Full text of Federal Reserve Bulletin : July 1999
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Volume 85 • Number 7 • July 1999
Federal Reserve
BULLETIN
Board of Governors of the Federal Reserve System, Washington, D.C.
Table of Contents
459 BANKING RELATIONSHIPS
OF
LOWER-INCOME
FAMILIES AND THE
GOVERNMENTAL
TREND TOWARD
ELECTRONIC
PAYMENT
In the past three years, the federal government
and many states have lowered their costs of
administering welfare and benefits programs by
expanding the use of electronic payment. These
initiatives promise to have their greatest significance, and meet their greatest challenge, among
lower-income families, the demographic group
with the lowest rate of bank account ownership
and the least familiarity with electronic transactions. Although the payment programs do not
require a banking relationship, the move to electronic transfer may change the financial practices of many recipients without a deposit
account or with no banking relationship at all.
For example, they may continue to obtain cash
from check cashing outlets and grocery stores,
but the attraction of a bank account may become
heightened by a federal plan to make special
accounts available at depository institutions primarily for the electronic transfer of federal payments. Moreover, the greater use of the banking
system by lower-income families could harmonize with the emphasis that welfare reform
has placed on asset-building, a goal that may
be harder to achieve without the use of a bank
account. This article examines the ways in
which lower-income families obtain checking
and credit services, the effects that the government move to electronic payment may have on
these families and on depository institutions,
and the promotional and educational efforts that
may be needed to facilitate the move of the
unbanked to electronic services.
474 INDUSTRIAL PRODUCTION AND
UTILIZATION FOR MAY 1999
CAPACITY
Industrial production rose 0.2 percent in May
after gains of 0.4 percent in April and 0.7 percent in March. At 134.1 percent of its 1992
average, industrial production in May was
1.7 percent higher than in May 1998; capacity
utilization for total industry—at 80.5 percent—
was off more than 2 percentage points from a
year earlier.
477 STATEMENTS
TO THE
CONGRESS
Patrick M. Parkinson, Associate Director, Division of Research and Statistics, Board of Governors, highlights a few key conclusions and recommendations of the Report on Hedge Funds,
Leverage, and the Lessons of Long-Term Capital Management by the President's Working
Group on Financial Markets and testifies that the
Working Group has concluded that the central
policy issue raised by the Long-Term Capital
Management episode is how to constrain leverage more effectively. Further, he states that the
Working Group believes that the best approach
to addressing concerns about excessive leverage
is to make market discipline more effective and
that the primary responsibility for increasing
the effectiveness of market discipline necessarily rests with market participants. (Testimony
before the House Committee on Banking and
Financial Services, May 6, 1999)
479 Laurence H. Meyer, member, Board of Governors, comments on H.R. 1585, the "Depository
Institutions Regulatory Streamlining Act of
1999" and testifies that the Board welcomes this
legislation and supports its purpose of revising
outdated banking statutes that are imposing costs
without providing commensurate benefits to the
safety and soundness of depository institutions,
enhancing consumer protection, or expanding
credit availability. He states further that the legislation builds upon past successes in regulatory
reform and relieves regulatory burdens on banking organizations; in a few areas, however, the
bill may not achieve meaningful reform but
instead would lead to competitive inequities or
raise safety and soundness and other concerns.
(Testimony before the Subcommittee on Financial Institutions and Consumer Credit of the
House Committee on Banking and Financial
Services, May 12, 1999)
484 Patrick M. Parkinson presents the views of the
Board on whether it is necessary to modernize
the Commodity Exchange Act and testifies that
the Board believes that modernization of the act
is essential and that the reauthorization of the
Commodity Futures Trading Commission offers
the best opportunity to make the necessary
changes. He states further that counterparties to
financial derivatives transactions are predominantly institutions and other professional counterparties and that the Board believes that
privately negotiated derivatives transactions
between professional counterparties should be
excluded from the act. (Testimony before the
Subcommittee on Risk Management, Research,
and Specialty Crops of the House Committee on
Agriculture, May 18, 1999)
487 Alan Greenspan, Chairman, Board of Governors, testifies that exposure of an economy to
short-term capital inflows before its financial
system is sufficiently sturdy to handle a large
unanticipated withdrawal is a highly risky venture; thus some set of suggested standards that
countries should strive to meet would help the
new highly sensitive international financial system function effectively. Further, he states that
improvements in transparency, commercial and
legal structures, and supervision cannot be
implemented quickly and that the transition to a
more effective and stable international financial
system will take time. (Testimony before the
House Committee on Banking and Financial
Services, May 20, 1999)
490
ANNOUNCEMENTS
Statement after the meeting of the Federal Open
Market Committee on May 18, 1999.
Statement by Chairman Greenspan on the resignation of Secretary of the Treasury Robert
Rubin.
Publication of a revised
adjustable-rate mortgages.
handbook
on
Changes in Board staff.
493 MINUTES OF THE FEDERAL OPEN
MARKET COMMITTEE MEETING HELD
MARCH 30, 1999
ON
At its meeting on March 30, 1999, the Committee adopted a directive that called for maintaining conditions in reserve markets that would be
consistent with an unchanged federal funds rate
of 43A percent and that did not contain any bias
with respect to the direction of possible adjustments to policy during the intermeeting period.
499 LEGAL
DEVELOPMENTS
Various bank holding company, bank service
corporation, and bank merger orders; and pending cases.
A1 FINANCIAL
AND BUSINESS
STATISTICS
These tables reflect data available as of
May 26, 1999.
A3 GUIDE TO TABULAR PRESENTATION
A4 Domestic Financial Statistics
A42 Domestic Nonfinancial Statistics
A50 International Statistics
A63 GUIDE TO STATISTICAL
SPECIAL TABLES
RELEASES
A66 INDEX TO STATISTICAL
TABLES
A68 BOARD OF GOVERNORS
AND
AND
STAFF
Meeting of the Consumer Advisory Council.
A70 FEDERAL OPEN MARKET COMMITTEE
STAFF; ADVISORY
COUNCILS
Issuance of guidance on loan-loss allowances.
A72 FEDERAL
RESERVE
BOARD
AND
PUBLICATIONS
Proposed actions.
Enforcement actions.
Publication of the Annual Report and Budget
Review.
A74 MAPS OF THE FEDERAL
A76 FEDERAL RESERVE
AND OFFICES
RESERVE
BANKS,
SYSTEM
BRANCHES,
PUBLICATIONS COMMITTEE
Lynn S. Fox, Chair • Karen H. Johnson • Donald L. Kohn Q Stephen R. Malphrus
• J. Virgil Mattingly, Jr. • Michael J. Prell • Dolores S. Smith • Richard Spillenkothen
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 Multimedia Technologies Center
under the direction of Christine S. Griffith, and Publications Services supervised by Linda C. Kyles.
Banking Relationships of Lower-Income
Families and the Governmental Trend
toward Electronic Payment
Jeanne M. Hogarth and Kevin H. O 'Donnell, of the
Board's Division of Consumer and Community
Affairs, prepared this article.
In the past three years, the federal government and
many states have lowered their costs of administering
welfare and benefits programs by expanding the use
of electronic payment. These initiatives promise to
have their greatest significance, and meet their greatest challenge, among lower-income families, the
demographic group with the lowest rate of bank
account ownership and the least familiarity with electronic transactions.
Although the payment programs do not require a
banking relationship, the move to electronic transfer
could change the financial practices of many recipients without a deposit account or with no banking
relationship at all. Recipients of social security and
other benefits payments who do not have a checking
account may well continue to obtain cash and other
financial services from alternative service providers,
such as check cashing outlets and grocery stores. But
in light of the increased promotion of direct deposit,
many of these recipients may be more inclined to
open a deposit account. The attraction of a bank
account for some families without one may become
heightened as governments and the payment system
in general move more toward electronic transactions.
An example of such a move is the federal government's introduction this summer of special accounts
to be made available at depository institutions primarily for the transfer of federal payments.
In these ways, the governmental move to electronic payment may do more than the "basic banking" effort of the 1980s to spread the use of bank
accounts to "unbanked" families. Moreover, the
greater use of the banking system by these families
could harmonize with the emphasis that welfare
reform has placed on asset-building for lower-income
families, a goal that may be harder to achieve without
the use of a bank account. On the other hand, a move
by greater numbers of lower-income families into the
mainstream of the payment system is likely to be a
difficult transition for many of them, given survey
results on why they do not currently use the banking
system.
This article examines the ways in which lowerincome families obtain checking and credit services,
the effects that the government move to electronic
payment may have on these families and on depository institutions, and the promotional and educational
efforts that may be needed to facilitate the move to
electronic services.
OWNERSHIP OF TRANSACTION
ACCOUNTS
AND USE OF FINANCIAL
INSTITUTIONS
According to the Federal Reserve Board's Survey of
Consumer Finances (SCF), about 87 percent of all
U.S. families in 1995 had a transaction account at a
financial institution.1 Most of these (85 percent of all
families) had a checking account, and 36 percent of
all families had a savings account (table 1; also see
box "Account Ownership over Time"). 2
1. Except as noted, data in this article are from the SCF. Details on
the survey and its results are available in Arthur B. Kennickell,
Martha Starr-McCluer, and Annika E. Sunden, "Family Finances in
the U.S.: Recent Evidence from the Survey of Consumer Finances,"
Federal Reserve Bulletin, vol. 83 (January 1997), pp. 1-24; see also
the survey's web site, at www.federalreserve.gov/pubs/oss/oss2/
scfindex.html. Although the present article does not directly address
the statistical significance of the results presented, it highlights findings that are significant or provide insight in a broad context.
2. The SCF asks respondents whether they have a "checking
account," but under the term "transaction account" the SCF also
tracks ownership of a broader set of assets—"checkable" accounts
and savings accounts.
Checkable accounts consist of checking accounts and money market accounts at depository institutions, money market accounts with
mutual funds, and call/cash accounts at brokerages. Savings accounts
are passbook and statement savings accounts at depository institutions
but not term accounts such as certificates of deposit.
Depository institutions consist of commercial banks, trust companies, thrift institutions, and credit unions. Thrift institutions consist of
savings and loan associations and savings banks. See the SCF Codebook for a full listing of financial institutions covered by the SCF.
In this article, the terms "bank" and "banking" are used generically to encompass all depository institutions unless specifically
limited to commercial banks.
460
1.
Federal Reserve Bulletin • July 1999
Ownership of transaction accounts and other financial
products, 1995
Percent
All U.S.
families
Lower-income
families
87.4
85.0
36.0
33.5
75.8
72.1
25.4
21.5
66.5
44.6
30.8
11.8
14.2
18.6
10.6
13.5
Mortgage2
First
Second
Home equity line of credit .
MEMO: Owns home
38.7
3.4
11.0
64.7
18.1
1.4
4.3
49.6
ii
Savings and investments
Certificate of deposit
Savings bonds
IRA or Keogh account
Mutual fund
Stocks
Bonds
Annuities
14.3
22.8
26.1
12.3
15.2
3.1
3.2
12.9
10.6
12.1
4.2
6.7
.6
2.1
Hi
Life insurance3
Any
Term
Whole life
Both term and whole life
71.9
76.0
44.4
20.4
55.0
71.0
40.1
11.1
Transaction account
Either checking or savings . . .
Checking
Savings
Both checking and savings ...
Credit
Major credit card'
Loan
Vehicle
Education
Consumer
it
lion families) did not; about 72 percent of lowerincome families had a checking account (table 1). In
addition, substantial percentages of lower-income
families held an array of other financial products
including loans, investments, and life insurance, some
of which may have involved a relationship with a
depository institution. Hence many of the 11 million
lower-income families that reported having no transaction account could well have had some other formal connection with a depository institution.
m
NOTE. Data in this and other tables in this article are from the 1995 Survey of
Consumer Finances except as noted. For details and definition of lower income,
see text and appendix A. For definition of transaction account and depository
institution, see text note 2.
1. Discover, MasterCard, Optima, and Visa.
2. On primary residence.
3. Percentages of respondents holding particular types are for those owning
life insurance.
IRA Individual Retirement Account.
Use of Financial Services by Lower-Income
Families
The median income of the 100 million families in the
United States (including single-person households)
for the year preceding the 1995 SCF was roughly
$32,000. At the threshold commonly used to define
low to moderate income (80 percent of median
income), approximately 45 percent of U.S. families in
1995, or about 45 million families, were in that
category (hereafter referred to as lower income; see
box "Some Characteristics of Low- to ModerateIncome Families" and appendix A).3
Of the lower-income families in the 1995 survey,
about 75 percent (roughly 34 million families) had a
transaction account, and 25 percent (roughly 11 mil-
Use of Financial Institutions by Lower-Income
Families
Our most sharply defined area of attention in this
article is lower-income families with no direct connection to the mainstream system of banking and
finance. These families would require the most attention by programs promoting the use of checking and
savings accounts and electronic payment. These families will be found among those with no transaction
accounts.
About 13 percent of lower-income families in the
1995 SCF said that they did not have any accounts or
loans with financial institutions nor did they "regularly" conduct any personal financial business
through financial institutions (table 2). Thus, of the
11 million or so lower-income families without a
transaction account in 1995, about 1.5 million had
little or no contact of any kind with financial institutions (see appendix B for a further discussion of these
data and their limitations)
Individuals who report regularly doing business
with a financial institution may be relatively more
2.
Financial institutions used regularly by lower-income
families, by status of transaction account ownership, 1995
Percent
—-
Has
Has no
transaction transaction
account
account
Any1
86.62
100.0
44.42
Depository institution
Commercial bank
or trust company
Thrift institution
Credit union
Finance or loan company
Vehicle finance company
97.6
99.8
81.8
78.7
23.1
25.4
17.5
1.2
82.3
23.5
25.7
16.9
1.1
52.6
20.1
22.9
22.2
1.3
2
2
1
MEMO: Median umber of financial
institutions used2
3. The median income measure is for 1994 and is from the Bureau
of the Census, Current Population Survey. The number of families at
or beneath the 80 percent threshold is from the 1995 SCF, which asked
respondents for their income in calendar year 1994.
All
lowerincome
families
NOTE. See general note to table 1.
1. Percentages of respondents using particular types are for those using an
institution.
2. Includes unspecified regular use of one or more unidentified financial
institutions; see appendix B.
Banking Relationships
of Lower-Income
Families and the Governmental
Trend toward Electronic Payment
461
Account Ownership over Time
Estimates of account ownership rates have varied between
1977 and 1996 by data source, definition of account holding, and timing of the study (table). Nonetheless, one can
compare findings from the same surveys—for example, the
Survey of Consumer Finances (SCF) conducted in 1983,
1989,1992, and 1995 or the Panel Study of Income Dynamics (PSID) conducted 1984, 1989, and 1994.1
In the SCF data, ownership rates apparently decline from
1983 to 1989, rise during the 1989-92 period, and then hold
steady from 1992 to 1995. In the PSID data, however,
ownership rates for roughly the same periods seem to rise to
a peak in 1989 and decline thereafter.
Because the PSID data are longitudinal (covering the
same respondents over time) rather than cross-sectional (as
are the SCF data), one can examine the rate at which
families with the same head of household have retained
their accounts over time.2
Among families with the same head of household
between 1984 and 1989, account ownership was fairly
high and steady throughout the period at about 83 percent
(data not shown). Among families with the same head of
household between 1989 and 1994, however, ownership
had dropped by the end of the period, to about 80 percent.
The pattern of ebb and flow in ownership during the
two periods is as follows: Of households with an account
in 1984, 6 percent no longer had one in 1989; conversely,
of households without an account in 1984, 8 percent had
acquired one by 1989. In contrast, the figures for the
1989-94 period are 9 percent losing account ownership
and 6 percent acquiring account ownership.
1. The SCF is conducted by the Board of Governors of the Federal
Reserve System (see text note 1), and the PSID is conducted by the
University of Michigan Survey Research Center. The Board conducted a
Survey of Consumer Finances in 1986, as well, but, among other differences,
it was of more limited scope.
2. Erik Hurst, Ming Ching Luoh, and Frank Stafford, "The Wealth
Dynamics of American Families, 1984-94," Brookings Papers on Economic Activity, 1:1998, pp. 267-338; see the discussion on pp. 299-301
on transaction accounts.
Surveys with data on ownership of checking and savings accounts
Survey
Sample type
Year
Measure of
account ownership
Account
ownership
(percent)
Consumer Credit Survey, Board of
Governors of the Federal Reserve System
National probability sample; cross
section; personal interview
1977
Checking or savings account
91
Survey of Consumer Finances, Board
of Governors of the Federal Reserve System
National probability sample plus
oversampling of wealthy
households; cross section; personal
interview
1983
1989
1992
1995
Checking, savings, or money market
deposit account, money market mutual
fund, or call/cash account at brokerage
87.5
85.5
87.1
87.6
Panel Study of Income Dynamics, Survey
Research Center, University of Michigan
Began as national probability sample;
longitudinal data follow all members
of original households; personal
interview
1984
1989
1994
Checking, saving, or money market
account, nonstock individual
retirement account, or Treasury bills
80.8
81.2
77.8
Survey of Consumers, Survey Research
Center, University of Michigan
National probability sample; cross
section; telephone interview
1984
1996
Checking or savings account
92
90
willing to consider opening an account with that
institution when changes in the payment system make
an account more attractive. Consumers without
accounts who do not regularly use financial institutions may be relatively less willing to open an
account when these changes arise.
A helpful initiative in terms of broadening the
involvement of lower-income families with mainstream financial services has been the creation of
"community development financial institutions"
(CDFIs) to serve lower-income neighborhoods. Since
their widespread rise in the 1990s, CDFIs have been
providing housing and business lending, consumer
financial services (such as checking and savings
accounts and home improvement loans), credit counseling, and business planning assistance. CDFIs can
take the form of community development banks,
community development credit unions, community
development loan funds, microenterprise funds, and
venture capital funds.4
Reasons for Not Having a Checking
Account
The 1995 SCF asked respondents without checking
accounts to state their "most important" reason for
4. See David Saunders and David Stoesz, "Welfare Capitalism in
a Global Economy: The American Experience," Virginia Commonwealth University (paper prepared for the Symposium on Financial
Services in a Post-Welfare-Reform Society, Federal Reserve Bank of
Richmond, April 1998). CDFI customers and their financial practices
are a promising area of study for insight into broader issues regarding
the finances of lower-income families.
462
Federal Reserve Bulletin • July 1999
Some Characteristics of Low- to Moderate-Income Families
Low- to moderate-income (lower-income) families differ
from families overall in a number of respects (table).
Lower-income families tend to be older and to include a
higher proportion of minorities and of family heads who are
single females.
On average, lower-income families have less education
than the U.S. population as a whole: Three out of ten
lower-income families are headed by individuals with less
than a high school education, and one-third of the heads of
families have only a high school education. Lower-income
families also have lower net worth—a median of $22,100 in
1995 compared with $57,450 for all families (although, as
measured, the lower-income group may include some
wealthy families that happen to have a temporarily low
current income). Lower-income families are less likely to
be homeowners and are less likely to be employed.
Demographic characteristics of U.S. families, 1995
Demographic characteristics—Continued
Percent except as noted
Characteristic
All
Race or ethnicity
White non-Hispanic
African American
Hispanic
Other
All
100
77.7
12.8
5.6
.3.9
All
Lowerincome
52.4
28.5
13.3
30.2
47.2
16.9
2
2
Housing status
Homeowner
Renter or other
64.7
35.3
49.6
50.4
Current employment status of head
Employed
Retired
Unemployed or laid off
Other not employed
67.8
17.9
4.0
10.3
49.1
26.0
6.3
18.6
19.8
24.0
35.1
21.1
19.9
23.7
34.9
21.5
Lowerincome
Characteristic
45
71.1
18.8
6.9
3.2
Age of head (years)
18-24
25-34
35-44
45-54
55-64
65 or more
Median
5.3
19.5
23.0
17.8
12.5
21.9
45
9.2
18.5
16.2
11.0
11.9
33.2
50
Education of head
No high school diploma or GED
High school diploma or GED
Some college but no degree
College degree or more
Median (years)
18.5
31.7
19.1
30.7
12
29.8
35.2
19.1
15.9
12
Marital status and sex of head
Married or living with partner
Single female
Family size (number of persons)
Region of residence
North Central
West
Family income in 1994 (dollars)'
Less than 15,000
15,000 to 29,999
30,000 to 49,999
50,000 or more
Family net worth in 1995
Median (dollars)
25.9
25.6
24.1
24.4
57,450
57.2
42.8
22,100
not having one (see also appendix A). Among the
lower-income families, about one-fourth said the
main reason was that they "don't write enough
checks," another one-fourth said the main reason was
"don't have enough money," and one-fifth said the
main reason was "do not like dealing with banks"
(table 3). The remaining responses were spread over
a miscellany of reasons involving costs and practical
factors. Only a few respondents identified lack
of access to branches or inconvenient hours as
problems.
About one-third of lower-income families without
checking accounts used financial institutions in some
way, such as through loans, or other types of asset
accounts, or unspecified regular personal business
(table 3). Among these families, "don't write enough
NOTE. See general note to table 1.
1. These data will not match values cited in the text for median income,
which are from the Bureau of the Census, Current Population Survey (see
appendix A).
GED General education diploma.
. . . Not applicable.
checks" was cited distinctly more frequently than
other explanations as the most important reason for
not having a checking account. Among the remaining
two-thirds, who did not make regular use of financial
institutions, the most prominent primary reason for
not having a checking account was "don't have
enough money."
Other studies have also found that lack of money
was cited as the main reason for not having an
account. A 1996 Treasury survey of recipients of
federal benefit checks such as those for social security and Supplemental Security Income found that, of
the roughly 20 percent that did not have a checking
or savings account, about half cited "don't have
enough money" as the primary reason.
In a 1996 survey of low-income families, the most
Banking Relationships
3.
of Lower-Income
Families and the Governmental
Lower-income families without checking accounts,
distributed by reasons given and by status of
financial institution usage, 1995
Reason
Any
Don't write enough checks. ..
Don't have enough money . . .
Don't like dealing
with banks
Cost factors1
Practical factors2
No depository institution
with convenient hours
or location
All
100
Does not
use
financial
institution
36.3
63.6
26.2
25.5
31.6
12.6
23.1
32.9
20.5
17.0
10.0
21.4
19.9
13.2
20.2
15.4
8.1
*
*
#
NOTE. See general note to table 1.
1. Includes minimum balance too high, service charges too high, must keep
balances low because of welfare.
2. Includes can't manage or balance checking account, haven't gotten around
to it, don't need or want checking account, use alternative checking source,
checkbook has been lost or stolen.
* Number of respondents too few to be meaningful.
frequently cited main reason was "no savings" followed by "bank account fees too high" and "banks
require too much money just to open an account." 5
Anecdotal evidence indicates that concern over
attachment of funds to satisfy court judgments
regarding debt, child support, or other payments is
another reason families do not have accounts.
Although this response has appeared only rarely in
most surveys to date, one out of five respondents
without a checking account in the 1996 low-income
survey indicated that wanting to "keep our financial
records private" was their primary reason for not
having an account.
The frequencies with which all families have cited
certain explanations as the main reason for not having a checking account have changed between the
1989 and 1995 SCF. "Don't write enough checks"
remained the most frequently cited main reason, but
the proportion of families giving this response fell
about one-fifth. The proportion of families citing "do
not like dealing with banks" as the main reason rose
about one-half, and the proportion citing "can't manage or balance a checking account" as the main
reason rose about four-fifths.6
5. John Caskey, Lower-Income Americans, Higher-Cost
Financial
Services (University of Wisconsin-Madison: Filene Research Institute, Center for Credit Union Research, 1997), table 3.
6. Kennickell, Starr-McCluer, and Sunden, "Family Finances
in the U.S." (see section on "Families without a Checking Account,"
p. 7).
463
Other Financial Products and Services Used
by Lower-Income Families
Percent
Uses
financial
institution
Trend toward Electronic Payment
Besides a checking account, a major credit card was
the most widely held financial product among lowerincome families (table 4).7 Although holdings of savings and investment products were not widely
reported by lower-income families, more than half of
them reported having term or whole-life insurance
(table 1). Nearly half of lower-income families were
homeowners; of these, more than one-third had first
mortgages on their homes, while about 5 percent had
some type of second mortgage.
Not surprisingly, holdings of other financial products vary by ownership of a deposit account (table 4).
Lower-income families with a deposit account are
more likely to have a major credit card, a first mortgage, and a vehicle loan, and they are more likely to
have insurance and term savings such as certificates
of deposit.8
7. For these families, the average interest rate was 14.9 percent,
and the average credit limit was $8,400. Just over half of lowerincome families with credit cards carried a balance, the median of
which was $1,300. These results indicate use comparable to that of
U.S. families as a whole: The average interest rate for all SCF families
was 14.5 percent, and the average total credit limit was $13,000; for
the 59 percent who carried a balance, the median amount was $ 1,500.
8. Other factors also affect the likelihood that a lower-income
family will have such products and accounts. See also Jeanne M.
Hogarth and Kevin H. O'Donnell, "If You Build It, Will They Come?
A Simulation of Financial Product Use among Low-to-Moderate
Income Families," Proceedings of the Association for Financial Counseling and Planning Education (November 1998), pp. 146-54.
4.
Ownership of financial products by all families, and
by lower-income families by status of transaction
account ownership
Percent
Lower-income families
Product
Credit
Major credit card1
Loan
First mortgage
Vehicle
Education
Consumer
All U.S.
families
All
Has
Has no
transaction transaction
account
account
66.5
44.6
56.2
7.7
38.7
30.8
11.8
14.2
18.1
18.6
10.6
13.5
21.3
20.0
10.7
13.9
8.1
14.1
10.2
12.1
Savings and investment
Certificate of deposit ..
IRA or Keogh account .
14.3
26.1
12.9
12.1
16.5
15.7
*
Life insurance
71.9
55.0
61.5
34.0
NOTE. See general note to table 1.
1. Discover, MasterCard, Optima, and Visa.
IRA Individual Retirement Account.
* Number of respondents too few to be meaningful.
*
464
Federal Reserve Bulletin • July 1999
Cross-Use of Checking Accounts and Check
Cashing Outlets
Many families with bank accounts also use check
cashing outlets and various retail stores to obtain
cash, and many families without accounts use banks
for cashing checks. The 1996 survey by Treasury
asked families where they cashed their benefit checks.
Banks were most commonly cited (88 percent
reported using them); even among families without
accounts, 58 percent reported cashing their checks
at a bank. Among all respondents, nearly one-fourth
used grocery stores, 8 percent used check cashing
services, and 2 percent used other retail stores. When
questioned about their willingness to have their payments electronically deposited, some account-holding
check recipients said that having their checks mailed
gave them greater certainty about the arrival of payments and about resolving errors.9
A 1996 survey of low-income families with and
without accounts found that about half (48 percent)
of the respondents cashed checks at depository institutions and 17 percent used check cashing outlets.10
The same survey revealed that one out of seven
account holders used check cashers. Looking at the
opposite case, survey and trade association data indicate that about half to two-thirds of consumers who
use check cashers may have checking accounts.11
GROWTH OF ALTERNATIVE
SERVICES
FINANCIAL
The number of check cashing outlets in the United
States has grown sharply over the past decade or so,
from about 2,100 in the mid-1980s to about 6,000
in 1997 (the latest year measured). The expansion,
roughly on the order of 9 percent per year, has
generated several attempts at explanation.
9. U.S. Department of the Treasury, Mandatory EFT Demographic
Study, OMB 1510-00-68, Financial Management Service (1997),
pp. 57-60. The average income of recipients still receiving their
payments by check was $19,700; seven out of ten were white, and
nearly four out of ten had less than a high school education.
10. Caskey, Lower-Income Americans, Higher-Cost Financial Services, tables 3 and 5. The results of this survey differ from those in the
Treasury study primarily because Treasury surveyed federal benefit
check recipients, a sample that contains virtually all income groups.
An indication of the transactions needs among the low-income in this
study is that, among those who used check cashing outlets ten or more
times per year, 37 percent purchased between eleven and thirty money
orders per year, and 35 percent purchased more than thirty.
11. The survey is in Sherrie Rhine and Maude Toussaint, "The Use
of Formal and Informal Markets Among Black Families," Consumer
Interest Annual, vol. 45 (forthcoming).
Some attention has been given to changes in the
number of branches and community banks in the
midst of growth in mergers and acquisitions. As
noted, however, surveys do not reveal a noticeable
problem with the location or hours of depository
institutions for those without accounts. Moreover,
access to the financial mainstream is clearly not the
issue for the many users of alternative financial services who have transaction accounts.
Recent work on the effects of consolidation in the
banking industry has some bearing on the analysis of
changes in the market for financial services. A study
employing a newly constructed database covering
banking consolidation and neighborhood characteristics for 1975-95 found that the number of banking
offices rose about 30 percent over the period. In
general, the number of offices per capita in higherincome areas increased while the number in lowerincome areas decreased. By 1995, the number of
banking offices per capita was roughly constant
across neighborhood income categories.12
A second study, employing an updated version of
the database and covering 1993-97, looked at the
effect of consolidation on home-purchase lending to
minority and lower-income borrowers and neighborhoods. It found that, after consolidation, banking
organizations decreased home-purchase lending in
some areas and increased it in others; independent
mortgage companies and credit unions also increased
their activity in some areas. The net effect was that
consolidation caused no significant change in such
lending to minority and lower-income borrowers and
neighborhoods, but at the end of the period, more
than half of all home-purchase loans were being
made by offices outside the borrower's local community.13 Although the potential ease of obtaining a
mortgage from an institution located outside one's
neighborhood would seem to be greater than that of
cashing a check outside one's neighborhood, the data
suggest that conclusions about the effects of bank
consolidation are not obvious or straightforward.
Another theory is that the mix and fee structure of
products and services offered by banking organizations have become less attractive to lower-income
families than the offerings of the alternative financial
12. Robert B. Avery, Raphael Bostic, Paul S. Calem, and Glenn B.
Canner, "Changes in the Distribution of Banking Offices," Federal
Reserve Bulletin, vol. 83 (September 1997), p. 723.
13. Robert B. Avery, Raphael Bostic, Paul S. Calem, and Glenn B.
Canner, "Trends in Home Purchase Lending: Consolidation and the
Community Reinvestment Act," Federal Reserve Bulletin, vol. 85
(February 1999), pp. 81-102.
Banking Relationships
of Lower-Income
Families and the Governmental
Trend toward Electronic Payment
465
Where Can I Cash This Check?
Policies and charges for check cashing vary widely but
generally hold regardless of the type of check (governmental, payroll, or personal). The examples below involve a
check written either by, or to, the person presenting it
("second-party" checks) and do not necessarily apply to
checks written to someone else and endorsed on the back
for payment to the presenter ("third-party" checks).
• When a bank customer presents a second-party check
at his or her bank and wishes to receive an equivalent
amount of cash, the bank will issue the cash only if it is
already available in the customer's account or through a
credit line. In that case, the customer is not actually "cashing" the check but is simply depositing it and simultaneously withdrawing cash that was already available.
If the cash is not available, the customer must generally
wait at least one business day as the check passes through
the payment system before gaining access to the check's
funds. The Federal Reserve's Regulation CC on funds availability determines the maximum length of time that a bank
may hold the funds under varying circumstances. The
majority of banks generally do not use the full hold periods
available to them.
• Credit unions often give their customers instant availability of the full amount of a second-party check for
amounts that may exceed the customer's current account
balance or credit line.
• Many depository institutions will not cash a check
sector. For example, small short-term loans are a
popular product in the alternative financial sector,
where check cashers make funds immediately available to customers via the cashing of post-dated
checks (also known as "payday loans" or "deferred
presentment"). Except for cash advances on credit
cards, such loans are generally not found in the
mainstream financial sector (see box "Where Can I
Cash This Check?"). Others contend that the factor
bringing users to alternative service providers is not
convenience but comfort; that is, users find that the
alternative sector provides more person-to-person
contact than mainstream institutions (a consideration
sometimes called "high touch versus high tech").14
The informal financial market—that is, family,
friends, and social organizations—is also a significant source of credit and financial services to lowerincome families, especially in the face of financial
shocks, although the dollars transacted are likely to
14. D. Fontana, "Need Seen to Teach the Poor About High-Tech
Banking," American Banker, March 17, 1997.
presented by someone who does not have an account
with the institution, and those that do often charge a fee.
The fee may be limited by state law.
• Grocery stores often will allow their customers to write
a check for the amount of purchase plus an extra amount
returned in cash (generally no more than $25 to $50).
• Grocery stores may allow customers to cash secondparty checks free of charge with a minimum purchase.
• Check cashing outlets will charge either a flat fee or a
fee based on the value of the check; the fees may be capped
by state law at a certain percentage of the check's value. In
New York, for example, check cashers can charge no more
than 1.4 percent of the value of the check.
A service provided by some check cashing outlets that is
not available from depository institutions is the cashing of a
check drawn on the presenter's account but carrying a date
in the future. The service is known as "deferred presentment" because the check casher must defer its presentment
of the check to the customer's bank until the date given on
the check. The date may be a payday for the customer, or it
may be the end of a hold period placed by the customer's
bank on another check previously deposited. Some states
consider deferred presentment to be a loan and hence
require that customers receive Truth-in-Lending disclosures
when the service is provided. Some other states limit the fee
for the service.
be relatively small.15 Three-fourths of families facing
emergency expenses related to illness and three-fifths
of families facing them because of unemployment
have reported using some type of informal financing
arrangement. Information that helps both borrowers
and lenders in the informal market is often inexpensive to obtain relative to other markets.
ALTERNATIVE AND MAINSTREAM
FINANCIAL
SERVICES: A COMPARISON OF COSTS
Check cashing outlets generally charge a percentage
of the amount of the check being cashed, often up to
some maximum fee. Some states limit these fees; for
example, at the 1.4 percent limit imposed in New
York, the fee for cashing a $340 check would be
15. See Rhine and Toussaint, "The Use of Formal and Informal
Markets Among Black Families"; and Philip Bond and Robert
Townsend, "Formal and Informal Financing in a Chicago Ethnic
Neighborhood," Federal Reserve Bank of Chicago, Economic Perspectives, vol. 20 (July/August 1996), pp. 3-27.
466
Federal Reserve Bulletin • July 1999
about $4.75, which is nearly equal to the average
monthly fee charged by banks and savings associations in 1998 for a noninterest "fee-only" checking
account.16
Check Cashing and Bill Paying
According to some estimates, consumers relying on
check cashers pay from $86 to $500 per year to cash
checks and pay bills, while the cost would have been
$30 to $60 had they used a bank where they held an
account.17 Researchers often infer from this price
difference that lower-income families are not sensitive to the price of financial services. Another possible explanation is that consumers do not realize
how much more they are paying at check cashers
than they would at a bank. Some surveys have found,
however, that a large proportion of consumers are
aware of the price difference and understand that the
fees charged by check cashers depend on the size of
the transaction.18
know or understand the APR while still being aware
of the dollar amount paid for the loan.20
Consumers who use alternative financial service
providers may not consistently receive federal Truth
in Lending disclosures and other information that
could help them make appropriate decisions regarding these loan products. For example, in examinations during the first nine months of 1998, the Tennessee Department of Financial Institutions found
various violations at 53 percent of the state's licensed
check cashing outlets, among the most frequent being
failure under the Truth in Lending Act to make the
required form of disclosure of the APR.21 The high
rate of violations may have been an anomaly because
1998 was the first year of examinations under the
state's Deferred Presentment Services Act, passed in
1997. Nonetheless, another implicit cost to users of
alternative service providers in some states may be
relative weakness in consumer protections and their
enforcement.
BASIC
BANKING
Consumers who obtain credit from alternative financial service providers may also pay higher fees than
they would have through a depository institution.
Most of the loans in question are payday loans for
small amounts (generally in the $100 to $500 range)
and for short periods (usually seven to fourteen days),
although some can be for as long as sixty days; the
borrower is often allowed to renew the loan for
additional periods. Although the fees may seem low
to the consumer (say, 15 percent up to a fee cap of
$30 for as much as a $500 loan), the annual percentage rate (APR) of interest can be more than 1,000
percent.19 In these cases the customer might not
During the 1980s, various state legislatures and consumer groups began exploring the provision of lifeline or "basic banking" services to consumers.22 One
of the first formal demands for basic banking was a
1984 petition filed with California's attorney general
and state banking superintendent on behalf of a coalition of consumer groups. The petition asserted that
recent developments in banking practices in
California—including the requirement of a credit
card to open a bank account—prevented low-income
consumers from obtaining the services they needed.
Although the petition was rejected by the California
banking superintendent, the banking relationships and
account features outlined in the petition became the
model for other basic-banking initiatives.
16. Board of Governors of the Federal Reserve System, Annual
Report to the Congress on Retail Fees and Services of Depository
Institutions (June 1999), table 1, p. 3. A fee-only account imposes a
monthly fee but requires no minimum balance.
17. Joseph J. Doyle, Jose A. Lopez, and Marc R. Saidenberg,
"How Effective Is Lifeline Banking in Assisting the 'Unbanked'?"
Federal Reserve Bank of New York, Current Issues in Economics and
Finance, vol. 4 (June 1998); Organization for a New Equality, Cash,
Credit & EFT '99: Reducing the Cost of Credit and Capital for the
Urban Poor (Washington, D.C.: Organization for a New Equality,
1998).
18. Joan Koonce-Lewis, Roger Swagler, and John Burton, "LowIncome Consumers' Use of the Alternative Financial Sector," Consumer Interest Annual, vol. 42 (1996), pp. 271-74.
19. Jean Ann Fox, The Growth of Legal Loan Sharking: A Report
on the Payday Loan Industry (Washington, D.C.: Consumer Federation of America, 1998).
20. A 1972 study of the so-called small small loan industry in
Texas found that only 2.4 percent of consumers were aware of the
APR, but two-thirds were aware of the dollar cost of their loan, and
four-fifths believed that the small small loan companies charged more
for loans than banks did (Thomas A. Durkin, A High Rate Market for
Consumer Loans: The Small Small Loan Industry in Texas, Technical
Studies of the National Commission on Consumer Finance, vol. 2,
Government Printing Office, 1975).
21. See Tennessee Department of Financial Institutions, Report to
the 101st General Assembly on the Deferred Presentment Services Act
(January 1999); for example, instead of carrying the APR to at least
the required two places to the right of the decimal, some licensees
rounded it to the nearest whole number. See also Robert E. Smith,
"Payday Loaners Sued," Chicago Defender, March 23, 1999, p. 1.
22. See, for example, Glenn Canner and Ellen Maland, "Basic
Banking," Federal Reserve Bulletin, vol. 70 (April 1987), pp. 255-69.
Credit
Banking Relationships of Lower-Income Families and the Governmental Trend toward Electronic Payment
Basic banking is broadly considered to consist of a
minimum level of financial services that should be
available to all. In an October 1986 policy statement,
the FFIEC encouraged efforts by trade associations
and depository institutions to offer "basic financial
services, consistent with safe and sound business
practices," and specified three elements of such services: a safe and accessible place to keep money, a
way to obtain cash (including, for example, the cashing of government checks), and a way to make thirdparty payments.23
At the state level, different models of basic banking have emerged. State laws in Illinois, New Jersey,
and New York outline account features and set specific fees and limits. Vermont's law encourages banks
operating in the state to provide basic banking
accounts. Rhode Island and Minnesota require banks
to offer savings accounts at no charge provided that
the balance is above a given threshold.24 Massachusetts implemented a voluntary basic-banking program in 1994 that encourages banks in the state to
offer low- or no-cost accounts to lower-income
families.
Many banks in basic-banking states, and in other
states as well, offer services priced below the caps set
by the states. For example, in a 1997 survey, the
Consumer Bankers Association found that 36 percent of institutions offered a low-cost "ATM-only"
account, and 70 percent offered a low-priced account
for certain groups, such as senior citizens or students.
Eighty percent of banks, savings and loan associations, and savings banks surveyed indicated that they
have a basic "economy" checking account that offers
limited service at a lower cost than "regular" checking accounts. Of these economy accounts, 76 percent
had a fixed fee that averaged $3.66 per month with no
minimum balance requirement. For the three-fourths
of these accounts with a check fee, the average number of checks that could be written per month without
a fee was about eight, and the fee for each check over
the limit averaged $0.59.
The American Bankers Association's 1998 survey
of retail banking found that 48 percent of small
banks, 58 percent of midsized banks, and 69 percent
23. The member agencies of the Federal Financial Institutions
Examination Council (FFIEC) are the Board of Governors of the
Federal Reserve System, the Federal Deposit Insurance Corporation,
the Office of the Comptroller of the Currency, the Office of Thrift
Supervision (formerly, the Federal Home Loan Bank Board), and the
National Credit Union Administration.
24. Illinois's and Rhode Island's laws were passed in 1986, Vermont's in 1987, New Jersey's in 1994, and Minnesota's and New
York's in 1995. Pennsylvania had a basic-banking law in the late
1980s but repealed it in 1995.
467
of large banks offered a "basic/no frills" checking
account. The average monthly fee was $3, and most
of the banks allowed between eight and ten checks
per month before charging a per-check fee; the
median per-check fee was $0.50.
Some critics point out that depository institutions
are doing little marketing, if any, to promote their
basic banking accounts, and that without such marketing, many lower-income consumers without
accounts will not know the basic accounts exist. A
1996 survey of financial institutions in New York
City found no signage about the availability of basic
banking accounts at any of the eighty-three branches
of the thirty banks surveyed.25 The survey found that
brochures on basic banking accounts were available
at only 40 percent of the branches; and staff members
at 40 percent of the branches failed to mention the
availability of the basic banking account to the surveyors. Critics also contend that a policy followed at
some banks to obtain a consumer's credit report in
the deposit account application process discourages
some consumers from seeking accounts at mainstream financial institutions.
A recent study concludes that low-cost accounts,
characterized by low minimum deposits and low
monthly fees, have had limited success in drawing
the unbanked into the mainstream financial sector.26
The potential cost of a bank account includes more
than the monthly fee or minimum balance requirements, however, especially for lower-income families
who may face a high probability of overdrawing the
account or of depositing a "bad" check. The costs of
such events are not trivial: In 1998 the average charge
by banks and savings associations for NSF (not sufficient funds) checks written by the customer was
approximately $17, whether the check was paid by
the institution or returned unpaid. On the deposit
side, about three-fifths of banks and four-fifths of
savings associations charged a fee for deposit items
returned; these fees averaged about $5.50 at banks
and about $7.50 at savings associations.27
Hence, even on the grounds of price competition,
basic-banking accounts may not be competitive with
alternative providers when the total cost of use
expected by a lower-income customer is considered.
25. Chris Meyer and Tracy Shelton, Buried Treasure: A Survey of
New York City Banks Shows "Lifeline Law" to be Best-Kept Consumer Secret in New York (New York Public Interest Research Group,
1996).
26. Doyle, Lopez, and Saidenberg, "How Effective Is Lifeline
Banking in Assisting the 'Unbanked'?"
27. Board of Governors, Annual Report to the Congress on Retail
Fees and Services of Depository Institutions, p. 10.
468
Federal Reserve Bulletin • July 1999
THE GOVERNMENTAL MOVE
ELECTRONIC
PAYMENT
TOWARD
In the mid-1990s, legislators turned their attention
from basic banking to the electronic delivery of government payments. As a result of two federal laws,
electronic payment methods were established for all
needs-based, federally assisted programs—that is,
food stamps and family welfare payments—and for
all federal benefits, such as social security and veterans payments.
Electronic Benefit Transfers
In the early 1990s, pilot programs were established
for electronic delivery of food stamp benefits and
certain cash programs such as Aid to Families with
Dependent Children (AFDC). Recipients used plastic
cards and personal identification numbers to obtain
food stamp benefits at point-of-sale (POS) terminals
in grocery stores and cash benefits at automated teller
machines and POS terminals.
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 established electronic delivery for food stamps and for payments
under Temporary Assistance for Needy Families
(TANF), the program that replaced AFDC. Under the
law, all food stamp benefits will be delivered electronically by October 1, 2002.
A growing number of states—for example, New
York, Maryland, and the members of the Southern
Alliance of States—deliver food stamps and TANF
benefits electronically.28 As part of the movement
toward electronic benefit transfers (EBT), these and
other states deliver state-level welfare benefits electronically as well. Some states have formed alliances
with each other and with private-sector service providers to deliver these benefits, either through a debit
card system or by encouraging clients to establish a
direct deposit account at a financial institution. For
program agencies, the electronic transfer of benefits
offers significant advantages over paper-based delivery systems: It reduces the cost of benefit delivery,
facilitates the management of program funds, and
helps reduce fraud.
For recipients, the EBT program can provide
greater convenience and security than the paperbased system because funds can be obtained or used
more quickly, only as needed, and with greater pri28. The members of the Southern Alliance of States are Alabama,
Arkansas, Florida, Georgia, Kentucky, Missouri, North Carolina, and
Tennessee. Mississippi and West Virginia are considering joining the
alliance.
vacy; EBT can also lower the recipient's costs of
obtaining benefits by eliminating check cashing
and the associated fees.29 Despite the evidence that
lower-income consumers who use the alternative
financial services sector prefer high person-to-person
involvement with financial transactions, recipients'
experiences with EBT suggest that they may find
a smooth transition to electronic financial services
(see box "Methods of Doing Business with Depository Institutions").30
During the early development of the EBT program,
a major policy issue involved the level of consumer
protections afforded to welfare recipients. State agencies expressed concern about the compliance costs
associated with the Electronic Fund Transfer Act
(EFTA) and its implementing rules (Regulation E),
particularly in the areas of liability for unauthorized
transfers and error resolution.
The Federal Reserve Board supported state and
federal efforts to provide benefits electronically and
sought to accommodate agency concerns while maintaining consumer protections. In 1995 the Board
adopted a final rule for Regulation E that made some
exceptions to facilitate compliance by state and federal agencies. At the same time, the Board determined that all consumers using electronic funds transfer services—including welfare recipients—were
entitled to the same protections under the EFTA and
Regulation E. The Board set a three-year period for
voluntary compliance, after which the rules were to
become mandatory. In response to states' concerns,
however, the Congress exempted state-administered,
federally assisted benefits from coverage under the
EFTA in the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996.
Electronic Transfer of Recurring
Benefits
Federal
The Congress took electronic delivery of federal payments beyond the realm of welfare when it enacted
the Debt Collection Improvement Act of 1996. A
29. Barbara Leyser, "Recipient Concerns with the Use of Electronic Benefit Transfer Systems for the Delivery of State and Federal
Benefits," National Poverty Law Center, Clearinghouse
Review,
vol. 32 (September-October 1998), pp. 216-51.
30. See Josephine Swanson, Jeanne M. Hogarth, and Jane Baker
Segelken, "Voices of Experience: Limited Resource Families and
Financial Management," Proceedings of the Family Economics &
Management Conference (American Home Economics Association
Meetings, 1993), pp. 13-28; and Jeanne M. Hogarth and Josephine
Swanson, "Using Contemporary Adult Education Principles in Financial Education with Low Income Audiences," Family Economics &
Resource Management Biennial, vol. 1 (1995), pp. 1 3 9 ^ 6 .
Banking Relationships
of Lower-Income
Families and the Governmental
Trend toward Electronic Payment
469
Methods of Doing Business with Depository Institutions
In 1995, the most common method of doing business with
depository institutions for all families with a transaction
account was a teller visit; use of electronic methods was
second, and the mail was third. About 75 percent of all
families with transaction accounts used some form of electronic technology for their banking, and about 70 percent of
lower-income families with accounts did so (table).1 Similarly, one-third of all families with accounts used automated
teller machines (ATMs), while one-fourth of all lowerincome families did so. Sex, age, education, marital status,
and region of residence also influenced the probability of
ATM use.
The field of market research has shown that product
innovation and diffusion follow a somewhat predictable
pattern; and learning theory posits that, once consumers
become comfortable with one technology, they are able to
generalize and apply that learning to other technologies.
Thus, one could expect to see growth over time in the
proportions of families who use some of these technolo-
1. See Arthur B. Kennickell and Myron L. Kwast, "Who Uses Electronic
Banking? Results from the 1995 Survey of Consumer Finances," Finance
and Economics Discussion Series 1997-35 (Board of Governors of the
Federal Reserve System. 1997), for a more detailed discussion of consumers'
use of electronic technologies in banking.
portion of the bill that became known as "EFT '99"
declared that by January 2, 1999, the Department of
the Treasury would have to use direct deposit for all
recurring federal benefits, such as payments for social
security, Supplemental Security Income, veterans
benefits, and retirement. The primary motivation for
this new law was to save tax dollars: A check costs
the government $0.43 to prepare and have delivered,
while an electronic funds transfer costs only $0.02.
Treasury's final rules for implementing EFT '99,
issued in September 1998, stop short of mandating
direct deposit.31 Instead, consumers have the choice
of receiving their benefits through direct deposit;
receiving a check; or using a special new account, the
Electronic Transfer Account (ETA), which is scheduled to become available in late 1999. Between the
July 1996 enactment of EFT '99 and April 1999,
the proportion of recurring federal benefit payments
delivered electronically grew from 58 percent of unit
volume to 73 percent.
An additional effect of the law was to draw the
attention of Treasury and other government agencies
31. Federal Register, "Management of Federal Agency Disbursements, 31 CFR 208," September 25, 1998, pp. 51489-505.
gies.2 For example, as families become familiar with direct
deposit, electronic benefit transfers from welfare programs,
or electronic transaction accounts, they may be more willing to use other electronic technologies for their banking.
2. Jeanne M. Hogarth, Kevin H. O'Donnell, Jinkook Lee, and Eun-Ju Lee,
"Consumers' Use of Electronic Technologies in Financial Services: A View
toward the 21st Century," Consumer Interest Annual, vol. 45 (forthcoming).
Methods of doing business with depository institutions,
for families with transaction accounts, 1995
Percent
Electronic
Any
All U.S.
families
Lower-income
families
78.0
69.4
ATM
Telephone
Computer
Direct deposit
Direct payment
ATM, telephone.
or computer
35.3
26.8
3.9
53.4
24.7
25.7
16.7
1.7
14.0
16.6
50.5
36.3
Non-electronic
Teller visits
Mail
86.5
58.6
85.0
40.0
NOTE. See general note to table I.
ATM Automated teller machine.
to families without direct deposit, including the relatively large number of lower-income benefit recipients without deposit accounts at financial institutions.
Treasury's EFT '99 program fostered the formation
of the Financial Services Education Coalition, a
major community-based program involving other
federal agencies, trade associations, and community
groups, to help unbanked recipients choose and use
financial accounts.
The coalition prepared a resource guide, Helping
People in Your Community Understand Basic Financial Services, to provide community-based educators
with information on planning, implementing, and
evaluating EFT '99 education programs in their communities.32 Regional and state-level train-the-trainer
32. Members of the Financial Services Education Coalition are the
American Association of Retired Persons, the American Bankers
Association, the Board of Governors of the Federal Reserve System,
Call for Action, the Consumer Information Center, the Credit Union
National Association, the Federal Deposit Insurance Corporation, the
Federal Trade Commission, the Independent Bankers Association of
America, the National Association of Federal Credit Unions, the
National Community Reinvestment Coalition, the National Consumers League, the National Foundation for Consumer Credit, the Organization for a New Equality, the U.S. Department of Agriculture's
Cooperative States Research, Education, and Extension Service,
and the U.S. Department of the Treasury's Financial Management
470
Federal Reserve Bulletin • July 1999
and direct-to-consumer training sessions were held
across the country to provide the type of one-to-one
contact recommended by focus groups and survey
participants. Trained staff from community-based
organizations have worked with church groups, housing service providers, senior citizen groups, nutrition
programs, and tribal councils to reach consumers
with information on choices for receiving federal
payments.
No additional features, such as checkwriting or
electronic debits initiated by billers, will be allowed
with or without an extra fee. Institutions may charge
for balance inquiries and withdrawals above the minimum allowed; they may also charge for other services, such as card replacement and account research,
at their customary rates. Depository institutions may
choose to pay interest on ETA balances. Treasury
will pay a one-time set-up fee to institutions for each
ETA they open.
Electronic Transfer Accounts
Part of the EFT '99 legislation charged Treasury with
ensuring access to an account at a depository institution for individuals affected by the electronic delivery
mandate contemplated at that time.33 Through survey
studies and focus groups, Treasury developed the
ETA to be an account that would meet recipients'
needs at a low cost.
On the basis of the studies as well as negotiations
with financial institutions, Treasury determined that
allowing no check writing with the ETA was reasonable given the greater potential for overdrafts and
associated fees on the accounts. As announced by
Treasury on June 30, 1999, some depository institutions will offer the ETA by late summer, and the
accounts will have the following characteristics:
• Be available only at federally insured depository
institutions to any individual receiving payments for
federal benefits, wages, salary, or retirement through
Treasury
• Carry the same protections afforded other
account holders at the financial institution
• Accept electronic federal payments; the depository institution may allow other types of deposits
• Allow at least four withdrawals per month in any
combination of ATM and over-the-counter (teller)
transactions
• Allow at least four balance inquiries per month
at an ATM or teller window
• Allow unlimited use with POS networks (including those permitting a cash-back feature) if available
• Carry a maximum fee of $3 per month and a
maximum overdraft fee of $10
• Have no minimum balance except as required by
federal or state law
• Provide a monthly statement.
Service. Copies of the guide and other education materials in
English and Spanish are available at www.fms.treas.gov/eft/educ/
educmain.html or through Treasury's Financial Management Service.
33. Federal Register, "Electronic Transfer Account Notice,"
November 23, 1998, pp. 64820-25.
ALTERNATIVE FINANCIAL SERVICE PROVIDERS
AND ELECTRONIC BENEFIT PAYMENTS
In Treasury's demographic survey, 8 percent of check
recipients reported using check cashers; in the survey
for the Center for Credit Union Research, 17 percent
of low-income families reported using check cashers.
As previously noted, the number of outlets has been
growing fast, and the current market is large: The
National Check Cashers Association (NaCCA), the
trade association for 3,500 of the 6,000 check cashing
outlets in the United States, estimates that their members annually cash about 180 million checks with a
face value exceeding $55 billion.34
The EFT '99 initiative has led check cashers to
look for ways that federal check recipients could
receive their benefits electronically through check
cashing outlets. Under Treasury's definition of financial institution, check cashers are not eligible to offer
deposit accounts or to receive electronic deposits
directly from the government. Instead, some have
developed arrangements with financial institutions to
have consumers open an account and then move the
account's funds into an intermediary account that
consumers can access through check cashing outlets.
Under such "hybrid" arrangements, however,
funds moved into the intermediary account are no
longer covered by FDIC insurance or other federal
protections, such as the EFTA and Regulation E.
Consumer advocates have raised some concerns
about the cost and safety of these arrangements. As a
result, Treasury in early 1999 issued a request for
comment on the possible need to regulate or prohibit
such hybrid accounts.
34. National Check Cashers Association, Q&A—NaCCA Facts,
1999 (www.nacca.org/q&a.htm). Check cashers, pawn brokers, wire
transfer companies, and other alternative financial service providers
have been the subject of several studies over the past decade. See, for
example, Jean Ann Fox, The High Cost of 'Banking' at the Corner
Check Casher (Washington, D.C.: Consumer Federation of America,
1997); and John Caskey, Fringe Banking: Check-Cashing Outlets,
Pawnshops, and the Poor (Russell Sage, 1994).
Banking Relationships
of Lower-Income
Families and the Governmental
In one of several partnership arrangements taking
another approach, NaCCA has joined with a major
depository institution to offer a debit card to individuals without bank accounts who frequently cash federal benefit or payroll checks at a check casher affiliated with NaCCA. Under the program, the individual
receives a special account at the bank that allows
debit-card purchases or ATM withdrawals at any
NaCCA-member outlet in the country. The program
is set for testing this summer.
ASSET-BUILDING
LOWER-INCOME
OPPORTUNITIES
FAMILIES
FOR
The ownership of savings instruments by lowerincome families is more limited than their ownership
of checking accounts.35 The awareness is growing,
however, that lower-income families could better
their chances for income gains by building savings
for home ownership, education, training, and entrepreneurship. As programs for EBT and for direct
deposit of federal payments reach more people, the
familiarity with mainstream financial institutions that
is necessary for many of the unbanked to establish
savings may grow as well.
Even with a greater willingness to deal with
depository institutions, families receiving welfare
benefits face a special problem in acquiring savings
because of state limitations on asset holdings. A
family whose income and assets are above particular
levels will not qualify for welfare benefits. The allowable level of assets varies by state, and in some cases
by region within the state, even for the federally
assisted welfare programs (food stamps and TANF).
In general, asset limits have been set in the range of
$1,000 to $2,000. Many states have raised the limits
and, along with the federal government, have begun
to respond to the problem of savings with programs
that will also tend to bring families without accounts
into banking (see box "Asset Limits and Individual
Development Accounts").
CHALLENGES AND OPPORTUNITIES IN BACKING
RELATIONSHIPS
FOR LOWER-INCOME
FAMILIES
Treasury's EFT '99 initiative and the advent of the
ETA may open new doors to basic banking services
for federal benefit recipients. The marketing of the
ETAs may also have spillover effects for those who
are not recipients of a federal payment but who
35. See Michael Sherraden and Neil Gilbert, Assets and the Poor:
A New American Welfare Policy (M.E. Sharpe, 1991).
Trend toward Electronic Payment
471
Asset Limits and Individual Development
Accounts
In 1996, Iowa became the first state to raise asset limits
for welfare recipients and, for low-income families more
generally, to test a new savings instrument, the Individual
Development Account (IDA).1 The use of funds in an
IDA is limited to education expenses, a first-time home
purchase, or the start-up of a small business. In an IDA
program, a household's deposits are matched, up to a
limit, by funds from foundations and other sources. The
matching funds are generally not counted as assets in
considering a family's welfare eligibility.
Since 1996, thirty-five other states and the District of
Columbia either provide for IDAs or have enabling legislation pending. Since Iowa's action in 1996, another
thirty-eight states have raised their welfare-related limits
on assets, some to as much as $10,000. The Assets for
Independence Act of 1998 reinforced the emphasis on
asset building for lower-income households by providing
additional resources for IDAs. Pending federal legislation
would allow tax credits to financial institutions that provide matching funds on IDAs they open and would allow
tax credits to organizations contributing funds to nonprofit organizations that administer IDA programs.
Improving the awareness of welfare recipients regarding eligibility limits could help them make the most
effective use of IDAs. In a 1996 report, only 13 percent
of welfare recipients surveyed correctly identified the
$1,000 asset limit of their state's welfare program;
84 percent thought the asset limit was $500; 3 percent
thought it was $2,000. Such misunderstanding of welfare
eligibility limits may be as much of a barrier to assetbuilding as the limits themselves.2
1. The IDA concept was introduced in Sherraden and Gilbert, Assets
and the Poor (see text note 35). More information on IDAs is available
from the Corporation for Enterprise Development, Washington, D.C.
(www.cfed.org).
2. The data on knowledge of eligibility limits is in Julia Marlowe,
Deborah Godwin, and Esther Maddux, "Barriers to Effective Financial
Management Among Welfare Recipients," Advancing the Consumer
Interest, vol. 8 (Fall 1996), pp. 9-13. See also John Caskey, Beyond Cash
and Carry: Financial Savings, Financial Services, and Low-Income
Households in Two Communities (Washington, D.C.: Consumer Federation of America, 1997).
become interested in a basic type of banking account
because of the ETA marketing.
Nonetheless, many lower-income families are
probably still without a deposit account and might
benefit from the greater wealth-building potential that
a banking relationship could offer. Moreover, evidence suggests that lower-income families are less
informed about the financial marketplace than other
families. Many may not know the choices they have
among institutions and accounts, especially as new
accounts and transaction products become available.
Others may not clearly understand the long-term
472
Federal Reserve Bulletin • July 1999
costs and the opportunity costs of the services they
use. And families who qualify for welfare may not be
aware of the higher asset limits offered by their states
or their opportunity to build assets through ID As.
While laws may provide the opportunity for lowerincome families to more fully use mainstream financial services, factors such as innovation, information,
and education will play an important role in creating
awareness of the choices available to these families.
For example, for families without a checking account,
the primary barrier to having one seems to be that
they "don't write enough checks." Therefore, such
families might see an advantage in an all-electronic
account with access to low-cost money orders, debits,
and direct payment for bill paying. Those that say
they "don't have enough money" might find that
low- or no-cost accounts offer advantages relative to
check cashing outlets and other alternative financial
service providers.
For lower-income families, account ownership
seems to be as much a function of household characteristics as it is of account features and the other
product offerings, services, and delivery systems of
financial institutions. The move toward more electronic delivery of banking services may be fairly
smooth for those lower-income families already using
electronic benefit transfers for food stamp and
TANF benefits and for those federal benefit recipients
who sign up for an ETA. The theory of diffusion of
innovation leads to the conclusion that, over time,
more families will use these newer electronic technologies, and learning theory predicts that, with experience, families will use additional electronic technologies. For families without experience in using
electronic technology, assistance from community
educators and financial institutions can help them
become more familiar with the technology and other
considerations about bank accounts so that they might
better assess their options.
Navigating the transition to an "all-electronic Treasury," evaluating account offerings at both mainstream and alternative financial sector providers, and
helping lower-income families build wealth require a
combination of policy development and education
initiatives that target both sides of the marketplace.
On the consumers' side of the market, lower-income
families may need additional exposure to information
and education if they are to choose accounts and
products that fit their needs and to use electronic
technologies to manage these accounts. On the firms'
side of the market, financial institutions need to have
appropriate products, services, delivery systems, and
information available to consumers to enable them to
more fully participate in the financial marketplace.
APPENDIX A
MEASURING INCOME AND
OF CHECKING
ACCOUNTS
OWNERSHIP
Agencies required to implement laws regarding lowto moderate-income households or families (referred
to in the text as lower-income families) often define
that income as being no more than 80 percent of
the median income for the area or region of residence. This article combines data on median regional
income from the Current Population Survey of the
Bureau of the Census with data on family income
from the Survey of Consumer Finances (SCF) to
estimate the number of lower-income families in the
United States. The Current Population Survey covers
a sample population far larger than that of the SCF
and offers a more stable base for estimating incomes
nationally and regionally.
Census Measure of Median Income
To get data on each family's income for a full year,
the SCF collects information on families' total cash
income before taxes in the preceding calendar year.
Hence, the 1995 SCF reports 1994 income. The
present study distributes the SCF sample across
the four regions of the United States as defined by
the U.S. Bureau of the Census and compares the
respondents' reported incomes with 80 percent of
the 1994 median incomes that Census reported for
those regions. These regions, their 1994 median
incomes, and the corresponding 80 percent maximums for lower income are as follows:
• Northeast, $34,926 and $27,940
• Midwest, $32,505 and $26,004
• South, $30,021 and $24,016
• West, $34,452 and 27,561.
Of the 4,299 families in the SCF, 1,372 (about
45 percent, weighted data) reported income in the
low to moderate range of the regional Census data.
Ownership of Checking
Accounts
Transaction accounts at financial institutions are
checkable accounts and savings accounts as described
in text note 2.
In addition to questions about specific transaction
accounts and other assets, the SCF asks respondents
Banking Relationships of Lower-Income Families and the Governmental Trend toward Electronic Payment
whether they or any family members living with
them have a checking account. The interviewer does
not limit the meaning of "checking account" in this
question except to ask the respondent to exclude
money market funds not used regularly as checking
accounts. If the answer to the question is "no," the
interviewer asks for the "most important" reason for
not holding a checking account.
In this article, families that hold only other products (major credit cards, first mortgages, home equity
loans, vehicle loans, education loans, consumer loans,
certificates of deposit, IRAs and Keogh accounts, or
life insurance) are considered separately from families owning transaction accounts to shed some light
on possible interrelationships among holdings of
financial products.
APPENDIX B
MEASURING USE OF FINANCIAL
INSTITUTIONS
Little data beyond those in the Survey of Consumer
Finances (SCF) indicate the number of families that
make no use whatsoever of depository institutions,
not even to cash checks. The data on this issue in the
SCF are indicative, but the question on which they
are based is not sharply drawn. Some detailed discussion of the question and possible answers is warranted to ensure that interpretations of the results are
not too broad.
The SCF does not have any questions that specifically probe for the use of alternative financial service
providers such as check cashing outlets nor for the
use of banks for check cashing and other services by
those without accounts or loans at banks. The question in the 1995 SCF that does touch on this issue
asks, "With how many financial institutions do you
and your family currently living here have accounts
or loans, or regularly do personal financial business?" The respondents were asked to include
"banks, savings and loans, credit unions, brokerages,
loan companies, and so forth" but to exclude institutions at which they had only a credit card account or
business loan.36
36. Question X305, 1995 SCF Codebook.
473
The families reporting that they had no financial
institutions at which they had accounts or loans or
regularly did personal financial business are the families categorized in this article as making no regular
use of a financial institution (and being the most
clearly "unbanked").
The SCF reconciles the "accounts or loans" aspect
of the answers to the question with information collected from subsequent questions. For example, if a
respondent answers "none" to the question "With
how many financial institutions .. ." and later reports
having a loan or other account, the original answer is
revised to reflect the new information.
The SCF has no follow-up questions, however, that
would shed light on "regularly do personal financial
business." Therefore, answers to this question from
families without accounts are not as reliable as the
answers regarding the "accounts or loans" aspect of
the question from families with accounts. For example, a family may answer, say, "one or two" to the
question "With how many financial institutions . . ."
If the family is subsequently found to have no
accounts or loans, they are nonetheless assumed to
conduct some unspecified regular personal financial
business with a financial institution. No subsequent
questions are asked to discover the nature of the use
implied by the original answer. Conceivably, some
respondents with no accounts or loans may consider,
say, their regular purchase of stamps in a bank lobby
as constituting regular business. On the other hand,
some families without accounts or loans may answer
"none" to the question even though they regularly
cash checks at one or more banks. So the responses to
the question may constitute both under-reporting and
over-reporting of families with no accounts or loans
who indicate that they regularly do personal financial
business with a financial institution.
•
474
Industrial Production and Capacity Utilization
for May 1999
Released for publication June 16
Industrial production rose 0.2 percent in May after
gains of 0.4 percent in April and 0.7 percent in
March. Manufacturing output advanced 0.4 percent
in May, about matching the pace of the previous three
months. Production at utilities fell sharply, and mining activity was little changed. At 134.1 percent of its
1992 average, industrial production in May was
1.7 percent higher than in May 1998; capacity utilization for total industry—at 80.5 percent—was off
more than 2 percentage points from a year earlier.
MARKET
GROUPS
The production of consumer goods, which had accel-
Industrial production and capacity utilization
Ratio scale, 1992 = 100
Industrial production
Percent of capacity
Capacity utilization
Manufacturing
Total industry
Total industry
Manufacturing
Industrial production, market groups
Consumer goods
Intermediate products
Durable
Construction supplies
Business supplies
Nondurable
Materials
Equipment
Business
Durable goods
Nondurable goods and energy
Defense and space
All series are seasonally adjusted. Latest series, May. Capacity is an index of potential industrial production.
475
Industrial production and capacity utilization, May 1999
Industrial production, index, 1992= 100
Percentage change
Category
1999
19991
r
r
r
r
May 1998
to
May 1999
r
Mar.
Apr.
MayP
.2
1.7
Feb.'
Mar.
Apr.
May?
Feb.
134.1
.1
.7
.4
.1
.5
.6
Total
132.5
133.3
133.8
Previous estimate
132.5
133.2
134.0
Major market groups
Products, total2
Consumer goods
Business equipment
Construction supplies
Materials
124.6
115.3
167.6
132.7
145.3
125.3
115.6
168.5
132.1
146.5
125.7
115.9
169.9
132.5
147.1
125.8
116.1
170.1
132.2
147.8
.1
.1
.2
.2
.2
.5
.2
.5
-.4
.9
.4
.3
.9
.3
.4
.0
.1
.1
-.2
.5
1.0
-.6
4.3
4.4
2.9
Major industry groups
Manufacturing
Durable
Nondurable
Mining
Utilities
136.9
161.7
111.9
98.9
111.3
137.5
162.9
112.0
98.3
116.8
138.1
164.0
112.0
97.7
117.2
138.6
164.9
112.2
97.8
114.6
.3
.2
.5
.4
-3.0
.4
.7
.1
-.6
4.9
.4
.7
A
-.6
.3
.4
.6
.2
.1
-2.2
2.4
4.9
-.7
-7.2
-.5
MEMO
Capacity utilization, percent
Capacity,
1998
Average,
1967-98
Total
82.1
Low,
1982
71.1
High,
1988-89
85.4
81.1
80.5
82.4
87.5
87.4
69.0
70.4
66.2
80.3
75.9
85.7
84.2
88.9
88.0
92.6
NOTE. Data seasonally adjusted or calculated from seasonally adjusted
monthly data.
1. Change from preceding month.
erated in March and April, edged up. The growth in
the output of durable consumer goods decreased to a
still-strong 0.8 percent rate. The deceleration primarily reflected a large drop in the production of appliances after a strong advance in April; other major
categories posted output gains. In particular, the production of automotive products increased sharply
for a second consecutive month. The production of
nondurable consumer goods edged down; a small
increase in the production of non-energy goods was
more than offset by a significant drop in the production of energy goods, mainly utility output
for residential use. Among non-energy nondurable
consumer goods, growth in the production of consumer chemicals, food, tobacco, and paper products
was partially offset by a drop in the production of
clothing.
The output of business equipment inched up
after an upward-revised advance of 0.9 percent in
April. A substantial further rise in the production of
centage
change,
May 1998
to
May 1999
May
Feb.r
Mar.'
Apr/
MayP
82.6
80.2
80.5
80.5
80.5
4.4
80.2
80.4
80.6
79.5
78.4
82.7
81.8
87.7
79.5
78.5
82.7
81.2
92.0
79.6
78.6
82.7
80.7
92.2
79.7
78.7
82.7
80.7
90.1
4.9
5.9
2.5
1.1
.7
Previous estimate
Manufacturing
Advanced processing
Primary processing .
Mining
Utilities
1999
81.6
80.7
84.3
87.9
91.3
2. Contains components in addition to those shown,
r Revised,
p Preliminary.
information processing equipment and in the assembly of business vehicles was counterbalanced by
lackluster activity in farm machinery and equipment, another cutback in the production of civilian
aircraft, and a decline in the output of industrial
equipment.
The production of construction supplies receded
0.2 percent but, on balance, has remained little
changed from its high level earlier in the year: Over
the past twelve months, output in this sector has
increased 4.4 percent. The index for business supplies declined 0.3 percent after having increased substantially in March and April. The output of materials
increased 0.5 percent. Among producers of durable
goods materials, the output of semiconductors and
computer parts continued to gain appreciably. The
production of nondurable goods materials remained
sluggish and was about 1 percent below the level of
May 1998; the production of energy materials
dropped.
476
Federal Reserve Bulletin • July 1999
INDUSTRY
GROUPS
Production in manufacturing increased 0.4 percent.
The factory operating rate inched up, to 79.7 percent,
but was down from its May 1998 level of 81.6 percent. Durable goods production rose 0.6 percent—
about the same pace as in the previous two months.
In particular, the output of electrical machinery grew
noticeably—albeit at a slower rate than in April—
boosted by robust increases in the output of communications equipment and semiconductors. The production of motor vehicles and parts and of computers
increased more than 2 percent. Excluding computers,
the production of industrial machinery declined more
than 1 percent. The production of fabricated metals
also retreated in May, but the output of iron and steel
rebounded. With gains in production matching gains
in productive capacity, the rate of capacity utilization
in durable manufacturing remained unchanged at
79.5 percent, a level identical to its 1967-98 average.
The output of nondurable manufactured goods
advanced 0.2 percent; production has been advancing
slowly since last autumn and has increased about
1 percent over the past four months. Furthermore,
most major industries posted gains in May. The only
major industries registering declines were textile and
apparel products, both of which had posted substantial increases in April. The operating rate in nondurable manufacturing edged up 0.1 percentage point, to
80.4 percent: Utilization for these industries was
more than 2 percentage points below its level of May
1998 and was 3 percentage points below its longterm average.
Mining production inched up. Reductions in the
output of coal and stone and earth minerals partly
offset advances in drilling for oil and gas wells and in
metal mining. The rate of capacity utilization in
mining stayed at 80.7 percent in May, down from
87.9 percent twelve months earlier. Most of the drop
in capacity utilization over the past year reflects
severe weakness in oil and gas drilling activity that
has persisted throughout the period.
Output at utilities, which had rebounded 4.9 percent in March and posted a small increase in April,
fell 2.2 percent, with declines in both gas and electric
utilities. The operating rate at electric utilities
remained above its historic average, while utilization
at gas utilities was about 7 percentage points below
the 1967-98 average.
NOTICE
This release contains revised estimates of capacity
and capacity utilization for selected industries beginning with the data for January 1999. With the revision, the estimated growth of aggregate capacity
between the fourth quarter of 1998 and the fourth
quarter of 1999 increased 0.2 percentage point, to
about 33/4 percent. In addition, beginning with the
data for February 1999, the industrial production
indexes were revised to reflect the semiannual revision to seasonal factors for motor vehicle assemblies
and for series that use production-worker hours as
their monthly indicator.
•
477
Statements to the Congress
Statement by Patrick M. Parkinson, Associate Director, Division of Research and Statistics, Board of
Governors of the Federal Reserve System, before the
Committee on Banking and Financial Services, U.S.
House of Representatives, May 6, 1999
I am pleased to appear before this committee to
discuss the President's Working Group on Financial
Markets' Report on Hedge Funds, Leverage, and the
Lessons of Long-Term Capital Management. Under
Secretary Gensler has made a comprehensive presentation of the report's conclusions and recommendations. Chairman Greenspan participated actively in
the Working Group's discussions and supports the
contents of the report. My remarks this morning will
be limited to highlighting a few key conclusions and
recommendations.
LEVERAGE
AND MARKET
DISCIPLINE
As the title of its report indicates, the Working Group
has concluded that the central public policy issue
raised by the Long-Term Capital Management
(LTCM) episode is excessive leverage. Leverage
plays a positive role in our financial system, resulting
in greater market liquidity, lower credit costs, and a
more efficient allocation of resources in our economy. But leverage poses risks to firms and their
creditors, and the LTCM episode demonstrated that a
single firm could become both so large and so highly
leveraged that failure of its business strategies could
pose risks to the financial system as well.
While LTCM is a hedge fund, excessive leverage is
neither characteristic of, nor necessarily limited to,
hedge funds. Available data indicate that no other
hedge fund was or is as large as LTCM, and no other
large hedge fund was or is so highly leveraged.
Indeed, a large majority of hedge funds are not significantly leveraged, having balance sheet leverage
ratios of less than 2 to 1. Many financial institutions,
including some banks and securities firms, are far
larger than LTCM and are significantly leveraged.
Whether any of these larger financial institutions was
or is as highly leveraged as LTCM cannot be established definitively. Leverage is best defined as the
ratio of economic risk relative to capital, but defined
this way, it is very difficult to measure. The fact that
no other large U.S. financial institution saw its capital
significantly impaired indicates that none was so
vulnerable as LTCM to the extraordinary market conditions that emerged last August.
In our market-based economy, the discipline provided by creditors and counterparties is the primary
mechanism that regulates firms' leverage. If a firm
seeks to achieve greater leverage, its creditors and
counterparties will ordinarily respond by increasing
the cost or reducing the availability of credit to the
firm. The rising cost or reduced availability of funds
provides a powerful economic incentive for firms to
restrain their risk-taking. In our system, government
oversight of leverage is the exception, not the rule.
Even when government oversight has been deemed
appropriate, as is the case of banks and brokerdealers, it is intended to supplement and reinforce
market discipline, not to replace it.
However, in the case of LTCM, market discipline
seems largely to have broken down. LTCM received
very generous credit terms, even though it took an
exceptional degree of risk. Furthermore, this breakdown in market discipline reflected weaknesses in
risk-management practices by LTCM's counterparties that were also evident, albeit to a lesser degree, in
their dealings with other highly leveraged firms.
If market discipline is to be effective, counterparties of a firm must obtain sufficient information to
make reliable assessments of its risk profile, both at
the inception of the credit relationship and throughout its duration. Furthermore, they must have in place
mechanisms that place limits on the credit risk exposures that become more stringent as the firm's riskiness increases and its creditworthiness declines. In
the case of LTCM, however, few, if any, of its counterparties really seem to have understood its risk
profile, especially its very large positions in certain
illiquid markets. And many of its counterparties did
not effectively limit their risk exposures to LTCM. In
part, they simply did not anticipate the extraordinary
market conditions last August. But a combination of
the aggressive pursuit of earnings in a highly competitive environment and excessive confidence in
LTCM's management appears to have led some counterparties to suspend or ignore fundamental riskmanagement principles.
478
Federal Reserve Bulletin • July 1999
The Working Group's recommendations are intended to make market discipline more effective
by (1) improving risk-management practices, and
(2) increasing the availability of information on the
risk profiles of hedge funds and their creditors. The
Working Group has not recommended steps, such as
direct government regulation of hedge funds, that
would risk significantly weakening market discipline
by creating or exacerbating moral hazard.
ENHANCING
RISK
MANAGEMENT
Primary responsibility for addressing the weaknesses
in risk-management practices that were evident in the
LTCM episode rests with the private financial
institutions—a relatively small number of U.S. and
foreign banks and broker-dealers, most of which
were LTCM's counterparties—whose credit and
clearing services are critical to the establishment of
leveraged trading positions. Addressing the weaknesses is in their self-interest, as their experience
with LTCM demonstrated. And as the world leaders
in risk management, these firms have the capabilities
as well as the incentives to address the weaknesses.
Nonetheless, prudential supervisors and regulators
have a responsibility to help to ensure that the processes that banks and securities firms utilize to manage risk are commensurate with the size and complexity of their portfolios and responsive to changes
in financial market conditions.
Since the LTCM episode, both private financial
institutions and prudential supervisors and regulators
have taken steps to strengthen risk-management practices. Banks and securities firms have demanded
more information and tightened their credit terms,
especially vis-a-vis highly leveraged institutions. Supervisors and regulators have sought to lock in this
progress by issuing guidance on sound practices. As
banking supervisors testified in March before two of
this committee's subcommittees, the Basle Committee on Banking Supervision, the Federal Reserve, and
the Office of the Comptroller of the Currency have all
issued such guidance recently. The International Organization of Securities Commissions is well along in
developing appropriate guidance for securities firms.
That said, further improvements in riskmanagement practices can and should be made. And
as was demonstrated so clearly by the Group of
Thirty's 1993 work on risk management, shared
private-sector initiatives can be extremely effective in
fostering progress. One such initiative has already
been completed. The International Swaps and Deriva
tives Association has issued a review of collateral
management practices that draws lessons from collateral managers' experiences during the LTCM episode and other recent periods of market volatility.
The practitioners found that collateralization proved
to be a highly successful tool for mitigating credit
risk during such periods. However, echoing concerns
expressed by bank supervisors, they warned that collateralization should be regarded as a complement to,
not a replacement for, other credit risk safeguards. In
particular, they emphasized that it does not obviate
careful credit analysis of the counterparty. The review
set out recommendations for improving collateral
management practices and an action plan for facilitating their implementation.
A broader and more ambitious initiative also is
well under way. In January, twelve major internationally active banks and securities firms formed the
Counterparty Risk Management Policy Group. As the
co-chairmen of the group testified in March before
this Committee's Capital Markets Subcommittee, the
objective is to develop flexible standards for strengthened risk-management practices in providing creditbased services to major counterparties, including, but
not limited to, hedge funds. The group has established three working parties to address issues relating
to risk management, reporting, and risk reduction
through cooperative initiatives. The group hopes to
complete its work and publish its findings in midJune.
Such private-sector initiatives can fulfill their considerable promise only if their words are translated
into actions. Here again, the private market participants should have primary responsibility. But supervisors and regulators undoubtedly will study these
reports carefully and, when appropriate, incorporate
their findings in supervisory guidance, as they did
with the findings of the Group of Thirty's earlier
report.
IMPROVING INFORMATION
ON RISK
PROFILES
Improving the quality of information on the risk
profiles of hedge funds and certain other highly leveraged institutions is particularly challenging because
the liquidity of markets permits them to alter their
risk profiles significantly within days or even hours.
In this instance, too, the Working Group's recommendations call for actions by both the private sector and
public authorities. One of the most difficult and
important issues to be addressed by the Counterparty Risk Management Policy Group involves the
Statements to the Congress
exchange of information between creditors and counterparties. The challenge is to develop meaningful
measures of risk that could be exchanged frequently
without revealing proprietary information on strategies or positions. The revelation of proprietary information not only would jeopardize market participants' profits but could also significantly impair
market liquidity and widen liquidity premiums for
the assets traded.
The need for timely information on rapidly changing risk profiles means that counterparties cannot
expect to rely on public disclosure mechanisms to
meet their requirements. Nonetheless, new public
disclosure requirements for both hedge funds and
public companies could also contribute to the goal of
strengthening market discipline.
With respect to hedge funds, the Working Group
has recommended that more frequent and more meaningful information be made public. Some hedge funds
are already required to report certain financial information to the Commodity Futures Trading Commission. However, the information is only reported annually, does not include comprehensive and meaningful
measures of risk, and cannot be made available to the
public. Quarterly release to the public of enhanced
information on a broader group of hedge funds (not
limited to those that trade futures) would help inform
public opinion about the role of hedge funds in
our financial system. Equally important, by making
clear that public disclosure is the sole objective of
any reporting requirements, any false impression that
the regulatory agency operating the reporting system
is conducting prudential oversight of hedge funds
would be discouraged. Such a false impression can
be dangerous because it weakens private market discipline without any hope that government oversight
is making up for what is lost.
In the case of public companies, including financial institutions, the Working Group recommends that
they publicly disclose additional information about
their material financial exposures to significantly
leveraged institutions. The information to be disStatement by Laurence H. Meyer, Member, Board of
Governors of the Federal Reserve System, before
the Subcommittee on Financial Institutions and
Consumer Credit of the Committee on Banking and
Financial Services, U. S. House of Representatives,
May 12, 1999
The Board of Governors appreciates this opportunity
to comment on H.R. 1585, the "Depository Institution Regulatory Streamlining Act of 1999," intro
479
closed would be total exposures (aggregating across
all relevant transactions), disaggregated by sector (for
example, commercial banks, securities firms, hedge
funds, and so on). The goal is to enhance market
discipline on creditors of significantly leveraged institutions, which, in turn, would enhance creditor discipline on the leveraged institutions themselves. The
precise nature of any new disclosure requirements
will be determined by the Securities and Exchange
Commission (SEC), taking into account public comments through the normal rule-making process. Both
fellow regulators and market participants will need to
support and assist the SEC in developing requirements that are both meaningful and cost effective.
SUMMARY
To sum up, then, the Working Group has concluded
that the central public policy issue raised by the
LTCM episode is how to constrain leverage more
effectively. In our market-based economy, we have
always relied on market discipline as the primary
mechanism for constraining leverage. Although market discipline seems to have largely broken down in
the case of LTCM, the Working Group believes that
the best approach to addressing concerns about excessive leverage is to make market discipline more
effective. Primary responsibility for increasing the
effectiveness of market discipline necessarily rests
with market participants. Nonetheless, prudential
supervisors and regulators of the banks and brokerdealers that are critical sources of credit to leveraged
institutions should seek to ensure that the necessary
improvements in risk-management practices are
implemented. The Working Group believes that further progress in this area can and should be made
and, through its constituent agencies, will be monitoring the credit-risk-management policies of large commercial banks and securities firms and assessing their
effectiveness.
duced by Representative Roukema. The Board welcomes this legislation and supports its purpose of
revising outdated banking statutes that are imposing
costs without providing commensurate benefits to
the safety and soundness of depository institutions,
enhancing consumer protection, or expanding credit
availability. As the members of this subcommittee
are aware, unnecessary regulatory burdens hinder the
ability of banking organizations to compete effectively in the broader financial services marketplace
480
Federal Reserve Bulletin • July 1999
and, ultimately, adversely affect the availability and
prices of banking services and credit products to
consumers.
MEASURES
THE BOARD
SUPPORTS
In my testimony today, I would like to highlight those
provisions of this legislation that the Board supports
and believes are particularly significant in reducing
burden and promoting efficient regulation. The Board
strongly supports allowing the Federal Reserve System to pay interest on required and excess reserve
balances held by depository institutions at the Federal
Reserve Banks, and it supports allowing banks to pay
interest on demand deposits. (Attached to this statement is an appendix containing an expanded discussion of these topics.)1 The Board also strongly supports the protections embodied in title V of this bill,
the "Bank Examination Report Privilege Act," which
promote effective bank supervision by enhancing the
cooperative exchange of information between supervised financial institutions and their regulators.
While the Board also applauds many of the other
measures contained in this bill, which eliminate
restrictions that no longer serve a useful purpose and
thereby enhance the ability of U.S. banking institutions to operate efficiently and effectively in increasingly competitive financial markets, there are a few
provisions with which the Board has concerns. While
I will discuss them, I do not wish these objections
to detract from my central message—that the nation's
banking system would benefit from the type of
reform embodied in this legislation.
Interest on Reserves and Interest
on Demand Deposits
The Board strongly supports provisions in section 101 of H.R. 1585, which would permit the Federal Reserve to pay interest on both required and
excess reserve balances that depository institutions
maintain at Federal Reserve Banks. Because required
reserve balances do not currently earn interest, banks
and other depository institutions employ costly procedures to reduce such balances to a minimum. The
cost of designing and maintaining the systems
that facilitate these reserve avoidance techniques
1. The attachment to this statement is available from Publications
Services, Mail Stop 127, Board of Governors of the Federal Reserve
System, Washington, DC 20551, and on the Board's site on the World
Wide Web (http://federalreserve.gov).
represents a significant waste of resources for the
economy. In addition, because some small banks do
not have a sufficient volume of deposits to justify
these costs, current reserve avoidance techniques
tend to place smaller institutions at a competitive
disadvantage.
The reserve avoidance measures utilized by depository institutions could also eventually complicate
the implementation of monetary policy. Declines in
required reserve balances through avoidance schemes
could lead to increased volatility in the federal funds
rate. Since last July, when I spoke to this subcommittee on the same topic, required reserve balances have
fallen further and some episodes of heightened volatility in federal funds rates have occurred, although
they were associated in part with stresses on global
financial markets. Allowing the payment of interest
on required reserve balances would reduce current
incentives for reserve avoidance and would likely
induce a rebuilding of reserve balances over time. If
volatility in the federal funds rate nevertheless did
become a persistent concern, the Federal Reserve at
present has a limited set of tools to address such a
situation; authorizing interest payments on excess
reserve balances would be a useful addition to the
Federal Reserve's monetary policy tools for this purpose. Several other major central banks, including the
European Central Bank and the Bank of Canada,
already have the power to pay interest on excess
reserve balances.
If increased volatility in the federal funds rate did
become a persistent feature of the money market, it
would affect other overnight interest rates, raising
funding risks for large banks, securities dealers, and
other money market participants. Suppliers of funds
to the overnight markets, including many small banks
and thrift institutions, would also face greater uncertainty about the returns they would earn. Accordingly, allowing the Board to pay interest on required
reserve balances would not only eliminate economic
inefficiencies but also alleviate risks that could affect
monetary policy and the smooth functioning of the
money markets.
Because the level of required reserve balances has
fallen substantially in recent years, because of the
implementation of additional reserve avoidance measures by depository institutions, estimates of the revenue losses to the Treasury associated with paying
interest on required reserve balances have dropped to
a relatively low level. After having taken account of
the increases in revenue from a related measure, the
payment of interest on demand deposits, the Congressional Budget Office recently estimated that the net
federal budget costs of similar legislation pending in
Statements to the Congress
the Senate would be about $130 million per year over
the next five years.
The Board strongly supports allowing the immediate payment of interest on demand deposits held by
businesses. The current prohibition against paying
interest on such deposits is an anachronism that no
longer serves any public policy purpose. This prohibition was enacted in the 1930s, at a time when the
Congress was concerned that large money center
banks had earlier bid deposits away from country
banks to make loans to stock market speculators.
This rationale for the prohibition is certainly not
applicable today: Funds flow freely around the country and among banks of all sizes. The absence of
interest on demand deposits is no bar to the movement of money from depositories with surpluses—
whatever their size or location—to the markets where
funds can be profitably employed.
Moreover, although the prohibition has no current
policy purpose, it imposes a significant burden both
on banks and on those holding demand deposits,
especially small banks and small businesses. Smaller
banks complain that they are unable to compete for
the deposits of businesses precisely because of their
inability to offer interest on demand deposit accounts.
Small banks, unlike their larger counterparts, lack the
systems to offer compensating balance schemes and
sweep accounts that allow these banks to offer businesses credit for or interest on excess demand balances. Small businesses, which often earn no interest
on their demand deposits because they do not have
account balances large enough to justify the fees
charged for sweep programs, stand to gain the most
from eliminating the prohibition of interest on
demand deposits.
For these reasons, the Board strongly supports
immediate repeal of the prohibition of interest
on demand deposits. In contrast, section 102 of
H.R. 1585 would allow payment of interest on
demand deposits to begin on October 1, 2004. During
a transition period lasting until that time, the bill
would authorize a twenty-four-transaction-per-month
money market deposit account (MMDA). Demand
deposits could be swept into this new MMDA in
order to earn interest. The twenty-four-transaction
MMDA would be fully reservable, and therefore
would not contribute to further declines in required
reserve balances and the complications that might
entail for the implementation of monetary policy.
While a relatively short transition period before the
implementation of direct payments on demand deposits would not be objectionable, delaying direct interest payments on demand deposits for any extended
period, such as the five years or so proposed in the
481
bill, is not advisable. Such a long delay would be
associated with further wasteful sweep activities and
would disadvantage small banks and their business
customers relative to the larger organizations already
using sweep programs that can be modified to incorporate a new MMDA product.
Finally, the committee has asked the Board to
comment specifically on the impact on the banking
industry of repealing the prohibition on paying interest on business checking accounts. For banks, interest
on demand deposits will increase costs, at least in the
short run. Larger banks (and securities firms) may
also lose some of the fees they currently earn on
sweeps of business demand deposits. The higher
costs to banks will be partially offset by interest
on reserve balances, and, over time, these measures
should help the banking sector attract liquid funds in
competition with nonbank institutions and direct market investments by businesses. Small banks, in particular, should be able to bid for business demand
deposits on a more level playing field vis-a-vis both
nonbank competition and large bank sweep programs. Moreover, large and small banks will be
strengthened by fairer prices on the services they
offer and by the elimination of unnecessary costs
associated with sweeps and other procedures currently used to try to minimize the level of reserves.
Bank Examination Report
Privilege
The Board endorses title V of the bill, the Bank
Examination Report Privilege Act (BERPA). BERPA
would take three steps to promote effective supervision of depository institutions by helping to preserve
candor in communications between such institutions
and their examiners. First, BERPA would clarify that
a supervised institution may voluntarily disclose
information that is protected by the institution's own
privileges, such as the attorney-client privilege, to a
federal banking agency without waiving those privileges as to third parties. Some courts have ruled that
disclosure of information to examiners waives an
institution's privileges in private civil litigation, and,
as a result, some institutions have attempted to withhold information from their supervisors. By ensuring
that privileges are not waived when data is given
to examiners, BERPA would overcome the present
reluctance of many institutions to disclose information for fear of losing common-law privileges.
Second, BERPA would establish uniform procedures that govern how a third party may seek to
obtain confidential supervisory information from a
banking agency. BERPA would require that third
482
Federal Reserve Bulletin • July 1999
parties request such information directly from the
federal banking agencies, under regulations and procedures adopted by the agencies. Third parties may
turn to the courts only after having exhausted their
administrative remedies. Finally, BERPA would
define what constitutes confidential supervisory information and would strengthen the protection afforded
to such information. In this regard, the measure
would also require that federal courts afford to confidential supervisory information of state and foreign
bank supervisory authorities the same status with
regard to privilege as is afforded to the confidential supervisory information of the federal banking
agencies.
By protecting disclosures by depository institutions to their examiners and by safeguarding supervisory information based on such disclosures, BERPA
would prevent unwarranted disclosures that would
have a chilling effect on the examinations process.
Taken together, these measures would enhance the
ability of the federal banking agencies to assess and
to protect the safety and soundness of depository
institutions.
The banking agencies may have some further suggestions for refining the language of sections 501 and
502, and we would be pleased to work with the
subcommittee on those suggestions.
Other Burden Reduction
Provisions
There are other parts of this bill, as well, that would
relieve regulatory burden without giving rise to safety
and soundness, supervisory, consumer protection, or
other policy concerns. For example, section 311
would eliminate the outdated and largely redundant
requirement in section ll(m) of the Federal Reserve
Act, which currently sets a rigid ceiling on the percentage of bank capital and surplus that may be
represented by loans collateralized by securities. Current supervisory policy, as well as national and state
bank lending limits, addresses concerns regarding
concentrations of credit more comprehensively than
section ll(m) but does so without the unnecessary
constraining effects of this section of the Federal
Reserve Act.
Section 312 would eliminate section 3(f) of the
Bank Holding Company Act, which applies certain
restrictions that govern the nonbanking activities of
bank holding companies to the activities conducted
directly by savings banks under state law. Since the
enactment of section 3(f), the courts have found that
the insurance and other nonbanking prohibitions of
the Bank Holding Company Act do not apply to the
direct activities of banks. Eliminating section 3(f)
would put savings banks that are subsidiaries of bank
holding companies on equal competitive footing with
their state bank counterparts, allowing savings banks
and their subsidiaries to engage in those activities
that are permissible for state banks under state law.
Section 303 of the bill authorizes the banking
agencies to act jointly to allow up to 100 percent of
the fair market value of an institution's purchased
mortgage servicing rights to be included in its tier 1
capital. Currently, only 90 percent of the value of
such assets can be included. Developments since the
Congress enacted current law in 1991 have greatly
reduced the concerns that prompted the existing capital "haircut." Accordingly, the Board believes the
change envisioned in section 303 would reduce regulatory burden without compromising safety and
soundness. The Board also suggests changing all the
section's references concerning "purchased mortgage servicing rights" to "mortgage servicing assets"
to reflect current accounting terminology.
In another area, the alternative consumer credit
disclosure mechanism permitted by section 401 will
be less burdensome to creditors, and just as helpful to
consumers, as the disclosure requirement embodied
in current law. The Congress has already eliminated
the requirement that creditors disclose a historical
table for closed-end variable rate loans. Taking similar action with respect to open-end variable rate
home-secured loans would reduce regulatory burdens
without sacrificing consumer protections.
AREAS OF
CONCERN
Although the Board supports most of the provisions
in the bill, there are a few sections of the legislation
that cause us concern. These provisions may give
certain entities unfair competitive advantages, may
harm the safety and soundness of depository institutions, or are unnecessary.
Nonbank Banks
Two sections of the bill would eliminate limitations
that have been applied to nonbank banks. Section 223
would allow nonbank banks, and FDIC-insured credit
card banks, to offer business credit cards, even when
these business loans are funded by insured demand
deposits. Section 222 would remove the activity limitations and cross-marketing restrictions that currently
apply to nonbank banks. It would also liberalize the
Statements to the Congress
divestiture requirements that apply when companies
violate the nonbank bank operating limitations and
allow nonbank banks to acquire assets from credit
card banks. Eliminating these restrictions on nonbank
banks, at first glance, may have intuitive appeal.
However, there are important reasons for the Board's
concern about these provisions.
Nonbank banks—which, despite their popular
name, are federally insured, national or statechartered banks—came into existence by exploiting
a loophole in the law. By means of this loophole,
industrial, commercial, and other companies were
able to acquire insured banks and to mix banking and
commerce in a manner that was then, and remains
today, statutorily prohibited for banking organizations. In 1987, in the Competitive Equality Banking
Act (CEBA), the Congress closed the nonbank-bank
loophole. At that time, the Congress chose not to
require that the fifty-seven companies operating nonbank banks divest these institutions. Instead, the Congress permitted the companies owning these banks to
retain their ownership so long as they complied with
a carefully crafted set of limitations on the activities
of nonbank banks and their parents. In a unique
statutory explanation of legislative purpose, the Congress stated in CEBA that these limitations were
necessary to prevent the owners of nonbank banks
from competing unfairly with bank holding companies and independent banks.
Fewer than fifteen nonbank banks currently claim
the grandfather rights accorded in CEBA. The Board
is concerned that removal of the limitations and
restrictions that apply to nonbank banks would
enhance advantages that this relative handful of organizations already possess over other owners of banks
and would give rise to the potential adverse effects
about which the Congress has in the past expressed
concern. In addition, removal of limitations would
permit the increased combination of banking and
commerce for a select group of commercial companies, a mixture that the House Banking Committee
recently considered and decided not to permit in the
context of a broader effort to modernize our financial
laws.
The Board continues to believe that the questions
of whether and to what extent it is appropriate to
enhance the position of nonbank banks are questions
most fairly determined in connection with broad
financial modernization legislation. In that broader
context, it may be possible to relieve some of the
restraints placed on the handful of existing nonbank
banks without seriously disadvantaging the majority
of banking organizations that do not have the privileges enjoyed by nonbank banks.
Call Report
483
Simplification
Section 302 of the bill largely restates section 307 of
the Riegle Community Development and Regulatory
Improvement Act (Riegle Act). The Board and
the other Banking agencies, working through the
Federal Financial Institutions Examination Council
(FFIEC), have made substantial progress in implementing the mandate of section 307 of the Riegle Act
and the Board believes that this section of the bill is
unnecessary.
Thus far, in response to section 307, the federal
banking agencies have eliminated approximately
100 Call Report data items; placed revised instructions and forms on the Internet for the Call Report,
the Bank Holding Company (BHC) Reports, and the
Thrift Financial Report (TFR); adopted generally
accepted accounting principles (GAAP) as the
reporting basis for all Call Reports (and consistent
with the reporting basis for the BHC reports and the
TFR); produced a draft core report that is consistent
with the TFR report and resolves most of the definitional differences between the reports; condensed
four sets of Call Report instructions into one; provided an index for Call Report instructions; implemented an electronic filing requirement for all institutions submitting Call Reports (consistent with
existing mandatory electronic filing for the TFR and
optional electronic filing for the BHC reports); placed
much of the Call Report data and some of the BHC
data on the Internet; and reported to the Congress on
recommendations to enhance efficiency for filers and
users.
The agencies surveyed users of the information to
identify additional Call Report items that could be
eliminated, while retaining items that are essential for
safety and soundness and other public policy purposes. The FFIEC's Reports Task force is analyzing
the results of the survey of Call Report users throughout each of the agencies to identify all of the current
purposes served by the information. After the surveys
are analyzed, the Task Force will recommend ways to
further streamline the reporting requirements and
continue to refine a set of common, or "core," reporting items. The agencies have not determined an
implementation date, given year 2000 concerns for
the banking industry and the regulatory agencies, and
given that banking institutions have requested a minimum lead time of one year to implement a "core"
report. However, we believe significant progress that
has been made by the agencies to date and the agencies' ongoing efforts suggest that this section of the
draft bill is not necessary.
484
Federal Reserve Bulletin • July 1999
CLOSING
THOUGHTS
The legislation being considered by the subcommittee today builds on two prior reform measures, the
Community Development and Regulatory Improvement Act of 1994 and the Economic Growth and
Regulatory Paperwork Reduction Act of 1996, that
the Board supported. Those were useful measures
that achieved meaningful reductions in regulatory
burden. Those bills—coupled with the Board's independent initiatives to make our regulations simpler,
less burdensome, and more transparent—have had a
practical, bottom-line effect: Fewer applications need
to be filed with the Board, and banking organizations
have saved substantial regulatory, legal, compliance,
and other costs. Those statutory and regulatory
changes have enhanced the competitiveness of banking organizations and have benefited the customers of
these financial institutions. Nonetheless, more can
and should be done.
Statement by Patrick M. Parkinson, Associate Director, Division of Research and Statistics, Board of
Governors of the Federal Reserve System, before the
Subcommittee on Risk Management, Research, and
Specialty Crops of the Committee on Agriculture, U.S.
House of Representatives, May 18, 1999
I am pleased to be here today to present the Federal
Reserve Board's views on whether it is necessary
to modernize the Commodity Exchange Act (CEA).
The Board believes that modernization of the act is
essential. The reauthorization of the Commodity
Futures Trading Commission (CFTC) offers the best
opportunity to make the necessary changes. If this
opportunity is lost, the Board is concerned that market participants will abandon hope for regulatory
reform in the United States and take critical steps to
shift their activity to jurisdictions that provide more
appropriate legal and regulatory frameworks.
THE NEED FOR
OF THE CEA
MODERNIZATION
The key elements of the CEA were put in place in the
1920s and 1930s to regulate the trading on exchanges
of grain futures by the general public, including retail
investors. The public policy objectives were, and are,
The Board applauds the efforts of the subcommittee to continue to eliminate unnecessary governmentimposed burdens. The subcommittee has fashioned
legislation that, in the main, builds upon past successes in regulatory reform and relieves regulatory
burdens on banking organizations. In a few areas,
however, the bill may not achieve meaningful reform
but instead would lead to competitive inequities or
raise safety and soundness and other concerns.
The Board has long endorsed regulatory relief and
financial modernization strategies that promote regulatory equity for all participants in the financial services industry, minimize the chances that federal
safety net subsidies will be expanded into new activities and beyond the confines of insured depository
institutions, guarantee adequate federal supervision
of financial organizations, and ensure the continued
safety and soundness of financial organizations. The
Board would be pleased to work with the subcommittee and its able staff to reach these goals through
legislation.
clear: to deter market manipulation and to protect
investors.
The objective of the Grain Futures Act of 1922
was to reduce or eliminate "sudden or unreasonable
fluctuations" in the prices of grain on futures
exchanges. The framers of the act believed that such
price fluctuations reflected the susceptibility of grain
futures to manipulation. During the latter part of the
nineteenth century and the early part of the twentieth
century, attempts to corner the markets for wheat and
other grains, while rarely successful, often led to
temporary, but sharp, increases in prices that engendered large losses to short sellers of futures contracts
who had no alternative but to buy and deliver grain
under their contractual obligations. Because quantities of grain after a harvest are generally known and
limited, it is possible, at least in principle, to corner
a grain market. Furthermore, because grain futures
prices were widely disseminated and widely used as
the basis for pricing grain transactions off
the exchanges, price fluctuations from attempts at
manipulation had broad ramifications for the agricultural sector and, given the relative size of the agricultural sector at the time, for the economy as a
whole.
The Commodity Exchange Act of 1936 introduced
provisions to protect retail investors in agricultural
futures. Retail participation in these markets had been
increasing and was viewed as beneficial, but retail
Statements to the Congress
investors may lack the knowledge and sophistication
to protect themselves effectively against fraud or to
manage counterparty credit exposures effectively.
Safeguards against fraud and counterparty losses
were intended to foster their participation in these
markets.
Although the objectives of the CEA have not
changed since the 1930s, what are now called
the derivatives markets have undergone profound
changes. On the futures exchanges themselves, financial contracts now account for about 70 percent of the
activity, and retail participation in most financial contracts is negligible. Outside the exchanges, enormous
markets have developed in which banks, corporations, and other institutions privately negotiate customized derivatives contracts, the vast majority of
which are based on interest rates or exchange rates.
The Board believes that the application of the CEA
to the trading of financial derivatives by professional
counterparties is unnecessary. Prices of financial
derivatives are not susceptible to, that is, easily influenced by, manipulation. Some financial derivatives,
for example, Eurodollar futures or interest rate swaps,
are virtually impossible to manipulate because they
are settled in cash, and the cash settlement is based
on a rate or price in a highly liquid market with a
very large or virtually unlimited deliverable supply.
For other financial derivatives—for example, futures
contracts for government securities—manipulation of
prices is possible, but it is by no means easy. Large
inventories of the instruments are immediately available to be offered in markets if traders endeavor to
create an artificial shortage. Furthermore, the issuers
of the instruments can add to the supply if circumstances warrant. This contrasts sharply with supplies
of agricultural commodities, for which supply is
limited to a particular growing season and finite
carryover.
In addition, professional counterparties simply do
not require the kind of investor protections that the
CEA provides. Such counterparties typically are quite
adept at managing credit risks and are more likely to
base their investment decisions on independent judgment. And, if they believe they have been defrauded,
they are quite capable of seeking restitution through
the legal system. Nor is there any obvious public
policy reason to foster direct retail participation in
financial derivatives markets.
Most professional counterparties in financial
derivatives markets view the regulatory protections
imposed by the CEA as unnecessary and burdensome. Although to date there is no clear-cut evidence
of a significant migration of activity to other jurisdictions, should the next CFTC reauthorization not pro
485
vide for modernization of the regulation of financial
derivatives, this could change—perhaps quickly.
Rapid advances in technology are making electronic
trading systems increasingly attractive, both as an
alternative to open outcry trading on exchanges and
as an alternative to the use of telephones and voice
brokers in the over-the-counter (OTC) markets. Such
electronic trading systems might develop in the
United States, but if the United States continues to
impose what market participants perceive as unnecessary regulatory burdens, such systems could instead
develop abroad. In particular, much of the existing
activity in financial derivatives consists of transactions between large global financial institutions, all of
which already have substantial operations in London.
Regulatory burdens on financial derivatives transactions in the United Kingdom (UK) are generally
perceived to be significantly lighter than those currently imposed by the CEA, yet participants have
considerable confidence in the integrity of the UK
markets. If unnecessary regulatory burdens in the
United States prompt global institutions to join, or
even develop, a London-based electronic trading system for financial derivatives, the United States would
suffer a serious and perhaps irreversible blow to its
international competitiveness in financial services.
MODERNIZING THE
OTC
DERIVATIVES
CEA:
In the Board's view, then, significant changes in the
CEA are appropriate, and the time to make those
changes is in the next CFTC reauthorization. In the
case of privately negotiated derivatives transactions
between institutions, the Board has supported exclusion of such transactions from coverage under the
CEA in the past and continues to do so. In these
markets, private market discipline appears to achieve
the public policy objectives of the CEA quite effectively and efficiently. Counterparties to these transactions have limited their activity to contracts that are
very difficult to manipulate. A global survey conducted by central banks and coordinated by the Bank
for International Settlements revealed that, as of June
1998, 97 percent of OTC derivatives were interest
rate or foreign exchange contracts. The vast majority
of these OTC contracts are settled in cash rather than
through delivery. Cash settlement is typically based
on a rate or price in a highly liquid market with a
very large or virtually unlimited deliverable supply—
for example, LIBOR (London interbank offered rate)
or the spot dollar-yen exchange rate.
To be sure, some types of OTC contracts that have
486
Federal Reserve Bulletin • July 1999
a limited deliverable supply, such as equity swaps
and some credit derivatives, are growing in importance. However, unlike agricultural futures, for which
failure to deliver has additional significant penalties,
costs of failure to deliver in OTC derivatives are
almost always limited to actual damages. Thus,
manipulators attempting to corner a market, even if
successful, would have great difficulty inducing sellers in privately negotiated transactions to pay significantly higher prices to offset their contracts or to
purchase the underlying assets.
Finally, the prices established in privately negotiated transactions are not used directly or indiscriminately as the basis for pricing other transactions.
Counterparties in the OTC markets can be expected
to recognize the risks to which they would be
exposed by failing to make their own independent
valuations of their transactions, whose economic and
credit terms may differ in significant respects. Moreover, they usually have access to other, often more
reliable or more relevant, sources of information on
valuations. Hence, any price distortions in particular
transactions would not affect other buyers or sellers
of the underlying asset.
Professional counterparties to privately negotiated
contracts have also demonstrated their ability to
protect themselves from losses from counterparty
insolvencies and from fraud. In general, they have
managed credit risks effectively through careful
evaluation of counterparties, the setting of internal
credit limits, and judicious use of netting and collateral agreements. In particular, they have insisted that
dealers have financial strength sufficient to warrant a
credit rating of A or higher. This, in turn, provides
substantial protection against losses from fraud. Dealers are established institutions with substantial assets
and significant investments in their reputations. When
they have engaged in deceptive practices, the professional counterparties that have been victimized have
been able to obtain redress under laws applicable to
contracts generally. Moreover, the threat of legal
damage awards provides dealers with strong incentives to avoid misconduct. A far more powerful
incentive, however, is the fear of loss of the dealer's
good reputation, without which it cannot compete
effectively, regardless of its financial strength or
financial engineering capabilities.
The effectiveness of these incentives was confirmed in a 1995 survey of end-users of OTC derivatives that was conducted by the General Accounting
Office. When asked if they were satisfied with derivatives dealers' sales practices, 85 percent of users of
plain vanilla derivatives and 79 percent of users of
more complex derivatives indicated satisfaction. The
great majority of the remainder responded neutrally
rather than indicating that they were dissatisfied.
MODERNIZING THE CEA:
EXECUTION OR CLEARING
DERIVATIVES
CENTRALIZED
OF FINANCIAL
Recently, some participants in the OTC markets have
shown interest in utilizing centralized mechanisms
for clearing or executing OTC derivatives transactions. For example, the London Clearing House plans
to introduce clearing of interest rate swaps and forward rate agreements in the second half of 1999, and
several entities are developing electronic trading systems for interest rate and foreign exchange contracts.
Such mechanisms could well reduce risk and increase
transparency in derivatives markets. However, their
development in the United States is being impeded
by the specter that the CEA might be held to apply to
transactions executed or settled through such mechanisms. Application of the act not only is perceived as
entailing unnecessary regulatory burdens, but also,
because of the exchange trading requirement of the
act, it raises questions about the legal enforceability
of the contracts traded or cleared.
Provided that participation is limited to professional counterparties acting as principals, the Board
believes financial derivatives executed or cleared
through such centralized mechanisms should nonetheless be excluded from the CEA. The use of such
mechanisms would not make these transactions any
more susceptible to manipulation than when the
transactions are bilaterally executed and cleared. Nor
would their use impair the demonstrated ability of
professional counterparties to protect themselves
from losses from fraud.
Because clearing concentrates and often mutualizes counterparty risks, some type of government
oversight of clearing systems may be appropriate.
However, it is not obvious that regulation of such
clearing facilities under the CEA would always be
the best approach. For example, the Board sees no
reason why a clearing agency regulated by the Securities and Exchange Commission should not be
allowed to clear OTC derivatives transactions, especially if it already clears the instruments underlying
the derivatives. Likewise, if a clearing facility were
established in the United States for privately negotiated interest rate or exchange rate contracts between
dealers, most of which were banks, oversight by one
of the federal banking agencies would seem most
appropriate.
Statements to the Congress
MODERNIZING THE CEA:
HARMONIZING
REGULATION OF THE OTC MARKETS AND
FUTURES
EXCHANGES
Beyond question, the centralized execution and clearing of what to date have been privately negotiated
and bilaterally cleared transactions would narrow the
existing differences between exchange-traded and
OTC derivatives transactions. However, that is not a
reason to extend the CEA to cover OTC transactions.
As we have argued, doing so is unnecessary to
achieve the public policy objectives of the act. Moreover, as the economic differences between OTC and
exchange-traded contracts are narrowing, it is becoming more apparent that OTC market participants share
this conclusion; their decision to trade outside the
regulated environment implies they do not see the
benefits of the act as outweighing its costs.
Instead, the Federal Reserve believes that the
futures exchanges should be allowed to compete in
offering such services to professional counterparties,
free from the constraints and burdens of the CEA.
The conclusion that centralized mechanisms for
professional trading of financial derivatives do not
require regulation under the act is valid even if those
centralized mechanisms are operated by entities that
also operate traditional futures exchanges.
If an exchange chooses to clear professional transactions in financial derivatives through the same
clearinghouse that clears its traditional CEAregulated contracts, then the clearing should be regulated by the CFTC. But exchanges should be allowed
to choose to establish a separate clearing system for
Statement by Alan Greenspan, Chairman, Board of
Governors of the Federal Reserve System, before the
Committee on Banking and Financial Services, U.S.
House of Representatives, May 20,1999
We at the Federal Reserve are in broad agreement
with the approach outlined by Secretary Rubin and
expect to continue to work closely with the Treasury
in this area.
As I have indicated previously before this committee, dramatic advances in computer and telecommunications technologies in recent years have enabled
a broad unbundling of risks through innovative
financial engineering. The financial instruments of a
bygone era, common stocks and debt obligations,
have been augmented by a vast array of complex
hybrid financial products that has led to a far more
efficient financial system. These same new technologies and financial products, however, have chal
487
such transactions that would be overseen by another
regulator. In general, with respect to such transactions, the exchanges should have the same options
and be subject to the same constraints as competing
service providers.
SUMMARY
To sum up, the Commodity Exchange Act was
designed in the 1920s and 1930s to regulate the
trading of grain and other agricultural futures by
the general public, including retail investors. Since
then, what are now called the derivatives markets
have undergone profound changes. Both on futures
exchanges and in the OTC markets, financial derivatives now account for the great bulk of the activity.
Counterparties to financial derivatives transactions
are predominantly institutions and other professional
counterparties; retail participation in most of these
markets is negligible. Financial derivatives are not
susceptible to manipulation, and professional counterparties do not need the protections that retail investors do.
The Board believes that privately negotiated
derivatives transactions between professional counterparties should be excluded from the act. Furthermore, the exclusion should apply to centrally
executed or cleared transactions, provided that any
clearing system is subject to official oversight.
Futures exchanges should be allowed to compete as
operators of such trading or clearing systems, free
from the burdens and constraints of the act.
lenged the ability of inward-looking and protectionist
economies to maintain effective barriers, which,
along with the superior performance of their more
open trading partners, has led, over the past decade,
to a major dismantling of impediments to the free
flow of trade and capital. The new international financial system that has evolved as a consequence has
been, despite recent setbacks, a major factor in the
marked increase in living standards for those economies that have chosen to participate in it.
Notwithstanding the demonstrable advantages of
the new international financial system, the Mexican
financial breakdown in late 1994 and, of course, the
most recent episodes in East Asia and elsewhere have
raised questions about the inherent stability of this
new system.
These newly open markets were exposed to a huge
expansion in capital inflows that their economic and
financial systems were not ready to absorb. These
488
Federal Reserve Bulletin • July 1999
flows, in turn, were engendered by the increasing
diversification out of industrial country investment
portfolios, augmented by huge capital gains through
1997. Net private capital inflows into emerging markets roughly quadrupled between 1990 and the onset
of the Asian crisis. Such diversification was particularly directed at those economies in Asia that had
been growing so vigorously through the 1970s,
1980s, and into the 1990s—the so-called "Asian
tigers." In the event, these economies were ill prepared to absorb such volumes of funds. There were
simply not enough productive investment opportunities to yield the returns that investors in the West
were seeking. It was perhaps inevitable then that
the excess cash found its way in too many instances
into ill-conceived and unwisely financed real estate
ventures.
What appeared to be a successful locking of currencies onto the dollar over a period of years in East
Asia, led, perhaps inevitably, to large borrowings of
cheaper dollars to lend, unhedged, at elevated domestic interest rates that reflected unheeded devaluation
risk premiums. When the amount of such unhedged
dollar borrowings finally became excessive, as was
almost inevitable, the exchange rate broke.
Although it might seem that the consequences were
easily discernible, they were not. Problems with
imprudently financed real estate investments emerge
with chronic frequency around the globe without
triggering the size of the collapse experienced in East
Asia in 1997. The size of the crisis became evident
only when the normal buffers that any economy
builds up to absorb shocks were, in the case of the
East Asian economies, so readily breached under
pressure.
It has taken the long-standing participants in the
international financial community many decades to
build sophisticated financial and legal infrastructures
that buffer shocks. Those infrastructures discourage
speculative attacks against a well-entrenched currency because financial systems are robust and are
able to withstand the consequences of vigorous policy responses to such attacks. For the newer participants in global finance, their institutions, until
recently, had not been tested against the rigors of
major league pitching, to use a baseball analogy.
The heightened sensitivity of exchange rates of
emerging economies under stress would be of less
concern if banks and other financial institutions in
those economies were strong and well capitalized.
Developed countries' banks are highly leveraged but
subject to sufficiently effective supervision both by
counterparties and regulatory authorities so that, in
most countries, banking problems do not escalate
into international financial crises. Most banks in
emerging-market economies are also highly leveraged, but their supervision often has not proved
adequate to forestall failures and a general financial
crisis. The failure of some banks is highly contagious
to other banks and businesses that deal with them, as
the Asian crisis has so effectively demonstrated.
This weakness in banking supervision in emerging
market economies was not a major problem for the
rest of the world before those economies' growing
participation in the international financial system over
the past decade or so. Exposure of an economy to
short-term capital inflows, before its financial system
is sufficiently sturdy to handle a large unanticipated
withdrawal, is a highly risky venture.
It thus seems clear that some set of suggested
standards that countries should strive to meet would
help the new highly sensitive international financial
system function effectively. There are many ways
to promote such standards without developing an
inappropriately exclusive and restrictive club of
participants.
For example, in any set of standards there should
surely be an enhanced level of transparency in the
way domestic finance operates and is supervised.
This is essential if investors are to make more knowledgeable commitments and supervisors are to judge
the soundness of such commitments by their financial institutions. A better understanding of financial
regimes as yet unseasoned in the vicissitudes of our
international financial system also will enable counterparties to more appropriately evaluate the credit
standing of institutions investing in such financial
systems. There should be no mechanism, however, to
insulate investors from making foolish decisions, but
some of the ill-advised investing of recent years can
be avoided in the future if investors, their supervisors, and counterparties are more appropriately
forewarned.
To be sure, counterparties often exchange otherwise confidential information as a condition of a
transaction. But broader dissemination of detailed
disclosures by governments, financial institutions,
and firms is required if the greater risks inherent in
our vastly expanded global financial structure are
to be contained. A market system can approach an
appropriate equilibrium only if the signals to which
individual market participants respond are -curate
and adequate to the needs of the adjustment; xocess.
Product and asset prices, interest rates, debt by maturity, and detailed accounts of central banks and private enterprises are among the signals so essential to
the effective functioning of a global economy. I find
it difficult to believe, for example, that the crises that
arose in Thailand and Korea would have been nearly
so virulent had their central banks published data
Statements to the Congress
before the crises on net reserves instead of the not
very informative gross reserve positions only. Some
inappropriate capital inflows would almost surely
have been withheld, and policymakers would have
been forced to make difficult choices more promptly
if earlier evidence of difficulty had emerged.
As a consequence, the Group of Ten and the International Monetary Fund (IMF) initiated an effort to
establish standards for disclosure of on- and offbalance-sheet foreign currency activities of the public
sector by countries that participate, or aspire to participate, in international capital markets. The focus
of this work was the authorities' foreign currency
liquidity position, which consists of foreign exchange
resources that can be easily mobilized, adjusted for
potential drains on those resources. This work was
part of a larger effort to enhance disclosure of a
broader set of economic and financial data under the
IMF Special Data Dissemination Standard.
Such transparency suggests a second standard
worth considering. Countries that lack the seasoning
of a long history of dealing in international finance
should manage their external assets and liabilities in
such a way that they are always able to live without
new foreign borrowing for up to, for example, one
year. That is, usable foreign exchange reserves should
exceed scheduled amortizations of foreign currency
debts (assuming no rollovers) during the following
year. This rule could be readily augmented to meet
the additional test that the average maturity of a
country's external liabilities should exceed a certain
threshold, such as three years. This could be accomplished directly or through the myriad innovations
to augment maturities through rollover options. The
constraint on the average maturity ensures a degree
of private sector "burden sharing" in times of crisis
because in the event of a crisis the market value
of longer maturities would doubtless fall sharply.
Clearly few, if any, locked-in holders of long-term
investments could escape without significant loss.
Short-term foreign creditors, on the other hand, are
able to exit without significant loss as their instruments mature. If the preponderance of a country's
liabilities are short term, the entire burden of a crisis
would fall on the emerging market economy in the
form of a run on reserves.
Some emerging-market countries may argue that
they have difficulty selling long-term maturities. If
that is indeed the case, their economies are being
exposed to too high a risk generally. For too long, too
many emerging-market economies have managed
their external liabilities so as to minimize their
current borrowing cost. This shortsighted approach
ignores the insurance embedded in long-term debt,
489
insurance that is almost always well worth the
price.
Adherence to such a rule is no guarantee that all
financial crises can be avoided. If the confidence of
domestic residents is undermined, they can generate
demands for foreign exchange that would not be
captured in this analysis. But controlling the structure
of external assets and liabilities nonetheless could
make a significant contribution to stability.
Considerable progress has been made in recent
years in developing sophisticated financial instruments. These developments create added complexity
that all financial market participants, including policymakers from emerging-market economies, must
manage. However, they also create opportunities that
emerging-market economies should seek to exploit.
In doing so there are lessons they can learn from
advances in risk-management strategies developed
by major financial institutions.
To the extent that policymakers are unable to
anticipate or evaluate the types of complex risks that
the newer financial technologies are producing, the
answer, as it always has been, is less leverage, that is,
less debt, more equity, and, hence, a larger buffer
against adversity and contagion.
A third standard could be a legal infrastructure that
enables the inevitable bankruptcies that will occur in
today's complex world to be adjudicated in a manner
that minimizes the disruption and contagion that
can surface if ready resolutions to default are not
available.
A fourth standard is the obvious necessity of sound
monetary and fiscal policies whose absence was so
often the cause of earlier international financial
crises. With increased emphasis on private international capital flows, especially interbank flows, private misjudgments within flawed economic structures have been the major contributors to recent
problems. But inappropriate macropolicies also have
been a factor for some emerging-market economies
in the current crisis.
There are, of course, numerous other elements
of sound international finance that are worthy of
detailed consideration, but the aforementioned would
constitute a good start. Even so, improvements in
transparency, commercial and legal structures, as well
as supervision cannot be implemented quickly. Such
improvements and the transition to a more effective
and stable international financial system will take
time. The current crisis, accordingly, has had to be
addressed with ad hoc remedies. It is essential, however, that those remedies not conflict with a broader
vision of how our new international financial system
will function as we enter the next century.
•
490
Announcements
STATEMENT AFTER THE MEETING OF THE
FEDERAL OPEN MARKET
COMMITTEE
ON MAY
18,1999
The Federal Reserve released the following statement
after the Federal Open Market Committee meeting on
May 18, 1999:
While the FOMC did not take action today to alter the
stance of monetary policy, the Committee was concerned
about the potential for a buildup of inflationary imbalances
that could undermine the favorable performance of the
economy and therefore adopted a directive that is tilted
toward the possibility of a firming in the stance of monetary policy. Trend increases in costs and core prices have
generally remained quite subdued. But domestic financial
markets have recovered and foreign economic prospects
have improved since the easing of monetary policy last
fall. Against the background of already-tight domestic
labor markets and ongoing strength in demand in excess of
productivity gains, the Committee recognizes the need to
be alert to developments over coming months that might
indicate that financial conditions may no longer be consistent with containing inflation.
STATEMENT
SECRETARY
ON THE RESIGNATION
OF
OF THE TREASURY ROBERT
RUBIN
Chairman Alan Greenspan of the Federal Reserve
Board on May 12, 1999, issued the following
statement:
I am saddened by the resignation of my friend Bob
Rubin. He has been one of the most effective Secretaries of
the Treasury in this nation's history. He will be missed,
especially by those of us at the Federal Reserve who have
been privileged to work with him over these last four and a
half years.
Fortunately, the President has chosen Larry Summers to
succeed him. He is a person of extraordinary talent and
judgment, who will continue the important work Bob
Rubin initiated. I, and my colleagues, look forward to
working with our 71st Secretary of the Treasury.
MEETING
COUNCIL
OF THE CONSUMER
ADVISORY
The Federal Reserve Board on May 24, 1999,
announced that the Consumer Advisory Council
would hold its next meeting on Thursday, June 24, in
a session open to the public.
The council's function is to advise the Board on
the exercise of its responsibilities under the Consumer Credit Protection Act and on other matters on
which the Board seeks its advice.
ISSUANCE OF GUIDANCE
ALLOWANCES
ON
LOAN-LOSS
The Federal Reserve on May 21, 1999, issued guidance to supervisors and bankers regarding a Financial
Accounting Standards Board (FASB) staff article on
loan-loss allowances. This guidance includes emerging points of agreement between the Securities and
Exchange Commission and the Federal Reserve on
loan-loss accounting matters.
The Federal Reserve expects institutions to consider the FASB guidance in maintaining conservative loan-loss allowances, consistent with generally
accepted accounting principles (GAAP). In this
regard, banks may record their loan-loss allowances
at the high end of the range of estimated losses when
it reflects management's best estimate.
Furthermore, determining the appropriate allowance involves a high degree of management judgment. And allowances designated as unallocated are
not inconsistent with GAAP, provided they reflect an
estimate of inherent credit losses determined in accordance with GAAP.
It is expected that recent accounting developments
discussed in the FASB article will have a limited
effect on the level of the banking industry's loan-loss
allowances. As the federal banking agencies and the
Securities and Exchange Commission noted in a joint
letter on March 10:
We recognize that today instability in global markets, for
example, is likely to increase loss inherent in affected
institutions' portfolios and consequently require higher
allowances for credit losses than were appropriate in more
stable times.
Looking ahead, given the fundamental changes
that have taken place in credit-risk management in
recent years, a broader reexamination of accounting
491
standards for loan-loss allowances would appear beneficial. The Federal Reserve intends to play an active
role in promoting and participating in such an effort
to ensure that allowance levels remain conservative
and prudent, consistent with safety and soundness
considerations.
The supervisory guidance letter is available on
the Federal Reserve's web site (http://www.
federalreserve.gov).
PROPOSED
ACTIONS
The Federal Reserve Board on May 18, 1999,
requested comments on the benefits and drawbacks
of modifying the Federal Reserve Banks' deposit
deadlines and pricing practices for automated clearinghouse (ACH) transactions they exchange with
private-sector ACH operators. These modifications
may have implications for competition in the provision of ACH services, for the efficiency of the ACH
system, and for long-term growth of ACH volume.
Comments are requested by August 6, 1999.
The Federal Reserve Board on May 21, 1999,
requested comments on a proposal to establish a
Century Date Change Special Liquidity Facility, a
program for lending to depository institutions from
November 1, 1999, through April 7, 2000. The facility should enable depository institutions to confidently commit to supplying loans to other financial
institutions and businesses through the rollover to
the new century. Comments are requested by July 2,
1999.
Under the proposal, the interest rate charged on
loans from the special facility would be higher than
the Federal Open Market Committee's intended federal funds rate. Although the collateral requirements
would be the same as for regular discount window
loans, there would be fewer restrictions on the use
and duration of loans from the special facility. Moreover, borrowers would not be required to seek funds
elsewhere first. Use of the special facility would
be restricted to adequately and well-capitalized
institutions.
ENFORCEMENT
ACTIONS
The Federal Reserve Board on May 18, 1999,
announced the execution of a written agreement by
and among the Wellington State Bank, Wellington,
Texas, the Federal Reserve Bank of Dallas, and
The Banking Commissioner of Texas. The written
agreement includes provisions addressing Year 2000
readiness.
The federal banking agencies announced on
May 21, 1999, the execution of an agreement with
Trans Alliance, L.R, Bellevue, Washington. The
agreement addresses the Year 2000 readiness of
TranAlliance's electronic funds transfer services.
The Federal Reserve Board on May 21, 1999,
announced the issuance of a consent order against
B.O.T. Corporation, N.V., Curacao, Netherlands
Antilles. B.O.T. Corporation, without admitting to
any allegations, consented to the issuance of the
order in connection with allegations of violations of
the Bank Holding Company Act as a result of B.O.T.
Corporation's indirect acquisition of a controlling
interest in the Lippo Bank, Los Angeles, California,
and in connection with a preliminary determination
that B.O.T. Corporation exercises a controlling influence over the management or policies of the bank.
The order requires the divestiture of at least 98 percent of the voting shares of the Lippo Bank. The
order also requires B.O.T. Corporation to pay a civil
money penalty of $300,000 and any profit from the
sale of the bank.
The issuance of the order by the Board does not
relate in any manner to the condition or activities of
the Lippo Bank.
PUBLICATION OF THE ANNUAL
BUDGET
REVIEW
REPORT
AND
The 85th Annual Report, 1998, of the Board of Governors of the Federal Reserve System, covering
operations for the calendar year 1998, is now available from Publications Services, Mail Stop 127,
Board of Governors of the Federal Reserve System,
Washington, DC 20551 or phone 202-452-3244 or
3245. Also available from Publications Services is
a separately printed companion document, Annual
Report: Budget Review, 1999, which describes the
budgeted expenses of the Federal Reserve System
for 1999, the 1999 phase of the Board's current
two-year (1998-99) budget, and income and expenses
for 1997 and 1998. Both reports are also available
on the Federal Reserve Board's web site (http://
www.federalreserve.gov).
PUBLICATION OF A REVISED HANDBOOK
ADJUSTABLE-RATE
MORTGAGES
ON
The Federal Reserve Board announced on May 14,
1999, that it had issued a revised Consumer Handbook on Adjustable Rate Mortgages.
492
Federal Reserve Bulletin • July 1999
Regulation Z, which implements the Truth in
Lending Act, requires creditors to provide the brochure, or a suitable substitute, to consumers when an
application form is provided or before the consumer
pays a nonrefundable fee. Creditors may use the
earlier version of the brochure until existing supplies
are exhausted.
Copies of the revised brochure are available from
Publications Services, Mail Stop 127, Board of Governors of the Federal Reserve System, Washington,
DC 20551. The first 100 copies are free. The brochure is also available on the Board's public web site
(http ://w w w .federalreserve .gov/consumers .htm)
CHANGES IN BOARD
STAFF
The Federal Reserve Board announced on May 24,
1999, that Clyde H. Farnsworth, Jr., Director of the
Division of Reserve Bank Operations and Payment
Systems, would retire in June after thirty years of
service in the Federal Reserve System.
On May 18, 1999, the Federal Reserve Board
announced the appointment of Louise L. Roseman as
Director of the Division of Reserve Bank Operations
and Payment Systems. Her appointment was effective
on June 13, 1999, shortly before the retirement of
Clyde Farnsworth. Ms. Roseman joined the Board's
staff in 1985. She was appointed an officer in 1987
and in 1994 was promoted to Associate Director.
The Division of Reserve Bank Operations and
Payment Systems oversees the Federal Reserve
Banks' provision of financial services to depository
institutions, fiscal agency services to the Treasury
and other government agencies, and significant support functions, such as information technology, financial and cost accounting, audit, human resources, and
facilities management.
The division is also responsible for the development of policies and regulations to foster the efficiency and integrity of the U.S. payments system, and
it works with other central banks and international
organizations to improve the payments system more
broadly.
•
493
Minutes of the
Federal Open Market Committee Meeting
Held on March 30, 1999
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 30, 1999, at 9:00 a.m.
Present:
Mr. Greenspan, Chairman
Mr. McDonough, Vice Chairman
Mr. Boehne
Mr. Ferguson
Mr. Gramlich
Mr. Kelley
Mr. McTeer
Mr. Meyer
Mr. Moskow
Ms. Rivlin
Mr. Stern
Messrs. Broaddus, Guynn, Jordan, and Parry,
Alternate Members of the Federal Open Market
Committee
Mr. Hoenig, Ms. Minehan, and Mr. Poole, Presidents
of the Federal Reserve Banks of Kansas City,
Boston, and St. Louis respectively
Mr. Kohn, Secretary and Economist
Mr. Bernard, Deputy Secretary
Ms. Fox, Assistant Secretary
Mr. Gillum, Assistant Secretary
Mr. Mattingly, General Counsel
Mr. Prell, Economist
Ms. Johnson, Economist
Messrs. Cecchetti, Hooper, Hunter, Lang, Lindsey,
Slifman, Stockton, and Rosenblum, Associate
Economists
Mr. Fisher, Manager, System Open Market Account
Mr. Ettin, Deputy Director, Division of Research and
Statistics, Board of Governors
Messrs. Madigan and Simpson, Associate Directors,
Divisions of Monetary Affairs and Research and
Statistics respectively, Board of Governors
Mr. Reinhart, Deputy Associate Director, Division of
Monetary Affairs, Board of Governors
Ms. Low, Open Market Secretariat Assistant,
Division of Monetary Affairs, Board of
Governors
Ms. Pianalto, First Vice President, Federal Reserve
Bank of Cleveland
Ms. Browne, Messrs. Eisenbeis, Goodfriend, Hakkio,
Kos, Rasche, and Sniderman, Senior Vice
Presidents, Federal Reserve Banks of Boston,
Atlanta, Richmond, Kansas City, New York,
St. Louis, and Cleveland respectively
Messrs. Judd and Weber, Vice Presidents, Federal
Reserve Banks of San Francisco and
Minneapolis respectively
By unanimous vote, the minutes of the meeting of
the Federal Open Market Committee held on February 2-3, 1999, were approved.
The Manager of the System Open Market Account
reported on recent developments in foreign exchange
markets. There were no open market operations in
foreign currencies for the System's account in the
period since the previous meeting, and thus no vote
was required of the Committee.
The Manager also reported on developments in
domestic financial markets and on System open market transactions in government securities and federal
agency obligations during the period February 3,
1999, through March 29, 1999. By unanimous vote,
the Committee ratified these transactions.
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.
The domestic policy directive that was approved by
the Committee and issued to the Federal Reserve
Bank of New York follows the summary.
The information reviewed at this meeting suggested that the economic expansion remained robust
early in the year. Consumer spending was particularly strong, and housing starts climbed higher. While
494
Federal Reserve Bulletin • July 1999
growth of business capital spending moderated somewhat after a fourth-quarter surge, it was still quite
rapid. Heavy competition from imports damped the
rise of industrial production; however, employment
expansion remained brisk and labor markets tight.
Price inflation was still low.
Nonfarm payroll employment posted sizable further gains in January and February. Hiring in construction and retail trade was notably strong, and
employment in the service industries continued to
trend higher. By contrast, manufacturing suffered further job losses. The civilian unemployment rate, at
4.4 percent in February, stayed in the narrow 4lA to
41/2 percent range that had prevailed since spring
1998.
Total industrial production was unchanged in January and rose slightly in February. Gas and oil extraction slumped in January, and mild weather restrained
utility output in February. Manufacturing production
increased modestly in both months, reflecting strong
increases in the output of high-tech industries that
more than offset declines in the production of aircraft
and of motor vehicles and parts. The factory operating rate fell further in the January-February period,
as the growth in manufacturing capacity continued to
outpace the rise in production.
Consumer spending surged in the early months of
1999, supported by rapidly rising disposable personal
income, soaring household net worth, and buoyant
consumer sentiment. Attractive pricing and the favorable trends in income and wealth contributed to
strong underlying demand for motor vehicles, and
substantial gains were recorded in most other categories of retail sales as well. Expenditures on services
in January (latest available data) also exhibited
strength, most notably in spending for energy services, which picked up after an unseasonably warm
December.
Housing demand remained elevated. Single-family
home sales were still at a very strong level in January
(latest data), despite a drop from their recent record
high. Housing starts increased appreciably in the
January-February period, as builders took advantage
of good weather to try to catch up with backlogged
demand.
Business fixed investment appeared to have decelerated noticeably from the very fast pace of the fourth
quarter. Data on shipments of nondefense capital
goods in January and February suggested that business outlays for computers and motor vehicles were
growing less rapidly, and purchases of most other
types of durable equipment seemed to be slowing
somewhat. Nonresidential construction activity was
down on balance in January, though the construction
of office buildings trended still higher and the building of lodging facilities picked up.
Total business inventories changed little in January, and stocks generally were at comfortable levels,
though conditions varied across industries. Manufacturing stocks fell in January, largely reflecting further
reductions in inventories of aircraft and parts, and the
aggregate stock-sales ratio for the sector was at the
bottom of its range over the past twelve months. In
the wholesale sector, a reduction in inventories in
January was concentrated in motor vehicles. The
decline in stocks was closely paralleled by a drop in
sales, and the aggregate inventory-sales ratio for the
sector stayed around the top of its range over the past
twelve months. Retail inventories increased considerably in January, but with sales growing rapidly, the
aggregate inventory-sales ratio remained at the bottom of its range over the past year.
The U.S. trade deficit in goods and services widened substantially in January from its fourth-quarter
average. The value of exports fell for a third straight
month and reached its lowest level since last August;
half of the drop was in agricultural products. The
value of imports retraced in January most of its
December decline, with sizable increases recorded
for imported consumer goods, computers, and motor
vehicles from Canada. The economies of many of the
major foreign industrial countries faltered in the
fourth quarter. Japan recorded a fifth straight quarterly decline in economic activity, and growth in real
output weakened in the euro area and remained sluggish in the United Kingdom. By contrast, economic
activity rebounded in Canada. Elsewhere, while economic activity continued to decline in Latin America
and Russia, there were indications that some Asian
economies might be bottoming out and that recovery
might be under way in Korea.
Inflation remained subdued in early 1999. Both the
total and core measures of consumer prices increased
only slightly in January and February, and core inflation for the twelve months ended in February was
somewhat lower than for the year-earlier period.
At the producer level, prices of finished goods other
than food and energy changed little over January
and February. For the twelve months ended in February, core producer price inflation was somewhat
higher than for the year-earlier period, but the
pickup partly reflected the large increase in tobacco
prices that had resulted from the settlement of the
lawsuit brought by state attorneys general. Average
hourly earnings of private production or nonsupervisory workers increased moderately on balance over
the January-February period. The rise in average
hourly earnings for the year ended in February
Minutes of the Federal Open Market Committee
was noticeably smaller than that for the year-earlier
period.
At its meeting on February 2-3, 1999, the Committee adopted a directive that called for maintaining
conditions in reserve markets consistent with an
unchanged federal funds rate of about 43A percent
and that did not contain any bias relating to the
direction of possible adjustments to policy during
the intermeeting period. The Committee judged this
policy stance to be consistent with its objectives of
fostering high employment and sustained low inflation and, over the near term at least, viewed the risks
to this outlook as reasonably well balanced.
Open market operations throughout the intermeeting period were directed toward maintaining the federal funds rate at around 43A percent. Market interest
rates changed little immediately after the February
meeting because market participants had expected
the Committee's decision. Subsequently, however,
Treasury yields moved up significantly in response to
incoming data suggesting further robust growth in
aggregate spending and then retraced much of the
rise after the receipt of favorable news on inflation.
Short-term interest rates changed little on balance
over the intermeeting interval, and longer-term rates
rose somewhat. Key indexes of stock market prices
recorded mixed changes.
The trade-weighted value of the dollar in foreign
exchange markets increased somewhat over the intermeeting period in relation to the currencies of a broad
group of important U.S. trading partners. Much of the
dollar's upward movement came against a subset
of major currencies. A large rise in terms of the yen
occurred in response to an easing of monetary policy
by the Bank of Japan that reduced the overnight call
rate to an extremely low level and fostered a considerable decline in Japanese bond yields. The dollar
also rose substantially against the euro, which was
weighed down by signs of continued weakness in
Germany and, late in the period, by the outbreak of
hostilities in the Balkans. Among the emerging countries, the Brazilian real depreciated on balance against
the dollar, although it firmed late in the period as
overall financial conditions in that country stabilized
somewhat, and the Mexican peso appreciated against
the dollar in association with a rebound in oil prices.
Expansion of M2 and M3 moderated considerably
on balance in the early months of 1999 from the rapid
increases of the fourth quarter. The deceleration of
these aggregates apparently reflected the waning
effects of the policy easings of last autumn in narrowing the opportunity cost of holding M2 assets, a
slowdown in mortgage refinancing activity, and a
bounceback in household purchases of stock mutual
495
funds as conditions in financial markets brightened.
Both aggregates were estimated to have increased
over the first quarter at rates somewhat above the
Committee's annual ranges. Total domestic nonfinancial debt continued to expand at a pace somewhat
above the middle of its range.
The staff forecast prepared for this meeting suggested that the expansion would gradually moderate
to a rate commensurate with the growth of the economy's estimated potential. Growth of private final
demand would be damped by the anticipated waning
of positive wealth effects stemming from earlier large
increases in equity prices and by slower growth of
spending on consumer durables, housing units, and
business equipment after the earlier buildup in the
stocks of these items. The lagged effects of the earlier
rise in the foreign exchange value of the dollar were
expected to place continuing, though diminishing,
restraint on the demand for U.S. exports for some
period ahead and to lead to further substitution of
imports for domestic products. Pressures on labor
resources were likely to remain substantial. Price
inflation was projected to rise somewhat over the
projection horizon, largely as a result of an expected
upward trend in energy prices.
In the Committee's discussion of current and prospective economic developments, members commented that for an extended period most forecasters
had been projecting slower economic growth and
higher inflation than actually had materialized. With
regard to output, current indicators provided little
evidence of any moderation in the pace of the expansion from the robust growth experienced on average
over the last few years. Even so, most members
viewed a slowing to a rate closer to most estimates of
the growth of the economy's potential as a reasonable
expectation. They agreed, however, that the timing
and extent of such moderation were subject to a wide
range of uncertainty. Factors expected to foster
slower growth in key demand sectors of the economy
included the buildup of large stocks of business
equipment, housing units, and durable goods by
households and an assumption that the stock market
would play a more neutral role than in recent years.
The effects of domestic demand on domestic production would continue to be damped by further
increases in the trade deficit, though the offset from
this source might well diminish if financial markets
and economies in key developing nations were to
exhibit more signs of stabilization or improvement.
Given the persistence of robust growth in domestic
demand and the continuing forward momentum in
U.S. economic activity, many of the members commented that the risks to their forecasts were tilted
496
Federal Reserve Bulletin • July 1999
toward the eventual emergence of somewhat greater
inflation pressures. Despite the persistence of very
tight labor markets across the nation, however, there
currently were only scattered indications of more
rapid increases in wages and no evidence of rising
price inflation. The reasons underlying this remarkable economic performance were potentially transitory but also possibly of a longer-term nature. Lower
oil and other input prices had played a role. However,
it also seemed likely that accelerating productivity
helped to account for the economy's ability to sustain
not only higher rates of growth of output but also
relatively low levels of unemployment, at least for a
time, without generating higher inflation.
In their review of developments across the nation,
the members reported sustained, and in some areas
rising, overall growth in regional economic activity.
At the same time, some sectors were continuing to
experience varying degrees of softness, notably those
most affected by developments abroad such as manufacturing, agriculture, and energy. A number of members referred, however, to signs of recent improvement in manufacturing that appeared to be associated
primarily with the strength of domestic demand but
to some extent also with increased demand from
some developing countries.
With regard to developments in key expenditure
sectors of the economy, the members anticipated that
growth in consumer spending would retain considerable upward momentum, given their expectations of
favorable fundamentals such as further expansion in
employment and incomes, the rise in financial wealth
that had continued through the first quarter, and ready
access to consumer credit. Some also referred to
the currently elevated level of consumer confidence.
As time went on, however, it seemed unlikely that
growth in consumer spending would be sustained
at its recent exceptional pace. The accumulation of
durable goods by consumers in recent years should at
some point inhibit further large increases in spending
for such goods. Moreover, the favorable effect of the
extended run-up in stock market wealth evidently had
been a factor in bolstering consumer confidence and
willingness to spend. While the course of stock market prices could not reliably be predicted, the market's stimulative effect on spending was likely to
wane over time in the absence of further appreciable
advances in prices. Current indications of some softening in home sales and reduced mortgage refinancing activity, should they persist, also augured less
stimulus to consumer spending in coming quarters.
The extraordinary expansion in business fixed
investment in recent years, fueled to a major extent
by purchases of new equipment, was also expected to
moderate over time as a result of the large buildup
and reduced utilization of capacity and the forecasted
slower growth in final sales. While the prospect of
further declines in the prices of some equipment
would encourage continued growth in spending, the
lower prices were not expected to outweigh the
effects of relatively low capacity usage and more
moderate growth in overall demand in coming quarters. In this regard, some signs of deceleration could
be detected in the currently available data, though
from extremely rapid rates of growth. With respect to
commercial building, members reported strong construction activity in many areas, but some also noted
that such construction appeared to have reached a
peak, as evidenced in part by signs of overbuilding in
a few areas. Moreover, current data suggested little or
no growth in overall expenditures on nonresidential
structures.
Residential sales and construction were described
as very strong in many parts of the country and
indeed were being held down in some areas by low
inventories of housing available for sale and a limited
supply of qualified construction workers. Some members commented that housing construction backlogs
and unusually mild winter weather in many areas had
sustained a high level of housing construction in
recent months. Looking ahead, however, members
observed that residential building activity appeared to
have peaked in some areas, and an oversupply of
apartments was reported in a few major cities. More
generally, the rise in mortgage rates since last fall and
some softening of demand indicators pointed to less
strength in the housing sector. Even so, the outlook
for jobs and income and the buildup of financial
wealth constituted favorable home affordability factors that appeared likely to support a continuing high
level of housing demand, especially in the singlefamily sector.
Relatively heavy spending on imports owing to
strong domestic demand and low prices likely would
exert a continuing negative effect on net exports over
the next several quarters. Nevertheless, demand for
U.S. exports could begin to pick up, given what now
appeared to be improved prospects for economic
activity in several emerging market economies.
Financial market conditions had become more settled
in a number of these economies, and contagion from
developments in Brazil now seemed to present a
reduced threat to that nation's trading partners. Even
so, foreign-sector forecasts—for industrial as well as
emerging market economies—remained subject to
considerable downside risk, including uncertainties
stemming from the recent flare-up of hostilities in the
Balkans.
Minutes of the Federal Open Market Committee
In the Committee's discussion of the outlook for
inflation, members commented that they saw no evidence of any acceleration in price inflation despite
the continuing strength of the economic expansion
and the tightness of labor markets. Anecdotal reports
from around the nation continued to underscore the
difficulty or inability of most business firms to raise
prices in highly competitive markets. There were a
limited number of reports of relatively sizable
increases in wages paid to workers with skills in
especially short supply, but on the whole employers
were successful in holding down increases in labor
compensation and offsetting them through improvements in productivity. Indeed, increases in unit labor
costs, at least in the nonfinancial corporate sector and
perhaps more widely as well, had declined to a very
low rate over the past year.
The members saw little reason to anticipate any
significant, continuing increase in inflation in the
near term. Inflation was expected to rise, owing to the
recent hikes in oil prices, but the increase should be
limited. And with little evidence of rising pressures
on prices at early stages of production or on nominal
wages, inflation should remain contained for a time.
However, some members were concerned about the
risk that sustained rapid growth in aggregate demand
would stretch markets even more. Even presuming
that growth in economic activity would moderate to a
pace close to the economy's potential, labor markets
would remain relatively taut and at some point could
trigger faster increases in labor compensation and, in
turn, rising price inflation. Moreover, the dissipation
or reversal of favorable supply factors—including,
for example, in addition to energy prices the waning
effects of the dollar's earlier appreciation—could contribute to higher inflation expectations and faster
nominal compensation increases. In the view of some
others, though, the impact on prices of the unwinding
of the favorable factors might well be muted or offset
by a possible further uptick in productivity growth.
Accelerating productivity had been spurring investment in capacity and intense competition among businesses and had been holding down labor costs. Furthermore, optimism about improving productivity
was evident in projections of business profits and the
high level of equity prices. In any event, it was clear
that forecasts in recent years typically had overstated
the rise in inflation, and a great deal of uncertainty
surrounded the extent to which productivity gains
and other factors, some unspecified, might continue
to hold down inflation in a period of robust economic
growth and relatively tight labor markets.
In the Committee's discussion of policy for the
intermeeting period ahead, all the members indicated
497
that they favored an unchanged policy stance. Several
commented that they saw no significant changes in
the tenor of recent statistical and anecdotal reports
that would constitute the basis for an adjustment to
policy or a greater presumption that policy might
need to be changed soon. Many referred in particular
to the absence of any warning signs of accelerating
inflation over the near term as a major consideration in support of a steady policy at this time. In the
view of some, however, the next policy action was
more likely to be a firming than an easing. They
saw a greater likelihood that tight—and perhaps
tightening—labor markets would add to price pressures than that demand would falter or that inflation
would decrease further. Yet they recognized that such
forecasts were subject to a substantial degree of
uncertainty. This argued for a cautious approach to
any policy change, especially in light of an economic
performance that had not conformed to historical
patterns in recent years. While a number of members
noted that a case might be made for unwinding part
of the Committee's easing actions during the fall of
last year, given the recovery in financial markets and
the improvement in the economic outlook since then,
they argued that the incoming data and prospects for
sustained favorable economic performance did not
support such an action. The members concluded that
the Committee was in a position to wait for developments to unfold, especially given the absence of any
evidence of an impending acceleration of underlying
inflation. If the risks of higher inflation intensified, it
would still have time to take action to head off price
pressures in order to foster sustained economic
growth and a high level of employment. Many of the
members emphasized, however, that in such circumstances the Committee might need to act promptly to
forestall a buildup of inflationary forces that could
destabilize the expansion.
All the members endorsed a proposal to retain the
existing symmetry of the directive with respect to
possible adjustments to policy during the intermeeting period. While many believed that the next policy
move likely would be in the direction of some tightening, such an outcome was not a foregone conclusion, and in any event the timing of the next policy
action was highly uncertain. It also was noted that a
biased directive would not be consistent with the
members' view that a policy adjustment was unlikely
in the period just ahead. Moreover, while the Committee's disclosure procedures do not always require
the immediate announcement of a shift in symmetry,
the members agreed that were they to announce a
shift to a tightening bias, it would likely have in
current circumstances a relatively pronounced and
498
Federal Reserve Bulletin • July 1999
undesired effect on financial markets. In particular,
the markets might well build in higher odds of a
policy tightening move at the May or June meetings
than currently was consistent with the members'
thinking. It also seemed desirable to defer any change
in the directive and await further developments relating to the hostilities in the Balkans.
At the conclusion of this discussion, the Committee voted to authorize and direct the Federal Reserve
Bank of New York, until it was instructed otherwise, to execute transactions in the System Account
in accordance with the following domestic policy
directive:
The information reviewed at this meeting suggests that
the expansion in economic activity is still robust. Nonfarm
payroll employment posted sizable further gains in January
and February, and the civilian unemployment rate remained
below 4V2 percent. Total industrial production edged higher
over the first two months of the year. Total retail sales rose
sharply further over the two months, and housing starts
increased appreciably from an already elevated level.
Available indicators suggest that business capital spending
decelerated in early 1999 but growth was still relatively
rapid. The nominal deficit on U.S. trade in goods and
services widened substantially in January from its fourthquarter average. Inflation has remained subdued despite
very tight labor markets.
Short-term interest rates have changed little since the
meeting on February 2-3, 1999, while longer-term rates
have risen somewhat on balance. Key measures of share
prices in equity markets have registered mixed changes
over the intermeeting period. In foreign exchange markets,
the trade-weighted value of the dollar has risen somewhat
over the period in relation to the currencies of a broad
group of important U.S. trading partners, and the appreciation has been a bit larger against a subset of major
currencies.
M2 and M3 continued to record large increases in January and February, but available data pointed to substantial
moderation in March. Both aggregates are estimated to
have increased over the first quarter at rates somewhat
above the Committee's annual ranges. Total domestic nonfinancial debt has continued to expand at a pace somewhat
above the middle of its range.
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 2 to 6 percent respectively, measured from
the fourth quarter of 1998 to the fourth quarter of 1999.
The range for growth of total domestic nonfinancial debt
was set at 3 to 7 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 and
financial markets.
To promote the Committee's long-run objectives of price
stability and sustainable economic growth, the Committee
in the immediate future seeks conditions in reserve markets
consistent with maintaining the federal funds rate at an
average of around 43A percent. In view of the evidence
currently available, the Committee believes that prospective developments are equally likely to warrant an increase
or a decrease in the federal funds rate operating objective
during the intermeeting period.
Votes for this action: Messrs. Greenspan, McDonough,
Boehne, Ferguson, Gramlich, Kelley, McTeer, Meyer,
Moskow, Ms. Rivlin, and Mr. Stern. Votes against this
action: None
It was agreed that the next meeting of the Committee would be held on Tuesday, May 18, 1999.
The meeting adjourned at 12:35 p.m.
Donald L. Kohn
Secretary
499
Legal Developments
ORDERS ISSUED UNDER BANK HOLDING COMPANY
ACT
Orders Issued Under Section 3 of the Bank Holding
Company Act
Chittenden Corporation
Burlington, Vermont
Order Approving the Acquisition of a Bank Holding
Company
Chittenden Corporation ("Chittenden"), a bank holding
company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 3 of the BHC Act (12 U.S.C. § 1842)
to acquire Vermont Financial Services Corp., Brattleboro,
Vermont ("Vermont Financial"), and its wholly owned
subsidiary banks, Vermont National Bank ("Vermont
National"), also in Brattleboro, and United Bank, Greenfield, Massachusetts ("United Bank").1
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(64 Federal Register 6361 (1999)). The time for filing
comments has expired, and the Board has considered the
proposal and all comments received in light of the factors
set forth in section 3 of the BHC Act.
Chittenden, with total consolidated assets of $2.1 billion,
operates depository institutions in Vermont and Massachusetts.2 Chittenden is headquartered in Vermont and is the
third largest depository institution in the state, controlling
deposits of $1.2 billion, representing approximately
16.8 percent of total deposits in insured depository institutions in the state ("state deposits"). Vermont Financial,
with total consolidated assets of $2.1 billion, also operates
depository institutions in Vermont and Massachusetts. Vermont Financial is the second largest depository institution
in Vermont, controlling deposits of $1.3 billion, representing approximately 17.3 percent of state deposits. On consummation of the proposal, and after accounting for the
proposed divestitures discussed in this order, Chittenden
would become the largest depository institution in Ver1. Chittenden expects to merge the subsidiary banks of Vermont
Financial into the subsidiary banks of Chittenden in the near future.
Chittenden also has requested the Board's approval to hold and to
exercise an option to acquire up to 19.9 percent of the voting shares of
Vermont Financial. This option would expire on consummation of the
proposal.
2. Asset data are as of December 31, 1998. State deposit data are as
of June 30, 1998. In this context, depository institutions include
commercial banks, savings banks, and savings associations.
mont, controlling deposits of $2 billion, representing approximately 27.3 percent of state deposits.
Chittenden is the 32d largest depository institution in
Massachusetts, controlling deposits of $499 million, representing less than 1 percent of state deposits. Vermont
Financial is the 71st largest depository institution in the
state, controlling deposits of $238 million, also representing less than 1 percent of state deposits. On consummation
of the proposal, Chittenden would become the 18th largest
depository institution in Massachusetts, controlling deposits of $737 million, representing less than 1 percent of state
deposits.3
Interstate Analysis
Section 3(d) of the BHC Act allows the Board to approve
an application by a bank holding company to acquire
control of a bank located in a state other than the home
state of the bank holding company if certain conditions are
met.4 For purposes of the BHC Act, the home state of
Chittenden is Vermont, and Vermont Financial's subsidiary banks are located in Vermont, Massachusetts, and
New Hampshire.5 Thus, for purposes of section 3(d), this
transaction involves the acquisition by a Vermont bank
holding company of banks in Massachusetts and New
Hampshire.
All the conditions for an interstate acquisition enumerated in section 3(d) of the BHC Act are met in this case. 6 In
3. Vermont Financial's subsidiary banks also maintain branches in
New Hampshire. On consummation of the proposal, Chittenden would
become the sixth largest depository institution in New Hampshire,
controlling deposits of $229 million, representing approximately
1.7 percent of state deposits.
4. See 12 U.S.C. § 1842(d). A bank holding company's home state
is that state in which the total deposits of all banking subsidiaries of
the company were the largest on July 1, 1966, or on the date on which
the company became a bank holding company, whichever is later.
12 U.S.C. § 1841(o)(4)(C).
5. For purposes of section 3(d) of the BHC Act, the Board considers
a bank to be located in the states in which the bank is chartered or
headquartered or operates a branch. NationsBank
Corporation,
84 Federal Reserve Bulletin 858 (1998).
6. See 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and
(B). Chittenden is adequately capitalized and adequately managed, as
defined in the BHC Act, and the subsidiary banks of Vermont Financial have been in existence and operated for the minimum periods of
time necessary to satisfy age requirements established by applicable
state law. See Mass. Gen. Laws Ann. Ch. 167A, § 2 (West 1998)
(three years). Chittenden also would not exceed applicable state law
deposit limitations as calculated under state law. See Mass. Gen. Laws
Ann. Ch. 167A, § 2 (West 1998) (30 percent); N.H. Rev. Stat. Ann.
§ 384-B:3 (1999) (20 percent). On consummation of the proposal,
Chittenden would control less than 10 percent of the total amount of
deposits in insured depository institutions in the United States. All
500
Federal Reserve Bulletin • July 1999
view of all the facts of record, the Board is permitted to
approve the proposal under section 3(d) of the BHC Act.
Competitive
Considerations
The BHC Act prohibits the Board from approving an
application under section 3 of the BHC Act if the proposal
would result in a monopoly or would be in furtherance of
any attempt to monopolize the business of banking. The
BHC Act also prohibits the Board from approving a proposed combination that would substantially lessen competition or tend to create a monopoly in any relevant banking
market, unless the Board finds that the anticompetitive
effects of the proposal are clearly outweighed in the public
interest by the probable effects of the proposal in meeting
the convenience and needs of the community to be served.7
Chittenden and Vermont Financial compete directly in
eight banking markets in Vermont and two banking markets in Massachusetts.8 The Board has carefully reviewed
the competitive effects of the proposal in these banking
markets in light of all the facts of record, including the
number of competitors that would remain in the markets,
the relative shares of total deposits in depository institutions in the markets ("market deposits")9 controlled by the
companies involved in this transaction, the concentration
levels of market deposits and the increase in these levels as
measured by the Herfindahl-Hirschman Index ("HHI")
under the Department of Justice Merger Guidelines ("DOJ
Guidelines"),10 and other characteristics of the markets.
A. Banking Markets in Massachusetts
Consummation of the proposal without divestitures would
be consistent with Board precedent and the DOJ Guidelines in the Boston and Springfield, Massachusetts, bank-
other requirements of section 3(d) of the BHC Act also would be met
on consummation of the proposal.
7. 12 U.S.C. § 1842(c).
8. The banking markets are described in Appendix A.
9. Market share data are as of June 30, 1998, and are based on
calculations that, except as noted in this order, include the deposits of
thrift institutions 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, e.g., Midwest
Financial Group, 75 Federal Reserve Bulletin 386 (1989); National
City Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the
Board has regularly included thrift deposits in the calculation of
market share on a 50-percent weighted basis. See, e.g., First Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991).
10. Under the DOJ Guidelines, 49 Federal Register 26,823 (1984),
a market in which the post-merger HHI is more than 1800 is considered highly concentrated. The Department of Justice has informed the
Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive
effects) unless the post-merger HHI is at least 1800 and the merger
increases the HHI by more than 200 points. The Department of Justice
has stated that the higher than normal HHI thresholds for screening
bank mergers for anticompetitive effects implicitly recognize the
competitive effects of limited-purpose lenders and other nondepository financial institutions.
ing markets.11 After consummation of the proposal, numerous competitors would remain in each banking market and
the markets would remain moderately concentrated as measured by the HHI.
B. Banking Markets in Vermont
To mitigate the potential anticompetitive effects of the
proposal in the eight banking markets in Vermont, Chittenden has committed to divest 18 branches that control a
total of $497 million in deposits.12 After accounting for the
proposed divestitures, consummation of the proposal
would be consistent with Board precedent and the DOJ
Guidelines in six of the Vermont banking markets:
Bennington, Brattleboro, Middlebury, Rutland, Springfield,
and Vergennes.13 In addition, a significant number of competitors would remain in each of these banking markets
relative to the size of the market after consummation of the
proposal.
Consummation of the proposal in the Barre-Montpelier
and Burlington-St. Albans banking markets would exceed
the DOJ Guidelines after accounting for the proposed
divestitures. In these markets, the Board has considered
whether other factors either mitigate the competitive effects of the proposal in the market or indicate that the
proposal would have a significantly adverse effect on competition in the market.14
Barre-Montpelier. Chittenden is the fourth largest depository institution in the market, controlling deposits of
$106.6 million, representing approximately 15.4 percent of
market deposits. Vermont Financial is the second largest
depository institution in the market, controlling deposits of
$150.9 million, representing approximately 21.9 percent of
market deposits. Chittenden proposes to divest two
branches in the Barre-Montpelier banking markets with
total deposits of $30.1 million to a banking organization
11. The effect of the proposal on the concentration of banking
resources in these markets is set forth in Appendix B.
12. With respect to each market in which Chittenden has committed
to divest offices to mitigate the anticompetitive effects of the proposal,
Chittenden has committed to execute, before consummation of the
acquisition of Vermont Financial, sales agreements for the proposed
divestitures with a purchaser determined by the Board to be competitively suitable and to complete the divestiture within 180 days of
consummation of the acquisition of Vermont Financial. Chittenden
also has committed that, if it is unsuccessful in completing any
divestitures within the 180-day period, it will transfer the unsold
branch(es) to an independent tnistee that is acceptable to the Board
and will instruct the trustee to sell the branch(es) promptly to one or
more alternative purchasers acceptable to the Board. See BankAmerica Corporation, 78 Federal Reserve Bulletin 338 (1992); United
New Mexico Financial Corporation, 11 Federal Reserve Bulletin 484
(1991). Chittenden also has committed to submit to the Board an
executed trust agreement acceptable to the Board stating the terms of
these divestitures.
13. The effect of the proposal on the concentration of banking
resources in these markets is set forth in Appendix C.
14. The number and strength of factors necessary to mitigate the
competitive effects of a proposal depend on the level of concentration
and size of the increase in market concentration. See NationsBank
Corporation, 84 Federal Reserve Bulletin 129 (1998).
Legal Developments
that does not currently have a presence in the market. On
consummation of the proposed merger and divestiture,
Chittenden would become the largest depository institution
in the market, controlling deposits of $227.3 million, representing approximately 32.9 percent of market deposits.
A number of factors indicate that the competitive effects
of the proposal are not likely to be significantly adverse in
this market. First, a large number of financial institutions
compete in this market. Seven commercial banks, in addition to Chittenden, would remain in the market after the
merger. In addition, one savings association that competes
in the market is particularly active in commercial as well as
mortgage and consumer lending. Based on these activities,
the Board has concluded that this savings association
should be considered as a full competitor of banks in this
market.15 Seven credit unions also compete in the market
and control approximately $234.2 million of deposits. One
credit union controls approximately $191.9 million of deposits and represents that its members include approximately 38 percent of all households in the market.16
Second, the Barre-Montpelier banking market has characteristics that make it attractive for entry. From 1993 to
1998, market deposits increased 13.8 percent, compared to
an average statewide increase of 10.6 percent in Vermont.
One bank entered the market de novo in 1995, and three
other banks have entered the market by acquisition since
1993. The proposed divestiture to an out-of-market commercial banking organization would provide another market entrant.
Burlington-St. Albans. Chittenden is the second largest
depository institution in the market, controlling deposits of
$604.2 million, representing approximately 26.6 percent of
market deposits. Vermont Financial is the third largest
depository institution in the market, controlling deposits of
$348.5 million, representing approximately 15.3 percent of
market deposits. Chittenden proposes to divest seven
branches in the Burlington-St. Albans banking market with
total deposits of $220.8 million, representing approximately 9.7 percent of market deposits, to a suitable competitor. On consummation of the proposed merger and divestiture, Chittenden would become the largest depository
institution in the market, controlling deposits of
$731.9 million, representing approximately 32.2 percent of
15. The Board previously has indicated that, when analyzing the
competitive effects of a proposal, it may consider the competition of
savings associations at a level greater than 50 percent of the savings
association's deposits if appropriate. See, e.g., Banknorth Group, Inc.,
73 Federal Reserve Bulletin 703 (1989). This savings association
controls deposits of approximately $252.7 million and accounted for
more than 30 percent of all small business loans originated in
the market from September 1997 to June 1998. On the basis of
100-percent deposit weighting, this savings association is the third
largest depository institution in the market, with 30.9 percent of
market deposits, and Chittenden would become the second largest
depository institution in the market, with 27.8 percent of market
deposits. In this light, the post-merger HHI would increase 277 points
to 2314.
16. Credit unions control 22.2 percent of all insured deposits in the
market, compared to 9 percent of insured deposits controlled by credit
unions statewide in Vermont.
501
market deposits. The HHI would increase not more than
219 points to 2198.
Several factors mitigate the potential adverse effects that
may result from the proposal in the Burlington-St. Albans
banking market. In particular, the Board has considered the
number of competing institutions in and the structure of the
Burlington-St. Albans banking market. Seven depository
institutions in addition to Chittenden would remain in the
market after the proposed acquisition. The proposed acquiror of the divested branches would become the fourth
largest depository institution in the market, controlling
11.2 percent of market deposits. Four depository institutions in addition to Chittenden would each control more
than 9 percent of market deposits.
The market also appears to be attractive for entry by
out-of-market competitors. Average household income in
the Burlington MSA, which closely approximates the banking market, substantially exceeds the statewide average in
Vermont, and the population in the Burlington MSA increased 7.8 percent from 1990 to 1997, compared to an
average statewide increase of 5.1 percent. In addition, one
depository institution entered the market de novo in 1998,
and three depository institutions have entered by acquisition since 1993.
C. Views of Other Agencies and Conclusion
The Department of Justice has conducted a detailed review
of the proposal and advised the Board that, conditioned on
completion of the proposed divestitures, consummation of
the proposal would not likely have a significantly adverse
effect on competition in any relevant banking market. The
Office of the Comptroller of the Currency ("OCC") and
the Federal Deposit Insurance Corporation ("FDIC") also
have been afforded an opportunity to comment and have
not objected to consummation of the proposal.
After carefully reviewing all the facts of record, and for
the reasons discussed in the order and appendices, the
Board concludes that consummation of the proposal would
not likely result in a significantly adverse effect on competition or on the concentration of banking resources in any
of the ten banking markets in which Chittenden and Vermont Financial directly compete or in any other relevant
banking market. Accordingly, based on all the facts of
record, and subject to completion of the proposed divestitures and compliance with the related commitments, the
Board has determined that competitive factors are consistent with approval of the proposal.
Convenience and Needs
Considerations
In acting on a proposal under section 3 of the BHC Act, the
Board is required to consider the effect of the proposal on
the convenience and needs of the community to be served.
The Board has carefully considered the effect of the proposal on the convenience and needs of the communities to
be served in light of all the facts of record, including
comments submitted by two community development organizations in Vermont and New Hampshire ("Comment-
502
Federal Reserve Bulletin • July 1999
ers"). Commenters expressed concern that the proposal
may result in reduced lending for affordable housing and
community development activities, reduced accessibility
of banking services, and elimination of certain products
and services offered by Vermont National.
The Board has long held that consideration of the convenience and needs factor includes a review of the records of
the relevant depository institutions under the Community
Reinvestment Act (12 U.S.C. § 2901 etseq.) ("CRA"). As
provided in the CRA, the Board has evaluated this factor in
light of examinations by the appropriate federal banking
supervisors of the CRA performance records of the relevant institutions.17 Chittenden's lead subsidiary bank, Chittenden Trust Company, Burlington, Vermont ("Chittenden
Trust"), has received five consecutive "outstanding" ratings for CRA performance from the FDIC, most recently
as of June 1998. Chittenden's other subsidiary banks, The
Bank of Western Massachusetts, Springfield, Massachusetts ("Western Massachusetts"), and Flagship Bank &
Trust Company, Worcester, Massachusetts, also received
"outstanding" ratings for CRA performance from the
FDIC at their most recent examinations, as of June 1998
and June 1997, respectively. Vermont Financial's lead subsidiary bank, Vermont National, was rated "satisfactory"
for CRA performance by the OCC, as of June 1997, and
Vermont Financial's other subsidiary bank, United Bank,
was rated "satisfactory" for CRA performance by the
FDIC, as of December 1996.
In reviewing this case, the Board has paid particular
attention to the record of performance of Chittenden Trust
in helping to meet the convenience and needs of the
community, because Chittenden has indicated that Chittenden Trust and Vermont National would merge no later
than April 1, 2000, and that, in the interim, executive
officers of Chittenden Trust would serve as directors and
officers of Vermont National.18 Chittenden also has committed that it will extend Chittenden Trust's comprehensive regulatory compliance program to Vermont National
after consummation of the proposal.
A. Chittenden Trust's CRA Performance Record
In the most recent CRA performance examination of Chittenden Trust, examiners found that the geographical distribution of lending by Chittenden Trust reflected lending
throughout its assessment area and at all income levels.
Examiners noted no substantive or technical violations at
the bank of any antidiscrimination laws or regulations.
17. The Interagency Questions and Answers Regarding Community
Reinvestment provide that an institution's most recent CRA performance evaluation is a particularly important consideration in the
applications process because it represents a detailed on-site evaluation
of the institution's overall record of performance under the CRA by
the appropriate federal banking supervisor. 62 Federal
Register
52,105, 52,121 (1997).
18. Chittenden also has indicated that United Bank would be
merged into Western Massachusetts no later than September 30, 1999.
Both the proposed bank mergers are subject to the prior approval of
the FDIC under the Bank Merger Act.
During 1996 and 1997, the bank ranked second in the
percentage of home mortgage loans originated in its assessment area, and the number and dollar volume of its home
mortgage loans and its market share of all such loans
steadily increased during these two years. Chittenden Trust
also originated a higher percentage of its home mortgage
loans during 1996 and 1997 among low- and moderateincome ("LMI") borrowers than did lenders in the aggregate.
Examiners reported that Chittenden Trust provided a
broad range of loan products, including state and federal
supported affordable mortgage loan programs.19 Chittenden
Trust also has developed its own affordable mortgage loan
programs in response to the needs of the community it
serves. For example, the bank offers the Chittenden Affordable Real Estate ("CARE") Mortgage, which provides
home mortgage loans featuring flexible underwriting
guidelines to LMI borrowers. Chittenden Trust originated
approximately $6.7 million of CARE loans during 1996
and 1997.
Examiners cited consumer lending by Chittenden Trust
during 1997 as an indicator of the bank's responsiveness to
the needs of its community.20 Examiners also commended
Chittenden Trust for its responsiveness to a demand for
small business loans, noting that during 1996 it originated
nearly 23 percent of the total number of small business
loans made in its assessment area by reporting financial
institutions.21
In addition, examiners found that Chittenden Trust participated in community development lending in a manner
consistent with the needs of its assessment area. The bank
originated over $1.5 million of qualified community devel-
19. Commenters questioned whether Chittenden would expand its
support for affordable housing loans and multi-family housing projects
to compensate fully for the loss of support for these projects by
Vermont National. Commenters expressed particular concern that
Chittenden might not maintain Vermont National's level of support of
the Home Ownership Using Shared Equity ("HOUSE") program
sponsored by the Vermont Housing Finance Authority ("VHFA"),
which combines state subsidies, low-cost bank funding, and the assistance of nonprofit associations to provide affordable mortgages to
low-income homebuyers. Chittenden has indicated that it intends to
maintain funding for HOUSE in the same manner as provided by
Vermont National through the membership of its subsidiary bank,
Western Massachusetts, in the Federal Home Loan Bank of Boston.
Chittenden Trust also offers Federal Housing Administration and
Veterans Administration loans and loans sponsored by Vermont Rural
Housing Services.
20. Chittenden Trust made 29.8 percent of the total number of its
consumer loans and 23.7 percent of the total dollar volume of these
loans to low-income households, while low-income households represented 22.1 percent of total households in its assessment area. Chittenden Trust similarly made 27.3 percent of the total number of its
consumer loans, accounting for 25.4 percent of the total dollar amount
of its consumer loans, to moderate-income households, which represented 17.2 percent of total households in its assessment area.
21. More than 65 percent of the bank's loans were made to borrowers with gross annual revenues of $1 million or less, while reporting
lenders in the assessment area in the aggregate made less than
35 percent of their loans to borrowers in this category. In addition,
more than 75 percent of Chittenden Trust's small business loans and
all its small farm loans were originated in amounts under $100,000.
Legal Developments
503
opment loans in its assessment area during the period
covered in the CRA performance examination. The bank
also made 74 qualified community development investments, totaling $9.5 million, during this period.22
Chittenden Trust was considered by examiners to be
competitive in the banking hours it offered, the accessibility of its branches and alternative retail delivery systems,
and the variety of its banking products.23 For example,
Chittenden Trust's Basic Banking Account requires no
minimum balance and, for a $3 monthly fee, includes ten
checks a month and offers free ATM access. Chittenden
Trust also offers a free checking account to senior citizens.
Branch openings and closings during 1996 and 1997 were
reported not to have affected any LMI areas.24
The Board has carefully considered all the facts of record,
including the comments received, responses to these comments, and the CRA performance records of Chittenden
Trust, Vermont National, and the other subsidiary banks of
Chittenden and Vermont Financial, including relevant reports of examination and other supervisory information.
Based on a review of the entire record and for the reasons
discussed above, the Board concludes that convenience
and needs considerations, including the CRA records of
performance of the institutions involved, are consistent
with approval of the proposal.
B. Vermont National's CRA Performance Record
Financial, Managerial, and Other Supervisory Factors
In the most recent CRA performance examination of Vermont National, Vermont Financial's lead subsidiary bank,
examiners found that Vermont National extended credit to
borrowers of all income levels and to businesses of all
sizes throughout its assessment area. The Socially Responsible Banking Fund ("SRB Fund"), an independent division of the bank, contributed to this performance by offering the 1-4 Affordable Housing mortgage, which featured
flexible underwriting guidelines and below-market fixed
interest rates for residences in low-income housing
projects.25 The SRB Fund also offered mobile home and
manufactured housing loans and other innovative home
financing for LMI households. A fair lending review conducted concurrently with the CRA performance examination did not identify any violations of antidiscrimination
laws and regulations and noted that the bank had an effective fair lending compliance program in place.
The BHC Act also requires the Board, in acting on an
application, to consider the financial and managerial resources and future prospects of the companies and banks
involved in a proposal, the convenience and needs of the
community to be served, and certain other supervisory
factors.
The Board has carefully considered the financial and
managerial resources and future prospects of Chittenden
and Vermont Financial and their respective subsidiary
banks, and other supervisory factors in light of all the facts
of record. As part of this consideration, the Board has
reviewed relevant reports of examination and other supervisory information prepared by the Federal Reserve Bank
of Boston and other federal banking supervisory agencies,
including reports concerning the parties' data processing
systems. The Board notes that the bank holding companies
and their subsidiary banks are well capitalized and are
expected to remain so after consummation of the proposal.
The Board also has considered other aspects of the
financial condition and resources of the two organizations,
the structure of the proposed transaction, and the managerial resources of each of the entities and the combined
organization. Based on these and other facts of record, the
Board concludes that considerations relating to the financial and managerial resources and future prospects of Chittenden, Vermont Financial, and their respective subsidiaries are consistent with approval of the proposal, as are the
other supervisory factors that the Board must consider
under section 3 of the BHC Act.
22. Of this amount, $5 million was fully funded and $4.5 million
consisted of unfunded commitments at the time of the examination.
Funded investments included $1.4 million invested under programs
sponsored by the VHFA to develop four low-income housing projects.
23. Commenters raised concerns that branch closings, consolidations, and divestitures after consummation of the proposal would
reduce customer convenience, and that Chittenden Trust would not
offer certain consumer lending and deposit products currently offered
by Vermont National.
24. Commenters questioned whether job losses and community
disruptions might arise as a result of consolidations that would occur
after consummation of the proposal. Chittenden has described certain
steps it would take to minimize these effects, including posting notices
of job openings among Vermont Financial employees before consummation of the proposal and maintaining Chittenden's and Vermont
Financial's operations centers at their current locations.
25. Vermont National originated 64 mortgage loans totaling
$6.4 million under this program during 1996 and the first half of 1997.
Commenters commended Vermont Financial for the expertise and
leadership in community development activities that it has provided
through the SRB Fund, and expressed concern that Chittenden may
not retain this program and provide the same level of support for
state-supported affordable housing programs and community development programs. Chittenden has indicated that it intends to maintain
the SRB Fund, including its staff and advisory board, after consummation of the proposal.
C. Conclusion on Convenience and Needs
Considerations
Conclusion
Based on the foregoing, and in light of all the facts of
record, the Board has determined that the application
should be, and hereby is, approved. Approval of the application is specifically conditioned on compliance by Chittenden with all the commitments made in connection with
the proposal and with the conditions stated or referred to in
this order, including Chittenden's divestiture commitments.
For purposes of this transaction, the commitments and
conditions referred to in this order shall be deemed to be
conditions imposed in writing by the Board in connection
504
Federal Reserve Bulletin • July 1999
with its findings and decision and, as such, may be enforced in proceedings under applicable law.
The acquisition shall not be consummated before the
fifteenth calendar day after the effective date of this order,
and the proposal shall not be consummated later than three
months after the effective date of this order, unless such
period is extended for good cause by the Board or by the
Federal Reserve Bank of Boston, acting pursuant to delegated authority.
By order of the Board of Governors, effective May 12,
1999.
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Kelley, Meyer, and Ferguson. Absent and not voting:
Governor Gramlich.
ROBERT DEV. FRIERSON
Associate Secretary of the Board
Grand Isle County; and Belvidere, Cambridge, and Waterville in Lamoille County.
Middlebury:
Addison County, excluding the city of Vergennes and
the towns of Addison, Ferrisburg, Goshen, Granville, Hancock, Monkton, Panton, Starksboro, and Waltham.
Rutland:
Rutland RMA and the towns of Benson, Pittsfield, Poultney, Sherburne, and West Haven in Rutland County and
Goshen in Addison County.
Springfield:
The towns of Athens, Grafton, Rockingham, and Westminster in Windham County and Andover, Baltimore, Cavendish, Chester, Londonderry, Jamaica, Ludlow, Reading,
Springfield, Wethersfield, Weston, and Windham in Windsor County.
Vergennes:
The city of Vergennes and the towns of Addison, Ferrisburg, Panton, and Waltham in Addison County.
Appendix A
Appendix B
Banking Markets in which Chittenden and Vermont
Financial Directly Compete
Massachusetts
Boston:
Boston Rand McNally Marketing Area ("RMA") and
the town of Lyndeboro in New Hampshire.
Springfield:
Springfield RMA and the towns of Otis in Berkshire
County; Deerfield, Leverett, Shutesbury, and Whately in
Franklin County; Blandford, Chester, Granville, and
Tolland in Hampden County; Chesterfield, Cummington,
Goshen, Pelham, Plainfield, Westhampton, and Worthington in Hampshire County; and Hardwick and Warren in
Worcester County.
Vermont
Barre-Montpelier:
Barre-Montpelier RMA and the towns of Groton, Hardwick, Stannard, and Walden in Caledonia County; Chelsea
and Topsham in Orange County; and Cabot, Duxbury,
Roxbury, and Woodbury in Washington County.
Bennington:
Bennington County, excluding the towns of Readsboro
and Stamford, and the towns of Danby, Pawlet, Wells, and
West Pawlet in Rutland County.
Brattleboro:
The towns of Brattleboro, Brookline, Dummerston, Guilford, Halifax, Marlboro, Newfane, Putney, Townsend, and
Vernon in Windham County and the town of Hinsdale in
New Hampshire.
Burlington-St. Albans:
Burlington RMA and Franklin County and the towns of
Monkton and Starksboro in Addison County; Bolton,
Buel's Gore, Huntington, Underhill, and Westford in Chittenden County; Alburg, Grand Isle, and Isle La Motte in
Banking Markets in Massachusetts
Boston:
Chittenden is the 179th largest depository institution in
the market, controlling deposits of $11.6 million, representing less than 1 percent of market deposits. Vermont Financial is the 142d largest depository institution in the market,
controlling deposits of $27.3 million, also representing less
than 1 percent of market deposits. On consummation of the
proposal, Chittenden would become the 118th largest depository institution in the market, controlling deposits of
$38.9 million, representing less than 1 percent of market
deposits. The HHI would remain unchanged at 1373.
Springfield:
Chittenden is the seventh largest depository institution in
the market, controlling deposits of $228.8 million, representing approximately 4 percent of market deposits. Vermont Financial is the 18th largest depository institution in
the market, controlling deposits of $64 million, representing approximately 1.1 percent of market deposits. On consummation of the proposal, Chittenden would become the
fifth largest depository institution in the market, controlling
deposits of $292.8 million, representing approximately
5.2 percent of market deposits. The HHI would increase
9 points to 1205.
Appendix C
Banking Markets in Vermont
Bennington:
Chittenden is the third largest depository institution in
the market, controlling deposits of $102.8 million, representing approximately 20.9 percent of market deposits.
Vermont Financial is the fourth largest depository institution in the market, controlling deposits of $53.9 million,
representing approximately 11 percent of market deposits.
Legal Developments
Chittenden proposes to divest one branch with deposits of
approximately $53.9 million to a suitable competitor. After
the proposed merger and divestiture, Chittenden would
remain the third largest of seven depository institutions in
the market, controlling deposits of $102.8 million, representing approximately 20.9 percent of market deposits.
Thus, Chittenden's market share would not increase in this
market. Assuming that Chittenden would sell branches to a
suitable in-market competitor, the HHI would increase not
more than 112 points to 1872.
Brattleboro:
Chittenden is the fourth largest depository institution in
the market, controlling deposits of $26 million, representing approximately 5.8 percent of market deposits. Vermont
Financial is the largest depository institution in the market,
controlling deposits of $206.8 million, representing approximately 46.1 percent of market deposits. Chittenden
proposes to divest one branch with deposits of approximately $28.5 million. After the proposed merger and divestiture, Chittenden would become the largest of eight depository institutions in the market, controlling deposits of
$204.3 million, representing approximately 45.5 percent of
market deposits. The HHI would decrease 45 points to
3234.
Middlebury:
Chittenden is the second largest depository institution in
the market, controlling deposits of $68.8 million, representing approximately 25 percent of market deposits. Vermont
Financial is the fourth largest depository institution in the
market, controlling deposits of $22.3 million, representing
approximately 8.4 percent of market deposits. Chittenden
proposes to divest one branch with deposits of approximately $22.3 million to a suitable competitor. After the
proposed merger and divestiture, Chittenden would remain
the second largest of six depository institutions in the
market, controlling deposits of $68.8 million, representing
approximately 25 percent of market deposits. Thus, Chittenden's market share would not increase in this market.
Assuming that Chittenden would sell branches to a suitable
in-market competitor, the HHI would increase not more
than 47 points to 2332.
Rutland:
Chittenden is the fourth largest depository institution in
the market, controlling deposits of $117.6 million, representing approximately 14.6 percent of market deposits.
Vermont Financial is the third largest depository institution
in the market, controlling deposits of $135.7 million, representing approximately 17.6 percent of market deposits.
Chittenden proposes to divest two branches in the Rutland
banking market with total deposits of $54.7 million. After
the proposed merger and divestiture, Chittenden would
become the second largest of seven depository institution
in the market, controlling deposits of $193.6 million, representing approximately 25.1 percent of market deposits. The
HHI would increase 158 points to 2141.
Springfield:
Chittenden is the second largest depository institution in
the market, controlling deposits of $83.8 million, representing approximately 21.4 percent of market deposits. Ver-
505
mont Financial is the largest depository institution in the
market, controlling deposits of $141.5 million, representing approximately 36.1 percent of market deposits. Chittenden proposes to divest three branches with total deposits
of $68.1 million. After the proposed merger and divestiture, Chittenden would become the largest of eight depository institutions in the market, controlling deposits of
$157.2 million, representing approximately 40.1 percent of
market deposits. The HHI would increase 150 points to
2428.
Vergennes:
Chittenden is the largest depository institution in the
market, controlling deposits of $33.6 million, representing
approximately 55.1 percent of market deposits. Vermont
Financial is the second largest depository institution in the
market, controlling deposits of $18.7 million, representing
approximately 30.7 percent of market deposits. Chittenden
proposes to divest one branch with deposits of $18.7 million. After the proposed merger and divestiture, Chittenden
would remain the largest of three depository institutions in
the market, controlling deposits of $33.6 million, representing approximately 55.1 percent of market deposits. The
HHI would remain unchanged at 4181.
Orders Issued Under Sections 3 and 4 of the Bank
Holding Company Act
BOK Financial Corporation
Tulsa, Oklahoma
BOKF Merger Corporation
Number Seven
Tulsa, Oklahoma
Order Approving Acquisition of a Bank Holding
Company
BOK Financial Corporation ("BOK Financial"), a bank
holding company within the meaning of the Bank Holding
Company Act ("BHC Act"), and BOKF Merger Corporation Number Seven ("Merger Corporation") have requested the Board's approval under section 3 of the BHC
Act (12 U.S.C. § 1842) to acquire First Bancshares of
Muskogee, Inc. ("First Bancshares"), and its wholly
owned subsidiary, First National Bank and Trust Company
of Muskogee ("First National"), both of Muskogee, Oklahoma.1 BOK Financial and Merger Corporation also have
requested the Board's approval under section 4(c)(8) of the
BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.24 of
the Board's Regulation Y (12 C.F.R. 225.24) to acquire First
1. Merger Corporation has filed an application to become a bank
holding company in connection with the proposed transaction. Merger
Corporation and First Bancshares would merge, with Merger Corporation as the survivor. BOK Financial proposes to merge First National
into BOK Financial's subsidiary bank, Bank of Oklahoma, National
Association ("BOK"), on consummation of the proposal, subject to
approval by the Office of the Comptroller of the Currency under the
Bank Merger Act.
506
Federal Reserve Bulletin • July 1999
of Muskogee Insurance Corporation, Muskogee, Oklahoma ("First Insurance"), and thereby engage in creditrelated insurance agency activities pursuant to section
225.28(b)(ll)(i) of the Board's Regulation Y (12 C.F.R.
225.28(b)(ll)(i)).
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(64 Federal Register 1804 (1999)). The time for filing
comments has expired, and the Board has considered the
proposal and all comments received in light of the factors
set forth in sections 3 and 4(c)(8) of the BHC Act.
BOK Financial, with total consolidated assets of
$6.8 billion, operates banks in Oklahoma, Arkansas, New
Mexico, and Texas, and engages through nonbanking subsidiaries in permissible leasing and securities-related activities. BOK Financial is the largest depository institution in
Oklahoma, controlling deposits of $3.5 billion, representing approximately 10.5 percent of total deposits in insured
depository institutions in the state ("state deposits").2 First
Bancshares is the 23d largest depository organization in
Oklahoma, controlling deposits of $218 million, representing less than 1 percent of state deposits. On consummation
of the proposal, BOK Financial would remain the largest
banking organization in Oklahoma, controlling deposits of
$3.7 billion, representing approximately 11.2 percent of
state deposits.
Competitive
Considerations
Section 3 of the BHC Act prohibits the Board from approving a proposal that would result in a monopoly in any
relevant banking market. That section also prohibits the
Board from approving a proposal that may substantially
lessen competition in any relevant banking market, unless
the anticompetitive effects of the proposal are clearly outweighed in the public interest by the probable effect of the
proposal in meeting the convenience and needs of the
community to be served.3
In order to determine the effect of a particular transaction
on competition, it is necessary to designate the area of
effective competition between the parties, which the courts
have held is decided by reference to the relevant "line of
commerce" or product market and a geographic market.
The Board and the courts have consistently recognized that
the appropriate product market for analyzing the competitive effects of bank mergers and acquisitions is the cluster
of products (various kinds of credit) and services (such as
checking accounts and trust administration) offered by
banking institutions.4 Consistent with this precedent, and
2. All asset, deposit, and ranking data are as of June 30, 1998. In
this context, depository institutions include commercial banks, savings banks, and savings associations.
3. 12 U.S.C. § 1842(c)(1).
4. See Chemical Banking Corporation, 82 Federal Reserve Bulletin
239 (1996) ("Chemical"), and the cases and studies cited therein. The
Supreme Court has emphasized that it is the cluster of products and
services that, as a matter of trade reality, makes banking a distinct line
of commerce. See United States v. Philadelphia National Bank,
374 U.S. 321, 357 (1963) ("Philadelphia National"); accord United
on the basis of the facts of record in this case, the Board
concludes that the cluster of banking products and services
represents the appropriate line of commerce for analyzing
the competitive effects of this proposal.
Once the relevant line of commerce or product market
has been defined, the appropriate geographic market in
which competition for the supply and demand of the line of
commerce occurs must be defined. In defining the relevant
geographic market, the Board consistently has sought to
identify the area in which the cluster of products and
services is provided by the competing institutions and in
which purchasers of the products and services seek to
obtain these products and services.5 The Supreme Court
has indicated that this is the area in which the effect of an
acquisition will be direct and immediate.6 In applying these
standards to bank acquisition proposals, the Board and the
Court consistently have held that the geographic market for
the cluster of services is local in nature.7
The Muskogee Banking Market
BOK and First Financial operate in Muskogee, Oklahoma.
In determining the geographic market to be applied in this
case, the Board notes that the city of Muskogee is significantly larger than any other community in the surrounding
area, and provides substantially more employment opportunities, professional and commercial services, and retail
outlets than the surrounding communities.8
Commuting between the surrounding communities and
Muskogee appears to be extensive. Divided four-lane high-
States v. Connecticut National Bank, 418 U.S. 656 (1974); Phillipsburg National Bank, 399 U.S. 350 (1969) ("Phillipsburg National").
5. See, e.g., Sunwest Financial Services, Inc., 73 Federal Reserve
Bulletin 463 (1987); Pikeville National Corporation, 71 Federal Reserve Bulletin 240 (1985); Wyoming Bancorporation, 68 Federal
Reserve Bulletin 313 (1982), aff'd 729 F.2d 687 (10th Cir. 1984).
6. Philadelphia National, 374 U.S. at 357 (1963). In that case, the
Court stated that the "area of effective competition in the known line
of commerce must be charted by careful selection of the market area
in which the seller operates, and to which the purchaser can practicably turn for supplies." Id. at 359 (emphasis in orginal) (quoting Tampa
Electric Co. v. Nashville Coal Co., 365 U.S. 320, 327 (1961)).
7. See Philadelphia National, 374 U.S. at 357; Phillipsburg National; First Union Corporation, 84 Federal Reserve Bulletin 489
(1998); Chemical; St. Joseph Valley Bank, 68 Federal Reserve Bulletin 673 (1982) ("St. Joseph"). In determining the geographic scope of
local banking markets, the Board considers a number of factors,
including the following: population density; worker commuting patterns (as indicated by census data); shopping patterns; the availability
and geographic reach of various modes of advertising; the presence of
shopping, employment, health care, and other necessities; the availability of transportation systems and routes; branch banking patterns;
deposit and loan activity; and other indicia of economic integration
and the transmission of competitive forces among depository institutions that affect the pricing and availability of banking products and
services. See Crestar Bank, 81 Federal Reserve Bulletin 200, 201 n.5
(1995); Pennbancorp, 69 Federal Reserve Bulletin 548 (1983);
St. Joseph.
8. The population of the Muskogee Ranally Metropolitan Area,
which closely approximates the city of Muskogee and immediately
adjacent communities, is approximately 50,000. The next largest
towns in the area are Tahlequah (population 11,965); Wagoner (population 7,242); and Checotah (population 3,290).
Legal Developments
ways connect Muskogee with the towns of Tahlequah,
Wagoner, and Checotah, and traffic counts indicate that a
substantial majority of the daily trips on these roads are
between the four communities.9 Within a 10-mile radius of
Muskogee, approximately 2,400 businesses employ almost
28,000 workers, which exceeds the available workforce of
21,500 in that area. A survey of the 17 largest employers in
the Muskogee area, which employ 7,267 workers, found
that 30 percent of their workers lived outside Muskogee
and the nearby community of Ft. Gibson.10 In addition, the
Oklahoma Department of Commerce divides the state of
Oklahoma into 23 labor markets. The department includes
Muskogee in the Muskogee-Tahlequah labor market, which
comprises all of Muskogee County, all of Cherokee County
(including Tahlequah), the eastern half of Wagoner County
(including Wagoner), the northern half of Mcintosh County
(including Checotah), and Adair County.11
Muskogee also offers a broad range of goods and services that are unavailable in the surrounding communities
and that attract residents to Muskogee. Muskogee has a
336-bed hospital staffed by more than 200 physicians, a
Veterans Adminstration hospital, 160 businesses in the
health services industry, and an enclosed mall that features
three major national department store anchors and several
other national retail chains. Data from the mall's anchor
stores indicate that only 40 percent of their sales are
derived from Muskogee residents, and that the majority of
the their business is from residents of the surrounding
communities.12 A survey conducted by the Federal Reserve
Bank of Kansas City ("Reserve Bank") revealed that
55 percent of respondents in Tahlequah traveled to Muskogee at least once a month, including 13 percent who
reported that they traveled to Muskogee at least once a
week. In Wagoner, 70 percent of respondents indicated that
they traveled to Muskogee at least once a month, including
32 percent who traveled to Muskogee at least once a week.
Newspaper circulation statistics also indicate that there
is extensive economic interaction between Muskogee and
Tahlequah. Approximately 22 percent of Tahlequah households receive the daily Muskogee newspaper, which features stories about events in Tahlequah and advertisements
9. For example, more than 10,000 vehicles pass daily between
Tahlequah and Muskogee on U.S. Highway 62. East of Tahlequah and
west of Muskogee, this highway has two lanes and the traffic count
drops to 1,500, according to the Oklahoma Department of Transportation.
10. The statistics are from a survey by the Greater Muskogee
Development Corporation. The survey indicated that 13.7 percent of
the workforce in Tahlequah was employed in Muskogee County. Data
from the 1990 United States census indicate that 23 percent of the
workforce in the town of Checotah and 19 percent of the workforce in
the town of Wagoner were employed in Muskogee County.
11. In response to a survey conducted by the Federal Reserve Bank
of Kansas City, the Tahlequah office of the Oklahoma Employment
Security Commission reported that it placed 10 percent to 15 percent
of its applicants in jobs in Muskogee, and employment services in
Muskogee indicated that 10 percent to 20 percent of their applicants
were from Tahlequah.
12. Tahlequah residents provided approximately 10 percent of the
stores' receipts, and sales to residents of Wagoner and Checotah
approximated their percentage of the area population.
507
by Tahlequah businesses.13 In addition, both the daily and
the weekly newspaper in Tahlequah regularly carry news
stories about events in Muskogee and advertisements by
Muskogee businesses.14 All four radio stations in Muskogee advertise in the Tahlequah newspaper and carry advertisements for Tahlequah businesses. The local telephone
book for the "Muskogee-Tahlequah Region" combines
listings for businesses in those two communities, Wagoner,
Checotah, and other small towns in the area.
Discussions by the Reserve Bank with local bankers and
business and civic leaders also indicated that businesses in
Tahlequah regularly seek financial services in Muskogee,
and that the distance between the communities is not a
significant impediment.15 Based on Reserve Bank surveys,
it further appears that there is little or no difference in
prices for banking products and services among Muskogee
and the surrounding communities, including Tahlequah.
Based on the foregoing and all other facts of record, the
Board concludes that the appropriate banking market for
considering the competitive effects of this case is the
cluster of banking products and services, and that the
appropriate geographic market for considering the competitive effects of this proposal is the area that includes
Muskogee County, Cherokee County (including Tahlequah), the eastern half of Wagoner County (including
Wagoner), and the town of Checotah in Mcintosh County,
all in Oklahoma (the "Muskogee banking market").
In the Muskogee banking market, BOK Financial is the
third largest depository institution, controlling deposits of
$148 million, representing approximately 12.8 percent of
all deposits held by depository institutions in the market
("market deposits").16 First Bancshares is the second largest depository institution in the market, controlling deposits of $217 million, representing approximately 18.9 percent of market deposits. On consummation of the proposal,
BOK Financial would become the largest depository institution in the Muskogee banking market, controlling deposits of $365 million, representing approximately 31.7 percent of market deposits. The concentration of market
deposits, as measured by the Herfindahl-Hirschman Index
13. In addition, more than one-third of the households in Wagoner
and three-fourths of the households in Checotah receive the Muskogee
daily newspaper.
14. An independent newspaper circulation audit firm has determined that the newspaper market for the Muskogee daily newspaper
includes all of Muskogee County, western portions of Cherokee
County (including Tahlequah), eastern portions of Wagoner County
(including Wagoner), and northeastern portions of Mcintosh County
(including Checotah).
15. The Tehlequah office of Oklahoma Small Business Development Center indicated that it often refers its small business clients in
Tahlequah to banks in Muskogee to obtain financing.
16. Market share data are based on calculations in which the
deposits of thrift institutions are included at 50 percent. The Board
previously has indicated that thrift institutions have become, or have
the potential to become, significant competitors of commercial banks.
See Midwest Financial Group, 75 Federal Reserve Bulletin 386
(1989); National City Corporation, 70 Federal Reserve Bulletin 743
(1984). Thus, the Board has regularly included thrift institutions in the
calculation of market shares on a 50-percent weighted basis. See, e.g.,
First Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991).
508
Federal Reserve Bulletin • July 1999
("HHI"), would not exceed the threshold level set in the
Department of Justice Merger Guidelines ("DOJ Guidelines").17
In reviewing the likely competitive effects of the proposal in the Muskogee banking market, the Board has
considered all the facts of record. Twelve commercial
banks, including BOK Financial, and two savings associations would remain in the market after consummation of
the proposal, which represents a large number of competitors relative to the size of the market.18 One competing
commercial bank would control more than 20 percent of
market deposits, and 5 additional competing commercial
banks would each control at least five percent of market
deposits.
The market also appears attractive for additional entry.
From 1990 to 1998, household income increased 33 percent in Muskogee County and 39.1 percent in Cherokee
County, compared to an average statewide increase of
19.5 percent. Deposits also increased at a higher percentage than the statewide average Total deposits in insured
depository institutions increased 20.2 percent in Muskogee
County and 14.7 percent in Cherokee County, compared to
an average increase of 14.6 percent statewide. Cherokee
County's population increased 14.3 percent from 1990 to
1998, compared to an average statewide increase of
2.4 percent.
Thus, the market structure and other characteristics of
the Muskogee banking market, including the significant
number of depository institutions in the market, the market
shares and resources of those institutions, and the potential
for entry by additional competitors, reduce the likelihood
of successful anticompetitive pricing or collusion in the
market. As in other cases, the Board sought comments
from the Department of Justice, the Federal Deposit Insurance Corporation ("FDIC"), and the Office of the Comptroller of the Currency ("OCC") on the competitive effects
of the proposal. Neither the FDIC nor the OCC have
objected to the proposal.19
Based on all the facts of record, and for the reasons
discussed above, the Board concludes that consummation
of the proposal would not result in a monopoly or have a
significantly adverse effect on competition or on the con-
17. On consummation of the proposal, the HHI would increase 484
points to 1705. Under the DOJ Guidelines (49 Federal
Register
26,823 (June 29, 1984)), a market in which the post-merger HHI is
between 1000 and 1800 is considered to be moderately concentrated.
The Department of Justice has informed the Board that a bank merger
or acquisition generally will not be challenged (in the absence of other
factors indicating anticompetitive effects) unless the post-merger HHI
is at least 1800 and the merger increases the HHI by more than 200
points. The Department of Justice has stated that the higher than
normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effects of limitedpurpose lenders and other nondepository financial entities.
18. In addition, BOK Financial has contracted, after consummation
of the proposal, to divest two offices and $2 million of deposits in
Muskogee to an in-market commercial bank. After accounting for this
divestiture, the HHI would increase 473 points to 1695.
19. The Department of Justice has advised the Board that the
proposal is under review.
centration of banking resources in the Muskogee banking
market or any other relevant banking market.
Financial, Managerial, and Other Considerations
The BHC Act also requires the Board to consider the
financial and managerial resources and future prospects of
the companies and banks involved in the proposal, the
convenience and needs of the community to be served, and
certain supervisory factors. The Board has reviewed these
factors in light of all the facts of record, including supervisory reports of examination assessing the financial and
managerial resources of the organizations. Based on all the
facts of record, the Board concludes that the financial and
managerial resources and future prospects of BOK Financial, First Bancshares, and their respective subsidiaries are
consistent with approval. Considerations related to the
convenience and needs of the community and the other
supervisory factors the Board must consider under section
3 of the BHC Act also are consistent with approval.
Nonbanking Activities
BOK Financial also has filed a notice under section 4(c)(8)
of the BHC Act to acquire First Bancshares' nonbanking
subsidiary, First Insurance, and thereby engage in creditrelated insurance agency activities. The Board has determined by regulation that providing credit-related insurance
is closely related to banking for purposes of the BHC
Act.20 BOK Financial has committed to conduct this nonbanking activity in accordance with the limitations set
forth in Regulation Y and the Board's orders and interpretations governing this activity.
In order to approve a notice under section 4(c)(8) of the
BHC Act, the Board also must determine that the proposed
activities are a proper incident to banking, that is, that the
proposal "can reasonably be expected to produce benefits
to the public . . . that outweigh possible adverse effects,
such as undue concentration of resources, decreased or
unfair competition, conflicts of interests, or unsound banking practices."21 As part of its evaluation of these factors,
the Board considers the financial condition and managerial
resources of the notificant and its subsidiaries, including
the companies to be acquired, and the effect of the proposed transaction on those resources. Based on all the facts
of record, the Board has concluded that financial and
managerial considerations are consistent with approval of
the notice.
BOK currently does not provide credit-related insurance
and, therefore, the proposed acquisition would not result in
a loss of competition in any market. Based on all the facts
of record, the Board has concluded that the proposal would
not result in any significantly adverse competitive effects in
any relevant market. In addition, as the Board has previously noted, there are public benefits to be derived from
20. See 12 C.F.R. 225.28(b)(ll)(i).
21. 12U.S.C. § 1843(c)(8).
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permitting capital markets to operate so that bank holding
companies can make potentially profitable investments in
nonbanking companies and from permitting banking organizations to allocate their resources in the manner they
consider to be most efficient when such investments and
actions are consistent, as in this case, with the relevant
considerations under the BHC Act.22
The Board also concludes that the conduct of the proposed nonbanking activity within the framework established under Regulation Y is not likely to result in adverse
effects, such as undue concentration of resources, decreased or unfair competition, conficts of interests, or unsound banking practices, that would outweigh the public
benefits of the proposal, such as increased customer convenience and gains in efficiency. Accordingly, based on all
the facts of record, the Board has determined that the
balance of public benefits that the Board must consider
under the proper incident to banking standard of section
4(c)(8) of the BHC Act is favorable and consistent with
approval of BOK Financial's notice.
Conclusion
Based on the foregoing, and in light of all the facts of
record, the Board has determined that the applications and
notice should be, and hereby are, approved. Approval of
the applications and notice is specifically conditioned on
compliance by BOK Financial with all the commitments
made in connection with the proposal and with the conditions stated or referred to in this order. The Board's determination on nonbanking activity also is subject to all the
terms and conditions set forth in sections 225.7 and
225.25(c) (12 C.F.R. 225.7 and 25.25(c)), 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
thereunder. For purposes of this order, the commitments
and conditions referred to above are deemed to be conditions imposed in writing by the Board in connection with
its findings and decision and, as such, may be enforced in
proceedings under applicable law.
The acquisition of First National shall not be consummated before the thirtieth calendar day after the effective
date of this order, and the proposal may 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 Reserve Bank, acting pursuant to delegated
authority.
By order of the Board of Governors, effective May 24,
1999.
22. See, e.g., Banc One Corporation, 84 Federal Reserve
553 (1998); First Union Corporation, 84 Federal Reserve
489 (1998).
Bulletin
Bulletin
509
Voting for this action: Vice Chair Rivlin and Governors Kelley,
Meyer, Ferguson, Gramlich. Absent and not voting: Chairman Greenspan.
ROBERT DEV. FRIERSON
Associate Secretary of the Board
Deutsche Bank AG
Frankfurt am Main, Germany
Order Approving an Application to Become a Bank
Holding Company and Notices to Acquire Nonbanking
Companies
Deutsche Bank AG ("Deutsche Bank"), a foreign banking
organization subject to the Bank Holding Company Act
("BHC Act"), has requested the Board's approval under
section 3 of the BHC Act (12 U.S.C. § 1842) to become a
bank holding company by acquiring all the voting shares of
Bankers Trust Corporation, New York, New York ("BT
Corp"), and its wholly owned subsidiary banks, Bankers
Trust Company, New York, New York ("Bankers Trust");
Bankers Trust (Delaware), Wilmington, Delaware ("Delaware Bank"); and Bankers Trust Florida, N.A., Palm
Beach, Florida ("Florida Bank").1 Deutsche Bank also has
requested the Board's approval under section 4(c)(8) of the
BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.24 of
the Board's Regulation Y (12 C.F.R. 225.24) to acquire the
nonbanking subsidiaries of BT Corp and thereby engage
worldwide in certain permissible nonbanking activities.2 In
addition, Deutsche Bank proposes to acquire the Edge
corporations of BT Corp pursuant to section 25A of the
Federal Reserve Act (12 U.S.C. § 611 et seq.) and the
Board's Regulation K (12 C.F.R. 211). 3
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published (64
Federal Register 5061 (1999)). The time for filing comments has expired, and the Board has considered the proposal and all comments received in light of the factors set
forth in sections 3 and 4 of the BHC Act.
Deutsche Bank, with total consolidated assets of
$734 billion, is the largest bank in Germany and one of the
largest banking organizations in the world.4 Deutsche Bank
operates a branch in New York, New York, which controls
1. Deutsche Bank proposes to acquire BT Corp by merging an
indirect, wholly owned acquisition subsidiary with and into BT Corp,
with BT Corp as the surviving company. Deutsche Bank also proposes
to hold BT Corp through an intermediate holding company in the
United States. Because this intermediate company would indirectly
control a U.S. bank, it would be a bank holding company for purposes
of the BHC Act.
2. The nonbanking activities in which BT Corp engages and for
which Deutsche Bank has sought Board approval under section 4 of
the BHC Act are listed in the Appendix.
3. Deutsche Bank also has requested the Board's approval to hold
and exercise an option to acquire up to 19.9 percent of the shares of
BT Corp's common stock. The option would expire on consummation
of the proposal.
4. Asset and ranking data are as of December 31, 1998, and are
based on exchange rates then applicable.
510
Federal Reserve Bulletin • July 1999
$21.9 billion in deposits in New York State,5 and a representative office in San Francisco, California. Deutsche
Bank also engages in a broad range of permissible nonbanking activities in the United States through subsidiaries,
including underwriting and dealing in debt and equity
securities to a limited extent.
BT Corp, with total consolidated assets of $133 billion,
is the eighth largest commercial banking organization in
the United States, and the third largest commercial banking
organization in New York, controlling deposits of approximately $26.8 billion in the state. BT Corp also engages in a
broad range of permissible nonbanking activities in the
United States, including underwriting and dealing in debt
and equity securities to a limited extent.
The proposal would represent the largest acquisition by
a foreign bank of a U.S. banking organization to date. On
consummation of the proposal, Deutsche Bank would become the largest commercial banking organization in the
world ranked by assets.
Factors Governing Board Review of Transaction
The BHC Act sets forth the factors that the Board must
consider when reviewing the formation of a bank holding
company or the acquisition of banks. These factors are the
competitive effects of the proposal in the relevant geographic markets; the financial and managerial resources
and future prospects of the companies and banks involved
in the proposal; the convenience and needs of the community to be served, including the records of performance
under the Community Reinvestment Act (12 .S.C. §2901
et seq.) ("CRA") of the insured depository institutions
involved in the transaction; the availability of information
needed to determine and enforce compliance with the BHC
Act and other applicable federal banking law; and, in the
case of applications involving a foreign bank such as
Deutsche Bank, whether the foreign bank is subject to
comprehensive supervision and regulation on a consolidated basis by its home country supervisor. In cases involving interstate bank acquisitions, the Board also must consider the concentration of deposits in the nation and
relevant individual states, as well as compliance with other
provisions of section 3(d) of the BHC Act.
The Board has considered these factors in light of a
comprehensive record that includes information provided
by Deutsche Bank, confidential supervisory and examination information, and publicly reported financial and other
information. The Board also has considered information
collected from the primary home country supervisors of
Deutsche Bank and various federal and state agencies,
including the New York State Banking Department, the
United States Department of State ("State Department"),
and other relevant agencies. In addition, the Board has
considered information provided by public commenters in
connection with the proposal.6
5. Deposit data are as of June 30, 1998.
6. The Board received comments from 17 public commenters.
Interstate Analysis
Section 3(d) of the BHC Act allows the Board to approve
an application by a bank holding company to acquire
control of a bank located in a state other than the home
state of the bank holding company if certain conditions are
met. For purposes of the BHC Act, the home state of
Deutsche Bank is New York,7 and the subsidiary banks of
BT Corp are located in New York, Delaware, and Florida.8
All the conditions for an interstate acquisition enumerated
in section 3(d) are met in this case.9 In light of all the facts
of record, the Board is permitted to approve the proposal
under section 3(d) of the BHC Act.
Competitive
Considerations
Section 3 of the BHC Act prohibits the Board from approving a proposal that would result in a monopoly. The BHC
Act also prohibits the Board from approving a proposed
bank acquisition that would substantially lessen competition in any relevant banking market unless the anticompetitive effects of the proposal are clearly outweighed in the
public interest by the probable effect of the proposal in
meeting the convenience and needs of the community to be
served.10
Deutsche Bank and BT Corp control banking operations
that compete directly in the New York/New Jersey Metropolitan banking market ("New York banking market").11
On consummation of the proposal, Deutsche Bank would
control deposits of $48.7 billion, including the deposits in
Deutsche Bank's New York branch, in the New York
banking market. After the transaction, the market would
7. A bank holding company's home state is that state in which the
total deposits of all banking subsidiaries of such company were the
largest on July 1, 1966, or the date on which the company became a
bank holding company, whichever is later. 12 U.S.C. § 1841(o)(4)(C).
On consummation of the proposal, Deutsche Bank would become a
bank holding company, and the state in which the total deposits of its
U.S. banking subsidiaries are the largest would be New York.
8. For purposes of section 3(d), the Board considers a bank to be
located in the states in which the bank is chartered, headquartered, or
operates a branch.
9. Deutsche Bank is adequately capitalized and adequately managed, as defined by applicable law. 12 U.S.C. § 1842(d)(1)(A). Delaware ank and Florida Bank have been in existence and operated
continuously for at least the period of time required by applicable state
laws. See 12 U.S.C. § 1842(d)(1)(B); Del. Code Ann. tit. 5, § 795
(1997) (5 years); Fla. Stat. ch. 658.295 (1997) (3 years). Deutsche
Bank and BT Corp do not operate insured depository institutions in
the same states, and, on consummation of the proposal, Deutsche
Bank and its affiliates would control less than 10 percent of the total
amount of deposits of insured depository institutions in the United
States. 12 U.S.C. § 1842(d)(2). All other requirements of section 3(d)
of the BHC Act would be met on consummation of the proposal.
10. 12 U.S.C. § 1842(c)(1).
11. The New York banking market includes New York City; Nassau, Orange, Putnam, Rockland, Suffolk, Sullivan, and Westchester
Counties in New York; Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union,
Warren, and a portion of Mercer Counties in New Jersey; Pike County
in Pennsylvania; and portions of Fairfield and Litchfield Counties in
Connecticut.
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remain unconcentrated, as measured by the HerfindahlHirschman Index ("HHI") under the Department of Justice
Merger Guidelines ("DOJ Guidelines").12 In addition, numerous competitors would remain in the New York banking market. Based on these and all other facts of record, the
Board concludes that consummation of the proposal would
not result in any significantly adverse effects on competition or on the concentration of banking resources in the
New York banking market or any other relevant banking
market.
Financial and Managerial
Considerations
The Board has carefully considered the financial and managerial resources and future prospects of the companies
and banks involved in the proposal, the effect the proposed
transaction would have on such resources, and other supervisory factors in light of all the facts of record, including
public comments.13
In evaluating the financial and managerial factors, the
Board has considered the terms of the merger, including
the proposed financing arrangements for the transaction.
The Board also has reviewed the proposed structure of the
combined organization, including proposals to restructure
the current operations of BT Corp, and various commitments made by Deutsche Bank regarding the proposal and
the restructuring. In particular, the Board has considered
that Deutsche Bank proposes to hold BT Corp and its
subsidiaries, including BT Alex. Brown Incorporated ("BT
Alex. Brown"), and Deutsche Bank's U.S. nonbanking
operations, through a registered bank holding company
located in the United States. In addition, the Board has
reviewed confidential examination and other supervisory
information assessing the financial and managerial strength
of Deutsche Bank and its subsidiaries and of BT Corp and
its subsidiaries, including Bankers Trust in particular.
12. See 49 Federal Register 26,823 (June 29, 1984). Under the DOJ
Guidelines, a market in which the post-merger HHI is less than 1000
points is considered to be unconcentrated. The Department of Justice
has informed the Board that a bank merger or acquisition generally
will not be challenged (in the absence of other factors indicating
anticompetitive effects) unless the post-merger HHI is at least 1800
and the merger increases the HHI by more than 200 points. The
Department of Justice has stated that the higher than normal HHI
thresholds for screening bank mergers for anticompetitive effects
implicitly recognize the competitive effects of limited-purpose lenders
and other nondepository financial entities. The HHI in the New York
banking market would remain less than 1000 points after consummation of the proposal.
13. Several commenters expressed concerns about the financial and
managerial resources of Deutsche Bank and BT Corp. The comments
included contentions that: (i) Deutsche Bank's financial resources
may be impaired by the Holocaust-related class action lawsuits filed
against the bank; (ii) Deutsche Bank has inadequate operating systems
and back office arrangements; (iii) BT Corp has made risky investments in Russia and Indonesia and has insufficient risk management
policies and programs; (iv) the executive officers of BT Corp receive
excessive compensation; and (v) BT Corp's management has demonstrated inadequacies in its involvement with Delta Funding Corporation, Woodbury, New York ("Delta"). The Board also has considered
these comments, as relevant, in reviewing the convenience and needs
factor in this case.
511
Moreover, the Board has reviewed information submitted
by Deutsche Bank about the programs that Deutsche Bank
and BT Corp have implemented to prepare their systems
for the Year 2000 and confidential examination and supervisory information assessing the organizations' efforts to
ensure Year 2000 readiness, both before and after the
proposed transaction.
In evaluating financial factors in expansion proposals by
banking organizations, the Board consistently has considered capital adequacy to be especially important.14 The
Board expects banking organizations contemplating expansion to maintain strong capital levels substantially in excess of the minimum levels specified in the Board's Capital
Adequacy Guidelines. Deutsche Bank's capital ratios exceed the minimum levels that would be required under the
Basle Capital Accord, and are considered equivalent to the
capital that would be required of a U.S. banking organization. Moreover, the proposed transaction would not materially affect the capital of Deutsche Bank or BT Corp, and is
not expected to have a significantly adverse effect on the
financial resources of Deutsche Bank. Other financial factors are consistent with approval.
The Board also has carefully considered the managerial
resources of Deutsche Bank and BT Corp in light of all the
facts of record, including confidential examination and
other supervisory information.15 Based on all the facts of
record, the Board concludes that considerations relating to
the financial and managerial resources and future prospects
of the organizations involved are consistent with approval.16
Convenience and Needs Factor
The Board also has carefully considered the effect of the
proposal on the convenience and needs of the communities
to be served in light of all the facts of record, including
comments received on the effect the proposal would have
on the communities to be served by the combined organization.
A. CRA Performance Examinations
The Board has long held that consideration of the convenience and needs factor includes a review of the records of
14. See Chemical Banking Corporation, 82 Federal Reserve Bulletin 230 (1996).
15. One commenter alleged that the current management of BT
Corp does not include a sufficient number of minorities or women.
The racial and gender composition of management are not factors the
Board is authorized to consider under the BHC Act.
16. In reviewing the managerial resources factor, the Board has
considered Bankers Trust's recent guilty plea on federal charges
relating to the organization's client processing services unit. The
Board has taken particular note of BT Corp's cooperation with regulatory authorities in identifying and remedying fraudulent activities, its
actions to ensure future compliance with all laws and standards
applicable to these activities, and its discipline of individuals responsible for the activities. The Board also has contacted and considered
information provided by the U.S. Attorney for the Southern District of
New York and other government agencies regarding this matter.
512
Federal Reserve Bulletin • July 1999
the relevant depository institutions under the CRA. As
provided in the CRA, the Board evaluates the record of
performance of an institution in light of examinations by
the appropriate federal supervisors of the CRA performance records of the relevant institutions. An institution's
most recent CRA performance evaluation is a particularly
important consideration in the applications process because
it represents a detailed, on-site evaluation of the institution's overall record of performance under the CRA by its
appropriate federal supervisor.17
Deutsche Bank currently does not control an institution
subject to evaluation under the CRA. The Board has reviewed in detail, however, the CRA performance records
of the insured depository institutions of BT Corp. Bankers
Trust received an "outstanding" CRA performance rating
from the Federal Reserve Bank of New York ("Reserve
Bank") at its most recent examination, as of June 1, 1998
(the "1998 Examination"), and at its previous examination, as of May 28, 1996. In addition, the New York State
Banking Department, as of May 29, 1998, rated Bankers
Trust's CRA performance "outstanding" pursuant to section 28-b of New York state banking law. Delaware Bank
received a "satisfactory" rating from its appropriate federal supervisor, the Federal Deposit Insurance Corporation
("FDIC"), at its most recent examination for CRA performance, as of January 6, 1998. Florida Bank also received
an overall rating of "satisfactory" from its appropriate
federal supervisor, the Office of the Comptroller of the
Currency ("OCC"), at its most recent evaluation for CRA
performance, as of September 9, 1996.
Examiners found no evidence of prohibited discrimination or other illegal credit practices at Bankers Trust,
Delaware Bank, or Florida Bank and found no violations of
fair lending laws. Examiners also reviewed the assessment
areas delineated by the depository institutions and found
that such assessment areas were reasonable and did not
arbitrarily exclude low- and moderate-income ("LMI")
areas.
B. Community Development Record of Bankers
Trust
Bankers Trust is a wholesale banking institution that provides investment banking, global sales and trading, asset
management, and financial advisory services to major corporations, financial institutions, governments, and high net
worth individuals. As such, Bankers Trust has been evaluated as a "wholesale bank" under the Board's CRA regulations.18 Deutsche Bank proposes to continue to operate
17. The Interagency Questions and Answers Regarding Community
Reinvestment provide that a CRA examination is an important and
often controlling factor in the consideration of an institution's CRA
record. See 64 Federal Register 23,641 (1999).
18. A "wholesale bank" is a bank that (i) is not in the business of
extending home mortgage, small business, small farm, or consumer
loans to retail customers and (ii) has been designated as a wholesale
bank by its appropriate federal supervisor. 12C.F.R. 228.12(w). In
August 1997, the Board designated Bankers Trust as a "wholesale
bank" under the CRA.
Bankers Trust as a wholesale bank and to maintain the
CRA policies of Bankers Trust. Bankers Trust's designation as a wholesale bank requires the Board to evaluate the
bank's record of CRA performance under a separate "community development test."19 Community development activities as a general matter must benefit areas within an
institution's assessment area(s) or a broader statewide or
regional area that includes the institution's assessment
area(s).20
The 1998 Examination indicated that Bankers Trust's
community development loan commitments during the examination period (May 28, 1996, through June 1, 1998)
totalled $137 million, and represented a 49.6 percent increase since the previous examination. Consistent with
Bankers Trust's wholesale bank operations, 88 percent of
these loans were indirect, i.e., they were made to intermediaries supporting housing and economic development within
the bank's assessment area.21 Examiners made special
mention of Bankers Trust's participation in several innovative lending programs, including Closing Assistance Support for Homebuyers, a joint effort by Neighborhood Housing Services of New York City and a consortium of local
banks led by Bankers Trust to provide down payment and
closing cost assistance loans to LMI homebuyers, and
Global Resources for Affordable Neighborhood Development, a loan pool organized and administered by Bankers
Trust that makes funds available, at below market rates, for
the construction of new affordable housing units in LMI
communities. The 1998 Examination also stated that, during the examination period, Bankers Trust received a
$975,000 incentive grant award from the U.S. Treasury's
Community Development Financial Institutions Fund as a
result of the bank's record of financing projects critically
needed in its communities.
The 1998 Examination determined that Bankers Trust
had an excellent level of community development invest19. See 12 C.F.R. 228.25(a). This test evaluates a wholesale bank on
its record of community development services, community development investments, and community development lending. 12 C.F.R.
228.25(c). The primary purpose of any service, investment, or loan
considered under the test must be "community development," which
is defined in terms of specific categories of activities that benefit LMI
individuals, LMI areas, or small businesses or farms. See 12 C.F.R.
228.12(h).
20. Community development activities outside an institution's assessment area(s) may also be considered if the institution has adequately addressed the needs of its assessment area(s). See 12 C.F.R.
228.25(e).
21. One commenter criticized BT Corp for making few home
mortgage and small business loans. The Board notes that the CRA
does not require an institution to offer any specific credit products but
allows an institution to help serve the credit needs of the institution's
community by providing credit of the types consistent with the institution's overall business strategy and expertise. As discussed above,
Bankers Trust does not engage in the business of extending home
mortgage or small business loans, and has been designated a wholesale bank, consistent with the CRA regulations of the banking agencies. Accordingly, its CRA performance is measured by a community
development test rather than the traditional lending, investment, and
service tests. As noted below, BT Corp's other insured subsidiary
banks also have been designated as wholesale banks by their appropriate federal supervisors.
Legal Developments
ments. Qualified investments totalled $164 million, a 126
percent increase over the bank's investment levels at the
time of the previous examination. Examiners noted, in
particular, Bankers Trust's tax credit investments of
$67.6 million in the New York Equity Fund, an investment
pool for corporate equity investments supporting lowincome housing development.22 Examiners also found that
Bankers Trust provided a high level of community development services in its assessment area, including technical
assistance, investment advisory services, in-kind donations, and mentoring programs.23
C. Conclusion on Convenience and Needs
The Board has carefully considered all the facts of record,24
including the public comments received, responses to the
comments, and reports of examinations of CRA performance of the institutions involved, in reviewing the proposal's effect on the convenience and needs of the communities to be served by the combined organization.25 The
22. Examiners also noted favorably (i) Bankers Trust's lead
$1 million investment in the Neighborhood 2000 Fund, which will
provide support for about 50 nonprofit organizations with annual
grants for operating expenses to support housing, economic development, and community building initiatives; and (ii) Bankers Trust's
proprietary Microcredit Development Fund, which provides below
market rate loans to nonprofit microcredit lending programs worldwide.
23. The FDIC, which designated Delaware Bank as a wholesale
bank on June 17, 1996, found at its most recent CRA examination of
Delaware Bank that the bank provided an adequate level of community development loans, investments, and services to its assessment
area. The OCC, which designated Florida Bank as a wholesale bank
on April 16, 1996, found at its most recent CRA examination of
Florida Bank that the bank's level of community development lending, investments, and services to its assessment area was reasonable.
24. One commenter urged the Board to condition approval of the
proposal on BT Corp's making certain community reinvestment and
other commitments. The Board notes that the CRA requires only that,
in considering an acquisition proposal, the Board carefully review the
actual record of past performance of the relevant depository institutions in helping to meet the credit needs of their communities. The
CRA does not require depository institutions to make pledges of
future performance under the CRA. The Board also notes that the
future activities of Deutsche Bank's subsidiary banks will be reviewed
by the appropriate federal supervisors in future performance examinations, and such CRA performance records will be considered by the
Board in any subsequent applications by Deutsche Bank to acquire a
depository institution.
25. Several commenters maintained that BT Corp has engaged in
discriminatory lending practices as a result of its relationships to
certain subprime lenders, including in particular Delta. BT Corp
provides trust and custodial services to Delta and other subprime
lenders in connection with the securitization of home loans made by
such lenders. BT Corp has indicated that (i) neither BT Corp nor any
of its subsidiaries has had any involvement in the origination of
mortgage loans by Delta; and (ii) BT Corp has no business relationship with Delta other than acting as custodian and trustee in the
context of Delta's securitizations. The Board has considered these
comments in light of BT Corp's limited role solely as trustee and
custodian for the securitization trusts of subprime lenders, and its lack
of involvement in originating the underlying loans that are securitized
and in developing and monitoring the criteria governing the types of
loans that may be securitized. The Board has forwarded a copy of all
comments on Delta to the Departments of Justice and Housing and
513
Board also has carefully considered the effect of the proposed acquisition of BT Corp by Deutsche Bank on the
future performance of BT Corp's subsidiary banks under
the CRA. In connection with the proposal, Deutsche Bank
has indicated that it intends to continue BT Corp's outstanding record of CRA performance.
The Board expects that, after the proposed acquisition by
Deutsche Bank, Bankers Trust and BT Corp's other subsidiary banks will demonstrate the same commitment to serving the community development needs of their communities that they have demonstrated to date. Deutsche Bank is
a large banking organization with a satisfactory record of
complying with U.S. banking regulations, and has financial
and managerial resources that are sufficient to ensure compliance by BT Corp's subsidiary banks with all relevant
regulatory requirements, including the CRA. Based on a
review of the entire record, and for the reasons discussed
above, the Board concludes that convenience and needs
considerations, including the CRA performance records of
BT Corp's subsidiary banks, are consistent with approval
of the proposal.26
Other Comments on the Proposal
The Board has received several comments from individuals
and organizations that expressed concern about certain
activities of Deutsche Bank during World War II. The
commenters, who included representatives in pending class
action lawsuits against Deutsche Bank, generally alleged
that the bank, before and during World War II, collaborated
with the Nazi regime to confiscate and liquidate Jewish
assets, and that the bank financed and controlled other
companies that used slave or forced labor. Other commenters expressed concern that the bank may have handled gold
stolen by the Nazis. Several commenters alleged that they,
or the individuals they represent, had been unsuccessful in
attempts to recover assets in World War II-era accounts
from Deutsche Bank.
Some commenters urged the Board to investigate these
alleged activities and produce a full accounting of any
assets wrongfully retained by Deutsche Bank and any
profits that the bank realized from companies controlled or
Urban Development and to the Federal Trade Commission, which
have responsibility for reviewing compliance with the fair lending
laws by nonbanking companies.
26. One commenter asserted that BT Corp has not provided sufficient information on the quantity of goods and services it acquires
from minority-owned businesses. Although the Board fully supports
programs designed to stimulate and create economic opportunities for
all members of society, the Board considers the third-party contracting
activities of BT Corp to be beyond the scope of the CRA and other
relevant banking statutes. A few commenters expressed concern that
the proposal would result in the loss of jobs. The effect of a proposed
transaction on employment in a community is not among the factors
included in the BHC Act, and the convenience and needs factor has
been consistently interpreted by the federal banking agencies, the
courts, and Congress to relate to the effect of a proposal on the
availability and quality of banking services in the community. See
Wells Fargo & Company, 82 Federal Reserve Bulletin 445, 457
(1996).
514
Federal Reserve Bulletin • July 1999
financed by it that used slave labor. Others requested that
the Board withhold approval of the proposal until the asset
conversion and slave labor issues are resolved and appropriate restitution and compensation is made.
Deutsche Bank has provided substantial information
about the steps that the bank has taken and is taking to
address its activity during World War II.27 In addition to
the steps that it previously has taken to address its
Holocaust-related activities, Deutsche Bank, along with 12
other German banks, insurers, and nonfinancial corporations, recently proposed the establishment of the Foundation Initiative of German Enterprises: Remembrance, Responsibility and Future ("Foundation Initiative").28 As
proposed, the Foundation Initiative includes a humanitarian fund (the "Fund") for the benefit of Holocaust victims
and a foundation to support projects linked to the Fund's
purpose.29 The Fund is expected to compensate forced and
slave laborers and to resolve claims against German banks
arising from their conversion of Jewish assets and their
handling of World War II-era bank accounts.30
The Board sought the views of the State Department on
current German efforts to address Holocaust-related issues.
Although it took no position on the merits of the subject
proposal, the State Department noted that it has sought to
expedite resolution of Holocaust-era claims and has supported the Foundation Initiative. The State Department
also indicated that it has supported Deutsche Bank's continuing efforts to conduct a historical review of the bank's
activities under the Nazi regime. The State Department
further noted that sanctions against German banks are not
justified and would only retard progress on Holocaustrelated issues.31
The Board has carefully reviewed the issues presented
by the commenters in light of all the facts of record,
including the information received from the State Department, and in light of the Board's authority under the
federal banking laws. To the extent that the matters raised
by commenters relate to the factors that the Board is
authorized to consider, the Board has considered, in particular, the past efforts of Deutsche Bank to investigate and
address its Holocaust involvement, and the forthcoming
and ongoing efforts of current management to resolve these
matters. The Board also has taken into account that many
of the matters raised by the commenters involve subjects of
public concern that are not within the Board's limited
jurisdiction to adjudicate or do not relate to the factors that
the Board may consider when reviewing an application or
notice under the BHC Act. 32 For these reasons, and based
on all the facts of record, the Board concludes that the
Holocaust-related matters presented by commenters do not
warrant denial of the proposal.
Other Supervisory
27. See Historical Commission Appointed to Examine the History
of Deutsche Bank in the Period of National Socialism (Avraham
Barkai et al.), The Deutsche Bank and Its Gold Transactions during
the Second World War (1998) ("Gold Report"); and John Authers &
Uta Harnischfeger, Deutsche Admits Auschwitz Link, Fin. Times, Feb
5, 1999. See also Lothar Gall et al., The Deutsche Bank: 1870-1995
(J.A. Underwood et al. trans., 1995) (a comprehensive history of
Deutsche Bank commissioned by the bank and compiled by five
independent scholars); Jewish Organizations to Receive Proceeds of
Deutsche Bank Gold Sale, The Week in Germany, March 27, 1998.
28. See the statement, dated February 16, 1999, released by the 13
German organizations that proposed the Foundation Initiative to the
German Chancellor ("Joint Statement").
One commenter stated that persons with disabilities should not be
excluded from Holocaust reparations and argued that Deutsche Bank
should make a commitment to disabled victims of the Holocaust as a
condition of its acquisition of BT Corp. Although the Joint Statement
does not specify categories of claimants or specifically address the
rights of the disabled, the Joint Statement does state that its paramount
goal is "to provide cooperative, fair, unbureaucratic and above all
prompt assistance to Nazi victims." The Joint Statement evinces no
intent to exclude any category of Holocaust survivors from receiving
reparations.
29. See Joint Statement. The Board also notes that the German
companies involved in establishing the Foundation Initiative intend to
finalize arrangements and begin making payments from the Fund by
September 1, 1999. Id.
30. See Letter dated March 25, 1999, from Ambassador Stuart
Eizenstat, Under Secretary of State for Economic, Business, and
Agricultural Affairs, United States Department of State, to Alan
Greenspan, Chairman, Board of Governors of the Federal Reserve
System. Deutsche Bank publicly has denied that it used slave labor
during the Holocaust era. See Suing for Reparations, Baltimore Sun,
Jan. 17, 1999, at ID; see also Reuters, Deutsche Bank Pressed for Big
Sums in Holocaust Talks, Feb. 8, 1999. Moreover, Deutsche Bank
made reparations to slave laborers who worked for a company that the
bank purchased in 1985. See U.P.I. Foreign News Briefs, December 26, 1985.
Considerations
Under section 3 of the BHC Act, the Board may not
approve an application involving a foreign bank unless the
bank is "subject to comprehensive supervision or regulation on a consolidated basis by the appropriate authorities
in the bank's home country."33 The Board previously has
31. The Comptroller of the City of New York originally informed
the Board of his view that Deutsche Bank's proposal should not be
approved until all interested parties agreed on a structure to settle all
Holocaust-era claims. Based on recent progress toward negotiation of
a final settlement of outstanding Holocaust-era issues, however, the
Comptroller withdrew his original objection and indicated that the
Board should base its decision exclusively on the proposal's impact
on the banks, the public, and the financial community.
32. The factors that the Board may consider when reviewing an
application or notice under the BHC Act are limited by the Act.
Moreover, the Board previously has noted and the courts have held
that the Board's limited jurisdiction to review applications and notices
under the BHC Act does not authorize the Board to adjudicate
disputes involving an applicant that do not arise under laws administered and enforced by the Board. See Union Bank of Switzerland, 84
Federal Reserve Bulletin 684 (1998); Norwest Corporation, 82 Federal Reserve Bulletin 580 (1996); see also Western Bancshares v.
Board of Governors, 480 F.2d 749 (10th Cir. 1973).
33. 12 U.S.C. § 1842(c)(3)(B). As provided in Regulation Y, the
Board determines whether a foreign bank is subject to consolidated
home country supervision under the standards set forth in Regulation K. 12 C.F.R. 225.13(a)(4). Regulation K provides that a foreign
bank may be considered subject to consolidated supervision if the
Board determines that the bank is supervised or regulated in such a
manner that its home country supervisor receives sufficient information on the worldwide operations of the foreign bank, including the
relationships of the bank to its affiliates, to assess the foreign bank's
overall financial condition and compliance with law and regulation.
12 C.F.R. 211.24(c)(l)(ii).
Legal Developments
determined, in applications under the International Banking Act (12 U.S.C. § 3101 et seq.) ("IBA") and the BHC
Act, that certain German commercial banks were subject to
comprehensive consolidated supervision by their home
country authorities.34 In this case, the Board has determined that Deutsche Bank is supervised on substantially
the same terms and conditions as the other German banks.35
Based on all the facts of record, the Board has concluded
that Deutsche Bank is subject to comprehensive supervision and regulation on a consolidated basis by its home
country supervisor.
The BHC Act also requires the Board to determine that
the foreign bank has provided adequate assurances that it
will make available to the Board such information on its
operations and activities and those of its affiliates that the
Board deems appropriate to determine and enforce compliance with the BHC Act. The Board has reviewed the
restrictions on disclosure in jurisdictions where Deutsche
Bank has material operations and has communicated with
relevant government authorities concerning access to information. Deutsche Bank has committed that, to the extent
not prohibited by applicable law, it will make available to
the Board such information on the operations of Deutsche
Bank and any of its affiliates that the Board deems necessary to determine and enforce compliance with the BHC
Act, the IBA, and other applicable federal law. Deutsche
Bank also has committed to cooperate with the Board to
obtain any waivers or exemptions that may be necessary in
order to enable Deutsche Bank to make any such information available to the Board. In light of these commitments
and other facts of record, the Board has concluded that
Deutsche Bank has provided adequate assurances of access
to any appropriate information the Board may request. For
these reasons, and based on all the facts of record, the
Board has concluded that the supervisory factors it is
required to consider under section 3(c)(3) of the BHC Act
are consistent with approval.
Nonbanking Activities
Deutsche Bank also has filed notice under section 4(c)(8)
of the BHC Act to acquire the nonbank subsidiaries of BT
Corp. Deutsche Bank has proposed to hold these nonbank
subsidiaries, in particular BT Alex. Brown, through a U.S.
company that will be a registered bank holding company.
Through these subsidiaries, Deutsche Bank would engage
in a number of nonbanking activities, including lending
activities, activities related to extending credit, leasing
activities, performing trust company functions, providing
investment and financial advisory services, providing secu-
34. See Commerzbank AG, 85 Federal Reserve Bulletin 336 (1999);
Sudwestdeutsche Landesbank Girozentrale, 83 Federal Reserve Bulletin 937 (1997); West Merchant Bank Limited, 81 Federal Reserve
Bulletin 519(1995).
35. A commenter contended that the failure of German bank regulators to address Deutsche Bank's Holocaust-related activities calls into
question the determinations under the Foreign Bank Supervision Enhancement Act that the Board must make in this case.
515
rities brokerage, private placement, riskless principal, futures commission merchant, and other agency transactional
services, investing and trading activities, community development activities, data processing and transmission activities, underwriting and dealing to a limited extent in debt
and equity securities, and providing administrative services
to open-end investment companies ("mutual funds").36
The Board has determined by regulation or order that the
types of activities for which notice has been provided are
closely related to banking for purposes of section 4(c)(8) of
the BHC Act.37 Deutsche Bank has committed that it will
conduct these activities in accordance with the Board's
regulations and in accordance with the orders approving
these activities for BT Corp.
A. Bank-Ineligible Securities Activities
Deutsche Bank currently is engaged in underwriting and
dealing in bank-ineligible securities, to a limited extent,
through Deutsche Bank Securities Inc. ("DBSI"). 38 BT
Corp also currently is engaged in underwriting and dealing
in bank-ineligible securities, to a limited extent, through
BT Alex. Brown.39 Deutsche Bank intends to make BT
Alex. Brown a wholly owned subsidiary of DBSI on or
immediately after consummation of the proposal and to
merge BT Alex. Brown with and into DBSI as soon as
practicable thereafter. DBSI and BT Alex. Brown are, and
after consummation of the proposal will continue to be,
registered as broker-dealers with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.) and members
of the National ssociation of Securities Dealers, Inc.
("NASD"). Accordingly, DBSI and BT Alex. Brown are,
and will continue to be, subject to the record-keeping and
reporting obligations, fiduciary standards, and other requirements of the Securities Exchange Act of 1934, the
SEC, and the NASD.
The Board has determined that, subject to the framework
of prudential limitations established in previous decisions
36. BT Corp is currently engaged in providing investment advisory,
brokerage, administrative, and other services to mutual funds. See
Bankers Trust New York Corporation, 83 Federal Reserve Bulletin
780 (1997) ("BT/Alex. Brown"). Deutsche Bank proposes to continue
providing such services to mutual funds and has proposed interlocks
that are consistent with the limitations established by the Board in
previous orders. See, e.g., Travelers Group Inc., 84 Federal Reserve
Bulletin 985 (1998).
37. See 12 C.F.R. 225.28(b)(1), (2), (3), (5), (6), (7), (8)(i) and (ii),
(12), and (14); J.P. Morgan & Co. Inc., et al, 75 Federal Reserve
Bulletin 192 (1989), aff'd sub nom. Securities Industry Ass'n v. Board
of Governors of the Federal Reserve System, 900 F.2d 360 (D.C. Cir.
1990) ("J.P. Morgan")', Citicorp, 73 Federal Reserve Bulletin 473
(1987), aff'd sub nom. Securities Industry Ass'n v. Board of Governors of the Federal Reserve System, 839 F.2d 47 (2d Cir.), cert,
denied, 486 U.S. 1059 (1988) ("Citicorp") (underwriting and dealing,
to a limited extent, in all types of securities); Mellon Bank Corporation, 79 Federal Reserve Bulletin 626 (1993), and Commerzbank AG,
83 Federal Reserve Bulletin 678 (1997) ("Commerzbank") (providing
administrative services to mutual funds).
38. See Deutsche Bank AG, 79 Federal Reserve Bulletin 133 (1993).
39. See BT/Alex. Brown.
516
Federal Reserve Bulletin • July 1999
to address the potential for conflicts of interests, unsound
banking practices, or other adverse effects, underwriting
and dealing in bank-ineligible securities is so closely related to banking as to be a proper incident thereto within
the meaning of section 4(c)(8) of the BHC Act. 40 The
Board also has determined that underwriting and dealing in
bank-ineligible securities is consistent with section 20 of
the Glass-Steagall Act (12 U.S.C. § 377), provided that the
ompany engaged in the activities derives no more than
25 percent of its gross revenues from underwriting and
dealing in bank-ineligible securities over a two-year period.41 Deutsche Bank has committed that, after consummation of the proposal, DBSI and BT Alex. Brown will
conduct their bank-ineligible securities underwriting and
dealing activities subject to the 25-percent revenue limitation and the prudential limitations previously established
by the Board,42 and this order is conditioned on compliance by Deutsche Bank with the revenue restriction and the
Operating Standards established for section 20 subsidiaries 43
The Board also has reviewed the capitalization of Deutsche Bank, DBSI, and BT Alex. Brown in light of the
standards set forth in the Section 20 Orders. The Board
finds the capitalization of each to be consistent with approval of the proposal. The Board's determination is based
on all the facts of record, including the projections of the
volume of bank-ineligible securities underwriting and dealing activities to be conducted by DBSI and BT Alex.
Brown.44
40. See J.P. Morgan; Citicorp; as modified by Review of Restrictions on Director, Officer and Employee Interlocks,
Cross-Marketing
Activities, and the Purchase and Sale of Financial Assets Between a
Section 20 Subsidiary and an Affiliated Bank or Thrift, 61 Federal
Register 57,679 (1996); Amendments to Restrictions in the Board's
Section 20 Orders, 62 Federal Register 45,295 (1997); and Clarification to the Board's Section 20 Orders, 63 Federal Register 14,803
(1998) (collectively, "Section 20 Orders").
41. See Section 20 Orders. Compliance with the revenue limitation
shall be calculated in accordance with the method stated in the Section
20 Orders, as modified by Order Approving Modifications to the
Section 20 Orders, 75 Federal Reserve Bulletin 751 (1989);
10 Percent Revenue Limit on Bank-Ineligible Activities of Subsidiaries
of Bank Holding Companies Engaged in Underwriting and Dealing in
Securities, 61 Federal Register 48,953 (1996); and Revenue Limit on
Bank-Ineligible Activities of Subsidiaries of Bank Holding Companies
Engaged in Underwriting and Dealing in Securities, 61 Federal
Register 68,750 (1996) (collectively, "Modification Orders").
42. As noted above, Deutsche Bank intends to merge BT Alex.
Brown with and into DBSI as soon as practicable after consummation
of the proposal. Until that merger occurs, both DBSI and BT Alex.
Brown will be independently subject to the 25-percent revenue limitation on underwriting and dealing in bank-ineligible securities. See
Citicorp at 486 n.5.
43. 12 C.F.R. 225.200. DBSI and BT Alex. Brown each may
provide services that are necessary incidents to the proposed bankineligible securities underwriting and dealing activities. Unless DBSI
or BT Alex. Brown receives specific approval under section 4(c)(8) of
the BHC Act to conduct the incidental activities independently, any
revenues from such activities must be treated as ineligible revenues
subject to the Board's revenue limitation.
44. In connection with its 1997 acquisition of Alex. Brown Incorporated, BT Corp committed to conform the activities and investments
of Alex. Brown and its subsidiaries to those permissible for bank
B. Proper Incident Considerations
In order to approve the notice, the Board also must determine that the acquisition of the nonbank subsidiaries of BT
Corp and the performance of the proposed activities by
Deutsche Bank can reasonably be expected to produce
benefits to the public that outweigh possible adverse effects, such as undue concentration of resources, decreased
or unfair competition, conflicts of interests, or unsound
banking practices.
Deutsche Bank has indicated that the proposed transaction would allow the combined organization to reduce
costs and realize revenue synergies by cutting back overlapping operations and blending complementary operations
of Deutsche Bank and BT Corp. Deutsche Bank also has
stated that the proposal would allow it to benefit from
economies of scale in certain business lines, and that the
acquisition would enable the combined organization to
serve better the convenience and needs of its customers
and communities. In addition, Deutsche Bank has indicated
that the acquisition of BT Corp would assist Deutsche
Bank in maintaining a well-balanced revenue stream and a
broad capital base and, accordingly, would increase the
financial stability of the combined organization.
In addition, there are public benefits to be derived from
permitting capital markets to operate so that bank holding
companies can make potentially profitable investments in
nonbanking companies and from permitting banking organizations to allocate their resources in the manner they
consider to be most efficient when such investments and
actions are consistent, as in this case, with the relevant
considerations under the BHC Act.
The Board has carefully considered the competitive effects of the proposed transaction under section 4 of the
BHC Act. To the extent that Deutsche Bank and BT Corp
offer different types of nonbanking products, the proposed
acquisition would result in no loss of competition. Certain
nonbanking subsidiaries of Deutsche Bank and BT Corp
do compete, however, in commercial lending, investment
advisory, asset management, securities brokerage, private
placement, and securities underwriting and dealing activities. The markets for each of these nonbanking activities
are regional or national in scope. The record in this case
indicates that there are numerous providers of these services and that the markets for these nonbanking services
are unconcentrated. For these reasons, and based on all the
facts of record, the Board concludes that consummation of
the proposal would have a de minimis effect on competition.
holding companies under section 4 of the BHC Act and Regulation Y
within two years of acquiring Alex. Brown. See BT/Alex. Brown.
Deutsche Bank now has requested a one-year extension of this conformance period, until September 1, 2000. Based on the good faith
efforts made by BT Corp to fulfill the commitment, the additional
restructuring options that would be made available to BT Corp by the
Deutsche Bank acquisition, and the other facts of record, the Board
has determined to approve this request for a one-year extension of the
BT/Alex. Brown conformance period.
Legal Developments
The Board also believes that the conduct of the proposed
nonbanking activities within the framework established in
this order, prior orders, and Regulation Y is not likely to
result in adverse effects, such as undue concentration of
resources, decreased or unfair competition, conflicts of
interests, or unsound banking practices, that would not be
outweighed by the public benefits of the proposal, such as
increased customer convenience and gains in efficiency.
Accordingly, based on all the facts of record, the Board
has determined that the balance of public interest factors
that the Board must consider under the proper incident to
banking standard of section 4(c)(8) of the BHC Act is
favorable and consistent with approval.
Deutsche Bank also has provided notice under section
25A of the Federal Reserve Act and sections 211.4 and
211.5 of Regulation K (12 C.F.R. 211.4 and 211.5) to
acquire BT Corp's companies organized under section 25A
of the Federal Reserve Act. The Board concludes that all
the factors required to be considered under the Federal
Reserve Act, the BHC Act, and the Board's Regulation K
are consistent with approval of the proposal.45
Conclusion
Based on the foregoing, the Board has determined that the
transaction should be, and hereby is, approved 46 In reaching its conclusion, the Board has considered all the facts of
record in light of the factors that the Board is required to
consider under the BHC Act and other applicable stat-
45. Bankers Trust controls an amount of shares of a non-U.S.
company that, when aggregated with shares controlled by Deutsche
Bank in the same company, would make this investment impermissible on consummation of the proposal. Deutsche Bank has committed
to conform this investment to the requirements of Regulation K within
six months of consummation of the proposal.
46. Four commenters requested that the Board hold a public meeting or hearing on the proposal. Section 3(b) of the BHC Act does not
require the Board to hold a public hearing on an application unless the
appropriate supervisory authority for the bank to be acquired makes a
timely written recommendation of denial of the application. The
Board has not received such a recommendation from the appropriate
supervisory authorities.
Under its rules, the Board also may, in its discretion, hold a public
meeting or hearing on an application to acquire a bank if a meeting or
hearing is necessary or appropriate to clarify factual issues related to
the application and to provide an opportunity for testimony. 12 C.F.R.
225.16(e). Section 4 of the BHC Act and the Board's rules thereunder
provide for a hearing on a notice to acquire nonbanking companies if
there are disputed issues of material fact that cannot be resolved in
some other manner. 12 U.S.C. § 1843(c)(8); 12 C.F.R. 225.25(a)(2).
The Board has considered carefully these commenters' requests in
light of all the facts of record. In the Board's view, commenters have
had ample opportunity to submit their views, and did submit written
comments that have been considered carefully by the Board in acting
on the proposal. The commenters' requests fail to demonstrate why
their written comments do not present their views adequately and fail
to identify disputed issues of fact that are material to the Board's
decision that would be clarified by a public meeting or hearing. For
these reasons, and based on all the facts of record, the Board has
determined that a public meeting or hearing is not required or warranted in this case. Accordingly, the requests for a public meeting on
the proposal are denied.
517
utes.47 The Board's approval is specifically conditioned on
compliance by Deutsche Bank with all the commitments
made in connection with this application and notice, including the commitments discussed in this order, and the
conditions set forth in this order and the above-noted
Board regulations and orders. The Board's approval of the
nonbanking aspects of the proposal also is subject to all the
conditions set forth in Regulation Y, including those in
sections 225.7 and 225.25(c) of Regulation Y (12 C.F.R.
225.7 and 225.25(c)), 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. 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. Underwriting and dealing in any manner other than as approved in this order and
the Section 20 Orders (as modified by the Modification
Orders) is not within the scope of the Board's approval and
is not authorized for Deutsche Bank.
The acquisition of BT Corp's subsidiary banks may not
be consummated before the fifteenth calendar day after the
effective date of this order, and the proposal may 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 Reserve Bank, acting pursuant to delegated authority.
By order of the Board of Governors, effective May 20,
1999.
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Kelley, Meyer, Ferguson, and Gramlich.
ROBERT DEV. FRIERSON
Associate Secretary of the Board
47. A number of commenters requested that the Board delay action
or extend the comment period on the proposal until (i) pending
Holocaust-related lawsuits against Deutsche Bank and other
Holocaust-related issues are resolved; (ii) Deutsche Bank makes certain CRA and diversity commitments; and (iii) Deutsche Bank submits additional information regarding the acquisition and its plans for
BT Corp. The requests for delay do not warrant postponement of the
Board's consideration of the proposal. The Board has accumulated a
significant record in this case, including reports of examination,
supervisory information, public reports and information, and considerable public comment. In the Board's view, for the reasons discussed
above, commenters have had ample opportunity to submit their views,
and, in fact, have provided substantial written submissions that have
been considered carefully by the Board in acting on the proposal.
Moreover, the BHC Act and Regulation Y require the Board to act on
proposals submitted under those provisions within certain time periods. Based on a review of all the facts of record, the Board concludes
that the record in this case is sufficient to warrant Board action at this
time, and that further delay of consideration of the proposal, extension
of the comment period, or denial of the proposal on the grounds
discussed above or on the basis of informational insufficiency is not
warranted.
518
Federal Reserve Bulletin • July 1999
Appendix
Nonbanking Activities of Bankers Trust Corporation
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
Extending credit and servicing loans, in accordance
with section 225.28(b)(1) of the Board's Regulation Y (12 C.F.R. 225.28(b)(1));
Activities related to extending credit, in accordance
with section 225.28(b)(2) of the Board's Regulation Y (12 C.F.R. 225.28(b)(2));
Providing leasing services, in accordance with section 225.28(b)(3) of Regulation Y (12 C.F.R.
225.28(b)(3));
Performing trust company functions, in accordance
with section 225.28(b)(5) of Regulation Y (12 C.F.R.
225.28(b)(5));
Providing investment and financial advisory services, in accordance with section 225.28(b)(6) of
Regulation Y (12 C.F.R. 225.28(b)(6));
Providing securities brokerage, riskless principal,
private placement, futures commission merchant,
and other agency transactional services, in accordance with section 225.28(b)(7) of Regulation Y
(12 C.F.R. 225.28(b)(7));
Underwriting and dealing in government obligations
and money market instruments in which state member banks may underwrite and deal under 12 U.S.C.
§§ 335 and 24(7), and investing and trading activities, in accordance with section 225.28(b)(8)(i) and
(ii) of Regulation Y (12 C.F.R. 225.28(b)(8)(i) and
(ii));
Community development activities, in accordance
with section 225.28(b)(12) of Regulation Y
(12 C.F.R. 225.28(b)(12));
Data processing and transmission activities, in accordance with section 225.28(b)(14) of Regulation Y
(12 C.F.R. 225.28(b)(14));
Underwriting and dealing in, to a limited extent, all
types of debt and equity securities other than interests in open-end investment companies, in accordance with previous Board decisions (see Bankers
Trust New York Corporation, 83 Federal Reserve
Bulletin 780 (1997)); and
Providing administrative services to open-end investment companies ("mutual funds"), in accordance
with previous Board decisions (see Mellon Bank
Corporation, 79 Federal Reserve Bulletin 626
(1993), and Commerzbank AG, 83 Federal Reserve
Bulletin 678 (1997)).
ORDERS ISSUED UNDER INTERNATIONAL BANKING
ACT
Banco BBA-Creditanstalt
Sao Paulo, Brazil
S.A.
Order Approving Establishment of a Representative Office
Banco BBA-Creditanstalt S.A. ("Bank"), Sao Paulo, Bra
zil, 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 stablish a representative
office in New York, New York. 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 submit comments, has been published in a
newspaper of general circulation in New York, New York
(New York Post, February 13, 1998). The time for filing
comments has expired, and the Board has considered the
application and all comments received.
Bank, with assets of approximately $6.8 billion,1 was
incorporated in Brazil in 1988. Bank engages in a full
range of commercial and investment banking activities. In
addition, through subsidiaries, Bank provides consumer
loans and private banking services. Bank operates five
banking offices in Brazil, a branch in Nassau, the Bahamas,
and a representative office in Buenos Aires, Argentina.
Bank recently received approval from the U.K. Financial
Services Authority to establish a representative office in
London, England.
Bank is a subsidiary of BBA Participacoes S.A. ("Participacoes"), Sao Paulo, Brazil, a holding company, and
Bank Austria Aktiengesellschaft ("Bank Austria"),
Vienna, Austria. Participacoes owns a registered brokerdealer, BBA Securities Corp., in New York, New York.
Bank Austria operates branches in Greenwich, Connecticut, and New York, New York; representative offices in
Atlanta, Georgia, Chicago, Illinois, and San Francisco,
California; and owns several U.S. subsidiaries that engage
in nonbanking activities in accordance with the Bank Holding Company Act ("BHC Act") and Regulation Y.2
The proposed representative office would solicit new
business, conduct research, and act as a liaison between
Bank's head office in Brazil and customers in the United
States.
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 and has furnished to the Board the information it
needs to assess the application adequately. The Board also
shall take into account whether the foreign bank and any
foreign bank parent is subject to comprehensive supervision or regulation on a consolidated basis by its home
country supervisor (12 U.S.C. § 3107(a)(2); 12 C.F.R.
1. Data are as of December 31, 1998.
2. Bank Austria's Greenwich, Connecticut, branch, and its Atlanta,
Georgia, and San Francisco, California, representative offices were
previously owned by Creditanstalt-Bankverein ("Creditanstalt"). Effective September 24, 1998, Creditanstalt was merged with and into
Bank Austria. Before the merger, Bank Austria received approval
from the Board, under section 211.24(a)(3) of Regulation K, to
continue to operate these offices pending consideration of its application.
Legal Developments
211.24(d)(2)).3 In addition, the Board may take into account additional standards set forth in the IBA and Regulation
K
(12
U.S.C. § 3105(d)(3)-(4);
12 C.F.R.
211.24(c)(2)). The Board previously has 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.4
With respect to home country supervision of Bank, the
Board has considered the following information. Bank is
subject to the regulatory and supervisory authority of the
Central Bank of Brazil ("Central Bank"), which has primary responsibility for the regulation of financial institutions in Brazil. The Central Bank has no objection to
Bank's establishment of the proposed representative office.
The Board has previously determined that the Central
Bank exercises a significant degree of supervision over the
activities of two other Brazilian banks, both of which were
approved to establish representative offices in the United
States.5 The Board has determined that Bank is supervised
by the Central Bank on substantially the same terms and
conditions as the other Brazilian banks.
Bank Austria is subject to the supervisory authority of
the Austrian Federal Ministry of Finance ("Ministry") and
the Austrian National Bank. The Board has previously
determined that the Austrian supervisors exercise a significant degree of supervision over the activities of Bank
Austria in connection with the establishment of a representative office in Chicago, Illinois.6
Based on all the facts of record, the Board has determined that factors relating to the supervision of Bank and
Bank Austria by their respective home country supervisors
are consistent with approval of the proposed representative
office.
3. In assessing this standard, the Board considers, among other
factors, the extent to which the home country supervisors:
(i) Ensure that the bank has adequate procedures for monitoring and
controlling its activities worldwide;
(ii) Obtain information on the condition of the bank and its subsidiaries and offices through regular examination reports, audit reports,
or otherwise;
(iii) Obtain information on the dealings with and relationship between the bank and its affiliates, both foreign and domestic;
(iv) Receive from the bank financial reports that are consolidated on
a worldwide basis, or comparable information that permits analysis
of the bank's financial condition on a worldwide consolidated basis;
(v) Evaluate prudential standards, such as capital adequacy and risk
asset exposure, on a worldwide basis. These are indicia of comprehensive consolidated supervision. No single factor is essential and
other elements may inform the Board's determination.
4. See 58 Federal Register 6348, 6351 (1993). See also Citizens
National Bank, 79 Federal Reserve Bulletin 805 (1993); Agricultural
Bank of China, 83 Federal Reserve Bulletin 617 (1997).
5. See Banco Bandeirantes, S.A., 81 Federal Reserve Bulletin 742
(1995); Unibanco-Uniao de Bancos Brasileiros, S.A., 82 Federal
Reserve Bulletin 1148 (1996).
6. See Bank Austria, A.G., 81 Federal Reserve Bulletin 979 (1995).
519
The Board also has determined that for the purposes of
the IBA and Regulation K, Bank and Bank Austria engage
directly in the business of banking outside of the United
States. Bank and its parent companies have provided the
Board with information necessary to assess the application
through submissions that address the relevant issues.
The Board also has taken into account the additional
standards set forth in section 7 of the IBA and Regulation K (see 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R.
211.24(c)(2)). As noted above, the Central Bank has no
objection to Bank's establishment of the proposed representative office. The Board also 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 representative office and has established controls and procedures
for the proposed representative office to ensure compliance
with U.S. law.
With respect to access to information about Bank's
operations, the Board has reviewed the restrictions on
disclosure in relevant jurisdictions in which Bank operates
and has communicated with relevant government authorities regarding access to information. Bank and its ultimate
parents have committed to 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 BHC Act, as
amended, and other applicable federal law. To the extent
that the provision of such information to the Board may be
prohibited by law, Bank and its ultimate parents have
committed to cooperate with the Board to obtain any
necessary consents or waivers that might be required from
third parties for disclosure of such information. In addition,
subject to certain conditions, the Central Bank and Ministry may share information on Bank's operations with other
supervisors, including the Board. In light of these commitments and other facts of record, and subject to the conditions described below, the Board concludes that Bank has
provided adequate assurances of access to any necessary
information that the Board may request.
On the basis of all the facts of record, and subject to the
commitments made by Bank and its ultimate parents, and
the terms and conditions set forth in this order, the Board
has determined that Bank's application to establish a representative office should be, and hereby is, approved. Should
any restrictions on access to information on the operations
or activities of Bank and its affiliates subsequently interfere
with the Board's ability to obtain information to determine
and enforce compliance by Bank or its affiliates with
applicable federal statutes, the Board may require termination of any of Bank's direct or indirect activities in the
United States. Approval of this application also is specifically conditioned on compliance by Bank and its ultimate
parents with the commitments made in connection with
this application and with the conditions in this order.7 The
7. The Board's authority to approve the establishment of the proposed representative office parallels the authority of the State of New
520
Federal Reserve Bulletin • July 1999
commitments and conditions referred to above are conditions imposed in writing by the Board in connection with
its decision, and may be enforced in proceedings under
12 U.S.C. § 1818 against Bank and its affiliates.
By order of the Board of Governors, effective May 17,
1999.
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Kelley, Meyer, Ferguson, and Gramlich.
ROBERT DEV. FRIERSON
Associate Secretary of the Board
York to license offices of a foreign bank. The Board's approval of this
application does not supplant the authority of the State of New York
and its agent, the New York State Banking Department ("Department"), to license the proposed representative office of Bank in
accordance with any terms or conditions that the Department may
impose.
APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT
By the Secretary of the Board
Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to
the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System,
Washington, D.C. 20551.
Section 3
Applicant(s)
Bank(s)
Effective Date
FirstBank of Adams County,
Thornton, Colorado
May 27, 1999
FirstBank of El Paso County,
Colorado Springs, Colorado
May 21, 1999
XEON Financial Corporation,
Stateline, Nevada
Nevada Banking Company,
Stateline, Nevada
Comstock Bancorp,
Reno, Nevada
Comstock Bank,
Reno, Nevada
May 14, 1999
Applicant(s)
Bank(s)
Effective date
Cullen/Frost Bankers, Inc.,
San Antonio, Texas
New Galveston Company,
Wilmington, Delaware
First National of Nebraska, Inc.,
Omaha, Nebraska
Frost Securities, Inc.,
Dallas, Texas
May 21, 1999
Path Technology Group, Inc.,
Des Moines, Iowa
May 17, 1999
FirstBank Holding Company
Stock Ownership Plan,
Lakewood, Colorado
FirstBank Holding Company
Lakewood, Colorado
FirstBank Holding Company
Stock Ownership Plan,
Lakewood, Colorado
FirstBank Holding Company
Lakewood, Colorado
First Security Corporation,
Salt Lake City, Utah
Employee
of Colorado,
Employee
of Colorado,
Section 4
Legal Developments
521
Section 4—Continued
Applicant(s)
Bank(s)
Effective date
Old Kent Financial Corporation,
Grand Rapids, Michigan
CFSB Bancorp, Inc.,
Lansing, Michigan
Community First Bank,
Lansing, Michigan
Community First Mortgage Corporation,
Lansing, Michigan
Capitol Consolidated Financial Corporation,
Lansing, Michigan
Allegan Insurance Agency, Inc.,
Lansing, Michigan
May 27, 1999
By Federal Reserve Banks
Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to
the Reserve Banks.
Section 3
Applicant(s)
Bank(s)
Reserve Bank
Effective Date
Amoret Bancshares, Inc.,
Butler, Missouri
C. J. Bancshares, Inc.,
Harrisonville, Missouri
Citizens Bank of Missouri,
Harrisonville, Missouri
The Bank of Rochester,
Rochester, Michigan
Chaparral Bancshares, Inc.,
Richardson, Texas
Canyon Creek National Bank,
Richardson, Texas
Van Alstyne Financial Corporation,
Van Alstyne, Texas
Mid-Cities Bancshares, Inc.,
Hurst, Texas
Mid-Cities National Bank,
Hurst, Texas
Skaneateles Savings Bank,
Ridgefield, Connecticut
Skaneateles Bancorp, Inc.,
Ridgefield, Connecticut
East Valley Community Bank,
Chandler, Arizona
Kansas City
May 20, 1999
Chicago
May 5, 1999
Kansas City
April 30, 1999
Kansas City
May 12, 1999
New York
April 28, 1999
Chicago
May 3, 1999
Atlanta
May 5, 1999
Kansas City
May 14, 1999
Atlanta
May 6, 1999
Bloomfield Hills Bancorp, Inc.
Bloomfield Hills, Michigan
BOK Financial Corporation,
Tulsa, Oklahoma
BOK Financial Corporation,
Tulsa, Oklahoma
BSB Bancorp, Inc.,
Binghamton, New York
BSB Bank and Trust Company,
Binghamton, New York
Capitol Bancorp Limited,
Lansing, Michigan
Sun Community Bancorp Limited,
Phoenix, Arizona
Centon Bancorp, Inc.,
Richton, Mississippi
Central Financial Corporation,
Hutchinson, Kansas
Citizens Bancshares of Southwest
Florida,
Naples, Florida
Richton Bank and Trust Company,
Richton, Mississippi
Mid-America Bancorp, Inc.,
Jewell, Kansas
Citizens National Bank of Southwest
Florida,
Naples, Florida
522
Federal Reserve Bulletin • July 1999
Section 3—Continued
Applicant(s)
Bank(s)
Reserve Bank
Effective Date
CNB, Inc.,
Walker, Minnesota
Decatur Corporation, Inc.,
Leon, Iowa
Durant Bancorp, Inc.,
Durant, Oklahoma
Centennial National Bank,
Walker, Minnesota
Spectrum Bancorporation, Inc.,
Omaha, Nebraska
First United Bank and Trust Company,
Durant, Oklahoma
First Shawnee Bancshares, Inc.,
Shawnee, Oklahoma
First State Bank and Trust Company,
Shawnee, Oklahoma
South Florida Bank Holding Company,
Fort Myers, Florida
First Financial Bank, A Federal Savings
Bank,
El Dorado, Arkansas
First Bank of Arkansas, N.A.,
Scottsdale, Arizona
Minneapolis
April 29, 1999
Chicago
May 12, 1999
Kansas City
May 12, 1999
Cleveland
April 27, 1999
St. Louis
April 27, 1999
San Francisco
April 20, 1999
F & M Merger Corporation,
Kaukauna, Wisconsin
CBE, Inc.,
Elkhorn, Wisconsin
Community Bank of Elkhorn,
Elkhorn, Wisconsin
Yampa Valley National Bank,
Hayden, Colorado
Chicago
April 21, 1999
Kansas City
April 21, 1999
State Bank FFG,
Freeport, Illinois
Hudson City Savings Bank,
Paramus, New Jersey
Chicago
April 22, 1999
New York
May 14, 1999
Bank of Macks Creek,
Macks Creek, Missouri
Bank of England,
England, Arkansas
St. Louis
May 14, 1999
St. Louis
April 29, 1999
Minster Bank,
Minster, Ohio
New Commerce Bank, N.A.,
Simpsonville, South Carolina
First Bancorp, Inc.,
Ketchikan, Alaska
First Bank,
Ketchikan, Alaska
Community Bank of Boone,
Boone, Iowa
Oswego County Savings Bank,
Oswego, New York
Cleveland
May 6, 1999
Richmond
April 29, 1999
San Francisco
May 13, 1999
Chicago
May 18, 1999
New York
May 20, 1999
Fifth Third Bancorp,
Cincinnati, Ohio
First Financial Banc Corporation,
El Dorado, Arkansas
First National Bank of Nevada
Holding Company,
Scottsdale, Arizona
F & M Bancorporation, Inc.,
Kaukauna, Wisconsin
FNBR Holding Corporation,
Meeker, Colorado
First National Bank of the Rockies,
Meeker, Colorado
Foresight Financial Group, Inc.,
Freeport, Illinois
Hudson City, MHC,
Paramus, New Jersey
Hudson City Bancorp, Inc.,
Paramus, New Jersey
Macks Creek Bancshares, Inc.,
Macks Creek, Missouri
MHBC Investments Limited
Partnership,
Little Rock, Arkansas
Minster Financial Corp,
Minster, Ohio
New Commerce BanCorp,
Simpsonville, South Carolina
Newco Alaska, Inc.,
Ketchikan, Alaska
Ogden Bancshares, Inc.,
Ogden, Iowa
Oswego County, MHC,
Oswego, New York
Oswego County Bancorp, Inc.,
Oswego, New York
Legal Developments
Section 3—Continued
Applicant(s)
Bank(s)
Reserve Bank
Effective Date
Penn Laurel Financial Corp.,
Curwensville, Pennsylvania
Poteau Bancshares, Inc.,
Poteau, Oklahoma
First Poteau Corporation,
Poteau, Oklahoma
Rich Land Bancorp, Inc.,
Olney, Illinois
Roxton Corporation Employee Stock
Ownership Plan,
Waco, Texas
Sharon Bancshares, Inc.,
Martin, Tennessee
Clearfield Bank & Trust Company,
Clearfield, Pennsylvania
The First State Bank,
Wister, Oklahoma
Philadelphia
May 18, 1999
Kansas City
May 19, 1999
Cisne State Bank,
Cisne, Illinois
The Roxton Corporation,
Celeste, Texas
St. Louis
April 23, 1999
Dallas
April 22, 1999
St. Louis
May 13, 1999
St. Louis
May 20, 1999
Dallas
April 24, 1999
Northeast Bancorp, Inc.,
North East, Maryland
First National Bank of North East,
North East, Maryland
Prime Bancorp, Inc.,
Fort Washington, Pennsylvania
Prime Bank,
Philadelphia, Pennsylvania
First State Bank of Van Orin,
Van Orin, Illinois
Westernbank Puerto Rico,
Mayagiiez, Puerto Rico
Philadelphia
May 10, 1999
New York
May 17, 1999
Chicago
May 6, 1999
New York
May 17, 1999
Applicant(s)
Nonbanking Activity/Company
Reserve Bank
Effective Date
Bank of Montreal,
Toronto, Canada
Bankmont Financial Corp.,
Chicago, Illinois
The Bank of New York Company,
Inc.,
New York, New York
Nesbitt Burns Securities, Inc.,
Chicago, Illinois
Chicago
April 23, 1999
BNY Trust Company of Missouri,
St. Louis, Missouri
Union Planters Bank, N.A.,
Memphis, Tennessee
New York
April 29, 1999
Simmons First National
Corporation,
Pine Bluff, Arkansas
South Texas Bancorp, Inc.,
Hebbronville, Texas
South Texas Bancorp of Delaware,
Inc.,
Wilmington, Delaware
Sterling Bancorp, Inc.,
Lancaster, Pennsylvania
Summit Bancorp,
Princeton, New Jersey
First Valley Corporation,
Bethlehem, Pennsylvania
Van Orin Bancorp, Inc.,
Van Orin, Illinois
W Holding Company, Inc.,
Mayagiiez, Puerto Rico
First Northwest Bancshares, Inc.
Kenton, Tennessee
First State Bank,
Kenton, Tennessee
NBC Bank Corp.,
El Dorado, Arkansas
National Bank of Commerce of
El Dorado,
El Dorado, Arkansas
Hebbronville State Bank,
Hebbronville, Texas
Section 4
523
524
Federal Reserve Bulletin • July 1999
Section 4—Continued
Applicant(s)
Nonbanking Activity/Company
Reserve Bank
Effective Date
Community Trust Financial Services
Corp.,
Hiram, Georgia
Community Loan Company,
Hiram, Georgia
Drummond Association, Inc.,
Cartersville, Georgia
Bartow Loan Company,
Cartersville, Georgia
First Finance,
Cartersville, Georgia
Dahlonega Loan Company,
Dahlonega, Georgia
Griffin Finance & Thrift,
Griffin, Georgia
First Finance & Thrift,
Rome, Georgia
Darlington County Bank,
Darlington, South Carolina
Transatlantic Capital Company, L.L.C.,
New York, New York
Atlanta
May 10, 1999
Richmond
May 3, 1999
New York
May 12, 1999
BSI Financial Services, Inc.,
Titusville, Pennsylvania
Chicago
April 29, 1999
Beloit Development, L.P.,
Beloit, Kansas
Kansas City
May 10, 1999
Kennedy American Mortgage, LLC,
Bozeman, Montana
Beloit Development, L.P.,
Beloit, Kansas
North Country Financial Group, Inc.,
Denver, Colorado
Minneapolis
May 3, 1999
Kansas City
April 21, 1999
Minneapolis
May 13, 1999
Passumpsic Bank, FSB,
Littleton, New Hampshire
Springfield Investment Company Doing
Business as F&M Insurance Agency,
Springfield, Minnesota
To engage in extending credit and
servicing loans
D & N Financial Corporation,
Hancock, Michigan
D & N Bank,
Hancock, Michigan
D & N Mortgage Corporation,
Hancock, Michigan
D & N Capital Corporation,
Hancock, Michigan
American Holdings Investment, Inc.,
Union City, Tennessee
Boston
May 7, 1999
Minneapolis
May 3, 1999
Chicago
April 30, 1999
Chicago
April 29, 1999
St. Louis
May 4, 1999
Darlington County Bancshares, Inc.,
Darlington, South Carolina
Deutsche Bank AG,
Frankfurt, Germany
German American Capital
Corporation,
New York, New York
First Mutual of Richmond, Inc.,
Richmond, Indiana
Richmond Mutual Bancorporation,
Inc.,
Richmond, Indiana
First National Bankshares of Beloit,
Inc.,
Beloit, Kansas
Guaranty Development Company,
Livingston, Montana
Guaranty, Inc.,
Beloit, Kansas
North Country Financial
Corporation,
Manistique, Michigan
Passumpsic Bancorp,
St. Johnsbury, Vermont
Piesco, Inc.,
Springfield, Minnesota
Readlyn Bancshares, Inc.,
Saint Paul, Minnesota
Republic Bancorp, Inc.,
Ann Arbor, Michigan
Sharon Bancshares, Inc.,
Martin, Tennessee
Legal Developments
525
Section 4—Continued
Applicant(s)
Nonbanking Activity/Company
Reserve Bank
Effective Date
SunTrust Banks, Inc.,
Atlanta, Georgia
SunTrust Community Development
Corporation,
Atlanta, Georgia
Regency Development Associates, Inc.
Raleigh, North Carolina
Regency Constructors, Inc.,
Raleigh, North Carolina
AExpert, Inc.,
Lititz, Pennsylvania
AExpert Advisory, Inc.,
Lititz, Pennsylvania
Trustmark Bankcard, National
Association,
Columbus, Georgia
Virginia Commonwealth Trust
Company,
Culpeper, Virginia
Atlanta
April 29, 1999
Philadelphia
April 22, 1999
Atlanta
April 27, 1999
Richmond
April 26, 1999
Susquehanna Bancshares, Inc.,
Lititz, Pennsylvania
Trustmark Corporation,
Jackson, Mississippi
Virginia Commonwealth Financial
Corporation,
Culpeper, Virginia
Sections 3 and 4
Applicant(s)
Nonbanking Activity/Company
Reserve Bank
Effective Date
BB&T Corporation,
Winston-Salem, North Carolina
FCNB Corp,
Frederick, Maryland
First Citizens Corporation,
Newnan, Georgia
First Frederick Financial Corporation,
Frederick, Maryland
Richmond
May 12, 1999
Richmond
May 19, 1999
APPLICATIONS APPROVED UNDER BANK MERGER 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.
Applicant(s)
Bank(s)
Effective Date
Central Savings Bank,
Sault Ste. Marie, Michigan
First Security Bank of Nevada,
Salt Lake City, Utah
First Security Corporation,
Salt Lake City, Utah
North Country Bank & Trust,
Manistique, Michigan
Comstock Bank,
Reno, Nevada
Nevada Banking Company,
Stateline, Nevada
May 7, 1999
May 14, 1999
526
Federal Reserve Bulletin • July 1999
By Federal Reserve
Banks
Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to
the Reserve Banks.
Applicant(s)
Bank(s)
Reserve Bank
Effective Date
BANKFIRST,
Sioux Falls, South Dakota
The Eaton Bank,
Eaton, Colorado
FCNB Bank,
Frederick, Maryland
Minster Bank,
Minster, Ohio
Summit Bank,
Bethlehem, Pennsylvania
Minnesota BANKFIRST,
Minneapolis, Minnesota
World Savings Bank, FSB,
Oakland, California
First Bank of Frederick,
Frederick, Maryland
MSB Interim Bank,
Minster, Ohio
Prime Bank,
Philadelphia, Pennsylvania
Minneapolis
May 12, 1999
Kansas City
May 19, 1999
Richmond
May 19, 1999
Cleveland
May 6, 1999
Philadelphia
May 17, 1999
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.
Sedgwick v. Board of Governors, No. Civ 99 0702 (D. Arizona, filed April 14, 1999). Action under Federal Tort
Claims Act alleging violation of bank supervision requirements.
Hunter v. Board of Governors, No. 1:98CV02994 (TFH)
(D.D.C., filed December 9, 1998). Action under the Freedom of Information Act and the Privacy Act.
Folstad v. Board of Governors, No. 1:99 CV 124 (W.D. Mich.,
filed February 17, 1999). Freedom of Information Act complaint. On March 23, 1999, the Board filed a motion to
dismiss or for summary judgment.
Nelson v. Greenspan, No. 1:99CV00215 (EGS) (D.D.C., filed
January 28, 1999). Employment discrimination complaint.
On March 29, 1999, the Board filed a motion to dismiss the
action.
Fraternal Order of Police v. Board of Governors, No.
1:98CV03116 (D. D.C., filed December 22, 1998). Declaratory judgment action challenging Board labor practices. On
February 26, 1999, the Board filed a motion to dismiss the
action.
Inner City Press/Community on the Move v. Board of Governors, No.98-9604 (2d Cir., filed December 3, 1998). Appeal of district court order dated October 6, 1998, granting
summary judgment for the Board in a Freedom of Information Act case.
Independent Bankers Association of America v. Board of Governors, No. 98-1482 (D.C. Cir., filed October 21, 1998).
Petition for review of a Board order dated September 23,
1998, conditionally approving the applications of Travelers
Group, Inc., New York, New York, to become a bank
holding company by acquiring Citicorp, New York, New
York, and its bank and nonbank subsidiaries.
Board of Governors v. Carrasco, No. 98 Civ. 3474 (LAK)
(S.D.N.Y., filed May 15, 1998). Action to freeze assets of
individual pending administrative adjudication of civil money
penalty assessment by the Board. On May 26, 1998, the court
issued a preliminary injunction restraining the transfer or disposition of the individual's assets and appointing the Federal
Reserve Bank of New York as receiver for those assets.
Board of Governors v. Pharaon, No. 98-6101 (2d Cir., filed
May 4, 1998). Appeal and cross-appeal of district court
order granting in part and denying in part the Board's
motion for summary judgment seeking prejudgment interest
and a statutory surcharge in connection with a civil money
penalty assessed by the Board. On February 24, 1999, the
court granted the Board's appeal and denied the crossappeal, and remanded the matter to the district court for
determination of prejudgment interest due to the Board.
Fenili v. Davidson, No. C-98-01568-CW (N.D. California,
filed April 17, 1998). Tort and constitutional claim arising
out of return of a check. On June 5, 1998, the Board filed its
motion to dismiss.
Logan v. Greenspan, No. 1:98CV00049 (D.D.C., filed January 9, 1998). Employment discrimination complaint.
Goldman v. Department of the Treasury, No. 98-9451 (11th
Circuit, filed November 10, 1998). Appeal from a District
Court order dismissing an action challenging Federal Reserve notes as lawful money.
Kerr v. Department of the Treasury, No. CV-S-97-01877DWH (D. Nev., filed December 22, 1997). Challenge to
income taxation and Federal Reserve notes. On September 3, 1998, a motion to dismiss was filed on behalf of
all federal defendants. The court dismissed the action on
March 31, 1999, and on April 28, 1999, the plaintiff filed a
notice of appeal.
Bettersworth v. Board of Governors, No. 97-CA-624 (W.D.
Tex., filed August 21, 1997). Privacy Act case. On June 1,
1999, the Board filed a motion for summary judgment.
Legal Developments
FINAL ENFORCEMENT ORDERS ISSUED BY THE
BOARD OF GOVERNORS
B.O.T. Corporation,
N.V.,
Curacao, Netherlands
Antilles
The Federal Reserve Board announced on May 21, 1999,
the issuance of a consent Order against B.O.T. Corporation, N.V., Curacao, Netherlands Antilles.
527
WRITTEN AGREEMENTS APPROVED BY FEDERAL
RESERVE BANKS
Wellington State Bank
Wellington, Texas
The Federal Reserve Board announced on May 18, 1999,
the execution of a Written Agreement by and among the
Wellington State Bank, Wellington, Texas, the Federal
Reserve Bank of Dallas, and The Banking Commissioner
of Texas.
A1
Financial and Business Statistics
A3
DOMESTIC FINANCIAL STATISTICS
Money Stock and Bank Credit
A4
A5
A6
Reserves, money stock, and debt
measures
Reserves of depository institutions and Reserve Bank
credit
Reserves and borrowings—Depository
institutions
Policy
A7
A8
A9
Federal
GUIDE TO TABULAR PRESENTATION
Instruments
Federal Reserve Bank interest rates
Reserve requirements of depository institutions
Federal Reserve open market transactions
Federal Reserve
Banks
A10 Condition and Federal Reserve note statements
A l l Maturity distribution of loan and security
holding
Finance—Continued
All
Gross public debt of U.S. Treasury—
Types and ownership
A28 U.S. government securities
dealers—Transactions
A29 U.S. government securities dealers—
Positions and financing
A30 Federal and federally sponsored credit
agencies—Debt outstanding
Securities Markets and Corporate
Finance
A31 New security issues—Tax-exempt state and local
governments and corporations
A32 Open-end investment companies—Net sales
and assets
A32 Corporate profits and their distribution
A32 Domestic finance companies—Assets and
liabilities
A3 3 Domestic finance companies—Owned and managed
receivables
Real Estate
Monetary and Credit
Aggregates
A12 Aggregate reserves of depository institutions
and monetary base
A13 Money stock, and debt measures
Commercial Banking
Assets and Liabilities
A15
A16
A17
A19
A20
Institutions—
All commercial banks in the United States
Domestically chartered commercial banks
Large domestically chartered commercial banks
Small domestically chartered commercial banks
Foreign-related institutions
Financial
A34 Mortgage markets—New homes
A3 5 Mortgage debt outstanding
Consumer
A3 6 Total outstanding
A3 6 Terms
Flow of Funds
A37
A39
A40
A41
Funds raised in U.S. credit markets
Summary of financial transactions
Summary of credit market debt outstanding
Summary of financial assets and liabilities
Markets
All
Commercial paper and bankers dollar
acceptances outstanding
A22 Prime rate charged by banks on short-term
business loans
A23 Interest rates—Money and capital markets
A24 Stock market—Selected statistics
Federal
Credit
Finance
A25 Federal fiscal and financing operations
A26 U.S. budget receipts and outlays
A27 Federal debt subject to statutory limitation
DOMESTIC NONFINANCIAL STATISTICS
Selected
A42
A42
A43
A44
A46
A47
A48
A49
Measures
Nonfinancial business activity
Labor force, employment, and unemployment
Output, capacity, and capacity utilization
Industrial production—Indexes and gross value
Housing and construction
Consumer and producer prices
Gross domestic product and income
Personal income and saving
2
Federal Reserve Bulletin • July 1999
INTERNATIONAL STATISTICS
Summary
Statistics
A50
A51
A51
A51
U.S. international transactions
U.S. foreign trade
U.S. reserve assets
Foreign official assets held at Federal Reserve
Banks
A52 Selected U.S. liabilities to foreign official
institutions
Reported by Banks in the United States
A52
A53
A55
A56
Liabilities to, and claims on, foreigners
Liabilities to foreigners
Banks' own claims on foreigners
Banks' own and domestic customers' claims on
foreigners
A56 Banks' own claims on unaffiliated foreigners
A57 Claims on foreign countries—Combined
domestic offices and foreign branches
Reported by Nonbanking
Business
Enterprises in the United States
A58 Liabilities to unaffiliated foreigners
A59 Claims on unaffiliated foreigners
Securities Holdings and
Transactions
A60 Foreign transactions in securities
A61 Marketable U.S. Treasury bonds and
notes—Foreign transactions
Interest and Exchange
Rates
A62 Foreign exchange rates
A63 GUIDE TO STATISTICAL RELEASES AND
SPECIAL TABLES
SPECIAL TABLE
A64 Pro forma balance sheet and income
statements for priced service operations,
March 31, 1999
A66 INDEX TO STATISTICAL TABLES
A3
Guide to Tabular Presentation
SYMBOLS AND
c
e
n.a.
ABBREVIATIONS
ATS
BIF
CD
CMO
CRA
FFB
FHA
FHLBB
FHLMC
FmHA
FNMA
FSLIC
G-7
Corrected
Estimated
Not available
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
Community Reinvestment Act of 1977
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
GENERAL
INFORMATION
P
r
*
0
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
G-10
GNMA
GDP
HUD
IMF
IO
IPCs
IRA
MMDA
MSA
NOW
OCD
OPEC
OTS
PMI
PO
REIT
REMIC
RP
RTC
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
Private mortgage insurance
Principal only
Real estate investment trust
Real estate mortgage investment conduit
Repurchase agreement
Resolution Trust Corporation
Securitized credit obligation
Special drawing right
Standard Industrial Classification
Department of Veterans Affairs
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.
A42 DomesticNonfinancialStatistics • July 1999
1.10
RESERVES, MONEY STOCK, A N D DEBT MEASURES
Percent annual rate of change, seasonally adjusted1
1998
1999
1998
1999
Monetary or credit aggregate
1
2
3
4
Reserves of depository
Total
Required
Nonborrowed
Monetary base 3
institutions2
r
1
r
Mar. r
Apr.
Q2
Q3
Q4
Ql
-3.6r
-2.5
—4.1r
5.4r
—7.7r
— 8.9r
-8.6r
6.9 r
— 1.8r
—2.5r
8.7r
-1.2
1.0
-1.3
9.1
10.9r
12.5r
10.0r
7.5 r
6.0
7.5
3.6
10.5
-15.3
-7.0
-13.0
9.4
-22.5
-25.6
-21.1
7.8
7.2
11.5
4.5
10.3
1.0
7.5
10.1
5.9 r
-2.0
6.9
8.6
5.9 r
5.0
11.0
12.9
6.4
2.7
7.2
7.2
5.7
4.8 r
10.1
12.0
6.1
-2.6
6.6
4.0
5.3
1.6
5.7
8.7
4.7
10.1
2.8
-2.2
6.3
6.9
8.8
7.9
n.a.
9.8
17.8
9.9
13.5
13.0
18.4
8.7
7.1
11.9r
17.3
9.6
-3.2
7.0
16.9
.3
-15.7
9.4
5.2
Dec.
Jan.
Feb.
4
5
6
7
8
Concepts of money, liquid assets, and debt
Ml
M2
M3
Debt
Nontransaction
9 In M2 5
10 In M3 only 6
components
Time and savings deposits
Commercial banks
Savings, including MMDAs
Small time 7
Large time 8 ' 9
Thrift institutions
14
Savings, including MMDAs
15
Small time 7
16
Large time 8
13.4
.1
16.4
15.8
.1
3.5
17.6
.4
3.9
11.6
-5.4
-2.4
19.2
-4.2
8.0
12.6
-7.7
10.6
5.4
-7.5
-26.8
.2
-3.5
-23.2
17.5
-3.3
14.7
10.8
-4.4
-4.5
9.0
-7.3
.5
10.1
-6.7
10.4
12.7
-6.2
7.4
10.8
-5.9
16.4
15.0
-4.8
25.6
14.3
-5.9
-14.5
7.3
-7.8
-16.0
9.5
-4.1
4.1
Money market mutual funds
17 Retail
18 Institution-only
20.9
34.7
19.0
26.6
28.4
41.8
20.5
17.9
22.4 r
29.5
22.7
-2.8
22.6
34.7
3.1
-1.8
12.6
21.1
Repurchase agreements and Eurodollars
19 Repurchase agreements 10
20 Eurodollars 10
14.5
-3.3
11.7
21.7
16.4
7.6
11.2
-2.7
34.0
-20.0
-25.0
-28.1
68.7
34.4
-50.2
31.9
-39.0
3.0
Debt components4
21 Federal
22 Nonfederal
-1.4
8.4
-1.5
8.3r
-2.0
9ff
-2.6
8.2
-.4
8.2r
-2.1
7.5
-7.3
8.3
-1.1
8.5
n.a.
n.a.
11
12
13
1. Unless otherwise noted, rates of change are calculated from average amounts outstanding during preceding month or quarter.
2. Figures incorporate adjustments for discontinuities, or "breaks," associated with
regulatory changes in reserve requirements. (See also table 1.20.)
3. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally
adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency
component of the money stock, plus (3) (for all quarterly reporters on the "Report of
Transaction Accounts, Other Deposits and Vault Cash" and for all weekly reporters whose
vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference
between current vault cash and the amount applied to satisfy current reserve requirements.
4. Composition of the money stock measures and debt is as follows:
M l : (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of
depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all
commercial banks other than those owed to depository institutions, the U.S. government, and
foreign banks and official institutions, less cash items in the process of collection and Federal
Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of
withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions,
credit union share draft accounts, and demand deposits at thrift institutions. Seasonally
adjusted Ml is computed by summing currency, travelers checks, demand deposits, and
OCDs, each seasonally adjusted separately.
M2: M l plus (1) savings (including MMDAs), (2) small-denomination time deposits (time
deposits—including retail RPs—in amounts of less than $100,000), and (3) balances in retail
money market mutual funds. Excludes individual retirement accounts (IRAs) and Keogh
balances at depository institutions and money market funds. Seasonally adjusted M2 is
calculated by summing savings deposits, small-denomination time deposits, and retail money
fund balances, each seasonally adjusted separately, and adding this result to seasonally
adjusted M l .
M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more), (2)
balances in institutional money funds, (3) RP liabilities (overnight and term) issued by all
depository institutions, and (4) Eurodollars (overnight and term) held by U.S. residents at
foreign branches of U.S. banks worldwide and at all banking offices in the United Kingdom
and Canada. Excludes amounts held by depository institutions, the U.S. government, money
market funds, and foreign banks and official institutions. Seasonally adjusted M3 is calculated
by summing large time deposits, institutional money fund balances, RP liabilities,
and Eurodollars, each seasonally adjusted separately, and adding this result to seasonally
adjusted M2.
Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial
sectors—the federal sector (U.S. government, not including government-sponsored enterprises or federally related mortgage pools) and the nonfederal sectors (state and local
governments, households and nonprofit organizations, nonfinancial corporate and nonfarm
noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and
corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data,
which are derived from the Federal Reserve Board's flow of funds accounts, are breakadjusted (that is, discontinuities in the data have been smoothed into the series) and
month-averaged (that is, the data have been derived by averaging adjacent month-end levels).
5. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail
money fund balances, each seasonally adjusted separately.
6. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities
(overnight and term) issued by depository institutions, and (4) Eurodollars (overnight and
term) of U.S. addressees, each seasonally adjusted separately.
7. Small time deposits—including retail RPs—are those issued in amounts of less than
$100,000. All IRA and Keogh account balances at commercial banks and thrift institutions
are subtracted from small time deposits.
8. Large time deposits are those issued in amounts of $100,000 or more, excluding those
booked at international banking facilities.
9. Large time deposits at commercial banks less those held by money market funds,
depository institutions, the U.S. government, and foreign banks and official institutions.
10. Includes both overnight and term.
Money Stock and Bank Credit
1.11
A5
RESERVES OF DEPOSITORY INSTITUTIONS A N D RESERVE B A N K CREDIT 1
Millions of dollars
Average of
daily figures
Average of daily figures for week ending on date indicated
Apr. 7
Apr.
Apr. 14
Apr. 21
SUPPLYING RESERVE FUNDS
1 Reserve Bank credit outstanding
U.S. government securities
2
Bought outright—System account 3
Held under repurchase agreements
3
Federal agency obligations
4
Bought outright
Held under repurchase agreements
5
6
Acceptances
Loans to depository institutions
7
Adjustment credit
Seasonal credit
8
9
Extended credit
10
Float
11
Other Federal Reserve assets
12 Gold stock
13 Special drawing rights certificate account
14 Treasury currency outstanding
501,636
508,369
507,920
511,052
511.893
513,556
466,781
9,002
469,667
6,496
470,563
6,685
311
2,022
458,706
3,310
464,000
6,499
469,926
6,691
464,197
4,497
464,809
8,006
465,257
7,863
336
3,222
318
3,408
311
2,110
311
3,690
311
3,944
311
3,387
311
2,212
311
1,660
0
0
0
0
0
0
0
0
0
118
10
32
17
167
38
4
16
87
20
44
21
168
27
32
30
199
36
0
0
0
0
0
0
0
0
0
446
35,488
210
33,436
297
33,330
62
34,837
-453
31,646
-41
32,657
13
32,538
264
33,433
103
33,638
11,049
9,200
26,454
11,048
8,329
26,58 l r
11,050
8,200
26,675
11,049
8,200
26,573 r
11,048
8,200
26,605 r
11,048
8,200
26,638 r
11,051
8,200
26,652
11,050
8,200
26,666
11,049
8,200
26,680
510,631
114
514,736 r
132
519,355
144
514,779
132
515,112 r
134
515,762 r
135
518,373
135
519,963
141
519,632
145
4,800
202
7,129
270
16,686
8,507
5,463
177
6,979 r
247
17,002
9,143 r
6,379
208
6,716
283
17,275
8,435
6,313
180
6,896
261
17,117
7,758
5,309
166
7,227 r
236
17,184
8,856 r
5,160
168
6,815 r
227
17,091
10,029 r
5,644
245
6,636
311
17,188
8,422
4,853
188
6,672
305
17,322
8,365
6,790
215
6,717
283
17,269
8,435
Apr. 7
Apr. 14
Apr. 21
516,531
512,417
514,232
470,506
5,880
ABSORBING RESERVE FUNDS
15 Currency in circulation
16 Treasury cash holdings
Deposits, other than reserve balances, with
Federal Reserve Banks
17
Treasury
18
Foreign
19
Service-related balances and adjustments . .
20
Other
21 Other Federal Reserve liabilities and capital .
22 Reserve balances with Federal Reserve Banks'
Wednesday figures
End-of-month figures
Mar. 31
Apr.
SUPPLYING RESERVE FUNDS
1 Reserve Bank credit outstanding
U.S. government securities
2
Bought outright—System account 3
3
Held under repurchase agreements
Federal agency obligations
4
Bought outright
5
Held under repurchase agreements
6
Acceptances
Loans to depository institutions
7
Adjustment credit
8
Seasonal credit
9
Extended credit
0
Float
1
Other Federal Reserve assets
12 Gold stock
13 Special drawing rights certificate account
14 Treasury currency outstanding
503,077
516,387
519,959
508,228
461,036
3,558
465,686
12,730
473,573
8,930
464,506
4,495
464,744
17,013
465,686
12,730
467,237
8,910
471,409
5,880
0
311
5,606
0
311
3,292
0
311
3,840
0
311
4,533
0
311
5,606
0
311
2,096
0
311
1,334
0
311
1,334
0
223
22
0
1
20
0
163
34,893
2
17
0
-305
30,217
223
22
0
32,690
1,030
28
0
146
32,802
74
32
0
-319
33,695
1,367
41
0
1,050
33,744
4
12
0
39
34,208
32,690
2
65
0
36
33,749
11,047
9,200
26,508
11,049
8,200
26,638 r
11,050
8,200
26,708
11,049
8,200
26,573 r
11,047
8,200
26,605 r
11,049
8,200
26,638 r
11,051
8,200
26,652
11,048
8,200
26,666
11,049
8,200
26,680
511,709
120
517,790 r
135
519,702
167
515,774 r
134
516,177 r
134
517,790 r
135
520,543
140
520,911
145
520,370
145
4,538
200
7,030
225
16,460
9,551
5,374
166
6,815 r
235
16,805
14,954 r
10,040
260
6,788
263
17,214
11,484
6,318
173
6,896
247
16,906
7,602
5,199
169
1,221'
220
17,089
16,167 r
5,374
166
6,815 r
235
16,805
14,954 r
5,438
183
6,636
304
17,135
8,083
4,157
191
6,672
306
17,040
8,909
6,690
193
6,717
240
17,007
8,800
-882
-882
ABSORBING RESERVE FUNDS
15 Currency in circulation
16 Treasury cash holdings
Deposits, other than reserve balances, with
Federal Reserve Banks
17
Treasury
18
Foreign
19
Service-related balances and adjustments . .
20
Other
21 Other Federal Reserve liabilities and capital .
22 Reserve balances with Federal Reserve Banks 4
1. Amounts of cash held as reserves are shown in table 1.12, line 2.
2. Includes securities loaned—fully guaranteed by U.S. government securities pledged
with Federal Reserve Banks—and excludes securities sold and scheduled to be bought back
under matched sale-purchase transactions.
3. Includes compensation that adjusts for the effects of inflation on the principal of
inflation-indexed securities.
4. Excludes required clearing balances and adjustments to compensate for float.
A42 DomesticNonfinancialStatistics • July 1999
1.12
RESERVES A N D BORROWINGS
Depository Institutions 1
Millions of dollars
Prorated monthly averages of biweekly averages
Reserve classification
1
2
3
4
5
6
7
8
9
10
Reserve balances with Reserve Banks 2
Total vault cash 3
Applied vault cash 4
Surplus vault cash 5
Total reserves 6
Required reserves
Excess reserve balances at Reserve Banks 7
Total borrowings at Reserve Banks 8
Seasonal borrowings
Extended credit 9
1996
1997
1998
Dec/
Dec. r
Dec.
Oct.r
Nov.
Dec.
Jan.
Feb.
Mar.r
Apr.
13,330
44,525
37,844
6,681
51,174
49,758
1,416
155
68
0
10,664
44,740
37,255
7,485
47,920
46,235
1,685
324
79
0
9,02 l r
44,305
35,997
8,308
45,018 r
43,435
l,583 r
117
15
0
9,027
43,268
35,089
8,179
44,117
42,543
1,574
174
107
0
8,855
43,104
35,297
7,807
44,152
42,528 r
1,624
83r
37
0
9,02 l r
44,305
35,997
8,308
45,018 r
43,435
l,583 r
117
15
0
9,658 r
45,499
36,687
8,812
46,345 r
44,811
l,534 r
206
7
0
8,578
46,468
36,660
9,809
45,237
44,022
1,215
116
9
0
8,851
42,898
34,270
8,628
43,121
41,816
1,305
65
18
0
9,240
42,162
34,407
7,755
43,647
42,483
1,164
166
39
0
1998
1999
Biweekly averages of daily figures for two week periods ending on dates indicated
1998
1
2
3
4
5
6
7
8
9
10
Reserve balances with Reserve Banks 2
Total vault cash 3
Applied vault cash 4
Surplus vault cash 5
Total reserves 6
Required reserves
Excess reserve balances at Reserve Banks 7
Total borrowings at Reserve Banks 8
Seasonal borrowings
Extended credit 9
1999
Dec. 30
Jan. 13r
Jan. 27
Feb. 10
Feb. 24
Mar. 10
Mar. 24
Apr. 7 r
Apr. 21
May 5
9,057
45,470
36,748
8,722
45,805
43,999
1,806
195
18
0
9,550
45,023
35,911
9,112
45,461
43,241
2,220
370
9
0
10,019
44,837
36,847
7,990
46,866
45,878
988
68
5
0
8,750
49,363
38,649
10,714
47,399
46,181
1,217
158
8
0
8,233
45,597
35,997
9,600
44,230
43,041 r
1,189
112
9
0
9,356
42,284
34,007
8,277
43,362
42,062
1,300
22
14
0
8,309
43,524
34,521
9,004
42,830
41,613
1,217
63
18
0
9,213
42,525
34,147
8,378
43,360
41,872
1,487
130
24
0
8,409
42,348
34,422
7,926
42,831
41,915
916
149
33
0
10,554
41,592
34,587
7,006
45,141
43,842
1,299
223
59
0
1. Data in this table also appear in the Board's H.3 (502) weekly statistical release. For
ordering address, see inside front cover. Data are not break-adjusted or seasonally adjusted.
2. Excludes required clearing balances and adjustments to compensate for float and
includes other off-balance-sheet "as-of' adjustments.
3. Vault cash eligible to satisfy reserve requirements. It includes only vault cash held by
those banks and thrifts that are not exempt from reserve requirements. Dates refer to the
maintenance periods in which the vault cash can be used to satisfy reserve requirements.
4. All vault cash held during the lagged computation period by "bound" institutions (that
is, those whose required reserves exceed their vault cash) plus the amount of vault cash
applied during the maintenance period by "nonbound" institutions (that is, those whose vault
cash exceeds their required reserves) to satisfy current reserve requirements.
5. Total vault cash (line 2) less applied vault cash (line 3).
6. Reserve balances with Federal Reserve Banks (line 1) plus applied vault cash
(line 3).
7. Total reserves (line 5) less required reserves (line 6).
8. Also includes adjustment credit.
9. Consists of borrowing at the discount window under the terms and conditions established for the extended credit program to help depository institutions deal with sustained
liquidity pressures. Because there is not the same need to repay such borrowing promptly as
with traditional short-term adjustment credit, the money market elfect of extended credit is
similar to that of nonborrowed reserves.
Policy Instruments
1.14
A7
FEDERAL RESERVE B A N K INTEREST RATES
Percent per year
Current and previous levels
Adjustment credit1
Federal Reserve
Bank
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
On
6/11/99
Extended credit 3
Effective date
Previous rate
On
6/11/99
Effective date
Previous rate
On
6/11/99
Effective date
Previous rate
11/18/98
11/17/98
11/17/98
11/19/98
11/18/98
11/18/98
4.75
4.85
6/3/99
4.80
5.35
6/3/99
5.30
4.75
4.85
6/3/99
4.80
5.35
6/3/99
5.30
4.50
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco . . . .
Seasonal credit 2
11/19/98
11/19/98
11/19/98
11/18/98
11/17/98
11/17/98
4.50
Range of rates for adjustment credit in recent years
Effective date
In effect Dec. 31, 1977
1978—Jan.
Range (or
level)—All
F.R. Banks
6
9
20
11
12
3
10
21
22
16
20
1
3
6-6.5
6.5
6.5-7
7
7-7.25
7.25
7.75
8
8-8.5
8.5
8.5-9.5
9.5
1979—July 20
Aug. 17
20
Sept. 19
21
Oct. 8
10
10
10-10.5
10.5
10.5-11
11
11-12
12
1980—Feb. 15
19
May 29
30
June 13
16
July 28
29
Sept. 26
Nov. 17
Dec. 5
8
1981—May 5
8
Nov. 2
6
Dec. 4
12-13
13
12-13
12
11-12
11
10-11
10
11
12
12-13
13
13-14
14
13-14
13
12
May
July
Aug.
Sept.
Oct.
Nov.
F.R. Bank
of
N.Y.
6
6.5
6.5
7
7
7.25
7.25
7.75
8
8.5
8.5
9.5
9.5
10
10.5
10.5
11
11
12
12
13
13
13
12
11
11
10
10
11
12
13
13
14
14
13
13
12
Range (or
level)—All
F.R. Banks
F.R. Bank
of
N.Y.
11.5-12
11.5
11-11.5
11
10.5
10-10.5
10
9.5-10
9.5
9-9.5
9
8.5-9
8.5-9
8.5
11.5
11.5
11
11
10.5
10
10
9.5
9.5
9
9
9
8.5
8.5
9
13
Nov. 21
26
Dec. 24
8.5-9
9
8.5-9
8.5
8
9
9
8.5
8.5
8
1985—May 20
24
7.5-8
7.5
7.5
7.5
1986—Mar.
7
10
Apr. 21
23
July 11
Aug. 21
22
7-7.5
7
6.5-7
6.5
6
5.5-6
5.5
7
7
6.5
6.5
6
5.5
5.5
1987—Sept. 4
11
5.5-6
6
1988—Aug.
9
11
1989—Feb. 24
27
Effecti\
1982—July 20
23
Aug. 2
3
16
27
30
Oct. 12
13
Nov. 22
26
Dec. 14
15
17
1984—Apr.
Effective date
1990—Dec. 19
Range (or
level)—All
F.R. Banks
F.R. Bank
of
N.Y.
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
3.5^1.5
3.5
6
6
5.5
5.5
5
5
4.5
4.5
3.5
3.5
2
7
3-3.5
3
1994—May 17
18
Aug. 16
18
Nov. 15
17
3-3.5
3.5
3.5-4
4
4-4.75
4.75
3.5
3.5
4
4
4.75
4.75
1
9
4.75-5.25
5.25
5.25
5.25
1996—Jan. 31
Feb. 5
5.00-5.25
5.00
5.00
5.00
1998—Oct. 15
Oct. 16
4.75-5.00
4.75
4.75
4.75
6
6
1998—Nov. 17
Nov. 19
4.50-4.75
4.50
4.50
4.50
6-6.5
6.5
6.5
6.5
In effect June 11, 1999
4.50
4.50
6.5-7
7
7
7
1991—Feb.
Apr.
May
Sept.
Nov.
Dec.
1992—July
1995—Feb.
1. Available on a short-term basis to help depository institutions meet temporary needs for
funds that cannot be met through reasonable alternative sources. The highest rate established
for loans to depository institutions may be charged on adjustment credit loans of unusual size
that result from a major operating problem at the borrower's facility.
2. Available to help relatively small depository institutions meet regular seasonal needs for
funds that arise from a clear pattern of intrayearly movements in their deposits and loans and
that cannot be met through special industry lenders. The discount rate on seasonal credit takes
into account rates charged by market sources of funds and ordinarily is reestablished on the
first business day of each two-week reserve maintenance period; however, it is never less than
the discount rate applicable to adjustment credit.
3. May be made available to depository institutions when similar assistance is not
reasonably available from other sources, including special industry lenders. Such credit may
be provided when exceptional circumstances (including sustained deposit drains, impaired
access to money market funds, or sudden deterioration in loan repayment performance) or
practices involve only a particular institution, or to meet the needs of institutions experiencing
difficulties adjusting to changing market conditions over a longer period (particularly at times
of deposit disintermediation). The discount rate applicable to adjustment credit ordinarily is
charged on extended-credit loans outstanding less than thirty days; however, at the discretion
4
3
3
of the Federal Reserve Bank, this time period may be shortened. Beyond this initial period, a
flexible rate somewhat above rates charged on market sources of funds is charged. The rate
ordinarily is reestablished on the first business day of each two-week reserve maintenance
period, but it is never less than the discount rate applicable to adjustment credit plus 50 basis
points.
4. For earlier data, see the following publications of the Board of Governors: Banking and
Monetary Statistics, 1914-1941, and 1941-1970\ and the Annual Statistical Digest, 19701979.
In 1980 and 1981, the Federal Reserve applied a surcharge to short-term adjustment-credit
borrowings by institutions with deposits of $500 million or more that had borrowed in
successive weeks or in more than four weeks in a calendar quarter. A 3 percent surcharge was
in effect from Mar. 17, 1980, through May 7, 1980. A surcharge of 2 percent was reimposed
on Nov. 17, 1980; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and to
4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981,
and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981, the formula for applying the
surcharge was changed from a calendar quarter to a moving thirteen-week period. The
surcharge was eliminated on Nov. 17, 1981.
A42 DomesticNonfinancialStatistics • July 1999
1.15
RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS 1
Type of deposit
1
2
Net transaction accounts
$0 million-$46.5 million 3 .
More than $46.5 million 4 .
3
Nonpersonal time deposits ;
12/27/90
4
Eurocurrency liabilities 6 . . .
12/27/90
1. Required reserves must be held in the form of deposits with Federal Reserve Banks
or vault cash. Nonmember institutions may maintain reserve balances with a Federal
Reserve Bank indirectly, on a pass-through basis, with certain approved institutions. For
previous reserve requirements, see earlier editions of the Annual Report or the Federal
Reserve Bulletin. Under the Monetary Control Act of 1980, depository institutions
include commercial banks, savings banks, savings and loan associations, credit unions,
agencies and branches of foreign banks, and Edge Act corporations.
2. Transaction accounts include all deposits against which the account holder is permitted
to make withdrawals by negotiable or transferable instruments, payment orders of withdrawal, or telephone or preauthorized transfers for the purpose of making payments to third
persons or others. However, accounts subject to the rules that permit no more than six
preauthorized, automatic, or other transfers per month (of which no more than three may be
by check, draft, debit card, or similar order payable directly to third parties) are savings
deposits, not transaction accounts.
3. The Monetary Control Act of 1980 requires that the amount of transaction accounts
against which the 3 percent reserve requirement applies be modified annually by 80 percent of
the percentage change in transaction accounts held by all depository institutions, determined
as of June 30 of each year. Effective with the reserve maintenance period beginning
December 31, 1998, for depository institutions that report weekly, and with the period
beginning January 14, 1999, for institutions that report quarterly, the amount was decreased
from $47.8 million to $46.5 million.
Under the Garn-St Germain Depository Institutions Act of 1982, the Board adjusts the
amount of reservable liabilities subject to a zero percent reserve requirement each year for the
12/31/98
12/31/98
succeeding calendar year by 80 percent of the percentage increase in the total reservable
liabilities of all depository institutions, measured on an annual basis as of June 30. No
corresponding adjustment is made in the event of a decrease. The exemption applies only to
accounts that would be subject to a 3 percent reserve requirement. Effective with the reserve
maintenance period beginning December 31, 1998, for depository institutions that report
weekly, and with the period beginning January 14, 1999, for institutions that report quarterly,
the exemption was raised from $4.7 million to $4.9 million.
4. The reserve requirement was reduced from 12 percent to 10 percent on
Apr. 2, 1992, for institutions that report weekly, and on Apr. 16, 1992, for institutions that
report quarterly.
5. For institutions that report weekly, the reserve requirement on nonpersonal time deposits
with an original maturity of less than 1 1 /2 years was reduced from 3 percent to 1 x/2 percent for
the maintenance period that began Dec. 13, 1990, and to zero for the maintenance period that
began Dec. 27, 1990. For institutions that report quarterly, the reserve requirement on
nonpersonal time deposits with an original maturity of less than 1 '/i years was reduced from 3
percent to zero on Jan. 17, 1991.
The reserve requirement on nonpersonal time deposits with an original maturity of \l/2
years or more has been zero since Oct. 6, 1983.
6. The reserve requirement on Eurocurrency liabilities was reduced from 3 percent to zero
in the same manner and on the same dates as the reserve requirement on nonpersonal time
deposits with an original maturity of less than 11/2 years (see note 5).
Policy Instruments
1.17
A9
FEDERAL RESERVE OPEN MARKET TRANSACTIONS 1
Millions of dollars
1999
1998
Type of transaction
and maturity
1996
1997
1998
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
U . S . T R E A S U R Y SECURITIES 2
23
7,4
25
Outright transactions (excluding
transactions)
Treasury bills
Gross purchases
Gross sales
Exchanges
For new bills
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
76
27
Matched transactions
Gross purchases
Gross sales
78
29
Repurchase agreements
Gross purchases
Gross sales
30
Net change in U.S. Treasury securities
1
7
4
5
7
8
9
10
11
17.
13
14
15
16
17
18
19
70
21
22
matched
9,901
0
426,928
426,928
0
9,147
0
436,257
435,907
0
3,550
0
450,835
450,835
2,000
0
0
33,140
33,140
0
0
0
40,712
40,712
0
0
0
34,957
34,957
0
0
0
41,393
41,393
0
0
0
35,069
35,069
0
0
0
36,862
36,862
0
0
0
35,065
35,065
0
524
0
30,512
-41,394
2,015
5,549
0
41,716
-27,499
1,996
6,297
0
46,062
-49,434
2,676
1,038
0
2,301
-2,242
0
741
0
2,423
-400
602
662
0
5,444
-8,093
0
0
0
2,539
-2,555
0
0
0
2,865
-400
492
2,103
0
5,578
-7,458
0
1,060
0
3,015
-5,956
0
3,898
0
-25,022
31,459
19,680
0
-37,987
20,274
12,901
0
-37,777
37,154
3,989
0
-2,301
2,242
725
0
-2,423
0
2,397
0
-4,574
6,013
0
0
-2,539
2,555
0
0
-2,865
0
2,752
0
-4,928
4,778
2,428
0
-3,015
5,956
1,116
0
-5,469
6,666
3,849
0
-1,954
5,215
2,294
0
-5,908
7,439
351
0
0
0
0
0
0
400
862
0
718
1,135
0
0
0
0
0
0
0
400
335
0
-650
1,340
346
0
0
0
1,655
0
-20
3,270
5,897
0
-1,775
2,360
4,884
0
-2,377
4,842
0
0
0
0
1,674
0
0
0
698
0
-1,589
945
0
0
0
0
615
0
0
0
0
0
0
1,340
2,404
0
0
0
17,094
0
2,015
44,122
0
1,996
29,926
0
4,676
5,377
0
0
3,140
0
602
4,619
0
0
0
0
0
615
0
492
5,190
0
0
6,238
0
0
3,092,399
3,094,769
3,577,954
3,580,274
4,395,430
4,399,330
380,594
382,063
402,581
400,995
358,438
359,256
418,538
420,397
365,779
363,604
324,078
322,669
393,267
394,865
457,568
450,359
810,485
809,268
512,671
514,186
63,924
59,731
40,823
48,672
23,884
19,200
49,296
38,592
21,968
37,157
26,098
27,025
62,878
53,706
19,919
41,022
19,835
8,101
-3,725
8,484
8,845
-12,891
5,672
13,812
0
0
409
0
0
1,540
0
25
322
0
0
48
0
0
15
0
0
20
0
0
30
0
0
2
0
0
0
0
0
25
75,354
74,842
160,409
159,369
284,316
276,266
18,486
19,953
51,471
50,032
51,419
48,785
48,815
44,285
23,577
31,744
37,416
36,067
35,731
34,009
FEDERAL A G E N C Y OBLIGATIONS
31
37
33
Outright transactions
Gross purchases
Gross sales
Redemptions
34
35
Repurchase agreements
Gross purchases
Gross sales
36
Net change in federal agency obligations
37
Total net change in System Open Market A c c o u n t . . .
103
-500
7,703
-1,515
1,424
2,614
4,500
-8,169
1,349
1,697
20,021
40,522
27,538
6,586
-2,301
11,098
13,345
-21,060
7,021
15,509
1. Sales, redemptions, and negative figures reduce holdings of the System Open Market
Account; all other figures increase such holdings.
2. Transactions exclude changes in compensation for the effects of inflation on the principal
of inflation-indexed securities.
A42
1.18
DomesticNonfinancialStatistics • July 1999
FEDERAL RESERVE BANKS
Condition and Federal Reserve Note Statements 1
Millions of dollars
Account
Mar. 31
Apr. 7
Wednesday
End of month
1999
1999
Apr. 14
Apr. 21
Apr. 28
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
11,049
8,200
428
11,051
8,200
424
11,048
8,200
408
11,049
8,200
415
11,048
8,200
416
11,047
9,200
464
11,049
8,200
428
11,050
8,200
430
246
0
0
1,058
0
0
107
0
0
1,408
0
0
66
0
0
16
0
0
246
0
0
68
0
0
311
5,606
311
2,096
311
1,334
311
1,334
311
3,015
336
3,884
311
5,606
311
3,292
478,416
476,147
477,289
476,386
480,357
464,594
478,416
482,503
10 Bought outright 2
11
Bills
12
Notes
13
Bonds
14 Held under repurchase agreements
465,686
196,759
194,968
73,959
12,730
467,237
197,758
195,425
74,055
8,910
471,409
199,600
197,493
74,317
5,880
470,506
198,718
197,120
74,667
5,880
473,627
199,175
199,721
74,730
6,730
461,036
198,357
191,126
71,553
3,558
465,686
196,759
194,968
73,959
12,730
473,573
199,121
199,721
74,731
8,930
15 Total loans and securities
484,578
479,611
479,041
479,439
483,748
468,830
484,578
486,174
7,097
1,303
8,303
1,304
7,910
1,308
9,065
1,309
8,254
1,311
5,176
1,302
7,097
1,303
5,248
1,310
15,171
16,126
15,250
16,160
15,254
16,995
15,258
17,110
15,263
17,496
18,702
14,313
15,171
16,126
15,034
17,336
543,952
540,303
540,165
541,845
545,736
529,034
543,952
544,782
9 Total U.S. Treasury securities
16 Items in process of collection
17 Bank premises
Other assets
18 Denominated in foreign currencies 3
19 All other 4
20 Total assets
LIABILITIES
491,715
494,455
494,798
494,250
494,606
485,784
491,715
493,590
22 Total deposits
28,316
20,893
20,396
22,406
26,392
21,798
28,316
28,623
23
24
25
26
22,541
5,374
166
235
14,968
5,438
183
304
15,742
4,157
191
306
15,283
6,690
193
240
17,442
8,545
168
237
16,835
4,538
200
225
22,541
5,374
166
235
18,061
10,040
260
263
7,117
4,328
7,821
4,379
7,931
4,239
8,182
4,184
7,682
4,230
4,992
4,205
7,117
4,328
5,354
4,493
531,475
527,547
527,365
529,023
532,911
516,779
531,475
532,062
6,122
5,944
411
6,123
5,952
681
6,172
5,952
677
6,166
5,952
704
6,180
5,952
693
6,063
5,872
320
6,122
5,944
411
6,182
5,952
586
543,952
540,303
540,165
541,845
545,736
529,034
543,952
544,782
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
21 Federal Reserve notes
Depository institutions
U.S. Treasury—General account
Foreign—Official accounts
Other
27 Deferred credit items
28 Other liabilities and accrued dividends 5
29 Total liabilities
CAPITAL A C C O U N T S
30 Capital paid in
31 Surplus
32 Other capital accounts
33 Total liabilities and capital accounts
MEMO
34 Marketable U.S. Treasury securities held in custody for
foreign and international accounts
Federal Reserve note statement
35 Federal Reserve notes outstanding (issued to Banks)
36
LESS: Held by Federal Reserve Banks
37
Federal Reserve notes, net
38
39
40
41
Collateral held against notes, net
Gold certificate account
Special drawing rights certificate account
Other eligible assets
U.S. Treasury and agency securities
42 Total collateral
665,942
174,228
491,715
671,979
177,524
494,455
676,627
181,829
494,798
681,449
187,199
494,250
685,435
190,828
494,606
641,086
155,302
485,784
665,942
174,228
491,715
687,900
194,309
493,590
11,049
8,200
0
472,466
11,051
8,200
0
475,204
11,048
8,200
0
475,550
11,049
8,200
0
475,001
11,048
8,200
0
475,358
11,047
9,200
0
465,537
11,049
8,200
0
472,466
11,050
8,200
0
474,340
491,715
494,455
494,798
494,250
494,606
485,784
491,715
493,590
1. Some of the data in this table also appear in the Board's H.4.1 (503) weekly statistical
release. For ordering address, see inside front cover.
2. Includes securities loaned—fully guaranteed by U.S. Treasury securities pledged with
Federal Reserve Banks—and includes compensation that adjusts for the effects of inflation on
the principal of inflation-indexed securities. 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.
Federal Reserve Banks
1.19
FEDERAL RESERVE BANKS
All
Maturity Distribution of Loan and Security Holding
Millions of dollars
Type of holding and maturity
Mar. 31
Apr. 7
Wednesday
End of month
1999
1999
Apr. 14
Apr. 21
Apr. 28
Feb. 26
Mar. 31
Apr. 30
1 Total loans
246
1,058
107
1,408
66
445
65
68
2 Within fifteen days1
3. Sixteen days to ninety days
243
3
1,033
26
77
30
1,406
2
52
14
445
0
64
1
40
28
4 Total U.S. Treasury securities 2
478,416
476,147
477,289
476,386
480,357
470,976
478,416
482,503
Within fifteen days 1
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
26,785
98,303
134,439
112,263
46,598
60,029
18,048
101,247
137,410
112,518
46,894
60,029
20,396
97,871
138,060
113,451
47,220
60,292
20,105
96,179
138,454
113,786
47,221
60,642
22,035
100,866
134,011
115,258
47,545
60,642
24,996
98,522
133,298
110,291
46,246
57,623
26,785
98,303
134,439
112,263
46,598
60,029
13,804
103,293
142,071
115,147
47,546
60,642
11 Total federal agency obligations
5,917
2,407
1,645
1,645
3,326
7,559
5,917
3,603
12
13
14
15
16
17
5,606
27
79
30
175
0
2,096
27
79
30
175
0
1,334
32
84
20
175
0
1,334
32
84
20
175
0
3,015
37
79
20
175
0
7,248
0
106
30
175
0
5,606
27
79
30
175
0
3,292
37
79
20
175
0
5
6
7
8
9
10
Within fifteen days'
Sixteen days to ninety days
Ninety-one days to one year
One year to five years
Five years to ten years
More than ten years
1. Holdings under repurchase agreements are classified as maturing within fifteen days in
accordance with maximum maturity of the agreements.
2. Includes compensation that adjusts for the effects of inflation on the principal of
inflation-indexed securities.
A12
1.20
Domestic Financial Statistics • July 1999
AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS A N D MONETARY BASE 1
Billions of dollars, averages of daily figures
1998
Item
1995
Dec. r
1996
Dec/
1997
Dec. r
1998
Dec.
Sept.1"
Oct. r
1999
Nov.1"
Dec.
Jan.
Feb.
Mar/
Apr.
44.90 r
44.79
44.79
43.32
512.32 r
45.13 r
44.92 r
44.92 r
43.59 r
516.8 l r
44.55 r
44.44 r
44.44 r
43.34 r
520.84 r
43.72
43.65
43.65
42.41
524.23
43.98
43.82
43.82
42.82
528.72
Seasonally adjusted
A D J U S T E D FOR
C H A N G E S IN R E S E R V E R E Q U I R E M E N T S 2
1
2
3
4
5
Total reserves 3
Nonborrowed reserves 4
Nonborrowed reserves plus extended credit 5
Required reserves
Monetary base 6
56.45
56.20
56.20
55.16
434.10
50.16
50.01
50.01
48.75
451.37
46.86
46.54
46.54
45.18
478.88
44.90 r
44.79
44.79
43.32
512.32 r
44.54
44.29
44.29
42.85
502.04
44.41
44.23
44.23
42.83
505.84
44.50
44.41
44.41
42.87
509.14
Not seasonally adjusted
6
7
8
9
10
Total reserves 7
Nonborrowed reserves
Nonborrowed reserves plus extended credit 5
Required reserves 8
Monetary base 9
58.02
57.76
57.76
56.73
439.03
51.45
51.30
51.30
50.04
456.63
48.01
47.69
47.69
46.33
484.98
45.12 r
45.00 r
45.00 r
43.54'
518.28 r
44.27
44.02
44.02
42.58
500.98
44.20
44.03
44.03
42.63
504.47
44.24
44.16
44.16
42.62
510.14
45.12 r
45.00 r
45.00 r
43.54 r
518.28""
46.34
46.14 r
46.14 r
44.81
520.01
45.25
45.13
45.13
44.03
519.70
43.14
43.08
43.08
41.84
523.35
43.67
43.51
43.51
42.51
526.75
57.90
57.64
57.64
56.61
444.45
1.29
.26
51.17
51.02
51.02
49.76
463.40
1.42
.16
47.92
47.60
47.60
46.24
491.79
1.69
.32
45.02
44.90
44.90
43.44
525.06
1.58
.12
44.20
43.95
43.95
42.50
507.83
1.69
.25
44.12
43.94
43.94
42.54
511.36
1.57
.17
44.15
44.07
44.07
42.53
516.96
1.62
.08
45.02
44.90
44.90
43.44
525.06
1.58
.12
46.35
46.14
46.14
44.81
527.59
1.53r
.21
45.24
45.12
45.12
44.02
526.85
1.22
.12
43.12
43.06
43.06
41.82
530.30
1.31
.07
43.65
43.48
43.48
42.48
533.47
1.16
.17
N O T A D J U S T E D FOR
C H A N G E S IN R E S E R V E R E Q U I R E M E N T S 1 0
11
12
13
14
15
16
17
Total reserves 11
Nonborrowed reserves
Nonborrowed reserves plus extended credit 5
Required reserves
Monetary base 12
Excess reserves 13
Borrowings from the Federal Reserve
1. Latest monthly and biweekly figures are available from the Board's H.3 (502) weekly
statistical release. Historical data starting in 1959 and estimates of the effect on required
reserves of changes in reserve requirements are available from the Money and Reserves
Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve
System, Washington, DC 20551.
2. Figures reflect adjustments for discontinuities, or "breaks," associated with regulatory
changes in reserve requirements. (See also table 1.10.)
3. Seasonally adjusted, break-adjusted total reserves equal seasonally adjusted, breakadjusted required reserves (line 4) plus excess reserves (line 16).
4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally adjusted,
break-adjusted total reserves (line 1) less total borrowings of depository institutions from the
Federal Reserve (line 17).
5. Extended credit consists of borrowing at the discount window under the terms and
conditions established for the extended credit program to help depository institutions deal
with sustained liquidity pressures. Because there is not the same need to repay such
borrowing promptly as with traditional short-term adjustment credit, the money market effect
of extended credit is similar to that of nonborrowed reserves.
6. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally
adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency
component of the money stock, plus (3) (for all quarterly reporters on the "Report of
Transaction Accounts, Other Deposits and Vault Cash" and for all those weekly reporters
whose vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted
difference between current vault cash and the amount applied to satisfy current reserve
requirements.
7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) plus excess
reserves (line 16).
8. To adjust required reserves for discontinuities that are due to regulatory changes in
reserve requirements, a multiplicative procedure is used to estimate what required reserves
would have been in past periods had current reserve requirements been in effect. Breakadjusted required reserves include required reserves against transactions deposits and nonpersonal time and savings deposits (but not reservable nondeposit liabilities).
9. The break-adjusted monetary base equals (1) break-adjusted total reserves (line 6), plus
(2) the (unadjusted) currency component of the money stock, plus (3) (for all quarterly
reporters on the "Report of Transaction Accounts, Other Deposits and Vault Cash" and for all
those weekly reporters whose vault cash exceeds their required reserves) the break-adjusted
difference between current vault cash and the amount applied to satisfy current reserve
requirements.
10. Reflects actual reserve requirements, including those on nondeposit liabilities, with no
adjustments to eliminate the effects of discontinuities associated with regulatory changes in
reserve requirements.
11. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy reserve
requirements.
12. The monetary base, not break-adjusted and not seasonally adjusted, consists of (1) total
reserves (line 11), plus (2) required clearing balances and adjustments to compensate for float
at Federal Reserve Banks, plus (3) the currency component of the money stock, plus (4) (for
all quarterly reporters on the "Report of Transaction Accounts, Other Deposits and Vault
Cash" and for all those weekly reporters whose vault cash exceeds their required reserves) the
difference between current vault cash and the amount applied to satisfy current reserve
requirements. Since February 1984, currency and vault cash figures have been measured over
the computation periods ending on Mondays.
13. Unadjusted total reserves (line 11) less unadjusted required reserves (line 14).
Monetary and Credit Aggregates
1.21
A13
MONEY STOCK A N D DEBT MEASURES 1
Billions of dollars, averages of daily figures
1999
Item
1995
Dec.
1996
Dec.
1997
Dec.
1998
Dec.
Jan.
r
Feb/
Mar. r
Apr.
Seasonally adjusted
1
2
3
4
Measures2
Ml
M2
M3
Debt
5
6
7
8
Ml components
Currency 3
Travelers checks 4
Demand deposits 5
Other checkable deposits 6
1,126.7
3,649.1
4,618.5
13,703.2
1,081.3
3,823.9
4,955.6
14,425.3
1,074.9
4,046.6
5,404.7
15,141.3
l,093.4 r
4,402. l r
5,999.8 r
16,085.5r
1,091.0
4,426.2
6,019.6
16,156.1
1,092.5
4,447.1
6,063.1
16,219.5
1,101.7
4,457.3
6,052.2
16,304.7
1,108.0
4,489.9
6,091.8
n.a.
372.3
8.3
389.4
356.7
394.1
8.0
403.0
276.2
424.5
7.7
396.5
246.2
459.2
7.8
377.5
248.8 r
462.7
7.8
371.1
249.5
467.6
7.7
371.6
245.5
472.0
7.8
373.9
248.0
476.5
7.8
373.6
250.1
2,522.4
969.4
2,742.6
1,131.7
2,971.8
1,358.0
3,308.7 r
1,597.7
3,335.2
1,593.5
3,354.6
1,616.0
3,355.5
1,594.9
3,381.9
1,601.8
Commercial banks
11 Savings deposits, including MMDAs
12 Small time deposits 9
13 Large time deposits 10 ' 11
775.3
575.0
346.6
905.2
593.7
414.8
1,022.9
626.1
490.2
1,189.8
626.1
541.1
1,202.3
622.1
545.9
1,207.7
618.2
533.7
1,207.9
616.4
523.4
1,225.5
614.7
529.8
Thrift institutions
14 Savings deposits, including MMDAs
15 Small time deposits 9
16 Large time deposits 10
359.8
356.7
74.5
367.1
353.8
78.4
377.3
343.2
85.9
415.2
325.9
89.1
420.4
324.6
91.0
425.4
323.0
89.9
428.0
320.9
88.7
431.4
319.8
89.0
Money market mutual funds
17 Retail
18 Institution-only
455.5
255.9
522.8
313.3
602.3
379.9
751,7 r
516.2
765.9
515.0
780.3
529.9
782.3
529.1
790.5
538.4
Repurchase agreements and Eurodollars
19 Repurchase agreements 12
20 Eurodollars 12
198.7
93.7
211.3
113.9
252.8
149.2
297.7
153.6
291.5
150.0
308.2
154.3
295.3
158.4
285.7
158.8
3,638.9
10,064.2
3,780.6
10,644.7
3,798.4
11,342.9
3,747.4
12,338.2r
3,740.9
12,415.3
3,718.2
12,501.3
3,714.7
12,590.0
n.a.
n.a.
Nontransaction
9 In M2 7
10 In M3 only 8
components
Debt components
21 Federal debt
22 Nonfederal debt
Not seasonally adjusted
23
24
25
26
Measures2
Ml
M2
M3
Debt
27
28
29
30
Ml components
Currency 3
Travelers checks 4
Demand deposits 5
Other checkable deposits 6
1,152.4
3.671.7
4,638.0
13,704.6
1,104.9
3,843.7
4,972.5
14,425.3
1,097.4
4,064.8
5,420.8
15,140.9
1,115.3
4,418.9 r
6,016.0 r
16,086.0r
1,098.3
4,429.6
6,027.9
16,139.7
1,083.2
4,441.4
6,071.8
16,191.5
1,096.9
4,480.8
6,091.1
16,296.9
1,113.4
4,527.4
6,128.8
n.a.
376.2
8.5
407.2
360.5
397.9
8;3
419.9
278.8
428.9
7.9
412.3
248.3
464.2
8.0
392.4
250.7
462.5
7.9
375.7
252.2
466.5
7.9
364.6
244.2
471.3
7.9
368.7
249.0
476.0
7.9
373.7
255.8
2,519.3
966.4
2,738.9
1,128.8
2,967.4
1,356.0
3,303.6 r
1,597.0
3,331.3
1,598.3
3,358.1
1,630.5
3,383.9
1,610.4
3,414.1
1,601.4
Commercial banks
33 Savings deposits, including MMDAs
34 Small time deposits 9
35 Large time deposits 10, 11
774.1
573.8
345.8
903.3
592.7
413.3
1,020.4
625.3
487.7
l,186.8 r
625.4
537.5
1,197.3
622.8
532.2
1,203.8
619.6
529.1
1,217.6
617.3
527.8
1,241.3
614.8
530.6
Thrift institutions
36 Savings deposits, including MMDAs
37 Small time deposits 9
38 Large time deposits 10
359.2
355.9
74.3
366.3
353.2
78.1
376.4
342.8
85.4
414.1
325.6
88.5
418.6
324.9
88.8
424.0
323.7
89.1
431.5
321.3
89.5
437.0
319.8
89.1
Money market mutual funds
39 Retail
40 Institution-only
456.1
257.7
523.2
316.0
602.5
384.5
751.7 r
523.3
767.6
529.3
787.0
547.3
796.2
537.9
801.1
536.7
Repurchase agreements and Eurodollars
41 Repurchase agreements 12
42 Eurodollars 12
193.8
94.9
205.7
115.7
246.1
152.3
290.3
157.4
292.9
155.1
307.7
157.1
297.9
157.3
288.4
156.6
3,645.9
10,058.7
3,787.9
10,637.3
3,805.8
11,335.1
3,754.9
12,331. l r
3,736.6
12,403.0
3,721.8
12,469.7
3,741.2
12,555.7
Nontransaction
31 In M2 7
32 In M3 only 8
components
Debt components
43 Federal debt
44 Nonfederal debt
Footnotes appear on following page.
n.a.
n.a.
A42
DomesticNonfinancialStatistics • July 1999
NOTES TO TABLE 1.21
1. Latest monthly and weekly figures are available from the Board's H.6 (508) weekly
statistical release. Historical data starting in 1959 are available from the Money and Reserves
Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve
System, Washington, DC 20551.
2. Composition of the money stock measures and debt is as follows:
M l : (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of
depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all
commercial banks other than those owed to depository institutions, the U.S. government, and
foreign banks and official institutions, less cash items in the process of collection and Federal
Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of
withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions,
credit union share draft accounts, and demand deposits at thrift institutions. Seasonally
adjusted M l is computed by summing currency, travelers checks, demand deposits, and
OCDs, each seasonally adjusted separately.
M2: M l plus (1) savings deposits (including MMDAs), (2) small-denomination time
deposits (time deposits—including retail RPs—in amounts of less than $100,000), and (3)
balances in retail money market mutual funds. Excludes individual retirement accounts
(IRAs) and Keogh balances at depository institutions and money market funds. Seasonally
adjusted M2 is calculated by summing savings deposits, small-denomination time deposits,
and retail money fund balances, each seasonally adjusted separately, and adding this result to
seasonally adjusted M l .
M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more)
issued by all depository institutions, (2) balances in institutional money funds, (3) RP
liabilities (overnight and term) issued by all depository institutions, and (4) Eurodollars
(overnight and term) held by U.S. residents at foreign branches of U.S. banks worldwide and
at all banking offices in the United Kingdom and Canada. Excludes amounts held by
depository institutions, the U.S. government, money market funds, and foreign banks and
official institutions. Seasonally adjusted M3 is calculated by summing large time deposits,
institutional money fund balances, RP liabilities, and Eurodollars, each seasonally adjusted
separately, and adding this result to seasonally adjusted M2.
Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial
sectors—the federal sector (U.S. government, not including government-sponsored enter-
prises or federally related mortgage pools) and the nonfederal sectors (state and local
governments, households and nonprofit organizations, nonfinancial corporate and nonfarm
noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and
corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data,
which are derived from the Federal Reserve Board's flow of funds accounts, are breakadjusted (that is, discontinuities in the data have been smoothed into the series) and
month-averaged (that is, the data have been derived by averaging adjacent month-end levels).
3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of depository
institutions.
4. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers.
Travelers checks issued by depository institutions are included in demand deposits.
5. Demand deposits at commercial banks and foreign-related institutions other than those
owed to depository institutions, the U.S. government, and foreign banks and official institutions, less cash items in the process of collection and Federal Reserve float.
6. Consists of NOW and ATS account balances at all depository institutions, credit union
share draft account balances, and demand deposits at thrift institutions.
7. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail
money fund balances.
8. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities
(overnight and term) issued by depository institutions, and (4) Eurodollars (overnight and
term) of U.S. addressees.
9. Small time deposits—including retail RPs—are those issued in amounts of less than
$100,000. All IRAs and Keogh accounts at commercial banks and thrift institutions are
subtracted from small time deposits.
10. Large time deposits are those issued in amounts of $100,000 or more, excluding those
booked at international banking facilities.
11. Large time deposits at commercial banks less those held by money market funds,
depository institutions, the U.S. government, and foreign banks and official institutions.
12. Includes both overnight and term.
Commercial Banking Institutions—Assets
1.26
COMMERCIAL BANKS IN THE UNITED STATES
and Liabilities
A15
Assets and Liabilities 1
A. All commercial banks
Billions of dollars
Wednesday figures
Monthly averages
Account
Apr. r
Oct.
Nov.
1999
1999
1998
1998
Dec.
Jan.
Feb.
Mar.
Apr.
Apr. 7
Apr. 14
Apr. 21
Apr. 28
Seasonally adjusted
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit 2 . . .
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security 3
Other loans and leases
Interbank loans
Cash assets 4
Other assets 5
16 Total assets 6
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 others
Net due to related foreign offices
Other liabilities
27 Total liabilities
28 Residual (assets less liabilities) 7
4,219.0
1,112.9
764.3
348.6
3,106.1
873.7
1,272.2
100.6
1,171.6
502.1
117.8
340.4
213.0
266.9
307.6
4,488.0
1,216.4
776.4
440.0
3,271.6
942.2
1,293.1
99.1
1,194.0
496.4
157.8
382.1
218.8
247.7
329.7
4,528.0
1,220.4
789.6
430.9
3,307.6
952.9
1,316.1
99.3
1,216.8
499.5
151.2
388.0
217.6
255.0
337.8
4,547.1
1,224.3
791.4
433.0
3,322.8
950.7
1,330.8
99.1
1,231.7
501.3
151.6
388.4
217.4
257.6
339.0
4,529.8
1,215.3
792.8
422.5
3,314.5
947.1
1,334.8
98.8
1,236.0
502.9
147.1
382.5
222.6
264.5
351.4
4,516.7
1,205.1
790.4
414.7
3,311.6
947.1
1,337.8
98.4
1,239.3
502.4
139.6
384.7
225.8
262.3
356.6
4,483.5
1,186.0
797.9
388.1
3,297.5
950.7
1,337.7
98.6
1,239.1
501.3
119.5
388.3
219.2
263.7
356.2
4,490.2
1,186.4
798.1
388.3
3,303.9
954.1
1,338.9
99.4
1,239.5
501.9
122.8
386.2
213.7
264.9
345.7
4,489.6
1,186.4
802.0
384.3
3,303.2
951.4
1,340.5
98.9
1,241.6
500.7
122.4
388.3
216.5
259.0
347.6
4,497.2
1,189.8
802.3
387.5
3,307.4
955.1
1,337.3
99.2
1,238.0
502.4
127.1
385.5
205.2
264.0
342.5
4,483.2
1,182.0
793.0
389.0
3,301.2
957.3
1,340.7
99.5
1,241.3
503.2
117.4
382.6
204.5
264.9
350.7
4,490.4
1,187.9
796.4
391.6
3,302.5
953.6
1,335.7
99.7
1,236.0
502.0
123.9
387.2
227.5
270.5
343.1
4,949.2
5,2263
5,280.5
5303.2
5,3103
5303.2
5,264.2
5,256.1
5,254.4
5,250.7
5,244.9
5,273.2
3,203.1
688.5
2,514.6
688.4
1,826.2
906.8
305.6
601.2
185.6
262.1
3,289.7
673.4
2,616.3
716.4
1,899.9
983.7
315.0
668.6
220.9
315.4
3,324.9
670.7
2,654.2
727.8
1,926.4
1,017.5
323.9
693.6
214.4
302.5
3,341.1
672.3
2,668.8
719.3
1,949.5
1,023.0
323.3
699.8
213.9
305.7
3,362.7
667.2
2,695.5
723.8
1,971.7
1,003.3
318.1
685.3
213.5
305.4
3,372.4
662.0
2,710.4
728.2
1,982.2
990.2
316.1
674.1
217.4
298.1
3,360.5
668.7
2,691.8
718.1
1,973.7
984.5
318.1
666.4
217.3
274.8
3,370.7
664.7
2,706.0
724.8
1,981.2
980.5
310.8
669.7
210.2
275.4
3,357.7
647.7
2,710.0
718.2
1,991.8
988.8
321.9
666.9
232.0
274.2
3,391.5
665.2
2,726.4
728.9
1,997.5
972.4
309.1
663.3
208.6
272.0
3,376.9
671.0
2,705.9
726.3
1,979.6
965.2
302.5
662.7
203.0
277.0
3,355.4
677.7
2,677.7
726.2
1,951.5
996.8
310.0
686.8
195.8
279.9
4,557.7
4,809.7
43593
4,883.7
4,884.9
4,878.1
4,837.1
4,836.9
4,852.7
4^445
4322.1
4327.8
391.6
416.6
421.3
419.5
425.4
425.1
427.1
419.2
401.7
406.2
422.8
445.4
Not seasonally adjusted
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit 2 . . .
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security 3
Other loans and leases
Interbank loans
Cash assets 4
Other assets 5
44 Total assets 6
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 others
Net due to related foreign offices
Other liabilities
....
55 Total liabilities
56 Residual (assets less liabilities)
7
4,225.7
1,121.1
773.3
347.8
3,104.6
879.6
1,269.1
99.9
1,169.2
498.6
119.1
338.2
217.7
264.1
309.8
4,493.0
1,214.3
771.7
442.6
3,278.8
941.9
1,296.6
99.9
1,196.6
496.9
159.4
384.0
216.7
248.1
327.6
4,541.4
1,226.6
792.0
434.7
3,314.8
952.3
1,320.1
100.1
1,220.0
499.8
153.6
388.9
227.0
261.8
336.2
4,562.5
1,226.0
792.2
433.8
3,336.5
950.6
1,332.7
99.5
1,233.2
506.6
153.7
392.7
225.6
273.1
339.9
4,538.8
1,217.9
793.1
424.8
3,321.0
946.0
1,333.9
98.9
1,235.0
509.1
147.2
384.8
225.5
277.8
344.1
4,514.3
1,210.6
794.6
416.0
3,303.8
948.6
1,332.1
98.1
1,234.0
502.3
139.2
381.6
225.6
263.4
353.3
4,481.9
1,192.7
804.3
388.4
3,289.3
954.3
1,331.2
97.7
1,233.5
496.5
122.9
384.4
222.3
256.0
351.6
4,498.3
1,195.0
808.0
387.0
3,303.3
960.7
1,335.5
98.7
1,236.8
498.4
124.7
384.0
218.6
262.5
348.7
4,494.2
1,199.2
813.4
385.8
3,295.0
955.9
1,336.4
97.7
1,238.7
495.0
121.0
386.8
229.3
252.1
350.3
4,505.7
1,199.5
812.9
386.6
3,306.2
960.3
1,334.4
98.4
1,236.0
498.1
130.3
383.1
216.7
266.0
345.9
4,494.8
1,189.2
802.0
387.2
3,305.6
966.4
1,336.9
99.1
1,237.8
500.3
121.2
380.8
206.6
263.6
352.1
4,496.1
1,192.7
804.7
388.0
3,303.4
960.4
1,332.8
99.5
1,233.3
500.5
125.8
384.0
222.1
267.3
346.5
4,960.2
5,227.6
5308.4
5343.1
5328.6
5,298.5
5,253.5
5,269.9
5,267.9
5,276.2
5,258.9
5,273.7
3,216.8
698.8
2,518.0
685.3
1,832.8
907.0
306.5
600.5
179.0
261.8
3,289.2
663.3
2,625.9
718.0
1,907.9
985.9
313.1
672.7
223.4
313.9
3,350.7
681.0
2,669.7
732.7
1,937.0
1,023.1
327.6
695.5
216.3
302.8
3,374.9
706.5
2,668.4
723.9
1,944.5
1,025.6
329.2
696.4
219.1
306.4
3,362.0
682.0
2,680.1
722.0
1,958.1
1,019.6
323.1
696.5
216.4
306.3
3,349.4
657.1
2,692.4
728.9
1,963.5
993.3
316.6
676.7
227.1
300.5
3,355.1
662.2
2,692.9
720.1
1,972.9
978.9
318.0
660.9
215.4
275.4
3,381.5
672.4
2,709.1
721.8
1,987.3
981.0
311.6
669.4
203.4
275.0
3,385.0
658.3
2,726.7
714.6
2,012.1
971.6
318.4
653.2
209.6
273.6
3,425.9
688.8
2,737.1
724.7
2,012.3
959.7
306.0
653.7
189.1
271.6
3,378.1
675.0
2,703.1
722.7
1,980.4
977.7
307.1
670.6
198.0
276.1
3,338.7
672.1
2,666.7
724.3
1,942.3
1,011.2
314.2
697.1
214.6
279.9
4,564.6
4,812.4
4,892.8
4,926.1
4,9043
4,8703
4,824.8
4,840.9
4,839.7
4,8463
4329.9
43445
428.2
428.7
429.0
428.2
429.9
429.0
429.2
415.6
417.1
424.3
132.3
112.8
114.8
112.4
108.5
87.0
87.1
88.0
86.5
86.5
87.4
129.5
111.6
112.9
109.5
106.7
85.7
87.8
88.6
86.3
87.5
88.5
395.6
415.2
84.0
85.4
MEMO
57 Revaluation gains on off-balance-sheet
items 8
58 Revaluation losses on off-balancesheet items 8
Footnotes appear on p. A21.
A16
1.26
Domestic Financial Statistics • July 1999
COMMERCIAL BANKS IN THE UNITED STATES
Assets and Liabilities 1 —Continued
B. Domestically chartered commercial banks
Billions of dollars
Monthly averages
Account
1998
1998
Apr.
Oct.
Wednesday figures
r
Nov.
1999
Dec.
Jan.
Feb/
1999
Mar/
Apr.
Apr. 7
Apr. 14
Apr. 21
Apr. 28
Seasonally adjusted
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit2
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security3
Other loans and leases
Interbank loans
Cash assets4
Other assets5
16 Total assets 6
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 others
Net due to related foreign offices
Other liabilities
....
27 Total liabilities
28 Residual (assets less liabilities)
7
3,658.7 r
915.1
676.0
239.1
2,743.6 r
660. l r
l,247.1 r
100.6r
l,146.5 r
502.l r
64.2
270. l r
190.4
231.7
271.8 r
3,868.3
997.8
695.6
302.2
2,870.5
719.5
1,269.6
99.1
1,170.5
496.4
87.8
297.3
193.1
212.0
291.2
3,917.5
1,005.2
708.2
297.1
2,912.3
729.6
1,293.5
99.3
1,194.2
499.5
86.1
303.6
190.4
220.1
300.9
3,949.4
1,011.5
709.8
301.7
2,937.9
733.3
1,309.1
99.1
1,210.0
501.3
85.6
308.5
189.3
221.8
300.6
3,946.8
1,004.3
709.4
294.9
2,942.5
734.4
1,313.0
98.8
1,214.2
502.9
84.3
308.0
193.1
228.0
312.9
3,947.9
1,001.0
707.9
293.1
2,946.9
735.8
1,316.1
98.4
1,217.7
502.4
80.6
311.9
193.9
226.1
318.9
3,929.3
987.6
714.0
273.5
2,941.7
741.1
1,316.0
98.6
1,217.4
501.3
69.3
314.0
192.8
226.5
318.7
3,938.5
985.8
710.8
275.1
2,952.6
747.3
1,317.0
99.4
1,217.6
501.9
71.5
315.0
187.6
227.1
308.2
3,940.2
988.7
714.7
273.9
2,951.6
743.4
1,318.6
98.9
1,219.8
500.7
72.5
316.4
188.9
221.1
308.7
3,942.2
989.1
714.7
274.3
2,953.1
745.6
1,315.4
99.2
1,216.1
502.4
75.4
314.4
182.2
226.8
306.4
3,930.4
980.3
706.1
274.2
2,950.1
749.8
1,318.8
99.5
1,219.4
503.2
65.6
312.6
179.0
227.6
311.2
3,939.9
985.8
708.7
277.1
2,954.2
750.4
1,313.7
99.7
1,214.0
502.0
72.5
315.5
198.4
232.3
307.3
4,295.6 r
4,507.1
4,571.1
4,603.6
4,623.2
4,628.8
4,609.1
4,603.3
4,601.0
4,599.7
4,590.0
4,619.8
2,909.5
676.4
2,233.1
408.1
1,824.9
722.6
279.1
443.5
79.5
195.l r
2,971.9
658.0
2,313.9
415.9
1,898.1
768.4
284.5
484.0
115.3
236.3
3,009.4
657.9
2,351.6
426.9
1,924.6
802.9
291.8
511.2
115.2
226.3
3,032.5
660.8
2,371.7
422.9
1,948.8
819.3
296.0
523.3
112.4
229.0
3,044.4
654.3
2,390.2
419.6
1,970.6
809.7
296.6
513.1
111.7
231.1
3,051.4
648.0
2,403.3
422.3
1,981.0
809.4
298.1
511.3
117.3
227.7
3,049.2
655.6
2,393.7
421.0
1,972.7
810.5
293.8
516.7
117.8
206.7
3,055.2
652.0
2,403.2
423.4
1,979.8
806.4
289.3
517.1
115.3
207.8
3,050.0
634.7
2,415.4
425.2
1,990.2
814.9
299.7
515.1
119.3
206.3
3,073.8
652.3
2,421.5
425.4
1,996.2
796.2
284.7
511.5
115.9
205.3
3,057.4
657.9
2,399.6
421.1
1,978.5
791.1
281.7
509.5
113.5
205.6
3,037.7
665.6
2,372.1
422.0
1,950.1
824.8
291.2
533.6
110.0
214.1
3,906.7 r
4,091.9
4,153.9
4,193.2
4,197.0
4,205.9
4,184.2
4,184.7
4,190.5
4,191.3
4,167.8
4,186.5
389.0 r
415.2
417.3
410.4
426.2
422.9
424.9
418.5
410.4
408.4
422.3
433.2
Not seasonally adjusted
29
30
31
32
33
34
35
36
3/
38
39
40
41
42
43
Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit2
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security3
Other loans and leases
Interbank loans
Cash assets 4
Other assets5
44 Total assets 6
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 others
Net due to related foreign offices . . . .
Other liabilities
55 Total liabilities
56 Residual (assets less liabilities)7
3,668.3
924.8
685.5
239.2
2,743.5
6613'
l,244.4 r
99.9 r
l,144.5 r
498.6 r
65.8
267.5 r
195.1
230.2
275.6 r
3,869.2
992.6
690.9
301.6
2,876.6
718.2
1,272.8
99.9
1,172.9
496.9
89.6
299.0
191.0
212.0
289.3
3,927.7
1,008.2
710.1
298.1
2,919.5
727.8
1,297.2
100.1
1,197.1
499.8
89.1
305.4
199.8
226.3
299.1
3,962.0
1,014.6
710.4
304.2
2,947.4
730.6
1,311.0
99.5
1,211.5
506.6
87.3
311.9
197.6
235.8
300.0
3,952.4
1,006.7
710.1
296.6
2,945.8
731.4
1,311.9
98.9
1,213.0
509.1
84.4
309.0
196.0
240.9
305.3
3,941.7
1,004.8
711.8
293.1
2,936.9
735.4
1,310.1
98.1
1,212.0
502.3
80.6
308.6
193.7
227.9
314.5
3,926.1
993.1
719.6
273.5
2,933.0
744.3
1,309.4
97.7
1,211.7
496.5
72.1
310.6
195.9
220.0
313.5
3,949.4
996.0
721.1
275.0
2,953.4
755.4
1,313.9
98.7
1,215.2
498.4
73.5
312.3
.192.5
226.0
313.0
3,945.4
1,000.1
726.0
274.1
2,945.3
748.9
1,314.7
97.7
1,217.0
495.0
71.4
315.2
201.7
215.9
313.0
3,954.0
1,000.5
725.9
274.6
2,953.5
752.4
1,312.7
98.4
1,214.4
498.1
78.7
311.5
193.7
229.9
311.5
3,944.7
990.5
716.7
273.8
2,954.3
759.8
1,315.2
99.1
1,216.1
500.3
69.3
309.6
181.1
227.5
314.9
3,950.5
993.9
717.0
276.8
2,956.7
759.3
1,311.1
99.5
1,211.6
500.5
74.3
311.5
192.9
230.2
312.3
4,312.5 r
4,503.9
4,595.1
4,637.7
4,637.3
4,619.9
4,597.3
4,622.9
4,618.2
4,631.3
4,610.3
4,628.0
2,924.2
686.9
2,237.3
406.3
1,831.0
722.8
279.9
442.9
78.0
195.7r
2,971.0
647.9
2,323.1
417.6
1,905.4
770.6
282.6
488.1
115.5
235.5
3,035.6
668.2
2,367.4
432.4
1,935.0
808.5
295.4
513.0
113.7
225.7
3,062.7
694.6
2,368.1
425.4
1,942.7
821.9
302.0
519.9
111.4
228.3
3,046.4
669.0
2,377.4
421.2
1,956.2
826.0
301.7
524.3
112.0
231.8
3,029.7
643.4
2,386.3
424.8
1,961.5
812.5
298.6
513.9
123.4
228.5
3,040.6
648.9
2,391.7
420.8
1,970.9
804.9
293.7
511.2
117.7
207.3
3,066.6
659.8
2,406.7
421.3
1,985.4
806.9
290.1
516.8
114.0
208.5
3,078.9
645.4
2,433.5
423.3
2,010.2
797.7
296.2
501.4
108.1
207.1
3,109.7
676.1
2,433.6
423.2
2,010.4
783.6
281.6
502.0
104.1
206.1
3,059.9
662.3
2,397.6
419.1
1,978.4
803.6
286.3
517.3
114.0
206.1
3,019.8
660.1
2,359.8
419.3
1,940.4
839.3
295.4
543.9
127.0
214.8
3,920.7 r
4,092.7
4,183.5
4,224.4
4,216.1
4,194.2
4,170.5
4,195.9
4,191.8
4,203.5
4,183.6
4,200.8
391.8 r
411.2
411.6
413.3
421.2
425.8
426.8
427.0
426.5
427.8
426.8
427.2
43.9
80.3
64.3
66.7
66.5
64.9
46.8
48.3
48.3
48.0
47.3
49.2
82.0
335.8
66.6
346.0
68.3
345.4
67.2
341.5
65.4
339.5
46.6
333.5
49.0
331.4
49.0
333.2
48.2
332.5
47.9
329.1
50.3
329.8
MEMO
57 Revaluation gains on off-balance-sheet
items 8
58 Revaluation losses on off-balancesheet items 8
59 Mortgage-backed securities9
Footnotes appear on p. A21.
46. l
294.7
r
Commercial Banking Institutions—Assets
1.26
COMMERCIAL BANKS IN THE UNITED STATES
and Liabilities
All
Assets and Liabilities 1 —Continued
C. Large domestically chartered commercial banks
Billions of dollars
Wednesday figures
Monthly averages
Account
1998r
1998
Apr.r
Oct.
Nov.
1999
1999
Dec.
Jan. r
Feb. r
Mar. r
Apr.
Apr. 7
Apr. 14
Apr. 21
Apr. 28
Seasonally adjusted
Assets
1 Bank credit
2
Securities in bank credit
3
U.S. government securities
4
Trading account
5
Investment account
6
Other securities
7
Trading account
8
Investment account
9
State and local government .
10
Other
11
Loans and leases in bank credit2 . . .
12
Commercial and industrial
13
Bankers acceptances
14
Other
15
Real estate
16
Revolving home equity
17
Other
18
Consumer
19
Security 3
20
Federal funds sold to and
repurchase agreements
with broker-dealers
21
Other
22
State and local government
23
Agricultural
24
Federal funds sold to and
repurchase agreements
with others
25
All other loans
26
Lease-financing receivables
27 Interbank loans
28
Federal funds sold to and
repurchase agreements with
commercial banks
29
Other
30 Cash assets 4
31 Other assets 5
32 Total assets 6
33
34
35
36
37
38
39
40
41
42
Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From others
Net due to related foreign offices
Other liabilities
43 Total liabilities
44 Residual (assets less liabilities)7
Footnotes appear on p. A21.
2,268.0
520.2
369.4
23.5
345.9
150.8
70.0
80.8
22.8
58.0
1,747.8
480.5
1.2
479.3
704.3
72.6
631.6
304.6
58.0
2,404.3
577.6
375.6
21.0
354.6
202.1
110.4
91.7
23.9
67.8
1,826.7
527.1
1.3
525.7
692.6
70.8
621.9
300.7
81.3
2,425.4
576.1
381.6
22.3
359.3
194.5
98.4
96.1
24.5
71.7
1,849.3
534.3
1.3
532.9
703.8
70.6
633.2
301.9
79.3
2,436.8
575.1
379.1
23.0
356.1
196.0
98.9
97.0
24.8
72.2
1,861.7
535.1
1.3
533.8
709.3
70.4
638.9
302.4
79.2
2,428.3
565.5
377.5
25.1
352.4
188.0
91.4
96.6
24.6
71.9
1,862.9
535.1
1.3
533.9
707.7
70.1
637.6
305.3
78.1
2,421.9
559.3
375.1
17.9
357.2
184.2
87.5
96.7
24.7
72.0
1,862.6
536.3
1.2
535.1
706.9
70.0
636.9
304.3
74.5
2,394.9
542.9
378.6
22.5
356.2
164.2
66.7
97.5
24.9
72.7
1,852.1
540.6
1.1
539.4
703.5
70.1
633.5
301.8
63.2
2,398.7
539.9
374.7
25.9
348.8
165.2
66.1
99.1
24.6
74.5
1,858.7
545.3
1.1
544.2
702.1
70.7
631.4
300.2
65.7
2,402.6
543.1
378.7
28.6
350.1
164.4
66.3
98.1
24.5
73.6
1,859.4
542.2
1.2
541.0
704.5
70.3
634.2
300.5
66.2
2,401.5
542.5
378.0
28.6
349.3
164.6
65.6
99.0
24.8
74.2
1,859.0
544.0
1.1
542.9
701.1
70.6
630.5
300.8
69.2
2,391.0
535.4
370.8
24.2
346.7
164.6
65.0
99.6
24.5
75.1
1,855.6
547.6
1.1
546.5
703.9
70.8
633.1
300.7
59.9
2,399.6
539.7
372.7
23.6
349.1
167.0
67.2
99.8
24.5
75.3
1,859.9
547.6
1.1
546.5
698.3
71.0
627.3
299.3
67.3
40.2
17.9
11.6
10.0
63.4
17.9
11.6
10.0
61.8
17.5
11.9
10.1
62.5
16.7
11.6
10.2
61.4
16.7
11.6
10.2
57.6
16.9
11.5
10.3
46.1
17.1
11.5
10.2
47.7
18.0
11.8
10.3
49.2
17.0
12.0
10.1
51.2
18.0
11.7
10.4
41.2
18.7
11.7
10.4
49.5
17.8
11.7
10.2
7.4
80.8
90.5
128.3
13.0
89.0
101.4
120.4
12.4
92.1
103.6
120.7
16.2
91.6
106.2
123.2
12.7
93.5
108.6
125.3
12.0
93.7
113.1
126.8
12.0
93.6
115.6
129.0
11.4
94.3
117.8
125.6
12.3
94.6
117.1
127.4
11.6
92.8
117.3
119.7
11.5
91.7
118.1
115.8
10.6
96.4
118.6
137.0
78.0
50.3
167.6
214.0
74.4
46.0
144.3
224.1
74.7
46.0
150.0
229.2
74.1
49.2
151.4
226.8
78.6
46.7
157.3
235.9
78.8
48.0
155.2
242.8
81.8
47.2
154.8
242.6
78.0
47.6
156.3
231.9
81.6
45.8
151.0
231.4
73.6
46.1
157.4
230.5
69.5
46.3
157.7
234.6
85.7
51.4
159.3
231.6
2,739.9
2,855.0
2,8873
2,900.2
2,908.7
2,9083
2,882.9
2,874.4
2,874.1
2,871.0
2,860.9
2,8893
1,655.4
394.2
1,261.2
225.5
1,035.7
569.9
209.1
360.9
76.0
167.9
1,656.8
372.9
1,283.9
225.0
1,058.9
597.5
203.9
393.6
110.6
206.1
1,672.9
370.4
1,302.5
231.9
1,070.6
623.8
207.5
416.2
111.6
195.5
1,677.5
370.5
1,307.0
230.1
1,076.9
634.9
209.5
425.4
108.8
197.8
1,678.5
365.4
1,313.1
229.5
1,083.7
628.3
213.8
414.5
108.7
200.0
1,673.9
358.8
1,315.1
228.8
1,086.3
624.2
214.0
410.2
114.1
197.3
1,672.4
363.0
1,309.4
226.1
1,083.3
621.1
208.7
412.4
113.3
176.3
1,679.1
365.0
1,314.1
227.0
1,087.1
618.7
205.8
412.9
110.4
176.8
1,675.1
354.7
1,320.4
228.8
1,091.6
628.5
217.7
410.7
114.2
175.4
1,695.9
367.4
1,328.5
229.4
1,099.1
608.6
202.0
406.6
110.8
174.5
1,678.5
367.3
1,311.2
224.7
1,086.5
606.4
199.3
407.1
108.7
174.5
1,665.4
372.4
1,293.0
225.2
1,067.8
633.2
204.5
428.6
105.3
182.8
2,469.2
2,571.0
2,603.8
2,619.0
2,615.5
2,609.6
2,583.1
2,585.0
2,593.2
2,589.9
2,568.0
2,586.6
270.7
283.9
283.4
281.1
293.1
298.7
299.7
289.4
280.9
281.2
292.9
302.7
A18
1.26
Domestic Financial Statistics • July 1999
COMMERCIAL BANKS IN THE UNITED STATES
Assets and Liabilities 1 —Continued
C. Large domestically chartered commercial banks—Continued
Monthly averages
1998r
1998
Account
Apr.
r
Wednesday figures
Oct.
Nov.
1999
Dec.
Jan/
Feb/
1999
Mar/
Apr.
Apr. 7
Apr. 14
Apr. 21
Apr. 28
Not seasonally adjusted
Assets
45 Bank credit
46
Securities in bank credit
47
U.S. government securities
48
Trading account
49
Investment account
50
Mortgage-backed securities . .
51
Other
52
One year or less
53
One to five years
54
More than five years . . .
55
Other securities
56
Trading account
57
Investment account
58
State and local government . .
59
Other
60
Loans and leases in bank credit 2 . .
61
Commercial and industrial
62
Bankers acceptances
63
Other
64
Real estate
65
Revolving home equity
66
Other
67
Commercial
68
Consumer
69
Security3
70
Federal funds sold to and
repurchase agreements
with broker-dealers . . . .
71
Other
72
State and local government . . . .
73
Agricultural
74
Federal funds sold to and
repurchase agreements
with others
75
All other loans
76
Lease-financing receivables . . . .
77 Interbank loans
78
Federal funds sold to and
repurchase agreements
with commercial banks
79
Other
80 Cash assets 4
81 Other assets5
82 Total assets 6
83
84
85
86
87
88
89
90
91
92
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
93 Total liabilities
94 Residual (assets less liabilities)7
....
2,273.1
525.1
374.9
22.9
352.0
228.4
123.6
33.2
54.1
36.2
150.3
70.0
80.3
22.9
57.3
1,747.9
485.7
1.2
484.5
701.7
72.0
387.1
242.6
302.3
59.6
2,406.1
575.3
373.6
21.9
351.6
257.4
94.2
26.2
37.3
30.7
201.7
110.4
91.3
24.0
67.4
1,830.8
527.2
1.3
525.9
694.4
71.4
382.3
240.8
300.6
83.1
2,438.3
581.3
385.8
24.6
361.3
260.4
100.9
27.3
38.3
35.3
195.5
98.4
97.1
24.6
72.5
1,857.0
533.9
1.3
532.5
707.1
71.1
393.4
242.6
301.6
82.4
2,451.2
578.6
379.8
23.7
356.1
255.6
100.5
26.7
38.5
35.3
198.7
98.9
99.8
25.0
74.8
1,872.6
533.2
1.3
531.8
712.8
70.6
397.9
244.4
305.7
80.9
2,440.4
568.5
378.7
25.2
353.5
252.2
101.3
27.6
37.7
36.1
189.8
91.4
98.4
24.8
73.6
1,871.9
532.8
1.3
531.6
710.5
70.2
393.6
246.7
310.6
78.2
2,426.5
565.3
380.5
18.6
362.0
250.0
112.0
25.7
46.9
39.4
184.8
87.5
97.3
24.8
72.5
1,861.2
536.2
1.2
535.1
705.6
69.7
386.3
249.7
304.7
74.5
2,397.5
546.8
382.6
23.4
359.2
243.4
115.8
23.9
52.2
39.7
164.2
66.7
97.5
24.9
72.6
1,850.6
543.2
1.1
542.0
700.5
69.4
380.5
250.7
299.2
66.0
2,404.6
545.2
380.8
25.2
355.5
240.5
115.0
24.3
53.1
37.6
164.5
66.1
98.4
24.7
73.7
1,859.3
551.3
1.1
550.2
699.2
70.1
377.2
251.9
297.7
67.6
2,408.3
551.1
387.0
30.0
357.0
242.7
114.3
24.3
52.7
37.4
164.1
66.3
97.8
24.5
73.3
1,857.2
546.7
1.2
545.5
702.3
69.3
381.4
251.5
297.1
65.1
2,409.8
549.3
385.3
28.9
356.3
241.3
115.0
23.8
53.8
37.4
164.1
65.6
98.5
24.9
73.6
1,860.5
549.1
1.1
548.0
698.9
69.9
377.2
251.8
298.2
72.5
2,398.0
540.0
376.6
23.1
353.5
238.7
114.8
24.1
53.0
37.8
163.5
65.0
98.5
24.7
73.8
1,858.0
555.0
1.1
553.9
700.0
70.4
376.8
252.8
298.4
63.6
2,401.4
542.0
376.1
20.8
355.3
239.0
116.3
25.3
52.9
38.1
165.9
67.2
98.8
24.7
74.1
1,859.4
553.9
1.1
552.9
694.9
70.8
372.8
251.3
297.7
69.1
41.8
17.8
11.5
9.8
65.2
18.0
11.7
10.2
65.0
17.4
12.0
10.1
63.7
17.2
11.7
10.2
62.0
16.2
11.6
10.2
58.1
16.4
11.5
9.9
48.7
17.3
11.5
9.8
49.6
18.0
11.6
10.0
49.3
15.8
11.8
9.8
54.4
18.1
11.6
10.1
44.2
19.5
11.6
10.2
50.7
18.3
11.6
10.0
7.4
79.1
90.7
131.9
13.0
89.9
100.7
116.8
12.4
95.0
102.6
122.1
16.2
96.1
105.8
126.4
12.7
95.1
110.3
128.2
12.0
92.2
114.4
126.6
12.0
91.9
116.5
129.1
11.4
92.4
118.1
129.6
12.3
94.4
117.8
130.8
11.6
90.5
117.9
125.3
11.5
89.6
118.1
120.1
10.6
93.2
118.4
139.9
80.4
51.5
166.1
217.7
71.4
45.4
144.9
222.0
77.4
44.7
154.1
226.1
77.9
48.5
161.9
226.2
82.2
46.0
167.0
231.3
79.3
47.3
156.0
239.6
81.5
47.6
149.8
238.7
80.7
48.9
155.2
236.3
83.5
47.3
145.5
235.0
77.8
47.5
159.3
235.3
72.6
47.5
158.3
239.0
87.1
52.8
158.1
236.0
2,750.9
2,851.7
2,902.5
2,927.7
2,929.1
2,910.5
2£76.6
2,887.7
2,881.7
2,891.9
2,877.4
2,897.4
1,663.7
400.9
1,262.9
223.7
1,039.2
572.4
211.4
361.0
74.5
167.9
1,653.2
365.9
1.287.4
226.8
1,060.6
597.3
200.3
397.0
110.9
206.1
1,686.9
377.1
1,309.8
237.4
1,072.4
627.2
209.5
417.7
110.1
195.5
1,701.7
393.5
1,308.2
232.7
1,075.5
635.6
213.5
422.1
107.8
197.8
1,687.7
375.6
1,312.1
231.1
1,081.0
644.1
218.2
426.0
109.0
200.0
1,669.6
355.9
1,313.7
231.2
1,082.5
629.9
215.7
414.2
120.2
197.3
1,670.8
357.6
1,313.1
225.9
1,087.2
621.1
210.9
410.1
113.1
176.3
1,685.2
369.1
1,316.1
224.9
1,091.2
621.8
208.3
413.5
109.1
176.8
1,691.5
357.3
1,334.2
226.9
1,107.2
618.3
217.7
400.6
103.0
175.4
1,719.0
381.8
1,337.2
227.2
1,110.0
602.9
202.7
400.1
99.0
174.5
1,679.5
369.9
1,309.6
222.7
1,086.8
619.0
204.6
414.4
109.1
174.5
1,653.2
370.7
1,282.5
222.5
1,060.0
644.9
207.9
436.9
122.3
182.8
2,478.5
2,567.5
2,619.7
2,642.8
2,640.9
2,617.1
2,581.3
2,592.9
2,588.2
2,595.4
2,582.0
2,603.2
272.4
284.2
282.8
284.8
288.3
293.4
295.3
294.9
293.5
296.5
295.3
294.2
43.9
MEMO
95 Revaluation gains on off-balancesheet items 8
96 Revaluation losses on off-balancesheet items8
97 Mortgage-backed securities9
98
Pass-through securities
99
CMOs, REMICs, and other
mortgage-backed securities . .
100 Net unrealized gains (losses) on
available-for-sale securities 10 . . .
101 Offshore credit to U.S. residents" . . .
Footnotes appear on p. A21.
80.3
64.3
66.7
66.5
64.9
46.8
48.3
48.3
48.0
47.3
49.2
46.1
249.3
168.1
82.0
282.8
191.5
66.6
289.2
198.6
68.3
286.2
196.7
67.2
281.7
193.9
65.4
278.8
189.2
46.6
271.8
182.1
49.0
269.0
179.1
49.0
271.3
181.1
48.2
270.1
180.0
47.9
267.2
177.3
50.3
267.3
178.1
81.2
91.3
90.6
89.4
87.8
89.6
89.7
89.9
90.3
90.2
89.9
89.2
3.0
35.5
4.4
38.5
3.1
39.1
3.0
38.5
3.0
38.9
2.3
38.9
0.6
39.0
0.9
37.9
0.7
37.7
1.0
37.5
0.9
37.7
0.9
38.2
Commercial Banking Institutions—Assets
1.26
COMMERCIAL BANKS IN THE UNITED STATES
and Liabilities
A15
Assets and Liabilities'—Continued
D. Small domestically chartered commercial banks
Billions of dollars
Wednesday figures
Monthly averages
Account
1998 r
1998
Apr/
Oct.
Nov.
1999
1999
Dec.
Jan. r
Feb. r
Mar. r
Apr.
Apr. 7
Apr. 14
Apr. 21
Apr. 28
Seasonally adjusted
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit2
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security 3
Other loans and leases
Interbank loans
Cash assets 4
Other assets 5
16 Total assets 6
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 others
Net due to related foreign offices
Other liabilities
....
27 Total liabilities
28 Residual (assets less liabilities) 7
1,390.7
395.0
306.6
88.4
995.8
179.6
542.9
28.0
514.9
197.5
6.1
69.7
62.1
64.2
57.7
1,464.0
420.2
320.1
100.1
1,043.8
192.4
577.0
28.4
548.6
195.7
6.5
72.3
72.7
67.8
67.1
1,492.1
429.2
326.6
102.6
1,062.9
195.3
589.7
28.8
560.9
197.5
6.8
73.6
69.6
70.1
71.7
1,512.6
436.4
330.7
105.8
1,076.2
198.3
599.8
28.8
571.1
199.0
6.4
72.7
66.1
70.5
73.9
1,518.5
438.8
331.9
106.9
1,079.7
199.2
605.3
28.7
576.6
197.6
6.2
71.4
67.8
70.7
77.1
1,526.0
441.7
332.8
108.9
1,084.2
199.6
609.2
28.4
580.7
198.1
6.1
71.3
67.1
70.8
76.1
1,534.3
444.7
335.4
109.3
1,089.6
200.5
612.5
28.5
584.0
199.5
6.1
71.1
63.9
71.7
76.1
1,539.8
445.9
336.1
109.8
1,093.9
202.0
614.9
28.7
586.2
201.8
5.8
69.5
61.9
70.8
76.3
1,537.7
445.5
336.0
109.5
1,092.1
201.2
614.2
28.6
585.6
200.2
6.3
70.3
61.5
70.1
77.4
1,540.7
446.5
336.8
109.8
1,094.1
201.6
614.2
28.6
585.6
201.6
6.2
70.5
62.5
69.4
75.9
1,539.4
444.9
335.3
109.6
1,094.5
202.2
615.0
28.7
586.2
202.5
5.7
69.1
63.2
69.9
76.6
1,540.4
446.1
336.0
110.1
1,094.3
202.8
615.5
28.7
586.7
202.7
5.3
68.1
61.3
73.0
75.7
1,555.8
1,652.1
1,683.9
1,703.4
1,714.5
1,7205
1,7263
1,728.9
1,726.9
1,728.7
1,729.2
1,730.4
1,254.1
282.3
971.8
182.6
789.2
152.7
70.0
82.7
3.5
27.2
1,315.1
285.1
1,030.1
190.9
839.2
170.9
80.5
90.3
4.7
30.2
1,336.5
287.5
1,049.0
195.0
854.0
179.2
84.2
94.9
3.6
30.8
1,355.0
290.3
1,064.7
192.8
872.0
184.4
86.5
97.9
3.6
31.2
1,365.9
288.9
1,077.0
190.1
887.0
181.4
82.8
98.6
3.0
31.1
1,377.5
289.2
1,088.3
193.5
894.8
185.2
84.1
101.1
3.2
30.4
1,376.9
292.6
1,084.3
194.9
889.4
189.4
85.1
104.2
4.5
30.3
1,376.1
286.9
1,089.2
196.5
892.7
187.7
83.5
104.2
4.9
31.0
1,375.0
280.0
1,095.0
196.4
898.6
186.4
82.0
104.4
5.1
30.9
1,378.0
284.9
1,093.1
196.0
897.1
187.6
82.6
105.0
5.1
30.8
1,378.9
290.6
1,088.4
196.4
892.0
184.8
82.4
102.4
4.9
31.2
1,372.3
293.2
1,079.2
196.8
882.3
191.6
86.7
105.0
4.6
31.3
1/437.4
1,520.9
1,550.0
1,574.2
15815
15963
1,601.1
1599.7
I597.4
1,601.4
1,599.8
1,599.9
118.3
131.2
133.8
129.2
133.1
124.1
125.2
129.2
129.5
127.3
129.4
130.6
Not seasonally adjusted
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit2
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security 3
Other loans and leases
Interbank loans
Cash assets 4
Other assets 5
44 Total assets 6
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 others
Net due to related foreign offices
Other liabilities
55 Total liabilities
56 Residual (assets less liabilities) 7
....
1,395.2
399.6
310.7
89.0
995.6
181.6
542.6
27.9
514.7
196.3
6.1
69.0
63.3
64.1
57.9
1,463.1
417.3
317.4
99.9
1,045.8
191.0
578.4
28.6
549.8
196.3
6.5
73.6
74.2
67.0
67.3
1,489.3
426.9
324.3
102.6
1,062.5
194.0
590.1
29.0
561.1
198.3
6.8
73.3
77.7
72.2
73.1
1,510.9
436.1
330.6
105.5
1,074.8
197.4
598.1
28.9
569.2
201.0
6.4
71.9
71.2
73.9
73.8
1,512.0
438.1
331.4
106.8
1,073.9
198.5
601.4
28.7
572.7
198.5
6.2
69.3
67.8
73.9
74.0
1,515.2
439.5
331.2
108.3
1,075.7
199.2
604.4
28.4
576.0
197.6
6.1
68.5
67.1
71.9
74.9
1,528.6
446.2
337.0
109.3
1,082.4
201.1
608.9
28.3
580.5
197.3
6.1
68.9
66.8
70.2
74.7
1,544.9
450.8
340.3
110.5
1,094.1
204.1
614.7
28.6
586.1
200.7
5.8
68.8
62.9
70.7
76.6
1,537.1
449.0
338.9
110.1
1,088.1
202.3
612.5
28.4
584.1
197.9
6.3
69.2
70.9
70.3
78.0
1,544.2
451.2
340.7
110.5
1,093.0
203.4
613.8
28.5
585.3
199.9
6.2
69.8
68.4
70.6
76.1
1,546.7
450.4
340.1
110.3
1,096.3
204.8
615.2
28.7
586.5
201.9
5.7
68.7
61.0
69.2
75.9
1,549.2
451.9
341.0
110.9
1,097.3
205.4
616.2
28.7
587.4
202.7
5.3
67.7
53.1
72.0
76.4
1,561.5
1,652.1
1,692.6
1,710.0
1,708.2
1,709.4
1,720.7
1,735.2
1,7365
1,739.4
1,733.0
1,730.6
1,260.5
286.0
974.4
182.6
791.8
150.4
68.6
81.8
3.5
27.8
1,317.8
282.1
1,035.7
190.9
844.8
173.3
82.3
91.0
4.7
29.4
1,348.7
291.1
1,057.6
195.0
862.6
181.3
85.9
95.3
3.6
30.2
1,361.0
301.1
1,060.0
192.8
867.2
186.3
88.5
97.8
3.6
30.5
1,358.6
293.4
1,065.2
190.1
875.2
181.9
83.5
98.3
3.0
31.7
1,360.0
287.5
1,072.6
193.5
879.0
182.6
82.9
99.7
3.2
31.2
1,369.9
291.3
1,078.6
194.9
883.7
183.9
82.8
101.1
4.5
30.9
1,381.3
290.7
1,090.6
196.5
894.1
185.1
81.8
103.3
4.9
31.7
1,387.4
288.0
1,099.3
196.4
903.0
179.4
78.6
100.8
5.1
31.7
1,390.7
294.3
1,096.4
196.0
900.4
180.7
78.9
101.8
5.1
31.6
1,380.4
292.4
1,088.0
196.4
891.6
184.6
81.6
103.0
4.9
31.7
1,366.7
289.4
1,077.3
196.8
880.4
194.4
87.4
107.0
4.6
32.0
1,442.2
1,525.1
1,563.7
1,581.5
1575.2
1,577.1
1,589.2
1,603.1
1,603.6
1,608.1
1,601.6
1,597.7
119.4
127.0
128.8
128.5
133.0
132.3
131.5
132.1
133.0
131.3
131.4
133.0
45.4
53.0
56.8
59.2
59.8
60.7
61.7
62.4
61.9
62.3
62.0
62.5
MEMO
57 Mortgage-backed securities'
Footnotes appear on p. A21.
A18
Domestic Financial Statistics • July 1999
1.26
COMMERCIAL BANKS IN THE UNITED STATES
Assets and Liabilities 1 —Continued
E. Foreign-related institutions
Billions of dollars
Monthly averages
Account
1998
Apr.
Wednesday figures
1998
Oct.
Nov.
1999
Dec.
Jan.
Feb.
1999
Mar."
Apr.
Apr. 7
Apr. 14
Apr. 21
Apr. 28
Seasonally adjusted
1
2
3
4
5
6
7
8
9
10
11
12
Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit 2 . . .
Commercial and industrial
Real estate
Security 3
Other loans and leases
Interbank loans
Cash assets 4
Other assets 5
13 Total assets 6
14
15
16
17
18
19
20
21
Liabilities
Deposits
Transaction
Nontransaction
Borrowings
From banks in the U.S
From others
Net due to related foreign offices
Other liabilities
22 Total Uabilities
23 Residual (assets less liabilities) 7
560.3r
197.7
88.3
109.5
362.5
213.5r
25.1
53.7r
70.3r
22.6
35.1
35.9
619.7
218.6
80.8
137.8
401.1
222.8r
23.5
70.0r
84.8r
25.7
35.7
38.5
610.6
215.2
81.4
133.8
395.4
223.3r
22.6
65.2r
84.3r
27.2
34.9
36.9
597.7
212.8
81.6
131.2
384.8r
217.3r
21.7
65.9"
19.9
28.0
35.8
38.4
583.0"
211.0
83.3
127.6
372.0"
212.8r
21.8
62.9"
74.5r
29.5
36.4
38.5
568.8r
204.1
82.5
121.6
364.7r
211.3r
21.6
59.0"
72.8r
31.9
36.2
37.7
554.3
198.4
83.8
114.6
355.8
209.7
21.7
50.2
74.3
26.4
37.2
37.5
551.8
200.5
87.3
113.2
351.2
206.8
21.9
51.3
71.2
26.1
37.8
37.5
549.4
197.7
87.3
110.4
351.6
208.0
21.9
49.9
71.8
27.6
37.9
38.8
555.0
200.7
87.5
113.2
354.3
209.5
21.9
51.7
71.1
23.0
37.2
36.1
552.8
201.7
86.8
114.8
351.1
207.4
21.9
51.8
70.0
25.5
37.3
39.6
550.5
202.2
87.7
114.5
348.3
203.2
22.0
51.4
71.7
29.1
38.2
35.8
653.6
7193
709.4
699.7
687.1 r
674.4 r
655.1
652.9
653.4
651.0
654.8
653/4
293.6
12.1
281.5
184.2
26.6
157.6
106.1
67.0
317.8
15.4
302.4
215.3
30.6
184.7
105.6
79.1
315.4
12.8
302.6
214.6
32.1
182.5
99.2
76.2
308.6
11.5
297.1
203.7
27.2
176.5
101.5
76.7
318.3
12.9
305.3
193.6
21.5
172.2
101.7
74.3
321.0
13.9
307.1r
180.7
18.0
162.8r
100.1
70.4
311.2
13.1
298.1
174.0
24.3
149.7
99.5
68.1
315.5
12.7
302.8
174.1
21.5
152.6
95.0
67.6
307.6
13.0
294.7
173.9
22.1
151.8
112.7
67.8
317.7
12.9
304.8
176.1
24.4
151.7
92.7
66.7
319.5
13.1
306.4
174.1
20.8
153.2
89.5
71.4
317.6
12.1
305.6
172.0
18.8
153.2
85.8
65.8
651.0
717.8
705.4
690.5
687.9
672.2 r
652.8
652.2
662.1
653.2
6543
641.2
2.6
1.5
4.0
9.2
—,8r
2.2"
2.3
.7
-8.7
-2.2
.5
12.2
Not seasonally adjusted
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
Assets
Bank credit
Securities in bank credit
U.S. government securities
Trading account
Investment account
Other securities
Trading account
Investment account
Loans and leases in bank credit 2 . . .
Commercial and industrial
Real estate
Security 3
Other loans and leases
Interbank loans
Cash assets 4
Other assets 5
40 Total assets 6
41
42
43
44
45
46
47
48
Liabilities
Deposits
Transaction
Nontransaction
Borrowings
From banks in the U.S
From others
Net due to related foreign offices
Other liabilities
....
49 Total liabilities
50 Residual (assets less liabilities) 7
557.4r
196.3
87.8
18.5
69.3
108.5
65.0
43.5
361.0
212.2r
24.8
53.3r
70.7r
22.6
33.9
34.2
623.9
221.7
80.7
16.6
64.2
141.0
91.6
49.3
402.2
223.7r
23.7
69.8r
85.0"
25.7
36.1
38.3
613.8
218.4
81.8
14.1
67.7
136.6
84.8
51.8
395.4
224.5r
22.9
64.5r
83.5r
27.2
35.5
37.1
600.5r
211.4
81.8
15.2
66.6
129.6
78.9
50.8
389.1
220. l r
21.8
66.4r
80.8r
28.0
37.3
39.9
586.4r
211.2
83.0
17.5
65.5
128.2
79.1
49.1
375.2r
214.6r
22.0
62.8r
75.8r
29.5
36.9
38.8
572.6"
205.8
82.8r
18.5
64.4
122.9
75.4
47.5
366.8r
213.2"
22.0
58.6"
73.0"
31.9
35.5
38.8
555.9
199.6
84.7
19.9
64.8
114.9
71.4
43.5
356.3
210.0
21.8
50.9
73.7
26.4
36.1
38.1
548.9
198.9
86.9
21.3
65.7
112.0
69.8
42.2
350.0
205.3
21.7
51.3
71.7
26.1
36.6
35.7
548.8
199.1
87.4
21.3
66.1
111.7
69.9
41.8
349.7
206.9
21.6
49.6
71.6
27.6
36.3
37.3
551.7
199.0
87.0
21.0
66.0
112.0
69.4
42.6
352.7
207.9
21.6
51.6
71.6
23.0
36.1
34.4
550.0
198.7
85.4
20.0
65.4
113.4
70.7
42.7
351.3
206.6
21.7
51.9
71.2
25.5
36.1
37.2
545.6
198.8
87.7
23.3
64.4
111.1
69.1
42.1
346.8
201.1
21.7
51.4
72.5
29.1
37.1
34.1
647.8 r
723.7
7133 r
705.4 r
6913 r
678.6 r
656.2
647.0
649.7
644.9
648.5
645.7
292.7
11.9
280.7
184.2
26.6
157.6
101.0
66.1
318.2
15.4
302.8
215.3
30.6
184.7
107.8
78.4
315.0
12.7
302.3
214.6
32.1
182.5
102.6
77.1
312.2
11.9
300.3
203.7
27.2
176.5
107.7
78.1
315.7
13.0
302.7
193.6
21.5
172.2
104.4
74.5
319.8"
13.7
306.1"
180.7
18.0
162.8r
103.7
71.9
314.5
13.3
301.2
174.0
24.3
149.7
97.7
68.1
314.9
12.5
302.4
174.1
21.5
152.6
89.4
66.5
306.1
12.9
293.2
173.9
22.1
151.8
101.5
66.5
316.2
12.7
303.5
176.1
24.4
151.7
85.0
65.5
318.2
12.7
305.5
174.1
20.8
153.2
84.1
70.0
318.9
12.0
306.9
172.0
18.8
153.2
87.6
65.2
644.0
719.7
709.4
701.7
676.1 r
6543
644.9
648.0
642.8
6463
643.6
2.4r
1.9
2.0
1.7
2.1
2.2
2.1
3.8
4.0
3.9"
3.7
688.2
r
3.1
r
MEMO
51 Revaluation gains on off-balance-sheet
items 8
52 Revaluation losses on off-balancesheet items 8
Footnotes appear on p. A21.
40.1
52.0
48.6
48.1
45.9
43.6
40.2
38.8
39.7
38.4
39.2
38.1
39.3
47.5
44.9
44.5
42.2
41.3
39.1
38.8
39.7
38.2
39.6
38.1
Commercial Banking Institutions—Assets
and Liabilities All
NOTES TO TABLE 1.26
NOTE. Tables 1.26, 1.27, and 1.28 have been revised to reflect changes in the Board's H.8
statistical release, "Assets and Liabilities of Commercial Banks in the United States." Table
1.27, "Assets and Liabilities of Large Weekly Reporting Commercial Banks," and table 1.28,
"Large Weekly Reporting U.S. Branches and Agencies of Foreign Banks," are no longer
being published in the Bulletin. Instead, abbreviated balance sheets for both large and small
domestically chartered banks have been included in table 1.26, parts C and D. Data are both
merger-adjusted and break-adjusted. In addition, data from large weekly reporting U.S.
branches and agencies of foreign banks have been replaced by balance sheet estimates of all
foreign-related institutions and are included in table 1.26, part E. These data are breakadjusted.
The not-seasonally-adjusted data for all tables now contain additional balance sheet items,
which were available as of October 2, 1996.
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, 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.
The data for large and small domestic banks presented on pp. A17-19 are adjusted to
remove the estimated effects of mergers between these two groups. The adjustment for
mergers changes past levels to make them comparable with current levels. Estimated
quantities of balance sheet items acquired in mergers are removed from past data for the bank
group that contained the acquired bank and put into past data for the group containing the
acquiring bank. Balance sheet data for acquired banks are obtained from Call Reports, and a
ratio procedure is used to adjust past levels.
2. Excludes federal funds sold to, reverse RPs with, and loans made to commercial banks
in the United States, all of which are included in "Interbank loans."
3. Consists of reverse RPs with brokers and dealers and loans to purchase and carry
securities.
4. Includes vault cash, cash items in process of collection, balances due from depository
institutions, and balances due from Federal Reserve Banks.
5. Excludes the due-from position with related foreign offices, which is included in "Net
due to related foreign offices."
6. Excludes unearned income, reserves for losses on loans and leases, and reserves for
transfer risk. Loans are reported gross of these items.
7. This balancing item is not intended as a measure of equity capital for use in capital
adequacy analysis. On a seasonally adjusted basis this item reflects any differences in the
seasonal patterns estimated for total assets and total liabilities.
8. Fair value of derivative contracts (interest rate, foreign exchange rate, other commodity and
equity contracts) in a gain/loss position, as determined under FASB Interpretation No. 39.
9. Includes mortgage-backed securities issued by U.S. government agencies, U.S.
government-sponsored enterprises, and private entities.
10. Difference between fair value and historical cost for securities classified as availablefor-sale under FASB Statement No. 115. Data are reported net of tax effects. Data shown are
restated to include an estimate of these tax effects.
11. Mainly commercial and industrial loans but also includes an unknown amount of credit
extended to other than nonfinancial businesses.
A42
1.32
DomesticNonfinancialStatistics • July 1999
COMMERCIAL PAPER A N D BANKERS DOLLAR ACCEPTANCES OUTSTANDING
A. Commercial Paper
Millions of dollars, seasonally adjusted, end of period
1999
1998
Year ending December
Item
1 Ail issuers
1994
1995
1996
1997
1998
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
595,382
674,904
775,371
966,699
1,163,303
1,150,213
1,159,027
1,163,303
1,178,168
1,178,303
1,204,627
223,038
207,701
275,815
210,829
361,147
229,662
513,307
252,536
614,142
322,030
627,170
289,184
621,246
304,545
614,142
322,030
629,569
314,601
615,053
320,468
684,616
276,424
164,643
188,260
184,563
200,857
227,132
233,859
233,236
227,132
233,998
242,782
243,587
Financial companies 1
2
3
Dealer-placed paper, total 2
Directly placed paper, total 3
4 Nonfinancial companies 4
1. Institutions engaged primarily in commercial, savings, and mortgage banking; sales,
personal, and mortgage financing; factoring, finance leasing, and other business lending;
insurance underwriting; and other investment activities.
2. Includes all financial-company paper sold by dealers in the open market.
3. As reported by financial companies that place their paper directly with investors.
4. Includes public utilities and firms engaged primarily in such activities as communications, construction, manufacturing, mining, wholesale and retail trade, transportation, and
services.
B. Bankers Dollar Acceptances
Millions of dollars, not seasonally adjusted, year ending September2
1995
1996
1997
1998
1 Total amount of reporting banks' acceptances in existence
29,242
25,832
25,774
14,363
2 Amount of other banks' eligible acceptances held by reporting banks
3 Amount of own eligible acceptances held by reporting banks (included in item 1)
4 Amount of eligible acceptances representing goods stored in, or shipped between, foreign countries
(included in item 1)
1,249
10,516
709
7,770
736
6,862
523
4,884
11,373
9,361
10,467
5,413
Item
1. Includes eligible, dollar-denominated bankers acceptances legally payable in the United
States. Eligible acceptances are those that are eligible for discount by Federal Reserve Banks;
that is, those acceptances that meet the criteria of Paragraph 7 of Section 13 of the Federal
Reserve Act (12 U.S.C. §372).
1.33
PRIME RATE CHARGED B Y BANKS
2. Data on bankers dollar acceptances are gathered from approximately 65 institutions;
includes U.S. chartered commerical banks (domestic and foreign offices), U.S. branches and
agencies of foreign banks, and Edge and agreement corporations. The reporting group is
revised every year.
Short-Term Business Loans 1
Percent per year
Date of change
1996—Jan
Feb.
Rate
i
1
8 50
8.25
1997—Mar. 26
8.50
1998—Sept. 30
Oct. 16
Nov. 18
8.25
8.00
7.75
Period
Average
rate
1996
1997
1998
8.27
8.44
8.35
1996—Jan
Feb
Mar.
Apr
May
June
July
8.50
8.25
8.25
8.25
8.25
8.25
8.25
8.25
8.25
8.25
8.25
8.25
Sept
Oct
Nov
Dec
1. The prime rate is one of several base rates that banks use to price short-term business
loans. The table shows the date on which a new rate came to be the predominant one quoted
by a majority of the twenty-five largest banks by asset size, based on the most recent Call
Period
1997—Jan
Feb
Mar.
Apr
May
June
Julv
Aug
Sept
Oct
Nov
Dec
Average
rate
8.25
8.25
8.30
8.50
8.50
8.50
8.50
8.50
8.50
8.50
8.50
8.50
Period
Average
rate
1998—Jan
Feb
Mar.
Apr.
Mav
June
July
Aug
Sept
Oct
Nov
Dec
8.50
8.50
8.50
8.50
8.50
8.50
8.50
8.50
8.49
8.12
7.89
7.75
1999—Jan
Feb
Mar
Apr.
May
7.75
7.75
7.75
7.75
7.75
Report. Data in this table also appear in the Board's H.15 (519) weekly and G.13 (415)
monthly statistical releases. For ordering address, see inside front cover.
Financial Markets
1.35
INTEREST RATES
A23
Money and Capital Markets
Percent per year; figures are averages of business day data unless otherwise noted
1999, week ending
1999
Item
1996
1997
1998
Jan.
Feb.
Mar.
Apr.
Apr. 2
Apr. 9
Apr. 16
Apr. 23
Apr. 30
MONEY MARKET INSTRUMENTS
1 Federal funds 1 ' "
2 Discount window borrowing 2 , 4
Commercial
Nonfinancial
3
1-month
4
2-month
5
3-month
6
7
8
5.46
5.00
5.35
4.92
4.63
4.50
4.76
4.50
4.81
4.50
4.74
4.50
4.84
4.50
4.80
4.50
4.68
4.50
4.61
4.50
4.79
4.50
n.a.
n.a.
n.a.
5.57
5.57
5.56
5.40
5.38
5.34
4.80
4.78
4.77
4.80
4.80
4.79
4.82
4.82
4.81
4.79
4.78
4.79
4.84
4.82
4.82
4.81
4.80
4.80
4.78
4.78
4.79
4.76
4.77
4.78
4.77
4.77
4.77
n.a.
n.a.
n.a.
5.59
5.59
5.60
5.42
5.40
5.37
4.83
4.81
4.81
4.82
4.82
4.82
4.84
4.83
4.84
4.80
4.80
4.80
4.84
4.83
4.83
4.82
4.82
4.82
4.79
4.81
4.80
4.78
4.79
4.79
4.79
4.78
4.79
5.43
5.41
5.42
5.54
5.58
5.62
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.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
5.31
5.29
5.21
5.44
5.48
5.48
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.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
5.31
5.31
5.54
5.57
5.39
5.30
4.80
4.73
4.79
4.74
4.82
4.82
4.80
4.80
4.82
4.83
4.80
4.80
4.80
4.80
4.80
4.80
4.80
4.80
5.35
5.39
5.47
5.54
5.62
5.73
5.49
5.47
5.44
4.89
4.89
4.90
4.86
4.90
4.95
4.88
4.91
4.98
4.84
4.88
4.94
4.87
4.90
4.96
4.86
4.88
4.94
4.85
4.88
4.94
4.83
4.88
4.94
4.83
4.87
4.94
5.38
5.61
5.45
4.88
4.86
4.88
4.87
4.88
4.88
4.88
4.88
4.87
5.01
5.08
5.22
5.06
5.18
5.32
4.78
4.83
4.80
4.34
4.33
4.31
4.44
4.44
4.48
4.44
4.47
4.53
4.29
4.37
4.45
4.35
4.34
4.48
4.29
4.35
4.43
4.20
4.34
4.43
4.26
4.38
4.45
4.39
4.43
4.49
5.02
5.09
5.23
5.07
5.18
5.36
4.81
4.85
4.85
4.34
4.36
4.34
4.45
4.43
4.37
4.48
4.52
4.67
4.28
4.36
4.50
4.38
4.34
4.50
4.27
4.35
n.a.
4.19
4.32
n.a.
4.23
4.37
n.a.
4.34
4.41
4.49
5.52
5.84
5.99
6.18
6.34
6.44
6.83
6.71
5.63
5.99
6.10
6.22
6.33
6.35
6.69
6.61
5.05
5.13
5.14
5.15
5.28
5.26
5.72
5.58
4.51
4.62
4.61
4.60
4.80
4.72
5.45
5.16
4.70
4.88
4.90
4.91
5.10
5.00
5.66
5.37
4.78
5.05
5.11
5.14
5.36
5.23
5.87
5.58
4.69
4.98
5.03
5.08
5.28
5.18
5.82
5.55
4.72
4.99
5.06
5.12
5.37
5.24
5.92
5.63
4.66
4.91
4.96
5.00
5.24
5.11
5.78
5.50
4.67
4.96
5.01
5.05
5.25
5.14
5.78
5.51
4.70
5.00
5.06
5.10
5.29
5.20
5.83
5.56
4.73
5.03
5.10
5.15
5.32
5.26
5.85
5.58
6.80
6.67
5.69
5.39
5.60
5.81
5.77
5.88
5.73
5.73
5.78
5.80
5.52
5.79
5.76
5.32
5.50
5.52
4.93
5.14
5.09
4.85
5.21
5.01
4.80
5.21
5.03
4.96
5.32
5.10
4.89
5.27
5.08
4.97
5.34
5.11
4.93
5.25
5.07
4.85
5.25
5.06
4.85
5.26
5.07
4.86
5.27
5.07
7.66
7.54
6.87
6.76
6.89
7.07
7.05
7.12
7.01
7.02
7.06
7.09
7.37
7.55
7.69
8.05
7.27
7.48
7.54
7.87
6.53
6.80
6.93
7.22
6.24
6.68
6.84
7.29
6.40
6.79
6.97
7.39
6.62
6.98
7.14
7.53
6.64
6.96
7.13
7.48
6.70
7.02
7.19
7.56
6.59
6.91
7.08
7.45
6.60
6.93
7.10
7.44
6.65
6.97
7.14
7.48
6.68
7.00
7.17
7.50
2.19
1.77
1.49
1.30
1.32
1.30
1.24
1.29
1.24
1.24
1.24
1.23
paper,'i,(l
Financial
1-month
2-month
3-month
(historicalJ3'5,7
9
10
11
Commercial paper
1-month
3-month
6-month
12
13
14
Finance paper, directly placed
1-month
3-month
6-month
15
16
Bankers
acceptances3'5'9
3-month
6-month
17
18
19
Certificates of deposit, secondary
1-month
3-month
6-month
(historical)3'5'8
market3'10
20 Eurodollar deposits, 3-month 3 ' 1 1
74
75
26
U.S. Treasury bills
Secondary market 3 , 5
3-month
6-month
1-year
Auction high 3 ' 5 ' 1 2
3-month
6-month
1-year
27
78
79
30
31
37
33
34
Constant
maturities13
1-year
2-year
3-year
5-year
1-year
10-year
20-year
30-year
7.1
??
23
5.30
5.02
U.S. TREASURY NOTES AND BONDS
Composite
35 More than 10 years (long-term)
STATE AND LOCAL NOTES AND BONDS
Moody's
series14
36 Aaa
37 Baa
38 Bond Buyer series 15
CORPORATE BONDS
39 Seasoned issues, all industries 16
40
41
47
43
Rating
Aaa
Aa
A
Baa
group
MEMO
Dividend-price
ratio17
44 Common stocks
1. The daily effective federal funds rate is a weighted average of rates on trades through
New York brokers.
2. Weekly figures are averages of seven calendar days ending on Wednesday of the
current week; monthly figures include each calendar day in the month.
3. Annualized using a 360-day year or bank interest.
4. Rate for the Federal Reserve Bank of New York.
5. Quoted on a discount basis.
6. Interest rates interpolated from data on certain commercial paper trades settled by the
Depository Trust Company. The trades represent sales of commercial paper by dealers or
direct issuers to investors (that is, the offer side). See Board's Commercial Paper Web pages
(http://www.federalreserve.gov/releases/cp) for more information.
7. An average of offering rates on commercial paper for firms whose bond rating is AA or
the equivalent. Series ended August 29, 1997.
8. An average of offering rates on paper directly placed by finance companies. Series
ended August 29, 1997.
9. Representative closing yields for acceptances of the highest-rated money center banks.
10. An average of dealer offering rates on nationally traded certificates of deposit.
11. Bid rates for Eurodollar deposits collected around 9:30 a.m. Eastern time. Data are for
indication purposes only.
12. Auction date for daily data; weekly and monthly averages computed on an issue-date
basis. On or after October 28, 1998, data are stop yields from uniform-price auctions. Before
that, they are weighted average yields from multiple-price auctions.
13. Yields on actively traded issues adjusted to constant maturities. Source: U.S. Department of the Treasury.
14. General obligation bonds based on Thursday figures; Moody's Investors Service.
15. State and local government general obligation bonds maturing in twenty years are used
in compiling this index. The twenty-bond index has a rating roughly equivalent to Moodys'
A1 rating. Based on Thursday figures.
16. Daily figures from Moody's Investors Service. Based on yields to maturity on selected
long-term bonds.
17. Standard & Poor's corporate series. Common stock ratio is based on the 500 stocks in
the price index.
NOTE. Some of the data in this table also appear in the Board's H.15 (519) weekly and
G.13 (415) monthly statistical releases. For ordering address, see inside front cover.
A42
1.36
DomesticNonfinancialStatistics • July 1999
STOCK MARKET
Selected Statistics
1998
Indicator
1997
1996
1999
1998
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
Prices and trading volume (averages of daily figures)1
Common stock prices (indexes)
1 New York Stock Exchange
(Dec. 31, 1965 = 50)
2
Industrial
3
Transportation
4
Utility
5
Finance
357.98
453.57
327.30
126.36
303.94
456.99
574.97
415.08
143.87
424.84
550.65
684.35
468.61
190.52
516.65
539.16
665.66
441.36
186.24
511.22
506.56
629.51
408.75
186.17
454.28
511.49
636.62
396.61
195.09
448.12
564.26
704.46
442.95
206.29
501.45
576.05
717.14
456.70
215.57
510.31
595.43
741.43
479.72
224.75
523.38
588.70
736.20
477.47
218.24
514.75
603.69
751.93
491.25
218.11
544.08
627.75
780.84
523.08
228.48
564.99
6 Standard & Poor's Corporation
(1941-43 = 10)2
670.49
873.43
1,085.50
1,074.62
1,020.64
1,032.47
1,144.43
1,190.05
1,248.77
1,246.58
1,281.66
1,334.76
7 American Stock Exchange
(Aug. 31, 1973 = 50)'
570.86
628.34
682.69
655.67
621.48
607.16
667.60
660.76
704.22
699.15
711.08
748.29
409,740
22,567
523,254
24,390
666,534
28,870
712,710
32,721
790,238
33,331
808,816
31,946
668,932
27,266
680,397
28,756
847,135
31,015
756,932
31,774
776,538
29,563
874,818
38,895
Volume of trading (thousands of shares)
8 New York Stock Exchange
9 American Stock Exchange
Customer financing (millions of dollars, end-of-period balances)
10 Margin credit at broker-dealers
Free credit balances at brokers5
11 Margin accounts 6
12 Cash accounts
4
97,400
126,090
140,980
147,800
137,540
130,160
139,710
140,980
153,240
151,530
156,440
172,880
22,540
40,430
31,410
52,160
40,250
62,450
38,460
53,850
41,970
54,240
43,500
54,610
40,620
56,170
40,250
62,450
36,880
59,600
38,850
57,910
40,120
59,435
41,200
60,870
Margin requirements (percent of market value and effective date) 7
13 Margin stocks
14 Convertible bonds
15 Short sales
Mar. 11, 1968
June 8, 1968
May 6, 1970
Dec. 6, 1971
Nov. 24, 1972
70
50
70
80
60
80
65
50
65
55
50
55
65
50
65
1. Daily data on prices are available upon request to the Board of Governors. For ordering
address, see inside front cover.
2. In July 1976 a financial group, composed of banks and insurance companies, was added
to the group of stocks on which the index is based. The index is now based on 400 industrial
stocks (formerly 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and
40 financial.
3. On July 5, 1983, the American Stock Exchange rebased its index, effectively cutting
previous readings in half.
4. Since July 1983, under the revised Regulation T, margin credit at broker-dealers has
included credit extended against stocks, convertible bonds, stocks acquired through the
exercise of subscription rights, corporate bonds, and government securities. Separate reporting of data for margin stocks, convertible bonds, and subscription issues was discontinued in
April 1984.
5. Free credit balances are amounts in accounts with no unfulfilled commitments to
brokers and are subject to withdrawal by customers on demand.
Jan. 3, 1974
50
50
50
6. Series initiated in June 1984.
7. Margin requirements, stated in regulations adopted by the Board of Governors pursuant
to the Securities Exchange Act of 1934, limit the amount of credit that can be used to
purchase and carry "margin securities" (as defined in the regulations) when such credit is
collateralized by securities. Margin requirements on securities are the difference between the
market value (100 percent) and the maximum loan value of collateral as prescribed by the
Board. Regulation T was adopted effective Oct. 15, 1934; Regulation U, effective May 1,
1936; Regulation G, effective Mar. 11, 1968; and Regulation X, effective Nov. 1, 1971.
On Jan. 1, 1977, the Board of Governors for the first time established in Regulation T the
initial margin required for writing options on securities, setting it at 30 percent of the current
market value of the stock underlying the option. On Sept. 30, 1985, the Board changed the
required initial margin, allowing it to be the same as the option maintenance margin required
by the appropriate exchange or self-regulatory organization; such maintenance margin rules
must be approved by the Securities and Exchange Commission.
Federal Finance
1.38
A25
FEDERAL FISCAL A N D FINANCING OPERATIONS
Millions of dollars
Calendar year
Fiscal year
Type of account or operation
US. budget1
1 Receipts, total
2
On-budget
3
Off-budget
4 Outlays, total
5
On-budget
6
Off-budget
7 Surplus or deficit ( - ) , total
On-budget
8
9
Off-budget
Source of financing (total)
10 Borrowing from the public
11 Operating cash (decrease, or increase (—))
12 Other 2
1999
1998
1996
1997
1998
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
1,453,062
1,085,570
367,492
1,560,512
1,259,608
300,904
-107,450
-174,038
66,588
1,579,292
1,187,302
391,990
1,601,235
1,290,609
310,626
-21,943
-103,307
81,364
1,721,798
1,305,999
415,799
1,652,552
1,335,948
316,604
69,246
-29,949
99,195
113,978
81,836
32,142
130,915
99,898
31,017
-16,937
-18,062
1,125
178,646
143,337
35,309
183,802
149,138
34,655
-5,156
-5,801
654
171,722
129,921
41,801
101,217
102,320
-1,103
70,505
27,601
42,904
99,414
65,058
34,356
141,760
110,486
31,274
-42,345
-45,428
3,082
130,292
92,425
37,867
152,701
121,999
30,702
-22,409
-29,574
7,165
266,142
219,403
46,739
152,683
123,376
29,307
113,459
96,027
17,432
129,712
-6,276
-15,986
38,171
604
-16,832
-51,049
4,743
-22,940
22,364
20,335
-25,762
-5,390
-1,621
12,167
-31,249
-39,567
311
1,688
52,432
-11,775
37,013
-16,988
2,384
-85,208
-36,512
8,261
44,225
7,700
36,525
43,621
7,692
35,930
38,878
4,952
33,926
15,882
5,219
10,663
17,503
6,086
11,417
57,070
7,623
49,446
4,638
4,538
100
21,626
5,374
16,252
58,138
10,040
48,098
MEMO
13 Treasury operating balance (level, end of
period)
14
Federal Reserve Banks
15
Tax and loan accounts
1. Since 1990, off-budget items have been the social security trust funds (federal old-age
survivors insurance and federal disability insurance) and the U.S. Postal Service.
2. Includes special drawing rights (SDRs); reserve position on the U.S. quota in the
International Monetary Fund (IMF); loans to the IMF; other cash and monetary assets;
accrued interest payable to the public; allocations of SDRs; deposit funds; miscellaneous
liability (including checks outstanding) and asset accounts; seigniorage; increment on gold;
net gain or loss for U.S. currency valuation adjustment; net gain or loss for IMF loanvaluation adjustment; and profit on sale of gold.
SOURCE. Monthly totals: U.S. Department of the Treasury, Monthly Treasury Statement of
Receipts and Outlays of the U.S. Government; fiscal year totals: U.S. Office of Management
and Budget, Budget of the U.S. Government.
A42
1.39
DomesticNonfinancialStatistics • July 1999
U.S. BUDGET RECEIPTS A N D OUTLAYS 1
Millions of dollars
Fiscal year
Calendar year
Source or type
1997
1997
1998
1999
1998
HI
H2
HI
H2
Feb.
Mar.
Apr.
RECEIPTS
1 All sources
2 Individual income taxes, net
3
Withheld
4
Nonwithheld
5
Refunds
Corporation income taxes
6
Gross receipts
Refunds
/
8 Social insurance taxes and contributions, net . . .
9
Employment taxes and contributions 2
10
Unemployment insurance
11
Other net receipts 3
12
13
14
15
Excise taxes
Customs deposits
Estate and gift taxes
Miscellaneous receipts 4
1,579,292
1,721,798
845,527
773,810 r
922,630 r
825,057 r
99,414
130,292
266,142
737,466
580,207
250,753
93,560
828,586
646,483
281,527
99,476
400,436
292,252
191,050
82,926
354,072
306,865
58,069
10,869
447,514
316,309
219,136
87,989
392,332
339,144
65,204
12,032
42,792
59,055
2,949
19,219
50,468
69,559
7,245
26,351
164,832
55,484
145,935
36,600
204,493
22,198
539,371
506,751
28,202
4,418
213,249
24,593
571,831
540,014
27,484
4,333
106,451
9,635
288,251
268,357
17,709
2,184
104,659
10,135
260,795
247,794
10,724
2,280
109,353
14,220
312,713
293,520
17,080
2,112
104,163
14,250
268,466
256,142
10,121
2,202
3,641
2,465
46,683
43,735
2,594
353
23,131
4,578
49,216
48,592
269
355
27,118
5,419
65,162
60,186
4,547
428
56,924
17,928
19,845
25,465
57,673
18,297
24,076
32,658
28,084
8,619
10,477
12,866
31,133
9,679
10,262
13,348
29,922
8,546
12,971
15,829
33,366
9,838
12,359
18,735
3,892
1,403
1,600
1,868
5,880
1,546
2,172
2,457
5,579
1,350
5,138
2,383
OUTLAYS
1,601,235
1,652,552
797,418
824,368 r
815,884 r
877,412 r
141,760 r
152,701 r
152,683
17
18
19
20
21
22
National defense
International affairs
General science, space, and technology
Energy
Natural resources and environment
Agriculture
270,473
15,228
17,174
1,483
21,369
9,032
268,456
13,109
18,219
1,270
22,396
12,206
132,698
5,740
8,938
803
9,628
1,465
140,873
9,420
10,040
411
11,106
10,590
129,351
4,610
9,426
957
10,051
2,387
140,196
8,297
10,142
699
12,671
16,757
20,909
1,372
1,312
-189
1,919
1,074
25,469
949
1,663
588
1,862
1,046
25,433
1,686
1,565
-156
1,611
666
23
24
25
26
Commerce and housing credit
Transportation
Community and regional development
Education, training, employment, and
social services
-14,624
40,767
11,005
1,014
40,332
9,720
-7,575
16,847
5,678
-3,526
20,414
5,749
-2,483
16,196
4,863
4,046
20,834
6,972
-1,237
2,259
720
-1,474
2,636
1,148
-536
2,737
684
53,008
54,919
25,080
26.851
25,928
27,760 r
4,908 r
6,319 r
4,202
123,843
555,273
230,886
131,440
572,047
233,202
61,809
278,863
124,034
63,552
283,109
106,353
65,053
286,305
125,196
67,836
316,809
109,481
11,100
46,727
29,856
11,988
49,846
27,065 r
12,284
51,816
24,420
39,313
20,197
12,768
244,013
-49,973
41,781
22,832
13,444
243,359
-47,194
17,697
10,670
6,623
122,655
— 24,235
22,077
10,212
7,302
122,620
-22,795
19,615
11,287
6,139
122,345
-21,340
22,750
12,041
9,136
116,954
-25,795
3,574
1,832
274
18,049
-2,700
3,693
2,180
1,130
19,970
-3,376
5,498
2,625
929
20,195
-2,976
16 All types
27 Health
28 Social security and Medicare
29 Income security
30
31
32
33
34
Veterans benefits and services
Administration of justice
General government
Net interest 5
Undistributed offsetting receipts 6
1. Functional details do not sum to total outlays for calendar year data because revisions to
monthly totals have not been distributed among functions. Fiscal year total for receipts and
outlays do not correspond to calendar year data because revisions from the Budget have not
been fully distributed across months.
2. Old-age, disability, and hospital insurance, and railroad retirement accounts.
3. Federal employee retirement contributions and civil service retirement and
disability fund.
4. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts.
5. Includes interest received by trust funds.
6. Rents and royalties for the outer continental shelf, U.S. government contributions for
employee retirement, and certain asset sales.
SOURCE. Fiscal year totals: U S . Office of Management and Budget, Budget of the U.S.
Government, Fiscal Year 2000\ monthly and half-year totals: U.S. Department of the Treasury, Monthly Treasury Statement of Receipts and Outlays of the U.S. Government.
Federal Finance
1.40
A27
FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION
Billions of dollars, end of month
1997
1998
1999
Item
Mar. 31
June 30
Sept. 30
Dec. 31
Mar. 31
June 30
Sept. 30
Dec. 31
Mar. 31
1 Federal debt outstanding
5,415
5,410
5,446
5,536
5,573
5,578
5,556
5,643
5,726
2 Public debt securities
3
Held by public
4
Held by agencies
5,381
3,874
1,507
5,376
3,805
1,572
5,413
3,815
1,599
5,502
3,847
1,656
5,542
3,872
1,670
5,548
3,790
1,758
5,526
3,761
1,766
5,614
3,787
1,827
5,652
n.a.
n.a.
34
26
8
34
26
7
33
26
7
34
27
7
31
26
5
30
26
4
29
26
4
29
29
1
74
n.a.
n.a.
5 Agency securities
6
Held by public
7
Held by agencies
5,294
5,290
5,328
5,417
5,457
5,460
5,440
5,530
5,566
9 Public debt securities
10 Other debt'
8 Debt subject to statutory limit
5,294
0
5,290
0
5,328
0
5,416
0
5,456
0
5,460
0
5,439
0
5,530
0
5,566
0
MEMO
11 Statutory debt limit
5,500
5,500
5,950
5,950
5,950
5,950
5,950
5,950
5,950
1. Consists of guaranteed debt of U.S. Treasury and other federal agencies, specified
participation certificates, notes to international lending organizations, and District of Columbia stadium bonds.
1.41
GROSS PUBLIC DEBT OF U.S. TREASURY
SOURCE. U.S. Department of the Treasury, Monthly Statement of the Public Debt of the
United States and Treasury Bulletin.
Types and Ownership
Billions of dollars, end of period
1998
Type and holder
1 Total
2
3
4
5
6
7
8
9
10
11
12
13
14
15
gross public debt
By type
Interest-bearing
Marketable
Bills
Notes
Bonds
Inflation-indexed notes and bonds 1
Nonmarketable 2
State and local government series
Foreign issues 3
Government
Public
Savings bonds and notes
Government account series 4
Non-interest-bearing
By holder5
16 U.S. Treasury and other federal agencies and trust funds
17 Federal Reserve Banks
18 Private investors
19
Commercial banks
20
Money market funds
21
Insurance companies
22
Other companies
23
State and local treasuries 6 ' 7
Individuals
24
Savings bonds
25
Other securities
26
Foreign and international 8
27
Other miscellaneous investors 7,9
1995
1997
1999
1998
Q2
Q3
Q4
Qi
4,988.7
5,323.2
5,502.4
5,614.2
5,547.9
5,526.2
5,614.2
5,651.6
4,964.4
3,307.2
760.7
2,010.3
521.2
n.a.
1,657.2
104.5
40.8
40.8
.0
181.9
1,299.6
24.3
5,317.2
3,459.7
777.4
2,112.3
555.0
n.a.
1,857.5
101.3
37.4
47.4
.0
182.4
1,505.9
6.0
5,494.9
3,456.8
715.4
2,106.1
587.3
33.0
2,038.1
124.1
36.2
36.2
.0
181.2
1,666.7
7.5
5,605.4
3,355.5
691.0
1,960.7
621.2
50.6
2,249.9
165.3
34.3
34.3
.0
180.3
1,840.0
8.8
5,540.2
3,369.5
641.1
2,064.6
598.7
50.1
2,170.7
155.0
36.0
36.0
.0
180.7
1,769.1
7.7
5,518.7
3,331.0
637.7
2,009.1
610.4
41.9
2,187.7
164.4
35.1
35.1
.0
180.8
1,777.3
7.5
5,605.4
3,355.5
691.0
1,960.7
621.2
50.6
2,249.9
165.3
34.3
34.3
.0
180.3
1,840.0
8.8
5,643.1
3,361.3
725.5
1,912.0
632.5
59.2
2,281.8
167.5
33.5
33.5
.0
180.6
1,870.2
8.5
1,304.5
391.0
3,294.9
278.7
71.5
241.5
228.8
469.6
1,497.2
410.9
3,411.2
261.8
91.6
214.1
258.5
482.5
1,655.7
451.9
3,393.4
269.8
88.9
224.9
265.0
493.0
1,826.8
471.7
3,334.0
215.0
105.8
186.0
267.9
490.0
1,757.6
458.4
3,330.6
263.6
82.7
183.6
267.2
470.0
1,765.6
458.1
3,301.0
219.8
84.2
186.1
271.4
487.4
1,826.8
471.7
3,334.0
215.0
105.8
186.0
267.9
490.0
185.0
162.7
835.2
825.9
187.0
169.6
1,102.1
678.9
186.5
168.4
1,241.6
552.0
186.7
164.9
1,276.3
441.4
186.0
165.0
1,256.0
456.5
186.0
166.4
1,221.8
477.9
186.7
164.9
1,276.3
441.4
1. The U.S. Treasury first issued inflation-indexed securities during the first quarter of
1997.
2. Includes (not shown separately) securities issued to the Rural Electrification Administration, depository bonds, retirement plan bonds, and individual retirement bonds.
3. Nonmarketable series denominated in dollars, and series denominated in foreign currency held by foreigners.
4. Held almost entirely by U.S. Treasury and other federal agencies and trust funds.
5. Data for Federal Reserve Banks and U.S. government agencies and trust funds are actual
holdings; data for other groups are Treasury estimates.
6. Includes state and local pension funds.
1996
n.a.
7. In March 1996, in a redefinition of series, fully defeased debt backed by nonmarketable
federal securities was removed from "Other miscellaneous investors" and added to "State and
local treasuries." The data shown here have been revised accordingly.
8. Consists of investments of foreign balances and international accounts in the United
States.
9. Includes savings and loan associations, nonprofit institutions, credit unions, mutual
savings banks, corporate pension trust funds, dealers and brokers, certain U.S. Treasury
deposit accounts, and federally sponsored agencies.
SOURCE. U.S. Treasury Department, data by type of security, Monthly Statement of the
Public Debt of the United States; data by holder, Treasury Bulletin.
A42
1.42
DomesticNonfinancialStatistics • July 1999
U.S. GOVERNMENT SECURITIES DEALERS
Transactions 1
Millions of dollars, daily averages
1999
1999, week ending
Item
Jan.
Feb.
Mar. 3
Mar.
Mar. 10
Mar. 17
Mar. 24
Mar. 31
Apr. 7
Apr. 14
Apr. 21
Apr. 28
OUTRIGHT TRANSACTIONS2
1
2
3
4
5
6
7
8
9
By type of security
U.S. Treasury bills
Coupon securities, by maturity
Five years or less
More than five years
Inflation-indexed
Federal agency
Discount notes
Coupon securities, by maturity
One year or less
More than one year, but less than
or equal to five years
More than five years
Mortgage-backed
By type of counterparty
With interdealer broker
U.S. Treasury
Federal agency
Mortgage-backed
With other
13
U.S. Treasury
14
Federal agency
Mortgage-backed
15
10
11
12
32,211
31,811
34,426
51,699
28,431
26,936
25,567
46,405
24,386
28,340
27,047
35,341
100,641
68,441
1,552
107,777
71,489
772
96,141
62,008
402
122,778
83,554
727
99,358
73,684
548
79,570
51,433
276
97,269
54,205
264
92,383
55,781
323
64,393
40,696
2,435
89,544
64,236
1,418
97,475
51,897
1,393
95,249
54,133
530
43,028
41,355
40,089
42,125
40,996
41,217
37,095
39,828
34,125
40,893
39,211
34,272
1,098
1,796
1,097
1,515
1,009
1,176
1,281
672
363
1,050
1,691
1,734
6,150
4,079
82,210
7,446
3,633
75,923
7,640
3,141
69,547
12,035
3,312
80,707
4,829
5,367
94,031
8,518
3,068
68,385
8,832
1,974
50,182
5,743
2,052
58,892
4,709
1.532
68,305
8,882
5,697
106,601
8,307
3,396
59,442
5,580
7,323
44,570
113,084
3,806
24,932
117,230
3,791
25,301
106,659
4,121
23,601
142,719
4,677
24,875
112,829
3,908
31,902
87,756
5,290
24,202
98,164
3,853
16,254
106,251
3,099
21,281
71,992
2,533
20,165
99,834
4,685
35,318
95,890
3,836
23,725
100,968
4,529
15,829
89,761
50,548
57,278
94,620
50,438
50,622
86,316
47,846
45,946
116,038
54,311
55,832
89,192
48,293
62,129
70,459
48,689
44,183
79,140
45,329
33,928
88,640
45,195
37,611
59,919
38,197
48,140
83,704
51,838
71,282
81,921
48,768
35,718
84,285
44,380
28,741
n.a.
n.a.
n.a.
n.a.
FUTURES TRANSACTIONS3
By type of deliverable
security
16 U.S. Treasury bills
Coupon securities, by maturity
17
Five years or less
18
More than five years
19 Inflation-indexed
Federal agency
20 Discount notes
Coupon securities, by maturity
21
One year or less
22
More than one year, but less than
or equal to five years
More than five years
23
24 Mortgage-backed
0
n.a.
0
n.a.
0
0
2,225
15,953
0
2,512
17,132
0
2,649
15,926
0
5.110
23,513
0
3,180
19,329
0
2,399
12,912
0
2,048
13,793
0
1,492
13,116
0
1,656
10,251
0
1,645
13,785
0
1,847
11,103
0
2,127
11,002
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
n.a.
OPTIONS TRANSACTIONS4
25
26
27
28
29
30
31
32
33
By type of underlying security
U.S. Treasury bills
Coupon securities, by maturity
Five years or less
More than five years
Inflation-indexed
Federal agency
Discount notes
Coupon securities, by maturity
One year or less
More than one year, but less than
or equal to five years
More than five years
Mortgage-backed
0
0
0
0
0
0
0
0
0
0
0
0
1,673
4,712
4,745
1,153
5,798
0
1,506
5,050
0
797
5,453
0
1,442
5,276
0
1,929
5,257
0
1,105
4,763
0
1,972
4,662
0
1,398
4,380
0
1,198
4,326
n.a.
505
4,471
0
797
4,745
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1,309
0
0
844
0
0
825
0
0
1,123
0
0
650
0
0
852
0
0
1,184
0
0
434
0
0
1,010
0
0
1,170
0
0
392
0
0
537
1. Transactions are market purchases and sales of securities as reported to the Federal
Reserve Bank of New York by the U.S. government securities dealers on its published list of
primary dealers. Monthly averages are based on the number of trading days in the month.
Transactions are assumed to be evenly distributed among the trading days of the report week.
Immediate, forward, and futures transactions are reported at principal value, which does not
include accrued interest; options transactions are reported at the face value of the underlying
securities.
Dealers report cumulative transactions for each week ending Wednesday.
2. Outright transactions include immediate and forward transactions. Immediate delivery
refers to purchases or sales of securities (other than mortgage-backed federal agency securities) for which delivery is scheduled in five business days or less and "when-issued"
securities that settle on the issue date of offering. Transactions for immediate delivery of mortgagebacked agency securities include purchases and sales for which delivery is scheduled in thirty business
days or less. Stripped securities are reported at market value by maturity of coupon or coipus.
Forward transactions are agreements made in the over-the-counter market that specify
delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt
securities are included when the time to delivery is more than five business days. Forward
contracts for mortgage-backed agency securities are included when the time to delivery is
more than thirty business days.
3. Futures transactions are standardized agreements arranged on an exchange. All futures
transactions are included regardless of time to delivery.
4. Options transactions are purchases or sales of put and call options, whether arranged on
an organized exchange or in the over-the-counter market, and include options on futures
contracts on U.S. Treasury and federal agency securities.
NOTE, "n.a." indicates that data are not published because of insufficient activity.
Federal Finance
1.43
U.S. GOVERNMENT SECURITIES DEALERS
A29
Positions and Financing 1
Millions of dollars
1999, week ending
1999
Jan.
Feb.
Mar.
Mar. 3
Mar. 10
Mar. 17
Mar. 24
Mar. 31
Apr. 7
Apr. 14
Apr. 21
Positions 2
NET OUTRIGHT POSITIONS^
1
2
3
4
5
6
7
8
9
By type of security
U.S. Treasury bills
Coupon securities, by maturity
Five years or less
More than five years
Inflation-indexed
Federal agency
Discount notes
Coupon securities, by maturity
One year or less
More than one year, but less than
or equal to five years
More than five years
Mortgage-backed
1,346
4,509
24,510
25,480
25,042
20,081
17,666
34,834
33,128
33,463
21,008
-8,148
432
1,973
-12,028
1,465
1,931
-18,124
-6,408
1,846
-21,390
-4,195
2,157
-21,756
-5,998
2,160
-19,183
-5,538
1,849
-13,623
-6,597
1,754
-16,536
-8,447
1,487
-14,410
-6,437
2,527
-9,854
-4,872
2,473
-14,757
-5,400
2,763
18,818
18,671
18,189
14,894
20,544
17,653
19,310
16,659
22,169
29,505
25,230
2,858
3,450
2,683
3,439
2,744
3,060
2,361
2,243
2,007
3,072
2,545
4,441
4,545
23,961
5,044
3,146
17,432
5,222
4,110
16,774
8,311
2,544
21,168
6,820
4,670
17,990
3,150
5,455
15,397
5,669
3,710
18,817
3,925
3,275
13,010
1,622
3,518
11,138
4,589
6,643
14,753
4,917
5,864
11,968
n.a.
n.a.
n.a.
n.a.
0
0
0
n.a.
n.a.
n.a.
-777
-20,814
0
459
-14,876
0
-910
-12,929
0
-328
-11,398
0
-576
-11,713
0
-1,329
-12,930
0
-1,111
-15,091
0
-873
-12,639
0
-1,380
-17,065
0
-1,732
-19,412
0
754
-17,518
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
NET FUTURES POSITIONS4
By type of deliverable
security
10 U.S. Treasury bills
Coupon securities, by maturity
11
Five years or less
12
More than five years
13 Inflation-indexed
Federal agency
14 Discount notes
Coupon securities, by maturity
15
One year or less
16
More than one year, but less than
or equal to five years
17
More than five years
18 Mortgage-backed
0
NET OPTIONS POSITIONS
19
20
21
22
23
24
25
26
27
By type of deliverable
security
U.S. Treasury bills
Coupon securities, by maturity
Five years or less
More than five years
Inflation-indexed
Federal agency
Discount notes
Coupon securities, by maturity
One year or less
More than one year, but less than
or equal to five years
More than five years
Mortgage-backed
0
0
0
0
0
0
0
0
0
0
0
-1,090
-1,004
n.a.
-1,960
-1,487
n.a.
-1,268
-448
n.a.
-1,743
-1,215
n.a.
-1,893
-982
n.a.
-854
380
n.a.
-970
826
n.a.
-1,153
-1,687
n.a.
-652
-275
n.a.
-564
895
n.a.
-1,427
494
n.a.
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
n.a.
3,410
n.a.
5,873
n.a.
6,928
n.a.
8,918
n.a.
6,829
n.a.
6,304
n.a.
6,720
n.a.
7,006
n.a.
5,929
n.a.
5,544
0
n.a.
5,353
Financing 5
Reverse repurchase
agreements
28 Overnight and continuing
29 Term
239,627
799,672
261,190
788,073
256,331
781,168
276,948
762,673
258,279
783,478
250,927
800,575
247,536
829,709
259,744
718,837
247,637
761,966
251,660
793,952
272,375
828,632
Securities
borrowed
30 Overnight and continuing
31 Term
222,768
105,788
225,926
100,463
226,297
93,810
228,006
94,536
232,396
92,844
236,084
93,192
223,042
97,864
212,933
91,031
215,288
92,377
211,883
99,873
211,372
106,626
2,509
n.a.
2,380
n.a.
2,555
0
n.a.
n.a.
n.a.
n.a.
n.a.
2,555
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
0
Repurchase
agreements
34 Overnight and continuing
35 Term
633,520
695,303
666,536
674,687
655,676
673,650
679,928
651,208
659,715
668,923
677,844
686,985
654,994
719,778
619,756
628,532
651,616
653,537
689,099
686,115
705,273
724,626
Securities loaned
36 Overnight and continuing
37 Term
10,040
n.a.
11,753
5,776
12,875
6,122
12,090
5,776
11,998
6,242
12,304
6,142
11,226
6,129
16,310
n.a.
10,950
6,283
10,208
5,609
10,040
5,593
Securities pledged
38 Overnight and continuing
39 Term
48,487
5,776
48,945
5,896
48,533
7,712
48,696
6,388
47,985
6,843
49,625
6,890
49,795
8,249
46,655
9,434
46,507
9,340
45,624
10,223
45,781
11,720
Collateralized
40 Total
17,735
18,388
18,177
17,885
19,168
19,349
17,296
17,018
17,043
20,633
20,663
Securities received as pledge
32 Overnight and continuing
33 Term
loans
1. Data for positions and financing are obtained from reports submitted to the Federal
Reserve Bank of New York by the U.S. government securities dealers on its published list of
primary dealers. Weekly figures are close-of-business Wednesday data. Positions for calendar
days of the report week are assumed to be constant. Monthly averages are based on the
number of calendar days in the month.
2. Securities positions are reported at market value.
3. Net outright positions include immediate and forward positions. Net immediate positions include securities purchased or sold (other than mortgage-backed agency securities) that
have been delivered or are scheduled to be delivered in five business days or less and
"when-issued" securities that settle on the issue date of offering. Net immediate positions for
mortgage-backed agency securities include securities purchased or sold that have been
delivered or are scheduled to be delivered in thirty business days or less.
Forward positions reflect agreements made in the over-the-counter market that specify
delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt
securities are included when the time to delivery is more than five business days. Forward
contracts for mortgage-backed agency securities are included when the time to delivery is
more than thirty business days.
4. Futures positions reflect standardized agreements arranged on an exchange. All futures
positions are included regardless of time to delivery.
5. Overnight financing refers to agreements made on one business day that mature on the
next business day; continuing contracts are agreements that remain in effect for more than one
business day but have no specific maturity and can be terminated without advance notice by
either party; term agreements have a fixed maturity of more than one business day. Financing
data are reported in terms of actual funds paid or received, including accrued interest.
NOTE, "n.a." indicates that data are not published because of insufficient activity.
A42
1.44
DomesticNonfinancialStatistics • July 1999
FEDERAL A N D FEDERALLY SPONSORED CREDIT AGENCIES
Debt Outstanding
Millions of dollars, end of period
1999
1998
Agency
1
1995
Federal and federally sponsored agencies
Federal agencies
Defense Department 1
Export-Import Bank 2 ' 3
Federal Housing Administration 4
Government National Mortgage Association certificates of
participation 5
7
Postal Service 6
8
Tennessee Valley Authority
9
United States Railway Association 6
2
3
4
5
6
10
11
1?
13
14
15
16
17
18
Federally sponsored agencies 7
Federal Home Loan Banks
Federal Home Loan Mortgage Corporation
Federal National Mortgage Association
Farm Credit Banks 8
Student Loan Marketing Association 9
Financing Corporation10
Farm Credit Financial Assistance Corporation"
Resolution Funding Corporation 12
1996
1997
Federal Financing Bank debt 1 3
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
Other lending14
? 5 Farmers Home Administration
? 6 Rural Electrification Administration
2 7 Other
Nov.
Dec.
925,823
1,022,609
1,296,477
1,207,495
1,255,412
1,296,477
37,347
6
2,050
97
29,380
6
1,447
84
27,792
6
552
102
26,502
6
26,350
6
26,315
6
26,502
6
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
27,786
26,496
26,344
26,309
26,496
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
205
188
205
Jan.
n.a.
n.a.
26,355
6
26,180
6
n.a.
n.a.
70
205
n.a.
n.a.
Feb.
69
n.a.
n.a.
n.a.
n.a.
26,349
26,174
n.a.
n.a.
5,765
29,429
27,853
n.a.
n.a.
807,264
243,194
119,961
299,174
57,379
47,529
8,170
1,261
29,996
896,443
263,404
156,980
331,270
60,053
44,763
8,170
1,261
29,996
994,817
313,919
169,200
369,774
63,517
37,717
8,170
1,261
29,996
1,269,975
382,131
287,396
460,291
63,488
35,399
8,170
1,261
29,996
1,181,145
367,274
246,708
431,300
60,720
33,981
8,170
1,261
29,996
1,229,097
373,755
267,890
446,377
66,086
33,928
8,170
1,261
29,996
1,269,975
382,131
287,396
460,291
63,488
35,399
8,170
1,261
29,996
n.a.
n.a.
383,572
300,927
461,157
61,292
36,385
8,170
1,261
29,996
383,769
471,300
66,622
36,464
8,170
1,261
29,996
78,681
58,172
49,090
44,129
44,952
44,824
44,129
43,803
41,637
n.a.
agencies
2,044
1,431
n.a.
n.a.
n.a.
n.a.
3,200
n.a.
21,015
17,144
29,513
18,325
16,702
21,714
1. Consists of mortgages assumed by the Defense Department between 1957 and 1963
under family housing and homeowners assistance programs.
2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976.
3. On-budget since Sept. 30, 1976.
4. Consists of debentures issued in payment of Federal Housing Administration insurance
claims. Once issued, these securities may be sold privately on the securities market.
5. Certificates of participation issued before fiscal year 1969 by the Government National
Mortgage Association acting as trustee for the Farmers Home Administration, the Department
of Health, Education, and Welfare, the Department of Housing and Urban Development, the
Small Business Administration, and the Veterans Administration.
6. Off-budget.
7. Includes outstanding noncontingent liabilities: notes, bonds, and debentures. Includes
Federal Agricultural Mortgage Corporation, therefore details do not sum to total. Some data
are estimated.
8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, which is
shown on line 17.
9. Before late 1982, the association obtained financing through the Federal Financing Bank
(FFB). Borrowing excludes that obtained from the FFB, which is shown on line 22.
Oct.
844,611
MEMO
19
1998
552
n.a.
n.a.
n.a.
n.a.
13,530
14,898
20,110
f
f
f
t
f
t
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
1
1
1
1
1
t
9,500
14,091
20,538
1
t
9,500
14,191
21,261
T
9,500
14,199
21,125
T
9,500
14,091
20,538
t
9,500
14,101
20,202
T
8,550
13,999
19,088
10. The Financing Corporation, established in August 1987 to recapitalize the Federal
Savings and Loan Insurance Corporation, undertook its first borrowing in October 1987.
11. The Farm Credit Financial Assistance Corporation, established in January 1988 to
provide assistance to the Farm Credit System, undertook its first borrowing in July 1988.
12. The Resolution Funding Corporation, established by the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, undertook its first borrowing in October 1989.
13. The FFB, which began operations in 1974, is authorized to purchase or sell obligations
issued, sold, or guaranteed by other federal agencies. Because FFB incurs debt solely for the
purpose of lending to other agencies, its debt is not included in the main portion of the table to
avoid double counting.
14. Includes FFB purchases of agency assets and guaranteed loans; the latter are loans
guaranteed by numerous agencies, with the amounts guaranteed by any one agency generally
being small. The Farmers Home Administration entry consists exclusively of agency assets,
whereas the Rural Electrification Administration entry consists of both agency assets and
guaranteed loans.
Securities Markets and Corporate Finance
1.45
NEW SECURITY ISSUES
A31
Tax-Exempt State and Local Governments
Millions of dollars
1998
Type of issue or issuer,
or use
1996
1997
1999
1998
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
1 All issues, new a n d r e f u n d i n g 1
171,222
214,694
262,342
17,526
19,528
19,325
24,288
16,926
16,233
24,323
15,758
By type of issue
2 General obligation
3 Revenue
60,409
110,813
69,934
134,989
87,015
175,327
5,619
11,907
6,791
12,737
5,433
13,892
8,632
15,656
6,925
10,001
6,786
9,446
8,323
16,000
6,443
9,315
By type of issuer
4 State
5 Special district or statutory authority 2
6 Municipality, county, or township
13,651
113,228
44,343
18,237
134,919
70,558
23,506
178,421
60,173
1,280
12,490
3,756
1,865
12,924
4,739
778
13,473
5,073
2,561
15,937
5,790
318
12,929
3,679
1,837
11,145
3,251
1,895
14,604
7,825
907
10,010
4,841
7 Issues for new capital
112,298
135,519
160,568
9,106
12,736
12,452
14,517
11,917
10,674
16,201
10,474
26,851
12,324
9,791
24,583
6,287
32,462
31,860
13,951
12,219
27,794
6,667
35,095
36,904
19,926
21,037
n.a.
8,594
42,450
2,041
918
831
n.a.
315
2,726
2,605
1,598
2,785
n.a.
471
3,359
2,353
806
2,225
n.a.
638
3,242
2,766
1,800
984
n.a.
1,376
4,477
2,936
1,706
672
n.a.
452
4,439
3,751
628
394
n.a.
343
3,207
3,537
1,640
2,839
n.a.
1,084
3,918
2,734
1,107
1,372
n.a.
618
2,592
8
9
10
11
12
13
By use of proceeds
Education
Transportation
Utilities and conservation
Social welfare
Industrial aid
Other purposes
1. Par amounts of long-term issues based on date of sale.
2. Includes school districts.
1.46
NEW SECURITY ISSUES
SOURCE. Securities Data Company beginning January
Digest before then.
1990; Investment
Dealer's
U.S. Corporations
Millions of dollars
1998
Type of issue, offering,
or issuer
1996
1997
1999
1998
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
1 All issues 1
773,110
929,256
1,127,721
57,276
88,764
70,287
111,762
81,326
93,665
103,175
125,884
2 Bonds 2
651,104
811,376
1,000,966
53,551
84,124
61,632
102,860
72,656
86,529
92,885
116,340
By type of offering
3 Public, domestic
4 Private placement, domestic 3
5 Sold abroad
567,671
83,433
n.a.
708,188
103,188
n.a.
923,001
77,965
n.a.
49,751
3,800
2,391
81,507
2,618
4,122
54,795
6,837
2,428
95,106
7,754
2,878
69,395
3,261
3,874
76,511
10,018
684
82,871
10,014
648
100,924
15,416
1,224
By industry group
6 Nonfinancial
7 Financial
167.904
483,200
222,603
588,773
308,157
692,809
16,067
37,483
10,738
73,386
14,426
47,206
32,124
70,736
25,008
47,648
21,193
65,336
23,131
69,754
39,368
76,973
8 Stocks 2
122,006
117,880
126,755
3,725
4,640
8,655
8,902
8,670
7,136
10,290
9,544
By type of offering
9 Public
10 Private placement 3
122.006
n.a.
117,880
n.a.
126,755
n.a.
3,725
n.a.
4,640
n.a.
8,655
n.a.
8,902
n.a.
8,670
n.a.
7,136
n.a.
10,290
n.a.
9,544
n.a.
By industry group
11 Nonfinancial
12 Financial
80.460
41.546
60,386
57,494
74,113
52,642
2,560
1,165
2,266
2,374
5,879
2,776
6,145
2,757
7,559
1,111
3,701
3,435
8,911
1,379
8,367
1,177
1. Figures represent gross proceeds of issues maturing in more than one year; they are the
principal amount or number of units calculated by multiplying by the offering price. Figures
exclude secondary offerings, employee stock plans, investment companies other than closedend, intracorporate transactions, and Yankee bonds. Stock data include ownership securities
issued by limited partnerships.
2. Monthly data cover only public offerings.
3. Monthly data are not available.
SOURCE. Beginning July 1993, Securities Data Company and the Board of Governors of
the Federal Reserve System.
A42
1.47
DomesticNonfinancialStatistics • July 1999
Net Sales and Assets 1
O P E N - E N D INVESTMENT COMPANIES
Millions of dollars
1999
1998
Item
1997
1998
Sept.
1 Sales of own shares 2
Nov.
Oct.
Dec.
Mar. r
Feb.
Jan.
Apr.
1,190,900
1,461,430
118,478
116,471
112,627
140,700
161,889
132,199
164,290
165,893
918,728
272,172
1,217,022
244,408
107,049
11,429
108,838
7,633
89,702
22,925
134,289
6,412
135,713
26,176
128,125
4,074
146,479
17,811
139,066
26,827
4 Assets 4
3,409,315
4,173,531
3,625,841
3,804,591
4,002,089
4,173,531
4,298,071
4,180,115
4,328,150
4,505,001
5 Cash 5
6 Other
174,154
3,235,161
191,393
3,982,138
211,253
3,414,588
210,026
3,594,565
207,422
3,794,667
191,393
3,982,138
203,470
4,094,601
198,134
3,981,982
198,741
4,129,409
212,315
4,292,686
2 Redemptions of own shares
3 Net sales 3
1. Data include stock, hybrid, and bond mutual funds and exclude money market mutual
funds.
2. Excludes reinvestment of net income dividends and 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 open-end investment companies registered with the Securities and
Exchange Commission. Data reflect underwritings of newly formed companies after their
initial offering of securities.
CORPORATE PROFITS A N D THEIR DISTRIBUTION
Billions of dollars; quarterly data at seasonally adjusted annual rates
1997
Account
1 Profits with inventory valuation and
capital consumption adjustment
2 Profits before taxes
3 Profits-tax liability
4 Profits after taxes
5
Dividends
Undistributed profits
6
7 Inventory valuation
8 Capital consumption adjustment
SOURCE. U.S. Department of Commerce, Survey of Current
1.51
DOMESTIC FINANCE COMPANIES
1996
1997
1999
1998
1998
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Ql
750.4
680.2
226.1
454.1
261.9
192.3
817.9
734.4
246.1
488.3
275.1
213.2
824.6
717.8
240.1
477.7
279.2
198.5
815.5
729.8
241.9
487.8
274.7
213.2
840.9
758.9
254.2
504.7
275.1
229.5
820.8
736.4
249.3
487.1
276.4
210.6
829.2
719.1
239.9
479.2
277.3
201.8
820.6
723.5
241.6
481.8
278.1
203.7
827.0
720.5
243.2
477.3
279.0
198.3
821.7
708.1
235.6
472.5
282.3
190.2
853.5
738.4
245.8
492.6
285.6
207.1
-1.2
71.4
6.9
76.6
14.5
92.3
10.3
75.5
4.8
77.2
4.3
80.1
25.3
84.9
7.8
89.4
11.7
94.8
13.4
100.2
10.4
104.7
Business.
Assets and Liabilities 1
Billions of dollars, end of period; not seasonally adjusted
1997
Account
1996
1997
1998
1999
1998
Q3
Q4
Ql
Q2
Q3
Q4
Ql
ASSETS
1 Accounts receivable, gross 2
Consumer
2
Business
3
4
Real estate
637.1
244.9
309.5
82.7
663.3
256.8
318.5
87.9
711.7 r
261.8'
347.5 r
102.3 r
660.5
254.5
319.5
86.4
663.3
256.8
318.5
87.9
667.2
251.7
325.9
89.6
676.0
251.3
334.9
89.9
687.6'
254.0'
335.1
98.5
711.7'
261.8'
347.5'
102.3'
733.5
262.9
361.7
109.0
55.6
13.1
52.7
13.0
53.6
13.3
54.6
12.7
52.7
13.0
52.1
13.1
53.2
13.2
52.4
13.2
53.6
13.3
53.1
13.5
7 Accounts receivable, net
8 All other
568.3
290.0
597.6
312.4
644.8'
321.1
593.1
289.1
597.6
312.4
601.9
329.7
609.6
340.1
622.0'
313.7
644.8'
321.1
666.9
389.6
9 Total assets
858.3
910.0
965.9 r
882.3
910.0
931.6
949.7
935.7 r
965.9 r
1,056.5
19.7
177.6
24.1
201.5
25.0
232.3
20.4
189.6
24.1
201.5
22.0
211.7
22.3
225.9
24.9
226.9
25.0
232.3
23.6
333.5
60.3
332.5
174.7
93.5
64.7
328.8
189.6
101.3
64.6
358.4
194.6
106.6
61.6
322.8
190.1
97.9
64.7
328.8
189.6
101.3
64.6
338.2
193.1
102.1
60.0
348.7
188.9
103.9
58.3
337.6
185.4
103.6
64.6
358.4
194.6
106.6
22.6
394.9
179.8
102.1
858.3
910.0
981.4
882.3
910.0
931.6
949.7
936.6
981.4
1,056.5
5 LESS: Reserves for unearned income
Reserves for losses
6
LIABILITIES AND CAPITAL
10 Bank loans
11 Commercial paper
12
13
14
15
Debt
Owed to parent
Not elsewhere classified
All other liabilities
Capital, surplus, and undivided profits
16 Total liabilities a n d capital
1. Includes finance company subsidiaries of bank holding companies but not of retailers
and banks. Data are amounts carried on the balance sheets of finance companies; securitized
pools are not shown, as they are not on the books.
2. Before deduction for unearned income and losses,
Securities Market and Corporate Finance
1.52
DOMESTIC FINANCE COMPANIES
A3 3
Owned and Managed Receivables 1
Billions of dollars, amounts outstanding
1998
Type of credit
1996
1999
1997
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Seasonally adjusted
1 Total
761.9
809.8
874.9
865.9
871.1
874.9
888.5
899.1
910.4
2
3
4
307.7
111.9
342.4
327.7
121.1
361.0
352.5
131.4
391.0
350.4
132.3
383.2
352.1
134.3
384.7
352.5
131.4
391.0
356.8
135.7
396.0
361.3
135.7
402.0
363.9
137.2
409.3
Consumer
Real estate
Business
Not seasonally adjusted
5 Total
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
.30
31
32
33
34
35
36
Consumer
Motor vehicles loans
Motor vehicle leases
Revolving 2
Other 3
Securitized assets 4
Motor vehicle loans
Motor vehicle leases
Revolving
Other
Real estate
One- to four-family
Other
Securitized real estate assets 4
One- to four-family
Other
Business
Motor vehicles
Retail loans
Wholesale loans 5
Leases
Equipment
Loans
Leases
Other business receivables 6
Securitized assets 4
Motor vehicles
Retail loans
Wholesale loans
Leases
Equipment
Loans
Leases
Other business receivables 6
769.7
818.1
884.0
864.2
872.8
884.0
888.7
898.4
911.0
310.6
86.7
92.5
32.5
33.2
330.9
87.0
96.8
38.6
34.4
356.1
103.1
93.3
32.3
33.1
350.0
97.6
94.6
33.3
34.6
352.2
99.0
94.4
33.1
34.6
356.1
103.1
93.3
32.3
33.1
356.1
102.8
93.9
32.4
32.1
358.1
105.0
94.5
32.2
32.5
360.2
104.7
93.9
32.3
32.0
36.8
8.7
.0
20.1
111.9
52.1
30.5
44.3
10.8
.0
19.0
121.1
59.0
28.9
54.8
12.7
8.7
18.1
131.4
75.7
26.6
51.6
14.4
5.3
18.6
132.3
72.2
30.2
53.4
14.2
5.3
18.4
134.3
74.1
30.7
54.8
12.7
8.7
18.1
131.4
75.7
26.6
56.0
12.5
8.6
17.9
135.7
80.1
26.9
54.9
12.3
8.7
18.1
135.7
80.3
27.1
59.0
12.0
8.5
17.8
137.2
77.7
31.3
28.9
.4
347.2
67.1
25.1
33.0
9.0
194.8
59.9
134.9
47.6
33.0
.2
366.1
63.5
25.6
27.7
10.2
203.9
51.5
152.3
51.1
29.0
.1
396.5
79.6
28.1
32.8
18.7
198.0
50.4
147.6
69.9
29.8
.1
382.0
68.5
30.4
27.0
11.1
211.5
47.2
164.3
59.6
29.4
.1
386.3
70.9
29.4
30.3
11.2
212.0
47.8
164.2
60.4
29.0
.1
396.5
79.6
28.1
32.8
18.7
198.0
50.4
147.6
69.9
28.6
.1
396.9
79.1
28.4
31.9
18.9
197.6
49.7
147.8
72.5
28.3
.1
404.6
82.1
28.9
34.3
18.9
200.7
51.0
149.8
73.3
28.0
.3
413.6
84.8
30.0
36.0
18.8
202.4
51.6
150.7
74.5
24.0
2.7
21.3
.0
11.3
4.7
6.6
2.4
33.0
2.4
30.5
.0
10.7
4.2
6.5
4.0
29.2
2.6
24.7
1.9
13.0
6.6
6.4
6.8
25.0
1.9
23.2
.0
12.0
5.6
6.4
5.2
25.8
2.4
23.4
.0
11.8
5.4
6.4
5.3
29.2
2.6
24.7
1.9
13.0
6.6
6.4
6.8
28.2
2.5
23.8
1.9
12.7
6.3
6.4
6.8
28.8
2.4
24.6
1.9
12.9
6.2
6.7
6.8
31.0
2.4
26.6
1.9
12.8
6.1
6.7
8.2
NOTE. This table has been revised to incorporate several changes resulting from the
benchmarking of finance company receivables to the June 1996 Survey of Finance Companies. In that benchmark survey, and in the monthly surveys that have followed, more detailed
breakdowns have been obtained for some components. In addition, previously unavailable
data on securitized real estate loans are now included in this table. The new information has
resulted in some reclassification of receivables among the three major categories (consumer,
real estate, and business) and in discontinuities in some component series between May and
June 1996.
Includes finance company subsidiaries of bank holding companies but not of retailers and
banks. Data in this table also appear in the Board's G.20 (422) monthly statistical release. For
ordering address, see inside front cover.
1. Owned receivables are those carried on the balance sheet of the institution. Managed
receivables are outstanding balances of pools upon which securities have been issued; these
balances are no longer carried on the balance sheets of the loan originator. Data are shown
before deductions for unearned income and losses. Components may not sum to totals
because of rounding.
2. Excludes revolving credit reported as held by depository institutions that are subsidiaries of finance companies.
3. Includes personal cash loans, mobile home loans, and loans to purchase other types of
consumer goods such as appliances, apparel, boats, and recreation vehicles.
4. Outstanding balances of pools upon which securities have been issued; these balances
are no longer carried on the balance sheets of the loan originator.
5. Credit arising from transactions between manufacturers and dealers, that is, floor plan
financing.
6. Includes loans on commercial accounts receivable, factored commercial accounts, and
receivable dealer capital; small loans used primarily for business or farm purposes; and
wholesale and lease paper for mobile homes, campers, and travel trailers.
A42
1.53
DomesticNonfinancialStatistics • July 1999
MORTGAGE MARKETS
Mortgages on N e w Homes
Millions of dollars except as noted
1998
Item
1996
1997
1999
1998
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
Terms and yields in primary and secondary markets
PRIMARY M A R K E T S
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) 2
Yield (percent per year)
6 Contract rate'
7 Effective rate 1 ' 3
8 Contract rate (HUD series) 4
182.4
139.2
78.2
27.2
1.21
180.1
140.3
80.4
28.2
1.02
195.2
151.1
80.0
28.4
.89
201.4
155.8
79.8
28.6
.86
192.1
148.1
79.5
28.3
.76
206.0
159.0
79.4
28.7
.98
202.3
153.3
78.0
28.4
1.01
204.1
155.4
78.2
28.7
.92
211.0
162.9
79.4
28.8
.82
209.4
162.4
79.5
28.9
.77
7.56
7.77
8.03
7.57
7.73
7.76
6.95
7.08
7.00
6.72
6.85
6.86
6.68
6.80
6.84
6.80
6.94
6.83
6.81
6.96
6.80
6.78
6.92
7.02
6.74
6.86
7.03
6.74
6.85
6.93
8.19
7.48
7.89
7.26
7.04
6.43
7.07
6.10
7.02
6.25
7.06
6.18
7.08
6.18
7.10
6.42
7.07
6.58
7.08
6.50
SECONDARY MARKETS
Yield (percent per year)
9 FHA mortgages (Section 203) 5
10 G N M A securities 6
Activity in secondary markets
FEDERAL NATIONAL MORTGAGE ASSOCIATION
Mortgage holdings (end of period)
11 Total
12
111A/VA insured
13
Conventional
287,052
30,592
256,460
316,678
31,925
284,753
414,515
33,770
380,745
386,452
32,814
353,638
399,804
33,420
366,384
414,515
33,770
380,745
418,323
33,483
384,840
431,836
34,000
397,836
440,139
34,870
405,269
446,025
36,158
409,867
14 Mortgage transactions purchased (during period)
68,618
70,465
188,448
18,967
23,557
26,222
14,005
22,029
16,923
14,225
Mortgage
15 Issued 7
16 To sell 8
65,859
130
69,965
1,298
193,795
1,880
30,551
393
17,994
0
16,803
434
20,754
0
26,509
0
16,891
266
20,192
75
137,755
220
137,535
164,421
177
164,244
255,010
785
254,225
231,458
569
230,889
242,270
602
241,668
255,010
785
254,225
257,062
387
256,675
262,921
755
262,166
277,624
754 r
276,870 r
284,006
750
283,256
125,103
119,702
117,401
114,258
267,402
250,565
20,629
19,472
23,986
22,660
34,299
28,024
27,672
31,431
25,225
24,232
29,921
28,740
26,473
25,464
128,995
120,089
281,899
25,025
28,903
29,703
23,900
24,829
32,546
24,050
commitments
(during
period)
FEDERAL HOME LOAN MORTGAGE CORPORATION
Mortgage holdings (end of
17 Total
18
I-llA/VA insured
19
Conventional
Mortgage transactions
20 Purchases
21 Sales
period)8
(during
period)
22 Mortgage commitments contracted (during period) 9
1. Weighted averages based on sample surveys of mortgages originated by major institutional lender groups for purchase of newly built homes; compiled by the Federal Housing
Finance Board in cooperation with the Federal Deposit Insurance Corporation.
2. Includes all fees, commissions, discounts, and "points" paid (by the borrower or the
seller) to obtain a loan.
3. Average effective interest rate on loans closed for purchase of newly built homes,
assuming prepayment at the end of ten years.
4. Average contract rate on new commitments for conventional first mortgages; from 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, minimum-downpayment first mortgages insured
by the Federal Housing Administration (FHA) for immediate delivery in the private
secondary market. Based on transactions on first day of subsequent month.
6. Average net yields to investors on fully modified pass-through securities backed by
mortgages and guaranteed by the Government National Mortgage Association (GNMA),
assuming prepayment in twelve years on pools of thirty-year mortgages insured by the
Federal Housing Administration or guaranteed by the Department of Veterans Affairs.
7. Does not include standby commitments issued, but includes standby commitments
converted.
8. Includes participation loans as well as whole loans.
9. Includes conventional and government-underwritten loans. The Federal Home Loan
Mortgage Corporation's mortgage commitments and mortgage transactions include activity
under mortgage securities swap programs, whereas the corresponding data for F N M A
exclude swap activity.
Real Estate
1.54
A3 5
MORTGAGE DEBT OUTSTANDING 1
Millions of dollars, end of period
1998
1997
Type of holder and property
1 All holders
2
3
4
5
By type of property
One- to four-family residences
Multifamily residences
Nonfarm, nonresidential
Farm
By type of holder
6 Major financial institutions
7
Commercial banks 2
8
One- to four-family
9
Multifamily
10
Nonfarm, nonresidential
11
Farm
12
Savings institutions 3
13
One- to four-family
14
Multifamily
1.5
Nonfarm, nonresidential
16
Farm
17
Life insurance companies
18
One- to four-family
19
Multifamily
20
Nonfarm, nonresidential
21
Farm
22 Federal and related agencies
23
Government National Mortgage Association
24
One- to four-family
25
Multifamily
26
Farmers Home Administration 4
27
One- to four-family
28
Multifamily
29
Nonfarm, nonresidential
30
Farm
31
Federal Housing and Veterans' Administrations
32
One- to four-family
33
Multifamily
34
Resolution Trust Corporation
35
One- to four-family
36
Multifamily
37
Nonfarm, nonresidential
38
Farm
39
Federal Deposit Insurance Corporation
40
One- to four-family
41
Multifamily
42
Nonfarm, nonresidential
43
Farm
44
Federal National Mortgage Association
45
One- to four-family
46
Multifamily
47
Federal Land Banks
48
One- to four-family
49
Farm
50
Federal Home Loan Mortgage Corporation
51
One- to four-family
52
Multifamily
53 Mortgage pools or trusts 5
54
Government National Mortgage Association
55
One- to four-family
56
Multifamily
57
Federal Home Loan Mortgage Corporation
58
One- to four-family
59
Multifamily
60
Federal National Mortgage Association
61
One- to four-family
62
Multifamily
63
Farmers Home Administration 4
64
One- to four-family
Multifamily
65
66
Nonfarm, nonresidential
67
Farm
68
Private mortgage conduits
69
One- to four-family 6
70
Multifamily
71
Nonfarm, nonresidential
Farm
72
73 Individuals and others 7
74
One- to four-family
75
Multifamily
76
Nonfarm, nonresidential
Farm
77
1995
1996
Q4
Q1
Q2
Q3
Q4 P
4,610,350
4,928,367
5,257,422
5,257,422
5,371,196
5,487,535
5,623,695
5,782,027
3,532,977
286,875
705,937
84,561
3,755,719
309,321
776,193
87,134
3,998,763
329,733
838,627
90,299
3,998,763
329,733
838,627
90,299
4,082,959
338,439
858,641
91,157
4,163,964
347,449
883,476
92,646
4,268,149
353,546
908,192
93,808
4,375,730
362,092
949,230
94,974
1,900,089
1,090,189
669,434
43,837
353,088
23,830
596,763
482,353
61,987
52,135
288
213,137
8,890
28,714
165,876
9,657
1,981,885
1,145,389
698,508
46,675
375,322
24,883
628,335
513,712
61,570
52,723
331
208,161
6,977
30,750
160,314
10,120
2,083,978
1,245,315
762,533
50,651
405,144
26,986
631,822
520,672
59,543
51,252
354
206,841
7,187
30,402
158,780
10,472
2,083,978
1,245,315
762,533
50,651
405,144
26,986
631,822
520,672
59,543
51,252
354
206,841
7,187
30,402
158,780
10,472
2,114,528
1,271,037
779,941
51,688
411,949
27,458
637,012
527,036
59,074
50,532
369
206,480
7,174
31,156
157,696
10,454
2,121,939
1,281,849
785,019
52,077
416,434
28,319
632,359
522,088
58,908
50,978
386
207,730
7,218
31,849
158,146
10,517
2,137,412
1,295,768
784,987
53,049
429,045
28,688
634,244
525,842
56,706
51,297
399
207,399
7,206
31,661
158,032
10,500
2,193,378
1,337,664
810,680
53,586
444,363
29,034
643,773
533,680
56,806
52,871
417
211,940
7,364
32,354
161,492
10,730
308,757
2
2
0
41,791
17,705
11,617
6,248
6,221
9,809
5,180
4,629
1,864
691
647
525
0
4,303
492
428
3,383
0
178,807
163,648
15,159
28,428
1,673
26,755
43,753
39,901
3,852
295,192
2
2
0
41,596
17,303
11,685
6,841
5,768
6,244
3,524
2,719
0
0
0
0
0
2,431
365
413
1,653
0
168,813
155,008
13,805
29,602
1,742
27,860
46,504
41,758
4,746
286,167
8
8
0
41,195
17,253
11,720
7,370
4,852
3,821
1,767
2,054
0
0
0
0
0
724
109
123
492
0
161,308
149,831
11,477
30,657
1,804
28,853
48,454
42,629
5,825
286,167
8
8
0
41,195
17,253
11,720
7,370
4,852
3,821
1,767
2,054
0
0
0
0
0
724
109
123
492
0
161,308
149,831
11,477
30,657
1,804
28,853
48,454
42,629
5,825
286,877
8
8
0
40,972
17,160
11,714
7,369
4,729
3,694
1,641
2,053
0
0
0
0
0
786
118
134
534
0
160,048
149,254
10,794
31,005
1,824
29,181
50,364
44,440
5,924
287,161
8
8
0
40,921
17,059
11,722
7,497
4,644
3,631
1,610
2,021
0
0
0
0
0
564
85
96
384
0
159,816
149,383
10,433
31,352
1,845
29,507
50,869
44,597
6,272
287,125
7
7
0
40,907
17,025
11,736
7,566
4,579
3,405
1,550
1,855
0
0
0
0
0
482
72
82
328
0
159,104
149,069
10,035
32,009
1,883
30,126
51,211
44,254
6,957
291,858
7
7
0
40,851
16,895
11,739
7,705
4,513
3,405
1,550
1,855
0
0
0
0
0
361
54
61
245
0
157,675
147,594
10,081
32,473
1,911
30,562
57,085
49,106
7,979
1,863,210
472,283
461,438
10,845
515,051
512,238
2,813
582,959
569,724
13,235
11
2
0
5
4
292,906
227,800
15,584
49,522
0
2,064,882
506,340
494,158
12,182
554,260
551,513
2,747
650,780
633,210
17,570
3
0
0
0
3
353,499
261,900
21,967
69,633
0
2,272,999
536,810
523,156
13,654
579,385
576,846
2,539
709,582
687,981
21,601
2
0
0
0
2
447,219
318,000
29,264
99,955
0
2,272,999
536,810
523,156
13,654
579,385
576,846
2,539
709,582
687,981
21,601
2
0
0
0
2
447,219
318,000
29,264
99,955
0
2,330,674
533,011
519,152
13,859
583,144
580,715
2,429
730,832
708,125
22,707
2
0
0
0
2
483,685
336,824
33,477
113,384
0
2,442,603
537,586
523,243
14,343
609,791
607,469
2,322
761,359
737,631
23,728
2
0
0
0
2
533,865
364,316
38,144
131,405
0
2,548,050
541,431
526,934
14,497
635,726
633,124
2,602
798,460
770,979
27,481
2
0
0
0
2
572,431
391,736
40,893
139,802
0
2,631,790
537,431
522,483
14,948
646,459
643,465
2,994
834,518
804,205
30,313
1
0
0
0
1
613,382
410,900
44,690
157,792
0
538,295
371,806
73,528
75,154
17,806
586,408
376,039
82,492
109,707
18,169
614,279
388,988
90,879
115,633
18,779
614,279
388,988
90,879
115,633
18,779
639,117
409,548
93,430
117,176
18,964
635,833
402,395
95,534
118,633
19,271
651,109
413,480
95,992
122,123
19,514
665,001
425,836
94,686
124,762
19,717
1. Multifamily debt refers to loans on structures of five or more units.
2. Includes loans held by nondeposit trust companies but not loans held by bank trust
departments.
3. Includes savings banks and savings and loan associations.
4. FmHA-guaranteed securities sold to the Federal Financing Bank were reallocated from
FmHA mortgage pools to FmHA mortgage holdings in 1986:Q4 because of accounting
changes by the Farmers Home Administration.
5. Outstanding principal balances of mortgage-backed securities insured or guaranteed by
the agency indicated.
1997
6. Includes securitized home equity loans.
7. Other holders include mortgage companies, real estate investment trusts, state and local
credit agencies, state and local retirement funds, noninsured pension funds, credit unions, and
finance companies.
SOURCE. Based on data from various institutional and government sources. Separation of
nonfarm mortgage debt by type of property, if not reported directly, and interpolations and
extrapolations, when required for some quarters, are estimated in part by the Federal Reserve.
Line 69 from Inside Mortgage Securities and other sources.
A42
1.55
DomesticNonfinancialStatistics • July 1999
CONSUMER CREDIT 1
Millions of dollars, amounts outstanding, end of period
1998
Holder and type of credit
1999
1998
1997
Nov.
Oct.
Dec.
Jan.
Feb.'
Mar.
Seasonally adjusted
1 Total
2 Automobile
3 Revolving
4 Other 2
1,181,913
1,233,099
1,299,207
1,294,917
1,296,630
1,299,207
1,314,471
1,323,228
1,324,760
392,321
499,486
290,105
413,369
531,140
288,590
447,013
560,515
291,680
437,820
557,644
299,453
442,430
556,535
297,665
447,013
560,515
291,680
454,096
566,690
293,684
459,078
569,099
295,051
462,860
568,338
293,562
Not seasonally adjusted
5 Total
1,211,590
1,264,103
1,331,742
1,297,576
1,304,499
1,331,742
1,323,250
1,316,400
1,312,647
By major holder
Commercial banks
Finance companies
Credit unions
Savings institutions
Nonfinancial business 3
Pools of securitized assets 4
526,769
152,391
144,148
44,711
77,745
265,826
512,563
160,022
152,362
47,172
78,927
313,057
508,932
168,491
155,406
51,611
74,877
372,425
502,076
165,573
154,991
50,966
65,962
358,008
498,838
166,622
155,221
51,625
66,615
365,578
508,932
168,491
155,406
51,611
74,877
372,425
507,264
167,305
155,726
52,047
70,950
369,958
497,753
169,664
155,203
52,482
67,972
373,326
487,583
168,944
155,027
52,916
67,143
381,034
By major type of credit
12 Automobile
13
Commercial banks
14
Finance companies
15
Pools of securitized assets 4
395,609
157,047
86,690
51,719
416,962
155,254
87,015
64,950
450,968
158,072
103,094
72,955
443,120
156,788
97,637
71,788
446,566
157,126
98,954
72,582
450,968
158,072
103,094
72,955
452,181
160,273
102,822
73,232
453,951
159,922
104,987
73,232
458,108
159,333
104,652
77,829
16 Revolving
17
Commercial banks
Finance companies
18
Nonfinancial business 3
19
20
Pools of securitized assets 4
522,860
228,615
32,493
44,901
188,712
555,858
219,826
38,608
44,966
221,465
586,528
210,346
32,309
39,166
272,327
556,006
200,869
33,309
33,762
258,139
559,211
196,923
33,056
33,756
265,311
586,528
210,346
32,309
39,166
272,327
575,675
204,774
32,414
36,389
269,918
569,111
197,623
32,195
34,327
272,444
562,812
188,652
32,326
33,738
275,444
21 Other
22
Commercial banks
23
Finance companies
24
Nonfinancial business 3
25
Pools of securitized assets 4
293,121
141,107
33,208
32,844
25,395
291,283
137,483
34,399
33,961
26,642
294,246
140,514
33,088
35,711
27,143
298,450
144,419
34,627
32,200
28,081
298,722
144,789
34,612
32,859
27,685
294,246
140,514
33,088
35,711
27,143
295,394
142,217
32,069
34,561
26,808
293,338
140,208
32,482
33,645
27,650
291,727
139,598
31,966
33,405
27,761
6
7
8
9
10
11
1. The Board's series on amounts of credit covers most short- and intermediate-term credit
extended to individuals. Data in this table also appear in the Board's G.19 (421) monthly
statistical release. For ordering address, see inside front cover.
2. Comprises mobile home loans and all other loans that are not included in automobile or
revolving credit, such as loans for education, boats, trailers, or vacations. These loans may be
secured or unsecured.
1.56
3. Includes retailers and gasoline companies.
4. Outstanding balances of pools upon which securities have been issued; these balances
are no longer carried on the balance sheets of the loan originator.
5. Totals include estimates for certain holders for which only consumer credit totals are
available.
TERMS OF CONSUMER CREDIT 1
Percent per year except as noted
1998
Item
1996
1997
1999
1998
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
INTEREST RATES
Commercial
banks2
1 48-month new car
2 24-month personal
9.05
13.54
9.02
13.90
8.72
13.74
n.a.
n.a.
n.a.
n.a.
8.62
13.75
n.a.
n.a.
n.a.
n.a.
8.34
13.41
n.a.
n.a.
Credit card plan
3 All accounts
4 Accounts assessed interest
15.63
15.50
15.77
15.57
15.71
15.59
n.a.
n.a.
n.a.
n.a.
15.69
15.54
n.a.
n.a.
n.a.
n.a.
15.41
14.73
n.a.
n.a.
Auto finance
5 New car
6 Used car
9.84
13.53
7.12
13.27
6.30
12.64
5.92
12.65
6.33
12.58
6.79
12.41
6.43
12.31
6.22
11.81
6.43
12.08
6.31
12.09
51.6
51.4
54.1
51.0
52.1
53.5
53.1
54.2
53.1
54.2
52.8
54.3
52.2
54.2
52.1
56.0
53.4
55.9
53.0
56.0
91
100
92
99
92
99
93
101
92
100
91
100
91
100
92
99
92
99
91
99
16,987
12,182
18,077
12,281
19,083
12,691
19,028
12,731
19.199
12,914
19,590
13,112
19,734
13,202
19,628
13,497
19,304
13,604
19,339
13,653
companies
OTHER TERMS 3
Maturity
(months)
7 New car
8 Used car
Loan-to-value
9 New car
10 Used car
ratio
Amount financed
11 New car
12 Used car
(dollars)
1. The Board's series on amounts of credit covers most short- and intermediate-term credit
extended to individuals. Data in this table also appear in the Board's G.19 (421) monthly
statistical release. For ordering address, see inside front cover.
2. Data are available for only the second month of each quarter,
3. At auto finance companies,
Flow of Funds
1.57
A3 9
FUNDS RAISED IN U.S. CREDIT MARKETS 1
Billions of dollars; quarterly data at seasonally adjusted annual rates
1997
1998
1999
Transaction category or sector
Q3
Q4
QL
Q2
906.1 r
909.6 r
-30.0
-27.6
-2.4
-70.9
-69.4
-1.4
Q3
Q4 r
QL
1,089.0
1,002.0
26.9
14.7
12.2
-119.2
-117.7
-1.5
Nonfinancial sectors
586.6 r
575.7 r
700.0 r
693.1 r
722.6 r
812.7 r
839.9 r
By sector and instrument
2 Federal government
3
Treasury securities
4
Budget agency securities and mortgages
256.1
248.3
7.8
155.9
155.7
.2
144.4
142.9
1.5
145.0
146.6
-1.6
23.1
23.2
-.1
30.3
31.2
-.9
40.8
39.0
1.7
5 Nonfederal
330.5 R
419.9 R
555.6 R
548.L R
699.5 R
782.4 R
799.21
9 3 6 . LR
980.5 R
9 8 0 . LR
1,062.1
1,121.2
By instrument
Commercial paper
Municipal securities and loans
Corporate bonds
Bank loans n.e.c
Other loans and advances
Mortgages
Home
Multifamily residential
Commercial
Farm
Consumer credit
10.0
74.8
75.2
6.4
-18.9
122.3 R
160.0 R
-5.1R
-33.6R
1.0
60.7
21.4
-35.9
23.3
75.2
34.0
177.0 R
183.3 R
-2.1R
-6.5R
2.2
124.9
18.1
-48.2
73.3
101.lr
67.2
2 0 5 . LR
179.7 R
7.6 R
16.2 R
1.6
138.9
-.9
2.6
72.5
62.lr
36.4
286.7 R
243.01
11.5 R
29.6 R
2.6
88.8
13.7
71.4
90.7
106.7 R
66.2
298.2 R
235.8 R
10.8 R
48.4 R
3.2
52.5
14.5
88.9
122.9
29.5 R
78.1
398.2 R
325.6 R
11.0 R
58.0 R
3.5
50.3
12.8
103.2
74.4
139.7 R
142.3
289.0 R
199.3 R
18.5 R
68.3 R
2.9
37.8
51.1
116.7
157.2
1.5R
84.3
466.9 R
371.4 R
22.5 R
69.7 R
3.3 R
58.5 R
3.8
100.1
160.8
194.2 R
34.6
420.7 R
310.4 R
2 1 . LR
83.4 R
5.9 R
66.3 R
85.6
83.6
87.1
127.5 R
73.6 R
441.L R
345.2 R
I6.R
75.2 R
4.5 R
81.7 R
-43.0
87.0
123.8
114.4
106.7
609.1
444.1
30.7
127.2
7.2
64.1
64.4
67.9
155.0
38.1
118.6
550.9
420.4
32.6
94.8
3.1
126.2
By borrowing sector
Household
Nonfinancial business
Corporate
Nonfarm noncorporate
Farm
State and local government
211.6 R
52.7 R
46.9 R
3.2
2.6
66.2
316.1 R
150.0 R
142.4 R
3.3
4.4
-46.2
349.0 R
2 5 8 . LR
224.6 R
30.6
2.9
-51.5
346.01
208.9 R
120.4 R
83.8 R
4.8
-6.8
326.6 R
316.8 R
233.2 R
77.4 R
6.2
56.1
360.3 R
349.5 R
256.0 R
88.8 R
4.7
72.6
293,4 R
413.5 R
317.7 R
86.5 R
9.2
92.3
440.6 R
401.2 R
296.8 R
97.2 R
7.2 R
94.3
453.L R
448.5 R
345.6 R
95.9 R
7.1 R
78.9
436.01
471.4 R
368.1 R
97.3 R
6.0 R
72.6
561.2
425.5
315.9
103.1
6.6
75.4
556.3
498.1
390.9
101.7
5.5
66.8
69.8
-9.6
82.9
.7
-4.2
-14.0
-26.1
12.2
1.4
-1.5
71.1
13.5
49.7
8.5
-.5
76.9
11.3
55.8
9.1
.8
56.9
3.7
46.7
8.5
-2.0
42.3
.7
32.4
15.7
-6.5
67.8
55.3
14.3
5.2
-7.0
85.9
-25.5
107.5
8.4
-28.0
6.2
-35.3
3.6
-2.4
-38.1
-4.7
-32.9
9.8
-10.3
20.7
18.3
2.0
1.1
-.7
771.1 r
770.0 r
779.5 r
882.2 r
973.9 r
995.6 r
815.6 r
1,050.9
1,022.7
1,298.2
1,202.2
1 Total net borrowing by domestic noniinancial sectors
6
7
8
9
10
11
12
13
14
1*>
16
17
18
19
20
71
22
2 3 Foreign net borrowing in United States
Commercial paper
24
25
Bonds
26
Bank loans n.e.c
27
Other loans and advances
28 Total domestic plus foreign
...
656.4 r
561.7 r
92.5
-11.6
100.3
7.3
-3.5
905.2 r
-4.4
843.6 r
-136.5
-136.1
-.4
Financial sectors
2 9 Total net borrowing by financial sectors
30
31
32
33
By instrument
Federal government-related
Government-sponsored enterprise securities
Mortgage pool securities
Loans from U.S. government
34 Private
35
Open market paper
36
Corporate bonds
37
Bank loans n.e.c
38
Other loans and advances
Mortgages
39
By borrowing sector
40 Commercial banking
41 Savings institutions
47. Credit unions
4 3 Life insurance companies
44 Government-sponsored enterprises
4 5 Federally related mortgage pools
4 6 Issuers of asset-backed securities (ABSs)
4 7 Finance companies
4 8 Mortgage companies
4 9 Real estate investment trusts (REITs)
5 0 Brokers and dealers
51 Funding corporations
294.4
468.4
456.5 r
557.3 r
652.0 r
603.1 r
988.3 r
933.0 r
987.5 r
l,055.5 r
165.3
80.6
84.7
.0
287.5
176.9
115.4
-4.8
204.1
105.9
98.2
.0
231.5
90.4
141.1
.0
212.8
98.4
114.4
.0
161.0
46.4
114.6
.0
298.1
157.9
140.3
.0
227.3
142.5
84.8
.0
413.4
166.4
247.0
.0
561.6
294.0
267.5
.0
681.6
510.5
171.2
.0
564.9
193.0
372.0
.0
129.1
-5.5
123.1
-14.4
22.4
3.6
180.9
40.5
121.8
-13.7
22.6
9.8
252.4 R
42.7
195.9 R
5.1 R
325.8 R
92.2
176.9 R
20.9 R
27.9
7.9 R
439.2 R
166.7
209.0 R
13.LR
35.6
14.9 R
4 4 2 . LR
168.8
203.8 R
25.3 R
37.5
6.7 R
690.2 R
244.2
339.0 R
25.0 R
61.7
20. R
705.7 R
237.4
350.3 R
7 6 . LR
32.7
9.R
574.2 R
493.9 R
141.0
169.8 R
61.2 R
82.3
39.6 R
616.6
130.7
273.7
11.7
169.9
30.6
637.2
79.2
488.7
7.0
42.2
20.1
20.1
12.8
.2
22.5
2.6
-.1
-.1
105.9
98.2
142.4 R
50.2
13.0
25.5
.1
1.1
90.4
141.1
153.9 R
45.9
12.4
11.9 R
-2.0
64.1
46.1
19.7
.1
.2
98.4
114.4
200.71
48.7
-4.7
39.6 R
8.1
80.7
32.5
22.3
.2
.2
46.4
114.6
225.0 R
8.9
11.4
61.0
41.7
.3
83.5
10.6
.5
.0
142.5
84.8
281.8 R
80.1
49.2
63.L R
-1.0
137.9
61.7
63.7
1.0
1.6
294.0
267.5
291.0 R
-14.0
2.0
79.3 R
-2.6
10.1
66.3
103.2
32.6
58.0
1.5
13.4
11.3
.2
.2
80.6
84.7
85.4 R
-1.4
.0
1.7R
12.0
6.3
.3
172.1
115.4
76.5 R
48.7
-11.5
10.2 R
.5
23.1
3.4
5.3 R
.4
4.5 R
-5.0
34.9
33.3 r
-6.9
115.3
-.3
157.9
140.3
373.L R
59.6
-17.4
66.(f
7.0
99.2
134.8
R
373.5
-30.0R
76.0
19.9 R
80.0
31.2
.2
-.6
166.4
247.0
358.4 R
101.8
-48.0
64.4 R
20.0
-33.3
.4
1.8
510.5
171.2
334.1
4.3
2.0
44.0
12.4
48.1
3.3
193.0
372.0
302.2
76.0
3.1
26.4
-31.2
165.3
A42
1.57
DomesticNonfinancialStatistics • July 1999
FUNDS RAISED IN U S . CREDIT MARKETS 1 —Continued
1993
1994
1995
1996
1999
1998
1997
Transaction category or sector
1997
Q3
Q4
Q1
Q2
Q3
Q4 r
Q1
All sectors
52 Total net borrowing, all sectors
950.8 r
l,030.2 r
l,227.6 r
l,327.3 r
l,431.5 r
l,508.4 r
l,870.5 r
l,906.9 r
l,983.1 r
l,871.1 r
2,349.1
2,224.9
Open market paper
U.S. government securities
Municipal securities
Corporate and foreign bonds
Bank loans n.e.c
Other loans and advances
Mortgages
Consumer credit
-5.1
421.4
74.8
281.2
-7.2
-.8
125.9r
60.7
35.7
448.1
-35.9
157.3
62.9
50.3
186.7r
124.9
74.3
348.5
-48.2
318.9'
114.7
70.2
210.4'
138.9
102.6
376.5
2.6
305.2'
92.1
65.1
294.6'
88.8
184.1
235.9
71.4
346.5'
128.2
99.8
313.1'
52.5
171.7
191.3
88.9
427.1'
62.2
112.1
404.8'
50.3
257.7
338.9
103.2
445.8'
180.5
197.5
309.1'
37.8
343.8
197.3
116.7
521.9'
82.8'
110.0
476.0'
58.5'
113.1
342.5
100.1
641.9'
172.5'
106.1
440.5'
66.3 r
232.7
425.1
83.6
221.6'
192.3'
153.4
480.7'
81.7'
83.0
708.5
87.0
364.6
135.9
266.3
639.7
64.1
161.9
445.7
67.9
645.7
46.2
160.1
571.1
126.2
53
54
55
56
57
58
59
60
Funds raised through mutual funds and corporate equities
61 Total net issues
429.7
125.2
144.3
228.9 r
186.4
239.4
157.7
217.7 r
276.8 r
-166.5r
46.8
124.9
62 Corporate equities
Nonfinancial corporations
63
64
Foreign shares purchased by U.S. residents
Financial corporations
65
66 Mutual fund shares
137.7
21.3
63.4
53.0
292.0
24.6
-44.9
48.1
21.4
100.6
-3.1
-58.3
50.4
4.8
147.4
-8.7'
-69.5'
60.0
.8
237.6
-78.8
-114.4
41.3
-5.6
265.1
-60.5
-124.0
64.3
-.8
299.9
-103.3
-143.3
-.3
40.3
261.0
-107.5
-139.2
13.6
18.2
325.2'
-115.9
-129.1
4.0
9.2
392.7'
-319.0
-308.4
-32.9
22.2
152.5'
-196.7
-491.3
319.1
-24.6
243.5
-96.1
-46.1
-33.0
-17.1
221.1
1. Data in this table also appear in the Board's Z. 1 (780) quarterly statistical release, tables
F.2 through F.4. For ordering address, see inside front cover.
Flow of Funds
1.58
A3 9
S U M M A R Y OF FINANCIAL TRANSACTIONS 1
Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates
1998
1997
Transaction category or sector
1994
1993
1995
1999
1997
1996
Q3
Q4
Q1
Q2
Q3 r
Q4 r
Ql
NET LENDING IN CREDIT MARKETS 2
1 Total net lending in credit m a r k e t s
2 Domestic nonfederal nonfinancial sectors
Household
4
Nonfinancial corporate business
5
Nonfarm noncorporate business
6
State and local governments
7 Federal government
8 Rest of the world
9 Financial sectors
Monetary authority
10
Commercial banking
11
1?
U.S.-chartered banks
Foreign banking offices in United States
n
14
Bank holding companies
Banks in U.S.-affiliated areas
n
16
Savings institutions
17
Credit unions
18
Bank personal trusts and estates
19
Life insurance companies
20
Other insurance companies
21
Private pension funds
State and local government retirement funds
22
23
Money market mutual funds
Mutual funds
74
25
Closed-end funds
26
Government-sponsored enterprises
27
Federally related mortgage pools
28
Asset-backed securities issuers (ABSs)
29
Finance companies
30
Mortgage companies
31
Real estate investment trusts (REITs)
32
Brokers and dealers
33
Funding corporations
950.8 r
l,030.2 r
r
R
l,227.6 r
l,327.3 r
r
l,431.5 r
l,508.4 r
l,870.5 r
l,906.9 r
l,983.1 r
1,871.1
2,349.1
2,224.9
10.5 r
-18.01
— 12.8 r
-.6"
42.0 r
9.0
208.7
l,642.4 r
52.9
464.9
386.2
58.2
19.4
1.1
-2.0
7.7
8.8
34.1
34.7
79.5
9.5
144.2
61.8
-3.4
158.5
140.3
320.3 r
-21.3
-93.6
15.6 r
71.7
134.8 r
— 236.3 r
—253.2"
4.2 r
,0r
12.8 r
15.5
238.6
394.3 r
295.2 r
r
— 61.0
,0 r
160.1 r
12.8
314.2
1,261.8"
7.7
136.1
130.5
18.1
-17.6
5.1
-1.8
22.7
3.1
62.6"
-1.5
130.1
61.6"
200.1
155.7"
-2.4
150.2 r
247.0
327.4 r
27.1
-56.4
13.1"
-183.1
-30.4"
15.4
-138.0
17.4
.0
136.0
13.9
58.6
1,783.3
48.3
242.7
286.8
-53.1
6.0
2.9
34.0
19.3
2.0
70.9
-7.7
95.6
50.9
247.5
97.7
-2.4
264.0
267.5
245.5
79.7
4.5
2.8
77.0
-42.4
-326.7
-426.0
10.3
.0
89.0
11.8
391.8
2,272.2
.8
554.9
570.1
-24.2
-7.4
16.4
102.1
17.4
3.9
86.6
67.5
174.4
48.0
356.4
102.7
-2.0
430.0
171.2
311.1
72.1
6.0
-13.7
-209.1
19.1
190.5
123.0
31.2
.0
36.2
18.2
194.4
1,821.8
71.3
52.1
124.5
-61.9
-6.0
-4.5
104.2
37.0
3.1
105.9
20.7
60.7
52.1
239.7
84.3
-2.0
158.4
372.0
284.7
73.3
10.0
-1.4
38.3
— 2.3 r
9.1
-1.1
32.6
-18.4
129.3
801.6 r
36.2
142.2
149.6
—9.8
.0
2.4
-23.3
21.7
9.5
100.4
27.7
50.2
22.7
20.4
159.5
20.0
87.8
84.7
82.8 r
-20.9
.0
.6
14.8
-35.1
274.9 r
17.7
.6
-55.0
-27.5
132.3
687.1"
31.5
163.4
148.1
11.2
.9
3.3
6.7
28.1
7.1
72.0
24.9
46.1
22.3
30.0
-7.1
-3.7
117.8
115.4
69.4 r
48.3
-24.0
4.7
-44.2
-16.2
-99.r
-3.7r
-8.8
4.7
-91.4
-.2
273.9
l,053.0 r
12.7
265.9
186.5
75.4
-.3
4.2
-7.6
16.2
-8.3
100.0
21.5
56.0
27.5
86.5
52.5
10.5
86.7
98.2
120.6 r
49.9
-3.4
,8 r
90.1
-23.8
-30.0
3.8"
4.2 r
—4.3r
—33.7r
-7.7
417.3
947.8 r
12.3
187.5
119.6
63.3
3.9
.7
19.9
25.5
-7.7
69.6
22.5
52.3
45.9
88.8
48.9
4.7
84.2
141.1
123.6 r
18.4
8.2
— .3 r
-15.7
13.5 r
— 125.9
— 128.2 r
2.7"
-.6'
4.9
310.1
l,242.4 r
38.3
324.3
274.9
40.2
5.4
3.7
-4.7
16.8
7.6
94.3
25.2
65.5
36.6
87.5
80.9
-3.4
94.3
114.4
162.3 r
21.9
-9.1
9.1 r
14.9
54.8 r
— 175.5 r
— 152.9 r
18.6 r
— ,6 r
—40.7"
3.3
402.9
l,277.6 r
22.9
226.2
220.7
4.6
-5.0
5.8
-35.3
13.6
7.3
92.9
32.0
64.6
79.1
121.5
108.0
-3.4
55.6
114.6
162.4 r
68.3
82.9
6.6 r
18.0
30.2 r
950.8 r
l,030.2 r
l,227.6 r
l,327.3 r
l,431.5 r
l,508.4 r
l,870.5 r
l,906.9 r
l,983.1 r
1,871.1
2,349.1
2,224.9
.8
.0
.4
-18.5
50.5
117.3
-70.3
-23.5
20.2
71.3
137.7
292.0
52.2
61.4
37.1
267.4
11.4
.9
24. l r
345.3 r
-5.8
.0
.7
52.9
89.8
-9.7
-39.9
19.6
43.3
78.2
24.6
100.6
94.0
-.1
35.5
259.6 r
2.6
17.8
53.6 r
241.3"
8.8
2.2
.6
35.3
9.9
-12.7
96.6
65.6
142.3
110.5
-3.1
147.4
101.5
26.7
45.8
229.2 r
6.2
4.0
60.3 r
455.6 r
-6.3
-.5
.1
85.9
-51.6
15.8
97.2
114.0
145.8
41.4
-8.7r
237.6
83.4 r
52.4
44.5
244.3 r
16.0"
-8.6
,lr
521.5 r
.7
-.5
.0
107.4
-19.7
41.5
97.1
122.5
157.6
120.9
-78.8
265.1
100.4 r
54.3
307.6 r
16.8 r
75.0
6.7 r
590. l r
2.4
.0
1.3
116.1
-25.0
-38.4
47.0
188.4
226.2
115.5
-60.5
299.9
137.9 r
91.1
63.9
338.l r
30.7 r
80.8
15.0 r
122.1'
17.5
.0
-1.9
103.0
79.8
71.9
155.9
70.7
147.8
117.9
-103.3
261.0
146.9 r
116.8
37.4
301.l r
-,6r
78.4
-43.7r
386.l r
1.0
.0
.3
-45.3
— 124.8 r
65.6
154.9
186.2
248.0
259.5
-107.5
325.2 r
63.8 r
165.3
49.3
262.2 r
8.5 r
50.3
-6.3r
l,164.0 r
8.1
.0
.2
89.0
30.0"
109.3
36.2
-16.5
186.4
-113.6
-115.9
392.7 r
-58.0r
128.3
53.3"
265.8"
-1.0r
57.5
—5.4r
294.2"
11.4
.0
1.7
87.3
49.8
-61.7
111.6
81.5
400.7
228.6
-319.0
152.5
56.7
179.6
51.7
278.8
36.0
47.8
-59.9
661.9
8.6
.0
-2.3
36.8
-89.7
80.7
309.0
119.2
306.6
-164.3
-196.7
243.5
-97.1
-39.6
59.0
318.7
8.2
67.1
15.8
975.1
-17.4
-4.0
.0
72.2
125.8
79.8
-1.2
-14.2
248.1
255.3
-96.1
221.1
73.0
-89.6
54.7
280.2
12.2
64.1
19.0
192.5
2,328.5 r
2,088.8 r
2,760.3 r
2,951.9 r
3,507.3 r
3,861.5 r
3,813.3 r
4,627.1 r
3,323.7 r
3,868.2
4,307.7
3,700.2
-.2
-5.7
4.2
46.4
15.8
— 163.5 r
-.2
43.0
-2.7
69.4
16.6
-192.8r
-.5
25.1
-3.1
17.5
21.1
-229.6r
-.9
59.6 r
-3.3
,5 r
20.4
—50.2r
-.6
107.4
-19.9
65.3
18.8 r
—235.3r
.7
93.1'
-50.0
23.9
15.2
—54.9r
-2.4
147.9 r
-33.0
190.8
-566.5r
-.2
—94.5r
30.7
148.7 r
4.4 r
-62.0r
-.3
144.3 r
11.4
-170.5"
5.3"
-203.6'
1.1
73.7
19.4
106.0
26.4
-91.8
-3.4
26.5
-49.0
-3.0
17.3
-72.7
-1.2
25.0
54.3
198.9
3.4
-503.9
-6.0
-3.8
-11.7
.5
-4.0
—52.6r
-2.7
-3.9
8.5 r
10.0
-3.0
66.9"
-7.9
-5.0
46.4 r
7.5
-4.0
6.6 r
-41.7
-3.0
-148.8"
24.1
-3.2
-76.4
20.4
-2.1
-49.6
-3.2
-2.0
-48.4
2,951.3 r
2,981.8 r
3,569.7 r
3,758.8 r
4,031.5 r
4,589.9 r
3,730.6 r
3,788.8
4,423.2
3,977.3
238. L
r
.1'
1 , 8 8 9 . LR
27.4
292.9
260.5
11.6
15.3
5.5
10.8 r
16.5
2.4
88.4 r
23.4
74.5
80.7 r
172.0
146.3 r
-2.4
198.9'
84.8
222.1'
28.7
58.8
11.3 r
245.8
90.6 r
86.1
4.3
RELATION OF LIABILITIES
TO FINANCIAL ASSETS
34 Net flows t h r o u g h credit m a r k e t s
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
Other financial sources
Official foreign exchange
Special drawing rights certificates
Treasury currency
Foreign deposits
Net interbank transactions
Checkable deposits and currency
Small time and savings deposits
Large time deposits
Money market fund shares
Security repurchase agreements
Corporate equities
Mutual fund shares
Trade payables
Security credit
Life insurance reserves
Pension fund reserves
Taxes payable
Investment in bank personal trusts
Noncorporate proprietors' equity
Miscellaneous
55 Total financial sources
56
57
58
59
60
61
Liabilities not identified as assets ( - )
Treasury currency
Foreign deposits
Net interbank liabilities
Security repurchase agreements
Taxes payable
Miscellaneous
Floats not included in assets ( —)
62 Federal government checkable deposits
63 Other checkable deposits
64 Trade credit
65 Total identified to sectors as assets
-1.5
-1.3
-4.0
2,438.1 r
-4.8
-2.8
1.5
2,161.7 r
1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables
F.l and F.5. For ordering address, see inside front cover.
111.0
11.6r
2. Excludes corporate equities and mutual fund shares.
A42
1.59
DomesticNonfinancialStatistics • July 1999
S U M M A R Y OF CREDIT MARKET DEBT OUTSTANDING 1
Billions of dollars, end of period
1997
1998
1999
1996
Q3
Q4
Ql
Q2
Q3
Q4 r
QI
Nonfinancial sectors
1 Total credit market debt owed by
domestic nonfinancial sectors
13,016.0 r
13,716.0 r
14,409.2 r
15,130.2 r
14,881.7 r
15,130.2 r
15,358.2 r
15,547.0 r
15,754.7 r
16,067.3
16,325.9
By sector and instrument
2 Federal government
3
Treasury securities
4
Budget agency securities and mortgages
3.4y2.3
3.465.6
26.7
3,636.7
3,608.5
28.2
3,781.8
3,755.1
26.6
3,804.9
3,778.3
26.5
3,771.2
3,745.1
26.1
3,804.9
3,778.3
26.5
3,830.8
3,804.8
25.9
3,749.0
3,723.4
25.6
3,720.2
3,694.7
25.5
3,752.2
3,723.7
28.5
3,759.7
3,731.6
28.1
5 Nonfederal
9,523.7 r
10,079.3r
10,627.4r
ll,325.4 r
11,110.5r
ll,325.4 r
1 l,527.4 r
11,798. l r
12,034.6r
12,315.1
12,566.2
6
7
8
y
10
11
12
13
14
15
16
By instrument
Commercial paper
Municipal securities and loans
Corporate bonds
Bank loans n.e.c
Other loans and advances
Mortgages
Home
Multifamily residential
Commercial
Farm
Consumer credit
139.2
1,341.7
1,253.0
759.9
669.6
4,376.4 r
3,332. l r
261.5 r
699.8 r
83.0
983.9
157.4
1,293.5
1,326.3
861.0 r
736.9
4,581.4 r
3,511.8 r
269. l r
716.0 r
84.6
1,122.8
156.4
1,296.0
1,398.8
923.l r
773.2
4,868.2 r
3,721.2 r
284.3 r
775.6 r
87.1
1,211.6
168.6
1,367.5
1,489.5
l,029.8 r
839.5
5,166.4 r
3,957.0 r
295. r
824. l r
90.3
1,264.1
176.6
1,340.2
1,470.9
994.0 r
802.9
5,099.0 r
3,912.1 r
290.4 r
807.0r
89.6
1,226.7
168.6
1,367.5
1,489.5
l,029.8 r
839.5
5,166.4 r
3,957.0 r
295.l r
824. r
90.3
1,264.1
193.1
1,397.1
1,528.8
l,032.2 r
866.1
5,274.2 r
4,040.9 r
300.7 r
841.5 r
91.l r
1,236.0
202.5
1,429.3
1,569.0
l,086.8 r
873.5
5,380.3 r
4,119.4 r
306.0 1
862.3 r
92.6
1,256.8
216.9
1,439.9
1,590.8
l,109.9 r
886.1
5,504.4 r
4,219.5 r
310.0 r
881.l r
93.7 r
l,286.6 r
193.0
1,464.3
1,621.8
1,139.2
914.2
5,650.9
4,324.8
317.7
912.9
95.5
1,331.7
223.9
1,481.6
1,660.5
1,151.5
949.7
5,780.5
4,421.7
325.8
936.6
96.3
1,318.6
1/
18
iy
20
21
22
By borrowing sector
Household
Nonfinancial business
Corporate
Nonfarm noncorporate
Farm
State and local government
4,429. l r
3,972.9r
2,708.9r
1,121.8
142.2
1,121.7
4,783.0 r
4,226. l r
2,928.6 r
1,152.4
145.1
1,070.2
5,100.2 r
4,463.8 r
3,077.7 r
l,236.1 r
149.9
1,063.4
5,429.5 r
4,116.4'
3,306.7 r
1,313.6r
156.1
1,119.5
5,333.0 r
4,682.0 r
3,235.5r
l,291.3 r
155.2
1,095.5
5,429.5 r
4,776.4 r
3,306.7 r
1,313.6r
156.1
1,119.5
5,487.5 r
4,895.6 r
3,402.6 r
l,337.9 r
155.1
1,144.3
5,608.2 r
5,019.0 r
3,496.7 r
l,361.8 r
160.6
1,170.8
5,738.5 r
5,117.3 r
3,569.4 r
l,385.5 r
162.5
1,178.8
5,902.3
5,213.0
3,638.2
1,411.9
162.9
1,199.8
5,987.8
5,360.8
3,762.0
1,437.4
161.3
1,217.6
23 Foreign credit market debt held in
United States
370.8
441.9
518.8
569.6
557.7
569.6
584.1
606.6
600.2
591.6
596.2
24
25
26
27
42.7
242.3
26.1
59.8
56.2
291.9
34.6
59.3
67.5
347.7
43.7
60.0
65.1
394.4
52.1
58.0
64.3
386.3
48.2
58.9
65.1
394.4
52.1
58.0
76.7
398.0
53.4
55.9
71.4
424.9
55.5
54.8
74.0
416.0
56.4
53.8
72.9
407.8
58.9
52.0
77.2
408.3
59.1
51.5
Commercial paper
Bonds
Bank loans n.e.c
Other loans and advances
28 Total credit market debt owed by nonfinancial
sectors, domestic and foreign
13,386.9 r
14,158.0 r
14,928.0 r
15,699.9 r
15,439.4 r
15,699.9 r
15,942.3 r
16,153.6 r
16,355.0 r
16,658.9
16,922.1
Financial sectors
2y Total credit market debt owed by
financial sectors
3,822.2
4,281.3 r
4,838.6 r
5,457.5 r
5,214.2 r
5,457.5 r
5,685.7 r
5,937.4 r
6,206.2 r
6,526.1
6,821.6
30
31
32
33
34
35
36
37
38
39
By instrument
Federal government-related
Government-sponsored enterpnse securities
Mortgage pool securities
Loans from U.S. government
Private
Open market paper
Corporate bonds
Bank loans n.e.c
Other loans and advances
Mortgages
2,172.7
700.6
1,472.1
.0
1,649.5
441.6
1,008.8
48.9
131.6
18.7
2,376.8
806.5
1,570.3
.0
l,904.5 r
486.9
l,204.7 r
54.0 r
135.0
24. r
2,608.3
896.9
1,711.4
.0
2,230.4 r
579.1
1,381.5r
74.9 r
162.9
31.9r
2,821.0
995.3
1,825.8
.0
2,636.5 r
745.7
l,557.5 r
88.0r
198.5
46.8 r
2,746.5
955.8
1,790.7
.0
2,467.7 r
684.7
l,477.3 r
80.9r
183.0
41.8 r
2,821.0
995.3
1,825.8
.0
2,636.5 r
745.7
l,557.5 r
88.0r
198.5
46.8 r
2,877.9
1,030.9
1,847.0
.0
2,807.9 r
804.9
1,640.9r
106.3r
206.6
49. l r
2,981.2
1,072.5
1,908.7
.0
2,956.2 r
838.9
l,738.7 r
99.0 r
225.6
54. l r
3,121.6
1,146.0
1,975.6
.0
3,084.6 r
874.2
l,786.2 r
113.9r
246.2
64.0 r
3,292.0
1,273.6
2,018.4
.0
3,234.1
906.7
1,849.4
117.7
288.7
71.6
3,433.2
1,321.8
2,111.4
.0
3,388.3
926.4
1,967.2
118.8
299.3
76.6
40
41
42
43
44
45
46
47
48
49
50
51
52
By borrowing sector
Commercial banks
Bank holding companies
Savings institutions
Credit unions
Life insurance companies
Government-sponsored enterprises
Federally related mortgage pools
Issuers of asset-backed securities (ABSs)
Brokers and dealers
Finance companies
Mortgage companies
Real estate investment trusts (REITs)
Funding corporations
94.5
133.6
112.4
.5
.6
700.6
1,472.1
570.1 r
34.3
433.7
18.7
40.0 r
211.0
102.6
148.0
115.0
.4
.5
806.5
1,570.3
712.5 r
29.3
483.9
19.1
44.6 r
248.6
113.6
150.0
140.5
.4
1.6
896.9
1,711.4
866.4 r
27.3
529.8
31.5
56.5 r
312.7
140.6
168.6
160.3
.6
1.8
995.3
1,825.8
l,078.2 r
35.3
554.5
26.8
96. r
373.7
130.0
164.0
149.8
.5
1.9
955.8
1,790.7
981.0 r
33.6
532.7
31.2
19.6'
363.4
140.6
168.6
160.3
.6
1.8
995.3
1,825.8
l,078.2 r
35.3
554.5
26.8
96. l r
373.7
148.7
181.2
162.9
.7
1.8
1,030.9
1,847.0
l,143.0 r
35.1
571.9
39.1
111.9r
411.6
159.6
190.5
170.7
.8
1.6
1,072.5
1,908.7
l,230.4 r
40.1
596.9
27.1
I28.0 r
410.5
169.6
196.1
186.6
1.0
2.0
1,146.0
1,975.6
l,307.0 r
39.4
589.4
27.6
147.8r
417.9
188.6
193.5
212.4
1.1
2.5
1,273.6
2,018.4
1,394.6
42.5
597.5
28.1
158.8
414.4
187.6
202.6
226.9
1.5
3.3
1,321.8
2,111.4
1,464.2
34.7
614.1
28.9
165.4
459.1
All sectors
53 Total credit market debt, domestic and foreign . . .
54
55
56
57
58
5y
60
61
Open market paper
U.S. government securities
Municipal securities
Corporate and foreign bonds
Bank loans n.e.c
Other loans and advances
Mortgages
Consumer credit
17,209.1 r
18,439.3 r
19,766.6 r
21,157.4 r
20,653.6 r
21,157.4 r
21,628.0 r
22,091.0 r
22,561.1 r
23,184.9
23,743.7
623.5
5,665.0
1,341.7
2,504.0
834.9
860.9
4,395. l r
983.9
700.4
6,013.6
1,293.5
2,822.9 r
949.6
931.1
4,605.5 r
1,122.8
803.0
6,390.0
1,296.0
3,128.l r
1,041.7
996.2
4,900. l r
1,211.6
979.4
6,625.9
1,367.5
3,44l.5 r
1,169.8
1,095.9
5,213.2 r
1,264.1
925.7
6,517.7
1,340.2
3,334.5 r
1,123.1
1,044.9
5,140.8 r
1,226.7
979.4
6,625.9
1,367.5
3,441.5 r
1,169.8
1,095.9
5,213.2 r
1,264.1
1,074.8
6,708.6
1,397.1
3,567.7 r
l,191.9 r
1,128.7
5,323.2 r
1,236.0
1,112.7
6,730.2
1,429.3
3,732.6 r
l,241.3 r
1,153.9
5,434.3 r
1,256.8
1,165.1
6,841.8
1,439.9
3,793.l r
l,280.3 r
1,186.1
5,568.3 r
l,286.6 r
1,172.6
7,044.2
1,464.3
3,879.0
1,315.7
1,254.9
5,722.5
1,331.7
1,227.6
7,192.9
1,481.6
4,036.1
1,329.4
1,300.4
5,857.1
1,318.6
1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables
L.2 through L.4. For ordering address, see inside front cover.
Flow of Funds A3 9
1.60
S U M M A R Y OF FINANCIAL ASSETS A N D LIABILITIES 1
Billions of dollars except as noted, end of period
1997
Transaction category or sector
1994
1996
1995
1999
1998
1997
Q3
Q4
Ql
Q2
Q3'
Q4'
Ql
CREDIT MARKET DEBT OUTSTANDING 2
1 Total credit m a r k e t assets
7 Domestic nonfederal nonfinancial sectors
Household
Nonfinancial corporate business
4
Nonfarm noncorporate business
State and local governments
6
7 Federal government
8 Rest of the world
Financial sectors
Monetary authority
10
Commercial banking
11
17
U.S.-chartered banks
Foreign banking offices in United States
N
Bank holding companies
14
Banks in U.S.-affiliated areas
15
Savings institutions
16
Credit unions
17
Bank personal trusts and estates
18
Life insurance companies
19
Other insurance companies
70
Private pension funds
71
State and local government retirement funds
77
73
Money market mutual funds
Mutual funds
74
Closed-end funds
75
Government-sponsored enterprises
76
Federally related mortgage pools
77
Asset-backed securities issuers (ABSs)
78
Finance companies
79
30
Mortgage companies
Real estate investment trusts (REITs)
31
37
Brokers and dealers
Funding corporations
33
17,209.1R
18,439.3R
19,766.6 R
21,157.4R
20,653.6R
21,LS7.4 R
21,628.0R
22,091.0R
22,561.1
23,184.9
23,743.7
r
3,031.0
l,974.3 r
289.2
37.6
729.9
203.4
1,216.0
12,758.7 r
368.2
3,254.3
2,869.6
337.1
18.4
29.2
920.8
246.8
248.0
1,487.5
446.4
660.9
455.8
459.0
718.8
86.0
663.3
1,472.1
532.8 r
476.2
36.5
13.3
93.3
107.5
r
2,890.6
l,929.3 r
280.4
42.3
638.6
203.2
1,530.3
13,815.2 r
380.8
3,520.1
3,056.1
412.6
18.0
33.4
913.3
263.0
239.7
1,587.5
468.7
716.9
483.3
545.5
771.3
96.4
750.0
1,570.3
653.4 r
526.2
33.0
14. l r
183.4
86.3
2,900.7'
1,982.7'
275.2'
38.0'
604.8 r
195.5
1,933.8
14,736.6'
393.1
3,707.7
3,175.8
475.8
22.0
34.1
933.2
288.5
232.0
1,657.0
491.2
769.2
529.2
634.3
820.2
101.1
807.9
1,711.4
777.0'
544.5
41.2
13.8'
167.7
99.8'
2,724.8'
1,804.4'
278.0'
37.4 r
605.0'
200.4
2,259.0
15,973.2'
431.4
4,031.9
3,450.7
516.1
27.4
37.8
928.5
305.3
239.5
1,751.3
515.3
834.7
565.8
721.9
901.1
97.7
902.2
1,825.8
939.3'
566.4
32.1
22.9'
182.6
149.9'
2,710.6'
1,814.5'
265.1'
37.5'
593.5'
198.2
2,196.4
15,548.4'
412.7
3,912.9
3,351.9
501.0
22.5
37.5
929.0
303.9
237.3
1,746.7
506.6
814.8
562.0
678.7
890.4
98.5
862.5
1,790.7
855.3'
564.4
55.5
19.0'
164.7
120.9'
2,724.8'
1,804.4'
278.0'
37.4'
605.0'
200.4
2,259.0
15,973.2'
431.4
4,031.9
3,450.7
516.1
27.4
37.8
928.5
305.3
239.5
1,751.3
515.3
834.7
565.8
721.9
901.1
97.7
902.2
1,825.8
939.3'
566.4
32.1
22.9'
182.6
149.9'
2,662.1'
1,759.6'
259.1'
37.4'
606.0'
204.3
2,324.0
16,437.6'
433.8
4,093.3
3,505.0'
517.9
31.2
39.2
931.2'
306.7
240.1
1,777.3'
521.1
853.4
582.2'
775.0
940.0'
97.1
951.4'
1,847.0
989.3'
572.0
46.8
25.7'
244.0
179.0'
2,718.7'
1,786.8'
245.4'
37.4'
649.1'
207.5
2,401.2
16,763.6'
440.3
4,136.4
3,543.6
525.6
26.8
40.4
930.8'
315.1
240.9
1,793.2'
520.8
885.9
600.2
815.9
979.1'
96.5
989.4'
1,908.7
1,068.9'
579.0
32.7
29.0'
198.3
173.2'
2,739.1
1,769.5
251.2
37.4
681.1
210.9
2,416.4
17,194.7
446.5
4,195.7
3,616.2
510.1
28.3
41.1
939.3
320.5
241.4
1,810.6
518.9
909.8
613.1
869.9
1,005.9
95.9
1,055.4
1,975.6
1,134.2
592.7
33.8
29.7
217.5
162.4
2,686.4
1,673.9
270.7
37.4
704.4
213.9
2,509.8
17,774.8
452.5
4,337.1
3,761.3
504.2
26.5
45.2
964.8
324.2
242.4
1,828.4
535.7
953.4
626.1
965.9
1,026.7
95.4
1,163.0
2,018.4
1,216.0
618.4
35.3
26.3
165.2
160.5
2,733.4
1,727.6
257.2
37.4
711.2
218.5
2,563.6
18,228.1
466.0
4,340.2
3,782.9
488.1
25.0
44.1
990.8
330.7
243.1
1,858.9
540.9
968.6
635.1
1,036.2
1,049.9
94.9
1,202.0
2,111.4
1,281.2
635.4
37.8
25.9
186.8
171.9
17,209.1R
18,439.3R
19,766.6R
21,157.4R
20,653.6R
21,157.4R
21,628.0R
22,091.0R
22,561.1
23,184.9
23,743.7
53.2
8.0
17.6
373.9
280.1
1,242.0
2,183.2
411.2
602.9
549.5
1,477.3
279.0
520.3
5,057.5
1,140.6
101.4
699.4
5,292.2 r
63.7
10.2
18.2
418.8
290.7
1,229.3
2,279.7
476.9
745.3
660.0
1,852.8
305.7
566.2
5,821.1
1,242.2
107.6
803.0
5,656.0 r
53.7
9.7
18.3
516.1
240.8
1,245.1
2,377.0
590.9
891.1
701.5
2,342.4
358.1
610.6
6,567.8
1,325.6'
123.6'
871.7
6,144.2'
48.9
9.2
18.3
619.4
219.4
1,286.6
2,474.1
713.4
1,048.7
822.4
2,989.4
469.1
665.0
7,680.9
1,426.0'
140.4 r
1,082.8
6,800.8'
46.1
9.2
18.7
597.8
189.0
1,234.2
2,438.8
696.1
1,005.1
797.7
2,973.6
431.8
655.6
7,556.4'
1,362.5'
143.4'
1,058.9
6,787.7'
48.9
9.2
18.3
619.4
219.4
1,286.6
2,474.1
713.4
1,048.7
822.4
2,989.4
469.1
665.0
7,680.9
1,426.0'
140.4'
1,082.8
6,800.8'
48.2
9.2
18.4
608.1
177.9'
1,259.4
2,525.2
760.9
1,130.7
891.0
3,339.3'
505.3
677.3
8,246.8
1,409.3'
151.2'
1,179.5'
7,039.7'
50.1
9.2
18.4
630.4
189.2'
1,321.0
2,530.8
754.0
1,153.7
861.5
3,438.4'
540.6
690.6'
8,344.4'
1,400.5'
143.5'
1,204.9'
7,094.8'
54.5
9.2
18.8
652.2
196.5
1,282.7
2,553.5
776.5
1,249.7
919.8
3,137.3
579.0
703.5
7,805.4
1,414.4
154.3
1,118.9
7,370.9
60.1
9.2
18.3
661.4
187.6
1,335.1
2,627.0
806.0
1,334.2
875.0
3,610.0
577.5
718.3
8,724.2
1,417.3
153.3
1.274.2
7,287.2
53.6
8.2
18.3
679.4
206.5
1,313.3
2,639.3
803.4
1,416.0
941.2
3,763.3
550.2
731.9
8,873.0
1,402.5
165.5
1,317.0
7,350.5
37,498.7R
40,986.5R
44,754.6R
49,672.1R
48,656.2R
49,672.1R
51,605.3R
52,466.9R
52,558.3
54,860.6
55,976.5
21.1
6,237.9
3,410.5 r
22.1
8,331.3
3,658.3 r
21.4
10,062.4
3,865.2'
21.1
12,776.0
4,214.9'
21.0
12,649.4
4,142.3'
21.1
12,776.0
4,214.9'
21.2
14,397.6
4,231.1'
21.0
14,556.1
4,268.5'
21.2
12,758.4
4,291.6
21.6
15,437.7
4,315.1
20.7
15,970.3
4,314.3
-6.7
-5.4
-5.8
431.4'
360.2
325.4
-10.6
-9.0
-6.5
85.9 r
85.3
67.8
76.7'
62.4
48.8
r
r
— l,106.4 — 1,460.3 - 1 , 7 0 6 . 6 '
-7.3
534.6'
-32.2
151.2
93.5'
-1,913.0'
-6.7
501.8'
-22.1
113.0'
88.2'
-1,461.4'
-7.3
534.6'
-32.2
151.2
93.5'
-1,913.0'
-7.4
511.0'
-21.2
191.8'
89.1'
-1,895.2'
-7.4
547.1'
-17.1
144.0'
94.7'
-1,916.3'
-7.2
565.5
-15.4
180.8
101.5
-1,921.8
-8.0
572.2
-27.2
171.5
103.8
-2,201.6
224.0
96.5
-2,340.3
-1.6
30.1
-310.1'
-8.1
26.2
-312.7'
-7.8
19.5
-396.2'
-8.1
26.2
-312.7'
-10.4
21.4
-364.0'
-16.1
24.2
-413.2'
-12.0
15.7
-438.8
-3.9
23.1
-379.7
-7.2
18.9
-445.4
60,115.1R
68,151.9R
66,640.6R
68,151.9R
71,740.0R
72,872.7R
71,161.2
76,384.8
78,176.5
RELATION OF LIABILITIES
TO FINANCIAL ASSETS
34 Total credit m a r k e t d e b t
35
36
37
38
39
40
41
4^
43
44
45
46
47
48
49
50
51
52
Other liabilities
Official foreign exchange
Special drawing rights certificates
Treasury currency
Foreign deposits
Net interbank liabilities
Checkable deposits and currency
Small time and savings deposits
Large time deposits
Money market fund shares
Security repurchase agreements
Mutual fund shares
Security credit
Life insurance reserves
Pension fund reserves
Trade payables
Taxes payable
Investment in bank personal trusts
Miscellaneous
53 Total liabilities
Financial assets not included in liabilities (+)
54 Gold and special drawing rights
55 Corporate equities
56 Household equity in noncorporate business
57
58
59
60
61
62
Liabilities not identified as assets (—)
Treasury currency
Foreign deposits
Net interbank transactions
Security repurchase agreements
Miscellaneous
Floats not included in assets (—)
63 Federal government checkable deposits
64 Other checkable deposits
65 Trade credit
66 Total identified to sectors as assets
3.4
38.0
-245.9
3.1
34.2
-257.6
48,048.8R
54,185.8R
1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables
L.l and L.5. For ordering address, see inside front cover.
2. Excludes corporate equities and mutual fund shares.
-8.3
578.4
-11.2
A42
2.10
Domestic Nonfinancial Statistics • July 1999
NONFINANCIAL BUSINESS ACTIVITY
Selected Measures
Monthly data seasonally adjusted, and indexes 1992=100, except as noted
1999
1998
Measure
1996
1997
1998
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.'
Mar.'
Apr.
1 I n d u s t r i a l production 1
119.5
126.8
131.3
132.4
131.9
132.4
132.2
132.3
132.3
132.5
133.2
134.0
Market groupings
2 Products, total
3
Final, total
4
Consumer goods
5
Equipment
6
Intermediate
7 Materials
114.4
115.5
111.3
122.7
110.9
127.8
119.6
121.1
114.1
133.9
115.2
138.2
123.5
125.4
115.2
144.2
118.0
144.0
124.9
126.8
116.1
146.0
119.1
144.4
124.1
126.0
114.8
146.2
118.3
144.4
124.9
126.7
115.2
147.5
119.0
144.5
124.5
126.1
114.8
146.5
119.3
144.6
124.4
125.9
114.9
145.6
119.8
145.2
124.5
125.8 r
115.2'
145.0'
120.3'
144.9
124.6
126.0
115.5
144.9
120.2
145.3
125.0
126.3
115.3
146.1
120.9
146.5
125.5
126.7
116.0
145.9
121.5
147.9
Industry groupings
8 Manufacturing
121.4
129.7
135.1
135.7
135.2
136.1
136.4
136.7
136.4'
136.9
137.5
138.4
81.4
82.0
80.8
80.7
80.1
80.3
80.1
80.0
79.5'
79.5
79.6
79.8
10 Construction contracts 3
130.9
142.8'
154.2'
159.0'
153.0
153.0'
159.0'
161.0
162.0'
153.0
149.0
147.0
11 Nonagricultural employment, total 4
12
Goods-producing, total
Manufacturing, total
13
14
Manufacturing, production workers
Service-producing
15
16 Personal income, total
17
Wages and salary disbursements
18
Manufacturing
19
Disposable personal income 5
20 Retail sales 5
117.3
2.4
97.4
98.6
123.1
165.2
159.8
135.7
164.0
159.6
120.3
2.4
98.2
99.6
126.5
174.5
171.2
144.7
171.7
166.9
123.4
2.3
98.5
99.6
130.1
183.3
182.6
151.1
178.6
175.1'
123.8
102.4
98.4
99.1
130.6
184.2
184.1
151.3
179.4
174.9
123.9
102.3
98.4
99.3
130.9
184.8
184.6
152.1
179.9
175.6
124.1
102.2
98.1
99.0
131.1
185.6
185.7
151.8
180.7
177.7
124.4
102.1
97.8
98.6
131.5
187.2
186.7
151.6
182.4
178.9
124.7
102.4
97.7
98.5
131.8
187.1
187.6
151.7
182.1
180.9
124.9
102.3
97.6
98.4
132.1
188.3
189.0
152.4'
183.4'
183.3
125.2
102.4
97.3
98.1
132.5
189.1
190.1
152.7
184.2
186.4
125.2
102.1
97.1
97.9
132.6
189.7
190.4
152.9
184.9
186.5
125.5
102.0
97.0
97.7
133.0
190.6
191.5
153.5
185.8
186.6
Prices6
21 Consumer ( 1 9 8 2 - 8 4 = 1 0 0 )
22 Producer finished goods (1982= 100)
156.9
131.3
160.5
131.8
163.0
130.7
163.4
130.7
163.6
130.6
164.0
131.4
164.0
130.9
163.9
131.1'
164.3
131.5
164.5
130.9
165.0
131.2
166.2
131.8
9 Capacity utilization, manufacturing (percent) 2 . .
1. Data in this table appear in the Board's G.17 (419) monthly statistical release. The data
are also available on the Board's web site, http://www.federalreserve.gov/releases/gl7. The
latest historical revision of the industrial production index and the capacity utilization rates
was released in November 1998. The recent annual revision is described in an article in the
January 1999 issue of the Bulletin. For a description of the methods of estimating industrial
production and capacity utilization, see "Industrial Production and Capacity Utilization:
Historical Revision and Recent Developments," Federal Reserve Bulletin, vol. 83 (February
1997), pp. 67-92, and the references cited therein. For details about the construction of
individual industrial production series, see "Industrial Production: 1989 Developments and
Historical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204.
2. Ratio of index of production to index of capacity. Based on data from the Federal
Reserve, DRI McGraw-Hill, U.S. Department of Commerce, and other sources.
2.11
3. Index of dollar value of total construction contracts, including residential, nonresidential, and heavy engineering, from McGraw-Hill Information Systems Company, F.W. Dodge
Division.
4. Based on data from U.S. Department of Labor, Employment and Earnings. Series covers
employees only, excluding personnel in the armed forces.
5. Based on data from U.S. Department of Commerce, Survey of Current Business.
6. Based on data not seasonally adjusted. Seasonally adjusted data for changes in the price
indexes can be obtained from the U.S. Department of Labor, Bureau of Labor Statistics,
Monthly Labor Review.
NOTE. Basic data (not indexes) for series mentioned in notes 4 and 5, and indexes for series
mentioned in notes 3 and 6, can also be found in the Survey of Current Business.
LABOR FORCE, EMPLOYMENT, A N D UNEMPLOYMENT
Thousands of persons; monthly data seasonally adjusted
1998
Category
1996
1997
1999
1998
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.'
Mar.'
Apr.
HOUSEHOLD SURVEY DATA 1
1 Civilian labor force 2
Employment
2
Nonagricultural industries 3
3
Agriculture
Unemployment
4
Number
5
Rate (percent of civilian labor force)
133,943
136,297
137,673
138,081
138,116
138,193
138,547
139,347
139,271
138,816
139,091
123,264
3,443
126,159
3,399
128,085
3,378
128,348
3,470
128,300
3,558
128,765
3,348
129,304
3,222
130,097
3,299
129,817
3,328
129,752
3,281
129,685
3,384
7,236
5.4
6,739
4.9
6,210
4.5
6,263
4.5
6,258
4.5
6,080
4.4
6,021
4.3
5,950
4.3
6,127
4.4
5,783
4.2
6,022
4.3
119,608
122,690
125,833
126,363
126,527
126,804
127,118
127,335
127,670
127,677
127,911
18,495
580
5,418
6,253
28,079
6,911
34,454
19,419
18,657
592
5,686
6,395
28,659
7,091
36,040
19,570
18,716
575
5,965
6,551
29,299
7,341
37,525
19,862
18,692
568
5,981
6,579
29,454
7,393
37,768
19,928
18,633
564
6,012
6,595
29,453
7,417
37,905
19,948
18,573
560
6,051
6,604
29,549
7,441
38,040
19,986
18,559
557
6,153
6,627
29,594
7,458
38,148
20,022
18,534
547
6,170
6,644
29,662
7,488
38,245
20,045
18,478
539
6,249
6,653
29,772
7,495
38,377
20,107
18,449
537
6,196
6,665
29,754
7,501
38,446
20,129
18,420
531
6,204
6,687
29,831
7,524
38,577
20,137
ESTABLISHMENT SURVEY DATA
6 N o n a g r i c u l t u r a l payroll e m p l o y m e n t 4
7
8
9
10
11
12
13
14
Manufacturing
Mining
Contract construction
Transportation and public utilities
Trade
Finance
Service
Government
1. Beginning January 1994, reflects redesign of current population survey and population
controls from the 1990 census.
2. Persons sixteen years of age and older, including Resident Armed Forces. Monthly
figures are based on sample data collected during the calendar week that contains the twelfth
day; annual data are averages of monthly figures. By definition, seasonality does not exist in
population figures.
3. Includes self-employed, unpaid family, and domestic service workers.
4. Includes all full- and part-time employees who worked during, or received pay for, the
pay period that includes the twelfth day of the month; excludes proprietors, self-employed
persons, household and unpaid family workers, and members of the armed forces. Data are
adjusted to the March 1992 benchmark, and only seasonally adjusted data are available at this
time.
SOURCE. Based on data from U.S. Department of Labor, Employment and Earnings.
Selected Measures
2.12
A43
OUTPUT, CAPACITY, A N D CAPACITY UTILIZATION 1
Seasonally adjusted
1998
1998
1999
1998
1999
1999
Series
Q2
Q3
Qir
Q4
Q2
Q3
Ql
Q4
Capacity (percent of 1992 output)
Output (1992= 100)
Q2
Q3
Q4
Qir
Capacity utilization rate (percent) 2
1 Total industry
131.3
131.6
132.3
132.7
159.6
161.5
163.4
165.1
82.3
81.5
80.9
80.3
2 Manufacturing
134.7
134.8
136.4
137.0
165.8
168.1
170.3
172.2
81.2
80.2
80.1
79.5
Primary processing 3
Advanced processing 4
121.1
141.4
120.2
142.1
120.6
144.4
121.7
144.6
144.0
176.4
145.1
179.2
146.1
182.0
146.9
184.5
84.1
80.2
82.9
79.3
82.5
79.3
82.9
78.4
6
7
8
9
10
11
12
13
Durable goods
Lumber and products
Primary metals
Iron and steel
Nonferrous
Industrial machinery and equipment
Electrical machinery
Motor vehicles and parts
Aerospace and miscellaneous
transportation equipment . .
156.1
116.4
125.3
124.0
127.0
203.0
282.8
135.3
157.9
117.7
122.4
118.7
126.8
207.9
292.7
137.2
161.2
119.2
119.3
112.9
126.9
211.7
304.8
148.5
162.0
121.9
119.8
115.2
125.2
213.8
311.1
147.4
193.9
143.0
142.0
142.8
140.8
234.7
366.6
183.9
197.5
143.9
143.2
144.6
141.3
242.9
381.6
184.9
201.2
144.9
144.4
146.5
141.7
251.6
396.6
186.0
204.4
145.8
145.4
147.9
142.1
259.6
411.0
186.7
80.5
81.4
88.3
86.9
90.1
86.5
77.1
73.6
79.9
81.8
85.5
82.1
89.7
85.6
76.7
74.2
80.1
82.3
82.6
77.0
89.6
84.1
76.9
79.8
79.2
83.6
82.4
77.9
88.1
82.3
75.7
79.0
106.1
106.6
105.8
103.2
127.5
128.0
128.5
128.8
83.2
83.3
82.4
80.2
14
15
16
17
18
19
Nondurable goods
Textile mill products
Paper and products
Chemicals and products
Plastics materials
Petroleum products
112.7
113.2
115.0
116.9
127.5
112.0
111.3
112.1
115.0
114.4
128.4
112.7
111.4
110.2
114.3
114.0
131.9
111.9
111.8
108.2
116.2
114.2
130.5
116.3
136.6
134.9
131.6
148.0
140.7
116.5
137.5
135.1
132.5
148.9
141.9
116.8
138.4
135.2
133.4
149.7
143.2
117.1
139.1
135.2
134.2
150.3
144.4
117.4
82.5
83.9
87.4
79.0
90.6
96.1
80.9
83.0
86.8
76.8
90.5
96.5
80.5
81.5
85.7
76.1
92.1
95.6
80.4
80.0
86.6
76.0
90.4
99.1
105.3
115.6
118.3
103.6
119.6
121.2
100.7
112.9
116.7
97.8
114.2
115.8
119.9
126.2
123.8
120.1
126.5
124.0
120.6
126.7
124.3
120.9
126.9
124.5
87.8
91.6
95.6
86.2
94.6
97.7
83.5
89.2
93.9
80.8
90.0
93.1
1973
1975
Previous cycle 5
High
Low
High
Apr.P
3
4
?0 Mining
?1 Utilities
22
Electric
Low
Latest cycle 6
High
Low
1998
1998
Apr.
Nov.
1999
Dec.
Jan. r
Feb/
Mar/
Capacity utilization rate (percent) 2
1 Total industry
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
72.6
87.3
71.1
85.4
78.1
82.6
80.8
80.7
80.4
80.2
80.4
80.6
69.0
85.7
76.6
81.7
80.1
80.0
79.5
79.5
79.6
79.8
88.5
70.5
86.9
91.2
87.2
68.2
71.8
88.1
86.7
66.2
70.4
88.9
84.2
77.7
76.1
84.6
80.7
82.4
79.4
82.9
79.0
83.0
78.2
82.8
78.4
82.7
78.5
83.0
78.8
Durable goods
Lumber and products
Primary metals
Iron and steel
Nonferrous
Industrial machinery and
equipment
Electrical machinery
Motor vehicles and parts
Aerospace and miscellaneous
transportation equipment
89.2
88.7
100.2
105.8
90.8
68.9
61.2
65.9
66.6
59.8
87.7
87.9
94.2
95.8
91.1
63.9
60.8
45.1
37.0
60.1
84.6
93.6
92.7
95.2
89.3
73.1
75.5
73.7
71.8
74.2
81.1
81.4
90.0
89.1
91.2
80.0
81.6
82.2
74.9
91.3
79.8
83.6
81.9
77.9
87.0
79.3
83.8
83.2
79.1
88.3
79.1
83.4
81.4
76.1
88.0
79.3
83.5
82.6
78.4
88.0
79.6
83.2
82.0
76.9
88.5
96.0
89.2
93.4
74.3
64.7
51.3
93.2
89.4
95.0
64.0
71.6
45.5
85.4
84.0
89.1
72.3
75.0
55.9
86.5
77.7
76.7
83.9
76.8
80.0
83.6
76.5
78.7
82.5
76.0
77.9
82.3
75.5
79.2
82.1
75.7
79.8
81.9
76.7
81.6
78.4
67.6
81.9
66.6
87.3
79.2
83.0
82.3
81.5
80.1
80.2
80.2
78.0
Nondurable goods
Textile mill products
Paper and products
Chemicals and products
Plastics materials
Petroleum products
87.8
91.4
97.1
87.6
102.0
96.7
71.7
60.0
69.2
69.7
50.6
81.1
87.5
91.2
96.1
84.6
90.9
90.0
76.4
72.3
80.6
69.9
63.4
66.8
87.3
90.4
93.5
86.2
97.0
88.5
80.7
77.7
85.0
79.3
74.8
85.1
82.9
84.0
87.8
79.7
91.7
96.9
80.7
80.5
84.2
76.6
94.1
96.3
80.6
80.9
86.2
76.1
93.1
96.0
80.1
80.9
86.7
74.9
88.2
99.5
80.5
81.2
86.8
76.2
91.7
99.1
80.4
78.1
86.3
76.8
91.2
98.6
80.6
80.2
86.8
77.1
90.2
97.1
94.3
96.2
99.0
88.2
82.9
82.7
96.0
89.1
88.2
80.3
75.9
78.9
88.0
92.6
95.0
87.0
83.4
87.1
88.2
89.5
93.1
83.8
87.3
92.2
82.0
88.2
92.6
81.5
90.5
93.4
80.8
88.5
91.6
80.2
90.9
94.2
80.2
91.5
94.8
2 Manufacturing
3
89.2
Primary processing 3
Advanced processing 4
20 Mining
?1 Utilities
Electric
22
1. Data in this table appear in the Board's G.17 (419) monthly statistical release. The data
are also available on the Board's web site, http://www.federalreserve.gov/releases/gl7. The
latest historical revision of the industrial production index and the capacity utilization rates
was released in November 1998. The recent annual revision is described in an article in the
January 1999 issue of the Bulletin. For a description of the methods of estimating industrial
production and capacity utilization, see "Industrial Production and Capacity Utilization:
Historical Revision and Recent Developments," Federal Reserve Bulletin, vol. 83 (February
1997), pp. 67-92, and the references cited therein. For details about the construction of
individual industrial production series, see "Industrial Production: 1989 Developments and
Historical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204.
2. Capacity utilization is calculated as the ratio of the Federal Reserve's seasonally adjusted
index of industrial production to the corresponding index of capacity.
3. Primary processing includes textiles; lumber; paper; industrial chemicals; synthetic
materials; fertilizer materials; petroleum products; rubber and plastics; stone, clay, and glass;
primary metals; and fabricated metals.
4. Advanced processing includes foods; tobacco; apparel; furniture and fixtures; printing
and publishing; chemical products such as drugs and toiletries; agricultural chemicals; leather
and products; machinery; transportation equipment; instruments; and miscellaneous manufactures.
5. Monthly highs, 1978-80; monthly lows, 1982.
6. Monthly highs, 1988-89; monthly lows, 1990-91.
A42
2.13
Domestic Nonfinancial Statistics • July 1999
INDUSTRIAL PRODUCTION
Indexes and Gross Value 1
Monthly data seasonally adjusted
1992
Group
portion
1999
1998
1998
avg.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan. r
Feb. r
Mar. r
Apr. p
Index (1992 = 100)
MAJOR MARKETS
100.0
131.3
131.3
131.9
130.6
130.5
132.4
131.9
132.4
132.2
132.3
132.3
132.5
133.2
134.0
2 Products
3
Final products
4
Consumer goods, total
Durable consumer goods
5
6
Automotive products
7
Autos and trucks
8
Autos, consumer
9
Trucks, consumer
10
Auto parts and allied goods . . . .
11
Other
12
Appliances, televisions, and air
conditioners
13
Carpeting and furniture
14
Miscellaneous home goods
15
Nondurable consumer goods
16
Foods and tobacco
17
Clothing
18
Chemical products
Paper products
19
Energy
20
21
Fuels
22
Residential utilities
60.5
46.3
29.1
6.1
2.6
1.7
.9
.7
.9
3.5
123.5
125.4
115.2
135.7
132.9
137.8
109.2
166.2
125.0
137.8
124.0
126.2
116.4
136.9
134.6
141.3
107.4
173.8
123.7
138.8
124.5
126.6
116.8
138.3
136.8
143.5
108.4
177.1
126.0
139.4
123.6
125.5
115.1
130.7
121.7
118.2
93.8
142.2
125.4
137.8
123.3
124.7
114.0
124.6
107.3
92.8
75.8
110.0
125.6
138.7
124.9
126.8
116.1
140.1
141.7
151.4
124.4
178.9
127.6
138.5
124.1
126.0
114.8
137.4
136.4
143.4
128.3
161.1
125.9
138.0
124.9
126.7
115.2
140.5
141.1
150.6
119.9
181.0
127.4
139.7
124.5
126.1
114.8
138.9
139.6
149.1
113.7
183.2
125.9
137.9
124.4
125.9
114.9
139.8
139.8
147.7
115.5
179.1
128.2
139.5
124.5
125.8
115.2
141.5
141.7
149.4
111.7
185.2
130.5
141.0
124.6
126.0
115.5
143.4
141.2
149.4
107.0
188.9
129.3
144.9
125.0
126.3
115.3
141.5
139.5
147.3
109.7
183.0
128.2
142.8
125.5
126.7
116.0
144.5
142.4
151.5
112.1
188.9
129.2
145.9
1.0
.8
1.6
23.0
10.3
2.4
4.5
2.9
2.9
.8
2.1
206.2
117.1
114.7
110.1
109.0
97.8
120.5
105.8
112.2
110.5
112.3
203.4
115.9
118.2
111.4
110.2
99.9
123.2
106.2
111.5
111.6
111.0
202.7
119.1
117.9
111.5
110.8
98.8
122.5
105.7
112.5
110.9
112.9
199.9
117.0
117.1
111.2
108.5
98.8
122.8
105.3
118.2
111.4
121.2
207.8
117.3
115.9
111.2
108.5
98.4
122.2
106.3
118.4
112.9
120.7
209.4
116.7
115.3
110.3
107.5
97.7
119.0
106.6
120.1
112.1
123.7
209.9
116.3
114.5
109.3
106.9
97.1
118.0
105.9
116.8
108.3
120.7
215.2
120.3
113.6
109.1
108.0
95.4
117.2
105.2
115.0
108.4
117.8
222.5
117.5
109.5
109.0
109.6
94.5
119.3
104.1
106.5
109.1
104.5
226.0
116.8
111.4
108.9
109.6
94.6
118.7
103.6
107.1
109.6
105.2
229.6
120.7
110.9
108.9
110.0
93.4
115.3
102.0
113.3
112.2
113.3
241.7
123.1
112.6
108.8
110.1
92.8
117.8
101.0
110.3
113.3
108.1
236.1
116.3
114.2
109.0
109.9
91.4
118.7
99.7
113.7
111.8
114.2
238.6
121.8
116.1
109.2
109.6
91.9
120.3
99.8
113.0
109.7
114.2
23
24
25
26
27
28
29
30
31
32
33
Equipment
Business equipment
Information processing and related
Computer and office equipment
Industrial
Transit
Autos and trucks
Other
Defense and space equipment
Oil and gas well drilling
Manufactured homes
17.2
13.2
5.4
1.1
4.0
2.5
1.2
1.3
3.3
.6
.2
144.2
163.5
209.9
646.0
140.0
133.7
124.6
138.9
75.7
134.7
149.2
143.6
162.2
206.0
601.5
139.4
133.6
123.4
140.8
75.9
147.6
148.0
144.2
163.1
209.2
620.6
138.1
135.5
125.1
139.6
76.0
147.1
149.0
144.1
163.6
210.3
638.6
142.9
128.2
108.6
141.7
75.8
136.7
146.1
143.9
163.5
211.8
654.6
144.2
121.9
91.7
146.6
76.1
131.9
151.1
146.0
166.6
213.1
671.6
142.3
141.6
136.9
132.6
76.5
127.7
145.7
146.2
167.4
217.3
693.6
139.5
140.1
135.6
140.9
75.5
123.4
147.8
147.5
169.0
219.0
716.7
141.6
141.6
136.1
141.1
76.4
119.4
150.9
146.5
168.1
219.7
745.2
139.9
140.5
136.4
138.5
75.7
115.2
154.6
145.6
167.9
220.8
759.9
141.3
139.6
136.0
131.7
74.6
103.2
156.6
145.0
167.3
222.0
777.0
139.9
137.6
134.8
131.5
74.4
99.2
159.1
144.9
167.2
222.1
787.3
137.8
136.4
133.0
140.3
74.9
97.4
154.1
146.1
168.3
225.4
806.2
137.7
136.3
131.7
141.9
75.5
104.2
152.8
145.9
168.9
229.3
820.2
138.7
135.0
134.8
136.6
74.0
97.2
151.0
34
35
36
Intermediate products, total
Construction supplies
Business supplies
14.2
5.3
8.9
118.0
127.2
112.6
117.3
125.4
112.5
118.2
126.6
113.3
118.0
126.1
113.2
119.1
128.5
113.6
119.1
128.0
113.8
118.3
126.9
113.3
119.0
128.4
113.5
119.3
129.6
113.2
119.8
131.0
113.3
120.3
132.4
113.1
120.2
131.7
113.4
120.9
131.5
114.6
121.5
132.0
115.3
37 Materials
38
Durable goods materials
39
Durable consumer parts
40
Equipment parts
41
Other
42
Basic metal materials
43
Nondurable goods materials
44
Textile materials
45
Paper materials
46
Chemical materials
47
Other
48
Energy materials
49
Primary energy
50
Converted fuel materials
39.5
20.8
4.0
7.6
9.2
3.1
8.9
1.1
1.8
3.9
2.1
9.7
6.3
3.3
144.0
176.4
144.0
277.4
129.0
121.2
113.5
108.7
116.0
114.5
111.5
103.5
101.2
108.1
143.1
174.5
144.4
266.9
130.3
123.5
114.4
110.5
116.3
116.2
110.9
103.8
101.3
108.6
143.6
175.4
147.9
268.6
129.6
123.0
114.1
111.0
115.5
115.6
111.2
104.3
101.0
110.8
141.8
171.7
131.9
271.0
128.3
120.1
113.9
110.2
117.3
114.8
110.6
104.8
101.8
110.7
141.9
171.8
129.7
274.1
128.1
120.2
114.1
110.1
117.3
114.6
111.7
104.8
102.9
108.6
144.4
177.4
149.6
278.0
128.3
121.9
113.1
107.7
116.4
113.6
111.6
104.4
101.2
110.7
144.4
177.7
147.7
282.7
127.7
118.2
112.0
107.6
115.0
111.8
111.5
105.2
102.3
110.9
144.5
178.8
146.2
287.0
128.4
118.3
111.7
108.8
115.8
111.1
110.4
103.7
102.6
106.1
144.6
179.9
145.6
289.9
129.3
117.3
112.2
103.0
112.7
113.7
113.2
101.5
99.8
104.9
145.2
180.4
144.8
292.6
129.3
116.3
112.5
102.5
114.7
113.0
114.4
102.6
100.3
107.2
144.9
180.1
141.9
293.2
129.8
118.4
112.0
99.0
116.5
112.8
112.5
102.6
100.4
107.1
145.3
180.4
145.8
293.0
128.8
116.5
113.0
99.6
115.8
114.0
114.8
102.4
100.5
106.0
146.5
182.7
149.1
296.9
129.9
117.6
113.1
100.0
116.6
114.6
113.0
102.4
98.8
109.3
147.9
184.9
151.0
302.7
130.5
117.6
113.2
100.4
117.6
114.4
113.2
103.5
100.1
110.3
97.1
95.1
131.3
130.8
131.3
130.9
131.8
131.3
131.2
131.2
131.6
131.7
132.1
131.3
131.7
131.0
132.1
131.5
131.9
131.4
132.1
131.7
132.0
131.7
132.3
131.8
133.0
132.4
133.7
133.1
98.2
27.4
26.2
127.1
113.9
115.5
127.3
115.1
117.0
127.7
115.3
117.3
126.4
114.8
114.7
126.2
114.9
113.5
128.0
114.3
115.7
127.4
113.2
114.6
127.8
113.4
115.3
127.4
113.0
115.8
127.5
113.2
115.8
127.4
113.4
115.4
127.6
113.7
116.1
128.2
113.6
115.5
128.9
114.1
116.4
12.0
167.9
166.7
167.4
170.0
171.8
169.9
171.0
172.7
171.6
171.5
170.9
171.1
172.5
172.8
12.1
29.8
142.4
156.7
142.3
155.5
142.6
156.0
142.7
153.4
142.2
153.6
144.8
156.9
145.1
156.7
146.2
157.3
144.6
158.2
144.1
158.6
143.1
158.2
142.9
158.8
143.5
160.3
143.8
161.8
1 Total index
SPECIAL AGGREGATES
51 Total excluding autos and trucks
52 Total excluding motor vehicles and parts
53 Total excluding computer and office
equipment
54 Consumer goods excluding autos and trucks .
55 Consumer goods excluding energy
56 Business equipment excluding autos and
trucks
57 Business equipment excluding computer and
office equipment
58 Materials excluding energy
Selected Measures
2.13
INDUSTRIAL PRODUCTION
Group
Indexes and Gross Value 1 —Continued
1992
proportion
SIC
code
A43
1998
avg.
Apr.
May
June
July
Aug.
Sept
Jan. r
Feb/
Mar/
Apr/
Index (1992 = 100)
MAJOR INDUSTRIES
100.0
131.3
131.3
131.9
130.6
130.5
132.4
131.9
132.4
132.2
132.3
132.3
132.5
133.2
134.0
85.4
26.5
58.8
135.1
120.7
142.1
134.9
121.5
141.6
135.4
121.4
142.3
133.7
120.2
140.4
133.6
120.7
139.9
135.7
120.6
143.3
135.2
119.3
143.2
136.1
120.1
144.2
136.4
120.3
144.6
136.7
121.3
144.4
136.4
121.8
143.8
136.9
121.6
144.6
137.5
121.8
145.4
138.4
122.2
146.5
24
25
45.0
2.0
1.4
157.5
117.0
121.4
156.2
116.1
121.0
157.2
116.4
120.6
154.8
116.7
122.0
154.4
117.5
120.8
159.8
118.5
120.1
159.6
117.0
121.6
161.2
118.0
124.5
161.0
118.3
123.6
161.5
121.4
122.9
161.4
122.0
122.5
161.7
121.7
124.6
162.8
122.0
125.7
164.2
121.8
127.1
32
33
331,2
331PT
333-6,9
34
2.1
3.1
1.7
.1
1.4
5.0
126.2
123.8
121.1
115.7
127.0
127.3
124.0
127.5
126.7
122.4
128.4
127.8
124.5
126.5
125.5
121.9
127.6
128.7
123.5
122.1
119.8
116.0
124.9
128.0
125.4
122.6
120.2
118.3
125.4
127.8
127.0
124.4
122.5
120.3
126.7
126.3
126.6
120.1
113.4
112.6
128.1
126.2
128.3
120.6
114.4
109.7
128.0
126.9
130.5
118.7
109.7
100.2
129.3
127.7
131.6
118.6
114.6
102.0
123.4
128.7
133.5
120.7
116.7
106.6
125.4
127.6
132.2
118.3
112.6
106.6
125.1
126.7
131.4
120.3
116.3
109.1
125.1
127.2
133.0
119.6
114.2
107.7
126.0
127.9
35
8.0
203.7
200.6
202.5
205.8
209.0
207.0
207.7
211.2
211.1
212.7
212.3
213.8
215.2
216.4
657.0
289.4
108.2
107.6
86.9
673.6
290.8
130.3
154.2
142.0
695.5
297.7
127.6
149.9
136.5
718.5
302.4
128.4
150.2
140.4
746.9
304.8
127.1
148.8
138.1
761.6
307.3
125.6
146.6
137.3
778.9
308.7
124.0
145.3
137.9
789.4
310.1
125.3
147.8
137.0
807.9
314.4
125.9
149.2
135.9
823.1
322.3
126.1
152.6
139.6
59 Total index
60 Manufacturing
Primary processing
61
62
Advanced processing
63
64
65
66
357
36
37
371
371PT
1.8
7.3
9.5
4.9
2.6
649.1
291.9
123.0
141.1
128.5
605.4
280.8
123.3
140.8
130.9
623.9
282.0
125.2
144.1
132.7
641.4
285.5
114.2
121.1
110.1
79
80
Durable goods
Lumber and products
Furniture and fixtures
Stone, clay, and glass
products
Primary metals
Iron and steel
Raw steel
Nonferrous
Fabricated metal products . .
Industrial machinery and
equipment
Computer and office
equipment
Electrical machinery
Transportation equipment. . .
Motor vehicles and parts .
Autos and light trucks .
Aerospace and
miscellaneous
transportation
equipment
Instruments
Miscellaneous
372-6,9
38
39
4.6
5.4
1.3
104.9
113.0
117.7
105.7
113.0
120.1
106.3
113.8
119.1
106.3
112.4
118.5
107.1
112.6
118.5
106.9
113.0
117.7
105.8
114.2
117.0
106.9
114.6
115.9
105.7
114.1
114.1
104.8
113.9
115.4
103.2
114.3
114.8
103.2
113.9
115.9
103.3
114.6
116.8
100.4
115.4
118.4
81
82
83
84
85
86
87
88
89
90
91
Nondurable goods
Foods
Tobacco products
Textile null products
Apparel products
Paper and products
Printing and publishing . . . .
Chemicals and products . . . .
Petroleum products
Rubber and plastic products .
Leather and products
20
21
22
23
26
27
28
29
30
31
40.4
9.4
1.6
1.8
2.2
3.6
6.7
9.9
1.4
3.5
.3
111.9
109.6
106.0
112.2
99.2
115.0
105.1
115.5
112.0
132.6
75.3
113.0
110.3
109.8
113.3
101.0
115.2
105.5
117.7
112.8
133.2
76.3
113.0
110.7
111.5
114.5
100.4
115.0
105.6
116.9
111.5
133.1
75.8
112.0
109.2
104.7
112.0
100.5
114.9
105.5
116.2
111.6
132.4
74.5
112.1
109.0
106.0
113.2
100.1
115.9
105.4
115.7
113.4
132.7
75.3
111.3
107.9
107.0
111.8
99.2
115.3
104.9
114.3
114.1
132.2
74.0
110.6
107.7
104.2
111.2
98.3
113.9
104.6
113.3
110.7
132.6
73.5
110.9
109.1
101.9
112.4
97.3
115.4
104.2
113.1
110.4
133.4
72.8
111.6
111.3
99.8
108.8
95.5
112.3
105.4
114.7
112.8
135.0
74.3
111.7
111.1
100.0
109.4
95.3
115.3
105.1
114.0
112.5
136.0
73.0
111.3
112.0
96.9
109.3
94.1
116.2
103.6
112.5
116.7
135.4
70.9
112.0
112.2
97.1
109.7
93.8
116.5
103.7
114.5
116.3
136.2
70.5
112.0
111.8
97.7
105.6
93.4
116.0
104.1
115.6
115.9
137.0
69.9
112.4
111.8
96.2
108.4
94.0
116.9
104.4
116.1
114.9
138.1
69.7
10
12
13
14
6.9
.5
1.0
4.8
.6
104.0
110.0
109.7
99.6
124.7
105.7
106.9
107.2
102.9
123.3
105.4
108.5
106.0
102.4
124.4
104.7
108.0
110.4
100.4
125.6
104.6
105.7
112.8
100.0
125.4
103.7
109.0
109.7
99.2
124.3
102.4
106.4
115.8
96.8
120.3
102.0
113.6
110.8
96.8
118.8
101.1
110.7
108.6
94.2
132.1
99.0
108.3
114.5
91.0
125.6
98.5
110.1
107.7
91.5
126.9
97.7
108.4
109.1
91.0
121.9
97.0
104.5
103.4
91.7
121.2
97.1
106.3
107.2
91.0
120.0
491,493PT
492.493PT
7.7
6.2
1.6
113.9
117.2
101.9
112.8
115.2
102.0
115.2
118.9
98.3
118.7
121.0
108.4
118.3
119.8
111.7
120.2
121.2
115.7
120.3
122.6
109.7
116.5
120.3
98.7
110.6
114.6
92.0
111.8
115.2
96.0
114.7
116.2
108.4
112.3
114.1
104.3
115.5
117.3
107.1
116.2
118.1
107.7
80.5
134.7
134.6
134.9
134.5
135.1
134.6
134.4
135.3
135.7
136.2
136.0
136.3
136.9
137.6
83.6
130.2
130.2
130.6
128.8
128.6
130.6
130.0
130.8
130.9
131.1
130.8
131.2
131.7
132.4
5.9
515.6
482.7
490.7
502.9
511.8
522.5
538.3
552.1
562.8
571.2
576.6
580.7
593.1
609.3
81.1
120.1
120.9
121.1
119.2
118.9
120.6
119.9
120.4
120.4
120.5
120.1
120.5
120.8
121.4
79.5
118.5
119.3
119.5
117.5
117.2
119.0
118.1
118.7
118.8
118.9
118.5
118.9
119.2
119.6
2,540.8
67
68
69
70
71
72
73
74
75
76
77
78
92 Mining
Metal
93
94
Coal
95
Oil and gas extraction
96
Stone and earth minerals
97 Utilities
Electric
98
99
Gas
SPECIAL AGGREGATES
100 Manufacturing excluding motor
vehicles and parts
101 Manufacturing excluding
computer and office
equipment
102 Computers, communications
equipment, and
semiconductors
103 Manufacturing excluding
computers and
semiconductors
104 Manufacturing excluding
computers, communications
equipment, and
semiconductors
Gross value (billions of 1992 dollars, annual rates)
Major Markets
105 Products, total
2,001.9
2,489.8
2,489.8
2,498.5
2,470.3
2,454.6
2,525.1
2,501.0
2,519.7
2,511.6
2,513.9
2,527.3
2,527.7
2,530.9
106 Final
1,552.1
1,958.0
1,961.6
1,966.1
1,938.2
1,915.6
1,985.9
1,966.4
1,982.3
1,973.4
1,972.7
1,982.5
1,983.9
1,984.0
1,990.4
Consumer goods
107
Equipment
108
109 Intermediate
1,049.6
502.5
449.9
1,212.3
746.9
533.6
1,224.8
739.9
529.7
1,225.2
744.2
533.6
1,201.8
740.1
532.6
1,185.0
734.3
538.4
1,227.4
762.5
540.3
1,208.2
762.7
535.7
1,217.1
769.8
538.7
1,212.6
765.2
539.1
1,215.0
762.0
541.9
1,227.4
758.8
545.4
1,229.6
758.0
544.6
1,225.0
763.1
547.3
1,231.3
763.0
550.6
1. Data in this table appear in the Board's G.17 (419) monthly statistical release. The data
are also available on the Board's web site, http://www.federalreserve.gov/releases/gl7. The
latest historical revision of the industrial production index and the capacity utilization rates
was released in November 1998. The recent annual revision is described in an article in the
January 1999 issue of the Bulletin. For a description of the methods of estimating industrial
production and capacity utilization, see "Industrial Production and Capacity Utilization:
Historical Revision and Recent Developments," Federal Reserve Bulletin, vol. 83 (February
1997), pp. 67-92, and the references cited therein. For details about the construction of
individual industrial production series, see "Industrial Production: 1989 Developments and
Historical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204.
2. Standard industrial classification.
A42
2.14
Domestic Nonfinancial Statistics • July 1999
HOUSING A N D CONSTRUCTION
Monthly figures at seasonally adjusted annual rates except as noted
1998
Item
1996
1997
1999
1998
June
July
Aug.
Sept.
Oct.
Nov.
Jan. r
Feb. r
Mar.
l,708 r
1,296 r
412 r
1,750
1,383
367
999
688
311
1,440
1,150
290
382
1,778
1,279
499
1,820
1,393
427
1,011
697
314
1,648
1,292
356
390
1,738
1,306
432
1,752
1,380
372
1,032
712
320
1,530
1,250
280
381
1,654
1,242
412
1,751
1,398
353
1,035
716
319
1,723
1,378
345
383
Dec.
Private residential real estate activity (thousands of units except as noted)
NEW UNITS
1
2
3
4
5
6
7
8
9
10
11
12
13
Permits authorized
One-family
Two-family or more
Started
One-family
Two-family or more
Under construction at end of period1
One-family
Two-family or more
Completed
One-family
Two-family or more
Mobile homes shipped
Merchant builder activity in
one-family units
14 Number sold
15 Number for sale at end of period1
Price of units sold
of dollars)2
16 Median
17 Average
1,53 l r
l,143 r
388 r
1,626
1,274
352
930
639
291
1,480
1,169
311
362
1,626 r
l,191 r
435 r
1,719
1,306
413
938
642
296
1,549
1,230
319
380
1,670 r
l,202 r
468 r
1,615
1,264
351
939
644
295
1,517
1,183
334
368
l,569 r
l,171 r
398 r
1,576
1,251
325
946
648
298
1,459
1,184
275
369
l,726 r
l,210 r
516 r
1,698
1,298
400
968
659
309
1,455
1,164
291
352
l,688 r
1,254 r
434 r
1,654
1,375
279
971
667
304
1,600
1,254
346
389
886
300
909
286
883
283
836
285
861
289
903
293
985
292
958 r
295
908
296
890
298
909
302
146.0
176.2
152.5 r
181.9
148.0
175.9
149.9
179.8
154.9
186.5
155.0
182.7
154.5
182.8
151.0
178.6
152.5 r
183.3 r
152.5
182.0
155.4
187.8
153.0
188.8
4,196 r
4,381 r
4,970 r
5,080 r
5,170 r
4,810 r
4,960 r
4,940 r
5,020 r
5,340 r
5,060
5,140
5,420
115.8 r
141.8 r
121.8 r
150.5 r
128.4 r
159.1 r
131.3 r
164.6 r
131.9 r
164.9 r
130.8 r
162.0 r
129.4 r
158.9 r
128.1 r
157.7 r
129.4 r
159.9 r
128.5 r
159.6 r
130.3
162.8
128.1
159.6
129.6
162.3
1,426
1,070
356
1,477
1,161
316
819
584
235
1,406
1,123
283
361
1,441
1,062
379
1,474
1,134
340
834
570
264
1,406
1,120
285
354
1,604
1,184
421
1,617
1,271
346
935
638
297
1,473
1,158
315
372
757
326
804
287
140.0
166.4
(thousands
EXISTING UNITS (one-family)
18 Number sold
Price of units sold
of dollars)2
19 Median
20 Average
(thousands
Value of new construction (millions of dollars) 3
CONSTRUCTION
21 Total p u t in place
581,813
618,051
654,528
650341
658,673
663,300
670,133
668,287
670,996
679,428
691,050
704,564
708,084
22 Private
23
Residential
24
Nonresidential
25
Industrial buildings
26
Commercial buildings
27
Other buildings
28
Public utilities and other
444,743
255,570
189,173
32,563
75,722
30,637
50,252
470,969
265,536
205,433
31,417
83,727
37,382
52,906
508,539
295,586
212,953
30,340
88,131
38,111
56,371
503,592
291,907
211,685
30,067
88,480
37,334
55,804
511,514
299,300
212,214
28,616
88,310
37,406
57,882
516,601
300,612
215,989
32,302
86,243
38,305
59,139
521,050
304,993
216,057
30,300
87,553
38,309
59,895
523,642
306,264
217,378
29,246
90,986
37,538
59,608
525,453
307,259
218,194
30,011
93,644
37,793
56,746
531,004
311,529
219,475
28,971
96,033
39,149
55,322
537,969
317,630
220,339
28,659
94,365
38,380
58,935
546,446
319,884
226,562
30,399
97,532
39,758
58,873
549,543
326,312
223,231
28,785
96,796
38,738
58,912
29 Public
30
Military
31
Highway
32
Conservation and development
33
Other
137,070
2,639
41,326
5,926
87,179
147,082
2,625
45,246
5,628
93,583
145,989
2,725
44,742
5,529
92,993
146,749
2,659
44,541
5,989
93,560
147,159
3,325
43,809
5,475
94,550
146,699
3,187
44,291
5,442
93,779
149,083
2,325
45,719
5,904
95,135
144,644
2,568
45,166
5,146
91,764
145,544
2,502
43,721
5,643
93,678
148,425
2,608
44,269
5,539
96,009
153,080
2,060
50,434
5,859
94,727
158,118
2,781
52,265
6,361
96,711
158,541
2,364
54,283
6,120
95,774
1. Not at annual rates.
2. Not seasonally adjusted.
3. Recent data on value of new construction may not be strictly comparable with data for
previous periods because of changes by the Bureau of the Census in its estimating techniques.
For a description of these changes, see Construction Reports ( C - 3 0 - 7 6 - 5 ) , issued by the
Census Bureau in July 1976.
SOURCE. Bureau of the Census estimates for all series except (1) mobile homes, which are
private, domestic shipments as reported by the Manufactured Housing Institute and seasonally adjusted by the Census Bureau, and (2) sales and prices of existing units, which are
published by the National Association of Realtors. All back and current figures are available
from the originating agency. Permit authorizations are those reported to the Census Bureau
from 19,000 jurisdictions beginning in 1994.
Selected Measures
2.15
A43
CONSUMER A N D PRODUCER PRICES
Percentage changes based on seasonally adjusted data except as noted
Change from 12
months earlier
Change from 3 months earlier
(annual rate)
Item
1998'
1998
Apr.
Change from 1 month earlier
1999r
1998
Mar.
Dec.
Jan.
Feb.
Index
level,
Apr.
1999 1
1999
1999
Apr.
June
Sept.
Dec.
Mar.
Apr.
CONSUMER PRICES2
(1982-84=100)
1.4
2.3
2.2
1.5
2.0
1.5
.1
.1
.1
.2
.7
166.2
2.0
-7.4
2.1
.2
3.0
2.3
3.0
2.2
.8
2.8
2.3
-3.4
2.6
1.7
2.8
2.5
-9.0
2.3
1.1
3.0
2.8
-5.1
2.5
2.5
2.5
1.7
5.8
.9
-3.0
2.7
.1
-1.1
.3
.6
.2
.5
-.2
.1
.0
.2
.1
.0
.1
-.4
.2
-.2
1.6
.1
-.3
.3
.1
6.1
.4
.6
.4
163.4
105.0
176.8
144.9
195.0
7 Finished goods
8
Consumer foods
9
Consumer energy
10
Other consumer goods
11
Capital equipment
-.9
-.4
-8.7
1.4
-.6
1.1
-.4
1.5
2.7
.0
-.3
-.6
-3.1
1.4
-1.2
.6
1.8
-9.2
3.0
.9
2.2
.3
-8.9
8.3
.3
.9
2.1
6.8
-.5
-.3
,5r
,0r
— 1.8r
1.8r
-.1
,4r
1.5r
1.4r
-.1
-.1
-.4
-1.4
-1.0
-.1
.1
.2
.4
1.2
.1
.0
.5
-.9
5.1
.0
.0
131.8
133.2
75.8
151.3
137.7
Intermediate materials
12 Excluding foods and feeds
13 Excluding energy
-1.1
-.1
-1.2
-1.4
-1.6
-1.2
-2.2
-1.8
-4.5
-2.7
.7
-.9
-,7r
-.2'
.2'
-A'
-.4
-.2
.3
.1
.7
.2
122.3
132.2
Crude materials
14 Foods
15 Energy
16 Other
-9.3
-4.8
-5.6
-9.5
-8.5
-12.7
-3.3
-14.6
-5.8
-19.6
-25.3
-19.9
-7.0
13.5
-24.3
4.1
-16.9
1.2
-4.3r
—4.0r
- 1.7r
5.3r
—2.8r
-2.8
-7.4
1.1
-1.3
6.1
-.8
-2.5
8.5
-1.1
95.8
66.5
128.9
1 All items
7 Food
3 Energy items
4 All items less food and energy
Commodities
6
Services
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.
.R
SOURCE. US. Department of Labor, Bureau of Labor Statistics.
A42
2.16
Domestic Nonfinancial Statistics • July 1999
GROSS DOMESTIC PRODUCT AND INCOME
Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates
1998
Account
1996
1997
1999
1998
Ql
Q2
Q3
Q4
Ql
GROSS DOMESTIC PRODUCT
1 Total
7,661.6
8,110.9
8,511.0
8,384.2
8,440.6
8,537.9
8,681.2
8,799.7
By source
Personal consumption expenditures
Durable goods
Nondurable goods
Services
5,215.7
643.3
1,539.2
3,033.2
5,493.7
673.0
1,600.6
3,220.1
5,807.9
724.7
1,662.4
3,420.8
5,676.5
705.1
1,633.1
3,338.2
5,773.7
720.1
1,655.2
3,398.4
5,846.7
718.9
1,670.0
3,457.7
5,934.8
754.5
1,691.3
3,488.9
6,049.2
771.2
1,735.6
3,542.4
6 Gross private domestic investment
/
Fixed investment
8
Nonresidential
9
Structures
10
Producers' durable equipment
11
Residential structures
1,131.9
1,099.8
787.9
216.9
571.0
311.8
1,256.0
1,188.6
860.7
240.2
620.5
327.9
1,367.1
1,307.8
938.2
246.9
691.3
369.6
1,366.6
1,271.1
921.3
245.0
676.3
349.8
1,345.0
1,305.8
941.9
245.4
696.6
363.8
1,364.4
1,307.5
931.6
246.2
685.4
375.8
1,392.4
1,346.7
957.9
250.9
706.9
388.9
1,415.9
1,376.1
971.1
253.2
717.9
405.0
32.1
24.5
67.4
63.1
59.3
52.7
95.5
90.5
39.2
31.5
57.0
49.3
45.7
39.3
39.8
36.1
-91.2
873.8
965.0
-93.4
965.4
1,058.8
-151.2
959.0
1,110.2
-123.7
973.3
1,097.1
-159.3
949.6
1,108.9
-165.5
936.2
1,101.7
-156.2
976.8
1,133.0
-203.1
958.1
1,161.2
17 Government consumption expenditures and gross investment
18
Federal
19
State and local
1,405.2
518.4
886.8
1,454.6
520.2
934.4
1,487.1
520.6
966.5
1,464.9
511.6
953.3
1,481.2
520.7
960.4
1,492.3
519.4
972.9
1,510.2
530.7
979.5
1,537.7
536.9
1,000.8
By major type of product
20 Final sales, total
21
Goods
22
Durable
23
Nondurable
24
Services
25
Structures
7,629.5
2,780.3
1,228.8
1,551.6
4,179.5
669.7
8,043.5
2,911.2
1,310.1
1,601.0
4,414.1
718.3
8,451.6
3,044.7
1,391.0
1,653.7
4,641.0
765.9
8,288.7
3,005.8
1,376.9
1,628.8
4,538.4
744.6
8,401.3
3,025.3
1,380.8
1,644.4
4,619.5
756.6
8,480.9
3,029.0
1,373.0
1,655.9
4,678.5
773.5
8,635.5
3,118.8
1,433.1
1,685.7
4,727.7
789.0
8,759.9
3,145.7
1,429.0
1,716.7
4,795.4
818.8
32.1
20.8
11.4
67.4
33.6
33.8
59.3
25.2
34.1
95.5
49.9
45.6
39.2
4.5
34.7
57.0
19.5
37.5
45.7
27.0
18.7
39.8
18.1
21.7
6,994.8
7,269.8
7,551.9
7,464.7
7,498.6
7,566.5
7,677.7
7,754.7
30 Total
6,256.0
6,646.5
6,994.7
6,875.0
6,945.5
7,032.3
7,126.0
7,251.0
31 Compensation of employees
32
Wages and salaries
33
Government and government enterprises
34
Other
35
Supplement to wages and salaries
36
Employer contributions for social insurance
37
Other labor income
4,409.0
3,640.4
640.9
2,999.5
768.6
381.7
387.0
4,687.2
3,893.6
664.2
3,229.4
793.7
400.7
392.9
4,981.0
4,153.9
689.3
3,464.6
827.1
420.1
406.9
4,882.8
4,065.9
679.5
3,386.4
816.8
414.1
402.8
4,945.2
4,121.6
685.8
3,435.8
823.5
417.9
405.7
5,011.6
4,181.1
692.7
3,488.4
830.5
422.1
408.4
5,084.3
4,246.8
699.2
3,547.6
837.5
426.5
411.0
5,163.9
4,314.5
711.6
3,603.0
849.4
434.7
414.7
527.7
488.8
38.9
551.2
515.8
35.5
577.2
548.5
28.7
564.2
536.8
27.4
571.7
544.0
27.7
576.1
550.9
25.2
596.9
562.2
34.7
601.0
575.5
25.5
2
3
4
5
12
13
Change in business inventories
Nonfarm
14 Net exports of goods and services
Exports
15
16
Imports
26 Change in business inventories
27
Durable goods
28
Nondurable goods
MEMO
29 Total G D P in chained 1992 dollars
NATIONAL INCOME
38 Proprietors' income 1
39
Business and professional 1
Farm'
40
41 Rental income of persons 2
150.2
158.2
162.6
158.3
161.0
163.6
167.5
168.9
42 Corporate profits'
Profits before tax 3
43
44
Inventory valuation adjustment
Capital consumption adjustment
45
750.4
680.2
-1.2
71.4
817.9
734.4
6.9
76.6
824.6
717.8
14.5
92.3
829.2
719.1
25.3
84.9
820.6
723.5
7.8
89.4
827.0
720.5
11.7
94.8
821.7
708.1
13.4
100.2
853.5
738.4
10.4
104.7
46 Net interest
418.6
432.0
449.3
440.5
447.1
454.0
455.6
463.6
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.
3. For after-tax profits, dividends, and the like, see table 1.48.
SOURCE. U.S. Department of Commerce, Survey of Current Business.
Selected Measures
2.17
A43
PERSONAL INCOME A N D SAVING
Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates
1999
1998
Account
1996
1997
1998
Ql
Qi
Q2
Q3
Q4
7,003.9
7,081.9
7,160.8
7,257.9
7,350.7
4,314.5
1,047.0
759.0
969.9
1,586.0
711.6
414.7
601.0
575.5
25.5
168.9
268.8
770.2
1,175.7
598.0
PERSONAL INCOME AND SAVING
1
Total personal income
6,425.2
2 Wage and salary disbursements
Commodity-producing industries
3
4
Manufacturing
Distributive industries
6
Service industries
7
Government and government enterprises
8
9
10
11
17
13
14
15
16
17
Other labor income
Proprietors' income 1
Business and professional 1
Rental income of persons 2
Dividends
Personal interest income
Transfer payments
Old age survivors, disability, and health insurance benefits
LESS: Personal contributions for social insurance
18 EQUALS: Personal income
6,784.0
7,126.1
3,631.1
909.0
674.6
823.3
1,257.9
640.9
3,889.8
975.0
719.5
879.8
1,370.8
664.2
4,149.9
1,026.9
751.5
939.6
1,494.0
689.3
4,061.9
1,019.0
750.4
918.9
1,444.5
679.5
4,117.6
1,023.2
750.8
932.2
1,476.4
685.8
4,177.1
1,028.0
750.9
945.8
1,510.6
692.7
4,242.8
1,037.4
754.1
961.5
1,544.6
699.2
387.0
527.7
488.8
38.9
150.2
248.2
719.4
1,068.0
538.0
392.9
551.2
515.8
35.5
158.2
260.3
747.3
1,110.4
565.9
406.9
577.2
548.5
28.7
162.6
263.1
764.8
1,149.0
586.5
402.8
564.2
536.8
27.4
158.3
261.6
757.0
1,139.0
581.6
405.7
571.7
544.0
27.7
161.0
262.1
763.0
1,145.8
585.0
408.4
576.1
550.9
25.2
163.6
263.0
769.2
1,152.9
589.0
411.0
596.9
562.2
34.7
167.5
265.7
769.9
1,158.3
590.6
306.3
326.2
347.4
340.9
345.1
349.5
354.1
363.2
6,425.2
6,784.0
7,126.1
7,003.9
7,081.9
7,160.8
7,257.9
7,350.7
890.5
989.0
1,098.3
1,066.8
1,092.9
1,108.4
1,124.9
1,135.9
20 EQUALS: Disposable personal income
5,534.7
5,795.1
6,027.9
5,937.1
5,988.9
6,052.4
6,133.1
6,214.7
21
LESS: Personal outlays
5,376.2
5,674.1
6,000.2
5,864.0
5,963.3
6,039.8
6,133.6
6,249.8
22 EQUALS: Personal saving
158.5
121.0
27.7
73.0
25.6
12.6
-.6
-35.0
26,335.7
17,893.0
18,989.0
27,136.2
18,340.9
19,349.0
27,938.9
19,065.0
19,790.0
27,718.8
18,771.1
19,632.0
27,783.0
19,007.8
19,719.0
27,972.1
19,156.3
19,829.0
28,299.8
19,336.4
19,980.0
28,509.8
19,606.8
20,141.0
2.9
2.1
.5
1.2
.4
.2
.0
-.6
27 Gross saving
1,274.5
1,406.3
1,468.0
1,482.5
1,448.5
1,474.5
1,466.6
1,498.5
28 Gross private saving
1,114.5
1,141.6
1,090.4
1,130.1
1,079.0
1,078.7
1,073.7
1,062.0
79 Personal saving
30 Undistributed corporate profits 1
31 Corporate inventory valuation adjustment
158.5
262.4
-1.2
121.0
296.7
6.9
27.7
305.4
14.5
73.0
312.0
25.3
25.6
300.9
7.8
12.6
304.8
11.7
-.6
303.9
13.4
-35.0
322.1
10.4
Capital consumption
37
33 Noncorporate
452.0
232.3
477.3
242.8
500.6
252.7
492.5
248.6
497.8
250.7
503.1
254.2
508.9
257.5
514.8
260.1
34 Gross government saving
35
Federal
36
Consumption of fixed capital
37
Current surplus or deficit ( - ) , national accounts
38
State and local
39
Consumption of fixed capital
40
Current surplus or deficit ( - ) , national accounts
160.0
-39.6
70.6
-110.3
199.7
77.1
122.6
264.7
49.5
70.6
-21.1
215.2
81.1
134.1
377.6
142.5
69.7
72.8
235.2
85.0
150.2
352.4
128.7
69.9
58.8
223.7
83.5
140.2
369.4
143.9
69.5
74.4
225.6
84.3
141.3
395.7
161.6
69.6
92.0
234.2
85.4
148.7
392.9
135.8
70.0
65.8
257.1
86.6
170.5
436.5
180.9
69.5
111.4
255.5
87.5
168.1
41 Gross investment
1,242.3
1,350.5
1,391.5
1,428.4
1,362.7
1,372.5
1,402.4
1,407.5
47 Gross private domestic investment
43 Gross government investment
44 Net foreign investment
1,131.9
229.7
-119.2
1,256.0
235.4
-140.9
1,367.1
237.0
-212.6
1,366.6
237.4
-175.6
1,345.0
232.5
-214.8
1,364.4
239.7
-231.6
1,392.4
238.3
-228.3
1,415.9
255.1
-263.6
-32.2
-55.8
-76.5
-54.1
-85.7
-102.0
-64.2
-91.0
19
LESS: Personal tax and nontax payments
MEMO
Per capita (chained 1992 dollars)
73 Gross domestic product
24 Personal consumption expenditures
25 Disposable personal income
26 Saving rate (percent)
GROSS SAVING
allowances
45 Statistical discrepancy
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.
SOURCE. U.S. Department of Commerce, Survey of Current
Business.
A50
3.10
International Statistics • July 1999
U.S. INTERNATIONAL TRANSACTIONS
Summary
Millions of dollars; quarterly data seasonally adjusted except as noted1
1998
1997
Item credits or debits
1 Balance on current account
2
Merchandise trade balance"
3
Merchandise exports
4
Merchandise imports
Military transactions, net
5
6
Other service transactions, net
7
Investment income, net
8
U.S. government grants
9
U.S. government pensions and other transfers
10
Private remittances and other transfers
11 Change in U.S. government assets other than official
reserve assets, net (increase, —)
1997
1996
-134,915
-191,337
611,983
-803,320
4,684
78,079
14,236
-15,023
-4,442
-21,112
1998
-155,215
-197.954
679,325
-877,279
6.781
80,967
-5.318
-12,090
-4,193
-23,408
-233,448
-247,985
671,055
-919,040
4,072
74,799
-22,479
-12,492
-4,304
-25,059
Q4
Q1
Q2
Q3
Q4 P
-45,043
-49,839
174,284
-224,123
1,103
20,277
-4,247
-5,213
-1,069
-6,055
-47,018
-56,033
171,190
-227,223
1,527
19,134
-2,218
- 2,266
-1,073
-6,089
-56,971
-64,778
164,543
-229,321
1,043
19,500
-3,346
-2,063
-1,073
-6,254
-65,694
-64,899
163,414
-228,313
829
17,573
-9,165
-2,663
-1,080
-6,289
-63,765
-62,275
171,908
-234,183
673
18,592
-7,754
-5,500
-1,078
-6,423
-708
174
-836
29
-388
-433
174
-189
12 Change in U.S. official reserve assets (increase. —)
13
Gold
14
Special drawing rights (SDRs)
15
Reserve position in International Monetary Fund
16
Foreign currencies
6,668
0
370
-1,280
7,578
-1,010
0
-350
-3,575
2,915
-6,784
0
-149
-5,118
-1,517
-4,524
0
-150
-4,221
-153
-444
0
-182
-85
-177
-1,945
0
72
-1,031
-986
-2,026
0
188
-2,078
-136
-2,369
0
-227
-1,924
-218
17 Change in U.S. private assets abroad (increase, —)
18
Bank-reported claims 3
19
Nonbank-reported claims
20
U.S. purchases of foreign securities, net
21
U.S. direct investments abroad, net
-374,761
-91.555
-86,333
-115,801
-81,072
-477,666
-147,439
-120,403
-87,981
-121,843
-297,765
-31,040
-45,440
-89,352
-131,933
-118,946
-27,539
-47,907
-8,030
-35,470
-45,193
3,074
-6,596
-6,973
-34,698
-107,786
-24,615
-14,327
-27,878
-40,966
-58,543
-31,996
-20,320
17,056
-23,283
-86,240
22,497
22 Change in foreign official assets in United States (increase, + )
23
U.S. Treasury securities
24
Other U.S. government obligations
25
Other U.S. government liabilities 4
26
Other U.S. liabilities reported by U.S. banks 3
Other foreign official assets 5
27
127,344
115,671
5,008
-362
5,704
1,323
15,817
-7.270
4,334
-2.521
21.928
-654
-22,112
-9,946
6,332
-2,506
-12,515
-3,477
-26,979
-24,578
86
-244
-3,250
1,007
11,324
11,336
2,610
-1,059
-607
-956
-10,274
-20,318
254
-422
9,380
832
-46,347
-32,811
1,906
-264
-12,684
-2,494
23,185
31,847
1,562
-761
-8,604
-859
28 Change in foreign private assets in United States (increase. + )
29
U.S. bank-reported liabilities'
30
U.S. nonbank-reported liabilities
31
Foreign private purchases of U.S. Treasury securities, net
32
U.S. currency flows
33
Foreign purchases of other U.S. securities, net
34
Foreign direct investments in United States, net
436,013
16,478
39,404
154,996
17,362
130,151
77,622
717,624
148.059
107.779
146.710
24.782
196,845
93,449
564,594
42,568
43,803
48,060
16,622
217,312
196,229
247,470
89,643
47,390
35,301
9,900
36,783
28,453
84,313
-50,497
32,707
-1,701
746
77.019
26,039
175,241
37,670
18,040
26,916
2,349
71,017
19,249
145,089
76,993
11,875
-1,438
7,277
20,041
30,341
159,951
-21,598
35 Allocation of special drawing rights
36 Discrepancy
37
Due to seasonal adjustment
38
Before seasonal adjustment
0
-59,641
0
-99,724
0
-3,649
-59,641
-99.724
-3,649
0
-52,007
3,528
-55,535
0
-2,594
6,769
-9,363
0
2,168
2,024
144
0
27,347
-10,195
37,542
0
-30,573
1,399
-31,972
-71,557
-32,983
24,283
6,250
49,235
120,600
MEMO
Changes in official assets
39 U.S. official reserve assets (increase, —)
40 Foreign official assets in United States, excluding line 25
(increase, + )
41 Change in Organization of Petroleum Exporting Countries official
assets in United States (part of line 22)
6,668
-1.010
-6,784
-4,524
-444
-1,945
-2,026
-2,369
127,706
18,338
-19,606
-26,735
12,383
-9,852
-46,083
23,946
14,911
10,822
-1,282
-968
-494
-9,647
3,598
1. Seasonal factors are not calculated for lines 12-16, 18-20, 22-34, and 38^10.
2. Data are on an international accounts basis. The data differ from the Census basis data,
shown in table 3.11, for reasons of coverage and timing. Military exports are excluded from
merchandise trade data and are included in line 5.
3. Reporting banks include all types of depository institutions as well as some brokers and
dealers.
4. Associated primarily with military sales contracts and other transactions arranged with
or through foreign official agencies.
5. Consists of investments in U.S. corporate stocks and in debt securities of private
corporations and state and local governments.
SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current
Business.
Summary Statistics
3.11
A51
U.S. FOREIGN TRADE 1
Millions of dollars; monthly data seasonally adjusted
1998
Item
1996
1997
1999
1998
Sept.
Oct.
Nov.
Dec.
Jan.
Feb. r
Mar.p
1 Goods and services, balance
2
Merchandise
3
Services
-108,574
-191,337
82,763
-110,207
-197,955
87,748
-169,288
-248,159
78,871
-14,595
-20,914
6,319
-13,963
-20,280
6,317
-15,165
-21,669
6,504
-14,055
-20,499
6,444
-16,808
-23,259
6,451
-19,146
-25,934
6,788
-19,698
-26,456
6,758
4 Goods and services, exports
5
Merchandise
6
Services
850,775
611,983
238,792
937,593
679,325
258,268
931,026
670,641
260,385
77,443
55,912
21,531
80,415
58,246
22,169
78,942
57,110
21,832
77,873
56,133
21,740
77,082
55,168
21,914
76,799
54,357
22,442
77,520
54,881
22,639
7 Goods and services, imports
8
Merchandise
9
Services
-959,349
-803,320
-156,029
-1,047,799
-877,279
-170,520
-1,100,314
-918,800
-181,514
-92,038
-76,826
-15,212
-94,378
-78,526
-15,852
-94,107
-78,779
-15,328
-91,928
-76,632
-15,296
-93,890
-78,427
-15,463
-95,945
-80,291
-15,654
-97,218
-81,337
-15,881
1. Data show monthly values consistent with quarterly figures in the U.S. balance of
payments accounts.
3.12
SOURCE. FT900, U.S. Department of Commerce, Bureau of the Census and Bureau of
Economic Analysis.
U.S. RESERVE ASSETS
Millions of dollars, end of period
1998
Asset
1 Total
2 Gold stock, including Exchange
Stabilization Fund 1
3 Special drawing rights 2-3
4 Reserve position in International Monetary
Fund 2
5 Foreign currencies 4
1995
1996
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.P
85,832
75,090
69,954
75,66
79,183
77,683
81,755
80,675
75,322
74,359
73,694
11,050
11,037
11,049
10,312
11,050
10,027
11,044
10,106
11,041
10,379
11,041
10,393
11,041
10,603
11,046
10,465
11,048
9,474
11,049
9,682
11,049
9,634
14,649
49,096
15,435
38,294
18,071
30,809
21,644
32,882
22,278
35,485
22,049
34,200
24,111
36,001
24,129
35,035
24,283
30,517
23,231
30,397
23,054
29,957
SDR holdings and reserve positions in the IMF also have been valued on this basis since July
1974.
3. Includes allocations of SDRs by the International Monetary Fund on Jan. 1 of the year
indicated, as follows: 1970—$867 million; 1971—$717 million; 1972—$710 million; 1979—
$1,139 million; 1980—$1,152 million; 1981—$1,093 million; plus net transactions in SDRs.
4. Valued at current market exchange rates.
1. Gold held "under earmark" at Federal Reserve Banks for foreign and international
accounts is not included in the gold stock of the United States; see table 3.13, line 3. Gold
stock is valued at $42.22 per fine troy ounce.
2. Special drawing rights (SDRs) are valued according to a technique adopted by the
International Monetary Fund (IMF) in July 1974. Values are based on a weighted average of
exchange rates for the currencies of member countries. From July 1974 through December
1980, sixteen currencies were used; since January 1981, five currencies have been used. U.S.
3.13
1999
1997
FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS'
Millions of dollars, end of period
1998
Asset
1995
1996
Sept.
1 Deposits
Held in custody
2 U.S. Treasury securities 2
3 Earmarked gold 3
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.p
386
167
457
347
154
211
167
233
200
166
260
522,170
11,702
638,049
11,197
620,885
10,763
578,403
10,457
588,768
10,403
08,060
10,355
607,574
10,343
612,670
10,343
615,139
10,347
610,649
10,347
606,662
10,340
1. Excludes deposits and U.S. Treasury securities held for international and regional
organizations.
2. Marketable U.S. Treasury bills, notes, and bonds and nonmarketable U.S. Treasury
securities, in each case measured at face (not market) value.
1999
1997
3. Held in foreign and international accounts and valued at $42.22 per fine troy ounce; not
included in the gold stock of the United States.
A52
3.15
International Statistics • July 1999
SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS
Millions of dollars, end of period
1999
1998
Item
1996
1997
Sept.
1 Total 1
2
3
4
6
7
8
9
10
11
12
By type
Liabilities reported by banks in the United States
U.S. Treasury bills and certificates 3
U.S. Treasury bonds and notes
Marketable
Nonmarketable 4
U.S. securities other than U.S. Treasury securities 5
By area
Europe 1
Canada
Latin America and Caribbean
Asia
Africa
Other countries
Dec.
Jan.
Feb.
751,523 r
757,934
762,236
761,013
768,107
776,505
732,527
113,098
198,921
135,384
148,301
131,048 r
128,146
134,644 r
128,598
125,173 r
133,702
123,915
134,141
121,834
136,840
125,275
135,471
124,581
141,941
384,045
5,968
54,501
428,004
5,994
58,822
406,009
6,350
60,974
415,010
5,997
60,725
426,853
6,035
59,760
432,127
6,074
61,677
434,601
6,113
62,848
430,902
6,151
63,214
427,626
6,191
67,768
246,983
38,723
79,949
403,265
7,242
6,457
252,289
36,177
96,942
400,144
9,981
7,058
247.302
33,598
79,164
383,08 l r
11,584
3,884 r
259,698
34,644
77,469
385,523 r
10,976
2,750 r
261,028
36,885
76,800 r
389,359
10,084
3,453
256,026
36,715
79,417
398,717
10,059
3,086
258,298
37,471
73,986
405,425
10,144
2,998
256,164
38,462
75,986
404,111
9,838
2,538
253,808
39,611
72,828
414,933
9,906
3,107
LIABILITIES TO, A N D CLAIMS ON, FOREIGNERS
Payable in Foreign Currencies
744,974
Mar.P
Nov.
r
756,533
1. Includes the Bank for International Settlements.
2. Principally demand deposits, time deposits, bankers acceptances, commercial paper,
negotiable time certificates of deposit, and borrowings under repurchase agreements.
3. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official
institutions of foreign countries.
4. Excludes notes issued to foreign official nonreserve agencies. Includes current value of
zero-coupon Treasury bond issues to foreign governments as follows: Mexico, beginning
March 1988, 20-year maturity issue and beginning March 1990, 30-year maturity issue;
3.16
Oct.
r
Venezuela, beginning December 1990, 3C-year maturity issue; Argentina, beginning April
1993, 30-year maturity issue.
5. Debt securities of U.S. government corporations and federally sponsored agencies, and
U.S. corporate stocks and bonds.
SOURCE. Based on U.S. Department of the Treasury data and on data reported to the
department by banks (including Federal Reserve Banks) and securities dealers in the United
States, and on the 1994 benchmark survey of foreign portfolio investment in the United
States.
Reported by Banks in the United States 1
Millions of dollars, end of period
1998
Item
1 Banks' liabilities
2 Banks' claims
3
Deposits
4
Other claims
5 Claims of banks' domestic customers'
1995
109,713
74,016
22,696
51,320
6,145
1. Data on claims exclude foreign currencies held by U.S. monetary authorities.
1996
103,383
66,018
22,467
43,551
10,978
1997
117,524
83,038
28,661
54,377
8,191
Mar.
June
Sept.
Dec.
100,708
82,209
28,127
54,082
7,926
87,889
68.286
27,387
40,899
7,354
92,934
67,901
27.293
40,608
8,453
101,125
74,013
41,846
32,167
29,975
2. Assets owned by customers of the reporting bank located in the United States that
represent claims on foreigners held by reporting banks for the accounts of the domestic
customers.
Nonbank-Reported
3.17
LIABILITIES TO FOREIGNERS
Payable in U.S. dollars
Data
A53
Reported by Banks in the United States 1
Millions of dollars, end of period
1998
Item
1996
1997
1999
1998
Sept.'
Oct.
Nov.
Dec.
Jan.
Feb.
Mar. p
BY HOLDER AND TYPE OF LIABILITY
1 Total, all foreigners
2 Banks' own liabilities
3
Demand deposits
4
Time deposits 2
5
Other 3
6
Own foreign offices 4
7 Banks' custodial liabilities 5
8
U.S. Treasury bills and certificates 6
9
Other negotiable and readily transferable
instruments 7
10
Other
11 Nonmonetary international and regional organizations 8
12
Banks' own liabilities
13
Demand deposits
14
Time deposits"
15
Other 3
16
17
18
19
Banks' custodial liabilities 5
U.S. Treasury bills and certificates 6
Other negotiable and readily transferable
instruments 7
Other
20 Official institutions'
21
Banks' own liabilities
22
Demand deposits
23
Time deposits 2
24
Other 3
25
26
27
28
Banks' custodial liabilities 5
U.S. Treasury bills and certificates 6
Other negotiable and readily transferable
instruments 7
Other
29 Banks 1 0
30
Banks' own liabilities
31
Unaffiliated foreign banks
32
Demand deposits
33
Time deposits 2
34
Other 3
35
Own foreign offices 4
36
37
38
39
Banks' custodial liabilities 5
U.S. Treasury bills and certificates 6
Other negotiable and readily transferable
instruments 7
Other
40 Other foreigners
41
Banks' own liabilities
42
Demand deposits
43
Time deposits 2
44
Other 3
45
46
47
48
Banks' custodial liabilities 5
U.S. Treasury bills and certificates 6
Other negotiable and readily transferable
instruments 7
Other
..
1,162,148
l,283,027 r
l,346,827 r
1,350,504
l,372,288 r
1,346,457'
l,346,827 r
l,332,425 r
l,340,770 r
1,337,974
758,998
27,034
186,910
143,510
401,544
r
882,980
31,344 r
198,546
168,011
485,079
r
884,529
29,341
151,589
140,753
562,846 r
917,550
33,547
174,183
165,471
544,349
911,548'
32,071
158,664
153,388'
567,425'
880,919'
32,104
149,787'
143,441'
555,587'
884,529'
29,341
151,589
140,753
562,846'
872,307'
33,039
147,456
145,309
546,503'
880,160'
31,905'
153,182'
161,955'
533,118 r
873,062
31,530
151,831
157,104
532,597
403,150
236,874
400,047
193,239
462,298
183,490
432,954
160,598
460,740
168,764
465,538
182,917
462,298
183,490
460,118
185,231
460,610'
184,851
464,912
192,799
72,011
94,265
93,641
113,167
141,103
137,705
142,180
130,176
151,239
140,737
142,399
140,222
141,103
137,705
137,428
137,459
134,109
141,650'
133,352
138,761
13,972
13,355
29
5,784
7,542
11,690
11,486
16
5,466
6,004
11,833
10,850
172
5,793
4,885
15,481
14,128
408
5,763
7,957
12,929'
11,763'
97
5,418
6,248"
11,833
10,850
172
5,793
4,885
13,839
12,829
62
6,161
6,606
19,706'
18,949'
407'
7,215'
11,327'
15,037
14,321
194
6,556
7,571
617
352
204
69
983
636
1,353
435
1,166
509
940
570
983
636
1,010
623
757
549
716
548
265
0
133
2
347
0
818
100
657
0
370
0
347
0
387
0
207
1
168
312,019
79,406
1,511
33,336
44,559
283,685
102,028
2,314
41,396
58,318
258,056
79,149
2,787
28,947
47,415
259,194
84,979
3,607
27,745
53,627
263,242'
84,784"
3,325
26,148
55,311'
258,875"
79,491'
2,744
25,700'
51,047
258,056
79,149
2,787
28,947
47,415
258,674
76,044
3,666
24,176
48,202
260,746
77,262
2,850
25,988
48,424
266,522
76,834
3,393
23,840
49,601
232,613
198,921
181,657
148,301
178,907
134,141
174,215
128,146
178,458"
128,598
179,384
133,702
178,907
134,141
182,630
136,840
183,484
135,471
189,688
141,941
33,266
426
33,151
205
44,092
674
45,512
557
49,555'
305
45,213
469
44,092
674
45,202
588
47,213
800
47,174
573
694,835
562,898
161,354
13,692
89,765
57,897
401,544
815,247 r
641,447 r
156,368 r
16,767 r
83,433
56,168
485,079
885,442'
676,208 r
113,362
14,072
46,273
53,017
562,846'
876,912
688,431
144,082
15,799
71,600
56,683
544,349
899,258'
691,075'
123,650'
15,802
56,193
51,655'
567,425'
885,929'
673,648'
118,061
15,119
51,352
51,590
555,587'
885,442'
676,208'
113,362
14,072
46,273
53,017
562,846'
866,186'
658,114'
111,611
15,327
46,745
49,539
546,503'
854,523'
648,149'
115,031'
15,335
46,745'
52,951
533,118'
851,582
648,591
115,994
13,985
49,149
52,860
532,597
131,937
23,106
173,800
31,915
209,234
35,544
188,481
21,563
208,183'
27,556
212,281
35,213
209,234
35,544
208,072
35,325
206,374
34,472
202,991
36,737
17,027
91,804
35,393
106,492
45,102
128,588
44,990
121,928
48,376'
132,251
45,132
131,936
45,102
128,588
44,087
128,660
40,108
131,794
37,304
128,950
141,322
103,339
11,802
58,025
33,512
172,405
128,019
12,247
68,251
47,521
191,496
118,322
12,310
70,576
35,436
198,917
130,012
13,733
69,075
47,204
196,859
123,926
12,847
70,905
40,174
188,346
115,413
14,007
66,933
34,473
191,496
118,322
12,310
70,576
35,436
193,726
125,320
13,984
70,374
40,962
205,795'
135,800'
13,313'
73,234'
49,253
204,833
133,316
13,958
72,286
47,072
37,983
14,495
44,386
12,954
73,174
13,169
68,905
10,454
72,933
12,101
72,933
13,432
73,174
13,169
68,406
12,443
69,995'
14,359
71,517
13,573
21,453
2,035
24,964
6,468
51,562
8,443
50,860
7,591
52,651
8,181
51,684
7,817
51,562
8,443
47,752
8,211
46,581
9,055'
48,706
9,238
14,573
16,083
27,026
27,455
29,996'
28,858'
27,026
25,858
23,341
23,035
13,307'
12,367'
234
5,802
6,331'
0
MEMO
49 Negotiable time certificates of deposit in custody for
foreigners
1. Reporting banks include all types of depository institutions as well as some brokers and
dealers. Excludes bonds and notes of maturities longer than one year.
2. Excludes negotiable time certificates of deposit, which are included in "Other negotiable and readily transferable instruments."
3. Includes borrowing under repurchase agreements.
4. For U.S. banks, includes amounts owed to own foreign branches and foreign subsidiaries consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory
agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists
principally of amounts owed to the head office or parent foreign bank, and to foreign
branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank.
5. Financial claims on residents of the United States, other than long-term securities, held
by or through reporting banks for foreign customers.
6. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official
institutions of foreign countries.
7. Principally bankers acceptances, commercial paper, and negotiable time certificates of
deposit.
8. Principally the International Bank for Reconstruction and Development, the InterAmerican Development Bank, and the Asian Development Bank. Excludes "holdings of
dollars" of the International Monetary Fund.
9. Foreign central banks, foreign central governments, and the Bank for International
Settlements.
10. Excludes central banks, which are included in "Official institutions."
A54
3.17
International Statistics • July 1999
LIABILITIES TO FOREIGNERS Reported by Banks in the United States'—Continued
1998
Item
1996
1997
1999
1998
Sept.
Nov.
Oct.
Dec.
Jan.
Feb.
Mar. p
AREA
50
Total, all foreigners
1,162,148
l,283,027 r
l,346,827 r
l,350,504 r
l,372,288 r
l,346,457 r
l,346,827 r
l,332,425 r
l,340,770 r
1,337,974
51
Foreign countries
1,148,176
l,271,337 r
l,334,994
r
r
l,359,359
r
r
l,334,994
r
r
l,321,064 r
1,322,937
52
33
54
Europe
Austria
Belgium and Luxembourg
Denmark
Finland
France
Germany
Greece
Italy
Netherlands
Norway
Portugal
Russia
Spain
Sweden
Switzerland
Turkey
United Kingdom
Yugoslavia11
Other Europe and other former U.S.S.R. 12
376,590
5,128
24,084
2,565
1,958
35,078
24,660
1,835
10,946
11,110
1,288
3,562
7,623
17,707
1,623
44,538
6,738
153,420
206
22,521
419,672R
2,717
41,007
1,514
2,246
46,607
23,737
1,552
11,378
7,385
317
2,262
7,968
18,989
1,628
39,023
4,054
181,904
239
25,145R
427,367
3,178
42.818
1,437
1,862
44,616
21,357
2.066
7,103
10,793
710
3,235
2.439
15,775
3,027
50,654
4.286
181.554
258
30,199
450,652R
3,137
33,934
1,578
1,181
50,405
25,821R
2,544
9,183
8,066
688
2,292
3,085
20,485
3,285
48,393
4,264
204,970R
253
27,088
451,350
2,799
39,911
1,813
1,193
47,348
22,024
2.901
7,124
7.251
1,149
2,377
3,735
26,569
3,257
47,332
4,105
202.536
362
27,564
449,567
2,824
42.014
1,675
1,706
48,155R
22,606
2.444
6,378
9,298
797
2,400
2,698
27,017
3,857
50,167
3,842
195,113R
271
26,305
427,367
3.178
42,818
1,437
1.862
44,616
21,357
2,066
7,103
10,793
710
3,235
2.439
15,775
3,027
50,654
4,286
181,554
258
30,199
436,330R
3,070
41,594
1,826
1,643
47,617R
23,111
2,509
6,684
14,792
1,102
2,225
2,438
13.457
2,918
60,348R
5,045
173,542R
287
32,122
418,896
3,274
41,468
1,992
1,800
47,932
23,746
2,447
5,743
12,273
1,022
2,237
2,500
9,315
2,193
47,874
5,639
175,769
237
31,435
35
3b
3/
38
39
60
61
62
63
64
63
66
67
68
69
70
71
72
Canada
73
74
/3
76
Latin America and Caribbean
Argentina
Bahamas
Bermuda
Brazil
British West Indies
Chile
Colombia
Cuba
Ecuador
Guatemala
Jamaica
Mexico
Netherlands Antilles
Panama
Peru
Uruguay
Venezuela
Other
l,335,023
l,333,150
l,318,586
429,636
2,902
38,897
1,200
1,989
44,444
20,315
2,195
6,155
10,580
1,065
2,543
2,231
12,843
3,132
59,871
5,105
177,240
275
36,654
38,920
28,341
30,212
28,701
31,278
29,249
30,212
29,725
28,019
467,529
13,877
88,895
5,527
27,701
251,465
2,915
3,256
21
1,767
1,282
628
31,240
6,099
4,099
834
1,890
17,363
8,670
536,393
20,199
112,217
6,911
31,037
276,418
4,072
3,652
66
2,078
1,494
450
33,972
5,085
4,241
893
2,382
21,601
9,625
554,734 r
561,373 r
18,384
124,249
7,920
18,453
298,567 r
5,725
4,475
62
1,540
1,241
576,008R
17,706
128,893
7,247
17,308
310,229 r
5,598
4,888
57
1,679
1,232
578
38,058
6,255
3,793
799
2,223
19,662
9,803
545,454 r
18,892
115,598
7,241
13,370
298,422 r
4,778
4,124
63
1,510
1,204
524
36,720
6,009
3,774
814
2,240 r
19,631
10,540
554,734 r
19,013
118,085
6,839
15,800
302,472 r
5,010
4,616
62
1,573
1,332
539
37,148
5,010
3,864
840
2,486
19,894
10,151
540,664 r
17,175
121,606
8,969
12,268
287,308 r
5,188
4,535
64
1,525
1,224
565
35,965
5,681
4,499
864
2,380
20,250
10,598
538,465 r
18,245r
118,727
8,370
12,913
285,676 r
5,189
4,462
62 r
1.513
l,338 r
542
35,891
8,406
4,401
828
2,274
19,354
10,274r
551,708
16,891
119,209
7,514
13,841
300,103
5,058
4,636
63
1,606
1,392
551
36,622
7,256
4,196
810
2,378
19,149
10,433
249,083
269,379
307,140
275,755 r
284,441
293,584
307,140
301,454
302,520 r
305,467
30,438
15,995
18,789
3,930
2,298
6,051
117,316
5,949
3,378
10,912
16.285
17,742
18,252
11,840
17,722
4,567
3,554
6,281
143,401
13,041
12,708
20,898
5,250
8,282
7.749
168,236
13,060
12,454
3,324
18.525r
12,080
16,627
5,144
5.470
5,984
142,767
12,979r
15,814
12,802
16,508
5,337
5,671
4,781
156,340
12,505
2,539
7,134
14,718
30,292
13,784
12,361
16,739
5,089
6,247
8,106
164,311
12,396
2,849
6,788
16,370
28,544
13,041
12,708
20,898
5,250
8,282
7,749
168,236
12,454
3,324
7,359
15,609
32,230
14,854
10,980
22,844
5,279
7,909
7,287
161,207
12,446
2,318
7,300
14,655
34,375
15,345
12,211
25,509
5,241
6,172
7,598
161,073
9,990
2,482
6,590
16,157r
34,152 r
13,996
13,183
27,589
6,189
6,675
8,246
161,887
11,127
2,362
6,588
15,453
32,172
105 Africa
106
Egypt
10/
Morocco
South Africa
108
109
Zaire
110
Oil-exporting countries 14
111
Other
8,116
2,012
112
458
10
2,626
2,898
10,347
1,663
138
2,158
10
3,060
3,318
8,905
1,339
97
1,522
5
3,088
2,854
9,110
1,856
98
1,308
6
2,989
2,853
8,658
1,902
73
1,343
13
2,737
2,590
8,465
1,758
85
1,258
9
2,772
2,583
112 Other
113
Australia
114
Other
7,938
6,479
1,459
13,972
12,099
1,339
534
II
78
79
80
81
82
83
84
83
86
87
88
89
90
91
92
93
94
93
96
97
98
99
100
101
102
103
104
China
Mainland
Taiwan
Hong Kong
India
Indonesia
Israel
Japan
Korea (South)
Philippines
Thailand
Middle Eastern oil-exporting countries 13
Other
115 Nonmonetary international and regional organizations . .
116
International 15
117
Latin American regional 16
118
Other regional 17
3,250
6,501
14,959
25,992
541
35,682 r
8,588
3,826
843
2,276
19,180
9,821
2,712
7,359
15,609
32,230
6,664
16,627
30,176
8,905
1,339
97
1,522
9,749
1,288
78
2,358
3,088
2,854
11,098
1,616
88
2,658
6
3,727
3,003
3,291
2,727
8,889
1,498
75
1,659
12
3,017
2,628
7,205
6,304
901
6,636
5,495
1,141
7,444
6,427
1.017
6,533
5,372
1,161
6,407
5,180
1,227
6,636
5,495
1,141
7,997
6,854
1,143
7,072
5,550
1,522
6,613
5,582
1,031
11,690
10,517
424
749
11,833
10,221
594
1,018
15,481r
13,048 r
803
1,630
12,929r
10,638r
1,008
1,283
13,307 r
1 l,398 r
598
1,311
11,833
10,221
594
1,018
13,839
11,787
917
1,135
19,706 r
17.079r
1,411
1,216
15,037
12,545
1,394
1,098
11. Since December 1992, has excluded Bosnia, Croatia, and Slovenia.
12. Includes the Bank for International Settlements. Since December 1992, has
included all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia.
13. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab
Emirates (Trucial States).
14. Comprises Algeria, Gabon, Libya, and Nigeria.
19,013
118.085
6,839
15,800
302,472 r
5,010
4,616
62
1,573
1,332
539
37.148
5,010
3,864
840
2,486
19,894
10,151
31,788
5
7
15. Principally the International Bank for Reconstruction and Development. Excludes
'"holdings of dollars" of the International Monetary Fund.
16. Principally the Inter-American Development Bank.
17. Asian, African, Middle Eastern, and European regional organizations, except the Bank
for International Settlements, which is inclt ded in "Other Europe."
Nonbank-Reported
3.18
Data
A55
BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States 1
Payable in U.S. Dollars
Millions of dollars, end of period
1999
1998
Area or country
1996
1997
1998
1 Total, all foreigners
2 Foreign countries
3 Europe
Austria
4
Belgium and Luxembourg
6
Denmark
Finland
1
8
France
9
Germany
10
Greece
1 1 Italy
Netherlands
1?
13
Norway
Portugal
14
Russia
IS
16
Spain
Sweden
17
18
Switzerland
19
Turkey
20
United Kingdom
21
Yugoslavia 2
Other Europe and other former U.S.S.R.3
22
23 Canada
599,925
708,225
Nov.
Oct.
Sept.
Dec.
Jan.
Feb. r
Mar.p
734,794
768,481 r
749,546 r
757,183 r
734,794
718,269 r
712,950
695,242
r
r
r
731,176
713,263 r
707,524
690,622
225,892
2,634
5,599
1,816
963
18,575
15,115
533
6,168
5,828
645
584
742
4,560
4,338
46,122
1,796
98,959
53
10,862
230,424
1,824
7,073
1,656
1,233
18,583
16,362
637
5,714
6,048
561
888
724
4,260
4,664
50,905
1,870
97,431
54
9,937
226,769
2,759
5,573
1,619
1,351
15,192
16,910
554
6,044
6,675
596
1,205
972
3,041
4,439
51,672
2,077
97,324
54
8,712
744,156
751,875
597,321
705,762
731,176
763,159
165,769
1,662
6,727
492
971
15,246
8,472
568
6,457
7,117
808
418
1,669
3,211
1,739
19,798
1,109
85,234
115
3,956
199,880
1,354
6,641
980
1,233
16,239
12,676
402
6,230
6,141
555
777
1,248
2,942
1,854
28,846
1,558
103,143
52
7,009
233,480
1,043
7,187
2,383
1,070
15,251
15,922
575
7,283
5,734
827
669
789
5,735
4,223
46,880
1,982
106,358
53
9,516
234,967
1,849
8,200
1,059
1,073
17,077
15,375
373
6,510
4,803
640
975
920
7,980
4,319
55,798
1,900
97,436
53
8,627
224,661
2,358
9,245
1,768
1,149
16,307
15,121
415
7,153
5,230
662
885
883
6,051
4,508
43,337
1,848
98,746
53
8,942
228,924
2,311
7,409
2,524
1,050
18,881
17,997
510
6,544
5,686
385
679
760
5,234
5,087
45,858
1,915
97,072
53
8,969
233,480
1,043
7,187
2,383
1,070
15,251
15,922
575
7,283
5,734
827
669
789
5,735
4,223
46,880
1,982
106,358
53
9,516
26,436
27,189
47,212
41,165
37,316
44,830
47,212
42,925
40,801
41,266
340,673
10,184
91,104
6,028
15,357
155,326
8,085
6,462
0
1,341
1,255
602
21,564
6,571
3,390
3,353
934
3,684
5,433
325,524
10,398
88,639
4,091
15,423
146,683
8,074
6,220
0
1,219
1,053
318
20,532
6,666
3,320
3,232
838
3,502
5,316
74 Latin America and Caribbean
Argentina
Bahamas
Bermuda
Brazil
British West Indies
Chile
Colombia
Cuba
Ecuador
Guatemala
Jamaica
Mexico
Netherlands Antilles
Panama
Peru
Uruguay
Venezuela
Other
274,153
7,400
71,871
4,129
17,259
105,510
5,136
6,247
0
1,031
620
345
18,425
25,209
2,786
2,720
589
1,702
3,174
343,730
8,924
89,379
8,782
21,696
145,471
7,913
6,945
0
1,311
886
424
19,428
17,838
4,364
3,491
629
2,129
4,120
342,081
9,553
96,455
4,969
16,193
153,269
8,261
6,523
0
1,400
1,127
239
21,143
6,779
3,584
3,260
1,126
3,089
5,111
373,237
8,777
86,867
10,610
19,073
182,757
8,345
6,813
0
1.458
1,166
305
20,677
10,294
4,226
3,829
955
2,638
4,447
368,394
9,087
88,923
6,585
17,614r
183,152r
8,549
6,764
0
1,444
947
330
22,039
7,323
4,011
3,706
958
2,689
4,273
368,212
9,225
91,171
5,702
17,771r
179,253r
8,824
6,639
0
1,351
1,483
299
22,483
7,696
3,864
3,618
1,040
2,788
5,005
342,081
9,553
96,455
4,969
16,193
153,269
8,261
6,523
0
1,400
1,127
239
21,143
6,779
3,584
3,260
1,126
3,089
5,111
344,347 r
9,713
93,000
5,547
15,616
158,010r
8,232
6,433
0
1,403
1,107
333
21,128
7,403
3,549
3,364
997
3,312
5,200
43 Asia
China
Mainland
44
45
Taiwan
46
Hong Kong
47
India
48
Indonesia
49
Israel
50
Japan
51
Korea (South)
57
Philippines
53
Thailand
Middle Eastern oil-exporting countries 4
54
Other
55
122,478
125,092
98,650
104,668r
104,784r
100,77 r
98,650
90,840
86,502
88,080
1,401
1,894
12,802
1,946
1,762
633
59,967
18,901
1,697
2,679
10,424
8,372
1,579
922
13,991
2,200
2,651
768
59,549
18,162
1,689
2,259
10,790
10,532
1,311
1,041
9,082
1,440
1,954
1,166
46.712
8,238
1,465
1,806
16,145
8,290
1,380
1,031
10,548
1,823
2,162 r
941
52,213
9,823
1,280
2,129
12,681
8,657
2,275
1,079
8,244
1,582
2,047 r
1,504
52,904
9,733
1,128
1,952
13,531
8,805
2,488
957
8,238
1,533
2,072 r
916
48,406
8,947
1,619
1,895
15,077
8,623
1,311
1,041
9,082
1,440
1,954
1,166
46,712
8,238
1,465
1,806
16,145
8,290
2,691
728
8,332
1,483
1,948
833
41,817
8,679
1,310
1,759
14,328
6,932
2,400
778
6,785
1,529
2,110
774
39,141
8,479
1,589
1,708
12,831
8,378
3,403
1,331
7,994
1,701
1,897
1,082
39,972
9,134
1,540
1,720
12,167
6,139
2,776
247
524
584
0
420
1,001
3,530
247
511
805
0
1,212
755
3,122
257
372
643
0
936
914
3,012
272
390
694
0
787
869
2,785
322
405
665
0
533
860
2,611
259
390
704
0
454
804
3,122
257
372
643
0
936
914
2,899
302
378
802
0
516
901
3,087
264
361
933
0
625
904
2,938
260
422
798
0
325
1,133
63 Other
Australia
64
Other
65
5,709
4,577
1,132
6,341
5,300
1,041
6,631
6,167
464
6.110
5,783
327
6,216
5,809
407
6,527
6,008
519
6,631
6,167
464
6,360
5,866
494
6,037
5,367
670
6,045
5,638
407
6
66 Nonmonetaiy international and regional organizations . . .
2,604
2,463
3,618
5,322
5,390
5,308 r
3,618
5,006 r
5,426
4,620
76
77
78
79
30
31
37
33
34
35
36
37
38
39
40
41
42
56
57
58
59
60
61
62
Morocco
South Africa
Zaire
Oil-exporting countries 5
Other
1. Reporting banks include all types of depository institutions as well as some brokers and
dealers.
2. Since December 1992, has excluded Bosnia, Croatia, and Slovenia.
3. Includes the Bank for International Settlements. Since December 1992, has included all
parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia.
4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab
Emirates (Trucial States).
5. Comprises Algeria, Gabon, Libya, and Nigeria.
6. Excludes the Bank for International Settlements, which is included in "Other Europe."
A56
3.19
International Statistics • July 1999
BANKS' OWN A N D DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS
Payable in U.S. Dollars
Reported by Banks in the United States 1
Millions of dollars, end of period
1998 R
Type of claim
1996
1997
1999
1998
Sept.
Oct.
Nov.
749,546
28,164
476,973
108,524
25,988
82,536
135,885
757,183
27,063
487,641
117,919
33,774
84,145
124,560
1
Total
743,919
852,852
875,332
926,532
2
3
4
5
6
7
8
Banks' claims
Foreign public borrowers
Own foreign offices'
Unaffiliated foreign banks
Deposits
Other
All other foreigners
599,925
22,216
341,574
113,682
33,826
79,856
122,453
708,225
20,581
431,685
109,230
30,995
78,235
146,729
734,794
23,540
484,356
105,732
26,808
78,924
121,166
768,481
26,428
486,452
108,426
30,301
78,125
147,175
143,994
77,657
144,627
73,110
140,538
78,167
158,051
89,602
140,538
78,167
51,207
53,967
48,848
53,512
48,848
15,130
17,550
13,523
14,937
13,523
4,519
Claims of banks' domestic customers 3
Deposits
Negotiable and readily transferable
instruments 4
12
Outstanding collections and other
claims
9
10
11
Feb. r
Mar. p
718,269
30,269
459,017
106,557
30,558
75,999
122,426
712,950
31,514
461,685
102,596
29,400
73,196
117,155
695,242
34,913
451,769
94,055
25,044
69,011
114,505
38,941
39,055
33,038
Jan.
Dec.
1
875,332
734,794
23,540
484,356
105,732
26,808
78,924
121,166
MEMO
13
Customer liability on acceptances
10,388
9,624
4,519
6,068
14
Dollar deposits in banks abroad, reported by
nonbanking business enterprises in the
United States5
39,661
33,816
39,978
25,093
32,888
39,978
principally of amounts due from the head office or parent foreign bank, and from foreign
branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank.
3. Assets held by reporting banks in the accounts of their domestic customers.
4. Principally negotiable time certificates of deposit, bankers acceptances, and commercial
paper.
5. Includes demand and time deposits and negotiable and nonnegotiable certificates of
deposit denominated in U.S. dollars issued by banks abroad.
1. For banks' claims, data are monthly; for claims of banks' domestic customers, data are
for quarter ending with month indicated.
Reporting banks include all types of depository institution as well as some brokers and
dealers.
2. For U.S. banks, includes amounts due from own foreign branches and foreign subsidiaries consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory
agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists
3.20
34,265
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
1998
Maturity, by borrower and area 2
1995
1996
1997
Mar.
June
Sept.
Dec.P
1
Total
224,932
258,106
276,550
285,590
292,788
281,136
250,366
2
3
4
5
6
7
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
178,857
14,995
163,862
46,075
7,522
38,553
211,859
15,411
196,448
46,247
6,790
39,457
205,781
12,081
193,700
70,769
8,499
62,270
214,779
16,874
197,905
70,811
11,285
59,526
211,347
16,997
194,350
81,441
10,688
70,753
208,374
14,613
193,761
72,762
10,926
61,836
186,422
13,675
172,747
63,944
9,838
54,106
55,622
6,751
72,504
40,296
1,295
2,389
55,690
8,339
103,254
38,078
1,316
5,182
58,294
9,917
97,207
33,964
2,211
4,188
69,150
9,297
101,070
28,751
2,227
4,284
73,787
8,766
99,611
23,570
1,116
4,497
68,996
8,953
99,646
22,330
1,762
6,687
68,708
11,125
81,454
18,035
1,835
5,265
4,995
2,751
27,681
7,941
1,421
1,286
6,965
2,645
24,943
9,392
1,361
941
13,240
2,525
42,049
10,235
1,236
1,484
15,118
2,765
39,363
10,806
1,254
1,505
15,606
2,571
47,969
12,630
1,259
1,406
15,395
2,982
39,138
12,173
1,170
1,904
15,055
3,140
33,340
10,039
1,233
1,137
8
9
10
11
12
13
14
15
16
17
18
19
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
Mother3
1. Reporting banks include all types of depository institutions as well as some brokers and
dealers.
2. Maturity is time remaining until maturity.
3. Includes nonmonetary international and regional organizations.
Nonbank-Reported
3.21
CLAIMS ON FOREIGN COUNTRIES
Data
A57
Held by U.S. and Foreign Offices of U.S. Banks 1
Billions of dollars, end of period
1 Total
1994
499.5
1998
1997
1996
Area or country
1995
551.9
Sept.
Dec.
749.0 r
724.3 r
687.5 r
r
r
Dec.
Mar.
June
Sept.
Dec.
Mar.
June
645.3
647.6
678.8
711.0
719.3 r
739.1
191.2
7.2
19.1
24.7
11.8
3.6
2.7
5.1
85.8
10.0
21.1
206.0
13.6
19.4
27.3
11.5
3.7
2.7
6.7
82.4
10.3
28.5
228.3
11.7
16.6
29.8
16.0
4.0
2.6
5.3
104.7
14.0
23.7
231.4
14.1
19.7
32.1
14.4
4.5
3.4
6.0
99.2
16.3
21.7
250.0
9.4
17.9
34.1
20.2
6.4
3.6
5.4
110.6
15.7
26.8
247.8
11.4
20.2
34.7
19.3
7.2
4.1
4.8
108.3
15.1
22.6
242.8
11.0
15.4
28.6
15.5
6.2
3.3
7.2
113.4
13.7
28.6
249.0
11.2
15.5
25.5
19.7
7.3
4.8
5.6
120.1
13.5
25.8
275,2
13.1
20.5
28.8 r
19.5
8.3
3.1
6.9
134.9'
16.5
23.7
258.3
10.9
19.9
28.9
17.9
8.1
2.1
7.4
124.91
15.5
22.7
247.0
13.1
18.0
30.7
11.3
7.7
2.2
8.2
114.9
16.7
24.1
13 Other industrialized countries
14
Austria
Denmark
15
16
Finland
17
18
Norway
19
Portugal
70
Spain
71
Turkey
77
Other Western Europe
73
South Africa
24
Australia
45.7
1.1
1.3
.9
4.5
2.0
1.2
13.6
1.6
3.2
1.0
15.4
50.2
.9
2.6
.8
5.7
3.2
1.3
11.6
1.9
4.7
1.2
16.4
65.7
1.1
1.5
.8
6.7
8.0
.9
13.2
2.7
4.7
2.0
24.0
66.4
1.9
1.7
.7
6.3
5.3
1.0
14.4
2.8
6.3
1.9
24.4
71.7
1.5
2.8
1.4
6.1
4.7
1.1
15.4
3.4
5.5
1.9
27.8
73.8
1.7
3.7
1.9
6.2
4.6
1.4
13.9
4.4
6.1
1.9
28.0
64.5
1.5
2.4
1.3
5.1
3.6
.9
11.7
4.5
8.2
2.2
23.1
74.3
1.7
2.0
1.5
6.1
4.0
.7
16.5
4.9
9.9
3.7
23.2
72. l r
1.9
2.1
1.4
5.8
3.4
1.3
15.2r
6.5
9.6
5.0
20.0
71.3T
2.1
2.8
1.6
5.7
3.2r
1.0
17.5
5.2
10.3
3.7
18.2
67.7
1.4
2.1
1.4
5.9
3.2
1.3
13.5
4.8
10.4
3.5
20.3
7S OPEC 2
76
Ecuador
Venezuela
77
78
Indonesia
79
Middle East countries
30
African countries
24.1
.5
3.7
3.8
15.3
.9
22.1
.7
2.7
4.8
13.3
.6
19.7
1.1
2.4
5.2
10.7
.4
21.8
1.1
1.9
4.9
13.2
.7
22.3
.9
2.1
5.6
12.5
1.2
22.9
1.2
2.2
6.5
11.8
1.1
26.0
1.3
2.5
6.7
14.4
1.2
25.7
1.3
3.3
5.5
14.3
1.4
25.3
1.2
3.2
5.1
15.5
.3
25.8
1.2
3.1
4.7
16.1
.8
26.9
1.2
3.2
4.7
16.9
1.0
31 Non-OPEC developing countries
96.0
112.6
130.3
128.1
140.6
137.0
138.7
147.4
144.4
139.7r
140.9r
11.2
8.4
6.1
2.6
18.4
.5
2.7
12.9
13.7
6.8
2.9
17.3
.8
2.8
14.3
20.7
7.0
4.1
16.2
1.6
3.3
14.3
22.0
6.8
3.7
17.2
1.6
3.4
16.4
27.3
7.6
3.3
16.6
1.4
3.4
17.1
26.1
8.0
3.4
16.4
1.8
3.6
18.4
28.6
8.7
3.4
17.4
2.0
4.1
19.3
32.4
9.0
3.3
17.7
2.1
4.0
20.2
29.9
9.1
3.6
17.9
2.2
4.4
22.3
24.9 r
8.5
3.4
18.4
2.2
4.6
22.3
24.2 r
8.3
3.2
18.4
2.2
5.4
India
Israel
Korea (South)
Malaysia
Philippines
Thailand
Other Asia
1.1
9.2
4.2
.4
16.2
3.1
3.3
2.1
4.7
1.8
9.4
4.4
.5
19.1
4.4
4.1
4.9
4.5
2.5
10.3
4.3
.5
21.5
6.0
5.8
5.7
4.1
2.7
10.5
4.9
.6
14.6
6.5
6.0
6.8
4.3
3.6
10.6
5.3
.8
16.3
6.4
7.0
7.3
4.7
4.3
9.7
4.9
1.0
16.2
5.6
5.7
6.2
4.5
3.2
9.0
4.9
.7
15.6
5.1
5.7
5.4
4.3
4.2
11.7
5.0
.7
16.2
4.5
5.0
5.5
4.2
3.9
11.3
4.9
.9
14.5
4.7
5.4
4.9
3.7
2.8
12.1
5.3
.9
12.9
5.0
4.7
5.3
3.1
3.0
12.8
5.3
1.1
13.6
5.6
5.1
4.6
2.9
Africa
Egypt
Morocco
Zaire
Other Africa 3
.3
.6
.0
.8
.4
.7
.0
.9
.7
.7
.1
.9
.9
.6
.0
.9
1.1
.7
.0
.9
.9
.7
.0
.9
.9
.6
.0
.8
1.0
.6
.0
1.1
1.5
.6
.0
.8
1.7
.5
.0
1.1
1.3
.5
.0
1.0
2.7
.8
1.9
4.2
1.0
3.2
6.9
3.7
3.2
8.9
3.5
5.4
7.1
4.2
2.9
9.8
5.1
4,7
9.1
5.1
4.0
12.0
7.5
4.6
10.9
6.8
4.1
6.0
2.8
3.2
5.2
2.2
3.1
72.9
10.2
8.4
21.4
1.6
1.3
.1
20.0
10.1
.1
66.9
99.2
11.0
6.3
32.4
10.3
1.4
.1
25.0
13.1
.1
57.6
134.7
20.3
4.5
37.2
26.1
2.0
.1
27.9
16.7
.1
59.6
131.3
20.9
6.7
32.8
19.9
2.0
.1
30.8
17.9
.1
59.6
129.6
16.1
7.9
35.1
15.8
2.6
.1
35.2
16.7
.3
57.6
138.9
19.8
9.8
45.7
21.7
2.1
.1
27.2
12.7
.1
80.8
139.0r
23.3 r
9.8
43.4
14.6
3.1
.1
32.2
12.7
.1
99.1
129.3
29.2
9.0
24.9
14.0
3.2
.1
33.8
15.0
.1
101.3
125.5r
24.7 r
9.3
33.9
10.5
3.3
.1
30.0
13.5
.2
95.7 r
118.6
28.9
10.4
27.4
6.0
4.0
.2
30.6
11.1
.2
104.5
90.8 r
33.0r
4.5
12.3
2.6
3.8
.1
23.2
11.1
.2
109.0r
~>
3
4
5
6
7
8
9
in
11
12
G-10 countries and Switzerland
Belgium and Luxembourg
Netherlands
Sweden
Switzerland
United Kingdom
Japan
Latin America
37
33
34
35
36
37
38
39
40
41
47
43
44
45
46
47
48
49
50
51
Brazil
Chile
Colombia
Other
Asia
China
Mainland
57 Eastern Europe
53
Russia 4
54
Other
55 Offshore banking centers
56
57
Bermuda
58
Cayman Islands and other British West Indies
59
Netherlands Antilles
60
Panama 5
61
Lebanon
67
Hong Kong, China
Singapore
63
64
Other"
65 Miscellaneous and unallocated 7
1. The banking offices covered by these data include U.S. offices and foreign branches of
U.S. banks, including U.S. banks that are subsidiaries of foreign banks. Offices not covered
include U.S. agencies and branches of foreign banks. Beginning March 1994, the data include
large foreign subsidiaries of U.S. banks. The data also include other types of U.S. depository
institutions as well as some types of brokers and dealers. To eliminate duplication, the data
are adjusted to exclude the claims on foreign branches held by a U.S. office or another foreign
branch of the same banking institution.
These data are on a gross claims basis and do not necessarily reflect the ultimate country
risk or exposure of U.S. banks. More complete data on the country risk exposure of U.S. banks
are available in the quarterly Country Exposure Lending Survey published by the Federal
Financial Institutions Examination Council.
2. Organization of Petroleum Exporting Countries, shown individually; other members of
OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United
Arab Emirates); and Bahrain and Oman (not formally members of OPEC).
3. Excludes Liberia. Beginning March 1994 includes Namibia.
4. As of December 1992, excludes other republics of the former Soviet Union.
5. Includes Canal Zone.
6. Foreign branch claims only.
7. Includes New Zealand, Liberia, and international and regional organizations.
A58
3.22
International Statistics • July 1999
LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in
the United States
Millions of dollars, end of period
1997
Type of liability, and area or country
1995
1996
1998
1997
Sept.
Dec.
Mar.
June
Sept.
Dec. p
1 Total
46,448
61,782
60,037
55,891
60,037
58,040
51,433
49,278
46,553
2 Payable in dollars
3 Payable in foreign currencies
33,903
12,545
39,542
22,240
41.956
18,081
39,746
16,145
41,956
18,081
42,258
15,782
40,026
11,407
38,409
10,869
36,651
9,902
By type
4 Financial liabilities
5
Payable in dollars
6
Payable in foreign currencies
24,241
12,903
11,338
33,049
11,913
21,136
29,532
13,043
16,489
26,461
11,487
14,974
29,532
13,043
16,489
28,050
13,568
14,482
22,322
11,988
10,334
19,331
9,812
9,519
19,255
10,371
8,884
7 Commercial liabilities
8
Trade payables
Advance receipts and other liabilities
9
22,207
11,013
11,194
28,733
12,720
16,013
30.505
10,904
19,601
29,430
10,885
18,545
30,505
10,904
19,601
29,990
10,107
19,883
29,111
9,537
19,574
29,947
10,276
19,671
27,298
10,961
16,337
10
11
Payable in dollars
Payable in foreign currencies
21,000
1,207
27,629
1,104
28,913
1,592
28,259
1,171
28,913
1,592
23,690
1,300
28,038
1,073
28,597
1,350
26,280
1,018
12
13
14
IS
16
17
18
By area or country
Financial liabilities
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
15,622
369
999
1,974
466
895
10,138
23,179
632
1,091
1,834
556
699
17,161
19,657
186
1,684
2,018
494
776
12,737
18,019
89
1,334
1,730
507
645
12,165
19,657
186
1,684
2,018
494
776
12,737
20,307
127
1,795
2,578
472
345
1 ?, 145
15,468
75
1,699
2,441
484
189
8,765
12,905
150
1,457
2,167
417
179
6,610
12,589
79
1,097
2,063
1,406
155
5,980
19
Canada
632
1,401
2.392
651
2,392
1,045
539
389
693
20
21
22
23
24
2S
26
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
1,783
59
147
57
866
12
2
1,668
236
50
78
1,030
17
1
1,386
141
229
143
604
26
1
1,067
10
64
52
669
76
1
1,386
141
229
143
604
26
1
965
17
86
91
517
21
1
1,320
6
49
76
845
51
1
1,351
1
73
154
834
23
1
1,495
7
101
152
957
59
2
27
28
29
Asia
Japan
Middle Eastern oil-exporting countries'
5,988
5,436
27
6,423
5,869
25
5,394
5,085
32
6,239
5,725
23
5,394
5,085
32
5,024
4,767
23
4,315
3,869
0
4,005
3,754
0
3,785
3,612
0
30
31
Africa
Oil-exporting countries"
150
122
38
0
60
0
33
0
60
0
33
0
29
0
31
0
28
0
32
All other 3
66
340
643
452
643
676
651
650
665
7,700
331
481
767
500
413
3,568
9,767
479
680
1,002
766
624
4,303
10,228
666
764
1,274
439
375
4,086
9,343
703
782
945
452
400
3,829
10,228
666
764
1,274
439
375
4,086
9,951
565
840
1,068
443
407
4,041
9.987
557
612
1.219
485
349
3,743
11,010
623
740
1,408
440
507
4,286
10,032
278
920
1,394
429
499
3,697
33
34
35
36
37
38
39
Commercial liabilities
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
40
Canada
1,040
1,090
1,175
1,150
1,175
1,347
1,206
1,504
1,390
41
42
43
44
45
46
47
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
1,740
1
205
98
56
416
221
2,574
63
297
196
14
665
328
2,176
16
203
220
12
565
261
2,224
38
180
233
23
562
322
2,176
16
203
220
12
565
261
2,051
27
174
249
5
520
219
2,285
14
209
246
27
557
196
1,840
48
168
256
5
511
230
1,619
14
198
152
10
347
202
48
49
50
Asia
Japan
Middle Eastern oil-exporting countries'
10,421
3.315
1,912
13,422
4,614
2,168
14,966
4.500
.3,111
14,628
4,553
2,984
14,966
4,500
3,111
14,672
4,372
3,138
13,611
3,995
3,194
13,538
3,779
3,582
12,322
3,808
2,851
51
52
Africa
Oil-exporting countries 2
619
254
1,040
532
874
408
929
504
874
408
833
376
921
354
810
372
794
393
53
Other 3
687
840
1,086
1,156
1,086
! ,136
1,101
1,245
1,141
1. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab
Emirates (Trucial States).
2. Comprises Algeria, Gabon, Libya, and Nigeria.
3. Includes nonmonetary international and regional organizations.
Nonbank-Reported
3.23
CLAIMS ON UNAFFILIATED FOREIGNERS
the United States
Data
A59
Reported by Nonbanking Business Enterprises in
Millions of dollars, end of period
1998
1997
Type of claim, and area or country
1995
1996
1997
Sept.
Dec.
Mar.
June
Sept.
Dec.1'
1 Total
52,509
65,897
68,128
70,506
68,128
71,004
63,202
67,976
77,543
2 Payable in dollars
3 Payable in foreign currencies
48.711
3,798
59,156
6,741
62,173
5,955
64,144
6,362
62,173
5,955
65,359
5,645
57,601
5,601
62,034
5,942
72,263
5,280
By type
4 Financial claims
5
Deposits
6
Payable in dollars
Payable in foreign currencies
7
8
Other financial claims
9
Payable in dollars
10
Payable in foreign currencies
27,398
15,133
14,654
479
12,265
10,976
1,289
37,523
21,624
20,852
772
15,899
12,374
3,525
36,959
22,909
21,060
1,849
14,050
11,806
2,244
41,805
23,951
22,392
1,559
17,854
14,795
3,059
36,959
22,909
21,060
1,849
14,050
11,806
2,244
40,301
20,863
19,155
1,708
19,438
16,981
2,457
32,355
14,762
13,084
1,678
17,593
14,918
2,675
37,262
15,406
13,374
2,032
21,856
19,867
1,989
46,324
30,192
28,549
1,643
16,132
14,124
2,008
1 1 Commercial claims
12
Trade receivables
13
Advance payments and other claims
25,111
22,998
2,113
28,374
25,751
2,623
31,169
27,536
3,633
28,701
25,110
3,591
31,169
27,536
3,633
30,703
26,888
3,815
30,847
26,764
4,083
30,714
26,330
4,384
31,219
27,211
4,008
14
15
Payable in dollars
Payable in foreign currencies
23,081
2,030
25,930
2,444
29,307
1,862
26,957
1,744
29,307
1,862
29,223
1,480
29,599
1,248
28,793
1,921
29,590
1,629
16
17
18
19
20
21
22
By area or country
Financial claims
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
7,609
193
803
436
517
498
4,303
11,085
185
694
276
493
474
7,922
14,999
406
1,015
427
677
434
10,337
15.608
360
1,112
352
764
448
11,000
14,999
406
1,015
427
677
434
10,337
14,187
378
902
393
911
401
9,289
14,105
518
810
290
975
403
9,639
14,473
496
1,140
359
867
409
9,849
12,362
661
863
379
875
414
7,765
2,851
3,442
3,313
4,279
3,313
4,688
3,020
4,090
2,502
14,500
1,965
81
830
10,393
554
32
20,032
1,553
140
1,468
15,536
457
31
15,543
2,308
108
1,313
10,462
537
36
19,176
2,442
190
1,501
12,957
508
15
15,543
2,308
108
1,313
10,462
537
36
18,207
1,316
66
1,408
13,551
967
47
11,967
1,306
48
1,394
7,349
1,089
57
15,758
2,105
63
710
10,960
1,122
50
27,714
403
39
835
24,388
1,245
55
1,579
871
3
2,221
1,035
22
2,133
823
11
2,015
999
15
2,133
823
11
2.174
791
9
2,376
886
12
2,121
928
13
3.026
1,194
9
Africa
Oil-exporting countries 2
276
5
174
14
319
15
174
16
319
15
325
16
155
15
157
16
160
16
All other 3
583
569
652
553
652
720
732
663
560
9,824
231
1,830
1,070
452
520
2,656
10,443
226
1,644
1,337
562
642
2,946
12,120
328
1,796
1,614
597
554
3,660
10,486
331
1,642
1,395
573
381
2,904
12,120
328
1,796
1,614
597
554
3,660
12,854
232
1,939
1,670
534
476
4,828
12,882
216
1,955
1,757
492
418
4,664
13,029
219
2,098
1,502
463
546
4,681
13,249
238
2,172
1,822
467
484
4,769
23
Canada
24
25
26
27
28
29
30
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
31
32
33
34
35
36
37
.38
39
40
41
4?
43
Japan
Middle Eastern oil-exporting countries'
Commercial claims
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
44
Canada
1,951
2,165
2,660
2,649
2,660
2,882
2,779
2,291
2,595
45
46
47
48
49
50
51
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
4,364
30
272
898
79
993
285
5,276
35
275
1,303
190
1,128
357
5,750
27
244
1,162
109
1,392
576
5,028
22
128
1,101
98
1,219
418
5,750
27
244
1,162
109
1,392
576
5,481
13
238
1,128
88
1,302
441
6,082
12
359
1,183
110
1,462
585
5,773
39
173
1,062
91
1,356
566
6,328
24
536
992
137
1,574
401
7,312
1,870
974
8,376
2,003
971
8,713
1,976
1,107
8,576
2,048
987
8,713
1,976
1,107
7,638
1,713
987
7,367
1,757
1,127
7,190
1,789
967
7,194
1,681
1,131
654
87
746
166
680
119
764
207
680
119
613
122
657
116
740
128
712
165
1,006
1,368
1,246
1,198
1,246
1,235
1,080
1,691
1,141
5?
53
54
Japan
Middle Eastern oil-exporting countries'
55
56
Africa
Oil-exporting countries"
57
Other 3
1. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab
Emirates (Trucial States).
2. Comprises Algeria, Gabon, Libya, and Nigeria.
3. Includes nonmonetary international and regional organizations.
A60
International Statistics • July 1999
3.24
FOREIGN TRANSACTIONS IN SECURITIES
Millions of dollars
1999
Transaction, and area or country
1997
1998
1999
1998
Jan.Mar.
Sept.
Nov.
Oct.
Dec.
Jan.
Feb.
Mar. p
U.S. corporate securities
STOCKS
1,097,958
1,028,361
1,596,255
1,542,099
495,283
484,278
137,418
147,891
145,588
142,831
126,571
119,042
138,942
134,306
155,819
152,303
159,570 r
154,968
179,894
177,007
3 Net p u r c h a s e s , o r sales ( - )
69,597
54,156
11,005
-10,473
2,757
7,529
4,636
3,516
4,602 r
2,887
4 Foreign countries
69,754
54,536
10,991
-10,430
2,754
7,546
4,634
3,502
4,602 r
2,887
62,688
6,641
9,059
3,831
7,848
22,478
-1,406
5,203
383
2,072
4,787
472
342
72,349
6,099
10,609
8,326
6,269
24,336
-4,766
781
-1,082
-12,554
-1,407
624
-816
19,014
1,561
2,387
2,145
2,123
7,301
1,699
-3,973
210
-6,193
-2,885
120
114
2,182
85
1,281
876
-307
700
-195
-11,766
148
-678
519
-98
-23
-249
360
68
1,009
-1,974
632
-507
2,058
-177
1,823
597
-217
23
4,406
50
372
1,816
-420
1,902
-201
3,691
-334
-8
822
41
-49
2,441
-614
-189
332
-314
3,154
-976
3,088
-219
155
141
16
129
6,048
537
1,035
86
-10
3,893
728
-1,279
152
-2,306
-616
22
137
6,403 r
-175
872
956
582
2,833 r
248
-1,279
-240
-630
-344
11
89
6,563
1,199
480
1,103
1,551
575
723
-1,415
298
-3,257
-1,925
87
-112
-157
-380
14
-43
3
-17
2
14
19 Foreign purchases
20 Foreign sales
610,116
475,958
905,272
727,866
217,826
161,914
100,186
92,663
108,678
105,437
81,943
60,480
58,884
41,141
66,585
53,759
74,368 r
55,946
21 Net purchases, o r sales (—)
134,158
177,406
55,912
7,523
3,241
21,463
17,743
12,826
18,422 r
24,664
22 Foreign countries
133,595
177,749
56,074
7,473
3,230
22,433
17,665
12,825
18,381 r
24,868
71,631
3.300
2,742
3,576
187
54,134
6,264
34,733
2,155
16,996
9,357
1,005
811
127,932
3,390
4,381
3,490
4,856
97,683
6,077
24,731
4,994
12,679
8,381
190
1,146
29,425
291
1,856
807
1,210
20,108
1,215
13,642
2,609
8,603
1,315
567
13
12,323
184
268
275
1,003
9,760
443
-2,927
-58
-1,847
-713
-61
-400
12,062
701
-135
704
-50
10,182
292
-11,135
2
1,185
1,624
55
769
16,717
235
435
64
251
13,777
558
2,295
835
1,904
1,194
24
100
9,099
-170
217
996
-36
6,863
184
2,688
2,472
3,152
2,238
16
54
2,857
145
398
60
403
703
100
6,382
1,436
2,032
561
40
-22
13,842 r
124
1,268
329
535
10,243 r
475
2,057
314
1,439
165
266
-12
12,726
22
190
418
272
9,162
640
5,203
859
5,132
589
261
47
563
-343
-162
50
11
-970
78
1
1 Foreign purchases
2 Foreign sales
5
6
7
8
9
10
11
12
13
14
13
16
17
Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East 1
Other Asia
Japan
Africa
Other countries
18 N o n m o n e t a r y i n t e r n a t i o n a l a n d
regional organizations
0
0
BONDS 2
23
24
23
26
2/
28
29
30
31
32
33
34
33
Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East 1
Other Asia
Japan
Africa
Other countries
36 N o n m o n e t a r y in tern atio na l a n d
regional organizations
41
76,873
52,209
-204
Foreign securities
37 Stocks, net purchases, or sales ( —)
38
Foreign purchases
39
Foreign sales
40 Bonds, net purchases, or sales ( - )
41
Foreign purchases
Foreign sales
42
43 Net purchases, or sales (—), of stocks a n d b o n d s
...
-40,942
756,015
796,957
-48,171
1,451,704
1,499,875
8,503
940,678
932,175
-18,957
1,335,314
1,354,271
8,240
247,070
238,830
-495
198,164
198,659
6,107
89,496
83,389
3,384
152,881
149,497
8,046
90,407
82,361
15,980
102,202
86,222
-2,729
70,402
73,131
-918
55,573
56,491
841
69,578
68,737
-4,684
56,845
61,529
3,308 r
77,93 l r
74,623 r
-2,304
56,072
58,376
3,083 r
73,941
70,858 r
— 20 r
66,198 r
66,218 r
-89,113
-10,454
7,745
9,491
24,026
-3,647
-3,843
l,004r
3,063 r
3,678
r
2,787 r
3,718
6,429 r
-551
726 r
-3,344
-3,390
-25
-448
13,848
144
-3,572
-7,155
-7,250
-16
469
44 Foreign countries
-88,921
-10,125
7,388
9,492
24,119
-3,641
-3,683
883
45
46
47
48
49
50
51
-29,874
-3,085
-25,258
-25,123
-10,001
-3,293
-2,288
11,139
-1,163
-12,860
-3,326
-1,663
-1,411
-2,504
20,683
-717
-491
-12,057
-10,499
-19
-11
6,007
-1,118
1,214
3,550
2,239
-163
2
10,792
946
4,585
6,699
6,134
4
1,093
2,326
562
-4,074
-2,064
-2,390
-56
-335
3,072
-4,828
-19
-1,489
-1,882
5
-424
406 r
-310
2,355
-1,558
141
22
-32
-192
-329
357
-1
-93
-6
-160
121
Europe
Canada
Latin America and Caribbean
Asia
Japan
Africa
Other countries
52 N o n m o n e t a r y international a n d
regional organizations
1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar,
Saudi Arabia, and United Arab Emirates (Trucial States).
276
1,849
95,198
93,349
1,829
75,894
74,065
-40
2. Includes state and local government securities and securities of U.S. government
agencies and corporations. Also includes issues of new debt securities sold abroad by U.S.
corporations organized to finance direct investments abroad.
Securities Holdings and Transactions
3.25
MARKETABLE U.S. TREASURY BONDS A N D NOTES
A61
Foreign Transactions 1
Millions of dollars; net purchases, or sales (—) during period
1998
1999
Area or country
1997
1999
1998
Jan.Mar.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.p
1
Total estimated
184,171
46,677
-17,256
-5,270
-2,193
25,456
10,549
-4,165
-14,623
1,532
2
Foreign countries
183,688
44,208
-16,527
-5,261
-2,855
25,556
9,426
-4,107
-14,182
1,762
.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
144,921
3,427
22,471
1,746
-465
6,028
98,253
13,461
-811
21,586
3,805
148
-5,533
1,486
5,240
12,120
4,320
572
-5,604
-79
377
1,960
321
-3,581
-4,985
383
-389
-2,771
113
894
-579
-330
363
2,217
-5,449
-663
-9,869
-606
1,171
1,543
193
2,811
-13,168
-1,813
-1,188
5,475
510
307
-1,156
586
531
3,207
1,490
3,694
8,077
2,148
-556
898
581
175
3,074
1,757
614
1,519
-229
-268
2,347
163
-2,171
718
959
-1,729
-7,354
204
217
-584
-228
47
-5,721
-1,289
1,127
231
-54
428
197
386
-1,457
18
713
213
12
13
14
15
16
17
18
19
Latin America and Caribbean
Venezuela
Other Latin America and Caribbean
Netherlands Antilles
-2,554
655
-549
-2,660
39,567
20,360
1,524
1,041
-3,735
59
9,450
-13,244
27,383
13,048
751
-2,349
-10,558
1
-6,573
-3,986
-509
-4,569
-41
574
-1,233
6
2,982
-4,221
-207
128
81
-468
-491
-35
-1,288
832
7,756
1,233
87
850
1,961
327
-5,411
7,045
13,632
7,311
145
649
-3,817
108
-165
-3,760
4,347
3,750
16
189
-5,621
-17
-1,979
-3,625
2,310
-2,134
17
-603
-6,037
463
-2,024
-4,476
-2,216
-1,124
- 6
304
1,100
-445
-2,570
4,115
-603
-1,311
-52
873
483
621
170
2,469
1,502
199
-729
-654
-1
- 9
-288
-5
662
645
0
-100
-19
- 6
1,123
1,084
2
-58
-77
3
-441
-371
1
-230
-206
- 5
183,688
43,959
139,729
44,208
4,123
40,085
-16,527
-4,501
-12,026
-5,261
-10,304
5,043
-2,855
9,001
-11,856
25,556
11,843
13,713
9,426
5,274
4,152
-4,107
2,474
-6,581
-14,182
-3,699
-10,483
1,762
-3,276
5,038
7,636
-12
-16,554
2
6,051
0
-5,837
0
-276
0
233
0
-2,442
0
4,080
0
-618
0
2,589
0
Japan
Africa
Other
20
21
22
Nonmonetary international and regional organizations
International
Latin American regional
23
24
25
Foreign countries
Official institutions
Other foreign
26
27
Oil-exporting countries
Middle East 2
Africa 3
MEMO
1. Official and private transactions in marketable U.S. Treasury securities having an
original maturity of more than one year. Data are based on monthly transactions reports.
Excludes nonmarketable U.S. Treasury bonds and notes held by official institutions of foreign
countries.
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab
Emirates (Trucial States).
3. Comprises Algeria, Gabon, Libya, and Nigeria.
A62
3.28
International Statistics • July 1999
FOREIGN EXCHANGE RATES A N D INDEXES OF THE FOREIGN EXCHANGE VALUE OF THE U.S. DOLLAR 1
Currency units per dollar except as noted
1999
1998
Item
1996
1997
1998
Dec.
Jan.
Feb.
Mar.
Apr.
May
Exchange Rates
COUNTRY/CURRENCY UNIT
1 Australia/dollar 2
2 Austria/schilling
3 Belgium/franc
4 Brazil/real
5 Canada/dollar
6 China, P.R./yuan
7 Denmark/krone
8 European Monetary Union/euro 3
9 Finland/markka
10 France/franc
11 Germany/deutsche mark
12 Greece/drachma
Hong Kong/dollar
India/rupee
Ireland/pound 2
Italy/lira
Japan/yen
Malaysia/ringgit
Mexico/peso
Netherlands/guilder
New Zealand/dollar'
7 7 Norway/krone
23 Portugal/escudo
13
14
15
16
17
18
19
70
71
74 Singapore/dollar
7 5 South Africa/rand
76
77
78
79
30
31
South Korea/won
Spain/peseta
Sri Lanka/rupee
Sweden/krona
Switzerland/franc
Taiwan/dollar
3 7 Thailand/baht
33 United Kingdom/pound 2
34 Venezuela/bolivar
78.28
10.589
30.97
1.0051
1.3638
8.3389
5.8003
n.a.
4.5948
5.1158
1.5049
240.82
74.37
12.206
35.81
1.0779
1.3849
8.3193
6.6092
n.a.
5.1956
5.8393
1.7348
273.28
62.91
12.379
36.31
1.1605
1.4836
8.3008
6.7030
n.a.
5.3473
5.8995
1.7597
295.70
61.82
11.746
34.44
1.2052
1.5433
8.2780
6.3531
n.a.
5.0769
5.5981
1.6698
280.43
63.20
n.a.
n.a.
1.5120
1.5194
8.2789
6.4194
1.1591
n.a.
n.a.
n.a.
278.91
63.99
n.a.
n.a.
1.926]
1.4977
8.2755
6.6379
1.1203
n.a.
n.a.
n.a.
287.41
63.08
n.a.
n.a.
1.9057
1.5176
8.2792
6.8287
1.0886
n.a.
n.a.
n.a.
296.36
64.20
n.a.
n.a.
1.7025
1.4881
8.2792
6.9475
1.0701
n.a.
n.a.
n.a.
304.26
.6628
n.a.
n.a.
1.6853
1.4611
8.2785
6.9925
1.0630
n.a.
n.a.
n.a.
305.96
7.7345
35.51
159.95
1.542.76
108.78
2.5154
7.600
1.6863
68.77
6.4594
154.28
7.7431
36.36
151.63
1,703.81
121.06
2.8173
7.918
1.9525
66.25
7.0857
175.44
7.7467
41.36
142.48
1,736.85
130.99
3.9254
9.152
1.9837
53.61
7.5521
180.25
7.7471
42.59
148.76
1,653.23
117.07
3.8014
9.907
1.8816
52.23
7.6050
171.19
7.7486
42.55
n.a.
n.a.
113.29
3.8000
10.128
n.a.
53.88
7.4532
n.a.
7.749('
42.53
n.a.
n.a.
116.67
3.8000
10.006
n.a.
54.35
7.7240
n.a.
7.7493
42.52
n.a.
n.a.
119.47
3.8000
9.732
n.a.
53.45
7.8151
n.a.
7.7495
42.80
n.a.
n.a.
119.77
3.8000
9.430
n.a.
54.27
7.7750
n.a.
7.7531
42.86
n.a.
n.a.
122.00
3.8000
9.395
n.a.
.5530
7.7496
n.a.
1.4100
4.3011
805.00
126.68
55.289
6.7082
1.2361
27.468
25.359
156.07
417.19
1.4857
4.6072
947.65
146.53
59.026
7.6446
1.4514
28.775
31.072
163.76
488.39
1.6722
5.5417
1,400.40
149.41
65.006
7.9522
1.4506
33.547
41.262
165.73
548.39
1.6515
5.9030
1,213.22
142.08
68.117
8.0716
1.3604
32.337
36.276
167.08
565.89
1.6791
5.9931
1,175.11
n.a.
68.630
7.8188
1.3856
32.300
36.622
164.98
569.80
1.7004
6.1146
1,188.84
n.a.
69.070
7.9532
1.4272
32.564
37.137
162.76
577.32
1.7292
6.2136
1,229.72
n.a.
69.570
8.2144
1.4660
33.165
37.557
162.13
580.06
1.7134
6.1186
1,209.96
n.a.
69.588
8.3293
1.4971
32.965
37.631
160.89
587.79
1.7122
6.1809
1,197.92
n.a.
70.581
8.4432
1.5078
32.791
37.051
1.6154
596.48
Indexes 3
NOMINAL
35
36
37
38
G - 1 0 (March 1973= 100) 4
Broad (January 1997 = 100)'
Major currencies (March 1973= 100) 6
Other important trading partners (January
1997 = 100) 7
87.34
97.43
85.23
96.38
104.47
91.85
98.85
116.25
96.52
94.61
114.56
93.40
n.a.
114.68
92.37
n.a.
116.37
93.76
n.a.
117.80
95.69
n.a.
117.15
95.76
n.a.
116.91
95.79
98.25
104.67
125.70
126.80
128.98
130.83
131.03
129.24
128.55
85.99
85.88
90.59
93.24
98.46
98.36
95.93 r
95.48 r
95.61 r
94.9 LR
96.69 r
96.40 r
98.08 r
98.401"
96.91 r
98.71 r
96.65
98.64
92.52
93.61
105.83
103.61
103.62 r
104.19 r
104.81 r
101.52 r
100.99 r
REAL
39 Broad (March 1 9 7 3 = 1 0 0 ) '
40 Major currencies (March 1973= 100) 6
41 Other important trading partners (March
1973 = 100) 7
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. As of January 1999, the euro is reported in place of the individual euro area currencies.
These currency rates can be derived from the euro rate by using the fixed conversion rates (in
currencies per euro) as shown below:
Euro equals
13.7603
40.3399
5.94573
6.55957
1.95583
.787564
Austrian schillings
Belgian francs
Finnish markkas
French francs
German marks
Irish pounds
1936.27
40.3399
2.20371
200.482
166.386
Italian lire
Luxembourg francs
Netherlands guilders
Portuguese escudos
Spanish pesetas
4. For more information on the indexes of the foreign exchange value of the dollar, see
Federal Reserve Bulletin, vol. 84 (October 1998), pp. 811-18.
5. Weighted average of the foreign exchange value of the U.S. dollar against the currencies
of the other G-10 countries. The weight for each of the ten countries is the 1972-76 average
world trade of that country divided by the average world trade of all ten countries combined.
Series revised as of August 1978 (see Federal Reserve Bulletin, vol. 64 (August 1978),
p. 700).
6. Weighted average of the foreign exchange value of the U.S. dollar against the currencies
of a broad group of U.S. trading partners. The weight for each currency is computed as an
average of U.S. bilateral import shares from and export shares to the issuing country and of a
measure of the importance to U.S. exporters of that country's trade in third country markets.
7. Weighted average of the foreign exchange value of the U.S. dollar against a subset of
broad index currencies that circulate widelj outside the country of issue. The weight for each
currency is its broad index weight scaled so that the weights of the subset of currencies in the
index sum to one.
8. Weighted average of the foreign exchange value of the U.S. dollar against a subset of
broad index currencies that do not circulate widely outside the country of issue. The weight
for each currency is its broad index weight scaled so that the weights of the subset of
currencies in the index sum to one.
A63
Guide to Statistical Releases and Special Tables
STATISTICAL RELEASES—List Published Semiannually,
with Latest Bulletin Reference
Anticipated schedule of release dates for periodic releases
Issue
December 1998
Page
A72
Issue
Page
August
November
February
May
1998
1998
1999
1999
A64
A64
A64
A64
August
November
February
May
1998
1998
1999
1999
A67
A66
A66
A66
August
November
February
May
1998
1998
1999
1999
A72
A72
A72
A72
October 1998
January 1999
July 1999
A64
A64
A64
September 1996
September 1997
September 1998
A68
A68
A68
September 1997
September 1998
A76
A72
September 1998
A76
September 1998
A79
SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference
Title and Date
Assets and liabilities
of commercial
banks
March 31, 1998
June 30, 1998
September 30, 1998
December 31, 1998
Terms of lending at commercial
May 1998
August 1998
November 1998
February 1999
banks
Assets and liabilities of U.S. branches and agencies
March 31, 1998
June 30, 1998
September 30, 1998
December 31, 1998
of foreign
banks
Pro forma balance sheet and income statements for priced service
June 30, 1998
September 30, 1998
March 31, 1999
operations
Residential
1995
1996
1997
lending reported
Act
Disposition
1996
1997
of applications
Small loans to businesses
1997
Community
1997
development
under the Home Mortgage
for private
mortgage
Disclosure
insurance
and farms
lending reported under the Community Reinvestment
Act
A64
4.31
Special Tables • July 1999
PRO FORMA FINANCIAL STATEMENTS FOR FEDERAL RESERVE PRICED SERVICES
A.
Pro forma balance sheet
Millions of dollars
Short-term assets (Note 1)
Imputed reserve requirement on clearing balances
Investment in marketable securities
Receivables
Materials and supplies
Prepaid expenses
Items in process of collection
610.7
5,496.3
68.5
4.6
24.3
5,892.3
671.3
6,041.7
73.4
4.1
29.8
4,406.3
12,096.8
11,226.7
Total short-term assets
Long-term
Mar. 31, 1998
Mar. 31, 1999
Item
assets (Note 2)
391.8
130.8
25.4
366.4
404.7
143.1
29.5
459.3
Furniture and equipment
Leases and leasehold improvements
Prepaid pension costs
Total long-term assets
Total assets
Short-term
liabilities
Clearing balances and balances arising from early credit
of uncollected items
Deferred-availability items
Short-term debt
1.036.5
914.4
12,263.1
13,011.2
7,381.2
4,618.1
97.4
6,192.0
4,927.3
107.4
12,096.8
11,226,7
Total short-term liabilities
Long-term
liabilities
Obligations under capital leases
Long-term debt
Postretirement/postemployment benefits obligation
.0
191.8
207.7
.0
214.7
219.3
Total long-term liabilities
Total liabilities
Equity
Total liabilities a n d equity (Note 3)
434.1
399.5
11,660.7
12,496.3
602.4
514.9
12,263.1
13,011.2
NOTE. Components may not sum to totals because of rounding. The priced services
financial statements consist of these tables and the accompanying notes.
B.
Pro forma income statement
Millions of dollars
Item
Quarter ending Mar. 31, 1999
Income before income taxes
162.9
32.8
Income from operations
Income from operations after imputed costs
Other income and expenses (Note 7)
Investment income on clearing balances
Earnings credits
195.1
203.1
170.4
Revenue from services provided to depository institutions (Note 4)
Operating expenses (Note 5)
Imputed costs (Note 6)
Interest on float
Interest on debt
Sales taxes
FDIC insurance
Quarter ending Mar. 31, 1998
5.4
4.6
2.2
.8
13.1
32.3
5.4
4.3
2.0
.0
19.7
81.9
(70.5)
11.4
31.1
11.7
20.6
93.5
(84.0)
9.5
30.1
Imputed income taxes (Note 8)
10.0
9.7
Net income
21.2
20.4
17.3
15.7
MEMO
Targeted return on equity (Note 9)
NOTE. Components may not sum to totals because of rounding. The priced services
financial statements consist of these tables and the accompanying notes.
Nonbank-Reported
Data
A65
NOTES TO FINANCIAL STATEMENTS FOR FEDERAL RESERVE PRICED SERVICES
( 1 ) S H O R T - T E R M ASSETS
(6) IMPUTED COSTS
The imputed reserve requirement on clearing balances held at Reserve Banks by depository
institutions reflects a treatment comparable to that of compensating balances held at correspondent banks by respondent institutions. The reserve requirement imposed on respondent
balances must be held as vault cash or as nonearning balances maintained at a Reserve Bank;
thus, a portion of priced services clearing balances held with the Federal Reserve is shown as
required reserves on the asset side of the balance sheet. The remainder of clearing balances is
assumed to be invested in three-month Treasury bills, shown as investment in marketable
securities.
Receivables are (1) amounts due the Reserve Banks for priced services and (2) the share of
suspense-account and difference-account balances related to priced services.
Materials and supplies are the inventory value of short-term assets.
Prepaid expenses include salary advances and travel advances for priced-service personnel.
Items in process of collection is gross Federal Reserve cash items in process of collection
(CIPC) stated on a basis comparable to that of a commercial bank. It reflects adjustments for
intra-System items that would otherwise be double-counted on a consolidated Federal
Reserve balance sheet; adjustments for items associated with non-priced items, such as those
collected for government agencies; and adjustments for items associated with providing fixed
availability or credit before items are received and processed. Among the costs to be
recovered under the Monetary Control Act is the cost of float, or net CIPC during the period
(the difference between gross CIPC and deferred-availability items which is the portion of
gross CIPC that involves a financing cost), valued at the federal funds rate.
Imputed costs consist of interest on float, interest on debt, sales taxes, and the FDIC
assessment. Interest on float is derived from the value of float to be recovered, either
explicitly or through per-item fees, during the period. Float costs include costs for checks,
book-entry securities, noncash collection, ACH, and funds transfers.
Interest is imputed on the debt assumed necessary to finance priced-service assets. The
sales taxes and FDIC assessment that the Federal Reserve would have paid had it been a
private-sector firm are among the components of the PSAF (see note 3).
Float costs are based on the actual float incurred for each priced service, multiplied by the
appropriate federal funds rate. Other imputed costs are allocated among priced services
according to the ratio of operating expenses less shipping expenses for each service to the
total expenses for all services less the total shipping expenses for all services.
The following list shows the daily average recovery of float (before converting to float
costs) by the Reserve Banks for the first quarter of 1999 and 1998 in millions of dollars:
( 2 ) L O N G - T E R M ASSETS
Consists of long-term assets used solely in priced services, the priced-services portion of
long-term assets shared with nonpriced services, and an estimate of the assets of the Board of
Governors used in the development of priced services. Effective Jan. 1, 1987, the Reserve
Banks implemented the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 87, Employers' Accounting for Pensions (SFAS 87). Accordingly,
the Federal Reserve Banks recognized credits to expenses of $21.9 million in the first quarter
of 1999 and $16.2 million in the first quarter of 1998, and corresponding increases in this
asset account.
(3) LIABILITIES AND EQUITY
Under the matched-book capital structure for assets that are not "self-financing," short-term
assets are financed with short-term debt. Long-term assets are financed with long-term debt
and equity in a proportion equal to the ratio of long-term debt to equity for the fifty largest
bank holding companies, which are used in the model for the private-sector adjustment factor
(PSAF). The PSAF consists of the taxes that would have been paid and the return on capital
that would have been provided had priced services been furnished by a private-sector firm.
Other short-term liabilities include clearing balances maintained at Reserve Banks and
deposit balances arising from float. Other long-term liabilities consist of obligations on capital
leases.
(4) REVENUE
Revenue represents charges to depository institutions for priced services and is realized from
each institution through one of two methods; direct charges to an institution's account or
charges against its accumulated earnings credits.
1999
Total float
Unrecovered float
Float subject to recovery
Sources of float recovery
Income on clearing balances
As-of adjustments
Direct charges
Per-item fees
1998
486.0
(516.1)
1,002.1
758.7
(10.7)
769.4
98.9
531.8
245.2
126.2
76.6
376.4
141.4
175.0
Unrecovered float includes float generated by services to government agencies and by other
central bank services. Float recovered through income on clearing balances is the result of the
increase in investable clearing balances; the increase is produced by a deduction for float for
cash items in process of collection, which reduces imputed reserve requirements. The income
on clearing balances reduces the float to be recovered through other means. As-of adjustments
are memorandum adjustments to an institution's reserve or clearing position to recover float
incurred by the institution. Direct charges are billed to the institution for float incurred when
an institution chooses to close on a normal business day and for float incurred on interterritory
check transportation. Float recovered through direct charges is valued at cost using the federal
funds rate and charged directly to an institution's account. Float recovered through per-item
fees is valued at the federal funds rate and has been added to the cost base subject to recovery
in the first quarter of 1999.
( 7 ) OTHER INCOME AND EXPENSES
Consists of imputed investment income on clearing balances and the actual cost of earnings
credits. Investment income on clearing balances represents the average coupon-equivalent
yield on three-month Treasury bills applied to the total clearing balance maintained, adjusted
for the effect of reserve requirements on clearing balances. Expenses for earnings credits
granted to depository institutions on their clearing balances are derived by applying the
average federal funds rate to the required portion of the clearing balances, adjusted for the net
effect of reserve requirements on clearing balances.
( 8 ) INCOME TAXES
Imputed income taxes are calculated at the effective tax rate derived from the PSAF model
(see note 3).
(5) OPERATING EXPENSES
Operating expenses consist of the direct, indirect, and other general administrative expenses
of the Reserve Banks for priced services plus the expenses for staff members of the Board of
Governors working directly on the development of priced services. The expenses for Board
staff members were $.85 million in the first quarter of 1999 and $0.7 million in the first
quarter of 1998. The credit to expenses under SFAS 87 (see note 2) is reflected in operating
expenses.
( 9 ) R E T U R N ON EQUITY
Represents the after-tax rate of return on equity that the Federal Reserve would have earned
had it been a private business firm, as derived from the PSAF model (see note 3). This amount
is adjusted to reflect the recovery of automation consolidation costs of $3.3 million for first
quarter of 1999 and $2.6 million for the first quarter of 1998. The Reserve Banks plan to
recover these amounts, along with a finance charge, by the end of 1999.
66
Federal Reserve Bulletin • July 1999
Index to Statistical Tables
References are to pages A3-A65
although the prefix "A" is omitted in this index
ACCEPTANCES, bankers (See Bankers acceptances)
Assets and liabilities (See also Foreigners)
Commercial banks, 15-21
Domestic finance companies, 32, 33
Federal Reserve Banks, 10
Foreign-related institutions, 20
Automobiles
Consumer credit, 36
Production, 44, 45
BANKERS acceptances, 5, 10, 22, 23
Bankers balances, 15-21. (See also Foreigners)
Bonds (See also U.S. government securities)
New issues, 31
Rates, 23
Business activity, nonfinancial, 42
Business loans (See Commercial and industrial loans)
CAPACITY utilization, 43
Capital accounts
Commercial banks, 15-21
Federal Reserve Banks, 10
Certificates of deposit, 23
Commercial and industrial loans
Commercial banks, 15-21
Weekly reporting banks, 17, 18
Commercial banks
Assets and liabilities, 15-21
Commercial and industrial loans, 15-21
Consumer loans held, by type and terms, 36
Real estate mortgages held, by holder and property, 35
Time and savings deposits, 4
Commercial paper, 22, 23, 32
Condition statements (See Assets and liabilities)
Construction, 42, 46
Consumer credit, 36
Consumer prices, 42
Consumption expenditures, 48, 49
Corporations
Profits and their distribution, 32
Security issues, 31, 61
Cost of living (See Consumer prices)
Credit unions, 36
Currency in circulation, 5, 13
Customer credit, stock market, 24
DEBT (See specific types of debt or securities)
Demand deposits, 15-21
Depository institutions
Reserve requirements, 8
Reserves and related items, 4, 5, 6, 12
Deposits (See also specific types)
Commercial banks, 4, 15-21
Federal Reserve Banks, 5, 10
Discount rates at Reserve Banks and at foreign central banks and
foreign countries (See Interest rates)
Discounts and advances by Reserve Banks (See Loans)
Dividends, corporate, 32
EMPLOYMENT, 42
Euro, 62
FARM mortgage loans, 35
Federal agency obligations, 5, 9, 10, 11, 28, 29
Federal credit agencies, 30
Federal finance
Debt subject to statutory limitation, and types and ownership
of gross debt, 27
Receipts and outlays, 25, 26
Treasury financing of surplus, or deficit, 25
Treasury operating balance, 25
Federal Financing Bank, 30
Federal funds, 23, 25
Federal Home Loan Banks, 30
Federal Home Loan Mortgage Corporation, 30, 34, 35
Federal Housing Administration, 30, 34, 35
Federal Land Banks, 35
Federal National Mortgage Association, 30, 34, 35
Federal Reserve Banks
Condition statement, 10
Discount rates (See Interest rates)
U.S. government securities held, 5, 10, 11, 27
Federal Reserve credit, 5, 6, 10, 12
Federal Reserve notes, 10
Federal Reserve System
Balance sheet for priced services, 64, 65
Condition statement for priced services, 64, 65
Federally sponsored credit agencies, 30
Finance companies
Assets and liabilities, 32
Business credit, 33
Loans, 36
Paper, 22, 23
Float, 5
Flow of funds, 37-41
Foreign currency operations, 10
Foreign deposits in U.S. banks, 5
Foreign exchange rates, 62
Foreign-related institutions, 20
Foreign trade, 51
Foreigners
Claims on, 52, 55, 56, 57, 59
Liabilities to, 51, 52, 53, 58, 60, 61
GOLD
Certificate account, 10
Stock, 5, 51
Government National Mortgage Association, 30, 34, 35
Gross domestic product, 48, 49
HOUSING, new and existing units, 46
INCOME and expenses, Federal Reserve System, 64, 65
Income, personal and national, 42, 48, 49
Industrial production, 42, 44
Insurance companies, 27, 35
Interest rates
Bonds, 23
Consumer credit, 36
Federal Reserve Banks, 7
Money and capital markets, 23
Mortgages, 34
Prime rate, 22
International capital transactions of United States, 50-61
International organizations, 52, 53, 55, 58, 59
Inventories, 48
Investment companies, issues and assets, 32
A67
Investments (See also specific types)
Commercial banks, 4, 15-21
Federal Reserve Banks, 10, 11
Financial institutions, 35
LABOR force, 42
Life insurance companies (See Insurance companies)
Loans (See also specific types)
Commercial banks, 15-21
Federal Reserve Banks, 5, 6, 7, 10, 11
Federal Reserve System, 64, 65
Financial institutions, 35
Insured or guaranteed by United States, 34, 35
MANUFACTURING
Capacity utilization, 43
Production, 43, 45
Margin requirements, 24
Member banks, reserve requirements, 8
Mining production, 45
Mobile homes shipped, 46
Monetary and credit aggregates, 4, 12
Money and capital market rates, 23
Money stock measures and components, 4 , 1 3
Mortgages (See Real estate loans)
Mutual funds, 13, 32
Mutual savings banks (See Thrift institutions)
NATIONAL defense outlays, 26
National income, 48
OPEN market transactions, 9
PERSONAL income, 49
Prices
Consumer and producer, 42, 47
Stock market, 24
Prime rate, 22
Producer prices, 42, 47
Production, 42, 44
Profits, corporate, 32
REAL estate loans
Banks, 15-21, 35
Terms, yields, and activity, 34
Type of holder and property mortgaged, 35
Reserve requirements, 8
Reserves
Commercial banks, 15-21
Depository institutions, 4, 5, 6, 12
Federal Reserve Banks, 10
U.S. reserve assets, 51
Residential mortgage loans, 34, 35
Retail credit and retail sales, 36, 42
SAVING
Flow of funds, 37-41
National income accounts, 48
Savings institutions, 35, 36, 37-41
Savings deposits (See Time and savings deposits)
Securities (See also specific types)
Federal and federally sponsored credit agencies, 30
Foreign transactions, 60
New issues, 31
Prices, 24
Special drawing rights, 5, 10, 50, 51
State and local governments
Holdings of U.S. government securities, 27
New security issues, 31
Rates on securities, 23
Stock market, selected statistics, 24
Stocks (See also Securities)
New issues, 31
Prices, 24
Student Loan Marketing Association, 30
TAX receipts, federal, 26
Thrift institutions, 4. (See also Credit unions and Savings
institutions)
Time and savings deposits, 4, 13, 15-21
Trade, foreign, 51
Treasury cash, Treasury currency, 5
Treasury deposits, 5, 10, 25
Treasury operating balance, 25
UNEMPLOYMENT, 42
U.S. government balances
Commercial bank holdings, 15-21
Treasury deposits at Reserve Banks, 5, 10, 25
U.S. government securities
Bank holdings, 1 5 - 2 1 , 2 7
Dealer transactions, positions, and financing, 29
Federal Reserve Bank holdings, 5, 10, 11, 27
Foreign and international holdings and
transactions, 10, 27, 61
Open market transactions, 9
Outstanding, by type and holder, 27, 28
Rates, 23
U.S. international transactions, 50-62
Utilities, production, 45
VETERANS Administration, 34, 35
WEEKLY reporting banks, 17, 18
Wholesale (producer) prices, 42, 47
YIELDS (See Interest rates)
68
Federal Reserve Bulletin • July 1999
Federal Reserve Board of Governors
and Official Staff
ALAN GREENSPAN,
Chairman
ALICE M . RIVLIN, Vice Chair
EDWARD W . K E L L E Y , J R
OFFICE OF BOARD
DIVISION OF INTERNATIONAL
LAURENCE H . MEYER
MEMBERS
LYNN S. FOX, Assistant to the Board
DONALD J. WINN, Assistant to the Board
WINTHROP P. HAMBLEY, Deputy Congressional
Liaison
BOB STAHLY MOORE, Special Assistant to the Board
DIANE E. WERNEKE, Special Assistant to the Board
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
KATHERINE H. WHEATLEY, Assistant General Counsel
OFFICE OF THE SECRETARY
JENNIFER J. J O H N S O N ,
Secretary
ROBERT DEV. FRIERSON, Associate
Secretary
BARBARA R. LOWREY, Associate Secretary and
Ombudsman
DIVISION OF BANKING
SUPERVISION AND REGULATION
RICHARD SPILLENKOTHEN,
Director
STEPHEN C. SCHEMERING, Deputy Director
HERBERT A. BIERN, Associate
Director
ROGER T. COLE, Associate
Director
WILLIAM A. RYBACK, Associate
Director
GERALD A. EDWARDS, JR., Deputy Associate
Director
STEPHEN M. HOFFMAN, JR., Deputy Associate
Director
JAMES V. HOUPT, Deputy Associate
Director
JACK P. JENNINGS, Deputy Associate
Director
MICHAEL G. MARTINSON, Deputy Associate
Director
SIDNEY M. SUSSAN, Deputy Associate
Director
MOLLY S. WASSOM, Deputy Associate
Director
HOWARD A. AMER, Assistant Director
NORAH M. BARGER, Assistant
Director
BETSY CROSS, Assistant Director
RICHARD A. SMALL, Assistant
Director
WILLIAM C. SCHNEIDER, JR., Project Director,
National Information Center
KAREN H . JOHNSON,
FINANCE
Director
LEWIS S. ALEXANDER, Deputy Director
PETER HOOPER HI, Deputy Director
DALE W. HENDERSON, Associate
Director
DONALD B. ADAMS, Senior Adviser
DAVID H. HOWARD, Senior Adviser
THOMAS A. CONNORS, Assistant
Director
RALPH W. TRYON, Assistant
Director
DIVISION OF RESEARCH AND
M I C H A E L J. PRELL,
STATISTICS
Director
EDWARD C. ETTIN, Deputy Director
DAVID J. STOCKTON, Deputy Director
WILLIAM R. JONES, Associate
Director
MYRON L. KWAST, Associate
Director
PATRICK M. PARKINSON, Associate
Director
THOMAS D. SIMPSON, Associate
Director
LAWRENCE SLIFMAN, Associate
Director
MARTHA S. SCANLON, Deputy Associate
Director
STEPHEN D. OLINER, Assistant
Director
STEPHEN A. RHOADES, Assistant
Director
JANICE SHACK-MARQUEZ, Assistant
Director
CHARLES S. STRUCKMEYER, Assistant
Director
A L I C E PATRICIA W H I T E , Assistant
Director
JOYCE K. ZICKLER, Assistant
Director
GLENN B. CANNER, Senior Adviser
DAVID S. JONES, Senior Adviser
JOHN J. MINGO, Senior Adviser
DIVISION OF MONETARY
DONALD L. KOHN,
AFFAIRS
Director
DAVID E. LINDSEY, Deputy Director
BRIAN F. MADIGAN, Associate
Director
RICHARD D. PORTER, Deputy Associate
Director
VINCENT R. REINHART, Deputy Associate
Director
WILLIAM C. WHITESELL, Assistant Director
NORMAND R. V. BERNARD, Special Assistant to the Board
DIVISION OF CONSUMER
AND COMMUNITY AFFAIRS
DOLORES S . SMITH,
Director
GLENN E. LONEY, Deputy Director
SANDRA F. BRAUNSTEIN, Assistant
Director
MAUREEN P. ENGLISH, Assistant
Director
ADRIENNE D. HURT, Assistant
Director
IRENE S H A W N M C N U L T Y , Assistant
Director
A69
R O G E R W . F E R G U S O N , JR.
EDWARD M . G R A M L I C H
OFFICE OF
STAFF DIRECTOR FOR
DIVISION OF RESERVE BANK
MANAGEMENT
STEPHEN R. MALPHRUS, Staff
JOHN R . W E I S ,
MANAGEMENT
Director
Adviser
DIVISION
STEPHEN J. CLARK, Associate Director, Finance Function
DARRELL R. PAULEY, Associate Director, Human Resources
Function
SHEILA CLARK, EEO Programs
Director
DIVISION OF SUPPORT
R O B E R T E . FRAZIER,
SERVICES
Director
GEORGE M. LOPEZ, Assistant
DAVID L. WILLIAMS, Assistant
Director
Director
DIVISION OF INFORMATION
RICHARD C . STEVENS,
TECHNOLOGY
Director
MARIANNE M. EMERSON, Deputy Director
TILLENA G. CLARK, Assistant
Director
MAUREEN HANNAN, Assistant
Director
Director
P o KYUNG KIM, Assistant
RAYMOND H. MASSEY, Assistant
Director
EDWARD T. MULRENIN, Assistant
Director
DAY W. RADEBAUGH, JR., Assistant Director
AND PAYMENT
OPERATIONS
SYSTEMS
LOUISE L . ROSEMAN,
Director
PAUL W. BETTGE, Assistant
Director
KENNETH D. BUCKLEY, Assistant
Director
JACK DENNIS, JR., Assistant
Director
JOSEPH H. HAYES, JR., Assistant
Director
JEFFREY C. MARQUARDT, Assistant
Director
MARSHA REIDHILL, Assistant
Director
JEFF STEHM, Assistant
Director
OFFICE OF THE INSPECTOR
GENERAL
BARRY R. SNYDER, Inspector General
DONALD L. ROBINSON, Assistant Inspector
General
70
Federal Reserve Bulletin • July 1999
Federal Open Market Committee
and Advisory Councils
FEDERAL
OPEN MARKET
COMMITTEE
MEMBERS
A L A N GREENSPAN,
WILLIAM J. MCDONOUGH, Vice
Chairman
Chairman
EDWARD G . BOEHNE
E D W A R D W . KELLEY, JR.
MICHAEL H . MOSKOW
ROGER W . FERGUSON, JR.
LAURENCE H . MEYER
GARY H . STERN
E D W A R D M . GRAMLICH
ROBERT D . MCTEER, JR.
ALICE M . RIVLIN
ALTERNATE
J. A L F R E D B R O A D D U S , JR.
JERRY L . JORDAN
JACK G U Y N N
ROBERT T. PARRY
MEMBERS
JAMIE B . STEWART, JR.
STAFF
DONALD L. KOHN, Secretary and
Economist
NORMAND R.V. BERNARD, Deputy
Secretary
LYNN S. FOX, Assistant
Secretary
GARY P. GILLUM, Assistant
Secretary
J. VIRGIL MATTINGLY, JR., General
Counsel
THOMAS C. BAXTER, JR., Deputy General
Counsel
M I C H A E L J. PRELL,
K A R E N H . JOHNSON,
STEPHEN G. CECCHETTI, Associate
Economist
PETER HOOPER III, Associate
Economist
WILLIAM C. HUNTER, Associate
Economist
RICHARD W. LANG, Associate
Economist
DAVID E. LINDSEY, Associate
Economist
ARTHUR J. ROLNICK, Associate
Economist
HARVEY ROSENBLUM, Associate
Economist
LAWRENCE SLIFMAN, Associate
Economist
DAVID J. STOCKTON, Associate
Economist
Economist
Economist
LEWIS S. ALEXANDER, Associate
Economist
PETER R. FISHER, Manager,
FEDERAL
ADVISORY
System
Account
COUNCIL
ROBERT W . GILLESPIE,
President
KENNETH D. LEWIS,Vice
President
NORMAN R. BOBINS, Seventh District
KATIE S. WINCHESTER, Eighth District
RICHARD A. ZONA, Ninth District
C. Q. CHANDLER, Tenth District
RICHARD W. EVANS, JR., Eleventh District
WALTER A. DODS, JR., Twelfth District
LAWRENCE K. FISH, First District
DOUGLAS A. WARNER III, S e c o n d District
RONALD L. HANKEY, Third District
ROBERT W. GILLESPIE, Fourth District
KENNETH D. LEWIS, Fifth District
STEPHEN A. HANSEL, Sixth District
Open Market
JAMES A N N A B L E ,
WILLIAM J. KORSVIK,
Co-Secretary
Co-Secretary
A71
CONSUMER ADVISORY
COUNCIL
Y V O N N E S . SPARKS STRAUTHER, S t . L o u i s , M i s s o u r i ,
DWIGHT GOLANN, Boston, Massachusetts, Vice
Chairman
Chairman
LAUREN ANDERSON, N e w O r l e a n s , L o u i s i a n a
JOHN C . L A M B , S a c r a m e n t o , C a l i f o r n i a
WALTER J. B O Y E R , G a r l a n d , T e x a s
W A Y N E - K E N T A . BRADSHAW, LOS A n g e l e s , C a l i f o r n i a
ANNE S. LI, Trenton, N e w Jersey
MARTHA W. MILLER, Greensboro, North Carolina
MALCOLM M . B U S H , C h i c a g o , I l l i n o i s
DANIEL W . MORTON, C o l u m b u s , O h i o
M A R Y E L L E N DOMEIER, N e w ULM, M i n n e s o t a
CAROL J. PARRY, N e w Y o r k , N e w Y o r k
JEREMY D . EISLER, B i l o x i , M i s s i s s i p p i
PHILIP PRICE, JR., P h i l a d e l p h i a , P e n n s y l v a n i a
ROBERT F. ELLIOT, Prospect Heights, Illinois
MARTA RAMOS, San Juan, Puerto Rico
JOHN C . G A M B O A , S a n F r a n c i s c o , C a l i f o r n i a
DAVID L . RAMP, S t . P a u l , M i n n e s o t a
ROSE M . GARCIA, L a s C r u z e s , N e w
MARILYN ROSS, O m a h a , N e b r a s k a
Mexico
VINCENT J. GIBLIN, West Caldwell, N e w Jersey
ROBERT G . SCHWEMM, L e x i n g t o n , K e n t u c k y
KARL A S . IRVINE, C i n c i n n a t i , O h i o
DAVID J. SHIRK, E u g e n e , O r e g o n
WILLIE M . JONES, B o s t o n , M a s s a c h u s e t t s
GAIL M. SMALL, Lame Deer, Montana
JANET C. KOEHLER, Ponte Vedra, Florida
GARY S . WASHINGTON, C h i c a g o , I l l i n o i s
G W E N N S. KYZER, A l l e n , T e x a s
ROBERT L . W Y N N , II, M a d i s o n , W i s c o n s i n
THRIFT INSTITUTIONS ADVISORY
COUNCIL
WILLIAM A. FITZGERALD, Omaha, Nebraska, President
F. WELLER MEYER, Falls Church, Virginia, Vice President
GAROLD R . BASE, P i a n o , T e x a s
BABETTE E. HEIMBUCH, Santa Monica, California
JAMES C. BLAINE, Raleigh, North Carolina
THOMAS S . JOHNSON, N e w Y o r k , N e w Y o r k
D A V I D A . BOCHNOWSKI, M u n s t e r , I n d i a n a
WILLIAM A . LONGBRAKE, S e a t t l e , W a s h i n g t o n
LAWRENCE L . B O U D R E A U X III, N e w O r l e a n s , L o u i s i a n a
KATHLEEN E. MARINANGEL, M c H e n r y , I l l i n o i s
RICHARD P. C O U G H L I N , S t o n e h a m , M a s s a c h u s e t t s
A N T H O N Y J. POPP, M a r i e t t a , O h i o
72
Federal Reserve Bulletin • July 1999
Federal Reserve Board Publications
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BOOKS AND MISCELLANEOUS
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T H E FEDERAL RESERVE A C T A N D OTHER STATUTORY PROVISIONS
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T H E U . S . ECONOMY IN AN INTERDEPENDENT WORLD: A M U L T I -
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REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL
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RATE
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$5.00.
G U I D E TO THE FLOW OF F U N D S ACCOUNTS. 6 7 2 p p . $ 8 . 5 0 e a c h .
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EDUCATION
PAMPHLETS
Short pamphlets
suitable for classroom
available without
charge.
use. Multiple
copies
are
Consumer Handbook on Adjustable Rate Mortgages
Consumer Handbook to Credit Protection L a w s
A Guide to Business Credit for W o m e n , Minorities, and Small
Businesses
Series on the Structure of the Federal Reserve
System
The Board of Governors of the Federal Reserve System
The Federal Open Market Committee
Federal Reserve Bank Board of Directors
Federal Reserve Banks
A Consumer's Guide to Mortgage Lock-Ins
A Consumer's Guide to Mortgage Settlement Costs
A Consumer's Guide to Mortgage Refinancings
H o m e Mortgages: Understanding the Process and Your Right
to Fair Lending
H o w to File a Consumer Complaint
Making S e n s e of Savings
SHOP: The Card You Pick Can Save You M o n e y
W e l c o m e to the Federal Reserve
W h e n Your H o m e is on the Line: What You Should K n o w
About H o m e Equity Lines of Credit
Keys to Vehicle Leasing
Looking for the B e s t Mortgage
A73
STAFF STUDIES: Only Summaries
BULLETIN
Printed
in the
162.
EVIDENCE ON THE S I Z E OF B A N K I N G MARKETS FROM M O R T GAGE
Studies and papers on economic and financial subjects that are of
general interest. Requests to obtain single copies of the full text or
to be added to the mailing list for the series may be sent to
Publications
Services.
LOAN
RATES
IN
TWENTY
CITIES,
by
Stephen
A.
REAL
ESTATE,
BY
Rhoades. February 1992. 11 pp.
164.
THE
1989-92
CREDIT
CRUNCH
FOR
JAMES T. FERGUS A N D JOHN L . G O O D M A N , JR. JULY
2 0 PP.
167.
A SUMMARY OF MERGER PERFORMANCE STUDIES IN B A N K ING, 1 9 8 0 - 9 3 , A N D AN ASSESSMENT OF THE
Staff Studies 1 - 1 5 8 , 161, 163, 165, 166, and 1 6 8 - 1 6 9 are out of
print.
PERFORMANCE"
"EVENT
STUDY"
"OPERATING
METHODOLOGIES,
T H E COST OF IMPLEMENTING CONSUMER F I N A N C I A L R E G U -
SUBSIDI-
LATIONS: A N A N A L Y S I S OF EXPERIENCE WITH THE T R U T H
ARIES OF B A N K H O L D I N G COMPANIES, b y N e l l i e L i a n g a n d
IN SAVINGS ACT, by Gregory Elliehausen and Barbara R.
Lowrey, December 1997. 17 pp.
N E W DATA ON THE PERFORMANCE OF N O N B A N K
Donald Savage. February 1990. 12 pp.
160.
AND
by Stephen A. Rhoades. July 1994. 37 pp.
170.
159.
1993.
BANKING
VICES
BY
MARKETS
SMALL
AND
AND
THE
USE
OF F I N A N C I A L
MEDIUM-SIZED
BUSINESSES,
SERby
Gregory E. Elliehausen and John D. Wolken. September
1990. 35 pp.
171.
T H E COST OF B A N K REGULATION: A R E V I E W OF THE E V I -
DENCE, by Gregory Elliehausen, April 1998. 35 pp.
74
Federal Reserve Bulletin • July 1999
Maps of the Federal Reserve System
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 February 1996.
A75
2-B
1-A
4-D
3-C
Ml-.
5-E
Pittsburgh
Baltimore
MD
NY
f
VAM
/
I
VT
CI
Bull .ilo
MA ™
wv
NT
inati
•Charloik'
/
NJ
BOSTON
sc
PHILADELPHIA
N E W YORK
6-F
RICHMOND
CLEVELAND
8-H
7-G
KY
/
IL
MO
1
LA
AR
* Jacksotwille
) IN f
Louisville
- T N
1
• Memphis
Little / lIC
Rock ( MS
N e w Oilcans
ATLANTA
9-1
S T . LOUIS
CHICAGO
MT
ll
' M M —
• Helena
• "
MINNEAPOLIS
12-L
10-J
CO
•
Omaha*
^ MO
Us
• '
Denver
NM
Oklahoma C'it\
•
KANSAS CITY
11-K
NM
A/
DALLAS
S A N FRANCISCO
76
Federal Reserve Bulletin • July 1999
Federal Reserve Banks, Branches, and Offices
FEDERAL RESERVE B A N K
branch, or facility
Zip
Chairman
Deputy Chairman
President
First Vice President
BOSTON*
02106
William C. Brainard
William O. Taylor
Cathy E. Minehan
Paul M. Connolly
NEW YORK*
10045
John C. Whitehead
Peter G. Peterson
Bal Dixit
William J. McDonough
Jamie B. Stewart, Jr.
Buffalo
14240
Carl W. Turnipseed 1
PHILADELPHIA
19105
Joan Carter
Charisse R. Lillie
Edward G. Boehne
William H. Stone, Jr.
CLEVELAND*
44101
Jerry L. Jordan
Sandra Pianalto
Cincinnati
Pittsburgh
45201
15230
G. Watts Humphrey, Jr.
David H. Hoag
George C. Juilfs
John T. Ryan, III
RICHMOND*
23219
J. Alfred Broaddus, Jr.
Walter A. Varvel
Baltimore
Charlotte
21203
28230
Claudine B. Malone
Jeremiah J. Sheehan
Daniel R. Baker
Joan H. Zimmerman
John F. Wieland
Paula Lovell
V. Larkin Martin
Marsha G. Rydberg
Mark T. Sodders
N. Whitney Johns
R. Glenn Pumpelly
Jack Guynn
Patrick K. Barron
Lester H. McKeever, Jr.
Arthur C. Martinez
Florine Mark
Michael H. Moskow
William C. Conrad
Susan S. Elliott
Charles W. Mueller
Diana T. Hueter
Roger Reynolds
Mike P. Sturdivant, Jr.
William Poole
W. LeGrande Rives
David A. Koch
James J. Howard
Thomas O. Markle
Gary H. Stern
Colleen K. Strand
Jo Marie Dancik
Terrence P. Dunn
Kathryn A. Paul
Larry W. Brummett
Gladys Styles Johnston
Thomas M. Hoenig
Richard K. Rasdall
Roger R. Hemminghaus
James A. Martin
Patricia Z. Holland-Branch
Edward O. Gaylord
Bartell Zachry
Robert D. McTeer, Jr.
Helen E. Holcomb
Gary G. Michael
Nelson C. Rising
Lonnie Kane
Nancy Wilgenbusch
Barbara L. Wilson
Richard R. Sonstelie
Robert T. Parry
John F. Moore
ATLANTA
Birmingham
Jacksonville
Miami
Nashville
New Orleans
30303
35283
32231
33152
37203
70161
CHICAGO*
60690
Detroit
48231
ST. LOUIS
63166
Little Rock
Louisville
Memphis
72203
40232
38101
MINNEAPOLIS
55480
Helena
K A N S A S CITY
Denver
Oklahoma City
Omaha
DALLAS
El Paso
Houston
San Antonio
59601
64198
80217
73125
68102
75201
79999
77252
78295
S A N FRANCISCO
94120
Los Angeles
Portland
Salt Lake City
Seattle
90051
97208
84125
98124
Vice President
in charge of branch
Barbara B.Henshaw
Robert B. Schaub
William J. Tignanelli 1
Dan M. Bechter 1
James M. McKee
Fred R. Herr1
James D. Hawkins 1
James T. Curry III
Melvyn K. Purcell 1
Robert J. Musso 1
David R. Allardice 1
Robert A. Hopkins
Thomas A. Boone
Martha Perine Beard
Samuel H. Gane
Carl M. Gambs 1
Kelly J. Dubbert
Steven D. Evans
Sammie C. Clay
Robert Smith, III 1
James L. Stull 1
Mark L. Mullinix 1
Raymond H. Laurence 1
Andrea P. Wolcott
Gordon R. G. Werkema 2
* Additional offices of these Banks are located at Windsor Locks, Connecticut 06096; East Rutherford, New Jersey 07016; Utica at Oriskany, New York 13424;
Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; Milwaukee,
Wisconsin 53202; and Peoria, Illinois 61607.
1. Senior Vice President.
2. Executive Vice President
All
Publications of Interest
FEDERAL
RESERVE
CONSUMER
CREDIT
PUBLICATIONS
The Federal Reserve Board publishes a series of
brochures covering individual credit laws and topics,
as pictured below.
Five brochures on the mortgage process are available: A Consumer's Guide to Mortgage Lock-Ins,
A Consumer's Guide to Mortgage Refinancings, A
Consumer's Guide to Mortgage Settlement Costs,
Home Mortgages: Understanding the Process and
Your Right to Fair Lending, and Looking for the Best
Mortgage: Shop, Compare, Negotiate. These brochures were prepared in conjunction with the Federal
Home Loan Bank Board and in consultation with
other federal agencies and trade and consumer
groups. The Board also publishes the Consumer
Handbook to Credit Protection Laws, a complete
guide to consumer credit protections. This forty-fourpage booklet explains how to shop and obtain credit,
how to maintain a good credit rating, and how to
dispute unfair credit transactions.
A Consumer's
Quids to
Mortgage
Lock-ins
Shop . . . The Card You Pick Can Save You Money
is designed to help consumers comparison shop when
looking for a credit card. It contains the results of the
Federal Reserve Board's survey of the terms of credit
card plans offered by credit card issuers throughout
the United States. Because the terms can affect the
amount an individual pays for using a credit card, the
booklet lists the annual percentage rate (APR), annual
fee, grace period, type of pricing (fixed or variable
rate), and a telephone number for each card issuer
surveyed. A Guide to Business Credit for Women,
Minorities, and Small Businesses covers the credit
application process and points out sources of technical assistance for small business loans.
Up to 100 copies of consumer publications are
available free of charge from Publications Services,
Mail Stop 127, Board of Governors of the Federal
Reserve System, Washington, DC 20551.
HOME MORTGAGES:
Understanding the Process
and Your Right
to Fair Lending
iMJLCl
78
Federal Reserve Bulletin • July 1999
Publications of Interest
FEDERAL
RESERVE
REGULATORY
SERVICE
To promote public understanding of its regulatory functions, the Board publishes the Federal Reserve Regulatory Service, a four-volume loose-leaf service containing all Board regulations as well as related statutes,
interpretations, policy statements, rulings, and staff
opinions. For those with a more specialized interest in
the Board's regulations, parts of this service are published separately as handbooks pertaining to monetary
policy, securities credit, consumer affairs, and the payment system.
These publications are designed to help those who
must frequently refer to the Board's regulatory materials. They are updated monthly, and each contains citation indexes and a subject index.
Requirements
The Monetary Policy and Reserve
Handbook contains Regulations A, D, and Q, plus
related materials.
The Securities Credit Transactions Handbook contains Regulations T, U, and X, dealing with extensions of credit for the purchase of securities, together
with related statutes, Board interpretations, rulings,
and staff opinions. Also included is the Board's list of
foreign margin stocks.
The Consumer and Community Affairs Handbook
contains Regulations B, C, E, M, Z, AA, BB, and DD,
and associated materials.
GUIDE
TO THE FLOW
OF FUNDS
ACCOUNTS
Guide to the Flow of Funds Accounts explains in detail
how the U.S. financial flow accounts are prepared. The
accounts, which are compiled by the Division of
Research and Statistics, are published in the Board's
quarterly Z.l statistical release, "Flow of Funds
Accounts, Flows and Outstandings." The Guide updates
and replaces Introduction to Flow of Funds, published
in 1980.
The 670-page Guide begins with an explanation of
the organization and uses of the flow of funds accounts
and their relationship to the national income and
product accounts prepared by the U.S. Department of
Commerce. Also discussed are the individual data
series that make up the accounts and such proce-
The Payment System Handbook deals with expedited
funds availability, check collection, wire transfers, and
risk-reduction policy. It includes Regulations CC, J, and
EE, related statutes and commentaries, and policy
statements on risk reduction in the payment system.
For domestic subscribers, the annual rate is $200 for
the Federal Reserve Regulatory Service and $75 for
each handbook. For subscribers outside the United
States, the price including additional air mail costs is
$250 for the service and $90 for each handbook.
The Federal Reserve Regulatory Service is also available on CD-ROM for use on personal computers. For a
standalone PC, the annual subscription fee is $300. For
network subscriptions, the annual fee is $300 for 1 concurrent user, $750 for a maximum of 10 concurrent
users, $2,000 for a maximum of 50 concurrent users,
and $3,000 for a maximum of 100 concurrent users.
Subscribers outside the United States should add $50
to cover additional airmail costs. For further information, call (202) 452-3244.
All subscription requests must be accompanied by a
check or money order payable to the Board of Governors of the Federal Reserve System. Orders should be
addressed to Publications Services, mail stop 127, Board
of Governors of the Federal Reserve System, Washington, DC 20551.
dures as seasonal adjustment, extrapolation, and
interpolation.
The balance of the Guide contains explanatory tables
corresponding to the tables of financial flows data that
appeared in the September 1992 Z.l release. These
tables give, for each data series, the source of the data or
the methods of calculation, along with annual data for
1991 that were published in the September 1992 release.
Guide to the Flow of Funds Accounts is available for
$8.50 per copy from Publications Services, Board of
Governors of the Federal Reserve System, Washington,
DC 20551. Orders must include a check or money order,
in U.S. dollars, made payable to the Board of Governors
of the Federal Reserve System.
@FedFRASER