Full text of Federal Reserve Bulletin : June 1999
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Volume 85 • Number 6 • J u n e 1999 Federal Reserve BULLETIN Board of Governors of the Federal Reserve System, Washington, D.C. Table of Contents 3 6 9 PROFITS AND BALANCE SHEET DEVELOPMENTS AT U.S. COMMERCIAL BANKS IN 1998 The performance of the U.S. commercial banking industry remained strong in 1998, but slipped a bit from the remarkable results of recent years. Both the return on assets and the return on equity edged down last year, although they remained high by historical standards. While supported by growth in fee income, profitability was damped by a large decline in the rates banks earned on their interest-bearing assets relative to the rates they paid on their liabilities, and also by higher noninterest costs, especially merger and restructuring expenses. Profitability was uneven last year across bank sizes: Whereas the largest and the smallest banks posted lower earnings, the profits of mediumsized banks—which account for almost twothirds of industry assets—improved once again in 1998. Nevertheless, though these figures attest to the profitability of most banks, the share of bank assets at unprofitable institutions increased 2 percentage points, to 2.6 percent, the highest since 1994. 3 9 6 TREASURY AND FEDERAL RESERVE FOREIGN EXCHANGE OPERATIONS During the first quarter of 1999, the dollar appreciated 8.4 percent against the euro and 5.3 percent against the yen. The dollar's value was largely influenced by changes in market expectations for economic growth in the United States, Europe, and Japan. Against the euro, the dollar strengthened as the differential between U.S. and European interest rates moved increasingly in favor of the dollar. Against the yen, the dollar fell to a two-and-a-half-year low and then rebounded after the Bank of Japan reportedly intervened to counter yen appreciation and subsequently guided overnight interest rates to near zero. The U.S. monetary authorities did not intervene in the foreign exchange markets during the quarter. 401 INDUSTRIAL UTILIZATION PRODUCTION FOR APRIL AND 1999 CAPACITY Industrial production, which had been essentially flat between October and February, accelerated in March and April. At 134.0 percent of its 1992 average, industrial production in April was 2.0 percent higher than in April 1998. Capacity utilization in manufacturing, mining, and electric and gas utilities rose 0.2 percentage point in April, to 80.6 percent, down from 82.6 percent a year earlier. 4 0 4 STATEMENTS TO THE CONGRESS Edward W. Kelley, Jr., member, Board of Governors, discusses the Board's extensive interest in, and efforts to address, Year 2000 issues and testifies that he is increasingly optimistic that the operational transition will go well and has come to believe that Year 2000 technical issues will not cause major problems in the financial markets of the United States. He further testifies that the Federal Reserve is committed to a rigorous program of industry testing and contingency planning and, through our supervisory initiatives, to identifying those organizations that most need to apply additional attention to Year 2000 readiness programs. (Testimony before the House Committee on Banking and Financial Services, April 13, 1999) 413 Kenneth D. Buckley, Assistant Director, Division of Reserve Bank Operations and Payment Systems, discusses the arrangements the Federal Reserve is making to ensure the timely delivery of veterans' benefit payments made by direct deposit during the rollover to the Year 2000 and testifies that internal Federal Reserve systems used to deliver veterans' benefit payments have been modified, tested, and placed into production. Further, he testifies that while the Board expects that the industry may experience some minor or localized problems during the rollover, it fully expects to conduct business as usual through the year 2000 and veterans and their families should be confident that their benefits will be paid as usual. (Testimony before the Senate Committee on Veterans' Affairs, April 20, 1999) 415 Richard A. Small, Assistant Director, Division of Banking Supervision and Regulation, discusses the Federal Reserve's role in the government's efforts to detect and deter money laundering and other financial crimes, with a particular emphasis on matters related to the Bank Secrecy Act and the reporting of suspicious activity; he testifies that compliance with the Bank Secrecy Act and the suspicious-activity reporting requirements by financial institutions provides timely and valuable information to law enforcement and is the best indicator of the existence of satisfactory anti-money-laundering and anti-fraud policies and procedures. (Testimony before the Subcommittee on General Oversight and Investigations and the Subcommittee on Financial Institutions and Consumer Credit of the House Committee on Banking and Financial Services, April 20, 1999) 419 Alan Greenspan, Chairman, Board of Governors, presents the views of the Federal Reserve on the current version of H.R. 10, the approach to financial modernization most recently approved by the House Banking Committee and testifies that the Federal Reserve strongly supports the new powers that would be authorized by H.R. 10. He testifies that the new activities should not be authorized for banks through operating subsidiaries and that the holding company structure is the most appropriate and effective one for limiting transfer of the federal subsidy to new activities and fostering a level playing field both for financial firms affiliated with banks and for independent firms, while fostering the safety and soundness of our insured banking system, enhancing functional regulation, and achieving the benefits of financial modernization for the consumer and the financial services industry. (Testimony before the Subcommittee on Finance and Hazardous Materials of the House Committee on Commerce, April 28, 1999) 424 ANNOUNCEMENTS Launch of a new design for the Federal Reserve Board's web site. Issuance by the Basle Committee of a paper on credit-risk modeling. Enforcement actions. Changes in Board staff. 426 MINUTES OF THE FEDERAL OPEN MARKET COMMITTEE MEETING HELD ON FEBRUARY 2-3, 1999 At its meeting on February 2-3, 1999, the Committee voted to approve without change the growth ranges for M2 and M3 in 1999 that had been established on a provisional basis on July 1, 1998. For the intermeeting period ahead, the Committee adopted a directive that called for conditions in reserve markets that were consistent with an unchanged federal funds rate of 43A percent. The directive did not include a bias with regard to any adjustments to policy during the intermeeting period. 4 3 7 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 April 28, 1999. A 3 GUIDE TO TABULAR PRESENTATION A4 Domestic Financial Statistics A42 Domestic Nonfinancial Statistics A50 International Statistics A 6 3 GUIDE TO STATISTICAL SPECIAL TABLES RELEASES A 6 4 INDEX TABLES TO STATISTICAL AND A66 BOARD OF GOVERNORS AND STAFF A68 FEDERAL OPEN MARKET COMMITTEE AND STAFF; ADVISORY A 7 0 FEDERAL A 7 2 SCHEDULE PERIODIC RESERVE COUNCILS BOARD OF RELEASE RELEASES PUBLICATIONS DATES FOR A74 MAPS OF THE FEDERAL RESERVE SYSTEM A76 FEDERAL RESERVE BANKS, BRANCHES, AND OFFICES PUBLICATIONS COMMITTEE Lynn S. Fox, Chair • Karen H. Johnson • Donald L. Kohn • 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. Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 Antulio N. Bomfim and William R. Nelson, of the Board's Division of Monetary Affairs, prepared this article. Thomas C. Allard assisted in developing, and was responsible for maintaining, the database used in this article. Douglas M. Conover and Adrian R. Sosa provided research assistance. The performance of the U.S. commercial banking industry remained strong in 1998, but slipped a bit from the remarkable results of recent years. Both the return on assets and the return on equity edged down last year, although they remained high by historical standards (chart 1). While supported by growth in fee income, profitability was damped by a large decline in the rates banks earned on their interest-bearing assets relative to the rates they paid on their liabilities, and also by higher noninterest costs, especially merger and restructuring expenses. Profitability was uneven last year across bank sizes: Whereas the largest and the smallest banks posted lower earnings, the profits of medium-sized banks—which account for almost two-thirds of industry assets—improved once again in 1998. Nevertheless, though these figures attest to the profitability of most banks, the share of bank assets at unprofitable institutions increased 2 percentage points, to 2.6 percent, the highest since 1994.1 1. Except where otherwise indicated, data in this article are from the quarterly Reports of Condition and Income (Call Reports) for insured domestic commercial banks and nondeposit trust companies (hereafter, banks). The data consolidate information from foreign and domestic offices and have been adjusted to take account of mergers. For additional information on the adjustments to the data, see the appendix in William B. English and William R. Nelson, "Profits and Balance Sheet Developments at U.S. Commercial Banks in 1997," Federal Reserve Bulletin, vol. 84 (June 1997), p. 408. Size categories, based on assets at the start of each quarter, are as follows: the 10 largest banks, large banks (those ranked 11 through 100 by size), medium-sized banks (those ranked 101 through 1,000 by size), and small banks (those not among the largest 1,000 banks). At the start of the fourth quarter of 1998, the approximate asset size of the banks in those groups were as follows: the 10 largest banks, more than $71 billion; large banks, $6 billion to $71 billion; medium-sized banks, $309 million to $6 billion; small banks, less than $309 million. Many of the data series reported here begin in 1985 because the Call Reports were significantly revised in 1984. Data from before 1985 are taken from Federal Deposit Insurance Corporation, Statistics on Banking (FDIC, 1997). The FDIC data are also available on the World Wide Web (http://www.fdic.gov/databank/sob/). Data shown may not match 1. Measures of commercial bank profitability, 1970-98 Percent Return on equity - - — V ; Mil — Return on assets s 15 — 10 — 5 1 i ! ! ! 1 / — 1.0 — 0.5 Mil 1970 1975 1980 1985 1990 1995 Although, in the third quarter, trading income was sharply curtailed and provisions for loan losses were elevated at the largest banks, the turmoil in financial markets in the second half had little effect on profits last year for the banking industry as a whole. But the late-summer currency devaluation and default in Russia left a discernible imprint on the balance sheets of U.S. commercial banks in 1998: Growth in bank assets was boosted by the financial reintermediation process that characterized much of the second half of last year, with holdings of both loans and securities posting sizable gains. Bank stocks underperformed broader market indexes in 1998, ending the year about where they began. After having risen strongly in the first half, bank equity prices, particularly those of money center banks, fell sharply in the aftermath of the Russian crisis, but later recovered as conditions abroad calmed and the domestic economic expansion continued. Dividend payments made by banks, including those made to parent holding companies, declined last year, helping bank capital to grow in line with assets. Risk-based capital measures edged down again, but remained high: Nearly 95 percent of bank data published in earlier years because of revisions and corrections. In the tables, components may not sum to totals because of rounding. 370 2. Federal Reserve Bulletin • June 1999 Number of commercial banks and percentage of assets at the largest 100 banks, 1970-98 Thousands bank assets. A 9Vi percent expansion in managed liabilities, matched by a similar gain in equity capital, bridged the gap between growth in assets and in core deposits. Number Loans to Businesses Percentage of assets at largest 100 assets were held by institutions classified as "well capitalized" at year-end. Bank consolidation continued and included some particularly large mergers. As a result, the share of industry assets at the largest 3100 banks rose to 70 percent at year-end, up from 67 /4 percent a year earlier and around 50 percent in 1985. The number of commercial banks fell by 371, as the number of newly created banks was more than offset by the 588 banks that ceased to exist (almost entirely because of mergers). At the end of 1998, there were 8,817 commercial banks in the United States, more than one-third fewer than the 14,393 banks that existed in 1985 (chart 2). Banking industry consolidation was also evident in mergers between holding companies, whose numbers declined by 139 last year, to 5,971. The largest 50 holding companies continued to steadily increase their share of industry assets, from 74 percent at the end of 1997 to 76 percent at the end of last year. Bank loans to commercial and industrial (C&I) enterprises expanded almost 13 percent last year, topping even 1997's considerable advance. Nowhere was the influence of last year's two driving forces for bank credit—strong economic fundamentals and skittish financial markets—more evident than in this category of bank loans. For the year as a whole, capital expenditures by nonfinancial corporations expanded rapidly, particularly for below-investment-grade companies, while profits remained near their 1997 level. As a result, the financing gap—the excess of capital expenditures over internally generated funds— widened substantially (chart 3). The borrowing needs of nonfinancial corporations were further elevated by a rapid pace of net equity retirement, which was fueled by corporate mergers and acquisitions and stock buyback programs. Banks played an especially important role in business financing needs during the fall of last year, when the issuance of corporate securities was severely disrupted and spreads between yields on private debt instruments and on comparable Treasury securities widened appreciably. Indeed, with investors favoring safe and liquid assets, yields on junk bonds rose even as Treasury yields were falling, and the 3. Financing gap at nonfarm nonfinancial corporations, 1990-98 Billions of dollars BALANCE SHEET DEVELOPMENTS — Bank assets expanded 81/4 percent last year, versus 9!/4 percent in 1997 (table 1). In addition to robust economic conditions throughout the year, turmoil in financial markets in the fall helped sustain the rapid growth of bank credit in 1998. Loans on banks' books benefited the most, increasing almost 9 percent last year after a 5Vi percent rise in 1997. Banks' securities holdings also advanced briskly, rising 8'/3 percent, although that was a bit less fast than the increase posted in 1997. On the liability side, core deposits grew 7 percent, well above the AVi percent increase in 1997 but still short of the rapid advance in 1990 1992 1994 19% 100 1998 NOTE. T h e data are four-quarter m o v i n g averages. T h e financing gap is the difference between capital expenditures and internally generated funds. SOURCE. Federal Reserve Board, Statistical Release Z . l , " F l o w of Funds Accounts of the United States," table F. 102. Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 371 1. Annual rates of growth of balance sheet items, 1989-98 Percent ——rrrrc MEMO: Dec. Item Assets Interest-earning assets Loans and leases (net) Commercial and industrial Real estate Booked in domestic offices One- to four-family residential Other Booked in foreign offices Consumer Other loans and leases Loan-loss reserves and unearned income Securities Investment account U.S. Treasury U.S. government agency and corporation obligations Other Trading account Other Non-interest-earning assets Liabilities Core deposits Transaction deposits Savings and small time deposits Managed liabilities 1 Deposits booked in foreign offices Large time Subordinated notes and debentures Other managed liabilities Other Equity capital 1989 1990 1991 1992 1993 1994 5.35 5.61 6.24 2.97 12.69 13.02 2.64 2.23 2.37 -.67 8.79 8.55 1.33 1.98 -2.65 -9.10 2.73 2.90 2.19 2.53 -1.04 -4.10 1.94 2.57 5.68 6.56 6.05 .52 6.13 6.17 8.06 5.77 9.83 9.33 7.90 7.64 7.55 7.69 10.53 12.26 8.33 8.48 6.09 5.67 8.12 7.24 5.44 16.13 10.34 2.99 6.18 -.94 14.00 3.62 16.64 .38 -5.68 7.76 -1.93 -2.35 -2.55 -4.91 7.53 -2.86 -17.80 -1.66 -4.24 11.08 .22 4.67 9.06 9.97 10.09 4.35 18.35 16.01 5.29 10.29 5.08 4.04 -13.79 .35 8.46 8.19 3.50 -3.78 16.23 14.42 32.01 -4.85 12.29 11.44 23.95 -5.82 12.26 8.11 7.24 33.41 -5.35 20.62 2.49 3.50 24.02 -6.70 11.87 11.70 5.51 15.88 -2.56 38.88 2.82 -3.10 12.77 -5.20 21.01 1.57 -.32 9.62 6.09 51.84 5.43 5.75 .93 8.71 5.13 2.37 7.58 2.43 10.51 -6.15 1.01 5.25 3.38 6.24 -1.07 5.00 -5.88 —5.68 16.98 9.86 3.29 4.18 1998 1997 1998 9.24 5.50 8.88 8.38 12.02 9.30 9.53 8.22 8.18 8.91 12.97 7.98 7.96 5,380 4,631 3,142 893 1,335 1,304 10.06 6.25 2.81 9.50 14.23 4.65 6.75 3.18 4.90 22.28 9.67 9.33 .34 -2.18 13.73 6.34 10.28 8.79 1.03 14.04 758 546 31 550 425 -2.22 -2.61 -1.73 -8.46 .25 .57 -1.58 -19.21 -.06 .84 -1.12 -14.30 -.49 8.86 8.68 -8.85 3.38 8.34 12.04 -25.17 60 1,090 965 113 -7.90 -.86 .87 2.49 -9.43 3.25 25.65 6.43 4.20 18.51 7.64 6.61 3.61 1.82 14.44 -.90 8.87 14.20 11.21 9.97 12.81 11.48 16.98 26.93 -13.56 2.35 8.47 585 267 125 399 749 -6.19 1.35 5.09 14.62 .18 -6.07 5.12 1.49 5.47 -.85 12.30 8.31 -.17 -.33 -.08 17.57 7.17 3.97 -3.09 8.37 10.44 5.95 4.12 -3.45 8.34 9.65 9.13 4.53 -4.54 9.04 13.84 8.09 7.05 -1.35 10.71 9.60 4,926 2,670 747 1,923 1,885 3.81 -19.73 -5.85 -26.20 15.06 -9.21 30.89 8.72 5.13 19.61 4.27 21.16 11.13 20.15 8.71 9.09 572 413 20.99 -8.06 4.43 4.69 -1.39 -4.18 34.90 6.94 -1.02 10.82 22.18 15.30 9.23 12.91 79.17 6.61 11.24 20.46 17.74 8.21 2.60 21.05 12.23 23.79 17.00 9.87 8.11 72 827 371 6.64 5.98 13.75 12.58 5.24 12.00 7.72 10.46 9.62 454 -2.58 19.27 -4.03 10.37 -.60 9.66 4.00 -3.12 6.35 .67 7.66 2.03 10.13 14.18 11.35 22.11 554 464 1995 1996 (billions of dollars) MEMO Commercial real estate loans 2 Mortgage-backed securities n.a. n.a. 41.00 34.39 NOTE. Data are from year-end to year-end. n.a. Not available. 1. Measured as the sum of deposits in foreign offices, large time deposits in domestic offices, federal funds purchased and securities sold under agreements to resell, demand notes issued to the U.S. Treasury, subordinated notes and debentures, and other borrowed money. 2. Measured as the sum of construction and land development loans secured by real estate; real estate loans secured by nonfarm nonresidential properties; real estate loans secured by multifamily residential properties; and loans to finance commercial real estate, construction, and land development activities not secured by real estate. spread between yields on those bonds and yields on comparable Treasuries roughly doubled between midsummer and mid-fall. The spread between investment-grade corporate bonds and Treasuries also widened substantially during that period, as did that between yields on lower-tier commercial paper and higher-quality paper (charts 4 and 5). Consistent with such inhospitable financial market conditions, respondents to the Federal Reserve's Senior Loan Officer Opinion Survey on Bank Lending Practices (BLPS) in November pointed to shifts from other sources of credit as the primary cause for increased loan demand in the fall. In particular, about three-quarters of the largest domestic and the foreign respondents indicated that substitution from the bond market had intensified loan demand; about half also mentioned substitution from the commercial paper market. Partly as a result of these substitutions, banks posted further gains in their share of total nonmortgage credit market debt owed by the nonfinancial business sector (chart 6). The substitutions toward bank financing occurred even though banks, like other lenders, tightened the terms and standards on loans to businesses after the turbulence that hit the financial markets in the second half of the year. Judging from responses to the BLPS, the tightening was especially noticeable for large and medium-sized borrowers and represented the first time that large banks did not ease terms, on net, since 1993 (chart 7). Respondents to the September and November BLPSs cited a reduced tolerance for risk and a less favorable economic environment as rea- 372 4. Federal Reserve Bulletin • June 1999 Spreads between yields on corporate bonds and Treasury securities, 1998 Basis points 200 1998 NOTE. T h e data are daily. T h e spread of high-yield b o n d s c o m p a r e s the yield on the Merrill L y n c h Master II index with that on a seven-year Treasury; the other t w o spreads c o m p a r e yields on the appropriate Merrill L y n c h indexes with that on a ten-year Treasury. SOURCE. Merrill L y n c h ; Federal Reserve Board, Statistical Release H.15, "Selected Interest Rates." sons for the tightening in the latter part of the year.2 Data from the Federal Reserve's quarterly Survey of Terms of Business Lending (STBL) also showed a widening of the average spread on business loans in late 1998 (chart 8, upper panels).3 While growth in 2 . O r d i n a r i l y , t h e B L P S i s c o n d u c t e d o n a q u a r t e r l y b a s i s , but the F e d e r a l R e s e r v e u s e d its a u t h o r i t y t o c o n d u c t u p t o s i x s u r v e y s a y e a r t o a s s e s s the i m p a c t o f t h e o n g o i n g financial t u r b u l e n c e o n the b a n k l o a n m a r k e t in a s p e c i a l B L P S in m i d - S e p t e m b e r . 3. A l t h o u g h s p r e a d s o v e r t h e f e d e r a l f u n d s rate w i d e n e d last f a l l , rates o n l o a n s g e n e r a l l y d e c l i n e d , r e f l e c t i n g the e f f e c t s o n m a r k e t rates o f the three e a s i n g a c t i o n s u n d e r t a k e n b y t h e F e d e r a l R e s e r v e b e t w e e n C&I loans was strong for banks of all sizes, the widening of spreads was generally applied to larger loans—which are typically made by the bigger banks. These loans were probably taken out by businesses most affected by the financial market turmoil, either because they would normally have raised a significant share of their funds in the capital market, or because they were directly exposed to the Russian crisis and the subsequent deterioration in other emerging-market economies. Last fall's disruption in the private debt markets highlighted the important role played by loan commitments as a buffer against sudden shifts in financing conditions. Indeed, according to the STBL, spreads on C&I loans not made under commitment widened much more sharply in late 1998 than did those on other loans, indicating that businesses would have been subject to considerably more financial strain in the absence of such commitments (chart 8, lower panels). As with total C&I loans, the tightening in conditions on bank loans not made under commitment was most evident for larger loans; spreads on smaller loans widened only slightly last year. Of course, the existence of loan commitments implies that banks likely made some loans at spreads they considered too narrow under the circumstances that emerged during the second half of last year. Indeed, one-fourth of the banks reported in the January 1999 BLPS that they would tighten terms on more than 20 percent of their outstanding revolving loan commitments if those commitments were maturing and being repriced at the time of the survey. September and N o v e m b e r . 5. Spread between rates on lower-tier commercial paper and rates on high-quality paper, 1998 6. Bank loans as a share of total nonmortgage credit market debt, nonfinancial businesses, 1970-98 Percent Basis points 1998 NOTE. T h e data are daily. T h e spread c o m p a r e s the rate on A2/P2-rated, thirty-day commercial paper with that on AA-rated, thirty-day paper. SOURCE. Federal Reserve Board. Statistical Release, " C o m m e r c i a l Paper." 1970 1975 1980 1985 1990 1995 NOTE. T h e data are quarterly. SOURCE. Federal Reserve Board, Statistical Release Z . l . " F l o w of Funds Accounts of the United States," table L. 101. Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 7. C&I loan standards and terms, by size of borrower, 1990-99: Q1 373 8. Spread between the C&I loan rate and the intended federal funds rate, by size of loan and commitment status, 1998-99:Q1 Percent Basis points N e t percentage o f selected large c o m m e r c i a l banks A l l l o a n s o f m o r e than $ 1 , 0 0 0 , 0 0 0 that t i g h t e n e d s t a n d a r d s 180 160 140 Small borrowers 120 Net percentage o f selected large commercial banks that i n c r e a s e d s p r e a d s o v e r their c o s t o f f u n d s All loans of l e s s than $ 1 , 0 0 0 , 0 0 0 60 400 40 380 20 + 360 0 340 20 40 : L o a n s o f m o r e than $ 1 , 0 0 0 , 0 0 0 not made under c o m m i t m e n t 180 160 NOTE. T h e data are quarterly. Net percentage is the percentage of b a n k s reporting a tightening of standards or an increase in spreads less the percentage reporting an easing or decrease. T h e definition for firm size suggested for, and generally used by, survey respondents is that medium firms are those with sales of between $ 5 0 million and $ 2 5 0 million. SOURCE. Federal Reserve Board, Senior Loan Officer Opinion Survey on Bank Lending Practices. 140 • Hi 120 L o a n s o f less than $ 1 , 0 0 0 , 0 0 0 not m a d e under c o m m i t m e n t Commercial real estate loans on banks' books accelerated to an 11 Vs percent rise in 1998, fueled by continuing strong conditions in the property market, especially in the office sector, where vacancy rates fell further and prices continued to rise. In addition, BLPS responses suggest that the demand for bank financing of commercial real estate ventures was enhanced at the end of last year by the turmoil in financial markets. Take, for example, the 35 percent of the domestic survey respondents that reported an increase in demand for commercial real estate loans over the previous three months on the January 1999 BLPS; among them, the most important explanation for the stronger demand was a shift in customer borrowing from lenders having difficulty securitizing commercial mortgages. As with C&I loans, banks tightened terms and standards on commercial real estate loans in response to market turbulence. According to responses to the November 1998 and January 1999 surveys, the primary reasons for tightening in the second half of the year were disruptions in the market for commercial mortgage-backed securities, a less favorable, or more uncertain, eco- 400 380 360 340 1998 1999 NOTE. The data are quarterly and weighted by loan volume. SOURCE. Federal Reserve Board, Statistical Release E.2, " S u r v e y of Terms of Business Lending." nomic outlook, and deepened concern about the reliability of take-out financing. The strong pace of commercial real estate lending by banks in 1998 extended a five-year uptrend and was most evident among those institutions not included among the top 100 banks. The share of total assets at such banks represented by nonfarm nonresidential real estate loans has been rising steadily, roughly doubling between 1985 and 1998. In contrast, this same share has remained close to constant so far this decade among the largest 100 banks, where commercial real estate loans grew only 6.9 percent last year. Larger banks tend to securitize 374 Federal Reserve Bulletin • June 1999 many of their originations as commercial mortgagebacked securities and so hold on their books a smaller share of the loans they make. Increases in securitization in recent years may account for the slow growth of commercial real estate loans on the books of such banks. 10. Securitized share of outstanding consumer loans originated by banks, 1988-98 Percent / — Loans to Households 9. Net percentage of selected commercial banks that tightened standards for credit cards and other consumer loans, 1996-99:Q1 Percent 1997 1998 NOTE. T h e data are quarterly. Net percentage is the percentage of b a n k s that reported a tightening of standards less the percentage that reported an easing. SOURCE. Federal Reserve Board, Senior Loan Officer Opinion Survey on Bank Lending Practices. / — Consumer loans on banks' books expanded 1 percent last year, following a 2VS percent decline in 1997. Two main factors helped restrain growth in this category of bank loans, even as consumer spending remained strong throughout the year and a lower proportion of banks reported tightening standards for credit card and other consumer loans than in 1997 (chart 9). On the demand side, households apparently substituted mortgage for consumer debt, as they did in 1997. On the supply side, 1998 was another strong year for consumer loan securitization, although stresses in the financial markets in the fall did cause a temporary disruption to the market for asset-backed securities—which include securities backed by credit card and auto loans. For the year as a whole, the securitized share of bank consumer loans outstanding reached a new high of almost 35 percent at the end of 1998 (chart 10). Including these loans, outstanding consumer loans originated by banks expanded 6 percent last year, compared with a 4 percent rise in 1997. This acceleration reflected a pick-up in the growth of credit card loans originated by banks, which rose 1996 / 1 1988 1 1990 1 1 1992 1 1 1994 1 1 1996 — 30 — 20 — 10 1 1 1998 NOTE. T h e data are quarterly and seasonally adjusted. SOURCE. Federal Reserve B o a r d , Statistical Releases H.8, "Assets and Liabilities of C o m m e r c i a l Banks in the United States," and G.19, " C o n s u m e r Credit." 93/4 percent in 1998, significantly more than the nearly 6 percent rise in 1997. Substitutions by households from consumer loans at banks toward home equity loans, which had been particularly prevalent in recent years, were not much in evidence in 1998. Outstanding loans on banks' books made under home equity lines of credit actually fell 1V2 percent last year, and closed-end residential real estate loans secured by junior liens (second mortgages) increased only 53/4 percent, less than half the average pace of the previous three years. Instead, households appear to have tapped into the accumulated equity in their homes directly in the form of cash-out refinancing and to have used some of the proceeds to pay down or substitute for other debt, including home equity loans.4 Indeed, a by-product of the steep decline in yields on Treasury securities during last year's market turmoil was a significant, though not so pronounced, fall in the rates on thirty-year fixed-rate mortgages, which substantially bolstered mortgage refinancing activity last year (chart 11). The high level of refinancing also acted to lengthen the average remaining maturity of the home mortgages held by banks at year-end, though that lengthening likely reflected, in part, a buildup of loans targeted for securitization by some banks during last year's financial market stress.5 Taken together, the 4. According to available estimates, one-third to one-half of homeowners took some cash out when refinancing their mortgages last year. 5. Postponed securitizations probably also contributed to the impressive 14 percent advance in residential real estate loans on banks' books in the fourth quarter. Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 11. Average rate on new, fixed-rate thirty-year mortgages and the mortgage refinancing index, 1990-99:Q1 Percent Mortgage rate ]( ^ ^ ^ ^ ^ ^ i Index. I990.Q1 = 1 Refinancing index 1990 1992 1994 1996 1998 NOTE. The data are quarterly. SOURCE. Mortgage rate, f r o m the Federal Home Loan M o r t g a g e Corporation; refinancing index, f r o m the Mortgage Bankers Association. pickup in refinancing activity and the relative slowing in mortgage securitization during the fall and early winter fostered an expansion in the fraction of mortgages that have fixed rates on banks' books from just over one-half, where it had persisted for several years, to more than two-thirds by year-end. Similarly, the fraction of home mortgages that next reprice or mature further out than five years rose over the year from about one-fourth to about two-fifths. Despite last year's low mortgage rates, one- to four-family residential loans on banks' books increased only 6lA percent, well below the 9% percent expansion in 1997. Several factors help account for this downshift, even as the residential mortgage market heated up. First, despite the troubles associated with the financial market turmoil, banks continued to securitize a large share of the residential real estate loans they originated in 1998. Indeed, the shift toward fixed-rate mortgages, whose durations considerably exceed that of banks' liabilities, likely increased banks' incentive to securitize those loans. Second, in recent years, banks have faced stiffer competition from nonbank financial institutions in the market for fixed-rate mortgages and thus have benefited relatively less from an increase in demand for these loans. Lastly, as noted above, the expansion in fixed-rate mortgages came partly at the expense of home equity loans. rate as total assets. Coupled with the sizable growth in total loans on banks' books, the surge in securities suggests that banks stretched their capital positions further in 1998. Asked about reasons for the rapid buildup in securities during the first quarter of the year, respondents to the May 1998 BLPS cited a willingness to boost leverage to improve return on equity. With growth in bank security holdings strong again late last year, the January 1999 BLPS included additional questions on the subject. Among large banks that reported increased securities holdings in the fourth quarter of 1998, the most important reason offered was that yields on some securities were attractive relative to the costs of funds. Indeed, heightened interest rate volatility and intense risk aversion in the financial markets around that time pushed the yields on mortgage-backed securities to high levels relative to three-month wholesale CD rates (chart 12). Yield spreads on other securities also widened in the fourth quarter relative to funding costs, especially for commercial paper and other corporate securities. Other reasons offered by banks for expanding their securities holdings in the fourth quarter were, again, a willingness to use more leverage to improve the return on equity and a desire to extend the duration of their securities portfolios. Banks' concerns about the duration of those portfolios were likely related to the market turmoil that dominated the latter part of the year: Unexpectedly low mortgage rates—and the resulting higher prepayment risk—reportedly led to unintended reductions in the duration of banks' portfolios of mortgage-backed securities. The market turmoil may also have contributed to the fourth-quarter buildup in securities by making it more difficult to place mortgage-backed securities in 12. Spread between the yield on mortgage-backed securities and the rate on the three-month wholesale CD, 1998 Basis points 150 I Securities Banks' holdings of securities increased a strong 8!/3 percent last year, expanding at about the same 375 1 L_ 1 I I L i I 1 I I i 1998 NOTE. T h e data are weekly. SOURCE. For the C D rate. Federal Reserve Board, Statistical Release H.15, " S e l e c t e d Interest R a t e s ; " for the yield on m o r t g a g e - b a c k e d securities, Bloomberg L.R 376 Federal Reserve Bulletin • June 1999 the market. In particular, many banks apparently converted refinanced residential loans into mortgagebacked securities because they have a lower capital charge than loans do, but then waited for a more receptive market to sell them. In addition, banks added briskly to their holdings of "other" securities—which include commercial paper and corporate bonds—whose yields, as discussed above, rose relative to other market rates. Other securities also include the many types of instruments backed by loans—including bank-originated loans—other than residential mortgages. As in the mortgage-backed securities market, reluctance by some participants to invest in these securities in the fourth quarter may have contributed to the increase in holdings by banks. All of the growth in banks' securities portfolios last year occurred in investment accounts, whose holdings advanced 12 percent in 1998, topping even the previous year's strong 8% percent expansion. Holdings of securities in trading accounts declined a sizable 131/2 percent last year, reflecting a pullback from trading activities in the wake of losses related to the Russian debt default. Over the final two quarters of last year, securities in banks' trading accounts declined nearly $34 billion—more than 20 percent— with the runoff occurring entirely in trading assets booked abroad. Liabilities Core deposits at commercial banks grew 7 percent last year, well above the 4!/2 percent advance in 1997.6 Some of the pickup resulted from a decrease in short-term interest rates spurred by the three monetary policy actions in the fall: As usual, rates on deposits fell more slowly than market rates, trimming the opportunity cost of holding deposits. However, an important additional source of the expansion in core deposits in the latter part of 1998 was likely related to investors' increased preference for safe and liquid assets in light of the turmoil that followed the Russian crisis. Banks continued to deepen their reliance on managed liabilities, which grew faster than total bank assets for the sixth consecutive year (chart 13).7 Though strong, last year's 9V2 percent expansion fell short of the nearly 14 percent rise posted in 1997. The slower growth in 1998 reflected the pickup in core deposits and the deceleration in asset growth. 6. Core deposits are transaction accounts, savings accounts (including MMDAs), and small time deposits. 7. Managed liabilities are defined in table 1. 13. Annual growth of assets and change in the ratio of managed liabilities to assets, 1986-98 Percent 1986 1988 1990 1992 1994 1996 1998 NOTE. T h e data are f r o m year-end to year-end. Subordinated notes and debentures, which expanded 17 percent, posted the strongest growth among major categories of managed liabilities. Capital Bank equity grew 9Vi percent last year, maintaining the share of assets funded with capital essentially at its 1997 level of 8V2 percent. Capital for regulatory purposes also increased about in line with assets, and the leverage ratio moved sideways. About half of the growth in bank equity was attributable to the portion of income retained by banks. Indeed, as discussed below, the dollar amount of dividends paid in 1998 declined for the first time since 1992, suggesting that rapid growth in both loans and securities may have resulted in some capital pressures last year. Those same pressures probably were related to the substantial rise in new capital provided by parent holding companies last year, as they evidently felt the need to bolster the capital positions of their banks. New capital accounted for about a quarter of the growth in bank equity, and the remainder was owed in large part to the excess of banks' issuance of equity related to acquisitions over the value of the shares of banks retired in mergers. Though the ratio of capital to assets was unchanged, risk-based capital measures (total and tier 1) edged down again in 1998, after several consecutive annual increases through 1996 (chart 14).8 Despite 8. The tier 1 ratio is the ratio of tier 1 capital to risk-weighted assets, and the total ratio is the ratio of the sum of tier 1 and tier 2 capital to risk-weighted assets. Tier 1 capital consists mainly of common equity (excluding intangible assets such as goodwill and Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 14. Regulatory capital ratios and the share of industry assets at well-capitalized banks, 1991-98 TRENDS IN PROFITABILITY Percent Regulatory capital ratios Total (tier 1 + tier 2 ) ratio 1991 1992 1993 1994 1995 1996 — 1997 '4 1998 NOTE. T h e data on regulatory capital ratios are quarterly. For the definition of capital ratios, see text note 8. their decline last year, regulatory capital ratios remained high, and nearly 95 percent of bank assets were at well-capitalized banks at the end of 1998. Nevertheless, the average margin by which these banks remained well capitalized shrank further last year, a signal that banks may become more concerned about their overall capital positions.9 excluding net unrealized gains on investment account securities classified as available for sale) and certain perpetual preferred stock. Tier 2 capital consists primarily of subordinated debt, preferred stock not included in tier 1, and loan-loss reserves. Risk-weighted assets are calculated by multiplying the amount of assets and the creditequivalent amount of off-balance-sheet items (an estimate of the potential credit exposure posed by the item) by the risk weight for each category, where the risk weights rise from zero to 1 as the credit risk of the assets increases. The leverage ratio is the ratio of tier 1 capital to average tangible assets. Tangible assets are equal to total assets less assets excluded from common equity in the calculation of tier 1 capital. 9. The average margin by which banks remained well capitalized was computed as follows. First, we looked at the leverage, tier 1, and total capital ratios of each well-capitalized bank and defined the institution's tightest capital ratio as that one closest to the regulatory standard for being "well capitalized." We then defined the bank's margin as the percentage-point difference between its tightest capital 377 The net income of U.S. commercial banks increased 4 percent to $611/2 billion in 1998. The industry's return on assets fell 5 basis points to 1.20 percent (table 2), and return on equity declined 3A percentage point to 14 percent—below the elevated range it has occupied since 1993, although still high relative to longer-term historical norms. The prices of bank stocks, particularly those of money center banks, rose strongly in the first half of the year, as concerns ebbed that the troubles that had emerged in Asia in the preceding year would slow the U.S. economy or cause significant trading and loan losses at banks with Asian exposures (chart 15). In the summer, however, worries over prospects for emerging-market economies arose, and fresh turbulence in financial markets sparked by the Russian default resulted in sharply lower trading income and higher loan losses at some large banking companies. A sharp decline in bank stocks ensued. Toward year-end, as markets calmed and investors' concerns about trading exposures eased, bank stock prices recovered, ending the year about where they began, although down relative to most broad stock indexes. Though investor attention was focused on the trading and foreign-related losses of a few large banks in the third quarter, industry profitability for the year as a whole was more seriously affected by a narrowing of the net interest margin and by a rise in noninterest expense, including merger and restructuring charges. These influences were only partly offset by higher noninterest income, which reflected a continuation of a decade-long rise in fee-generating activities, including the funding by banks of assets through securitization rather than on their balance sheets. As a result of the decline in profitability, as well as the capital pressures discussed above, the dollar amount of dividends, which are paid primarily to parent holding companies, declined more than 3 percent last year (a decline of 10 basis points as a percentage of assets); this was the first annual reduction in the dollar amount of dividends since 1992. Nonetheless, the fifty largest bank holding companies increased dividends paid to stockholders $2.6 billion, to $19.6 billion, last year. However, those holding companies more than offset the rise in dividends by reducing net stock repurchases $17.3 billion, to ratio and the corresponding regulatory standard. The average margin among all well-capitalized banks—the measure we refer to in the text—is the weighted average of all the individual margins, in which the weights are each bank's share of the total assets of well-capitalized banks. 378 Federal Reserve Bulletin • June 1999 2. Selected income and expense items as a proportion of assets, 1992-98 Percent 1992 1993 1994 1995 1996 1997 1998 3.89 1.95 3.86 .78 .11 1.32 3.90 2.13 3.94 .47 .09 1.70 3.78 2.00 3.75 .28 -.01 1.73 3.72 2.02 3.64 .30 .01 1.81 3.73 2.18 3.71 .37 .03 1.85 3.67 2.23 3.61 .41 .04 1.93 3.52 2.40 3.77 .41 .06 1.81 Taxes and extraordinary items Net i n c o m e (return o n assets) .41 .91 .50 1.20 .58 1.15 .63 1.18 .65 1.20 .67 1.25 .61 1.20 Dividends .41 .62 .73 .75 .90 .90 .80 Retained income .49 .58 .42 .43 .30 .35 .39 Item Net interest income Noninterest i n c o m e Noninterest e x p e n s e Loss provisioning Realized gains on investment account securities I n c o m e before taxes and extraordinary items $8.9 billion. The sum of dividends and net stock repurchases at the top fifty holding companies was one-third lower in 1998 than in 1997. Industry performance differed markedly by bank size in 1998. The return on equity of the top 10 banks, which absorbed the bulk of the trading and foreign-related losses as well as the merger and restructuring charges, was the hardest hit, falling 23/4 percentage points to 10 Vi percent, its lowest level since 1991. At the other end of the spectrum, earnings of the smallest banks—those not in the top 1,000—were also below recent norms last year. Net interest income makes up the largest share of revenue for these banks, and smaller net interest margins contributed to a decline of Vi percentage point in their return on equity to just over 12 percent. By contrast, medium-sized banks, for which noninterest income is a more significant share of revenue and which generally do not have large trading or foreign 15. Indexes of bank holding company stock prices and the S&P 500, January 7, 1998-March 31, 1999 Index, January 7, 1998 = 100 140 S & P 5 < M ) A / ^ — — - 120 J 110 — Regional bank holding companies — — 1 I I 130 i 11 V \ \\ U rj [ / ^ \ / v/ III. 1998 i / \f y 100 Money center bank holding companies 90 80 I i t i i ! 1999 NOTE. T h e data are weekly. T h e holding company indexes are for seven m o n e y center companies and forty-two regional companies as defined by D o w Jones. SOURCE. D o w Jones and Standard and P o o r ' s . operations, had another record year in 1998. Banks in the top 100 but not in the top 10, and those in the top 1,000 but not in the top 100, generated returns on equity of MVI percent and \5VI percent, respectively—in both cases record highs. Interest Income and Expense Net interest income as a percentage of average assets declined 15 basis points last year, reflecting a similar decline in banks' net interest margin (net interest income as a percentage of average interest-earning assets), which fell to a level not seen in seven years (chart 16). Three factors contributed to the decline in the net interest margin: A shift in bank assets away from relatively high-yielding assets, a shift in bank sources of funds toward relatively expensive liabilities, and, controlling for these shifts, a decline in rates earned on bank assets relative to rates paid on bank liabilities. About one-third of the narrowing of the net interest margin resulted from the shift in the composition of bank assets last year away from consumer loans. Consumer loan yields are higher, on average, than those on other bank assets, in part as compensation for the higher expense of servicing these loans, and also because of their higher loss rates. As noted earlier, some of the slow growth in consumer loans on banks' books last year resulted from the funding of these loans off bank balance sheets through securitization, which shifted some of the associated net revenue generated out of net interest income and into noninterest income. In addition, a few basis points of the decline in the net interest margin stemmed from banks' increased reliance on managed liabilities, which generally pay higher yields than core deposits. The remaining two-thirds of the narrowing of the net interest margin resulted from a decline in the yields on bank assets relative to bank liabilities after Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 16. Net interest margin, investment-account securities as a share of interest-earning assets, and consumer loans as a share of total loans, 1985-98 Net interest margin1 4.4 — 4.2 4.0 I n v e s t m e n t - a c c o u n t securities as a share of interest-earning assets 1986 1988 1990 1992 1994 1996 1998 NOTE. Data are annual averages. 1. Net interest margin is net interest income divided by interest-earning assets. controlling for shifts in composition. Yields on bank assets shrank in part because for most of the year, banks continued to compete vigorously for business loans, and as discussed above, the average spread on these loans over the intended federal funds rate, measured by the Survey of Terms of Business Lending, remained quite narrow through the early part of the third quarter. It widened in the fourth quarter, but because the survey measures rates on newly extended loans, most of any resulting gain in bank profits will 379 appear only gradually over several quarters. A decline in the average yield on real estate loans, no doubt owing in part to the wave of refinancings last year, also contributed to the decline in the average yield on bank assets. Developments that placed upward pressure on interest expense also acted to narrow the net interest margin. In the fall, the spread between rates on the managed liabilities of banks and risk-free rates widened sharply, as these institutions were seen by investors as vulnerable to losses abroad and a slowing in the domestic economy.10 Furthermore, rates on core deposits, which tend to adjust gradually in any case, were especially slow to match the decline in market rates in the fall, because banks needed to fund the rapid growth in assets at that time. The shrinkage in the net interest margin last year nearly completes the reversal of the sharp expansion in the margin in 1991 and 1992. That expansion was largely the result of two factors. First, it was a reaction to the compression of margins in the late 1980s by competition among banks for loans and funding sources as well as by the elevated rates that some troubled banks and thrift institutions were paying for funds. Second, a number of banks may not have had the capital levels they needed to meet risk-based capital rules phased in between 1990 and 1992. With bank equity prices depressed at that time, capital was expensive to raise, and so these banks were under pressure to limit balance sheet expansion and push up profits. Consequently, they bid for deposits and made loans less aggressively, causing a widening of spreads between loan and deposit rates. Moreover, competitive pressures on margins also may have eased as troubled institutions were recapitalized or closed. Since 1993, the banking industry has grown rapidly, and the forces that widened the margin have been unwound, largely because of banks' increasingly competitive stance in loan markets and greater reliance on managed liabilities. Several factors had limited the narrowing in the margin between 1994 and 1996, including a shift in bank assets toward loans, particularly consumer loans; relatively low rates paid on deposits compared with market rates; and a greater reliance on capital, the returns on which are not included as an interest expense. However, for the last two years these supporting forces have generally not been present, or have been reversed. As a result, the net interest margin has narrowed faster. 10. In the fourth quarter, banks still found it advantageous to invest in assets, particularly some types of securities, suggesting that expected returns on these assets rose by even more than the increase in banks' marginal cost of funds. 380 Federal Reserve Bulletin • June 1999 Noninterest Income Noninterest income as a percentage of assets rose 18 basis points last year, more than matching the decline in net interest income. Noninterest income also increased as a share of revenue last year, continuing a decade-long trend (chart 17). The increase was concentrated in the "other fee income" component of noninterest income, which includes, among other items, credit card fees, mortgage servicing fees, fees from the sale and servicing of mutual funds and annuities, ATM surcharges, and fee income from securitized loans; it excludes deposit fees, which edged down 1 basis point as a percentage of assets last year. Although no finer detail is available on other fee income, the increase last year probably reflected, in part, the high level of mortgage refinancing, for which banks collect processing fees, and the rapid growth in bank loans that are securitized, earnings on which are generally booked in this component. 17. Noninterest income and its components as a share of total revenue, 1985-98 Selected components Deposit fees Other noninterest income 1986 1990 1994 1998 NOTE. Components of "other noninterest income" were first included in the March 1991 Call Reports. The rise in other fee income was particularly apparent at banks that specialize in credit card lending.11 These credit card banks, defined here as those banks among the largest 1,000 by assets for which credit card loans constitute more than half of assets, earned a return on equity of 29Vi percent in 1998; this was sharply more than the 173/4 percent in 1997, and only slightly below the returns on equity earned by these banks in 1993 and 1994, before the significant worsening of the performance of credit card loans in 1995. Credit card banks earn nearly half of their revenue as other fee income, compared with 14V2 percent of revenue for other banks, and they account for a quarter of the other fee income earned by all commercial banks. Other fee income makes up such a large share of revenue at these banks because more than three-fourths of their on-balance-sheet assets are credit card loans, and off-balance-sheet credit card loans at these banks exceed their on-balance-sheet assets. The increase in noninterest income was due also to a rise in the nonfee component of "other noninterest income." Among the items in this component are income from professional services, including those provided for holding company affiliates; gains on the sale of assets other than securities, including loans and bank branches; and income from venture capital activities. Industry consolidation may have contributed to the growth in this component, in part because of the resulting rise in the provision of specialized services within holding companies (fees on which do not increase the income of the holding company as a whole), and in part because of the sale of assets in the course of mergers and reorganizations. Some banks book gains on proprietary investments in equities resulting from the venture capital activities of their small business investment company subsidiaries in this component, so the rise in stock prices over recent years has probably contributed to its growth as well. The bull market for equities, and the high volume of financial transactions, has likely also benefited fiduciary income, which rose 2 basis points as a percentage of assets in 1998. Fiduciary income includes earnings on services rendered by banks' trust departments and by any consolidated subsidiaries acting in a fiduciary capacity. The trading income component of noninterest income declined 2 basis points last year as a percentage of assets. During the first half of the year, trading 11. For more information on credit card banks, see William R. Nelson and Ann L. Owen, "Profits and Balance Sheet Developments at U.S. Commercial Banks in 1996," Federal Reserve Bulletin, vol. 83 (June 1997), pp. 476-77. Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 3. Trading revenue at all U.S. banks, by type of exposure, 1995-98 Noninterest Millions of dollars Year Total Interest rate Foreign exchange Equity and other 1995 6,337 3,012 2,491 635 1996 7,526 4,112 2,689 725 1997 8,020 3,995 3,951 72 1998 7,678 2,469 4,715 493 Ql 2,652 1,068 1,320 264 Q2 2,531 942 1,342 247 Q3 543 -101 875 -232 Q4 1,952 560 1,178 214 revenues, particularly those earned on exchange rate exposures, were robust (table 3). However, in the third quarter, following the pronounced widening of liquidity and risk spreads, trading income declined precipitously and several large banks posted trading losses. The losses, reportedly, were of three general kinds: First, the sharp decline in the value of certain securities, including some foreign-related assets such as Brady bonds, caused losses at those banks holding such securities in their trading accounts on an unhedged basis. Second, in some cases U.S. banks had hedged their holdings by taking two offsetting positions. When some Russian counterparties defaulted, the U.S. banks were left with substantial losses on the contracts that had been hedged by the contracts with those Russian counterparties.12 Lastly, in other cases, the deteriorating financial condition of counterparties in emerging-market economies, including Asia and Latin America, led some banks to write down the value of trading assets to reflect widening credit-risk spreads. Trading income subsequently recovered in the fourth quarter and, for the year as a whole, was only slightly below its level in 1997. Profits were supported somewhat last year by realized gains on investment account securities, which increased 40 percent to $3 billion. The realized gains were strongest in the fourth quarter and reflected, in part, sales of Treasury securities that had risen in value in the fall. 12. When bank counterparties in derivatives transactions default, the resulting obligation to the bank is either first recorded as a loan and then charged off, or is recorded as a trading loss. Since 1996, banks have reported credit losses on derivatives transactions on the Call Report, although they have not indicated whether the losses were booked as a charge-off or as a debit to trading revenue. These losses totaled $781 million last year, up from $120 million in 1997 and 381 Expense Bank profitability was damped last year by a sharp rise in noninterest expense, as a percentage of both assets and revenue (chart 18). The rise was largest in the broad "other noninterest expense" category, which accounts for almost half of noninterest expense. Some of it was attributable to merger and restructuring charges and to an increase in data processing services, in part from efforts to prepare computer systems for the century date change.13 Noninterest expense was also elevated by a rise in wage and occupancy costs, both of which increased about 10 percent last year, in each case the most rapid growth in more than a decade. Labor costs rose so fast in part because employment, which had declined 4 percent between 1985 and 1995, advanced 4lA percent last year alone, following 2 percent growth in 13. The five largest bank holding companies, which together account for one-third of commercial bank assets, reported aggregate costs of preparing for the century date change of approximately $1.3 billion in 1998. By comparison, other noninterest expense of commercial banks rose $13.6 billion in 1998. However, not all of the preparedness costs repeated by the these bank holding companies would be booked at their commercial bank subsidiaries. 18. Noninterest expense and its components as a percentage of total revenue, 1985-98 382 Federal Reserve Bulletin • June 1999 1997. Employment growth was particularly robust in the fourth quarter, and was relatively faster at those banks that posted more rapid growth in home mortgages, suggesting employment growth may have been lifted by the mortgage refinancing boom. Despite the rise in employment, revenue per employee increased 4VI percent last year, although employment costs per employee rose 5 V2 percent. The rise in occupancy costs stemmed, in part, from a small increase in the number of bank offices, but more importantly from a 63A percent rise in real occupancy cost per office, which had fallen 3 percent between 1985 and 1997. The abundant supply of office space had resulted in a decline in the rents on, and prices of, office buildings nationwide in the early 1990s, helping to restrain banks' occupancy costs, but office rents and prices rose sharply in 1997 and 1998. Loan Provisioning and Loan Performance Bank profits continue to be supported by the good overall performance of loans. Although provisions for loan and lease losses edged up last year as a percentage of loans, tracking the slight rise in net 19. Loss provisioning and net charge-offs as a percentage of loans, 1976-98 Percent Loss provisioning — i f — 2.0 — 1.5 — 1.0 — .5 Net charge-offs w 1978 1982 1986 1990 1994 1998 NOTE. Net charge-offs are charge-offs net of recoveries. charge-offs, both provisions and charge-offs remained very low in 1998 (chart 19). The performance of specific types of loans also changed little last year. The delinquency rate on commercial mortgages fell a bit further from the already low levels posted in 1997, reflecting the strong market for office and commercial space 20. Delinquency and charge-off rates, by type of loan, 1991-98 Percent D e l i n q u e n c y rates for loans to businesses Charge-off rates for loans to businesses 12 C o m m e r c i a l real estate C o m m e r c i a l real estate —^^ • D e l i n q u e n c y rates for loans to households 0 Charge-off rates for loans to households R e s i d e n t i a l real e s t a t e Other consumer R e s i d e n t i a l real e s t a t e 1992 1994 1996 1998 NOTE. T h e data are quarterly and seasonally adjusted. Delinquent loans are loans that are not accruing interest and those that are accruing interest but are more than thirty days past due. T h e delinquency rate is the end-of-period level of delinquent loans divided by the end-of-period level of outstanding 1992 1994 1996 1998 loans. T h e charge-off rate is the annualized a m o u n t of charge-offs over the period, net of recoveries, divided by the average level of outstanding loans over the period. Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 21. Charge-off rates on C&I loans, by location of borrower, 383 22. Debt burden of businesses, 1985-98 Percent Percent — All l o a n s — — — 20 — 15 — 10 L o a n s to non-US. addressees 1 ! 1985 1987 1 1 1989 1 1 1991 1 1993 1 1995 1997 NOTE. T h e data are quarterly. Debt burden is for nonfinancial corporations and is calculated as interest p a y m e n t s as a percentage of cash flow. SOURCE. National income and product accounts and the Federal Reserve System. (chart 20). The net charge-off rate on these loans remained near zero. Delinquency and charge-off rates on commercial and industrial loans rose a little, though they too remained low. Most of the moderate upward trend in charge-off rates on C&I loans for the past two years reflects an increase in loss rates on loans booked abroad, probably to some extent because of difficulties in a number of emergingmarket economies (chart 21). The good performance of C&I loans was in line with the strong financial condition of the nonfinancial business sector: The aggregated debt-service burden for nonfinancial corporations, measured as the ratio of net interest payments to cash flow, remained near its low of 1997 and less than half its peak level earlier in the decade (chart 22), and business failures remained at the low end of the range seen over the past decade. Measures of household financial stress were also relatively stable last year, although some were at high levels. The annual increase in personal bankruptcy filings has been about 3 percent for the past year and a half, sharply down from annual increases of roughly 25 percent between early 1995 and early 1997. Although household debt grew rapidly last year, lower interest rates and longer loan maturities, which resulted from the shift toward mortgage finance, helped mitigate the effects of increased borrowing on household debt-service burdens. Reflecting these trends, the delinquency and charge-off rates on consumer loans varied little, although they tended to be on the high side of historical norms. By contrast, delinquency and charge-off rates on household mortgages stayed low. The net charge-off rate on loans other than business, consumer, and real estate loans, which had been less than 0.1 percent per year in the preceding three years, ticked up to 0.4 percent in 1998. More than half of those charge-offs occurred during the turbulent third quarter, when some loans to hedge funds were written off and when some banks' counterparties on derivatives transactions defaulted. Of course, the strength of the economy was responsible for much of the continued good overall loan performance last year. If the economy were to slow, loan losses would probably rise, perhaps markedly if the easing in bank lending standards during the current long expansion turns out to have been excessive. At the end of last year, reserves for loan and lease losses remained high relative to delinquent loans (chart 23). However, relative to net charge-offs, reserves have fallen in recent years and are now near the middle of their historical range. On the one hand, it seems sensible to compare reserves to delinquencies, because it is for losses that are probable at the time that banks should be setting 23. Measures of reserves for loan and lease losses, 1985-98 Percent Reserves as a percentage — of delinquencies Ratio Ratio o f reserves to c h a r g e - o f f s 384 Federal Reserve Bulletin • June 1999 aside reserves. On the other hand, one may want to compare reserves to net charge-offs, because different loan types have different levels of losses for the same level of delinquencies. As a result, changes in the distribution of banks' delinquent loans can affect the expected level of losses for a given level of delinquencies. In particular, the average ratio of chargeoffs to delinquencies on consumer loans is well above the average for other loan types. Given the shift in the composition of delinquent loans toward consumer loans in recent years, the ratio to net charge-offs is probably a more reliable measure of the adequacy of loan-loss reserves, suggesting that banks, in the aggregate, do not appear particularly over- or underreserved.14 International Operations of U.S. Banks Lingering concerns over economic prospects in Asia and growing worries over Latin America, Russia, and Eastern Europe led many banks to scale back their foreign operations last year. The share of U.S. bank assets booked at foreign offices fell nearly 2 percentage points to about 13 percent in 1998, after having risen by nearly 3 percentage points since 1993 (table 4). The share of income attributable to foreign operations fell from 10V4 percent in the previous year to 8V2 percent—the lowest since 1989. Foreign income had been relatively high in the first half of the year, but declined sharply in the third quarter and remained low in the fourth quarter. The drop in the 14. Indeed, if l o a n - l o s s r e s e r v e s are c o m p a r e d w i t h d e l i n q u e n c i e s w e i g h t e d , f o r e a c h l o a n c o m p o n e n t , by the a v e r a g e ratio o f chargeo f f s to d e l i n q u e n c i e s o f that c o m p o n e n t in recent years, the a d e q u a c y o f l o a n - l o s s reserves appears to be about as it d o e s w h e n r e s e r v e s are c o m p a r e d with net c h a r g e - o f f s . 4. Share of U.S. bank assets booked at foreign offices and net income attributable to foreign operations, 1993-98 Percent Year Assets Net income 1993 12.15 16.34 1994 13.21 11.94 1995 13.64 11.61 1996 14.76 12.02 1997 15.04 10.27 1998 13.17 8.48 Q1 14.96 11.13 Q2 15.03 12.68 Q3 14.44 3.70 Q4 13.17 5.84 NOTE. Foreign offices include Edge Act and agreement subsidiaries and international banking facilities (IBFs). Edge Act and agreement subsidiaries are federally or state-chartered corporations, respectively, that are domiciled in the United States but engage in international banking activities. An I B F is a set of asset and liability accounts that cover selected international transactions of the U.S. offices of the bank. third quarter was concentrated in noninterest income, perhaps owing to losses on trading account securities booked abroad, and was widespread among those banks with significant foreign operations.15 The decline in foreign revenue also resulted from efforts by banks to lessen their exposure to troubled foreign economies. The exposure of U.S. commercial banks, as a fraction of capital, to troubled Asian, Eastern European, and Russian economies declined about one-fourth from year-end 1997 to year-end 1998 (table 5). The exposure of money center and other large banks to Russia declined from over 3 percent of capital to less than V2 percent, as many of these institutions wrote off a large fraction, of Russian obligations. The exposure to Latin American econo15. For additional details o n the international o p e r a t i o n s o f U.S. banks, s e e E n g l i s h and N e l s o n , "Profits and B a l a n c e S h e e t D e v e l o p m e n t s at U.S. C o m m e r c i a l B a n k s in 1 9 9 7 , " p. 4 0 6 . 5. Exposure of U.S. banking organizations to selected economies, relative to capital, year-end 1997 and 1998 Percent except as noted Money center and other large banks All reporting Region or country MEMO: All other banks Total exposure, all banks (billions of dollars) 1997 1998 1997 1998 1997 1998 1997 1998 16.11 9.47 26.87 15.17 2.34 1.21 55.24 37.87 3.47 1.80 2.13 .26 6.12 3.16 3.54 .43 .08 .05 .09 0.00 11.91 6.16 8.53 1.05 Latin America All Brazil 29.67 9.74 26.24 6.89 48.37 16.13 40.56 10.76 5.73 1.56 0.00 101.73 33.40 104.96 27.55 Total 49.25 37.84 81.37 59.27 8.16 6.83 168.89 151.36 Troubled Asia 1 Eastern Europe and Russia All Russia NOTE. Exposures include the institutions' lending and derivatives exposures for cross-border as well as local-office operations. Respondents may file information on one bank or on the bank holding company as a whole. Capital is defined as equity, subordinated debt, and loan-loss reserves. 5.53 1. Indonesia, Korea, Malaysia, Philippines, and Thailand. SOURCE. Federal Financial Institutions Examination Council, Country Exposure Report. Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 mies at these large banks fell nearly 8 percentage points to a bit over 40 percent of capital, with much of the decline resulting from reduced exposures to Brazil. DEVELOPMENTS IN 1999 Responding, in part, to earnings concerns, but also to the devaluation and subsequent floating of the Brazilian real, indexes of bank stock prices fell in January. However, as evidence accumulated that the U.S. economy continued to enjoy strong growth and low inflation, and emerging-market economies appeared to stabilize, bank equities recovered. The stock prices of money center bank holding companies were up about 10 percent for the year through April; those of regional banks were about 4 percent higher, half the rise in the broader market. Bank stock prices were lifted by first-quarter earnings announcements, which generally exceeded expectations. Bank holding companies again reported A.l. 385 hefty gains in fee income, including fees from consumer lending, mortgage banking, and investment banking. Trading revenue also contributed to the gains, in part because credit-risk spreads on emerging-market securities narrowed. Assets at the domestic offices of U.S. commercial banks were about unchanged in the first quarter of 1999, with weakness in many of the components that had expanded in the wake of financial turmoil in the fall. Business loans declined early in the quarter, as borrowers that had turned to banks returned to the corporate bond and commercial paper markets. Banks' holdings of mortgage-backed securities and other non-Treasury issues, which had ballooned in the fall, fell sharply. As mortgage refinancings ebbed, banks caught up on securitizing the backlog of mortgages that had been brought onto their books when refinanced, and real estate loans were about flat in the first quarter. Those loans may have been supported, in part, by further substitution for consumer loans, which edged down somewhat despite strong consumer spending. • Report of income, all U.S. banks, 1989-98 Millions of dollars Item 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Gross interest income Taxable equivalent Loans Securities Gross federal funds sold and reverse repurchase agreements Other 317,046 321,251 237,815 46,713 320,404 324,054 238,829 51,031 290,692 293,879 215,019 52,769 256,415 259,394 185,938 51,825 244,742 247,620 178,425 48,678 257,064 259,821 189,762 48,299 302,376 305,010 227.218 51,030 313,115 315,575 239,307 50,601 338,230 340,664 255,504 52,662 359,250 361,716 271,012 56.607 13,059 19,461 12,571 17,971 9,149 13,757 5,913 12,739 4,796 12,843 6,415 12,587 9,744 14,382 9,265 13,944 13,658 16,407 15,001 16,629 Gross interest expense Deposits Gross federal funds purchased and repurchase agreements Other 205,078 157,466 204,949 161,483 168,492 139,431 122,517 98,809 105,615 79,503 110,849 79,106 147,958 105,329 150,045 107,465 164,516 117,351 178,026 125,229 24,898 22,713 22,778 20,687 14,439 14,623 9,263 14,441 8,442 17,669 12,476 19,269 18,424 24,204 16,775 25,806 20,440 26,724 22,184 30,612 Net interest income Taxable equivalent 111.968 116,173 115,455 119,105 122,200 125,387 133,898 136,877 139,127 142,005 146,215 148,972 154,418 157,052 163.070 165,530 173,714 176,148 181,224 183,690 Loss provisioning 1 31,297 32,282 34,871 26,813 16,841 10,993 12,631 16,206 19,173 21,217 Noninterest income Service charges on deposits Income from fiduciary activities Trading income Other 51,599 10,270 8,313 4,051 28,965 55,684 11,446 8,886 4,854 30,497 61,124 12,884 9,499 5,954 32,785 67,044 14,126 10,452 6,273 36,193 75,847 14,898 11,199 9,238 40,513 77,223 15,281 12,124 6,249 43,572 83,851 16,057 12,890 6,337 48,567 95,278 17,042 14,288 7,526 56,421 105,775 18,558 16,604 8,020 62,593 123,592 19,773 18,972 7,678 77,172 108,993 49,412 16,697 42,885 116,606 52,111 17,547 46,948 126,665 53,810 17,984 54,871 132,815 55,484 18,152 59,181 140,523 58,507 18,578 63,439 144,905 60,904 18,978 65,023 151,137 64,013 19,760 67,363 162,399 67,775 20,883 73,741 170,995 72,347 22,082 76,567 193,719 79,521 24,161 90,038 57,394 60,922 65,541 65,771 64,676 67,682 67,286 67,121 65,220 70,127 Noninterest expense Salaries, wages, and employee benefits .. Expenses of premises and fixed assets .. Other Net noninterest expense Realized gains on investment account securities 800 474 2,897 3,957 3,054 -560 481 1,123 1,826 3,088 Income before taxes and extraordinary items Taxes Extraordinary items 24,079 9,547 312 22,725 7,749 650 24,684 8,292 1,198 45,273 14,450 401 60,662 19,861 2,085 66,989 22,430 -17 74,980 26,222 28 80,864 28,430 88 91,145 31,988 56 92,967 31,941 508 Net income 14,843 15,626 17,590 31,224 42,886 44,542 48,785 52,521 59,211 61,535 14,127 716 13,965 1,661 15,562 2,028 14,226 16,997 22,068 20,816 28,164 16,377 31,105 17,681 39,391 13,131 42,726 16,485 41,3001 20,233 Cash dividends declared Retained income 1. Includes provisions for loan and lease losses and for allocated transfer risk. 386 Federal Reserve Bulletin • June 1999 A.2. Portfolio composition, interest rates, and income and expense, all U.S. banks, 1989-98 A. All banks Item 1989 1990 1991 1992 1993 1994 1995 1 ! r 1996 i 1997 1998 Balance sheet items as a percentage of average net consolidated assets Interest-earning assets Loans and leases, net Commercial and industrial U.S. addressees Foreign addressees Consumer Credit card Installment and other Real estate In domestic offices Construction and land development Farmland One- to four-family residential Home equity Other Multifamily residential Nonfarm nonresidential In foreign offices Depository institutions Foreign governments Agricultural production Other loans Lease-financing receivables LESS: Unearned income on loans LESS: Loss reserves' Securities Investment account Debt U.S. Treasury U.S. government agency and corporation obligations Government-backed mortgage pools .. Collateralized mortgage obligations . . . Other State and local government Private mortgage-backed securities Other Equity Trading account Gross federal funds sold and reverse RPs Interest-bearing balances at depositories Non-interest-earning assets Revaluation gains on off-balance-sheet items 2 .. Other 87.94 60.64 19.09 16.54 2.55 11.89 3.69 8.20 22.50 21.78 4.16 .51 10.15 1.42 8.73 .60 6.36 .72 1.76 1.03 .96 4.31 1.10 -.48 -1.52 18.39 17.14 16.84 4.98 87.82 60.53 18.50 15.99 2.51 11.77 3.78 7.99 23.86 23.10 4.00 .51 11.21 1.67 9.54 .62 6.76 .76 1.60 .78 .96 3.93 1.12 -.42 -1.57 19.09 17.63 17.37 4.57 88.04 59.55 17.33 15.00 2.33 11.45 3.88 7.57 24.87 24.11 3.41 .53 12.27 1.95 10.32 .66 7.23 .76 1.42 .75 1.01 3.60 1.09 -.36 -1.62 20.70 18.93 18.62 5.06 88.33 57.30 15.78 13.54 2.24 11.00 3.80 7.20 24.87 24.18 2.64 .56 12.91 2.09 10.83 .75 7.32 .69 1.24 .73 1.02 3.50 1.03 -.28 -1.60 23.52 21.18 20.82 6.49 88.50 56.25 14.88 12.72 2.16 11.00 3.88 7.11 24.80 24.18 1.99 .57 13.49 2.07 11.42 .79 7.33 .62 1.08 .67 .99 3.56 .99 -.21 -1.51 25.37 22.50 22.12 7.08 86.55 56.07 14.51 12.35 2.16 11.43 4.21 7.22 24.43 23.80 1.65 .56 13.74 1.91 11.84 .79 7.07 .63 1.42 .41 1.00 3.34 1.03 -.16 -1.36 24.27 21.60 21.21 6.77 86.47 58.37 15.20 12.87 2.33 12.08 4.69 7.39 25.01 24.36 1.59 .56 14.42 1.88 12.54 .81 6.97 .65 1.88 .30 .96 3.15 1.19 -.14 -1.26 21.94 19.39 18.98 5.25 86.80 59.89 15.60 13.07 2.53 12.21 4.87 7.34 25.06 24.43 1.63 .56 14.43 1.85 12.57 .85 6.96 .63 2.29 .26 .92 3.36 1.51 -.12 -1.21 21.01 18.20 17.75 4.20 86.58 58.69 15.78 13.18 2.60 11.44 4.55 6.89 25.02 24.41 1.73 .55 14.42 1.94 12.48 .83 6.88 .61 1.89 .18 .90 2.84 1.87 -.09 -1.13 20.41 17.25 16.75 3.38 86.26 58.32 16.37 13.62 2.75 10.36 3.97 6.39 24.86 24.29 1.86 .55 14.26 1.89 12.37 .82 6.81 .57 1.88 .15 .89 2.81 2.14 -.07 -1.07 20.38 17.48 16.94 2.71 6.04 3.27 n.a. 2.77 3.15 n.a. 2.68 .30 1.25 4.33 4.58 12.06 n.a. 12.06 7.56 4.08 1.25 2.22 2.64 n.a. 2.59 .27 1.46 4.46 3.75 12.18 n.a. 12.18 8.75 4.51 2.07 2.16 2.28 .94 1.59 .31 1.77 4.58 3.21 11.96 n.a. 11.96 9.86 4.52 3.12 2.21 2.08 .82 1.58 .37 2.34 4.54 2.97 11.67 n.a. 11.67 10.73 4.74 3.72 2.27 2.06 .73 1.52 .38 2.87 4.27 2.62 11.50 n.a. 11.50 10.24 4.67 3.24 2.33 2.02 .64 1.54 .39 2.67 3.82 2.40 13.45 2.61 10.84 9.81 4.47 2.67 2.68 1.80 .62 1.49 .41 2.55 3.93 2.23 13J3 2.90 10.62 9.75 4.80 2.11 2.83 1.68 .61 1.51 .45 2.81 3.82 2.08 13.20 2.25 I0'95 9.74 4.94 1.94 2.86 1.59 .50 1.54 .50 3.16 5.18 2.29 1342 2.59 10.83 10.28 5.17 2.12 2.99 1.57 .67 1.70 .55 2.89 5.37 2.19 13.74 2.95 10.79 Liabilities Interest-bearing liabilities Deposits In foreign offices In domestic offices Other checkable deposits Savings (including MMDAs) Small-denomination time deposits Large-denomination time deposits Gross federal funds purchased and RPs Other Non-interest-bearing liabilities Demand deposits in domestic offices Revaluation losses on off-balance-sheet items 2 Other 93.64 76.02 62.58 9.68 5? 90 6.12 16.28 18.38 12.13 8.22 5.22 17.62 13.49 n.a. 4.13 93.60 76.53 63.44 9.26 54.18 6.19 16.59 19.96 11.44 8.03 5.07 17.07 12.79 n.a. 4.27 93.33 76.58 64.45 8.55 55.90 6.72 18.00 21.30 9.89 7.09 5.03 16.75 12.59 n.a. 4.16 92.82 75.32 62.94 8.37 54.56 7.65 20.28 19.21 7.42 7.02 5.36 17.50 13.24 n.a. 4.27 92.15 73.92 60.26 8.32 51.94 8.24 20.91 16.98 5.81 7.47 6.19 18.23 13.86 n.a. 4.37 92.12 71.86 57.34 9.39 47.96 7.80 19.60 15.33 5.23 7.60 6.92 20.26 13.49 2.32 445 91.99 71.86 56.30 10.28 46.03 6.63 17.48 16.14 5.77 7.71 7.85 20.13 12.68 2.88 4.57 91.73 71.62 55.87 10.01 45.86 4.75 18.71 15.97 6.42 7.18 8.56 20.11 12.82 2.14 5.14 91.57 71.36 55.01 10.02 44.99 3.62 19.13 15.17 7.08 8.13 8.21 20.21 12.16 2.64 5.41 91.51 71.35 54.67 10.15 44.53 3.12 19.92 14.16 7.34 7.99 8.69 20.15 11.00 2.97 6.18 6.36 6.40 6.67 7.18 7.85 7.88 8.01 8.27 8.43 8.49 n.a. .39 35.78 n.a. .50 34.31 12.02 .75 31.05 11.34 .82 28.70 10.63 .63 28.28 9.94 .36 29.61 9.83 .19 32.08 9.92 .14 32.73 9.99 .11 34.09 10.12 .08 34.95 3,187 3,338 3,379 3.442 3.566 3.863 4,148 4,376 4,733 5,145 Capital account MEMO Commercial real estate loans . . . Other real estate owned Managed liabilities Average net consolidated assets (billions of dollars) Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 387 A.2.—Continued A. All banks Item 1989 1990 1991 1992 1993 1994 1995 Effective interest rate (percent) 1996 1997 1998 3 Rates earned Interest-earning assets Taxable equivalent Loans and leases, gross Net of loss provisions Securities Taxable equivalent Investment account U.S. government and other debt State and local Equity Trading account Gross federal funds sold and reverse RPs Interest-bearing balances at depositories 11.13 11.29 12.02 10.44 8.73 9.25 8.55 8.83 7.45 7.70 11.11 9.17 10.59 10.67 10.80 11.49 9.94 8.79 9.21 8.67 8.92 7.39 7.34 10.15 8.08 9.96 9.57 9.69 10.40 8.72 8.19 8.56 8.25 8.43 7.25 6.20 7.54 5.69 8.44 8.27 8.37 9.20 7.87 7.04 7.34 7.11 7.18 6.81 5.32 6.40 3.58 7.31 7.61 7.71 8.69 7.87 6.08 6.36 6.07 6.07 6.25 4.79 6.16 3.04 6.61 7.61 7.70 8.62 8.12 5.96 6.20 5.79 5.80 5.87 4.79 7.41 4.26 5.71 8.33 8.41 9.25 8.74 6.51 6.73 6.35 6.42 5.82 5.51 7.73 5.63 6.84 8.14 8.21 8.99 8.39 6.42 6.66 6.35 6.47 5.55 5.23 6.86 5.21 6.21 8.15 8.22 9.01 8.34 6.50 6.73 6.45 6.60 5.41 5.15 6.75 5.45 6.24 7.99 8.06 8.85 8.15 6.37 6.63 6.29 6.45 5.23 4.92 6.85 5.29 6.27 Rates paid Interest-bearing liabilities Interest-bearing deposits In foreign offices In domestic offices Other checkable deposits Savings (including MMDAs) Large-denomination time deposits 4 Small-denomination time deposits 4 Gross federal funds purchased and RPs Other interest-bearing liabilities 8.53 7.87 10.87 7.32 4.83 6.18 8.66 8.29 9.20 13.76 8.04 7.57 10.71 7.02 4.79 5.99 8.03 7.97 7.97 12.26 6.55 6.34 8.54 6.00 4.34 5.11 6.69 6.93 5.76 8.65 4.75 4.51 7.32 4.07 2.70 3.25 4.90 5.15 3.64 7.87 4.01 3.65 6.82 3.14 1.99 2.50 4.00 4.19 3.07 8.02 4.01 3.53 5.59 3.14 1.85 2.58 4.09 4.17 4.18 7.25 4.99 4.47 6.12 4.11 2.06 3.19 5.47 5.44 5.65 7.47 4.82 4.33 5.54 4.07 2.03 2.99 5.39 5.40 5.12 6.93 4.92 4.39 5.44 4.16 2.25 2.93 5.45 5.54 5.17 6.95 4.88 4.31 5.66 4.01 2.29 2.79 5.22 5.47 5.19 6.88 Income and expense as a percentage of average net consolidated assets Gross interest income Taxable equivalent Loans Securities Gross federal funds sold and reverse RPs Other 9.95 10.08 7.46 1.47 .41 .61 9.60 9.71 7.15 1.53 .38 .54 8.60 8.70 6.36 1.56 .27 .41 7.45 7.54 5.40 1.51 .17 .37 6.86 6.94 5.00 1.37 .13 .36 6.65 6.73 4.91 1.25 .17 .33 7.29 7.35 5.48 1.23 .23 .35 7.16 7.21 5.47 1.16 .21 .32 7.15 7.20 5.40 1.11 .29 .35 6.98 7.03 5.27 1.10 .29 .32 Gross interest expense Deposits Gross federal funds purchased and RPs Other 6.44 4.94 .78 .71 6.14 4.84 .68 .62 4.99 4.13 .43 .43 3.56 2.87 .27 .42 2.96 2.23 .24 .50 2.87 2.05 .32 .50 3.57 2.54 .44 .58 3.43 2.46 .38 .59 3.48 2.48 .43 .56 3.46 2.43 .43 .60 Net interest income Taxable equivalent 3.51 3.65 3.46 3.57 3.62 3.71 3.89 3.98 3.90 3.98 3.78 3.86 3.72 3.79 3.73 3.78 3.67 3.72 3.52 3.57 Loss provisioning 5 .98 .97 1.03 .78 .47 .28 .30 .37 .41 .41 1.62 .32 .26 .13 n.a. n.a. n.a. .91 1.67 .34 .27 .15 n.a. n.a. n.a. .91 1.81 .38 .28 .18 n.a. n.a. n.a. .97 1.95 .41 .30 .18 n.a. n.a. n.a. 1.05 2.13 .42 .31 .26 n.a. n.a. n.a. 1.14 2.00 .40 .31 .16 n.a. n.a. n.a. 1.13 2.02 .39 .31 .15 n.a. n.a. n.a. 1.17 2.18 .39 .33 .17 .09 .06 .02 1.29 2.23 .39 .35 .17 .08 .08 • 1.32 2.40 .38 .37 .15 .05 .09 .01 1.50 Noninterest expense Salaries, wages, and employee benefits Expenses of premises and fixed assets Other 3.42 1.55 .52 1.35 3.49 1.56 .53 1.41 3.75 1.59 .53 1.62 3.86 1.61 .53 1.72 3.94 1.64 .52 1.78 3.75 1.58 .49 1.68 3.64 1.54 .48 1.62 3.71 1.55 .48 1.69 3.61 1.53 .47 1.62 3.77 1.55 .47 1.75 Net noninterest expense 1.36 Noninterest income Service charges on deposits Income from fiduciary activities Trading income Interest rate exposures Foreign exchange exposures Equity, commodity, and other exposures Other ... 1.80 1.83 1.94 1.91 1.81 1.75 1.62 1.53 1.38 Realized gains on investment account securities . .03 .01 .09 .11 .09 -.01 .01 .03 .04 .06 Income before taxes and extraordinary items Taxes Extraordinary items .76 .30 .01 .68 .23 .02 .73 .25 .04 1.32 .42 .01 1.70 .56 .06 1.73 .58 1.81 .63 1.85 .65 1.93 .68 1.81 .62 .01 Net income (return on assets) Cash dividends declared Retained income .47 .44 .02 .47 .42 .05 .52 .46 .06 .91 .41 .49 1.20 .62 .58 1.15 .73 .42 1.18 .75 .43 1.20 .90 .30 1.25 .90 .35 1.20 .80 .39 7.33 7.31 7.80 12.64 15.32 14.63 14.69 14.52 14.84 14.08 MEMO: Return on equity * • * * * In absolute value, less than 0.005 percent. DEFINITIONS. n.a. Not available. MMDA Money market deposit account. RP Repurchase agreement. C D Certificate of deposit. 1. Includes the allowance for loan and lease losses and the allocated transfer risk reserve. 2. Before 1994, the netted value of off-balance-sheet items appeared in "trading account securities" if a gain and "other non-interest-bearing liabilities" if a loss. 3. When possible, based on the average of quarterly balance sheet data reported on schedule RC-K of the quarterly Call Reports. 4. Before 1997, data for large time open accounts are included in small-denomination time deposits. 5. Includes provisions for loan and lease losses and for allocated transfer risk. 388 A.2. Federal Reserve Bulletin • June 1999 Portfolio composition, interest rates, and income and expense, all U.S. banks, 1989-98 B. Ten largest banks by assets Item 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Balance sheet items as a percentage of average net consolidated assets Interest-earning assets Loans and leases, net Commercial and industrial U.S. addressees Foreign addressees Consumer Credit card Installment and other Real estate In domestic offices Construction and land development Farmland One- to four-family residential Home equity Other Multifamily residential Nonfarm nonresidential In foreign offices Depository institutions Foreign governments Agricultural production Other loans Lease-financing receivables LESS: Unearned income on loans LESS: Loss reserves' Securities Investment account Debt U.S. Treasury U.S. government agency and corporation obligations Government-backed mortgage pools . . . Collateralized mortgage obligations Other State and local government Private mortgage-backed securities Other Equity Trading account Gross federal funds sold and reverse RPs Interest-bearing balances at depositories Non-interest-earning assets Revaluation gains on off-balance-sheet items 2 . . . Other 85.16 59.66 22.61 13.18 9.43 6.21 1.99 4.22 18.02 15.05 3.60 .08 7.45 1.04 6.41 .68 3.23 2.97 4.56 3.34 .31 6.36 1.49 -.45 -2.77 13.13 9.05 8.83 1.29 84.85 61.69 22.91 13.39 9.53 6.87 2.20 4.67 20.56 17.36 3.79 .08 9.31 1.31 8.00 .68 3.51 3.20 3.64 2.76 .31 6.05 1.60 -.39 -2.63 14.03 9.22 8.98 1.09 85.41 62.14 22.42 13.44 8.97 7.20 2.53 4.67 21.68 18.37 3.42 .08 10.34 1.63 8.71 .57 3.95 3.32 3.05 2.88 .31 5.61 1.68 -.35 -2.34 15.58 9.38 9.08 1.35 85.16 58.34 20.32 12.00 8.32 7.31 2.61 4.70 19.93 17.07 2.48 .07 10.08 1.63 8.46 .58 3.86 2.85 2.56 2.75 .28 6.05 1.51 -.27 -2.08 19.13 10.70 10.36 2.30 84.79 55.57 18.65 10.75 7.90 7.33 2.50 4.83 18.54 15.99 1.59 .07 10.29 1.60 8.68 .53 3.51 2.55 2.35 2.46 .27 6.82 1.30 -.21 -1.94 22.74 12.45 12.08 2.39 76.97 49.91 16.43 9.16 7.27 6.59 2.28 4.31 16.21 13.80 .84 .06 9.69 1.40 8.29 .41 2.79 2.41 3.37 1.27 .25 6.44 1.14 -.16 -1.63 20.43 11.68 11.30 2.17 77.02 50.05 16.16 8.66 7.50 6.60 1.96 4.65 15.82 13.48 .58 .06 9.62 1.40 8.22 .38 2.83 2.35 4.95 .90 .21 5.85 1.14 -.14 -1.45 19.53 10.65 10.27 2.03 79.94 53.51 17.17 9.59 7.59 6.22 1.23 4.99 16.53 14.44 .51 .06 10.43 1.53 8.90 .38 3.05 2.09 6.06 .69 .23 6.42 1.59 -.11 -1.30 19.83 10.60 10.22 1.93 81.62 50.91 16.90 10.24 6.66 6.40 1.34 5.06 17.42 15.69 .68 .09 11.02 1.70 9.31 .39 3.52 1.73 4.14 .45 .31 4.21 2.24 -.07 -1.08 20.00 10.97 10.55 1.56 81.07 50.77 18.07 11.76 6.31 6.04 1.30 4.74 16.51 15.08 .77 .09 10.33 1.72 8.61 .38 3.51 1.43 4.00 ,35 .28 3.79 2.81 -.06 -1.01 19.72 12.12 11.65 1.70 2.29 2.07 n.a. .22 1.58 n.a. 3.68 .22 4.08 4.12 8.26 14.84 n.a. 14.84 2.91 2.24 .54 .14 1.08 n.a. 3.90 .24 4.81 2.88 6.25 15.15 n.a. 15.15 3.46 2.26 1.12 .08 .77 .48 3.01 .30 6.19 2.96 4.74 14.59 n.a. 14.59 4.45 2.43 1.97 .05 .66 .33 2.62 .33 8.43 3.23 4.45 14.84 n.a. 14.84 6.14 3.30 2.76 .08 .59 .38 2.59 .36 10.30 2.71 3.76 15.21 n.a. 15.21 5.16 2.79 2.31 .06 .60 .43 2.94 .38 8.74 2.68 3.95 23.03 9.89 13.14 4.46 2.89 1.50 .08 .49 .32 2.97 .38 8.88 3.20 4.25 22.98 10.77 12.21 4.59 3.58 .95 .06 .39 .30 3.01 .38 9.23 3.10 3.50 20.06 7.63 12.43 5.34 4.26 .93 .15 .51 .32 2.81 .42 9.03 7.56 3.15 18.38 7.36 11.02 6.31 5.13 .93 .26 .47 .60 2.57 .47 7.60 7.81 2.77 18.93 7.61 11.32 Liabilities Interest-bearing liabilities Deposits In foreign offices In domestic offices Other checkable deposits Savings (including MMDAs) Small-denomination time deposits Large-denomination time deposits Gross federal funds purchased and RPs Other Non-interest-bearing liabilities Demand deposits in domestic offices Revaluation losses on off-balance-sheet items 2 . Other 95.11 74.17 57.56 30.08 27.49 2.70 11.32 5.64 7.82 6.72 9.89 20.94 11.60 n.a. 9.34 95.29 73.97 57.95 29.66 28.28 2.74 12.05 6.16 7.33 6.90 . 9.13 21.32 10.93 n.a. 10.39 94.97 74.62 57.67 28.47 29.19 3.00 13.50 6.55 6.14 6.80 10.15 20.35 10.36 n.a. 9.99 94.44 73.08 55.73 27.16 28.56 3.38 14.91 5.72 4.56 6.19 11.16 21.36 11.05 n.a. 10.30 93.24 71.56 52.91 25.51 27.41 3.45 15.33 5.09 3.53 6.70 11.94 21.68 11.27 n.a. 10.41 93.42 64.33 48.20 26.10 22.10 2.91 12.70 3.98 2.51 5.83 10.29 29.09 10.15 8.75 10.20 93.59 63.37 47.49 28.36 19.12 2.30 10.56 4.04 2.23 6.17 9.71 30.22 8.88 10.68 10.66 93.04 64.45 47.87 26.41 21.46 1.61 12.31 4.68 2.86 5.88 10.69 28.59 9.73 7.27 11.59 92.61 65.83 47.36 22.18 25.18 1.21 14.26 5.82 3.89 10.26 8.20 26.78 8.98 7.53 10.27 92.57 65.81 47.65 20.17 27.48 .99 15.84 6.03 4.62 9.79 8.37 26.76 8.46 7.66 10.64 4.89 4.71 5.03 5.56 6.76 6.58 6.41 6.96 7.39 7.43 n.a. .23 56.31 n.a. .42 54.79 9.05 .78 53.23 8.01 1.13 50.82 6.46 1.02 49.23 4.65 .58 46.21 4.40 .27 47.94 4.65 .18 47.39 5.45 .13 46.02 5.61 .09 44.43 693 725 717 775 818 949 1,051 1,189 1,514 1,820 Capital account MEMO Commercial real estate loans Other real estate owned Managed liabilities Average net consolidated assets (billions of dollars) Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 389 A.2.—Continued B. Ten largest banks by assets Item 1989 1990 1991 1992 1993 1994 1995 Effective interest rate (percent) 1996 1997 1998 3 Rates earned Interest-earning assets Taxable equivalent Loans and leases, gross Net of loss provisions Securities Taxable equivalent Investment account U.S. government and other debt State and local Equity Trading account Gross federal funds sold and reverse RPs Interest-bearing balances at depositories 12.31 12.31 13.19 10.87 10.11 10.08 9.20 9.60 7.69 7.03 12.13 8.98 10.88 11.65 11.70 12.29 11.10 9.85 10.00 9.34 9.68 7.54 5.82 10.75 8.01 11.06 9.92 9.95 10.46 8.58 8.52 8.63 8.99 9.29 7.67 4.22 7.84 5.60 10.05 8.67 8.72 9.36 7.51 7.38 7.54 7.96 8.13 7.40 4.04 6.69 3.65 9.29 8.16 8.20 9.07 7.95 6.69 6.77 6.90 6.99 6.99 3.72 6.45 3.02 8.34 8.15 8.18 8.89 8.38 7.09 7.19 6.57 6.70 6.35 3.27 7.79 4.52 7.27 8.20 8.22 8.84 8.62 7.41 7.47 7.06 7.22 6.23 4.03 7.83 5.20 7.15 7.72 7.74 8.32 8.11 6.80 6.85 6.71 6.86 5.73 3.84 6.90 4.92 6.71 7.55 7.60 8.25 7.93 6.70 6.85 6.61 6.80 5.55 3.47 6.81 5.45 6.91 7.54 7.57 8.21 7.62 6.79 6.89 6.71 6.92 5.50 2.98 6.92 5.20 7.16 Rates paid Interest-bearing liabilities Interest-bearing deposits In foreign offices In domestic offices Other checkable deposits Savings (including M M D A s ) Large-denomination time deposits 4 Small-denomination time deposits 4 Gross federal funds purchased and RPs Other interest-bearing liabilities 10.74 9.19 10.96 7.28 4.40 6.49 8.87 8.26 9.27 19.31 10.18 9.03 11.11 6.81 4.35 6.21 7.96 7.76 7.75 17.27 7.71 7.09 8.76 5.47 3.93 5.09 6.50 6.09 5.98 11.20 6.17 5.33 7.55 3.25 1.97 2.95 4.66 3.81 4.04 10.40 5.60 4.50 6.87 2.36 1.28 2.14 3.55 3.01 3.26 11.16 5.43 4.32 6.04 2.35 1.10 2.35 3.12 2.80 4.05 10.87 5.88 4.99 6.07 3.42 1.29 3.11 3.73 5.08 5.22 9.80 5.44 4.57 5.62 3.32 1.32 2.76 4.62 4.58 4.93 8.86 5.41 4.54 5.52 3.69 1.97 2.68 5.17 5.45 5.02 9.13 5.29 4.40 5.83 3.39 1.67 2.45 4.53 5.21 5.18 8.85 Income and expense as a percentage of average net consolidated assets Gross interest income Taxable equivalent Loans Securities Gross federal funds sold and reverse RPs Other 10.82 10.83 8.23 .83 .37 1.39 10.37 10.43 7.96 .86 .25 1.30 8.77 8.80 6.77 .84 .17 .98 7.69 7.72 5.65 .85 .14 1.05 7.22 7.25 5.22 .86 .11 1.04 6.37 6.40 4.49 .77 .15 .97 6.42 6.43 4.44 .75 .21 1.00 6.26 6.27 4.48 .71 .18 .88 6.31 6.33 4.31 .73 .45 .82 6.21 6.23 4.27 .81 .42 .70 Gross interest expense Deposits Gross federal funds purchased and RPs Other 8.01 5.37 .72 1.92 7.65 5.41 .64 1.60 5.81 4.23 .43 1.15 4.54 3.09 .28 1.17 4.06 2.48 .24 1.35 3.52 2.15 .24 1.13 3.74 2.43 .35 .95 3.52 2.26 .31 .95 3.55 2.26 .54 .75 3.48 1 2.20 .54 .74 I Net interest income Taxable equivalent 2.82 2.82 2.72 2.77 2.96 2.99 3.15 3.18 3.16 3.19 2.86 2.88 2.68 2.70 2.73 2.75 2.76 2.79 2.73 2.75 Loss provisioning 5 1 1 I 1.45 .77 1.21 1.12 .64 .26 .11 .11 .16 .31 Noninterest income Service charges on deposits Income from fiduciary activities Trading income Interest rate exposures Foreign exchange exposures Equity, commodity, and other exposures Other 2.19 .22 .27 .42 n.a. n.a. n.a. 1.29 2.27 .23 .31 .52 n.a. n.a. n.a. 1.21 2.40 .26 .33 .64 n.a. n.a. n.a. 1.16 2.59 .30 .37 .66 n.a. n.a. n.a. 1.27 2.99 .30 .39 .91 n.a. n.a. n.a. 1.38 2.33 .26 .36 .53 n.a. n.a. n.a. 1.18 2.16 .25 .30 .46 n.a. n.a. n.a. 1.15 2.34 .28 .31 .52 .30 .17 .05 1.23 2.12 .32 .34 .43 .23 .20 1.04 2.15 .33 .32 .33 .10 .20 .03 1.17 Noninterest expense Salaries, wages, and employee benefits Expenses of premises and fixed assets Other 3.43 1.66 .62 1.15 3.55 1.74 .65 1.16 3.83 1.79 .66 1.38 3.86 1.78 .65 1.43 4.13 1.88 .66 1.59 3.56 1.65 .55 1.36 3.32 1.58 .50 1.24 3.57 1.57 .50 1.50 3.24 1.45 .47 1.33 3.47 | 1.45 1 .47 1.54 Net noninterest expense 1.24 1.28 1.44 1.27 1.14 1.23 1.16 1.23 1.12 1.32 Realized gains on investment account securities . .03 .02 .04 .11 .13 .02 .03 .04 .08 .11 Income before taxes and extraordinary items Taxes Extraordinary items .16 .38 .03 .69 .27 .06 .34 .17 .03 .87 .26 1.50 .53 .16 1.39 .48 1.44 .55 1.44 .52 1.56 .58 1.22 .44 • * * * * * -.19 .37 -.57 .48 .26 .21 * .61 .18 .43 1.13 .28 .85 .91 .58 .33 .88 .57 .31 .92 .70 .21 .98 .82 .15 .78 .53 .25 -3.92 10.13 10.91 16.75 13.86 13.78 13.21 13.22 10.53 Net income (return on assets) Cash dividends declared Retained income MEMO: Return on equity .21 .21 4.23 * * In absolute value, less than 0.005 percent. DEFINITIONS. n.a. Not available. M M D A Money market deposit account. RP Repurchase agreement. C D Certificate of deposit. 1. Includes the allowance for loan and lease losses and the allocated transfer risk reserve. 2. Before 1994, the netted value of off-balance-sheet items appeared in "trading account securities" if a gain and "other non-interest-bearing liabilities" if a loss. 3. When possible, based on the average of quarterly balance sheet data reported on schedule RC-K of the quarterly Call Reports. 4. Before 1997, data for large time open accounts are included in small-denomination time deposits. 5. Includes provisions for loan and lease losses and for allocated transfer risk. 1 I I 1 1 | 1 J I I 1 1 I 1 1 I 390 Federal Reserve Bulletin • June 1999 A.2. Portfolio composition, interest rates, and income and expense, all U.S. banks, 1989-98 C. Banks ranked 11th through 100th by assets Item 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Balance sheet items as a percentage of average net consolidated assets Interest-earning assets Loans and leases, net Commercial and industrial U.S. addressees Foreign addressees Consumer Credit card Installment and other Real estate In domestic offices Construction and land development Farmland One- to four-family residential Home equity Other Multifamily residential Nonfarm nonresidential In foreign offices Depository institutions Foreign governments Agricultural production Other loans Lease-financing receivables LESS: Unearned income on loans LESS: Loss reserves' Securities Investment account Debt U.S. Treasury U.S. government agency and corporation obligations Government-backed mortgage pools . . . Collateralized mortgage obligations Other State and local government Private mortgage-backed securities Other Equity Trading account Gross federal funds sold and reverse RPs Interest-bearing balances at depositories Non-interest-earning assets Revaluation gains on off-balance-sheet items 2 Other 86.91 62.61 22.75 21.23 1.53 12.97 5.82 7.16 19.09 18.85 5.25 .12 7.54 1.41 6.13 .45 5.49 .24 1.55 .88 .29 5.17 1.73 -.34 -1.48 15.21 14.38 14.15 4.10 86.81 61.22 21.76 20.44 1.33 12.25 5.48 6.76 20.21 20.04 4.91 .12 8.53 1.67 6.86 .46 6.01 .18 1.57 .52 .28 4.82 1.67 -.26 -1.60 16.19 15.32 15.14 3.42 86.88 60.08 20.53 19.30 1.24 11.66 5.04 6.62 21.51 21.37 4.00 .12 10.17 2.07 8.10 .54 6.53 .14 1.58 .39 .31 4.55 1.53 -.22 -1.76 17.38 16.25 16.02 3.78 87.97 58.30 18.83 17.78 1.05 11.72 5.16 6.56 21.89 21.78 3.02 .14 11.36 2.50 8.85 .66 6.61 .11 1.43 .33 .31 4.28 1.49 -.17 -1.79 20.38 19.24 18.99 5.88 88.36 57.33 18.03 17.05 .98 11.47 5.23 6.24 22.11 22.01 2.08 .13 12.30 2.54 9.76 .71 6.79 .10 1.30 .30 .29 4.05 1.47 -.11 -1.60 21.97 20.60 20.34 7.05 88.16 58.56 18.03 16.99 1.04 12.62 5.99 6.63 22.26 22.17 1.63 .14 12.98 2.33 10.65 .71 6.72 .09 1.49 .28 .29 3.47 1.60 -.07 -1.41 21.19 19.82 19.50 6.85 88.31 62.68 19.26 18.10 1.16 14.23 7.34 6.89 23.25 23.10 1.50 .13 14.16 2.19 11.97 .77 6.54 .15 1.59 .20 .26 3.32 1.96 -.07 -1.32 18.64 17.88 17.51 4.82 87.75 64.24 18.95 17.71 1.24 15.67 8.26 7.40 23.26 23.10 1.55 .13 14.15 2.08 12.07 .89 6.37 .16 1.50 .20 .28 3.30 2.41 -.06 -1.27 16.87 16.06 15.62 3.34 86.95 63.89 19.01 17.78 1.22 15.62 8.50 7.12 22.99 22.85 1.69 .14 13.88 2.22 11.65 .93 6.21 .15 1.27 .09 .29 3.21 2.70 -.05 -1.24 15.80 15.07 14.58 2.81 87.40 64.40 18.94 17.60 1.33 14.52 7.67 6.85 24.57 24.39 2.02 .17 14.84 2.17 12.67 1.00 6.35 .18 1.06 .06 .33 3.38 2.75 -.04 -1.16 16.65 16.12 15.57 2.24 5.01 4.03 n.a. .98 2.70 n.a. 2.34 .23 .83 3.71 5.38 13.09 n.a. 13.09 7.42 5.32 1.56 .54 2.03 n.a. 2.27 .18 .88 4.41 4.98 13.19 n.a. 13.19 8.43 5.38 2.48 .57 1.63 1.09 1.10 .22 1.13 4.90 4.51 13.12 n.a. 13.12 9.26 5.22 3.54 .50 1.46 1.05 1.34 .25 1.14 4.78 4.52 12.03 n.a. 12.03 9.55 5.21 3.71 .63 1.31 1.06 1.37 .26 1.37 4.98 4.08 11.64 n.a. 11.64 9.28 5.30 3.07 .91 1.21 .93 1.22 .32 1.37 5.11 3.30 11.84 .57 11.28 9.40 5.06 2.82 1.51 1.11 1.02 1.16 .37 .76 4.52 2.47 11.69 .50 11.18 9.12 5.42 2.16 1.54 .99 .96 1.21 .44 .80 4.26 2.38 12.25 .51 11.75 8.98 5.17 2.13 1.68 .88 .73 1.18 .49 .73 4.38 2.88 13.05 .69 12.36 9.93 4.98 2.82 2.12 .92 .96 1.53 .55 .54 3.58 2.77 12.60 .75 11.85 Liabilities Interest-bearing liabilities Deposits In foreign offices In domestic offices Other checkable deposits Savings (including M M D A s ) Small-denomination time deposits Large-denomination time deposits Gross federal funds purchased and RPs Other Non-interest-bearing liabilities Demand deposits in domestic offices Revaluation losses on off-balance-sheet items 2 . Other 94.45 76.23 56.45 8.63 47.82 4.67 14.58 13.49 15.08 13.22 6.57 18.22 13.86 n.a. 4.36 94.35 77.02 57.46 7.84 49.62 4.75 15.50 15.59 13.78 13.03 6.53 17.33 13.23 n.a. 4.10 93.93 76.07 59.24 6.69 52.54 5.36 17.62 17.99 11.56 10.94 5.89 17.87 13.76 n.a. 4.10 93.13 74.66 56.99 6.20 50.79 6.26 20.21 15.98 8.34 11.45 6.22 18.47 14.52 n.a. 3.95 92.56 73.38 54.22 6.78 47.43 7.21 20.60 14.19 5.44 11.93 7.23 19.18 15.38 n.a. 3.80 92.47 72.86 53.03 8.05 44.98 6.91 20.13 13.26 4.68 11.48 8.34 19.62 15.27 .53 3.82 92.23 74.05 52.32 8.12 44.20 5.62 18.78 14.24 5.55 11.37 10.36 18.18 14.26 .49 3.43 92.02 73.14 51.81 7.52 44.30 3.06 20.76 14.09 6.39 10.00 11.32 18.89 14.47 .49 3.93 91.85 72.62 51.47 7.85 43.62 1.95 21.09 13.43 7.15 9.36 11.79 19.22 14.17 .68 4.37 91.63 73.46 51.52 8.16 43.36 1.75 21.42 12.83 7.36 9.48 12.46 18.17 12.41 .76 5.01 5.55 5.65 6.07 6.87 7.44 7.53 7.77 7.98 8.15 8.37 n.a. .30 43.90 n.a. .46 41.59 11.83 .76 35.49 11.09 .70 32.59 10.29 .47 31.76 9.69 .25 32.89 9.42 .13 35.68 9.38 .08 35.60 9.44 .06 36.60 10.09 .04 38.14 940 995 1,006 1,003 1,082 1,204 1,338 1,450 1,604 1,746 Capital account MEMO Commercial real estate loans Other real estate owned Managed liabilities Average net consolidated assets (billions of dollars) Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 391 A.2.—Continued C. Banks ranked 11th through 100th by assets Item 1989 1990 1991 1992 1993 1994 1995 Effective interest rate (percent) 1996 1997 1998 3 Rates earned Interest-earning assets Taxable equivalent Loans and leases, gross Net of loss provisions Securities Taxable equivalent Investment account U.S. government and other debt State and local Equity Trading account Gross federal funds sold and reverse RPs Interest-bearing balances at depositories 11.10 11.27 11.74 9.87 8.76 9.36 8.77 9.09 7.41 8.73 8.66 9.35 11.35 10.46 10.55 11.09 9.08 8.86 9.18 8.92 9.18 7.32 8.09 8.01 8.15 9.72 9.30 9.39 9.96 7.98 8.23 8.57 8.37 8.51 7.23 7.36 6.46 5.80 8.15 7.97 8.07 8.75 7.45 7.00 7.30 7.12 7.16 6.80 6.71 4.73 3.70 6.76 7.35 7.45 8.25 7.46 6.05 6.32 6.14 6.14 6.30 5.20 4.74 3.11 6.50 7.29 7.37 8.22 7.68 5.70 5.92 5.70 5.69 6.04 5.00 5.75 4.31 4.69 8.31 8.37 9.10 8.49 6.38 6.56 6.34 6.38 6.05 5.68 7.27 5.91 6.78 8.16 8.23 8.87 8.05 6.42 6.66 6.41 6.50 5.84 4.84 6.53 5.31 5.82 8.31 8.36 9.03 8.11 6.50 6.70 6.52 6.63 5.58 5.07 6.05 5.45 5.77 8.10 8.16 8.82 8.01 6.21 6.46 6.22 6.31 5.36 5.26 5.86 5.47 5.57 Rates paid Interest-bearing liabilities Interest-bearing deposits In foreign offices In domestic offices Other checkable deposits Savings (including MMDAs) Large-denomination time deposits 4 Small-denomination time deposits 4 Gross federal funds purchased and RPs Other interest-bearing liabilities 8.66 8.14 11.08 7.61 4.57 6.42 8.75 8.72 9.35 10.23 7.96 7.55 10.08 7.15 4.67 6.07 8.11 8.09 8.12 9.27 6.41 6.27 8.39 6.01 4.21 5.04 6.77 6.96 5.75 6.55 4.43 4.30 7.26 3.96 2.43 3.07 5.10 5.07 3.57 5.77 3.76 3.51 7.37 2.98 1.70 2.33 4.30 4.06 3.04 5.97 3.72 3.25 4.60 3.03 1.62 2.46 4.21 4.18 4.28 5.24 4.94 4.35 6.30 4.01 1.89 3.10 5.70 5.35 5.86 6.43 4.70 4.15 5.29 3.96 1.78 2.91 5.50 5.26 5.19 5.95 4.79 4.22 5.23 4.04 2.01 2.84 5.47 5.43 5.29 5.85 4.76 4.15 5.22 3.96 2.41 2.77 5.32 5.33 5.23 5.80 Income and expense as percentage of average net consolidated assets Gross interest income Taxable equivalent Loans Securities Gross federal funds sold and reverse RPs Other 9.77 9.91 7.51 1.26 .36 .65 9.31 9.39 7.01 1.37 .38 .56 8.24 8.31 6.15 1.36 .28 .45 7.12 7.19 5.23 1.37 .18 .34 6.58 6.64 4.84 1.26 .15 .32 6.46 6.51 4.91 1.13 .21 .21 7.40 7.45 5.79 1.13 .27 .21 7.24 7.28 5.80 1.03 .23 .18 7.26 7.30 5.87 .98 22 .19 7.16 7.20 5.79 1.00 .19 .18 Gross interest expense Deposits Gross federal funds purchased and RPs Other 6.50 4.59 1.24 .66 6.08 4.36 1.12 .60 4.80 3.75 .67 .38 3.26 2.48 .43 .35 2.74 1.93 .38 ,43 2.67 1.73 .51 .43 3.62 2.29 .67 .66 3.39 2.18 .55 .66 3.41 2.23 .51 .68 3.45 2.23 .51 .71 Net interest income Taxable equivalent 3.27 3.41 3.23 3.31 3.43 3.51 3.86 3.93 3.84 3.91 3.79 3.85 3.78 3.84 3.84 3.89 3.85 3.89 3.71 3.74 Loss provisioning 5 1.20 1.27 1.22 .78 .47 .32 .39 .54 .60 .53 Noninterest income Service charges on deposits Income from fiduciary activities Trading income Interest rate exposures Foreian exchange exposures Equity, commodity, and other exposures Other 1.86 .31 .35 .08 n.a. n.a. n.a. 1.12 1.84 .34 .33 .08 n.a. n.a. n.a. 1.09 2.05 .41 .36 .10 n.a. n.a. n.a. 1.19 2.25 .44 .38 .09 n.a. n.a. n.a. 1.33 2.29 .46 .38 .14 n.a. n.a. n.a. 1.32 2.25 .45 .39 .08 n.a. n.a. n.a. 1.33 2.38 .44 .40 .09 n.a. n.a. n.a. 1.45 2.61 .44 .43 .08 .03 .04 .01 1.67 2.76 .44 .44 .08 .02 .05 3.07 .42 .49 .09 .03 .06 1.79 2.07 Noninterest expense Salaries, wages, and employee benefits Expenses of premises and fixed assets Other 3.34 1.47 .50 1.37 3.44 1.47 .50 1.48 3.77 1.52 .51 1.74 3.98 1.53 .49 1.95 3.95 1.52 .47 1.95 3.86 1.50 .47 1.89 3.79 1.47 .47 1.85 3.85 1.51 .48 1.86 3.85 1.51 .46 1.88 4.03 1.53 .46 2.04 Net noninterest expense .96 * 1.47 1.60 1.73 1.73 1.65 1.61 1.41 1.24 1.10 Realized gains on investment account securities . .04 .03 .14 .15 .09 -.01 .02 .02 .02 .03 Income before taxes and extraordinary items . . . . Taxes Extraordinary items .65 .18 .62 .19 .03 1.50 .48 .03 1.81 .56 1.85 .63 2.01 .70 2.09 .75 2.18 .77 2.24 .79 * .38 .15 .01 Net income (return on assets) Cash dividends declared Retained income .47 .40 .06 .24 .38 -.14 .47 .47 1.04 .46 .58 1.25 .76 .49 1.22 .86 .36 1.31 .85 .46 1.34 1.07 .26 1.42 .93 .48 1.46 .96 .50 8.41 4.18 7.71 15.16 16.86 16.27 16.84 16.78 17.36 17.42 MEMO: Return on equity * * * * * * * In absolute value, less than 0.005 percent. DEFINITIONS. n.a. Not available. MMDA Money market deposit account. RP Repurchase agreement. C D Certificate of deposit. 1. Includes the allowance for loan and lease losses and the allocated transfer risk reserve. 2. Before 1994. the netted value of off-balance-sheet items appeared in "trading account securities" if a gain and "other non-interest-bearing liabilities" if a loss. 3. When possible, based on the average of quarterly balance sheet data reported on schedule RC-K of the quarterly Call Reports. 4. Before 1997. data for large time open accounts are included in small-denomination time deposits. 5. Includes provisions for loan and lease losses and for allocated transfer risk. * 392 Federal Reserve Bulletin • June 1999 A.2. Portfolio composition, interest rates, and income and expense, all U.S. banks, 1989-98 D. Banks ranked 101st through 1,000th by assets Item 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Balance sheet items as a percentage of average net consolidated assets Interest-earning assets Loans and leases, net Commercial and industrial U.S. addressees Foreign addressees Consumer Credit card Installment and other Real estate In domestic offices Construction and land development Farmland One- to four-family residential Home equity Other Multifamily residential Nonfarm nonresidential In foreign offices Depository institutions Foreign governments Agricultural production Other loans Lease-financing receivables LESS: Unearned income on loans LESS: Loss reserves' Securities Investment account Debt U.S. Treasury U.S. government agency and corporation obligations Government-backed mortgage pools . . . Collateralized mortgage obligations Other State and local government Private mortgage-backed securities Other Equity Trading account Gross federal funds sold and reverse RPs Interest-bearing balances at depositories Non-interest-earning assets Revaluation gains on off-balance-sheet items 2 . . . Other 88.98 63.62 17.68 17.53 .15 15.49 4.83 10.66 25.97 25.95 4.82 .27 11.56 2.08 9.48 .70 8.61 .01 .92 .16 .45 3.77 .82 -.56 -1.07 18.75 18.38 18.02 5.91 88.84 63.09 16.69 16.56 .13 15.48 5.22 10.26 27.01 26.99 4.37 .28 12.49 2.31 10.18 .73 9.11 .03 1.05 .09 .47 3.16 .83 -.50 -1.20 19.34 18.87 18.54 5.44 88.91 61.03 15.04 14.88 .16 15.13 5.74 9.39 27.51 27.47 3.66 .28 13.22 2.53 10.69 .80 9.50 .05 .93 .07 .49 2.81 .85 -.40 -1.42 21.28 20.91 20.55 6.16 89.02 58.49 13.34 13.16 .18 14.18 5.37 8.80 28.11 28.07 2.86 .32 14.26 2.56 11.69 .96 9.69 .04 .80 .05 .54 2.47 .79 -.30 -1.49 24.13 23.78 23.32 7.75 89.55 57.94 12.19 12.03 .16 14.83 5.63 9.20 28.61 28.59 2.26 .34 15.17 2.50 12.67 1.07 9.75 .02 .43 .03 .56 2.16 .77 -.21 -1.44 25.92 25.64 25.16 8.64 90.09 59.75 12.07 11.90 .16 15.85 6.06 9.79 29.42 29.39 2.08 .36 16.24 2.33 13.91 1.13 9.57 .03 .40 .02 .62 2.01 .83 -.15 -1.30 25.71 25.40 24.95 8.26 90.12 62.18 12.70 12.54 .16 16.25 6.30 9.95 30.82 30.80 2.21 .40 17.49 2.36 15.13 1.21 9.48 .02 .35 .02 .69 1.80 .90 -.12 -1.22 23.09 22.89 22.43 6.49 90.13 62.63 12.79 12.61 .18 15.88 6.66 9.22 31.37 31.35 2.38 .46 17.34 2.31 15.04 1.29 9.88 .02 .48 .02 .71 1.69 1.01 -.10 -1.22 22.67 22.55 22.03 5.61 90.31 62.21 12.43 12.20 .23 13.99 5.48 8.51 33.26 33.23 2.69 .53 18.16 2.30 15.85 1.29 10.57 .02 .57 .02 .74 1.50 .99 -.10 -1.18 23.47 23.36 22.75 4.95 90.38 61.12 12.45 12.13 .32 12.29 4.48 7.81 33.97 33.95 2.89 .56 18.21 2.15 16.06 1.26 11.04 .02 .50 .02 .80 1.32 .98 -.09 -1.13 24.28 24.17 23.48 3.93 6.07 3.03 n.a. 3.04 3.50 n.a. 2.55 .35 .38 4.11 2.49 11.02 n.a. 11.02 7.75 3.83 1.72 2.19 3.11 n.a. 2.25 .32 .48 4.51 1.90 11.16 n.a. 11.16 9.35 4.51 2.73 2.11 2.65 1.16 1.23 .37 .36 4.71 1.89 11.09 n.a. 11.09 11.08 4.74 3.95 2.39 2.27 1.01 1.21 .46 .35 4.92 1.47 10.98 n.a. 10.98 12.32 4.97 4.82 2.53 2.26 .84 1.10 .48 .28 4.48 1.20 10.45 n.a. 10.45 12.67 5.57 4.39 2.71 2.29 .75 .99 .44 .31 3.64 .98 9.91 .02 9.90 12.23 5.42 3.56 3.25 2.13 .68 .89 .47 .20 3.91 .93 9.88 .05 9.83 12.66 5.68 3.12 3.85 2.24 .76 .77 .52 .12 3.87 .96 9.87 .02 9.84 13.98 6.23 3.02 4.73 2.45 .59 .78 .61 .10 3.59 1.03 9.69 15.13 6.47 3.23 5.44 2.71 .65 1.06 .69 .11 4.17 .82 9.62 9.69 9.61 Liabilities Interest-bearing liabilities Deposits In foreign offices In domestic offices Other checkable deposits Savings (including MMDAs) Small-denomination time deposits Large-denomination time deposits Gross federal funds purchased and RPs Other Non-interest-bearing liabilities Demand deposits in domestic offices Revaluation losses on off-balance-sheet items 2 . Other 93.28 76.42 63.74 2.09 61.65 7.14 19.52 22.08 12.91 9.21 3.47 16.85 14.86 n.a. 1.99 93.07 77.04 65.05 1.65 63.40 7.31 19.69 24.09 12.31 8.43 3.56 16.03 14.07 n.a. 1.96 92.89 77.26 66.35 1.76 64.59 7.83 20.79 25.22 10.76 7.46 3.45 15.63 13.56 n.a. 2.07 92.47 75.98 65.65 1.56 64.09 9.14 23.34 23.56 8.06 7.17 3.15 16.49 14.39 n.a. 2.10 91.85 74.42 63.05 1.43 61.62 9.94 24.06 20.77 6.85 7.43 3.93 17.43 15.07 n.a. 2.36 91.62 74.77 60.38 1.69 58.69 9.70 22.92 19.29 6.78 8.45 5.94 16.85 14.58 .02 2.25 91.36 75.00 59.69 1.71 57.97 8.54 20.76 21.12 7.56 8.31 7.00 16.36 14.07 .05 2.24 91.06 75.06 59.99 1.33 58.66 6.21 22.51 21.61 8.34 8.19 6.88 16.00 13.84 .02 2.14 90.79 75.19 61.51 1.23 60.28 4.97 23.60 22.05 9.66 7.08 6.59 15.60 13.16 .01 2.44 90.54 75.44 62.45 1.29 61.16 4.24 25.66 21.25 10.01 6.16 6.83 15.10 11.89 .01 3.20 6.72 6.93 7.11 7.53 8.15 8.38 8.64 8.94 9.21 9.46 n.a. .43 27.73 n.a. .52 26.00 14.63 .77 23.48 13.91 .80 20.00 13.37 .57 19.69 13.05 .28 22.89 13.20 .17 24.61 13.84 .13 24.78 14.79 .11 24.63 15.40 .09 24.42 892 937 962 968 977 1,032 1,092 1,076 967 935 Capital account * * MEMO Commercial real estate loans Other real estate owned Managed liabilities Average net consolidated assets (billions of dollars) Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 393 A.2.—Continued D. Banks ranked 101st through 1,000th by assets Item 1989 1990 1991 1992 1993 1994 1995 Effective interest rate (percent) Rates earned Interest-earning assets Taxable equivalent Loans and leases, gross Net of loss provisions Securities Taxable equivalent Investment account U.S. government and other debt State and local Equity Trading account Gross federal funds sold and reverse RPs Interest-bearing balances at depositories Rates paid Interest-bearing liabilities Interest-bearing deposits In foreign offices In domestic offices Other checkable deposits Savings (including M M D A s ) Large-denomination time deposits 4 Small-denomination time deposits 4 Gross federal funds purchased and RPs Other interest-bearing liabilities 1996 1997 1998 3 10.75 10.96 11.61 10.45 8.34 8.97 8.35 8.64 7.28 7.00 7.61 9.05 9.21 10.42 10.57 11.21 9.48 8.52 9.00 8.49 8.76 7.33 6.94 9.92 7.99 8.52 9.55 9.70 10.43 8.72 8.11 8.54 8.12 8.30 7.25 6.02 7.19 5.64 6.82 8.14 8.25 9.11 7.83 6.88 7.19 6.90 6.95 6.83 5.08 5.61 3.47 4.61 7.43 7.55 8.57 7.76 5.78 6.10 5.79 5.76 6.30 4.95 4.74 3.02 3.51 7.58 7.68 8.64 8.11 5.69 5.93 5.69 5.68 5.92 5.30 5.29 4.06 4.28 8.42 8.51 9.43 8.76 6.23 6.49 6.24 6.28 5.80 6.05 5.55 5.45 6.09 8.40 8.49 9.38 8.59 6.31 6.59 6.31 6.40 5.50 6.30 5.94 5.24 5.54 8.50 8.59 9.48 8.60 6.42 6.69 6.42 6.55 5.36 6.35 6.37 5.41 5.49 8.32 8.44 9.37 8.61 6.22 6.57 6.22 6.36 5.16 6.36 6.48 5.30 5.75 7.72 7.36 8.98 7.31 4.88 6.13 8.70 8.31 9.01 9.08 7.26 7.05 8.12 7.02 4.75 5.98 8.04 8.03 7.86 8.28 6.11 6.06 6.38 6.05 4.28 5.14 6.64 7.08 5.62 6.78 4.19 4.17 4.25 4.17 2.67 3.33 4.76 5.35 3.46 5.28 3.33 3.26 3.35 3.25 2.02 2.58 3.90 4.40 2.95 4.44 3.57 3.31 4.31 3.28 1.87 2.64 4.23 4.40 4.12 4.92 4.64 4.26 5.94 4.21 2.02 3.24 5.62 5.53 5.61 6.27 4.57 4.26 5.43 4.23 1.96 3.11 5.47 5.57 5.16 5.89 4.66 4.34 5.42 4.32 2.17 3.08 5.56 5.57 5.21 6.12 4.59 4.28 5.54 4.26 2.16 2.97 5.50 5.64 5.13 6.00 Income and expense as percentage of average net consolidated assets Gross interest income Taxable equivalent Loans Securities Gross federal funds sold and reverse RPs Other 9.68 9.86 7.52 1.54 .38 .25 9.38 9.51 7.21 1.60 .36 .20 8.64 8.76 6.52 1.70 .28 .15 7.36 7.46 5.46 1.64 .17 .08 6.75 6.84 5.07 1.49 .14 .06 6.90 6.99 5.26 1.45 .14 .06 7.68 7.76 5.98 1.43 .21 .07 7.67 7.75 5.99 1.42 .20 .06 7.76 7.84 6.01 1.50 .19 .06 7.64 7.72 5.86 1.50 .22 .05 Gross interest expense Deposits Gross federal funds purchased and RPs Other 5.84 4.69 .83 .31 5.54 4.58 .67 .29 4.68 4.03 .42 .23 3.16 2.75 .25 .17 2.46 2.07 .22 .17 2.65 2.01 .35 .29 3.46 2.56 .46 .44 3.40 2.57 .43 .40 3.47 2.70 .37 .40 3.45 2.72 .32 .41 Net interest income Taxable equivalent 3.84 4.02 3.83 3.97 3.96 4.08 4.19 4.30 4.28 4.38 4.25 4.34 4.23 4.31 4.27 4.35 4.29 4.37 4.19 4.28 Loss provisioning 5 .75 1.12 1.07 .77 .47 .33 .43 .50 .56 .48 1.38 .36 .25 .04 n.a. n.a. n.a. .74 1.50 .37 .26 .02 n.a. n.a. n.a. .84 1.65 .40 .27 .04 n.a. n.a. n.a. .95 1.69 .44 .28 .02 n.a. n.a. n.a. .95 1.84 .45 .29 .03 n.a. n.a. n.a. 1.08 1.86 .42 .28 .02 n.a. n.a. n.a. 1.14 1.84 .42 .27 .03 n.a. n.a. n.a. 1.12 1.88 .42 .28 .02 .01 .01 2.08 .40 .32 .01 .01 2.25 .39 .34 .01 .01 1.16 1.34 1.51 Noninterest expense Salaries, wages, and employee benefits Expenses of premises and fixed assets Other 3.45 1.48 .49 1.49 3.50 1.47 .49 1.55 3.77 1.48 .49 1.80 3.87 1.51 .49 1.87 3.92 1.51 .48 1.93 3.78 1.49 .46 1.83 3.68 1.44 .45 1.79 3.68 1.44 .45 1.80 3.73 1.51 .46 1.76 3.87 1 1.57 1 .47 1.83 1 Net noninterest expense 2.07 2.01 2.12 2.18 2.08 1.92 1.84 1.81 1.65 1.61 1 .01 .01 .09 .10 .06 -.05 -.01 .02 .02 .04 | 1.02 .32 .72 .21 .86 .29 -.07 1.35 .44 1.96 .67 1.96 .67 1.98 .69 2.10 .73 Noninterest income Service charges on deposits Income from fiduciary activities Trading income Interest rate exposures Foreign exchange exposures Equity, commodity, and other exposures Other ... Realized gains on investment account securities . Income before taxes and extraordinary items Taxes Extraordinary items Net income (return on assets) Cash dividends declared Retained income MEMO: Return on equity * * * * * 1.78 .61 .04 .71 .48 .23 .51 .53 -.02 .49 .33 .16 .91 .49 .42 1.22 .79 .43 1.29 .81 .48 1.28 .87 .41 1.29 1.04 .25 1.37 1.10 .28 1.47 1.02 .45 10.54 7.37 6.93 12.13 14.93 15.40 14.82 14.45 14.93 15.53 * * * * * * * In absolute value, less than 0.005 percent. DEFINITIONS. n.a. Not available. M M D A Money market deposit account. RP Repurchase agreement. C D Certificate of deposit. 1. Includes the allowance for loan and lease losses and the allocated transfer risk reserve. 2. Before 1994, the netted value of off-balance-sheet items appeared in "trading account securities" if a gain and "other non-interest-bearing liabilities" if a loss. 3. When possible, based on the average of quarterly balance sheet data reported on schedule RC-K of the quarterly Call Reports. 3. Includes provisions for loan and lease losses and for allocated transfer risk. 4. Before 1997, data for large time open accounts are included in small-denomination time deposits. 5. Includes provisions for loan and lease losses and for allocated transfer risk. * 2.14 1 .73 1 .06 | j 1 | 394 Federal Reserve Bulletin • June 1999 A.2. Portfolio composition, interest rates, and income and expense, all U.S. banks, 1989-98 E. Banks not ranked among the 1.000 largest by assets Item 1989 1990 1991 1992 1993 1994 1 1995 1996 1997 1998 91.65 58.77 10.15 10.07 .08 9.06 .91 8.15 35.51 35.50 2.82 2.68 18.15 1 ">4 16 91 .95 10.91 91.88 59.13 10.33 10.25 .08 8.48 .71 7.77 36.04 36.04 3.01 2.83 18.05 1 ">1 16 84 .93 11.21 Balance sheet items as a percentage of average net consolidated assets Interest-earning assets Loans and leases, net Commercial and industrial U.S. addressees Foreign addressees Consumer Credit card Installment and other Real estate In domestic offices Construction and land development Farmland One- to four-family residential Other Multifamily residential Nonfarm nonresidential In foreign offices Depository institutions Foreign governments Agricultural production Other loans Lease-financing receivables LESS: Unearned income on loans LESS: LOSS r e s e r v e s ' Securities Investment account Debt U.S. Treasury U.S. government agency and corporation obligations Government-backed mortgage pools . . . Collateralized mortgage obligations Other State and local government Private mortgage-backed securities Other Equity Trading account Gross federal funds sold and reverse RPs Interest-bearing balances at depositories Non-interest-earning assets Revaluation gains on off-balance-sheet items 2 . . . Other Liabilities Interest-bearing liabilities Deposits In foreign offices Other checkable deposits Small-denomination time deposits Large-denomination time deposits Gross federal funds purchased and RPs Other Non-interest-bearing liabilities Demand deposits in domestic offices Revaluation losses on off-balance-sheet items 2 . Other Capital account 90.90 54.84 12.10 12.07 .03 11.46 .93 10.53 27.36 27.36 2.29 1.82 14.81 .94 13.86 .62 7.82 91.06 54.74 11.53 11.49 .04 11.20 1.00 10.20 28.35 28.35 2.37 1.86 15.37 1.16 14.21 .66 8.09 91.25 54.05 10.60 10.56 .04 10.44 1.02 9.42 29.34 29.33 2.18 1.93 16.00 1.29 14 71 .71 8.50 91.39 53.03 9.74 9.69 .04 9.69 1.00 8.69 30.15 30.15 1.98 2.06 16.44 1 34 15 10 .77 8.90 * * * * .26 .01 3.28 1.67 .19 -.60 -.88 27.92 27.85 27.45 8.84 .23 .01 3.30 1.41 .18 -.58 -.89 28.38 28.28 27.92 8.77 .20 .01 3.48 1.24 .17 -.51 -.93 29.99 29.94 29.56 9.24 .13 .01 3.55 .99 .17 -.43 -.96 32.10 32.04 31.60 10.25 .12 .02 3.58 .87 .18 -.36 -.97 33.06 33.00 32.55 10.48 .13 .01 3.89 .81 .20 -.31 -.95 32.90 32.86 32.42 10.81 3.95 .76 22 -.30 -.93 30.50 30.46 30.01 9.19 11.37 3.76 n.a. 7.61 4.94 n.a. 2.29 .40 .07 5.74 2.40 9.10 n.a. 9.10 12.43 4.58 .90 6.93 4.56 n.a. 2.15 .36 .10 6.13 1.81 8.94 n.a. 8.94 13.82 5.59 1.56 6.68 4.26 .89 1.34 .38 .06 5.64 1.57 8.75 n.a. 8.75 15.04 5.52 2.66 6.85 4.29 .77 1.26 .44 .05 5.10 1.16 8.61 n.a. •8.61 15.80 5.38 3.33 7.09 4.70 .47 1.10 .45 .07 4.69 .97 8.35 n.a. 8.35 15.35 4.81 3.11 7.43 5.01 .27 .98 .44 .04 3.42 .77 8.28 15.12 4.19 2.75 8.18 4.69 .20 .81 .45 .03 3.92 .67 8.30 8.28 8.30 8.36 8.35 8.12 91.44 77.13 75.00 .06 74.93 10.38 19.S1 33.66 11.38 1.35 .78 14.31 13.09 n.a. 1.22 91.40 77.83 75.79 .07 75.72 10.45 18.73 35.37 11.17 1.36 .67 13.57 12.37 n.a. 1.21 91.37 78.39 76.40 .08 76 33 10.99 19 35 35.88 10.11 1.31 .68 12.98 11.84 n.a. 1.14 91.07 77.83 75.75 .07 75 68 12.33 22 10 32.85 8.40 1.36 .72 13.24 12.23 n.a. 1.01 90.63 76.89 74.53 .08 74 45 13.15 23 5 5 30.10 7.65 1.44 .91 13.75 12.82 n.a. .93 90.43 76.19 73.14 .09 73 05 13.31 23 ">3 28.83 7.68 1.89 1.16 14.25 13.34 90.03 75.74 72.68 .11 7° 56 12.37 ">0 40 30.91 8.88 1.78 1.28 14.29 13.22 89.81 75.58 72.47 .10 1"> 36 11.75 19 56 31.28 9.77 1.70 1.41 14.23 13.13 89.62 75.47 71.99 .09 71 90 11.37 18 98 31.05 10.49 1.68 1.80 14.15 13.09 89.53 75.35 71.76 .07 71 70 11.17 19 01 30.42 11.10 1.50 2.09 14.18 13.08 .90 1.07 1.10 1.06 1.10 8.56 8.60 8.63 8.93 9.37 9.57 9.97 10.19 10.38 10.47 n.a. .63 13.59 n.a. .61 13.29 11.74 .66 12.19 11.84 .65 10.56 12.22 .52 10.10 13.02 .35 10.83 13.71 .25 12.08 14.18 .20 13.00 14.78 .16 14.08 15.26 .13 14.77 662 681 694 697 688 679 666 661 648 644 91.65 52.94 9.24 9.20 .04 9.18 .93 8.25 31.09 31.08 1.93 2.20 16.81 1 V 15 54 .84 9.30 91.72 54.64 9.31 9.26 .05 9.37 .96 8.41 32.19 32.19 2.14 2.34 16.95 1 "M 15 73 .93 9.83 * * * 91.70 56.62 9.65 9.59 .06 9.57 1.04 8.53 33.54 33.54 2.38 2.48 17.45 1 20 16 .95 10.27 91.64 57.37 9.98 9.90 .07 9.41 1.03 8.38 34.10 34.09 2.61 2.55 17.47 1 19 16 ''S .92 10.54 * .16 * .17 * * .17 * .12 * * 3.93 .72 .23 -.27 -.90 29.53 29.50 29.01 7.85 4.05 .70 .25 -.24 -.88 28.21 28.18 27.65 6.70 4.27 .69 .25 -.20 -.86 26.67 26.65 26.11 5.05 15.67 4.21 2.46 9.00 4.62 .18 .68 .49 .03 4.05 .69 8.36 15.55 4.00 2.19 9.37 4.59 .19 .61 .52 .03 3.96 .71 8.35 15.42 3.90 2.01 9.51 4.80 .16 .68 .54 .02 5.12 .96 8.12 * * * * * * MEMO Commercial real estate loans Other real estate owned Managed liabilities Average net consolidated assets (billions of dollars) Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 395 A.2.—Continued E. Banks not ranked among the 1,000 largest by assets Item 1989 1990 1991 1992 1993 1994 "T J 1995 1996 1997 1998 Effective interest rate (percent) 3 Rates earned Interest-earning assets Taxable equivalent Loans and leases, gross Net of loss provisions Securities Taxable equivalent Investment account U.S. government and other debt State and local Equity Trading account Gross federal funds sold and reverse RPs Interest-bearing balances at depositories Rates paid Interest-bearing liabilities Interest-bearing deposits In foreign offices In domestic offices Other checkable deposits Savings (including MMDAs) Large-denomination time deposits 4 Small-denomination time deposits 4 Gross federal funds purchased and RPs Other interest-bearing liabilities 10.50 10.72 11.76 10.87 8.37 9.01 8.36 8.53 7.57 8.12 14.84 9.25 9.11 10.31 10.52 11.60 10.65 8.42 8.99 8.41 8.59 7.46 8.30 12.13 8.12 8.55 9.64 9.82 11.02 10.08 8.04 8.53 8.04 8.20 7.17 7.14 8.41 5.66 7.35 8.43 8.59 9.83 9.05 6.99 7.40 6.99 7.06 6.70 5.64 7.14 3.51 5.59 7.62 7.78 9.14 8.63 5.92 6.33 5.92 5.91 6.09 5.16 4.83 2.95 4.53 7.57 7.72 9.00 8.65 5.61 5.99 5.61 5.59 5.69 5.52 6.03 4.08 4.64 8.41 8.56 9.85 9.42 6.09 6.49 6.09 6.17 5.64 6.26 6.12 5.95 5.91 8.35 8.49 9.74 9.31 6.10 6.52 6.10 6.23 5.44 6.06 6.48 5.39 6.10 8.50 8.63 9.81 9.36 6.25 6.65 6.25 6.43 5.32 6.40 6.60 5.51 5.70 8.33 8.50 9.70 9.22 5.98 6.47 5.98 6.16 5.14 6.11 6.45 5.36 5.68 7.16 7.10 9.35 7.10 5.09 5.82 8.35 8.03 8.52 8.31 7.02 6.96 7.57 6.96 5.02 5.73 7.92 7.88 8.03 7.84 6.17 6.15 5.95 6.15 4.61 5.18 6.72 6.98 5.72 7.06 4.44 4.44 3.97 4.44 3.14 3.62 4.90 5.36 3.74 5.01 3.54 3.53 2.91 3.53 2.42 2.91 3.96 4.39 3.17 4.64 3.49 3.44 3.92 3.44 2.29 2.83 4.12 4.28 4.12 4.98 4.47 4.39 5.73 4.39 2.50 3.32 5.55 5.51 5.62 6.87 4.49 4.44 11.43 4.43 2.41 3.24 5.49 5.59 5.10 5.84 4.61 4.54 4.77 4.54 2.46 3.37 5.53 5.67 5.23 6.15 4.61 4.53 5.08 4.53 2.45 3.39 5.54 5.64 5.05 6.44 Income and expense as a percentage of average net consolidated assets Gross interest income Taxable equivalent Loans Securities Gross federal funds sold and reverse RPs Other 9.65 9.85 6.53 2.33 .57 .23 9.51 9.68 6.44 2.38 .53 .17 8.91 9.06 6.04 2.41 .34 .12 7.79 7.94 5.30 2.24 .18 .07 7.05 7.19 4.91 1.95 .14 .05 7.01 7.15 4.98 1.84 .15 .04 7.80 7.93 5.66 1.86 .25 .04 7.75 7.87 5.67 1.80 .24 .04 7.89 8.01 5.85 1.76 .24 .04 7.74 7.86 5.80 1.59 .29 .06 Gross interest expense Deposits Gross federal funds purchased and RPs Other 5.50 5.32 .12 .06 5.44 5.28 .11 .05 4.82 4.70 .07 .05 3.45 3.36 .05 .04 2.72 2.63 .04 .04 2.65 2.52 .07 .06 3.38 3.19 .10 .09 3.38 3.22 .08 .08 3.47 3.28 .08 .11 3.46 3.25 .07 .13 Net interest income Taxable equivalent 4.15 4.35 4.07 4.24 4.09 4.24 4.34 4.49 4.33 4.48 4.36 4.50 4.42 4.55 4.37 4.49 4.41 4.54 4.28 4.40 Loss provisioning 5 .50 .53 .51 .42 .27 .19 .25 .25 .27 .29 1.00 .41 .14 .01 n.a. n.a. n.a. .44 1.01 .42 .14 .01 n.a. n.a. n.a. .44 1.07 .44 .14 .01 n.a. n.a. n.a. .49 1.16 .45 .16 .01 n.a. n.a. n.a. .55 1.25 .45 .16 .01 n.a. n.a. n.a. .64 1.30 .44 .17 1.42 .44 .20 1.44 .44 .20 1.53 .42 .23 n.a. n.a. n.a. .69 1.38 .44 .22 .01 n.a. n.a. n.a. .71 Noninterest expense Salaries, wages, and employee benefits Expenses of premises and fixed assets Other 3.49 1.65 .51 1.33 3.49 1.64 .49 1.36 3.59 1.64 .49 1.46 3.67 1.69 .49 1.49 3.74 1.72 .48 1.53 3.78 1.75 .49 1.55 Net noninterest expense 2.49 2.48 2.52 2.51 2.48 2.48 .06 .09 .07 -0.03 Noninterest income Service charges on deposits Income from fiduciary activities Trading income Interest rate exposures Foreign exchange exposures Equity, commodity, and other exposures Other ... Realized gains on investment account securities . Income before taxes and extraordinary items Taxes Extraordinary items Net income (return on assets) Cash dividends declared Retained income MEMO: Return on equity — .01 * * * * * * * * * * * .78 .79 .88 3.81 1.80 .50 1.51 3.70 1.77 .49 1.44 3.70 1.80 .49 1.41 3.74 1.82 .49 1.43 2.43 2.28 2.27 2.21 .01 .01 .02 1.85 .59 1.89 .59 1.80 .54 * 1.17 .37 .02 1.06 .34 .02 1.11 .35 .19 1.50 .47 .02 1.64 .51 .05 1.66 .51 .83 .52 .30 .74 .49 .25 .95 .89 .06 1.04 .50 .54 1.19 .56 .63 1.15 .57 .58 1.20 .62 .58 1.26 .64 .62 1.30 .73 .57 1.26 .83 .44 9.66 8.61 11.05 11.64 12.65 12.05 12.05 12.33 12.54 12.07 * 1.75 .55 * * * * In absolute value, less than 0.005 percent. DEFINITIONS. n.a. Not available. M M D A Money market deposit account. RP Repurchase agreement. C D Certificate of deposit. 1. Includes the allowance for loan and lease losses and the allocated transfer risk reserve. 2. Before 1994, the netted value of olf-balance-sheet items appeared in "trading account securities" if a gain and "other non-interest-bearing liabilities" if a loss. 3. When possible, based on the average of quarterly balance sheet data reported on schedule RC-K of the quarterly Call Reports. 4. Before 1997, data for large time open accounts are included in small-denomination time deposits. 5. Includes provisions for loan and lease losses and for allocated transfer risk. * * * * 396 Treasury and Federal Reserve Foreign Exchange Operations This quarterly report describes U.S. Treasury and System foreign exchange operations for the period from January through March 1999. It was presented by Peter R. Fisher, Executive Vice President, Federal Reserve Bank of New York, and Manager, System Open Market Account. Laura F. Ambroseno was primarily responsible for preparation of the report. During the first quarter of 1999, the dollar appreciated 8.4 percent against the euro and 5.3 percent against the yen. The dollar's value was largely influenced by changes in market expectations for economic growth in the United States, Europe, and Japan. Against the euro, the dollar strengthened as the differential between U.S. and European interest rates moved increasingly in favor of the dollar. Against the yen, the dollar fell to a two-and-a-halfyear low, then rebounded after the Bank of Japan reportedly intervened to counter yen appreciation and subsequently guided overnight interest rates to near zero. The U.S. monetary authorities did not intervene in the foreign exchange markets during the quarter. PARTIAL RECOVERY OF RISK APPETITE At the outset of the new year, trading in the major currencies was thin. Reduced activity was attributed in part to a decline in speculative trading and a tentative return of asset managers to higher-yielding markets. Euro trading volumes remained below historical German mark trading volumes over comparable time frames; uncertainty regarding the behavior of the newly established European Central Bank (ECB) contributed to the low volume. Although new investment supported selected emerging markets and high-yield assets, lingering concern about overall risk exposure resulted in heightened differentiation and relatively high risk premiums. The devaluation of the Brazilian real on January 13 evoked some apprehension, but reaction was fairly muted as a result of the position unwinding that had already occurred after the Russian currency devaluation and debt moratorium in August 1998. Reflective of market sentiment, emerging-market sovereign yield spreads over U.S. Treasuries rose sharply after the Brazilian currency devaluation but soon returned to early-January levels. Nonetheless, spreads generally remained well above pre-Russian devaluation levels, and many emerging-market mutual funds continued to experience net outflows. U.S. corporate high-yield spreads over U.S. Treasuries narrowed, reflecting the desire of investors to increase risk exposure on a selective basis. RISE OF THE DOLLAR AGAINST THE EURO The dollar depreciated to $ 1.1832 against the euro on the first trading day of stage three of the Economic and Monetary Union. However, the dollar then steadily appreciated to $1.0765 by quarter-end as "europhoria" dissipated and market participants focused on the apparent divergence in the outlooks for growth between the U.S. and European economies. Over the quarter, the implied yield spread between September three-month Eurodollar and Euribor (European interbank offered rate for euro deposits) futures contracts widened 49 basis points, to 232 basis points, supported by market expectations of divergent monetary policy responses to growth trends by the Federal Open Market Committee (FOMC) and the ECB Governing Council. Similarly, the spread between yields of ten-year U.S. Treasuries and German bonds widened 62 basis points from the start of the quarter, to a decade high of 146 basis points on February 25. The dollar was supported throughout most of the quarter by expectations of a shift in U.S. monetary policy toward a tightening bias. The change in expectations was prompted by stronger-than-expected economic growth, employment, consumer spending, and hourly earnings data, which raised concern that the US. economy might begin to show signs of inflationary pressures. Speculation of a near-term change in U.S. monetary policy mounted after the HumphreyHawkins testimony on February 23, during which Chairman Greenspan stated that the FOMC would evaluate "whether the full extent of the policy easings undertaken last fall to address the seizing-up of 397 1. Exchange rate of the euro against the dollar, 1999:Q1 3. Reconstructed trade-weighted exchange rate of the euro, 1990-April 1999 Dollars per euro Index, 1990 average = 100 — — A y \ 1 Jan. — 1.15 — i.io 1 Feb. 1999 1 Mar. NOTE. T h e data are daily. SOURCE. B l o o m b e r g L.P. NOTE. B e f o r e year-end 1998, the calculation is based o n weighted averages of euro area countries' effective e x c h a n g e rates; f r o m January 1999, the calculation is based on weighted averages of bilateral euro e x c h a n g e rates. Weights are based on 1990 manufacturing g o o d s trade and capture third-market effects. SOURCE. European Central Bank; Bank for International Settlements. financial markets remains appropriate as those disturbances abate." The implied yield of the federal funds futures contract for September rose 44 basis points from the start of the quarter, to a high of 5.09 percent on March 1. U.S. Treasury yields rose in response to rising short-term yields, heavy corporate bond issuance, and reported sales by Japanese financial institutions before their fiscal year-end on March 31. Meanwhile, the euro experienced downward pressure from increasing expectations of a euro area rate cut after several economic data releases indicated further downside risk to European growth and by official commentary that was interpreted as suggesting approval of current exchange rate levels. The resignation of German Finance Minister LaFontaine on March 11, that was perceived as having reduced political pressure on the ECB, also contributed to speculation that the ECB Governing Council would 2. Spread between implied yields of September three-month Eurodollar and Euribor futures, 1999:Q1 Basis points F \J\__S^\A — — . — — J — 240 J 230 — 220 — 210 — 200 — 190 J 1 Jan. NOTE. T h e data are daily. SOURCE. B l o o m b e r g L.P. 1 Feb. 1999 1 Mar. cut rates sooner than previously expected. Implied yield of the September three-month Euribor futures contract fell 27 basis points, to 2.79 percent by quarter-end. Both the euro-dollar exchange rate and spreads between U.S. and European yields stabilized toward the end of the quarter, as expectations for a near-term shift in U.S. monetary policy receded after the release of U.S. wage data suggesting that inflationary pressures remained quiescent. On a trade-weighted basis, the euro depreciated 5.3 percent over the quarter, approaching the lower end of its reconstructed tenyear trading range. STRENGTHENING OF THE AGAINST THE YEN DOLLAR The dollar began the new year at ¥112.80, but soon depreciated to a multiyear low of ¥108.22 on January 11, as Japanese investors reallocated funds from U.S. assets to European and Japanese assets. International investors also expressed interest in Japanese assets, as evidenced by strong foreign demand for Japanese bonds auctioned on January 7. In addition, the perception that Japanese monetary conditions tightened as funding pressures abated at the calendar year-end, along with renewed investor focus on the U.S. current account deficit, appeared to weigh on the dollar-yen exchange rate early in the period. On January 12, the dollar gained more than four yen from the day's low of ¥108.62 after the Bank of Japan reportedly intervened by selling yen in the foreign exchange market. Market participants interpreted the reported intervention as Japanese resis 398 Federal Reserve Bulletin • June 1999 4. Exchange rate of the dollar against the Japanese yen, 1999:Q1 6. Spread between ten-year U.S. Treasury and Japanese government bond yields, 1999:Q1 Yen per dollar \ — — — 1 1 Jan. 1 Feb. 1999 r v 120 — 115 — 110 1 Mar. Basis points k / \ — J 350 — 300 — 250 1 1 Jan. NOTE. The data are daily. SOURCE. Bloomberg L.P. V Feb. 1999 Mar. NOTE. The data are daily. SOURCE. Bloomberg L.P. tance to yen appreciation above ¥110. Options prices indicated that market anxiety over the possibility of a rapid rise in the yen's value receded after the reported intervention, with one-month implied volatility falling from a high of more than 22 percent on January 5 to about 17 percent by quarter-end. In addition, the premium for one-month yen call options over onemonth yen put options, as measured by risk reversal prices, fell from a record high of nearly 4.5 percent on January 6 to approximately 1.2 percent by quarterend, indicating less demand for protection against further yen appreciation. In the weeks following the reported intervention, the dollar traded in a range between ¥110 and ¥117, supported both by commentary from Japanese offi5. One-month dollar-yen risk reversals, 1999:Q1 Percent cials suggesting that "excessive yen strength" would elicit intervention and by expectations of continued disparity between U.S. and Japanese economic growth. However, several factors limited the dollar's upward momentum, including narrower long-term U.S.-Japanese interest rate differentials, concern over U.S. equity market valuation, and nervousness surrounding the Brazilian currency devaluation. The yield on the Japanese government benchmark bond (ten-year) rose 35 basis points from the start of the quarter, to a high of 2.36 percent on February 5, as Japanese investors reduced portfolio duration and realized profits before their fiscal year-end and as market participants became increasingly concerned about the Japanese government's apparent acceptance of rising yields. The spread between yields of ten-year U.S. Treasuries and Japanese government bonds narrowed to a three-year low of 248 basis points by February 3. 7. Ten-year Japanese government bond yield, 1999:Q1 Percent Jan. Feb. 1999 Mar. NOTE. The data are daily. A dollar-yen risk reversal is an option position consisting of a purchased dollar call-yen put and a written dollar put-yen call that mature on the same date and are equally out-of-the-money. The price of a risk reversal indicates whether the dollar call or the dollar put is more valuable. If the dollar call is at a premium, the market is willing to pay more to insure against the risk that the dollar will rise against the yen. If the dollar put is at a premium, the market is willing to pay more to insure against the risk that the dollar will fall against the yen. SOURCE. Citibank, N.A. NOTE. The data are daily. SOURCE. Bloomberg L.P. Treasury and Federal Reserve Foreign Exchange Operations The dollar began to appreciate steadily against the yen after the Bank of Japan reduced the target for the overnight call rate from 25 to 15 basis points on February 12 and subsequently guided the rate to as low as 2 basis points. The dollar was further supported by growing expectations of a shift toward quantitative monetary targeting in Japan, official efforts to contain the rapid rise in Japanese bond yields, and signs of persistent strength in the U.S. economy. On March 4, the dollar strengthened to a period high of ¥123.75 and the spread between ten-year U.S. and Japanese bond yields peaked at 381 basis points, up 133 basis points from its February 3 low. Throughout March, movements in the dollar-yen exchange rate fluctuated in response to shifting expectations for monetary policy objectives and Japanese fiscal year-end dynamics. The dollar initially moved lower in response to U.S. economic data releases suggesting that inflation remained subdued. Meanwhile, the yen was supported by commentary from Japanese officials implying that a shift in monetary policy toward quantitative targets was unlikely in the near term and by substantial purchases of Japanese equities by international investors who were increasing the weight of Japanese assets in their portfolios. At the end of the quarter, the dollar-yen exchange rate drifted back to ¥118.80, as purchases of Japanese equities subsided and Japanese accounts reportedly satisfied fiscal year-end foreign exchange requirements. TREASURY AND FEDERAL RESERVE FOREIGN EXCHANGE RESERVES The U.S. monetary authorities did not undertake any intervention operations during the quarter. At the end of the quarter, the current values of euro and Japanese yen reserve holdings totaled $15.2 billion for the Federal Reserve System and $15.2 billion for the Exchange Stabilization Fund. The U.S. monetary authorities invest all of their foreign currency balances in a variety of instruments that yield marketrelated rates of return and that have a high degree of liquidity and credit quality. A significant portion of these balances is invested in German and Japanese government securities held directly or under repurchase agreement. As of March 31, outright holdings 399 of foreign government securities by U.S. monetary authorities totaled $7.3 billion. Japanese and German government securities held under repurchase agreement are arranged either through transactions executed directly in the market or through agreements with official institutions. Foreign government securities held under repurchase agreement by the U.S. monetary authorities totaled $12.8 billion at the end of the quarter. Foreign currency reserves are also invested in deposits at the Bank for International Settlements and in facilities at other official institutions. On February 3, 1999, the United States paid the equivalent of a $14.8 billion increase in its International Monetary Fund (IMF) quota, which had been previously approved by the Congress. The payment was not an outlay of funds, but rather an exchange of monetary assets. In exchange for the payment, the United States received an increase in its IMF reserve position, which is an interest-bearing asset. In accordance with agreed-upon IMF procedures, 25 percent of the quota increase, equal to about $3.7 billion, was transferred to the IMF in the form of foreign currency reserve assets, specifically euros held by the U.S. Treasury's Exchange Stabilization Fund (ESF). Simultaneously, the U.S. Treasury's general account reimbursed the ESF with dollars in an amount equivalent to the value of the euro reserve transfer. The remaining 75 percent of the quota increase, equal to about $11.1 billion, was paid through an increase in the U.S. letter of credit to the IMF and did not involve a flow of funds. Separately, the U.S monetary authorities conducted an off-market currency transaction that was designed to redress imbalances in their respective foreign currency holdings. Imbalances had evolved over time both in terms of the overall level and currency composition of the foreign exchange reserves held by the Federal Reserve and the ESF. Effective March 18, the Federal Reserve exchanged approximately $4.8 billion of euros for $1.4 billion of Japanese yen and $3.4 billion of U.S. dollars from the ESF. The transaction was executed at prevailing market exchange rates. As designed, this transaction distributed the overall level of the U.S. monetary authorities' foreign reserve assets more evenly between the ESF and the Federal Reserve and left the resulting balances of euros and yen roughly equal for both accounts (see table 1). • 400 Federal Reserve Bulletin • June 1999 1. Foreign currency holdings of U.S. monetary authorities based on current exchange rates, 1999:Q1 Millions of dollars Quarterly changes in balances by source Item Balance, Dec. 3 1 , 1 9 9 8 Net purchases and sales' Effect of sales 2 Investment income Currency valuation adjustments 3 Interest accrual (net) and other 4 -4,780.5 1,418.9 -3,361.6 -18.7 0 -18.7 118.7 3.0 121.7 -915.9 -318.7 -1,234.6 0 0 0 Balance. Mar. 3 1 , 1 9 9 9 FEDERAL RESERVE SYSTEM O P E N MARKET ACCOUNT E M U euro Japanese yen Total Interest receivables 5 Other cash flow from investments 6 . . . Total 12,824.0 6,846.9 19,670.9 82.8 14.8 19,768.5 -3361.6 -18.7 121.7 -1,234.6 6,494.4 9,799.4 16,293.8 1,081.1 -1,407.0 -325.9 -10.4 11.9 1.5 45.9 4.2 50.1 -374.4 -458.4 -832.8 7,227.6 7,950.1 15,177.7 -29.1 -.9 53.7 13.9 -30.0 15,245.3 0 0 0 7,236.6 7,950.1 15,186.7 U . S . TREASURY E X C H A N G E STABILIZATION F U N D ( E S F ) EMU euro Japanese yen Total Interest receivables 5 Other cash flow f r o m investments 6 . . . 44.3 21.4 16,359.5 Total -325.9 50.1 1.5 -832.8 -12.0 -3.0 32.3 18.4 -15.0 15,237.4 NOTE. Figures may not sum to totals because of rounding. 1. Purchases and sales reflect changes in the foreign currency holdings as a result of the rebalancing between the S O M A and ESF portfolios and a withdrawal of funds from the ESF euro portfolio to meet an IMF quota. 2. Calculated using marked-to-market exchange rates; represents the difference between the sale exchange rate and the most recent revaluation exchange rate in addition to the gain or loss resulting from changes in the market values of the investments sold. See table 2 for realized profits and losses on sales of foreign currencies computed as the difference between the historic cost-ofacquisition exchange rate and the sale exchange rate, and the gain or loss resulting f r o m the changes in the market values of the investments sold. 3. Foreign currency balances are marked to market monthly at month-end exchange rates. 4. Includes the ESF's payment to meet its IMF quota. 5. Interest receivables for the ESF are as of February 28, 1999, and are revalued at February 28, 1999, month-end exchange rates. Interest receivables for the S O M A are carried at cost and are not marked to market until interest is paid. SOMA interest receivables are net of unearned interest collected. 6. Cash flow differences from payment and collection of funds on Japanese Gensaki investments. 2. Net profits or losses (-) on U.S. Treasury and Federal Reserve foreign exchange operations, based on historical cost-of-acquisition exchange rates, 1999:Q1 3. Currency arrangements, March 31, 1999 Millions of dollars Institution Amount of facility Outstanding, Mar. 3 1 , 1 9 9 9 Millions of dollars Period and item Valuation profits and losses on outstanding assets and liabilities, Dec. 31, 1998 E M U euro Total Realized profits and losses from foreign currency sates, Jan. 1, 1999-Mar. 31, 1999> E M U euro Japanese yen Federal Reserve System Open Market Account U.S. Treasury Exchange Stabilization Fund 998.5 1,229.8 96.6 1,766.0 2,228.3 1,862.6 0 -71.0 208.0 55.7 137.0 Valuation profits and losses on outstanding assets and liabilities, Mar. 31, 1999 E M U euro Japanese yen -10.6 911.2 1,123.3 Total 900.6 895.8 Total 55.7 1. See table 1 for an explanation of these gains. -227.5 Federal Reserve reciprocal currency arrangements Bank of Canada Bank of Mexico 2,000 3,000 0 0 Total 5,000 0 U.S. Treasury Exchange Stabilization Fund currency arrangements Bank of Mexico 3.000 0 Total 3,000 0 401 Industrial Production and Capacity Utilization for April 1999 Released for publication May 14 Industrial production, which had been essentially flat between October and February, accelerated in March and April. The total index was revised upward to show a gain of 0.5 percent in March and is estimated to have risen 0.6 percent in April. Manufacturing output also grew 0.6 percent in April, its third straight monthly gain of close to percent. Some of the acceleration came in high-technology industries, but many other industries showed improvement as well. At 134.0 percent of its 1992 average, industrial production in April was 2.0 percent higher than in April 1998. Capacity utilization in manufacturing, mining, and electric and gas utilities rose 0.2 percentage point Industrial production and capacity utilization P e r c e n t of capacity Ratio scale, 1 9 9 2 = 100 Industrial production, market groups Ratio scale, 1992 = 100 R a t i o scale, 1992 = 100 Ratio scale, 1 9 9 2 = 100 R a t i o scale, 1 9 9 2 = 100 175 Equipment 160 145 130 115 N o n d u r a b l e g o o d s and e n e r g y D e f e n s e and space I I 1990 I I 1992 85 I I 1994 L 1996 J L ll J I 1990 L 1992 All series are seasonally adjusted. Latest series, April. Capacity is an index of potential industrial production. 100 1994 1996 1998 402 Federal Reserve Bulletin • June 1999 Industrial production and capacity utilization, April 1999 Industrial production, index, 1992=100 Percentage change Category 1999 1999' Jan. Feb. Mar. r Apr. i Total 132.3 132.5 133.2 134.0 Previous estimate 132.3 132.6 132.8 Major market groups Products, total 2 Consumer goods . . . Business equipment Construction supplies Materials 124.5 115.2 167.3 132.4 144.9 124.6 115.5 167.2 131.7 145.3 125.0 115.3 168.3 131.5 146.5 Major industry groups Manufacturing Durable Nondurable Mining Utilities 136.4 161.4 111.3 98.5 114.7 136.9 161.7 112.0 97.7 112.3 137.5 162.8 112.0 97.0 115.5 Jan. Apr. 1998 to Apr. 1999 Feb/ Mar. 1 Apr. 1 .6 2.0 .0 .1 .5 -.1 .3 .1 125.5 116.0 168.9 132.0 147.9 .1 .2 -.4 1.1 -.2 .1 .3 .0 -.5 .3 .3 -.1 .7 -.2 .8 .4 .6 .3 .4 .9 1.2 -.4 4.1 5.3 3.3 138.4 164.2 112.4 97.1 116.2 -.2 -.1 -.4 -.5 2.7 .4 .2 .6 -.8 -2.1 .4 .7 .1 -.7 2.8 .6 .8 .3 .1 .7 2.5 5.1 -.6 -8.1 3.0 Capacity utilization, percent 1998 Average, 1967-98 82.1 Total Low, 1982 71.1 Apr. Jan. Feb. Mar. 1 Apr. i 85.4 82.6 80.4 80.2 80.4 80.6 4.5 80.3 80.3 80.1 85.7 84.2 88.9 88.0 92.6 81.7 80.7 84.6 88.2 89.5 79.5 78.2 83.0 81.5 90.5 79.5 78.4 82.8 80.8 88.5 79.6 78.5 82.7 80.2 90.9 79.8 78.8 83.0 80.2 91.5 5.0 6.0 2.6 1.1 .7 Previous estimate Manufacturing Advanced processing Primary processing . Mining Utilities 81.1 80.5 82.4 87.5 87.4 69.0 70.4 66.2 80.3 75.9 NOTE. Data seasonally adjusted or calculated from seasonally adjusted monthly data. 1. Change from preceding month. in April, to 80.6 percent, down from 82.6 percent a year earlier. MARKET GROUPS The production of consumer goods, which had been little changed in March, advanced 0.6 percent in April. The output of durable consumer goods jumped 2.1 percent, more than reversing a decline in March; output gains were sizable for automotive products, carpeting and furniture, and home electronics. The production of nondurable consumer goods rose 0.2 percent, even though the output of tobacco products declined and the production of gasoline was cut by disruptions at refineries. The advance in the production of non-energy nondurable consumer goods was led by a continued recovery in the output of consumer chemical products and an uptick in apparel production. The output of business equipment increased 0.3 percent in April after an upward-revised advance 1999 High, 1988-89 2. Contains components in addition to those shown, r Revised, p Preliminary. of 0.7 percent in March. Although the assembly of business vehicles gained substantially, a further drop in the production of civil transport aircraft caused the measure for transit equipment to decline again. The index for industrial equipment, which had fallen over the two preceding quarters, turned up, and the index for information processing equipment rose substantially further; the latter increased more than 3 percent over March and April. In contrast, the production of farm machinery and equipment fell back after some recovery in February and March. The production of defense and space equipment fell 2.0 percent in April, partly because of a strike at a major shipyard. The production of construction supplies, which had eased in February and March from the high level in January, resumed its growth. Over the past twelve months, it has increased 5.3 percent. The index for business supplies, which had been stagnant for about a year, has picked up recently. The output of materials increased 0.9 percent in April after an upwardrevised gain of 0.8 percent in March. The indexes for Industrial Production and Capacity Utilization both durable goods materials and energy materials rose more than 1 percent, with large increases in semiconductors and computer parts for a second month and a rebound in coal production from a dip in March. INDUSTRY GROUPS Production in manufacturing increased 0.6 percent, compared with 0.4 percent in the two preceding months. The factory operating rate rose 0.2 percentage point, to 79.8 percent, but was down from 81.7 percent last April. Durable goods production rose 0.8 percent, a gain similar to that in March, and the advances were again widespread. The increase in the output of electrical machinery, boosted by an acceleration of production in the semiconductor and communications industries, rose to 2.5 percent in April. The production of motor vehicles and parts rose 2.3 percent, and computer output increased nearly 2 percent. Production declined at facilities for iron and steel, aircraft and parts, and shipbuilding. With the solid gains in production, the rate of capacity utilization in durable manufacturing rose 0.3 percentage point, to 79.6 percent, a level close to its 1967-98 average. 403 The output of nondurable manufactured goods advanced 0.3 percent; production has been in a slow recovery since last fall and has increased about 1 percent over the past three months. The output of textile mill products, apparel, and paper and products rebounded from declines in March, while the production of chemicals and products and rubber and plastics products advanced further. The operating rate in nondurable manufacturing rose 0.2 percentage point. But at 80.6 percent, utilization for these industries is more than 2 percentage points below its level of April 1998 and is nearly 3 percentage points below its long-term average. Despite rebounds in coal and metal ores, mining production edged up only 0.1 percent; it has dropped 10 percent over the past fifteen months. Drilling for 011 and gas wells fell back in April to a very low level. Primarily because of the low level of oil and gas extraction, the rate of capacity utilization in mining remained at 80.2 percent in April, down from 88.2 percent twelve months earlier. Output at utilities, which had rebounded 2.8 percent in March, advanced another 0.7 percent and is up 3.0 percent from the level of April 1998. The operating rate at electric utilities is near its 1988-89 high, while utilization at gas utilities is below its 1967-98 average. • 404 Statements to the Congress Statement by Edward W. Kelley, Jr., Member, Board of Governors of the Federal Reserve System, before the Committee on Banking and Financial Services, U.S. House of Representatives, April 13, 1999 I appreciate the opportunity to appear before this committee to update you on Year 2000 issues. I will describe the Federal Reserve's continuing efforts with respect to our contingency and event management plans as a central bank to ensure that adequate sources of currency and liquidity are available, and summarize the special attention being given to maintaining public confidence in the banking system. I will also focus on the progress of the banking industry in preparing for the new millennium and our supervisory initiatives, where considerable progress has been made since I last testified in September. Next, I will provide an overview of our efforts to support the President's Year 2000 Conversion Council and the international financial regulators' Joint Year 2000 Council, and close with our perspective on legislative proposals relating to Year 2000.1 will also discuss the Board's strong support for passage of H.R. 1094, which would amend the Federal Reserve Act to broaden the range of discount window loans that may be used as collateral for Federal Reserve notes. That is a lot of material to cover, and it reflects our extensive interest in and efforts to address the litany of Year 2000 issues. We are approaching the last months before the century date change (CDC) with a keener understanding of the magnitude of the task the banking industry, our country, and the rest of the world have been confronting. We are continuing our efforts to ensure that our financial system is safe and sound and ready for the century rollover. I am increasingly optimistic that the operational transition will go well and have come to believe that Year 2000 technical issues will not cause major problems in the financial markets of the United States. One issue I am concerned about and have raised with the press is how to ensure that the public has reliable, complete information about the readiness of the financial services industry and the other industrial and infrastructure sectors of the country. Actions taken by the public based upon fear or bad information rather than upon fact-based rationality may pose a greater threat to our economy than those caused by Year 2000 computer problems themselves. The public's perception of the Year 2000 challenge and response to that perception relative to our banking system is of critical importance to us all. The banking agencies are increasingly turning their attention to public education, and, in that regard, I welcome the opportunity this hearing affords to explain the Federal Reserve's perspective on the century date change. CONTINGENCY PLANNING EVENT MANAGEMENT AND Having worked extensively to correct the Year 2000 computer problems in our systems, we are confident that we will be fully prepared for the new millennium. Nevertheless, as the nation's central bank, the Federal Reserve is actively engaged in contingency and event management planning for any operational disruptions or systemic risks. The Federal Reserve's CDC Council, a group of our most senior officials, is coordinating contingency and event management planning across the Federal Reserve System to ensure a cohesive approach to our preparations. In addition, we are completing plans for our supervision function that provide for monitoring and responding to developments during the transition to the Year 2000, including any disruptions that may occur at financial institutions or in key financial markets for which we have responsibilities. These plans are being coordinated with other federal, state, and foreign regulators and with the Year 2000 Response Center of the President's Council on Year 2000 Conversion. Business Resumption The Federal Reserve's plans for ensuring operational continuity build upon existing business resumption contingency plans. As part of our standard business processes, the Federal Reserve has long maintained and tested comprehensive business resumption plans, which have proved successful in providing for our continued operations during past crisis situations and natural disasters. Last fall, each of the Federal Reserve's business functions completed assessments 405 of the adequacy of existing contingency plans for addressing Year 2000 risks. These plans are being enhanced to address issues unique to the century date change. For example, we are identifying problems external to the Federal Reserve that may arise when the date changes to 2000, such as those affecting telecommunications providers, utility companies, and key market participants. Based on available information, we do not expect widespread problems in these areas, but we nevertheless believe it prudent to develop action plans to mitigate or work around them should they occur. Between now and the century date change, we will test and continue to refine these plans as necessary to optimize operational effectiveness at the century rollover. The goal of the contingency planning process is to minimize the chance for surprise disruptions and to minimize their impact should they occur. Year 2000 Event Management Plan Over the years, the Federal Reserve has demonstrated the ability to manage a wide range of crisis situations. Nevertheless, we are augmenting our existing communication and control structures to enhance our ability to collect information and react to issues as they develop during the next six months and, particularly, during the "rollover period," that is, the last few days or weeks of 1999 and the early days of 2000, as well as the leap year at the end of February. The objectives of our event management plan are to • Monitor and report the status of internal systems, financial institutions and markets, infrastructure, and other pertinent areas • Maintain a consistent flow of information within the Federal Reserve, to our business partners, and to the public at large • Identify potential or actual problems and resolve them promptly. The CDC Council has established an Event Management Planning Team that is formulating recommendations to meet these objectives. As with any complex institution, this is challenging because it is necessary to integrate the myriad needs and functions of all areas of the Federal Reserve System into one coordinated and cohesive plan. The Event Management Planning Team presented a number of recommendations to the CDC Council last week and will continue to refine them in coming months. As we finalize our plans, we will coordinate with other federal and state regulators as well as the President's Council on Year 2000 Conversion. This should result in further streamlining and enhancements. Our event management plans should be substantially completed during the second quarter 1999 and will be tested during the third quarter 1999— with September 9, 1999, scheduled as our first operational date. Cash and Liquidity Issues The Federal Reserve does not believe that the public needs to hold excess cash in anticipation of the century rollover. Although there may be isolated problems, we expect that the usual payment methods of checks, debit cards, and credit cards will operate. Nevertheless, we recognize that there likely will be some increased demand for cash during the period surrounding the century rollover. In developing cash and liquidity contingency plans, depository institutions have been advised and are taking steps to forecast and prepare for potential spikes in year-end cash demands of their customers. Such plans should address how to distribute cash to locations where it is most needed and provide for close coordination with armored carriers and cash suppliers (their Federal Reserve Bank or correspondent bank). Some of the best practices we've seen include plans to increase cash inventories ahead of seasonal and any anticipated Year 2000-related rise in demand. They also include advance identification of prudent trigger points to replenish currency supplies based upon customer demand that take into account the availability and frequency of transportation arrangements. Equally important, they provide for a customer communication program that explains the Year 2000 problem, how the bank is preparing for it, and any plans to work around minor disruptions in services that could affect access to the bank. We have reminded banks that, as part of their Year 2000 contingency cash planning, they should review their insurance policies and blanket bond limits to ensure they have sufficient coverage. As I have said in previous testimony, we instituted plans to increase our inventory of currency as a precautionary measure, and not because we believe the public should hold more cash because of the Year 2000. Some observers have suggested that this represents a contradictory message to the public. Not so. Regardless of our view that consumers do not need to hold excess cash during this period, the Federal Reserve has been given the mission by the Congress to provide currency to the public as 406 Federal Reserve Bulletin • June 1999 demanded, and we will be prepared to fulfill this responsibility whatever the level of demand might be. Another related issue for the central bank is the possibility that despite the best efforts of some depository institutions, they may encounter problems resulting from or affecting relationships with counterparties and customers. To the extent these problems reduce their liquidity, and other sources of funding may no longer be reasonably available, the Federal Reserve is prepared to lend to provide liquidity with adequate collateral. Depository institutions are expected to address liquidity issues in their contingency plans and to take steps necessary to facilitate the process of borrowing from the Federal Reserve, for example, by completing necessary documentation and prepositioning collateral now rather than waiting for the actual event when there may be other organizations seeking additional funding at the same time. We have sent a letter to all depository institutions encouraging them to consider including the Federal Reserve, as lender of last resort, in their funding contingency plans and, if they do, to complete necessary documentation and collateral arrangements as soon as possible. PUBLIC AFFAIRS PROGRAM Let me go back to an earlier comment I made regarding the public's perception of the Year 2000 issue. We believe that the best way to engender a strong and positive public attitude is through open and candid discussion. The public is getting information from a variety of sources. We believe that it is important to ensure that the public can look to the Federal Reserve System as a source of accurate information regarding the readiness of the banking industry and the payments mechanisms through the century rollover. Federal Reserve communications activities have been focused on providing accurate, consistent information to the public and keeping the media informed about our Year 2000 activities. The Federal Reserve has initiated a series of public affairs activities related to the Year 2000 designed to provide the public with the information it needs. In this regard, the staff is working actively with the communications team for the President's Council on Year 2000 Conversion to develop responses to consumer questions that come in on the Council's Year 2000 "hotline." A Year 2000 consumer web page is being designed to provide easy access to the information already available on the Federal Reserve's Year 2000 web site. A brochure describ ing the Year 2000 issue and the Federal Reserve's Year 2000 program will soon be available. Many Federal Reserve officials as well as several Board members have been giving speeches on Year 2000. Reserve Banks have scheduled press conferences and briefing sessions for the media, and the media kit that we provide is updated regularly to include current information and new materials. There are a number of other communications programs under way, including joint programs with the other bank regulatory agencies as well as with banking industry trade groups. In this regard, the regulatory agencies are sponsoring consumer research, planning a consumer awareness video, developing a consumer checklist for financial institution customers, and planning to hold joint press briefings. Many people would like to have an ironclad guarantee that there will be no Year 2000 disruptions, but that guarantee cannot be made. We cannot know in advance exactly how the millennium rollover will go. The truth is that no one can guarantee that everything will work perfectly even later this morning, but we have every confidence that it will. In fact, banking systems and utilities experience brief disruptions in service from time to time that are transparent to consumers or present only minor inconveniences. Public confidence does not require that everyone believe that everything will work perfectly all the time. Rather, the public needs to be confident that the information it is receiving is complete, reliable, balanced, and adequate to identify actions appropriate to their own circumstances. BANK SUPERVISION Turning to our efforts with respect to the readiness of individual banking organizations, let me emphasize today, as I have in the past, that while the bank supervisors have appropriately provided significant guidance and meaningful incentives to the industry to prepare for the Year 2000, we cannot be responsible for ensuring the readiness of any banking organization. The boards of directors and senior management of banks are responsible for ensuring that their organizations are able to provide uninterrupted services and operate in a safe and sound manner after the century date change. With that said, over the past few months the Federal Reserve and the banking agencies have been active in responding to requests for additional guidance about the difficult tasks of testing and contingency planning and the importance of effective customer communication programs. We also have been Statements to the Congress extremely active in banker outreach and education programs across the country, and in participating in domestic and international securities industrypayment systems work groups such as the Global 2000 Co-ordinating Group. Even more important, we have completed a second round of on-site Year 2000 supervisory reviews of the banking organizations we supervise to assess their progress in testing remediated systems, evaluating customer and counterparty risk, and in developing their business resumption contingency plans. Issuance of Supervisory Guidance Shortly after my testimony to you in September, on October 15, 1998, the Federal Financial Institutions Examination Council (FFIEC) agencies adopted "Interagency Guidelines Establishing Year 2000 Standards for Safety and Soundness," which apply to all insured depository institutions. The guidelines incorporate important elements of previously issued FFIEC guidance, including aggressive milestone dates for testing and implementation. The guidelines were issued under section 39 of the Federal Deposit Insurance Act, which authorizes the Federal Reserve and other banking agencies to direct an insured depository institution to prepare an acceptable corrective action plan and comply with such a plan, without having to initiate an administrative proceeding. The guidelines, therefore, provide an expedited enforcement tool to address serious Year 2000 deficiencies at insured depository institutions and may be useful in addressing any serious deficiencies over the next few months, when time is of the essence. On December 11, 1998, the FFIEC issued "Questions and Answers Regarding Year 2000 Contingency Planning" to answer frequently asked questions received by the agencies. The statement underscores the importance of implementing an effective business resumption plan that establishes a course of action to resume core business processes in the event of a system failure. On February 17, 1999, the FFIEC issued additional guidance to assist financial institutions with customer communications on the Year 2000. The guidance supplements the May 1998 FFIEC policy statement on Year 2000 Customer Awareness Programs and emphasizes that maintaining customer confidence in the financial services industry needs to be a top priority of bank management. The guidance outlines key subject matters that could be incorporated into bank customer communication statements. The two papers together emphasize that it is essential for 407 banks to establish customer communication programs and train staff so that they are able to respond to customer inquiries about their readiness. Outreach to Banking Industry We stress the importance of customer communications whenever we meet with bankers, and we do that often. We participated in 101 programs during the fourth quarter 1998 that were attended by 5,000 participants. We participated in a total of 497 programs during 1998 that were attended by more than 26,000 participants. So far in 1999, we have participated in more than 75 programs reaching more than 6,600 participants. We think these programs have been extremely useful to all parties because they provide attendees with an opportunity to hear about our expectations "up close and personal" and to ask questions. They also provide us with an opportunity to hear about the concerns, problems, and accomplishments being experienced by participants and their colleagues. Phase II Supervision Program The Federal Reserve has just completed Phase II of its Year 2000 supervision program, which ran from July 1, 1998, through March 31, 1999. During Phase II we performed a risk-focused Year 2000 assessment of approximately 1,500 supervised institutions, including state member banks, bank holding companies with at least $1 billion in total assets or with significant information processing activities, and U.S. branches and agencies of certain foreign banking organizations. Our Phase II program called for an evaluation of a bank's overall Year 2000 program and progress relative to FFIEC guidelines and milestone dates. Based on our reviews, 95 percent of the banking organizations we supervise are making satisfactory progress in their Year 2000 programs and are in substantial compliance with the FFIEC milestone dates. Any financial institution rated less than satisfactory is required to file an acceptable corrective action plan within thirty days of receiving a deficiency notification letter from the Federal Reserve. These institutions are placed on an intensified monthly monitoring plan, and depending on the severity of the deficiencies identified, the use of an appropriate informal or formal supervisory action is considered. This "watch list" program for monitoring less-than-satisfactory banks has proved extremely effective in bringing the 408 Federal Reserve Bulletin • June 1999 issues to the attention of boards of directors and management and obtaining an appropriate response. We find that most banks are able to intensify their programs and begin making satisfactory progress within a few months. For the small minority of financial organizations found to be making less-than-satisfactory progress, the deficiencies most frequently noted during Phase II reviews have been relatively manageable and include delays in completing evaluations of customer risk, weaknesses or delays in completing remediation or testing programs, and insufficient communication between management and boards of directors. The progress of institutions that lagged behind the December 31, 1998, FFIEC milestone for completion of internal testing is being closely monitored. With respect to the readiness of bank customers and counterparties, it does appear that banks are formulating policies for managing credit risk and are incorporating Year 2000 considerations into their underwriting and loan-review practices. We are just beginning to see instances in which credit standards and collateral requirements are being tightened when a counterparty or customer is not able to provide sufficient assurances of Year 2000 readiness. We expect to see an increase in the number of banks acting to minimize credit risks over the next few months. In addition to reviewing the status of banking organizations, the Federal Reserve participates with the other FFIEC agencies in Year 2000 reviews of certain large national and regional data processing service providers and software vendors serving financial institutions. Sixteen national Multiregional Data Processing Servicers (MDPS), twelve national Shared Application Software Review (SASR) software vendors, and approximately 250 other independent service providers and software vendors are in the review program. Because of their importance to the Year 2000 readiness of financial institutions, service providers and software vendors subject to review by the FFIEC agencies were reviewed on site at least twice by December 31, 1998. Review reports for service providers and software vendors are sent to banks that are direct customers for their information. These entities are also subject to quarterly reviews and were contacted during the first quarter of 1999 to assess the availability of testing programs for their bank customers. Based on reviews completed and other available information, nearly all vendor software products have been renovated and internally tested, and financial institutions are actively testing these products within their own environments. Proxy testing has been pursued by many institutions that rely on a specific vendor software product for its core banking systems when their hardware-software platform and operating environment are identical to the one that was used to perform direct testing with the servicer. National and regional service providers have also implemented Year 2000-ready services and are testing with their customers. Overall, the service providers and software vendors have made meaningful progress in meeting the testing and implementation needs of their financial institution customers. The few service providers that are not rated satisfactory are subject to intense oversight by the FFIEC agencies, and the review reports detailing deficiencies or problems being experienced have been sent to their bank customers. While I'm on the subject of testing with service providers, I would like to update you on the Federal Reserve's customer testing program. As I informed you last September, beginning June 29, 1998, the Federal Reserve is offering customers the opportunity to test future-dated transactions for Fedwire funds and securities transfer, Fed Automated Clearing House, the Integrated Accounting System, Treasury Tax and Loan, Check, and other services with electronic data exchanges. To date, more than 8,000 institutions have tested with us, and the Financial Management Service of the U.S. Treasury has conducted interface testing for social security payments. We are continuing to offer testing opportunities through the end of 1999. Phase III Supervision Program In January, we distributed guidance on our Phase III program, including intensified monitoring procedures for institutions that are rated less than satisfactory, and established broad criteria under which it will be presumed that the Federal Reserve will take an informal or formal enforcement action against such an institution. These procedures provide guidelines for addressing problem institutions through the century date change. Looking forward to the critical months remaining until the century date change, the Federal Reserve has initiated a Phase III program for monitoring the Year 2000 readiness of banking organizations. Our Phase III supervision program—which began April 1 and runs through December 31, 1999—calls for riskbased Year 2000 reviews of financial institutions during the second and third quarters of 1999 to confirm that all FFIEC milestone dates have been Statements to the Congress met. Our examiners have been instructed to confirm that every state member bank is in compliance with FFIEC guidelines by the end of the third quarter 1999. Financial institutions of special importance to key financial and payment systems in the United States will be subject to at least monthly contacts after June 1999, and the top fifty bank holding companies will be subject to at least quarterly contacts, to ensure that implementation is completed and that appropriate risk-management policies and contingency plans are up to date. Service providers and software vendors that service large numbers of banking organizations will continue to be subject to at least quarterly contacts to review the status of third-party testing and contingency planning. By June 30, 1999, financial institutions are expected to comply with critical FFIEC milestone dates for completing all Year 2000 internal and external testing, implementation of remediated missioncritical systems, and contingency planning. A major emphasis of our supervision program through the century date change will be the adequacy of contingency plans, which should incorporate not only operational issues but liquidity, funding, customercounterparty risk, customer and community communications, and other subject matters. Through the end of the year, financial institutions will be expected to continue to monitor customer and counterparty credit risk and to update contingency plans as necessary to respond to internal and external events or other Year 2000-related developments that could affect operations. I must emphasize that the FFIEC milestone dates are not hard and fast deadlines but rather important benchmarks for ensuring that a financial institution is managing its Year 2000 program in a prudent manner—one that provides a six-month cushion to tie up loose ends, continue testing activities, complete work on non-mission-critical systems, and observe renovated and newly installed systems in a production environment. During Phase III reviews, we will apply our best judgment in assessing an institution's progress in meeting FFIEC milestones, most important the June 30 date. Let me caution, however, that this process is very complex, and it should not be surprising to see some testing activity prescribed by the FFIEC policy statements extend past the milestone dates. If during our Phase III reviews we find that it is taking an institution a little longer to complete its preparations, we will assess the risk presented and respond accordingly, either through increased monitoring and supervision or through intelligent use of enforcement actions and disclosure. 409 While ratings provide an objective measure of our assessment of an organization's progress relative to the FFIEC's milestones, during Phase III the actual Year 2000 status of an organization through and into the Year 2000 will be the focus of our supervisory activities. Our Reserve Banks will be assessing each financial institution reviewed under the program by the end of the third quarter 1999. Obviously we want these assessments to reflect the Year 2000 progress and status of each banking organization accurately, and Reserve Banks to be consistent in assigning ratings to organizations within their Districts. In this regard, each Reserve Bank will have an internal review process to ensure that organizations that are similarly situated relative to the extent of work remaining will be comparably rated. Moreover, in our discussions with Reserve Banks, we have established certain parameters that limit somewhat the flexibility examiners have when rating an organization. Our staff in Washington reviews all reports for organizations rated less than satisfactory as well as a sampling of "satisfactory" reports to ensure that there is consistency across Districts. Implicit in all of this is the understanding that our examiners have a "hands on" understanding of each organization— including the scope of its Year 2000 project and status, the track record of management in responding to challenges and meeting regulatory directives, and the adequacy of the organization's resources. These factors provide the depth and intelligence necessary to formulate realistic and fair appraisals of banking organizations. FFIEC Contingency Planning Working Group There is one other supervisory initiative I would like to mention. The FFIEC agencies have established a Year 2000 Contingency Planning Working Group to identify and coordinate contingency planning issues of common interest. The group has agreed upon many areas of common interest and is considering how contingency planning efforts in these areas can be coordinated among the agencies. The subjects for review include communications with the public, monitoring of large institutions, internationalpayment systems, liquidity, fraud, nonviable and viable financial institutions, service providers and software vendors, and resource sharing among agencies. The Conference of State Banking Supervisors also participates. When appropriate, the group is preparing guidance and planning how to coordinate responses to problems that may arise in these areas. 410 Federal Reserve Bulletin • June 1999 PRESIDENT'S CONVERSION COUNCIL ON YEAR FINANCIAL SECTOR 2000 GROUP The Federal Reserve has been extremely active in assisting the government's coordination of the nation's Year 2000 preparations. The Federal Reserve represents the banking industry on the President's Council on Year 2000 Conversion, and a senior Board official chairs the Financial Sector Group (FSG), which is made up of twenty-seven U.S. government agencies and corporations, government-sponsored enterprises, and state regulatory associations that play a role in the credit, equity, debt and exchange-traded derivatives markets. The financial sector includes depository institutions, credit unions, the securities industry, stock markets, clearing and settlement firms, and the insurance industry. The sector group also includes more than fifty trade associations that represent U.S. financial market participants. The FSG is charged with increasing awareness of the importance of Year 2000 readiness in the financial services industry, as well as promoting communications and cooperation with public and private organizations within the sector. It serves as a forum for addressing interagency issues and developing positions on important matters before the President's Council. For example, the FSG recently took the lead in developing a cross-sector paper examining the pros and cons of establishing a special Year 2000 holiday and related proposals for the President's Council. The FSG is also assisting in the Council's event management planning and will participate in its national communication center during the last quarter of 1999 and the first quarter of 2000. The FSG sponsored a trade association summit meeting in December 1998. The theme of the meeting was infrastructure readiness, and Senator Bennett was our keynote speaker. More than 250 trade association representatives and members of the press attended this informative event, which significantly expanded the dialogue and opened the door for better coordination of Year 2000 efforts between the financial services industry and the electric power and telecommunications sectors. The FSG is sponsoring a second summit on April 15, addressing the themes of contingency planning and customer awareness. Congressman Leach will be our keynote speaker. JOINT YEAR 2000 COUNCIL The Joint Year 2000 Council was established in April 1998 by the Basle Committee on Banking Supervision, the G-10 Committee on Payment and Settle- ment Systems, the International Association of Insurance Supervisors, and the International Organization of Securities Commissions. My colleague Governor Roger Ferguson chairs the council. The council provides a vital forum for communication among international regulatory and supervisory authorities on Year 2000 issues. It also serves as a point of contact with various national and international private sector initiatives. Among its initiatives, the council has developed a global supervisory contact list of more than 600 financial regulators and initiated several mechanisms for communicating with them. It is publishing a series of bulletins on different Year 2000 topics and has issued six guidance papers on key phases in the Year 2000 process, including papers on testing, information sharing, and contingency planning, which are published on its web site. The council has conducted regional Year 2000 roundtables for regulators in Europe, Asia-Pacific, North and South America and the Caribbean, the Middle East, and Africa. These conferences provide an excellent means of bringing supervisors together to discuss common interests within specific geographic areas. Another round of regional meetings is being planned for this year, with a focus on the important issues of implementing remediated systems, information sharing, testing, and contingency planning. The international arena remains an area that needs to be watched closely by all market participants and supervisors. The Year 2000 readiness survey conducted by the Basle Committee on Banking Supervision late last year identified significant progress in the international financial community's efforts to prepare for the century date change and help prevent serious problems. Of the 100 banking supervisors that responded to the survey, all indicated that they had contacted their banks regarding the Year 2000 issue, and the large majority—including all major markets—had initiated supervisory programs to ensure that banks allocate the necessary resources to identify any potential Year 2000 problems. However, much work remains to be done, particularly in smaller, less industrial and emerging countries. While we do not know with certainty what the outcome will be around the globe, the level of Year 2000 awareness of financial services regulators is now quite high. Moreover, the effect of applying the FFIEC policy statements to the U.S. operations of foreign banking organizations had a salutary effect in making their parent organizations abroad aware of the problem and the need to formulate Year 2000 programs. In light of the recent increase in information showing that the Year 2000 problem is receiving Statements to the Congress increased attention and resources, and that progress is being made abroad, it is increasingly likely that Year 2000 technical issues will not cause significant problems in the most active foreign global markets. However, to achieve that goal, it is critical that the current momentum and level of resources be maintained. It also is essential that countries coordinate with each other across financial and other sectors to share information and develop contingency plans in areas of common interest. LEGISLATIVE MATTERS Federal Reserve Note Collateral The Board strongly supports adoption of H.R. 1094, which would amend the Federal Reserve Act to broaden the range of discount window loans that may be used as collateral for Federal Reserve notes. Section 16 of the Federal Reserve Act requires that the Federal Reserve collateralize Federal Reserve notes when they are issued. In other words, we are required to hold certain kinds of assets in an amount at least equal to the amount of currency in the hands of the public. The list of eligible collateral includes Treasury and federal agency securities, gold certificates, special drawing right certificates, foreign currencies, and discount window loans made under section 13 of the Federal Reserve Act. The reference to discount window loans made under section 13 was in the original Federal Reserve Act. Subsequently, however, when the Federal Reserve Act, including section 13, was amended to allow discount window loans to be made against a wider array of collateral, section 16 was not similarly amended. Thus, section 16 currently limits the types of discount window loans the Federal Reserve can use to collateralize the currency. For example, certain discount window loans under section 10B of the act secured by mortgages on one- to four-family residences cannot be used. The margin of available extra currency collateral has been shrinking because of the growth of retail sweep accounts, which reduces reserve balances, causing a corresponding reduction in Treasury securities held by Reserve Banks. In this context and in light of the potential for depository institutions to seek access to the discount window because of events related to the Year 2000, we believe that it would be prudent to amend the Federal Reserve Act to expand the types of assets eligible to collateralize the currency to include all types of discount window loans, thereby assuring flexibility in times of high loan demand. 411 Year 2000 Holiday Various segments of the financial services industry, particularly those operating abroad, have suggested that governments adopt an additional holiday around the century date change. There are a number of dates proposed for a Year 2000 holiday—Friday, December 31; Monday, January 3; and even Tuesday, January 4—although there does not appear to be any consensus on which date would be most desirable. Adding to the uncertainty is the question whether the holiday should be mandatory (requiring all businesses to close) or permissive (permitting but not requiring businesses to close). In the United States most holidays are permissive, and December 31 will be such a federal holiday. The Federal Reserve announced last year that the Reserve Banks will be open for business on that day and on Monday, January 3, 2000, and we understand that most businesses plan to be open on those days as well. We do not support the concept of a special Year 2000 holiday. Some have suggested that a Year 2000 holiday facilitate the transition to the next century. For example, a December 31, 1999, holiday would provide additional time to complete end-ofday (December 30) as well as at least some end-ofquarter and end-of-year processing before the rollover to January 1. A January 3, 2000, holiday—as contemplated by H.J. Res. 14—would provide an additional day for organizations to confirm that computer, telecommunications, and embedded systems are operating properly and to identify and resolve any Year 2000 disruptions that may occur, although, since the holiday would be permissive, the extent to which organizations would take advantage of it is unclear, and it could engender even more confusion as to who is open and who is not. The recently proposed January 4 holiday purportedly would provide time to process and react to any problems that appear on the first business day of the new millennium. In our view, the drawbacks to a Year 2000 holiday are significant and include additional operational burdens, potential contractual and taxation issues, and potential adverse public reaction. The adoption of a mandatory Year 2000 holiday may require banks to initiate additional procedural and operational changes. Internal systems would have to be reprogrammed to include the new holiday and to treat it as a nonbusiness day for purposes of completing transactions. Because these changes are date-related, systems that already have been remediated would require additional Year 2000 testing to ensure that the changes did not inadvertently create date-related processing problems. Banks would have to revise their 412 Federal Reserve Bulletin • June 1999 test scripts, create different future-dated computing environments to simulate the new sequence of business days, generate new test data to reflect the holiday, and then retest systems that were previously designated as Year 2000 ready. This would place significant additional burdens on firms and may increase, rather than reduce, the risk of disruption. Moreover, the task would divert already scarce resources away from the primary task of completing Year 2000 testing, implementation, and contingency planning. We should understand that all of this work would have to occur long after the FFIEC milestone dates for completion of testing and implementation of remediated systems. Declaring a new Year 2000 holiday would also further increase transaction volume on the last and first business days of the year, when volume is traditionally higher than average. This may exacerbate workloads on adjacent days, complicating the transition and the resolution of any problems. A special Year 2000 holiday would also affect contractual and other payment obligations, and there would be potential tax implications attendant to any pre- or postYear 2000 payments made as a result of the new holiday. Finally, and equally troubling, changes to existing holiday laws would send a signal to the public that the government has serious concerns about the potential for significant Year 2000 problems within the financial services industry. We do not believe significant problems will occur, and we are opposed to taking actions that could unnecessarily erode public confidence in the industry, where erosion of confidence can create significant destabilizing effects on our economy. The Federal Reserve first discussed the holiday issue with the financial industry more than a year ago. At that time, proponents of a Year 2000 holiday emphasized that the decision must be made no later than the first quarter 1998 for organizations to derive the intended benefits without incurring undue costs and risks. They correctly believed that declaration of a Year 2000 holiday at a later time would impede an organization's ability to limit changes to remediated systems during the period surrounding the century date change. Indeed, many institutions such as the Federal Reserve have adopted change management policies in order to limit the risks to information systems posed by changes in the second half of 1999. Changes in holidays or payment schedules at this late date would run counter to the risk mitigation objectives of these policies. Some agencies have asked whether rescheduling payments from early January to late December should be considered as part of their contingency planning. While this initially may seem to be a prudent approach, the premise underlying the proposal must be that either the financial system will be unable to deliver payments to recipients' bank accounts or that, once payments have been delivered, recipients will be unable to use those funds because of problems at their banks. With respect to the ability of the financial system to deliver payments to banks, we have a high degree of confidence that the Federal Reserve will continue to process payments during this period. Further, our understanding of the readiness of privatesector providers of payment services, gained through our supervisory efforts and the efforts of the other financial supervisory agencies, gives us confidence that other wholesale providers of payments services will also continue to process payments during this period. With respect to individuals' and businesses' ability to use their funds at their banks, we believe that it is reasonable to assume, based on the Year 2000 progress being made by the banking industry, that access to those funds will continue unabated. To assume otherwise could engender problems more severe than the problems that people are seeking to avoid. For example, if a large number of individuals interpret an early payment to mean that they will be unable to access their bank account, or make payments by other means, such as credit cards, for some period, they may seek to withdraw large quantities of cash. Moreover, cash is in many respects an inefficient payment vehicle—the risk of loss or theft is great, and its delivery to remote payees can be difficult and time-consuming. While there may be particular circumstances that warrant rescheduling payments during the Year 2000 rollover period, we would caution against actions that may themselves lead to problems as severe or even more severe than the problems that they are designed to avoid. Credit Union Liquidity In an area related to issues of cash availability and liquidity of financial institutions, the Federal Reserve has been working with representatives of the credit union industry and the National Credit Union Administration to address logistical problems that might arise because of any need for a large number of credit unions to obtain liquidity beyond the considerable amount they already have available. Although this work is still in the preliminary stages, we are confident that a relatively cost-effective, efficient means can be found to channel funds through the corporate Statements to the Congress credit union system to natural person credit unions in need of liquidity. Such a structure would seek to rely to the extent possible on existing credit relationships and documentation. Litigation Issues There has been a great deal of talk about litigation that may arise because of Year 2000 problems. This has led to the introduction of a number of bills designed to limit litigation relating to Year 2000, including H.R. 775, the proposed "Year 2000 Readiness and Responsibility Act," as well as concerns whether existing consumer laws limiting liability for bona fide errors should be clarified. We do not have a position as to whether H.R. 775 should be adopted. We do believe that no legislation should be construed to limit the financial supervisory agencies' ability to bring enforcement actions based on Year 2000related problems. To do so could interfere with the agencies' ability to encourage supervised institutions to address Year 2000 issues appropriately. Accordingly, we recommend that any legislation limiting liability in civil actions should exclude actions brought by a federal, state, or other public entity, agency, or authority acting in a regulatory, supervisory, or enforcement capacity. A similar exclusion was incorporated in the Year 2000 Information and Readiness Disclosure Act. The issue of banking agency enforcement authority may be of particular significance with respect to section 605 of H.R. 775, "Suspension of Penalties for Certain Year 2000 Failures by Small Business Concerns." That section would provide that, as a general rule, no agency shall impose a civil penalty on a small business concern for a first-time error resulting from a Year 2000 failure. Some banking institutions and their affiliates may come within the definition of small business concerns to which this provision applies. Again, we are concerned that this provision could interfere with the financial supervisory agencies' ability to encourage supervised institutions to address Year 2000 issues appropriately and urge that this limitation not apply to any penalty imposed by Statement by Kenneth D. Buckley, Assistant Director, Division of Reserve Bank Operations and Payment Systems, Board of Governors of the Federal Reserve System, before the Committee on Veterans' Affairs, U.S. Senate, April 20,1999 I am pleased to appear before the committee to discuss the arrangements the Federal Reserve is mak- 413 a federal banking agency as defined in the Federal Deposit Insurance Act. Finally, with respect to the bona fide error provisions contained in many consumer laws, in our view, computer malfunctions and programming errors due to Year 2000 problems appear to be covered by statutory provisions dealing with "bona fide errors." Accordingly, we do not see a need for additional clarifying legislation. CONCLUSION In closing, I would like to thank the committee for the opportunity to share this information with you. We appreciate your concern and assistance in identifying the appropriate focus of our efforts during the last months before the Year 2000. Financial institutions are continuing their efforts and making significant progress in renovating their systems to prepare for the century rollover. The Federal Reserve is committed to a rigorous program of industry testing and contingency planning and, through our supervisory initiatives, to identifying those organizations that most need to apply additional attention to Year 2000 readiness programs. We are committed to working with national and international counterparts and other groups, including the President's Council on Year 2000 Conversion, the Joint Year 2000 Council, and industry trade associations to assist the industry in preparing for the rollover to the Year 2000.1 1. Important Year 2000 web sites are the following: Federal Reserve Year 2000 web site— http://www.federalreserve.gov/y2k/ Federal Reserve Century Date Change Project— http://www.frbsf.org/fiservices/cdc/ Federal Financial Institutions Examination Council— http://www.ffiec.gov/ President's Council on Year 2000 Conversion— http://www.y2k.gov/ Bank for International Settlements and Joint Year 2000 Council-— http://www.bis.org/ Global 2000 Co-ordinating Group— http://www.global2k.org/ ing to ensure the timely delivery of veterans' benefit payments made by direct deposit during the rollover to the Year 2000. Veterans and their families depend on Federal Reserve systems to reliably deliver their payments electronically to their banks. We believe that they should feel confident that their benefits will be paid as usual during and after the rollover to the Year 2000. I will review the Federal Reserve's role 414 Federal Reserve Bulletin • June 1999 in processing these payments and address the Federal Reserve's Year 2000 preparations. I will also be pleased to answer any questions you may have. The Federal Reserve Banks provide a variety of payment services to banks and U.S. government agencies.1 These services range from electronic payment mechanisms, such as Fed wire funds transfer and automated clearing house (Fed ACH), to check collection. As fiscal agents of the United States, the Reserve Banks use these services to collect and disburse payments on behalf of government agencies. Government payments are typically originated by federal agencies through the Treasury Department's Financial Management Service (FMS), which in turn delivers payment instructions to the Federal Reserve for subsequent delivery to banks or processors. Most government payments are made electronically using the Fed ACH service. For veterans' benefit payments, the Department of Veterans Affairs provides instructions to FMS about the payments to be made and the method to be used. (Currently 75 percent of veterans' payments are made by ACH and 25 percent by check.2) FMS in turn creates an ACH payments file that includes the payment amount, beneficiary identification, settlement date, receiving bank routing information, and total dollar amount for all payments in the file. FMS sends the file electronically to the Federal Reserve three to four days before the payment date. The Fed ACH software edits the data for accuracy, sorts the payment information by receiving bank, sends a payment file to each receiving bank, and initiates accounting entries that will debit the Treasury's account and credit the receiving banks' accounts on the payment date. Receiving banks credit customers' accounts on the scheduled payment date. Because of our intermediary role as a payments processor, the Federal Reserve's Year 2000 readiness preparations involve both our internal systems and our external interfaces to other organizations, such as banks and FMS. Along with other federal banking regulators, we have advised banks to test, at a minimum, all mission-critical systems by June 30, 1999, and we have provided the facility for banks to test their interfaces with us. We are also working with US. government agencies to test their automated interfaces with the Federal Reserve by exchanging ACH test files. The Federal Reserve's mission-critical systems used to deliver veterans' benefit payments through the ACH are Year 2000 ready and in production. FMS has tested its interface to the Fed ACH system and has reported no problems. In fact, the General Accounting Office (GAO) recently reviewed critical Federal Reserve systems, including Fed ACH, and determined that the Federal Reserve has effective management controls for its internal Year 2000 program. The GAO's report, which was released earlier this month, noted no concerns about the Federal Reserve's Year 2000 readiness.3-4 Beginning in June 1998, the Federal Reserve offered to the Treasury, other government agencies, banks, and processors the opportunity to test futuredated ACH transactions and related accounting functions. We are encouraging all banks, especially those that originate a large volume of ACH payments, to test with the Federal Reserve as soon as possible. As of last week, about 6,400 banks, representing 67 percent of the Federal Reserve's ACH customers, had tested their automated interfaces with the Federal Reserve by exchanging Fed ACH test files that contain post-1999 dates. We will continue to offer testing opportunities through early 2000. We realize that the success of our Year 2000 program will be measured by our ability, and the public's confidence in our ability, to conduct business on and after January 3, 2000. Thus, the Federal Reserve will have contingency and business resumption plans in place for ACH payments. We are coordinating these efforts with the Treasury and other government agencies. Backup arrangements being offered by the Reserve Banks include magnetic tape options and paper listings from which banks could post accounts. We believe, however, that if there are any disruptions, they will be mild and short-lived. Boards of directors and senior managers of banks are working to ensure the Year 2000 readiness of their systems. Bank regulators are providing guidance, encouragement, and strong incentives to the banking industry to address the Year 2000 challenges, but management bears the responsibility for their institutions' readiness. In 1997, the Federal Reserve and the other Federal Financial Institutions Examination Council agencies started a three-phase Year 2000 supervision program for the banks they oversee. This program is intended to elevate the 1. For purposes of this discussion, the term "bank" includes all depository institutions, such as savings and loan associations and credit unions. 2. Federal Reserve Banks pay Treasury-issued checks as fiscal agents of the Treasury. 3. Year 2000 Computing Crisis: Federal Reserve Has Established Effective Year 2000 Management Controls for Internal Systems Conversion (GAO/AIMD-99-78, April 9, 1999). 4. In addition, major private-sector ACH operators—the American Clearing House Association, the New York Automated Clearing House, and Visa USA—have reported that their computer systems are Year 2000 ready. Statements to the Congress 415 awareness of Year 2000 issues, monitor the progress of banks' Year 2000 planning and readiness efforts, and require banks that are lagging in their Year 2000 preparedness efforts to develop specific plans to remedy deficiencies. Based on the assessments of bank supervisors at the Federal Reserve and the other banking agencies, we believe that the industry has made great progress in Year 2000 preparedness. The Federal Reserve actively participates in the President's Council on Year 2000 Conversion, and a senior Federal Reserve official chairs the Council's Financial Sector Group. This group comprises federal agencies with large payment volumes, including the Department of Veterans Affairs. We are also coordinating closely with numerous other government and industry entities to ensure that payments flow normally as the year rolls over. In conclusion, preparation for the Year 2000 will continue to be one of the Federal Reserve's highest priorities. Internal Federal Reserve systems used to deliver veterans' benefit payments have been modified, tested, and placed into production. As I have indicated, testing with banks and the Treasury is continuing. Extensive business resumption plans are being developed and reviewed. Every bank's Year 2000 preparedness efforts have been examined twice, and the Federal Reserve, like the other regulators, has found that the majority of institutions are making satisfactory progress in their Year 2000 readiness programs. Those institutions identified as lagging in their Year 2000 efforts have been targeted for additional follow-up and, if necessary, formal enforcement actions. While we expect that the industry may experience some minor or localized problems during the rollover, the Federal Reserve fully expects to conduct business as usual through the Year 2000. Veterans and their families should feel confident that their benefits will be paid as usual. Statement by Richard A. Small, Assistant Director, Division of Banking Supervision and Regulation, Board of Governors of the Federal Reserve System, before the Subcommittee on General Oversight and Investigations and the Subcommittee on Financial Institutions and Consumer Credit of the Committee on Banking and Financial Services, U.S. House of Representatives, April 20,1999 to deter money laundering through financial institutions by, among other things, redesigning the Bank Secrecy Act examination process, developing antimoney-laundering guidance, regularly examining the institutions we supervise for compliance with the Bank Secrecy Act and relevant regulations, conducting money-laundering investigations, providing expertise to the U.S. law enforcement community for investigation and training initiatives, and providing training to various foreign central banks and government agencies. Ten years ago the Federal Reserve started its antimoney-laundering program and appointed a senior official to coordinate the Federal Reserve's activities in this area. In 1993, the Federal Reserve established a special investigations unit, with responsibility for, among other things, the oversight of the Federal Reserve's anti-money-laundering program. In the same year, each of the Federal Reserve Banks designated a senior experienced examiner to be the Bank Secrecy Act coordinator. We have long felt that banking organizations and their employees are the first and strongest line of defense against money laundering and other financial crimes. As a result, the Federal Reserve emphasizes the importance of financial institutions putting in place controls to protect themselves and their customers from illicit activities. The Congress too has long recognized that a banking organization's best protection against criminal activities is its own policies and procedures designed to identify and then reject potentially illegal or damaging transactions. In 1986, the Congress passed a I am pleased to appear before the Subcommittee on General Oversight and Investigations and the Subcommittee on Financial Institutions and Consumer Credit to discuss the Federal Reserve's role in the government's efforts to detect and deter money laundering and other financial crimes with a particular emphasis on matters related to the Bank Secrecy Act and suspicious activity reporting. OVERVIEW The Federal Reserve has a long-standing commitment to combating money laundering and ensuring compliance with the Bank Secrecy Act and related suspicious-activity reporting requirements by the domestic and foreign banking organizations that it supervises. Compliance with the Bank Secrecy Act and suspicious-activity reporting requirements by financial institutions provides timely and valuable information to law enforcement and is the best indicator of the existence of satisfactory anti-moneylaundering and anti-fraud policies and procedures. Over the past several years, the Federal Reserve has been actively engaged in the government's efforts 416 Federal Reserve Bulletin • June 1999 law (section 8(s) of the Federal Deposit Insurance Act) mandating that the Federal Reserve and the other federal banking agencies issue regulations requiring the domestic and foreign financial institutions that the agencies supervise establish and maintain internal procedures designed to ensure and monitor compliance with the Bank Secrecy Act. Determining Compliance through Examinations To understand and properly evaluate the effectiveness of a banking organization's Bank Secrecy Act-related controls and procedures and compliance with the Board's rules issued under section 8(s) of the Federal Deposit Insurance Act, the Federal Reserve has developed comprehensive examination procedures and manuals. In November 1997, the Federal Reserve issued newly revised risk-focused Bank Secrecy Act examination procedures. These enhanced examination procedures specifically address anti-moneylaundering compliance. The examination procedures take a multistage "top down" approach. During every examination of a state member bank and U.S. branch or agency of a foreign bank supervised by the Federal Reserve, specially trained examiners review the institution's previous and current compliance with the Bank Secrecy Act. Examiners first determine whether the institution has included anti-money-laundering procedures in all of its operational areas, including retail operations, credit, private banking, and trust, and has adequate internal audit procedures to detect, deter, and report moneylaundering activities, as well as other potential financial crimes. This is done through a review of the institution's written compliance program and documentation of self-testing and training, as well as through a review of the institution's system for capturing and reporting certain transactions pursuant to the Bank Secrecy Act, including any suspicious or unusual transactions possibly associated with money laundering or other financial crimes. In those instances in which there are deficiencies in the written compliance program, failures to adequately document self-testing or training, obvious breakdowns in operating systems, or failures to implement adequate internal controls, the Federal Reserve's examination procedures require that examiners conduct a more intensified, second-stage examination that would include the review of source documents and expanded transaction testing, among other steps. Enforcement actions, including the assessment of civil money penalties, are used to address situations in which deficiencies are not promptly and fully corrected. SUSPICIOUS ACTIVITY REPORTING Before I describe how the Federal Reserve uses Suspicious Activity Reports and other Bank Secrecy Act reports, some background information regarding the new Suspicious Activity Reporting system would be useful. In 1985, the five federal financial institutions regulatory agencies—the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision (then the Federal Home Loan Bank Board), and the National Credit Union Administration—developed substantially similar, but not uniform, procedures and forms, then known as the criminal referral process, to be used by all financial institutions operating in the United States to report known or suspected criminal law violations. The introduction of the concept of criminal referral forms was the result of the efforts of the interagency Bank Fraud Working Group, which has been addressing the problems of combating white collar financial institution crime since 1984.1 The use of the forms and the attendant reporting procedures, which were jointly developed by the banking and criminal justice agencies participating in the Working Group, enabled financial institutions and the banking agencies to report all instances of suspected criminal activities to the appropriate law enforcement and supervisory authorities. In addition to ensuring the timely provision of information about known or suspected criminal activities to law enforcement authorities, the member agencies in the Working Group recognized the importance of sharing criminal referral information among themselves, particularly in the area of background checks and the coordination of particular significant matters of mutual interest. The need for an effective interagency database of criminal referral information was made an objective of the Working Group, and the agency representatives explored various ways to develop such a system. Beginning in 1994, the Federal Reserve participated in an interagency effort to completely redesign the criminal referral process for banking organiza- 1. The Working Group now consists of senior staff representatives from thirteen federal agencies, including the Federal Reserve, the other federal financial institutions regulators, the Federal Bureau of Investigation, the U.S. Secret Service, the Departments of Justice and the Treasury, including the Treasury's Financial Crimes Enforcement Network, the Internal Revenue Service's Criminal Investigation Division, and the Securities and Exchange Commission. The Working Group meets monthly, and its various subcommittees meet more frequently when necessary. Statements to the Congress tions. The banking agencies worked with Treasury's Financial Crimes Enforcement Network (FinCEN) as the manager of the new process because of that agency's experience in processing millions of currency transaction reports and its database management skills, and because the Congress had amended the Bank Secrecy Act to require FinCEN to issue suspicious-activity reporting rules for financial institutions, including banks, broker-dealers, and casinos. The result of this effort is the existing Suspicious Activity Report. The new Suspicious Activity Report became effective on April 1, 1996, for all banking organizations operating in the United States and subject to the jurisdiction of the five federal banking agencies and FinCEN. Before the effective date of the new Suspicious Activity Report, the Federal Reserve, each of the other federal banking agencies, and FinCEN issued new rules for the reporting of suspicious activity mandating the use of the interagency Suspicious Activity Report. Along with the enhanced reporting process, another important improvement is the statutory protection that the Congress provided for banking organizations reporting suspicious or criminal conduct. The statutory protection provides banking organizations and their employees with immunity from civil liability for reporting known or suspected criminal offenses or suspicious activities. The law also prohibited financial institutions filing Suspicious Activity Reports from notifying anyone involved with reported transactions about the filings. These protections, long sought by the banking community and supported by the Federal Reserve, give comfort to banking organizations that they will not be held liable for providing timely and useful information to law enforcement authorities or compelled to reveal information that has been reported to law enforcement authorities to help their crime-fighting efforts. UTILITY OF BANK SECRECY ACT AND SUSPICIOUS ACTIVITY REPORT INFORMATION As more fully detailed by representatives from the various law enforcement agencies, information collected and reported pursuant to the requirements of the Bank Secrecy Act and the suspicious activityreporting regulations provides necessary and essential assistance to government investigators and prosecutors. Similarly, as I explained earlier, during the course of examinations conducted by the Federal Reserve, a review of the information collected and reported pursuant to the Bank Secrecy Act and 417 the suspicious-activity reporting requirements assists examiners in determining compliance with these regulations. You asked whether information on the Bank Secrecy Act and Suspicious Activity Report has been beneficial to the Federal Reserve's supervisory and enforcement initiatives. The simple answer is that such information has been valuable and has led to numerous supervisory actions addressing wrongdoing by banking organizations and persons associated with them. Federal Reserve staff reviews Suspicious Activity Reports and Currency Transaction Reports filed by banking organizations supervised by the Federal Reserve. Our purpose in conducting reviews of Suspicious Activity Reports is to identify for further investigation potential problems that would normally not be detected during the course of an examination but that have been reported by a financial institution as being suspicious. Likewise, we review Currency Transaction Reports before we conduct Bank Secrecy Act examinations in order to better focus the scope of the examinations and, when necessary, to more precisely target problem areas. While the Federal Reserve's investigative initiatives resulting from our review of these reports are not public and cannot be discussed here, two recent events involving large banking organizations supervised by the Federal Reserve involved public court proceedings or reported cases in which the organizations' Suspicious Activity Reports were disclosed. For this reason, I am able to provide some details about how Federal Reserve staff used the information filed by the banking organizations. As the result of a Suspicious Activity Report filed by Bankers Trust, the Federal Reserve conducted a targeted review of certain activities of the bank involving escheatable funds. After our inquiry, the staff worked extensively with federal investigators and prosecutors, and the result was the recent guilty plea by Bankers Trust and the imposition of a $60 million fine. Similarly, a Suspicious Activity Report containing information of suspected criminal activity by a BankBoston official led to the discovery that the individual apparently defrauded BankBoston out of more than $73 million. After having reviewed the circumstances surrounding the official's actions, the Federal Reserve sought and received federal court orders freezing all of the individual's U.S. assets. We are continuing to work with law enforcement authorities during the course of their criminal investigation of this matter. Additionally, on several occasions, the Federal Reserve has commenced enforcement actions against individuals as the result of information first reported in a Suspicious Activity Report. 418 Federal Reserve Bulletin • June 1999 Currency transaction information provided to the government pursuant to the Bank Secrecy Act has also been a valuable asset for the Federal Reserve's enforcement function. A Federal Reserve investigation that in large part relied on information reported pursuant to the Bank Secrecy Act led to the conviction of the Bangkok Metropolitan Bank for criminal activity related to money laundering and fraud. This foreign banking organization subsequently was ordered by the Federal Reserve to cease all operations in the United States. Similarly, Bank Secrecy Act information was used during the Federal Reserve's involvement with the recently completed Operation Casablanca investigation, in which Federal Reserve staff worked extensively with federal law enforcement agencies during the course of their investigation of money-laundering activities by several foreign banking organizations and their employees. FEDERAL RESERVE ROLE In addition to the Federal Reserve's efforts to develop appropriate anti-money-laundering and anti-fraudrelated policies and procedures for the domestic and foreign financial institutions that we supervise and our examination for compliance with those policies and procedures, staff of the Federal Reserve has, as I just discussed, taken an active role among federal bank supervisors in the law enforcement community's battle to deter money laundering by providing expertise for law enforcement initiatives and training to various government agencies. The Federal Reserve routinely coordinates with federal law enforcement agencies with regard to potential criminal matters, including anti-moneylaundering and financial crime activities. The scope of this coordination ranges from our work on the development and implementation of the interagency Suspicious Activity Reporting system to the referral of illicit activities on a case-by-case basis to law enforcement agencies resulting from examinations of banking organizations and a review of Suspicious Activity Reports. The aforementioned situations involving Bankers Trust, BankBoston, and Operation Casablanca are good examples of our efforts in this area. Training provided by Federal Reserve staff to law enforcement agencies continues to include programs at the U.S. Department of the Treasury's Federal Law Enforcement Training Center and at the FBI Academy, as well as training for the U.S. Secret Service and the U.S. Customs Service. Additionally, Federal Reserve staff has provided training in anti-moneylaundering procedures to foreign law enforcement officials and central bank supervisory personnel in such countries as Russia, Poland, Hungary, the Czech Republic, and a number of the emerging Baltic states, as well as Brazil, Ecuador, Argentina, and several other countries in the Middle East and Far East. Over the years the Federal Reserve has taken the initiative to provide timely and useful information to banking organizations with regard to ongoing criminal conduct or potential schemes that may have an adverse impact on them. In the past few years, the Federal Reserve and the other federal banking supervisory agencies have issued alerts on such matters as "Prime Bank" frauds and credit card fraud schemes. Such notices to the banking industry are intended to advise banking organizations and the public about the potential dangers of such schemes and practices. Also, from time to time, the Federal Reserve has developed and issued policy statements with regard to activities occurring in banking organizations that we have determined could pose a threat to the integrity of a bank. One such example was the Federal Reserve's development and issuance of a policy statement on "payable-through accounts." The purpose of the policy statement was to ensure that banks that engage in payable-through activity, which basically involves the use of a checking account at a bank in the United States by an individual who resides outside of this country, have appropriate procedures in place to ensure that no illicit activities are being conducted through these accounts. The Federal Reserve's 1997 issuance of a sound practices paper on private banking is another example. CONCLUSION As bank supervisors, the Federal Reserve believes that it is necessary to take reasonable and prudent steps to ensure that banking organizations are not victims of, and also do not knowingly participate in, illicit activities such as money laundering or other financial crimes. For this reason, and to support our law enforcement agencies in their efforts to combat money laundering and other financial offenses, the Federal Reserve's commitment to ensuring compliance with the Bank Secrecy Act and suspiciousactivity reporting requirements continues to be a high bank supervisory priority. The Federal Reserve has an important role in ensuring that criminal activity does not pose a systemic threat and, as important, in improving the ability of individual banking organizations in the United States and abroad to protect Statements to the Congress 419 themselves from illicit activities. Both the Bank Secrecy Act and suspicious activity reporting requirements are vital to the continued efforts of the Federal Reserve and the government, as a whole, to combat illicit activities through the financial system, Statement by Alan Greenspan, Chairman, Board of Governors of the Federal Reserve System, before the Subcommittee on Finance and Hazardous Materials of the Committee on Commerce, U.S. House of Representatives, April 28,1999 the view that the long-term stability of U.S. financial markets and the interests of the American taxpayer would be better served by no financial modernization bill rather than one that allows the proposed new activities to be conducted by the bank, as proposed by H.R. 10. For reasons I shall discuss shortly, the Board is not dissuaded from this view by provisions that have been incorporated in H.R. 10 to address our concerns. I would like to thank the committee for the opportunity to present the views of the Federal Reserve on the current version of H.R. 10, the approach to financial modernization most recently approved by the House Banking Committee. Last year, I testified at length before this committee on many of the issues related to your deliberations on this legislation. Our views have not changed on the need to modernize our banking and financial system, on consolidated supervision, on the emphasis on reduced regulation, on the unitary thrift loophole, and especially on continuing to prohibit banks from conducting through their subsidiaries those activities that they are prohibited to do themselves. In the interest of time, however, I thought it might be best if I limit my formal comments only to the latter, that is, the setting of the underlying structure of American banking in the twenty-first century. The issue is whether the important new powers being contemplated are exercised in a financial services holding company through a nonbank affiliate or in a bank through its subsidiary. Such a decision would be of minor significance, and decidedly not a concern of legislators and regulators, if banks were not subsidized. We at the Federal Reserve strongly support the new powers that would be authorized by H.R. 10. We believe that these powers, however, should be financed essentially in the competitive marketplace and not financed by the sovereign credit of the United States. This requires that the new activities be permitted through holding companies and prohibited through banks. OPERATING SUBSIDIARIES The Board believes that any version of financial modernization legislation that authorizes banks to conduct in their subsidiaries any activity as principal that is prohibited to the bank itself is potentially a step backward to greater federal subsidization and eventually to more regulation to contain the subsidies. I and my colleagues, accordingly, are firmly of Subsidies Government guarantees of the banking system— deposit insurance and direct access to the Fed's discount window and payments system guarantees— provide banks with a lower average cost of capital than would otherwise be the case. This subsidized cost of capital is achieved through lower market risk premiums on both insured and uninsured debt and through lower capital than would be required by the market if there were no government guarantees. The lower cost of funding gives banks a distinct competitive advantage over nonbank financial competitors and permits them to take greater risks than they could otherwise. The safety net subsidy is reflected in lower equity capital ratios at banks that are consistently below those of a variety of nonbank financial institutions. Importantly, this is true even when we compare bank and nonbank financial institutions with the same credit ratings: Banks with the same credit ratings as their nonbank competitors are allowed by the market to have lower capital ratios. While the differences in capital ratios could reflect differences in overall asset quality, there is little to suggest that this factor accounts for more than a small part of the difference. Under H.R. 10, the subsidy that the government provides to banks as a byproduct of the safety net would be directly transferable to their operating subsidiaries to finance powers not currently permissible to the bank or its subsidiaries. The funds a bank uses to invest in the equity of its subsidiaries are available to the bank at a lower cost than that of any other potential investor, save the U.S. government, because of the subsidy. Thus, operating subsidiaries under H.R. 10 could conduct new securities, merchant banking, and other activities with a government-subsidized competitive advantage over independent firms that conduct the same activity. 420 Federal Reserve Bulletin • June 1999 That is to say, the use of the universal bank structure envisioned in H.R. 10 means the transference of the subsidy to a wider range of financial businesses, producing distortions in the competitive balance between those latter units that receive a subsidy and identical units that do not—whether those units are subs of holding companies or totally independent of banking. H.R. 10 does not contain provisions that effectively curtail the transfer of the subsidy to operating subsidiaries or address this competitive imbalance. The provisions of H.R. 10 that would require the deduction of such investments from the regulatory capital of the bank (after which the bank must still meet the regulatory definition of well capitalized) attempt, but fail, to limit the amount of subsidized funds that an individual bank can invest in its subsidiaries. What matters is not regulatory capital but actual or economic capital. The vast majority of banks now hold significantly more capital than regulatory definitions of "well capitalized" require. This capital is not "excess" in an economic sense that is somehow available for use outside the bank; it is the actual amount required by the market for the bank to conduct its own activities. The actual capital maintained by a bank is established in order to earn the perceived maximum risk-adjusted rate of return on equity. Unless this optimum economic capital is equal to, or less than, regulatory capital, deductions from regulatory capital would in no way inhibit the transfer of the subsidy from the bank to the subsidiary. Some have argued that the subsidy transference to subsidiaries of banks is no different from the transfer of subsidized bank dividends through the holding company parent to holding company affiliates. The direct upstreaming of dividends by a bank to its holding company parent that in turn invests the proceeds in subsidiaries of the holding company, while legally permissible, in fact does not occur—and for good reasons, as I will explain below. In the 1990s, dividend flows from banks to their parent holding companies have been less than the sum of holding company dividends, interest on holding company debt, and the cost of holding company stock buybacks, a substitute for dividends. Thus, the empirical evidence indicates that, on net, at the largest organizations there has been no financing of a bank's holding company affiliates with subsidized equity of the associated banks. All of that part of the subsidy reflected in earnings has flowed to investors. (There are a few large individual institutions that have, in some years, upstreamed dividends in excess of investor payments, but the cumulative amounts are very small and the conclusions are unchanged.) That bank dividends are not used to finance holding company subsidiaries should not be surprising. It simply is not in the interest of the consolidated banking organization to increase bank dividend flows beyond parent company capital-servicing cash flow needs because the resultant decline in bank capital would increase funding costs of the bank. Research at the Federal Reserve indicates that, over the past quarter of a century, for the largest banks the cost of uninsured bank funds has tended to rise as a bank's capital ratio fell and vice versa. This is just what one should expect: As the risk-absorbing equity cushion falls, the risk for uninsured creditors rises. The flow of dividends from the bank to the parent holding company reduces bank capital. That reduction, in turn, reduces the risk buffer for uninsured creditors, increasing the funding cost of the bank on all the uninsured liabilities by more—the data show—than the small subsidy transference of funding the additional equity investment in the affiliate. Thus, if a bank holding company were to finance its nonbank affiliates from bank dividends—that is, to directly pass on the bank's subsidy to the holding company's affiliates—the profitability of the consolidated organization would decline. If there were no net costs to the bank from upstreaming dividends to its parent for affiliate funding, it would be the prevalent practice today. In short, the subsidy appears to have been effectively bottled up in the bank. The Federal Reserve Board believes that this genie would be irreversibly let out of the bottle, however, should the Congress authorize wider financial activities in operating subsidiaries. Subsidized equity investments by banks can be made in their own subsidiaries without increasing funding costs on all of the bank's uninsured liabilities because the consolidated capital of the bank would not change in the process. But since the activities authorized to banks' subsidiaries cannot differ from those available to the bank itself, there is no additional profit to the overall banking organization in shifting bank powers to a subsidiary. But H.R. 10 would permit activities not now permitted in a bank. Those activities, when performed in bank subsidiaries and financed with bank equity capital, would increase the potential profit to the overall banking organization. It would also inevitably induce the gravitation to subsidiaries of banks, not only of the new powers authorized by H.R. 10 but all of those powers currently financed in holding company affiliates at higher costs of capital than those available to the bank. H.R. 10 thus effectively authorizes all holding company powers to be funded in the bank at funding costs significantly lower than the funding costs of its holding company. Statements to the Congress For the thirty-five of the fifty largest bank holding companies for which comparisons are available, ratings on debentures are always somewhat higher at the bank than at the holding company parent and, of course, higher ratings translate into lower interest rates. As might be expected, the data show that the value of these differences in bond ratings is higher during periods of market stress, when subsidies are more valuable, because the market is more risk sensitive. But even today, when losses in the financial system are quite low, the cost of debt capital to banks still averages 10 basis points to 12 basis points below that of the parent holding companies. That difference in bond ratings today between banks and bank holding companies, let alone the larger difference between banks and other financial institutions, is a significant part of the 20 basis point to 30 basis point gross margin on A-rated or better investment grade business loans—more than enough significantly to change lending behavior if it were not available. Business loan markets are particularly competitive, and hence there is little leeway for a competitor with higher funding costs to pass on such costs to the borrower. For example, the weakened credit standing of the Japanese banks has engendered a risk premium that these entities have paid—and today would have to pay—to fund their U.S. affiliates; this has required them to sharply reduce their business loan volume in the United States. Japanese bank branches and agencies in the United States have reduced their share of business loans from more than 16 percent of the market in 1995 to less than 11 percent today. In short, the subsidy is a critical competitive issue in competitive markets. Allowing the bank to inject federal subsidies into the proposed new activities could distort capital markets and the efficient allocation of both financial and real resources. New affiliations, if allowed through banks, would accord them an unfair competitive advantage over comparable nonbank firms. The holding company structure, on the other hand, fosters a level playing field within the financial services industry, contributing to a more competitive environment. Safety and Soundness In addition to our concern about the extension of the safety net that would accompany the widening of bank activities through operating subsidiaries, the Federal Reserve Board is also sensitive to the implications of operating subsidiaries for the safety and soundness of the parent bank. Most of the new activities contemplated by H.R. 10 would not be accompa 421 nied by unusually high risk, but they could imply more risk. The Board believes these activities add the potential for new profitable opportunities for banking organizations, but it is almost always the case that the more potentially profitable the activity, the riskier it is. Although, to be sure, diversification can reduce that risk, the losses that would accompany riskier activities from time to time would fall on the insured bank's capital if the new activities were authorized in bank subsidiaries. Such losses at holding company affiliates would, of course, fall on the uninsured holding company. This is an important distinction for the deposit insurance funds and potentially the taxpayer. This potential for loss and bank capital depletion is another reason for urging that the new activities be conducted in a holding company affiliate rather than in a banking subsidiary. H.R. 10 is supposed to virtually eliminate this concern. As I earlier noted, the bank's equity investment in the bank subsidiary under H.R. 10 would be deducted from the bank's regulatory capital, with the requirement that the remaining regulatory capital still meet the well-capitalized standard. At the same time, the Office of the Comptroller of the Currency has asserted that it would order an operating sub immediately to be sold or declared bankrupt and closed before its cumulative losses exceeded the bank's equity investment in the failing sub. Combined with the provision of H.R. 10 adjusting regulatory capital for investment in subs, this provision is intended to cap the effect on the bank of subsidiary losses to the amount of the bank's original investment. Because that amount would have already been deducted from the bank's regulatory capital, the failure of the subsidiary, it is maintained, could not affect the regulatory capital of the bank. The Board is concerned that this regulatory accounting approach, which does not address the actual capital of a bank, could provide a false sense of security. We had extensive experience with attempts to redefine reality by redefining regulatory capital in the thrift industry in the 1980s. This approach was widely viewed as a major mistake whose echoes we are still dealing with today. Regulatory capital at the time soon began to mean nothing to the market, and, as a consequence, the Congress in the Federal Deposit Insurance Corporation Improvement Act of 1991 ordered the banking agencies to follow Generally Accepted Accounting Principles (GAAP) whenever possible. In the current context, there is—as in the 1980s—no reason to believe the new regulatory definitions will change the reality of the market place. Economic, as opposed to regulatory, capital of the bank would not, as I have noted, 422 Federal Reserve Bulletin • June 1999 be changed by this special regulatory capital accounting, and such deductions from equity capital would not be reflected under GAAP. It is the economically more relevant GAAP statements to which uninsured creditors of banks look when deciding to deal with a bank, and they will continue to do so after financial modernization. Bank creditors will, in any event, continue to view the investment in the bank subsidiary as part of the capital protecting their position— for the simple reason that it does. If they see the economic and GAAP capital at the bank declining as operating subsidiary losses occur, they will react as any prudential creditor should—regardless of artificial regulatory accounting adjustments or regulatory measures of capital adequacy. Perhaps more to the point, it seems to me particularly relevant to underline that losses in financial markets—large losses—can occur so quickly that regulators would be unable to close the failing operating subsidiary as contemplated by H.R. 10 before the subsidiaries' capital ran out. Indeed, losses might even continue to build, producing negative net worth in the subsidiary. At the time of closure of a subsidiary, there is nothing to prevent the total charges for losses against the parent bank's regulatory capital from exceeding the prior deduction required by H.R. 10.1 Our experience after the stock market crash of 1987—when a subsidiary of a major bank not only lost more than the bank's investment in its subsidiary but the bank was unable to dispose of the subsidiary for several years—underscores the seriousness of such concerns. H.R. 10 would exclude from permissible bank subsidiaries only insurance underwriting and real estate development. One of the permissible activities is merchant banking, which does not have a long or significant twentieth century history in this country. Merchant banking currently means the negotiated private purchase of equity investments by financial institutions, with the objective of selling these positions at the end of some interval, usually measured in years. Merchant banking has become so important an element of full service investment banking in this country, so much so that to prohibit bank-related investment banks from participating in these activities would put them at a competitive disadvantage. 1. Moreover, should creditors of the subsidiary choose to attempt to recover their funds from the bank parent, the removal of the loss charged against the bank's capital could occur only when a court has affirmed both the bankruptcy and the rejection of the claims on the bank made by the subsidiary's creditors. This process could and would take some time, during which, even if the court eventually found for the bank and/or the regulator, further losses by the subsidiary could continue to impinge on the bank's capital. And, again, the point is that the bank would have been at risk during that interval. The Board has consequently supported merchant banking as an activity of a holding company subsidiary, but believes it is potentially the most risky activity that would be authorized by H.R. 10 and would be especially risky if permitted to be conducted in bank subsidiaries. Existing law permits some limited exceptions to the otherwise prohibited outright ownership of equity by banks and their subsidiaries, but these are quite limited both in the aggregate and in the kinds of businesses in which equity can be purchased, as well as in the scale of each investment. True merchant banking, as envisioned by H.R. 10, would place no such limits—either per firm or in total. The potential rewards for such equity investments are substantial, but such potential gains are the mirror image of the potential for substantial loss. In addition, poor equity performance generally occurs during periods of weak nationwide economic performance, the same intervals over which bank loan portfolios are usually under pressure, raising concerns about the compounding of bank problems during such periods. FUNCTIONAL REGULATION The holding company structure—especially for the new activities—also has the significant benefit of promoting effective supervision and the functional regulation of different activities. The holding company structure, along with the so-called "Fed-lite" provisions in H.R. 10, focuses on and enhances the functional regulation of securities firms, insurance companies, insured depository institutions, and their affiliates by relying on the expertise and supervisory strengths of different functional regulators, reducing the potential burdensome overlap of regulation and providing for increased coordination and reduced potential for conflict among functional regulators. EXECUTIVE BRANCH PREROGATIVES There is a final point I want to make because it appears to have driven the Treasury's recent opposition to financial modernization legislation that has not adopted the universal bank model. It is not necessary to adopt the universal bank model in order to preserve the executive branch's supervisory authority for national banks or federal savings associations; nor is it necessary in order to preserve the share of this nation's banking assets controlled by national banks and federal savings associations. In fact, the share of assets controlled by national banks is predominant Statements to the Congress and growing, in part the result of the enactment of interstate branching authorities, an initiative the Federal Reserve fully supported. As shown in the tables in the appendix to my statement, national bank assets have increased in each of the past three years while state bank assets have declined over the past two years.2 As of year-end 1998, 58.5 percent of all banking assets were under the supervision of the Comptroller of the Currency, up from a little more than 55 percent at the end of 1996. As the second table clearly suggests, the largest banks, especially those with large branching systems, tend to be national banks, providing a distinct advantage to national banks in an environment of interstate branching. Furthermore, the Congress for sound public policy reasons has purposefully apportioned responsibility for this nation's financial institutions among the elected executive branch and independent regulatory agencies. Action to alter these responsibilities would be contrary to the deliberate steps that the Congress 2. The attachment to this statement is available from Publications Services, Mail Stop 127, Board of Governors of the Federal Reserve System, Washington, DC 20551, and on the Board's site on the World Wide Web at http://www.federalreserve.gov. 423 has taken to ensure a proper balance in the regulation of this nation's dual banking system. SUMMING UP The Board is a strong advocate of financial modernization in order both to eliminate the inefficiencies of the current Great Depression regulatory structure and to create a system more in keeping with the technology and markets of the twenty-first century. We strongly support the thrust of H.R. 10 to accomplish these objectives. Equally as strongly, however, we also believe that the new activities should not be authorized for banks through operating subsidiaries. We believe that the holding company structure is the most appropriate and effective one for limiting transfer of the federal subsidy to new activities and fostering a level playing field both for financial firms affiliated with banks and independent firms. It will also, in our judgment, foster the protection of the safety and soundness of our insured banking system and the taxpayers, enhance functional regulation, and achieve all of the benefits of financial modernization for the consumer and the financial services industry. • 424 Announcements LAUNCH OF A NEW DESIGN FOR THE FEDERAL RESERVE BOARD WEB SITE ISSUANCE BY THE BASLE COMMITTEE OF A PAPER ON CREDIT-RISK MODELING The Federal Reserve Board on May 3, 1999, unveiled a new design for its web site on the Internet. The new design is constructed to make Federal Reserve information on the Internet easier to navigate through an improved format accompanied by an attractive presentation. New features include the following: The Basle Committee on Banking Supervision (Basle Committee) recently issued for comment a paper entitled Credit Risk Modelling: Current Practices and Applications. The paper describes the structure of various creditrisk models used by commercial banks worldwide and identifies related supervisory issues pertaining to the use of such models as a basis for regulatory capital standards. Comments are requested by October 1, 1999. The paper is available on the BIS Internet site at http://www.bis.org The Committee was established by the central bank governors of the Group of Ten countries in 1975 and operates under the auspices of the Bank for International Settlements (BIS) in Basle, Switzerland. It consists of senior supervisory authorities representing the world's largest banking systems and works to strengthen bank supervisory and regulatory practices worldwide. • "Breaking News," with direct links to announcements, statements, and documents released in the past day or two • "What's New," which lists the items carried under Breaking News as well as information about statistical releases and other items posted over the past two weeks • "Publications Schedule," which shows what is expected to be posted on the web site during the next two months, including speeches, congressional testimony, Federal Open Market Committee material, and statistical releases • "Site Map," featuring a complete list of the links found immediately under the main subject categories. Some categories have also been consolidated. The "Monetary Policy" site now contains Federal Open Market Committee information, the Beige Books, and Humphrey-Hawkins reports and testimony. The "Banking" site combines the material listed under Regulation and Supervision and under Supervision Manuals. "Research and Data" contains articles from the Federal Reserve Bulletin along with material listed under Domestic and International Research. The broad range of information available on the Board's web site also includes Board actions, press releases, consumer topics, reports to Congress, and connections to other banking regulators and to the Federal Reserve Banks. The web site was inaugurated in March 1996 and now contains more than 13,000 documents. The site averages 80,000 daily requests during the week and 45,000 daily requests on weekends. The Internet address is http://www.federalreserve.gov ENFORCEMENT ACTIONS The federal financial institution regulators (the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision) and First Data Corporation reached agreement on March 30, 1999, that the provider of data processing services to banks, thrift institutions, and credit unions will complete Year 2000 testing of the last of six merchant processing systems that serve banking and credit union clients by June 30, 1999, and fully implement the system in a Y2K production mode by July 11, 1999. The agreement covers a single credit card processing platform at the Nashville (Tennessee) Data Center of First Data Merchant Services, a subsidiary of the corporation. Within fifteen days, First Data will submit to the agencies and its financial institution clients a written report of how it will fulfill the 425 agreement and then update progress regularly. On this system, which is known as the Envoy processing system, First Data services more than 200 banks, thrift institutions, and credit unions. First Data committed to the federal agencies that it will have ample time to make the necessary adjustments to the Envoy system and to carry out appropriate testing. The agreement covers only the Envoy system, which, according to First Data, represents approximately 2 percent of its entire Y2K remediation effort. An on-site examination by an interagency team of examiners found that the Envoy system was lagging in meeting testing and implementation milestones, which are part of the interagency guidance. This is the second time regulators have taken action against a service provider. The agencies will continue to monitor financial institutions and service providers for compliance with Year 2000 guidelines. Bank of Chicago, and the Illinois Office of Banks and Real Estate. CHANGES IN BOARD STAFF The Board of Governors announced the retirement of Betsy Riggs, Assistant Director in the Division of Information Resources Management, effective May 31, 1999, after thirty-two years of service to the Board. On May 20, 1999, the Board of Governors announced the following official staff actions, also in the Division of Information Resources Management: The Federal Reserve Board on April 16, 1999, announced the issuance of a combined order to cease and desist and order of assessment of a civil money penalty against Paul P. Piper, Jr., a former institutionaffiliated party of First National Summit Bankshares, Crested Butte, Colorado, a former registered bank holding company, and the First National Summit Bank, Gunnison, Colorado, a former national bank. Mr. Piper, without admitting to any allegations, consented to the issuance of the order in connection with his alleged involvement in the acquisition of control of more than 25 percent of the outstanding voting shares of First National Summit Bankshares without prior approval from the Board of Governors. Mr. Piper paid a fine of $25,000. The appointment of Richard C. Stevens to the position of Director of the Division of Information Technology. Mr. Stevens joined the Board's staff in 1973. In July 1998, he was promoted to the position of Deputy Director for the Division of Information Resources Management. The appointment of Marianne M. Emerson to the position of Deputy Director. Ms. Emerson was appointed Assistant Director in 1990 and is ending a two-year assignment as technical adviser to the Division of Banking Supervision and Regulation. The appointment of Tillena G. Clark to the position of Assistant Director. Ms. Clark joined the Board's staff in 1994 and is currently serving as manager in the division's Year 2000 Program Office. She holds a B.A. from the University of Rochester and an M.A. from Catholic University. The Federal Reserve Board on April 22, 1999, announced the execution of a written agreement by and among Foxdale Bancorp, Inc., the Foxdale Bank, both of South Elgin, Illinois, the Federal Reserve Finally, the name of the division has been changed from Information Resources Management to Information Technology to more accurately reflect the division's responsibilities. • 426 Minutes of the Federal Open Market Committee Meeting Held on February 2-3, 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, February 2, 1999, at 2:30 p.m. and continued on Wednesday, February 3, 1999, at 9:00 a.m. Messrs. Madigan and Simpson, Associate Directors, Divisions of Monetary Affairs and Research and Statistics respectively, Board of Governors 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 Mr. Dennis,2 Assistant Director, Division of Reserve Bank Operations and Payment Systems, Board of Governors Mr. Reinhart, Deputy Associate Director, Division of Monetary Affairs, Board of Governors Messrs. Reifschneider 3 and Small,3 Section Chiefs, Divisions of Research and Statistics and Monetary Affairs respectively, Board of Governors Ms. Kole,4 Messrs. English 4 and Rosine,4 Senior Economists, Divisions of International Finance, Monetary Affairs, and Research and Statistics respectively Messrs. Broaddus, Guynn, Jordan, and Parry, Alternate Members of the Federal Open Market Committee Ms. Garrett, Economist, Division of Monetary Affairs, Board of Governors Ms. Minehan, Messrs. Poole and Hoenig, Presidents of the Federal Banks of Boston, St. Louis, and Kansas City respectively Mr. Evans,2 Manager, Division of Reserve Bank Operations and Payment Systems, Board of Governors Mr. Kohn, Secretary and Economist Mr. Bernard, Deputy Secretary Ms. Fox, Assistant Secretary Mr. Gillum, Assistant Secretary Mr. Mattingly, General Counsel Mr. Baxter, Deputy General Counsel Mr. Prell, Economist Ms. Low, Open Market Secretariat Assistant, Division of Monetary Affairs, Board of Governors Messrs. Alexander, Cecchetti, Hooper, Hunter, Lang, Lindsey, Rolnick, Rosenblum, Slifman, and Stockton, Associate Economists Mr. Fisher, Manager, System Open Market Account Mr. Conrad, First Vice President, Federal Reserve Bank of Chicago Messrs. Beebe, Eisenbeis, Goodfriend, Hakkio, and Rasche, Senior Vice Presidents, Federal Reserve Banks of San Francisco, Atlanta, Richmond, Kansas City, and St. Louis respectively Messrs. Altig, Bentley, and Rosengren, Vice Presidents, Federal Reserve Banks of Cleveland, New York, and Boston respectively Mr. Ettin, Deputy Director, Division of Research and Statistics, Board of Governors Mr. Winn,1 Assistant to the Board, Office of Board Members, Board of Governors 1. Attended Wednesday's session only. 2. Attended portions of meeting relating to the examination of the System Open Market Account and changes to the domestic securities lending program. 3. Attended portions of meeting relating to the discussion of the Committee's consideration of its monetary and debt ranges for 1999. 4. Attended portion of meeting relating to the Committee's review of the economic outlook and consideration of its monetary and debt ranges for 1999. 427 In the agenda for this meeting, it was reported that advices of the election of the following members and alternate members of the Federal Open Market Committee for the period commencing January 1, 1999, and ending December 31, 1999, had been received and that these individuals had executed their oaths of office. The elected members and alternate members are as follows: William J. McDonough, President of the Federal Reserve Bank of New York.5 Edward G. Boehne, President of the Federal Reserve Bank of Philadelphia, with J. Alfred Broaddus, Jr., President of the Federal Reserve Bank of Richmond, as alternate. Michael H. Moskow, President of the Federal Reserve Bank of Chicago, with Jerry L. Jordan, President of the Federal Reserve Bank of Cleveland, as alternate. Robert D. McTeer, Jr., President of the Federal Reserve Bank of Dallas, with Jack Guynn, President of the Federal Reserve Bank of Atlanta, as alternate. Gary H. Stern, President of the Federal Reserve Bank of Minneapolis, with Robert T. Parry, President of the Federal Reserve Bank of San Francisco, as alternate. By unanimous vote, the following officers of the Federal Open Market Committee were elected to serve until the election of their successors at the first meeting of the Committee after December 31, 1999, with the understanding that in the event of the discontinuance of their official connection with the Board of Governors or with a Federal Reserve Bank, they would cease to have any official connection with the Federal Open Market Committee: Alan Greenspan William J. McDonough Donald L. Kohn Normand R.V. Bernard Lynn S. Fox Gary P. Gillum J. Virgil Mattingly, Jr. Thomas C. Baxter, Jr. Michael J. Prell Karen H. Johnson Chairman Vice Chairman Secretary and Economist Deputy Secretary Assistant Secretary Assistant Secretary General Counsel Deputy General Counsel Economist Economist Lewis S. Alexander, Stephen G. Cecchetti, Peter Hooper, III, William C. Hunter, Richard W. Lang, David E. Lindsey, Arthur J. Rolnick, Harvey Rosenblum, Larry Slifman, and David J. Stockton, Associate Economists 5. Mr. Jamie B. Stewart, Jr., incoming First Vice President of the Federal Reserve Bank of New York, took his oath of office as alternate member for Mr. McDonough on February 18, 1999. By unanimous vote, the Federal Reserve Bank of New York was selected to execute transactions for the System Open Market Account until the adjournment of the first meeting of the Committee after December 31, 1999. By unanimous vote, Peter R. Fisher was selected to serve at the pleasure of the Committee as Manager, System Open Market Account, on the understanding that his selection was subject to being satisfactory to the Federal Reserve Bank of New York. Secretary's note: Advice subsequently was received that the selection of Mr. Fisher as Manager was satisfactory to the board of directors of the Federal Reserve Bank of New York. The Report of Examination of the System Open Market Account, conducted by the Board's Division of Reserve Bank Operations and Payment Systems as of the close of business on November 5, 1998, was accepted. On the recommendation of the Manager of the System Open Market Account, the Committee amended paragraph 2 of the Authorization for Domestic Open Market Operations relating to the Treasury securities lending program. The revised facility introduces the auction technique for awarding borrowed securities to dealer firms on a competitive basis. The new facility is designed to implement more effectively the objective of providing a shortterm "last resort" source of Treasury securities to the dealer market and thereby to facilitate the smooth clearing of Treasury securities and to ease liquidity strains in the market as they arise. The amended Authorization for Domestic Open Market Operations was approved unanimously in the form shown below: AUTHORIZATION OPEN MARKET FOR DOMESTIC OPERATIONS Amended February 2, 1999 1. The Federal Open Market Committee authorizes and directs the Federal Reserve Bank of New York, to the extent necessary to carry out the most recent domestic policy directive adopted at a meeting of the Committee: (a) To buy or sell U.S. Government securities, including securities of the Federal Financing Bank, and securities that are direct obligations of, or fully guaranteed as to principal and interest by, any agency of the United States in the open market, from or to securities dealers and foreign and international accounts maintained at the Federal Reserve Bank of New York, on a cash, regular, or deferred delivery basis, for the System Open Market Account at market prices, and, for such Account, to exchange maturing U.S. Government and Federal agency securities with the Treasury or the individual agencies or to allow them to 428 Federal Reserve Bulletin • June 1999 mature without replacement; provided that the aggregate amount of U.S. Government and Federal agency securities held in such Account (including forward commitments) at the close of business on the day of a meeting of the Committee at which action is taken with respect to a domestic policy directive shall not be increased or decreased by more than $12.0 billion during the period commencing with the opening of business on the day following such meeting and ending with the close of business on the day of the next such meeting; (b) To buy U.S. Government securities and obligations that are direct obligations of, or fully guaranteed as to principal and interest by, any agency of the United States, from dealers for the account of the Federal Reserve Bank of New York under agreements for repurchase of such securities or obligations in 60 calendar days or less, at rates that, unless otherwise expressly authorized by the Committee, shall be determined by competitive bidding, after applying reasonable limitations on the volume of agreements with individual dealers; provided that in the event Government securities or agency issues covered by any such agreement are not repurchased by the dealer pursuant to the agreement or a renewal thereof, they shall be sold in the market or transferred to the System Open Market Account. 2. In order to ensure the effective conduct of open market operations, the Federal Open Market Committee authorizes the Federal Reserve Bank of New York to lend on an overnight basis U.S. Government securities held in the System Open Market Account to dealers at rates that shall be determined by competitive bidding but that in no event shall be less than 1.0 percent per annum of the market value of the securities lent. The Federal Reserve Bank of New York shall apply reasonable limitations on the total amount of a specific issue that may be auctioned and on the amount of securities that each dealer may borrow. The Federal Reserve Bank of New York may reject bids which could facilitate a dealer's ability to control a single issue as determined solely by the Federal Reserve Bank of New York. 3. In order to ensure the effective conduct of open market operations, while assisting in the provision of shortterm investments for foreign and international accounts maintained at the Federal Reserve Bank of New York, the Federal Open Market Committee authorizes and directs the Federal Reserve Bank of New York (a) for System Open Market Account, to sell U.S. Government securities to such foreign and international accounts on the bases set forth in paragraph 1(a) under agreements providing for the resale by such accounts of those securities within 60 calendar days on terms comparable to those available on such transactions in the market; and (b) for New York Bank account, when appropriate, to undertake with dealers, subject to the conditions imposed on purchases and sales of securities in paragraph 1(b), repurchase agreements in U.S. Government and agency securities, and to arrange corresponding sale and repurchase agreements between its own account and foreign and international accounts maintained at the Bank. Transactions undertaken with such accounts under the provisions of this paragraph may provide for a service fee when appropriate. On the Manager's recommendation, the Committee also amended the Foreign Currency Authorization and the Foreign Currency Directive to reflect changes triggered by the launch of the euro. Specifically, it dropped from the Authorization those European currencies that now exist as denominations of the euro (Austrian schillings, Belgian francs, French francs, Italian lire, Netherlands guilders, and German marks). The amendments also removed the central banks of Austria, Belgium, Denmark, England, France, Germany, Italy, Japan, Netherlands, Norway, Sweden, and Switzerland, and the Bank for International Settlements from the list of institutions with which the Federal Reserve Bank of New York was authorized to maintain reciprocal currency arrangements (swap facilities). In keeping with the Committee's decision at the November 1998 meeting and after consultations with officials at the foreign institutions, the reciprocal currency arrangements in question were not renewed after they matured on various dates in December. Accordingly, the amended Authorization for Foreign Currency Operations and the Foreign Currency Directive were unanimously approved in the forms shown below: AUTHORIZATION OPERATIONS FOR FOREIGN CURRENCY Amended February 2, 1999 1. The Federal Open Market Committee authorizes and directs the Federal Reserve Bank of New York, for System Open Market Account, to the extent necessary to carry out the Committee's foreign currency directive and express authorizations by the Committee pursuant thereto, and in conformity with such procedural instructions as the Committee may issue from time to time: A. To purchase and sell the following foreign currencies in the form of cable transfers through spot or forward transactions on the open market at home and abroad, including transactions with the U.S. Treasury, with the U.S. Exchange Stabilization Fund established by Section 10 of the Gold Reserve Act of 1934, with foreign monetary authorities, with the Bank for International Settlements, and with other international financial institutions: Canadian dollars Danish kroner Euro Pounds sterling Japanese yen Mexican pesos Norwegian kroner Swedish kronor Swiss francs B. To hold balances of, and to have outstanding forward contracts to receive or to deliver, the foreign currencies listed in paragraph A above. C. To draw foreign currencies and to permit foreign banks to draw dollars under the reciprocal currency arrangements listed in paragraph 2 below, provided that Minutes of the Federal Open Market Committee drawings by either party to any such arrangement shall be fully liquidated within 12 months after any amount outstanding at that time was first drawn, unless the Committee, because of exceptional circumstances, specifically authorizes a delay. D. To maintain an overall open position in all foreign currencies not exceeding $25.0 billion. For this purpose, the overall open position in all foreign currencies is defined as the sum (disregarding signs) of net positions in individual currencies. The net position in a single foreign currency is defined as holdings of balances in that currency, plus outstanding contracts for future receipt, minus outstanding contracts for future delivery of that currency, i.e., as the sum of these elements with due regard to sign. 2. The Federal Open Market Committee directs the Federal Reserve Bank of New York to maintain reciprocal currency arrangements ("swap" arrangements) for the System Open Market Account for periods up to a maximum of 12 months with the following foreign banks, which are among those designated by the Board of Governors of the Federal Reserve System under Section 214.5 of Regulation N, Relations with Foreign Banks and Bankers, and with the approval of the Committee to renew such arrangements on maturity: Foreign bank Amount of arrangement (millions of dollars equivalent) 2,000 3,000 Any changes in the terms of existing swap arrangements, and the proposed terms of any new arrangements that may be authorized, shall be referred for review and approval to the Committee. 3. All transactions in foreign currencies undertaken under paragraph 1A. above shall, unless otherwise expressly authorized by the Committee, be at prevailing market rates. For the purpose of providing an investment return on System holdings of foreign currencies, or for the purpose of adjusting interest rates paid or received in connection with swap drawings, transactions with foreign central banks may be undertaken at non-market exchange rates. 4. It shall be the normal practice to arrange with foreign central banks for the coordination of foreign currency transactions. In making operating arrangements with foreign central banks on System holdings of foreign currencies, the Federal Reserve Bank of New York shall not commit itself to maintain any specific balance, unless authorized by the Federal Open Market Committee. Any agreements or understandings concerning the administration of the accounts maintained by the Federal Reserve Bank of New York with the foreign banks designated by the Board of Governors under Section 214.5 of Regulation N shall be referred for review and approval to the Committee. 5. Foreign currency holdings shall be invested to ensure that adequate liquidity is maintained to meet anticipated needs and so that each currency portfolio shall generally have an average duration of no more than 18 months (calculated as Macaulay duration). When appropriate in connection with arrangements to provide investment facilities for foreign currency holdings, U.S. Government securi 429 ties may be purchased from foreign central banks under agreements for repurchase of such securities within 30 calendar days. 6. All operations undertaken pursuant to the preceding paragraphs shall be reported promptly to the Foreign Currency Subcommittee and the Committee. The Foreign Currency Subcommittee consists of the Chairman and Vice Chairman of the Committee, the Vice Chairman of the Board of Governors, and such other member of the Board as the Chairman may designate (or in the absence of members of the Board serving on the Subcommittee, other Board members designated by the Chairman as alternates, and in the absence of the Vice Chairman of the Committee, his alternate). Meetings of the Subcommittee shall be called at the request of any member, or at the request of the Manager, System Open Market Account ("Manager"), for the purposes of reviewing recent or contemplated operations and of consulting with the Manager on other matters relating to his responsibilities. At the request of any member of the Subcommittee, questions arising from such reviews and consultations shall be referred for determination to the Federal Open Market Committee. 7. The Chairman is authorized: A. With the approval of the Committee, to enter into any needed agreement or understanding with the Secretary of the Treasury about the division of responsibility for foreign currency operations between the System and the Treasury; B. To keep the Secretary of the Treasury fully advised concerning System foreign currency operations, and to consult with the Secretary on policy matters relating to foreign currency operations; C. From time to time, to transmit appropriate reports and information to the National Advisory Council on International Monetary and Financial Policies. 8. Staff officers of the Committee are authorized to transmit pertinent information on System foreign currency operations to appropriate officials of the Treasury Department. 9. All Federal Reserve Banks shall participate in the foreign currency operations for System Account in accordance with paragraph 3 G(l) of the Board of Governors' Statement of Procedure with Respect to Foreign Relationships of Federal Reserve Banks dated January 1, 1944. FOREIGN CURRENCY DIRECTIVE Amended February 2, 1999 1. System operations in foreign currencies shall generally be directed at countering disorderly market conditions, provided that market exchange rates for the U.S. dollar reflect actions and behavior consistent with the IMF Article IV, Section 1. 2. To achieve this end the System shall: A. Undertake spot and forward purchases and sales of foreign exchange. B. Maintain reciprocal currency ("swap") arrangements with selected foreign central banks. C. Cooperate in other respects with central banks of other countries and with international monetary institutions. 3. Transactions may also be undertaken: 430 Federal Reserve Bulletin • June 1999 A. To adjust System balances in light of probable future needs for currencies. B. To provide means for meeting System and Treasury commitments in particular currencies and to facilitate operations of the Exchange Stabilization Fund. C. For such other purposes as may be expressly authorized by the Committee. 4. System foreign currency operations shall be conducted: A. In close and continuous consultation and cooperation with the United States Treasury; B. In cooperation, as appropriate, with foreign monetary authorities; and C. In a manner consistent with the obligations of the United States in the International Monetary Fund regarding exchange arrangements under the IMF Article IV. By unanimous vote, the Procedural Instructions with Respect to Foreign Currency Operations shown below were reaffirmed. PROCEDURAL INSTRUCTIONS WITH RESPECT TO FOREIGN CURRENCY OPERATIONS Reaffirmed February 2, 1999 In conducting operations pursuant to the authorization and direction of the Federal Open Market Committee as set forth in the Authorization for Foreign Currency Operations and the Foreign Currency Directive, the Federal Reserve Bank of New York, through the Manager, System Open Market Account ("Manager"), shall be guided by the following procedural understandings with respect to consultations and clearances with the Committee, the Foreign Currency Subcommittee, and the Chairman of the Committee. All operations undertaken pursuant to such clearances shall be reported promptly to the Committee. 1. The Manager shall clear with the Subcommittee (or with the Chairman, if the Chairman believes that consultation with the Subcommittee is not feasible in the time available): A. Any operation that would result in a change in the System's overall open position in foreign currencies exceeding $300 million on any day or $600 million since the most recent regular meeting of the Committee. B. Any operation that would result in a change on any day in the System's net position in a single foreign currency exceeding $150 million, or $300 million when the operation is associated with repayment of swap drawings. C. Any operation that might generate a substantial volume of trading in a particular currency by the System, even though the change in the System's net position in that currency might be less than the limits specified in l.B. D. Any swap drawing proposed by a foreign bank not exceeding the larger of (i) $200 million or (ii) 15 percent of the size of the swap arrangement. 2. The Manager shall clear with the Committee (or with the Subcommittee, if the Subcommittee believes that consultation with the full Committee is not feasible in the time available, or with the Chairman, if the Chairman believes that consultation with the Subcommittee is not feasible in the time available): A. Any operation that would result in a change in the System's overall open position in foreign currencies exceeding $1.5 billion since the most recent regular meeting of the Committee. B. Any swap drawing proposed by a foreign bank exceeding the larger of (i) $200 million or (ii) 15 percent of the size of the swap arrangement. 3. The Manager shall also consult with the Subcommittee or the Chairman about proposed swap drawings by the System and about any operations that are not of a routine character. On January 27, 1999, the continuing rules, regulations, and other instructions of the Committee had been distributed with the advice that, in accordance with procedures approved by the Committee, they were being called to the Committee's attention before the February 2-3 meeting to give members an opportunity to raise any questions they might have concerning them. Members were asked to indicate if they wished to have any of the instruments in question placed on the agenda for consideration at this meeting, and no requests for consideration were received. Accordingly, all of these instruments remained in effect in their existing form. The Committee discussed proposed changes to the Program for Security of FOMC Information to update the document with regard to certain security classifications and access to confidential FOMC information. The Committee decided to continue its discussion at a later meeting. By unanimous vote, the minutes of the meeting of the Federal Open Market Committee held on December 22, 1998, 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 December 22, 1998, through February 2, 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, followed by the domestic policy directive that was approved by the Committee and issued to the Federal Reserve Bank of New York. The information reviewed at this meeting suggested that the economy expanded rapidly in the Minutes of the Federal Open Market Committee closing months of 1998. Widespread strength in domestic final demand and a diminished drag from net exports underpinned further solid gains in production, employment, and income. Inflation remained subdued despite very tight labor markets. Nonfarm payroll employment recorded robust increases in November and December. Although manufacturing experienced further sizable job losses over the two months, strong employment gains were achieved in construction, retail trade, and the services industries. The civilian unemployment rate fell to 4.3 percent in December, and other measures of labor conditions also indicated that labor markets remained quite tight through year-end. Industrial production rebounded in December from a small November decline. Industrial output strengthened for the fourth quarter as a whole, largely reflecting a surge in the production of motor vehicles and parts that more than offset sizable reductions in mining and utility output. The manufacture of high-tech equipment surged further and the production of construction supplies stayed on a brisk upward trend, while activity in other manufacturing categories remained weak. On balance, output in manufacturing expanded at about the same pace as capacity, leaving the factory operating rate unchanged at a relatively low level. Consumer spending, supported by further sizable gains in income and net worth, remained robust through year-end. Retail sales rose sharply in the fourth quarter. Expenditures for durable goods, particularly motor vehicles, were very strong. Outlays for nondurable goods were brisk despite sluggish growth in spending for apparel. Unseasonably mild weather held down spending for energy services in November and December, but purchases of other types of services recorded moderate increases. Surveys in early 1999 indicated buoyant consumer sentiment, reflecting optimism about personal finances and the employment outlook. Residential housing activity continued to display substantial strength in the fourth quarter. Singlefamily housing starts remained at a very high level in December, and sales of new homes in that month were only slightly below the record established in November. Sales of existing homes hit a record high in December. Unseasonably favorable weather extended the construction season in some areas of the country, but low mortgage rates, rapid employment growth, rising net worth, and special financing programs designed to broaden opportunities for homeownership were important factors in the strength of home sales. Multifamily housing starts edged lower in the fourth quarter as a December increase 431 partially reversed a November decline; rents have continued to rise in real terms over the last several years, but vacancy rates have changed little. Business fixed investment picked up markedly in the fourth quarter after the small decline of the previous quarter. Much of the surge in spending on producers' durable equipment was attributable to a pickup in purchases of motor vehicles and aircraft. Elsewhere, investment in high-tech equipment expanded rapidly further, while spending for other types of durable equipment decelerated somewhat. Nonresidential construction activity apparently rose moderately in the fourth quarter. Office construction picked up further in an environment of falling vacancy rates and rising rental costs, but other building activity remained sluggish. The pace of business inventory investment in October and November was slightly above that of the third quarter, but in comparison with strong sales inventory positions were relatively lean in most industries. In manufacturing, stocks increased moderately in the October-November period, and the aggregate stockshipments ratio was in the middle of its narrow range for the past year. Inventory investment in the wholesale sector slowed considerably, but much of the swing reflected the unusually early harvest of farm products. The inventory-sales ratio for this sector was still at the top of its range for the last year, and inventory overhangs persisted in metals and minerals, machinery, and chemicals. Retailers stepped up their inventory accumulation in the October-November period. However, sales were robust and the inventory-sales ratio for this sector continued to trend downward. The average deficit on U.S. trade in goods and services for October and November was a little smaller than the rate for the third quarter. The value of exports for the two-month period rose considerably, with the largest gains occurring in automotive products shipped to Canada, aircraft, machinery, agricultural products, and services. The value of imports also moved up, but by less than the value of exports. While the increases in imports were widespread across trade categories, particularly large advances were recorded for automotive products from Canada and Mexico and for computers. The available data suggested a weaker economic performance in most of the major foreign industrial countries in the fourth quarter; economic activity likely fell further in Japan, and economic growth apparently slowed in most countries of the euro bloc. Activity in most Asian developing countries remained depressed, though some seemed to be approaching a trough and Korea appeared to be in the early stages of a recovery. 432 Federal Reserve Bulletin • June 1999 Moreover, economic conditions worsened in most Latin American economies. Inflation remained low in 1998. Consumer prices changed little in December, reflecting a sizable drop in energy prices that offset the large increase in tobacco prices put in place after a settlement was reached between the states and the tobacco makers. For 1998 as a whole, CPI inflation was slightly lower than in 1997; a substantial decline in energy prices more than offset a sizable pickup in food inflation and a small increase in core inflation. At the producer level, prices of finished goods edged down in 1998 following an appreciable decline in 1997. While finished energy prices fell by more in 1998, finished food prices were down only slightly and prices of core finished goods turned up after having been unchanged in 1997. Growth of hourly compensation of private industry workers slowed considerably in the fourth quarter of 1998, and the increase in hourly compensation for the year was little changed from that of 1997. At its meeting on December 22,1998, the Committee adopted a directive that called for maintaining conditions in reserve markets that were consistent with an unchanged federal funds rate of about 43A percent and that did not contain any bias with regard to the direction of possible adjustments to policy during the intermeeting period. In the Committee's view, the stance of policy appeared to be consistent with its objectives of fostering sustained low inflation and high employment, and the risks to this outlook were reasonably well balanced over the near term. Open market operations during the intermeeting period were directed toward maintaining the federal funds rate at the Committee's desired level. In the event, however, the rate averaged a little below its intended level, largely reflecting the efforts of the Trading Desk to keep reserve pressures around yearend to a minimum. Other short-term market rates declined somewhat on balance, partly owing to the disappearance of year-end pressures. Most long-term interest rates changed little over the intermeeting period, but Treasury bond yields moved up slightly on balance, apparently in response to incoming data suggesting stronger-than-expected economic growth. In foreign exchange markets, the trade-weighted value of the dollar appreciated slightly on balance over the period. A small decline in the dollar relative to other major currencies was more than offset by the dollar's appreciation in terms of the currencies of a broader group of countries that also are important trading partners of the United States. The dollar appreciated against the euro following the release of data confirming a slowdown of economic growth in much of the euro area and the absence of inflationary pressures, and it rose against the British pound after the Bank of England unexpectedly cut its repo rate. Moreover, the economic crisis in Brazil apparently contributed to an increase in the dollar relative to some emerging market currencies. Against the yen, however, the dollar fell in early January to its lowest level in more than two years, evidently in response to sharp increases in yields on Japanese bonds, but the decline was partially reversed subsequently. M2 and M3 continued to expand rapidly in December, with their liquid components, especially money market funds, registering particularly large increases. The effects of recent monetary policy easings in reducing the opportunity costs of these components, strong growth in GDP, and perhaps continued heightened demands for liquid and safe assets seemed to have contributed to this performance. Available data for January pointed to appreciable moderation in the growth of both aggregates. From the fourth quarter of 1997 to the fourth quarter of 1998, M2 and M3 rose at rates well above their annual ranges, while total domestic nonfinancial debt expanded at a pace somewhat above the middle of its range. The staff forecast prepared for this meeting pointed to a substantial moderation in the expansion to a rate commensurate with the growth of the economy's 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 slow growth of spending on consumer durables, housing units, and business capital goods after the earlier buildup in the stocks of these items. Subdued expansion of foreign economic activity and 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 near current levels and inflation was projected to rise somewhat over the projection horizon, largely as a result of an expected upturn in energy prices. In the Committee's discussion of current and prospective economic conditions, members referred to continuing indications of an exceptional economic performance that was characterized by the persistence of quite low inflation despite very high and rapidly rising levels of overall output and employment. The members currently saw few signs that the economic expansion had moderated to a more sustainable rate, but most continued to anticipate substantial slowing over the year ahead to a pace close to Minutes of the Federal Open Market Committee or somewhat above that of the economy's long-run potential. While many agreed that such an outlook was subject to greater upside risk than they had anticipated a few months ago—given the abatement of market turmoil and positive business and consumer sentiment—such factors as the waning effects of the earlier increases in stock market wealth on consumer spending and some slowing in the extraordinary growth in business expenditures for equipment were likely to exert a moderating effect on the expansion. Moreover, potentially greater weakness in foreign economies and possible disruption to foreign financial markets remained a downside risk to the outlook. Against this background, the members generally anticipated some pickup in inflation, though to a still relatively low rate, primarily as last year's declines in oil and other import prices were not repeated. A number referred, however, to the experience of recent years, which suggested that the inflation process was not well understood and that inflation forecasts were subject to a wide range of uncertainty. In keeping with the practice at meetings just before the Federal Reserve's semiannual monetary policy report to the Congress and the Chairman's associated testimony, the members of the Committee and the Federal Reserve Bank presidents not currently serving as members had provided individual projections of the growth in real and nominal GDP, the rate of unemployment, and the rate of inflation for the year 1999. Their forecasts of the rate of expansion in real GDP in 1999 had a central tendency of 2Vi to 3 percent and a full range of 2 to VA percent. Such growth was expected to be associated with a civilian unemployment rate in a range centering on AVA to AVI percent in the fourth quarter of this year, implying little or no change from the current level. With regard to nominal GDP growth in 1999, the forecasts were mainly in a range of 4 to ALH percent, with an overall range of 33A to 5 percent. Projections of the rate of inflation, as measured by the consumer price index, had a central tendency of 2 to 2Vi percent, somewhat above the outcome for 1998 when the rise in the index was held down by a marked decline in energy prices and reduced prices of non-oil imports. In their review of developments across the nation, members reported a mix of high overall levels of economic activity in every region but softness in a number of specific business activities, notably those affected by foreign competition. In particular, many manufacturing firms along with businesses engaged in agriculture, mining, and energy were being adversely affected by weak demand in foreign markets, strong import competition, and depressed oil 433 and other commodity prices in world markets. Foreign developments were seen as a continuing element of weakness for the U.S. economy and also as a major source of uncertainty in the outlook for the year ahead. In this regard many members referred in particular to the problems facing Brazil and the risk that further financial and economic instability in that nation would spread to other Latin American countries, with repercussions on the U.S. economy. Markets in the major trading nations around the world were likely to remain on the soft side, with Japan struggling to recover from its ongoing recession and economic growth in Europe showing signs of becoming more sluggish. Robust domestic demand clearly had offset weakness in net exports by a large margin in 1998, and while the growth in such demand was projected to slow this year it was expected to remain sufficient to support appreciable further expansion in overall economic activity. Consumer spending had exhibited considerable vigor during the recent holiday season, and anecdotal reports from several regions suggested that the momentum in such spending had carried into the opening weeks of this year. Further, though prospectively moderating, growth in jobs and incomes, supportive credit conditions, and upbeat consumer sentiment suggested that consumer expenditures were likely to be well maintained over coming quarters. Even so, members anticipated at least some moderation in the growth of consumption after an extended period of sizable accumulation of consumer durable goods. Among other factors, the positive effects on consumer spending of the large accumulation of stock market wealth in recent years were likely to abate over time in the absence of a further and unanticipated surge in stock market prices. Growth in business capital spending also was expected to moderate as the year progressed to a pace well below that experienced in recent years. Members commented in this regard that slowing growth in overall spending normally fostered reduced capital investment, and indeed developments in the second half of 1998 suggested that such investment might already be on a less strong uptrend. Moreover, the prospects of reduced growth in profits and a less ebullient stock market could also be expected to damp business fixed investment. Nonetheless, growth in such investment likely would continue to exceed that of overall spending, reflecting ongoing efforts to improve efficiency and hold down labor costs in highly competitive markets and more generally to take advantage of the declining costs of business equipment and the rapid pace of technological innovation. Members also cited reports from contacts in 434 Federal Reserve Bulletin • June 1999 various sectors of the economy and areas of the country that business plans continued to call for substantial outlays for business equipment. Nonresidential building activity remained robust in several regions, but given already ample capacity in many sectors, the prospects for such construction were relatively weak. Housing activity had continued to display impressive strength in many parts of the country, evidently reflecting rapid growth in employment and incomes, rising household net worth, and low mortgage interest rates. With the affordability of new homes expected to remain unusually attractive, the members anticipated that housing activity would be sustained at a high level. Some moderation in housing starts from recent peak levels appeared likely, however, in the context of the slowing in job and income gains associated with the members' overall forecasts. With regard to the outlook for inflation, the members saw no evidence of accelerating price inflation despite high levels of business activity and very tight labor markets across most of the nation. Indeed, the conjuncture over an extended period of strong economic growth, very low rates of unemployment, and the absence of any buildup of inflation could not be explained in terms of normal historical relationships. While temporary factors, such as declining oil prices, had played a role in depressing inflation, the persistence of very low inflation under these conditions most likely also resulted from more lasting changes in economic relationships. These were perhaps best evidenced by the widespread inability of business firms to raise prices because of strong competitive pressures in domestic and global markets and the related efforts to hold down costs, including labor costs. Contributing importantly to the success of those cost-saving efforts were the continued rapid growth of increasingly efficient business capital. The accumulation of such capital evidently had greatly enhanced productivity in a broad range of economic activities. In this regard, available indicators suggested that productivity gains had essentially matched increases in labor costs for nonfinancial corporations over the past year. Members also cited widespread expectations of low inflation as an important underlying factor in moderating wage and price increases. Looking ahead, an abatement or reversal of some of the temporary factors reducing prices was likely to raise measured inflation. The course of underlying inflation pressures was more difficult to gauge, however. If growth slowed to trend, as many expected, uncertainty about evolving relationships among economic activity, productivity growth, and wages made it unclear whether the enhanced competitiveness in many markets and greater cost reducing efforts of businesses would be sufficient to continue to hold price increases in check at the current degree of tautness in labor markets. Members generally agreed that if labor markets continued to tighten, cost and price pressures would begin to pick up. Some members also expressed concern that rapid money growth, should it persist, would suggest that monetary policy was too accommodative to contain inflation pressures. On balance, while a somewhat less favorable inflation performance was viewed as likely over the year ahead, the members did not anticipate any substantial deterioration in the inflation climate if growth in economic activity approximated the central tendency of their forecasts. In keeping with the requirements of the Full Employment and Balanced Growth Act of 1978 (the Humphrey-Hawkins Act), the Committee reviewed the ranges for growth of the monetary and debt aggregates in 1999 that it had established on a tentative basis in early July 1998. Those ranges included expansion of 1 to 5 percent for M2 and 2 to 6 percent for M3, measured from the fourth quarter of 1998 to the fourth quarter of 1999. The associated range for growth of total domestic nonfinancial sector debt was provisionally set at 3 to 7 percent for 1999. The tentative ranges for 1999 were unchanged from the ranges that had been adopted for the past several years. All the members endorsed a proposal to adopt the growth ranges for M2 and M3 in 1999 that had been established on a provisional basis in July of last year. According to a staff analysis, growth of these aggregates would moderate considerably this year but was likely to remain above the tentative ranges, especially in the case of M3. The rapid growth of M2 and M3 in 1998 was associated with outsized declines in their velocities that appeared to have resulted in part from the turbulent behavior of financial markets and related efforts by the public to move funds to relatively safe and liquid assets and to turn to banks for credit. Other factors appear to have included some rechanneling of financial flows into moneytype balances after an extended period of surging stock market prices and the drop in the opportunity cost of holding money as market interest rates fell over the latter part of the year. The expansion of M3 was further stimulated by the ongoing strength in institution-only money market funds whose popularity as a cash management tool continued to grow. The calming of financial markets and forecasts of moderating nominal GDP growth pointed to reduced growth in the broad monetary aggregates this year. However, it was clear that substantial uncertainty still Minutes of the Federal Open Market Committee surrounded any projection of monetary expansion and the linkage between particular rates of money growth over a year and the basic objectives of monetary policy. In these circumstances, the members did not see any firm basis for deviating from the practice in recent years of setting ranges that, assuming velocity behavior consistent with average historical patterns, would serve as benchmarks for monetary expansion consistent with longer-run price stability and a sustainable rate of real economic growth. Domestic nonfinancial debt, which had grown at a rate in the upper part of its 3 to 7 percent range in 1998, was thought likely to remain within that range this year, indeed near the midpoint of the range according to a staff analysis. Outstanding federal debt was expected to contract by a larger amount this year and, given current economic forecasts, the debt of the major nonfinancial sectors of the economy seemed likely to grow a bit more slowly. Thus, the members saw no reason to depart from the tentative range for nonfinancial debt, which was expected to readily encompass the likely rate of growth in this aggregate. At the conclusion of this review, the Committee voted to approve without change the ranges for 1999 that it had established on a tentative basis on July 1, 1998. Accordingly, the following statement of longerrun policy and growth ranges for 1999 was approved for inclusion in the domestic policy directive: 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 this meeting 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. Votes for this action: Messrs. Greenspan, McDonough, Boehne, Ferguson, Gramlich, Kelley, McTeer, Meyer, Moskow, Ms. Rivlin, and Mr. Stern. Votes against this action: None. In the Committee's discussion of policy for the intermeeting period ahead, all the members favored an unchanged policy stance. Many were concerned that the odds were tilted toward rising inflation over time, especially if the expansion did not slow to a more sustainable rate. Members commented that the market unsettlement that had in large measure prompted the Committee's easing actions during the fall had now lessened appreciably. In the view of some, those actions might need to be reversed, at 435 least in part, to restore what they regarded as a policy stance that seemed most likely to prove consistent with desirable economic trends. Still, the persistence of subdued inflation and the absence of current evidence of accelerating inflation were seen as arguing against a policy tightening move at this point. Moreover, it was clear that the outlook for economic activity was subject to considerable uncertainty and that some shortfall from current forecasts, perhaps in conjunction with unexpectedly adverse trade and financial influences stemming from developments abroad, might materialize and damp inflationary demand pressures. Even in the absence of greaterthan-anticipated slowing in the economic expansion, the experience of recent years had amply demonstrated that the relationship between demand pressures on resources and inflation was not following historical patterns, and developments exerting a more lasting moderating effect on inflation, such as more productive capital investment and effective access to spare capacity overseas, could help to contain inflation for some time. Against this background, the members agreed on the need to continue to monitor the economy with care for signs either of a potential upturn in inflation or greater softness in the expansion than they were currently forecasting and to be prepared to respond promptly in either direction. In light of the uncertainties and diversity of risks surrounding the economic outlook, most members were in favor of retaining the existing symmetry of the directive. In one view, however, the risks of rising inflation were strong enough to warrant consideration of an asymmetrical directive that was tilted toward restraint. Nonetheless, since inflation was difficult to predict and any needed adjustment to policy in the period ahead could readily be implemented even with a symmetrical directive, all the members indicated that they could accept such a directive. 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 economy expanded rapidly in the closing months of 1998. Nonfarm payroll employment posted strong gains in November and December, and the civilian unemployment rate fell to 4.3 percent in December. Total industrial production strengthened in the fourth quarter, owing in large measure to a surge in the production of motor vehicles and parts. Total retail sales rose sharply in the fourth quarter, and home sales and housing starts increased appreciably. Available indicators suggest that business capital spending picked up markedly in the fourth quarter after a lull in the 436 Federal Reserve Bulletin • June 1999 third. In November, the nominal deficit on U.S. trade in goods and services was somewhat larger than in October, but the combined October-November deficit was slightly smaller than its third-quarter average. Inflation has remained subdued despite very tight labor markets. Most short-term interest rates have declined somewhat on balance since the meeting on December 22, while longer-term rates have changed little. Share prices in equity markets have posted further sizable gains on balance over the intermeeting period. In foreign exchange markets, the trade-weighted value of the dollar has depreciated slightly over the period in relation to other major currencies but it has appreciated somewhat in terms of the currencies of a broader group that also includes other important trading partners of the United States. M2 and M3 continued to record very large increases in late 1998, but available data pointed to some moderation in January. From the fourth quarter of 1997 to the fourth quarter of 1998, both aggregates rose at rates well above the Committee's annual ranges. Total domestic nonfinancial debt expanded at a pace somewhat above the middle of its range in 1998. 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 this meeting 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. SUNSET LEGISLATION RELATING TO HUMPHREY-HAWKINS REPORTS The Committee discussed the Federal Reports Elimination and Sunset Act of 1995, which provides for the termination of the legal requirements for semiannual Humphrey-Hawkins reports to the Congress after 1999. At this meeting, the members agreed that the semiannual reports and associated congressional hearings had been quite useful and should be continued. They had given the Committee an effective means to explain its policies and communicate its views on a variety of issues and had enhanced its accountability to the public and the Congress. SALE OF EURO RESERVES In a notation vote completed on March 22, 1999, the Committee unanimously approved an off-market sale of approximately $4.8 billion equivalent of the System's euro reserves to the Exchange Stabilization Fund (ESF). In return, the System received $3.4 billion in dollars and $1.4 billion equivalent of Japanese yen from the ESF. The transaction reduced the System's overall holdings of foreign currencies to the level of those held by the ESF and left the resulting balances of euro and yen equal in both the System and ESF accounts. It was agreed that the next meeting of the Committee would be held on Tuesday, March 30, 1999. The meeting adjourned at 11:40 a.m. on February 3, 1999. Donald L. Kohn Secretary 437 Legal Developments JOINT FINAL RULE—AMENDMENT TO RISK-BASED CAPITAL STANDARDS FOR MARKET RISK The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Board), and the Federal Deposit Insurance Corporation (FDIC) (collectively, the agencies) are adopting as a final rule an interim rule amending their respective risk-based capital standards for market risk applicable to certain banks and bank holding companies with significant trading activities. The interim rule implemented a revision to the Basle Accord adopted in 1997. Prior to the revision, an institution that measured specific risk with an internal model that adequately measured such risk was subject to a minimum capital charge. An institution's capital charge for specific risk had to be at least as large as 50 percent of a specific risk charge calculated using the standardized approach. The rule will finalize the interim rule, which reduced regulatory burden for institutions with qualifying internal models because they no longer must calculate a standardized specific risk capital charge. Effective July 1, 1999, 12 C.F.R. Parts 3, 208, 225, and 325 are amended as follows. Appendix E to Part 208—Capital Adequacy Guidelines for State Member Banks; Market Risk Measure 3. In Appendix E to Part 208, section 2., paragraph (b)(2) is revised to read as follows: Section 2.—Definitions (b) * * * (2) Specific risk means changes in the market value of specific positions due to factors other than broad market movements and includes event and default risk as well as idiosyncratic variations. 4. In Appendix E to Part 208, section 5., paragraphs (a), (b), and the introductory text of paragraph (c) are revised to read as follows: Part 3—Risk-Based Capital Standards: Market Risk For the reasons set out in the joint preamble, the OCC's portion of the joint interim rule with request for comment amending 12 C.F.R. parts titled Risk-Based Capital Standards: Market Risk, published on December 30, 1997, at 62 Federal Register 68,067 is adopted as final without change. Part 208—Membership of State Banking Institutions in the Federal Reserve System (Regulation H) 1. The authority citation for Part 208 continues to read as follows: Authority: 12 U.S.C. 24, 36, 92a, 93a, 248(a), 248(c), 321338a, 371d, 461, 481-486, 601, 611, 1814, 1816, 1818, 1823(j), 1828(o), 1831o, 1831p-l, 1831r-l, 1835a, 1882, 2901-2907, 3105, 3310, 3331-3351, and 3906-3909; 15 U.S.C. 78b, 781(b), 781(g), 781(i), 78o-4(c)(5), 78q, 78q-l, and 78w; 31 U.S.C. 5318; 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128. 2. In Appendix E to Part 208, the appendix heading is revised to read as follows: Section 5.—Specific Risk (a) Modeled specific risk. A bank may use its internal model to measure specific risk. If the bank has demonstrated to the Federal Reserve that its internal model measures the specific risk, including event and default risk as well as idiosyncratic variation, of covered debt and equity positions and includes the specific risk measures in the VAR-based capital charge in section 3(a)(2)(i) of this appendix, then the bank has no specific risk add-on for purposes of section 3(a)(2)(ii) of this appendix. The model should explain the historical price variation in the trading portfolio and capture concentration, both magnitude and changes in composition. The model should also be robust to an adverse environment and have been validated through backtesting which assesses whether specific risk is being accurately captured. (b) Partially modeled specific risk. (1) A bank that incorporates specific risk in its internal model but fails to demonstrate to the Federal Reserve that its internal model adequately measures all aspects of specific risk for covered debt and equity positions, including event and default risk, as provided by section 5(a) of the appendix, must 438 Federal Reserve Bulletin • June 1999 calculate its specific risk add-on in accordance with one of the following methods: (i) If the model is susceptible to valid separation of the VAR measure into a specific risk portion and a general market risk portion, then the specific risk add-on is equal to the previous day's specific risk portion. (ii) If the model does not separate the VAR measure into a specific risk portion and a general market risk portion, then the specific risk add-on is the sum of the previous day's VAR measures for subportfolios of covered debt and equity positions that contain specific risk. (2) If a bank models the specific risk of covered debt positions but not covered equity positions (or vice versa), then the bank may determine its specific risk charge for the included positions under section 5(a) or 5(b)(1) of this appendix, as appropriate. The specific risk charge for the positions not included equals the standard specific risk capital charge under paragraph (c) of this section. movements and includes event and default risk as well as idiosyncratic variations. 4. In Appendix E to Part 225, section 5., paragraphs (a), (b), and the introductory text of paragraph (c) are revised to read as follows: Section 5.—Specific Risk (b) * * * (a) Modeled specific risk. A bank holding company may use its internal model to measure specific risk. If the organization has demonstrated to the Federal Reserve that its internal model measures the specific risk, including event and default risk as well as idiosyncratic variation, of covered debt and equity positions and includes the specific risk measures in the VAR-based capital charge in section 3(a)(2)(i) of this appendix, then the organization has no specific risk add-on for purposes of section 3(a)(2)(ii) of this appendix. The model should explain the historical price variation in the trading portfolio and capture concentration, both magnitude and changes in composition. The model should also be robust to an adverse environment and have been validated through backtesting which assesses whether specific risk is being accurately captured. (b) Partially modeled specific risk. (1) A bank holding company that incorporates specific risk in its internal model but fails to demonstrate to the Federal Reserve that its internal model adequately measures all aspects of specific risk for covered debt and equity positions, including event and default risk, as provided by section 5(a) of this appendix, must calculate its specific risk add-on in accordance with one of the following methods: (i) If the model is susceptible to valid separation of the VAR measure into a specific risk portion and a general market risk portion, then the specific risk add-on is equal to the previous day's specific risk portion. (ii) If the model does not separate the VAR measure into a specific risk portion and a general market risk portion, then the specific risk add-on is the sum of the previous day's VAR measures for subportfolios of covered debt and equity positions that contain specific risk. (2) If a bank holding company models the specific risk of covered debt positions but not covered equity positions (or vice versa), then the bank holding company may determine its specific risk charge for the included positions under section 5(a) or 5(b)(1) of this appendix, as appropriate. The specific risk charge for the positions not included equals the standard specific risk capital charge under paragraph (c) of this section. (2) Specific risk means changes in the market value of specific positions due to factors other than broad market (c) Specific risk not modeled. If a bank holding company does not model specific risk in accordance with section (c) Specific risk not modeled. If a bank does not model specific risk in accordance with section 5(a) or 5(b) of this appendix, then the bank's specific risk capital charge shall equal the standard specific risk capital charge, calculated as follows: Part 225—Bank Holding Companies and Change in Bank Control (Regulation Y) 1. The authority citation for Part 225 continues to read as follows: Authority. 12 U.S.C. 1817(j)(13), 1818, 1828(o), 1831i, 1831p-l, 1843(c)(8), 1844(b), 1972(1), 3106, 3108, 3310, 3331-3351, 3907, and 3909. 2. In Appendix E to part 225, the appendix heading is revised to read as follows: Appendix E to Part 225—Capital Adequacy Guidelines for Bank Holding Companies: Market Risk Measure 3. In Appendix E to Part 225, section 2., paragraph (b)(2) is revised to read as follows: Section 2.—Definitions Legal Developments 5(a) or 5(b) of this appendix, then the organization's specific risk capital charge shall equal the standard specific risk capital charge, calculated as follows: Part 325—Capital Maintenance 1. The authority citation for Part 325 continues to read as follows: Authority: 12 U.S.C. 1815(a), 1815(b), 1816, 1818(a), 1818(b), 1818(c), 1818(t), 1819(Tenth), 1828(c), 1828(d), 1828(i), 1828(n), 1828(o), 1831o, 1835, 3907, 3909, 4808; Pub. L. 102-233, 105 Stat. 1761, 1789, 1790 (12 U.S.C. 183In note); Pub. L. 102- 242, 105 Stat. 2236, 2355, 2386 (12 U.S.C. 1828 note). 2. In Appendix C to Part 325, the appendix heading is revised to read as follows: Appendix C to Part 325—Risk-Based Capital For State Non-Member Banks: Market Risk 3. In Appendix C to Part 325, section 2., paragraph (b)(2) is revised to read as follows: Section 2.—Definitions. (b) * * * (2) Specific risk means changes in the market value of specific positions due to factors other than broad market movements and includes event and default risk as well as idiosyncratic variations. 4. In Appendix C to Part 325, section 5., paragraphs (a), (b), and (c) introductory text are revised to read as follows: 439 explain the historical price variation in the trading portfolio and capture concentration, both magnitude and changes in composition. The model should also be robust to an adverse environment and have been validated through backtesting which assesses whether specific risk is being accurately captured. (b) Add-on charge for modeled specific risk. A bank that incorporates specific risk in its internal model but fails to demonstrate to the FDIC that its internal model adequately measures all aspects of specific risk for covered debt and equity positions, including event and default risk, as provided by section 5(a) of this appendix, must calculate the bank's specific risk add-on for purposes of section 3(a)(2)(ii) of this appendix as follows: (1) If the model is capable of valid separation of the VAR measure into a specific risk portion and a general market risk portion, then the specific risk add-on is equal to the previous day's specific risk portion. (2) If the model does not separate the VAR measure into a specific risk portion and a general market risk portion, then the specific risk add-on is the sum of the previous day's VAR measures for subportfolios of covered debt and equity positions. (c) Add-on charge if specific risk is not modeled. If a bank does not model specific risk in accordance with paragraph (a) or (b) of this section, the bank's specific risk add-on charge for purposes of section 3(a)(2)(h) of this appendix equals the sum of the components for covered debt and equity positions. If a bank models, in accordance with paragraph (a) or (b) of this section, the specific risk of covered debt positions but not covered equity positions (or vice versa), then the bank's specific risk add-on charge for the positions not modeled is the component for covered debt or equity positions as appropriate: ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT Orders Issued Under Section 3 of the Bank Holding Company Act ANB Corporation Muncie, Indiana Section 5.—Specific Risk. (a) Modeled specific risk. A bank may use its internal model to measure specific risk. If the bank has demonstrated to the FDIC that its internal model measures the specific risk, including event and default risk as well as idiosyncratic variation, of covered debt and equity positions and includes the specific risk measure in the VARbased capital charge in section 3(a)(2)(i) of this appendix, then the bank has no specific risk add-on for purposes of section 3(a)(2)(ii) of this appendix. The model should Order Approving the Acquisition of a Bank Holding Company ANB Corporation ("ANB"), 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 Farmers State Bancorp ("Bancorp") and thereby to acquire The Farmers State Bank of Union City ("Bank"), both in Union City, Ohio. 440 Federal Reserve Bulletin • June 1999 Notice of 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. ANB is the 33rd largest depository institution in Indiana, controlling deposits of approximately $417.5 million, representing less than 1 percent of total deposits in depository institutions in Indiana ("state deposits").1 Bank is the 179th largest depository institution in Ohio, controlling deposits of $63.3 million, representing less than 1 percent of state deposits. Bank also is the 112th largest depository institution in Indiana, controlling approximately $18.2 million in deposits, representing less than 1 percent of state deposits.2 On consummation of the proposal, ANB would become the 32nd largest depository institution in Indiana, controlling $435.7 million, representing less than 1 percent of state deposits. 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 state3 of such bank holding company, provided that certain conditions are met. For purposes of the BHC Act, the home state of ANB is Indiana, and ANB proposes to acquire a bank in Ohio. The proposed transaction meets all of the conditions for an interstate acquisition that are enumerated in section 3(d).4 In 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 pro- 1. Deposit data are as of June 30, 1998. In this context, depository institutions include commercial banks, savings banks, and savings associations. 2. Bank controls total deposits of $81.5 million, $18.2 million of which are booked in its branch office in Indiana. The balance of the bank's deposits are booked in its main office in Ohio. 3. 12U.S.C. § 1842(d). 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 on the date on which the company became a bank holding company, whichever is later. 12 U.S.C. 1841(o)(4)(C). 4. See 12 U.S.C. §§ 1842(d)(1)(A) & (B) and 1842(d)(2)(A) & (B). ANB is adequately capitalized and adequately managed, as defined by applicable law. Bank has been in existence and operated continuously during the five-year minimum statutory period. On consummation of the proposal, ANB would control less than 10 percent of the total amount of deposits of insured depository institutions in the United States. All other requirements of section 3(d) of the BHC Act would be met on consummation of the proposal. posed 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 effect of the proposal in meeting the convenience and needs of the community to be served. ANB and Bank compete in the Muncie, Indiana, banking market ("Muncie banking market"). 5 The Board has carefully reviewed the competitive effects of the proposal in the Muncie banking market in light of all of the facts of record, including the characteristics of the market and the projected increase in the concentration of total deposits in insured depository institutions in this market ("market deposits") as measured by the Herfindahl-Hirschman Index ("HHI") under the Department of Justice Merger Guidelines ("DOJ Guidelines"). The Board also has carefully considered the number of competitors that would remain in the market after consummation of the proposal. ANB is the second largest depository institution in the Muncie banking market, controlling $355.5 million in deposits, representing 23 percent of market deposits.6 Bank is the seventh largest depository institution in the market, controlling $81.5 million in deposits, representing 5.3 percent of market deposits. On consummation of the proposal, ANB would remain the second largest depository institution in the market, controlling deposits of $437 million, representing 28.3 percent of market deposits. The HHI would increase by 243 points to 2450.7 The Board believes that several characteristics of the Muncie banking market mitigate the proposal's potential anticompetitive effects. First, a significant number of other depository institutions would have the market share and resources to compete effectively in the banking market. Eight bank and thrift institutions, including ANB, would remain in the market after consummation of the proposal, including several multistate banking organizations. Four of 5. The Muncie banking market is defined as Delaware County excluding Salem township; Randolph County excluding Washington and Greensfork townships; Licking and Johnson townships in Blackford County, all in Indiana; and Jackson township in Darke County, Ohio. 6. Market share data are reported as of June 30, 1998. Market share data are based on calculations that 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). 7. Under the revised DOJ Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI exceeds 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 effect of limited-purpose lenders and other nondepository financial entities. Legal Developments these institutions, including ANB, would each control market shares of 9 percent or more of market deposits and several large regional bank holding companies would continue to operate in the market. The Muncie banking market also is attractive for entry. Data for the year ending June 30, 1998 show that the Muncie Metropolitan Statistical Area ("MSA"), which encompasses most of the population of the Muncie banking market, has had a larger increase in total deposits and per capita income than the increase on average in these statistics for other MSAs in Indiana. The market also has recently experienced de novo entry and entry by acquisition, including two entries by acquisition in 1998. Indiana, moreover, permits unrestricted intrastate branching.8 The Department of Justice reviewed the proposal and advised the Board that consummation of the proposal would not likely have any significantly adverse competitive effects in the Muncie banking market or any other relevant banking market. The Federal Deposit Insurance Corporation has been consulted and has not objected to the proposal. Based on all the facts of record, and for the reasons discussed above, the Board concludes that consummation of the proposal is not likely to result in any significantly adverse effects on competition or on the concentration of banking resources in the Muncie banking market or any other relevant banking market, and that competitive factors are consistent with approval of the proposal. Other Considerations 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, the convenience and needs of the communities 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 ANB, its subsidiary banks, and Bank are consistent with approval, as are the other supervisory factors the Board must consider under section 3 of the BHC Act. Considerations related to the convenience and needs of communities to be served, including the records of performance of the institutions involved under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.), also are consistent with approval of the proposal. 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 ANB 8. Ind. Code Ann. §§ 28-2-13-19 & 28-2-16-15 (West 1998). 441 with all the commitments made in connection with the application. For the purposes of this order, the commitments and conditions relied on by the Board in reaching its decision are deemed to be conditions imposed in writing by the Board in connection with its findings and decision and, as such, may be enforced in proceedings under applicable law. The transaction shall not be consummated before the fifteenth calendar day after the effective date of this order, or later than three months after the effective date of this order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of Chicago, acting pursuant to delegated authority. By order of the Board of Governors, effective April 1, 1999. Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Meyer, Ferguson, and Gramlich. JENNIFER J. JOHNSON Secretary of the Board Banco Santander, S.A. Madrid, Spain Order Approving Acquisition of a Bank Holding Company Banco Santander, S.A. ("Santander"), 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 BCH-USA, New York, New York ("Bank"), a wholly owned subsidiary bank of Banco Central Hispanoamericano, S.A., Madrid, Spain ("BCH"). 1 Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (64 Federal Register 9995 (1999)). The time for filing comments has expired, and the Board has considered the application and all comments received in light of the factors set forth in section 3 of the BHC Act. Santander, with total consolidated assets of approximately $181 billion, is the largest banking organization in Spain.2 In the United States, Santander operates a branch in New York, New York; and an agency and an Edge corporation in Miami, Florida. Santander also controls Banco Santander Puerto Rico, San Juan, Puerto Rico ("Santander- 1. Santander and BCH are two large foreign banks headquartered in Spain, each with modest operations in the United States. This application involves a review of the proposed combination of the U.S. operations of these banks as part of a merger of BCH with and into Santander, in which Santander would be the surviving corporation. On consummation, Santander would change its corporate name to "Banco Santander Central Hispano, S.A." Santander also has applied under the International Banking Act, 12 U.S.C. § 3101 et seq., to retain BCH's direct U.S. branches and other offices. That application will be considered separately. 2. Asset data are as of December 31, 1998, using exchange rates then in effect. Ranking data are as of December 31, 1997. 442 Federal Reserve Bulletin • June 1999 PR"), a subsidiary bank that also maintains a branch in New York, New York. Santander also has an indirect interest in Citizens Financial Group, Inc., Providence, Rhode Island, a registered bank holding company.3 In addition, Santander engages directly and through subsidiaries in a number of permissible nonbanking activities in the United States. BCH, with total consolidated assets of approximately $95 billion, is the third largest banking organization in Spain. In addition to Bank, BCH's U.S. banking operations consist of branches in New York, New York, and Miami, Florida. would result in an increase of less than one point in the Herfindahl-Hirschman Index ("HHI") for the Metropolitan New York-New Jersey banking market. The banking market would remain unconcentrated with numerous competitors operating in the market.8 Based on all the facts of record, the Board concludes that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in the Metropolitan New York-New Jersey banking market or any other relevant banking market. Interstate Analysis 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. Santander'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. Bank's capital ratios exceed the "well capitalized" thresholds and would be unchanged by this transaction. Based on these and all the other facts of record, including confidential examination and other supervisory information concerning the foreign banks involved in the proposal and their existing U.S. operations and the commitments provided in this case, the Board concludes that financial and managerial factors are consistent with approval.9 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 such bank holding company if certain conditions are met.4 For purposes of the BHC Act, the home state of Santander is Rhode Island and Santander proposes to acquire control of a bank in New York.5 All the conditions for an interstate acquisition under section 3(d) are met in this case.6 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 As noted above, Santander and BCH operate various banking entities that compete in the Metropolitan New YorkNew Jersey banking market.7 Each of these banking entities is relatively small and consummation of the proposal 3. Santander owns its indirect minority interest in Citizens Financial Group, Inc. ("Citizens") through The Royal Bank of Scotland Group pic and its subsidiary, The Royal Bank of Scotland pic, both of Edinburgh, Scotland. See Banco de Santander, S.A. de Credito, 78 Federal Reserve Bulletin 60 (1992). 4. 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 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). 5. For purposes of section 3(d) of the BHC Act, the home state of Santander is Rhode Island by virtue of Santander's indirect ownership interest in Citizens, a bank holding company in Providence, Rhode Island. See The Royal Bank of Scotland Group pic, 82 Federal Reserve Bulletin 428 (1996). 6. 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). Santander meets the capital and managerial requirements established by applicable law. On consummation of the proposal, Santander and its affiliates would control less than 10 percent of the total amount of deposits of insured depository institutions in the United States, and less than 30 percent of the total amount of deposits in New York. See N.Y. Banking Law § 142-a (McKinney 1999). All other requirements of section 3(d) of the BHC Act also would be met on consummation of the proposal. 7. The Metropolitan New York-New Jersey 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 Counties, and a portion of Mercer Financial and Managerial Considerations County in New Jersey; Pike County in Pennsylvania; and portions of Fairfield and Litchfield Counties in Connecticut. 8. Market share data used to analyze the competitive effects of the proposal are as of June 30, 1997, and are based on calculations in which the deposits of thrift institutions are included at 50 percent. The HHI for the Metropolitan New York-New Jersey banking market would remain at 761 after consummation of the proposal. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (1984), a market in which the post-merger HHI is less than 1000 is considered to be unconcentrated. The Department of Justice has informed the Board that a bank merger or acquisition 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 and acquisitions for anticompetitive effects implicitly recognize the competitive effects of limitedpurpose lenders and other nondepository financial entities. 9. On May 18, 1998, the Board issued a temporary cease and desist order (the "Order") pursuant to section 8(c) of the Federal Deposit Insurance Act (12 U.S.C. § 1818(c)) against Santander to address deficiencies in its anti-money laundering programs. See Issuance of Enforcement Actions, 84 Federal Reserve Bulletin 539 (1998). The Order arose out of an investigation into the improper activities of two employees of Santander's subsidiary bank in Mexico, Banco Santander Mexicano, S.A. In response to the Order, Santander completed an internal investigation of the subject accounts and transactions and reported its findings to the appropriate U.S. and Mexican authorities. In addition, Santander, with the assistance of outside counsel and independent auditors, conducted a review of its anti-money laundering policies and on June 30, 1998, submitted a confidential report to the Board on the adequacy of its procedures and a plan designed to ensure that the conduct described in the Order would not occur in the future. The Board received a comment from Inner City Press/Community on the Move ("Protestant") stating that the issues raised by the Order Legal Developments Convenience and Needs Considerations 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. The Board has long held that consideration of the convenience and needs factor includes a review of the records of the relevant depository institutions under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). 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 financial supervisory agency. CRA Performance Examinations. Santander-PR, the only Santander banking operation that is subject to the CRA, received an "outstanding" rating at its most recent CRA performance evaluation from its primary federal financial supervisory agency, the Federal Deposit Insurance Corporation ("FDIC"), as of October 14, 1997.10 Bank received a "satisfactory" rating from the FDIC at its most recent CRA performance evaluation, as of December 31, 1998.11 Santander's CRA Performance Record. According to examiners, Santander-PR's lending activities reflected responsiveness to credit needs in the bank's assessment area.12 From January 1 through September 30, 1997, Santander-PR originated more than 3,200 small business loans, totaling more than $247 million, and more than 100 small farm loans, totaling more than $9 million. Of these loans, Santander originated more than 400 of the small business loans, totaling more than $36 million, and 16 of the small farm loans, totaling more than $700,000 in lowand moderate-income ("LMI") census tracts. Examiners stated that from October 1, 1996, through September 30, 1997, Santander-PR originated 180 Small were grounds on which the application should be denied. In light of Santander's compliance with the Order to date, and its other efforts, the Board concludes that these matters do not warrant denial of the proposal. 10. Santander-PR also received an "outstanding" rating at its CRA performance evaluation by the FDIC, as of September 18, 1995. Examiners noted in the October 14, 1997, CRA performance evaluation that Santander-PR's branch in New York, New York, does not generally engage in domestic retail deposit or lending activities. The examiners found that the branch had performed in a satisfactory manner under the CRA when the branch was compared to similar institutions in the assessment area. 11. Bank received "needs to improve" ratings from the FDIC in two prior CRA performance evaluations, as of July 15, 1996, and May 31, 1995. Protestant argues that these earlier CRA ratings support a denial of the proposal. Bank's current CRA performance evaluation was recently completed by the FDIC, and its rating of "satisfactory" was announced by the bank after the date of Protestant's comment letter. 12. Examiners noted that Santander-PR did not engage in residential mortgage lending, but that Bank's affiliate, Santander Mortgage Corporation ("SMC"), offered affordable and first-time buyer programs sponsored by the Government National Mortgage Association. In addition, examiners stated that SMC offered Federal Housing Administration and Veterans Administration mortgage products. 443 Business Administration ("SBA") loans totaling more than $26 million. Examiners noted that Santander-PR had been designated a "Preferred Lender" and "Certified Lender" by the SBA. Examiners also commended the bank on the distribution of its loans to businesses of different sizes. Of the small business loans made by Santander-PR since its last CRA evaluation, 22 percent were to businesses with gross annual revenues of less than $50,000, and 74 percent were to businesses with gross annual revenues of less than $250,000. Examiners also noted that Santander-PR had made $81 million in qualified community development loans since its October 1995 CRA evaluation, including a loan to a consortium of small poultry processors under the Rural Housing and Community Development Service guarantee program to construct a poultry processing facility in a low-income census tract in Salinas, Puerto Rico; a loan to a builder under the affordable housing guidelines set by the Government Development Bank of Puerto Rico to construct 49 single-family homes in a moderate-income census tract in Barceloneta, Puerto Rico; and a loan to construct a condominium project in a moderate-income census tract in Rio Piedras, Puerto Rico, with one-third of the units designated for affordable housing. Bank's CRA Performance Record. On May 21, 1998, the FDIC granted Bank's request for designation as a "wholesale institution" for purposes of evaluation under the CRA, and Bank's CRA activities have been focused on lending to community development intermediaries operating in its assessment area.13 At Bank's December 31, 1998 examination, examiners noted that Bank's CRA performance had improved since its previous CRA performance evaluation because the bank had improved its ascertainment and financial support of local community development initiatives consistent with its resources and capabilities. Examiners noted that Bank's community development lending (including new originations from January 1997 through December 1998 and prior loans funded with outstanding balances) totaled more than $1 million. Examiners stated that, since its last CRA examination, Bank has increased its community development lending by providing six commitments totaling $900,000, representing a 600 percent increase in funding.14 Examiners also stated that Bank's levels of qualified investments and community development service since its prior CRA evaluation were adequate. 13. See 12 C.F.R. 345.25 (community development test for wholesale institutions). 14. These commitments included a $150,000 three-year term loan to a nonprofit community development financial institution to assist with the construction of affordable housing; a three-year, low-interest $200,000 loan to a nonprofit community development support organization that acts as an intermediary by channeling grants, loans, and equity investments to underserved communities; and a two-year, lowinterest $150,000 loan to the capitalization program of a nonprofit association that assists community development credit unions serving low-income communities and community groups seeking to form credit unions. 444 Federal Reserve Bulletin • June 1999 Conclusion on Convenience and Needs Considerations. The Board has carefully considered all the facts of record, including the comments received and the public CRA performance records of the institutions involved. In particular, the Board has considered the efforts by Bank to improve its CRA performance, as verified by the FDIC in a recently concluded CRA performance examination, and the fact that this proposal represents an acquisition by an applicant that has maintained a consistently outstanding CRA performance record. Based on a review of the entire record, including the relevant reports of examination, the Board concludes that considerations relating to the convenience and needs of the communities to be served are consistent with approval. Other Supervisory 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."15 The Board previously determined that Santander was subject to such supervision and regulation,16 and based on all the facts of record, the Board has concluded that Santander continues to be 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 and the International Banking Act ("IBA") (12 U.S.C. § 3101 et seq.). The Board has reviewed restrictions on disclosure in jurisdictions where Santander has material operations and has communicated with relevant banking authorities concerning access to information. Santander has committed that, to the extent not prohibited by applicable law, it will make available to the Board such information on the operations of Santander 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. Santander also has committed to cooperate with the Board to obtain any waivers or exemptions that may be necessary to enable Santander to make any such information available to the 15. 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. See 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 relationship of the bank and its affiliates, to assess the foreign bank's overall financial condition and compliance with law and regulation. See 12 C.F.R. 211.24(c)(l)(ii). 16. See, e.g., Banco Santander, S.A., 82 Federal Reserve Bulletin 833 (1996). Board. In light of these commitments and other facts of record, the Board has concluded that Santander has provided adequate assurances of access to any appropriate information that 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) of the BHC Act are consistent with approval.17 Conclusion Based on the foregoing and all other facts of record, the Board has determined that the application should be, and hereby is, approved. The Board's approval of the proposal is expressly conditioned on Santander's compliance with all the commitments made in connection with the application. The commitments and conditions relied on by the Board in reaching this decision are deemed to be conditions imposed in writing by the Board in connection with its findings and decision and, as such, may be enforced in proceedings under applicable law. The proposal shall not be consummated before the fifteenth calendar day after the effective date of this order, or later than three months after the effective date of this order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of New York, acting pursuant to delegated authority. By order of the Board of Governors, effective April 1, 1999. Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Meyer, Ferguson, and Gramlich. JENNIFER J. JOHNSON Secretary of the Board Community Capital Bancshares, Inc. Albany, Georgia Order Approving Formation of a Bank Holding Company Community Capital Bancshares, Inc. ("CCB") has requested the Board's approval under section 3(a)(1) of the Bank Holding Company Act ("BHC Act") (12 U.S.C. § 1842(a)(1)) to become a bank holding company by acquiring all the voting shares of Albany Bank & Trust, N.A., Albany, Georgia ("Bank"), a de novo bank. Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (64 Federal Register 9155 (1999)). The time for filing 17. Protestant argues that the Board should deny Santander's application because the matters described by the Order referred to in footnote 9 raise questions about whether Santander is subject to comprehensive consolidated supervision by its home country supervisor under section 3 of the BHC Act. As noted above, in light of Santander's compliance with the Order to date, and its other efforts, the Board does not believe that these matters warrant denial of the subject proposal. Legal Developments 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. CCB is a corporation formed for the purpose of acquiring control of Bank.1 The Board previously has noted that establishment of a de novo bank enhances competition in the relevant banking market and is a positive consideration in an application under section 3 of the BHC Act.2 Accordingly, the Board concludes that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in any relevant banking market and that competitive considerations are consistent with approval. Based on all the facts of record, the Board also concludes that the financial and managerial resources and future prospects of CCB and Bank are consistent with approval of the proposal, as are the other supervisory factors the Board must consider under section 3 of the BHC Act. The Board also has considered carefully 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 a comment submitted on behalf of Business Research and Development, Albany, Georgia ("Commenter"). Commenter contends that Bank will not adequately serve the credit and banking needs of minorities nor of low- and moderate-income ("LMI") individuals and neighborhoods in the Albany area. Commenter also contends that Bank has not sufficiently marketed its proposed products and services to African Americans in Albany.3 Bank is a de novo insured depository institution and, accordingly, has no record of performance under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). Bank, however, has established a comprehensive CRA plan that details the products and services that Bank intends to offer to assist in meeting the credit, service and investment needs of Bank's entire community, including LMI neighborhoods. For example, Bank plans to offer a variety of housing-related loans, including first- and second-mortgages, home equity, and home improvement loans. Bank also plans to originate small business loans guaranteed by the Small Business Administration and lines of credit to help agricultural borrowers meet seasonal demand for credit. In addition, Bank intends to make avail- 1. The Office of the Comptroller of the Currency ("OCC") recently approved Bank's application for a national bank charter, subject to the Board's approval of this application. See Letter from John O. Stein, II, Corporate Manager, Southeastern District Office, to Robert E. Lee, dated February 9, 1999. 2. See CFBanc Holdings, Inc., 85 Federal Reserve Bulletin 52 (1999); Wilson Bank Holding Co., 82 Federal Reserve Bulletin 568 (1996). 3. Commenter also contends that African Americans are not fairly represented in the management of CCB and Bank. The racial composition of an applicant's management is not a factor the Board is permitted to consider in acting on an application under section 3 of the BHC Act. The Board notes that the Equal Employment Opportunity Commission has jurisdiction to determine whether banking organizations such as CCB and Bank are in compliance with Federal equal employment opportunity statutes under the regulations of the Department of Labor. See 41 C.F.R. 60-1.7(a), 60-1.40. 445 able consumer loans and student loans to assist in meeting the credit needs of its local community, and to offer workshops in LMI neighborhoods on basic money management skills and the fundamentals of maintaining a bank account. Bank also would offer several types of deposit accounts, including a checking account with a $100 minimum balance, no monthly maintenance fees, and unlimited checkwriting privileges.4 Bank's CRA plan provides that Bank will actively market its products and services throughout its community, including LMI neighborhoods, in several ways, including direct mail and telemarketing programs and the sponsorship of community programs. Bank also has held three public forums in the Albany area to inform members of the local community about Bank's proposed products and services,5 and Bank plans to hold an additional three public forums in the Albany area before commencing operations. The Board notes, moreover, that Bank's President and Chief Executive Officer and Bank's Executive Vice President and Senior Loan Officer recently served in management positions at insured depository institutions that received "outstanding" ratings at their most recent CRA performance evaluation by their appropriate federal supervisory agency. As noted above, the OCC recently approved Bank's application for a national bank charter after considering Bank's proposed assessment area and plans to meet the credit needs of the local community, including LMI areas, in light of substantially similar comments filed by Commenter. Consistent with the CRA, Bank has delineated a local assessment area within which the OCC, Bank's appropriate federal supervisory agency, will evaluate the performance of Bank under the CRA in future examinations. 6 Bank's delineated assessment area includes all of Dougherty County and the southern half of Lee County, both in Georgia. Bank's assessment area includes all of Albany and does not arbitrarily exclude LMI areas. Based on all the facts of record, and for reasons discussed above, the Board concludes that considerations relating to the convenience and needs factor are consistent with approval of the application. The Board notes that the OCC will evaluate Bank's actual record of meeting the credit needs of the Albany community, including LMI neighborhoods, in future CRA performance examinations of Bank, and the Board will carefully consider that record in acting on future applications by CCB to acquire an insured depository institution. Based on the foregoing, and in light of all the facts of record, the Board has determined that the application 4. Bank also plans to establish an additional branch in downtown Albany during its third year of operation. This branch would further increase Bank's ability to serve the banking and credit needs of its community, including African-American and LMI residents of Albany. 5. Before holding these public forums, Bank advertised the date, location, and purpose of the forums in a newspaper of general circulation in the Albany area. 6. See 12 C.F.R. 25.41(a). 446 Federal Reserve Bulletin • June 1999 should be, and hereby is, approved.7 The Board's approval is specifically conditioned on compliance by CCB with all the commitments made in connection with the application. For the purpose of this action, the commitments and conditions relied on by the Board in reaching its decision are deemed to be conditions imposed in writing by the Board in connection with its findings and decision and, as such, may be enforced in proceedings under applicable law.8 The acquisition of Bank shall not be consummated before the fifteenth calendar day after the effective date of this order, or later than three months after the effective date of this order, and Bank shall be open for business within six months following the effective date of this order, unless such periods are extended for good cause by the Board or the Federal Reserve Bank of Atlanta, acting pursuant to delegated authority. By order of the Board of Governors, effective April 12, 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 7. Commenter has requested that the Board hold public meetings or hearings 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. The Board has not received such a recommendation from the OCC. 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, if appropriate. 12 C.F.R. 225.16(e). The Board has carefully considered Commenter's request in light of all the facts of record. In the Board's view, Commenter has had ample opportunity to submit its views, and did submit written comments that have been carefully considered by the Board in acting on the proposal. Commenter's request fails to demonstrate why its written comments do not adequately present its evidence and fails 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. 8. Commenter also has requested that the Board delay action on the proposal for at least 90 days. The Board is required under applicable law and its processing procedures to act on applications submitted under the BHC Act within a specified time. The Board has reviewed Commenter's request in light of these requirements and the record compiled in this case. As noted above, Commenter was afforded ample opportunity to comment and its comments were carefully considered. 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 on the proposal at this time, and further delay is not warranted. ORDERS ISSUED UNDER INTERNATIONAL BANKING ACT Banco de Credito e Inversiones S.A. Santiago, Chile Order Approving Establishment of an Agency Banco de Credito e Inversiones S.A. ("Bank"), Santiago, Chile, a foreign bank within the meaning of the International Banking Act ("IBA"), has applied under section 7(d) of the IBA (12 U.S.C. § 3105(d)) to establish an agency in Miami, Florida. The Foreign Bank Supervision Enhancement Act of 1991 ("FBSEA"), which amended the IBA, provides that a foreign bank must obtain the approval of the Board to establish an agency 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 Miami, Florida (The Miami Herald, April 23, 1998). The time for filing comments has expired, and the Board has considered the application and all comments received. Bank, with total consolidated assets of approximately $5.9 billion,1 is the sixth largest bank in Chile. Approximately 70 percent of the shares of Bank are held by related parties.2 Mr. Yarur directly owns less than 1 percent of Bank's shares, and persons related to Mr. Yarur directly and indirectly own another 15 percent of Bank's shares. The remaining shares of Bank are widely held, with no single shareholder owning more than 5 percent of shares.3 Bank engages in a full range of wholesale, retail, and investment banking activities, including deposit-taking, private-sector lending, foreign exchange trading, and traderelated financing. Bank operates 139 branches or offices in Chile. In addition, Bank operates six subsidiaries in Chile, which engage in stock brokerage, mutual fund administration, financial consulting, collections, insurance brokerage, and marketing activities, and owns a one-third equity interest in an unincorporated association that engages in electronic funds clearing activities. At present, Bank does not operate any foreign branches, agencies, or subsidiaries. Bank's primary purposes for establishing the proposed agency in Florida are to enhance its ability to serve existing customers and to expand its international customer base. 1. Asset data are as of June 30, 1998. 2. Empresas Juan Yarur S.A.C., Santiago, Chile ("Empresas"), which owns 54.7 percent of Bank's shares, is the only shareholder that directly owns more than 5 percent of Bank's shares. Mr. Luis Enrique Yarur Rey, chairman of Bank's board, controls Empresas through two holding companies: Inversiones Petro S.A., Santiago, Chile ("Petro"), which directly owns 55.2 percent of Empresas; and Inversiones Baquio S.A., Santiago, Chile ("Baquio"), which directly owns 5.7 percent of Empresas's shares and directly owns 53 percent of Petro. Together, Mr. Yarur and his wife own all of the shares of Baquio. 3. Approximately 12 percent of Bank's shares are held in custodial accounts by Deposito Central de Valores ("DCV"), the clearinghouse for the Santiago stock exchange. DCV acts only as a clearinghouse and custodian of securities and does not exercise any voting authority over shares in its custody. Legal Developments The agency would provide correspondent banking, corporate banking, private banking, and investment advisory and fund management services. Bank does not engage directly or indirectly in any nonbanking activities in the United States. Bank would be a qualifying foreign banking organization within the meaning of Regulation K (12 C.F.R. 211.23(b)). The Superintendencia de Bancos e Instituciones Financieras ("SBIF"), Bank's primary home country supervisor, has indicated that it has no objection to establishment of the proposed agency. In order to approve an application by a foreign bank to establish an agency in the United States, the IBA and Regulation K require the Board to determine that the foreign bank applicant engages directly in the business of banking outside of the United States and has furnished to the Board the information it needs to assess the application adequately. The Board generally also must determine that the foreign bank is subject to comprehensive supervision or regulation on a consolidated basis by its home country supervisor (12 U.S.C. § 3105(d)(2); 12 C.F.R. 211.24). The Board also may take into account additional standards as set forth in the IBA and Regulation K (12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)). As noted above, Bank engages directly in the business of banking outside of the United States. Bank also has provided the Board with information necessary to assess the application through submissions that address the relevant issues. Regulation K provides that a foreign bank will be considered to be subject to comprehensive supervision or regulation on a consolidated basis if the Board determines that the bank is supervised and regulated in such a manner that its home country supervisor receives sufficient information on the foreign bank's worldwide operations, including the relationship of the foreign bank to any affiliate, to assess the overall financial condition of the foreign bank and its compliance with law and regulation (12 C.F.R. 211.24(c)(1)).4 With respect to the issue of supervision by home country authorities, the Board has considered the following information. Bank is supervised and regulated by the SBIF. The 4. In determining whether this standard is met, the Board considers, among other factors, the extent to which the home country supervisor: (a) Ensures that the bank has adequate procedures for monitoring and controlling its activities worldwide; (b) Obtains information on the condition of the bank and its subsidiaries and offices through regular examination reports, audit reports, or otherwise; (c) Obtains information on the dealings with and relationship between the bank and its affiliates, both foreign and domestic; (d) Receives from the bank financial reports that are consolidated on a worldwide basis, or comparable information that permits analysis of the bank's financial condition on a worldwide consolidated basis; (e) Evaluates prudential standards, such as capital adequacy and risk asset exposure, on a worldwide basis. These are indicia of comprehensive, consolidated supervision. No single factor is essential, and other elements may inform the Board's determination. 447 Board previously determined that another Chilean credit institution was subject to comprehensive supervision on a consolidated basis by the SBIF.5 The Board has determined that Bank is supervised on substantially the same terms and conditions as that other institution. Moreover, there have been recent enhancements to Chilean supervision in a number of areas, including increasing risk-based capital requirements and promoting information exchanges with foreign supervisory authorities. Based on all the facts of record, the Board concludes that Bank is subject to comprehensive supervision and regulation on a consolidated basis by its home country supervisor. The Board also has taken into account the additional standards set forth in section 7 of the IBA (see 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). As noted above, the SBIF has indicated no objection to establishment of the proposed agency. Chile's risk-based capital standards conform to those established by the Basle Capital Accord ("Accord"). Bank's capital is in excess of the minimum levels that would be required by the Accord and is considered equivalent to capital that would be required of a U.S. banking organization. Managerial and other financial resources of Bank also are considered consistent with approval of the proposed agency. Bank does not currently have operations outside Chile. Nevertheless, in view of the experience of the proposed agency manager, and given the fact that Bank has had extensive experience conducting the types of activities in which the proposed agency would be engaged, Bank appears to have the experience and capacity to support the activities to be conducted by the proposed agency. Bank has established controls and procedures for the proposed agency to ensure compliance with U.S. law and for its operations in general. Finally, the Board has reviewed the restrictions on disclosure in relevant jurisdictions in which Bank operates and has communicated with relevant government authorities about access to information. Bank and Baquio have committed to make available to the Board such information on the operations of Bank and any affiliate of Bank that the Board deems necessary to determine and enforce compliance with the IBA, the Bank Holding Company Act of 1956, as amended, and other applicable Federal law. To the extent that the provision of such information is prohibited or impeded by law, Bank and Baquio have committed to cooperate with the Board to obtain any necessary consents or waivers that might be required from third parties in connection with disclosure of such information. In addition, subject to certain conditions, the SBIF may share information on Bank's operations with other supervisors, including the Board. In light of these commitments and other facts of record, and subject to the condition described below, the Board concludes that Bank and Baquio have provided adequate assurances of access to any necessary information the Board may request. 5. See Banco de Chile, 80 Federal Reserve Bulletin 179 (1994). 448 Federal Reserve Bulletin • June 1999 On the basis of all the facts of record, and subject to the commitments made by Bank and Baquio and the terms and conditions set forth in this order, the Board has determined that Bank's application to establish a state-licensed agency should be, and hereby is, approved. Should any restrictions on access to information on the operations or activities of Bank or 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 is also specifically conditioned on Bank's compliance with the commitments made in connection with this application, and with the conditions in this order.6 The commitments and conditions referred to above are conditions imposed in writing by the Board in connection with its decision, and may be enforced in proceedings under 12 U.S.C. § 1818 or 12 U.S.C. § 1847 against Bank, its offices, and its affiliates. By order of the Board of Governors, effective April 12, 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 ING Bank, N.V. Amsterdam, The Netherlands Order Approving Establishment of a Representative Office ING Bank, N.V. ("Bank"), Amsterdam, The Netherlands, a foreign bank within the meaning of the International Banking Act ("IBA"), has applied under section 10(a) of the IBA (12 U.S.C. § 3107(a)) to establish a representative office in 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 Times, September 14, 1998). The time for filing comments has expired, and the Board has considered the application and all comments received. 6. The Board's authority to approve the establishment of the proposed agency parallels the continuing authority of the Florida Department of Banking and Finance to license offices of a foreign bank. The Board's approval of the application does not supplant the authority of the State of Florida and its agent, the Florida Department of Banking and Finance, to license the proposed agency of Bank in accordance with any terms or conditions that the Florida Department of Banking and Finance may impose. Bank, with assets of $298.5 billion,1 is the third largest bank in The Netherlands. Bank has 380 offices in The Netherlands, and approximately 125 offices in more than 50 countries. Bank's parent company, ING Groep, N.V. ("ING Group"), 2 Amsterdam, The Netherlands, with total assets of $460.6 billion,3 is one of the world's largest financial services providers, offering life and non-life insurance, commercial and investment banking, asset management and related products and services. ING Group has operations in Europe, North America, South America, Africa, Asia, and Australia. The proposed representative office's activities would include marketing the products of Bank, maintaining relationships with U.S. corporate clients, and supporting Bank's Latin American offices on such matters as product development and marketing. 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 of the United States, and has furnished to the Board the information it needs to assess the application adequately. The Board also shall take into account whether the foreign bank and any foreign bank parent is subject to comprehensive supervision or regulation on a consolidated basis by its home country supervisor (12 U.S.C. § 3107(a)(2); 12 C.F.R. 211.24(d)(2)).4 In addition, the Board also may take into account additional standards as set forth in the IBA and Regulation K (12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). As noted above, Bank engages directly in the business of banking outside the United States. Bank also has provided the Board with information necessary to assess the application through submissions that address the relevant issues. 1. Unless otherwise indicated, data are as of January 5, 1998. 2. Ninety-nine percent of the outstanding voting shares of ING Group are owned by a Dutch trust, Stichting Administratiekantoor ING Groep (the "Trust"). The Trust engages in no activity other than holding shares of ING Group. Interests in the Trust are evidenced by bearer receipts which carry no voting rights. Other than the Trust, no person owns more than 10 percent of the voting shares or bearer receipts. 3. Data as of December 31, 1998. 4. In assessing this standard, the Board considers, among other factors, the extent to which the home country supervisors: (i) Ensure that the bank has adequate procedures for monitoring and controlling its activities worldwide; (ii) Obtain information on the condition of the bank and its subsidiaries and offices through regular examination reports, audit reports, or otherwise; (iii) Obtain information on the dealings with and relationship between the bank and its affiliates, both foreign and domestic; (iv) Receive from the bank financial reports that are consolidated on a worldwide basis or comparable information that permits analysis of the bank's financial condition on a worldwide consolidated basis; (v) Evaluate prudential standards, such as capital adequacy and risk asset exposure, on a worldwide basis. These are indicia of comprehensive, consolidated supervision. No single factor is essential, and other elements may inform the Board's determination. Legal Developments With respect to supervision by home country authorities, the Board previously has determined, in connection with applications involving other banks in The Netherlands, that those banks were subject to home country supervision on a consolidated basis.5 Bank is supervised by De Nederlandsche Bank (the "Central Bank") on substantially the same terms and conditions as those other banks.6 Based on all the facts of record, the Board has determined that Bank is subject to comprehensive supervision and regulation on a consolidated basis by its home country supervisor. 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)). The Central Bank has no objection to the establishment of the proposed representative office. With respect to the financial and managerial resources of Bank, taking into consideration Bank's record of operations in its home country, its overall financial resources, and its standing with its home country supervisors, the Board has also determined that financial and managerial factors are consistent with approval of the proposed representative 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 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 Bank Holding Company Act of 1956, as amended, and other applicable federal law. To the extent that the provision of such information to the Board may be prohibited by law, Bank and its 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 may share information on Bank's operations with other supervisors, including the Board. In light of these commitments and other facts of record, and subject to the condition described below, the Board concludes that Bank has provided adequate assurances of access to any necessary information that the Board may request. On the basis of all the facts of record, and subject to the commitments made by Bank and its parents, as well as the terms and conditions set forth in this order, the Board has 5. See MeesPierson, N.V., 80 Federal Reserve Bulletin 662 (1994); Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., Rabobank Nederland, 80 Federal Reserve Bulletin 947 (1994). 6. The Central Bank also receives information on ING Group with regard to its nonbanking operations. The Central Bank and the Insurance Supervisory Board have entered into a protocol for the purpose of jointly regulating groups with interests in both banks and insurance companies. 449 determined that Bank's application to establish the 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 activities in the United States. Approval of this application also is specifically conditioned on compliance by Bank and its parents with the commitments made in connection with this application and with the conditions in this order.7 The commitments and conditions referred to above are conditions imposed in writing by the Board in connection with its decision and may be enforced in proceedings under 12 U.S.C. § 1818 against Bank and its affiliates. By order of the Board of Governors, effective April 19, 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 Paribas Paris, France Order Approving Establishment of a Representative Office Paribas, Paris, France, a foreign bank within the meaning of the International Banking Act ("IBA"), has applied under section 10(a) of the IBA (12 U.S.C. § 3107(a)) to establish a representative office in Atlanta, Georgia. The Foreign Bank Supervision Enhancement Act of 1991, which amended the IBA, provides that a foreign bank must obtain the approval of the Board to establish a representative office in the United States. Notice of the application, affording interested persons an opportunity to submit comments, has been published in a newspaper of general circulation in Atlanta, Georgia (Atlanta Journal and Constitution, October 23, 1998). The time for filing comments has expired, and the Board has considered the application and all comments received. Paribas, with total consolidated assets of approximately $309 billion,1 is the surviving entity resulting from the merger into Banque Paribas of its parent company, Compagnie Financie re de Paribas, and certain other subsidiaries and affiliated companies in May 1998. 7. The Board's authority to approve the establishment of the proposed representative office parallels the continuing authority of the State of New York to license offices of a foreign bank. The Board's approval of this application does not supplant the authority of the State of New York and the New York State Banking Department ("Department") to license the proposed office of Bank in accordance with any terms or conditions that the Department may impose. 1. Data are as of December 31, 1998. 450 Federal Reserve Bulletin • June 1999 Paribas, which primarily engages in investment banking, asset management, and retail financial services, is the fifth largest banking group in France and has offices in more than 60 countries. In the United States, Paribas operates branches in New York, New York, and Chicago, Illinois; agencies in Houston, Texas, and Los Angeles, California; and representative offices in Dallas, Texas, and San Francisco, California. Paribas also owns several U.S. subsidiaries that engage in nonbanking activities. The proposed representative office would market Paribas's products and services. 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. 211.24(d)(2)).2 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)). As noted above, Paribas engages directly in the business of banking outside the United States. Paribas also has provided the Board with information necessary to assess the application through submissions that address the relevant issues. With respect to supervision by home country authorities, the Board previously has determined, in connection with applications involving other banks in France, that those banks were subject to home country supervision on a consolidated basis.3 Paribas is supervised by the French regulators on substantially the same terms and conditions as those other banks. Based on all the facts of record, the Board has determined that Paribas is subject to comprehensive supervision and regulation on a consolidated basis by its home country supervisors.4 The Board 2. In assessing this standard, the Board considers, among other factors, the extent to which the home country supervisors: (i) Ensure that the bank has adequate procedures for monitoring and controlling its activities worldwide; (ii) Obtain information on the condition of the bank and its subsidiaries and offices through regular examination reports, audit reports, or otherwise; (iii) Obtain information on the dealings with and relationship between the bank and its affiliates, both foreign and domestic; (iv) Receive from the bank financial reports that are consolidated on a worldwide basis or comparable information that permits analysis of the bank's financial condition on a worldwide consolidated basis; (v) Evaluate prudential standards, such as capital adequacy and risk asset exposure, on a worldwide basis. These are indicia of comprehensive, consolidated supervision. No single factor is essential, and other elements may inform the Board's determination. 3. See Banque Nationale de Paris, 81 Federal Reserve Bulletin 515 (1995); Caisse Nationale de Credit Agricole, 81 Federal Reserve Bulletin 1055 (1995); Credit Agricole Indosuez, 83 Federal Reserve Bulletin 1025 (1997). 4. On February 1, 1999, Societe Generale ("SoGen") announced its intention to make a stock-for-stock exchange offer for all of the shares 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)). The Commission Bancaire has no objection to the establishment of the proposed representative office. With respect to the financial and managerial resources of Paribas, taking into consideration Paribas's record of operations in its home country, its overall financial resources, and its standing with its home country supervisors, the Board has also determined that financial and managerial factors are consistent with approval of the proposed representative office. Paribas 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 Paribas's operations, the Board has reviewed the restrictions on disclosure in relevant jurisdictions in which Paribas operates and has communicated with relevant government authorities regarding access to information. Paribas has committed to make available to the Board such information on the operations of Paribas and any of its affiliates that the Board deems necessary to determine and enforce compliance with the IBA, the Bank Holding Company Act of 1956, as amended, and other applicable federal law. To the extent that the provision of such information to the Board may be prohibited by law, Paribas has 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 Commission Bancaire may share information on Paribas'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 Paribas 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 Paribas, as well as the terms and conditions set forth in this order, the Board has determined that Paribas'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 Paribas and its affiliates subsequently interfere with the Board's ability to obtain information to determine and enforce compliance by Paribas or its affiliates with applicable federal statutes, the Board may require termination of any of Paribas's direct or indirect activities in the United States. Approval of this application is also specifically conditioned on Paribas's compliance with the commitments made in connection with this application and with the conditions in this order.5 The commitments and condi- of Paribas. The Board previously determined that the home country supervision of SoGen was consistent with the approval of a representative office. See Societe Generale, 80 Federal Reserve Bulletin 665 (1994). 5. The Board's authority to approve the establishment of the proposed office parallels the continuing authority of the State of Georgia Legal Developments tions referred to above are conditions imposed in writing by the Board in connection with its decision and may be to license offices of a foreign bank. The Board's approval of this application does not supplant the authority of the State of Georgia and the State of Georgia Department of Banking and Finance ("Department") to license the proposed office of Paribas in accordance with any terms of conditions that the Department may impose. 451 enforced in proceedings under 12 U.S.C. § 1818 against Paribas and its affiliates. By order of the Board of Governors, effective April 1, 1999. Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Meyer, Ferguson, and Gramlich. JENNIFER J. JOHNSON Secretary of the Board ORDERS ISSUED OR ACTIONS TAKEN BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (JANUARY I, 1999-MARCH 31,1999) Applicant Arizona Bank, Tucson, Arizona The Banc Corporation, Birmingham, Alabama BankAmerica Corporation, Charlotte, North Carolina BancWest Corporation, Honolulu, Hawaii BB&T Corporation, Winston-Salem, North Carolina First Union Corporation, Charlotte, North Carolina SunTrust Banks, Inc., Atlanta, Georgia Wachovia Corporation, Winston-Salem, North Carolina Zions Bancorporation, Salt Lake City, Utah Bay Port Financial Corporation, Bay Port, Michigan C-B-G, Inc., Wilton, Iowa Commerzbank AG, Frankfurt am Main, Germany First Banks, Inc., Creve Coeur, Missouri First Banks America, Inc., Clayton, Missouri First Security Corporation, Salt Lake City, Utah Date of Approval Bulletin Volume and Page To acquire 15 branches in Arizona March 3, 1999 85, 343 Emerald Coast Bancshares, Inc., Panama City Beach, Florida Emerald Coast Bank, Panama City Beach, Florida Honor Technologies, Inc., Maitland, Florida Star Systems, Inc., San Diego, California February 1, 1999 85, 269 February 1, 1999 85, 271 March 22, 1999 85, 333 March 29, 1999 85, 335 March 15, 1999 85, 336 February 12, 1999 85, 268 January 25, 1999 85, 207 Merged or Acquired Bank or Activity Bay Port State Bank, Bay Port, Michigan Peoples National Corporation, Columbus Junction, Iowa Community Bank, Muscatine, Iowa Korea Exchange Bank, Seoul, Korea California Korea Bank, Los Angeles, California Redwood Bancorp, San Francisco, California Redwood Bank, San Francisco, California Van Kasper & Company, San Francisco, California Redwood Securities Group, Inc., San Francisco, California 452 Federal Reserve Bulletin • June 1999 Index of Orders—Continued Applicant The Fuji Bank, Limited, Tokyo,Japan Istituto Bancario San Paolo di Torino-Istituto Mobiliare Italiano S.p.A., Turin, Italy Union Planters Corporation, Memphis, Tennessee Union Planters Holding Corporation, Memphis, Tennessee Wachovia Corporation, Winston-Salem, North Carolina Westdeutsche Immobilienbank, Mainz, Germany Date of Approval Bulletin Volume and Page The Yasuda Trust and Banking Co., Ltd. Tokyo,Japan Yasuda Bank and Trust Company, New York, New York Mabon Securities Corp., New York, New York Cedar Street Securities Corp., New York, New York March 15, 1999 85, 338 February 1, 1999 85, 275 First Mutual Bancorp, Inc., Decatur, Illinois First Mutual Bank, S.B., Decatur, Illinois Interstate/Johnson Lane, Inc., Charlotte, North Carolina Interstate/Johnson Lane Corporation, Charlotte, North Carolina To establish a representative office in New York, New York January 11, 1999 85, 205 March 17, 1999 85, 340 March 1, 1999 85, 346 Merged or Acquired Bank or Activity 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 BancTenn Corporation, Kingsport, Tennessee Capital City Group, Inc. Tallahassee, Florida Paragon Commercial Bank, Raleigh, North Carolina Grady Holding Company, Cairo, Georgia First National Bank of Grady County, Cairo, Georgia Commerce Financial Corporation, Fort Worth, Texas Bank of Commerce, Fort Worth, Texas April 22, 1999 Cullen/Frost Bankers, Inc. San Antonio, Texas April 7, 1999 April 23, 1999 Legal Developments 453 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 1st Constitution Bancorp, Cranbury, New Jersey 1st State Bancorp, Inc., Burlington, North Carolina 1st State Bank Foundation, Inc. Burlington, North Carolina 1st Constitution Bank, Cranbury, New Jersey 1st State Bank, Burlington, North Carolina 1st State Bancorp, Inc., Burlington, North Carolina 1st State Bank, Burlington, North Carolina Otoe County Bancorporation, Inc., Nebraska City, Nebraska D Bancorp, Inc., DeSoto, Texas Bank of DeSoto, N.A., DeSoto, Texas Heartland Bancshares, Inc., Herrin, Illinois Heartland National Bank, Herrin, Illinois Somerville Bank and Trust Company, Somerville, Tennessee The California Community Financial Institutions Fund Limited Partnership, San Francisco, California California Financial Bancorp, Newport Beach, California Security First Bank, Fullerton, California The Bank of Orange County, Fountain Valley, California Downey National Bank, Downey, California National Business Bank, Torrance, California Walthall Capital Group, Ltd., Tylertown, Mississippi Walthall Citizens Bank, Tylertown, Mississippi Chelsea Bancshares, Inc., Chelsea, Oklahoma Community Commercial Bank, Germantown, Tennessee New York March 26, 1999 Richmond April 8, 1999 Richmond April 8, 1999 Kansas City April 5, 1999 Dallas April 15, 1999 St. Louis April 5, 1999 St. Louis April 14, 1999 San Francisco April 15, 1999 Atlanta March 26, 1999 Kansas City April 13, 1999 St. Louis April 16, 1999 Atlanta April 14, 1999 Kansas City March 31, 1999 Ameriwest Corporation, Omaha, Nebraska Bank of DeSoto, N.A., Employee Stock Ownership Trust, DeSoto, Texas Banterra Corp., Eldorado, Illinois Barret Bancorp, Inc., Barretville, Tennessee Belvedere Capital Partners LLC, San Francisco, California Citizens Corporation, Columbia, Mississippi Commerce Bancshares, Inc., Adair, Oklahoma Community Commercial Bancshares, Inc., Germantown, Tennessee Community First Bancshares, Inc., New Iberia, Louisiana Community State Bancshares, Inc.. Wichita, Kansas Community First Bank, New Iberia, Louisiana Community Bank of Wichita, Inc., Wichita, Kansas 454 Federal Reserve Bulletin • June 1999 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date First Capital Bank Holding Corporation, Fernandina Beach, Florida First Financial Bancorp, Hamilton, Ohio Goodenow Bancorporation, Okoboji, Iowa Greater Community Bancorp, Totowa, New Jersey Habersham Bancorp, Cornelia, Georgia Horizon Financial Corp., Bellingham, Washington First National Bank of Nassau County, Fernandina Beach, Florida Atlanta March 26, 1999 Hebron Bancorp, Inc., Hebron, Kentucky Southwest State Bank, Windom, Minnesota Rock Community Bank, Glen Rock, New Jersey CB Financial Corp., Warrenton, Georgia Bellingham Bancorporation, Bellingham, Washington Bank of Bellingham, Bellingham, Washington Crawford Financial Corporation, Indianapolis, Indiana Marengo State Bank, Marengo, Indiana Union-Adams Bancorp., Creston, Iowa Iowa State Savings Bank, Creston, Iowa The Mahopac National Bank, Mahopac, New York Cleveland April 15, 1999 Chicago April 9, 1999 New York April 8, 1999 Atlanta April 2, 1999 San Francisco April 15, 1999 St. Louis April 2, 1999 Chicago April 21, 1999 New York April 6, 1999 First Mercantile Bank, N.A., Dallas, Texas Dallas April 13, 1999 Southwest State Bank, Windom, Minnesota Morgantown Deposit Bancorp, Inc., Morgantown, Kentucky RCB Holding Company, Roseville, Minnesota Roseville Community Bank, N.A., Roseville, Minnesota Norwood Bancshares, Inc., Norwood Young America, Minnesota Citizens State Bank of Norwood, Norwood Young America, Minnesota Springfield Investment Company, Springfield, Minnesota Farmers and Merchants State Bank of Springfield, Springfield, Minnesota Reliance Bank, Des Peres, Missouri St. John National Bank, St. John, Kansas Southeast Security Bank, Mediapolis, Iowa Chicago April 9, 1999 St. Louis April 7, 1999 Minneapolis March 30, 1999 Minneapolis April 8, 1999 St. Louis April 1, 1999 Kansas City April 15, 1999 Chicago April 15, 1999 Independence Bancorp, New Albany, Indiana Iowa Community Bancorp, Inc., Creston, Iowa Letchworth Independent Bancshares Corporation, Castile, New York Mercantile Bancorp, Inc., Dallas, Texas Mercantile Delaware Bancorp, Inc., Dover, Delaware Midwest Bancorporation, Inc., Okoboji, Iowa M.R. Melton Limited Partnership, Mt. Sterling, Kentucky Northfield Bancshares, Inc., Northfield, Minnesota Piesco, Inc., Springfield, Minnesota Reliance Bancshares, Inc., Des Peres, Missouri SJN Banc Co., St. John, Kansas Southeast Bancshares, Inc., Mediapolis, Iowa Legal Developments Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Stearns Financial Services, Inc. Employee Stock Ownership Plan and Trust, St. Cloud, Minnesota Suncoast Bancorp, Inc., Sarasota, Florida Swedish-American Bancshares, Inc., Courtland, Kansas Violeta Investments, Ltd., Hebbronville, Texas Stearns Financial Services, Inc. St. Cloud, Minnesota Minneapolis April 7, 1999 Suncoast National Bank, Sarasota, Florida Swedish-American State Bank, Courtland, Kansas Hebbronville State Bank, Hebbronville, Texas Atlanta April 8, 1999 Kansas City April 21, 1999 Dallas April 15, 1999 Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Centennial Bank Holdings, Inc., Eaton, Colorado Citigroup, Inc., New York, New York Centennial Bankers Mortgage, LLC, Eaton, Colorado Associates Corporation of North America, Irving, Texas Kansas City March 24, 1999 New York March 31, 1999 Kansas City March 30, 1999 Dallas March 31, 1999 Kansas City March 30, 1999 Chicago April 16, 1999 New York April 1, 1999 Kansas City March 29, 1999 New York April 19, 1999 San Francisco April 15. 1999 San Francisco March 30, 1999 Commercial Credit Corporation, Baltimore, Maryland Consolidated Equity Corporation, Purcell, Oklahoma Lubbock National Bancshares, Inc. Lubbock, Texas McClain County Bancorporation, Purcell, Oklahoma National Australia Bank Limited, Melbourne, Australia Homeside Lending, Inc., Jacksonville, Florida Standard Chartered PLC, London, England Standard Chartered Bank, London, England Stockgrowers Banc Corporation, Ashland, Kansas UBS AG, Basle, Switzerland Wells Fargo & Company, San Francisco, California Norwest Financial Services, Inc., Des Moines, Iowa Norwest Financial, Inc., Des Moines, Iowa Wells Fargo & Company, San Francisco, California Heart of Oklahoma Community Development Corporation, Purcell, Oklahoma Commerce Southwest Mortgage, L.L.C. Lubbock, Texas Heart of Oklahoma Community Development Corporation, Purcell, Oklahoma First Chicago NBD Mortgage Company, Troy, Michigan UBS AG, Basle, Switzerland Howell Insurance Agency of Ashland, Ashland, Kansas Warburg Dillon Read, LLC, New York, New York TCF National Bank Minnesota Minneapolis, Minnesota TCF Consumer Financial Services, Inc. Minneapolis, Minnesota TCF Financial Services, Inc., Minneapolis, Minnesota ATI Title Agency of Ohio, Inc., Cleveland, Ohio 455 456 Federal Reserve Bulletin • June 1999 Section 4—Continued Applicant(s) Norwest Insurance, Inc., West Des Moines, Iowa Wells Fargo & Company, San Francisco, California Nonbanking Activity/Company Reserve Bank Effective Date PaymentNet, Inc., Pleasanton, California Norwest Services, Inc., Minneapolis, Minnesota San Francisco March 29, 1999 APPLICATIONS APPROVED UNDER BANK MERGER ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Applicant(s) Bank(s) Reserve Bank Effective Date Farmers Bank of Maryland, Annapolis, Maryland First Interstate Bank, Billings, Montana The Northwestern Bank, Chippewa Falls, Wisconsin Premier Bank, Lenexa, Kansas WestStar Bank, Vail, Colorado First Virginia Bank-Maryland, Upper Marlboro, Maryland First National Bank of Montana, Libby, Montana M&I Community State Bank, Eau Claire, Wisconsin Bank of Craig, Craig, Missouri World Savings Bank, FSB, Oakland, California Richmond April 6, 1999 Minneapolis April 15, 1999 Minneapolis March 30, 1999 Kansas City March 30, 1999 Kansas City April 12, 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. Clarkson v. Greenspan, No.98-5349 (D.C. Cir., filed July 29, 1998). Appeal of district court order granting Board's motion for summary judgment in a Freedom of Information Act case. On March 2, 1999, the Court granted the Board's motion for summary affirmance of the district court dismissal. 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 Legal Developments 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 u 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. Bettersworth v. Board of Governors, No. 97-CA-624 (W.D. Tex., filed August 21, 1997). Privacy Act case. 457 FINAL ENFORCEMENT ORDERS ISSUED BY THE BOARD OF GOVERNORS Paul P. Piper Crested Butte, Colorado The Federal Reserve Board announced on April 16, 1999, the issuance of a Combined Order to Cease and Desist and Order of Assessment of a Civil Money Penalty against Paul P. Piper, Jr., a former institution- affiliated party of first National Summit Bankshares, Crested Butte, Colorado, a former registered bank holding company, and the First National Summit Bank, Gunnison, Colorado, a former national bank. WRITTEN AGREEMENTS APPROVED BY FEDERAL RESERVE BANKS Foxdale Bancorp, Inc. South Elgin, Illinois The Federal Reserve Board announced on April 22, 1999, the execution of a Written Agreement by and among Foxdale Bancorp, Inc., the Foxdale Bank, both of South Elgin, Illinois, the Federal Reserve Bank of Chicago, and the Illinois Office of Banks and Real Estate. 1 Financial and Business Statistics A3 DOMESTIC FINANCIAL STATISTICS Money Stock and Bank Credit A4 A5 A6 Reserves, money stock, liquid assets, and debt measures Reserves of depository institutions and Reserve Bank credit Reserves and borrowings—Depository institutions Policy Instruments A7 A8 A9 Federal Finance—Continued GUIDE TO TABULAR PRESENTATION 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 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 A33 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, liquid assets, and debt measures Commercial Banking Institutions— Assets and Liabilities A15 A16 A17 A19 A20 All commercial banks in the United States Domestically chartered commercial banks Large domestically chartered commercial banks Small domestically chartered commercial banks Foreign-related institutions A34 Mortgage markets—New homes A35 Mortgage debt outstanding Consumer Credit 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 Financial Markets A22 Commercial paper and bankers dollar acceptances outstanding A22 Prime rate charged by banks on short-term business loans A23 Interest rates—Money and capital markets A24 Stock market—Selected statistics Federal Finance A25 Federal fiscal and financing operations A26 U.S. budget receipts and outlays All Federal debt subject to statutory limitation DOMESTIC NONFINANCIAL STATISTICS Selected Measures A42 A42 A43 A44 A46 A47 A48 A49 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 95 Federal Reserve Bulletin • June 1999 INTERNATIONAL STATISTICS Summary Reported by Nonbanking Enterprises in the United 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 A52 A53 A55 A56 States Liabilities to, and claims on, foreigners Liabilities to foreigners Banks' own claims on foreigners Banks' own and domestic customers' claims on foreigners A56 Banks' own claims on unaffiliated foreigners A57 Claims on foreign countries—Combined domestic offices and foreign branches Business 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 A64 INDEX TO STATISTICAL TABLES 3 Guide to Tabular Presentation SYMBOLS AND c e n.a. p r ABBREVIATIONS 0 . . . 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 5 0 0 , 0 0 0 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 * 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. A4 1.10 DomesticNonfinancialStatistics • June 1999 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted 1 1998 1999 1999 1998 Monetary or credit aggregate 1 2 3 4 Reserves of depository institutions1 Total Required Nonborrowed Monetary base 3 5 6 7 8 Concepts of money, liquid assets, and debt4 Ml M2 M3 Debt Nontransaction 9 In M2 5 10 In M3 only 6 Nov. Dec. Jan. Feb.r Mar. -2.3 -.1 -2.3 8.9 5.0 3.8 7.5 8.9 9.0 10.5 8.1 8.3 -.5 .8 -2.9 8.4 -14.4 -6.0 -12.0 9.5 -13.1 -16.1 -11.8 9.8 5.0 11.0 12.9 6.4r 2.5 7.2 7.1 n.a. 9.6 10.6 13.4 7.4r 4.7 10.1 12.0 6.r -3.0r 6.5 3.9r 5.r 1.4 5.6 8.8 4.8 9.8 2.8 -3.0 n.a. 9.9 13.5 13.0 18.4 8.7 6.9 11.0 21.2 11.8 17.3 9.6 —3.2r 7.1 17.6 .4 -18.8 Q2 Q3 04 Q1 -3.8 -2.5 -4.3 5.3 -7.4 -9.0 -8.4 6.8 -1.6 -2.3 -.4 8.9 1.0 7.5 10.1 6.0 -2.0 6.9 8.6 6.ff 9.8 17.8 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 time8 13.4 .1 16.4 15.8 .1 3.5 17.6 .4 3.9 11.4 -5.4 -3.6 16.4 1.5 8.1 19.2 -4.2 8.0 12.3 -7.9 10.6 5.1 -7.5 -27.0 .0 -3.5 -34.2 10.8 -4.4 -4.5 9.0 -7.3 .5 10.1 -6.7 10.4 12.7 -6.4 7.4 10.9 -10.5 2.7 10.8 —5.9r 16.4 14.7r -5.2 25.6 14.6 -5.9 -14.5 7.3 -8.2 -16.0 Money market mutual funds 17 Retail 18 Institution-only 20.9 34.7 19.0 26.6 28.4 41.8 21.0 17.9 20.5 42.2 22.3 29.5 23.2 -2.8 23.7 34.7 4.0 -1.8 Repurchase agreements and Eurodollars 19 Repurchase agreements10 20 Eurodollars10 14.5 -3.3 11.7 21.7 16.4 7.6 11.2 -.4 25.4 1.5 34.0 -20.0 -25.0 -28.1 r 68.7 42.4 -50.2 36.3 Debt components4 21 Federal 22 Nonfederal -1.4 8.4r -1.5 8.4r -2.0 9.1r n.a. n.a. -.5 9.9r -.4 8.1r -2.1 7.3r -7.3 8.4 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: Ml 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 Ml. 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 AND RESERVE BANK CREDIT 1 Millions of dollars Average of daily figures Average of daily figures for week ending on date indicated 1999 Feb. 17 Feb. 24 Mar. 3 Mar. 10 Mar. 17 Mar. 24 Mar. 31 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding U.S. government securities2 2 Bought outright—System account3 3 Held under repurchase agreements Federal agency obligations 4 Bought outright 5 Held under repurchase agreements 6 Acceptances Loans to depository institutions 7 Adjustment credit 8 Seasonal credit 9 Extended credit 10 Float 11 Other Federal Reserve assets 12 Gold stock 13 Special drawing rights certificate account 14 Treasury currency outstanding 504,486 501,636r 507,920 501,302 507,119 507,613 508,369 453,333 7,056 458,706 3,310 464,000 6,499 458,088 2,292 459,973 4,829 461,317 4,805 462,738 5,832 464,197 4,497 464,809 8,006 337 4,670 336 3,222 318 3,408 336 3,359 336 3,542 336 3,478 332 2,739 311 3,690 311 3,944 201 6 118 10 32 17 107 10 12 14 5 14 4 16 87 20 2,313 36,570 446r 35,488r 210 33,436 1,229 35,891 375 34,536 -320 34,218 1,134 34,326 62 34,837 -453 31,646 11,046 9,200 26,329 11,049 9,200 26,454r 11,048 8,329 26,540 11,049 9,200 26,453r 11,049 9,200 26,480r 11,047 9,200 26,508 11,047 8,343 26,522 11,049 8,200 26,536 11,048 8,200 26,550 510,137 87 510,631' 114 514,694 132 511,75 l r 125 512,217r 117 512,507 121 513,872 131 514,742 132 515,057 134 6,597 186 7,618 443 16,711 9,281 4,800 202 7,129r 270 16,686 8,507r 5,463 177 6,981 247 17,002 9,141 4,223 204 6,865 288 16,838 7,710 4,998 186 6,944' 279 16,942 8,755' 4,974 188 7,030 254 16,520 9,019 5,087 190 6,958 251 16,855 9,688 6,313 180 6,896 261 17,117 7,758 5,309 166 7,232 236 17,184 8,851 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ABSORBING RESERVE FUNDS 15 Currency in circulation 16 Treasury cash holdings Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 18 Foreign 19 Service-related balances and adjustments . . 20 Other 21 Other Federal Reserve liabilities and capital . 22 Reserve balances with Federal Reserve Banks4 Wednesday figures End-of-month figures Mar. 3 Mar. 10 Mar. 17 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding U.S. government securities2 2 Bought outright—System account3 3 Held under repurchase agreements Federal agency obligations 4 Bought outright 5 Held under repurchase agreements 6 Acceptances Loans to depository institutions 7 Adjustment credit 8 Seasonal credit 9 Extended credit 10 Float 11 Other Federal Reserve assets 12 Gold stock 13 Special drawing rights certificate account 14 Treasury currency outstanding 498,740 503,077' 454,439 4,485 461,036 3,558 336 2,535 516,531 514,187 505,212 514,527 465,686 12,730 456,987 4,101 461,106 9,870 461,998 5,562 463,621 9,498 464,506 4,495 464,744 17,013 311 5,606 336 3,314 336 7,223 336 2,047 311 5,402 311 3,840 311 4,533 0 0 0 0 1 16 0 0 0 1 20 0 0 0 0 55 5 4 12 223 22 164 36,721 39r 34,208r 32,690 3,552 34,176 35,275 1,372 33,881 935 34,745 163 34,893 -305 30,217 11,048 9,200 26,397 11,047 9,200 26,508' 11,049 8,200 26,564 11,049 9,200 26,453' 11,048 9,200 26,480' 11,047 9,200 26,508 11,047 8,200 26,522 11,049 8,200 26,536 11,047 8,200 26,550 505,528 511,709' 120 517,716 135 513,043' 117 512,884' 120 514,036 131 515,272 131 515,737 134 516,122 134 7,623 234 7,828 246 16,269 7,558 4,538 200 7,030' 225 16,460 9,551' 5,374 166 6,817 235 16,805 14,952 4,893 185 6,865 291 16,695 7,145 4,753 218 6,944' 271 16,858 18,867' 5,050 185 7,030 265 16,257 9,013 4,722 165 6,958 250 16,982 15,816 6,318 173 6,896 247 16,906 7,602 5,199 169 7,229 220 17,089 0 0 0 -882 0 433 12 0 -68 4 12 0 2 17 0 ABSORBING RESERVE FUNDS 15 Currency in circulation 16 Treasury cash holdings Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 18 Foreign 19 Service-related balances and adjustments . . 20 Other 21 Other Federal Reserve liabilities and capital . 22 Reserve balances with Federal Reserve Banks' 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. 16,166 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. A6 Domestic Financial Statistics • June 1999 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Prorated monthly averages of biweekly averages Reserve classification 1 2 3 4 5 6 7 8 9 10 Reserve balances with Reserve Banks 2 Total vault cash3 Applied vault cash 4 Surplus vault cash 5 Total reserves6 Required reserves Excess reserve balances at Reserve Banks7 Total borrowings at Reserve Banks 8 Seasonal borrowings Extended credit9 1996 1997 1998 1999 Dec. Dec. Dec. Sept. Oct. Nov. Dec. Jan. Feb.r Mar. 13,395 44,525 37,848 6,678 51,242 49,819 1,423 155 68 0 10,673 44,740 37,206 7,534 47,880 46,196 1,683 324 79 0 9,022 44,305 35,997 8,308 45,019 43,435 1,584 117 15 0 9,284 42,524 34,909 7,614 44,193 42,509 1,684 251 178 0 9,026 43,268 35,090 8,178 44,115 42,544 1,572 174 107 0 8,855 43,104 35,297 7,807 44,152 42,527 1,624 84 37 0 9,022 44,305 35,997 8,308 45,019 43,435 1,584 117 15 0 9,659 45,499 36,687 8,812r 46,346 44,811 1,535 206 7 0 8,578 46,468 36,660 9,809 45,237 44,022 1,215 116 9 0 8,854 42,898 34,271 8,627 43,125 41,817 1,308 65 18 0 1998 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 Total vault cash 3 Applied vault cash4 Surplus vault cash 5 Total reserves6 Required reserves Excess reserve balances at Reserve Banks7 Total borrowings at Reserve Banks8 Seasonal borrowings Extended credit9 1999 Dec. 2 Dec. 16 Dec. 30 Jan. 13 Jan. 27 Feb. 10 Feb. 24 Mar. 10r Mar. 24 Apr. 7 9,028 43,313 35,853 7,460 44,880 43,221 1,659 79 20 0 8,949 43,230 35,273 7,957 44,222 42,917 1,304 26 13 0 9,057 45,470 36,748 8,722 45,805 43,999 1,806 195 18 0 9,551 45,023 35,911 9,113 45,462 43,240 2,221 370 9 0 10,019 44,837r 36,847 7,990r 46,866 45,878 988 68 5 0 8,750 49,363r 38,649 10,714r 47,399 46,181 1,217 158 8 0 8,233 45,597 r 35,997 9,60a1 44,230 43,040 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 9,229 42,525 34,149 8,376 43,377 41,874 1,503 130 24 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 effect of extended credit is similar to that of nonborrowed reserves. Policy Instruments 1.14 A7 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit Federal Reserve Bank Boston New York Philadelphia Cleveland Richmond Atlanta On 5/7/99 4.50 Chicago St. Louis Minneapolis Kansas City Dallas San Francisco . . . . 4.50 1 Extended credit3 Seasonal credit2 Effective date Previous rate On 5/7/99 Effective date Previous rate On 5/7/99 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 5/6/99 4.75 5.35 5/6/99 5.25 4.75 4.85 5/6/99 4.75 5.35 5/6/99 5.25 11/19/98 11/19/98 11/19/98 11/18/98 11/17/98 11/17/98 Range of rates for adjustment credit in recent years Range (or level)—All F.R. Banks F.R. Bank of N.Y, 9 20 11 12 3 10 21 22 16 20 1 3 6-6.5 6.5 6.5-7 7 7-7.25 7.25 7.75 8 8-8.5 8.5 8.5-9.5 9.5 6.5 6.5 7 7 7.25 7.25 7.75 8 8.5 8.5 9.5 9.5 1979—July 20 Aug. 17 20 Sept. 19 21 Oct. 8 10 10 10-10.5 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 In effect Dec. 31, 1977 1978—Jan. May July Aug. Sept. Oct. Nov. 10-11 10 11 12 12-13 13 13-14 14 13-14 13 12 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 1982—July 20 23 Aug. 2 3 16 27 30 Oct. 12 13 Nov. 22 26 Dec. 14 15 17 1984—Apr. Effective date 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 3.5^1 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 May 7, 1999 4.50 4.50 6.5-7 7 7 7 1990—Dec. 19 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. A8 DomesticNonfinancialStatistics • June 1999 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS 1 Type of deposit Net transaction accounts2 $0 million-$46.5 million 3 . More than $46.5 million 4 . 12/31/98 12/31/98 3 Nonpersonal time deposits ; 12/27/90 4 Eurocurrency liabilities 6 . . . 12/27/90 1 2 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 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 '/2 years was reduced from 3 percent to 1Vz 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 l /l 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 ' / i 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 1V6 years (see note 5). Policy Instruments A9 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS 1 M i l l i o n s o f dollars 1999 1998 Type of transaction and maturity 1996 1997 1998 Aug. Sept. Oct. Nov. Dec. Jan. Feb. U.S. TREASURY SECURITIES2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 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 matched Matched transactions 26 Gross purchases 27 Gross sales Repurchase agreements 28 Gross purchases 29 Gross sales 30 Net change in U.S. Treasury securities 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 34,607 34,607 0 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 0 524 0 30,512 -41,394 2,015 5,549 0 41,716 -27,499 1,996 6,297 0 46,062 -49,434 2,676 986 0 6,367 -8,964 0 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 3,898 0 -25,022 31,459 19,680 0 -37,987 20,274 12,901 0 -37,777 37,154 535 0 -2,168 5,828 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 1,116 0 -5,469 6,666 3,849 0 -1,954 5,215 2,294 0 -5,908 7,439 303 0 -3,411 1,364 351 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 1,655 0 -20 3,270 5,897 0 -1,775 2,360 4,884 0 -2,377 4,842 1,769 0 -789 1,772 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 17,094 0 2,015 44,122 0 1,996 29,926 0 4,676 3,593 0 0 5,377 0 0 3,140 0 602 4,619 0 0 0 0 0 615 0 492 5,190 0 0 3,092,399 3,094,769 3,577,954 3,580,274 4,395,430 4,399,330 346,245 348,318 380,594 382,063 402,581 400,995 358,438 359,256 418,538 420,397 365,779 363,604 324,078 322,669 457,568 450,359 810,485 809,268 512,671 514,186 39,078 38,402 63,924 59,731 40,823 48,672 23,884 19,200 49,296 38,592 21,968 37,157 26,098 27,025 19,919 41,022 19,835 2,196 8,101 -3,725 8,484 8,845 -12,891 5,672 0 0 409 0 0 1,540 0 25 322 0 25 50 0 0 48 0 0 15 0 0 20 0 0 30 0 0 2 0 0 0 75,354 74,842 160,409 159,369 284,316 276,266 33,431 30,625 18,486 19,953 51,471 50,032 51,419 48,785 48,815 44,285 23,577 31,744 37,416 36,067 FEDERAL AGENCY OBLIGATIONS Outright transactions 31 Gross purchases 32. Gross sales 33 Redemptions Repurchase agreements 34 Gross purchases 35 Gross sales 36 Net change in federal agency obligations 37 Total net change in System Open M a r k e t A c c o u n t . . . 103 -500 7,703 2,731 -1,515 1,424 2,614 4,500 -8,169 1,349 20,021 40,522 27,538 4,927 6,586 -2,301 11,098 13,345 -21,060 7,021 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. A10 1.18 DomesticNonfinancialStatistics • June 1999 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 M i l l i o n s o f dollars Account Mar. 3 Mar. 10 Wednesday End of month 1999 1999 Mar. 17 Mar. 24 Mar. 31 Jan. 31 Feb. 28 Mar. 31 Consolidated condition statement ASSETS 1 Gold certificate account 2 Special drawing rights certificate account 3 Coin Loans 4 To depository institutions 5 Other 6 Acceptances held under repurchase agreements Federal agency obligations 1 Bought outright 8 Held under repurchase agreements 11,047 9,200 435 11,047 8,200 441 11,049 8,200 450 11,047 8,200 446 11,049 8,200 428 11,048 9,200 459 11,047 9,200 464 11,049 8,200 428 17 0 0 16 0 0 21 0 0 18 0 0 246 0 0 60 0 0 16 0 0 246 0 0 336 2,047 311 5,402 311 3,840 311 4,533 311 5,606 336 2,535 336 3,884 311 5,606 467,560 473,119 469,001 481,757 478,416 458,924 464,594 478,416 10 Bought outright 2 11 Bills 12 Notes 13 Bonds 14 Held under repurchase agreements 461,998 199,319 191,126 71,553 5,562 463,621 199,366 191,474 72,781 9,498 464,506 199,231 192,493 72,781 4,495 464,744 197,733 193,554 73,457 17,013 465,686 196,759 194,968 73,959 12,730 454,439 196,948 187,403 70,089 4,485 461,036 198,357 191,126 71,553 3,558 465,686 196,759 194,968 73,959 12,730 15 Total loans a n d securities 9 Total U.S. Treasury securities 469,960 478,847 473,172 486,619 484,578 461,855 468,830 484,578 16 Items in process of collection 17 Bank premises 10,059 1,302 8,235 1,302 7,350 1,303 6,555 1,304 7,097 1,303 5,325 1,299 5,176 1,302 7,097 1,303 Other assets 18 Denominated in foreign currencies 3 19 All other 4 18,707 14,117 18,715 14,844 18,722 14,889 15,360 16,393 15,171 16,126 19,235 16,165 18,702 14,313 15,171 16,126 534,826 541,630 535,135 545,923 543,952 524,586 529,034 543,952 20 Total assets LIABILITIES 488,094 489,322 489,785 490,152 491,715 479,689 485,784 491,715 22 Total deposits 22,023 27,994 20,877 31,955 28,316 23,682 21,798 28,316 23 24 25 26 16,524 5,050 185 265 22,857 4,722 165 250 14,138 6,318 173 247 26,366 5,199 169 220 22,541 5,374 166 235 15,577 7,623 234 246 16,835 4,538 200 225 22,541 5,374 166 235 8,452 4,087 7,332 4,403 7,568 4,277 6,727 4,449 7,117 4,328 4,948 4,183 4,992 4,205 7,117 4,328 522,656 529,051 522,507 533,284 531,475 512,501 516,779 531,475 6,076 5,894 200 6,074 5,937 568 6,077 5,952 600 6,090 5,952 598 6,122 5,944 411 5,955 5,943 188 6,063 5,872 320 6,122 5,944 411 534,826 541,630 535,135 545,923 543,952 524,586 529,034 543,952 n.a. n.a. n.a. n.a. n.a. 600,443 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 29 Total liabilities CAPITAL ACCOUNTS 30 Capital paid in 31 Surplus 32 Other capital accounts 33 Total liabilities a n d 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) LESS: Held by Federal Reserve Banks 36 Federal Reserve notes, net 37 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 643,700 155,606 488,094 648,379 159,057 489,322 654,316 164,531 489,785 660,570 170,418 490,152 665,942 174,228 491,715 625,230 145,541 479,689 641,086 155,302 485,784 665,942 174,228 491,715 11,047 9,200 0 467,847 11,047 8,200 0 470,075 11,049 8,200 0 470,536 11,047 8,200 0 470,905 11,049 8,200 0 472,466 11,048 9,200 0 459,441 11,047 9,200 0 465,537 11,049 8,200 0 472,466 488,094 489,322 489,785 490,152 491,715 479,689 485,784 491,715 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 Wednesday End of month 1999 1999 Mar. 31 Jan. 29 18 246 143 445 65 18 243 3 143 0 445 0 64 1 481,757 478,416 458,924 470,976 478,416 18,333 99,462 134,895 110,865 46,595 58,851 29,788 99,537 135,444 110,866 46,596 59,527 26,785 98,303 134,439 112,263 46,598 60,029 10,051 110,149 130,178 107,040 45,222 56,284 24,996 98,522 133,298 110,291 46,246 57,623 26,785 98,303 134,439 112,263 46,598 60,029 5,713 4,151 4,844 5,917 2,871 7,559 5,917 5,402 3,840 23 83 30 175 4,533 23 83 30 175 5,606 27 79 30 175 2,535 25 81 55 175 0 7,248 0 106 30 175 0 5,606 27 79 30 175 Mar. 3 Mar. 10 Mar. 17 Mar. 24 1 Total loans 17 16 21 2 Within fifteen days1 3. Sixteen days to ninety days 2 14 4 12 18 3 467,560 473,119 469,001 19,073 104,811 129,960 109,847 46,246 57,623 17,348 105,319 135,160 109,848 46,594 58,851 11 Total federal agency obligations 2,383 12 13 14 15 16 17 2,072 4 Total U.S. Treasury securities 2 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 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 — — 106 30 175 106 30 175 — — 1. Holdings under repurchase agreements are classified as maturing within fifteen days in accordance with maximum maturity of the agreements. — — — — Feb. 26 Mar. 31 — 2. Includes compensation that adjusts for the effects of inflation on the principal of inflation-indexed securities. A12 Domestic Financial Statistics • June 1999 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE 1 Billions of dollars, averages of daily figures 1998 Item 1995 Dec. 1996 Dec. 1997 Dec. Aug. Total reserves3 Nonborrowed reserves4 Nonborrowed reserves plus extended credit5 Required reserves Monetary base 6 Sept. Nov. Dec. Jan. Feb.r Mar. 44.57 44.49 44.49 42.95 509.50 44.91 44.79 44.79 43.32 513.04 44.89 44.68 44.68 43.35 516.64 44.35 44.23 44.23 43.13 520.73 43.86 43.80 43.80 42.56 524.96 Oct. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 2 3 4 5 1999 1998 Dec. 56.40 56.14 56.14 55.12 434.03 50.08 49.93 49.93 48.66 451.60 46.67 46.35 46.35 44.99 479.39 44.91 44.79 44.79 43.32 513.04 45.00 44.73 44.73 43.48 498.17 44.59 44.33 44.33 42.90 502.24 44.39 44.21 44.21 42.81 505.77 Not seasonally adjusted 6 7 8 9 10 Total reserves7 Nonborrowed reserves Nonborrowed reserves plus extended credit5 Required reserves8 Monetary base9 58.02 57.76 57.76 56.74 439.02 51.52 51.37 51.37 50.10 456.71 47.97 47.65 47.65 46.29 485.05 45.17 45.06 45.06 43.59 518.33 44.81 44.54 44.54 43.30 497.49 44.31 44.06 44.06 42.63 500.99 44.24 44.07 44.07 42.67 504.51 44.29 44.21 44.21 42.67 510.19 45.17 45.06 45.06 43.59 518.33 46.34 46.13 46.13 44.81 520.01 45.25 45.13 45.13 44.03 519.70 43.14 43.08 43.08 41.83 523.32 57.90 57.64 57.64 56.62 444.44 1.28 .26 51.24 51.09 51.09 49.82 463.48 1.42 .16 47.88 47.56 47.56 46.20 491.86 1.68 .32 45.02 44.90 44.90 43.44 525.06 1.58 .12 44.71 44.44 44.44 43.19 504.39 1.51 .27 44.19 43.94 43.94 42.51 507.80 1.68 .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 1.54 .21 45.24 45.12 45.12 44.02 526.85 1.22 .12 43.13 43.06 43.06 41.82 530.27 1.31 .07 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS'0 11 12 13 14 15 16 17 Total reserves" Nonborrowed reserves Nonborrowed reserves plus extended credit5 Required reserves Monetary base 12 Excess reserves' 3 Borrowings from the Federal Reserve 1. Latest monthly and biweekly figures are available from the Board's H.3 (502) weekly statistical release. Historical data 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, LIQUID ASSETS, AND DEBT MEASURES 1 Billions of dollars, averages of daily figures 1999 1998 Item 1995 Dec. 1996 Dec. 1997 Dec. 1998 Dec. Dec. Jan. Feb. Mar. Seasonally adjusted 1 2 3 4 Measures2 Ml M2 M3 Debt 5 6 7 8 Ml components Currency3 Travelers checks4 Demand deposits5 Other checkable deposits6 1,126.7 3,649.1 4,618.5 13,703.2 1,081.3 3,823.9 4,955.6 14,425.3r 1,074.9 4,046.6 5,404.7 15,141.3r 1,093.3 4,401.9r 5,999.6 16,087.3r 1,093.3 4,401.9r 5,999.6 16,087.3r l,090.6 r 4,425.6r 6,019.0" 16,155.4r l,091.9 r 4,446.4r 6,063.3r 16,219.8 1,100.8 4,456.6 6,048.1 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 7.8 377.5 248.7 459.2 7.8 377.5 248.7 462.7 7.8 371.0r 249.2 467.7 r 7.7 371.6r 244.9 472.0 7.8 373.8 247.1 2,522.4 969.4 2,742.6 1,131.7 2,971.8 1,358.0 3,308.6 1,597.7 3,308.6 1,597.7 3,335.0 l,593.4 r 3,354.6 1,616.8r 3,355.8 1,591.5 Commercial banks 11 Savings deposits, including MMDAs 12 Small time deposits9 13 Large time deposits' 0, 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 1,189.8 626.1 541.1 1,202.0 622.0 545.9 1,207.1 618.1r 533.6r 1,207.1 616.3 518.4 Thrift institutions 14 Savings deposits, including MMDAs 15 Small time deposits9 16 Large time deposits 10 359.8 356.7 74.5 367.1 353.8 78.4 377.3 343.2 85.9 415.2 325.9r 89.1 415.2 325.9r 89.1 420.3 r 324.5r 91.0 425.4 322.9 89.9r 428.0 320.7 88.7 Money market mutual funds 17 Retail 18 Institution-only 455.5 255.9 522.8 313.3 602.3 379.9 751.6 516.2 751.6 516.2 766.1 515.0 781.2 529.9 783.8 529.1 Repurchase agreements and Eurodollars 19 Repurchase agreements12 20 Eurodollars 12 198.7 93.7 211.3 113.9 252.8 149.2 297.7 153.6 297.7 153.6 291.5 150.0r 308.2 155.3r 295.3 160.0 3,638.9 10,064.2 3,780.6 10,644.7 3,798.4 ll,342.9 r 3,747.4 12,339.9r 3,747.4 12,339.9r 3,740.9 12,414.5r 3,718.2 12,501.6 n.a. n.a. 1,098.0 4,429.0" 6,027.2r 16,138.9r l,082.6 r 4,440.8r 6,072.1r 16,191.1 1,096.0 4,480.1 6,087.1 n.a. Nontransaction 9 In M27 10 In M3 only8 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 Currency3 Travelers checks 4 Demand deposits5 Other checkable deposits6 1,152.4 3,671.7 4,638.0 13,704.6 1,104.9 3,843.7 4,972.5 14,425.3r 1,097.4 4,064.8 5,420.8 15,140.9r 1,115.3 4,418.7r 6,015.7r 16,087.7r 1,115.3 4,418.7r 6,015.7r 16,087.7r 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 8.0 392.4 250.7 464.2 8.0 392.4 250.7 462.5 7.9 375.7 251.9 466.6 r 7.9 364.6r 243.6 471.3 7.9 368.6 248.1 2,519.3 966.4 2,738.9 1,128.8 2,967.4 1,356.0 3,303.5 1,597.0 3,303.5 1,597.0 3,331.1 l,598.2 r 3,358.1 l,631.3 r 3,384.1 1,607.0 Commercial banks 33 Savings deposits, including MMDAs 34 Small time deposits9 35 Large time deposits10, 11 774.1 573.8 345.8 903.3 592.7 413.3 1,020.4 625.3 487.7 1,186.7 625.4 537.5 1,186.7 625.4 537.5 1,197.0 622.7 532.2 1,203.2 619.4 529.0" 1,216.7 617.1 522.8 Thrift institutions 36 Savings deposits, including MMDAs 37 Small time deposits9 38 Large time deposits10 359.2 355.9 74.3 366.3 353.2 78.1 376.4 342.8 85.4 414.1 325.6 88.5 414.1 325.6 88.5 418.6 324.9 88.7r 424.0 323.6 89.1 431.5 321.1 89.5 Money market mutual funds 39 Retail 40 Institution-only 456.1 257.7 523.2 316.0 602.5 384.5 751.6 523.3 751.6 523.3 767.8 529.3 787.9 547.3 797.7 537.9 Repurchase agreements and Eurodollars 41 Repurchase agreements 12 42 Eurodollars 12 193.8 94.9 205.7 115.7 246.1 152.3 290.3 157.4 290.3 157.4 292.9 155.1r 307.7 158.1r 297.9 159.0 3,645.9 10,058.7 3,787.9 10,637.3r 3,805.8 11,335. l r 3,754.9 12,332.8r 3,754.9 12,332.8r 3,736.6 12,402.2r 3,721.8 12,469.3 Nontransaction 31 In M2 7 32 In M3 only8 components Debt components 43 Federal debt 44 Nonfederal debt Footnotes appear on following page. n.a. n.a. A14 DomesticNonfinancialStatistics • June 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: Ml 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 and Liabilities 1.26 COMMERCIAL BANKS IN THE UNITED STATES A15 Assets and Liabilities 1 A. All commercial banks Billions of dollars Wednesday figures Monthly averages 1998r 1998 Account Mar.r Sept. Oct. 1999 1999 Nov. Dec. Jan. r Feb.r Mar. Mar. 10 Mar. 17 Mar. 24 Mar. 31 Seasonally adjusted Assets 1 Bank credit Securities in bank credit 7 U.S. government securities Other securities 4 Loans and leases in bank credit2 . . . Commercial and industrial 6 Real estate 7 8 Revolving home equity 9 Other in Consumer Security3 u Other loans and leases i? n Interbank loans 14 Cash assets4 15 Other assets5 4,215.8 1,125.1 777.1 348.0 3,090.7 871.1 1,265.3 98.0 1,167.3 500.2 115.9 338.1 215.0 272.1 299.5 4,387.5 1,172.4 771.0 401.5 3,215.0 915.3 1,284.2 97.7 1,186.5 496.0 142.9 376.7 217.0 253.4 326.2 4,486.5 1,214.8 776.4 438.4 3,271.7 938.2 1,292.1 96.7 1,195.4 498.0 157.6 385.8 218.8 247.7 326.9 4,526.7 1,218.8 789.6 429.2 3,307.9 948.8 1,315.2 96.9 1,218.2 501.1 150.9 391.8 217.6 255.0 334.9 4,545.8 1,222.8 791.4 431.4 3,323.0 946.7 1,329.8 96.7 1,233.1 503.0 151.3 392.2 217.3 257.6 336.1 4,529.5 1,214.5 792.4 422.2 3,315.0 943.7 1,333.4 96.6 1,236.8 504.7 146.8 386.3 222.4 264.5 348.7 4,515.5 1,204.2 789.6 414.7 3,311.3 943.9 1,335.6 96.2 1,239.4 504.2 139.1 388.5 225.7 262.3 354.2 4,482.9 1,185.2 797.2 388.0 3,297.7 947.5 1,335.9 96.3 1,239.7 503.1 119.2 392.0 219.1 262.6 353.7 4,488.2 1,186.5 791.8 394.7 3,301.8 943.5 1,340.6 96.1 1,244.5 502.4 124.5 390.8 220.0 265.3 356.5 4,472.7 1,175.4 790.0 385.4 3,297.3 949.4 1,338.3 96.2 1,242.0 503.4 116.0 390.1 216.2 251.1 359.7 4,479.0 1,185.2 801.7 383.5 3,293.9 953.1 1,331.6 96.3 1,235.3 502.9 112.7 393.6 232.9 265.1 350.9 4,484.0 1,187.6 806.9 380.8 3,296.3 944.6 1,334.1 96.5 1,237.6 503.5 120.4 393.7 207.8 269.9 347.6 16 Total assets 6 4,945.5 5,126.6 5,221.9 5,276.2 5,298.9 5307.1 5,299.6 5059.9 5,271.7 5,241.5 5,269.6 5,250.4 3,197.4 689.8 2,507.6 687.0 1,820.6 889.9 306.3 583.5 205.4 258.5 3,264.2 675.2 2,589.1 702.0 1,887.1 945.0 304.9 640.1 206.4 296.5 3,289.7 673.4 2,616.3 716.4 1,899.9 983.7 315.0 668.6 220.9 310.9 3,324.9 670.7 2,654.2 727.8 1,926.4 1,017.5 323.9 693.6 214.4 297.8 3,341.0 672.3 2,668.7 719.4 1,949.4 1,023.1 323.2 699.8 213.9 301.0 3,363.9 667.2 2,696.7 724.9 1,971.7 1,004.1 318.0 686.2 213.5 300.7 3,372.4 662.0 2,710.5 728.2 1,982.3 990.0 315.9 674.1 217.4 294.8 3,360.6 668.7 2,691.9 718.1 1,973.8 983.7 318.0 665.7 217.1 271.3 3,362.4 651.1 2,711.3 724.4 1,986.9 1,000.9 324.6 676.3 217.8 269.9 3,358.3 658.1 2,700.2 722.3 1,977.9 974.1 312.5 661.6 215.2 266.8 3,342.3 674.9 2,667.4 710.7 1,956.6 983.6 324.9 658.8 225.8 270.2 3,364.7 694.3 2,670.4 710.5 1,959.9 973.9 312.9 661.0 218.3 272.5 4,551.2 4,7122 4,805.2 4,854.7 4,878.9 4,882.1 4,874.7 4,832.7 4,851.1 4,814.4 4,821.9 4,8293 394.3 414.4 416.7 421.6 419.9 424.9 425.0 427.3 420.6 427.1 447.7 421.1 17 18 19 70 ?1 77 73 ?4 75 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 Not seasonally adjusted Assets 79 Bank credit Securities in bank credit 31 U.S. government securities Other securities 37 33 Loans and leases in bank credit2 . . . Commercial and industrial 34 35 Real estate Revolving home equity 36 Other 37 38 Consumer 39 Security3 40 Other loans and leases 41 Interbank loans 47 Cash assets4 43 Other assets5 4,213.7 1,131.7 783.4 348.3 3,082.0 873.9 1,259.3 97.2 1,162.1 495.3 119.3 334.2 218.0 263.8 295.7 4,379.6 1,163.1 762.3 400.8 3,216.5 912.1 1,287.6 98.4 1,189.2 498.9 139.0 378.8 213.1 250.9 328.4 4,491.6 1,212.7 771.7 441.0 3,278.9 937.9 1,295.6 97.5 1,198.1 498.5 159.2 387.8 216.7 248.1 324.7 4,540.2 1,225.0 792.0 433.0 3,315.2 948.3 1,319.1 97.7 1,221.4 501.5 153.4 392.9 227.0 261.8 333.3 4,561.4 1,224.5 792.2 432.3 3,336.9 946.7 1,331.7 97.1 1,234.7 508.3 153.5 396.7 225.5 273.1 336.9 4,538.7 1,217.1 792.7 424.5 3,321.6 942.6 1,332.5 96.7 1,235.8 511.0 146.9 388.7 225.3 277.8 341.4 4,513.2 1,209.7 793.8 416.0 3,303.5 945.3 1,329.9 95.9 1,234.1 504.0 138.8 385.3 225.4 263.4 351.0 4,481.2 1,191.9 803.6 388.3 3,289.3 951.0 1,329.4 95.4 1,234.0 498.3 122.5 388.1 222.2 255.0 349.1 4,485.5 1,195.1 799.0 396.1 3,290.4 944.0 1,335.3 95.4 1,239.9 497.7 127.8 385.6 225.5 256.2 350.5 4,472.3 1,182.4 796.2 386.2 3,290.0 953.3 1,331.6 95.4 1,236.1 498.8 120.9 385.4 219.8 247.4 352.0 4,469.4 1,188.2 806.3 381.9 3,281.2 956.5 1,323.5 95.3 1,228.2 497.9 115.9 387.4 228.5 246.8 343.6 4,486.9 1,195.0 814.5 380.5 3,291.9 950.5 1,328.3 95.5 1,232.8 497.8 122.2 393.2 214.1 268.6 348.3 44 Total assets 6 4,9343 5,1143 5,2233 53043 5339.0 5325.6 534.9 5,249.2 5,2593 5,2333 5,230.0 5,2593 Liabilities 45 Deposits Transaction 46 Nontransaction 47 48 49 Other 50 Borrowings 51 From banks in the U.S 57 From others 53 Net due to related foreign offices . . . . 54 Other liabilities 3,192.0 682.7 2,509.3 688.7 1,820.6 885.3 306.4 578.9 203.8 259.2 3,261.9 668.8 2,593.1 703.7 1,889.4 940.8 301.7 639.1 203.1 295.5 3,289.2 663.3 2,625.9 718.0 1,907.9 985.9 313.1 672.7 223.4 309.4 3,350.7 681.0 2,669.7 732.7 1,937.0 1,023.1 327.6 695.5 216.3 298.2 3,374.8 706.5 2,668.4 723.9 1,944.4 1,025.7 329.2 696.4 219.1 301.8 3,363.2 682.0 2,681.2 723.1 1,958.1 1,020.4 323.0 697.4 216.4 301.6 3,349.5 657.1 2,692.4 728.9 1,963.5 993.1 316.4 676.6 227.1 297.2 3,355.2 662.2 2,693.0 720.1 1,972.9 978.0 317.9 660.2 215.1 272.0 3,357.7 645.0 2,712.7 726.9 1,985.8 986.6 321.4 665.1 212.6 271.5 3,352.1 653.9 2,698.2 724.2 1,974.0 974.2 313.1 661.1 210.0 267.5 3,317.7 647.9 2,669.8 713.0 1,956.8 982.9 326.2 656.7 230.5 270.3 3,379.7 702.5 2,677.2 711.4 1,965.8 964.8 313.8 651.1 215.1 272.1 55 Total liabilities 4,540.2 4,7013 4,807.9 4,888.2 4,9213 4,901.6 4,866.8 4,8203 4,8283 4,803.8 4,801.4 4,831.8 394.0 413.0 415.3 416.1 417.7 424.1 428.1 428.8 431.0 429.4 428.6 427.5 88.1 109.4 130.7 111.2 113.2 111.9 108.1 86.5 91.4 83.5 82.1 82.9 109.3 128.0 110.1 111.4 108.1 106.6 85.2 89.6 81.5 82.4 80.7 56 Residual (assets less liabilities) 7 MEMO 57 Revaluation gains on off-balance-sheet items8 58 Revaluation losses on off-balancesheet items8 Footnotes appear on p. A21. 89.7 A16 1.26 Domestic Financial Statistics • June 1999 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities 1 —Continued B. Domestically chartered commercial banks Billions of dollars Monthly averages Account 1998R 1998 Mar. r Wednesday Sept. Oct. 1999 Nov. Dec. Jan. r Feb/ figures 1999 Mar. Mar. 10 Mar. 17 Mar. 24 Mar. 31 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 h o m e equity Other Consumer Security 3 Other loans and leases Interbank loans Cash assets 4 Other assets 5 16 Total a s s e t s 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 F r o m others Net due to related foreign offices Other liabilities .... 27 Total liabilities 28 Residual (assets less liabilities) 7 3,651.9 927.6 688.6 239.1 2,724.2 651.7 1,239.5 98.0 1,141.4 500.2 65.8 267.0 191.9 237.7 263.5 3,789.4 960.6 687.7 272.9 2,828.8 698.5 1,260.6 97.7 1,162.9 496.0 76.2 297.6 189.7 219.1 288.8 3,866.8 996.2 695.6 300.5 2,870.6 714.7 1,268.6 96.7 1,171.9 498.0 87.8 301.5 193.1 212.0 288.4 3,916.1 1,003.6 708.2 295.4 2,912.5 724.8 1,292.5 96.9 1,195.6 501.1 86.1 308.0 190.4 220.1 298.0 3,948.0 1,009.9 709.8 300.2 2,938.1 728.5 1,308.1 96.7 1,211.4 503.0 85.6 312.9 189.3 221.8 297.7 3,946.4 1,003.6 709.0 294.5 2,942.9 730.0 1,311.6 96.6 1,215.0 504.7 84.3 312.3 192.9 228.1 310.2 3,946.7 1,000.1 707.1 293.1 2,946.5 731.5 1,314.0 96.2 1,217.7 504.2 80.6 316.3 193.8 226.1 316.6 3,928.5 986.9 713.4 273.5 2,941.7 736.7 1,314.2 96.3 1,218.0 503.1 69.3 318.3 192.8 225.4 315.9 3,930.4 985.6 708.6 277.1 2,944.7 734.5 1,319.1 96.1 1,223.0 502.4 73.3 315.4 195.6 226.0 318.7 3,920.5 979.1 708.2 270.9 2,941.4 735.9 1,316.6 96.2 1,220.4 503.4 69.6 315.8 189.7 213.9 321.0 3,927.6 987.1 717.5 269.6 2,940.6 740.4 1,309.7 96.3 1,213.5 502.9 66.1 321.5 207.5 227.1 313.8 3,928.1 990.0 719.9 270.1 2,938.1 737.1 1,312.1 96.5 1,215.6 503.5 65.3 320.1 179.9 235.1 310.3 4,288.4 4,429.8 4,502.7 4,566.8 4,599.1 4,619.9 4,625.1 4,604.5 4,612.6 4,587.2 4,617.9 4,594.8 2,907.7 678.1 2,229.6 410.3 1,819.3 718.0 279.3 438.7 81.7 188.2 2,948.9 659.8 2,289.1 404.6 1,884.4 739.7 276.5 463.3 108.4 220.6 2,971.9 658.0 2,313.9 415.9 1,898.1 768.4 284.5 484.0 115.3 231.8 3,009.4 657.9 2,351.6 426.9 1,924.6 802.9 291.8 511.2 115.2 221.7 3,032.4 660.7 2,371.7 423.0 1,948.7 819.3 296.0 523.3 112.4 224.3 3,045.6 654.3 2,391.3 420.7 1,970.7 810.5 296.5 514.0 111.7 226.4 3,051.5 648.0 2,403.4 422.3 1,981.1 809.3 298.0 511.4 117.3 224.4 3,049.3 655.6 2,393.7 421.0 1,972.7 809.5 293.6 515.9 117.7 203.2 3,044.5 637.8 2,406.7 420.8 1,985.9 824.0 300.7 523.2 118.5 201.2 3,044.2 644.4 2,399.9 422.6 1,977.3 801.3 287.8 513.6 115.5 198.5 3,037.4 662.5 2,374.8 418.4 1,956.4 814.2 300.4 513.8 126.8 203.1 3,060.7 681.5 2,379.2 421.4 1,957.8 797.0 286.9 510.1 116.0 204.5 3,895.6 4,017.6 4,087.4 4,149.3 4,188.5 4,194.2 4,202.6 4,179.7 4,188.2 4,159.5 4,181.4 4,178.3 392.8 412.2 415.3 417.5 410.7 425.6 422.6 424.7 424.4 427.7 436.5 416.5 Not seasonally adjusted 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 Assets B a n k credit Securities in bank credit U.S. government securities Other securities Loans and leases in hank credit 2 Commercial and industrial Real estate Revolving h o m e equity Other Consumer Security 3 Other loans and leases Interbank loans Cash assets 4 Other assets 5 4 4 Total a s s e t s 6 45 46 47 48 49 50 51 52 53 54 Liabilities Deposits Transaction Nontransaction Large time Other Borrowings F r o m banks in the U.S F r o m others Net due to related foreign offices Other liabilities .... 55 T o t a l liabiUties 56 Residual (assets less liabilities) 7 MEMO 57 Revaluation gains on off-balance-sheet items 8 58 Revaluation losses on off-balancesheet items 8 59 Mortgage-backed securities 9 Footnotes appear on p. A21. 3,647.3 932.8 693.9 238.9 2,714.5 654.1 1,233.4 97.2 1,136.2 495.3 68.1 263.6 194.9 230.4 259.2 3,782.3 951.8 679.8 272.0 2,830.5 695.8 1,264.0 98.4 1,165.6 498.9 72.1 299.7 185.8 216.9 290.6 3,867.7 991.0 690.9 300.0 2,876.7 713.5 1,271.8 97.5 1,174.3 498.5 89.6 303.3 191.0 212.0 286.5 3,926.4 1,006.6 710.1 296.4 2,919.8 723.0 1,296.3 97.7 1,198.6 501.5 89.1 309.9 199.8 226.3 296.2 3,960.9 1,013.1 710.4 302.6 2,947.8 725.7 1,310.0 97.1 1,212.9 508.3 87.3 316.5 197.5 235.8 297.1 3,952.2 1,005.9 709.7 296.3 2,946.2 727.0 1,310.4 96.7 1,213.8 511.0 84.4 313.4 195.8 241.0 302.6 3,940.5 1,003.9 710.9 293.0 2,936.5 731.1 1,307.9 95.9 1,212.1 504.0 80.6 312.9 193.5 227.9 312.2 3,925.2 992.4 718.9 273.5 2,932.9 739.9 1,307.7 95.4 1,212.2 498.3 72.1 314.9 195.8 219.0 310.7 3,926.0 991.9 714.9 277.0 2,934.1 735.4 1,313.6 95.4 1,218.1 497.7 76.4 311.0 201.1 218.4 310.7 3,917.6 983.6 712.9 270.7 2,934.0 739.4 1,309.8 95.4 1,214.3 498.8 73.9 312.1 193.3 211.5 312.5 3,918.6 991.0 721.4 269.6 2,927.6 743.7 1,301.7 95.3 1,206.4 497.9 68.5 315.8 203.1 209.9 306.7 3,929.9 997.4 727.0 270.4 2,932.5 742.2 1,306.6 95.5 1,211.1 497.8 66.2 319.7 186.2 234.2 311.7 4,275.3 4,418.1 4,499.5 4,590.9 4,633.5 4,634.2 4,616.2 4,592.6 4,598.2 4,576.8 4,580.2 4,603.7 2,899.6 670.8 2,228.8 410.1 1,818.6 713.4 279.3 434.1 82.1 188.7 2,946.8 652.8 2,294.0 404.1 1,889.9 735.5 273.3 462.3 106.8 220.0 2,971.0 647.9 2,323.1 417.6 1,905.4 770.6 282.6 488.1 115.5 231.0 3,035.6 668.2 2,367.4 432.4 1,935.0 808.5 295.4 513.0 113.7 221.1 3,062.6 694.5 2,368.1 425.5 1,942.6 821.9 302.0 519.9 111.4 223.7 3,047.5 669.0 2,378.5 422.3 1,956.2 826.8 301.6 525.2 112.0 227.0 3,029.8 643.4 2,386.4 424.8 1,961.6 812.4 298.5 513.9 123.4 225.2 3,040.7 649.0 2,391.8 420.8 1,971.0 803.9 293.5 510.4 117.6 203.8 3,038.6 631.8 2,406.8 422.9 1,983.9 809.6 297.6 512.1 119.4 202.1 3,034.9 640.2 2,394.7 422.7 1,972.0 801.4 288.3 513.1 113.8 199.0 3,007.3 635.3 2,372.0 417.1 1,954.9 813.5 301.7 511.7 129.3 203.5 3,071.7 689.3 2,382.4 418.5 1,963.9 787.9 287.8 500.2 113.7 204.9 3,883.8 4,009.1 4,088.2 4,178.9 4,219.6 4,213.3 4,190.7 4,165.9 4,169.7 4,149.2 4,153.5 4,178.3 391.4 409.0 411.4 412.0 413.9 420.9 425.5 426.7 428.4 427.6 426.8 425.4 47.2 61.7 78.7 62.7 65.2 66.0 64.5 46.3 49.0 44.1 43.0 43.6 49.6 299.8 65.1 313.2 80.5 335.8 65.1 346.0 66.8 345.4 65.8 341.3 65.3 339.3 46.0 333.3 48.4 332.8 43.5 332.0 44.3 332.3 42.3 334.9 Commercial Banking Institutions—Assets and Liabilities 1.26 A17 Assets and Liabilities 1 —Continued COMMERCIAL BANKS IN THE UNITED STATES C. Large domestically chartered commercial banks Billions of dollars Monthly averages Account 1998 Mar. r Wednesday figures 1999 1998' Sept. Oct. Nov. Dec. Jan. r Feb/ 1999 Mar. Mar. 10 Mar. 17 Mar. 24 Mar. 31 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 assets5 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. 2,259.1 530.1 377.8 25.1 352.7 152.3 73.1 79.1 22.6 56.5 1,729.0 472.6 1.2 471.3 698.1 69.7 628.4 300.2 59.8 2,337.5 545.6 369.8 22.2 347.6 175.8 86.4 89.4 23.4 66.0 1,791.9 507.9 1.3 506.6 689.3 68.9 620.4 298.8 69.9 2,395.4 573.6 373.2 21.0 352.2 200.5 108.8 91.7 23.9 67.8 1,821.7 521.4 1.3 520.1 689.2 68.0 621.2 300.7 81.3 2,416.5 572.0 379.1 22.3 356.9 192.9 96.8 96.1 24.5 71.7 1,844.5 528.5 1.3 527.2 700.4 67.8 632.6 302.0 79.3 2,428.0 571.1 376.7 23.0 353.7 194.4 97.4 97.0 24.8 72.2 1,856.8 529.3 1.3 528.0 705.9 67.6 638.3 302.4 79.2 2,420.7 562.6 375.1 25.1 350.1 187.5 90.9 96.6 24.6 71.9 1,858.0 529.3 1.3 528.1 704.3 67.6 636.8 305.3 78.1 2,414.4 556.5 372.4 17.5 354.9 184.1 87.5 96.7 24.7 72.0 1,857.8 530.5 1.2 529.3 703.5 67.5 636.1 304.3 74.5 2,387.2 540.0 376.1 22.2 353.8 163.9 66.4 97.5 24.9 72.7 1,847.2 534.7 1.1 533.6 700.1 67.4 632.7 301.9 63.2 2,391.2 539.6 372.0 19.5 352.4 167.6 70.2 97.4 24.8 72.6 1,851.6 532.6 1.1 531.5 705.5 67.4 638.2 302.8 67.0 2,379.5 532.9 371.3 18.9 352.4 161.6 64.3 97.3 24.9 72.3 1,846.6 534.0 1.1 532.9 702.7 67.5 635.3 301.9 63.5 2,385.8 539.9 380.1 26.0 354.1 159.8 62.7 97.1 24.9 72.2 1,845.8 538.6 1.1 537.5 695.4 67.4 628.0 301.0 60.1 2,383.5 541.6 381.1 25.5 355.6 160.5 61.6 98.9 24.9 74.1 1,841.9 534.6 1.2 533.4 696.2 67.5 628.7 301.3 59.4 42.0 17.8 11.6 10.0 51.5 18.5 11.6 10.0 63.3 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 10.2 46.1 17.1 11.5 10.2 50.0 17.0 11.5 10.1 46.1 17.4 11.5 10.1 43.3 16.8 11.5 10.1 42.4 17.0 11.6 10.2 7.4 81.3 88.0 131.6 12.4 92.0 99.9 118.7 12.9 92.9 101.7 120.3 12.4 96.1 103.8 120.6 16.2 95.7 106.4 123.1 12.6 97.7 108.8 125.2 12.0 97.8 113.4 126.7 12.0 97.8 115.9 128.9 10.3 96.9 114.8 131.6 11.7 95.4 115.6 125.5 12.9 99.7 116.4 142.7 13.1 98.3 117.2 119.0 82.1 49.5 174.5 205.9 65.4 53.3 151.0 223.9 74.3 46.0 144.1 220.8 74.6 46.0 149.8 225.8 73.9 49.2 151.2 223.3 78.5 46.7 157.1 232.4 78.6 48.0 155.0 239.0 81.6 47.2 153.5 238.9 84.2 47.5 155.6 241.6 79.9 45.5 145.0 243.1 93.6 49.0 154.1 236.6 72.5 46.5 159.5 233.9 2,733.4 2,793.5 2,842.5 2^74.7 2^87.6 2,8973 2^70.1 2381.7 2£54£ 2^80.8 2357.1 1,652.6 394.7 1,257.9 229.5 1,028.4 567.0 209.1 357.9 77.6 160.7 1,640.5 373.7 1,266.8 213.8 1.053.0 574.0 199.2 374.8 104.6 191.1 1,651.0 371.9 1,279.1 223.1 1,056.0 596.2 203.5 392.7 110.6 201.5 1,667.0 369.4 1,297.7 229.9 1,067.8 622.4 207.1 415.3 111.6 190.7 1,671.6 369.4 1,302.1 228.2 1,074.0 633.6 209.0 424.6 108.8 193.0 1,672.6 364.3 1,308.3 227.5 1,080.7 627.8 213.3 414.5 108.7 195.4 1,668.1 357.9 1,310.2 226.8 1,083.4 622.9 213.5 409.4 114.1 193.9 1,666.5 362.0 1,304.5 224.2 1,080.3 619.0 208.2 410.8 113.2 172.6 1,664.3 353.7 1,310.6 225.2 1,085.4 632.5 214.7 417.8 114.6 170.6 1,663.4 356.4 1,307.0 226.2 1,080.8 609.0 201.4 407.6 111.7 168.1 1,656.3 364.1 1,292.2 221.0 1,071.3 621.4 213.4 408.1 121.6 172.5 1,674.6 375.7 1,298.9 223.1 1,075.8 610.9 204.8 406.1 110.2 173.5 2,457.9 2,510.2 2,5593 2^91.8 2,606.9 2,604.5 2^98.9 2^71.4 2382.1 2£522 2^71.9 2^69.2 275.4 283.3 283.2 282.9 280.7 292.8 297.8 298.8 299.6 302.6 308.8 288.0 A18 1.26 Domestic Financial Statistics • June 1999 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities 1 —Continued C. Large domestically chartered commercial banks—Continued Monthly averages Account 1998r 1998 Feb.' Wednesday figures Sept. Oct. 1999 Nov. Dec. Jan. r Feb. r 1999 Mar. Mar. 10 Mar. 17 Mar. 24 Mar. 31 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 Security 3 70 Federal funds sold to and repurchase agreements with broker-Sealers . . . . 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 assets 5 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 .... 2,260.4 533.9 381.7 26.6 355.2 232.9 122.3 31.8 54.7 35.8 152.2 73.1 79.0 22.7 56.3 1,726.5 474.4 1.2 473.2 695.4 69.0 386.4 240.0 297.5 62.0 2,327.0 538.7 363.4 22.0 341.4 236.4 105.0 27.7 44.3 33.0 175.3 86.4 88.9 23.2 65.6 1,788.3 506.3 1.3 505.0 689.6 69.3 381.0 239.2 300.8 65.9 2,397.1 571.3 371.2 21.9 349.3 255.3 94.0 26.1 37.2 30.6 200.1 108.8 91.3 24.0 67.4 1,825.9 521.5 1.3 520.2 691.0 68.6 382.9 239.5 300.6 83.1 2,429.6 577.3 383.4 24.6 358.9 258.2 100.7 27.2 38.2 35.2 193.9 96.8 97.1 24.6 72.5 1,852.3 528.1 1.3 526.8 703.7 68.3 394.1 241.3 301.6 82.3 2,442.5 574.6 377.4 23.7 353.7 253.5 100.2 26.6 38.4 35.2 197.2 97.4 99.8 25.0 74.8 1,867.9 527.4 1.3 526.1 709.5 67.8 398.6 243.0 305.7 80.9 2,432.9 565.7 376.4 25.2 351.2 250.1 101.1 27.5 37.6 36.0 189.3 90.9 98.4 24.8 73.6 1,867.2 527.1 1.3 525.8 707.1 67.6 394.1 245.4 310.7 78.2 2,418.9 562.6 377.8 18.2 359.6 247.9 111.7 25.6 46.8 39.3 184.7 87.5 97.3 24.8 72.5 1,856.3 530.4 1.2 529.3 702.2 67.2 386.7 248.4 304.7 74.5 2,389.6 544.0 380.1 23.2 356.9 241.4 115.5 23.8 52.1 39.6 163.9 66.4 97.5 24.9 72.6 1,845.7 537.3 1.1 536.2 697.1 66.8 381.1 249.3 299.2 66.0 2,395.7 545.9 378.1 21.9 356.2 241.5 114.7 23.5 51.6 39.5 167.8 70.2 97.6 24.9 72.7 1,849.8 533.5 1.1 532.4 704.2 66.8 389.3 248.1 300.3 70.1 2,383.2 536.3 374.7 20.4 354.3 239.5 114.8 23.7 51.9 39.2 161.6 64.3 97.2 24.9 72.3 1,847.0 536.8 1.1 535.7 700.0 66.8 383.7 249.5 299.4 67.8 2,380.6 541.0 381.4 25.8 355.5 240.1 115.4 24.2 51.3 39.9 159.6 62.7 96.9 24.9 72.0 1,839.7 540.8 1.1 539.7 690.9 66.6 374.3 250.0 298.3 62.5 2,386.7 545.4 385.2 25.1 360.1 242.6 117.5 23.8 54.0 39.8 160.2 61.6 98.7 24.9 73.8 1,841.3 538.8 1.2 537.7 692.8 66.8 376.0 250.0 297.8 60.4 44.1 17.9 11.6 9.6 47.6 18.3 11.7 10.3 65.2 17.9 11.7 10.1 65.0 17.3 12.0 10.1 63.7 17.1 11.7 10.1 62.0 16.2 11.6 10.1 58.1 16.4 11.5 9.9 48.7 17.3 11.5 9.8 53.4 16.7 11.5 9.8 50.3 17.5 11.5 9.8 45.3 17.2 11.5 9.8 42.8 17.5 11.5 9.9 7.4 79.8 88.7 131.5 12.4 92.5 98.9 116.8 12.9 93.8 101.0 116.7 12.4 99.2 102.8 122.0 16.2 100.4 106.0 126.3 12.6 99.3 110.5 128.1 12.0 96.3 114.7 126.5 12.0 96.0 116.8 129.0 10.3 94.2 115.9 130.9 11.7 93.5 116.4 126.3 12.9 95.8 117.2 138.6 13.1 99.1 118.0 122.7 81.9 49.6 168.7 202.7 63.9 52.9 150.0 225.2 71.3 45.4 144.8 218.7 77.3 44.7 153.9 222.7 77.7 48.5 161.7 222.8 82.1 46.0 166.8 227.9 79.2 47.3 155.8 235.9 81.4 47.6 148.6 235.1 83.4 47.5 148.9 235.2 79.6 46.6 142.9 238.5 89.3 49.3 142.3 231.3 75.7 47.0 159.2 233.7 2,725.6 2,781.1 2^393 2390.1 2^)15.4 2^)17.9 2398.9 2,863.9 2,8723 2352.6 2354.6 2364.0 1,650.2 389.0 1,261.2 229.3 1,031.9 566.9 211.0 355.8 78.0 160.7 1,636.0 369.7 1,266.3 213.3 1,053.0 567.7 195.6 372.1 103.0 191.1 1,647.4 364.9 1,282.6 224.8 1,057.7 596.0 199.9 396.2 110.9 201.5 1,681.0 376.1 1,304.9 235.4 1,069.6 625.8 209.0 416.8 110.1 190.7 1,695.7 392.4 1,303.3 230.7 1,072.6 634.2 213.0 421.2 107.8 193.0 1,681.8 374.6 1,307.2 229.2 1,078.1 643.6 217.7 425.9 109.0 195.4 1,663.8 354.9 1,308.9 229.3 1,079.6 628.5 215.2 413.3 120.2 193.9 1,664.9 356.7 1,308.2 224.0 1,084.2 618.9 210.5 408.4 113.0 172.6 1,664.7 346.4 1,318.3 227.3 1,091.0 626.5 215.2 411.3 115.6 170.6 1,663.5 352.8 1,310.7 226.3 1,084.4 615.0 204.5 410.6 110.0 168.1 1,638.2 346.0 1,292.2 219.6 1,072.5 624.8 216.3 408.5 124.1 172.5 1,683.9 381.4 1,302.5 220.2 1,082.3 605.8 207.3 398.5 107.8 173.5 2,455.8 2,497.8 2^553 2,607.7 2,630.8 2,629.8 2,606/4 2,569.5 2377.4 2,556.6 2,559.7 2^71.1 269.8 283.3 283.5 282.4 284.7 288.1 292.5 294.4 294.9 295.9 294.9 292.9 47.2 61.7 78.7 62.7 65.2 66.0 64.5 46.3 49.0 44.1 43.0 43.6 49.6 253.9 171.0 65.1 260.5 167.3 80.5 280.7 189.5 65.1 287.0 196.6 66.8 284.0 194.7 65.8 279.6 191.9 65.3 276.7 187.3 46.0 269.8 180.3 48.4 269.4 179.6 43.5 268.9 179.5 44.3 268.6 179.7 42.3 270.8 180.9 82.9 93.2 91.2 90.4 89.3 87.7 89.4 89.5 89.7 89.3 88.9 90.0 2.9 35.2 3.7 36.8 4.4 38.5 3.1 39.1 3.0 38.5 3.0 38.9 2.4 38.9 1.5 39.0 1.5 39.1 1.6 40.0 1.5 39.5 1.6 37.6 MEMO 95 Revaluation gains on off-balancesheet items 8 96 Revaluation losses on off-balancesheet items 8 97 Mortgage-backed securities 9 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 11 . . . Footnotes appear on p. A21. Commercial Banking Institutions—Assets and Liabilities 1.26 A19 Assets and Liabilities 1 —Continued COMMERCIAL BANKS IN THE UNITED STATES D. Small domestically chartered commercial banks Billions of dollars Wednesday figures Monthly averages Account 1998 1998 Mar. r Sept. Oct. r 1999 1999 Nov. Dec. Jan. r Feb/ Mar. Mar. 10 Mar. 17 Mar. 24 Mar. 31 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 1,392.7 397.5 310.7 86.8 995.3 179.1 541.3 28.3 513.0 200.1 6.0 68.7 60.4 63.2 57.6 1,451.8 414.9 317.9 97.0 1,036.9 190.6 571.3 28.8 542.5 197.2 6.2 71.6 71.0 68.1 64.9 1,471.4 422.5 322.5 100.1 1,048.9 193.3 579.4 28.7 550.7 197.3 6.5 72.4 72.8 67.9 67.6 1,499.6 431.6 329.0 102.6 1,068.0 196.3 592.1 29.1 563.0 199.1 6.8 73.7 69.8 70.3 72.2 1,520.0 438.8 333.0 105.8 1,081.2 199.2 602.2 29.1 573.1 200.6 6.4 72.8 66.2 70.7 74.3 1,525.8 441.0 333.9 107.1 1,084.8 200.7 607.3 29.0 578.2 199.4 6.2 71.4 67.7 71.0 77.8 1,532.3 443.6 334.7 108.9 1,088.7 201.1 610.4 28.8 581.7 199.9 6.1 71.3 67.1 71.1 77.6 1,541.3 446.9 337.3 109.5 1,094.5 202.0 614.1 28.8 585.3 201.2 6.1 71.0 63.9 71.9 77.0 1,539.2 446.1 336.6 109.5 1,093.1 201.9 613.5 28.7 584.8 199.7 6.3 71.8 64.0 70.4 77.1 1,541.0 446.2 336.8 109.3 1,094.9 201.9 613.9 28.8 585.1 201.5 6.1 71.4 64.3 68.9 77.9 1,541.9 447.1 337.4 109.8 1,094.7 201.8 614.4 28.9 585.5 201.9 6.0 70.8 64.9 73.0 77.2 1,544.6 448.4 338.8 109.6 1,096.2 202.5 615.9 29.0 587.0 202.2 5.8 69.7 60.9 75.5 76.4 1,555.0 1,636-3 1,660.2 1,692.1 1,7113 1,722.6 1,728.4 1,7343 1,730.9 1,7323 1,737.1 1,737.6 1,255.0 283.3 971.7 180.8 790.9 151.0 70.2 80.8 4.1 27.5 1,308.4 286.1 1,022.3 190.8 831.5 165.7 77.2 88.5 3.7 29.5 1,320.9 286.1 1,034.9 192.8 842.1 172.2 81.0 91.2 4.7 30.3 1,342.4 288.5 1,053.9 197.0 856.9 180.5 84.7 95.8 3.6 30.9 1,360.9 291.3 1,069.5 194.8 874.7 185.7 87.0 98.8 3.6 31.3 1,373.0 289.9 1,083.1 193.2 889.9 182.7 83.2 99.5 3.0 31.0 1,383.4 290.2 1,093.2 195.5 897.7 186.4 84.4 102.0 3.2 30.6 1,382.8 293.6 1,089.2 196.8 892.4 190.5 85.3 105.1 4.5 30.6 1,380.2 284.1 1,096.1 195.6 900.5 191.5 86.0 105.4 3.9 30.6 1,380.8 288.0 1,092.8 196.4 896.5 192.3 86.4 106.0 3.8 30.3 1,381.0 298.5 1,082.6 197.4 885.1 192.8 87.0 105.7 5.1 30.5 1,386.1 305.8 1,080.3 198.3 882.0 186.1 82.1 104.0 5.9 31.0 1,437.6 1307.4 1328.1 13573 13813 1389.8 1,603.6 1,608.4 1,606.1 1,6073 1,6093 1,609.1 117.4 128.9 132.0 134.6 130.0 132.8 124.8 126.0 124.8 125.0 127.6 128.5 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) MEMO 57 Mortgage-backed securities® Footnotes appear on p. A21. 7 .... 1,386.9 398.9 312.1 86.8 988.0 179.7 538.0 28.2 509.8 197.8 6.0 66.5 63.4 61.7 56.6 1,455.3 413.1 316.4 96.7 1,042.2 189.5 574.4 29.1 545.4 198.1 6.2 73.9 69.0 66.9 65.3 1,470.5 419.7 319.7 99.9 1,050.8 191.9 580.8 28.9 551.9 197.9 6.5 73.7 74.3 67.2 67.8 1,496.8 429.3 326.7 102.6 1,067.5 194.9 592.6 29.3 563.2 199.9 6.8 73.4 77.8 72.4 73.5 1,518.3 438.4 333.0 105.5 1,079.9 198.3 600.5 29.3 571.2 202.6 6.4 72.0 71.2 74.1 74.2 1,519.3 440.2 333.3 106.9 1,079.0 199.9 603.4 29.0 574.3 200.3 6.2 69.3 67.7 74.2 74.7 1,521.6 441.4 333.1 108.3 1,080.2 200.7 605.7 28.7 577.0 199.3 6.1 68.5 67.0 72.1 76.3 1,535.6 448.4 338.9 109.6 1,087.2 202.6 610.5 28.7 581.9 199.1 6.1 68.9 66.9 70.4 75.6 1,530.3 446.0 336.8 109.2 1,084.3 201.9 609.4 28.6 580.7 197.4 6.3 69.3 70.3 69.5 75.4 1,534.3 447.3 338.2 109.1 1,087.0 202.6 609.7 28.6 581.1 199.4 6.1 69.1 67.1 68.6 74.0 1,537.9 450.0 340.1 110.0 1,087.9 202.8 610.8 28.7 582.1 199.7 6.0 68.6 64.4 67.6 75.4 1,543.2 452.0 341.9 110.1 1,091.2 203.4 613.8 28.7 585.1 199.9 5.8 68.2 63.5 74.9 78.0 1349.7 1,637.0 1,660.2 1,700.8 1,718.1 1,716.2 1,7173 1,728.7 1,725.9 1,7243 1,725.6 1,739.7 1,249.4 281.8 967.5 180.8 786.7 146.6 68.3 78.3 4.1 28.0 1,310.8 283.2 1,027.6 190.8 836.8 167.8 77.6 90.2 3.7 28.9 1,323.6 283.1 1,040.5 192.8 847.7 174.6 82.7 91.9 4.7 29.6 1,354.6 292.2 1,062.5 197.0 865.4 182.6 86.4 96.2 3.6 30.3 1,366.9 302.1 1,064.8 194.8 870.0 187.7 89.0 98.7 3.6 30.7 1,365.7 294.4 1,071.3 193.2 878.1 183.1 83.9 99.2 3.0 31.7 1,366.0 288.4 1,077.5 195.5 882.0 183.8 83.3 100.6 3.2 31.4 1,375.8 292.3 1,083.5 196.8 886.7 184.9 83.0 101.9 4.5 31.1 1,373.9 285.4 1,088.5 195.6 892.9 183.1 82.4 100.7 3.9 31.5 1,371.4 287.4 1,084.1 196.4 887.7 186.4 83.9 102.5 3.8 30.9 1,369.1 289.3 1,079.8 197.4 882.4 188.6 85.4 103.3 5.1 31.0 1,387.7 307.9 1,079.9 198.3 881.6 182.1 80.4 101.7 5.9 31.4 1,428.1 1,511.3 1332.4 1,571.2 1388.9 13833 1384.4 13963 1392.4 1392.6 13933 1,607.1 131.9 132.6 63.6 64.1 121.6 125.7 127.8 129.6 129.2 132.7 133.0 132.3 133.5 131.7 45.9 52.7 55.2 59.0 61.4 61.7 62.6 63.5 63.4 63.1 A20 1.26 Domestic Financial Statistics • June 1999 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities 1 —Continued E. Foreign-related institutions Billions of dollars Monthly averages Account 1998r 1998 Mar/ Wednesday figures Sept. Oct. 1999 Nov. Dec. Jan/ Feb/ 1999 Mar. Mar. 10 Mar. 17 Mar. 24 Mar. 31 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 credit2 . . . Commercial and industrial Real estate Security3 Other loans and leases Interbank loans Cash assets4 Other assets5 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 liabilities 23 Residual (assets less liabilities)7 564.0 197.5 88.6 109.0 366.4 219.4 25.9 50.1 71.1 23.1 34.4 36.0 598.1 211.9 83.3 128.6 386.2 216.8 23.6 66.7 79.1 27.3 34.3 37.3 619.7 218.6 80.8 137.8 401.1 223.5 23.5 69.8 84.3 25.7 35.7 38.5 610.6 215.2 81.4 133.8 395.4 224.1 22.6 64.9 83.8 27.2 34.9 36.9 597.7 212.8 81.6 131.2 384.9 218.2 21.7 65.7 79.4 28.0 35.8 38.4 583.1 211.0 83.3 127.6 372.1 213.7 21.8 62.6 74.0 29.5 36.4 38.5 568.9 204.1 82.5 121.6 364.8 212.4 21.6 58.5 72.3 31.9 36.2 37.7 554.4 198.4 83.8 114.5 356.0 210.8 21.7 49.9 73.7 26.4 37.2 37.8 557.9 200.8 83.2 117.6 357.1 209.0 21.5 51.2 75.4 24.4 39.3 37.8 552.2 196.3 81.8 114.5 355.9 213.5 21.6 46.4 74.3 26.5 37.2 38.7 551.4 198.1 84.2 113.9 353.3 212.7 21.8 46.6 72.1 25.4 38.1 37.1 555.8 197.6 87.0 110.6 358.2 207.5 21.9 55.1 73.6 27.9 34.9 37.3 657.1 696.7 7193 709.4 699.7 687.2 674.5 655.5 659.1 6543 651.7 655.6 289.7 11.8 278.0 171.9 27.1 144.8 123.7 70.3 315.3 15.3 300.0 205.3 28.4 176.8 98.1 75.9 317.8 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 13.9 307.0 180.7 18.0 162.7 100.1 70.4 311.2 13.1 298.1 174.2 24.4 149.8 99.4 68.1 317.9 13.3 304.6 177.0 23.9 153.1 99.3 68.7 314.0 13.7 300.3 172.8 24.7 148.0 99.7 68.4 305.0 12.4 292.6 169.4 24.5 145.0 99.0 67.1 304.0 12.7 291.2 176.9 26.0 150.9 102.2 67.9 655.6 694.6 717.8 705.4 690.5 687.9 672.1 652.9 662.9 654.9 640.5 651.0 1.4 2.1 1.5 4.0 9.2 -.7 2.4 2.5 -3.8 -.6 11.2 4.6 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 credit2 . . . Commercial and industrial Real estate Security3 Other loans and leases Interbank loans Cash assets4 Other assets5 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 MEMO 51 Revaluation gains on off-balance-sheet items8 52 Revaluation losses on off-balancesheet items8 Footnotes appear on p. A21. 566.4 198.9 89.5 17.5 72.1 109.3 66.0 43.3 367.5 219.8 25.9 51.2 70.6 23.1 33.4 36.4 597.3 211.3 82.5 20.7 61.8 128.8 84.2 44.6 386.0 216.3 23.6 66.8 79.2 27.3 34.1 37.8 623.9 221.7 80.7 16.6 64.2 141.0 91.6 49.3 402.2 224.4 23.7 69.6 84.5 25.7 36.1 38.3 613.8 218.4 81.8 14.1 67.7 136.6 84.8 51.8 395.4 225.3 22.9 64.3 83.0 27.2 35.5 37.1 600.6 211.4 81.8 15.2 66.6 129.6 78.9 50.8 389.1 221.0 21.8 66.2 80.3 28.0 37.3 39.9 586.5 211.2 83.0 17.5 65.5 128.2 79.1 49.1 375.3 215.5 22.0 62.5 75.3 29.5 36.9 38.8 572.7 205.8 82.9 18.5 64.4 122.9 75.4 47.5 366.9 214.2 22.0 58.2 72.5 31.9 35.5 38.8 556.0 199.5 84.7 19.9 64.8 114.8 71.8 43.1 356.5 211.1 21.8 50.5 73.1 26.4 36.1 38.4 559.5 203.1 84.0 19.7 64.3 119.1 74.3 44.8 356.3 208.6 21.8 51.4 74.6 24.4 37.8 39.8 554.8 198.8 83.3 19.1 64.2 115.5 72.0 43.5 356.0 213.9 21.8 47.0 73.3 26.5 35.9 39.5 550.8 197.2 84.9 19.9 65.0 112.3 69.9 42.4 353.6 212.9 21.8 47.4 71.5 25.4 36.9 36.9 557.0 197.6 87.5 21.5 66.0 110.2 70.1 40.0 359.4 208.3 21.7 56.0 73.5 27.9 34.4 36.6 659.0 6962 723.7 713.4 7055 691.4 678.7 656.5 661.2 656.4 649.7 655.6 292.4 11.9 280.5 171.9 27.1 144.8 121.7 70.4 315.1 16.0 299.1 205.3 28.4 176.8 96.3 75.5 318.2 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 74.5 319.7 13.7 306.0 180.7 18.0 162.7 103.7 71.9 314.5 13.2 301.3 174.2 24.4 149.8 97.6 68.2 319.1 13.2 306.0 177.0 23.9 153.1 93.2 69.3 317.2 13.7 303.5 172.8 24.7 148.0 96.2 68.5 310.5 12.6 297.9 169.4 24.5 145.0 101.3 66.8 308.0 13.3 294.8 176.9 26.0 150.9 101.4 67.2 656.4 692.2 719.7 709.4 701.7 688.2 676.0 654.4 658.6 654.6 648.0 653.6 2.6 4.0 4.0 4.0 3.8 3.2 2.6 2.1 2.6 1.8 1.8 2.1 40.9 47.7 52.0 48.6 48.1 45.9 43.6 40.3 42.4 39.4 39.1 39.3 40.2 44.2 47.5 44.9 44.5 42.2 41.3 39.1 41.2 38.0 38.2 38.4 Commercial Banking Institutions—Assets and Liabilities A21 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. A22 1.32 DomesticNonfinancialStatistics • June 1999 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING A. Commercial Paper Millions of dollars, seasonally adjusted, end of period Year ending December 1998 1999 Item 1 All issuers 1994 1995 1996 1997 1998 Sept. Oct. Nov. Dec. Jan. Feb. 595,382 674,904 775,371 966,699 1,163,303 1,119,816 1,152,337 1,150,213 1,159,027 1,163,303 1,178,168 223,038 207,701 275,815 210,829 361,147 229,662 513,307 252,536 614,142 322,030 606,355 281,927 639,571 271,526 627,170 289,184 621,246 304,545 614,142 322,030 629,569 314,601 164,643 188,260 184,563 200,857 227,132 231,534 241,239 233,859 233,236 227,132 233,998 Financial companies' 2 3 Dealer-placed paper, total 2 Directly placed paper, total 3 4 Nonfinancial companies4 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 1 Millions of dollars, not seasonally adjusted, year ending September 2 Item 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 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 BY 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. 1 1 Rate 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 1996—Jan. . Feb. Mar. Apr. May June July . Aug. 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 Average rate 1997—Jan. . Feb. Mar. Apr. May June July . Aug. Sept. Oct. . Nov. Dec. 1998—Jan. . Feb. Mar Apr. May June July . Aug. Sept. Oct. . Nov. Dec. 1999—Jan Feb. Mar. 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 1998 Item 1996 1997 1999, week ending 1999 1998 Dec. Jan. Feb. Mar. Feb. 26 Mar. 5 Mar. 12 Mar. 19 Mar. 26 MONEY MARKET INSTRUMENTS 1 Federal funds 1,2 ' 3 2 Discount window borrowing 2 ' 4 5.30 5.02 5.46 5.00 5.35 4.92 4.68 4.50 4.63 4.50 4.76 4.50 4.81 4.50 4.75 4.50 4.85 4.50 4.80 4.50 4.79 4.50 4.79 4.50 3 4 5 Commercial paper!'5'6 Nonfinancial 1-month 2-month 3-month n.a. n.a. n.a. 5.57 5.57 5.56 5.40 5.38 5.34 5.24 5.12 5.00 4.80 4.78 4.77 4.80 4.80 4.79 4.82 4.82 4.81 4.81 4.82 4.81 4.83 4.83 4.83 4.82 4.82 4.81 4.81 4.82 4.81 4.82 4.80 4.81 6 7 8 Financial 1-month 2-month 3-month n.a. n.a. n.a. 5.59 5.59 5.60 5.42 5.40 5.37 5.31 5.13 5.04 4.83 4.81 4.81 4.82 4.82 4.82 4.84 4.83 4.84 4.83 4.84 4.83 4.84 4.85 4.86 4.84 4.84 4.84 4.83 4.83 4.83 4.83 4.83 4.82 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. (historical)3'5,7 9 10 11 Commercial paper 1-month 3-month 6-month 12 13 14 Finance paper, directly placed (historicalJ3,5'8 1-month 3-month 6-month 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. 15 16 Bankers acceptances3'5"9 3-month 6-month 5.31 5.31 5.54 5.57 5.39 5.30 5.08 4.91 4.80 4.73 4.79 4.74 4.82 4.82 4.81 4.79 4.82 4.80 4.82 4.82 4.82 4.81 4.82 4.82 17 18 19 Certificates of deposit, secondary market 1-month 3-month 6-month 5.35 5.39 5.47 5.54 5.62 5.73 5.49 5.47 5.44 5.47 5.14 5.01 4.89 4.89 4.90 4.86 4.90 4.95 4.88 4.91 4.98 4.87 4.92 4.99 4.89 4.93 5.03 4.88 4.90 4.98 4.86 4.89 4.96 4.87 4.90 4.97 5.38 5.61 5.45 5.13 4.88 4.86 4.88 4.88 4.88 4.88 4.88 4.88 5.01 5.08 5.22 5.06 5.18 5.32 4.78 4.83 4.80 4.39 4.40 4.32 4.34 4.33 4.31 4.44 4.44 4.48 4.44 4.47 4.53 4.53 4.51 4.58 4.52 4.56 4.63 4.48 4.51 4.53 4.42 4.48 4.50 4.39 4.38 4.50 5.02 5.09 5.23 5.07 5.18 5.36 4.81 4.85 4.85 4.42 4.43 4.31 4.34 4.36 4.34 4.45 4.43 4.37 4.48 4.52 4.67 4.53 4.43 n.a. 4.57 4.59 4.67 4.51 4.54 n.a. 4.47 4.53 n.a. 4.38 4.42 n.a. 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 4.52 4.51 4.48 4.45 4.65 4.65 5.36 5.06 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 4.82 5.05 5.09 5.11 5.29 5.18 5.80 5.49 4.89 5.18 5.25 5.29 5.47 5.38 5.93 5.65 4.77 5.05 5.10 5.13 5.35 5.21 5.86 5.56 4.74 5.00 5.03 5.05 5.27 5.14 5.78 5.50 4.75 5.02 5.07 5.11 5.34 5.20 5.87 5.58 6.80 6.67 5.69 5.29 5.39 5.60 5.81 5.74 5.88 5.80 5.73 5.81 5.52 5.79 5.76 5.32 5.50 5.52 4.93 5.14 5.09 4.83 5.17 4.98 4.85 5.21 5.01 4.80 5.21 5.03 4.96 5.32 5.10 4.75 5.19 5.08 5.00 5.35 5.14 4.97 5.32 5.11 4.92 5.29 5.07 4.95 5.31 5.08 7.66 7.54 6.87 6.72 6.76 6.89 7.07 6.99 7.14 7.05 7.01 7.06 40 41 Aa 47 A 43 Baa 7.37 7.55 7.69 8.05 7.27 7.48 7.54 7.87 6.53 6.80 6.93 7.22 6.22 6.65 6.80 7.23 6.24 6.68 6.84 7.29 6.40 6.79 6.97 7.39 6.62 6.98 7.14 7.53 6.51 6.89 7.07 7.47 6.69 7.03 7.22 7.61 6.60 6.96 7.13 7.52 6.55 6.92 7.08 7.47 6.62 6.97 7.12 7.53 MEMO Dividend-price ratio 44 Common stocks 2.19 1.77 1.49 1.37 1.30 1.32 1.30 1.31 1.34 1.28 1.28 1.30 3 11 20 Eurodollar deposits, 3-month ' 24 25 26 U.S. Treasury bills Secondary market 3,5 3-month 6-month 1-year Auction high 3,5,12 3-month 6-month 1-year 27 28 29 30 31 32 33 34 Constant maturities13 1-year 2-year 3-year 5-year 7-year 10-year 20-year 30-year ?1 ?? 23 U.S. TREASURY NOTES AND BONDS Composite 35 More than 10 years (long-term) STATE AND LOCAL NOTES AND BONDS Moody's series14 36 37 Baa 38 Bond Buyer series CORPORATE BONDS 39 Seasoned issues, all industries16 Rating group 1. The daily eifective federal funds rate is a weighted average of rates on trades through New York brokers. 2. Weekly figures are averages of seven calendar days ending on Wednesday of the current week; monthly figures include each calendar day in the month. 3. Annualized using a 360-day year 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. A24 1.36 DomesticNonfinancialStatistics • June 1999 STOCK MARKET Selected Statistics 1998 Indicator 1996 1997 1999 1998 July Sept. Aug. Oct. Nov. Dec. Jan. Feb. Mar. 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 Finance 5 357.98 453.57 327.30 126.36 303.94 456.99 574.97 415.08 143.87 424.84 550.65 684.35 468.61 190.52 516.65 586.39 718.54 503.89 189.95 579.67 539.16 665.66 441.36 186.24 511.22 506.56 629.51 408.75 186.17 454.28 511.49 636.62 396.61 195.09 448.12 564.26 704.46 442.95 206.29 501.45 576.05 717.14 456.70 215.57 510.31 595.43 741.43 479.72 224.75 523.38 588.70 736.20 477.47 218.24 514.75 603.69 751.93 491.25 218.11 544.08 6 Standard & Poor's Corporation ( 1 9 4 1 - 4 3 = 10)2 670.49 873.43 1,085.50 1,156.58 1,074.62 1,020.64 1,032.47 1,144.43 1,190.05 1,248.77 1,246.58 1,281.66 7 American Stock Exchange (Aug. 31, 1973 = 50) 3 570.86 628.34 682.69 724.83 655.67 621.48 607.16 667.60 660.76 704.22 699.15 711.08 409,740 22,567 523,254 24,390 666,534 28,870 639,744 26,473 712,710 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 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' 97,400 126,090 140,980 154,370 147,800 137,540 130,160 139,710 140,980 153,240 151,530 156,440 Free credit balances at brokers5 11 Margin accounts 6 12 Cash accounts 22,540 40,430 31,410 52,160 40,250 62,450 31,820 53,780 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 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 AND FINANCING OPERATIONS Millions of dollars Calendar year Fiscal year Type of account or operation 1998 1996 U.S. budget1 1 Receipts, total 2 On-budget 3 Off-budget 4 Outlays, total 5 On-budget 6 Off-budget 7 Surplus or deficit ( - ) , total 8 On-budget 9 Off-budget Source of financing (total) 10 Borrowing from the public 11 Operating cash (decrease, or increase ( - ) ) 12 Other 2 1997 1999 1998 Oct. Nov. Dec. Jan. Feb. Mar. 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 99,195 119,974 90,064 29,910 152,436 123,687 28,749 -32,462 -33,623 1,161 113,978 81,836 32,142 131,095 100,078 31,017 -17,117 -18,242 1,125 178,646 143,337 35,309 184,056 149,401 34,655 -5,410 -6,064 654 171,722 129,921 41,801 101,386 102,489 -1,103 70,336 27,432 42,904 99,414 65,058 34,356 142,281 111,007 31,274 -42,867 -45,949 3,082 130,292 92,425 37,867 152,707 122,005 30,702 -22,415 -29,580 7,165 129,712 -6,276 -15,986 38,171 604 -16,832 -51,049 4,743 -22,940 15,330 2,661 14,471 22,364 20,335 -25,582 -5,390 -1,621 12,421 -31,249 -39,567 480 1,688 52,432 -11,253 37,013 -16,988 2,390 44,225 7,700 36,525 43,621 7,692 35,930 38,878 4,952 33,926 36,217 4,440 31,776 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 MEMO 13 Treasury operating balance (level, end of period) 14 Federal Reserve Banks Tax and loan accounts 15 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. A26 1.39 DomesticNonfinancialStatistics • June 1999 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Fiscal year Calendar year Source or type 1997 1997 1998 1999 1998 HI H2 HI H2 Jan. Feb. Mar. 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 contributions2 10 Unemployment insurance 11 Other net receipts3 1 12 13 14 15 Excise taxes Customs deposits Estate and gift taxes Miscellaneous receipts4 1,579,292 1,721,798 845,527 773,812 922,632 825,055 171,722 99,414 130,292 737,466 580,207 250,753 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 99,857 58,527 42,324 994 42,792 59,055 2,949 19,219 50,468 69,559 7,245 26,351 204,493 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 7,185 2,055 54,928 53,725 867 337 3,641 2,465 46,683 43,735 2,594 353 23,131 4,578 49,216 48,592 269 355 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 4,806 1,286 2,206 3,509 3,892 1,403 1,600 1,868 5,880 1,546 2,172 2,457 OUTLAYS 16 All types 1,601,235 1,652,552 797,418 824,370 815,886 877,026 101,386 142,281 152,707 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 19,270 1,179 1,398 -107 1,458 3,939 20,909 1,372 1,312 -189 1,919 1,074 25,469 949 1,663 588 1,862 1,046 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 6,972 745 2,558 709 -1,237 2,259 720 -1,474 2,636 1,148 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 interest5 Undistributed offsetting receipts6 53,008 54,919 25,080 26,851 25,928 28,216 5,136 5,429 6,641 123,843 555,273 230,886 131,440 572,047 233,202 61,809 278,863 124,034 63,552 283,109 106,353 65,053 286,305 125,196 67,836 316,809 109,481 10,984 15,248 17,349 11,100 46,727 29,856 11,988 49,846 26,749 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 1,828 2,090 188 19,947 -2,530 3,574 1,832 274 18,049 -2,700 3,693 2,180 1,130 19,970 -3,376 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 US. Government, Fiscal Year 2000; monthly and half-year totals: U.S. Department of the Treasury, Monthly Treasury Statement of Receipts and Outlays of the V.S. Government. Federal Finance 1.40 A27 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1997 1997 1998 1999 Item Mar. 31 June 30 1 Federal debt outstanding 5,415 5,410 5,446 5,536 5,573 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 34 26 8 34 26 7 33 26 7 34 27 7 31 26 5 5 Agency securities 6 Held by public 7 Held by agencies Sept. 30 Dec. 31 Mar. 31 Sept. 30 Dec. 31 Mar. 31 5,578 5,556 5,643 5,726 5,548 3,790 1,758 5,526 3,761 1,766 5,614 3,787 1,827 5,652 n.a. n.a. 30 26 4 29 26 4 29 29 1 74 n.a. n.a. June 30 5,294 5,290 5,328 5,417 5,457 5,460 5,440 5,530 5,566 9 Public debt securities 10 Other debt1 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 8 Debt subject to statutory limit 1. Consists of guaranteed debt of U.S. Treasury and other federal agencies, specified participation certificates, notes to international lending organizations, and District of Columbia stadium bonds. 1.41 GROSS PUBLIC DEBT OF U S . TREASURY 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 gross public debt 2 3 4 5 6 7 8 9 10 11 12 13 14 15 By type Interest-bearing Marketable Bills Notes Bonds Inflation-indexed notes and bonds1 Nonmarketable2 State and local government series Foreign issues3 Government Public Savings bonds and notes Government account series4 Non-interest-bearing By holder 5 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 treasuries6'7 Individuals 24 Savings bonds 25 Other securities 26 Foreign and international8 27 Other miscellaneous investors7'9 1995 1997 1999 1998 Q2 Q3 Q4 Q1 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. A28 1.42 DomesticNonfinancialStatistics • June 1999 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 M i l l i o n s o f dollars, daily a v e r a g e s 1998 1999 1999, week ending Item Dec. Jan. Feb. Feb. 3 Feb. 10 Feb. 17 Feb. 24 Mar. 3 Mar. 10 Mar. 17 Mar. 24 Mar. 31 OUTRIGHT TRANSACTIONS2 By type of security 1 U.S. Treasury bills Coupon securities, by maturity 2 Five years or less 3 More than five years 4 Inflation-indexed Federal agency 5 Discount notes Coupon securities, by maturity One year or less 6 7 More than one year, but less than or equal to five years More than five years 8 9 Mortgage-backed By type of counterparty With interdealer broker U.S. Treasury Federal agency Mortgage-backed With other U.S. Treasury 13 Federal agency 14 15 Mortgage-backed 10 11 12 30,397 32,211 31,811 31,081 28,338 30,512 29,067 51,699 28,431 26,936 25,567 46,405 76,147 47,464 415 100,641 68,441 1,552 107,777 71,489 772 112,778 70,930 934 113,895 79,070 471 91,824 68,136 991 108,612 62,772 776 122,778 83,554 727 99,358 73,684 548 79,570 51,433 276 97,269 54,205 264 92,383 55,781 323 38,998 43,028 41,355 39,619 41,477 43,823 39,499 42,125 40,996 41,217 37,095 39,828 716 1,098 1,796 867 1,579 2,715 1,764 1,515 1,009 1,176 1,281 672 3,491 2,413 59,167 6,150 4,079 82,210 7,446 3,633 75,923 6,254 4,984 66,974 9,021 3,639 100,554 5,200 3,118 69,208 6,995 3,459 61,462 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 84,186 2,193 20,854 113,084 3,806 24,932 117,230 3,791 25,301 117,573 3,965 21,099 123,277 3,623 31,935 103,664 4,064 22,694 114,347 3,229 23,967 142,719 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 70,237 43,424 38,314 89,761 50,548 57,278 94,620 50,438 50,622 98,150 47,758 45,875 98,497 52,093 68,620 87,798 50,791 46,515 86,880 48,487 37,495 116,038 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 n.a. n.a. n.a. n.a. n.a. n.a. n.a. FUTURES TRANSACTIONS3 16 17 18 19 20 21 22 23 24 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 108 0 0 2,731 10,292 0 2,225 15,953 0 2,512 17,132 0 2,234 16,756 0 2,587 16,565 0 1,618 15,906 0 2,457 16,597 0 5,110 23,513 0 3,180 19,329 0 n.a. n.a. 2,399 12,912 0 2,048 13,793 0 1,492 13,116 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 OPTIONS TRANSACTIONS4 By type of underlying security 25 U.S. Treasury bills Coupon securities, by maturity 26 Five years or less 27 More than five years 28 Inflation-indexed Federal agency 29 Discount notes Coupon securities, by maturity 30 One year or less 31 More than one year, but less than or equal to five years 32 More than five years 33 Mortgage-backed 0 0 0 0 0 0 0 0 0 0 0 0 934 3,004 0 1,673 4,712 0 1,153 5,798 0 1,327 4,838 0 1,005 6,564 0 783 5,688 0 1,710 5,854 0 797 5,483 0 1,442 5,276 0 1,929 5,257 0 1,105 4,763 0 1,972 4,662 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 0 806 0 0 1,309 0 0 844 0 0 529 0 0 1,121 0 0 839 0 0 650 0 0 1,123 0 0 650 0 0 832 0 0 1,184 0 0 431 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 corpus. Forward transactions are agreements made in the over-the-counter market that specify delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt securities are included when the time to delivery is more than five business days. Forward contracts for mortgage-backed agency securities are included when the time to delivery is more than thirty business days. 3. Futures transactions are standardized agreements arranged on an exchange. All futures transactions are included regardless of time to delivery. 4. Options transactions are purchases or sales of put and call options, whether arranged on an organized exchange or in the over-the-counter market, and include options on futures contracts on U.S. Treasury and federal agency securities. NOTE, "n.a." indicates that data are not published because of insufficient activity. Federal Finance 1.43 U.S. GOVERNMENT SECURITIES DEALERS A29 Positions and Financing 1 M i l l i o n s o f dollars 1998 1999, week ending 1999 Dec. Feb. Jan. Feb. 3 Feb. 10 Feb. 17 Feb. 24 Mar. 3 Mar. 10 Mar. 17 Mar. 24 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 -4,551 1,346 4,509 1,248 1,023 4,804 -2,884 25,480 25,042 20,081 17,666 -5,388 3,180 1,186 -8,148 432 1,973 -12,028 1,465 1,931 -10,856 -391 1,869 -3,817 2,950 1,900 -15,331 5,354 1,980 -12,089 121 1,811 -21,390 -4,195 2,157 -21,756 -5,998 2,160 -19,183 -5,538 1,849 -13,623 -6,597 1,754 20,788 18,818 18,671 19,092 20,929 20,165 16,897 14,894 20,544 17,653 19,310 2,075 2,858 3,450 2,727 3,899 3,340 3,429 3,439 2,744 3,060 2,361 3,093 3,499 38,689 4,441 4,545 23,961 5,044 3,146 17,432 5,350 3,325 19,792 3,949 2,847 12,377 3,411 2,918 16,853 5,772 3,941 19,918 8,311 2,544 21,168 6,820 4,670 17,990 3,150 5,455 15,397 5,669 3,710 18,817 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 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. -4,012 -24,757 0 -777 -20,814 0 459 -14,876 0 144 -18,225 0 23 -12,831 0 161 -16,884 0 1,776 -15,464 0 -328 -11,398 0 -576 -11,713 0 -1,329 -12,930 0 -791 -15,466 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 0 507 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 -3,155 -1,387 0 -1,090 -1,004 0 -1,960 -1,487 0 -3,481 122 n.a. -2,858 -2,984 n.a. -1,209 -1,024 n.a. -1,284 -1,299 n.a. -1,743 -1,215 n.a. -1,893 -982 n.a. -854 380 n.a. -970 826 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 0 n.a. 1,213 n.a. 3,410 n.a. 5,873 n.a. 3,850 n.a. 4,936 n.a. 5,607 n.a. 6,204 n.a. 8,918 n.a. 6,829 n.a. 6,304 n.a. 6,720 Financing 5 Reverse repurchase agreements 28 Overnight and continuing 29 Term 242,653 807,304 239,627 799,672 261,190 788,073 248,218 862,566 249,836 898,988 276,427 709,335 253,860 738,485 276,948 762,673 258,279 783,478 250,927 800,575 247,536 829,709 Securities borrowed 30 Overnight and continuing 31 Term 205,654 112,684 222,768 105,788 225,926 100,463 228,350 101,670 227,431 103,907 228,684 98,571 219,436 101,781 228,006 94,536 232,396 92,844 236,084 93,192 223,042 97,864 2,952 67 2,509 n.a. 2,380 n.a. 2,477 n.a. 2,403 n.a. 2,306 n.a. 2,389 n.a. n.a. n.a. n.a. n.a. n.a. n.a. Repurchase agreements 34 Overnight and continuing 35 Term 608,988 713,037 633,520 695,303 666,536 674,687 634,074 745,088 661,367 782,905 683,030 589,106 661,472 635,295 679,928 651,208 659,715 668,923 677,844 686,985 654,994 719,778 Securities loaned 36 Overnight and continuing 37 Term 9,369 3,567 10,040 n.a. 11,753 5,776 9,616 0 10,997 n.a. 12,722 n.a. 12,265 n.a. 12,090 5,776 11,998 6,242 12,304 6,142 11,226 6,129 Securities pledged 38 Overnight and continuing 39 Term 47,565 5,075 48,487 5,776 48,945 5,896 50,497 6,076 49,509 6,015 49,112 4,567 47,693 6,747 48,696 6,388 47,985 6,843 49,625 6,890 49,795 8,249 Collateralized 40 Total 21,850 17,735 18,388 20,727 19,414 18,259 16,775 17,885 19,168 19,349 17,296 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 2,555 n.a. 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. A30 1.44 DomesticNonfinancialStatistics • June 1999 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding M i l l i o n s o f dollars, end o f p e r i o d 1999 1998 1995 Agency 844,611 1 Federal a n d federally sponsored agencies 2 Federal agencies 3 Defense Department' 4 Export-Import Bank 2 , 3 5 Federal Housing Administration 4 Government National Mortgage Association certificates of 6 participation 5 7 Postal Service 6 Tennessee Valley Authority 8 9 United States Railway Association 6 10 Federally sponsored agencies 7 11 Federal Home Loan Banks 12 Federal Home Loan Mortgage Corporation 13 Federal National Mortgage Association 14 Farm Credit Banks 8 15 Student Loan Marketing Association 9 16 Financing Corporation 10 17 Farm Credit Financial Assistance Corporation" Resolution Funding Corporation 12 18 MEMO 19 Federal Financing B a n k 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 25 Farmers Home Administration 26 Rural Electrification Administration 27 Other 1996 925,823 1998 Sept. Oct. Nov. Dec. Jan. 1,022,609 1,296,477 1,172,575 1,207,495 1,255,412 1,296,477 26,691 6 n.a. 174 26,350 6 n.a. 188 26,315 6 n.a. 205 26,502 6 n.a. 205 26,355 6 n.a. 70 n.a. 37,347 6 2,050 97 29,380 6 1,447 84 27,792 6 552 102 26,502 6 n.a. 205 n.a. 5,765 29,429 n.a. n.a. n.a. 27,853 n.a. n.a. n.a. 27,786 n.a. n.a. n.a. 26,496 n.a. n.a. n.a. 26,685 n.a. n.a. n.a. 26,344 n.a. n.a. n.a. 26,309 n.a. n.a. n.a. 26,496 n.a. n.a. n.a. 26,349 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 1,145,884 343,188 232,994 430,582 64,332 33,760 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. 383,572 300,927 461,157 61,292 n.a. 8,170 1,261 29,996 78,681 58,172 49,090 44,129 45,955 44,952 44,824 44,129 43,803 2,044 5,765 n.a. 3,200 n.a. 1,431 n.a. n.a. n.a. n.a. 552 n.a. n.a. n.a. n.a. F 1 n.a. I 1 F 1 n.a. 1 i F 1 n.a. I 1 n.a. 1 1 F 1 n.a. I 1 21,015 17,144 29,513 18,325 16,702 21,714 13,530 14,898 20,110 9,500 14,091 20,538 9,500 14,166 22,289 9,500 14,191 21,261 9,500 14,199 21,125 9,500 14,091 20,538 agencies 1. Consists of mortgages assumed by the Defense Department between 1957 and 1963 under family housing and homeowners assistance programs. 2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976. 3. On-budget since Sept. 30, 1976. 4. Consists of debentures issued in payment of Federal Housing Administration insurance claims. Once issued, these securities may be sold privately on the securities market. 5. Certificates of participation issued before fiscal year 1969 by the Government National Mortgage Association acting as trustee for the Farmers Home Administration, the Department of Health, Education, and Welfare, the Department of Housing and Urban Development, the Small Business Administration, and the Veterans Administration. 6. Off-budget. 7. Includes outstanding noncontingent liabilities: notes, bonds, and debentures. Includes Federal Agricultural Mortgage Corporation, therefore details do not sum to total. Some data are estimated. 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, which is shown on line 17. 9. Before late 1982, the association obtained financing through the Federal Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is shown on line 22. 1997 • 1 n.a. 1 1 9,500 14,101 20,202 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 1 All issues, new and refunding 1996 1 1997 1999 1998 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. 171,222 214,694 262,342 20,344 17,526 19,528 19,325 24,288 16,926 16,233 24,323 By type of issue 2 General obligation 3 Revenue 60,409 110,813 69,934 134,989 87,015 175,327 5,812 14,532 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 By type of issuer 4 State 5 Special district or statutory authority2 6 Municipality, county, or township 13,651 113,228 44,343 18,237 134,919 70,558 23,506 178,421 60,173 1,483 14,233 4,628 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 7 Issues for new capital 112,298 135,519 160,568 11,258 9,106 12,736 12,452 14,517 11,917 10,674 16,201 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 2,435 1,982 1,179 n.a. 709 2,764 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 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 1990; Investment Digest before then. Dealer's U.S. Corporations Millions of dollars 1998r Type of issue, offering, or issuer 1 All issues 1 1996 1997 1999 1998 July Aug. Sept. Oct. Nov. Dec. Jan.r Feb. n.a. n.a. 77,750 60,708 85,833 70,907 104,288 73,414 89,632 n.a. n.a. n.a. 68,133 57,145 81,352 62,692 95,910 65,374 82,523 n.a. By type of offering 3 Public, domestic 4 Private placement, domestic3 5 Sold abroad 465,489 n.a. 83,433 537,880 n.a. 103,188 54,266 7,600 6,267 45,745 7,600 3,800 71,134 7,600 2,618 48,256 7,600 6,837 80,556 7,600 7,754 54,513 7,600 3,261 64,905 7,600 10,018 67,528 7,600 8,376 By industry group 6 Nonfinancial 7 Financial n.a. 429,157 n.a. 510,953 24,821 43,313 20,399 36,746 16,562 64,790 16,632 46,060 31,911 63,999 21,397 43,977 19,853 62,670 n.a. 63,049 8 Stocks 2 2 Bonds 2 n.a. 122,006 117,880 126,755 9,772 3,725 4,640 8,655 8,902 8,670 7,136 10,066 By type of offering 9 Public 10 Private placement3 122,006 n.a. 117,880 n.a. 126,755 n a. 9,772 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. 10,066 n.a. By industry group 11 Nonfinancial 12 Financial 80,460 41,546 60,386 57,494 74,113 52,642 6,390 3,382 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 1,155 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. A32 1.47 DomesticNonfinancialStatistics • June 1999 Net Sales and Assets 1 OPEN-END INVESTMENT COMPANIES M i l l i o n s o f dollars 1998 Item 1997 Sept. Aug. 1 Sales of own shares 2 1999 1998 Nov. Oct. Dec. Feb. r Jan. Mar. 1,190,900 1,461,430 111,587 118,478 116,471 112,627 140,700 161,889 132,199 164,681 918,728 272,172 1,217,022 244,408 118,812 -7,225 107,049 11,429 108,838 7,633 89,702 22,925 134,289 6,412 135,713 26,176 128,125 4,074 146,567 18,114 4 Assets 4 3,409,315 4,173,531 3,479,401 3,625,841 3,804,591 4,002,089 4,173,531 4,298,071 4,180,115 4,330,269 5 Cash 5 6 Other 174,154 3,235,161 191,393 3,982,138 194,435 3,284,967 211,253 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 3,981,982 199,742 4,130,526 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 AND THEIR DISTRIBUTION B i l l i o n s o f 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 6 Undistributed profits 7 Inventory valuation 8 Capital consumption adjustment SOURCE. U.S. Department of Commerce, Survey of Current 1.51 DOMESTIC FINANCE COMPANIES 1996 1997 1998 1998 Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 750.4 680.2 226.1 454.1 261.9 192.3 817.9 734.4 246.1 488.3 275.1 213.2 824.6 717.8 240.1 477.7 279.2 198.5 794.3 712.4 238.8 473.6 274.1 199.5 815.5 729.8 241.9 487.8 274.7 213.2 840.9 758.9 254.2 504.7 275.1 229.5 820.8 736.4 249.3 487.1 276.4 210.6 829.2 719.1 239.9 479.2 277.3 201.8 820.6 723.5 241.6 481.8 278.1 203.7 827.0 720.5 243.2 477.3 279.0 198.3 821.7 708.1 235.6 472.5 282.3 190.2 -1.2 71.4 6.9 76.6 14.5 92.3 8.1 73.8 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 Business. Assets and Liabilities1 B i l l i o n s o f dollars, e n d o f period; not s e a s o n a l l y adjusted 1997 Account 1996 1997 1998 1998 Q2 Q3 Q4 Ql Q2 Q3 Q4 ASSETS 1 Accounts receivable, gross 2 2 Consumer 3 Business 4 Real estate 637.1 244.9 309.5 82.7 663.3 256.8 318.5 87.9 727.1 265.4 355.5 106.2 651.6 255.1 311.7 84.8 660.5 254.5 319.5 86.4 663.3 256.8 318.5 87.9 667.2 251.7 325.9 89.6 676.0 251.3 334.9 89.9 688.6 254.9 335.1 98.5 727.1 265.4 355.5 106.2 55.6 13.1 52.7 13.0 53.6 13.3 57.2 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 7 Accounts receivable, net 8 All other 568.3 290.0 597.6 312.4 660.3 321.1 581.2 306.8 593.1 289.1 597.6 312.4 601.9 329.7 609.6 340.1 622.9 313.7 660.3 321.1 9 Total assets 858.3 910.0 981.4 887.9 882.3 910.0 931.6 949.7 936.6 981.4 19.7 177.6 24.1 201.5 25.0 232.3 18.8 193.7 20.4 189.6 24.1 201.5 22.0 211.7 22.3 225.9 24.9 226.9 25.0 232.3 60.3 332.5 174.7 93.5 64.7 328.8 189.6 101.3 64.6 358.4 194.6 106.6 60.0 345.3 171.4 98.7 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 64.6 358.4 194.6 106.6 858.3 910.0 981.4 887.9 882.3 910.0 931.6 949.7 936.6 981.4 5 LESS: Reserves for unearned income 6 Reserves for losses LIABILITIES AND CAPITAL 10 Bank loans 11 Commercial paper 12 13 14 15 Debt Owed to parent Not elsewhere classified All other liabilities Capital, surplus, and undivided profits 16 Total liabilities 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 1997 1999 1998 Sept. Oct. Nov. Dec. Jan. Feb. Seasonally adjusted 1 Total 761.9 809.8 874.9 852.6 865.9 871.1 874.9 888.5 r 899.1 2 3 4 307.7 111.9 342.4 327.7 121.1 361.0 352.5 131.4 391.0 343.0 128.8 380.7 350.4 132.3 383.2 352.1 134.3 384.7 352.5 131.4 391.0 356.8r 135.7 396.0 361.3 135.7 402.0 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 Revolving2 Other3 Securitized assets4 Motor vehicle loans Motor vehicle leases Revolving Other Real estate One- to four-family Other Securitized real estate assets4 One- to four-family Other Business Motor vehicles Retail loans Wholesale loans5 Leases Equipment Loans Leases Other business receivables6 Securitized assets4 Motor vehicles Retail loans Wholesale loans Leases Equipment Loans Leases Other business receivables6 769.7 818.1 884.0 849.0 864.2 872.8 884.0 888.7 r 898.4 310.6 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 33.1 344.0 96.2 94.9 28.4 34.6 350.0 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 33.1 356.1r 102.8r 93.9r 32.4r 32.1r 358.1 105.0 94.5 32.2 32.5 36.8 8.7 0.0 20.1 111.9 52.1 30.5 44.3 10.8 0.0 19.0 121.1 59.0 28.9 54.8 12.7 8.7 18.1 131.4 75.7 26.6 51.8 14.2 5.3 18.8 128.8 68.4 30.1 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 56.0r 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 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 30.2 .1 376.2 65.5 30.0 24.2 11.3 210.8 47.9 162.9 58.9 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 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 24.5 2.0 22.5 .0 11.3 4.9 6.4 5.3 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 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. A34 1.53 DomesticNonfinancialStatistics • June 1999 MORTGAGE MARKETS Mortgages on New Homes M i l l i o n s o f dollars e x c e p t as n o t e d 1999 1998 1996 Item 1997 1998 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Terms and yields in primary and secondary markets PRIMARY MARKETS 1 2 3 4 5 Terms1 Purchase price (thousands of dollars) Amount of loan (thousands of dollars) Loan-to-price ratio (percent) Maturity (years) Fees and charges (percent of loan amount) 2 Yield (percent per year) 6 Contract rate 1 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 .89 192.7 150.8 80.9 28.7 .85 201.4 155.8 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 7.56 7.77 8.03 7.57 7.73 7.76 6.95 7.08 7.00 6.85 6.98 6.64 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 8.19 7.48 7.89 7.26 7.04 6.43 6.53 6.05 7.07 6.10 7.02 6.25 7.06 6.18 7.08 6.18 7.10 6.42 7.07 6.58 418,323 33,483 384,840' SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (Section 203) 5 10 GNMA securities 6 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 12 FHA/VA insured 13 Conventional 287,052 30,592 256,460 316,678 31,925 284,753 414,515 33,770 380,745 375,665 32,903 342,762 386,452 32,814 353,638 399,804 33,420 366,384 414,515 33,770 380,745 14 Mortgage transactions purchased (during period) 68,618 70,465 188,448 15,681 18,967 23,557 26,222 Mortgage commitments 15 Issued 7 16 To sell 8 65,859 130 69,965 1,298 193,795 1,880 16,282 249 30,551 393 17,994 0 Mortgage holdings (end of period)8 17 Total 18 FHA/VA insured 19 Conventional 137,755 220 137,535 164,421 177 164,244 255,010 785 254,225 216,521 569 215,952 231,458 569 230,889 Mortgage transactions 20 Purchases 21 Sales 125,103 119,702 117,401 114,258 267,402 250,565 25,366 24,294 128,995 120,089 281,899 23,375 (during 431,836 34,000 397,836 440,139 34,870 405,269 14,005 22,029 16,923 16,803 434 20,754 0 26,509 0 16,891 266 242,270 602 241,668 255,010 785 254,225 257,062 387 256,675 262,921 755 r 262,166 r 277,624 750 276,874 20,629 19,472 23,986 22,660 34,299 28,024 27,672 31,431 25,225 24,232 r 29,921 28,740 25,025 28,903 29,703 23,900 24,829 32,546 period) FEDERAL HOME LOAN MORTGAGE CORPORATION (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 FNMA exclude swap activity. Real Estate 1.54 A3 5 MORTGAGE DEBT OUTSTANDING 1 Millions of dollars, end of period 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 banks2 8 One- to four-family 9 Multifamily 10 Nonfarm, nonresidential 11 Farm 12 Savings institutions3 13 One- to four-family 14 Multifamily 15 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 Administration4 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 trusts5 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 Administration4 64 One- to four-family 65 Multifamily 66 Nonfarm, nonresidential 67 Farm 68 Private mortgage conduits 69 One- to four-family 6 70 Multifamily 71 Nonfarm, nonresidential 72 Farm 73 Individuals and others7 74 One- to four-family 75 Multifamily 76 Nonfarm, nonresidential 77 Farm 1995 1996 Q4 Q1 Q2 Q3 Q4P 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. 1998 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. A36 1.55 DomesticNonfinancialStatistics • June 1999 CONSUMER CREDIT1 Millions of dollars, amounts outstanding, end of period 1998 Holder and type of credit 1996 1997 1999 1998 Sept. Oct. Nov. Dec. Jan.' Feb. Seasonally adjusted 1 Total 2 Automobile 3 Revolving 4 Other2 1,181,913 1,233,099 1,299,207"' 1,283,573' l,294,917 r 1,296,630r 1,299,207r 1,314,471 1,323,166 392,321 499,486 290,105 413,369 531,140 288,590 447,013r 560,515r 291,680r 435,592r 551,673r 296,308r 437,820' 557,644' 299,453' 442,430' 556,535' 297,665' 447,013' 560,515' 291,680' 454,096 566,690 293,684 459,265 568,979 294,922 Not seasonally adjusted 1,211,590 1,264,103 1,331,742r l,286,589 r l,297,576 r 1,304,499r 1,331,742"" 1,323,250 1,316,336 By major holder Commercial banks Finance companies Credit unions Savings institutions Nonfinancial business3 Pools of securitized assets4 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 74,877r 372,425 497,870 159,141 154,339r 50,307 65,539r 359,393 502,076 165,573 154,991' 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 70,950 369,958 497,701 169,664 155,141 52,482 67,915 373,433 By major type of credit 12 Automobile Commercial banks 13 14 Finance companies Pools of securitized assets4 IS 395,609 157,047 86,690 51,719 416,962 155,254 87,015 64,950 450,968r 158,072 103,094 72,955 439,598' 156,287 96,183 72,146 443,120' 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 73,232 454,136 159,922 104,987 73,232 16 Revolving Commercial banks 17 Finance companies 18 19 Nonfinancial business3 20 Pools of securitized assets4 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' 272,327 549,001' 197,615 28,375 33,743 259,348 556,006' 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 36,389 269,918 568,991 197,571 32,195 34,295 272,551 21 Other 22 Commercial banks Finance companies 23 24 Nonfinancial business3 25 Pools of securitized assets4 293,121 141,107 33,208 32,844 25,395 291,283 137,483 34,399 33,961 26,642 294,246r 140,514 33,088 35,71 r 27,143 297,990' 143,968 34,583 31,796' 27,899 298,450' 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 26,808 293,209 140,208 32,482 33,620 27,650 5 Total 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 CREDIT1 Percent per year except as noted 1998 Item 1996 1997 1999 1998 Aug. Sept. Oct. Nov. Dec. Jan. Feb. INTEREST RATES Commercial banks2 9.05 13.54 9.02 13.90 8.72 13.74 8.71 13.45 n.a. n.a. n.a. 8.62 13.75 n.a. n.a. n.a. n.a. 8.34 13.41 Credit card plan 15.63 15.50 15.77 15.57 15.71 15.59' 15.83 15.85 n.a. n.a. n.a. 15.69 15.54' n.a. n.a. n.a. n.a. 15.41 14.73 Auto finance companies 9.84 13.53 7.12 13.27 6.30 12.64 6.00 12.68 5.92 12.65 6.33 12.58 6.79 12.41 6.43 12.31 6.22 11.81 6.43 12.08 Maturity (months) 51.6 51.4 54.1 51.0 52.1 53.5 53.0 54.1 53.1 54.2 53.1 54.2 52.8 54.3 52.2 54.2 52.1 56.0 53.4 55.9 Loan-to-value ratio 91 100 92 99 92 99 93 101 93 101 92 100 91 100 91 100 92 99 92 99 16,987 12,182 18,077 12,281 19,083 12,691 19,068 12,407 19,028 12,731 19,199 12,914 19,590 13,112 19,734 13,202 19,628 13,497 19,304 13,604 OTHER TERMS3 Amount financed (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 7 FUNDS RAISED IN U.S. CREDIT MARKETS 1 Billions of dollars; quarterly data at seasonally adjusted annual rates 1998 1997 Transaction category or sector 1993 1994 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors . . . 587.1 577.1 703.4 720.3 736.9 612.0 826.5 858.3 904.7 925.4 855.5 1,118.3 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 -43.5 -43.8 .2 30.3 31.2 -.9 40.8 39.0 1.7 -30.0 -27.6 -2.4 -70.9 -69.4 -1.4 -136.5 -136.1 -.4 26.9 14.7 12.2 5 Nonfederal 331.0 421.3 558.9 575.3 713.8 655.6 796.2 817.5 934.7 996.2 991.9 1,091.4 6 7 8 9 in ii 1? 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 10.0 74.8 75.2 6.4 -18.9 122.9 156.1 -4.7 -29.6 1.0 60.7 21.4 -35.9 23.3 75.2 34.0 178.4 179.7 .5 -4.1 2.2 124.9 18.1 -48.2 73.3 101.4 67.2 208.1 176.0 9.7 20.9 1.6 138.9 -.9 2.6 72.5 63.0 36.4 313.0 256.4 17.1 36.9 2.6 88.8 13.7 71.4 90.7 106.3 66.2 312.9 243.0 15.1 51.6 3.2 52.5 20.3 59.6 86.1 114.1 20.8 295.2 211.7 18.9 60.1 4.5 59.5 14.5 88.9 122.9 29.0 78.1 412.5 334.0 14.7 60.3 3.5 50.3 12.8 103.2 74.4 138.6 142.3 308.4 208.6 27.0 69.9 2.9 37.8 51.1 116.7 157.2 -2.8 84.3 471.3 372.8 28.3 66.8 3.4 57.0 3.8 100.1 160.8 185.3 34.6 446.8 320.3 31.1 89.4 6.0 64.8 85.6 83.6 87.1 125.8 73.5 453.0 361.5 12.4 74.5 4.6 83.4 -43.0 87.0 123.8 144.0 117.0 596.0 453.3 14.3 123.7 4.7 66.6 17 18 19 20 ?1 22 By borrowing sector Household Nonfinancial business Corporate Nonfarm noncorporate Farm State and local government 207.7 57.2 51.4 3.2 2.6 66.2 312.6 155.0 147.4 3.3 4.4 -46.2 345.4 265.0 231.5 30.6 2.9 -51.5 359.8 222.3 170.7 46.8 4.8 -6.8 333.6 324.1 257.9 59.9 6.2 56.1 328.0 285.1 214.1 64.7 6.4 42.5 368.4 355.2 283.8 66.7 4.7 72.6 302.1 423.1 341.7 72.1 9.2 92.3 437.5 402.9 321.1 74.5 7.3 94.3 457.2 460.1 357.3 95.7 7.2 78.9 452.7 466.6 374.6 85.9 6.1 72.6 592.7 423.3 318.7 98.8 5.8 75.4 23 Foreign net borrowing in United States 24 Commercial paper Bonds 75 7.6 Bank loans n.e.c 27 Other loans and advances 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 61.7 10.4 38.7 11.5 1.2 92.5 -11.6 100.3 7.3 -3.5 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 -4.4 -28.0 6.2 -35.3 3.6 -2.4 -38.0 -4.7 -32.9 9.9 -10.3 28 Total domestic plus foreign 656.9 563.1 774.5 797.3 793.8 673.7 919.0 900.5 972.5 1,011.3 827.5 1,080.3 Financial sectors 29 Total net borrowing by financial sectors 30 31 32 33 34 35 36 37 38 39 40 41 47 43 44 45 46 47 48 49 50 51 By instrument Federal government-related Government-sponsored enterprise securities Mortgage pool securities Loans from U.S. government Open market paper Corporate bonds Bank loans n.e.c Other loans and advances Mortgages By borrowing sector Commercial banking Savings institutions Credit unions Life insurance companies Government-sponsored enterprises Federally related mortgage pools Issuers of asset-backed securities (ABSs) Finance companies Mortgage companies Real estate investment trusts (REITs) Brokers and dealers Funding corporations 294.4 468.4 456.2 552.1 652.8 667.9 601.9 993.2 936.4 994.9 1,061.5 1,471.3 165.3 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 .0 286.2 198.1 88.1 .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 .0 785.7 614.5 171.2 .0 129.1 -5.5 123.1 -14.4 22.4 3.6 180.9 40.5 121.8 -13.7 22.6 9.8 252.1 42.7 196.7 4.8 3.4 4.6 320.7 92.2 175.5 20.0 27.9 5.0 440.0 166.7 208.2 13.4 35.6 16.2 381.7 77.0 228.1 -2.0 63.0 15.5 440.9 168.8 202.3 25.9 37.5 6.5 695.0 244.2 337.8 26.1 61.7 25.2 709.1 237.4 340.5 78.6 32.7 19.8 581.5 134.8 376.9 -21.1 76.0 14.8 499.9 141.0 178.3 62.0 82.3 36.3 685.7 130.7 337.2 -16.3 173.7 60.3 13.4 11.3 .2 .2 80.6 84.7 83.6 -1.4 .0 3.4 12.0 6.3 20.1 12.8 .2 .3 172.1 115.4 72.9 48.7 -11.5 13.7 .5 23.1 22.5 2.6 -.1 -.1 105.9 98.2 141.1 50.2 .4 5.6 -5.0 34.9 13.0 25.5 .1 1.1 90.4 141.1 153.6 45.9 12.4 7.0 -2.0 64.1 46.1 19.7 .1 .2 98.4 114.4 204.4 48.7 -4.7 36.8 8.1 80.7 76.4 31.9 .2 .1 198.1 88.1 120.7 120.5 -12.2 30.6 34.9 -21.5 32.5 22.3 .2 .2 46.4 114.6 226.2 8.9 11.4 30.8 -6.9 115.3 61.0 41.7 .3 -.3 157.9 140.3 385.1 59.6 -17.4 58.9 7.0 99.2 83.5 10.6 .5 .0 142.5 84.8 282.1 80.1 49.2 66.2 -1.0 137.9 80.0 31.2 .2 -.6 166.4 247.0 368.1 101.8 -48.0 62.1 20.0 -33.3 61.7 63.7 1.0 1.6 294.0 267.5 293.5 -14.0 2.0 82.8 -2.6 10.1 66.5 106.8 .4 1.8 614.5 171.2 324.2 76.8 2.0 50.0 12.3 44.9 A38 1.57 DomesticNonfinancialStatistics • June 1999 FUNDS RAISED IN U S . CREDIT MARKETS 1 —Continued 1997 Transaction category or sector 1993 1994 1995 1996 1998 1997 Q2 Q3 Q4 Q1 Q2 Q3 Q4 All sectors 52 Total net borrowing, all sectors 951.4 1,031.6 1,230.7 1,349.4 1,446.6 1,341.5 1,521.0 1,893.7 1,908.9 2,006.2 1,889.0 2,551.6 53 54 55 56 57 58 59 60 -5.1 421.4 74.8 281.2 -7.2 -.8 126.5 60.7 35.7 448.1 -35.9 157.3 62.9 50.3 188.2 124.9 74.3 348.5 -48.2 319.6 114.7 70.2 212.7 138.9 102.6 376.5 2.6 303.8 92.1 65.1 318.0 88.8 184.1 235.9 71.4 345.7 128.2 99.8 329.1 52.5 107.7 242.6 59.6 352.9 123.6 85.0 310.7 59.5 171.7 191.3 88.9 425.5 62.2 112.1 419.0 50.3 257.7 338.9 103.2 444.6 180.5 197.5 333.6 37.8 343.8 197.3 116.7 512.0 81.0 110.0 491.1 57.0 113.1 342.5 100.1 645.3 172.7 106.1 461.6 64.8 232.7 425.1 83.6 230.1 191.4 153.4 489.4 83.4 83.0 812.5 87.0 428.1 137.5 280.5 656.3 66.6 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 Funds raised through mutual funds and corporate equities 61 Total net issues 429.7 125.2 144.3 234.2 186.4 173.9 239.4 157.7 213.9 267.8 -118.1 24.8 62 Corporate equities 63 Nonfinancial corporations 64 Foreign shares purchased by U.S. residents 65 Financial corporations 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 -3.4 -64.2 60.0 .8 237.6 -78.8 -114.4 41.3 -5.6 265.1 -76.2 -100.0 54.4 -30.6 250.1 -60.5 -124.0 64.3 -.8 299.9 -103.3 -143.3 -.3 40.3 261.0 -107.5 -139.2 13.6 18.2 321.4 -115.9 -129.1 4.0 9.2 383.7 -319.0 -308.4 -32.9 22.2 200.9 -171.4 -474.4 319.1 -16.1 196.2 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables F.2 through F.4. For ordering address, see inside front cover. Flow of Funds 1.58 A3 7 SUMMARY OF FINANCIAL TRANSACTIONS 1 B i l l i o n s o f dollars e x c e p t as noted; quarterly data at s e a s o n a l l y adjusted annual rates 1998 1997 Transaction category or sector 1993 1994 1995 1996 1997 Q2 Q3 Q4 Ql Q2 Q3 Q4 NET LENDING IN CREDIT MARKETS2 951.4 1,031.6 1,230.7 1,349.4 1,446.6 1,341.5 1,521.0 1,893.7 1,908.9 2,006.2 1,889.0 2,551.6 40.4 -.2 9.1 -1.1 32.6 -18.4 129.3 800.0 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 81.0 -20.9 .0 .6 14.8 -35.1 237.7 274.4 17.7 .6 -55.0 -27.5 132.3 689.0 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 65.8 48.3 -24.0 4.7 -44.2 -16.2 -95.6 -.1 -8.8 4.7 -91.4 -.2 273.9 1,052.5 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 98.2 119.3 49.9 -3.4 2.2 90.1 -23.8 -17.7 -18.4 20.0 4.4 -23.7 -7.7 417.3 957.6 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 84.2 141.1 123.4 18.4 8.2 3.8 -15.7 24.0 -106.7 -124.0 14.8 2.7 -.2 4.9 310.1 1,238.3 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 94.3 114.4 166.0 21.9 -9.1 8.8 14.9 58.4 -56.5 -72.2 -28.7 2.7 41.8 5.7 308.5 1,083.8 42.9 290.0 286.7 -3.6 5.1 1.8 23.8 25.2 10.7 171.3 28.0 61.6 34.6 26.1 90.0 -3.4 118.9 88.1 105.9 .9 -24.4 8.4 -17.4 2.8 -155.3 -148.7 31.7 2.8 -41.0 3.3 402.9 1,270.0 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 55.6 114.6 163.7 68.3 82.9 7.2 18.0 30.4 36.4 8.2 -2.6 2.9 27.9 9.0 208.7 1,639.7 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 -3.4 158.5 140.3 332.2 -21.3 -93.6 17.6 71.7 141.4 -218.5 -227.5 13.2 3.0 -7.3 15.5 238.6 1,873.3 27.4 292.9 260.5 11.6 15.3 5.5 10.1 16.5 2.4 95.7 23.4 74.5 81.7 172.0 143.6 -2.4 165.2 84.8 223.0 28.7 58.8 13.2 245.8 115.9 404.7 310.1 -45.6 3.2 137.1 12.8 314.2 1,274.5 7.7 136.1 130.5 18.1 -17.6 5.1 -1.8 22.7 3.1 66.5 -1.5 130.1 60.6 200.1 152.6 -2.4 140.4 247.0 337.0 27.1 -56.4 9.3 -183.1 -20.5 7.8 -137.1 23.3 3.3 118.3 13.9 58.6 1,808.7 48.3 242.6 286.7 -53.1 6.0 2.9 33.9 20.5 2.0 87.8 -7.7 95.5 50.9 247.5 93.5 -2.4 250.0 267.5 248.0 79.7 4.5 -2.4 77.0 -27.9 -173.8 -174.4 -11.0 3.4 8.2 10.7 385.1 2,329.6 .8 554.6 569.7 -24.1 -7.4 16.4 101.1 28.1 3.9 136.6 3.0 174.4 75.1 356.4 98.6 -2.0 401.0 171.2 292.9 119.4 6.0 -10.0 -230.5 49.1 34 Net flows through credit m a r k e t s 951.4 1,031.6 1,230.7 1,349.4 1,446.6 1,341.5 1,521.0 1,893.7 1,908.9 2,006.2 1,889.0 2,551.6 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 .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 25.9 340.9 -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 35.5 258.9 2.6 17.8 50.3 248.3 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 45.8 228.5 6.2 4.0 62.1 459.0 -6.3 -.5 .1 85.9 -51.6 15.8 97.2 114.0 145.8 41.4 -3.4 237.6 76.9 52.4 44.5 243.6 16.2 -8.6 43.3 448.8 .7 -.5 .0 107.4 -19.7 41.5 97.1 122.5 157.6 120.9 -78.8 265.1 99.2 111.0 54.3 306.9 14.6 75.0 25.1 568.9 .4 .0 .2 23.9 -56.3 50.6 34.0 174.7 98.9 202.9 -76.2 250.1 48.7 124.4 62.4 326.5 14.1 71.8 39.6 523.0 2.4 .0 1.3 116.1 -25.0 -38.4 47.0 188.4 226.2 115.5 -60.5 299.9 136.1 91.1 63.9 337.3 30.1 80.8 38.7 554.3 17.5 .0 -1.9 103.0 79.8 71.9 155.9 70.7 147.8 117.9 -103.3 261.0 151.9 116.8 37.4 300.3 -7.7 78.4 -26.8 404.1 1.0 .0 .3 -45.3 -107.1 65.6 154.9 186.2 248.0 259.5 -107.5 321.4 88.5 165.3 49.3 261.5 9.7 50.3 20.2 1,206.6 8.1 .0 .2 89.0 46.6 109.3 36.2 -16.5 186.4 -113.6 -115.9 383.7 4.9 128.3 38.3 284.9 -2.7 57.5 -8.7 224.8 11.4 .0 1.7 87.3 14.3 -61.7 115.2 81.5 400.7 228.6 -319.0 200.9 81.4 179.6 31.7 278.0 34.0 47.8 -43.1 637.4 8.6 .0 -2.3 36.8 -103.3 81.3 313.6 115.1 306.6 -153.4 -171.4 196.2 77.4 -71.0 49.0 352.6 -5.7 67.1 15.8 556.8 2,326.3 2,093.3 2,767.8 2,942.6 3,515.4 3,255.0 3,726.3 3,868.4 4,737.4 3,347.3 3,896.7 4,221.6 -.2 -5.7 4.2 46.4 15.8 -169.5 -.2 43.0 -2.7 69.4 16.6 -155.9 -.5 25.1 -3.1 17.5 21.1 -198.5 -.9 59.4 -3.3 .6 20.4 -61.0 -.6 107.4 -19.9 65.3 17.2 -228.4 -.5 10.7 -26.7 168.9 29.3 -396.1 .7 93.8 -50.0 23.9 15.2 -42.4 -2.4 148.3 -33.0 190.8 5.0 -550.3 -.2 -94.6 30.7 115.2 6.8 95.0 -.3 148.3 11.4 -175.3 5.0 -75.8 1.1 69.2 19.4 90.5 25.8 -105.0 -3.0 31.3 -48.4 .7 -.8 -79.1 -1.5 -1.3 -4.0 -4.8 -2.8 1.5 -6.0 -3.8 -11.7 .5 -4.0 -26.7 -2.7 -3.9 21.5 -8.3 -4.3 -58.7 10.0 -3.0 72.6 -7.9 -5.0 81.9 7.5 -4.0 10.4 -41.7 -3.0 -110.7 24.1 -3.2 -58.0 20.4 -2.1 -30.8 2,442.0 2,129.3 2,927.7 2,957.6 3,559.5 3,540.7 3,605.4 4,040.9 4,570.6 3,589.6 3,832.9 4,333.5 1 Total net lending in credit m a r k e t s 7 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 10 Monetary authority 11 Commercial banking U.S.-chartered banks 17 N Foreign banking offices in United States 14 Bank holding companies IS Banks in U.S.-affiliated areas 16 Savings institutions 17 Credit unions 18 Bank personal trusts and estates 19 Life insurance companies 70 Other insurance companies 71 Private pension funds 77 State and local government retirement funds 73 Money market mutual funds 74 Mutual funds 75 Closed-end funds Government-sponsored enterprises 26 27 Federally related mortgage pools 78 Asset-backed securities issuers (ABSs) 79 Finance companies 30 Mortgage companies 31 Real estate investment trusts (REITs) 37 Brokers and dealers 33 Funding corporations RELATION OF LIABILITIES TO FINANCIAL ASSETS 35 36 37 38 39 40 41 47 43 44 45 46 47 48 49 50 51 57 53 54 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. Data in this table also appear in the Board's Z. 1 (780) quarterly statistical release, tables F.l and F.5. For ordering address, see inside front cover. 2. Excludes corporate equities and mutual fund shares. A40 Domestic Financial Statistics • June 1999 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING 1 B i l l i o n s of dollars, e n d of period 1997 Transaction category or sector 1995 19 98 1997 Q3 Q2 Q4 QI Q2 Q3 Q4 Nonfinancial sectors 1 Total c r e d i t m a r k e t d e b t o w e d b y domestic nonfinancial sectors 13,018.6 13,721.9 14,442.3 15,177.6 14,721.3 14,924.5 15,177.6 15,405.6 15,598.7 15,809.8 16,130.1 By sector and instrument 2 Federal government Treasury securities 3 4 Budget agency securities and mortgages 3,492.3 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 3,760.6 3,734.3 26.3 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 5 Nonfederal 9,526.3 10,085.2 10,660.5 11,372.7 10,960.7 11,153.3 11,372.7 11,574.9 11,849.8 12,089.6 12,377.8 6 7 8 9 10 11 12 13 14 15 16 By instrument Commercial paper Municipal securities and loans Corporate bonds B a n k 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 4,378.9 3,357.0 269.5 669.5 83.0 983.9 157.4 1,293.5 1,326.3 861.3 736.9 4,587.0 3,533.0 279.2 690.3 84.6 1,122.8 156.4 1,296.0 1,398.8 924.3 773.2 4,900.1 3,755.7 300.0 757.2 87.1 1,211.6 168.6 1,367.5 1,489.5 1,030.7 839.5 5,212.9 3,998.8 315.1 808.8 90.3 1,264.1 179.3 1,326.8 1,440.2 995.9 788.5 5,024.9 3,855.3 304.6 776.3 88.7 1,205.0 176.6 1,340.2 1,470.9 995.2 802.9 5,140.7 3,951.5 308.3 791.3 89.6 1,226.7 168.6 1,367.5 1,489.5 1,030.7 839.5 5,212.9 3,998.8 315.1 808.8 90.3 1,264.1 193.1 1,397.1 1,528.8 1,032.0 866.1 5,321.8 4,083.0 322.1 825.5 91.2 1,236.0 202.5 1,429.3 1,569.0 1,084.4 873.5 5,434.4 4,164.0 329.9 847.9 92.6 1,256.8 216.9 1,439.9 1,590.8 1,107.1 886.1 5,561.5 4,268.1 333.0 866.5 93.8 1,287.4 193.0 1,464.3 1,621.8 1,143.7 916.8 5,704.7 4,375.7 336.6 897.4 95.0 1,333.6 17 18 19 20 21 22 By borrowing sector Household Nonfinancial business Corporate N o n f a r m noncorporate Farm State and local government 4,454.0 3,950.6 2,686.6 1,121.8 142.2 1,121.7 4,804.3 4,210.7 2,913.2 1,152.4 145.1 1,070.2 5,135.4 4,461.7 3,112.6 1,199.2 149.9 1,063.4 5,471.7 4,781.6 3,366.4 1,259.1 156.1 1,119.5 5,261.2 4,613.5 3,235.6 1,224.4 153.5 1,086.1 5,373.0 4,684.8 3,289.1 1,240.4 155.2 1,095.5 5,471.7 4,781.6 3,366.4 1,259.1 156.1 1,119.5 5,529.3 4,901.2 3,468.3 1,277.8 155.1 1,144.3 5,651.4 5,027.6 3,565.3 1,301.6 160.6 1,170.8 5,786.2 5,124.7 3,639.7 1,322.5 162.5 1,178.8 5,958.3 5,219.8 3,709.3 1,347.8 162.7 1,199.8 23 F o r e i g n c r e d i t m a r k e t d e b t h e l d in United States 370.8 441.9 518.8 569.6 539.2 557.7 569.6 584.1 606.6 600.2 591.6 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 71.3 361.2 46.4 60.3 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 13,389.4 14,163.8 14,961.1 15,747.2 15,260.5 15,482.2 15,747.2 15,989.7 16,205.3 16,410.0 16,721.7 Commercial paper Bonds B a n k loans n.e.c Other loans and advances 28 Total credit m a r k e t debt owed by nonfinancial sectors, domestic a n d foreign Financial sectors 29 Total credit m a r k e t debt owed by financial sectors 3,822.2 4,281.0 4,833.2 5,452.9 5,086.3 5,208.3 5,452.9 5,682.0 5,935.5 6,205.7 6,568.9 30 31 32 33 34 3B 36 37 38 39 By instrument Federal government-related Government-sponsored enterprise 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 1,904.2 486.9 1,205.4 53.7 135.0 23.3 2,608.3 896.9 1,711.4 .0 2,224.9 579.1 1,380.9 73.7 162.9 28.3 2,821.0 995.3 1,825.8 .0 2,631.9 745.7 1,556.1 87.1 198.5 44.5 2,706.2 944.2 1,762.1 .0 2,380.1 642.5 1,453.9 73.5 173.7 36.6 2,746.5 955.8 1,790.7 .0 2,461.8 684.7 1,476.2 79.7 183.0 38.2 2,821.0 995.3 1,825.8 .0 2,631.9 745.7 1,556.1 87.1 198.5 44.5 2,877.9 1,030.9 1,847.0 .0 2,804.1 804.9 1,637.0 106.1 206.6 49.4 2,981.2 1,072.5 1,908.7 .0 2,954.3 838.9 1,735.7 101.0 225.6 53.2 3,121.6 1,146.0 1,975.6 .0 3,084.2 874.2 1,785.4 116.1 246.2 62.2 3,318.0 1,299.6 2,018.4 .0 3,250.9 906.7 1,864.4 112.9 289.6 77.3 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 1,472.1 579.0 34.3 433.7 18.7 31.1 211.0 102.6 148.0 115.0 .4 .5 806.5 1,570.3 720.1 29.3 483.9 19.1 36.7 248.6 113.6 150.0 140.5 .4 1.6 896.9 1,711.4 873.8 27.3 529.8 31.5 43.7 312.7 140.6 168.6 160.3 .6 1.8 995.3 1,825.8 1,089.3 35.3 554.5 26.8 80.4 373.7 125.7 160.5 144.3 .4 1.8 944.2 1,762.1 917.9 35.3 557.8 28.3 58.0 350.0 130.0 164.0 149.8 .5 1.9 955.8 1,790.7 989.0 33.6 532.7 31.2 65.7 363.4 140.6 168.6 160.3 .6 1.8 995.3 1,825.8 1,089.3 35.3 554.5 26.8 80.4 373.7 148.7 181.2 162.9 .7 1.8 1,030.9 1,847.0 1,154.1 35.1 571.9 39.1 97.0 411.6 159.6 190.5 170.7 .8 1.6 1,072.5 1,908.7 1,243.9 40.1 596.9 27.1 112.5 410.5 169.6 196.1 186.6 1.0 2.0 1,146.0 1,975.6 1,321.2 39.4 589.4 27.6 133.2 417.9 188.7 193.5 213.3 1.1 2.5 1,299.6 2,018.4 1,406.2 42.5 615.6 28.1 145.7 413.6 All sectors 53 Total credit m a r k e t debt, domestic a n d foreign . . . 54 55 56 5/ 58 59 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 17,211.6 18,444.9 19,794J 21,200.2 20,346.8 20,690.5 21,200.2 21,671.7 22,140.8 22,615.8 23,290.6 623.5 5,665.0 1,341.7 2,504.0 834.9 860.9 4,397.6 983.9 700.4 6,013.6 1,293.5 2,823.6 949.6 931.1 4,610.4 1,122.8 803.0 6,390.0 1,296.0 3,127.5 1,041.7 996.2 4,928.4 1,211.6 979.4 6,625.9 1,367.5 3,440.1 1,169.8 1,095.9 5,257.4 1,264.1 893.1 6,466.8 1,326.8 3,255.3 1,115.8 1,022.4 5,061.5 1,205.0 925.7 6,517.7 1,340.2 3,333.4 1,123.1 1,044.9 5,178.9 1,226.7 979.4 6,625.9 1,367.5 3,440.1 1,169.8 1,095.9 5,257.4 1,264.1 1,074.8 6,708.6 1,397.1 3,563.9 1,191.5 1,128.7 5,371.2 1,236.0 1,112.7 6,730.2 1,429.3 3,729.6 1,240.9 1,153.9 5,487.5 1,256.8 1,165.1 6,841.8 1,439.9 3,792.2 1,279.7 1,186.1 5,623.7 1,287.4 1,172.6 7,070.2 1,464.3 3,893.9 1,315.5 1,258.4 5,782.0 1,333.6 1. Data in this table also appear in the B o a r d ' s Z. 1 (780) quarterly statistical release, tables L.2 through L.4. For ordering address, see inside front cover. Flow of Funds A3 7 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES1 Billions of dollars e x c e p t as noted, e n d o f period 1997 Transaction category or sector 1994 1995 1996 1998 1997 Q2 Q3 Q4 Q1 Q2 Q3 Q4 CREDIT MARKET DEBT OUTSTANDING2 1 Total c r e d i t m a r k e t assets 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Domestic nonfederal nonfinancial sectors Household Nonfinancial corporate business N o n f a r m noncorporate business State and local governments Federal government Rest of the world Financial sectors Monetary authority Commercial banking U.S.-chartered banks Foreign banking offices in United States Bank holding companies Banks in U.S.-affiliated areas Savings institutions Credit unions Bank personal trusts and estates Life insurance companies Other insurance companies Private pension f u n d s State and local government retirement funds M o n e y market mutual f u n d s Mutual f u n d s Closed-end f u n d s Government-sponsored enterprises Federally related mortgage pools Asset-backed securities issuers (ABSs) Finance companies Mortgage companies Real estate investment trusts (REITs) Brokers and dealers Funding corporations 17,211.6 18,444.9 19,794.3 21,200.2 20,346.8 20,690.5 21,200.2 21,671.7 22,140.8 22,615.8 23,290.6 3,035.9 1,979.2 289.2 37.6 729.9 203.4 1,216.0 12,756.3 368.2 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 1,472.1 541.7 476.2 36.5 13.3 93.3 107.5 2,899.1 1,937.8 280.4 42.3 638.6 203.2 1,530.3 13,812.3 380.8 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 1,570.3 661.0 526.2 33.0 15.5 183.4 86.3 2,921.5 1,968.9 291.0 46.7 614.8 195.5 1,933.8 14,743.5 393.1 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 1,711.4 784.4 544.5 41.2 19.3 167.7 110.3 2,764.8 1,794.9 305.8 49.5 614.6 200.4 2,259.0 15,975.9 431.4 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 1,825.8 950.4 566.4 32.1 28.1 182.6 164.0 2,801.5 1,853.2 281.4 48.0 618.9 197.3 2,095.0 15,252.9 412.4 3,856.8 3,295.2 501.8 23.8 36.1 937.8 299.9 235.5 1,723.7 498.6 798.7 542.7 656.5 861.3 99.4 848.6 1,762.1 818.9 553.1 34.8 21.9 160.2 130.0 2,744.2 1,798.4 290.4 48.7 606.6 198.2 2,196.4 15,551.8 412.7 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 1,790.7 863.3 564.4 55.5 23.7 164.7 133.4 2,764.8 1,794.9 305.8 49.5 614.6 200.4 2,259.0 15,975.9 431.4 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 1,825.8 950.4 566.4 32.1 28.1 182.6 164.0 2,706.9 1,756.5 289.6 50.2 610.6 204.3 2,324.0 16,436.5 433.8 4,093.3 3,505.1 517.9 31.2 39.2 931.0 306.7 240.1 1,779.1 521.1 853.4 582.5 775.0 939.3 97.1 942.9 1,847.0 1,000.4 572.0 46.8 31.5 244.0 199.5 2,766.5 1,787.4 280.1 51.0 648.0 207.5 2,401.2 16,765.6 440.3 4,136.4 3,543.6 525.6 26.8 40.4 930.6 315.1 240.9 1,796.0 520.8 885.9 600.2 815.9 977.6 96.5 978.5 1,908.7 1,082.4 579.0 32.7 33.8 198.3 196.2 2,785.4 1,770.3 287.7 51.8 675.5 210.9 2,416.4 17,203.0 446.5 4,195.7 3,616.2 510.1 28.3 41.1 939.0 320.8 241.4 1,817.6 518.9 909.8 613.1 869.9 1,003.4 95.9 1,041.0 1,975.6 1,148.3 592.7 33.8 33.2 217.5 189.0 2,771.3 1,737.7 302.3 52.7 678.7 213.6 2,508.1 17,797.5 452.5 4,337.0 3,761.1 504.2 26.5 45.2 964.3 327.2 242.4 1,847.9 519.6 953.4 632.9 965.9 1,023.2 95.4 1,141.3 2,018.4 1,225.6 630.2 35.3 30.7 159.9 194.6 17,211.6 18,444.9 19,794.3 21,200.2 20,346.8 20,690.5 21,200.2 21,671.7 22,140.8 22,615.8 23,290.6 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 5,326.6 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 5,693.7 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 1,319.0 123.8 871.7 6,012.0 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 1,418.2 138.3 1,082.8 6,461.5 46.7 9.2 18.4 568.8 197.5 1,265.3 2,432.3 646.7 952.4 768.0 2,717.5 414.3 639.6 7,169.4 1,319.8 133.9 982.9 6,258.4 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 7,556.3 1,353.5 143.1 1,058.9 6,449.8 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 1,418.2 138.3 1,082.8 6,461.5 48.2 9.2 18.4 608.1 182.4 1,259.4 2,525.2 760.9 1,130.7 891.0 3,340.2 505.3 677.3 8,246.8 1,407.7 149.5 1,179.3 6,746.4 50.1 9.2 18.4 630.4 197.8 1,321.0 2,530.8 754.0 1,153.7 861.5 3,439.0 540.6 686.9 8,349.4 1,414.6 141.4 1,207.2 6,784.3 54.5 9.2 18.8 652.2 196.3 1,282.7 2,554.4 776.5 1,249.7 919.8 3,151.9 579.0 694.8 7,810.4 1,434.8 151.7 1,112.4 7,042.9 60.1 9.2 18.3 661.4 184.0 1,335.2 2,629.1 805.0 1,334.2 877.7 3,626.1 569.6 707.0 8,770.1 1,481.3 147.2 1,291.0 6,848.0 37,535.5 41,029.9 44,643.8 49,365.7 46,888.0 48,346.0 49,365.7 51,357.4 52,230.9 52,307.5 54,644.9 21.1 6,237.9 3,370.5 22.1 8,331.3 3,578.3 21.4 10,062.4 3,776.1 21.1 12,776.0 4,097.4 21.1 11,627.0 3,964.4 21.0 12,649.4 4,030.7 21.1 12,776.0 4,097.4 21.2 14,397.6 4,108.8 21.0 14,556.1 4,136.2 21.2 12,758.4 4,153.7 21.6 15,437.7 4,164.4 -5.4 325.4 -6.5 67.8 48.8 -1,046.5 -5.8 360.2 -9.0 85.3 62.4 -1,369.3 -6.7 431.2 -10.6 86.0 76.9 -1,723.8 -7.3 534.5 -32.2 151.2 91.4 -2,110.0 -6.9 478.1 -8.1 96.6 77.6 -1,687.0 -6.7 501.5 -22.1 113.1 87.9 -1,656.3 -7.3 534.5 -32.2 151.2 91.4 -2,110.0 -7.4 510.8 -21.2 183.5 87.4 -2,018.7 -7.4 547.9 -17.1 134.4 92.6 -2,007.8 -7.2 565.2 -15.4 167.4 98.8 -2,012.6 -7.9 573.0 -27.0 159.0 97.7 -2,304.1 3.4 38.0 -245.9 3.1 34.2 -257.6 -1.6 30.1 -284.2 -8.1 26.2 -273.8 -6.8 27.9 -366.6 -7.8 19.5 -366.2 -8.1 26.2 -273.8 -10.4 21.4 -323.8 -16.1 24.2 -363.2 -12.0 15.7 -383.7 -3.9 23.1 -319.5 47,985.7 54,058.1 59,906.5 67,888.3 63,895.6 66,384.2 67,888.3 71,463.4 72,556.7 70,824.6 76,078.2 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Total c r e d i t m a r k e t d e b t 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 Other liabilities Official foreign exchange Special drawing rights certificates Treasury currency Foreign deposits Net interbank liabilities Checkable deposits and currency Small time and savings deposits Large time deposits Money market f u n d shares Security repurchase agreements Mutual fund shares Security credit Life insurance reserves Pension f u n d 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 Taxes payable Miscellaneous (—) Floats not included in assets (—) 63 Federal government checkable deposits 64 Other checkable deposits 65 Trade credit 66 Total identified to s e c t o r s a s a s s e t s 1. Data in this table also appear in the B o a r d ' 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 f u n d A42 2.10 Domestic Nonfinancial Statistics • June 1999 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, and indexes 1 9 9 2 = 1 0 0 , except as noted 1998 Measure 1996 1997 1999 1998 July Aug. Sept. Oct. Nov. Dec.r Jan.r Feb.r Mar. 1 Industrial production 1 119.5 126.8 131.3 r 130.5 132.4 131.9 132.4 132.2 132.3 132.3 132.6 132.8 Market groupings Products, total Final, total Consumer goods Equipment Intermediate Materials 114.4 115.5 111.3 122.7 110.9 127.8 119.6 121.1 114.1 133.9 115.2 138.2 123.5 125.4 115.2 144.2r 118.0 144.0 123.3 124.7 114.0 143.9 119.1 141.9 124.9 126.8 116.1 146.0 119.1 144.4 124.1 126.0 114.8 146.2 118.3 144.4 124.9 126.7 115.2 147.5 119.0 144.5 124.5 126.1 114.8 146.5 119.3 144.6 124.4 125.9 114.9 145.6 119.8 145.2 124.5 125.7 115.1 144.8 120.5 144.9 124.6 125.8 115.2 144.8 120.8 145.6 124.6 125.9 115.2 145.1 120.5 146.1 121.4 129.7 135.1 133.6 135.7 135.2 136.1 136.4 136.7 136.5 137.0 137.0 81.4 82.0 80.8 79.8 80.7 80.1 80.3 80.1 80.0 79.6 79.5 79.3 10 Construction contracts3 130.9 142.7r 153.7r 156.0 155.0 ISS.O1 152.0r 158.01 161.0 159.0 148.0 145.0 11 Nonagricultural employment, total4 12 Goods-producing, total 13 Manufacturing, total 14 Manufacturing, production workers 15 Service-producing 16 Personal income, total 17 Wages and salary disbursements 18 Manufacturing Disposable personal income 5 19 20 Retail sales5 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 99.6 130.1 183.3r 182.6r 151.1 178.6 175.2 123.5 101.9 97.9 98.4 130.4 183.4 182.8 149.6 178.7 174.8 123.8 102.4 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 99.0 131.1 185.6r 185.7' 151.8 180.7r 177.7 124.4 102.1 97.8 98.6 131.5 187.2r 186.7r 151.6r 182.4r 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 98.4 132.1 188.3 189.0 152.1 183.5 183.3 125.2 102.4 97.3 98.1 132.5 189.3 190.2 152.1 184.5 186.4 125.2 102.1 97.1 97.9 132.6 n.a. n.a. n.a. n.a. 186.9 Prices6 21 Consumer (1982-84= 100) 22 Producer finished goods (1982= 100) 156.9 131.3 160.5 131.8 163.0 130.7 163.2 131.0 163.4 130.7 163.6 130.6 164.0 131.4 164.0 130.9r 163.9 131.0 164.3 131.5 164.5 130.9 165.0 131.2 2 3 4 5 6 7 Industry groupings 8 Manufacturing 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, AND UNEMPLOYMENT Thousands of persons; monthly data seasonally adjusted 1998 Category 1996 1997 1999 1998 Aug. Sept. Oct. Nov. Dec. Jan.' Feb.1 Mar. HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 Employment 2 Nonagricultural industries3 3 Agriculture Unemployment 4 Number 5 Rate (percent of civilian labor force) 133,943 136,297 137,673 137,481 138,081 138,116 138,193 138,547 139,347 139,271 138,816 123,264 3,443 126,159 3,399 128,085 3,378 127,772 3,492 128,348 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 7,236 5.4 6,739 4.9 6,210 4.5 6,217 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 4.2 119,608 122,690 125,833 126,191 126,363 126,527 126,804 127,118 127,335 127,632 127,678 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 18,693 571 5,989 6,570 29,383 7,372 37,691 19,922 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 18,483 539 6,249 6,657 29,746 7,491 38,369 20,098 18,448 532 6,202 6,665 29,744 7,505 38,464 20,118 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment 4 7 8 9 10 11 12 13 14 Manufacturing Mining Contract construction Transportation and public utilities Trade Finance Service Government 1. Beginning January 1994, reflects redesign of current population survey and population controls from the 1990 census. 2. Persons sixteen years of age and older, including Resident Armed Forces. Monthly figures are based on sample data collected during the calendar week that contains the twelfth day; annual data are averages of monthly figures. By definition, seasonality does not exist in population figures. 3. Includes self-employed, unpaid family, and domestic service workers. 4. Includes all full- and part-time employees who worked during, or received pay for, the pay period that includes the twelfth day of the month; excludes proprietors, self-employed persons, household and unpaid family workers, and members of the armed forces. Data are adjusted to the March 1992 benchmark, and only seasonally adjusted data are available at this time. SOURCE. Based on data from U.S. Department of Labor, Employment and Earnings. Selected Measures 2.12 A43 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1999 1998 1999 1999 Series Q2 Q3 Q4r Ql Q2 Q3 Q4 Ql Capacity (percent of 1992 output) Output (1992=100) Q2 Q3 Q4r Ql Capacity utilization rate (percent)2 1 Total industry 131.3 131.6 132.3 132.5 159.6 161.5 163.5 r 165.1 82.3 81.5 80.9 80.3 2 Manufacturing 134.7 134.8 136.4 136.8 165.8 168.1 170.3 172.2 81.2 80.2 80.1 79.5 Primary processing3 Advanced processing4 121.1 141.4 120.2 142.1 120.6 144.4 121.7 144.4 144.0 176.4 145.1 179.2 146.1 182.0 146.9 184.5 84.1 80.2 82.9 79.3 82.5 79.3 82.8 78.3 5 6 7 8 9 10 11 12 13 Durable goods Lumber and products Primary metals Iron and steel Nonferrous Industrial machinery and equipment Electrical machinery Motor vehicles and parts Aerospace and miscellaneous transportation equipment . . . 156.1 116.4 125.3 124.0 127.0 203.0 282.8 135.3 157.9 117.7 122.4 118.7 126.8 207.9 292.7 137.2 161.2 119.2 119.3 112.9 126.9 211.7 304.8 148.5 161.8 121.4 118.9 114.1 124.6 213.6 312.2 146.7 193.9 143.0 142.0 142.8 140.8 234.7 366.6 183.9 197.5 143.9 143.2 144.6 141.3 242.9 381.6 184.9 201.2r 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 83.3 81.8 77.2 87.6 82.3 76.0 78.6 106.1 106.6 105.8 102.7 127.5 128.0 128.5 128.8 83.2 83.3 82.4 79.8 14 15 16 17 18 19 Nondurable goods Textile mill products Paper and products Chemicals and products Plastics materials Petroleum products 112.7 113.2 115.0 116.9 127.5 112.0 111.3 112.1 115.0 114.4 128.4 112.7 111.4 110.2 114.3 114.0 131.9 111.9 111.7 109.8 116.9 113.7 128.0 115.0 136.6 134.9 131.6 148.0 140.7 116.5 137.5 135.1 132.5 148.9 141.9 116.8 138.4 135.2 133.4 149.7 143.2 117.1 139.1 135.2 134.2 150.3 144.4 117.4 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 80.3 81.2 87.1 75.6 88.7 98.0 105.3 115.6 118.3 103.6 119.6 121.2 100.7 112.9 116.7 97.5 114.2 116.9 119.9 126.2 123.8 120.1 126.5 124.0 120.6 126.7 124.3 120.9 126.9 124.5 87.8 91.6 95.6 86.2 94.6 97.7 83.5 89.2 93.9 80.7 90.0 93.9 1973 1975 Previous cycle5 High Low High 3 4 20 Mining 71 Utilities Electric 22 Low Latest cycle6 High Low Mar. 1999 1998 1998 Oct. Nov. Dec/ Jan/ Feb/ Mar.p Capacity utilization rate (percent)2 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 85.4 78.1 82.6 81.3 80.8 80.7 80.3 80.3 80.1 69.0 85.7 76.6 81.6 80.3 80.1 80.0 79.6 79.5 79.3 88.9 84.2 77.7 76.1 84.4 80.6 82.4 79.6 82.4 79.4 82.9 79.0 83.1 78.3 82.8 78.4 82.6 78.2 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 81.0 90.0 90.2 89.9 80.6 81.6 83.7 78.4 90.4 80.0 81.6 82.2 74.9 91.3 79.8 83.6 81.9 77.9 87.0 79.4 83.7 82.8 78.9 87.7 79.2 83.6 81.2 76.2 87.6 78.9 82.5 81.3 76.4 87.6 64.0 71.6 45.5 85.4 84.0 89.1 72.3 75.0 55.9 86.6 78.1 76.4 84.9 77.2 80.9 83.9 76.8 80.0 83.6 76.5 78.7 82.6 76.2 77.9 82.6 75.9 79.1 81.7 75.7 78.7 82.2 83.3 82.3 81.5 80.0 79.8 79.6 82.6 83.5 87.9 79.1 89.5 97.2 80.3 83.2 86.7 75.7 89.1 94.4 80.7 80.5 84.2 76.6 94.1 96.3 80.6 80.9 86.2 76.1 93.1 96.0 80.2 81.1 86.7 75.2 88.2 99.8 80.4 82.0 87.3 75.8 88.8 97.4 80.3 80.6 87.3 76.0 88.9 96.7 84.7 92.0 96.9 83.8 87.3 92.2 82.0 88.2 92.6 80.6 89.9 93.5 81.0 89.2 93.4 80.4 90.9 95.0 72.6 87.3 88.5 70.5 86.9 91.2 87.2 68.2 71.8 88.1 86.7 66.2 70.4 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 96.0 89.2 93.4 74.3 64.7 51.3 93.2 89.4 95.0 78.4 67.6 81.9 66.6 87.3 79.2 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 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 88.4 90.5 93.6 2 Manufacturing 3 4 71.1 89.2 1 Total industry 3 Primary processing Advanced processing4 7.0 Mining 71 Utilities 22 Electric 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. A44 2.13 Domestic Nonfinancial Statistics • June 1999 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data seasonally adjusted 1992 Group portion 1998 1999 1998 avg. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.' Jan.' Feb.' Mar.p Index (1992 = 100) MAJOR MARKETS 1 Total index 100.0 131.3 130.7 131.3 131.9 130.6 130.5 132.4 131.9 132.4 132.2 132.3 132.3 132.6 132.8 2 Products 3 Final products 4 Consumer goods, total 5 Durable consumer goods 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 Carpeting and furniture 13 14 Miscellaneous home goods 15 Nondurable consumer goods 16 Foods and tobacco 17 Clothing 18 Chemical products 19 Paper products 20 Energy 21 Fuels 22 Residential utilities 60.5 46.3 29.1 6.1 2.6 1.7 .9 .7 .9 3.5 123.5 125.4 115.2 135.7 132.9 137.8 109.2 166.2 125.0 137.8 123.2 125.3 115.8 135.9 132.7 138.9 106.5 169.8 122.7 138.5 124.0 126.2 116.4 136.9 134.6 141.3 107.4 173.8 123.7 138.8 124.5 126.6 116.8 138.3 136.8 143.5 108.4 177.1 126.0 139.4 123.6 125.5 115.1 130.7 121.7 118.2 93.8 142.2 125.4 137.8 123.3 124.7 114.0 124.6 107.3 92.8 75.8 110.0 125.6 138.7 124.9 126.8 116.1 140.1 141.7 151.4 124.4 178.9 127.6 138.5 124.1 126.0 114.8 137.4 136.4 143.4 128.3 161.1 125.9 138.0 124.9 126.7 115.2 140.5 141.1 150.6 119.9 181.0 127.4 139.7 124.5 126.1 114.8 138.9 139.6 149.1 113.7 183.2 125.9 137.9 124.4 125.9 114.9 139.8 139.8 147.7 115.5 179.1 128.2 139.5 124.5 125.7 115.1 141.4 141.7 149.4 111.7 185.2 130.4 140.9 124.6 125.8 115.2 142.5 141.1 149.4 107.0 188.9 129.2 143.3 124.6 125.9 115.2 141.8 139.6 147.1 109.7 182.7 128.6 143.2 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 97.8 120.5 105.8 112.2 110.5 112.3 203.8 114.3 118.3 110.8 109.1 100.4 121.3 106.3 113.2 111.2 113.7 203.4 115.9 118.2 111.4 110.2 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 94.6 118.7 103.6 107.1 109.6 105.2 229.5 120.3 110.9 108.8 110.0 93.6 116.3 102.0 110.9 112.2 109.7 233.9 122.6 112.6 108.6 109.9 93.9 117.4 101.2 109.3 109.4 108.8 231.2 121.5 114.0 108.8 109.5 92.8 118.2 101.1 111.6 108.8 112.5 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 75.7 134.7 149.2 142.4 160.1 202.3 584.9 139.4 130.3 121.6 139.8 75.9 155.7 148.0 143.6 162.2 206.0 601.5 139.4 133.6 123.4 140.8 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 74.6 103.2 156.6 144.8 167.1 221.5 776.8 139.8 137.4 134.8 131.8 74.5 99.2 159.1 144.8 167.2 222.0 789.6 138.4 135.5 133.1 140.0 74.8 97.4 154.1 145.1 166.9 223.3 800.5 137.9 135.3 131.6 136.6 75.4 104.2 153.9 34 35 36 Intermediate products, total Construction supplies Business supplies 14.2 5.3 8.9 118.0 127.2 112.6 116.9 124.7 112.2 117.3 125.4 112.5 118.2 126.6 113.3 118.0 126.1 113.2 119.1 128.5 113.6 119.1 128.0 113.8 118.3 126.9 113.3 119.0 128.4 113.5 119.3 129.6 113.2 119.8 131.0 113.3 120.5 132.5 113.4 120.8 131.8 114.2 120.5 131.0 114.2 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 Primary energy 49 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 3.3 144.0 176.4 144.0 277.4 129.0 121.2 113.5 108.7 116.0 114.5 111.5 103.5 101.2 108.1 142.7 173.7 143.7 265.8 129.7 123.7 114.2 110.6 116.3 115.6 111.0 103.7 101.0 109.0 143.1 174.5 144.4 266.9 130.3 123.5 114.4 110.5 116.3 116.2 110.9 103.8 101.3 108.6 143.6 175.4 147.9 268.6 129.6 123.0 114.1 111.0 115.5 115.6 111.2 104.3 101.0 110.8 141.8 171.7 131.9 271.0 128.3 120.1 113.9 110.2 117.3 114.8 110.6 104.8 101.8 110.7 141.9 171.8 129.7 274.1 128.1 120.2 114.1 110.1 117.3 114.6 111.7 104.8 102.9 108.6 144.4 177.4 149.6 278.0 128.3 121.9 113.1 107.7 116.4 113.6 111.6 104.4 101.2 110.7 144.4 177.7 147.7 282.7 127.7 118.2 112.0 107.6 115.0 111.8 111.5 105.2 102.3 110.9 144.5 178.8 146.2 287.0 128.4 118.3 111.7 108.8 115.8 111.1 110.4 103.7 102.6 106.1 144.6 179.9 145.6 289.9 129.3 117.3 112.2 103.0 112.7 113.7 113.2 101.5 99.8 104.9 145.2 180.4 144.8 292.6 129.3 116.3 112.5 102.5 114.7 113.0 114.4 102.6 100.3 107.2 144.9 180.3 141.9 294.7 129.5 117.8 112.4 99.2 116.5 113.0 113.6 101.5 98.3 107.7 145.6 181.1 146.0 295.9 128.7 116.6 113.2 99.6 116.9 113.6 115.6 102.2 99.8 106.8 146.1 182.2 146.5 298.7 129.3 116.8 113.1 98.8 117.4 113.6 115.2 101.7 98.1 108.8 97.1 95.1 131.3 130.8 130.7 130.3 131.3 130.9 131.8 131.3 131.2 131.2 131.6 131.7 132.1 131.3 131.7 131.0 132.1 131.5 131.9 131.4 132.1 131.7 132.0 131.6 132.4 131.9 132.6 132.1 98.2 27.4 26.2 127.1 113.9 115.5 126.7 114.5 116.1 127.3 115.1 117.0 127.7 115.3 117.3 126.4 114.8 114.7 126.2 114.9 113.5 128.0 114.3 115.7 127.4 113.2 114.6 127.8 113.4 115.3 127.4 113.0 115.8 127.5 113.2 115.8 127.4 113.3 115.6 127.7 113.4 115.9 127.8 113.5 115.6 12.0 167.9 164.6 166.7 167.4 170.0 171.8 169.9 171.0 172.7 171.6 171.5 170.7 171.0 170.9 12.1 29.8 142.4 156.7 140.8 154.9 142.3 155.5 142.6 156.0 142.7 153.4 142.2 153.6 144.8 156.9 145.1 156.7 146.2 157.3 144.6 158.2 144.1 158.6 143.0 158.5 142.8 159.3 142.3 160.0 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 A45 1999 1998 1998 avg. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. r Jan. r Feb. r Mar? Index (1992 = 100) MAJOR INDUSTRIES 100.0 131.3 130.7 131.3 131.9 130.6 130.5 132.4 131.9 132.4 132.2 132.3 132.3 132.6 132.8 85.4 26.5 58.8 r 135.1 120.7 142.1 134.1 121.0 140.6 134.9 121.5 141.6 135.4 121.4 142.3 133.7 120.2 140.4 133.6 120.7 139.9 135.7 120.6 143.3 135.2 119.3 143.2 136.1 120.1 144.2 136.4 120.3 144.6 136.7 121.3 144.4 136.5 121.9 143.9 137.0 121.6 144.7 137.0 121.5 144.8 " ' 24 25 45.0 2.0 1.4 157.5 117.0 121.4 155.2 115.3 121.5 156.2 116.1 121.0 157.2 116.4 120.6 154.8 116.7 122.0 154.4 117.5 120.8 159.8 118.5 120.1 159.6 117.0 121.6 161.2 118.0 124.5 161.0 118.3 123.6 161.5 121.4 122.9 161.5 121.9 122.5 161.9 121.9 124.1 162.0 120.6 125.4 32 33 331,2 331PT 333-6,9 34 2.1 3.1 1.7 .1 1.4 5.0 126.2 123.8 121.1 115.7 127.0 127.3 124.5 127.1 127.7 120.0 126.4 127.2 124.0 127.5 126.7 122.4 128.4 127.8 124.5 126.5 125.5 121.9 127.6 128.7 123.5 122.1 119.8 116.0 124.9 128.0 125.4 122.6 120.2 118.3 125.4 127.8 127.0 124.4 122.5 120.3 126.7 126.3 126.6 120.1 113.4 112.6 128.1 126.2 128.3 120.6 114.4 109.7 128.0 126.9 130.5 118.7 109.7 100.2 129.3 127.7 131.6 118.6 114.6 102.0 123.4 128.7 133.6 120.1 116.4 106.6 124.6 127.9 132.1 118.1 112.7 106.6 124.5 127.2 131.0 118.4 113.2 107.2 124.6 127.5 59 Total index 60 Manufacturing Primary processing 61 Advanced processing 62 79 80 Durable goods Lumber and products Furniture and fixtures Stone, clay, and glass products Primary metals Iron and steel Raw steel Nonferrous Fabricated metal products . . Industrial machinery and equipment Computer and office equipment Electrical machinery Transportation equipment.. . Motor vehicles and parts . Autos and light trucks . Aerospace and miscellaneous transportation equipment Instruments Miscellaneous 81 82 83 84 85 86 87 88 89 90 91 Nondurable goods Foods Tobacco products Textile mill products Apparel products Paper and products Printing and publishing . . . . Chemicals and products . . . . Petroleum products Rubber and plastic products . Leather and products 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 92 Mining 93 Metal 94 Coal 95 Oil and gas extraction Stone and earth minerals 96 97 Utilities Electric 98 Gas 99 35 8.0 203.7 198.4 200.6 202.5 205.8 209.0 207.0 207.7 211.2 211.1 212.7 212.3 214.4 214.0 357 36 37 371 371PT 1.8 7.3 9.5 4.9 2.6 649.1 291.9 123.0 141.1 128.5 589.6 278.2 122.3 140.0 128.8 605.4 280.8 123.3 140.8 130.9 623.9 282.0 125.2 144.1 132.7 641.4 285.5 114.2 121.1 110.1 657.0 289.4 108.2 107.6 86.9 673.6 290.8 130.3 154.2 142.0 695.5 297.7 127.6 149.9 136.5 718.5 302.4 128.4 150.2 140.4 746.9 304.8 127.1 148.8 138.1 761.6 307.3 125.6 146.6 137.3 778.7 309.8 124.0 145.3 137.9 791.7 312.1 125.0 147.7 137.0 802.8 314.6 124.5 147.0 135.8 372-6,9 38 39 4.6 5.4 1.3 104.9 113.0 117.7 104.5 112.8 120.0 105.7 113.0 120.1 106.3 113.8 119.1 106.3 112.4 118.5 107.1 112.6 118.5 106.9 113.0 117.7 105.8 114.2 117.0 106.9 114.6 115.9 105.7 114.1 114.1 104.8 113.9 115.4 103.0 114.4 114.8 102.7 113.7 116.0 102.5 114.4 117.0 "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 75.3 112.4 109.7 105.3 112.6 101.6 115.0 105.4 116.6 113.0 131.4 77.9 113.0 110.3 109.8 113.3 101.0 115.2 105.5 117.7 112.8 133.2 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 73.0 111.4 111.9 96.9 109.6 94.2 116.2 103.6 112.8 117.1 135.4 71.1 111.9 112.2 97.1 110.9 93.9 117.1 103.9 113.9 114.3 136.3 71.1 111.8 111.5 97.8 109.0 93.0 117.4 103.7 114.3 113.7 137.6 70.1 10 12 13 14 6.9 .5 1.0 4.8 .6 104.0 110.0 109.7 99.6 124.7 105.8 109.3 103.4 104.0 120.0 105.7 106.9 107.2 102.9 123.3 105.4 108.5 106.0 102.4 124.4 104.7 108.0 110.4 100.4 125.6 104.6 105.7 112.8 100.0 125.4 103.7 109.0 109.7 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 U0.7 108.6 94.2 132.1 99.0 108.3 114.5 91.0 125.6 97.4 110.1 102.0 90.9 128.1 98.0 U0.9 108.6 90.9 123.9 97.3 U0.9 101.1 91.6 123.8 491.493PT 492.493PT 1.1 6.2 1.6 113.9 117.2 101.9 114.0 115.7 106.3 112.8 115.2 102.0 115.2 118.9 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 96.0 114.0 116.3 103.6 113.2 116.3 99.1 115.4 118.3 102.4 80.5 134.7 133.8 134.6 134.9 134.5 135.1 134.6 134.4 135.3 135.7 136.2 136.1 136.4 136.5 83.6 130.2 129.5 130.2 130.6 128.8 128.6 130.6 130.0 130.8 130.9 131.1 130.9 131.2 131.2 5.9 515.6 473.4 482.7 490.7 502.9 511.8 522.5 538.3 552.1 562.8 571.2 578.1 586.1 594.3 81.1 120.1 120.2 120.9 121.1 119.2 118.9 120.6 119.9 120.4 120.4 120.5 120.2 120.4 120.3 79.5 118.5 118.7 119.3 119.5 117.5 117.2 119.0 118.1 118.7 118.8 118.9 118.6 118.8 118.6 2,519.6 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 r 2,474.5 r 106 Final 1,552.1 l,958.0 Consumer goods 107 108 Equipment 109 Intermediate 1,049.6 502.5 449.9 l,212.3 r 746.9 r 533.6 r 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 2,525.8 2,522.6 1,948.1 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 1,979.9 1,975.4 1,974.4 1,218.7 732.5 527.6 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 1,225.5 758.2 546.3 1,221.5 757.8 547.4 1,220.2 758.1 545.6 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. A46 2.14 Domestic Nonfinancial Statistics • June 1999 HOUSING AND CONSTRUCTION M o n t h l y figures at s e a s o n a l l y adjusted annual rates e x c e p t as n o t e d 1998 1996 1997 1999 1998 May June July Aug. Sept. Oct. Nov. Dec. Jan. r Feb. 1,729 1,306 423 1,750 1,383 367 999 688 311 L,440R 1,150R 290R 382 1,778 1,275 503 1,820 1,393 427 1,011 697 314 1,645 1,287 358 390 1,741 1,303 438 1,790 1,402 388 1,033 713 320 1,546 1,265 281 381 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 1,426 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 1,120 285 354 757 326 804 287 140.0 166.4 1,604 1,184 421 1,617 1,271 346 935 638 297 L,473R L,158R 315R 372 1,543 1,152 391 1,541 1,221 320 916 626 290 1,457 1,114 343 374 1,517 1,128 389 1,626 1,274 352 930 639 291 1,480 1,169 311 362 1,581 1,173 408 1,719 1,306 413 938 642 296 1,549 1,230 319 380 1,618 1,180 438 1,615 1,264 351 939 644 295 1,517 1,183 334 368 1,544 1,164 380 1,576 1,251 325 946 648 298 1,459 1,184 275 369 1,690 1,198 492 1,698 1,298 400 968 659 309 1,455 1,164 291 352 1,656 1,238 418 1,654 1,375 279 971 667 304 1,600 1,254 346 389 886 300 893 287 909 286 883 283 836 285 861 289 903 293 985 292 964 295 899 297 881 301 146.0 176.2 152.2 181.9 153.2 183.5 148.0 175.9 149.9 179.8 154.9 186.5 155.0 182.7 154.5 182.8 151.0 178.6 152.0 183.1 150.8 184.1 158.0 187.2 4,087 4,215 4,785 4,770 4,780 4,860 4,740 4,710 4,800 4,900 5,030 5,040 5,020 118.2 145.5 124.1 154.2 130.6 162.9 130.5 162.3 134.0 169.2 133.8 168.4 132.9 165.9 131.2 162.9 130.7 161.8 131.7 163.9 130.5 163.0 131.3 161.8 129.5 162.6 (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 618,051 654,528 r 635,396 650,341 658,673 663,300 670,133 668,287 r R 670,996 r 679,428 r 691,022 706,511 22 Private 23 Residential 24 Nonresidential 25 Industrial buildings 26 Commercial buildings 2/ 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 52,906 508,539 295,586R 212,953R 30,340R 88,131R 38,lllr 56,37 LR 496,495 288,003 208,492 29,642 86,321 37,678 54,851 503,592 291,907 211,685 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 R 306,264R 217,378 R 29,246 90,986R 37,538R 59,608R 525,453 R 307,259R 218,194 R 30,011R 93,644R 37,793R 56,746R 531,004 R 311,529R 219,475R 28,971R 96,033R 39,149R 55,322R 536,493 317,372 219,121 28,721 93,886 37,900 58,614 544,849 319,930 224,919 30,985 97,819 38,586 57,529 29 Public 30 Military Highway 31 32 Conservation and development 33 Other 137,070 2,639 41,326 5,926 87,179 147,082 2,625 45,246 5,628 93,583 145,989R 2,725 r 44,742 r 5,529 r 92,993 r 138,901 2,471 42,030 5,146 89,254 146,749 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 95,135 144,644R 2,568 r 45,166 r 5,146 r 91,764 r 145,544R 2,502 r 43,721 r 5,643 r 93,678 r 148,425R 2,608 r 44,269 r 5,539 r 96,009 r 154,530 2,058 52,096 5,584 94,792 161,662 2,781 57,505 6,011 95,365 21 Total p u t in place 581,813 1. Not at annual rates. 2. Not seasonally adjusted. 3. Recent data on value of new construction may not be strictly comparable with data for previous periods because of changes by the Bureau of the Census in its estimating techniques. For a description of these changes, see Construction Reports (C-30-76-5), issued by the Census Bureau in July 1976. SOURCE. Bureau of the Census estimates for all series except (1) mobile homes, which are private, domestic shipments as reported by the Manufactured Housing Institute and seasonally adjusted by the Census Bureau, and (2) sales and prices of existing units, which are published by the National Association of Realtors. All back and current figures are available from the originating agency. Permit authorizations are those reported to the Census Bureau from 19,000 jurisdictions beginning in 1994. Selected Measures 2.15 A47 CONSUMER AND PRODUCER PRICES Percentage changes based o n seasonally adjusted data except as noted Change from 3 months earlier (annual rate) Change from 12 months earlier Item 1998 1999 1998 1998 Mar. Change from 1 month earlier Index level, Mar. 1999 1 1999 1999 Mar. June Sept. Dec. Mar. Nov. Dec. Jan. Feb. Mar. CONSUMER PRICES2 (1982-84=100) 1.4 1.7 2.2 1.5 2.0 1.5 .2 .1 .1 .1 .2 165.0 2.0 -8.6 2.1 .1 3.0 2.3 -3.1 2.1 .6 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 -.3 .1 -.1 .3 .1 -1.1 .3 .6 .2 .5 -.2 .1 .0 .2 .1 .0 .1 -.4 .2 -.2 1.6 .1 -.3 .3 163.3 98.4 176.2 143.9 194.7 -1.5 -1.3 -10.6 1.2 -.6 .8 .9 -3.8 2.9 -.1 -.3 -.6 -3.1 1.4 -1.2 .6 1.8 -9.2 3.0 .9 1.5 -.3 -10.4 8.0 .3 1.5 2.7 8.6 -.3 -.3 -,2r — .4r -1.3r ,0r ,l r .3r -,lr —2.2r 1.7r -.r .5 1.6 1.8 -.1 -.1 -.4 -1.4 -1.0 -.1 .1 .2 .4 1.2 .1 .0 131.2 134.6 71.4 151.4 137.8 Intermediate materials 12 Excluding foods and feeds 13 Excluding energy -1.5 -.1 -1.9 -1.6 -1.6 -1.2 -2.2 -1.8 -3.8 -2.4 .0 -1.2 -.3 -.2 -.5 -,lr .1 -.2 -.4 -.2 .3 .1 121.3 132.0 Crude materials 14 Foods 15 Energy 16 Other -6.8 -9.7 -6.5 -7.0 -11.9 -12.9 -3.3 -14.6 -5.8 -19.6 -25.3 -19.9 -6.2 -1.3 -24.6 3.3 -4.4 1.6 -.6 2.0r —2.2r -4.1 —7.3r -1.8r 5.1 .6 .2 -2.8 -7.4 1.1 -1.3 6.1 -.8 98.9 61.3 130.0 1 All items 7 Food 3 Energy items 4 All items less food and energy 5 Commodities 6 Services PRODUCER PRICES (1982=100) 7 Finished goods 8 Consumer foods 9 Consumer energy 10 Other consumer goods Capital equipment 11 1. Not seasonally adjusted. 2. Figures for consumer prices are for all urban consumers and reflect a rental-equivalence measure of homeownership. SOURCE. U.S. Department of Labor, Bureau of Labor Statistics. A48 2.16 Domestic Nonfinancial Statistics • June 1999 GROSS DOMESTIC PRODUCT AND INCOME B i l l i o n s o f c u r r e n t d o l l a r s e x c e p t a s n o t e d ; q u a r t e r l y data at s e a s o n a l l y a d j u s t e d a n n u a l r a t e s 1997 Account 1996 1997 1998 1998R Q4 QL Q2 Q3 Q4 R GROSS DOMESTIC PRODUCT 1 Total 7,661.6 8,110.9 8,511.0 8,254.5 8,384.2 8,440.6 8,537.9 8,681.2 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 5,593.2 682.2 1,613.2 3,297.8 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 Gross private domestic investment 7 Fixed investment 8 Nonresidential Structures 9 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 1,292.0 1,220.1 882.8 246.4 636.4 337.4 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 32.1 24.5 67.4 63.1 59.3 52.7 71.9 66.9 95.5 90.5 39.2 31.5 57.0 49.3 45.7 39.3 -91.2 873.8 965.0 -93.4 965.4 1,058.8 -151.2 959.0 1,110.2 -98.8 988.6 1,087.4 -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 17 G o v e r n m e n t 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 1,468.1 520.1 947.9 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 By major type of 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 8,182.6 2,948.7 1,334.3 1,614.4 4,501.2 732.7 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 32.1 20.8 11.4 67.4 33.6 33.8 59.3 25.2 34.1 71.9 34.0 37.9 95.5 49.9 45.6 39.2 4.5 34.7 57.0 19.5 37.5 45.7 27.0 18.7 6,994.8 7,269.8 7,551.9 7,364.6 7,464.7 7,498.6 7,566.5 7,677.7 6,256.0 6,646.5 6,994.7 6,767.9 6,875.0 6,945.5 7,032.3 7,126.0 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 4,798.0 3,993.6 671.4 3,322.2 804.4 407.4 397.0 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 3,547.6 837.5 426.5 411.0 527.7 488.8 38.9 551.2 515.8 35.5 577.2 548.5 28.7 558.0 526.6 31.4 564.2 536.8 27.4 571.7 544.0 27.7 576.1 550.9 25.2 596.9 562.2 34.7 2 3 4 5 12 13 C h a n g e in business inventories Nonfarm 14 Net exports of goods and services 15 Exports 16 Imports product 26 Change in business inventories 27 Durable goods Nondurable goods 28 MEMO 29 Total G D P in c h a i n e d 1992 d o l l a r s NATIONAL INCOME 30 Total 31 32 33 34 35 36 37 Compensation of employees Wages and salaries Government and government enterprises Other Supplement to wages and salaries Employer contributions for social insurance Other labor income 38 Proprietors' i n c o m e ' Business and professional' 39 40 Farm 1 41 Rental income of persons 2 150.2 158.2 162.6 158.8 158.3 161.0 163.6 167.5 4 2 Corporate profits' 43 Profits before tax 3 44 Inventory valuation adjustment 45 Capital consumption adjustment 750.4 680.2 -1.2 71.4 817.9 734.4 6.9 76.6 824.6 717.8 14.5 92.3 820.8 736.4 4.3 80.1 829.2 719.1 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 46 Net interest 418.6 432.0 449.3 432.4 440.5 447.1 454.0 455.6 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 C o m m e r c e , Survey of Current Business. Selected Measures 2.17 A49 PERSONAL INCOME AND SAVING Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1998 1997 Account 1996 1997 1998 Q4 QI Q2 Q3 Q4 r PERSONAL INCOME AND SAVING 1 Total personal income 6,425.2 6,784.0 7,126.1 r 6,904.9 7,003.9 7,081.9 7,160.8 7,257.9 2 Wage and salary disbursements Commodity-producing industries 3 4 Manufacturing Distributive industries 6 Service industries Government and government enterprises 7 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 4,149.9r 1,026.9 751.5 939.6r 1,494.0 689.3 3,989.9 1,003.7 741.3 904.5 1,410.2 671.4 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 1,110.4 565.9 406.9 511.2' 548.5 28.7r 162.6r 263.1 764.8 l,149.0 r 586.5 397.0 558.0 526.6 31.4 158.8 261.3 753.0 1,120.5 572.2 402.8 564.2 536.8 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 8 Other labor income 9 Proprietors' income1 Business and professional1 10 Farm1 11 12 Rental income of persons2 13 Dividends 14 Personal interest income IS Transfer payments Old-age survivors, disability, and health insurance benefits 16 306.3 326.2 347.4 333.6 340.9 345.1 349.5 354.1 6,425.2 6,784.0 7,126.1r 6,904.9 7,003.9 7,081.9 7,160.8 7,257.9 890.5 989.0 l,098.3 r 1,025.5 1,066.8 1,092.9 1,108.4 1,124.9 5,534.7 5,795.1 6,027.9r 5,879.4 5,937.1 5,988.9 6,052.4 6,133.1 LESS: Personal outlays 5,376.2 5,674.1 6,000.2r 5,781.2 5,864.0 5,963.3 6,039.8 6,133.6 22 EQUALS: Personal saving 158.5 121.0 21.1' 98.2 73.0 25.6 12.6 -.6 26,335.7 17,893.0 18,989.0 27,136.2 18,340.9 19,349.0 27,938.9r 19,065.0r 19,790.0r 27,398.2 18,530.5 19,478.0 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 2.9 2.1 .5 1.7 1.2 .4 .2 .0 27 Gross saving 1,274.5 1,406.3 1,468.0 1,428.0 1,482.5 1,448.5 1,474.5 1,466.6 28 Gross private saving 1,114.5 1,141.6 1,090.4 1,131.6 1,130.1 1,079.0 1,078.7 1,073.7 29 Personal saving 30 Undistributed corporate profits1 31 Corporate inventory valuation adjustment 158.5 262.4 -1.2 121.0 296.7 6.9 21.1' 305.4 14.5 98.2 295.0 4.3 73.0 312.0 25.3 25.6 300.9 7.8 12.6 304.8 11.7 -.6 303.9 13.4 Capital consumption allowances 3? Coiporate 33 Noncorporate 452.0 232.3 477.3 242.8 500.6 252.7 487.7 247.0 492.5 248.6 497.8 250.7 503.1 254.2 508.9 257.5 34 Gross government saving 35 Federal Consumption of fixed capital 36 Current surplus or deficit (—), national accounts 37 State and local 38 Consumption of fixed capital 39 Current surplus or deficit ( - ) , national accounts 40 160.0 -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 85.0r 150.2 296.4 72.3 70.2 2.2 224.1 82.7 141.4 352.4 128.7 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 41 Gross investment 1,242.3 1,350.5 1,391.5 1,360.7 1,428.4 1,362.7 1,372.5 1,402.4 42 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 l,367.1 r 231.& -212.6 1,292.0 236.5 -167.8 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 -32.2 -55.8 -76.5 -67.3 -54.1 -85.7 -102.0 -64.2 17 LESS: Personal contributions for social insurance 18 EQUALS: Personal income 19 LESS: Personal tax and nontax payments 20 EQUALS: Disposable personal income 21 MEMO Per capita (chained 1992 dollars) 23 Gross domestic product 24 Personal consumption expenditures 25 Disposable personal income 26 Saving rate (percent) GROSS SAVING 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 • June 1999 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data seasonally adjusted except as noted 1 1997 Item credits or debits 1 Balance on current account 2 Merchandise trade balance 2 3 Merchandise exports 4 Merchandise imports 5 Military transactions, net 6 Other service transactions, net 7 Investment income, net 8 U.S. government grants y U.S. government pensions and other transfers 10 Private remittances and other transfers i i Change in U.S. government assets other than official reserve assets, net (increase, —) 1996 -134,915 -191,337 611,983 -803,320 4,684 78,079 14,236 -15,023 -4,442 -21,112 1997 1998 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 Ql Q2 Q3 Q4P -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) lb 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 -71,557 -32,983 22 Change in foreign official assets in United States (increase, +) 23 U.S. Treasury securities 24 Other U.S. government obligations 2b Other U.S. government liabilities4 26 Other U.S. liabilities reported by U.S. banks3 27 Other foreign official assets5 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 liabilities3 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 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 t. Seasonal factors are not calculated for lines 12-16, 18-20, 22-34, and 38^-0. 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. 24,283 6,250 49,235 120,600 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' Millions of dollars; monthly data seasonally adjusted 1998 Item 1996 1997 1999 1998 Aug. Sept. Oct. Nov. Dec. Jan.1 Feb.p 1 Goods and services, balance Merchandise 2 Services 3 -108,574 -191,337 82,763 -110,207 -197,955 87,748 -169,288 -248,159 78,871 -16,733 -22,847 6,114 -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 -19,438 -26,150 6,712 4 Goods and services, exports Merchandise 5 Services 6 850,775 611,983 238,792 937,593 679,325 258,268 931,026 670,641 260,385 74,986 53,769 21,217 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 76,597 54,339 22,258 7 Goods and services, imports Merchandise 8 Services 9 -959,349 -803,320 -156,029 -1,047,799 -877,279 -170,520 -1,100,314 -918,800 -181,514 -91,719 -76,616 -15,103 -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 -96,035 -80,489 -15,546 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' 3 Special drawing rights2 ' 4 Reserve position in International Monetary Fund2 5 Foreign currencies4 1995 1996 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar.p 85,832 75,090 69,954 73,544 75,66 79,183 77,683 81,755 80,675 75,322 74,359 11,050 11,037 11,049 10,312 11,050 10,027 11,046 9,891 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 14,649 49,096 15,435 38,294 18,071 30,809 21,161 31,446 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 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 SDR holdings and reserve positions in the IMF also have been valued on this basis since July 1974. 3. Includes allocations of SDRs by the International Monetary Fund on Jan. 1 of the year indicated, as follows: 1970—$867 million; 1971—$717 million; 1972—$710 million; 1979— $1,139 million; 1980—$1,152 million; 1981—$1,093 million; plus net transactions in SDRs. 4. Valued at current market exchange rates. FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS' Millions of dollars, end of period 1998 Asset 1995 1996 Aug. 1 Deposits Held in custody 2 US. Treasury securities2 3 Earmarked gold" Sept. Oct. Nov. Dec. Jan. Feb. Mar.p 386 167 457 161 347 154 211 167 233 200 166 522,170 11,702 638,049 11,197 620,885 10,763 588,337 10,510 578,403 10,457 588,768 10,403 608,060 10,355 607,574 10,343 612,670 10,343 615,139 10,347 610,649 10,347 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 • June 1999 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1998r Item 1 Total1 2 3 4 5 6 7 8 9 10 11 12 By type Liabilities reported by banks in the United States* U.S. Treasury bills and certificates3 U.S. Treasury bonds and notes Marketable Nonmarketable4 U.S. securities other than U.S. Treasury securities5 By area Europe1 Canada Latin America and Caribbean Asia Africa Other countries 1996r Aug. Sept. Oct. Nov. Dec. Jan.r Feb.p 756,533 776,505 758,773 733,030 745,152 751,482 757,934 762,236 761,013 113,098 198,921 135,384 148,301 144,120 130,398 131,551 128,146 134,822 128,598 125,132 133,702 123.915 134,141 121,834 136,840 125,275 135,471 384,045 5,968 54,501 428,004 5,994 58,822 416,313 6,311 61,631 406,009 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 63,214 246,983 38,723 79,949 403,265 7,242 6,457 252,289 36,177 96,942 400,144 9,981 7,058 255,668 33,815 97,806 381,683 11.364 4.523 247,302 33,598 79,164 383,412 11,584 4,056 259,698 34,644 77,469 385,565 10,976 2,886 261,028 36,885 76,759 389,359 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 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 1999 1997r LIABILITIES TO, AND CLAIMS ON, FOREIGNERS Payable in Foreign Currencies Venezuela, beginning December 1990, 30-year maturity issue; Argentina, beginning April 1993, 30-year maturity issue. 5. Debt securities of U.S. government corporations and federally sponsored agencies, and U.S. corporate stocks and bonds. SOURCE. Based on U.S. Department of the Treasury data and on data reported to the department by banks (including Federal Reserve Banks) and securities dealers in the United States, and on the 1994 benchmark survey of foreign portfolio investment in the United States. Reported by Banks in the United States' 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' Millions of dollars, end of period 1999 1998 Item 1996 1998r 1997 Aug. Sept. Oct. Nov. Dec.1" Jan.r Feb.p BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners ?, Banks' own liabilities 3 Demand deposits 4 Time deposits2 Other3 5 Own foreign offices4 6 7 Banks' custodial liabilities5 8 U.S. Treasury bills and certificates6 Other negotiable and readily transferable 9 instruments7 Other 10 11 Nonmonetary international and regional organizations8 . . 17. Banks' own liabilities Demand deposits 13 14 Time deposits* Other3 15 16 17 18 19 Banks' custodial liabilities5 U.S. Treasury bills and certificates6 Other negotiable and readily transferable instruments7 Other 70 Official institutions9 71 Banks' own liabilities Demand deposits 7.2 23 Time deposits2 24 Other3 75 26 27 28 Banks' custodial liabilities5 U.S. Treasury bills and certificates6 Other negotiable and readily transferable instruments7 Other 79 Banks 10 30 Banks' own liabilities . . 31 Unaffiliated foreign banks Demand deposits 32 33 Time deposits2 Other3 34 Own foreign offices4 35 36 37 38 39 Banks' custodial liabilities5 U.S. Treasury bills and certificates6 Other negotiable and readily transferable instruments7 Other 40 Other foreigners Banks' own liabilities 41 Demand deposits 47 43 Time deposits2 Other3 44 1,162,148 1,283,787 1,346,654 1,341,295 1,350,292 1,371,998 1,346,154 1,346,654 1,332,241 1,339,175 758,998 27,034 186,910 143,510 401,544 883,740 32,104 198,546 168,011 485,079 884,356 29,341 151,589 140,753 562,673 928,182 33,038 183,556 190,542 521,046 917,008 33,547 174,173 165,205 544,083 911,258 32,071 158,664 153,269 567,254 880,616 32,104 149,746 143,341 555,425 884,356 29,341 151,589 140,753 562,673 872,123 33,039 147,456 145,309 546,319 879,415 31,681 153,247 161,556 532,931 403,150 236,874 400,047 193,239 462,298 183,490 413,113 162,235 433,284 160,598 460,740 168,764 465,538 182,917 462,298 183,490 460,118 185,231 459,760 184,851 72,011 94,265 93,641 113,167 141,103 137,705 123,378 127,500 142,169 130,517 151,239 140,737 142,399 140,222 141,103 137,705 137,428 137,459 134,109 140,800 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 15,188 13,684 59 6,252 7,373 15,215 13,862 408 5,763 7,691 12,810 11,644 97 5,418 6,129 13,207 12,267 234 5,802 6,231 11,833 10,850 172 5,793 4,885 13,839 12,829 62 6,161 6,606 19,187 18,430 187 7,315 10,928 617 352 204 69 983 636 1,504 490 1,353 435 1,166 509 940 570 983 636 1,010 623 757 549 265 0 133 2 347 0 1,012 2 818 100 657 0 370 0 347 0 387 0 207 1 312,019 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 47,415 274,518 101,608 3,456 35,578 62,574 259,697 85,310 3,607 28,076 53,627 263,420 84,826 3,325 26,148 55,353 . 258,834 79,450 2,744 25,659 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 48,424 232,613 198,921 181,657 148,301 178,907 134,141 172,910 130,398 174,387 128.146 178,594 128,598 179,384 133,702 178,907 134,141 182.630 136,840 183,484 135,471 33,266 426 33,151 205 44,092 674 41,759 753 45,684 557 49,691 305 45,213 469 44,092 674 45,202 588 47,213 800 694,835 562,898 161,354 13,692 89,765 57,897 401,544 816,007 642,207 157,128 17,527 83,433 56,168 485,079 885,269 676,035 113,362 14,072 46,273 53,017 562,673 852,890 673,127 152,081 16,063 74,201 61,817 521,046 876,463 687,824 143,741 15,799 71,259 56,683 544,083 898,909 690,862 123,608 15,802 56,193 51,613 567,254 885,767 673,486 118,061 15,119 51,352 51,590 555,425 885,269 676,035 113,362 14,072 46,273 53,017 562,673 866,002 657,930 111,611 15,327 46,745 49,539 546,319 854,319 647,945 115,014 15,335 46,728 52,951 532,931 131,937 23,106 173,800 31,915 209,234 35,544 179,763 20,696 188,639 21,563 208,047 27,556 212,281 35,213 209,234 35,544 208,072 35,325 206,374 34,472 17,027 91,804 35,393 106,492 45,102 128,588 40,180 118,887 44,807 122,269 48,240 132,251 45,132 131,936 45,102 128,588 44,087 128,660 40,108 131,794 141,322 103,339 11,802 58,025 33,512 172,405 128,019 12,247 68,251 47,521 191,496 118,322 12,310 70,576 35,436 198,699 139,763 13,460 67,525 58,778 198,917 130,012 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 40,962 204,923 135,778 13,309 73,216 49,253 Banks' custodial liabilities5 U.S. Treasury bills and certificates6 Other negotiable and readily transferable instruments7 Other 37,983 14,495 44,386 12,954 73,174 13,169 58,936 10,651 68,905 10,454 72,933 12,101 72,933 13,432 73,174 13,169 68,406 12,443 69,145 14,359 21,453 2,035 24,964 6,468 51,562 8,443 40,427 7,858 50,860 7,591 52,651 8,181 51,684 7,817 51,562 8,443 47,752 8,211 46,581 8,205 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 14,573 16,083 27,026 25,867 27,391 29,933 28,793 27,026 25,858 23,341 45 46 47 48 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 • June 1999 LIABILITIES TO FOREIGNERS Reported by Banks in the United States 1 —Continued 1998 Item 1996 1997 1999 1998 Aug. Sept. Oct. Nov. Dec. Jan. r Feb. p AREA 50 Total, all foreigners 51 Foreign countries 52 Europe 53 Austria 54 Belgium and Luxembourg 55 Denmark 56 Finland 57 France 58 Germany 59 Greece 60 Italy 61 Netherlands 62 Norway 63 Portugal 64 Russia 65 Spain 66 Sweden Switzerland 67 68 Turkey 69 United Kingdom 70 Yugoslavia1' 71 Other Europe and other former U.S.S.R. 1 " 72 Canada 73 Latin America and Caribbean 74 Argentina /5 Bahamas 76 Bermuda 77 Brazil 78 British West Indies 79 Chile 80 Colombia 81 Cuba 82 Ecuador 83 Guatemala 84 Jamaica 85 Mexico 86 Netherlands Antilles 87 Panama 88 Peru 89 Uruguay 90 Venezuela 91 Other 92 Asia China Mainland Taiwan Hong Kong India Indonesia 97 98 Israel 99 Japan 100 Korea (South) 101 Philippines 102 Thailand 103 Middle Eastern oil-exporting countries" 104 Other 93 94 95 96 1,283,787 l,346,654 r 1,341,295 1350,292 1371,998 1,346,154 1346,654 r 1,332,241 1,339,175 1,148,176 1,272,097 1,334,82l r 1,326,107 1,335,077 1,359,188 1,332,947 l,334,821 r 1,318,402 1,319,988 376,590 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 22,521 420,432 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 25,905 427,367 r 3,178 r 42,818 r l,437 r 1,862 44,616 r 21,357 2,066 7,103 10,793 r 710 3,235 2,439 r 15,775 3,027 50,654 4,286 181,554 r 258 30,199 r 457,537 2,671 35,086 2,128 1,350 48,328 28,751 2,941 10,625 9,239 1,469 2,424 2,718 14,283 1,769 39,362 4,317 219,197 242 30,637 450,587 3,137 33,934 1,578 1,181 50,405 25,811 2,544 9,183 8,066 688 2,292 3,085 20,485 3,285 48,393 4,264 204,915 253 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 48,169 22,606 2,444 6,378 9,298 797 2,400 2,698 27,017 3,857 50,167 3,842 195,099 271 26,305 427,367 r 3,178 r 42,818 r l,437 r 1,862 44,616 r 21,357 2,066 7,103 10,793 r 710 3,235 2,439 r 15,775 3,027 50,654 4,286 181,554 r 258 30,199 r 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 36,654 436,331 3,070 41,594 1,826 1,643 47,620 23,111 2,509 6,684 14,792 1,102 2,225 2,438 13,457 2,918 60,345 5,045 173,543 287 32,122 1,162,148 38,920 28,341 30,212 27,844 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 9,625 554,561 r 19,013 118,085 6,839 15,800 302,299 r 5,010 4,616 62 1,573 1,332r 539 37,148 5,010 3,864 840 2,486 19,894 10,151 556,699 21,655 113,543 7,332 27,824 291,098 4,726 4,102 62 1,608 1,237 550 38,087 8,340 3,675 900 2,091 20,125 9,744 561,502 18,384 124,249 7,920 18,453 298,697 5,725 4,475 62 1,540 1,241 541 35,681 8,588 3,826 843 2,276 19,180 9,821 575,837 17,706 128,893 7,247 17,308 310,058 5,598 4,888 57 1,679 1,232 578 38,058 6,255 3,793 799 2,223 19,662 9,803 545,251 18,892 115,598 7,241 13,370 298,260 4,778 4.124 63 1,510 1,204 524 36,720 6,009 3,774 814 2,199 19,631 10,540 554,56 l r 19,013 118,085 6,839 15,800 302,299 r 5,010 4,616 62 1,573 l,332 r 539 37,148 5,010 3,864 840 2,486 19,894 10,151 540,480 17,175 121,606 8,969 12,268 287,124 5,188 4,535 64 1,525 1,224 565 35,965 5,681 4,499 864 2,380 20,250 10,598 537,394 18,228 118,727 8,370 12,913 284,639 5,189 4,462 56 1,513 1,337 542 35,891 8,406 4,401 828 2,274 19,354 10,264 249,083 269,379 307,140 r 266,480 275,745 284,441 293,584 307,140 r 301,454 302,514 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 13,060 3,250 6,501 14,959 25,992 13,041 12,708 20,898 r 5,250 r 8,282 r 7,749 168,236 r 12,454 3,324 r 7,359 r 15,609 r 32,230 r 18,506 11,290 18,349 6,437 5,651 5,296 131,376 12,493 2,777 7,869 14,532 31,904 18,523 12,080 16,627 5,144 5,470 5,984 142,767 12,971 2,712 6,664 16,627 30,176 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 r 5,250 r 8,282 r 7,749 168.2361" 12,454 3,324 r 7,359 r 15,609 r 32,230 r 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 16,152 34,151 8,116 2,012 112 458 10,347 1,663 138 2,158 10,562 1,459 76 2,428 35 3,684 2,880 11,098 1,616 88 2,658 6 3,727 3,003 9,749 1,288 78 2,358 7 3,291 2,727 8,889 1,498 75 1,659 3,017 2,628 8,905 r 1,339 97 1,522 5 3,088 2,854 r 9,110 1,856 98 1,308 6 2,989 2,853 8,658 1,902 73 1,343 13 2,737 2,590 105 Africa 106 Egypt 107 Morocco 108 South Africa 109 Zaire 110 Oil-exporting countries 14 111 Other 10 10 2,626 2,898 3,060 3.318 8,905 r 1,339 97 1,522 5 3,088 2,854 r 112 Other 113 Australia 114 Other 7,938 6,479 1,459 7,205 6,304 901 6,636 r 5,495 r 1,141 6,985 5,931 1,054 7,444 6,427 1,017 6,533 5,372 1,161 6,407 5,180 1,227 6,636 r 5,495 r 1,141 7,997 6,854 1,143 7,072 5,550 1,522 13,972 12,099 1,339 534 11,690 10,517 424 749 1 l,833 r 10,221 r 594 r 1,018 15,188 12,825 721 1,642 15,215 12,782 803 1,630 12,810 10,519 1,008 1,283 13,207 11,298 598 1,311 1 l,833 r 10,221 r 594 r 1,018 13,839 11,787 917 1,135 19,187 16,560 1,411 1,216 115 Nonmonetary international and regional organizations . . lib International 15 117 Latin American regional 16 118 Other regional 17 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. 12 15. Principally the International Bank for Reconstruction and Development. Excludes "holdings of dollars" of the International Monetary Fund. 16. Principally the Inter-American Development Bank. 17. Asian, African, Middle Eastern, and European regional organizations, except the Bank for International Settlements, which is included in "Other Europe." Nonbank-Reported 3.18 Data A55 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States' Payable in U.S. Dollars Millions of dollars, end of period 1999 1998 Area or country 1996 1997 1998 Aug. Sept. Oct. Nov. Dec. Jan.r Feb.p 1 Total, all foreigners 599,925 708,225 734,794r 764,878 768,427 749,543 756,110 734,794 r 716,521 710,070 2 Foreign countries 597,321 705,762 731,176r 760,488 763,105 744,153 751,872 731,176 r 712,936 706,055 165,769 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 7,009 233,480r 1,043 7,187 2,383r 1,070 15,251 15,922 575 7,283 5,734 827 669r 789 5,735 4,223 46,880r 1,982 106,358r 53 9,516r 227,688 1,856 6,779 1,374 1,161 17,314 12,029 530 8,617 4,321 1,110 725 1,209 5,225 4,456 49,258 1,990 99,174 53 10,507 234,967 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 8,969 233,480r 1,043 7,187 2,383r 1,070 15,251 15,922 575 7,283 5,734 827 669r 789 5,735 4,223 46,880r 1,982 106,358r 53 9,516r 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 10,862 229,661 1,809 6,933 1,616 1,233 18,418 16,362 624 5,714 5,866 561 888 724 4,260 4,589 50,797 1,857 97,424 57 9,929 3 Europe 4 Austria Belgium and Luxembourg 5 6 Denmark 7 Finland 8 France 9 Germany 10 Greece 11 Italy 12 Netherlands 13 Norway 14 Portugal 15 Russia 16 Spain 17 Sweden 18 Switzerland 19 Turkey 20 United Kingdom 21 Yugoslavia2 22 Other Europe and other former U.S.S.R.3 26,436 27,189 47,212 41,402 41,165 37,316 44,830 47,212 42,925 40,743 24 Latin America and Caribbean 25 Argentina 26 Bahamas 27 Bermuda 28 Brazil 29 British West Indies 30 Chile 31 Colombia 3? Cuba 33 Ecuador 34 Guatemala 35 Jamaica 36 Mexico 37 Netherlands Antilles 38 Panama 39 Peru 40 Uruguay 41 Venezuela 42 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 4,120 342,08 l r 9,553 96,455 4,969 16,193 153,269 8,261 6,523 0 1,400 1,127 239 21,143 6,779 3,584r 3,260 1,126 3,089 5,111 379,383 8,724 77,875 9,629 23,530 192,334 8,307 6,905 0 1,518 950 318 20,078 12,939 4,157 4,061 1,055 2,649 4,354 373,237 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 17,644 183,122 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 17,801 179,223 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 3,584r 3,260 1,126 3,089 5,111 344,020 9,713 93,000 5,547 15,616 157,683 8,232 6,433 0 1,403 1,107 333 21,128 7,403 3,549 3,364 997 3,312 5,200 340,291 10,184 91,102 6,028 15,357 154,982 8,085 6,462 0 1,341 1,269 588 21,534 6,571 3,384 3,353 934 3,684 5,433 43 Asia China 44 Mainland 45 Taiwan 46 Hong Kong 47 India 48 Indonesia 49 Israel 50 Japan 51 Korea (South) 57 Philippines 53 Thailand 54 Middle Eastern oil-exporting countries4 55 Other 122,478 125,092 98,650r 102,382 104,614 104,781 100,768 98,650r 90,840 86,388 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 9,082r 1,440r 1,954r 1,166 46,712 8,238r l,465 r l,806 r 16,145 8,290r 2,703 651 13,821 1,878 2,031 898 44,822 11,508 1,259 1,883 12,136 8,792 1,380 1,031 10,548 1,823 2,108 941 52,213 9,823 1,280 2,129 12,681 8,657 2,275 1,079 8,244 1,582 2,044 1,504 52,904 9,733 1,128 1.952 13,531 8,805 2,488 957 8,238 1,533 2,069 916 48,406 8,947 1,619 1,895 15,077 8,623 1,311 1,041 9,082r 1,440r l,954 r 1,166 46,712 8,238r 1,465r l,806 r 16,145 8,290r 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 6,736 1,529 2,110 774 39,064 8,461 1,589 1,708 12,861 8,378 56 Africa 57 Egypt 58 Morocco 59 South Africa 60 Zaire 61 Oil-exporting countries5 62 Other 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 3,262 279 426 653 0 1,046 858 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 3,027 264 361 876 0 625 901 63 Other 64 Australia 65 Other 5,709 4,577 1,132 6,341 5,300 1,041 6,63 r 6,167 464r 6,371 5,999 372 6,110 5,783 327 6,216 5,809 407 6,527 6,008 519 6,63 l r 6,167 464r 6,360 5,866 494 5,945 5,275 670 66 Nonmonetary international and regional organizations6 , . . 2,604 2,463 3,618 4,390 5,322 5,390 4,238 3,618 3,585 4,015 23 Canada 1. Reporting banks include all types of depository institutions as well as some brokers and dealers. 2. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 3. Includes the Bank for International Settlements. Since December 1992, has included all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia. 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). 5. Comprises Algeria, Gabon, Libya, and Nigeria. 6. Excludes the Bank for International Settlements, which is included in "Other Europe." A56 3.19 International Statistics • June 1999 BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Payable in U.S. Dollars Reported by Banks in the United States' M i l l i o n s o f dollars, end o f period 1999 1998 Type of claim 1996 1998R 1997 Aug. Sept. Nov. 749,543 28,164 476,973 109,140 26,713 82,427 135,266 756,110 25,993 487,641 117,919 33,774 84,145 124,557 743,919 852,852 875,332 599,925 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 78,924 121,166 143.994 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 MEMO 13 Customer liability on acceptances 10,388 9,624 4,519 6,068 4,519 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States 5 39,661 33,816 39,978 9 Claims of banks' domestic customers 3 Deposits 10 11 Negotiable and readily transferable instruments 4 12 Outstanding collections and other claims 926,478 28,436 25,082 34,265 32,888 734,794 23,540 484,356 105,732 26,808 78,924 121,166 716,521 28,848 459,017 106,230 30,231 75,999 122,426 710,070 29,688 461,685 102,235 29,291 72,944 116,462 38,941 39,978 n.a. principally of amounts due from the head office or parent foreign bank, and from foreign branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. 3. Assets held by reporting banks in the accounts of their domestic customers. 4. Principally negotiable time certificates of deposit, bankers acceptances, and commercial paper. 5. Includes demand and time deposits and negotiable and nonnegotiable certificates of deposit denominated in U.S. dollars issued by banks abroad. 1. For banks' claims, data are monthly; for claims of banks' domestic customers, data are for quarter ending with month indicated. Reporting banks include all types of depository institution as well as some brokers and dealers. 2. For U.S. banks, includes amounts due from own foreign branches and foreign subsidiaries consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists 3.20 768,427 26,377 486,452 108,972 30,426 78,546 146,626 Feb. p 875,332 1 Total 2 Banks' claims Foreign public borrowers 3 4 Own foreign offices* Unaffiliated foreign banks 6 Deposits 7 Other All other foreigners 8 764,878 29,758 466.019 106,034 24,593 81.441 163,067 Jan. r Dec. r Oct. BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Payable in U.S. Dollars Reported by Banks in the United States' M i l l i o n s o f dollars, e n d o f period 1998 Maturity, by borrower and area" 1 Total 2 3 4 5 6 7 8 9 10 11 12 13 By borrower Maturity of one year or less Foreign public borrowers All other foreigners Maturity of more than one year Foreign public borrowers All other foreigners By area Maturity of one year or less Europe Canada Latin America and Caribbean Africa All other 3 Maturity of more than one year 14 Europe 15 Canada 16 Latin America and Caribbean 17 18 Africa 19 All other 3 1996 1995 Mar. June Sept. Dec. p 224,932 258,106 276,550 285,590 292,788 281,136 250,366 178,857 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 1. Reporting banks include all types of depository institutions as well as some brokers and dealers. 1997 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' Billions of dollars, end of period 1996 Area or country 1 Total 1994 499.5 1998 1997 1995 551.9 Dec. Mar. June Sept. Dec. Mar. June Sept. Dec.p 645.3 647.6 678.8 711.0 726.0 739.1 746.6 723.0 688.2 258.5 10.9 19.9 28.9 17.9 8.1 2.1 7.4 125.1 15.5 22.7 247.0 13.1 18.0 30.7 11.3 7.7 2.2 8.2 114.9 16.7 24.1 191.2 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 25.8 275.0 13.1 20.5 28.7 19.5 8.3 3.1 6.9 134.8 16.5 23.7 13 Other industrialized countries 14 Austria 15 Denmark 16 Finland 17 Greece 18 Norway 19 Portugal 20 Spain 21 Turkey 22 Other Western Europe 23 South Africa 24 Australia 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 72.0 1.9 2.1 1.4 5.8 3.4 1.3 15.1 6.5 9.6 5.0 20.0 71.4 2.1 2.8 1.6 5.7 3.3 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 25 OPEC 2 26 Ecuador 27 Venezuela 28 Indonesia 29 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 2 G-10 countries and Switzerland 3 Belgium and Luxembourg 4 France 5 Germany 6 Italy 7 Netherlands 8 Sweden 9 Switzerland 10 United Kingdom 11 Canada 12 Japan 96.0 112.6 130.3 128.1 140.6 137.0 138.7 147.4 144.4 138.2 141.5 32 33 34 35 36 37 38 Latin America Argentina Brazil Chile Colombia Mexico Peru Other 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 23.4 8.5 3.4 18.4 2.2 4.6 22.3 24.8 8.3 3.2 18.4 2.2 5.4 39 40 41 42 43 44 45 46 47 Asia China Mainland Taiwan 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 48 49 50 51 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 99.2 6.3 32.4 10.3 1.4 134.7 20.3 4.5 37.2 26.1 2.0 131.3 20.9 6.7 32.8 19.9 2.0 129.6 16.1 7.9 35.1 15.8 2.6 138.9 19.8 9.8 45.7 21.7 2.1 145.7 29.9 9.8 43.4 14.6 3.1 129.3 29.2 9.0 24.9 14.0 3.2 123.5 22.7 9.3 33.9 10.5 3.3 118.6 28.9 10.4 27.4 6.0 4.0 90.4 32.6 4.5 12.3 2.6 3.8 20.0 10.1 .1 66.9 25.0 13.1 .1 57.6 27.9 16.7 .1 59.6 30.8 17.9 .1 59.6 35.2 16.7 .3 57.6 27.2 12.7 .1 80.8 32.2 12.7 .1 99.1 33.8 15.0 .1 101.3 30.0 13.5 .2 95.6 30.6 11.1 .2 104.5 23.2 11.1 .2 109.4 52 Eastern Europe 53 Russia4 54 Other 55 Offshore banking centers 56 Bahamas 57 Bermuda 58 Cayman Islands and other British West Indies 59 Netherlands Antilles 60 Panama5 61 Lebanon 62 Hong Kong, China 63 Singapore 64 Other 65 Miscellaneous and unallocated7 11.0 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 International Statistics • June 1999 3.22 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/ 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 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 y Advance receipts and other liabilities 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 n 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 28,690 1,300 28,038 1,073 28,597 1,350 26,280 1,018 12 13 14 15 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 13,145 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 iy Canada 20 21 22 23 24 25 26 Latin America and Caribbean Bahamas Bermuda Brazil British West Indies Mexico Venezuela 27 28 2y 30 31 32 33 34 35 36 37 38 39 Japan Middle Eastern oil-exporting countries' Africa Oil-exporting countries2 All other3 Commercial liabilities Europe Belgium and Luxembourg France Germany Netherlands Switzerland United Kingdom 632 1,401 2,392 651 2,392 1,045 539 389 693 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 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 0 150 122 38 0 60 0 33 0 60 0 33 0 29 0 31 0 28 0 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 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 4y 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" 619 254 1,040 532 874 408 929 504 874 408 833 376 921 354 810 372 794 393 53 Other3 687 840 1,086 1,156 1,086 1,136 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 Data 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS the United States 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.p 1 Total 52,509 65,897 68,128 70,506 68,128 71,004 63,202 67,976 77,543 7 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 Deposits 6 Payable in dollars Payable in foreign currencies 7 8 Other financial claims Payable in dollars <3 Payable in foreign currencies 10 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 11 Commercial claims 17 Trade receivables Advance payments and other claims 13 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 70 71 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 23 Canada 74 75 76 77 78 79 30 Latin America and Caribbean Bahamas Bermuda Brazil British West Indies Mexico Venezuela 31 32 33 Japan Middle Eastern oil-exporting countries' 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 34 35 Africa Oil-exporting countries2 276 5 174 14 319 15 174 16 319 15 325 16 155 15 157 16 160 16 36 All other3 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 37 38 39 40 41 47 43 44 45 46 47 48 49 50 51 57 53 54 Commercial claims Europe Belgium and Luxembourg France Germany Netherlands Switzerland United Kingdom Canada 1,951 2,165 2,660 2,649 2,660 2,882 2,779 2,291 2,595 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 Japan Middle Eastern oil-exporting countries 55 56 Africa Oil-exporting countries2 57 Other3 1. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). 2. Comprises Algeria, Gabon, Libya, and Nigeria. 3. Includes nonmonetary international and regional organizations. A60 3.24 International Statistics • June 1999 FOREIGN TRANSACTIONS IN SECURITIES M i l l i o n s o f dollars 1999 Transaction, and area or country 1997 1998 1999 1998 Jan.— Feb. Aug. Sept. Oct. Nov. Dec. Jan. r Feb. p 126,571 119,042 138,942 134,306 155,819 152,303 159,532 154,968 4,564 U.S. corporate securities STOCKS 1 Foreign purchases 2 Foreign sales 1,097,958 1,028,361 1,596,255 1,542,099 3 Net purchases, or sales ( —) 69,597 54,156 4 Foreign countries 69,754 54,536 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 -157 19 Foreign purchases 20 Foreign sales 141.566 139.722 137,418 147,891 8,080 1,844 -10,473 2,757 7,529 4,636 3,516 8,066 1,843 -10,430 2,754 7,546 4,634 3,502 4,564 12,413 362 1,907 1,042 572 6,688 976 -2,558 -88 -2,936 -960 33 226 5,459 988 1,326 163 -277 1.740 -276 610 -157 -4,112 214 159 160 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 6,365 -175 872 956 582 2,795 248 -1,279 -240 -630 -344 11 89 -380 14 1 -43 3 -17 2 14 0 610,116 475,958 905,272 727,866 141,009 109,705 67.529 58,678 100,186 92,663 108,678 105,437 81,943 60,480 58,884 41,141 66,585 53,759 74,424 55,946 21 Net purchases, or sales (—) 134,158 177,406 31,304 8,851 7,523 3,241 21,463 17,743 12,826 18,478 22 Foreign countries 133,595 177,749 31,262 8,813 7,473 3,230 22,433 17,665 12,825 18,437 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 16,755 269 1,666 389 938 11,002 575 8,439 1.750 3,471 726 306 -34 5,813 233 139 32 100 3,924 439 1,592 -188 1.709 -10 -17 -535 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 13,898 124 1,268 329 535 10,299 475 2,057 314 1,439 165 266 -12 563 -343 42 38 50 11 -970 78 1 41 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 R 56,845 61,529R 3,305 77,922 74,617 -2,304 56,072 58,376 3,661 73,941 70,280 30 66,142 66,112 5 6 / 8 9 10 11 12 13 14 15 16 1/ Europe France Germany Netherlands Switzerland United Kingdom Canada Latin America and Caribbean Middle East 1 Other Asia Japan Africa Other countries 18 Nonmonetary international a n d regional organizations 315,351 307,271 145,588 142,831 BONDS2 23 24 25 26 2/ 28 29 30 31 32 33 34 35 Europe France Germany Netherlands Switzerland United Kingdom Canada Latin America and Caribbean Middle East 1 Other Asia Japan Africa Other countries 36 Nonmonetary international a n d regional organizations Foreign securities 37 Stocks, net purchases, or sales ( —) 38 Foreign purchases 39 Foreign sales 40 Bonds, net purchases, or sales ( - ) 41 Foreign purchases 42 Foreign sales -40,942 756,015 796,957 -48,171 1,451,704 1,499,875 8,503 940,678 932,175 — 18,957R 1,335,314 1,354,27 l r 6,966 151,863 144,897 -2,274 122,214 124,488 5,557 74,376 68,819 1,049 139,393 138,344 6,107 89,496 83,389 3,384 152,881 149,497 -89,113 — 10,454 r 4,692 6,606 9,491 24,026 -3,647 —3,843 r 1,001 3,691 44 Foreign countries -88,921 — 10,125 r 4,295 6,623 9,492 24,119 -3,641 —3,683 r 880 3,415 45 46 4/ 48 49 50 51 -29,874 -3,085 -25,258 -25,123 -10,001 -3,293 -2,288 11,139 -1,163 - 12,860R -3,326 -1,663 -1,411 -2,504 7,354 -861 3,187 -4,902 -3,249 -3 -480 1,202 2,667 -1,196 4,227 1,741 -122 -155 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 - 19R -1,489 -1,882 5 -424 403 -310 2,355 -1,558 141 22 -32 6,951 -551 832 -3,344 -3,390 -25 -448 397 -17 -1 -93 -6 121 276 43 Net purchases, or sales (—), of stocks and bonds Europe Canada Latin America and Caribbean Japan Africa Other countries 52 Nonmonetary international and regional organizations .... -192 -329 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). -160 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 AND NOTES A61 Foreign Transactions' Millions of dollars; net purchases, or sales (—) during period 1997 1999 1998 1999 Area or country 1998 Jan.— Feb. Aug. Sept. Oct. Nov. Dec. Jan.r Feb.p 1 Total estimated 184,171 46,677 -18,788 -15,795 -5,270 -2,193 25,456 10,549 -4,165 -14,623 2 Foreign countries 183,688 44,208 -18,289 -15,795 -5,261 -2,855 25,556 9,426 -4,107 -14,182 3 4 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 -5.835 -25 -51 1.763 -65 -2,124 -5.003 -330 -602 -2,823 667 -1,799 -3,081 -152 -680 8,000 -5,778 -2,088 -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 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 -11,658 446 -4,003 -8,101 94 -3,258 11 -299 -5,940 -1,308 3,914 -8,546 -3,856 299 62 -1,150 -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 -6 304 483 621 170 2,469 1,502 199 -499 -448 4 0 -10 8 -9 -288 -5 662 645 0 -100 -19 -6 1,123 1,084 2 -58 -77 3 -441 -371 183,688 43,959 139,729 44,208 4,123 40,085 -18,289 -1,225 -17,064 -15,795 -16,920 1,125 -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 7,636 -12 -16,554 2 3,462 -4,160 1 -5,837 0 -276 0 233 0 -2,442 0 4,080 0 -618 0 6 7 8 9 in ii i? 13 14 IS 16 17 18 19 Japan Africa Other 20 Nonmonetary international and regional organizations 21 International 22 Latin American regional MEMO 73 Foreign countries 74 Official institutions 25 Other foreign Oil-exporting countries 76 Middle East 2 27 1. Official and private transactions in marketable U.S. Treasury securities having an original maturity of more than one year. Data are based on monthly transactions reports. Excludes nonmarketable U.S. Treasury bonds and notes held by official institutions of foreign countries. 0 1 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 • June 1999 F O R E I G N E X C H A N G E R A T E S A N D I N D E X E S O F T H E F O R E I G N E X C H A N G E V A L U E O F T H E U.S. D O L L A R 1 Currency units per dollar except as noted 1999 1998 Item 1996 1998 1997 Nov. Dec. Jan. Feb. Mar. Apr. Exchange Rates COUNTRY/CURRENCY UNIT 1 2 3 4 5 6 7 8 9 10 11 12 Australia/dollar Austria/schilling Belgium/franc Brazil/real Canada/dollar China, P.R./yuan Denmark/krone European Monetary Union/euro3 . . Finland/markka France/franc Germany/deutsche mark Greece/drachma 13 14 15 16 17 18 19 20 21 22 23 Hong Kong/dollar India/rupee Ireland/pound* Italy/lira Japan/yen Malaysia/ringgit Mexico/peso Netherlands/guilder New Zealand/dollar' Norway/krone Portugal/escudo 24 25 26 27 28 29 30 31 32 33 34 Singapore/dollar South Africa/rand South Korea/won Spain/peseta Sri Lanka/rupee Sweden/krona Switzerland/franc Taiwan/dollar Thailand/baht United Kingdom/pound2 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 63.49 11.840 34.71 1.1932 1.5404 8.2778 6.3960 n.a. 5.1163 5.6422 1.6827 282.64 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. 1.9261 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 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 7.7432 42.43 147.77 1,664.91 120.29 3.8000 9.969 1.8969 53.40 7.4562 172.52 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. 7.7490 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. 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 947.65r 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 1.6378 5.6511 1,294.01 143.05 67.578 8.0140 1.3852 32.603 36.527 166.11 569.66 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 . Indexes3 NOMINAL 35 36 37 38 G-10 (March 1973= 100)4 Broad (January 1997= 100)5 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 95.46 115.34 94.23 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 98.25 104.67 125.70 127.31 126.80 128.98 130.83 131.03 129.24 85.99r 85.88r 90.59r 93.24r 98.46r 98.361" 96.7 r 96.24r 95.93r 95.47r 96.041" 94.88r 97.10r 96.35r 98.34r 98.17r 97.77 98.30 r r r r r r r 104.18 REAL 39 Broad (March 1973=100)' 40 Major currencies (March 1973= 100)6 . . 41 Other important trading partners (March 1973= 100)7 92.52 93.61 105.83 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. !04.47 103.61 104.75 105.30 105.79 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 Resen'e 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 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. 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. 63 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 July 1998 October 1998 January 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 March 31, 1998 June 30, 1998 September 30, 1998 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 157 Federal Reserve Bulletin • June 1999 Index to Statistical Tables References are to pages A3-A62 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 Interest rates, 14 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 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, 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 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) 65 Loans (See also specific types) Commercial banks, 15-21 Federal Reserve Banks, 5, 6, 7, 10, 11 Financial institutions, 35 Insured or guaranteed by United States, 34, 35 MANUFACTURING Capacity utilization, 43 Production, 43, 45 Margin requirements, 24 Member banks, reserve requirements, 8 Mining production, 45 Mobile homes shipped, 46 Monetary and credit aggregates, 4, 12 Money and capital market rates, 23 Money stock measures and components, 4, 13 Mortgages (See Real estate loans) Mutual funds, 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, 37^11 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, 15-21, 27 Dealer transactions, positions, and financing, 29 Federal Reserve Bank holdings, 5, 10, 11, 27 Foreign and international holdings and transactions, 10, 27, 61 Open market transactions, 9 Outstanding, by type and holder, 27, 28 Rates, 23 U.S. international transactions, 50-62 Utilities, production, 45 VETERANS Administration, 34, 35 WEEKLY reporting banks, 17, 18 Wholesale (producer) prices, 42, 47 YIELDS (See Interest rates) 159 Federal Reserve Bulletin • June 1999 Federal Reserve Board of Governors and Official Staff A L A N GREENSPAN, ALICE M . RIVLIN, OFFICE OF BOARD Chairman Vice Chair EDWARD W . KELLEY, JR. LAURENCE H . M E Y E R DIVISION 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 JENNIFER J. J O H N S O N , SECRETARY 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 Director SIDNEY M. SUSSAN, Deputy Associate 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 OF INTERNATIONAL KAREN H . JOHNSON, FINANCE Director LEWIS S. ALEXANDER, Deputy Director PETER HOOPER III, 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 M I C H A E L J. PRELL, AND 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 . S M I T H , 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 67 ROGER W . FERGUSON, JR. EDWARD M . GRAMLICH OFFICE OF STAFF DIRECTOR FOR MANAGEMENT STEPHEN R. MALPHRUS, Staff JOHN R . WEIS, 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 Director DAVID L. WILLIAMS, Assistant Director DIVISION OF INFORMATION RICHARD C . STEVENS, TECHNOLOGY Director MARIANNE M. EMERSON, Deputy Director TILLENA G. CLARK, Assistant Director MAUREEN HANNAN, Assistant Director P o KYUNG KIM, Assistant Director RAYMOND H. MASSEY, Assistant Director EDWARD T. MULRENIN, Assistant Director DAY W. RADEBAUGH, JR., Assistant Director DIVISION OF RESERVE BANK AND PAYMENT SYSTEMS C L Y D E H . F A R N S W O R T H , JR., OPERATIONS Director LOUISE L. ROSEMAN, Associate 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 161 Federal Reserve Bulletin • June 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 . R I V L I N 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 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 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, 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., T w e l f t h District LAWRENCE K. FISH, First District DOUGLAS A. WARNER III, Second 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 69 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 . GAMBOA, 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, EL P a s o , T e x a s MARILYN Ross, Omaha, Nebraska 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 KARLA 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 J A N E T C . KOEHLER, J a c k s o n v i l l e , F l o r i d a G A R Y 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 . M A R I N A N G E L , 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 163 Federal Reserve Bulletin • June 1999 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, M S - 1 2 7 , Board of Governors of the Federal Reserve System, Washington, D C 20551, or telephone (202) 4 5 2 - 3 2 4 4 , or FAX (202) 7 2 8 - 5 8 8 6 . You may also use the publications order form available on the Board's World Wide Web site (http://www.federalreserve.gov). When a charge is indicated, payment should accompany request and be made payable to the of the Federal Reserve System or may be Board of Governors ordered via Mastercard, Visa, or American Express. Payment from foreign residents should be drawn on a U.S. bank. BOOKS AND MISCELLANEOUS THE FEDERAL RESERVE PUBLICATIONS SYSTEM—PURPOSES AND FUNCTIONS. 1 9 9 4 . 1 5 7 pp. A N N U A L REPORT: B U D G E T REVIEW, 1 9 9 9 . T H E FEDERAL RESERVE A C T A N D O T H E R STATUTORY PROVISIONS THE FEDERAL RESERVE SYSTEM, as amended T H E U . S . 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Multiple copies are Consumer Handbook on Adjustable Rate Mortgages Consumer Handbook to Credit Protection Laws A Guide to Business Credit for Women, Minorities, and Small Businesses Series on the Structure of the Federal Reserve System The Board of Governors of the Federal Reserve System The Federal Open Market Committee Federal Reserve Bank Board of Directors Federal Reserve Banks 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 Sense 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 When 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 Best Mortgage 71 STAFF STUDIES: Only Summaries Printed in the 163. 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. CLEARANCE A N D SETTLEMENT IN U . S . SECURITIES MAR- KETS, by Patrick Parkinson, Adam Gilbert, Emily Gollob, Lauren Hargraves, Richard Mead, Jeff Stehm, and Mary Ann Taylor. March 1992. 37 pp. BULLETIN 164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, James T. Fergus and John L. Goodman, Jr. July 20 pp. by 1993. 1 6 5 . T H E D E M A N D FOR TRADE CREDIT: A N INVESTIGATION OF Staff Studies 1 - 1 5 7 , 161, and 1 6 8 - 1 6 9 are out of print. 1 5 8 . T H E ADEQUACY A N D CONSISTENCY OF M A R G I N MENTS IN THE MARKETS FOR STOCKS AND MOTIVES FOR TRADE CREDIT U S E BY SMALL BUSINESSES, b y Gregory E. Elliehausen and John D. Wolken. September 1 9 9 3 . 1 8 pp. REQUIRE- DERIVATIVE 166. 159. 160. N E W DATA ON THE PERFORMANCE OF N O N B A N K SUBSIDI- 167. A SUMMARY OF M E R G E R PERFORMANCE S T U D I E S IN B A N K - ARIES OF B A N K HOLDING COMPANIES, b y N e l l i e L i a n g a n d ING, 1 9 8 0 - 9 3 , A N D AN ASSESSMENT OF THE Donald Savage. February 1990. 12 pp. PERFORMANCE" BANKING VICES BY MARKETS SMALL AND AND THE USE OF FINANCIAL MEDIUM-SIZED by 170. RATES IN TWENTY Rhoades. February 1992. 11 pp. CITIES, by Stephen A. "EVENT STUDY" "OPERATING METHODOLOGIES, T H E COST OF IMPLEMENTING CONSUMER F I N A N C I A L R E G U LATIONS: A N A N A L Y S I S OF EXPERIENCE WITH THE T R U T H IN SAVINGS ACT, by Gregory Elliehausen and Barbara R. Lowrey, December 1997. 17 pp. EVIDENCE ON THE S I Z E OF B A N K I N G MARKETS FROM M O R T GAGE L O A N AND by Stephen A. Rhoades. July 1994. 37 pp. SER- BUSINESSES, Gregory E. Elliehausen and John D. Wolken. September 1 9 9 0 . 35 pp. 162. T H E ECONOMICS OF THE PRIVATE PLACEMENT M A R K E T , b y Mark Carey, Stephen Prowse, John Rea, and Gregory Udell. January 1994. 111 pp. PRODUCTS, by Mark J. Warshawsky with the assistance of Dietrich Earnhart. September 1989. 23 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. 165 Federal Reserve Bulletin • June 1999 ANTICIPATED SCHEDULE OF RELEASE DATES FOR PERIODIC RELEASES OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (PAYMENT MUST ACCOMPANY REQUESTS) Release number and title Annual USPS rate Annual fax rate Approximate release days' Period or date to which data refer Corresponding Bulletin table numbers 2 Weekly Releases H.2. Actions of the Board: Applications and Reports Received $55.00 n.a. Friday Week ended previous Saturday H.3. Aggregate Reserves of Depository Institutions and the Monetary Base 3 $20.00 n.a. Thursday Week ended previous Wednesday 1.20 H.4.1. Factors Affecting Reserve Balances of Depository Institutions and Condition Statement of Federal Reserve Banks 3 $20.00 n.a. Thursday Week ended previous Wednesday 1.11, 1.18 H.6. Money Stock, Liquid Assets, and Debt Measures 3 $35.00 n.a. Thursday Week ended Monday of previous week 1.21 H.8. Assets and Liabilities of Commercial Banks in the United States 3 $30.00 n.a. Friday Week ended previous Wednesday 1.26A-E H.10. Foreign Exchange Rates 3 $20.00 $20.00 Monday Week ended previous Friday 3.28 H.15. Selected Interest Rates 3 $20.00 $20.00 Monday Week ended previous Friday 1.35 Monthly Releases G.5. Foreign Exchange Rates 3 $ 5.00 $ 5.00 First of month Previous month 3.28 G.13. Selected Interest Rates $ 5.00 $ 5.00 First Tuesday of month Previous month 1.35 G.15. Research Library—Recent Acquisitions N o charge n.a. First of month Previous month G.17. Industrial Production and Capacity Utilization 3 $15.00 n.a. Midmonth Previous month 2.12, 2.13 G.19. Consumer Credit 3 $ 5.00 $ 5.00 Fifth working day of month Second month previous 1.55, 1.56 G.20. Finance Companies $ 5.00 n.a. End of month Second month previous 1.51, 1.52 73 Release number and title Annual USPS rate Annual fax rate Approximate release days' Period or date to which data refer Corresponding Bulletin table numbers 2 Quarterly Releases E.2. Survey of Terms of Lending $ 5.00 $5.00 Midmonth of March, June, September, and December February, May, August, and November E.7. List of Foreign Margin Stocks N o charge n.a. March and September March and September E. 11. Geographical Distribution of Assets and Liabilities of Major Foreign Branches of U.S. Banks $ 5.00 n.a. 15th of March, June, September, and December Previous quarter E.15. Agricultural Finance Databook $ 5.00 n.a. End of March, June, September, and December January, April, July, and October E.16. Country Exposure Lending Survey $ 5.00 n.a. January, April, July, and October Previous quarter Z. 1. F l o w of Funds Accounts of the United States: F l o w s and Outstandings 3 $25.00 n.a. S e c o n d w e e k of March, June, September, and December Previous quarter $ 5.00 n.a. February End of previous June % 4.23 1.57, 1.58, 1.59, 1.60 Annual Release C.2. Aggregate Summaries of Annual Surveys of Securities Credit Extension 1. Please note that for some releases there is normally a certain variability in the release date because of reporting or processing procedures. Moreover, for all series unusual circumstances may, from time to time, result in a release date being later than anticipated. 2. The data in some releases are also reported in the Bulletin statistical appendix. 3. These releases are also available on the Board's World Wide Web site (http://www.federalreserve.gov) under Domestic and International Research, Statistical releases. n.a. Not available. 167 Federal Reserve Bulletin • June 1999 Maps of the Federal Reserve System tetew*^" HSHifJii •Bi&ki H 0 9 L ADELPHIA YORK v * J W ALASKA HAWAII # LEGEND fiof/i 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. 75 1-A 3-C 2-B ME 4-D 5-E Pittsburgh Baltimore MD X VT NH Buffalo » 4*f NY CT N E W YORK BOSTON 6-F PTv T N — 9 • Birmingham. " #-I1 PHILADELPHIA cinnati RICHMOND CLEVELAND 8-H 7-G Nashville • \ llllliPck. 7alSMkville s i sville > New Drlrleans Miami ATLANTA CHICAGO S T . LOUIS 9-1 MINNEAPOLIS 10-J 12-L wy m tm I* oktafaoiBaCiv^ * ' KANSAS CITY 11-K DALLAS S A N FRANCISCO 169 Federal Reserve Bulletin • June 1999 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK 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 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 KANSAS CITY Denver Oklahoma City Omaha DALLAS El Paso Houston San Antonio 59601 64198 80217 73125 68102 75201 79999 77252 78295 SAN FRANCISCO 94120 Los Angeles Portland Salt Lake City Seattle 90051 97208 84125 98124 Vice President in charge of branch Carl W. Turnipseed1 Charles A. Cerino1 Robert B. Schaub William J. Tignanelli 1 Dan M. Bechter 1 James M. Mckee Fred R. Herr1 James D. Hawkins1 James T. Curry III Melvyn K. Purcell1 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, III1 James L. Stull 1 Mark L. Mullinix 1 Raymond H. Laurence1 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 REGULATORY SERVICE To promote public understanding of its regulatory functions, the Board publishes the Federal Reserve Regulatory Service, a four-volume loose-leaf service containing all Board regulations as well as related statutes, interpretations, policy statements, rulings, and staff opinions. For those with a more specialized interest in the Board's regulations, parts of this service are published separately as handbooks pertaining to monetary policy, securities credit, consumer affairs, and the payment system. These publications are designed to help those who must frequently refer to the Board's regulatory materials. They are updated monthly, and each contains citation indexes and a subject index. The Monetary Policy and Reserve Requirements Handbook contains Regulations A, D, and Q, plus related materials. The Securities Credit Transactions Handbook contains Regulations 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. 171 Federal Reserve Bulletin • June 1999 Federal Reserve Statistical Releases Available on the Commerce Department's Economic Bulletin Board The Board of Governors of the Federal Reserve System makes some of its statistical releases available to the public through the U.S. Department of Commerce's economic bulletin board. Computer access to the releases can be obtained by subscription. For further information regarding a subscription to the economic bulletin board, please call (202) 4821986. The releases transmitted to the economic bulletin board, on a regular basis, are the following: Reference Number Statistical release Frequency of release H.3 Aggregate Reserves Weekly/Thursday H.4.1 Factors Affecting Reserve Balances Weekly /Thursday H.6 Money Stock Weekly/Thursday H.8 Assets and Liabilities of Insured Domestically Chartered and Foreign Related Banking Institutions Weekly/Monday H.10 Foreign Exchange Rates Weekly/Monday H.15 Selected Interest Rates Weekly/Monday G.5 Foreign Exchange Rates Monthly/end of month G. 17 Industrial Production and Capacity Utilization Monthly/midmonth G.19 Consumer Installment Credit Monthly/fifth business day Z.l Flow of Funds Quarterly