Full text of Federal Reserve Bulletin : October 1996
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VOLUME 8 2 •
NUMBER 1 0 •
OCTOBER 1 9 9 6
FEDERAL RESERVE
BULLETIN
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D . C .
PUBLICATIONS COMMITTEE
Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood • Donald L. Kohn
• J. Virgil Mattingly, Jr. • Michael J. Prell • Richard Spillenkothen • Edwin M. Truman
The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed
except in official statements and signed articles. It is assisted by the Economic Editing Section headed by S. Ellen Dykes, the Graphics Center under the direction of
Peter G. Thomas, and Publications Services supervised by Linda C. Kyles.
Table of Contents
883 THE LOCATION OF U.S. CURRENCY:
MUCH is ABROAD?
HOW
Federal Reserve bank notes are widely used
outside the United States. Knowledge of how
much U.S. currency is abroad is important for a
variety of reasons, but currency movements are
notoriously difficult to measure, and estimates of
the foreign component of currency stocks and
flows have been subject to a great deal of speculation and uncertainty. This article brings together several new methods and data sources to
narrow the range of that uncertainty. The authors
estimate that about $200 billion to $250 billion
of U.S. currency was abroad at the end of 1995,
or more than half the roughly $375 billion then
in circulation outside of banks. Moreover,
growth in foreign demand for U.S. currency—
especially for hundred-dollar bills ($100s)—has
been far stronger than growth in U.S. demand.
On average over the 1990s, the currency stock
abroad has been growing at about three times
the rate of growth of the domestic stock.
904 INDUSTRIAL PRODUCTION AND CAPACITY
UTILIZATION FOR AUGUST 1996
Industrial production increased 0.5 percent in
August, to 126.9 percent of its 1987 average,
after a gain of 0.1 percent in My. Industrial
capacity utilization rose 0.2 percentage point, to
83.5 percent.
907
ANNOUNCEMENTS
Issuance of final agency guidelines on safety
and soundness standards for asset quality and
earnings.
Issuance of a final rule amending the risk-based
capital standards to incorporate a measure of
market risk.
Adoption of a final rule regarding investment
adviser activities in Regulation Y.
Recission of a staff interpretive letter.
Amendment to regulations regarding loans in
areas with special flood hazards.
Proposal to amend the risk-based capital guidelines for banks and bank holding companies
regarding the treatment of collateralized transactions; proposed amendments to Regulation Y.
Development of public service announcements
on the sale of mutual funds at banks.
909 MINUTES OF THE FEDERAL OPEN
MARKET COMMITTEE
MEETING
HELD ON JULY 2-3,
1996
At its meeting on July 2-3, 1996, the Committee reaffirmed the ranges for 1996 growth of M2
and M3 of 1 to 5 percent and 2 to 6 percent
respectively and the monitoring range for
expansion of total domestic nonfinancial debt of
3 to 7 percent that it had established in January.
The Committee provisionally set the same
ranges for 1997.
For the intermeeting period ahead, the Committee adopted a directive that called for
maintaining the existing degree of pressure
on reserve positions and that included a bias
toward the possible firming of reserve conditions during the intermeeting period.
917 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
August 28, 1996.
A3 GUIDE TO TABULAR
PRESENTATION
A4 Domestic Financial Statistics
A42 Domestic Nonfinancial Statistics
A50 International Statistics
A63 GUIDE TO STATISTICAL RELEASES AND
SPECIAL TABLES
A66 INDEX TO STATISTICAL
PUBLICATIONS
A74 M4.PS OF THE FEDERAL RESERVE SYSTEM
TABLES
A68 BOARD OF GOVERNORS AND STAFF
A70 FEDERAL OPEN MARKET COMMITTEE AND
STAFF; ADVISORY COUNCILS
A72 FEDERAL RESERVE BOARD
A76 FEDERAL RESERVE BANKS,
AND OFFICES
BRANCHES,
The Location of U.S. Currency:
How Much Is Abroad?
Richard D. Porter and Ruth A. Judson, of the Division of Monetary Affairs, prepared this article. Lyle
Kumasaka, Adam Reed, and James Walsh provided
research assistance.
Federal Reserve bank notes are widely used outside
the United States. Knowing how much U.S. currency
is abroad is important for a variety of reasons, but
currency movements are notoriously difficult to measure, and estimates of the foreign component of currency stocks and flows have been subject to a great
deal of speculation and uncertainty. Here we bring
together several new methods and data sources to
narrow the range of that uncertainty. According to
our estimates, about $200 billion to $250 billion of
U.S. currency was abroad at the end of 1995, or more
than half the roughly $375 billion then in circulation
outside of banks. Moreover, that proportion has been
rising. Our calculations indicate that growth in foreign demand for U.S. currency—especially for
hundred-dollar bills ($100s)—is far stronger than
growth in U.S. demand. On average over the 1990s,
the overseas stock has been growing at about three
times the rate of growth of the domestic stock.
Today, foreigners hold U.S. currency for the same
reasons that people once held gold coins: as a unit of
account, a medium of exchange, and a store of value
when the purchasing power of the domestic currency
is uncertain or when other assets lack sufficient anonymity, portability, divisibility, liquidity, or security.
A safe asset in an unpredictable world, dollars often
flow into a country during periods of economic and
political upheaval and sometimes remain there well
after the crisis has subsided.
NOTE. We are grateful to Michael Bordo, David B. Humphrey,
Russell Krueger, J.L. Laake, Robert M. Lucas, Jr., Howard Murad,
Gerald Pollack, and our colleagues in the Federal Reserve for helpful
assistance, comments, and discussions on various points. We thank
FinCEN, the Financial Crimes Enforcement Network of the Department of the Treasury, for permission to use aggregate information
derived from the U.S. Customs Service's Currency and Monetary
Instrument Reports. Finally, we are grateful for the stimulating dialogue we have had with Edgar L. Feige on all aspects of this study.
Questions and comments can be e-mailed to the authors at
rporter@frb.gov or ijudson@frb.gov.
Currency movements are difficult to measure for
some of the same reasons that currency is popular: It
can be easily concealed and readily carried across
borders, even in large quantities (a briefcase can hold
$1 million in $100s). The total amount of U.S. currency in circulation is known; in principle, one could
conduct a census to determine the domestic stock and
assume that the rest of the currency is abroad. However, such a census would be invasive, prohibitively
costly, and unlikely to yield reliable results. Thus, the
amount of currency held abroad can only be estimated, and then only from incomplete or indirect
evidence about dollars flowing across U.S. borders.
Policymakers would find it useful to have a clear
idea of how much U.S. currency is circulating outside
the country. First, foreign demand for U.S. currency,
if large and unrelated to domestic U.S. spending, will
complicate the interpretation of movements in the
amount of currency outstanding and in various other
monetary aggregates.
Second, estimates of changes in foreign holdings
of U.S. currency may also reduce the average size of
the errors-and-omissions category in the U.S. international transaction accounts, which do not currently
incorporate any estimates of changes in foreign holdings of currency.
Third, a significant foreign demand for U.S. currency will have important effects on the amount of
seigniorage that the United States can expect.1 All
U.S. currency, including that held externally, can be
thought of as a form of interest-free Treasury borrowing and therefore as a saving to the taxpayer. If the
amount of currency abroad is around $200 billion,
and the three-month Treasury bill rate is 5.2 percent
(which it is as of this writing), the amount of seigniorage (and taxpayer saving) from externally circulating
currency, calculated as the product of these two
figures, would be more than $10 billion per year.
Knowing more accurately the amount of seigniorage
1. Seigniorage is defined as the government's gain from converting
valuable metal into more valuable coins. We use the term here in the
looser sense that includes the central bank's income from issuing
paper currency.
884
Federal Reserve Bulletin •
October 1996
derived from externally circulating currency would
assist policymakers in deciding how many resources
to devote to protecting it by, for example, combating
the counterfeiting of U.S. currency abroad or improving the physical quality of externally circulating
notes. Add to these reasons the fact that currency
outstanding has surged over recent years, and a reliable answer to the question of how much is abroad
becomes a matter of considerable interest.
In all, we have examined ten methods for estimating the amount of currency held abroad. We first
outline the major sources of foreign demand for U.S.
currency. We also review the available information,
from statistical reports to institutional structure, none
of which, alone, covers the full extent of currency
stocks or flows but which nonetheless point to foreign use as the major source of recent growth in US.
currency. We then describe two of the ten methods
we use to estimate the stock of currency abroad, the
seasonal method and the biometric method, which
provide convenient illustrations of the assumptions
and empirical relationships required to estimate overseas currency flows and stocks.
After briefly summarizing the remaining eight
methods, we present a summary measure, the
"median flow estimate," based on several methods
for which we have sufficient time-series data. We
show that although year-to-year changes in domestic
holdings have been relatively stable, changes in total
currency have grown and have become increasingly
dominated by foreign movements. In light of the
evidence, we examine and find unpersuasive several
arguments supporting the claim that very little currency is held outside the United States. Finally, when
our estimate of U.S. currency held abroad is subtracted from the total outstanding, the amount of
domestically circulating currency per U.S. resident
that remains is considerably smaller than the corresponding measure for most other developed countries, and we examine some of the economic forces
underlying these cross-country differences.2
2. For earlier estimates of the foreign component of currency
stocks and flows and related issues, see, for example,
Robert B. Avery, Gregory E. Elliehausen, Arthur B. Kennickell,
and Paul A. Spindt, "Changes in the Use of Transaction Accounts
and Cash from 1984 to 1986," Federal Reserve Bulletin, vol. 73
(March 1987), pp. 179-96.
Alan S. Blinder, "The Role of the Dollar as an International
Currency," Eastern Economic Journal, vol. 22 (Spring 1996),
pp. 127-36.
Edgar L. Feige, "Overseas Holdings of U.S. Currency and the
Underground Economy," in Susan Pozo, ed., Exploring The Underground Economy: Studies of Illegal and Unreported
Activity
(Kalamazoo, Mich.: W.E. Upjohn Institute for Employment Research,
1996), pp. 5-62.
THE INTERNATIONAL MARKET
FOR U.S. CURRENCY
Before the advent of paper currency, gold coin—in
the form of Dutch guilders, Spanish pieces of eight,
and other coins of the realm—circulated far outside
the countries in which they were minted; similarly,
bank notes (that is, notes issued by private commercial banks) in the United States and England in the
19th century circulated far beyond the market areas
of those banks. U.S. currency today provides many of
the monetary services that gold coins once did. As
the leading international currency, Federal Reserve
notes enter other national economies for reasons both
public and private. Some countries, including Panama
and Liberia, have elected at times to use the U.S.
dollar as their currency. Other countries that issue
currency maintain stable exchange rates between
their own currency and the U.S. dollar; in the Caribbean, for example, that stability allows tourists and
residents to use both dollars and local currency without fear of a sudden change in exchange value. Workers employed outside their home countries are often
paid in U.S. dollars, which make their way into local
economies directly or via remittances: U.S. soldiers
have been paid in dollars since World War II, and
many expatriate workers in the oil-producing countries of the Middle East are paid in dollars. The dollar
is also the preferred currency for exchange: Travelers
heading for points outside of Western Europe often
economize on exchange costs by carrying dollars.
Jeffrey A. Frankel, "Still the Lingua Franca," Foreign Affairs,
vol. 74 (July/August 1995), pp. 9-16.
Lawrence B. Lindsey, "America's Most Ignored Export," Durell
Journal of Money and Banking, vol. 6 (Winter 1994-95), pp. 2-5.
John Mueller, "Most of Our Money Is Missing—Again," Durell
Journal of Money and Banking, vol. 6 (Winter 1994-95), pp. 6-13.
Richard D. Porter, "Estimates of Foreign Holdings of U.S.
Currency—An Approach Based on Relative Cross-Country Seasonal
Variations," in Nominal Income Targeting with the Monetary Base as
Instrument: An Evaluation ofMcCallums' Rule, Finance and Economics Discussion Series Working Study 1 (Board of Governors of the
Federal Reserve System, March 1993).
, "Foreign Holdings of U.S. Currency," International
Economic Insights (November/December 1993), p. 5.
and Ruth A. Judson, "The Location of U.S. Currency:
How Much Is Abroad?" (Board of Governors of the Federal Reserve
System, April 15, 1996).
Franz Seitz, "The Circulation of Deutsche Mark Abroad," Discussion Paper 1/95, Economic Research Group of the Deutsche
Bundesbank (May 1995).
Case M. Sprenkle, "The Case of the Missing Currency," Journal of
Economic Perspectives, vol. 7 (Fall 1993), pp. 175-84.
Scott B. Summer, "The Case of the Missing Currency, Correspondence," Journal of Economic Perspectives,
vol. 8 (Fall 1994),
pp. 201-03.
, "The Transactions and Hoarding Demand for Currency," Quarterly Review of Economics and Business, vol. 30
(Spring 1990), pp. 75-89.
The Location of U.S. Currency: How Much Is Abroad?
Episodes of economic and political turmoil have
frequently been the catalyst for major influxes of
dollars into a region. Recently, Argentina and the
former Soviet Union received large inflows of dollars. In Argentina, which experienced chronic high
inflation from the 1960s to the early 1990s and brief
bouts of hyperinflation in the mid 1970s and late
1980s, U.S. currency is still used as the settlement
medium for large-scale transactions such as those
involving real estate and cars.3 Argentina has
received as much as $40 billion in net shipments of
U.S. currency, or well over $1,000 per capita.4 However, a Federal Reserve and Treasury study of the use
of U.S. currency in Argentina suggests that some
currency that was initially shipped to Argentina could
have subsequently moved to neighboring countries.5
In the countries of the former Soviet Union, past
and current high inflation, confiscatory currency
reforms, and the underdevelopment of the banking
system encourage people to hold and use U.S. dollars
for everything from retail purchases of imported consumer products to the settlement of debts between
and within countries. Cumulative net shipments of
U.S. dollars to this part of the world have likely
surpassed those to Argentina, with some estimates as
high as $60 billion. Moreover, evidence from
Argentina and other countries indicates that long
after crisis episodes have passed, many residents
3. Daniel Heymann and Axel Leijonhufvud discuss the forces
affecting currency holdings in countries experiencing high inflation
but not hyperinflation (High Inflation: The Arne Ryde Memorial
Lectures, Clarendon Press, 1995). See also Carlos A. Vegh, "Stopping
High Inflation," International Monetary Fund, Staff Papers, vol. 39
(September, 1992), pp. 626-95; and Miguel A. Savastano, "Dollarization in Latin America: Recent Evidence and Some Policy Issues," in
P.D. Mizen and E.J. Pentecost, eds., The Macroeconomics of International Currencies: Theory, Policy, and Evidence (Brookfleld, Vt.:
Elgar, forthcoming).
For a perspective on this phenomenon and its relationship to sovereignty, see Benjamin J. Cohen, "The Political Economy of Currency
Regions," in Edward D. Mansfield and Helen V. Milner, eds., The
Political Economy of Regionalism (Columbia University Press, forthcoming). For an international treatment of this issue, including a
discussion of the implications for balance-of-payments statistics, see
John Wilson, "Physical Currency Movements and Capital Flows,"
in Report on the Measurement of International Capital Flows:
Part II—Background Papers (International Monetary Fund, 1992),
pp. 91-97; and Russell Krueger and Jiming Ha, "Measurement of
Co-Circulation of Currencies," Working Paper 95/34 (International
Monetary Fund, 1995).
4. This figure extends through 1995 the cumulation of net currency
shipments to Argentina calculated in Steven Kamin and Neil R.
Ericsson, "Dollarization in Argentina," International Finance Discussion Papers 460 (Board of Governors of the Federal Reserve System,
1993). Kamin and Ericsson find their estimate of Argentine dollar
holdings to be consistent with the reduction in domestic money
demand attributable to high inflation.
5. Graciela Kaminsky, "Study by the U.S. Treasury Department
and Federal Reserve System of the Use of U.S. Currency Outside the
United States" (Board of Governors of the Federal Reserve System,
1994).
885
continue to hold dollars as an instantly liquid form
of insurance against further political or economic
upheaval. Finally, in a high-inflation economy, holding dollars as currency and bearing the implicit
interest cost can be more convenient than holding
other available savings or transactions instruments,
even if they earn interest.6
DATA SOURCES FOR ESTIMATES
OF CURRENCY HELD ABROAD
We have two direct sources of information about
currency flows abroad—the U.S. Customs Service
and the Federal Reserve Bank of New York. However, data from these sources are often inadequate for
measuring the stock of currency abroad, in particular
because they miss much of the cash that is handcarried or remitted by mail by guest workers and
travelers. Thus, to better estimate stocks, we also use
sources of indirect information about currency flows.
We first describe the major sources of direct and
indirect data on currency flows in and out of the
United States. We then present other institutional and
general information on currency growth and economic activity that point to a large and increasing
presence of U.S. currency outside the country.
The Currency and Monetary
Reports
Instrument
The most obvious direct source of information on
currency flows across U.S. borders are the Currency
and Monetary Instrument Reports (CMIRs) required
by the U.S. Customs Service.7 In principle, these
reports are a rich source of information because individuals or firms making almost any shipment of more
than $10,000 in cash across a U.S. border are required
to file a CMIR (the reporting threshold was raised,
from $5,000 to $10,000, in 1980). Although CMIR
data on shipments by banks seem to agree with the
banks' own reports to the Federal Reserve Bank of
6. In fact, some evidence indicates that the private holding of
dollars in high-inflation regimes may possibly be more efficient than
other arrangements: A recent study of the welfare cost of inflation
presents evidence that the financial sectors in high-inflation countries
are larger than they would be otherwise; but among such highinflation economies, those that have been "dollarized" tend to have
somewhat smaller financial sectors than the others. See William B.
English, "Inflation and Financial Sector Size," Finance and Economics Discussion Series 9 6 - 1 6 (Board of Governors of the Federal
Reserve System, April 1996).
7. For more detail on these reports, see Feige, "Overseas Holdings
of U.S. Currency."
886
Federal Reserve Bulletin •
October 1996
New York, the CMIR data on nonbank shipments
sum to improbably large net inflows.8 At least four
factors indicate that CMIRs are neither accurate nor
thorough measures of large cash shipments that take
place outside the banking sector.
First, because arriving travelers must pass through
Customs but departing travelers ordinarily do not,
the CMIR data are biased toward measuring inflows
of currency. Departing travelers are occasionally
informed of the filing requirement or are targeted for
enforcement purposes, but their responses are not
adjusted statistically to account for the large proportion of outgoing travelers who should, but apparently
do not, file CMIRs. For example, in 1994 the number
of travelers entering the United States from anywhere
in the world was about the same as the number of
travelers leaving (about 45 million), but in that year,
about 170,000 arriving travelers filed CMIRs,
whereas only about 34.000 departing travelers did so.
Second, CMIRs do not capture shipments of
$10,000 or less, activity that could cumulate to a
significant total. In 1994, excluding travel to Mexico
and Canada, 18.7 million U.S. residents left the
United States, and 19.2 million visitors entered. If
these travelers carried an average of $1,000 each,
the unrecorded flows in each direction would be
relatively large, around one-half of the measured
$32.8 billion 1994 CMIR inflows and $39.1 billion
outflows. For example, banking statistics seem to
indicate that U.S. currency flows only back from the
Caribbean to the United States; the currency going in
the other direction, from the United States to the
Caribbean, goes not through the international banking system but via the pockets of American tourists
and others, and most of it presumably goes
unrecorded.
Third, many shipments greater than $10,000 are
likely to be misreported or not reported at all.
Although banks and other firms are accustomed to
filing CMIRs and probably do so fairly diligently,
individuals are potentially less aware of these reports,
less willing to file them, or even eager to avoid them.
Fourth, the record-keeping system for CMIRs was
designed with the purpose of identifying individual
transactions, not of developing accurate aggregate
statistics on currency flows. In sum, CMIRs are an
important source of data, but they probably do not
8. In the CMIR system, double counting may exist for some
transactions: for example, a bank and a commercial shipper may both
report the same currency shipment. Further, not all cross-border
consignments of cash require a CMIR. In particular, overland shipments of currency between banks and established customers do not
need to be reported, nor do overland shipments between established
offices of banks (31 C.F.R. 103.23, (3) and (9)).
provide accurate aggregate data because of a onesided data collection process and the omission of
some potentially large volumes of currency flows.
Foreign Currency Shipments by Banks
A second direct source of currency flow data is the
information provided to the Federal Reserve Bank of
New York by commercial bank-note brokers, primarily large commercial banks. Currently, we have
monthly data on incoming and outgoing currency
shipments by country for two intervals, the interwar
period (for which the country data had been published annually) and the period beginning in 1988.
We focus on the recent data.9
Overall, the shipments data indicate that well over
$100 billion in U.S. currency on net has moved
overseas since the late 1980s. From 1988 through
1991, the region receiving the bulk of currency shipments was Latin America, led by Argentina, which
received a little more than one-third of total net
shipments from the United States to the rest of the
world in this period. Since then, Europe has become
the dominant destination, reflecting the turbulence in
the former Soviet Union. Net U.S. currency flows to
Russia alone in both 1994 and 1995 have been at
least $20 billion per year, or well more than half of
total net foreign shipments of U.S. currency.
On the whole, from 1988 to 1995 about half of net
U.S. currency shipments abroad have gone to Europe,
with the bulk of those presumably going to Russia.
About 30 percent has been evenly split between the
Far East and the Middle East, with the remainder
going to Latin America, particularly Argentina.
Disaggregated Sources: Surveys and Federal
Reserve Cash Offices
Two of the most important sources of indirect information on currency flows are recent survey results
9. The details of the data from 1988 onward are confidential. For
the interwar period, see for example, "Foreign Movements of United
States Currency," Federal Reserve Bank of New York, Monthly
Review of Credit and Business Conditions, October 1, 1926, p. 6;
"Shipments of American Currency To and From Europe," Banking
and Monetary Statistics: 1914-1941 (Board of Governors of the
Federal Reserve System, 1943), pp. 405-07, and table 113, pp.
417-18; and "Shipments of American Currency To and From
Europe," Federal Reserve Bulletin, vol. 18 (January 1932), pp. 7-9.
Also, some annual data cover a brief period following World War II:
See Balance of Payments Statistical Supplement to Survey of Current
Business (Department of Commerce, 1958), pp. 178-79, note 3,
international investment position table referencing U.S. currency
abroad in 1946-56.
The Location of U.S. Currency: How Much Is Abroad?
and data from currency processing performed at
the Federal Reserve System's Cash Offices. Twice
in the mid-1980s and again in May 1995 the Federal
Reserve engaged the Michigan Survey Research
Center to poll at least 500 households regarding
their use of currency and various transaction
accounts (table l). 10 In the latest survey, average
cash holdings (line 1), the percentage of currency
outstanding that is accounted for by holdings of
adults (line 5), and the percentage of expenditures
made with cash (line 10) all had dropped significantly
from the levels of the mid-1980s. Furthermore, businesses and children are not believed to hold significant amounts of currency. Hence, the declines
recorded by the surveys over a period when real per
capita currency was increasing sharply (see table 3)
most likely point to growing demand outside the
country.
The other type of indirect data, which we use in the
biometric method (described below), comes from the
10. Results from the 1980s surveys are discussed in Avery and
others, "Changes in the Use of Transaction Accounts"; and Robert B.
Avery, Gregory E. Elliehausen, Arthur B. Kennickell, and Paul A.
Spindt, "The Use of Cash and Transaction Accounts by American
Families," Federal Reserve Bulletin, vol. 72 (February 1986),
pp. 87-108.
1. Results of three household surveys on use of cash, 1984,
1986, and 1995
Item
1. Average cash holdings (dollars) 1
2. Cash on hand before acquisition
of cash (dollars)
3. Cash acquired (dollars)
4. Days between acquisitions of cash . . . .
5. Percentage of total currency and
coin outside of depository
institutions and held by adults . . .
6. Percentage of cash acquired in $ 100s .
7. Annual turnover rate of cash
(cash spent divided by average
cash balance)
8. Number of cash transactions
per month
9. Monthly cash expenditures (dollars) ..
10. Percentage of total expenditures
made with cash
June
1984
June
1986
May
1995
148
153
100 2
50
196
12
50
207
16
27
1493
12
11
n.a.
11
n.a.
50
49
5
23
gljj/s
Isjs
36
n.a.
633
n.a.
669
29
301
30
34
20
NOTE. Dollar values for 1984 and 1986 have been inflated by the chain-type
price index for personal consumption expenditures to make them comparable to
the nominal 1995 values. All statistics are sample means.
1. Estimated as cash on hand before the acquisition of cash (line 2) plus
one-half of the cash acquired (line 3).
2. Based on 458 respondents.
3. Based on 453 respondents who held positive amounts of cash. Calculating
as in note 1 for the 453 respondents in lines 2 and 3 in May 1995, average cash
balances were $27 + $ 1 4 9 / 2 = $101.50. The May 1995 entry in line 1 is $100
($1.50 less) because it includes 5 additional individuals, who held no cash
whatsoever. In both of the earlier surveys, all of the respondents reported that
they held some cash.
n.a. Not available.
SOURCE. Federal Reserve.
887
thirty-seven Federal Reserve Cash Offices. Each of
the twelve Federal Reserve Banks has at least one
main Cash Office and up to five Branch Cash Offices.
The Cash Offices record—by denomination and, to a
limited extent, by series—all currency received, processed, destroyed, and paid out or shipped to other
Cash Offices. These data do not differentiate foreign
and domestic flows, but by comparing Cash Office
reports on shipments of $100s and $50s with information from the surveys, we can enhance our knowledge of stocks and flows abroad. The biometric
method indicates that about two-thirds of $100s and
nearly half of $50s are held abroad.
Institutional Knowledge: The New York Cash
Office and $100 Notes
Hundred-dollar notes are the largest denomination
now issued by the Federal Reserve. Although $20s
are in more common use than $100s in the United
States, $100s make up 60 percent of the dollar value
of all U.S. currency outstanding. Two facts about the
use of $100 notes suggest that the net new demand
for them is coming primarily from abroad. First, the
Federal Reserve Cash Office serving the New York
City region is the primary supplier of currency to
foreign users, especially of $100s, and second, its
shipments of $ 100s are unusually large relative to the
size of its District, as measured by several economic
variables, including regional shares of vault cash,
population, income, and deposits (table 2).11 This
Cash Office, one of the two Cash Offices in the
New York District (the other is in Buffalo), has
accounted for 97 percent of the nationwide net issuance of $100s since 1988; for the twenty-two years of
currency issuance reported in table 2, the New York
City Cash Office accounted for nearly 83 percent of
the net national issuance of $100s.
Given the survey data described above (table 1),
the largest possible number of $100s per person in
the United States is less than one-third of a single
$100 bill, while for every U.S. resident about nine
11. The determination of a given District's share of nationwide
currency holdings should depend on some combination of the variables in the first five columns of table 2. Because the Federal Reserve
System supplies currency on demand, we need consider only the
demand for currency. That demand depends on national variables such
as the price level and interest rates and on regional measures such as
spending and population. If the use of cash in some Districts is more
intensive than in others, that propensity would be visible in variables
such as vault cash. Thus, it is fair to assume that a given District's
share of currency is explained by some combination of spending (for
which we substitute personal income), population, vault cash, or
deposits in that District.
888
Federal Reserve Bulletin •
October 1996
2. District shares of nationwide characteristics of economic size and total cash issuance
Percent
Federal Reserve District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total
Vault cash'
5.0
13.0
3.6
6.9
9.7
12.7
10.6
4.0
1.9
4.6
6.4
21.5
100
Population 2
Personal
income 3
5.0
9.7
4.6
6.5
9.4
12.8
12.3
5.0
3.0
5.4
7.4
18.8
100
6.1
12.1
5.1
5.9
9.3
11.2
12.4
4.2
2.6
5.0
6.4
19.6
100
NOTE. Because the distribution of these values changes extremely slowly, the
variation in dates for which we have data introduces only a small discrepancy
into the comparisons.
1. 1995:Q4.
$100 notes circulate somewhere in the world.12 In
sum, the basic information we have from surveys and
the Federal Reserve Cash Offices about the circulation of $100 notes is consistent with relatively low
dollar use domestically and high use abroad.
Aggregate Data on the Relative Growth of
Currency and Related Economic Variables
Finally, basic domestic macroeconomic data corroborate our findings that recent currency growth is not
driven by domestic factors. Empirically, the amount
of currency outstanding typically grows in line with,
or even a bit more slowly than, consumption in the
United States. Indeed, this was the pattern until 1990.
However, in the current decade, currency has grown
about 3V6 percentage points more rapidly than consumption in nominal terms and in real per capita
terms (table 3).13 Yet as the survey data show, the
12. We do not know the proportion of survey respondents who held
$100s before their acquisition of cash, but we do know the maximum
number of $100s they could have held from the individual data
underlying table 1, line 2. Based on this maximum as well as on line 6
and the assumption that the average holding of this denomination is
the initial amount plus one-half of the $100s acquired, the maximum
amount of $100s held on average could not have been more than
30 percent of one note in the 1995 survey.
13. Currency in circulation is defined as currency, including coin,
held outside of the Federal Reserve and the Treasury. The currency
component of Ml is equal to currency in circulation less vault cash
held at depository institutions. Definitive estimates on the amounts of
currency that have been lost or destroyed are not available, but
presumably the quantities are small (see Robert Laurent, "Currency in
Circulation and the Real Value of Notes," Journal of Money, Credit,
and Banking, vol. 16, May 1974, pp. 213-26). In this paper we use a
variety of currency measures, the choice of which depends on the
availability of the data needed for a given method; hence, our estimates of currency abroad do not always refer to exactly the same
currency concept. The differences between the currency measures are
Transaction
deposits 1
4.4
14.3
3.3
6.3
8.8
11.1
12.6
5.0
3.2
5.9
6.9
18.1
100
Savings and
transaction
deposits 1
4.6
14.4
3.6
6.8
9.5
12.0
12.4
4.6
2.9
5.3
6.3
17.5
100
$100s issued 4
All
denominations
issued 4
4.4
82.8
3.0
4.5
6.7
-15.9
13.8
3.7
1.7
3.0
1.2
-9.1
10.7
80.5
-.7
13.0
9.4
-34.8
29.0
3.8
1.9
4.3
-3.6
-13.4
100
100
2. 1990 census.
3. Per capita for 1989 multiplied by the 1990 population.
4. Value issued from 1974 to 1995 inclusive.
SOURCE. Authors' calculations.
1990s have been a period of declining use of cash for
consumption spending within the United States. In
real per capita terms, the amount of notes outstanding, other than $100s, has not changed much since
the late 1950s, so the increase is almost all attributable to $100s: the stock of $100s outstanding has
risen about $700 in real terms, to nearly $850, since
1959.
Other data pointing to a dominant external demand
for currency are the changes in total real per capita
currency holdings and the ratio of currency to M2
since 1959, which are a puzzle if one ignores foreign
currency demands (chart 1). In real terms, total per
capita balances for all denominations plus coin
increased relatively slowly from 1959 to 1979, then
jumped sharply from the early 1980s to the end of
1995. In contrast, the direction of change in the ratio
of currency to M2 was generally downward until the
late 1980s, a trend that reflected in part the absence of
interest paid on currency and the implicit or explicit
interest paid on the rest of M2.14 Because most of M2
bears interest at the market rate and currency yields
no interest, households have an incentive to economize on currency in favor of other M2 assets, so the
ratio should (other things equal) tend to decrease over
time. Indeed, one might have expected this decline to
have accelerated somewhat as more and more of M2
bore a market rate of interest, a process that began in
1978 and was completed for the explicit interest-
very small, however, relative to the magnitude of the uncertainty
inherent in our estimates of overseas currency holdings. To reflect that
uncertainty, we round all of the reported percentage estimates to the
nearest percent.
14. A similar declining pattern for this or comparable ratios holds
in most other developed countries.
The Location of U.S. Currency: How Much Is Abroad?
889
3. Spending and currency measures in the United States, 1959-95
Mean year-end to year-end growth (percent)
Period
Personal
consumption
expenditures
Currency
component
of Ml
$100s
Level, end of period
Currency
component
of M l
$100s
Nominal
1959
1960-69
1970-79
1980-89
1990-95
6.5
9.9
7.9
5.1
4.6
8.3
7.5
8.6
Billions of dollars
6.2
13.4
10.4
11.8
28.8
45.7
104.8
222.6
372.2
Per capita, real terms
1959
1960-69
1970-79
1980-89
1990-95
3.0
2.3
2.1
1.0
1.1
.7
1.7
4.5
Other
denominations
5.9
11.0
42.0
118.7
241.5
24.4
36.9
72.0
123.6
159.9
Per capita dollars, real terms
2.7
5.8
4.6
7.7
701
779
839
995
1,303
144
188
336
531
843
594
630
576
552
558
NOTE. Growth is at logarithmic rates. End-of-period values for the currency
component of M l are December averages; for denominations, December 31.
Real terms calculated with the chain-type price index for personal consumption
expenditures, 1992 base year.
. . . Not applicable.
SOURCE. Federal Reserve, U.S. Department of the Treasury, and authors'
calculations.
bearing components of this aggregate in the mid1980s. In any case, until the latter part of the 1980s,
the downward trend in this currency ratio was interrupted only by business cycles. Thus, the large
increase in the currency ratio starting at the end of
the 1980s is a surprise, suggesting once more that
explaining currency growth with domestic factors
alone is problematic.15
estimates; thereafter, we summarize the other eight
methods and present the median estimate.16 The seasonal and biometric approaches are indirect methods
in that they do not directly use information about
currency flows or currency abroad but infer them
from other characteristics of currency.
The Seasonal Method
ESTIMATION
METHODS
Because data on currency flows abroad are incomplete, cumulating them does not provide a good estimate of the stock of currency held abroad. Thus, we
combine the flow data with estimates from a variety
of alternate methods. We have examined ten methods
for estimating the share of currency abroad. We discuss in detail two methods, one based on differences
in the seasonal patterns of U.S. and Canadian currency demand and one based on biometric population
15. Part of the increase in the ratio reflects the shift of assets out of
M2 into non-M2 instruments such as stock and bond funds in the first
few years of the 1990s; see Athanasios Orphanides and Richard
Porter, "P* Revisited: Money-Based Inflation Forecasts with a Changing Equilibrium Velocity" (Board of Governors of the Federal
Reserve System, 1996). But even after accounting for such shifts, the
implied increase in the demand for currency from the low point of the
ratio in the late 1980s would be quite large, on the order of $140 billion to account for the increase in the ratio. We will show below that a
shift of this magnitude is consistent with most of the estimates of net
shipments of currency abroad during the period since 1988 (table 5).
We have not included interest rates in the discussion, even though
they move in the right direction to explain some of the recent acceleration in currency growth (table 3). We do not find compelling evidence
that the interest sensitivity of currency is large enough to explain this
acceleration (see appendix A).
In general, the seasonal method presupposes that U.S.
currency held abroad behaves differently from U.S.
16. For details of these methods, see Porter and Judson, "The
Location of U.S. Currency."
1. U.S. currency ratio and the total real stock of U.S.
currency measured in dollars per U.S. resident
Chained (1992) dollars
NOTE. Currency ratio calculated with the currency component of M l (see
text note 13). Per capita holdings deflated by the chain-type price index for
personal consumption expenditures, 1992 base year. Shading indicates periods
of recession as defined by the National Bureau of Economic Research.
890
Federal Reserve Bulletin •
October 1996
currency held at home in some measurable respect.17
The average measured characteristic of currency, say
X, will be a weighted average of the characteristic for
the domestically held currency, XD, and of that for the
foreign-held currency, XI, as follows:
(1)
X=(3Xrf + (l
holdings, then overall seasonal variations in U.S.currency holdings should have diminished. Rough support for such a hypothesis comes from a comparison
of the 1959-63 seasonal variations in the currency
component of Ml with the component's 1991-95
variations. The seasonal fluctuations for the last fiveyear period are much reduced from what they were in
the early period (chart 2).19
where the weight P is the domestic share of total
currency outstanding, and 1 — (3 is the foreign share.
By observing the overall behavior of currency, we
Canada as the Benchmark
know X. We exploit various data to infer XD or XF,
for U.S. Domestic Behavior
thus allowing an estimate of the shares of currency
held at home and abroad (see box "The Seasonal
Canada is a suitable benchmark for comparison for
Variation Technique").
two basic reasons. First, Canadian currency is not
The seasonal method uses relative seasonal variaused outside of Canada to any significant degree.
tions in the currency circulating in the United States
Second, because the United States and Canada have a
and Canada to infer overseas holdings of dollars.18
similar set of major holidays and school vacations
Four assumptions underlie this method: (1) the seaand share many customs, the seasonal variations in
sonal pattern in domestic demand for U.S. dollars is
retail sales and in consumption in the two countries
similar to the seasonal pattern of demand within
are similar; hence the induced domestic demand for
Canada for Canadian dollars, (2) foreign demand for
their respective currencies should also have about the
U.S. dollars has no significant seasonal pattern,
(3) the circulation of Canadian dollars outside of
Canada is negligible, so that the demand for Cana19. The degree of the decline may be overstated in the chart
because of differing trends in the two periods. To investigate more
dian dollars can be attributed solely to domestic
precisely, we use a seasonal filter, STL, to extract the seasonal
demand, and (4) U.S. currency is not used to a
component of the series and focus on the seasonal amplitude, which is
substantial degree inside Canada. Under these
the difference between the maximum seasonal effect (reached in
December) and the minimum (usually reached in the subsequent
assumptions, the share of U.S. currency abroad can
February). According to this measure, the amplitude of seasonal
be deduced by comparing the seasonality of Canavariation declines about one-half from 1960 to 1995. The STL method
dian currency in circulation to the seasonality of all
is set out in Robert B. Cleveland, William S. Cleveland, Jean E.
McRae, and Irma Terpenning, "STL: A Seasonal-Trend DecomposiU.S. currency in circulation. If foreign holdings
tion Procedure Based on Loess," Statistics Sweden, Journal of Offiexhibit seasonality similar to that of domestic holdcial Statistics, vol. 6, no. 1 (1990), pp. 3-73. More formally, statistical
ings, the estimate generally provides a lower bound
tests indicate that net foreign shipments of currency by banks do not
have a significant seasonal pattern; see Porter and Judson, "The
on the share of currency held abroad.
Location of U.S. Currency."
Seasonality in Currency Holdings
and in Banking Shipments
One factor undercutting any seasonality in foreign
holdings is the unpredictable timing of foreign
national crises, which tend to precipitate large dollar
inflows to the affected nation. In addition, transaction
costs may discourage foreign users from returning to
the United States those dollars received in routine
exchanges that may have a seasonal pattern. If foreign currency holdings have relatively little seasonality and have tended to increase relative to domestic
17. Two other indirect methods, the coin and demographic, also
embody this assumption (Porter and Judson, "The Location of U.S.
Currency").
18. Porter and Judson, "The Location of U.S. Currency."
2. Stock of U.S. currency in two periods, 1959-63
and 1991-95
Ratio scale, billions of dollars
34
Ratio scale, billions of dollars
—
360
32
1991-95,
(right scale)
—
320
30
—
28
—
1959-63,
(left scale)
280
1
Dec.
Dec.
Dec.
Dec.
NOTE. Currency measured as currency component of M l .
Dec.
The Location of U.S. Currency: How Much Is Abroad?
891
The Seasonal Variation Technique
Typically, the currency component of Ml is seasonally
adjusted with a model in which the unadjusted series is
viewed as a product of three terms: a trend-cycle term, a
seasonal term, and an irregular, or noise, term. The seasonal
term in the unadjusted series (the reciprocal of the seasonal
factor) is around 1 in periods without a discernible seasonal
influence; it registers its largest values above 1 in periods of
significant seasonal increases of currency, which occur
around Christmas and the summertime vacation period; and
it is typically the furthest below 1 after such periods, when
the seasonal term typically declines sharply.
Given the assumptions above, the model for the domestic
and foreign holdings of currency can be written as follows.
First, overall currency holdings can be modeled as the
product of a trend-cycle (and irregular) component and a
seasonal component in the respective (domestic and foreign) locations. In symbols let S be the seasonal term and T
be the trend term so that
(1.1)
TtS, = T}Sd + 7?Sf
where the superscript d is associated with the multiplicative
currency components held domestically, the superscript/is
associated with those components held outside the country,
and the subscript t denotes time.1 The left side of equation
1.1 represents the overall unadjusted currency series as the
product of the trend-cycle and seasonal terms, while the
right side displays a parallel decomposition for the domestic
and foreign components. If we let (5, be the fraction of the
overall trend held domestically, and 1 - (3, the fraction held
abroad, then equation 1.1 can be rewritten as
(1.2)
r,s,=P,r(s?+( i - p , ) W
Cancelling Tt from both sides of equation 1.2,
(1.3)
s,=p,s? + a - P , ) #
Observe that equation 1.3 is an example of the main text's
equation 1, with the seasonal term playing the role of the X
variable in that definitional equation. Finally, assuming that
the foreign seasonal component is always equal to 1 (that is,
same seasonal pattern.20 This similarity implies that
any difference between the seasonal variation in total
20. The notion that the seasonal term in retail sales induces the
seasonal term in holdings of domestic currency is of long standing
(see, for example, "Seasonal Variations in Money in Circulation,"
Federal Reserve Bulletin, vol. 18, December 1932, pp. 7 3 5 ^ 6 ) .
foreign demand does not vary seasonally), we can simplify
equation 1.3 slightly:
(1.4)
S, =
+ (1 - P,)
Given values for the seasonal terms, equation 1.4 becomes
a single equation in one unknown, (3,. We can solve for
provided that the seasonal terms in equation 1.4 do not
equal 1. In periods without a seasonal influence (which is
when 5, = 1 and S,d =1), any value of P, is consistent with
equation 1.4, so we cannot identify a unique value. Thus,
the method generates sensible estimates at an annual frequency but not at all frequencies.
The best estimate of the model is obtained by measuring
the seasonal variation around Christmas, specifically from
the seasonal high that is reached in currency in December
to the seasonal low in February. This period of the year is
the one in which the seasonal in currency is best aligned
with the seasonal in transactions (retail sales).
Formally, we take equation 1.4 and rewrite the time
subscript t as m,y (where m refers to the mA month in the yA
year) and set (5, to (3. Then subtracting equation 1.4 for
February from equation 1.4 for the preceding December
and collecting terms in (3, we find that the share of currency
held domestically is
°dec,y ^feb,y + 1
To calculate this equation with actual values, we assume,
for the reasons given above, that Canadian data can be used
to estimate what the relative seasonal variations in the
United States would be without any foreign holdings of
currency. Given a seasonal adjustment procedure, we can
use the estimate of the overall seasonal component for the
currency component of Ml in the United States to estimate
the numerator in equation 1.5 and use the analogous term
for Canada to estimate the denominator; with the value for
p, the domestic share, the share held abroad is then calculated as 1 - p.
1. The irregular term in the seasonal decomposition can be viewed as
being confined within the trend term. Adding an explicit irregular term does
not alter the results.
demand for U.S. currency and that for Canadian
currency likely reflects foreign demand for U.S. currency. In addition, Canada's set of denominations is
similar to that in the United States, and the bilateral
exchange rate is sufficiently close to 1 that pair-wise
comparisons of individual denominations or combinations of denominations in the two currencies can be
considered.
892
Federal Reserve Bulletin •
October 1996
Estimates from the Seasonal Method
Biometric
Applying the seasonal method produces an estimate
of the share of currency held abroad that begins with
about 40 percent in 1960 and then rises uniformly,
reaching 70 percent by 1995 (chart 3, top panel).21
The estimated rise in the currency share abroad stems
both from the drop in seasonal amplitude within the
United States and from an increase in that for Canada.
Toward the end of the period, the growth in the share
of currency held abroad moderated, but the implied
flows abroad picked up sharply (chart 3, bottom
panel) because of the large increase in overall currency holdings.
Our use of the biometric method focuses on the
supply of $100s. The share of the nationwide net
issuance of $100s attributable to four Reserve
Districts—New York, Atlanta, Dallas, and San
Francisco—over the past twenty-two years is out of
proportion to the Districts' shares of other national
economic characteristics (table 2). The anomaly
regarding these four Districts is consistent with our
understanding that most foreign shipments of currency go in and out of the New York District, with
additional smaller net inflows through the Atlanta
and Dallas Districts (from Latin America) and the
San Francisco District (from the Far East).
To obtain a more precise understanding of such
regional breakdowns, including the overall domesticforeign split in currency holdings, the second estimation method we develop mimics a technique used by
biologists to estimate the size of an animal population
when they are able to capture only a sample of the
population at any given time. The approach draws on
studies by a Danish biologist, Carl Petersen, who
worked more than 100 years ago. Petersen's work
suggested that an animal population can be estimated
by capturing a sample of animals, marking them,
releasing them, and capturing another sample later.22
Assuming that the marks do not affect the animals'
ability to survive (and thus their likelihood of being
in the second sample), the share of marked animals in
the (unknown) general population will be the same as
the share of marked animals in the recaptured sample
(see box "The Biometric Method").
We adapt Petersen's approach to obtain an estimate
of how much U.S. currency is abroad by combining
two sources of information. First, data from Federal
Reserve Cash Offices on currency shipped to and
from local banks allow us to obtain virtually continuous "samples" of currency. Second, although currency is not literally marked, statistics for the pre1990-series note are maintained separately from those
for the 1990-series $100 note, which contains an
embedded security thread.23 We can think of the
1990-series notes as marked animals: When a pre-
21. The seasonal adjustment method, applied to the logarithm of
the series, is from Cleveland and others, "STL: A Seasonal-Trend
Decomposition." On balance, the results using XI1 ARIMA or official (central bank) adjustment procedures are very similar to those
shown here. We have chosen to report the STL results because they
are the smoothest, but the basic results would be little changed if other
estimates were substituted. Because the time-varying estimate is calculated without averaging, it might seem surprising that the estimate
shown in the top panel of chart 3 is so smooth. By construction the
STL seasonal adjustment procedure guarantees that the monthly seasonal components are smooth through time, a property that evidently
carries over in this application to the ratios.
3. U.S. currency abroad, estimated with seasonal method
Percent
Percentage held abroad
Billions of dollars
N e t amount
1965
flowing^
1970
1975
1980
1985
1990
NOTE. Currency measured as currency component of M l .
1995
Estimates
22. E.D. Le Cren, "A Note on the History of Mark-Recapture
Population Estimates," The Journal of Animal Ecology, vol. 34
(June 1965), pp. 453-54, notes that Petersen did not use the method
for counting but that others properly credit him with the method. See
C.G. Joh. Petersen, "On the Biology of Our Fiat-Fishes and on the
Decrease of Our Flat-Fish Fisheries," Report of the Danish Biological
Station, vol. 4, 1893. See also G.A.F. Seber, The Estimation of Animal
Abundance and Related Parameters, 2d ed. (Macmillan, 1982).
23. The 1990-series notes were introduced in August 1991, in
$100s. The 1996-series $100 note was introduced in March 1966 (see
box "The 1996-Series $100 Note").
The Location of U.S. Currency: How Much Is Abroad?
893
The Biometric Method
For any geographic area, the total population of notes to be
estimated, N, can be expressed in relation to three known
numbers: M, the total number of marked (1990-series)
notes; n, the number of notes in a sample; and m, the
number of marked (1990-series) notes in a sample. Assuming that the notes circulate freely and randomly, so that the
sampled proportions of marked notes are representative of
the notes circulating in the area chosen, Petersen's approach
(see text note 22) tells us that the sample proportion of
marked notes is equal to the proportion of marked notes in
the whole population:
(i.D
N
^
n
With the total number of notes in the population, N, in some
geographic area (for example, a Federal Reserve Cash
Office's area) as the only unknown in this relationship, we
can solve for it as
(1.2)
N =— M
m
We have used the Petersen method to obtain estimates of
Federal Reserve 1990-series $100 and $50 notes circulating
in the United States and abroad ($50s with the embedded
security thread were introduced in 1992). We know the total
number of marked notes, M, from outflows of the 1990series $100s and $50s from each of the Federal Reserve
Cash Offices; and we know the ratio of total sampled notes
to marked sampled notes, n/m, from notes that are received
from circulation at each Cash Office.
Because almost all currency sent to and received from
foreign countries goes through the New York City Cash
Office, we provisionally assume that this office is the foreign pool and the rest of the Offices together constitute the
domestic pool. We estimate total notes in circulation
throughout the United States excluding New York City, say
Nmy, by applying equation 1.2 to the pool consisting of all
the Offices outside New York City. Then, to obtain an
estimate of total domestic currency circulation (that is,
including New York City), Nd, we scale up to account for
the population served by the New York City Cash Office:
P°Pny
POPxn>
where popny is the population served by the New York City
Office, and popxny is the population served by the rest of the
Cash Offices combined.
We can estimate the foreign share of currency holdings in
two different ways, depending on whether total notes are
determined as the sum of the notes in all the Federal
Reserve Districts, say N = Nny + Nmy (that is, an estimate) or
are taken as the actual total of notes in circulation, say N.
Unlike the biologists, we do know N, apart from what has
been lost or destroyed.1 Using N, the estimate for total
notes, the number of notes held in foreign countries is Nf~
N - Nd, and the share of notes abroad is just Nf/N. This
method has the advantage of using parallel estimates for
domestic and foreign circulation. Using the actual N, the
share of currency abroad is estimated as Nf/N, which has
the advantage of using our knowledge of the total amount
of currency in circulation for each of the denominations.
The range of estimates for each denomination (see table)
can be considered outer bounds for the true figures because
of the way they represent hoarded notes. The biometric
method is able to estimate only the population of notes
actively in circulation; the bank notes that are hoarded do
not circulate and hence cannot be part of the estimates of
n/m for any location. When the foreign share is estimated
as the ratio of notes circulating in the foreign pool to all
notes outstanding, the implicit assumption is that all
uncounted notes are in the domestic pool, which is presumably not true; thus, the estimate is a lower bound of currency held abroad. Similarly, estimating the foreign share
as the number of notes in the foreign pool over total
measured notes implicitly assumes that notes are hoarded in
the same proportion that they circulate. In this case, if notes
are hoarded disproportionately abroad, the estimate could
be higher; however, the estimate for $100s is about 70 percent, and we find it unlikely that more than 70 percent of
the hoarded notes in the world are hoarded abroad. Thus,
we consider this estimate an upper bound.2
1. A difference between this problem and the biometricians' is that they
capture and count marked species over discrete time intervals, whereas the
Federal Reserve continuously processes currency. Thus, our computations
should, in principle, use a lag of the quantity of new notes in circulation to
account for the fact that notes released during the sample period are not
actually part of the pool for the whole period. In practice, lags do not appear
to matter. For estimates of notes that are lost and destroyed, see Laurent,
"Currency in Circulation."
2. The estimates appear to be relatively robust to alternative assumptions
about the location of the foreign pool. Little changes if, as part of the foreign
pool, we include two other cities, Los Angeles and Miami, that are believed
to have significant foreign currency activity. Generally, if we try to align the
District biometric estimates with the relevant economic variables that influence domestic currency location, we obtain estimates of domestic holdings
that are similar to the aggregate biometric estimates.
Biometric estimates of currency held abroad
Percent
$50s
Year
1991
1992
1993
1994
1995
$100s
Value used for total bank notes
Estimated
Actual
Estimated
Actual
n.a.
29
30
34
40
n.a.
62
54
48
49
56
47
53
60
66
82
75
72
71
75
894
Federal Reserve Bulletin •
October 1996
1990 note is "sampled," or returned to a Federal
Reserve Cash Office, it is "marked" by being
replaced with a 1990-series note. We know how
many 1990-series notes have been issued by each
Federal Reserve Cash Office, and we know how
many return to the Cash Offices in later samples.
Second, we make use of the institutional fact that the
New York City Cash Office handles relatively few
cash shipments to and from domestic banks and that
most of the currency shipments it handles are to and
from foreign banks. Thus, if we can estimate the
"population" of dollars in the "pool" served by each
Federal Reserve Cash Office, the currency abroad can
be estimated as the population in the New York City
Cash Office pool.
Using the biometric method, we find that the
December 1995 estimate of the share of $100s held
abroad is between 66 percent and 75 percent and the
estimate for $50s (marked with a security thread in
1992) is between 40 percent and 49 percent.24
SUMMARY OF ALL ESTIMATION
Domestic and foreign shipments of a newly designed
U.S. $100 note began in March 1996. Aside from minor
changes introduced in 1990, the 1996 note was the first
redesign of U.S. currency since 1928. The goal of the
change was to preserve as much of the traditional appearance of the note as possible while introducing new security features that would make the note more difficult to
counterfeit. With the new design, which will be applied
to smaller denominations over six- to twelve-month intervals, notes are the same size, use the same ink color and
paper, and feature the same historical figures and monuments as before. However, the portrait has been enlarged
and moved to the left to make room for a watermark
that matches the portrait. Other security features include
microprinting around the portrait and elsewhere, a thread
woven into the note in a different position for each
denomination, and, for the larger denominations, a special ink for the denomination number in the lower right
front corner of the note that changes color when one
changes the viewing angle of the note.
METHODS
In addition to the two methods described above, eight
other techniques were developed to estimate the stock
of U.S. currency held abroad. These are summarized
in table 4.
The estimate of the foreign share of currency using
indirect estimates of the type just described is just
under 30 percent using the coin method and ranges
from about 50 percent to 70 percent using the biometric, demographic, and seasonal methods (table 5).
Although flow-based methods (both direct and outlier) do not yield straightforward estimates of the
stock held abroad, such estimates can be derived
because the flow data over the years can be consistent
only with a relatively narrow range for the overseas
stock. The estimates are obtainable from a trial-anderror procedure using various assumed values for the
current proportion abroad.25
24. As an alternative, we have also estimated the model for each
Cash Office and then aggregated the results. The estimate in the text
should be preferred if there are significant movements of currency
(leakages) across these domestic pools. In any event, this alternative
estimate tends to be within a few percentage points of those shown in
the text by the end of the sample period. Thus, it does not seem to
matter very much whether we explicitly consider leakages of currency
across the domestic pools.
25. To see the steps involved, consider what foreign holdings of
currency would be consistent with some flow estimates. According to
the shipments proxy, currency shipped abroad between 1977 and 1995
totaled $183.3 billion, on net, as shown in table 5, column 1. If no
currency had been held overseas at the end of 1976, the total stock of
foreign holdings at the end of 1995 would have been $183.3, or
49 percent of the total outstanding. At the other extreme, if all
The 1996-Series $100 Note
Taking the midpoint of this range of estimates
gives us a way of assigning an end-of-year value for
the share abroad for any method for which we have
flow data; for example, we derive an extreme range
of 49 percent to 71 percent for the shipments proxy
(see note 25), the midpoint of which is 60 percent.26
Overall, the shares of currency held abroad at yearend 1995 as derived from the flow-based estimates
range from the low of 17 percent for the CMIR
statistics to a high of 60 percent using the shipments
proxy.
We have also used the same trial-and-error method
to get an estimate of currency held abroad averaging
across all of the methods. We begin by taking the
estimated flows abroad for each year of the period
currency outstanding at the end of 1976 had been held overseas
($80.1 billion, not seasonally adjusted), then the stock of foreign
holdings would have been $263.4 billion, or 71 percent of the total.
26. Clearly, neither endpoint is likely to be correct, whereas a value
near the middle is much more likely to be so. Thus, we will use the
midpoint in what follows as a rough gauge of the percentage held
abroad.
The Location of U.S. Currency: How Much Is Abroad?
from 1977 to 1995 for each of the seven available
methods.27 For each year of the period, we take the
median value of the seven estimates, which are then
summed across years to obtain the total median flow
estimate for the entire period, shown in the first two
columns of the bottom row of table 5. Taking the
flows from the median flow estimate and using the
same technique to estimate year-end shares that we
used before for each of the direct methods (taking
27. For three of the methods (biometric, demographic, and foreign
currency shipments), we do not have sufficient years of data to include
them in the median calculation.
4.
895
the midpoint between the two extremes), we obtain a
midpoint estimate of 55 percent as the proportion of
total currency that was held abroad at the end of
1995.
As a check on this estimated percentage abroad, it
is helpful to evaluate the largest denomination in
active circulation, the hundred-dollar bill, which
plays such a major role in the overseas currency
market. The available estimates for $100s, shown in
table 5, are consistent with 74 percent of this denomination being held abroad. If only $100s were abroad,
they alone could account for an overseas share for
total currency of 44 percent. A reasonable assumption is that the smaller denominations could easily
Methods for estimating currency abroad
Method
Description
Indirect (stock-based)
Seasonal
Described in text
Biometric
Described in text
Coin
As in the seasonal method, we use Canada's ratio of notes to coin to estimate the U.S. domestic
ratio, assuming that U.S. coins are not typically used outside the country
Demographic
Estimates of the ages of domestic and foreign notes were obtained from special samples of physical
notes taken in March and October 1989. The overall age of notes in circulation is a weighted
average of notes circulating abroad and domestically
Direct (flow-based)
Customs reports
Businesses and individuals moving more than $10,000 across U.S. borders must generally file
Currency and Monetary Instrument Reports (CMIRs) with U.S. Customs. Incoming travelers are
informed of the filing requirement on their Customs Declaration. Departing travelers are
occasionally informed of the filing requirement or are targeted for enforcement purposes
Foreign currency shipments
Net foreign currency shipments are reported to Federal Reserve Cash Offices on an informal basis
by the small number of commercial banks that are major international shippers of currency
Shipments proxy
We assume that monthly net shipments of $100s from the New York City Cash Office are
approximately equal to net shipments abroad of all currency. We exploit the institutional fact that
foreign shipments are predominantly in $100 notes and that they most often originate at the Federal
Reserve Bank of New York. We assume that the three sources of disparity between actual net flows
and New York shipments (that is, the quantity of $100s used domestically within the area served by
the N Y. Office, the quantity of lower-denomination notes this Office sends abroad, and foreign
shipments by other Cash Offices) are all small
Cash Office flows
We compare currency shipment data from each Federal Reserve Cash Office with other indicators
of regional cash demand such as population and income. Cash Offices whose share of total shipments
is much different from their population or income shares are assumed to be making or receiving
foreign shipments. Statistical methods yield an estimate of the domestic cash demand component
as indicated by local population and income
Outlier-based
(flow-based)
Money demand
Signal extraction
Summary measure of currency
flows abroad
Median flow estimate
If currency holdings abroad increase sharply, then predictions of U.S. demand based on domestic
factors such as U.S. interest rates and transactions should produce a significant underestimate. This
approach measures the net flows of currency abroad from prediction errors generated by the Federal
Reserve Board staff's currency demand model
Like the money-demand method, this method is based on outliers from a prespecified relationship,
in this case a time-series model
Computed as the median in each year of the estimates from seven of the above methods: seasonal,
coin, Customs reports, shipments proxy, Cash Office flows, money demand, and signal extraction.
The remaining three methods do not have data for enough years to be included in this estimate
896
Federal Reserve Bulletin •
October 1996
contribute 11 additional percentage points.28 Thus,
the evidence for $100s appears consistent with an
estimated minimum of around 55 percent of currency
being held abroad.
PROPERTIES OF MEDIAN FLOW ESTIMATE
OF OVERSEAS CURRENCY FLOWS
All our methods except the CMIR indicate that overseas currency flows are large and growing. We focus
on the median flow estimate because it does not
depend very much on the results of any one method.
The median flow calculations show that the overseas
component of currency flows has been picking up, to
more than 70 percent of total currency flows in the
28. Estimates from the biometric, seasonal, and demographic methods for denominations less than $100 can easily account for the
needed increment.
5. Net flows of U.S. currency to foreign locations and the
percentage of U.S. currency abroad, by method of
estimation
Flow
(billions
of dollars)1
Method
Indirect (stock-based)
Seasonal
Biometric
Coin
Demographic
Stock,
December 1995
except as noted
(percent)
1977-95
1988-95
Overall
$100s
223.6
n.a.
173.8
132.5
n.a.
92.2
70
n.a.
29
492
74
70'
n.a.
methods
Direct (flow-based)
methods
Customs reports
Net foreign currency shipments,
as compiled by N.Y. FR
Cash Office
Shipments proxy
Estimates based on Cash Office
flows
5.2
42.1
17*
n.a.
183.3
107.1
140.3
54 4
604
123.2
4
1990s (table 6). The domestic flows show no distinct
trend, and most of the year-to-year changes in the
currency component of Ml (including the pickup in
the 1990s) are accounted for by variations in the
foreign flows.29 (Appendix A is an economic and
statistical analysis of these summary flows.)
Two notable multiyear spurts appear in the net
amount of currency going abroad: in 1990 and the
early part of 1991 and again in 1993 and 1994. The
first surge is associated with an increase to Argentina
and with a worldwide increase in the demand for
dollar currency as a result of the Persian Gulf war;
the second is part of the deteriorating situation in
Russia and other parts of the former Soviet Union.
Although overseas currency flows tended to drop
back somewhat after these surges, the general upward
path for foreign currency shipments is unmistakable.
Predicting the future course of shipments is even
more problematic than estimating past flows. Some
of the currency held abroad is used by travelers to
areas outside of Western Europe, so that more such
travel is likely to increases the foreign demand for
currency. But the remaining, larger component is
much more unpredictable and subject to massive and
abrupt shifts because of wars or fundamental changes
in economic and political regimes or to evolving
fears about such developments.
29. Statistically, they have a simple correlation coefficient of 0.98
with annual data.
513
6. Increase in the currency component of Ml, by foreign
or domestic destination
Billions of dollars except as noted
163.1
55
63
4
Year
Total
increase 1
Going to foreign
economies
Amount
Outlier-based
(flow-based)
methods
Money demand
Signal extraction
119.6
179.6
104.6
140.4
43 4
594
944
Median flow estimate 3
163.8
123.1
55 4
746
NOTE. For detail on the results of the coin, shipments proxy, Cash Office, and
outlier-based methods, see Porter and Judson, "The Location of U.S. Currency." For detail on the demographic method, see Feige, "Overseas Holdings of U.S. Currency."
1. The average of the two estimates that bound the true value.
2. Surveys taken in the spring and fall of 1989. An updated estimate of the
currency held abroad based on this 1989 estimate and the median flow estimate
(last row in table) yields a result of 59 percent at the end of 1995.
3. This value becomes 78 percent when updated by the increase in $100s
since 1989 that is associated with the shipments proxy.
4. Midpoint of feasible range for proportion of currency held abroad; see
text.
5. Computed by taking, for each year, the median of the seven methods that
have data for 1977-95 and then taking the median of the resulting series.
6. Median of all methods yielding a value, with the demographic value
updated as in note 3.
n.a. Not available.
. . . Not applicable.
/
Percent
Going to domestic
economy
Amount
Percent
1977
1978
1979
7.9
8.6
8.8
1.6
2.6
2.4
20.2
29.8
27.2
6.3
6.1
6.4
79.8
70.2
72.8
1980
1981
1982
1983
1984
10.6
7.2
9.9
13.7
9.9
3.6
2.3
3.8
5.3
3.5
33.7
32.0
38.1
38.7
35.6
7.0
4.9
6.2
8.4
6.4
66.3
68.0
61.9
61.3
64.4
1985
1986
1987
1988
1989
11.8
12.8
16.1
15.4
10.4
5.0
4.6
6.0
6.5
5.7
42.5
36.2
37.3
41.9
54.5
6.8
8.2
10.1
9.0
4.7
57.5
63.8
62.7
58.1
45.5
1990
1991
1992
1993
1994
24.2
20.6
25.5
29.5
32.5
18.3
15.1
18.1
22.3
23.6
75.7
73.1
71.2
75.6
72.5
5.9
5.5
7.3
7.2
8.9
24.3
26.9
28.8
24.4
27.5
1995
18.3
13.6
74.5
4.7
25.5
1. December to December, seasonally adjusted.
SOURCE. Federal Reserve and authors' calculations.
The Location of U.S. Currency: How Much Is Abroad?
Finally, the growth of total U.S. currency outstanding over the past fifteen years has clearly outpaced
both the inflation rate and the growth of the U.S.
population (that is, as shown in chart 4, total real U.S.
currency outstanding per U.S. resident has risen substantially since the early 1980s). But the level of real
domestic balances has been nearly flat since the late
1980s (chart 4), a result, perhaps, of the increasing
use of currency substitutes such as checks and credit
cards (as found in the 1995 currency survey). By
contrast, real foreign demand has been increasing
sharply, resulting in a more stable appearance for the
trend in total real currency per US. resident than for
either of its components.30
The Contrarian View That Most U.S. Currency
Is Held at Home
One of our basic findings is that most of the recent
increase in the demand for currency has been from
outside of the United States. The other possibility is
that the increased demand has been domestic in origin. But domestic sources for the recent surge in total
cash holdings are difficult to identify. Most analysts
do not ascribe very much currency holding to businesses; the thinness of their likely holdings can be
30. The foreign component is the median flow estimate for 197795, here deflated by U.S. population because we are uncertain of the
size of the foreign population that holds U S . currency. The levels for
the foreign component are based on the midpoint of the range for this
series, estimated to be 55 percent at the end of 1995.
4. Median flow estimate of the foreign component
of the total real stock of U.S. currency,
measured in dollars per U.S. resident
Ratio scale, chained (1992) dollars
1980
1985
1990
1995
NOTE. Currency measured as currency component of M l and deflated by the
chain-type price index for personal consumption expenditures, 1992 base year.
1. The domestic component is defined here as total less foreign.
897
seen from simple back-of-envelope calculations.31
And we have already seen that surveys do not assign
much cash to households, although respondents may
understate the true amounts they hold.32
An unreported rise in the use of currency could
reflect a rise in tax evasion or underground activity
(such behavior is very unlikely to be picked up in a
survey of currency usage). But the estimated size of
the unrecorded economy does not seem sufficient to
account for the observed increase in currency holdings. Suppose that 10 percent of U.S. gross domestic
product were generated in the cash economy—a generous assumption—and that all worldwide illegal
drug transactions were exclusively done with U.S.
currency (an assumption that double counts the illegal
drug transactions included in the U.S. cash economy).
We know from currency surveys that an average unit
of currency turns over on the order of thirty-five to
fifty times per year. Thus, the amount of currency
required to support both the 10 percent of our $7 trillion GDP economy plus all drug trafficking (reported
to be on the order of $300 billion) would be between
about $20 billion and $30 billion, or only 5 percent to
8 percent of U.S. currency outstanding.33
Tax avoidance is the most likely other possibility
that would account for the cash we attribute to foreign holdings. Suppose that, to avoid taxation, individuals and businesses manage to hide sizable
31. Most businesses need nothing more than seed cash to operate,
and the total amount of such cash is not likely to be significant, as the
following calculation shows. Almost 2.7 million retail establishments
existed in 1992. Taking certain elements of cash use at supermarket
chains as the standard for all retail establishments that year, assume
that each establishment had ten cash registers (currently the median
number for supermarket chains) and each register contained $200 of
seed cash (the amount that at least one large supermarket chain uses
for that purpose); then the total currency holdings by all retail establishments would have been only $5.4 billion, or 1.8 percent of the
total stock of currency at the end of 1992. If, in addition, one business
days' worth of total consumption was always in transit to depository
institutions, the total amount from both of these sources would have
been only $22.3 billion, or only 7.7 percent of total currency holdings
in that year.
32. Even taken at face value, CMIR statistics contradict claims that
the foreign component is small. For example, the CMIR data imply
that, taking the midpoint of the range of estimates, 17 percent of
currency was held abroad at the end of 1995; but in that case, the
implied amount overseas at the beginning of the sample (the end of
1976) would have been 67 percent. On the other hand, if little
currency is held abroad currently, how would one account for the
$53.2 billion in currency that was returned to the United States in
1995, according to CMIR statistics?
33. That is, with a turnover rate of fifty, ([0.1 x 7 x 10 12 ] + [300 x
10 9 ]) / 50 = 20 x 10 9 . The most recent cash survey, in 1995, found
that the turnover rate of currency was about thirty-six times per year,
down from a rate of fifty times per year in the mid-1980s (a decline
from about seven days per turnover to ten). Such a decline might be
expected in light of the generally lower level of interest rates prevailing more recently.
898
Federal Reserve Bulletin •
October 1996
amounts of cash that they had skimmed from their
business cash receipts. Such activities undoubtedly
occur, but it strikes us as dubious that in the aggregate they could fill the void, given that currency,
which does not pay interest, must compete with many
other investment vehicles that produce significant
real returns.
Another counterargument to our findings would be
that we have not given sufficient recognition to the
unique characteristics of currency, including its anonymity, which can have great value in some (mostly
illicit) transactions. However, this advantage is not
unique to transactions within the United States but
extends to the world, in part because of even fewer
legal and regulatory restrictions on the use of currency elsewhere. Also, the increase in $100s, the
denomination with the most significant increase, has
been concentrated in one Federal Reserve Cash
Office, that serving only New York City and its
environs. Tax evasion and other illegal activity cannot explain this geographic concentration. Moreover,
if the New York City region actually had a highly
unusual distribution of cash, it would surely be
reflected in other statistics such as a skewed geographic distribution of vault cash, which is not the
case, at least for the District in which New York City
is located (table 2). Nor, finally, can tax evasion and
other illegal activity explain the data's temporal
pattern—for example, the sharp rise in the ratio of
currency to M2 that began at the end of the 1980s.
CROSS-COUNTRY
COMPARISONS
After decades in which many developed countries
have supposedly been moving to cashless economies,
the sheer size of current per capita currency holdings
around the world may come as a surprise (table 7).
For two countries, the United States and Germany,
part of the mystery is removed when we take the
foreign holdings into account.34 Making such adjustments, the United States per capita holdings move to
the low end of the international scale, roughly equal
to the per capita levels in Great Britain, Finland, and
Canada—countries without significant external holdings of their currencies. Appendix B explores how
the relatively high amount in other countries (even in
Germany after deducting its foreign holdings) might
be explained in the context of an analysis of the
34. Work at the German central bank suggests that between 30 percent and 40 percent of deutsche marks are held outside Germany. See
Seitz, "The Circulation of Deutsche Mark Abroad."
demand for money in these developed countries.35
We conclude that these differences can be explained
in part by differences in the principal determinants
of currency holdings—interest rates, inflation, and
spending. But more important, we believe the differences can be more fully explained by differences in
payment systems and practices as well as in the levels
of crime and taxation, the availability of ATM
machines, the relative size of the denominations in
which currency is issued, and, we suspect, the relative strictness of the regulations regarding currency
usage.
SUMMARY AND
CONCLUSIONS
One of the purposes of the Federal Reserve System is
to provide currency on demand—"to furnish an elastic currency," according to the preamble of the 1913
act creating the Federal Reserve. The original impetus for providing a more flexible currency supply was
domestic in nature—for example, at the time, onethird of the population was still engaged in agricultural pursuits and thus subject to the large seasonal
swings in agricultural transactions, a great many of
35. The balances for Switzerland conceivably include substantial
amounts of cash held by nonresidents in safety deposit boxes at Swiss
banks. If so, the Swiss data, like that for the United States and
Germany, should be adjusted for "foreign" holdings. Currently,
almost 90 percent of Swiss currency value is held in three largedenomination notes—100 francs, 500 francs, and 1,000 francs—with
almost 50 percent of total currency held in the largest of these.
Because 1,000-franc notes rarely circulate in Switzerland, we suspect
that some of the currency is held in safety deposit boxes.
7. Comparison of per capita amounts of currency in
circulation in selected industrial countries, 1995
Country
Japan
Switzerland
Germany
Netherlands
United States
Norway
Belgium
Germany with foreign holdings removed,
assuming 35 percent abroad
Sweden
Italy
Denmark
France
Canada
United States with foreign holdings removed.
assuming 55 percent abroad
Finland
Great Britain
U.S. dollars
3,590
3,450
2,030
1,550
1,450
1,410
1,350
1,320
1,160
1,080
1,050
900
670
650
560
530
NOTE. Per capita amounts converted to dollars and rounded to the nearest
$10. Some values for 1995 population are extrapolations.
SOURCE. International Financial Statistics (International Monetary Fund),
Bank for International Settlements, and authors' calculations.
The Location of U.S. Currency: How Much Is Abroad?
which were undertaken with cash. But within a
decade of the act's passage, the Federal Reserve
began to collect data on overseas shipments of currency by a number of large commercial banks in
New York City, and over the subsequent seventy
years, U.S. currency has become the world's leading
cash medium. In addition to the dollar's virtues as
cash (anonymity and compactness), dollars are held
and used because of their liquidity and stability relative to most of the world's currencies. While much of
U.S. currency abroad is held in $100s, a significant
amount also appears to be in smaller denominations.
Determining how much of U.S. currency has gone
abroad or returned from abroad in any period is
difficult. Identifying flows between the United States
and any individual country is even more problematic.
If the flows in both directions stay within the banking
system, the banking data we have will often capture
much of it. However, if the flows are extraordinarily
large, as they appear to have been recently, the outlier
methods—the money demand and signal extraction
methods—may be able to pick up aggregate net outflows as well.36
The difficulty is that not all currency moves across
borders within the banking system. Thus, part of our
motivation for developing the indirect methods, such
as the seasonal and the biometric, was to capture
flows that might not show up in the more direct
measures. In fact, all of the methods except for that
using the CMIR data from Customs suggest that a
large amount of currency has gone abroad, and we
are inclined to view those expansive estimates as
being close to the truth. Does this mean that the
methods are inherently good? Or is this just a coincidence? We think it safe to say that the movements
abroad have been so large in the 1990s that any
reasonable method would have a fair chance of picking them up.
Our "median flow" estimates of the amount of
currency held abroad and the size of recent overseas
flows suggest that more than half of the nearly
$300 billion increase in the currency component of
Ml since 1976 has gone abroad to accommodate
increased demands for Federal Reserve currency
(table 6). Higher flows abroad would be registered if
we used the shipments proxy (60 percent) and much
lower flows would be estimated if we used the Customs data on CMIRs (less than 2 percent). We have
also estimated that between 55 percent and 70 per-
36. The same also applies to the Cash Office flows, which can be
thought of as a crude form of money demand applied to the District or
Branch level.
899
cent of the U.S. currency stock is currently held
outside the country.
The large expansion of the stock of U.S. currency
in the past decade—attributable, as we have seen, to
foreign demand—has provided a significant rise in
seigniorage to the U.S. Treasury and in the benefit
that seigniorage provides to U.S. taxpayers. In the last
several years, the Federal Reserve's holdings of U.S.
securities (the bulk of the Federal Reserve's balancesheet counterpart to the stock of U.S. currency
outstanding) have yielded annual net earnings—
seigniorage—of roughly $15 billion to $25 billion,
which is turned over to the U.S. Treasury. Our estimate is that roughly one-half to two-thirds of the
earnings is likely attributable to foreign holdings of
U.S. currency.
In sum, we now have several methods of determining the stocks and flows of dollars abroad. The estimates are far from identical, but they generally point
in the same direction, toward large and increasing
quantities of U.S. dollars abroad.
APPENDIX A: OTHER PROPERTIES
OF THE MEDIAN FLOW ESTIMATE
Here are details on our investigation of the relationship of the changes in the overall demand for currency and its domestic and foreign components and
on considerations in determining a confidence interval for the median flow estimate.
The Median Flow Estimate
and Domestic Demand
Recent changes in currency holdings seem to be
dominated by the foreign component: While the foreign component has been trending up, the domestic
component has been rather flat at an average level of
a little less than $7 billion (table 6). To see whether
the domestic component responds to economic incentives, we regressed the change in the currency component of Ml on the median flow estimate as well as
on variables possibly determining changes in the
domestic demand for money.
If the coefficient on the median flow estimate is
close to 1 (as it is in the regression reported in
table A.l), then we can interpret the remaining coefficients as a domestic money demand function for
the annual change in domestic currency holdings.
That is, with the full effect of the median flow estimate being captured by the change in the currency
component of Ml, the result is essentially the same
900
Federal Reserve Bulletin •
October 1996
as if we had subtracted the median flow estimate
from the change in the currency component and then
estimated a money demand function for domestic
currency holdings. Of course, if the coefficient on the
overseas flow is significantly different from 1, such
an interpretation will not hold.
The domestic part of the specification explains the
changes in domestic currency holdings by an intercept, the change in the nominal interest rate, and a
consumption measure. The change in the nominal
interest rate is measured (in the spirit suggested by
Lawrence Ball) as the weighted average rate on a
narrow alternative to holding currency, namely the
components of M2 without any maturity: other
checkable deposits, money market deposit accounts,
savings accounts, and money market mutual fund
accounts.37 The scale measure is the change in nominal consumption expenditures (excluding those on
automobiles, which are generally not bought with
currency). The specification is in changes and not in
levels because levels (together with lagged stocks to
cover distributed lag effects) require accounting for
the measurement error in the level of currency
abroad.38
Each of the estimates has the correct sign, but most
of the variance of the change in the currency component, at least at an annual frequency, apparently
results from changes in foreign holdings and not
domestic holdings. The framework of table A.l
allows us to distinguish the relative contributions in
an analysis of variance, and we find that almost
90 percent of the variance of currency changes results
from changes in foreign currency holdings (row 2).
37. Lawrence Ball, "Velocity and the Return on Near Moneys,"
(Johns Hopkins University, June 1995).
38. If we drop any one of the methods from the median calculation,
the resulting regression estimates are relatively similar to those shown
in table A. 1.
A.l.
Confidence Intervals for the Median Flow
Estimate
An advantage of using the median flow estimate as
the summary measure of currency flows abroad is
that it readily permits statements of confidence intervals. From a statistical point of view, one may regard
the seven estimates (one from each of our seven
different methods) used in constructing the median
flow estimate as a random sample from a continuous
distribution of possible estimates; in that case, the
sample median that we use is an estimate of the
median of the population distribution.
In the example at hand, the median is the middle
result obtained from the seven estimation methods
and hence can be thought of as a result of discarding
the three highest and three lowest estimates of net
flows abroad; in that light, variations in confidence
intervals for median flow estimates can be constructed on the basis of variations in the number of
extreme observations that are excluded from the
calculation (chart A.l). 39 For the widest confidence
interval, none of the observations are excluded, so
that the lower and upper confidence limits are formed
by the lowest and highest of all seven observations;
for the intermediate interval, the lowest and highest
observations are excluded; and for the narrowest, the
two lowest and two highest are discarded. These
ranges may be useful if one wants to represent some
39. To obtain the widest interval, we drop none of the observations
in constructing the range. In that case the probability that the range
consisting of the smallest to largest flow would cover the true median
in some period is about 0.98; alternatively, if one removed the top and
bottom estimates from the set of seven, the resulting confidence
interval for the median would be about 0.87; finally if one removed
the top two and bottom two estimates, the probability that the resulting interval would cover the true median would be about 0.55. See
Robert V. Hogg and Allen T. Craig, Introduction to Mathematical
Statistics, 5th ed. (Prentice Hall, 1995), pp. 497-98.
Results of regression of change in currency component of Ml on foreign demand and the determinants of domestic
demand, and associated decomposition of variance
Determinants of domestic demand
Foreign demand,
median flow
estimate
Intercept
Change in
nominal interest
rates
Change in
consumption
expenditures
Regression'
.993
(15.1)
5.912
(3.5)
-1.223
(-2.7)
13.096
(.7)
Variance decomposition 2
52.6
(90.3)
Item
1
.9
(1-5)
1. Numbers in parentheses are t statistics.
2. Numbers in parentheses are the percentages of the variance of changes in
currency that are explained by each column or set of columns.
. . . Not applicable.
Residual
standard error
Covariance
term
1.3
1.7
(2.9)
Ri
.9754
3.1
(5.3)
The Location of U.S. Currency: How Much Is Abroad?
of the uncertainty that exists about net flows of
currency abroad.
For that purpose we are inclined to use either the
intermediate or narrowest interval: The width of neither interval shows any tendency to trend up over
time; the widths are not constant but can get relatively narrow, as in 1990 or 1992, years for which the
various methods are in broad agreement about net
flows of currency abroad.
Another part of our reason for preferring the two
narrowest ranges is that they exclude the smallest
observation in each year and thus give less weight to
A. 1. Alternative confidence intervals for the median flow
estimate
901
the CMIR data, which generally appear to underestimate net currency flows abroad and produce the
smallest flow measure in nearly three-fourths of the
periods. This result raises the question of how much
the median flow estimate would rise if we excluded
the CMIR statistics at the outset: In that case, the
resulting summary measure matches the median flow
estimate for much of the period and lies slightly
above it otherwise; the average amount by which it
exceeds the median flow estimate is only $0.5 billion
per year.40
Alternatively, because the CMIR flows are most
often at the bottom of the range of estimates, one
could diminish their influence by constructing a confidence interval ranging from the next to the smallest
flow to the largest flow in any period; such a range
would cover the true median about 93 percent of the
time. Further, as an indication of the level of uncertainty about net flows abroad, the implied standard
error associated with such a range would currently
lie between about %2Vi billion and $23/4 billion per
year.
APPENDIX B: ESTIMATES OF
CURRENCY DEMAND
CROSS-COUNTRY
We investigated the degree to which the crosscountry differences in per capita holdings of currency
can be explained by various economic factors. We
estimated currency demand equations for fourteen
developed countries with data covering a seven-year
period ending in 1993.41 The equations have the
following specifications:
• The dependent variable, VELOCITY, which is the
currency velocity of GNP, that is, the ratio of GNP to
the estimated currency holdings that are inside the
country but outside the banking system.
40. Taking the median of the six methods excluding the CMIR
method would increase the midpoint estimate of the amount held
abroad slightly, from 55 percent to 57 percent.
41. In our specification, all the variables are natural logs of the
underlying series, and the variable names are written in small capital
letters. We thank David B. Humphrey and his collaborators for making their cross-country currency data available to us (see David B.
Humphrey, Lawrence B. Pulley, and Jukka M. Vesala, "Cash, Paper,
and Electronic Payments," Journal of Money, Credit, and Banking,
vol. 28, November 1996, part 2, in press). The only variable that
we have added is RATIO OF REVENUE TO GDP from Robert Summers
and Alan Heston, "The Penn World Table (Mark 5): An Expanded
Set of International Comparisons, 1950-1988," The Quarterly Journal of Economics, vol. 106 (May 1991), pp. 327-68. We used
an updated version, Mark 5.5, available by anonymous ftp from
ftp://nber.harvard.edu.
902
Federal Reserve Bulletin •
October 1996
• Two opportunity cost terms, an interest rate
and the rate of inflation (INFLATION
RATE). Higher opportunity costs tend to induce currency holders to reduce their holdings, resulting in
higher currency velocities.
• Two "scale" terms. The first, RATIO OF REVENUE TO GDP, accounts for the velocity effect of the
underground economy: If government raises taxes,
tax avoidance will rise, leading to more production
in the off-the-books (cash) sector, which in turn
increases the amount of currency per unit of output
and thus works to lower velocity.
The second scale term is VIOLENT CRIME per
100,000 population. The effects of crime are ambiguous: On one hand, street crime is likely to reduce
currency holdings (raise velocity) because of fear of
being robbed; on the other hand, various forms of
criminal activities involve the use of currency.
• The total estimated number of noncash payments, NONCASH PAYMENTS, per capita. Presumably,
other things equal, an economy with a higher level of
noncash payments will have lower currency holdings
and higher currency velocities.
• The number of automated teller machines, ATM,
per capita. The effect of ATMs is ambiguous. On one
hand, more ATMs reduce the cost of obtaining currency and thus should lower currency obtained per
transaction and overall currency holdings. On the
other hand, lowering the cost of obtaining currency
could also make it more convenient relative to other
transaction media such as credit cards, thus increasing overall currency holdings and lowering velocity.
The last factor we consider accounts for the
notable differences that exist among countries in the
(NOMINAL RATE)
B.l.
Pooled panel-data regressions for currency velocities
Variable
Low-denomination
countries
High-denomination
countries
purchasing power associated with the largest denomination of domestic currency that is generally available. For example, the largest denomination in active
circulation in Japan (the ¥10,000 note), the-United
Kingdom (the £50 note), and the United States (the
$100 note) range in value in dollar terms from about
$78 to $100 as of this writing; these values represent
considerably less purchasing power than that of the
largest denominations in Canada, Germany, the
Netherlands, and Switzerland, all of which have
1,000-unit bank notes, which now range in value
from about $600 to $830. Categorizing some countries as "low-denomination" (those in which the
largest denomination has relatively low purchasing
power) and others as "high-denomination," we find
that significant differences emerge between the two
groups in the responsiveness of their currency
demand functions. For example, for both groups,
increases in the price level tend to redirect more
transactions toward the largest denomination; but, for
low-denomination countries, another effect of inflation may be more important: the substitution out of
currency into other means of payment for large-value
transactions that would otherwise require an inconvenient amount of cash to execute.
The specification we estimate uses a pooled
panel regression with different slopes for the lowdenomination and high-denomination countries
(table B.l). The opportunity-cost elasticities in the
low-denomination countries are higher (in absolute
value) than those in the high-denomination countries,
perhaps because of the above-mentioned substitution
effect in low-denomination countries as rising prices
B.2. Actual real per capita holdings of currency in selected
industrial nations compared with holdings predicted by
pooled panel-data regressions for velocity
U.S. dollars
Country
NOMINAL RATE
4.47
(3.0)
1.21
(.4)
INFLATION RATE
7.52
(3.9)
5.05
(1.4)
-.70
(-4-7)
-.81
(-5.9)
VIOLENT CRIME
-.02
(-.3)
.29
(1.5)
United Kingdom
United States'
NONCASH PAYMENTS
.70
(7.2)
1.60
(5.6)
High-denomination
-.15
(-1.8)
-.36
(-3.3)
INTERCEPT
1.82
(4.3)
-3.40
(-4.1)
R2
Number of observations
.78
60
RATIO OF REVENUE TO GDP . . .
ATM
NOTE. Numbers in parentheses are t statistics.
.79
34
Low-denomination
Denmark
Germany 2
Netherlands
Switzerland
Actual
Predicted
714
407
784
943
2,247
1,132
1,108
462
358
839
610
650
1,028
2,033
924
840
520
340
1,178
618
906
1,309
2,732
1,281
648
1,067
1,057
2,566
countries
countries
NOTE. Holdings are averages for 1987-93. Dollar values deflated by the
chain-type price index for personal consumption expenditures, 1992 base year.
1. After removal of foreign holdings, which were estimated using midpoint
of overseas stock from the median flow estimate.
2. After removal of estimated foreign holdings (35 percent of total).
The Location of U.S. Currency: How Much Is Abroad?
intensify the inconvenience of their low purchasing
power currency.42 Except for the effect of crime,
which is ambiguous, all of the variables appear to
have the expected signs and are generally quite
significant43
42. Using a Chow test, we solidly reject the hypothesis that the
corresponding slope coefficients in the velocity specifications are
equal in the high- and low-denomination countries; the test statistic
equaled 5.50, which has a p value of 0.0001.
B o t h o p p o r t u n i t y c o s t v a r i a b l e s (NOMINAL RATE a n d INFLATION
RATE) are measured as a gross return so that we treat them symmetrically and can take logs for the deflation of the price level that occurs
in the sample. As a result, the coefficient of the elasticity of real
money balances with respect to these opportunity costs measured as a
net return (the more usual way of introducing such variables) will be
x / (1 + x) times the gross elasticity, where x is a fraction; for example,
a 5 percent rate would imply that the elasticity on the gross return
should be reduced by 0.05 / 1.05 = 0.0471 to express it as an elasticity
on a net return.
43. The crime variable has different signs in the two regressions
and is insignificant in either case. The underground economy effects
(RATIO OF REVENUE TO GDP) are s i m i l a r i n m a g n i t u d e . W e b e l i e v e o n
balance that crime should reduce currency holdings and thus increase
velocity. We find such a result for the high-denomination countries,
and it is marginally significant on a one-sided test of statistical
significance.
The opportunity-cost elasticities in the high-denomination countries
are not significant, perhaps because of the relatively low number of
degrees of freedom.
903
The underground economy effects (RATIO OF REVENUE TO GDP), are similar in magnitude in both types
of countries and appear to have powerful explanatory
effects. The ATM results are especially significant in
the high-denomination countries and indicate that the
convenience effects dominate the transaction-cost
effects. The difference between the intercepts in the
two specifications implies that residents in the highdenomination countries hold on average about $185
more in currency than their counterparts in lowdenomination countries. Excluding foreign holdings
from the domestic currency stock of Germany and
the United States yields values that on average tend
to track the currency series in the various countries,
with about 80 percent of the variation in velocity
explained by the specification in both types of countries (table B.2).
In sum, the cross-country differences in currency
holdings appear to be somewhat explicable by the
basic factors we have been considering, including the
magnitude of the largest denomination in which currency is issued. To be sure, consideration of such
denomination effects, as well as of the NONCASH
PAYMENTS variable, may also embody other aspects
of the demand for currency, such as the regulatory
environment in which bank notes are handled.
•
904
Industrial Production and Capacity Utilization
for August 1996
Released for publication September 17
Industrial production increased 0.5 percent in August
after a gain of 0.1 percent in July. Some of the
acceleration from July to August resulted from
weather-related swings in utility output; manufacturing output increased 0.3 percent in both months. At
126.9 percent of its 1987 average, total industrial
production in August was 3.4 percent higher than it
was in August 1995. Industrial capacity utilization
rose 0.2 percentage point, to 83.5 percent.
When analyzed by market group, the data show
that the output of consumer goods fell 0.6 percent,
with the decline concentrated in durables; the production of nondurable consumer goods was unchanged.
The drop in the output of durable consumer goods
reflected decreases in the output both of automotive
products and of other durable goods. Motor vehicle
Industrial production indexes
Twelve-month percent change
Twelve-month percent change
10
Materials
10
Durable
manufacturing
Products
1990
1991
1992
1993
1994
1995
1990
1996
1991
1992
1993
1994
1995
1996
Capacity and industrial production
Ratio scale, 1987 production = 100
—
Total industry
—
Capacity
Ratio scale, 1987 production = 1 0 0
160
~ Manufacturing
140
-
—
Capacity
_ —~~
120
140
^
120
100
-
Production
Production
1
1
1
I
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
Percent of capacity
1
I
1
1
Percent of capacity
Manufacturing
Total industry
-
Utilization
90
90
Utilization
80
80
70
1
1982
1
1984
1
100
80
80
1
160
1
1986
1
1988
1990
1992
1
1994
1
1
1996
70
1
1982
1
1984
1
1
1
1986
All series are seasonally adjusted. Latest series, August. Capacity is an index of potential industrial production.
1
1988
1
1
1
1990
1
1
1992
1
1994
1
1
1996
905
Industrial production and capacity utilization, August 1996
Industrial production, index, 1987 = 100
Percentage change
Category
1996
1996 1
May'
June r
July r
Aug. p
May r
June r
July r
Total
125.4
126.2
126.3
126.9
.7
.6
.1
Previous estimate
125.2
126.0
126.2
.5
.6
.1
121.3
116.3
166.0
131.6
122.1
116.6
168.5
113.8
132.5
122.4
117.3
170.0
112.2
132.2
122.4
116.5
170.9
111.9
133.8
.5
.4
-.2
1.7
1.0
.6
.3
1.5
2.5
.7
127.4
139.1
114.4
100.5
128.4
128.4
141.2
114.4
101.9
126.2
128.8
141.6
114.8
100.9
123.9
129.1
142.0
114.9
103.3
125.8
.7
.6
.8
.1
1.6
.8
1.5
.0
1.4
-1.8
Major market groups
Products, total 2
Consumer goods
Business equipment
Construction supplies
Materials
Major industry
Manufacturing
Durable
Nondurable
Mining
Utilities
111.0
Aug.p
Aug. 1995
to
Aug. 1996
.5
3.4
.2
.5
.8
-1.4
-.2
.0
-.6
.6
-.3
1.2
2.7
.6
8.6
4.6
4.5
.3
.3
.3
-1.0
-1.8
.3
.3
.2
2.4
1.5
4.0
6.7
.6
3.3
-2.4
groups
MEMO
Capacity utilization, percent
1995
Average,
1967-95
Total
Low,
1982
Aug.
May r
June r
July r
Aug.?
83.3
83.5
83.3
83.5
3.9
83.2
83.4
83.2
82.1
80.5
86.1
89.8
94.1
82.5
80.8
86.6
91.1
92.3
82.4
80.8
86.4
90.2
90.5
82.3
80.6
86.5
92.4
91.8
4.4
5.2
2.5
-.1
1.3
82.1
71.8
84.9
83.9
81.4
80.7
82.6
87.4
86.9
70.0
71.4
66.8
80.6
76.2
85.2
83.5
89.0
86.5
92.6
82.7
81.2
86.2
89.3
95.3
Previous estimate
Manufacturing
Advanced processing
Primary processing
Mining
Utilities
NOTE. Data seasonally adjusted or calculated from seasonally adjusted
monthly data.
1. Change from preceding month.
assemblies fell 0.7 million units from their July level,
to 12.6 million units (annual rate). The August rate
was higher than in any month during the first half of
the year. Decreases in the output of air conditioners,
appliances, and television sets led the decline in other
durables. Among consumer nondurables, increases in
residential electricity usage and in the production of
gasoline and heating oil were offset by decreases in
the output of consumer chemical products and
clothing.
The output of business equipment advanced
0.6 percent; the increase was concentrated at producers of information processing equipment. The output of industrial equipment, which had fallen for five
consecutive months, barely edged up; because of the
drop in motor vehicle assemblies, the production of
transit equipment fell. However, the decrease in transit equipment was muted somewhat by another month
of increased activity at aircraft manufacturers. The
output of defense and space equipment increased for
a second month; production in this sector has risen
since the end of last year, the first sustained increase
since the 1980s. The production of construction sup
1996
High,
1988-89
Capacity,
percentage
change,
Aug. 1995
to
Aug. 1996
2. Contains components in addition to those shown,
r Revised,
p Preliminary.
plies decreased 0.3 percent after a 1.4 percent drop in
July. Despite these recent declines, the production
index for this sector remains 4.6 percent above its
year-earlier level.
The output of industrial materials rose 1.2 percent
in August. Increases in electricity generation and in
coal mining pushed the output of energy materials up
2.5 percent. The output of durable goods materials
rose 1.1 percent, with gains in the output of parts
destined for use in consumer goods or in business and
defense equipment. The output of nondurable materials increased 0.4 percent for a second month; the
production in this grouping has risen about 4]/i percent since its low point at the beginning of the year.
When analyzed by industry group, the data show
that the 0.3 percent increase in factory output
reflected gains both in durable goods and in nondurable goods. Among durables, large increases came
in computer and office equipment, aerospace and
miscellaneous transportation equipment, and instruments; all posted increases of more than 1 percent.
Besides motor vehicles and parts, the production of
lumber and of iron and steel fell significantly. Among
906
Federal Reserve Bulletin • October 1996
nondurables, the indexes for petroleum refining, rubber and plastics products, and tobacco showed gains
of more than 1 percent. On the negative side, the
output of textile mill products fell 1.1 percent, and
the output indexes for both apparel and chemicals fell
0.5 percent. Apparel production is down nearly 6 percent from its year-earlier level.
The factory operating rate edged down 0.1 percentage point, to 82.3 percent. The rate for advancedprocessing industries decreased 0.2 percentage point,
to 80.6 percent, and the rate for primary-processing
industries edged up 0.1 percentage point, to 86.5 percent. Utilization for primary-processing industries
remains about 4 percentage points above its 1967-95
average. Rates for primary metals, petroleum refining, fabricated metals products, and rubber and plastics products are more than 5 percentage points above
their long-run averages.
The operating rate for utilities increased 1.3 percentage points in August but stayed below its level
during the first half of the year; temperatures moved
up from their low levels in July but remained below
normal.
This release and the history for all series published here are available on the Internet at
http://www.bog.frb.fed.us, the Board of Governors'
World Wide Web site.
1996 REVISION
ANNOUNCEMENT
During the fourth quarter, the Federal Reserve will
publish revisions of its measures of industrial production (IP), capacity, capacity utilization, and industrial
use of electric power; the current target month for the
release is November. The revisions of IP, capacity,
and capacity utilization will incorporate updated
source data for recent years and will feature a change
in the method of aggregating the indexes. From 1977
onward, the value-added proportions used to weight
individual series will be updated annually rather than
quinquennially. In addition, the IP indexes and the
capacity measures will be rebased so that 1992 actual
output equals 100. Capacity utilization, the ratio of IP
to capacity, will be recomputed on the basis of
revised IP and capacity measures.
The aggregate IP indexes will be constructed with
a superlative index formula similar to that introduced
by the Bureau of Economic Analysis as the featured
measure of real output in its January 1996 comprehensive revision of the National Income and Product
Accounts. At present, the aggregate IP indexes are
computed as linked Laspeyres indexes, with the
weights updated every five years. Because of the
rapid fall in the relative price of computers and
peripheral equipment, that periodic updating of
weights is too infrequent to provide reliable estimates
of current changes in output, capacity, and capacity
utilization. With the publication of the revision,
value-added proportions will be updated annually,
and the new index number formula will be applied to
all aggregates of IP, capacity, and gross value of
product. For the most part, relative price movements
among the 260 individual components of the IP index
are likely to have little visible effect on total IP.
However, the more frequent updating of the relative
price of the output of the computer industry could
lower overall IP growth in some years by as much as
'/2 percentage point; in other years, the updating of
weights will have virtually no effect. Because the
new index number formula will slow capacity growth
as well as IP growth, the effect of the reaggregation
on overall capacity utilization should be small.
The regular updating of source data for IP will
include the introduction of annual data from the 1994
Annual Survey of Manufactures and selected 1995
Current Industrial Reports of the Bureau of the Census. Available annual data on mining for 1994 and
1995 from the Department of the Interior will also be
introduced. Revisions to the monthly indicators for
each industry (physical product data, productionworker hours, or electric power usage) and revised
seasonal factors will be incorporated back to 1992.
The statistics on the industrial use of electric power
will be revised back to 1972. These revisions stem
from three basic sources. First, the new figures incorporate more complete reports received from utilities
for the past few years. Second, an updated panel of
reporters on cogeneration will be fully integrated into
our survey of electric power use. Third, the levels of
the monthly electric power series for manufacturing
industries will be benchmarked to indexes derived
from data published in the Census Bureau's annual
surveys and censuses of manufactures. These indexes
will also be revised so that 1992 electric power usage
equals 100.
More detail on the plans for this revision is available on the Internet at http://www.bog.frb.fed.us.
Once the revision is published, the revised data will
be available at that site and on diskettes from the
Board of Governors of the Federal Reserve System,
Publications Services, 202-452-3245. The revised
data will also be available through the Economic
Bulletin Board of the Department of Commerce, call
202-482-1986. In addition to the data currently provided, the time series of implicit prices necessary for
a user to aggregate IP and capacity under the new
methodology will be provided by the Industrial Output Section, 202-452-3151.
•
907
Announcements
ISSUANCE OF FINAL AGENCY GUIDELINES
ON SAFETY AND SOUNDNESS STANDARDS
FOR ASSET QUALITY AND EARNINGS
The Federal Reserve Board along with the Office of
the Comptroller of the Currency, the Federal Deposit
Insurance Corporation, and the Office of Thrift
Supervision on August 27, 1996, issued final interagency guidelines prescribing safety and soundness
standards for asset quality and earnings, thus completing the requirements of section 132 of the Federal
Deposit Insurance Corporation Improvement Act of
1991. The guidelines were effective October 1, 1996.
The guidelines prescribe that insured depository
institutions establish and maintain systems that are
commensurate with the institution's size and the
nature and scope of its operations to accomplish the
following:
• Identify problem assets and prevent deterioration
in those assets
• Evaluate and monitor earnings and ensure that
earnings are sufficient to maintain adequate capital
and reserves.
The guidelines are general in nature and focus on
what proper management should achieve, while leaving the methods for achieving those objectives to
each institution. Because the guidelines are consistent
with existing sound practices at banks, the Board
believes that well-managed banks will not need to
alter their operations to comply with the guidelines.
The final guidelines are substantially the same as
those proposed in 1995.
ISSUANCE OF FINAL RULE AMENDING
THE RISK-BASED CAPITAL STANDARDS TO
INCORPORATE A MEASURE OF MARKET RISK
The Federal Reserve Board along with the Office of
the Comptroller of the Currency (OCC) and the
Federal Deposit Insurance Corporation (FDIC) on
August 29, 1996, issued a final rule amending riskbased capital standards to incorporate a measure for
market risk. The final rule is effective January 1,
1997, and compliance is mandatory as of January 1,
1998.
The final rule implements an amendment to the
Basle Capital Accord that sets forth a supervisory
framework for measuring market risk to cover debt
and equity positions located in an institution's trading
account and foreign exchange and commodity positions wherever located.
The effect of the final rule is that any bank or bank
holding company (institution) that is regulated by the
Board, the OCC, or the FDIC and has significant
exposure to market risk must measure that risk using
its own internal value-at-risk model, subject to the
parameters contained in the final rule, and hold a
commensurate amount of capital.
ADOPTION OF A FINAL RULE REGARDING
INVESTMENT ADVISER ACTIVITIES
IN REGULATION Y
The Federal Reserve Board on August 26, 1996,
announced adoption of a final amendment to
the Board's interpretive rule regarding investment adviser activities contained in Regulation Y
(12 C.F.R. 225.125). The final rule was effective
September 30, 1996.
The amendment permits a bank holding company
(and its bank and nonbank subsidiaries) to purchase,
in a fiduciary capacity, securities of an investment
company advised by the bank holding company if the
purchase is specifically authorized by the terms of the
instrument creating the fiduciary relationship, by
court order, or by the law of the jurisdiction under
which the trust is administered.
RESCISSION OF A STAFF INTERPRETIVE
LETTER
The Federal Reserve Board on August 26, 1996,
determined to rescind a June 27, 1986, staff interpretive letter setting forth restrictions that a bank holding
company must abide by in selling mutual fund and
unit investment trust shares through a nonbanking
subsidiary engaged in securities brokerage. In light of
regulatory changes that have occurred since the issu-
908
Federal Reserve Bulletin • October 1996
ance of the so-called Sovran Letter, the Board determined that the restrictions contained in the letter
either have been effectively superseded or are no
longer necessary.
AMENDMENT TO REGULATIONS REGARDING
LOANS IN AREAS WITH SPECIAL FLOOD
HAZARDS
The Federal Reserve Board is amending regulations
regarding loans in areas having special flood hazards.
The Board's action was effective October 1, 1996.
This action implements the provisions of the National
Flood Insurance Reform Act of 1994.
As required by statute, the final rules establish new
escrow requirements for flood insurance premiums,
add reference to the statutory authority and the requirement for lenders and servicers to "force place"
flood insurance under certain circumstances, enhance
flood hazard notice requirements, set forth new
authority for lenders to charge fees for determining
whether a property is located in a special flood hazard
area, and contain various other provisions necessary
to implement the National Flood Insurance Reform
Act of 1994.
Similar action is being taken by the Office of the
Comptroller of the Currency, the Federal Deposit
Insurance Deposit Corporation, the Office of Thrift
Supervision, the National Credit Union Administration, and the Farm Credit Administration.
PROPOSED
ACTIONS
The Federal Reserve Board along with the Office of
the Comptroller of the Currency, the Federal Deposit
Insurance Corporation, and the Office of Thrift
Supervision (Agencies) on August 8, 1996, requested
comments on a proposal to amend the risk-based
capital guidelines for banks and bank holding com-
panies (banking organizations) regarding the treatment of collateralized transactions. Comments are
requested by October 15, 1996.
The Federal Reserve Board on August 28, 1996,
requested comment on proposed revisions to Regulation Y that are intended to improve the competitiveness of bank holding companies by eliminating
unnecessary regulatory burden and operating restrictions and by streamlining the application and notice
process. Comments are requested by October 31,
1996.
PUBLIC SERVICE ANNOUNCEMENTS
ON THE SALE OF MUTUAL FUNDS
The Federal Reserve announced on August 15, 1996,
that it is providing public service announcements to
145 television stations across the United States as
part of its continuing nationwide education program
entitled "Mutual Funds: Understand the Risks."
The public service announcements, in 15- and 30second versions, deal with the sale of mutual funds
and annuities at banks. The announcements highlight
that these investment products, even when purchased
through banks, are not insured by the Federal Deposit
Insurance Corporation and are subject to market risks,
including loss of principal.
As part of the education campaign, the Federal
Reserve System has been offering seminars on this
topic for consumer and banker groups. Additional
information may be obtained from the regional Federal Reserve Banks. Following is a list of contact
numbers:
Boston
(617) 9 7 3 - 3 6 4 7
Chicago
(312) 3 2 2 - 5 1 1 0
N e w York
(212) 7 2 0 - 6 1 3 6
St. Louis
(314)444-8688
Philadelphia
(215) 5 7 4 - 6 4 3 9
Minneapolis
(612) 3 4 0 - 2 3 7 3
Cleveland
(216) 579-2891
Kansas City
(816)881-2681
Richmond
(804) 6 9 7 - 8 1 3 5
Dallas
(214) 922-5255
Atlanta
(404) 5 2 1 - 8 9 3 4
San Francisco (415) 9 7 4 - 2 4 8 9
909
Minutes of the
Federal Open Market Committee Meeting
Held on July 2-3, 1996
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, July 2, 1996, at 1:00 p.m. and continued on
Wednesday, July 3, 1996, at 9:00 a.m.
Present:
Mr. Greenspan, Chairman
Mr. McDonough, Vice Chairman
Mr. Boehne
Mr. Jordan
Mr. Kelley
Mr. Lindsey
Mr. McTeer
Mr. Meyer
Ms. Phillips
Ms. Rivlin
Mr. Stern
Ms. Yellen
Messrs. Broaddus, Guynn, Moskow, and Parry,
Alternate Members of the Federal Open Market
Committee
Messrs. Hoenig and Melzer, and Ms. Minehan,
Presidents of the Federal Reserve Banks of
Kansas City, St. Louis, and Boston respectively
Mr. Kohn, Secretary and Economist
Mr. Bernard, Deputy Secretary
Mr. Coyne, Assistant Secretary
Mr. Gillum, Assistant Secretary
Mr. Mattingly, General Counsel
Mr. Baxter, Deputy General Counsel
Mr. Prell, Economist
Mr. Truman, Economist
Messrs. D. Lindsey, Mishkin, Promisel, Rolnick,
Rosenblum, Siegman, Simpson, Sniderman,
and Stockton, Associate Economists
Mr. Fisher, Manager, System Open Market Account
Mr. Winn,1 Assistant to the Board, Office of
Board Members, Board of Governors
Mr. Ettin, Deputy Director, Division of Research
and Statistics, Board of Governors
1. Attended portion of meeting concerning issues relating to the
long-run price objective for monetary policy.
Messrs. Madigan and Slifman, Associate Directors,
Divisions of Monetary Affairs and Research and
Statistics respectively, Board of Governors
Mr. Bray ton,2 Ms. Johnson,2 Messrs. Reinhart
and Smith,3 Assistant Directors, Divisions of
Research and Statistics, International Finance,
Monetary Affairs, and International Finance
respectively, Board of Governors
Ms. Kusko2 and Mr. Wilcox,2 Senior Economists,
Divisions of Research and Statistics and
Monetary Affairs respectively,
Board of Governors
Ms. Garrett, Economist, Division of Monetary
Affairs, Board of Governors
Ms. Low, Open Market Secretariat Assistant,
Division of Monetary Affairs, Board of
Governors
Ms. Holcomb, First Vice President, Federal Reserve
Bank of Dallas
Mr. Beebe, Ms. Browne, Messrs. Davis, Dewald,
Eisenbeis, Goodfriend, and Hunter, Senior
Vice Presidents, Federal Reserve Banks of
San Francisco, Boston, Kansas City, St. Louis,
Atlanta, Richmond, and Chicago respectively
Messrs. Kos and Meyer, Vice Presidents, Federal
Reserve Banks of New York and Philadelphia
respectively
By unanimous vote, the minutes of the meeting of
the Federal Open Market Committee held on May 21,
1996, were approved.
The Manager of the System Open Market Account
reported on recent developments in foreign exchange
markets. There were no open market transactions in
foreign currencies for System account during the
period since the meeting on May 21, 1996, and thus
no vote was required of the Committee.
The Manager also reported on recent developments
in domestic financial markets and on System open
market transactions in U.S. government securities and
federal agency obligations during the period May 21,
2. Attended portion of the meeting relating to the Committee's
discussion of the economic outlook and its longer-run growth ranges
for the monetary and debt aggregates.
3. Attended portion of the meeting relating to the Committee's
review of its swap line agreements.
910
Federal Reserve Bulletin • October 1996
1996, through July 2, 1996. By unanimous vote, the
Committee ratified these transactions.
The Committee then turned to a discussion of the
economic and financial outlook, the ranges for the
growth of money and debt in 1996 and 1997, 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 economic activity advanced considerably
further in the second quarter, although growth in
aggregate final demand showed some signs of slowing. Consumer spending continued to post sizable
gains, but business investment in equipment and
structures apparently was rising less vigorously, and
higher mortgage rates evidently were starting to exert
some restraint on housing construction activity. Business inventories had been brought into better balance
with sales, and production and employment had risen
appreciably. Upward pressures on food and energy
prices had led to somewhat larger increases in the
consumer price index over recent months.
Nonfarm payroll employment continued to expand
briskly over April and May. Job gains were concentrated in the service-producing and construction
industries, while employment in manufacturing was
stable on balance over the April-May period after
having declined somewhat in 1995 and the first quarter of 1996. The civilian unemployment rate rose in
May to 5.6 percent, which was the average rate for
the year to date.
Industrial production increased appreciably further
in May. In contrast to April's advance, much of
which had resulted from the resumption of operations
at a major motor vehicle manufacturer after the settlement of a strike, the May rise largely reflected gains
in a wide range of non-auto-related manufacturing
industries as well as a weather-related jump in electricity generation. The surge in overall output lifted
total utilization of industrial capacity somewhat
above the average rate recorded during the previous
two quarters.
Total nominal retail sales surged in May after
having changed little in April; the increase in sales,
coupled with available information on prices, suggested that real consumer spending on goods had
risen substantially on balance since the first quarter.
Recent data (available through April) indicated that
spending on services had increased moderately on
balance in recent months. Single-family housing
starts fell considerably in May from the relatively
high April level. The decline suggested that the rise
in mortgage rates in recent months had begun to
damp construction activity, but indicators of housing
demand, such as sales of new and existing homes,
remained relatively robust.
Growth in business expenditures on durable equipment and nonresidential structures appeared to be
slowing following a surge in outlays in the first
quarter. In May, shipments of nondefense capital
goods rebounded from the substantial decline in
April; however, excluding movements in the volatile
aircraft category, shipments were down on balance
over the two months. Among the major components,
shipments of both computing and communications
equipment fell sharply in April and retraced only part
of that decline in May. Recent data on new orders
pointed to more modest increases in spending on
business equipment over the months ahead. Nonresidential building activity increased considerably further in April (latest data available), but incoming
information on contracts suggested that growth in
nonresidential construction would weaken somewhat
in coming months.
Businesses had made considerable progress in
recent months in bringing their inventories into better
alignment with sales. In manufacturing, stocks rose
moderately in April after a decline in March. The
stock-to-shipments ratio dropped further in April
and was at a low level. At the wholesale trade
level, inventory accumulation was appreciable in
April after several months of modest growth. The
inventory-to-sales ratio for this sector edged up in
April but remained well below the elevated levels of
last fall. Retail inventories increased slightly in April
after a large decline in March associated with a
substantial liquidation of motor vehicle stocks. The
aggregate ratio of inventories to sales for retail establishments was around the lower end of its range in
recent years.
The nominal deficit on U.S. trade in goods and
services widened in April from its rate in the first
quarter, reflecting a slightly larger increase in the
value of imports than in that of exports. The expansion in imports was concentrated in oil as U.S. refiners sought to meet growing domestic demand and
rebuild their inventories. The rise in exports was
broadly based, although exports of computers, semiconductors, and automotive products edged off.
Economic activity in the major foreign industrial
countries appeared to have expanded moderately on
balance since the beginning of the year. In the first
quarter, economic performance ranged from unexpectedly robust in Japan to further weakness in
Minutes of the Federal Open Market Committee
Germany; the limited data available for the second
quarter suggested a slowdown in Japan, a bounceback in Germany, and moderate growth in other
major trading partners.
Although upward pressures on energy prices continued to boost overall consumer prices in April and
May, price increases for nonfood, non-energy items
remained small. Over the twelve months ended in
May, the increase in core consumer prices was appreciably smaller than in the previous twelve-month
period; much of the deceleration reflected swings in
automobile finance charges. At the producer level,
higher prices for finished energy goods over April
and May were partially offset by slightly lower prices
for finished foods; prices for nonfood, non-energy
finished goods were little changed over the twomonth period and rose less over the twelve months
ended in May than in the comparable year-earlier
period. Data on average hourly earnings of production and nonsupervisory workers indicated that this
measure of labor costs had increased by a somewhat
larger amount in the year ended in May than in the
comparable year-earlier period.
At its meeting on May 21, 1996, the Committee
adopted a directive that called for maintaining the
existing degree of pressure on reserve positions and
that did not include a presumption about the likely
direction of any adjustments to policy during the
intermeeting period. The directive stated that in the
context of the Committee's long-run objectives for
price stability and sustainable economic growth, and
giving careful consideration to economic, financial,
and monetary developments, slightly greater reserve
restraint or slightly lesser reserve restraint would be
acceptable during the intermeeting period. The
reserve conditions associated with this directive were
expected to be consistent with moderate growth in
M2 and M3 over coming months.
Open market operations were directed toward
maintaining the existing degree of pressure on reserve
positions throughout the intermeeting period. The
federal funds rate averaged near 5lA percent, the level
expected to be associated with the unchanged policy
stance. Because the Committee's decision had been
largely anticipated in financial markets, other market
interest rates also were little changed during the early
part of the period. However, market rates increased
appreciably following the release of a strong employment report in early June, though most of that rise
was later retraced as expectations of near-term tightening of monetary policy diminished. On balance,
most market rates were up a little over the intermeeting period. Major indexes of stock prices were down
on balance over the period.
911
In foreign exchange markets, the trade-weighted
value of the dollar in terms of the other G-10 currencies depreciated slightly over the intermeeting period.
The dollar declined against the German mark and
other European currencies as growing indications of
a recent pickup in economic activity in Germany
damped market expectations of any further easing of
monetary policy by the Bundesbank. By contrast, the
dollar rose against the yen in apparent response to a
series of statements by Japanese officials suggesting
that there would be no near-term firming of Japanese
monetary policy.
The broad monetary aggregates were weak in May:
M2 declined, and M3 expanded relatively sluggishly.
The weakness in M2 and M3 was associated in part
with the adverse effects of the earlier rise in market
interest rates on the opportunity costs of holding
deposits. Deposit balances also may have been drawn
down to meet unusually large individual tax liabilities on the April 15 tax date. Partial data for June
pointed to a rebound in both aggregates. For the year
through June, these aggregates were estimated to
have grown at rates around the upper bounds of their
respective annual ranges. Expansion of total domestic
nonfinancial debt had slowed somewhat in recent
months, but the debt aggregate had remained in the
middle portion of its annual range.
The staff forecast prepared for this meeting suggested that, after a sizable advance in economic activity in the second quarter, growth would moderate and
the economy would expand around or perhaps a little
above its estimated potential. Consumer spending
was projected to expand at a more moderate pace, in
line with disposable income; the favorable effect of
higher equity prices on household wealth and the
still-ample availability of credit were expected to
balance persisting consumer concerns about job and
retirement security and the restraining effect of high
household debt burdens. Homebuilding was forecast
to slow somewhat in response to the back-up in
residential mortgage rates but was expected to remain
at a relatively high level in the context of sustained
income growth and the still-favorable cash flow
affordability of home ownership. Business spending
on equipment and structures was projected to grow
less rapidly in light of the anticipated moderate
growth of sales and profits and the reduced rate of
utilization of production capacity now prevailing.
The external sector was expected to exert a small
restraining influence on economic activity over the
projection period, even though an anticipated firming
of economic activity abroad would bolster demand
for U.S. exports. Little further fiscal contraction was
forecast over the projection period. Inflation recently
912
Federal Reserve Bulletin • October 1996
had been lifted by adverse developments in energy
markets and was projected to remain above the levels
of recent years, given the still-high level of resource
utilization and the effects of tight grain supplies on
food prices.
In the Committee's discussion of current and
prospective economic developments, members commented on the stronger-than-expected expansion in
overall economic activity in recent months, but for a
variety of reasons they anticipated that growth would
slow appreciably over the second half of the year to a
pace more in line with the growth in the economy's
potential. Key factors bearing on this outlook
included the prospective effects of the rise in interest
rates and the dollar that had occurred since earlier in
the year and the waning influence of transitory factors that had stimulated economic activity in the
second quarter. The members generally agreed, however, that, apart from evidence of some moderation in
the growth of business investment expenditures from
a very rapid pace, there were few hard indications of
a slowing in the expansion and the risks were clearly
to the upside of their current forecasts. Against that
background, they were concerned that inflation could
begin to rise. Cost and price pressures had been
surprisingly well contained at high levels of resource
utilization, but this unusually favorable performance
might not be sustained, and in any event even greater
resource utilization, as would occur if growth did not
moderate appreciably, carried substantial inflation
risk. There were some scattered indications in statistical and anecdotal reports that tended to suggest that
wage inflation might be trending higher, although key
measures of price inflation, excluding their food and
energy components, continued to display a flat or
even a declining trend.
In keeping with the practice at meetings when the
Committee sets its long-run ranges for the money and
debt aggregates, the members of the Committee and
the Federal Reserve Bank presidents not currently
serving as members provided individual projections
of the growth in real and nominal GDP, the rate of
unemployment, and the rate of inflation for the years
1996 and 1997. (The ranges in this paragraph take
into account minor revisions made by a few members
subsequent to the meeting.) The forecasts of the rate
of expansion in real GDP for 1996 as a whole had a
central tendency of 2Vi to 23A percent, reflecting
expectations of considerable moderation in the rate of
economic growth over the second half of the year; for
1997, the projections centered on continued moderate
growth of GDP in a range of l3A to 2'A percent. With
regard to the expansion of nominal GDP, the forecasts were concentrated in growth ranges of 5 to
5Y2 percent for 1996 and 4]A to 5 percent for 1997.
The civilian rate of unemployment associated with
these forecasts was expected by most members to
remain around 5V2 percent this year and to be in a
range of 5XA to 53A percent in 1997. This level of
resource utilization was expected to be associated
with a slightly higher rate of inflation in 1996, as
measured by the consumer price index, than that
recorded in 1995 owing to developments in the food
and energy sectors, but a decline was anticipated in
1997. Specifically, the projections converged on rates
of 3 to 3lA percent in 1996 and 23A to 3 percent in
1997. The projections for both 1996 and 1997 were
based on individual views concerning what would be
an appropriate monetary policy over the projection
horizon.
In their assessment of factors bearing on the outlook for final demand, members commented that
growth in consumer spending was likely to moderate
in coming quarters from its pace thus far this year.
This moderation would reflect the projected slowing
in income growth. While overall employment conditions, the buildup of household net worth, and access
to financing would bolster consumer expenditures,
members also cited a number of limiting factors. The
latter included the increase in consumer indebtedness, satisfaction of earlier pent-up demand for consumer durable goods, and continuing concern about
job security. Higher interest rates also were expected
to exert an inhibiting effect on purchases of consumer
durables, including those related to housing. Some
members observed that while slower growth in consumer spending was the most probable forecast, they
saw an upside risk from the wealth effects of the
large rise that had occurred in the value of stock
market holdings.
Business expenditures for plant and equipment
were expected to grow at a slower though still appreciable pace. Indeed, such spending already appeared
to be moderating. Contract data suggested that nonresidential construction activity was on a slowing
growth trajectory and expansion of outlays for producers' durable equipment also appeared to have
softened. Given the outlook for slower growth in
final demand, many businesses would not have to add
significantly to capacity. However, spending for computing equipment, while perhaps moderating from
the exceptional pace of recent quarters, was thought
likely to remain buoyant as continuing innovations
and declining prices stimulated further solid gains in
this segment of business spending.
Housing was seen as another important sector of
the economy that was likely to exert a retarding effect
on the expansion as the rise that had occurred in
Minutes of the Federal Open Market Committee
mortgage interest rates was felt increasingly in housing markets. The anecdotal information from around
the nation and the available statistics suggested, however, that those markets generally had remained
surprisingly ebullient thus far, and there were only
limited indications of some softening in home construction activity.
Business inventory investment was viewed as a
key upside risk in the economic outlook for coming
quarters. An inventory overhang at the end of last
year had been corrected in the first quarter, and
inventory investment was indicated to have turned
positive again in the second quarter. However, current inventory-to-sales ratios appeared to be relatively lean, and final sales that exceeded current
expectations might well induce a sharp upward
adjustment in inventory accumulation, especially if
lead times were to lengthen and producers perceived
shortfalls in their safety stocks.
Members viewed the outlook for inflation as a
source of substantial uncertainty in their forecasts,
though many saw reasonable prospects that a rate of
economic expansion in line with their forecasts and
associated levels of capacity utilization would prove
to be consistent with little change in the core rate of
inflation. Some important measures of price inflation,
after adjustment to exclude their volatile food and
energy components, had shown a flat or even a
declining trend in recent quarters. The outlook for
overall price increases would remain contingent in
part on food and energy price developments, but
more importantly on underlying cost pressures in the
economy.
Several members commented that the levels of
utilization of capital and labor resources that had
prevailed over the past couple of years would have
been expected, on the basis of historical patterns, to
foster rising cost pressures and greater inflation.
However, labor compensation gains had been subdued in relation to earlier cyclical experience, likely
as a consequence of increased worker concerns about
job security and job opportunities. Despite the continued low rate of unemployment and widespread
anecdotal reports of tight labor markets across the
country, there were only limited indications in
national data that wage inflation might be increasing.
Whether greater labor cost pressures would emerge
in the context of the members' consensus forecast for
economic activity was a critical issue in the outlook
for prices, though it was noted that at least some of
the rising costs were likely to be absorbed in shrinking profit margins. Even if greater price inflation
were averted under that scenario, the members saw a
substantial risk that if economic growth did not slow
913
in line with their current forecasts, the resulting added
pressures on resources would at some point translate
into higher price inflation. Accordingly, the factors
bearing on the outlook for resource use and inflation
needed to be monitored with special care in this
period.
With regard to inflation over the long run, the
members agreed that it was essential for the Committee to continue to focus on reducing inflation over
time because the achievement of an even less inflationary economic environment would foster a more
productive economy and maximum sustainable economic expansion. The members acknowledged that
as inflation diminished to very low levels, questions
about the measurement of the overall price level
presented difficult problems for assessing progress
toward price stability. Some also observed that the
precise level of average price inflation that might be
compatible with the optimal functioning of the economy was an unsettled issue owing, for example, to
potential rigidities in labor markets. Thus far, such
rigidities had not impeded the economy from functioning at a very high level as inflation came down,
and continued adaptation to even lower inflation rates
was very likely. However, the Committee would need
to pay careful attention to these potential problems as
inflation fell further. For now, the members agreed
that some additional progress in reducing inflation
was very likely to improve the ultimate performance
of the economy, and that it was particularly important
at this juncture to resist firmly any tendency for
inflation to worsen.
In keeping with the requirements of the Full
Employment and Balanced Growth Act of 1978 (the
Humphrey-Hawkins Act), the Committee at this
meeting reviewed the ranges for growth of the monetary and debt aggregates that it had established in
January for 1996, and it decided on tentative ranges
for those aggregates for 1997. The current ranges set
in January for the period from the fourth quarter of
1995 to the fourth quarter of 1996 were unchanged
from the ranges for 1995 and included expansion of
1 to 5 percent for M2 and 2 to 6 percent for M3. An
unchanged monitoring range of 3 to 7 percent was set
in January for growth of total domestic nonfinancial
debt in 1996.
A majority of the members favored retaining the
current ranges for this year and extending them on a
provisional basis to 1997. They anticipated that
growth of M2 and M3 probably would continue at
rates close to the upper limit of their respective
ranges in both years, given the Committee's expectations for the performance of the economy and prices.
However, despite a degree of concern about setting
914
Federal Reserve Bulletin • October 1996
ranges that did not more comfortably encompass
expected growth, these members preferred not to
change the ranges for a variety of reasons. The current ranges for the broad monetary aggregates could
be viewed as anchors or benchmarks for money
growth that would be associated with approximate
price stability and sustained economic growth,
assuming behavior of velocity in line with historical
experience. Accordingly, a reaffirmation of those
ranges would underscore the Committee's commitment to a policy of achieving price stability over
time; and in the view of some members, higher
ranges could raise questions in this regard. Moreover,
a change in the ranges might be misinterpreted as a
signal of greater reliance on the broad monetary
aggregates in the formulation and conduct of monetary policy. In this connection, the members noted
that the behavior of M2 in relation to nominal GDP
and interest rates had displayed a pattern over the
past two years or so that was in line with historical
norms before the 1990s. However, in light of difficulties in the early 1990s and changes in financial markets, the prospective growth of M2 and its velocity
remained subject to considerable uncertainty and the
members felt that it would be premature for the
Committee to place increased reliance on M2 at this
point.
A few members preferred somewhat higher growth
ranges for M2 and M3 because such ranges would
more comfortably surround the Committee's expectations for monetary growth. The higher ranges would
be more informative for the Congress and the public
as to the money growth likely to be associated with
the Committee's expected economic outcomes for
the period covered by the ranges. They believed that
the reasons for establishing the higher ranges could
readily be explained and understood as appropriate
technical adjustments that did not imply any lessened
commitment to the Committee's price stability goal.
For example, such an explanation appeared to have
been accepted with little or no comment by the public
when the range for M3 was increased in July 1995.
The Committee members were unanimously in
favor of retaining the current monitoring range of 3 to
7 percent for growth of total domestic nonfinancial
debt in 1996 and extending that range on a provisional basis to 1997. They took account of a staff
projection indicating that growth of the debt aggregate was likely to slow somewhat from its pace
earlier this year in line with some moderation in the
expansion of nominal income. According to the staff
projection, growth in the debt measure would be near
the midpoint of the existing range over the period
through 1997.
At the conclusion of this discussion, the Committee voted to reaffirm the ranges for growth of M2 and
M3 and the monitoring range for expansion of total
domestic nonfinancial debt that it had established in
January for 1996. For the year 1997, the Committee
approved provisional ranges for M2 and M3 and a
provisional monitoring range for total domestic nonfinancial debt that were unchanged from the 1996
ranges. In keeping with its usual procedure under the
Humphrey-Hawkins Act, the Committee would
review its preliminary ranges for 1997 early next
year, or sooner if interim conditions warranted, in
light of their growth and velocity behavior and
ongoing economic and financial developments.
Accordingly, the Committee voted to incorporate the
following statement regarding the 1996 and 1997
ranges in its 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 reaffirmed at this meeting
the ranges it had established in January for growth of M2
and M3 of 1 to 5 percent and 2 to 6 percent respectively,
measured from the fourth quarter of 1995 to the fourth
quarter of 1996. The monitoring range for growth of total
domestic nonfinancial debt was maintained at 3 to 7 percent for the year. For 1997 the Committee agreed on
tentative ranges for monetary growth, measured from the
fourth quarter of 1996 to the fourth quarter of 1997, of 1 to
5 percent for M2 and 2 to 6 percent for M3. The Committee provisionally set the associated monitoring range for
growth of total domestic nonfinancial debt at 3 to 7 percent
for 1997. 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, Jordan, Kelley, McTeer, Meyer, Mses. Phillips
and Rivlin, and Mr. Stern. Votes against this action: Mr.
Lindsey and Ms. Yellen.
Mr. Lindsey and Ms. Yellen dissented because they
preferred somewhat higher ranges for M2 and M3
growth in 1996 and 1997. The central tendencies of
the members' forecasts of nominal GDP for the two
years were likely to be associated with growth of the
broad monetary aggregates at rates around the top of
the current ranges. Somewhat higher ranges would
more comfortably encompass the anticipated growth
of the monetary aggregates and in their view would
conform more closely with the provisions and intent
of the Federal Reserve Act that require the System to
communicate its objectives and plans for monetary
growth to the Congress. They believed the reasons
for raising the ranges could easily be explained and
understood as a technical adjustment that did not
represent a reduced commitment to the goal of price
Minutes of the Federal Open Market Committee
stability or an increased emphasis on the monetary
aggregates in policy formulation.
In the Committee's discussion of policy for the
intermeeting period ahead, all but one of the members supported a proposal to maintain an unchanged
policy stance. These members also indicated that
they preferred or could accept an asymmetric directive that was biased toward restraint. In their view,
the most likely outcome was a slowing of the expansion to a more sustainable pace and a continuation of
subdued inflation. Nevertheless, they were concerned
that the risks to that outcome were tilted toward
higher inflation. While a strong economy generally
was a welcome development, at current levels of
resource use a continuation of rapid growth was not
likely to be sustainable because it would have the
potential for adding significantly to inflation pressures. However, inflation had remained relatively
damped thus far, and the rise in interest rates among
other factors was expected to curb demand. Moreover, any tendency for price pressures to mount was
likely to emerge only gradually and be reversible
through a relatively limited policy adjustment. The
current stance of monetary policy could not be described in this view as clearly accommodative. While
the federal funds rate had been reduced appreciably
in nominal terms over the past year, its current level
on an inflation-adjusted basis seemed to be only
marginally below its peak prior to mid-1995. In the
circumstances, the Committee could afford to wait
for more evidence to see whether additional inflation
pressures were likely to develop. A number of key
economic data would become available over the next
several weeks that would provide a much better basis
for assessing the economy's momentum over the
second half of the year and the outlook for inflation.
A differing view gave more emphasis to prospects
for rising inflation and the need for immediate action
to forestall a buildup of cost and price pressures
before they undermined the expansion. There was
little firm evidence that economic growth was slowing and reports of appreciable wage pressures were
increasing. Inflation expectations persisted in financial markets, and probably in product and labor markets as well; if they were allowed to worsen, the
Committee's long-run goal of price stability would
become much more difficult to achieve. Delaying
action risked the need for a greater adjustment in
policy at a later date with possible disruption to the
economy.
Members observed that an asymmetric directive
would represent a shift from the symmetric directives
that had been adopted over the past year but would be
in keeping with their assessments of the risks of
915
higher inflation. Several commented that an asymmetric directive did not imply a commitment to
tighten monetary policy at some point, whether during the intermeeting period or at a future meeting, but
it did imply the need for special vigilance. Some
noted that a policy tightening action could tend to
have a more pronounced effect than usual because it
would indicate a shift in the direction of policy and
might generate expectations of further tightening.
Under the circumstances, the Committee would consult in some way before any policy tightening was
undertaken.
At the conclusion of the Committee's discussion,
all but one member indicated that they supported
a directive that called for maintaining the existing
degree of pressure on reserve positions and that
included a bias toward the possible firming of reserve
conditions during the intermeeting period. Accordingly, in the context of the Committee's long-run
objectives for price stability and sustainable economic growth, and giving careful consideration to
economic, financial, and monetary developments,
the Committee decided that somewhat greater reserve
restraint would be acceptable and slightly lesser
reserve restraint might be acceptable during the intermeeting period. The reserve conditions contemplated
at this meeting were expected to be consistent with
moderate growth of M2 and M3 over coming months.
At the conclusion of the meeting, the Federal
Reserve Bank of New York was authorized and
directed, until instructed otherwise by the Committee, to execute transactions in the System Account
in accordance with the following domestic policy
directive:
The information reviewed at this meeting suggests that
economic activity advanced considerably further in the
second quarter, but increases in final demand showed some
signs of moderation. Nonfarm payroll employment was up
substantially in April and May; the civilian unemployment
rate rose to 5.6 percent in May. Industrial production
increased appreciably further in May, reflecting gains
across a wide range of industries. Real consumer spending
rose substantially on balance over April and May. Singlefamily housing starts fell considerably in May from a
relatively high level in April. Orders and contracts point to
some deceleration in spending on business equipment and
nonresidential structures after a very rapid expansion earlier in the year. The nominal deficit on U.S. trade in goods
and services widened in April from its rate in the first
quarter. Upward pressures on food and energy prices have
led to somewhat larger increases in the consumer price
index over recent months.
Most market interest rates have edged higher since the
Committee meeting on May 21. In foreign exchange markets, the trade-weighted value of the dollar in terms of the
other G-10 currencies has depreciated slightly over the
intermeeting period.
916
Federal Reserve Bulletin • October 1996
M2 declined in May, though partial data for June pointed
to a rebound. Growth of M3 was relatively sluggish in May
but also appears to have turned up in June. For the year
through June, both aggregates are estimated to have grown
at rates around the upper bounds of their respective ranges
for the year. Expansion in total domestic nonfinancial debt
has been moderate on balance over recent months and has
remained in the middle portion of its range.
The Federal Open Market Committee seeks monetary
and financial conditions that will foster price stability and
promote sustainable growth in output. In furtherance of
these objectives, the Committee reaffirmed at this meeting
the ranges it had established in January for growth of M2
and M3 of 1 to 5 percent and 2 to 6 percent respectively,
measured from the fourth quarter of 1995 to the fourth
quarter of 1996. The monitoring range for growth of total
domestic nonfinancial debt was maintained at 3 to 7 percent for the year. For 1997 the Committee agreed on
tentative ranges for monetary growth, measured from the
fourth quarter of 1996 to the fourth quarter of 1997, of 1 to
5 percent for M2 and 2 to 6 percent for M3. The Committee provisionally set the associated monitoring range for
growth of total domestic nonfinancial debt at 3 to 7 percent
for 1997. 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.
In the implementation of policy for the immediate future,
the Committee seeks to maintain the existing degree of
pressure on reserve positions. In the context of the Committee's long-run objectives for price stability and sustainable economic growth, and giving careful consideration to
economic, financial, and monetary developments, somewhat greater reserve restraint would or slightly lesser
reserve restraint might be acceptable in the intermeeting
period. The contemplated reserve conditions are expected
to be consistent with moderate growth in M2 and M3 over
coming months.
Votes for short-run policy: Messrs. Greenspan,
McDonough, Boehne, Jordan, Kelley, Lindsey, McTeer,
Meyer, Mses. Phillips, Rivlin, and Yellen. Vote against
this action: Mr. Stern.
Mr. Stern dissented because he was convinced that
a modestly more restrictive policy was warranted. In
his view, the momentum of the economy and strains
on capacity in labor and some other markets raised
the possibility of an acceleration of inflation that
would jeopardize the economic expansion. This concern aside, Mr. Stern also believed that current circumstances were favorable for policy action to reduce
inflation further and thereby help to sustain the ongoing improvement in the economy.
As a prelude to its formal review later in the year,
the Committee at this meeting considered its existing
network of swap arrangements with a number of
foreign central banks and the Bank for International
Settlements. From time to time in recent years the
Committee had discussed a variety of issues relating
to its foreign exchange activities and its financial
arrangements with other central banks. In this discission, the Committee considered in particular
whether the swap arrangements, all of which had
been put in place in the 1960s, remained an appropriate approach to international financial cooperation
among central banks in light of the evolution of the
international financial system in recent decades, and
whether other approaches should be considered. The
Committee made no decisions relating to these matters, though it was understood that these issues would
be explored further.
It was agreed that the next meeting of the Committee would be held on Tuesday, August 20, 1996.
The meeting adjourned at 12:50 p.m.
Donald L. Kohn
Secretary
917
Legal Developments
JOINT FINAL RULE—AMENDMENTS
TO REGULA-
TIONS H AND Y
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 amending their
respective risk-based capital standards to incorporate a
measure for market risk to cover all positions located in an
institution's trading account and foreign exchange and
commodity positions wherever located. The final rule implements an amendment to the Basle Capital Accord that
sets forth a supervisory framework for measuring market
risk. The effect of the final rule is that any bank or bank
holding company (institution) regulated by the OCC, the
Board, or the FDIC, with significant exposure to market
risk must measure that risk using its own internal value-atrisk model, subject to the parameters contained in this final
rule, and must hold a commensurate amount of capital.
Effective January 1, 1997, 12C.F.R. Parts 3, 208, 225,
and 325 are amended as follows:
Part 3—Minimum Capital Ratios; Issuance of
Directives
1. The authority citation for Part 3 continues to read as
follows:
Authority. 12U.S.C. 93a, 161, 1818, 1828(n), 1828 note,
183In note, 1835, 3907, and 3909.
2. Section 3.6 is amended by revising paragraph (a) to read
as follows:
Section 3.6—Minimum capital ratios.
(a) Risk-based capital ratio. All national banks must have
and maintain the minimum risk-based capital ratio as set
forth in Appendix A (and, for certain banks, in Appendix B).
3. A new Appendix B is added to Part 3 to read as follows:
Appendix B to Part 3—Risk-Based Capital
Guidelines; Market Risk Adjustment
Section 1—Purpose, Applicability, Scope, and Effective
Date.
(a) Purpose. The purpose of this Appendix is to ensure that
banks with significant exposure to market risk maintain
adequate capital to support that exposure.1 This Appendix
supplements and adjusts the risk-based capital ratio calculations under Appendix A of this part with respect to those
banks.
(b) Applicability. (1) This Appendix applies to any national
bank whose trading activity2 (on a worldwide consolidated basis) equals:
(i) 10 percent or more of total assets;3 or
(ii) $1 billion or more.
(2) The OCC may apply this Appendix to any national
bank if the OCC deems it necessary or appropriate for
safe and sound banking practices.
(3) The OCC may exclude a national bank otherwise
meeting the criteria of paragraph (b)(1) of this section
from coverage under this Appendix if it determines the
bank meets such criteria as a consequence of accounting,
operational, or similar considerations, and the OCC
deems it consistent with safe and sound banking practices.
(c) Scope. The capital requirements of this Appendix support market risk associated with a bank's covered positions.
(d) Effective date. This Appendix is effective as of January 1, 1997. Compliance is not mandatory until January 1,
1998. Subject to supervisory approval, a bank may opt to
comply with this Appendix as early as January 1, 1997.4
Section 2—Definitions.
For purposes of this Appendix, the following definitions
apply:
(a) Covered positions means all positions in a bank's
trading account, and all foreign exchange5 and commodity
1. This Appendix is based on a framework developed jointly by
supervisory authorities from the countries represented on the Basle
Committee on Banking Supervision and endorsed by the Group of Ten
Central Bank Governors. The framework is described in a Basle
Committee paper entitled "Amendment to the Capital Accord to
Incorporate Market Risk," January 1996.
2. Trading activity means the gross sum of trading assets and
liabilities as reported in the bank's most recent quarterly Consolidated
Report of Condition and Income (Call Report).
3. Total assets means quarter-end total assets as reported in the
bank's most recent Call Report.
4. A bank that voluntarily complies with the final rule prior to
January 1, 1998, must comply with all of its provisions.
5. Subject to supervisory review, a bank may exclude structural
positions in foreign currencies from its covered positions.
918
Federal Reserve Bulletin • October 1996
positions, whether or not in the trading account.6 Positions
include on-balance-sheet assets and liabilities and offbalance-sheet items. Securities subject to repurchase and
lending agreements are included as if they are still owned
by the lender.
(b) Market risk means the risk of loss resulting from
movements in market prices. Market risk consists of general market risk and specific risk components.
(1) General market risk means changes in the market
value of covered positions resulting from broad market
movements, such as changes in the general level of
interest rates, equity prices, foreign exchange rates, or
commodity prices.
(2) Specific risk means changes in the market value of
specific positions due to factors other than broad market
movements and includes such risk as the credit risk of an
instrument's issuer.
(c) Tier 1 and Tier 2 capital are the same as defined in
Appendix A of this part.
(d) Tier 3 capital is subordinated debt that is unsecured; is
fully paid up; has an original maturity of at least two years;
is not redeemable before maturity without prior approval
by the OCC; includes a lock-in clause precluding payment
of either interest or principal (even at maturity) if the
payment would cause the issuing bank's risk-based capital
ratio to fall or remain below the minimum required under
Appendix A of this part; and does not contain and is not
covered by any covenants, terms, or restrictions that are
inconsistent with safe and sound banking practices.
(e) Value-at-risk (VAR) means the estimate of the maximum amount that the value of covered positions could
decline during a fixed holding period within a stated confidence level, measured in accordance with section 4 of this
Appendix.
Section 3—Adjustments to the Risk-Based Capital
Ratio Calculations.
(a) Risk-based capital ratio denominator. A bank subject
to this Appendix shall calculate its risk-based capital ratio
denominator as follows:
(1) Adjusted risk-weighted assets. Calculate adjusted
risk-weighted assets, which equals risk-weighted assets
(as determined in accordance with Appendix A of this
part), excluding the risk-weighted amounts of all covered positions (except foreign exchange positions outside the trading account and over-the-counter derivative
positions).7
(2) Measure for market risk. Calculate the measure for
market risk, which equals the sum of the VAR-based
capital charge, the specific risk add-on (if any), and the
capital charge for de minimis exposure (if any).
6. The term trading account is defined in the instructions to the Call
Report.
7. Foreign exchange positions outside the trading account and all
over-the-counter derivative positions, whether or not in the trading
account, must be included in adjusted risk-weighted assets as determined in Appendix A of this part.
(i) VAR-based capital charge. The VAR-based capital
charge equals the higher of:
(A) The previous day's VAR measure; or
(B) The average of the daily VAR measures for
each of the preceding 60 business days multiplied
by three, except as provided in section 4(e) of this
Appendix;
(ii) Specific risk add-on. The specific risk add-on is
calculated in accordance with section 5 of this Appendix; and
(iii) Capital charge for de minimis exposure. The
capital charge for de minimis exposure is calculated
in accordance with section 4(a) of this Appendix.
(3) Market risk equivalent assets. Calculate market risk
equivalent assets by multiplying the measure for market
risk (as calculated in paragraph (a)(2) of this section) by
12.5.
(4) Denominator calculation. Add market risk equivalent assets (as calculated in paragraph (a)(3) of this
section) to adjusted risk-weighted assets (as calculated
in paragraph (a)(1) of this section). The resulting sum is
the bank's risk-based capital ratio denominator.
(b) Risk-based capital ratio numerator. A bank subject to
this Appendix shall calculate its risk-based capital ratio
numerator by allocating capital as follows:
(1) Credit risk allocation. Allocate Tier 1 and Tier 2
capital equal to 8.0 percent of adjusted risk-weighted
assets (as calculated in paragraph (a)(1) of this section).8
(2) Market risk allocation. Allocate Tier 1, Tier 2, and
Tier 3 capital equal to the measure for market risk as
calculated in paragraph (a)(2) of this section. The sum of
Tier 2 and Tier 3 capital allocated for market risk must
not exceed 250 percent of Tier 1 capital allocated for
market risk. (This requirement means that Tier 1 capital
allocated in this paragraph (b)(2) must equal at least
28.6 percent of the measure for market risk.)
(3) Restrictions, (i) The sum of Tier 2 capital (both
allocated and excess) and Tier 3 capital (allocated in
paragraph (b)(2) of this section) may not exceed
100 percent of Tier 1 capital (both allocated and excess).9
(ii) Term subordinated debt (and intermediate-term
preferred stock and related surplus) included in Tier 2
capital (both allocated and excess) may not exceed 50
percent of Tier 1 capital (both allocated and excess).
(4) Numerator calculation. Add Tier 1 capital (both
allocated and excess), Tier 2 capital (both allocated and
excess), and Tier 3 capital (allocated under paragraph
(b)(2) of this section). The resulting sum is the bank's
risk-based capital ratio numerator.
8. A bank may not allocate Tier 3 capital to support credit risk (as
calculated under Appendix A).
9. Excess Tier 1 capital means Tier 1 capital that has not been
allocated in paragraphs (b)(1) and (b)(2) of this section. Excess Tier 2
capital means Tier 2 capital that has not been allocated in paragraph
(b)( 1) and (b)(2) of this section, subject to the restrictions in paragraph
(b)(3) of this section.
Legal Developments
Section 4—Internal Models.
(a) General. For risk-based capital purposes, a bank subject to this Appendix must use its internal model to measure its daily VAR, in accordance with the requirements of
this section.10 The OCC may permit a bank to use alternative techniques to measure the market risk of de minimis
exposures so long as the techniques adequately measure
associated market risk.
(b) Qualitative requirements. A bank subject to this Appendix must have a risk management system that meets the
following minimum qualitative requirements:
(1) The bank must have a risk control unit that reports
directly to senior management and is independent from
business trading units.
(2) The bank's internal risk measurement model must be
integrated into the daily management process.
(3) The bank's policies and procedures must identify,
and the bank must conduct, appropriate stress tests and
backtests.11 The bank's policies and procedures must
identify the procedures to follow in response to the
results of such tests.
(4) The bank must conduct independent reviews of its
risk measurement and risk management systems at least
annually.
(c) Market risk factors. The bank's internal model must
use risk factors sufficient to measure the market risk inherent in all covered positions. The risk factors must address
interest rate risk,12 equity price risk, foreign exchange rate
risk, and commodity price risk.
(d) Quantitative requirements. For regulatory capital purposes, VAR measures must meet the following quantitative
requirements:
(1) The VAR measures must be calculated on a daily
basis using a 99 percent, one-tailed confidence level
with a price shock equivalent to a ten-business day
movement in rates and prices. In order to calculate VAR
measures based on a ten-day price shock, the bank may
either calculate ten-day figures directly or convert VAR
figures based on holding periods other than ten days to
the equivalent of a ten-day holding period (for instance,
10. A bank's internal model may use any generally accepted measurement techniques, such as variance-covariance models, historical
simulations, or Monte Carlo simulations. However, the level of sophistication and accuracy of a bank's internal model must be commensurate with the nature and size of its covered positions. A bank that
modifies its existing modeling procedures to comply with the requirements of this Appendix for risk-based capital purposes should, nonetheless, continue to use the internal model it considers most appropriate in evaluating risks for other purposes.
11. Stress tests provide information about the impact of adverse
market events on a bank's covered positions. Backtests provide information about the accuracy of an internal model by comparing a bank's
daily VAR measures to its corresponding daily trading profits and
losses.
12. For material exposures in the major currencies and markets,
modeling techniques must capture spread risk and must incorporate
enough segments of the yield curve—at least six—to capture differences in volatility and less than perfect correlation of rates along the
yield curve.
919
by multiplying a one-day VAR measure by the square
root of ten).
(2) The VAR measures must be based on an historical
observation period (or effective observation period for a
bank using a weighting scheme or other similar method)
of at least one year. The bank must update data sets at
least once every three months or more frequently as
market conditions warrant.
(3) The VAR measures must include the risks arising
from the non-linear price characteristics of options positions and the sensitivity of the market value of the
positions to changes in the volatility of the underlying
rates or prices. A bank with a large or complex options
portfolio must measure the volatility of options positions
by different maturities.
(4) The VAR measures may incorporate empirical correlations within and across risk categories, provided that
the bank's process for measuring correlations is sound.
In the event that the VAR measures do not incorporate
empirical correlations across risk categories, then the
bank must add the separate VAR measures for the four
major risk categories to determine its aggregate VAR
measure.
(e) Backtesting. (1) Beginning one year after a bank starts
to comply with this Appendix, a bank must conduct
backtesting by comparing each of its most recent 250
business days' actual net trading profit or loss13 with the
corresponding daily VAR measures generated for internal risk measurement purposes and calibrated to a oneday holding period and a 99 percent, one-tailed confidence level.
(2) Once each quarter, the bank must identify the number of exceptions, that is, the number of business days
for which the magnitude of the actual daily net trading
loss, if any, exceeds the corresponding daily VAR measure.
(3) A bank must use the multiplication factor indicated
in Table 1 of this Appendix in determining its capital
charge for market risk under section 3(a)(2)(i)(B) of this
Appendix until it obtains the next quarter's backtesting
results, unless the OCC determines that a different adjustment or other action is appropriate.
1. Multiplication Factor Based on Results of Backtesting
Number of exceptions
Multiplication factor
4 or fewer
5
6
7
8
9
10 or more
3.00
3.40
3.50
3.65
3.75
3.85
4.00
13. Actual net trading profits and losses typically include such
things as realized and unrealized gains and losses on portfolio positions as well as fee income and commissions associated with trading
activities.
920
Federal Reserve Bulletin • October 1996
Section 5—Specific Risk.
(a) Specific risk add-on. For purposes of section 3(a)(2)(ii)
of this Appendix, a bank's specific risk add-on equals the
standard specific risk capital charge calculated under paragraph (c) of this section. If, however, a bank can demonstrate to the OCC that its internal model measures the
specific risk of covered debt and/or equity positions and
that those measures are included in the VAR-based capital
charge in section 3(a)(2)(i) of this Appendix, then the bank
may reduce or eliminate its specific risk add-on under this
section. The determination as to whether a model incorporates specific risk must be made separately for covered
debt and equity positions.
(1) If a model includes the specific risk of covered debt
positions but not covered equity positions (or vice versa), then the bank can reduce its specific risk charge for
the included positions under paragraph (b) of this section. The specific risk charge for the positions not included equals the standard specific risk capital charge
under paragraph (c) of this section.
(2) If a model addresses the specific risk of both covered
debt and equity positions, then the bank can reduce its
specific risk charge for both covered debt and equity
positions under paragraph (b) of this section. In this
case, the comparison described in paragraph (b) of this
section must be based on the total VAR-based figure for
the specific risk of debt and equity positions, taking into
account any correlations that are built into the model.
(b) VAR-based specific risk capital charge. In all cases
where a bank measures specific risk in its internal model,
the total capital charge for specific risk (i.e., the VARbased specific risk capital charge plus the specific risk
add-on) must equal at least 50 percent of the standard
specific risk capital charge (this amount is the minimum
specific risk charge).
(1) If the portion of a bank's VAR measure that is
attributable to specific risk (multiplied by the bank's
multiplication factor if required in section 3(a)(2) of this
Appendix) is greater than or equal to the minimum
specific risk charge, then the bank has no specific risk
add-on and its capital charge for specific risk is the
portion included in the VAR measure.
(2) If the portion of a bank's VAR measure that is
attributable to specific risk (multiplied by the bank's
multiplication factor if required in section 3(a)(2) of this
Appendix) is less than the minimum specific risk charge,
then the bank's specific risk add-on is the difference
between the minimum specific risk charge and the specific risk portion of the VAR measure (multiplied by the
bank's multiplication factor if required in section 3(a)(2)
of this Appendix).
(c) Standard specific risk capital charge. The standard
specific risk capital charge equals the sum of the components for covered debt and equity positions as follows:
(1) Covered debt positions, (i) For purposes of this
section 5, covered debt positions means fixed-rate or
floating-rate debt instruments located in the trading
account and instruments located in the trading account
with values that react primarily to changes in interest
rates, including certain non-convertible preferred
stock, convertible bonds, and instruments subject to
repurchase and lending agreements. Also included are
derivatives (including written and purchased options)
for which the underlying instrument is a covered debt
instrument that is subject to a non-zero specific risk
capital charge.
(A) For covered debt positions that are derivatives,
a bank must risk-weight (as described in paragraph (c)(l)(iii) of this section) the market value of
the effective notional amount of the underlying debt
instrument or index portfolio. Swaps must be included as the notional position in the underlying
debt instrument or index portfolio, with a receiving
side treated as a long position and a paying side
treated as a short position; and
(B) For covered debt positions that are options,
whether long or short, a bank must risk-weight (as
described in paragraph (c)(l)(iii) of this section) the
market value of the effective notional amount of the
underlying debt instrument or index multiplied by
the option's delta.
(ii) A bank may net long and short covered debt
positions (including derivatives) in identical debt issues or indices.
(iii) A bank must multiply the absolute value of the
current market value of each net long or short covered
debt position by the appropriate specific risk weight2. Specific Risk Weighting Factors for Covered Debt
Positions
Category
Government1
Qualifying 2
Other
3
Remaining maturity
(contractual)
Weighting factor
(in percent)
N/A
.00
6 months or less
Over 6 months to 24
months
over 24 months
.25
1.00
N/A
8.00
1.60
1. The "government" category includes all debt instruments of central governments of OECD countries (as defined in Appendix A of this part) including
bonds, Treasury bills, and other short-term instruments, as well as local currency
instruments of non-OECD central governments to the extent the bank has
liabilities booked in that currency.
2. The "qualifying" category includes debt instruments of U.S. governmentsponsored agencies (as defined in Appendix A of this part), general obligation
debt instruments issued by states and other political subdivisions of OECD
countries, multilateral development banks (as defined in Appendix A of this
part), and debt instruments issued by U.S. depository institutions or OECDbanks (as defined in Appendix A of this part) that do not qualify as capital of the
issuing institution. This category also includes other debt instruments, including
corporate debt and revenue instruments issued by states and other political
subdivisions of OECD countries, that are: (1) rated investment grade by at least
two nationally recognized credit rating services; (2) rated investment grade by
one nationally recognized credit rating agency and not rated less than investment grade by any other credit rating agency; or (3) unrated, but deemed to be of
comparable investment quality by the reporting bank and the issuer has instruments listed on a recognized stock exchange, subject to review by the OCC.
3. The "other" category includes debt instruments that are not included in the
government or qualifying categories.
Legal Developments
ing factor indicated in Table 2 of this Appendix. The
specific risk capital charge component for covered
debt positions is the sum of the weighted values.
(2) Covered equity positions, (i) For purposes of this
section 5, covered equity positions means equity instruments located in the trading account and instruments located in the trading account with values that
react primarily to changes in equity prices, including
voting or non-voting common stock, certain convertible bonds, and commitments to buy or sell equity
instruments. Also included are derivatives (including
written and purchased options) for which the underlying is a covered equity position.
(A) For covered equity positions that are derivatives, a bank must risk weight (as described in
paragraph (c)(2)(iii) of this section) the market
value of the effective notional amount of the underlying equity instrument or equity portfolio. Swaps
must be included as the notional position in the
underlying equity instrument or index portfolio,
with a receiving side treated as a long position and
a paying side treated as a short position; and
(B) For covered equity positions that are options,
whether long or short, a bank must risk weight (as
described in paragraph (c)(2)(iii) of this section) the
market value of the effective notional amount of the
underlying equity instrument or index multiplied by
the option's delta.
(ii) A bank may net long and short covered equity
positions (including derivatives) in identical equity
issues or equity indices in the same market.14
(iii) (A) A bank must multiply the absolute value of
the current market value of each net long or short
covered equity position by a risk weighting factor of
8.0 percent, or by 4.0 percent if the equity is held in a
portfolio that is both liquid and well-diversified. For
covered equity positions that are index contracts comprising a well-diversified portfolio of equity instruments, the net long or short position is multiplied by a
risk weighting factor of 2.0 percent.
(B) For covered equity positions from the following
futures-related arbitrage strategies, a bank may apply a 2.0 percent risk weighting factor to one side
(long or short) of each position with the opposite
side exempt from charge:
(1) Long and short positions in exactly the same
index at different dates or in different market
centers; or
(2) Long and short positions in index contracts at
the same date in different but similar indices.
(C) For futures contracts on broadly-based indices
that are matched by offsetting positions in a basket
14. A bank may also net positions in depository receipts against an
opposite position in the underlying equity or identical equity in
different markets, provided that the bank includes the costs of conversion.
921
of stocks comprising the index, a bank may apply a
2.0 percent risk weighting factor to the futures and
stock basket positions (long and short), provided
that such trades are deliberately entered into and
separately controlled, and that the basket of stocks
comprises at least 90 percent of the capitalization
of the index.
(iv) The specific risk capital charge component for
covered equity positions is the sum of the weighted
values.
Section 6—Reservation of Authority.
The OCC reserves the authority to modify the application
of any of the provisions in this Appendix to any bank, upon
reasonable justification.
Part 208—Membership of State Banking
Institutions in the Federal Reserve System
(Regulation H)
1. The authority citation for Part 208 is revised to read as
follows:
Authority. 12 U.S.C. 36, 248(a), 248(c), 321-338a, 371d,
461, 481-486, 601, 611, 1814, 1823(j), 1828(o), 1831o,
183lp-1, 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 Part 208, section 208.13 is revised to read as follows:
Section 208.13—Capital Adequacy.
The standards and guidelines by which the capital adequacy of state member banks will be evaluated by the
Board are set forth in Appendix A and Appendix E for
risk-based capital purposes, and, with respect to the ratios
relating capital to total assets, in Appendix B to Part 208
and in Appendix B to the Board's Regulation Y, 12 C.F.R.
Part 225.
3. In Part 208, Appendix A is amended in the introductory
text, by adding a new paragraph after the second undesignated paragraph to read as follows:
Appendix A to Part 208—Capital Adequacy
Guidelines for State Member Banks; Risk-Based
Measure
In addition, when certain banks that engage in trading
activities calculate their risk-based capital ratio under this
Appendix A, they must also refer to Appendix E of this
part, which incorporates capital charges for certain market
risks into the risk-based capital ratio. When calculating
922
Federal Reserve Bulletin • October 1996
their risk-based capital ratio under this Appendix A, such
banks are required to refer to Appendix E of this part for
supplemental rules to determine qualifying and excess
capital, calculate risk-weighted assets, calculate market
risk equivalent assets, and calculate risk-based capital ratios adjusted for market risk.
4. In Part 208, a new Appendix E is added to read as
follows:
Appendix E to Part 208 —Capital Adequacy
Guidelines for State Member Banks; Market Risk
Measure
Section 1—Purpose, Applicability, Scope, and
Elfective Date.
(a) Purpose. The purpose of this Appendix is to ensure that
banks with significant exposure to market risk maintain
adequate capital to support that exposure.1 This Appendix
supplements and adjusts the risk-based capital ratio calculations under Appendix A of this part with respect to those
banks.
(b) Applicability. (1) This Appendix applies to any insured
state member bank whose trading activity2 (on a worldwide consolidated basis) equals:
(i) 10 percent or more of total assets;3 or
(ii) $1 billion or more.
(2) The Federal Reserve may additionally apply this
Appendix to any insured state member bank if the Federal Reserve deems it necessary or appropriate for safe
and sound banking practices.
(3) The Federal Reserve may exclude an insured state
member bank otherwise meeting the criteria of paragraph (b)(1) of this section from coverage under this
Appendix if it determines the bank meets such criteria as
a consequence of accounting, operational, or similar
considerations, and the Federal Reserve deems it consistent with safe and sound banking practices.
(c) Scope. The capital requirements of this Appendix support market risk associated with a bank's covered positions.
1. A portfolio is liquid and well-diversified if:
(1) It is characterized by a limited sensitivity to price changes of
any single equity issue or closely related group of equity issues
held in the portfolio;
(2) The volatility of the portfolio's value is not dominated by the
volatility of any individual equity issue or by equity issues from
any single industry or economic sector;
(3) It contains a large number of individual equity positions, with
no single position representing a substantial portion of the portfolio's total market value; and
(4) It consists mainly of issues traded on organized exchanges or
in well-established over-the-counter markets.
2. Trading activity means the gross sum of trading assets and
liabilities as reported in the bank's most recent quarterly Consolidated
Report of Condition and Income (Call Report).
3. Total assets means quarter-end total assets as reported in the
bank's most recent Call Report.
(d) Effective date. This Appendix is elfective as of January 1, 1997. Compliance is not mandatory until January 1,
1998. Subject to supervisory approval, a bank may opt to
comply with this appendix as early as January 1, 1997.4
Section 2—Definitions.
For purposes of this Appendix, the following definitions
apply:
(a) Covered positions means all positions in a bank's
trading account, and all foreign exchange5 and commodity
positions, whether or not in the trading account.6 Positions
include on-balance-sheet assets and liabilities and offbalance-sheet items. Securities subject to repurchase and
lending agreements are included as if they are still owned
by the lender.
(b) Market risk means the risk of loss resulting from
movements in market prices. Market risk consists of general market risk and specific risk components.
(1) General market risk means changes in the market
value of covered positions resulting from broad market
movements, such as changes in the general level of
interest rates, equity prices, foreign exchange rates, or
commodity prices.
(2) Specific risk means changes in the market value of
specific positions due to factors other than broad market
movements and includes such risk as the credit risk of an
instrument's issuer.
(c) Tier I and Tier 2 capital are defined in Appendix A of
this part.
(d) Tier 3 capital is subordinated debt that is unsecured; is
fully paid up; has an original maturity of at least two years;
is not redeemable before maturity without prior approval
by the Federal Reserve; includes a lock-in clause precluding payment of either interest or principal (even at maturity) if the payment would cause the issuing bank's riskbased capital ratio to fall or remain below the minimum
required under Appendix A of this part; and does not
contain and is not covered by any covenants, terms, or
restrictions that are inconsistent with safe and sound banking practices.
(e) Value-at-risk (VAR) means the estimate of the maximum amount that the value of covered positions could
decline during a fixed holding period within a stated confidence level, measured in accordance with section 4 of this
Appendix.
4. A bank that voluntarily complies with the final rule prior to
January 1, 1998, must comply with all of its provisions.
5. Subject to supervisory review, a bank may exclude structural
positions in foreign currencies from its covered positions.
6. The term trading account is defined in the instructions to the Call
Report.
Legal Developments
Section 3—Adjustments to the Risk-Based Capital
Ratio Calculations.
(a) Risk-based capital ratio denominator. A bank subject
to this Appendix shall calculate its risk-based capital ratio
denominator as follows:
(1) Adjusted risk-weighted assets. Calculate adjusted
risk-weighted assets, which equals risk-weighted assets
(as determined in accordance with Appendix A of this
part), excluding the risk-weigh ted amounts of all covered positions (except foreign exchange positions outside the trading account and over-the-counter derivative
positions).7
(2) Measure for market risk. Calculate the measure for
market risk, which equals the sum of the VAR-based
capital charge, the specific risk add-on (if any), and the
capital charge for de minimis exposures (if any).
(i) VAR-based capital charge. The VAR-based capital
charge equals the higher of:
(A) The previous day's VAR measure; or
(B) The average of the daily VAR measures for
each of the preceding 60 business days multiplied
by three, except as provided in section 4(e) of this
Appendix;
(ii) Specific risk add-on. The specific risk add-on is
calculated in accordance with section 5 of this Appendix; and
(iii) Capital charge for de minimis exposure. The
capital charge for de minimis exposure is calculated in
accordance with section 4(a) of this Appendix.
(3) Market risk equivalent assets. Calculate market risk
equivalent assets by multiplying the measure for market
risk (as calculated in paragraph (a)(2) of this section) by
12.5.
(4) Denominator calculation. Add market risk equivalent assets (as calculated in paragraph (a)(3) of this
section) to adjusted risk-weighted assets (as calculated
in paragraph (a)(1) of this section). The resulting sum is
the bank's risk-based capital ratio denominator.
(b) Risk-based capital ratio numerator. A bank subject to
this Appendix shall calculate its risk-based capital ratio
numerator by allocating capital as follows:
(1) Credit risk allocation. Allocate Tier 1 and Tier 2
capital equal to 8.0 percent of adjusted risk-weighted
assets (as calculated in paragraph (a)(1) of this section).8
(2) Market risk allocation. Allocate Tier 1, Tier 2, and
Tier 3 capital equal to the measure for market risk as
calculated in paragraph (a)(2) of this section. The sum of
Tier 2 and Tier 3 capital allocated for market risk must
not exceed 250 percent of Tier 1 capital allocated for
market risk. (This requirement means that Tier 1 capital
7. Foreign exchange positions outside the trading account and all
over-the-counter derivative positions, whether or not in the trading
account, must be included in adjusted risk weighted assets as determined in Appendix A of this part.
8. A bank may not allocate Tier 3 capital to support credit risk (as
calculated under Appendix A of this part).
923
allocated in this paragraph (b)(2) must equal at least
28.6 percent of the measure for market risk.)
(3) Restrictions, (i) The sum of Tier 2 capital (both
allocated and excess) and Tier 3 capital (allocated in
paragraph (b)(2) of this section) may not exceed
100 percent of Tier 1 capital (both allocated and
excess).9
(ii) Term subordinated debt (and intermediate-term
preferred stock and related surplus) included in Tier 2
capital (both allocated and excess) may not exceed
50 percent of Tier 1 capital (both allocated and excess).
(4) Numerator calculation. Add Tier 1 capital (both
allocated and excess), Tier 2 capital (both allocated and
excess), and Tier 3 capital (allocated under paragraph (b)(2) of this section). The resulting sum is the
bank's risk-based capital ratio numerator.
Section A—Internal Models.
(a) General. For risk-based capital purposes, a bank subject to this Appendix must use its internal model to measure its daily VAR, in accordance with the requirements of
this section.10 The Federal Reserve may permit a bank to
use alternative techniques to measure the market risk of
de minimis exposures so long as the techniques adequately
measure associated market risk.
(b) Qualitative requirements. A bank subject to this Appendix must have a risk management system that meets the
following minimum qualitative requirements:
(1) The bank must have a risk control unit that reports
directly to senior management and is independent from
business trading units.
(2) The bank's internal risk measurement model must be
integrated into the daily management process.
(3) The bank's policies and procedures must identify,
and the bank must conduct, appropriate stress tests and
backtests.11 The bank's policies and procedures must
identify the procedures to follow in response to the
results of such tests.
9. Excess Tier 1 capital means Tier 1 capital that has not been
allocated in paragraphs (b)(1) and (b)(2) of this section. Excess Tier 2
capital means Tier 2 capital that has not been allocated in paragraph (b)(1) and (b)(2) of this section, subject to the restrictions in
paragraph (b)(3) of this section.
10. A bank's internal model may use any generally accepted measurement techniques, such as variance-covariance models, historical
simulations, or Monte Carlo simulations. However, the level of sophistication and accuracy of a bank's internal model must be commensurate with the nature and size of its covered positions. A bank that
modifies its existing modeling procedures to comply with the requirements of this Appendix for risk-based capital purposes should, nonetheless, continue to use the internal model it considers most appropriate in evaluating risks for other purposes.
11. Stress tests provide information about the impact of adverse
market events on a bank's covered positions. Backtests provide information about the accuracy of an internal model by comparing a bank's
daily VAR measures to its corresponding daily trading profits and
losses.
924
Federal Reserve Bulletin • October 1996
(4) The bank must conduct independent reviews of its
risk measurement and risk management systems at least
annually.
(c) Market risk factors. The bank's internal model must
use risk factors sufficient to measure the market risk inherent in all covered positions. The risk factors must address
interest rate risk,12 equity price risk, foreign exchange rate
risk, and commodity price risk.
(d) Quantitative requirements. For regulatory capital purposes, VAR measures must meet the following quantitative
requirements:
(1) The VAR measures must be calculated on a daily
basis using a 99 percent, one-tailed confidence level
with a price shock equivalent to a ten-business day
movement in rates and prices. In order to calculate VAR
measures based on a ten-day price shock, the bank may
either calculate ten-day figures directly or convert VAR
figures based on holding periods other than ten days to
the equivalent of a ten-day holding period (for instance,
by multiplying a one-day VAR measure by the square
root of ten).
(2) The VAR measures must be based on an historical
observation period (or effective observation period for a
bank using a weighting scheme or other similar method)
of at least one year. The bank must update data sets at
least once every three months or more frequently as
market conditions warrant.
(3) The VAR measures must include the risks arising
from the non-linear price characteristics of options positions and the sensitivity of the market value of the
positions to changes in the volatility of the underlying
rates or prices. A bank with a large or complex options
portfolio must measure the volatility of options positions
by different maturities.
(4) The VAR measures may incorporate empirical correlations within and across risk categories, provided that
the bank's process for measuring correlations is sound.
In the event that the VAR measures do not incorporate
empirical correlations across risk categories, then the
bank must add the separate VAR measures for the four
major risk categories to determine its aggregate VAR
measure.
(e) Backtesting. (1) Beginning one year after a bank starts
to comply with this Appendix, a bank must conduct
backtesting by comparing each of its most recent 250
business days' actual net trading profit or loss13 with the
corresponding daily VAR measures generated for internal risk measurement purposes and calibrated to a one-
12. For material exposures in the major currencies and markets,
modeling techniques must capture spread risk and must incorporate
enough segments of the yield curve—at least six—to capture differences in volatility and less than perfect correlation of rates along the
yield curve.
13. Actual net trading profits and losses typically include such
things as realized and unrealized gains and losses on portfolio positions as well as fee income and commissions associated with trading
activities.
day holding period and a 99 percent, one-tailed confidence level.
(2) Once each quarter, the bank must identify the number of exceptions, that is, the number of business days
for which the magnitude of the actual daily net trading
loss, if any, exceeds the corresponding daily VAR measure.
(3) A bank must use the multiplication factor indicated
in Table 1 of this Appendix in determining its capital
charge for market risk under section 3(a)(2)(i)(B) of this
Appendix until it obtains the next quarter's backtesting
results, unless the Federal Reserve determines that a
different adjustment or other action is appropriate.
1. Multiplication Factor Based on Results of Backtesting
Number of exceptions
Multiplication factor
4 or fewer
5
6
7
8
9
10 or more
3.00
3.40
3.50
3.65
3.75
3.85
4.00
Section 5—Specific Risk.
(a) Specific risk add-on. For purposes of section 3(a)(2)(ii)
of this Appendix, a bank's specific risk add-on equals the
standard specific risk capital charge calculated under paragraph (c) of this section. If, however, a bank can demonstrate to the Federal Reserve that its internal model measures the specific risk of covered debt and/or equity
positions and that those measures are included in the
VAR-based capital charge in section 3(a)(2)(i) of this Appendix, then the bank may reduce or eliminate its specific
risk add-on under this section. The determination as to
whether a model incorporates specific risk must be made
separately for covered debt and equity positions.
(1) If a model includes the specific risk of covered debt
positions but not covered equity positions (or vice versa), then the bank can reduce its specific risk charge for
the included positions under paragraph (b) of this section. The specific risk charge for the positions not included equals the standard specific risk capital charge
under paragraph (c) of this section.
(2) If a model addresses the specific risk of both covered
debt and equity positions, then the bank can reduce its
specific risk charge for both covered debt and equity
positions under paragraph (b) of this section. In this
case, the comparison described in paragraph (b) of this
section must be based on the total VAR-based figure for
the specific risk of debt and equity positions, taking into
account any correlations that are built into the model.
(b) VAR-based specific risk capital charge. In all cases
where a bank measures specific risk in its internal model,
the total capital charge for specific risk (i.e., the VARbased specific risk capital charge plus the specific risk
Legal Developments
add-on) must equal at least 50 percent of the standard
specific risk capital charge (this amount is the minimum
specific risk charge).
(1) If the portion of a bank's VAR measure that is
attributable to specific risk (multiplied by the bank's
multiplication factor if required in section 3(a)(2) of this
Appendix) is greater than or equal to the minimum
specific risk charge, then the bank has no specific risk
add-on and its capital charge for specific risk is the
portion included in the VAR measure.
(2) If the portion of a bank's VAR measure that is
attributable to specific risk (multiplied by the bank's
multiplication factor if required in section 3(a)(2) of this
Appendix) is less than the minimum specific risk charge,
then the bank's specific risk add-on is the difference
between the minimum specific risk charge and the specific risk portion of the VAR measure (multiplied by the
bank's multiplication factor if required in section 3(a)(2)
of this Appendix).
(c) Standard specific risk capital charge. The standard
specific risk capital charge equals the sum of the components for covered debt and equity positions as follows:
(1) Covered debt positions, (i) For purposes of this
section 5, covered debt positions means fixed-rate or
floating-rate debt instruments located in the trading
account and instruments located in the trading account
with values that react primarily to changes in interest
rates, including certain non-convertible preferred
stock, convertible bonds, and instruments subject to
repurchase and lending agreements. Also included are
derivatives (including written and purchased options)
for which the underlying instrument is a covered debt
instrument that is subject to a non-zero specific risk
capital charge.
(A) For covered debt positions that are derivatives,
a bank must risk-weight (as described in paragraph (c)(l)(iii) of this section) the market value of
the effective notional amount of the underlying debt
instrument or index portfolio. Swaps must be included as the notional position in the underlying
debt instrument or index portfolio, with a receiving
side treated as a long position and a paying side
treated as a short position; and
(B) For covered debt positions that are options,
whether long or short, a bank must risk-weight (as
described in paragraph (c)(l)(iii) of this section) the
market value of the effective notional amount of the
underlying debt instrument or index multiplied by
the option's delta,
(ii) A bank may net long and short covered debt
positions (including derivatives) in identical debt issues or indices.
(iii) A bank must multiply the absolute value of the
current market value of each net long or short covered
debt position by the appropriate specific risk weighting factor indicated in Table 2 of this Appendix. The
specific risk capital charge component for covered
debt positions is the sum of the weighted values.
925
2. Specific Risk Weighting Factors for Covered Debt
Positions
Category
Government
Qualifying
Other
Remaining Maturity
(contractual)
Weighting Factor
(in percent)
N/A
.00
6 months or less
over 6 months to 24
months
over 24 months
.25
1.00
N/A
8.00
1.60
(A) The government category includes all debt instruments of central governments of OECD-based
countries14 including bonds, Treasury bills, and
other short-term instruments, as well as local currency instruments of non-OECD central governments to the extent the bank has liabilities booked
in that currency.
(B) The qualifying category includes debt instruments of U.S. government-sponsored agencies, general obligation debt instruments issued by states
and other political subdivisions of OECD-based
countries, multilateral development banks, and debt
instruments issued by U.S. depository institutions
or OECD-banks that do not qualify as capital of the
issuing institution.15 This category also includes
other debt instruments, including corporate debt
and revenue instruments issued by states and other
political subdivisions of OECD countries, that are:
(1) Rated investment-grade by at least two nationally recognized credit rating services;
(2) Rated investment-grade by one nationally
recognized credit rating agency and not rated less
than investment-grade by any other credit rating
agency; or
(3) Unrated, but deemed to be of comparable
investment quality by the reporting bank and the
issuer has instruments listed on a recognized
stock exchange, subject to review by the Federal
Reserve.
(C) The other category includes debt instruments
that are not included in the government or qualifying categories.
(2) Covered equity positions, (i) For purposes of this
section 5, covered equity positions means equity instruments located in the trading account and instruments located in the trading account with values that
react primarily to changes in equity prices, including
voting or non-voting common stock, certain convertible bonds, and commitments to buy or sell equity
instruments. Also included are derivatives (including
14. Organization for Economic Cooperation and Development
(OECD)-based countries is defined in Appendix A of this part.
15. U.S. government-sponsored agencies, multilateral development
banks, and OECD banks are defined in Appendix A of this part.
926
Federal Reserve Bulletin • October 1996
written and purchased options) for which the underlying is a covered equity position.
(A) For covered equity positions that are derivatives, a bank must risk weight (as described in
paragraph (c)(2)(iii) of this section) the market
value of the effective notional amount of the underlying equity instrument or equity portfolio. Swaps
must be included as the notional position in the
underlying equity instrument or index portfolio,
with a receiving side treated as a long position and
a paying side treated as a short position; and
(B) For covered equity positions that are options,
whether long or short, a bank must risk weight (as
described in paragraph (c)(2)(iii) of this section) the
market value of the effective notional amount of the
underlying equity instrument or index multiplied by
the option's delta.
(ii) A bank may net long and short covered equity
positions (including derivatives) in identical equity
issues or equity indices in the same market.16
(iii) (A) A bank must multiply the absolute value of
the current market value of each net long or short
covered equity position by a risk weighting factor
of 8.0 percent, or by 4.0 percent if the equity is held
in a portfolio that is both liquid and welldiversified.17 For covered equity positions that are
index contracts comprising a well-diversified portfolio of equity instruments, the net long or short
position is multiplied by a risk weighting factor of
2.0 percent.
(B) For covered equity positions from the following
futures-related arbitrage strategies, a bank may apply a 2.0 percent risk weighting factor to one side
(long or short) of each position with the opposite
side exempt from charge, subject to review by the
Federal Reserve:
(7) Long and short positions in exactly the same
index at different dates or in different market
centers; or
(2) Long and short positions in index contracts at
the same date in different but similar indices.
(C) For futures contracts on broadly-based indices
that are matched by offsetting positions in a basket
16. A bank may also net positions in depository receipts against an
opposite position in the underlying equity or identical equity in
different markets, provided that the bank includes the costs of conversion.
17. A portfolio is liquid and well-diversified if:
(1) It is characterized by a limited sensitivity to price changes of
any single equity issue or closely related group of equity issues
held in the portfolio;
(2) The volatility of the portfolio's value is not dominated by the
volatility of any individual equity issue or by equity issues from
any single industry or economic sector;
(3) It contains a large number of individual equity positions, with
no single position representing a substantial portion of the portfolio's total market value; and
(4) It consists mainly of issues traded on organized exchanges or
in well-established over-the-counter markets.
of stocks comprising the index, a bank may apply a
2.0 percent risk weighting factor to the futures and
stock basket positions (long and short), provided
that such trades are deliberately entered into and
separately controlled, and that the basket of stocks
comprises at least 90 percent of the capitalization
of the index.
(iv) The specific risk capital charge component for
covered equity positions is the sum of the weighted
values.
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. 12U.S.C. 1817(j)(13), 1818, 1831i, 1831p-l,
1843(c)(8), 1844(b), 1972(1), 3106, 3108, 3310, 33313351,3907, and 3909.
2. In Part 225, Appendix A is amended in the introductory
text, by adding a new paragraph after the second undesignated paragraph to read as follows:
Appendix A to Part 225—Capital Adequacy
Guidelines for Bank Holding Companies:
Risk-Based Measure
In addition, when certain organizations that engage in
trading activities calculate their risk-based capital ratio
under this Appendix A, they must also refer to Appendix E
of this part, which incorporates capital charges for certain
market risks into the risk-based capital ratio. When calculating their risk-based capital ratio under this Appendix A,
such organizations are required to refer to Appendix E of
this part for supplemental rules to determine qualifying and
excess capital, calculate risk-weighted assets, calculate
market risk equivalent assets, and calculate risk-based capital ratios adjusted for market risk.
3. In Part 225, a new Appendix E is added to read as
follows:
Appendix E to Part 225—Capital Adequacy
Guidelines for Bank Holding Companies: Market
Risk Measure
Section 1—Purpose, Applicability, Scope, and
Effective Date.
(a) Purpose. The purpose of this Appendix is to ensure that
bank holding companies (organizations) with significant
exposure to market risk maintain adequate capital to sup-
Legal Developments
927
port that exposure.1 This Appendix supplements and adjusts the risk-based capital ratio calculations under Appendix A of this part with respect to those organizations.
(b) Applicability. (1) This Appendix applies to any bank
holding company whose trading activity2 (on a worldwide consolidated basis) equals:
(i) 10 percent or more of total assets;3 or
(ii) $1 billion or more.
(2) The Federal Reserve may additionally apply this
Appendix to any bank holding company if the Federal
Reserve deems it necessary or appropriate for safe and
sound banking practices.
(3) The Federal Reserve may exclude a bank holding
company otherwise meeting the criteria of paragraph (b)(1) of this section from coverage under this
Appendix if it determines the organization meets such
criteria as a consequence of accounting, operational, or
similar considerations, and the Federal Reserve deems it
consistent with safe and sound banking practices.
(c) Scope. The capital requirements of this Appendix support market risk associated with an organization's covered
positions.
(d) Effective date. This Appendix is effective as of January 1, 1997. Compliance is not mandatory until January 1,
1998. Subject to supervisory approval, a bank holding
company may opt to comply with this Appendix as early as
January 1, 1997.4
(1) General market risk means changes in the market
value of covered positions resulting from broad market
movements, such as changes in the general level of
interest rates, equity prices, foreign exchange rates, or
commodity prices.
(2) Specific risk means changes in the market value of
specific positions due to factors other than broad market
movements and includes such risk as the credit risk of an
instrument's issuer.
(c) Tier 1 and Tier 2 capital are defined in Appendix A of
this part.
(d) Tier 3 capital is subordinated debt that is unsecured; is
fully paid up; has an original maturity of at least two years;
is not redeemable before maturity without prior approval
by the Federal Reserve; includes a lock-in clause precluding payment of either interest or principal (even at maturity) if the payment would cause the issuing organization's
risk-based capital ratio to fall or remain below the minimum required under Appendix A of this part; and does not
contain and is not covered by any covenants, terms, or
restrictions that are inconsistent with safe and sound banking practices.
(e) Value-at-risk (VAR) means the estimate of the maximum amount that the value of covered positions could
decline due to market price or rate movements during a
fixed holding period within a stated confidence level, measured in accordance with section 4 of this Appendix.
Section 2—Definitions.
Section 3—Adjustments to the Risk-Based Capital
Ratio Calculations.
For purposes of this Appendix, the following definitions
apply:
(a) Covered positions means all positions in an organization's trading account, and all foreign exchange5 and commodity positions, whether or not in the trading account.6
Positions include on-balance-sheet assets and liabilities
and off-balance-sheet items. Securities subject to repurchase and lending agreements are included as if still owned
by the lender.
(b) Market risk means the risk of loss resulting from
movements in market prices. Market risk consists of general market risk and specific risk components.
1. This Appendix is based on a framework developed jointly by
supervisory authorities from the countries represented on the Basle
Committee on Banking Supervision and endorsed by the Group of Ten
Central Bank Governors. The framework is described in a Basle
Committee paper entitled "Amendment to the Capital Accord to
Incorporate Market Risk," January 1996.
2. Trading activity means the gross sum of trading assets and
liabilities as reported in the bank holding company's most recent
quarterly Y-9C Report.
3. Total assets means quarter-end total assets as reported in the bank
holding company's most recent Y-9C Report.
4. A bank holding company that voluntarily complies with the final
rule prior to January 1, 1998, must comply with all of its provisions.
5. Subject to supervisory review, a bank may exclude structural
positions in foreign currencies from its covered positions.
6. The term trading account is defined in the instructions to the Call
Report.
(a) Risk-based capital ratio denominator. An organization
subject to this Appendix shall calculate its risk-based capital ratio denominator as follows:
(1) Adjusted risk-weighted assets. Calculate adjusted
risk-weighted assets, which equals risk-weighted assets
(as determined in accordance with Appendix A of this
part) excluding the risk-weighted amounts of all covered
positions (except foreign exchange positions outside the
trading account and over-the-counter derivative positions).7
(2) Measure for market risk. Calculate the measure for
market risk, which equals the sum of the VAR-based
capital charge, the specific risk add-on (if any), and the
capital charge for de minimis exposures (if any).
(i) VAR-based capital charge. The VAR-based capital
charge equals the higher of:
(A) The previous day's VAR measure; or
(B) The average of the daily VAR measures for
each of the preceding 60 business days multiplied
by three, except as provided in section 4(e) of this
Appendix;
7. Foreign exchange positions outside the trading account and all
over-the-counter derivative positions, whether or not in the trading
account, must be included in adjusted risk weighted assets as determined in Appendix A of this part.
928
Federal Reserve Bulletin • October 1996
(ii) Specific risk add-on. The specific risk add-on is
calculated in accordance with section 5 of this Appendix; and
(iii) Capital charge for de minimis exposure. The
capital charge for de minimis exposure is calculated in
accordance with section 4(a) of this Appendix.
(3) Market risk equivalent assets. Calculate market risk
equivalent assets by multiplying the measure for market
risk (as calculated in paragraph (a)(2) of this section) by
12.5.
(4) Denominator calculation. Add market risk equivalent assets (as calculated in paragraph (a)(3) of this
section) to adjusted risk-weighted assets (as calculated
in paragraph (a)(1) of this section). The resulting sum is
the organization's risk-based capital ratio denominator.
(b) Risk-based capital ratio numerator. An organization
subject to this Appendix shall calculate its risk-based capital ratio numerator by allocating capital as follows:
(1) Credit risk allocation. Allocate Tier 1 and Tier 2
capital equal to 8.0 percent of adjusted risk-weighted
assets (as calculated in paragraph (a)(1) of this section).8
(2) Market risk allocation. Allocate Tier 1, Tier 2, and
Tier 3 capital equal to the measure for market risk as
calculated in paragraph (a)(2) of this section. The sum of
Tier 2 and Tier 3 capital allocated for market risk must
not exceed 250 percent of Tier 1 capital allocated for
market risk. (This requirement means that Tier 1 capital
allocated in this paragraph (b)(2) must equal at least
28.6 percent of the measure for market risk.)
(3) Restrictions, (i) The sum of Tier 2 capital (both
allocated and excess) and Tier 3 capital (allocated in
paragraph (b)(2) of this section) may not exceed
100 percent of Tier 1 capital (both allocated and
excess).9
(ii) Term subordinated debt (and intermediate-term
preferred stock and related surplus) included in Tier 2
capital (both allocated and excess) may not exceed
50 percent of Tier 1 capital (both allocated and excess).
(4) Numerator calculation. Add Tier 1 capital (both
allocated and excess), Tier 2 capital (both allocated and
excess), and Tier 3 capital (allocated under paragraph (b)(2) of this section). The resulting sum is the
organization's risk-based capital ratio numerator.
Section A—Internal Models.
(a) General. For risk-based capital purposes, a bank holding company subject to this Appendix must use its internal
model to measure its daily VAR, in accordance with the
8. An institution may not allocate Tier 3 capital to support credit
risk (as calculated under Appendix A of this part).
9. Excess Tier 1 capital means Tier 1 capital that has not been
allocated in paragraphs (b)(1) and (b)(2) of this section. Excess Tier 2
capital means Tier 2 capital that has not been allocated in paragraph (b)(1) and (b)(2) of this section, subject to the restrictions in
paragraph (b)(3) of this section.
requirements of this section.10 The Federal Reserve may
permit an organization to use alternative techniques to
measure the market risk of de minimis exposures so long
as the techniques adequately measure associated market
risk.
(b) Qualitative requirements. A bank holding company
subject to this Appendix must have a risk management
system that meets the following minimum qualitative requirements:
(1) The organization must have a risk control unit that
reports directly to senior management and is independent from business trading units.
(2) The organization's internal risk measurement model
must be integrated into the daily management process.
(3) The organization's policies and procedures must
identify, and the organization must conduct, appropriate
stress tests and backtests.11 The organization's policies
and procedures must identify the procedures to follow in
response to the results of such tests.
(4) The organization must conduct independent reviews
of its risk measurement and risk management systems at
least annually.
(c) Market risk factors. The organization's internal model
must use risk factors sufficient to measure the market risk
inherent in all covered positions. The risk factors must
address interest rate risk,12 equity price risk, foreign exchange rate risk, and commodity price risk.
(d) Quantitative requirements. For regulatory capital purposes, VAR measures must meet the following quantitative
requirements:
(1) The VAR measures must be calculated on a daily
basis using a 99 percent, one-tailed confidence level
with a price shock equivalent to a ten-business day
movement in rates and prices. In order to calculate VAR
measures based on a ten-day price shock, the organization may either calculate ten-day figures directly or
convert VAR figures based on holding periods other than
ten days to the equivalent of a ten-day holding period
(for instance, by multiplying a one-day VAR measure by
the square root of ten).
10. An organization's internal model may use any generally accepted measurement techniques, such as variance-covariance models,
historical simulations, or Monte Carlo simulations. However, the level
of sophistication and accuracy of an organization's internal model
must be commensurate with the nature and size of its covered positions. An organization that modifies its existing modeling procedures
to comply with the requirements of this Appendix for risk-based
capital purposes should, nonetheless, continue to use the internal
model it considers most appropriate in evaluating risks for other
purposes.
11. Stress tests provide information about the impact of adverse
market events on a bank's covered positions. Backtests provide information about the accuracy of an internal model by comparing an
organization's daily VAR measures to its corresponding daily trading
profits and losses.
12. For material exposures in the major currencies and markets,
modeling techniques must capture spread risk and must incorporate
enough segments of the yield curve—at least six—to capture differences in volatility and less than perfect correlation of rates along the
yield curve.
Legal Developments
(2) The VAR measures must be based on an historical
observation period (or effective observation period for
an organization using a weighting scheme or other similar method) of at least one year. The organization must
update data sets at least once every three months or more
frequently as market conditions warrant.
(3) The VAR measures must include the risks arising
from the non-linear price characteristics of options positions and the sensitivity of the market value of the
positions to changes in the volatility of the underlying
rates or prices. An organization with a large or complex
options portfolio must measure the volatility of options
positions by different maturities.
(4) The VAR measures may incorporate empirical correlations within and across risk categories, provided that
the organization's process for measuring correlations is
sound. In the event that the VAR measures do not
incorporate empirical correlations across risk categories,
then the organization must add the separate VAR measures for the four major risk categories to determine its
aggregate VAR measure.
(e) Backtesting. (1) Beginning one year after a bank holding company starts to comply with this Appendix, it
must conduct backtesting by comparing each of its most
recent 250 business days' actual net trading profit or
loss13 with the corresponding daily VAR measures generated for internal risk measurement purposes and calibrated to a one-day holding period and a 99th percentile,
one-tailed confidence level.
(2) Once each quarter, the organization must identify the
number of exceptions, that is, the number of business
days for which the magnitude of the actual daily net
trading loss, if any, exceeds the corresponding daily
VAR measure.
(3) A bank holding company must use the multiplication
factor indicated in Table 1 of this Appendix in determining its capital charge for market risk under section
1. Multiplication Factor Based on Results of Backtesting
Number of exceptions
Multiplication factor
4 or fewer
5
6
7
8
9
10 or more
3.00
3.40
3.50
3.65
3.75
3.85
4.00
3(a)(2)(i)(B) of this Appendix until it obtains the next
quarter's backtesting results, unless the Federal Reserve
determines that a different adjustment or other action is
appropriate.
13. Actual net trading profits and losses typically include such
things as realized and unrealized gains and losses on portfolio positions as well as fee income and commissions associated with trading
activities.
929
Section 5—Specific Risk.
(a) Specific risk add-on. For purposes of section 3(a)(2)(h)
of this Appendix, a bank holding company's specific risk
add-on equals the standard specific risk capital charge
calculated under paragraph (c) of this section. If, however,
an organization can demonstrate to the Federal Reserve
that its internal model measures the specific risk of covered
debt and/or equity positions and that those measures are
included in the VAR-based capital charge in section
3(a)(2)(i) of this Appendix, then it may reduce or eliminate
its specific risk add-on under this section. The determination as to whether a model incorporates specific risk must
be made separately for covered debt and equity positions.
(1) If a model includes the specific risk of covered debt
positions but not covered equity positions (or vice versa), then the organization can reduce its specific risk
charge for the included positions under paragraph (b) of
this section. The specific risk charge for the positions not
included equals the standard specific risk capital charge
under paragraph (c) of this section.
(2) If a model addresses the specific risk of both covered
debt and equity positions, then the organization can
reduce its specific risk charge for both covered debt and
equity positions under paragraph (b) of this section. In
this case, the comparison described in paragraph (b) of
this section must be based on the total VAR-based figure
for the specific risk of debt and equity positions, taking
account of any correlations that are built into the model.
(b) VAR-based specific risk capital charge. In all cases
where a bank holding company measures specific risk in its
internal model, the total capital charge for specific risk
{i.e., the VAR-based specific risk capital charge plus the
specific risk add-on) must equal at least 50 percent of the
standard specific risk capital charge (this amount is the
minimum specific risk charge).
(1) If the portion of an organization's VAR measure that
is attributable to specific risk (multiplied by the organization's multiplication factor if required in section 3(a)(2) of this Appendix) is greater than or equal to
the minimum specific risk charge, then the organization
has no specific risk add-on and its capital charge for
specific risk is the portion included in the VAR measure.
(2) If the portion of an organization's VAR measure that
is attributable to specific risk (multiplied by the organization's multiplication factor if required in section 3(a)(2) of this Appendix) is less than the minimum
specific risk charge, then the organization's specific risk
add-on is the difference between the minimum specific
risk charge and the specific risk portion of the VAR
measure (multiplied by the multiplication factor if required in section 3(a)(2) of this Appendix).
(c) Standard specific risk capital charge. The standard
specific risk capital charge equals the sum of the components for covered debt and equity positions as follows:
(1) Covered debt positions, (i) For purposes of this
section 5, covered debt positions means fixed-rate or
floating-rate debt instruments located in the trading
930
Federal Reserve Bulletin • October 1996
account or instruments located in the trading account
with values that react primarily to changes in interest
rates, including certain non-convertible preferred
stock, convertible bonds, and instruments subject to
repurchase and lending agreements. Also included are
derivatives (including written and purchased options)
for which the underlying instrument is a covered debt
instrument that is subject to a non-zero specific risk
capital charge.
(A) For covered debt positions that are derivatives,
an organization must risk-weight (as described in
paragraph (c)(l)(iii) of this section) the market
value of the effective notional amount of the underlying debt instrument or index portfolio. Swaps
must be included as the notional position in the
underlying debt instrument or index portfolio, with
a receiving side treated as a long position and a
paying side treated as a short position; and
(B) For covered debt positions that are options,
whether long or short, an organization must riskweight (as described in paragraph (c)(l)(iii) of this
section) the market value of the effective notional
amount of the underlying debt instrument or index
multiplied by the option's delta.
(ii) An organization may net long and short covered
debt positions (including derivatives) in identical debt
issues or indices.
(iii) An organization must multiply the absolute value
2. Specific Risk Weighting Factors for Covered Debt
Positions
Category
Government
Qualifying
Other
Remaining Maturity
(contractual)
Weighting Factor
(in percent)
N/A
.00
6 months or less
over 6 months to 24
months
over 24 months
.25
1.00
N/A
8.00
1.60
of the current market value of each net long or short
covered debt position by the appropriate specific risk
weighting factor indicated in Table 2 of this Appendix. The specific risk capital charge component for
covered debt positions is the sum of the weighted
values.
(A) The government category includes all debt instruments of central governments of OECD-based
countries14 including bonds, Treasury bills, and
other short-term instruments, as well as local currency instruments of non-OECD central govern-
14. Organization for Economic Cooperation and Development
(OECD)-based countries is defined in Appendix A of this part.
ments to the extent the organization has liabilities
booked in that currency.
(B) The qualifying category includes debt instruments of U.S. government-sponsored agencies, general obligation debt instruments issued by states
and other political subdivisions of OECD-based
countries, multilateral development banks, and debt
instruments issued by U.S. depository institutions
or OECD banks that do not qualify as capital of the
issuing institution.15 This category also includes
other debt instruments, including corporate debt
and revenue instruments issued by states and other
political subdivisions of OECD countries, that are:
(7) Rated investment-grade by at least two nationally recognized credit rating services;
(2) Rated investment-grade by one nationally
recognized credit rating agency and not rated less
than investment grade by any other credit rating
agency; or
(3) Unrated, but deemed to be of comparable
investment quality by the reporting organization
and the issuer has instruments listed on a recognized stock exchange, subject to review by the
Federal Reserve.
(C) The other category includes debt instruments
that are not included in the government or qualifying categories.
(2) Covered equity positions, (i) For purposes of this
section 5, covered equity positions means equity instruments located in the trading account and instruments located in the trading account with values that
react primarily to changes in equity prices, including
voting or non-voting common stock, certain convertible bonds, and commitments to buy or sell equity
instruments. Also included are derivatives (including
written or purchased options) for which the underling
is a covered equity position.
(A) For covered equity positions that are derivatives, an organization must risk weight (as described in paragraph (c)(2)(iii) of this section) the
market value of the effective notional amount of the
underlying equity instrument or equity portfolio.
Swaps must be included as the notional position in
the underlying equity instrument or index portfolio,
with a receiving side treated as a long position and
a paying side treated as a short position; and
(B) For covered equity positions that are options,
whether long or short, an organization must risk
weight (as described in paragraph (c)(2)(iii) of this
section) the market value of the effective notional
amount of the underlying equity instrument or index multiplied by the option's delta.
15. U.S. government-sponsored agencies, multilateral development
banks, and OECD banks are defined in Appendix A of this part.
Legal Developments
(ii) An organization may net long and short covered
equity positions (including derivatives) in identical
equity issues or equity indices in the same market.16
(iii) (A) An organization must multiply the absolute
value of the current market value of each net long
or short covered equity position by a risk weighting
factor of 8.0 percent, or by 4.0 percent if the equity
is held in a portfolio that is both liquid and welldiversified.17 For covered equity positions that are
index contracts comprising a well-diversified portfolio of equity instruments, the net long or short
position is to be multiplied by a risk weighting
factor of 2.0 percent.
(B) For covered equity positions from the following
futures-related arbitrage strategies, an organization
may apply a 2.0 percent risk weighting factor to
one side (long or short) of each equity position with
the opposite side exempt from charge, subject to
review by the Federal Reserve:
(7) Long and short positions in exactly the same
index at different dates or in different market
centers; or
(2) Long and short positions in index contracts at
the same date in different but similar indices.
(C) For futures contracts on broadly-based indices
that are matched by offsetting positions in a basket
of stocks comprising the index, an organization
may apply a 2.0 percent risk weighting factor to the
futures and stock basket positions (long and short),
provided that such trades are deliberately entered
into and separately controlled, and that the basket
of stocks comprises at least 90 percent of the capitalization of the index.
(iv) The specific risk capital charge component for
covered equity positions is the sum of the weighted
values.
Part 325—Capital Maintenance
1. The authority citation for Part 325 continues to read as
follows:
16. An organization may also net positions in depository receipts
against an opposite position in the underlying equity or identical
equity in different markets, provided that the organization includes the
costs of conversion.
17. A portfolio is liquid and well-diversified if:
(1) It is characterized by a limited sensitivity to price changes of
any single equity issue or closely related group of equity issues
held in the portfolio;
(2) The volatility of the portfolio's value is not dominated by the
volatility of any individual equity issue or by equity issues from
any single industry or economic sector;
(3) It contains a large number of individual equity positions, with
no single position representing a substantial portion of the portfolio's total market value; and
(4) It consists mainly of issues traded on organized exchanges or
in well-established over-the-counter markets.
931
Authority: 12U.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, 3907, 3909, 4808;
Pub. L. 102-233, 105 Stat. 1761, 1789, 1790 (12U.S.C.
1831n note); Pub. L. 102-242, 105 Stat. 2236, 2355, 2386
(12 U.S.C. 1828 note).
2. Appendix A to Part 325 is amended in the introductory
text, by adding a new paragraph after the third undesignated paragraph to read as follows:
Appendix A to Part 325—Statement of Policy on
Risk-Based Capital
In addition, when certain banks that engage in trading
activities calculate their risk-based capital ratio under this
Appendix A, they must also refer to Appendix C of this
part, which incorporates capital charges for certain market
risks into the risk-based capital ratio. When calculating
their risk-based capital ratio under this Appendix A, such
banks are required to refer to Appendix C of this part for
supplemental rules to determine qualifying and excess
capital, calculate risk-weighted assets, calculate market
risk equivalent assets and add them to risk-weighted assets,
and calculate risk-based capital ratios as adjusted for market risk.
3. A new Appendix C is added to Part 325 to read as
follows:
Appendix C to Part 325—Risk-Based Capital for
State Non-Member Banks; Market Risk
Section 1—Purpose, Applicability, Scope, and
Effective Date.
(a) Purpose. The purpose of this Appendix is to ensure that
banks with significant exposure to market risk maintain
adequate capital to support that exposure.1 This Appendix
supplements and adjusts the risk-based capital ratio calculations under Appendix A of this part with respect to those
banks.
(b) Applicability. (1) This Appendix applies to any insured
state nonmember bank whose trading activity2 (on a
worldwide consolidated basis) equals:
(i) 10 percent or more of total assets;3 or
1. This Appendix is based on a framework developed jointly by
supervisory authorities from the countries represented on the Basle
Committee on Banking Supervision and endorsed by the Group of Ten
Central Bank Governors. The framework is described in a Basle
Committee paper entitled "Amendment to the Capital Accord to
Incorporate Market Risk," January 1996.
2. Trading activity means the gross sum of trading assets and
liabilities as reported in the bank's most recent quarterly Consolidated
Report of Condition and Income (Call Report).
3. Total assets means quarter-end total assets as reported in the
bank's most recent Call Report.
932
Federal Reserve Bulletin • October 1996
(ii) $1 billion or more.
(2) The FDIC may additionally apply this Appendix to
any insured state nonmember bank if the FDIC deems it
necessary or appropriate for safe and sound banking
practices.
(3) The FDIC may exclude an insured state nonmember
bank otherwise meeting the criteria of paragraph (b)(1)
of this section from coverage under this Appendix if it
determines the bank meets such criteria as a consequence of accounting, operational, or similar considerations, and the FDIC deems it consistent with safe and
sound banking practices.
(c) Scope. The capital requirements of this Appendix support market risk associated with a bank's covered positions.
(d) Effective date. This Appendix is effective as of January 1, 1997. Compliance is not mandatory until January 1,
1998. Subject to supervisory approval, a bank may opt to
comply with this Appendix as early as January 1, 1997.4
ratio to fall or remain below the minimum required under
Appendix A of this part; and does not contain and is not
covered by any covenants, terms, or restrictions that are
inconsistent with safe and sound banking practices,
(e) Value-at-risk (VAR) means the estimate of the maximum amount that the value of covered positions could
decline during a fixed holding period within a stated confidence level, measured in accordance with section 4 of this
Appendix.
Section 3—Adjustments to the Risk-Based Capital
Ratio Calculations.
(a) Covered positions means all positions in a bank's
trading account, and all foreign exchange5 and commodity
positions, whether or not in the trading account.6 Positions
include on-balance-sheet assets and liabilities and offbalance-sheet items. Securities subject to repurchase and
lending agreements are included as if they are still owned
by the lender.
(b) Market risk means the risk of loss resulting from
movements in market prices. Market risk consists of general market risk and specific risk components.
(1) General market risk means changes in the market
value of covered positions resulting from broad market
movements, such as changes in the general level of
interest rates, equity prices, foreign exchange rates, or
commodity prices.
(2) Specific risk means changes in the market value of
specific positions due to factors other than broad market
movements and includes such risk as the credit risk of an
instrument's issuer.
(c) Tier 1 and Tier 2 capital are defined in Appendix A of
this part.
(d) Tier 3 capital is subordinated debt that is unsecured; is
fully paid up; has an original maturity of at least two years;
is not redeemable before maturity without prior approval
by the FDIC; includes a lock-in clause precluding payment
of either interest or principal (even at maturity) if the
payment would cause the issuing bank's risk-based capital
(a) Risk-based capital ratio denominator. A bank subject
to this Appendix shall calculate its risk-based capital ratio
denominator as follows:
(1) Adjusted risk-weighted assets. Calculate adjusted
risk-weighted assets, which equals risk-weighted assets
(as determined in accordance with Appendix A of this
part), excluding the risk-weighted amounts of all covered positions (except foreign exchange positions outside the trading account and over-the-counter derivative
positions).7
(2) Measure for market risk. Calculate the measure for
market risk, which equals the sum of the VAR-based
capital charge, the specific risk add-on (if any), and the
capital charge for de minimis exposures (if any).
(i) VAR-based capital charge. The VAR-based capital
charge equals the higher of:
(A) The previous day's VAR measure; or
(B) The average of the daily VAR measures for
each of the preceding 60 business days multiplied
by three, except as provided in section 4(e) of this
Appendix;
(ii) Specific risk add-on. The specific risk add-on is
calculated in accordance with section 5 of this Appendix; and
(iii) Capital charge for de minimis exposure. The
capital charge for de minimis exposure is calculated
in accordance with section 4(a) of this Appendix.
(3) Market risk equivalent assets. Calculate market risk
equivalent assets by multiplying the measure for market
risk (as calculated in paragraph (a)(2) of this section) by
12.5.
(4) Denominator calculation. Add market risk equivalent assets (as calculated in paragraph (a)(3) of this
section) to adjusted risk-weighted assets (as calculated
in paragraph (a)(1) of this section). The resulting sum is
the bank's risk-based capital ratio denominator.
(b) Risk-based capital ratio numerator. A bank subject to
this Appendix shall calculate its risk-based capital ratio
numerator by allocating capital as follows:
4. A bank that voluntarily complies with the final rule prior to
January 1, 1998, must comply with all of its provisions.
5. Subject to FDIC review, a bank may exclude structural positions
in foreign currencies from its covered positions.
6. The term trading account is defined in the instructions to the Call
Report.
7. Foreign exchange positions outside the trading account and all
over-the-counter derivative positions, whether or not in the trading
account, must be included in adjusted risk weighted assets as determined in Appendix A of this part.
Section 2—Definitions.
For purposes of this Appendix, the following definitions
apply:
Legal Developments
(1) Credit risk allocation. Allocate Tier 1 and Tier 2
capital equal to 8.0 percent of adjusted risk-weighted
assets (as calculated in paragraph (a)(1) of this section).8
(2) Market risk allocation. Allocate Tier 1, Tier 2, and
Tier 3 capital equal to the measure for market risk as
calculated in paragraph (a)(2) of this section. The sum of
Tier 2 and Tier 3 capital allocated for market risk must
not exceed 250 percent of Tier 1 capital allocated for
market risk. (This requirement means that Tier 1 capital
allocated in this paragraph (b)(2) must equal at least 28.6
percent of the measure for market risk.)
(3) Restrictions, (i) The sum of Tier 2 capital (both
allocated and excess) and Tier 3 capital (allocated in
paragraph (b)(2) of this section) may not exceed
100 percent of Tier 1 capital (both allocated and
excess).9
(ii) Term subordinated debt (and intermediate-term
preferred stock and related surplus) included in Tier 2
capital (both allocated and excess) may not exceed
50 percent of Tier 1 capital (both allocated and excess).
(4) Numerator calculation. Add Tier 1 capital (both
allocated and excess), Tier 2 capital (both allocated and
excess), and Tier 3 capital (allocated under paragraph
(b)(2) of this section). The resulting sum is the bank's
risk-based capital ratio numerator.
Section A—Internal Models.
(a) General. For risk-based capital purposes, a bank subject to this Appendix must use its internal model to measure its daily VAR, in accordance with the requirements of
this section.10 The FDIC may permit a bank to use alternative techniques to measure the market risk of de minimis
exposures so long as the techniques adequately measure
associated market risk.
(b) Qualitative requirements. A bank subject to this Appendix must have a risk management system that meets the
following minimum qualitative requirements:
(1) The bank must have a risk control unit that reports
directly to senior management and is independent from
business trading units.
8. A bank may not allocate Tier 3 capital to support credit risk (as
calculated under Appendix A of this part).
9. Excess Tier 1 capital means Tier 1 capital that has not been
allocated in paragraphs (b)(1) and (b)(2) of this section. Excess Tier 2
capital means Tier 2 capital that has not been allocated in paragraph
(b)(1) and (b)(2) of this section, subject to the restrictions in paragraph
(b)(3) of this section.
10. A bank's internal model may use any generally accepted measurement techniques, such as variance-covariance models, historical
simulations, or Monte Carlo simulations. However, the level of sophistication and accuracy of a bank's internal model must be commensurate with the nature and size of its covered positions. A bank that
modifies its existing modeling procedures to comply with the requirements of this Appendix for risk-based capital purposes should, nonetheless, continue to use the internal model it considers most appropriate in evaluating risks for other purposes.
933
(2) The bank's internal risk measurement model must be
integrated into the daily management process.
(3) The bank's policies and procedures must identify,
and the bank must conduct, appropriate stress tests and
backtests.11 The bank's policies and procedures must
identify the procedures to follow in response to the
results of such tests.
(4) The bank must conduct independent reviews of its
risk measurement and risk management systems at least
annually.
(c) Market risk factors. The bank's internal model must
use risk factors sufficient to measure the market risk inherent in all covered positions. The risk factors must address
interest rate risk,12 equity price risk, foreign exchange rate
risk, and commodity price risk.
(d) Quantitative requirements. For regulatory capital purposes, VAR measures must meet the following quantitative
requirements:
(1) The VAR measures must be calculated on a daily
basis using a 99 percent, one-tailed confidence level
with a price shock equivalent to a ten-business day
movement in rates and prices. In order to calculate VAR
measures based on a ten-day price shock, the bank may
either calculate ten-day figures directly or convert VAR
figures based on holding periods other than ten days to
the equivalent of a ten-day holding period (for instance,
by multiplying a one-day VAR measure by the square
root of ten).
(2) The VAR measures must be based on an historical
observation period (or effective observation period for a
bank using a weighting scheme or other similar method)
of at least one year. The bank must update data sets at
least once every three months or more frequently as
market conditions warrant.
(3) The VAR measures must include the risks arising
from the non-linear price characteristics of options positions and the sensitivity of the market value of the
positions to changes in the volatility of the underlying
rates or prices. A bank with a large or complex options
portfolio must measure the volatility of options positions
by different maturities.
(4) The VAR measures may incorporate empirical correlations within and across risk categories, provided that
the bank's process for measuring correlations is sound.
In the event that the VAR measures do not incorporate
empirical correlations across risk categories, then the
bank must add the separate VAR measures for the four
11. Stress tests provide information about the impact of adverse
market events on a bank's covered positions. Backtests provide information about the accuracy of an internal model by comparing a bank's
daily VAR measures to its corresponding daily trading profits and
losses.
12. For material exposures in the major currencies and markets,
modeling techniques must capture spread risk and must incorporate
enough segments of the yield curve—at least six—to capture differences in volatility and less than perfect correlation of rates along the
yield curve.
934
Federal Reserve Bulletin • October 1996
major risk categories to determine its aggregate VAR
measure.
(e) Backtesting. (1) Beginning one year after a bank starts
to comply with this Appendix, a bank must conduct
backtesting by comparing each of its most recent 250
business days' actual net trading profit or loss13 with the
corresponding daily VAR measures generated for internal risk measurement purposes and calibrated to a oneday holding period and a 99 percent, one- tailed confidence level.
(2) Once each quarter, the bank must identify the number of exceptions, that is, the number of business days
for which the magnitude of the actual daily net trading
loss, if any, exceeds the corresponding daily VAR measure.
(3) A bank must use the multiplication factor indicated
in Table 1 of this Appendix in determining its capital
charge for market risk under section 3(a)(2)(i)(B) of this
Appendix until it obtains the next quarter's backtesting
results, unless the FDIC determines that a different adjustment or other action is appropriate.
1. Multiplication Factor Based on Results of Backtesting
Number of exceptions
Multiplication factor
4 or fewer
5
6
7
8
9
10 or more
3.00
3.40
3.50
3.65
3.75
3.85
4.00
Section 5—Specific Risk.
(a) Specific risk add-on. For purposes of section 3(a)(2)(ii)
of this Appendix, a bank's specific risk add-on equals the
standard specific risk capital charge calculated under paragraph (c) of this section. If, however, a bank can demonstrate to the FDIC that its internal model measures the
specific risk of covered debt and/or equity positions and
that those measures are included in the VAR-based capital
charge in section 3(a)(2)(i) of this Appendix, then the bank
may reduce or eliminate its specific risk add-on under this
section. The determination as to whether a model incorporates specific risk must be made separately for covered
debt and equity positions.
(1) If a model includes the specific risk of covered debt
positions but not covered equity positions (or vice versa), then the bank can reduce its specific risk charge for
the included positions under paragraph (b) of this section. The specific risk charge for the positions not in-
13. Actual net trading profits and losses typically include such
things as realized and unrealized gains and losses on portfolio positions as well as fee income and commissions associated with trading
activities.
eluded equals the standard specific risk capital charge
under paragraph (c) of this section.
(2) If a model addresses the specific risk of both covered
debt and equity positions, then the bank can reduce its
specific risk charge for both covered debt and equity
positions under paragraph (b) of this section. In this
case, the comparison described in paragraph (b) of this
section must be based on the total VAR-based figure for
the specific risk of debt and equity positions, taking into
account any correlations that are built into the model.
(b) VAR-based specific risk capital charge. In all cases
where a bank measures specific risk in its internal model,
the total capital charge for specific risk (i.e., the VARbased specific risk capital charge plus the specific risk
add-on) must equal at least 50 percent of the standard
specific risk capital charge (this amount is the minimum
specific risk charge).
(1) If the portion of a bank's VAR measure that is
attributable to specific risk (multiplied by the bank's
multiplication factor if required in section 3(a)(2) of this
Appendix) is greater than or equal to the minimum
specific risk charge, then the bank has no specific risk
add-on and its capital charge for specific risk is the
portion included in the VAR measure.
(2) If the portion of a bank's VAR measure that is
attributable to specific risk (multiplied by the bank's
multiplication factor if required in section 3(a)(2) of this
Appendix) is less than the minimum specific risk charge,
then the bank's specific risk add-on is the difference
between the minimum specific risk charge and the specific risk portion of the VAR measure (multiplied by the
bank's multiplication factor if required in section 3(a)(2)
of this Appendix).
(c) Standard specific risk capital charge. The standard
specific risk capital charge equals the sum of the components for covered debt and equity positions as follows:
(1) Covered debt positions, (i) For purposes of this
section 5, covered debt positions means fixed-rate or
floating-rate debt instruments located in the trading
account and instruments located in the trading account
with values that react primarily to changes in interest
rates, including certain non-convertible preferred
stock, convertible bonds, and instruments subject to
repurchase and lending agreements. Also included are
derivatives (including written and purchased options)
for which the underlying instrument is a covered debt
instrument that is subject to a non-zero specific risk
capital charge.
(A) For covered debt positions that are derivatives,
a bank must risk-weight (as described in paragraph (c)(l)(iii) of this section) the market value of
the effective notional amount of the underlying debt
instrument or index portfolio. Swaps must be included as the notional position in the underlying
debt instrument or index portfolio, with a receiving
side treated as a long position and a paying side
treated as a short position; and
(B) For covered debt positions that are options,
Legal Developments
whether long or short, a bank must risk-weight (as
described in paragraph (c)(l)(iii) of this section) the
market value of the effective notional amount of the
underlying debt instrument or index multiplied by
the option's delta.
(ii) A bank may net long and short covered debt
positions (including derivatives) in identical debt issues or indices.
(iii) A bank must multiply the absolute value of the
current market value of each net long or short covered
debt position by the appropriate specific risk weighting factor indicated in Table 2 of this Appendix. The
specific risk capital charge component for covered
debt positions is the sum of the weighted values.
2. Specific Risk Weighting Factors for Covered Debt
Positions
Category
Remaining Maturity
(contractual)
Weighting Factor
(in percent)
N/A
0.00
6 months or less
over 6 months to 24
months
over 24 months
0.25
1.00
N/A
8.00
Government
Qualifying
Other
1.60
(A) The government category includes all debt instruments of central governments of OECD-based
countries14 including bonds, Treasury bills, and
other short-term instruments, as well as local currency instruments of non-OECD central governments to the extent the bank has liabilities booked
in that currency.
(B) The qualifying category includes debt instruments of U.S. government-sponsored agencies, general obligation debt instruments issued by states
and other political subdivisions of OECD-based
countries, multilateral development banks, and debt
instruments issued by U.S. depository institutions
or OECD-banks that do not qualify as capital of the
issuing institution.15 This category also includes
other debt instruments, including corporate debt
and revenue instruments issued by states and other
political subdivisions of OECD countries, that are:
(7) Rated investment-grade by at least two nationally recognized credit rating services;
(2) Rated investment-grade by one nationally
recognized credit rating agency and not rated less
than investment-grade by any other credit rating
agency; or
(3) Unrated, but deemed to be of comparable
investment quality by the reporting bank and the
14. Organization for Economic Cooperation and Development
(OECD)-based countries is defined in Appendix A of this part.
15. U.S. government-sponsored agencies, multilateral development
banks, and OECD banks are defined in Appendix A of this part.
935
issuer has instruments listed on a recognized
stock exchange, subject to review by the FDIC.
(C) The other category includes debt instruments
that are not included in the government or qualifying categories.
(2) Covered equity positions, (i) For purposes of this
section 5, covered equity positions means equity instruments located in the trading account and instruments located in the trading account with values that
react primarily to changes in equity prices, including
voting or non-voting common stock, certain convertible bonds, and commitments to buy or sell equity
instruments. Also included are derivatives (including
written and purchased options) for which the underlying is a covered equity position.
(A) For covered equity positions that are derivatives, a bank must risk weight (as described in
paragraph (c)(2)(iii) of this section) the market
value of the effective notional amount of the underlying equity instrument or equity portfolio. Swaps
must be included as the notional position in the
underlying equity instrument or index portfolio,
with a receiving side treated as a long position and
a paying side treated as a short position; and
(B) For covered equity positions that are options,
whether long or short, a bank must risk weight (as
described in paragraph (c)(2)(iii) of this section) the
market value of the effective notional amount of the
underlying equity instrument or index multiplied by
the option's delta.
(ii) A bank may net long and short covered equity
positions (including derivatives) in identical equity
issues or equity indices in the same market.16
(iii) (A) A bank must multiply the absolute value of
the current market value of each net long or short
covered equity position by a risk weighting factor
of 8.0 percent, or by 4.0 percent if the equity is held
in a portfolio that is both liquid and welldiversified.17 For covered equity positions that are
index contracts comprising a well-diversified portfolio of equity instruments, the net long or short
position is multiplied by a risk weighting factor of
2.0 percent.
16. A bank may also net positions in depository receipts against an
opposite position in the underlying equity or identical equity in
different markets, provided that the bank includes the costs of conversion.
17. A portfolio is liquid and well-diversified if:
(1) It is characterized by a limited sensitivity to price changes of
any single equity issue or closely related group of equity issues
held in the portfolio;
(2) The volatility of the portfolio's value is not dominated by the
volatility of any individual equity issue or by equity issues from
any single industry or economic sector;
(3) It contains a large number of individual equity positions, with
no single position representing a substantial portion of the portfolio's total market value; and
(4) It consists mainly of issues traded on organized exchanges or
in well-established over-the-counter markets.
936
Federal Reserve Bulletin • October 1996
(B) For covered equity positions from the following
futures-related arbitrage strategies, a bank may apply a 2.0 percent risk weighting factor to one side
(long or short) of each position with the opposite
side exempt from charge, subject to review by the
FDIC:
(/) Long and short positions in exactly the same
index at different dates or in different market
centers; or
(2) Long and short positions in index contracts at
the same date in different but similar indices.
(C) For futures contracts on broadly-based indices
that are matched by offsetting positions in a basket
of stocks comprising the index, a bank may apply a
2.0 percent risk weighting factor to the futures and
stock basket positions (long and short), provided
that such trades are deliberately entered into and
separately controlled, and that the basket of stocks
comprises at least 90 percent of the capitalization
of the index.
(iv) The specific risk capital charge component for
covered equity positions is the sum of the weighted
values.
JOINT FINAL RULE—AMENDMENT
TO REGULATION
H
The Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Board), Federal Deposit Insurance Corporation (FDIC), Office of Thrift Supervision (OTS). and National Credit Union Administration
(NCUA) are amending their regulations, and the Farm
Credit Administration (FCA) is issuing new regulations,
regarding loans in areas having special flood hazards. This
action is required by statute to implement the provisions of
the National Flood Insurance Reform Act of 1994. The
joint final rules establish new escrow requirements for
flood insurance premiums, add references to the statutory
authority and the requirement for lenders and servicers to
''force place" flood insurance under certain circumstances,
enhance flood hazard notice requirements, set forth new
authority for lenders to charge fees for determining whether
a property is located in a special flood hazard area, and
contain various other provisions necessary to implement
the National Flood Insurance Reform Act of 1994.
Effective October 1, 1996; except for Part 614, which
will be effective October 3, 1996, and Part 760, which will
be effective November 1, 1996, 12C.F.R. Parts 22, 208,
339, 563, 572, 614, and 760 are amended as follows:
Part 22—Loans in Areas Having Special Flood
Hazards
Section
22.1—Authority, purpose, and scope.
22.2—Definitions.
22.3—Requirement to purchase flood insurance where
available.
22.4—Exemptions.
22.5—Escrow requirement.
22.6—Required use of standard flood hazard determination
form.
22.7—Forced placement of flood insurance.
22.8—Determination fees.
22.9—Notice of special flood hazards and availability of
Federal disaster relief assistance.
22.10—Notice of servicer's identity.
Appendix A to Part 22—Sample Form of Notice of
Special Flood Hazards and Availability of Federal
Disaster Relief Assistance
Authority. 12U.S.C. 93a; 42 U.S.C. 4012a, 4104a, 4104b,
4106, and 4128.
Section 22.1—Authority, purpose, and scope.
(a) Authority. This part is issued pursuant to 12 U.S.C. 93a
and 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128.
(b) Purpose. The purpose of this part is to implement the
requirements of the National Flood Insurance Act of 1968
and the Flood Disaster Protection Act of 1973, as amended
(42 U.S.C. 4001-4129).
(c) Scope. This part, except for sections 22.6 and 22.8,
applies to loans secured by buildings or mobile homes
located or to be located in areas determined by the Director
of the Federal Emergency Management Agency to have
special flood hazards. Sections 22.6 and 22.8 apply to loans
secured by buildings or mobile homes, regardless of location.
Section 22.2—Definitions.
(a) Act means the National Flood Insurance Act of 1968, as
amended (42 U.S.C. 4001-4129).
(b) Bank means a national bank or a bank located in the
District of Columbia and subject to the supervision of the
Comptroller of the Currency.
(c) Building means a walled and roofed structure, other
than a gas or liquid storage tank, that is principally above
ground and affixed to a permanent site, and a walled and
roofed structure while in the course of construction, alteration, or repair.
(d) Community means a State or a political subdivision of a
State that has zoning and building code jurisdiction over a
particular area having special flood hazards.
(e) Designated loan means a loan secured by a building or
mobile home that is located or to be located in a special
flood hazard area in which flood insurance is available
under the Act.
(f) Director of FEM A means the Director of the Federal
Emergency Management Agency.
(g) Mobile home means a structure, transportable in one or
more sections, that is built on a permanent chassis and
Legal Developments
designed for use with or without a permanent foundation
when attached to the required utilities. The term mobile
home does not include a recreational vehicle. For purposes
of this part, the term mobile home means a mobile home on
a permanent foundation. The term mobile home includes a
manufactured home as that term is used in the NFIP.
(h) NFIP means the National Flood Insurance Program
authorized under the Act.
(i) Residential improved real estate means real estate upon
which a home or other residential building is located or to
be located.
(j) Servicer means the person responsible for:
(1) Receiving any scheduled, periodic payments from a
borrower under the terms of a loan, including amounts
for taxes, insurance premiums, and other charges with
respect to the property securing the loan; and
(2) Making payments of principal and interest and any
other payments from the amounts received from the
borrower as may be required under the terms of the loan.
(k) Special flood hazard area means the land in the flood
plain within a community having at least a one percent
chance of flooding in any given year, as designated by the
Director of FEMA.
(1) Table funding means a settlement at which a loan is
funded by a contemporaneous advance of loan funds and
an assignment of the loan to the person advancing the
funds.
Section 22.3—Requirement to purchase flood
insurance where available.
(a) In general. A bank shall not make, increase, extend, or
renew any designated loan unless the building or mobile
home and any personal property securing the loan is covered by flood insurance for the term of the loan. The
amount of insurance must be at least equal to the lesser of
the outstanding principal balance of the designated loan or
the maximum limit of coverage available for the particular
type of property under the Act. Flood insurance coverage
under the Act is limited to the overall value of the property
securing the designated loan minus the value of the land on
which the property is located.
(b) Table funded loans. A bank that acquires a loan from a
mortgage broker or other entity through table funding shall
be considered to be making a loan for the purposes of this
part.
Section 22.4—Exemptions.
The flood insurance requirement prescribed by section 22.3
does not apply with respect to:
(a) Any State-owned property covered under a policy of
self-insurance satisfactory to the Director of FEMA, who
publishes and periodically revises the list of States falling
within this exemption; or
(b) Property securing any loan with an original principal
balance of $5,000 or less and a repayment term of one year
or less.
937
Section 22.5—Escrow requirement.
If a bank requires the escrow of taxes, insurance premiums,
fees, or any other charges for a loan secured by residential
improved real estate or a mobile home that is made,
increased, extended, or renewed after October 1, 1996, the
bank shall also require the escrow of all premiums and fees
for any flood insurance required under section 22.3. The
bank, or a servicer acting on behalf of the bank, shall
deposit the flood insurance premiums on behalf of the
borrower in an escrow account. This escrow account will
be subject to escrow requirements adopted pursuant to
section 10 of the Real Estate Settlement Procedures Act of
1974 (12 U.S.C. 2609) (RESPA), which generally limits
the amount that may be maintained in escrow accounts for
certain types of loans and requires escrow account statements for those accounts, only if the loan is otherwise
subject to RESPA. Following receipt of a notice from the
Director of FEMA or other provider of flood insurance that
premiums are due, the bank, or a servicer acting on behalf
of the bank, shall pay the amount owed to the insurance
provider from the escrow account by the date when such
premiums are due.
Section 22.6—Required use of standard flood
hazard determination form.
(a) Use ofform. A bank shall use the standard flood hazard
determination form developed by the Director of FEMA
(as set forth in Appendix A of 44 C.F.R. Part 65) when
determining whether the building or mobile home offered
as collateral security for a loan is or will be located in a
special flood hazard area in which flood insurance is available under the Act. The standard flood hazard determination form may be used in a printed, computerized, or
electronic manner.
(b) Retention of form. A bank shall retain a copy of the
completed standard flood hazard determination form, in
either hard copy or electronic form, for the period of time
the bank owns the loan.
Section 22.7—Forced placement of flood insurance.
If a bank, or a servicer acting on behalf of the bank,
determines at any time during the term of a designated loan
that the building or mobile home and any personal property
securing the designated loan is not covered by flood insurance or is covered by flood insurance in an amount less
than the amount required under section 22.3, then the bank
or its servicer shall notify the borrower that the borrower
should obtain flood insurance, at the borrower's expense,
in an amount at least equal to the amount required under
section 22.3, for the remaining term of the loan. If the
borrower fails to obtain flood insurance within 45 days
after notification, then the bank or its servicer shall purchase insurance on the borrower's behalf. The bank or its
servicer may charge the borrower for the cost of premiums
and fees incurred in purchasing the insurance.
938
Federal Reserve Bulletin • October 1996
Section 22.8—Determination fees.
(a) General. Notwithstanding any Federal or State law
other than the Flood Disaster Protection Act of 1973 as
amended (42 U.S.C. 4001-4129), any bank, or a servicer
acting on behalf of the bank, may charge a reasonable fee
for determining whether the building or mobile home securing the loan is located or will be located in a special
flood hazard area. A determination fee may also include,
but is not limited to, a fee for life-of-loan monitoring.
(b) Borrower fee. The determination fee authorized by
paragraph (a) of this section may be charged to the borrower if the determination:
(1) Is made in connection with a making, increasing,
extending, or renewing of the loan that is initiated by the
borrower;
(2) Reflects the Director of FEMA's revision or updating
of floodplain areas or flood-risk zones;
(3) Reflects the Director of FEMA's publication of a
notice or compendium that:
(i) Affects the area in which the building or mobile
home securing the loan is located; or
(ii) By determination of the Director of FEMA, may
reasonably require a determination whether the building or mobile home securing the loan is located in a
special flood hazard area; or
(4) Results in the purchase of flood insurance coverage
by the bank or its servicer on behalf of the borrower
under section 22.7.
(c) Purchaser or transferee fee. The determination fee
authorized by paragraph (a) of this section may be charged
to the purchaser or transferee of a loan in the case of the
sale or transfer of the loan.
Section 22.9—Notice of special flood hazards and
availability of Federal disaster relief assistance.
(a) Notice requirement. When a bank makes, increases,
extends, or renews a loan secured by a building or a mobile
home located or to be located in a special flood hazard
area, the bank shall mail or deliver a written notice to the
borrower and to the servicer in all cases whether or not
flood insurance is available under the Act for the collateral
securing the loan.
(b) Contents of notice. The written notice must include the
following information:
(1) A warning, in a form approved by the Director of
FEMA, that the building or the mobile home is or will
be located in a special flood hazard area;
(2) A description of the flood insurance purchase requirements set forth in section 102(b) of the Flood
Disaster Protection Act of 1973, as amended (42 U.S.C.
4012a(b));
(3) A statement, where applicable, that flood insurance
coverage is available under the NFIP and may also be
available from private insurers; and
(4) A statement whether Federal disaster relief assistance may be available in the event of damage to the
building or mobile home caused by flooding in a Federally declared disaster.
(c) Timing of notice. The bank shall provide the notice
required by paragraph (a) of this section to the borrower
within a reasonable time before the completion of the
transaction, and to the servicer as promptly as practicable
after the bank provides notice to the borrower and in any
event no later than the time the bank provides other similar
notices to the servicer concerning hazard insurance and
taxes. Notice to the servicer may be made electronically or
may take the form of a copy of the notice to the borrower.
(d) Record of receipt. The bank shall retain a record of the
receipt of the notices by the borrower and the servicer for
the period of time the bank owns the loan.
(e) Alternate method of notice. Instead of providing the
notice to the borrower required by paragraph (a) of this
section, a bank may obtain satisfactory written assurance
from a seller or lessor that, within a reasonable time before
the completion of the sale or lease transaction, the seller or
lessor has provided such notice to the purchaser or lessee.
The bank shall retain a record of the written assurance
from the seller or lessor for the period of time the bank
owns the loan.
(f) Use of prescribed form of notice. A bank will be
considered to be in compliance with the requirement for
notice to the borrower of this section by providing written
notice to the borrower containing the language presented in
Appendix A to this part within a reasonable time before the
completion of the transaction. The notice presented in
Appendix A to this part satisfies the borrower notice requirements of the Act.
Section 22.10—Notice of servicer's identity.
(a) Notice requirement. When a bank makes, increases,
extends, renews, sells, or transfers a loan secured by a
building or mobile home located or to be located in a
special flood hazard area, the bank shall notify the Director
of FEMA (or the Director's designee) in writing of the
identity of the servicer of the loan. The Director of FEMA
has designated the insurance provider to receive the bank's
notice of the servicer's identity. This notice may be provided electronically if electronic transmission is satisfactory to the Director of FEMA's designee.
(b) Transfer of servicing rights. The bank shall notify the
Director of FEMA (or the Director's designee) of any
change in the servicer of a loan described in paragraph (a)
of this section within 60 days after the effective date of the
change. This notice may be provided electronically if electronic transmission is satisfactory to the Director of
FEMA's designee. Upon any change in the servicing of a
loan described in paragraph (a) of this section, the duty to
provide notice under this paragraph (b) shall transfer to the
transferee servicer.
Legal Developments
Appendix A to Part 22—Sample Form of Notice of
Special Flood Hazards and Availability of Federal
Disaster Relief Assistance
We are giving you this notice to inform you that: The
building or mobile home securing the loan for which you
have applied is or will be located in an area with special
flood hazards. The area has been identified by the Director
of the Federal Emergency Management Agency (FEMA)
as a special flood hazard area using FEMA's Flood Insurance Rate Map or the Flood Hazard Boundary Map for the
following community:
.
This area has a one percent (1%) chance of a flood equal to
or exceeding the base flood elevation (a 100-year flood) in
any given year. During the life of a 30-year mortgage loan,
the risk of a 100-year flood in a special flood hazard area is
26 percent (26%). Federal law allows a lender and borrower jointly to request the Director of FEMA to review
the determination of whether the property securing the loan
is located in a special flood hazard area. If you would like
to make such a request, please contact us for further
information.
The community in which the property securing the
loan is located participates in the National Flood Insurance
Program (NFIP). Federal law will not allow us to make you
the loan that you have applied for if you do not purchase
flood insurance. The flood insurance must be maintained
for the life of the loan. If you fail to purchase or renew
flood insurance on the property, Federal law authorizes and
requires us to purchase the flood insurance for you at your
expense.
• Flood insurance coverage under the NFIP may be
purchased through an insurance agent who will obtain the
policy either directly through the NFIP or through an
insurance company that participates in the NFIP. Flood
insurance also may be available from private insurers that
do not participate in the NFIP.
• At a minimum, flood insurance purchased must cover
the lesser of.
(1) The outstanding principal balance of the loan; or
(2) The maximum amount of coverage allowed for the
type of property under the NFIP.
Flood insurance coverage under the NFIP is limited to
the overall value of the property securing the loan minus
the value of the land on which the property is located.
• Federal disaster relief assistance (usually in the form
of a low-interest loan) may be available for damages
incurred in excess of your flood insurance if your community's participation in the NFIP is in accordance with NFIP
requirements.
Flood insurance coverage under the NFIP is not
available for the property securing the loan because the
community in which the property is located does not
participate in the NFIP. In addition, if the non-participating
community has been identified for at least one year as
containing a special flood hazard area, properties located in
the community will not be eligible for Federal disaster
939
relief assistance in the event of a Federally declared flood
disaster.
PART 208—MEMBERSHIP
OF STATE BANKING
INSTITUTIONS IN THE FEDERAL RESERVE SYSTEM
(REGULATION H)
1. The authority citation for Part 208 is revised to read as
follows:
Authority. 12 U.S.C. 36, 248(a), 248(c), 321-338a, 37Id,
461, 481-486, 601, 611, 1814, 1823(j), 1828(o), 1831o,
183lp-1, 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.
Section 208.8(e) [Removed and Reserved]
2. In section 208.8, paragraph (e) is removed and reserved,
and APPENDIX A— SAMPLE NOTICES is removed.
3. A new section 208.23 and its Appendix A are added at
the end of subpart A to read as follows:
Section 208.23—Loans in areas having special
flood hazards.
(a) Purpose and scope—(1) Purpose. The purpose of this
section is to implement the requirements of the National
Flood Insurance Act of 1968 and the Flood Disaster
Protection Act of 1973, as amended (42 U.S.C. 40014129).
(2) Scope. This section, except for paragraphs (f) and (h)
of this section, applies to loans secured by buildings or
mobile homes located or to be located in areas determined by the Director of the Federal Emergency Management Agency to have special flood hazards. Paragraphs (f) and (h) of this section apply to loans secured
by buildings or mobile homes, regardless of location.
(b) Definitions. (1) Act means the National Flood Insurance Act of 1968, as amended (42 U.S.C. 4001-4129).
(2) Building means a walled and roofed structure, other
than a gas or liquid storage tank, that is principally
above ground and affixed to a permanent site, and a
walled and roofed structure while in the course of construction, alteration, or repair.
(3) Community means a State or a political subdivision
of a State that has zoning and building code jurisdiction
over a particular area having special flood hazards.
(4) Designated loan means a loan secured by a building
or mobile home that is located or to be located in a
special flood hazard area in which flood insurance is
available under the Act.
(5) Director of FEMA means the Director of the Federal
Emergency Management Agency.
(6) Mobile home means a structure, transportable in one
or more sections, that is built on a permanent chassis and
940
Federal Reserve Bulletin • October 1996
designed for use with or without a permanent foundation
when attached to the required utilities. The term mobile
home does not include a recreational vehicle. For purposes of this section, the term mobile home means a
mobile home on a permanent foundation. The term
mobile home includes a manufactured home as that term
is used in the NFIR
(7) NFIP means the National Flood Insurance Program
authorized under the Act.
(8) Residential improved real estate means real estate
upon which a home or other residential building is
located or to be located.
(9) Servicer means the person responsible for:
(i) Receiving any scheduled, periodic payments from
a borrower under the terms of a loan, including
amounts for taxes, insurance premiums, and other
charges with respect to the property securing the loan;
and
(ii) Making payments of principal and interest and
any other payments from the amounts received from
the borrower as may be required under the terms of
the loan.
(10) Special flood hazard area means the land in the
flood plain within a community having at least a one
percent chance of flooding in any given year, as designated by the Director of FEMA.
(11) Table funding means a settlement at which a loan is
funded by a contemporaneous advance of loan funds and
an assignment of the loan to the person advancing the
funds.
(c) Requirement to purchase flood insurance where
available—
(1) In general. A state member bank shall not make,
increase, extend, or renew any designated loan unless
the building or mobile home and any personal property
securing the loan is covered by flood insurance for the
term of the loan. The amount of insurance must be at
least equal to the lesser of the outstanding principal
balance of the designated loan or the maximum limit of
coverage available for the particular type of property
under the Act. Flood insurance coverage under the Act is
limited to the overall value of the property securing the
designated loan minus the value of the land on which the
property is located.
(2) Table funded loans. A state member bank that acquires a loan from a mortgage broker or other entity
through table funding shall be considered to be making a
loan for the purposes of this section.
(d) Exemptions. The flood insurance requirement prescribed by paragraph (c) of this section does not apply with
respect to:
(1) Any State-owned property covered under a policy of
self-insurance satisfactory to the Director of FEMA,
who publishes and periodically revises the list of States
falling within this exemption; or
(2) Property securing any loan with an original principal
balance of $5,000 or less and a repayment term of one
year or less.
(e) Escrow requirement. If a state member bank requires
the escrow of taxes, insurance premiums, fees, or any other
charges for a loan secured by residential improved real
estate or a mobile home that is made, increased, extended,
or renewed after October 1, 1996, the state member bank
shall also require the escrow of all premiums and fees for
any flood insurance required under paragraph (c) of this
section. The state member bank, or a servicer acting on its
behalf, shall deposit the flood insurance premiums on
behalf of the borrower in an escrow account. This escrow
account will be subject to escrow requirements adopted
pursuant to section 10 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2609) (RESPA), which generally limits the amount that may be maintained in escrow
accounts for certain types of loans and requires escrow
account statements for those accounts, only if the loan is
otherwise subject to RESPA. Following receipt of a notice
from the Director of FEMA or other provider of flood
insurance that premiums are due, the state member bank,
or a servicer acting on its behalf, shall pay the amount
owed to the insurance provider from the escrow account by
the date when such premiums are due.
(f) Required use of standard flood hazard determination
form—
(1) Use of form. A state member bank shall use the
standard flood hazard determination form developed by
the Director of FEMA (as set forth in Appendix A of
44 C.F.R. Part 65) when determining whether the building or mobile home offered as collateral security for a
loan is or will be located in a special flood hazard area in
which flood insurance is available under the Act. The
standard flood hazard determination form may be used
in a printed, computerized, or electronic manner.
(2) Retention of form. A state member bank shall retain a
copy of the completed standard flood hazard determination form, in either hard copy or electronic form, for the
period of time the bank owns the loan.
(g) Forced placement of flood insurance. If a state member
bank, or a servicer acting on behalf of the bank, determines
at any time during the term of a designated loan that the
building or mobile home and any personal property securing the designated loan is not covered by flood insurance or
is covered by flood insurance in an amount less than the
amount required under paragraph (c) of this section, then
the bank or its servicer shall notify the borrower that the
borrower should obtain flood insurance, at the borrower's
expense, in an amount at least equal to the amount required
under paragraph (c) of this section, for the remaining term
of the loan. If the borrower fails to obtain flood insurance
within 45 days after notification, then the state member
bank or its servicer shall purchase insurance on the borrower's behalf. The state member bank or its servicer may
charge the borrower for the cost of premiums and fees
incurred in purchasing the insurance.
(h) Determination fees—(1) General. Notwithstanding any
Federal or State law other than the Flood Disaster Protection Act of 1973, as amended (42 U.S.C. 4001-4129),
any state member bank, or a servicer acting on behalf of
Legal Developments
the bank, may charge a reasonable fee for determining
whether the building or mobile home securing the loan
is located or will be located in a special flood hazard
area. A determination fee may also include, but is not
limited to, a fee for life-of-loan monitoring.
(2) Borrower fee. The determination fee authorized by
paragraph (h)(1) of this section may be charged to the
borrower if the determination:
(i) Is made in connection with a making, increasing,
extending, or renewing of the loan that is initiated by
the borrower;
(ii) Reflects the Director of FEMA's revision or updating of floodplain areas or flood-risk zones;
(iii) Reflects the Director of FEMA's publication of a
notice or compendium that:
(A) Affects the area in which the building or mobile
home securing the loan is located; or
(B) By determination of the Director of FEMA,
may reasonably require a determination whether
the building or mobile home securing the loan is
located in a special flood hazard area; or
(iv) Results in the purchase of flood insurance coverage by the lender or its servicer on behalf of the
borrower under paragraph (g) of this section.
(3) Purchaser or transferee fee. The determination fee
authorized by paragraph (h)(1) of this section may be
charged to the purchaser or transferee of a loan in the
case of the sale or transfer of the loan.
(i) Notice of special flood hazards and availability of
Federal disaster relief assistance—
(1) Notice requirement. When a state member bank
makes, increases, extends, or renews a loan secured by a
building or a mobile home located or to be located in a
special flood hazard area, the bank shall mail or deliver a
written notice to the borrower and to the servicer in all
cases whether or not flood insurance is available under
the Act for the collateral securing the loan.
(2) Contents of notice. The written notice must include
the following information:
(i) A warning, in a form approved by the Director of
FEMA, that the building or the mobile home is or will
be located in a special flood hazard area;
(ii) A description of the flood insurance purchase
requirements set forth in section 102(b) of the Flood
Disaster Protection Act of 1973, as amended
(42 U.S.C. 4012a(b));
(iii) A statement, where applicable, that flood insurance coverage is available under the NFIP and may
also be available from private insurers; and
(iv) A statement whether Federal disaster relief assistance may be available in the event of damage to the
building or mobile home caused by flooding in a
Federally declared disaster.
(3) Timing of notice. The state member bank shall provide the notice required by paragraph (i)(l) of this
section to the borrower within a reasonable time before
the completion of the transaction, and to the servicer as
promptly as practicable after the bank provides notice to
941
the borrower and in any event no later than the time the
bank provides other similar notices to the servicer concerning hazard insurance and taxes. Notice to the servicer may be made electronically or may take the form
of a copy of the notice to the borrower.
(4) Record of receipt. The state member bank shall retain
a record of the receipt of the notices by the borrower and
the servicer for the period of time the bank owns the
loan.
(5) Alternate method of notice. Instead of providing the
notice to the borrower required by paragraph (i)(l) of
this section, a state member bank may obtain satisfactory written assurance from a seller or lessor that, within
a reasonable time before the completion of the sale or
lease transaction, the seller or lessor has provided such
notice to the purchaser or lessee. The state member bank
shall retain a record of the written assurance from the
seller or lessor for the period of time the bank owns the
loan.
(6) Use of prescribed form of notice. A state member
bank will be considered to be in compliance with the
requirement for notice to the borrower of this paragraph (i) by providing written notice to the borrower
containing the language presented in Appendix A to this
section within a reasonable time before the completion
of the transaction. The notice presented in Appendix A
to this section satisfies the borrower notice requirements
of the Act.
(j) Notice of servicer's identity—(1) Notice requirement.
When a state member bank makes, increases, extends,
renews, sells, or transfers a loan secured by a building or
mobile home located or to be located in a special flood
hazard area, the bank shall notify the Director of FEMA
(or the Director's designee) in writing of the identity of
the servicer of the loan. The Director of FEMA has
designated the insurance provider to receive the state
member bank's notice of the servicer's identity. This
notice may be provided electronically if electronic transmission is satisfactory to the Director of FEMA's designee.
(2) Transfer of servicing rights. The state member bank
shall notify the Director of FEMA (or the Director's
designee) of any change in the servicer of a loan described in paragraph (j)(l) of this section within 60 days
after the effective date of the change. This notice may be
provided electronically if electronic transmission is satisfactory to the Director of FEMA's designee. Upon any
change in the servicing of a loan described in paragraph (j)(l) of this section, the duty to provide notice
under this paragraph (j)(2) shall transfer to the transferee
servicer.
Appendix A to Section 208.23—Sample Form of
Notice Notice of Special Flood Hazards and
Availability of Federal Disaster Relief Assistance
We are giving you this notice to inform you that:
The building or mobile home securing the loan for which
942
Federal Reserve Bulletin • October 1996
you have applied is or will be located in an area with
special flood hazards. The area has been identified by the
Director of the Federal Emergency Management Agency
(FEMA) as a special flood hazard area using FEMA's
Flood Insurance Rate Map or the Flood Hazard Boundary
Map for the following community:
.
This area has a one percent (1%) chance of a flood equal to
or exceeding the base flood elevation (a 100-year flood) in
any given year. During the life of a 30-year mortgage loan,
the risk of a 100-year flood in a special flood hazard area is
26 percent (26%). Federal law allows a lender and borrower jointly to request the Director of FEMA to review
the determination of whether the property securing the loan
is located in a special flood hazard area. If you would like
to make such a request, please contact us for further
information.
The community in which the property securing the
loan is located participates in the National Flood Insurance
Program (NFIP). Federal law will not allow us to make you
the loan that you have applied for if you do not purchase
flood insurance. The flood insurance must be maintained
for the life of the loan. If you fail to purchase or renew
flood insurance on the property, Federal law authorizes and
requires us to purchase the flood insurance for you at your
expense.
• Flood insurance coverage under the NFIP may be
purchased through an insurance agent who will obtain the
policy either directly through the NFIP or through an
insurance company that participates in the NFIP. Flood
insurance also may be available from private insurers that
do not participate in the NFIP.
• At a minimum, flood insurance purchased must cover
the lesser of:
(1) the outstanding principal balance of the loan; or
(2) the maximum amount of coverage allowed for the
type of property under the NFIP.
Flood insurance coverage under the NFIP is limited to
the overall value of the property securing the loan minus
the value of the land on which the property is located.
• Federal disaster relief assistance (usually in the form
of a low-interest loan) may be available for damages
incurred in excess of your flood insurance if your community's participation in the NFIP is in accordance with NFIP
requirements.
Flood insurance coverage under the NFIP is not
available for the property securing the loan because the
community in which the property is located does not
participate in the NFIP. In addition, if the non-participating
community has been identified for at least one year as
containing a special flood hazard area, properties located in
the community will not be eligible for Federal disaster
relief assistance in the event of a Federally declared flood
disaster.
FINAL RULE—AMENDMENT
TO REGULATION Y
The Board of Governors is adopting a final rule amending
its interpretive rule regarding investment adviser activities
of bank holding companies to allow a bank holding company (and its bank and nonbank subsidiaries) to purchase,
in a fiduciary capacity, securities of an investment company advised by the bank holding company if the purchase
is specifically authorized by the terms of the instrument
creating the fiduciary relationship, by court order, or by the
law of the jurisdiction under which the trust is administered. This amendment would reflect changes that have
occurred since the rule was adopted; and would conform
the Board's interpretive rule to rules applied to banks by
the Federal Deposit Insurance Corporation and the Office
of the Comptroller of the Currency, and the standard in
section 23B of the Federal Reserve Act for this type of
activity.
Effective September 30, 1996, 12 C.F.R. Part 225 is
amended as follows:
Part 225—Bank Holding Companies and Change in
Bank Control (Regulation Y)
1. The authority citation for 12 C.F.R. Part 225 continues
to read as follows:
Authority: 12 U.S.C. 1817(j)(13), 1818, 1831i, 1831p-l,
1843(c)(8), 1844(b), 1972(1), 3106, 3108, 3310, 33313351,3907, and 3909.
2. Section 225.125 is amended by revising paragraph (g) to
read as follows:
Section 225.125—Investment adviser activities.
(g) In view of the potential conflicts of interests that may
exist, a bank holding company and its bank and nonbank
subsidiaries should not:
(1) Purchase for their own account securities of any
investment company for which the bank holding company acts as investment adviser;
(2) Purchase in their sole discretion, any such securities
in a fiduciary capacity (including as managing agent)
unless the purchase is specifically authorized by the
terms of the instrument creating the fiduciary relationship, by court order, or by the law of the jurisdiction
under which the trust is administered;
(3) Extend credit to any such investment company; or
(4) Accept the securities of any such investment company as collateral for a loan which is for the purpose of
purchasing securities of the investment company.
ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT
Orders Issued Under Section 3 of the Bank Holding
Company Act
First Merchants Corporation
Muncie, Indiana
Legal Developments
Order Approving the Acquisition of a Bank Holding
Company
First Merchants Corporation, Muncie, Indiana ("First Merchants"), 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 merge with Randolph County
Bancorp ("Randolph"), and thereby acquire its wholly
owned subsidiary bank, Randolph County Bank ("Randolph Bank"), both in Winchester, Indiana.
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(61 Federal Register 31,941 (1996)). The time for filing
comments has expired, and the Board has considered the
proposal and all comments received in light of the factors
set forth in section 3(c) of the BHC Act.
First Merchants is the 14th largest commercial banking
organization in Indiana, controlling deposits of approximately $596 million, representing approximately 1.1 percent of total deposits in commercial banking organizations
in Indiana.1 Randolph is the 88th largest commercial banking organization in Indiana, controlling approximately
$63.4 million in deposits, representing less than 1 percent
of total deposits in commercial banking organizations in
the state. On consummation of the proposal, First Merchants would become the 13th largest commercial banking
organization in Indiana and control approximately
$659.4 million in deposits, representing approximately 1.2
percent of total deposits in commercial banking organizations in the state.
Competitive Considerations
First Merchants's subsidiary bank, First Merchants Bank,
National Association, Muncie ("Merchants Bank"), and
Randolph Bank compete directly in the Muncie banking
market ("Muncie banking market").2 Merchants Bank is
the largest depository institution in the Muncie banking
market, controlling deposits of approximately $446.9 million, representing approximately 31.6 percent of total deposits in depository institutions in the market ("market
deposits").3 Randolph Bank is the eighth largest deposi-
1. State deposit data are as of December 31, 1995, and market share
data are as of June 30, 1995.
2. The Muncie banking market is approximated by Delaware and
Randolph Counties in Indiana, excluding Washington and Greensfork
townships; Licking and Jackson townships in Blackford County, Indiana; and Jackson township in Darke County, Ohio.
3. In this context, depository institutions include commercial banks,
savings banks, and savings associations. Market share data are based
on a calculation in which the deposits of thrift institutions are included
at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant
competitors of commercial banks. See WM Bancorp, 76 Federal
Reserve Bulletin 788 (1990); National City Corporation, 70 Federal
Reserve Bulletin 743 (1984). Thus, the Board has regularly included
thrift deposits in the calculation of market share on a 50-percent
weighted basis. See, e.g., First Hawaiian Inc., 11 Federal Reserve
Bulletin 52 (1991).
943
tory institution in the Muncie banking market, controlling
deposits of $62.8 million, representing approximately
4.4 percent of market deposits. After consummation of the
proposal, First Merchants would control deposits of approximately $509.7 million, representing approximately
36 percent of market deposits. The Herfindahl-Hirschman
Index ("HHI") for the Muncie banking market would
increase by 281 points to 2184. Consummation of the
proposal, therefore, would exceed the threshold levels of
market concentration as measured by the HHI under the
Department of Justice Merger Guidelines.4
The Board believes that several factors in the Muncie
banking market mitigate the potential anticompetitive effects of the proposal. For example, eight other competitors
would remain in the market, including three relatively
large out-of-state banking organizations, each with total
deposits of more than $2 billion. In addition, three of the
eight other competitors, including one of the large out-ofstate banking organizations, would each control at least
9 percent of total deposits in depository institutions in the
market.
The Muncie banking market also has several characteristics that make it attractive for entry. Deposit growth in the
Muncie Metropolitan Statistical Area ("MSA") has substantially exceeded the average deposit growth in Indiana's
other MSAs during recent years, and recent job growth in
the market has been substantial.5 The Muncie MSA also
has recently experienced both de novo entry and entry by
acquisition,6 and a large interstate banking organization
has announced its intention to enter the Muncie banking
market. Indiana's interstate and branch banking laws,
moreover, permit both statewide branching and interstate
banking, and, therefore, present low legal barriers to entry
into the Muncie banking market for in-state and out-ofstate banking organizations.7 The Department of Justice
has reviewed the proposal and advised the Board that
consummation of the proposal would not likely have any
significantly adverse competitive effects in this or any
relevant banking market.8
4. Under the revised Department of Justice Merger Guidelines,
49 Federal Register 26823 (June 29, 1984), a market in which the
post-merger HHI is above 1800 is considered to be highly concentrated. The Department of Justice has informed the Board that a bank
merger or acquisition generally will not be challenged (in the absence
of other factors indicating anticompetitive effects) unless the postmerger HHI is at least 1800 and the merger increases the HHI by more
than 200 points. The Department of Justice has stated that the higher
than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limitedpurpose lenders and other nondepository financial entities.
5. One recent study ranked the Muncie metropolitan area first
among 50 similarly sized metropolitan areas in terms of job creation
in the United States.
6. Michigan's third largest bank entered the market de novo in 1995,
and entry by acquisition occurred in 1994 and 1995.
7. Indiana Code Annotated §§ 28-2-13-19 and 28-2-16-15 (Burns
1996).
8. The Office of the Comptroller of the Currency and the Federal
Deposit Insurance Corporation have not objected to the proposal.
944
Federal Reserve Bulletin • October 1996
Based on these and all the facts of record, the Board
concludes that consummation of the proposal is not likely
to have a significantly adverse effect on competition or on
the concentration of banking services in the Muncie banking market or any other relevant market. In light of all the
facts of record, the Board also concludes that the financial
and managerial resources and future prospects of First
Merchants and Randolph and their respective subsidiaries
are consistent with approval, as are considerations relating
to the convenience and needs of the community to be
served and other supervisory factors the Board must consider under the BHC Act.
For these reasons, and in light of all the other facts of
record, the Board has determined that the application
should be, and hereby is, approved. The Board's approval
is expressly conditioned on First Merchants' compliance
with all the commitments made in connection with the
application. The commitments relied on by the Board in
reaching this decision shall be deemed to be conditions
imposed in writing by the Board in connection with its
findings and decision, and, as such, may be enforced in
proceedings under applicable law.
The merger with Randolph shall not be consummated
before the fifteenth calendar day following the effective
date of this order or later than three months after the
effective date of this order, unless such period is extended
for good cause by the Board or by the Federal Reserve
Bank of Chicago, acting pursuant to delegated authority.
By order of the Board of Governors, effective
August 28, 1996.
Voting for this action: Chairman Greenspan, and Governors Lindsey, Phillips, Yellen, and Meyer. Absent and not voting: Vice Chair
Rivlin and Governor Kelley.
WILLIAM W. WILES
Secretary of the Board
InterWest Bancorp, Inc.
Oak Harbor, Washington
Order Approving the Acquisition of a Bank Holding
Company
InterWest Bancorp, Inc., Oak Harbor ("InterWest"), 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 merge with Central Bancorporation,
Wenatchee ("Central"), and thereby indirectly acquire its
wholly owned subsidiary banks, Central Washington Bank,
Wenatchee, and North Central Washington Bank, Omak,
all in Washington.
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(61 Federal Register 21,183 (1996)). The time for filing
comments has expired, and the Board has considered the
proposal and all comments received in light of the factors
set forth in section 3(c) of the BHC Act.
InterWest is the ninth largest depository institution in
Washington, controlling deposits of approximately
$833 million, representing approximately 1.6 percent of
total deposits in depository institutions in Washington.1
Central is the 3 2d largest depository institution in Washington, controlling approximately $178 million in deposits,
representing less than 1 percent of total deposits in depository institutions in the state. On consummation of the
proposal, InterWest would become the seventh largest
commercial banking organization in Washington, and control approximately $1 billion in deposits, representing approximately 2 percent of total deposits in depository institutions in the state.
Competitive Considerations
InterWest's subsidiary savings bank, Interwest Savings
Bank, Oak Harbor, Washington ("Savings Bank"), and
Central's commercial bank subsidiaries, Central Washington Bank, Wenatchee, Washington ("Central Washington"), and North Central Washington Bank, Omak, Washington ("North Central"), compete directly in the
Washington banking markets of Wenatchee ("Wenatchee
banking market"), Omak-Okanogan ("Omak-Okanogan
banking market"), and Chelan ("Chelan banking market"). 2 Consummation of the proposal would not exceed
the threshold levels of market concentration3 as measured
by the Herfindahl-Hirschman Index ("HHI") under the
Department of Justice Merger Guidelines in the Wenatchee
banking market.4
1. Deposit and market share data are as of June 30, 1995, adjusted
for mergers and acquisitions that were consummated as of April 30,
1996. In this context, depository institutions include commercial
banks, savings banks, and savings associations.
2. The Wenatchee banking market is approximated by the towns of
Wenatchee, East Wenatchee, Leavenworth, Cashmere, and Waterville,
Washington. The Omak-Okanogan banking market is approximated
by the towns of Omak, Okanogan, Oroville, Tonasket, Twisp, and
Winthrop, Washington. The Chelan banking market is approximated
by the towns of Manson and Chelan, Washington.
3. Market share data are based on a calculation in which the
deposits of thrift institutions are included at 50 percent. The Board
previously has indicated that thrift institutions have become, or have
the potential to become, significant competitors of commercial banks.
See WM Bancorp, 76 Federal Reserve Bulletin 788 (1990); National
City Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the
Board has regularly included thrift deposits in the calculation of
market share on a 50-percent weighted basis. See, e.g., First Hawaiian
Inc., 77 Federal Reserve Bulletin 52 (1991).
4. The HHI for the Wenatchee banking market would increase by
145 points to 1987. Under the revised Department of Justice Merger
Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in
which the post-merger HHI is above 1800 is considered to be highly
concentrated. The Department of Justice has informed the Board that a
bank merger or acquisition generally will not be challenged (in the
absence of other factors indicating anticompetitive eifects) unless the
post-merger HHI is at least 1800 and the merger increases the HHI by
more than 200 points. The Department of Justice has stated that the
higher than normal HHI thresholds for screening bank mergers for
anticompetitive eifects implicitly recognize the competitive effect of
limited-purpose lenders and other nondepository financial entities.
Legal Developments
These thresholds, however, would be exceeded in the
Omak-Okanogan and Chelan banking markets.5 The Board
notes that HHI levels are only guidelines that are used by
the Board, the Department of Justice, and the other banking agencies to help identify cases in which a more detailed
competitive analysis is appropriate to assure that the proposal would not have a significantly adverse effect on
competition in any relevant market. A proposal that fails to
pass the HHI market screen may nonetheless be approved
because other information may indicate that the proposal
would not have a significantly adverse effect on competition. The Department of Justice has reviewed the proposal
and advised the Board that consummation of the proposal
would not likely have any significantly adverse competitive effects in these or any relevant Washington banking
market.6
The Board also believes that several factors in the OmakOkanogan and Chelan markets mitigate the potential anticompetitive effects of the proposal. The Board believes that
a calculation of the HHI based on total market deposits
does not accurately reflect the competitive effects of this
proposal in these markets. In addition, numerous competitors would remain in both banking markets after consummation of the proposal. In the Omak-Okanogan banking
market, seven depository institutions would remain, including three large regional commercial banking organizations
each with more than 10 percent of market deposits. In the
Chelan banking market, four depository institution competitors would remain, including two large bank holding companies that would control more than 34 percent and
24 percent of market deposits, respectively.
The record indicates that governmental deposits of local
political subdivisions represent a majority of the deposits
held by Interwest in the Omak-Okanogan banking market.
These types of deposits may be volatile because they
generally are short-term, subject to competitive bidding,
and usually can be used to fund only short-term loans. The
Board previously has determined that individual, partnership, and corporation ("IPC") deposits may be the proper
focus for the competitive analysis of markets in which
government deposits constitute a relatively large share of
total market deposits.7 In the Omak-Okanogan banking
market, 62.6 percent of InterWest's deposits are non-IPC
deposits, compared with market-wide non-IPC deposits of
approximately 9.4 percent.8 In light of these and all the
facts of record, the Board concludes that the competitive
5. The HHI would increase for the Omak-Okanogan banking market
by 397 points to 1875, and for the Chelan banking market by
211 points to 2981.
6. The Office of the Comptroller of the Currency and the Federal
Deposit Insurance Corporation ("FDIC") have not objected to the
proposal.
7. See Banco Popular de Puerto Rico, 79 Federal Reserve Bulletin
979 (1993); CNB Bancshares, Inc., 80 Federal Reserve Bulletin 538
(1994).
8. On average, non-IPC deposits account for approximately
6.4 percent of total deposits in banks in the United States. These data
are as of June 30, 1995.
945
effects of the proposal should be considered on the basis of
IPC deposits. When analyzed on the basis of IPC deposits,
the HHI for deposits in the Omak-Okanogan banking market would increase 172 points to 1757, and Interwest
would control 24.3 percent of IPC deposits after consummation of the proposal.
Barriers to entry into these markets are relatively low
because Washington law permits banks to branch statewide
without restriction. The Chelan banking market, in particular, has characteristics that make it attractive for entry by
an out-of-market firm. The population of the Chelan banking market increased by 15.9 percent from 1990 to 1994,
while the population for the entire state increased by
9.8 percent.
Based on these and all the facts of record, the Board
concludes that consummation of the proposal is not likely
to have a significantly adverse effect on competition or on
the concentration of banking services in the OmakOkanogan or Chelan banking markets or any other relevant
market. The Board also concludes in light of all the facts of
record that the financial and managerial resources and
future prospects of InterWest and Central and their respective subsidiaries are consistent with approval, as are considerations relating to the convenience and needs of the
community to be served and other supervisory factors the
Board must consider under the BHC Act.9
For these reasons, and in light of all the other facts of
record, the Board has determined that the application
should be, and hereby is, approved. The Board's approval
is expressly conditioned on InterWest's compliance with
all the commitments made in connection with the application. The commitments relied on by the Board in reaching
this decision shall be deemed to be conditions imposed in
writing by the Board in connection with its findings and
decision, and, as such, may be enforced in proceedings
under applicable law.
The transactions shall not be consummated before the
fifteenth calendar day following the effective date of this
order, or later than three months after the effective date of
this order, unless such period is extended for good cause by
the Board or by the Federal Reserve Bank of San Francisco, acting pursuant to delegated authority.
By order of the Board of Governors, effective
August 12, 1996.
9. Interwest proposes to operate Savings Bank's branches, which
are insured by the Savings Association Insurance Fund, in tandem
with the branches of Central's subsidiary banks, which are insured by
the Bank Insurance Fund. The FDIC has determined generally that
tandem operations of the type proposed are consistent with restrictions
on a "conversion transaction" under the Federal Deposit Insurance
Act (12 U.S.C. § 1815), see FDIC Press Release 47-96 (July 1, 1996).
InterWest has proposed steps to ensure that deposit transfers by
customers are voluntary and to inform customers that the depository
subsidiaries of InterWest and Central are separate.
946
Federal Reserve Bulletin • October 1996
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Kelley, Phillips, and Meyer. Absent and not voting: Governors Lindsey and Yellen.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
KeyCorp
Cleveland, Ohio
Order Approving the Acquisition of a Bank
KeyCorp, Cleveland, Ohio ("KeyCorp"), a bank holding
company within the meaning of the Bank Holding Company Act ("BHC Act"), and its wholly owned subsidiary,
Key Bancorp of New Hampshire, Inc., Bedford, New
Hampshire, have requested the Board's approval under
section 3 of the BHC Act (12 U.S.C. § 1842) to acquire
Key Bank, Bedford, New Hampshire ("Key Bank"), a de
novo state-chartered bank.
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(61 Federal Register 26,181 (1996)).1 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.
KeyCorp, with total consolidated assets of $66.3 billion,
operates subsidiary banks in 13 states. KeyCorp is the tenth
largest commercial banking organization in the United
States, controlling 1.7 percent of total United States banking assets, and is the third largest commercial banking
organization in Ohio, controlling approximately $13.2 billion in deposits, representing 13.4 percent of all deposits in
commercial banking organizations in the state.2 KeyCorp
also engages in a number of permissible nonbanking activities throughout the United States.
Interstate Analysis
Section 3(d) of the BHC Act, as amended by section 101 of
the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, allows the Board to approve an appli-
1. Inner City Press/Community on the Move ("Protestant") contends that notice of the proposal was required under the Board's Rules
of Procedure to be published in Albany, New York. The Board's Rules
of Procedure provide for newspaper publication in the "community or
communities in which the head offices of the largest subsidiary bank,
if any, or an applicant and of each bank, shares of which are to be
directly or indirectly acquired, are located in the case of applications
under section 3 of the Bank Holding Company Act." 12 C.F.R.
262.3(b)(l)(ii)(E). The record indicates that Key Bancorp of New
Hampshire, Inc., a New Hampshire corporation, initially was chartered as a non-operating company located in Albany, New York, but
subsequently moved its headquarters to New Hampshire. Accordingly,
KeyCorp's publication of notice of the proposal in newspapers of
general circulation on April 26, 1996, in appropriate areas in Ohio and
New Hampshire complied with the Board's Rules of Procedure.
2. U.S. banking asset data are as of March 31, 1996. State deposit
data are as of June 30, 1995.
cation by a bank holding company to acquire control of a
bank located in a state other than the home state of such
bank holding company, if certain conditions are met. For
purposes of the BHC Act, the home state of KeyCorp is
Ohio.3 As noted above, KeyCorp would establish a de novo
bank in New Hampshire. The conditions for an interstate
acquisition under section 3(d) are met in this case.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
Section 3 of the BHC Act prohibits the Board from approving an application if the proposal would result in a monopoly, or would substantially lessen competition in any relevant market unless such anticompetitive effects are clearly
outweighed in the public interest by the probable effects of
the transaction in meeting the convenience and needs of
the community to be served. KeyCorp currently does not
operate an insured depository institution in New Hampshire. Based on all the facts of record, the Board concludes
that consummation of the proposal would not have any
significantly adverse effects on competition or the concentration of banking resources in any relevant banking market. Accordingly, the Board concludes that competitive
considerations are consistent with approval.
Other Factors under the BHC Act
The BHC Act also requires the Board to consider the
financial and managerial resources and future prospects of
the companies and banks involved, the convenience and
needs of the community to be served, and certain other
supervisory factors.
A. Supervisory Factors
The Board has carefully considered the financial and managerial resources and future prospects of KeyCorp and its
subsidiaries, as well as other supervisory factors in light of
all the facts of record. These facts include supervisory
3. Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding
company's home state is the state in which the operations of the bank
holding company's banking subsidiaries were principally conducted
on July 1, 1966, or the date on which the company became a bank
holding company, whichever is later.
4. See 12 U.S.C. § § 1842(d)(1)(A) and (B) and 1842(d)(2)(A)
and (B). KeyCorp is adequately capitalized and adequately managed.
The New Hampshire Banking Department has determined that Key
Bank is not subject to the minimum charter age requirements under
current New Hampshire law because the transaction was authorized
and approved before New Hampshire law was amended to impose a
minimum age requirement. In addition, on consummation of the
proposal, KeyCorp 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 20 percent of the total amount of deposits
of insured depository institutions in New Hampshire, as required by
state law. The New Hampshire Banking Department approved KeyCorp 's petition to organize a de novo bank, and has issued a Certificate to Affiliate to KeyCorp.
Legal Developments
reports of examination assessing the financial and managerial resources of the organizations and confidential financial information provided by KeyCorp. Based on these and
all other facts of record, the Board concludes that all the
supervisory factors under the BHC Act, including financial
and managerial considerations, weigh in favor of approving the proposal.5
B. Convenience and Needs Factor
The Board has long held that consideration of the convenience and needs factor includes a review of the records of
the relevant depository institutions under the Community
Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). As
provided in the CRA, the Board has evaluated this factor in
light of examinations by the primary federal supervisors of
the CRA performance records of the relevant institutions.
The Board also has carefully considered comments from
Protestant contending that branch closings by KeyCorp's
subsidiary banks have adversely affected access to credit
and banking services in low-to-moderate income ("LMI")
communities located in several states.6 Protestant also argues that KeyCorp's reported plan to close up to 40 percent
of its traditional brick and mortar branches over the next
four to five years would disproportionately disadvantage
LMI areas. In addition, Protestant criticizes the record of
lending of several of KeyCorp's subsidiary banks in LMI
areas and areas with predominantly African-American populations7 by citing housing-related loan data filed under the
Home Mortgage Disclosure Act (12 U.S.C. § 2801 et seq.)
("HMDA") for a number of metropolitan areas.8
An institution's most recent CRA performance evaluation is a particularly important consideration in the applications process because it represents a detailed on-site evaluation of the institution's overall record of performance
under the CRA by its primary federal supervisor.9 In addi-
5. Protestant alleges that KeyCorp management improperly paid for
a flight for the New York State Tax Commissioner from Cleveland to
Albany in May, 1996. KeyCorp states that it has billed the Commissioner's office for the cost of passage on the flight which had been
scheduled to transport KeyCorp employees from Cleveland to Albany.
6. In particular, Protestant alleges that specific branch closings and
consolidations in Indiana and Ohio in 1995 and 1996 eliminated
convenient banking alternatives in a number of communities. Protestant believes that the criteria that these banks have used to determine
whether a branch should be closed have a disparate impact on LMI
areas and communities with predominantly minority populations.
7. These banks include Key Bank of New York, Albany, New York
("Key Bank-NY"), Key Bank of Washington, Tacoma, Washington
("Key Bank-WA"), Key Bank of Oregon, Portland, Oregon ("Key
Bank-OR"), Society National Bank, Cleveland, Ohio ("SocietyOH"), Society National Bank, South Bend, Indiana ("Society-IN"),
and Society Bank, Ann Arbor, Michigan ("Society-MI").
8. Data for KeyCorp's subsidiary banks cited by Protestant include
data from the following metropolitan areas: Albany, Buffalo, Rochester, Syracuse, Binghamton, and New York City, all in New York;
Seattle and Tacoma, both in Washington; Portland and Salem, both in
Oregon; Detroit, Michigan; Bloomington, Indianapolis and ElkhartGoshen, all in Indiana; and Cincinnati, Ohio.
9. The Board notes that the Statement of the Federal Financial
Supervisory Agencies Regarding the Community Reinvestment Act
947
tion, the Board considers an institution's policies and practices for compliance with applicable fair lending laws. The
Board also takes into account information on an institution's lending activities that assist in meeting the credit
needs of low- and moderate-income neighborhoods, including programs and activities initiated since its most
recent CRA performance examination.10
Performance Examinations. All of KeyCorp's subsidiary banks, including the banks conducting the banking
activities in the areas discussed in Protestant's comments,
received a CRA performance rating of "satisfactory" or
"outstanding" in their most recent evaluations for CRA
performance by their primary federal supervisors (collectively, "CRA Examinations").11 In particular, Key BankNY, Key Bank-OR, Society-OH, Society-IN, and
Society-MI received "outstanding" ratings from their primary federal supervisors.12 Key Bank-WA was rated "satisfactory" by the Federal Deposit Insurance Corporation
("FDIC") at its most recent CRA performance evaluation.
The examinations of the particular KeyCorp subsidiary
banks that were the primary focus of Protestant's comments generally found that the community delineations for
the banks were reasonable and did not exclude any LMI
neighborhoods.13 In general, examiners also concluded that
the geographic distribution of credit demonstrated reasonable penetration of all segments of each bank's communities, including LMI neighborhoods. None of the banks was
found to have engaged in illegal credit practices or prac-
provides that a CRA examination is an important and often controlling
factor in the consideration of an institution's CRA record and that
reports of these examinations will be given great weight in the
applications process. 54 Federal Register 13,742, 13,745 (1989).
10. Protestant argues that KeyCorp's examinations should be accorded little weight because they are outdated. As noted, the Board
has considered all the information of record since the performance
examinations of KeyCorp's subsidiary banks, including information
provided by Protestant and KeyCorp. The Board has also considered
supervisory information from the primary federal supervisors of the
subsidiary banks, particularly when the most recent examination of a
KeyCorp subsidiary bank indicated areas to be addressed to improve
its performance.
11. The CRA ratings for all of KeyCorp's subsidiary banks are set
forth in Appendix A. KeyCorp also owns Key Bank USA, N.A.,
Cleveland, Ohio ("Key Bank USA"), which was chartered in September 1995 and has not been examined for CRA performance. Protestant
maintains that the bank's recent designation as a limited purpose bank
under the new CRA regulations was in error. See 60 Federal Register
22,156 (1995). This designation was made by the Office of the
Comptroller of the Currency ("OCC"), the primary federal supervisor
of Key Bank USA, under 12 C.F.R. 25.25(b) and is not reviewable by
the Board.
12. Key Bank-NY also received an "outstanding" rating for CRA
performance from the New York State Banking Department
("NYSBD") as of December 31, 1995. Protestant contends that this
examination should be given little weight because it was conducted
off-site. The Board has considered information provided by the
NYSBD examination, which assesses the bank's compliance under
section 28-b of the New York Banking Law, as well as information
provided by the FDIC's on-site examination.
13. FDIC examiners concluded that Key Bank-WA had inconsistently applied the bank's methodology for delineating its service
community. The Board has considered the bank's new delineated
community in light of supervisory information provided by the FDIC.
948
Federal Reserve Bulletin • October 1996
tices that discourage applications for credit.14 Examiners
also determined that the banks' ascertainment efforts were
effective, and marketing activities sufficiently informed all
residents of banks' delineated community of its available
banking products and services. Examiners indicated that all
the banks offered some programs to support affordable
housing and small business lending in their communities
and that all the banks participated to some extent in federal
and local government-sponsored loan programs. These examinations, moreover, found that many of the banks were
actively involved in community development lending programs with local nonprofit organizations or community
development corporations.
KeyCorp has developed several products on the corporate level to help meet the credit and banking service needs
of LMI customers. KeyCorp's Home Assist program offers
mortgages with a lower downpayment and the ability to
finance closing costs. Under this program, an approved
applicant is eligible to receive a contribution from the bank
of up to 2 percent of the purchase price of a home, up to a
maximum of $1,000. A related corporate product called
LoanAssist helps customers establish or improve credit
histories.
KeyCorp's subsidiary banks also locally develop and
participate in special lending programs that reflect the
unique credit needs of particular communities. Each subsidiary bank has several specialized programs designed to
improve its lending to LMI and minority communities. For
example, Key Bank-NY has committed permanent mortgage financing for Affordable Housing Projects in several
cities in New York and has developed the Key Affordable
Mortgage Program in conjunction with the New York State
Commissioner of Housing to provide homeownership opportunities for LMI individuals. In April 1994, Key
Bank-NY introduced the Key to the City program that
required only a $500 down payment for the purchase of a
one-to-four family residential dwelling located in an LMI
census tract. Through May 1995, Key Bank-NY originated
approximately $50 million in mortgages under the Key to
the City product. In addition, in January 1994, Key
Bank-NY committed $20 million to the Key to Ownership
program offered with New York state's Home Ownership
Development Program and the State of New York Mortgage Agency's Mortgage Insurance Fund. The Key to
Ownership program has a $5,000 minimum loan amount,
terms up to 30 years, flexible underwriting standards, and
reduced downpayment and closing costs.
14. The KeyCorp-WA examination noted weaknesses in the bank's
procedures for fair lending law compliance, including reviews of all
denied applications, and in the bank's ability to retrieve denied loan
files. The examiners found that there was no indication of prohibited
discriminatory or other illegal credit practices, but noted that recordkeeping deficiencies prevented the completion of their assessment.
KeyCorp-WA has initiated steps to improve its fair lending law
compliance, including a second review process for initially denied
housing-related loan applications, and other steps to address examiners' comments. The Board has reviewed these steps in light of
supervisory information from the FDIC.
KeyBank National Association ("KeyBank, N.A."), participates in special lending programs in Ohio, Michigan,
and Indiana involving loan pools, entrepreneurial groups,
housing partnerships and other local, state, and federal
programs.15 In Ohio, KeyBank, N.A., provides financing
for the Microloan Initiative Fund for women-owned businesses, participates in programs with the Coalition for
Community Reinvestment Group, and offers its BusinessAssist Program, which assists in paying the Small Business
Administration guarantee fee. In Indiana, KeyBank, N.A.,
participates in projects with Habitat for Humanity, Elkhart
Housing Partnership, Noblesville Housing Association, and
Corporation for Entrepreneurial Development.
Key Bank-WA and Key Bank-OR also participate in
programs offered with community reinvestment associations, small business associations, and affordable housing
organizations. For example, examiners noted that Key
Bank-WA, is a founding member of the Washington Community Reinvestment Association, a nonprofit mortgage
banking consortium that assists in providing affordable
housing to LMI individuals throughout the state. Key
Bank-OR offers the Federal Home Administration
("FHA") Title I Home Improvement program and the
bank's own Basic Home Repair Loan Program.16
HMDA Data. The Board has carefully reviewed HMDA
data cited by Protestant to support its contention that
certain of KeyCorp's subsidiary banks have inadequate and
discriminatory lending records. These data show that in
some respects, such as in the percentage of applications
received from and loans made to African-American applicants, KeyCorp's performance is comparable to or exceeds
the performance of lenders in the aggregate in a significant
number of the metropolitan areas analyzed by Protestant.
In other respects, however, the data show disparities in
application and denial rates to African-American loan applicants as compared to white applicants in certain markets.17
The Board is concerned when the record of an institution
indicates such disparities in lending, and believes that all
15. In the first half of 1996, Society-OH, Society-IN, and
Society-MI merged to form KeyBank, N.A.
16. The Basic Home Repair Loan Program supplements the FHA
program and focuses on low-income individuals who have little or no
equity in their homes but need to improve basic functions, such as
electrical wiring and plumbing.
17. Protestant claims that KeyCorp's mortgage lending has declined
and, consequently, that KeyCorp is no longer committed to serving the
mortgage credit needs of its communities. The Board notes that
KeyCorp's subsidiary banks continue to provide housing-related
loans, including loans to LMI neighborhoods. The Board has reviewed KeyCorp's HMDA data for 1994 and 1995 for areas in which
KeyCorp's mortgage lending has declined. In New York, for example,
the Board notes that mortgage lending by all HMDA-reporting lenders
in Key Bank-NY's delineated community also declined during this
period. In addition, the Board notes that the CRA does not require
banks to provide any specific type of loan product, participate in any
specific type of loan program, or allocate any particular level of
resources to any such product or program. As discussed, KeyCorp's
subsidiary banks provide a variety of products and programs to meet
the housing-related credit needs of LMI communities.
Legal Developments
banks are obligated to ensure that their lending practices
are based on criteria that assure not only safe and sound
lending, but also assure equal access to credit by creditworthy applicants regardless of race. The Board recognizes,
however, that HMDA data alone provide an incomplete
measure of an institution's lending in its community because these data cover only a few categories of housingrelated lending and provide limited information about the
covered loans.18 HMDA data, therefore, have limitations
that make the data an inadequate basis, absent other information, for concluding that an institution has engaged in
illegal discrimination in lending.
Because of the limitations of HMDA data, the Board has
carefully reviewed other information such as the examinations reports of the banks' primary supervisors. As noted,
the CRA examinations found none of the KeyCorp's subsidiary banks engaged in practices that would discourage
individuals from applying for credit. In addition, KeyCorp
has initiated a number of steps to ensure compliance with
fair lending laws. For example, Key Corp has implemented
a second review of denied loan applications in many of its
banks to ensure that consistent loan decisions are made.
The second review generally is conducted before a final
decision when denial of a mortgage application is recommended. In addition, examiners noted in the CRA Examinations that management of all of KeyCorp's subsidiary
banks had implemented training and compliance programs
to support fair and equal treatment of loan applicants.19
18. For example, these data do not provide a basis for an independent assessment of whether an applicant who was denied credit was in
fact creditworthy. Thus, credit history problems and excessive debt
levels relative to income—reasons most frequently cited for a credit
denial—are not available from the HMDA data.
19. Protestant alleges that 1994 HMDA data reported by Key
Bank-NY, Key Bank-WA, and Key Bank-OR reflect illegal prescreening because of the extremely high approval rates for home
purchase loans to minorities in certain MSAs. KeyCorp denies that it
has engaged in illegal pre-screening and believes that the data issues
raised by Protestant result from the operations of its former mortgage
subsidiary, KeyCorp Mortgage Inc. ("KMI"), which was sold in
1995. Data reported by Key Bank-NY reflect coding errors for loans
made under one special loan program by KMI in 1994. In essence,
incorrect computer coding of these items caused applications under
this program that were denied, withdrawn, closed for incompleteness,
or approved but not accepted to be deleted from the relevant HMDA
Loan Application Register ("LAR"). Key Bank-NY also inadvertently reported loans under this special program as originations instead of purchases in its HMDA LAR. KeyCorp has and undertaken
steps to improve the accuracy of its HMDA data reporting. For
example, in 1995, KeyCorp implemented significant enhancements to
its programming systems and centralized all HMDA data processing
at the parent holding company. KeyCorp also states that the three
banks cited by Protestant may have had high approval rates because
many loans and applications resulted from an accommodation loan
program with KMI. Under this program, if a loan application did not
meet secondary market guidelines, KMI, as an accommodation for its
affiliate banks, would offer the banks the opportunity to originate the
loan. This practice ended with the sale of KMI and KeyCorp's
subsidiary banks now originate their loans directly. The Board also
has provided Protestant's comments and KeyCorp's responses regarding HMDA data reporting to the banks' primary federal supervisor,
the FDIC, to consider in conducting its scheduled on-site examinations of the banks in October 1996.
949
Branch Closings. Protestant maintains that KeyCorp's
branch closings have adversely affected access to credit
and banking services, particularly in Indiana and Ohio.20
KeyCorp indicates that Society-IN has not closed or consolidated any branches in LM1 neighborhoods since its
1995 examination. Examiners concluded that the eight
branches closed during the two years preceding the 1995
examination had not adversely affected overall access to
the bank's loan products.21 Society-IN's branch closing
policy required management to consider the impact of a
proposed closure or reduction in services on the community, customers, and employees. Before a final decision on
closure was made, the proposal was reviewed by the bank's
local Advisory Board and the Community Investment
Committee.
Society-OH has closed or consolidated 31 branches with
five branches located in LMI neighborhoods during the
period January 1, 1994, to May 31, 1996. Examiners
reviewed the bank's closure of 12 branches and automated
teller machines ("ATMs") for the two-year period preceding the examination, and the proposed closure of
14 branches and one ATM at the time of the examination,
and concluded that these closures had not and would not
adversely impact LMI areas. Examiners also considered
Society-OH's record of opening and closing branches
within its communities to be very strong and noted that its
Community Development Department was involved in the
beginning if a proposed branch closing affected an LMI
area.22
The Board also has considered Protestant's comments
regarding KeyCorp's reported plan—independent of the
proposed transaction under review in this case—to close
branches over a four to five year period. This case involves
the establishment by KeyCorp of a new bank in New
Hampshire. KeyCorp currently does not operate any banks
or branches in New Hampshire, and KeyCorp proposes to
open seven new branches to serve communities in New
Hampshire.23 The Board notes, moreover, that any pro20. Protestant disputes KeyCorp's determination that certain cessations of branch operations were branch consolidations, which do not
require advanced notice, instead of branch closings, which do require
advanced notice. Protestant also disputes KeyCorp's interpretation of
the Joint Policy Statement on Branch Closings (58 Federal Register
49,083 (1993)), with respect to the distinction between consolidations
and closings set forth in the statement. The OCC is conducting an
on-site CRA examination of KeyBank, N.A.. which serves Ohio and
Indiana. The Board has considered Protestant's comments in light of
information provided by the OCC. and information made public by
KeyCorp in connection with the proposal that indicates that advance
notice was provided regardless of whether the cessation in branch
operations was categorized as a consolidation or a closing.
21. Examiners also noted that Society-IN initiated discussions with
some city officials and community leaders on potential new inner-city
branch sites in LMI areas and alternative delivery systems.
22. Branch closings by other KeyCorp banks discussed in Protestant's comments are reviewed in Appendix B.
23. Protestant criticizes KeyCorp's plan to open seven supermarket
branches by noting that no supermarket is located in an LMI community and by arguing that such smaller automated facilities disproportionately exclude LMI communities and businesses. KeyCorp states
that three of Key Bank's proposed supermarket branches are located
950
Federal Reserve Bulletin • October 1996
jected branch closings by KeyCorp's subsidiary banks
would be reviewed by its primary federal supervisors during CRA examinations and by the Board in future applications.
Conclusion on Convenience and Needs Factor. The
Board has carefully considered the entire record in its
review of the convenience and needs factor under the BHC
Act. Based on all the facts of record, including information
provided by Protestant and KeyCorp, relevant reports of
CRA evaluations of performance and other supervisory
information from the banks' regulators, the Board concludes that the efforts of KeyCorp to help meet the credit
needs of all segments of the communities served, including
residents of low- and moderate-income areas, are consistent with approval. Since KeyCorp currently does not
operate any banks or branches in New Hampshire, the
proposal under review would have a positive effect on the
convenience and needs of the New Hampshire communities by providing a new banking alternative. In this light,
the Board concludes that convenience and needs considerations, including the CRA performance records of KeyCorp's subsidiary banks, are consistent with approval.24
Board's approval is expressly conditioned on compliance
by KeyCorp with all the commitments made in connection
with the proposal and with the conditions referred to in this
order. For purposes of this action, the commitments and
conditions relied on by the Board in reaching this decision
are deemed to be conditions imposed in writing and, as
such, may be enforced in proceedings under applicable
law.
This proposal shall not be consummated before the fifteenth calendar day following the effective date of this
order or later than three months following the effective date
of this order, unless such period is extended for good cause
by the Board or by the Federal Reserve Bank of Cleveland,
acting pursuant to delegated authority.
By order of the Board of Governors, effective August 5,
1996.
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Kelley, Phillips, and Meyer. Absent and not voting: Governors Lindsey and Yellen.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
Conclusion
Appendix A
Based on the foregoing and
including all the commitments
nection with the proposal, the
the application should be, and
all other facts of record,
made by KeyCorp in conBoard has determined that
hereby is, approved.25 The
within three miles of 19 of the 24 LMI census tracts in New Hampshire. In addition, KeyCorp notes that these supermarket branches
would be full-service branches offering the same products and services offered at traditional branches, including deposit and loan products.
24. Protestant maintains that negative comments in the public CRA
files at certain KeyCorp banks, and KeyCorp's responses which
Protestant considers to be inadequate, raise adverse considerations for
KeyCorp's CRA record. The Board believes that these isolated comments are outweighed by all the facts of record relating to KeyCorp's
CRA performance. In addition, the Board notes that such comments
and responses by the bank are reviewed by the bank's primary federal
regulator as part of the examination process in assessing the institution's CRA performance record.
25. Protestant requested that the Board hold a public hearing or
public meeting. Section 3(b) of the BHC Act does not require the
Board to hold a public hearing or meeting on an application unless the
appropriate supervisory authority for the bank to be acquired makes a
timely written recommendation of denial of the application. In this
case, the New Hampshire Banking Department has not recommended
denial.
Under the Board's rules, the Board may, in its discretion, hold a
public hearing or meeting on an application to clarify factual issues
related to the application and to provide an opportunity for testimony,
if appropriate. 12 C.F.R. 262.3(e) and 262.25(d). The Board has
carefully considered Protestant's request in light of all the facts of
record. Protestant has had ample opportunity to submit its views and
has, in fact, submitted substantial materials that have been considered
by the Board in acting on the application. Protestant does not indicate
what, if any, additional views would be expressed at a public hearing
or meeting, or why its written submission does not adequately present
the views of its members. Based on all the facts of record, the Board
has determined that public or private hearings or meetings are not
necessary to clarify the factual record or otherwise warranted in this
Bank
Key Bank Alaska,
Anchorage, Alaska
Key Bank Colorado,
Ft Collins, Colorado
Key Bank Idaho,
Boise, Idaho
Key Bank New York,
Albany, New York
Key Bank Maine,
Portland, Maine
Key Bank Oregon,
Portland, Oregon
Key Bank Utah,
Salt Lake City, Utah
Key Bank Vermont,
Burlington, Vermont
Key Bank Washington,
Tacoma, Washington
Key Bank Wyoming,
Cheyenne, Wyoming
Key Savings Bank,
Vancouver, Washington . . .
Society National Bank, 1
Cleveland, Ohio
Society Bank, 1
Ann Arbor, Michigan
Society National Bank, 1
South Bend, Indiana
Rating
Supervisor
Date
outstanding
FDIC
June 27, 1994
satisfactory
FDIC
Oct. 28, 1994
outstanding
FDIC
Mar. 28, 1994
outstanding
FDIC
Oct. 4, 1994
outstanding
FDIC
July 19, 1994
outstanding
FDIC
June 27, 1994
outstanding
FDIC
Feb. 7, 1994
outstanding
FDIC
Aug. 30, 1994
satisfactory
FDIC
Nov. 8, 1993
outstanding
FDIC
May 23, 1994
satisfactory
FDIC
Dec. 12, 1994
outstanding
occ
Mar. 23, 1994
outstanding
FDIC
Nov. 15, 1993
outstanding
occ
Mar. 31, 1995
1. These banks were merged in 1995 to form KeyBank National Association,
Cleveland, Ohio.
Appendix B
Branch Closings by Key Bank-NY
According to KeyCorp, Key Bank-NY has closed or consolidated 18 branches with 5 branches located in LMI
case, and, accordingly, the request for public hearings or meetings on
the applications are denied.
Legal Developments
neighborhoods from January 1, 1994, to May 31, 1996.
Examiners reviewed the bank's closure of 20 branches in
the 18 months preceding the 1994 examination, and noted
that the bank had opened and closed numerous offices as a
result of the acquisition of two institutions in 1993. Examiners found that Key Bank-NY had established written
policies and procedures covering branch openings and
closings, which include the requirements of federal law
and specify individual responsibilities for all personnel
involved in branch closings.
Branch Closings by Key Bank-ME
KeyCorp indicates that Key Bank-ME has closed or consolidated 16 branches with 5 branches located in LMI
neighborhoods from January 1, 1994, to May 31, 1996.1
KeyCorp also indicates that many of these closures and
consolidations were in connection with Key Bank-ME's
merger with Casco Northern Bank. Examiners reviewed
the bank's closure of 5 branches in the two years preceding
the 1994 examination, and noted that in all cases it appears
that the bank reviewed all possible options prior to actually
closing the branches and complied with federal regulations. Examiners found that Key Bank-ME decided against
closing one branch office as a result of receiving strong
support from the community to keep the branch open. In
addition, examiners noted that the bank's branch closing
policy meet the requirements of federal law.
Branch closings by Key Bank-WA
KeyCorp indicates that Key Bank-WA has closed or consolidated 21 branches with 8 branches located in LMI
neighborhoods from January 1, 1994, to May 31, 1996.
Examiners reviewed the bank's closure of 16 branches in
the three years preceding the 1993 examination, and noted
that all branches closed involved a facility which was
within one half mile of another full service Key Bank-WA
branch. Examiners also noted that the bank appeared to
consider the possible elfects of any reduction in banking
services prior to closing branches and that the bank adopted
a branch closing policy in conformance with federal law.
Shinhan Bank
Seoul, Korea
Order Approving the Formation of a Bank Holding
Company
Shinhan Bank, Seoul, Korea ("Shinhan"), has requested
the Board's approval under section 3 of the Bank Holding
Company Act (12 U.S.C. § 1842(a)) ("BHC Act") to
1. Key Bank-ME has applied to the FDIC to establish and relocate
branches in Maine. Protestant has objected to these applications and
maintains that these actions do not constitute relocations. Protestant's
comments are under consideration by the FDIC.
951
become a bank holding company by acquiring Marine
National Bank, Irvine, California ("Marine").
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(60 Federal Register 67,137 (1995)). The time for filing
comments has expired, and the Board has considered the
application and all comments received in light of the
factors set forth in section 3 of the BHC Act.
Shinhan, with total assets equivalent to approximately
$22.7 billion, is the 11th largest banking organization in
Korea.1 Shinhan also operates a branch in New York, New
York. Marine controls $94.3 million in deposits, representing less than 1 percent of total deposits in banks and thrifts
in California.2 Shinhan and Marine do not compete in any
relevant banking market. Accordingly, the Board concludes that consummation of this proposal would not have
a significantly adverse effect on competition or the concentration of banking resources in any relevant banking market.
Under section 3 of the BHC Act, as amended by the
Foreign Bank Supervision Enhancement Act of 1991,3 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."4 The Board
has previously determined, in applications under the International Banking Act (12 U.S.C. § 3101 et seq.) (the
"IBA"), that certain Korean commercial banks were subject to comprehensive consolidated supervision by their
home country authorities.5 In this case, the Board has
determined that Shinhan is supervised on substantially the
same terms and conditions as the other Korean commercial
banks. Based on all the facts of record, the Board has
concluded that Shinhan is subject to comprehensive supervision and regulation on a consolidated basis by its home
country supervisors.
The BHC Act also requires the Board to determine that
the foreign bank has provided adequate assurances that it
will make available to the Board such information on its
operations and activities and those of its affiliates that the
Board deems appropriate to determine and enforce compliance with the BHC Act. The Board has reviewed the
1. Asset and ranking data are as of December 31, 1995, and employ
the exchange rate then in effect.
2. Deposit data are as of December 31, 1995.
3. Pub. L. No. 102-242, § 201 et seq., 105 Stat. 2286 (1991).
4. 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 (International Banking Operations). 12C.F.R. 225.13(b)(5).
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 to its
affiliates, to assess the foreign bank's overall financial condition and
compliance with law and regulation. 12 C.F.R. 211.24(c)(l)(ii).
5. See Donghwa Bank, 81 Federal Reserve Bulletin 744 (1995), Cho
Hung Bank, 81 Federal Reserve Bulletin 475 (1995), KorAm Bank, 80
Federal Reserve Bulletin 184 (1994) ("KorAm").
952
Federal Reserve Bulletin • October 1996
restrictions on disclosure in jurisdictions where Shinhan
has material operations and has communicated with the
relevant government authorities concerning access to information. Shinhan has committed that, to the extent not
prohibited by applicable law, it will make available to the
Board such information on the operations of Shinhan 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. Shinhan also has
committed to cooperate with the Board to obtain any
waivers or exemptions that may be necessary in order to
enable Shinhan to make any such information available to
the Board. In light of these commitments and other facts of
record,6 the Board has concluded that Shinhan has provided adequate assurances of access to any appropriate
information the Board may request. For these reasons, and
based on all the facts of record, the Board has concluded
that the supervisory factors the Board is required to consider under section 3 of the BHC Act are consistent with
approval.
The Board also has concluded that considerations relating to the financial and managerial resources7 and future
prospects of Shinhan and its subsidiaries and Bank and the
convenience and needs of the community to be served are
consistent with approval of this proposal, as are other
supervisory factors.
Based on the foregoing and all the other facts of record,
the Board has determined that this application should be,
and hereby is, approved. The Board's approval of this
proposal is expressly conditioned on Shinhan's compliance
with all the commitments made in connection with this
application, and with the conditions in this order. For
purposes of this action, these commitments and conditions
are deemed to be conditions imposed in writing by the
Board in connection with its findings and decision and, as
such, may be enforced in proceedings under applicable
law.
This transaction shall not be consummated before the
fifteenth calendar day following the effective date of this
order or later than three months after the effective date of
this order, unless such period is extended for good cause by
the Board or by the Federal Reserve Bank of San Francisco, acting pursuant to delegated authority.
By order of the Board of Governors, effective
August 19, 1996.
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Kelley, Lindsey, Phillips, Yellen, and Meyer.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
6. The Board previously has reviewed relevant provisions of confidentiality, secrecy, and other laws in jurisdictions in which Shinhan
has material operations. See KorAm; Bank of Tokyo, 81 Federal
Reserve Bulletin 279 (1995).
7. Shinhan's capital exceeds the minimum levels that would be
required under the Basle Capital Accord, and is considered equivalent
to the capital that would be required of a U.S. banking organization.
Orders Issued Under Section 4 of the Bank Holding
Company Act
CNB Financial Corp.
Canajoharie, New York
Order Approving a Notice to Engage in Certain
Investment Advisory Activities
CNB Financial Corp., Canajoharie, New York ("CNB"), a
bank holding company within the meaning of the Bank
Holding Company Act ("BHC Act"), has applied for the
Board's approval under section 4(c)(8) of the BHC Act
(12 U.S.C. § 1843(c)(8)) and section 225.23 of Regulation Y (12 C.F.R. 225.23) to establish and retain all the
voting shares of Central Asset Management, Inc., also of
Canajoharie, New York ("Company"), and thereby engage
de novo in providing portfolio investment advisory services, including discretionary investment management services to institutional customers, and general economic advice pursuant to sections 225.25(b)(4)(iii) and (iv) of
Regulation Y. CNB also proposes to provide discretionary
investment management services to customers who do not
qualify as institutional customers under Regulation Y.1
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(61 Federal Register 31,942 (1996)). The time for filing
comments has expired, and the Board has considered the
notice and all comments received in light of the factors set
forth in section 4(c)(8) of the BHC Act.
CNB, with total consolidated assets of $583.4 million,
controls one commercial bank in New York.2 CNB has
committed to the Board that Company would be registered
as an investment adviser under the Investment Advisers
Act of 1940 (15 U.S.C. § 80b-1 et seq.) ("Investment
Advisers Act") before engaging in any investment advisory activities.
Section 4(c)(8) of the BHC Act provides that a bank
holding company may engage, with Board approval, in any
activity that the Board determines to be "so closely related
to banking or managing or controlling banks as to be a
proper incident thereto." The Board previously has determined that all of the proposed investment advisory activities are closely related to banking.3
In order to approve this notice, the Board also must find
that the performance of the proposed activities by CNB
"can reasonably be expected to produce benefits to the
public . . . that outweigh possible adverse effects, such as
undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices."4 As part of its evaluation of these factors, the Board
considers the financial and managerial resources of the
1. 12 C.F.R. 225.2(g).
2. Asset data are as of March 31, 1996.
3. See 12 C.F.R. 225.25(b)(4)(iii) and (iv); and CoreStates Financial
Corp., 80 Federal Reserve Bulletin 644 (1994) ("CoreStates").
4. 12 U.S.C. § 1843(c)(8).
Legal Developments
notificant and its subsidiaries and the effect the transaction
would have on such resources.5 Based on all the facts of
record, the Board concludes that financial and managerial
considerations are consistent with approval.
The Board expects that consummation of this proposal
to engage de novo in these activities would result in greater
competition in the market for these services. In addition,
consummation of the proposal can reasonably be expected
to provide added convenience and services to CNB's customers. CNB has stated that Company would be able to
make investment advisory services more accessible to customers in the central New York region. Consummation of
this proposal is unlikely to result in significantly adverse
effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or
unsound banking practices.6 Based on all the facts of
record, the Board finds that the public benefits of CNB's
proposed activities outweigh any adverse effects, and,
therefore, that the activities are a proper incident to banking for purposes of section 4(c)(8) of the BHC Act.
Based on the foregoing and all the facts of record,
including the commitments discussed in this order and all
other commitments and representations made by CNB in
connection with this notice, and subject to the terms and
5. See 12 C.F.R. 225.24.
6. CNB has committed that, with two exceptions, Company will
conduct these activities pursuant to the conditions and limitations
specified in the Board's regulations and in CoreStates. In CoreStates,
the Board, in approving the provision of discretionary investment
management services to non-institutional customers, relied on certain
commitments intended to mitigate any potential for abuse, conflicts of
interest, or customer confusion. In this regard, CNB has committed
that no investment transactions will be executed by Company on
behalf of non-institutional customers through Company, CNB, or any
affiliate of CNB; Company will not purchase, for discretionary investment advisory accounts, any securities for which CNB acts as underwriter, dealer, distributor, or placement agent, other than obligations of
the United States, unless directed to do so in writing by the customer
prior to each such transaction and after disclosure of any such affiliated relationships involved in the particular transaction; fees charged
by Company to its non-institutional customers for its discretionary
investment advisory services will not be based on the number of
account transactions executed; the services of Company will not be
advertised, promoted, or otherwise marketed through branches of
CNB's depository institution subsidiaries; Company's affiliation with
CNB will not be advertised or promoted, unless and to the extent
required by law; Company, CNB, and affiliates of CNB will not share
confidential information regarding their respective customers without
the customer's consent; and Company's offices will not be located in,
located in the same building as, or geographically proximate to any
branches of CNB's depository institution subsidiaries. CNB has requested relief, however, from two other restrictions. In particular,
CNB has proposed that its depository institution subsidiaries be permitted to refer non-institutional customers to Company, and that
Company be permitted to have a name that is similar to the name of
the existing depository institution subsidiary of CNB. To mitigate the
potential for customer confusion, CNB has committed that its depository institution subsidiaries will provide customers with oral and
written disclosures before making any referral to Company to enforce
the understanding that Company and CNB's depository institution
subsidiaries are separate and that products provided by Company are
uninsured. These disclosures are similar to those required in the
Interagency Statement on the Retail Sale of Nondeposit Investment
Products. I FRRS ^ 3-1579.51 and 3-1579.52.
953
conditions set forth in this order, the Board has determined
that the notice should be, and hereby is, approved. The
Board's determination is subject to all the conditions set
forth in Regulation Y, including those in sections 225.7 and
225.23(b)(3) and (b)(7) of Regulation Y (12 C.F.R. 225.7
and 225.25(b)(3) and (b)(7)), and to the Board's authority
to require modification or termination of the activities of a
bank holding company or any of its subsidiaries as the
Board finds necessary to assure compliance with, and to
prevent evasion of, the provisions of the BHC Act and the
Board's regulations and orders issued thereunder. The
Board's decision is specifically conditioned on CNB's
compliance with the commitments and representations
made in connection with this notice, including the commitments and conditions discussed in this order. The commitments, representations, and conditions relied on in reaching
this decision shall be deemed to be conditions imposed in
writing by the Board in connection with its findings and
decision and may be enforced in proceedings under applicable law.
This transaction shall not be consummated later than
three months after the effective date of this order, unless
such period is extended for good cause by the Board or the
Federal Reserve Bank of New York, acting pursuant to
delegated authority.
By order of the Board of Governors, effective
August 12, 1996.
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Kelley, Phillips, and Meyer. Absent and not voting: Governors Lindsey and Yellen.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
First State Bancshares of Blakely, Inc.
Blakely, Georgia
Order Denying Acquisition of a Thrift Holding Company
First State Bancshares of Blakely, Inc., Blakely, Georgia
("First State"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has
requested the Board's approval under section 4(c)(8) of the
BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of
the Board's Regulation Y (12 C.F.R. 225.23) to acquire
First Southwest Bancorp, Inc. ("Southwest"), and Southwest's wholly owned thrift subsidiary, First Federal Savings Bank of Southwest Georgia ("FFSB"), both of Donalsonville, Georgia, and thereby to engage in operating a
savings association.
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(61 Federal Register 33,920 (1996)). The time for filing
comments has expired, and the Board has considered the
application and all comments received in light of the
factors set forth in section 4(c)(8) of the BHC Act.
First State is the 138th largest depository institution in
Georgia, controlling deposits of $69.8 million, represent-
954
Federal Reserve Bulletin • October 1996
ing less than 1 percent of total deposits in depository
institutions in the state.' Southwest, with deposits of
$69.6 million, is the 140th largest depository institution in
the state. On consummation of the proposal, First State
would be the 62d largest depository institution in Georgia,
controlling total deposits of $139.4 million, representing
less than 1 percent of the total deposits in depository
institutions in the state.
The Board previously has determined by regulation that
the operation of a savings association by a bank holding
company is closely related to banking within the meaning
of section 4(c)(8) of the BHC Act. 12 C.F.R. 225.25(b)(9).
The Board requires savings associations acquired by bank
holding companies to conform their direct and indirect
activities to those permissible for bank holding companies
under section 4 of the BHC Act and Regulation Y.2
Competitive Considerations
Under section 4(c)(8) of the BHC Act, the Board is required to consider whether a proposal is likely to result in
any significant adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of
interests, or unsound banking practices.3 The Board has
carefully considered First State's contentions that consummation of this proposal would not result in significantly
adverse competitive effects because First State and FFSB
do not provide the same types of banking products and
services in Early County, Georgia ("Early County"), a
rural county in southwest Georgia near the Alabama and
Florida state lines. In addition, First State maintains that
the relevant geographic banking market for analyzing the
competitive effects of this proposal extends beyond Early
County and includes the City of Dothan, which is the
county seat of Houston County, Alabama ("Dothan").
In evaluating the competitive effects of a proposed transaction, the Board must determine the appropriate product
market and geographic market. Using the cluster of banking products and services approximated by market deposits, which is the traditional method for analyzing the competitive effects of an acquisition of a depository institution,4
the Board concludes that consummation of this proposal
would result in significantly adverse effects on competition
in the Early County banking market for the reasons discussed below.
The Board also concludes that the relevant banking
market does not include Dothan. The Board and the courts
have found that the relevant geographic banking market for
1. Deposit data are as of December 31, 1995. In this context,
depository institutions include commercial banks, savings banks, and
savings associations.
2. Southwest and FFSB currently do not engage in any activities
that are not permissible for bank holding companies under the BHC
Act.
3. 12 U.S.C. § 1843(c)(8).
4. First Hawaiian, Inc., 79 Federal Reserve Bulletin 966, 966-68
(1993); SouthTrust Corporation, 78 Federal Reserve Bulletin 710
(1992); see also United States v. Philadelphia Nat'I Bank, 374 U.S.
321, 357 (1963).
analyzing the competitive effects of a proposal must reflect
commercial and banking realities and should consist of the
local area where the depository institutions involved offer
their services and where local consumers can practicably
turn for alternatives.5 In making a determination on the
geographic market in this case, the Board has considered
worker commuting patterns (as indicated by census data),
shopping patterns, and other indicia of economic integration and the transmission of competitive forces among
depository institutions.6 In addition, the Board has reviewed information from an on-site investigation of the
area conducted by Board staff and the Federal Reserve
Bank of Atlanta in connection with the proposal ("Federal
Reserve Survey").
First State Bank is headquartered and FFSB's branch is
located in Blakely, which is approximately 32 miles northeast of Dothan and connected to Dothan by a two-lane state
highway. Blakely and Dothan are separated by the Chattahoochee River, and there is little commercial development
between the two towns. Traffic count data do not indicate a
significant amount of daily travel from Blakely to Dothan.7
In addition, commuting data from the 1990 US. Census
indicate that only approximately 4 percent of the resident
work force in Early County commutes to the Dothan
Metropolitan Statistical Area ("MSA"). 8 Moreover, the
Dothan Ranally Metro Area ("RMA") does not include
5. See St. Joseph Valley Bank, 68 Federal Reserve Bulletin 673
(1982). The key question to be considered in making this selection "is
not where the parties to the merger do business or even where they
compete, but where, within the area of competitive overlap, the effect
of the merger on competition will be direct and immediate." United
States v. Philadelphia Nat'I Bank, 374 U.S. at 357; United States v.
Phillipsburg Nat'I Bank, 399 U.S. 350 (1969).
6. First State discounts the value of commuting data for Early
County and contends that data showing where Early County residents
regularly travel to obtain goods and services is more useful in defining
the relevant banking market. First State conducted an informal survey
of FFSB customers, which found that 44 percent of the 128 FFSB
customers questioned believe Blakely, the county seat of Early
County, is the most important town for their shopping and financial
needs, but that 30 percent selected Dothan. First State reports that
46 percent of the FFSB customers surveyed had banking relationships
with one of the other financial institutions in Blakely, and 9 percent
had banking relationships with institutions in Dothan. First State also
contends that Early County's small population and declining economic base require its residents to travel regularly to Dothan to obtain
goods, services, and entertainment. To support this view. First State
notes that Blakely does not have a major shopping center, sit-down
restaurant, or movie theater and that all these facilities are available in
Dothan. Dothan also has three college-level institutions, all of which
waive out-of-state tuition for residents of Early County.
7. The population of Early County is approximately 11,800 residents. Data from the Georgia Department of Transportation for 1995
indicate that approximately 2300 cars travel daily on state highway 62
from Blakely to Dothan. Assuming that not more than 50 percent of
the cars (1150) that drive through Blakely to get to Dothan are from
counties surrounding Early County, approximately 10 percent of the
residents (assuming one passenger per car) travel daily to Dothan.
8. MSAs are designated by the Office of Management and Budget
and reflect some degree of economic integration. No part of Early
County is included within the Dothan MSA.
Legal Developments
any portion of Early County or extend to the AlabamaGeorgia line.9
Basic shopping and medical facilities are available to
residents within Early County. For example, a grocery
store, small retail operations, farm supply and hardware
stores, car dealerships and 17 fast-food restaurants are
located in Blakely. Medical services are provided by a
small hospital, six physicians, two dentists, and several
pharmacies that are located in the county. In addition,
Early County residents have a number of entertainment
facilities, including video rental stores, several private
clubs, a swimming pool, and a ball park. Approximately 68
percent of the participants in a telephone survey conducted
as part of the Federal Reserve Survey indicated that their
regular shopping was done in the Early County area, primarily Blakely, and only 28.3 percent of the participants
regularly shopped in Dothan.10
The Federal Reserve Survey also indicates that Early
County residents rely on financial institutions located in
the county for banking services. A survey of Early County
residents showed that 91 percent of Early County households with depository institution accounts had their transaction accounts with in-market institutions. In addition,
84 percent of savings accounts and 78 percent of certificates of deposit ("CDs") held by Early County residents
are with the local banks and thrift. The Federal Reserve
Survey found that, by contrast, residents of Early County
do not use Dothan's financial institutions." Georgia state
law also limits a Georgia bank's ability to compete with
other depository institutions located outside a particular
county. In fact, until this year, Georgia banks were prohibited from branching de novo in counties other than the
county where the main office of the bank was located.12
Observations of bank practices and discussions with senior
management of depository institutions in Early County and
Dothan confirm that competition between Early County
9. RMA is a privately defined geographic locality that is demographically and economically integrated. The Board previously has
found RMA definitions to be useful guidelines in defining relevant
geographic markets. See, e.g., SouthTrust Corporation, 78 Federal
Reserve Bulletin 711 (1992).
10. The Federal Reserve Survey also showed little evidence of
economic integration between the town of Arlington and Early
County. Arlington straddles the county line between Early and Calhoun Counties and most of its residents live and work in Calhoun
County. Arlington also is served by a different local telephone company from the one that serves Early County, and Arlington residents
are not listed in the Early County telephone directory. Accordingly, in
light of all the facts of record, the Board concludes that Arlington
should be excluded from the definition of the Early County banking
market.
11. Of the 81 households surveyed that reported having checking
accounts, only one maintained an account with an institution in
Dothan; of the 82 savings and time deposit accounts maintained by the
survey respondents, only one was held at an institution in Dothan. In
addition, none of the respondents who reported obtaining a loan in the
last five years received their loan from a Dothan-based institution.
12. Effective July 1, 1996, Georgia law was amended to permit
de novo branching into three non-contiguous counties. Statewide
branching is authorized after July 1, 1998. See Ga. Code Ann.
§ 7-1-601.
955
and Dothan banking organizations is limited. Deposit rates
paid by the banks in Early County appear to be alfected
primarily by rates offered by other institutions in the Early
County banking market, and not by institutions in Dothan.
In addition, Dothan-based institutions do not report actively seeking customers in Early County. Overall, Dothan
is regarded as too distant to be considered a convenient or
cost-effective alternative source of banking services for
most of Early County's residents and small business.13
Based on all the facts of record, and for the reasons
discussed above, the Board concludes that the Early
County banking market, an area that includes all of Early
County except the town of Arlington, is the appropriate
geographic market for analyzing the competitive effects of
the proposal, and that Dothan should not be included in the
relevant banking market.
Competitive Effects in the Early County Banking Market
First State Bank is the largest of three depository institutions in the Early County banking market, controlling
$53.3 million of deposits, representing nearly 54 percent of
the total deposits in the market ("market deposits").14
FFSB is the smallest of the three depository institutions in
the market, controlling deposits of $18.6 million, which
represents 9.4 percent of market deposits based on weighting thrift deposits at 50 percent. On consummation, First
State would control total deposits of $71.9 million, representing more than 66 percent of market deposits. Only one
depository institution would compete with First State in the
market.13 The market, as measured by the HerfindahlHirschman Index ("HHI"), would be highly concentrated.
The HHI would increase by 1208 points to 5549, an
increase in concentration that would significantly exceed
13. The ability of residents to bank locally is important in view of
the county's large proportion of low-income families, who are unlikely to travel considerable distances for goods and services. Twothirds of Early County households have annual incomes of less than
$25,000, and 27 percent of families have annual incomes below the
poverty level.
14. Market data are as of June 30, 1996. Market share data are based
on calculations that include the deposits of the thrift institution at
50 percent. The Board previously has indicated that thrift institutions
have become, or have the potential to become, significant competitors
of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin
743 (1984). Because the deposits of FFSB would be controlled by a
commercial banking organization after consummation of the proposal,
those deposits are included at 100 percent in the calculation of First
State's pro forma market share. See Norwest Corporation, 78 Federal
Reserve Bulletin 452 (1992); First Banks, Inc., 76 Federal Reserve
Bulletin 669 (1990).
15. First State contends that the remaining competitor, Bank of
Early, Blakely, Georgia, has an established record of aggressively
competing with First State across several major product lines. As a
result of this proposal, however, First State Bank would control twice
the percentage of market deposits controlled by Bank of Early
(66 percent of market deposits compared to 33 percent) and have three
branches or offices in the Early County banking market as compared
to Bank of Early's single office in the market.
956
Federal Reserve Bulletin • October 1996
the threshold levels in the Department of Justice merger
guidelines.16
The Board notes that HHI thresholds are only guidelines
that are used by the Board, the Department of Justice, and
other banking agencies to help identify cases in which a
more detailed competitive analysis is appropriate to ensure
that the proposal would not have a significantly adverse
effect on competition in any relevant market. A proposal
that fails to pass the HHI market screen nevertheless may
be approved because other information may indicate that
the proposal would not have a significantly adverse effect
on competition.
First State contends that First State Bank and FFSB do
not provide the same types of banking products and services in the Early County area.17 First State also argues that
a number of factors mitigate the potential anticompetitive
effects of the proposal, including competition offered by
nonbank competitors in Early County and the inability of
the declining Early County economy to support three depository institutions.
Although First State Bank and FFSB do not focus on the
same products, they do compete directly, in particular
across four individual loan product lines that are important
to Early County residents: commercial and industrial
("C&I") loans, agricultural loans, l-to-4 family mortgage
loans, and consumer loans. First State Bank and FFSB both
offer C&I loans.18 Following consummation of this proposal, concentration in the market for C&I loans, as measured by the HHI, would increase 1082 points to 5779.19
Both institutions also offer agricultural loans to Early
County residents and, although FFSB does less agricultural
lending than First State Bank, there is evidence that the
thrift plays an important role in the provision of agricultural credit. FFSB is one of a small number of financial
institutions in southwest Georgia that offers guaranteed
and/or subsidized loans through the Rural Economic and
Community Development Service and the Farm Services
Administration. These loans provide Early County farmers
with operating funds necessary to plant and harvest crops,
and they provide guaranteed lines of credit to farmers for
operating expenses.
FFSB and First State Bank also are important competitors in the provision of consumer loans, and approval of
this proposal would result in the elimination of one important source for this type of credit.20 Following consummation of this proposal, the market concentration for these
loans, as measured by the HHI, would increase by 2010
points to 5581.21 Both FFSB and First State Bank also
engage in l-to-4 family mortgage lending. More than
70 percent of FFSB's loans consist of home mortgages,
and 16 percent of First State Bank's loans are such mortgages. Accordingly, both institutions have the expertise
and familiarity with Early County real estate to make
mortgage loans in this market.22
First State and FFSB also compete directly with respect
to deposit accounts. Both institutions concentrate on providing small retail deposit accounts (accounts with average
balances of less than $10,000), and both institutions have a
significant number of these accounts.23 First State maintains that FFSB is an ineffective competitor for small
accounts because it offers interest rates lower than its two
commercial bank competitors in the market. The Board
notes, however, that FFSB has offered competitive rates on
certain products in the past and currently offers the highest
rate in the market for small passbook savings accounts, a
particularly important product in a county in which
42 percent of the population has an annual income of less
than $15,000 a year.
Nonbank organizations are not significant competitors
for the depository institutions in the Early County banking
market. The largest nonbank competitor, Five Star Federal
Credit Union, Cedar Springs, Georgia ("Five Star"), has
membership requirements that would disqualify approximately 50 percent of Early County residents and offers
16. Under the revised Department of Justice Merger Guidelines, 49
Federal Register 26,823 (1984), a market in which the post-merger
HHI is above 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 Justice Department has stated that the higher than normal HHI
thresholds for screening bank mergers for anticompetitive effects
implicitly recognize the competitive effect of limited-purpose lenders
and other non-depository institutions.
17. FFSB, a thrift institution, engages primarily in residential mortgage and real estate lending and provides few unsecured commercial
loans and agricultural loans in the market. First State Bank, on the
other hand, engages in limited residential mortgage lending and has
focused its activities on commercial and agricultural lending.
18. FFSB offers only secured C&I loans, whereas First State Bank
makes both secured and unsecured loans. Each C&I loan made in the
market was for less than $1 million. Data submitted by First State
indicate that the average size of its secured C&I loans is $24,000; the
average size of such loans made by FFSB is $20,000.
19. Interviews conducted as part of the Federal Reserve Study
indicate that FFSB would welcome the opportunity to do more commercial and industrial lending.
20. As of May 9, 1996, First State Bank made 44.4 percent of the
total amount of these loans in the market ("market share") and, as of
March 31, 1996, FFSB had a 22.6 percent market share. Following
consummation of this proposal, First State would control 67.1 percent
of the market for this type of credit.
21. The Board recognizes that there are other lenders that provide
consumer credit to Early County residents. These nonbanking firms
are not significant competitors of the three depository institutions.
Nonetheless, if the total volume of consumer loans made by an
in-market credit union and several area finance companies were
considered in calculating the competitive effects of the proposal, the
HHI would increase by 268 points to 4029.
22. First State Bank generally limits the maturity of its mortgages to
15 years, while FFSB offers a broader array of products with maturities extending to 30 years. Each institution has the capacity to offer
various types of mortgages should demand for a particular type of
mortgage increase.
23. More than 76 percent of FFSB's accounts and almost 81 percent
of First State Bank's accounts are small retail deposit accounts. As of
June 30, 1996, small retail deposit accounts in the Blakely office of
FFSB included 780 savings accounts, 439 CDs, and 737 checking and
NOW accounts. These accounts at First State Bank's Blakely office
included 1,747 savings accounts, 1,365 CDs, and 3,131 transaction
accounts.
Legal Developments
limited products and services.24 In addition, the mitigating
effect of competition provided by Five Star would be
minimal even if it were considered to be an equal competitor of the depository institutions.25 Moreover, the Federal
Reserve Survey indicates that the overwhelming majority
of Early County residents obtain their deposit and credit
products from the three depository institutions in the market.26 Small businesses as well rely on in-market depository institutions.27
Data indicate that Early County is recovering from the
economic decline that First State cites as a factor supporting its contention that three depository institutions cannot
operate profitability in the market. From 1990 to 1995, the
population in Early County increased by 2.9 percent and,
from 1991 to 1994 (the latest available data), per capita
income increased at a rate equal to the rate of increase for
the state as a whole and the rate of increase for the state's
non-metropolitan areas. From 1993 to 1994, per capita
income growth in Early County was double the state average and nearly three times the national average.28 The
Federal Reserve Survey, which included discussions with
Early County officials and businessmen, indicates that the
current rate of growth is anticipated to continue in part
because of the planned expansion of highway connections
between Early County and other parts of the region.
A review of profitability data also indicates that the three
depository institutions have generally performed well.
Bank performance ratios for Early County, although below
average, are comparable to those in other rural Georgia
counties.29 The banking market's growth rate for deposits
and population also slightly exceeds the state and rural
Georgia county averages.
First State contends that FFSB's Blakely branch is not
performing well to support its view that Early County is a
declining market. The Board notes that, although First
State claims that FFSB's Blakely office was unprofitable in
the last two years, FFSB's Blakely office earned a profit in
24. Other nonbank firms in the market provide negligible deposit
services and offer a narrow range of loan products.
25. If Five Star's deposits were given 100 percent weight, the HHI
would increase 1205 points to 4182 as a result of the proposal.
26. For example, evidence suggests that the finance companies that
operate in the Early County banking market do not compete with the
depository institutions. Interviews conducted as part of the Federal
Reserve Survey suggested that the customer base of the finance
companies differs substantially from the customer base of the depository institutions.
27. According to Federal Reserve Survey, nearly 85 percent of the
177 small business reporting had relationships with Early County
depository institutions. Large regional bank holding companies had
almost no accounts.
28. During this time period, per capita income grew in Early County
by 11.5 percent, while the growth rate was 5.0 percent in Georgia and
4.2 percent in the United States. In 1994, Early County was ranked
107th of 159 Georgia counties in terms of population, but ranked 88th
in terms of per capita income.
29. First State consistently earned 1 percent or more on assets in the
1990s. Bank of Early earned more than 1 percent on assets in each of
the last four years.
957
1993.30 The data thus do not establish any long-term downward trend. Moreover, FFSB's Blakely office has experienced a steady growth in deposits since it was established
20 years ago, including a significant deposit growth in the
past several years. For example, deposits in the branch
have grown from $13.2 million in 1990 to $19.2 million in
1995, a 45 percent increase.
Public Benefits
The Board also has considered whether the potential benefits to the public, such as greater convenience, increased
competition, or gains in efficiency outweigh possible adverse effects. First State contends that cost savings realized
as a result of this proposal would permit the combined
institutions to provide more products and services to its
customers, increased community development activities,
and affordable banking products for low- and moderateincome residents in Early County. First State believes that
it can expand FFSB's programs to benefit the existing
customers of both institutions.
The requirement under section 4 of the BHC Act that the
Board must determine that public benefits from a proposal
can reasonably be expected to outweigh potential adverse
effects necessarily involves a balancing process that takes
into account the extent of the potential for adverse effects.
For the reasons discussed in this order, the effects on
competition in the Early County banking market are substantially adverse.
The Board also notes that Southwest and FFSB are
well-managed organizations in satisfactory financial condition. FFSB has an "outstanding" rating from its primary
federal supervisor in its most recent evaluation for performance under the Community Reinvestment Act. In light of
these and all the facts of record, the Board does not believe
that the public benefits derived from costs savings and
gains in efficiency in the proposal are sufficient, on balance, to outweigh the significantly adverse effects on competition in the Early County banking market.
For these reasons, and based on all of the facts of record,
the Board concludes that the proposed transaction would
have significantly adverse effects of the Early County
banking market. The Board also concludes that considerations relating to public benefits, including financial and
managerial resources of the institutions involved, do not
lend sufficient weight to outweigh these adverse competitive effects. Accordingly, the Board hereby denies First
State's notice under section 4(c)(8) of the BHC Act.
By order of the Board of Governors, effective
August 26, 1996.
30. The record suggests that the Blakely branch may have been
unprofitable in part because deposits gathered at the branch have been
invested in the federal funds market rather than in higher yielding
loans. Also, income earned from FFSB's investments are allocated to
the FFSB home office, while the corresponding expenses are divided
equally between the home office and the branches. Such internal
accounting procedures may understate the profits earned at the Blakely
office.
958
Federal Reserve Bulletin • October 1996
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Kelley, Lindsey, Yellen, and Meyer. Voting against this
action: Governor Phillips.
WILLIAM W. WILES
Secretary of the Board
KeyCorp
Cleveland, Ohio
Order Approving a Notice to Engage in Certain
Nonbanking Activities
KeyCorp, Cleveland, Ohio, a bank holding company within
the meaning of the Bank Holding Company Act ("BHC
Act"), has requested the Board's approval under section
4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and
section 225.23 of the Board's Regulation Y (12 C.F.R.
225.23) to acquire all the voting shares of Carleton, McCreary, Holmes & Co. ("CMHC"), Cleveland, Ohio. Under this proposal, KeyCorp would merge CMHC with and
into Key Capital Markets, Inc., Cleveland, Ohio ("Key
Capital"), a wholly owned subsidiary of KeyCorp authorized to engage in certain nonbanking activities, including
underwriting and dealing in, to a limited extent, securities
that a state member bank may not underwrite or deal in
("bank-ineligible securities").1 KeyCorp would thereby
engage in the following nonbanking activities throughout
the United States:
(1) Providing corporate financial advisory services pursuant to 12 C.F.R. 225.25(b)(4), and
(2) acting as agent in the private placement of all types of
debt and equity securities as permitted by Board order.2
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(61 Federal Register 33,118 (1996)). The time for filing
comments has expired, and the Board has considered the
notice and all comments received in light of the factors set
forth in section 4(c)(8) of the BHC Act.
KeyCorp, with total consolidated assets of approximately $65 billion, is the 13th largest banking organization
in the United States.3 KeyCorp operates banking subsidiaries in several states and engages through other subsidiaries
in various permissible nonbanking activities. Key Capital
is registered as a broker-dealer with the Securities and
Exchange Commission ("SEC") under the Securities Exchange Act of 1934 ("1934 Act") (15 U.S.C. § 78a et seq.),
and is a member of the National Association of Securities
Dealers, Inc. ("NASD"). Accordingly, Key Capital is subject to the record keeping and reporting obligations, fidu-
1. See KeyCorp, 82 Federal Resen'e Bulletin 359 (1996) ("KeyCorp Order"). The transaction would involve two steps. KeyCorp
would acquire 100 percent of the voting shares of CMHC through its
wholly owned subsidiary, KeySub, Inc., Cleveland, Ohio. Shortly
thereafter, KeyCorp would merge the corporation surviving the acquisition ("NewCo") with and into Key Capital.
2. See J.P. Morgan & Company Incorporated, 76 Federal Reserve
Bulletin 26 (1990).
3. Assets and ranking are as of March 31, 1996.
ciary standards, and other requirements of the 1934 Act,
the SEC, and the NASD.
Activities Approved by Order
The Board previously determined that it was permissible
under section 4(c)(8) of the BHC Act and section 20 of the
Glass-Steagall Act for KeyCorp to conduct the proposed
activities through Key Capital.4 KeyCorp has committed to
engage in these activities in accordance with the conditions
and limitations relied on by the Board in the KeyCorp
Order, with one exception.5
Director Interlocks
KeyCorp has requested that the Board permit three (of
seven) directors of Key Capital also to serve as directors of
Key Capital's bank or thrift affiliates ("affiliated banks"). 6
KeyCorp has committed that the three interlocking directors would not be officers of Key Capital or the affiliated
banks, or have the authority to conduct the daily business
or handle individual transactions of Key Capital or its
affiliated banks. In addition, KeyCorp has committed that,
at a meeting of the board of directors of Key Capital or the
affiliated banks, a quorum will not be deemed to exist
unless the interlocking directors are less than a majority of
the directors present.
The Board previously has permitted limited interlocks
between a banking organization and an affiliated subsidiary
engaged in bank-ineligible securities activities ("section
20 subsidiary").7 The addition of the interlocks proposed
by KeyCorp would not, in view of the commitments provided by KeyCorp, appear to give the affiliated banks
managerial control over Key Capital or otherwise raise any
conflicts of interest. Accordingly, the Board finds these
limited interlocks should be permitted, since it appears that
Key Capital would be operationally distinct from its affiliated banks. The Board expects that KeyCorp will ensure
that the framework established in the KeyCorp Order will
be maintained in all other respects.
4. See KeyCorp Order.
5. KeyCorp anticipates that there may be a brief period (ranging
from one or two days to a few weeks) between the acquisition of the
voting shares of CMHC through KeySub and the merger of the assets
of CMHC into Key Capital. During the period between the acquisition
and the merger, KeyCorp will conduct the proposed activities through
NewCo. KeyCorp has committed that, during this time, it will treat
NewCo as if it were Key Capital for the purposes of the commitments
and limitations of the KeyCorp Order.
6. KeyCorp previously received the Board's approval to have two
director interlocks and one officer interlock between Key Capital and
its affiliated banks. The interlocking officer provides only legal counsel and corporate record keeping services to Key Capital and does not
serve as a management official of, have sales or policy making
responsibilities for, or have contact with customers of Key Capital.
See KeyCorp Order.
1. See KeyCorp Order, National City Corporation, 80 Federal
Reserve Bulletin 346 (1994); Synovus Financial Corp., 11 Federal
Reserve Bulletin 954 (1991); Banc One Corporation, 76 Federal
Resen'e Bulletin 756 (1990).
Legal Developments
Financial Factors, Managerial Resources and Other
Considerations
In order to approve this notice, the Board must consider
whether the proposed activities "can reasonably be expected to produce benefits to the public, such as greater
convenience, increased competition, or gains in efficiency,
that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition,
conflicts of interests, or unsound banking practices."8 As
part of its evaluation of these factors, the Board considers
the financial condition and managerial resources of the
notificant and its subsidiaries and the effect of the proposed
transaction on these resources.9 Based on all the facts of
record, including relevant reports of examination, the
Board has concluded that financial and managerial considerations are consistent with approval of the proposal.
The Board expects that the proposed transaction would
result in public benefits by permitting CMHC and its
customers to draw upon the greater resources of and
broader range of products offered by Key Capital and its
affiliates. The Board also expects that the transaction would
produce efficiencies and economies of scale for KeyCorp
and thereby would permit KeyCorp to provide better investment banking services to its customers. In sum, the
proposal should yield greater convenience for KeyCorp's
and CMHC's customers and may be expected to foster
improved methods of meeting customer needs. There is no
evidence in the record to indicate that the proposed transaction would result in any undue concentration of resources
or decreased or unfair competition, conflicts of interests,
unsound banking practices, or other adverse effects. In
addition, to address any potential adverse impact from its
performance of the proposed activities, KeyCorp has committed to conduct the activities pursuant to conditions the
Board previously has found satisfactory to mitigate potential adverse effects. Accordingly, the Board has concluded
that the performance of the proposed activities by KeyCorp
can reasonably be expected to produce public benefits that
outweigh possible adverse effects under the proper incident
to banking standard of section 4(c)(8) of the BHC Act.
Based on the foregoing and all the facts of record, the
Board has determined that the notice should be, and hereby
is, approved. Approval of this notice is specifically conditioned on compliance by KeyCorp with the commitments
made in connection with this notice. The Board's determination also is subject to all the terms and conditions set
forth in Regulation Y, including those in sections 225.7 and
225.23(b) (12 C.F.R. 225.27 and 225.23(b)), and to the
Board's authority to require such modification or termination of the activities of a bank holding company or any of
its subsidiaries as the Board finds necessary to ensure
compliance with, and to prevent evasion of, the provisions
of the BHC Act and the Board's regulations and orders
thereunder. For purposes of this transaction, the commit-
8. 12 U.S.C. § 1843(c)(8).
9. See 12 C.F.R. 225.24.
959
ments and conditions agreed to by KeyCorp shall be
deemed to be conditions imposed in writing by the Board
in connection with its findings and decision, and as such
may be enforced in proceedings under applicable law.
These activities shall not be commenced later than three
months after the effective date of this order, unless such
period is extended for good cause by the Board or, pursuant
to delegated authority, by the Federal Reserve Bank of
Cleveland.
By order of the Board of Governors, effective
August 14, 1996.
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Kelley, Phillips, and Meyer. Absent and not voting: Governors Lindsey and Yellen.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
Union Planters Corporation
Memphis, Tennessee
Order Approving Notice to Acquire a Savings
Association and Engage in Certain Nonbanking Activities
Union Planters Corporation ("Applicant"), a bank holding
company within the meaning of the Bank Holding Company ("BHC") Act, has requested the Board's approval
under section 4(c)(8) of the BHC Act (12 U.S.C.
§ 1843(c)(8)) and section 225.23 of the Board's Regulation Y (12 C.F.R. 225.23) to acquire all the voting shares of
Leader Financial Corporation ("Leader Financial") and its
wholly owned subsidiary, Leader Federal Bank for Savings
("Savings Bank"), a federal savings bank, all in Memphis,
Tennessee. Applicant also has requested the Board's approval under section 4(c)(8) of the BHC Act to acquire the
other direct and indirect nonbanking subsidiaries of Leader
Financial listed in the Appendix and thereby engage nationwide in permissible nonbanking activities.1
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(61 Federal Register 30,240 (1996)). The time for filing
comments has expired, and the Board has considered the
notice and all comments received in light of the factors set
forth in section 4(c)(8) of the BHC Act.
Applicant, with total consolidated assets of $11.4 billion,
operates subsidiary banks in Alabama, Arkansas, Ken-
1. The proposal is the first step in a series of transactions to merge
Savings Bank with and into Applicant's wholly owned subsidiary
bank, Union Planters National Bank, Memphis, Tennessee ("UPNB").
Immediately after the merger, UPNB would sell Savings Bank's
Nashville branches to Union Planters Bank-Middle Tennessee, Nashville, Tennessee ("UPB-Middle Tennessee"). These transactions (the
"Bank Mergers") are subject to the approval of the Office of the
Comptroller of the Currency ("OCC") under section 18(c) of the
Federal Deposit Insurance Act (12 U.S.C. § 1828(c)).
960
Federal Reserve Bulletin • October 1996
tucky, Louisiana, Mississippi, Missouri, and Tennessee.2
Applicant is the third largest depository organization in
Tennessee, controlling $4.9 billion in deposits, representing approximately 8.9 percent of total deposits in depository institutions in the state.3 Leader Financial, with total
consolidated assets of $3.2 billion, is the 8th largest depository organization in Tennessee, controlling $1.5 billion in
deposits, representing 2.8 percent of total deposits in depository institutions in the state. On consummation of the
proposal, Applicant would remain the third largest depository organization in Tennessee, controlling deposits of
$6.4 billion, representing approximately 11.7 percent of
total deposits in depository institutions in the state.
The Board has determined that the operation of a savings
association by a bank holding company is closely related to
banking for purposes of section 4(c)(8) of the BHC Act.4
Applicant has committed to conform all activities of Savings Bank to those permissible for bank holding companies
under section 4(c)(8) of the BHC Act and Regulation Y.5
The Board also has determined by regulation that the
proposed lending, leasing, community development, creditrelated insurance, and full-service securities brokerage activities are closely related to banking within the meaning of
section 4(c)(8) of the BHC Act.6 Applicant has committed
to conduct these activities subject to the limitations set
forth in Regulation Y.
Competitive Considerations
Under section 4(c)(8) of the BHC Act, the Board is required to consider whether a proposal is likely to result in
any significantly adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts
of interests, or unsound banking practices.7 In evaluating
the competitive eifects of a proposed transaction, the Board
must determine the appropriate product market and geographic market.8 Using the cluster of banking products and
2. Consolidated asset data are as of March 31, 1996. All other data
are as of June 30, 1995, and are adjusted to reflect acquisitions of
Applicant consummated through March 15, 1996.
3. In this context, depository institutions include commercial banks,
savings banks, and savings associations.
4. See 12 C.F.R. 225.25(b)(9). Applicant's proposed acquisition of
Leader Financial also is subject to the approval of the Office of Thrift
Supervision ("OTS") pursuant to the Home Owners Loan Act
(12 U.S.C. § 1467a(e)).
5. Applicant has committed that all impermissible real estate activities will be divested or terminated within two years of consummation
of the proposal, that no new impermissible projects or investments
will be undertaken during this period, and that capital adequacy
guidelines will be met excluding impermissible real estate investments. Applicant also has committed that any impermissible securities
or insurance activities conducted by Savings Bank will cease on or
before consummation of the proposal. Savings Bank may continue to
service any impermissible insurance policies for two years after
consummation of the proposal, but may not renew any policies during
this two-year period.
6. See 12 C.F.R. 225.25(b)(1), (5), (6), (8)(i), and (15)(ii).
7. 12 U.S.C. § 1843(c)(8).
8. See First Hawaiian, Inc., 79 Federal Reserve Bulletin 966,
966-68 (1993); SouthTrust Corporation, 78 Federal Reserve Bulletin
services, which is the traditional method for analyzing the
competitive effects of an acquisition of a depository institution, the Board finds that consummation of the proposal
would not have a significantly adverse effect on competition in any relevant banking market.9
Applicant and Savings Bank compete directly in the
Memphis and Nashville, Tennessee, banking markets.10
Consummation of the proposal would not cause the levels
of concentration as measured by the Herfindahl-Hirschman
Index ("HHI") to exceed the Department of Justice merger
guidelines in either of these banking markets,11 and a large
number of depository institutions would continue to oper-
710 (1992); see also United States v. Philadelphia National Bank,
374 U.S. 321, 357 (1963). Mid-South Peace and Justice Center, Memphis, Tennessee ("Mid-South"), maintains that the Board should
analyze the competitive eifects of the proposal on specific loan products and banking services, including loans secured by used automobiles. Mid-South provides no evidence to support the conclusion that
individual products and services should be considered separately.
Available data indicate that consummation of the proposal is not likely
to increase appreciably the level of concentration in consumer lending
or commercial lending, including small business lending. Moreover,
numerous competitors, including a number of nonbank lenders that
provide consumer loans, would remain after consummation of the
proposal, and the relevant markets are attractive for entry by other
competitors.
9. Mid-South and Inner City Press/Community on the Move, Bronx,
New York ("ICP"), contend that the Board should separately consider
the competitive effects of the proposal in several downtown and lowto moderate-income areas of Memphis, Tennessee. In determining the
relevant geographic markets, the Board has considered the location of
the depository institutions, worker commuting patterns (as indicated
by census data), and other indicia of economic integration and the
transmission of competitive forces among depository institutions.
Commuting data from the 1990 Census show significant levels of
commuting into Shelby County, Tennessee, which includes Memphis,
from the five surrounding counties. In addition, Memphis is the largest
city in the six-county area and is the primary location for shopping,
services and entertainment for residents in the area. Other relevant
indicators, moreover, including the Memphis Metropolitan Statistical
Area ("MSA") and Memphis Ranally Metropolitan Area, reflect a
substantial degree of economic integration between Shelby County
and its surrounding counties. Based on all the facts of record, the
Board concludes that the appropriate geographic market for analyzing
the combination of Applicant and Leader Financial in this area is the
Memphis, Tennessee banking market, which is approximated by
Shelby, Tipton and Fayette Counties in Tennessee; Crittendon County,
Arkansas; and De Soto and Tate Counties in Mississippi.
10. The Nashville, Tennessee, banking market is approximated by
Cheatham, Davidson, Robertson, Rutherford, Sumner, Williamson,
and Wilson Counties, and the town of Spring Hill in Maury County,
all in Tennessee.
11. On consummation of the proposal, the HHIs would increase 261
points to 1671 in the Memphis banking market, and 1 point to 1467 in
the Nashville banking market. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), a
market in which the post-merger HHI is between 1000 and 1800 is
considered moderately concentrated. The Justice Department has informed the Board that a bank merger or acquisition will not be
challenged (in the absence of other factors indicating anti-competitive
effects) unless the post-merger HHI is at least 1800 and the merger
increases the HHI by more than 200 points. The Justice Department
has stated that the higher than normal HHI thresholds for screening
bank mergers for anticompetitive effects implicitly recognize the
competitive effect of limited purpose lenders and other non-depository
financial entities.
Legal Developments
ate in these markets.12 Based on these and all other facts of
record, the Board concludes that consummation of the
proposal would not result in any significantly adverse
eifects on competition or on the concentration of banking
resources in the Memphis or Nashville banking markets or
any other relevant banking market.
Applicant also operates subsidiaries that engage in mortgage lending, leasing, credit-related insurance, and securities brokerage activities in competition with Leader Financial subsidiaries. The record indicates that there are
numerous providers of these services and that the markets
for these services are unconcentrated. Based on all the facts
of record, the Board concludes that consummation of the
proposal would not have any significantly adverse eifects
on competition in the markets for these nonbanking services.
Record of Performance Under the Community
Reinvestment Act
In acting on a proposal to acquire a savings association
under section 4(c)(8) of the BHC Act, the Board reviews
the records of the relevant depository institutions under the
Community Reinvestment Act (12 U.S.C. § 2901 et seq.)
("CRA"). 13 As provided in the CRA, the Board has evaluated the record of performance of Applicant's depository
institutions and Savings Bank in light of the CRA performance examinations of these organizations by their primary federal supervisors.
12. After consummation of the proposal, Applicant would remain
the second largest depository institution in the Memphis banking
market and the fourth largest depository institution in the Nashville
banking market. Applicant would control approximately 25.5 percent
of total deposits in depository institutions in the Memphis banking
market ("market deposits") and 8.6 percent of market deposits in the
Nashville banking market after consummation of the proposal. In
addition, 37 depository institutions would remain in the Memphis
banking market and 32 depository institutions would remain in the
Nashville banking market after consummation of the proposal.
Market share data are based on calculations in which the deposits of
thrift institutions are included at 50 percent. The Board previously has
indicated that thrift institutions have become, or have the potential to
become, significant competitors of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin 743 (1984). Because the deposits of
Savings Bank would be controlled by a commercial banking organization after consummation of the proposal, those deposits are included
at 100 percent in the calculation of Applicant's pro forma market
share. See Norwest Corporation, 78 Federal Reserve Bulletin 452
(1992); First Banks, Inc., 76 Federal Reserve Bulletin 669 (1990).
13. The Board previously has determined that the CRA by its terms
generally does not apply to applications by bank holding companies to
acquire nonbanking companies under section 4(c)(8) of the BHC Act.
See The Mitsui Bank, Ltd., 76 Federal Reserve Bulletin 381 (1990).
The Board also has stated that, unlike other companies that may be
acquired by bank holding companies under section 4(c)(8) of the BHC
Act, savings associations are depository institutions, as that term is
defined in the CRA, and thus acquisitions of savings associations are
subject to review under the express terms of the CRA. See Norwest
Corporation, 76 Federal Reserve Bulletin 873 (1990).
961
The Board also has carefully considered comments from
several organizations and an individual ("Protestants") 14
that criticize the record of Applicant and Savings Bank in
meeting the credit needs of minority individuals and lowto moderate-income communities in Memphis, Tennessee.
In addition, some Protestants contend that UPNB and
Savings Bank have an insufficient number of branches in
downtown and low- to moderate-income areas of Memphis, and that Applicant's proposed branch closings in
Memphis after consummation of this transaction would
adversely affect the local communities. Several Protestants
also contend that data filed under the Home Mortgage
Disclosure Act ("HMDA") (12 U.S.C. § 2801 et seq.)
indicate that UPNB and Savings Bank have refused or
failed to assist in meeting the housing-related credit needs
of African Americans, low- to moderate-income neighborhoods, and areas with predominantly minority populations
("minority communities") in Memphis.
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 an institution's overall record of performance
under the CRA by its primary federal supervisor.15 In
addition, the Board considers an institution's policies and
practices for compliance with applicable fair lending laws.
The Board also takes into account information on an institution's lending activities that assist in meeting the credit
needs of low- to moderate-income neighborhoods.
Performance Examinations. All of Applicant's subsidiary banks and savings associations that have been examined for CRA performance received "outstanding" or "satisfactory" ratings from their primary federal supervisors in
their most recent examinations. In particular, UPNB received a "satisfactory" CRA performance rating from the
OCC, its primary federal supervisor, at its most recent
examination as of October 1994 ("UPNB Examination").16
Furthermore, Savings Bank received a "satisfactory" CRA
performance rating from the OTS at its most recent examination as of April 1995 ("Savings Bank Examination").
Performance Records of Applicant and Savings Bank.
As noted above, Applicant proposes to merge Savings
Bank with and into UPNB, after which the operations of
Savings Bank would become subject to the CRA policies,
procedures, and programs of UPNB. The Board has care-
14. In addition to Mid-South and ICP, Protestants include Memphis
Area Community Reinvestment Organization ("MACRO"); VECA
Community Development Corporation; Students, Mothers, and Concerned Citizens, Inc.; and Douglass, Bungalow & Crump Neighborhood Association's Coalition Alliance ("DBC Neighborhood Alliance"), all of Memphis, Tennessee.
15. The Board notes that the Statement of the Federal Financial
Supervisory Agencies Regarding the Community Reinvestment Act
provides that a CRA examination is an important and often controlling
factor in consideration of an institution's CRA record and that reports
of these examinations will be given great weight in the applications
process. See 54 Federal Register 13,742, 13,745 (1989).
16. UPB-Middle Tennessee also received a "satisfactory" CRA
performance rating from the OCC at its most recent examination as of
January 1996.
962
Federal Reserve Bulletin • October 1996
fully reviewed Applicant's CRA performance record in
light of substantially similar comments submitted in connection with a number of recent applications filed by
Applicant.17 In the Union Planters Orders, the Board carefully reviewed UPNB's CRA performance record, including its lending, marketing, and outreach activities, the
services provided through its branches, its branch closing
policies, and the actions that the bank had taken to
strengthen its lending in low- to moderate-income areas.
The Board also considered Applicant's HMDA data for
1990 to 1994, and preliminary 1995 HMDA data. For the
reasons discussed in detail in the Union Planters Orders,
which are hereby incorporated by reference, the Board
concluded that the CRA performance record of Applicant
was consistent with approval of the applications under the
BHC Act.
The Union Planters Orders noted that the UPNB Examination found that the bank's community delineation was
reasonable and did not exclude any low- to moderateincome neighborhoods. The examination also found that
UPNB had a satisfactory record of ascertaining community
credit needs and that the bank's marketing program effectively informed all segments of its delineated community
of the bank's credit products and services. In addition,
examiners concluded that the bank's distribution of loans,
applications, and denials was reasonable. The Union Planters Orders also reviewed UPNB's special lending programs to assist in meeting the credit needs of low- to
moderate-income borrowers, including participation in a
number of government-sponsored programs through the
Federal Housing Administration ("FHA"), Veterans Administration ("VA"), Tennessee Housing Development Authority, and Small Business Administration.18
The Savings Bank Examination found that the institution's delineated community was reasonable and did not
unreasonably exclude any low- to moderate-income neighborhoods. Examiners found that Savings Bank's branches
that accepted mortgage loan applications were easily accessible to members of the local communities. Examiners also
found that Savings Bank had a strong record of ascertain-
17. See Union Planters Corporation, 82 Federal Reserve Bulletin
756 (1996); Union Planters Corporation, 82 Federal Reserve Bulletin
745 (1996); Union Planters Corporation, 82 Federal Reserve Bulletin
78 (1996); and Union Planters Corporation, 81 Federal Reserve
Bulletin 800 (1995) (collectively, "Union Planters Orders"). These
matters have included UPNB's sensitivity to the credit needs of
African Americans, its history of providing loans and other banking
services to low- to moderate-income neighborhoods and minority
residents of Memphis, and its branch locations in downtown and lowto moderate-income areas of Memphis.
18. One Protestant expresses concern that consummation of the
proposal would reduce the level of funding available for community
development activities in Memphis. The UPNB Examination noted
that UPNB was a charter member of the Memphis Multi-Bank Community Development Corporation, and had formed an association with
the City of Memphis and community groups to develop housing for
low- to moderate-income persons. Applicant, moreover, has requested
approval to continue Leader Financial's participation in two community development housing projects that will be rented primarily to
low- to moderate-income persons.
ing the credit needs of, and marketing its credit products to,
residents of Memphis.19 The Savings Bank Examination
concluded that Savings Bank had performed reasonably
well in attracting loan applications from individuals in
low- to moderate-income census tracts in the Memphis
MSA, and that the association's credit extensions, credit
applications and credit denials were adequately distributed
throughout its delineated community. In addition, examiners noted that Savings Bank was an active participant in the
market for FHA and VA loans and participated in a variety
of community development projects in Memphis.20
Branch Locations and Closings. The UPNB Examination concluded that the bank's branch and automated teller
machine ("ATM") networks were reasonably accessible to
all segments of the bank's community, including low- to
moderate-income neighborhoods. UPNB operates 35 fullservice branches and 37 stand-alone ATMs in Shelby
County.21 Five of UPNB's branches in Memphis are located in low- to moderate-income census tracts. The bank
recently applied for the OCC's approval to establish an
additional 55 stand-alone ATMs in convenience stores
located throughout Shelby County, and 26 of these ATMs
would be located in low- to moderate-income census
tracts.22 Savings Bank operates 15 branches in Shelby
County, including two branches that are located in low- to
moderate-income census tracts.
19. Examiners noted that Savings Bank initiated a marketing plan in
the Memphis area that placed special emphasis on attracting credit
applications from individuals in low- to moderate-income census
tracts. Examiners also found that the association marketed its credit
products through local newspapers and radio programs with predominately minority audiences and through advertisements in low- to
moderate-income and minority communities.
20. Savings Bank purchased and originated 6,245 FHA and VA
loans in 1993 and 1994, totalling more than $419 million. In connection with its operations, Savings Bank purchases and services pools of
delinquent FHA and VA loans. Certain Protestants contend, without
providing any substantiation, that Savings Bank may use improper
collection techniques to service these delinquent loans, and question
whether UPNB's proposed acquisition of this line of business is
consistent with the convenience and needs of the community. The
Board has carefully considered Protestants comments in light of
confidential reports of examination assessing Savings Bank's FHA/VA
loan purchase and servicing program. The Board also notes that OTS
examiners favorably noted Savings Bank's purchase of FHA and VA
loans at the Savings Bank Examination.
21. Fifteen of UPNB's branches are designated "Home Buyer
Centers" and are staffed by employees with particular knowledge of
the bank's mortgage products, including its special housing-related
lending programs.
22. Two Protestants submitted proposals requesting that Applicant
agree to establish a bank branch in specific neighborhoods in Memphis. UPNB is conducting an internal analysis to determine whether
UPNB should construct a branch at the locations identified by Protestants. Although communications by depository institutions with community groups provide a valuable method of assessing and determining how an institution may best address the credit needs of the
community, the Board believes that the CRA does not require that a
depository institution enter into an agreement with any organization.
Accordingly, in reviewing the proposal, the Board has focused on the
programs and policies that Applicant and Savings Bank have in place
to serve the credit needs of their entire communities. See Fifth Third
Bancorp, 80 Federal Reserve Bulletin 838 (1994).
Legal Developments
UPNB has publicly stated that it plans to close or consolidate 14 branches of UPNB and Savings Bank in the
Memphis banking market after consummation of the proposal and the related Bank Mergers. The operations of the
14 branches would be transferred to other branches of the
combined entity.23 More than 70 percent of the branches to
be closed or consolidated in the Memphis area are located
within one-half mile of another UPNB branch, and all of
the branches are located within one mile of another UPNB
branch.24 Two of the branches to be closed or consolidated
are located in low- to moderate-income areas. After the
proposed branch actions, UPNB would continue to operate
five branches in low- to moderate-income census tracts.25
Applicant has stated that the proposed branch closings
and consolidations in Memphis would be conducted in
accordance with UPNB's branch closing policy. The
UPNB Examination concluded that the bank's branch
closing/service reduction policy seeks to minimize the
impact of any reduction in services and that UPNB had an
acceptable record of opening and closing branch offices.
The Board notes that UPNB's branch closing policy requires the bank to notify community groups and leaders
prior to closing any branch, and that UPNB has sent
notification of the proposed closings and consolidations to
a variety of community groups in the Memphis area.26 In
addition, UPNB's proposed branch closings will be subject
to the Joint Agency Policy Statement on Branch Closings
("Joint Policy Statement").27 The Board also notes that the
impact of UPNB's proposed branch closings and consoli23. Some Protestants contend that the closure of specific branches
would negatively affect the local communities. Applicant has stated
that it would continue to serve all communities currently served by the
branches slated for closure or consolidation. Applicant also has noted
that UPNB intends to establish a telephone banking center capable of
opening accounts and accepting loan applications from customers
located throughout the Memphis area.
24. Applicant also has stated that it intends to close or consolidate
an additional four branches of Savings Bank and UPB-Middle Tennessee in the Nashville banking market after consummation of the proposal. Three of the four branches to be closed or consolidated in the
Nashville area are located within one-half mile of another UPBMiddle Tennessee branch, and none of the four branches is located in
a low- to moderate-income census tract.
25. None of the branches to be closed or consolidated in connection
with the proposal are located in a census tract that has a minority
population of 80 percent or more.
26. These groups include the National Association for the Advancement of Colored People, the Memphis Urban League, the Memphis
Area Neighborhood Development Community Organization, and the
DBC Neighborhood Alliance.
27. See 58 Federal Register 49,083 (1993) (interpreting section 42
of the Federal Deposit Insurance Act (12 U.S.C. § 1831r-l)). Under
these provisions, all insured depository institutions are required to
submit a notice of any proposed branch closing to the appropriate
federal banking agency no later than 90 days before the date of closure
that contains:
(1) The identity of the branch to be closed and the proposed closing
date;
(2) A detailed statement of the reasons for the decision to close the
branch; and
(3) Statistical or other information supporting the reasons for closure, consistent with the institution's written policy for branch
closings.
963
dations will be assessed by examiners as part of the bank's
next CRA performance examination and will be reviewed
by the Board in future applications to acquire a depository
facility.
HMDA Data. In the Union Planters Orders, the Board
noted that 1990-1994 HMDA data for Applicant and
UPNB generally reflect reasonable efforts by UPNB to
assist in meeting the credit needs of communities with lowto moderate-income and minority residents.28 In connection with the proposal, the Board has carefully reviewed
the 1995 HMDA data for Applicant and the 1993, 1994,
and 1995 HMDA data for Savings Bank.29 These data for
UPNB indicate that UPNB continues to assist in meeting
the needs of minorities and low- to moderate-income communities.30
HMDA data for Applicant and Savings Bank, however,
also generally indicate some disparities in the rate of loan
originations, denials, and applications by racial group and
income level. The Board is concerned when an institution's
record indicates disparities in lending to minority applicants and believes that all banks are obligated to ensure
that their lending practices are based on criteria that assure
not only safe and sound banking, but also equal access to
credit by creditworthy applicants regardless of race. The
Board recognizes, however, that HMDA data alone provide
an incomplete measure of an institution's lending in its
community because these data cover only a few categories
of housing-related lending and provide limited information
about the covered applications and loans.31 HMDA data,
therefore, have limitations that make the data an inadequate basis, absent other information, for concluding that
an institution has engaged in illegal discrimination in making lending decisions.
Movement of branches within the same immediate neighborhood that
do not substantially affect the nature of the business or the customers
served are considered consolidations or relocations under the Joint
Policy Statement and, as such, do not require prior notice.
28. The Board noted, for example, that the percentage of the total
number of applications received by UPNB from African Americans
had increased every year from 1992 to 1994. In addition, the Board
noted that UPNB had received a greater percentage of loan applications from, and originated a greater percentage of loans to, African
Americans than the aggregate average of banking institutions in the
Memphis MSA from 1992 to 1994.
29. MACRO submitted a survey of 1993 and 1994 HMDA data for
Applicant and Leader Financial in the Memphis MSA. Based on this
survey, MACRO concluded that Applicant had an "above average"
record of housing-related lending in the Memphis MSA and in the
center city area of Memphis, and that Leader Financial had a "below
average" record of housing-related lending in these areas.
30. For example, the 1995 data indicate that UPNB continued to
receive a higher percentage of its total loan applications in Shelby
County from, and continued to originate a higher percentage of its
total loans to, African Americans than lenders in the aggregate. These
data also indicate that UPNB originated a higher percentage of the
loan applications that it received from low- to moderate-income
census tracts in 1995 than in 1994.
31. For example, HMDA data do not provide a basis for an
independent assessment of whether an applicant who was denied
credit was in fact creditworthy. Thus, credit history problems and
excessive debt levels relative to income—reasons most frequently
cited for a credit denial—are not available from the HMDA data.
964
Federal Reserve Bulletin • October 1996
Because of the limitations of HMDA data, the Board has
carefully reviewed other information, particularly examination reports that provide an on-site evaluation of compliance by UPNB and Savings Bank with the fair lending
laws. The UPNB Examination and Savings Bank Examination found no evidence of prohibited discrimination or
other illegal credit practices at the institutions.32 Examiners
at both institutions also found no evidence of any practices
intended to discourage applications for the types of credit
listed in the bank's CRA statement.
In addition, UPNB and Savings Bank have initiated
several measures to assure compliance with the fair lending laws. For example, UPNB has instituted a "second
look" program for its retail and mortgage loan divisions
and provides sensitivity and diversity training to bank
personnel.33 In May 1996, UPNB also hired a private
consulting firm to conduct a comprehensive fair lending
review of its residential mortgage activities. The Savings
Bank Examination noted that management routinely monitored the association's underwriting policies and procedures to assure that loan applicants are not discriminated
against on a prohibited basis.34
Conclusion Regarding Record of Performance Under
CRA. The Board has carefully reviewed all the facts of
record in considering the CRA performance record of
Applicant and Savings Bank, including information provided by Protestants, Applicant's responses, and the results
of the performance examinations of Applicant's bank subsidiaries and Savings Bank. Based on this review, and for
the reasons discussed in this order and the Union Planters
Orders, the Board concludes that considerations relating to
the CRA are consistent with approval.35
32. Examiners at the UPNB Examination reviewed all first mortgage and home improvement loan applications received by UPNB
during the first six months of 1994, and compared the loan files of
white applicants whose loans were approved with the files of AfricanAmerican applicants whose loans were denied. This review revealed
no instances, practices, or policies indicating that customers were
treated in an illegal manner. Examiners at the Savings Bank Examination also conducted a comparative review of loan files for white
applicants who received loans and minority applicants who were
denied loans. Examiners found no patterns of discriminatory treatment
and concluded that minority and non-minority applicants were given
similar levels of assistance during the underwriting process.
33. UPNB also takes a "second look" at loan applications received
through the bank's automated loan machines.
34. Examiners also noted that Savings Bank's board of directors had
instructed management to reemphasize to all employees the institution's commitment to nondiscriminatory lending.
35. One Protestant contends, without providing supporting facts,
that banking organizations in the Memphis area, including Applicant
and Leader Financial, charge an excessive fee for returned checks and
that banking organizations have colluded to establish a uniformly high
fee for this service. The record indicates that UPNB has an established
record of providing a full range of banking and lending services in its
delineated communities, including substantial lending services, and
offers access to a full range of retail banking services, including a
checking account with no monthly fee for senior citizens and other
low-cost checking account products. While the Board has recognized
that banks help serve the banking needs of their communities by
making available basic banking services at a nominal or no charge, the
CRA does not require that banks limit the fees charged for services.
Other Considerations
In order to approve the proposal, the Board also must
determine that the proposed activities are a proper incident
to banking, that is, that the proposal "can reasonably be
expected to produce benefits to the public, such as greater
convenience, increased competition, or gains in efficiency,
that outweigh possible adverse eifects, such as undue concentration of resources, decreased or unfair competition,
conflicts of interests, or unsound banking practices."36 As
part of the Board's evaluation of these factors, the Board
has carefully reviewed the financial and managerial resources of Applicant, Leader Financial, and their respective subsidiaries, and the effect the transaction would have
on such resources in light of all the facts of record.37 These
facts of record include confidential reports of examination
and other supervisory information received from the primary federal supervisors of the organizations assessing
their financial and managerial resources and compliance
with consumer-related laws.38 Based on all the facts of
record, the Board concludes that the financial and managerial resources of the organizations involved in this proposal
are consistent with approval.39
The record does not support the conclusion that the fees charged by
Applicant or Leader Financial for checking accounts or other banking
services are based in any way on a factor prohibited by law.
The Board also has noted that the limited jurisdiction granted to the
Board under the BHC Act does not authorize the Board to adjudicate
unsubstantiated allegations that arise under a statute administered and
enforced by another agency. See Norwest Corporation, 82 Federal
Reserve Bulletin 580 (1996). The Department of Justice ("DOJ") has
express statutory authority to investigate and prosecute the type of
collusive practices alleged by Protestant, and the Board has provided
Protestant's comments to the DOJ for its consideration.
36. 12 U.S.C. § 1843(c)(8). One Protestant notes that Leader Financial is a defendant in lawsuits concerning the forced placement of
collateral insurance. The "forced placement" of insurance occurs
when a creditor obtains, at the borrower's expense, insurance to
protect collateral after other coverage for the collateral has lapsed.
Leader Financial has denied any wrongdoing and the courts have not
reached any final judgment in these lawsuits. The Board retains
adequate supervisory authority to take action, if appropriate, should
the allegations of improper actions be substantiated. Protestant also
reiterates comments that the Board previously reviewed in the Union
Planters Orders, including comments relating to pending lawsuits
against Applicant involving the forced placement of collateral insurance, a past lawsuit against Applicant involving the sale of securitized
automobile receivables by Applicant's three nonbank subsidiaries,
and allegations of management misconduct at a Mississippi state bank
acquired by Applicant in 1994.
37. See 12 C.F.R. 225.24; see also The Fuji Bank, Limited, 75
Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73
Federal Reserve Bulletin 155 (1987).
38. In conducting this review, the Board has carefully considered
comments from certain Protestants alleging misconduct and violations
of banking laws by the management of Leader Financial, and violations of the Real Estate Settlement Procedures Act (12 U.S.C. § 2601
et seq.) by UPNB and Leader Financial. Based on all the facts of
record, including supervisory information provided by the primary
federal supervisor of UPNB and Leader Financial, the Board does not
believe that the record supports these allegations.
39. One Protestant has questioned whether the proposal would be
eligible for "pooling-of-interests" accounting treatment and why Applicant's pro forma financial statements do not reflect the "goodwill"
Legal Developments
In reviewing the public interest factors in this case, the
Board also has carefully considered the contentions of
certain Protestants that Applicant has not sufficiently demonstrated the public benefits of the proposal.40 The record
indicates that consummation of the proposal and the Bank
Mergers would provide customers of the combined institutions with access to a broader array of banking products
and services than currently is offered by each of the institutions individually.41 In addition, the proposed merger of
Savings Bank and UPNB would provide the customers of
Savings Bank with access to Applicant's larger network of
branches and ATMs.42 Applicant also has stated that it
intends to invest approximately $2.5 million to upgrade the
branches of Savings Bank acquired by UPNB and UPBMiddle Tennessee.43 Applicant states, moreover, that the
combination of Savings Bank and UPNB would permit
UPNB to achieve greater economies of scale and efficiencies in its mortgage operations.
The requirement under section 4 of the BHC Act that the
Board must determine that public benefits from a proposal
can reasonably be expected to outweigh potential adverse
effects necessarily involves a balancing process that takes
currently maintained by Leader Financial. The Board has reviewed
these comments in light of relevant accounting principles and all the
facts of record, including a preliminary opinion of Applicant's independent public accountant stating that the proposal would qualify for
pooling-of-interests accounting treatment. In addition, Applicant has
stated that it will not consummate the proposal unless it qualifies for
pooling-of-interests accounting treatment. The Board also notes that
Leader Financial has no "goodwill" on its financial statements.
40. One Protestant also contends, without providing any supporting
factual evidence, that prior acquisitions by Applicant have benefited
only stockholders of the institutions and resulted in adverse effects
such as increased fees to consumers and fewer banking services and
facilities for low- to moderate-income customers. The facts of record
in this application, and the facts of record considered in the Union
Planters Orders, do not support these contentions.
41. For example, UPNB operates ten automated loan machines and
offers retail trust services and telephone bill payment services to its
customers. Comparable products or services currently are not offered
by Savings Bank. In addition, Applicant has stated that consummation
of the proposal would permit Applicant to offer to its expanded
customer base certain mortgage and loan products that have been
developed by Savings Bank, including a variety of adjustable-rate
mortgage programs and a temporary construction loan that converts to
a permanent loan upon completion of the project.
42. After the Bank Mergers and the proposed branch consolidations,
current customers of Savings Bank would have access to 36 full-service UPNB branches in the Memphis banking market and 24 full-service UPB-Tennessee branches in the Nashville banking market. This
represents a substantial increase over the 15 branches that Savings
Bank currently operates in the Memphis banking market, and the four
branches operated by Savings Bank in the Nashville banking market.
Applicant also operates 37 stand-alone ATMs in the Memphis banking
market and 11 stand-alone ATMs in the Nashville banking market. In
comparison, Savings Bank operates four stand-alone ATMs in the
Memphis banking market and no stand-alone ATMs in the Nashville
banking market. As noted above, UPNB also has requested the approval of the OCC to establish 55 more stand-alone ATMs throughout
Shelby County.
43. Applicant states that these improvements may include expanding the branches to accommodate increased staff, providing drivethrough teller or ATM access, or adding safe deposit boxes or night
depositories.
965
into account the extent of the potential for adverse effects.
For the reasons discussed in this order and the Union
Planters Orders, the potential for adverse effects, if any,
resulting from the transaction is negligible. The Board also
concludes that, based on the considerations discussed
above, including the expanded products and services for
customers, the proposal can reasonably be expected to
produce notable public benefits. Accordingly, based on all
the facts of record, the Board has determined that consummation of the proposal can reasonably be expected to
produce public benefits that would outweigh any likely
adverse effects under the proper incident to banking standard of section 4(c)(8) of the BHC Act.44
Conclusion
Based on the foregoing and all the facts of record, including the commitments discussed in this order and all other
commitments and representations made by Applicant in
connection with the notice, and subject to the terms and
conditions set forth in this order, the Board has determined
that the notice should be, and hereby is, approved.43 The
Board's determination is subject to all the conditions set
forth in Regulation Y, including those in sections 225.7 and
225.23(g) of Regulation Y (12 C.F.R. 225.7 and
44. Some Protestants contend that the Board should delay consideration of the proposal and request additional information from Applicant on the competitive impact of the proposal, proposed branch
closures, the public benefits anticipated from consummation of the
proposal, and the management of Savings Bank's FHA/VA loan
program. Protestants have not provided any facts to demonstrate that a
delay is warranted. The Board is required by the BHC Act and the
Board's rules to act on applications submitted under section 4 of the
BHC Act within specified time periods. Based on all the facts of
record, the Board concludes that the record on this notice is sufficient
to act on the notice at this time and that delay or denial of the proposal
on the grounds of informational insufficiency is not warranted.
45. Some of the Protestants have requested that the Board hold a
public hearing or meeting to receive public testimony on this proposal, including testimony relating to Applicant's proposed branch
closures, the effect of the proposal on banking competition and the
level of lending in Memphis, and the CRA record of performance of
Applicant and Leader Financial. Under the Board's rules, a hearing is
required under section 4 of the BHC Act only if there are disputed
issues of material fact that cannot be resolved in some other manner.
12 C.F.R. 225.23(f). Protestants do not identify disputed issues of fact
that are material to the Board's decision. In addition, interested parties
have had an ample opportunity to present their views, and Protestants
have submitted substantial written comments that have been considered by the Board. Protestants' requests fail to demonstrate why a
written presentation would not suffice and to summarize the evidence
that would be presented at a hearing or meeting. See 12 C.F.R.
262.3(e). The Board has carefully considered the proposal in light of
all the facts of record, including Protestants' comments on the issues
discussed above, and, for the reasons discussed in this order and the
Union Planters Orders, has concluded that the factors that the Board
must consider under section 4 of the BHC Act are consistent with
approval. Protestants' requests dispute the weight that should be
accorded to, and the conclusions that the Board should draw from, the
existing facts of record. For these reasons, and based on all the facts of
record, the Board has determined that a public hearing or meeting is
not required or necessary to clarify the factual record in the notice, or
otherwise warranted in this case. Accordingly, the requests for a
public hearing or meeting on the notice are hereby denied.
966
Federal Reserve Bulletin • October 1996
225.25(g)), and to the Board's authority to require modification or termination of the activities of a bank holding
company or any of its subsidiaries as the Board finds
necessary to assure compliance with, and to prevent evasion of, the provisions of the BHC Act and the Board's
regulations and orders issued thereunder. The Board's decision is specifically conditioned on Applicant's compliance
with the commitments made in connection with the notice,
including the commitments and conditions discussed in
this order. The commitments and conditions relied on in
reaching this decision shall be deemed to be conditions
imposed in writing by the Board in connection with its
findings and decision and may be enforced in proceedings
under applicable law.
This transaction shall not be consummated later than
three months after the effective date of this order, unless
such period is extended for good cause by the Board or the
Federal Reserve Bank of St. Louis, acting pursuant to
delegated authority.
By order of the Board of Governors, effective August 5,
1996.
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Kelley, Phillips, and Meyer. Absent and not voting: Governors Lindsey and Yellen.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
Appendix
Other Nonbanking Subsidiaries of Leader Financial to
be Acquired by Applicant
(1) Leader Services, Inc., Memphis, Tennessee, and
thereby engage in acting as principal, agent or broker in the
sale of certain insurance (including home mortgage redemption insurance) that is directly related to an extension
of credit by the bank holding company or its subsidiaries
pursuant to section 225.25(b)(8)(i) of the Board's Regulation Y; and in full-service brokerage activities pursuant to
section 225.25(b)(15)(ii) of the Board's Regulation Y;
(2) Leader Federal Mortgage, Inc. ("Leader Mortgage"),
Leader Funding Corporation I, and Leader Funding Corporation III, all in Memphis, Tennessee, and thereby engage
in making, acquiring and servicing loans or other extensions of credit pursuant to section 225.25(b)(1) of the
Board's Regulation Y; and
(3) Leader Leasing, Inc., Memphis, Tennessee, and thereby
engage in leasing real and personal property, including
certain higher-residual-value leasing, pursuant to section
225.25(b)(5) of the Board's Regulation Y and making,
acquiring, or servicing commercial loans pursuant to section 225.25(b)(1) of the Board's Regulation Y.
Applicant also has applied to retain Leader Financial's
direct and indirect ownership interest in the following
joint ventures:
(1) Millcreek Development Partnership, L.P. and Hoover
Road, L.P., both in Memphis, Tennessee, and thereby engage in community development activities pursuant to
section 225.25(b)(6) of the Board's Regulation Y; and
(2) Southeastern Mortgage of Alabama, L.L.C., Birmingham, Alabama, and ASMI, LLC, Indianapolis, Indiana, and
thereby engage in making, acquiring, or servicing loans or
other extensions of credit pursuant to section 225.25(b)(1)
of the Board's Regulation Y.
ORDERS ISSUED UNDER FEDERAL RESERVE ACT
Community Bank of Nevada
Las Vegas, Nevada
Order Approving Establishment of a Branch
Community Bank of Nevada, Las Vegas, Nevada
("Bank"), a state member bank, has requested the Board's
approval under section 9 of the Federal Reserve Act
(12 U.S.C. § 321 et seq.) to establish a branch at
2887 South Maryland Parkway, Las Vegas, Nevada.
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published in
accordance with the Board's Rules of Procedure. The time
for filing comments has expired, and the Board has considered the application and all comments received in light of
the factors specified in the Federal Reserve Act.
Bank, with total deposits of approximately $34.9 million, is the 18th largest commercial banking organization
in Nevada, controlling less than 1 percent of the total
deposits in commercial banking organizations in the state.1
Bank has been in operation since July 1995, and, under this
proposal, would establish its first permanent branch.
Considerations Related to the Community Reinvestment
Act
In reviewing an application to establish a branch, the Board
is required to take into account the institution's record
under the Community Reinvestment Act (12 U.S.C. § 2901
et seq.) ("CRA"). 2 The Board has received comments from
the Culinary Workers Union, Local 226, and a number of
individuals ("Protestants") criticizing Bank's record of
performance under the CRA.3 In particular, Protestants
maintain that Bank: .
(1) Has a declining loan-to-deposit ratio;
1. Deposit and state ranking data are as of March 31, 1996.
2. See 12 U.S.C. §§ 2902(3)(C), 2903(2).
3. The Board has also considered comments supporting Protestants'
contentions from the Association of Community Organizations for
Reform Now, the National Community Reinvestment Coalition, and
the National Low Income Housing Coalition.
Legal Developments
(2) Originates a small percentage of real estate loans
within its assessment area;
(3) Lends primarily to borrowers in high-income census
tracts and to large residential developments and commercial projects; and
(4) Does not sufficiently provide residential lending in
census tracts with substantial minority populations.
Protestants also contend that the significant amount of
lending to Bank's directors and shareholders impairs its
ability to assist in meeting the credit needs of its communities.4 The Board has carefully reviewed those comments in
light of all the facts of record.
An institution's most recent CRA performance evaluation is a particularly important consideration in the applications process because it represents a detailed on-site evaluation of the institution's overall record of performance
under the CRA by its primary federal supervisor.5 In connection with this application, the Federal Reserve Bank of
San Francisco ("Reserve Bank") conducted a full-scope,
on-site examination of Bank's CRA record of performance
(the "July 1996 Examination") and has preliminarily rated
Bank's performance as "satisfactory."
Bank qualifies as a small bank for purposes of the new
regulations jointly promulgated by the federal financial
supervisory agencies to implement the CRA.6 Bank was
evaluated under the small bank performance standards,
which consider:
(1) The bank's loan-to-deposit ratio, adjusted for seasonal variation and, as appropriate, other lending-related
activities;
(2) The percentage of loans and, as appropriate, other
lending-related activities located in the bank's assessment area;
(3) The bank's record of lending to and, as appropriate,
engaging in other lending-related activities for borrowers of different income levels and businesses and farms
of different sizes;
(4) The geographic distribution of the bank's loans; and
(5) The bank's record of taking actions, if warranted, in
response to written complaints about its performance in
helping to meet credit needs in its assessment area(s).7
Examiners also consider any evidence of discriminatory or
other illegal credit practices.8
4. In addition, Protestants believe that Bank should provide Spanish
language brochures and other materials.
5. The Board notes that the Statement of the Federal Financial
Supervisory Agencies Regarding the Community Reinvestment Act
provides that a CRA examination is an important and often controlling
factor in the consideration of an institution's CRA record and that
reports of these examinations will be given great weight in the
applications process. See 54 Federal Register 13,742, 13,745 (1989).
6. See 60 Federal Register 22,156 (May 4, 1995). See also 12 C.F.R.
228.12(t) which defines a "small bank" with no parent holding
company as a bank that had less than $250 million in assets as of
December 31 of either of the prior two years. Bank's assets totalled
approximately $37 million as of December 31, 1995.
7. See 12 C.F.R. 228.26.
8. 12 C.F.R. 228.28(c).
967
Bank's loan-to-deposit ratio averaged approximately
70 percent over the four quarters from September 30, 1995,
to June 30, 1996. The July 1996 Examination found that
this ratio exceeded the standards for satisfactory performance in light of peer averages for commercial banks
within Bank's assessment area and nationally. Although
Bank's loan-to-deposit ratio declined to 58 percent as of
June 30, 1996, examiners concluded that the decline resulted from the greater than expected success of Bank's
certificate of deposit program and not from a diminution in
lending.9
As noted, Bank is a small institution and is primarily
engaged in business-purpose lending, especially small business loans.10 Bank's outstanding loans consist of approximately 66 percent for business-related purposes, totaling
$16.5 million, and approximately 23 percent for financing
real estate construction and development, totaling
$5.7 million. The July 1996 Examination found that all of
Bank's business-related loans were small business loans,
and that approximately 74 percent by count and 72 percent
by dollar amount of those loans were made in its assessment area.11 Approximately 49 percent of Bank's construction and development loans by count and 56 percent by
dollar amount of commitment were also made in its assessment area. Overall, approximately 67 percent by count of
Bank's business-related and construction and development
loans and 62 percent by dollar amount were conducted
within its assessment area.
Of Bank's small business loans, 24 percent by count and
35 percent by dollar amount were made in moderateincome census tracts.12 Bank also is qualified to make
government-sponsored loans through the Small Business
Administration ("SBA"), specifically the SBA's 504 and
9. If Bank's loans to directors were excluded from consideration in
calculating the ratio, as suggested by Protestants, examiners still
considered Bank's loan-to-deposit ratio to be reasonable as compared
to the ratio for its national peers. Examiners also reviewed the level of
aggregate loans to Bank's directors and their related interests. They
concluded that the level was not unusual for a de novo bank that had
been in operation for a short period of time, because such institutions
often rely on established relationships to generate business.
10. For purposes of the new CRA regulation, a small business loan
is a commercial and industrial loan with an original amount of
$1 million or less, or a loan secured by nonfarm nonresidential
property with an original amount of $1 million or less. See 12 C.F.R.
228.12(u). Bank also participated as a mortgage broker in 67 home
mortgages, totaling approximately $12.6 million, as of the July 1996
Examination.
11. As determined by the examiners, Bank's assessment area encompasses 52 census tracts in Clark County, Nevada, which includes
the City of Las Vegas. This area, which is located in the western part
of the city and includes only whole geographies (i.e, in this case,
census tracts), was considered by examiners to be reasonable and not
to reflect any illegal discrimination or to exclude arbitrarily any lowand moderate-income areas. Bank's assessment area is comprised of
the following numbers of census tracts by income: low income—4,
moderate income—10, middle income—21, and high income—17.
Bank intends to expand its assessment area after opening the proposed
branch.
12. The largest dollar amount of loans extended by Bank was in
moderate-income census tracts (as opposed to middle- or upperincome census tracts).
968
Federal Reserve Bulletin • October 1996
7A programs. Examiners also found that residential real
estate development within Bank's assessment area was
focused primarily in middle- and high-income census
tracts, consistent with construction and development lending by Bank and by other institutions. Nevertheless, Bank
financed the development of 16 condominiums to provide
affordable housing to low- and moderate-income individuals, with purchase prices ranging from $68,000 to
$70,000.13
Examiners considered Bank to be generally responsive
to written complaints about its efforts to assist in meeting
the credit needs of its community. The July 1996 Examination noted a number of complaints in Bank's public comment file from members of the Culinary Workers Union.
Bank invited all complainants who provided return addresses to discuss their concerns, but no complainant has
responded. The July 1996 Examination also found no
evidence of illegal discrimination and considered Bank's
compliance with fair lending laws and regulations satisfactory.14
The Board has carefully reviewed all the facts of record
in considering the CRA performance record of Bank, including information provided by Protestants, Bank's responses, and the results of the July 1996 Examination.
Based on this review, the Board concludes that considerations relating to the CRA are consistent with approval.15
Other Considerations
The Board also carefully reviewed the factors required to
be considered in proposals to establish a branch, including
the financial condition of Bank,16 the general character of
13. Bank also financed the development of 23 single family homes
with purchase prices ranging from $89,950 to $112,945. Examiners
noted, based on information from the Housing Authority of the City of
Las Vegas and the Nevada Fair Housing Center, that housing with a
purchase price of less than $90,000 is considered affordable for lowto moderate-income individuals.
14. The compliance examination included a sampling of approved
and denied loan applications, a review of Bank's loan policies and
lending criteria, and interviews with Bank personnel. Examiners also
noted that Bank financed a real estate development project in one
census tract and made 13 percent of its small business loans in another
census tract within Bank's assessment area that have substantial
minority populations.
15. Protestants question whether Bank has provided sufficient information to demonstrate a benefit to the community from this proposal.
In reviewing an application to establish a branch, the Board is required to consider the specific factors set forth in the Federal Reserve
Act and the bank's record of performance under the CRA. As discussed in this order, the Board has carefully reviewed the proposal in
light of these considerations. Neither of these Acts, however, requires
a separate finding that benefits to the community would result from
the establishment of a branch. Protestants also maintain that Bank has
not complied with all aspects of its internal CRA policy, including
documentation of its outreach efforts. The new CRA regulations, as a
general matter, focus on an institution's actual performance and not
the documentation of its lending efforts.
16. Protestants contend that a substantial portion of Bank's deposits
is from large depositors in amounts of $100,000 or more.
Approximately 60 percent of Bank's large deposits are held by
Bank's primary shareholders, and two of these depositors are Bank
its management, and the proposed exercise of corporate
powers. Protestants argue that an administrative action by
the National Labor Relations Board ("NLRB") against a
casino owned by one of Bank's outside directors, past
business proposals between Bank and its officers and directors, and current loans extended to Bank insiders raise
adverse managerial considerations and conflicts of interests
concerns. Protestants also allege that Bank has made loans
to single borrowers and their related interests that exceed
25 percent of its unimpaired capital in violation of Nevada
state law.17
The Board does not believe that the conduct at issue in
the NLRB proceeding warrants a denial of the proposal.18
In addition, the Board notes that issues raised by Bank's
proposed business dealings with its officers and directors
were resolved in the context of Bank's application for
membership in the Federal Reserve System two years ago.
Reserve Bank and state examiners also recently conducted
a joint safety and soundness examination of Bank. Examiners reviewed all of Bank's loans to insiders and concluded
that they complied with Regulation 0 ( 1 2 C.F.R. Part 215),
the regulation applicable to loans to insiders of state member banks, including the requirement that an insider abstain
from voting on his or her own loan application. Bank also
has sold to institutions unaffiliated with Bank or Bank's
directors participations in loans to single borrowers, in
order to comply with Nevada limitations on loans to single
borrowers; and state examiners did not find any violations
of applicable state law lending limits. The Board also notes
that Bank has a compliance officer and written procedures
to ensure compliance with all applicable regulations. In
light of these and all the facts of record, the Board concludes that other factors required to be considered under
section 9 of the Federal Reserve Act are consistent with
approval.19
directors. In this light, examiners in a recent safety and soundness
examination did not consider the volatility of these deposits to adversely affect the financial condition of Bank and noted that Bank
management monitors large depositor relationships closely.
17. See Nevada Revised Stat. §§ 662.145 and 662.155 (1992);
Nevada Administrative Code § 662.002 et seq.
18. The NLRB proceeding is part of a long-standing dispute between the casino and the unions representing beverage dispensers and
hotel and restaurant employees. The NLRB found that the casino had
engaged in unfair labor practices that:
(1) Interfered with, restrained, or coerced employees in the exercise
of their rights under the National Labor Relations Act ("NLRA"),
and
(2) Refused to bargain collectively with the representatives of
employees.
See §§ 8(a)(1) and (a)(5) of the NLRA (29 U.S.C. §§ 158(a)(1) and
(a)(5)). The conduct at issue included surveillance on and ejection of
union representatives, unilaterally imposing new rules on employee
conduct and unilaterally ceasing to pay pension fund contributions.
The casino was ordered to cease and desist from these activities, and
the NLRB's finding was upheld by a federal circuit court of appeals.
19. Protestants argue that the record of this proposal is informationally incomplete because Bank has failed to respond to their requests
for information, including information regarding its CRA-related activities. In light of all the facts of record, and for the reasons discussed
above, the Board concludes that the record of the proposal is sufficient
Legal Developments
Based on the foregoing, the Board has determined that
the application should be, and hereby is, approved.20 The
Board's approval is specifically conditioned on compliance
by Bank with all the commitments made in connection
with the application. For purposes of this action, these
commitments and conditions are conditions imposed in
writing by the Board in connection with its findings and
decisions and, as such, may be enforced in proceedings
under applicable law.
Approval of the establishment of the branch is subject to
the completion of the facility within one year after the
effective date of this order, unless such period is extended
for good cause by the Board or the Reserve Bank, acting
pursuant to delegated authority.
By order of the Board of Governors, effective
August 28, 1996.
Voting for this action: Chairman Greenspan and Governors Lindsey, Meyer, Phillips, and Yellen. Absent and not voting: Vice Chair
Rivlin and Governor Kelley.
WILLIAM W. WILES
Secretary of the Board
ORDERS ISSUED UNDER INTERNATIONAL BANKING
ACT
Korea Development Bank
Seoul, Korea
Order Approving Establishment of a Branch
Korea Development Bank, Seoul, Korea ("Bank"), a foreign bank within the meaning of the International Banking
Act ("IBA"), has applied under section 7(d) of the IBA
(12 U.S.C. § 3105(d)) to establish a state-licensed branch
in New York, New York. The Foreign Bank Supervision
Enhancement Act of 1991 ("FBSEA"), which amended
to act on the application at this time and that delay or denial of the
proposal on the grounds of informational insufficiency is not warranted.
20. Protestants have requested that the Board hold a public hearing
or meeting on this proposal to allow Protestants to question Bank on
its submissions, to obtain additional information from Bank, and to
present information on the proposal. The Federal Reserve Act does
not require the Board to hold a public hearing on applications to
establish branches. Generally, under its Rules of Procedure, the Board
may, in its discretion, hold a public hearing or meeting on an application to clarify factual issues related to the application and to provide
an opportunity for testimony, if appropriate. 12 C.F.R. 262.3(e) and
262.25(d). Protestants in this case have had ample opportunity to
submit their views, and have, in fact, submitted substantial written
comments that have been carefully considered in connection with the
Board's decision. Protestants' requests fail to demonstrate why written comments are inadequate in this case to present their views or
resolve the issues raised by their comments as required by the Board's
rules. 12 C.F.R. 262.3(e). For these reasons, and based on all the facts
of record, the Board has determined that a public hearing or meeting is
not necessary to clarify the factual record in this application, or
otherwise warranted in this case. Accordingly, Protestants' requests
for a public hearing or meeting on the proposal are denied.
969
the IBA, provides that a foreign bank must obtain the
approval of the Board to establish a branch in the United
States.
Notice of the application, affording interested persons an
opportunity to submit comments, has been published in a
newspaper of general circulation in New York (The New
York Times, April 26, 1996). The time for filing comments
has expired, and the Board has considered the application
and all comments received.
Bank has total consolidated assets of approximately
$62 billion, and is wholly owned by the Government of the
Republic of Korea.1 Bank, which originally was chartered
as a development bank focused on executing the government's economic development plans after the Korean War,
now engages in a wide range of commercial banking
activities in the domestic and international markets.2 In
addition to its network of domestic branches, Bank also
operates 13 domestic subsidiaries engaged in leasing, venture capital finance, investment advisory and securities
services, merchant and investment banking and manufacturing activities. International operations include branches,
representative offices, and banking and financial subsidiaries located in Europe, Asia, and North America. In the
United States, Bank operates a representative office and a
broker-dealer subsidiary, Korea Associated Securities, Inc.
("KASI"), 3 in New York, New York, and several nonbank
subsidiaries and affiliates.4 Bank would be a qualifying
banking organization within the meaning of Regulation K
after establishment of the proposed branch. 12 C.F.R.
211.23(b).
Bank would upgrade its existing representative office in
New York, New York, to a state-licensed branch that
would engage in wholesale banking activities including the
provision of long-term facility loans to Korean manufacturing companies operating in the United States, loan syndications for project and lease finance, and trade financing for
export and import transactions between Korea and the
United States.
The Ministry of Finance and Economy of the Republic
of Korea (the "Ministry") has no objection to the establishment of the proposed branch. The State of New York
Banking Department has approved the application of Bank
to establish the proposed branch.
1. All data are as of December 31, 1995.
2. The Government of Korea does not direct Bank's lending activities or impose legal restrictions, goals, quotas or directives on Bank as
to particular types of commercial transactions or particular borrowers.
A relatively small percentage of Bank's lending is to governmentowned companies.
3. Bank would apply under section 4(c)(8) of the Bank Holding
Company Act for the approval of the Board to retain its ownership
interest in KASI following establishment of the proposed branch.
4. KDB has indirect investments in the following non-bank entities
in the U.S.: Pohang Steel America, a wholly owned subsidiary of
Pohang Iron & Steel Co. of Korea, Daewoo Equipment Corporation
and Daewoo Machinery Corporation, subsidiaries of Daewoo Industries of Korea, Hanjung America Corporation, a wholly owned subsidiary of Korea Heavy Industries & Construction Co., Ltd., and a direct
investment in Asiana Airlines, a Korean commercial air carrier with
ticketing offices in the United States.
970
Federal Reserve Bulletin • October 1996
In order to approve an application by a foreign bank to
establish a branch in the United States, the IBA and Regulation K require the Board to determine that the foreign
bank applicant engages directly in the business of banking
outside of the United States, and has furnished to the Board
the information it needs to adequately assess the application. The Board 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)). The Board may also take into
account additional standards as set forth in the IBA
(12 U.S.C. § 3105(d)(3)-(4)) and Regulation K (12 C.F.R.
211.24(c)).
Bank engages directly in the business of banking outside
of the United States through its commercial banking operations in Korea. Bank also has provided the Board with the
information necessary to assess the application through
submissions that address the relevant issues.
Regulation K provides that a foreign bank will be considered to be subject to comprehensive supervision or
regulation on a consolidated basis if the Board determines
that the bank is supervised and regulated in such a manner
that its home country supervisor receives sufficient information on the 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)).5 In making its determination under this standard, the Board has considered the following information.
Bank's primary supervisor is the Ministry. Additionally,
Bank is subject to supervision by the Office of Bank
Supervision and Examination (the "OBSE") of the Bank
of Korea.6 As a government-owned institution, Bank also
is subject to audit and inspection by the Board of Audit and
5. 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.
6. The Board previously has determined that several other Korean
banks are subject to comprehensive supervision on a consolidated
basis in connection with their applications filed under the FBSEA.
These banks, however, are chartered as commercial banks and are
subject to primary supervision by the OBSE. In addition, the Board
recently determined that Long Term Credit Bank of Korea, a private
development bank under the primary supervision of the Ministry, is
also subject to comprehensive supervision on a consolidated basis.
82 Federal Reserve Bulletin 767 (1996).
Inspection (the "BAI"), an independent government
agency that reports directly to the President of Korea.7
The Ministry's supervisory authority extends to establishment or change of location of Bank's subsidiaries and
offices, amendments to the by-laws, approval of an annual
operational program and annual budget, changes in the
amount of capital, nomination of the governor of Bank and
the appointment of the auditor of Bank, and determination
of any permissible incidental activities of Bank.
The BAI is authorized to audit the books and records of
all government-owned institutions, including Bank and its
subsidiaries. The results of the BAI's annual on-site examinations of Bank are reviewed by the Ministry in its role as
the principal supervisor of Bank. BAI inspectors have
broad authority to request any documents necessary to
conduct their examination and their inspection authority
extends to all domestic and foreign offices and subsidiaries
of Bank.
On-site examinations of Bank's head office occur once a
year. These examinations include a review of asset quality,
capital adequacy, accounting procedures, compliance with
laws and regulations, adequacy of internal compliance and
controls, proper procurement of goods and services, appropriateness of expenditures, adequacy of foreign operations,
including an evaluation of management effectiveness over
those operations, and accuracy of reports submitted by
foreign offices.
The BAI has authority to audit all domestic and foreign
offices and subsidiaries of Bank. On-site examinations of
foreign offices occur generally every three years. The
schedule, however, is adjusted as necessary to address
changes in risk profiles or other specific issues. Off-site
examinations are conducted annually in conjunction with
the head office examination, and are similar in scope to
on-site examinations.
Bank is required to submit periodic reports to the Ministry and the OBSE. The Ministry requires the submission of
reports from Bank on all aspects of Bank's banking operations including management, financial performance, and
foreign exchange activity. Certain financial statements, including the balance sheet and income statement, and the
report on capital adequacy are prepared on a consolidated
basis. Reports submitted monthly to either the OBSE or the
Ministry include a balance sheet, deposit and reserve requirement information, credit exposures exceeding 15 percent of equity, aggregate large exposure concentrations,
and loans outstanding to the 30 largest Korean business
conglomerates. Additionally, Bank is required to provide
the OBSE with semiannual operational reports of its foreign branches and subsidiaries. These reports include fi-
7. Certain domestic nonbanking subsidiaries of Bank are subject to
supervision and audit by other regulatory authorities in addition to the
BAI, the Ministry and the Bank of Korea. KDB Securities Co., Ltd.
and Korea Development Investment Management Co., Ltd. are subject to supervision by the Securities Supervisory Board (the "SSB"),
a Ministry-subordinated entity that supervises and regulates securities
firms. The SSB examines these entities on an as-needed basis and
reports the result of the examinations to the Ministry upon request.
Legal Developments
nancial statements and analyses of past due loans and other
exposures. Bank also provides the OBSE with annual
financial reports. The OBSE has the authority to require
any relevant statistical data or information.
In addition to the audits performed by the BAI, all of
Bank's foreign subsidiaries are audited by external auditors at least annually. The external auditors review, among
other things, asset quality and internal controls. Internal
control weaknesses are reported to senior management and
the board of directors. Although there is no formal and
direct communication channel between the external auditors and the Ministry and Bank of Korea, audited financial
statements are provided to the Ministry and Bank of Korea
upon request.
Bank provides the Ministry with operational information
on a consolidated basis which includes materials concerning the business activities of Bank and its domestic and
foreign subsidiaries. Although there are no express legal or
regulatory restrictions imposed on transactions between
Bank and its affiliates, Bank represents that it observes
restrictions fundamentally similar to those imposed on
commercial banks. In this regard, Bank applies limits on
loans to its officers and employees as well as officers or
employees of its affiliated companies. Additionally, certain
restrictions on equity investments apply to Bank.
Bank's internal audit function is responsible for annual
on-site audits of the head office and branches and bi-annual
audits of foreign offices. In accordance with standards set
by the Ministry, the audit group conducts general, specific,
and routine (daily) audits.8 The scope of the general audit
is broad, covering financial performance as well as compliance with Korean banking law and regulations. Head office
audits include a review of asset quality, internal controls,
accounting policies and procedures, operational policies
and controls, budgeting and expenditure controls. The annual internal audit report is submitted to the Ministry and
includes the examination scope, correction orders, and
recommendations. The audit group is also responsible for
ensuring that the foreign offices are complying with Bank's
internal policies and procedures and all applicable banking
laws and regulations of the host countries. The branch also
would be audited by the BAI.
Under the KDB Act, the Ministry has the power to
dismiss the senior officers, executive directors, and auditor
of KDB, and may request the dismissal of the governor.
The BAI may request the Ministry to take disciplinary
action against any officer or employee of KDB who has
committed any unlawful act, refused inspection, or caused
any delay in the presentation of documents requested by
the BAI.
Based on all the facts of record, including the information described above, the Board concludes that Bank is
8. A general audit encompasses an annual review of all operating
departments. Special audits may be conducted at the request of the
Ministry, the board of directors, or the governor in response to specific
issues or concerns which may arise. Routine or daily audits relate
specifically to the loan approval process.
971
subject to comprehensive supervision on a consolidated
basis by its home country supervisor.
The Board has also taken into account the additional
standards set forth in section 7 of the IB A (see 12 U.S.C.
§ 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). Bank has provided the Board with the information necessary to assess
the application through submissions that address the relevant issues. As noted above, Bank has received the consent
of the Ministry to establish the proposed state-licensed
branch. In addition, the Ministry may share information on
Bank's operations with other supervisors, including the
Board.
Korea is a signatory to the Basle risk-based capital
standards, and Korean risk-based capital standards meet
those established by the Basle Capital Accord. Bank's
capital is in excess of the minimum levels that would be
required by the Basle Capital Accord and is considered
equivalent to capital that would be required of a U.S.
banking organization. Managerial and other financial resources of Bank also are considered consistent with approval, and Bank appears to have the experience and
capacity to support the proposed branch. Bank has established controls and procedures for the proposed branch in
order to ensure compliance with U.S. law, as well as
controls and procedures for its worldwide 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 has committed that
it will make available to the Board such information on the
operations of Bank and any affiliate of Bank that the Board
deems necessary to determine and enforce compliance with
the IBA, the Bank Holding Company Act of 1956, as
amended, and other applicable federal law. To the extent
that the provision of such information is prohibited or
impeded by law, Bank has 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 certain information. In addition, subject to
certain conditions, the Ministry may share information on
Bank's operations with other supervisors, including the
Board. In light of these commitments and other facts of
record, and subject to the condition described below, the
Board concludes that Bank has provided adequate assurances of access to any necessary information the Board
may request.
On the basis of all the facts of record, and subject to the
commitments made by Bank, as well as the terms and
conditions set forth in this order, the Board has determined
that Bank's application to establish a state-licensed branch
should be, and hereby is, approved. Should any restrictions
on access to information on the operations or activities of
Bank and its affiliates subsequently interfere with the
Board's ability to obtain information to determine and
enforce compliance by Bank or its affiliates with applicable
federal statutes, the Board may require termination of any
of Bank's direct or indirect activities in the United States.
972
Federal Reserve Bulletin • October 1996
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.9 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, elfective
August 23, 1996.
9. The Board's authority to approve establishment of the proposed
branch 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 its agent, the New York State Banking Department, to license the
Deputy Secretary of the Board
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Kelley, Lindsey, Phillips, and Meyer. Absent and not
voting: Governor Yellen.
JENNIFER J. JOHNSON
INDEX
OF ORDERS ISSUED
OR ACTIONS
proposed branch office of Bank in accordance with any terms or
conditions that the New York State Banking Department may impose.
TAKEN BY THE BOARD
OF GOVERNORS
OF THE FEDERAL
RESERVE
SYSTEM
(APRIL I, 1996-JUNE 30,1996)
,.
Applicant
Merged or Acquired Bank
* • •
or Activity
Date of
*
Approval
Aspen Bancshares, Inc.,
Aspen, Colorado
Val Cor Bancorporation, Inc.,
Cortez, Colorado
Valley National Bank of Cortez,
Cortez, Colorado
The Boston Bancorp,
Boston, Massachusetts
South Boston Savings Bank,
Boston, Massachusetts
BNY Capital Markets, Inc.,
New York, New York
May 31, 1996
82, 665
June 3, 1996
82, 733
June 10, 1996
82, 748
Bessemer Asset Management, Inc.,
New York, New York
Cambridge Bank Professionals, LLC,
St. Cloud, Minnesota
BNC Financial Corporation,
St. Cloud, Minnesota
First Citizens Bank of Butte,
Butte, Montana
CALFP (US), Inc.,
New York, New York
April 24, 1996
82, 569
May 1, 1996
82, 673
April 1, 1996
82, 554
June 10, 1996
82, 754
Order approving an exemption from the
anti-tying provisions
Security First Network Bank,
Pineville, Kentucky
Five Paces Software, Inc.,
Atlanta, Georgia
To establish a representative office in
New York, New York
To establish a representative office in
New York, New York
April 11, 1996
82,584
May 21, 1996
82, 674
April 24, 1996
82, 591
April 22, 1996
82, 592
Bank of Boston Corporation,
Boston, Massachusetts
The Bank of New York Company,
Inc.,
New York, New York
The Bessemer Group, Incorporated,
Woodbridge, New Jersey
BNCCORP, Inc.,
Bismarck, North Dakota
Butte Bank Shares, Inc.,
Butte, Montana
Caisse Nationale de Credit Agricole,
S.A.,
Paris, France
Capital One Financial Corporation,
Falls Church, Virginia
Cardinal Bancshares, Inc.,
Lexington, Kentucky
Cedel Bank, S.A.,
Luxembourg
Commercial Bank "Ion Tiriac",
S.A.,
Bucharest, Romania
Bulletin
Volume
,_
and Page
Legal Developments
Applicant
Community Bancshares of
Marysville, Inc.,
Marysville, Kansas
Creditanstalt-Bankverein,
Vienna, Austria
Croghan Bancshares, Inc.,
Fremont, Ohio
The Croghan Colonia Bank,
Fremont, Ohio
Dresdner Bank AG,
Frankfurt, Germany
Emigrant Bancorp, Inc.,
New York, New York
Farmers State Corporation,
Mountain Lake, Minnesota
Bank Southwest Corporation,
Worthington, Minnesota
Firstar Corporation,
Milwaukee, Wisconsin
Firstar Corporation of Minnesota,
Bloomington, Minnesota
First Commerce Banks of Florida,
Inc.,
Winter Haven, Florida
First Commerce Corporation,
New Orleans, Louisiana
First Hawaiian, Inc.,
Honolulu, Hawaii
Flathead Holding Company of
Bigfork,
Bigfork, Montana
Fleet Financial Group, Inc.,
Boston, Massachusetts
Huntington Bancshares,
Incorporated,
Columbus, Ohio
National City Corporation,
Cleveland, Ohio
Bulletin
Volume
and Page
Merged or Acquired Bank
or Activity
Date of
Approval
Community State Bank,
Hanover, Kansas
June 17, 1996
82, 735
To relocate its existing federally
licensed uninsured branch from
New York, New York, to Greenwich,
Connecticut
Union Bancshares Corp.,
Bellevue, Ohio
Union Bank and Savings Company,
Bellevue, Ohio
Union Bank and Savings Company,
Bellevue, Ohio
RCM Capital Management, California
Limited Partnership,
San Francisco, California
RCM Capital Trust Company,
San Francisco, California
Queens County Bancorp, Inc.,
Flushing, New York
First Security Bank-Madison,
Madison, Minnesota
April 22, 1996
82, 594
June 10, 1996
82, 737
June 10, 1996
82, 737
May 30, 1996
82, 676
April 1, 1996
82, 555
April 8, 1996
82, 557
Jacob Schmidt Company,
St. Paul, Minnesota
American Bancorporation, Inc.,
St. Paul, Minnesota
Prime Bank of Central Florida,
Titusville, Florida
June 24, 1996
82, 762
June 5, 1996
82, 738
150 Baronne Street Limited Partnership,
New Orleans, Louisiana
Pacific One Bank,
Portland, Oregon
Pioneer Federal Savings Bank,
Honolulu, Hawaii
Bank West, N.A.,
Kalispell, Montana
May 29, 1996
82, 679
April 8, 1996
82, 575
June 24, 1996
82, 741
April 15, 1996
82, 558
May 23, 1996
82, 688
NatWest Bank National Association,
Jersey City, New Jersey
Order approving an exemption from the
anti-tying provisions
973
974
Federal Reserve Bulletin • October 1996
Applicant
Huntington Bancshares
Incorporated,
Columbus, Ohio
Wachovia Corporation,
Winston-Salem, North Carolina
Area Bancshares Corporation,
Owensboro, Kentucky
Iowa State Bank,
Hull, Iowa
Komercni Banka, a.s.,
Prague, Czech Republic
Korea Long Term Credit Bank,
Seoul, Korea
Morgan Guaranty Trust Company of
New York,
New York, New York
National Bancshares Corporation of
Texas,
Laredo, Texas
National Bank of Canada,
Montreal, Cananda
Norwest Corporation,
Minneapolis, Minnesota
Norwest Corporation,
Minneapolis, Minnesota
Norwest Corporation,
Minneapolis, Minnesota
Promstroybank of Russia,
Moscow, Russian Federation
R&G Financial Corporation,
Hato Rey, Puerto Rico
Signet Bank,
Richmond, Virginia
Swiss Bank Corporation,
Basle, Switzerland
Bulletin
Volume
and Page
Merged or Acquired Bank
or Activity
Date of
Approval
Five Paces Software, Inc.,
Atlanta, Georgia
May 21, 1996
82, 680
To establish a branch at
1101 Main Street,
Hull, Iowa
To establish a representative office in
New York, New York
To establish a state-licensed branch in
New York, New York
J.P. Morgan Delaware,
Wilmington, Delaware
June 24, 1996
82, 767
April 22, 1996
82, 597
June 24, 1996
82, 767
April 29, 1996
82, 585
Corpus Christi Bancshares, Inc.,
Corpus Christi, Texas
April 29, 1996
82, 565
To establish representative offices in
Denver, Colorado; Boca Raton,
Florida; Baltimore, Maryland; Boston,
Massachusetts; Southfield, Michigan;
Charlotte, North Carolina; Cincinnati,
Ohio; Cleveland, Ohio; Pittsburgh,
Pennsylvania; Memphis, Tennessee;
and Richmond, Virginia
AmeriGroup, Incorporated,
Minnetonka, Minnesota
AmeriBank,
Bloomington, Minnesota
The Prudential Home Mortgage
Company, Inc.,
Clayton, Missouri
Union Texas Bancorporation, Inc.,
Laredo, Texas
Union National Bank of Texas,
Laredo, Texas
To establish a representative office in
New York, New York
R-G Premier Bank of Puerto Rico,
Hato Rey, Puerto Rico
R&G Mortgage Corporation,
Hato Rey, Puerto Rico
Signet Bank N.A.,
Falls Church, Virginia
S.G. Warburg Overseas Ltd.,
London, England
S.G. Warburg Forex Ltd.,
London, England (branch located in
New York, New York)
June 10, 1996
82, 769
April 29, 1996
82, 580
May 6, 1996
82, 683
May 29, 1996
82, 667
April 8, 1996
82, 599
June 17, 1996
82, 745
April 29, 1996
82, 590
May 13, 1996
82, 685
Legal Developments
Applicant
Swiss Bank Corporation,
Basle, Switzerland
Union Planters Corporation,
Memphis, Tennessee
Union Planters Corporation,
Memphis, Tennessee
West One Bank, Idaho,
Boise, Idaho
Wilson Bank Holding Company,
Lebanon, Tennessee
Woodforest Bancshares, Inc.,
Houston, Texas
975
Bulletin
Merged or Acquired Bank
or Activity
Date of
Approval
To establish a representative office in
Houston, Texas
Eastern National Bank,
Miami, Florida
Franklin Financial Group, Inc.,
Morristown, Tennessee
Franklin Federal Savings Bank,
Morristown, Tennessee
U.S. Bank of Idaho, National
Association,
Coeur D'Alene, Idaho
DeKalb Community Bank,
Smithville, Tennessee
Mutual Money Investments, Inc.,
Houston, Texas
May 13, 1996
82, 690
June 5, 1996
82, 745
June 10, 1996
82, 756
June 17, 1996
82, 765
April 1, 1996
82, 568
April 8, 1996
82, 573
Volume
and Page
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 4
Applicant(s)
Bank(s)
Effective Date
Wachovia Corporation,
Winston-Salem, North Carolina
Wachovia Capital Markets, Inc.,
Atlanta, Georgia
August 26, 1996
By Federal Reserve Banks
Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to
the Reserve Banks.
Section 3
Applicant(s)
Bank(s)
Reserve Bank
Effective Date
Alabama National Bancorporation,
Birmingham, Alabama
FIRSTBANC Holding Company, Inc.,
Robertsdale, Alabama
First Bank of Baldwin County,
Robertsdale, Alabama
Commerce Bancorporation, Inc.,
McLoud, Oklahoma
Bootheel Bancorp, Inc.,
Maiden, Missouri
First Community Bank,
Bernie, Missouri
Atlanta
August 21, 1996
Kansas City
July 26, 1996
St. Louis
August 19, 1996
BancFirst Corporation, Inc.,
Oklahoma City, Oklahoma
The Belknap Partnership, L.P.,
Poplar Bluff, Missouri
976
Federal Reserve Bulletin • October 1996
Section 3—Continued
Applicant(s)
Bank(s)
Reserve Bank
Effective Date
Big Bend Bancshares Corporation,
Presidio, Texas
Rio Bancshares Corporation,
Wilmington, Delaware
Bullsboro Bancshares, Inc.,
Newnan, Georgia
Community Holdings Corporation,
Palos Hills, Illinois
Marfa National Bank,
Marfa, Texas
Dallas
July 30, 1996
The Bank of Newnan,
Newnan, Georgia
First State Bank and Trust Company of
Palos Hills,
Palos Hills, Illinois
Air Academy National Bancorp,
United States Air Force Academy,
Colorado
East Texas Delaware Financial
Corporation,
Dover, Delaware
Community Bank,
Longview, Texas
Community Bank,
Longview, Texas
Atlanta
August 14, 1996
Chicago
August 19, 1996
Kansas City
August 21, 1996
Dallas
July 30, 1996
Dallas
July 30, 1996
FirstBank of Greeley,
Greeley, Colorado
Kansas City
August 20, 1996
City National Bank,
Whitehouse, Texas
First Interstate Bank of Montana, N.A.,
Kalispell, Montana
First Interstate Bank of Wyoming, N.A.
Casper, Wyoming
The First National Bank of St. Mary's,
St. Mary's, West Virginia
Allegiance Banc Corporation,
Bethesda, Maryland
Richmond
St. Louis
July 29, 1996
UB&T Financial Corporation,
Dallas, Texas
Dallas
August 2, 1996
Granite Holding Corporation,
Granite Falls, Minnesota
Investors Savings Bank,
Millburn, New Jersey
Minneapolis
July 30, 1996
New York
August 16, 1996
First Interstate Bank of Montana, N.A.,
Kalispell, Montana
First Interstate Bank of Wyoming, N.A.,
Casper, Wyoming
Minneapolis
August 14, 1996
DFC Acquisition Corporation Two,
Kansas City, Missouri
East Texas Bancorp, Inc.,
Longview, Texas
East Texas Delaware Financial
Corporation,
Dover, Delaware
FirstBank Holding Company of
Colorado Employee Stock
Ownership Plan,
Lakewood, Colorado
FirstBank Holding Company of
Colorado,
Lakewood, Colorado
First Commercial Corporation,
Little Rock, Arkansas
First Interstate BancSystem of
Montana, Inc.,
Billings, Montana
First National Bancorp, Inc.,
St. Mary's, West Virginia
F & M National Corporation,
Winchester, Virginia
FNB Bancshares, Inc.,
Gaffney, South Carolina
Freeman Bancstock Investments,
Dallas, Texas
Inwood Bancshares, Inc.,
Dallas, Texas
Independent Bancshares, Inc.,
Clarkfield, Minnesota
Investors Bancorp, MHC,
Millburn, New Jersey
Investors Bancorp, Inc.,
Millburn, New Jersey
JS Investments, Limited Partnership,
Billings, Montana
Nbar5, Limited Partnership,
Ranchester, Wyoming
August 14, 1996
Richmond
August 14, 1996
August 15, 1996
August 16, 1996
Legal Developments
Section 3—Continued
Applicant(s)
Bank(s)
Reserve Bank
Effective Date
Kingsbury BDC Financial Services,
Inc.,
Ponca, Nebraska
Bank of Dixon County,
Ponca, Nebraska
American State Bank,
Newcastle, Nebraska
First United, Inc.,
Central City, Kentucky
Northland Bancshares, Inc.,
Kansas City, Missouri
First National Bank of Platte County,
Kansas City, Missouri
Peoples State Bank,
Topeka, Kansas
Kansas City
July 30, 1996
St. Louis
August 21, 1996
St. Louis
August 15, 1996
St. Louis
August 5, 1996
Minneapolis
July 31, 1996
Atlanta
August 8, 1996
St. Louis
August 2, 1996
Minneapolis
August 20, 1996
Atlanta
August 22, 1996
Dallas
August 2, 1996
Kansas City
August 20, 1996
Kansas City
July 26, 1996
Minneapolis
August 7, 1996
Northland Security Bank,
Ramsey, Minnesota
Second Bancshares, Inc.,
Miami, Oklahoma
The Austin State Bank,
Austin, Indiana
Sierra Thrift,
Fresno, California
Minneapolis
July 31, 1996
Kansas City
July 31, 1996
St. Louis
August 12, 1996
San Francisco
August 8, 1996
Applicant(s)
Nonbanking Activity/Company
Reserve Bank
Effective Date
Arrow Financial Corporation,
Glens Falls, New York
Arrow Vermont Corporation,
Rutland, Vermont
Centura Banks, Inc.,
Rocky Mount, North Carolina
VNB Trust Company,
Rutland, Vermont
New York
July 31, 1996
First Greensboro Home Equity, Inc.
Greensboro, North Carolina
Richmond
August 12, 1996
Lawton Partners Holding Company,
Central City, Kentucky
Mark Twain Bancshares, Inc.,
St. Louis, Missouri
Mark Twain Acquisition Corp. II,
St. Louis, Missouri
Mercantile Bancorporation Inc.,
St. Louis, Missouri
Ameribanc, Inc.,
St. Louis, Missouri
Mesaba Bancshares, Inc.,
Biwabik, Minnesota
Mid State Banks, Inc.,
Cordele, Georgia
National City Bancshares, Inc.,
Evansville, Indiana
Norwest Corporation,
Minneapolis, Minnesota
ONB Financial Services, Inc.,
Ocala, Florida
Ouachita Bancshares Corp.,
West Monroe, Louisiana
Premier Bancorp, Inc.,
Denver, Colorado
R. Banking Limited Partnership,
Oklahoma City, Oklahoma
The Ringsmuth Family Limited
Partnership,
Wakefield, Michigan
River Bancorp, Inc.,
Ramsey, Minnesota
SSB Holdings, Inc.,
Miami, Oklahoma
S.Y. Bancorp, Inc.,
Louisville, Kentucky
WKS, Inc.,
Fresno, California
River Bancorp, Inc.,
Ramsey, Minnesota
The First State Bank of Ocilla,
Ocilla, Georgia
First National Bank of Wayne City,
Wayne City, Illinois
Texas Bancorporation, Inc.,
Odessa, Texas
Ocala National Bank,
Ocala, Florida
Ouachita Independent Bank,
Monroe, Louisiana
Premier Bank,
Lenexa, Kansas
Commerce Bancorporation, Inc.,
McLoud, Oklahoma
Wakefield Bancorporation, Inc.,
Wakefield, Michigan
Section 4
977
978
Federal Reserve Bulletin • October 1996
Section 4—Continued
Applicant(s)
Nonbanking Activity/Company
Reserve Bank
Elfective Date
Century Bancshares, Inc.,
Gainesville, Missouri
Commerzbank Aktiengesellschaft,
Frankfurt am Main, Germany
Deutsche Bank AG,
Frankfurt (Main), Federal
Republic of Germany,
To engage de novo in discount
brokerage securities activities
Commerz Futures Corporation,
Chicago, Illinois
Deutsche Financial Capital Limited
Liability Company,
Greensboro, North Carolina
Oakwood Homes Corporation,
Greensboro, North Carolina
Greater Community Financial, L.L.C.,
Totowa, New Jersey
Smoky Mountain Financial Services,
Inc.,
Jefferson City, Tennessee
To engage in making and servicing
loans
Smoky Mountain Financial Services,
Inc.,
Jefferson City, Tennessee
Central Computers, Inc.,
Victoria, Texas
Norwest Technical Services, Inc.,
Minneapolis, Minnesota
To engage de novo in the issuance
and sale at retail of money orders
Sunburst Financial Services, Inc.,
Jackson, Mississippi, dba Rapid
Finance, Inc.,
Jackson, Mississippi
St. Louis
July 30, 1996
New York
August 12, 1996
New York
August 16, 1996
New York
August 2, 1996
Atlanta
July 31, 1996
Chicago
August 8, 1996
Atlanta
August 16, 1996
Minneapolis
July 26, 1996
Minneapolis
August 22, 1996
Minneapolis
July 26, 1996
Cleveland
August 2, 1996
St. Louis
July 26, 1996
San Francisco
August 14, 1996
San Francisco
August 6, 1996
Greater Community Bancorp,
Totowa, New Jersey
NBN Corp.,
Newport, Tennessee
NEB Corporation,
Fond du Lac, Wisconsin
NBN Corp.,
Newport, Tennessee
Norwest Corporation,
Minneapolis, Minnesota
Norwest Corporation,
Minneapolis, Minnesota
Norwest Financial, Inc.,
Des Moines, Iowa
Norwest Financial Services, Inc.,
Des Moines, Iowa
Norwest Corporation,
Minneapolis, Minnesota
Norwest Financial Services, Inc.,
Des Moines, Iowa
Norwest Financial, Inc.,
Des Moines, Iowa
Security Banc Corporation,
Springfield, Ohio
Sharon Bancshares, Inc.,
Sharon, Tennessee
The Tokai Bank, Limited,
Nagoya, Japan
Wells Fargo & Company,
San Francisco, California
Third Financial Corporation,
Piqua, Ohio
To engage de novo in full-service
brokerage activities
Tokai Financial Services, Inc.,
Berwyn, Pennsylvania
To engage de novo on a nationwide
basis, through all of its subsidiary
banks, in the issuance and sale of
money instruments as follows:
(1) domestic money orders up to a
maximum face value of $10,000;
(2) international money orders in
denominations not to exceed $10,000;
and (3) official checks with no
maximum limitation on the face
amount, but subject to certain
limitations
Legal Developments
979
Section 4—Continued
Applicant(s)
Nonbanking Activity/Company
Reserve Bank
Effective Date
Wells Fargo & Company,
San Francisco, California
To expand to nationwide, the
geographic scope of the previously
approved activity of installing,
owning, operating, and maintaining
automatic teller machines
To engage de novo in the activity of
installing, owning, and operating
automatic teller machines
San Francisco
August 5, 1996
San Francisco
August 9, 1996
Zions Bancorporation,
Salt Lake City, Utah
Sections 3 and 4
Applicant(s)
Nonbanking Activity/Company
Reserve Bank
Effective Date
North Shore Community Bancorp,
Inc.,
Wilmette, Illinois
Lake Forest Bancorp, Inc.,
Lake Forest, Illinois
Hinsdale Bancorp, Inc.,
Hinsdale, Illinois
Libertyville, Bancorp, Inc.,
Lake Forest, Illinois
Crabtree Capital Corporation,
Schaumburg, Illinois
Community Charter Corporation,
St. Louis, Missouri
Missouri State Bank and Trust
Company,
St. Louis, Missouri
Roosevelt Bank,
Chesterfield, Missouri
Roosevelt Mortgage Company,
Chesterfield, Missouri
Chicago
August 14, 1996
St. Louis
August 19, 1996
Roosevelt Financial Group, Inc.,
Chesterfield, Missouri
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
BancFirst,
Oklahoma City, Oklahoma
Boulder Valley Bank & Trust,
Boulder, Colorado
The Bank of Commerce,
McLoud, Oklahoma
Mountain Parks Bank-East,
Evergreen, Colorado
Mountain Parks Bank-West,
Breckenridge, Colorado
The Bank of Louisville,
Louisville, Colorado
Granville United Bank,
Oxford, North Carolina
Kansas City
July 26, 1996
Kansas City
July 26, 1996
Richmond
August 2, 1996
Triangle Bank,
Raleigh, North Carolina
980
Federal Reserve Bulletin • October 1996
Bank Merger Act—Continued
Applicant(s)
Bank(s)
Reserve Bank
Effective Date
Yellowstone Bank,
Laurel, Montana
Yellowstone Bank,
Absarokee, Montana
Yellowstone Bank,
Billings, Montana
Yellowstone Bank,
Columbus, Montana
Minneapolis
August 20, 1996
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.
Long v. Board of Governors, No. 96-9526 (10th Cir., filed
July 31, 1996). Petition for review of Board order dated
July 2, 1996, assessing a civil money penalty and cease and
desist order for violations of the Bank Holding Company
Act.
Esformes v. Board of Governors, No. 96-1916 (S.D. Fla., filed
July 12, 1996). Complaint challenging Board denial of
administrative request for confidential supervisory information. On July 12, 1996, plaintiffs moved for an expedited
hearing on the complaint. The motion was denied on August 1, 1996.
Board of Governors v. Interamericas Investments, Ltd.,
No. 96-7108 (D.C. Cir., filed June 14, 1996). Appeal of
district court ruling granting, in part, the Board's application to enforce an adminstrative investigatory subpoena for
documents and testimony. Appellants filed a motion for a
stay of the district court ruling on July 17, 1996; the
Board's opposition was filed on July 23, 1996.
Interamericas Investments, Ltd. v. Board of Governors,
No. 96-60326 (5th Cir., filed May 8, 1996). Petition for
review of order imposing civil money penalties and cease
and desist order in enforcement case. Petitioners' brief was
filed on July 26, 1996. On August 20, petitioners' motion
for a stay of the Board's orders pending judicial review was
denied by the Court of Appeals.
Kuntz v. Board of Governors, No. 96-1137 (D.C. Cir., filed
April 25, 1996). Petition for review of a Board order dated
March 25, 1996, approving an application by CoreStates
Financial Corp., Philadelphia, Pennsylvania to acquire Meridian Bancorp, Inc., Reading, Pennsylvania. The Board's
motion to dismiss was filed on June 3, 1996.
Kuntz v. Board of Governors, No. 96-1079 (D.C. Cir., filed
March 7, 1996). Petition for review of a Board order dated
February 7, 1996, approving applications by The Fifth
Third Bank, Cincinnati, Ohio, and The Firth Third Bank of
Columbus, Columbus, Ohio, to acquire certain assets and
assume certain liabilities of 25 branches of NBD Bank,
Columbus, Ohio. Petitioner has moved to consolidate the
case with Kuntz v. Board of Governors, No. 95-1495. On
April 8, 1996, the Board filed a motion to dismiss the
action.
Henderson v. Board of Governors, No. 96-1054 (D.C. Cir.,
filed February 16, 1996). Petition for review of a Board
order dated January 17, 1996, approving the merger of First
Citizens BancShares, Inc., Raleigh, North Carolina, with
Allied Bank Capital, Inc., Sanford, North Carolina. Petitioners' motion for a stay was denied on March 7, 1996.
Research Triangle Institute v. Board of Governors,
No. 1:96CV00102 (M.D.N.C., filed February 12, 1996).
Contract dispute. On May 3, 1996, the Board filed a motion
to dismiss the action.
Inner City Press/Community on the Move v. Board of Governors, No. 96-4008 (2nd Cir., filed January 19, 1996). Petition for review of a Board order dated January 5, 1996,
approving the applications and notices by Chemical Banking Corporation to merge with The Chase Manhattan Corporation, both of New York, New York, and by Chemical
Bank to merge with The Chase Manhattan Bank, N.A., both
of New York, New York. Petitioners' motion for an emergency stay of the transaction was denied following oral
argument on March 26, 1996. The Board's brief on the
merits was filed July 8, 1996. The case has been consolidated for oral argument and decision with Lee v. Board of
Governors, No. 95^1134 (2d Cir.).
Menick v. Greenspan, No. 95-CV-01916 (D. D.C., filed October 10, 1995). Complaint alleging sex, age, and handicap
discrimination in employment.
Kuntz v. Board of Governors, No. 95-1495 (D.C. Cir., filed
September 21, 1995). Petition for review of Board order
dated August 23, 1995, approving the applications of The
Fifth Third Bank, Cincinnati, Ohio, to acquire certain assets
and assume certain liabilities of 12 branches of PNC Bank,
Ohio, N.A., Cincinnati, Ohio, and to establish certain
branches. The Board's motion to dismiss was filed on
October 26, 1995.
Lee v. Board of Governors, No. 95-4134 (2nd Cir., filed
August 22, 1995). Petition for review of Board orders dated
July 24, 1995, approving certain steps of a corporate reorganization of U.S. Trust Corporation, New York, New York,
and the acquisition of U.S. Trust by Chase Manhattan
Legal Developments
Corporation, New York, New York. On September 12,
1995, the court denied petitioners' motion for an emergency
stay of the Board's orders. The Board's brief was filed on
April 16, 1996.
Beckman v. Greenspan, No. 95-35473 (9th Cir., filed May 4,
1995). Appeal of dismissal of action against Board and
others seeking damages for alleged violations of constitutional and common law rights. The appellants' brief was
filed on June 23, 1995; the Board's brief was filed on
July 12, 1995.
Money Station, Inc. v. Board of Governors, No. 95-1182
(D.C. Cir., filed March 30, 1995). Petition for review of a
Board order dated March 1, 1995, approving notices by
Bank One Corporation, Columbus, Ohio; CoreStates Financial Corp., Philadelphia, Pennsylvania; PNC Bank Corp.,
Pittsburgh, Pennsylvania; and KeyCorp, Cleveland, Ohio,
to acquire certain data processing assets of National City
Corporation, Cleveland, Ohio, through a joint venture subsidiary. On April 23, 1996, the court vacated the Board's
order. On July 31, 1996, the full court granted the Board's
suggestion for rehearing en banc, and vacated the April 23
panel decision.
In re Subpoena Duces Tecum, Misc. No. 95-06 (D.D.C., filed
January 6, 1995). Action to enforce subpoena seeking predecisional supervisory documents sought in connection with
an action by Bank of New England Corporation's trustee in
bankruptcy against the Federal Deposit Insurance Corporation. The Board filed its opposition on January 20, 1995.
Oral argument on the motion was held July 14, 1995.
Board of Governors v. Pharaon, No. 91-CIV-6250 (S.D. New
York, filed September 17, 1991). Action to freeze assets of
individual pending administrative adjudication of civil
money penalty assessment by the Board. On September 17,
1991, the court issued an order temporarily restraining the
transfer or disposition of the individual's assets.
FINAL ENFORCEMENT
OF GOVERNORS
981
ORDERS ISSUED BY THE BOARD
Joseph G. Donner, Jr.
Lenexa, Kansas
The Federal Reserve Board announced on August 14,
1996, the issuance of an Order of Prohibition against
Joseph G. Donner, Jr., an appraiser for the Premier Bank,
Lenexa, Kansas, a state member bank, and other banks.
Albert L. Margolin
Lenexa, Kansas
The Federal Reserve Board announced on August 14,
1996, the issuance of an Order of Prohibition against
Albert L. Margolin, an appraiser for the Premier Bank,
Lenexa, Kansas, a state member bank, and other banks.
WRITTEN AGREEMENTS APPROVED BY FEDERAL
RESERVE BANKS
The Bank of Corning Company
Corning, Ohio
The Federal Reserve Board announced on August 13,
1996, the execution of a Written Agreement by and among
The Bank of Corning Company, Corning, Ohio, the Federal Reserve Bank of Cleveland, and the Superintendent of
Financial Institutions of the State of Ohio.
A1
Financial and Business Statistics
A3
GUIDE TO TABULAR
DOMESTIC
FINANCIAL
STATISTICS
Money Stock and Bank Credit
A4
A5
A6
A6
Reserves, money stock, liquid assets, and debt
measures
Reserves of depository institutions, Reserve Bank
credit
Reserves and borrowings—Depository
institutions
Selected borrowings in immediately available
funds—Large member banks
Policy Instruments
A7
A8
A9
Federal Finance
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
holdings
Monetary and Credit Aggregates
A12 Aggregate reserves of depository institutions
and monetary base
A13 Money stock, liquid assets, and debt measures
A15 Deposit interest rates and amounts outstanding—
commercial and BIF-insured banks
A16 Bank debits and deposit turnover
A25
A26
A27
A27
Federal fiscal and financing operations
U.S. budget receipts and outlays
Federal debt subject to statutory limitation
Gross public debt of U.S. Treasury—
Types and ownership
A28 U.S. government securities
dealers—Transactions
A29 U.S. government securities dealers—
Positions and financing
A30 Federal and federally sponsored credit
agencies—Debt outstanding
Securities Markets and Corporate Finance
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
A3 3 Domestic finance companies—Assets and
liabilities, and consumer, real estate, and business
credit
Real Estate
A34 Mortgage markets
A35 Mortgage debt outstanding
Consumer Installment Credit
A3 6 Total outstanding
A36 Terms
Flow of Funds
Commercial Banking Institutions
A17 Assets and liabilities, Wednesday figures
Weekly Reporting Commercial Banks—
Assets and liabilities
A19 Large reporting banks
A21 Branches and agencies of foreign banks
A37
A39
A40
A41
Funds raised in U.S. credit markets
Summary of financial transactions
Summary of credit market debt outstanding
Summary of financial assets and liabilities
DOMESTIC
NONFINANCIAL
STATISTICS
Selected Measures
Financial Markets
A22 Commercial paper and bankers dollar
acceptances outstanding
A22 Prime rate charged by banks on short-term
business loans
A23 Interest rates—money and capital markets
A24 Stock market—Selected statistics
A42 Nonfinancial business activity—
Selected measures
A42 Labor force, employment, and unemployment
A43 Output, capacity, and capacity utilization
A44 Industrial production—Indexes and gross value
A46 Housing and construction
A47 Consumer and producer prices
2
Federal Reserve Bulletin • October 1996
DOMESTIC NONFINANCIAL STATISTICSCONTINUED
Selected Measures—Continued
A48 Gross domestic product and income
A49 Personal income and saving
INTERNATIONAL STATISTICS
Summary Statistics
A50
A51
A51
A51
U.S. international transactions—Summary
U.S. foreign trade
U.S. reserve assets
Foreign official assets held at Federal Reserve
Banks
A52 Selected U.S. liabilities to foreign official
institutions
Reported by Nonbanking Business
Enterprises in the United States
A58 Liabilities to unaffiliated foreigners
A59 Claims on unaffiliated foreigners
Securities Holdings and Transactions
A60 Foreign transactions in securities
A61 Marketable U.S. Treasury bonds and
notes—Foreign transactions
Interest and Exchange Rates
A61 Discount rates of foreign central banks
A61 Foreign short-term interest rates
A62 Foreign exchange rates
A63 GUIDE TO STATISTICAL RELEASES AND
SPECIAL TABLES
Reported by Banks in the United States
A52
A53
A55
A56
Liabilities to and claims on foreigners
Liabilities to foreigners
Banks' own claims on foreigners
Banks' own and domestic customers' claims on
foreigners
A56 Banks' own claims on unaffiliated foreigners
A57 Claims on foreign countries—
Combined domestic offices and foreign branches
SPECIAL TABLE
A64 Pro forma balance sheets and income statements
for priced service operations, June 30, 1996
A66 INDEX TO STATISTICAL TABLES
A3
Guide to Tabular Presentation
SYMBOLS AND ABBREVIATIONS
c
e
n.a.
n.e.c.
P
r
*
0
ATS
BIF
CD
CMO
FFB
FHA
FHLBB
FHLMC
FmHA
FNMA
FSLIC
G-7
Corrected
Estimated
Not available
Not elsewhere classified
Preliminary
Revised (Notation appears on column heading
when about half of the figures in that column
are changed.)
Amounts insignificant in terms of the last decimal
place shown in the table (for example, less than
500,000 when the smallest unit given is millions)
Calculated to be zero
Cell not applicable
Automatic transfer service
Bank insurance fund
Certificate of deposit
Collateralized mortgage obligation
Federal Financing Bank
Federal Housing Administration
Federal Home Loan Bank Board
Federal Home Loan Mortgage Corporation
Farmers Home Administration
Federal National Mortgage Association
Federal Savings and Loan Insurance Corporation
Group of Seven
G-10
GNMA
GDP
HUD
IMF
IO
IPCs
IRA
MMDA
MSA
NOW
OCD
OPEC
OTS
PO
REIT
REMIC
RP
RTC
SAIF
SCO
SDR
SIC
VA
Group of Ten
Government National Mortgage Association
Gross domestic product
Department of Housing and Urban
Development
International Monetary Fund
Interest only
Individuals, partnerships, and corporations
Individual retirement account
Money market deposit account
Metropolitan statistical area
Negotiable order of withdrawal
Other checkable deposit
Organization of Petroleum Exporting Countries
Office of Thrift Supervision
Principal only
Real estate investment trust
Real estate mortgage investment conduit
Repurchase agreement
Resolution Trust Corporation
Savings Association Insurance Fund
Securitized credit obligation
Special drawing right
Standard Industrial Classification
Department of Veterans Affairs
GENERAL INFORMATION
In many of the tables, components do not sum to totals because of
rounding.
Minus signs are used to indicate (1) a decrease, (2) a negative
figure, or (3) an outflow.
"U.S. government securities" may include guaranteed issues
of U.S. government agencies (the flow of funds figures also
include not fully guaranteed issues) as well as direct obligations of the Treasury. "State and local government" also includes municipalities, special districts, and other political
subdivisions.
A4
1.10
DomesticNonfinancialStatistics • October 1996
RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES
Percent annual rate of change, seasonally adjusted'
1995
1996
1996
Monetary or credit aggregate
Q3
Q4
Ql
Q2
Mar.
Apr.
May
June
July
-11.7
-11.6
-13.2
-.6
-20.8
-15.4
-21.6
1.0
-2.5
-9.1'
-8.3'
5.7
-20.2
-18.8
-20.0
7.6
-8.8
2.3
3.8
n.a.
n.a.
1
2
3
4
Reserves of depository institutions2
Total
Required
Nonborrowed
Monetary base3
-1.5
-2.5
-2.4
1.7
-6.9
-7.7
-6.4
2.7
-7.9
-8.5
-6.5
1.5
-6.4
-5.7
-7.6
2.1
19.2
13.2
19.6
8.9
5
6
7
8
9
Concepts of money, liquid assets, and debt4
Ml
M2
M3
L
Debt
-1.5
6.9
8.0
9.1
4.9
-5.1
4.1
4.5
5.9
4.7
-2.7
5.9
7.2
5.1
4.7
-,7r
4.1
5.4r
5.9
4.8
10.0
11.7
11.1
12.6
6.1r
-3.2r
1.9r
1.8r
5.7r
4.5r
-6.8r
- 1.7r
3.0r
3.7
-.5'
5.5'
4.7
6.5
3.8
10.9
12.1
8.3
6.3
9.7
12.6
6.r
10.6
12.4
9.0
4.1r
1.5
.6
21.2r
8.1'
1.5'
7.0
9.5
Nontransaction components
10 In M2 5
11 In M3 only6
-.r
Time and savings deposits
Commercial banks
Savings, including MMDAs
Small time7
Large time 8,9
Thrift institutions
15
Savings, including MMDAs
16
Small time7
17
Large time8
9.0
11.0
13.0
13.1
4.8
19.4
22.6
2.5
8.9
12.7
—2.6r
17.8r
25.2
-4.5
27.4
8.6r
-3.5
8.1r
4.1r
-2.1'
20.2'
12.3
1.3'
18.5'
10.9
5.6
25.1
-7.3
4.1
13.7
-2.8
5.0
8.0
-.3
-2.5
6.2
8.1
-3.4
-2.8
5.7
-8.4
-9.5
13.91
-1.7
1.6
5.2'
-2.7
-9.5
2.9
-3.4'
6.4
.0
-3.1
12.7
Money market mutual funds
18 Retail
19 Institution-only
36.9
27.6
16.5
10.3
14.7
27.9
11.5
8.7
32.6
21.6
2.7
-13.0
21.2
29.1
14.0
16.8
Repurchase agreements and Eurodollars
20 Repurchase agreements10
21 Eurodollars10
-5.0
9.4
-14.6
—6.6r
1.3
16.9r
5.0r
10.8r
-13.5
-29.8
-7.8
33.1'
80.0
17.4'
-70.7'
11.0
-18.3
-19.4
4.6
5.0
2.3
5.5
2.7
5.4
5.2
4.7
3.6
4.8r
1.8
4.4
2.5
4.3
12
13
14
-3.2
-10.3
4
Debt components
22 Federal
23 Nonfederal
1. Unless otherwise noted, rates of change are calculated from average amounts outstanding during preceding month or quarter.
2. Figures incorporate adjustments for discontinuities, or "breaks," associated with
regulatory changes in reserve requirements. (See also table 1.20.)
3. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally
adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency
component of the money stock, plus (3) (for all quarterly reporters on the "Report of
Transaction Accounts, Other Deposits and Vault Cash" and for all weekly reporters whose
vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference
between current vault cash and the amount applied to satisfy current reserve requirements.
4. Composition of the money stock measures and debt is as follows:
Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of
depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all
commercial banks other than those owed to depository institutions, the U.S. government, and
foreign banks and official institutions, less cash items in the process of collection and Federal
Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of
withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions,
credit union share draft accounts, and demand deposits at thrift institutions. Seasonally
adjusted Ml is computed by summing currency, travelers checks, demand deposits, and
OCDs, each seasonally adjusted separately.
M2: Ml plus (1) 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 (money funds with minimum initial investments of less than
$50,000). Excludes individual retirement accounts (IRAs) and Keogh balances at depository
institutions and money market funds. Seasonally adjusted M2 is calculated by summing
savings deposits, small-denomination time deposits, and retail money fund balances, each
seasonally adjusted separately, and adding this result to seasonally adjusted M1.
M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more), (2)
balances in institutional money funds (money funds with minimum initial investments of
$50,000 or more), (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
11.2
4.3r
n.a.
n.a.
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.
L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury
securities, commercial paper, and bankers acceptances, net of money market fund holdings of
these assets. Seasonally adjusted L is computed by summing U.S. savings bonds, short-term
Treasury securities, commercial paper, and bankers acceptances, each seasonally adjusted
separately, and then adding this result to M3.
Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial
sectors—the federal sector (U.S. government, not including 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 A5
1.11
RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT 1
Millions of dollars
Factor
Average of
daily figures
Average of daily figures for week ending on date indicated
1996
1996
May
June
July
June 19
June 26
July 3
July 10
July 17
July 24
July 31
416,807
420,911R
423,810
422,869
420,638R
425,037
425,448
425,198
419,274
424,561
380,178
1,983
382,000
4,456
383,166
5,677
382,857
5,418
382,495
3,086
383,362
7,282
383,437
7,611
383,393
6,422
382,763
1,794
383,049
6,078
2,442
503
0
2,401
524
0
2,359
449
0
2,388
256
0
2,388
747
0
2,388
62
0
2,383
96
0
2,351
1,010
0
2,351
414
0
2,336
407
0
24
106
0
517
31,054
185
190
0
380 R
30,775R
92
285
0
468
31,314
586
193
0
312
30,861
22
227
0
718 R
30,956R
269
254
0
127
31,293
30
263
0
670
30,958
5
283
0
385
31,349
16
299
0
450
31,188
261
308
0
266
31,856
11,051
10,168
24,415R
11,051
10,168
24,482R
11,050
10,168
24,543
11,051
10,168
24,483R
11,050
10,168
24,497R
11,050
10,168
24,511
11,050
10,168
24,525
11,050
10,168
24,539
11,050
10,168
24,553
11,050
10,168
24,567
420,050R
276
423,445R
281
428,381
269
423,217R
285
423,303R
279
426,183
280
430,109
278
428,958
268
427,422
267
427,164
258
6,162
177
6,161
330
13,224
16,832 R
5,304
180
6,228
318
13,391
15,501
7,184
171
6,184
332
13,252
15,649 R
6,417
188
6,172
333
13,351
17,842
5,277
207
6,270
314
13,228
15,507
5,464
176
6,002
342
13,252
16,494
5,260
173
6,380
313
13,242
11,988
5,384
164
6,281
295
13,885
16,914
SUPPLYING RESERVE FUNDS
7
8
9
10
11
Reserve Bank credit outstanding
U.S. government securities2
Bought outright—System account
Held under repurchase agreements
Federal agency obligations
Bought outright
Held under repurchase agreements
Acceptances
Loans to depository institutions
Adjustment credit
Seasonal credit
Extended credit
Float
Other Federal Reserve assets
12
13
14
Gold stock
Special drawing rights certificate account
Treasury currency outstanding
15
16
Currency in circulation
Treasury cash holdings
Deposits, other than reserve balances, with
Federal Reserve Banks
Treasury
Foreign
Service-related balances and adjustments
Other
Other Federal Reserve liabilities and capital
Reserve balances with Federal Reserve Banks3 .. .
1
2
3
4
5
6
ABSORBING RESERVE FUNDS
17
18
19
20
21
22
5,714
196
6,188
362
12,885
16,771
6,022
173
6,117
336
13,304
19,117
Wednesday figures
End-of-month figures
June 19
June 26
July 3
July 10
July 17
July 24
July 31
436,326
433,333
421,392R
426,627
426,066
432,275
419,946
436,326
383,914
7,086
382,378
15,458
382,761
12,711
382,522
4,226
382,702
9,012
383,785
8,798
383,364
12,700
382,967
2,080
382,378
15,458
2,388
0
0
2,336
282
0
2,388
195
0
2,388
0
0
2,388
433
0
2,351
40
0
2,351
1,690
0
2,351
700
0
2,336
282
0
May
June
July
420,959
425,292R
381,346
5,704
2,428
1,350
0
SUPPLYING RESERVE FUNDS
7
8
9
10
11
Reserve Bank credit outstanding
U.S. government securities2
Bought outright—System account
Held under repurchase agreements
Federal agency obligations
Bought outright
Held under repurchase agreements
Acceptances
Loans to depository institutions
Adjustment credit
Seasonal credit
Extended credit
Float
Other Federal Reserve assets
12
13
14
Gold stock
Special drawing rights certificate account
Treasury currency outstanding
15
16
Currency in circulation
Treasury cash holdings
Deposits, other than reserve balances, with
Federal Reserve Banks
Treasury
Foreign
Service-related balances and adjustments
Other
Other Federal Reserve liabilities and capital
Reserve balances with Federal Reserve Banks3
1
2
3
4
5
6
8
148
0
-342
30,318
388
248
0
-190R
31,458R
1,423
295
0
504
33,649
3,644
207
0
92
31,334
17
241
0
907 R
31,091R
10
255
0
664
31,162
4
272
0
-450
31,265
9
295
0
18
31,848
17
310
0
197
31,324
1,423
295
0
504
33,649
11,051
10,168
24,455R
11,050
10,168
r
24,5 ll
11,050
10,168
24,567
11,051
10,168
24,483R
11,050
10,168
24,497R
11,050
10,168
24,511
11,050
10,168
24,525
11,050
10,168
24,539
11,050
10,168
24,553
11,050
10,168
24,567
422,41 l r
265
424,780R
280
428,715
261
423,830R
279
424,830R
280
429,537
282
430,701
268
428,935
269
427,693
257
428,715
261
7,701
183
6,172
326
13,374
18,205 R
6,836
166
6,281
278
14,817
24,756
7,290
163
6,184
326
13,024
15,012 R
3,703
171
6,172
315
13,049
19,127
5,668
190
6,270
347
13,094
15,271
5,323
167
6,002
363
13,067
23,907
5,211
167
6,380
291
13,194
12,524
6,836
166
6,281
278
14,817
24,756
ABSORBING RESERVE FUNDS
17
18
19
20
21
22
3,757
160
6,237
300
13,148
20,357
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.
6,142
167
6,117
326
13,141
29,033
3. Excludes required clearing balances and adjustments to compensate for float.
A6
DomesticNonfinancialStatistics • October 1996
1.12
RESERVES AND BORROWINGS
Depository Institutions1
Millions of dollars
Prorated monthly averages of biweekly averages
Reserve classification
1
2
3
4
5
6
7
8
9
10
Reserve balances with Reserve Banks2
Total vault 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
1993
1994
1995
Dec.
Dec.
Dec.
Jan.
Feb.
Mar.
Apr.
May
June
July
29,374
36,818
33,484
3,334
62,858
61,795
1,063
82
31
0
24,658
40,378
36,682
3,696
61,340
60,172
1,168
209
100
0
20,440
42,088
37,460
4,628
57,900
56,622
1,278
257
40
0
17,763
44,676
39,170
5,506
56,934
55,449
1,485
38
7
0
16,792
42,115
36,957
5,158
53,749
52,898
851
35
7
0
18,426
40,892
36,458
4,435
54,884
53,747
1,137
21
10
0
19,181
40,889
36,688
4,201
55,869
54,750
1,120
91
34
0
16,753
41,146
36,382
4,764
53,135
52,275
860
127
105
0
16,590r
41,979
37,095
4,883
53,685r
52,535r
1,150r
386
192
0
15,395
42,773
37,451
5,322
52,846
51,778
1,068
368
284
0
1996
Biweekly averages of daily figures for two week periods ending on dates indicated
1996
1
2
3
4
5
6
7
8
9
10
Reserve balances with Reserve Banks2
Total vault cash 3
Applied vault cash 4
Surplus vault cash5
Total reserves6
Required reserves
Excess reserve balances at Reserve Banks7
Total borrowings at Reserve Banks8
Seasonal borrowings
Extended credit9
Mar. 27
Apr. 10
Apr. 24
May 8
May 22
June 5
June 19
July 3
July 17
July 31
18,492
40,362
36,011
4,352
54,502
53,346
1,156
20
12
0
18,954
40,903
36,767
4,136
55,721
54,567
1,154
47
16
0
20,331
40,398
36,417
3,981
56,748
55,629
1,119
122
30
0
16,876
42,013
37,190
4,823
54,065
53,002
1,063
92
71
0
16,946
40,823
36,091
4,732
53,037
52,201
836
129
103
0
16,341
40,879
36,117
4,762
52,458
51,743
715
156
138
0
16,565
42,824
37,747
5,078
54,311
53,234
1,078
469
173
0
16,735r
41,403
36,712
4,692
53,447r
52,007r
l,439 r
386
241
0
16,049
42,347
37,320
5,027
53,369
52,543
826
290
273
0
14,453
43,492
37,741
5,751
52,194
50,965
1,229
442
304
0
1. Data in this table also appear in the Board's H.3 (502) weekly statistical release. For
ordering address, see inside front cover. Data are not break-adjusted or seasonally adjusted.
2. Excludes required clearing balances and adjustments to compensate for float and
includes other off-balance-sheet "as-of' adjustments.
3. Total "lagged" vault cash held by depository institutions subject to reserve
requirements. Dates refer to the maintenance periods during which the vault cash may be used
to satisfy reserve requirements. The maintenance period for weekly reporters ends sixteen
days after the lagged computation period during which the vault cash is held. Before Nov. 25,
1992, the maintenance period ended thirty days after the lagged computation period.
4. All vault cash held during the lagged computation period by "bound" institutions (that
is, those whose required reserves exceed their vault cash) plus the amount of vault cash
applied during the maintenance period by "nonbound" institutions (that is, those whose vault
cash exceeds their required reserves) to satisfy current reserve requirements.
1.13
5. Total vault cash (line 2) less applied vault cash (line 3).
6. Reserve balances with Federal Reserve Banks (line 1) plus applied vault cash
(line 3).
7. Total reserves (line 5) less required reserves (line 6).
8. Also includes adjustment credit.
9. Consists of borrowing at the discount window under the terms and conditions established for the extended credit program to help depository institutions deal with sustained
liquidity pressures. Because there is not the same need to repay such borrowing promptly as
with traditional short-term adjustment credit, the money market effect of extended credit is
similar to that of nonborrowed reserves.
SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS
Large Banks1
Millions of dollars, averages of daily figures
1996, week ending Monday
Source and maturity
1
2
3
4
5
6
7
8
Federal funds purchased, repurchase agreements, and other
selected borrowings
From commercial banks in the United States
For one day or under continuing contract
For all other maturities
From other depository institutions, foreign banks and official
institutions, and U.S. government agencies
For one day or under continuing contract
For all other maturities
Repurchase agreements on U.S. government and federal
agency securities
Brokers and nonbank dealers in securities
For one day or under continuing contract
For all other maturities
All other customers
For one day or under continuing contract
For all other maturities
June 3
June 10
June 17
June 24
July 1
July 8
July 15
July 22
July 29
85,577
18,749r
82,179
17,752'
80,092
18,129r
73,504r
18,182r
77,701
17,457
81,116
16,080
75,971
16,780
75,271
15,435
72,877
14,984
21,158
22,330r
19,602
21,178r
17,394
21,307r
24,776
22,056r
18,186
21,159
22,846
20,122
22,183
21,500
22,679
20,195
18,460
20,210
21,158r
41,306r
18,891r
41,082r
17,804r
40,444r
17,786r
39,570r
15,609
37,087
17,296
38,104
14,058
39,958
11,804
39,674
12,467
41,571
39,439
13,652
38,153
13,611
37,560
14,195
35,588
14,362
34,254
13,905
36,086
13,089
37,174
12,734
37,226
13,145
37,015
13,065
68,874
21,sir
68,559
25,847
70,490
27,762
66,112
24,775
72,735
22,878
70,774
25,514
64,529
25,023
64,835
22,049
66,286
21,470
MEMO
Federal funds loans and resale agreements in immediately
available funds in maturities of one day or under
continuing contract
9 To commercial banks in the United States
10 To all other specified customers2
1. Banks with assets of $4 billion or more as of Dec. 31, 1988.
Data in this table also appear in the Board's H.5 (507) weekly statistical release. For
ordering address, see inside front cover.
2. Brokers and nonbank dealers in securities, other depository institutions, foreign banks
and official institutions, and U.S. government agencies,
Policy Instruments
1.14
A7
FEDERAL RESERVE BANK INTEREST RATES
Percent per year
Current and previous levels
Seasonal credit2
Adjustment credit1
Federal Reserve
Bank
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
On
8/30/96
Extended credit3
Effective date
Previous rate
On
8/30/96
Effective date
Previous rate
On
8/30/96
Effective date
Previous rate
2/1/96
1/31/96
1/31/96
1/31/96
2/1/96
1/31/96
5.25
5.30
8/29/96
5.35
5.80
8/29/96
5.85
5.25
5.30
8/29/96
5.35
5.80
8/29/96
5.85
5.00
2/1/96
2/5/96
1/31/96
2/1/96
1/31/96
1/31/96
5.00
Range of rates for adjustment credit in recent years4
Effective date
In effect Dec. 31, 1977
Range (or
level)—All
F.R. Banks
6
9
20
May 11
12
July 3
10
Aug. 21
Sept. 22
Oct. 16
20
Nov. 1
3
6-6.5
6.5
6.5-7
7
7-7.25
7.25
7.75
8
8-8.5
8.5
8.5-9.5
9.5
1979—July 20
Aug. 17
20
Sept. 19
21
Oct. 8
10
10
10-10.5
10.5
10.5-11
11
11-12
12
1980—Feb. 15
19
May 29
30
June 13
16
July 28
29
Sept 26
Nov. 17
Dec. 5
8
1981—May 5
8
12-13
13
12-13
12
11-12
11
10-11
10
11
12
12-13
13
13-14
14
1978—Jan.
F.R. Bank
of
N.Y.
6
6.5
6.5
7
7
7.25
7.25
7.75
8
8.5
8.5
9.5
9.5
10
10.5
10.5
11
11
12
12
13
13
13
12
11
11
10
10
11
12
13
13
14
14
Effectiv
1981—Nov. 2
Dec. 4
13-14
13
12
F.R. Bank
of
N.Y.
13
13
Range (or
level)—All
F.R. Banks
1988—Aug. 9
11
1984—Apr.
9
13
Nov. 21
26
Dec. 24
11.5-12
11.5
11-11.5
11
11.5
11.5
27
11
11
10.5
10-10.5
10
9.5-10
9.5
9-9.5
9
8.5-9
8.5-9
8.5
10.5
10
10
9.5
9.5
9
9
9
8.5
8.5
8.5-9
9
8.5-9
8.5
9
9
8.5
8.5
1990—Dec. 19
1991—Feb.
Apr.
May
Sept.
Nov.
Dec.
1992—July
1
4
30
2
13
17
6
7
20
24
2
7
6.5
6.5
6.5-7
7
7
7
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
6.5
6
6
5.5
5.5
5
5
4.5
4.5
3.5
3.5
3-3.5
3
3
3
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
5.00
5.00
18
1985—May 20
24
6.5
6-6.5
6
5.5-6
5.5
5-5.5
5
4.5-5
4.5
3.5^1.5
3.5
3-3.5
3.5
3.5-4
4
4-4.75
4.75
1994—May 17
Aug. 16
18
Nov. 15
17
1995—Feb.
In effect Aug. 30, 1996
6
6-6.5
6.5
12
1989—Feb. 24
1982—July 20
23
Aug. 2
3
16
27
30
Oct. 12
13
Nov. 22
26
Dec. 14
15
17
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
Range (or
level)—All
F.R. Banks
6
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 • October 1996
1.15
RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS 1
Type of deposit
Net transaction accounts
1 $0 million—$52.0 million3 .
2 More than $52.0 million4 .
12/19/95
12/19/95
3
Nonpersonal time deposits'
12/27/90
4
Eurocurrency liabilities6. . .
12/27/90
1. Required reserves must be held in the form of deposits with Federal Reserve Banks
or vault cash. Nonmember institutions may maintain reserve balances with a Federal
Reserve Bank indirectly, on a pass-through basis, with certain approved institutions. For
previous reserve requirements, see earlier editions of the Annual Report or the Federal
Reserve Bulletin. Under the Monetary Control Act of 1980, depository institutions
include commercial banks, mutual 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 Dec. 19, 1995, the amount was decreased from $54.0
million to $52.0 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 Dec. 19, 1995,
the exemption was raised from $4.2 million to $4.3 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 '/> years was reduced from 3 percent to 1 [ /i 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 11/2 years was reduced from 3
percent to zero on Jan. 17, 1991.
The reserve requirement on nonpersonal time deposits with an original maturity of 1 xfi
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 1 !/> years (see note 5).
Policy Instruments
A9
1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS 1
Millions of dollars
1996
1995
Type of transaction
and maturity
1993
1994
1995
Dec.
Jan.
Feb.
Mar.
Apr.
May
June
U.S. TREASURY SECURITIES
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Outright transactions (excluding matched
transactions)
Treasury bills
Gross purchases
Gross sales
Exchanges
Redemptions
Others within one year
Gross purchases
Gross sales
Maturity shifts
Exchanges
Redemptions
One to five years
Gross purchases
Gross sales
Maturity shifts
Exchanges
Five to ten years
Gross purchases
Gross sales
Maturity shifts
Exchanges
More than ten years
Gross purchases
Gross sales
Maturity shifts
Exchanges
All maturities
Gross purchases
Gross sales
Redemptions
Matched transactions
25 Gross purchases
26 Gross sales
Repurchase agreements
27 Gross purchases
28 Gross sales
29 Net change in U.S. Treasury securities
17,717
0
332,229
0
17,484
0
376,277
0
10,932
0
398,487
900
0
0
31,535
0
0
0
31,476
0
0
0
39,332
0
0
0
30,556
0
88
0
32,218
0
0
0
40,467
0
3,311
0
31,726
0
1,223
0
31,368
-36,582
0
1,238
0
0
-21,444
0
390
0
0
0
0
390
0
0
0
0
0
0
2,048
-3,287
1,228
0
0
2,746
-7,575
0
0
0
0
0
0
35
0
3,511
-4,824
787
0
0
5,107
-5,448
0
0
0
0
0
0
10,350
0
-27,140
0
9,168
0
-6,004
17,801
4,966
0
0
0
2,317
0
0
0
0
0
-2,048
3,287
0
0
-1,908
5,175
0
0
0
0
1,899
0
-3,511
4,824
0
0
-4,049
3,748
0
0
0
0
4,168
0
0
0
3,818
0
-3,145
2,903
1,239
0
0
0
0
0
0
0
0
0
0
0
0
0
-818
1,500
0
0
0
0
479
0
0
0
0
0
-1,058
1,700
0
0
0
0
3,457
0
0
0
3,606
0
-918
775
3,122
0
0
0
1,884
0
0
0
0
0
0
0
0
0
-20
900
0
0
0
0
1,065
0
0
0
0
0
0
0
0
0
0
0
36,915
0
767
35,314
0
2,337
20,649
0
2,376
4,591
0
0
0
0
1,228
0
0
0
0
0
0
3,566
0
787
0
0
0
3,311
0
0
1,475,941
1,475,085
1,700,836
1,701,309
2,197,736
2,202,030
227,858
228,071
260,425
259,186
274,290
275,979
251,623
251,086
253,482
251,510
259,135
259,595
248,534
249,277
475,447
470,723
309,276
311,898
331,694
328,497
34,325
28,546
16,040
28,802
6,230
6,230
31,602
27,706
48,869
50,345
30,688
27,404r
43,048
41,666
41,729
29,882
17,175
10,157
-12,751
-1,689
4,433
3,274
2,824r
3,950
0
0
774
0
0
1,002
0
0
1,303
0
0
58
0
0
0
0
0
0
0
0
108
0
0
82
0
0
16
0
0
40
35,063
34,669
52,696
52,696
36,851
36,776
2.888
1,788
9,793
10,893
765
765
5,640
4,640
2,372
3,372
5,122'
4,372 r
5,138
6,488
-380
-1,002
-1,228
1,042
-1,100
0
892
-1,082
l,334 r
-1,390
11,199
-13,851
-1,689
5,325
2,192
4,158r
2,560
FEDERAL AGENCY OBLIGATIONS
Outright transactions
30 Gross purchases
31 Gross sales
32 Redemptions
Repurchase agreements
33 Gross purchases
34 Gross sales
35 Net change in federal agency obligations
36 Total net change in System Open Market Account...
41,348
28,880
15,948
1. Sales, redemptions, and negative figures reduce holdings of the System Open Market
Account; all other figures increase such holdings.
A10
1.18
DomesticNonfinancialStatistics • October 1996
FEDERAL RESERVE BANKS
Condition and Federal Reserve Note Statements'
Millions of dollars
Account
July 3
July 10
Wednesday
End of month
1996
1996
July 17
July 24
July 31
May
31
June 30
July 31
Consolidated condition statement
ASSETS
11,050
10,168
523
11,050
10,168
495
11,050
10,168
494
11,050
10,168
508
11,050
10,168
11,051
10,168
11,050
10,168
11,050
10,168
521
552
552
521
265
276
327
0
0
1,718
0
0
636
0
0
1,718
0
0
304
0
0
155
0
0
2,388
2,351
2,351
2,351
2,336
2,428
40
1,690
700
282
1,350
2,388
0
2,336
433
391,714
392,583
396,064
385,047
397,836
387,050
391,000
397,836
10 Bought outright2
11
Bills
12
Notes
13
Bonds
14 Held under repurchase agreements
382,702
186,158
150,102
46,443
9,012
383,785
187,241
150,102
46,443
8,798
383,364
186,819
150,102
46,443
12,700
382,967
186,422
150,102
46,443
2,080
382,378
185,833
150,102
46,443
15,458
381,346
184,801
150,102
46,443
5,704
383,914
187,370
150,102
46,443
7,086
382,378
185,833
150,102
46,443
15,458
15 Total loans and securities
394,801
395,251
400,410
388,425
402,173
390,983
394,025
402,173
7,106
1,182
5,938
1,184
6,567
1,190
5,830
1,191
6,143
1,190
4,007
1,171
4,152
1,182
6,143
1,190
19,556
10,436
19,564
10,682
19,573
11,203
19,581
10,598
20,183
12,349
19,561
9,538
19,554
10,726
20,183
12,349
454,822
454,333
460,654
447,351
463,777
447,032
451,409
463,777
1 Gold certificate account
2 Special drawing rights certificate account
3 Coin
Loans
4 To depository institutions
5 Other
6 Acceptances held under repurchase agreements
Federal agency obligations
7 Bought outright
8 Held under repurchase agreements
9 Total U.S. Treasury securities
16 Items in process of collection
17 Bank premises
Other assets
18 Denominated in foreign currencies3
19 All other4
20 Total assets
0
0
0
0
282
LIABILITIES
405,830
406,938
405,159
403,905
404,930
398,773
401,101
404,930
22 Total deposits
29,442
28,855
36,501
24,886
38,332
30,901
32,804
38,332
23
24
25
26
25,253
3,703
171
315
22,649
5,668
190
347
30,649
5,323
167
363
19,217
5,211
167
291
31,052
6,836
166
278
26,685
3,757
160
300
24,594
7,701
183
326
31,052
6,836
166
278
6,501
4,416
5,446
4,364
5,927
4,323
5,366
4,182
5,697
5,156
4,210
4,542
4,130
4,464
5,697
5,156
446,189
445,603
451,911
438,339
454,116
438,426
442,499
454,116
4,139
3,966
528
4,139
3,966
624
4,159
3,966
618
4,421
3,966
625
4,437
3,966
1,257
4,154
3,960
492
4,138
3,966
806
4,437
3,966
1,257
454,822
454,333
460,654
447,351
463,777
447,032
451,409
463,777
547,336
550,556
549,228
553,814
559,611
556,832
551,797
559,611
21 Federal Reserve notes
Depository institutions
U.S. Treasury—General account
Foreign—Official accounts
Other
27 Deferred credit items
28 Other liabilities and accrued dividends5
29 Total liabilities
CAPITAL ACCOUNTS
30 Capital paid in
31 Surplus
32 Other capital accounts
33 Total liabilities and capital accounts
MEMO
34 Marketable U.S. Treasury securities held in custody for
foreign and international accounts
Federal Reserve note statement
35 Federal Reserve notes outstanding (issued to Banks)
36
LESS: Held by Federal Reserve Banks
37
Federal Reserve notes, net
38
39
40
41
Collateral held against notes, net
Gold certificate account
Special drawing rights certificate account
Other eligible assets
U.S. Treasury and agency securities
42 Total collateral
518,722
112,892
405,830
518,712
111,773
406,938
519,731
114,573
405,159
520,444
116,539
403,905
521,387
116,457
404,930
514,098
115,325
398,773
519,234
118,133
401,101
521,387
116,457
404,930
11,050
10,168
0
384,611
11,050
10,168
0
385,720
11,050
10,168
0
383,941
11,050
10,168
0
382,687
11,050
10,168
0
383,713
11,051
10,168
0
377,554
11,050
10,168
0
379,883
11,050
10,168
0
383,713
405,830
406,938
405,159
403,905
404,930
398,773
401,101
404,930
1. Some of the data in this table also appear in the Board's H.4.1 (503) weekly statistical
release. For ordering address, see inside front cover.
2. Includes securities loaned—fully guaranteed by U.S. Treasury securities pledged with
Federal Reserve Banks—and excludes securities sold and scheduled to be bought back under
matched sale-purchase transactions.
3. Valued monthly at market exchange rates.
4. Includes special investment account at the Federal Reserve Bank of Chicago in Treasury
bills maturing within ninety days.
5. Includes exchange-translation account reflecting the monthly revaluation at market
exchange rates of foreign exchange commitments.
Federal Reserve Banks
1.19
FEDERAL RESERVE BANKS
All
Maturity Distribution of Loan and Security Holding
Millions of dollars
Wednesday
Type of holding and maturity
July 3
July 10
July 17
July 24
52
224
282
23
301
26
1 Total loans
2 Within fifteen days1
July 31
May 31
1,718
61
204
1,555
1,163
75
80
231
383,914
18
3 Sixteen days to ninety days
391,714
392,583
396,064
385,047
397,836
381,346
17,925
93,246
116,132
92,749
32,941
38,721
23,270
88,725
116,177
92,749
32,941
38,721
27,773
87,508
116,650
91,751
33,662
38,721
17,531
91,086
112,295
91,751
33,662
38,721
28,057
86,783
118,032
92,581
33,662
38,721
2,926
98,950
116,114
91,694
32,941
38,721
4,410
99,558
116,591
91,694
32,941
38,721
2,821
2,391
4,041
3,051
2,618
2,428
2,388
470
730
645
485
467
25
55
715
655
475
467
25
659
555
475
467
25
871
709
505
475
467
25
438
722
492
475
467
25
372
473
575
512
472
25
307
495
4 Total U.S. Treasury securities...
5
6
7
8
9
10
11
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
Total federal agency obligations
12
13
14
15
16
17
Within fifteen days'
Sixteen days to ninety days
Ninety-one days to one year
One year to five years
Five years to ten years
More than ten years
1. Holdings under repurchase agreements are classified as maturing within fifteen days in
accordance with maximum maturity of the agreements.
610
485
467
25
NOTE. Total acceptances data have been deleted from this table because data are no longer
available.
A12
1.20
DomesticNonfinancialStatistics • October 1996
AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE 1
Billions of dollars, averages of daily figures
1995
Item
1992
Dec.
1993
Dec.
1994
Dec.
Dec.
Total reserves3
Nonborrowed reserves4
Nonborrowed reserves plus extended credit5
Required reserves
Monetary base6
Jan.
Feb.
Mar.
Apr.
May
June
July
55.73
55.71
55.71
54.59
436.87
55.18
55.09
55.09
54.06
436.64
54.23
54.10
54.10
53.37
437.01r
54.1 l r
53.73
53.73
52.96
439.08r
53.20
52.83
52.83
52.13
441.85
Seasonally adjusted
ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS 2
1
2
3
4
5
1996
1995
Dec.
54.37
54.24
54.24
53.21
351.24
60.52
60.44
60.44
59.46
386.88
59.36
59.16
59.16
58.20
418.72
56.36
56.11
56.11
55.09
435.01
56.36
56.11
56.11
55.09
435.01
55.61
55.57
55.57
54.12
435.18
54.85
54.81
54.81
54.00
433.67
Not seasonally adjusted
6
7
8
9
10
Total reserves7
Nonborrowed reserves
Nonborrowed reserves plus extended credit5
Required reserves8
Monetary base9
56.06
55.93
55.93
54.90
354.55
62.37
62.29
62.29
61.31
390.59
61.13
60.92
60.92
59.96
422.51
58.02
57.76
57.76
56.74
439.03
58.02
57.76
57.76
56.74
439.03
56.95
56.91
56.91
55.47
436.01
53.80
53.77
53.77
52.95
430.29
54.97
54.95
54.95
53.84
434.86
56.00
55.90
55.90
54.88
437.12
53.29
53.16
53.16
52.43
436.13
53.87
53.48r
53.48r
52.72
439.88r
53.06
52.69
52.69
51.99
443.19
56.54
56.42
56.42
55.39
360.90
1.16
.12
62.86
62.78
62.78
61.80
397.62
1.06
.08
61.34
61.13
61.13
60.17
427.25
1.17
.21
57.90
57.64
57.64
56.62
444.45
1.28
.26
57.90
57.64
57.64
56.62
444.45
1.28
.26
56.93
56.90
56.90
55.45
441.96
1.49
.04
53.75
53.72
53.72
52.90
436.26
.85
.04
54.88
54.86
54.86
53.75
440.77
1.14
.02
55.87
55.78
55.78
54.75
442.96
1.12
.09
53.14
53.01
53.01
52.28
442.17r
.86
.13
53.69
53.30
53.30
52.54r
445.94r
1.15r
.39
52.85
52.48
52.48
51.78
449.26
1.07
.37
NOT ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS 1 0
11
12
13
14
15
16
17
Total reserves"
Nonborrowed reserves
Nonborrowed reserves plus extended credit5
Required reserves
Monetary base12
Excess reserves13
Borrowings from the Federal Reserve
1. Latest monthly and biweekly figures are available from the Board's H.3 (502) weekly
statistical release. Historical data starting in 1959 and estimates of the effect on required
reserves of changes in reserve requirements are available from the Money and Reserves
Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve
System, Washington, DC 20551.
2. Figures reflect adjustments for discontinuities, or "breaks," associated with regulatory
changes in reserve requirements. (See also table 1.10.)
3. Seasonally adjusted, break-adjusted total reserves equal seasonally adjusted, breakadjusted required reserves (line 4) plus excess reserves (line 16).
4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally adjusted,
break-adjusted total reserves (line 1) less total borrowings of depository institutions from the
Federal Reserve (line 17).
5. Extended credit consists of borrowing at the discount window under the terms and
conditions established for the extended credit program to help depository institutions deal
with sustained liquidity pressures. Because there is not the same need to repay such
borrowing promptly as with traditional short-term adjustment credit, the money market effect
of extended credit is similar to that of nonborrowed reserves.
6. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally
adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency
component of the money stock, plus (3) (for all quarterly reporters on the "Report of
Transaction Accounts, Other Deposits and Vault Cash" and for all those weekly reporters
whose vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted
difference between current vault cash and the amount applied to satisfy current reserve
requirements.
7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) plus excess
reserves (line 16).
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 the introduction of contemporaneous reserve requirements in February
1984, currency and vault cash figures have been measured over the computation periods
ending on Mondays.
13. Unadjusted total reserves (line 11) less unadjusted required reserves (line 14).
Monetary and Credit Aggregates
1.21
A13
MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES 1
Billions of dollars, averages of daily figures
1996r
Item
1992
Dec.
1993
Dec.
1994
Dec.
1995
Dec.
Apr.
May
June
July
Seasonally adjusted
1
2
3
4
5
Measures2
Ml
M2
M3
L
Debt
6
7
8
9
Ml components
Currency3
Travelers checks4
Demand deposits5
Other checkable deposits6
Nontransaction components
10 In M27
11 In M3 only8
1,024.4
3,438.7
4,187.3
5,075.8
11,880.5
292.9
8.1
339.1
384.2
1,128.6
3,494.1
4,249.6
5,164.5
12,517.4
322.4 .
7.9
384.3
414.0
1,148.7
3,509.4
4,319.7
5,303.7
13,159.3
1,124.9
3,662.6
4,576.0
5,685.5
13,894.8
1,123.6
3,735.9
4,693.4
5,813.0
14,132.9
1,117.2
3,730.7
4,705.1
5,812.7
14,177.0
1,116.7
3,747.8
4,723.5
5,844.2
14,222.4
1,108.5
3,755.0
4,738.3
n.a.
n.a.
354.9
8.5
382.4
402.9
373.2
8.9
389.8
353.0
376.0
8.9
406.3
332.4
377.1
8.7
409.6
321.8
379.4
8.6
413.6
315.0
382.6
8.5
410.5
306.9
2,414.3
748.6
2,365.4
755.6
2,360.7
810.3
2,537.7
913.4
2,612.3
957.5
2,613.5
974.4
2,631.2
975.6
2,646.5
983.3
Commercial banks
12 Savings deposits, including MMDAs
13 Small time deposits9
14 Large time deposits10' "
754.1
509.3
286.6
785.0
470.4
272.3
751.9
505.4
298.7
775.0
578.5
342.4
826.9
576.4
356.6
829.7
575.4
362.6
838.2
576.0
368.2
845.8
578.7
375.9
Thrift institutions
15 Savings deposits, including MMDAs
16 Small time deposits9
17 Large time deposits10
433.0
361.9
67.1
433.8
317.6
61.5
397.0
318.2
64.8
359.5
359.6
75.0
366.3
354.0
75.6
367.9
353.2
75.0
368.8
352.2
75.4
368.8
351.3
76.2
Money market mutual funds
18 Retail
19 Institution-only
356.0
199.8
358.7
197.9
388.1
183.7
465.1
227.2
488.7
245.6
487.4
243.5
496.0
249.4
501.8
252.9
Repurchase agreements and Eurodollars
20 Repurchase agreements12
21 Eurodollars12
128.1
66.9
157.5
66.3
180.8
82.3
177.6
91.2
182.9
96.8
195.1
98.2
183.6
99.1
180.8
97.5
3,068.6
8,812.0
3,328.3
9,189.1
3,497.6
9,661.7
3,644.6
10,250.2
3,707.0
10,425.9
3,712.6
10,464.4
3,720.2
10,502.1
n.a.
n.a.
Debt components
22 Federal debt
23 Nonfederal debt
Not seasonally adjusted
24
25
26
27
28
Measures2
Ml
M2
M3
L
Debt
29
30
31
32
Ml components
Currency3
Travelers checks4
Demand deposits5
Other checkable deposits6
1,046.0
3,455.1
4,205.3
5,103.1
11,881.5
1,153.7
3,514.1
4,271.3
5,194.2
12,509.6
1,174.2
3,529.8
4,341.5
5,333.2
13,150.2
1,150.7
3,682.3
4,597.1
5,715.0
13,878.0
1,129.9
3,748.8
4,698.2
5,818.6
14,060.2
1,104.0
3,716.1
4,690.0
5,793.5
14,070.7
1,112.8
3,746.2
4,720.7
5,835.3
14,138.7
1,108.5
3,761.9
4,740.4
n.a.
n.a.
295.0
7.8
354.4
388.9
324.8
7.6
401.8
419.4
357.5
8.1
400.1
408.4
376.1
8.5
407.9
358.1
375.8
8.6
406.0
339.4
377.5
8.6
399.5
318.3
380.5
8.9
409.8
313.6
383.8
9.1
411.1
304.5
2,409.1
750.2
2,360.4
757.1
2,355.6
811.7
2,531.5
914.8
2,618.9
949.4
2,612.1
973.8
2,633.4
974.5
2,653.4
978.5
Commercial banks
35 Savings deposits, including MMDAs
36 Small time deposits9
37 Large time deposits10, 11
752.9
507.8
286.2
784.3
468.2
272.1
751.6
502.5
298.5
775.0
574.5
342.3
825.9
578.4
353.8
827.7
577.5
364.9
839.9
578.1
369.0
848.3
581.2
374.2
Thrift institutions
38 Savings deposits, including MMDAs
39 Small time deposits9
40 Large time deposits10
432.4
360.9
67.0
433.4
316.1
61.5
396.9
316.4
64.8
359.5
357.1
75.0
365.9
355.2
75.0
367.0
354.4
75.5
369.5
353.4
75.5
369.9
352.7
75.8
Money market mutual funds
41 Retail
42 Institution-only
355.1
201.1
358.3
199.4
388.2
185.5
465.4
229.4
493.5
242.8
485.5
241.1
492.5
244.5
501.4
250.2
Repurchase agreements and Eurodollars
43 Repurchase agreements' 2
44 Eurodollars12
127.2
68.7
156.6
67.6
179.6
83.4
176.1
92.0r
182.3
95.5
195.4
96.9
187.2
98.3
181.4
96.9
3,069.8
8,811.7
3,329.5
9,180.1
3,499.0
9,651.2
3,645.9
10,232.1
3,699.5
10,360.7
3,692.0
10,378.7
3,698.0
10,440.6
Nontransaction components
33 In M27
34 In M3 only8
Debt components
45 Federal debt
46 Nonfederal debt
Footnotes appear on following page.
n.a.
n.a.
A14
DomesticNonfinancialStatistics • October 1996
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 Atfairs, Board of Governors of the Federal Reserve
System, Washington, DC 20551.
2. Composition of the money stock measures and debt is as follows:
Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of
depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all
commercial banks other than those owed to depository institutions, the U.S. government, and
foreign banks and official institutions, less cash items in the process of collection and Federal
Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of
withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions,
credit union share draft accounts, and demand deposits at thrift institutions. Seasonally
adjusted Ml is computed by summing currency, travelers checks, demand deposits, and
OCDs, each seasonally adjusted separately.
M2: Ml plus (1) 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 (money funds with minimum initial investments of less than $50,000). Excludes individual retirement accounts (IRAs) and Keogh
balances at depository institutions and money market funds. Seasonally adjusted M2 is
calculated by summing savings deposits, small-denomination time deposits, and retail money
fund balances, each seasonally adjusted separately, and adding this result to seasonally
adjusted Ml.
M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more)
issued by all depository institutions, (2) balances in institutional money funds (money funds
with minimum initial investments of $50,000 or more), (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.
L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury
securities, commercial paper, and bankers acceptances, net of money market fund holdings of
these assets. Seasonally adjusted L is computed by summing U.S. savings bonds, short-term
Treasury securities, commercial paper, and bankers acceptances, each seasonally adjusted
separately, and then adding this result to M3.
Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial
sectors—the federal sector (U.S. government, not including 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).
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.
Monetary and Credit Aggregates
1.22
DEPOSIT INTEREST RATES AND AMOUNTS OUTSTANDING
Commercial and BIF-insured saving banks1
1996
1995
Item
1993
1994
Dec.
Dec.
Nov.
A15
Dec.
Jan.
Feb.
Mar.
Apr.
May
June
July
Interest rates (annual effective yields)2
INSURED COMMERCIAL B A N K S
1 Negotiable order of withdrawal accounts
2 Savings deposits3
3
4
5
6
7
Interest-bearing time deposits with balances of
less than $100,000, by maturity
7 to 91 days
92 to 182 days
183 days to 1 year
More than 1 year to 2'/> years
More than 2 vl years
1.86
2.46
1.96
2.92
1.93
3.13
1.91
3.10
1.90
3.01
1.91
2.98
1.85
2.91
1.89
2.91
1.88
2.89
1.90
2.86 R
1.94
2.87
2.65
2.91
3.13
3.55
4.28
3.79
4.44
5.12
5.74
6.30
4.13
4.74
5.11
5.27
5.49
4.10
4.68
5.02
5.17
5.40
4.02
4.57
4.91
5.03
5.26
3.99
4.45
4.79
4.89
5.10
4.02
4.49
4.83
4.94
5.19
4.01
4.51
4.86
5.03
5.28
4.03R
4.51
4.88R
5.10 R
5.36
4.08R
4.55
4.95R
5.18
5.46
4.13
4.59
5.00
5.25
5.51
1.87
2.63
1.94
2.87
1.94
2.99
1.91
2.98
1.85
2.95
1.84
2.92
1.83
2.86
1.84
2.85
1.82
2.84
1.80
2.85
1.81
2.88
2.81
3.02
3.31
3.67
4.62
3.80
4.89
5.52
6.09
6.43
4.43
5.02
5.28
5.47
5.64
4.43
4.95
5.18
5.33
5.46
4.38
4.86
5.06
5.22
5.34
4.26
4.77
4.91
5.10
5.24
4.37
4.76
4.89
5.15
5.24
4.42
4.77
4.91
5.23
5.32
4.49
4.83
4.96
5.25
5.38
4.54
4.91
5.02
5.35
5.51
4.64
5.01
5.09
5.41
5.60
BIF-INSURED SAVINGS B A N K S 4
8 Negotiable order of withdrawal accounts
9 Savings deposits3
10
11
12
13
14
Interest-bearing time deposits with balances of
less than $100,000, by maturity
7 to 91 days
92 to 182 days
183 days to 1 year
More than 1 year to 2 x/i years
More than 2yi years
Amounts outstanding (millions of dollars)
INSURED COMMERCIAL B A N K S
15 Negotiable order of withdrawal accounts
16 Savings deposits3
17
Personal
18
Nonpersonal
19
20
21
22
23
Interest-bearing time deposits with balances of
less than $100,000, by maturity
7 to 91 days
92 to 182 days
183 days to 1 year
More than 1 year to 2 V5 years
More than 2 Yl years
24 IRA and Keogh plan deposits
BIF-INSURED SAVINGS B A N K S
Interest-bearing time deposits with balances of
less than $100,000, by maturity
7 to 91 days
92 to 182 days
183 days to 1 year
More than 1 year to 2'/i years
More than 2 Vl years
34 IRA and Keogh plan accounts
304,896
737,068
580,438
156,630
257,098
753,139
588,995
164,144
248,417
776,466
615,113
161,353
245,749
768,071
612,321
155,750
242,930
784,035
623,110
160,925
218,604
827,666
661,919
165,748
228,637r
805,317r
639,92 l r
165,396r
208,890r
839,482r
669,107r
170,375r
203,034r
844,348r
672,737r
171,61 l r
207,043
841,265
667,595
173,670
29,362
109,050
145,386
139,781
180,461
32,265
96,650
163,062
164,395
192,712
31,093
95,513
184,704
208,315
199,389
32,170
93,941
183,834
208,601
199,002
33,783
95,350
184,046
212,394
199,254
35,719
97,219
184,095
210,493
198,922
35,377
97,141
186,158
208,915
198,980
34,07 r
96,052r
190,018r
208,252r
197,783r
30,356r
95,896r
193,722r
208,767r
198,332r
31,345r
95,100r
195,450r
209,587r
198,856r
31,691
94,659
197,958
209,067
197,733
144,011
144,155
149,647
150,546
150,366
149,965
150,496
150,580r
150,889r
151,349r
151,273
11,191
80,376
77,263
3,113
11,175
70,082
67,159
2,923
11,088
68,345
64,932
3,413
11,918
68,643
65,366
3,277
11,139
66,702
63,377
3,325
11,597
67,614
64,524
3,090
11,703
67,276
64,208
3,068
11,492
66,808
63,559
3,249
11,744
67,715
64,199
3,516
11,234
66,886
63,594r
3,292r
10,921
66,956
63,651
3,305
2,746
12,974
17,469
16,589
20,501
2,144
11,361
18,391
17,787
21,293
1,819
11,394
24,833
27,149
22,552
2,001
12,140
25,686
27,482
22,866
2,009
12,334
26,304
26,582
22,449
2,131
13,247
26,863
26,945
21,819
2,140
13,477
26,534
25,934
22,646
2,179
13,911
27,265
25,684
22,526
2,345
13,934
28,079
25,422
22,638
2,226
13,702
27,907
25,492
22,569r
2,372
13,613
28,556
26,186
22,556
19,791
19,013
21,231
21,321
20,827
20,845
20,615
20,553
20,543
20,709
20,647
4
25 Negotiable order of withdrawal accounts
26 Savings deposits3
27
Personal
28
Nonpersonal
29
30
31
32
33
305,237
767,035
598,276
168,759
1. BIF, Bank Insurance Fund. Data in this table also appear in the Board's H.6 (508)
Special Supplementary Table monthly statistical release. For ordering address, see inside
front cover. Estimates are based on data collected by the Federal Reserve System from a
stratified random sample of about 425 commercial banks and 75 savings banks on the last day
of each month. Data are not seasonally adjusted and include IRA and Keogh deposits and
foreign currency-denominated deposits. Data exclude retail repurchase agreements and deposits held in U.S. branches and agencies of foreign banks.
2. As of October 31, 1994, interest rate data for NOW accounts and savings deposits
reflect a series break caused by a change in the survey used to collect these data.
3. Includes personal and nonpersonal money market deposits.
4. Includes both mutual and federal savings banks.
A16
1.23
Domestic Financial Statistics • October 1996
BANK DEBITS AND DEPOSIT TURNOVER 1
Debits are in billions of dollars; turnover is ratio of debits to deposits; monthly data are at annual rates
1995
1996
Dec.
Demand deposits3
All insured banks
Major New York City banks
Other banks
4
5
Other checkable deposits4
Savings deposits (including MMDAs) 5
6
7
8
Demand deposits3
All insured banks
Major New York City banks
Other banks
Mar.
Apr.'
May
447,869.0
238,538.4
209,330.6
422,696.7
224,066.5
198,630.2
463,246.0
245,440.5
217,805.5
470,743.6
252,388.3
218,355.3
Seasonally adjusted
DEBITS
1
2
3
Feb.
Jan.
334,784.1
171,224.3
163,559.7
369,029.1
191,168.8
177,860.3
397,649.3
201,161.4
196,487.9
397,538.3
203,977.5
193,560.8
430,421.2
229,379.2
201,042.0
3,481.5
3,497.4
3,798.6
3,766.3
4,207.4
4,507.8
4,595.5
5,703.6
4,967.8R
6,035.9R
5,024.4R
6,406.6R
4,942.7R
6,283. F
5,281.1
7,357.0
5,703.5
7,132.9
785.9
4,198.1
424.6
817.4
4,481.5
435.1
874.1
4.867.3
475.2
852.7
5,069.7
454.4
916.8
5,368.0
471.1
950.6
5,852.3
486.4
881.0
5,608.2
451.6
970.0
5,884.3
499.7
987.3
6,032.3
502.0
11.9
4.6
12.6
4.9
15.4
6.1
18.6
7.4
20.8
7.7
21.6
8.1
23.3
9.0
26.4
8.7
456,900.3
238,335.3
218,565.0
459,063.0
240,893.0
218,170.0
DEPOSIT TURNOVER
9
10
Other checkable deposits4
Savings deposits (including MMDAs)5
Not seasonally adjusted
DEBITS
11
12
13
Demand deposits3
All insured banks
Major New York City banks
Other banks
14
15
Other checkable deposits4
Savings deposits (including MMDAs) 5
16
17
18
Demand deposits3
All insured banks
Major New York City banks
Other banks
19
20
Other checkable deposits4
Savings deposits (including MMDAs)5
21.7 R
7.8
334,899.2
171,283.5
163,615.7
369,121.8
191,226.0
177,895.7
397,657.8
201,182.6
196,475.3
411,802.7
210,780.0
201,022.7
429,213.3
227,293.7
201,919.6
414,819.1
222,007.5
192,811.6
442,977.6
236,954.2
206,023.4
3,481.7
3.498.3
3,795.6
3,764.4
4,202.6
4,500.8
4,784.8
6,013.9
5,393.9R
6,309.7R
4,629. lr
5,798.9R
4,990.4R
6,444.7R
5,580.8
7,690.1
5,479.6
7,061.8
786.1
4,197.9
424.8
818.2
4,490.3
435.3
874.6
4,873.1
475.4
847.5
4,900.9
453.9
895.4
5,109.7
464.3
900.9
5,427.5
459.6
947.0
6,060.5
480.6
956.6
5,774.9
500.9
980.1
5,963.5
509.8
11.9
4.6
12.6
4.9
15.3
6.1
19.0
7.8
24.1
9.4
25.6
8.6
DEPOSIT TURNOVER
1. Historical tables containing revised data for earlier periods can be obtained from the
Publications Section, Division of Support Services, Board of Governors of the Federal
Reserve System, Washington, DC 20551.
Data in this table also appear in the Board's G.6 (406) monthly statistical release. For
ordering address, see inside front cover.
2. Annual averages of monthly figures.
3. Represents accounts of individuals, partnerships, and corporations and of states and
political subdivisions.
22.0 R
8.1
19.9
7.3
21.8 R
1.9'
4. As of January 1994, other checkable deposits (OCDs), previously defined as automatic
transfer to demand deposits (ATSs) and negotiable order of withdrawal (NOW) accounts,
were expanded to include telephone and preauthorized transfer accounts. This change
redefined OCDs for debits data to be consistent with OCDs for deposits data.
5. Money market deposit accounts.
Commercial Banking Institutions A17
1.26
ASSETS AND LIABILITIES OF COMMERCIAL BANKS 1
Billions of dollars
Wednesday figures
Monthly averages
1996r
1995
Account
July
Jan.
Feb.
Mar.
Apr.
ALL COMMERCIAL
BANKING INSTITUTIONS
1996
May
June
July
July 10
July 17
July 24
July 31
Seasonally adjusted
Assets
1 Bank credit
7
Securities in bank credit
U.S. government securities
4
Other securities
Loans and leases in bank credit2 . . .
6
Commercial and industrial
Real estate
7
8
Revolving home equity
9
Other
in
Consumer
ii
Security3
Other
l?
13 Interbank loans4
14 Cash assets5
15 Other assets6
3,533.2r
982.8r
703.9
278.8r
2,550.4
697.7
l,062.2r
78.0
984.2r
481.0
87.1
222.4
192.8
213.8
225.4r
3,633.6
991.2
702.4
288.8
2,642.3
723.6
1,086.4
79.7
1,006.7
500.2
85.0
247.1
203.2
233.3
237.9
3,647.3
998.2
715.3
282.9
2,649.1
728.0
1,090.0
80.0
1,010.0
500.3
85.7
245.1
192.3
219.6
243.0
3,641.1
983.0
704.7
278.3
2,658.1
726.9
1,095.4
80.0
1,015.4
503.8
84.9
247.1
202.6
216.4
242.0
3,659.4
982.0
704.8
277.3
2,677.4
732.8
1,097.3
80.2
1,017.1
507.4
85.9
254.0
208.9
222.5
243.6
3,663.2
988.2
713.2
275.0
2,675.0
735.1
1,099.0
79.8
1,019.2
504.9
82.6
253.5
208.7
219.4
242.8
3,668.4
980.3
706.6
273.7
2,688.1
738.1
1,102.3
79.4
1,022.9
510.0
82.1
255.7
207.0
216.7
253.3
3,671.9
975.0
706.2
268.8
2,696.9
741.9
1,103.5
79.8
1,023.7
511.9
80.3
259.1
199.6
216.9
264.8
3,670.0
978.0
706.9
271.0
2,692.1
738.8
1,101.7
79.6
1,022.0
511.5
82.7
257.4
196.2
209.8
265.4
3,678.3
979.6
705.2
274.4
2,698.7
743.2
1,103.5
79.9
1,023.6
511.9
80.5
259.7
198.3
219.7
264.3
3,676.2
975.4
707.3
268.2
2,700.8
743.4
1,104.3
79.8
1,024.5
512.8
80.4
259.8
198.8
214.6
265.3
3,664.7
967.1
705.2
261.9
2,697.6
743.0
1,105.7
80.0
1,025.8
511.7
76.8
260.3
203.1
227.0
267.0
16 Total assets7
4,108.2r
4,251.1
4,245.5
4,245.2
4211.2
4,277.1
4,288.1
4,2953
4,283.6
4302.7
4,297.0
4303.7
Liabilities
17 Deposits
18
Transaction
Nontransaction
IP
?0
Large time
Other
71
77 Borrowings
?3
From banks in the U.S
From nonbanks in the U.S
?4
?5 Net due to related foreign offices
26 Other liabilities8
2,609.0
792.0
1,817.0
402.0
1,415.0
685.8
195.5r
490.3r
235.5r
213.7r
2,687.5
782.9
1,904.7
422.0
1,482.7
705.1
206.6
498.5
270.2
231.6
2,681.7
765.5
1,916.2
426.4
1,489.8
691.8
192.6
499.2
276.6
233.8
2,702.6
766.7
1,935.9
429.1
1,506.8
688.8
204.0
484.8
261.6
224.1
2,718.7
770.1
1,948.7
433.3
1,515.3
710.5
207.6
502.9
254.6
231.7
2,717.7
756.4
1,961.3
440.0
1,521.3
710.4
207.4
503.0
256.1
219.9
2,721.5
749.8
1,971.7
445.4
1,526.3
702.2
203.6
498.6
255.1
226.9
2,728.4
742.6
1,985.9
448.0
1,537.9
692.5
200.2
492.3
248.1
225.3
2,722.2
737.1
1,985.1
448.8
1,536.2
683.9
197.6
486.3
247.8
226.6
2,726.4
739.9
1,986.5
448.7
1,537.8
694.6
203.4
491.2
251.5
227.8
2,732.3
748.8
1,983.4
447.4
1,536.1
695.9
197.4
498.4
240.9
225.6
2,736.8
752.7
1,984.1
445.8
1,538.3
697.5
201.4
496.1
248.1
221.9
3,744.0r
3394.4
3,883.9
3,877.0
3,915.5
3,904.0
3,905.6
3,894.4
3380.4
3,900.4
3,894.7
3,9043
364.2r
356.7
361.5
368.2
361.6
373.1
382.5
400.9
403.2
402.4
402.3
399.4
27 Total liabilities
28 Residual (assets less liabilities)
9
Not seasonally adjusted
Assets
79 Bank credit
Securities in bank credit
31
U.S. government securities
3?
Other securities
33
Loans and leases in bank credit2 . . .
Commercial and industrial
34
35
Real estate
36
Revolving home equity
Other
37
38
Consumer
39
Security3
40
Other
41 Interbank loans4
47 Cash assets5
43 Other assets6
3,526.ff
979.6r
701.9
277.7r
2,546.4
698.5
1,062.1
78.1
984.0
478.5
84.3
223.0
189.6
211.7
225,6r
3,624.4
978.9
697.1
281.8
2,645.5
720.6
1,086.2
79.5
1,006.6
504.8
86.9
247.0
212.2
240.8
238.6
3,638.9
993.2
710.6
282.6
2,645.7
726.1
1,086.9
79.5
1,007.4
500.8
88.7
243.2
194.2
220.4
242.3
3,635.4
987.4
709.1
278.4
2,648.0
730.9
1,089.8
79.2
1,010.6
499.5
84.8
243.0
200.5
209.2
240.5
3,660.4
987.2
710.8
276.4
2,673.2
738.7
1,093.4
79.6
1,013.8
504.7
86.7
249.7
205.9
217.0
241.0
3,660.1
992.7
714.0
278.7
2,667.4
740.5
1,095.9
79.7
1,016.3
503.2
78.4
249.5
202.3
216.7
243.8
3,665.3
981.5
706.8
274.7
2,683.8
741.1
1,100.9
79.3
1,021.6
506.3
80.0
255.6
203.3
214.6
252.8
3,664.7
971.7
704.0
267.7
2,693.0
743.0
1,103.3
79.9
1,023.4
509.2
77.8
259.6
196.8
214.6
265.5
3,662.4
973.5
703.9
269.6
2,688.9
740.9
1,102.4
79.7
1,022.7
507.6
79.3
258.7
195.0
208.8
265.7
3,670.3
973.7
702.3
271.4
2,696.6
744.7
1,103.7
80.0
1,023.7
509.0
78.4
260.8
193.5
215.7
263.3
3,661.6
972.0
705.1
266.9
2,689.6
742.5
1,103.3
79.9
1,023.4
510.5
76.4
256.8
188.9
200.0
262.4
3,661.7
967.0
704.7
262.3
2,694.7
742.5
1,104.8
80.2
1,024.6
510.5
76.2
260.7
203.3
228.6
270.8
44 Total assets7
4,0%.2r
4,2593
4,239.1
4,228.5
4,267.5
4,265.9
4,278.8
4,284.0
4,274.6
4,285.2
4,2553
4306.6
2,601.6
784.2
1,817.4
400.1
1,417.3
695.4
193.7r
501.7r
233.8r
212.9r
2,694.3
794.6
1,899.7
419.0
1,480.7
692.2
213.6
478.6
277.3
233.3
2,672.7
758.3
1,914.4
426.9
1,487.4
686.2
194.3
491.9
278.2
234.3
2,688.9
751.9
1,937.0
430.6
1,506.4
680.7
199.2
481.5
262.2
225.5
2,715.6
769.0
1,946.6
433.2
1,513.4
696.6
206.4
490.2
254.8
228.0
2,707.4
744.0
1,963.4
445.4
1,517.9
707.7
204.6
503.1
258.4
222.5
2,718.3
743.3
1,974.9
445.2
1,529.7
711.9
205.3
506.6
247.6
227.7
2,721.6
735.4
1,986.2
445.9
1,540.2
704.7
198.5
506.2
246.7
224.8
2,724.0
736.1
1,987.9
445.6
1,542.2
698.1
197.3
500.7
243.8
224.4
2,715.7
729.0
1,986.7
446.6
1,540.0
709.9
200.0
509.9
245.5
226.7
2,693.8
712.1
1,981.7
446.8
1,534.8
701.8
190.3
511.5
248.9
224.4
2,737.1
752.3
1,984.7
445.2
1,539.5
708.9
200.8
508.1
247.5
223.9
3,743.7r
3^97.1
3,871.4
3,8573
3,895.0
3,896.0
3,905.4
3,897.7
3,890.2
3,897.9
3,868.9
3,917.4
352.5r
362.2
367.7
371.2
372.5
369.9
373.3
386.3
384.4
387.3
386.4
389.2
45
46
47
48
49
50
51
5?
53
54
Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From nonbanks in the U.S
Net due to related foreign offices
Other liabilities8
55 Total liabilities
56 Residual (assets less liabilities)9
Footnotes appear on following page.
A18
1.26
DomesticNonfinancialStatistics • October 1996
ASSETS AND LIABILITIES OF COMMERCIAL BANKS'—Continued
Billions of dollars
Monthly averages
Account
1995
July
1996'
Jan.
Feb.
Mar.
Apr.
DOMESTICALLY CHARTERED
COMMERCIAL BANKS
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit2
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security3
Other
Interbank loans4
Cash assets5
Other assets6
Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From nonbanks in the U.S
Net due to related foreign offices . . . .
Other liabilities8
83 Total liabilities
84 Residual (assets less liabilities)
1996
May
June
July
July 10
July 17
July 24
July 31
Seasonally adjusted
72 Total assets7
73
74
75
76
77
78
79
80
81
82
Wednesday figures
9
3,110.0
849.4r
639.9
209.5
2,260.6
522.9
1,024.3
78.0
946.3r
481.0
51.9
180.5
171.4
187.0
171.6
3,197.3
854.2
639.2
215.1
2,343.0
540.3
1,051.1
79.7
971.5
500.2
55.5
195.8
181.4
202.2
182.7
3,196.0
852.6
641.8
210.8
2,343.4
541.0
1,055.7
79.9
975.8
500.3
52.2
194.2
171.6
190.3
186.4
3,197.9
843.0
633.5
209.4
2,354.9
541.4
1,062.1
80.0
982.2
503.8
51.2
196.5
181.8
189.1
187.0
3,211.6
841.8
633.2
208.6
2,369.8
545.8
1,064.1
80.1
983.9
507.4
52.9
199.6
187.8
196.3
188.7
3,213.4
845.2
635.3
209.9
2,368.2
548.0
1,065.9
79.7
986.2
504.9
50.7
198.8
187.4
193.2
187.4
3,210.9
835.9
627.2
208.6
2,375.0
548.1
1,069.4
79.3
990.1
510.0
46.8
200.7
184.6
191.5
201.1
3,212.2
833.2
625.5
207.8
2,379.0
549.4
1,070.2
79.8
990.4
511.9
46.1
201.3
180.4
191.6
215.1
3,211.5
835.9
625.5
210.4
2,375.6
547.8
1,068.4
79.6
988.8
511.5
48.2
199.7
176.9
184.3
215.3
3,217.8
837.0
624.8
212.1
2,380.8
550.0
1,070.2
79.9
990.4
511.9
46.7
202.0
177.9
194.3
214.6
3,215.9
834.7
627.2
207.5
2,381.2
549.9
1,071.2
79.8
991.4
512.8
45.6
201.7
179.8
189.3
215.6
3,204.2
825.0
623.8
201.2
2,379.2
549.9
1,072.1
80.0
992.2
511.7
43.3
202.1
184.9
201.8
217.7
3,582.9
3,706.7
3,687.6
3,698.9
3,7273
3,7245
3,730.8
3,741.5
3,730.2
3,746.8
3,742.7
3,750.6
2,445.1
782.5
1,662.5
248.3
1,414.3
567.2
176.4r
390.71"
82.9
137.2
2,523.6
772.1
1,751.5
272.3
1,479.2
590.8
185.2
405.7
93.0
152.7
2,516.9
754.8
1,762.1
274.4
1,487.7
574.1
173.1
401.0
90.5
153.9
2,534.6
756.8
1,777.8
273.3
1,504.5
577.0
183.5
393.5
81.3
147.1
2,549.2
759.5
1,789.7
275.6
1,514.0
591.1
184.4
406.7
84.6
154.8
2,545.1
745.4
1,799.7
279.4
1,520.3
585.4
183.9
401.5
88.2
146.4
2,549.3
739.0
1,810.4
283.1
1,527.3
582.1
183.3
398.8
79.7
155.9
2,553.9
731.9
1,822.0
285.5
1,536.6
576.1
180.6
395.5
76.1
155.8
2,545.8
726.3
1,819.5
285.2
1,534.3
568.6
178.9
389.7
76.0
156.5
2,551.9
729.4
1,822.5
286.3
1,536.3
579.8
183.8
396.1
76.4
158.1
2,558.9
738.1
1,820.8
285.8
1,535.0
576.3
175.7
400.6
74.8
155.9
2,563.0
742.0
1,821.0
283.8
1,537.2
580.3
181.9
398.5
74.4
153.5
3,2323r
3,360.2
3335.4
3,340.0
3379.7
3365.1
3367.0
3361.9
3346.8
33663
3365.9
3371.2
350.6
346.5
352.2
358.9
347.6
359.4
363.8
379.6
383.4
380.5
376.8
379.4
Not seasonally adjusted
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit2
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security3
Other
Interbank loans4
Cash assets5
Other assets6
100 Total assets7
101
102
103
104
105
106
107
108
109
110
Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From nonbanks in the U.S
Net due to related foreign offices . . . .
Other liabilities8
111 Total liabilities
112 Residual (assets less liabilities)9
3,102.4
845.4
638.0
207.4
2,257.0
522.9
l,024.2r
78.1
946.1r
478.5
50.5
180.9
168.2
184.4
172.5
3,185.6
843.2
632.0
211.2
2,342.4
537.2
1,051.0
79.5
971.5
504.8
53.9
195.5
189.1
210.0
183.7
3,187.8
848.6
637.7
210.9
2,339.3
540.2
1,052.4
79.5
973.0
500.8
53.2
192.6
175.3
192.2
185.2
3,190.7
846.2
636.6
209.6
2,344.5
544.5
1,056.4
79.2
977.2
499.5
51.3
192.9
180.5
182.2
186.3
3,214.3
846.9
638.9
208.0
2,367.4
551.7
1,060.6
79.5
981.0
504.7
53.9
196.6
185.7
191.4
187.9
3,213.8
848.5
637.0
211.5
2,365.3
553.5
1,063.0
79.6
983.4
503.2
49.5
196.2
180.8
191.0
187.7
3,211.3
839.3
628.6
210.7
2,372.0
550.6
1,068.1
79.3
988.8
506.3
47.0
200.0
182.6
188.6
200.9
3,204.4
829.3
623.5
205.9
2,375.0
549.4
1,070.1
79.9
990.2
509.2
44.8
201.5
177.6
188.9
216.5
3,204.5
832.1
624.2
208.0
2,372.3
548.7
1,069.3
79.7
989.6
507.6
46.3
200.5
175.9
183.1
216.8
3,208.5
831.0
622.2
208.8
2,377.5
550.1
1,070.4
79.9
990.5
509.0
45-5
202.5
174.3
190.0
214.2
3,200.3
829.3
624.0
205.3
2,371.1
548.0
1,070.1
79.9
990.2
510.5
43.4
199.0
169.8
174.3
213.3
3,200.1
823.3
622.8
200.5
2,376.7
549.2
1,071.4
80.1
991.3
510.5
43.1
202.5
184.2
202.9
221.7
3,570.9
3,711.9
3,683.9
3,682.7
3,722.4
3,7163
3,726.1
3,729.8
3,722.8
3,729.5
3,700.2
3,751.1
2,439.4
774.8
1,664.7
248.3
1,416.3
571.6
173.5r
398. r
81.8
137.0
2,529.4
783.8
1,745.7
269.6
1,476.0
581.7
192.1
389.6
92.9
153.4
2,508.2
747.7
1,760.5
275.8
1,484.7
573.2
175.6
397.6
92.3
152.3
2,520.6
742.2
1,778.3
273.8
1,504.6
569.5
178.5
390.9
84.5
148.8
2,548.4
759.0
1,789.4
277.0
1,512.4
576.3
184.1
392.1
85.0
152.8
2,533.3
733.7
1,799.6
282.7
1,517.0
584.5
182.8
401.7
93.2
147.9
2,544.0
732.7
1,811.2
282.9
1,528.3
587.6
183.4
404.2
78.5
156.2
2,549.3
724.7
1,824.5
285.6
1,538.9
582.8
177.8
405.0
75.1
155.8
2,551.8
725.5
1,826.4
285.3
1,541.1
576.3
176.7
399.6
72.2
155.5
2,543.4
718.4
1,825.1
286.3
1,538.8
588.1
179.3
408.7
73.9
157.8
2,521.4
701.5
1,820.0
286.5
1,533.5
579.9
169.6
410.3
77.1
155.4
2,564.6
741.7
1,823.0
284.8
1,538.1
586.9
180.1
406.8
75.7
154.8
3,229.9
3357.4
3326.0
3323.4
3362.4
3358.9
33663
3362.9
3355.8
3363.2
3333.9
3382.1
341.0
354.4
357.9
359.3
360.0
357.4
359.8
366.9
367.0
366.3
366.3
369.0
1. Covers the following types of institutions in the fifty states and the District of
Columbia: domestically chartered commercial banks that submit a weekly report of condition
(large domestic); other domestically chartered commercial banks (small domestic); branches
and agencies of foreign banks; New York State investment companies, and Edge Act and
agreement corporations (foreign-related institutions). Excludes international banking facilities. Data are Wednesday values, or pro rata averages of Wednesday values. Large domestic
banks constitute a universe; data for small domestic banks and foreign-related institutions are
estimates based on weekly samples and on quarter-end condition reports. Data are adjusted
for breaks caused by reclassifications of assets and liabilities.
2. Excludes federal funds sold to, reverse repurchase agreements with, and loans to
commercial banks in the United States.
3. Consists of reserve repurchase agreements with broker-dealers and loans to purchase
and carry securities.
4. Consists of federal funds sold to, reverse repurchase agreements with, and loans to
commercial banks in the United States.
5. Includes vault cash, cash items in process of collection, demand balances due from
depository institutions in the United States, balances due from Federal Reserve Banks, and
other cash assets.
6. Excludes the due-from position with related foreign offices, which is included in lines
25, 53, 81, and 109.
7. Excludes unearned income, reserves for losses on loans and leases, and reserves for
transfer risk. Loans are reported gross of these items.
8. Excludes the due-to position with related foreign offices, which is included in lines 25,
53, 81, and 109.
9. This balancing item is not intended as a measure of equity capital for use in capital
adequacy analysis.
Weekly Reporting Commercial Banks
1.27
A19
ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS
Millions of dollars, Wednesday figures
1996
Account
June 26
July 3
July 10
July 17
July 24
July 31
June 5
June 12
June 19
114,726
277,713
21,150
256,563
115,964
110,322
273,645
18,954
254,691
115,590
125,851
271,603
18,345
253,258
114,558
110,485
272,833
17,982
254,851
115,923
125,567
275,315
19,693
255,623
116,364
113,212
274,472
19,343
255,129
116,197
121,647
273,839
18,671
255,168
115,085
109,121
274,836
18,847
255,990
115,354
130,333
276,139
21,740
254,399
116,003
33,750
59,428r
47,421r
124,631
l,677 r
63,475
18,444
3,909
14,535
45,030
59,479r
34,018
57,420r
47,663r
124,182
l,814 r
63,743
18,543
3,915
14,627
45,200
58,625r
33,613
57,122'
47,965r
123,464
2,380r
64,111
18,775
3,995
14,779
45,336
56,972r
33,645
59,007'
46,276'
122,014
2,262'
63,689
18,845
4,012
14,833
44,844
56,064'
33,424
59,855
45,980
121,839
2,403
63,403
18,303
3,634
14,669
45,100
56,033
32,917
60,109
45,906
121,616
2,325
62,886
18,368
3,720
14,648
44,518
56,404
33,661
59,806
46,616
122,600
2,274
62,978
18,399
3,807
14,592
44,578
57,348
34,451
59,424
46,761
119,324
2,114
62,395
18,658
3,794
14,864
43,737
54,815
31,970
59,361
47,065
114,337
2,271
62,278
18.770
3,872
14,898
43,509
49,788
112,854
81,728
26,224
4,902
1,298,990
355,720r
1,369
354,352r
351,755'
2,597
506,019
48,092
457,927
252,993r
75,897
44,109
3,174
28,614
15,356
6,833
10,384
1,095
27,321
47,373
1,935
33,291
1,263,764
169,655
115,303
82,091
28,326
4,885
1,298,139
353,482r
1,401
352,080r
2,609
507,727
48,135
459,592
254,03 l r
75,821
43,194
3,456
29,171
15,196
6,893
10,163
1,106
25,707
48,013
1,987
33,244
1,262,908
155,524
110,919
79,256
26,292
5,371
1,305,751
357,929r
1,390
356,539r
353,902'
2,637
508,668
48,594
460,074
253,286'
75,057
43,189
3,339
28,529
17,183
7,065
10,392
1,207
26,479
48,486
2,002
33,284
1,270,465
158,979
111,917
83,254
22,608
6,055
1,306,656
357,713'
1,324
356,389'
353,783'
2,605
508,198
48,854
459,343
255,230'
75,479
43,596
3,254
28,629
15,602
7,243
10,520
1,066
26,723
48,883
2,003
33,153
1,271,500
157,831
122,635
91,258
25,629
5,748
1,333,950
363,254
1,365
361,888
359,193
2,696
521,651
49,187
472,464
259,699
75,806
42,590
3,637
29,580
15,411
7,295
10,613
1,079
29,980
49,161
1,988
33,617
1,298,345
172,999
105,554
75,201
25,948
4,405
1,327,943
359,336
1,404
357,932
355,173
2,759
521,806
49,224
472,582
259,840
77,635
43,813
4,367
29,455
14,899
7,286
10,606
1,046
25,923
49,567
2,018
33,602
1,292,323
174,112
105,366
74,976
25,731
4,658
1,334,213
360,809
1,437
359,372
356,540
2,832
521,466
49,529
471,937
261,321
81,484
45,983
6,471
29,030
14,561
7,305
10,698
1,313
25,500
49,755
2,037
33,782
1,298,394
173,688
103,366
75,560
23,547
4,259
1,332,857
360,324
1,453
358,872
355,965
2,907
522,547
49,813
472,734
262,873
77,282
44,555
4,838
27,889
14,891
7,259
10,690
960
26,166
49,863
2,148
33,781
1,296,928
173,218
116,856
87,541
22,708
6,606
1,332,798
361,180
1,536
359,644
356,819
2,826
522,917
49,881
473,036
261,937
75,904
43,551
3,752
28,601
15,186
7,254
10,695
959
26,244
50,521
2,132
33,957
1,296,709
175,842
2,063,343
2,041,883
2,061,280
2,046,580
2,116,700
2,081,290
2,095,534
2,076,792
2,110,216
ASSETS
1 Cash and balances due from depository institutions
2 U.S. Treasury and government securities
Trading account
3
Investment account
4
Mortgage-backed securities'
5
All others, by maturity
One year or less
6
One year through five years
7
More than five years
8
9 Other securities
Trading account
10
Investment account
11
12
State and local government, by maturity
One year or less
13
More than one year
14
Other bonds, corporate stocks, and securities
15
Other trading account assets
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
Federal funds sold2
To commercial banks in the United States
To nonbank brokers and dealers in securities
To others3
Other loans and leases, gross
Commercial and industrial
Bankers acceptances and commercial paper
All other
U.S. addressees
Non-U.S. addressees
Real estate loans
Revolving, home equity
All other
To individuals for personal expenditures
To depository and financial institutions
Commercial banks in the United States
Banks in foreign countries
Nonbank depository and other financial institutions
For purchasing and carrying securities
To finance agricultural production
To states and political subdivisions
To foreign governments and official institutions
All other loans
Lease-financing receivables
LESS: Unearned income
Loan and lease reserve3
Other loans and leases, net
All other assets
45 Total assets
Footnotes appear on the following page.
3 4 9 , 4 7 LR
A20
1.27
DomesticNonfinancialStatistics • October 1996
ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS—Continued
Millions of dollars, Wednesday figures
1996
Account
June 5
June 12
June 19
June 26
July 3
July 10
July 17
July 24
July 31
46 Deposits
Demand deposits
47
Individuals, partnerships, and corporations
48
49
Other holders
States and political subdivisions
50
51
U.S. government
52
Depository institutions in the United States
53
Banks in foreign countries
54
Foreign governments and official institutions
55
Certified and officers' checks
56
Transaction balances other than demand deposits4
Nontransaction balances
57
58
Individuals, partnerships, and corporations
Other holders
59
States and political subdivisions
60
61
U.S. government
62
Depository institutions in the United States
Foreign governments, official institutions, and banks . .
63
1,238,748
317,013
271,951
45,061
8,238
2,147
22,222
5,172
564
6,718
73,194
848,541
818,924
29,618
23,619
4,030
1,669
300
1,230,539
311,611
267,381
44,230
7,790
2,432
20,565
5,933
588
6,922
72,100
846,828
817,297
29,531
23,587
4,014
1,631
299
1,230,209
311,034
262,712
48,323
9,318
4,319
21,596
5,464
569
7,057
73,684
845,491
816,880
28,611
22,663
4,009
1,633
305
1,221,262
305,247
260,886
44,361
9,059
2,095
19,480
5,892
555
7,279
72,220
843,795
815,778
28,017
21,938
4,050
1,724
306
1,289,538
334,354
286,262
48,091
8,647
2,466
22,769
5,861
761
7,587
70,019
885,166
857,087
28,079
22,007
4,242
1,424
406
1,264,586
314,641
272,047
42,594
7,715
1,681
20,002
5,439
539
7,218
70,413
879,532
851,281
28,251
22,179
4,004
1,531
536
1,263,211
313,598
269,945
43,653
7,816
1,619
19,370
6,871
802
7,175
70,631
878,983
850,729
28,254
22,059
4,010
1,675
509
1,253,938
304,755
262,340
42,415
7,938
1,765
19,596
5,168
523
7,424
69,991
879,192
850,882
28,310
22,131
4,005
1,663
510
1,283,224
331,139
284,903
46,237
9,328
2,321
21,449
4,566
807
7,766
70,901
881,184
852,651
28,533
22,489
4,026
1,582
436
64 Liabilities for borrowed money5
65
Borrowings from Federal Reserve Banks
66
Treasury tax and loan notes
Other liabilities for borrowed money6
67
68 Other liabilities (including subordinated notes and debentures) . . .
408,777
0
580
408.197
218,946
400,126
0
2,710
397,416
213,405
419,678
3,522
24,581
391,575
213,780
413,207
0
22,963
390,244
214,996
406,560
0
6,143
400,416
214,170
400,223
0
2,692
397,531
209,098
412,173
0
12,316
399,857
212,799
400,513
0
18,540
381,973
213,759
407,117
1,381
22,640
383,096
211,755
1,866,471
1,844,069
1,863,667
1,849,464
1,910,268
1,873,906
1,888,184
1,868,209
1,902,096
196,872
197,814
197,613
197,115
206,432
207,383
207,351
208,583
208,120
1,688,351
126,160
1,020
264
755
28,415
68,820
1,685,983
126,540
1,014
264
750
28,332
74,965
1,689,292
126,910
1,000
264
736
29,051
72,643
1,686,570
126,032
989
263
725
28.633
78,224
1,719,892
130,282
980
263
717
28,993
73,058
1,710,572
130,983
974
263
711
28,681
67,112
1,715,058
131,296
967
263
704
28,623
68,578
1,710,268
132,154
958
263
695
28,729
72,397
1,709,038
130,448
951
263
689
28,859
71,078
LIABILITIES
69 Total liabilities
70 Residual (total assets less total liabilities)7
MEMO
71
72
73
74
75
76
77
Total loans and leases, gross, adjusted, plus securities8
Time deposits in amounts of $100,000 or more
Loans sold outright to affiliates9
Commercial and industrial
Other
Foreign branch credit extended to U.S. residents10
Net owed to related institutions abroad
1. Includes certificates of participation, issued or guaranteed by agencies of the U.S.
government, in pools of residential mortgages.
2. Includes securities purchased under agreements to resell.
3. Includes allocated transfer risk reserve.
4. Includes negotiable order of withdrawal (NOWs) and automatic transfer service (ATS)
accounts, and telephone and preauthorized transfers of savings deposits.
5. Includes borrowings only from other than directly related institutions.
6. Includes federal funds purchased and securities sold under agreements to repurchase.
7. This balancing item is not intended as a measure of equity capital for use in capitaladequacy analysis.
8. Excludes loans to and federal funds transactions with commercial banks in the
United States.
9. Affiliates include a bank's own foreign branches, nonconsolidated nonbank affiliates of
the bank, the bank's holding company (if not a bank), and nonconsolidated nonbank
subsidiaries of the holding company.
10. Credit extended by foreign branches of domestically chartered weekly reporting banks
to nonbank U.S. residents. Consists mainly of commercial and industrial loans, but includes
an unknown amount of credit extended to other than nonfinancial businesses.
Weekly Reporting Commercial Banks
1.28
A21
LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS
Assets and Liabilities
Millions of dollars, Wednesday figures
1996
Account
June 5
June 12
June 19
June 26
July 3
July 10
July 17
July 24
July 31
ASSETS
20
21
Cash and balances due from depository
institutions
U.S. Treasury and government agency
securities
Other securities
Federal funds sold1
To commercial banks in the United States
To others2
Other loans and leases, gross
Commercial and industrial
Bankers acceptances and commercial paper .
All other
U.S. addressees
Non-U.S. addressees
Loans secured by real estate
Loans to depository and financial
institutions
Commercial banks in the United States
Banks in foreign countries
Nonbank financial institutions
For purchasing and carrying securities
To foreign governments and official
institutions
All other
Other assets (claims on nonrelated parties)
22
Total assets3
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
15,943
15,613
15,994
15,533
15,588
15,069
15,486
15,065
15,508
49,899
44,026'
26,267
7,320
18,947
186,699R
120,260
4,942
115,318
109,080
6,239
20,048R
50,413
43,294'
30,215
6,078
24,138
188,397'
120,539
5,066
115,473
109,233
6,241
20,054'
50,018
40,347
29,399
7,787
21,612
190,581'
121,100
4,887
116,214
109,935
6,279
20,147'
49,962
40,278
27,389
6,285
21,104
190,630'
121,958
4,969
116,989
109,927
7,061
20,291'
50,301
39,819
28,122
6,072
22,050
193,652
122,773
5,096
117,678
110,850
6,827
19,979
50,927
40,206
28,779
6,667
22,112
192,435
121,868
4,979
116,889
109,970
6,919
20,105
51,105
40,838
28,406
6,531
21,875
194,750
123,292
4,953
118,339
111,360
6,979
19,848
51,780
40,101
26,480
4,831
21,650
194,536
123,294
4,951
118,344
111,388
6,956
19,837
52,247
40,252
26,710
5,674
21,036
194,731
122,401
4,718
117,684
110,747
6,936
19,890
33,676
3,100
3,062
27,514
5,387
35,306
3,253
3,075
28,978
5,143
35,978
3,007
3,075
29,896
5,742
36,044
2,735
3,129
30,181
4,994
37,352
2,715
3,334
31,302
5,920
37,529
2,704
3,244
31,581
5,300
38,773
2,709
3,518
32,546
5,444
38,397
2,586
3,351
32,460
5,490
39,340
2,584
3,370
33,385
5,472
587
6,740R
39,783R
599
6,755'
38,897'
791
6,822'
34,643'
783
6,560'
33,636'
773
6,855
32,944
778
6,855
33,634
775
6,619
34,049
787
6,731
34,490
933
6,696
35,740
397,625R
399,306R
391,745R
388,649R
387,099
387,109
388,883
388,071
393,033
111,088
4,325
3,617
708
106,763
78,147
28,616
110,595
4,145
3,487
658
106,450
77,787
28,663
108,608
4,462
3,563
899
104,146
75,870
28,276
108,311
4,380
3,684
696
103,931
76,005
27,927
104,020
4,203
3,503
700
99,818
73,784
26,034
106,582
4,095
3,413
683
102,486
74,867
27,619
109,787
4,664
4,015
648
105,123
76,480
28,643
109,304
3,839
3,223
616
105,465
76,329
29,136
109,190
4,192
3,416
776
104,997
75,548
29,449
LIABILITIES
31
32
33
34
35
36
37
Deposits or credit balances owed to other
than directly related institutions
Demand deposits4
Individuals, partnerships, and corporations . . . .
Other
Nontransaction accounts
Individuals, partnerships, and corporations . . . .
Other
Borrowings from other than directly
related institutions
Federal funds purchased5
From commercial banks in the United States . .
From others
Other liabilities for borrowed money
To commercial banks in the United States
To others
Other liabilities to nonrelated parties
38
Total liabilities6
23
24
25
26
27
28
29
30
81,729
49,330
11,993
37,337
32,399
3,812
28,587
62,494R
86,177
52,350
11,234
41,116
33,827
3,970
29,856
62,390'
84,714
50,509
11,002
39,507
34,206
4,024
30,181
55,313'
81,610
49,987
10,202
39,786
31,623
4,241
27,382
56,290'
83,982
53,652
11,635
42,018
30,329
3,953
26,377
55,731
81,803
52,091
10,089
42,001
29,712
4,129
25,583
56,051
78,595
48,083
7,897
40,186
30,512
3,712
26,800
55,708
80,900
48,649
9,042
39,607
32,251
3,612
28,639
55,563
86,068
53,673
13,688
39,985
32,395
3,641
28,754
57,353
397,62SR
399,306R
391,745R
388,649R
387,099
387,109
388,883
388,071
393,033
296,471'
107,306'
302,988'
107,667'
299,549'
112,345'
299,239'
111,216'
303,106
116,692
302,976
116,615
305,859
120,544
305,481
116,686
305,682
112,577
MEMO
39
40
Total loans (gross) and securities, adjusted7
Net owed to related institutions abroad
1. Includes securities purchased under agreements to resell.
2. Includes transactions with nonbank brokers and dealers in securities.
3. For U.S. branches and agencies of foreign banks having a net "due from" position,
includes net due from related institutions abroad.
4. Includes other transaction deposits.
5. Includes securities sold under agreements to repurchase.
6. For U.S. branches and agencies of foreign banks having a net "due to" position,
includes net owed to related institutions abroad.
7. Excludes loans to and federal funds transactions with commercial banks in the United
States.
A22
1.32
DomesticNonfinancialStatistics • October 1996
COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING
Millions of dollars, end of period
Year ending December
1996
Item
1991
1992
1993
1994
1995
Jan.
Feb.
Mar.
Apr.
May
June
Commercial paper (seasonally adjusted unless noted otherwise)
1 All issuers
528,832
545,619
555,075
595,382
674,904
685,791
687,669
695,230r
710,690r
719,069r
731,027
Financial companies'
2
Dealer-placed paper 2 , total
3
Directly placed paper 3 , total
212,999
182,463
226,456
171,605
218,947
180,389
223,038
207,701
275,815
210,829
288,368
208,159
293,313
208,046
291,600'
208,880
302,504'
211,833
301,670'
221,463
310,524
223,236
4 Nonfinancial companies4
133,370
147,558
155,739
164,643
188,260
189,264
186,310
194,750'
196,352'
195,936'
197,267
Bankers dollar acceptances (not seasonally adjusted)
5 Total
6
7
8
9
10
By holder
Accepting banks
Own bills
Bills bought from other banks
Federal Reserve Banks6
Foreign correspondents
Others
By basis
11 Imports into United States
12 Exports from United States
13 All other
43,770
38,194
32,348
29,835
11,017
9,347
1,670
10,555
9,097
1,458
12,421
10,707
1,714
11,783
10,462
1,321
1,739
31,014
1,276
26,364
725
19,202
410
17,642
12,843
10,351
20,577
12,209
8,096
17,890
10,217
7,293
14,838
10,062
6,355
13,417
1. Institutions engaged primarily in commercial, savings, and mortgage banking; sales,
personal, and mortgage financing; factoring, finance leasing, and other business lending;
insurance underwriting; and other investment activities.
2. Includes all financial-company paper sold by dealers in the open market.
3. As reported by financial companies that place their paper directly with investors.
4. Includes public utilities and firms engaged primarily in such activities as communications, construction, manufacturing, mining, wholesale and retail trade, transportation, and
services.
1.33
PRIME RATE CHARGED BY BANKS
29,242
5. Data on bankers dollar acceptances are gathered from approximately 100 institutions.
The reporting group is revised every January. Beginning January 1995, data for Bankers
dollar acceptances will be reported annually in September.
6. In 1977 the Federal Reserve discontinued operations in bankers dollar acceptances for
its own account.
Short-Term Business Loans1
Percent per year
Date of change
1993—Jan.
1
6.00
1994—Mar.
Apr.
May
Aug.
Nov.
24
19
17
16
15
6.25
6.75
7.25
7.75
8.50
1995—Feb. 1
July 7
Dec. 20
9.00
8.75
8.50
1996—Feb.
8.25
1
Period
Rate
Average
rate
1993
1994
1995
6.00
7.15
8.83
1993- -Jan
Feb
Mar
Apr.
May
June
July
Aug
Sept
Oct
Nov
Dec
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
1. The prime rate is one of several base rates that banks use to price short-term business
loans. The table shows the date on which a new rate came to be the predominant one quoted
by a majority of the twenty-five largest banks by asset size, based on the most recent Call
Period
1994—Jan
Feb
Mar
Apr.
May
June
July
Aug
Sept
Oct
Nov
Dec
Average
rate
6.00
6.00
6.06
6.45
6.99
7.25
7.25
7.51
7.75
7.75
8.15
8.50
Period
Average
rate
1995—Jan
Feb
Mar.
Apr.
May
June
July
Aug
Sept
Oct
Nov
Dec
8.50
9.00
9.00
9.00
9.00
9.00
8.80
8.75
8.75
8.75
8.75
8.65
1996—Jan
Feb
Mar
Apr
May
June
July
Aug
8.50
8.25
8.25
8.25
8.25
8.25
8.25
8.25
Report. Data in this table also appear in the Board's H.15 (519) weekly and G.13 (415)
monthly statistical releases. For ordering address, see inside front cover.
Financial Markets
1.35
INTEREST RATES
A23
Money and Capital Markets
Percent per year; figures are averages of business day data unless otherwise noted
1996, week ending
1996
Item
1993
1994
1995
Apr.
May
June
July
June 28
July 5
July 12
July 19
July 26
MONEY MARKET INSTRUMENTS
1 Federal funds 1 ' 2,3
2 Discount window borrowing2'4
3.02
3.00
4.21
3.60
5.83
5.21
5.22
5.00
5.24
5.00
5.27
5.00
5.40
5.00
5.21
5.00
5.53
5.00
5.26
5.00
5.23
5.00
5.25
5.00
3
4
5
Commercial paper3-5,6
1-month
3-month
6-month
3.17
3.22
3.30
4.43
4.66
4.93
5.93
5.93
5.93
5.40
5.39
5.38
5.38
5.39
5.42
5.45
5.49
5.57
5.44
5.53
5.67
5.50
5.51
5.61
5.49
5.52
5.63
5.45
5.56
5.70
5.44
5.54
5.69
5.40
5.51
5.65
6
7
8
Finance paper, directly placed*'5'1
1-month
3-month
6-month
3.12
3.16
3.15
4.33
4.53
4.56
5.81
5.78
5.68
5.31
5.28
5.20
5.29
5.29
5.23
5.35
5.37
5.35
5.33
5.43
5.44
5.38
5.40
5.38
5.35
5.39
5.36
5.36
5.45
5.48
5.31
5.44
5.45
5.29
5.42
5.43
9
10
Bankers acceptances3,5,8
3-month
6-month
3.13
3.21
4.56
4.83
5.81
5.80
5.28
5.28
5.29
5.31
5.38
5.47
5.45
5.57
5.40
5.49
5.43
5.52
5.47
5.59
5.45
5.58
5.44
5.55
11
12
13
Certificates of deposit, secondary market3,9
1-month
3-month
6-month
3.11
3.17
3.28
4.38
4.63
4.96
5.87
5.92
5.98
5.34
5.36
5.42
5.32
5.36
5.47
5.37
5.46
5.64
5.37
5.53
5.75
5.39
5.49
5.66
5.39
5.49
5.69
5.40
5.57
5.80
5.36
5.54
5.75
5.33
5.51
5.73
3.18
4.63
5.93
5.36
5.36
5.46
5.49
5.48
5.45
5.54
5.48
5.47
3.00
3.12
3.29
4.25
4.64
5.02
5.49
5.56
5.60
4.95
5.06
5.23
5.02
5.12
5.33
5.09
5.25
5.48
5.15
5.30
5.52
5.09
5.22
5.47
5.13
5.26
5.49
5.15
5.34
5.57
5.13
5.28
5.47
5.16
5.30
5.53
3.02
3.14
3.33
4.29
4.66
5.02
5.51
5.59
5.69
4.99
5.08
5.17
5.02
5.12
5.31
5.11
5.26
5.56
5.17
5.32
5.49
5.10
5.23
5.56
5.12
5.22
n.a.
5.21
5.41
n.a.
5.19
5.36
n.a.
5.14
5.30
5.49
3.43
4.05
4.44
5.14
5.54
5.87
6.29
6.59
5.32
5.94
6.27
6.69
6.91
7.09
7.49
7.37
5.94
6.15
6.25
6.38
6.50
6.57
6.95
6.88
5.54
5.96
6.11
6.30
6.48
6.51
6.98
6.79
5.64
6.10
6.27
6.48
6.66
6.74
7.11
6.93
5.81
6.30
6.49
6.69
6.83
6.91
7.22
7.06
5.85
6.27
6.45
6.64
6.76
6.87
7.14
7.03
5.79
6.25
6.44
6.63
6.76
6.86
7.16
7.02
5.82
6.25
6.43
6.60
6.73
6.85
7.12
7.00
5.90
6.34
6.53
6.72
6.86
6.95
7.23
7.11
5.80
6.22
6.40
6.59
6.71
6.81
7.11
7.00
5.85
6.25
6.44
6.62
6.73
6.85
7.12
7.02
6.45
7.41
6.93
6.94
7.08
7.20
7.13
7.14
7.10
7.21
7.09
7.10
5.38
5.83
5.60
5.77
6.17
6.18
5.80
6.10
5.95
5.62
5.94
5.94
5.75
5.97
5.98
5.67
5.98
6.02
5.83
5.96
5.92
5.90
5.96
5.97
5.90
5.96
5.94
5.80
5.92
6.00
5.86
6.01
5.88
5.76
5.94
5.86
7.54
8.26
7.83
7.80
7.91
8.00
7.95
7.96
7.92
8.02
7.92
7.93
7.22
7.40
7.58
7.93
7.46
7.97
8.15
8.28
8.63
8.29
7.59
7.72
7.83
8.20
7.86
7.50
7.68
7.83
8.19
7.90
7.62
7.77
7.94
8.30
8.02
7.71
7.87
8.02
8.40
8.13
7.65
7.82
7.97
8.35
8.07
7.66
7.83
7.97
8.36
7.97
7.62
7.79
7.94
8.32
8.23
7.73
7.89
8.05
8.42
8.09
7.61
7.79
7.94
8.32
8.01
7.62
7.81
7.95
8.34
8.06
2.78
2.82
2.56
2.24
2.21
2.21
2.28
2.22
2.19
2.25
2.32
2.35
14 Eurodollar deposits, 3-month 3,10
18
19
20
U.S. Treasury bills
Secondary market 3,5
3-month
6-month
1-year
Auction average 3 ' 5 '"
3-month
6-month
1-year
21
22
23
24
25
26
27
28
Constant maturities12
1-year
2-year
3-year
5-year
7-year
10-year
20-year
30-year
15
16
17
U.S. TREASURY NOTES AND BONDS
Composite
29 More than 10 years (long-term)
STATE AND LOCAL NOTES AND BONDS
Moody's series13
30
31 Baa
32 Bond Buyer series14
CORPORATE BONDS
33 Seasoned issues, all industries15
34
35
36
37
38
Rating group
Aaa
Aa
A
Baa
A-rated, recently offered utility bonds16
MEMO
Dividend-price raticP
39 Common stocks
1. The daily effective federal funds rate is a weighted average of rates on trades through
New York brokers.
2. Weekly figures are averages of seven calendar days ending on Wednesday of the
current week; monthly figures include each calendar day in the month.
3. Annualized using a 360-day year for bank interest.
4. Rate for the Federal Reserve Bank of New York.
5. Quoted on a discount basis.
6. An average of offering rates on commercial paper placed by several leading dealers for
firms whose bond rating is AA or the equivalent.
7. An average of offering rates on paper directly placed by finance companies.
8. Representative closing yields for acceptances of the highest-rated money center banks.
9. An average of dealer offering rates on nationally traded certificates of deposit.
10. Bid rates for Eurodollar deposits at approximately 11:00 a.m. London time. Data are
for indication purposes only.
11. Auction date for daily data; weekly and monthly averages computed on an issue-date
basis.
12. Yields on actively traded issues adjusted to constant maturities. Source: U.S. Department of the Treasury.
13. General obligation bonds based on Thursday figures; Moody's Investors Service.
14. State and local government general obligation bonds maturing in twenty years are used
in compiling this index. The twenty-bond index has a rating roughly equivalent to Moodys'
A1 rating. Based on Thursday figures.
15. Daily figures from Moody's Investors Service. Based on yields to maturity on selected
long-term bonds.
16. Compilation of the Federal Reserve. This series is an estimate of the yield on recently
offered, A-rated utility bonds with a thirty-year maturity and five years of call protection.
Weekly data are based on Friday quotations.
17. Standard & Poor's corporate series. Common stock ratio is based on the 500 stocks in
the price index.
NOTE. Some of the data in this table also appear in the Board's H.15 (519) weekly and
G.13 (415) monthly statistical releases. For ordering address, see inside front cover.
A24
1.36
DomesticNonfinancialStatistics • October 1996
STOCK MARKET
Selected Statistics
1995
Indicator
1996
1993
Nov.
Jan.
Dec.
Mar.
Feb.
Apr.
May
June
July
Prices and trading volume (averages of daily figures)1
Common stock prices (indexes)
1 New York Stock Exchange
(Dec. 31, 1965 = 50)
2
Industrial
3
Transportation
4
Utility
5
Finance
249.71
300.10
242.68
114.55
216.55
254.16
315.32
247.17
104.96
209.75
291.18
367.40
270.14
110.64r
238.48
317.58
398.66
300.06
119.49
266.12
327.90
412.11
303.53
123.95r
273.36
329.22
413.05
300.43
127.09
274.96
346.46
435.92
315.29
135.51
290.97
346.73
439.55
324.77
122.83
290.44
347.50
441.99
326.42
122.44
287.92
354.84
452.63
334.66
124.86
290.43
358.32
458.30
331.57
123.60
294.42
345.06
438.58
316.57
122.66
287.89
6 Standard & Poor's Corporation
(1941-43 = 10)2
451.63
460.42
541.72
595.53
614.57
614.42
649.54
647.07
647.17
661.23
668.50
644.06
7 American Stock Exchange
(Aug. 31, 1973 = 50)3
438.77
449.49
498.13
529.93
538.01
540.48
562.34
565.69
580.60
600.93
591.99
550.16
263,374
18,188
290,652
17,951
345,729
20,387
360,199
16,724
384,310
21,085
416,048
21,069
434,607
27,107
426,198
22,988
419,941
24,886
404,184
28,127
392,413
23,903
398,245
21,281
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 4
60,310
61,160
76,680
77,875
76,680
73,530
77,090
78,308
81,170
86,100
87,160
79,860
Free credit balances at brokers5
11 Margin accounts6
12 Cash accounts
12,360
27,715
14,095
28,870
16,250
34,340
15,590
30,340
16,250
34,340
14,950
32,465
15,840
34,700
15,770
33,113
15,780
33,100
16,890
33,760
16,800r
33,775r
17,700
32,935
Margin requirements (percent of market value and eifective 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
Jan. 3, 1974
70
50
70
80
60
80
65
50
65
55
50
55
65
50
65
50
50
50
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.
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 other than options are the
difference between the market value (100 percent) and the maximum loan value of collateral
as prescribed by the Board. Regulation T was adopted effective Oct. 15, 1934; Regulation U,
effective May 1, 1936; Regulation G, effective Mar. 11, 1968; and Regulation X, effective
Nov. 1, 1971.
On Jan. 1, 1977, the Board of Governors for the first time established in Regulation T the
initial margin required for writing options on securities, setting it at 30 percent of the current
market value of the stock underlying the option. On Sept. 30, 1985, the Board changed the
required initial margin, allowing it to be the same as the option maintenance margin required
by the appropriate exchange or self-regulatory organization; such maintenance margin rules
must be approved by the Securities and Exchange Commission. Effective Jan. 31, 1986, the
SEC approved new maintenance margin rules, permitting margins to be the price of the option
plus 15 percent of the market value of the stock underlying the option.
Eifective June 8, 1988, margins were set to be the price of the option plus 20 percent of the
market value of the stock underlying the option (or 15 percent in the case of stock-index
options).
Federal Finance
1.38
A25
FEDERAL FISCAL AND FINANCING OPERATIONS
Millions of dollars
Fiscal year
Calendar year
Type of account or operation
1996
1993
U.S. budget1
1 Receipts, total
2
On-budget
3
Off-budget
4 Outlays, total
5
On-budget
6
Off-budget
7 Surplus or deficit ( - ) , total
8
On-budget
9
Off-budget
Source of financing (total)
10 Borrowing from the public
11 Operating cash (decrease, or increase (—))
12 Other 2
1994
1995
Feb.
Mar.
Apr.
May
June
July
1.153,535
841,601
311,934
1,408,675
1.142,088
266,587
-255,140
-300,487
45,347
1,257,737
922,711
335,026
1,460,841
1,181,469
279,372
-203,104
-258,758
55,654
1,355,213
1,004,134
351,079
1,519,133
1,230,469
288,664
-163,920
-226,335
62,415
89,349
60,912
28,437
133,644
105,711
27,933
-44,295
-44,799
504
89,011
56,677
32,334
136,286
108,365
27,921
-47,275
-51,688
4,413
203,386
160,774
42,612
130,993
105,131
25,862
72,393
55,643
16,750
90,044
60,106
29,938
143,342
114,486
28,856
-53,298
-54,380
1,082
151,919
116,718
35,201
117,818
104,161
13,657
34,101
12,557
21,544
103,813
75,202
28,611
130,909
104,454
26,455
-27,096
-29,252
2,156
248,619
6,283
238
185,344
16,564
1,196
171,288
-2,007
-5,361
47,022
6,297
-9,024
39,189
9,283
-197
-35,466
-26,449
-10,478
20,633
43,809
-11,144
-8,619
-33,519
8,037
29,098
1,262
-3,264
52,506
17,289
35,217
35,942
6,848
29,094
37,949
8,620
29,329
31,157
5,632
25,525
21,874
7,021
14,853
48,323
11,042
37,281
4,514
3,757
757
38,033
7,701
30,332
36,771
6,836
29,936
MEMO
13 Treasury operating balance (level, end of
period)
14
Federal Reserve Banks
15
Tax and loan accounts
1. Since 1990, off-budget items have been the social security trust funds (federal old-age
survivors insurance and federal disability insurance) and the U.S. Postal Service.
2. Includes special drawing rights (SDRs); reserve position on the U.S. quota in the
International Monetary Fund (IMF); loans to the IMF; other cash and monetary assets;
accrued interest payable to the public; allocations of SDRs; deposit funds; miscellaneous
liability (including checks outstanding) and asset accounts; seigniorage; increment on gold;
net gain or loss for U.S. currency valuation adjustment; net gain or loss for IMF loanvaluation adjustment; and profit on sale of gold.
SOURCE. Monthly totals: U.S. Department of the Treasury, Monthly Treasury Statement of
Receipts and Outlays of the U.S. Government; fiscal year totals: U.S. Office of Management
and Budget, Budget of the U.S. Government.
A26
1.39
DomesticNonfinancialStatistics • October 1996
U.S. B U D G E T R E C E I P T S A N D
OUTLAYS1
Millions of dollars
Fiscal year
Calendar year
Source or type
May
July
RECEIPTS
1 All sources
2 Individual income taxes, net
3
Withheld
4
Nonwithheld
5
Refunds
Corporation income taxes
6
Gross receipts
7
Refunds
8 Social insurance taxes and contributions, net
9
Employment taxes and contributions2
10
Unemployment insurance
11
Other net receipts3
12
13
14
15
Excise taxes
Customs deposits
Estate and gift taxes
Miscellaneous receipts4
1,257,737
1,355,213
625,556
710,542
656,402
766,631
90,044
151,919
103,813
543,055
459,699
160,433
77,077
590,244
499,927
175,855
85,538
273,315
240,063
42,029
8,787
307,498
251,398
132,001
75,959
292,393
256,916
43,100
10,058
347,285
264,177
162,782
79,735
29,914
45,399
6,352
21,850
60,816
2,061
49,814
48,072
3,631
1,893
154,205
13,820
461,475
428,810
28,004
4,661
174,422
17,418
484,473
451,045
28,878
4,550
78,393
7,747
220,140
206,615
11.177
2,349
92,132
10,399
261,837
241,557
18,001
2,279
88,302
7,518
224,269
211,323
10,702
2,247
96,480
9,704
277,767
257,446
3,647
1,077
48,676
38,104
10,155
417
37,950
992
45,583
44,888
400
295
39,258
36,946
1,939
372
55,225
20,099
15,225
22,274
57,484
19,301
14,763
31,944
30.178
11,041
7,067
13,169
27,452
8,848
7,425
15,750
30,014
9,849
7,718
11,374
25,682
8,731
8,775
11,620
4,113
1,427
1,415
1,929
4,310
1,450
1,141
1,663
4,508
1,712
1,259
2,287
18,068
2,254
35,941
26,926
5,656
681
OUTLAYS
16 All types
1,460,841
1,519,133
752,150
760,824
752,511
785,730
143,342
117,818
130,909
17
18
19
20
21
22
National defense
International affairs
General science, space, and technology
Energy
Natural resources and environment
Agriculture
281,642
17,083
16,227
5,219
21,064
15,046
272,066
16,434
16,724
4,936
22,105
9,773
141,885
11,889
7,604
2,923
11,911
7,623
135,648
4,797
132,870r
6,994
26,609
1,165
1,584
216
1,757
-175
19,769
837
1,536
822
1,543
-124
22,541
497
1,660
187
23
24
25
26
Commerce and housing credit
Transportation
Community and regional development
Education, training, employment, and
social services
-5,118
38,066
10,454
-14,441
39,350
10,641
256
3,324
826
-1,368
3,185
-304
3,648
959
9,762
44,731
11,332
10,077
45,376
18,189
1,570
1,327
1,755
18,977
-2,636
3,255
1,989
53
20,311
-3,543
46,307
8,611
8,810
2,358
10,273
4,039
2,203
12,633
3,062
133,439r
8,074
8,897
1,355
10,238
71
-4,270
21,835
6,283
-13,937
18,193
5,073
-4,412
19,931
6,169r
-7,334
18,291
5,237r
27,450
25,893
26,137
3,961
27 Health
28 Social security and Medicare
29 Income security
107,122
464,312
214,031
115,418
495,701
220,449
54,147
236,817
101,806
59,057
251,975
117,190
57,098r
251,387
104,041r
59,957
264,649
121,032
11,201
30
31
32
33
34
37,642
15,256
11,303
202,957
-37,772
37,938
16,223
13,835
232,173
-44,455
19,761
7,753
7,355
109,434
-20,066
19,269
8,051
5,796
116,169
-17,631
18,684
18,164
9,021
4,641
120,579
-16,716
Veterans benefits and services
Administration of justice
General government
Net interest5
Undistributed offsetting receipts6
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.
8,116 r
7,621
119,351r
— 26,994
46,727
21,407
5,254
1,683
180
20,359
-2,991
2,062
843
4. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts.
5. Includes interest received by trust funds.
6. Rents and royalties for the outer continental shelf, U.S. government contributions for
employee retirement, and certain asset sales.
SOURCE. Fiscal year totals: U.S. Office of Management and Budget, Budget of the U.S.
Government, Fiscal Year 1997; monthly and half-year totals: U.S. Department of the Treasury, Monthly Treasury Statement of Receipts and Outlays of the U.S. Government.
Federal Finance A25
1.40
FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION
Billions of dollars, end of month
1994
1995
1996
Item
June 30
Sept. 30
Dec. 31
Mar. 31
June 30
Sept. 30
Dec. 31
Mar. 31
June 30
1 Federal debt outstanding
4,673
4,721
4,827
4,891
4,978
5,001
5,017
5,153
5,197
2 Public debt securities
3
Held by public
4
Held by agencies
4,646
3,443
1,203
4,693
3,480
1,213
4,800
3,543
1,257
4,864
3,610
1,255
4,951
3,635
1,317
4,974
3,653
1,321
4,989
3,684
1,305
5,118
3,764
1,354
5,161
n.a.
n.a.
28
27
0
29
29
0
27
27
0
27
26
0
27
27
0
27
27
0
28
28
0
36
28
8
36
n.a.
n.a.
5 Agency securities
6
Held by public
/ Held by agencies
8 Debt subject to statutory limit
9 Public debt securities
10 Other debt1
4,559
4,605
4,711
4,775
4,861
4,885
4,900
5,030
5,073
4,559
0
4,605
0
4,711
0
4,774
0
4,861
0
4,885
0
4,900
0
5,030
0
5,073
0
4,900
4,900
4,900
4,900
4,900
4,900
4,900
5,500
5,500
MEMO
11 Statutory debt limit
1. Consists of guaranteed debt of U.S. Treasury and other federal agencies, specified
participation certificates, notes to international lending organizations, and District of Columbia stadium bonds.
1.41
GROSS PUBLIC DEBT OF U.S. TREASURY
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
1995
Type and holder
1 Total gross public debt
2
3
4
5
6
7
8
9
10
11
12
13
14
By type
Interest-bearing
Marketable
Bills
Notes
Bonds
Nonmarketable1
State and local government series
Foreign issues2
Government
Public
Savings bonds and notes
Government account series'
Non-interest-bearing
By holder 4
15 U.S. Treasury and other federal agencies and trust funds
16 Federal Reserve Banks
17 Private investors
Commercial banks
18
Money market funds
19
Insurance companies
20
Other companies
21
State and local treasuries5'6
22
Individuals
Savings bonds
23
24
Other securities
Foreign and international7
25
Other miscellaneous investors6'8
26
1992
1994
1996
1995
Q3
Q4
Q1
Q2
4,177.0
4,535.7
4,800.2
4,988.7
4,974.0
4,988.7
5,117.8
5,161.1
4,173.9
2,754.1
657.7
1,608.9
472.5
1,419.8
153.5
37.4
37.4
.0
155.0
1,043.5
3.1
4,532.3
2,989.5
714.6
1,764.0
495.9
1,542.9
149.5
43.5
43.5
.0
169.4
1,150.0
3.4
4,769.2
3,126.0
733.8
1,867.0
510.3
1,643.1
132.6
42.5
42.5
.0
177.8
1,259.8
31.0
4,964.4
3,307.2
760.7
2,010.3
521.2
1,657.2
104.5
40.8
40.8
.0
181.9
1,299.6
24.3
4,950.6
3,260.5
742.5
1,980.3
522.6
1,690.2
113.4
41.0
41.0
.0
181.2
1,324.3
23.3
4,964.4
3,307.2
760.7
2,010.3
521.2
1,657.2
104.5
40.8
40.8
.0
181.9
1,299.6
24.3
5,083.0
3,375.1
811.9
2,014.1
534.1
1,707.9
96.5
40.4
40.4
.0
183.0
1,357.7
34.8
5,126.8
3,348.4
773.6
2,025.8
534.1
1,778.3
97.8
37.8
37.8
.0
183.8
1,428.5
34.3
1,047.8
302.5
2,839.9
294.4
79.7
197.5
192.5
563.3
1,153.5
334.2
3,047.4
322.2
80.8
234.5
213.0
605.9
1,257.1
374.1
3,168.0
290.1
67.6
240.1
226.5
483.4
1,304.5
391.0
3,294.9
280.1
71.3
252.6
228.8
343.8
1,320.8
374.1
3,279.5
289.0
64.2
249.8
224.1
384.9
1,304.5
391.0
3,294.9
280.1
71.3
252.6
228.8
343.8
1,353.8
381.0
3,382.8
281.0
87.3
254.5
229.0
343.0
157.3
131.9
549.7
673.5
171.9
137.9
623.0
658.3
180.5
150.7
688.6
840.5
185.0
162.7
861.8
908.8
183.5
162.4
848.1
873.5
185.0
162.7
861.8
908.8
185.8
161.4
930.1
910.7
1. Includes (not shown separately) securities issued to the Rural Electrification Administration, depository bonds, retirement plan bonds, and individual retirement bonds.
2. Nonmarketable series denominated in dollars, and series denominated in foreign currency held by foreigners.
3. Held almost entirely by U.S. Treasury and other federal agencies and trust funds.
4. Data for Federal Reserve Banks and U.S. government agencies and trust funds are actual
holdings; data for other groups are Treasury estimates.
5. Includes state and local pension funds.
6. 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.
1993
n a.
7. Consists of investments of foreign balances and international accounts in the United
States.
8. 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 • October 1996
U.S. GOVERNMENT SECURITIES DEALERS
Transactions1
Millions of dollars, daily averages
1996, week ending
1996
Item
Apr.
May
June
June 5
55,901
47,278
52,915
57,129
97,216
41,971
28,936
34,788
94,636
49,383
29,131
35,929
99,169
43,649
33,225
35,542
98,440
44,864
29,123
35,943
112,758
795
11,979
111,032
661
13,422
113,378
704
13,267
111,907
496
15,522
82,330
28,141
22,808
80,265
28,470
22,507
82,355
32,521
22,275
88,526
28,626
20,421
June 19
June 26
July 3
July 10
53,849
55,294
47,770
51,172
45,975
108,694
48,800
30,317
56,857
96,599
42,796
35,178
31,260
92,456
36,010
35,464
21,376
99,661
50,178
36,166
27,774
89,231
53,013
35,736
52,724
126,241
752
19,210
113,458
828
11,399
101,372
707
8,498
113,246
575
11,624
106,315
629
18,216
85,103
29,565
37,647
81,230
34,350
19,861
74,864
34,757
12,878
87,765
35,591
16,150
81,904
35,108
34,509
June 12
July 17
July 24
July 31
46,759
44,730
45,143
102,734
48,832
34,710
41,762
101,135
40,111
35,317
27,177
76,322
37,812
34,819
24,319
115,888
748
15,669
108,081
662
10,056
91,951
665
7,890
82,436
33,962
26,093
77,896
34,654
17,121
67,327
34,154
16,429
OUTRIGHT TRANSACTIONS 2
1
2
3
4
5
6
7
8
9
10
11
By type of security
U.S. Treasury bills
Coupon securities, by maturity
Five years or less
More than five years
Federal agency
Mortgage-backed
By type of counterparty
With interdealer broker
U.S. Treasury
Federal agency
Mortgage-backed
With other
U.S. Treasury
Federal agency
Mortgage-backed
FUTURES TRANSACTIONS 3
By type of deliverable security
12 U.S. Treasury bills
Coupon securities, by maturity
13
Five years or less
14
More than five years
15 Federal agency
16 Mortgage-backed
369
410
539
481
779
866
121
250
265
316
1,203
11,717
0
0
1,550
12,854
0
0
l,761 r
12,742
0
0
2,158
14,370
0
0
2,064
15,346
0
0
1,946
13,997
0
0
1.026
8.484
0
0
1,781
11,299
0
0
1,494
11,484
0
0
1,945
11,291
0
0
n.a.
100
1,774
11,071
0
0
1,086
9,513
0
0
OPTIONS TRANSACTIONS 4
By type of underlying security
17 U.S. Treasury bills
Coupon securities, by maturity
18
Five years or less
19
More than five years
20 Federal agency
21 Mortgage-backed
0
0
0
0
0
0
0
0
0
0
0
0
1,582
3,773
0
1,110
2,294
4,057
0
1,046
2,937
4,494
0
786
2,255
4,562
0
971
4,289
5,585
0
1,288
2,502
4,753
0
467
2,329
3,252
0
510
3,186
4,119
0
740
1,417
4,806
0
1,089
2,187
4,064
0
590
1,978
3,654
0
633
1,588
3,644
0
489
1. Transactions are market purchases and sales of securities as reported to the Federal
Reserve Bank of New York by the U.S. government securities dealers on its published list of
primary dealers. Monthly averages are based on the number of trading days in the month.
Transactions are assumed evenly distributed among the trading days of the report week.
Immediate, forward, and futures transactions are reported at principal value, which does not
include accrued interest; options transactions are reported at the face value of the underlying
securities.
Dealers report cumulative transactions for each week ending Wednesday.
2. Outright transactions include immediate and forward transactions. Immediate delivery
refers to purchases or sales of securities (other than mortgage-backed federal agency securities) for which delivery is scheduled in five business days or less and "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.
Major changes in the report form filed by primary dealers induced a break in the dealer data
series as of the week ending July 6, 1994.
Federal Finance
1.43
U.S. GOVERNMENT SECURITIES DEALERS
A25
Positions and Financing1
Millions of dollars
1996, week ending
1996
Item
Apr.
May
June
June 5
June 12
June 19
June 26
July 3
July 10
July 17
July 24
Positions"
NET OUTRIGHT POSITIONS 3
By type of security
1 U.S. Treasury bills
Coupon securities, by maturity
2
Five years or less
3
More than five years
4 Federal agency
5 Mortgage-backed
17,119
15,447
13,791
28,159
22,380
8,845
4,991
4,854
10,113
12,921
23,286
7,771
-27,702
26,566
32,583
2,210
-23,291
23,921
34,206
-4,136
-20,940
22,350
35,764
-961
-22,315
22,655
36,270
-3,042
-21,501
24,935
35,104
-10,342
-21,006
22,365
35,001
-1,686
-20,230
22,229
35,372
-3,448
-19,366
17,632
38,307
-14,023
-17,599
18,296
37,003
-10,059
-19,276
22,818
39,147
-8,166
-20,244
24,189
40,305
-3,560
-4,625
-2,006
—3,484
-2,941
-1,157
-1,049
-1,681
-1,571
-2,778
-3,226
1,073
-4,285
0
0
632
-3,598
0
0
254
-7,798
0
0
7
-4,910
466
-5,945
0
260
-10,124
0
0
-2,202
-14,039
0
0
-1,978
-11,211
0
0
-2,079
-12,557
0
0
1,617
-5,821
0
0
-1,015
-15,194
0
0
0
0
0
0
0
0
0
0
0
0
0
-2,796
1,308
2,896
-2,225
3,123
n.a.
2,425
-732
1,884
n.a.
2,886
-908
1,162
n.a.
2,548
-1,058
3,229
0
2,604
NET FUTURES POSITIONS 4
By type of deliverable security
6 U.S. Treasury bills
Coupon securities, by maturity
7
Five years or less
8
More than five years
9 Federal agency
10 Mortgage-backed
0
0
0
NET OPTIONS POSITIONS
11
12
13
14
15
By type of deliverable security
U.S. Treasury bills
Coupon securities, by maturity
Five years or less
More than five years
Federal agency
Mortgage-backed
1,542
1,081
0
4,435
-139
-703
0
3,902
-2,515
670
0
3,075
-1,868
-735
0
3,465
-2,276
235
0
3,479
-3,099
70
0
2,941
0
Financing5
Reverse repurchase agreements
16 Overnight and continuing
17 Term
256,694
467,590
251,988
453,182
243,475
463,139
235,548
428,448
238,277
470,543
248,074
471,190
242,786
479,431
255.640
450,945
267,488
475,371
263,405
488,031
250,706
507,791
Securities borrowed
18 Overnight and continuing
19 Term
166,490
67,330
173,105
63,987
179,427
60,592
182,616
58,906
181,178
61,003
182,894
60,316
173,201
61,212
177,206
61,379
182,305
59,185
185,499
58,974
182,017
64,132
3,275
53
2,488
52
5,063
82
4,501
47
4,446
91
5,423
112
5,411
86
5,605
51
5,503
56
4,516
56
4,060
49
Repurchase agreements
22 Overnight and continuing
23 Term
577,949
399,259
559,390
392,946
540,745
409,135
556,952
362,346
561,144
403,262
545,801
415,376
508,525
444,087
532,327
405,814
563,727
412,138
568,361
424,209
560,993
449,452
Securities loaned
24 Overnight and continuing
25 Term
4,728
2,611
4,804
3,094
5,341
3,160
5,577
5,711
5,890
0
0
0
4,636
0
4,670
3,160
4,697
3,133
4,915
3,159
4,384
3,524
Securities pledged
26 Overnight and continuing
27 Term
37,160
8,518
41,591
6,797
46,541
6,584
45,317
6,016
45,388
6,063
47,466
6,060
51,352
7,419
40,053
7,664
39,833
7,595
40,852
6,566
37,337
6,668
12,819
10,687
6,955
14,023
15,662
15,662
14,260
Securities received as pledge
20 Overnight and continuing
21 Term
Collateralized loans
28 Overnight and continuing
29 Term
30 Total
1,289
1,284
1,289
1,794
1,189
1,289
13,097
12,080
1,470
13,550
10,911
1,411
12,091
10,828
1,327
12,155
11,827
1,328
14,045
12,200
8,239
15,312
17,456
16,791
15,549
MEMO: Matched book
Securities in
31 Overnight and continuing
32 Term
244,480
464,018
244,668
441,772
243,847
448,381
236,593
413,953
236,204
459,074
250,199
453,905
244,804
461,803
253,497
439,546
270,866
460,576
271,578
475,035
265,571
497,723
Securities out
33 Overnight and continuing
34 Term
362,930r
349,263
349,379r
337,119
344,632
353,804
337,593
309,423
356,820
345,288
350,654
360,676
330,951
385,233
345,504
357,154
374,155
361,575
369,901
379,096
369,738
397,826
1,270
6
1. Data for positions and financing are obtained from reports submitted to the Federal
Reserve Bank of New York by the U.S. government securities dealers on its published list of
primary dealers. Weekly figures are close-of-business Wednesday data. Positions for calendar
days of the report week are assumed to be constant. Monthly averages are based on the
number of calendar days in the month.
2. Securities positions are reported at market value.
3. Net outright positions include immediate and forward positions. Net immediate positions include securities purchased or sold (other than mortgage-backed agency securities) that
have been delivered or are scheduled to be delivered in five business days or less and
"when-issued" securities that settle on the issue date of offering. Net immediate positions for
mortgage-backed agency securities include securities purchased or sold that have been
delivered or are scheduled to be delivered in thirty business days or less.
Forward positions reflect agreements made in the over-the-counter market that specify
delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt
securities are included when the time to delivery is more than five business days. Forward
contracts for mortgage-backed agency securities are included when the time to delivery is
more than thirty business days.
4. Futures positions reflect standardized agreements arranged on an exchange. All futures
positions are included regardless of time to delivery.
5. Overnight financing refers to agreements made on one business day that mature on the
next business day; continuing contracts are agreements that remain in effect for more than one
business day but have no specific maturity and can be terminated without advance notice by
either party; term agreements have a fixed maturity of more than one business day. Financing
data are reported in terms of actual funds paid or received, including accrued interest.
6. Matched-book data reflect financial intermediation activity in which the borrowing and
lending transactions are matched. Matched-book data are included in the financing breakdowns given above. The reverse repurchase and repurchase numbers are not always equal
because of the "matching" of securities of different values or different types of collateralization.
NOTE, "n.a." indicates that data are not published because of insufficient activity.
Major changes in the report form filed by primary dealers induced a break in the dealer data
series as of the week ending July 6, 1994.
A30
1.44
DomesticNonfinancialStatistics • October 1996
FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES
Debt Outstanding
Millions of dollars, end of period
1996
Agency
1 Federal and federally sponsored agencies
2 Federal agencies
3
Defense Department'
4
Export-Import Bank2'3
5
Federal Housing Administration4
Government National Mortgage Association certificates of
6
participation5
7
Postal Service6
Tennessee Valley Authority
8
9
United States Railway Association6
10 Federally sponsored agencies7
11
Federal Home Loan Banks
Federal Home Loan Mortgage Corporation
12
13
Federal National Mortgage Association
14
Farm Credit Banks8
Student Loan Marketing Association 9
15
16
Financing Corporation10
17
Farm Credit Financial Assistance Corporation"
Resolution Funding Corporation12
18
1992
1993
1994
1995
Jan.
Feb.
Mar.
483,970
570,711
738,928
844,611
836,820
840,384
846,807
41,829
7
7,208
374
45,193
6
5,315
255
39,186
6
3,455
116
37,347
6
2,050
97
37,273
6
2,050
31
31,986
6
2,050
35
31,284
6
2,015
52
n.a.
10,660
23,580
n.a.
n.a.
9,732
29,885
n.a.
n.a.
8,073
27,536
n.a.
n.a.
5,765
29,429
n.a.
n.a.
5,765
29,421
n.a.
n.a.
300
29,595
n.a.
n.a.
300
28,911
n.a.
442,141
114,733
29,631
166,300
51,910
39,650
8,170
1,261
29,996
523,452
139,512
49,993
201,112
53,123
39,784
8,170
1,261
29,996
699,742
205,817
93,279
257,230
53,175
50,335
8,170
1,261
29,996
807,264
243,194
119,961
299,174
57,379
47,529
8,170
1,261
29,996
799,547
234,664
120,868
297,657
58,659
47,673
8,170
1,261
29,996
808,398
233,404
123,777
304,159
57,536
49,495
8,170
1,261
29,996
815,523
239,253
124,278
306,815
59,428
45,723
8,170
1,261
29,996
154,994
128,187
103,817
78,681
78,512
68,037
66,725
7,202
10,440
4,790
6,975
n.a.
5,309
9,732
4,760
6,325
n.a.
3,449
8,073
n.a.
3,200
n.a.
2,044
5,765
n.a.
3,200
n.a.
2,044
5,765
n.a.
3,200
n.a.
2,044
300
n.a.
n.a.
n.a.
2,009
300
n.a.
n.a.
n.a.
42,979
18,172
64,436
38,619
17,578
45,864
33,719
17,392
37,984
21,015
17,144
29,513
21,015
17,026
29,462
21,015
17,040
27,638
21,015
17,049
26,352
Apr.
May
n a.
n a.
242,437
136,185
306,361
60,815
47,052
8 170
1,261
29,996
837,570
243,389
141,248
305,050
61,197
46,735
8,170
1,261
29,996
n.a.
n a.
MEMO
19 Federal Financing Bank debt 13
20
21
22
23
24
Lending to federal and federally sponsored agencies
Export-Import Bank3
Postal Service6
Student Loan Marketing Association
Tennessee Valley Authority
United States Railway Association6
Other lending14
25 Farmers Home Administration
26 Rural Electrification Administration
27 Other
1. Consists of mortgages assumed by the Defense Department between 1957 and 1963
under family housing and homeowners assistance programs.
2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976.
3. On-budget since Sept. 30, 1976.
4. Consists of debentures issued in payment of Federal Housing Administration insurance
claims. Once issued, these securities may be sold privately on the securities market.
5. Certificates of participation issued before fiscal year 1969 by the Government National
Mortgage Association acting as trustee for the Farmers Home Administration, the Department
of Health, Education, and Welfare, the Department of Housing and Urban Development, the
Small Business Administration, and the Veterans Administration.
6. Off-budget.
7. Includes outstanding noncontingent liabilities: notes, bonds, and debentures. Includes
Federal Agricultural Mortgage Corporation; therefore details do not sum to total. Some data
are estimated.
8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, which is
shown on line 17.
9. Before late 1982, the association obtained financing through the Federal Financing Bank
(FFB). Borrowing excludes that obtained from the FFB, which is shown on line 22.
10. The Financing Corporation, established in August 1987 to recapitalize the Federal
Savings and Loan Insurance Corporation, undertook its first borrowing in October 1987.
11. The Farm Credit Financial Assistance Corporation, established in January 1988 to
provide assistance to the Farm Credit System, undertook its first borrowing in July 1988.
12. The Resolution Funding Corporation, established by the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, undertook its first borrowing in October 1989.
13. The FFB, which began operations in 1974, is authorized to purchase or sell obligations
issued, sold, or guaranteed by other federal agencies. Because FFB incurs debt solely for the
purpose of lending to other agencies, its debt is not included in the main portion of the table to
avoid double counting.
14. Includes FFB purchases of agency assets and guaranteed loans; the latter are loans
guaranteed by numerous agencies, with the amounts guaranteed by any one agency generally
being small. The Farmers Home Administration entry consists exclusively of agency assets,
whereas the Rural Electrification Administration entry consists of both agency assets and
guaranteed loans.
Securities Market and Corporate Finance A31
1.45
NEW SECURITY ISSUES
Tax-Exempt State and Local Governments
Millions of dollars
1996
1995
Type of issue or issuer,
or use
1993
1994
1995
Dec.
Jan.
Feb.
Mar.
Apr.
May
June
July
1 All issues, new and refunding1
279,945
153,950
143,101
16,978
11,545
11,598
15,244
13,199
14,991
16,533
11,162
By type of issue
2 General obligation
3 Revenue
90,599
189,346
54,404
99,546
55,737
86,555
5,489
11,489
6,074
5,471
2,063
9,535
4,846
10,398
5,083
8,116
5,476
9,515
6,493
10,040
4,078
7,084
By type of issuer
4 State
5 Special district or statutory authority2
6 Municipality, county, or township
27,999
178,714
73,232
19,186
95,896
38,868
14,215
91,419
36,658
951
11,678
4,349
1,630
7,052
2,863
695
7,820
3,083
904
10,141
4,199
926
9,571
2,702
2,807
9,824
2,360
1,047
9,899
5,587
680
6,923
3,559
91,434
105,972
94,412
11,070
6,517
6,383
10,621
9,487
9,594
13,864
9,364
16,831
9,167
12,014
13,837
6,862
32,723
21,267
10,836
10,192
20,289
8,161
35,227
24,926
11,887
9,618
18,612
6,566
26,518
2,968
1,178
1,664
1,614
1,325
2,321
2,065
573
439
935
322
2,183
2,226
359
582
904
110
2,202
1,847
1,417
892
2,715
785
2,965
2,142
682
592
1,669
751
3,651
2,442
778
1,368
1,764
302
2,940
3,453
1,390
974
3,152
414
4,481
1,859
547
984
2,074
326
3,574
beginning
January
7 Issues for new capital
8
9
10
11
12
13
By use of proceeds
Education
Transportation
Utilities and conservation
Social welfare
Industrial aid
Other purposes
1. Par amounts of long-term issues based on date of sale.
2. Includes school districts.
1.46
NEW SECURITY ISSUES
SOURCE. Securities Data
Dealer's Digest before then.
Company
1993;
Investment
U.S. Corporations
Millions of dollars
1996
1995
Type of issue, offering,
or issuer
1 All issues'
2 Bonds
2
By type of offering
3 Public, domestic
4 Private placement, domestic3
5 Sold abroad
6
7
8
9
10
11
By industry group
Manufacturing
Commercial and miscellaneous
Transportation
Public utility
Communication
Real estate and financial
12 Stocks2
By type of offering
13 Public preferred
14 Common
15 Private placement3
16
17
18
19
20
21
By industry group
Manufacturing
Commercial and miscellaneous
Transportation
Public utility
Communication
Real estate and financial
1993
769,088
1994
583,240
1995
n a.
Dec.
Jan.
55,349
40,149
49,520r
62,115r
55,666r
48,844r
69,176
66,233
r
r
r
36,344r
55,894
53,492
Feb.
Apr.
Mar.
May
June
646,634
498,039
n a.
47,568
34,619
44,764
487,029
121,226
38,379
365,222
76,065
56,755
408,806
n a.
76,910
43,336
n.a.
4,232
32,219
n.a.
2,399
35,443r
n.a.
9,321r
45,972r
n.a.
6,984r
41,419r
n.a.
6,837r
30,585r
n.a.
5,759r
46,825
n.a.
9,069
45,446
n.a.
8,046
88,160
58,559
10,816
56,330
31,950
400,820
43,423
40,735
6,867
13,322
13,340
380,352
42,950
37,139
5,727
11,974
18,158
369,769
4,017
4,178
225
485
3,333
35,330
3,205
3,099
1,240
685
648
25,742
3,952r
2,277r
664
l,906 r
748
35,217r
2,522r
2,840r
584
965r
2,691
43,354r
3,335
3,803r
137
788r
2,253r
37,94 l r
2,503r
2,663r
120
444r
724r
29,890r
5,937
4,933
819
691
1,187
42,326
5,339
4,272
850
1,144
2,231
39,658
122,454
85,155
n.a.
7,781
5,530
4,756
9,160
7,410r
12,500
13,282
12,741
18,897
82,657
20,900
12,570
47,828
24,800
10,964
57,809
2,210
5,571
n.a.
890
4,640
n.a.
2,167
2,589
n.a.
3,258
5,902
n.a.
967
6,443
n.a.
2,000
10,500
n.a.
1,660
11,622
n.a.
3,195
9,546
n.a.
22,271
25,761
2,237
7,050
3,439
61,004
17,798
15,713
2,203
2,214
494
46,733
2,209
3,274
97
36
0
2,166
681
2,632
156
322
0
1,739
295
2,521
38
115
200
1,588
1,543
2,659
141
809
122
3,719
2,036
3,577
232
319
100
1,130
3,968
4,122
37
149
144
4,079
2,777
5,041
322
147
1,205
3,789
2,688
6,444
189
569
837
2,015
n.a.
1. Figures represent gross proceeds of issues maturing in more than one year; they are the
principal amount or number of units calculated by multiplying by the offering price. Figures
exclude secondary offerings, employee stock plans, investment companies other than closedend, intracorporate transactions, equities sold abroad, and Yankee bonds. Stock data include
ownership securities issued by limited partnerships.
Nov.
52,955
48,256
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 • October 1996
OPEN-END INVESTMENT COMPANIES
Net Sales and Assets 1
Millions of dollars
1996
1995
Item
1994
1995
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
May
June
1 Sales of own shares 2
841,286
871,415
70,499
94,719
112,332
90,370
93,856
101,310
96,501
88,115
2 Redemptions of own shares
3 Net sales3
699,823
141,463
699,497
171,918
52,727
17,772
67,945
26,774
75,354
36,978
60,398
29,972
65,748
28,108
81,005
20,305
69,419
27,082
69,072
19,044
4 Assets 4
1,550,490
2,067,337
2,032,958
2,067,337
2,143,185
2,181,711
2,212,517
2,293,491
2,356,307
2,363,024
5 Cash5
6 Other
121,296
1,429,195
142,572
1,924,765
141,489
1,891,470
142,572
1,924,765
150,772
1,992,414
144,520
2,037,191
142,697
2,069,820
148,777
2,144,713
145,554
2,201,752
144,275
2,218,749
1. Data on sales and redemptions exclude money market mutual funds but include
limited-maturity municipal bond funds. Data on asset positions exclude both money market
mutual funds and limited-maturity municipal bond funds.
2. Includes reinvestment of net income dividends. Excludes reinvestment of capital gains
distributions and share issue of conversions from one fund to another in the same group.
3. Excludes sales and redemptions resulting from transfers of shares into or out of money
market mutual funds within the same fund family.
1.48
4. Market value at end of period, less current liabilities.
5. Includes all U.S. Treasury securities and other short-term debt securities.
SOURCE. Investment Company Institute. Data based on reports of membership, which
comprises substantially all 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
Billions of dollars; quarterly data at seasonally adjusted annual rates
1995r
1994'
Account
1 Profits with inventory valuation and
capital consumption adjustment
2 Profits before taxes
3 Profits-tax liability
4 Profits after taxes
5 Dividends
6 Undistributed profits
7 Inventory valuation
8 Capital consumption adjustment
1993
1996
1995r
Q3
Q4
Ql
Q2
Q3
Q4
Qlr
Q2
464.4r
464.3
163.8
300.5
197.3
103.2r
529.5
531.2
195.3
335.9
211.0
124.8
586.6
598.9
218.7
380.2
227.4
152.8
553.1
550.8
203.4
347.4
212.5
134.9
570.9
572.4
213.5
358.8
218.5
140.3
560.0
594.5
217.3
377.2
221.7
155.5
562.3
589.6
214.2
375.3
224.6
150.8
612.5
607.2
224.5
382.8
228.5
154.3
611.8
604.2
218.7
385.5
234.7
150.8
645.1
642.2
233.4
408.8
239.9
168.9
653.8
644.0
236.7
407.4
243.1
164.3
-6.6
6.7
-13.3
11.6
-28.1
15.9
-16.5
18.8
-22.8
21.3
-51.9
17.4
-42.3
15.0
-9.3
14.6
-8.8
16.5
-17.4
20.4
-13.0
22.7
SOURCE. U.S. Department of Commerce, Survey of Current Business.
1994r
Securities Markets and Corporate Finance A3 3
1.51
DOMESTIC FINANCE COMPANIES
Assets and Liabilities1
Billions of dollars, end of period; not seasonally adjusted
1994
Account
1994
1993
1996
1995
1995
Q3
Q4
Ql
Q2
Q3
Q4
Ql
ASSETS
482.8
116.5
294.6
71.7
551.0
134.8
337.6
78.5
614.6
152.0
375.9
86.6
524.1
130.3
317.2
76.6
551.0
134.8
337.6
78.5
568.5
135.8
351.9
80.8
586.9
141.7
361.8
83.4
594.7
146.2
362.4
86.1
614.6
152.0
375.9
86.6
621.8r
151.9r
380.9r
89.1
50.7
11.2
55.0
12.4
63.2
14.1
51.1
12.1
55.0
12.4
58.9
12.9
62.1
13.7
61.2
13.8
63.2
14.1
61.5r
14.2
Accounts receivable, net
8 All other
420.9
170.9
483.5
183.4
537.3
210.7
460.9
177.2
483.5
183.4
496.7
194.6
511.1
198.1
519.7
198.1
537.3
210.7
546. r
212.8r
9 Total assets
591.8
666.9
748.0
638.1
666.9
691.4
709.2
717.8
748.0
758.9
25.3
159.2
21.2
184.6
23.1
184.5
21.6
171.0
21.2
184.6
21.0
181.3
21.5
181.3
21.8
178.0
23.1
184.5
23.5
184.8
42.7
206.0
87.1
71.4
51.0
235.0
99.5
75.7
62.3
284.7
106.2
87.2
50.0
228.2
95.0
72.3
51.0
235.0
99.5
75.7
52.5
254.4
102.5
79.7
57.5
264.4
102.1
82.5
59.0
272.1
102.4
84.4
62.3
284.7
106.2
87.2
62.3
291.4
105.7
91.1
591.8
666.9
748.0
638.1
666.9
691.4
709.2
717.8
748.0
758.9
1 Accounts receivable, gross2
2
Consumer
3
Business
4
Real estate
5 LESS: Reserves for unearned income
6
Reserves for losses
7
LIABILITIES AND CAPITAL
10 Bank loans
11 Commercial paper
12
13
14
15
Debt
Owed to parent
Not elsewhere classified
All other liabilities
Capital, surplus, and undivided profits
16 Total liabilities and capital
1. Includes finance company subsidiaries of bank holding companies but not of retailers
and banks. Data are amounts carried on the balance sheets of finance companies; securitized
pools are not shown, as they are not on the books.
1.52
DOMESTIC FINANCE COMPANIES
2. Before deduction for unearned income and losses,
Consumer, Real Estate, and Business Credit1
Millions of dollars, amounts outstanding, end of period
1996
Type of credit
1993
1994
1995
Jan.
Feb.
Mar.
Apr.
May
June
Seasonally adjusted
1 Total
546,103
615,618
691,616
696,099
700,977
703,398
708,343
710,367
719,536
2 Consumer
3 Real estate2
4 Business
160,227
72,043
313,833
176,085
78,910
360,624
198,861
87,077
405,678
200,162
88,084
407,853
202,548
88,188
410,241
203,280
89,502
410,616
205,184
89,943
413,216
207,027
90,180
413,160
210,341
93,917
415,278
Not seasonally adjusted
5
6
7
Motor vehicles
8
Other consumer3
9
Securitized motor vehicles
10
Securitized other consumer
11 Real estate2
12 Business
13
Motor vehicles
14
Retail loans5
15
Wholesale loans6
16
Leases
17
Equipment
18
Loans7
19
Leases
20
Other business8
21
Securitized business assets
22
Retail loans
23
Wholesale loans
24
Leases
550,751
620,975
697,340
697,312
701,576
705,650
710,762
712,429
722,597
162,770
56,057
60,396
36,024
10,293
71,727
316,254
95,173
18,091
31,148
45,934
145,452
43,514
101,938
53,997
21,632
2,869
10,584
8,179
178,999
61,609
73,221
31,897
12,272
78,479
363,497
118,197
21,514
35,037
61,646
157,953
49,358
108,595
61,495
25,852
4,494
14,826
6,532
202,101
70,061
81,988
33,633
16,419
86,606
408,633
133,277
25,304
36,427
71,546
177,297
59,109
118,188
65,363
32,696
4,723
21,327
6,646
201,774
71,420
81,186
32,128
17,040
88,495
407,043
132,062
25,906
34,198
71,958
175,984
57,997
117,987
66,643
32,354
4,467
21,130
6,757
202,108
73,312
81,214
30,364
17,218
88,520
410,948
132,153
26,591
33,386
72,176
176,461
57,574
118,887
68,070
34,264
4,252
23,460
6,552
202,337
72,129
79,779
31,093
19,336
89,056
414,257
134,098
27,140
33,910
73,048
177,285
57,909
119,376
69,497
33,377
4,067
22,622
6,688
203,532
73,810
79,489
30,476
19,757
89,975
417,255
134,500
27,954
32,155
74,391
178,507
57,576
120,931
69,193
35,055
4,367
24,327
6,361
205,678
74,327
80,435
31,435
19,481
90,182
416,569
134,196
27,151
31,360
75,685
178,151
57,327
120,824
68,112
36,110
4,790
25,028
6,292
209,851
74,286
80,344
34,826
20,395
93,100
419,646
137.477
29,032
32,095
76,350
178,983
58,788
120,195
67,210
35,976
4,688
24,950
6,338
1. Includes finance company subsidiaries of bank holding companies but not of retailers
and banks. Data are before deductions for unearned income and losses. Data in this table also
appear in the Board's G.20 (422) monthly statistical release. For ordering address, see inside
front cover.
2. Includes all loans secured by liens on any type of real estate, for example, first and junior
mortgages and home equity loans.
3. Includes personal cash loans, mobile home loans, and loans to purchase other types of
consumer goods such as appliances, apparel, general merchandise, and recreation vehicles.
4. Outstanding balances of pools upon which securities have been issued; these balances
are no longer carried on the balance sheets of the loan originator.
5. Passenger car fleets and commercial land vehicles for which licenses are required.
6. Credit arising from transactions between manufacturers and dealers, that is, floor plan
financing.
7. Beginning with the June 1996 data, retail and wholesale business equipment loans have
been combined and are no longer separately available.
8. 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 • October 1996
MORTGAGE MARKETS
Mortgages on New Homes
Millions of dollars except as noted
1996
Item
1993
1994
1995
Jan.
Feb.
Mar.
Apr.
May
June
July
Terms and yields in primary and secondary markets
PRIMARY MARKETS
1
2
3
4
5
Terms[
Purchase price (thousands of dollars)
Amount of loan (thousands of dollars)
Loan-to-price ratio (percent)
Maturity (years)
Fees and charges (percent of loan amount)2
Yield (percent per year)
6 Contract rate1
7 Effective rate1,3
8 Contract rate (HUD series)4
163.1
123.0
78.0
26.1
1.30
170.4
130.8
78.8
27.5
1.29
175.8
134.5
78.6
27.7
1.21
179.2
135.8
77.3
27.7
1.07
181.7
143.2
80.3
27.8
1.24
184.5
141.5
77.8
26.4
1.30
175.2
133.2
78.4
27.1
1.17
179.5
137.6
79.3
27.2
1.16
180.1
139.4
78.7
25.8
1.31
194.0
144.2
76.2
26.7
1.25
7.03
7.24
7.37
7.26
7.47
8.58
7.65
7.85
8.05
7.15
7.32
7.23
7.00
7.20
7.56
7.25
7.49
7.97
7.57
7.76
8.22
7.61
7.80
8.34
7.75
8.05
8.37
7.80
8.01
8.28
7.46
6.65
8.68
7.96
8.18
7.57
7.11
6.71
7.57
6.85
8.09
7.40
8.52
7.63
8.57
7.81
8.55
7.91
8.56
7.84
SECONDARY MARKETS
Yield (percent per year)
9 FHA mortgages (Section 203)5
10 GNMA securities6
Activity in secondary markets
FEDERAL NATIONAL MORTGAGE ASSOCIATION
Mortgage holdings (end of period)
11 Total
190,861
23,857
167,004
222,057
27,558
194,499
253,511
28,762
224,749
255,619
28,622
226,997
257,970
28,502
229,468
262,014
28,744
233,270
263,809
29,132
234,677
267,330
30,442
236,888
270,042
30,936
239,106
272,458
30,830
241,628
14 Mortgage transactions purchased (during period)
92,037
62,389
56,598
4,810
5,371
7,681
5,339
6,720
5,421
5,345
Mortgage commitments (during period)
15 Issued7
16 To sell8
92,537
5,097
54,038
1,820
56,092
360
5,750
3
7,013
0
6,293
29
5,599
0
5,228
13
5,280
0
5,036
0
55,012
321
54,691
72,693
276
72,416
107,424
267
107,157
111,143
226
110,917
114,793
223
114,570
117,420
220
117,200
119,520
216
119,304
121,058
212
120,846
123,806
209r
123,597r
125,574
205
125,369
Mortgage transactions (during period)
20 Purchases
21 Sales
229,242
208,723
124,697
117,110
98,470
85,877
13,357
11,624
10,891
9,733
11,984
11,384
12,740
11,958
12,385
11,904
10,266
9,969
9,934
9,496
22 Mortgage commitments contracted (during period)'
274,599
136,067
118,659
12,765
10,378
14,520
13,009
11,075
11,164
10,626
12
FHA/VA insured
13
Conventional
FEDERAL HOME LOAN MORTGAGE CORPORATION
Mortgage holdings (end of period)8
17 Total
18
FHA/VA insured
19
Conventional
1. Weighted averages based on sample surveys of mortgages originated by major institutional lender groups for purchase of newly built homes; compiled by the Federal Housing
Finance Board in cooperation with the Federal Deposit Insurance Corporation.
2. Includes all fees, commissions, discounts, and "points" paid (by the borrower or the
seller) to obtain a loan.
3. Average effective interest rate on loans closed for purchase of newly built homes,
assuming prepayment at the end of ten years.
4. Average contract rate on new commitments for conventional first mortgages; from 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
1996
1995
Type of holder and property
1992
1994
1993
Ql
Q2
Q3
Q4
Qlp
1 All holders
4,092,984
4,268,420
4,473,100
4,515,854
4,584,566
4,663,864
4,715,884
4,773,998
By type of property
2 One- to four-family residences
3 Multifamily residences
4 Nonfarm, nonresidential
5
3,037,408
274,234
700,604
80,738
3,227,134
270,796
689,296
81,194
3,430,023
275,303
684,803
82,971
3,465,065
276,398
690,988
83,403
3,524,378
280,390
695,947
83,850
3,593,966
284,238
701,241
84,420
3,634,698
288,090
708,467
84,629
3,682,610
292,448
713,751
85,189
1,769,187
894,513
507,780
38,024
328,826
19,882
627,972
489,622
69,791
68,235
324
246,702
11,441
27,770
198,269
9,222
1,767,835
940,444
556,538
38,635
324,409
20,862
598,330
469,959
67,362
60,704
305
229,061
9,458
25,814
184,305
9,484
1,815,810
1,004,280
611,697
38,916
331,100
22,567
596,199
477,499
64,400
54,011
289
215,332
7,910
24,306
173,539
9,577
1,841,815
1,024,854
625,378
39,746
336,795
22,936
601,777
483,625
63,778
54,085
288
215,184
7,892
24,250
173,142
9,900
1,868,175
1,053,048
648,705
40,593
340,176
23,575
599,745
482,005
64,404
53,054
282
215,382
7,911
24,310
173,565
9,596
1,895,285
1,072,780
662,126
43,003
343,826
23,824
604,614
489,150
63,569
51,604
291
217,892
8,006
24,601
175,643
9,643
1,890,539
1,080,373
663,588
43,846
349,109
23,829
596,789
482,765
61,926
51,809
288
213,377
7,833
24,070
171,855
9,619
1,895,878
1,087,174
666,306
45,201
351,736
23,931
595,903
484,020
60,494
51,089
299
212,801
7,815
24,013
171,445
9,528
286,263
30
30
0
41,695
16,912
10,575
5,158
9,050
12,581
5,153
7,428
32,045
12,960
9,621
9,464
0
0
0
0
0
0
137,584
124,016
13,568
28,664
1,687
26,977
33,665
31,032
2,633
327,014
22
15
7
41,386
15,303
10,940
5,406
9,739
12,215
5,364
6,851
17,284
7,203
5,327
4,754
0
14,112
2,367
1,426
10,319
0
166,642
151,310
15,332
28,460
1,675
26,785
46,892
44,345
2,547
319,401
6
6
0
41,781
13,826
11,319
5,670
10,966
10,964
4,753
6,211
10,428
5,200
2,859
2,369
0
7,821
1,049
1,595
5,177
0
178,059
162,160
15,899
28,555
1,671
26,885
41,786
38,956
2,830
317,753
15
15
0
41,857
13,507
11,418
5,807
11,124
10,890
4,715
6,175
9,342
4,755
2,494
2,092
0
6,730
840
1,310
4,580
0
177,615
161,780
15,835
28,065
1,651
26,414
43,239
40,105
3,134
315,722
7
7
0
41,917
13,217
11,512
5,949
11,239
10,098
4,838
5,260
6,456
2,870
1,940
1,645
0
6,039
731
1,135
4,173
0
178,462
162,674
15,788
28,005
1,648
26,357
44,738
41,477
3,261
319,923
2
2
0
41,858
12,914
11,557
6,096
11,291
9,535
4,918
4,617
4,889
2,299
1,420
1,170
0
5,015
618
722
3,674
0
182,229
166,393
15,836
28,151
1,656
26,495
48,243
44,809
3,434
320,828
2
2
0
41,791
12,643
11,617
6,248
11,282
9,809
5,180
4,629
1,864
691
647
525
0
4,303
492
428
3,383
0
183,782
168,122
15,660
28,428
1,673
26,755
50,849
46,997
3,852
322,131
2
2
0
41,594
12,327
11,636
6,365
11,266
8,439
4,228
4,211
0
0
0
0
0
5,553
1,848
560
3,145
0
183,531
167,895
15,636
28,891
1,700
27,191
54,120
50,058
4,062
1,434,264
419,516
410,675
8,841
407,514
401,525
5,989
444,979
435,979
9,000
38
8
0
17
13
162,217
140,718
6,305
15,194
0
1,564,571
414,066
404,864
9,202
447,147
442,612
4,535
495,525
486,804
8,721
28
5
0
13
10
207,806
173,635
8,701
25,469
0
1,718,297
450,934
441,198
9,736
490,851
487,725
3,126
530,343
520,763
9,580
19
3
0
9
7
246,150
194,451
14,925
36,774
0
1,731,468
454,401
444,632
9,769
492,194
489,114
3,080
533,262
523,903
9,359
14
2
0
7
5
251,597
198,040
15,743
37,814
0
1,759,091
457,101
446,855
10,246
498,216
495,182
3,034
543,669
533,091
10,578
13
2
0
6
5
260,093
202,718
17,281
40,094
0
1,795,041
463,654
453,114
10,540
503,370
500,417
2,953
559,585
548,400
11,185
12
2
0
5
5
268,420
207,679
18,903
41,838
0
1,853,613
472,298
461,453
10,845
515,051
512,238
2,813
582,959
569,724
13,235
11
2
0
5
4
283,294
214,635
21,279
47,380
0
1,895,309
475,823
464,644
11,179
524,326
521,721
2,605
599,546
585,527
14,019
10
1
0
5
4
295,604
220,022
24,477
51,104
0
603,270
447,871
64,688
75,441
15,270
609,000
455,676
65,397
73,917
14,009
619,592
461,157
69,601
76,153
12,681
624,819
465,111
70,305
76,667
12,736
641,578
480,447
71,050
77,284
12,796
653,615
491,463
71,897
77,384
12,872
650,904
486,660
73,243
78,152
12,850
660,680
494,495
74,354
78,861
12,970
By type of holder
6 Major financial institutions
7
Commercial banks2
8
One- to four-family
Multifamily
9
10
Nonfarm, nonresidential
Farm
11
12
Savings institutions3
One- to four-family
13
Multifamily
14
Nonfarm, nonresidential
15
16
Farm
Life insurance companies
17
18
One- to four-family
Multifamily
19
20
Nonfarm, nonresidential
Farm
21
22 Federal and related agencies
Government National Mortgage Association
23
24
One- to four-family
25
Multifamily
Farmers Home Administration4
26
27
One- to four-family
Multifamily
28
29
Nonfarm, nonresidential
Farm
30
Federal Housing and Veterans' Administrations
31
32
One- to four-family
Multifamily
33
Resolution Trust Corporation
34
One- to four-family
35
Multifamily
36
37
Nonfarm, nonresidential
Farm
38
Federal Deposit Insurance Corporation
39
40
One- to four-family
Multifamily
41
Nonfarm, nonresidential
42
Farm
43
44
Federal National Mortgage Association
45
One- to four-family
Multifamily
46
Federal Land Banks
47
48
One- to four-family
49
Farm
Federal Home Loan Mortgage Corporation
50
One- to four-family
51
Multifamily
52
53 Mortgage pools or trusts5
54
Government National Mortgage Association
One- to four-family
55
Multifamily
56
57
Federal Home Loan Mortgage Corporation
58
One- to four-family
Multifamily
59
60
Federal National Mortgage Association
61
One- to four-family
Multifamily
62
63
Farmers Home Administration4
64
One- to four-family
Multifamily
65
Nonfarm, nonresidential
66
Farm
67
68
Private mortgage conduits
69
One- to four-family 6
Multifamily
70
Nonfarm, nonresidential
71
Farm
72
73 Individuals and others7
74
One- to four-family
Multifamily
75
Nonfarm, nonresidential
76
Farm
77
1. Multifamily debt refers to loans on structures of five or more units.
2. Includes loans held by nondeposit trust companies but not loans held by bank trust
departments.
3. Includes savings banks and savings and loan associations.
4. FmHA-guaranteed securities sold to the Federal Financing Bank were reallocated from
FmHA mortgage pools to FmHA mortgage holdings in 1986:Q4 because of accounting
changes by the Farmers Home Administration.
5. Outstanding principal balances of mortgage-backed securities insured or guaranteed by
the agency indicated.
6. 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
DomesticNonfinancialStatistics • October 1996
CONSUMER INSTALLMENT CREDIT1
1.55
Millions of dollars, amounts outstanding, end of period
1996r
Holder and type of credit
1993
1994
1995
Jan.
Feb.
Mar.
Apr.
May
June
Seasonally adjusted
1 Total
844,118
966,457
1,103,164
1,112,235
1,123,182
1,132,882
1,139,830
1,145,428
1,153,703
2 Automobile
3 Revolving
4 Other2
279,786
287,011
277,321
317,182
339,337
309,939
351,052
413,894
338,218
352,520
418,971
340,745
355,136
425,658
342.388
357,752
431,035
344,095
360,460
438,222
341,148
361,627
443,909
339,892
366,936
446,707
340,060
Not seasonally adjusted
5 Total
863,924
990,247
1,131,747
1,122,524
1,120,273
1,122,549
1,129,073
1,135,676
1,146,536
By major holder
Commercial banks
Finance companies
Credit unions
Savings institutions
Nonfinancial business3
Pools of securitized assets 4 ..
399,683
116,453
101,634
37,855
77,229
131,070
462,923
134,830
119,594
38,468
86,621
147,811
507,414
152,624
131,939
40,106
85,061
214,603
501,083
152,606
131,257
40,224
80,733
216,621
498,804
154,365
130,839
40,448
78,138
217,679
498,302
151,749
130,837
40,762
76,681
224,218
503,371
153,299
131,844
41,000
73,765
225,794
502,173
155,893
133,367
41,000
74,680
228,563
504,866
154,630
134,710
40,323
72,521
239,486
By major type of credit5
12 Automobile
13
Commercial banks
14
Finance companies
15
Pools of securitized assets4
281,538
122,000
56,057
39,561
319,715
141,895
61,609
36,376
354,260
149,094
70,626
44,616
352,028
148,186
71,420
42,373
352,907
147,703
73,312
41,568
354,061
148,455
72.129
42,800
356,014
150,434
73,810
40,545
358,948
151,271
74,327
41,021
365,449
153,814
74,286
44,828
16 Revolving
17
Commercial banks
18
Nonfinancial business3 . . .
19
Pools of securitized assets4
302,201
149.920
50,125
80,242
357,307
182,021
56,790
96,130
435,674
210,298
53,525
147,934
425,964
200,080
50,520
151,640
424,537
198,886
48,613
153,390
425,664
196,836
47,416
157,690
431,499
201,903
44,526
161,185
438,033
205,011
45,182
163,774
441,814
204,658
43,097
169,865
20 Other
21
Commercial banks
22
Finance companies
23
Nonfinancial business3 . . .
24
Pools of securitized assets4
280,185
127,763
60,396
27,104
11,267
313,225
139,007
73,221
29,831
15,305
341,813
148,022
81,998
31,536
22,053
344,532
152,817
81,186
30,213
22,608
342,829
152,215
81,053
29,525
22,721
342,824
153,011
79,620
29,265
23,728
341,560
151,034
79,489
29,239
24,064
338,695
145,891
81,566
29,498
23,768
339,273
146,394
80,344
29,424
24,793
6
7
8
9
10
11
1. The Board's series on amounts of credit covers most short- and intermediate-term credit
extended to individuals that is scheduled to be repaid (or has the option of repayment) in two
or more installments. Data in this table also appear in the Board's G.19 (421) monthly
statistical release. For ordering address, see inside front cover.
2. Comprises mobile home loans and all other installment loans that are not included in
automobile or revolving credit, such as loans for education, boats, trailers, or vacations. These
loans may be secured or unsecured.
1.56
3. Includes retailers and gasoline companies.
4. Outstanding balances of pools upon which securities have been issued; these balances
are no longer carried on the balance sheets of the loan originator.
5. Totals include estimates for certain holders for which only consumer credit totals are
available.
TERMS OF CONSUMER INSTALLMENT CREDIT1
Percent per year except as noted
1995
Item
1993
1994
1996
1995
Dec.
Jan.
Feb.
Mar.
Apr.
May
June
INTEREST RATES
Commercial banks~
1 48-month new car
2 24-month personal
8.09
13.47
8.12
13.19
9.57
13.94
n.a.
n.a.
n.a.
n.a.
9.12
13.63
n.a.
n.a.
n.a.
8.93
13.52
n.a.
Credit card plan
3 All accounts
4 Accounts assessed interest
n.a.
n.a.
15.69
15.77
16.02
15.79
n.a.
n.a.
n.a.
n.a.
15.82
15.41
n.a.
n.a.
n.a.
n.a.
15.44
15.41
n.a.
Auto finance companies
5 New car
6 Used car
9.48
12.79
9.79
13.49
11.19
14.48
10.52
13.83
9.74
13.27
9.86
13.28
9.77
13.19
9.64
13.26
9.37
13.49
9.53
13.62
54.5
48.8
54.0
50.2
54.1
52.2
53.6
51.8
51.8
52.2
52.3
52.1
51.8
52.0
51.5
51.8
50.8
51.7
50.4
51.6
91
98
92
99
92
99
92
99
92
99
91
98
91
98
91
99
91
99
91
100
14,332
9,875
15,375
10,709
16,210
11,590
17,034
12,152
16,698
12,059
16,627
11,990
16,520
11,934
16,605
12,024
16,686
12,233
16,854
12,249
OTHER TERMS 3
Maturity (months)
7 New car
8 Used car
Loan-to-value ratio
9 New car
10 Used car
Amount financed (dollars)
11 New car
12 Used car
1. The Board's series on amounts of credit covers most short- and intermediate-term credit
extended to individuals that is scheduled to be repaid (or has the option of repayment) in two
or more installments. Data in this table also appear in the Board's G.19 (421) monthly
statistical release. For ordering address, see inside front cover.
2. Data are available for only the second month of each quarter,
3. At auto finance companies,
Flow of Funds
1.57
A37
FUNDS RAISED IN U.S. CREDIT MARKETS 1
Billions of dollars; quarterly data at seasonally adjusted annual rates
1994
Transaction category or sector
1991
1992
1993
1994
1995
1996
1995
Q3
Q4
QL
Q2
Q3
Q4
QL
Nonfinancial sectors
1 Total net borrowing by domestic nonfinancial sectors....
481.7
543.0
628.5
618.9
732.9
587.6
634.8
880.4
888.3
584.8
578.2
863.5
By sector and instrument
2 U.S. government
3 Treasury securities
4
Budget agency issues and mortgages
278.2
292.0
-13.8
304.0
303.8
.2
256.1
248.3
7.8
155.9
155.7
.2
144.4
142.9
1.5
135.6
132.8
2.9
150.1
155.7
-5.7
266.8
268.0
-1.2
202.8
201.2
1.6
65.8
65.4
.4
42.4
37.2
5.1
288.7
291.0
-2.3
5 Private
203.5
239.0
372.3
463.1
588.5
452.0
484.7
613.6
685.6
519.1
535.9
574.8
87.8
78.8
158.4
173.6
-5.5
-10.0
.4
-13.7
-40.9
-18.4
-48.5
30.5
67.6
130.9
187.6
-10.4
-47.8
1.4
5.0
-13.7
8.6
10.1
74.8
75.2
157.2
187.9
-6.0
-25.0
.5
61.5
3.8
10.0
-10.2
-29.3
23.3
194.3
202.4
1.3
-11.1
1.8
124.9
73.1
21.4
55.4
-41.3
73.3
237.5
204.7
11.0
20.1
1.7
142.9
103.0
18.1
54.9
-58.4
15.4
205.5
210.3
5.6
-12.7
2.2
133.8
92.1
28.5
35.1
-53.8
6.2
210.6
216.8
-4.2
-3.4
1.4
141.8
76.7
30.7
72.4
-45.8
53.0
222.5
196.8
2.7
21.2
1.7
138.3
152.5
12.3
80.8
-4.3
98.4
239.6
207.2
14.2
16.3
1.8
156.9
96.8
39.1
59.1
-107.4
59.8
290.5
256.8
13.7
17.7
2.3
158.5
76.8
13.9
27.1
-7.6
82.0
197.4
157.8
13.6
25.2
.8
118.2
86.0
7.2
52.7
-6.4
58.9
285.4
250.1
15.6
17.4
2.2
121.7
52.8
37.9
24.5
183.8
-61.9
2.1
-53.0
81.6
198.4
19.5
1.3
-16.0
34.1
21.1
249.1
61.0
2.0
7.0
52.0
62.3
362.2
144.3
2.8
12.1
129.3
-43.4
383.5
250.6
2.0
35.9
212.7
-45.7
385.3
132.1
2.4
8.8
120.9
-65.4
392.4
160.8
-2.0
16.5
146.3
-68.5
358.6
300.1
.9
51.3
247.9
-45.1
393.0
303.6
3.6
34.4
265.6
-11.1
448.1
181.5
4.3
29.8
147.4
-110.6
334.5
217.4
-.8
28.2
190.0
-16.0
387.7
190.7
.9
29.3
160.5
-3.7
23 Foreign net borrowing in United States
24
Bonds
Bank loans n.e.c
25
26
Commercial paper
Other loans and advances
27
14.8
15.0
3.1
6.4
-9.8
22.6
15.7
2.3
5.2
-.6
68.8
81.3
.7
-9.0
-4.2
-20.3
7.1
1.4
-27.3
-1.6
67.7
46.5
8.5
13.6
-.8
19.6
20.8
4.7
-8.1
2.2
33.5
27.7
-.5
5.9
.4
61.4
13.5
8.1
37.9
1.9
40.4
49.9
5.6
-11.1
-4.0
94.1
52.1
8.2
30.9
2.9
75.1
70.6
11.9
-3.4
-4.1
36.9
45.4
8.7
-13.8
-3.3
28 Total domestic plus foreign
496.5
565.6
697.3
598.6
800.7
607.2
668.3
941.8
928.8
678.9
653.3
900.4
6
7
8
9
10
11
12
13
14
15
16
By instrument
Municipal securities
Corporate bonds
Mortgages
Home mortgages
Multifamily residential
Commercial
Farm
Consumer credit
Bank loans n.e.c
Commercial paper
Other loans and advances
17
18
19
20
21
22
By borrowing sector
Household
Nonfinancial business
Farm
Nonfarm noncorporate
Corporate
State and local government
-11.0
Financial sectors
155.6
240.0
291.1
467.9
444.9
428.7
536.8
273.1
436.1
490.0
580.4
313.6
145.7
9.2
136.6
.0
155.8
40.3
115.6
.0
164.2
80.6
83.6
.0
288.6
176.9
116.5
-4.8
205.1
106.9
98.2
.0
250.3
152.1
98.3
.0
321.2
249.0
72.2
.0
89.4
62.9
26.4
.0
192.1
127.2
64.9
.0
221.4
101.5
119.9
.0
317.5
136.1
181.4
.0
147.2
37.4
109.8
.0
34 Private
Corporate bonds
35
36
Mortgages
Bank loans n.e.c
37
38
Open market paper
39
Other loans and advances
9.8
69.9
.5
8.8
-32.0
-37.3
84.2
82.7
.6
2.2
-.7
-.6
126.9
120.1
3.6
-13.0
-6.2
22.4
179.2
117.5
9.8
-12.3
41.6
22.6
239.8
185.5
5.3
3.0
42.6
3.4
178.3
103.9
12.0
-11.7
41.3
32.8
215.6
84.9
4.9
1.9
85.9
38.1
183.7
167.5
5.2
-3.0
38.5
-24.5
244.0
182.3
5.2
21.2
34.0
1.3
268.6
208.1
5.2
7.1
43.3
4.9
262.9
184.0
5.6
-13.4
54.7
32.0
166.4
136.2
5.5
7.6
22.6
-5.5
By borrowing sector
40 Government-sponsored enterprises
41 Federally related mortgage pools
42 Private financial sectors
Commercial banks
43
44
Bank holding companies
45
Funding corporations
46
Savings institutions
47
Credit unions
48
Life insurance companies
*
Finance companies
49
50
Mortgage companies
51
Real estate investment trusts (REITs)
52
Brokers and dealers
53
Issuers of asset-backed securities (ABSs)
9.1
136.6
9.8
-10.7
-2.5
-6.5
-44.7
.0
.0
17.7
-2.4
1.2
3.7
54.0
40.2
115.6
84.2
7.7
2.3
13.2
-7.0
.0
.0
-1.6
8.0
.3
2.7
58.5
80.6
83.6
126.9
4.6
8.8
2.9
11.3
.2
.2
.2
.0
3.4
12.0
83.3
172.1
116.5
179.2
9.9
10.3
24.2
12.8
.2
.3
50.2
-11.5
13.7
.5
68.5
106.9
98.2
239.8
8.1
14.4
32.0
2.6
-.1
-.1
51.6
-2.1
5.4
-5.0
133.0
152.1
98.3
178.3
23.9
11.5
47.3
14.8
.5
.0
16.3
-7.0
18.8
-7.6
59.8
249.0
72.2
215.6
4.1
16.0
11.1
36.1
.2
1.3
57.3
1.1
6.3
19.3
62.8
62.9
26.4
183.7
6.3
16.3
61.5
-18.9
-.3
.0
83.1
-7.4
5.2
-29.5
67.6
127.2
64.9
244.0
18.2
20.8
21.7
-7.2
-.1
.1
57.2
14.8
5.2
-.1
113.2
101.5
119.9
268.6
8.8
28.2
52.1
5.1
.1
-.1
6.5
4.0
5.2
2.1
156.5
136.1
181.4
262.9
-.9
-7.8
-7.3
31.5
.0
-.4
59.6
-20.0
6.0
7.7
194.5
37.4
109.8
166.4
-4.8
-25.8
26.6
10.9
-.1
2.5
50.0
.7
5.9
-31.8
132.2
29 Total net borrowing by financial sectors
30
31
32
33
By instrument
U.S. government-related
Government-sponsored enterprise securities
Mortgage pool securities
Loans from U.S. government
A38
1.57
DomesticNonfinancialStatistics • October 1996
FUNDS RAISED IN U.S. CREDIT MARKETS'—Continued
1994
1996
1995
Transaction category or sector
Q3
Q4
QI
Q2
Q3
Q4
QL
All sectors
54 Total net borrowing, all sectors
652.1
805.6
988.4
1,066.5
1,245.6
1,035.9
1,205.2
1,214.8
1,364.9
1,169.0
1,233.7
1,214.0
55
56
57
58
59
60
61
62
424.0
87.8
163.6
158.9
-13.7
-29.1
-44.0
-95.6
459.8
30.5
166.0
131.5
5.0
-9.3
13.1
8.9
420.3
74.8
276.6
160.8
61.5
-8.5
-5.1
8.0
449.3
-29.3
147.9
204.1
124.9
62.2
35.7
71.7
349.5
-41.3
305.3
242.8
142.9
114.5
74.3
57.5
386.0
-58.4
140.1
217.5
133.8
85.1
61.7
70.2
471.3
-53.8
118.8
215.5
141.8
78.1
122.5
111.0
356.2
-45.8
234.0
227.7
138.3
157.6
88.8
58.1
394.9
-4.3
330.6
244.8
156.9
123.7
61.9
56.5
287.2
-107.4
320.0
295.7
158.5
92.1
88.1
34.9
359.9
-7.6
336.7
202.9
118.2
84.5
58.5
80.6
435.9
-6.4
240.5
290.9
121.7
69.0
46.6
15.7
U.S. government securities
Municipal securities
Corporate and foreign bonds
Mortgages
Consumer credit
Bank loans n.e.c
Open market paper
Other loans and advances
Funds raised through mutual funds and corporate equities
63 Total net share issues
209.4
294.9
442.1
150.8
159.3
113.2
-81.1
40.0
156.7
196.1
244.3
273.4
64 Mutual funds
65 Corporate equities
66
Nonfinancial corporations
67
Financial corporations
Foreign shares purchased by U.S. residents
68
147.2
62.2
18.3
13.3
30.7
209.1
85.8
27.0
28.1
30.7
323.7
118.4
21.3
36.6
60.5
128.9
21.9
-44.9
24.1
42.7
173.9
-14.7
-74.2
12.3
47.2
129.7
-16.4
-50.0
10.5
23.1
-12.6
-68.5
-118.0
16.3
33.2
78.5
-38.5
-60.0
8.7
12.8
173.3
-16.6
-71.3
17.7
37.0
195.3
.7
-92.8
9.7
83.9
248.6
-4.3
-72.8
13.3
55.3
290.9
-17.6
-118.0
11.5
89.0
1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables
F.2 through F.5. For ordering address, see inside front cover.
Flow of Funds
1.58
A39
SUMMARY OF FINANCIAL TRANSACTIONS 1
Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates
1994
Transaction category or sector
1991
1992
1993
1994
1995
1996
1995
Q3
Q4
Ql
1,245.6
1,035.9
1,205.2
-84.8
51.5
1.0
-3.5
-133.7
-21.3
271.7
1,080.0
94.7
213.4
292.3
.7
37.3
-117.0
-11.3
137.5
696.3
121.9
227.8
343.4
.9
53.2
-169.7
98.3
29.7
183.4
155.6
22.9
2.7
2.2
-43.4
53.8
89.5
25.3
42.5
-11.1
63.8
-14.0
-29.3
-13.6
57.7
5.5
-21.9
50.6
7.7
72.2
30.0
174.5
174.2
-5.6
-2.4
8.3
-4.2
32.4
79.4
30.4
74.7
36.6
81.7
Q4
Q2
Q3
1,214.8
1,364.9
1,169.0
1,233.7
1,214.0
35.3
170.8
.5
-142.3
-77.2
1.1
39.5
-105.7
-54.9
203.2
1.1
-50.2
-209.0
-23.9
358.0
889.8
-177.3
-90.7
1.2
37.6
-125.3
-23.9
161.7
1,273.1
-133.6
-103.6
1.2
52.7
-83.9
-24.6
327.6
1,044.5
Ql
NET LENDING IN CREDIT MARKETS 2
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
26
27
28
29
30
31
32
Total net lending in credit markets
652.1
805.6
988.4
Private domestic nonfinancial sectors
Households
Nonfarm noncorporate business
Nonfinancial corporate business
State and local governments
U.S. government
Rest of the world
Financial sectors
Government sponsored enterprises
Federally related mortgage pools
Monetary authority
Commercial banking
U.S. chartered banks
Foreign banking offices in United States
Bank holding companies
Banks in U.S. affiliated areas
Funding corporations
Thrift institutions
Life insurance companies
Other insurance companies
Private pension funds
State and local government retirement funds
Finance companies
Mortgage companies
Mutual funds
Closed-end funds
Money market mutual funds
Real estate investment trusts (REITs)
Brokers and dealers
Asset-backed securities issuers (ABSs)
Bank personal trusts
105.2
29.0
-5.3
30.7
50.8
10.5
13.3
523.1
15.1
87.9
81.7
-.1
27.8
-21.5
-11.9
98.2
631.5
68.8
65.6
52.2
.6
9.1
3.7
-18.4
128.3
812.8
90.2
258.9
304.7
.7
48.1
-94.6
136.6
31.1
80.8
35.7
48.5
-1.5
-1.9
8.2
-146.1
86.5
30.0
35.4
41.1
-9.2
11.2
83.6
36.2
142.2
149.6
-9.8
116.5
31.5
163.4
148.1
11.2
12.8
32.7
-.7
17.5
50.0
10.0
115.6
27.9
95.3
69.5
16.5
5.6
3.7
17.7
-61.3
78.5
6.7
41.1
23.0
7.5
.1
126.2
18.2
4.7
1.1
-1.3
53.7
8.0
652.1
-5.9
80.1
1,066.5
-24.2
134.4
697.4
119.1
-24.4
210.9
790.8
171.4
-41.1
-94.9
-13.2
241.2
951.6
28.2
-24.3
326.1
1,205.3
97.5
-8.0
42.6
1.4
26.4
16.3
343.1
183.4
158.8
-1.5
2.4
39.8
28.2
132.4
19.2
58.9
62.4
92.5
-14.4
-15.1
3.5
53.1
1.8
30.5
55.5
-10.8
64.9
20.8
315.6
222.4
83.9
5.3
4.0
-3.5
9.7
131.2
21.7
57.2
3.2
65.7
29.9
21.5
6.4
135.2
1.8
146.2
100.9
-20.6
61.5
119.9
-11.1
248.9
227.5
24.1
-9.6
7.0
5.5
43.6
77.0
21.8
50.5
6.8
43.7
7.3
52.0
8.4
33.2
1.8
-1.8
144.6
-23.7
191.7
181.4
24.7
157.7
112.9
35.0
4.6
5.2
-17.0
-46.8
54.3
22.8
78.5
13.2
52.7
-36.4
151.5
5.0
124.6
1.9
185.6
148.0
-20.2
42.3
109.8
14.3
130.7
85.9
51.1
-5.3
-.9
154.9
-2.1
122.1
22.2
77.8
87.3
56.7
1.7
62.9
-1.2
170.1
1.9
-101.1
112.2
-18.1
.0
.9
2.4
-19.4
-1.7
100.9
27.7
45.9
19.8
-9.0
20.4
.6
14.8
80.8
9.5
3.3
-27.4
34.9
66.3
24.9
47.0
29.0
68.2
-22.9
-7.1
-5.5
30.0
4.7
-44.2
61.9
7.1
98.2
12.7
266.3
186.6
75.4
-.3
4.7
6.2
8.7
98.7
21.4
61.3
21.4
63.6
-3.4
52.5
5.8
86.5
1.8
90.1
112.3
-18.8
805.6
988.4
1,066.5
1,245.6
1,035.9
1,205.2
1,214.8
1,364.9
1,169.0
1,233.7
1,214.0
-1.6
-2.0
.8
-5.8
.2
.0
17.8
.0
.7
54.0
302.5
-13.6
42.8
18.1
116.8
59.9
161.8
39.2
78.5
-38.5
-10.7
113.6
15.3
26.9
-44.3
327.2
-1.9
-2.1
.8
67.7
238.0
4.1
-66.0
-51.8
84.0
56.4
86.0
28.1
129.7
-16.4
-59.3
97.2
10.2
46.0
23.6
264.8
-8.6
.0
.7
21.6
293.4
99.9
-40.5
-46.9
36.5
86.5
51.9
97.9
-12.6
-68.5
37.1
149.4
4.2
23.1
11.9
303.4
9.0
8.6
.8
3.2
22.6
18.8
236.8
8.8
2.2
.6
49.9
258.5
10.1
-12.5
96.5
65.6
142.3
110.7
5.8
173.9
-14.7
26.7
106.0
1.3
38.7
-47.7
461.9
10.3
.0
25.2
133.5
112.0
69.2
233.5
130.7
90.6
173.3
-16.6
30.8
30.5
-4.3
33.5
-45.6
505.1
29.9
223.0
-43.2
-151.5
142.2
76.3
121.2
85.1
-63.8
195.3
.7
35.4
183.2
4.0
48.6
-63.9
347.6
.0
66.0
197.7
71.8
-75.0
113.6
.3
154.8
65.2
-42.8
248.6
-4.3
51.3
96.8
-9.8
45.7
-37.1
667.6
56.0
301.5
-80.9
51.7
174.7
52.0
225.6
-31.6
-32.0
290.9
-17.6
80.3
129.7
9.5
53.1
-47.3
466.0
.0
159.5
11.0
2.1
-70.4
-10.0
53.9
.2
RELATION OF LIABILITIES
TO FINANCIAL ASSETS
33 Net flows through credit markets
34
35
36
3/
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
Other financial sources
Official foreign exchange
Special drawing rights certificates
Treasury currency
Life insurance reserves
Pension fund reserves
Interbank claims
Checkable deposits and currency
Small time and savings deposits
Large time deposits
Money market fund shares
Security repurchase agreements
Foreign deposits
Mutual fund shares
Corporate equities
Security credit
Trade payables
Taxes payable
Noncorporate proprietors' equity
Investment in bank personal trusts
Miscellaneous
54 Total financial sources
.0
25.7
198.2
-3.4
86.3
1.5
-58.5
41.6
-16.5
-26.5
147.2
62.2
51.4
31.0
-7.4
.5
16.1
278.2
27.3
238.6
49.4
113.5
-57.2
-73.2
4.5
43.1
-3.5
209.1
85.8
4.6
46.6
9.7
16.7
-7.1
280.5
.0
.4
35.2
247.3
50.5
117.3
-70.3
-23.5
20.2
71.2
-18.5
323.7
118.4
61.4
54.4
5.2
3.4
1.6
364.6
.0
.2
.7
34.0
248.0
89.7
-9.7
-40.0
19.6
43.3
78.3
45.8
128.9
21.9
-.1
111.0
.0
.7
49.9
310.7
.0
.0
.0
1,473.9
1,790.4
2,351.7
2,113.5
2,730.1
1,979.2
2,245.7
2,482.9
3,237.8
2,357.5
2,842.3
2,893.5
Floats not included in assets ( —)
55 U.S. government checkable deposits
56 Other checkable deposits
57 Trade credit
-13.1
4.5
36.1
.7
1.6
11.3
-1.5
-1.3
-6.6
-4.8
-2.8
-7.8
-6.0
-3.8
-14.8
7.4
-3.3
12.6
-24.4
-2.3
-44.0
13.2
-3.7
79.5
-16.3
-3.9
12.7
3.5
-3.5
-44.1
-24.3
-4.2
-107.3
17.8
-3.9
-71.6
Liabilities not identified as assets (—)
58 Treasury currency
5 9 Interbank claims
60 Security repurchase agreements
61 Foreign deposits
62 Taxes payable
63 Miscellaneous
-.6
-.2
-4.9
3.6
-2.8
11.9
-.1
-.2
26.2
-9.5
-24.0
-2.2
9.7
4.2
34.3
-7.0
11.1
-126.1
-.2
-2.7
31.5
36.9
8.6
-138.7
-.5
-3.1
-.2
-1.7
86.7
55.7
-.9
-107.3
-.2
.8
64.4
45.6
-8.9
-230.6
-.4
8.2
-47.3
-1.5
8.7
-29.8
-.2
10.1
-53.5
39.5
10.8
-44.3
31.6
-36.9
-.3
7.6
39.6
-93.6
10.8
-4.8
-1.0
-29.1
-12.7
-39.5
1.4
153.1
-.9
12.4
-76.7
-41.5
-24.0
123.3
1,446.8
1,769.3
2,444.9
2,193.7
2,769.8
2,000.1
2,284.2
2,522.7
3,208.3
2,442.4
2,905.9
2,958.8
64 Total identified to sectors as assets
1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables
F.6 and F.7. For ordering address, see inside front cover.
11.0
81.6
2. Excludes corporate equities and mutual fund shares.
A40
1.59
DomesticNonfinancialStatistics • October 1996
SUMMARY OF CREDIT MARKET DEBT OUTSTANDING 1
Billions of dollars, end of period
1994
1995
1996
Transaction category or sector
Q3
Q4
Ql
Q2
Q3
Q4
Ql
Nonfinancial sectors
1 Total credit market debt owed by
domestic nonfinancial sectors
11,894.5
12,537.8
13,163.0
13,895.9
12,965.8
13,163.0
13,339.3
13,548.4
13,707.8
13,895.9
14,072.1
By sector and instrument
2 U.S. government
Treasury securities
4
Budget agency issues and mortgages
3,080.3
3,061.6
18.8
3,336.5
3,309.9
26.6
3,492.3
3,465.6
26.7
3,636.7
3,608.5
28.2
3,432.3
3,404.1
28.2
3,492.3
3,465.6
26.7
3,557.9
3,531.5
26.4
3,583.5
3,556.7
26.8
3,603.4
3,576.5
26.9
3,636.7
3,608.5
28.2
3,717.2
3,689.6
27.6
5 Private
8,814.2
9,201.3
9,670.7
10,259.2
9,533.6
9,670.7
9,781.4
9,964.9
10,104.4
10,259.2
10,354.9
6
/
8
9
10
11
12
13
14
15
16
By instrument
Municipal securities
Corporate bonds
Mortgages
Home mortgages
Multifamily residential
Commercial
Farm
Consumer credit
Bank loans n.e.c
Commercial paper
Other loans and advances
1,302.8
1,154.5
4,088.7
3,037.4
272.5
698.1
80.7
802.4
672.2
107.1
686.5
1,377.5
1,229.7
4,260.0
3,227.6
267.8
683.4
81.2
863.9
676.0
117.8
676.3
1,348.2
1,253.0
4,454.4
3,430.0
269.1
672.3
83.0
988.8
749.0
139.2
738.0
1,307.0
1,326.3
4,691.8
3,634.7
280.2
692.4
84.6
1,131.7
852.0
157.4
792.9
1,362.6
1,251.5
4,400.5
3,374.6
270.2
673.1
82.6
933.9
724.9
138.7
721.6
1,348.2
1,253.0
4,454.4
3,430.0
269.1
672.3
83.0
988.8
749.0
139.2
738.0
1,335.4
1,266.3
4,495.8
3,465.1
269.8
677.6
83.4
989.3
782.8
149.8
762.0
1,331.7
1,290.9
4,563.2
3,524.4
273.3
681.6
83.9
1,029.7
810.6
162.9
775.8
1,309.9
1,305.8
4,641.2
3,594.0
276.8
686.1
84.4
1,077.5
825.6
163.3
781.2
1,307.0
1,326.3
4,691.8
3,634.7
280.2
692.4
84.6
1,131.7
852.0
157.4
792.9
1,304.1
1,341.0
4,748.6
3,682.6
284.1
696.7
85.2
1,123.3
861.9
173.2
802.7
1/
18
19
20
21
22
By borrowing sector
Household
Nonfinancial business
Farm
Nonfarm noncorporate
Corporate
State and local government
4,021.4
3,696.8
136.3
1,122.9
2,437.6
1,095.9
4,272.9
3,770.3
138.3
1,129.9
2,502.0
1,158.2
4,634.7
3,921.1
141.2
1,142.0
2,638.0
1,114.8
5,018.3
4,171.8
143.2
1,178.0
2,850.7
1,069.1
4,515.1
3,885.6
143.1
1,137.4
2,605.0
1,132.8
4,634.7
3,921.1
141.2
1,142.0
2,638.0
1,114.8
4,676.5
4,002.7
138.9
1,154.5
2,709.2
1,102.2
4,784.1
4,084.0
142.8
1,163.3
2,777.8
1,096.8
4,908.0
4,122.3
144.9
1,170.4
2,807.0
1,074.1
5,018.3
4,171.8
143.2
1,178.0
2,850.7
1,069.1
5,063.2
4,224.8
140.9
1,185.0
2,898.9
1,066.9
23 Foreign credit market debt held in
United States
313.1
381.9
361.6
429.4
352.4
361.6
376.8
387.6
409.9
429.4
438.5
24
25
26
27
146.2
23.9
77.7
65.3
227.4
24.6
68.7
61.1
234.6
26.1
41.4
59.6
281.1
34.6
55.0
58.7
227.6
26.3
39.9
58.6
234.6
26.1
41.4
59.6
237.9
28.2
50.9
59.8
250.4
29.6
48.1
59.5
263.4
31.6
55.8
59.0
281.1
34.6
55.0
58.7
292.4
36.8
51.5
57.8
12,207.6
12,919.7
13,524.6
14,325.3
13,318.3
13,524.6
13,716.1
13,935.9
14,117.7
14,325.3
14,510.7
Bonds
Bank loans n.e.c
Commercial paper
Other loans and advances
28 Total credit market debt owed by nonfinancial
sectors, domestic and foreign
Financial sectors
29 Total credit market debt owed by
financial sectors
30
31
32
33
34
35
36
3/
38
39
By instrument
U.S. government-related
Government-sponsored enteipnses securities
Mortgage pool securities
Loans from U.S. government
Private
Corporate bonds
Mortgages
Bank loans n.e.c
Open market paper
Other loans and advances
By borrowing sector
40 Government-sponsored enterprises
41 Federally related mortgage pools
42 Private financial sectors
43 Commercial banks
44 Bank holding companies
45 Funding corporations
46 Savings institutions
47 Credit unions
48 Life insurance companies
49 Finance companies
50 Mortgage companies
51 Real estate investment trusts (REITs)
52 Brokers and dealers
53 Issuers of asset-backed securities (ABSs)
3,025.0
3,321.5
3,794.6
4,242.1
3,656.2
3,794.6
3,861.4
3,971.8
4,093.9
4,242.1
4,317.1
1,720.0
443.1
1,272.0
4.8
1,305.1
738.4
5.4
80.5
394.3
86.6
1,884.1
523.7
1,355.6
4.8
1,437.4
858.5
8.9
67.6
393.5
108.9
2,172.7
700.6
1,472.1
.0
1,621.9
973.5
18.7
55.3
442.8
131.6
2,377.8
807.5
1,570.3
.0
1,864.3
1,158.9
24.0
58.3
488.1
135.0
2,093.3
638.3
1,454.9
.0
1,563.0
949.5
17.5
53.4
420.5
122.0
2,172.7
700.6
1,472.1
.0
1,621.9
973.5
18.7
55.3
442.8
131.6
2,196.2
716.3
1,479.9
.0
1,665.2
1,012.3
20.0
53.4
454.1
125.4
2,247.1
748.1
1,499.0
.0
1,724.7
1,056.4
21.3
58.4
462.8
125.7
2,300.1
773.5
1,526.6
.0
1,793.8
1,110.2
22.6
60.3
473.6
127.0
2,377.8
807.5
1,570.3
.0
1,864.3
1,158.9
24.0
58.3
488.1
135.0
2,416.6
816.9
1,599.7
.0
1,900.6
1,189.6
25.4
59.1
492.8
133.6
447.9
1,272.0
1,305.1
80.0
114.6
161.6
88.4
.0
.0
390.4
30.2
13.9
21.7
404.3
528.5
1,355.6
1,437.4
84.6
123.4
169.9
99.6
.2
.2
390.5
30.2
17.4
33.7
487.6
700.6
1,472.1
1,621.9
94.5
133.6
199.3
112.4
.5
.6
440.7
18.7
31.1
34.3
556.1
807.5
1,570.3
1,864.3
102.6
148.0
233.9
115.0
.4
.5
492.3
16.6
36.5
29.3
689.1
638.3
1,454.9
1,563.0
92.6
129.6
200.6
103.4
.4
.3
420.9
18.5
29.5
29.4
537.7
700.6
1,472.1
1,621.9
94.5
133.6
199.3
112.4
.5
.6
440.7
18.7
31.1
34.3
556.1
716.3
1,479.9
1,665.2
95.0
137.7
221.0
107.7
.4
.6
456.7
16.9
32.4
26.9
570.0
748.1
1,499.0
1,724.7
99.9
142.9
229.9
105.9
.3
.6
467.2
20.6
33.7
26.8
596.8
773.5
1,526.6
1,793.8
102.0
150.0
240.0
107.2
.4
.6
471.9
21.6
35.0
27.4
637.8
807.5
1,570.3
1,864.3
102.6
148.0
233.9
115.0
.4
.5
492.3
16.6
36.5
29.3
689.1
816.9
1,599.7
1,900.6
100.5
141.6
244.6
117.8
.4
1.1
499.8
16.8
38.0
21.4
718.8
All sectors
54 Total credit market debt, domestic and foreign....
55
56
57
58
59
60
61
62
U.S. government securities
Municipal securities
Corporate and foreign bonds
Mortgages
Consumer credit
Bank loans n.e.c
Open market paper
Other loans and advances
15,232.6
16,241.2
17,319.2
18,567.4
16,974.5
17,319.2
17,577.5
17,907.8
18,211.5
18,567.4
18,827.8
4,795.5
1,302.8
2,039.0
4,094.1
802.4
776.6
579.0
843.1
5,215.8
1,377.5
2,315.6
4,269.0
863.9
768.2
580.0
851.1
5,665.0
1,348.2
2,461.0
4,473.1
988.8
830.4
623.5
929.1
6,014.6
1,307.0
2,766.3
4,715.9
1,131.7
944.9
700.4
986.6
5,525.6
1,362.6
2,428.6
4,418.0
933.9
804.5
599.2
902.2
5,665.0
1,348.2
2,461.0
4,473.1
988.8
830.4
623.5
929.1
5,754.1
1,335.4
2,516.5
4,515.9
989.3
864.4
654.7
947.2
5,830.6
1,331.7
2,597.7
4,584.6
1,02.9.7
898.6
673.8
961.0
5,903.5
1,309.9
2,679.5
4,663.9
1,077.5
917.4
692.7
967.1
6,014.6
1,307.0
2,766.3
4,715.9
1,131.7
944.9
700.4
986.6
6,133.8
1,304.1
2,823.1
4,774.0
1,123.3
957.8
717.6
994.2
1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables
L.2 through L.4. For ordering address, see inside front cover.
1.60
Flow of Funds
A41
1995
1996
SUMMARY OF FINANCIAL ASSETS AND LIABILITIES 1
Billions of dollars except as noted, end of period
1994
Transaction category or sector
1992
1993
1994
1995
Q3
Q4
Qi
Q2
Q3
Q4
Ql
CREDIT MARKET DEBT OUTSTANDING 2
1 Total credit market assets
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
Private domestic nonfinancial sectors
Households
Nonfarm noncorporate business
Nonfinancial corporate business
State and local governments
U.S. government
Rest of the world
Financial sectors
Government-sponsored enterprises
Federally related mortgage pools
Monetary authority
Commercial banking
U.S. chartered banks
Foreign banking offices in United States
Bank holding companies
Banks in U.S. affiliated areas
Funding corporations
Thrift institutions
Life insurance companies
Other insurance companies
Private pension funds
State and local government retirement funds
Finance companies
Mortgage companies
Mutual funds
Closed-end funds
Money market mutual funds
Real estate investment trusts (REITs)
Brokers and dealers
Asset-backed securities issuers (ABSs)
Bank personal trusts
15,232.6
16,241.2
17,319.2
18,567.4
16,974.5
17,319.2
17,577.5
17,907.8
18,211.5
18,567.4
18,827.8
2,671.6
1,618.5
38.1
257.8
757.2
235.0
1,022.8
11,303.2
457.8
1,272.0
300.4
2,948.6
2,571.9
335.8
17.5
23.4
162.5
1,134.5
1,309.1
389.4
571.7
417.5
496.4
60.5
566.4
67.7
408.6
8.1
122.7
378.0
231.5
2,730.1
1,658.9
38.8
271.5
760.8
230.7
1,146.6
12,133.8
548.0
1,355.6
336.7
3,090.8
2,721.5
326.0
17.5
25.8
149.2
1,132.7
1,420.6
422.7
617.6
437.3
482.8
60.4
725.9
78.6
429.0
8.6
137.5
458.8
240.9
3,019.3
1,993.9
39.5
319.7
666.3
206.5
1,255.7
12,837.7
667.1
1,472.1
368.2
3,254.3
2,869.6
337.1
18.4
29.2
129.5
1,167.6
1,487.0
446.4
664.6
466.3
551.0
37.5
718.8
73.1
459.0
13.3
93.3
520.7
248.0
2,930.4
2,041.3
40.4
316.1
532.5
185.2
1,527.5
13,924.3
761.8
1,570.3
380.8
3,520.6
3,056.1
412.6
18.0
33.8
138.3
1,176.3
1,585.7
471.9
725.9
487.7
614.6
34.1
771.3
78.9
545.5
15.1
183.4
632.9
229.2
2,900.6
1,857.7
39.3
295.3
708.3
212.6
1,240.7
12,620.6
624.3
1,454.9
356.8
3,203.9
2,822.3
335.5
19.0
27.1
130.2
1,160.4
1,470.7
439.1
645.9
454.3
524.1
37.0
741.8
75.6
437.9
13.3
95.3
507.3
247.7
3,019.3
1,993.9
39.5
319.7
666.3
206.5
1,255.7
12,837.7
667.1
1,472.1
368.2
3,254.3
2,869.6
337.1
18.4
29.2
129.5
1,167.6
1,487.0
446.4
664.6
466.3
551.0
37.5
718.8
73.1
459.0
13.3
93.3
520.7
248.0
2,984.8
2,013.6
39.6
291.0
640.6
203.2
1,324.4
13,065.2
673.5
1,479.9
367.1
3,327.8
2,906.5
373.6
18.0
29.8
140.8
1,173.4
1,523.1
451.8
679.3
480.7
568.5
33.9
719.3
74.0
480.6
13.8
101.0
531.5
245.3
2,935.1
1,974.3
39.9
302.8
618.1
197.1
1,402.6
13,372.9
698.6
1,499.0
375.7
3,409.8
2,963.7
396.0
19.3
30.8
137.4
1,177.4
1,557.1
458.5
693.6
482.1
586.9
41.4
724.8
75.6
508.0
14.2
137.5
555.2
240.2
2,942.2
2,048.3
40.2
290.4
563.4
191.2
1,493.1
13,585.1
714.0
1,526.6
370.6
3,474.2
3,023.7
401.1
16.9
32.5
143.1
1,188.9
1,575.5
464.4
706.2
481.8
594.7
43.2
739.2
77.7
505.7
14.7
137.0
593.2
234.2
2,930.4
2,041.3
40.4
316.1
532.5
185.2
1,527.5
13,924.3
761.8
1,570.3
380.8
3,520.6
3,056.1
412.6
18.0
33.8
138.3
1,176.3
1,585.7
471.9
725.9
487.7
614.6
34.1
771.3
78.9
545.5
15.1
183.4
632.9
229.2
2,858.6
2,001.8
40.7
306.6
509.4
179.0
1,617.8
14,172.5
771.7
1,599.7
379.6
3,541.4
3,068.8
422.3
16.7
33.6
174.9
1,174.6
1,619.2
478.1
745.3
508.2
623.3
34.5
791.7
78.6
595.6
15.6
158.2
657.6
224.7
15,232.6
16,241.2
17,319.2
18,567.4
16,974.5
17,319.2
17,577.5
17,907.8
18,211.5
18,567.4
18,827.8
51.8
8.0
16.5
433.0
4.055.1
138.5
5,050.2
1,134.4
2,293.5
415.2
539.5
399.9
267.7
992.5
217.7
995.1
79.7
660.6
4,785.2
53.4
8.0
17.0
468.2
4,471.6
189.3
5,154.9
1,251.7
2,223.2
391.7
559.6
471.1
257.6
1,375.4
279.0
1,049.4
84.9
691.3
5,165.2
53.2
8.0
17.6
502.2
4,693.9
280.0
5,296.0
1,242.0
2,183.3
411.2
602.9
549.4
307.1
1,477.3
279.0
1,160.5
88.0
699.4
5,397.3
63.7
10.2
18.2
552.1
5,499.6
290.7
5,704.4
1,229.5
2,279.7
476.9
745.3
660.1
312.9
1,852.8
305.6
1,266.5
89.3
767.4
5,769.9
55.5
8.0
17.5
496.8
4,677.0
250.1
5,212.4
1,205.0
2,199.1
402.6
578.7
548.1
278.9
1,515.8
263.9
1,099.8
87.1
701.1
5,373.0
53.2
8.0
17.6
502.2
4,693.9
280.0
5,296.0
1,242.0
2,183.3
411.2
602.9
549.4
307.1
1,477.3
279.0
1,160.5
88.0
699.4
5,397.3
64.1
8.0
17.8
515.7
4,895.7
273.0
5,389.5
1,193.9
2,200.1
441.1
634.0
603.4
316.9
1,553.3
269.5
1,159.8
94.3
719.7
5,459.7
67.1
8.0
18.0
528.1
5,095.4
265.9
5,572.4
1,246.3
2,222.4
456.2
678.5
629.3
339.6
1,661.0
277.9
1,174.2
89.2
739.7
5,537.2
65.1
10.2
18.2
535.6
5,318.1
267.4
5,615.3
1,200.4
2,255.6
477.4
702.7
655.6
323.6
1,782.0
286.2
1,217.3
91.9
758.6
5,626.9
63.7
10.2
18.2
552.1
5,499.6
290.7
5,704.4
1,229.5
2,279.7
476.9
745.3
660.1
312.9
1,852.8
305.6
1,266.5
89.3
767.4
5,769.9
62.1
10.2
18.2
566.1
5,745.6
266.2
5,799.1
1,183.8
2,336.4
490.6
816.9
666.5
304.9
2,004.8
318.3
1,269.7
94.2
781.6
5,836.4
32,716.4
35,248.7
37,271.6
40,757.9
36,732.4
37,271.6
37,997.6
38,941.9
39,804.3
40,757.9
41,600.4
19.6
5,462.9
2,458.3
20.1
21.1
6,293.4
2,564.6
22.1
21.1
6,293.4
2,564.6
22.7
6,835.8
2,576.7
22.9
7,393.0
2,607.0
22.1
8,013.8
2,619.3
22.1
8,345.4
2,657.7
21.0
6,228.7
2,550.9
22.1
6,278.5
2,476.3
8,345.4
2,657.7
8,820.5
2,669.9
RELATION OF LIABILITIES
TO FINANCIAL ASSETS
33
Total credit market debt
52
Other liabilities
Official foreign exchange
Special drawing rights certificates
Treasury currency
Life insurance reserves
Pension fund reserves
Interbank claims
Deposits at financial institutions
Checkable deposits and currency
Small time and savings deposits
Large time deposits
Money market fund shares
Security repurchase agreements
Foreign deposits
Mutual fund shares
Security credit
Trade payables
Taxes payable
Investment in bank personal trusts
Miscellaneous
53
Total liabilities
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
Financial assets not included in liabilities (+)
5 4 Gold and special drawing rights
5 5 Corporate equities
5 6 Household equity in noncorporate business
57
58
59
Floats not included in assets (—)
U.S. government checkable deposits
Other checkable deposits
Trade credit
6.8
42.0
-251.1
5.6
40.7
-251.4
3.4
38.0
-260.1
3.1
34.2
-274.9
1.2
30.6
-323.2
3.4
38.0
-260.1
4.2
33.3
-297.1
2.0
35.7
-315.8
.6
27.3
-331.3
3.1
34.2
-274.9
.0
29.6
-356.1
60
61
62
63
64
65
Liabilities not identified as assets ( - )
Treasury currency
Interbank claims
Security repurchase agreements
Foreign deposits
Taxes payable
Miscellaneous
-4.9
-9.3
43.0
217.6
25.2
-514.5
-5.1
-4.7
77.3
218.4
26.8
-667.2
-5.4
-6.5
108.8
258.7
25.0
-830.5
-5.8
-9.0
119.8
257.2
33.7
-859.2
-5.3
-3.4
100.7
241.3
22.8
-688.2
-5.4
-6.5
108.8
258.7
25.0
-830.5
-5.4
-2.7
132.9
270.1
10.0
-892.2
-5.5
-2.9
114.5
290.5
25.6
-878.5
-5.6
.1
136.4
267.1
28.7
-884.9
-5.8
-9.0
119.8
257.2
33.7
-859.2
-6.0
-2.5
108.7
246.8
13.5
-896.0
66
Total identified to sectors as assets
41,102.3
44,583.2
46,819.3
52,483.9
46,156.5
46,819.3
48,179.7
49,699.2
51,221.1
52,483.9
53,975.0
1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables
L.6 and L.7. For ordering address, see inside front cover.
2. Excludes corporate equities and mutual fund
A42
2.10
Domestic Nonfinancial Statistics • October 1996
NONFINANCIAL BUSINESS ACTIVITY
Selected Measures
Monthly data seasonally adjusted, and indexes 1 9 8 7 = 1 0 0 , except as noted
Apr.
May'
Juner
120.8r
124.8
115.9r
139.2
121.2
121.8
125.0
125.5
137.3
109.3
129.4
120.0
123.4
115.3
136.5
109.6
129.1
1 Industrial production
Market groupings
2 Products, total
3
Final, total
4
Consumer goods
5
Equipment
6
Intermediate
7 Materials
110.0
118.8
119.2
118.6
121.9
115.9
131.4
109.3
128.4
122.1
128.4
121.9
114.6
133.7
108.5
128.5
120.7
124.5
101.8
115.6
118.3
113.7
125.3
107.3
113.8
122.0
118.3
121.4
115.1
131.4
109.0
127.4
105.1
114.2
118.3
122.0
117.0
120.0 r
113.0
126.0 r
127.0'
125.0
120.0
108.6
112.0
94.6
95.1
95.3
113.1
141.3
136.0
119.3
142.4
134.7
96.9
96.4
97.5
116.8
148.4r
142.6
124.9r
149.3r
144.8
115.0
98.1
97.2
98.7
120.3
157.7r
150.9r
130.4r
158.2r
152.2
115.6
97.8
96.6
98.0
121.3
115.9
97.9
96.7
98.1
115.8
97.7
96.4
97.7
116.3
98.3
96.5
97.8
116.7
98.1
96.2
97.5
121.6
121.6
161.7 r
122.1
164.3r
157.5r
134.4r
162.9r
159.1
117.3
98.4
96.3
97.5
123.3
154.3
161,6r
154.6r
132.0r
162.3r
155.3
117.0
98.3
96.3
97.5
123.0
165.1
158.2
135.1
165.1
160.4
144.5
124.7
148.2
125.5
152.4
127.9
153.6
128.7
153.5
129.1
156.3
130.8
156.6
131.0
156.7
131.6
112.7
109.5
117.5
115.7
132.3
110.1
116.6
116.1
116.1
108.6
130.3r
139.4
109.7
131.4
140.8
110.5
132.5
Industry groupings
8 Manufacturing
9 Capacity utilization, manufacturing (percent)'
10 Construction contracts3
4
11 Nonagricultural employment, total
12
Goods-producing, total
13
Manufacturing, total
14
Manufacturing, production workers
15
Service-producing
16 Personal income, total
17
Wages and salary disbursements
18
Manufacturing
19
Disposable personal income5
20 Retail sales5
Prices6
21 Consumer (1982-84=100)
22 Producer finished goods (1982=100)
160.7r
153.8r
131.6r
161.3r
1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. For
the ordering address, see the inside front cover. The latest historical revision of the industrial
production index and the capacity utilization rates was released in November 1995. See "A
Revision to Industrial Production and Capacity Utilization, 1991-95," Federal Reserve
Bulletin, vol. 82 (January 1996), pp. 16—25. For a detailed description of the industrial
production index, see "Industrial Production: 1989 Developments and Historical Revision,"
Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204.
2. Ratio of index of production to index of capacity. Based on data from the Federal
Reserve, DRI McGraw-Hill, U.S. Department of Commerce, and other sources.
3. Index of dollar value of total construction contracts, including residential, nonresidential, and heavy engineering, from McGraw-Hill Information Systems Company, F.W. Dodge
Division.
4. Based on data from U.S. Department of Labor, Employment and Earnings. Series covers
employees only, excluding personnel in the armed forces.
2.11
154.4r
130.8r
162.2r
155.3
162.9r
156.0r
132.5r
163.2r
158.6
116.5
98.1
96.2
97.4
122.3
163.5r
156.7r
131.8r
163.7r
159.3
154.4
129.4
154.9
129.4
155.7
130.1'
122.6
166.6
160.3
135.7
166.5
159.5
5. Based on data from U.S. Department of Commerce, Survey of Current Business.
6. Based on data not seasonally adjusted. Seasonally adjusted data for changes in the price
indexes can be obtained from the U.S. Department of Labor, Bureau of Labor Statistics,
Monthly Labor Review.
NOTE. Basic data (not indexes) for series mentioned in notes 4 and 5, and indexes for series
mentioned in notes 3 and 6, can also be found in the Survey of Current Business.
Figures for industrial production for the latest month are preliminary, and many figures for
the three months preceding the latest month have been revised. See "Recent Developments in
Industrial Capacity and Utilization," Federal Reserve Bulletin, vol. 76 (June 1990), pp.
411-35. See also "Industrial Production Capacity and Capacity Utilization since 1987,"
Federal Reserve Bulletin, vol. 79 (June 1993), pp. 590-605.
LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT
Thousands of persons; monthly data seasonally adjusted
1995
Category
1993
1994
1996
1995
Dec.
Jan.
Feb.
Mar.
Apr.
May'
June'
July
HOUSEHOLD SURVEY DATA 1
1 Civilian labor force2
Employment
Nonagricultural industries3
2
Agriculture
3
Unemployment
Number
4
Rate (percent of civilian labor force)
5
129,200
131.056
132,304
132,352
132,903
133,018
133,655
133,361
133,910
133,669
134,181
117,144
3,115
119,651
3,409
121,460
3,440
121,656
3,325
121,698
3,529
122,143
3,519
122,664
3,487
122,726
3,368
122,971
3,491
123,228
3,382
123,382
3,502
8,940
6.9
7,996
6.1
7,404
5.6
7,371
5.6
7,677
5.8
7,355
5.5
7,504
5.6
7,266
5.4
7,448
5.6
7,060
5.3
7,297
5.4
110,730
114,172
117,203
118,136
118,070
118,579
118,737
118,928
119,335
119,555
119,748
18,075
610
4,668
5,829
25,755
6,757
30,197
18,841
18,321
601
4,986
5,993
26,670
6,896
31,579
19,128
18,468
580
5,158
6,165
27,585
6,830
33,107
19,310
18,367
570
5,223
6,249
27,832
6,887
33,661
19,347
18,309
569
5,234
6,254
27,780
6,894
33,694
19,336
18,332
573
5,349
6,270
27,869
6,919
33,902
19,365
18,282
574
5,340
6,289
27,891
6,932
34,035
19,394
18,283
573
5,353
6,294
27,972
6,942
34,114
19,397
18,302
576
5,384
6,311
28,066
6,964
34,274
19,458
18,298
574
5,406
6,329
28,162
6,968
34,364
19,454
18,278
570
5,431
6,336
28,263
6,987
34,392
19,491
ESTABLISHMENT SURVEY DATA
6 Nonagricultural payroll employment4
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
1995
1995
1996
1996
1996
1995
Series
Q3
Q4
Q2r
Ql
Q3
Q4
Ql
Q2
Capacity (percent of 1987 output)
Output (1987=100)
Q3
Q4
Ql
Q2r
Capacity utilization rate (percent)2
83.2
1 Total industry
122.3
122.5
123.4
125.2
146.3
147.7
149.1
150.6
83.6
82.9
82.8
2 Manufacturing
124.1
124.6
125.3
127.3
150.2
151.9
153.5
155.1
82.6
82.0
81.6
82.1
Primary processing3
Advanced processing4
117.1
127.5
117.1
128.1
116.7
129.4
118.5
131.5
135.2
157.5
136.1
159.5
136.9
161.5
137.8
163.5
86.6
80.9
86.1
80.3
85.2
80.1
86.0
80.4
5
6
7
8
9
10
11
12
13
Durable goods
Lumber and products
Primary metals
Iron and steel
Nonferrous
Industrial machinery and equipment
Electrical machinery
Motor vehicles and parts
Aerospace and miscellaneous
transportation equipment
133.0
104.6
118.2
121.3
113.9
178.9
178.4
140.7
134.2
105.8
118.8
121.3
115.3
186.8
182.9
140.5
136.0
104.6
118.9
122.6
113.8
195.3
186.3
132.6
139.5
108.3
119.8
123.3
114.9
201.4
189.4
145.9
161.7
119.8
128.8
132.9
123.3
206.1
206.3
176.8
164.2
120.9
129.5
133.5
124.0
212.0
213.9
179.2
166.7
121.7
130.3
134.4
124.8
218.1
221.8
181.3
169.4
122.4
131.4
135.7
125.5
224.5
229.9
182.9
82.3
87.3
91.8
91.3
92.4
86.8
86.5
79.6
81.7
87.5
91.8
90.9
93.0
88.1
85.5
78.4
81.6
85.9
91.2
91.2
91.2
89.5
84.0
73.2
82.4
88.4
91.2
90.9
91.5
89.7
82.4
79.8
86.9
79.0
84.0
86.3
130.1
129.3
128.6
128.1
66.8
61.1
65.3
67.4
14
15
16
17
18
19
Nondurable goods
Textile mill products
Paper and products
Chemicals and products
Plastics materials
Petroleum products
114.3
110.9
119.5
124.6
118.3
109.2
113.9
109.4
118.1
126.4
123.1
107.7
113.5
106.4
114.6
126.9
126.9
109.7
113.8
109.3
119.2
126.3
138.4
132.8
133.9
156.5
137.1
116.6
139.0
133.7
134.9
157.5
138.6
116.8
139.6
134.2
135.8
158.5
117.1
83.0
84.3
90.0
80.1
87.3
93.8
82.3
82.4
88.2
80.7
89.7
92.4
81.7
79.6
85.0
80.6
91.6
93.9
81.5
81.5
87.8
79.7
109.7
137.7
131.6
132.8
155.6
135.4
116.4
93.7
100.2
124.7
125.0
98.2
124.1
123.7
98.7
126.7
126.4
100.8
126.7
127.2
111.9
135.2
132.5
111.9
135.6
133.0
111.9
136.0
133.4
111.8
136.5
133.9
89.5
92.3
94.3
87.8
91.5
93.1
88.2
93.2
94.8
90.1
92.8
94.9
1973
1975
Previous cycle5
High
Low
High
May r
June
Julyp
83.2
3
4
20 Mining
21 Utilities
Electric
22
Low
Latest cycle6
High
Low
1996
1995
July
Feb.
Mar.
Apr/
Capacity utilization rate (percent)2
1 Total industry
89.2
72.6
87.3
71.8
84.9
78.0
83.3
83.3
82.6
83.0
83.2
83.4
2 Manufacturing
88.9
70.8
87.3
70.0
85.2
76.6
82.4
82.3
81.3
81.9
82.0
82.3
82.3
92.2
87.5
68.9
72.0
89.7
86.3
66.8
71.4
89.0
83.5
77.9
76.1
86.7
80.6
84.9
81.1
85.3
79.6
85.5
80.4
86.0
80.3
86.5
80.6
86.2
80.7
Durable goods
Lumber and products
Primary metals
Iron and steel
Nonferrous
Industrial machinery and
equipment
Electrical machinery
Motor vehicles and parts
Aerospace and miscellaneous
transportation equipment
88.8
90.1
100.6
105.8
92.9
68.5
62.2
66.2
66.6
61.3
86.9
87.6
102.4
110.4
90.5
65.0
60.9
46.8
38.3
62.2
84.0
93.3
92.8
95.7
88.7
73.7
76.1
74.2
72.0
75.2
81.7
86.9
92.0
89.8
94.8
82.5
84.8
89.8
88.9
91.0
80.9
88.2
90.3
89.1
91.8
82.1
88.7
91.0
90.8
91.1
82.2
87.6
90.6
89.7
91.6
82.9
89.0
92.0
92.1
91.8
83.0
87.7
90.8
90.9
90.8
96.4
87.8
93.4
74.5
63.8
51.1
92.1
89.4
93.0
64.9
71.1
44.5
84.0
84.9
85.1
71.8
77.0
56.6
86.2
86.2
77.7
89.9
85.1
77.9
89.9
83.7
66.7
89.5
82.5
79.1
89.5
82.1
79.1
90.1
82.5
81.0
89.9
82.5
84.2
77.0
66.6
81.1
66.9
88.4
78.8
67.2
65.5
66.7
67.0
67.3
67.8
67.8
Nondurable goods
Textile mill products
Paper and products
Chemicals and products
Plastics materials
Petroleum products
87.9
92.0
96.9
87.9
102.0
96.7
71.8
60.4
69.0
69.9
50.6
81.1
87.0
91.7
94.2
85.1
90.9
89.5
76.9
73.8
82.0
70.1
63.4
68.2
86.7
92.1
94.8
85.9
97.0
88.5
80.3
78.8
86.7
79.0
74.8
84.6
83.1
83.7
91.6
79.9
87.9
93.7
81.9
79.4
84.1
80.7
91.3
94.3
81.6
81.4
85.4
80.1
92.6
94.0
81.5
80.7
87.7
79.7
93.4
93.8
81.7
81.0
87.9
79.7
94.5
93.8
81.5
82.6
87.7
79.6
81.3
82.4
89.0
79.5
93.6
92.9
94.4
95.6
99.0
88.4
82.5
82.7
96.6
88.3
88.3
80.6
76.2
78.7
86.5
92.6
94.8
86.1
83.1
86.7
90.0
90.8
92.3
87.6
93.1
94.9
90.3
94.0
95.2
89.7
92.7
94.0
89.6
93.7
96.1
91.1
92.2
94.8
90.9
90.3
92.6
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Primary processing3
Advanced processing4
20 Mining
71 Utilities
22 Electric
1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. For
the ordering address, see the inside front cover. The latest historical revision of the industrial
production index and the capacity utilization rates was released in November 1995. See "A
Revision to Industrial Production and Capacity Utilization, 1991-95," Federal Reserve
Bulletin, vol. 82 (January 1996), pp. 16—25. For a detailed description of the industrial
production index, see "Industrial Production: 1989 Developments and Historical Revision,"
Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204.
2. Capacity utilization is calculated as the ratio of the Federal Reserve's seasonally adjusted
index of industrial production to the corresponding index of capacity.
3. Primary processing includes textiles; lumber; paper; industrial chemicals; synthetic
materials; fertilizer materials; petroleum products; rubber and plastics; stone, clay, and glass;
primary metals; and fabricated metals.
4. Advanced processing includes foods; tobacco; apparel; furniture and fixtures; printing
and publishing; chemical products such as drugs and toiletries; agricultural chemicals; leather
and products; machinery; transportation equipment; instruments; and miscellaneous manufactures.
5. Monthly highs, 1978-80; monthly lows, 1982.
6. Monthly highs, 1988-89; monthly lows, 1990-91.
A44
2.13
Domestic Nonfinancial Statistics • October 1996
INDUSTRIAL PRODUCTION
Indexes and Gross Value1
Monthly data seasonally adjusted
Group
1992
proportion
1995
1996
1995
avg.
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.r
May'
June
Julyp
Index (1987 = 100)
MAJOR MARKETS
1 Total index
100.0
121.9
121.5
122.7
122.8
122.2
122.6
122.8
122.5
124.2
123.6
124.5
125.2
126.0
126.2
2 Products
J
Final products
4
Consumer goods, total
Durable consumer goods
6
Automotive products
/
Autos and trucks
8
Autos, consumer
9
Trucks, consumer
Auto parts and allied goods
10
11
Other
12
Appliances, televisions, and air
conditioners
13
Carpeting and furniture
14
Miscellaneous home goods
15
Nondurable consumer goods
16
Foods and tobacco
1/
Clothing
18
Chemical products
19
Paper products
Energy
20
21
Fuels
22
Residential utilities
60,6
46.3
28.6
5.6
2.5
1.6
.9
.7
.9
3.0
118.3
121.4
115.1
124.2
130.7
131.4
103.1
181.7
127.8
118.6
118.0
121.2
114.6
121.4
125.3
123.9
101.0
163.9
126.6
118.1
119.2
122.4
115.9
124.0
130.7
132.0
100.6
188.2
126.6
118.1
119.4
122.6
116.0
125.8
132.9
133.1
102.6
187.7
130.8
119.6
118.3
121.3
114.9
123.4
128.5
128.6
100.2
179.1
126.7
118.9
118.8
121.9
115.9
124.9
130.5
129.8
100.2
182.8
130.2
119.9
119.2
122.1
115.7
126.3
132.8
132.1
99.5
190.6
132.7
120.5
118.6
121.9
114.6
120.3
125.9
124.1
92.8
180.4
128.1
115.5
120.7
124.5
116.6
125.1
133.1
133.5
99.7
194.4
130.7
118.1
120.0
123.4
115.3
119.3
120.3
111.1
77.0
173.1
137.2
118.5
120.8
124.8
115.9
125.5
133.5
135.9
104.1
192.7
127.2
118.5
121.2
125.0
116.1
126.1
134.1
135.4
106.2
187.3
129.9
119.2
121.8
125.5
116.1
130.1
137.5
138.9
110.4
189.2
133.1
123.6
122.0
125.9
116.5
133.5
145.0
149.8
116.5
209.3
133.5
123.5
.7
.8
1.5
23.0
10.3
2.4
4.5
2.9
2.9
.9
2.1
135.5
105.8
118.2
112.9
111.3
94.8
131.3
106.6
116.5
108.8
119.6
132.2
107.9
117.4
113.0
112.8
93.6
128.6
107.6
116.1
108.2
119.4
135.8
104.4
118.0
113.9
111.8
93.9
132.6
106.7
122.3
108.4
128.2
139.4
106.9
117.8
113.7
111.6
93.4
134.0
107.3
119.0
111.4
122.2
140.1
105.6
116.9
112.9
111.1
92.9
135.7
106.6
113.1
107.3
115.4
145.3
104.1
117.6
113.8
110.9
91.5
135.0
108.4
121.1
108.2
126.6
141.9
107.4
118.3
113.2
110.6
89.7
136.5
106.3
119.5
108.6
124.1
132.2
101.1
116.2
113.3
110.6
88.2
138.1
104.9
121.0
108.6
126.1
137.5
103.4
117.7
114.5
112.0
90.3
138.1
106.0
122.6
111.8
127.2
138.3
105.7
116.9
114.4
112.3
88.9
136.7
105.8
123.9
112.2
128.8
139.7
104.4
117.1
113.6
112.2
88.8
133.8
106.1
121.8
111.5
126.2
138.9
105.5
118.2
113.7
111.8
89.2
134.0
107.2
122.0
111.7
126.3
151.6
110.0
118.6
112.7
111.4
88.2
132.3
106.6
119.6
110.7
123.3
153.3
109.5
117.9
112.3
110.6
88.1
133.1
108.0
117.0
110.0
119.9
23
24
25
26
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
17.7
13.7
5.7
1.4
4.0
2.6
1.2
1.4
3.3
.6
.2
131.4
155.7
198.1
373.5
127.5
136.3
140.1
123.2
65.9
87.1
152.7
131.6
155.7
197.2
371.7
127.1
139.8
139.9
122.6
66.5
88.4
148.6
132.9
157.5
201.0
379.6
129.1
138.0
141.3
122.2
66.1
89.5
155.9
133.1
158.2
203.0
390.0
128.7
137.9
143.3
123.3
65.2
88.3
158.0
131.5
156.5
206.5
402.9
128.6
122.3
135.7
120.9
64.4
83.5
158.9
131.4
156.9
208.1
417.8
129.1
119.6
134.2
121.4
62.9
83.1
161.8
132.3
158.4
209.4
431.7
129.5
124.5
135.3
121.7
62.0
83.8
164.4
133.7
160.5
213.3
442.9
129.6
128.1
129.1
122.1
61.6
85.1
158.1
137.3
164.8
220.5
463.3
131.3
133.2
136.0
123.5
63.1
89.7
157.8
136.5
162.7
221.6
476.0
130.3
121.2
113.6
122.5
64.2
96.3
168.2
139.2
166.3
224.9
491.1
129.9
136.1
140.0
122.1
64.0
100.6
170.7
139.4
166.2
225.9
503.3
129.4
135.1
138.2
121.2
64.4
104.3
170.4
140.8
168.5
229.9
513.1
128.7
138.9
141.9
124.0
63.8
102.3
172.4
141.2
169.3
230.3
521.8
128.4
144.5
152.0
123.2
63.6
99.1
34
35
36
Intermediate products, total
Construction supplies
Business supplies
14.3
5.3
9.0
109.0
108.2
109.6
108.5
107.3
109.5
109.4
107.0
111.0
109.5
108.4
110.3
109.2
108.3
109.9
109.3
108.7
109.9
110.1
110.5
110.0
108.5
107.2
109.6
109.3
109.3
109.5
109.6
111.5
108.6
108.6
109.2
108.4
109.7
110.4
109.4
110.5
112.8
109.2
110.2
112.8
108.7
37 Materials
Durable goods materials
38
Durable consumer parts
39
40
Equipment parts
41
Other
42
Basic metal materials
Nondurable goods materials
43
44
Textile materials
45
Paper materials
Chemical materials
46
Other
47
Energy materials
48
Primary energy
49
50
Converted fuel materials
39.4
20.8
4.0
7.5
9.2
3.1
8.9
1.1
1.8
3.9
2.1
9.7
6.3
3.3
127.4
141.5
138.5
163.0
126.2
125.7
119.8
109.2
120.5
124.4
116.5
106.6
101.9
116.0
126.8
140.2
133.9
164.4
124.4
124.9
118.9
102.6
123.9
124.4
113.8
107.5
102.3
118.1
128.1
142.3
138.4
167.1
124.9
123.1
118.8
109.2
120.4
123.1
114.6
108.5
101.4
122.8
128.1
144.1
139.8
169.1
126.8
127.0
117.8
106.2
117.0
123.3
115.1
105.8
101.2
115.0
128.1
143.9
138.6
169.4
126.5
124.3
118.7
107.3
121.4
122.9
114.6
105.5
101.7
113.1
128.4
145.3
140.1
171.0
127.9
128.1
116.6
104.8
114.3
122.7
114.1
105.7
100.8
115.4
128.4
144.8
139.3
170.8
127.2
126.6
117.4
103.3
115.2
121.9
118.9
106.0
101.0
116.2
128.5
145.8
140.6
171.7
128.2
125.7
115.7
100.3
113.4
121.8
115.2
105.9
100.6
116.6
129.4
147.3
141.1
176.3
127.8
123.7
116.1
101.8
113.4
121.3
117.1
106.1
101.3
115.5
129.1
145.5
132.5
176.8
127.4
124.4
116.3
103.0
113.7
121.6
116.4
108.2
103.9
116.7
130.3
147.3
142.1
177.2
126.8
123.7
118.8
104.9
118.9
123.6
117.8
107.0
103.1
114.9
131.4
148.8
143.4
178.8
128.1
124.3
119.8
106.1
118.6
125.3
118.3
107.5
102.4
117.8
132.5
150.5
148.0
181.3
128.1
125.4
120.3
106.8
115.2
127.0
120.0
107.8
103.3
116.9
132.6
151.1
148.7
183.1
127.6
124.3
120.5
107.0
118.2
126.5
119.0
106.9
102.7
115.4
97.2
95.2
121.5
120.9
121.2
120.7
122.3
121.7
122.4
121.8
121.9
121.3
122.3
121.7
122.5
121.9
122.4
121.9
123.8
123.3
123.9
123.7
124.1
123.5
124.8
124.2
125.5
124.8
125.4
124.7
98.2
27.0
25.7
118.2
114.0
114.9
117.8
114.0
114.5
118.9
114.8
115.1
118.9
114.9
115.7
118.1
114.0
115.1
118.4
115.0
115.3
118.5
114.7
115.3
118.0
114.0
113.9
119.5
115.5
115.9
118.7
115.6
114.3
119.5
114.6
115.2
120.1
114.8
115.4
120.7
114.6
115.7
120.8
114.3
116.4
12.5
157.0
157.2
158.9
159.5
158.4
159.0
160.5
163.5
167.5
167.5
168.7
168.8
170.9
170.9
12.2
29.7
133.0
134.9
133.2
133.7
134.4
135.1
134.3
136.1
131.6
136.2
130.8
136.6
131.3
136.4
132.6
136.6
135.5
137.8
132.3
136.6
134.8
138.6
133.8
139.9
135.4
141.3
135.6
141.7
21
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
1996
1995
1995
avg.
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr/
Mayr
June
Julyp
123.6
124.5
125.2
126.0
126.2
128.1
119.4
132.3
128.6
119.2
133.0
Index (1987 = 100)
MAJOR INDUSTRIES
59 Total index
100.0
60 Manufacturing
61 Primary processing
62 Advanced processing
63
(A
65
66
121.9
121.5
122.7
122.8
122.2
122.6
122.8
122.5
124.2
85.4
26.6
58.9
123.9
117.6
126.8
123.3
116.9
126.3
124.2
116.6
127.8
124.9
117.8
128.2
124.4
117.0
127.9
124.5
117.1
128.0
124.8
117.3
128.4
124.5
116.7
128.2
126.2
116.3
131.0
125.2
117.1
129.0
126.5
117.5
130.8
127.2
118.5
131.3
"'24
25
45.0
2.0
1.4
132.5
104.5
111.6
131.5
103.7
111.1
133.2
103.7
110.9
134.4
106.2
112.0
133.5
105.7
110.9
134.3
104.8
109.8
134.8
106.9
109.3
134.9
103.1
109.3
137.5
103.3
110.5
135.6
107.5
107.7
138.3
108.4
108.9
139.2
107.3
111.9
141.2
109.1
113.0
142.0
107.8
112.5
32
33
331,2
331PT
333-6,9
34
2.1
3.1
1.7
.1
1.4
5.0
104.1
119.2
122.4
114.7
114.8
113.9
103.2
118.3
119.3
111.5
116.5
112.4
103.0
115.4
117.7
114.2
111.9
114.3
103.8
121.0
127.0
118.6
113.2
115.1
104.5
115.7
115.1
111.3
115.8
114.0
104.9
120.8
126.1
116.4
113.8
114.5
104.3
120.0
122.7
118.0
116.2
115.0
105.5
121.5
128.1
113.9
113.0
115.6
104.1
117.1
119.5
112.5
113.6
117.0
102.9
118.0
120.2
114.9
114.8
116.1
103.6
119.2
122.9
112.9
114.2
115.5
104.9
119.0
121.8
113.2
115.1
116.7
105.9
121.1
125.4
115.7
115.5
117.4
104.4
120.0
124.1
35
8.0
177.8
176.0
179.5
181.3
183.8
186.5
190.1
191.9
196.1
197.8
199.0
201.0
204.2
205.7
357
36
37
371
371PT
1.8
7.2
9.5
4.8
2.5
373.5
174.9
113.3
141.9
131.3
371.7
175.7
111.6
136.7
124.3
379.6
178.7
114.1
142.1
131.6
390.0
180.8
114.1
143.3
132.8
402.9
182.4
109.3
139.7
128.4
417.8
183.6
108.6
140.7
129.6
431.7
182.8
109.7
141.2
131.5
442.9
182.4
108.3
135.5
123.5
463.3
188.7
112.1
141.1
132.8
476.0
187.9
103.1
121.3
109.9
491.1
187.3
114.6
144.3
135.5
503.3
188.8
114.9
144.7
135.3
513.1
192.0
117.1
148.7
138.9
521.8
194.2
120.1
155.0
149.6
79
80
Durable goods
Lumber and products
Furniture and fixtures
Stone, clay, and glass
products
Primary metals
Iron and steel
Raw steel
Nonfeirous
Fabricated metal products. . .
Industrial machinery and
equipment
Computer and office
equipment
Electrical machinery
Transportation equipment. . .
Motor vehicles and parts .
Autos and light trucks .
Aerospace and
miscellaneous
transportation
equipment
Instruments
Miscellaneous
372-6,9
38
39
4.7
5.4
1.3
85.8
110.7
122.7
87.6
110.2
121.4
87.2
111.4
122.4
85.9
111.3
122.9
80.0
111.4
122.2
77.7
111.5
123.3
79.4
109.7
123.5
82.2
111.0
122.1
84.2
113.4
124.0
85.7
112.9
124.0
86.0
112.8
122.6
86.3
112.4
123.0
86.8
113.3
124.4
86.6
112.6
123.1
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
"'20
21
22
23
26
27
28
29
30
31
40.5
9.4
1.6
1.8
2.2
3.6
6.8
9.9
1.4
3.5
.3
114.3
115.3
90.2
112.6
95.7
119.8
99.4
125.0
108.3
139.4
81.3
114.3
115.3
99.1
109.9
94.8
121.3
99.0
124.0
109.0
137.7
78.7
114.3
115.5
91.3
112.4
94.5
118.6
100.5
124.4
108.5
138.7
80.8
114.4
115.5
90.2
110.5
94.5
118.5
99.8
125.3
110.0
139.8
80.5
114.3
115.4
88.2
111.1
93.3
119.7
98.9
126.7
106.9
139.7
79.7
113.7
114.8
88.9
108.9
92.4
116.2
99.3
126.0
107.4
140.3
78.2
113.8
114.8
88.4
108.3
91.5
118.2
98.8
126.5
108.9
139.3
76.8
113.1
114.8
87.1
104.1
89.2
114.9
97.9
127.1
108.9
139.0
75.6
113.8
116.0
90.9
106.2
90.9
113.5
98.7
127.1
110.2
139.7
77.1
113.6
115.6
92.6
109.0
89.7
115.5
96.7
126.5
109.9
140.5
76.7
113.5
115.4
94.6
108.2
90.4
118.9
96.3
126.0
109.7
137.6
76.2
114.0
115.4
91.9
108.8
90.8
119.5
97.5
126.4
109.8
140.7
75.9
113.8
114.6
93.0
111.1
90.9
119.4
96.6
126.5
109.7
140.5
75.7
113.8
114.1
90.8
111.0
90.5
121.4
96.7
126.6
108.9
140.5
73.9
lO
12
13
14
6.9
.5
1.0
4.8
.6
99.9
169.3
112.9
91.9
112.3
100.7
172.2
117.0
91.9
113.5
100.0
172.1
109.7
92.4
111.6
100.0
170.8
116.2
91.2
113.1
98.2
178.3
112.3
89.2
112.4
98.3
175.9
109.5
90.1
110.9
98.1
172.8
108.5
90.1
112.4
97.1
159.5
103.3
90.8
108.9
98.0
157.1
108.0
90.2
117.2
101.1
166.1
114.8
92.6
117.4
100.4
158.3
109.5
93.3
115.6
100.2
161.3
111.9
92.8
112.7
101.9
164.4
113.2
94.1
117.9
101.6
164.0
108.5
94.5
118.7
491,493PT
492,493PT
7.7
6.1
1.6
122.0
122.1
121.7
122.7
122.2
124.5
128.8
130.0
124.3
122.7
122.7
122.4
121.6
123.7
113.6
125.4
123.6
132.5
125.1
123.9
129.9
125.6
125.5
125.6
126.6
126.6
126.3
128.0
127.1
131.5
126.4
125.7
128.9
127.9
128.7
124.8
125.9
127.1
121.4
123.6
124.4
120.5
67
68
69
70
71
72
73
74
75
76
77
78
92 Mining
93 Metal
94 Coal
95 Oil and gas extraction
96 Stone and earth minerals
97 Utilities
98 Electric
99 Gas
"
114.4
117.5
SPECIAL AGGREGATES
100 Manufacturing excluding motor
vehicles and parts
101 Manufacturing excluding office
and computing machines . . .
80.6
122.8
122.5
123.1
123.8
123.4
123.6
123.9
123.9
125.4
125.4
125.5
126.1
126.9
127.0
83.7
119.5
118.9
119.8
120.3
119.6
119.6
119.7
119.3
120.7
119.5
120.7
121.2
122.0
122.3
Gross value (billions of 1992 dollars, annual rates)
MAJOR MARKETS
102 Products, total
2,002.9
2,245.6
2,238.8
2,257.8
2,268.1
2,240.3
2,255.8
2,265.7
2,248.9
2,293.1
2,269.5
2,300.3
2,304.8
2,316.9
2,326.4
103 Final
104 Consumer goods
105 Equipment
106 Intermediate
1,552.2
1,033.4
518.8
450.7
1,748.7
1.130.5
618.3
496.9
1,743.2
1,124.0
619.2
495.6
1,760.5
1,135.7
624.8
497.3
1,768.2
1,141.1
627.1
499.9
1,741.9
1,125.1
616.7
498.4
1,756.8
1,139.3
617.5
499.0
1,761.9
1,139.0
622.9
503.8
1,753.0
1,124.7
628.4
495.9
1,794.2
1,148.4
645.8
498.8
1,766.8
1,129.5
637.3
502.7
1,801.5
1,144.9
656.6
498.8
1,803.5
1,145.6
657.9
501.3
1,810.7
1,145.6
665.0
506.2
1,821.9
1,151.2
670.8
504.5
1. Data in this table also appear in the Board's G. 17 (419) monthly statistical release. For
the ordering address, see the inside front cover. The latest historical revision of the industrial
production index and the capacity utilization rates was released in November 1995. See "A
Revision to Industrial Production and Capacity Utilization, 1991-95," Federal Reserve
Bulletin, vol. 82 (January 1996), pp. 16-25. For a detailed description of the industrial
production index, see "Industrial Production: 1989 Developments and Historical Revision,"
Federal Reserve Bulletin, vol. 76, (April 1990), pp. 187-204.
2. Standard industrial classification.
A46
2.14
Domestic Nonfinancial Statistics • October 1996
HOUSING AND CONSTRUCTION
Monthly figures at seasonally adjusted annual rates except as noted
1995
Sept.
1996
Nov.
Oct.
Dec.
Jan.
Feb.
Mar.
Apr/
May
June
Private residential real estate activity (thousands of units except as noted)
NEW UNITS
1,199
987
213
1,288
1,126
162
680
543
137
1,193
1,040
153
254
1,372
1,068
303
1,457
1,198
259
762
558
204
1,347
1,160
187
304
1,332
997
335
1,354
1,076
278
776
547
229
1,313
1,066
247
340
1,427
1,079
348
1,401
1,130
271
783
555
228
1,267
1,009
258
352
1,393
1,050
343
1,351
1,109
242
781
560
221
1,320
1,039
281
354
1,450
1,073
377
1,458
1,129
329
790
562
228
1,360
1,081
279
355
1,487
1,123
364
1,425
1,150
275
800
569
231
1,225
1,003
222
352
1,378
1,056
322
1,453
1,146
307
803
569
234
1,403
1,113
290
352
1,417
1,087
330
1,514
1,183
331
800
565
235
1,328
1,052
276
341
1,423
1,097
326
1,439
1,163
276
816
581
235
1,391
1,112
279
364
1,459
1,115
344
1,511
1,209
302
826
591
235
1,350
1,073
277
378
1,452
1,098
354
1,478
1,144
334
833
594
239
1,392
1,108
284
369
1,415
1,085
330
1,474
1,201
273
842
604
238
1,398
1,100
298
372
666
293
670
337
665
372
684
350
673
360
679
368
683
372
743
370
784
355
713r
368r
740
369
739
365
726
363
126.1
147.6
130.4
153.7
133.4
157.6
130.0
155.6
135.2
156.2
137.0
160.7
138.6
165.6
131.9
155.3
139.4
163.7
137.0r
162.l r
140.0
170.0
136.0
162.1
140.0
165.3
18 Number sold
3,800
3,946
3,801
4,090
4,070
4,000
3,870
3,720
3,940
4,200
4,200
4,280
4,160
Price of units sold (thousands
of dollars)2
19 Median
20 Average
106.5
133.1
109.6
136.4
112.2
138.4
114.8
140.2
113.2
138.7
114.3
139.5
113.9
138.7
114.8
141.2
114.0
138.7
115.7
140.1
116.5
141.9
117.6
144.4
122.9
150.2
1
2
3
4
5
6
7
8
9
10
11
12
13
Permits authorized
One-family
Two-family or more
Started
One-family
Two-family or more
Under construction at end of period1
One-family
Two-family or more
Completed
One-family
Two-family or more
Mobile homes shipped
Merchant builder activity in
one-family units
14 Number sold
15 Number for sale at end of period1
Price of units sold (thousands
of dollars)2
16 Median
17 Average
EXISTING UNITS ( o n e - f a m i l y )
Value of new construction (millions of dollars)3
CONSTRUCTION
21 Total put in place
482,737
527,063
547,079
550,467
549,952
549,745
555,701
558,952
544,577
556,983
564,985
559,198
565,891
22 Private
23
Residential
24
Nonresidential
25
Industrial buildings
26
Commercial buildings
27
Other buildings
28
Public utilities and other
362,587
210,455
152,132
26,482
53,375
26,219
46,056
400,007
238,873
161,134
28,947
59,728
26,961
45,498
410,197
236,598
173,599
32,301
67,528
26,923
46,847
411,326
237,663
173,663
32,427
67,660
27,340
46,236
410,550
237,952
172,598
31,422
67,259
27,899
46,018
411,015
239,938
171,077
32,032
65,555
27,418
46,072
417,191
243,104
174,087
31,996
66,447
28,197
47,447
418,896
242,474
176,422
32,495
66,475
28,103
49,349
411,248
238,558
172,690
30,792
66,461
27,470
47,967
419,726
245,881
173,845
30,593
65,503
27,884
49,865
423,568
247,469
176,099
30,316
67,485
27,426
50,872
417,414
246,744
170,670
27,363
65,748
27,755
49,804
424,749
246,076
178,673
29,360
69,043
29,837
50,433
29 Public
30
Military
31
Highway
32
Conservation and development
33
Other
120,151
2,454
34,342
5,908
77,447
127,056
2,319
37,673
6,370
80,694
136,884
3,005
38,161
6,389
89,329
139,140
3,218
38,209
6,212
91,501
139,402
2,295
40,125
5,222
91,760
138,729
3,217
38,344
5,888
91,280
138,510
3,211
40,402
6,014
88,883
140,056
3,554
39,444
5,352
91,706
133,329
3,982
40,956
5,455
82,936
137,257
3,126
39,527
5,811
88,793
141,417
3,192
39,763
5,884
92,578
141,784
3,015
38,071
5,689
95,009
141,142
3,307
38,517
5,920
93,398
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 on seasonally adjusted data except as noted
Change from 12
months earlier
Change from 3 months earlier
(annual rate)
Item
1995
1995
July
Change from 1 month earlier
1996
Index
level,
July
1996 1
1996
1996
July
Sept.
Dec.
Mar.
June
Mar.
Apr.
May
June
July
CONSUMER PRICES 2
(1982-84=100)
1 All items
2.8
3.0
1.6
2.4
4.0
3.1
.4
.4
.3
.1
.3
157.0
2
3 Energy items
4 All items less food and energy
Commodities
6
Services
2.7
1.2
3.0
1.1
3.8
3.4
4.1
2.7
1.4
3.3
2.7
-10.5
2.8
2.0
3.0
1.9
1.9
2.2
1.7
2.5
3.2
15.8
3.5
2.6
3.4
4.6
8.4
2.2
-.3
3.9
.6
1.4
.3
.4
.2
.3
3.2
.1
-.1
.3
.1
1.1
.2
.0
.3
.7
-2.2
.2
.0
.3
.5
-.4
.3
.0
.3
153.2
112.5
165.5
140.3
179.9
7 Finished goods
8
Consumer foods
9
Consumer energy
10
Other consumer goods
11
Capital equipment
1.7
1.8
.4
2.2
1.8
2.6
4.0
5.3
1.7
1.2
1.6
8.8
-10.2
2.3
1.8
4.4
4.4
10.8
3.4
2.9
2.5
,6r
17.8
-,3r
,0r
1.9
4.9r
.0
2.5r
-.3'
.5
,8r
2.6
.4
-,4r
2.8
.2
1.6
-2.1
.3
-.1
.0
.2
-.9
-.1
.3
131.5
133.6
84.1
144.4
138.2
Intermediate materials
12 Excluding foods and feeds
13 Excluding energy
6.4
7.4
-.9
-1.8
-.6
1.5
-.6
-2.9
-1.0
-3.5r
1.0
-9.4
13.8
24.7
15.1
-13.5
34.8
-21.0
-17.6
20.8
33.9
-18.4
-4.r
52.8r
- 10.6r
PRODUCER PRICES
(1982=100)
Crude materials
14 Foods
15 Energy
16 Other
1. Not seasonally adjusted.
2. Figures for consumer prices are for all urban consumers and reflect a rental-equivalence
measure of homeownership.
-.R
.R
.R
-.1
.0
-.6
.1
-.1
.0
.0'
.2
-.2'
.3
-.r
.2
.2
-.6
-.1
-.4
-.3
125.5
133.6
58.1r
—15.0r
-1.9'
.f
—2.5r
-2.3r
4.0
8.2r
-.4r
6.3
-3.8
-.3
1.4
-7.7
-1.4
2.7
1.4
-1.6
130.4
78.5
153.1
.l 1
SOURCE. U.S. Department of Labor, Bureau of Labor Statistics.
A48
2.16
Domestic Nonfinancial Statistics • October 1996
GROSS DOMESTIC PRODUCT AND INCOME
Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates
1995
Account
1993
1994
1996
1995
Q2
Q3
Q4
QL
Q2
GROSS DOMESTIC PRODUCT
1
Total
6,553.0r
6,935.7r
7,253.8r
7,204.9r
7,309.8r
7,350.6r
7,426.8r
7,538.1
2
3
4
5
By source
Personal consumption expenditures
Durable goods
Nondurable goods
Services
4,454.1
530.7
1,368.9
2,554.6
4,700.9'
580.9
1,429.7
2,690.3'
4,924.9'
606.4
1,485.9'
2,832.6'
4,910.5'
604.0
1,486.7'
2,819.8'
4,957.9'
615.8
1,491.2'
2,850.9'
4,990.5'
612.8
1,494.2'
2,883.5'
5,060.5'
625.2
1,522.1'
2,913.2'
5,143.9
641.6
1,549.3
2,953.1
871.1
850.5
598.8
171.8
427.0
251.7
1,014.4
954.9
667.2
180.2
487.0
287.7
1,065.3
1,028.2
738.5
199.7
538.8
289.8
1,050.3
1,016.3
734.4
197.6
536.8
281.9
1,074.8
1,036.6
746.3
202.5
543.8
290.3
1,064.0
1,046.2
749.7
204.0
545.7
296.5
1,068.9
1,070.7
769.0
208.4
560.6
301.7
1,093.0
1,081.6
768.0
205.9
562.1
313.6
20.6
26.8
59.5
48.0
37.0
39.6
34.0
36.1
38.2
41.5
17.8
19.9
-1.7
2.7
11.4
15.1
-62.7R
657.8R
720.5'
-94.4R
719.1'
813.5'
-94.7'
807.4'
902.0'
-115.3'
797.3'
912.6'
-87.6'
819.0'
906.6'
-67.2'
837.0'
904.2'
6
7
8
9
10
11
12
13
Gross private domestic investment
Fixed investment
Nonresidential
Structures
Producers' durable equipment
Residential structures
Change in business inventories
Nonfarm
14
15
16
Net exports of goods and services
Exports
Imports
17
18
19
Government consumption expenditures and gross investment
Federal
State and local
1,290.4'
522.6'
767.8
1,314.7
516.4'
798.4
1,358.3'
516.6'
841.7
1,359.4'
522.0'
837.3
1,364.6'
516.8'
847.7
1,363.4'
507.7'
855.7
1,383.7
518.6
865.1
1,406.2
527.7
878.5
20
21
22
23
24
25
By major type of product
Final sales, total
Goods
Durable
Nondurable
Services
Structures
6,532.4'
2,401.4'
1,014.3'
1,387.2
3,584.0'
547.0
6,876.2'
2,534.4'
1,086.2'
1,448.3
3,746.5'
595.3
7,216.7'
2,662.2'
1,147.3'
1,515.0'
3,926.9'
627.6
7,170.9'
2,646.2'
1,138.6'
1,507.7'
3,908.9'
615.7
7,271.5'
2,688.8'
1,167.2'
1,521.6'
3,950.2'
632.6
7,332.8'
2,698.0'
1,166.4'
1,531.7'
3,992.4'
642.3
7,428.6'
2,749.3'
1,192.1'
1,557.1'
4,027.9'
651.4
7,526.8
2,782.7
1,215.1
1,567.5
4,079.6
664.5
26
27
28
Change in business inventories
Durable goods
Nondurable goods
29
Total GDP in chained 1992 dollars
20.6
15.7
4.9
59.5
31.9
27.7
37.0
34.9
2.2
38.2
29.2
9.1
34.0
28.5
5.4
17.8
27.3
-9.4
-86.3'
839.5'
925.8'
-1.7
12.3
-14.0
-105.0
850.9
955.9
11.4
12.6
-1.2
MEMO
6,386.4'
6,608.7r
6,742.9r
6,713.5r
6,776.4r
6,780.7r
6,814.3r
6,885.1
NATIONAL INCOME
30
Total
5,195.3r
5,501.6r
5,813.5r
5,755.4r
5,861.4r
5,927.4r
6,015.3r
n.a.
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
3,809.5'
3,095.3'
584.2
2,511.1'
714.2
333.3
380.9
4,009.8'
3,257.3'
602.5
2,654.8'
752.4
350.2
402.2
4,222.7'
3,433.2'
621.7
2,811.5'
789.5
365.5
424.0
4,191.6'
3,406.0'
619.6
2,786.4'
785.6
363.6
422.0
4,247.7'
3,454.0'
624.1
2,829.9'
793.7
367.8
425.9
4,301.1'
3,501.1'
626.9
2,874.2'
800.1
369.8
430.2
4,344.3'
3,540.2'
634.0
2,906.1'
804.1
375.0
429.1
4,420.8
3,606.3
639.0
2,967.3
814.5
380.5
434.0
38
39
40
Proprietors' income'
Business and professional'
Farm'
41
Rental income of persons2
102.5
116.6
122.2
121.6
120.9
125.8
126.9
42
43
44
45
Corporate profits'
Profits before tax3
Inventory valuation adjustment
Capital consumption adjustment
464.4'
464.3
-6.6
6.7
529.5'
531.2'
-13.3
11.6
586.6'
598.9'
-28.1
15.9
562.3'
589.6'
-42.3
15.0
612.5'
607.2'
-9.3
14.6
611.8'
604.2'
-8.8
16.5
645.1'
642.2'
-17.4
20.4
46
Net interest
398.9'
394.9'
403.6'
405.2'
400.7'
401.9'
399.5'
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.
420.0
388.1
32.0
450.9
415.9
35.0
478.3
449.3
29.0
474.7
447.1
27.6
'
479.6
451.5
28.1
486.7
454.9
31.8
499.5
461.1
38.4
3. For after-tax profits, dividends, and the like, see table 1.48.
SOURCE. U.S. Department of Commerce, Survey of Current Business.
515.8
470.1
45.7
122.6
n.a.
n.a.
-15.8
22.7
n.a.
Selected Measures
2.17
A49
PERSONAL INCOME AND SAVING
Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates
1995r
Account
1993
1996
1995r
1994'
Q2
Q3
Q4
Ql
r
Q2
PERSONAL INCOME AND SAVING
1 Total personal income
5,480.1r
5,753.1
6,115.1
6,074.4
6,146.9
6,234.5
6,308.5
6,411.3
2 Wage and salary disbursements
Commodity-producing industries
3
4
Manufacturing
Distributive industries
6
Service industries
7
Government and government enterprises
3,090.7r
781.3
593.1
698.4
l,026.7 r
584.2
3,241.8
824.9
621.1
739.2
1,075.2
602.5
3,430.6
863.5
648.4
783.7
1,161.6
621.7
3,403.1
858.7
645.3
777.3
1,147.5
619.6
3,451.2
866.7
650.1
789.3
1,171.1
624.1
3,500.2
873.9
654.7
800.7
1,198.6
626.9
3,538.2
878.7
654.8
810.5
1,215.1
634.0
3,606.3
900.2
671.6
822.1
1,245.0
639.0
380.9
420.0
388.1
32.0
102.5
186.8
648. l r
910.7
444.4
402.2
450.9
415.9
35.0
116.6
199.6
663.7
956.3
472.9
424.0
478.3
449.3
29.0
122.2
214.8
717.1
1,022.6
507.4
422.0
474.7
447.1
27.6
121.6
212.2
716.6
1,016.8
505.1
425.9
479.6
451.5
28.1
120.9
215.8
719.9
1,029.9
510.7
430.2
486.7
454.9
31.8
125.8
221.7
727.2
1,041.4
516.1
429.1
499.5
461.1
38.4
126.9
226.6
726.1
1.063.0
529.9
434.0
515.8
470.1
45.7
122.6
229.3
733.1
1,076.0
536.4
259.6
278.1
294.5
292.7
296.2
298.8
301.0
305.8
5,480. r
5,753.1
6,115.1
6,074.4
6,146.9
6,234.5
6,308.5
6,411.3
689.9
731.4
794.3
801.5
798.4
807.2
824.9
867.4
r
5,021.7
5,320.8
5,272.9
5,348.5
5,427.3
5,483.5
5,544.0
LESS: Personal outlays
4,575.8r
4,832.3
5,071.5
5,054.4
5,106.6
5,144.7
5,218.1
5,304.4
22 EQUALS: Personal saving
2I4.4 r
189.4
249.3
218.5
241.9
282.6
265.4
239.6
24,734.3r
16,806.7r
18,078.0r
25,349.8
17,158.4
18,330.0
25,628.7
17,399.5
18,799.0
25,555.9
17,395.8
18,676.0
25,726.7
17,453.8
18,829.0
25,684.5
17,459.9
18,986.0
25,753.3
17,570.2
19,041.0
25,962.0
17,692.4
19,071.0
4.5
3.8
4.7
4.1
4.5
5.2
4.8
4.3
8
9
10
11
12
13
14
15
16
17
Other labor income
Proprietors' income'
Business and professional'
Farm'
Rental income of persons
Dividends
Personal interest income
Transfer payments
Old-age survivors, disability, and health insurance benefits
LESS: Personal contributions for social insurance
18 EQUALS: Personal income
19
LESS: Personal tax and nontax payments
20 EQUALS: Disposable personal income
21
4,790.2
MEMO
Per capita (chained 1992 dollars)
23 Gross domestic product
24 Personal consumption expenditures
25 Disposable personal income
26 Saving rate (percent)
GROSS SAVING
27 Gross saving
935.5r
1,056.3
1,151.8
1,102.9
1,168.6
1,220.6
1,217.9
n.a.
28 Gross private saving
962.4r
1,006.7
1,071.8
1,018.5
1,085.9
1,138.9
1,133.8
n.a.
29 Personal saving
30 Undistributed corporate profits'
31 Corporate inventory valuation adjustment
214.4r
103.3r
-6.6
189.4
123.2
-13.3
249.3
140.6
-28.1
218.5
123.5
-42.3
241.9
159.6
-9.3
282.6
158.4
-8.8
265.4
171.8
-17.4
239.6
n.a.
-15.8
Capital consumption allowances
32 Corporate
33 Noncorporate
417.0
223.1
441.0
237.7
454.0
225.2
451.3
222.4
456.9
224.7
463.6
233.4
465.6
229.1
470.6
232.4
-26.9 r
-187.4 r
68.2
-255.6 r
160.5
65.6
94.9
49.6
-119.6
70.6
-190.2
169.2
69.4
99.7
80.0
-87.9
73.8
-161.7
167.9
72.9
95.0
84.4
-86.9
74.2
-161.1
171.3
72.3
99.0
82.7
-84.6
73.8
-158.5
167.3
73.4
93.9
81.7
-80.7
73.8
-154.5
162.4
74.3
88.1
84.1
-82.0
73.2
-155.2
166.1
75.1
91.0
n.a.
n.a.
72.5
n.a.
n.a.
76.0
n.a.
41 Gross investment
993.S
1,090.4
1,150.9
1,123.2
1,161.5
1,173.9
1,167.9
42 Gross private domestic investment
43 Gross government investment
44 Net foreign investment
871.1
210.6
-88.2
1,014.4
212.3
-136.4
1,065.3
221.9
-136.3
1,050.3
223.7
-150.8
1,074.8
224.7
-138.1
1,064.0
220.1
-110.2
1,068.9
228.8
-129.9
34.1
-.9
20.3
-7.1
-46.7
-50.0
34 Gross government saving
Federal
35
36
Consumption of fixed capital
Current surplus or deficit ( - ) , national accounts
37
38
State and local
39
Consumption of fixed capital
Current surplus or deficit ( —), national accounts
40
45 Statistical discrepancy
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.
58.0r
SOURCE. U.S. Department of Commerce, Survey of Current Business.
n.a.
1,093.0
233.6
n.a.
n.a.
A50
3.10
International Statistics • October 1996
U.S. INTERNATIONAL TRANSACTIONS
Summary
Millions of dollars; quarterly data seasonally adjusted except as noted 1
1995
Item credits or debits
1 Balance on current account
2
Merchandise trade balance2
3
Merchandise exports
4
Merchandise imports
5
Military transactions, net
6
Other service transactions, net
/
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, - )
1993
1994
1996
1995
-99,936
-132,609
456,832
-589,441
881
59,690
9,742
-16,823
-4,081
-16,736
-148,405
-166,121
502,463
-668,584
1,963
59,779
-4,159
-15,816
-4,544
-19,506
-148,154
-173,424
575,940
-749,364
3,585
64,775
-8,016
-10,959
-3,420
-20,696
Q1
Q2
Q3
Q4
Qlp
-39,054
-44,923
138,551
-183,474
628
14,780
-900
-2,846
-758
-5,035
-40,976
-47,927
142,983
-190,910
859
15,244
-862
-2,381
-967
-4,942
-37,688
-42,548
144,984
-187,532
1,120
17,093
-4,361
-2,933
-964
-5,095
-30,435
-38,026
149,422
-187,448
978
17,657
-1,890
-2,799
-731
-5,624
-35,588
-42,738
150,019
-192,757
628
17,758
-395
-4,340
-1,026
-5,475
-342
-341
-280
-154
-179
252
-199
52
12 Change in U.S. official reserve assets (increase, —)
13
Gold
14
Special drawing rights (SDRs)
13
Reserve position in International Monetary Fund
16
Foreign currencies
-1,379
0
-537
-44
-797
5,346
0
-441
494
5,293
-9,742
0
-808
-2,466
-6,468
-5,318
0
-867
-526
-3,925
-2,722
0
-156
-786
-1,780
-1,893
0
362
-991
-1,264
191
0
-147
-163
501
17
0
-199
-849
1,065
17 Change in U.S. private assets abroad (increase, —)
18
Bank-reported claims3
19
Nonbank-reported claims
20
U.S. purchases of foreign securities, net
21
U.S. direct investments abroad, net
-192,889
29,947
1,581
-146,253
-78,164
-155,700
-8,161
-32,804
-60,270
-54,465
-297,834
-69,146
-34,219
-98,960
-95,509
-56,275
-29,114
-4,537
-7,571
-15,053
-105,398
-41,236
-22,904
-23,011
-18,247
-37,954
8,476
7,500
-35,839
-18,091
-98,206
-7,272
-14,278
-32,539
-44,117
-55,801
4,510
72,153
48,952
4,062
1,713
14,841
2,585
40,253
30,745
6,077
2,344
3,560
-2,473
109,757
68,813
3,734
1,082
32,862
3,266
21,822
10,132
1,126
-331
10,630
265
37,380
25,208
1,326
235
7,662
2,949
39,186
20,489
518
-71
18,478
-228
11,369
12,984
764
1,249
-3,908
280
51,582
55,600
52
-195
-3,664
-211
178,843
20,859
10,489
24,381
80,092
43,022
245,123
111,842
-7,710
34,225
57,006
49,760
314,705
25,283
34,578
99,340
95,268
60,236
69,173
3,860
9,076
29,969
15,480
10,788
78,041
10,200
7,285
30,368
20,496
9,692
79,630
-21,542
6,945
37,269
31,971
24,987
87,860
32,765
11,272
1,734
27,321
14,768
47,234
-29,449
0
43,550
0
13,724
0
31,548
43,550
13,724
31,548
0
9,806
6,519
3,287
0
33,854
-266
34,120
0
-41,533
-7,407
-34,126
0
29,420
1,153
28,267
0
-7,496
6,365
-13,861
22 Change in foreign official assets in United States (increase, +)
23
U.S. Treasury securities
24
Other U.S. government obligations
25
Other U.S. government liabilities4
26
Other U.S. liabilities reported by U.S. banks3
21
Other foreign official assets5
28 Change in foreign private assets in United States (increase, +)
29
U.S. bank-reported liabilities3
30
US. nonbank-reported liabilities
31
Foreign private purchases of U.S. Treasury securities, net
32
Foreign purchases of other U.S. securities, net
33
Foreign direct investments in United States, net
34 Allocation of special drawing rights
35 Discrepancy
36
Due to seasonal adjustment
3/
Before seasonal adjustment
-33,492
-26,819
11,734
35,437
29,512
MEMO
Changes in official assets
38 U.S. official reserve assets (increase, - )
39 Foreign official assets in United States, excluding line 25
(increase, +)
40 Change in Organization of Petroleum Exporting Countries official
assets in United States (part of line 22)
-1,379
5,346
-9,742
-5,318
-2,722
-1,893
191
17
70,440
37,909
108,675
22,153
37,145
39,257
10,120
51,777
-3,717
-1,529
3,959
-412
-341
6,147
-1,435
-1,417
1. Seasonal factors are not calculated for lines 12-16, 18-20, 22-34, and 38^10.
2. Data are on an international accounts basis. The data differ from the Census basis data,
shown in table 3.11, for reasons of coverage and timing. Military exports are excluded from
merchandise trade data and are included in line 5.
3. Reporting banks include all types of depository institutions as well as some brokers and
dealers.
4. Associated primarily with military sales contracts and other transactions arranged with
or through foreign official agencies.
5. Consists of investments in U.S. corporate stocks and in debt securities of private
corporations and state and local governments.
SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current
Business.
Summary Statistics
3.11
A51
U.S. FOREIGN TRADE 1
Millions of dollars; monthly data seasonally adjusted
1995
Item
1993
1994
1996
1995
Dec.
Jan.
Feb.
Mar.
Apr.
May
Junep
1 Goods and services, balance
2
Merchandise
3
Services
-72,037
-132,607
60,570
-104,381
-166,123
61,742
-105,064
-173,424
68,360
-6,399
-12,601
6,202
-9,686
-15,505
5,819
-6,654
-12,784
6,130
-8,012
-14,450
6,438
-9,606
-15,585
5,979
-10,546
-16,791
6,245
-8,111
-14,454
6,343
4 Goods and services, exports
Merchandise
5
Services
6
642,953
456,834
186,119
698,301
502,462
195,839
786,529
575,939
210,590
68,088
50,120
17,968
66,493
48,645
17,848
69,163
50,883
18,280
69,277
50,490
18,787
68,990
50,740
18,250
69,893
51,384
18,509
69,706
51,192
18,514
7 Goods and services, imports
8
Merchandise
Services
9
-714,990
-589,441
-125,549
-802,682
-668,585
-134,097
-891,593
-749,363
-142,230
-74,487
-62,721
-11,766
-76,179
-64,150
-12,029
-75,817
-63,667
-12,150
-77,289
-64,940
-12,349
-78,596
-66,325
-12,271
-80,439
-68,175
-12,264
-77,817
-65,646
-12,171
1. Data show monthly values consistent with quarterly figures in the U.S. balance of
payments accounts.
3.12
SOURCE. FT900, U.S. Department of Commerce, Bureau of the Census and Bureau of
Economic Analysis.
U.S. RESERVE ASSETS
Millions of dollars, end of period
1995
Asset
1 Total
2 Gold stock, including Exchange
Stabilization Fund'
3 Special drawing rights2,3
4 Reserve position in International Monetary
Fund2
5 Foreign currencies4
1992
1993
Dec.
Jan.
Feb.
Mar.
Apr.
May
June
Julyp
71,323
73,442
74,335
85,832
82,717
84,270
84,212
83,710
83,468
83,455
85,099
11,056
8,503
11,053
9,039
11,051
10,039
11,050
11,037
11,052
10,778
11,053
11,106
11,053
11,049
11,052
10,963
11,051
11,037
11,050
11,046
11,050
11,216
11,759
40,005
11,818
41,532
12,030
41,215
14,649
49,096
14,312
46,575
14,813
47,298
15,249
46,861
15,117
46,578
15,227
46,153
15,282
46,077
15,665
47,168
SDR holdings and reserve positions in the IMF also have been valued on this basis since July
1974.
3. Includes allocations of SDRs by the International Monetary Fund on Jan. 1 of the year
indicated, as follows: 1970—$867 million; 1971—$717 million; 1972—$710 million; 1979—
$1,139 million; 1980—$1,152 million; 1981—$1,093 million; plus net transactions in SDRs.
4. Valued at current market exchange rates.
1. Gold held "under earmark" at Federal Reserve Banks for foreign and international
accounts is not included in the gold stock of the United States; see table 3.13, line 3. Gold
stock is valued at $42.22 per fine troy ounce.
2. Special drawing rights (SDRs) are valued according to a technique adopted by the
International Monetary Fund (IMF) in July 1974. Values are based on a weighted average of
exchange rates for the currencies of member countries. From July 1974 through December
1980, sixteen currencies were used; since January 1981, five currencies have been used. U.S.
3.13
1996
1994
FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS 1
Millions of dollars, end of period
1995
Asset
1992
1993
1996
1994
Dec.
1 Deposits
Held in custody
2 U.S. Treasury securities2
3 Earmarked gold3
Feb.
Mar.
Apr.
May
June
July"
205
386
250
386
165
209
191
166
160
182
166
314,481
13,118
379,394
12,327
441,866
12,033
522,170
11,702
532,776
11,702
559,741
11,689
573,435
11,590
573,924
11,445
578,608
11,339
572,839
11,296
580,277
11,273
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.
Jan.
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 • October 1996
SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS
Millions of dollars, end of period
1995
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
Dec.
Jan.
Feb.
Mar.
Apr.
May
June p
482,915
520,934
630,775
644,570
670,229
682,952
687,217r
689,711
695,954
69,721
151,100
73,386
139,571
107,258
168,534
103,919
173,949
103,242
191,188
103,994
198,382
111,017'
186,638
104,926
188,321
117,835
187,171
212,237
5,652
44,205
254,059
6,109
47,809
293,684
6,491
54,808
306,299
6,120
54,283
314,980
6,159
54,660
319,728
6,199
54,649
327,981
6,238r
55,343
334,463
5,903
56,098
327,815
5,941
57,192
207,034
15,285
55,898
197,702
4,052
2,942
215,374
17,235
41,492
236,824
4,180
5,827
222,314
19,473
66,720
310,966
6,296
5,004
223,569
19,078
70,281
320,512
6,924
4,204
231,389
18,850
70,497
338,999
6,574
3,918
242,589
20,846
73,039
335,006
6,584
4,886
241,161
20,878
71,287r
341,148'
7,388
5,353
244.294
21.670
67.949
343,206
7.173
5,417
245,385
21,250
69,739
346,071
6,996
6,511
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
1996
1994
1993
LIABILITIES TO, AND CLAIMS ON, FOREIGNERS
Payable in Foreign Currencies
Venezuela, beginning December 1990, 30-year maturity issue; Argentina, beginning April
1993, 30-year maturity issue.
5. Debt securities of U.S. government corporations and federally sponsored agencies, and
U.S. corporate stocks and bonds.
SOURCE. Based on U.S. Department of the Treasury data and on data reported to the
department by banks (including Federal Reserve Banks) and securities dealers in the United
States, and on the 1989 benchmark survey of foreign portfolio investment in the United
States.
Reported by Banks in the United States1
Millions of dollars, end of period
1995
Item
1 Banks'liabilities
2 Banks' claims
3
Deposits
4
Other claims
5 Claims of banks' domestic customers2
1992
72,796
62,799
24,240
38,559
4,432
1. Data on claims exclude foreign currencies held by U.S. monetary authorities.
1993
78,259
62,017
20,993
41,024
12,854
1996
1994
89,284
60,689
19,661
41,028
10,878
June
Sept.
Dec.
Mar.
106,621
77,042
28,909
48,133
10,244
102,147
69,481
25,712
43,769
6,624
112,556
74,830
22,688
52,142
6,145
109,635'
69,522
22,220
47,302
6,064
2. Assets owned by customers of the reporting bank located in the United States that
represent claims on foreigners held by reporting banks for the accounts of the domestic
customers.
Nonbank-Reported
3.17
LIABILITIES TO FOREIGNERS
Payable in U.S. dollars
Data
A53
Reported by Banks in the United States1
Millions of dollars, end of period
1995
Item
1993
1994
1996
1995
Dec.
Jan.
Apr.
May
June p
l,100,426 r
l,100,602 r
r
Feb.
Mar.
l,101,912 r
B Y HOLDER AND TYPE OF LIABILITY
1 Total, all foreigners
2 Banks' own liabilities
3
Demand deposits
4
Time deposits2
5
Other3
6
Own foreign offices4
7 Banks' custodial liabilities5
8
U.S. Treasury bills and certificates6
9
Other negotiable and readily transferable
instruments7
10
Other
11 Nonmonetary international and regional organizations 8 ...
12
Banks' own liabilities
13
Demand deposits
14
Time deposits2
15
Other3
16
17
18
19
Banks' custodial liabilities5
U.S. Treasury bills and certificates6
Other negotiable and readily transferable
instruments7
Other
20 Official institutions9
21
Banks' own liabilities
22
Demand deposits
23
Time deposits2
24
Other3
25
26
27
28
Banks' custodial liabilities5
U.S. Treasury bills and certificates6
Other negotiable and readily transferable
instruments7
Other
29 Banks 10
Banks' own liabilities
30
31
Unaffiliated foreign banks
32
Demand deposits
33
Time deposits2
34
Other3
Own foreign offices4
35
36
37
38
39
Banks' custodial liabilities5
U.S. Treasury bills and certificates6
Other negotiable and readily transferable
instruments7
Other
40 Other foreigners
41
Banks' own liabilities
42
Demand deposits
43
Time deposits2
44
Other3
45
46
47
48
Banks' custodial liabilities5
U.S. Treasury bills and certificates6
Other negotiable and readily transferable
instruments7
Other
1,014,808
l,099,665 r
l,099,665 r
l,098,640 r
1,096,063
1,097,972
626,919
21,569
175,106
111,971
318,273
718,440
23,386
186,512
112,984
395,558
r
753,545
24,460
192,700
139,780
396,605r
r
753,545
24,460
192,700
139,780
396,605r
r
747,46 l
22,182
198,434'
141,963
384,882
732,922'
23,507
192,116r
149,009
368,290
729,805
23,371
193,549'
138,311
374,574
735,762'
23,958
192,011'
146,589'
373,204
723,566
23,337
181,031
144,051
375,147
731,351
27,486
189,671
149,290
364,904
299,753
176,739
296,368
162,908
346,120
197,341
346,120
197,341
351,179
203,478
368,990
223,395
370,621
228,705
364,840
217,106
372,497
220,823
366,621
218,604
36,289
86,725
42,532
90,928
52,246
96,533
52,246
96,533
46,973
100,728
43,404
102,191
40,483
101,433
44,823
102,911
49,655
102,019
51,465
96,552
10,936
5,639
15
2,780
2,844
8,606
8,176
29
3,298
4,849
11,039
10,347
21
4,656
5,670
11,039
10,347
21
4,656
5,670
10,622
9,628
30
4,385
5,213
11,109
10,314
43
3,479
6,792
9,476
8,558
16
3,527
5,015
11,954
11,167
34
3,402
7,731
12,093
10,849
123
3,987
6,739
5,297
4,275
430
281
692
350
692
350
994
764
795
555
918
564
826
426
787
376
1,244
874
1,022
0
149
0
341
1
341
1
230
0
230
10
298
56
400
0
390
21
370
0
220,821
64,144
1,600
21,653
40,891
212,957
59,935
1,564
23,511
34,860
275,792
83,311
2,098
30,716
50,497
275,792
83,311
2,098
30,716
50,497
277,868
85,040
1,522
28,069
55,449
294,430
84,077
1,655
29,904
52,518
302,376
88,537
1,423
32,404
54,710
297,655'
91,602'
1,679
36,637'
53,286'
293,247
81,894
1,504
32,656
47,734
305,006
91,502
2,216
38,567
50,719
156,677
151,100
153,022
139,571
192,481
168,534
192,481
168,534
192,828
173,949
210,353
191,188
213,839
198,382
206,053
186,638
211,353
188,321
213,504
187,171
5,482
95
13,245
206
23,603
344
23,603
344
18,532
347
18,138
1,027
14,970
487
19,065
350
22,661
371
25,835
498
592,171
478,755
160,482
9,718
105,262
45,502
318,273
678,367
563,466
167,908
10,633
111,171
46,104
395,558
691,555r
567,980r
171,375
11,756
103,554
56,065
396,605r
691,555r
567,980r
171,375
11,756
103,554
56,065
396,605r
687,180r
558,951r
174,069r
10,247
110,436r
53,386
384,882
670,727r
541,421r
173,13 l r
10,948
104,230r
57,953
368,290
666,739'
539,657'
165,083'
10,971
101,013'
53,099
374,574
665,4901
537,427'
164,223'
11,453
96,222'
56,548'
373,204
662,333
533,016
157,869
10,660
89,075
58,134
375,147
654,502
530,708
165,804
12,389
90,901
62,514
364,904
113,416
10,712
114,901
11,251
123,575
15,869
123,575
15,869
128,229
15,992
129,306
17,947
127,082
15,967
128,063
16,801
129,317
17,584
123,794
18,241
17,020
85,684
14,505
89,145
13,035
94,671
13,035
94,671
13,590
98,647
12,094
99,265
11,864
99,251
10,814
100,448
11,775
99,958
11,021
94,532
102,744
78,381
10,236
45,411
22,734
114,878
86,863
11,160
48,532
27,171
121,279
91,907
10,585
53,774
27,548
121,279
91,907
10,585
53,774
27,548
122,970
93,842
10,383
55,544
27,915
125,646
97,110
10,861
54,503
31,746
121,835
93,053
10,961
56,605
25,487
126,191
96,293
10,798
55,173
30,322
128,529
97,489
11,139
55,898
30,452
126,371
98,292
12,758
56,216
29,318
24,363
10,652
28,015
11,805
29,372
12,588
29,372
12,588
29,128
12,773
28,536
13,705
28,782
13,792
29,898
13,241
31,040
14,542
28,079
12,318
12,765
946
14,633
1,577
15,267
1,517
15,267
1,517
14,621
1,734
12,942
1,889
13,351
1,639
14,544
2,113
14,829
1,669
14,239
1,522
17,567
17,895
9,099
9,099
10,479
10,544
10,005
8,306
9,284
9,580
926,672
11,266'
10,440'
28
3,979
6,433'
MEMO
49 Negotiable time certificates of deposit in custody for
foreigners
1. Reporting banks include all types of depository institutions as well as some brokers and
dealers. Excludes bonds and notes of maturities longer than one year.
2. Excludes negotiable time certificates of deposit, which are included in "Other negotiable and readily transferable instruments."
3. Includes borrowing under repurchase agreements.
4. For U.S. banks, includes amounts owed to own foreign branches and foreign subsidiaries consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory
agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists
principally of amounts owed to the head office or parent foreign bank, and to foreign
branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank.
5. Financial claims on residents of the United States, other than long-term securities, held
by or through reporting banks for foreign customers.
6. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official
institutions of foreign countries.
7. Principally bankers acceptances, commercial paper, and negotiable time certificates of
deposit.
8. Principally the International Bank for Reconstruction and Development, the InterAmerican Development Bank, and the Asian Development Bank. Excludes "holdings of
dollars" of the International Monetary Fund.
9. Foreign central banks, foreign central governments, and the Bank for International
Settlements.
10. Excludes central banks, which are included in "Official institutions."
A54
3.17
International Statistics • October 1996
LIABILITIES TO FOREIGNERS Reported by Banks in the United States'—Continued
1995
Item
1993
1994
1996
1995
Dec.
Jan.
Feb.
Mar.
Apr.
Junep
May
AREA
50
Total, all foreigners
926,672
1,014,808
l,099,665 r
l,099,665 r
l,098,640 r
l,101,912 r
l,100,426 r
l,100,602 r
l,096,063 r
1,097,972
51
Foreign countries
915,736
1,006,202
l,088,626 r
l,088,626 r
l,088,018 r
l,090,803 r
l,090,950 r
r
l,084,109 r
1,085,879
377,911
1,917
28,670
4,517
1,872
40,316
26,685
1,519
11,759
16,096
390,710
3,588
21,877
2,884
1,436
362,786
3,537
24,842
2,921
2,831
39,204
24,035
2,011
10.875
368,325
3,437
24,881
2,979
2,421
39,697
25,988
1,998
9,616
363,790
3,234
20,831
2,796
1,745
40,444
25,863
1,690
12,109
13,724
11,350
1,067
370,581
2,848
25,584
2,876
1,768
41,332
25,229
1,966
11,475
12,839
1,034
367,761 R
3,624
25,955
2,645
2,188
39,640 R
23,950
1,665
11,045
12,578
2,338
2,846
2,726
374,048
2,996
27,182
3,861
2,409
41,099
24,695
2,063
12,468
12,173
1,246
3 7 5 , 5 25R
3,477
27,572
2,787
2,203
41,304 R
24,854
1,714
10,178
12,397
2,966
3,366
2,511
20,496
2,738
41,560
3,227
133,993
372
33,331
362,786
3,537
24,842
2,921
2,831
39,204
24,035
2,011
10,875
13,724
1,394
2,761
7,950
10,012
3,245
43,627
4,124
139,127
177
26,389
2,931
9,180
11,589
2,813
42,010
4,559
146,985
163
23,626
2,843
7,950
10,012
3,245
43,627
4,124
139,127
177
26,389
3,055
7,858
11,838
2,555
40,806
4,350
152,654
163
21,612
915
2,529
8,798
19,548
3,943
36,805
4,453
146,612
145
25,291
828
1,858
7,260
19,010
2,410
37,099
4,669
146,335r
146
24,856r
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
11
Austria
Belgium and Luxembourg
Denmark
Finland
France
Germany
Greece
Italy
Netherlands
Norway
Portugal
Russia
Spain
Sweden
Switzerland
Turkey
United Kingdom
Yugoslavia11
Other Europe and other former U.S.S.R.12
44,361
27,109
1,393
10,885
16,033
14,675
3,094
40,515
3,341
163,795
245
27,769
1,394
2,761
9,321
18,976
2,2 56
39,083
4,103
144,136
143
22,769
l,089,336
12,161
1,388
1,401
6,925
20,312
2,693
39,008
4,926
143,770
217
22,277
20,235
24,768
30,470r
30,470r
33,012
32,031
31,500
31,285
33,178
33,389
73 Latin America and Caribbean
Argentina
14
Bahamas
75
/6
Bermuda
7/
Brazil
78
British West Indies
79
Chile
80
Colombia
81
Cuba
82
Ecuador
Guatemala
83
84
Jamaica
85
Mexico
86
Netherlands Antilles
8/
Panama
88
Peru
Uruguay
89
90
Venezuela
91
Other
362,238
14,477
73,820
8,117
5,301
193,699
3,183
3,171
33
880
1,207
410
28,019
4,686
3,582
929
1,611
440,216
12,236
94,991
4,897
23,797
239,083
2,825
3,666
440,216
12,236
94,991
4,897
23,797
239,083
2,825
3,666
11,810
7,531
435,624r
13,524
96,77 l r
4,633
22,715
233,383
2,978
3,505
7
1,236
1,058
500
23,643
4,448
4,030
1,025
1,799
12,662
7,707
421,950r
11,764
91,124r
4,702
21,761
227,438
2,772
3,682
7
1,201
1,075
495
23,899
4,461
4,166
1,092
1,726
12,611
7,974
433,599r
11,985
87,987r
5,035
21,483r
240,61 r
2,815
3,637
7
1,274
1,060
503
24,577
4,402
4,026
962
1,908
13,255
8,072
430,933r
14,117
85,769r
4,262
20,222
239,129
2,882
3,790
13
1,265
1,085
516
23,330
5,272
3,887
1,081
1,748
14,244
8,321
433,075'
11,650
86,303r
4,998
20,105
243,145r
2,867
3,430
6,327
423,830
17,203
104,002
8,424
9,145
229,599
3.127
4,615
13
875
1,121
529
12,227
5,217
4,551
900
1,597
13,985
6,700
1,284
1.073
550
23.214
4.722
3.846
1,064
1.757
14.672
8,387r
432,566
13,580
85,257
4,172
28,130
231,948
2,937
3,680
10
1,302
1,073
534
24,777
5,162
3,878
1,011
1,769
14,925
8,421
92 Asia
China
People's Republic of China
93
94
Republic of China (Taiwan)
95
Hong Kong
144,527
154,334
240,740
240,740
238,175
249,447
241,958
237,705
235,906
239,232
4,011
10,627
17,132
1,114
1,986
4,435
61,466
4,913
2,035
6,137
15,822
14,849
10,066
9,844
17,104
2,338
1,587
5,157
62,981
5,124
2,714
6,466
15,482
15,471
33,750
11,714
20,303
3,373
2,708
4,073
109,193
5,749
3,089
12,279
15,582
18,927
33,750
11,714
20,303
3,373
2,708
4,073
109,193
5,749
3,089
12,279
15,582
18,927
35,733
12,311
20,307
3,263
2,011
4,348
106,728
5,092
2,394
13,121
14,417
18,450
32,200
12,955
22,286
3,527
2,349
5,780
113,361
5,607
2,366
13,389
13,491
22,136
24,430
15,513
20,187
3,990
2,169
5,344
117,325
5,875
2,336
12,158
13,741
18,890
25,861
14,953
18,379
3,752
2,627
5,450
111,635
5,860
2,467
12,905
14,895
18,921
24,857
14,598
18,605
3,938
2,374
5,123
111,498
5,664
2,897
13,387
14,234
18,731
25,485
16,637
18,257
4,012
2,317
5,199
113,802
6,569
2,970
12,262
13,379
18,343
6,633
2,208
99
451
12
1,303
2,560
6,524
1,879
97
433
9
1,343
2,763
7,641
2,136
104
739
10
1,797
2,855
7,641
2,136
739
10
1,797
2,855
7,679
1,848
99
1,217
11
1,774
2,730
7,818
2,375
52
665
8
1,968
2,750
7,089
2,057
65
413
9
1,706
2,839
7,832
2,002
114
1,001
8
1,904
2,803
7,404
1,873
113
745
16
1,887
2,770
7,507
1,831
115
666
6
2,013
2,876
4,192
3,308
884
6,036
5,142
894
6,773
5,644
1,129
6,773
5,644
1,129
5,203
4,326
877
5,509
4,503
1,006
6,223
5,239
984
6,056
4,896
1,160
6,785r
5,757
l,028 r
9,395
7,981
1,414
10,936
6,851
3,218
867
8,606
7,537
613
456
11,039
9,300
893
846
11,039
9,300
893
846
10,622
9,639
349
634
11,109
10,075
292
742
9,476
7,938
758
780
11,266r
9,982r
422
862
1 l,954 r
10,587r
594
773
12,093
10,835
72
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
Indonesia
Israel
Japan
Korea (South)
Philippines
Thailand
Middle Eastern oil-exporting countries13
Other
Egypt
Morocco
South Africa
Zaire
Oil-exporting countries14
Other
112 Other
Australia
113
114
Other
Nonmonetary international and regional organizations.. .
International' 5
117
Latin American regional16
118
Other regional17
115
116
12,786
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.
8
8
1,315
1,275
1,315
1,275
481
24,555
4,672
4,265
974
481
24,555
4,672
4,265
974
1,835
11,810
7,531
1,835
104
8
451
807
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
BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States1
Payable in U.S. Dollars
Millions of dollars, end of period
1996
1995
Area or country
1993
1994
1995
Dec.
1 Total, all foreigners
2 Foreign countries
3 Europe
4
Austria
Belgium and Luxembourg
5
6
Denmark
Finland
7
8
France
Germany
9
10
Greece
11
Italy
12
Netherlands
Norway
13
14
Portugal
Russia
15
Spain
16
Sweden
17
18
Switzerland
Turkey
19
20
United Kingdom
21
YugoslaviaOther Europe and other former U.S.S.R.3
22
Jan.
Feb.
Mar.
Apr/
May
June p
483,242
529,948r
529,948r
527,317
520,790
531,340r
527,363
518,375
536,311
486,092
478,651
528,017
r
r
525,015
518,011
527,526r
524,647
514,881
533,289
123,741
412
6,532
382
594
11,822
7,724
691
8,834
3,063
396
834
2,310
3,717
4,254
6,605
1,301
62,013
473
1,784
123,380
692
6,738
1,129
512
12,146
7,608
604
6,043
2,959
504
938
973
3,530
4,098
5,746
878
66,846
265
1,171
130,315
565
7,599
403
1,055
14,798
8,864
449
5,364
5,051
665
888
660
2,166
2,060
7,074
785
67,388
147
4,334
133,923
683
8,365
541
1,397
12,253
8,072
555
5,010
4,305
1,098
853
678
3,811
2,315
4,613
732
75,147
481
3,014
138,574
773
8,519
599
1,313
13,161
8,774
603
4,838
4,722
1,408
743
775
4,041
2,151
4,016
707
78,040
118
3,273
138,820'
892r
6,003r
698r
1,782
13,740
9,260
507
5,865r
5,585r
1,016
773
868
5,420
2,206r
4,841
810
73,741r
120
4,693
135,605
1,213
8,688
543
1,305
11,604
8,647
622
5,696
6,346
793
889
741
5,092
3,534
6,370
973
69,117
208
3,224
134,471
1,212
8,711
482
1,282
11,954
8,099
554
6,166
5,618
933
813
482
3,158
2,526
8,713
867
69,581
204
3,116
146,204
1,088
6,921
432
1,013
11,767
11,831
563
5,721
6,546
1,243
704
472
2,519
2,799
12,144
930
75,810
164
3,537
488,497
528,017
130,315
565
7,599
403
1,055
14,798
8,864
449
5,364
5,051
665
888
660
2,166
2,060
7,074
785
67,388
147
4,334
18,617
18,490
20,192r
20,192r
20,068
18,421
18,040r
22,061
20,885
22,241
24 Latin America and Caribbean
25
Argentina
26
Bahamas
27
Bermuda
Brazil
28
29
British West Indies
Chile
30
Colombia
31
32
Cuba
Ecuador
33
34
Guatemala
35
Jamaica
36
Mexico
37
Netherlands Antilles
Panama
38
39
Peru
40
Uruguay
41
Venezuela
42
Other
225,238
4,474
63,353
8,901
11,848
99,319
3,643
3,181
0
681
288
195
15,879
2,683
2,894
657
969
2,910
3,363
223,523
5,844
66,410
8,481
9,583
95,741
3,820
4,004
0
682
366
258
17,749
1,396
2,198
997
503
1,831
3,660
256,955r
6,439
58,815r
5,717
13,297
123,914
5,024
4,550
0
825
457
323
18,028
9,229
3,018
1,829
466
1,661
3,363
256,955r
6,439
58,815r
5,717
13,297
123,914
5,024
4,550
0
825
457
323
18,028
9,229
3,018
1,829
466
1,661
3,363
257,146
6,185
60,284
5,011
13,252
122,759
4,996
4,622
0
841
439
299
17,114
11,043
2,845
1,762
422
1,575
3,697
248,483
6,057
63,240
4,742
13,915
108,833
4,593
4,492
0
842
461
362
17,167
12,973
2,820
1,928
463
1,572
4,023
252,727
6,216
65,628
4,829
13,813
113,239
4,559
4,547
0
977
465
332
16,953
10,902
2,612
1,936
623
1,559
3,537
245,845
6,187
54,911
5,031
14,175
118,599
4,605
4,517
0
959
473
335
17,071
8,728
2,503
2,042
578
1,377
3,754
237,369
6,037
55,476
2,993
14,189
110,770
4,363
4,523
0
944
461
345
16,857
8,674
2,397
2,350
602
1,279
5,109
239,237
6,437
60,592
3,113
15,076
101,589
5,062
4,540
0
957
456
368
16,811
12,888
2,567
2,395
623
1,392
4,371
43
111,775
107,079
115,361r
115,361r
108,989
107,056
111,390
115,030
115,954
118,381
2,271
2,625
10,828
589
1,527
826
60,032
7,539
1,410
2,170
15,115
6,843
836
1,448
9,161
994
1,470
688
59,151
10,286
662
2,902
13,748
5,733
1,023
1,713
12,895
1,846
1,678
739
61,308
14,089r
1,350
2,599
9,639
6,482
1,023
1,713
12,895
1,846
1,678
739
61,308
14,089r
1,350
2,599
9,639
6,482
1,014
1,407
13,254
1,864
1,458
668
55,897
14,501
814
2,397
8,053
7,662
1,351
1,404
13,867
1,859
1,478
683
55,077
15,523
779
3,256
6,410
5,369
2,439
1,729
15,545
1,869
1,604
665
52,776
17,362
1,202
3,060
7,145
5,994
3,405
1,626
15,329
1,787
1,526
642
54,657
17,250
779
2,970
7,252
7,807
2,857
1,514
14,738
1,786
1,539
615
54,685
17,854
836
3,015
8,976
7,539
2,141
1,490
16,016
1,794
1,537
615
54,260
19,256
1,298
3,194
8,354
8,426
56 Africa
57
Egypt
Morocco
58
South Africa
59
60
Zaire
61
Oil-exporting countries5
62
Other
3,861
196
481
633
4
1,129
1,418
3,050
225
429
671
2
856
867
2,727
210
514
465
1
552
985
2,727
210
514
465
1
552
985
2,798
208
514
483
1
589
1,003
2,879
237
561
520
1
526
1,034
2,884
247
585
567
1
516
968
2,743
225
594
493
1
501
929
2,691
217
628
468
1
478
899
2,768
198
639
515
1
474
941
63 Other
64
Australia
Other
65
2,860
2,037
823
3,129
2,186
943
2,467
1,622
845
2,467
1,622
845
2,091
1,822
269
2,598
2,243
355
3,665
2,645
1,020
3,363
2,620
743
3,511
2,333
1,178
4,458
2,513
1,945
66 Nonmonetary international and regional organizations6 . . .
2,405
4,591
1,931
1,931
2,302
2,779
3,814
2,716
3,494
3,022
23 Canada
44
45
46
47
48
49
50
51
52
53
54
55
China
People's Republic of China
Republic of China (Taiwan)
Hong Kong
India
Indonesia
Israel
Japan
Korea (South)
Philippines
Thailand
Middle Eastern oil-exporting countries4
Other
1. Reporting banks include all types of depository institutions as well as some brokers and
dealers.
2. Since December 1992, has excluded Bosnia, Croatia, and Slovenia.
3. Includes the Bank for International Settlements. Since December 1992, has included all
parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia.
4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab
Emirates (Trucial States).
5. Comprises Algeria, Gabon, Libya, and Nigeria.
6. Excludes the Bank for International Settlements, which is included in "Other Europe."
A55
A56
3.19
International Statistics • October 1996
BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS
Payable in U.S. Dollars
Reported by Banks in the United States1
Millions of dollars, end of period
1995
Type of claim
1993
1994
1996
1995
Dec.
Jan.
Feb.
527,317
23,148
305,118
97,240
35,520
61,720
101,811
520,790
24,383
295,217
98,139
37,565
60,574
103,051
Mar.'
1 Total
575,818
599,521
652,715r
652,715r
2 Banks' claims
3
Foreign public borrowers
4
Own foreign offices2
5
Unaffiliated foreign banks
6
Deposits
7
Other
8
All other foreigners
488,497
29,228
285,510
100,865
49,892
50,973
72,894
483,242
23,416
283,183
109,228
59,250
49,978
67,415
529,948r
22,522
307,509'
98,702
37,343
61,359
101,215
529,948'
22,522
307,509'
98,702
37,343
61,359
101,215
87,321
41,734
116,279
64,829
122,767
58,519
122,767
58,519
125,891
68,800
31,186
36,008
44,161
44,161
39,274
14,401
15,442
20,087
20,087
17,817
7,920
8,427
8,410
8,410
9,026
29,150
32,796
30,717
30,717
9 Claims of banks' domestic customers3
10
Deposits
11
Negotiable and readily transferable
instruments4
12
Outstanding collections and other
claims
Apr.'
May
June p
527,363
26,263
298,972
101,182
37,393
63,789
100,946
518,375
22,217
300,425
98,174
35,413
62,761
97,559
536,311
22,697
307,516
105,549
33,866
71,683
100,549
32,384
34,258
30,598
657,231
531,340
27,759
297,601
103,509
41,914
61,595
102,471
MEMO
13 Customer liability on acceptances
14 Dollar deposits in banks abroad, reported by
nonbanking business enterprises in the
United States5
32,777
33,113
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
27,830
BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS
Payable in U.S. Dollars
Reported by Banks in the United States1
Millions of dollars, end of period
1995
Maturity, by borrower and area"
1992
1993
June
1 Total
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
By borrower
Maturity of one year or less
Foreign public borrowers
All other foreigners
Maturity of more than one year
Foreign public borrowers
All other foreigners
By area
Maturity of one year or less
Europe
Canada
Latin America and Caribbean
Asia
Africa
All other3
Maturity of more than one year
Europe
Canada
Latin America and Caribbean
Asia
Africa
All other3
Sept.
Dec.
Mar.
r
216,986r
222,338
233,591
195,119
202,566
200,042
220,360
163,325
17,813
145,512
31,794
13,266
18,528
172,662
17,828
154,834
29,904
10,874
19,030
168,331
15,435
152,896
31,711
7,838
23,873
186,383'
15,822
170,561'
33,977
7,892
26,085
178,686'
14,192
164,494'
38,300
8,220
30,080
176,172
15,015
161,157
46,166
7,506
38,660
193,803
19,569
174,234
39,788
8,110
31,678
53,300
6,091
50,376
45,709
1,784
6,065
57,413
7,727
60,490
41,418
1,820
3,794
55,742
6,690
58,877
39,851
1,376
5,795
60,323
7,838
68,681'
43,965'
1,447
4,129
52,045
7,135
71,319
42,556'
1,261
4,370
53,897
6,089
72,393
40,133
1,271
2,389
58,001
5,473
84,297
40,332
1,302
4,398
5,367
3.287
15,312
5,038
2,380
410
5,310
2,581
14,025
5,606
1,935
447
4,203
3,505
15,717
5,318
1,583
1,385
4,240
3,685
17,557
6,058
1,389
1,048
4,594
3,571
20,224
7,373
1,389
1,149
4,885
2,731
27,811
8,023
1,430
1,286
6,827
2,563
19,532
8.461
1,474
931
1. Reporting banks include all types of depository institutions as well as some brokers and
dealers.
1996
1994
2. Maturity is time remaining until maturity.
3. Includes nonmonetary international and regional organizations.
Nonbank-Reported
3.21
CLAIMS ON FOREIGN COUNTRIES
Data
A57
Held by U.S. and Foreign Offices of U.S. Banks'
Billions of dollars, end of period
1992
1996
1995
1994
Area or country
1993
June
Sept.
Dec.
Mar.
June
Sept.
Dec.
Mar.
Junep
407.7
486. l r
486.4r
496.6r
541.8r
526.3r
527.0r
549.0r
571.6
605.0
131.3
.0
15.3
9.1
6.5
.0
2.3
4.8
59.7
6.3
18.8
161.8
7.4
12.0
12.6
7.7
4.7
2.7
5.9
84.3
6.9
17.6
r
173.3
8.6
18.6
24.7
14.0
3.4
3.0
5.4
64.9r
9.9
20.7
182.6'
9.6
20.7
24.0
11.6
3.4
2.6
5.5
78.4r
10.2
16.5
190.6'
7.0
19.1
24.7
11.8
3.6
2.7
5.1
85.7'
10.0
20.7
210.6'
10.2
19.8
31.2
10.6
3.5
3.1
5.7
89.9'
10.5
25.9
202.6'
9.4
19.3
29.9'
10.7
4.3
3.0
6.2
86.7'
11.1
22.1
196.8'
10.7
17.5'
27.2
12.6
4.1
2.7
6.3
80.0'
11.9
24.0
203.4'
13.5
19.2
26.9'
11.5
3.4
2.7
6.3
82.0'
9.4
28.5
202.3
10.7
17.9
31.5
13.2
3.0
3.3
5.2
84.8
9.7
22.9
222.0
8.0
17.7
31.4
14.9
4.7
2.7
6.3
101.4
11.1
23.9
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
24.0
1.2
.9
.7
3.0
1.2
.4
8.9
1.3
1.7
1.7
2.9
25.6
.4
1.0
.4
3.2
1.7
.8
9.9
2.1
2.6
1.1
2.3
42.6r
1.0
1.1
.8
4.6
1.6
1.1
12.6
2.1
2.8
1.2
13.7
42.6r
1.0
1.0r
.8
4.3r
1.6
1.0
14.0
1.8
1.0
1.2
15.0
45.2'
1.1
1.3
.9
4.5'
2.0
1.2
13.6
1.6
2.7
1.0
15.4
44.1'
.9
1.7
1.1
4.9'
2.4
1.0
14.1
1.4
2.5
1.5
12.6
43.3'
.7
1.1
.5
5.0'
1.8
1.2
13.3
1.4
2.6
1.4
14.3
50.1'
1.2
1.8
.7
5.1'
2.3
1.9
13.3
2.0'
3.0
1.3
17.4
50.2'
.9
2.6
.8
5.7'
3.2
1.3
11.6
1.9'
4.7
1.2
16.4
61.3
1.3
3.4
.7
5.6
2.1
1.6
17.5
2.0
3.8
1.7
21.7
55.5
1.2
3.3
.6
5.6
2.3
1.6
13.6
2.2
3.4
2.0
19.7
25 OPEC2
26
Ecuador
27
Venezuela
28
Indonesia
29
Middle East countries
30
African countries
15.8
.6
5.2
2.7
6.2
1.1
17.4
.5
5.1
3.3
7.4
1.2
21.6
.5
4.4
3.2
12.4
1.1
21.7'
.4
3.9
3.3
13.0
1.1
23.9'
.5
3.7
3.8
15.0
.9'
19.5
.5
3.5
4.0
10.7
.7
20.3'
.7
3.5
4.1
11.4
.6'
22.4
.7
3.0
4.4
13.6
.6
22.1
.7
2.7
4.8
13.3
.6
21.2
.8
2.9
4.7
12.3
.6
20.1
.9
2.3
4.9
11.5
.5
31 Non-OPEC developing countries
72.6
83.1
94.8r
93.2'
96.0'
98.5'
103.6
104.0
112.6'
116.8
125.9
6.6
10.8
4.4
1.8
16.0
.5
2.6
7.7
12.0
4.7
2.1
17.8
.4
3.1
9.8
12.0
5.1
2.4
18.6
.6
2.7
10.5
9.3
5.5
2.4
19.8
.6
2.8
11.2
8.4
6.1
2.6
18.4
.5
2.7
11.4
9.2
6.4
2.6
17.8
.6
2.4
12.3
10.0'
7.1
2.6
17.6
.8
2.6
10.9
13.6
6.4
2.9
16.3
.7
2.6
12.9
13.7
6.8
2.9
17.3
.8
2.8
12.7
17.8
6.4
2.9
16.1
.9
3.1
14.1
22.2
6.7
2.8
15.3
1.2
3.1
1 Total
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
344.7
32
33
34
35
36
37
38
Latin America
Argentina
Brazil
Chile
Colombia
Mexico
Peru
Other
39
40
41
42
43
44
45
46
47
Asia
China
People's Republic of China
Republic of China (Taiwan)
India
Israel
Korea (South)
Malaysia
Philippines
Thailand
Other Asia
.7
5.2
3.2
.4
6.6
3.1
3.6
2.2
3.1
2.0
7.3
3.2
.5
6.7
4.4
3.1
3.1
3.1
.8
7.1
3.7
.4
14.3
5.2
3.2
3.3
3.2
1.0
6.9
3.9
.4
14.4
3.9
2.9
3.5
3.4
1.1
9.2
4.2
.4
16.2
3.1
3.3
2.1
4.7
1.1
8.5
3.8
.6
16.9
3.9
3.0
3.3
4.9
1.4
9.0
4.0
.7
18.7
4.1
3.6
3.8
3.5
1.7
9.0
4.4
.5
18.0
4.3
3.3
3.9
3.7
1.8
9.4
4.4
.5
19.1
4.4
4.1
4.9
4.5
3.3
9.7
4.7
.5
19.4
4.7
3.9
5.2
4.3
2.9
9.8
4.2
.5
21.8
5.0
4.7
5.4
4.7
48
49
50
51
Africa
Egypt
Morocco
Zaire
Other Africa3
.2
.6
.0
1.0
.4
.7
.0
.8
,5r
.7
.0
1.0
.3
.7
.0
.9
.3
.6
.0
.8
.4
.6
.0
.7
.4
.9
.0
.6
.4
.9'
.0
.7
.4
.7
.0
.9
.2
.7
.0
.7
.2
.8
.0
.8
3.1
1.9
.6
.6
3.2
1.6
.6
.9
3.2
1.3
.5
1.4
3.0
1.1
.5
1.5
2.7
.8
.5
1.4
2.3
.7
.4
1.2
1.8
.4
.3
1.0
3.4
.6
.4
2.3
4.2
1.0
.3
2.8
6.2
1.4
.3
4.5
5.0
1.0
.3
3.7
56 Offshore banking centers
57
Bahamas
58
Bermuda
59
Cayman Islands and other British West Indies
60
Netherlands Antilles
61
Panama6
62
Lebanon
63
Hong Kong
64
Singapore
65
Other'
58.1
6.9
6.2
21.5
1.1
1.9
73.0
10.9
8.9
18.0
2.6
2.4
80.61
13.3
6.5
23.8
2.5
2.0
77.2'
13.8
6.0
21.5
1.7
1.9'
71.4'
10.3
8.4
19.9
1.3
1.3
84.4'
12.5
8.6
19.4
.9
1.1
82.1
8.4
8.3
23.7
2.4
1.3
86.0'
12.6
6.1
23.4
5.5
1.3'
99.0
11.0
6.3
32.1
9.9
1.4
100.7
13.4
5.3
28.5
10.7
1.6
103.2
17.3
3.6
23.6
13.0
1.7
13.9
6.5
.0
18.7
11.2
.1
21.8
10.6
.0
203
11.8
.0
19.9
10.1
.1
22.5'
19.2'
.0
23! 1
14.8
.0
23.7
13.3
.1
25.1
13.1
.1
25.7
15.4
.1
27^8
15.9
.1
66 Miscellaneous and unallocated8
39.7
43.4
69.1'
65.8'
66.7'
82.2
72.3
64.0'
57.3'
62.5
72.8
52 Eastern Europe
53
Russia4
54
Yugoslavia5
55
Other
1. The banking offices covered by these data include US. offices and foreign branches of
U.S. banks, including U.S. banks that are subsidiaries of foreign banks. Offices not covered
include U.S. agencies and branches of foreign banks. Beginning March 1994, the data include
large foreign subsidiaries of U.S. banks. The data also include other types of U.S. depository
institutions as well as some types of brokers and dealers. To eliminate duplication, the data
are adjusted to exclude the claims on foreign branches held by a U.S. office or another foreign
branch of the same banking institution.
These data are on a gross claims basis and do not necessarily reflect the ultimate country
risk or exposure of U.S. banks. More complete data on the country risk exposure of U.S. banks
are available in the quarterly Country Exposure Lending Survey published by the Federal
Financial Institutions Examination Council.
2. Organization of Petroleum Exporting Countries, shown individually; other members of
OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United
Arab Emirates); and Bahrain and Oman (not formally members of OPEC).
3. Excludes Liberia. Beginning March 1994 includes Namibia.
4. As of December 1992, excludes other republics of the former Soviet Union.
5. As of December 1992, excludes Croatia, Bosnia and Hercegovinia, and Slovenia.
6. Includes Canal Zone.
7. Foreign branch claims only.
8. Includes New Zealand, Liberia, and international and regional organizations.
A58
International Statistics • October 1996
3.22
LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in
the United States
Millions of dollars, end of period
1994
Type of liability, and area or country
1992
1993
1995
1996
1994
Dec.
Mar.
June
Sept.
Dec.
Mar.p
1 Total
45,511
50,597
54,309
54,309
50,187
49,973
47,673
46,448
49,608
2 Payable in dollars
3 Payable in foreign currencies
37,456
8,055
38,728
11,869
38,298
16,011
38,298
16,011
35,903
14,284
34,281
15,692
33,908
13,765
33,903
12,545
36,314
13,294
By type
4 Financial liabilities
Payable in dollars
6
Payable in foreign currencies
23,841
16,960
6,881
29,226
18,545
10,681
32,954
18,818
14,136
32,954
18,818
14,136
29,775
16,704
13,071
29,282
15,028
14,254
26,237
13,872
12,365
24,241
12,903
11,338
26,225
13,826
12,399
7 Commercial liabilities
8
Trade payables
y
Advance receipts and other liabilities
21,670
9,566
12,104
21,371
8,802
12,569
21,355
10,005
11,350
21,355
10,005
11,350
20,412
9,844
10,568
20,691
10,527
10,164
21,436
10,061
11,375
22,207
11,013
11,194
23,383
10,815
12,568
10
ii
Payable in dollars
Payable in foreign currencies
20,496
1,174
20,183
1,188
19,480
1,875
19,480
1,875
19,199
1,213
19,253
1,438
20,036
1,400
21,000
1,207
22,488
895
12
13
14
lb
16
17
18
By area or country
Financial liabilities
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
13,387
414
1,623
889
606
569
8,610
18,810
175
2,539
975
534
634
13,332
21,703
495
1,727
1,961
552
688
15,543
21,703
495
1,727
1,961
552
688
15,543
17,541
612
2,046
1,755
633
883
10,764
18,223
778
1,101
1,589
530
1,056
12,138
16,401
347
1,365
1,670
474
948
10,518
15,622
369
999
1,974
466
895
10,138
16,605
483
1,679
2,161
479
957
10,241
19
Canada
20
21
22
23
24
25
26
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
27
28
29
30
31
32
33
34
35
36
37
38
39
Japan
Middle Eastern oil-exporting countries'
Africa
Oil-exporting countries2
All other
3
Commercial liabilities
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
544
859
629
629
1,817
893
797
632
1,166
4,053
379
114
19
2,850
12
6
3,359
1,148
0
18
1,533
17
5
2,034
101
80
207
998
0
5
2,034
101
80
207
998
0
5
2,065
135
149
58
1,068
10
5
1,950
81
138
58
1,030
3
4
1,904
79
144
111
930
3
3
1,783
59
147
57
866
12
2
1,876
78
126
57
946
16
2
5,818
4,750
19
5,956
4,887
23
8,403
7,314
35
8,403
7,314
35
8,156
7,182
27
8,023
7,141
25
6,947
6,308
25
5,988
5,436
27
6,390
5,980
26
6
0
133
123
135
123
135
123
156
122
151
122
149
122
150
122
131
122
33
109
50
50
40
42
39
66
57
7,398
298
700
729
535
350
2,505
6,827
239
655
684
688
375
2,039
6,773
241
728
604
722
327
2,444
6,773
241
728
604
722
327
2,444
6,642
271
642
482
536
327
2,848
6,776
311
504
556
448
432
2,902
7,263
349
528
660
566
255
3,351
7,700
331
481
767
500
413
3,568
8,444
370
648
870
659
432
3,525
40
Canada
1,002
879
1,037
1,037
1,235
1,146
1,219
1,040
960
41
42
43
44
45
46
47
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
1,533
3
307
209
33
457
142
1,658
21
350
214
27
481
123
1,857
19
345
161
23
574
276
1,857
19
345
161
23
574
276
1,368
8
260
96
29
356
273
1,836
3
397
107
12
420
204
1,607
1
219
143
5
357
175
1,740
1
205
98
56
416
221
2,114
28
570
129
10
470
243
48
49
50
Asia
Japan
Middle Eastern oil-exporting countries'
10,594
3,612
1,889
10,980
4,314
1,534
10,741
4,555
1,576
10,741
4,555
1,576
10,151
4,110
1,787
9,978
3,531
1,790
10,275
3,475
1,647
10,421
3,315
1,912
10,496
3,726
1,747
51
52
Africa
Oil-exporting countries2
568
309
453
167
428
256
428
256
463
248
481
252
589
241
619
254
708
254
575
574
519
519
553
474
483
687
661
53
Other
3
1. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab
Emirates (Trucial States).
2. Comprises Algeria, Gabon, Libya, and Nigeria.
3. Includes nonmonetary international and regional organizations.
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
1994
Type of claim, and area or country
1992
1993
1996
1995
1994
Dec.
Mar.
June
Sept.
Dec.
Mar.p
1 Total
45,073
49,159
57,888
57,888
52,218
58,051
53,424
52,509
55,398
2 Payable in dollars
3 Payable in foreign currencies
42,281
2,792
45,161
3,998
53,805
4,083
53,805
4,083
48,425
3,793
54,138
3,913
49,696
3,728
48,711
3,798
50,999
4,399
By type
4 Financial claims
Deposits
5
Payable in dollars
6
7
Payable in foreign currencies
Other financial claims
8
9
Payable in dollars
Payable in foreign currencies
10
26,509
17,695
16,872
823
8,814
7,890
924
27,771
15,717
15,182
535
12,054
10,862
1,192
33,897
18,507
18.026
481
15,390
14,306
1,084
33,897
18,507
18.026
481
15,390
14,306
1,084
29,606
17,115
16,458
657
12,491
11,275
1,216
34,574
22,046
21,351
695
12,528
11,370
1,158
29,891
17,974
17,393
581
11,917
10,689
1,228
27,398
15,133
14,654
479
12,265
10,976
1,289
30,810
17,595
17,044
551
13,215
11,328
1,887
11 Commercial claims
12
Trade receivables
Advance payments and other claims
13
18,564
16,007
2,557
21,388
18,425
2,963
23,991
21,158
2,833
23,991
21,158
2,833
22,612
20,415
2,197
23,477
21,326
2,151
23,533
21,409
2,124
25,111
22,998
2,113
24,588
22,077
2,511
14
15
Payable in dollars
Payable in foreign currencies
17,519
1,045
19,117
2,271
21,473
2,518
21,473
2,518
20,692
1,920
21,417
2,060
21,614
1,919
23,081
2,030
22,627
1,961
16
17
18
19
20
21
22
By area or country
Financial claims
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
9,331
8
764
326
515
490
6,252
7,299
134
826
526
502
530
3,585
7,936
86
800
540
429
523
4,649
7,936
86
800
540
429
523
4,649
7,630
146
808
527
606
490
4,040
7,927
155
730
356
601
514
4,790
7,840
160
753
301
522
530
4,924
7,609
193
803
436
517
498
4,303
8,929
159
1,015
320
486
470
5,568
23
Canada
24
25
26
27
28
29
30
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
31
32
33
Asia
Japan
Middle Eastern oil-exporting countries'
34
35
Africa
Oil-exporting countries'
36
37
38
39
40
41
42
43
All other3
Commercial claims
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
1,833
2,032
3,581
3,581
3,848
3,705
3,526
2,851
5,269
13,893
778
40
686
11,747
445
29
16,224
1,336
125
654
12,699
872
161
19,536
2,424
27
520
15,228
723
35
19,536
2,424
27
520
15,228
723
35
16,109
940
37
528
13,531
583
27
21,159
2,355
85
502
17,013
635
27
15,345
1,552
35
851
11,816
487
50
14,500
1,965
81
830
10,393
554
32
13,865
1,588
77
1,943
9,164
461
40
864
668
3
1,657
892
3
1,871
953
141
1,871
953
141
1,504
621
4
1,235
471
3
2,160
1,404
4
1,579
871
3
1,890
1,171
13
83
9
99
1
373
0
373
0
141
9
138
9
188
6
276
5
277
5
505
460
600
600
374
410
832
583
580
8,451
189
1,537
933
552
362
2,094
9,105
184
1,947
1,018
423
432
2,377
9,540
213
1,881
1,027
311
557
2,556
9,540
213
1,881
1,027
311
557
2,556
8,947
199
1,790
977
324
556
2,388
9,200
218
1,669
1,023
341
612
2,469
8,862
224
1,706
997
338
438
2,479
9,824
231
1,830
1,070
452
520
2,656
9,757
247
1,803
1,407
442
575
2,607
44
Canada
1,286
1,781
1,988
1,988
2,010
2,003
1,971
1,951
2,044
45
46
47
48
49
50
51
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
3,043
28
255
357
40
924
345
3,274
11
182
460
71
990
293
4,117
9
234
612
83
1,243
348
4,117
9
234
612
83
1,243
348
4,140
17
208
695
55
1,106
295
4,370
21
210
777
83
1,109
319
4,359
26
245
745
66
1,026
325
4,364
30
272
898
79
993
285
4,147
30
273
808
106
868
308
52
53
54
Asia
Japan
Middle Eastern oil-exporting countries'
4,866
1,903
693
6,014
2,275
704
6,982
2,655
708
6,982
2,655
708
6,200
1,911
689
6,516
2,011
707
6,826
1,998
775
7,312
1,870
974
7,078
2,009
1,024
55
56
Africa
Oil-exporting countries2
554
78
493
72
454
67
454
67
468
71
478
60
544
74
654
87
667
107
57
Other3
364
721
910
910
847
910
971
1,006
895
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 • October 1996
FOREIGN TRANSACTIONS IN SECURITIES
Millions of dollars
Transaction, and area or country
1994
1996
1995
Jan.—
June
Dec.
1996
1995
Jan.
Feb.
Mar.
Apr.
May
June p
U.S. corporate securities
STOCKS
1 Foreign purchases
2 Foreign sales
350,593
348,716
462,950
451,710
305,207
294,700
46,479
44,372
43,574
41,948
52,260
51,083
55,281
54,450
53,047
48,774
57,671
56,084
43,374
42,361
3 Net purchases, or sales ( - )
1,877
11,240
10,507
2,107
1,626
1,177
831
4,273
1,587
1,013
4 Foreign countries
1,867
11,445
10,530
2,109
1,623
1,306
877
4,129
1,582
1,013
6,714
-201
2,110
2,251
-30
840
-1,160
-2,111
-1,142
-1,234
1,162
29
771
4,912
-1,099
-1,837
3,507
-2,283
8,066
-1,517
5,814
-337
2,503
-2,725
2
68
3,121
-317
650
1,187
1,320
-283
781
3,984
-1,206
3,924
1,535
-67
-7
1,028
-382
-11
373
191
1,277
-175
219
148
883
1,231
-1
7
1,954
164
239
660
639
-165
645
-487
-507
-40
94
6
52
-1,072
-161
-37
20
-441
-223
518
2,694
-285
-336
-131
-62
-151
1,377
661
86
208
566
-241
-90
-318
-33
-291
-749
-44
276
1,429
-336
174
237
618
345
52
808
-6
1,852
1,446
31
-37
-259
-306
-30
-67
-140
417
-425
1,245
-261
1,380
73
6
-104
-308
-339
218
129
78
-416
81
42
-114
1,359
802
-4
-43
10
-205
-23
-2
3
-129
-46
144
5
0
289,586
229,665
293,533
206,951
192,385
134,909
22,020
21,117
26,598
17,726
32,759
23,608
39,808
25,113
24,116r
18,693
34,753
24,026
34,351
25,743
21 Net purchases, or sales ( - )
59,921
86,582
57,476
903
8,872
9,151
14,695
5,423r
10,727
8,608
22 Foreign countries
59,036
87,036
57,374
875
8,830
9,230
14,607
5,392r
10,722
8,593
23
24
25
26
21
28
29
30
31
32
33
34
35
37,065
242
657
3,322
1,055
31,642
2,958
5,442
771
12,153
5,486
-7
654
70,318
1,143
5,938
1,463
494
57,591
2,569
6,141
1,869
5,659
2,250
234
246
36,238
3,047
3,913
834
199
24,292
2,113
10,671
-55
8,777
3,503
187
-557
1,631
137
236
101
-381
1,247
181
-848
187
-293
-904
86
-69
5,631
839
-26
163
56
3,854
104
2,096
-194
1,272
338
-16
-63
8,968
314
1,859
365
-86
6,280
235
-713
-334
1,161
336
-40
-47
6,476
670
467
-66
-38
4,745
149
7,140
13
831
245
37
-39
3,947
785
721
-52
-144
2,264
359
33
122
l,094 r
135'
49
-212
7,144
113
891
371
178
4,247
952
1,253
120
1,279
537
107
-133
4,072
326
1
53
233
2,902
314
862
218
3,140
1,912
50
-63
885
-454
102
28
42
-79
88
5
15
5
b
1
8
9
10
11
12
13
14
15
16
17
Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East1
Other Asia
Japan
Africa
Other countries
18 Nonmonetary international and
regional organizations
BONDS2
19 Foreign purchases
20 Foreign sales
Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East1
Other Asia
Japan
Africa
Other countries
36 Nonmonetary international and
regional organizations
31
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
43 Net purchases, or sales (—), of stocks and bonds
....
-48,071
386,106
434,177
-9,224
848,368
857,592
-50,291
345,540
395,831
-48,545
889,471
938,016
-39,720
224,817
264,537
-14,648
519,705
534,353
-6,602
32,369
38,971
-4,050
80,328
84,378
-6,434
33,481
39,915
-4,584
84,638
89,222
-5,704
37,464
43,168
-1,404
95,201
96,605
-10,345
36,115
46,460
-6,038
93,345
99,383
-6,706
37,764
44,470
-153
81,256
81,409
-3,055
43,515
46,570
-527
82,414
82,941
-7,476
36,478
43,954
-1,942
82,851
84,793
-57,295
-98,836
-54,368
-10,652
-11,018
-7,108
-16,383
-6,859
-3,582
-9,418
44 Foreign countries
-57,815
-98,031
-54,059
-10,711
-11,049
-6,983
-16,387
-6,802
-3,473
-9,365
45
46
47
48
49
50
51
-3,516
-7,475
-18,334
-24,275
-17,427
-467
-3,748
-48,125
-7,952
-7,634
-34,056
-25,072
-327
63
-19,947
-4,680
-5,962
-20,767
-11,416
-861
-1,842
-5,926
-14
-802
-4,391
-3,687
-44
466
-4,068
-2,668
-3
-4,685
-3,427
-96
471
-2,552
-58
-1,031
-2,557
-1,592
-161
-624
-4,508
-1,865
-2,582
-5,756
-3,224
-436
-1,240
-1,949
614
-1,190
-4,094
-950
-14
-169
1,475
-231
-2,136
-2,260
-921
-32
-289
-8,345
-472
980
-1,415
-1,302
-122
9
520
-805
-309
59
31
-125
4
-57
-109
-53
Europe
Canada
Latin America and Caribbean
Japan
Africa
Other countries
52 Nonmonetary international and
regional organizations
1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar,
Saudi Arabia, and United Arab Emirates (Trucial States).
2. Includes state and local government securities and securities of U.S. government
agencies and corporations. Also includes issues of new debt securities sold abroad by U.S.
corporations organized to finance direct investments abroad.
Securities Holdings and Transactions!Interest
3.25
MARKETABLE U.S. TREASURY BONDS AND NOTES
and Exchange Rates
A61
Foreign Transactions1
Millions of dollars; net purchases, or sales (—) during period
1994
Area or country
78,801
1 Total estimated
2 Foreign countries
3
4
5
6
7
8
9
10
11
Europe
Belgium and Luxembourg
Germany
Netherlands
Sweden
Switzerland
United Kingdom
Other Europe and former U.S.S.R
Canada
1?
13
14
15
16
17
18
19
Latin America and Caribbean
Venezuela
Other Latin America and Caribbean
Netherlands Antilles
Japan
Africa
Other
20 Nonmonetary international and regional organizations
International
21
22
Latin American regional
1996
1996
1995
Jan.June
Dec.
Jan.
Feb.
75,261
-9,454
14,018
15,451
1995
133,991
May
7,025
15,751r
14,368
8,648
6,414
17,126'
14,130
9,459
78,637
133,552
77,034
-9,016
13,713
16,192
38,542
1,098
5,709
1,254
794
481
23,365
5,841
3,491
50,000
591
6,136
1,891
358
-472
34,778
6,718
252
42,058
579
8,875
-2,263
1,729
1,395
19,715
12,028
4,723
-1,120
171
452
381
-285
-664
-4,377
3,202
208
7,291
149
1,385
807
-45
76
1,177
3,742
1,867
8,462
-120
1,829
354
803
84
1,644
3,868
1,863
4,083
81
958
-1,597
372
65
2,270
1,934
35
8,712
399
1,833
-2,137
286
1,329
6,070
932
1,766
7,776
-151
1,674
-757
342
683
3,364
2,621
-669
5,734
221
1,196
1,067
-29
-842
5,190
-1,069
-139
-10,383
-319
-20,493
10,429
47,317
29,793
240
-570
48,609
-2
25,152
23,459
32,319
16,863
1,464
908
-8,214
-301
1,566
-9,479
38,076
15,957
950
-559
3,762
61
4,710
-1,009
-11,843
-5,695
252
-275
-2,648
-142
8,922
-11,428
6,920
2,619
515
-232
-2,931
-93
-1,896
-942
8,616
3,069
-100
282
-4,985
-44
-2,696
-2,245
6,941
2,443
311
29
l,993 r
4
3,865r
-1,876
4,478
2,382
250
-73
-1,167
-39
-2,195
1,067
8,202
4,565
-48
36
1,524
13
-4,434
5,945
2,919
879
22
-601
164
526
-154
439
9
261
-1,773
-621
-1,279
-438
-347
-115
305
210
-45
-741
-308
-254
611
647
12
-1,375
-414
-1,008
238
-9
9
-811
-747
7
78,637
41,822
36,815
133,552
39,625
93,927
77,034
34,131
42,903
-9,016
2,651
-11,667
13,713
12,615
1,098
16,192
8,681
7,511
6,414
4,748
1,666
17,126r
8,253
8,873r
14,130
6,482
7,648
9,459
-6,648
16,107
-38
0
3,075
2
4,409
1
-1,085
0
-658
0
122
1
1,127
0
863
0
2,162
1
793
-1
MEMO
23
?4
25
Foreign countries
Official institutions
Other foreign
Oil-exporting countries
7.6 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.
3.26
Junep
Apr.
Mar.
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab
Emirates (Trucial States).
3. Comprises Algeria, Gabon, Libya, and Nigeria.
DISCOUNT RATES OF FOREIGN CENTRAL BANKS 1
Percent per year, averages of daily figures
Rate on Aug. 31, 1996
Rate on Aug. 31, 1996
Country
Country
Month
effective
Apr. 1996
Apr. 1995
Aug. 1996
Apr. 1996
July 1996
2.5
2.5
4.25
3.25
3.55
Austria. .,
Belgium. .
Canada. .
Denmark
France2 .
1. Rates shown are mainly those at which the central bank either discounts or makes
advances against eligible commercial paper or government securities for commercial banks or
brokers. For countries with more than one rate applicable to such discounts or advances, the
rate shown is the one at which it is understood that the central bank transacts the largest
proportion of its credit operations.
3.27
2.5
8.25
.5
2.5
1.5
Germany . . .
Italy
Japan
Netherlands .
Switzerland .
2. Since February 1981, the rate has been that at which the Bank of France discounts
Treasury bills for seven to ten days,
FOREIGN SHORT-TERM INTEREST RATES1
Percent per year, averages of daily figures
1996
Type or country
1
2
3
4
5
6
7
8
9
10
Eurodollars
United Kingdom
Canada
Germany
Switzerland
Netherlands
France
Italy
Belgium
Japan
1993
3.18
5.88
5.14
7.17
4.79
6.73
8.30
10.09
8.10
2.96
1994
4.63
5.45
5.57
5.25
4.03
5.09
5.72
8.45
5.65
2.24
1995
5.93
6.63
7.14
4.43
2.94
4.30
6.43
10.43
4.73
1.20
1. Rates are for three-month interbank loans, with the following exceptions: Canada,
finance company paper; Belgium, three-month Treasury bills; and Japan, CD rate.
Feb.
Mar.
Apr.
May
June
July
5.14
6.13
5.22
3.26
1.61
3.00
4.29
9.90
3.23
.61
5.28
6.02
5.23
3.25
1.68
3.09
4.14
9.82
3.25
.60
5.36
5.97
5.03
3.22
1.68
2.83
3.87
9.60
3.23
.61
5.36
6.03
4.82
3.19
1.99
2.61
3.78
8.88
3.19
.62
5.46
5.80
4.87
3.29
2.53
2.81
3.85
8.73
3.23
.57
5.49
5.69
4.76
3.29
2.52
2.99
3.73
8.72
3.29
.67
Aug.
5.41
5.72
4.30
3.20
2.21
3.05
3.84
8.77
3.21
.62
A62
3.28
International Statistics • October 1996
FOREIGN EXCHANGE RATES1
Currency units per dollar except as noted
1996
Country/currency unit
2
1
2
3
4
5
6
7
8
9
10
Australia/dollar
Austria/schilling
Belgium/franc
Canada/dollar
China, P.R./yuan
Denmark/krone
Finland/markka
France/franc
Germany/deutsche mark
Greece/drachma
11
12
13
14
15
16
17
18
19
20
Hong Kong/dollar
India/rupee
Ireland/pound2
Italy/lira
Japan/yen
Malaysia/ringgit
Netherlands/guilder
New Zealand/dollar2
Norway/krone
Portugal/escudo
21
22
23
24
25
26
27
28
29
30
Singapore/dollar
South Africa/rand
South Korea/won
Spain/peseta
Sri Lanka/rupee
Sweden/krona
Switzerland/franc
Taiwan/dollar
Thailand/baht
United Kingdom/pound2
1993
1994
1995
Mar.
Apr.
May
June
July
Aug.
67.993
11.639
34.581
1.2902
5.7795
6.4863
5.7251
5.6669
1.6545
229.64
73.161
11.409
33.426
1.3664
8.6404
6.3561
5.2340
5.5459
1.6216
242.50
74.073
10.076
29.472
1.3725
8.3700
5.5999
4.3763
4.9864
1.4321
231.68
77.136
10.391
30.371
1.3656
8.3495
5.7074
4.6066
5.0583
1.4776
241.54
78.566
10.580
30.902
1.3592
8.3583
5.8050
4.7288
5.1049
1.5048
242.00
79.700
10.782
31.502
1.3693
8.3479
5.9160
4.7541
5.1855
1.5324
243.27
79.122
10.755
31.433
1.3658
8.3424
5.8941
4.6710
5.1787
1.5282
241.75
78.974
10.576
30.947
1.3697
8.3409
5.8014
4.5812
5.0881
1.5025
237.65
78.305
10.435
30.553
1.3722
8.3379
5.7327
4.4793
5.0636
1.4826
237.00
7.7357
31.291
146.47
1,573.41
111.08
2.5738
1.8585
54.127
7.1009
161.08
7.7290
31.394
149.69
1,611.49
102.18
2.6237
1.8190
59.358
7.0553
165.93
7.7357
32.418
160.35
1,629.45
93.96
2.5073
1.6044
65.625
6.3355
149.88
7.7325
34.485
157.21
1,562.43
105.94
2.5417
1.6540
68.079
6.4277
152.93
7.7345
34.320
156.51
1,565.60
107.20
2.5113
1.6805
68.242
6.4901
154.51
7.7363
35.025
156.29
1,556.71
106.34
2.4936
1.7135
68.571
6.5748
157.54
7.7404
35.100
158.31
1,542.30
108.96
2.4967
1.7120
67.650
6.5376
157.40
7.7379
35.667
160.31
1,526.82
109.19
2.4915
1.6862
69.001
6.4465
154.56
7.7345
35.800
161.08
1,516.62
107.87
2.4933
1.6633
68.860
6.4153
152.27
1.6158
3.2729
805.75
127.48
48.211
7.7956
1.4781
26.416
25.333
150.16
1.5275
3.5526
806.93
133.88
49.170
7.7161
1.3667
26.465
25.161
153.19
1.4171
3.6284
772.69
124.64
51.047
7.1406
1.1812
26.495
24.921
157.85
1.4095
3.9293
781.31
124.39
53.748
6.7318
1.1959
27.400
25.251
152.71
1.4082
4.2130
780.42
125.49
54.163
6.7141
1.2180
27.188
25.290
151.60
1.4074
4.3679
780.86
127.97
54.868
6.7984
1.2539
27.352
25.289
151.52
1.4090
4.3519
798.45
128.87
55.529
6.6807
1.2579
27.674
25.354
154.16
1.4160
4.3963
813.03
126.96
55.293
6.6394
1.2320
27.573
25.355
155.30
1.4124
4.5289
817.52
125.72
55.603
6.6211
1.2029
27.496
25.289
154.99
MEMO
31 United States/dollar3
93.18
91.32
84.25
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.
86.57
87.46
88.28
88.16
87.25
86.54
3. Index of weighted-average exchange value of U.S. dollar against the currencies of ten
industrial countries. The weight for each of the ten countries is the 1972-76 average world
trade of that country divided by the average world trade of all ten countries combined. Series
revised as of August 1978 (see Federal Reserve Bulletin, vol. 64 (August 1978), p. 700).
A63
Guide to Statistical Releases and Special Tables
STATISTICAL RELEASES—List Published Semiannually, with Latest Bulletin Reference
Issue
Anticipated schedule of release dates for periodic releases
June 1996
Page
All
SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference
Title and Date
Assets and liabilities
Issue
of commercial
banks
March 31, 1993
June 30, 1993
September 30, 1993
December 31, 1993
Terms of lending at commercial
of U.S. branches
and agencies
of foreign
Pro forma balance sheet and income statements for priced service
of life insurance
lending reported
November
February
May
August
1995
1996
1996
1996
A68
A68
A68
A64
November
February
May
September
1995
1996
1996
1996
All
All
All
A64
October
January
July
October
1995
1996
1996
1996
All
A68
A64
A64
December
May
August
March
1991
1992
1992
1993
A79
A81
A83
A71
September 1995
September 1996
A68
A68
companies
June 30, 1991
September 30, 1991
December 31, 1991
September 30, 1992
1994
1995
A70
A70
A70
A68
operations
June 30, 1995
September 30, 1995
March 31, 1996
June 30, 1996
Residential
1993
1993
1994
1994
banks
June 30, 1995
September 30, 1995
December 31, 1995
March 31, 1996
Assets and liabilities
August
November
February
May
banks
August 1995
November 1995
February 1996
May 1996
Assets and liabilities
Page
under the Home Mortgage
Disclosure
Act
A64
4.31
Special Tables • October 1996
PRO FORMA FINANCIAL STATEMENTS FOR FEDERAL RESERVE PRICED SERVICES
A.
Pro forma balance sheet
Millions of dollars
Item
Short-term assets (Note 1)
Imputed reserve requirement on clearing balances
Investment in marketable securities
Receivables
Materials and supplies
Prepaid expenses
Items in process of collection
June 30, 1996
June 30, 1995
603.0
5,427.0
61.9
11.0
24.6
2,154.8
404.3
3,638.7
63.0
8.1
25.5
2,125.1
6,264.7
8,282.2
Total short-term assets
Long-term assets (Note 2)
Furniture and equipment
Leases and leasehold improvements
Prepaid pension costs
377.1
149.5
21.2
266.3
349.0
162.8
23.0
221.3
814.0
756.2
9,096.3
7,020.9
Total long-term assets
Total assets
Short-term liabilities
Clearing balances and balances arising from early credit
of uncollected items
Deferred-availability items
Short-term debt
8,282.2
Total short-term liabilities
Long-term liabilities
Obligations under capital leases
Long-term debt
Postretirement/postemployment benefits obligation
4,096.2
2,071.8
96.7
6,093.5
2,091.2
97.5
2.3
181.0
183.7
3.8
159.5
170.8
367.0
334.1
8,649.2
6,598.8
Total long-term liabilities
Total liabilities
447.1
422.1
9,096.3
7,020.9
Equity
Total liabilities and equity (Note 3)
NOTE. Components may not sum to totals because of rounding. The priced services
financial statements consist of these tables and the accompanying notes.
( 1 ) SHORT-TERM ASSETS
The imputed reserve requirement on clearing balances held at Reserve Banks by depository
institutions reflects a treatment comparable to that of compensating balances held at correspondent banks by respondent institutions. The reserve requirement imposed on respondent
balances must be held as vault cash or as nonearning balances maintained at a Reserve Bank;
thus, a portion of priced services clearing balances held with the Federal Reserve is shown as
required reserves on the asset side of the balance sheet. The remainder of clearing balances is
assumed to be invested in three-month Treasury bills, shown as investment in marketable
securities.
Receivables are (1) amounts due the Reserve Banks for priced services and (2) the share of
suspense-account and difference-account balances related to priced services.
Materials and supplies are the inventory value of short-term assets.
Prepaid expenses include salary advances and travel advances for priced-service personnel.
Items in process of collection is gross Federal Reserve cash items in process of collection
(CIPC) stated on a basis comparable to that of a commercial bank. It reflects adjustments for
intra-System items that would otherwise be double-counted on a consolidated Federal
Reserve balance sheet; adjustments for items associated with non-priced items, such as those
collected for government agencies; and adjustments for items associated with providing fixed
availability or credit before items are received and processed. Among the costs to be
recovered under the Monetary Control Act is the cost of float, or net CIPC during the period
(the difference between gross CIPC and deferred-availability items which is the portion of
gross CIPC that involves a financing cost), valued at the federal funds rate.
6,264.7
( 2 ) LONG-TERM ASSETS
Consists of long-term assets used solely in priced services, the priced-services portion of
long-term assets shared with nonpriced services, and an estimate of the assets of the Board of
Governors used in the development of priced services. Elfective Jan. 1, 1987, the Reserve
Banks implemented the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 87, Employers' Accounting for Pensions (SFAS 87). Accordingly,
the Federal Reserve Banks recognized credits to expenses of $12.0 million in the second
quarter of 1996, S12.2 million in the first quarter of 1996, S8.7 million in the second quarter
of 1995 and $7.2 million in the first quarter of 1995, and corresponding increases in this asset
account.
( 3 ) LIABILITIES AND EQUITY
Under the matched-book capital structure for assets that are not "self-financing," short-term
assets are financed with short-term debt. Long-term assets are financed with long-term debt
and equity in a proportion equal to the ratio of long-term debt to equity for the fifty largest
bank holding companies, which are used in the model for the private-sector adjustment factor
(PSAF). The PSAF consists of the taxes that would have been paid and the return on capital
that would have been provided had priced services been furnished by a private-sector firm.
Other short-term liabilities include clearing balances maintained at Reserve Banks and
deposit balances arising from float. Other long-term liabilities consist of obligations on capital
leases.
Nonbank-Reported
4.31
Data
PRO FORMA FINANCIAL STATEMENTS FOR FEDERAL RESERVE PRICED SERVICES
B.
Pro forma income statement
Millions of dollars
Item
Quarter ending June 30, 1996
Revenue from services provided to depository institutions (Note 4)
Operating expenses (Note 5)
Income from operations
Imputed costs (Note 6)
Interest on float
Interest on debt
Sales taxes
FDIC insurance
1.1
4.3
2.6
0.0
Quarter ending June 30, 1995
196.0
162.3
183.1
161.8
33.7
21.3
8.0
3.1
4.1
2.9
1.8
25.7
Income from operations after imputed costs
Other income and expenses (Note 7)
Investment income on clearing balances
Earnings credits
75.7
68.6
7.1
11.9
9.4
61.6
55.8
5.8
Income before income taxes
Imputed income taxes (Note 8)
32.8
9.8
15.1
4.7
Income before cumulative effect of a change in accounting principle
Cumulative effect on previous years from retroactive application of accrual
method of accounting for postemployment benefits (net of $6.5 million tax)
(Note 9)
23.0
10.4
Net income
23.0
10.4
10.7
9.6
MEMO
Targeted return on equity (Note 10)
Six months ending June 30, 1996
Revenue from services provided to depository institutions (Note 4)
Operating expenses (Note 5)
Income from operations
Imputed costs (Note 6)
Interest on float
Interest on debt
Sales taxes
FDIC insurance
11.8
8.6
5.4
0.0
Six months ending June 30, 1995
390.1
323.4
365.1
330.7
66.7
34.3
25.8
8.8
8.1
5.1
5.4
147.2
134.0
13.2
27.4
6.9
40.9
Income from operations after imputed costs
Other income and expenses (Note 7)
Investment income on clearing balances
Earnings credits
125.5
110.1
15.3
Income before income taxes
Imputed income taxes (Note 8)
54.1
16.2
22.3
6.9
Income before cumulative effect of a change in accounting principle
Cumulative effect on previous years from retroactive application of accrual
method of accounting for postemployment benefits (net of $6.5 million tax)
(Note 9)
37.9
15.4
Net income
37.9
.8
21.0
17.7
-14.6
MEMO
Targeted return on equity (Note 10)
NOTE. Components may not sum to totals because of rounding. The priced services
financial statements consist of these tables and the accompanying notes.
( 4 ) REVENUE
Revenue represents charges to depository institutions for priced services and is realized from
each institution through one of two methods: direct charges to an institution's account or
charges against its accumulated earnings credits.
(5) OPERATING EXPENSES
Operating expenses consist of the direct, indirect, and other general administrative expenses
of the Reserve Banks for priced services plus the expenses for staif members of the Board of
Governors working directly on the development of priced services. The expenses for Board
staff members were $.7 million in the first and second quarters of 1996 and 1995. The credit
to expenses under SFAS 87 (see note 2) is reflected in operating expenses.
(6) IMPUTED COSTS
Imputed costs consist of interest on float, interest on debt, sales taxes, and the FDIC
assessment. Interest on float is derived from the value of float to be recovered, either
explicitly or through per-item fees, during the period. Float costs include costs for checks,
book-entry securities, noncash collection, ACH, and funds transfers.
Interest is imputed on the debt assumed necessary to finance priced-service assets. The
sales taxes and FDIC assessment that the Federal Reserve would have paid had it been a
private-sector firm are among the components of the PSAF (see note 3).
The following list shows the daily average recovery of float by the Reserve Banks for the
second quarter of 1996 and 1995 in millions of dollars:
Total float
Unrecovered float
Float subject to recovery
Sources of float recovery
Income on clearing balances
As-of adjustments
Direct charges
Per-item fees
1996
1995
413.4
15.4
398.0
457.6
41.2
416.4
40.3
318.4
107.7
(68.5)
42.2
210.5
77.9
85.8
Unrecovered float includes float generated by services to government agencies and by other
central bank services. Float recovered through income on clearing balances is the result of the
increase in investable clearing balances; the increase is produced by a deduction for float for
cash items in process of collection, which reduces imputed reserve requirements. The income
on clearing balances reduces the float to be recovered through other means. As-of adjustments
and direct charges are mid-week closing float and interterritory check float, which may be
recovered from depositing institutions through adjustments to the institution's reserve or
clearing balance or by valuing the float at the federal funds rate and billing the institution
directly. Float recovered through per-item fees is valued at the federal funds rate and has been
added to the cost base subject to recovery in the second quarters of 1996 and 1995.
(7) OTHER INCOME AND EXPENSES
Consists of investment income on clearing balances and the cost of earnings credits.
Investment income on clearing balances represents the average coupon-equivalent yield on
three-month Treasury bills applied to the total clearing balance maintained, adjusted for the
effect of reserve requirements on clearing balances. Expenses for earnings credits granted to
depository institutions on their clearing balances are derived by applying the average federal
funds rate to the required portion of the clearing balances, adjusted for the net effect of
reserve requirements on clearing balances.
(8) INCOME TAXES
Imputed income taxes are calculated at the effective tax rate derived from the PSAF model
(see note 3).
(9) POSTEMPLOYMENT BENEFITS
Effective Jan. 1, 1995, the Reserve Banks implemented SFAS 112, Employers' Accounting
for Postemployment Benefits. Accordingly in the first quarter of 1995 the Reserve Banks
recognized a one-time cumulative charge of $21.1 million to reflect the retroactive application
of this change in accounting principle.
( 1 0 ) RETURN ON EQUITY
Represents the after-tax rate of return on equity that the Federal Reserve would have earned
had it been a private business firm, as derived from the PSAF model (see note 3). This amount
is adjusted to reflect the recovery of automation consolidation costs of $1.6 million for the
second quarter of 1996, $1.2 million for the first quarter of 1996, $1.7 million for the second
quarter of 1995, and $.3 million for the first quarter of 1995. The Reserve Banks plan to
recover these amounts, along with a finance charge, by the end of the year 2001.
A65
A66
Index to Statistical Tables
References are to pages A3-A65 although the prefix "A" is omitted in this index
ACCEPTANCES, bankers (See Bankers acceptances)
Agricultural loans, commercial banks, 19, 20
Assets and liabilities (See also Foreigners)
Banks, by classes, 17-21
Domestic finance companies, 33
Federal Reserve Banks, 10
Financial institutions, 25
Foreign banks, U.S. branches and agencies, 21
Automobiles
Consumer installment credit, 36
Production, 44, 45
BANKERS acceptances, 10, 11, 19-22, 23
Bankers balances, 17-21. (See also Foreigners)
Bonds (See also U.S. government securities)
New issues, 31
Rates, 23
Branch banks, 21
Business activity, nonfinancial, 42
Business loans (See Commercial and industrial
loans)
CAPACITY utilization, 43
Capital accounts
Banks, by classes, 17
Federal Reserve Banks, 10
Central banks, discount rates, 61
Certificates of deposit, 23
Commercial and industrial loans
Commercial banks, 19, 20
Weekly reporting banks, 19-21
Commercial banks
Assets and liabilities, 17-21
Commercial and industrial loans, 17-21
Consumer loans held, by type and terms, 36
Deposit interest rates of insured, 15
Loans sold outright, 20
Real estate mortgages held, by holder and
property, 35
Time and savings deposits, 4
Commercial paper, 22, 23, 33
Condition statements (See Assets and liabilities)
Construction, 42, 46
Consumer installment credit, 36
Consumer prices, 42
Consumption expenditures, 49, 50
Corporations
Profits and their distribution, 32
Security issues, 31, 61
Cost of living (See Consumer prices)
Credit unions, 36
Currency in circulation, 5, 13
Customer credit, stock market, 24
DEBITS to deposit accounts, 16
Debt (See specific types of debt or securities)
Demand deposits
Banks, by classes, 17-21
Ownership by individuals, partnerships, and
corporations, 20, 21
Turnover, 16
Depository institutions
Reserve requirements, 8
Reserves and related items, 4, 5, 6, 12
Deposits (See also specific types)
Banks, by classes, 4, 17-21
Federal Reserve Banks, 5, 10
Interest rates, 15
Turnover, 16
Discount rates at Reserve Banks and at foreign central banks and
foreign countries (See Interest rates)
Discounts and advances by Reserve Banks (See Loans)
Dividends, corporate, 32
EMPLOYMENT, 42
Eurodollars, 23
FARM mortgage loans, 35
Federal agency obligations, 5, 9, 10, 11, 28, 29
Federal credit agencies, 30
Federal finance
Debt subject to statutory limitation, and types and ownership
of gross debt, 27
Receipts and outlays, 25, 26
Treasury financing of surplus, or deficit, 25
Treasury operating balance, 25
Federal Financing Bank, 30
Federal funds, 6, 19, 20, 21, 23, 25
Federal Home Loan Banks, 30
Federal Home Loan Mortgage Corporation, 30, 34, 35
Federal Housing Administration, 30, 34, 35
Federal Land Banks, 35
Federal National Mortgage Association, 30, 34, 35
Federal Reserve Banks
Condition statement, 10
Discount rates (See Interest rates)
U.S. government securities held, 5, 10, 11, 27
Federal Reserve credit, 5, 6, 10, 11
Federal Reserve notes, 10
Federal Reserve System
Balance sheet for priced services, 64, 65
Condition statement for priced services, 64, 65
Federally sponsored credit agencies, 30
Finance companies
Assets and liabilities, 33
Business credit, 33
Loans, 36
Paper, 22, 23
Financial institutions, loans to, 19, 20, 21
Float, 5
Flow of funds, 37-41
Foreign banks, assets and liabilities of U.S. branches and agencies,
20,21
Foreign currency operations, 10
Foreign deposits in U.S. banks, 5, 20
Foreign exchange rates, 62
Foreign trade, 51
Foreigners
Claims on, 52, 55, 56, 57, 59
Liabilities to, 20, 51, 52, 53, 58, 60, 61
GOLD
Certificate account, 10
Stock, 5 , 5 1
Government National Mortgage Association, 30, 34, 35
Gross domestic product, 48
HOUSING, new and existing units, 46
A67
INCOME and expenses, Federal Reserve System, 64, 65
Income, personal and national, 42, 48, 49
Industrial production, 42, 44
Installment loans, 36
Insurance companies, 27, 35
Interest rates
Bonds, 23
Consumer installment credit, 36
Deposits, 15
Federal Reserve Banks, 7
Foreign central banks and foreign countries, 61
Money and capital markets, 23
Mortgages, 34
Prime rate, 22
International capital transactions of United States, 50-61
International organizations, 52, 53, 55, 58, 59
Inventories, 48
Investment companies, issues and assets, 32
Investments (See also specific types)
Banks, by classes, 17-21
Commercial banks, 4, 17-21
Federal Reserve Banks, 10, 11
Financial institutions, 35
LABOR force, 42
Life insurance companies (See Insurance companies)
Loans (See also specific types)
Banks, by classes, 17—21
Commercial banks, 17-21
Federal Reserve Banks, 5, 6, 7, 10, 11
Federal Reserve System, 64, 65
Financial institutions, 35
Insured or guaranteed by United States, 34, 35
MANUFACTURING
Capacity utilization, 43
Production, 43, 45
Margin requirements, 24
Member banks (See also Depository institutions)
Federal funds and repurchase agreements, 6
Reserve requirements, 8
Mining production, 45
Mobile homes shipped, 46
Monetary and credit aggregates, 4, 12
Money and capital market rates, 23
Money stock measures and components, 4, 13
Mortgages (See Real estate loans)
Mutual funds, 32
Mutual savings banks (See Thrift institutions)
NATIONAL defense outlays, 26
National income, 48
OPEN market transactions, 9
PERSONAL income, 49
Prices
Consumer and producer, 42, 47
Stock market, 24
Prime rate, 22
Producer prices, 42, 47
Production, 42, 44
Profits, corporate, 32
REAL estate loans
Banks, by classes, 19, 20, 35
Real estate loans—Continued
Terms, yields, and activity, 34
Type of holder and property mortgaged, 35
Repurchase agreements, 6
Reserve requirements, 8
Reserves
Commercial banks, 17
Depository institutions, 4, 5, 6, 12
Federal Reserve Banks, 10
U.S. reserve assets, 51
Residential mortgage loans, 34
Retail credit and retail sales, 36, 42
SAVING
Flow of funds, 37-41
National income accounts, 48
Savings institutions, 35, 36, 37
Savings deposits (See Time and savings deposits)
Securities (See also specific types)
Federal and federally sponsored credit agencies, 30
Foreign transactions, 60
New issues, 31
Prices, 24
Special drawing rights, 5, 10, 50, 51
State and local governments
Deposits, 19, 20
Holdings of U.S. government securities, 27
New security issues, 31
Ownership of securities issued by, 19, 21
Rates on securities, 23
Stock market, selected statistics, 24
Stocks (See also Securities)
New issues, 31
Prices, 24
Student Loan Marketing Association, 30
TAX receipts,
federal,
26 also Credit unions and Savings
Thrift
institutions,
4. (See
institutions)
Time and savings deposits, 4, 13, 15, 17-21
Trade, foreign, 51
Treasury cash, Treasury currency, 5
Treasury deposits, 5, 10, 25
Treasury operating balance, 25
UNEMPLOYMENT, 42
U.S. government balances
Commercial bank holdings, 17-21
Treasury deposits at Reserve Banks, 5, 10, 25
U.S. government securities
Bank holdings, 17-21, 27
Dealer transactions, positions, and financing, 29
Federal Reserve Bank holdings, 5, 10, 11, 27
Foreign and international holdings and
transactions, 10, 27, 61
Open market transactions, 9
Outstanding, by type and holder, 27, 28
Rates, 23
U.S. international transactions, 50-62
Utilities, production, 45
VETERANS Administration, 34, 35
WEEKLY reporting banks, 17-21
Wholesale (producer) prices, 42, 47
YIELDS (See Interest rates)
A68
Federal Reserve Board of Governors
and Official Staff
ALAN GREENSPAN,
Chairman
ALICE M . RIVLIN, Vice Chair
EDWARD W . KELLEY, JR.
OFFICE
JOSEPH R. COYNE, Assistant to the Board
DONALD J. WINN, Assistant to the Board
THEODORE E. ALLISON, Assistant to the Board for Federal
Reserve System Affairs
LYNN S. FOX, Deputy Congressional
Liaison
WINTHROP P. HAMBLEY, Special Assistant to the Board
BOB STAHLY MOORE, Special Assistant to the Board
DIANE E. WERNEKE, Special Assistant to the Board
PORTIA W. THOMPSON, Equal Employment
Opportunity
Programs
Adviser
DIVISION OF INTERNATIONAL
FINANCE
EDWIN M. TRUMAN, Staff Director
LARRY J. PROMISEL, Senior Associate
Director
CHARLES J. SIEGMAN, Senior Associate
Director
DALE W. HENDERSON, Associate
Director
DAVID H. HOWARD, Senior Adviser
DONALD B. ADAMS, Assistant
Director
THOMAS A. CONNORS, Assistant
Director
PETER HOOPER III, Assistant
Director
KAREN H. JOHNSON, Assistant
Director
CATHERINE L. MANN, Assistant
Director
RALPH W. SMITH, JR., Assistant
Director
LEGAL
DIVISION OF RESEARCH AND STATISTICS
OF BOARD
LAWRENCE B . LINDSEY
MEMBERS
DIVISION
J. VIRGIL MATTINGLY, JR., General Counsel
SCOTT G. ALVAREZ, Associate General Counsel
RICHARD M. ASHTON, Associate General Counsel
OLIVER IRELAND, Associate General Counsel
KATHLEEN M. O'DAY, Associate General Counsel
ROBERT DEV. FRIERSON, Assistant General Counsel
KATHERINE H. WHEATLEY, Assistant General Counsel
OFFICE
OF THE
WILLIAM W . WILES,
SECRETARY
Secretary
JENNIFER J. JOHNSON, Deputy
Secretary
BARBARA R. LOWREY, Associate Secretary and
DIVISION OF
BANKING
SUPERVISION
AND
REGULATION
RICHARD SPILLENKOTHEN,
Director
STEPHEN C. SCHEMERING, Deputy Director
WILLIAM A. RYBACK, Associate
Director
HERBERT A. BIERN, Deputy Associate
Director
ROGER T. COLE, Deputy Associate
Director
JAMES I. GARNER, Deputy Associate
Director
HOWARD A. AMER, Assistant
Director
GERALD A. EDWARDS, JR., Assistant
Director
STEPHEN M. HOFFMAN, JR., Assistant
Director
JAMES V. HOUPT, Assistant
Director
JACK P. JENNINGS, Assistant
Director
MICHAEL G. MARTINSON, Assistant
Director
RHOGER H PUGH, Assistant
Director
SIDNEY M. SUSSAN, Assistant
Director
MOLLY S. WASSOM, Assistant
Director
WILLIAM SCHNEIDER, Project Director,
National Information
Center
Ombudsman
M I C H A E L J. PRELL,
Director
EDWARD C. ETTIN, Deputy
Director
DAVID J. STOCKTON, Deputy
Director
MARTHA BETHEA, Associate
Director
WILLIAM R. JONES, Associate
Director
MYRON L. KWAST, Associate
Director
PATRICK M. PARKINSON, Associate
Director
THOMAS D. SIMPSON, Associate
Director
LAWRENCE SLIFMAN, Associate
Director
MARTHA S. SCANLON, Deputy Associate
Director
PETER A. TINSLEY, Deputy Associate
Director
DAVID S. JONES, Assistant
Director
STEPHEN A. RHOADES, 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
JOHN J. MINGO, Senior Adviser
GLENN B . CANNER,
DIVISION
Adviser
OF MONETARY
DONALD L. KOHN,
AFFAIRS
Director
DAVID E. LINDSEY, Deputy
Director
BRIAN F. MADIGAN, Associate
Director
RICHARD D. PORTER, Deputy Associate
Director
VINCENT R. REINHART, Assistant
Director
NORMAND R.V. BERNARD, Special Assistant to the Board
DIVISION
OF
CONSUMER
AND COMMUNITY AFFAIRS
GRIFFITH L . G A R W O O D ,
Director
GLENN E. LONEY, Associate
Director
DOLORES S. SMITH, Associate
Director
MAUREEN P. ENGLISH, Assistant
Director
IRENE S H A W N M C N U L T Y , Assistant
Director
A69
S U S A N M . PHILLIPS
LAURENCE H . M E Y E R
JANET L . Y E L L E N
OFFICE OF
STAFF DIRECTOR FOR MANAGEMENT
DIVISION OF RESERVE BANK OPERATIONS
AND PAYMENT SYSTEMS
S. DAVID FROST, Staff Director
SHEILA CLARK, EEO Programs
C L Y D E H . F A R N S W O R T H , JR.,
DIVISION OF HUMAN RESOURCES
MANAGEMENT
DAVID L. S H A N N O N ,
Director
JOHN R. WEIS, Associate
Director
JOSEPH H. HAYES, JR., Assistant
Director
FRED HOROWITZ, Assistant
Director
OFFICE OF THE INSPECTOR GENERAL
OFFICE OF THE CONTROLLER
GEORGE E . L I V I N G S T O N ,
Controller
STEPHEN J. CLARK, Assistant Controller (Programs and
DARRELL R. PAULEY, Assistant Controller
(Finance)
DIVISION OF SUPPORT SERVICES
R O B E R T E . FRAZIER,
Director
GEORGE M. LOPEZ, Assistant
DAVID L. WILLIAMS, Assistant
Director
Director
DIVISION OF INFORMATION RESOURCES
MANAGEMENT
STEPHEN R. MALPHRUS,
Director
MARIANNE M. EMERSON, Assistant
Director
P o KYUNG KIM, Assistant
Director
RAYMOND H. MASSEY, Assistant
Director
EDWARD T. MULRENIN, Assistant
Director
DAY W. RADABAUGH, JR., Assistant
Director
ELIZABETH B. RIGGS, Assistant
Director
RICHARD C. STEVENS, Assistant
Director
Director
DAVID L. ROBINSON, Deputy Director (Finance and
LOUISE L. ROSEMAN, Associate
Director
CHARLES W. BENNETT, Assistant
Director
JACK DENNIS, JR., Assistant
Director
EARL G. HAMILTON, Assistant
Director
Director
JEFFREY C. MARQUARDT, Assistant
JOHN H. PARRISH, Assistant
Director
FLORENCE M. YOUNG, Assistant
Director
Director
Budgets)
BRENT L. BOWEN, Inspector
General
DONALD L. ROBINSON, Assistant Inspector
General
BARRY R. SNYDER, Assistant Inspector
General
Control)
70
Federal Reserve Bulletin • October 1996
Federal Open Market Committee
and Advisory Councils
FEDERAL OPEN MARKET
COMMITTEE
MEMBERS
A L A N GREENSPAN,
WILLIAM J. M C D O N O U G H , Vice
Chairman
EDWARD G . B O E H N E
LAWRENCE B . LINDSEY
ALICE M . RIVLIN
JERRY L . JORDAN
ROBERT D . M C T E E R , JR.
GARY H . S T E R N
EDWARD W . KELLEY, JR.
LAURENCE H . MEYER
JANET L . YELLEN
S U S A N M . PHILLIPS
ALTERNATE MEMBERS
J. ALFRED BROADDUS, JR.
MICHAEL H . MOSKOW
JACK G U Y N N
ROBERT T. PARRY
ERNEST T. PATRIKIS
STAFF
D O N A L D L . K O H N , Secretary
and
Economist
N O R M A N D R . V . BERNARD, Deputy
Secretary
JOSEPH R . C O Y N E , Assistant
GARY P. GILLUM, Assistant
LARRY J. PROMISEL, Associate
A R T H U R J. ROLNICK, Associate
Secretary
THOMAS C. BAXTER, JR., Deputy
EDWIN M . TRUMAN,
FREDERIC S . MISHKIN, Associate
Secretary
J. VIRGIL MATTINGLY, JR., General
MICHAEL J. PRELL,
DAVID E . LINDSEY, Associate
Counsel
General
Counsel
RICHARD W . L A N G , Associate
PETER R. FISHER, Manager,
FEDERAL ADVISORY
Economist
Economist
DAVID J. STOCKTON, Associate
Economist
System
Open Market
Economist
Economist
Economist
Account
COUNCIL
RICHARD G . TILGHMAN,
President
FRANK V . CAHOUET, Vice
President
Seventh District
Eighth District
RICHARD M . KOVACEVICH, Ninth District
CHARLES E. NELSON, Tenth District
CHARLES T. D O Y L E , Eleventh District
WILLIAM F. Z U E N D T , Twelfth District
First District
Second District
WALTER E. DALLER, JR., Third District
FRANK V. CAHOUET, Fourth District
RICHARD G. TILGHMAN, Fifth District
CHARLES E. RICE, Sixth District
WILLIAM M . CROZIER, JR.,
ROGER L . FITZSIMONDS,
WALTER V. SHIPLEY,
THOMAS H . JACOBSEN,
Economist
CHARLES J. SIEGMAN, Associate
M A R K S . SNIDERMAN, Associate
Economist
Economist
Economist
HARVEY ROSENBLUM, Associate
THOMAS D . SIMPSON, Associate
Economist
Economist
HERBERT V. PROCHNOW, Secretary
JAMES A N N A B L E ,
WILLIAM J. KORSVIK,
Emeritus
Co-Secretary
Co-Secretary
Chairman
A71
CONSUMER ADVISORY
COUNCIL
KATHARINE W. MCKEE, Durham, North Carolina, Chairman
JULIA M. SEWARD, Richmond, Virginia, Vice Chairman
RICHARD S . AMADOR, LOS A n g e l e s , C a l i f o r n i a
ERROL T. LOUIS, B r o o k l y n , N e w Y o r k
THOMAS R . B U T L E R , R i v e r w o o d s , I l l i n o i s
WILLIAM N . L U N D , F a l m o u t h , M a i n e
ROBERT A . COOK, B a l t i m o r e , M a r y l a n d
R O N A L D A . PRILL, M i n n e a p o l i s , M i n n e s o t a
A L V I N J. COWANS, O r l a n d o , F l o r i d a
LISA R I C E - C O L E M A N , T o l e d o , O h i o
E L I Z A B E T H G . FLORES, L a r e d o , T e x a s
JOHN R . RINES, D e t r o i t , M i c h i g a n
HERIBERTO FLORES, S p r i n g f i e l d , M a s s a c h u s e t t s
MARGOT SAUNDERS, W a s h i n g t o n , D . C .
E M A N U E L FREEMAN, P h i l a d e l p h i a , P e n n s y l v a n i a
A N N E B . SHLAY, P h i l a d e l p h i a , P e n n s y l v a n i a
DAVID C . F Y N N , C l e v e l a n d , O h i o
REGINALD J. SMITH, Kansas City, Missouri
ROBERT G . GREER, H o u s t o n , T e x a s
GEORGE P. SURGEON, A r k a d e l p h i a , A r k a n s a s
KENNETH R. HARNEY, Chevy Chase, Maryland
GREGORY D . SQUIRES, M i l w a u k e e ,
GAIL K . HILLEBRAND, S a n F r a n c i s c o , C a l i f o r n i a
J O H N E . TAYLOR, W a s h i n g t o n , D . C .
TERRY JoRDE,'Cando, North Dakota
LORRAINE V A N E T T E N , T r o y , M i c h i g a n
FRANCINE JUSTA, N e w Y o r k , N e w Y o r k
THEODORE J. WYSOCKI, JR., C h i c a g o , I l l i n o i s
E U G E N E I. L E H R M A N N , M a d i s o n , W i s c o n s i n
LILY K. YAO, Honolulu, Hawaii
THRIFT INSTITUTIONS ADVISORY
Wisconsin
COUNCIL
E. LEE BEARD, Hazleton, Pennsylvania, President
DAVID F. HOLLAND, Burlington, Massachusetts, Vice President
BARRY C . BURKHOLDER, H o u s t o n , T e x a s
CHARLES R . RINEHART, I r w i n d a l e , C a l i f o r n i a
M I C H A E L T. CROWLEY, JR., M i l w a u k e e , W i s c o n s i n
JOSEPH C . SCULLY, C h i c a g o , I l l i n o i s
GEORGE L . ENGELKE, JR., L a k e S u c c e s s , N e w Y o r k
R O N A L D W . STIMPSON, M e m p h i s , T e n n e s s e e
D O U G L A S A . FERRARO, E n g l e w o o d , C o l o r a d o
LARRY T. WILSON, Raleigh, North Carolina
BEVERLY D . HARRIS, L i v i n g s t o n , M o n t a n a
WILLIAM W . Z U P P E , S p o k a n e , W a s h i n g t o n
A72
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440 pp. $9.00 each.
FINANCIAL
FUTURES
AND
OPTIONS
IN
THE
U.S.
ECONOMY.
December 1986. 264 pp. $10.00 each.
FINANCIAL SECTORS IN O P E N ECONOMIES: EMPIRICAL
ANALY-
SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each.
EDUCATION
PAMPHLETS
Short pamphlets suitable for classroom
available without charge.
use. Multiple copies
are
Consumer Handbook on Adjustable Rate Mortgages
Consumer Handbook to Credit Protection 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
Organization and Advisory Committees
A Consumer's Guide to Mortgage Lock-Ins
A Consumer's Guide to Mortgage Settlement Costs
A Consumer's Guide to Mortgage Refinancings
Home Mortgages: Understanding the Process and Your Right
to Fair Lending
How to File a Consumer Complaint
Making Deposits: When Will Your Money Be Available?
Making Sense of Savings
SHOP: The Card You Pick Can Save You Money
Welcome to the Federal Reserve
When Your Home is on the Line: What You Should Know
About Home Equity Lines of Credit
A73
STAFF STUDIES: Only Summaries
BULLETIN
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.
164.
THE
1989-92
CREDIT
CRUNCH
FOR
REAL
ESTATE,
by
James T. Fergus and John L. Goodman, Jr. July 1993.
20 pp.
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 are out of print.
MOTIVES FOR T R A D E CREDIT U S E BY SMALL BUSINESSES, b y
1 5 8 . T H E ADEQUACY A N D CONSISTENCY OF M A R G I N REQUIRE-
Gregory E. Elliehausen and John D. Wolken. September
1 9 9 3 . 1 8 pp.
DERIVATIVE
1 6 6 . T H E ECONOMICS OF THE PRIVATE PLACEMENT M A R K E T , b y
PRODUCTS, by Mark J. Warshawsky with the assistance of
Dietrich Earnhart. September 1989. 23 pp.
Mark Carey, Stephen Prowse, John Rea, and Gregory Udell.
January 1994. I l l pp.
MENTS
159.
160.
IN
THE
MARKETS
FOR STOCKS
AND
N E W DATA ON THE PERFORMANCE OF N O N B A N K
SUBSIDI-
ING, 1 9 8 0 - 9 3 , A N D AN ASSESSMENT OF THE
Donald Savage. February 1990. 12 pp.
PERFORMANCE"
BANKING
VICES
MARKETS
BY
SMALL
AND
AND
THE
USE
OF FINANCIAL
MEDIUM-SIZED
SER-
BUSINESSES,
by
Gregory E. Elliehausen and John D. Wolken. September
1990. 35 pp.
161.
1 6 7 . A SUMMARY OF MERGER PERFORMANCE STUDIES IN B A N K -
ARIES OF B A N K H O L D I N G COMPANIES, b y N e l l i e L i a n g a n d
A
REVIEW
OF
CORPORATE
RESTRUCTURING
ACTIVITY,
1 9 8 0 - 9 0 , by Margaret Hastings Pickering. May
21 pp.
1991.
1 6 2 . 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
RATES
IN
TWENTY
Rhoades. February 1992. 11 pp.
CITIES,
by
Stephen
A.
AND
"EVENT
STUDY"
"OPERATING
METHODOLOGIES,
by Stephen A. Rhoades. July 1994. 37 pp.
168. THE
ECONOMICS
OF THE PRIVATE
EQUITY
MARKET,
by
George W. Fenn, Nellie Liang, and Stephen Prowse. November 1 9 9 5 . 6 9 pp.
1 6 9 . B A N K MERGERS A N D INDUSTRYWIDE STRUCTURE,
by Stephen A. Rhoades. February 1996. 32 pp.
1980-94,
A74
Maps of the Federal Reserve System
9
1
MINNEAPOLIS •
°N
2
• N E W YORK
1
2
10
C B I C A O D M
KANSAS C I T Y B
•
4
CLEVELAND
.
^
ST. LOUIS
3
M
U
PHILADELPHIA
^
•
RICHMOND
5
6 i
ATLANTA
^
DALLAS
ALASKA
HAWAII
LEGEND
Both
pages
• Federal Reserve Bank city
• Board of Governors of the Federal
Reserve System, Washington, D.C.
Facing
page
• Federal Reserve Branch city
— Branch boundary
NOTE
The Federal Reserve officially identifies Districts by number
and Reserve Bank city (shown on both pages) and by letter
(shown on the facing page).
In the 12th District, the Seattle Branch serves Alaska,
and the San Francisco Bank serves Hawaii.
The System serves commonwealths and territories as
follows: the New York Bank serves the Commonwealth
of Puerto Rico and the U.S. Virgin Islands; the San
Francisco Bank serves American Samoa, Guam, and the
Commonwealth of the Northern Mariana Islands. The
Board of Governors revised the branch boundaries of the
System most recently in December 1991.
A75
1-A
2-B
4-D
3-C
5-E
Baltimore MD
vtIJ
• I
\
Buffalo
K
VT
NH
MA
CT
/
wv
NC
•Charlotte
•Cincinnati
I
/
NY
cr
sc
BOSTON
NEW YORK
CLEVELAND
PHILADELPHIA
6-F
7-G
RICHMOND
8-H
•Nashville
KY
Birmingham
JL
Jacksonville
•
JN
^
^ d •Memphis
Little/
Roek ( MS
JMiami
Ft
New Orleans
;
Louisville
Detroit •
ATLANTA
ST. LOUIS
CHICAGO
9-1
• Helena
MINNEAPOLIS
12-L
10-J
WY
1 NTI
Omaha*
CO
Beaver
NM
S3
Hi
Seattle
1
Oklahoim City
OK
KANSAS CITY
11-K
TX
Salt Lake City
•
EL Paso
FL
RA—H "
_
X Houston
• V*
San Antonio
DALLAS
LA
•Los Angeles
SAN FRANCISCO
A76
Federal Reserve Banks, Branches,
and Offices
FEDERAL RESERVE BANK
branch, or facility
Zip
Chairman
Deputy Chairman
President
First Vice President
BOSTON*
02106
Jerome H. Grossman
William C. Brainard
Cathy E. Minehan
Paul M. Connolly
NEW YORK*
10045
John C. Whitehead
Thomas W. Jones
Joseph J. Castiglia
William J. McDonough
Ernest T. Patrikis
Buffalo
14240
Carl W. Turnipseed1
PHILADELPHIA
19105
Donald J. Kennedy
Joan Carter
Edward G. Boehne
William H. Stone, Jr.
CLEVELAND*
44101
Jerry L. Jordan
Sandra Pianalto
Cincinnati
Pittsburgh
45201
15230
A. William Reynolds
G. Watts Humphrey, Jr.
John N. Taylor, Jr.
John T. Ryan III
RICHMOND*
23219
J. Alfred Broaddus, Jr.
Walter A. Varvel
Baltimore
Charlotte
Culpeper
21203
28230
22701
Claudine B. Malone
Robert L. Strickland
Michael R. Watson
James O. Roberson
Hugh M. Brown
Daniel E. Sweat, Jr.
Donald E. Boomershine
Joan D. Ruffier
R. Kirk Landon
Paula Lovell
Lucimarian Roberts
Jack Guynn
Patrick K. Barron
Robert M. Healey
Lester H. McKeever, Jr.
Florine Mark
Michael H. Moskow
William C. Conrad
John F. McDonnell
Susan S. Elliott
Janet M. Jones
John A. Williams
John V. Myers
Thomas C. Melzer
W. LeGrande Rives
Jean D. Kinsey
David A. Koch
Lane W. Basso
Gary H. Stern
Colleen K. Strand
Herman Cain
A. Drue Jennings
Peter I. Wold
Barry L. Eller
LeRoy W. Thom
Thomas M. Hoenig
Richard K. Rasdall
Cece Smith
Roger R. Hemminghaus
Patricia Z. Holland-Branch
Issac H Kempner III
Carol L. Thompson
Robert D. McTeer, Jr.
Helen E. Holcomb
Judith M. Runstad
James A. Vohs
Anita E. Landecker
Ross R. Runkel
Gerald R. Sherratt
George F. Russell, Jr.
Robert T. Parry
John F. Moore
ATLANTA
Birmingham
Jacksonville
Miami
Nashville
New Orleans
30303
35283
32231
33152
37203
70161
CHICAGO*
60690
Detroit
48231
ST. LOUIS
63166
Little Rock
Louisville
Memphis
72203
40232
38101
MINNEAPOLIS
55480
Helena
KANSAS CITY
Denver
Oklahoma City
Omaha
DALLAS
El Paso
Houston
San Antonio
SAN FRANCISCO . . . .
Los Angeles
Portland
Salt Lake City
Seattle
59601
64198
80217
73125
68102
75201
79999
77252
78295
94120
90051
97208
84125
98124
Vice President
in charge of branch
Charles A. Cerino1
Harold J. Swart'
William J. Tignanelli 1
Dan M. Bechter 1
Julius Malinowski, Jr.2
James M. Mckee 1
Fred R. Herr1
James D. Hawkins1
James T. Curry III
Melvyn K. Purcell
Robert J. Musso
David R. Allardice 1
Robert A. Hopkins
Thomas A. Boone
John P. Baumgartner
John D. Johnson
Carl M. Gambs 1
Kelly J. Dubbert
Harold L. Shewmaker
Sammie C. Clay
Robert Smith, III1
James L. Stull 1
Mark L. Mullinix 1
Raymond H. Laurence1
Andrea P. Wolcott
Gordon R. G. Werkema 3
•Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; East Rutherford, New Jersey 07016; Jericho,
New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311;
Des Moines, Iowa 50306; Indianapolis, Indiana 46204; Milwaukee, Wisconsin 53202; and Peoria, Illinois 61607.
1. Senior Vice President.
2. Assistant Vice President.
3. Executive Vice President
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
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. 1
Flow of Funds
Quarterly
release
Frequency
of release
Publications of Interest
FEDERAL RESERVE CONSUMER CREDIT
PUBLICATIONS
The Federal Reserve Board publishes a series of pamphlets covering individual credit laws and topics, as
pictured below.
Three booklets on the mortgage process are available:
A Consumer's Guide to Mortgage Lock-Ins, A Consumer's Guide to Mortgage Refinancings, and A Consumer's
Guide to Mortgage Settlement Costs. These booklets
were prepared in conjunction with the Federal Home
Loan Bank Board and in consultation with other federal
agencies and trade and consumer groups. The Board
also publishes the Consumer Handbook to Credit Protection Laws, a complete guide to consumer credit protections. This forty-four-page booklet explains how to
shop and obtain credit, how to maintain a good credit
rating, and how to dispute unfair credit transactions.
Shop . . . The Card You Pick Can Save You Money is
designed to help consumers comparison shop when
looking for a credit card. It contains the results of the
Federal Reserve Board's survey of the terms of credit
card plans offered by credit card issuers throughout the
United States. Because the terms can affect the amount
an individual pays for using a credit card, the booklet
lists the annual percentage rate (APR), annual fee, grace
period, type of pricing (fixed or variable rate), and a
telephone number for each card issuer surveyed.
Copies of consumer publications are available free
of charge from Publications Services, Mail Stop 127,
Board of Governors of the Federal Reserve System,
Washington, DC 20551. Multiple copies for classroom
use are also available free of charge.
A Consumer's
Quid* to
Mortgage
Settlement
Costs
A Guide to
Business
Credit
for W o m e n ,
Minorities, a n d
Small Businesses
SHOP
The Card You Pick
Can Save You Money
@FedFRASER