Full text of Federal Reserve Bulletin : October 1997

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VOLUME 8 3 •

NUMBER 1 0 •

OCTOBER 1 9 9 7

FEDERAL RESERVE

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

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

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




Table of Contents
797 EVALUATING INTERNATIONAL
POLICY WITH THE FEDERAL
GLOBAL
MODEL

ECONOMIC
RESERVE'S

FRB/Global is a large-scale macroeconomic
model developed and maintained by the Board's
staff. This article provides a historical perspective on the development of the model, gives
an overview of its structure, and highlights its
dynamic properties with three simulation experiments: a reduction in U.S. government purchases; a depreciation of the U.S. dollar; and an
increase in the price of oil exported by OPEC.
The article illustrates other uses of FRB/Global
by examining the spillover effects of fiscal and
monetary policy under alternative European
monetary policy regimes.
818 INDUSTRIAL PRODUCTION AND CAPACITY
UTILIZATION FOR AUGUST
1997

Industrial production increased 0.7 percent in
August, to 121.3 percent of its 1992 average,
and output growth in July was revised up
0.2 percentage point, to 0.4 percent. The rate of
industrial capacity utilization rose to 83.9 percent, its highest rate since September 1995.
821

ANNOUNCEMENTS

Amendments to Regulation E.
Modifications of prudential limits on underwriting and dealing activities by bank holding companies through section 20 subsidiaries
Extension of the Federal Reserve's "regular"
billing deposit deadline for ACH transactions
Proposal to amend the risk-based and tier 1
leverage capital guidelines for state member
banks and bank holding companies; proposal to
amend Regulation D; and extension of the comment period on a proposal to apply sections 23A
and 23B of the Federal Reserve Act to transactions between a member bank and any subsidiary that engages in activities that are impermis-




sible for the bank itself and that Congress has
not previously exempted from coverage by section 23A.
823 MINUTES OF THE FEDERAL OPEN
MARKET COMMITTEE
MEETING
HELD ON JULY 1-2,
1997

At its meeting on July 1-2, 1997, the Committee reaffirmed the ranges that it had established
in February for 1997 growth of M2 and M3 of
1 to 5 percent and 2 to 6 percent respectively
and for domestic nonfinancial debt of 3 to 7 percent. The Committee provisionally set the same
ranges for 1998.
For the intermeeting period ahead, the Committee adopted a directive that called for maintaining the existing degree of pressure on
reserve positions and that retained a bias toward
the possible firming of reserve conditions during the intermeeting period.
831 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 27, 1997.
A3 GUIDE TO TABULAR

PRESENTATION

A4 Domestic Financial Statistics
A42 Domestic Nonfinancial Statistics
A50 International Statistics
A 6 3 GUIDE TO STATISTICAL
SPECIAL TABLES

RELEASES

A70 INDEX TO STATISTICAL

TABLES

AND

A72 BOARD OF GOVERNORS AND STAFF

A74 FEDERAL OPEN MARKET COMMITTEE
STAFF; ADVISORY
COUNCILS
A 7 6 FEDERAL

RESERVE




AND

BOARD PUBLICATIONS

A78 MAPS OF THE FEDERAL
A 8 0 FEDERAL RESERVE
AND OFFICES

RESERVE

BANKS,

SYSTEM

BRANCHES,

Evaluating International Economic Policy
with the Federal Reserve's Global Model
Andrew Levin, John Rogers, and Ralph Tryon, of
the Board's Division of International Finance,
prepared this article. Asim Husain provided research
assistance.
FRB/Global is a large-scale macroeconomic model
developed and maintained by the staff of the Board
of Governors of the Federal Reserve System. The
model contains the equations of the FRB/US model
(discussed in the April 1997 issue of the Federal
Reserve Bulletin) to represent the macroeconomic
structure of the U.S. economy. In addition, FRB/
Global contains eleven other blocks of equations to
represent each of the foreign Group of Seven (G-7)
industrial economies (Canada, France, Germany,
Italy, Japan, and the United Kingdom), Mexico, and
four other groups of industrial and developing
economies.
Simulation experiments conducted with FRB/
Global assist the Board in analyzing sudden changes
in external macroeconomic variables and alternative
policy responses in foreign economies. For example,
experiments with FRB/Global provide useful information about the effects of exchange rate movements
or oil price changes on U.S. unemployment and inflation. The alternative scenarios studied with FRB/
Global also provide a valuable input to forecasts of
foreign activity and the U.S. external sector.
Over the past several years, two important features
have been added to the structure of FRB/Global.
First, the equations have been reformulated to ensure
long-run stability: In response to a macroeconomic
disturbance, each economy represented in FRB/
Global gradually converges to a balanced growth (or
equilibrium) path, that is, a path in which actual
output is equal to potential gross domestic product
and in which every inflation-adjusted variable has
a constant ratio to potential GDP. The inflation rate

adjusts to a target level determined by monetary
policy, and all relative prices reach constant values.
Fiscal solvency (a condition in which the stock of
government debt grows no faster than nominal GDP)
is maintained by assuming the gradual adjustment of
a country's tax rate. Similarly, national solvency (a
condition in which the stock of net external debt
grows no faster than nominal GDP), is ensured by the
assumption that the risk premium on a country's
external liabilities rises when net external debt is
high relative to nominal GDP.
The second feature added to FRB/Global is the
explicit treatment of expectations. In the model,
agents' expected values of future variables directly
influence interest rates, consumption and investment
expenditures, the aggregate wage rate, and the
exchange rate. Thus, the way in which agents form
expectations can have important implications for the
simulation results. In FRB/Global, simulations can be
performed under either of two assumptions about the
nature of expectations: (1) limited-information expectations, under which agents have incomplete information about the structure of the global economy or
(2) model-consistent expectations, under which
agents possess all the information contained in the
model.
This article provides a historical perspective on the
development of FRB/Global and an overview of the
model's blocks of equations for foreign countries.
We use three simulation experiments to highlight the
dynamic properties of FRB/Global: a reduction in
U.S. government purchases, a depreciation of the U.S.
dollar, and an increase in the price of oil exported by
countries in OPEC (the Organization of Petroleum
Exporting Countries). The article also illustrates other
uses of FRB/Global by examining the spillover
effects of fiscal and monetary policy under alternative
European monetary policy regimes.

A HISTORICAL PERSPECTIVE ON FRB/GLOBAL
NOTE. We thank Shaghil Ahmed, David Bowman, Flint Brayton,
Christopher Erceg, Dale Henderson, Jaime Marquez, David
Reifschneider, Robert Tetlow, and Volker Wieland for valuable comments and suggestions during the development of FRB/Global and the
preparation of this article.




In the mid-1970s, a variety of factors—increased
economic interaction among countries, the first
(1973) shock to oil prices, and the floating of

798

Federal Reserve Bulletin • October 1997

exchange rates—combined to raise interest in global
macroeconomic modeling. Against this background,
the Board's staff began the development of a largescale macroeconometric model called the Multicountry Model (MCM) to provide an empirical framework
for analyzing interactions among the major industrial
countries. One of the first models of its kind, the
MCM consisted of about 1,000 equations divided
into six blocks: one representing the U.S. economy
(with a more detailed external sector than in previous
models); four others representing Canada, Germany,
Japan, and the United Kingdom; and an aggregate
block representing the rest of the world.1 From 1979
onward, the Board staff regularly used the MCM to
simulate the effects of alternative policy scenarios
and external shocks.
In the early 1980s the staff significantly modified
the MCM with regard to exchange rate determination
and the capital account of the balance of payments. 2
Empirical considerations also led to the elimination
of detailed representations of banking sectors from
the equation blocks of individual countries. In subsequent versions of the MCM, the monetary authorities
were assumed to control either the money stock or
the short-term interest rate. Finally, in the wake of
the second (1979) OPEC oil price shock, the MCM
was extended to provide explicit treatment of the oil
sector.
In the mid-1980s, many of the equations in the
MCM were re-estimated using methods suggested
by David Hendry and other econometricians at the
London School of Economics. 3 The re-estimation
improved the fit and the dynamic properties of the
equations and represented a first step toward ensuring
the long-run stability of the model. In the late 1980s,
the equations in the Board staffs model of the U.S.

1. Guy Stevens led the effort to develop the MCM; see Guy V.G.
Stevens, Richard B. Berner, Peter B. Clark, Ernesto Hernandez-Cata,
Howard J. Howe, and Sung Y. Kwack, The U.S. Economy in an
Interdependent World: A Multicountry Model (Board of Governors of
the Federal Reserve System, 1984).
2. In particular, equations based on the portfolio balance approach
to the determination of exchange rates were replaced by modified
uncovered interest parity relationships, a specification based on interest rate differentials. The change was prompted by a lack of empirical
support for the portfolio balance model and by the attractive properties of the overshooting model of Dornbusch, which incorporated
assumptions of open interest parity, nominal price rigidities, and
model-consistent expectations (Rudiger Dornbusch, "Expectations
and Exchange Rate Dynamics," Journal of Political
Economy,
vol. 84, December 1976, pp. 1161-76).
3. The results of these and other changes to the MCM are described
in Hali Edison, Jaime Marquez, and Ralph Tryon, "The Structure and
Properties of the Federal Reserve Board Multicountry Model," Economic Modelling, vol. 4 (April 1987), pp. 115-315.




economy (the MPS model) were linked with the
foreign equation blocks of the MCM. FRB/Global
has continued this approach of linking foreign equation blocks with the staffs domestic U.S. model.
Another major restructuring and re-estimation of
the MCM came in 1991-92. The model continued to
use individual country blocks for the United States,
Canada, Germany, Japan, and the United Kingdom,
while the rest-of-world block was disaggregated into
seven blocks of equations representing France, Italy,
Mexico, the smaller industrial countries, the newly
industrializing economies, OPEC countries, and other
developing countries and economies in transition. A
multilateral trade structure replaced the bilateral one,
thereby greatly simplifying the data requirements and
the analysis of simulation results for each country
and region. The resulting arrangement—twelve countries and regions, each with an equation block containing multilateral trade equations—is used in the
current version of FRB/Global.
The staffs most recent reassessment of the MCM
began in 1993 and culminated in FRB/Global in
1996.4 Explicit treatment of expectations enabled
the model to capture the notion that news about
future economic developments can directly affect
the current economy; for example, the adoption
of a multiyear deficit reduction package can generate
an immediate drop in long-term interest rates. To
ensure the long-run stability of the model, errorcorrection mechanisms were incorporated into the
behavioral equations, and constraints that preserve
fiscal and national solvency were imposed. 5 The
long-run stability of FRB/Global permits simulations
under either model-consistent or limited-information
expectations. 6

4. This work drew heavily on the experimental multicountry model
of Joseph E. Gagnon, "A Forward-Looking Multi-Country Model:
MX-3," International Finance Discussion Papers 359 (Board of Governors of the Federal Reserve System, 1989).
5. The constraints of fiscal and national solvency in FRB/Global
are similar to those used in the IMF's multicountry model, MULTIMOD; see P. Masson, S. Symansky, R. Haas, and M. Dooley, "MULTIMOD: A Multi-Region Econometric Model," International Monetary Fund, World Economic Outlook, July 1988, pp. 50-104.
6. To represent limited-information expectations, FRB/US uses a
core vector autoregression with auxiliary equations (see F. Brayton
and P. Tinsley, eds., "A Guide to FRB/US: A Macroeconomic Model
of the United States," Finance and Economics Discussion Series
1996-42 (Board of Governors of the Federal Reserve System, 1996);
see also Flint Brayton, Eileen Mauskopf, David Reifschneider,
Peter Tinsley, and John Williams, "The Role of Expectations in the
FRB/US Macroeconomic Model," Federal Reserve Bulletin, vol. 83
(April 1997), pp. 227-45. Individual regression equations are used to
generate each of the expectation variables in the foreign blocks of
FRB/Global.

Evaluating International Economic Policy with the Federal Reserve's Global Model

THE STRUCTURE OF FRB/GLOBAL
FRB/Global consists of twelve blocks of equations,
with each block describing the economy of a country
or a group of countries. The U.S. block of FRB/
Global is taken directly from the staff's model of the
domestic economy, FRB/US, which consists of about
50 behavioral equations and about 250 accounting
identities. Among the FRB/US behavioral equations
are 4 that determine foreign aggregate demand, the
inflation-adjusted (real) effective exchange rate, the
oil import price deflator, and net investment income
from abroad. FRB/Global replaces these 4 equations
with about 1,400 equations that provide a much more
detailed representation of macroeconomic developments outside the United States.
Six blocks of FRB/Global represent the foreign
G-7 industrial countries (Canada, France, Germany,
Italy, Japan, and the United Kingdom). The equation
blocks for the foreign G-7 countries represent
medium-sized open economies in which, in the
short run, aggregate demand determines output and
employment, and wages and prices respond slowly to
macroeconomic shocks (a formulation in accord with
neo-Keynesian theory). Eventually, however, wages
and prices adjust to ensure that the economies return
to a balanced growth path, with output at potential
and unemployment at the natural rate (a result conforming to neoclassical theory). Gradual movement
of the direct tax rate ensures long-run fiscal solvency,
while the determination of the risk premium on
external liabilities ensures national solvency.7
To incorporate these features, the equation block
for each foreign G-7 country consists of about
60 behavioral equations and about 100 accounting
identities. The specification of these equations is
nearly identical for each country. The behavioral
differences among the six economies have been
derived from estimation and from calibration of the
model; the differences in monetary and fiscal policies
among the six depend on the assumptions of a particular simulation scenario.
The remaining five blocks of equations in FRB/
Global represent Mexico; 16 smaller OECD countries (SOECD); the newly industrializing economies
of Hong Kong, Korea, Singapore, and Taiwan

7. The risk premium on external liabilities (also known as the
sovereign risk premium) refers to the extra rate of return demanded by
creditors to compensate them for holding government bonds that have
some degree of credit risk. Credit risk is the risk that the government,
or sovereign, will not fully redeem the bonds at maturity. In the
model, the risk premium on the net foreign holdings of a country's
government bonds rises when those holdings are rising relative to that
country's GDP.




799

(NIEs); the 16 countries with fuel-oriented exports
(OPEC); and the rest of the world (ROW), which
comprises about 140 developing economies and
countries in transition.
The structure of the equation blocks for Mexico,
the NIEs, and the SOECD is fairly similar to that of
the foreign G-7 country blocks but with somewhat
less disaggregation: Each of these blocks consists of
about 45 behavioral equations and about 75 accounting identities. The OPEC and ROW blocks are much
smaller, with about 15 behavioral equations and
25 accounting identities each.
Each block of equations in FRB/Global may be
divided into five sectors: domestic spending, fiscal
accounts, the external sector, aggregate supply (production, employment, wage and price determination),
and financial markets (interest rates and exchange
rates). The remainder of this section outlines the
specification of these sectors for the foreign G-7
countries, highlights the role of expectations, and
outlines the features that ensure the long-run stability
of the model. For more details about the foreign
blocks of FRB/Global, see appendixes A and B.

Domestic Spending
In the foreign G-7 equations of FRB/Global, six
expenditure variables constitute domestic spending:
private consumption expenditures, business fixed
investment, residential investment, changes in business inventories, government fixed investment, and
other government spending on goods and services
(referred to as government consumption). Real private expenditures for consumption and for investment are determined endogenously (that is, by the
model) through assumptions and empirical findings
embodied in behavioral equations. Real government
consumption and investment, on the other hand, are
independent variables—they are determined exogenously (that is, outside the model).
The behavioral equation for each component of
private expenditure incorporates an error-correction
mechanism that permits realistic short-run dynamics
while ensuring that the level of expenditure gradually
adjusts to a long-run equilibrium growth path—that
is, a stable ratio of expenditures to real GDP. The
equilibrium path of each expenditure variable can be
shifted by a permanent change in real interest rates
or other specific macroeconomic variables. For example, the equilibrium path of real private consumption
depends on real disposable income and the labor
force participation rate as well as the long-term real
interest rate (see box "Determining Private Con-

800

Federal Reserve Bulletin • October 1997

Determining Private Consumption Expenditures
The equilibrium level of real private consumption expenditures, C, depends on real disposable income, Y; the ex ante
long-term real interest rate, R, \ and the labor force participation rate, L/POP.1 An accounting identity relates nominal
disposable income to nominal GDP, net investment income
from abroad, and taxes less government subsidies and transfers to households; then Y is computed by deflating nominal
disposable income by the consumption price index. The
determination of RL is described below. The labor force
participation rate is exogenously determined.
For each foreign G-7 country, statistical analysis has been
used to verify that the ratio of private consumption to
disposable income, C/Y, has a stationary long-run relationship with RL and L/POP, and to estimate the short-run
and long-run characteristics of this relationship.2 The table

below summarizes the response of private consumption to
changes in disposable income and the long-term real interest rate. In Germany, for example, a permanent 1 percentage
point increase in RL is estimated to reduce private consumption 0.23 percent within one quarter and 0.76 percent in the
long run.
In the short run, C exhibits partial adjustment in response
to permanent changes in Y and RL because of liquidity
constraints, information lags, and other factors. In Germany, for example, a permanent 1 percent change in Y
generates an immediate 0.73 percent change in C, so that
the consumption-income ratio temporarily falls. The gap
between the actual consumption-income ratio and its equilibrium value subsequently shrinks at a rate of 30 percent
per quarter (not shown in table).

1. In the foreign G-7 equation blocks of FRB/Global. private consumption
expenditures depend on current and past income so that consumption is
sensitive to movements in temporary as well as permanent income. In
FRB/US, consumption expenditures also depend on financial wealth and the
present discounted value of expected future labor and transfer income so that
consumption is less sensitive to fluctuations in temporary income; in future
work, we plan to investigate specifications in the foreign-country equations
of FRB/Global that are comparable to those in FRB/US.
2. The labor force participation rate is highly significant in explaining
long-term changes in private saving rates in Germany, Japan, and the United
Kingdom, perhaps because the private saving rate tends to decline as a higher
fraction of the population reaches retirement age. The labor force participation rate is not, however, statistically significant in explaining the private
saving rate in Canada. For Italy, the relationship between the private saving
rate and the rates of long-term interest and labor force participation appears
to be nearly nonstationary; for France, no satisfactory estimates of the
relationship could be obtained, so the relationship in Germany was used for
France as well.

Determinants of private consumption expenditures

sumption Expenditures"). The equilibrium paths of
real business fixed investment and residential investment are each determined by real GDP, the long-term
real interest rate, and the corresponding depreciation
rate. Finally, the equilibrium path of real inventory
investment depends on domestic sales and the shortterm real interest rate (see box "Determining Business Inventory Investment").
The determination of business fixed investment
provides a useful example of the long-run stability
and flexible dynamics associated with an errorcorrection mechanism. In each period, the business
capital stock changes by the amount of business fixed
investment less depreciation. Assuming competitive
markets for inputs (land, labor, and capital) and output, microeconomic theory holds that the marginal
product of capital should equal the real rental rate on
capital, which is the sum of the real interest rate and
the depreciation rate. In FRB/Global, the marginal
product of capital is inversely proportional to the
ratio of capital to GDP (the Cobb-Douglas produc


Y
Short run . . .
Long run . . .

iRl
Short

run . . .
Long run . . .

Canada

France

Germany

.58
1.0

.73
1.0

.73
1.0

-.13
-.37

-.23
-.76

-.23
-.76

Italy

Japan

U.K.

.10
1.0

.62
1.0

.29
1.0

-.05
-2.4

-.23
-1.5

-.19
-.65

NOTE. The first two rows indicate the elasticity of private consumption
expenditures, C, with respect to a permanent change in real disposable
income, Y. The last two rows indicate the percentage change in C arising
from a permanent 1 percentage point increase in the ex ante long-term real
interest rate, RL. The "short run" is the first quarter; the "long run" is the
steady-state.

tion function). Therefore, in the model's long run,
business fixed investment is determined in a manner
that will maintain the capital-output ratio at a level
consistent with the long-term real interest rate and the
depreciation rate.
In the short run, however, fluctuations in the
growth of real GDP strongly influence business fixed
investment through an accelerator effect. Business
fixed investment also incorporates a partial adjustment mechanism: For each of the foreign G-7 economies, the gap between current fixed investment and
its equilibrium level shrinks at an estimated rate of
about 25 percent per quarter.
For an illustration of these properties in the determination of business fixed investment, consider a
permanent 1 percent increase in real GDP (both
actual and potential) for Germany, with no change in
the real rental rate on capital (chart 1, top panel). The
dynamic accelerator generates a 3.5 percent increase
in business fixed investment during the first year and
an additional 0.75 percent increase over the subse-

Evaluating International Economic Policy with the Federal Reserve's Global Model

Determining Business Inventory Investment
In the equations for each foreign G-7 country, real inventory investment depends on domestic sales, the stock of
business inventory, and the ex ante short-term real interest rate. Domestic sales include all private and government consumption and fixed investment expenditures.
The equilibrium ratio of the inventory stock to domestic
sales depends on the cost of holding inventories, which is
mainly determined by the ex ante short-term real interest
rate. Thus, with domestic sales held unchanged along a
constant growth path, an increase in the short-term real
interest rate reduces the target stock of business inventories and thereby depresses the equilibrium level of
inventory investment.
In the very short run, an increase in the level of
domestic sales generates negative inventory investment
as firms use inventories as a buffer against sudden
changes in sales. The target inventory-sales ratio remains
unchanged, assuming a constant short-term real interest
rate. Thus, over the medium term, the increase in domestic sales stimulates higher inventory investment until the
stock of business inventories eventually rises in proportion to the increase in domestic sales.

quent two years. These changes in investment represent a small fraction of the existing stock of business
fixed capital, so that the capital stock rises gradually
in response to the output shock. With a constant real
rental rate, the equilibrium value of the capitaloutput ratio remains unchanged, so that the capital
stock eventually stabilizes at 1 percent above its
initial level. Given the constant depreciation rate,
fixed investment also rises 1 percent in the long run.
A permanent 1 percentage point increase in the real
rental rate on capital in Germany, with no change in
actual or potential output, also illustrates the model's
adjustment properties (chart 1, bottom panel). The
drop in the equilibrium capital-output ratio leads to
a 1.8 percent reduction in business fixed investment
over the first several years. The stock of business
fixed capital gradually falls about 0.4 percent, to its
new equilibrium level, with a similar long-run drop
in the level of business fixed investment.

Fiscal Accounts
The model's representation of the fiscal accounts of
the foreign G-7 countries is relatively straightforward: Government expenditures consist of consumption, investment, subsidies, transfers to households,
and interest payments; government revenues come



801

from direct taxes, social security payroll taxes, fuel
taxes, and other indirect taxes. The most important
feature of this sector is that the direct tax rate is
determined endogenously to prevent a shock from
causing a continuous rise or fall in the ratio of real
government debt (nominal debt deflated by the GDP
price deflator) to potential GDP. That is, each country's block of equations has a specified target path for
the debt-GDP ratio; if a shock causes the ratio to
deviate from that path, the direct tax rate is adjusted
to ensure that the ratio gradually returns to its target.
For an illustration of this mechanism, consider the
effects of a permanent reduction in government
consumption expenditures under two different fiscal
policy assumptions. Under the first assumption, the
target ratio of government debt to GDP is unchanged.
In this case, the direct tax rate will gradually move
downward so that the drop in government spending is
matched by a similar drop in direct tax revenue and
by a corresponding increase in disposable income. As
already noted, the equilibrium level of private consumption expenditures moves in proportion to real
disposable income. Thus, in the long run, the drop in

Illustration of error correction in FRB/Global:
< m e n t i n Germany

B u s i n e s s fixed i n v e s

Percent
Response to 1 percent rise in real G D P

Business fixed investment

pnai MUCK.

Response to 1 percentage point rise in real interest rate
—

0.5

802

Federal Reserve Bulletin • October 1997

government consumption is offset by a roughly equal
increase in private consumption.
Under the second assumption, the debt-GDP target
ratio gradually adjusts downward toward a new
value, so that the direct tax rate remains constant over
the first twenty-five years of the experiment. During
this period, lower real interest rates stimulate private
expenditures to keep real output at potential and
avoid deflationary pressures, and potential GDP itself
gradually rises in response to the higher level of
private investment. Eventually, however, the downward trajectory of the debt-GDP ratio must be halted
by reducing the direct tax rate, so that the long-run
effects are the same as those described for the previous experiment.

The External Sector
For each foreign G-7 country, exports and imports
are divided into three components: fuel, nonfuel merchandise, and services.
The volume of net fuel imports equals the difference between domestic fuel production and domestic
fuel consumption, in which fuel production is determined exogenously, and fuel consumption depends
on domestic nonfuel output and the relative price of
fuel.
The imports of services and nonfuel merchandise
are determined as follows. Under the assumption of
worldwide balanced growth in the long run, the equilibrium ratio of real nonfuel merchandise imports
to real domestic spending is set by the ratio of the
import price deflator for nonfuel goods to the price
deflator for nonfuel domestic output. In the short run,
real nonfuel merchandise imports adjust at a rate of
30 percent per quarter toward the equilibrium level.
The determination of imports of services involves the
relative price of such imports and follows essentially
the same error-correction mechanism as nonfuel
merchandise.
Exports of services and nonfuel merchandise are
determined by error-correction mechanisms (see box
"Determining Export Volumes").

Aggregate Supply
For each foreign G-7 country, wage and price
determination causes the rates of inflation and unemployment to move inversely in the short run (a
downward-sloping Phillips curve); in the long run,
unemployment settles on its "natural" rate, the point
at which the inflation rate is constant (a vertical



Determining Export Volumes
For each foreign G-7 country, the volume of nonfuel
merchandise exports, XG, is determined by foreign tradeweighted imports, M*, and relative prices, RPXG. We use
the equation block for Germany to illustrate the construction of the variables for foreign demand and relative
prices.
Foreign demand for German exports is the weighted
average of nonfuel goods imports by Germany's trading
partners, in which the weights are constructed using the
bilateral export data for Germany. The relative-price variable measures German competitiveness in each of its
export markets. For example, the share of German
exports in total French imports depends on the relative
price of German exports compared with other exporters
to France. Thus, in constructing the relative-price measure for Germany, RPXG, the French component is defined
as the ratio of the German nonfuel goods export price
deflator to the weighted average of foreign export prices,
in which the weights are constructed using bilateral
import data for France. Finally, the overall measure of
German competitiveness, RPXG, is computed as a weighted
average across German export markets, using bilateral
export weights for Germany.
Using these measures of foreign demand and relative
prices, an error-correction mechanism determines the volume of nonfuel merchandise exports. With constant relative prices, the ratio of XG to M* remains on its baseline
path; that is, each country exports a fixed share of world
imports. If relative prices change, the ratio of XG to M*
gradually adjusts toward its new equilibrium value at
a rate of 15 percent per quarter. Real exports of services
are determined by a similar error-correction mechanism
involving foreign trade-weighted service imports and the
relative price of service exports.

Phillips curve). For example, a monetary stimulus
initially generates a drop in the unemployment rate
and a relatively small increase in wage and price
inflation; as wages and prices rise further, unemployment gradually returns to its natural rate.
In particular, real GDP is determined by aggregate
demand, which is the sum of domestic spending and
net exports. The employment level (and hence the
unemployment rate) adjusts to equate aggregate
supply to aggregate demand. Potential GDP is determined by the size of the labor force, the natural
unemployment rate, the stocks of business fixed capital and residential capital, and net fuel imports. When
output exceeds potential (unemployment is below the
natural rate), wages initially move little but gradually
rise in response to pressures generated by excess
aggregate demand. An error-correction mechanism

Evaluating International Economic Policy with the Federal Reserve's Global Model

ensures that the price deflator for domestic output
gradually moves toward its equilibrium path, which
is a markup over the aggregate wage rate and the
domestic fuel price index.
The specific formulation of aggregate wage behavior depends on how expectations are formed. Under
limited-information expectations, the aggregate wage
inflation rate is a function of past wage inflation rates,
current and past output gaps, consumer price inflation
rates, and short-term interest rates.8 Under modelconsistent expectations, the aggregate wage rate is
determined by the overlapping nominal wage contract specification of Taylor. In this case, the new
wage contracts signed each period depend on expectations about future aggregate wages and deviations
of unemployment from its natural rate; the aggregate
wage rate is defined as the average value of the wage
contracts currently in effect. 9

Financial Markets
The financial-market equations for the foreign countries cover short- and long-term interest rates,
expected inflation, and exchange rates. For countries
whose currencies are assumed to be pegged to the
German mark, interest rates and expected inflation
move in parallel with the corresponding variables in
Germany, apart from an endogenously determined
risk premium on each country's external liabilities.
The premium is related to the ratio of net external
debt to GDP and helps avoid continuously rising or
falling levels of net external debt.
For the countries with independent monetary policies, the monetary policy regime and the method of
expectations formation are crucial in the determination of long-term interest rates, expected inflation,
and the bilateral U.S. dollar exchange rate.

Short-Term Interest Rates
In a typical FRB/Global simulation, Canada, Germany, Japan, and the United Kingdom follow independent monetary policies using a rule of the form
proposed by Henderson and McKibbin and by

8. Regression analysis has been used to estimate the parameters of
this relationship for each foreign G-7 country.
9. John Taylor, "Aggregate Dynamics and Staggered Contracts,"
Journal of Political Economy, vol. 88 (February 1980), pp. 1-23. This
specification of wage determination under model-consistent expectations is highly simplified; alternative specifications of wage determination for the foreign G-7 countries will be considered in subsequent
research.




803

Taylor.10 Under this form of rule, the short-term
interest rate is adjusted in response to the current
output gap and to the current deviation of consumer
price inflation from an exogenously specified target.
France and Italy are usually assumed to maintain
fixed exchange rates with respect to the German
mark. Although these are typical monetary policy
assumptions, FRB/Global has been designed so that
they can be modified easily from one simulation to
the next, a feature that will be highlighted later in this
article.
Long-Term Interest Rates
Under limited-information expectations, the longterm nominal interest rate is specified as a function of
current and past short-term interest rates, inflation
rates, and output gaps. The long-term interest rate
also exhibits partial adjustment, so that the spread
between short-term and long-term rates initially
widens and then gradually shrinks in response to a
shock to the short-term interest rate. Under modelconsistent expectations, the long-term interest rate is
determined as a geometrically declining weighted
average of future short-term interest rates.
Expected Inflation
Under limited-information expectations, short-term
expected inflation is equal to the current inflation
rate; long-term expected inflation is a moving average of current and past short-term inflation rates, with
a relatively slow adjustment of 5 percent per quarter
in response to a persistent change in the inflation rate.
Under model-consistent expectations, short-term
expected inflation is equal to the actual one-stepahead inflation rate, while long-term expected inflation is determined as a weighted average of future
short-term inflation rates (using the same geometrically declining weights as in the long-term interest
rate equation).
Exchange Rates
For those countries with independent monetary policies, the bilateral exchange rate under both limited-

10. In Carnegie-Rochester
Conference Series on Public Policy,
vol. 39 (June 1993), see Dale Henderson and W. McKibbin, "A
Comparison of Some Basic Monetary Policy Regimes for Open
Economies: Implications of Different Degrees of Instrument Adjustment and Wage Persistence," pp. 221-318; and John Taylor, "Discretion versus Policy Rules in Practice," pp. 195-214.

804

Federal Reserve Bulletin • October 1997

information and model-consistent expectations is
determined by real interest parity (the bilateral differential in real interest rates) and the risk premium on
external liabilities, which depends on the ratio of net
external debt to GDP, both measured in U.S. dollars
(see box "Determining Exchange Rates under Alternative Types of Expectations"). Thus, an increase in
the relative magnitude of U.S. net external debt puts
downward pressure on the real value of the dollar,
thereby preventing explosive paths for the net stock
of external debt.
Under either method of expectations formation, an
unanticipated temporary increase in U.S. interest rates
generates an initial rise in the exchange value of the
U.S. dollar, followed by depreciation back toward its
equilibrium value, a point referred to as purchasing

Determining Exchange Rates

power parity. For example, under limited-information
expectations, the bilateral exchange rate depends on
the corresponding differential in long-term interest
rates as adjusted for long-term expected inflation. In
this case, a 1 percentage point increase in the differential between U.S. and German long-term real interest rates generates a 0.08 percent real appreciation of
the dollar against the German mark.
Under model-consistent expectations, the exchange
rate is determined by short-term real interest parity. If
the U.S. three-month real interest rate temporarily
exceeds the German three-month real interest rate by
1 percentage point, then investors are willing to hold
assets denominated in German marks only if the U.S.
dollar is expected to depreciate 1 percent against the
mark over the subsequent quarter. Thus, the temporary interest rate differential generates an immediate
1 percent jump in the value of the dollar, followed by
depreciation back to its long-run value in the subsequent period.

under Alternative Types of Expectations
THE DYNAMIC PROPERTIES OF FRB/GLOBAL

Limited-information expectations:
RER, = 0.08[(RLys ~ ftp) - (RL, - ft,)]
„ , NXDEBTtus - NXDEBT,

-0.1

:

GDPVD"S + GDPVD,
Model-consistent expectations:
RER, - RER,+, = (RSW - j£f») - (RS, - n,)
_

1NXDEBTVS

_ NXDEBT,

JS

GDPVD[ + GDPVD,
Definitions
RER, = the natural logarithm of the bilateral real
exchange rate as adjusted by consumer
prices, where the exchange rate is defined
in units of local currency per U.S. dollar
RL, = the current long-term interest rate
RS, = the current short-term interest rate
NXDEBT, = the net external debt position in
U.S. dollars
GDPVD, = nominal GDP in U.S. dollars
Long-term expected inflation, rip is computed using
limited-information expectations. The one-step-ahead
inflation rate, n r+s , and the one-step-ahead real exchange
rate, RERl+ j, are computed using model-consistent expectations. The US superscript indicates the corresponding
variable in the U.S. block of equations. Each equation
includes an intercept and a residual term (not shown).




The dynamic properties of FRB/Global are described
here through three simulation experiments, each
featuring a different type of shock: an exogenous
reduction in U.S. government spending, an exogenous depreciation of the exchange value of the U.S.
dollar, and an exogenous increase in the OPEC oil
export price. In each experiment, expectations are
assumed to be formed with limited information.
The effects of each shock are evaluated under two
alternative U.S. monetary policy rules: "active" and
"passive." Under the active rule, the nominal federal
funds rate adjusts in response to the output gap and to
the deviation of consumer price inflation from the
target rate. Thus, for each percentage point that output exceeds potential, the short-term nominal interest
rate rises 50 basis points. For each percentage point
increase in average annual inflation (based on the
current and previous three quarters), the short-term
nominal interest rate rises 150 basis points. Under the
passive monetary policy rule, the nominal federal
funds rate is held constant throughout the simulation.
In each simulation experiment, Canada, Germany,
Japan, and the United Kingdom follow independent
monetary policies under the same active monetary
policy rule just described for the United States.
Meanwhile, the French franc, Italian lira, and
SOECD currencies remain fixed to the German mark.
The Mexican peso and the OPEC and ROW currencies are assumed to be pegged to the U.S. dollar,
while the NIE currencies are assumed to be pegged to
a trade-weighted basket of foreign currencies.

Evaluating International Economic Policy with the Federal Reserve's Global Model

The results of each experiment are reported in
terms of deviations from the baseline path; the construction of the baseline is described in appendix C.

Experiment 1: A Reduction in U.S. Government
Spending
In this experiment, real U.S. government purchases
of goods and services are permanently reduced by
1 percent of the baseline path of U.S. GDP, starting in
the first quarter of year 1, while U.S. tax rates are held
constant through year 14. During year 1, the spending
reduction amounts to about $70 billion. Because the
spending shock originates within the United States,
where foreign trade is a fairly small part of the
economy, the experiment also serves as a useful
benchmark for comparing the simulation results from
FRB/Global with those from FRB/US.
The two models generate nearly identical paths for
U.S. real GDP and consumer price inflation (chart 2,
top panels). In FRB/US, the two foreign variables
that enter into the determination of U.S. net exports—
2.

the trade-weighted real exchange rate and foreign
trade-weighted GDP—are each determined by a
single equation; in FRB/Global, they are jointly
determined by 1,400 equations. Yet, in the case of the
real exchange rate, the paths generated by the two
models are quite close, especially over the first three
years of the simulation (chart 2, bottom-left panel).
The differences in the paths for foreign GDP are
slightly larger (bottom-right panel), but the effect on
U.S. exports (not shown) is small.
This example illustrates the general result that,
for domestic shocks, FRB/Global produces essentially the same results as FRB/US. Thus, the natural
role for FRB/Global is in analyzing the effects of US.
shocks on foreign economies and the effects of external shocks on the U.S. economy as well as foreign
economies.

Active U.S. Monetary Policy Rule
Examining the U.S. government spending shock
over its first three years provides a good comparison

Comparison of FRB/Global and FRB/US: A shock in U.S. government spending




805

806

Federal Reserve Bulletin • October 1997

of its effects on four of the countries with independent monetary policies—the United States, Canada,
Germany, and Japan—under both active and passive
U.S. monetary rules (chart 3, sections A and B). In
the active-policy experiment, real GDP in Canada
closely tracks the contraction and recovery in U.S.
output (chart 3.A, top-left panel), inasmuch as
exports from Canada to the U.S. comprise a relatively
large share of aggregate demand in Canada. The U.S.
contraction has a much smaller effect on Japan and
Germany.
The active monetary policy rule prescribes a cut in
short-term interest rates in each country (chart 3.A,
bottom-left panel). The short rate in Canada falls a
full percentage point, whereas the Japanese and German short rates fall only about 20-40 basis points.
Long-term real interest rates in all three foreign
countries fall less than in the United States
(chart 3.A, bottom-right panel). Thus, each foreign
currency exhibits real appreciation relative to the U.S.
dollar (see the equations for determining exchange
rates), accounting for the depreciation in the tradeweighted U.S. real exchange rate (chart 2, bottom-left
panel).
The U.S. fiscal shock under an active U.S. monetary policy improves the U.S. trade balance by about
$15 billion (table l.A); the improvement arises
from a combination of the depreciation in the real
exchange rate and lower domestic spending. The U.S.
current account improves even more as lower rates of
profit and interest reduce the rates of return paid on
direct investment and portfolio liabilities. The rise in
U.S. net exports is reflected in a fairly even drop in
net exports among the other eleven blocks. The restof-world (ROW) trade balance is determined by the
constraint that the global trade deficit remain at its
baseline value. Nevertheless, the decline of about
$5 billion in ROW net exports seems to be reasonable
in light of the fact that the ROW block accounts for
about 30 percent of U.S. imports.

foreign real interest rates in response to the active
monetary policy rules in Canada, Germany, and Japan
lead to real appreciation of the U.S. dollar. As long
as the U.S. federal funds rate remains constant, these
contractionary influences will grow in magnitude,

Effects of selected shocks on the trade balances and
current accounts of countries and country groups in
FRB/Global, years 1 through 3
U.S. dollars
A. U.S. government spending shock

United States

Italy
United Kingdom
Smaller OECD
NIEs
OPEC
ROW

When the United States maintains a constant federal funds rate, U.S. real GDP remains stagnant, at
about 1 percent below baseline, during the first three
years of the simulation (chart 3.B, top-left panel),
while consumer price inflation falls because of the
downward-sloping short-run Phillips curve (toplight panel). Thus, expected long-term inflation falls,
and the long-term real interest rate gradually
increases (bottom-right panel). Meanwhile, falling




Current account

Year

Year

1

2

3

1

2

3

15.1
.1
-.6
-1.5
.1
.1
-.8
-1.0
-.3
-1.6
-4.4
-5.1

16.9
.2
-1.4
-1.3
-.3
-.3
-.6
-1.7
-.5
-1.2
-3.0
-6.8

11.8
.1
-1.6
-1.2
-.7
-.4
-.4
-1.1
-.6
-.4
-1.0
-4.3

24.3
-.8
-5.3
-1.0
-.4
.0
-1.6
-.8
-.2
-1.1
-4.9
-8.3

27.8
-.8
-7.4
-.9
-1.0
-.7
-1.8
-1.6
-.4
-1.2
-4.1
-7.9

23.7
-1.3
-9.0
-.9
-1.7
-.9
-1.8
-1.1
-.6
-.8
-2.8
-2.9

23.8
4.3
-5.6
1.2
2.3
.4
-4.0
-.9
1.4
-14.2
-2 1
-6.7

34.7
2.8
-10.5
.6
-1.6
-1.1
-4.1
-2.4
1.8
-13.5
_2
-6.4

-3.6
-2.4
-1.4
.3
1.6
3.1
-3.1
5.8
-.5
-5.3
97
15.1

18.1
-2.0
-3.8
.8
-1.2
-1.9
-10.0
2.1
.0
-6.4
52
9.6

28.2
-4.3
-10.6
.5
-5.9
-3.5
-10.0
.8
.5
-6.7
-3 5
14.5

-1.8
-3.0
-5.7
.2
-1.9
-2.3
-.2
1.7
1.4
-4.8
21.8
-5.5

-14.2
-4.6
-11.4
.9
-2.6
-3.2
.0
-1.1
1.4
-2.5
35.3
2.0

-3.1
-3.8
-10.1
.5
-2.5
-3.1
-1.0
.1
1.6
-3.0
30.7
-6.1

-1.0
-3.8
-9.3
.5
-2.6
-2.9
-1.1
1.6
1.5
-3.7
28.0
-7.2

B. U.S. currency shock
United States

NIEs

-2.8
2.2
-1.1
.5
3.7
2.4
-3.0
3.3
.4
-12.1

ROW

13.5

Canada
United Kingdom
Smaller OECD

C. OPEC oil export price shock
United States
Germany

United Kingdom
Smaller OECD

Passive U.S. Monetary Policy Rule

Trade balance
Country or
region

NIEs
OPEC
ROW

-13.1
-4.1
-12.3
1.3
-2.7
-3.0
.5
-1.2
1.4
-3.2
34.5
2.7

-4.0
-3.3
-7.9
.3
-2.1
-2.6
-.2
.2
1.4
-4.4
26.8
-4.1

NOTE. Each shock begins at the start of year 1. In each simulation, the U.S.
monetary authorities follow the active monetary policy rule, in which the federal funds rate is adjusted to counteract movements in the output gap and in
deviations of consumer price inflation from the target rate.
The U.S. government spending shock is a permanent reduction in spending
equal to 1 percent of the baseline path of U.S. GDP.
The U.S. currency shock is a 5 percent depreciation in the exchange value of
the U.S. dollar versus the Canadian dollar and a 10 percent depreciation versus
the currencies of the rest of the G-7, the smaller OECD countries, and the newly
industrializing economies (NIEs).
The OPEC oil export price shock is an increase of $5 per barrel above the
baseline path.

Evaluating International Economic Policy with the Federal Reserve's Global Model

3.

807

U.S. g o v e r n m e n t spending s h o c k under active and passive U.S. monetary policy rules

A. Active monetary policy rule

Percent

Percent

Output g a p

Consumption price deflator
—

0.5

—

—

0.5

Germany

Canada
United States

Percentage points
Short-term nominal interest rate

B. Passive monetary policy rule

Percentage points
Long-term interest rate

Percent

Percent
Consumption price deflator

Percentage points
Short-term nominal interest rate

NOTE. For definitions of shock and active monetary policy rule, see note to table 1.




Percentage points
Long-term interest rate

808

Federal Reserve Bulletin • October 1997

generating an explosive downward spiral for U.S.
output and prices. 11

Experiment 2: A Depreciation in the Exchange
Value of the U.S. Dollar
In this simulation, the exchange value of the US.
dollar depreciates 5 percent against the Canadian
dollar and 10 percent against the currencies of the
other foreign G-7 countries, the SOECD, and the
NIEs. After the depreciation in year 1, these exchange
rates remain fixed at the new level throughout the
simulation period. Because the depreciation is not
triggered by a change in expectations about future
interest rates, it may be viewed as arising from an
exogenous downward shift in preferences for holding
dollar-denominated assets.
Under the active as well as the passive monetary
policy regime, the exchange rate depreciation
improves U.S. external competitiveness and stimulates net exports, thereby raising real GDP about
0.6 percent within about a year (charts 4.A and 4.B,
top-left panels). The exchange rate depreciation also
passes gradually into U.S. import prices and ultimately into higher consumer price inflation (top-right
panels). The active monetary policy rule prescribes
an increase of almost 150 basis points in the federal
funds rate by the middle of year 2 and gradually
pushes up the long-term real interest rate (chart 4.A,
top-right panel).
Under the active U.S. monetary policy rule, the
U.S. trade balance displays a standard J-curve
response to the exchange rate depreciation, with a
small initial deterioration yielding to an improvement
of $35 billion by the end of year 3 (table l.B). The
U.S. current account improves a smaller amount as
higher rates of interest and profit generate higher net
factor payments. Japan and the NIEs bear the brunt
of the increase in U.S. net exports. The ROW is not
severely affected—its price level adjusts fairly
quickly to maintain a constant trade-weighted real
exchange rate.

Experiment 3: An Increase in OPEC Oil
Export Prices
In this case, the export price of OPEC oil increases
$5 per barrel above its baseline path in year 1 and
11. These results are consistent with standard economic theory,
which holds that the domestic price level is indeterminate (that is, not
tied down by macroeconomic fundamentals) under a fixed nominal
interest rate.




remains fixed at $5 above the baseline thereafter
(chart 5 and table l.C). This shock roughly corresponds to a 25 percent rise in the fuel import prices
faced by all countries and regions in the model.
Under the active monetary policy rule, the U.S. consumer price level rises about 0.3 percent by the end
of year 1 (chart 5.A, top-right panel).
To push inflation back toward its target rate, the
active policy raises the federal funds rate 20 basis
points, causing a mild contraction in which U.S. real
GDP falls about 0.3 percent (chart 5.A, top-left
panel). As inflationary pressures subside, the federal
funds rate returns to baseline, and by year 3 the
output gap is almost closed. By contrast, U.S. output
remains close to the baseline under a constant federal
funds rate (chart 5.B, top-left panel), but consumer
prices rise about 0.5 percent (chart 5.B, top-right
panel), nearly twice as much as under the active
policy rule.

ILLUSTRATIVE APPLICATIONS OF FRB/GLOBAL
FRB/Global can be used to analyze the spillover
effects of fiscal and monetary policy under alternative
European monetary policy regimes, an area of interest given the movement toward a European monetary
union. Simulations inform the forecasts of the
Board's staff regarding foreign activity and the U.S.
external sector. This section discusses three examples
of such simulations.

A Comparison of EMS and EMU
The first scenario highlights the effects of different
monetary policy regimes on simulations for France
and Germany of a fiscal shock originating in Germany. The shock is a permanent increase in German
government spending equal to 1 percent of German
GDP beginning at the outset of year 1. Although
hypothetical, this shock is comparable to the fiscal
expansion in Germany that followed reunification in
1990.
The scenario covers two monetary policy regimes:
the current arrangements (the European Monetary
System, or EMS) and those envisioned under the
Economic and Monetary Union (EMU). Under the
EMS regime, monetary policy in Germany follows
an active rule (German short rates respond to deviations of German output and inflation from target),
while France, Italy, and the SOECD countries peg

Evaluating

4.

International

Economic

Policy with the Federal Reserve's

Global Model

809

U.S. currency shock under active and passive U.S. monetary policy rules
A. Active monetary policy rule
Output gap

Consumption price deflator
0.5
0.5

United States

0.5
Germany

0 5

1.0

Percentage points

Percentage points
Long-term real interest rate

Short-term nominal interest rate

0.2

0.2

0.4

B. Passive monetary policy rule

Percent

Percent

Percentage points
Short-term nominal interest rate

0.5

1.0

2
Year
NOTE. For definitions of shock and active monetary policy rule, see note to table 1.




Percentage points
Long-term real interest rate

810

5.

Federal Reserve Bulletin • October 1997

S h o c k to the export price o f O P E C oil under active and p a s s i v e U.S. monetary p o l i c y rules

A. Active monetary policy rule
Output gap

Consumption price deflator
—

Canada

Percent

Percent

0.4

Germany

United States

Percentage points
Short-term nominal interest rate

B. Passive monetary policy rule

Percentage points
Long-term real interest rate

Percent

Percent
Consumption price deflator

Output gap

Percentage points
Short-term nominal interest rate

NOTE. For definitions of shock and active monetary policy rule, see note to table 1.




Percentage points
Long-term real interest rate

Evaluating International Economic Policy with the Federal Reserve's Global Model

their currencies to the German mark. 12 In this experiment, the United States, Canada, Japan, and the
United Kingdom follow independent monetary policies under the EMS.
Under the model's EMU regime, the European
Central Bank would implement monetary policy for
the member countries; it would use an active monetary policy rule in which the interest rate on the
common currency (the euro) responds to the weighted
average of the output gaps and inflation deviations of
all member countries. This rule highlights the contrast between the EMU and the EMS regimes; in the
latter, short-term interest rates in all member countries are determined by the output and inflation gap in
Germany (apart from a risk premium on external
liabilities).
The actual composition of the EMU and the relative influence of its members remain open issues. For
this experiment, all members of the European Union
except the United Kingdom are assumed to join the
EMU, and the influence of specific countries in the
equation governing the European Central Bank's
simulated response are represented by weights calculated from the relative dollar values of GDP of
the member states. On that basis, Germany's weight
is slightly more than lA, France and Italy each have
a weight of about Vs, and the SOECD weight is
about lA.
Under the EMS, the fiscal expansion in Germany
has a direct positive effect on German GDP and
prices (chart 6.A, top panels). The German central
bank responds to the shock by raising short-term
interest rates substantially (about 75 basis points)
(chart 6.A, bottom-left panel). France must raise
interest rates by a similar magnitude in order to
maintain the exchange rate peg (chart 6.B, bottomleft panel). The interest rate hike in France has
strongly contractionary effects on real GDP and
prices in France (chart 6.B, top panels), which are
only partially offset by higher net exports to
Germany.
Under the EMU regime, the same fiscal shock
produces a rise in the interest rate in each country
(about 60 basis points) that is somewhat smaller than
under the EMS (as noted, about 75 basis points)
(chart 6.A and 6.B, bottom-left panels). The smaller
rise in interest rates reflects the fact that the European
Central Bank adjusts interest rates according to the
effects of a shock on the output gaps and inflation
rates of all member countries. Under the EMU, the

12. Because the SOECD block includes Australia and New
Zealand, the simulations are intended to only approximately represent
both EMS and EMU.




811

effects of a German-specific fiscal expansion on the
rates of GDP and inflation in all member countries
are much smaller than the effect on Germany; therefore, interest rates rise less than they do under the
EMS, in which interest rates target only the German
output and inflation gaps.
In addition, output and prices in Germany rise
more under the EMU than they do under the EMS
in response to the fiscal expansion (chart 6.A, top
panels). These results highlight the point that relative
to the EMS, the EMU will tend to generate somewhat
higher variability of output and inflation in Germany
because German short-term interest rates will reflect
economic conditions in all member countries and not
just those in Germany, as they do under the EMS.
Likewise, under the EMU, the contractionary
effects in France arising from fiscal expansion in
Germany are much smaller than they are under the
EMS (chart 6.B). In particular, the variability of
French output and inflation are markedly lower.
These results illustrate the general point that, as modeled by FRB/Global, a country that currently pegs its
currency to the German mark will tend to reduce the
volatility of its output and inflation by joining EMU.

A Comparison of Independent Monetary Policy
and Participation in EMU
Although countries that currently participate in the
EMS (other than Germany) may experience a reduced
volatility of inflation and output under the EMU, a
non-EMS country joining the EMU presumably
would sacrifice some control over domestic macroeconomic outcomes by giving up its independent
monetary policy. To test the latter proposition, we
analyze a fiscal shock similar to that considered
above—a permanent increase in fiscal spending of
1 percent of GDP—but this time within the United
Kingdom instead of Germany. We consider its effects
on the United Kingdom under each of two monetary
policy scenarios: U.K. membership in the EMU and
an independent monetary policy in the United
Kingdom.
Under the EMU scenario, the European Central
Bank is assumed to adjust interest rates using the
active monetary policy rule discussed above, except
that the United Kingdom is now included in the set
of member countries. In this simulation, the United
Kingdom receives a relatively small GDP-based
weight of Vs. Under an independent monetary policy,
the United Kingdom uses a variant of the active
monetary policy rule, in which the short-term interest
rate is adjusted to keep U.K. output at its target level.

812

6.

Federal Reserve Bulletin • October 1997

German fiscal shock under EMS-style and EMU-style monetary policies
A. Effects on Germany

Percent

Real GDP

Percent
Consumption price deflator

EMU

Percentage points
Short-term interest rate

Percent
Nominal exchange rate

0.50

B. Effects on France

Percent

Real GDP

Consumption price deflator

Percentage points
Short-term interest rate

NOTE. The shock begins at the start of year 1 and consists of a permanent
increase in German central government spending equal to 1 percent of GDP. See
text for definition of monetary policy alternatives.




Percent
Long-term interest rate

Evaluating International Economic Policy with the Federal Reserve's Global Model

After the fiscal expansion in the United Kingdom,
output there initially rises sharply (to 1 percent above
baseline) if the country is in the EMU (chart 7,
top-left panel); in contrast, an independent U.K.
monetary policy could basically target output at baseline. The monetary tightening and the resulting rise in
U.K. interest rates under an independent policy is
considerably more aggressive than that which would
be taken by the ECB if the United Kingdom were one
of its members (bottom-left panel).
The simulation just described illustrates how a
country such as the United Kingdom stands to incur
some increase in the variability of output and inflation by forgoing an independent monetary policy.
Although the FRB/Global simulations help to assess
these costs, the simulations do not take into account
some potential benefits of joining EMU, including
the microeconomic benefits of lower transaction costs
that come with a common currency. Another potential benefit is the "credibility effects" that could
reduce the risk premium on a country's external

7.

813

liabilities. That is, choosing to link its economy to a
common monetary policy could enhance a country's
status as an inflation fighter, which would tend to
lower the risk premium on its external liabilities.

The Formation of Expectations
The final scenario examines the implications of
alternative assumptions about expectations. The
implications are most apparent in the case of shocks
whose effects arise after the start of the simulation.
We compare the results obtained from expectations
that are formed with limited information to the results
obtained with model-consistent expectations—those
formed with the benefit of all the information contained in the model.
Limited-information expectations depend exclusively on past information; hence, shocks are unforeseen. By contrast, with model-consistent expectations, agents are assumed to have perfect foresight
about the shock, meaning that they know the entire

U . K . fiscal s h o c k : E f f e c t s o n the U n i t e d K i n g d o m under i n d e p e n d e n t and E M U - s t y l e m o n e t a r y p o l i c i e s
Percent

—

PercCm

Consumption price deflator
1.0

0.5

Independent U.K.
—

0.5

Percentage points
Short-term nominal interest rate

0.5

Percentage points
Long-term real interest rate

1.0
—

2

0.5

3
Year
NOTE. The shock begins at the start of year 1 and consists of a permanent
increase in U.K. central government spending equal to 1 percent of GDP. See
text for definition of the monetary policy alternatives.




3
Year

814

Federal Reserve Bulletin • October 1997

future path of the variable whose value is being
exogenously changed in the simulation. The assumption of such foresight enables the model to capture
the notion that news about future economic developments can affect the current economy.
Under each variant of the model, we consider the
short- and medium-term response of agents to an
announcement by the German government at the
beginning of year 1 that, at the beginning of year 3, it
will permanently add to its spending an amount equal
to 1 percent of GDR The monetary policy regime
in years 1 and 2 is assumed to be the EMS; in
year 3, the EMU. (The United Kingdom conducts
an independent monetary policy throughout these
simulations.)
In Germany, limited-information expectations produce no response until the spending rise is implemented in year 3 (chart 8). Even long-term interest
rates fail to respond (bottom-right panel), an indication that, until the shock is implemented, agents do
not expect future short-term rates to rise. From year 3
forward, however, the limited-information dynamics
are like those in the previous simulation of the effects
8.

on Germany of a German fiscal expansion (chart 6. A)
because that simulation was also conducted under
limited-information expectations.
Under model-consistent expectations, agents in
year 1 can use the information that the European
Central Bank will be in operation as of the beginning
of year 3: As soon as the forthcoming year-3 shock is
announced, agents realize that the central bank will
have to raise short-term interest rates beginning in
year 3 to restrain the effects of the projected fiscal
expansion on output and prices. The expectation of
the rise in future short rates (chart 8, bottom-left
panel) causes an immediate rise in long-term rates
(bottom-right panel). The rise in long rates in turn
causes real activity to contract somewhat in years 1
and 2, so in this simulation, a future fiscal expansion
has a contractionary effect in the short run.
Thus, FRB/Global accommodates two different,
and somewhat extreme, perspectives on the formation of expectations. The degree of divergence in the
results produced by each perspective in a given scenario depends on whether the effects of the shock are
anticipated by economic agents.

Future German fiscal shock: Model-consistent vs. limited-information expectations
Percent
Consumption price deflator

Real G D P

Limited-information

Percentage points
Short-term interest rate

NOTE. The shock, of the magnitude given in chart 6, is announced in year 1
for implementation in year 3. See text for definition of expectations alternatives.




Percentage points
Long-term interest rate

Evaluating International Economic Policy with the Federal Reserve's Global Model

815

The equation blocks for the foreign G-7 countries
cover government expenditures, tax revenue, net
factor income, potential output, aggregate wages, and
domestic prices.

wage rate and total employment. 15 The fuel tax rate is
specified on a per-barrel basis, and the value of the
tax per barrel is indexed to the GDP price deflator but
not to the current price of fuel. Other indirect taxes
(for example, the value-added tax) are assumed to
vary proportionally with the value of private consumption and investment expenditures.

Government Expenditures

Net Investment Income from Abroad

Total government expenditures are divided into five
components: consumption, investment, subsidies,
transfers to households, and interest payments. Real
government consumption and investment expenditures on goods and services are exogenously determined; the corresponding nominal values are
obtained using price deflators for government consumption and investment. The nominal value of
government subsidies moves proportionally with
the level of nominal GDP. In contrast, real transfers
to households are assumed to be acyclical, depending only on potential GDP; nominal transfers are
obtained using the GDP price deflator. Finally, interest payments are computed by multiplying the stock
of government debt by the average rate of return on
outstanding government securities. The average rate
of return is assumed to be a weighted average of two
components: the current short-term Treasury bill rate
and a moving average of past long-term bond rates. 13

Net investment income from abroad is divided into
four components: direct investment payments and
receipts and portfolio investment payments and
receipts. Each of the four is computed by multiplying
the outstanding stock of claims or liabilities by the
appropriate rate of return. The rate of return on direct
investment liabilities varies with the domestic output
gap, while the rate of return on direct investment
claims varies with a weighted average of foreign
output gaps in which the weights are computed using
bilateral export data. The rate of return on portfolio
liabilities is assumed to be a weighted average of two
components: the current short-term interest rate and
a moving average of past long-term interest rates.
Finally, the rate of return on portfolio investment
claims is a weighted average of foreign rates of
return on portfolio investment liabilities, adjusted for
exchange rate movements.

APPENDIX
BLOCKS

A: THE FOREIGN

G-7

EQUATION

Potential Output
Tax Revenue
Total government revenues are divided into four components: direct taxes, social security payroll taxes,
fuel taxes, and other indirect taxes.14 Direct tax revenue consists mainly of personal and corporate income
taxes and is computed by multiplying the direct tax
rate by nominal net national product (nominal GDP
plus net factor income from abroad, less depreciation
allowances). The direct tax rate is endogenously
determined to stabilize the ratio of real government
debt to potential GDP.
Payroll taxes are assumed to vary proportionally
with labor income, which is the product of the hourly
13. In all foreign G-7 country blocks, the weights on the short-term
and long-term components are 10 percent and 90 percent respectively.
The long-term component assigns weights of 0.05 to the current
long-term bond rate and 0.95 to the previous period's long-term
component. In future work, we intend to construct new weights
that reflect cross-country differences in the maturity structure of
government debt.
14. Strictly speaking, payroll taxes are a subcategory of direct
taxes, so direct taxes in this discussion should be understood as
referring to the nonpayroll component of direct tax revenue.




Potential domestic nonfuel output is determined by a
Cobb-Douglas production function exhibiting constant returns to scale with respect to labor, the business fixed capital stock, the residential capital stock,
and domestic fuel consumption. 16 Potential GDP is
defined as potential nonfuel output less net fuel
imports, a formula that reflects the concept of GDP
as a measure of value added (gross output less raw
materials).

Aggregate Wages
Under limited-information expectations, the inflation
rate of aggregate wages is specified as a function of
15. Hours of work are assumed to be constant in the current
version of FRB/Global; this variable will be determined endogenously
in future work.
16. These four inputs have output elasticities of 0.7, 0.15, 0.1, and
0.05 respectively. Future work on FRB/Global will incorporate
country-specific production parameters and will relax the assumption
that the industrial sector uses a constant fraction of total domestic fuel
consumption.

816

Federal Reserve Bulletin • October 1997

past wage inflation rates as well as current and past
output gaps, consumer price inflation rates, and shortterm interest rates. Under model-consistent expectations, the aggregate wage rate is determined by overlapping nominal wage contracts, as formulated by
Taylor.17 At the beginning of each quarter, one-fourth
of the work force is assumed to sign new wage
contracts of annual duration. When unemployment
remains at its natural rate, each contract specifies a
wage rate equal to the average expected aggregate
wage rate over the subsequent year. In addition, the
wage contract is adjusted to account for the average
expected deviation of unemployment from its natural
rate over the subsequent year. In particular, for a
given value of the average expected aggregate wage,
a 1 percentage point increase in unemployment
throughout the coming year reduces the current contract wage rate 0.02 percent. Finally, the aggregate
wage rate is defined as the average of the four wage
contracts currently in effect.

Domestic Prices
The price deflator for domestic nonfuel output is
determined as a markup over the aggregate wage rate
and the domestic fuel price index. 18 The markup rate
is assumed to be mildly procyclical: Given employment and fuel costs, a persistent 1 percentage point
increase in the output gap generates a 0.36 percent
rise in the domestic nonfuel output price deflator. The
gap between the markup rate and its equilibrium
value shrinks about 33 percent per quarter. Given
prices for fuel imports and exports and the price
deflator for nonfuel output, nominal GDP is computed as nominal domestic nonfuel output less net
fuel imports, and nominal domestic spending is computed as nominal GDP plus net nonfuel imports. The
GDP price deflator is then determined by the ratio of
nominal to real GDP, and the domestic spending
deflator is determined as the ratio of nominal to real
domestic expenditures. The private and government
price deflators for consumption and investment move
proportionally with the domestic spending deflator,
so that the relative prices of the components of
domestic spending are held constant. Finally, the
domestic fuel price depends on the price of imported
fuel and the fuel tax rate.

17. Taylor, "Aggregate Dynamics and Staggered Contracts."
18. The relative weights are identical to those in the production
function: 0.92 on labor and 0.08 on fuel.




Import and Export Prices
The import price deflators for services and nonfuel
goods are determined by a weighted average of foreign export prices converted into local currency units,
with the weights constructed from bilateral import
data.
The export price deflators for services and nonfuel
goods are determined by the price of domestic nonfuel output and a weighted average of foreign output
prices converted into local currency, with the weights
constructed from bilateral export data.
The price deflators for fuel exports and imports are
determined by the local-currency equivalent of the
OPEC oil export price, which is expressed in U.S.
dollars per barrel.

APPENDIX B: OTHER
FOREIGN-COUNTRY
EQUATION BLOCKS OF
FRB/GLOBAL

Three blocks of equations represent Mexico, the
NIEs, and the SOECD. These three blocks have a
structure similar to that of the foreign G-7 blocks but
with no disaggregation of private investment, government revenue, and the capital account. The currencies
of the SOECD are assumed to be pegged to the
German mark, so that SOECD interest rates and
expected inflation move in parallel with the corresponding German variables, apart from differences
in risk premiums on external liabilities. Similarly,
the Mexican peso is assumed to be pegged to the
U.S. dollar, and the NIE currencies are assumed
to be pegged to a trade-weighted basket of foreign
currencies.
The OPEC block is intended to represent fuelexport-oriented developing economies with no inertia
in their nominal macroeconomic variables. The
OPEC currencies are assumed to be fixed to the U.S.
dollar, and the OPEC nonfuel output price level
adjusts in a flexible way to maintain a stable tradeweighted real exchange rate. OPEC imports adjust
gradually to maintain a constant ratio of net external
assets to nominal GDP. The OPEC oil export price is
endogenously determined by world fuel consumption
and a trade-weighted index of foreign prices converted into U.S. dollars. For example, a 1 percent
increase in world fuel consumption generates a 1 percent increase in the equilibrium OPEC oil export
price, with an adjustment rate of 40 percent per
quarter toward the new equilibrium price level.
The ROW block of FRB/Global plays a crucial
role in ensuring that all global adding-up constraints
are satisfied. Thus, all ROW variables related to the

Evaluating International Economic Policy with the Federal Reserve's Global Model

current account and capital account are defined by
accounting identities; for example, ROW net nonfuel
merchandise exports are determined by the sum of
net nonfuel merchandise imports of the other eleven
blocks.
At the same time, the ROW block is intended to be
representative of small open developing economies
with no nominal inertia. Thus, the ROW nonfuel
output price index adjusts fairly quickly in response
to changes in the ratio of net external debt to nominal
GDR Since the ROW currencies are assumed to be
fixed with respect to the U.S. dollar, these movements
in the ROW price level translate directly into the
trade-weighted real exchange rate, which in turn
influences the net exports of the other eleven blocks
and contributes to the long-run stability of the global
model.

APPENDIX C: CONSTRUCTION
FRB/GLOBAL
BASELINE

OF THE

The data used to construct the FRB/Global baseline
come from a variety of sources (table C.l). The
FRB/Global baseline (tables C.2 and C.3) is extrapolated to the fourth quarter of 2025 under the assumption of a gradual transition to a balanced growth path.
Thus, all output gaps in the model are closed within

C. 1.

about ten years, and each component of aggregate
demand converges to a constant fraction of real GDR
Consumer price inflation gradually converges to a
constant rate of 3 percent, and each wage and price
deflator eventually becomes constant relative to the
consumer price index. Finally, tax rates are adjusted
so that fiscal balance is achieved within about twenty
years.
•

C.2.

Highlights of the FRB/Global baseline
Percent
Country or
region

United States
Germany

Italy
United Kingdom ..
SOECD
NIEs
OPEC
ROW

United States
Domestic
External sector
Foreign industrial countries
National accounts, fiscal
and trade data
Foreign direct and portfolio
investment
Bilateral export and import shares
Fiscal data, stocks of government
debt
Oil production, consumption,
and trade
Oil prices and tax rates
Real capital stocks, depreciation
rates
Developing countries
Mexico and NIEs data
Additional data for NIEs
OPEC and ROW data

C.3.

Exports

24
8
15
2
5
4
4
12
1
3
2
20

Net external Government
debt
assets
-14
11
20
-43
-1
-5
7
16
-65
16
125
-20

11
24
10
38
24
24
29
27
32
56
31
20

Percent
Exporter

United States

United States

Germany

Japan

5

19
4

IMF balance of payments statistics
IMF direction of trade statistics

NIEs
OPEC
ROW

5
15
18
2
2
3
6
8
10
4
27

IMF government finance statistics

Total

100

OECD-IEA oil and gas statistics
OECD-IEA energy prices and taxes

NOTE. Averages for 1995. Imports measured in U.S. dollars.
. . . Not applicable.

FRB/US baseline
Baseline of a Federal Reserve
international transactions model

BIS database

Penn world tables
IMF international finance statistics
DRI database
IMF World Economic Outlook

49
77
59
107
44
119
56
63
n.a.
n.a.
n.a.
n.a.

Merchandise imports of the United States, Germany,
and Japan in the FRB/Global baseline, distributed by
exporter

Sources

BIS Bank for International Settlements
IMF International Monetary Fund
OECD-IEA Organisation for Economic Cooperation and DevelopmentInternational Energy Agency




Ratio to country's or region's GDP
Share of
world GDP

NOTE. Averages for 1995.
n.a. Not available.

Sources of baseline data for FRB/Global variables
Variables

817

Canada
France
Italy
United Kingdom
SOECD

5
.5
11
8
6
39
.1
4
2
20
100

3
2
2
2
15
.4
12
13
27
100

818

Industrial Production and Capacity Utilization
for August 1997
Released for publication September 15
Industrial production increased 0.7 percent in August,
with widespread gains in manufacturing. In addition,
output growth in July was revised up 0.2 percentage
point to 0.4 percent. The upward revision in July was
largely the result of higher manufacturing output—
especially nondurables. At 121.3 percent of its 1992
average, industrial production in August was 4.7 per-

cent higher than in August 1996. The rate of industrial capacity utilization rose to 83.9 percent—its
highest rate since September 1995.
The acceleration in industrial production between
July and August was concentrated in manufacturing;
much of it was related to the 10 percent jump in the
assembly of autos and light trucks, which had
dropped 5 percent from June to July. Excluding motor
vehicles and parts, manufacturing production rose

Industrial production indexes
Twelve-month percent change

Twelve-month percent change

Durable
manufacturing

Materials

10

Products

J

1991

1992

1993

I

1994

L

1995

1996

1991

1997

1992

1993

1994

1995

1996

1997

Capacity and industrial production
Ratio scale, 1992 production = 100

Ratio scale, 1992 production = 100
—

Total industry
Capacity

Production
1

1

1

1

1

1

1

1

1

160
140

—

120

-

100

=

-

Manufacturing

—

Capacity

1

1

1

—

1

1

1

1

1

1

1

1

Percent of capacity

1

_
1

1

1

1

1

Manufacturing
-

Utilization

90
80

Utilization

-

—

J ^ r ^ ^ r

1987

1989

1

1
1991

1

1

1

1993

1
1995

I

1
1997

70
t
1983

i

l
1985

I

l
1987

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




90

80

70
1
1985

80

Percent of capacity

Total industry

1983

140

100

""""

Production

1

160

120

80
1

_

1989

1991

1993

l

1995

l
1997

819

Industrial production and c a p a c i t y utilization, A u g u s t 1 9 9 7
Industrial production, index, 1992=100
Percentage change
Category

1997
19971
r

July

r

Aug.p
121.3

1

r

r

May'

June

Total

119.5

119.9

120.4

Previous estimate

119.3

119.6

119.8

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

115.9
112.6
136.1
120.6
125.2

116.1
112.5
137.5
120.3
125.9

116.3
112.8
139.0
118.8
127.0

117.2
113.5
141.7
119.2
127.8

-.2

1.1
-1.2

-.2

.6

.9

.6
1.9
.4
.7

Major industry groups
Manufacturing
Durable
Nondurable
Mining
Utilities

121.0
132.7
108.7
108.1
112.4

121.6
134.1
108.4
107.4
112.1

122.2
134.7
109.0
106.8
112.7

123.4
136.8
109.3
105.8
111.4

.1
.3
.0
1.9
-1.0

.4
1.0
-.3
-.6
-.3

.5
.4
.6
-.5
.5

1.0
1.6
.3
-.9
-1.1

May "

June

July

Aug.

4.7

.4
.4
.4
.4

.2

.2

-.1

.3

1.0

1996

Total

82.1

Low,
1982

71.1

85.3

81.2
80.6
82.3
87.5
87.2

69.0
70.4
66.2
80.3
75.9

85.7
84.2
88.9
86.8
92.6

NOTE. Data seasonally adjusted or calculated from seasonally adjusted
monthly data.
1. Change from preceding month.

0.7 percent in August, as it had in July, with large
increases in the output of commercial aircraft, computers, semiconductors, and primary metals. Output
at mines, however, declined 0.9 percent, and that at
utilities fell 1.1 percent.

MARKET

GROUPS

Led by a 2.1 percent advance in the production of
durable goods, the overall output of consumer goods
grew 0.6 percent in August; the production of nondurable goods advanced 0.3 percent. The gain in
consumer durables resulted from the sharp rebound
in the output of motor vehicles, which more than
offset noticeable declines in the production of appliances and most other consumer durables. Among
nondurable consumer goods, the production of nonenergy products increased for the second consecutive
month, with advances in food and tobacco products
and in chemical and paper products. The output of



.1

5.2
5.3
7.4
2.9
1.3
.5
Capacity,
percentage
change,
Aug. 1996
to
Aug. 1997

Aug.

May'

June r

July r

Aug.?

83.2

83.5

83.5

83.6

83.9

3.9

83.3

83.3

83.1

82.4
80.3
87.1
94.6
88.5

82.5
80.6
86.9
93.9
88.2

82.6
80.7
86.9
93.2
88.5

83.1
81.3
87.3
92.2
87.4

4.2
5.1
2.3
1.0
1.8

Previous estimate
Manufacturing
Advanced processing
Primary processing .
Mining
Utilities

1997

High,
1988-89

4.4
3.1
11.0

MEMO

Capacity utilization, percent

Average,
1967-96

Aug. 1996
to
Aug. 1997

82.3
80.4
86.5
91.9
88.5

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

consumer energy products was unchanged in August
because a large gain in the output of automotive
gasoline was nearly offset by a drop in residential
electricity sales.
The output of business equipment expanded at a
1.9 percent pace, marking a third straight month of
sizable gains; this index has increased 11.0 percent
since August 1996. While the growth in business
equipment was led by solid gains in the output of
business vehicles, it was also accompanied by further
strong increases in information processing equipment, especially computers and related equipment,
and by large gains in commercial aircraft and in farm
machinery and equipment. Moreover, after several
months of weakness, the production of industrial
equipment rebounded with big increases in both July
and August. The output of defense and space equipment rose 0.6 percent.
After a drop of 1.2 percent in July, the output of
construction supplies recovered partially with a
0.4 percent increase; nevertheless, the August index

820

Federal Reserve Bulletin • October 1997

for this market group was just 0.1 percent above
its August 1996 level. Meanwhile, the production
of materials posted another sizable gain, led by a
1.5 percent increase in the output of durable goods
materials; strong gains in the production of equipment parts, particularly semiconductors, and parts for
consumer durables, especially motor vehicles, supplied much of the boost. Energy materials fell 0.9 percent, with noticeable declines in coal mining and
electricity generation. The output of nondurable
goods materials decreased 0.3 percent; a large gain in
container output was more than offset by drops in the
other major categories of materials.

INDUSTRY

GROUPS

Manufacturing output increased 1.0 percent in August
after a 0.5 percent increase in July; excluding motor
vehicles and parts, production rose 0.7 percent for a
second month. The gains in manufacturing output
were largely concentrated in durable goods industries, which increased 1.6 percent. In addition to the
gain in motor vehicles and parts, there were strong
increases in furniture and fixtures, primary metals,




fabricated metals, industrial machinery and computers, electrical machinery, aerospace, and instruments.
The output of nondurable goods, which had been
weak since the beginning of the year, rebounded
0.6 percent in July and gained another 0.3 percent in
August. Only two nondurables industries—apparel
and paper—had output losses, while tobacco, petroleum, rubber and plastic products, and leather had
substantial gains.
A large drop in coal mining largely accounted for
the decline in mining output, and losses in electricity
generation and sales reduced utility output.
Led by a 7.3 percentage point increase in the
operating rate at auto and light truck factories, the
overall factory operating rate increased 0.5 percentage point, to 83.1 percent—its highest level since
September 1995. Similarly, the utilization rate for
advanced-processing industries increased 0.6 percentage point, to 81.3 percent—also its highest level
since September 1995. The rate for primaryprocessing industries increased 0.4 percentage point,
to 87.3 percent, about the same as its level in March.
The operating rate at mines decreased 1.0 percentage
point, to 92.2 percent, while the rate at utilities
decreased 1.1 percentage points, to 87.4 percent.
•

821

Announcements
REGULATION

E:

AMENDMENTS

The Federal Reserve Board on August 13, 1997,
adopted amendments to its Regulation E (Electronic
Fund Transfers), to carry out statutory amendments
to the Electronic Fund Transfer Act. These changes
became effective September 15, 1997.
The amendments to the regulation exempt certain
"needs-tested" electronic benefit transfer (EBT) programs established or administered by state or local
government agencies, such as the food stamp program, from requirements of the Electronic Fund
Transfer Act. The modified regulatory requirements
that the Board established in its 1994 rulemaking
would continue to apply to federally administered
EBT programs and state and local employmentrelated EBT programs, such as state pension
programs.
Generally, EBT programs involve the issuance
of access cards and personal identification numbers
to recipients of government benefits so that they
can obtain their benefits through automated teller
machines and point-of-sale terminals.

MODIFICATIONS OF PRUDENTIAL LIMITS ON
UNDERWRITING AND DEALING
ACTIVITIES
THROUGH SECTION 20
SUBSIDIARIES

The Federal Reserve Board on August 22, 1997,
announced modifications to the prudential limits or
firewalls that currently apply to bank holding companies engaged in securities underwriting and dealing
activities through section 20 subsidiaries. The modifications are effective October 31,1997.
The Board is eliminating those restrictions that
have proved to be unduly burdensome or unnecessary
in light of other laws or regulations and is consolidating the remaining restrictions in a series of eight
operating standards.
The new operating standards will cover the following areas:
• Capital requirement for bank holding company
and section 20 subsidiaries




• Internal controls
• Interlocks restriction
• Customer disclosure
• Credit for clearing purposes
• Funding of securities purchases from a section 20 affiliate
• Reporting requirement
• Application of sections 23A and 23B to foreign
banks.
The Board has concluded that the narrower set of
restrictions will be fully consistent with safety and
soundness and should improve operating efficiencies
at section 20 subsidiaries and increase options for
their customers.

EXTENSION OF THE FEDERAL
"REGULAR " BILLING DEPOSIT
ACH
TRANSACTIONS

RESERVE'S
DEADLINE

FOR

The Federal Reserve Board on August 29, 1997,
announced a five-hour extension of the Federal
Reserve Banks' automated clearinghouse (ACH)
"regular" billing deposit deadline. ACH operates
twenty-four hours a day.
Effective October 1, 1997, the "regular" processing window will begin at 3:00 a.m. Eastern Time and
close at 1:00 a.m. rather than 8:00 p.m. The fees
assessed to Federal Reserve Bank customers during
this regular billing period are 0.9 cents per transaction and a file fee of $1.75 for files of up to 2,500
transactions and 0.7 cents per transaction and a file
fee of $6.75 for files of more than 2,500 transactions.
The new "premium" hours will be between
1:00 a.m. and 3:00 a.m. Eastern Time, and the transaction surcharge assessed during this period will
remain 0.5 cents on each ACH item deposited with
the Reserve Banks.
The change will reduce fees charged to customers
originating ACH transactions by approximately
$2.1 million annually. This is the fourth time the
Federal Reserve has reduced its ACH fees in the past
twelve months. These price reductions reflect the
efficiencies the Federal Reserve is realizing from its
centralized ACH processing environment.

822

Federal Reserve Bulletin • October 1997

PROPOSED ACTIONS
The Federal Reserve Board on August 1, 1997,
requested comment on a proposal to amend its riskbased and tier 1 leverage capital guidelines for state
member banks and bank holding companies to
address the treatment of servicing assets on both
mortgage assets and financial assets other than mortgages (nonmortgages). Comments were requested by
October 6, 1997.
The Federal Reserve Board on August 5, 1997,
requested comment on a proposal to amend its Regulation D (Reserve Requirements of Depository Institutions) to allow U.S. branches and agencies of
foreign banks and Edge and agreement corporations




to choose whether to aggregate reserves on a nationwide basis in a single account at one Reserve Bank or
to continue to have separate accounts on a samestate-same-District basis as they do today. Comments
were requested by September 12, 1997.
The Federal Reserve Board on August 22, 1997,
extended the comment period from September 3,
1997, to October 3, 1997, on its proposal to apply
sections 23A and 23B of the Federal Reserve Act to
transactions between a member bank and any subsidiary that engages in activities that are impermissible
for the bank itself and that the Congress has not
previously exempted from coverage by section 23A.
The extension is granted to give the public additional
time to comment on the proposal.

823

Minutes of the
Federal Open Market Committee Meeting
Held on My 1-2, 1997
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 1, 1997, at 2:30 p.m. and continued on
Wednesday, July 2, 1997, at 9:00 a.m.
Present:
Mr. Greenspan, Chairman
Mr. McDonough, Vice Chairman
Mr. Broaddus
Mr. Guynn
Mr. Kelley
Mr. Moskow
Mr. Meyer
Mr. Parry
Ms. Phillips
Ms. Rivlin
Messrs. Hoenig, Jordan, Melzer, and Ms. Minehan,
Alternate Members of the Federal Open Market
Committee
Messrs. Boehne, McTeer, and Stern, Presidents of the
Federal Reserve Banks of Philadelphia, Dallas,
and Minneapolis respectively
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.

Kohn, Secretary and Economist
Bernard, Deputy Secretary
Coyne, Assistant Secretary
Gillum, Assistant Secretary
Mattingly, General Counsel
Baxter, Deputy General Counsel
Prell, Economist
Truman, Economist

Messrs. Beebe, Goodfriend, Hunter, Lindsey,
Mishkin, Promisel, Siegman, Slifman,
and Stockton, Associate Economists
Mr. Fisher, Manager, System Open Market Account
Mr. Ettin, Deputy Director, Division of Research and
Statistics, Board of Governors
Messrs. Madigan and Simpson, Associate Directors,
Divisions of Monetary Affairs and Research and
Statistics respectively, Board of Governors
Ms. Johnson, Assistant Director, Division of
International Finance, Board of Governors




Messrs. Reifschneider 1 and Small, 1 Section Chiefs,
Divisions of Research and Statistics and
Monetary Affairs respectively, Board of
Governors
Mr. Sichel, Senior Economist, Division of Research
and Statistics, Board of Governors
Mr. Elmendorf, 1 and Ms. Garrett, Economists,
Division of Monetary Affairs, Board of
Governors
Mr. Lebow, 2 and Ms. Lindner, 2 Economists, Division
of Research and Statistics, 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
Ms. Browne, Messrs. Dewald, Hakkio, Kos, Lang,
Rolnick, Rosenblum, and Sniderman, Senior
Vice Presidents, Federal Reserve Banks of
Boston, St. Louis, Kansas City, New York,
Philadelphia, Minneapolis, Dallas, and
Cleveland respectively
Ms. Rosenbaum, Vice President, Federal Reserve
Bank of Atlanta

By unanimous vote, the minutes of the meeting of
the Federal Open Market Committee held on May 20,
1997, were approved.
The Manager of the System Open Market Account
reported on developments in foreign exchange markets since the meeting on May 20, 1997. There were
no System open market transactions in foreign currencies during this period, and thus no vote was
required of the Committee.
The Manager also reported on developments in
domestic financial markets and on System open mar1. Attended portions of meeting relating to the Committee's review
of the economic outlook and establishment of its monetary and debt
ranges for 1998.
2. Attended portion of meeting relating to price measurement issues
for monetary policy.

824

Federal Reserve Bulletin • October 1997

ket transactions in government securities and federal
agency obligations during the period May 20, 1997,
through June 30, 1997. By unanimous vote, the Committee ratified these transactions.
The Committee then turned to a discussion of the
economic outlook, the ranges for the growth of
money and debt in 1997 and 1998, and the implementation of monetary policy over the intermeeting
period ahead. A summary of the economic and financial information available at the time of the meeting
and of the Committee's discussion is provided below,
followed by the domestic policy directive that was
approved by the Committee and issued to the Federal
Reserve Bank of New York.
The information reviewed at this meeting suggested that the economic expansion slowed substantially in the second quarter after having surged in late
1996 and earlier this year. Consumer spending decelerated considerably, but business spending on durable
equipment increased substantially further and housing demand appeared to have been well maintained.
Employment growth moderated recently, while industrial production continued to rise appreciably. Price
inflation remained subdued despite high rates of
resource utilization, notably that of labor.
Private nonfarm payroll employment rose at a
reduced pace in May after having registered sizable
advances over the first four months of the year. Job
growth remained brisk in the services sector despite a
further drop in employment at temporary help agencies that might have reflected constraints on the availability of workers for hire. Although employment
in construction recovered in May from the weatherdepressed level in April, the underlying growth in
such jobs seemed to have slowed. Employment in
manufacturing changed little over April and May
after having increased moderately in the first quarter.
The average workweek for production or nonsupervisory workers was unchanged in May but was slightly
below the average for the first quarter. The civilian
unemployment rate fell slightly further to 4.8 percent
in May.
Industrial production continued to grow briskly in
May. Manufacturing output recorded a substantial
gain and mining production rose considerably; however, cooler-than-average weather led to a drop in
utility output. Much of the rise in manufacturing
reflected a rebound in the production of motor vehicles and parts from strike-depressed levels in April
and strength in the output of business equipment,
construction supplies, and materials. With output
generally keeping pace with the rapid expansion of
factory capacity, the rate of utilization of manufacturing capacity remained at a relatively high level.




Personal consumption expenditures, in real terms,
rose substantially in May after having changed little
on balance over the preceding three months. Spending on services remained on a solid uptrend in May,
while aggregate purchases of goods turned up after
three months of lackluster spending on nondurable
goods and motor vehicles. The unusual weather patterns of late winter and early spring apparently had
a depressing effect on consumer expenditures, especially for seasonal items; however, the combination
of strong job gains, buoyant sentiment, and increased
household net worth pointed to a possible resumption
of more robust spending by consumers.
Housing activity appeared to have been generally
well maintained in recent months. Although housing
starts were down somewhat in May from the relatively elevated average rate for the first four months
of the year, this slowing might have been, at least in
part, the result of unusually mild winter weather that
enabled an early start on spring building activity. The
latest information on home sales suggested continued
firm demand for single-family housing: Sales of
existing homes rose in May and were among the
highest monthly totals on record, and sales of new
homes in April (latest data available) were down only
a little from the brisk pace of earlier months in the
year.
Available information suggested further sizable
gains in business fixed investment. Shipments of
nondefense capital goods edged higher in May after
having posted large increases in earlier months of the
year. Shipments of computers had been particularly
strong this year in conjunction with rapidly falling
prices, but shipments of other categories of capital
goods also had been robust on balance. Recent data
on orders pointed to further brisk growth in coming months. Nonresidential construction activity
appeared to have eased recently, with constructionput-in-place slipping in March and April from the
elevated pace of the first two months of the year.
However, other information suggested that the downturn might be shortlived: Vacancy rates for office
space had been declining, prices for commercial real
estate had been edging up, and recent data on contracts suggested that building activity would improve
in coming months.
Business inventory investment picked up sharply
in April from the slow pace in March but, overall,
stocks remained at a low level in relation to sales.
In manufacturing, much of the increase in stocks
occurred in capital goods industries in which production was expanding briskly. In the wholesale sector, a
substantial decline in stocks in April more than offset
a sizable increase in March, and the aggregate stock-

Minutes of the Federal Open Market Committee

sales ratio for the sector fell further over the MarchApril period. Retail inventories rose considerably in
April, with notable increases in stocks of apparel and
general merchandise. In a departure from the general
downtrend of recent months, inventory-sales ratios
for most types of retail establishments were up appreciably in April.
The nominal deficit on U.S. trade in goods and
services narrowed somewhat in April from a
downward-revised average rate in the first quarter.
The value of exports in April rose substantially from
the first-quarter level, led by increases in exports of
machinery and aircraft. The value of imports also
rose but less than that of exports; imports were up in
most trade categories except petroleum products.
Recent information suggested that, on average, economic activity in the major foreign industrial countries continued to grow at a moderate rate in the
second quarter. Growth remained robust in Canada
and the United Kingdom and was improving in Germany, France, and Italy. Economic activity appeared
to have flattened temporarily in Japan after an
increase in the consumption tax in April.
Price inflation remained subdued. For a third
straight month, consumer prices recorded only a
slight increase in May. Favorable developments in
food and energy continued to hold down the overall
rise and accounted for a much smaller advance in the
index of prices of all consumer items over the twelve
months ended in May than over the previous twelve
months. The decline in core CPI inflation over the
same time period was much less, though this measure
of inflation also remained relatively restrained. At the
producer level, prices of finished goods other than
food and energy fell further in May and were little
changed over the year ended that month. At earlier
stages of processing, producer prices for intermediate
materials other than food and energy changed little
over the year ended in May, and producer prices
at the crude level advanced only slightly. The tight
conditions prevailing in labor markets were associated with a somewhat larger increase in average
hourly earnings in the twelve months ended in May
than in the year-earlier period.
At its meeting on May 20, 1997, the Committee
adopted a directive that called for maintaining the
existing degree of pressure on reserve positions.
Because the members saw the potential need for
some tightening in monetary policy to counter rising
inflationary pressures, perhaps in the relatively near
term, the directive included a bias toward the possible firming of reserve conditions during the intermeeting period. The reserve conditions associated
with this directive were expected to be consistent




825

with moderate growth of M2 and M3 over coming
months.
Open market operations were directed throughout
the intermeeting period toward maintaining the existing degree of pressure on reserve positions, and the
federal funds rate averaged close to the intended level
of 5'/2 percent. Most other market interest rates
declined somewhat on balance during the period.
Market participants apparently concluded that the
likelihood of further policy tightening had decreased
substantially in light of incoming data that suggested
slowing growth of final demand and continued subdued inflation. Share prices in equity markets rose
considerably further.
In foreign exchange markets, the trade-weighted
value of the dollar in terms of the other G-10 currencies was up on balance over the intermeeting period;
the advance occurred despite a smaller decline on
average in long-term interest rates abroad than in the
United States. The dollar rose appreciably against the
German mark and most other continental European
currencies amid growing market concerns that there
would be broad participation in the European Monetary Union despite the fact that the major European
countries would not be able to comply strictly with
the Maastricht fiscal standards and related expectations that the euro would be a weak currency. In
contrast, the dollar fell against the Japanese yen and
the British pound; the yen moved up as markets
focused more closely on recent and prospective
increases in Japan's current account surplus, and the
pound strengthened in anticipation of further policy
tightening by the Bank of England.
Expansion of M2 and M3 slowed sharply in May
in association with a swing in household balances related to large tax payments; growth of M2
rebounded in June, but M3 accelerated less. For the
year through June, M2 increased at a rate near the
upper bound of its range for the year. Rapid growth
of M3 over the first half of the year, partly in conjunction with robust expansion of bank credit, placed
growth of this aggregate somewhat above the upper
bound of its range. The rate of increase in total
domestic nonfinancial debt had been a little higher in
recent months; for the year to date, this aggregate had
grown at a rate near the middle of its range.
The staff forecast prepared for this meeting suggested that the economy would expand at a pace
somewhat above that of its estimated potential in the
second half of the year but would slow to a rate of
increase more in line with that of potential in 1998.
Growth of consumer spending, supported by high
levels of household wealth and further projected
gains in employment and income, was expected to be

826

Federal Reserve Bulletin • October 1997

relatively brisk for some time. Business spending on
equipment and structures was anticipated to continue
outpacing the overall expansion of the economy,
though the differential would tend to narrow in association with the gradual diminution of increases in
sales and profits that was expected to occur in
the context of moderating economic growth. Housing
construction was projected to drift lower over the
forecast period. The staff anticipated that fiscal policy
and the external sector would exert mild restraint on
the expansion of economic activity. With labor compensation gradually accelerating in the context of
high resource utilization, core consumer price inflation was forecast to drift slightly higher.
In the Committee's discussion of current and
prospective economic developments, members commented on the continuing exceptional performance of
the economy, including widespread indications of
strength in business activity and subdued inflation.
After a surge in late 1996 and earlier this year, the
rate of expansion had moderated considerably in
recent months, and the members generally expected
economic activity to settle into a pattern of growth
over the next six quarters that would approximate the
economy's estimated output potential. A major factor
in that outlook was their expectation of some deceleration in demands for consumer durables and business plant and equipment in light of the substantial
buildup of such assets that already had taken place in
recent years. However, given the underlying strength
of the expansion, favorable financial conditions, and
the absence of major imbalances in the economy, the
risks of a different outcome were judged to be in the
direction of somewhat faster growth than currently
projected. The outlook for inflation was subject to
particular uncertainty. Despite an economy that had
been operating for a considerable period at rates of
resource utilization that were very close to, and by
some estimates somewhat above, sustainable levels,
inflation had remained relatively low and indeed had
declined on the basis of some broad measures of
prices. Such an outcome was very much welcome,
but the reasons for it were not completely understood
and appeared to include some factors that might exert
only temporary restraint on price increases. Consequently, continuing pressures on resources associated
with economic growth in line with the members'
current forecasts could well be reflected in rising
inflation over time.
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
1997 and 1998. The forecasts of the rate of expansion
in real GDP for 1997 as a whole had a central
tendency of 3 to 3XA percent and for 1998 were
centered on a range of 2 to 2 Vz percent. With regard
to the growth of nominal GDP, most of the forecasts
were in ranges of 5 to 5Vi percent for 1997 and 4'/2 to
5 percent for 1998. The civilian rate of unemployment associated with these forecasts had a central
tendency of 43A to 5 percent in the fourth quarters of
both years. Projections of the rate of inflation, as
measured by the consumer price index, pointed to a
sizable moderation this year from the rate in 1996
and a partially offsetting rise in 1998, with prices of
food and energy accounting for much of the swing.
Specifically, the projections converged on CPI inflation rates of 2XU to 1xh percent in 1997 and 2Vi to
3 percent in 1998.
In their review of the outlook for economic activity
in major sectors of the economy, members referred to
the generally sluggish pace of retail sales in recent
months. It was noted, however, that the slowdown
was perhaps in part an adjustment to very strong
growth of sales in previous months, and some members commented on anecdotal indications of some
pickup in recent weeks. More importantly, underlying trends and fundamentals pointed to prospective
growth in consumer expenditures at a pace that was
likely to continue to provide key support for further
moderate expansion in overall economic activity. In
particular, jobs and incomes had continued to post
sizable gains; further large increases in stock market
prices had raised wealth-to-income ratios sharply;
and consumer optimism had risen to new highs. On
the other hand, the accumulation of consumer durables that had occurred over the course of the current
cyclical advance was likely to exert a retarding influence on the rise in consumer spending. Other somewhat restraining factors included the prospect of
some softening in housing demand and related purchases of household goods and the already heavy
debt repayment burdens of many consumers. Some
members also noted that a possible correction from
the currently elevated levels of stock market prices
could have adverse effects on consumer sentiment
and purchasing power. On balance, growth in personal consumer expenditures was seen as likely to
approximate the moderate rate of increase projected
in overall domestic demand.
The members viewed the prospects for further
growth in business fixed investment as another
important supportive factor in the outlook for
sustained economic expansion. Current indicators

Minutes of the Federal Open Market Committee

pointed to the continuation of very rapid growth in
such spending over the near term, but some moderation was likely over the course of coming quarters in
conjunction with the projected slowing in the increase
of overall demand and the very large buildup in the
stock of capital that already had occurred in recent
years. Even so, investment spending was likely to be
relatively robust over the projection horizon in the
context of continuing incentives to hold down production costs in highly competitive markets and to
take advantage of falling prices and wider applications for certain types of new equipment, notably
computer-related equipment. The ready availability
of both debt and equity finance on favorable terms,
an upbeat outlook for sales in many industries, and
generally high profit levels were other positive
factors. The outlook for nonresidential construction
activity also seemed to be relatively favorable. Members referred to declining vacancy rates and rising
rents for commercial structures in many parts of the
country and noted that construction contracts for new
office buildings and hotels recently had turned up on
a nationwide basis after a pause earlier this year. In
sum, the growth in business fixed investment seemed
likely to continue to outpace that of overall demand
in coming quarters.
Some restraint on aggregate demand would come
from other sectors of the economy—notably government spending, net exports, housing, and perhaps
business inventories. None of these factors seemed
likely to exert a substantially negative effect, but in
total they were expected to help keep the pace of the
expansion close to the estimated rate of increase in
the economy's potential over coming quarters.
During the course of the Committee's discussion,
many of the members commented on the persistence
of an impressively benign inflation performance
despite widespread indications of very high, and by
some measures increasing, levels of capacity use.
Indeed, most broad measures of prices pointed to
subdued or even declining inflation, and it was difficult to find evidence of rising inflation pressures
in "pipeline" price data or the wage structure. The
members anticipated that inflation as measured by
the consumer price index would decrease appreciably
over 1997 as a result of favorable developments in
the food and especially the energy sectors of the
economy and declining import prices associated with
the previous appreciation of the dollar. These positive
influences would wane over time, however, and consumer prices were likely to rise at a somewhat faster
pace in 1998.
The members agreed that the risks to their price
forecasts were in the direction of higher inflation,




827

given already high levels of capacity use and their
expectations of appreciable further economic growth.
Nonetheless, the relatively low inflation experienced
despite a lengthy period of fully employed resources
suggested that the timing of a potential upturn in
inflation—indeed whether inflation would in fact
pick up—could not be predicted with any degree of
confidence on the basis of past historical patterns.
The reasons for the persistence of a relatively benign
inflation performance in the current expansion were
not fully understood. They included some temporary
factors such as the effect of the rise in the dollar on
import prices and the restraint on health care costs.
More fundamentally, they presumably also involved
the favorable effects on production costs of widespread business restructurings and the large volume
of investment in more productive technology in
recent years, the impact of both factors on the job
security concerns of workers and their willingness to
accept reduced increases in compensation, and the
effects of an intense degree of competition among
domestic and foreign producers in U.S. markets. With
regard to the possibility that more robust productivity
increases would be holding down production costs, it
was noted that a surge in economic activity, such as
had occurred in late 1996 and early 1997, tended to
be accompanied by above-trend gains in productivity.
A slower pace of economic growth in the second
quarter and beyond might provide an opportunity to
assess whether productivity increases were on a clear
uptrend and could help to explain the favorable
behavior of prices over an extended period. In any
event, it was too early to reach any firm conclusion
on this issue or the broader question of whether or
when a rise in inflation might materialize under
anticipated economic conditions.
The members also discussed a staff study of the
relative performance of various price indexes as
measures of inflation. Members noted that most broad
measures of inflation moved together over extended
periods of time, but they did not always do so over
short intervals. Differences in construction, coverage,
and other factors meant that none of the individual
measures was clearly superior in assessing general
inflation trends, and several members commented
that all measures needed to be monitored.
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
February for 1997, and it decided on tentative ranges
for those aggregates for 1998. The current ranges set
in February for the period from the fourth quarter of

828

Federal Reserve Bulletin • October 1997

1996 to the fourth quarter of 1997 were unchanged
from the ranges for 1996 and included expansion of
1 to 5 percent for M2 and 2 to 6 percent for M3. An
unchanged range of 3 to 7 percent also was set in
January for growth of total domestic nonfinancial
debt in 1997.
All the members favored retaining the current
ranges for this year and extending them on a provisional basis to 1998. They anticipated that growth of
M2 probably would continue at rates in the upper part
of its current range in both years and that of M3 at
rates approximating or even slightly above the upper
bound of its range, given the Committee's expectations for the performance of the economy and prices.
The current ranges were not expected to be guides
to money growth under anticipated conditions in the
period ahead, but instead 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 at least some
members, higher ranges could raise questions in this
regard.
Over the past few years, in contrast to earlier in the
1990s, the behavior of the broad aggregates, especially that of M2, in relation to nominal GDP and
short-term interest rates had displayed a pattern that
was in line with historical norms before the 1990s.
The members viewed this as an encouraging development in that it raised the possibility of giving more
weight at some point to the performance of these
aggregates as useful indicators in formulating monetary policy. However, the period of more predictable
M2 and M3 behavior was still relatively brief, and
such behavior had occurred at a time of generally
settled conditions in financial markets and the overall economy. The prospective performance of these
aggregates in periods of rapid changes in financial
and economic conditions was still an open question,
and in light of the uncertainties that were involved
the members concluded that it would be premature
to place increased reliance on them in the conduct
of policy. Accordingly, the Committee decided that
despite projected growth of M2 and M3 at rates in the
vicinity of the upper limits of the current ranges,
prevailing uncertainties made it desirable to retain
those ranges as benchmarks for the achievement of
price stability rather than to establish higher ranges
that seemed more likely to capture expected outcomes. In the circumstances, any tendency for growth
of the monetary aggregates to move outside the Com-




mittee's ranges would not in itself call for a policy
adjustment but would continue to be interpreted in
the context of a broad range of business and financial
developments bearing on the prospective performance of the overall economy.
The Committee members were unanimously in
favor of retaining the current range of 3 to 7 percent
for growth of total domestic nonfinancial debt in
1997 and extending that range on a provisional basis
to 1998. They took account of a staff projection
indicating that growth of the debt aggregate was
likely to slow somewhat from its pace in 1995 and
1996, reflecting a small reduction in the expansion of
federal government debt. According to the staff projection, growth in the debt measure would be near the
midpoint of the existing range over the period
through 1998.
At the conclusion of this discussion, the Committee voted to reaffirm the ranges for growth of M2,
M3, and total domestic nonfinancial debt that it had
established in February for 1997. For the year 1998,
the Committee approved provisional ranges for the
three aggregates that were unchanged from the 1997
ranges. In keeping with its usual procedure under
the Humphrey-Hawkins Act, the Committee would
review its preliminary ranges for 1998 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 1997 and 1998 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 February for growth of M2
and M3 of 1 to 5 percent and 2 to 6 percent respectively,
measured from the fourth quarter of 1996 to the fourth
quarter of 1997. The range for growth of total domestic
nonfinancial debt was maintained at 3 to 7 percent for the
year. For 1998, the Committee agreed on tentative ranges
for monetary growth, measured from the fourth quarter of
1997 to the fourth quarter of 1998, of 1 to 5 percent for M2
and 2 to 6 percent for M3. The Committee provisionally set
the associated range for growth of total domestic nonfinancial debt at 3 to 7 percent for 1998. 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,
Broaddus, Guynn, Kelley, Meyer, Moskow, Parry,
Mses. Phillips and Rivlin. Votes against this action:
None.

Minutes of the Federal Open Market Committee

In the Committee's discussion of policy for the
intermeeting period ahead, all the members favored
or could support a proposal to maintain an unchanged
policy stance, and they strongly supported the retention of a bias toward restraint. An unchanged policy
seemed appropriate with inflation still quiescent and
business activity projected to settle into a pattern
of moderate growth broadly consistent with the
economy's long-run output potential. While the members assessed risks surrounding such a forecast as
decidedly tilted to the upside, the slowing of the
expansion should keep resource utilization from rising substantially further, and this outlook together
with the absence of significant early signs of rising
inflationary pressures suggested the desirability of a
cautious "wait and see" policy stance at this point. In
the current uncertain environment, this would afford
the Committee an opportunity to gauge the momentum of the expansion and the related degree of pressure on resources and prices. The risks of waiting
appeared to be limited, given that the evidence at
hand did not point to a step-up in inflation despite
low unemployment and that the current stance of
monetary policy did not seem to be overly accommodative, at least on the basis of some measures such
as the level of real short-term interest rates. In these
circumstances, any tendency for price pressures to
mount was likely to emerge only gradually and to
be reversible through a relatively limited policy
adjustment. Some members commented, however,
that in the absence of unanticipated weakness in
the economy, some tightening of policy was likely
to be needed in the relatively near future, and one
expressed the view that a tightening action at this
meeting seemed desirable to forestall or limit the
risks of intensifying inflationary pressures. However,
waiting was an acceptable alternative given the favorable economic news and the persisting uncertainties
surrounding the relationship of output to prices.
In their discussion of possible adjustments to policy during the intermeeting period, all the members
indicated that they wanted to retain the existing asymmetry toward restraint adopted at the May meeting.
An asymmetric directive was consistent with their
view that the risks clearly were in the direction of
excessive demand pressures in the economy and an
associated upward trend in inflation. Such a bias in
the directive also would serve the purpose of signaling the Committee's ongoing commitment to curb
inflation in the interest of fostering maximum sustainable economic growth and employment. The members agreed that the current environment called for
careful monitoring of developments and for prompt
action by the Committee if needed to counter rising




829

inflation. Indeed, in the interest of fostering a continuation of sustainable growth of the economy, it would
be desirable to tighten on the basis of early signs of
potentially intensifying inflation and before higher
inflation actually materialized.
At the conclusion of the Committee's discussion,
all the members indicated that they could support a
directive that called for maintaining the existing
degree of pressure on reserve positions and that
retained 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 expansion in M2 and M3 over coming
months.
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
the economic expansion slowed substantially in the second quarter after surging in late 1996 and earlier this
year. Private nonfarm payroll employment increased at a
reduced pace in May, but the civilian unemployment rate
fell slightly further to 4.8 percent. Industrial production
registered another sizable gain in May. Personal consumption expenditures, in real terms, rose substantially in May
after having changed little over the preceding three months.
Housing activity appears to have been well maintained in
recent months. Available indicators point to further sizable
gains in business fixed investment. The nominal deficit on
U.S. trade in goods and services narrowed somewhat in
April from its downward-revised average rate in the first
quarter. Price inflation has remained subdued.
Market interest rates generally have declined somewhat
since the day before the Committee meeting on May 20,
1997; share prices in equity markets have risen considerably further. In foreign exchange markets, the tradeweighted value of the dollar in terms of the other G-10
currencies was up slightly on balance over the intermeeting
period.
Growth of M2 and M3 fluctuated sharply from April to
May in association with a swing in household balances
related to large tax payments; on balance, both aggregates
expanded at a moderate pace over the two months, and
available data pointed to further moderate growth in June.
For the year through June, M2 expanded at a rate near the
upper bound of its range for the year and M3 at a rate
somewhat above the upper bound of its range. Total domes-

830

Federal Reserve Bulletin • October 1997

tic nonfinancial debt has continued to expand in recent
months and is near the middle of its range.
The Federal Open Market Committee seeks monetary
and financial conditions that will foster price stability and
promote sustainable growth in output. In furtherance of
these objectives, the Committee reaffirmed at this meeting
the ranges it had established in February for growth of M2
and M3 of 1 to 5 percent and 2 to 6 percent respectively,
measured from the fourth quarter of 1996 to the fourth
quarter of 1997. The range for growth of total domestic
nonfinancial debt was maintained at 3 to 7 percent for the
year. For 1998, the Committee agreed on tentative ranges
for monetary growth, measured from the fourth quarter of
1997 to the fourth quarter of 1998, of 1 to 5 percent for M2
and 2 to 6 percent for M3. The Committee provisionally set
the associated range for growth of total domestic nonfinancial debt at 3 to 7 percent for 1998. 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 this action: Messrs. Greenspan, McDonough,
Broaddus, Guynn, Kelley, Meyer, Moskow, Parry,
Mses. Phillips and Rivlin. Votes against this action:
None.

It was agreed that the next meeting of the Committee would be held on Tuesday, August 19, 1997.
The meeting adjourned at 11:55 a.m. on July 2.
Donald L. Kohn
Secretary

831

Legal Developments
FINAL RULE—AMENDMENT

TO REGULATION

E

The Board of Governors is amending 12 C.F.R. Part 205,
its Regulation E (Electronic Fund Transfers). The revisions
implement an amendment to the Electronic Fund Transfer
Act ("EFTA"), contained in the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996, that
exempts certain electronic benefit transfer ( " E B T " ) programs from the EFTA. Generally, EBT programs involve
the issuance of access cards and personal identification
numbers to recipients of government benefits so that they
can obtain their benefits through automated teller machines
and point-of-sale terminals. The Board's amendments to
Regulation E exempt needs-tested EBT programs that are
established or administered by state or local government
agencies. Federally administered EBT programs and state
and local employment-related EBT programs (such as state
pension programs) remain covered by Regulation E subject
to modified requirements.
Effective September 15, 1997, 12 C.F.R. Part 205 is
amended as follows:

Part 205—Electronic
tion E)

Fund

Transfers

point-of-sale terminals, but does not include an account
for distributing needs-tested benefits in a program established under state or local law or administered by a state
or local agency.

FINAL RULE—AMENDMENT
DELEGATION

OF

TO RULES

REGARDING

AUTHORITY

The Board of Governors is amending 12 C.F.R. Part 265,
its Rules Regarding Delegation of Authority, to remove the
delegation to the Board's General Counsel to approve
provisions of Federal Reserve Bank operating circulars
related to uniform services. Under a newly amended supervisory letter, other Board officials will review uniform
Reserve Bank operating circulars, in consultation with the
General Counsel.
Effective August 21, 1997, 12 C.F.R. Part 265 is
amended as follows:

Part 265—Rules Regarding Delegation of Authority

(Regula-

1. The authority citation for Part 205 is revised to read as
follows:

1. The authority citation for Part 265 continues to read as
follows:
Authority.

12 U.S.C. 248(i) and (k).

Section 265.6[Amended]
Authority.

15 U.S.C. 1693-1693r.

2. Section 205.15 is amended by revising paragraph (a) to
read as follows:

2. In section 265.6, paragraph (a)(5) is removed.

Section 205.15—Electronic fund transfer of
government benefits.

ORDERS ISSUED UNDER BANK HOLDING

(a) Government agency subject to regulation. (1) A government agency is deemed to be a financial institution for
purposes of the act and this part if directly or indirectly it
issues an access device to a consumer for use in initiating an electronic fund transfer of government benefits
from an account, other than needs-tested benefits in a
program established under state or local law or administered by a state or local agency. The agency shall comply
with all applicable requirements of the act and this part,
except as provided in this section.
(2) For purposes of this section, the term account means
an account established by a government agency for
distributing government benefits to a consumer electronically, such as through automated teller machines or



COMPANY

ACT

Orders Issued Under Section 3 of the Bank Holding
Company Act
Northwest Bancorp, MHC
Warren, Pennsylvania
Northwest Bancorp, Inc.
Warren, Pennsylvania
Order Approving Formation of a Bank Holding
and Acquisitions by Bank Holding Companies

Company

Northwest Bancorp, MHC ("MHC"), Warren, Pennsylvania, a bank holding company within the meaning of the
Bank Holding Company Act ("BHC Act") and organized

832

Federal Reserve Bulletin • October 1997

in mutual form, has requested the Board's approval under
section 3 of the BHC Act (12 U.S.C. § 1842) to reorganize
its corporate structure by forming Northwest Bancorp, Inc.
("Bancorp"), as a majority owned subsidiary stock bank
holding company that would own all the voting shares of
MHC's subsidiary bank, Northwest Savings Bank
("Bank"), all of Warren, Pennsylvania. Bancorp also has
requested the Board's approval to become a bank holding
company under section 3 of the BHC Act.
Notice of this proposal, affording interested persons an
opportunity to submit comments, has been published
(62 Federal Register 3513 (1997)). 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.
Bank is the 19th largest depository institution in Pennsylvania, controlling approximately $1.5 billion in deposits, representing less than 1 percent of all deposits in
depository institutions in the state.1 Based on all the facts
of record, including the fact that the transaction represents
a corporate reorganization to form a second-tier bank holding company, the Board concludes that consummation of
the proposal would not have a significantly adverse effect
on competition or on the concentration of banking resources in any relevant banking market, and that competitive considerations are consistent with approval.
In every application under section 3 of the BHC Act, the
Board is required to consider the financial and managerial
resources and future prospects of the companies and banks
concerned, and the convenience and needs of the communities to be served. MHC owns approximately 69 percent of
the voting shares of Bank. The remaining 31 percent of
Bank's shares are owned by members of the public, including minority shareholders who serve as senior management
of Bank and members of MHC's board of trustees. Shareholders of Bank would exchange their stock for voting
shares of Bancorp, and would own the same percentage of
shares of Bancorp as they currently own of Bank. 2
When the Board approved the formation of MHC in
1994, the Board noted that, because MHC did not own all
the voting shares of Bank, equity could be transferred from
the mutual owners of the holding company to the minority
shareholders of Bank at the expense of the mutual owners
if MHC were the only shareholder to waive dividends from
Bank. 3 The Board concluded that such a result could

1. All banking data are as of September 30, 1996. In this context,
depository institutions include commercial banks, savings banks, and
savings and loan associations.
2. Bancorp would be formed through a series of transactions that
would occur simultaneously. Bancorp would initially be formed as a
wholly owned subsidiary of Bank. Bancorp would then charter an
interim savings bank as a wholly owned subsidiary. Bank would
merge with the interim savings bank and, as the surviving institution,
become a wholly owned subsidiary of Bancorp. The shareholders of
Bank would then exchange their Bank stock for Bancorp stock on a
one-for-one basis and Bancorp would own all the voting stock of
Bank.
3. See Northwest Bancorp, MHC, 80 Federal Reserve Bulletin 1131
(1994) ("Northwest Order").




present adverse considerations under the financial and managerial resources and future prospects and convenience and
needs factors required to be reviewed under the BHC Act. 4
After carefully reviewing all the facts of record, including
MHC's commitments requiring Bank to retain any dividends waived, and the fulfillment of the conditions imposed by the Federal Deposit Insurance Corporation
("FDIC") and the Pennsylvania Department of Banking,
the Board concluded that these factors were consistent with
approving the formation of MHC. 5
The formation of Bancorp as a subsidiary stock company between MHC and Bank potentially raises the same
adverse considerations discussed in the Northwest Order.
Bancorp, for example, as a company controlled by MHC,
could pay a dividend to insider minority shareholders,
notwithstanding MHC's dividend waiver commitment, by
issuing special classes of stock with dividend rights to the
minority shareholders. In addition, insider minority shareholders could increase the value of their shares at no cost
through the repurchase of MHC stock by Bancorp, or by
repurchases of insider minority shareholdings at above
market prices. The Board is also concerned that the preference to purchase new shares of Bank or shares of MHC
that was provided to Bank's depositors by the Northwest
Order could be circumvented through the sale of new
shares of Bancorp. 6
To address these concerns, MHC and Bancorp have
made a number of commitments set forth in the Appendix.
In particular, MHC or its subsidiaries will not issue any
securities that would give the holder a right to acquire
equity securities or convey an interest in the retained
earnings of the issuer to a person other than MHC without
the Board's approval. Bancorp also will seek the Board's
approval before repurchasing any equity securities from
MHC, will repurchase equity securities from shareholders
other than MHC only at the current market price, and will

4. The Board noted that a waiver of dividends by MHC could
reduce or impair its ability to serve as a source of strength for Bank.
The Board also concluded that a decision by MHC's board of trustees
to execute such a waiver, without a corresponding waiver by the
minority shareholders, raised a potential conflict of interest because,
as minority shareholders, board members had a financial interest in the
waiver. The potential conflict was of particular concern in a company
that was organized in mutual form because, unlike a stock company
whose management may be replaced by its shareholders, state law did
not provide a mechanism for management of a mutual holding company to be changed by its mutual owners. See Northwest Order at
1132-33.
5. The commitments and conditions discussed in the Northwest
Order are specifically incorporated by reference as commitments and
conditions in connection with the Board's action on this proposal.
6. The Office of Thrift Supervision's ("OTS") regulations require
that if a stock thrift subsidiary of a mutual holding company issues
stock, the thrift must first offer the stock to its depositors before
oifering shares to the public, including stock issuances to fund an
acquisition. FDIC regulations require the FDIC to take into account
the extent to which a proposal to convert a state chartered savings
bank to stock form complies with the OTS regulations, including
stock issuances and depositor preference rules. MHC has agreed to
commitments that are consistent with the OTS's depositor preference
rules and the commitments in the Northwest Order.

Legal Developments

maintain detailed records of all stock repurchases. Finally,
Bank's depositors will be accorded the same preference to
purchase shares that is provided by the Northwest Order
for any sale, transfer or issuance of shares of Bank or
Bancorp to any person other than MHC. The Board believes that these commitments permit the Board to monitor
and address the issues raised when a mutual holding company owns less than all the voting shares of a savings bank
through a subsidiary stock holding company. In this light,
and based on all the facts of record, including consultations
with federal and state banking supervisory agencies, the
Board concludes the financial and managerial resources
and future prospects of MHC, Bancorp, and Bank are
consistent with approval, as are the convenience and needs
and other supervisory factors that the Board must consider
under section 3 of the BHC Act.
Based on the foregoing and other facts of record, the
Board has determined that the applications should be, and
hereby are, approved. The Board's approval of the proposal is expressly conditioned on compliance with all the
commitments made by the applicants in connection with
the applications, including the commitments and conditions discussed in the order, and is conditioned on receipt
by the applicants of all necessary approvals from all relevant regulators, and compliance with the requirements
imposed by those regulators. 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 after the effective date of this order or
later than three months after the effective date of this order,
unless such period is extended for good cause by the Board
or by the Federal Reserve Bank of Cleveland, acting pursuant to delegated authority.
By order of the Board of Governors, effective
August 18, 1997.
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Kelley, Phillips, and Meyer.

JENNIFER J. JOHNSON

Deputy Secretary of the Board

APPENDIX

(1) MHC will not sell, transfer, or otherwise dispose of any
of its shares in Bancorp, or Bank to any person (including
an Employee Stock Ownership Plan) and Bancorp will not
sell, transfer, or otherwise dispose of any of its shares of
Bank without the prior approval of the Board. Bancorp,
Bank, or any other direct or indirect subsidiary of MHC
will not issue equity securities or any securities that would
accord the holder the right to acquire equity securities or
that would bestow upon the holder an interest in the
retained earnings of the issuer to persons other than MHC,




833

unless MHC and Bancorp seek prior approval of the Board
and the Board approves the issuance;
(2) In any conversion of MHC from mutual to stock form,
the holding company will file an application for approval
of the conversion with the Board and will comply with the
rules and regulations of the Office of Thrift Supervision
("OTS") as if Bank were a savings association and MHC
and Bancorp were savings and loan holding companies,
respectively, except that such rules shall be administered
by the Board;
(3) In connection with commitments 1 and 2, MHC and
Bancorp agree with the following:
A. In any sale, transfer or issuance of shares of Bank or
Bancorp to any person other than MHC, the depositors
of Bank will be accorded the same stock purchase priorities given to depositors of a mutual savings association
in connection with such association converting to stock
form, unless such condition is waived by the Board. In
making such sale, or transferring or issuing such shares,
MHC and Bancorp and their management will comply
with any fiduciary duty they owe.
B. The Board will take into account the extent to which
the proposed transactions conform with the provisions
and purpose of the regulations of the OTS (12C.F.R.
Parts 563b and 575) and the FDIC (12 C.F.R. 303.15 and
333.4), as currently in effect at the time the Board
reviews the required materials related to the proposed
transactions. Any nonconformity with those provisions
will be closely scrutinized. Conformity with the OTS
and FDIC requirements, however, will not be sufficient
for Board regulatory purposes if the Board determines
that the proposed transaction would pose a risk to the
institution's safety and soundness, violate any law or
regulations, or present a breach of fiduciary duty.
(4) Bancorp commits to seek the Board's prior approval
before repurchasing any equity securities from MHC. Bancorp commits that any repurchases of equity securities
from shareholders other than MHC shall be at the current
market price for such share repurchase. Bancorp shall
maintain detailed records of all stock repurchases for review by the Board;
(5) MHC and Bancorp commit not to incur debt without
receiving prior approval from the Board; and
(6) MHC and Bancorp commit not to pledge the stock of
Bancorp in support of any borrowing without receiving
prior approval from the Board.

Santa Barbara Bancorp
Santa Barbara, California
Order Approving the Acquisition of a Bank, the Merger
of Banks, and Establishment of Branches
Santa Barbara Bancorp, Santa Barbara ("Bancorp"), a
bank holding company within the meaning of the Bank
Holding Company Act ("BHC Act"), has requested the
Board's approval under section 3 of the BHC Act
(12 U.S.C. § 1842) to acquire Citizens State Bank of Santa
Paula, Santa Paula ("Citizens Bank"), both in California.

834

Federal Reserve Bulletin • October 1997

Bancorp's subsidiary bank, Santa Barbara Bank and Trust,
Santa Barbara, California ("SB Bank"), also has requested
the Board's approval under section 18(c) of the Federal
Deposit Insurance Act (12 U.S.C. § 1828(c)) (the "Bank
Merger Act") to merge with Citizens Bank, and under
section 9 of the Federal Reserve Act (12 U.S.C. 321) (the
"FRA") to establish branches at the existing offices of
Citizens Bank set forth in the Appendix.
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(62 Federal Register 35,397 (1997)). As required by the
Bank Merger Act, reports on the competitive effects of the
merger were requested from the United States Attorney
General ("Department of Justice"). 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, the Bank Merger
Act, and the FRA.
Bancorp is the 35th largest depository institution in
California, controlling deposits of approximately $1 billion, representing less than 1 percent of total deposits in
depository institutions in the state. 1 Citizens Bank is the
252nd largest depository institution in California, controlling approximately $68 million in deposits, representing
less than 1 percent of total deposits in depository institutions in the state. On consummation of the proposal, Bancorp would remain the 35th largest depository institution
and continue to control less than 1 percent of total deposits
in depository institutions in the state.
SB Bank and Citizens Bank compete directly in the
Oxnard-Ventura, California, banking market. 2 SB Bank is
the eighth largest depository institution in the banking
market, controlling deposits of approximately $68 million,
representing 2.4 percent of total deposits in depository
institutions in the market ("market deposits"). Citizens
Bank is the ninth largest depository institution in the
Oxnard-Ventura market, controlling deposits of approximately $67.6 million, representing 2.4 percent of market
deposits. On consummation of the proposal, SB Bank
would become the fifth largest depository institution in the
market, controlling deposits of approximately $135.6 million, representing approximately 5 percent of market deposits. Twenty-one competitors would remain in the
Oxnard-Ventura banking market.

1. In this context, depository institutions include commercial banks,
savings banks, and savings associations. State deposit, market share,
and rank data are as of lune 30, 1996, and incorporate structural
changes through May 1997. 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).
2. The Oxnard-Ventura banking market is approximated by the
Oxnard-Ventura RMA and the towns of Fillmore, Ojai, Piru, Port
Hueneme and Santa Paula, all in California.




The Herfindahl-Hirschman Index ("HHI") for the banking market would increase by 12 points to 1469. 3 The
increase in market concentration as measured by the HHI
would be well within the Department of Justice Merger
Guidelines. The Department of Justice has advised the
Board that consummation of the proposal would not likely
have any significantly adverse competitive effects in the
Oxnard-Ventura banking market or any other relevant
banking market.
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 OxnardVentura banking market or any other relevant market.
Other Factors
The BHC Act and the Bank Merger Act also require the
Board, in acting on an application, to consider the financial
and managerial resources of the companies and banks
involved, the convenience and needs of the communities to
be served, and certain other supervisory factors.

A. Financial, Managerial, and Other Supervisory
Factors
The Board has carefully considered the financial and managerial resources and future prospects of Bancorp,
SB Bank, and Citizens Bank, and other supervisory factors
in light of all the facts of record. The facts include supervisory reports of examination assessing the financial and
managerial resources of the organizations, and confidential
financial information provided by Bancorp. Based on these
and all other facts of record, the Board concludes that all
the supervisory factors under the BHC Act and the Bank
Merger Act, including the financial and managerial resources and future prospects of the institutions involved,
are consistent with approval of the proposal.

B. Convenience and Needs Factor
The Board also has carefully considered the effect of the
proposal on the convenience and needs of the communities
to be served in light of all the facts of record. In reviewing
convenience and needs considerations, the Board notes that
SB Bank provides a range of financial services including
mortgage, consumer, agricultural and small business loans.

3. 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 to be
moderately concentrated. The Department of Justice has informed the
Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive
effects) unless the post-merger HHI is at least 1800 and the merger
increases the HHI by more than 200 points. The Department of Justice
has stated that the higher than normal HHI thresholds for, screening
bank mergers for anticompetitive effects implicitly recognize the
competitive effect of limited-purpose lenders and other nondepository
financial entities.

Legal Developments

SB Bank also provides financing for affordable housing
and community development. Bancorp has indicated that
SB Bank plans to continue to offer credit products currently offered by Citizens Bank and may adopt portions of
Citizen Bank's program for helping to meet community
credit needs into SB Bank's program after consummation
of the proposal. Moreover, Bancorp expects that the acquisition of Citizens Bank would strengthen SB Bank's ability
to provide financial services throughout the combined service areas, including service areas comprised primarily of
low- and moderate-income ( " L M I " ) individuals and small
businesses.
The Board also 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 (12U.S.C. § 2901 et seq.)
("CRA"). The CRA performance records of the institutions involved are reviewed below in light of all the facts
of record, including comments received on the proposal.
CRA Performance Examinations. As provided in the
CRA, the Board evaluates the convenience and needs
factor in light of examinations of the CRA performance
records of the relevant institutions by their primary federal
supervisor. 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. 4
SB Bank received a "satisfactory" rating from the Federal Reserve Bank of San Francisco ("Reserve Bank") at
its most recent examination for CRA performance, as of
July 15, 1996 ("SB Bank Examination"). Citizens Bank
received an "outstanding" rating from the Reserve Bank at
its most recent examination for CRA performance, as of
March 10, 1997.

CRA Performance Record of SB Bank.
Lending. Examiners considered the overall lending activities of SB Bank to be very responsive to community credit
needs. They noted that LMI census tracts comprised
37 percent of the bank's delineated community and that
41 percent of its loans were made to borrowers with zip
codes in LMI areas during the period from July 1994 to
July 1996 covered by the SB Bank Examination. Examiners also considered the geographic distribution of SB
Bank's loans to be good and favorably noted that
92 percent of the bank's loans were made within its delineated community.
The SB Bank Examination concluded that residential
mortgage lending to LMI borrowers in the bank's delineated community was particularly difficult because of the

4. The Statement of the Federal Financial Supervisory Agencies
Regarding the Community Reinvestment Act ("Agency CRA Statement") provides that a CRA examination is an important and often
controlling factor in the consideration of an institution's CRA record,
and that reports of these examinations will be given great weight in
the applications process. 54 Federal Register 13,742, 13,745 (1989).




835

high cost of housing in Santa Barbara County. To address
housing-related credit needs, SB Bank offers a number of
residential mortgage products 5 and actively participates in
programs that provide affordable housing to LMI individuals. Overall, the bank estimates that it made 17 loans
totalling approximately $22.6 million to 9 affordable housing organizations and developers since 1996. The bank
has, for example, provided financing to the Santa Barbara
Housing Authority totalling approximately $5.9 million
since 1996. In addition, SB Bank has made approximately
$1 million in loans since 1996 through the Santa Barbara
County Home Buyers Assistance Program for the South
Coast Region. SB Bank also is affiliated with the Coastal
Housing Partnership which offers a loan program with
flexible underwriting guidelines called the Housing for
Employees Loan Program. Since 1996, the bank has made
65 loans, totalling approximately $1.6 million through the
program. SB Bank also provides financing to other developers specializing in the construction of affordable housing
for LMI individuals in Santa Barbara and Ventura Counties. 6
The SB Bank Examination also concluded that the bank
was very responsive to the credit needs of small businesses. One SB Bank product, for example, offered small
business loans in amounts less than $35,000 within
24 hours after completion of a one-page application. In
addition, the bank's Community Banking Group focused
on the credit needs of small businesses with less than
$1 million in gross revenues. Examiners found that
SB Bank made more than 1000 commercial loans, totalling
approximately $17.3 million, for amounts of less than
$100,000, and 12 loans, totalling $11.1 million, for agricultural purposes, during the examination period. The
SB Examination noted that although loans secured by
mixed-use property were difficult to obtain in the community, SB Bank made 5 such loans totalling $2.5 million. In
addition, examiners noted that the bank made 17 loans,
totalling approximately $652,000 to start-up businesses. 7
In 1996, SB Bank originated 696 small business loans,
totalling approximately $52.4 million. SB Bank also made
business development loans through its affiliation with the
California Coastal Rural Development Corporation, 8 and
participated in a number of small business organizations,
including Women's Economic Ventures, Santa Barbara

5. Examiners noted that SB Bank offered 50 different residential
mortgage loans and had made 496 mortgage loans totalling
$103 million during the examination period. Examiners concluded
that SB Bank's overall lending levels reflect responsiveness to the
community's credit needs.
6. SB Bank has operated in Ventura County for approximately two
years and would expand its presence in the county through the
acquisition of Citizens Bank. SB Bank has developed programs for
LMI residents in Ventura County similar to the programs offered in
Santa Barbara County.
7. SB Bank estimates that since 1996, the bank made 14 business
development loans totalling approximately $698,000 to 13 small
businesses.
8. Examiners noted that SB Bank made 13 small business loans
totalling $1 million in affiliation with this non-profit small business
development organization.

836

Federal Reserve Bulletin • October 1997

Hispanic Chamber of Commerce, and Ventura County
Economic Development.
Marketing and Ascertainment.
The SB Examination
found that the bank's marketing program informed all
segments of the community of general financial products
and services offered, including those that had been developed to address identified community credit needs. Moreover, examiners considered the bank's ascertainment efforts to be satisfactory in light of management's regular
contact with various community organizations and its formal call program. The examiners reported that senior management satisfactorily responded to local input regarding
community credit needs and the changing marketplace.
SB Bank established a Hispanic Marketing Committee
to focus on the credit needs of Hispanic residents within its
delineated community. In 1996, the bank made 116 small
business loans, totalling $4.9 million, in the seven census
tracts with the largest Hispanic populations in bank's delineated community. In addition, SB Bank has Spanishspeaking employees in 19 of its 21 branches, with 46 of its
224 employees available for Spanish-speaking customers. 9
SB Bank also stated that it would more prominently display brochures in Spanish that describe the products and
services available in all its branches.
Branch Locations. The SB Bank Examination found that
SB Bank's branches were readily accessible to all segments of SB Bank's community, that office hours and
services were tailored toward the convenience and needs of
the community, and that the bank periodically reviewed the
effectiveness of its branches. Since the SB Bank Examination, the bank's branch closing policies have been modified
to include the consideration of the impact of a branch
closing on the community before closing the branch.
SB Bank has not closed a branch since it was chartered
37 years ago, and it does not anticipate branch closings as a
result of the proposal. 10
Comments on the proposal. The Board has carefully
reviewed comments contending that SB Bank's efforts in
lending and outreach to LMI and minority residents, particularly Hispanic residents, are inadequate. 11 These concerns

9. The two branches without Spanish speaking employees are
located in areas with small Hispanic populations.
10. The Board previously has noted that federal banking law
addresses branch closings by specifically requiring an insured depository institution to provide notice to the appropriate regulatory agency
prior to closing a branch. See section 42 of the Federal Deposit
Insurance Corporation Act (12 U.S.C. § 183lr-1), as implemented by
the Joint Policy Statement Regarding Branch Closing (58 Federal
Register 49,083 (1993)). The statute, however, does not authorize the
federal regulators to prevent the closing of any branch. Similarly, the
BHC Act and the Bank Merger Act do not make approval of a
proposal contingent on an applicant's commitment to keep open all
branches of the resulting institution. Instead, branch closings resulting
from a proposed acquisition are reviewed insofar as they affect the
general availability of bank services and offices as one of the several
factors the Board considers in assessing the effect of the acquisition on
the convenience and needs of the community to be served. See
Westamerica Bank, 83 Federal Reserve Bulletin 614 (1997).
11. The commenters are The California Reinvestment Committee,
the Santa Clara Valley Citizens for Economic Vitality and the Board
of Supervisors of Ventura County. The Board also has received




are based, in large measure, on data filed by SB Bank
under the Home Mortgage Disclosure Act (12 U.S.C. 2801
et seq.) ("HMDA"). 1 2
The Board has reviewed the 1994, 1995, and 1996
HMDA data reported by SB Bank in light of the comments. These data reflect some disparities in the rate of
loan originations, denials, and applications by racial group
or income level. The Board is concerned when the record
of an institution indicates such disparities, and believes that
all banks are obligated to ensure that their lending practices
are based on criteria that ensure not only safe and sound
lending, but also equal access to credit by creditworthy
applicants regardless of race. The Board recognizes, however, that HMDA data alone provide an incomplete measure of an institution's lending in its community because
these data cover only a few categories of housing-related
lending. Moreover, HMDA data provide only limited information about the covered loans. 13 HMDA data, therefore,
have limitations that make the data an inadequate basis,
absent other information, for concluding that an institution
has engaged in illegal lending discrimination.
In light of the limitations of HMDA data, the Board has
carefully reviewed other information, particularly examination reports that provide an on-site evaluation of compliance with the fair lending laws by SB Bank. The
SB Examination found no evidence of prohibited discrimi-

submissions from commenters and SB Bank regarding information
provided to the commenters by SB Bank after the close of the
comment period. The comments discuss efforts by commenters to
resolve issues raised in their timely comments through commitments
to increase lending to affordable housing projects, small businesses,
community development projects, and to increase other CRA-related
activities. Although the Board has indicated in previous orders and in
the Agency CRA Statement that communication by depository institutions with community groups provides a valuable method of assessing
and determining how best to address the credit needs of the community, the Board concludes that the substance of the comments does not
involve matters required to be considered by the Board. Neither the
CRA nor the Agency CRA Statement require an insured depository
institution to enter into commitments with community representatives.
In reviewing an application under the BHC Act and the Bank Merger
Act, the CRA and the Agency CRA Statement instead require the
Board to focus on the established record of performance of the
institutions involved and the programs and policies that the institutions have in place to assist in meeting the credit needs of their entire
communities. In this case, the facts of record indicate that SB Bank
has programs to help meet the credit needs of its community.
12. Commenters also maintain SB Bank should establish a branch in
Piru, California, to serve the unmet banking needs of the LMI residents in this small rural community. As discussed above, the SB Bank
Examination found that the bank's branches were readily accessible to
all segments of SB Bank's community. Moreover, SB Bank would
acquire and keep open a branch of Citizens Bank located in Fillmore,
California, which is approximately seven miles from Piru. The record
indicates that residents in this area of California regularly drive to
work in Valencia and Ventura which are located 10 miles and
33 miles, respectively, from Piru. In this light, Piru residents would
continue to have reasonable access to banking services from SB Bank
after consummation of the proposal.
13. These data, for example, do not provide a basis for an independent assessment of whether an applicant who was denied credit was,
in fact, creditworthy. Credit history problems and excessive debt
levels relative to income — reasons most frequently cited by a credit
denial — are not available from HMDA data.

Legal Developments

nation or illegal credit practices, and found the bank to be
in substantial compliance with antidiscrimination laws and
regulations. 14 The record also indicates that SB Bank has
taken a number of steps to ensure compliance with the fair
lending laws. Examiners found, for example, that the board
of directors and senior management have developed adequate policies and training programs supporting nondiscrimination in lending and credit activities. As a part of
these programs, bank personnel receive periodic training in
fair lending policy and compliance bulletins and articles
regarding fair lending issues.
Conclusion on Convenience and Needs

Considerations

The Board has carefully considered all the facts of record,
including the public comments received, responses to those
comments, and the CRA performance records of SB Bank
and Citizens Bank, including relevant reports of examination. 15 Based on a review of the entire record, and for the
reasons discussed in this order, the Board has concluded
that convenience and needs considerations, including the
CRA records of performance of SB Bank and Citizens
Bank, are consistent with approval of this proposal.

Conclusion
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. 16 The Board's approval
is expressly conditioned on compliance with all the commitments made in connection with the applications. 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 21, 1997.
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Kelley, Phillips, and Meyer.
JENNIFER J. JOHNSON

C. FRA Factors
SB Bank also has applied under section 9 of the FRA to
establish branches at the offices of Citizens Bank listed in
the appendix. The Board has considered the factors it is
required to consider when reviewing applications for establishing branches pursuant to the FRA and, for the reasons
discussed in this order, finds those factors to be consistent
with approval.

14. Commenters point out that examiners noted widespread violations of technical provisions of Regulation C and HMDA in the
SB Examination. In considering the overall managerial record and
convenience and needs factor in this case, the Board has carefully
reviewed these violations in light of information regarding the type
and scope of the violations, the response of SB Bank to the findings,
and additional supervisory information. The Board concludes that
SB Bank's response adequately addresses the issues raised by examiners at this time. If future examinations by the Reserve Bank indicate
that additional steps are necessary, the Board retains sufficient supervisory authority to require corrective action.
15. Commenters contend that SB Bank's CRA performance rating
should have been less than satisfactory in light of certain remarks
made by examiners in the SB Examination. Commenters also maintain that the acquisition of Citizens Bank by a bank with a lower CRA
performance rating raises concerns about the possible adverse impact
the acquisition will have on the community currently served by
Citizens Bank. Although the SB Bank Examination noted some areas
in which bank could improve its CRA performance, the examiners
rated the bank's overall performance as "satisfactory." In addition,
SB Bank has initiated measures that satisfactorily respond to the
examiners' comments. Moreover, SB Bank's record of CRA performance indicates that the convenience and needs of the communities
currently served by Citizens Bank would continue to be served after
consummation of the proposal in a manner consistent with the requirements of the BHC Act, the Bank Merger Act, and the CRA.




837

Deputy Secretary of the Board

APPENDIX

Branches of SB Bank to be established
locations:

at Citizens

Bank

1. 948 East Main Street, Santa Paula, California 93060
2. 537 West Harvard Boulevard, Santa Paula, California
93060

16. Commenters have requested that the Board hold a public hearing or meeting on this proposal. Section 3(b) of the BHC Act does not
require the Board to hold a public hearing on an application unless the
appropriate supervisory authority for the bank to be acquired makes a
timely written recommendation of denial of the application. In this
case, the Board has not received such a recommendation from any
state or federal supervisory authority. In addition, neither the Bank
Merger Act nor the FRA require a public meeting on an application.
Under its rules, the Board also may, in its discretion, hold a public
hearing or meeting on an application or notice to clarify factual issues
related to the proposal and to provide an opportunity for testimony.
See 12 C.F.R. 225.25(a)(2), 262.3(e), and 262.25(d). The Board has
carefully considered commenters' requests for a hearing or meeting in
light of all the facts of record. In the Board's view, commenters have
had ample opportunity to submit views, and have, in fact, provided
written submissions that have been considered by the Board in acting
on this proposal. The requests fail to demonstrate why these written
submissions do not adequately present commenters' allegations. After
a careful review of all the facts of record, the Board has concluded
that these requests fail to identify any genuine dispute about facts that
are material to the Board's decision or any other basis on which a
hearing or meeting would be warranted. 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 the proposal, and is not
otherwise warranted in this case. Accordingly, the request for a public
hearing or meeting on the proposal is hereby denied.

838

Federal Reserve Bulletin • October 1997

3. 316 Central Avenue, Fillmore, California 93015
Orders Issued Under Section 4 of the Bank Holding
Company Act

CoreStates Financial Corporation
Philadelphia, Pennsylvania
Order Approving a Notice to Engage in Certain
Nonbanking Activities
CoreStates Financial Corporation, Philadelphia, Pennsylvania ("CoreStates"), 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 225.24
of the Board's Regulation Y (12 C.F.R. 225.24) to engage
in the following nonbanking activities through its wholly
owned subsidiary, CoreStates Securities Corporation, Philadelphia, Pennsylvania ("Company"):
(1) Underwriting and dealing in, to a limited extent,
certain municipal revenue bonds (including certain unrated municipal revenue bonds), 1-4 family mortgagerelated securities, consumer receivable-related securities, and commercial paper (collectively, "bankineligible securities");
(2) Providing financial and investment advisory services, pursuant to section 225.28(b)(6) of Regulation Y
(12 C.F.R. 225.28(b)(6));
(3) Buying and selling all types of securities on the order
of customers as a "riskless principal," pursuant to section 225.28(b)(7)(ii) of Regulation Y (12 C.F.R.
225.28(b)(7)(ii));
(4) Acting as agent in the private placement of all types
of securities, pursuant to section 225.28(b)(7)(iii) of
Regulation Y (12 C.F.R. 225.28(b)(7)(iii»;
(5) Providing other transactional services, pursuant to
section 225.28(b)(7)(v) of Regulation Y (12 C.F.R.
225.28(b)(7)(v)); and
(6) Providing investing and trading services, pursuant to
section 225.28(b)(8)(ii) of Regulation Y (12 C.F.R.
225.28(b)(8)(ii).
In addition, CoreStates proposes that Company engage in
extending credit and servicing loans, activities related to
extending credit, leasing personal and real property, and
management consulting and counseling activities that are
related to Company's underwriting and dealing, private
placement, riskless principal, and other securities activities. These activities would be conducted in accordance
with the Board's Regulation Y.1
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(62 Federal Register 32,117 (1997)). The time for filing
comments has expired, and the Board has considered the

1. Sections 225.28(b)(1), (b)(2), (b)(3), and (b)(9) of Regulation Y
(12 C.F.R. 225.28(b)(1), (b)(2), (b)(3), and (b)(9)).




notice and all comments received in light of the factors set
forth in section 4(c)(8) of the BHC Act.
CoreStates, with total consolidated assets of approximately $45.3 billion, is the 21st largest banking organization in the United States. 2 CoreStates operates bank subsidiaries in Pennsylvania, New Jersey, and Delaware, and
engages through its subsidiaries in a broad range of permissible nonbanking activities. Company is, and will continue
to be, registered as a broker-dealer with the Securities and
Exchange Commission ( " S E C " ) under the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.) and a member
of the National Association of Securities Dealers, Inc.
("NASD"). Accordingly, Company is, and will continue to
be, subject to the recordkeeping and reporting obligations,
fiduciary standards, and other requirements of the Securities Exchange Act of 1934, the SEC, and the NASD.
Underwriting and Dealing in Bank-Ineligible

Securities

The Board has determined that, subject to the prudential
framework of limitations established in previous decisions
to address the potential for conflicts of interests, unsound
banking practices, or other adverse effects, the proposed
activities of underwriting and dealing in bank-ineligible
securities are so closely related to banking as to be a proper
incident thereto within the meaning of section 4(c)(8) of
the BHC Act. 3 CoreStates has committed that Company
will conduct the underwriting and dealing activities using
the same methods and procedures and subject to the same
prudential limitations established by the Board in the Section 20 Orders. 4
The Board also has previously determined that conduct
of the proposed activities is consistent with section 20 of
the Glass-Steagall Act (12 U.S.C. § 377), provided that the
company engaged in underwriting and dealing activities
derives no more than 25 percent of its gross revenues from
underwriting and dealing in bank-ineligible securities over
a two-year period. 5 CoreStates has committed that Com-

2. Asset and ranking data are as of March 31, 1997.
3. See Citicorp, 73 Federal Reserve Bulletin 473 (1987), aff'd sub
nom. Securities Industry Ass'n v. Board of Governors of the Federal
Reserve System, 839 F.2d 47 (2d Cir.), cert, denied. 486 U.S. 1059
(1988), as modified by Review of Restrictions on Director, Officer and
Employee Interlocks, Cross-Marketing Activities, and the Purchase
and Sale of Financial Assets Between a Section 20 Subsidiary and an
Affiliated Bank or Thrift, 61 Federal Register 57,679 (1996) (collectively, "Section 20 Orders").
4. In connection with its proposal, CoreStates proposes to underwrite and deal in unrated municipal revenue bonds. CoreStates has
committed that Company will not underwrite unrated municipal revenue bonds until the Federal Reserve System has reviewed Company's
policies and procedures with respect to such activities. In conducting
this activity, Company will in each case conduct an independent credit
review to determine that the securities are of investment grade quality.
CoreStates also has provided other commitments previously relied on
by the Board in authorizing a section 20 company to underwrite and
deal in unrated municipal revenue bonds. See Letter Interpreting
Section 20 Orders, 81 Federal Reserve Bulletin 198 (1995); BOK
Financial Corporation, 83 Federal Reserve Bulletin 510 (1997).
5. See Section 20 Orders. Compliance with the revenue limitation
shall be calculated in accordance with the method stated in the Sec-

Legal Developments

pany will conduct its bank-ineligible securities underwriting and dealing activities subject to the Board's revenue
limit. 6
Other Activities Approved by Regulation
As noted above, Company proposes to engage in providing
credit, servicing loans, and activities related to extending
credit; leasing personal or real property; providing financial and investment advisory services; providing riskless
principal, private placement and other transactional services; providing investing and trading services; and providing management consulting and counseling services. 7 The
Board previously has determined by regulation that each of
the proposed activities is closely related to banking for
purposes of section 4(c)(8) of the BHC Act. 8 CoreStates
and Company will conduct these activities in accordance
with the limitations set forth in Regulation Y, and the
Board's orders and interpretations relating to each of these
activities. 9
Proper Incident to Banking

Standard

To approve this notice, the Board also must consider
whether performance of the proposed activities is a proper
incident to banking, that is, whether the activities proposed
"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." 10 As part of its evaluation of these factors, the Board
considers the financial condition and managerial resources

839

of the notificant and its subsidiaries and the effect the
transaction would have on such resources. 11 The Board has
carefully examined the financial resources, management
expertise, and risk management policies of CoreStates and
its subsidiaries. Based on all the facts of record, the Board
concludes that financial and managerial considerations are
consistent with approval.
The Board expects that the de novo entry of Company
into the market for the proposed services would provide
added convenience to CoreStates's customers and would
increase the level of competition among existing providers
of these services. As noted above, CoreStates has committed that Company will conduct its bank-ineligible securities underwriting and dealing activities in accordance with
the prudential framework established by the Board's Section 20 Orders. Under the framework and conditions established in this order and the Section 20 Orders, the Board
concludes that Company's proposed limited conduct of
underwriting and dealing in bank-ineligible securities is
not likely to result in significantly adverse effects, such as
undue concentration of resources, decreased or unfair competition, conflicts of interest, or unsound banking practices
that would outweigh the public benefits. Similarly, the
Board finds no evidence that Company's riskless principal,
private placement, and other nonbanking activities—
conducted under the framework and conditions established
in this order and Regulation Y—would likely result in any
significant adverse effects that would outweigh the public
benefits of the proposal. Accordingly, the Board has determined that performance of the proposed activities by CoreStates are a proper incident to banking for purposes of
section 4(c)(8) of the BHC Act.
Conclusion

tion 20 Orders, as modified by the Order Approving Modifications to
the Section 20 Orders, 75 Federal Reserve Bulletin 751 (1989) and
10 Percent Revenue Limit on Bank-Ineligible Activities of Subsidiaries
of Bank Holding Companies Engaged in Underwriting and Dealing in
Securities, 61 Federal Register 48,953 (1996) and Revenue Limit on
Bank-Ineligible Activities of Subsidiaries of Bank Holding Companies
Engaged in Underwriting and Dealing in Securities, 61 Federal
Register 68,750 (1996) (collectively, "Modification Orders").
6. Company may provide services that are necessary incidents to the
proposed underwriting and dealing activities. Unless Company receives specific approval under section 4(c)(8) of the BHC Act to
conduct the activities independently, any revenues from the incidental
activities must be treated as ineligible revenues subject to the Board's
revenue limitation.
7. As provided in the Section 20 Orders, no corporate reorganization of any subsidiary engaged in underwriting and dealing in bankineligible securities may be consummated without prior Board approval. CoreStates has stated that Company will not engage in any
additional activities or transfer assets or businesses into Company
without first consulting with the Board.
8. See 12 C.F.R. 225.28(b)(1), (b)(2), (b)(3), (b)(6), (b)(7)(ii),
(b)(7)(iii), (b)(7)(v), (b)(8)(ii), and (b)(9).
9. CoreStates also proposes that Company enter into a dualemployee arrangement with a third party insurance agent to sell
annuity products. CoreStates has committed that the dual-employee
arrangement will be consistent with the BHC Act and the restrictions
and limitations previously established by the Board on such insurance
sales arrangements. See, e.g., Letter dated December 6, 1995, from
J. Virgil Mattingly, Jr., to Russell J. Bruemmer, Esq.
10. 12 U.S.C. § 1843(c)(8).




Based on all the facts of record, and subject to the commitments made by CoreStates, as well as the terms and conditions set forth in this order and in the Board's orders and
regulations noted above, the Board has determined that the
notice should be, and hereby is, approved. Approval of the
proposal also is conditioned on compliance by CoreStates
and Company with the commitments made in connection
with the notice, the conditions referenced in this order, and
the above-cited Board regulations and orders. The Board's
determination also is subject to all the terms and conditions
set forth in Regulation Y, including those in sections 225.7
and 225.25(c) (12 C.F.R. 225.7 and 225.25(c)), and to the
Board's authority to require modification or termination of
the activities of a bank holding company or any of its
subsidiaries as the Board finds necessary to assure compliance with, and to prevent evasion of, the provisions of the
BHC Act and the Board's regulations and orders issued
thereunder. In approving the proposal, the Board has relied
on all the facts of record and all the representations and

11. See 12 C.F.R. 225.24; see also The Fuji Bank, Limited,
75 Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG,
73 Federal Reserve Bulletin 155 (1987).

840

Federal Reserve Bulletin • October 1997

commitments made by CoreStates. These commitments
and conditions shall be deemed to be conditions imposed
in writing by the Board in connection with its findings and
decisions, and may be enforced in proceedings under applicable law.
This transaction shall not be commenced 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 Philadelphia, acting pursuant to
delegated authority.

INDEX OF ORDERS ISSUED OR ACTIONS

By order of the Board of Governors, effective August 4,
1997.
This action was taken pursuant to the Board's Rules Regarding
Delegation of Authority (12 C.F.R. 265.4(b)(1)) by a committee of
Board members. Voting for this action: Chairman Greenspan and
Governors Phillips and Meyer. Absent and noting voting: Vice Chair
Rivlin and Governor Kelley.

TAKEN BY THE BOARD OF GOVERNORS

JENNIFER J. JOHNSON

Deputy Secretary of the Board

OF THE FEDERAL RESERVE

SYSTEM

(April 1, 1997-July 31, 1997)
Bulletin

Applicant

Merged or Acquired Bank or Activity

Date of Approval

Volume
and Page

Agricultural Bank of China,
Beijing, People's Republic of China
Allied Irish Banks, pic,
Dublin, Ireland
First Maryland Bancorp,
Baltimore, Maryland
Amboy Bancorporation,
Old Bridge, New Jersey
AMCORE Financial, Inc.,
Rockford, Illinois

To establish a representative office in
New York, New York
Dauphin Deposit Corporation,
Harrisburg, Pennsylvania
Dauphin Bank and Trust Company,
Harrisburg, Pennsylvania
The Community Bank of New Jersey,
Freehold, New Jersey
Country Bancshares Corporation,
Mount Horeb, Wisconsin
Belleville Bancshares Corporation,
Belleville, Wisconsin
State Bank of Mount Horeb,
Mount Horeb, Wisconsin
Montello State Bank,
Montello, Wisconsin
State Bank of Argyle,
Argyle, Wisconsin
Citizens State Bank,
Clinton, Wisconsin
Belleville State Bank,
Belleville, Wisconsin
AmSouth Bank of Florida,
Tampa, Florida
AmSouth Bank of Georgia,
Rome, Georgia
AmSouth Bank of Tennessee,
Chattanooga, Tennessee
AmSouth Bank of Walker County,
Jasper, Alabama
Liberty Bancorp, Inc.,
Oklahoma City, Oklahoma
Liberty Bank & Trust Company of
Oklahoma City, N.A.,
Oklahoma City, Oklahoma
Liberty Bank & Trust Company of Tulsa,
N.A.,
Tulsa, Oklahoma

May 14, 1997

83, 617

May 19, 1997

83, 607

April 14, 1997

83, 507

June 16, 1997

83, 666

June 1, 1997

83, 528

April 29, 1997

83, 520

AmSouth Bank of Alabama,
Birmingham, Alabama

Banc One Corporation,
Columbus, Ohio
Banc One Oklahoma Corporation,
Oklahoma City, Oklahoma




Legal Developments

841

Index of Orders Issued—Continued
Bulletin

Applicant

Merged or Acquired Bank or Activity

Date of Approval

Volume
and Page

Banc One Corporation, Inc.,
Columbus, Ohio

First USA, Inc.,
Dallas, Texas
First USA Federal Savings Bank,
Wilmington, Delaware
Roig Commercial Bank,
Humacao, Puerto Rico
Far East National Bank,
Los Angeles, California

May 14, 1997

83, 602

May 27, 1997

83, 612

June 11, 1997

83, 669

Alliance Securities Corporation,
Tulsa, Oklahoma
CAM Acquisition, LLC,
Wilmington, Delaware
Montgomery Asset Management, L.P.,
San Francisco, California
Montgomery Services, LLC,
San Francisco, California
Crestar Securities Corporation,
Richmond, Virginia
The Farmers and Merchants State Bank,
Effingham, Kansas

April 28, 1997

83, 510

June 16, 1997

83, 678

April 14, 1997

83, 512

June 30, 1997

83, 671

U.S. Bancorp,
Portland, Oregon
U.S. National Bank of Oregon,
Portland, Oregon
U.S. Bank of Washington, N.A.,
Seattle, Washington
U.S. Bank of Nevada,
Reno, Nevada
U.S. Bank of Utah,
Salt Lake City, Utah
U.S. Bank of Idaho,
Boise, Idaho
U.S. Bank of California,
Sacramento, California
First State Bank of Oregon,
Canby, Oregon
Sun Capital Bank,
St. George, Utah
Business & Professional Bank,
Woodland, California
Border Bancshares, Inc.,
Greenbush, Minnesota
Border State Bank,
Roseau, Minnesota
Security Capital Corporation,
Milwaukee, Wisconsin
Security Bank SSB,
Milwaukee, Wisconsin

June 23, 1997

83, 689

April 21, 1997

83, 509

June 30, 1997

83, 672

Banco Popular de Puerto Rico,
Hato Rey, Puerto Rico
Bank SinoPac,
Taipei, Taiwan
SinoPac Bancorp,
Los Angeles, California
BOK Financial Corporation,
Tulsa, Oklahoma
Commerzbank AG,
Frankfurt am Main,
Federal Republic of Germany

Crestar Financial Corporation,
Richmond, Virginia
Exchange Bankshares Corporation of
Kansas,
Atchison, Kansas
First Bank System, Inc.,
Minneapolis, Minnesota

G.B. Financial Services, Inc.,
Greenbush, Minnesota

Marshall & Ilsley Corporation,
Milwaukee, Wisconsin
Marshall & Ilsley Bank,
Milwaukee, Wisconsin




842

Federal Reserve Bulletin • October 1997

Index of Orders Issued—Continued

Applicant

Merged or Acquired Bank or Activity

Date of Approval

Bulletin
Volume
and Page

Mellon Bank Corporation,
Pittsburgh, Pennsylvania
Mercantile Bancorporation Inc.,
St. Louis, Missouri
Ameribanc, Inc.,
St. Louis, Missouri
National Canton Bancshares, Inc.,
Canton, Illinois

Buck Consultants, Inc.,
New York, New York
Roosevelt Financial Group, Inc.,
Chesterfield, Missouri
Roosevelt Bank,
Chesterfield, Missouri
Sturm Investment, Inc.,
Denver, Colorado
The Union National Bank of Macomb,
Macomb, Illinois
First National Security Company,
DeQueen, Arkansas
Calvin B. Taylor Bankshares, Inc.,
Berlin, Maryland
First Perry Bancorp, Inc.,
Pinckneyville, Illinois
The First National Bank in Falfurrias,
Falfurrias, Texas
SJS Bancorp, Inc.,
St. Joseph, Michigan
SJS Federal Savings Bank,
St. Joseph, Michigan
SJS Financial Corporation,
St. Joseph, Michigan
United Carolina Bancshares Corporation,
Whiteville, North Carolina
United Carolina Bank,
Whiteville, North Carolina
United Carolina Bank of South Carolina,
Greer, South Carolina
Standard Federal Bancorporation, Inc.,
Troy, Michigan
Standard Federal Bank,
Troy, Michigan
Standard Brokerage Services, Inc.,
Troy, Michigan

June 16, 1997

83, 681

June 4, 1997

83, 683

June 11, 1997

83, 676

May 12, 1997

83, 593

April 21, 1997

83, 515

May 29, 1997

83, 596

April 10, 1997

83, 518

ValliWide Bank,
Fresno, California

May 27, 1997

83, 614

NationsBank Corporation,
Charlotte, North Carolina
NB Holdings Corporation,
Charlotte, North Carolina

Shoreline Financial Corporation,
Benton Harbor, Michigan

Southern National Corporation,
Winston-Salem, North Carolina

Stichting Prioriteit ABN AMRO Holding,
Amsterdam, The Netherlands
Stichting Administratiekantoor ABN
AMRO Holding,
Amsterdam, The Netherlands
ABN AMRO Holding N.V.,
Amsterdam, The Netherlands
ABN AMRO Bank N.V.,
Amsterdam, The Netherlands
ABN AMRO North America, Inc.,
Chicago, Illinois
Westamerica Bank,
San Rafael, California




Legal Developments

APPLICATIONS APPROVED

By Federal Reserve

UNDER BANK HOLDING

COMPANY

843

ACT

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

AMFED Financial, Inc.,
Minneapolis, Minnesota

Norwest Bank Nevada, F.S.B.,
Las Vegas, Nevada
Norwest Bank Nevada,
National Association,
Las Vegas, Nevada
Elmwood Financial Corporation,
Racine, Wisconsin

Minneapolis

July 28, 1997

Chicago

August 8, 1997

St. Louis

July 23, 1997

Atlanta

August 21, 1997

Dallas

July 24, 1997

CNB Bancorp, Inc.,
Independence, Kansas

Kansas City

August 14, 1997

Commercial Bank of Volusia County,
Ormond Beach, Florida
Upper Rio Grande Bank Corporation,
Del Norte, Colorado
Citizens Bank,
Appleton City, Missouri
Community National Bank,
Waterloo, Iowa

Atlanta

August 20, 1997

Kansas City

August 6, 1997

Kansas City

August 15, 1997

Chicago

August 1, 1997

Atlanta

August 1, 1997

Kansas City

August 8, 1997

Chicago

July 31, 1997

Kansas City

August 6, 1997

Philadelphia

August 19, 1997

Bank of Elmwood Employee Stock
Ownership Plan and Trust,
Racine, Wisconsin
Banterra Corp.,
Eldorado, Illinois

Big Lake Financial Corporation,
Okeechobee, Florida

Bryan Family Management Trust,
Bryan, Texas
Bryan-Heritage Limited Partnership,
Bryan, Texas
Commerce Bancshares, Inc.,
Kansas City, Missouri
CBI-Kansas, Inc.,
Kansas City, Missouri
The Commercial Bancorp, Inc.,
Ormond Beach, Florida
Community Bankshares, Inc.,
Denver, Colorado
Community First Bancshares, Inc.,
Butler, Missouri
Community National
Bancorporation,
Waterloo, Iowa
Edison Bancshares, Inc.,
Fort Myers, Florida
First Fairland Bancshares, Inc.,
Fairland, Oklahoma
First Midwest Bancorp, Inc.,
Itasca, Illinois
FMB Acquisition Corporation,
Itasca, Illinois
First National Bank Shares, Ltd.,
Great Bend, Kansas
Harris Financial, Inc.,
Harrisburg, Pennsylvania
Harris Financial, MHC,
Harrisburg, Pennsylvania




1st Bancorp Vienna, Inc.,
Vienna, Illinois
The First State Bank of Vienna,
Vienna, Illinois
CNB Financial Corporation,
Clewiston, Florida
Clewiston National Bank,
Clewiston, Florida
The First National Bank of Bryan,
Bryan, Texas

Edison National Bank,
Fort Myers, Florida
Fairland Holding Company, Inc.,
Neosho, Missouri
SparBank, Inc.,
McHenry, Illinois
McHenry State Bank,
McHenry, Illinois
BankWest,
Castle Rock, Colorado
Harris Savings Bank,
Harrisburg, Pennsylvania

844

Federal Reserve Bulletin • October 1997

Section 3—Continued
Applicant(s)

Bank(s)

Reserve Bank

Effective Date

Hibernia Corporation,
New Orleans, Louisiana

Unicorp Bancshares-Texas, Inc.,
Orange, Texas
OrangeBank,
Orange, Texas
Morton Community Bank,
Morton, Illinois

Atlanta

August 14, 1997

Chicago

August 20, 1997

Lafayette Bancshares, Inc.,
Lexington, Missouri
Lafayette County Bank
of Lexington/Wellington,
Lexington, Missouri
B&L Bank,
Lexington, Missouri
Marquette Bank Rochester, N.A.,
Rochester, Minnesota
First State Bank,
Maypearl, Texas

Kansas City

August 7, 1997

Minneapolis

August 14, 1997

Dallas

August 19, 1997

Mount Prospect National Bank,
Mt. Prospect, Illinois
The Bank of the Southwest, N.A.,
Pagosa Springs, Colorado
Halo Bancorporation, Inc.,
Devils Lake, North Dakota

Chicago

August 4, 1997

Minneapolis

August 7, 1997

Minneapolis

August 20, 1997

Farmers Bank of Malone,
Malone, Florida

Atlanta

August 14, 1997

People's Community Bank of South
Carolina,
Aiken, South Carolina
Progress Bank of Sullivan,
Sullivan, Missouri
Pekin Savings, s.b.,
Pekin, Illinois
Florida Gulfcoast Bancorp, Inc.,
Sarasota, Florida
Enterprise National Bank of Sarasota,
Sarasota, Florida
Northeastern Oklahoma Banshares, Inc.,
Inola, Oklahoma
Ready Bank of West Florida,
Fort Walton Beach, Florida

Richmond

August 21, 1997

St. Louis

August 15, 1997

Chicago

August 19, 1997

Cleveland

July 31, 1997

Kansas City

July 31, 1997

Atlanta

July 25, 1997

Southwestern Bank & Trust Company,
Oklahoma City, Oklahoma
First Houston Bancshares, Inc.,
Houston, Texas
Houston National Bank,
Houston, Texas

Kansas City

August 19, 1997

Dallas

August 7, 1997

Hometown Independent Bancorp,
Inc.,
Morton, Illinois
Lexington B&L Financial Corp.,
Lexington, Missouri

Marquette Bancshares, Inc.,
Minneapolis, Minnesota
Maypearl Bancshares, Inc.,
Maypearl, Texas
Maypearl Holdings, Inc.,
Wilmington, Delaware
Northwest Suburban Bancorp, Inc.,
Arlington Heights, Illinois
Norwest Corporation,
Minneapolis, Minnesota
Otto Bremer Foundation,
St. Paul, Minnesota
Bremer Financial Corporation,
St. Paul, Minnesota
Peoples Community Bancshares,
Inc.,
Colquitt, Georgia
People's Community Capital
Corporation,
Aiken, South Carolina
Progress Bancshares, Inc.,
Sullivan, Missouri
Progressive Bancorp, Inc.,
Pekin, Illinois
Provident Bancorp, Inc.,
Cincinnati, Ohio
FGBI Acquisition Corp.,
Cincinnati, Ohio
RCB Holding Company, Inc.,
Claremore, Oklahoma
Ready Bank of Fort Walton Beach
Holding Company, Inc.,
Fort Walton Beach, Florida
Southwestern Bancshares, Inc.,
Oklahoma City, Oklahoma
Sterling Bancshares, Inc.,
Houston, Texas




Legal Developments

Section 3—Continued
Applicant(s)

Bank(s)

Reserve Bank

Effective Date

Stockmens Financial Corporation,
Rushville, Nebraska
TNB Bancorporation, Inc.,
Brenham, Texas
TNB Bancorporation of Delaware,
Inc.,
Wilmington, Delaware
Triangle Bancorp, Inc.,
Raleigh, North Carolina
United Community Banks, Inc.,
Blairsville, Georgia

BankWest,
Castle Rock, Colorado
Texas National Bank,
Brenham, Texas

Kansas City

August 6, 1997

Dallas

August 1, 1997

Bank of Mecklenburg,
Charlotte, North Carolina
First Clayton Bancshares, Inc.,
Clayton, Georgia
First Clayton Bank & Trust Company,
Clayton, Georgia

Richmond

August 6, 1997

Atlanta

August 20, 1997

Applicant(s)

Nonbanking Activity/Company

Reserve Bank

Effective Date

BB&T Corporation,
Winston-Salem, North Carolina
BB&T Financial Corporation of
Virginia,
Winston-Salem, North Carolina
Caisse Nationale de Credit Agricole,
Paris, France
Credit Agricole Group,
Paris, France

Virginia First Financial Corporation,
Petersburg, Virginia

Richmond

August 21, 1997

Credit Agricole Indosuez,
Paris, France
Indosuez Investment Management
Services, Inc.,
Menlo Park, California
Cash Now L.L.C.,
Grandview, Missouri
Cash Now, Inc.,
Kansas City, Kansas
To engage de novo in the purchasing
and servicing of accounts receivable
through a joint venture
Finance Company of North America,
LLC,
East Lansing, Michigan
Money Station, Inc.,
Columbus, Ohio

Chicago

August 1, 1997

Kansas City

August 8, 1997

Kansas City

August 4, 1997

Chicago

August 12, 1997

Cleveland

August 5, 1997

St. Louis

August 5, 1997

Minneapolis

August 14, 1997

Section 4

Central Bancshares, Inc.,
Kansas City, Missouri

Citizens Bancshares Company,
Chillicothe, Missouri
First National Bancshares, Inc.
East Lansing, Michigan
Mellon Bank Corporation,
Pittsburgh, Pennsylvania
APT Holdings, Inc.,
Pittsburgh, Pennsylvania
Middleburg Bancorp, Inc.,
Middleburg, Kentucky

Northwest Wisconsin Bancorp, Inc.
Chippewa Falls, Wisconsin
BCB Bancorp, Inc.,
Chippewa Falls, Wisconsin




Lincoln Financial Bancorp, Inc.,
Stanford, Kentucky
Lincoln Federal Savings Bank,
Liberty, Kentucky
Heartland Data Center, Inc.,
Cameron, Wisconsin

845

846

Federal Reserve Bulletin • October 1997

Section 4—Continued
Applicant(s)

Nonbanking Activity/Company

Reserve Bank

Effective Date

Norwest Corporation,
Minneapolis, Minnesota
Norwest Financial Services, Inc.
Des Moines, Iowa
Norwest Financial, Inc.,
Des Moines, Iowa
Norwest Corporation,
Minneapolis, Minnesota
Norwest Financial Services, Inc.
Des Moines, Iowa
Norwest Financial, Inc.,
Des Moines, Iowa
P.C.B. Bancorp, Inc.,
Largo, Florida
Peoples Bancorp, Inc.,
Marietta, Ohio
Pioneer Bancshares, Inc.,
Chattanooga, Tennessee
Royal Bank of Canada,
Montreal, Quebec, Canada

Family Loan, Inc.,
Stockbridge, Georgia

Minneapolis

August 13, 1997

Fidelity Acceptance Corporation,
Kansas City, Missouri

Minneapolis

August 7, 1997

Anchor Savings Bank, F.S.B.,
St. Petersburg, Florida
Gateway Bancorp, Inc.,
Catlettsburg, Kentucky
Pioneer Bank, f.s.b.,
Chattanooga, Tennessee
Integrion Financial Network, LLC,
Atlanta, Georgia
VISA Interactive, Inc.,
Herndon, Virginia
RBC Dominion Securities Corporation,
New York, New York
State Bank & Trust Mortgage, L.L.C.,
Colorado Springs, Colorado
Integrion Financial Network, LLC,
Atlanta, Georgia
VISA Interactive, Inc.,
Herndon, Virginia

Atlanta

August 13, 1997

Cleveland

August 8, 1997

Atlanta

August 21, 1997

New York

August 14, 1997

New York

August 4, 1997

Kansas City

August 21, 1997

Chicago

August 14, 1997

Applicant(s)

Nonbanking Activity/Company

Reserve Bank

Effective Date

Area Bancshares Corporation,
Owensboro, Kentucky

Cardinal Bancshares, Inc.,
Lexington, Kentucky
The Vine Street Trust Company,
Lexington, Kentucky
HNB Bank, National Association,
Harlan, Kentucky
First and Peoples Bank,
Springfield, Kentucky
Jefferson Banking Company,
Louisville, Kentucky

St. Louis

July 30, 1997

Royal Bank of Canada,
Montreal, Quebec, Canada
SBT Bankshares, Inc.,
Colorado Springs, Colorado
Stichting Administratiekantoor ABN
AMRO Holding,
Amsterdam, The Netherlands
Stichting Prioriteit ABN AMRO
Holding,
Amsterdam, The Netherlands
ABN AMRO Holding N.V.,
Amsterdam, The Netherlands
ABN AMRO Bank N.V.,
Amsterdam, The Netherlands
ABN AMRO North America, Inc.,
Chicago, Illinois

Sections 3 and 4




Legal Developments

847

Sections 3 and 4—Continued
Applicant(s)

Nonbanking Activity/Company

F.N.B. Corporation,
Hermitage, Pennsylvania

Alliance Bank, FSB,
Somerset, Kentucky
Mutual Service Corporation,
Somerset, Kentucky
Sun Bancorp, Inc.,
Selinsgrove, Pennsylvania

APPLICATIONS

APPROVED

By Federal Reserve

UNDER BANK MERGER

Reserve Bank

Effective Date

Cleveland

August 15, 1997

ACT

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

Ambassador Bank of the
Commonwealth,
Allentown, Pennsylvania
Bank of Mecklenburg,
Charlotte, North Carolina
Colonial Bank,
Montgomery, Alabama
Colonial Bank,
Montgomery, Alabama
Community Bank & Trust
Company,
Neosho, Missouri
Fifth Third Bank Cincinnati,
Cincinnati, Ohio
Fifth Third Bank Columbus,
Columbus, Ohio
First Virginia Bank-Southwest,
Roanoke, Virginia

Wilbur Savings Bank,
Bethlehem, Pennsylvania

Philadelphia

August 14, 1997

Triangle-Mecklenburg Interim Bank,
Charlotte, North Carolina
Dadeland Bank,
Miami, Florida
First Independence Bank of Florida,
Fort Myers, Florida
Citizens State Bank,
Galena, Kansas

Richmond

August 6, 1997

Atlanta

August 20, 1997

Atlanta

August 6, 1997

Kansas City

August 12, 1997

Cleveland

July 31, 1997

Cleveland

July 31, 1997

Richmond

August 6, 1997

Chicago

July 31, 1997

Cleveland

August 14, 1997

Atlanta

July 31, 1997

Richmond

August 7, 1997

Chicago

July 31, 1997

Chicago

July 31, 1997

Omni Bank,
Macomb, Illinois
The Provident Bank,
Cincinnati, Ohio
Provident Bank of Florida,
Apollo Beach, Florida
Resource Bank,
Virginia Beach, Virginia
Tiskilwa State Bank,
Tiskilwa, Illinois

UnionBank,
Streator, Illinois




Great Lakes National Bank,
Hamilton, Ohio
Great Lakes National Bank,
Hamilton, Ohio

Premier Bank-South, National
Association,
Wytheville, Virginia
Farmers State Bank,
Ferris, Illinois
The Provident Bank of Kentucky,
Alexandria, Kentucky
Enterprise National Bank,
Sarasota, Florida
Eastern American Bank, F.S.B.,
Herndon, Virginia
Tampico National Bank,
Tampico, Illinois
The First National Bank of Manlius,
Manlius, Illinois
UnionBank/Sandwich,
Sandwich, Illinois

848

Federal Reserve Bulletin • October 1997

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.
Eliopulos v. Board of Governors, No. 97-1442 (D.C. Cir.,
filed July 17, 1997). Petition for review of a Board order
dated June 23, 1997, approving the application of First
Bank System, Inc., Minneapolis, Minnesota, to acquire U.S.
Bancorp, Portland, Oregon, and thereby acquire U.S. Bancorp's banking and nonbanking subsidiaries.
Greeff v. Board of Governors, No. 97-1976 (4th Cir., filed
June 17, 1997). Petition for review of a Board order dated
May 19, 1997, approving the application of by Allied Irish
Banks, pic, Dublin, Ireland, and First Maryland Bancorp,
Baltimore, Maryland, to acquire Dauphin Deposit Corporation, Harrisburg, Pennsylvania, and thereby acquire Dauphin's banking and nonbanking subsidiaries.
Inner City Press/Community on the Move v. Board of Governors, No. 97-1394 (D.C. Cir., filed June 12, 1997). Petition
to review a Board order dated May 14, 1997, approving the
application of Banc One Corporation, Inc., Columbus, Ohio,
to merge with First USA, Inc., Dallas, Texas. On June 16,
1997, petitioners moved for a stay pending appeal. The
motion was denied on June 27, 1997. On August 11, 1997,
the Board filed a motion to dismiss the petition.
Vickery v. Board of Governors, No. 97-1344 (D.C. Cir., filed
May 9, 1997). Petition for review of a Board order dated
April 14, 1997, prohibiting Charles R. Vickery, Jr., from
further participation in the banking industry.
Wilkins v. Board of Governors, No. 3:97CV331 (E.D. Va.,
filed May 2, 1997). Customer dispute with bank. On
June 11, 1997, the Board filed a motion to dismiss.
Pharaon v. Board of Governors, No. 97-1114 (D.C. Cir., filed
February 28, 1997). Petition for review of a Board order
dated January 31, 1997, imposing civil money penalties and
an order of prohibition for violations of the Bank Holding
Company Act.
Research Triangle Institute v. Board of Governors, No. 971282 (4th Cir., filed February 24, 1997). Appeal of district
court's dismissal of contract claim.
Jones v. Board of Governors, No. CV97-0198 (W.D. Louisiana, filed January 30, 1997). Complaint alleging violations
of the Fair Housing Act. The case was dismissed on
May 29, 1997.
The New Mexico Alliance v. Board of Governors, No. 969552 (10th Cir., filed December 24, 1996). Petition for
review of a Board order dated December 16, 1996, approving the acquisition by NationsBank Corporation and NB
Holdings Corporation, both of Charlotte, North Carolina, of
Boatmen's Bancshares, Inc., St. Louis, Missouri. Also on
December 24, 1996, petitioners moved for an emergency
stay of the Board's order. The motion for a stay was denied
by the 10th Circuit on January 3, 1997; on January 6, 1997,
petitioners' application for emergency stay was denied by
the Supreme Court.




Artis v. Greenspan, No. 1:96CV02619 (D.D.C., filed November 19, 1996). Employment discrimination action. On
May 30, 1997, the court granted the Board's motion to
dismiss the action. The plaintiff filed a notice of appeal on
August 25, 1997.
Snyder v. Board of Governors, No. 96-1403 (D.C. Cir., filed
October 3, 1996). Petition for review of Board order dated
September 11, 1996, prohibiting John K. Snyder and
Donald E. Hedrick from further participation in the banking
industry. On May 8, 1997, the court of appeals granted the
Board's motion to dismiss the petition. Petitioners' request
for rehearing or rehearing en banc was denied on July 31,
1997.
American Bankers Insurance Group, Inc. v. Board of Governors, No. 96-CV-2383-EGS (D.D.C., filed October 16,
1996). Action seeking declaratory and injunctive relief invalidating a new regulation issued by the Board under the
Truth in Lending Act relating to treatment of fees for debt
cancellation agreements. On October 18, 1996, the district
court denied plaintiffs' motion for a temporary restraining
order. On January 17, 1997, the parties filed cross-motions
for summary judgment.
Artis v. Greenspan, No. 96-CV-02105 (D. D.C., filed September 11, 1996). Class complaint alleging race discrimination
in employment. On December 20, 1996, the Board moved
to dismiss the action. On June 30, 1997, the court granted
the motion and dismissed the case. The plaintiffs filed a
notice of appeal on August 25, 1997.
Leuthe v. Board of Governors, No. 96-5725 (E.D. Pa., filed
August 16, 1996). Action against the Board and other
Federal banking agencies challenging the constitutionality
of the Office of Financial Institution Adjudication. On January 24, 1997, the agencies filed a motion to dismiss the
action.
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. Oral argument was heard on May 12, 1997, and on
June 30, 1997, the court affirmed the Board's decision.
Inner City Press/Community on the Move v. Board of Governors, No. 96^1008 (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 was consolidated for
oral argument and decision with Lee v. Board of Governors,
No. 95-4134 (2d Cir.); oral argument was held on January 13, 1997. On July 2, 1997, the court of appeals dismissed the petition for review.

Legal Developments

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
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. Oral argument, consolidated with Inner City
Press/Community on the Move v. Board of Governors, took
place on January 13, 1997. On July 2, 1997, the court of
appeals dismissed the petition for review.
In re Subpoena Duces Tecum, Misc. No. 95-06 (D.D.C., filed
January 6, 1995). Action to enforce subpoena seeking predecisional supervisory documents and testimony sought in
connection with an action by Bank of New England Corporation's trustee in bankruptcy against the Federal Deposit
Insurance Corporation. On August 7, 1997, the court
granted in part and denied in part the motions to compel.
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.

Judge ("ALJ") Arthur L. Shipe, issued following an administrative hearing held between November 1994 and
August 1995. In the Recommended Decision, the ALJ
found that the OCC's Enforcement Counsel had established all of the requirements for an order of prohibition:
that both respondents had engaged in misconduct from
which they gained and the Bank lost, and that reflected
culpability inconsistent with their continued participation
in banking. The ALJ therefore recommended that both
respondents be prohibited from participating in banking
without the approval of the appropriate regulatory agencies. Respondents filed 424 pages of exceptions to the
recommended decision in which they concede most of the
underlying conduct but argue that it was reasonable and
legitimate.
Based on a review of the record and the arguments
raised by the Towes, the Board adopts the recommended
decision and rejects the Towes' exceptions for the reasons
stated by the ALJ, except as specifically noted in this Final
Decision.

I. Statement of the Case
A. Statutory and Regulatory Framework
1. Standards for Prohibition

FINAL ENFORCEMENT
OF

DECISION

ISSUED BY THE

BOARD

GOVERNORS

In the Matter of
Edward Towe, Former President and Director, and
Thomas E. Towe, Former Director and
Chairman of the Board of Directors
First National Bank and Trust
Wibaux, Montana

Docket Nos.
OCC-AA-EC-93-42
OCC-AA-EC-93-43
Final Decision
This is an administrative proceeding pursuant to section
8(e) of the Federal Deposit Insurance Act ("FDI Act"),
12 U.S.C. § 1818(e), in which the Office of the Comptroller
of the Currency of the United States of America ( " O C C " )
seeks to prohibit Respondents Edward and Thomas E.
Towe from further participation in the affairs of any
federally-supervised financial institution as a result of their
conduct during their former affiliation with First National
Bank and Trust, Wibaux, Montana (the "Bank"). As required by statute, the OCC has referred the action to the
Board of Governors of the Federal Reserve System (the
"Board") for final decision.
The proceeding comes before the Board in the form of a
219-page Recommended Decision by Administrative Law




849

Order

Under the FDI Act, the ALJ is responsible for conducting
an administrative hearing on a notice of intent to prohibit.
12 U.S.C. § 1818(e)(4). Following the hearing, the ALJ
issues a recommended decision that is referred to the
Board, and the parties may file exceptions to the ALJ's
recommendations. The Board makes the final findings of
fact, conclusions of law, and determination whether to
issue an order of prohibition. Id.\ 12 C.F.R. 263.40.
To issue a prohibition order under the FDI Act, the
Board must make each of three findings:
(1) There must be a specified type of misconduct—
violation of law, regulation, or final cease-and-desist
order, unsafe or unsound practice, or breach of fiduciary
duty;
(2) The misconduct must have a prescribed effect—
financial gain to the respondent or financial loss or other
damage to the institution or prejudice to the institution's
depositors; 1 and
(3) The misconduct must involve culpability of a certain
degree—personal dishonesty or willful or continuing
disregard for the safety or soundness of the institution.

1. The standards for the issuance of an order of prohibition were
amended by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), Pub. L. No. 101-73, 103 Stat. 183
(1989), effective August 9, 1989. Prior to that date, the statute required that the loss to the institution be "substantial" and that the
prejudice to the depositors be "serious." While the conduct in this
case began before the statutory changes and continued thereafter, the
ALJ's conclusions of law applied the higher pre-FlRREA standard in
each instance, and therefore more than satisfied the post-FIRREA
standards for prohibition.

850

Federal Reserve Bulletin • October 1997

B. Procedural History
The OCC initiated this proceeding on March 24, 1993 with
the issuance of an assessment of civil money penalties and
a notice that it would seek an order of prohibition against
the Towes. Recommended Decision ( " R D " ) 1. Both actions were addressed in a common hearing before the ALJ
and by the ALJ's Recommended Decision. The FDI Act
assigns authority for a final decision regarding prohibition
to the Board and the final decision as to civil money
penalties to the Comptroller. 12U.S.C. § 1818(h), (i). The
Board takes official notice that on July 25, 1997, the
Comptroller issued a final Decision and Order adopting
almost all of the ALJ's recommendations and assessing a
penalty of $10,000 against Edward Towe and $25,000
against Thomas Towe.

II. Discussion
After reviewing the exceptions to the Recommended Decision of the ALJ, the Board adopts the findings and conclusions of the ALJ, except as otherwise indicated in this
Order.

A. Factual Overview
Edward Towe and his son Thomas Towe have extensive
banking backgrounds. By the early 1970's, each was a
director of every bank in a chain of 13 state and national
banks, and Edward Towe was president of all but two.
Recommended Finding of Fact ("RFF") 3. Thomas Towe,
an attorney, performed most of the legal work for these
banks and has practiced generally in the areas of banking
law and taxation. RFF 4.
Prior to January 1987, Edward Towe served as a director
of the Bank, but neither he nor the Towe family exercised
exclusive control of the Bank. On January 15, 1987, the
Towe family gained exclusive control of the Bank, a national bank subject to the OCC's supervision. 2 Edward
Towe became its president, and Thomas Towe became
chairman of the Bank's board of directors and served as its
legal counsel. RD 5-6. Accordingly, both Edward and
Thomas Towe were subject to the OCC's supervisory
jurisdiction no later than January 15, 1987. During 1990,
Edward Towe was given proxies to vote over 66 percent of
the Bank's shares, a figure that increased to 82 percent in
1991. RFF 165. Thus, during these years at least Edward

2. While Edward Towe directly owned only director's qualifying
shares in the Bank, the remainder of the Bank's shares were largely
owned by family members or by entities that Towe controlled. Grant
Investments owned about 15.6 percent of the total shares outstanding,
family trusts owned more than 50 percent, and Edward Towe's sisters
owned an additional 31 percent. RFF 315-317. Edward Towe exercised control at shareholders meetings in 1990 and 1991 through
proxies executed in his favor representing a majority of the voting
stock. RFF 165-171.




Towe controlled the Bank for purposes of section 23A of
the Federal Reserve Act, 12 U.S.C. § 371c. 3
The record in this action establishes repeated instances
on the part of both Edward and Thomas Towe of selfdealing, conflicts of interest, unsafe and unsound banking
practices, and a willingness to use the Bank for the Towes'
personal ends. The Towes arranged for payments to be
made to Edward Towe and his wife in a manner intended to
avoid an IRS wage levy, knowingly exposing the Bank to
IRS penalties and resulting in false statements in the
Bank's books. Edward Towe operated a family-owned
company, Grant Investments, from the Bank's premises
and used Bank personnel to service loans made by Grant
without providing adequate compensation to the Bank.
Assets were transferred back and forth between Grant and
the Bank in transactions known only to Edward Towe, who
"agreed" to both sides of these transactions, and who gave
Grant superior rights in collateral held by the Bank. In the
so-called "Jacobson Transaction," Edward Towe involved
the Bank in a transaction the sole purpose of which was to
cloud the title to property of a former business partner with
whom he was feuding, leading to a lawsuit against the
Bank. Edward and Thomas Towe arranged for a swap of
worthless checks, drawn on accounts at the Bank, in order
to deceive the IRS into believing that a family foundation
had liquidated its interest in Grant Investments. On the
advice of Thomas Towe, the Bank repeatedly violated the
terms of a final cease-and-desist order. These and other
transactions, described in more detail below and in the
Recommended Decision, amply demonstrate that the requirements for orders of prohibition against Edward Towe
and Thomas Towe have been established. 4

B. Disguised Payments to Edward and Florence
Towe
Beginning in 1986, the IRS served levies on the Bank
directing it to pay over to the IRS any wages, salary or
other income for which the Bank was obligated to Edward
Towe or his wife, Florence Towe. RFF 5. In response,
Edward Towe ceased to collect director's fees from the
Bank. When the Towe family acquired exclusive control of
the Bank and Edward Towe became its president in January 1987, the Bank, at Edward Towe's direction and with
Thomas Towe's knowledge and assistance, decided not to
pay Edward Towe a salary, but instead arranged for the
Bank to compensate him in a variety of ways disguised as
something other than salary in an effort to fall outside the
terms of the IRS levies. These practices, involving the

3. The Board rejects Respondents' argument that the shares Edward
Towe controlled by proxy are irrelevant for purposes of the control
provisions of section 23A. See 1 F.R.R.S. 3-1144, 3-1146.2.
4. The Board bases its conclusion as to Thomas Towe upon his
status as chairman of the Bank's board, and not on his role as counsel
to the Bank. Because Thomas Towe did not maintain a clear distinction between his two capacities with respect to arranging or assisting
the transactions at issue (as opposed to his representation of the Bank
in litigation as counsel), he bears responsibility as chairman for those
actions.

Legal Developments

manipulation and falsification of Bank records, exposed
the Bank to a suit by the IRS seeking damages, penalties,
and interest for the failure to honor the levies, which was
eventually settled for a $20,000 payment by the Bank. RFF
36; Ex. 711.
The disguised payments purported successively to be
reimbursement for travel expenses, "subsistence," and
consulting fees, and were designed to funnel money to the
Towes in circumvention of the IRS levies rather than to
purchase services that would benefit the Bank. RFF 28, 31,
34, 35. From January 1987 until about August 1988, the
Bank issued monthly travel expense checks to Edward
Towe totalling over $6,000, purporting to compensate him
for travel to and from directors' meetings in Wibaux from
his former home in Texas. In fact, Edward Towe incurred
no significant travel expenses on behalf of the Bank during
this period. For almost all of that time, from January 1987
until mid-1988, Edward Towe travelled to directors meetings from his home in a Bank-owned apartment located
directly above the Bank, where he and his wife lived
rent-free, with all utilities paid for by the Bank. RFF 6, 7.5
When OCC examiners questioned the travel payments, the
Bank redesignated the payments as "subsistence," and
continued to pay them in the same amounts as before from
September 1988 until January 1989. 6 The month following
the last of these payments, Florence Towe began to be paid
$300 per month in "consulting fees", though she had no
contract with the Bank, did not report to the Bank's board,
and performed no additional services beyond the "public
relations" work previously performed for free. RFF 24-28.
Additionally, the Bank paid Edward Towe a $5,000 "consulting fee" on December 18, 1989. RFF 29. These consulting fees were intended to provide living expenses to the
Towes that would not be subject to the IRS levies. The
making of these payments by the Bank was initially suggested by Thomas Towe, who advised the board of directors to approve them, but failed to disclose to the other
board members that he was simultaneously representing
his parents in connection with the IRS levies.
The Board adopts the ALJ's conclusion that as a result
of the Bank's payments to Edward Towe, Edward and
Thomas Towe engaged in unsafe and unsound practices
and breaches of their fiduciary duty as directors and officers of the Bank. Specifically, the Board finds that, by
causing the Bank to make travel and similar reimbursement payments to Edward Towe for expenses that he never
incurred, and to pay him and his wife for services that were
already obligated to be provided or were in fact already
being provided without fee to the Bank, the Towes caused
the Bank to expend funds with no corresponding benefit to
the Bank. In addition, the Towes' conduct was also unsafe
and unsound because it subjected the Bank to a substantial
risk of financial loss in that it would have to pay penalties

5. When Edward and Florence Towe moved into a house in Wibaux
in mid-1988 within 10 miles of the Bank, the Bank continued to pay
their utility expenses. RFF 8.
6. No other member of the board was paid "subsistence" or travel
payments for non-travel.




851

and fines to the IRS for violation of the levy on Edward
Towe's salary from the Bank. That liability was realized
when the Bank paid $20,000 to the IRS to settle the penalty
case.
The Board rejects Respondents' exceptions to the ALJ's
conclusions on this point that: the total compensation package to Edward Towe was not unreasonable in amount; that
the payment represented permissible tax avoidance rather
than evasion; and that in any event Edward Towe was
entitled to payment by the Bank for at least the subsistence
payments that he received as part of the reimbursed travel
expenses because Wibaux was not his legal residence.
Except. 162-200. Respondents' assertions about the
amount of the reimbursements miss the point. What is
important is not whether the amount of money paid by the
Bank to Edward Towe was too much, but whether he was
entitled to receive any travel reimbursement payments and
consulting fees. As explained above, there is no basis for
concluding that Edward Towe incurred any travel costs on
behalf of the Bank or performed any services for the Bank
that he was not already required to perform as the president. Moreover, there is no factual basis to support the
claim that Edward Towe was entitled to "subsistence" (or
"per diem") payments from the Bank for "temporary"
service as bank president. He was not "temporarily transferred" by the Bank from his home in Texas to Wibaux,
Montana. Instead, he came out of retirement and moved to
Wibaux to work at the Bank after the Towe family assumed control of that institution. RD 5; cf. Rev. Rul.
75-432 (95-2 CCH 21,780 f 8500.069 (discussing temporary assignments).
The Board rejects Respondents' assertions that the payments constituted permissible tax avoidance. As a general
matter, it is not unsafe or unsound or otherwise improper
for a bank to arrange a transaction in a manner so as to
minimize the tax consequences, provided the transaction
complies with all other applicable legal requirements. Here,
however, in the Board's judgment, the payment scheme
devised by the Towes was not even a facially plausible tax
avoidance device. First, in making the payments to Edward
Towe, the Bank was not attempting to minimize its own
tax liability, but instead to prevent collection of taxes owed
by a Bank insider. Second, the scheme involved the false
characterization on the Bank's books of the purpose of
payments made by the Bank, which itself is a violation of
law.

C. Self Dealing Through Commingled Bank and
Towe Interests
1. Bank Services to Grant Investments Fund
Grant Investments Fund ("Grant") was an investment partnership organized in 1955 by Towe family members for the
purpose of making and buying personal and commercial
loans. It was owned by numerous Towe family members
and trusts. Edward Towe acted as general manager of
Grant and it is uncontested that Edward Towe controlled
Grant for purposes of section 23A of the Federal Reserve

852

Federal Reserve Bulletin • October 1997

Act, 12 U.S.C. § 371c. RFF 164; see Exceptions at 23539.7 Edward Towe operated Grant "with virtually unrestrained latitude" from his office as president of the Bank,
using Bank resources. RD 11-12. Grant made loans primarily to Bank borrowers, many of whom were insufficiently creditworthy to qualify for new or additional bank
loans. RD 12. Grant also made loans to Thomas Towe.
RFF 138-139.
Grant's operations were tightly intertwined with those of
the Bank. Grant used Bank resources in its operations,
including operating rent-free from Edward Towe's office at
the Bank, and using note forms bearing the Bank's name,
which led to confusion among borrowers as to the identity
of their creditor. Moreover, at Edward Towe's direction,
the Bank provided all of the loan servicing for Grant
Investment loans: the Bank received and collected payments on the various Grant loans, processed the payments,
maintained documents connected to the loans, issued demands for payment, recovered collateral on defaulted
loans, and provided collection services. These services
were originally provided without compensation to the Bank
and without any formal agreement between Grant and the
Bank; later, Grant began to pay a minimal and belowmarket amount for loan processing. RD 13; RFF 245-251.
In addition, Edward Towe arranged that all Grant Investment partners would receive free checking accounts from
the Bank. RFF 230-233. These practices violated section
23B of the Federal Reserve Act, 12 U.S.C. § 371c-l, and
constituted a breach of Edward Towe's fiduciary duty to
the Bank.
2. " B a n k Related"

Loans by

Grant

Grant was in the business of lending to "unbankable"
clients, making loans to individuals or companies that
could not obtain financing from the Bank either because of
violation of loan limits or because they would not qualify
for Bank lending. RFF 259. In numerous cases, Edward
Towe categorized these loans as "bank-related." The relevance of that categorization was that Grant obtained priority over the Bank on whatever collateral the Bank had from
the borrower, and would generally get repaid first out of
whatever proceeds were obtained from the borrower or the
collateral. The subordination "agreement" between the
Bank and Grant pursuant to which these payments were
made existed solely in Edward Towe's mind, was never
reduced to writing, and was not approved by the Bank's
board. RFF 272-275. Essentially, however, it meant that
Grant was protected by the Bank's collateral for any loan it
made up to the value of that collateral, even if that meant
that the Bank would suffer a loss on the loan.
Grant loans were generally considered "bank-related" if
the borrower was a Bank borrower, and the categorization
of a particular loan could change at the whim of Edward

7. Accordingly, at least in 1990 and 1991, the Bank and Grant were
"affiliates" for purposes of sections 23A and 23B of the Federal
Reserve Act, 12U.S.C. §§ 371c and 371c-l. See 12U.S.C.
§ 371 c(b)( 1), b(3)(A).




Towe. Although the Respondents argue in their exceptions
that "bank related" loans were made for the benefit of the
Bank, Edward Towe's own testimony refutes that position.
RFF 279-282; Tr. 4423. Over a 5>/2 year period, Grant
made 79 "bank-related" loans totalling $205,000.
RFF 275.
An example is the so-called "Preiss loan." David Preiss
had borrowed $96,959 from the Bank, secured by commercial property known as the Stockman Lounge. Preiss began
experiencing financial difficulty in 1986 and 1987. The
Bank could not make additional loans to Preiss because he
had become an unacceptably high credit risk. Edward
Towe caused Grant, however, to make Preiss a series of
unsecured loans totalling approximating $10,000 for working capital. These additional loans were evidenced by notes
bearing the Bank's name, and Preiss was unaware that he
was borrowing from Grant Investments rather than the
Bank. Later, Edward Towe caused the Bank to transfer the
collateral for Preiss's Bank loans from the Bank to Grant
Investments. He achieved this by physically altering a
quitclaim deed to substitute Grant for the Bank as the
grantee. Edward Towe did not deny that he made the
alteration. Tr. 5379-5381.
Ultimately, Preiss became bankrupt. The Stockman
Lounge property was resold, with the Bank funding
100 percent of the new sale price. Grant's loans to Preiss
were repaid out of the proceeds of the second loan, but the
Bank was never made whole for its original loan. Further,
the new buyers defaulted and the Bank was forced to write
off its second loan on the property, although Grant subsequently purchased that note from the Bank. RD 22.
Another example involves property known as the Glendive House, which the Bank had acquired through foreclosure. There, too, the Bank made an initial loan, Grant made
additional loans that did not reduce the balance on the
Bank's loan, the borrowers defaulted, the Bank repossessed and financed the resale of the property, Grant was
made whole from the new loan proceeds while the Bank
was not, and the second loan defaulted, causing significant
losses. RD 23-25.
Respondents argue with respect to the "Bank related"
loans that the transactions were intended to help the Bank
by enabling borrowers to pay olf Bank loans and that the
terms of those transactions were governed by an "unwritten agreement" or "oral understanding" subordinating the
Bank's claims to Grant's claims to the proceeds of the sale
of collateral. Except. 216-263. The Board rejects these
arguments. While the ALJ found that Grant did indeed help
the Bank in some instances, as in its purchase of the second
note in the case of the Preiss loan, that help was offset by
instances where Grant benefited at the expense of the
Bank. Moreover, Grant can be found to have "helped" the
Bank only by isolating one portion of the constantly cycling mix of transactions between the Bank and Grant. The
Towes' actions are hardly mitigated by the fact that Grant
relieved the Bank of some portion of its loss after they had,
by forgery, caused Grant to obtain security that properly
belonged to the Bank, and then funded the payment to
Grant with the proceeds of another bad loan.

Legal Developments

More important, as the ALJ acknowledged, is that these
transactions, whether or not they conferred some transient
benefit on the Bank, constituted egregious unsafe and
unsound banking practices. By arranging, with himself, to
subordinate the Bank's secured position to another lender
with respect to all "bank-related" loans, and by authorizing himself to categorize a given loan as "bank-related,"
Edward Towe prevented the impartial review of this arrangement by the Bank. While it is conceivable that there
might have been transactions in which a disinterested Bank
officer would have concluded that the Bank's interests
would be served by subordinating its security interest to a
third-party lender, no such review was possible. The agreement was not reduced to writing, but originated with and
remained in the mind of Respondent Edward Towe, as did
the identification of a given loan as "bank-related."
RD 23. 8 There was no independent review by Bank personnel other than Edward Towe to determine if the transaction
was equivalent to one on an arms' length basis. In any
event, the agreement in which Edward Towe allegedly
represented both the Bank and Grant was frequently unfavorable to the Bank and caused the Bank to make concessions that were not financially or economically justified.
A bank insider who engages in self-dealing transactions
runs a high risk of breaching fiduciary duties and of engaging in unsafe and unsound banking practices. In some
cases, such conflicts may be cured by full disclosure of the
existence of conflicts and approval by a majority of the
non-interested members of the Board of directors. Such
approval is not possible, of course, where the terms of the
transaction have not been reduced to writing and remain
subject to change at the whim of the insider. See Greenberg
v. Board of Governors, 968 F.2d 164, 171 (2d Cir. 1992)
(minutes of board of directors meetings silent as to conflict
relationship). Moreover, an agreement that exists wholly in
the mind of a single person cannot be said to have any legal
meaning whatsoever.
Furthermore, the Towes' commingling of their family
business interests with those of the Bank breached their
fiduciary responsibilities to the Bank (and to the family
interests). "The threshold inquiry in assessing whether a
director violated his duty of loyalty is whether the director
has a conflicting interest in the transaction. Directors are
considered to be 'interested' if they either 'appear on both
sides of a transaction [] or expect to derive any personal
financial benefit from it in the sense of self-dealing, as
opposed to a benefit which devolves upon the corporation
or all stockholders generally." In re Seidman, 37 F. 3d 911,

8. Respondents' argument that the agreement was nonetheless enforceable has the flavor of a Gilbert and Sullivan farce: "Just because
Edward Towe is on both sides of an agreement doesn't mean that no
agreement exists at all. Both parties had the capacity to enter into a
contract, both parties intended to enter into a contract, and there
certainly was a mutual meeting of the minds. Thus all of the elements
of an agreement exist." Except, at 222. Moreover, the question is not
whether the agreement was enforceable, but whether it was a good
deal for the Bank—a determination no one at the Bank had an
opportunity to review since the agreement was not in writing or
known to anyone other than Edward Towe.




853

934 (3d Cir. 1994), quoting In re Bush, OTS AP 91-16 at
11, 15-16. Here, as Respondents admit, Edward Towe was
repeatedly "on both sides of a transaction," in breach of
his fiduciary responsibility to the Bank.

3. Condominiums
In another set of transactions, involving condominium
properties that the Bank had acquired upon default of the
loans that financed their construction, Respondents used
Grant to create the false appearance that the Bank had sold
the condominiums in compliance with banking regulations
concerning "other real estate owned" ( " O R E O " ) .
RD 28-35. Those regulations required the Bank to dispose
of the condominiums within five years, and, in order for
such sales to be recognized, prohibited the Bank from
financing more than 90 percent of the sale transactions.
12 C.F.R. 7.3025 (1988).
The Bank entered into a scheme to make it appear that
the Bank had complied with the applicable regulations by
selling the foreclosed condominium properties. In particular, the Bank made a series of loans on extremely favorable
terms to marginally creditworthy or uncreditworthy borrowers to purchase the condominiums, leading to repeated
defaults and resales. Initially, the Bank required only a
$200 cash down payment for the condominium units, far
less than 10 percent of the purchase price of the condominiums, and financed the remainder of the purchase price.
The ALJ found, and the record shows, that the Bank
extended credit to any purchaser who applied for a loan,
without examining the borrower's credit condition. As a
result, the condominium loans experienced an extraordinarily high default rate, increasing the Bank's losses and
requiring the Bank repeatedly to reacquire title to the
condominium units.
Edward and Thomas Towe engaged in conduct that
further increased the Bank's risk with respect to the foreclosed condominium properties.
(a) Diversion of Down Payments. From 1989 until 1991,
down payments made by purchasers buying condominiums
from the Bank were deposited into an account controlled
by Edward Towe, which was used for the buyers' real
estate expenses associated with the condominiums and to
make unrecorded loans to condominium buyers, rather
than being credited to the Bank. RD 40-41. When the
Bank's board reviewed expenses each month, it was not
shown the expenses paid out of the down payment account.
RFF 372.
(b) Down Payment Loans. When informed of an upcoming
OCC examination, Edward Towe attempted to disguise the
Bank's near-100 percent financing of the sales. He caused
Grant to loan each purchaser of a Bank condominium an
amount equal to ten percent of the purchase price of each
unit, which was applied to reduce the principal amount of
the existing Bank loans. RD 31. This gave the appearance
that the borrowers had made a 10 percent down payment,
when they had not, and thus that the sales would be

854

Federal Reserve Bulletin • October 1997

deemed to comply with the regulatory requirements. 9 The
down payment loans also made the borrowers' financial
condition appear stronger than it actually was and created
the appearance that the loans were performing. RD 32.
After Grant had extended these retroactive down payment loans, any payments received from borrowers were
applied to the Grant loans rather than to the Bank loans.
Edward Towe testified that Grant's preferred status was the
product of an agreement that he made with himself to
subordinate the Bank's position to Grant's. RD 32;
Tr. 5778. There is no evidence in the record that there was
any independent review of this agreement on behalf of the
Bank or that the Bank obtained any benefit for the subordination of its position with regard to these loans. Edward
and Thomas Towe then falsified the loan ledgers, reconstructing them to conceal aspects of these transactions,
including the fact that the proceeds of the loans from Grant
had been applied to reduce the principal amount of the
Bank loans. RD 32-35; RFF 492.

owned 13.5 percent of Towe Farms, and understood that
Towe Farms's losses on the mortgage insurance would be
subject to indemnity by Towe Farms' shareholders. RFF
526."
The Towes' conduct with respect to the loans to finance
the purchases of foreclosed condominium properties constituted unsafe and unsound practices and breaches of their
fiduciary duty to the Bank. The making of loans to less
than creditworthy borrowers without adequate review, the
diversion of the small down payments made by the borrowers, the subordination of the Bank's loans to the Grant
down payment loans, and the Bank's reimbursement of
Towe Farms for mortgage insurance payments all exacerbated the Bank's losses with respect to the condominium
properties. In addition, the loans to finance the condominium purchases failed to comply with the OCC's regulations.

(c) Sham Mortgage Insurance. In December 1988, the
OCC informed the Bank that the condominiums were still
considered to be OREO, despite the down payment loans
from Grant. The Bank therefore purchased the down payment loans from Grant and tried another way to remove the
condominiums from OREO status. The Bank paid Grant
$16,084, representing full principal and interest on the
down payment loans. Defaults on these loans following
the Bank's acquisition resulted in losses of over $11,000.
RD 33.
Under OCC regulations, a bank may finance in excess of
90 percent of the purchase price of foreclosed OREO
property and still consider the transaction to be an effective
sale if private mortgage insurance covers the amount of the
bank's loan in excess of 90 percent of the purchase price.
As part of this new attempt to establish effective sales of
the condominiums, Edward and Thomas Towe arranged
for another family entity, Towe Farms, to issue what appeared to be private mortgage insurance to condominium
purchasers to cover 10 percent of the loan amount. In
reality, as the ALJ found, the mortgage insurance was a
complete sham. RD 36. The Bank was rarely reimbursed
despite the high default rate, and in those cases where
Towe Farms did make payments under the policies, the
Bank frequently reimbursed Towe Farms for the payments.
In other cases, Towe Farms' liability to the Bank was
"waived" by Edward Towe. RD 35- 37. 10 Thomas Towe

(a) Jacobson Sham Transaction. Edward Towe, with
Thomas Towe's knowledge, caused the Bank to engage in
a sham transaction with the purpose of clouding the title of
property part-owned by a former business partner, with
whom he was feuding. The former partner, Ellis Jones, had
built his personal home on land in which he owned an
undivided half-interest. Towe family interests owned the
other undivided half-interest, which was so encumbered by
IRS liens as to be worthless. RD 16. Edward Towe, through
Grant, conveyed the Towes' interest in the property to a
nominee, John Jacobson. Towe then caused the Bank to
purport to loan Jacobson $53,000 secured by the property,
evidenced by a mortgage that included the Jones home.
One day later, the $53,000 was repaid to the Bank by
Jacobson through Grant, and Grant took the Jacobson loan
and the mortgage. RD 18.

9. In addition, Grant applied funds to delinquent condominium
loans to create the appearance that the loans were performing. RD 32.
Given the relationship between the Bank and Grant, it cannot be
assumed that Grant's down payment loans actually shifted any risk of
loss with respect to the condominium loans from the Bank to Grant.
10. Although actual private mortgage insurance on the condominium loans would have required substantial premiums, neither the Bank
nor the borrowers paid Towe Farms for issuing its mortgage insurance. This may explain why, despite defaults on 38 covered mortgage
loans, Towe Farms paid out only three times (excluding those payments that were fully reimbursed by the Bank), with total payments of
$4715. RFF 508-509, 522.




4. Sham Transactions

The net effect was to cloud Jones's title to the property,
which led to a lawsuit, settled by the Bank after paying
Thomas Towe $5371 in legal fees. Thomas Towe objected
to the transaction at a board meeting because it would
expose the Bank to a lawsuit for slander of title, but
Edward Towe insisted on proceeding with the transaction.
RFF 93-94.
This sham transaction 12 had no prospect of producing a

11. In 1989 the OCC informed the Bank that it needed to document
the legal and financial capacity of Towe Farms to issue private
mortgage insurance, and noted that Montana law requires a certificate
of authority to transact insurance. Thomas Towe's response was to
call the Montana Insurance Commissioner's office to ask if a "guarantee" was subject to the insurance laws. When told that it was not,
Thomas Towe ended his research into the issue. RFF 515-519.
12. Among the indicia that this was a sham transaction were that:
Jacobson did not file a financial statement or loan application; no title
search was performed; the collateral was not appraised; Jacobson did
not pay property taxes or secure insurance for the property; Jacobson
never made a single payment of principal or interest; and Edward
Towe did not believe that Jacobson had the monev to pay the loan.
RFF 68-74.

Legal Developments

benefit to the Bank, 13 in fact caused the Bank a loss at least
in the form of unnecessary legal fees, and displayed Edward Towe's willingness to misuse the Bank for personal
ends. In their exceptions to the ALJ's findings, Respondents do not dispute the facts concerning the transaction or
even its motivation, but argue that it caused no harm and
did not constitute wrongdoing. Except, at 200-201. Respondents argue that in the settlement of the ensuing litigation with Jones, Jones dropped the slander of title claim
and the Bank was able to make a settlement of unrelated
claims that Thomas Towe regarded as favorable. Except, at
202.
The Board rejects those exceptions. The manipulation of
a bank for a self-dealing transaction is an unsafe or unsound practice when it is motivated by spite as well as
when it is motivated by venality. 14 As the Board has
previously observed:
The safety or soundness element addresses the
nature, rather than the degree, of the departure from
ordinary standards of prudent banking. Conduct
departing from such standards represents an unsafe
or unsound banking practice when it is of a kind
that, if continued, would present an abnormal
risk—i.e., risks other than those inherent in doing
business—of harm or loss to the bank.
In re Van Dyke, No. AA-EC-87-88 (June 13, 1988), slip
op. at 26, aff'd, Van Dyke v. Board of Governors, 876 F.2d
1377, 1380 (8th Cir. 1989); see Greene County Bank v.
FDIC, 92 F.3d 633, 636 (8th Cir. 1996) (unsafe or unsound
practice is conduct deemed contrary to accepted standards
of banking operation which might result in abnormal risk
or loss to a banking institution or shareholder).
The Jacobson transaction exposed the Bank to substantial financial loss for slander of title, and caused actual loss
in the form of whatever settlement value was exchanged
for the dropping of the claim. 15 Furthermore, the transaction cost the Bank a portion of the $5,7103 in legal fees
paid to Thomas Towe.
(b) New Year's Day Sham Transaction. Edward Towe's tax
problems included a claim by the IRS that Grant was
Edward Towe's alter ego and that, as such, it had engaged
in acts of self-dealing in 1989, 1990, and 1991. RFF 113.
At the end of 1991, Edward Towe was under pressure from
the IRS to cause the Towe Foundation to liquidate its
investment in Grant by the end of the year or be subject to

13. Edward Towe conceded that the transaction was not intended to
benefit the Bank. RD 18; RFF 100.
14. Notwithstanding Respondents' arguments that there was nothing wrong with the use of the Bank to gain revenge against Jones
(Except, at 214-15), such practices are clearly contrary to generally
accepted standards of prudent operation and, if continued, could pose
an abnormal risk to the institution. They therefore meet the standard
for "unsafe or unsound banking practice."
15. The Bank settled claims brought by Jones totalling $28,000 for
$9000, and it is impossible to determine what portion of the payment
was associated with the slander of title claim. Similarly, it cannot be
determined what portion of the legal fees are properly attributed to the
transaction.




855

a $50,000 penalty for an additional year of self-dealing.
RFF 113-115.
On January 1, 1992, in order to give the appearance of
complying with that requirement, Edward Towe, with the
knowledge and consent of Thomas Towe, effected a circular transaction between the Towe Foundation and Grant
accounts at the Bank. Edward Towe deposited a check
drawn on Towe Foundation's account, in the amount of
$994,500, into Grant's account; simultaneously, he deposited a check in the same amount, drawn on Grant's account, into Towe Foundation's account. Neither account
had sufficient funds to pay the checks; Grant's account had
a balance of $3007, and Towe Foundation's account had a
balance of $11,036. Edward Towe admitted that part of the
purpose of the transaction was to produce Bank documents
that Thomas Towe could use to show to the IRS that the
Towe Foundation's investment in Grant had been liquidated. RFF 111-125.
The Board rejects Respondents' argument that the transaction represented a legitimate assignment of assets from
Grant to the Towe Foundation in lieu of cash, and that the
exchange of checks was merely Edward Towe's idiosyncratic bookkeeping method of recording the transaction.
Even though Grant eventually transferred some assets to
Towe Foundation, that was not the transaction reflected by
the exchange of checks, and it was those cancelled checks
that were used to demonstrate to the IRS that Towe Foundation had liquidated its investment in Grant.
The Board finds that the Bank's involvement in this
transaction, which was designed to mislead the IRS, exposed the Bank to possible financial penalties. Accordingly, Edward and Thomas Towe engaged in an unsafe and
unsound transaction and a breach of fiduciary duty by
entering into the transaction.

5. Violations of Cease and Desist Order
In 1986, before the Towes assumed control, the Bank
consented to the issuance of a cease and desist order, which
continued in effect throughout the time relevant to the
Notice. Among other things, the Order required the Bank
to revise and implement its lending policy, adopt and
implement written policies and procedures governing
charge-offs and recognition of losses, establish a loan review system, adopt and implement policies governing supervision and control of non-accrual loans, and refrain
from extending credit without obtaining and analyzing
current and satisfactory credit information.
From January 1987 until June 1992, during the time the
Towes were in control, the Bank operated in continuous
violation of the Order in a host of respects including:
failing to adhere to workout programs; failing to comply
with the Bank's loan policy; failing to recognize quarterly
losses; and failing to require current and satisfactory credit
information. RD 50. OCC examiners severely criticized
these failures in reports in January and September 1987,
1988, 1989, and 1991. Id. The board of directors failed to
take effective action to comply because Thomas Towe

856

Federal Reserve Bulletin • October 1997

repeatedly reassured the board that the Bank was in compliance with almost all provisions of the Order.
The Board rejects Respondents' exception arguing that
because the Order used the word "adherence" with respect
to one article of the Order, but not others, the Order should
be read as excusing non-adherence to the plans, policies,
programs and systems that the Order concededly required
the Bank to "adopt and implement," or "establish." Except. 378-384. In construing the terms of the Order, the
Board draws upon its institutional experience in requiring
the establishment of such programs through cease and
desist orders. When an institution displays problems of
sufficient severity to warrant the imposition of a cease and
desist order, it is imperative that action be taken through
such programs to address identified problems in a manner
endorsed by and monitored by the supervisor. Thomas
Towe's construction of the Order, which implicitly reads it
as requiring only empty formalities, is at odds with banking reality. The requirement of "adoption" or "establishment" and "implementation" of such programs in a cease
and desist order therefore necessarily connotes "adherence" to the programs thus established.
When the OCC appointed a conservator for the Bank in
June 1992, these violations of the Order were cited, among
other things, as grounds for the conservatorship. When
challenged by the Bank, the OCC's findings were upheld
by the courts, which expressly rejected the contention that
the Order required only "adoption," not actual implementation. of the policies specified. First Nat'I Bank & Trust
Dep't of Treasury. 63 F.2d 894, 899 (9th Cir. 1995)(Bank's
argument "without merit" because it would "render the
[Order] meaningless").
The very fact that Thomas Towe maintains this untenable argument before the Board undermines his argument
that he has been singled out for punishment as an "effective advocate for the Bank." Except. 378. It instead shows
a resistance to fundamental principles of banking and bank
regulation inconsistent with service as a bank director.
The Board also rejects the argument that Respondents
could delegate their responsibility for compliance with the
Order to another bank officer. Except. 398-400. The Board
has previously observed:
A cease and desist order is the most important tool
available to federal banking agencies to ensure that banking organizations operate in a safe and sound manner and
in conformance with law and regulation . . . The Board
believes that these orders must be treated with seriousness
by the officers and directors of the companies against
which they are issued, because they are meant to assure
that banks operate in a safe and sound manner and do not
put at risk the resources of the federal safety net and the
taxpayers. Under these circumstances, the Board must expect and demand that [bank] officers and directors take
particular care to ensure that the provisions of such orders
are fulfilled,
In re Northwest Indiana Bancshares, Inc. (September 7,
1990) at 32-33, ajf'd sub nom. Stanley v. Board of Governors, 940 F.2d 267 (7th Cir. 1991). For these reasons.




directors may not simply delegate away their responsibilities for compliance.
The violations of the cease and desist order unquestionably caused loss to the Bank. As an example, the condominium loans were made in violation of the loan policies
the cease and desist order required the Bank to adopt. The
1991 examination classified around $300,000 in condominium loans as "loss."

Basis For Prohibition
The Board adopts the ALJ's recommended conclusions
that the conduct of each of the Respondents satisfies all of
the requirements for an order of prohibition.

1. Misconduct
a. Unsafe and Unsound Banking Practices
Respondents participated in a host of unsafe and unsound
banking practices reflected by self-dealing transactions including: the disguised payment of compensation to Edward
Towe; the commingling of the business operations of the
Bank and the other family interests; and the sham transactions, which represented the manipulation of Bank resources for personal reasons rather than for legitimate
Bank business. Each of these practices is contrary to prudent principles of banking operation and, if continued,
could result in abnormal risk of harm or loss to the Bank.
b. Breaches of Fiduciary Duty
All of the transactions and practices represented conflicts
of interest between the Respondents' Bank and non-Bank
duties, and thus breaches of the Respondents' fiduciary
duties to the Bank (and to the family interests for which
they were fiduciaries.) The surreptitious payment of compensation to Edward Towe benefitted him while putting the
Bank at significant risk, and the sham transactions were
undertaken to serve personal interests rather than those of
the Bank. Respondents' actions in connection with Grant
Investments also showed repeated willingness to subordinate the Bank's interests to those of other entities. Respondents appeared not to recognize the existence of these
conflicts and took no action to avoid or cure them.
c. Violations of Law, Regulations, and Orders
Various of the transactions also reflected violations of law
and regulation. For example, the transfer of low-quality
assets between the Bank and the affiliated Towe family
interests, particularly Grant Investments, violated sections 23A and 23B of the Federal Reserve Act (12 U.S.C.
§§ 371c and 371 c-1). The provision of free or belowmarket Bank services to Grant also violated section 23B.
The Bank's failure legitimately to dispose of the condominiums within the five-year holding period, and its failure
accurately to report its continued holding of this real estate,
constituted violations of 12C.F.R. 7.3025 and 12 U.S.C.
§ 29 and 161. Edward and Thomas Towe also participated
in the Bank's violation of the 1986 cease and desist order.

Legal Developments

857

2. Effects

Procedural

These practices, violations, and breaches unquestionably
caused both gain to the Respondents and financial and
other loss to the Bank. Respondents received financial gain
in a number of the transactions and practices, including the
disguised compensation payments (Edward Towe received
the payments that otherwise would have gone to the IRS);
the New Years Day sham transaction (Edward Towe received gain through the avoided IRS penalty); and the
commingled Grant/Bank transactions (Grant, an affiliate of
Respondents, gained at the expense of the Bank). In addition, the Bank suffered substantial financial loss through a
number of the transactions and practices, including the
disguised compensation payments (which exposed it to the
IRS suit that was ultimately settled for $20,000), the provision of free or below-market services to Grant, the commingled transactions which caused it repeatedly to throw
good money after bad while Grant was paid off, the diversion of condominium down payments from the Bank into
the account Edward Towe used to pay condominium buyers' expenses, and the violations of the cease and desist
order that caused losses on the condominium loans, among
others.

Administrative law judges are normally accorded wide
discretion in dealing with procedural issues before and
during the hearing. The ALJ's decisions here were well
within his authority under the Uniform Rules of Procedure
governing the hearing, and Respondents' procedural exceptions are therefore denied. See 12 C.F.R. 19.5.

3.

Culpability

The record amply reflects that Respondents repeatedly
displayed willful disregard for the safety or soundness of
the Bank in every one of the transactions or practices,
consciously placing the interests of themselves and of their
other family interests ahead of the interests of the Bank.
The Board also adopts the ALJ recommended conclusion
that both respondents engaged in "continuing disregard for
the safety and soundness of the institution," a standard that
captures conduct reflecting recklessness or indifference
with respect to an institution's safety. See Brickner v.
FDIC, 747 F.2d 1198, 1203 n.6. (8th Cir. 1984); Grubb v.
FDIC, 34 F.3d 956, 962 (10th Cir. 1994).
Furthermore, a number of the practices also meet the
alternative requirement of personal dishonesty in that they
served the purpose of deception. These practices include
the disguised compensation payments, the surreptitious
down payment loans, and the New Years Day sham transaction. In addition, Edward Towe's admitted physical alteration of the terms of the Preiss deed further evidenced
personal dishonesty.
Accordingly, all of the elements required for issuance of
an order of prohibition have been amply met. 16

16. The Board denies Respondents' exception relating to the A L J ' s
amended recommendation as to the term of prohibition, revising his
initial recommendation of a term-limited order to one with an indefinite term. In a recent case the Board expressed doubt that it has the
authority to order any term of prohibition other than indefinite. See In
re Vickery, 83 Federal Reserve Bulletin 535, 541 (1997). In any event,
the Board would be disinclined on the facts of this case to issue any
term of prohibition other than indefinite.
The Board also declines to issue an advisory opinion on the application of the Order of Prohibition to Thomas Towe's law practice, as he




Exceptions

Conclusion
For the foregoing reasons, the Board orders that the attached Orders of Prohibition issue.
By Order of the Board of Governors, this 18th day of
August, 1997.
Board of Governors of the
Federal Reserve System
WILLIAM W. WILLS

Secretary of the Board
Order of Prohibition
WHEREAS, pursuant to section 8(e) of the Federal Deposit Insurance Act, as amended (the "Act")(12 U.S.C.
§ 1818(e)), the Board of Governors of the Federal Reserve
System ("the Board") is of the opinion, for the reasons set
forth in the accompanying Final Decision, that a final
Order of Prohibition should issue against EDWARD
TOWE and THOMAS E. TOWE;
NOW, THEREFORE, IT IS HEREBY ORDERED that:
(1) In the absence of prior written approval by the Board,
and by any other Federal financial institution regulatory
agency where necessary pursuant to section 8(e)(7)(B) of
the Act (12 U.S.C. § 1818(e)(7)(B)), EDWARD TOWE and
THOMAS E. TOWE are hereby prohibited:
(a) From participating in the conduct of the affairs of
any bank holding company, any insured depository
institution or any other institution specified in
subsection 8(e)(7)(A) of the Act (12 U.S.C.
§ 1818(e)(7)(A));
(b) From soliciting, procuring, transferring, attempting to transfer, voting or attempting to vote any proxy,
consent, or authorization with respect to any voting
rights in any institution described in subsection
8(e)(7)(A) of the Act (12 U.S.C. § 1818(e)(7)(A));
(c) from violating any voting agreement previously
approved by the appropriate Federal banking agency;
or

requests in his motion for clarification. The Board notes that the FDI
Act specifically distinguishes between persons generally participating
in the conduct of the affairs of a bank, and an independent contractor,
such as an attorney. 12 U.S.C. § 1813(u)(3)-(4). See Cavallari v. Office
of the Comptroller of the Currency, 57 F.3d 127 (2d Cir. 1995)
(finding attorney to be an institution-affiliated party under 12 U.S.C.
§ 1813(u)(4)). Thomas Towe should seek any more specific guidance
he desires from the appropriate financial institution regulatory agency.

858

Federal Reserve Bulletin • October 1997

(d) From voting for a director, or from serving or
acting as an institution-affiliated party as defined in
section 3(u) of the Act, (12 U.S.C. § 1813(u)), such as
an officer, director, or employee.
2. This Order, and each provision hereof, is and shall
remain fully eifective and enforceable until expressly
stayed, modified, terminated or suspended in writing by the
Board.
This Order shall become eifective upon the expiration of
thirty days after service is made.




By Order of the Board of Governors, this 18th day of
August, 1997.

Board of Governors of the
Federal Reserve System
WILLIAM W. WILES

Secretary of the Board

A1

Financial and Business Statistics
A3

GUIDE

TO TABULAR

DOMESTIC

FINANCIAL

STATISTICS

Money Stock and Bank Credit
A4
A5
A6

Federal Finance—Continued

PRESENTATION

Reserves, money stock, liquid assets, and debt
measures
Reserves of depository institutions, Reserve Bank
credit
Reserves and borrowings—Depository
institutions

All
All

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
Policy Instruments
A7
A8
A9

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
A11 Maturity distribution of loan and security
holdings

A31 New security issues—Tax-exempt state and local
governments and corporations
A32 Open-end investment companies—Net sales
and assets
A32 Corporate profits and their distribution
A32 Domestic finance companies—Assets and
liabilities
A33 Domestic finance companies—Consumer, real estate,
and business credit

Real Estate

Monetary and Credit Aggregates
A11 Aggregate reserves of depository institutions
and monetary base
A12 Money stock, liquid assets, and debt measures
A14 Deposit interest rates and amounts outstanding—
commercial and BIF-insured banks

Commercial Banking Institutions—
Assets and Liabilities
A15
A16
A17
A19
A20

All commercial banks
Domestically chartered commercial banks
Large domestically chartered commercial banks
Small domestically chartered commercial banks
Foreign-related institutions

Financial Markets
A22 Commercial paper and bankers dollar
acceptances outstanding
All Prime rate charged by banks on short-term
business loans
A23 Interest rates—money and capital markets
A24 Stock market—Selected statistics

Federal Finance
A25 Federal fiscal and financing operations
A26 U.S. budget receipts and outlays




A34 Mortgage markets
A35 Mortgage debt outstanding

Consumer Credit
A36 Total outstanding
A3 6 Terms

Flow of Funds
A37
A39
A40
A41

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

NONFINANCIAL

STATISTICS

Selected Measures
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
A48 Gross domestic product and income
A49 Personal income and saving

2

Federal Reserve Bulletin • October 1997

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 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

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
A 6 3 GUIDE

TO STATISTICAL

SPECIAL
SPECIAL

A58 Liabilities to unaffiliated foreigners
A59 Claims on unaffiliated foreigners




AND

TABLES
TABLES

A64 Terms of lending at commercial banks,
May 1997
A68 Pro forma balance sheet and income statements
for priced service operations, June 30, 1997
A 7 0 INDEX TO STATISTICAL

Reported by Nonbanking Business
Enterprises in the United States

RELEASES

TABLES

A3

Guide to Tabular Presentation
SYMBOLS
c
e
n.a.
n.e.c.
P
r

*

0
ATS
BIF
CD
CMO
FFB
FHA
FHLBB
FHLMC
FmHA
FNMA
FSLIC
G-7

GENERAL

AND

ABBREVIATIONS

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

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

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

INFORMATION

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




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

A4

DomesticNonfinancialStatistics • October 1997

1.10

RESERVES, M O N E Y STOCK, LIQUID ASSETS. A N D DEBT MEASURES
Percent annual rate of change, seasonally adjusted1
1997

1996

1997

Monelary or credit aggregate
Q3

Q4

Ql

Q2

Mar.

Apr.

May

June

July

-16.4
-16.5
-17.6
5.3

-17.2
-18.5
-16.2
5.1

-8.3
-8.4
-7.2
5.6

-14.3
—15.0r
-16.0
3.3

-17.0
-20.7
-19.9
3.5

-21.9
-18.6
-24.5
1.6

-9.7
-15.8
-9.3
3.6

1.5r
,5r
- 1.6r
4.7

-5.6
-3.8
-6.7
7.4

-6.5
3.4
5.5
6.5
5.2r

-7.3
5.1
8.2
7.2
5.0

-.7

-5.5
4.3
7.1r
7.7
4.9

-6.0
5.2
7.9
'
8.2'
5.3

-11.3

8.2
6.7
4.5

9.5'
10.3'
5.9

-2.7
-.1
2.0 r
3.1 r
3.9r

.6
4.6
5.9r
6.4
2.6

-1.0
4.5
11.0
n.a.
n.a.

7.7
13.4r

10.3
19.6r

8.7
15.6r

8.1
16.8r

9.6
16.8r

12.7
21.3 r

.9'
8.9'

6.2
10.1r

6.5
32.7

12.0
3.7
19.1

17.0
4.7
22.9

14.0
2.9
12.8

10.7
5.9
23.7

17.1
5.1
25.5

17.6
5.6
35.4

-3.2
6.2
4.6

5.7
11.6
25.6

9.3
12.6
47.1

.2
-.3
9.0

.8
3.0
9.1

2.7
.1
12.8

5.8
-3.1
5.1

2.3
-10.5
1.5

9.7
-4.1
7.3

7.7
3.4
-1.5

.0
-4.1
11.7

-1.6
-13.3
21.6

Monet market mutual funds
18 Retail
19 Institution-onlv

16.3
20.7

17.2
19.8

16.3
15.5

14.7
12.5

19.9
25.1

24.5
-.8

-4.2
.0

12.1
28.1

12.6
19.6

Repurchase agreements and Eurodollars
7
0 Repurchase agreements 10
21 Eurodollars'"

-4.0'
9.7'

3.0'
48.2 r

8.5r
40.6 r

5.2 r
30.8 r

-10.1'
21.0 r

16.2'
45.3'

3.6 r
61.7'

— 12.4r
-50.5r

41.9
7.5

3.8
5.7r

3.2
5.6

1.8
5.4r

.7
6.3

4.7
5.6r

2.4
7.2'

-3.9
6.6 r

-3.9
4.8

1
2
3
4

Reserves of depositorv
Total
Required
Nonborrowed
Monetary base'1

5
6
7
8
9

Concepts of money, liquid assets, and debt4
M1
M2
M3
L
Debt

Nonlransaction
10 In M2 3
11 In M3 only 6

institutions'

6.1

6.1

components

Time and savings deposits
Commercial banks
Savinas, including MMDAs
Smalltime 7
Large time 8 ' }
Thrift institutions
15
Savinas. including MMDAs
16
Smalltime 7
17
Large time 8

P
13
14

Debt components4
2~> 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 M l .
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




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
1.11

A5

RESERVES OF DEPOSITORY INSTITUTIONS A N D RESERVE BANK CREDIT 1
Millions of dollars
Average of
daily figures

Average of daily figures for week ending on date indicated

May

July

June 18

June 25

July 2

July 9

447,486

450,254 r

July 16

July 23

July 30

SUPPLYING R E S E R V E FUNDS

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

449,169 r

456,507

449,824

405,099
10,616

407,635
7,801

410,681
3,618

407,195
6.331

409,750
7,427

409,846
11,652

411,184
3.575

411,118
5,039

410,818
1,713

1,970
680

1,563
862

1,220
814

1,496
659

1,496
457

1,422
831

1,236
1,513

1,222

1,209
163

0

0

0

0

0

0

0

0

0

66
176

94
243

425
304

21

10

294

303

27
347

0

105
330

69
295

0

9
221

0

0

0

0

0

150
30,028

474
30,497

r

497
31.534

1,278
30,297

30.787

608
31,419

754
31,246

197
31,694

566
31,540

11,051
9,200
25,260 r

11,050
9,200
25,31 l r

11,050
9,200
25,369

11,050
9.200
25.310 r

11,050
9,200
25,322 r

11,050
9,200
25,335

11,050
9,200
25,349

11,049
9,200
25,363

11,049
9,200
25,377

448,766 r
320

451,823 r
343

456,114
336

451,814 r
344

451,528 r
344

453,544
344

458,067
346

456,881
345

455,217
334

11,513
175
7,117
356
15,132
10,918

4,750
175
7,309
319
15,354
10.063

6,831
172
7,146
374
15,198

11,868
208
7,122
338
15,194
9,223 r

12,577
177
7,559
324
15,467
12,100

3,902
171
7,285
324
15,172
10,155

4,919
190
7,251
321
15,359
11,026

5,212

7,185
366
15,497
10,487 r

7,293
311
15,343
8,130

July 16

July 23

0

0

-21'

1,096

ABSORBING R E S E R V E F U N D S

15 Currency in circulation
16 Treasury cash holdings
Deposits, other than reserve balances, with
Federal Reserve Banks
17
Treasury
18
Foreign
19
Service-related balances and adjustments . . .
20
Other
21 Other Federal Reserve liabilities and capital . .
22 Reserve balances with Federal Reserve Banks 4

182

11,168

Wednesday figures

End-of-month figures

July

May

168

July 2

July 9

SUPPLYING RESERVE FUNDS

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

451,816

449,141

450,131

446,018

405,124
7,453

410.914
15,456

407,839
6,326

407,451
9,211

409,719
13,140

411,461
3,360

410,155
3,415

411,733
4,840

409,877
1,650

1,970
1,847

1,496
1,117

1,209
743

1,496
966

1,496
1.400

1,236
1,725

1,236
1.470

1,209
500

1,209
190

0

0

0

0

0

0

0

0

0

353
219

1,587
307

14
398

268

393
309

1,142
296

107
291

4
328

365

0

0

0

0

0

811

0
128

447,054

0

0
461r

1
0

103
29,986

32,338

959
31,459

30,562

-703r
31,349

1,848
30,747

1,253
31,214

31,388

948
31,778

11,051
9,200
25.284'

11,050
9,200
25,335 r

11,051
9,200
25,405

11,050
9,200
25,310'

11,050
9,200
25,322''

11,050
9,200
25,335

11,050
9,200
25,349

11,049
9,200
25,363

11,050
9,200
25,377

451,141r
330

453,624 r
343

455,103
311

452,468 r
344

452,834 r
343

456,813
346

458,689
347

456,880
336

455,703
323

5,174
177
7,124
325
16,037
12,281

16,368
178
7,559
321
15,517
15,350 r

5,014
175
7,139
325
14,785
11,752

9,050
167
7,146
371
14,940
11,846

19,285
468
7,122
337
15,166
7,120 r

5,253
172
7,559
340
14,971
11,945

4,645
170
7,285
303
15,101
8,200

6,562
265
7,251
317
15,167
8,965

4,942
163
7,293
308
15,138
7,777

ABSORBING RESERVE FUNDS

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

1. Amounts of cash held as reserves are shown in table 1.12, line 2.
2. Includes securities loaned—fully guaranteed by U.S. government securities pledged
with Federal Reserve Banks—and excludes securities sold and scheduled to be bought back
under matched sale-purchase transactions.




3. Includes compensation that adjusts for the effects of inflation on the principal of
inflation-indexed securities.
4. Excludes required clearing balances and adjustments to compensate for float.

A6
1.12

DomesticNonfinancialStatistics • October 1997
RESERVES A N D BORROWINGS

Depository Institutions'

Millions of dollars
Prorated monthly averages of biweekly averages

Reserve classification

1
2
3
4
5
6
7
8
9
10

Reserve balances with Reserve Banks 2
Total vault cash 1
Applied vault cash 4
Surplus vault cash 5
Total reserves 6
Required reserves
Excess reserve balances at Reserve Banks 7
Total borrowings at Reserve Banks 8
Seasonal borrowings
Extended credit9

1994

1995

1996

1997

Dec.

Dec.

Dec.

Jan.

Feb.

Mar.

Apr.

May

June r

July

24,658
40,378
36,682
3,696
61,340
60,172
1.168
209
100
0

20,440
42.094
37.460
4,634
57,900
56,622
1,278
257
40
0

13,395
44,426
37,848
6,578
51,243
49,819
1,424
155
68
0

11,710
47,172
38,932
8,240
50,642
49,419
1,223
45
19
0

11,455
43,375
36,588
6,788
48,043
47,012
1,031
42
21
0

11,515
42,116
36,029
6,087
47,543
46,383
1,160
156
37
0

12,308
41,381
35,571
5,810
47,879
46,869
1,010
261
88
0

10,916
41,111
35,081
6,030
45,997
44,757
1,240
243
173
0

10,291
42,398
36.319
6,079
46,610
45,330
1,280
367
243
0

9,854
43,129
36,530
6,599
46,383
45,179
1,204
409
330
0

Biweekly averages of daily figures for two week periods ending on dates indicated
1997

1
2
3
4
5
6
7
8
9
10

Reserve balances with Reserve Banks"
Total vault cash 3
Applied vault cash 4
Surplus vault cash'1
Total reserves 6
Required reserves
Excess reserve balances at Reserve Banks 7
Total borrowings at Reserve Banks 8
Seasonal borrowings
Extended credit 9

Apr. 9

Apr. 23

May 7

May 21

June 4

June 18

July 2 r

July 16

July 30

Aug. 13

12,620
41,640
35,916
5,724
48,536
47,313
1,223
344
61
0

12,516
40,986
35.359
5,627
47,874
47,209
665
228
86
0

11,493
41,838
35,551
6,288
47,043
45,619
1,424
219
127
0

10,547
40,879
34,780
6,099
45,326
44,280
1,046
189
169
0

11,030
40,929
35,176
5,753
46,205
44,821
1,384
336
210
0

9,782
43,447
36,911
6,536
46,693
45,417
1,276
222
205
0

10,639
41,664
36,009
5,655
46,648
45,398
1,250
547
300
0

10,560
42,756
36,565
6,191
47,125
45,739
1,386
314
299
0

9,007
43,703
36,559
7,144
45,566
44,561
1,005
484
363
0

10,251
43,250
36,665
6,585
46,916
45,576
1,340
426
371
0

1. Data in this table also appear in the Board's H.3 (502) weekly statistical release. For
ordering address, see inside front cover. Data are not break-adjusted or seasonally adjusted.
2. Excludes required clearing balances and adjustments to compensate for float and
includes other off-balance-sheet "as-of" adjustments.
3. Total "lagged" vault cash held by depository institutions subject to reserve
requirements. Dates refer to the maintenance periods during which the vault cash may be used
to satisfy reserve requirements. The maintenance period for weekly reporters ends sixteen
days after the lagged computation period during which the vault cash is held. Before Nov. 25,
1992, the maintenance period ended thirty days after the lagged computation period.
4. All vault cash held during the lagged computation period by "bound" institutions (that
is, those whose required reserves exceed their vault cash) plus the amount of vault cash
applied during the maintenance period by "nonbound" institutions (that is, those whose vault
cash exceeds their required reserves) to satisfy current reserve requirements.




5. Total vault cash (line 2) less applied vault cash (line 3).
6. Reserve balances with Federal Reserve Banks (line 1) plus applied vault cash
(line 3).
7. Total reserves (line 5) less required reserves (line 6).
8. Also includes adjustment credit.
9. Consists of borrowing at the discount window under the terms and conditions established for the extended credit program to help depository institutions deal with sustained
liquidity pressures. Because there is not the same need to repay such borrowing promptly as
with traditional short-term adjustment credit, the money market effect of extended credit is
similar to that of nonborrowed reserves.

Policy Instruments
1.14

A7

FEDERAL RESERVE BANK INTEREST RATES
Percent per year
Current and previous levels
Adjustment credit1

Federal Reserve
Bank

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta

On
9/5/97

Extended credit 3

Effective date

Previous rate

On
9/5/97

Eifective date

Previous rate

On
9/5/97

Effective date

Previous rate

2/1/96
1/31/96
1/31/96
1/31/96
2/1/96
1/31/96

5.25

5.60

8/28/97

5.55

6.10

8/28/97

6.05

5.25

5.60

8/28/97

5.55

6.10

8/28/97

6.05

5.00

Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

Seasonal credit 2

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 years
Range (or
level)—All
F.R. Banks

F.R. Bank
of
N.Y.

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

6.5
6.5
7
7
7.25
7.25
7.75
8
8.5
8.5
9.5
9.5

In effect Dec. 31, 1977
1978—Jan.

9
20
May 11
12
July 3
10

Aug. 21
Sept. 22
Oct. 16
20
Nov. 1
3

1981—Nov.

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

10
10-10.5
10.5
10.5-11
11

1980—Feb. 15
19
May 29
30
June 13

12-13

10

16

July 28
29
Sept. 26
Nov. 17
Dec. 5
8
1981—May 5

Range (or
evel)—All
F.R. Banks

11-12
12

13
12-13
12

10
10.5
10.5

11
12
12

13
13
13
12
11

11
10
10
11
12

12-13
13
13-14

13
13
14

2
6
4

1982—July 20
23
Aug. 2
3

13
13
12
11.5
11.5
11
11
10.5
10
10
9.5
9.5
9
9
9
8.5
8.5

9
13
Nov. 21
26
Dec. 24

8.5-9
9
8.5-9
8.5
8

9
9
8.5
8.5
8

1985—May 20
24

7.5-8
7.5

7.5
7.5

1986—Mar.

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

7
7
6.5
6.5
6
5.5
5.5

5.5-6
6

6
6

16

27
30
Oct. 12

13
Nov. 22
26
Dec. 14

15
17
1984—Apr.

7
10

Apr. 21
23.
July II
Aug. 21
22

Effective date

1988—Aug.

11

Range (or
level)—All
F.R. Banks

F.R. Bank
of
N.Y.

9
11

6-6.5
6.5

6.5
6.5

1989—Feb. 24
27

6.5-7
7

7
7

1990—Dec. 19

6.5

6.5

1
4
30
2
13
17
6
7
20
24

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

6
6
5.5
5.5
5
5
4.5
4.5
3.5
3.5

2
7

3-3.5
3

1994—May 17
18
Aug. 16
18
Nov. 15
17

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

3.5
3.5
4
4
4.75
4.75

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

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

1995—Feb.

In effect Sept. 5. 1997
1987—Sept. 4

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




13-14
13
12

F.R. Bank
of
N.Y.

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

11

11-12
11
10-11
10
11
12

14

Dec.

4

3
3

of the Federal Reserve Bank, this time period may be shortened. Beyond this initial period, a
flexible rate somewhat above rates charged on market sources of funds is charged. The rate
ordinarily is reestablished on the first business day of each two-week reserve maintenance
period, but it is never less than the discount rate applicable to adjustment credit plus 50 basis
points.
4. For earlier data, see the following publications of the Board of Governors: Banking and
Monetary Statistics, 1914-1941, and 1941-1970; and the Annual Statistical Digest, 19701979.
In 1980 and 1981, the Federal Reserve applied a surcharge to short-term adjustment-credit
borrowings by institutions with deposits of $500 million or more that had borrowed in
successive weeks or in more than four weeks in a calendar quarter. A 3 percent surcharge was
in effect from Mar. 17, 1980, through May 7, 1980. A surcharge of 2 percent was reimposed
on Nov. 17, 1980; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and to
4 percent on May 5. 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981,
and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981, the formula for applying the
surcharge was changed from a calendar quarter to a moving thirteen-week period. The
surcharge was eliminated on Nov. 17, 1981.

A8

DomesticNonfinancialStatistics • October 1997

1.15

RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS 1

Type of deposit

Net transaction accounts
$0 million-$49.3 million 3 .
More than $49.3 million 4 .

1/2/97
1/2/97

3

Nonpersonal time deposits'

12/27/90

4

Eurocurrency liabilities6. . .

12/27/90

1
2

1. Required reserves must be held in the form of deposits with Federal Reserve Banks
or vault cash. Nonmember institutions may maintain reserve balances with a Federal
Reserve Bank indirectly, on a pass-through basis, with certain approved institutions. For
previous reserve requirements, see earlier editions of the Annual Report or the Federal
Reserve Bulletin. Under the Monetary Control Act of 1980, depository institutions
include commercial banks, 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 with the reserve maintenance period beginning January 2,
1997, for depository institutions that report weekly, and with the period beginning January 16,
1997, for institutions that report quarterly, the amount was decreased from $52.0 million to
$49.3 million.
Under the Garn-St Germain Depository Institutions Act of 1982, the Board adjusts the
amount of reservable liabilities subject to a zero percent reserve requirement each year for the




succeeding calendar year by 80 percent of the percentage increase in the total reservable
liabilities of all depository institutions, measured on an annual basis as of June 30. No
corresponding adjustment is made in the event of a decrease. The exemption applies only to
accounts that would be subject to a 3 percent reserve requirement. Effective with the reserve
maintenance period beginning January 2, 1997, for depository institutions that report weekly,
and with the period beginning January 16, 1997, for institutions that report quarterly, the
exemption was raised from $4.3 million to $4.4 million.
4. The reserve requirement was reduced from 12 percent to 10 percent on
Apr. 2, 1992, for institutions that report weekly, and on Apr. 16, 1992, for institutions that
report quarterly.
5. For institutions that report weekly, the reserve requirement on nonpersonal time deposits
with an original maturity of less than 1 1 /2 years was reduced from 3 percent to 1 1 /2 percent for
the maintenance period that began Dec. 13, 1990, and to zero for the maintenance period that
began Dec. 27, 1990. For institutions that report quarterly, the reserve requirement on
nonpersonal time deposits with an original maturity of less than 1 x/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 '/2
years or more has been zero since Oct. 6, 1983.
6. The reserve requirement on Eurocurrency liabilities was reduced from 3 percent to zero
in the same manner and on the same dates as the reserve requirement on nonpersonal time
deposits with an original maturity of less than 1 '/2 years (see note 5).

Policy Instruments
1.17

A9

FEDERAL RESERVE OPEN MARKET TRANSACTIONS'
Millions of dollars
1997

1996
Type of transaction
and maturity

1994

1995

1996
Dec.

Jan.

Feb.

Mar.

Apr.

May

June

U.S. TREASURY SECURITIES 2

1
2
3
4
5
6
V
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

Outright transactions (excluding
transactions)
Treasury bills
Gross purchases
Gross sales
Exchanges
For new bills
Redemptions
Others within one vear
Gross purchases
Gross sales
Maturity shifts
Exchanges
Redemptions
One to five years
Gross purchases
Gross sales
Maturity shifts
Exchanges
Five to ten years
Gross purchases
Gross sales
Maturity shifts
Exchanges
More than ten years
Gross purchases
Gross sales
Maturity shifts
Exchanges
All maturities
Gross purchases
Gross sales
Redemptions

matched

Matched transactions
26 Gross purchases
27 Gross sales
Repurchase agreements
28 Gross purchases
29 Gross sales
30 Net change in U.S. Treasury securities

17,484
0
380,327
380,327
0

10,932
0
405,296
405,296
900

9,901
0
426,928
426,928
0

0
0
34,211
34,211
0

0
0
40,346
40,346
0

0
0
33,997
33.647
0

0
0
31,720
31,720
0

4,006
0
33,160
33,160
0

0
0
47,456
47,456
0

596
0
33,022
33,022
0

733
0
0
-31,949
2,337

390
0
43,574
-35,407
1.776

524
0
30,512
-41.394
2,015

0
0
2.259
-1,950
0

0
0
2,481
-550
607

818
0
5,086
-2,864
0

0
0
3,143
-1,534
0

0
0
2,006
-2,100
376

383
0
5,666
-4,229
0

494
0
1,476
-2,250
0

9,916
0
-6.004
26,458

5,366
0
-34,646
26,387

3,898
0
-25,022
31,459

0
0
-2,259
1.950

0
0
-2,481
550

1,125
0
-4,926
1,874

2,861
0
-3,143
1.534

1,924
0
-2,006
1,700

1,102
0
-4,685
2,479

2,797
0
-1,476
2,250

3,575
0
-3.145
4,717

1,432
0
-3,093
7,220

1.116
0
- 5,469
6,666

0
0
0
0

0
0
0
0

0
0
1,236
890

0
0
0
0

0
0
0
400

734
0
-981
1.750

499
0
0
0

3,606
0
-918
775

2,529
0
-2,253
1,800

1.655
0
-20
3,270

0
0
0
0

0
0
0
0

0
0
-1,396
450

1.117
0
0
0

0
0
0
0

988
0
0
0

906
0
0
0

35,314
0
2,337

20.649
0
2,676

17,094
0
2,015

0
0
0

0
0
607

1,943
0
0

3,978
0
0

5,930
0
376

3,206
0
0

5,292
0
0

1,700,836
1,701,309

2,197,736
2,202,030

3,092,399
3,094,769

272,117
273,872

285,667
283,240

250,867
254,741

288,373
288,073

303,056
301,177

287,229
287,826

293,506
293,008

309,276
311,898

331.694
328,497

457.568
450,359

85,924
73,501

74,422
86,673

48,805
45,747

60.425
60,718

102,578
62,685

46,552
89.477

60,286
47,070

29,882

16.875

19,919

10,669

-10,430

1.127

3.984

47.326

-40,316

19.006

0
0
942

0
0
1,003

0
0
409

0
0
12

0
0
187

0
0
27

0
0
17

0
0
24

0
0
0

0
0
474

52,696
52,696

36,851
36,776

75,354
74,842

7,796
8,947

17,668
17,995

9,795
9.454

14,300
14.830

10,178
10,285

7,954
7.096

9.228
9,131

FEDERAL A G E N C Y OBLIGATIONS

Outright transactions
31 Gross purchases
32 Gross sales
33 Redemptions
Repurchase agreements
34 Gross purchases
35 Gross sales
36 Net change in federal agency obligations
37 Total net change in System Open Market Account . . .

-942

-928

103

-1,163

-514

314

-547

-131

858

-377

28,940

15,948

20,021

9,506

-10,944

1,441

3,437

47,195

-39,458

18,629

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




2. Transactions exclude changes in compensation for the effects of inflation on the principal
of inflation-indexed securities.

A10
1.18

DomesticNonfinancialStatistics • October 1997
FEDERAL RESERVE BANKS

Condition and Federal Reserve Note Statements 1

Millions of dollars

Account
July 2

July 9

Wednesday

End of month

1997

1997

July 16

July 23

July 30

May 31

June 30

July 31

Consolidated condition statement

ASSETS

11,050
9,200
473

11,050
9,200
459

11,049
9,200
468

11,050
9,200
471

11,051
9,200
477

11,051
9,200
531

11,050
9,200
492

11,051
9,200
484

Loans
4 To depository institutions
5 Other
6 Acceptances held under repurchase agreements

1,438
0
0

398
0
0

332
0
0

366
0
0

1,679
0
0

571
0
0

1,894
0
0

411
0
0

Federal agency obligations
1 Bought outright
8 Held under repurchase agreements

1,236
1,725

1,236
1,470

1,209
500

1,209
190

1,209
975

1,970
1,847

1,496
1,117

1,209
743

1 Gold certificate account
2 Special drawing rights certificate account
3 Coin

414,821

413,570

416,573

411,527

417,919

412,577

426,370

414,165

10 Bought outright 2
11
Bills
12
Notes
13
Bonds
14 Held under repurchase agreements

411,461
196,077
161,122
54,261
3,360

410,155
194,772
161,122
54,261
3,415

411,733
196,947
160,524
54,261
4,840

409,877
195,091
160,524
54,261
1,650

408,992
194,207
160,524
54,261
8,927

405,124
194,437
157,770
52,916
7,453

410,914
195.531
161,122
54,261
15,456

407,839
193,053
160,524
54,261
6,326

15 Total loans and securities

419,220

416,674

418,615

413,292

421,782

416,965

430,878

416,529

8,916
1,251

7,988
1,252

7,241
1,259

6,424
1,259

5,733
1,258

4,188
1,243

2,400
1,251

4,833
1,257

17,972
11,696

17,979
12,213

17,986
12,267

17,992
12,400

17,999
13,074

18,080
10,727

17,970
13,295

17,204
12,976

479,778

476,815

478,084

472,088

480,574

471,985

486,536

473,534

432,297

434,145

432,321

431,119

430,862

426,718

429,124

430,492

25,498

21,051

24,009

20,080

28,624

25,268

40,087

23,646

19,732
5,253
172
340

15,932
4,645
170
303

16,865
6,562
265
317

14,668
4,942
163
308

22,984
5,153
170
316

19,592
5,174
177
325

23,219
16,368
178
321

18,132
5,014
175
325

7,011
4,779

6,518
4,691

6,586
4,663

5,751
4,575

5,549
4,929

3,962
5,187

1,808
5,029

4,611
4,919

469,585

466,405

467,580

461,525

469,963

461,135

476,048

463,667

5,055
4,496
642

5,063
4,496
852

5,074
4,496
934

5,079
4,496
988

5,087
4,496
1,028

4,828
4,496
1,527

5,050
4,496
943

5,087
4,317
462

479,778

476,815

478,084

472,088

480,574

471,985

486,536

473,534

630,606

628,414

627,882

629,980

631,119

643,549

632,925

634,814

9 Total U.S. Treasury securities

16 Items in process of collection
17 Bank premises
Other assets
18 Denominated in foreign currencies 3
19 All other 4
20 Total assets
LIABILITIES

21 Federal Reserve notes
22 Total deposits
23
24
25
26

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

27 Deferred credit items
28 Other liabilities and accrued dividends 5
29 Total liabilities
CAPITAL A C C O U N T S

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

MEMO

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

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

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

42 Total collateral

541,847
109,550
432,297

541,156
107,010
434,145

540,855
108,534
432,321

540,941
109,821
431,119

541,296
110,434
430,862

536,348
109,630
426,718

542,199
113,075
429,124

541,783
111,291
430,492

11,050
9,200
0
412,047

11,050
9,200
0
413,896

11,049
9,200
0
412,072

11,050
9,200
0
410,869

11,051
9,200
0
410,611

11,051
9,200
0
406,468

11,050
9,200
0
408,874

11,051
9,200
0
410,241

432,297

434,145

432,321

431,119

430,862

426,718

429,124

430,492

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




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

Federal Reserve Banks/Monetary and Credit Aggregates
1.19

FEDERAL RESERVE BANKS

All

Maturity Distribution of Loan and Security Holding

Millions of dollars

Type of holding and maturity
July 2

July 9

Wednesday

End of month

1997

1997

July 16

July 23

July 30

May 30

June 30

July 31

1 Total loans

1,438

398

332

366

1,677

571

1,894

412

2 Within fifteen days'
3. Sixteen days to ninety days

1,191
248

180
218

209
123

310
56

1,610
73

466
105

1,726
169

193
218

414,821

413,570

416,573

411,527

417,919

412,577

426,370

414,165

12,768
95,093
128,617
95,315
39,017
44,011

17,059
89,047
129,122
95,315
39,016
44,011

19,827
87,937
131,778
94,034
39,016
44,011

15,482
94,167
124,847
94,004
39,016
44,011

16,820
92,691
131,377
94,004
39,016
44,011

8,778
100,730
127,057
94,392
38,516
43,105

23,839
94,494
129,694
95,315
39,016
44,011

9,419
88,758
139,787
93,174
39,016
44,011

11 Total federal agency obligations

2,961

2,706

1,709

1,399

2,184

3,797

2,613

2,130

12
13
14
15
16
17

1,752
269
210
416
290
25

1,497
329
150
416
290
25

500
349
145
401
290
25

354
200
130
401
290
25

1,154
185
130
401
290
25

2,301
434
315
416
307
25

1,392
281
210
416
290
25

922
185
130
401
290
25

4 Total U.S. Treasury securities 2
5
6
7
8
9
10

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

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

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

1.20

2. Includes compensation that adjusts for the effects of inflation on the principal of
inflation-indexed securities.

AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS A N D MONETARY BASE 1
Billions of dollars, averages of daily figures
1997

1996
Item

1993
Dec.

1994
Dec.

1995
Dec.

1996
Dec.
Dec.

Total reserves"
Nonborrowed reserves 4
Nonborrowed reserves plus extended credit 5
Required reserves
Monetary base 6

Feb.

Mar.

Apr.

May

June r

July

48.31
48.16
48.16
47.15
457.62

47.43
47.17
47.17
46.42
458.24

47.05
46.81
46.81
45.81
459.61

47.11
46.74
46.74
45.83
461.42

46.89
46.48
46.48
45.68
464.25

Seasonally adjusted

ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS 2

1
2
3
4
5

Jan.

60.55
60.46
60.46
59.48
386.88

59.40
59.20
59.20
58.24
418.48

56.39
56.13
56.13
55.11
434.52

50.06
49.91
49.91
48.64
452.67

50.06
49.91
49.91
48.64
452.67

49.52
49.47
49.47
48.29
454.14

49.01
48.97
48.97
47.98
456.28

Not seasonally adjusted
6
7
8
9
10

Total reserves 7
Nonborrowed reserves
Nonborrowed reserves plus extended credit 5
Required reserves 8
Monetary base 9

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

51.52
51.37
51.37
50.10
456.72

51.52
51.37
51.37
50.10
456.72

50.67
50.62
50.62
49.44
455.55

48.12
48.08
48.08
47.09
452.56

47.69
47.53
47.53
46.53
455.26

48.09
47.83
47.83
47.08
458.17

46.26
46.02
46.02
45.02
458.30

46.93
46.56
46.56
45.65
461.82

46.76
46.35
46.35
45.56
465.59

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

51.24
51.09
51.09
49.82
463.49
1.42
.16

51.24
51.09
51.09
49.82
463.49
1.42
.16

50.64
50.60
50.60
49.42
462.71
1.22
.05

48.04
48.00
48.00
47.01
459.64
1.03
.04

47.54
47.39
47.39
46.38
462.22
1.16
.16

47.88
47.62
47.62
46.87
465.06
1.01
.26

46.00
45.75
45.75
44.76
465.23
1.24
.24

46.61
46.24
46.24
45.33
468.80
1.28
.37

46.38
45.97
45.97
45.18
472.62
1.20
.41

N O T ADJUSTED FOR
C H A N G E S IN RESERVE R E Q U I R E M E N T S 1 0

11
12
13
14
15
16
17

Total reserves"
Nonborrowed reserves
Nonborrowed reserves plus extended credit 5
Required reserves
Monetary base' 2
Excess reserves' 3
Borrowings from the Federal Reserve

1. Latest monthly and biweekly figures are available from the Board's H.3 (502) weekly
statistical release. Historical data starting in 1959 and estimates of the effect on required
reserves of changes in reserve requirements are available from the Money and Reserves
Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve
System, Washington, DC 20551.
2. Figures reflect adjustments for discontinuities, or "breaks," associated with regulatory
changes in reserve requirements. (See also table 1.10.)
3. Seasonally adjusted, break-adjusted total reserves equal seasonally adjusted, breakadjusted required reserves (line 4) plus excess reserves (line 16).
4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally adjusted,
break-adjusted total reserves (line 1) less total borrowings of depository institutions from the
Federal Reserve (line 17).
5. Extended credit consists of borrowing at the discount window under the terms and
conditions established for the extended credit program to help depository institutions deal
with sustained liquidity pressures. Because there is not the same need to repay such
borrowing promptly as with traditional short-term adjustment credit, the money market effect
of extended credit is similar to that of nonborrowed reserves.
6. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally
adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency
component of the money stock, plus (3) (for all quarterly reporters on the "Report of
Transaction Accounts, Other Deposits and Vault Cash" and for all those weekly reporters
whose vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted
difference between current vault cash and the amount applied to satisfy current reserve
requirements.
7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) plus excess
reserves (line 16).




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

A12
1.21

DomesticNonfinancialStatistics • October 1997
MONEY STOCK, LIQUID ASSETS, A N D DEBT MEASURES'
Billions of dollars, averages of daily figures
1997
Item

1993
Dec.

1994
Dec.

1995
Dec.

1996
Dec.
Apr.

May

June

July

Seasonally adjusted
Measures'
1 Ml
M2
3 M3
4 1.
Debt

1,129.8
3,486.6
4,254.4
5,167.8
12,508.7

1,150.7
3,502.1
4,327.3 r
5,308.4 r
13,150.9

1,129.0
3,655.0
4,592.5 r
5,697.6 r
13,866.9r

1,081.0
3,834.3
4,933.0 r
6,098.7 r
14,614.0r

1,065.1
3,905.0
5,067.5
6,254.9 r
14,857.8r

1,062.7
3,904.7
5,075.8 r
6,270.9 r
14,905.9r

1,063.2
3,919.8
5,100.8 r
6,304.2
14,937.8

1,062.3
3,934.4
5,147.5
n.a.
n.a.

322.2
7.9
385.2
414.5

354.4
8.5
384.1
403.8

372.6
8.9
391.1
356.5

395.2
8.6
402.4
274.8

403.7
8.3
395.4
257.7

406.1
8.2
395.6
252.8

407.7
8.0
397.3
250. r

410.3
8.2
396.4
247.4

2,356.8
767.8

2,351.4
825.3 r

2,526.0
937.5 r

2,753.3
l,098.7 r

2,839.9
1,162.5

2,842.0 r
l,171.1 r

2,856.6
1,181 .C

2,872.1
1,213.2

Commercial banks
12 Savings deposits, including MMDAs
13 Small time deposits 9
14 Large time deposits' 0, "

785.2
468.3
271.9

752.4
503.2
298.4

776.0
576.0
344.7

903.9
592.0
412.3

947.9
598.9
439.7

945.4
602.0
441.4

949.9
607.8
450.8 r

957.3
614.2
468.5

Thrift institutions
13 Savings deposits, including MMDAs
16 Small time deposits'1
1/ Large time deposits 10

434.0
314.3
61.5

397.2
314.3
64.7

361.1
357.7
75.1

367.1
353.7
79.2

373.1
350.8
82.5

375.5
351.8
82.4

375.5
350.6
83.2

375.0
346.7
84.7

Money market mutual funds
18 Retail
19 Institution-only

354.9
209.5

384.3
198.5

455.2
246.9

536.6
299.3

569.2
311.6

567.2
311.6

572.9
318.9

578.9
324.1

Repurchase agreements and Eurodollars
20 Repurchase agreements 121 Eurodollars' 2

158.6
66.4

182.9
80.8 r

182.1
88.7r

194.0r
113.9'"

202. l r
126.5r

202.7 r
133.0r

200.6'
127.4'

207.6
128.2

3,323.3
9,185.4

3,492.2
9,658.7

3,638.8
10,228. r

3,780.4
10,833.6r

3,806.8
11,051.1r

3,794.3
11,111.6r

3,782.1
11,155.7

n.a.
n.a.

6
/
8
y

Ml components
Currency 3
Travelers checks 4
Demand deposits 5
Other checkable deposits 6

Nontransaction
10 In M2
11 In M3 only 8

components

Debt components
22 Federal debt
23 Nonfederal debt

Not seasonally adjusted

24
25
26
2/
28

Measures2
Ml
M2
M3
L
Debt

29
30
31
32

Ml components
Currency 3
Travelers checks 4
Demand deposits 5
Other checkable deposits 6

1,153.7
3,506.6
4,274.8
5,197.7
12,510.7

1,174.4
3,522.5
4,347.4 r
5,338.8 r
13,152.4

324.8
7.6
401.8
419.4

357.5
8.1
400.3
408.6

2,352.9
768.2

Commercial banks
35 Savings deposits, including MMDAs
36 Small time deposits'
37 Large time deposits 10 ' "

1,103.0
3,852.8
4,950.0 r
6,128.1 r
14,612.1r

1,071.6
3,922.0 r
5,075.1
6,266.7 r
14,820.9r

1,051.8
3,887.2
5,057.6 r
6,247.4 r
14,857.6r

1,062.5
3,917.3'
5,097.0'
6,288.7
14,890.6

1,063.9
3,939.2
5,145.3
n.a.
n.a.

376.2
8.5
407.3
360.8

397.9
8.3
418.8
278.0

403.4
8.2
396.4
263.6 r

406.1
8.2
387.3
250.2

408.4
8.2
396.3
249.5'

411.4
8.7
398.1
245.6

2,348.1
824.9 r

2,522.6
936.6 r

2,749.8
l,097.2 r

2,850.4
l,153.1 r

2,835.4
1,170.4r

2,854.8'
1,179.7'

2,875.4
1,206.1

784.3
466.8
272.0

751.7
501.5
298.9

775.3
573.8
345.7

902.9
589.8
413.7

949.4
600.6
435.7

943.7
603.2
443.6

952.7'
608.2
451.1'

960.7
614.8
466.0

Thrift institutions
38 Savings deposits, including MMDAs
39 Small time deposits 9
40 Large time deposits'"

433.4
313.3
61.5

396.8
313.2
64.8

360.8
356.3
75.4

366.7
352.4
79.5

373.7
351.8
81.8

374.8
352.5
82.8

376.6
350.8
83.3

376.3
347.1
84.2

Money market mutual funds
41 Retail
42 Institution-only

355.0
210.6

385.0
199.8

456.3
248.2

538.1
300.5

574.8
309.2

561.1
307.0

566.5
313.1

576.5
321.0

Repurchase agreements and Eurodollars
43 Repurchase agreements' 2
44 Eurodollars 12

156.6
67.6

179.6
81.8r

178.0
89.4r

188.8r
114.7r

200.8 r
125.6r

205.3 r
131.8r

205.8'
126.5'

208.3
126.5

3,329.5
9,181.2

3,499.0
9,653.5

3,645.9
10,221.4r

3,787.9
10,824.2r

3,810.3
11,010.6'

3,781.3
1 l,076.3 r

Nontransaction
33 In M2
34 In M3 only 8

1,152.8
3,675.3
4,612.0 r
5,729.5 r
13,867.3'

components

Debt components
45 Federal debt
46 Nonfederal debt
Footnotes appear on following page.




3,766.2
11,124.5

n.a.
n.a.

Monetary and Credit Aggregates

A13

NOTES TO TABLE 1.21
1. Latest monthly and weekly figures are available from the Board's H.6 (508) weekly
statistical release. Historical data starting in 1959 are available from the Money and Reserves
Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve
System, Washington, DC 20551.
2. Composition of the money stock measures and debt is as follows:
M l : (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of
depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all
commercial banks other than those owed to depository institutions, the U.S. government, and
foreign banks and official institutions, less cash items in the process of collection and Federal
Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of
withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions,
credit union share draft accounts, and demand deposits at thrift institutions. Seasonally
adjusted 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 M l .
M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more)
issued by all depository institutions, (2) balances in institutional money funds (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.

A14
1.22

DomesticNonfinancialStatistics • October 1997
DEPOSIT INTEREST RATES AND AMOUNTS OUTSTANDING

Commercial and BIF-insured saving banks'

1996

Item

1995

1996

Dec.

Dec.
Nov.

1997

Dec.

Jan.

Feb.

Mar.

Apr.

May

June

July

Interest rates (annual effective yields)
INSURED C O M M E R C I A L B A N K S
1
2

Negotiable order of withdrawal accounts 2
Savings deposits"

I.91
3.10

n.a.
n.a.

1.98
2.85

n.a.
n.a.

n.a.
n.a.

n.a.
n.a.

n.a.
n.a.

n.a.
n.a.

n.a.
n.a.

n.a.
n.a.

n.a.
n.a.

4.10
4.68
5.02
5.17
5.40

4.03
4.63
5.00
5.22
5.46

4.08
4.60
4.99
5.23
5.48

4.03
4.63
5.00
5.22
5.46

4.03
4.63
5.01
5.25
5.49

4.05
4.62
5.02
5.27
5.51

4.02
4.67
5.08
5.36
5.60

4.01
4.72
5.13
5.46
5.69

4.07
4.77
5.15
5.45
5.68

4.09
4.79 R
5.16
5.44
5.69

4.08
4.76
5.15
5.41
5.63

Negotiable order of withdrawal accounts"
Savings deposits - ' 1

1.91
2.98

n.a.
n.a.

1.92
2.82

n.a.
n.a.

n.a.
n.a.

n.a.
n.a.

n.a.
n.a.

n.a.
n.a.

n.a.
n.a.

n.a.
n.a.

n.a.
n.a.

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 vear
More than 1 year to 2'zi years
More than 2V2 years

4.43
4.95
5.18
5.33
5.46

4.66
5.02
5.28
5.53
5.72

4.67
5.03
5.29
5.56
5.76

4.66
5.02
5.28
5.53
5.72

4.75
5.05
5.31
5.58
5.77

4.73
5.04
5.31
5.59
5.78

4.80
5.06
5.37
5.69
5.84

4.83
5.13
5.43
5.75
5.91

4.81
5.15
5.45
5.77
5.91

4.82
5.13R
5.47
5.72
5.90 R

4.87
5.13
5.44
5.74
5.89

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^/2 years
/ More than 2Vl years

J
4
5
6

B I F - I N S U R E D SAVINGS B A N K S 4
8
9

10
11
12
13
14

Amounts outstanding (millions of dollars)
INSURED C O M M E R C I A L B A N K S

15 Negotiable order of withdrawal accounts"
16 Savings deposits - "
17
Personal
18
Nonpersonal

19
20
21
22
23

Interest-bearing time deposits with balances of
less than $100,000, by maturity
7 to 91 days
92 to 182 days
183 days to 1 year
More than 1 year to 2 x/2 years
More than 2'/2 years

24 IRA and Keogh plan deposits
B I F - I N S U R E D 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'/2 years
More than 2'/2 years

34 IRA and Keogh plan accounts

n.a.
n.a.
n.a.
n.a.

167,503
896,820
713,672
183,148

n.a.
n.a.
n.a.
n.a.

n.a.
n.a.
n.a.
n.a.

n.a.
n.a.
n.a.
n.a.

n.a.
n.a.
n.a.
n.a.

n.a.
n.a.
n.a.
n.a.

n.a.
n.a.
n.a.
n.a.

n.a.
n.a.
n.a.
n.a.

n.a.
n.a.
n.a.

32,170
93,941
183,834
208,601
199,002

32,931
92,301
201,449
213,198
199,906

32,044
92,503
201,281
214,405
198,539

32,931
92,301
201,449
213,198
199,906

32,799
94,955
201,491
213,875
198,077

32,796
95,235
202,329
212,970
197,958

34,853
93,804
203,336
214,066
200,282

34,485
92.432
207,006
226,159
199,147

32,561
91,234
209,296
220,795
198,694

31,464r
91,512 r
21 l,961 r
228,783 r
197,903r

30,115
90,765
211,772
231,833
195,665

150,067

151,275

151.389

151,275

150,442

150,356

151,931

151,105

151,192

152,639r

152,137

11,918
68,643
65,366
3,277

n.a.
n.a.
n.a.
n.a.

9,710
68,102
64,369
3.733

n.a.
n.a.
n.a.
n.a.

n.a.
n.a.
n.a.
n.a.

n.a.
n.a.
n.a.
n.a.

n.a.
n.a.
n.a.
n.a.

n.a.
n.a.
n.a.
n.a.

n.a.
n.a.
n.a.
n.a.

n.a.
n.a.
n.a.
n.a.

n.a.
n.a.
n.a.
n.a.

2,001
12,140
25,686
27,482
22,866

2,428
13,013
28,792
29,095
22,254

2,405
13,074
29,329
28,573
21,823

2,428
13,013
28.792
29,095
22,254

2,542
13,112
29,503
29,163
21,828

2,535
13,099
29,510
29,699
21,877

2,656
13,377
30,002
31,028
21,731

2,698
13,463
30,076
31,616
21,640

2,738
13,731
29,661
31,664
21,391

2,684
13,747r
29,804 r
32,126r
21,472 r

2,596
13,629
29,850
32,730
21,171

21,408

21,365

20,627

21,365

20,405

20,423

20,860

20,860

20,683

20,595 r

20,557

4

25 Negotiable order of withdrawal accounts"
26 Savings deposits"' 1
27
Personal
28
Nonpersonal

29
30
31
32
33

248,417
776,466
615,113
161,353

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. Owing to statistical difficulties associated in part with the implementation of sweep
accounts, estimates for NOW and savings accounts are not available beginning December
1996.
3. Includes personal and nonpersonal money market deposits.
4. Includes both mutual and federal savings banks.

Commercial Banking Institutions—Assets and Liabilities
1.26

COMMERCIAL BANKS IN THE UNITED STATES

A15

Assets and Liabilities1

A. All commercial banks
Billions of dollars
Wednesday figures

Monthly averages
1997 r

1996

Account

July

Jan.

Feb.

Mar.

Apr.

1997

May

June

July

July 9

July 16

July 23

July 30

Seasonally adjusted

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit 2 . . .
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security 3
Other loans and leases
Interbank loans
Cash assets 4
Other assets 5

16 Total assets 6

17
18
19
20
21
22
23
24
25
26

Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From others
Net due to related foreign offices
Other liabilities

27 Total liabilities
28 Residual (assets less liabilities) 7

3,685.6
984.7
708.2
276.5r
2,700.9
744.7
1,104.8
80.1
1,024.7
511.8
77.9
261.7
197.7
220.5
247.7

3,803.8
1,004.4
706.4
298.0
2,799.4
785.4
1,134.7
85.7
1,049.0
521.5
82.4
275.5
198.9
232.2
256.2

3,840.4
1,020.1
703.6
316.5
2,820.3
793.7
1,140.3
86.5
1,053.8
520.5
83.9
282.0
204.7
233.4
265.0

3,860.1
1,014.2
708.3
305.9
2,845.9
798.0
1,153.9
87.9
1,066.0
518.1
88.2
287.7
220.0
239.9
272.8

3,900.9
1,034.0
723.6
310.4
2,866.9
805.2
1,166.9
89.7
1,077.2
516.2
89.7
288.9
216.0
246.4
277.3

3,909.2
1,015.7
723.3
292.4
2,893.5
811.0
1,177.7
90.9
1,086.8
519.1
89.1
296.6
218.6
244.0
277.7

3,932.4
1,012.5
726.4
286.1
2,920.0
817.9
1,187.1
92.4
1,094.8
521.7
94.0
299.3
191.7
248.3
282.7

3,963.0
1,032.5
727.2
305.3
2,930.5
822.1
1,191.6
93.3
1,098.3
521.4
95.3
300.1
186.1
244.8
277.8

3,946.3
1,026.1
733.5
292.5
2,920.2
819.9
1,189.9
93.0
1,096.9
520.9
91.3
298.2
179.2
237.8
277.5

3,958.6
1,029.6
724.3
305.3
2,929.0
822.7
1,190.2
93.2
1,097.0
521.1
94.9
300.2
193.6
248.8
279.1

3,962.1
1,031.3
721.7
309.7
2,930.7
821.2
1,192.6
93.4
1,099.1
521.9
94.1
301.0
189.0
244.2
277.9

3,984.7
1,044.0
727.7
316.3
2,940.6
823.9
1,194.0
93.6
1,100.4
522.0
100.8
300.0
182.8
248.5
277.7

4,294.0

4,435.0

4,487.4

4,536.6

4,584.0

4,593.0

4,598.2

4,614.4

4,5833

4,622.8

4,616.0

4,636.5

2,743.0
743.9
1,999.1
447.3r
1,551.8r
701.1
287.1
414.0
257.4
219.9

2,871.9
715.1
2,156.8
526.7
1,630.1
724.2
300.6
423.6
222.3
268.5

2,892.6
705.1
2,187.6
542.3
1,645.2
735.2
304.9
430.3
217.7
286.2

2,916.1
699.8
2,216.3
548.5
1,667.8
747.9
313.0
434.8
209.1
277.6

2,949.7
701.9
2,247.8
567.8
1,679.9
763.7
313.2
450.6
211.5
270.3

2,937.3
690.1
2,247.2
563.2
1,684.0
766.9
302.8
464.0
233.7
262.5

2,971.8
694.5
2,277.3
580.5
1,696.7
737.6
271.2
466.4
229.4
263.2

2,992.4
688.7
2,303.6
599.7
1,703.9
736.5
266.5
470.0
215.3
277.3

2,983.5
673.7
2,309.7
599.3
1,710.5
728.5
264.0
464.6
220.5
270.1

3,000.7
694.8
2,305.9
597.2
1,708.7
731.3
270.8
460.5
225.4
272.1

2.990.7
691.6
2,299.1
599.2
1,699.9
735.4
260.0
475.4
209.1
279.9

2,992.0
696.1
2,295.9
604.0
1,691.9
749.0
269.5
479.5
207.6
289.8

3,921.5

4,086.9

4,131.7

4,150.7

4,195.2

4,2003

4,201.9

4,221.5

4,202.5

4,229.4

4,215.0

4,238.5

372.6

348.1

355.7

385.9

388.8

392.7

396.2

392.9

380.8

393.4

401.0

398.0

Not seasonally adjusted

Assets
29 Bank credit
30
Securities in bank credit
31
U.S. government securities
32
Other securities
33
Loans and leases in bank credit 2 . . .
34
Commercial and industrial
35
Real estate
36
Revolving home equity
37
Other

42 Cash assets 4
43 Other assets 5

3,682.8
983.3
705.8
277.5
2,699.5r
745.8r
1,104.8
80.1
1,024.7
509.7
76.5
262.6
195.2
217.3
249.4

3,802.5
995.8
700.4
295.4
2,806.7
783.1
1,136.7
85.7
1,051.0
527.2
81.6
278.1
208.7
242.5
256.8

3,833.2
1,016.7
702.3
314.4
2,816.5
793.3
1,137.2
86.1
1,051.1
521.2
85.0
279.8
209.1
234.5
264.9

3,850.5
1,016.9
712.9
304.0
2,833.7
800.6
1,147.9
87.1
1,060.8
513.5
87.8
283.8
216.4
230.8
268.2

3,900.4
1.036.4
726.3
310.2
2,863.9
812.5
1,162.4
88.9
1,073.5
513.7
90.2
285.1
214.4
241.7
275.0

3,913.9
1,024.8
725.8
299.0
2,889.1
817.8
1,173.3
90.6
1,082.6
517.0
89.5
291.4
214.2
241.8
280.0

3,936.1
1,018.9
726.2
292.8
2,917.2
821.4
1,185.5
92.4
1,093.1
518.8
93.6
298.0
189.2
244.9
282.8

3,958.7
1,029.7
723.1
306.7
2,928.9
823.4
1,191.7
93.3
1,098.4
519.0
93.8
301.1
183.8
241.1
279.8

3,945.8
1,024.5
726.8
297.7
2,921.3
823.3
1,190.6
93.0
1,097.6
516.9
89.4
301.1
181.7
240.3
280.9

3,952.2
1,023.6
719.3
304.4
2,928.5
823.9
1,190.9
93.3
1,097.6
518.3
93.6
301.8
191.1
245.0
279.1

3,951.5
1,026.0
718.2
307.9
2,925.5
821.7
1,191.8
93.4
1,098.4
520.1
92.4
299.5
181.8
228.9
276.1

3,980.4
1,043.9
726.2
317.7
2,936.5
822.6
1,193.5
93.7
1,099.8
521.2
99.6
299.6
179.3
246.0
281.9

44 Total assets 6

4,287.5

4,454.7

4,485.8

4,509.8

4,574.9

4,593.2

4,596.0

4,606.4

4,591.7

4,610.4

4,5813

4,630.6

2,734.5
737.0
1,997.4
444.2r
l,553.2 r
714.7
296.1
418.6
252.0
218.8

2,875.8
726.5
2,149.2
525.4
1.623.8
718.6
294.8
423.8
232.7
265.8

2,877.6
698.1
2,179.5
541.9
1,637.6
719.7
293.1
426.6
228.6
288.1

2,904.8
687.6
2,217.3
548.6
1,668.6
728.4
301.3
427.1
218.3
275.8

2,947.1
705.1
2,242.0
563.5
1,678.5
764.7
311.9
452.7
210.1
270.6

2,928.6
680.2
2,248.4
568.1
1,680.4
776.7
310.9
465.8
236.7
266.1

2,967.0
688.8
2,278.2
580.3
1,697.9
756.7
284.0
472.7
220.0
265.5

2,983.7
682.5
2,301.2
595.4
1,705.9
749.8
274.4
475.3
211.5
275.6

2,991.3
681.2
2,310.1
590.7
1,719.4
740.9
272.4
468.5
208.7
266.9

2,990.0
686.2
2,303.8
592.5
1,711.3
747.3
279.2
468.1
217.1
270.5

2,958.8
664.2
2,294.6
597.2
1,697.3
747.1
266.4
480.8
212.9
276.8

2,982.5
689.8
2,292.6
603.0
1,689.7
759.0
276.4
482.6
210.7
289.9

3,920.0

4,092.8

4,114.1

4,127.3

4,192.5

4,208.0

4,209.1

4,220.6

4,207.8

4,224.9

4,195.6

4,242.0

385.5

385.7

388.6

39
40

45
46
47
48
49
50
51
52
53
54

Security-1
Other loans and leases

Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From others
Net due to related foreign offices
Other liabilities

55 Total liabilities
56 Residual (assets less liabilities)

7

367.5

361.9

371.7

382.4

382.4

385.2

386.9

385.8

383.9

n.a.

88.7

101.8

90.4

90.1

81.4

76.7

87.8

78.3

82.5

86.5

90.7

n.a.

85.0

98.5

86.9

88.0

85.7

81.4

92.4

80.8

86.4

90.4

96.3

MEMO

57 Revaluation gains on off-balance-sheet
items 8
58 Revaluation losses on off-balancesheet items 8
Footnotes appear on p. A21.




A16
1.26

Domestic Financial Statistics • October 1997
COMMERCIAL BANKS IN THE UNITED STATES

Assets and Liabilities'—Continued

B. Domestically chartered commercial banks
Billions of dollars

Monthly averages

Account

1997 r

1996

July

Wednesday figures

Jan.

Feb.

Mar.

Apr.

1997

May

June

July

July 9

July 16

July 23

July 30

Seasonally adjusted -

1
1
3
4
5
6
7
8
9
10
11
12
13
14
15

Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit2
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security 1
Other loans and leases
Interbank loans
Cash assets 4
Other assets 5

16 Total assets 6

17
18
19
20
21
22
23
24
25
26

Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From others
Net due to related foreign offices
Other liabilities

27 Total liabilities
28 Residual (assets less liabilities) 7

3,216.7
833.8
628.0
205.8
2,382.9
550.7
1,071.8
80.1
991.8
511.8
45.9
202.7
178.2
192.2
209.8

3,288.1
834.4
624.6
209.8
2,453.7
571.0
1,102.8
85.7
1,017.2
521.5
44.3
214.1
176.2
201.1
218.2

3,309.8
843.2
618.2
225.0
2,466.6
576.5
1,108.2
86.5
1,021.8
520.5
44.1
217.2
183.8
200.5
223.9

3,334.8
841.3
624.7
216.6
2,493.5
581.9
1,122.3
87.9
1,034.4
518.1
48.4
222.7
197.3
207.6
231.8

3,367.2
855.9
635.7
220.2
2,511.3
588.6
1.135.5
89.7
1,045.8
516.2
46.5
224.5
197.0
213.7
238.2

3,369.3
840.1
633.4
206.8
2,529.1
591.3
1,147.1
90.9
1,056.2
519.1
45.6
226.0
198.0
210.0
238.8

3,389.8
835.0
634.1
201.0
2,554.7
597.3
1,157.5
92.4
1,065.1
521.7
48.0
230.2
171.8
212.6
241.5

3,417.1
847.5
633.6
214.0
2,569.5
601.6
1,163.1
93.3
1,069.8
521.4
50.5
233.1
166.5
210.8
234.7

3,402.0
840.6
635.0
205.6
2,561.4
599.2
1,161.1
93.0
1,068.1
520.9
49.8
230.5
160.7
204.4
233.7

3,415.4
847.0
632.7
214.3
2,568.4
601.9
1,161.8
93.2
1,068.6
521.1
50.6
233.0
174.0
215.0
234.4

3,422.1
849.9
633.7
216.2
2,572.3
602.1
1,164.2
93.4
1,070.8
521.9
48.9
235.2
168.8
210.5
236.2

3,429.2
853.8
632.2
221.6
2,575.3
602.6
1,165.4
93.6
1,071.8
522.0
52.5
232.8
162.9
214.2
235.1

3,739.7

3,827.7

3,862.2

3,915.5

3,959.8

3,959.8

3,958.9

3,972.1

3,943.8

3,981.8

3,980.7

3,984.5

2,563.8
733.3
1.830.5
281.R
1,549.4
577.5
256.5
320.9
79.3
151.2

2,646.2
704.8
1,941.4
313.5
1,627.9
593.9
272.6
321.3
72.0
178.6

2,654.7
695.4
1,959.3
318.1
1.641.3
592.0
271.0
321.0
78.2
186.4

2,673.4
689.3
1,984.1
319.9
1,664.2
607.9
278.3
329.6
68.0
183.7

2,691.8
691.1
2,000.7
323.4
1,677.3
623.7
280.4
343.3
77.1
178.3

2,685.1
678.8
2,006.3
324.9
1,681.4
623.1
269.7
353.4
85.1
173.1

2,713.4
683.4
2,030.1
335.9
1,694.2
596.1
240.1
356.0
80.7
173.0

2,721.1
677.5
2,043.6
342.4
1,701.3
598.8
235.9
362.9
85.3
180.7

2,710.7
662.4
2,048.4
340.5
1,707.8
592.3
235.9
356.4
83.5
177.3

2,732.3
684.1
2,048.2
342.1
1,706.2
593.3
238.2
355.1
92.4
176.7

2,720.3
680.3
2,040.1
342.7
1,697.3
604.0
231.9
372.1
83.0
183.0

2,717.9
684.7
2,033.2
344.2
1,689.0
606.0
236.7
369.3
86.1
186.9

3,371.8

3,490.7

3,511.3

3,533.0

3,570.9

3,566.5

3,563.3

3,585.8

3,563.8

3,594.6

3,590.3

3,596.9

367.9

337.0

350.9

382.5

388.9

393.4

395.6

386.3

380.0

387.3

390.4

387.6

Not seasonally adjusted

29
30
31
32
33
34
35
36
37
38
39
40
41
42
43

Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit2
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security 3
Other loans and leases
Interbank loans
Cash assets 4
Other assets 5

44 Total assets 6
45
46
47
48
49
50
51
52
53
54

Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From others
Net due to related foreign offices
Other liabilities

55 Total liabilities
56 Residual (assets less liabilities) 7

3,212.5
832.3
626.7
205.6
2,380.2
550.7
1,072.0
80.1
991.9
509.7
44.5
203.2
175.8
188.8
212.2

3,289.5
829.6
617.6
212.0
2,459.9
568.8
1,104.8
85.7
1,019.2
527.2
43.5
215.6
186.1
211.1
219.6

3,302.1
838.8
615.1
223.7
2,463.2
576.2
1,105.1
86.1
1,019.1
521.2
45.2
215.5
188.2
202.4
223.0

3,325.4
843.3
626.3
217.0
2,482.1
584.9
1,116.4
87.1
1,029.3
513.5
48.1
219.2
193.7
199.0
227.8

3,366.6
857.9
638.9
219.0
2,508.7
595.2
1,131.4
88.9
1.042.5
513.7
47.0
221.3
195.4
209.8
237.3

3,371.3
844.3
635.3
209.0
2,527.0
597.8
1,142.9
90.6
1,052.3
517.0
46.0
223.2
193.6
207.8
240.1

3,393.1
840.8
635.2
205.7
2,552.2
600.0
1,155.9
92.4
1,063.6
518.8
47.6
229.8
169.3
208.5
241.7

3,412.3
846.0
632.2
213.8
2,566.4
601.7
1,163.2
93.3
1,069.9
519.0
48.9
233.5
164.2
207.0
237.6

3,403.2
842.7
633.6
209.1
2,560.5
601.2
1,161.8
93.0
1,068.8
516.9
47.9
232.7
163.2
206.8
238.5

3,409.5
843.7
631.2
212.4
2,565.8
601.9
1,162.6
93.3
1,069.3
518.3
49.3
233.7
171.5
211.3
235.4

3,410.2
845.0
631.5
213.5
2,565.2
601.1
1,163.4
93.4
1,070.0
520.1
47.3
233.3
161.6
195.2
235.1

3,423.0
851.8
631.7
220.1
2,571.2
601.1
1,165.2
93.7
1,071.5
521.2
51.3
232.4
159.5
211.5
239.6

3,732.3

3,850.5

3,859.9

3,890.0

3,952.9

3,956.3

3,955.7

3,964.4

3,955.0

3,970.9

3,945.4

3,976.7

2,557.2
726.4
1,830.8
279.9
l,550.8 r
583.5
264.2
319.3
77.1
151.7

2,649.9
716.2
1,933.8
312.1
1,621.6
591.5
265.8
325.6
73.6
176.7

2,642.8
688.2
1,954.7
320.9
1,633.7
583.1
261.5
321.6
79.9
185.8

2,662.3
677.3
1,985.0
319.9
1,665.1
594.3
268.2
326.1
72.5
182.0

2,695.6
694.8
2,000.9
324.9
1,676.0
622.1
278.9
343.2
78.8
178.8

2,675.9
669.4
2,006.5
328.7
1,677.8
633.0
278.2
354.8
92.3
174.1

2,708.2
677.8
2,030.5
335.2
1,695.3
610.2
251.2
359.0
79.6
174.4

2,715.4
671.2
2,044.2
341.0
1,703.3
603.0
242.2
360.8
82.6
181.2

2,725.7
670.1
2,055.6
338.8
1,716.9
594.9
241.4
353.5
76.3
177.2

2,724.4
675.3
2,049.2
340.4
1,708.8
598.8
244.7
354.1
88.0
177.7

2,689.6
653.0
2,036.6
341.8
1,694.8
607.4
238.9
368.6
83.2
183.0

2,708.9
678.5
2,030.4
343.5
1,686.8
608.9
241.9
367.0
87.6
187.6

3,369.4

3,491.8

3,491.7

3,511.1

3,575.4

3,575.4

3,572.3

3,582.2

3,574.0

3,589.0

3,563.2

3,592.9

362.9

358.7

368.2

378.8

377.5

380.9

383.4

382.1

381.0

381.9

382.2

383.8

n.a.

47.5

55.9

49.0

49.5

42.0

38.5

44.3

41.2

42.8

45.5

48.3

n.a.
n.a.

44.0
244.9

50.9
244.1

43.2
246.2

44.6
249.5

43.4
249.6

40.2
249.0

45.7
250.2

41.3
252.2

43.9
251.6

46.9
251.4

51.1
251.4

MEMO

57 Revaluation gains on off-balance-sheet
items 8
58 Revaluation losses on off-balancesheet items 8
59 Mortgage-backed securities 9
Footnotes appear on p. A21.




Commercial Banking Institutions—Assets and Liabilities
1.26

COMMERCIAL BANKS IN THE UNITED STATES

A17

Assets and Liabilities 1 —Continued

C. Large domestically chartered commercial banks
Billions of dollars

Monthly averages
Account

1997r

1996
July1"

Wednesday figures

Jan.

Feb.

Mar.

Apr.

1997
May

June

July

July 9

July 16

July 23

July 30

Seasonally adjusted
Assets
1 Bank credit
2
Securities in bank credit
3
U.S. government securities
4
Trading account
Investment account
5
Other securities
6
Trading account
7
Investment account
8
State and local government. .
9
Other
10
11
Loans and leases in bank credit2 . . .
Commercial and industrial
12
Bankers acceptances
13
Other
14
Real estate
15
Revolving home equity
16
Other
17
Consumer
18
Security 3
19
Federal funds sold to and
20
repurchase agreements
with broker-dealers
Other
21
State and local government
22
Agricultural
23
24
Federal funds sold to and
repurchase agreements
with others
All other loans
25
Lease-financing receivables
26
27 Interbank loans
28
Federal funds sold to and
repurchase agreements with
commercial banks
Other
29
4
Cash
assets
30
31 Other assets5
32 Total assets 6
33
34
35
36
37
38
39
40
41
42

Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From others
Net due to related foreign offices
Other liabilities

43 Total liabilities
44 Residual (assets less liabilities)7
Footnotes appear on p. A21.




1,892.5
433.8
307.3
20.9
286.3
126.6
58.1
68.5
20.6
47.9
1,458.7
385.2
1.6
383.6
594.4
57.1
537.3
295.2
41.5

1,921.1
432.7
303.2
17.3
286.0
129.4
64.6
64.9
20.5
44.3
1,488.5
398.2
1.9
396.3
599.4
59.2
540.2
299.7
39.8

1,940.0
443.0
297.8
16.2
281.6
145.2
79.9
65.3
21.1
44.1
1,497.0
402.1
1.6
400.5
600.1
59.6
540.4
301.4
39.4

1,952.0
437.5
302.1
18.3
283.8
135.4
69.3
66.0
20.8
45.2
1,514.6
406.2
1.7
404.5
606.0
60.4
545.6
300.0
43.5

1,970.3
448.4
311.4
20.3
291.1
137.0
71.9
65.1
20.8
44.3
1,521.9
411.7
1.6
410.1
609.3
61.0
548.3
298.5
41.9

1,962.3
431.9
308.2
19.4
288.8
123.7
58.3
65.4
21.1
44.3
1,530.4
412.8
1.6
411.2
615.8
61.9
553.9
299.9
40.9

1,973.9
428.1
309.6
23.1
286.4
118.5
51.7
66.8
21.7
45.1
1,545.8
417.2
1.6
415.6
620.7
63.2
557.5
300.2
43.3

1,993.6
440.9
308.8
24.9
283.9
132.1
64.1
68.0
22.1
45.9
1,552.7
419.3
1.6
417.8
619.9
63.9
556.0
300.6
45.7

1,984.2
435.1
311.4
25.4
286.0
123.7
57.1
66.6
22.2
44.4
1,549.1
417.8
1.5
416.3
620.6
63.7
556.9
300.5
45.1

1,994.0
441.0
308.4
25.7
282.7
132.6
65.3
67.4
22.0
45.3
1,553.0
419.7
1.5
418.1
619.5
63.9
555.6
301.0
45.8

1,996.4
442.4
308.2
25.1
283.1
134.2
66.3
67.9
22.1
45.8
1,554.0
419.8
1.5
418.2
619.8
64.0
555.8
300.9
44.1

1.999.8
446.0
306.5
22.8
283.7
139.5
69.8
69.7
22.2
47.5
1,553.8
419.4
1.5
417.9
619.5
64.2
555.3
300.4
47.8

25.8
15.7
11.8
9.1

23.9
15.9
11.7
8.7

24.0
15.3
11.6
8.7

27.1
16.5
11.5
8.7

23.8
18.1
11.2
8.7

23.3
17.6
11.1
8.9

26.5
16.9
11.2
8.8

28.6
17.1
11.2
8.7

28.3
16.7
11.2
8.7

28.4
17.5
11.2
8.6

27.6
16.6
11.1
8.7

29.8
18.0
11.1
8.7

5.6
63.2
52.7
138.9

6.1
61.2
63.8
129.3

5.3
62.7
65.8
133.8

6.2
64.9
67.4
143.3

7.3
64.1
69.1
148.9

5.7
64.8
70.5
149.6

6.3
66.0
72.2
121.5

7.3
65.7
74.3
115.2

7.3
64.1
73.8
109.7

7.1
66.0
74.1
122.3

7.7
67.1
74.6
117.6

6.8
65.1
74.9
112.3

93.1
45.8
134.9
163.4

81.4
47.9
139.0
169.8

83.9
49.9
135.5
173.3

92.0
51.3
140.4
174.4

96.8
52.1
145.2
179.6

93.4
56.3
143.0
181.4

69.8
51.7
142.8
179.3

69.5
45.7
141.8
172.7

63.9
45.8
138.2
173.0

77.2
45.2
144.0
171.9

72.4
45.2
141.2
174.0

66.6
45.7
144.8
172.2

2,291.5

2322.7

2346.2

2373.7

2,4073

2399.8

2380.8

2386.6

2368.1

2395.5

2392.6

23925

1,414.1
429.4
984.7
142.4
842.4
436.0
177.3
258.7
73.6
126.0

1,447.6
402.9
1,044.8
159.7
885.1
440.0
188.1
251.9
68.0
154.4

1,445.4
392.7
1,052.7
162.8
890.0
439.4
187.4
252.0
74.2
161.5

1,453.3
385.8
1,067.6
163.5
904.1
453.1
194.0
259.1
64.1
157.4

1,465.7
385.7
1,080.0
167.8
912.2
466.2
195.4
270.8
72.7
152.3

1,455.3
375.1
1,080.1
167.9
912.2
466.8
184.2
282.6
80.9
146.4

1,469.8
378.3
1,091.4
176.1
915.3
438.6
160.4
278.2
76.9
145.8

1,462.9
371.6
1,091.3
180.7
910.7
438.4
160.4
278.1
80.5
154.2

1,459.9
364.2
1,095.7
179.2
916.5
434.5
161.3
273.2
78.2
150.9

1,470.6
375.9
1,094.7
180.2
914.5
434.4
163.4
271.0
87.5
150.4

1,460.4
372.2
1,088.2
181.0
907.2
442.0
155.5
286.5
78.4
156.8

1,457.4
374.6
1,082.8
182.0
900.7
442.3
160.2
282.1
81.3
160.2

2,049.8

2,110.0

2,120.5

2,127.9

2,156.8

2,149.4

2,131.1

2,136.0

2,123.5

2,142.9

2,137.6

2,141.2

241.7

212.7

225.7

245.8

250.4

250.5

249.7

250.6

244.6

252.6

255.0

251.3

A18
1.26

DomesticNonfinancialStatistics • October 1997
COMMERCIAL BANKS IN THE UNITED STATES

Assets and Liabilities'—Continued

C. Large domestically chartered commercial banks—Continued
Monthly averages
Account

1997r

1996
July r

Wednesday figures

Jan.

Feb.

Mar.

Apr.

1997
May

June

July

July 9

July 16

July 23

July 30

Not seasonally adjusted
Assets
45 Bank credit
46
Securities in bank credit
47
U.S. government securities
48
Trading account
49
Investment account
50
Mortgage-backed securities.
51
Other
52
One year or less
53
Between one and five years
54
More than five y e a r s . . . .
55
Other securities
56
Trading account
57
Investment account
58
State and local government . .
59
Other
60
Loans and leases in bank credit2 . .
61
Commercial and industrial
62
Bankers acceptances
63
Other
64
Real estate
65
Revolving home equity
66
Other
67
Commercial
68
Consumer
69
Security3
70
Federal funds sold to and
repurchase agreements
with broker-dealers
71
Other
72
State and local government
73
Agricultural
74
Federal funds sold to and
repurchase agreements
with others
75
All other loans
76
Lease-financing receivables . . . .
77 Interbank loans
78
Federal funds sold to and
repurchase agreements
with commercial banks
79
Other
80 Cash assets4
81 Other assets5
82 Total assets 6
83
84
85
86
87
88
89
90
91
92

Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From nonbanks in the U.S
Net due to related foreign offices . . . .
Other liabilities

93 Total liabilities
94 Residual (assets less liabilities)7

1,8 S7.8
433.1
306.7
20.0
286.7

126.4
58.7
67.7
20.2
47.4
1,454.7
385.2
1.5
383.7
594.1
57.1
n.a.
n.a.
293.4
40.2

1,924.4
429.4
297.5
16.4
281.2
181.1
99.6
27.5
58.3
13.8
131.9
66.5
65.4
20.6
44.8
1,495.0
396.0
1.9
394.2
601.8
59.3
331.1
209.1
304.3
38.9

1,937.7
440.3
296.2
16.4
279.8
181.9
97.4
26.2
56.1
15.0
144.1
78.8
65.4
21.1
44.2
1,497.4
402.1
1.6
400.5
599.5
59.4
328.4
209.4
301.2
40.4

1,947.2
438.1
302.6
19.4
283.3
183.7
99.0
26.5
56.2
16.3
135.5
69.8
65.7
20.8
44.9
1,509.0
408.6
1.6
407.0
603.1
59.9
330.3
210.7
297.2
43.2

1,969.3
447.0
311.5
20.5
290.9
186.3
104.2
28.9
57.3
17.9
135.5
70.7
64.8
20.9
43.8
1,522.4
417.0
1.5
415.5
607.9
60.6
336.6
208.5
296.5
42.4

1,964.5
434.3
308.6
19.6
289.0
186.1
102.4
27.4
56.5
18.5
125.7
60.5
65.1
21.2
43.9
1,530.2
417.9
1.5
416.4
613.2
61.8
340.4
208.7
298.2
41.5

1,976.3
432.1
308.8
21.6
287.2
186.4
100.3
27.3
54.3
18.7
123.3
56.9
66.4
21.8
44.6
1,544.2
418.7
1.6
417.1
619.3
63.2
343.2
210.5
299.1
43.0

1,988.5
440.1
308.2
23.8
284.4
187.7
96.2
25.7
50.5
20.0
131.9
64.8
67.1
21.7
45.4
1,548.4
419.4
1.5
417.9
619.6
63.9
343.1
210.3
298.4
44.3

1,984.2
437.3
310.0
23.4
286.6
188.4
98.1
25.4
53.6
19.2
127.3
61.6
65.7
21.6
44.0
1,547.0
419.1
1.5
417.6
621.1
63.7
345.4
212.1
297.7
43.1

1,986.8
438.0
307.4
24.4
283.0
187.9
95.1
25.3
50.5
19.3
130.6
64.0
66.6
21.6
45.0
1,548.9
419.5
1.5
418.0
619.6
63.9
344.4
211.3
298.4
44.7

1,984.5
438.4
306.9
23.8
283.0
187.2
95.9
25.2
49.9
20.8
131.5
64.7
66.9
21.8
45.1
1,546.0
419.1
1.5
417.6
618.6
64.0
343.6
211.0
298.8
42.8

1,994.4
445.8
307.9
23.2
284.7
187.2
97.5
27.1
48.8
21.6
137.9
69.1
68.8
21.9
46.9
1,548.5
418.7
1.5
417.2
618.9
64.2
343.4
211.2
299.0
46.9

25.1
15.1
11.8
9.3

22.9
16.0
11.5
8.6

24.3
16.1
11.5
8.4

26.8
16.4
11.5
8.5

24.8
17.6
11.2
8.6

24.1
17.4
11.1
8.9

26.0
17.0
11.2
8.9

27.9
16.5
11.2
8.9

27.0
16.1
11.3
8.9

28.2
16.5
11.2
8.9

27.3
15.5
11.2
9.0

29.2
17.7
11.2
9.0

5.8
62.6
52.4
139.1

6.2
62.9
64.8
137.9

6.1
61.7
66.4
136.1

6.2
63.0
67.8
139.8

7.0
62.8
68.9
146.9

5.8
63.2
70.4
148.6

6.5
65.5
72.0
121.8

7.5
65.1
73.8
115.5

7.4
64.8
73.5
110.8

7.5
65.4
73.7
122.6

7.8
64.9
73.9
115.6

7.0
63.8
74.2
113.1

92.5
46.6
132.0
165.8

86.4
51.5
146.8
170.1

85.9
50.2
138.2
171.0

90.0
49.7
134.1
171.4

96.9
50.0
142.7
179.7

94.3
54.3
141.0
183.1

71.2
50.6
140.1
181.5

68.9
46.7
138.4
175.6

64.4
46.4
138.3
176.4

76.2
46.4
141.8
174.6

68.9
46.7
129.1
174.9

66.5
46.6
142.7
175.6

2,286.7

2,342.9

2346.7

2,355.9

2,402.0

2/400.7

2383.0

2381-4

2373.1

23892

2367.6

23893

1,411.0
424.8
986.2
142.0
14.2
442.5
183.5
259.0
71.4
126.3

1,453.9
410.5
1,043.4
159.6
883.7
435.9
181.6
254.3
69.7
152.3

1,443.4
389.3
1,054.0
164.9
889.1
431.8
179.7
252.1
76.0
160.5

1,447.2
378.1
1,069.1
162.6
906.5
444.9
187.6
257.3
68.6
155.4

1,467.3
389.1
1,078.2
168.3
909.9
467.2
194.8
272.4
74.4
152.5

1,448.6
369.1
1,079.5
170.9
908.6
472.8
190.3
282.5
88.1
147.7

1,466.5
374.3
1,092.1
175.9
916.2
449.0
168.5
280.5
75.8
147.6

1,460.6
367.5
1,093.1
180.1
913.0
442.7
165.0
277.6
77.8
154.5

1,469.3
366.8
1,102.5
178.5
923.9
436.4
165.3
271.1
71.0
150.8

1,468.2
370.7
1,097.5
179.7
917.8
440.4
168.3
272.1
83.2
151.1

1,441.1
353.9
1,087.2
180.6
906.6
445.4
160.2
285.2
78.6
156.4

1,453.8
372.2
1,081.6
182.0
899.7
446.5
164.4
282.1
82.8
160.6

2,051.2

2,111.6

2,111.6

2,116.1

2,161.3

2,157.2

2,138.9

2,135.6

2,1275

2,142.9

2,1215

2,143.8

235.6

231.3

235.1

239.8

240.7

243.6

244.1

245.8

245.6

246.3

246.1

245.5

47.5

55.9

49.0

49.5

42.0

38.5

44.3

41.2

42.8

45.5

48.3

44.0
202.7
138.3

50.9
202.3
138.6

43.2
203.2
139.9

44.6
206.1
142.3

43.4
205.7
142.9

40.2
203.9
142.0

45.7
204.0
142.3

41.3
204.5
142.6

43.9
204.0
142.6

46.9
203.6
142.4

51.1
203.5
141.4

64.4

63.7

63.4

63.8

62.8

61.9

61.7

61.9

61.4

61.2

62.1

2.7
30.9

2.7
32.1

2.7
32.9

1.8
33.3

2.1
33.6

2.6
33.4

3.1
33.7

3.1
33.0

3.2
34.0

3.1
33.8

3.2
33.8

n.a.

MEMO

95 Revaluation gains on off-balancesheet items8
96 Revaluation losses on off-balancesheet items 8
97 Mortgage-backed securities9
98
Pass-through securities
99
CMOs, REMICs, and other
mortgage-backed securities . . .
100 Net unrealized gains (losses) on
available-for-sale securities 10 . . .
101 Offshore credit to U.S. residents" . . .
Footnotes appear on p. A21.




n.a.

>8.8

Commercial Banking Institutions—Assets and Liabilities
1.26

COMMERCIAL BANKS IN THE UNITED STATES

A19

Assets and Liabilities'—Continued

D. Small domestically chartered commercial banks
Billions of dollars

Wednesday figures

Monthly averages

Account

1997 r

1996
July r

Jan.

Feb.

Mar.

Apr.

1997

May

June

July

July 9

July 16

July 23

July 30

Seasonally adjusted

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit2
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security 5
Other loans and leases
Interbank loans
Cash assets 4
Other assets 5

16 Total assets 5

17
18
19
20
21
22
23
24
25
26

Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From others
Net due to related foreign offices
Other liabilities

27 Total liabilities
28 Residual (assets less liabilities)

7

1,329.9
400.7
321.5
79.2
929.2
166.2
479.8
23.0
456.8
217.7
4.6
60.8
43.1
57.9
48.0

1,372.4
402.2
321.8
80.4
970.3
173.5
505.8
26.5
479.2
223.0
4.7
63.2
50.5
62.8
50.0

1,375.3
400.6
320.8
79.9
974.7
175.2
510.5
26.9
483.6
220.3
4.9
63.7
53.6
65.6
52.1

1,388.2
404.3
323.1
81.3
983.9
176.6
518.6
27.6
491.1
219.2
5.1
64.3
57.6
67.7
58.9

1,395.6
406.8
323.6
83.1
988.8
177.5
524.0
28.1
495.9
218.2
4.8
64.3
52.1
68.8
59.9

1,404.7
407.3
324.3
83.0
997.4
179.1
528.6
28.4
500.2
219.7
4.8
65.2
52.2
67.3
58.7

1,412.2
405.8
323.5
82.2
1,006.5
180.4
533.8
28.5
505.2
221.5
4.9
65.9
53.2
70.0
63.3

1,418.8
405.4
323.7
81.6
1,013.4
182.5
539.3
28.7
510.6
220.5
4.9
66.1
54.1
69.2
63.1

1,413.1
404.3
322.6
81.6
1,008.8
181.6
536.6
28.6
508.0
220.1
4.9
65.7
53.6
66.4
61.9

1,416.7
404.7
323.3
81.4
1,012.0
182.5
538.4
28.7
509.8
219.8
5.0
66.2
54.8
71.2
63.5

1,421.0
406.2
324.5
81.7
1,014.8
182.5
540.5
28.7
511.7
220.7
5.0
66.2
54.0
69.5
63.2

1,424.7
406.5
324.7
81.8
1,018.2
183.4
542.2
28.8
513.4
221.3
4.9
66.4
53.4
69.6
64.0

1,459.5

1,516.2

1,527.1

1,553.0

1,556.7

1,563.1

1,578.7

1,584.9

1,574.9

1,586.0

1,5873

1,5913

1,156.5
305.7
850.7
139.0
711.7
142.9
79.2
63.7
5.7
25.2

1,205.6
303.7
901.9
154.2
747.7
155.5
84.5
71.0
4.0
24.3

1,216.3
304.3
911.9
155.7
756.3
154.2
83.6
70.6
4.0
25.0

1,227.1
305.2
921.9
156.8
765.2
156.4
84.3
72.1
3.9
26.4

1,227.9
305.8
922.1
155.7
766.4
158.4
84.7
73.7
4.4
26.1

1,230.9
303.8
927.1
157.1
770.0
157.0
85.1
72.0
4.2
26.8

1,244.3
305.2
939.1
159.6
779.5
157.6
79.0
78.5
3.8
27.3

1,257.7
305.9
951.7
161.5
790.2
160.3
74.9
85.5
4.8
26.5

1,250.4
298.3
952.2
161.1
791.1
157.7
73.9
83.8
5.3
26.5

1,261.1
308.3
952.9
161.6
791.3
158.8
74.1
84.7
4.9
26.4

1,259.3
308.0
951.2
161.6
789.7
162.0
75.7
86.2
4.6
26.3

1,259.9
310.2
949.7
161.9
787.8
163.7
75.8
87.9
4.8
26.8

1330J

1,389.4

1399.5

1,413.8

1,416.7

1,419.0

1,432.9

1,4493

1,439.9

1,451.2

1,452.1

1,455.1

129.3

126.8

127.6

139.2

140.0

144.1

145.8

135.6

135.0

134.8

135.2

136.2

Not seasonally adjusted

29
30
31
32
33
34
35
36
37
38
39
40
41
42
43

Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit2
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security 3
Other loans and leases
Interbank loans
Cash assets 4
Other assets 5

44 Total assets 6

45
46
47
48
49
50
51
52
53
54

Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From others
Net due to related foreign offices
Other liabilities

55 Total liabilities
56 Residual (assets less liabilities) 7

1,330.4
399.9
320.7
79.2
930.4
166.3
480.2
23.1
457.2
217.5
4.5
62.0
40.5
57.5
47.9

1,370.5
400.7
320.6
80.2
969.8
173.6
505.4
26.5
478.9
224.0
4.8
62.1
51.7
64.9
51.0

1,369.8
399.0
319.4
79.6
970.8
174.9
507.9
26.7
481.2
221.1
5.0
61.8
55.6
64.9
53.5

1,383.7
405.7
324.2
81.5
978.1
177.1
515.6
27.3
488.3
217.4
5.1
62.8
57.6
65.5
58.0

1,395.9
410.2
326.8
83.4
985.7
178.7
521.3
27.9
493.4
217.8
4.8
63.1
52.5
67.4
58.9

1,404.5
409.1
325.8
83.2
995.4
180.5
527.1
28.3
498.8
219.2
4.6
64.0
48.8
67.1
58.2

1,413.1
407.5
325.4
82.1
1,005.6
181.6
533.6
28.5
505.1
219.7
4.7
65.9
50.4
68.6
61.3

1,419.2
404.6
322.9
81.7
1,014.6
182.5
539.7
28.7
511.0
220.3
4.8
67.2
51.5
68.8
63.1

1,414.2
404.2
322.6
81.5
1,010.1
182.4
536.8
28.6
508.1
218.9
5.0
67.0
55.0
68.6
63.3

1,417.9
404.4
322.9
81.5
1,013.5
182.7
539.1
28.7
510.4
219.6
4.8
67.3
52.0
69.7
61.9

1,421.0
405.3
323.6
81.7
1,015.7
182.2
540.9
28.7
512.2
221.0
4.6
66.9
48.8
66.3
61.3

1,424.0
404.7
322.7
81.9
1,019.4
182.7
542.6
28.9
513.7
221.9
4.7
67.5
49.1
69.0
64.9

1/456.9

1,518.7

1,5243

1,5453

1,555.1

1,558.7

1,5733

1,5823

1,581.0

1,581.4

1,577.1

1,586.8

1,153.0
303.4
849.6
138.3
711.3
142.4
80.7
61.8
5.7
25.4

1,203.1
307.4
895.7
152.9
742.8
157.2
84.3
72.9
4.0
24.5

1,206.4
300.5
906.0
156.4
749.6
152.9
81.8
71.2
4.0
25.4

1,222.1
300.9
921.3
157.7
763.6
151.0
80.6
70.4
3.9
26.7

1,230.1
306.0
924.1
156.8
767.3
155.8
83.8
72.0
4.4
26.3

1,228.4
300.5
927.9
157.9
770.0
161.0
87.5
73.5
4.2
26.5

1,242.3
303.5
938.8
159.1
779.7
161.3
82.0
79.2
3.8
26.8

1,254.3
303.8
950.6
160.7
789.9
160.3
76.4
83.9
4.8
26.7

1,255.9
303.3
952.6
160.0
792.6
158.5
75.4
83.1
5.3
26.4

1,255.7
304.6
951.1
160.5
790.6
158.4
75.7
82.7
4.9
26.7

1,247.8
299.1
948.8
161.0
787.7
162.0
77.9
84.1
4.6
26.7

1,254.4
306.3
948.1
161.4
786.7
162.3
76.7
85.6
4.8
27.0

1,326.6

1,388.8

1388.8

1,403.8

1,416.7

1,420.1

1,434.2

1,446.2

1,446.1

1,445.7

1,441.2

1,448.5

130.4

129.9

135.5

141.5

138.3

138.6

139.2

136.1

134.9

135.7

136.0

138.2

42.2

41.8

42.9

43.4

43.9

45.1

46.2

46.1

46.0

46.2

46.3

MEMO

57 Mortgage-backed securities 9
Footnotes appear on p. A21.




n.a.

A20
1.26

Domestic Financial Statistics • October 1997
COMMERCIAL BANKS IN THE UNITED STATES

Assets and Liabilities'—Continued

E. Foreign-related institutions
Billions of dollars

Monthly averages

Account

1996

July

Wednesday figures

1997

Jan.

Feb.

Mar.

Apr.

1997

May

June"

July

July 9

July 16

July 23

July 30

Seasonally adjusted

1
2
3
4
5
6
7
8
9
10
11
12

Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit 2 . . .
Commercial and industrial
Real estate
Security 1
Other loans and leases
Interbank loans
Cash assets 4
Other assets 5

13 Total assets 6

14
15
16
17
18
19
20
21
22
23

Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From others
Net due to related foreign offices
Other liabilities

24 Total liabilities
25 Residual (assets less liabilities) 7

468.9
150.9
80.1
70.8
318.0r
194.0
32.9
32.0
59.0
19.4
28.3
37.8

515.7'
170.1r
81.8
88.3r
345.7
214.4
31.8
38.1
61.3
22.7
31.1
38.0"

530.5"
176.9"
85.4
91.5"
353.6
217.1
32.0
39.8
64.7
20.9
32.9
41.1"

525.3"
172.9"
83.6
89.3"
352.4
216.1
31.5
39.7
65.1
22.7
32.4
41.0"

533.5"
177.9"
87.8
90.1"
355.6
216.6
31.4
43.2
64.5
18.9
32.7
39.1'

539.8'
175.5"
89.9
85.5"
364.3
219.7
30.6
43.5
70.5
20.6
34.0
38.8"

543.2
178.0
92.3
85.7
365.2
220.5
29.6
46.0
69.1
19.9
35.7
41.3

550.0
189.0
93.6
95.4
360.9
220.5
28.5
44.9
67.1
19.6
34.0
43.9

548.2
189.5
98.5
91.0
358.8
220.7
28.8
41.5
67.8
18.5
33.3
44.6

547.3
186.7
91.5
95.2
360.5
220.7
28.4
44.3
67.1
19.5
33.8
45.6

544.0
185.6
88.0
97.7
358.4
219.1
28.3
45.2
65.8
20.2
33.7
42.6

559.5
194.3
95.4
98.8
365.2
221.2
28.6
48.3
67.1
19.8
34.3
43.4

554.4

607.3 R

625.2"

621.1 R

624.0 R

633.0"

639.9

647.2

644.4

645.9

640.2

656.8

179.3
10.6
168.7
166.2
2.4
123.6
30.5
93.1
178.1
68.7

225.7
10.3
215.4
213.2
2.2
130.3
27.9r
102.4r
150.3
89.9"

238.0
9.7
228.2
224.3
4.0
143.2"
33.9"
109.3'
139.4
99.8"

242.7
10.4
232.2
228.7
3.6
140.0"
34.8"
105.2'
141.1
94.0"

257.7
10.8
246.9
244.5
2.5
139.8'
32.8"
107.1'
134.6
92.0"

252.0
11.2
240.8
238.4
2.4
143.6"
33.2"
110.5"
148.7
89.3"

258.2
11.1
247.0
244.6
2.4
141.3
31.2
110.2
148.8
91.0

271.1
11.3
259.9
257.4
2.4
137.5
30.6
107.0
130.2
101.9

272.6
11.4
261.2
258.7
2.5
136.1
28.1
108.0
137.1
98.1

268.3
10.8
257.5
255.1
2.4
137.9
32.6
105.2
133.2
100.6

270.2
11.3
258.9
256.4
2.4
131.2
28.1
103.1
126.3
102.2

274.0
11.4
262.5
260.1
2.5
142.8
32.8
110.0
121.7
108.1

549.7

596.2 R

620.4"

617.6 R

624.1"

633.7 R

639.3

640.8

643.9

640.0

629.9

646.6

4.7

11.1

4.8"

3.5"

-0.1

-0.7"

0.6

6.4

0.5

6.0

10.4

10.2

Not seasonally adjusted

26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41

Assets
Bank credit
Securities in bank credit
U.S. government securities
Trading account
Investment account
Other securities
Trading account
Investment account
Loans and leases in bank credit 2 . . .
Commercial and industrial
Real estate
Security 1
Other loans and leases
Interbank loans
Cash assets 4
Other assets 5

42 Total assets

43
44
45
46
47
48
49
50
51
52

Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From others
Net due to related foreign offices
Other liabilities

53 Total liabilities
54 Residual (assets less liabilities) 7

470.3
151.0"
79.1
n.a.
n.a.
71.9
n.a.
n.a.
319.2
195.0
32.8
32.0
59.4
19.4
28.5
37.2

513.0"
166.2"
82.8
17.0
65.8
83.4'
58.7'
24.8"
346.8
214.3
31.8
38.1
62.6
22.7
31.5
37.3"

531.2"
177.9"
87.2
21.4
65.8
90.7"
65.2
25.5"
353.3
217.1
32.1
39.8
64.4
20.9
32.1
41.9"

525.1"
173.5"
86.6
20.0
66.6
87.0"
60.4
26.6"
351.6
215.7
31.5
39.7
64.6
22.7
31.8
40.4"

533.6'
178.4"
87.3
18.6
68.7
91.1"
61.1"
29.9"
355.2
217.3
30.9
43.2
63.8
18.9
31.8
37.7"

542.4"
180.4"
90.5
18.8
71.6
89.9"
59.7"
30.2"
362.0
220.0
30.3
43.5
68.3
20.6
34.0
39.9"

543.6
178.7
91.0
18.8
72.2
87.7
58.9
28.8
364.9
221.3
29.5
46.0
68.2
19.9
36.4
41.2

550.5
188.0
90.9
18.2
72.7
97.1
65.2
31.9
362.5
221.7
28.4
44.9
67.5
19.6
34.1
43.1

546.7
186.0
93.2
19.5
73.8
92.7
61.2
31.5
360.7
222.0
28.7
41.5
68.4
18.5
33.5
43.3

546.8
184.1
88.0
16.1
71.9
96.1
64.2
31.9
362.7
222.0
28.3
44.3
68.2
19.5
33.8
44.5

545.5
185.2
86.7
14.8
71.8
98.5
66.5
32.0
360.3
220.6
28.3
45.2
66.1
20.2
33.7
41.8

561.6
196.3
94.5
21.9
72.6
101.8
68.8
33.0
365.3
221.5
28.3
48.3
67.1
19.8
34.5
43.2

555.3

604.2"

625.8 R

619.8 R

621.8 R

636.7"

641.0

647.0

641.7

644.4

640.9

658.8

177.2
10.6
166.7
164.3
2.4
131.3
32.0
99.3
174.9
67.2

225.8
10.4
215.5
213.2
2.2
127.1"
29.01
98.2'
159.1
89.1"

234.8
9.9
224.9
221.0
3.9
136.6"
31.7"
105.0"
148.6
102.3"

242.5
10.2
232.3
228.7
3.5
134.1"
33.2"
100.9"
145.8
93.8"

251.3
10.4
241.0
238.6
2.4
142.3"
33.0"
109.3"
131.5
91.8"

252.5
10.7
241.8
239.4
2.4
143.4"
32.7"
110.7"
144.5
92.0"

258.6
11.1
247.5
245.1
2.4
146.3
32.9
113.5
140.6
92.0

268.1
11.3
256.8
254.4
2.4
146.6
32.3
114.3
129.0
99.6

265.5
11.1
254.3
251.9
2.4
145.9
31.0
114.8
132.6
94.8

265.4
11.0
254.5
252.1
2.4
148.2
34.4
113.8
129.2
97.9

269.0
11.3
257.8
255.4
2.4
139.5
27.5
112.0
129.9
98.9

273.5
11.3
262.1
259.7
2.4
149.9
34.4
115.5
123.2
107.5

550.6

6OI.R

622.4 R

616.2"

616.9"

632.5"

637.5

643-3

638.8

640.9

6373

654.1

4.7

3.1"

3.5"

3.6"

4.8"

3.5

3.7

2.9

3.6

3.5

4.7

n.a.

41.1"

45.9"

41.4"

40.5"

39.4"

38.2

43.5

40.5

43.2

44.5

45.9

n.a.

41.0"

47.6"

43.7"

43.4"

42.3"

41.2

46.7

43.6

46.6

47.5

49.2

4.2

v

MEMO

55 Revaluation gains on off-balance-sheet
items 8
56 Revaluation losses on off-balancesheet items 8
Footnotes appear on p. A21.




Commercial Banking Institutions—Assets and Liabilities

A21

NOTES TO TABLE 1.26
NOTE. Tables 1.26, 1.27, and 1.28 have been revised to reflect changes in the Board's H.8
statistical release, "Assets and Liabilities of Commercial Banks in the United States." Table
1.27, "Assets and Liabilities of Large Weekly Reporting Commercial Banks," and table 1.28,
"Large Weekly Reporting U.S. Branches and Agencies of Foreign Banks," are no longer
being published in the Bulletin. Instead, abbreviated balance sheets for both large and small
domestically chartered banks have been included in table 1.26, parts C and D. Data are both
merger-adjusted and break-adjusted. In addition, data from large weekly reporting U.S.
branches and agencies of foreign banks have been replaced by balance sheet estimates of all
foreign-related institutions and are included in table 1.26, part E. These data are breakadjusted.
The not-seasonally-adjusted data for all tables now contain additional balance sheet items,
which were available as of October 2, 1996.
1. Covers the following types of institutions in the fifty states and the District of
Columbia: domestically chartered commercial banks that submit a weekly report of condition
(large domestic); other domestically chartered commercial banks (small domestic); branches
and agencies of foreign banks, and Edge Act and agreement corporations (foreign-related
institutions). Excludes International Banking Facilities. Data are Wednesday values or pro
rata averages of Wednesday values. Large domestic banks constitute a universe; data for
small domestic banks and foreign-related institutions are estimates based on weekly samples
and on quarter-end condition reports. Data are adjusted for breaks caused by reclassifications
of assets and liabilities.
The data for large and small domestic banks presented on pp. A17— 19 are adjusted to
remove the estimated effects of mergers between these two groups. The adjustment for
mergers changes past levels to make them comparable with current levels. Estimated
quantities of balance sheet items acquired in mergers are removed from past data for the bank




group that contained the acquired bank and put into past data for the group containing the
acquiring bank. Balance sheet data for acquired banks are obtained from Call Reports, and a
ratio procedure is used to adjust past levels.
2. Excludes federal funds sold to, reverse RPs with, and loans made to commercial banks
in the United States, all of which are included in "Interbank loans."
3. Consists of reverse RPs with brokers and dealers and loans to purchase and carry
securities.
4. Includes vault cash, cash items in process of collection, balances due from depository
institutions, and balances due from Federal Reserve Banks.
5. Excludes the due-from position with related foreign offices, which is included in "Net
due to related foreign offices."
6. Excludes unearned income, reserves for losses on loans and leases, and reserves for
transfer risk. Loans are reported gross of these items.
7. This balancing item is not intended as a measure of equity capital for use in capita]
adequacy analysis. On a seasonally adjusted basis this item reflects any differences in the
seasonal patterns estimated for total assets and total liabilities.
8. Fair value of derivative contracts (interest rate, foreign exchange rate, other commodity and
equity contracts) in a gain/loss position, as determined under FASB Interpretation No. 39.
9. Includes mortgage-backed securities issued by U.S. government agencies, U.S.
government-sponsored enterprises, and private entities.
10. Difference between fair value and historical cost for securities classified as availablefor-sale under FASB Statement No. 115. Data are reported net of tax effects. Data shown are
restated to include an estimate of these tax effects.
11. Mainly commercial and industrial loans but also includes an unknown amount of credit
extended to other than nonfinancial businesses.

A22
1.32

DomesticNonfinancialStatistics • October 1997
COMMERCIAL PAPER A N D BANKERS DOLLAR ACCEPTANCES OUTSTANDING
Millions of dollars, end of period
1997

Year ending December
Item
1992
Dec.

1993
Dec.

1994
Dec.

1995
Dec.

1996
Dec.

Feb.

Mar.

Apr.

May

June

July

Commercial paper (seasonally adjusted unless noted otherwise)
1 All issuers
?
3

Financial companies'
Dealer-placed paper", total
Directly placed paper 1 , total

4 Nonfinancial companies 4

545,619

555,075

595,382

674,904

775,371

813,168

836,979

838,366

855,178

864,758

889,494

226,456
171.605

218,947
180,389

223,038
207.701

275.815
210,829

361 14/
229,662

387,164
239,509

402,291
246,215

404,727
248,920

413,776
252,856

414,475
256,165

440,262
253,971

147,558

155,739

164,643

188,260

184,563

186,495

188,473

184,719

188,546

194,119

195,260

n.a.

n.a.

n.a.

Bankers dollar acceptances (not seasonally adjusted) 5
5 Total
6
7
8
9
10

Bx holder
Accepting banks
Own bills
Bills bought from other banks
Federal Reserve Banks 6
Foreign correspondents
Others

By basis
11 Imports into United States
12 Exports from United States
13 All other

38,194

32,348

29,835

10,555
9,097
1,458

12,421
10,707
1.714

11,783
10,462
1,321

1.276
26.364

725
19,202

410
17.642

12,209
8.096
17,890

10.217
7,293
14,838

10,062
6.355
13.417

29,242

25,754

n.a.

n.a.

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 B Y BANKS

n.a.

n.a.

n.a.

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 are reported annually in September.
6. In 1977 the Federal Reserve discontinued operations in bankers dollar acceptances for
its own account.

Short-Term Business Loans'

Percent per year
Average
rate
6.25
6.75
7.25
7.75
8.50
9.00
8.75
8.50
8.25
8.50

1994
1995
1996

7.15
8.83
8.27

1994—Jan. .
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Ocl
Nov.
Dec.

6.00
6.00
6.06

6.45
6.99
7.25
7.25
7.51
7.75
7.75
8.15
8.50

1. The prime rate is one of several base rates that banks use to price short-term business
loans. The table shows the date on which a new rate came to be the predominant one quoted
by a majority of the twenty-five largest banks by asset size, based on the most recent Call




Average
rate
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.
Sept.
Oct. .
Nov.
Dec.
1997—Jan. .
Feb.
Mar.
Apr.
May
June
July .
Aug.

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
1997, week ending

1997
1994

Item

1995

1996
Apr.

May

June

July

June 27

July 4

July 11

July 18

July 25

M O N E Y M A R K E T INSTRUMENTS

Federal funds 1 ' 2,3
2 Discount window borrowing 2 ' 4
1

4
5

Commercial
1-month
3-month
6-month

6
7
8

Finance paper, directly
1-month
3-month
6-month

3

5.30
5.02

5.51
5.00

5.50
5.00

5.56
5.00

5.52
5.00

5.42
5.00

5.82
5.00

5.48
5.00

5.44
5.00

5.43
5.00

4.43
4.66
4.93

5.93
5.93
5.93

5.43
5.41
5.42

5.61
5.71
5.79

5.61
5.69
5.78

5.60
5.65
5.69

5.56
5.57
5.60

5.61
5.63
5.65

5.62
5.63
5.66

5.56
5.58
5.62

5.55
5.56
5.60

5.54
5.55
5.57

4.33
4.53
4.56

5.81
5.78
5.68

5.31
5.29
5.21

5.51
5.61
5.60

5.53
5.61
5.66

5.53
5.57
5.57

5.49
5.50
5.50

5.54
5.55
5.53

5.54
5.55
5.52

5.48
5.51
5.50

5.49
5.50
5.51

5.48
5.49
5.48

4.56
4.83

5.81
5.80

5.31
5.31

5.62
5.71

5.62
5.71

5.59
5.63

5.53
5.54

5.58
5.61

5.58
5.61

5.54
5.55

5.53
5.55

5.51
5.52

4.38
4.63
4.96

5.87
5.92
5.98

5.35
5.39
5.47

5.57
5.71
5.90

5.58
5.70
5.87

5.57
5.66
5.78

5.54
5.60
5.70

5.58
5.66
5.76

5.58
5.66
5.78

5.54
5.61
5.71

5.54
5.59
5.71

5.53
5.59
5.68

4.63

5.93

5.38

5.70

5.69

5.66

5.61

5.63

5.65

5.63

5.63

5.59

4.25
4.64
5.02

5.49
5.56
5.60

5.01
5.08
5.22

5.16
5.37
5.64

5.05
5.30
5.54

4.93
5.13
5.38

5.05
5.12
5.24

4.99
5.08
5.35

5.04
5.09
5.32

4.99
5.09
5.24

5.05
5.12
5.24

5.08
5.15
5.25

4.29
4.66
5.02

5.51
5.59
5.69

5.02
5.09
5.23

5.17
5.35
5.66

5.13
5.35
5.64

4.92
5.14
5.35

5.07
5.12
5.26

4.94
5.05
5.35

5.12
5.14
n.a.

4.97
5.07
n.a.

5.05
5.09
n.a.

5.11
5.17
5.26

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

5.52
5.84
5.99
6.18
6.34
6.44
6.83
6.71

5.99
6.45
6.61
6.76
6.86
6.89
7.20
7.09

5.87
6.28
6.42
6.57
6.66
6.71
7.02
6.94

5.69
6.09
6.24
6.38
6.46
6.49
6.84
6.77

5.54
5.89
6.00
6.12
6.20
6.22
6.56
6.51

5.65
6.04
6.20
6.33
6.42
6.45
6.80
6.73

5.63
6.01
6.17
6.31
6.40
6.42
6.78
6.72

5.54
5.91
6.03
6.15
6.24
6.26
6.61
6.56

5.56
5.90
6.02
6.14
6.22
6.23
6.57
6.52

5.54
5.89
5.97
6.09
6.16
6.18
6.52
6.46

7.41

6.93

6.80

7.18

7.00

6.82

6.55

6.78

6.76

6.60

6.55

6.50

5.77
6.17
6.18

5.80
6.10
5.95

5.52
5.79
5.76

5.66
5.85
5.88

5.48
5.67
5.70

5.33
5.53
5.53

5.33
5.53
5.35

5.24
5.43
5.53

5.29
5.48
5.53

5.24
5.41
5.38

5.23
5.38
5.32

n.a.
n.a.
5.28

8.26

7.83

7.66

7.99

7.86

7.68

7.42

7.63

7.62

7.47

7.43

7.37

7.97
8.15
8.28
8.63
8.29

7.59
7.72
7.83
8.20
7.86

7.37
7.55
7.69
8.05
7.77

7.73
7.93
7.98
8.34
8.23

7.58
7.80
7.86
8.20
8.01

7.41
7.62
7.68
8.02
7.85

7.14
7.36
7.42
7.75
7.62

7.36
7.56
7.62
7.96
7.84

7.35
7.55
7.61
7.94
7.72

7.19
7.41
7.47
7.79
7.62

7.15
7.38
7.43
7.76
7.59

7.09
7.31
7.38
7.70
7.52

2.82

2.56

2.19

1.98

1.85

1.77

1.66

1.76

1.71

1.70

1.65

1.64

placed3-5-7

Bankers
acceptances3'5'8
3-month
6-month

11
12
13

Certificates of deposit, secondary
1-month
3-month
6-month

market3'9

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

5.83
5.21

paper ' '

10

9

3.60

4.21

356

U . S . TREASURY N O T E S AND B O N D S

Composite
29 More than 10 years (long-term)
STATE AND L O C A L N O T E S AND B O N D S

Moody's series13
30 Aaa
31 Baa
32 Bond Buyer series
CORPORATE BONDS

33 Seasoned issues, all industries' 5
34

35
36
37
38

Rating group
Aaa
Aa
A
Baa
A-rated. recently offered utility bonds' 6
MEMO

Dividend-price
ratio17
39 Common stocks

1. The daily effective federal funds rate is a weighted average of rates on trades through
New York brokers.
2. Weekly figures are averages of seven calendar days ending on Wednesday of the
current week; monthly figures include each calendar day in the month.
3. Annualized using a 360-day year for bank interest.
4. Rate for the Federal Reserve Bank of New York.
5. Quoted on a discount basis.
6. An average of offering rates on commercial paper placed by several leading dealers for
firms whose bond rating is AA or the equivalent.
7. An average of offering rates on paper directly placed by finance companies.
8. Representative closing yields for acceptances of the highest-rated money center banks.
9. An average of dealer offering rates on nationally traded certificates of deposit.
10. Bid rates for Eurodollar deposits at 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 1997
STOCK MARKET

Selected Statistics
1997

1996
Indicator
Nov.

Jan.

Dec.

Feb.

Mar.

Apr.

May

June

July

Prices and trading volume (averages of daily figures)'
Common stock prices (indexes)
1 New York Stock Exchange
(Dec. 31, 1965 = 50)
2
Industrial
3
Transportation
4
Utility
5
Finance

254.16
315.32
247.17
104.96
209.75

291.18
367.40
270.14
110.64
238.48

357.98
453.57
327.30
126.36
303.94

388.75
490.60
348.32
135.88
345.30

391.61
494.38
352.28
128.55
350.01

403.58
509.18
359.40
131.95
361.45

418.57
524.30
364.15
142.88
388.75

416.72
523.08
372.37
132.38
387.19

401.00
506.69
366.67
126.66
364.25

433.36
549.65
395.50
140.52
392.32

457.07
578.57
410.93
140.24
419.12

480.94
610.42
433.75
144.25
441.59

6 Standard & Poor's Corporation
(1941-43 = lOr

460.42

541.72

670.49

735.67

743.25

766.22

798.39

792.16

763.93

833.09

876.29

925.29

7 American Stock Exchange
(Aug. 31, 1973 = 50) 3

449.49

498.13

570.86

583.21

582.96

585.09

593.29

593.64

554.13

584.06

619.94

635.28

290,652
17,951

345,729
20,387

409,740
22,567

443,521
22,151

431,538
23,648

526,631
24,019

508.199
21,250

496,241
19,232

473,094
19,122

479,907
19,634

516,241
23.277

543,006
25,562

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

61,160

76,680

97,400

91,680

97,400

99,460

100,000

100,160

98,870

106,010

113,440

116,190

Free credit balances at brokers'
11 Margin accounts 6
12 Cash accounts

14,095
28,870

16,250
34,340

22.540
40.430

20.020
36,650

22.540
40,430

22,870
41,280

22,200
40,090

22,930
41,050

22,700
37,560

22,050
39,400

23,860
41.840 r

24,290
43,985

Margin requirements (percent of market value and effective date) 7

13 Margin stocks
14 Convertible bonds
15 Short sales

Mar. 11, 1968

June 8, 1968

May 6, 1970

Dec. 6, 1971

Nov. 24, 1972

70
50
70

80
60
80

65
50
65

55
50
55

65
50
65

1. Daily data on prices are available upon request to the Board of Governors. For ordering
address, see inside front cover.
2. In July 1976 a financial group, composed of banks and insurance companies, was added
to the group of stocks on which the index is based. The index is now based on 400 industrial
stocks (formerly 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60). and
40 financial.
3. On July 5, 1983, the American Stock Exchange rebased its index, effectively cutting
previous readings in half.
4. Since July 1983, under the revised Regulation T, margin credit at broker-dealers has
included credit extended against stocks, convertible bonds, stocks acquired through the
exercise of subscription rights, corporate bonds, and government securities. Separate reporting of data for margin stocks, convertible bonds, and subscription issues was discontinued in
April 1984.
5. Free credit balances are amounts in accounts with no unfulfilled commitments to
brokers and are subject to withdrawal by customers on demand.




Jan. 3, 1974
50
50
50

6. Series initiated in June 1984.
7. Margin requirements, stated in regulations adopted by the Board of Governors pursuant
to the Securities Exchange Act of 1934, limit the amount of credit that can be used to
purchase and carry "margin securities" (as defined in the regulations) when such credit is
collateralized by securities. Margin requirements on securities are the dilference 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. I, 1977, the Board of Governors for the first time established in Regulation T the
initial margin required for writing options on securities, setting it at 30 percent of the current
market value of the stock underlying the option. On Sept. 30, 1985, the Board changed the
required initial margin, allowing it to be the same as the option maintenance margin required
by the appropriate exchange or self-regulatory organization; such maintenance margin rules
must be approved by the Securities and Exchange Commission.

Federal Finance
1.38

A25

FEDERAL FISCAL A N D FINANCING OPERATIONS
Millions of dollars
Fiscal year

Calendar year

Type of account or operation

1997
1994

1995

1996
Feb.

Mar.

Apr.

May

June

July

1

U.S. budget
1 Receipts, total
2
On-budget
Off-budget
3
4 Outlays, total
On-budget
5
6
Off-budget
7 Surplus or deficit (—), total
On-budget
8
9
Off-budget
Source of financing (total)
10 Borrowing from the public
11 Operating cash (decrease, or increase (—))
12 Other 2

1,258,627
923,601
335,026
1.461,731
1,181,469
279,372
-203,104
-258,758
55,654

1,351,830
1,000,751
351,079
1,515,729
1,227,065
288,664
-163,899
-226,314
62,415

1,453,062
1,085,570
367,492
1,560,330
1,259,872
300,458
-107,268
-174,302
67,034

90,293
59,673
30,620
134,303
104,964
29,339
-44,010
-45,291
1,281

108.099
73,869
34,230
129,422
100,427
28,996
-21,323
-26,558
5.234

228,588
187,997
40,591
134,650
107,842
26,807
93,939
80,155
13,784

94,493
63,146
31,347
142,988
112,625
30,362
-48,494
-49,479
985

173,361
135,922
37,439
118,726r
105,267r
13,459
54,635'
30,655 r
23,980

109,178
79,599
29.579
134,802
107,049
27,753
-25,624
-27,450
1,826

185,344
16,564
1,196

171,288
-2,007
-5,382

129,712
-6,276
-16,168

35,968
21,357
-13,315

28,833
-18,274
10,764

-39,001
-55.908
970

-19,054
72,532
-4,984

-11.147
-34,387
-9,ior

-1,408
23,748
3,284

35,942
6,848
29,094

37,949
8,620
29,329

44,225
7,700
36,525

15,222
5,258
9,965

33,496
5,945
27,551

89,404
52,215
37,189

16,872
5,174
11,698

51,259
16,368
34,891

27,511
5,014
22,496

MEMO

13 Treasury operating balance (level, end of
period)
14
Federal Reserve Banks
Tax and loan accounts
15

1. Since 1990, off-budget items have been the social security trust funds (federal old-age
survivors insurance and federal disability insurance) and the U.S. Postal Service.
2. Includes special drawing rights (SDRs); reserve position on the U.S. quota in the
International Monetary Fund (IMF); loans to the IMF; other cash and monetary assets;
accrued interest payable to the public; allocations of SDRs; deposit funds; miscellaneous
liability (including checks outstanding) and asset accounts; seigniorage; increment on gold;




net gain or loss for U.S. currency valuation adjustment; net gain or loss for IMF loanvaluation adjustment; and profit on sale of gold.
SOURCE. Monthly totals: U.S. Department of the Treasury, Monthly Treasury Statement of
Receipts and Outlays of the U.S. Government, fiscal year totals: U.S. Office of Management
and Budget, Budget of the U.S. Government.

A26
1.39

DomesticNonfinancialStatistics • October 1997
U.S. BUDGET RECEIPTS A N D OUTLAYS'
Millions of dollars
Fiscal year

Calendar year

Source or type

1995

1996

1997

1997

1996

1995

H2

HI

H2

HI

May

June

July

RECEIPTS

1 All sources
2 Individual income taxes, net
3
Withheld
4
Nonwithheld
Refunds"
5
Corporation income taxes
6
Gross receipts
Refunds
7
8 Social insurance taxes and contributions, net . . .
9
Employment taxes and contributions"
10
Unemployment insurance
11
Other net receipts 3
12
13
14
15

Excise taxes
Customs deposits
Estate and sift taxes
Miscellaneous receipts 4

1,351,830

1,453,062

656,865

767,099

707,551

845,552

94,493

173,361

109,178

590.244
499.927
175,855
85.538

656.417
533,080
212,168
88,897

292.393
256.916
45.521
10.058

347.285
264.177
162.782
79.735

323,884
279.988
53.491
9.604

400,435
292.252
191.050
82.926

30.690
48.097
5.873
23,300

74.381
44,802
31.395
1,825

53,868
51,812
4,003
1.950

174.422
17,418
484.473
451.045
28,878
4.550

189.055
17.231
509,414
476.361
28,584
4,469

88,302
7.518
224.269
211.323
10.702
2.247

96.480
9.704
277.767
257.446
18.068
2.254

95.364
10,053
240.326
227,777
10.302
2.245

106.451
9.635
288.251
268.357
17.709
2,184

5.005
752
50.220
39,835
9,963
422

40.541
1.169
48,612
47,933
343
336

5.442
1.739
40.572
38,066
2.081
425

57.484
19.301
14.763
28.561

54,014
18,670
17,189
25.534

30.014
9.849
7.718
11.839

25.682
8.731
8.775
12.087

27,016
9,294
8,835
12,888

28,084
8,619
10.477
12,866

4,808
1.443
1,412
1,667

5.185
1,522
1,494
2.793

5.369
1.799
1.552
2.315

OUTLAYS

1,515,729

1,560,330

752,856

785.368

800,184 r

797,443 r

142,988

118,726 r

134,802

17
18
19
20
21
22

National defense
International affairs
General science, space, and technology
Energv
Natural resources and environment
Agriculture

272.066
16.434
16.724
4.936
22.078
9.778

265.748
13.496
16.709
2.836
21,614
9,159

132,887
6,908
7.970
1.992
11,392
3.065

132.599
8.076
8.897
1,356
10.254
73

138.350
8.895
9.498
806
11.642
10,699

131,525
5,779
8,939
801
9,688
1,433

26.152
256
1,655
129
1.719
-205

20.613
472
1,565
- 5
1,622
-255

22.944
1.541
1.763
238
1.909
-35

23
24
25
26

Commerce and housing credit
Transportation
Community and regional development
Education, training, employment, and
social services

-17,808
39.350
10.641

-10.646
39.565
10,685

-3.947
20.725
5.569

-6,885
18,290
5.245

-5.865'
21.205
6.192

-7.575''
18.046
5,699

-62
3.320
883

779'
3.224
1,207

-415
3.667
958

16 All types

54.263

52.001

26.212

25,979

26.032

25,227

3,799

3.702

3.542

27 Health
28 Social security and Medicare
79 Income security

1 15.418
495.701
220.493

119,378
523,901
225,989

57.128
251.388
104.847

59,989
264,647
121.186

61,466
269,410 r
107,182 r

61,808
278,817
123,874

10,374
48,887
22.357

10.595
47.558
11,298

9.821
47,860
17.921

30
31
3'
33
34

37.890
16.216
13,835
232.169
-44,455

36.985
17.548
1 1.892
241.090
— 37.620

18.678
8,091
7.601
119.348
-26.995

18.140

21.107
9.595
6,544
122.568
— 25.141 r

17,697
10.643
6.574
122,701
-24,234

4.333
1.875
484
21,162
-4,128

1.583
1,883
1.897
19,543
-8.556

3,409
1.863
366
7
1.046
-3.594

Veterans benefits and services
Administration of justice
General government
Net interest 3
Undistributed offsetting receipts 6

1. Functional details do not sum to total outlays for calendar year data because revisions to
monthly totals have not been distributed among functions. Fiscal year total for receipts and
outlays do not correspond to calendar year data because revisions from the Budget have not
been fully distributed across months.
2. O l d - a g e . d i s a b i l i t y , a n d h o s p i t a l i n s u r a n c e , a n d r a i l r o a d r e t i r e m e n t a c c o u n t s .

3. Federal employee
disability fund.




retirement

contributions

and civil service

retirement

and

9,015

4.641
120.576
-16.716

4. Deposits of earnings by Federal Reserv e 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.
S o i - R C E . Fiscal y e a r totals: U S . O f f i c e of M a n a g e m e n t a n d B u d g e t . Budget of the U.S.
Government,
Fiscal Year 199ft-. m o n t h l y a n d h a l f - y e a r totals: U.S. D e p a r t m e n t of the T r e a -

sury. 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
1995

1996

1997

Item
June 30

Sept. 30

Dec. 31

Mar. 31

June 30

Sept. 30

Dec. 31

Mar. 31

1 Federal debt outstanding

4,978

5,001

5,017

5,153

5,197

5,260

5,357

5,415

n.a.

2 Public debt securities
3
Held by public
4
Held by agencies

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
3,739
1,422

5,225
3,778
1,447

5,323
3,826
1,497

5,381
3,874
1,507

5,376

27
27
0

27
27
0

28
28
0

36
28
8

36
28
8

35
27
8

34
27
8

34
26
8

4,861

4,885

4,900

5,030

5,073

5,137

5,237

5,294

5,290

4.861
0

4,885
0

4,900
0

5,030
0

5,073
0

5,137
0

5,237
0

5,294
0

5,290
0

4.900

4,900

4,900

5,500

5,500

5,500

5,500

5,500

5,500

5 Agency securities
6
Held by public
1 Held by agencies
8 Debt subject to statutory limit
9 Public debt securities
10 Other debt1

June 30

1
1

n.a.
1

MEMO

11 Statutory debt limit

1. Consists of guaranteed debt of U.S. Treasury and other federal agencies, specified
participation certificates, notes to international lending organizations, and District of Columbia stadium bonds.

1.41

GROSS PUBLIC 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
1996
Type and holder

1 Total gross public debt
2
3
4
5
6
7
8
9
10

11
12
13
14
15

By tvpe
Interest-bearing
Marketable
Bills
Notes
Bonds
Inflation-indexed notes'
Nonmarketable"
State and local government series
Foreign issues 3
Government
Public
Savings bonds and notes
Government account series 4
Non-interest-bearing

By holder'
16 U.S. Treasury and other federal agencies and trust funds
17 Federal Reserve Banks
18 Private investors
19
Commercial banks
Money market funds
20
21
Insurance companies
22
Other companies
State and local treasuries 6-7
23
Individuals
24
Savings bonds
25
Other securities
Foreign and international 8
26
21
Other miscellaneous investors 7-9

1993

1995

1997

1996
Q3

Q4

Ql

Q2

4,535.7

4,800.2

4,988.7

5,323.2

5,224.8

5,323.2

5,380.9

5,376.2

4,532.3
2,989.5
714.6
1,764.0
495.9
n.a.
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
n.a.
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
n.a.
1,657.2
104.5
40.8
40.8
.0
181.9
1,299.6
24.3

5,317.2
3,459.7
777.4
2,112.3
555.0
n.a.
1,857.5
101.3
37.4
47.4
.0
182.4
1,505.9
6.0

5,220.8
3,418.4
761.2
2,098.7
543.5
n.a.
1,802.4
95.7
37.5
37.5
.0
184.2
1,454.7
4.0

5,317.2
3,459.7
777.4
2,112.3
555.0
n.a.
1,857.5
101.3
37.4
47.4
.0
182.4
1,505.9
6.0

5,375.1
3,504.4
785.6
2,131.0
565.4
7.4
1,870.8
104.8
36.8
36.8
.0
182.6
1,516.6
5.8

5.370.5
3,433.1
704.1
2,132.6
565.4
15.9
1,937.4
107.9
35.4
35.4
.0
182.7
1,581.5
5.7

1,153.5
334.2
3,047.4
322.2
80.8
234.5
213.0
609.2 r

1,257.1
374.1
3,168.0
290.4
67.6
240.1
224.5r
540.2r

1,304.5
391.0
3,294.9
278.7
71.5 r
241.5
228.8
421.5 r

1,497.2
410.9
3,411.2
261.7 r
91.6 r
235.9 r
258.5
358.0 r

1,447.0
390.9
3,386.2
274.8
85.2
235.6 r
249.1
382.3 r

1,497.2
410.9
3,411.2
261.7 r
9I.6 r
235.9 r
258.5
358.0 r

1,506.8
405.6
3,451.7
275.0
83.9
236.5
262.5
353.0

171.9
137.9
623.0
655.0 r

180.5
150.7
688.6
785.5 r

185.0
162.7
862.2
843.0 r

187.0
169.6
l,131.8 r
717.T

186.8
167.0
1,030.9
774.5 r

187.0
169.6
l,131.8 r
717.T

186.5
168.9
1,199.1
686.4

1. The U.S. Treasury first issued inflation-indexed notes during the first quarter of 1997.
2. Includes (not shown separately) securities issued to the Rural Electrification Administration, depository bonds, retirement plan bonds, and individual retirement bonds.
3. Nonmarketable series denominated in dollars, and series denominated in foreign currency held by foreigners.
4. Held almost entirely by U.S. Treasury and other federal agencies and trust funds.
5. Data for Federal Reserve Banks and U.S. government agencies and trust funds are actual
holdings; data for other groups are Treasury estimates.
6. Includes state and local pension funds.
7. In March 1996, in a redefinition of series, fully defeased debt backed by nonmarketable
federal securities was removed from "Other miscellaneous investors" and added to "State and
local treasuries." The data shown here have been revised accordingly.




1994

n.a.

8. Consists of investments of foreign balances and international accounts in the United
States.
9. Includes savings and loan associations, nonprofit institutions, credit unions, mutual
savings banks, corporate pension trust funds, dealers and brokers, certain U.S. Treasury
deposit accounts, and federally sponsored agencies.
SOURCE. U.S. Treasury Department, data by type of security. Monthly Statement of the
Public Debt of the United States; data by holder, Treasury Bulletin.

A28
1.42

DomesticNonfinancialStatistics • October 1997
U.S. GOVERNMENT SECURITIES DEALERS

Transactions'

Millions of dollars, daily averages
1997, week ending

1997

Item
Apr.

May

June

June 4

June 11

49,329

42,017

40.559

49,231

40,156R

40,063

39,012

35.964

30,635

32,509

38,791

33,065

104.196
49.121
38,194
41,984

107,517
57.216
41,103
39,712

112,860
56,041
39,498
48.439

113.651
61,943
44.927
41.622

114.155R
61.383R
35,059R
r
65,91 l

112,350
56.678
39,975
45.400

111,740
49,296
35.339
42,808

112,630
51.414
47,604
40,589

92,504
59,006
39,648
68,903

98,686
56,905
36,876
54,575

109,764
56,563
36,051
38,158

95,979
70,380
43,617
45,711

117,018
1.028
13.923

120,714
1.003
12.677

118.504
1,378
15.552

123,578
1.223
13.036

122,735
1.334
20,694

120,481
1,821
15,073

115,078
1.066
13,753

108,794
1,389
13,294

100,433
2,053
17,621

105.229
1,253
17,207

116,955
1.063
11,992

113,020
1,710
15,535

85,628
37,166
28,061

86,036
40,100
27,035

90,956
38,120
32,887

101,248
43.704
28.585

88,610
38,154
30,327

84,970
34,273
29,055

91,213
46,215
27,295

81,713
37,595
51,283

82,870
35,623
37,368

88,162
34,989
26,166

86,404
41,907
30,176

n.a.

n.a.

June 18

June 25

July 2

July 9

July 16

July 23

July 30

OUTRIGHT TRANSACTIONS 2

1
2
3
4
5

By type of security
U.S. Treasury bills
Coupon securities, by maturity
Five years or less
More than five years
Federal agency
Mortgage-backed

Bx type of counterparty
With interdealer broker
U.S. Treasury
Federal agencv
Mortgage-backed
With other
9
U.S. Treasury
10
Federal agency
11
Mortgage-backed
6
7
8

92.959R
33,726R
45,217R

FUTURES TRANSACTIONS 3

12
13
14
15
16

By type of deliverable security
U.S. Treasury bills
Coupon securities, by maturity
Five years or less
More than five years
Federal agencv
Mortgage-backed

191

217

352

244

1,720
12.314
0
0

2.014
14,506
0
0

2.430
15,048
0
0

3,447
18,631
0
0

473
2.364'
15,656 R
0
0

494

155

2,558
15,967
0
0

1,755
13,281
0
0

2,433
11,864
0
0

1.082
13,024
0
0

103

339

135

1,354
14,384
0
0

1,196
16,056
0
0

1,425
15,123
0
0

OPTIONS TRANSACTIONS 4

17
18
19
20
21

By type of underlying securityUS. Treasury bills
Coupon securities, by maturity
Five years or less
More than five years
Federal agencv
Mortgage-backed

0

0

0

0

0

0

0

0

0

0

0

0

3.195
4,277
0
584

3.570
5,024
0
560

3,103
4.018
0
408

2.342
4,325
0
445

3,993
4,265
0
530

4,122
3,691
0
572

1,655
3,760
0
163

3,095
4,271
0
304

2,362
8,238
0
887

2,494
4,791
0
290

2,000
6,506
0
557

1,725
5.726
0
711

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 w hich 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 Financing 1

Millions of dollars
1997

1997, week ending

Item
Apr.

May

June

June 4

June 11

June 18

June 25

July 2

July 9

July 16

July 23

Positions 2
N E T 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

4,082

-5,335

-1,305

10,641

3,197

-5,577

-3,991

-7,425

-5,265

-3,117

-1,038

-24,459'
-28,153
29,723
34,916

-22,394
-18,077
29,451
35,472

-20,661
-20,191
31,556
35,836

-19,961
-21,997
30,873
29,343

-16,154
-17,990
33,666
37,166

-22,525
-19,549
33,311
39,500

-21,468
-18,265
29,410
34,532

-23,790
-25,420
29,693
35,866

-18,706
-21,965
31,388
31,276

-17,720
-22,963
42,158
35,337

-12,025
-20,857
36,535
35,484

-2,308

-974

633

-237

-432

812

1,303

1,355

1,535

1,311

-252

4,018
-5,916
0
0

3,100
-11,685
0
0

2,705
-13,430
0
0

3,973
-9,970
0
0

3,485
-14,621
0
0

2,209
-12,934
0
0

1,200
-15,485
0
0

3,676
-12,348
0
0

3,119
-15,715
0
0

3,740
-17,546
0
0

2,769
-18,512
0
0

N E T FUTURES POSITIONS 4

B\ 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
N E T OPTIONS POSITIONS

11
12
13
14
15

By type of deliverable
security
US. Treasury bills
Coupon securities, by maturity
Five years or less
More than five years
Federal agency
Mortgage-backed

0

0

0

0

0

0

0

0

0

0

0

-2,458
-1,448
0
2,437

848
-671
0
2,210

2,660
2,466
0
240

2,882
-252
0
2,343

3,083
2,147
0
-464

2,692
2,495
0
-182

2,821
4,031
0
22

1,621
2,857
0
439

2,506
3,643
0
249

2,273
1,833
0
43

2,448
7,081
0
521

Financing 5
Reverse repurchase
agreements
16 Overnight and continuing
17 Term

279,264
537,456

293,697
552,156

290,312
592,367

291,476
555,332

283,840
600,039

305,383
607,423

274,543
626,584

299,419
542,271

304,295
574,692

295,803
584,084

285,438
626,375

Securities borrowed
18 Overnight and continuing
19 Term

213,138
81,206

216,864
78,569

213,510
87,422

215,458
76,489

211,755
83,949

214,207
93,569

209,449
93,508

219,116
83,907

214,131
91,447

214,489
92,001

214,679
95,797

6,499
n.a.

4,104
188

8,826
163

4,452
178

4,603
153

11,328
165

11,702
166

10,706
156

9,885
137

8,501
116

8,092
117

Repurchase
agreements
22 Overnight and continuing
23 Term

595,167
484,562

602,889
500,610

626,329
538,571

624,993
492,636

637,862
529,437

643,690
558,977

600,015
586,101

623,786
492,997

634,318
516,923

651,834
532,333

638,716
582,543

Securities loaned
24 Overnight and continuing
25 Term

5,795
4,430

6,399
4,352

6,774
4,574

5,584
4,427

5,947
4,879

7,346
4,522

7,310
4,458

7,330
4,497

7,473
4,394

7,812
4,293

8,524
4,990

Securities pledged
26 Overnight and continuing
27 Term

59,877
2,363

62,667
2,956

61,239
1,736

60,212
1,388

61,080
1,386

61,646
1,840

62,734
1,987

59,623
2,009

58,453
2,052

55,283
2,025

52,747
1,858

Collateralized
loans
28 Overnight and continuing
29 Term
30 Total

0
0
11,503

0
0
12,391

0
0
13,374

0
0
16,226

0
0
12,383

0
0
13,191

0
0
14,074

0
0
11,757

0
0
13,272

0
0
13,790

0
0
13,679

MEMO: Matched book 6
Securities in
31 Overnight and continuing
32 Term

281,975
521,831

298,289
531,303

290,345
575,636

290,066
533,488

290,077
579,944

303,114
594,712

272,007
610,520

298,739
527,780

305,482
565,779

294,008
569,975

281,480
610,930

Securities out
33 Overnight and continuing
34 Term

362,687
418,703

363,061
432,788

380,179
461,838

372,527
419,514

378,812
453,902

405,995
480,866

367,276
500,907

370,136
425,473

384,736
446,662

383,121
453,947

376,160
500,175

Securities received as pledge
20 Overnight and continuing
21 Term

1. Data for positions and financing are obtained from reports submitted to the Federal
Reserve Bank of New York by the U.S. government securities dealers on its published list of
primary dealers. Weekly figures are close-of-business Wednesday data. Positions for calendar
days of the report week are assumed to be constant. Monthly averages are based on the
number of calendar days in the month.
2. Securities positions are reported at market value.
3. Net outright positions include immediate and forward positions. Net immediate positions include securities purchased or sold (other than mortgage-backed agency securities) that
have been delivered or are scheduled to be delivered in five business days or less and
"when-issued" securities that settle on the issue date of offering. Net immediate positions for
mortgage-backed agency securities include securities purchased or sold that have been
delivered or are scheduled to be delivered in thirty business days or less.
Forward positions reflect agreements made in the over-the-counter market that specify
delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt
securities are included when the time to delivery is more than five business days. Forward
contracts for mortgage-backed agency securities are included when the time to delivery is
more than thirty business days.




4. Futures positions reflect standardized agreements arranged on an exchange. All futures
positions are included regardless of time to delivery.
5. Overnight financing refers to agreements made on one business day that mature on the
next business day; continuing contracts are agreements that remain in effect for more than one
business day but have no specific maturity and can be terminated without advance notice by
either party; term agreements have a fixed maturity of more than one business day. Financing
data are reported in terms of actual funds paid or received, including accrued interest.
6. Matched-book data reflect financial intermediation activity in which the borrowing and
lending transactions are matched. Matched-book data are included in the financing breakdowns given above. The reverse repurchase and repurchase numbers are not always equal
because of the "matching" of securities of different values or different types of collateralization.
NOTE, "n.a." indicates that data are not published because of insufficient activity.
Major changes in the report form filed by primary dealers induced a break in the dealer data
series as of the week ending July 6, 1994.

A30
1.44

DomesticNonfinancialStatistics • October 1997
FEDERAL A N D FEDERALLY SPONSORED CREDIT AGENCIES

Debt Outstanding

Millions of dollars, end of period
1997

Agency

1

T
4
S
6
7
8
9
10
1 1
12
13
14
15
16
17
18

1993

Federal and federally sponsored agencies
Federal agencies
Defense Department'
Export Import Bunk - "
Federal Housing Administration 4
Government National Mortgage Association certificates ot
participation"
Postal Service6
Tennessee Vallev Authority
United Stales Railwav Association 6
Federal Home Loan Banks
Federal Home Loan Mortgage Corporation
Federal National Mortgage Association
Farm Credit Banks's
Student Loan Marketing Association 9
Financing Corporation1"
Farm Credit Financial Assistance Corporation"
Resolution Funding Corporation 1-

1994

1995

1996

Jan.

Feb.

Mar.

Apr.

May

570.711

738,928

844,611

925,823

939,416

927,400

929.809

960,491

974,331

45.193
6
5.315
255

39.186
6
3.455
116

37.347
6
2.050
97

29.380
6
1.447
84

29.481
6
1.437
144

29.303
6
1.437
146

28.989
6
1.363
26

27.762
6
1,357
31

28.011
6
1.357
32

n.a.

n.a.

n.a.

9.732
29.885

8.073
27.536

5,765
29.429

n.a.
n.a.

n.a.
n.a.

n.a.
n.a.

n.a.
n.a.

n.a.
n.a.

27.853

27.831

27.714

27,594

27,756

n.a.
n.a.
28.005

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

5 2 3 45">
139,512
49.993
2 0 1 . 1 12
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

807.764
243,194
119.961
299.174
57.379
47.529
8.170
1.261
29,996

896,443
263.404
156.980
331,270
60,053
44,763
8.170
1,261
29.996

909.998
257.055
163.171
333.302
67.610
48,788
8.170
1.261
29.996

898.097
255.407
161,532
332.046
60.075
48.707
8.170
1,261
29.996

900.820
266.456
153,621
336.174
60,884
43.105
8.170
1.261
29,996

932,729
277.880
162.872
341,789
60.945
48.515
8.170
1.261
53.243R

946.320
284.861
167.407
344.350
61.384
47.620
8.170
1.261
29,996

128,187

103,817

78,681

58,172

57.635

57,625

53.688

5.309
9,732
4.760
6.325

3.449
8.073

2.044
5,765

n.a.

n.a.

MEMO
19

Federal Financing Bank debt 1 1

20
21
22
23
24

l.eiuliim to federal and federally sponsored
Export-Import Bank"1
Postal Service 6
Student Loan Marketing Association
Tennessee Vallev Authority
United States Railway Association 6

25
26
27

Other lending1'*
Farmers Home Administration
Rural Electrification Administration
Other

n.a.
38.619
17,578
45.864

3.200

3,200

n.a.

n.a.

33.719
17.392
37.984

1. Consists of mortgages assumed by the Defense Department between 1957 and 1963
under family housing and homeow ners 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.




n.a.

51.866

agencies

21.015
17,144
29,513

1,431

n.a.
n.a.
n.a.
n.a.

18,325
16,702
21.714

1.431

n.a.
n.a.
n.a.
n.a.

17.875
16,702
21,627

1,431

n.a.
n.a.
n.a.
n.a.

17.875
16,710
21.609

1,357

1,357

n.a.
n.a.
n.a.
n.a.

n.a.
n.a.
n.a.
n.a.

16,675
15.696
21.317

16.675
15,696 R
23.919

1.357

n.a.
n.a.
n.a.
n.a.

16.505
15.674
18.330

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 Coiporation. established in January 1988 to
provide assistance to the Farm Credit System, undertook its first borrowing in July 1988.
12. The Resolution Funding Corporation, established by the Financial Institutions Reform.
Recovery, and Enforcement Act of 1989, undertook its first borrowing in October 1989.
13. The FFB, which began operations in 1974. is authorized to purchase or sell obligations
issued, sold, or guaranteed by other federal agencies. Because FFB incurs debt solely for the
purpose of lending to other agencies, its debt is not included in the main portion of the table to
avoid double counting.
14. Includes FFB purchases of agency assets and guaranteed loans; the latter are loans
guaranteed by numerous agencies, with the amounts guaranteed by any one agency generally
being small. The Farmers Home Administration entry consists exclusively of agency assets,
whereas the Rural Electrification Administration entry consists of both agency assets and
guaranteed loans.

Securities Markets and Corporate Finance
1.45

NEW SECURITY ISSUES

A31

Tax-Exempt State and Local Governments

Millions of dollars
1997

1996
Type of issue or issuer,
or use

1994

1 All issues, new and refunding 1

1995

1996
Dec.

Jan.

Feb.

Mar.

Apr.

May1

June1

July

153,950

145,657

171,222

17,431

10,340

12,052

13,701

15,741

15,447

19,350

15,496

Bx tvpe of issue
i General obligation
3 Revenue

54,404
99,546

56,980
88.677

60,409
110,813

4,755
12.676

4,160
6,180

4.287
7,765

5.491
8.210

6.224
9.517

5.741
9,706

6.133
13.217

6.95 1
8.545

Bx type of issuer
4 Slate
Special district or statutory authority"
6 Municipality, county, or township

19.186
95.896
38.868

14.665
93,500
37,492

13.651
113.228
44,343

663
12.315
4,453

728
6,306
3,306

713
8.341
2.998

4.037
7.206
2.458

1,126
1 1.124
3,491

1.219
9.666
4.562

1.197
1 3.774
4.379

1,985
9.694
3,817

105,972

102,390

112,298

12,311

6,106

8,409

8,736

11,476

10,507

14,952

9,758

21.267
10,836
10,192
20,289
8.161
35.227

23,964
11.890
9.618
19,566
6,581
30,771

26,851
12,324
9,791
24,583
6,287
32.462

2.306
736
1.006
3.294
1,081
3.888

1,974
808
749
1.265
231
1.079

1,924
639
901
1.281
481
3,183

2,330
393
954
2.644
317
2,098

3.264
1.873
425
1.929
765
3,220

2,844
1.225
1.608
1.291
462
3.077

3.498
638
1.615
4.438
637
4,126

2.959
822
1.388
1.641
355
2.593

7 Issues for new capital
BY use of proceeds
X Education
9 Transportation
10 Utilities and conservation
1 1 Social welfare
12 Industrial aid
13 Other purposes
1. Par amounts of long-term issues based on date of sale.
2. Includes school districts.

1.46

NEW SECURITY ISSUES

SOI'RCE. Securities Data Company beginning January
Digest before then.

1990; Investment

Dealer

U.S. Corporations

Millions of dollars
1997

1996
Type of issue, offering,
or issuer

1994

1995

1996
Nov.

Dec.

Jan.

Feb.

Mar.

Apr.1

May

June

1 All issues'

583,240

n.a.

n.a.

57,937

48,747

57,186

53,027

62,41 l r

43.956

54,269

83,468

2 Bonds"

498,039

573,206

n.a.

44,569

39,585

44,027

44,980

54,632

37,672

46,259

72,561

Bx type of offering
3 Public, domestic
4 Private placement, domestic
5 Sold abroad

365.222
76.065
56,755

408,804
87,492
76,910

386 280
n.a.
74,793

38,948
n.a.
5,621

37.108
n.a.
2,477

35,449
n.a.
8,577

35,245
n.a.
9,735

45.886
n.a.
8,746

29.797
n.a.
7,875

38.1 15
n.a.
8.144

60.35 1
n.a.
12.210

43.423
40.735
6,867
13.322
13.340
380,352

61.070
50.689
8.430
13.751
22.999
416,269

41,959
34.076
5.111
8,161
13,320
358,446

2.720
4.282
270
773
475
36,049

5.096
1.727
341
680
628
31,113

4,088
4.926
366
858
1,210
32,578

4.791
2.004
100
1,476
405
36,204

3,060
1.641
324
1.185
2.802
45,619

2.276
6.201
257
47
500
28.391

2.355
4.225
4.445
653
300
34,282

3.748
2,771
667
1.377
576
6.3,423

12 Stocks"

85,155

100,573

n.a.

13,368

9,162

13,159

8,047

7,779

6.284

8,012

10,907

Bx type of offering
13 Public preferred
14 Common
15 Private placement"

12.570
47.828
24.800

10,917
57.556
32.100

33.208
83.052

5.656
7,712
n.a.

5,452
3.710
n.a.

8,048
5.111
n.a.

1,510
6.537
n.a.

2.740
5.039
n.a.

1.952
4.332
n.a.

2,055
5,957
n.a.

3.843
7.064
n.a.

17.798
15.713
2.203
2.214
494
46.733

21.545
27.844
804
1.936
1.077
47.367

1.530
3.974
367
210
42
7,219

899
2,922
54
103
23
5.161

608
1.827
250
1,847
0
8.292

2.008
3.041
258
96
28
2.575

1.136
1.923
0
841
0
3.879

847
1.181
0
570
25
3,661

1.594
1.912
35
200
0
4,219

966
2.933
257
1,046
374
5,344

6
7
8
9
10
11

16
17
18
19
20
21

Bx industn• group
Manufacturing
Commercial and miscellaneous
Transportation
Public utility
Communication
Real estate and financial

Bx industn group
Manufacturing
Commercial and miscellaneous
Transportation
Public utility
Communication
Real estate and financial

n.a.

I. 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.




2. Monthly data cover only public offerings.
3. Monthly data are not available.
SOt'RCE. Beginning July 1993, Securities Data Company and the Board of Governors of
the Federal Reserve System.

A32
1.47

DomesticNonfinancialStatistics • October 1997
O P E N - E N D INVESTMENT COMPANIES

Net Sales and Assets'

Millions of dollars
1996
Item

1995

1997

1996
Dec.

Jan.

Mar.

Feb.

Apr.

May

June

July

1 Sales of own shares 2

871,415

1,149,918

122,792

134,460

102,169

101,390

110,721

103,470

112,807

125,639

2 Redemptions of own shares
3 Net sales 3

699,497
171,918

853,460
296,458

87,949
34,843

96,243
38,218

73,871
28,298

79,976
21,413

100,188
10,532

76,337
27,133

87.056
25,752

90,131
35,508

4 Assets 4

2,067,337

2,637,398

2,637,398

2,752,273

2,772,715

2,700,474

2,782,077

2,952,609

3,067,392

3,279,457

6 Other

142,572
1,924,765

139,396
2,498,002

137,973
2,499,425

152,297
2,599,976

153,525
2,619,189

160,570
2,539,906

177,979
2,604,098

182,004
2,770,606

180,464
2,886,928

183,044
3,096,414

4. Market value at end of period, less current liabilities.
5. Includes all U.S. Treasury securities and other short-term debt securities.
SOURCE. Investment Company Institute. Data based on reports of membership, which
comprises substantially all open-end investment companies registered with the Securities and
Exchange Commission. Data reflect underwritings of newly formed companies after their
initial offering of securities.

1. Data on sales and redemptions exclude money market mutual funds but include
limited-maturity municipal bond funds. Data on asset positions exclude both money market
mutual funds and limited-maturity municipal bond funds.
2. Includes reinvestment of net income dividends. Excludes reinvestment of capital gains
distributions and share issue of conversions from one fund to another in the same group.
3. Excludes sales and redemptions resulting from transfers of shares into or out of money
market mutual funds within the same fund family.

1.48

CORPORATE PROFITS A N D THEIR DISTRIBUTION
Billions of dollars; quarterly data at seasonally adjusted annual rates
1995 r
Account

1994 r

1995 r

1996 r

1997

1996 r
Q3

Q4

Q1

Q2

Q3

Q4

Qir

Q2

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

570.5
535.1
186.6
348.5
216.2
132.3

650.0
622.6
213.2
409.4
264.4
145.0

735.9
676.6
229.0
447.6
304.8
142.8

672.8
630.6
218.8
411.8
266.8
145.0

685.7
634.1
215.3
418.8
274.4
144.5

717.7
664.9
226.2
438.7
300.7
138.0

738.5
682.2
232.2
450.0
303.7
146.4

739.6
679.1
231.6
447.5
305.7
141.8

747.8
680.0
226.0
454.0
309.1
144.9

779.6
708.4
241.2
467.2
326.8
140.3

794.5
717.3
244.4
473.0
333.0
140.0

7 Inventory valuation
8 Capital consumption adjustment

-16.1
51.4

-24.3
51.6

-2.5
61.8

-9.3
51.5

.4
51.1

-5.1
57.9

-5.4
61.6

-2.7
63.2

3.3
64.4

3.5
67.7

7.6
69.6

SOURCE. U.S. Department of Commerce, Survey of Current

1.51

DOMESTIC FINANCE COMPANIES

Business.

Assets and Liabilities'

Billions of dollars, end of period; not seasonally adjusted
1995 r
Account

1994 r

1995 r

1996 r

1997

1996r
Q4

Ql

Q2

Q3

Q4

Qlr

Q2

ASSETS

1 Accounts receivable, gross"
2
Consumer
.3
Business
4
Real estate

543.7
201.9
274.9
66.9

607.0
233.0
301.6
72.4

637.1
244.9
309.5
82.7

607.0
233.0
301.6
72.4

613.7
235.9
303.5
74.3

626.7
240.6
305.7
80.4

628.1
244.4
301.4
82.2

637.1
244.9
309.5
82.7

647.2
248.6
315.2
83.4

650.7
254.3
311.7
84.8

52.9
11.3

60.7
12.8

55.6
13.1

60.7
12.8

58.9
12.8

57.2
12.7

54.8
12.9

55.6
13.1

51.3
12.8

57.0
13.3

7 Accounts receivable, net
8 All other

479.5
216.8

533.5
250.9

568.3
290.0

533.5
250.9

542.0
255.0

556.7
258.7

560.5
268.7

568.3
290.0

583.1
289.9

580.4
308.1

9 Total assets

696.3

784.4

858.3

784.4

796.9

815.4

829.2

858.3

873.0

888.6

14.8
171.6

15.3
168.6

19.7
177.6

15.3
168.6

15.4
168.2

17.7
169.6

18.3
173.1

19.7
177.6

18.4
185.3

18.9
193.8

41.8
247.4
146.2
74.6

51.1
300.0
163.6
85.9

60.3
332.5
174.7
93.5

51.1
300.0
163.6
85.9

50.5
307.5
165.6
89.7

56.3
319.0
163.2
89.7

57.9
322.3
164.8
92.8

60.3
332.5
174.7
93.5

61.0
324.4
189.1
94.8

61.4
344.6
170.9
98.8

696.3

784.4

858.3

784.4

796.9

815.4

829.2

858.3

873.0

888.6

5 LESS: Reserves for unearned income
6
Reserves for losses

LIABILITIES AND C A P I T A L

10 Bank loans
11 Commercial paper

12
13
14
15

Debt
Owed to parent
Not elsewhere classified
All other liabilities
Capital, surplus, and undivided profits

16 Total liabilities a n d capital

1. Includes finance company subsidiaries of bank holding companies but not of retailers
and banks. Data are amounts carried on the balance sheets of finance companies; securitized
pools are not shown, as they are not on the books.




2. Before deduction for unearned income and losses,

Securities Market and Corporate Finance

1.52

DOMESTIC FINANCE COMPANIES

A33

Owned and Managed Receivables'

Billions of dollars, amounts outstanding
1997
Type of credit
Jan.

Feb.

Mar.

Apr.

May

June

Seasonally adjusted

1 Total

607.3

682.4

762.4

766.6

767.7

773.8

775.6

775.9

783.1

1
3
4

244.4
66.9
295.9

281.9
72.4
328.1

306.6
111.9
343.8

309.1
112.7
344.7

311.3
112.8
' 343.5

312.5
115.5
345.8

318.2
116.9
340.5

318.5
118.0
3.39.3

320.5
120.7
342.0

Consumer
Real estate
Business

Not seasonally adjusted

5 Total
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36

Consumer
Motor vehicles loans
Motor vehicle leases
Revolving 2
Other 3
Securitized assets 4
Motor vehicle loans
Motor vehicle leases
Revolving
Other
Real estate
One- to four-family
Other
Securitized real estate assets 4
One- to four-family
Other
Business
Motor vehicles
Retail loans
Wholesale loans 5
Leases
Equipment
Loans
Leases
Other business receivables 6
Securitized assets 4
Motor vehicles
Retail loans
Wholesale loans
Leases
Equipment
Loans
Leases
Other business receivables 6

613.5

689.5

769.7

767.7

766.2

775.0

776.6

777.8

787.2

248.0
70.2
67.5
25.9
38.4

285.8
81.1
80.8
28.5
42.6

310.6
86.7
92.5
32.5
33.2

310.6
86.8
93.6
32.3
34.4

309.9
87.1
94.3
32.2
34.0

311.0
85.8
95.6
33.2
34.0

315.6
83.2
96.7
34.3
34.3

317.5
85.1
97.3
34.4
34.7

320.6
87.0
98.5
34.1
35.3

32.8
2.2
n.a.
11.2
66.9
n.a.
n.a.

34.8
3.5
n.a.
14.7
72.4
n.a.
n.a.

36.8
8.7
0.0
20.1
111.9
52.1
30.5

35.0
8.6
0.0
19.8
112.7
53.2
30.3

34.2
8.5
0.0
19.7
112.8
53.8
30.2

34.5
8.4
0.0
19.6
115.5
53.3
30.1

38.3
9.4
0.0
19.3
116.9
55.0
30.3

36.8
9.3
0.0
19.9
118.0
54.9
30.3

36.8
9.2
0.0
19.7
120.7
55.1
30.3

n.a.
n.a.
298.6
62.0
18.5
35.2
8.3
8.3
8.3
8.3
8.3

n.a.
n.a.
331.2
66.5
21.8
36.6
8.0
8.0
8.0
8.0
8.0

28.9
0.4
347.2
67.1
25.1
33.0
9.0
9.0
9.0
9.0
9.0

28.9
0.3
344.4
68.4
24.9
34.5
9.1
191.9
56.1
135.8
47.7

28.5
0.3
343.4
71.0
25.0
36.9
9.1
190.8
54.5
136.3
48.3

31.8
0.4
348.5
73.8
25.1
39.6
9.1
192.1
55.0
137.1
49.3

31.3
0.3
344.1
71.7
24.6
37.9
9.2
189.9
53.8
136.1
49.6

32.5
0.3
342.2
70.4
24.4
36.6
9.3
188.0
52.3
135.6
50.3

.35.0
0.3
345.9
70.7
25.2
36.3
9.3
188.8
52.6
136.2
52.2

8.3
8.3
8.3
8.3
8.3
8.3
8.3
8.3

8.0
8.0
8.0
8.0
8.0
8.0
8.0
8.0

9.0
9.0
9.0
9.0
9.0
9.0
9.0
9.0

23.3
2.6
20.7
0.0
10.7
4.5
6.2
2.4

20.7
2.4
18.3
0.0
10.3
4.2
6.0
2.4

20.5
2.2
18.2
0.0
10.3
4.0
6.3
2.5

20.3
2.1
18.2
0.0
9.9
3.8
6.2
2.6

21.1
2.6
18.5
0.0
9.9
4.0
5.9
2.5

21.3
2.5
18.7
0.0
10.4
3.9
6.5
2.5

NOTE. This table has been revised to incorporate several changes resulting from the
benchmarking of finance company receivables to the June 1996 Survey of Finance Companies. In that benchmark survey, and in the monthly surveys that have followed, more detailed
breakdowns have been obtained for some components. In addition, previously unavailable
data on securitized real estate loans are now included in this table. The new information has
resulted in some reclassification of receivables among the three major categories (consumer,
real estate, and business) and in discontinuities in some component series between May and
June 1996.
Includes finance company subsidiaries of bank holding companies but not of retailers and
banks. Data in this table also appear in the Board's G.20 (422) monthly statistical release. For
ordering address, see inside front cover.
1. Owned receivables are those carried on the balance sheet of the institution. Managed
receivables are outstanding balances of pools upon which securities have been issued; these
balances are no longer carried on the balance sheets of the loan originator. Data are shown




before deductions for unearned income and losses. Components may not sum to totals
because of rounding.
2. Excludes revolving credit reported as held by depository institutions that are subsidiaries of finance companies.
3. Includes personal cash loans, mobile home loans, and loans to purchase other types of
consumer goods such as appliances, apparel, boats, and recreation vehicles.
4. Outstanding balances of pools upon which securities have been issued; these balances
are no longer carried on the balance sheets of the loan originator.
5. Credit arising from transactions between manufacturers and dealers, that is, Hoor plan
financing.
6. Includes loans on commercial accounts receivable, factored commercial accounts, and
receivable dealer capital; small loans used primarily for business or farm purposes; and
wholesale and lease paper for mobile homes, campers, and travel trailers.

A34
1.53

DomesticNonfinancialStatistics • October 1997
MORTGAGE MARKETS

Mortgages on New Homes

Millions of dollars except as noted
1997

Item

1994

1995

1996

Jan.

Feb.

Mar.

Apr.

May

June

July

Terms and yields in primary and secondary markets

PRIMARY M A R K E T S

1
2
3
4
5

Terms1
Purchase price (thousands of dollars)
Amount of loan (thousands of dollars)
Loan-to-price ratio (percent)
Maturity (years)
Fees and charges (percent of loan amount)"

Yield (percent per year)
6 Contract rate1
7 Effective rate 1 3
8 Contract rate (HUD series) 4

170.4
130.8
78.8
27.5
1.29

175.8
134.5
78.6
27.7
1.21

182.4
139.2
78.2
27.2
1.21

172.4
133.6
79.7
27.9
1.02

166.6
130.9
80.9
28.2
1.03

169.2
132.1
80.8
28.0
0.99

172.5
134.8
81.1
27.8
1.04

177.6
137.7
80.0
28.2
1.00

181.4
140.6
79.9
28.0
1.04

181.4
142.7
81.2
28.7
1.05

7.26
7.47
8.58

7.65
7.85
8.05

7.56
7.77
8.03

7.65
7.81
7.94

7.61
7.78
7.94

7.72
7.88
8.25

7.86
8.03
8.19

7.85
8.01
8.08

7.79
7.95
7.82

7.62
7.78
7.62

8.68
7.96

8.18
7.57

8.19
7.48

8.06
7.51

8.08
7.37

8.55
7.69

8.56
7.80

8.05
7.59

8.02
7.37

7.61
7.04

SECONDARY M A R K E T S

Yield (percent per year)
9 FHA mortgages (Section 203) 5
10 GNMA securities 6

Activity in secondary markets

FEDERAL NATIONAL M O R T G A G E ASSOCIATION

Mortgage holdings (end of period)
11 Total
17

F H A / V A insured

13

Conventional

14

Mortgage transactions purchased (during period)

Mortgage commitments (during period)
7
15 Issued
8
16 To sell

222,057
27,558
194,499

253,51 1
28,762
224,749

287,052
30,592
256,460

288,504
30,352
258,152

288,951
30,119
258,832

292,115
30,100
262.015

295,804
30,839
264,965

297,023
31,437
265.586

297,471
31,198
266,273

300,439
31,065
269.374

62,389

56,598

68.618

4,128

3,029

5.839

6,683

4.148

3,594

6,417

54,038
1,820

56,092
360

65.859
130

4,384
71

4,407
0

8,299
1

3,898
0

1,704
23

6,196
115

6.956
75

72.693
276
72,416

107,424
267
107,157

137,755
220
137,535

138,935
216
138,719

139,925
213
139.712

144,558
208
144,350

147,190
205
146,985

148,698
210
148,488

149,250
210
149,040

151,582
210
151,372

FEDERAL H O M E L O A N M O R T G A G E CORPORATION

Mortgage holdings (end of periodf
17 Total
18
19

F H A / V A insured

Conventional
Mortgage transactions (during period)

70
21

Sales

124,697
117,110

98.470
85,877

128,566
119,702

9,507
9,204

8,204
10,271

7,403
6,796

8,981
8,269

8,195
7,596

8,884
8,321

8,374
7,756

22

Mortgage commitments contracted (during period) 9

136,067

118,659

128,995

9,021

7,537

7,595

9.746

7,408

9,099

9,054

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-downpavment 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

A35

MORTGAGE DEBT OUTSTANDING 1
Millions of dollars, end of period
1997

1996
Type of holder and property

1 All holders
2
3
4
5

B\ type of property
One- to tour-family residences
Multifamilv residences
Nonfarm, nonresidential
Farm

Bv type of holder
6 Major financial institutions
Commercial banks"
7
8
One- to four-family
9
Multifamily
10
Nonfarm. nonresidential
Farm
1 1
12
Savings institutions"
13
One- to four-family
14
Multifamily
15
Nonfarm, nonresidential
16
Farm
17
Life insurance companies
18
One- to four-family
19
Multifamilv
20
Nonfarm. nonresidential
21
Farm
-n Federal and related agencies
23
Government National Mortgage Association
24
One- to four-family
25
Multifamily
26
Farmers Home Administration 4
27
One- to four-family
28
Multifamily
29
Nonfarm, nonresidential
30
Farm
31
Federal Housing and Veterans' Administrations
32
One- to four-familv
33
Multifamilv
34
Resolution Trust Corporation
One- to four-family
35
36
Multifamily
37
Nonfarm, nonresidential
38
Farm
Federal Deposit Insurance Corporation
39
40
One- to four-family
41
Multifamilv
Nonfarm, nonresidential
42
43
Farm
44
Federal National Mortgage Association
One- to four-family
45
46
Multifamily
47
Federal Land Banks
48
One- to four-family
49
Farm
50
Federal Home Loan Mortgage Corporation
51
One- to four-family
Multifamily
52
53 Mortgage pools or trusts 5
54
Government National Mortgage Association
55
One- to four-family
56
Multifamily
Federal
Home Loan Mortgage Corporation
57
58
One- to four-family
59
Multifamily
60
Federal National Mortgage Association
61
One- to four-family
Multifamily
62
Farmers Home Administration 4
63
64
One- to four-family
Multifamily
65
66
Nonfarm, nonresidential
Farm
67
68
Private mortgage conduits
69
One- to four-family 6
Multifamily
70
71
Nonfarm, nonresidential
Farm
72
73 Individuals and others 7
74
One- to four-family
Multifamily
75
76
Nonfarm, nonresidential
77

1994

1993

Ql

Q2

Q3

Q4

Qlp

4,269,331

4,475,550

4,709,386

4,788,889

4.882,718

4,964,129

5,052,167

5,113,053

3,232.753
270,380
685.015
81,183

3,436.677
275,301
680.615
82,957

3.633.779
287.761
703.226
84,620

3.700,246
292,084
711.355
85,204

3.775,559
297,543
723,090
86.526

3,848,864
301,943
725,919
87,405

3,915,412
310.395
738.301
88,060

3,966.770
313,285
744,567
88,432

1.763.404
940.595
556.660
38,657
324,413
20,866
598.437
470,000
67,367
60,765
305
224,372
8.593
25,376
180.934
9.469

1,811.417
1,004,322
611.391
39.360
331,004
22,567
596.191
477,626
64.343
53.933
289
210.904
7,018
23.902
170,421
9.563

1,884.623
1,080,366
663,614
43,842
349.081
23,829
596.789
482.351
61,988
52,162
288
207,468
7,316
23,435
167.095
9.622

1,897.191
1.087,207
665,935
44,700
352,641
23.931
602,631
489,634
60,540
52,155
302
207,353
7.273
23.427
167.039
9,614

1,919,622
1,099.643
670.756
45,368
358,956
24,563
611.735
498.219
60,680
52,522
315
208,244
7,270
23,534
167,800
9,640

1,945.088
1,112,914
679,217
46,529
362,353
24,815
628,037
513.291
61,434
52,991
320
204.138
6,190
23.155
165,096
9,697

1.967.948
1,136.128
696,333
47,037
367.875
24,883
628,337
513,376
61,624
53.007
331
203.483
5,817
23.082
164.573
10.011

1,979,222
1.149,716
705,210
47,904
371,372
25,231
627.212
513,903
60,718
52,255
336
202,293
5,412
22,968
163,765
10,148

327,014
n
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

319.327
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
41,712
38.882
2,830

313,760
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
43,781
39,929
3,852

312.950
2
i
0
41.594
12,327
11.636
6,365
11,266
8,439
4,228
4,211
0
0
0
0
0
5,553
839
1.099
3,616
0
183,531
167.895
15.636
28.891
1.700
27,191
44,939
40.877
4.062

314,694
0
2
0
41,547
11.982
11.645
6,552
11,369
8.052
3.861
4.191
0
0
0
0
0
5.016
840
955
3,221
0
186.041
170,572
15,469
29,362
1,728
27,634
44,674
40.477
4,197

311,697
2
2
0
41,575
11.630
11,652
6.681
11,613
6.627
3,190
3,438
0
0
0
0
0
4.025
675
766
2,584
0
185,221
170.083
15,138
29,579
1,740
27,839
44,668
40.304
4,364

309,757
2
2
0
41,596
11.319
11.685
6,841
11,752
6,244
3,524
2,719
0
0
0
0
0
2,431
365
413
1,653
0
184.445
169,765
14,680
29.602
1,742
27,860
45,437
40.691
4,746

303,591
6
6
0
41,485
11,311
11,692
6,969
11,513
4.330
2,335
1,995
0
0
0
0
0
2,217
333
377
1,508
0
182,556
168.436
14,120
29,668
1,746
27.922
43,329
38,301
5,028

1,570.666
414,066
404,864
9,202
447,147
442,612
4.535
495.525
486,804
8,721
28
5
0
13
10
213.901
179,730
8.701
25,469
0

1,726,833
450,934
441,198
9,736
490,851
487,725
3,126
530,343
520,763
9,580
19
3
0
9
7
254.686
202.987
14,925
36,774
0

1.861,864
472,292
461.447
10,845
515.051
512,238
2.813
582,959
569,724
13,235
11
2
0
5
4
291,551
222,892
21.279
47,380
0

1,905,515
475.829
464,650
11,179
524.327
521,722
2,605
599,546
585,527
14.019
10
1
0
5
4
305,803
230.221
24,477
51.104
0

1.963.909
485,441
473.950
11.491
536.671
534.238
2,433
621.285
606,271
15,014
9
1
0
4
4
320,502
239.153
26,809
54.541
0

2.008,229
497,248
485,303
11,945
545,608
543.341
2.267
636,362
619.869
16,493
7
0
0
4
3
329,003
244,527
28.141
56.336
0

2,057.873
505,977
493,795
12,182
554,260
551,513
2,747
650.780
633.210
17,570
3
0
0
0
3
346,853
249.700
33.689
63,464
0

2,100,674
513,531
500,651
12,880
562,894
560,369
2,525
663,668
645.324
18,344
3
0
0
0
3
360,579
258.000
35.498
67.081
0

608.247
455.903
65,393
72.943
14,009

617,972
460.419
69,615
75,257
12,681

649,140
485.464
73.492
77,346
12.838

673,233
507.414
74,492
78,431
12,896

684.494
516.239
75.758
79.495
13,002

699.115
529.501
76.622
79.874
13.118

716,590
544,259
78.221
80,888
13,221

729,565
555,434
79,236
81,616
13,280

1. Multifamily debt refers to loans on structures of tive 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 I986: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.




1995

6. Includes securitized home equity loans.
7. Other holders include mortgage companies, real estate investment trusts, state and local
credit agencies, state and local retirement funds, noninsured pension funds, credit unions, and
finance companies.
SOURCE. Based on data from various institutional and government sources. Separation of
nonfarm mortgage debt by type of property, if not reported directly, and interpolations and
extrapolations, when required for some quarters, are estimated in part by the Federal Reserve.
Line 69 from Inside Mortgage Securities and other sources.

A36
1.55

DomesticNonfinancialStatistics • October 1997
CONSUMER CREDIT1
Millions of dollars, amounts outstanding, end of period
1997r
Holder and type of credit

1994

1996

1995

Jan.

Feb.

Mar.

Apr.

May

June

Seasonally adjusted
1 Total

964,568

1,100,712

1,184,022

1,195,181

1,202,877

1,205,557

1,214,512

1,217,035

1,217,011

2 Automobile
3 Revolving
4 Other 2

326,356
364,616
273,596

362,097
441,862
296,753

390,308
497,977
295,738

390.649
505,306
299.226

390,823
510,617
301,437

390,450
509,476
305,632

394,260
512,381
307,871

394,399
514,126
308,510

394,321
516,627
306,063

Not seasonally adjusted
5 Total

988,079

1,128,618

1,214,882

1,204,825

1,197,168

1,193,994

1,202,634

1,206,863

1,211,382

By major holder
Commercial banks
Finance companies
Credit unions
Savings institutions
Nonfinancial business 3
Pools of securitized assets 4

462,923
134.421
119,594
38,468
86,621
146,052

507,753
152,123
131,939
40,106
85,061
211,636

529.417
152,391
144,148
44,711
77,745
266,470

525,749
153,487
144,432
45,095
73,611
262,451

518,596
153,275
143,788
45,478
70,599
265,432

511,584
152,995
144,415
45,860
69,954
269,186

516,640
151,897
146,265
46,243
69,346
272,243

517,956
154,177
147,558
46,626
67,744
272,802

515,785
156,450
148,674
47,009
68,039
275,425

By major type of credit5
12 Automobile
13
Commercial banks
14
Finance companies
Pools of securitized assets 4
15

328,576
141,895
70,157
36,689

364,726
149,094
81,073
44,635

393,189
153,983
86,690
52,363

389,461
153,013
86,809
49,481

387,539
151,826
87,064
48,195

386,713
150,458
85,754
49,334

389,844
150.937
83,230
53,504

391,259
151,203
85,106
51,505

393,437
149,029
86,979
52,739

16 Revolving
1/
Commercial banks
18
Finance companies
19
Nonfinancial business 3

383,187
182,021
25,880
56,790

464,134
210,298
28,460
53,525

522,860
228,615
32,493
44,901

513,437
223,184
32,262
41,900

508,559
215,772
32,206
39,813

502,850
207,251
33,225
39,433

504,916
209,031
34,345
38,953

509,207
212,796
34,411
37,078

513,376
215,342
34,130
37,283

Pools of securitized assets 4
20
21 Other
22
Commercial banks
Finance companies
23
24
Nonfinancial business 3
Pools of securitized assets 4
25

96,130
276,316
139,007
38.384
29,831
13,233

147,934
299.758
148,361
42,590
31,536
19,067

188,712
298,833
146,819
33,208
32,844
25,395

187,865
301,927
149,552
34,416
31,711
25,105

192,332
301,070
150,998
34,005
30,786
24,905

194,549
304,431
153,875
34,016
30,521
25,303

193.798
307,874
156,672
34,322
30,393
24,941

195,800
306,397
153,957
34,660
30,666
25,497

196,906
304,569
151.414
35,341
30,756
25,780

6
/
8
9
10
II

1. The Board's series on amounts of credit covers most short- and intermediate-term credit
extended to individuals. Data in this table also appear in the Board's G.19 (421) monthly
statistical release. For ordering address, see inside front cover.
2. Comprises mobile home loans and all other loans that are not included in automobile or
revolving credit, such as loans for education, boats, trailers, or vacations. These loans may be
secured or unsecured.

1.56

3. Includes retailers and gasoline companies.
4. Outstanding balances of pools upon which securities have been issued; these balances
are no longer carried on the balance sheets of the loan originator.
5. Totals include estimates for certain holders for which only consumer credit totals are
available.

TERMS OF CONSUMER CREDIT1
Percent per year except as noted
1996
Item

1994

1995

1997

1996
Dec.

Jan.

Feb.

Mar.

Apr.

May

June

INTEREST RATES

Commercial banks'
1 48-month new car
2 24-month personal

8.12
13.19

9,57
13.94

9.05
13.54

n.a.
n.a.

n.a.
n.a.

8.92
13.46

n.a.
n.a.

n.a.
n.a.

9.20
13.81

n.a.
n.a.

Credit card plan
3 All accounts
4 Accounts assessed interest

15.69
15.77

16.02
15.79

15.63
15.50

n.a.
n.a.

n.a.
n.a.

15.88
15.13

n.a.
n.a.

n.a.
n.a.

15.75
15.72

n.a.
n.a.

Auto finance
5 New car
6 Used car

9.79
13.49

11.19
14.48

9.84
13.53

8.60
13.42

7.17
12.93

7.44
13.08

8.08
13.18

8.56
13.29

7.80
13.48

7.64
13.55

54.0
50.2

54.1
52.2

51.6
51.4

52.3
49.9

55.1
51.5

54.6
51.1

53.5
51.1

52.8
51.2

53.2
51.3

53.3
51.3

92
99

92
99

91
100

90
99

92
99

92
99

90
99

91
99

93
99

93
99

15,375
10,709

16,210
11,590

16,987
12,182

17,670
12,492

17.090
12,362

16,837
12,202

17,198
12,194

17,620
12,195

18,060
12,261

18,171
12,239

companies

OTHER T E R M S 3

Maturity (months)
New car
8 Used car

7

Loan-to-value
9 New car
10 Used car

ratio

Amount financed
11 New car
12 Used car

(dollars)

1. The Board's series on amounts of credit covers most short- and intermediate-term credit
extended to individuals. Data in this table also appear in the Board's G.19 (421) monthly
statistical release. For ordering address, see inside front cover.




2. Data are available for only the second month of each quarter,
3. At auto finance companies,

Flow of Funds
1.57

A37

F U N D S R A I S E D IN U.S. C R E D I T M A R K E T S 1
Billions of dollars; quarterly data at seasonally adjusted annual rates
1996

1995
Q3

Q4

1997

Ql

Q2

Q3

Q4

Ql

Nonfinancial sectors
1 Total net borrowing by domestic nonfinancial s e c t o r s . . . .

545.6

628.8

621.6

719.7

751.8

571.1

590.2

886.1

715.0

712.7

693.2

762.9

fiv sector and instrument
1 Federal government
3
Treasury securities
4
Budget agency securities and mortgages

304.0
303.8
•2

256.1
248.3
7.8

155.9
155.7
.2

144.4
142.9
1.5

145.0
146.6
-1.6

86.0
85.6
.4

59.3
54.1
5.1

239.9
242.2
-2.3

62.4
60.2
2.2

161.3
164.4
-3.1

116.5
119.8
-3.3

93.7
95.2
-1.4

5 Nonfederal

241.6

372.7

465.8

575.3

606.7

485.1

530.9

646.3

652.6

551.4

576.7

669.1

8.6
30.5
67.6
-13.7
10.1
133.5
190.3
-10.7
-47.5
1.4
5.0

10.0
74.8
75.2
3.6
-9.4
157.0
186.4
-5.9
-23.9
.5
61.5

21.4
-29.3
23.3
73.2
54.4
196.4
203.9
1.7
-11.0
1.8
126.3

18.1
-44.2
73.3
99.5
59.0
228.0
197.1
10.5
18.7
1.7
141.6

-.9
1.5
72.5
70.2
38.8
331.4
281.6
18.9
27.4
3.4
93.2

18.1
-107.2
59.8
75.0
35.2
247.7
219.2
11.6
14.8
2.2
156.4

14.1
-12.6
82.0
77.9
61.0
191.0
161.4
13.3
15.2
1.1
117.5

30.3
-18.9
60.9
40.6
32.9
377.9
333.5
14.7
27.4
2.3
122.5

11.0
37.7
71.5
75.0
26.8
339.4
276.1
18.3
39.7
5.3
91.2

-16.1
-76.2
67.8
134.3
79.4
268.0
248.4
13.4
2.7
3.5
94.2

-29.0
63.5
89.9
31.0
16.2
340.2
268.5
29.1
39.9
2.6
65.0

13.1
26.8
79.4
138.4
34.9
296.4
274.3
6.3
14.3
1.5
80.2

201.0
19.5
34.1
-16.0
1.3
21.1

256.5
53.9
47.7
4.2
2.0
62.3

372.4
133.2
118.5
11.9
2.8
-39.8

381.9
232.4
197.0
33.7
1.6
-39.0

403.4
190.5
146.4
40.8
3.3
12.9

413.8
172.5
133.8
35.2
3.5
-101.3

334.6
207.0
174.9
33.1
-1.0
-10.8

473.5
176.4
130.9
45.5
.1
-3.6

420.3
187.8
148.3
32.4
7.1
44.4

372.1
240.9
211.8
30.2
-1.2
-61.6

347.7
156.8
94.6
55.0
7.2
72.2

391.4
237.5
189.2
48.8
-.4
40.3

23.7
5.2
16.8
2.3
-.6

70.4
-9.0
82.9
.7
-4.2

-15.3
-27.3
12.2
1.4
-1.6

69.5
13.6
48.3
8.5
-.8

67.4
10.9
46.8
9.1
.7

88.3
23.7
55.2
8.2
1.3

76.9
-3.9
72.7
11.9
-3.9

49.1
-8.5
47.9
8.7
1.1

36.6
9.5
11.1
15.1
.7

106.0
38.6
59.7
4.7
3.1

77.8
3.8
68.4
7.8
-2.2

29.0
13.3
17.3
-.6
-.9

569.3

699.3

606.4

789.1

819.1

659.4

667.1

935.3

751.5

818.7

771.0

791.9

By instrument
6
Commercial paper
7
Municipal securities and loans
8
Corporate bonds
9
Bank loans n.e.c
10
Other loans and advances
1 1 Mortgages
1?
Home
Multifamily residential
n
14
Commercial
15
Farm
16
Consumer credit
17
18
19
20
71
22

By borrowing sector
Household
Nonfinancial business
Corporate
Nonfarm noncorporate
Farm
State and local government

23 Foreign net borrowing in United States
24
Commercial paper
75
26
Bank loans n.e.c
Other loans and advances
27
28 Total domestic plus foreign

Financial sectors

29 Total net borrowing by financial sectors

240.0

291.3

467.7

447.2

531.2

506.3

574.3

330.9

689.3

497.2

607.2

332.8

By instrument
30 Federal government-related
31
Government-sponsored enterprise securities
Mortgage pool securities
32
33
Loans from U.S. government

155.8
40.3
115.6
.0

165.3
80.6
84.7
.0

287.5
176.9
115.4
-4.8

204.1
105.9
98.2
.0

231.1
90.4
140.7
.0

227.7
101.5
126.2
.0

305.5
132.1
173.4
.0

137.8
31.4
106.5
.0

296.0
126.9
169.1
.0

240.4
80.0
160.4
.0

250.0
123.3
126.8
.0

112.4
10.7
101.8
.0

84.2
-.7
82.7
2.2
-.6
.6

126.0
-6.2
119.2
-13.0
22.4
3.6

180.2
41.6
118.4
-12.3
22.6
9.8

243.1
42.6
185.6
5.6
3.4
5.9

300.1
92.7
154.3
14.5
27.2
11.4

278.6
43.7
217.3
8.2
4.9
4.5

268.8
55.1
175.1
-1.2
32.0
7.7

193.1
17.8
147.6
25.4
-5.5
7.7

393.3
105.7
204.7
23.5
48.6
10.8

256.8
85.2
120.7
4.1
33.9
12.9

357.2
162.0
144.1
5.0
31.8
14.3

220.3
177.1
45.7
-2.4
-16.1
16.0

10.0
-7.0
.0
.0
40.2
115.6
58.5
-1.6
8.0
.3
2.7
13.2

13.4
11.3
.2
.2
80.6
84.7
82.4
.2
.0
3.4
12.0
2.9

20.1
12.8
2
.3
172.1
115.4
69.5
50.2
- 11.5
13.7

22.5
2.6
-.1
-.1
105.9
98.2
133.2
51.6
.4
6.0
-5.0
32.0

11.6
26.0
.1
1.1
90.4
140.7
130.2
48.4
9.9
12.8
-2.0
62.1

38.9
5.1
.1
-.1
101.5
126.2
164.8
19.8
4.0
4.5
2.1
39.4

-9.7
31.5
.0
-.4
132.1
173.4
187.5
54.3
-10.0
8.3
7.7
-.4

-32.5
11.0
-.1
2.5
31.4
106.5
137.1
47.1
20.0
8.2
-31.8
31.6

40.1
42.1
-.2
.3
126.9
169.1
131.1
68.4
16.0
11.5
13.2
70.9

15.7
26.4
.3
-.4
80.0
160.4
101.8
56.9
1.6
13.7
5.7
35.0

23.2
24.7
.3
2.0
123.3
126.8
150.6
21.1
1.8
17.7
4.9
110.9

19.3
-14.6
-.2
.8
10.7
101.8
52.6
43.0
-2.6
18.9
-2.9
106.1

34
35
36
37
38
39
40
41
4?
41
44
45
46
47
48
49
50
51

Open market paper
Corporate bonds
Bank loans n.e.c
Other loans and advances
Mortgages
By borrowing sector
Commercial banking
Savings institutions
Credit unions
Life insurance companies
Government-sponsored enterprises
Federally related mortgage pools
Issuers of asset-backed securities (ABSs)
Finance companies
Mortgage companies
Real estate investment trusts (REITs)
Brokers and dealers
Funding corporations




24.2

A38

DomesticNonfinancialStatistics • October 1997

1.57

FUNDS RAISED IN U.S. CREDIT MARKETS 1 —Continued
1995

1997

1996

Transaction category or sector
Q3

Q4

Qi

Q2

Q3

Q4

Ql

All sectors
52 Total net borrowing, all sectors

809.3

990.6

1,074.1

1,236.3

1,350.3

1,165.7

1,241.4

1,266.2

1,440.8

1,315.9

1,378.2

1,124.7

Open market paper
U.S. government securities
Municipal securities
Corporate and foreign bonds
Bank loans n.e.c
Other loans and advances
sy Mortgages
60 Consumer credit

13.1
459.8
30.5
167.1
-9.3
8.9
134.1
5.0

-5.1
421.4
74.8
277.3
-8.6
8.7
160.6
61.5

35.7
448.1
-29.3
153.9
62.3
70.7
206.2
126.3

74.3
348.5
-44.2
307.2
113.5
61.6
233.8
141.6

102.6
376.1
1.5
273.6
93.8
66.7
342.8
93.2

85.5
313.7
-107.2
332.2
91.4
41.3
252.2
156.4

65.3
364.8
-12.6
329.9
88.6
89.1
198.7
117.5

39.6
377.7
-18.9
256.4
74.7
28.6
385.6
122.5

126.3
358.4
37.7
287.4
113.6
76.1
350.1
91.2

107.6
401.7
-76.2
248.2
143.1
116.5
280.9
94.2

136.8
366.5
63.5
302.4
43.8
45.8
354.5
65.0

203.4
206.2
26.8
142.4
135.4
17.9
312.4
80.2

53
54
55
5b
5/
58

Funds raised through mutual funds and corporate equities
61 Total net issues

312.5

453.9

153.0

156.3

240.1

197.1

228.6

306.3

396.7

91.9

165.4

184.3

62 Corporate equities
63
Nonfinancial corporations
64
Foreign shares purchased by U.S. residents
65
Financial corporations
66 Mutual fund shares

103.4
27.0
32.4
44.0
209.1

130.1
21.3
63.4
45.4
323.7

24.1
-44.9
48.1
20.9
128.9

-17.7
-73.8
50.7
5.5
173.9

-18.5
-81.2
57.8
4.9
258.6

-4.9
-92.8
88.2
-.3
202.0

-15.9
-71.2
57.4
-2.2
244.5

2.5
-92.4
89.8
5.1
303.8

53.0
-27.2
69.7
10.5
343.7

-106.3
-138.8
32.1
.5
198.2

-23.2
-66.4
39.5
3.7
188.6

-54.5
-84.8
47.3
-17.0
238.8

1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables
F.2 through F.4. For ordering address, see inside front cover.




Flow of Funds
1.58

A39

S U M M A R Y OF FINANCIAL TRANSACTIONS 1
Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates

1992

1994

1993

1995

1997

1996

1995

Transaction category or sector

1996
Q3

Q4

Q2

QI

Q3

Q4

Qi

N E T LENDING IN CREDIT M A R K E T S 2
1

Total net lending in credit markets

?.

Domestic nonfederal nonfinancial sectors
Household
Nonfinancial corporate business
Nonfarm noncorporate business
State and local governments
Federal government
Rest of the world
Financial sectors
Monetary authority
Commercial banking
U.S.-chartered banks
Foreign banking offices in United States
Bank holding companies
Banks in U.S.-affiliated areas
Savings institutions
Credit unions
Bank personal trusts and estates
Life insurance companies
Other insurance companies
Private pension funds
State and local government retirement funds
Money market mutual funds
Mutual funds
Closed-end funds
Government-sponsored enterprises
Federally related mortgage pools
Asset-backed securities issuers (ABSs)
Finance companies
Mortgage companies
Real estate investment trusts (REITs)
Brokers and dealers
Funding corporations

4
5
6
7
8
9
10

11
1?
13
14

15
16
17
18
19
20
21
22
23
74

25
26
27
28
29
30
31
3?
33

809.3

990.6

1,074.1

1,236.3

1,350.3

1,165.7

1,241.4

1,266.2

1,440.8

1,315.9

1,378.2

1,124.7

115.4
86.0
27.8
-.1
1.7
-11.9
98.4
607.4
27.9
95.3
69.5
16.5
5.6
3.7
-79.0
17.7
8.0
79.5
6.7
37.5
5.9
4.7
126.2

252.8
289.9
17.7
9
-55.0
-24.2
132.3
713.2
31.5
163.4
148.1
11.2
.9
3.3
6.7
28.1
7.1
66.7
24.9
47.7
30.7
30.0
-7.1
-3.3
120.6
115.4
62.8
68.2
-24.0
4.7
-44.2
-16.7

-98.5
-19.1
-2.4
.3
-77.4
-21.5
272.7
1,083.7
12.7
265.9
186.5
75.4
-.3
4.2
-7.5
16.2
-18.8
99.2
21.5
63.1
22.7
86.5
52.5
13.3
87.9
98.2
113.0
64.2
-3.4
2.2
90.1
4.3

.6
18.1
18.3
.4
-36.2
-21.9
405.6
966.0
12.3
187.9
119.7
63.3
3.9
1.0
19.9
25.5
3.9
59.7
24.4
46.6
34.5
88.8
48.9
9.3
93.8
140.7
105.2
43.1
8.2
3.0
-17.1
27.5

-82.4
84.6
-38.8
.3
-128.5
-24.3
361.0
911.3
-4.1
244.8
227.0
25.6
-9.6
1.8
32.2
11.0
-23.7
73.1
21.9
59.9
2.6
30.0
58.0
16.7
50.0
126.2
154.4
50.8
7.3
1.8
-5.2
3.7

-189.9
-93.6
-12.9
.3
-83.7
-24.4
157.6
1,298.0
19.7
166.2
118.1
36.1
4.6
7.4
-68.4
19.5
-20.2
53.1
22.3
81.3
20.2
125.1
141.9
13.2
186.5

-78.0
-121.1
40.4
.4
2.4
-20.7
341.1
1,023.8
16.9
121.7
80.5
44.2
-5.1

141.4
53.7
-36.4
3.4
189.3
12.8

-11.9

-69.9
-42.4
-21.8
.4
-6.2
-25.1
528.5
944.8
3.6
237.7
149.2
78.5
10.6
-.6
-48.8
24.8
7.2
67.6
25.3
29.5
17.3
73.4
21.5
7.5
137.5
126.8
107.3
34.3
4.1
2.0
77.0
-10.9

-113.8
-187.8
81.1
.5
-7.6
-18.7
360.3
896.8
37.5
310.3
210.0
92.1
2.2
6.0
-10.0
15.4
8.2
56.1
26.2
57.6
-2.8

175.0
81.8
10.9
33.4
106.5
117.3
40.9
51.8
3.4
-109.0
116.7

330.1
310.5
39.9
.4
-20.8
-15.2
268.2
857.7
9.4
190.2
125.5
57.5
5.4
1.7
40.5
34.8
4.2
2.5
23.7
45.4
50.6
18.4
54.1
9.8
122.2
169.1
120.9
41.3
-26.8
3.4
-72.0
15.9

-179.9
-74.7
14.8
.4
-120.4
-26.4
484.4
1,037.8
19.3
202.0
123.6
72.9
4.8
.7
53.7
20.3
7.8
120.1
24.9
41.9
8.0
88.5
38.3
9.0

68.8
115.6
53.7
7.5
.1
1.1
-1.3
13.3

76.0
35.3
9.1
-1.1
32.6
-18.4
129.3
803.7
36.2
142.2
149.6
-9.8
.0
2.4
-23.3
21.7
9.5
100.9
27.7
49.5
21.1
20.4
159.5
14.4
88.6
84.7
79.9
-9.0
.0
.6
14.8
-35.6

809.3

990.6

1,074.1

1,236.3

1,350.3

1,165.7

1,241.4

1,266.2

1,440.8

1,315.9

1,378.2

1,124.7

-1.6

.8
.0
.4
-18.5
50.5
117.3

-5.8
.0
.7
54.0
89.8
-9.7

8.8
2.2
.6
33.5
9.9
-12.8

-6.3
-.5
.0
47.7
-52.7
16.0

-1.9
.0
.0
18.2
80.9
-69.3

-26.6
-1.8
2.3
113.2
-113.0
107.1

.7
.0
-2.3
-8.5
47.0
-91.0

-22.2
-2.1
.4
59.4
-126.3

-40.0

96.5
65.6

97.0
113.9

-.9
.0
.0
85.0
-90.4
43.3
212.5
55.1

1.6
.0
.0
.9
-54.3
4.5

-70.3
-23.5
20.2
71.2
130.1
323.7
52.4
61.4
36.0
259.1
5.2

9.0
8.6
.8
-29.5
-13.1
-113.1
145.6

84.6

95.6
134.4

170.8

142.3

187.7

201.8

110.7
-17.7

-7.2
-4.3
56.6
291.1
-1.2
19.2
43.2
424.6

85.3
-23.2
188.6
104.9
131.1
51.8
308.5
-.6
19.8
18.8
652.3

30.7
-54.5
238.8
77.3

18.2

173.4

2.1
34.1
22.1
-3.5
48.7
23.6
69.5

62.1

82.1
160.4
75.1
55.9
3.4
3.4
35.5

77.1
37.9
6.7
63.2
101.8
27.6
72.3
-5.0
2.0
-11.8
26.6

RELATION OF LIABILITIES
TO FINANCIAL A S S E T S
34

35
36
37
38
39
40

41
42
43

44
45
46

47
48
49
50
51
52
53
54

Net flows through credit markets
Other financial sources
Official foreign exchange
Special drawing rights certificates
Treasury currency
Foreign deposits
Net interbank transactions
Checkable deposits and currency
Small time and savings deposits
Large time deposits
Money market fund shares
Security repurchase agreements
Corporate equities
Mutual fund shares
Trade payables
Security credit
Life insurance reserves
Pension fund reserves
Taxes payable
Investment in bank personal trusts
Noncorporate proprietors' equity
Miscellaneous

55 Total financial sources
56
57
58

59
60
61

Liabilities not identified as assets (—)
Treasury currency
Foreign deposits
Net interbank liabilities
Security repurchase agreements
Taxes payable
Miscellaneous

Floats not included in assets ( —)
62 Federal government checkable deposits
Other checkable deposits
64 Trade credit

63

65 Total identified to sectors as assets

-2.0
.2
-3.5
49.4
113.5

-57.2
-73.2
4.5
43.1
103.4

209.1
46.6
4.6
28.0
233.8
9.7

19.6

43.3
78.3
24.1
128.9
91.0

3,192.3

2,724.3

2,696.0

3,279.2

3,028.5

-.3
-56.0
12.3
75.7
10.3
-45.1

-1.0
19.3
-23.6
30.9
2.2
246.3

-1.1

-1.0
31.3
-26.9
115.1
24.9
-217.5

1.3

62.7
10.9
27.2
-23.2
-147.1

88.6
-9.2
-112.0
9.9
-62.4

-3.1
-63.9
11.6
85.2
3.2
143.0

41.6
26.9
-70.1
-34.2
-28.5

122.9

151.1

92.6

32.1
33.1
250.8
3.4
-65.8
36.4
510.2

62.2
-15.9
244.5
98.7
50.1
38.3
196.2
-10.2
-39.2
29.8
899.1

-4.9

202.0
147.0

-7.1

.9

29.9
267.8

35.5
363.9

-.1
34.5
257.7
3.2
17.8
27.9
290.2

1,808.3

2,407.0

2,179.5

2,820.6

2,972.9

2,613.9

-.2
44.0

-.5
26.7
-3.1
55.1
8.7
-4.3

-1.0
29.7
-3.4
28.9
3.7
-71.0
.5

-.2

-.2

-7.0

1.3

244.0
-19.3
2.5
303.8
62.3
120.6
19.0
260.9
5.6
-.6

182.5
147.4

-29.4
-106.3
198.2

45.8

103.4

58.5
290.9
-8.2
23.5
32.2
660.2

-.3

-2.8
-4.9
4.7
11.9
-37.9

-147.1

-2.7
57.3
8.6
-139.2

.7
1.6
11.3

-1.5
-1.3
-4.0

-4.8
-2.8
8.3

-6.0
-3.8
-27.3

3.8
-3.2
-43.3

-13.8
-4.7
-149.3

8.6
-3.8
45.1

-10.5
-4.2
26.6

28.0
-4.0
-98.6

-24.2
-4.0
-101.0

-3.9
-4.1

-32.0

1,824.0

2,506.8

2,211.1

2,775.0

3,021.6

2,659.7

2,981.6

3,212.9

2,786.6

2,854.5

3,232.3

3,101.9

4.2

46.1
11.1

1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables
F. 1 and F.5. For ordering address, see inside front cover.




102.5
26.7
44.9
247.6

3,087.9

145.8

-49.7
33.5
564.0

173.9

26.0
596.8

114.9
-.9

38.6
-18.5
258.6
74.3
52.4
40.0
274.7
2.6
12.5
25.7
500.8

123.4

-4.6
83.5
4.1
117.9
53.0
343.7
137.4
-37.7
32.5
238.3
6.6
11.8
14.8
329.6

80.2

-4.0

2. Excludes corporate equities and mutual fund shares.

-.8

A40
1.59

DomesticNonfinancialStatistics • October 1997
S U M M A R Y OF CREDIT MARKET DEBT OUTSTANDING 1
Billions of dollars, end of period
1995

1996

1997

4
Q4

Q3

Ql

Q2

Q3

Q4

Ql

Nonfinancial sectors
1 Total credit market debt owed by
domestic nonfinancial sectors

12,538.8

13,166.6

13,886.3

14,638.1

13,702.9

13,886.3

14,084.8

14,237.3

14,424.5

14,638.1

14,808.2

By sector and instrument
2 Federal government
3
Treasury securities
4
Budget agency securities and mortgages

3,336.5
3,309.9
26.6

3,492.3
3,465.6
26.7

3,636.7
3,608.5
28.2

3,781.8
3,755.1
26.6

3,603.4
3,576.5
26.9

3,636.7
3,608.5
28.2

3,717.2
3,689.6
27.6

3.693.8
3.665.5
28.2

3,733.1
3,705.7
27.4

3,781.8
3,755.1
26.6

3,829.8
3,803.5
26.3

5 Nonfederal

9,202.3

9,674.3

10,249.6

10,856.3

10,099.5

10,249.6

10,367.6

10,543.5

10,691.4

10,856.3

10.978.4

6
7
8
9
10
11
12
13
14
15
16

B\ instrument
Commercial paper
Municipal securities and loans
Corporate bonds
Bank loans n.e.c
Other loans and advances
Mortgages
Home
Multifamily residential
Commercial
Farm
Consumer credit

117.8
1,377.5
1,229.7
675.9
677.1
4,260.4
3,232.8
267.4
679.0
81.2
863.9

139.2
1,348.2
1.253.0
749.0
737.8
4,456.8
3,436.7
269.1
668.1
83.0
990.2

157.4
1,304.0
1,326.3
848.4
796.8
4,684.8
3,633.8
279.6
686.8
84.6
1,131.9

156.4
1,305.5
1,398.8
918.6
835.6
5,016.2
3,915.4
298.5
714.2
88.1
1.225.1

163.3
1,308.2
1.305.8
824.3
782.1
4,637.6
3,594.0
276.3
683.0
84.4
1,078.2

157.4
1,304.0
1,326.3
848.4
796.8
4,684.8
3,633.8
279.6
686.8
84.6
1,131.9

174.2
1,300.8
1,341.5
856.4
809.3
4,762.4
3,700.2
283.3
693.6
85.2
1,123.0

181.7
1,306.8
1,359.4
878.4
815.7
4,853.5
3,775.6
287.9
703.5
86.5
1,147.9

173.0
1,290.6
1,376.4
906.3
831.8
4,931.7
3,848.9
291.2
704.2
87.4
1,181.6

156.4
1,305.5
1,398.8
918.6
835.6
5,016.2
3,915.4
298.5
714.2
88.1
1,225.1

168.7
1,314.2
1,418.7
953.1
848.7
5,073.0
3,966.8
300.1
717.8
88.4
1,202.0

17
18
19
20
21
22

By borrowing sector
Household
Nonfinancial business
Corporate
Nonfarm noncorporate
Farm
State and local government

4,287.0
3,757.1
2,495.7
1,123.1
138.3
1,158.2

4,659.0
3,896.9
2,620.8
1,135.0
141.1
1,118.4

5,040.9
4,129.3
2,817.8
1,168.7
142.7
1,079.4

5,444.3
4,319.7
2,964.2
1,209.5
146.0
1,092.3

4,932.1
4,084.3
2,779.6
1,159.9
144.8
1,083.1

5,040.9
4,129.3
2,817.8
1,168.7
142.7
1,079.4

5,103.4
4,184.2
2,863.9
1,180.0
140.3
1,080.0

5,216.2
4,239.6
2.906.1
1,188.2
145.3
1,087.7

5,329.0
4,287.3
2,945.9
1,195.2
146.2
1,075.1

5.444.3
4,319.7
2,964.2
1,209.5
146.0
1,092.3

5,482.8
4,391.3
3.026.3
1,221.6
143.5
1,104.3

23 Foreign credit market debt held in
United States

385.6

370.4

439.9

507.2

419.8

439.9

450.8

459.6

487.1

507.2

513.3

24
25
26
27

68.7
230.1
24.6
62.1

41.4
242.3
26.1
60.6

55.0
290.6
34.6
59.7

65.8
337.3
43.7
60.4

55.8
272.4
31.6
60.0

55.0
290.6
34.6
59.7

51.5
302.5
36.8
60.0

53.4
305.3
40.5
60.4

64.8
320.2
41.7
60.4

65.8
337.3
43.7
60.4

67.9
341.7
43.5
60.3

12,924.3

13,537.0

14,326.2

15,145.3

14,122.7

14,326.2

14,535.6

14,696.9

14,911.6

15,145.3

15,321.5

Commercial paper
Bonds
Bank loans n.e.c
Other loans and advances

28 Total credit market debt owed by nonfinancial
sectors, domestic and foreign

Financial sectors
29 Total credit market debt owed by
financial sectors

3,321.7

3,794.6

4,244.4

4,775.6

4,096.3

4,244.4

4,325.4

4,497.8

4,619.7

4,775.6

4,857.9

30
31
32
33
34
35
36
37
38
39

By instrument
Federal government-related
Government-sponsored enterprise securities
Mortgage pool securities
Loans from U.S. government
Private
Open market paper
Corporate bonds
Bank loans n.e.c
Other loans and advances
Mortgages

1,885.2
523.7
1,356.8
4.8
1,436.4
393.5
857.6
67.6
108.9
8.9

2,172.7
700.6
1,472.1
.0
1,621.9
442.8
973.5
55.3
131.6
18.7

2,376.8
806.5
1,570.3
.0
1,867.6
488.0
1,159.1
60.9
135.0
24.6

2,607.9
896.9
1,711.0
.0
2,167.7
580.7
1,313.4
75.4
162.2
36.0

2,300.1
773.5
1,526.6
.0
1,796.2
473.6
1,112.6
60.3
127.0
22.7

2,376.8
806.5
1,570.3
.0
1,867.6
488.0
1,159.1
60.9
135.0
24.6

2,414.1
814.4
1,599.7
.0
1,911.4
491.9
1,192.7
66.7
133.6
26.5

2,489.5
846.1
1,643.4
.0
2,008.3
518.5
1,242.4
72.4
145.8
29.2

2,545.3
866.1
1,679.2
.0
2,074.4
539.6
1,274.8
73.3
154.2
32.4

2,607.9
896.9
1,711.0
.0
2,167.7
580.7
1,313.4
75.4
162.2
36.0

2.639.7
899.6
1,740.1
.0
2,218.2
624.5
1,321.2
74.3
158.2
40.0

40
41
42
43
44
45
46
47
48
49
50
51
52

By borrowing sector
Commercial banks
Bank holding companies
Savings institutions
Credit unions
Life insurance companies
Government-sponsored enterprises
Federally related mortgage pools
Issuers of asset-backed securities (ABSs)
Brokers and dealers
Finance companies
Mortgage companies
Real estate investment trusts (REITs)
Funding corporations

84.6
123.4
99.6
.2
.2
528.5
1,356.8
486.7
33.7
390.5
30.2
17.4
169.9

94.5
133.6
112.4
.5
.6
700.6
1,472.1
556.2
34.3
440.7
18.7
31.1
199.3

102.6
148.0
115.0
.4
.5
806.5
1,570.3
689.4
29.3
492.3
19.1
37.1
233.9

112.2
150.0
141.1
.4
1.6
896.9
1,711.0
819.6
27.3
540.7
29.0
49.9
296.0

102.0
150.3
107.2
.4
.6
773.5
1,526.6
639.8
27.4
471.9
21.6
35.0
239.9

102.6
148.0
115.0
.4
.5
806.5
1,570.3
689.4
29.3
492.3
19.1
37.1
233.9

100.5
141.4
117.8
.4
1.1
814.4
1,599.7
720.3
21.4
499.8
24.1
39.1
245.6

103.6
148.4
128.3
.3
1.2
846.1
1,643.4
751.7
24.6
514.4
28.1
42.0
265.6

106.7
149.1
134.9
.4
1.1
866.1
1,679.2
779.3
26.1
528.4
28.5
45.4
274.5

112.2
150.0
141.1
.4
1.6
896.9
1.711.0
819.6
27.3
540.7
29.0
49.9
296.0

114.5
152.0
137.4
.4
1.8
899.6
1,740.1
829.1
26.6
546.9
28.3
54.6
326.6

All sectors

53 Total credit market debt, domestic and foreign... .
54
55
56
57
58
59
60
61

Open market paper
US. government securities
Municipal securities
Corporate and foreign bonds
Bank loans n.e.c
Other loans and advances
Mortgages
Consumer credit

16,246.0

17,331.7

18,570.6

19,920.9

18,219.0

18,570.6

18,861.0

19,194.7

19,531.3

19,920.9

20,179.4

580.0
5,216.9
1,377.5
2,317.4
768.0
852.9
4,269.3
863.9

623.5
5,665.0
1,348.2
2,468.8
830.4
929.9
4,475.6
990.2

700.4
6,013.6
1,304.0
2,776.0
943.9
991.5
4,709.4
1,131.9

803.0
6,389.7
1,305.5
3,049.6
1,037.7
1,058.2
5,052.2
1,225.1

692.7
5,903.5
1,308.2
2,690.8
916.2
969.1
4,660.3
1,078.2

700.4
6,013.6
1,304.0
2,776.0
943.9
991.5
4,709.4
1,131.9

717.6
6,131.3
1,300.8
2,836.7
959.9
1,002.9
4,788.9
1,123.0

753.6
6,183.2
1,306.8
2,907.1
991.4
1,021.8
4,882.7
1,147.9

777.4
6,278.4
1.290.6
2,971.4
1.021.3
1,046.5
4,964.1
1,181.6

803.0
6,389.7
1,305.5
3,049.6
1,037.7
1,058.2
5,052.2
1,225.1

861.1
6,469.4
1,314.2
3,081.6
1,070.9
1,067.2
5,113.1
1,202.0

1. Data in this table also appear in the Board's Z. I (780) quarterly statistical release, tables
L.2 through L.4. For ordering address, see inside front cover.




1.60

Flow of Funds

A41

1996

1997

S U M M A R Y OF FINANCIAL ASSETS A N D LIABILITIES'
Billions of dollars except as noted, end of period
1995
Transaction category or sector

1993

1994

1995

1996
Q3

Q4

Ql

Q2

Q3

Q4

Ql

CREDIT M A R K E T D E B T 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
33

Domestic nonfederal nonfinancial sectors
Household
Nonfinancial corporate business
Nonfarm noncorporate business
State and local governments
Federal government
Rest of the world
Financial sectors
Monetary authority
Commercial banking
U.S.-chartered banks
Foreign banking offices in United States
Bank holding companies
Banks in U.S.-affiliated areas
Savings institutions
Credit unions
Bank personal trusts and estates
Life insurance companies
Other insurance companies
Private pension funds
State and local government retirement funds
Money market mutual funds
Mutual funds
Closed-end funds
Government-sponsored enterprises
Federally related mortgage pools
Asset-backed securities issuers (ABSs)
Finance companies
Mortgage companies
Real estate investment trusts (REITs)
Brokers and dealers
Funding corporations

16,246.0

17,331.7

18,570.6

19,920.9

18,219.0

18,570.6

18,861.0

19,194.7

19,531.3

19,920.9

20,179.4

2,786.5
1,693.0
271.5
37.0
784.9
231.7
1,147.8
12,080.0
336.7
3,090.8
2,721.5
326.0
17.5
25.8
914.1
218.7
240.9
1,416.0
422.7
611.4
423.4
429.0
725.9
82.0
546.4
1,356.8
457.9
482.8
60.4
8.6
137.5
117.9

3,069.6
2,013.3
289.2
37.2
729.9
207.5
1,254.7
12,799.8
368.2
3,254.3
2,869.6
337.1
18.4
29.2
920.8
246.8
248.0
1,482.6
446.4
659.2
454.1
459.0
718.8
78.7
667.0
1,472.1
520.7
551.0
36.5
13.3
93.3
109.0

2,935.9
1,959.1
286.8
37.5
652.5
186.1
1,561.8
13,886.9
380.8
3,520.1
3,056.1
412.6
18.0
33.4
913.3
263.0
229.2
1,581.8
468.7
722.3
476.8
545.5
771.3
92.0
755.0
1,570.3
633.7
615.2
33.0
15.5
183.4
115.9

2,963.1
2,003.8
305.1
37.9
616.3
164.2
1.967.3
14,826.2
393.1
3,708.0
3,175.9
475.8
22.0
34.4
933.2
288.5
233.1
1,641.5
492.8
768.8
511.3
634.3
820.2
101.3
822.5
1,711.0
738.9
658.3
41.2
18.5
166.3
143.4

2,989.6
2,005.5
273.8
37.4
672.9
192.2
1,493.4
13,543.9
370.6
3,473.2
3,023.7
401.1
16.9
31.5
930.4
258.5
234.2
1,571.2
463.0
701.9
470.6
505.7
739.2
88.7
708.4
1,526.6
595.7
594.7
42.2
14.7
136.1
118.3

2,935.9
1,959.1
286.8
37.5
652.5
186.1
1,561.8
13,886.9
380.8
3,520.1
3,056.1
412.6
18.0
33.4
913.3
263.0
229.2
1,581.8
468.7
722.3
476.8
545.5
771.3
92.0
755.0
1.570.3
633.7
615.2
33.0
15.5
183.4
115.9

2,891.1
1,928.1
273.6
37.6
651.8
180.8
1,653.6
14,135.5
379.6
3,541.6
3,068.8
422.2
16.8
33.9
921.8
267.0
228.3
1,596.2
474.5
739.6
491.9
595.6
795.9
94.8
762.7
1,599.7
659.7
621.7
46.0
16.3
156.2
146.5

2,972.5
1,999.9
285.7
37.7
649.1
177.0
1,718.2
14,326.9
386.3
3,590.8
3,101.3
437.1
18.1
34.3
932.0
276.9
229.4
1,596.7
480.2
751.0
505.0
594.7
809.0
97.2
767.6
1,643.4
688.5
633.2
39.3
17.2
138.2
150.3

2,949.2
2,002.4
291.6
37.8
617.4
170.5
1,840.6
14,571.0
386.2
3,643.3
3,135.3
454.2
19.3
34.5
945.4
282.6
231.3
1,627.0
486.4
761.4
506.3
606.6
818.3
99.5
788.2
1,679.2
709.5
642.0
40.2
18.0
147.1
152.6

2,963.1
2,003.8
305.1
37.9
616.3
164.2
1,967.3
14,826.2
393.1
3,708.0
3,175.9
475.8
22.0
34.4
933.2
288.5
233.1
1,641.5
492.8
768.8
511.3
634.3
820.2
101.3
822.5
1,711.0
738.9
658.3
41.2
18.5
166.3
143.4

2,911.2
1,958.8
301.3
38.0
613.0
159.5
2,063.8
15,045.0
397.1
3,778.8
3,220.9
499.5
22.5
35.9
930.7
290.9
235.2
1,657.6
499.3
783.2
510.2
659.0
834.2
103.0
837.6
1,740.1
742.2
672.7
39.9
19.0
163.4
151.1

16,246.0

17,331.7

18,570.6

19,920.9

18,219.0

18,570.6

18,861.0

19,194.7

19,531.3

19,920.9

20,179.4

53.4
8.0
17.0
271.8
189.3
1,251.7
2,223.2
391.7
559.6
471.1
1,375.4
279.0
470.8
4,642.9
1,048.2
84.9
691.3
5,176.6

53.2
8.0
17.6
324.6
280.1
1.242.0
2,183.3
411.2
602.9
549.4
1,477.3
279.0
505.3
4,848.4
1,139.2
88.0
699.4
5,462.9

63.7
10.2
18.2
361.4
290.7
1,229.3
2,279.7
476.9
745.3
660.1
1,852.8
305.7
550.2
5,570.8
1,241.7
89.3
767.4
5,928.9

53.7
9.7
18.2
409.1
239.6
1,245.2
2,376.7
590.8
891.1
698.7
2,342.4
358.1
590.2
6,285.9
1,316.0
91.9
872.0
6,274.4

65.1
10.2
18.2
353.6
267.2
1,200.3
2,255.8
477.5
702.7
654.8
1,782.0
286.1
540.6
5,442.0
1,192.2
91.9
758.6
5,757.3

63.7
10.2
18.2
361.4
290.7
1,229.3
2,279.7
476.9
745.3
660.1
1,852.8
305.7
550.2
5,570.8
1,241.7
89.3
767.4
5,928.9

62.1
10.2
18.2
382.7
266.0
1,183.3
2,342.3
493.6
816.9
666.1
1,997.0
326.9
555.0
5,748.3
1,229.1
94.3
793.7
6,067.5

61.4
10.2
18.2
382.9
249.1
1,212.3
2,340.1
511.1
809.5
692.1
2,129.9
318.6
563.1
5,883.4
1,264.4
90.3
811.7
6,089.1

54.3
9.7
18.8
411.2
223.6
1,220.8
2,357.4
557.6
838.1
687.6
2.211.6
317.8
577.2
6,013.2
1,263.9
92.1
829.0
6,197.3

53.7
9.7
18.2
409.1
239.6
1,245.2
2,376.7
590.8
891.1
698.7
2,342.4
358.1
590.2
6,285.9
1,316.0
91.9
872.0
6,274.4

46.3
9.2
18.3
423.9
204.0
1,218.9
2,428.7
605.4
950.8
717.1
2,410.3
374.4
604.8
6,396.7
1,307.7
93.6
890.4
6,387.6

35,451.8

37,503.8

41,012.7

44,584.6

40,075.1

41,012.7

41,914.0

42,632.0

43,412.6

44,584.6

45,267.5

20.1
6,280.0
2,499.5

21.1
6,263.3
2,591.5

22.1
8,389.9
2,702.8

21.4
10,090.0
2,740.7

22.1
7,972.4
2,657.7

22.1
8,389.9
2,702.8

22.1
8,875.8
2,739.5

22.0
9,170.9
2,762.5

21.2
9,387.4
2,787.2

21.4
10,090.0
2,740.7

20.9
10,099.2
2,827.2

-5.1
232.6
-4.7
-1.6
26.8
-869.9

-5.4
277.8
-6.5
55.7
35.4
-959.9

-5.8
307.6
-9.0
110.9
44.1
-993.3

-6.8
337.2
-10.8
139.8
45.1
-1,240.4

-5.6
299.7
.1
115.1
39.1
-876.3

-5.8
307.6
-9.0
110.9
44.1
-993.3

-6.1
323.2
-2.6
121.7
23.9
-1,052.2

-6.3
331.1
-8.0
141.4
38.0
-1,145.9

-6.0
353.2
-11.6
129.7
41.9
-1,140.7

-6.8
337.2
-10.8
139.8
45.1
-1,240.4

-6.9
347.6
-1.8
125.3
31.1
-1,181.9

5.6
40.7
-248.0

3.4
38.0
-240.7

3.1
34.2
-268.0

-1.6
30.1
-299.9

.6
27.3
-316.7

3.1
34.2
-268.0

.0
29.6
-319.2

-3.4
31.8
-329.7

-1.7
23.1
-365.5

-1.6
30.1
-299.9

-9.7
25.6
-367.2

45,075.0

47,181.7

52,903.7

58,444.0

51,444.0

52,903.7

54,433.1

55,538.4

56,586.0

58,444.0

59,252.7

RELATION OF LIABILITIES
TO FINANCIAL ASSETS

34 Total credit market debt
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52

Other liabilities
Official foreign exchange
Special drawing rights certificates
Treasury currency
Foreign deposits
Net interbank liabilities
Checkable deposits and currency
Small time and savings deposits
Large time deposits
Money market fund shares
Security repurchase agreements
Mutual fund shares
Security credit
Life insurance reserves
Pension fund reserves
Trade payables
Taxes payable
Investment in bank personal trusts
Miscellaneous

53 Total liabilities
Financial assets not included in liabilities ( + )
54 Gold and special drawing rights
55 Corporate equities
56 Household equity in noncorporate business
57
58
59
60
61
62

Liabilities not identified as assets (—)
Treasury currency
Foreign deposits
Net interbank transactions
Security repurchase agreements
Taxes payable
Miscellaneous

Floats not included in assets (—)
63 Federal government checkable deposits
64 Other checkable deposits
65 Trade credit
66 Total identified to sectors as assets

1. Data in this table also appear in the Board's Z. 1 (780) quarterly statistical release, tables
L.l and L.5. For ordering address, see inside front cover.




2. Excludes corporate equities and mutual fund shares.

A42
2.10

Domestic Nonfinancial Statistics • October 1997
NONFINANCIAL BUSINESS ACTIVITY

Selected Measures

Monthly data seasonally adjusted, and indexes 1992=100, except as noted
1996
Measure

1994

1995

1997

1996
Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May r

June r

July

1 Industrial production 1

108.6

112.1

115.2

117.2

117.7

117.8

118.4

118.8

119.3

119.3

119.6

119.8

Market groupings
Products, total
Final, total
Consumer goods
Equipment
Intermediate
Materials

106.8
107.1
107.4
106.6
106.1
111.3

109.3
109.9
108.9
111.6
107.5
116.6

112.0
112.8
110.5
116.8
109.4
120.3

114.1
114.8
112.3
119.0
111.9
122.2

114.3
115.3
112.7
119.6
111.3
123.1

114.2
115.1
111.7
120.8
111.6
123.4

114.8
115.6
111.6
122.6
112.0
124.1

115.3
116.3
112.1
123.5
112.1
124.5

115.4
116.6
112.1
124.31"
112.0
125.5 r

115.6
116.7
112.1
124.8
112.1
125.2

116.0
117.4
112.5
125.8
111.9
125.3

115.9
117.2
112.3
125.8
111.8
126.0

109.4

113.2

116.3

118.5

119.2

119.3

120.1

120.6

120.9

121.0

121.3

121.4

83.1

83.1

82.1

82.4

82.5

82.4

82.6

82.7

82.6

82.4

82.3

82.1

10 Construction contracts 3

117.3

121.7 r

130.2 r

132.0

128.0

130.0

131 0 r

133.0

137.0'

136.0

134.0

129.0

11 Nonagricultural employment, total 4
12
Goods-producing, total
13
Manufacturing, total
14
Manufacturing, production workers
15
Service-producing
lb Personal income, total
Wages and salary disbursements
1/
18
Manufacturing
19
Disposable personal income 5
20 Retail sales"

112.0
96.9
96.4
97.5
116.8
I48.9 r
142.6
124.9
149.7r
144.6

115.0
98.1
97.2
98.7
120.3
158.2 r
150.9
130.4
158.7 r
151.2

117.3
98.3
96.2
97.5
123.3
167.0 r
159.8 r
135.7 r
166.2 r
158.5 r

118.1
99.3
97.1
98.3
124.1
170. l r
163.4
137.7 r
168.7r
160.5

118.3
99.5
97.1
98.4
124.4
171.4 r
165.2 r
138.9 r
169.7 r
161.3

118.6
99.6
97.2
98.5
124.6
172.3 r
165.2 r
138.9 r
I70.6 r
163.9

118.8
99.9
97.2
98.5
124.9
173.6 r
167.2 r
139.5 r
171,7 r
166.1

119.0
100.0
97.3
98.6
125.1
174.6 r
168.1 r
140.5 r
172.5 r
165.6

119.3
100.0
97.4
98.6
125.5
174.9 r
168.2 r
140.7
172.7 r
163.7

119.5
100.1
97.4
98.7
125.7
175.5
168.7
140.9
173.1
163.3

119.7
100.2
97.5
98.7
126.0
176.6
170.2
141.3
174.1
164.3

120.0
100.2
97.5
98.8
126.4
n.a.
n.a.
n.a.
n.a.
165.4

Prices6
21 Consumer ( 1 9 8 2 - 8 4 = 1 0 0 )
22 Producer finished goods (1982=100)

148.2
125.5

152.4
127.9

156.9
131.3

158.6
132.6

158.6
132.7

159.1
132.6

159.6
132.2

160.0
132.1 r

160.2
131.6

160.1
131.5

160.3
131.6

160.5
131.3

2
3
4
5
6
/

Industry groupings
8 Manufacturing
9 Capacity utilization, manufacturing (percent)". .

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 January 1997. See
"Industrial Production and Capacity Utilization: Historical Revision and Recent Developments," Federal Reserve Bulletin, vol. 83 (February 1997), pp. 67-92. The article contains a
description of the new aggregation system for industrial production and capacity utilization.
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.

2.11

4. Based on data from U.S. Department of Labor, Employment and Earnings. Series covers
employees only, excluding personnel in the armed forces.
5. Based on data from U.S. Department of Commerce, Survey of Current Business.
6. Based on data not seasonally adjusted. Seasonally adjusted data for changes in the price
indexes can be obtained from the U.S. Department of Labor, Bureau of Labor Statistics.
Monthly Labor Review.
NOTE. Basic data (not indexes) for series mentioned in notes 4 and 5, and indexes for series
mentioned in notes 3 and 6, can also be found in the Survey of Current Business.
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, A N D UNEMPLOYMENT
Thousands of persons; monthly data seasonally adjusted
1996
Category

1994

1995

1997

1996
Dec.

Jan.

Feb.

Mar.

Apr.

May r

June r

July

H O U S E H O L D SURVEY DATA 1

1 Civilian labor force 2
Employment
2
Nonagricultural industries 3
3
Agriculture
Unemployment
4
Number
5
Rate (percent of civilian labor force)

131,056

132,304

133,943

135,022

135,848

135,634

136,319

136,098

136,173

136,200

136,290

119,651
3,409

121,460
3,440

123,264
3,443

124,429
3.426

125.112
3,468

125.138
3,292

125,789
3,386

125,887
3,497

126,209
3,430

125,973
3,391

126,226
3,482

7,996
6.1

7,404
5.6

7,236
5.4

7,167
5.3

7,268
5.4

7,205
5.3

7,144
5.2

6,714
4.9

6,534
4.8

6,836
5.0

6,583
4.8

114,172

117,203

119,549

120,659

120,909

121,162

121344

121,671

121,834

122,062

122378

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

18,282
570
5,405
6,318
28,178
6,977
34,360
19,459

18,448
571
5,521
6,288
28,471
6,962
34,884
19,514

18,465
574
5,542
6,351
28,487
6,971
34,990
19.529

18,475
574
5,604
6,376
28,515
6,980
35,091
19.547

18,489
572
5,609
6,405
28,556
6,992
35,176
19,545

18,495
573
5,599
6,421
28.651
7,019
35,334
19,579

18,498
576
5,628
6.431
28,656
7,029
35,451
19,565

18,520
576
5,624
6,430
28,711
7,038
35,521
19,642

18,515
574
5,627
6,461
28,805
7,064
35,634
19,698

ESTABLISHMENT SURVEY D A T A

6 N o n a g r i c u l t u r a l payroll e m p l o y m e n t 4
7
8
9
10
11
12
13
14

Manufacturing
Mining
Contract construction
Transportation and public utilities
Trade
Finance
Service
Government

1. Beginning January 1994, reflects redesign of current population survey and population
controls from the 1990 census.
2. Persons sixteen years of age and older, including Resident Armed Forces. Monthly
figures are based on sample data collected during the calendar week that contains the twelfth
day; annual data are averages of monthly figures. By definition, seasonality does not exist in
population figures.
3. Includes self-employed, unpaid family, and domestic service workers.




4. Includes all full- and part-time employees who worked during, or received pay for, the
pay period that includes the twelfth day of the month; excludes proprietors, self-employed
persons, household and unpaid family workers, and members of the armed forces. Data are
adjusted to the March 1992 benchmark, and only seasonally adjusted data are available at this
time.
SOURCE. Based on data from U.S. Department of Labor, Employment and Earnings.

Selected Measures
2.12

A43

OUTPUT, CAPACITY, A N D CAPACITY UTILIZATION 1
Seasonally adjusted
1996

1997

1996

1997

1996

1997

Series
Q3

Q4

Ql

Q2 r

Q3

Q4

Ql

Q2

Capacity (percent of 1992 output)

Output (1992=100)

Q4

Q3

Ql

Q2 r

Capacity utilization rate (percent) 2

1 Total industry

115.8

117.0

118.3

119.4

139.2

140.5

141.8

143.2

83.2

83.3

83.5

2 Manufacturing

117.2

118.4

120.0

121.1

142.5

143.9

145.3

146.9

82.3

82.3

82.5

83.4
824

115.7
123.7

130.7
148.2

131.5
150.0

132.2
151.9

132.9
153.8

86.6
80.4

86.6
80.4

86.8
80.7

87.0
80.4

154.5
129.1
129.8
131.9
127.1
176.3
200.6
176.1

156.9
130.0
131.0
133.5
127.8
181.3
208.5
177.3

159.3
131.0
132.1
134.9
128.6
186.5
216.3
178.2

161.8
132.0
133.3
136.0
129.8
192.3
224.2
178.7

82.3
85.6
91.4
89.4
93.9
90.1
82.0
74.5

81.7
84.7
91.5
88.9
94.8
89.1
80.2
71.0

82.0
84.9
90.6
87.7
94.3
89.1
79.6
73.0

82.1
86.1
91.7
89.0
95.2
89.0
79.6
69.7

Primary processing 3
Advanced processing 4

113.2
119.1

113.9
120.7

114.7
122.6

5
6
7
8
9
10
1 1
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 , , .

127.2
110.5
118.6
117.9
119.4
158.9
164.5
131.3

128.1
110.1
119.8
118.6
121.1
161.5
167.2
126.0

130.7
111.3
119.7
118.3
121.3
166.2
172.1
130.2

132.8
113.7
122.3
121.1
123.5
171.0
178.5
124.6

86.7

90.4

93.5

96.4

120.2

119.8

119.7

120.5

72.2

75.5

78.1

80.0

14
15
16
17
18
19

Nondurable goods
Textile mill products
Paper and products
Chemicals and products
Plastics materials
Petroleum products

130.1
130.8
123.3
140.3
134.0
113.8

130.6
131.3
123.6
141.5
136.2
113.9

131.1
131.4
123.9
142.6

83.0
82.1
89.0
80.1
93.5
94.6

83.1
81.6
89.9
79.8
93.3
94.9

82.8
82.3
90.4
78.9

114.2

82.2
82.9
88.7
78.4
95.1
93.9

98.0

113.7
125.9
124.4

113.8
126.5
125.1

114.3
127.0
125.6

91.2
88.2
89.6

91.3
89.8
90.4

93.0
87.7
89.1

93.8
88.2
89.0

3
4

106.5
107.9
109.0
109.2
125.3
106.7

108.1
107.4
109.8
112.4
125.3
107.7

108.6
107.1
111.2
112.8
127.0
108.1

108.6
108.2
111.9
112.6
111.9

129.6
130.1
122.9
139.2
131.8
113.7

103.7
110.5
110.8

103.8
113.0
112.4

105.8
110.9
111.5

107.2
111.9
111.8

113.7
125.2
123.6

1973

1975

Previous cycle 5

High

Low

High

20 Mining
21 Utilities
22
Electric

Low

Latest cycle 6
High

Low

1996
July

1997
Feb.

Mar.

Apr.r

May r

June

July p

83.1

Capacity utilization rate (percent) 2
1 Total industry

89.2

72.6

87.3

71.1

85.3

78.1

83.2

83.5

83.6

83.6

83.3

83.3

2 Manufacturing

88.5

70.5

86.9

69.0

85.7

76.6

82.4

82.6

82.7

82.6

82.4

82.3

82.1

3
4

91.2
87.2

68.2
71.8

88.1
86.7

66.2
70.4

88.9
84.2

77.8
76.1

86.7
80.6

86.9
80.7

87.3
80.7

87.1
80.6

87.2
80.3

86.8
80.3

86.5
80.1

89.2
88.7
100.2
105.8
90.8

68.9
61.2
65.9
66.6
59.8

87.7
87.9
94.2
95.8
91.1

63.9
60.8
45.1
37.0
60.1

84.5
93.6
92.7
95.2
89.3

73.2
75.5
73.7
71.8
74.2

82.6
84.9
91.2
89.8
92.9

82.1
85.5
90.8
87.6
95.0

82.3
86.3
91.5
87.7
96.3

82.2
86.3
90.5
87.9
93.7

82.0
86.4
92.7
90.8
95.2

82.0
85.7
92.0
88.3
96.7

81.8
85.0
91.0
87.9
94.8

96.0
89.2
93.4

74.3
64.7
51.3

93.2
89.4
95.0

64.0
71.6
45.5

85.4
84.0
89.1

72.4
75.1
55.9

90.2
82.7
76.3

89.3
79.7
72.7

88.8
80.1
72.3

90.0
79.8
70.2

88.7
79.4
69.2

88.2
79.6
69.7

88.3
80.1
67.8

78.4

67.6

81.9

66.6

87.3

79.2

71.3

78.2

79.1

79.5

80.0

80.6

81.1

83.1
82.4
90.6
79.0
93.0
94.9

83.0
82.7
90.6
79.6
93.3
97.0

82.8
81.8
91.0
78.6
92.5
98.1

82.7
82.4
89.4
78.6

82.4
82.1
90.0
78.2

98.9

97.3

94.3
86.8
88.1

92.9
89.6
90.6

94.4
87.3
88.0

94.0
87.6
88.4

93.6
88.8
90.0

5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

Primary processing'
Advanced processing 4
Durable goods
Lumber and products
Primary tnetals
Iron and steel
Nonferrous
Industrial machinery and
equipment
Electrical machinery
Motor vehicles and parts
Aerospace and miscellaneous
transportation equipment
Nondurable goods
Textile mill products
Paper and products
Chemicals and products
Plastics materials
Petroleum products

20 Mining
21 Utilities
22
Electric

87.8
91.4
97.1
87.6
102.0
96.7

71.7
60.0
69.2
69.7
50.6
81.1

87.5
91.2
96.1
84.6
90.9
90.0

76.4
72.3
80.6
69.9
63.4
66.8

87.3
90.4
93.5
86.2
97.0
88.5

80.7
77.7
85.0
79.3
74.8
85.1

82.2
83.7
89.8
78.6
94.9
92.7

83.2 .
81.4
89.9
79.7
93.3
95.4

94.3
96.2
99.0

88.2
82.9
82.7

96.0
89.1
88.2

80.3
75.9
78.9

86.8
92.6
95.0

86.1
83.4
87.1

90.7
87.6
89.2

93.4
87.1
88.7

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 January 1997. See
"Industrial Production and Capacity Utilization: Historical Revision and Recent Developments." Federal Reserve Bulletin, vol. 83 (February 1997), pp. 67-92. The article contains a
description of the new aggregation system for industrial production and capacity utilization.
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 1997
INDUSTRIAL PRODUCTION

Indexes and Gross Value 1

Monthly data seasonally adjusted

Group

1992
proportion

1996

1997

1996
avg.
July

Aug.

Sept.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.r

May'

June

July p

Index (1992 = 100)
MAJOR MARKETS
1

Total index

100.0

115.2

115.5

115.8

116.0

116.2

117.2

117.7

117.8

118.4

118.8

119.3

119.3

119.6

119.8

2 Products
3
Final products
4
Consumer goods, total
s
Durable consumer goods
6
Automotive products
/
Autos and trucks
8
Autos, consumer
9
Trucks, consumer
10
Auto parts and allied goods
11
Other
12
Appliances, televisions, and air
conditioners
13
Carpeting and furniture
14
Miscellaneous home goods
13
Nondurable consumer goods
16
Foods and tobacco
Clothing
17
18
Chemical products
Paper products
19
20
Energy
21
Fuels
22
Residential utilities

60.5
46.3
29.1
6.1
2.6
1.7
.9
.7
.9
3.5

112.0
112.8
110.5
126.2
125.8
132.6
120.2
147.2
114.5
126.3

112.3
113.4
110.7
129.7
132.1
145.7
137.8
161.3
112.4
128.0

112.2
113.0
110.1
128.0
128.7
138.7
132.5
152.3
113.5
127.5

112.7
113.3
110.5
127.1
127.7
134.6
129.9
146.6
116.2
126.6

112.8
113.6
110.8
124.5
122.0
125.7
112.3
147.4
114.4
126.2

114.1
114.8
112.3
127.1
127.4
133.8
123.5
152.4
116.4
126.8

114.3
115.3
112.7
128.4
127.2
135.5
115.9
164.9
114.0
129.1

114.2
115.1
111.7
127.3
129.6
138.7
120.1
167.0
115.5
125.5

114.8
115.6
111.6
129.2
131.0
138.9
122.3
165.0
118.1
127.8

115.3
116.3
112.1
131.0
131.7
138.9
123.3
163.8
119.7
130.4

115.4
116.6
112.1
126.9
124.4
127.1
116.0
146.1
118.0
128.6

115.6
116.7
112.1
128.4
126.3
130.0
117.7
150.5
118.8
129.7

116.0
117.4
112.5
130.6
128.2
132.6
114.9
159.5
119.6
132.1

115.9
117.2
112.3
130.6
123.7
123.6
118.0
136.1
120.3
135.2

1.0
.8
1.6
23.0
10.3
2.4
4.5
2.9
2.9
.8
2.1

173.0
109.9
107.9
106.5
106.1
95.5
112.7
101.1
112.0
106.6
114.3

181.1
107.0
108.5
106.0
105.9
95.4
112.6
101.4
109.1
106.7
109.9

175.9
111.1
108.0
105.6
105.4
95.4
111.3
101.8
109.4
107.7
110.0

174.2
110.5
107.6
106.3
106.1
95.1
113.5
101.9
109.4
105.4
110.9

176.5
108.6
106.5
107.3
106.6
95.5
115.5
102.9
110.7
108.1
111.7

176.9
110.7
106.4
108.5
107.2
95.0
117.3
102.9
115.3
107.8
118.5

181.1
109.3
109.6
108.7
108.2
94.9
118.8
103.0
111.8
106.0
114.2

171.2
106.0
109.2
107.8
107.7
94.0
117.9
101.1
110.4
105.1
112.6

179.5
106.9
109.2
107.2
108.0
93.8
116.2
101.5
107.6
106.2
108.0

183.6
111.6
109.9
107.4
108.7
94.2
114.9
102.3
107.5
108.5
106.8

179.0
108.6
110.0
108.3
107.8
94.4
117.2
102.6
113.0
110.1
114.1

180.9
111.7
109.6
108.0
107.6
94.9
116.3
103.4
111.4
111.9
110.9

187.9
114.2
109.7
108.0
107.0
93.8
116.9
104.5
112.1
113.2
111.4

197.9
114.8
110.9
107.7
107.1
93.2
115.9
103.4
112.6
110.9
113.1

23
24
25
26
21
28
29
30
31
32
33

Equipment
Business equipment
Information processing and related
Computer and office equipment
Industrial
Transit
Autos and trucks
Other
Defense and space equipment
Oil and gas well drilling
Manufactured homes

17.2
13.2
5.4
1.1
4.0
2.5
1.2
1.3
3.3
.6
2

116.8
126.6
143.2
292.0
126.9
100.0
115.3
116.4
77.0
120.5
162.0

118.1
128.1
144.1
301.7
127.2
104.1
126.5
118.0
77.7
122.1
163.0

117.9
127.7
144.6
306.2
126.7
103.0
120.9
116.1
77.9
122.6
167.4

118.1
128.3
146.3
314.3
126.3
103.8
117.7
115.5
77.7
117.5
165.6

118.4
128.8
147.4
318.8
127.0
101.9
109.4
118.7
77.0
120.2
165.3

119.0
129.8
147.1
323.5
127.1
106.6
115.9
119.9
76.1
120.7
159.8

119.6
130.7
148.5
327.1
127.3
107.2
113.7
121.4
76.2
123.6

120.8
132.1
149.6
335.7
127.9
109.8
117.2
123.4
74.7
130.8
156.3

122.6
133.8
152.4
343.0
128.2
111.8
118.7
124.4
75.4
140.7
163.5

123.5
134.3
153.6
349.9
127.5
113.1
118.3
125.1
75.6
153.4
160.9

124.3
135.5
155.1
358.6
130.3
110.1
110.0
128.8
75.2
152.5
168.0

124.8
135.9
156.2
365.5
129.3
112.1
111.7
128.3
75.6
154.2
166.4

125.8
136.8
158.4
374.6
128.7
113.2
111.4
128.7
76.4
161.4
163.1

125.8
137.6
159.6
384.3
128.5
114.0
110.1
130.3
76.0
149.6

34
35
36

Intermediate products, total
Construction supplies
Business supplies

14.2
5.3
8.9

109.4
116.8
105.1

108.9
117.5
103.9

110.0
119.2
104.6

110.6
119.8
105.3

110.2
117.7
105.8

111.9
120.7
106.8

111.3
117.8
107.4

111.6
117.0
108.4

112.0
120.0
107.3

112.1
121.8
106.5

112.0
120.1
107.2

112.1
120.9
107.0

111.9
120.1
107.1

111.8
119.7
107.2

39.5
20.8
4.0
7.6
9.2
3.1
8.9
1.1
1.8
3.9
2.1
9.7
6.3
3.3

120.3
134.0
128.8
159.2
118.2
113.1
106.4
106.3
107.4
105.9
106.1
103.9
102.6
106.2

120.5
134.5
131.1
159.6
118.2
112.9
107.4
109.9
109.1
106.1
107.1
102.4
101.7
103.9

121.5
136.2
133.9
161.7
119.2
113.6
106.5
107.4
108.2
106.2
104.7
104.0
103.2
105.4

121.2
135.5
128.3
162.6
119.2
114.7
106.9
107.1
107.0
106.8
106.2
103.9
102.2
107.0

121.7
135.8
126.6
163.4
120.0
117.2
108.0
108.4
108.0
109.3
103.9
103.9
102.0
107.5

122.2
136.5
129.7
165.3
119.1
114.4
108.4
108.5
110.9
107.7
106.8
104.0
101.6
108.5

123.1
137.8
130.3
167.9
119.9
115.7
109.5
105.9
112.5
110.2
106.3
103.9
102.6
106.3

123.4
138.4
132.1
169.4
119.3
114.9
109.6
106.8
111.5
111.1
105.3
103.8
101.6
108.0

124.1
139.2
129.7
172.6
119.8
116.4
110.5
107.7
113.2
111.2
107.5
104.0
102.8
106.2

124.5
140.2
129.8
175.6
120.0
116.4
110.6
104.9
113.8
111.2
108.4
103.5
102.3
105.9

125.5
141.7
130.5
178.1
121.0
116.7
111.3
109.5
114.4
111.7
107.8
103.8
101.7
107.6

125.2
141.8
127.3
180.5
121.1
118.6
109.9
105.4
114.7
109.9
107.3
103.5
102.0
106.4

125.3
142.2
126.1
182.3
121.2
118.6
110.0
106.7
110.8
110.1
109.8
102.9
100.7
107.0

126.0
142.8
125.7
184.9
120.9
117.7
110.4
106.0
112.4
110.3
110.3
104.5
102.7
108.0

97.1
95.1

114.9
114.6

114.9
114.6

115.4
115.0

115.7
115.4

116.1
115.9

116.9
116.6

117.4
117.2

117.4
117.1

118.0
117.8

118.5
118.3

119.3
119.0

119.2
119.0

119.5
119.3

119.8
119.7

98.2
27.4
26.2

112.9
109.2
110.2

113.1
108.9
110.9

113.4
108.6
110.2

113.5
109.2
110.6

113.7
109.9
110.8

114.6
111.0
111.8

115.1
111.4
112.8

115.1
110.3
111.9

115.6
110.1
112.1

116.0
110.7
112.7

116.4
111.1
111.9

116.3
111.0
112.1

116.6
111.3
112.5

116.7
111.4
112.2

12.0

127.7

128.2

128.3

129.3

130.7

131.2

132.4

133.6

135.3

135.9

138.0

138.4

139.4

140.3

12.1
29.8

115.8
125.4

116.8
126.1

116.1
127.0

116.3
126.6

116.6
127.1

117.5
127.8

118.2
129.0

119.2
129.4

120.5
130.3

120.7
131.0

121.5
132.2

121.6
131.8

122.1
132.1

122.4
132.6

37 Materials
38
Durable goods materials
39
Durable consumer parts
40
Equipment parts
41
Other
42
Basic metal materials
43
Nondurable goods materials
44
Textile materials
45
Paper materials
46
Chemical materials
47
Other
48
Energy materials
49
Primary energy
50
Converted fuel materials
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

siccode

A45

1996
avg.
July

Aug.

Sept.

Apr/

May r

July p

Index (1992 = 100)

MAJOR INDUSTRIES

59 Total index

100.0

115.2

115.5

115.8

116.0

116.2

117.2

117.7

117.8

118.4

118.8

119.3

119.3

119.6

119.8

85.4
26.5
58.9

116.3
112.2
118.4

117.0
113.0
118.9

117.2
113.1
119.2

117.4
113.5
119.3

117.6
113.8
119.5

118.5
113.8
120.8

119.2
114.0
121.7

119.3
113.8
122.0

120.1
114.8
122.6

120.6
115.6
123.0

120.9
115.6
123.5

121.0
115.9
123.5

121.3
115.6
124.1

121.4
115.4
124.3

" ' 24
25

45.0
2.0
1.4

125.7
109.7
108.9

126.9
109.3
108.1

127.5
111.4
108.8

127.2
110.7
108.8

127.1
109.2
110.4

128.4
113.1
110.5

128.8
108.0
110.5

129.5
108.6
109.7

130.8
112.0
110.3

131.7
113.3
111.0

132.3
113.6
112.7

132.7
114.1
114.0

133.4
113.5
114.1

133.8
112.9
114.7

32
33
331,2
331PT
333-6,9
34

2.1
3.1
1.7
.1
1.4
5.0

111.0
117.2
116.4
112.2
118.0
118.6

114.1
118.0
118.0
113.3
117.9
119.1

111.8
118.3
118.2
113.6
118.5
119.4

113.1
119.5
117.4
112.6
121.8
119.3

111.7
122.1
123.2
111.5
120.7
119.3

111.8
118.5
115.9
108.7
121.4
119.1

111.3
118.8
116.7
112.5
121.2
119.5

112.7
117.8
118.0
111.7
117.6
119.2

112.5
120.0
118.2
112.3
122.1
119.5

113.5
121.3
118.7
114.2
124.2
120.4

113.8
120.2
119.3
115.5
121.3
120.8

113.1
123.6
123.6
115.8
123.5
121.0

113.8
123.0
120.5
115.1
125.8
120.1

114.0
121.9
120.3
114.1
123.8
120.0

60 Manufacturing
61
Primary processing
62
Advanced processing

79
80

Durable goods
Lumber and products
Furniture and fixtures
Stone, clay, and glass
products
Primary metals
Iron and steel
Raw steel
Nonferrous
Fabricated metal products. . .
Industrial machinery and
equipment
Computer and office
equipment
Electrical machinery
Transportation equipment. . .
Motor vehicles and parts .
Autos and light trucks .
Aerospace and
miscellaneous
transportation
equipment
Instruments
Miscellaneous

81
82
83
84
85
86
87
88
89
90
91

Nondurable goods
Foods
Tobacco products
Textile mill products
Apparel products
Paper and products
Printing and publishing
Chemicals and products . . . .
Petroleum products
Rubber and plastic products .
Leather and products

63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78

92 Mining
Metal
93
94
Coal
95
Oil and gas extraction
96
Stone and earth minerals
97 Utilities
98
Electric
99
Gas

35

8.0

156.4

157.7

159.6

159.4

159.9

161.7

162.9

164.7

166.6

167.4

171.3

170.5

171.3

173.2

357
36
37
371
371PT

1.8
7.3
9.5
4.9
2.6

296.9
163.3
106.1
126.9
124.6

306.5
163.8
109.5
134.1
137.3

310.8
164.6
109.3
132.8
131.0

319.0
165.2
107.3
127.0
127.4

323.6
165.6
105.3
121.2
117.3

328.3
167.2
109.5
128.9
125.7

332.5
168.8
109.6
127.9
125.6

340.3
168.6
111.9
132.0
128.8

347.8
172.5
111.5
129.6
129.4

354.7
175.2
111.9
128.9
129.5

363.8
176.7
110.6
125.3
119.1

370.7
178.1
110.2
123.7
121.6

379.9
180.6
111.2
124.7
123.1

389.7
183.9
110.1
121.4
117.0

372-6,9
38
39

4.6
5.4
1.3

85.6
102.8
112.9

85.7
102.3
113.0

86.5
103.0
112.9

87.9
103.0
113.0

89.4
103.4
113.0

90.3
103.0
114.1

91.5
104.1
116.6

92.2
103.3
116.3

93.5
104.6
117.1

94.8
104.7
116.3

95.5
104.4
116.9

96.4
105.2
117.0

97.3
105.8
117.7

98.2
105.9
118.2

20
21
22
23
26
27
28
29
30
31

40.4
9.4
1.6
1.8
2.2
3.6
6.7
9.9
1.4
3.5
.3

106.3
106.3
105.6
106.6
98.2
108.0
98.4
108.9
106.5
120.5
80.0

106.4
106.5
102.5
108.7
98.3

106.9
106.2
104.9
107.2
98.2
108.8
99.1
109.7
106.9
122.8
79.4

107.4
107.1
104.0
107.6
97.8
107.6
99.7
111.3
108.4
121.4
78.4

107.9
107.6
105.4
108.2
97.3
110.1
100.0
111.8
107.4
121.7
77.3

108.8
108.2
108.9
106.3
97.2
99.8
114.0
107.3
122.6
80.1

108.5
108.2
104.6
106.3
96.2
110.3
100.5
113.7
107.4
121.1
78.3

108.6
108.4
105.7
106.9
95.8
111.1
100.6
112.8
108.6
123.1
77.6

108.7
109.2
106.9
108.2
96.3
112.1
99.7
112.0
108.1
124.0
78.4

108.7
108.3
105.5
108.6
96.1
112.2
99.6
113.3
110.7
122.3
78.8

108.5
108.1
104.2
107.5
96.5
112.8
99.8
112.0
112.0
123.3
76.9

108.5
107.9
102.8
108.4
96.3
110.9
100.1
112.4
113.0
123.9
76.4

108.3
107.8
104.1
108.0
95.4

97.6
109.0
105.3
120.7
80.0

106.2
105.5
104.1
107.7
98.5
108.1
97.9
108.7
107.8
122.0
79.5

99.6
112.1
111.4
123.8
74.9

10
12
13
14

6.9
.5
1.0
4.8
.6

102.9
102.0
105.9
100.3
118.7

103.1
103.1
102.7
100.9
120.6

104.5
104.0
109.6
101.1
121.7

103.4
105.3
106.2
100.5
118.5

103.4
105.6
107.5
100.0
120.0

103.5
102.5
108.8
100.2
120.2

104.5
106.3
109.5
100.7
122.9

103.6
105.7
106.4
100.8
117.2

106.3
105.7
109.6
103.1
125.0

107.5
104.8
105.2
105.4
128.8

106.0
103.5
104.1
104.5
122.3

107.9
104.4
115.6
104.4
124.5

107.6
105.7
107.3
105.3
126.9

107.2
104.6
113.8
103.7
124.5

7.7
6.2
1.6

112.8
112.7
113.2

109.4
110.1
107.1

110.8
111.5
108.5

111.1
110.9
111.8

111.9
112.0
111.3

114.5
112.7
120.9

112.6
112.6
112.7

112.7
113.2
110.9

110.2
110.9
107.6

109.9
110.3
108.7

113.6
113.6
113.2

110.8
110.5
111.9

111.3

491,493PT
492.493PT

111.7

113.0
113.4
111.7

110.2

111.6

111.2

111.6

SPECIAL AGGREGATES

100 Manufacturing excluding motor
vehicles and parts
101 Manufacturing excluding office
and computing machines . . .

80.5

115.7

116.0

116.3

116.8

117.3

117.9

118.6

118.6

119.5

120.0

120.6

120.8

121.1

121.3

83.6

113.7

114.3

114.4

114.5

114.7

115.5

116.1

116.2

116.9

117.3

117.5

117.5

117.8

117.8

Gross value (billions of 1992 dollars, annual rates)

MAJOR MARKETS
102

Products, total

2,001.9

2,258.7

2,276.1

2,272.9

2,273.4

2,270.7

2,303.5

2,301.1

2,302.9

2,315.3

2,327.5

2,324.7

2,331.5

2,340.3

2,334.5

103
104
105
106

Final
Consumer goods
Equipment
Intermediate

1,552.1
1,049.6
502.5
449.9

1,760.9
1,162.2
598.0
498.2

1,782.8
1,171.6
610.5
494.3

1,773.6
1,165.5
607.4
499.7

1,771.6
1,163.0
607.8
502.1

1,771.8
1,164.7
606.3
499.3

1,795.1
1,182.2
612.1
508.6

1,796.8
1,182.3
613.7
504.9

1,798.4
1,176.3
621.4
505.1

1,808.8
1,177.7
630.4
507.2

1,819.6
1,184.7
634.2
508.7

1,816.4
1,179.4
636.4
508.9

1,822.6
1,182.6
639.4
509.6

1,832.5
1,187.8
644.1
508.9

1,827.2
1,182.0
644.7
508.2

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 January 1997. See
"Industrial Production and Capacity Utilization: Historical Revision and Recent Develop-




ments," Federal Reserve Bulletin, vol. 83 (February 1997), pp. 67-92. 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 1997
HOUSING A N D CONSTRUCTION
Monthly figures at seasonally adjusted annual rates except as noted
1996

1997

lyy4

item

Sept.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.1

May

June

1,442
1,060
382
1,483
1,133
350
812
563
249
1,460
1,158
302
372

1,432
1,053
379
1.402
1,098
304
813
563
250
1,391
1,104
287
356

1,402
1,049
353
1.447
1,111
336
823
567
256
1,282
1,059
223
356

Private residential real estate activity (thousands of units except as noted)

N E W UNITS
1
2
3
4
5
6
7
8
9
10
11
12
13

Permits authorized
One-family
Two-family or more
Started
One-family
Two-family or more
Under construction at end of period1
One-family
Two-family or more
Completed
One-family
Two-family or more
Mobile homes shipped

1,372
1,069
303
1.457
1.198
259
755
584
171
1,346
1,161
185
305

1,333
997
335
1,354
1,076
278
775
554
221
1,319
1,073
246
341

1,426
1,070
356
1.477
1,161
316
819
584
235
1,407
1,124
283
362

1,391
1,029
362
1.470
1,148
322
825
592
233
1,356
1,097
259
372

1,349
1,003
346
1.407
1.104
303
825
588
237
1,375
1,129
246
364

1,391
1,016
375
1,486
1,133
353
828
584
244
1,431
1,151
280
354

1.405
999
406
1,353
1,024
329
815
571
244
1,484
1,177
307
338

1,395
1,052
343
1,375
1.125
250
818
573
245
1.362
1,109
253
339

1,438
1,069
369
1,554
1,237
317
821
574
247
1.572
1,267
305
353

670
340

667
374

757
326

768
331

706
330

788
327

794
322

822
308

826
300

825 R
287

764
287

772
283

819
282

130.0
154.5

133.9
158.7

140.0
166.4

139.0
167.4

143.8
168.4

143.5
172.0

144.9
171.8

145.0
171.9

143.0
171.1

148.0 R
172.7 R

150.0
179.1

140.0
168.5

142.9
176.4

3,967

3,812

4,087

4,020

4,000

4,060

3,950

3,910

4,230

4,160

4,060

4,250

4,150

109.9
136.8

113.1
139.1

118.2
145.5

117.8
144.7

116.6
143.6

117.4
144.1

118.8
147.1

120.6
149.6

117.5
144.7

120.0
147.5

120.7
150.4

123.1
153.1

127.2
158.4

1,457
1,034
423
1.479
1,142
337
814
566
248
1.471
1,156
315
353

Merchant builder activity in
one-family units
14 Number sold
1
15 Number for sale at end of period

Price of units sold
of dollars)2

(thousands

16 Median
17 Average
EXISTING UNITS ( o n e - f a m i l y )
18 Number sold

Price of units sold
of dollars)"
19 Median
2 0 Average

(thousands

Value of new construction (millions of dollars) 3

CONSTRUCTION
2 1 Total p u t in place

518,644

534,463

567,179

579,959

584,140

586,226

579,109

577,116

592,365

593,908

596,241

597,852

591,507

2 2 Private
23
Residential
24
Nonresidential
25
Industrial buildings
26
Commercial buildings
27
Other buildings
28
Public utilities and other

398,646
238,423
160,223
28,893
59,480
26,988
44,862

407,370
231,230
176,140
32,505
68,223
27,089
48,323

435,929
246,659
189,271
31,997
74,593
30,525
52,156

444.388
248,957
195,431
32,845
76.713
31,281
54,592

448,951
247,901
201,050
34,738
79,864
32,024
54,424

448,907
248,259
200,648
33,244
80,144
33,454
53,806

447,045
247,899
199,146
30,752
78,395
34,409
55,590

444,391
246,661
197,730
31,871
81,979
34,257
49,623

452,037
251,402
200,635
32,161
83.107
35.561
49,806

452,728
253,974
198,754
30,520
81,015
36,012
51,207

456,944
259,964
196,980
29.450
76,488
38.216
52,826

462,032
259,469
202,563
31,088
80,409
38,146
52,920

454,792
256,401
198,391
31,502
76,991
36.054
53,844

2 9 Public
30
Military
31
Highway
32
Conservation and development
Other
33

119,998
2,310
36,933
6,459
74,297

127,092
2,983
36,319
6,391
81,399

131,250
2,541
37,898
5,807
85,005

135,572
2,482
38,338
7,177
87,575

135,188
2,531
38,367
5.573
88.717

137,319
2,365
38.610
5,710
90.634

132,064
2,241
39,585
5,223
85,015

132,725
2,542
37,869
5.807
86.507

140,328
2,564
41,060
5,727
90.977

141.180
2,232
41,473
6,114
91,361

139,297
2,433
42,410
5,069
89,385

135,820
2,554
40,907
5,206
87,153

136,715
2.585
41,437
4,975
87.718

1. Not at annual rates.
2. Not seasonally adjusted.
3. Recent data on value of new construction may not be strictly comparable with data for
previous periods because of changes by the Bureau of the Census in its estimating techniques.
For a description of these changes, see Construction Reports ( C - 3 0 - 7 6 - 5 ) , issued by the
Census Bureau in July 1976.




SOURCE. Bureau of the Census estimates for all series except (1) mobile homes, which are
private, domestic shipments as reported by the Manufactured Housing Institute and seasonally adjusted by the Census Bureau, and (2) sales and prices of existing units, which are
published by the National Association of Realtors. All back and current figures are available
from the originating agency. Permit authorizations are those reported to the Census Bureau
from 19,000 jurisdictions beginning in 1994.

Selected Measures
2.15

A47

CONSUMER A N D PRODUCER PRICES
Percentage changes based on seasonally adjusted data except as noted
Change from 12
months earlier

Change from 3 months earlier
(annual rate)

Item

1997r

1996r
1996
July

Change from 1 month earlier
Index
level.
Julv
1997 1

1997

1997
July
Sept.

Dec.

Mar.

June

Mar.

Apr.

May

June

July

C O N S U M E R PRICES 2

(1982-84=100)
1 All items

3.0

2.2

3.1

3.3

1.8

1.0

.1

.1

.1

.1

.2

112.1

Food
3 Energy items
4 All items less food and energy
Commodities
Services
6

3.4
4.1
2.7
1.4
3.3

2.5
-1.0
2.4
.9
3.1

5.3
I.I
2.7
1.1
3.4

3.4
16.2
2.4
.9
3.1

.3
-2.8
2.4
1.1
2.7

1.5
-14.7
2.4
.6
3.5

.0
-1.7
.2
.1
.3

-.2
-1.5
.3
.3
.3

.4
-2.4
.2
.1

.2
.0
.1

.3
-.1

— ?

.3

.3

.2
-.1
.3

157.0
111.4
169.5
141.5
185.4

2.6
4.2
5.4
1.6
1.1

-.2

4.3
2.4
26.2
.6
-.6

-3.3
-2.0
-16.9
.6
.0

-3.6
-3.5
-15.1
-.6
-1.2

-.2

-1.4
.1
-.1

2.5
4.6
7.0
.6
1.2

,8r
-3.r
.2

-,5r
-.4
-2.7 1
.0

-.3
.4
-2.1

,OR

-.R

-.2

-.1
-.9
.7
.1
.1

-.1
-.2
.1
-.1
-.1

131.3
134.0
83.0
144.5
137.9

-.8
-1.8

-.1
.4

1.0
.0

2.2
-.3

-1.9
.6

-1.9
.3

-.6
.0

— ,4r
.0

-.2
.0

.2

-.2

.1

.0

125.5
134.2

25.1
19.9
-13.9

-14.4
-3.8
3.0

-9.4
18.7
-2.6

-28.5
235.2
-1.3

-2.8
-75.5
15.7

-10.1
10.2
-3.5

2.0r
-21.3r
,3r

3.2r

-.3
3.4
1.2

-5.4
-2.9
.4

.3
-.4
-.5

112.1
78.7
157.0

PRODUCER PRICES

(1982=100)
7 Finished goods
X
Consumer foods
9
Consumer energy
Other consumer goods
10
1 1 Capital equipment
Intermediate materials
17 Excluding foods and feeds
13 Excluding energy
Crude materials
14 Foods
15 Energy
16 Other

.1

1. Not seasonally adjusted.
2. Figures for consumer prices are for all urban consumers and reflect a rental-equivalence
measure of homeownership.




2.F

-2.5r

-.3

SOURCE. U.S. Department of Labor, Bureau of Labor Statistics.

A48
2.16

Domestic Nonfinancial Statistics • October 1997
GROSS DOMESTIC PRODUCT A N D INCOME
Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates
1996 r
Account

1994 r

1995r

1997

1996 r
Q2

Q3

Q4

Qir

Q2

G R O S S DOMESTIC P R O D U C T

1 Total

6,947.0

7,265.4

7,636.0

7,607.7

7,676.0

7,792.9

7,933.6

8,004.8

By source
2 Personal consumption expenditures
3
Durable goods
4
Nondurable goods
Services

4,717.0
579.5
1,428.4
2,709.1

4,957.7
608.5
1,475.8
2.873.4

5,207.6
634.5
1,534.7
3,038.4

5,189.1
638.6
1,532.3
3,018.2

5,227.4
634.5
1,538.3
3,054.6

5,308.1
638.2
1,560.1
3,109.8

5,405.7
658.4
1,587.4
3,159.9

5,429.8
644.0
1.578.9
3,206.9

6 Gross private domestic investment
/
Fixed investment
8
Nonresidential
9
Structures
Producers' durable equipment
1U
11
Residential structures

1,007.9
946.6
660.6
184.5
476.1
286.0

1,038.2
1,008.1
723.0
200.6
522.4
285.1

1.116.5
1,090.7
781.4
215.2
566.2
309.2

1,105.4
1,082.0
769.3
210.6
558.7
312.7

1,149.2
1,112.0
798.6
217.7
580.9
313.5

1,151.1
1,119.2
807.2
227.0
580.2
312.0

1,193.6
1,127.5
811.3
227.4
583.9
316.2

1,227.2
1,157.8
836.4
230.4
606.0
321.4

Change in business inventories
Nonfarm

61.2
50.5

30.1
38.1

25.9
23.0

23.4
17.2

37.1
31.3

31.9
28.7

66.1
62.2

69.4
64.8

14 Net exports of goods and services
Exports
13
16

-90.9
721.2
812.1

-86.0
818.4
904.5

-94.8
870.9
965.7

-93.8
865.0
958.7

-114.0
863.7
977.6

-88.6
904.6
993.2

-98.8
922.2
1,021.0

-103.3
948.4
1,051.8

17 Government consumption expenditures and gross investment
Federal
18
19
State and local

1,313.0
510.2
802.8

1,355.5
509.6
846.0

1,406.7
520.0
886.7

1,407.0
524.6
882.4

1,413.5
521.6
891.9

1,422.3
517.6
904.7

1,433.1
516.1
917.0

1,451.1
528.0
923.2

By major type of product
20 Final sales, total
21
Goods
22
Durable
Nondurable
23
24
Services
Structures
2b

6,885.7
2,520.2
1,072.5
1,447.6
3,772.4
593.2

7,235.3
2.637.9
1,133.9
1,503.9
3,980.7
616.8

7,610.2
2,759.3
1,212.0
1,547.3
4,187.3
663.6

7,584.3
2,759.3
1,214.8
1,544.5
4,162.2
662.8

7,638.9
2,760.7
1,216.3
1,544.4
4,208.1
670.1

7,761.0
2,795.0
1,233.5
1,561.5
4,282.7
683.3

7,867.4
2,838.4
1,248.0
1,590.4
4,338.2
690.8

7,935.4
2,835.4
1,258.3
1,577.2
4,400.9
699.0

61.2
33.6
27.7

30.1
29.1
1.1

25.9
16.9
9.0

23.4
18.1
5.3

37.1
33.3
3.9

31.9
-1.1
33.0

66.1
31.8
34.3

69.4
38.6
30.8

6,610.7

6,742.1

6,928.4

6,926.0

6,943.8

7,017.4

7,101.6

7,139.7

30 Total

5,590.7

5,912.3

6,254.5

6,229.4

6,303.3

6,376.5

6,510.0

n.a.

31 Compensation of employees
32
Wages and salaries
Government and government enterprises
33
34
Other
Supplement to wages and salaries
33
Employer contributions for social insurance
36
37
Other labor income

4,012.0
3,254.0
602.2
2,651.8
758.0
353.0
405.0

4,215.4
3,442.6
623.0
2,819.6
772.9
366.0
406.8

4,426.9
3,633.6
642.6
2,991.0
793.3
385.7
407.6

4,403.9
3,612.3
640.3
2.972.0
791.5
383.6
407.9

4,461.0
3,664.0
645.5
3,018.4
797.0
388.6
408.4

4,520.7
3,718.0
648.9
3,069.0
802.7
393.6
409.1

4,606.3
3.792.7
657.8
3,134.9
813.6
401.3
412.3

4,663.3
3,842.6
661.7
3,180.9
820.7
405.5
415.1

471.6
434.7
36.9

489.0
465.5
23.4

520.3
483.1
37.2

520.0
483.5
36.5

523.8
483.7
40.1

528.3
487.9
40.4

534.6
494.4
40.2

543.6
499.1
44.5

12
13

26 Change in business inventories
27
Durable goods
Nondurable goods
28
MEMO

29 Total G D P in chained 1992 dollars
NATIONAL INCOME

38 Proprietors' income 1
jy
Business and professional 1
40
Farm 1
41 Rental income of persons"

124.4

132.8

146.3

144.6

148.0

149.2

149.0

148.6

42 Corporate profits'
43
Profits before tax 3
44
Inventory valuation adjustment
43
Capital consumption adjustment

570.5
535.1
-16.1
51.4

650.0
622.6
-24.3
51.6

735.9
676.6
-2.5
61.8

738.5
682.2
-5.4
61.6

739.6
679.1
-2.7
63.2

747.8
680.0
3.3
64.4

779.6
708.4
3.5
67.7

n.a.
n.a.
18.1
69.9

46 Net interest

412.3

425.1

425.1

422.5

430.9

430.6

440.5

n.a.

1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.




3. For after-tax profits, dividends, and the like, see table 1.48.
SOURCE. U.S. Department of Commerce, Survey of Current Business.

Selected Measures
2.17

A49

PERSONAL INCOME A N D SAVING
Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates
1996r
1994r

Account

I995 r

1997

1996r
Q2

Q3

Q4

Ql'

Q2

PERSONAL INCOME AND SAVING

1 Total personal income
?
3

4
5
6
7
8
9
10
11
12
13
14
15
16
17

Wage and salary disbursements
Commodity-producing industries
Manufacturing
Distributive industries
Service industries
Government and government enterprises
Other labor income
Proprietors' income'
Business and professional 1
Farm1
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

5,791.8

6,150.8

6,495.2

6,461.3

6,541.9

6,618.4

6,746.2

6,830.0

3,240.7
824.4
620.8
741.4
1,072.7
602.2

3,429.5
864.4
648.4
783.1
1.159.0
623.0

3,632.5
909.1
674.7
823.3
1,257.5
642.6

3,611.2
906.3
674.1
819.2
1,245.3
640.3

3,662.8
917.2
680.1
829.0
1,271.1
645.5

3,716.9
927.8
685.6
840.6
1,299.5
648.9

3,791.5
942.9
694.1
856.8
1,334.1
657.8

3,841.5
953.3
700.7
866.8
1,359.6
661.7

405.0
471.6
434.7
36.9
124.4
204.8
668.1
954.7
473.0

406.8
489.0
465.5
23.4
132.8
251.9
718.9
1,015.0
507.8

407.6
520.3
483.1
37.2
146.3
291.2
735.7
1,068.0
537.6

407.9
520.0
483.5
36.5
144.6
290.0
727.8
1,064.8
535.4

408.4
523.8
483.7
40.1
148.0
292.0
742.7
1,072.4
540.0

409.1
528.3
487.9
40.4
149.2
295.2
749.8
1.081.5
545.6

412.3
534.6
494.4
40.2
149.0
312.5
757.2
1,107.2
558.9

415.1
543.6
499.1
44.5
148.6
318.3
766.8
1,117.5
564.4

277.5

293.1

306.3

305.0

308.2

311.5

318.2

321.3

5,791.8

6,150.8

6,495.2

6,461.3

6,541.9

6,618.4

6,746.2

6,830.0

739.1

795.1

886.9

887.8

897.3

922.6

955.7

982.0

20 EQUALS: Disposable personal income

5,052.7

5.355.7

5,608.3

5,573.5

5,644.6

5,695.8

5,790.5

5,848.0

21

LESS: Personal outlays

4,842.1

5,101.1

5,368.8

5,347.8

5,390.6

5,475.4

5.574.6

5,600.1

22 EQUALS: Personal saving

210.6

254.6

239.6

225.7

254.0

220.4

215.9

247.9

25,357.7
17.207.4
18,431.0

25,615.7
17.459.2
18.861.0

26.085.8
17,748.7
19,116.0

26,106.4
17,761.8
19,081.0

26,114.4
17,744.2
19,161.0

26.331.6
17,847.8
19,152.0

26,597.8
18,045.2
19.331.0

26,690.5
18,048.1
19,435.0

4.2

4.8

4.3

4.1

4.5

3.9

3.7

4.2

27 Gross saving

1,079.2

1,165.5

1,267.8

1,256.3

1,295.9

1,303.0

1,332.9

n.a.

28 Gross private saving

1.030.2

1,093.1

1,125.5

1,106.3

1,145.1

1,131.4

1,134.0

n.a.

210.6
167.6
-16.1

254.6
172.4
-24.3

239.6
202.1
-2.5

225.7
202.6
-5.4

254.0
202.3
-2.7

220.4
212.6
3.3

215.9
211.5
3.5

247.9
n.a.
18.1

412.3
226.3

428.9
224.1

452.3
230.5

448.5
228.3

455.5
232.2

462.0
235.2

467.4
238.0

472.1
239.8

34 Gross government saving
35
Federal
36
Consumption of fixed capital
37
Current surplus or deficit ( —). national accounts
38
State and local
39
Consumption of fixed capital
40
Current surplus or deficit ( —), national accounts

49.0
-117.2
69.5
-186.7
166.2
69.4
96.8

72.4
-103.6
70.9
-174.4
176.0
72.9
103.1

142.3
-39.3
71.2
-110.5
181.5
76.2
105.3

150.0
-40.2
71.4
-111.6
190.2
75.8
114.4

150.8
-28.3
71.2
-99.5
179.1
76.5
102.6

171.6
-5.9
71.3
-77.1
177.5
77.2
100.4

198.9
15.9
71.4
-55.5
182.9
78.2
104.7

n.a.
n.a.
71.5
n.a.
n.a.
79.1
n.a.

41 Gross investment

1,093.8

1,137.2

1,207.9

1,206.0

1,216.4

1,243.5

1,268.6

42 Gross private domestic investment
43 Gross government investment
44 Net foreign investment

1,007.9
206.0
-120.0

1.038.2
213.4
-114.4

1,116.5
224.3
-132.9

1,105.4
226.3
-125.6

1,149.2
223.6
-156.4

1,151.1
225.3
-132.9

1.193.6
223.3
-148.4

14.6

-28.2

-59.9

-50.2

-79.5

-59.5

-64.3

LESS: Personal tax and nontax payments

MEMO

Per capita (chained 1992 dollars)
23 Gross domestic product
2.4 Personal consumption expenditures
25 Disposable personal income
26 Saving rate (percent)
GROSS SAVING

29 Personal saving
30 Undistributed corporate profits'
31 Corporate inventory valuation adjustment
Capital consumption
32 Corporate
33 Noncorporate

,

allowances

45 Statistical discrepancy
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.




SOURCE. U.S. Department of Commerce, Survey of Current Business.

n.a.
1,227.2
226.7
n.a.
n.a.

A50
3.10

International Statistics • October 1997
U.S. INTERNATIONAL TRANSACTIONS

Summary

Millions of dollars; quarterly data seasonally adjusted except as noted1
1997

1996
Item credits or debits

1 Balance on current account
2
3
4
5
6
7
8
9
10

Merchandise trade balance"
Merchandise exports
Merchandise imports
Military transactions, net
Other service transactions, net
Investment income, net
U.S. government grants
U.S. government pensions and other transfers
Private remittances and other transfers

1994

-133,538
-166,192
502,398
-668,590
1,874
59,902
9,723
-15,671
-4,544
-18.630

1996

1995

QI

Q2

Q3

Q4

Qlp

-42,833
-52,493
150.764
-203,257
792
19.185
-1.370
-2,690
-1,064
-5,193

-36.874
-48.190
157,846
-206,036
1,295
20,697
1.250
-5,499
-1,050
-5.377

-40,966
-49,787
162,527
-212,314
518
20,152
-3,140
-2.162
-1,098
-5,449

-129,095
-173,560
575,871
-749,431
3,866
67,837
6,808
-11,096
-3,420
-19,530

-148,184
-191,170
612,069
-803,239
3,786
76,344
2,824
-14,933
-4,331
-20,704

-32,884
-42,925
150,048
-192,973
485
17,901
2,061
-4,321
-1,136
-4,949

-35,585
-47.562
153,411
-200,973
1,214
18,569
883
-2,423
-1,081
-5,185

11 Change in U.S. government assets other than official
reserve assets, net (increase, —)

-352

-549

-690

-210

-358

162

-284

31

12 Change in U.S. official reserve assets (increase, —)
Gold
13
14
Special drawing rights (SDRs)
Reserve position in International Monetary Fund
15
Foreign currencies
16

5.346
0
-441
494
5,293

-9,742
0
-808
-2,466
-6,468

6,668
0
370
-1,280
7.578

17
0
-199
-849
1,065

-523
0
-133
-220
-170

7,489
0
848
-183
6,824

-315
0
-146
-28
-141

4.480
0
72
1.055
3,353

17 Change in U.S. private assets abroad (increase, —)
18
Bank-reported claims"
19
Nonbank-reported claims
20
U.S. purchases of foreign securities, net
U.S. direct investments abroad, net
21

-165,510
-4,200
-31,739
-60,309
-69,262

-296,916
-75,108
-34,997
-100,074
-86,737

-358,422
-98,186
-64,234
-108,189
-87.813

-70,575
1,868
-15,778
-34,455
-22,210

-48,817
192
-5,047
-20.328
-23,634

-85,193
-33,589
-17,294
-23,206
-11,104

-153,837
-66,657
-26,115
-30,200
-30,865

-104,298
-56,560

22 Change in foreign official assets in United States (increase, +)
23
U.S. Treasury securities
Other U.S. government obligations
24
Other U.S. government liabilities4
25
Other U.S. liabilities reported by U.S. banks3
26
Other foreign official assets5
27

40,385
30,750
6,077
2,366
3,665
-2,473

110,729
68,977
3,735
744
34,008
3,265

122,354
111,253
4.381
720
4,722
1,278

52,014
55,600
52
-143
-3,284
-211

13,154
-3,383
1.258
-204
14,198
1,285

24,089
25,472
1,217
907
-1,922
-1,585

33.097
33,564
1,854
160
-4,270
1,789

28,337
23,107
651
377
7,489
-3,287

28 Change in foreign private assets in United States (increase, +)
29
U.S. bank-reported liabilities3
30
U.S. nonbank-reported liabilities
Foreign private purchases of U.S. Treasury securities, net
31
Foreign purchases of other U.S. securities, net
32
Foreign direct investments in United States, net
33

256,952
104,338
-7,710
34,274
56,971
45,679

340,505
30,176
34,588
99,548
96,367
67,526

425,201
9,784
31,786
155,578
133,798
76,955

36,219
-33,535
6,800
11,832
36.475
15,877

92.960
2,319
7,288
31,212
29,761
17.440

134,540
2,040
20,610
43,402
35.115
25,977

161,482
38,960
-2,912
67,338
32,447
17.661

130,530
18,891

34 Allocation of special drawing rights
35 Discrepancy
Due to seasonal adjustment
36
Before seasonal adjustment
37

0
-3,283

0
-14,931

0
-46,927

-3,284

- i 4,931

-46,926

0
15,419
6,228
9,191

0
-20,831
-1,076
-19,755

0
-38.254
-7,830
-30,424

0
-3.269
2,669
-5,938

0
-18,114
7,325
-25,439

-14,510
-24,628

38,738
21,700

MEMO

Changes in official assets
38 U.S. official reserve assets (increase, —)
39 Foreign official assets in United States, excluding line 25
(increase, +)

5,346

-9,742

6,668

17

-523

7,489

-315

4,480

38,019

109,985

121,634

52,157

13,358

23,182

32,937

27,960

40 Change in Organization of Petroleum Exporting Countries official
assets in United States (part of line 22)

-1,529

4,239

12,278

-1,539

5,239

5,263

3,315

6,717

1. Seasonal factors are not calculated for lines 12-16, 18-20, 22-34, and 3 8 ^ 0 .
2. Data are on an international accounts basis. The data differ from the Census basis data,
shown in table 3.11, for reasons of coverage and timing. Military exports are excluded from
merchandise trade data and are included in line 5.
3. Reporting banks include all types of depository institutions as well as some brokers and
dealers.




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. Suney of Current
Business.

Summary Statistics
3.11

A51

U.S. FOREIGN TRADE 1
Millions of dollars; monthly data seasonally adjusted
1996
Item

1994

1995

1997

1996
Dec.

Jan.

Feb.

Mar.

Apr.

May

June p

1 Goods and services, balance
2
Merchandise
3
Services

-104,416
-166,192
61,776

-101,857
-173,560
71,703

-111,040
-191,170
80,130

-10,601
-17,695
7.094

-11,474
-18,148
6,674

-9,884
-16,761
6.877

-7,755
-14,877
7,122

-8,746
-15.527
6,781

-9,536
-16,363
6.827

-8.158
-15.013
6,855

4 Goods and services, exports
Merchandise
5
6
Services

699.646
502,398
197,248

794,610
575,871
218,739

848,833
612,069
236,764

72,444
52,133
20,311

71,957
51,686
20,271

74,370
53,687
20.683

78,193
57,155
21,038

77,887
57,162
20,725

77,686
56,871
20,815

78,420
57,456
20,964

7 Goods and services, imports
8
Merchandise
9
Services

-804,062
-668.590
-135.472

-896,467
-749,431
-147,036

-959,873
-803,239
-156,634

-83,045
-69,828
-13,217

-83,431
-69.834
-13,597

-84,254
-70,448
-13,806

-85,948
-72,032
-13.916

-86.633
-72,689
-13.944

-87,222
-73,234
-13.988

-86,578
-72,469
-14,109

I. 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
1996
Asset

1 Total
2 Gold stock, including Exchange
Stabilization Fund1
3 Special drawing rights 2 ' 3
4 Reserve position in International Monetary
Fund"
5 Foreign currencies 4

1993

1994

Dec.

Jan.

Feb.

Mar.

Apr.

May

June

July p

73,442

74,335

85,832

75,090

68,200

67,482

67,222

65,873

68,054

67,813

66,119

11,053
9,039

11.051
10,039

11,050
11,037

11.049
10,312

11,048
9,793

11,051
9,866

11,050
9.879

11,051
9,726

11,051
10,050

11,050
10.023

11,050
9,810

11,818
41,532

12,030
41,215

14.649
49,096

15,435
38,294

14,372
32,987

14,037
32,528

13,846
32,447

13.660
31,436

13,805
32,935

13,805
32,935

13,677
31,582

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

1997

1995

FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS 1
Millions of dollars, end of period
1996
Asset

1993

1994

1997

1995
Jan.

Dec.
1 Deposits
Held in custody
2 U.S. Treasury securities*
3 Earmarked gold 3

Mar.

Apr.

May

June

JulyP

386

250

386

167

167

229

16

169

176

178

175

379,394
12,327

441,866
12,033

522,170
11,702

638,049
11,197

646,130
11,197

662,375
11,175

672,059
11,034

668,536
10,944

662,747
10.868

652,077
10,794

653,157
10,793

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.




Feb.

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 1997
SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS
Millions of dollars, end of period
1996
Item

1 Total 1
2
3
4
5
6
7
8
9
10
11
12

1994

1997

1995
Dec.

Jan.

Feb.

Mar.

Apr.

May

June p

520,934

630,918

752,663

762,914

771,952

781,077 r

777,370 r

782,285 r

776,610

By type
Liabilities reported by banks in the United States"
U.S. Treasury bills and certificates 3
U.S. Treasury bonds and notes
Marketable
Nonmarketable 4
U.S. securities other than U.S. Treasury securities 5

73,386
139,571

107,394
168,534

112,182
193,435

119,641
188,076

116,672
191,090

119,881r
191,548

117,337
183,628

125,584r
176,268

122,227
161,984

254,059
6,109
47,809

293,690
6,491
54,809

380,565
5,968
60,513

388,396
6,007
60,794

398,519
6.043
59,628

405,625
6,084
57,939

413,007 r
5.692
57,706

416,384 r
5,730
58,319

427,118
5,767
59,514

By area
Europe 1
Canada
Latin America and Caribbean
Asia
Africa
Other countries

215,374
17,235
41,492
236,824
4,180
5.827

222,406
19,473
66.721
311,016
6,296
5,004

253,099
21,343
81,807
383,107
7,379
5,926

262,055
21,151
77,411
390,803
6,717
4,775

260,962
21,237
79,332
399,294
7,411
3,714

264,919
21,997
80,232 r
401,098
7,908
4,921

264,68l r
19,677
77,024
403,526
7,765
4,695 r

265,724
20,196
82,292r
402,102
8,643
3,326r

271,004
20,577
88,760
381,478
8,890
5,899

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

LIABILITIES TO, A N D 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 States 1

Millions of dollars, end of period
1996
Item

1 Banks' liabilities
2 Banks' claims
3
Deposits
4
Other claims
5 Claims of banks' domestic customers 2

1993

78,259
62,017
20,993
41,024
12,854

1. Data on claims exclude foreign currencies held by U.S. monetary authorities.




1994

89,258
60,711
19,661
41,050
10,878

1997

1995

109,713
74,016
22,696
51,320
6,145

June

Sept.

Dec.

Mar.

111,651
65,825
20,890
44,935
7,554

111,140
68,120
24,026
44,094
7,390

103,383
66,018
22,467
43.551
10,978

109,238r
72,589
24,542
48,047
9,357

2. Assets owned by customers of the reporting bank located in the United States that
represent claims on foreigners held by reporting banks for the accounts of the domestic
customers.

Nonbank-Reported
3.17

LIABILITIES TO FOREIGNERS
Payable in U.S. dollars

Data

A53

Reported by Banks in the United States'

Millions of dollars, end of period
1997

1996
Item

1994

1995

1996
Dec.

Jan.

Feb.

Mar.

Apr.

May

June p

1,137,751

1,135,724

1,158,680

l,154,155 r

l,163,243 r

1,176,959

1,164,065

782,883 r
28,063 r
189,873 r
151,408 r
413,539 r

796,555'
29,745'
183,860'
161,326
421,624'

812,025
26,494
184,347
161,693
439,491

799,548
29,803
186,306
164,861
418,578

BY HOLDER AND T Y P E OF LIABILITY
1

Total, all foreigners

2 Banks' own liabilities
3
Demand deposits
4
Time deposits 2
Other 1
5
6
Own foreign offices 4
7 Banks' custodial liabilities 5
U.S. Treasury bills and certificates 6
8
9
Other negotiable and readily transferable
instruments 7
10
Other
11 Nonmonetary international and regional organizations 8 . . .
12
Banks' own liabilities
13
Demand deposits
14
Time deposits 2
15
Other 1
16
17
18
19

Banks' custodial liabilities 5
U.S. Treasury bills and certificates 6
Other negotiable and readily transferable
instruments 7
Other

20 Official institutions 9
21
Banks' own liabilities
22
Demand deposits
23
Time deposits"
24
Other 1
25
26
27
28

Banks' custodial liabilities 5
U.S. Treasury bills and certificates 6
Other negotiable and readily transferable
instruments 7
Other

29 Banks'"
30
Banks' own liabilities
Unaffiliated foreign banks
31
32
Demand deposits
33
Time deposits 2
34
Other 1
35
Own foreign offices 4
36
37
38
39

Banks' custodial liabilities 5
U.S. Treasury bills and certificates 6
Other negotiable and readily transferable
instruments 7
Other

40 Other foreigners
41
Banks' own liabilities
42
Demand deposits
43
Time deposits"
44
Other 1
45
46
47
48

Banks' custodial liabilities 5
U.S. Treasury bills and certificates 6
Other negotiable and readily transferable
instruments 7
Other

1,014,996

1,099,549

1,137,751

718,591
23,386
186,512
113,215
395,478

753,461
24,448
192,558
140,165
396,290

759.026
27,034
188,000
142,464
401,528

759,026
27,034
188,000
142,464
401,528

765,212
26,228
187,268
158,324
393,392

782,714
25,084
190,257
161,313
406,060

296,405
162,938

346,088
197,355

378,725
220,575

378,725
220,575

370,512
214,727

375,966
217,817

371,272
218,271

366,688
211,148

364,934
200,983

364,517
197,877

42,539
90,928

52,200
96,533

64,040
94,110

64,040
94,110

62,971
92,814

59,668
98,481

55,843
97,158

59,341
96,199

64,343
99,608

65,506
101,134

8,606
8,176
29
3,298
4,849

11,039
10,347
21
4,656
5,670

13,864
13,355
29
5,784
7,542

13,864
13,355
29
5,784
7,542

14,849
14,170
55
5,792
8,323

14,626
14,297
51
5,035
9,211

12,192
11,793
49
6,952
4,792

13,039
12,787
30
5,238
7,519

12,315
12,120
16
4,857
7,247

13,928
13,472
775
6,645
6,052

430
281

692
350

509
244

509
244

679
494

329
219

399
226

252
154

195
102

456
65

149
0

341
1

265
0

265
0

185
0

NO

0

158
15

98
0

88
5

383
8

212,957
59,935
1,564
23,511
34,860

275,928
83,447
2,098
30,717
50,632

305,617
79,406
1,511
33,336
44,559

305,617
79,406
1,511
33,336
44,559

307,717
88,190
1,290
32,646
54,254

307,762
87,317
1,378
34,457
51,482

311,429'
90,70 r
2,390
32,691
55,620'

300,965
86,794
2,345
33,428
51,021

301,852
92,847
1,857
36,627
54.363

284,211
96,311
1,559
39,793
54,959

153,022
139,571

192,481
168,534

226,211
193,435

226,211
193,435

219,527
188,076

220,445
191,090

220,728
191,548

214,171
183,628

209,005
176,268

187,900
161,984

13,245
206

23,603
344

32,350
426

32,350
426

31,291
160

29,008
347

28,797
383

30,396
147

32,485
252

25,487
429

678,532
563,617
168,139
10,633
111,171
46,335
395,478

691,412
567,834
171,544
11,758
103,471
56,315
396,290

680,923
562,912
161,384
13,692
90,811
56,881
401,528

680,923
562,912
161,384
13,692
90,811
56,881
401,528

669,225
553,650
160,258
12,898
90,123
57,237
393,392

683,142
562,652
156,592
11,642
89,723
55,227
406,060

687,849 r
567,824 r
154,285'
13,360
88,784
52,141'
413,539'

700,330'
580,203'
158,579'
14,909
83,540
60,130'
421,624'

710,688
591,295
151,804
12,957
81,585
57,262
439,491

719,266
576,582
158,004
14,954
80,416
62,634
418,578

114,915
11,264

123,578
15,872

118,011
13,886

118,011
13,886

115,575
13,969

120,490
13,289

120,025
13,996

120,127
14,177

119,393
11,223

142,684
23,025

14,506
89,145

13,035
94,671

12,321
91,804

12,321
91,804

11,142
90,464

11,210
95,991

11,204
94,825

12,169
93,781

14,363
93,807

24,140
95,519

114,901
86,863
11,160
48,532
27,171

121,170
91,833
10,571
53,714
27,548

137,347
103,353
11,802
58,069
33,482

137,347
103,353
11,802
58,069
33,482

143,933
109,202
11,985
58,707
38,510

153,150
118,448
12,013
61,042
45,393

142,685'
112,565'
12,264'
61,446'
38,855'

148,909'
116,771'
12,461'
61,654'
42,656'

152,104
115,763
11,664
61,278
42,821

146,660
113,183
12,515
59,452
41,216

28,038
11,822

29,337
12,599

33,994
13,010

33,994
13,010

34,731
12,188

34,702
13,219

30,120
12,501

32,138
13,189

36,341
13,390

33.477
12.803

14,639
1,577

15,221
1,517

19,104
1,880

19,104
1,880

20,353
2,190

19,340
2,143

15,684
1,935

16,678
2,271

17,407
5,544

15,496
5,178

17,895

9,103

9,934

9,934

9,035

8,745

9,332

10,658

10,916

11,651

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 1997
LIABILITIES TO FOREIGNERS Reported by Banks in the United States'—Continued
1996

Item

1994

1995

1997

1996

Jan.

Dec.

Feb.

Mar.

Apr.

May

June p

AREA
5 0 Total, all foreigners

1,014,996

1,099,549

1,137,751

1,137,751

1,135,724

1,158,680

l,154,155 r

l,163,243 r

l,176,959 r

1,164,065

51 Foreign countries

1,006,390

1,088,510

1,123,887

1,123,887

1,120,875

1,144,054

l,141,963 r

l,150,204 r

l,164,644 r

1,150,137

390,869
3,588
21,877
2.884
1,436
44.365
27,109
1,400
10.885
16,033
2,338
2.846
2,726
14,675
3,094
40,724
3.341

362,819
3,537
24,792
2,921
2,831
39,218
24,035
2.014
10,868
13.745
1.394
2.761
7.948
10,011
3,246
43,625
4.124

368.380
5,101
23,576
2,450
1,463
34,365
24,554
1,810
10,701
10,995
1.288
1,865
7,571
16,920
1,291
44,214
6.723

368,380
5,101
23,576
2.450
1,463
34,365
24,554
1,810
10,701
10,995
1,288
1,865
7.571
16,920
1,291
44,214

379.641
4,794
22,842
2,213
1,583
34.558
24,871
2,080
10,366
9,760
1.860
1.741
7,160
20,410
2,226
43,266

379,566
4,010
23.537
1,594
1.338
35,457
24,142
1,930
10,610
10,946
1,538
1,661
6,819
17,963
1,483
46.681

374.944R
4,589
22,107
1,692
1.017
34,861
25,410
2,392
8,676
11,008
1,896
1.756
7.771

43.315

374,978 R
3,069
18,764
1.647
1.747
40,227
25.697
1,740
9,419
11,975
1,357
1,995
7,863
17,674
2,190
41.803

376,406R
3,337
20,896
1,974
953
38,444
26,000
2,269
9,660
8.625
1,121
1.828
9,531
15,005
1,600
43,674

390,020
3,194
40,698
2,003
1,341
40,686
27,446
1,675
10,170
8,226
841
1,821
12,261
16,237
1,406
38,973

163,733
245
27,770

139,183
177
26,389

151.416
206
21,871

6.723
151.416
206
21.871

7,051
157,412
212
25.236

6,748
157,320
239
25,550

7.176
154.182 r
248
26.176

6,585
156,667 r
266
24,293

6,742
160,958 r
3?4
23,465

6,530
152.706
228
23,578

5 2 Europe
53
Austria
54
Belgium and Luxembourg

55
56
5/
58
59
60
61
62
63
64

65
66
6/
68

69
/0
/I

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.'"

72

18,791 r
1,881r

24,768

30.468

38,111

38,111

34.830

33,985

37,118

39,575

37.554

37,090

73 Latin America and Caribbean
Argentina
Bahamas
/5
/6
Bermuda
Brazil
British West Indies
Chile
Colombia
80
81
Cuba
82
Ecuador
83
Guatemala
84
Jamaica
Mexico
85
86
Netherlands Antilles
Panama
87
88
89
Uruguay
90
Venezuela
Other
91

423,847
17,203

440.213
12.235
94,991
4,897
23,797
239,083
2,826
3.659

465,733
13,794
88,304
5,299
27.662
250,786
2,915
3,256

13

8

875
1,121
529
12,227
5,217
4,551
900
1.597
13.986
6.704

1,314
1,276
24,560
4,673
4,264
974
1,836
11,808
7,531

465.733
13.794
88.304
5,299
27,662
250,786
2,915
3,256
21
1,767
1,282
628
31,230
5,977
4,077
834
1.888
17,361
8,652

1.767
1.282
628
31,230
5,977
4,077
834
1,888
17,361
8,652

455.457
16.475
90.460
5,103
22,467
244,633
2.987
2,791
19
1,617
1,348
576
27,139
6,401
3,849
967
1,915
18,119
8.591

472,600
17,018
98,120
8.803
23.858
248,571
3,459
2,855
19
1.633
1,410
576
27,442
6,085
4,135
917
1.857
18,125
7,717

464.191'
16,739
89.427 r
8.196
23,693
253,695 r
3,278
2,807
18r
1,484
1,378
585
26,598 r
3,474
3,847
926
1,843
18,454
7,749 r

476,694 r
14,057
104,831
7,197
23,373
250,232 r
3,117
3,165
52
1,469
1,514
525
27,722 r
5,334
3.711
881
1,756
18.968
8,790 r

491,878 r
16,379
100,081
6,265
25,405 r
267,075 r
3.239
2.776
54
1,608
1,457
472
27.914 r
3,678
4,005
1,117r
2,063
18,897
9,393 r

490,436
18,177
89,434
5,176
26,013
269,210
3,371
2,836
55
1,466
1,497
465
31,357
6,103
3,969
919
2,154
18,935
9,299

92

154,346

240,595

236,673

236.673

236,404

244,473

250,705 r

242,327 r

244,199 r

216,550

10,066
9,844
17,104
2,338
1,587
5,157
62,981
5,124
2,714
6.466
15.494
15.471

33,750
11,714
20,197
3,373
2,708
4,041
109,193
5,749
3,092
12,279
15.582
18.917

30,438
15,990
18,736
3.930
2,297
6,042
107,012
5,949
3,378
10,912
14.303
17,686

30,438
15,990
18,736
3,930
2,297
6.042
107,012
5,949
3,378
10,912
14.303
17.686

27,914
16,680
19,866
4,323
2,159
6,597
106,419
6,056
2,340
9,873
12,924
21,253

31,631
15,619
20,062
4,746
2.473
6,197
108,703
6.257
2,437
10,752
12,767
22,829

31,370
15,796
20,106
5,430
2,672
5,960 r
116,066 r
6,545
2,389
9,394
13,408
21,569

28,580
14,669
18,942
4,756
2,441
6,097 r
114,930 r
7,153
2,335
10,361
13,826
18,237

29,432
12,441
19,375
4,368
2,788
6,413 r
114,669 r
2,387
7,808
13,972
22,695

7,284
12,356
20,147
4,241
2,528
5,749
112,998
7,629
2,469
6,159
12,644
22,346

6.524
1.879
97
433
9
1,343
2,763

7,641
2.136
104
739
10
1,797
2.855

8,063
2.012
112
458

8,443
1,933
610
5
3,095
2,689

8,110
2,033
97
720
7
2,467
2,786

8,536
2,001
107
827

2,608
2,863

8.063
2.012
112
458
10
2,608
2,863

2,931
2,661

9,011
2,056
129
784
4
3,344
2,694

9,824
2,248
91
2,004
9
2,731
2,741

9,953
1,977
66
1,770
39
3,153
2,948

112 Other
Australia
113
114
Other

6,036
5,142
894

6,774
5.647
1,127

6,927
5,468
1,459

6.927
5,468
1,459

6,100
4.866
1,234

5,320
4,072
1,248

6,469
5,098
1,371

7,619
6.370
1,249

4,783
3,405 r
l,378 r

6,088
4,739
1,349

115 Nonmonetary international and regional organizations. . .
116
International 15
Latin American regional 16
Other regional 17
118

8,606
7,537
613
456

11.039
9.300
893
846

13,864
11,991
1,339
534

13.864
11,991
1,339
534

14,849
13,230
1,103
516

14,626
13,000
1,220
406

12,192
10,272
1,459
461

13,039
11,671
1,050
318

12,315 r
10,64 l r
1,435
239

13,928
12,273
1,071
584

14

n
m
19

93
94
95

China
Mainland
Taiwan
Hong Kong

96
9/
98
99
100
101
102
103
104

Indonesia
Israel
Japan
Korea (South)
Philippines
Thailand
Middle Eastern oil-exporting countries 13
Other

105
106
10/
108
109
110
111

Egypt
Morocco
South Africa
Zaire
Oil-exporting countries' 4
Other

117

104,014

8,424
9,145
229.599
3,127
4.615

481

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.




10

21

111

9

7,851

15. Principally the International Bank for Reconstruction and Development. Excludes
"holdings of dollars" of the International Monetary Fund.
16. Principally the Inter-American Development Bank.
17. Asian, African. Middle Eastern, and European regional organizations, except the Bank
for International Settlements, which is included in "Other Europe."

Nonbank-Reported
3.18

Data

A55

BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States 1
Payable in U.S. Dollars
Millions of dollars, end of period
1997

1996
Area or country

1 Total, all foreigners
2 Foreign countries

1994

485,432

1995

532,444

1996

600,676

Apr.

May

June p

Dec.

Jan.

Feb.

Mar.

600,676

607,491

633,662

636,645 r

641,080 r

632,145

651,993

r

638,792 r

629,813

650,070

195,969
1,440
8,017
924
1,121
17,492
9,059
477
6,478
8,190
1,199
306
1,881
5,854
1,870
24,574
1,306
101,240
79
4,462

191,790
1,395
8,129
1,010
1,414
16,926
9,947
630
7,865
10,841
749
468
2,020
6,810
2,539
22,500
1,455
93,161
75
3,856

480,841

530,513

598,072

598,072

605,719

631,407

635,139

124,124
692
6,923
1,129
512
12,149
7,623
604
6,044
2,960
504
938
973
3,536
4,098
5,747
878
66,863
265
1,686

132,150
565
7,624
403
1,055
15,033
9,263
469
5,370
5,346
665
888
660
2,166
2,080
7,474
803
67,784
147
4,355

166,489
1,662
6,727
492
971
15,246
8,472
568
6,457
7,080
808
418
1,669
3,211
2,673
19,798
1,109
85,057
115
3,956

166,489
1,662
6,727
492
971
15,246
8,472
568
6,457
7,080
808
418
1,669
3,211
2,673
19,798
1,109
85,057
115
3,956

178,480
1,643
7,611
678
1,144
18,111
9,659
636
5,419
8,119
1,058
420
1,673
6,507
2,013
21,457
1,029
86,711
108
4,484

193,227
1,284
6,855
571
976
20,576
9,077
530
5,587
8,658
766
310
1,704
5,407
2,314
25,258
1,221
96,988
107
5,038

204,790 r
1,911
8,439
546
1,684
24,929
11,971
755
6,427
7,616
1,226
421
2,028
6,633
2,311
20,855
1,236
99,129 r
87
6,586

183,017r
1,541
8,054
888
1,194
15,306
9,537
453
6,166
8,866
846
326
1,799
6,301
1,942
21,301
1,216
90,82 r
78
6,382

18,490

20,874

26,436

26,436

26,348

27,881

35,782 r

33,579 r

31,336

36,012

24 Latin America and Caribbean
25
Argentina
26
Bahamas
27
Bermuda
28
Brazil
British West Indies
29
Chile
30
31
Colombia
32
Cuba
33
Ecuador
34
Guatemala
35
Jamaica
Mexico
36
37
Netherlands Antilles
38
Panama
39
Peru
40
Uruguay
41
Venezuela
42
Other

224,229
5,854
66,410
8,533
9,583
96,373
3,820
4,004
0
682
366
258
17,749
1,404
2,198
997
503
1,832
3,663

256,944
6,439
58,818
5,741
13,297
124,037
4,864
4,550
0
825
457
323
18,024
9,229
3,008
1,829
466
1,661
3,376

274,127
7,400
71,871
4,103
17,259
105,510
5,136
6,247
0
1,031
620
345
18,425
25,209
2,786
2,720
589
1,702
3,174

274.127
7,400
71,871
4,103
17,259
105,510
5,136
6,247
0
1,031
620
345
18,425
25,209
2,786
2,720
589
1,702
3,174

271,654
6,987
62,679
4,444
17,620
108,643
5,509
6,166
0
1,079
612
336
18,323
27,675
2,796
2,867
623
1,599
3,696

275,255
6,952
66,771
5,980
17,758
110,143
5,602
6,033
0
1,134
634
336
18,297
24,250
2,911
2,944
766
1,452
3,292

261,155
6,995
67,728
6,216
17,752
98,778
5,784
6,099
0
1,155
629
366
19,516
18,926
3,110
2,510
741
1,516
3,334

282,478
6,870
68,219
8,125
17,590
111,300
5,636
6,026
0
995
633
325
20,292
25,235
3,243
2,473
682
1,558
3,276

264,380
7,237
65,546
6,596
18,588
106,921
5,745
6,041
0
1,092
619
328
19,168
14,759
3,347
2,580
735
1,710
3,368

281,329
7,297
66,664
6,951
19,152
121,962
5,598
6,320
2
1,130
651
334
19,211
14,022
3,194
2,606
721
1,778
3,736

43 Asia
China
44
Mainland
45
Taiwan
46
Hong Kong
47
India
Indonesia
48
49
Israel
50
Japan
51
Korea (South)
52
Philippines
53
Thailand
54
Middle Eastern oil-exporting countries 4
55
Other

107,800

115,336

122,535

122,535

121,362

127,080

124,334r

129,598

128,769

130,743

836
1,448
9,222
994
1,472
688
59,569
10,286
663
2,902
13,982
5,738

1,023
1,713
12,821
1,846
1,696
739
61,468
13,975
1,318
2,612
9,639
6,486

1,401
1,894
12,802
1,946
1,762
633
59,967
18,958
1,697
2,679
10,424
8,372

1,401
1,894
12,802
1,946
1,762
633
59,967
18,958
1,697
2,679
10,424
8,372

2,035
1,249
11,764
1,824
1,749
692
59,843
20,214
1,492
3,003
8,582
8,915

1,766
1,201
11,877
1,957
1,896
617
64,199
20,031
1,794
3,092
8,889
9,761

1,456
1,709
14,143
2,194
2,081
612
56,483 r
19,943
1,600
3,429
10,078
10,606

2,201
1,532
13,389
2,147
2,206
586
59,083
20,863
1,746
3,233
11,315
11,297

2,168
1,500
14,969
2,257
2,435
909
56,484
20,925
1,937
3,069
10,590
11,526

2,045
1,884
16,056
2,336
2,569
631
60,255
21,119
2,123
3,192
9,085
9,448

56 Africa
57
Egypt
Morocco
58
South Africa
59
Zaire
60
61
Oil-exporting countries 5
Other
62

3,053
225
429
674
2
856
867

2,742
210
514
465
1
552
1,000

2,776
247
524
584
0
420
1,001

2,776
247
524
584
0
420
1,001

2,731
246
489
572
0
408
1,016

2,772
245
522
564
0
474
967

2,735
244
473
470
0
605
943

3,282
231
478
452
1
1,177
943

2,847
270
463
569
0
679
866

3,269
312
465
602
0
1,129
761

63 Other
64
Australia
Other
65

3,145
2,192
953

2,467
1,622
845

5,709
4,577
1,132

5,709
4,577
1,132

5,144
3,743
1,401

5,192
3,176
2,016

6,343
4,101
2,242

6,838
4,918
1,920

6,512
4,088
2,424

6,927
5,042
1,885

66 Nonmonetary international and regional organizations 6 . ..

4,591

1,931

2,604

2,604

1,772

2,255

1,506

2,288

2,332

1,923

3 Europe
4
Austria
5
Belgium and Luxembourg
6
Denmark
7
Finland
France
8
9
Germany
10
Greece
11
Italy
12
Netherlands
13
Norway
14
Portugal
15
Russia
16
Spain
17
Sweden
18
Switzerland
19
Turkey
20
United Kingdom
21
Yugoslavia 2
Other Europe and other former U.S.S.R.3
22
23 Canada

1. Reporting banks include all types of depository institutions as well as some brokers and
dealers.
2. Since December 1992, has excluded Bosnia, Croatia, and Slovenia.
3. Includes the Bank for International Settlements. Since December 1992, has included all
parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia.




4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab
Emirates (Trucial States).
5. Comprises Algeria, Gabon, Libya, and Nigeria.
6. Excludes the Bank for International Settlements, which is included in "Other Europe."

A56
3.19

International Statistics • October 1997
BANKS' OWN A N D DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS
Payable in U.S. Dollars

Reported by Banks in the United States'

Millions of dollars, end of period
1997

1996

Type of claim

1994

1996

1995

Dec.

Jan.

Feb.

607,491
26,061
330,261
121,198
39,266
81,932
129,971

633,662
24,755
360,541
118,074
38,155
79,919
130,292

Mar. r

Total

601,814

655,211

744,691

744,691

Banks' claims
Foreign public borrowers
Own foreign offices"
Unaffiliated foreign banks
Deposits
Other
All other foreigners

485,432
23,416
283,015
110,410
59,368
51,042
68,591

532,444
22,518
307,427
101,595
37,771
63,824
100,904

600,676
22,241
342,508
113,505
33,826
79,679
122.422

600,676
22,241
342,508
113,505
33,826
79,679
122,422

116,382
64,829

122,767
58,519

144,015
77,673

144,015
77,673

161,972
95,147

36,111

44,161

51,207

51,207

49,518

15,442

20,087

15,135

15,135

17,307

8.427

8,410

10,437

10,437

11,247

32.796

30,717

42,679

42,679

Claims of banks' domestic customers 3
Deposits
Negotiable and readily transferable
instruments 4
Outstanding collections and other
12
claims

May

June p

641,080
29,215
362,790
116,018
34,592
81,426
133,057

632,145
27,314
367,977
112,784
34,566
78,218
124,070

651,993
28,322
379,524
120,043
35,785
84,258
124,104

42,719

44,870

38,214

798,617

1
2
3
4
5
6
7
8
9
10
11

Apr.r

636,645
28,898
360,340
118,396
37,284
81,112
129,011

MEMO
13

Customer liability on acceptances

14

Dollar deposits in banks abroad, reported by
nonbanking business enterprises in the
United States 5

47,270

38,815

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

43,452

BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS

Reported by Banks in the United States'

Payable in U.S. Dollars
Millions of dollars, end of period
1996
Maturity, by borrower and area 2

1994

1993

1997

1995
June

Sept.

Dec.

Mar. r

1 Total

202,566

202,282

224,932

228,534

232,997

257,924

276,080

By borrower
2 Maturity of one year or less
3
Foreign public borrowers
4
All other foreigners
.5 Maturity of more than one year
6
Foreign public borrowers
7
All other foreigners

172,662
17,828
154,834
29,904
10,874
19,030

170,411
15.435
154,976
31,871
7,838
24,033

178,857
14,995
163,862
46,075
7.522
38,553

185,878
14,982
170,896
42,656
8,126
34,530

189,047
16,003
173,044
43,950
6,922
37,028

211,740
15,411
196,329
46,184
6,815
39,369

223,817
19,910
203,907
52,263
8,861
43,402

57.413
7,727
60,490
41,418
1,820
3,794

56,381
6,690
59,583
40,567
1,379
5,811

55,622
6,751
72,504
40,296
1,295
2,389

57,138
6,806
78,586
38,111
1,279
3,958

58,545
8,811
79,622
37,199
1,320
3,550

55J513
8,339
103,254
38,135
1,316
5,183

75,011
10,404
96,867
36,495
1,451
3,589

5,310
2,581
14,025
5,606
1,935
447

4,358
3,505
15,717
5,323
1,583
1,385

4,995
2.751
27,681
7,941
1,421
1,286

8,189
3,689
19,538
9,234
1,410
596

7,117
3,533
21,382
9,808
1,349
761

6,928
2,645
24,917
9,392
1,361
941

9,478
2,953
26,771
10,773
1,204
1,084

8
9
10
11
12
13

By area
Maturity of one year or less
Europe
Canada
Latin America and Caribbean

Africa
All other 3
Maturity of more than one year
14
Europe
15
Canada
16
Latin America and Caribbean
17
18
Africa
19
All other 3

1. Reporting banks include all types of depository institutions as well as some brokers and
dealers.




2. Maturity is time remaining until maturity,
3. Includes nonmonetary international and regional organizations.

Nonbank-Reported
3.21

CLAIMS ON FOREIGN COUNTRIES

Data

A57

Held by U.S. and Foreign Offices of U.S. Banks 1

Billions of dollars, end of period

1993

1997

1996

1995
Area or country

1994
Mar.

June

Sept.

Dec.

Mar.

June

Sept.

Dec.

Mar.

409.5

499.5

545.0

531.9

535.3

551.9

574.6

612.7

586.0

645.0

647.7r

161.9
7.4
12.0
12.6
7.7
4.7
2.7
5.9
84.4
6.9
17.6

191.2
7.2
19.1
24.7
11.8
3.6
2.7
5.1
85.8
10.0
21.1

212.1
10.4
19.9
31.2
10.6
3.5
3.1
5.7
90.1
10.8
26.7

206.5
9.7
19.9
30.0
10.7
4.3
3.1
6.2
87.1
11.3
24.4

203.0
11.0
18.0
27.5
12.6
4.5
2.9
6.6
80.4
12.9
26.6

206.0
13.6
19.4
27.3
11.5
3.7
2.7
6.7
82.4
10.3
28.5

203.4
11.0
17.9
31.5
13.2
3.0
3.3
5.2
84.7
10.8
22.7

226.9
11.4
18.0
31.4
14.9
4.7
2.7
6.3
101.6
12.2
23.6

220.0
11.3
17.4
33.9
15.2
5.9
3.0
6.3
90.5
14.8
21.7

228.1
11.7
16.6
29.8
16.0
3.9
2.6
5.3
104.6
14.0
23.6

231.5r
14.1r
19.9r
32. r
14.4r
4.5r
3.4
6.0r
99.2r
16.3r
21.7

13 Other industrialized countries
14
Austria
Denmark
15
16
Finland
17
Greece
18
Norway
19
Portugal
Spain
20
21
Turkey
Other Western Europe
22
South Africa
23
24
Australia

26.5
.7
1.0
.4
3.2
1.7
.8
9.9
2.1
3.2
1.1
2.3

45.7
1.1
1.3
.9
4.5
2.0
1.2
13.6
1.6
3.2
1.0
15.4

44.4
.9
1.7
1.1
4.9
2.4
1.0
14.1
1.4
2.8
1.5
12.6

43.3
.7
1.1
.5
5.0
1.8
1.2
13.0
1.4
2.9
1.4
14.3

50.5
1.2
1.8
.7
5.1
2.3
1.9
13.3
2.0
3.3
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
2.3
3.4
2.0
19.6

62.1
1.0
1.7
.6
6.1
3.0
1.4
16.1
2.8
4.8
1.7
22.8

65.7
1.1
1.5
.8
6.7
8.0
.9
13.2
2.7
4.7
2.0
24.0

66.4r
1.9
1.7r
.7
6.3r
5.3
1.0
14.4r
2.7
6.3
1.9r
24.4

25 OPEC 2
26
Ecuador
27
Venezuela
28
Indonesia
29
Middle East countries
African countries
30

17.6
.5
5.1
3.3
7.6
1.2

24.1
.5
3.7
3.8
15.3
.9

19.5
.5
3.5
4.0
10.8
.7

20.3
.7
3.5
4.1
11.5
.6

22.7
.7
3.0
4.4
13.9
.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

19.2
.9
2.3
5.4
10.1
.4

19.7
1.1
2.4
5.2
10.6
.4

21.8r
1.1
1.9
4.9
13.2
.7

31 Non-OPEC developing countries

83.2

96.0

98.5

103.7

104.1

112.6

118.6

126.4

124.1

130.1

128.1r

7.7
12.0
4.7
2.1
17.9
.4
3.1

11.2
8.4
6.1
2.6
18.4
.5
2.7

11.4
9.2
6.4
2.6
17.9
.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
18.3
6.4
2.9
16.1
.9
3.1

14.1
21.7
6.7
2.8
15.4
1.2
3.0

15.0
17.8
6.6
3.1
16.1
1.3
3.0

14.3
20.7
7.0
4.1
16.2
1.6
3.3

14.3r
22.0r
6.8
3.7
17.2r
1.6
3.4r

2.0
7.3
3.2
.5
6.7
4.4
3.1
3.1
3.1

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
19.3
5.2
3.9
5.2
4.3

2.9
9.8
4.2
.6
21.7
5.3
4.7
5.4
4.8

2.6
10.3
3.8
.5
21.9
5.5
5.4
4.8
4.1

2.5
10.2
4.3
.5
21.5
5.9
5.8
5.7
4.1

2.7
10.5r
4.9
.6
14.6
6.5r
6.0
6.8
4.3r

.4
.7
.0
.8

.3
.6
.0
.8

.4
.6
.0
.7

.4
.9
.0
.6

.4
.9
.0
.8

.4
.7
.0
.9

.5
.7
.0
.8

.5
.8
.0
.8

.6
.7
.0
1.0

.7
.7
.1
.9

.9
.6
.0
.9

3.2
1.6
1.6

2.7
.8
1.9

2.3
.7
1.7

1.8
.4
1.3

3.4
.6
2.8

4.2
1.0
3.2

6.3
1.4
4.9

5.1
1.0
4.1

5.3
1.8
3.5

6.9
3.7
3.2

8.9r
3.5r
5.4r

73.5
10.9
8.9
18.4
2.8
2.4
.1
18.8
11.2
.1
43.6

72.9
10.2
8.4
21.4
1.6
1.3
.1
20.0
10.1
.1
66.9

85.7
12.5
8.7
20.7
1.2
1.1
.1
22.5
19.2
.0
82.5

83.8
8.4
8.4
25.3
2.8
1.2
.1
23.1
14.8
.0
72.6

87.5
12.6
6.1
25.1
5.7
1.3
.1
23.7
13.3
.1
64.2

99.2
11.0
6.3
32.4
10.3
1.4
.1
25.0
13.1
.1
57.6

101.3
13.9
5.3
28.8
11.1
1.6
.1
25.3
15.4
.1
62.6

106.2
17.3
4.1
26.1
13.2
1.7
.1
27.8
15.9
.1
72.7

105.3
14.2
4.0
32.0
11.7
1.7
.1
26.2
15.4
.1
50.0

134.9
20.3
4.5
37.2
26.1
2.0
.1
28.1
16.7
.1
59.5

131.3r
20.9'
6.7
32.8r
19.9
Z.ff
.1
30.8
17.9
.1
59.6r

1 Total
2 G-10 countries and Switzerland
Belgium and Luxembourg
3
4
France
5
Germany
6
Italy
7
Netherlands
8
Sweden
9
Switzerland
10
United Kingdom
11
Canada
Japan
12

32
33
34
35
36
37
38

39
40
41
42
43
44
45
46
47
48
49
50
51

Latin America
Argentina
Brazil
Chile
Colombia
Mexico
Other
Asia
China
Mainland
Taiwan
India
Korea (South)
Malaysia
Philippines
Thailand
Other Asia
Africa
Egypt
Morocco
Other Africa 3

52 Eastern Europe
Russia4
53
54
Other
55 Offshore banking centers
Bahamas
56
57
Bermuda
58
Cayman Islands and other British West Indies
59
Netherlands Antilles
60
Panama5
61
Lebanon
62
Hong Kong, China
Singapore
63
64
Other®
65 Miscellaneous and unallocated7

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. Includes Canal Zone.
6. Foreign branch claims only.
7. Includes New Zealand, Liberia, and international and regional organizations.

A58
3.22

International Statistics • October 1997
LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in
the United States
Millions of dollars, end of period
1995
Type of liability, and area or country

1993

1994

1997

1996

1995
Dec.

Mar.

June

Sept.

Dec.

Mar. p

1 Total

50,597

54,309

46,448

46,448

49,907

48,990

51,695

54,822

54,619

2 Payable in dollars
3 Payable in foreign currencies

38,728
11,869

38,298
16.011

33,903
12.545

33,903
12.545

36,273
13,634

35,385
13.605

36,465
15,230

39,003
15,819

.39,394
15,225

By type
4 Financial liabilities
5
Payable in dollars
6
Payable in foreign currencies

29,226
18,545
10,681

32,954
18,818
14,136

24,241
12.903
11,338

24,241
12,903
11,338

26,570
13,831
12,739

24,844
12,212
12,632

25,492
11,319
14,173

26,089
11,374
14,715

25,449
11.241
14,208

7 Commercial liabilities
8
Trade payables
y
Advance receipts and other liabilities

21,371
8,802
12,569

21,355
10,005
11,350

22,207
11,013
11,194

22,207
11,013
11,194

23,337
10,815
12,522

24,146
11,081
13,065

26,203
11,791
14,412

28,733
12,720
16,013

29,170
11,520
17,650

10
it

Payable in dollars
Payable in foreign currencies

20,183
1,188

19,480
1,875

21,000
1,207

21,000
1,207

22,442
895

23,173
973

25,146
1.057

27,629
1,104

28,153
1,017

12
13
14
15
16
17
18

By area or country
Financial liabilities
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom

18,810
175
2.539
975
534
634
13,332

21,703
495
1,727
1,961
552
688
15,543

15,622
369
999
1,974
466
895
10,138

15,622
369
999
1,974
466
895
10,138

16,950
483
1,679
2,161
479
1,260
10,246

16,434
498
1,011
1.850
444
1,156
10,790

16,133
547
1,220
2,276
519
830
9,884

16,242
632
1,091
1,834
556
699
10,224

15.962
769
1,205
1,589
507
694
9,756

19

Canada

859

629

632

632

1,166

951

973

1,401

602

20
21
22
23
24
25
26

Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela

3,359
1,148
0
18
1,533
17
5

2,034
101
80
207
998
0
5

1,783
59
147
57
866
12
2

1,783
59
147
57
866
12
2

1,876
78
126
57
946
16
2

969
31
28
8
826
11
1

1,169
50
25
52
764
13
1

1,668
236
50
78
1,030
17
1

1,834
284
27
75
927
16
1

27
28
2y

Asia
Japan
Middle Eastern oil-exporting countries'

5,956
4,887
23

8,403
7,314
35

5,988
5,436
27

5,988
5,436
27

6,390
5,980
26

6,351
6,051
26

6,969
6,602
25

6,400
5,846
25

6,347
5,771
72

30
31

Africa
Oil-exporting countries 2

133
123

135
123

150
122

150
122

131
122

72
61

153
121

38
0

29
0

109

50

66

66

57

67

95

340

675

6,827
239
655
684
688
375
2,039

6,773
241
728
604
722
327
2,444

7.700
331
481
767
500
413
3,568

7,700
331
481
767
500
413
3,568

8,425
370
648
867
659
428
3,525

7,916
326
678
839
617
516
3,266

8.702
427
657
959
668
409
3,664

9,767
479
680
1.002
766
624
4,303

9,582
643
688
1,045
553
486
4,165

32
33
34
3b
36
37
38
3y

Al! other

3

Commercial liabilities
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom

40

Canada

41
42
43
44
45
46
47

Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela

48
4y
50

Asia
Japan
Middle Eastern oil-exporting countries'

51
52

Africa
Oil-exporting countries 2

53

Other

3

879

1,037

1,040

1,040

959

998

1,145

1,090

1,070

1,658
21
350
214
27
481
123

1,857
19
345
161
23
574
276

1,740
1
205
98
56
416
221

1,740
1
205
98
56
416
221

2,110
28
570
128
10
468
243

2.301
35
509
119
10
475
283

2,396
33
355
203
15
451
341

2,574
63
297
196
14
665
328

2,573
43
479
207
14
637
318

10,980
4,314
1,534

10,741
4,555
1,576

10,42.1
3,315
1,912

10,421
3,315
1,912

10,474
3,725
1,747

11,389
3,943
1,784

12,238
4,150
1,951

13,422
4,614
2,168

13,978
4,503
2,495

453
167

428
256

619
254

619
254

708
254

924
462

1,020
490

1,040
532

1,037
479

574

519

687

687

661

618

702

840

930

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

M i l l i o n s of dollars, e n d of p e r i o d
1996

1995
Type of claim, and area or country

1993

1994

1997

1995
Dec.

Mar.

June

Sept.

Dec.

Mar.p

1 Total

49,159

57,888

52,509

52,509

55,406

60,195

59,048

63,604

63,835

2 Pavable in dollars
3 Pavable in foreign currencies

45.161
3.998

53,805
4,083

48.711
3,798

48,711
3,798

51,007
4,399

55.350
4.845

53,884
5.164

58,592
5,012

58,498
5.337

By type
4 Financial claims
Deposits
5
Payable in dollars
6
7
Pavable in foreign currencies
Other financial claims
8
y
Payable in dollars
Payable in foreign currencies
10

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

27,398
15.133
14,654
479
12,265
10,976
1.289

27.398
15,133
14,654
479
12.265
10,976
1.289

30,772
17,595
17.044
551
13,177
11,290
1,887

35,251
19,507
19.069
438
15.744
13.347
2,397

34,200
19,877
19.182
695
14.323
12,234
2,089

35,268
21,404
20.631
773
13,864
12,069
1.795

36.400
19,240
18,137
1,103
17,160
15,383
1.777

n Commercial claims
12
Trade receivables
13
Advance payments and other claims

21,388
18,425
2,963

23,991
21.158
2.833

25,111
22.998
2,113

25,111
22,998
2,113

24,634
22,123
2,511

24,944
22,353
2,591

24,848
22.410
2.438

28,336
25.713
2,623

27.435
24.698
2,737

14
15

Payable in dollars
Payable in foreign currencies

19.117
2,271

21,473
2,518

23,081
2,030

23,081
2,030

22.673
1.961

22,934
2.010

22.468
2,380

25.892
2,444

24,978
2.457

16
17
18
19
20
21
22

By area or country
Financial claims
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom

7,299
134
826
526
502
530
3,585

7.936
86
800
540
429
523
4,649

7.609
193
803
436
517
498
4,303

7,609
193
803
436
517
498
4.303

8,929
159
1,015
320
486
470
5.568

10.498
151
679
296
488
461
7.426

9,777
126
733
272
520
432
6.603

9.282
185
694
276
493
474
6.119

9,317
119
761
324
567
570
6.075

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

All other 3

37
38
39
40
41
42
43

Commercial claims
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom

2,032

3,581

2.851

2,851

5.269

4,773

4,502

3,445

4.817

16.224
1,336
125
654
12,699
872
161

19.536
2.424
27
520
15,228
723
35

14,500
1.965
81
830
10,393
554
32

14,500
1,965
81
830
10.393
554
32

13,827
1,538
77
1.019
10,100
461
40

17,644
2,168
84
1,242
13,024
392
23

17.241
1,746
1 13
1,438
12.809
413
20

19,577
1.452
140
1,468
15.182
457
31

19,453
1,894
157
1.404
14.846
517
22

1.657
892
3

1,871
953
141

1,579
871
3

1.579
871
3

1,890
1,171
13

1,571
852
9

1.834
1,001
13

2.221
1,035
22

2.068
831
12

99
1

373
0

276
5

276
5

277
5

197
5

177
13

174
14

183
14

460

600

583

583

580

568

669

569

562

9.105
184
1,947
1,018
423
432
2,377

9,540
213
1,881
1,027
311
557
2,556

9.824
231
1.830
1.070
452
520
2,656

9.824
231
1,830
1.070
452
520
2,656

9,776
247
1,803
1,410
442
579
2,607

9,842
239
1.659
1.335
481
602
2.658

9,266
213
1,532
1,240
424
590
2.515

10.424
225
1,644
1.336
561
642
2,946

9.827
364
1,514
1.360
582
405
2,625

44

Canada

1,781

1,988

1.951

1,951

2,045

2,074

2,082

2.165

2,380

45
46
47
48
49
50
51

Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela

3.274
11
182
460
71
990
293

4.117
9
234
612
83
1,24.3
348

4,364
30
272
898
79
993
285

4.364
30
272
898
79
993
285

4,151
30
273
809
106
870
308

4.347
28
264
838
103
1,021
313

4.399
14
290
963
1 19
931
316

5.264
35
275
1,291
190
1.128
357

5.048
40
159
1.201
127
1.098
330

52
53
54

Asia
Japan
Middle Eastern oil-exporting countries'

6.014
2.275
704

6,982
2,65.5
708

7.312
1.870
974

7,312
1,870
974

7,100
2.010
1,024

6.939
1.877
903

7,278
1,918
945

8,372
2,003
971

8,283
2,052
1,078

55
56

Africa
Oil-exporting countries 2

493
72

454
67

654
87

654
87

667
107

688
83

731
142

745
166

717
100

57

Other 3

721

910

1,006

1.006

895

1.054

1.092

1,366

1,180

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 1997
FOREIGN TRANSACTIONS IN SECURITIES
Millions of dollars

Transaction, and area or country

1995

1997

1996

Jan. June

Dec.

1997

1996
Jan.

Mar.

Apr.

May

June p

73.051
69.191

68.450
68.153

70.267 r
64,433'

82.604
75.655

87,060
76,826

Feb.

U.S. corporate securities
STOCKS

1 Foreign purchases

462.950
451.710

623,760
611.832

454,468
424.390

57,051
56.629

73,036
70,132

3 Net purchases, or sales (—)

11,240

11,928

30,078

422

2,904

3,860

297

5,834 r

6,949

10,234

4 Foreign countries

11,445

12.002

30,121

451

2,905

3.860

289

5,854 r

6,968

10,245

4.912
-1.099
-1.837
3,507
-2.283
8.066
-1.517
5.814
-337
2.503
-2.725
2
68

5.046
-2.354
1.104
1.389
2.710
4.119
2.221
5.563
-1.598
906
-372
-81

25,570
965
4.850
1.252
3.407
9.365
1.306
3.650
156
- 1.087
1.866
224
302

3.271
532
959
322
289
-134
422
1.364
-1
-2.175
-1.559
-8
32

5.486
427
1.086
- 334
784
2.950
308
405
26
-2.549
-500
58
126

2.116
-309
699
378
304
492
373
-1,433
10
-894
-253
96
21

6,686'
679
648
378
810r
3,274r
141r
-1,982
203
729
1,294
-7
84

2.440
238
601
382
184
218
27
7,916
-246
1.556
1,763
4
27 i

5,571
-602
857
126
1,036
2.565
35
2.380
164
2,246
1.121
81
-232

-205

-74

-43

-29

-1

0

8

-19

-11

293,533
206,951

422.249
294.636

287.002
227,049

43.054
32.825

48.955
37,135

48,818
36.424

43.455
38,104

42.663 r
31.726'

44,479
36.358

58.632
47,302

21 Net purchases, or sales (—)

86,582

127,613

59,953

10,229

11,820

12,394

5,351

10,937 r

8,121

11,330

72 Foreign countries

87,036

127,442

59.894

10,229

11,824

12,381

5,337

10,941 r

8,213

11,198

23
4
25
26
27
28
29
30
31
37
33
34
35

Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East1
Other Asia
Japan
Africa
Other countries

70.318
1.143
5.938
1.463
494
57.591
2.569
6.141
1,869
5,659
2.250
234
246

75.722
5.124
5.164
7.440
1.053
57.590
4.197
22.901
1.637
22.715
13.644
600
-330

38.196
1.391
478
1.766
-10
32.391
2.684
6.21 i
1.504
9.916
6,591
674
709

4,770
252
-27
148
-30
4,498
391
2.940
412
1.644
1,395
79
-7

6,088
73
-274
337
-58
5.911
379
3.189
480
1.661
1.597
89
-62

9.612
290
184
125
-189
9.229
1,055
-627
691
1.231
535
243
176

4.572
340
493
105
98
2,849
390
-2.434
480
2.165
1.213
47
117

5,377''
602
30
67
189
4.313 r
512
2.550
16
2,185
1,229
190
111

5.331
-4
145
978
-54
3,618
446
1.569
-179
874
399
44
128

7,216
90
-100
154
4
6,471
-98
1,964
16
1,800
1.618
61
239

36 Nonmonetary international and
regional organizations

-454

171

59

0

-4

13

14

-92

132

5
6
7
8
9
10
11
12
13
14
15
16
17

Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East1
Other Asia
Japan
Africa
Other countries

18 Nonmonetary international and
regional organizations

— 729
-1.064
-18
-160
-470
1,487
-9
994
-7
-232
- 343
10
-76

-20

BONDS2

19 Foreign purchases
20 Foreign sales

1

-4

Foreign securities
37 Stocks, net purchases, or sales ( - )
39
Foreign sales
40 Bonds, net purchases, or sales ( - )
41
Foreign purchases
42
Foreign sales

-50.291
345.540
395.831
-48,405
889.541
937.946

-57.122
456.826
513.948
-48.793
1.1 18.678
1.167.471

-25.797
316.685
342.482
-12,288
720.975
733.263

-5,902
41,850
47.752
-10.947
99,095
110.042

-3.646
47,084
50,730
-710
109.567
1 10.277

-4.353
50.139
54.492
- 1.626
1 10.510
112.136

-3.827
47.780
51,607
-2,979
131.453
134.432

—4.089r
49.725
53,814 r
5.720r
117,761'
112,041'

-4.095
57.612
61,707
-1,328
127.985
129,313

-5.787
64.345
70.132
-11.365
P3.699
135.064

-98.696

-105.915

-38,085

-16,849

-4,356

-5,979

-6.806

l,631 r

-5,423

-17,152

44 Foreign countries

-97,891

-105,044

-38,368

-16,838

-4.404

-6,061

-6,872

l,617 r

-5,480

-17,168

45
46
47
48
49
50
51

-48.125
-7.812
-7.634
-34.056
-25.072
-327
63

-55.948
-6,279
-9.503
-27.745
-5,888
-1.529
- 4.040

-968
- 166
-17.154
-19.732
-13.447
-248
-100

-10.740
-2,269
-2.020
-773
2.218
36
-1,072

740
525
-2,264
-2,830
-332
34
-609

- 2.030
1.855
-3.417
-2,284
-2.269
-7
-178

-3,005
-110
-1.574
-1.517
-674
-74
-592

5.732
-239
-1,240 r
-3.650'
-2,349
-121
1,135

-13
-841
-1,286
-3,570
-2.878
15
215

-2,392
- 1,356
-7,373
-5,881
-4.945
-95
-71

-805

-871

283

-11

48

82

66

14

57

16

43 Net purchases, or sales ( —), of stocks and bonds

Europe
Canada
Latin America and Caribbean
Asia
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 US. 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 and Exchange Rates
3.25

MARKETABLE U.S. TREASURY BONDS AND NOTES

A61

Foreign Transactions'

M i l l i o n s of dollars; net p u r c h a s e s , o r sales (—) d u r i n g p e r i o d

Area or country

1995

1997

1997

1996

Jan.June

Dec.

Jan.

Feb.

Mar.

Apr.

1996

May

June p

1

Total estimated

134,115

244,725

132,015

47,662

20,791

30,615

22,076

25,587 r

7,752

25,194

2

Foreign countries

133,676

246,567

130,630

46,519

21,257

29,707

22,386

25,127R

7,909

24,244

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

49,976
591
6,136
1,891
358
-472
34,754
6,718
252

118,345
1,486
17,647
-582
2,343
327
65,381
31,743
2,389

64,699
1,986
-3,137
1,416
-1,037
937
47,956
16,578
1,591

14,778
370
1,499
855
26
-517
7,265
5,280
-780

3,403
48
556
-671
-255
241
1,936
1,548
667

17,117
657
-1,227
546
-346
992
13,423
3,072
-402

13,473
83
-3,124
343
-581
-1,431
14,242
3,941
-317

10,625
937
-1,480
1,412
-86
1.029
6,482
2,331
17

9,688
298
721
194
90
-223
6,951
1,657
348

10,393
-37
1,417
-408
141
329
4,922
4,029
1,278

1?
13
14
15
16
17
18
19

Latin America and Caribbean
Venezuela
Other Latin America and Caribbean
Netherlands Antilles

48,609
- 2
25,152
23,459
32,467
16,979
1,464
908

25,379
-69
13,026
12,422
98,001
41,390
1,085
1,368

-859
751
13,824
-15,434
64,305
32,570
415
479

15,228
212
5,292
9,724
16,744
7,593
- 2
551

9,813
- 3
6,031
3,785
8,593
4,264
29
-1,248

-762
69
1,577
-2,408
14,217
6,326
57
-520

-3,336
10
3,763
-7,109
12,227
1,747
-22
361

1,381
- 8
-2,657
4,046
13,200
6,604
-16
-80R

-9,495
93
2,004
-11,592
7,537
7,657
27
-196

1,540
590
3,106
-2,156
8,531
5,972
340
2,162

439
9
261

-1,842
-1,390
-779

1,385
1,025
318

1,143
773
252

-466
-484
-1

908
530
362

-310
-384
80

-157
-172
- 2

950
1,068
-145

133,676
39,631
94,045

246,567
86,875
159,692

130,630
46,553
84,077

46,519
13,662
32,857

21,257
7,831
13,426

29,707
10,123
19,584

22,386
7,106
15,280

25,127R
7,382R
17,745 R

7,909
3,377
4,532

24,244
10,734
13,510

3,075
2

10,227
1

8,255
- 6

2,279
0

1,307
0

2,604
-1

2,533
0

2,879
1

542
- 6

-1,610
0

Japan
Africa
Other

20
21
22

Nonmonetary international and regional organizations
International
Latin American regional

73
?4
25

Foreign countries
Official institutions
Other foreign

460
467
24

MEMO

76
27

Oil-exporting countries
Middle East 2

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

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'
P e r c e n t p e r year, a v e r a g e s of daily

figures
Rate on Aug. 30, 1997

Rate on Aug. 30, 1997
Country

Country
Month
effective
2.5
2.5
3.5
3.25
3.1

Austria. . .
Belgium.
Canada. .
Denmark .
France 2 .

Apr. 1996
Apr. 1995
June 1997
Nov. 1996
Jan. 1997

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

Germany . . .
Italy
Japan
Netherlands .
Switzerland .

2.5
6.25
.5
2.5
1.0

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 RATES'
P e r c e n t p e r year, a v e r a g e s of daily

figures
1997

Type or country

1
2
3
4
5
6
7
8
9
10

Eurodollars
United Kingdom
Canada
Germany
Switzerland
Netherlands
France
Italy
Belgium
Japan

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

1996

5.38
5.99
4.49
3.21
1.92
2.91
3.81
8.79
3.19
.58

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

5.36
6.16
3.16
3.08
1.61
2.95
3.22
7.33
3.10
.54

5.50
6.17
3.25
3.16
1.77
3.12
3.26
7.40
3.40
.55

5.70
6.35
3.49
3.14
1.76
3.15
3.28
7.09
3.22
.55

5.69
6.41
3.35
3.09
1.51
3.15
3.37
6.82
3.22
.58

5.66
6.63
3.30
3.05
1.25
3.14
3.30
6.85
3.23
.60

5.61
6.93
3.57
3.06
1.43
3.17
3.27
6.87
3.39
.67

Aug.
5.58
7.12
3.67
3.19
1.39
3.40
3.31
6.85
3.55
.58

A62
3.28

International Statistics • October 1997
FOREIGN EXCHANGE RATES 1
Currency units per dollar except as noted
1997
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/pound 2
Italy/lira
Japan/yen
Malaysia/ringgit
Netherlands/guilder
New Zealand/dollar 2
Norway/krone
Portugal/escudo

21
22
23
24
25
26
27
28
29
30

Singapore/dollar
South Africa/rand
South Korea/won
Spain/peseta
Sri Lanka/rupee
Sweden/krona
Switzerland/franc
Taiwan/dollar
Thailand/baht
United Kingdom/pound 2

1994

1995

1996
Mar.

Apr.

May

June

July

Aug.

73.161
11.409
33.426
1.3664
8.6397
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

78.283
10.589
30.970
1.3638
8.3389
5.8003
4.5948
5.1158
1.5049
240.82

78.747
11.932
34.961
1.3725
8.3258
6.4628
5.0632
5.7154
1.6946
266.86

77.868
12.050
35.328
1.3942
8.3257
6.5226
5.1375
5.7672
1.7119
270.58

77.510
11.998
35.188
1.3804
8.3229
6.4926
5.1444
5.7482
1.7048
271.95

75.422
12.158
35.65 l r
1.3843r
8.3224
6.5804
5.1794
5.8293 r
1.7277r
273.83

74.199
12.620
37.040
1.3775
8.3162
6.8317
5.3164
6.0511
1.7939
281.43

74.036
12.946
38.011
1.3905
8.3187
7.0109
5.5046
6.2010
1.8400
288.41

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

7.7345
35.506
159.95
1,542.76
108.78
2.5154
1.6863
68.765
6.4594
154.28

7.7460
35.885
156.57
1,691.21
122.77
2.4773
1.9071
69.789
6.7915
170.35

7.7483
35.828
155.05
1,694.52
125.64
2.5028
1.9256
69.220
6.9932
171.77

7.7431
35.825
151.11
1,684.33
119.19
2.5070
1.9173
69.097
7.0797
171.72

7.7445
35.820
150.60
1,694.54'
114.29r
2.5167
1.9438r
68.713
7.2240
174.56

7.7454
35.747
149.45
1,745.91
115.38
2.5815
2.0201
66.097
7.4545
181.20

7.7436
36.009
145.34
1,797.12
117.93
2.7589
2.0709
64.211
7.6224
186.50

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

1.4100
4.3011
805.00
126.68
55.289
6.7082
1.2361
27.468
25.359
156.07

1.4378
4.4319
882.62
143.72
57.873
7.6502
1.4634
27.551
25.959
160.96

1.4417
4.4417
895.57
144.48
58.826
7.6942
1.4618
27.629
26.064
162.93

1.4368
4.4668
894.67
143.93
58.862
7.6856
1.4331
27.791
25.751
163.22

1.4271
4.5005
891.40
145.98
58.531
7.7506 r
1.4424r
27.903
24.534
164.49r

1.4521
4.5611
893.09
151.33
58.732
7.8188
1.4824
28.032
30.274
166.94

1.4977
4.6856
898.71
155.51
59.189
7.9886
1.5128
28.824
32.399
160.35

84.25

87.34

95.60

MEMO

31 United States/dollar 3

91.32

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.




96.39

95.29

95.42 r

97.48

99.96

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
Anticipated schedule of release dates for periodic releases

Issue
June 1997

Page
A72

Issue

Page

November
February
May
September

1996
1997
1997
1997

A100
A64
A64
A64

November
February
May
October

1996
1997
1997
1997

A104
A68
A68
A64

November
February
May
August

1996
1997
1997
1997

A108
A72
A72
A64

October
January
July
October

1996
1997
1997
1997

A64
A64
A64
A68

December
May
August
March

1991
1992
1992
1993

A79
A81
A83
A71

September 1995
September 1996
September 1997

A68
A68
A68

September 1997

A76

SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference
Title and Date
Assets and liabilities of commercial
June 30, 1996
September 30, 1996
December 31, 1996
March 31, 1997
Terms of lending at commercial
August 1996
November 1996
February 1997
May 1997

banks

banks

Assets and liabilities of U.S. branches and agencies
June 30, 1996
September 30, 1996
December 31, 1996
March 31, 1997

of foreign

banks

Pro forma balance sheet and income statements for priced service
June 30, 1996
September 30, 1996
March 31, 1997
June 30, 1997
Assets and liabilities of life insurance
June 30, 1991
September 30, 1991
December 31, 1991
September 30, 1992
Residential
1994
1995
1996

lending reported

Disposition
1996

of applications




companies

under the Home Mortgage

for private

operations

mortgage

Disclosure

Act

insurance

A64

4.23

Special Tables • October 1997

TERMS OF LENDING AT COMMERCIAL BANKS

Survey of Loans Made, May 5 - 9 , 1997

A. Commercial and industrial loans made by all commercial banks'

Weightedaverage
effective
loan rate
(percent)2

Amount of
loans
(millions
of dollars)

Average loan
size
(thousands of
dollars)

Amount of loans (percent)

Weightedaverage
maturity 3

Days

Secured by
collateral

Subject to
prepayment
penalty

Made under
commitment

31.0
59.5
30.6
23.1
35.5

72.1
67.3
53.6
79.6
87.8

L O A N RISK

1 All consumer and industrial loans
2
Minimal risk
3
Low risk
4
Moderate risk
5
Acceptable risk
By maturity/repricing
6 Zero interval
7
Minimal risk
8
Low risk
9
Moderate risk
10
Acceptable risk

6.82
6.10

6.24
7.05
7.49

113,807
11,450
28.086
36,639
19,762

692
1,306
1,461
602
514

15,714
280
2,214
6,014
5,495

213
184
317

5,820
26,589

241
38

32.4
21.4
29.0
33.0
42.0

22.5
31.3
21.8
23.6
19.7

490
230
374
518

57.9
41.6
41.4
65.0
56.3

21.5
35.8
19.6
22.4
22.6

22.4
21.9
26.4
20.1
14.7

26.0
26.8
26.8
35.2
13.8

29.8
59.5
23.6
21.4
38.1

57.5

4,936
2,918

37
14
33
36
108

168

297
324

interval6
8.79
7.46
8.58

186
267

7.5
11.8

5.9
6.3
10.6

95.5
95.4
92.4
87.7

11 Daily
12
Minimal risk
13
Low risk
14
Moderate risk
15
Acceptable risk

6.20

5.95
5.96
6.43
6.33

53,142
9,411
16,567
15,855
5,433

16 2 to 30 days
17
Minimal risk
18
Low risk
19
Moderate risk
20
Acceptable risk

6.80
6.20
6.36
6.91
7.54

15,608
1,088
2,955
4,822
3,133

890
2,273
1,796
761
591

225
38
267
319
259

28.8
6.6
18.3
29.9
52.1

24.4
83.0
15.7
16.0
17.4

46.5
82.7
38.3
30.9
58.7

81.8
94.9
67.0
82.6
94.9

21 31 to 365 days
22
Minimal risk
23
Low risk
24
Moderate risk
25
Acceptable risk

6.86

6.89
6.42
6.85
7.26

21,841
616
5,520
7,895
5,154

599
129
879
652
746

364
189
305
334
359

35.0
25.5
37.7
25.8
45.9

12.1
4.7
6.8
6.9
25.0

44.3
44.9
56.5
37.2
49.2

87.5
80.8
87.4
87.6
86.3

26 More than 365 days
27
Minimal risk . . .
28
Low risk
29
Moderate risk . .
30
Acceptable risk. .

8.26
9.26
8.38
8.69
8.78

3,035
41
230
1,548
424

69.6
89.4
60.3
84.2
72.7

12.7
21.9
5.6
10.0
3.8

8.0
16.5
.5
10.8
9.3

51.5
27.0
57.3
29,2
66.2

31.8
24.2
16.7
24.1

4.5
15.1
32.8
33.5

75.2

8.188

208
26
110

269
222

Weightedaverage risk
rating 5

62.6

32.7
74.2
87.2

Weightedaverage
maturity/
repricing
interval 6
Days

SIZE OF L O A N

31
32
33
34

1-99
100-999
1,000-9,999
10,000+

35
36
37
38
39

7

9.82
8.75
7.15
6.32

2,799
9,843
27,820
73,346

3.1
3.2
3.0
2.5

202
92
63
47

84.4
70.0
36.4
23.8

9.13
6.14
6.29

16,746
43,971
10,154
29,674
13,263

3.3
2.4
2.7
2.7
3.0

165
6
70
53
116

73.3

88.1

83.7
65.5

B A S E R A T E OF L O A N 4

Prime
Fed funds
Other domestic
Foreign
Other
Footnotes appear at the end of the table.




6.60

7.01

23.7

6.1

21.1

28.2

11.0

41.8
10.1
14.8

26.2
27.8
60.9
13.3

36.5
25.0

82.9
50.8
67.2
94.2
83.8

Financial Markets

4.23

TERMS OF LENDING AT COMMERCIAL BANKS

A65

Survey of Loans Made. May 5 - 9 , 1997

B. Commercial and industrial loans made by large domestic banks'

Weightedaverage
effective
loan rate
(perceni)"

Amount of
loans
(millions
of dollars)

7.05

8.11

44.201
754
8,519
16,720
6.837

912
1,891
3.558
1.067
420

8.19
8.25
6.87
8.34
8.46

9.607
127
) .364
3.765
3.348

11 Daily
12
Minimal risk .
13
Low risk
14
Moderate risk .
15
Acccptable risk

6.32
5.97
6.00
6.38
7.31

16 2 to 30 days . . . .
17
Minimal risk . .
18
Low risk
19
Moderate risk .
20
Acccptable risk

6.99

Average loan
size
(thousands of
dollars)

Amount of loans (percent)

Weightedaverage
maturity

Most
common
base pricing
rate

Secured by
collateral

Callable

Subject to
prepayment
penalty

378
313
397
409
424

35.7
15.9
40.6
39.2
45.1

27.9
9.4
56.0
31.0
10.2

9.0
67.6
10.4
8.3
8.1

65.0
93.9
51.3
67.1
80.9

Fed funds
Domestic
Fed funds
Prime
Prime

378
770
1,472
356
335

421
189
271
463
377

50.3
21.8
34.3
57.3
48.9

13.4
1 1.7
10.0
18.1
13.1

5.5
22.9
6.3
6.9
3.7

88.2
99.0
96.9
94.5
87.2

Prime
Other
Other
Prime
Pri me

16,396
358
4,571
6.338
590

4.480
4.855
7,114
5,847
654

109
339
263
79
552

32.3
.0
53.5
32.9
39.9

49.6
1 1.5
81.9
55.1
11.3

6.0
83.3
4.3
5.2
80

38.7
88.4
19.4
49.9
75.9

Fed funds
Domestic
Fed funds
Fed funds
Domestic

6.389

918
2.052
3,400
1,478
436

372
266
500
417
474

29.7
36.6
16.3
29.6
50.8

16.1
30.0
16.6
13.1

12.9
51.8
12.3
12.3
19.6

72.7
97.5
76.9
73.6
92.6

Domestic
Foreign
Domestic
Domestic
Prime

2,367
2.314
2,562
2.316
1.856

515
351
493
467
247

20.5
31.2
28.4
17.2
27.2

7.8
9.5
11.7
10.0
1.5

14.8
78.8
25.7
11.3
9.4

75.7
100.0
83.1
75.6
58.0

Foreign
Domestic
Foreign
Foreign
Foreign

64.8
98.9
39.8
82.8
61.4

10.7
1.6

10.0
99.0
.4
13.0
[3.7

53.9
84.9
69.9
27.9
73.0

Prime
Prime
Other
Prime
Prime

82.9
67.2
33.8
29.4

40.0
21.1
14.1
35.4

5.1
8.3
13.9
6.9

90.4
90.7
79.0
52.8

Prime
Prime
Ol helped funds

Days

Made under
commitment

LOAN RISK-

1 All consumer and industrial loans
2
Minimal risk
Low risk
Moderate risk
Acceptable risk
6
7
8
9
10

By malurity/rcpricing
Zero interval
Minimal risk
Low risk
Moderate risk
Acceptable risk

6.60
6.28

7.16

interval '

6.15

108

6.38
6.94
7.95

1.113
2.367
1,154

21 31 to 365 days
Minimal risk . .
Low risk
Moderate risk .
Acceptable risk.

6.99
6.95
6.55
6.91
7.57

6,220

26 More than 365 days
27
Minimal risk . . .
28
Low risk
29
Moderate risk . .
30
Acceptable risk. .

7.94
8.59
7.89
8.53
8.63

2.142
3
125

158
767
2,621
1.364

1.180

296

2,148
2.931
789

Weightedaverage risk
rating''

Weightedaverage
maturity/
repricing
interval''
Days

SIZE OF LOAN

31
32
33
34

1-99
100-999
1.000-9,999
10.000+

9.53
8.83
7.32
6.51

884
4.641

12,621

3.6
3.4

26,054

Average size
(thousands
of dollars)
BASE RATE OF L O A N 4

35
36
37
38
39

Prime'
Fed funds
Other domestic
Foreign
Other
Footnotes appear at the end of the table.




8.91
6.19
6.27
6.91
6.83

9,863
10,659
8,173
6.465
9,041

3.3
2.5
2.7
3.1
3.0

229
6
73
103

51

69.3
43.3
11.1
25.0
20.0

18.3
56.1
39.9
6.7
6.3

6.3
1.9
17.5
17.9
8.8

81.2
27.5
60.7
80.1
84.8

244
10.988
5.645
2.665
2.227

A66

4.23

Special Tables • October 1997

TERMS OF LENDING AT COMMERCIAL BANKS

Survey of Loans Made, May 5 - 9 , 1997

C. Commercial and industrial loans made by small domestic banks'

Weightedaverage
effective
loan rate
(percent) -

Amount of
loans
(millions
of dollars)

Average loan
size
(thousands of
dollars)

13.374
524
3.237
3,913
2,711

65
217
95
141

Amount of loans (percent)

Weightedaverage^
maturity"1

Subject to
prepayment
penalty-

Secured by
collateral

Made under
commitment

LOAN R I S K 5

1 All consumer and industrial loans
2
Minimal risk
3
Low risk
4
Moderate risk
5
Acceptable risk
By maturity/repricing
6 Zero interval
7
Minimal risk
8
Low risk
9
Moderate risk
10
Acceptable risk

7.96
8.43
7.16

8.26

8.30

126

487
360
321
594
501

57.2
47.8
39.6
62.5
73.9

20.9
36.8
12.5
16.4
22.9

23.9
14.6
34.7
24.3

66.8
64.5
54.6

21.8

76.3

80.8
69.0
70.0
86.8
82.4

30.3
50.6
25.6
27.5
32.6

5.5

125

524
275
650
557
417

4.9
5.6
8.7

85.5
91.1
91.3
85.2
79.5

654
544
1,077
506
565

62
9
17
79
66

24.1
4.7
14.1
14.7
26.7

4.2
20.4

373
138
237
585
510

46.0
25.5
32.1
53.2
74.7

29.1
63.1
15.3
21.7
22.9

23.0

14.6

70.9
74.6
42.3
85.7
89.6

490
259
356
545
672

56.3
62.0
43.4
52.2
80.5

18.2

9.3
13.9
2.6
17.6

17.5
9.6
18.7
17.5
27.8

76.8
34.2
72.9
58.5
96.9

80.9
88.6
85.0
88.9
98.8

14.4
22.3

15.1

7.8
8.7

3.9

272
177
176
35

86.1
83.6
57.4
21.4

28.0
28.1
23.3
8.3

3.6
6.9
13.7
59.6

67.2
81.3
83.4
38.3

97
30
257
104
487

83.3

30.8
7.5
59.1
13.3
13.4

5.0
84.5

81.7
12.9
76.3
90.9
68.2

61.1

b

inter\'al

9.15
9.78
8.93
9.09
9.31

4.278

6.48
6.50

2,640
72
920

128
605
1,692
1,203

94
97
107
82

11 Daily
12
Minimal risk
13
Low risk
14
Moderate risk
15
Acceptable risk

6.45
6.50

16 2 to 30 days
17
Minimal risk
18
Low risk
19
Moderate risk
20
Acceptable risk

7.81
8.13
6.94
8.33
8.24

1,415

160

126

314
497
79

2131
22
23
24
25

7.48
8.32
7.08
7.89
7.40

3.259
148
1.115
635
691

9.04
9.31
8.97
9.17
9.13

38
104
369
129

to 365 days
Minimal risk
Low risk
Moderate risk
Acceptable risk

26 More than 365 day>
27
Minimal risk . .
28
Low risk
29
Moderate risk .
30
Acceptable risk.

6.01

861
403

473
315
250

111

108
32
207
68
141

Weightedaverage risk
rating

5.4
2.6

.1

71.1
78.4
75.9
80.9
64.0

.2

39.6
11.1

12.2

28.1

78.1
15.1
16.4
35.5

45.7
22.6
41.9
33.6
50.6

Weightedaverage
maturity/
repricing
interval''
Days

SIZE OF LOAN

31
32
33
34

1-99
100-999
1,000-9.999
10,000+

35
36
37
38
39

7

10.01

9.16
7.64
6.30

1.849
3.523
3,901
4.100

3.0
2.9
2.7

BASE RATE OF L O A N 4

Prime
Fed funds
Other domestic
Foreign
Other
Footnotes appear at the end of the table.




9.51
6.02

7.12
6.81

7.96

5.427
2.729
420
2.441
2,356

3.1
2.7

2.0

3.0
2.8

12.6

36.2
47.6
62.6

17.2
4.5

Financial Markets

4.23

TERMS OF LENDING AT COMMERCIAL BANKS

A67

Survey of Loans Made, May 5-9, 1997

D . C o m m e r c i a l a n d i n d u s t r i a l l o a n s m a d e b y U.S. b r a n c h e s a n d a g e n c i e s o f f o r e i g n b a n k s '

Weightedaverage
effective
loan rate
(percent) 2

Amount of
loans
(millions
of dollars)

Average loan
size
(thousands of
dollars)

Amount of loans (percent)

Weightedaverage
maturity 3

Days

Subject to
prepayment
penalty

Secured by
collateral

Made under
commitment

LOAN RISK

6.37
5.95
6.03
6.63
6.85

56,233
10,172
16,330
16,006
10,215

5,548
36,351
8,425
4,094
3,448

8.42
6.51
7.11
8.63
8.63

1,829
25
245
557
944

11 Daily
12
Minimal risk
13
Low risk
14
Moderate risk
15
Acceptable risk

6.12
5.94
5.94
6.47

16 2 to 30 days
17
Minimal risk
18
Low risk
19
Moderate risk
20
Acceptable risk
21 31 to 365 days
22
Minimal risk
23
Low risk
24
Moderate risk
25
Acceptable risk

1 All consumer and industrial loans
2
Minimal risk
3
Low risk
Moderate risk
4
5
Acceptable risk
By maturity/repricing
6 Zero interval
7
Minimal risk
Low risk
8
Moderate risk
9
10
Acceptable risk

19.0
32.6
6.3
17.7
25.1

47.8

220

23.8
20.4
20.9
19.3
31.5

39.9
37.2
56.2

79.0
65.5
54.7
97.3
95.6

644
558
557
509
952

876
176
332
995
949

44.2
2.0
10.3
50.8
49.7

42.9
81.3
58.4
36.2
43.3

22.3
16.3
6.2
5.3
37.8

99.5
100.0
96.6
100.0
100.0

23,749
60,629
21,028
20,227
17,987

10

17.6
22.9
16.3

6.18

34,107
8,982
11,076
8,656
4,441

10.2

17.2
27.5
6.3
23.5
15.2

36.7
58.4
27.0
26.5
39.3

61.4
39.6
97.7
93.5

6.47

7,804

4,505

25.0

30.1

76.2

91.2

6.14
6.68
7.17

1,369
2,140
1,729

3,738
2,954
4,203

179
94

15.1
26.8
49.6

4.2
14.5
19.4

59.1
53.2
89.2

67.5
92.1
97.2

6.64

12,362
309
3.638
4.639
3,099

3.262
5,367
6,096
2,847
2,421

259
72
251
232
3.38

36.7
5.2
37.9
27.1
46.5

3.5
5.8
37.0

64.5
44.5
74.3
53.9
67.8

96.2
93.3
92.7
98.4
96.4

Weightedaverage risk
rating 5

Weightedaverage
maturity/
repricing
interval 6

33.9
24.2
17.3
19.2

19.2
48.3
57.0
45.4

32.9
20.7
46.4
10.8
49.9

9.5
29.4
77.6
75.9
39.9

118

61.2

interval6

6.18

6.20
6.68
7.09

2
2
3
57

11.2

*

26 More than 365 days
27
Minimal risk . . .
28
Low risk
29
Moderate risk
30
Acceptable r i s k . .

Days

SIZE OF L O A N

31
32
33
34

1-99
100-999
1.000-9,999
10,000+

35
36
37
38
39

Prime 7
Fed funds
Other domestic
Foreign
Other

3.3
3.2
3.0
2.4

56.3
49.1

6.20

66
1,679
11,297
43,191

9.22
6.14
6.19
6.48
6.67

1,457
30,582
1,561
20,768
1,865

3.5
2.3
3.2
2.6
3.3

62.7
14.2
3.6
38.8

8.46
7.66
6.78

32.1

20.6

94.5
95.4
89.0
75.7

B A S E R A T E OF L O A N 4

NOTE. This table has been revised to reflect several changes in the E.2 statistical release.
First, business loan pricing information is now disaggregated by risk categories for most
loans. Second, the previous disaggregation of loans by maturity categories has been replaced
by a "maturity/repricing interval," which measures the period from the day the loan is made
until it is next scheduled to reprice (for loans that reprice), or the period from the day the loan
is made until it is scheduled to mature (for loans that do not reprice). Third, information on
whether loans are callable or subject to prepayment penalties is now being collected and
published. In addition to these new loan characteristics, the survey now includes gross
business loan extensions of U.S. branches and agencies of foreign banks.
1. As of December 31, 1996, assets of most of the large banks were at least $7.0 billion.
Median total assets for all insured banks were roughly $62 million. Assets at all U.S. branches
and agencies averaged 1.3 billion.
2. Effective (compounded) annual interest rates are calculated from the stated rate and
other terms of the loans and weighted by loan amount. The standard error of the loan rate for
all commercial and industrial loans in the current survey (line 1, column 1) is 0.11 percentage
points. The chances are about two out of three that the average rate shown would differ by less
than this amount from the average rate that would be found by a complete survey of the
universe of all banks.
3. Average maturities are weighted by loan amount and exclude loans with no stated
maturities.
4. The most common base pricing rate is that used to price the largest dollar volume of
loans. Base pricing rates include the prime rate (sometimes referred to as a bank's "base" or

"reference" rate); the federal funds rate; domestic money market rates other than the prime
rate and the federal funds rate; foreign money market rates; and other base rates not included
http://fraser.stlouisfed.org/
in the foregoing classifications.

Federal Reserve Bank of St. Louis

1.6

5. A complete description of these risk categories is available from the Banking and
Money Market Statistics Section, Mail Stop 81, Board of Governors of the Federal Reserve
System, Washington, DC 20551. The category "Moderate risk" includes the average loan,
under average economic conditions, at the typical lender. The category "Acceptable risk" may
include a small volume of special mention or classified loans. The weighted-average risk
ratings published for loans in rows 31-39 are calculated by assigning a value of "1" to
minimal risk loans; "2" to low risk loans; "3" to moderate risk loans, "4" to acceptable risk
loans; and "5" to special mention and classified loans. These values are weighted by loan
amount and exclude loans with no risk rating. Some of the loans in lines 1,6, 11, 16, 21, 26,
and 31-39 are not rated for risk.
6. The maturity/repricing interval measures the period from the date the loan is made until it
first may reprice or it matures. For floating-rate loans that are subject to repricing at any
time—such as many prime-based loans—the maturity/repricing interval is zero. For floating-rate
loans that have a scheduled repricing interval, the maturity/repricing interval measures the number
of days between the date the loan is made and the date on which it is next scheduled to reprice. For
loans having rates that remain fixed until the loan matures (fixed-rate loans), the maturity/repricing
interval measures the number of days between the date the loan is made and the date on which it
matures. Loans that reprice daily mature or reprice on the business day after they are made. Owing
to weekends and holidays, such loans may have maturity/repricing intervals in excess of one day;
such loans are not included in the "2 to 30 day" category.
7. For the current survey, the average reported prime rate, weighted by the amount of
loans priced relative to a prime base rate, was 8.54 percent for all banks; 8.50 percent for
large domestic banks, 8.62 percent for small domestic banks; and 8.50 percent for U.S.
branches and agencies of foreign banks.

A68
4.31

Special Tables • October 1997
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, 1997

June 30, 1996

663.5
5.971.5
64.1
2.9
24.5
2.905.6

603.0
5,427.0
61.9
11.0
24.6
2,154.8
9,632.2

Total short-term assets
Long-term assets (Note 2)
Premises
Furniture and equipment
Leases and leasehold improvements
Prepaid pension costs

377.1
149.5
21.2
266.3

385.1
136.3
33.2
318.6

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

873.3

814.0

10,505.4

9,096.3

7,049.4
2,491.2
91.5

6,093.5
2,091.2
97.5

Total short-term liabilities
Long-term liabilities
Obligations under capital leases
Long-term debt
Postretirement/postemployment benefits obligation

.7
187.6
186.5

2.3
181.0
183.7
374.8

367.0

10,006.9

8,649.2

498.5

447.1

10,505.4

9,096.3

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 A S S E T S

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.




8,282.2

9,632.2

Total long-term liabilities
Total liabilities

8,282.2

(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. Effective Jan. 1, 1987, the Reserve
Banks implemented the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 87, Employers' Accounting for Pensions (SFAS 87). Accordingly,
the Federal Reserve Banks recognized credits to expenses of $15.6 million in the second
quarter of 1997, $15.6 million in the first quarter of 1997, $12.0 million in the second quarter
of 1996, and $12.2 million in the first quarter of 1996, 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

A69

PRO FORMA FINANCIAL STATEMENTS FOR FEDERAL RESERVE PRICED SERVICES
B.

Pro forma income statement

Millions of dollars

Quarter ending June 30, 1997
Revenue from services provided to depository institutions (Note 4)
Operating expenses (Note 5)

Quarter ending June 30, 1996

164.8

196.0
162.3

31.0

33.7

195.8

Income from operations
Inputed costs (Note 6)
Interest on float
Interest on debt
Sales taxes
FDIC insurance

1.8

1.1

4.4
2.3
0.5

4.3
2.6
0.0

8.0
25.7

Income from operations after imputed costs
Other income and expenses (Note 7)
Investment income on clearing balances
Earnings credits

91.7
87.6

75.7
68.6

7.1

Income before income taxes
Inputed income taxes (Note 8)

32.8

Net income

23.0

9.8

MEMO

10.7

Targeted return on equity (Note 9)

Six months ending June 30, 1997

Revenue from services provided to depository institutions (Note 4)
Operating expenses (Note 5)

Six months ending June 30, 1996

388.9
328.1

Income from operations
Imputed costs (Note 6)
Interest on float
Interest on debt
Sales taxes
FDIC insurance

390.1
323.4

11.8
8.6

4.9

1.0

Income from operations after imputed costs
Other income and expenses (Note 7)
Investment income on clearing balances
Earnings credits

5.4
20.8

0.0

180.1

147.2
134.0

165.8

25.8
40.9

39.9

13.2

Income before income taxes
Imputed income taxes (Note 8)

54.2
17.4

16.2

Net income

36.8

37.9

27.1

21.0

MEMO

Targeted return on equity (Note 9)
NOTE. Components may not sum to totals because of rounding. The priced services
financial statements consist of these tables and the accompanying notes.
(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 staff members of the Board of
Governors working directly on the development of priced services. The expenses for Board
staff members were $0.7 million in the first and second quarters of 1997 and 1996. 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 1997 and 1996 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




1997

1996

404.1
20.1
384.0

413.4
15.4
398.0

38.0
251.9
83.2
10.9

40.3
318.4
107.7
(68.5)

54.1

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 1997 and 1996.
( 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 ) 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 $1.9 million for the
second quarter of 1997, $2.3 million for the first quarter of 1997, $1.6 million for the second
quarter of 1996, and $1.2 million for the first quarter of 1996. The Reserve Banks plan to
recover these amounts, along with a finance charge, by the end of the year 2001.

A70

Index to Statistical Tables
References are to pages A3-A69 although the prefix 'A" is omitted in this index
ACCEPTANCES, bankers (See Bankers acceptances)
Assets and liabilities (See also Foreigners)
Commercial banks, 15-21
Domestic finance companies, 32, 33
Federal Reserve Banks, 10
Foreign-related institutions, 20
Automobiles
Consumer credit, 36
Production, 44, 45
BANKERS acceptances, 5, 10, 22, 23
Bankers balances, 15-21. (See also Foreigners)
Bonds (See also U.S. government securities)
New issues, 31
Rates, 23
Business activity, nonfinancial, 42
Business loans (See Commercial and industrial loans)
CAPACITY utilization, 43
Capital accounts
Commercial banks, 15-21
Federal Reserve Banks, 10
Central banks, discount rates, 61
Certificates of deposit, 23
Commercial and industrial loans
Commercial banks, 15-21, 64-67
Weekly reporting banks, 17, 18
Commercial banks
Assets and liabilities, 15-21
Commercial and industrial loans, 15-21, 64-67
Consumer loans held, by type and terms, 36, 64-67
Deposit interest rates of insured, 14
Real estate mortgages held, by holder and property, 35
Terms of lending, 64-67
Time and savings deposits, 4
Commercial paper, 22, 23, 32
Condition statements (See Assets and liabilities)
Construction, 42, 46
Consumer credit, 36
Consumer prices, 42
Consumption expenditures, 48, 49
Corporations
Profits and their distribution, 32
Security issues, 31,61
Cost of living (See Consumer prices)
Credit unions, 36
Currency in circulation, 5, 12
Customer credit, stock market, 24
DEBT (See specific types of debt or securities)
Demand deposits, 15-21
Depository institutions
Reserve requirements, 8
Reserves and related items, 4, 5, 6, 11
Deposits (See also specific types)
Commercial banks, 4, 15-21
Federal Reserve Banks, 5, 10
Interest rates, 14
Discount rates at Reserve Banks and at foreign central banks and
foreign countries (See Interest rates)
Discounts and advances by Reserve Banks (See Loans)
Dividends, corporate, 32
EMPLOYMENT, 42
Eurodollars, 23, 61




FARM mortgage loans, 35
Federal agency obligations, 5, 9, 10, 11, 28, 29
Federal credit agencies, 30
Federal finance
Debt subject to statutory limitation, and types and ownership
of gross debt, 27
Receipts and outlays, 25, 26
Treasury financing of surplus, or deficit, 25
Treasury operating balance, 25
Federal Financing Bank, 30
Federal funds, 23, 25
Federal Home Loan Banks, 30
Federal Home Loan Mortgage Corporation, 30, 34, 35
Federal Housing Administration, 30, 34, 35
Federal Land Banks, 35
Federal National Mortgage Association, 30, 34, 35
Federal Reserve Banks
Condition statement, 10
Discount rates (See Interest rates)
U.S. government securities held, 5, 10, 11, 27
Federal Reserve credit, 5, 6, 10, 11
Federal Reserve notes, 10
Federal Reserve System
Balance sheet for priced services, 68, 69
Condition statement for priced services, 68, 69
Federally sponsored credit agencies, 30
Finance companies
Assets and liabilities, 32
Business credit, 33
Loans, 36
Paper, 22, 23
Float, 5
Flow of funds, 37-41
Foreign currency operations, 10
Foreign deposits in U.S. banks, 5
Foreign exchange rates, 62
Foreign-related institutions, 20
Foreign trade, 51
Foreigners
Claims on, 52, 55, 56, 57, 59
Liabilities to, 51, 52, 53, 58, 60, 61
GOLD
Certificate account, 10
Stock, 5, 51
Government National Mortgage Association, 30, 34, 35
Gross domestic product, 48, 49
HOUSING, new and existing units, 46
INCOME and expenses, Federal Reserve System, 68, 69
Income, personal and national, 42, 48, 49
Industrial production, 42, 44
Insurance companies, 27, 35
Interest rates
Bonds, 23
Commercial banks, 64-67
Consumer credit, 36
Deposits, 14
Federal Reserve Banks, 7
Foreign banks, U.S. branches and agencies, 67
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

A71

International organizations, 52, 53, 55, 58, 59
Inventories, 48
Investment companies, issues and assets, 32
Investments (See also specific types)
Commercial banks, 4, 15-21
Federal Reserve Banks, 10, 11
Financial institutions, 35
LABOR force, 42
Life insurance companies (See Insurance companies)
Loans (See also specific types)
Commercial banks, 15-21, 64-67
Federal Reserve Banks, 5, 6, 7, 10, 11
Federal Reserve System, 68, 69
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)
Reserve requirements, 8
Mining production, 45
Mobile homes shipped, 46
Monetary and credit aggregates, 4, 11
Money and capital market rates, 23
Money stock measures and components, 4, 12
Mortgages (See Real estate loans)
Mutual funds, 12, 32
Mutual savings banks (See Thrift institutions)
NATIONAL defense outlays, 26
National income, 48
OPEN market transactions, 9
PERSONAL income, 49
Prices
Consumer and producer, 42, 47
Stock market, 24
Prime rate, 22
Producer prices, 42, 47
Production, 42, 44
Profits, corporate, 32
REAL estate loans
Banks, 15-21, 35
Terms, yields, and activity, 34
Type of holder and property mortgaged, 35
Reserve requirements, 8
Reserves
Commercial banks, 15-21
Depository institutions, 4, 5, 6, 11
Federal Reserve Banks, 10
U.S. reserve assets, 51




Residential mortgage loans, 34, 35
Retail credit and retail sales, 36, 42
SAVING
Flow of funds, 37-41
National income accounts, 48
Savings institutions, 35, 36, 37-41
Savings deposits (See Time and savings deposits)
Securities (See also specific types)
Federal and federally sponsored credit agencies, 30
Foreign transactions, 60
New issues, 31
Prices, 24
Special drawing rights, 5, 10, 50, 51
State and local governments
Holdings of U.S. government securities, 27
New security issues, 31
Rates on securities, 23
Stock market, selected statistics, 24
Stocks (See also Securities)
New issues, 31
Prices, 24
Student Loan Marketing Association, 30
TAX receipts, federal, 26
Thrift institutions, 4. (See also Credit unions and Savings
institutions)
Time and savings deposits, 4, 12, 14, 15-21
Trade, foreign, 51
Treasury cash, Treasury currency, 5
Treasury deposits, 5, 10, 25
Treasury operating balance, 25
UNEMPLOYMENT, 42
U.S. government balances
Commercial bank holdings, 15-21
Treasury deposits at Reserve Banks, 5, 10, 25
U.S. government securities
Bank holdings, 15-21, 27
Dealer transactions, positions, and financing, 29
Federal Reserve Bank holdings, 5, 10, 11, 27
Foreign and international holdings and
transactions, 10, 27, 61
Open market transactions, 9
Outstanding, by type and holder, 27, 28
Rates, 23
US. international transactions, 50-62
Utilities, production, 45
VETERANS Administration, 34, 35
WEEKLY reporting banks, 17, 18
Wholesale (producer) prices, 42, 47
YIELDS (See Interest rates)

A72

Federal Reserve Board of Governors
and Official Staff
A L A N GREENSPAN, Chairman
ALICE M . RIVLIN, Vice Chair

OFFICE

OF BOARD

EDWARD W . KELLEY, JR.
SUSAN M . PHILLIPS

DIVISION

MEMBERS

OF INTERNATIONAL

JOSEPH R. COYNE, Assistant

to the

Board

EDWIN M . TRUMAN, Staff

DONALD J. W I N N , Assistant

to the

Board

LARRY J. PROMISEL, Senior

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

LEGAL

DIVISION
Counsel

OFFICE

OF THE

SECRETARY

WILLIAM W . WILES,

Adviser

LEWIS S. ALEXANDER, Associate

Director

DALE W. HENDERSON, Associate

Director

PETER HOOPER III, Associate

Director

KAREN H. JOHNSON, Associate

Director

DAVID H. HOWARD, Senior

Adviser

DONALD B . ADAMS, Assistant

Director

THOMAS A . CONNORS, Assistant

Director

CATHERINE L. M A N N , Assistant

Director

OF RESEARCH

M I C H A E L J. P R E L L ,

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

Adviser

CHARLES J. SIEGMAN, Senior

DIVISION

J. VIRGIL MATTINGLY, JR., General

FINANCE

Director

AND

STATISTICS

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

Secretary

JENNIFER J. JOHNSON, Deputy

Secretary

BARBARA R. LOWREY, Associate

Secretary' and

DAVID S. JONES, Assistant

Ombudsman

Director

STEPHEN A . RHOADES, Assistant

Director

CHARLES S. STRUCKMEYER, Assistant

DIVISION OF BANKING
SUPERVISION
AND
REGULATION

JOYCE K. ZICKLER, Assistant

RICHARD SPILLENKOTHEN,

JOHN J. MINGO, Senior

Director

STEPHEN C. SCHEMERING, Deputy

Director

HERBERT A . BIERN, Associate

Director

GLENN B . CANNER, Senior

Adviser
Adviser

DIVISION

OF MONETARY

AFFAIRS

Director
Director

GERALD A. EDWARDS, JR., Deputy Associate
Director
STEPHEN M. HOFFMAN, JR., Deputy Associate
Director
JAMES V. HOUPT, Deputy Associate
Director
JACK P. JENNINGS, Deputy Associate
Director
MICHAEL G. MARTINSON, Deputy Associate
Director
SIDNEY M. SUSSAN, Deputy Associate
Director
MOLLY S. WASSOM, Deputy Associate
Director
HOWARD A . AMER, Assistant

Director

NORAH M . BARGER, Assistant
BETSY CROSS, Assistant

Director

Director

DONALD L. KOHN,

Director

DAVID E. LINDSEY, Deputy

Director

BRIAN F. MADIGAN, Associate

Director

RICHARD D. PORTER, Deputy Associate
VINCENT R . REINHART, Assistant

GRIFFITH L . G A R W O O D ,

Director

GLENN E . LONEY, Associate
DOLORES S. SMITH, Associate

WILLIAM SCHNEIDER, Project

Director,

MAUREEN P. ENGLISH, Assistant




to the Board

DIVISION OF
CONSUMER
AND COMMUNITY
AFFAIRS

Director

Center

Director

Director

NORMAND R.V. BERNARD, Special Assistant

RICHARD A . SMALL, Assistant

National Information

Director

Director

WILLIAM A . RYBACK, Associate
ROGER T. COLE, Associate

Director

ALICE PATRICIA WHITE, Assistant

Director
Director

IRENE SHAWN M C N U L T Y , Assistant

Director
Director

A73

LAURENCE H . MEYER

OFFICE OF
STAFF DIRECTOR

FOR

MANAGEMENT

S. DAVID FROST, Staff
Director
SHEILA CLARK, EEO Programs

DIVISION OF HUMAN
MANAGEMENT
DAVID L. SHANNON,

C L Y D E H . FARNSWORTH, JR.,

Director

OFFICE OF THE INSPECTOR
BRENT L. BOWEN, Inspector

CONTROLLER

STEPHEN J. CLARK, Assistant Controller (Programs and Budgets)

DIVISION OF SUPPORT
ROBERT E . FRAZIER,

Controller

SERVICES

Director

GEORGE M. LOPEZ, Assistant
DAVID L. WILLIAMS, Assistant

Director
Director

DIVISION OF INFORMATION
MANAGEMENT
STEPHEN R. MALPHRUS,

RESOURCES

Director

MARIANNE M . EMERSON, Assistant

Po KYUNG KIM, Assistant

Director

Director

R A Y M O N D H . M A S S E Y , Assistant

Director

EDWARD T. MULRENIN, Assistant

Director

DAY W. RADEBAUGH, JR., Assistant Director
ELIZABETH B. RIGGS, Assistant
RICHARD C. STEVENS, Assistant




(Finance)

Director
Director

BARRY R. SNYDER, Assistant

GENERAL

General

DONALD L. ROBINSON, Assistant

Controller

DARRELL R. PAULEY, Assistant

Director

LOUISE L. ROSEMAN, Associate
Director
PAUL W. BETTGE, Assistant
Director
JACK DENNIS, JR., Assistant
Director
EARL G. HAMILTON, Assistant
Director
JEFFREY C. MARQUARDT, Assistant
Director
FLORENCE M. YOUNG, Assistant
Director

RESOURCES

GEORGE E. LIVINGSTON,

OPERATIONS

DAVID L. ROBINSON, Deputy Director (Finance and Control)

Director

JOHN R. WEIS, Associate
Director
JOSEPH H. HAYES, JR., Assistant
Director
FRED HOROWITZ, Assistant
Director

OFFICE OF THE

DIVISION OF RESERVE BANK
AND PAYMENT SYSTEMS

Inspector

Inspector

General
General

74

Federal Reserve Bulletin • October 1997

Federal Open Market Committee
and Advisory Councils
FEDERAL

OPEN MARKET

COMMITTEE
MEMBERS

ALAN GREENSPAN,

WILLIAM J. MCDONOUGH, Vice

Chairman

J. A L F R E D B R O A D D U S , JR.

LAURENCE H.

JACK G U Y N N

MICHAEL H. MOSKOW

MEYER

E D W A R D W . K E L L E Y , JR.

ROBERT T. PARRY

S U S A N M . PHILLIPS
ALICE M .

ALTERNATE

THOMAS M .

CATHY E.

RIVLIN

MEMBERS

THOMAS C. MELZER

HOENIG

JERRY L . J O R D A N

Chairman

E R N E S T T . PATRIKIS

MINEHAN

STAFF
DONALD L. KOHN, Secretary

and

Economist

NORMAND R.V. BERNARD, Deputy

Secretary

JOSEPH R. COYNE, Assistant
GARY P. GILLUM, Assistant

WILLIAM C . HUNTER, Associate

Secretary

DAVID E . LINDSEY, Associate
Counsel

THOMAS C. BAXTER, JR., Deputy General
EDWIN M . TRUMAN,

Counsel

LARRY J. PROMISEL, Associate
CHARLES J. SIEGMAN, Associate

Economist

LAWRENCE SLIFMAN, Associate

Economist

DAVID J. STOCKTON, Associate

PETER R. FISHER, Manager, System Open Market

FEDERAL

ADVISORY

Economist
Economist

Economist

STEPHEN G . CECCHETTI, Associate

Economist

JACK BEEBE, Associate

Economist

MARVIN S. GOODFRIEND, Associate

Secretary

J. VIRGIL MATTINGLY, JR., General
M I C H A E L J. P R E L L ,

ROBERT A . EISENBEIS, Associate

Economist
Economist
Economist
Economist
Economist

Account

COUNCIL
WALTER V. SHIPLEY,

President

CHARLES E. NELSON, Vice

President

ROGER L. FITZSIMONDS, S e v e n t h D i s t r i c t

WILLIAM M . CROZIER, JR., First D i s t r i c t

WALTER V. SHIPLEY, S e c o n d D i s t r i c t

THOMAS H . JACOBSEN, E i g h t h D i s t r i c t

WALTER E. DALLER, JR., T h i r d D i s t r i c t

RICHARD M . KOVACEVICH, N i n t h D i s t r i c t

ROBERT W. GILLESPIE, Fourth D i s t r i c t

CHARLES E. NELSON, T e n t h D i s t r i c t

KENNETH D . LEWIS, F i f t h D i s t r i c t

CHARLES T. DOYLE, E l e v e n t h D i s t r i c t

STEPHEN A . HANSEL, S i x t h D i s t r i c t

WILLIAM F. ZUENDT, T w e l f t h D i s t r i c t




HERBERT V. PROCHNOW, Secretary
JAMES A N N A B L E ,
W I L L I A M J. K O R S V I K ,

Emeritus

Co-Secretary
Co-Secretary

A75

CONSUMER

ADVISORY

COUNCIL

JULIA W . SEWARD,
WILLIAM N . L U N D ,

R I C H A R D S . A M A D O R , LOS A n g e l e s ,

Richmond, Virginia, Chairman
Augusta, Maine, Vice Chairman

ERROL T. LOUIS, B r o o k l y n , N e w York

California

W A Y N E - K E N T A . B R A D S H A W , LOS A n g e l e s , C a l i f o r n i a

PAUL E. MULLINGS, M c L e a n , V i r g i n i a

THOMAS R. BUTLER, R i v e r w o o d s , I l l i n o i s

CAROL PARRY, N e w York, N e w York

ROBERT A . COOK, C r o f t o n , M a r y l a n d

P H I L I P PRICE, JR., P h i l a d e l p h i a ,

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

RONALD A . PRILL, M i n n e a p o l i s , M i n n e s o t a

Pennsylvania

EMANUEL 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

LISA RICE, T o l e d o , O h i o

DAVID C . FYNN, C l e v e l a n d , O h i o

JOHN R. RINES, D e t r o i t , M i c h i g a n

ROBERT G . GREER, H o u s t o n , T e x a s

SISTER M A R I L Y N R O S S , O m a h a ,

KENNETH R. HARNEY, Chevy Chase, Maryland

MARGOT SAUNDERS, W a s h i n g t o n ,

GAIL K. HILLEBRAND, S a n F r a n c i s c o ,

GAIL SMALL, Lame Deer, Montana

California

Nebraska
D.C.

TERRY JORDE, Cando, North Dakota

YVONNE S. SPARKS, St. L o u i s , M i s s o u r i

FRANCINE C. JUSTA, N e w York, N e w York

GREGORY D . SQUIRES, M i l w a u k e e , W i s c o n s i n

JANET C . KOEHLER, J a c k s o n v i l l e , F l o r i d a

GEORGE P. SURGEON, C h i c a g o , I l l i n o i s

EUGENE I. LEHRMANN, M a d i s o n , W i s c o n s i n

T H E O D O R E J. W Y S O C K I , JR., C h i c a g o , I l l i n o i s

THRIFT INSTITUTIONS

ADVISORY

DAVID

COUNCIL

F.

HOLLAND,

Burlington, Massachusetts, President
Irwindale, California, Vice President

CHARLES R . RINEHART,

BARRY C . BURKHOLDER, H o u s t o n ,

STEPHEN D . HAILER, A k r o n , O h i o

Texas

DAVID E. A . CARSON, B r i d g e p o r t , C o n n e c t i c u t
M I C H A E L T. C R O W L E Y , JR., M i l w a u k e e ,

Wisconsin

EDWARD J. MOLNAR, H a r l e y s v i l l e , P e n n s y l v a n i a

GUY C. PINKERTON, Seattle, Washington

DOUGLAS A . FERRARO, E n g l e w o o d , C o l o r a d o

TERRY R. WEST, J a c k s o n v i l l e , F l o r i d a

WILLIAM A . FITZGERALD, O m a h a ,

FREDERICK WILLETTS, III, Wilmington, North Carolina




Nebraska

A76

Federal Reserve Board Publications
For ordering assistance,
write PUBLICATIONS SERVICES,
MS-127, Board of Governors of the Federal Reserve System,
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use. Multiple

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A S U M M A R Y OF M E R G E R P E R F O R M A N C E S T U D I E S IN B A N K ING,

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PERFORMANCE"
T H E A D E Q U A C Y A N D C O N S I S T E N C Y OF M A R G I N
IN

THE

MARKETS

FOR

STOCKS

AND

168.

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ECONOMICS

OF

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PRIVATE

EQUITY

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Some Bulletin articles are reprinted. The articles listed below are
those for which reprints are available. Beginning with the January 1997 issue, articles are available on the Board's World Wide
Web site (http://www.bog.frb.fed.us) under P u b l i c a t i o n s , Federal
Reserve Bulletin articles.

A.

Rhoades. February 1992. 11 pp.
163.

REPRINTS OF SELECTED Bulletin ARTICLES

by

1993.

FAMILY F I N A N C E S

IN T H E

U.S.:

RECENT

EVIDENCE

S U R V E Y OF C O N S U M E R F I N A N C E S . J a n u a r y

1997.

FROM

THE

A78

Maps of the Federal Reserve System

1
2 •

9

~

MINNEAPOLIS
^

CHICAGO!
SAN FRANCISCO

10

^

CLEVELAND
KANSAS CITY I

• NEW YORK
PSLADELPHIA

RICHMOND

ST. LOUIS

ll

BOSTON

6

ATLANTA

DALLAS

ALASKA
HAWAII

LEGEND
Both

pages

•

Federal Reserve Bank city

n

Board of Governors of the Federal
Reserve System, Washington, D.C.

Facing

page

• Federal Reserve Branch city
—

Branch boundary

NOTE
The Federal Reserve officially identifies Districts by number and Reserve Bank city (shown on both pages) and by
letter (shown on the facing page).
In the 12th District, the Seattle Branch serves Alaska,
and the San Francisco Bank serves Hawaii.
The System serves commonwealths and territories as
follows: the New York Bank serves the Commonwealth




of Puerto Rico and the U.S. Virgin Islands; the San Francisco Bank serves American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands. The Board of
Governors revised the branch boundaries of the System
most recently in February 1996.

A79

1-A

2-B

4-D

3-C

5-E

Baltimore MD

vl^

VT

•

\

NH

(

CT

[

/
'Cincinnati

Buffalo

MA

f
NJ

CT

NY

sc

NEW YORK

BOSTON

7-G

6-F

RICHMOND

CLEVELAND

PHILADELPHIA

8-H

•Nashville

TN-

KY

Birmingham

n.

Detroit •

MS

^

Louisville

MO

Jacksonville

LA

•Memphis

PL

New Orleans

; w

Little"

Y

Miami
ATLANTA

ST. LOUIS

CHICAGO

9-1

MINNEAPOLIS
12-L

10-J
WY

1 NE

Omaha*

CO

MO

•

Denver
KM

„ • ,
Seattle

1

Oklahoma City
OK

KANSAS CITY
11-K

tx
Salt Late City
i

•
El Pas




Mi

I-A

r

~~ ^HouSton
•Los Angeles
San AtttoSio^-

DALLAS

SAN FRANCISCO

A80

Federal Reserve Banks, Branches,
and Offices
FEDERAL RESERVE BANK
branch, or facility
Zip

Chairman
Deputy Chairman

President
First Vice President

BOSTON*

02106

William C. Brainard
Frederick J. Mancheski

Cathy E. Minehan
Paul M. Connolly

NEW YORK*

10045

John C. Whitehead
Thomas W. Jones
Bal Dixit

William J. McDonough
Ernest T. Patrikis

Buffalo

14240

Carl W. Turnipseed 1

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

G. Watts Humphrey, Jr.
David H. Hoag
George C. Juilfs
John T. Ryan, III

RICHMOND*

23219
21203
28230

Claudine B. Malone
Robert L. Strickland
Rebecca Hahn Windsor
Dennis D. Lowery

J. Alfred Broaddus, Jr.
Walter A. Varvel

Baltimore
Charlotte

Hugh M. Brown
David R. Jones
D. Bruce CanPatrick C. Kelly
Kaaren Johnson-Street
James E. Dalton, Jr.
Jo Ann Slaydon

Jack Guynn
Patrick K. Barron

Lester H. McKeever, Jr.
Arthur C. Martinez
Florine Mark

Michael H. Moskow
William C. Conrad

John F. McDonnell
Susan S. Elliott
Robert D. Nabholz, Jr.
John A. Williams
John V. Myers

Thomas C. Melzer
W. LeGrande Rives

Jean D. Kinsey
David A. Koch
Matthew J. Quinn

Gary H. Stern
Colleen K. Strand

A. Drue Jennings
Jo Marie Dancik
Peter I. Wold
Barry L. Eller
Arthur L. Shoener

Thomas M. Hoenig
Richard K. Rasdall

Roger R. Hemminghaus
Cece Smith
Alvin T. Johnson
I. H. Kempner, III
H. B. Zachry, Jr.

Robert D. McTeer, Jr.
Helen E. Holcomb

Judith M. Runstad
Gary G. Michael
Anne L. Evans
Carol A. Whipple
Gerald R. Sherratt
Richard R. Sonstelie

Robert T. Parry
John F. Moore

ATLANTA
Birmingham
Jacksonville
Miami
Nashville
New Orleans

30303
35283
32231
33152
37203
... 70161

CHICAGO*

60690

Detroit

48231

ST. LOUIS

63166

Little Rock
Louisville
Memphis
MINNEAPOLIS
Helena
K A N S A S CITY
Denver
Oklahoma City
Omaha
DALLAS
EI Paso
Houston
San Antonio
S A N FRANCISCO . . . .
Los Angeles
Portland
Salt Lake City
Seattle

72203
40232
38101
55480
59601
64198
80217
73125
68102
75201
79999
77252
78295
94120
90051
97208
84125
98124

Vice President
in charge of branch

Charles A. Cerino 1
Robert B. Schaub

William J. Tignanelli'
Dan M. Bechter 1

James M. Mckee
Fred R. Herr1
James D. Hawkins 1
James T. Curry III
Melvyn K. Purcell
Robert J. Musso

David R. Allardice 1

Robert A. Hopkins
Thomas A. Boone
Martha L. Perine

John D.Johnson

Carl M. Gambs 1
Kelly J. Dubbert
Bradley C. Cloverdyke

Sammie C. Clay
Robert Smith, III1
James L. StuII1

Mark L. Mullinix 1
Raymond H. Laurence 1
Andrea P. Wolcott
Gordon R. G. Werkema 2

* Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; East Rutherford, New Jersey 07016; Utica
at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa 50306;
Indianapolis, Indiana 46204; Milwaukee, Wisconsin 53202; and Peoria, Illinois 61607.
1. Senior Vice President.
2. Executive Vice President




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.




A Consumer's
Guide to
Mortgage
Lock-ins

Quid* to
Mortgage
HtflMwoinyt

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
Guide to
Mortgage
Settlement
Costs

A Guide to

Business
Credit
for W o m e n ,
Minorities, and
Small Businesses

SHOP

The Card You Pick
Can Save You Money

Publications of Interest
FEDERAL

RESERVE

REGULATORY

SERVICE

To promote public understanding of its regulatory functions, the Board publishes the Federal Reserve Regulatory Service, a four-volume loose-leaf service containing all Board regulations as well as related statutes,
interpretations, policy statements, rulings, and staff
opinions. For those with a more specialized interest in
the Board's regulations, parts of this service are published separately as handbooks pertaining to monetary
policy, securities credit, consumer affairs, and the payment system.
These publications are designed to help those who
must frequently refer to the Board's regulatory materials. They are updated monthly, and each contains citation indexes and a subject index.
The Monetary Policy and Reserve Requirements
Handbook contains Regulations A, D, and Q, plus
related materials.
The Securities Credit Transactions Handbook contains Regulations G, T, U, and X, dealing with extensions of credit for the purchase of securities, together
with related statutes, Board interpretations, rulings,
and staff opinions. Also included are the Board's list
of marginable OTC stocks and its list of foreign margin
stocks.
The Consumer and Community Affairs Handbook
contains Regulations B, C, E, M, Z, AA, BB, and DD,
and associated materials.

GUIDE

TO THE FLOW

OF FUNDS

ACCOUNTS

A recent Federal Reserve publication, Guide to the Flow
of Funds Accounts, explains in detail how the U.S.
financial flow accounts are prepared. The accounts,
which are compiled by the Division of Research and
Statistics, are published in the Board's quarterly Z.l
statistical release, "Flow of Funds Accounts, Flows and
Outstandings." The Guide updates and replaces Introduction to Flow of Funds, published in 1980.
The 670-page Guide begins with an explanation of
the organization and uses of the flow of funds accounts
and their relationship to the national income and
product accounts prepared by the U.S. Department of
Commerce. Also discussed are the individual data
series that make up the accounts and such proce-




The Payment System Handbook deals with expedited
funds availability, check collection, wire transfers, and
risk-reduction policy. It includes Regulations CC, J, and
EE, related statutes and commentaries, and policy
statements on risk reduction in the payment system.
For domestic subscribers, the annual rate is $200 for
the Federal Reserve Regulatory Service and $75 for
each Handbook. For subscribers outside the United
States, the price including additional air mail costs is
$250 for the Service and $90 for each Handbook.
The Federal Reserve Regulatory Service is also available on diskette for use on personal computers. For a
standalone PC, the annual subscription fee is $300. For
network subscriptions, the annual fee is $300 for 1 concurrent user, $750 for a maximum of 10 concurrent
users, $2,000 for a maximum of 50 concurrent users,
and $3,000 for a maximum of 100 concurrent users.
Subscribers outside the United States should add $50
to cover additional airmail costs. For further information, call (202) 452-3244.
All subscription requests must be accompanied by a
check or money order payable to the Board of Governors of the Federal Reserve System. Orders should be
addressed to Publications Services, mail stop 127, Board
of Governors of the Federal Reserve System, Washington, DC 20551.

dures as seasonal adjustment, extrapolation, and
interpolation.
The balance of the Guide contains explanatory tables
corresponding to the tables of financial flows data that
appeared in the September 1992 Z.l release. These
tables give, for each data series, the source of the data or
the methods of calculation, along with annual data for
1991 that were published in the September 1992 release.
Guide to the Flow of Funds Accounts is available for
$8.50 per copy from Publications Services, Board of
Governors of the Federal Reserve System, Washington,
DC 20551. Orders must include a check or money order,
in U.S. dollars, made payable to the Board of Governors
of the Federal Reserve System.

Federal Reserve Statistical Releases
Available on the Commerce Department's
Economic Bulletin Board
The Board of Governors of the Federal Reserve System makes some of its statistical releases available to
the public through the U.S. Department of Commerce's economic bulletin board. Computer access
to the releases can be obtained by subscription.

For further information regarding a subscription to
the economic bulletin board, please call (202) 4821986. The releases transmitted to the economic bulletin board, on a regular basis, are the following:

Reference
Number

Statistical release

Frequency of release

H.3

Aggregate Reserves

Weekly/Thursday

H.4.1

Factors Affecting Reserve Balances

Weekly/Thursday

H.6

Money Stock

Weekly/Thursday

H.8

Assets and Liabilities of Insured Domestically Chartered
and Foreign Related Banking Institutions

Weekly/Monday

H.10

Foreign Exchange Rates

Weekly/Monday

H.15

Selected Interest Rates

Weekly/Monday

G.5

Foreign Exchange Rates

Monthly/end of month

G.17

Industrial Production and Capacity Utilization

Monthly/midmonth

G.19

Consumer Installment Credit

Monthly/fifth business day

Z. 1

Flow of Funds

Quarterly