Full text of Federal Reserve Bulletin : September 1991

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VOLUME 7 7 •

NUMBER 9 •

SEPTEMBER 1991

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 • 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
685 MONETARY POLICY REPORT
TO THE CONGRESS
Economic activity contracted appreciably
this past fall and winter, and the downward
momentum in activity carried into the early
part of 1991. However, much of the negative impetus to activity was reversed by the
cumulative drop in oil prices that occurred
between October and February and by the
boost in confidence that accompanied the
swift and successful conclusion of the Persian Gulf war. These events, combined with
a considerable easing of monetary policy,
set the stage for a recovery, and a few
sectors actually hit bottom quite early in the
year. Recently, further evidence has
emerged to indicate that economic activity,
in the aggregate, stabilized or began to
move up during the second quarter of the
year.
703 INDUSTRIAL PRODUCTION AND
CAPACITY UTILIZATION
Industrial production rose 0.7 percent in
June, after upward revised gains of 0.7
percent in May and 0.5 percent in April.
Total industrial capacity utilization increased 0.3 percentage point in June to 79.3
percent after an increase of 0.4 percentage
point in May.
706 STATEMENTS

TO THE CONGRESS

Oliver Ireland, Associate General Counsel,
Legal Division, Board of Governors of the
Federal Reserve System, discusses the issues of lender liability under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(CERCLA) and says that as an initial matter
the Board supports the purposes of CERCLA but is concerned over the effect of




recent court interpretations that have held
lenders liable for the cost of cleanup of
hazardous substances found on a borrower's property and believes that the imposition of cleanup liability on lenders is counterproductive to long-term environmental
goals and is contributing to an unnecessary
and unwarranted constriction of credit
availability to a wide range of otherwise
creditworthy borrowers, before the Subcommittee on Policy Research and Insurance of the House Committee on Banking,
Finance and Urban Affairs, July 10, 1991.
709 Alan Greenspan, Chairman, Board of Governors, presents the midyear Monetary Policy Report to the Congress and focuses on
current economic and financial conditions
as well as the outlook for the economy and
monetary policy over the coming year and a
half; he also discusses the importance of
changes in patterns of credit usage and
flows of money and credit through the financial system in light of what could be
significant departures from the trends prevalent in the 1980s, before the House Committee on Banking, Finance and Urban Affairs, July 16, 1991.
715 Wayne D. Angell and Edward W. Kelley,
Jr., Members, Board of Governors, discuss
and review the Federal Reserve System's
expenses and its budget for 1991 and the
budgets of the Reserve Banks and say that
the increase in the Federal Reserve System's expenses is projected to average 5.3
percent at an annual rate from 1986 through
the 1991 budget and that the Reserve
Banks' increase in expenses from 1989 to
1990 was only 4.2 percent because actual
1990 expenses were lower than budgeted,
before the Subcommittee on Domestic
Monetary Policy of the House Committee

on Banking, Finance and Urban Affairs,
July 18 1991.
722 Brent L. Bowen, Inspector General, Board
of Governors, provides a brief review of the
points made in the June 7,1991, assessment
of Governor Angell's report entitled "System and Procedures for Financial Supervision and Control" to determine any particular weaknesses or strengths in the
System's design for auditing and controlling
its own financial operations and also outlines plans for examining the Board's systems of oversight and supervision of the
Federal Reserve Banks, before the Subcommittee on Domestic Monetary Policy of
the House Committee on Banking, Finance
and Urban Affairs, July 18, 1991.
724 The Board of Governors presents its views
on the proposed Fair Trade in Financial
Services Act of 1991 and says that while the
Board shares the objectives of this proposed legislation to encourage other countries to liberalize their financial markets, the
legislation itself is unwarranted and would
have unfortunate consequences in that it
rejects the policy of national treatment, a
policy that has been fundamental to the
U.S. approach to the international operations of financial organizations and that
should be preserved, before the House
Committee on Ways and Means, July 29,
1991.
726 Franklin D. Dreyer, Senior Vice President,
Supervision and Regulation and Loans,
Federal Reserve Bank of Chicago, discusses asset securitization as it relates to
financial institutions and says that staff
members at the Federal Reserve have been
carefully reviewing securitization to ensure
that this process will not pose undue risk for
depository institutions and their holding
companies, before the Subcommittee on
Policy Research and Insurance of the
House Committee on Banking, Finance and
Urban Affairs, July 31, 1991.




732

ANNOUNCEMENTS
Recess appointment of Alan Greenspan as
Chairman of the Board of Governors.
Appointment of David W. Mullins, Jr., as
Vice Chairman of the Board of Governors.
Revised Lists of OTC Margin Stocks and
Foreign Margin Stocks now available.
Errata in charts for the Federal Reserve
Bulletin and in an entry in the 77th Annual
Report, 1990 of the Board of Governors.
Proposed definition of highly leveraged
transactions.
Changes in Board staff.

735 RECORD OF POLICY ACTIONS OF THE
FEDERAL OPEN MARKET COMMITTEE
At its meeting on May 14, 1991, the Committee indicated that it favored a directive
that called for maintaining the existing degree of pressure on reserve positions. The
members also noted that they preferred or
could accept a directive that did not include
a presumption about the likely direction of
any intermeeting adjustments in policy. Accordingly, the Committee decided that
somewhat greater reserve restraint or
somewhat lesser reserve restraint might be
acceptable during the period ahead depending on progress toward price stability,
trends in economic activity, the behavior of
the monetary aggregates, and developments
in foreign exchange and domestic financial
markets. The reserve conditions contemplated at this meeting were expected to be
consistent with growth of M2 and M3 at
annual rates of around 4 and 2 percent
respectively over the three-month period
from March through June.
741 LEGAL

DEVELOPMENTS

Various bank holding company, bank service corporation, and bank merger orders;
and pending cases.

AI FINANCIAL AND BUSINESS

STATISTICS

These tables reflect data available as of
July 26, 1991.
A3 Domestic Financial Statistics
A46 Domestic Nonfinancial Statistics
A55 International Statistics

A74 FEDERAL OPEN MARKET COMMITTEE
AND STAFF; ADVISORY COUNCILS
A76 FEDERAL RESERVE
PUBLICATIONS

BOARD

A78 INDEX TO STATISTICAL
A71 GUIDE TO TABULAR
PRESENTATION,
STATISTICAL RELEASES, AND SPECIAL
TABLES

TABLES

A80 FEDERAL RESERVE
BANKS,
BRANCHES, AND OFFICES

A72 BOARD OF GOVERNORS AND STAFF




A81 MAP OF THE FEDERAL
SYSTEM

RESERVE

Monetary Policy Report to the Congress
Report submitted to the Congress on July 16, 1991,
pursuant to the Full Employment and Balanced
Growth Act of19781

MONETARY POUCY AND THE
ECONOMIC OUTLOOK FOR 1991 AND 1992
When the Federal Reserve presented its most recent
monetary policy report to the Congress, in February
of this year, the economy was still in a downswing
that had been precipitated by Iraq's invasion of
Kuwait in August 1990 and the associated spike in
oil prices. To be sure, several developments early in
the year had created conditions that promised to help
foster a turnaround in the economy: Not only had oil
prices reversed most of their earlier run-up, but
monetary policy had been eased substantially in the
final months of 1990 and the early part of this year.
However, the economy continued to weaken for a
time, and in the spring, policy was eased further,
with the objective of ensuring a satisfactory recovery.
Recent evidence suggests that a pickup in activity
probably is now under way. Much of the uncertainty
that had depressed business and consumer sentiment
was removed by the successful end of hostilities in
the Persian Gulf. The resulting increase in confidence, combined with the boost to real purchasing
power provided by the retreat in oil prices, raised
consumer spending on balance over the late winter
and spring. These same factors, as well as lower
mortgage rates, also have spurred a gradual recovery
in the housing sector. Reflecting the stimulus from
housing and consumer demand, along with the
continued growth in U. S. exports, industrial production turned up in April and has advanced appreciably
since then; in addition, labor demand showed signs
of stabilizing during the spring.
As anticipated earlier this year, inflation has
slowed from its pace in 1990. Retail energy prices
1. The charts for the report are available on request from
Publication Services, Board of Governors of the Federal Reserve
System, Washington, D.C. 20551.




came down substantially during the first half of the
year, and the rise in consumer food prices moderated
after several years of relatively large increases.
More generally, the softness of labor and product
markets has attenuated price pressures for a range of
goods and services. This downdrift in "core" inflation
was difficult to discern earlier in the year because of
a bunching of price increases in January and
February; however, most of the significant increases
in those months either did not continue or were
reversed.
The Federal Reserve's easing moves over the first
part of the year not only were taken in light of the
contraction of economic activity and the progress in
reducing inflationary pressures, but also were
prompted by the continued slow growth of the
monetary aggregates early in the year and continuing
credit restraint by banks and other intermediaries.
Reserve market conditions were held steady after
April, however, as evidence began to accumulate
that the economy was on track toward recovery.
Reflecting the Federal Reserve's policy actions and
generally weak credit demands, short-term interest
rates declined appreciably during the first half of the
year. Longer-term rates, which had moved down
markedly in the final months of 1990, were mixed
over the first half; with bond market participants
focusing on signs of an emerging recovery, Treasury
bond yields rose a bit, while rates on bonds issued by
businesses fell as risk premiums narrowed sharply.
In the stock market, share prices have registered
sizable increases since January, and broad indexes
remain within a few percent of the all-time highs set
in the spring. Meanwhile, the value of the dollar has
climbed substantially on foreign exchange markets,
supported by the successful conclusion of military
operations in the Gulf, by expectations of a recovery
in the U. S. economy, and by economic developments
in Germany and political difficulties in the Soviet
Union.
In response to Federal Reserve easings and
associated declines in short-term interest rates,
growth of both M2 and M3 strengthened somewhat

686

Federal Reserve Bulletin • September 1991

1. Ranges for growth
of monetary and debt aggregates1
Percent
Aggregate
M2
M3
Debt2

1990
3-7
1-5
5-9

1991

1-5
4V4-8V4

Provisional
range
for 1992
2V4-6%
1-5

1. Change from average for fourth quarter of preceding year to average for
fourth quarter of year indicated. Ranges for monetary aggregates are targets;
range for debt is a monitoring range.
2. Domestic nonfinancial sector.

during the first half of 1991 relative to the slow pace
of the second half of 1990. M2 expanded more than
nominal GNP, and thus its velocity fell, although not
as much as might have been expected considering
the decline in short-term interest rates. The continued muted response of M2 to the easings in shortterm rates probably reflected the ongoing rerouting
of credit outside of depositories and an effort on the
part of savers to maintain yields on their assets by
turning to the stock and bond markets, sometimes
via mutual funds. Growth of M3 was boosted early
in the year by strong issuance of large time deposits
by U.S. branches and agencies of foreign banks in
response to a reduction in reserve requirements
around the end of 1990. In the second quarter,
however, the expansion of M3 slowed as issuance of
time deposits at foreign banks waned, and depository
credit and associated funding needs contracted.
Through June, both M2 and M3 had grown at rates
somewhat below the midpoint of their targeted
annual growth ranges.
Credit growth was slow in the first half of the year.
The federal government's borrowing requirements
were held down by reduced activity by the Resolution
Trust Corporation (RTC) and by contributions from
foreign countries to cover the costs of Operation
Desert Storm. Growth of private-sector debt was
restrained by slack demand associated with the
weakness of the economy and by a reduced appetite
for leveraging. On the latter score, a lasting shift
toward more conservative patterns of credit use
would be a fundamentally healthy development; the
excesses of the 1980s clearly left us with problems in
our financial sector that will take some time to
resolve. In part reflecting earlier credit losses, banks
continued to be cautious lenders through the first
half of 1991. However, private borrowers who
turned to securities markets found readier access to




capital as the economic outlook brightened and risk
premiums narrowed dramatically; financial intermediaries as well as nonfinancial firms issued large
volumes of equity and longer-term debt, making
significant progress in strengthening their balance
sheets.

Monetary Objectives for 1991 and 1992
At its meeting earlier this month, the FOMC
reaffirmed its previously established ranges for
money and credit for 1991. The target range for M2
had been lowered in February to 2 xh to 6lA percent
from the 3 to 7 percent range that had been in place
for 1990. To date this year, M2 has grown at an
annual rate of a little less than 4 percent, placing it
well within the target range for 1991 as a whole.
This, in effect, leaves the Committee some room to
maneuver as events unfold in the coming months,
while remaining within the annual range. The
potential need for such maneuvering room arises in
part in connection with the significant uncertainties
attending the prospects for the velocity of M2. If, for
example, the public's demand for M2 balances
should be damped by moves among depository
institutions to lower deposit rates (in response to
earlier declines in market yields and to higher
insurance premiums), then velocity might tend to be
stronger than otherwise would be the case and less
M2 growth would be required to support a given rate
of GNP increase. If, on the other hand, institutions
were to become more aggressive in bidding for
loanable funds in the retail deposit market, and thus
the public began to shift its portfolio back in favor of
M2 assets, then velocity could weaken and faster
M2 growth might be required. The Committee
expects that the current annual growth range will
permit it to deal with such velocity-altering disturbances in money supply and demand while it fosters
financial conditions conducive to moderate economic growth and further progress toward price
stability.
The 1 to 5 percent target range for M3 adopted in
February took into account an expected continued
contraction in the thrift industry and associated
redirection of credit flows away from depository
institutions. The assets of thrift institutions are
expected to shrink further in the second half of 1991,
in large part because of closures by the RTC.
Issuance of large time deposits by branches and

Monetary Policy Report to the Congress

2.

687

Economic projections for 1991 and 1992

1. From average for fourth quarter of preceding year to average for fourth
quarter of year indicated.
2. FOMC projections are for all urban consumers (CPI-U); Administration
projection is for urban wage earners and clerical workers (CPI-W).

3. FOMC projections are for civilian labor force; Administration projection
is for total labor force, including armed forces residing in the United States.

agencies of foreign banks has moderated, but ? The Committee will want to update its assessment of
domestic banks may have a greater appetite for
the underlying tendencies in the economy as well as
funds during the second half as sound lending
in the relations between money and debt expansion
opportunities increase with the projected improveand economic performance. Although the initial
ment in the economy.
indications of money and credit ranges that are given
in July always are tentative, flexibility seems all the
Even though growth of the aggregate debt of
more warranted in the current circumstances, with
domestic nonfinancial sectors at midyear was at the
the economy apparently at a cyclical turning point
lower end of its current\ x h to 8 xh percent monitoring
and the financial system being buffeted by fundamenrange, the Committee anticipates that the debt
tal change.
measure will end the year well within that range.
Stronger private credit demands are expected to
arise as the economy grows, and federal borrowing
will increase to finance stepped-up RTC activity.
Economic Projections for 1991 and 1992
However, debt growth is likely to continue to be
damped by the shift in attitudes about leveraging.
The target ranges for the monetary aggregates and
In setting provisional ranges for 1992, the Comdebt have been selected with the objective of
mittee chose to carry forward the 1991 ranges for the
supporting a sound economic expansion accompamonetary aggregates and for debt. Recognizing that
nied by declining inflation—a pattern the Board
the ranges had been reduced significantly over the
members and Reserve Bank presidents generally
past few years, the Committee at this time believes
expect to prevail over the coming year and a half.
that expansion of money and debt in 1992 within the
Most forecast that real GNP will grow 34 to
current ranges probably would be consistent with
1 percent over the four quarters of 1991; given the
consolidating and extending the gains toward lower
decline during the first quarter, this central tendency
inflation that have been made to date, and at the same
range for 1991 as a whole implies an appreciable
time would provide sufficient liquidity to support a
pickup in activity over the remainder of the year.
sustainable expansion of economic activity. The
The projections of growth in real GNP over the four
ranges will, of course, be reevaluated next February
quarters of 1992 have a central tendency of 2 XA to
in light of intervening economic and financial events.
3 percent.




688

Federal Reserve Bulletin • September 1991

In appraising the near-term outlook, the FOMC
participants have placed considerable weight on the
apparent absence of inventory overhangs in most
sectors. Accordingly, the recent firming of aggregate
final demand is expected to bring a halt soon to the
inventory drawdowns that persisted into the second
quarter. The resulting swing in the pace of inventory
investment is expected to boost domestic production
considerably over the rest of 1991. As typically
occurs in the initial stage of a recovery, much of this
rise in output is expected to reflect gains in the
productivity of existing workers, rather than a
marked pickup in employment. Thus, the Board
members and the Bank presidents project only
modest progress in reducing unemployment over
the second half of the year; the projected central
tendency for the civilian jobless rate in the fourth
quarter is 6% to 7 percent.
The pace of expansion may moderate somewhat
in 1992 as the initial impetus from the inventory
swing subsides and gains in production track the
growth in final demand more closely. The advance
in real GNP expected for 1992, though subdued
relative to that during the early part of most previous
expansions, is anticipated to reduce the margin of
slack in the economy over the year. The central
tendency of the civilian unemployment rate projected
for the fourth quarter of 1992 is 6% to 6Vi percent,
roughly Vi percentage point below the level expected
for the fourth quarter of this year.
Several factors lie behind the expectation of a
relatively mild upswing in economic activity. In real
estate markets, the persistent overhang of vacant
space for many types of buildings, along with
continued caution on the part of lenders, will likely
limit the amount of new construction. In addition,
fiscal policy will remain moderately restrictive
because of the federal budget agreement reached last
fall and efforts by state and local units to correct
serious imbalances in their budgets; although this
fiscal restraint ultimately will strengthen the U.S.
economy by boosting domestic saving and investment, its near-term effect will be to hold down
aggregate demand. Further, with the personal saving
rate already at a low level and some households
saddled with heavy debt burdens, consumer spending is projected to grow at a relatively slow pace.
Finally, the appreciation of the dollar this year has
offset some of the previous declines in relative prices
of U.S. goods in international markets, thus limiting




the contribution that can be expected from the
external sector.
By adopting policies intended to put the economy
on a path of moderate, sustainable growth, the
Board members and Reserve Bank presidents believe
that it will be possible to achieve meaningful progress
in reducing inflation over the remainder of this year
and into 1992. The central tendency of the projected
rise in the total consumer price index is 3% to
3% percent over the four quarters of 1991 and 3 to
4 percent over 1992, well below the 6% percent
rise recorded over the four quarters of 1990. In each
of the prior three years, 1987-89, the CPI rose about
4Vi percent.
The common midpoint of the forecast ranges for
CPI increases in 1991 and 1992,3V2 percent, masks
the downtrend in core inflation anticipated over the
next year and a half. In particular, most of the
slowing of inflation observed thus far this year has
reflected the sharp drop in energy prices and a move
toward smaller increases in food prices; excluding
food and energy, the deceleration in the CPI so far
has been relatively small. However, with the
tempering of labor-cost increases now under way
and the reduced pressure on plant utilization, core
inflation is expected to recede significantly in coming
quarters. As these declines become widely perceived, expectations of inflation should moderate,
reinforcing the tendencies toward deceleration. By
reducing and ultimately eliminating the distortion to
resource allocation stemming from ongoing, generalized price increases, a monetary policy aimed at
achieving price stability over time will enhance the
economy's potential for growth and thereby will
raise standards of living.
The Administration's economic projections for
1991, presented in the budget, differ from the
projections of Federal Reserve policymakers mainly
with respect to expectations for the consumer price
index. The Administration forecast, at 4.3 percent,
is above the central tendency projected by the Federal Reserve; however, recent statements by Administration officials suggest that this number will be
lowered in the mid-session update of the budget. The
Administration is somewhat more optimistic than
the FOMC participants about prospects for real
GNP growth in 1992; in addition, the Administration
anticipates an increase in consumer prices next year
near the upper end of the central tendency forecast
by the Federal Reserve policymakers. This combi-

Monetary Policy Report to the Congress

nation of output and inflation places the Administration's forecast of nominal GNP growth for 1992
somewhat above the range of projections by the
FOMC participants. Given the obvious limitations
on anyone's ability to forecast the economic future,
these differences certainly cannot be said to be
large—and the forecasts do have the important
common feature of pointing to a relatively moderate
recovery, with inflation remaining below the average
pace of the past few years. And, in light of the
uncertainties attending the behavior of the velocities
of money and credit in the current period of flux in
patterns of intermediation, there appears to be no
necessary inconsistency between the Administration's economic forecast and the FOMC's ranges for
money and debt for 1991 and 1992. The FOMC, of
course, will be reviewing the prospects for the
economy, along with those for velocity, when it
reconsiders the 1992 target ranges next February.

PERFORMANCE OF THE ECONOMY
DURING THE FIRST HALF OF 1991
Economic activity contracted appreciably this past
fall and winter. Although the economy had been
sluggish during the first half of 1990, real gross
national product registered a further increase in the
third quarter, and a substantial downturn in activity
began only after the jump in oil prices that followed
Iraq's invasion of Kuwait. With consumer and
business confidence badly shaken and real income
depressed by the higher oil prices, employment and
production declined markedly starting in October;
real GNP fell at a 1.6 percent annual rate in the
fourth quarter. The civilian unemployment rate,
which had held around the relatively low level of
5 lA percent during the first half of 1990, rose
steadily over the second half, to just over 6 percent at
year-end.
The downward momentum in activity carried into
the early part of 1991. Industrial production decreased through the first quarter, and the shrinkage
of private-sector payrolls continued through April
as firms moved aggressively to reduce inventories
and trim labor costs in response to the weakening of
final demand. However, much of the negative
impetus to activity was reversed by the cumulative
drop in oil prices that occurred between October and
February and by the boost in confidence that




689

accompanied the swift and successful conclusion of
the Persian Gulf war. These events, combined with a
considerable easing of monetary policy, set the stage
for a recovery, and a few sectors of the economy
actually hit bottom quite early in the year. Notably,
construction of single-family homes, which in past
recessions turned up before the economy as a whole,
reached its low point in January, as did real consumer
spending and real personal income.
Recently, further evidence has emerged to indicate
that economic activity, in the aggregate, stabilized
or began to move up during the second quarter of
1991. Much of this evidence is to be found in
developments in the labor market. Initial claims for
unemployment insurance—an indicator of the pace
of job loss—have fallen from their high level in
March; employment on nonfarm payrolls edged up,
on balance, over May and June after ten months of
decline; and the length of the average workweek
increased noticeably in May and June. In addition,
industrial production advanced in April, May, and
June, with the gains being propelled initially by
increased output of motor vehicles and parts.
Although these indicators are subject to revision and
thus should be read with considerable caution, the
weight of the available evidence points in the
direction of economic recovery.
The magnitude and length of the recent recession
still are not known with certainty, but the decline in
real GNP appears to have been considerably smaller
than the average decline during the previous postWorld War II recessions; for the industrial sector
alone, production dropped 5 percent between the
peak in September 1990 and the low point in March
1991, compared with an average falloff of nearly
10 percent during previous recessions. The recent
contraction also seems to have been relatively short
by historical standards. Aggregate job losses, however, were close to the average in previous recessions, suggesting that firms cut payrolls vigorously
in light of the fairly shallow drop in real activity. The
resulting rise in the unemployment rate, though,
was damped relative to that during earlier contractions, as unusually slow growth of the labor force
held down the number ofjob seekers; the unemployment rate in June of this year, 7 percent, was about
3
A percentage point below the average jobless rate at
the end of previous recessions.
Consumer price inflation, which exceeded 6 percent last year, slowed to a 2 3A percent annual rate

690

Federal Reserve Bulletin • September 1991

over the first five months of 1991. Consumer energy
prices fell sharply early this year after soaring
during the second half of 1990. In addition, the rate
of increase in food prices has retreated this year
from the pace registered during the preceding three
years.
Apart from food and energy, price increases were
large early in the year but have been more moderate
in recent months. In January and February, prices
were boosted by hikes in federal excise taxes and
postal rates and by the passthrough of the energy
price increases in 1990 to a wide range of goods and
services. With no further increases in these federal
charges and the reversal of energy prices beginning
to show through to other items, the CPI excluding
food and energy rose much more slowly over the
three months ended in May. On balance, over the
first five months of 1991, this portion of the CPI
increased a bit more than 5 percent at an annual rate,
about xh percentage point below the trend rate of
increase as of last summer. In part, the recent
headway made on inflation reflects the reduction in
labor-cost pressures that accompanied the rise in
unemployment. As measured by the employment
cost index, compensation per hour increased at an average annual rate of 4% percent over the second
half of 1990 and the first quarter of this year,
compared with the 5lA percent (annual rate) rise
over the first half of 1990.

The Household

Sector

Consumer spending was an area of notable weakness
last fall and early this year, largely in response to a
substantial decline in real income; purchasing power
was cut initially by the jump in oil prices, but it
continued to fall even after oil prices were in retreat,
reflecting the ongoing declines in employment. Real
consumer outlays dropped sharply between September and January; the monthly pattern of spending
was distorted to a degree by tax changes that caused
some households to shift purchases from early 1991
into late 1990. All told, real consumer spending fell
at a 1 Vi percent annual rate in the first quarter, after a
3 Vi percent (annual rate) decline in the fourth quarter
of 1990. However, in February, real income turned
up and consumer confidence rebounded late in the
month with the end of the Gulf war; both developments bolstered consumer spending. As a result of




the spending gains that began in February, the
average level of outlays in April and May stood
considerably above the first-quarter average.
Among the major components of consumer
spending, outlays for motor vehicles and other
durable goods were cut back sharply as the recession
unfolded. Indeed, between the third quarter of 1990
and the first quarter of this year, real consumer
outlays for motor vehicles fell at a 23 percent annual
rate; the resulting level of such outlays in the first
quarter was the lowest recorded since 1984. Substantial cuts also were made in purchases of nondurable
goods. In contrast, consumer outlays for services
trended up at a pace only slightly below that
registered during the first three quarters of 1990.
Since the January trough in total consumer outlays,
purchases of both durable and nondurable goods
have turned up. In particular, as of May, real
consumer purchases of motor vehicles had risen
about 8 percent from the depressed January level;
separate data on unit sales of new cars and light
trucks suggest that further gains were registered in
June.
During late 1990 and early this year, total
consumer outlays fell more sharply than they had in
most previous postwar recessions. The steepness of
the drop this time mainly reflects the unusual
weakness in several components of income out of
which the propensity to consume is high. Most
important, nominal wages and salaries fell more
during this recession than would have been expected
given the magnitude of the decline in nominal GNP,
as firms moved aggressively to control costs by
trimming payrolls. In addition, because the percentage of unemployed persons receiving unemployment
insurance benefits declined during the 1980s, total
payments to job losers were less than during earlier
downturns. The weakness in these components of
nominal income was compounded, in real terms, by
the spurt in energy prices.
Although consumers cut back spending, they
cushioned some of the effect of weak income by
reducing their savings. After averaging about
5 percent over the first half of 1990, the personal
saving rate dropped to 4.2 percent in the third
quarter and remained at that level through the first
quarter of this year. The decline in the saving rate
occurred despite some deterioration, on net, in
wealth positions during the second half of 1990,
which reflected the softening of house prices and

Monetary Policy Report to the Congress

losses in the stock market. The average level of the
saving rate dropped another notch in the spring, to
about 3% percent. The bounceback in the stock
market and the improvement in confidence may
have contributed to the decline in saving, but the
explanation also could involve the reduction in
personal interest income associated with the lowering of short-term interest rates between last fall and
this spring. Historically, consumer spending has
been rather insensitive to movements in interest
income, so that a decline in such income causes the
saving rate to fall in the short run. That said, the
saving rate is now at the lowest level since late
1987, and it would not be surprising if, in the near
term, gains in consumer spending lagged increases
in income as households worked to rebuild net
worth.
The recession placed some strains on household
finances, as indicated by the increase in delinquency
rates for all types of consumer loans during the first
quarter. By far the sharpest rise was for credit card
debt; in fact, the first-quarter delinquency rate was
close to the highest on record. This jump partly
reflects the relaxation of credit standards by major
card issuers in recent years; at the same time,
relatively low risk borrowers who have access to
home equity lines of credit evidently have reduced
their reliance on credit cards. Because of the
resulting deterioration in the quality of the pool of
credit card users, the rise in delinquencies for this
type of debt probably overstates the degree of stress
in the household sector as a whole. For other types of
consumer loans, the first-quarter delinquency rates
were not out of line with those typically seen during
recessions, despite the currendy high level of debt
relative to disposable income. Apparently, the rise
in asset values during the 1980s left most households
with sufficient wherewithal to cover the expanded
level of debt. Thus, although the recession has
weakened the financial position of the household
sector, the situation does not appear worse than that
at the end of other downturns.
Residential construction activity, which had been
trending lower since 1986, slumped further in the
second half of 1990. However, the market for
single-family homes bottomed out in January of this
year and has staged a mild recovery since then,
spurred by a firming of demand. Several factors
account for the pickup in demand, including the
decline in home prices to more affordable levels in a




691

number of markets, improved prospects for employment and income, and some reduction in mortgage
rates from those prevailing in the middle of last year.
Recent survey results show a more favorable attitude
toward homebuying among consumers than at any
other time since 1988. Reflecting this shift in
sentiment, sales of existing homes have risen
substantially from their low in January. Although
sales of new homes have been less impressive, the
higher level prevailing since February has reduced
considerably the inventory of unsold new homes
relative to sales; in response, home builders have
boosted production to satisfy consumer demand.
Despite continued lender caution about granting
land-acquisition and construction loans, the quantity
of financing available appears sufficient, on balance,
to support a further recovery in this sector.
In contrast, the market for multifamily housing
has continued to weaken this year. Starts in May
were at the lowest monthly level since the 1950s.
Moreover, even with the greatly reduced pace of
new construction in recent years, the vacancy rate
for multifamily units has remained exceptionally
high. Given current conditions in the market, both
lenders and potential investors recognize that the
number of viable projects is quite limited.

The Business Sector
During the latter part of 1990 and the first quarter of
this year, the business sector experienced considerable stress. Demand for business output was depressed both by the loss of domestic purchasing
power and by the enormous uncertainties created by
the situation in the Persian Gulf. In response to the
slump in demand, industrial production turned
downward last October; it continued to fall through
March. In most industries, the combination of
plummeting sales and rising energy prices caused
profit margins, which were already slim, to shrink
further during the second half of 1990. In the first
quarter of 1991, before-tax profits from current
operations of U.S. corporations edged down from
the low fourth-quarter level.
An unusual feature of the recent recession was the
speed with which producers cut output to avoid a
buildup of inventories. The promptness of this
adjustment likely reflected a combination of factors.
The downturn in final demand was widely antici-

692

Federal Reserve Bulletin • September 1991

pated, and some producers cut output preemptively
rather than risk being saddled with excessive stocks.
In addition, improved systems for monitoring and
controlling inventories, which have been installed in
recent years, enabled firms to react quickly to signs
of slowing demand. Further, the relatively heavy
debt burdens in the corporate sector created substantial financial pressures for many firms and focused
attention on the need to cut costs.
Accordingly, inventories were run off at a rapid
clip beginning late last summer. Automakers slashed
production and inventories particularly aggressively; domestic output of motor vehicles in the first
quarter of 1991 was nearly 30 percent below that in
the third quarter of 1990. The resulting drawdown
of inventories at auto dealers accounted for fully
one-half of the total liquidation of nonfarm stocks
during the fourth quarter and the first quarter.
Despite production cutbacks by the automakers and
other producers, the inventory-to-sales ratio for
total manufacturing and trade moved up through
January. However, by May, the ratio had retraced
most of the run-up that began with the onset of the
recession, reflecting the continued liquidation of
stocks and an upturn in sales.
Inventories in most industries appear now to be
reasonably well aligned with sales, and output has
begun to rise with the expansion of final demand.
After reaching a trough in March, industrial production expanded over the next three months at an
annual rate of more than 7 percent; although stronger
output of motor vehicles and parts accounted for
most of the increase early in the second quarter, the
gains in recent months have been more widespread.
Orders for a range of manufactured goods firmed in
April and May, pointing to a further pickup in
production during the summer.
Business spending for fixed investment was flat in
real terms during the fourth quarter of last year and
dropped sharply during the first quarter of this year.
Several factors worked to reduce outlays, including
the easing of pressures on capacity, the diminished
level of cash flow, and the general atmosphere of
uncertainty related to events in the Persian Gulf.
Real spending for equipment plunged during the
first quarter; measured in percentage terms, the
decline was the sharpest quarterly falloff recorded in
nearly eleven years. Reflecting the difficulties in the
manufacturing sector, real spending for industrial
equipment dropped at an annual rate of more than




20 percent, after smaller declines during the preceding five quarters. Real business outlays for motor
vehicles were cut at nearly a 35 percent annual
rate in the first quarter, sinking to the lowest level
since mid-1983. Purchases of computers and other
information-processing equipment also were scaled
back during the first quarter, and outlays for aircraft
edged down, after jumping 60 percent over the
preceding year.
The pace of nonresidential construction fell
substantially during the fourth quarter of 1990 and
the first quarter of 1991. The decline was broadbased, with the steepest contraction for office and
other commercial buildings. Activity in this sector
actually peaked in 1985 and has trended lower since
then in response to persistently high vacancy rates
and the removal of important tax benefits. In the
industrial sector, the rate of plant construction has
been damped by the emergence of substantial excess
capacity in a number of major industries. Petroleum
drilling activity, which moved up a bit late last year,
retreated during the first quarter with the price
declines for crude oil and natural gas; data on
drilling rigs in use indicate a further weakening of
activity during the second quarter.
Business spending for new equipment typically
does not turn up until several months after the end of
a recession, and the lag for construction outlays is
often substantially longer. As yet, there is little sign
of a rebound in spending for either equipment or
nonresidential structures. Nonetheless, shipments
of industrial equipment and other nondefense capital
goods—a coincident indicator of equipment spending—have stabilized in recent months. Similarly,
although vacancy rates for commercial buildings
remain high, the steepest declines in total nonresidential construction activity may be over; in April
and May, the average level of activity was about
unchanged from the first-quarter average, and the
downtrend in forward-looking indicators, such as
construction contracts and permits, has slowed
considerably.

The Government Sector
The federal budget deficit over the first eight months
of fiscal year 1991 was $175 billion, compared with
a $151 billion deficit during the same part of fiscal
year 1990. The deficit during the current fiscal year

Monetary Policy Report to the Congress

has been boosted considerably by the slowdown in
economic activity, and this cyclical increase has
masked the fiscal restraint imposed by last autumn's
budget agreement. On the revenue side, federal tax
receipts have been held down by the anemic growth
of nominal income since last fall; indeed, personal
income tax payments so far this fiscal year are little
changed from the payments made during the same
period a year earlier. The slowdown in activity also
has raised the deficit by increasing outlays for
income-support programs such as unemployment
insurance, food stamps, and Medicaid. These effects
of the contraction have been offset, to some degree,
by the easing of short-term interest rates, which has
restrained the growth of interest payments on the
federal debt.
Although the deficit has increased during the
current fiscal year, the increase has been far smaller
than that projected roughly six months ago. At that
time, the Administration and the Congressional
Budget Office both estimated that the deficit for
fiscal year 1991 would top $300 billion. Two
developments have caused the 1991 deficit to be
lower than was expected, though neither one
indicates any fundamental improvement in the
budget situation. First, cash contributions from our
allies in Operation Desert Storm have exceeded the
outlays made to date for U.S. involvement in the
Persian Gulf. The contributions not yet spent will be
used to pay for the replacement of munitions into
fiscal 1992 and beyond. Second, federal outlays
related to deposit insurance were well below
expectations during the first quarter, mainly reflecting the slow pace at which insolvent thrift institutions were resolved. The activities of the RTC
during that period apparendy were hindered, in
part, by a lack of funding; legislation providing
additional funding was enacted in late March, and
the RTC has scheduled more rapid resolutions over
the rest of the year.
Federal purchases of goods and services, the part
of federal spending that is included directly in GNP,
rose 5 lA percent in real terms over the four quarters
of 1990. This increase reflected the fourth-quarter
rise in defense purchases to support operations in the
Persian Gulf, as well as increases over the year in
such nondefense programs as law enforcement,
space exploration, and health research. In the first
quarter of 1991, real defense purchases moved
above the already high fourth-quarter level, while




693

nondefense purchases fell somewhat on net, pushed
down by sales of oil from the Strategic Petroleum
Reserve. Over the rest of 1991, fiscal policy likely
will be a restraining influence on the economy
because of the spending limits and tax increases
mandated by last fall's budget agreement.
The fiscal position of state and local governments
has remained extremely weak in recent quarters.
The deficit in operating and capital accounts (that is,
the deficit excluding social insurance funds) stood
above $40 billion at an annual rate in both the fourth
quarter of 1990 and the first quarter of 1991, after
holding at a $30 billion rate for a year. The recent
increase in the state and local deficit reflects, for the
most part, a cyclical shortfall in tax receipts. However, this cyclical effect overlays structural imbalances that have been growing for some time. Since
mid-1986, when the sector's accounts (excluding
social insurance) were roughly in balance, outlays
have risen from about 13 lA percent of nominal GNP
to 141/2 percent while revenues have held fairly
steady relative to GNP. The rise in the spending
share reflects an expansion of services largely related
to rapid growth in public school enrollments, prison
populations, and Medicaid expenses.
During the past year, state and local governments
moved to address their mounting fiscal difficulties.
Many governments trimmed outlays relative to
earlier trends. Between the first quarter of 1990 and
the first quarter of 1991, real purchases by state and
local governments rose only about 1 percent, well
below the 3V2 percent annual rate of increase
averaged over 1985-89. Moreover, last year several

states instituted broad-based hikes in personal
income and sales taxes. Looking ahead, state budgets
for fiscal year 1992—which began on July 1 for all
but four states—generally mandate significant further cost-cutting from earlier plans. On balance,
these budgets point to a weak picture for real state
and local purchases over the current calendar
year. Supplementing this restraint on spending,
many new budgets include a second wave of major
tax increases.

The External

Sector

Over the first half of 1991, the foreign exchange
value of the dollar appreciated about 15 percent, on
balance, in terms of the currencies of the other

694

Federal Reserve Bulletin • September 1991

Group of Ten (G-10) countries. The net appreciation
over this period reversed about two-thirds of the
decline in the dollar that had occurred between the
middle of 1989 and the end of 1990.
In early January, the dollar was boosted by
investors seeking a safe haven against the backdrop
of growing tensions in the Persian Gulf. However,
once the Allied bombing campaign commenced and
was perceived as going well, part of the safe-haven
demand for dollars evaporated, and the currency
resumed its earlier declLie. Between mid-January
and early February, the dollar fell about 4 percent
against the currencies of the other G-10 countries.
During this period, U.S. monetary authorities joined
with foreign central banks to support the dollar.
Subsequently, the dollar surged through the end of
March, largely reflecting the quick end of the war
and the resulting expectation of an early rebound in
the U.S. economy. The sharp run-up prompted
official sales of dollars during March and April,
mainly by European authorities. After dropping
back a bit, the value of the dollar rose again in June
on the accumulation of evidence suggesting that the
U.S. recession had ended.
On a bilateral basis, the dollar this year has
appreciated about 20 percent against the German
mark and by similar amounts against the European
currencies associated with the mark. The weakness
of these currencies partly reflects economic difficulties in Germany and the spillover effects of the
turmoil in the Soviet Union and Yugoslavia. In
contrast, the dollar has appreciated much less against
the currencies of most of our other major trading
partners. So far this year, the dollar has risen less
than 5 percent, on balance, against the Japanese yen
and has changed even less against the currencies of
Canada, Korea, Singapore, and Taiwan.
The overall strengthening of the dollar this year
has acted to restrain prices for non-oil imports. Over
the first quarter of 1991, these prices rose at a
2Vi percent annual rate, less than half the rate of
increase between June and December of 1990;
non-oil import prices then fell during April and
May, more than reversing the entire first-quarter
rise. The price of imported oil, which surged
between August and October of last year, has since
retraced most of the rise induced by the Iraqi invasion
of Kuwait. Taken together, these two developments
have contributed significandy to the restraint on
domestic inflation.




Real merchandise imports declined in the first
quarter to a level about 5 percent below that in the
third quarter of 1990, with the drop largely reflecting
the weakness in domestic demand. Import volumes
fell in the first quarter for a wide range of non-oil
products, including consumer goods, motor vehicles, and industrial supplies. Preliminary data for
April show some increase in non-oil imports, a
pattern that is likely to continue with the apparent
firming of domestic activity. The quantity of oil
imports-which plunged after the spurt in oil prices
last summer and remained relatively low early this
year—has moved back up in recent months, reflecting efforts to rebuild U.S. petroleum inventories.
Merchandise exports continued to move higher
through the spring, a factor that clearly tempered the
output loss in manufacturing after the oil shock last
year. In real terms, merchandise exports rose at a
10 percent annual rate between the third quarter of
1990 and the first quarter of this year, led by
increased sales of computers, other capital goods,
and industrial materials. Preliminary data indicate
that merchandise exports rose again in April. The
competitive position of U.S. companies has benefited, at least until quite recently, from the substantial
drop in the dollar over 1990 and the latter part of
1989. However, recessions in the economies of
some of our major trading partners, especially
Canada and the United Kingdom, have offset part of
the stimulus to U.S. exports provided by the rapid
economic growth in such countries as Germany,
Japan, and Mexico.
The merchandise trade deficit narrowed to $74 billion (at an annual rate) in the first quarter of 1991,
compared with $111 billion in the fourth quarter of
1990; the first-quarter deficit was the smallest since
mid-1983. The current account actually recorded a
$41 billion (annual rate) surplus in the first quarter, a
sharp improvement over the $94 billion deficit in the
fourth quarter of 1990. Most of this improvement
reflected unilateral transfers associated with Operation Desert Storm: The fourth-quarter deficit was
boosted by a grant from the U.S. government to
Egypt for the purpose of repaying outstanding loans,
while cash payments to the United States from our
coalition partners surged in the first quarter. Excluding these cash contributions and the special grant to
Egypt, the current account moved from a deficit of
$83 billion in the fourth quarter to a deficit of
$50 billion in the first quarter.

Monetary Policy Report to the Congress

A small net capital inflow was recorded in the first
quarter of 1991, as an increase in foreign official
holdings of reserve assets in the United States more
than offset a net outflow of private capital. Within
the private-sector accounts, there was a substantial
capital outflow in the first quarter associated with
U.S. direct investment abroad, the bulk of which
was in the countries of the European Community; at
the same time, capital inflows related to foreign
direct investment in the United States fell to a low
level. Increasingly, multinational firms have raised
funds in the United States to finance direct investment
here and elsewhere, taking advantage of the low
U.S. interest rates relative to those in other industrial
nations. With regard to other private transactions,
banks reported a small net capital inflow in the first
quarter, and net purchases of U.S. securities by
private foreigners about matched U. S. net purchases
of foreign securities.
The net capital inflow during the first quarter,
when combined with the surplus on current account,
implies a large negative statistical discrepancy in the
international accounts. Nearly as large a discrepancy
in the opposite direction was registered in the fourth
quarter of last year. These wide swings in the
statistical discrepancy, along with the huge size of
the discrepancy for 1990 as a whole, cast doubt
on the accuracy of both the capital account and
current account data used in the U.S. international
accounts and highlight the need to improve these
data.

Labor

Markets

Labor demand appears to have stabilized after
contracting sharply during the latter part of 1990 and
the early part of this year. Employment on private
nonfarm payrolls peaked last June, edged lower
through September, and then fell substantially in
each month from October through April. However,
the most recent data show that payrolls expanded
slightly on balance over May and June, and survey
results suggest that firms intend to increase employment further in the third quarter.
The cumulative decline in private nonfarm employment through April was slightly more than
IV2 million jobs, roughly a 1.7 percent drop.
Although that percentage decline is close to the



695

average in the other recessions after World War n ,
three industries had abnormally large job losses:
construction; retail and wholesale trade; and finance,
insurance, and real estate. The steep decline in
construction employment likely reflected the unusually sharp falloff in office and other commercial
construction, which compounded the normal cyclical
contraction in residential building. In the trade
sector, employment was depressed by the sizable
decline in consumer spending and the high degree of
financial distress among retailers, some of whom
were burdened with heavy debt-servicing costs as a
result of leveraged buyouts. Employment in finance,
insurance, and real estate-which continued to rise
during past recessions—edged lower this time,
reflecting the shakeout in the financial sector and
spillovers from the slump in real estate markets. In
contrast, the decline in manufacturing payrolls was
somewhat smaller than in previous contractions,
largely because the drop in industrial production
was relatively shallow. Employment in the services
industries continued to trend up during late 1990
and early 1991, as it had in previous recessions,
supported entirely by gains in health services.
Although the size of the drop in private nonfarm
payroll employment was similar to that in previous
contractions, the decline in real GNP during the
current episode was relatively small. This contrast
confirms the widespread impression that firms shed
workers to an unusual degree during the recent
downturn. At the same time, the rise in the civilian
unemployment rate from 5.5 percent in July 1990 to
7 percent this June was not particularly large relative
to the decline in real GNP. Apparently, an unusual
proportion of people who lost jobs subsequently
dropped out of the labor force and thus were no
longer counted as unemployed. In addition, the
muted rise in unemployment and labor-force size
during recent quarters may be part of a longer-term
deceleration in the rate at which women—especially
younger women—have entered the labor market.
For this latter group, there has been a shift toward
additional school attendance and toward staying at
home to care for young children. By reducing the
number of new job seekers at a time when jobs were
quite hard to find, this shift held down the rate of
unemployment.
A variety of indicators suggest that labor demand
has stabilized in recent months. Perhaps the earliest
signal of this improvement was provided by the data

696

Federal Reserve Bulletin • September 1991

on initial claims, which peaked at a weekly rate of
535,000 in March and then dropped back to about
470,000 in April; the pace of weekly claims has
since moved considerably lower. Employment on
private nonfarm payrolls rose in May, the first
increase since the middle of 1990. Although part of
this gain was reversed in June, firms continued to
lengthen the average workweek of their employees.
This pattern of cautious hiring combined with an
extension of the workweek is common in the early
stage of a recovery; given the expenses associated
with hiring and firing, such a strategy is a natural
response to uncertainty about the strength and
duration of the pickup in demand. A separate
measure of employment, derived from a survey of
households, also suggests that labor demand has
stabilized; the number of persons reporting themselves as employed was about flat, on balance, over
the second quarter, after falling sharply over the
three preceding quarters. Although the civilian
unemployment rate did continue to inch up over the
second quarter, this increase is not too surprising, as
the jobless rate often increases during the first
several months of a recovery. With the brightening
of employment prospects, job seekers enter the
labor force at an increasing rate, raising unemployment until hiring accelerates enough to outstrip the
growth in labor supply.

Output per hour in the nonfarm business sector
was essentially flat, on balance, over the year ended
in the first quarter of 1991, after declining during
1989 and the early part of 1990. This pattern differed
somewhat from the usual cyclical experience.
Typically, productivity continues to rise until shortly
before the business-cycle peak, then turns down and
falls sharply through the early part of the ensuing
recession. Productivity during this episode declined
well before the cyclical peak last summer, as output
growth slowed, and firms continued to hire at a
relatively rapid pace. However, as demand softened
at the peak, firms began to trim payrolls, and this
pruning continued in an aggressive fashion through
the recession; as a result, output per hour was better
maintained during the 1990-91 contraction than
during previous downturns. In manufacturing,
where competitive pressures have been particularly
intense, the process of cutting payrolls began well
before the onset of recession, and this early action
allowed productivity gains to remain robust over the
year leading up to the contraction. Although productivity in manufacturing turned down during the
recession, the continued cutting of factory jobs kept
the drop in output per hour relatively small by
historical standards.

The slack opened up in labor markets since last
summer has helped damp the rate of increase in labor
costs, which had trended higher between the end of
1987 and the middle of 1990. As indicated by the
employment cost index (ECI), increases in compensation per hour for private industry workers accelerated from 3% percent during 1987 to about a
5 % percent annual rate during the first half of 1990;
this measure of labor costs covers both wages and
payments for worker benefits. The most recent ECI
data show that compensation costs rose at an average
annual rate of 4% percent over the second half of
1990 and the first quarter of 1991, a full percentage
point below the peak rate recorded early last year.
Although this slowing of labor-cost inflation was
apparent in both wages and benefits, the latter
component of compensation decelerated the most
sharply, reflecting declines in nonproduction bonuses and pension contributions per hour of work.
However, employer costs for insurance, mainly for
health insurance premiums, continued to rise at
close to double-digit rates.

Price Developments




Inflation pressures have eased somewhat this year.
Most of last year's spike in energy prices has been
retraced, and the rate of increase in food prices has
slowed. In addition, the margin of slack in labor and
product markets that emerged during the recession
is placing downward pressure on price increases for
other goods and services; this trend toward slower
"core" inflation, however, was obscured early in the
year by a number of price increases that either were
one-time events or have since been reversed.
The Iraqi invasion of Kuwait last August precipitated a sharp rise in oil prices that carried through to
early October. At that point, the posted price of West
Texas Intermediate oil, the benchmark for U.S.
crude prices, reached nearly $40 per barrel, more
than double the $16 price prevailing just three
months earlier. Then, between October and February, virtually all of this price spike unwound, chiefly
as a result of two developments. Saudi Arabia and
other oil producers boosted output to offset the

Monetary Policy Report to the Congress

embargo on Iraq and Kuwait, and the Allied forces
demonstrated that they could prevent significant
disruptions to supply. In addition, prices were
damped by the slowdown in economic activity in the
United States and other industrial nations. After the
end of hostilities in February, OPEC sought to
bolster prices by trimming production. This effort
proved to be largely successful: The posted price of
West Texas Intermediate firmed to $20 per barrel in
April and has changed little on balance since then.
Energy prices for consumers have followed the
movements in world oil prices since last summer.
The CPI for energy peaked in November 1990 at a
level 15 percent above that in July and then fell
sharply through the first quarter of this year. By
April, the decline in crude oil prices had been fully
passed through to energy prices at the retail level. In
May, consumer energy prices edged back up, mainly
reflecting price increases for gasoline, the largest
component of the CPI for energy. Gasoline demand
this spring apparently was stronger than refiners had
expected, and inventories fell to exceptionally low
levels. Along with the tight inventory situation,
retail gasoline prices may have been boosted by the
mandatory switch to cleaner—and more expensive—
gasoline before the summer driving season. However, as of early June, gasoline inventories had
moved back into the normal seasonal range, and
survey data suggest that pump prices softened during
the second half of June and into early July.
Increases in consumer food prices this year have
slowed from the 5lA to 5V2 percent range that
prevailed over the preceding three years. During the
first five months of 1991, the CPI for food rose at
only a 3lA percent annual rate, held down in large
part by price declines for dairy products and by
roughly stable prices on balance for meat, poultry,
and eggs. Following the typical pattern in agricultural cycles, prices for these livestock products have
been damped by an expansion of supply that was
itself spurred by the relatively high prices of recent
years. In addition, price increases have been muted
for many foods for which labor and other nonfarm
inputs represent a large share of total cost. For
example, the prices of food consumed away from
home rose at a 3 XA percent annual rate over the first
five months of 1991, down from the 4lA percent
increases over 1989 and 1990. The deceleration in
food prices this year would have been somewhat
greater but for a series of adverse weather develop-




697

ments that have raised prices for fresh fruits and
vegetables; given the short production cycles for
many of these products, the recent price increases
should be reversed, at least in part, in coming
months.
The consumer price index for items other than
food and energy rose sharply during January and
February, but the jumps in those months reflected a
number of one-time or transitory increases. Higher
federal excise taxes on cigarettes and alcoholic
beverages went into effect, raising consumer prices
for both items; these tax hikes supplemented the
increases in sales and excise taxes that a number of
states have imposed over the past year. Postal rates
also were raised 16 percent in February. Apparel
prices climbed at double-digit annual rates in both
January and February, mainly because of the earlierthan-usual introduction of spring clothing lines,
which was not anticipated by the seasonal adjustment
factors used by the Bureau of Labor Statistics. More
generally, the spurt in oil prices last fall spilled over
through early 1991 to prices for a wide range of
non-energy goods and services; this pass-through
occurred via higher shipping costs and price hikes
for petroleum-based components. However, each of
these factors boosting inflation proved to be shortlived. After the large increases in January and
February, the CPI excluding food and energy rose at
just a 2 lA percent annual rate between February and
May. Apparel prices declined over this period, and
airfares—which are quite sensitive to changes in oil
prices—fell 10 percent (not an annual rate).
The uneven pace of inflation this year has tended
to obscure trends in the general level of retail prices.
Nonetheless, there is little doubt that the underlying
pace of inflation has moderated since last year. The
twelve-month change in the CPI excluding food and
energy—which held around 4Vi percent throughout
1988,1989, and the early part of 1990-moved up to
about 5V2 percent in August 1990. By May of this
year, the twelve-month change in this index had
fallen back to 5.1 percent. This figure slightly
overstates the trend rate of inflation because it
includes the increases in federal excise taxes and
postal rates earlier this year; in addition, the passthrough of lower energy prices to non-energy items
probably was not complete as of May. Adjusting for
both these factors would put the twelve-month
change in the CPI excluding food and energy a bit
below 5 percent.

698

Federal Reserve Bulletin • September 1991

Price developments at earlier stages of processing
have been favorable this year, reflecting the easing
of capacity pressures and price declines for petrochemical products. The producer price index for
finished goods excluding food and energy rose at a
3% percent annual rate over the first six months of
1991, a bit below the pace in 1990. Prices for
intermediate materials excluding food and energy
fell about IV2 percent at an annual rate between
December and June. Spot prices of raw industrial
commodities plunged late last year with the downturn in economic activity, and these prices moved
down somewhat further on balance over the first half
of 1991.

MONETARY AND FINANCIAL DEVELOPMENTS
DURING THE FIRST HALF OF 1991
The progressive easing of money market conditions
initiated last fall as the economy weakened continued
through much of the first half of 1991. Since the end
of last year, open market operations, in combination
with two cuts of Vi percentage point in the discount
rate, have reduced the federal funds rate from
7 percent to 5 3A percent—the lowest level in well
over a decade. These moves followed a number of
easings in the final months of 1990, including a
Vi point reduction in the discount rate in December,
that already had brought the federal funds rate down
about 1 percentage point. As a consequence of these
and earlier actions, the federal funds rate has
declined 4 percentage points from its most recent
peak in the spring of 1989.
The policy easings this year were undertaken to
foster a turnaround in the economy and to help
ensure a satisfactory expansion. They were prompted
by evidence that the economy was declining further
and that inflationary pressures were abating; early in
the year, continuing weakness in the monetary
aggregates and further restraint on credit availability,
especially at banks, also were important indications
of the need for additional policy easing. Policy
actions led to a strengthening of money growth over
the first half from the slow pace of earlier quarters,
and both M2 and M3 in June were in the middle
portions of their annual target ranges. The debt
aggregate, by contrast, expanded at the lower end of
its monitoring range throughout the first half, held
down by sluggish spending and also by a cautious




attitude toward additional debt by both borrowers
and lenders. As the monetary aggregates accelerated
and signs accumulated that the economy was
bottoming out, the pace of policy easings slowed,
and the last such move was made at the end of April.
Despite the drop in short-term interest rates,
long-term rates were mixed, on balance, over the
first half of the year. In the wake of the rapid
conclusion of the Gulf war, expectations became
widespread that there would be a strengthening in
aggregate demand, and this tended to push yields on
Treasury bonds a litde higher and contributed to an
increase in the foreign exchange value of the dollar.
With the blighter outlook for the economy, however, the risk entailed in holding private obligations
was seen as considerably reduced, and yields on
corporate bonds fell and stock prices rose. However, substantial loan losses continued to afflict
many financial intermediaries, and these institutions
maintained cautious attitudes toward extending new
loans; the caution was reflected in wide spreads of
lending rates over borrowing rates and more
stringent nonprice terms on credit.

Implementation

of Monetary

Policy

The Federal Reserve adjusted policy in three
separate steps during the first quarter of the year,
extending the series of moves initiated during the
final months of 1990. Amid signs of continuing steep
declines in economic activity and abating inflation
pressures, the Federal Reserve eased reserve provision through open market operations in January and
again in early March, leading to a decline in the
federal funds rate of a quarter point each time, and
reduced the discount rate VI percentage point on
February 1, resulting in a similar-sized decline in
the federal funds rate.2 The monetary aggregates
were very weak in January, and while strengthening
considerably in February and early March, remained
on a moderate growth track, especially taking into
consideration the lack of expansion late in 1990.

2. The federal funds rate came under some upward pressure
during much of January, as reduced levels of required reserve
balances at Federal Reserve Banks complicated commercial
banks' reserve management. Required reserves were low partly
because of the effects of the cut in reserve requirements on
nonpersonal deposits in December and partly because of seasonal
variations. For some banks, balances held in accounts at Reserve

Monetary Policy Report to the Congress

3.

699

Growth of money and debt
Percent

Annually, fourth quarter to fourth quarter
1980
198 1
1982
1983
1984
1985
1986
1987
1988
1989
1990
Semiannually (annual rate) 3
1991
Quarterly (annual rate) 4
1991:1
1. From average for fourth quarter of preceding year to average for fourth
quarter of year indicated.
2. Adjusted for shift to NOW accounts in 1981.

3. From average for fourth quarter of 1990 to average for second quarter of
1991.
4. From average for preceding quarter to average for quarter indicated,
e Partially estimated.

Other short-term rates generally fell about a
percentage point over this period. TTie commercial
bank prime loan rate was reduced xh percentage
point in early January in lagged response to earlier
declines in short-term rates. The drop apparently
had been delayed as banks attempted to hold down
loan growth as 1990 drew to a close, bolstering their
capital positions in response to market concerns and
the initial phase-in of risk-based capital requirements. The prime rate was reduced again after the
cut in the discount rate in early February.
Longer-term rates also fell, on balance, over the
first two months of the year, under the influence of
monetary easings and prospects for lower inflation,
especially when it became clear that the Gulf war
would not interrupt oil supplies. Initial success in the
Persian Gulf also led briefly to weakness of the
dollar in foreign exchange markets, as safe-haven
demands that had been boosting its value since late
1990, in the face of a substantial easing of U.S.
monetary policy, evaporated.

In March, however, long-term market rates began
to firm, reflecting the rebound in consumer confidence and initial indications of a turnaround in the
housing market, which were seen as pointing to a
somewhat shorter and milder recession than many
had previously feared. Rate increases on private
instruments were muted, though, as risk premiums
began to shrink in response to brightening prospects
for a recovery. These gains extended even to belowinvestment-grade bonds, and growing optimism was
reflected as well in a strong stock market in February
and into March. The debt and equity instruments of
banks generally outperformed broader indexes over
this period, as the market apparently expected banks'
earnings to be bolstered by lower short-term interest
rates and the deterioration in the quality of their loan
portfolios to be limited as the anticipated economic
recovery materialized. Better prospects for a U.S.
economic recovery about coincided with a turn
toward more pessimism about the economic outlook
abroad. As a result, the exchange value of the dollar
reversed, and the dollar began to appreciate sharply.
In the wake of the successful Gulf war and in view
of initial signs that the System's earlier easing actions
had begun to take hold, the FOMC concluded at its
meeting in late March that the risks to the economy
had become more evenly balanced. Accordingly,
the Committee decided to end the formal tilt toward
ease that it had adopted in mid-1990, when slowing
money growth and tightening credit availability

Banks threatened to fall below prudent clearing levels. To avoid
overnight overdrafts, banks markedly raised holdings of excess
reserves and borrowed sporadically at the discount window. But
with maintained balances still low relative to clearing needs, the
volatility of the federal funds rate increased. As banks became
more accustomed to operating with lower levels of required
reserves and as these reserves subsequently rose for seasonal
reasons, reserve management problems eased, and the volatility
of the federal funds rate diminished. The upward pressures on
the funds rate in January did not show through to other shortterm rates.




700

Federal Reserve Bulletin • September 1991

aroused concerns that financial conditions might be
placing greater-than-anticipated restraint on economic activity. Under the previous instructions, the
FOMC's directive to the domestic trading desk at the
Federal Reserve Bank of New York had stipulated
that possible adjustments to reserve pressures
between Committee meetings would be more responsive to unanticipated signs of economic weakness
and abating price pressures than to unexpected
evidence of strength. The directive issued at the
March meeting restored symmetry to these instructions concerning intermeeting adjustments.
Interest rates generally declined during April,
mainly at the short end, reflecting market participants' disappointment that the response to earlier
monetary easings and to the rebound in consumer
confidence they had expected had yet to show
through in measures of economic activity. At the
same time, with evidence also continuing to point to
a further abatement of inflation, particularly as
reflected in wage behavior, the Federal Reserve at
the end of April reduced the discount rate another
x
h percentage point, allowing about half that amount
to show through to money market rates. As was the
case in February, this action was followed by a
x
h percentage point decline in the bank prime rate.
Despite further monetary ease, the dollar continued
to rally on foreign exchange markets, in part boosted
by political developments abroad, particularly in the
Soviet Union, and potential economic difficulties in
Germany.
Market interest rates were little changed until
early June, when they rose in response to the release
of data on employment and retail sales for May that
strongly suggested the trough of the recession had
been reached, or at least was close at hand. The
ensuing rise in interest rates was particularly sharp
at the long end of the Treasury market. As signs of
the recovery grew more distinct and interest rates
firmed, the dollar strengthened further, and by June
it had retraced all its declines of late 1990 and early
1991. On balance, Treasury bond yields rose almost
% percentage point over the first half of 1991, while
yields on investment-grade corporates were down
close to Vi percentage point.

Monetary and Credit Flows
Despite the continuing weakness in economic




activity, expansion of the monetary aggregates in the
first half of 1991 picked up from the lackluster pace
of late 1990, and M2 and M3 grew at annual rates of
3% and 2 lA percent respectively, from the fourth
quarter of last year through June. M2 growth
increased as policy actions reduced short-term
market interest rates relative to returns that could be
earned on assets in this aggregate (a decline in the
"opportunity cost" of holding M2). As a consequence, expansion of M2 exceeded the growth of
nominal GNR However, the growth in M2 (and
decline in its velocity) was smaller than would have
been expected on the basis of past relationships with
income, interest rates, and opportunity costs. This
shortfall of M2 growth from historical patterns
followed an even greater discrepancy in 1990.
The tepid response of M2 to declines in interest
rates may partly reflect reduced funding needs at
depositories associated with weak credit growth. As
discussed below, commercial bank credit expanded
sluggishly over the first half of 1991, and thrift
institution balance sheets continued to contract. In
these circumstances, depositories may well have
been less aggressive in supplying retail deposits;
although rates on these deposits do not appear on the
surface to have fallen unusually rapidly, institutions
may have acted in other ways to reduce the cost of
funds, including adjusting advertising and marketing
strategies. On the demand side, growth in M2
appears to have been held down early in the year by
the public's concerns about depository institutions;
purchases of Treasury securities through noncompetitive tenders were especially heavy in January.
As the turnaround in the economy seemed in
prospect, bank access to both deposit and capital
markets improved greatly. Later, in the second
quarter, a slowdown in M2 growth appeared to be
partly related to the developing configuration of
returns on assets. Maturing small time deposits
could be rolled over only at much lower rates at the
same time the steep upward slope of the yield curve
seemed to offer an opportunity to preserve high
yields by moving into capital market instruments.
For example, expansion of stock and bond mutual
funds was quite strong over the second quarter. In
addition, with returns on M2 assets falling steeply
relative to rates charged on loans, households had a
greater incentive to finance spending by holding
down the accumulation of M2 assets rather than by
taking on new debt.

Monetary Policy Report to the Congress

The decline in market interest rates also promoted
a marked shift in the composition of M2 toward its
liquid household deposit components—other checkable deposits, money market deposit accounts, and
savings deposits. As is typically the case, offering
rates on these deposits adjusted very slowly to the
drop in market rates. As their opportunity costs
declined, these deposits accelerated, expanding at
double-digit rates over the first half. Small time
deposits, by contrast, contracted over the period as
some of the proceeds of maturing instruments
evidently were shifted into liquid components of M2
and depositors hesitated to commit currendy generated savings at available time deposit rates. The
strength in other checkable deposits contributed to a
strong first-half advance in Ml. In the first quarter,
this aggregate also was boosted by a surge in currency stemming from rising demand abroad, particularly the Middle East. Reflecting the strength in
currency and in other checkable deposits, the monetary base expanded over the first half at an 8V2 percent annual rate, more than twice the pace of M2.
Growth of M3 over the first half of 1991 was
concentrated in the early months of the year, when it
received a considerable boost from heavy issuance
of large time deposits by U.S. branches and agencies
of foreign banks. The issuance of these "Yankee
CDs" resulted from the reduction in December of
the reserve requirement on nonpersonal time deposits and net Eurocurrency deposits from 3 percent
to zero. Previously, branches and agencies had been
able to borrow a limited volume of funds from their
head offices without becoming subject to reserve
requirements. With Yankee CDs apparently an
inherently cheaper source of funds, institutions that
had been able to fund additional asset expansion
through reserve-free borrowing from their head
offices began to pay down these advances with funds
raised in the CD market. Some foreign banks also
tapped the CD market to advance funds to affiliates
abroad and to pay down other nondeposit liabilities.
Domestic banks and thrift institutions, in contrast,
ran off large time deposits in the first quarter as core
deposit inflows were more than adequate to fund
asset growth. The strength of M3 in the first quarter
also reflected strong growth of money market mutual
funds. The relative attractiveness of these funds
tends to rise when market rates are falling, as fund
owners receive returns based on average portfolio
yields, which decline only as fund holdings ma-




701

ture and must be replaced with lower-yielding
instruments.
M3 was about flat between March and June. Shifts
of foreign bank liabilities toward large time deposits
slowed, large time deposits at domestic depositories
ran off more rapidly with a contraction of their
credit, and money funds decelerated as their yields
came into line with market rates.
Bank credit expanded very slowly during the first
half of 1991 and was concentrated in acquisitions of
securities, particularly Treasury and agency securities. As in 1990, the recent strength in acquisitions
of these securities is due in part to their favorable
treatment under risk-based capital requirements.
Mainly, however, it reflects the impact on loan
growth of weaker spending by potential borrowers
and continued lending restraint by banks. A substantial proportion of bank lending officers, citing heightened uncertainties about the economy and, in many
cases, weak capital positions, reported implementing
still more restrictive lending policies in a Federal
Reserve survey conducted early in 1991. Evidence
of tightening continued into May, although the percentage of surveyed banks that reported additional
tightening declined, perhaps in part because of the
more favorable market environment that had developed from earlier in the year and that had allowed
banks to issue large volumes of debt and equity.
The asset-quality problems that dogged banks in
1990 continued to crop up in the first half of 1991.
Available data on delinquency rates show further
increases in the first quarter, for both commercial
real estate and other business credits and also for
consumer loans. At midyear, when a number of
large banks announced surprisingly large loan losses
and depressed profits, some of the gains that banks
had made in debt and equity markets were reversed.
The contraction in depository credit was not fully
reflected in the growth of total debt of nonfinancial
sectors. As occurred last year, credit advanced
through securities markets and by other intermediaries met an unusually high proportion of credit
needs. Banks themselves continued to sell consumer
loans and mortgages into securities markets to hold
down asset growth and to bolster capital ratios;
through these sales, the cost and availability of funds
to households has been largely insulated from the
possible effects of bank restraint on credit. In
addition, businesses turned to long-term securities
markets to meet credit needs and to restructure

702

Federal Reserve Bulletin • September 1991

balance sheets, reducing their reliance on banks as
well.
Overall, the debt of domestic nonfinancial sectors
increased at about a 4V6 percent annual rate over the
first half of 1991. This was likely a bit above the rate
of expansion of nominal GNP, though by considerably less than on average over the previous decade,
as both borrowers and lenders apparently have been
adopting more cautious attitudes toward additional
debt. Businesses, for example, stepped up new
equity issuance and greatly reduced the retirement
of existing equity in corporate restructurings. These
activities, together with the decline in financing
needs associated with falling inventories and fixed
investment, held down growth of business sector




debt to a 2 percent annual rate in the first half. With
some consumers also attempting to reduce high debt
loads, growth of consumer credit was weak as well.
Lower mortgage rates and stronger home sales
helped maintain growth of residential mortgages.
States and municipalities, facing continuing downgrades and the need to cut back expenditures, put
fairly limited net demands on the credit markets in
the first half of this year. Federal government debt
growth in the first quarter was held down by the slow
pace of RTC activity and the receipt of contributions
from foreign governments of payments related to the
Gulf war; government debt issuance picked up
sharply in the second quarter, however.
•

703

Industrial Production and Capacity Utilization
Released for publication on July 15
Industrial production rose 0.7 percent in June after
upward revised gains of 0.7 percent in May and
0.5 percent in April. On a quarterly average basis,
total output rose 1.7 percent at an annual rate in the
April-June period after having fallen sharply in the
two preceding quarters. In June, output of motor

vehicles, goods for the home, construction supplies,
and materials increased significantly. Total industrial
capacity utilization increased 0.3 percentage point
in June to 79.3 percent after an increase of 0.4 percentage point in May. At 106.9 percent of its 1987
annual average, total industrial production in June
was 2.9 percent below its year-ago level.
In market groups, among consumer goods,

Industrial production indexes
Twelve-month percent change

Twelve-month percent change

Capacity and industrial production
Ratio scale, 1987 production = 100

All series are seasonally adjusted. Latest series, June.




Ratio scale, 1987 production = 100

704

Federal Reserve Bulletin • September 1991

1987 = 100

Percentage change from preceding month

1991

1991

Industrial production

Percentage
change,
June 1990
to
June 1991

Mar. r

Apr. r

MayP

June?

Mar. r

Apr. r

MayP

June?

Total index

105.0

105.5

106.2

106.9

-.7

.5

.7

.7

-2.9

Previous estimates

105.0

105.3

105.8

-.6

.3

.5

Major market groups
Products, total

106.5

106.9

107.4

108.0

-.4

.4

.5

.5

-2.6

Consumer goods
Business equipment
Construction supplies
Materials

104.7
120.3
94.0
102.6

105.5
121.4
94.9
103.3

106.4
121.7
95.3
104.2

107.0
121.9
97.0
105.2

.0
-.2
-2.5
-1.2

.7
.9
1.0
.7

.9
.2
.4
.9

.6
.2
1.8
.9

-.7
-2.0
-8.5
-3.3

Major industry groups
Manufacturing
Durable
Nondurable
Mining
Utilities

105.2
105.0
105.4
101.5
106.4

105.9
106.0
105.8
100.8
105.7

106.4
106.6
106.2
100.5
109.8

107.1
107.4
106.8
102.0
109.2

.8
-1.0
-.6
-1.3
1.7

.7
.9
.4
-.7
-.6

.5
.5
.4
-.3
3.9

.7
.8
.6
1.5
-.5

-3.3
-5.2
-.8
-.2
-.5
Capacity
growth,
June 1990
to
June 1991

Percent of capacity
Capacity utilization

Average,
1967-90

Low,
1982

High,
1988-89

Total industry

82.2

71.8

Manufacturing
Advanced processing
Primary processing .
Mining
Utilities

81.5
81.1
82.4
87.4

70.0
71.4

86.8

76.2

66.8
80.6

1991

June

Mar.'

Apr.1

May r

June?

85.0

83.8

78.4

78.6

79.0

79.3

2.6

85.1
83.6
89.0
87.2
92.3

83.1

77.2
76.8
77.9
89.0
83.0

77.5
77.2
78.3
88.3
82.3

77.7
77.2
78.8
87.9
85.5

78.1
77.4
79.8
89.1
84.9

2.9
3.2
2.1
-.3
1.4

r Revised,
p Preliminary.

production of motor vehicles posted another sizable
increase; output of other durables, which include
appliances, furniture, and carpeting, also rose
noticeably for the fourth successive month. By
contrast, output of nondurable consumer goods
excluding residential utilities has risen only slightly
in recent months. Production of business equipment
other than motor vehicles, which declined over the
fall and winter months, rose a bit in April and was
unchanged in both May and June. Production of
construction supplies advanced substantially in June
after appreciable gains in April and May; even so,
the level of output was still more than 10 percent
below its most recent peak, which occurred in early
1990. Among materials, production of parts and
supplies for the motor vehicle industry rose further.
In addition, output of steel, textiles, and paper
increased sharply.
In industry groups, manufacturing output increased 0.7 percent in June after sizable increases in
May and April. While the turnaround in motor
vehicles has contributed noticeably to these gains,



1990

82.0

85.6
89.0
86.6

NOTE. Indexes are seasonally adjusted.

the upturn in output is evident in many other
industries, particularly those related to construction.
Utilization in total manufacturing, since having
reached a low in March of 77.2 percent, has risen to
78.1 percent in June. For primary processing
industries, the operating rate has jumped nearly
2 percentage points since the March low; among
advanced processing industries, the utilization rate
has risen 0.6 percentage point since March. Elsewhere, outputatmines increased 1.5 percent, owing,
in part, to a rebound in coal. Production at utilities,
after a large weather-related increase in May, fell
back only slightly last month. Among producers of
nondurables, output of textiles, apparel, chemicals,
and rubber and plastics strengthened over the second
quarter. Although the gains in textiles last quarter
were sizable, production in this industry in June was
still more than 3 percent below its year-ago level.
The June increase in output of durable goods was
again led by another rise in motor vehicles. In
addition, large gains occurred in constructionrelated industries, steel, and fabricated metals.

Industrial Production and Capacity Utilization

Output of nonelectrical machinery, which had fallen
sharply between October and March, was little
changed over the spring.
The three-month diffusion index of industrial
production, which reached a low during the recent




705

recession of 27.7 percent in January, increased to
50 percent in May, which indicates that the percentage of industries posting production advances during
the three-month period ending in May was equal to
the percentage in which output declined.

706

Statements to the Congress
Statement by Oliver Ireland, Associate General
Counsel, Legal Division, Board of Governors of
the Federal Reserve System, before the Subcommittee on Policy Research and Insurance of the
Committee on Banking, Finance and Urban Affairs, U.S. House of Representatives, July 10,
1991
I would like to thank you for the opportunity to
discuss the issues of lender liability under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA).
The issues presented in this legislation are complex, and I commend the committee for undertaking to explore them fully at this time.
As an initial matter, we strongly support the
purposes of CERCLA. We all wish to live in a
clean and healthy environment; however, the
costs of achieving this goal are substantial. The
Environmental Protection Agency has estimated that the cleanup of the 1,200 priority sites
alone may exceed $30 billion. The General
Accounting Office has estimated that as many
as 425,000 sites may need investigation and
possibly cleanup.
In light of these potential costs, we have
become concerned over the effect of recent
court interpretations of CERCLA that have
held lenders liable for the cost of the cleanup of
hazardous substances found on a borrower's
property. Despite an exemption in CERCLA
designed to shield lenders from CERCLA liability, these decisions, in effect, place lenders in
the role of policing the hazardous substance
disposal activities of their borrowers. Lenders
are often ill equipped to perform this function,
and imposition of unlimited liability can be
expected to reduce their willingness to provide
credit to prospective borrowers in any business
or area in which there is a risk of CERCLA
liability. A reduction in the availability of credit
threatens the viability of these businesses and
their ability to contribute to the cleanup of the




environment. Consequently, we believe that
the imposition of cleanup liability on lenders is
counterproductive to long-term environmental
goals and is contributing to an unnecessary and
unwarranted constriction of credit availability
to a wide range of otherwise creditworthy borrowers.
Under CERCLA, the owner or operator of a
property may be held liable for the entire cost of
cleaning up hazardous substances found on a
site, regardless of whether the owner or operator is responsible for the release of the hazardous substance. By its terms, CERCLA generally excludes secured lenders from this liability;
however, recent court decisions have largely
eroded the protection furnished by this exclusion. Courts have imposed lender liability under
CERCLA when a lender secured by property
forecloses on property or has "participated in
the management" of its borrower by virtue of
the rights reserved by the lender under its
lending and security agreements with the borrower. With the average projected cost of remedying contamination at sites on the National
Priority List climbing to more than $25 million,
liability in CERCLA cases may far exceed the
amount of the lender's original loan.
Because of the erosion of the secured lender
exemption, lenders to borrowers in businesses
that use or produce hazardous substances are
faced with a dilemma. Lenders can actively
attempt to police hazardous substance disposal
by their borrowers, risking being found to have
"participated in the management" of the borrower and therefore liable for potential cleanup
costs, or they can ignore the borrower's activities and risk nonpayment of the loan. Further,
these court decisions may discourage even normal loan collection practices out of concern that
they will be found to constitute management.
Lenders already have adequate incentives to
encourage their borrowers to engage in environmentally safe practices so that these borrowers

707

will avoid CERCLA liability. However, lenders
do not generally have the technical expertise to
police the environmental aspects of a borrower's
operations. Covenants in borrowing agreements
that give lenders a voice in their borrower's
activities are designed to ensure that the borrower acts prudently in financial matters and
places a high priority on the repayment of the
debt not to permit the lender to substitute its
judgment for the borrower's in technical aspects
of the borrower's business.
Imposing affirmative liability for environmental cleanup costs on lenders because of the
exercise of such covenants is likely to do little to
prevent the pollution of the environment but is
likely to interfere with the availability of credit to
even prudent businesses that use hazardous substances, such as farmers, dry cleaners, service
stations, and chemical and fertilizer producers.
Credit is a necessity for the operation of commercial enterprises. Lenders, already reluctant
to extend credit to borrowers that are subject to
a high risk of CERCLA liability, will only be
deterred further by the prospect of affirmative
lender liability under CERCLA. Increased lender
reluctance to provide funds to industries or areas
that present a risk of CERCLA liability is likely
to have a significant adverse effect on these
industries or areas.
Lack of credit in these cases may also frustrate
environmental interests. Companies that are unable to continue operating because they cannot
obtain credit will not be able to make any contribution to the environmental cleanup costs. Consequently, the current thrust of court decisions
imposing lender liability under CERCLA may
actually frustrate the environmental goals of
CERCLA and increase the cleanup costs that
must be borne by the government.
While the Board does not have comprehensive
data on lender losses because of CERCLA liability to date, clearly significant losses have already
occurred. More important to the future is that
data from the Federal Reserve Banks suggest
that CERCLA liability is, in fact, affecting the
availability of credit. Commercial banks are developing environmental guidelines that often indicate that the lender should decline to make
loans collateralized by real property when past
uses may have resulted in contamination of the




property or to make loans to businesses that may
use or produce hazardous substances in their
operations. In some cases it appears that banks
are declining to make loans regardless of the
safety of a borrower's handling of hazardous
substances.
In addition, banks are examining property
carefully before they foreclose on it and are
sometimes walking away from their collateral to
avoid environmental liability. This problem appears to be widespread and is not confined to
industrial areas of the country or to particular
types of businesses. Virtually every Federal Reserve Bank reported instances in which lenders
had walked away from collateral, even when the
collateral was the only source of repayment for
the loan. The experience of walking away from
collateral to avoid CERCLA liability is likely to
cause lenders to become increasingly cautious
about loans to many businesses or areas, even if
no actual liability has been incurred under
CERCLA.
In carrying out its examination and supervisory activities, the Federal Reserve expects
banking organizations to have policies and procedures in place to monitor and control the
risks to which they are exposed. However,
banks have experienced difficulty in determining the appropriate protective practices to minimize the potential for CERCLA liability. Lending institutions are at risk for hazardous waste
liability whether they have ignored hazardous
waste issues altogether or have actively attempted to monitor the safety of their borrowers' operations. The Board currently is developing guidelines for bank examiners to follow in
determining whether a lending institution has
adopted appropriate procedures and safeguards
to recognize potential hazardous substance
problems. Unfortunately, given the current
state of the law, there is no clear guidance that
we can provide as to how an institution can
extend credit and still avoid liability.
Besides private-sector liability, CERCLA
raises significant issues concerning the funding
of government operations. Many lending institutions that are potentially subject to CERCLA
liability are federally insured through the bank
and thrift insurance funds. Unlimited liability
under CERCLA poses a potential threat to the

708

Federal Reserve Bulletin • September 1991

capital and solvency of these institutions, and in
some cases could result in the costs of hazardous substance removal being borne by the bank
and thrift insurance funds. We understand that
the Federal Deposit Insurance Corporation
(FDIC) has already incurred losses as a result of
CERCLA.
Further, many agencies and instrumentalities
of the federal government, such as Federal
Reserve Banks, Federal Home Loan Banks, the
Farm Credit System, and the Small Business
Administration, are also lenders. Lender liability presents a threat to the ability of these
organizations to carry out the missions assigned
to them by the Congress. The Federal Reserve
Banks fulfill important functions in providing
adjustment credit and acting as a lender of last
resort for depository institutions. In acting as
lender of last resort, a Federal Reserve Bank
may advance funds to a depository institution
collateralized by the institution's loans, which
may, in turn, be secured by real property.
Should the institution fail, the FDIC, as receiver, would likely acquire the loans from the
Reserve Bank and would be left holding the
loans. In these cases, the FDIC would be
exposed to lender liability to the same extent as
the original lender. If the FDIC chose not to
acquire the loans, however, the Reserve Bank
would be subject to this exposure.
It is not appropriate to shift the risks and
expenses of environmental cleanup costs from
the funds allocated by the Congress for this
purpose to the bank and thrift insurance funds or
to governmental instrumentalities such as the
Federal Reserve Banks. Federal agencies and
instrumentalities have been charged by the Congress with particular responsibilities. Their funds
are intended to be used to fulfill these responsibilities, not to cover the costs of hazardous
substance removal.
The Environmental Protection Agency has
proposed rules that are intended to clarify the
provisions of CERCLA relating to both private
and public lenders. The proposed rules interpret
the secured lender exception to permit a range of
activities, including taking title to the property
following foreclosure, that a lender may undertake without being considered an owner under
CERCLA. The interpretation of the secured




lender exemption would apply to both public and
private lenders. EPA's proposal also attempts to
address the concerns of governmental lenders by
interpreting the provisions of the "innocent landowner" defense to apply to government entities
that acquired property through their activities as
lenders, conservators, or receivers. To use this
defense, the governmental lender would also
have to demonstrate that the contamination was
caused by a third party with which it had no
contractual relationship and that it had exercised
due care and taken precautions against the acts
of third parties.
We commend the Environmental Protection
Agency for its efforts to provide regulations to
clarify the secured lender exemption. Its efforts,
however, are necessarily limited by the current
statutory provisions, which may not provide
sufficient protection, particularly for governmental lenders. For example, the EPA regulations do
not expressly address the warranties that governmental entities are required to make under
CERCLA, and the ability of the EPA to provide
a broad exclusion from the warranty provisions
for governmental entities such as the FDIC or the
Resolution Trust Corporation is unclear. EPA
regulations also cannot provide governmental
lenders with any protection from liability under
state environmental statutes. Additionally, there
may be significant delays before the final rule can
be promulgated and any judicial determinations
as to its application made. We believe that
greater certainty and protection for both public
and private-sector lenders will be provided by
statutory amendments.
In closing, it is in the interests of the financial
and environmental communities to find a balanced solution to the lender liability issue. If this
issue is not resolved, we risk a reduction in the
availability of credit to any industry, area, or
borrower that appears to present a risk of liability
for hazardous substance removal. We also risk
imposing additional costs on the bank and thrift
insurance funds to pay for environmental
cleanup costs that would otherwise be met from
the funds allocated by the Congress for that
purpose. In light of these considerations, we
believe that the environmental goals of CERCLA
will be furthered rather than hampered by federal
legislation.
•

Statements to the Congress

Statement by Alan Greenspan, Chairman, Board
of Governors of the Federal Reserve
System,
before the Subcommittee on Domestic Monetary
Policy of the Committee on Banking, Finance
and Urban Affairs, U.S. House of Representatives, July 16, 1991
I am pleased to be here today to present the
midyear Monetary Policy Report to the Congress. 1 My prepared remarks this morning will
take their cue from that report by focusing on
current economic and financial conditions as well
as on the outlook for the economy and monetary
policy over the coming year and a half. These
topics merit particularly close attention at the
current time, when the economy appears to be
poised at a cyclical turning point—moving from
recession to expansion. In addition, I plan to
devote some time to discussing the importance of
the changes that we have been seeing in patterns
of credit usage and in the flows of money and
credit through the financial system. There are
signs of what could be significant departures
from the trends prevalent in the 1980s, with
potential implications for the interpretation of
financial data and economic developments.

ECONOMIC AND FINANCIAL
DEVELOPMENTS IN THE
FIRST HALF OF 1991
At the time of our last report in February, the
economy had been declining for several months.
The considerable uncertainty and higher oil
prices that followed the invasion of Kuwait had
depressed confidence and real incomes, discouraging spending by consumers and businesses and
pulling down output and employment. However,
even by February the first seeds of an economic
recovery appeared to have been sown: The initial
coalition successes in the Gulf War, the reversal
of much of the runup in oil prices, and the
significant easing of monetary policy all pointed
in the direction of a resumption of growth.

]. See "Monetary Policy Report to the Congress," in this
issue.




709

Today, there are compelling signs that the
recession is behind us. Although the turning
point has not yet been given a precise date, a
variety of cyclical indicators bottomed out by
early spring, and some indicators have moved
noticeably higher in recent months. Such data
strongly suggest that the economy is moving into
the expansion phase of the cycle. Nevertheless,
convincing evidence of a dynamic expansion is
still rather limited, and we must remain alert to
the chance that the recovery could be muted or
could even falter.
In recent months, there also have been promising signs of a slowing in inflation. The price
figures themselves have bounced around from
month to month, partly in response to the gyrations in oil prices and the partial embedding of
those swings in the underlying cost structure of
the economy. A bunching of price increases and
excise tax hikes at the beginning of the year also
boosted " c o r e " inflation measures for a time.
But in their wake an underlying softening trend
has become evident, with consumer prices outside the food and energy sectors rising quite
modestly. In an environment of slack demand,
businesses have worked especially hard to control costs by keeping their operations as lean and
productive as possible.
With the threat of an oil-related inflation surge
largely behind us and output evidently declining,
the Federal Reserve took a series of easing steps
in quick succession over the latter part of last
year and into the spring. These actions, aimed at
ensuring a satisfactory upturn in the economy,
brought the federal funds rate more than 2 percentage points below its prerecession level and 4
percentage points below its peak of about two
years ago. Other short-term interest rates
dropped more or less commensurately. Despite
the progressive easing of monetary policy, the
foreign exchange value of the dollar is up substantially since the beginning of the year, in part
owing to the brightening outlook in the United
States for economic recovery without added inflation. Anticipations of economic expansion also
were reflected in rising stock prices and in longterm interest rates, which have changed relatively little on balance so far this year even as
short-term rates have declined.
With the cumulative drop in short-term inter-

710

Federal Reserve Bulletin • September 1991

est rates making monetary assets more attractive
to the public, M2 growth picked up noticeably in
the first half of 1991. Its growth probably was
restrained to a degree, however, by the firmness
in returns on capital market instruments. And, as
had been anticipated at the beginning of the year,
growth of M2 remained below what would have
been predicted solely on the basis of historical
relationships with interest rates and income.
Money growth also continued to be held down by
the ongoing restructuring of credit flows away
from depository institutions. As the thrift industry has contracted and banks have remained
quite cautious about expanding their balance
sheets, there has been less need for depositories
to issue liabilities—which constitute the vast
bulk of the monetary aggregates. Currently, M2
and M3 are somewhat below the midpoints of
their respective target ranges.
In the last several months, monetary policy
has adopted a posture of watchful waiting as
economic indicators have pointed increasingly
toward recovery. With an eye to the usual lags in
policy effects, this stance has been viewed as
prudent to guard against the risk of adding excessive monetary stimulus to an economy that
might already be solidly into recovery. Monetary
policy during the first half of the year has had two
jobs: first, to help bring the economy out of the
recession; and, second, to avoid setting the stage
for the next recession, which would follow if we
allowed inflationary imbalances to develop in the
economy.
The progress against inflation that has been
set in motion must not be lost. Moreover, by
consolidating and building upon the gains against
inflation, we come that much closer to our
longer-run goal of price stability. Inflation and
uncertainty about inflation keep interest rates
higher than they need to be, distort saving and
investment, and impede the ability of our economy to operate at its peak efficiency and to
generate higher standards of living.

THE ECONOMIC

OUTLOOK

It is this strategy that has been guiding monetary
policy recently, and the effects of the strategy are
reflected in the economic projections of the Fed-




eral Open Market Committee (FOMC) members
and other Reserve Bank presidents. On the
whole, their outlook is for underlying inflation to
continue to slacken as the economy first recovers
and then expands at a moderate rate through the
end of next year.
For this year, while there remain—without
question—frailties in the economy, economic
activity appears on balance to be picking up in a
fairly broad-based manner. The expectation that
the turnaround in output is occurring, and that it
will persist, is evident in the economic projections of the FOMC members and other Reserve
Bank presidents. Their forecasts for real GNP
growth over the four quarters of 1991 center on 1
percent or a shade below, implying growth over
the remainder of this year that not only offsets
the first-quarter decline in GNP but also lifts
output above its prerecession peak by year-end.
Two fundamental questions may be posed
with regard to this outlook for the rest of the
year. The first is an inquiry into the potential
sources of strength in the recovery—those
forces that will be at work to pull the economy
out of recession in a lasting fashion. We see
several factors as having set the stage for the
recovery: in particular, the reversal of the spike
in world oil prices and the favorable effects of
that reversal on real incomes; the conclusion of
the Gulf War and the consequent rebound in
consumer and business confidence; and, finally,
the decline in short-term interest rates after our
policy easings and the narrowing of risk premiums in financial markets. Against this backdrop, growth in consumer expenditures seems
to have turned positive again, along with real
income; homebuilding has bottomed out and is
providing some lift to overall growth; and orders for capital goods are pointing to a firming
in demand that should be reflected in production and shipments in coming months.
The strongest force behind output growth in
the near term, though, probably will be the
behavior of inventories. Business inventories
have been drawn down aggressively in recent
quarters, and, with inventories now quite lean,
sales increasingly will have to be satisfied out of
new production. The inherent dynamics of an
inventory cycle, as the drawdown ceases and
eventually turns to rebuilding, likely will engen-

Statements to the Congress

der the bulk of the initial step-up in output. But
there may be additional areas of demand that will
impel the recovery; it is quite common at this
point in the cycle for forecasts both to underestimate the strength of the recovery and to miss
the forces that end up driving the expansion.
In fact, recessions typically have been followed by periods of appreciably stronger growth
than that foreseen here. This raises the second
question about the near-term forecasts, that is,
whether they are optimistic enough. Several considerations come to mind on that side of the
issue. First, and in some sense most appealing, is
the simple notion, which is lent some support by
history, that relatively mild recessions beget relatively mild recoveries. And this recession, assuming it came to an end in the spring, seems to
have been mild. Not only does it appear to have
been marked by a considerably smaller contraction in real GNP and industrial production than
the average postwar recession, but it also was a
bit shorter. In at least one respect, however, this
recession was close to average, and that was in
job losses, as firms cut payrolls fairly aggressively. Nevertheless, the unemployment rate did
not rise as much or as high as was typical in the
past.
Arguing against a rapid rebound in the economy are several other factors as well, including
the lack of impetus from some sectors that contributed in earlier cycles. First, it has not been
unusual to see some fiscal stimulus in the early
stages of expansion in the past; this time, however, the Congress and the Administration have
worked long and hard to make sure that genuine
progress will be made in righting the structural
imbalance in the budget, putting federal spending
in real terms on a downward path. Nor is fiscal
stimulus likely to emerge from the state and local
sector, where deepening budget problems are
constraining spending. A portion of the financial
distress of localities can be traced to the softness
in real estate markets feeding through to property
tax receipts. The condition of the real estate
market also is certain to restrain the pickup in
construction that usually accompanies a recovery, with overbuilding in commercial real estate
likely to damp activity in this area for some time
to come. Finally, in the consumer area, expenditures are unlikely to grow more rapidly than




711

personal income, as households avoid reducing
their saving rate further from its already low
level.
The expansion is seen as becoming more securely established next year, with real GNP
growth strong enough to bring the unemployment
rate down V2 percentage point or more from its
current level. Should the recovery unfold about
as we expect, price pressures will remain muted
and progress on inflation is likely. The expectations of FOMC members and other Reserve
Bank presidents for inflation this year are centered in the neighborhood of 3V2 percent, well
down from the 6V4 percent rate of inflation experienced last year. Although the slowdown this
year is exaggerated by the retreat in oil prices, a
clear deceleration should be evident even abstracting from energy prices. That deceleration in
the underlying trend is expected to continue next
year as well. However, the unwinding of the oil
shock this year masks the improvement so that
the projection for the increase in overall consumer prices is about the same for 1992 as for
1991.

RANGES FOR MONEY AND DEBT
FOR 1991 AND 1992

GROWTH

The FOMC viewed the near-term outlook for
output and prices as generally favorable and
consistent with growth of money and debt within
the ranges that had been specified earlier in the
year. Consequently, at its meeting earlier this
month, the FOMC reaffirmed the 1991 ranges for
money and debt growth. In addition, it was felt
that the money ranges retained enough scope for
policy to be responsive, should the economy
stray substantially from its expected path over
the remainder of the year. With M2 and M3 now
well within their ranges, there remains ample
room for money growth to change in the event
policy needs either to ease in support of a faltering recovery or to tighten in reaction to an
unexpected resurgence of inflation pressures.
Unlike the monetary aggregates, our latest
reading on debt of the domestic nonfinancial
sectors places it right at the bottom edge of its
1991 range. Its growth has been unusually low,
and its position within the range is indicative

712

Federal Reserve Bulletin • September 1991

both of the reduced demands for credit associated with the weak economy and of the restraint,
on the part of borrowers and lenders, that has
been evident in recent quarters. In these circumstances, the FOMC felt that lowering the monitoring range would be inappropriate and might
falsely suggest a complacency on the part of
policymakers about weakness in credit growth.
Instead, maintaining the debt range unchanged
underlines the implication that a further slowdown in this aggregate would warrant close scrutiny.
On a provisional basis, the FOMC extended
the 1991 ranges for money and debt growth to
1992, with the understanding that there will be
opportunities to reevaluate the appropriateness
of these ranges before they come fully into play
next year. The ranges were viewed as consistent
with additional progress against inflation and
with sustained economic expansion. Moreover,
the path of no change appeared most sensible to
the Committee at the current time of some uncertainty about the vigor and even the durability
of the economic recovery as well as about developments affecting the future of the thrift and
banking industries.
This uncertainty about the credit intermediation process is one of the factors that could
possibly make movements in M2 somewhat difficult to interpret in the short run, but I would
emphasize that we expect the aggregate to remain a stable guide for policy over the longer
term. The relationship between M2 and nominal
income has been one of the more enduring in our
financial system. Since the founding of the Federal Reserve, nominal GNP and M2 have grown,
on average, at almost precisely the same rate.
Presumably, this parity reflects an underlying
demand for liquidity on the part of businesses
and consumers that is associated with a given
level of spending and wealth. This demand is
likely to persist, though the financial structures
that supply the liquidity may change.
CHANGING PATTERNS
OF FINANCIAL
INTERMEDIATION
AND DEBT ACCUMULATION
Recently, patterns of financial intermediation
have been changing, and there are signs that




patterns of credit usage in general have been
changing as well. It is difficult to know which of
these developments will show some permanence
and which will prove ephemeral. But some of the
recent changes have been striking and have affected a number of the financial variables that the
Federal Reserve routinely monitors in an effort
to glean information about the health of the
economy, the soundness of the financial system,
and the appropriateness of current monetary
policy. I would like to address several aspects of
these recent developments in the remainder of
my remarks today.
First, at the most aggregate level, the ratio of
domestic nonfinancial sector debt to nominal
GNP, which soared in the 1980s, is beginning to
show signs of flattening out. With the federal
government's borrowing lifted by the effects of
the recession and payments related to deposit
insurance, these signs have been evident so far
only in the other sectors. While the changes in
behavior may, in part, reflect cyclical factors at
work, a longer-term trend also may be emerging.
And this trend, if it develops fully, would represent a return to the pattern evident in earlier
postwar decades. In that case, it would be the
1980s, with their burgeoning federal deficits and
massive corporate restructurings, that would appear to be the aberration. The deregulation,
technological advances, and financial innovations that came at an accelerated pace in the
1980s lowered the cost of borrowing for many
and probably raised the equilibrium ratio of debt
to net worth for a wide range of economic
entities. A temporary surge in borrowing was
implied in the course of this transition from one
equilibrium to another.
A tapering-oflf of that surge would then be
expected as the new equilibrium was approached, and this may be what we currently are
witnessing. The new equilibrium debt-to-income
ratio may even be below the current level, implying the possibility of sluggish debt growth for
some time. If these sorts of adjustments were in
train, the slow debt growth associated with them
should not be read as implying that credit was
insufficient to support satisfactory economic performance.
Several considerations point in the direction of
restructuring of balance sheets. The forces that

Statements to the Congress

appear to be restraining the demand for credit
can be generally categorized as less "grossing
u p " of balance sheets and less substitution of
debt for equity. During the 1980s, there was a
great deal of this "grossing u p " of balance
sheets, as credit financed more purchases both of
physical assets and of financial assets. As far as
physical assets are concerned, the 1980s saw
some strong spending on consumer durables and
nonresidential structures; spending on physical
assets, such as these, appears more often to be
financed with debt than is spending on most other
types of goods and services. Now, with stocks of
those assets already built up and with tax law
changes that have made it less attractive in many
cases to borrow to finance their purchase, credit
demands are likely to remain relatively damped.
The high interest rates of the late 1970s and
early 1980s spurred increased financial innovation and extensive deregulation, helping to bring
businesses and consumers increasingly into more
complex financial dealings. The state and local
sector built up a large stock of financial assets,
and the household sector acquired assets from
the wider array of instruments available. Moreover, household borrowing behavior was shaped
importantly by the rising capital gains available
on residential real estate over this period. As
house prices escalated, mortgage debt on existing homes increased, both as capital gains were
realized in home sales and as unrealized gains
were tapped through the use of second mortgages
and, more recently, home equity lines. In this
process, homeowners were able to redirect a
portion of these capital gains toward other assets
or current consumption.
Over the decade, the financial services industry grew at an extraordinary rate, in part by
creating debt instruments seemingly tailored to
every need and financial assets for any portfolio.
While households took advantage of a number of
these new instruments, the bulk of them were
directed toward business. Mergers and acquisitions took off, financed essentially by debt, resulting in net retirements of equity that averaged
nearly $100 billion annually between 1984 and
1989.
More recently, with debt levels relatively high
and lenders less eager to extend credit, markets
have changed. One aspect of this change shows




713

up dramatically in data for the second quarter,
where equity issuance by nonfinancial corporations is estimated to have exceeded equity retirements for the first time in eight years, removing
this element behind the buildup of debt. While
much of the weakness in credit demand at present reflects cyclical influences, borrowers likely
will continue to shy away from the heavy expansion of debt seen in the 1980s.
On the supply side of the credit market, perhaps the major factor at work in creating a break
with the behavior of the 1980s has been the
adverse consequences of that behavior. It is now
clear that a significant fraction of the credit
extended during those years should not have
been extended. We need merely look at the
recent string of defaults and bankruptcies and the
condition of many of our financial intermediaries
to confirm this impression.
In a sense, this process may have been very
nearly inevitable. With the financial system groping toward a new equilibrium, the likelihood of
mistakes was high. Laxity by lenders abetted the
spiral of debt, and we regulators were too often
slow to intervene. Now, financial institutions,
regulators, and taxpayers are facing the wrenching unwinding of those lending decisions. A key
lesson to be learned is how important it is to
avoid these costly adjustments in the future and
that this can only be done by avoiding a return to
such financial laxity.
Going forward, we likely will see a continuation of the "credit correction" now under way.
One aspect of this correction is the increased
attention paid by regulators and the financial
markets to the capital positions of financial intermediaries. The more prudent approach to capitalization and lending decisions is overwhelmingly a healthy development that ultimately will
result in strengthened balance sheets for the
nation's financial institutions and more assurance
of stability of the financial system.
In certain areas, however, the credit retrenchment appears to have gone beyond a point of
sensible balance. In some cases, lender attitudes
and actions have been characterized by excessive caution. As a result, there doubtless are
creditworthy borrowers that are unable to access
credit on reasonable terms. Even in the obviously troubled real estate area, new loans are

714

Federal Reserve Bulletin • September 1991

arguably too scarce, in some cases intensifying
the illiquidity of the market for existing properties. To an extent, the scarcity of some types of
loans may reflect the efforts of individual financial institutions to reduce the share of their assets
in a particular category, such as commercial
mortgages. While a single bank may be able to do
this without too much trouble, when the entire
industry is trying to make the same balance sheet
adjustment, it simply cannot be done without
massive untoward effects. Instead, it may be in
the banks' self-interest to make the adjustment in
an orderly manner over time. Regulatory efforts
to address concerns of credit availability continue.
Credit conditions remain tight in some sectors,
but in others the situation appears to have improved considerably since our last report in
February. To chronicle briefly what we know
about credit supply conditions at present: In
financial markets generally, risk premiums and
spreads between yields on different types of debt
have declined substantially this year as investor
attitudes have improved. In part reflecting this
narrowing, corporate bond offerings surged over
the first half of the year. Banking firms, too,
gained increased access to capital markets, leaving them in a better position to lend as credit
demands begin to pick up in the recovery. Indexes of bank stock prices rose much more
rapidly than the stock market as a whole, bringing the average market value of shares in the top
fifty bank holding companies back up to around
their book value. Yield spreads on bank-related
debt obligations narrowed sharply over the first
half of the year, prompting considerable issuance. Thus far, however, lending by commercial
banks has remained quite weak. To the extent we
can judge, this appears primarily to reflect weak
credit demand, as is typical at this point in the
business cycle. Nonetheless, supply restrictions
remain a problem. This so-called credit crunch
owes importantly to financial institutions' efforts
to build capital to meet the demands of both the
market and the regulators. Information on lending terms, however, suggested little further tightening over the spring.
Not only the behavior of the debt aggregate
itself but also the avenues through which the debt
flows represent something of a break with the




past. The recent decline in the importance of
depository institutions as intermediaries, when
measured by the credit they book, is quite striking. While this decline predominantly reflects the
contraction of the thrift industry, banks, too,
have contributed by growing only slowly. Over
time, other financial institutions have provided
more close substitutes for banking services, and
the profitability of the banking industry suffered
over the past decade or so from a decline in loan
quality. Moreover, recent emphasis on higher
capital ratios and higher deposit insurance premiums should affect this trend as well.
Even as the economy has firmed, financial
flows through depository institutions have remained weak. Some lag is typical. Indeed, in the
case of business loans, there is enough of a
regularity that they are included in the Department of Commerce's Index of Lagging Economic
Indicators. But lending to businesses has been
unusually weak for some time now, and the
outlook is for a rather modest upturn when it
comes. At the same time that decisions to purchase goods and services are made, decisions
about the financing of those purchases are usually being made. Increasingly, it appears that
those decisions are not being reflected in credit
on the books of depository institutions. Banks
still may be involved, however. They may, for
example, provide letters of credit or arrange
financing through a special-purpose corporation.
Mortgage and consumer debt may pass through
the balance sheets of these intermediaries only
briefly, as it is increasingly being securitized and
sold into capital markets. As banks make further
strides in bolstering their capital positions, however, they will become better able to take advantage of opportunities to add profitable loans to
their balance sheets. While the role of the banking industry has been changing, its importance in
the financial system and the economy remains
assured.
In sum, the financial system in this country is
changing, and it is changing rapidly. Technology,
regulatory initiatives, and market innovations are
changing many dimensions of the financial system. The relationships between borrowers and
lenders, between risk and balance-sheet exposure, and between credit and money are being
altered in profound ways. In response, we must

Statements to the Congress

715

understand the nature of these changes, their
permanence, their limitations, and their possible
implications for the economy and monetary policy. And we must ensure that the stability of the

financial system is protected as changes occur,
for a sound financial system is an essential ingredient of an effective monetary policy and a vital
economy.
•

Statement by Wayne D. Angell and Edward W.
Kelley, Jr., Members, Board of Governors of the
Federal Reserve System, before the Subcommittee on Domestic Monetary Policy of the Committee on Banking, Finance and Urban Affairs, U.S.
House of Representatives, July 18, 1991

an average annual rate of 5.3 percent from 1986
through the 1991 budget. This increase includes
expenses for supervision and regulation initiatives that account for 0.4 percentage point of the
increase, Expedited Funds Availability legislation requirements (0.3 percentage point), contingency planning initiatives (0.2 percentage point),
and several major initiatives for the U.S. Treasury (0.4 percentage point). I would add that it is
difficult to judge the degree of discipline in an
organization's budget solely on the growth rate
of expenses. In the Federal Reserve we recognize the responsibilities given to us by the Congress, and we discharge them in a manner that
reflects a high concern for quality and effectiveness as well as efficiency.
For 1991, the Federal Reserve System has
budgeted operating expenses of $1.6 billion, an
increase of 5.9 percent over the 1990 budget. The
last year for comparison of actual expenses is
1990 over 1989. This comparison shows expenses
up only 4.5 percent, reflecting a 0.8 percent
underspending of the 1990 budget. Before getting
to the substance of our 1991 plans, I would
remind the subcommittee of two aspects of Federal Reserve System operations that affect our
budget in unusual ways. First, 40 percent of
System expenses arise from the services I just
mentioned that are provided to depository institutions at fees adequate to cover all costs, including some imputed costs. Since additional costs of
these services are more than recovered by additional revenues, any increases in costs result in
increased earnings returned to the U.S. Treasury. Second, many fiscal agency operations are
provided to the Treasury Department and other
agencies on a reimbursable basis. Altogether, 58
percent of our total expenses are either recovered through pricing or are reimbursable. On a
net basis, the cost to the public of the Federal
Reserve System's operations is $675 million of
the total $1.6 billion budgeted for 1991. (Of
course, this amount does not include the earnings

It is a pleasure for Governor Kelley and me to
visit with this subcommittee today to discuss and
review the Federal Reserve System's expenses
and budget. Today as we look at the Federal
Reserve System's budget for 1991, Governor
Kelley will discuss the Board's budget and major
initiatives, and my comments will focus on the
Reserve Bank budgets as well as major System
initiatives.
The Board has recently made available to the
public and to this subcommittee copies of our
publication Annual Report: Budget
Review,
1990-91, presenting detailed information about
spending plans for 1991. The attached tables
have been updated for 1990 actual experience,
and, therefore, some variations exist from data in
that document. 1
While the Federal Reserve has always been
concerned with controlling costs, the Monetary
Control Act of 1980 has provided an additional
incentive. As a matter of law, services provided
to depository institutions must meet a clear market test. Specifically, all expenses (including
overhead and the imputed cost of capital and
taxes) for providing "priced" services are covered by charges to users. The markets in which
we operate in providing these correspondent
banking services are highly competitive, thereby
providing a strong and direct incentive to maintain our efficiency. Given these internal and
external restraints on costs, the Federal Reserve
System's expenses are projected to increase by
1. The attachments to this statement are available on
request from Publications Services, Board of Governors of
the Federal Reserve System, Washington, D.C. 20551.




716

Federal Reserve Bulletin • September 1991

on the System's portfolio of assets, derived directly from monetary policy and currency issuance activities, from which the System turned
over $23 billion to the Treasury in 1990.)

HISTORICAL

OVERVIEW

It may be helpful to put the budget for 1991 in
perspective by sketching the most recent tenyear history of System expenses. Between 1980
and 1990, Federal Reserve System expenses increased at an average annual rate of 5.9 percent;
System employment decreased at an average
annual rate of 0.1 percent; and volume in measured operations increased 26 percent over the
ten-year period. Unit cost did increase in some
services in the early eighties as Federal Reserve
Bank volumes fell after the implementation of
pricing under the Monetary Control Act. However, after the transition to pricing was completed in 1983, the composite unit cost for all
functions (unadjusted for inflation) has actually
declined 0.3 percent on an annual basis, even
while improvements have been made in the quality of services.
For priced services, a decline in unit cost has
been particularly noticeable in the electronic
payment areas. Automated clearinghouse (ACH)
unit cost has decreased 6.9 percent per year
(1980-90) and funds transfer unit cost has decreased 1.0 percent per year during the same
time period; since 1985, the decreases per year
have been 12.3 percent for ACH, and 2.9 percent
for funds. Volume growth has averaged more
than 9 percent per year for funds transfers and
more than 24 percent per year for automated
clearinghouse transactions (1980-90). In our
large check processing operation, on the other
hand, when there has been a significant effort to
improve the quality of service through increased
availability and improved deposit deadlines,
there has been an average increase in unit cost of
2.0 percent per year since 1983. However, in the
most recent year-over-year comparison (1990
over 1989) unit cost for check processing
dropped 1.2 percent, chiefly because the expensive implementation of the Expedited Funds
Availability legislation (EFA) was basically completed in 1989.




For our nonpriced cash operations—involving
the distribution of currency and coin—unit costs
have also been declining. Since 1983 the decline
has averaged about 2.6 percent per year, with
volumes increasing 5.2 percent per year. However, in our fiscal agency operations, also nonpriced, there has been an increase in unit costs of
2.9 percent per year since 1983, reflecting new
operations and services for the Treasury. In this
area the Federal Reserve System has managed
several initiatives for the Treasury to improve
long-term efficiency in Treasury securities and
savings bonds and improve the quality of service
to the public. Through 1990 the Federal Reserve
has added 322 staff members and spent a cumulative $65 million on these Treasury initiatives.
It is difficult to measure productivity improvements in the supervision and regulation area, but
these activities have required significant increases in resources over the last ten years.
Between 1980 and 1990, the number of staff
members for supervision and regulation increased 629 and annual expenditures increased
$125.8 million. These resources have been employed to strengthen the ability of the Reserve
Banks to identify and address problems in the
banking organizations under their jurisdiction.
Obviously, the Reserve Banks have had to deal
with greatly increasing work loads in the last
several years as reflected in the record number of
bank failures and problem banks as well as in the
increasingly complex issues they have had to
face in reviewing and processing regulatory applications and in developing supervisory policies
to deal with new and changing banking risks.
In presenting our spending plans for 1991, I
would like to mention that both the Reserve
Bank budgets and the Board's budget must be
approved by the Board of Governors. Reserve
Bank budgets are first approved by the Banks'
Boards of Directors and then reviewed by the
Committee on Federal Reserve Bank Activities
before submission to the Board of Governors.
Governor Kelley oversees the Board's budget,
and I will turn to him for that discussion.
INTRODUCTION
I appreciate this opportunity to discuss the operating and capital budgets of the Board of Gover-

Statements to the Congress

nors of the Federal Reserve System. This material was included in the Annual Report: Budget
Review 1990-91 furnished you in February, so I
will not repeat the detailed data or analysis.
The 1991 operating budget of the Board of
Governors totals $110.8 million. The growth in
Board expenses between 1990 and 1991, at 7.6
percent, is slightly higher than the 7.5 percent
increase from 1989 to 1990. The 1991 increase
results from actions to further strengthen our
supervision and regulation function, to fund the
higher level of salaries needed to remain competitive with changes in the marketplace, and to
meet a higher level of expenses for health insurance, Medicare, and the Board's Thrift Plan.
The budget authorized 1,557 positions for the
Board's operations. The number of positions increased by a net of 3 as requirements in the
supervision and regulation function and in the
system policy direction and oversight function
were largely met by offsetting reductions in staff
in the support functions. From 1984 to 1986 our
position level declined by about 80, even though
we were increasing resources devoted to the supervision and regulation function. Since then the
number of positions has remained substantially
constant even as further increases were reallocated to the supervision and regulation function.
The foregoing figures do not include $1.8 million and nineteen positions budgeted for the
Office of the Inspector General, which I will
cover at the end of this statement.
I will now discuss the budget as it relates to the
Board's four major operational areas.

MONETARY

AND ECONOMIC POLICY

This function is expected to cost $54.2 million in
1991, an increase of $3.0 million, or 5.8 percent,
over 1990. Most of this change is caused by
factors such as the increase in pay and benefits
and the 1991 component of the automation plan
supporting this function. There are no new positions in this function in spite of the continuing
growth in the work load.
The budget provides resources to maintain the
quality of economic analysis and continues major
resource commitments to implement the Financial
Institutions Reform, Recovery, and Enforcement




717

Act of 1989 (FIRREA), to help develop the National Information Center (NIC), and to support
analysis of changes in the country's financial
industry.
The growth of expenses in this budget area is
constrained because earlier investments in distributed processing systems have produced reductions in the cost of data previously provided
by the large mainframe computer and has further
limited cost growth by improving the productivity of existing staff.
SUPERVISION AND

REGULATION

The 1991 budget funds considerable growth in
this operational area. The budget of $32.8 million
is $3.7 million, or 12.7 percent, greater than
expenses for 1990. Eight new positions are
added, primarily related to policy development
and implementation, supervision of large bank
holding companies, and increased emphasis upon
compliance with consumer protection statutes.
Most of the positions are a result of underlying
problems and new developments in the financial
sector of the economy and ongoing work related
to FIRREA.
Besides the direct costs associated with the
new positions, the budget continues to support
development of the NIC. This comprehensive
database will be the only source of consolidated
structure and financial data for depository institutions; it will greatly enhance supervision and
regulation in an era of evolving structure in the
banking and financial sector. Development of the
NIC will avoid redundant costs, improve data
integrity, and lead to more timely and meaningful
analysis of applications, merger requests, and
other actions in a rapidly changing environment.
The office automation networks supporting
this functional area will be substantially upgraded during 1991. Besides acquiring new microcomputers, more advanced networking equipment will be installed.
SERVICES TO FINANCIAL
AND THE PUBLIC

INSTITUTIONS

The budget includes $2.9 million for this operational area— $107,000, or 3.9 percent more than

718

Federal Reserve Bulletin • September 1991

in 1990. This area is composed almost entirely of
oversight of the payments system function of the
Federal Reserve System.
A major factor in the higher level of costs is the
continued emphasis on reducing risk in the payments system and ensuring that it responds in an
efficient and timely manner to changes in the
financial system. The budget includes two new
positions to develop policies and procedures to
reduce risks in both national and international
payment and settlement systems.
The completion in 1990 of a large software
development project to manage currency orders
and cash shipments produces significant cost savings and thereby limits the overall increase in the
1991 budgets for the Board and the Reserve
Banks.

SYSTEM POLICY DIRECTION
OVERSIGHT

AND

System Policy Direction and Oversight includes
resources for the supervision of System and
Board programs. This functional area has been
partially redefined, and our trend data have been
adjusted to reflect the new treatment of the
budget for the Office of the Inspector General
that began in the 1990 budget.
The $20.3 million budgeted for this function is
$1.0 million, or 5.4 percent more than 1990
outlays.
There are no major mission increases in this
functional area. Staffing increases for the Reserve Bank examination function are continued
with the addition of an electronic data processing
(EDP) auditor to help ensure that internal controls over major Reserve Bank automation systems are adequate.
The budget funds replacement of older microcomputer equipment in the Division of Reserve
Bank Operations and Payment Systems and
some initiatives in support of the division's local
area network.

outcome since 77 percent of the Board's budget
is made up of personnel costs. The salary
increment in this budget, $5.1 million, is significantly less than it was in 1990, when major
actions were budgeted to fully implement the
new compensation program. This program has
succeeded in reducing the number of vacancies
with the concomitant effect of increasing the
salary budget.
A change in the Board's matching contribution for the Thrift Plan and a higher wage base
subject to social security taxes are the principal
factors resulting in the increase for retirement
costs.
Our insurance costs rose sharply because of
two factors. The most important factor is health
insurance for which costs are rising sharply for
the third consecutive year. Insurance costs also
increased as a result of the recent legislation
that raised the salary base subject to the employer's matching contribution to Medicare.

CAPITAL

OUTLAYS

The capital budget of $5,131,700 is $1.0 million
more than 1990 expenditures. The budget funds
requirements in the areas of automation and
telecommunication, facilities improvements, and
equipment replacements.
A major element of the capital budget is
$1,000,000 for the replacement of obsolescent
analog telephone switching equipment with a
digital, private branch exchange.
Continued investment in our office automation systems is in line with our long-range
automation-telecommunication plan. Productivity gains from such investments have been
critical in the past in limiting requirements for
additional staff to meet the Board's increasing
work load.
Several facilities improvements such as major
roof repairs will require a total of $1,080,000.

SUMMARY
INCREASES BY OBJECT OF EXPENSE
The most significant increase in the 1991 budget
is associated with salaries, not an unexpected




The 1991 operating budget contains sufficient
funding to meet the Board's major objectives in
each functional area, including the following:

Statements to the Congress

(1) expanding our oversight of the nation's financial institutions; (2) implementing risk-based capital standards; (3) supporting the FIRREA; (4)
enhancing payments system operations while reducing payments system risk; (5) continuing investments in productivity initiatives, including
office automation and the records management
project; (6) continuing the development of the
National Information Center to provide relevant
banking structure data; and (7) maintaining a safe
and effective working environment. Three new
positions were added in response to continued
growth in the work load as a result of problems in
the financial industry, continuing implementation
of FIRREA, and changes occurring in the payments system mechanism.

BUDGET OF THE INSPECTOR

GENERAL

The Office of the Inspector General was created
by the Board in July 1987. In 1989 its reporting
relationships, duties, and responsibilities were
brought into conformance with the Inspector
General Act Amendments of 1988. To ensure
the independence of the Office of the Inspector
General (OIG), its budget is presented to the
Board and reported on separately from the
regular operating budget. That is, its funds are
not commingled with Board operating funds.
The 1991 budget for the OIG is $1.8 million.
This amount is $432,200, or 32.2 percent more
than 1990 expenses. The increased level of resources is necessary to phase in broader audit
and investigation coverage of the Board's mission areas and to provide resources to review
new and existing laws and regulations for their
impact on the economy and efficiency of Board
programs and operations.
The $432,200 increment is largely tied to the
full-year cost of four positions added late in 1990
and increases resulting from the Boardwide compensation program. The travel budget projects an
increase of $55,000 associated with auditing functions delegated by the Board to Reserve Banks.
The Office's 1991 budget provides for no increase
in positions, leaving the position count at nineteen.
I will be happy to address any questions that




719

you may have after Governor Angell concludes
our joint testimony.

RESERVE BANK

BUDGETS

The Reserve Bank 1991 expense increase—both
priced and nonpriced—was budgeted at 5.8 percent more than the 1990 budget. The actual
increase in expenses from 1989 to 1990 was only
4.2 percent since actual 1990 expenses were
lower than budgeted. Nine major initiatives account for almost a third of the budgeted increase
in Reserve Bank expenses.
The fiscal agency initiatives are expected to
increase expenses by $4.9 million, with $4.2
million due to the nationwide implementation of
the Regional Delivery System (RDS). This system, which provides for centralized issuance of
U.S. savings bonds, is one of many services that
we provide the U.S. government—directly to the
Treasury Department—as its fiscal agent. This
project will not be fully implemented until 1993
and will require a total staff increase of 350 by
that time. A staff increase of 141 is expected in
1991. Other fiscal agency initiatives include expenses for processing savings bonds on high
speed check processing equipment (EZ Clear)
and centralized processing of payroll deductions
for savings bonds (Masterfile). Expenses for
these fiscal initiatives are fully reimbursable.
The supervision and regulation initiatives result from needs in several Reserve Districts for
additional staff members to handle increases in
work loads because of the greater complexity of
examinations, more holding company examinations, increased examination of foreign banks,
and more problem institutions. The expense impact is expected to be $4.0 million.
Of the "support" initiatives, the largest—$8.2
million—is for facility improvements. Approximately $5.5 million of this increase is for increased real estate taxes on recently completed
Federal Reserve buildings. The remaining increase involves efforts to provide space for efficient operations at Cleveland, St. Louis, Kansas
City, and the New York Reserve Bank's East
Rutherford Operations Center.
Reserve Bank operations in today's environment require more reliable and secure computer

720

Federal Reserve Bulletin • September 1991

systems, more office automation, more communication networks, and more efficient high-speed
sorters and counters for checks and currency.
The initiatives identified as contingency and automation initiatives, check operational improvements, and currency initiatives all result from
these requirements.
The remaining initiatives include $4.5 million
for the Reserve Banks' share of the matching
contribution for the thrift plan and the two initiatives that have the effect of reducing costs
through improved operational efficiency.
Besides these major initiatives, it may be helpful to look at 1991 budgeted expenses on the
basis of our four service lines.
Expenses for Services to Financial Institutions
and the Public, which include all of the priced
and some of the nonpriced services, are budgeted
at $992.1 million and account for two-thirds of
total expenses. Expenses are increasing $53.2
million, or 5.7 percent more than 1990. Staffing is
budgeted at 9,227, an increase of thirteen, which
is 0.01 percent more than the 1990 level. Expenses of priced services are budgeted at $646.6
million, an increase of 3.8 percent; these services, incidentally, are expected to generate revenues of about $780 million. Nonpriced services
are budgeted at $345.5 million, an increase of 9.3
percent.
Commercial check processing is by far the
largest component in this service line ($492.0
million); it accounts for 49.6 percent of these
expenses and employs 5,686 people. The anticipated increase in expenses is $18.9 million or 4.0
percent, while employment is expected to decline 35 or 0.6 percent. These levels represent
anticipated stable operations, with both check
volume and unit costs expected to increase 1.3
percent.
Our other large operations in this service line
are currency ($166.7 million and 1,532 people),
automated clearinghouse ($83.4 million and 370
people), and funds transfer ($70.0 million and 155
people). The currency service anticipates sizable
volume and staff increases in the San Francisco
District but with essentially stable operations
elsewhere (expenses up 6.8 percent; staff up
nineteen). Automated clearinghouse (expenses
up 5.7 percent; staff up five) and funds transfer
(expenses up 9.9 percent; staff up one) both




anticipate some increased costs for automationtype projects concerned with improving efficiency and security of data.
Expenses for Supervision and
Regulation,
budgeted at $234.2 million for 1991, are expected
to increase $22.3 million, or 10.5 percent over
1990. This service line has been the fastest growing of the service lines and now constitutes 15.6
percent of total System expenses, compared with
13.6 percent in 1985. The budgeted staff level is
2,305, an increase of 88 or 4.0 percent over 1990.
The expense increase is centered on the provision for the additional employees and compensation levels for the ongoing staff members as
well as travel, training, and automation. The
additional demands on the Federal Reserve's
examination staff have necessitated increases in
personnel. These increased demands on staff
members include expanded bank examination
programs, improved supervision of foreign banking agencies in the United States, the broadening
level of detail covered in the examination process, compliance with the FIRREA and the Bank
Secrecy Act, intensified surveillance of problem
financial institutions, and increased focus on the
requirements of the Community Reinvestment
Act.
Expenses for Services to the U.S. Treasury
and Other Government Agencies are budgeted at
$167.2 million, an increase of $10.3 million or 6.6
percent over 1990. These expenses continue at
about 11 percent of total expenses in 1991. Staffing levels are budgeted to increase by 96 or 5.3
percent. The major initiative driving the increases in both expenses and staff is the nationwide expansion of the Regional Delivery System
(RDS) discussed earlier, which consolidates the
issuance of U.S. savings bonds at one office in
each District. RDS volume is expected to increase by 5.4 million bonds in 1991.
Expenses in 1991 for the conduct of Monetary
and Economic Policy at the Federal Reserve
Banks total $107.5 million and account for about
7 percent of the total budget. An increase of $8.5
million and 8.6 percent is anticipated in 1991.
Employment budgeted at 786 reflects an increase
of 14 over the actual level in 1990 but in fact
brings the staff level only to the level approved in
the 1990 budget—approved staffing for 1990 was
not attainable because of attrition and the lag in

Statements to the Congress

finding qualified replacements. Besides providing
for the staff additions, the expense increase represents salary administration actions and increased equipment and data-processing costs associated with automation initiatives.
Reserve Bank expenses on an object of expense basis also might be useful to the subcommittee.
Operating expenses for Personnel comprise
officer and employee salaries, other compensation to personnel, and retirement and other benefits. Total personnel costs account for 64.5
percent of Reserve Bank expenses and are expected to increase 8.0 percent in 1991.
Salaries and other personnel expenses account
for about 52 percent of 1991 budgeted expenses
and are expected to be $49.3 million, or 6.7
percent above 1990 expenses. Salaries alone are
budgeted to increase $52.6 million, or 7.3 percent, and will be partially offset by a decline in
other personnel expenses of $3.2 million or 25.2
percent. The decrease in other personnel expenses results from a declining use of personnel
agencies. Merit pay increases of $37.1 million, or
5.1 percent, are the primary reason for salary
expense growth. Also contributing to additional
salary expenses are staffing level increases, promotions, reclassifications, and structure adjustments. These increases are partially offset by
position vacancies and reduced overtime.
Expenses for retirement and other benefits,
which account for 12.3 percent of Reserve Bank
budgets, are anticipated to increase $22.1 million, or 13.5 percent, in 1991. This increase is the
result of continued escalation in hospital and
medical costs, a rise in the social security tax,
and an increase in the thrift plan match in 1991.
Nonpersonnel expenses account for 35.5 percent of Reserve Bank expenses and are projected
to increase 4.5 percent in 1991.
Equipment expenses are expected to increase
7.2 percent and to account for 11.6 percent of
total expenses in 1991. Most of the increase is in
depreciation expenses resulting from acquisitions to expand data processing and data communications capabilities because of increased
work loads.
Shipping costs (primarily for check operations)
account for 5.8 percent of the 1991 budget and
are projected to increase 4.1 percent in 1991. The




721

increase is primarily the result of a substantial
increase in postal rates in early 1991, an increase
for the interdistrict transportation system (ITS),
and increases from rebidding local transportation
contracts.
Building expenses, which account for 9.1 percent of total expenses, are expected to increase
10.4 percent in 1991 because of higher real estate
taxes in several Districts and the full-year effect
of recently completed capital projects.
The plans of the Reserve Banks for Capital
spending in 1991 show that outlays for buildings
and for data processing and data communications
equipment continue to dominate Reserve Bank
capital budgets. By their nature, capital outlays
vary greatly from year to year.

SPECIAL BUDGET

EMPHASIS

The Board of Governors has continued approval
in 1991 of two research and development projects
intended to provide long-range benefits to the
Federal Reserve and the banking industry. Because the spending on such projects is relatively
high and short term, the Federal Reserve accounts for them separately from its operating
expenses, although they are included in the total
System budget. The budget for these "Special
Projects" in 1991 is $7.6 million, compared with
$5.2 million in 1990 and $7.5 million in 1989.
Since 1985, the Federal Reserve has been
working on a project—digital imaging of
checks—that could improve the efficiency of the
check collection system through transition from
paper delivery to electronic delivery. The System has been testing digital image technologies to
produce high-quality images of check documents
in a sustained high-speed check processing environment. The primary applications chosen for
the testing were truncation of government checks
and the processing of return items. Both of these
check processes provide rigorous tests for image
technology because they require the storage of
large amounts of data and require a high level of
quality in the retrieved image.
The focus of this project during 1991 will be on
the systems development of a high-speed government check archival system, of personal computer systems for potential applications such as

722

Federal Reserve Bulletin • September 1991

return-item processing, and of low-speed systems that will be efficient in very low-volume
applications in the near term. The 1991 budget
for this project is $3.7 million.
The second Special Project is the development
of currency authentication systems. Our effort is
to improve capabilities for detection of counterfeit notes in the processing of incoming currency
deposits, and thereby promote the integrity of
U.S. currency in circulation. The 1991 budget for
this project is $3.9 million.
Before concluding my comments, I would like
to add that the Federal Reserve knows a rigorous
budget process is only one part of financial
management. We are equally concerned about
other areas of financial integrity. The structure of
the Federal Reserve System provides for appropriate segregation of responsibilities; strong accounting control over assets, liabilities, revenues, and expenses; and an organizational
structure that establishes responsibilities for audit and oversight of the objectives and goals of
the Federal Reserve System.
This was the subject of our report to the
subcommittee earlier this year in which we described and documented procedures and systems
employed in supervising and controlling the Federal Reserve Banks. In brief summary, it is the
policy of the Federal Reserve that the Board and
each Reserve Bank maintain a system of internal
controls that is designed to ensure that objectives

of each are achieved and that they each operate
in compliance with all prescribed rules, regulations, and policies. The management of each is
responsible for maintaining adequate internal financial, custody, and data security controls over
all aspects of their respective operations.
To ensure that these controls are operating in
an effective manner at the Federal Reserve
Banks, we have put the following procedures in
place: (1) an internal audit function at each
Reserve Bank is responsible for assessing practices and procedures for soundness and conformity with regulations in accordance with professional auditing standards; (2) the Board of
Governors examiners conduct financial, operational, and procedural reviews at each of the
Banks; (3) a certified public accountant firm
reviews the procedures and practices of the
Board's examination program; and (4) the
Board's specialists review the effectiveness of
each Reserve Bank's internal audit function. We
believe that these measures offer excellent protection against financial impropriety.
Governor Kelley and I thank you for this
opportunity to address the subcommittee on the
Federal Reserve System budget. The existing
budget processes are working well in controlling
costs while at the same time encouraging quality
improvements. We welcome your comments and
would be pleased to address any questions you
may have on our budget.
•

Statement by Brent L. Bowen, Inspector General, Board of Governors of the Federal Reserve
System, before the Subcommittee on Domestic
Monetary Policy of the Committee on Banking,
Finance and Urban Affairs, U.S. House of Representatives, July 18, 1991

SUMMARY ASSESSMENT OF THE BOARD'S
FINANCIAL CONTROL SYSTEM REPORT

I am pleased to respond to your request to
provide a brief review of the points made in our
June 7, 1991, assessment of Governor Angell's
report to the subcommittee entitled "System and
Procedures for Financial Supervision and Control," and to outline our plans for examining the
Board's systems of oversight and supervision of
Federal Reserve Banks.




The subcommittee asked that the Board's Office
of Inspector General evaluate Governor Angell's
report to the subcommittee by assessing the
policies and procedures it describes and identifying any particular weaknesses or strengths in
the System's design for auditing and controlling
its own financial operations. Our assessment,
which I request be made a part of this hearing
record, noted the extensive internal controls
present in the Federal Reserve's processes but
identified two major points of possible concern.
First, we noted that the interactive participation of the Board in program management of

Statements to the Congress

Reserve Bank financial activities may be beneficial from a day-to-day management perspective
but may also present a potential conflict of interest from an oversight perspective: That is, participation by Board staff members in the management of Federal Reserve Bank
financial
operations could hinder their objective oversight
or evaluation of those operations.
Second, we concluded that while the Board
has an extensive internal control structure designed to prevent and detect fraud and abuse in
Reserve Bank valuables handling, it does not
have a specific program to prevent, detect, and
investigate specific cases of suspected or actual
fraud or abuse in other areas. Indeed, having
such a program in the same oversight office
would, in our opinion, cause some of the same
concerns about the potential conflict of interest
expressed in our first point.
The Inspector General Act gives my office the
authority to audit and investigate all aspects of
the Board's activities, which, by definition, include the Board's oversight of the Federal Reserve Banks. We can, therefore, review and
report on those areas of Board and Bank activity
that I have characterized as interactive participation by Board and Bank personnel to determine if
the potential conflict of interest previously cited
actually exists and can investigate allegations of
wrongdoing and the appropriateness of investigations conducted by Board and Bank personnel.

PLANS FOR EXAMINING THE BOARD'S
SYSTEMS OF OVERSIGHT
Our assessment of Governor Angell's report to
the subcommittee includes an outline of the various mission areas of the Federal Reserve—monetary and economic policy, supervision and regulation of financial institutions, system policy
direction and oversight (the area primarily addressed by Governor Angell's report), and administration—and the resources associated with those
mission areas. In developing our five-year strategic plan, we identified topics of interest within
each of these areas for specific audit attention,
leaving investigations to be more reactive to allegations of specific wrongdoing that could come




723

directly or through our nationwide hotline, from
managers and staff, and from audit findings.
Although a risk analysis that we are developing
could lead us to amend our priorities, we expect
to devote about 25 percent of our resources to the
area largely defined by Governor Angell's report
over the next few years, with about 40 percent of
our audit resources to be devoted to the mission
area of supervision and regulation of financial
institutions and the remainder of our resources to
be about equally divided between the mission
areas of monetary policy and administration.
We began our program to evaluate the effectiveness of the oversight of the Federal Reserve
Banks with reviews of the operations of the
Board's Division of Federal Reserve Bank Operations and Payment Systems and the Board's
Office of Federal Reserve Bank Activities. We
submitted those reports to the subcommittee last
year. We have just begun an audit of the process
used to examine the Federal Reserve Banks'
financial operations, and our 1991 audit plan
provides for an audit of the Board's oversight of
the Reserve Bank budget process and an audit of
Federal Reserve Bank branch building construction costs. We expect to then address the oversight of automation planning, communication
planning, payment system risk, securities and
fiscal services, cash review, check payments,
electronic payments, financial accounting, building planning, protection and contingency planning, General Auditor functions, and other areas
outlined in Governor Angell's report.
As for the other areas, we are currently conducting a nationwide audit of the Federal Reserve's commercial bank examiners' adherence
to conflicts of interest policies and procedures;
will release this week our report on the Federal
Reserve's development of a national information
center that contains a database of financial, organizational structure, and supervisory information on the nation's financial institutions; have
completed operations reviews of the Board's
monetary policy divisions; have completed the
audits of the Board's new compensation system;
and are proceeding with other audits identified in
our strategic and annual plans.
This concludes my formal comments. I would
be pleased to address any questions you may
have.
•

724

Federal Reserve Bulletin • September 1991

Statement submitted by the Board of Governors
of the Federal Reserve System to the Committee
on Ways and Means, U.S. House of Representatives, July 29, 1991
We are pleased to present the views of the
Federal Reserve Board on the proposed Fair
Trade in Financial Services Act of 1991. Given
our direct responsibilities with respect to the
financial services industry and our desire to
ensure a healthy and efficient environment for
the provision of financial services, the Federal
Reserve has a special interest in this legislation.
The proposed act has two major elements that
are relevant to a discussion of the policy issues
presented by the proposed legislation. First, the
Secretary of the Treasury would be required to
submit to the Congress every two years a report
identifying those countries that do not offer national treatment to U.S. banks, securities brokers and dealers, or investment advisers. A
country offers national treatment to foreign firms
if it offers "the same competitive opportunities
(including effective market access)" as are available to their domestic firms. In the case of the
country where a significant failure to accord
national treatment is found, the Secretary of the
Treasury must, in general, enter into negotiations
with the country to end the discrimination. The
Secretary may, at his discretion, publish in the
Federal Register a determination that a country
does not give national treatment; if he does so,
regulatory agencies would have authority to use
such a determination as a basis for denying
applications by financial institutions from that
country.
Second, if the Secretary of the Treasury has
published in the Federal Register a determination with respect to a country, institutions from
that country that are already operating in the
United States may not commence "any new line
of business" or conduct business from a "new
location" without obtaining prior approval from
the appropriate regulators. This provision would
apply to new U.S. activities or U.S. offices for
which no approval process is currently required
for either domestic or foreign banks. For example, a foreign-owned U.S. bank may decide to
begin to offer consumer mortgage lending or
investment advisory services. Currently, no ap-




plication for regulatory approval is required.
However, under the proposed act such activities
would be viewed as "new lines of business"
requiring regulatory approval.
While we share the objectives of this proposed
legislation, in that we too would like to encourage other countries to liberalize their financial
markets, we think that the legislation itself is
unwarranted and would have unfortunate consequences. It would reject national treatment—a
policy that has been fundamental to the U.S.
approach to the international operations of financial organizations. This policy should be preserved.
The principle of national treatment was established as U.S. policy with respect to foreign
banks by the International Banking Act of 1978.
Despite some individual legislative initiatives in
recent years, it is acknowledged by virtually all
major industrial countries as the principle upon
which regulation of the international operations
of banks ought to be based. Over many years the
U.S. government has assumed a leadership role
in building a consensus around this concept. At
home, our policy of national treatment seeks to
ensure that foreign and domestic banks have fair
and equal opportunity to participate in our markets. The motivation is not merely a commitment
to equity and nondiscrimination, though such a
commitment in itself is worthy. More fundamentally, the motivation also is to provide consumers
of financial services with access to a deep, varied, competitive, and efficient banking market in
which they can satisfy their financial needs on
the best possible terms.
Our policy of national treatment has served
this country well. The U.S. banking market, and
U.S. financial markets more generally, are the
most efficient, most innovative, and most sophisticated in the world. It is not a coincidence that
our markets are also among the most open to
foreign competition. Foreign banks, by their
presence and with the resources they bring from
their parents, make a significant contribution to
our market and to our economic growth; they
enhance the availability and reduce the cost of
financial services to U.S. firms and individuals,
as well as to U.S. public sector entities.
The proposed act would replace the U.S. policy of national treatment with a policy of recip-

Statements to the Congress

rocal national treatment. The United States
would be saying that we are prepared to forgo the
benefits of foreign banks' participation in our
market if U.S. banks are not allowed to compete
fully and equitably abroad.
Based on experience to date, the Federal Reserve feels strongly that there are better ways to
encourage other countries to open their markets.
Relying on market forces to induce liberalization
may actually be the most potent force. It is well
understood that any country that wants to have a
financial market with sufficient international stature to compete with New York and London must
liberalize and open its market. Many countries,
including notably—but not only—Japan and Germany, are moving inexorably in that direction.
Nevertheless, we have not relied only on such
a passive strategy, however successful such a
strategy ultimately may be. In 1979, after the
International Banking Act, the Treasury Department, with the help of other agencies including
the Federal Reserve, prepared its first National
Treatment Study, which has been updated several times, most recently last year, and which
will be prepared regularly in the future, pursuant
to the Omnibus Trade and Competitiveness Act
of 1988. Based on the findings of those reports,
the Treasury Department has engaged in bilateral
talks with several countries, including Japan,
partly as a consequence of which we have seen a
substantial degree of liberalization in foreign
financial markets.
Beyond those efforts, the Federal Reserve and
others urged countries of the European Community (EC) strongly and with some success to
soften the reciprocity provisions in their proposed Second Banking Directive. We have participated in a range of committees at the Bank of
International Settlements in Basle and at the
Organisation for Economic Co-operation and Development in Paris, where work has been aimed
in part at establishing the legal, supervisory, and
regulatory conditions that are a precondition for
ensuring a "level playing field." In addition, the
Federal Reserve has joined others in the U.S.
government in working vigorously to reach a
meaningful agreement on trade in financial services within the Uruguay round of multilateral
trade negotiations.
There is one other issue that we would bring to




725

the committee's attention. "Grandfathering" is a
practice widely accepted internationally as a
means of protecting investment in existing foreign banking operations at a time of statutory
change. U.S. operations of foreign banks were
grandfathered in the International Banking Act.
With respect to foreign operations of U.S. banks,
the Federal Reserve, along with others in the
U.S. government and the U.S. financial industry,
objected strenuously when the European Community was considering the elimination of grandfather rights for foreign banks, including U.S.
banks, operating in Europe; in the end the EC
preserved those rights. Consequently, European
subsidiaries of U.S. banks may continue to conduct business and expand their operations on a
national treatment basis.
By telling existing foreign-owned banks in the
United States that the rules and procedures that
have applied equally to them and to all other
banks operating in the United States now apply
only to U.S.-owned banks, we would be denying
national treatment to foreign banks. We would
run the risk of introducing instability and discouraging foreign investment in our markets.
Moreover, we would be inviting almost certain
retaliation.
In conclusion, the Federal Reserve would like
to emphasize that we have witnessed substantial
liberalization and structural reform in financial
markets abroad over the past decade. Like members of the Congress, we too would like to see
further progress. However, we must recognize
also that U.S. markets are not as open as other
countries would like, or for that matter as free as
many in the United States, including the Federal
Reserve, would like.
National treatment is an important concept,
but in its implementation it is also an elusive one.
Because it is enormously difficult to apply national treatment in a world in which the structures of banking markets in various countries
differ significantly, it is tempting to seek what
may appear to be direct, clear-cut solutions.
However, lawmakers in each country, including
the United States, must balance considerations
of competitive equity with other legitimate concerns. We cannot insist that other countries
adopt our structures any more than we can let
others dictate to us.

726

Federal Reserve Bulletin • September 1991

It could prove to be a costly mistake if we
jeopardize the gains we have made and are
continuing to make in improving our own markets, in reforming markets abroad, and in gain-

ing access for U.S. financial firms to those
markets, for the sake of trying, probably in
vain, to force others to adhere to our own
timetable.
•

Statement of Franklin D. Dreyer, Senior Vice
President,
Supervision
and Regulation
and
Loans, Federal Reserve Bank of Chicago, before
the Subcommittee on Policy Research and Insurance of the Committee on Banking, Finance and
Urban Affairs, U.S. House of
Representatives,
July 31, 1991

having relatively homogeneous characteristics
into pools that are transferred to a trust or
special, limited-purpose corporation. This entity then issues securities backed directly by the
pooled assets, and the principal and interest
payments of these underlying assets flow directly through to the holders of the securities.
The holders of these securities are essentially in
the same position as if they owned the underlying assets directly. The trust or corporation
that issues the securities is typically established
by the organization that generated and pooled
the underlying assets.
Over time, more complex securitization structures have evolved. These structures, originally
issued in the form of collateral mortgage obligations (CMOs) and now issued as real estate mortgage investment conduits (REMICs), aggregate
and then redirect the principal and interest cash
flows coming from the underlying assets and assign payment priorities to different classes of
investors. These more complex structures have
been developed to provide some classes of investors with a security that has a more certain
maturity or average life and thus a more predictable overall yield. However, by providing greater
certainty to some investors, the maturity and
overall yield to other classes of investors become
less certain. The introduction of these features,
while increasing the complexity of asset-backed
structures, has enhanced their marketability to
different types of investors by appealing to their
differing investment objectives and risk preferences.
Regardless of the type of structure, almost all
securitization programs involve the use of a
servicer. The servicer is responsible for collecting interest and principal payments on the loans
or other assets in the underlying pool and for
transmitting these funds to a trustee, who, in
turn, passes them on to investors. A servicer
may be the originator of the pooled asset or
another financial institution that has acquired the

I thank you for this opportunity to discuss asset
securitization as it relates to financial institutions. As you are aware, securitization of assets
is one of several innovations changing the nature
and complexity of our financial system. As with
other innovations, an understanding of the benefits and risks involved in securitization is necessary to evaluate properly the role that it is
increasingly playing in our financial markets.
Staff members at the Federal Reserve have been
carefully reviewing securitization to ensure that
this process will not pose undue risk for depository institutions and their holding companies.

THE NATURE OF SECURITIZATION
Securitization is a process that transforms illiquid assets into marketable securities. The process has come to be considered a normal activity
for depository institutions as well as for mortgage
banks—indeed, the securitization of loans into
tradable securities and subsequent sale of these
securities now serve as an important substitute
for retaining loans and funding these with bank
deposits. Securitization activities started in the
1970s. Fostered by certain government and government-related agencies, primarily to support
the housing industry, mortgage-related assets
were the first instruments to be securitized. Since
then, the economics of the process has sustained
its momentum as other types of assets have
recently been securitized.
Asset securitization, in its simplest form,
consists of aggregating loans or similar assets




Statements to the Congress

right to service the underlying assets on behalf of
the investor for a fee.
Another aspect of securitization is credit enhancement. This procedure involves use of a
guarantor to make sure that principal and interest
payments will be received by investors on a
timely basis, even if the servicer does not collect
these payments from the underlying obligors.
One form of credit enhancement is a recourse
provision, or guarantee, that requires the originator to cover any losses up to an amount
contractually agreed upon. Some asset-backed
securities, such as those backed by credit card
receivables, typically use a "spread account" as
a credit enhancement. A spread account is actually an escrow account whose funds are derived
from a portion of the spread between the interest
earned on the assets in the underlying pool and
the lower interest paid on securities issued by the
trust.
Credit enhancement may also be provided
through overcollateralization when the value of
the underlying assets in the pool exceeds the face
value of the securities issued against it. Seniorsubordinated security structures also provide
credit enhancement but generally benefit only the
senior class. Other forms of credit enhancement
include standby letters of credit or surety bonds
from third parties. Asset-backed securities other
than those securities supported by pools of mortgages generally depend on some form of credit
enhancement provided by the originator or third
party to insulate the investor from some or all of
any credit losses. Issues of mortgage-backed
securities can also be backed by the Government
National Mortgage Association (GNMA), a government agency backed by the full faith and
credit of the U.S. government, or by the Federal
National Mortgage Association (FNMA) or the
Federal Home Loan Mortgage Corporation
(FHLMC), which are government-sponsored
agencies.

THE SECURITIZATION

MARKET

Asset securitization has grown substantially
over the past few years. Residential mortgagebacked, pass-through securities are the largest
segment of the asset-backed securities market.




727

They have increased 290 percent since 1984 to
nearly $1.1 trillion by the end of 1990. As of
year-end 1990, approximately 40 percent of
outstanding one- to four-family residential
mortgage debt has been securitized. Furthermore, over the same period, securities backed
by other types of assets, such as credit card
receivables, automobile loans, student loans,
and other types of consumer loans, have also
been created. The annual issuance of securities
backed by assets other than mortgages has
increased from slightly more than $1 billion in
1985 to almost $43 billion by the end of 1990. As
of year-end 1990, approximately 10 percent of
consumer debt had been securitized.
Generally, the biggest purchasers of assetbacked securities have been banks, savings and
loan associations, life insurance companies,
and pension funds. Based on third-quarter 1990
data, commercial banks held approximately
19.1 percent of the total mortgage-related securities outstanding. Savings and loan associations held 14.5 percent, life insurance companies held 14.3 percent, pension funds held 7.3
percent, and mutual funds held 4.5 percent,
with the remaining amount held by other investors.
From the beginning, banking organizations
have been involved in the securitization process
as originators and securitizors of residential
mortgages. Over the past few years, they have
ventured into securitization of other types of
assets, such as credit card receivables and other
types of consumer loans. Also, many banking
organizations have increased their reliance on
securitization for funding, have acted as servicers or trustees for securitized issues, and
have increased their holdings of asset-backed
securities. More recently, as noted above,
banking organizations have begun to purchase
asset-backed securities or derivative instruments for investment or hedging purposes.
Banking organizations have found securitization an attractive way to reduce interest rate
risk, and securitization provides an additional
source of funding, generally at a lower cost than
other funding sources. Securitization helps reduce interest rate risk since the assets are
removed from the selling institution's books.
This risk is passed on to the investors, and, at

728

Federal Reserve Bulletin • September 1991

the same time, the cash received in the asset
sale raises funds for further lending activities.
Furthermore, the fees earned by banking organizations as servicers or trustees of assetbacked securities have provided a source of
noninterest income.
Banking organizations may also seek to securitize assets to accomplish several other objectives. First, in selling, rather than holding,
assets they have originated, banking organizations are able to lower both their reported
liabilities and assets, thereby reducing reserve
and capital requirements and deposit insurance
premiums. This occurs because traditional
lending activities are generally funded by deposits or other liabilities, and both the assets
and related liabilities are reflected on the balance sheet. Deposit liabilities must generally
increase to fund additional loans.
In contrast, so long as there is no recourse
back to the banking organization that originated
the assets, the securitization process generally
does not increase on-balance-sheet liabilities in
proportion to the volume of loans or other assets
generated. When banking organizations securitize their assets and these transactions are
treated as sales—that is, there is no recourse
back to the banking organization that originated
the loans—both the assets and the related assetbacked securities (that is, liabilities) are not
reflected on the banking organization's balance
sheet. The cash proceeds from the securitization
transactions are generally used to originate or
make additional loans for securitization, and the
process is repeated. Thus, for the same volume
of loan originations, securitization results in
lower reported assets and liabilities when compared with traditional lending activities.
As noted above, banking organizations can
earn fee income from servicing the loans that
they originated and sold. Additional advantages
include faster recognition of fee income than
normal. Previously deferred loan fees related to
assets that are sold, and any excess servicing
fees created by the asset securitization process
can, under generally accepted accounting principles (GAAP), be recognized at the time of sale
rather than be amortized over the life of the
asset as would be the case if it was held on the
bank's books.




RISKS OF SECURITIZATION
While clear benefits accrue to banking organizations that engage in securitization activities as
well as to those that invest in asset-backed
securities, these activities have the potential of
increasing the overall risk profile of the banking
organization if they are not carried out in a
prudent manner. For the most part, the risks that
financial institutions encounter in the securitization process are identical to those that they face
in traditional lending transactions. These involve
credit risk, concentration risk, operational risk,
liquidity risk, and interest rate risk, including
prepayment risk. However, since the securitization process separates the traditional lending
function into several limited roles, such as originator, servicer, credit enhancer, trustee, and
investor, the types of risks that a banking organization may encounter will differ depending on
the role it assumes.
As with direct investments in the underlying
assets, investors in asset-backed securities will
be exposed to credit risk, that is, the risk that
obligors will default on principal and interest
payments. Although investors in most assetbacked securities are largely shielded from credit
risk because of government-related guarantees
and other credit enhancements, investors are still
subject to the risk that the various parties, for
example, the servicer or credit enhancer, in the
securitization structure will be unable to fulfill
their contractual obligations. Moreover, investors may be susceptible to concentrations of risks
across various asset-backed security issues
through overexposure to an organization performing various roles in the securitization process or as a result of geographic concentrations
within pools of assets.
Furthermore, since the secondary markets for
certain asset-backed securities may be thin, investors may encounter greater-than-anticipated
difficulties when seeking to sell their assetbacked securities. Additionally, investors are
still subject to interest rate risk, which can vary
greatly depending on the nature of the individual
security they hold. Indeed, while certain security
classes of a REMIC are structured so that investors are subject to substantially less interest rate
risk than that associated with the underlying

Statements to the Congress

mortgages, other classes of the same REMIC are
necessarily structured so that these investors are
exposed to considerably greater interest rate
risk. Banking organizations that provide credit
enhancements to asset-backed security issues
are, of course, subject to the credit risk inherent
in the assets they are guaranteeing. In addition,
as credit enhancer, a banking organization may
be exposed to risk stemming from undue concentrations of assets coming from a limited geographical area or from an originator that may
have allowed its own credit standards to deteriorate.
Also, to generate the higher volume of receivables necessary to maintain or expand a securitization program, a banking organization that
originates the loans to be securitized may consciously or unconsciously lower its credit standards. Conversely, a banking organization that
issues asset-backed securities may be subject to
pressures to sell only their best assets, thus
reducing the quality of their own loan portfolios.
Banking organizations that service the loans
underlying asset-backed securities must ensure
that their policies, operations, and systems will
not permit breakdowns that may lead to defaults.
The servicer, whether it be the originator of the
assets or a third-party servicer, has a responsibility to perform, which includes having to undertake reasonable collection efforts to collect
delinquent payments. In this regard, the collection costs that an anticipated volume of problem
assets may require could substantially raise the
overall costs of operations for the servicer and
even exceed the related fee income. Furthermore, if a servicer fails to perform properly, the
trustee may take away its right to continue to
service assets and place those servicing rights
with another servicer, which would, of course,
collect the servicing fees.
Beyond the above operational risks, certain
servicing contracts, such as those entered into
with GNMA, FNMA, and FHLMC, increasingly contain recourse provisions that subject
the servicer to direct credit risk. Issuers may
face pressures to repurchase securities backed
by loans or leases that they have originated but
that have deteriorated and become nonperforming, thus providing "moral recourse" for the
securities.




729

REGULA TOR Y RESPONSE
In view of the increasing involvement of banking organizations in the asset securitization
process and the desire to foster prudent banking
practice with respect to this activity, the Federal Reserve and the other banking regulators
have taken several steps over the years to
address securitization activities. These steps
include the following: (1) regulatory reporting
requirements that, in general, permit banks to
take assets they have originated and securitized
off their balance sheets only when they have
" s o l d " those assets without recourse; (2) the
issuance in 1988 of an interagency supervisory
policy statement to address investments in
stripped, asset-backed securities and residual
interests and a subsequent proposed revision
that will address "high risk" collateralized
mortgage obligations; (3) development of examination guidelines addressing various aspects of
the securitization process; and (4) development
of the risk-based capital framework.
In April 1988, the three federal banking agencies issued a joint policy statement advising
banking organizations on the selection of securities dealers and unsuitable investment practices. In addition, this policy also discussed
several types of instruments, such as stripped
mortgage-backed securities and residual interests in pools of securitized assets, with very
volatile prices and high-risk characteristics due
to extreme sensitivity to interest rate risk. The
Board policy statement indicated that these
investments may be unsuitable for most institutions. The three banking agencies, along with
the Office of Thrift Supervision (OTS), are
currently updating the 1988 policy statement to
address other "high-risk" classes of CMOs and
REMICs. The high-risk nature of these securities stems from the manner in which the embodied interest rate risk affects the cash flows to
investors resulting in especially volatile price
movements.
Examiner guidelines on asset securitization
have been established for use by the Federal
Reserve's examiners. These guidelines provide
a structured framework for assessing the risks
associated with the securitization process at
banking organizations and for determining that

730

Federal Reserve Bulletin • September 1991

banking organizations have implemented certain prudential policies and procedures in this
area. In accordance with these guidelines, examiners are to determine the following:
• Securitization activities are integrated into
the overall strategic objectives of the organization.
• Sources of credit risk are understood and
properly analyzed and managed, without excessive reliance on credit ratings by outside agencies.
• Credit, operational, and other risks are
recognized and are addressed through appropriate policies, procedures, management reports,
and other controls.
• Possible sources of structural failure in securitization transactions are recognized, and the
organization has adopted measures to minimize
the impact of such failures should they occur.
• The organization is aware of the legal risks
and uncertainty regarding various aspects of securitization.
• Concentrations of exposure in the underlying
asset pools, in the asset-backed securities portfolio, or in the structural elements of securitization transactions are avoided.
• All sources of risk are evaluated at the inception of each securitization activity and are monitored on an ongoing basis.
Special seminars on asset securitization are
conducted for senior Federal Reserve examiners,
and securitization is a regular topic in the System's examiner schools. In-depth coverage of
securitization issues will continue to be part of a
regular examiner training program.
Capital requirements play an important role in
the supervision of banking organizations. As a
general, long-standing rule, bank regulatory
agencies have maintained a basic tenet that when
there is risk associated with a financial arrangement, capital should be held against that risk.
The risk-based capital framework assigns assets
and off-balance-sheet items to various broad risk
categories, depending on the level of credit risk
associated with that asset.
The risk-based capital framework has three
main features that will affect the asset securitization activities of banking organizations. First,
the framework assigns risk weights to loans,
asset-backed securities, and other assets re-




lated to securitization. Second, bank holding
companies that transfer assets with recourse to
the seller as part of the securitization process
are required under the risk-based capital guidelines to hold capital against their off-balancesheet credit exposures. Under GAAP, such
transactions may be treated as sales that remove the assets sold with recourse from the
bank holding company's books. Third, banking
organizations that provide credit enhancement
to asset securitization issues through standby
letters of credit or by other means must hold
capital against the related off-balance-sheet
credit exposure.
The risk weights assigned to asset-backed
securities that banking organizations hold as
investments depend on the issuer and whether
the assets that comprise the collateral pool are
mortgage related assets. Asset-backed securities issued by a trust or by a single-purpose
corporation and backed by nonmortgage assets
are typically assigned a risk weight of 100
percent.
Mortgage-backed, pass-through
securities
guaranteed by GNMA are risk weighted at
0 percent because GNMA is explicitly backed
by the full faith and credit of the United States.
Mortgage securities, such as participation
certificates and CMOs issued by FNMA or
FHLMC, are risk weighted at 20 percent because
they are government-sponsored agencies that
carry only the implied backing of the United
States.
However, several types of securities issued
by FNMA and FHLMC, such as residual interests and CMO classes that absorb more than
their share of loss, are excluded from the lower
risk weight and slotted in the 100 percent riskweight category because of their extreme price
volatility.
A privately issued, mortgage-backed security
that meets certain criteria is considered either a
direct or indirect holding of the underlying mortgage-related assets and is assigned to the same
risk category as those assets (for example, the
assets may be U.S. government agency securities, U.S. government-sponsored agency securities, FHA- and VA-guaranteed mortgages, and
conventional mortgages). However, under no
circumstances will a privately issued, mortgage-

Statements to the Congress

backed security be assigned to the 0 percent
risk-weight category.

NEW PRODUCT

systems. In addition, significant policies and procedures should be approved and reviewed periodically by the organization's Board of Directors.

DEVELOPMENT

In the past few years, securitization of assets has
become an increasingly complex activity. Product development in this field is being carried out
at a very fast pace because of (1) computer
models that assist in redirecting the cash flows
from the underlying assets in a number of different directions, (2) investor demand for more
specialized products to meet their individual
needs, (3) the marketplace growth with respect to
the number of originators and investors, and (4)
the globalization of the asset-backed securities
markets.
The increasing complexity makes it potentially
more difficult to determine what the risk is and
who has it. We expect banking organizations,
when they participate in securitization in any
capacity, to ensure that the activities are clearly
and logically integrated into the overall strategic
objectives of the organization. Appropriate policies, procedures, and controls should be established by a banking organization before participating in asset securitization. Controls should
include well-developed management information




731

SUMMARY
Securitization has resulted in several benefits for
banking organizations. It improves funding and
enhances liquidity for the banking system, particularly in the housing and consumer sectors. It
has also brought new investors into the marketplace because of the diversity of the securities
offered. Securitization of assets has also helped
banks to fund their portfolios.
But there are also potential drawbacks and
risks associated with asset securitization. The
complexity of risks in this process, coupled with
the increasing pace of innovation, could make it
difficult for banking organizations to liquidate
some types of securities. Moreover, increasingly
complex recourse or guarantee arrangements can
make it more difficult to monitor the risks associated with this activity. In addition, adverse risk
selection can weaken the credit underpinnings of
the securitization process. Bank regulators must
continue to carefully monitor the securitization
processes now under way.
•

732

Announcements
RECESS APPOINTMENT
OF ALAN GREENSPAN AS CHAIRMAN
OF THE BOARD OF GOVERNORS

REVISED LISTS OF OTC MARGIN
AND FOREIGN MARGIN STOCKS
NOW
AVAILABLE

President Bush on August 9, 1991, announced
the recess appointment of Alan Greenspan as
Chairman of the Board of Governors of the
Federal Reserve System, effective August 10,
1991. Following is the text of the White House
statement:

The Federal Reserve Board published on July 26,
1991, a revised List of Marginable OTC Stocks
(OTC List) for over-the-counter (OTC) stocks
that are subject to its margin regulations. Also
published was the List of Foreign Margin Stocks
(Foreign List) for foreign equity securities that
are subject to Regulation T (Credit by Brokers
and Dealers). The lists are effective August 12,
1991, and supersede the previous lists that were
effective May 13, 1991.
The Foreign List indicates those foreign equity
securities that are eligible for margin treatment at
broker-dealers. Margin treatment of foreign equity securities was made possible by a 1990
amendment to Regulation T. Twenty companies
were added to the Foreign List, bringing the total
number of foreign equity securities to 295. There
were no deletions from the Foreign List.
The changes that have been made to the revised OTC List, which now contains 2,714 OTC
stocks, are as follows:

The President today announced that he will recess
appoint Alan Greenspan as Chairman of the Board of
Governors of the Federal Reserve System, effective
August 10, 1991.

APPOINTMENT OF DAVID W. MULLINS,
AS VICE CHAIRMAN OF THE
BOARD OF GOVERNORS

JR.,

President Bush, on January 14, 1991, announced
his intention to appoint Governor David W.
Mullins, Jr., as Vice Chairman of the Board of
Governors, succeeding Manuel H. Johnson, who
resigned effective August 3,1990. Governor Mullins was subsequently confirmed by the Senate
on July 11, 1991, and took the oath of office on
July 24, 1991, for a four-year term.
A copy of the White House announcement
follows:

STOCKS

January 14, 1991

• One hundred eleven stocks have been included for the first time, 106 under national
market system (NMS) designation.
• Forty-seven stocks previously on the list
have been removed for substantially failing to
meet the requirements for continued listing.
• Thirty-four stocks have been removed for
reasons such as listing on a national securities
exchange or involvement in an acquisition.

The President today announced his intention to nominate. . . David W. Mullins, Jr., of Arkansas, to be
Vice Chairman of the Board of Governors of the
Federal Reserve System for a term of four years. He
would succeed Manuel H. Johnson. Since May 1990,
Dr. Mullins has served as a member of the Board of
Governors of the Federal Reserve System in Washington, D.C.

The OTC List is published by the Board for the
information of lenders and the general public. It
includes all OTC securities designated by the
Board pursuant to its established criteria as well
as all OTC stocks designated as NMS securities
for which transaction reports are required to be
made pursuant to an effective transaction report-

The White House
Office of the Press Secretary




Announcements

ing plan. Additional OTC securities may be designated as NMS securities in the interim between
the Board's quarterly publications and will be
immediately marginable. The next publication of
the Board's list is scheduled for November 1991.
In addition to NMS-designated securities, the
Board will continue to monitor the market activity of other OTC stocks to determine which
stocks meet the requirements for inclusion and
continued inclusion on the OTC List.

733

10. Ratios of tier 1 and tier 2 capital to risk-adjusted
assets, by size of bank, 1990:4*
Percent

ERRATA

Federal Reserve Bulletin
In chart 6 of the July 1991 Bulletin article,
"Recent Developments Affecting the Profitability and Practices of Commercial Banks," page
512, the plotting is incorrect; and in chart 10 of
the article, page 515, the labels for tier 1 and tier
2 are reversed. The corrected charts are shown
here.
6. Loan losses and delinquencies at medium
and large banks, by type of loan1
Percent

Percent

1. See text discussion for definitions of capital tiers and risk
adjustments.

Annual Report
On page 254 of the Board's 77th Annual Report,
1990, the entry for the merger of Texas Bank
with another institution is in error. The entry
should read,

Commercial and industrial

Texas Bank, Weatherford, Texas, to merge
with Citizens National Bank, Denton, Texas.

PROPOSED ACTION
The Federal Reserve Board, along with the
Comptroller of the Currency and the Federal
Deposit Insurance Corporation, issued on July 3,
1991, a request for public comment on the supervisory definition of highly leveraged transactions
(HLTs). Comments were due to the Board by
August 26, 1991.

CHANGES IN BOARD

1. Percentages are annual rates of average amount outstanding,
seasonally adjusted. Losses are net of recoveries; delinquent loans are
those in nonaccrual status plus those accruing interest and at least
thirty days past due.




STAFF

The Federal Reserve Board announced the retirement of Robert F. Gemmill, Staff Adviser in
the Division of International Finance, effective
August 2, 1991.

734

Federal Reserve Bulletin • September 1991

The Board also announced, effective August
7, 1991, a revision in the functions and reporting
relationships of the Office of the Staff Director
for Federal Reserve Bank Activities and in the
reporting relationships of the Division of Reserve Bank Operations and Payment Systems.
The Staff Director and his staff will be transferred to the Office of Board Members; and Mr.




Theodore E. Allison is appointed Assistant to
the Board for Federal Reserve System Affairs.
The Director of Reserve Bank Operations and
Payment Systems, Mr. Clyde H. Farnsworth,
will report directly to the Board of Governors
through the Reserve Bank Activities Committee. The Office of the Staff Director has been
disestablished.

735

Record of Policy Actions
of the Federal Open Market Committee
MEETING HELD ON MAY

14,1991

Domestic Policy Directive
The economic information reviewed at this meeting
was mixed, but on balance it suggested that business
activity might be in the process of stabilizing after
declining in the fourth and first quarters. Retail sales
were little changed in April, and housing markets
apparently strengthened in many areas; however,
business fixed investment remained weak, and some
liquidation of inventories seemed to be continuing.
Production held steady in April. Nonfarm payroll
employment continued to decline but by much less
than in previous months. Broad measures of prices
and wages pointed to moderating inflation pressures,
although a number of special factors tended to
obscure underlying inflation trends.
Total nonfarm payroll employment fell further in
April, but the reduction was substantially less than
the declines in the latter part of 1990 and the early
months of 1991. The job losses included much
smaller decreases in manufacturing and construction; employment in wholesale and retail trade also
continued to slide, and the loss more than offset a
further gain at service establishments. The civilian
unemployment rate declined somewhat in April to
6.6 percent.
After dropping sharply from October through
March, industrial production was about unchanged
in April. An upturn in the production of motor
vehicles provided an important boost to industrial
activity, and output of other consumer durable goods
also edged up. These gains offset further declines in
the production of consumer nondurable goods and
business equipment. Industrial materials, while
displaying a mixed pattern, continued to decline as a
group. Capacity utilization rates generally fell
further in April, and operating rates for most industry
groups were at their lowest point in the current
recession.
Real business fixed investment fell sharply in the



first quarter, with outiays for both equipment and
structures decreasing substantially. The plunge in
expenditures for equipment included large declines
in spending for computers, motor vehicles, and
many types of industrial equipment; in contrast,
oudays for aircraft were markedly higher. Recent
data on orders received by domestic manufacturers
pointed to additional cutbacks in spending for most
types of equipment. The sizable reduction in firstquarter expenditures for nonresidential structures
followed an even larger decline in the fourth quarter.
Forward-looking indicators of nonresidential construction suggested continuing weakness. Nonfarm
business inventories fell substantially further in the
first quarter, largely as a result of continuing
liquidation of stocks of motor vehicles. In March,
housing starts lost part of their sharp February gain.
However, more recent anecdotal reports and surveys
of homebuilders suggested that reduced mortgage
rates were continuing to stimulate consumer interest
in purchasing homes.
Retail sales, which had risen substantially in
February after sizable declines in previous months,
were now indicated to have increased somewhat
further in March and to have changed little in April.
The improvement in retail sales was led by the
durable goods category. Unit sales of motor vehicles
rose in March but subsequently softened again in
April. After rebounding earlier, consumer sentiment
was reported to have declined slightly in April.
Producer and consumer prices changed little in
March and April, partly because of some additional
reduction in energy prices. Excluding their food and
energy components, both producer and consumer
prices were up considerably less in the latest two
months than in previous months. Apparently reflecting an increase in the minimum wage, average
hourly earnings rose at a faster rate in April than in
earlier months of the year. In the first quarter, hourly
compensation as measured by the employment cost
index was boosted by special factors that included an
increase in the wage bases for social security and
medicare taxes.

736

Federal Reserve Bulletin • September 1991

The nominal U.S. merchandise trade deficit
narrowed in February, and for January-February
combined the deficit was considerably below its
average rate in the fourth quarter. The improvement
reflected a significant decline in the average price of
oil imports, a lower volume of non-oil imports, and
further expansion in the quantity of exports. In the
first quarter, economic activity appeared to have
continued to grow at a sluggish pace in the major
foreign industrial nations as a group.
At its meeting on March 26,1991, the Committee
adopted a directive that called for maintaining the
existing degree of pressure on reserve positions and
that contained no presumption regarding the likely
direction of possible intermeeting adjustments.
Accordingly, the directive indicated that somewhat
more or somewhat less pressure on reserve positions
might be appropriate during the intermeeting period
depending on progress toward price stability, trends
in economic activity, the behavior of the monetary
aggregates, and developments in foreign exchange
and domestic financial markets. The contemplated
reserve conditions were expected to be consistent
with some reduction in the growth of M2 and M3
from accelerated rates in previous months to annual
rates of about 5V2 and 3 ¥2 percent respectively over
the three-month period from March through June.
For much of the period after the Committee
meeting, open market operations were directed
toward maintaining the existing degree of pressure
on reserve positions. On April 30, in response to
indications of continuing weakness in the economy
and in the context of abating inflation pressures, the
discount rate was reduced from 6 to 516 percent and
part of this decline was allowed to show through to
the federal funds rate. Adjustment plus seasonal
borrowing averaged a bit above $150 million over
the intermeeting period, close to expected levels.
During this period, two technical increases were
made to assumed levels of borrowing to reflect a
normal upswing in seasonal credit. Federal funds
traded at an average rate just below 6 percent until
late April; the rate was under downward pressure at
times from market expectations of some further
easing in monetary policy and from unanticipated
reserve surpluses. After the announcement of the
reduction in the discount rate on April 30, federal
funds traded in a range around 5% percent.

ing period, apparently reflecting reactions to indications of continued weakness in the economy as well
as the easing in reserve conditions. Banks reduced
their prime rate from 9 to 8V2 percent in early May
after the easing of monetary policy. In long-term
debt markets, yields on Treasury bonds were little
changed on balance over the period as market
participants appeared to focus increasingly on the
prospects for very large Treasury financing needs.
In private-sector bond markets, rates edged lower
and risk premia fell further after declining sharply in
February and March. Major stock price indexes
retreated from record levels reached during April
but still rose on balance over the period. Prices of
bank debt and equities outpaced the broader indexes,
in part because bank earnings for the first quarter
were not as poor as many investors had feared.
In foreign exchange markets, the dollar tended to
weaken in reaction to the easing of U.S. monetary
policy in late April and the release of data that failed
to confirm market expectations of a quick recovery
in U. S. economic activity after the end of the Persian
Gulf war. However, some decline in short-term
interest rates abroad and reactions to political
developments in Germany and the Soviet Union
limited the downward pressure on the dollar. On
balance, the dollar was little changed over the period
in terms of the other G-10 currencies, and at the time
of this meeting it was at a level well above its lows of
mid-February.
After accelerating to a relatively rapid pace in
February and March, growth of M2 slowed appreciably in April. The slowing was somewhat greater
than had been anticipated and appeared to be related
in part to a relatively small buildup in household
deposit balances associated with a falloff in income
tax payments. The expansion of M3, which already
had moderated in March, stalled in April. Apart
from the effect of reduced M2 growth, M3 was
influenced by a runoff of large time deposits
associated with contracting credit at depository
institutions. For the year through April, M2 expanded at a rate close to the midpoint of the
Committee's annual range; M3 grew at a pace in the
upper half of the Committee's range, as the elimination of reserve requirements on nontransaction
accounts induced some foreign banks to shift funding
into the U.S. CD market.

Most short-term interest rates declined somewhat
more than the federal funds rate over the intermeet-

The staff projection prepared for this meeting
suggested that a recovery in economic activity was




Record of Policy Actions of the Federal Open Market Committee

imminent and would be fully under way by the
summer months; the expansion was projected to
continue through 1992. In the context of moderate
growth in consumer spending, the recovery would
be stimulated by an upturn in homebuilding and a
swing in coming months from decumulation to
accumulation of inventories. Capital expenditures
were expected to strengthen over time as sales trends
improved. On balance, however, the projection
pointed to a recovery that was less robust than most
of those experienced in previous postwar cycles.
Among the factors that would tend to inhibit the
recovery were the effect of unoccupied nonresidential structures on construction activity, the absence
of further significant impetus from net exports, and
the prospect of some continued constraint on the
availability of credit. Federal fiscal policy was
expected to remain moderately restrictive, and
efforts by states and localities to cope with budgetary
imbalances also promised to exert some restraint on
domestic demand. Against the background of some
persisting slack in labor and product markets, the
staff anticipated that the underlying rate of inflation
would trend down in coming quarters.
In the Committee's discussion of the economic
situation and outlook, members commented that
current business indicators continued to provide
mixed signals of the prospects for the economy but
that a variety of developments appeared to have laid
the groundwork for a recovery. Indeed, in the view
of a number of members, the economy might well be
close to its recession trough. Consumer spending,
while disappointing to many business firms, appeared to have been better maintained in recent
months than earlier reports had suggested, and
demand for housing clearly had picked up across the
nation. Overall spending had exceeded production
by a considerable margin since the fall of 1990, and
at some point the liquidation of inventories would
end and a pickup in production would be needed to
satisfy ongoing demand. On the financial side, the
stock market remained strong; households and
business firms were making progress in rebuilding
their balance sheets; and the overall condition of the
banking system appeared to be improving despite
the continuing difficulties of a number of individual
institutions. Negative factors included indications of
relatively depressed business sentiment; business
capital spending remained weak and members were
concerned that additional retrenchment in business




737

expenditures could develop, possibly induced by
further disappointment over the level of consumer
spending, that would deepen and prolong the
recession. Consumer confidence had receded after
its surge at the end of the Persian Gulf war.
Consumer and business attitudes were seen as a
critical factor bearing on the prospective performance of the economy.
Despite the uncertainties, the members generally
viewed a business recovery in the months ahead as a
reasonable expectation. At the same time, while
acknowledging the unpredictability of the economy's
momentum once the recovery got under way, many
questioned the potential strength of the anticipated
expansion. Their assessment of current conditions
did not point to major sources of stimulus to the
economy, aside perhaps from residential housing.
Some members also observed that the rebuilding of
balance sheets, to the extent that it continued, might
temper the initial strength of the recovery though it
would have obviously favorable implications for the
sustainability of the recovery over time. With regard
to inflation trends, members commented that on the
whole recent price and wage developments were
encouraging and provided a firmer basis than earlier
for projections of appreciable progress in reducing
the core rate of inflation over the next several
quarters.
Reports from around the country indicated that
business conditions were still uneven. Economic
activity appeared to have weakened somewhat
further in some regions over the course of recent
months but had changed little or shown modest gains
in other parts of the nation. Relatively weak economic conditions had limited the tax revenues of
numerous state and local governments, including
many major cities, and the imposition or the prospect
of higher taxes along with efforts to cut services
were having an unsettling influence on business and
consumer confidence in many areas. More generally,
fiscal developments, including trends in federal
spending, were expected to have a retarding effect
on the nation's economy over the balance of the year
and in 1992.
Many of the members observed that the consumer
sector might well remain relatively sluggish in the
months ahead as consumer expenditures continued
to be restrained by lagging growth in disposable
incomes and by concerns about employment prospects, debt burdens, and the health of a number of

738

Federal Reserve Bulletin • September 1991

financial institutions. With regard to the prospects
for business capital spending, members continued to
anticipate that significant strengthening would lag
an improvement in consumer spending. In this
connection, some commented that unless tangible
evidence of stronger consumer spending began to
emerge fairly soon, already gloomy business attitudes would be shaken further and could lead to an
additional cutback in business capital expenditures.
For now, the weakness in investment spending
appeared to reflect in large measure a stretching out
of major capital projects rather than widespread
cancellations. The large issuance of new equity and
long-term debt by business firms was being used at
this point mainly to shore up balance sheets rather
than to finance capital expenditures, but these
activities implied that business firms would be in an
improved position to finance more investment
spending later in response to a pickup in the demand
for their products and an ongoing need to modernize
production facilities for competitive reasons. In any
event, commercial construction activity was likely
to remain depressed for an extended period until
a severe overcapacity in office space and other
facilities in many parts of the country could be
worked down.
Several members commented that a turnaround in
inventory investment could play a significant role,
as it had historically, in helping to generate a business
recovery. The members recognized that a good deal
of uncertainty typically surrounded the outiook for
inventories, and it seemed especially difficult to
anticipate inventory behavior in the context of still
evolving business policies aimed at much tighter
inventory controls. Nonetheless, the general liquidation of inventories was not likely to persist, and its
termination would at the minimum remove a major
retarding influence on economic activity, should
appreciable rebuilding of inventories fail to materialize in the near term. Indeed, the reduction in auto
dealer inventories since late 1990 already had caused
production schedules in the motor vehicles industry
to be raised substantially for the second quarter
despite still lagging sales. A question obviously
remained regarding the prospective strength of the
buildup in business inventories once there were
relatively firm indications of a recovery in final
demand from recession levels. In one view, a pickup
in inventory investment was likely to be a key source
of expansion in the economy. A differing view




suggested a relatively limited role for inventories
in buttressing an expansion in light of the now
widespread business practice of tighter inventory
management.
Housing construction also was cited as a sector of
the economy that might make a significant contribution to a rebound in economic activity. Reports from
around the country already indicated a marked
revival in buyer interest, abetted by reduced mortgage rates and lower home prices in many areas.
Those developments had greatly enhanced the
affordability of houses. The availability of financing
to many home builders remained subject to some
uncertainty, but while lending institutions would
probably apply stricter credit standards than in
earlier years, the improving financial condition of
these lenders should induce them in the context of
strengthening housing markets generally to provide
the financing that would be needed to translate
increased home sales into more home construction.
With regard to the outlook for inflation, members
indicated that they were encouraged by recent price
and wage developments. Some observed that greater
progress had been made in recent months than they
had anticipated earlier, and many commented that
more progress in reducing the core rate of inflation
was a likely prospect over the next several quarters.
In this connection, members reported that competitive pressures remained strong and that many
business firms found it difficult to sustain price
increases. Moreover, the prices paid by business
firms for raw materials had tended to hold in a
narrow range, and many business contacts indicated
that they did not anticipate much change in such
prices during the months ahead. More generally, the
members continued to express confidence that the
ongoing effects of earlier monetary policy actions
and reduced monetary growth over an extended
period, together with the slack that had emerged in
labor and product markets, would result over time in
a lasting downward adjustment in the core rate of
inflation. In addition, the appreciation of the dollar
in foreign exchange markets would tend with some
lag to exert a favorable restraining effect on prices.
A number of members cautioned, however, that a
significant reduction in the core rate of inflation was
not yet assured, and some observed that the failure
of long-term bond yields to adjust more fully to
recessionary economic conditions and to the substantial cumulative decline in short-term interest rates

Record of Policy Actions of the Federal Open Market Committee

over the course of recent quarters might well be
indicative of continued and still considerable inflationary expectations on the part of the public.
In the Committee's discussion of a desirable policy
for the intermeeting period ahead, all of the members
indicated their support of a proposal to maintain an
unchanged degree of pressure on reserve positions.
Most also preferred to retain the current instruction
in the directive that did not bias possible intermeeting
adjustments toward ease or toward restraint. Monetary policy appeared to be properly positioned at this
point to help implement the Committee's objectives
in that it reflected an appropriate balancing of the
risks of an overly stimulative policy that would
threaten progress against inflation versus the risks of
a deepening recession or an overly delayed recovery.
A number of members commented that some further
deterioration in economic activity could not be ruled
out, and some emphasized that the costs of a
substantial shortfall in economic activity from
current projections would be much greater than
those of a markedly faster expansion than the
members currently expected, since present levels of
slack in labor and other resource use would tend to
limit the price consequences of a period of robust
economic growth. However, the System's earlier
easing actions, including the most recent reduction
in the discount rate in late April and some associated
easing in reserve conditions, had provided a good
deal of insurance against cumulative further weakening in business activity. Moreover, the System's
commitment to the goal of reducing inflation argued
for a cautious approach to any further easing at a
time when the economy might be close to its
recession trough. Steady progress against inflation
would foster lower interest rates in long-term debt
markets and would thus provide an added degree of
stimulus to the economy; conversely, a resurgence
in inflation would probably induce a backup in
long-term interest rates, including mortgage rates,
with adverse implications for housing markets and
the economy. Against this background, the members
concluded that a desirable policy was to take no
action at this time but to monitor carefully the
ongoing effects of the System's earlier easing moves.
In the course of the Committee's discussion, a
number of members underscored the desirability of
achieving monetary growth within the Committee's
ranges for the year. According to a staff analysis
prepared for this meeting, both M2 and M3 were




739

likely to strengthen over the balance of the current
quarter after showing little or no growth in April.
For the quarter as a whole, expansion of both
monetary aggregates was expected to be below the
rates projected at the time of the March meeting, but
their cumulative growth through midyear would still
be in the middle portions of their respective annual
ranges. The members recognized that the economy
was subject to events beyond the Committee's
control, but an appropriate rate of monetary expansion at this stage would support the view that policy
was positioned to help prevent substantial further
weakening in business activity on the one hand while
guarding against disappointing inflation results later
on the other. Subnormal monetary growth might be
an indication that monetary policy was still too tight,
perhaps because of the reluctance of depository
institutions and other lenders to extend credit. In that
regard, it might be especially useful in this period to
scrutinize the asset side of bank balance sheets,
notably the behavior of various categories of loans,
and other data on debt trends in relation to typical
cyclical behavior for possible clues regarding both
the strength of credit demands and business activity
and changes in lending practices and conditions.
Turning to possible adjustments to the degree of
reserve pressure during the intermeeting period, all
of the members supported or could accept a symmetrical directive in light of their current assessments of
the prospects for the economy and the behavior of
the monetary aggregates. Some members emphasized that the marked uncertainties in the current
economic situation underscored the need for a great
deal of vigilance in appraising ongoing economic
developments. Some indicated a slight preference
for a directive that was tilted toward possible easing.
These members believed that the risks in the economy remained at least marginally tilted toward a
weaker than projected economic performance and
that any policy adjustments in the intermeeting
period were likely to be in the direction of some
easing. Should the incoming data suggest a substantial shortfall from expectations, monetary policy in
this view should be adjusted promptly toward ease.
In the view of a majority of the members, however, a
symmetrical directive was warranted because the
risks to the economy were reasonably well balanced
at this point. While incoming data on business
activity might remain relatively weak over the near
term, a change in policy probably would not be

740

Federal Reserve Bulletin • September 1991

called for so long as such data did not suggest a
further cumulative decline in economic activity but
tended to confirm already available anecdotal
information and current Committee expectations.
At the conclusion of the Committee's discussion,
all of the members indicated that they favored a
directive that called for maintaining the existing
degree of pressure on reserve positions. T h e
members also noted that they preferred or could
accept a directive that did not include a presumption
about the likely direction of any intermeeting
adjustments in policy. Accordingly, the Committee
decided that somewhat greater reserve restraint or
somewhat lesser reserve restraint might be acceptable during the period ahead depending on progress
toward price stability, trends in economic activity,
the behavior of the monetary aggregates, and
developments in foreign exchange and domestic
financial markets. The reserve conditions contemplated at this meeting were expected to be consistent
with growth of M 2 and M 3 at annual rates of around
4 and 2 percent respectively over the three-month
period f r o m March through June.
At the conclusion of the meeting, the following
domestic policy directive was issued to the Federal
Reserve Bank of N e w York:
The information reviewed at this meeting provides
mixed signals regarding the course of economic activity,
which had weakened appreciably further earlier in the
year. Following sharp decreases in previous months, total
nonfarm payroll employment fell somewhat further in
April; the civilian unemployment rate edged down to
6.6 percent. Industrial output changed little in April after
declining markedly in earlier months. Retail sales were
about unchanged in April and are now indicated to have
risen somewhat in March. Advance indicators continue to
point to weakness in business fixed investment in coming
months. Housing starts were down in March, partly
offsetting a sizable advance in February, but sales of new
and existing homes continued to rise. The nominal U.S.
merchandise trade deficit declined in February and its
January-February rate was considerably below the




average rate in the fourth quarter. Producer and consumer
prices were little changed over March and April, partly
reflecting further reductions in energy prices.
Short-term interest rates have declined since the
Committee meeting on March 26, while bond yields have
changed little. The Board of Governors approved a
reduction in the discount rate from 6 to
percent on
April 30. The trade-weighted value of the dollar in terms
of the other G-10 currencies showed little change on
balance over the intermeeting period.
Growth of M2 and M3 weakened in April; for the year
thus far, expansion of M2 has been at the midpoint of the
Committee's range, while growth of M3 has been in the
upper half of its range.
The Federal Open Market Committee seeks monetary
and financial conditions that will foster price stability,
promote a resumption of sustainable growth in output,
and contribute to an improved pattern of international
transactions. In furtherance of these objectives, the
Committee at its meeting in February established ranges
for growth of M2 and M3 of 2xh to 6'/2 percent and 1 to
5 percent, respectively, measured from the fourth quarter
of 1990 to the fourth quarter of 1991. The monitoring
range for growth of total domestic nonfinancial debt was
set at 4V2 to Wi percent for the year. With regard to M3,
the Committee anticipated that the ongoing restructuring
of thrift depository institutions would continue to depress
its growth relative to spending and total credit. 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. Depending upon
progress toward price stability, trends in economic
activity, the behavior of the monetary aggregates, and
developments in foreign exchange and domestic financial
markets, somewhat greater reserve restraint or somewhat
lesser reserve restraint might be acceptable in the
intermeeting period. The contemplated reserve conditions
are expected to be consistent with growth of M2 and M3
over the period from March through June at annual rates
of about 4 and 2 percent, respectively.
Votes for this action: Messrs. Greenspan, Corrigan,
Angell, Black, Forrestal, Keehn, Kelley, LaWare,
Mullins, and Parry. Votes against this action: None.

741

Legal Developments
FINAL RULE—AMENDMENT
TO RULES
REGARDING EQUAL
OPPORTUNITY

The Board of Governors is amending 12 C.F.R. Part
268, its Rules Regarding Equal Opportunity, by adding
a new Subpart J—Employment of Noncitizens, and
making a conforming change to section 268.101(b)
("Purpose and scope"), in order to define the Board's
practices regarding the employment of persons who
are not citizens of the United States. The amendment
will govern employment of such persons consistent
with the Board's security requirements.
The amendment replaces the Board's Management
Policy Statement regarding Employment of Noncitizens, which prohibited employment of noncitizens
subject to limited exceptions. The amendment permits
the employment of persons who are not United States
citizens in all positions which do not require access to
sensitive information of the Board. The amendment
permits the employment of only United States citizens
and persons intending to become United States citizens in positions which require access to sensitive
information of the Board.
Effective July 11, 1991, the Board amends 12 C.F.R.
Part 268 as follows:

Part 268—Rules Regarding Equal

3. Subpart J, consisting of sections 268.1001 through
268.1004, is added immediately following Subpart I to
read as follows:

Subpart J—Employment
Section
Section
Section
Section

268.1001
268.1002
268.1003
268.1004

of

Noncitizens

Definitions.
Prohibitions.
Exception.
Applicability.

Subpart J—Employment of Noncitizens

Section 268.1001—Definitions.

Opportunity

1. The authority citation for Part 268 continues to read
as follows:
Authority: Sees. 10(4) and 11(7) of the Federal
Reserve Act (partially codified in 12 U.S.C. 244 and
248(7)).
2. Section 268.101(b) is revised to read as follows:

Section 268.101—Authority, purpose, and
scope.
(b) Purpose and scope. This regulation sets forth the
Board's policy, program, and procedures for providing
equal opportunity to Board employees and applicants
for employment without regard to race, color, religion,
sex, national origin, age, or physical or mental handi-




cap. It also sets forth the Board's policy, program, and
procedures for prohibiting discrimination on the basis
of physical or mental handicap in programs and activities conducted by the Board, and in addition specifies
the circumstances under which the Board will hire or
decline to hire persons who are not citizens of the
United States, consistent with the Board's operational
needs, the requirements and prohibitions of the Immigration Reform and Control Act of 1986 (8 U.S.C.
1101 et seq.), and other applicable law.

(a) Noncitizen means any person who is not a citizen
of the United States.
(b) Sensitive information means:
(1) Information that is classified for national security
purposes under Executive Order No. 10,450, including any amendments or superseding orders that the
President of the United States may issue from time
to time;
(2) Information that consists of confidential supervisory information of the Board, as defined in
12 C.F.R. 261.2(b), or of similar confidential business information regarding the affairs of institutions,
or their subsidiaries, which are supervised or regulated by the Board; or
(3) Information the disclosure or premature disclosure of which to unauthorized persons may be
reasonably likely to impair the formulation or implementation of monetary policy, or cause unnecessary
or unwarranted disturbances in securities or other
financial markets, such that access to such informa-

742

Federal Reserve Bulletin • September 1991

tion must be limited to persons who are loyal to the
United States.
For purposes of paragraph (b)(3) of this section
268.1001(b), information may not be deemed sensitive
information merely because it would be exempt from
disclosure under the Freedom of Information Act,
5 U.S.C. 552, but sensitive information must be information the unauthorized disclosure or premature disclosure of which may be reasonably likely to impair
important functions or operations of the Board,
(c) Sensitive position means:
(1) Any position of employment with the Board of
Governors of the Federal Reserve System in which
the employee will be required to have access to
sensitive information; or
(2) Any examiner position with any Federal Reserve
Bank for which the appointment or selection must
be made or approved by the Board of Governors of
the Federal Reserve System pursuant to 12 U.S.C.
325, 326, 338, or 625.

Section 268.1002—Prohibitions.
(a) Unauthorized aliens. The Board will not hire any
person unless that person is able to satisfy the requirements of section 101 of the Immigration Reform and
Control Act of 1986 (8 U.S.C. 1324a(a)).
(b) Employment in sensitive positions. The Board will
not hire any person to a sensitive position unless such
person is a citizen of the United States or, if a
noncitizen, is an intending citizen as defined in
8 U.S.C. 1324b(a)(3).
(c) Preference. Consistent with the Immigration Reform and Control Act of 1986 and other applicable law,
applicants for employment who are citizens of the
United States or intending citizens as defined in
8 U.S.C. 1324b(a)(3) shall be preferred over equally
qualified applicants who are neither United States
citizens nor intending citizens.

Section 268.1003—Exception.
The prohibition of section 268.1002(b) does not apply
to hiring for positions for which a security clearance is
required under Executive Order No. 10,450, including
any subsequent amendments or superseding orders
that the President of the United States may issue from
time to time, where the noncitizen either has or can
obtain the necessary security clearance. Any offer of
employment authorized by this section 268.1003 shall
be contingent upon receipt of the required security
clearance in the manner prescribed by law.




Section 268.1004—Applicability.
This Subpart J applies to employment in all positions
on the staff of the Board of Governors of the Federal
Reserve System and to employment by Federal Reserve Banks of examiners who must be appointed, or
selected and approved by the Board of Governors of
the Federal Reserve System pursuant to 12 U.S.C.
325, 326, 338, or 625. This Subpart J shall be effective
as of July 11, 1991.

ORDERS ISSUED UNDER BANK
COMPANY ACT

HOLDING

Orders Issued Under Section 3 of the Bank
Holding Company Act
Banc One Corporation
Columbus, Ohio
Banc One Ohio Corporation
Columbus, Ohio
Order Approving Acquisition of Banks
Banc One Corporation and Banc One Ohio Corporation, both of Columbus, Ohio (together, "Banc
One"), bank holding companies within the meaning
of the Bank Holding Company Act ("BHC Act"),
have applied under section 3 of the BHC Act
(12 U.S.C. § 1842) to acquire all of the voting shares
of the following indirect subsidiaries of PNC Financial Corp, Pittsburgh, Pennsylvania ("PNC"): The
Central Trust Company, Newark, Ohio; The Central
Trust Company of Northern Ohio, N.A., Lorain,
Ohio; The Central Trust Company of Northeastern
Ohio, N.A., Canton, Ohio; and The Central Trust
Company of Southeastern Ohio, N.A., Marietta,
Ohio (collectively, "Banks"). 1
Notice of the applications, affording interested
persons an opportunity to submit comments, has
been published (56 Federal Register 22,871 (1991)).
The time for filing comments has expired, and the
Board has considered the applications and all com-

1. Banc One will not acquire the branch of The Central Trust
Company of Southeastern Ohio, N.A., ("Central Trust-Marietta")
located in Meigs County, Ohio. A subsidiary of PNC, The Central
Trust Company, N.A., Cincinnati, Ohio, will purchase the assets and
assume the liabilities of the branch, and Banc One has committed not
to consummate its acquisition of Central Trust-Marietta until the
branch is transferred.

Legal Developments

ments received in light of the factors set forth in
section 3(c) of the BHC Act.2
Banc One, with total consolidated assets of $44.0
billion, controls 53 banking subsidiaries in Ohio, Kentucky, Indiana, Michigan, Wisconsin, and Texas.
Banc One is the second largest commercial banking
organization in Ohio, controlling approximately $12.3
billion in deposits, representing approximately 13.8
percent of the total deposits in commercial banks in
the state.3 PNC is the seventh largest commercial
banking organization in Ohio, controlling approximately $4.5 billion in deposits, representing approximately 5.1 percent of the total deposits in commercial
banks in the state. Banks control approximately $1.8
billion in deposits, representing approximately 2 percent of the total deposits in commercial banks in the
state. Upon consummation of the proposal, including
the planned divestiture, Banc One would become the
largest commercial banking organization in Ohio, controlling deposits of approximately $14.1 billion, representing approximately 15.9 percent of deposits in
commercial banks in Ohio. Consummation of this
proposal would not have a significantly adverse effect
upon the concentration of commercial banking resources in Ohio.
Banc One and Banks compete directly in seven
banking markets in Ohio. These markets are DoverNew Philadelphia, Akron, Cleveland, Columbus,
Marietta-Parkersburg, Wooster, and Canton.
In the Dover-New Philadelphia market,4 Banc One
is the second largest of nine commercial banking
organizations, controlling $213.7 million in deposits,
representing approximately 29.9 percent of the deposits in commercial banks in the market. The Central
Trust Company of Northeastern Ohio, N.A., is the
fourth largest commercial banking organization in the
market, controlling $59.5 million in deposits, representing approximately 8.3 percent of the commercial
bank deposits in the market. The Dover-New Philadelphia market is considered highly concentrated. The
HHI for the market is 2257 and would increase by 496
points to 2753 upon consummation of the proposal.5

2. The Board received comments from the National Association of
Life Underwriters, Inc.; the Ohio Association of Life Underwriters;
the Professional Insurance Agents of America; the Professional Insurance Agents of Ohio; the Independent Insurance Agents of America;
and the National Association of Casualty & Surety Agents regarding
the sale of insurance on the premises of Central Trust-Marietta. Banc
One has committed that Central Trust-Marietta will cease this activity
upon consummation of this transaction.
3. State deposit data are as of December 30, 1990. Market deposit
data are as of June 30, 1990.
4. The Dover-New Philadelphia market is approximated by Tuscarawas County, except for Lawrence and Sandy Townships.
5. Under the revised Department of Justice Merger Guidelines, 49
Federal Register 26,823 (June 29, 1984), a market in which the
post-merger HHI is above 1800 is considered to be highly concen-




743

In order to mitigate the anticompetitive effects that
would result from consummation of this proposal in the
Dover-New Philadelphia banking market, Banc One
has committed to divest, on or before consummation of
its acquisition of Banks, one banking office in the
Dover-New Philadelphia market that controls deposits
of $13.6 million. This divestiture represents approximately 1.9 percent of the deposits held by commercial
banks in the market. The Board believes that this
divestiture, together with the other facts of record,
substantially mitigates the effects on competition of this
proposal in the Dover-New Philadelphia banking market.
In particular, eight commercial banking organizations, including some of the largest commercial banking
organizations in Ohio, would remain as competitors
after consummation of the proposal. In addition, six
thrift institutions that control approximately 21.2 percent of the combined deposits of banks and thrift
institutions in the market actively compete in the market. Based upon the size, number, and market share of
thrift institutions in the Dover-New Philadelphia banking market, the Board has concluded that thrift institutions exert a competitive influence that mitigates in part
the anticompetitive effects of this proposal.6
Moreover, several characteristics of the Dover-New
Philadelphia market indicate that it is attractive for
entry. The Dover-New Philadelphia market's level of
per capita income and deposits per bank office and the
growth rates in bank deposits, employment, and retail
sales exceed those of similar Ohio markets. Of these
markets, Dover-New Philadelphia ranks first in the
state in terms of total deposits. Since 1985, three
commercial banks have entered the market by acquisition and one commercial bank has entered de novo.
Finally, because Ohio banking law permits statewide
branching and nationwide de novo entry on a reciprocal
basis, there are many potential entrants into the DoverNew Philadelphia banking market.
Based upon all of these and other facts of record, the
Board has concluded that consummation of this pro-

trated. In such markets, the Justice Department is likely to challenge
a merger that increases the HHI by more than 50 points. The Justice
Department has informed the Board that a bank merger or acquisition
generally will not be challenged (in the absence of other factors
indicating anticompetitive effects) unless the post-merger HHI is at
least 1800 and the merger increases the HHI by more than 200 points.
The Justice Department has stated that the higher than normal HHI
thresholds for screening bank mergers for anticompetitive effects
implicitly recognize the competitive effect of limited-purpose lenders
and other non-depository financial entities.
6. If 50 percent of the deposits held by thrift institutions were
included in the calculation of market concentration, Banc One's
pro forma market share, after taking account of the planned divestiture, would be 32.0 percent and the HHI would increase by 302 to
2324. See Midwest Financial Group, 75 Federal Reserve Bulletin 386
(1989); National City Corporation, 70 Federal Reserve Bulletin 743
(1984).

744

Federal Reserve Bulletin • September 1991

posal is not likely to result in a significantly adverse
effect on competition in the Dover-New Philadelphia
banking market.
The Board also has examined the effects of this
proposal in the other six banking markets in which
Banc One and Banks operate. After taking account of
competition by thrifts in these markets, the increase in
the HHI upon consummation would not exceed the
revised Department of Justice Guidelines in any of
these banking markets. Based on this and all the other
facts of record, the Board believes that consummation
of this proposal would not have a significantly adverse
effect on competition in any relevant banking market.
The financial and managerial resources of Banc One
and Banks and their future prospects are consistent
with approval. Considerations relating to the convenience and needs of the communities to be served are
also consistent with approval of this application.
Based on the foregoing and other facts of record,
including the proposal as finally structured, and commitments by Banc One, the Board has determined that
the applications should be, and hereby are, approved.
The Board's approval is specifically conditioned on
Banc One's compliance with the commitments discussed in this order and in the application and other
submissions by Banc One, and these commitments are
considered conditions imposed in writing in connection
with the Board's findings and decision. This transaction
shall not be consummated before the thirtieth calendar
day following the effective date of this order, or later
than three months after the effective date of this order,
unless such period is extended for good cause by the
Board or by the Federal Reserve Bank of Cleveland,
acting pursuant to delegated authority.
By order of the Board of Governors, effective
July 22, 1991.
Voting for this action: Chairman Greenspan and Governors
Angell, Kelley, LaWare, and Mullins.
JENNIFER J. JOHNSON

Associate

Secretary of the Board

Fifth Third Bancorp
Cincinnati, Ohio
Fifth Third Bank
Cincinnati, Ohio
Fifth Third Bank
Columbus, Ohio
Order Approving the Acquisition of a Bank, the
Acquisition of Certain Assets and Assumption of
Certain Liabilities of a Bank, and the Establishment
of Branches




Fifth Third Bancorp, Cincinnati, Ohio ("Bancorp"), a
bank holding company within the meaning of the Bank
Holding Company Act ("BHC Act"), has applied
under section 3 of the BHC Act (12 U.S.C. § 1842) to
acquire all of the voting shares of Farmers Exchange
Bank, Millersburg, Kentucky ("Farmers"). 1 Fifth
Third Bank, Cincinnati, Ohio ("Fifth Third Cincinnati"), and Fifth Third Bank, Columbus, Ohio ("Fifth
Third Columbus") (collectively "Banks") have also
applied to purchase certain assets and assume certain
liabilities from several branches of Chase Bank of
Ohio, Columbus, Ohio, under section 18(c) of the
Federal Deposit Insurance Act (12 U.S.C. § 1828(c))
("Bank Merger Act"). In addition, Banks have applied to establish certain branches pursuant to section
9 of the Federal Reserve Act (12 U.S.C. § 321). Locations of all branches are set forth in the Appendix.
Notice of the applications, affording interested persons an opportunity to submit comments, has been
published (56 Federal Register 21,493 (1991)). As
required by the Bank Merger Act, reports on the
competitive effects of the mergers were requested
from the United States Attorney General, the Office of
the Comptroller of the Currency, and the Federal
Deposit Insurance Corporation. The time for filing
comments has expired, and the Board has considered
the applications and all comments received in light of
the factors set forth in section 3(c) of the BHC Act, the
Bank Merger Act and the Federal Reserve Act.
Section 3(d) of the BHC Act, the Douglas Amendment, prohibits the Board from approving an application by a bank holding company to acquire control of
any bank located outside of the holding company's
home state, 2 unless such acquisition is "specifically
authorized by the statute laws of the State in which
[the] bank is located, by language to that effect and
not merely by implication." 12 U.S.C. § 1842(d). Bancorp's home state is Ohio, while Farmers is located in
Kentucky.
The Board has determined that the laws of Kentucky expressly authorize the acquisition of Kentucky
banks by Ohio bank holding companies. 3 Accordingly,
the Board's approval of these applications is not
precluded by the Douglas Amendment.

1. Bancorp proposes to merge Farmers into its subsidiary, Fifth
Third Bank of Central Kentucky, N.A., Paris, Kentucky.
2. A bank holding company's home state is that state in which the
operations of the bank holding company's banking subsidiaries were
principally conducted on July 1, 1966, or the date on which the
company became a bank holding company, whichever is later.
3. National City Corporation, 74 Federal Reserve Bulletin 581
(1988). See also Ky. Rev. Stat. Ann. § 287.900 (Michie/Bobbs-Merrill
1986) and Cooperative Agreement and Determination of Reciprocity
between the Commonwealth of Kentucky and the State of Ohio,
October 16, 1985.

Legal Developments

Bancorp, with total deposits of $6.3 billion, operates
subsidiary banks in Ohio, Indiana, and Kentucky.4
Bancorp is the sixth largest banking organization in
Ohio, controlling approximately $5.4 billion in deposits in Ohio, representing 6.4 percent of the total
deposits in commercial banking organizations in the
state. Bancorp is also the 11th largest banking organization in Kentucky, controlling approximately $401.1
million in deposits in Kentucky, representing 1.3 percent of the total deposits in commercial banking organizations in the state. Upon consummation of the
proposals, Bancorp would remain the sixth largest
banking organization in Ohio and would become the
tenth largest banking organization in Kentucky.5 Consummation of the proposal would not result in significantly adverse effects on the concentration of banking
resources in Ohio or Kentucky.
Bancorp and Farmers compete directly in the Lexington, Kentucky, banking market.6 Both Bancorp
and Farmers control less than 1 percent of the deposits
in commercial banking organizations in this market.7
Upon consummation of the proposed transaction,
Bancorp would become the 13th largest commercial
banking organization in the market, controlling deposits of $51.5 million, representing 1.5 percent of the
total deposits in commercial banking organizations in
the market. The Herfindahl-Hirschman Index
("HHI") would increase by 1 point, to a level of 1518.8
Fifth Third Cincinnati and Chase Bank of Ohio
compete directly in the Cincinnati banking market.9
Fifth Third Cincinnati is the second largest commer-

4. Total deposits are as of March 31,1991. State banking data are as
of June 30, 1990. Market share data are as of June 30, 1989.
5. Bancorp would control approximately $5.6 billion in deposits in
Ohio, representing 6.6 percent of the total deposits in Ohio commercial banking organizations, and approximately $419.4 million in deposits in Kentucky, representing 1.4 percent of the total deposits in
Kentucky commercial banking organizations.
6. The Lexington banking market is approximated by Bourbon
County, Clark County, Fayette County, Jessamine County, Powell
County, Scott County and Woodford County, all in Kentucky.
7. Bancorp is the 14th largest commercial banking organization in
the market, controlling deposits of $33.2 million, and Farmers is the
18th largest commercial banking organization in the market, controlling deposits of $18.3 million.
8. Under the revised Department of Justice Merger Guidelines, 49
Federal Register 26,823 (1984), a market in which the post-merger
HHI is between 1000 and 1800 is considered moderately concentrated.
The Department of Justice has informed the Board that, as a general
matter, a bank merger or acquisition will not be challenged, in the
absence of other factors indicating anticompetitive effects, unless the
post-merger HHI is at least 1800 and the merger increases the HHI by
200 points. The Justice Department has stated that the higher-thannormal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limitedpurpose lenders and other non-depository financial entities.
9. The Cincinnati banking market is approximated by Hamilton
County, Brown County, Clermont County, and portions of Butler
County and Warren County in Ohio; Dearborn County, Indiana; and
Boone County, Kenton County, Campbell County, Grant County and
Pendleton County, in Kentucky.




745

cial banking organization in the market, controlling
deposits of $2.8 billion, representing 19.4 percent of
the total deposits in commercial banking organizations
in the market. The deposits in the branches to be
acquired from Chase Bank of Ohio total $96.0 million
and represent less than 1 percent of the total deposits
in commercial banking organizations in the market.
Upon consummation of the proposal, the HHI would
increase by 25 points, to a level of 1448.'°
Fifth Third Columbus and Chase Bank of Ohio
compete directly in the Columbus banking market.11
Fifth Third Columbus is the ninth largest commercial
banking organization in the market, controlling deposits of $355.6 million, representing 2.1 percent of the
total deposits in commercial banking organizations in
the market. The deposits in the branches to be acquired from Chase Bank of Ohio total $95.0 million
and represent less than 1 percent of the total deposits
in commercial banking organizations in the market.
Upon consummation of the proposal, the HHI would
increase by 3 points, to a level of 1810.12
Based on all the facts of record, the Board has
determined that consummation of this proposal would
not have a significantly adverse effect on competition
in any relevant banking market. The Board also determines that the financial and managerial resources and
future prospects of Bancorp, Farmers and Banks are
consistent with approval of these applications.
In considering the convenience and needs of the
communities to be served under the BHC Act and the
Bank Merger Act, and the applications to establish
branches under the Federal Reserve Act, the Board
has taken into account the record of Bancorp and
Banks under the Community Reinvestment Act
(12 U.S.C. § 2901 et seq.) ("CRA"). The CRA requires the federal financial supervisory agencies to
encourage financial institutions to help meet the credit
needs of the local communities in which they operate
consistent with the safe and sound operation of such
institutions. To accomplish this end, the CRA requires
the appropriate federal supervisory authority to "assess an institution's record of meeting the credit needs
of its entire community, including low- and moderate-

10. Fifth Third Cincinnati would remain the second largest commercial banking organization in the market, controlling deposits of $2.9
billion, representing 20.3 percent of the total deposits in commercial
banking organizations in the market.
11. The Columbus banking market is approximated by Franklin
County, Delaware County, Fairfield County, Licking County, Madison County, Pickaway County, Union County, Perry Township in
Hocking County and Thorn Township in Perry County, all in Ohio.
12. Fifth Third Columbus would become the eighth largest commercial banking organization in the market, controlling deposits of $450.6
million, representing 2.8 percent of the total deposits in commercial
banking organizations in the market.

746

Federal Reserve Bulletin • September 1991

income neighborhoods, consistent with the safe and
sound operation of the institution." 12 U.S.C. § 2901.
In this regard, the Board has considered comments
filed by the Ohio Community Reinvestment Alliance
and the Coalition of Neighborhoods, both in Cincinnati, Ohio (collectively, "Protestants"). Protestants
allege that the performance of Banks under the CRA:
(i) does not demonstrate sufficient components of
effective CRA programs, including board of director involvement, employee training, community
outreach and marketing efforts;
(ii) reflects inadequate participation in CRA-related programs; and
(iii) indicates discriminatory lending practices.
The Board has carefully reviewed the CRA performance record of Bancorp and Banks, as well as
Protestants' comments and Fifth Third Cincinnati's
responses to those comments, in light of the CRA, the
Board's regulations, and the Statement of the Federal
Financial Supervisory Agencies Regarding the Community Reinvestment Act ("Agency CRA Statement"). 13 Banks have received a satisfactory rating
from their primary regulator in the most recent examination of their CRA performance.14 The Agency CRA
Statement provides that a CRA examination is an
important and often controlling factor particularly
where, as in this case, many of the specific issues
raised by the protests were incorporated in the reviews
of Banks. In addition, the Board extensively reviewed
the CRA performance of Banks in light of comments
raising very similar issues received from Protestants in
recent applications by Banks to establish branches and
Customer Bank Communication Terminals in Ohio.15
Accordingly, the Board has considered Protestants'
comments in light of these satisfactory ratings and the
Board's findings in the March Order.

13. 54 Federal Register 13,742 (1989). The Agency CRA Statement
provides guidance regarding the types of policies and procedures that
the supervisory agencies believe financial institutions should have in
place in order to fulfill their responsibilities under the CRA on an
ongoing basis and the procedures that the supervisory agencies will
use during the application process to review an institution's CRA
compliance and performance. The Agency CRA Statement also suggests that decisions by agencies to allow financial institutions to
expand will be made pursuant to an analysis of the institution's overall
CRA performance and will be based on the actual record of performance of the institution.
14. Protestants generally allege that these ratings are erroneous and
criticize the examination process. Protestants do not, however, factually rebut the examination findings but rather rely on comparisons of
certain factors chosen by Protestants with two other Cincinnati banks
that received satisfactory ratings by other federal regulators to support their allegations. The Board notes that the CRA performance
ratings of Banks are based on a review of the relevant CRA assessment factors as applied to the individual banks.
15. Fifth Third Bank, 77 Federal Reserve Bulletin 347 (1991)
("March Order").




In this regard, the March Order noted certain deficiencies in Banks' CRA performance and Banks'
representations that these deficiencies would be corrected. As discussed below, Banks have taken some
steps to correct these deficiencies. Banks are required
to report quarterly to the Federal Reserve Bank of
Cleveland ("Reserve Bank") on their progress in
correcting these deficiencies and Banks' first quarterly
reports are due on July 30, 1991. Banks' progress in
correcting these deficiencies will be carefully considered in reviewing future applications by Banks.
Components of CRA Programs
Protestants allege that components of Banks' CRA
programs are deficient in board-of-director involvement, employee training, community outreach, and
marketing efforts.16 For the reasons fully set forth in
the March Order, the Board believes that Banks have
adopted many elements of an effective CRA program
as outlined in the Agency Policy Statement, including
procedures for coordinating ascertainment efforts and
CRA activities with board-of-director involvement.
Banks have a CRA officer who is responsible for
coordinating the Banks' CRA program, keeping the
board of directors current on CRA developments, and
acting as the liaison between the bank and the community. Banks also have CRA committees that include
representatives from senior management, all lending
areas, the legal department, marketing, community
affairs, and the banking centers. These committees
meet twice a month to review ascertainment efforts,
discuss CRA concerns, and on occasions to meet with
community groups. CRA policies for each bank are set
by its board of directors and their CRA statements are
reviewed annually.17
Employee training is also part of Banks' CRA program.18 For example, Fifth Third Cincinnati states that
new customer service representatives are required to
attend mandatory training sessions which include ed-

16. Protestants also charge that Fifth Third Cincinnati does not have
adequate minority representation on its board of directors and in
senior management. While the Board fully supports affirmative programs designed to promote equal opportunity in every aspect of a
bank's personnel policies and practices in the employment, development, advancement, and treatment of employees and applicants for
employment, the Board believes that the alleged deficiencies in the
banks' general personnel practices are beyond the scope of factors
assessed under the CRA.
17. Protestants have questioned certain deficiencies noted in the
March Order regarding community delineations and listings of the
types of credit products available. These deficiencies raised technical
compliance issues and have been corrected by the bank.
18. The Ohio Community Reinvestment Alliance alleges that its
"checkers/testers" have found that no CRA training has been implemented. There have been no facts presented to support these allegations.

Legal Developments

ucation on CRA obligations within the first month of
their employment. In addition, its legal department
conducts lender compliance training sessions quarterly which include CRA compliance for commercial
and consumer lending officers. Fifth Third Cincinnati's
CRA officer also regularly makes CRA presentations
to banking center managers and annually presents a
summary of CRA program components to consumer
and commercial lending officers which emphasizes
community needs assessment, documentation, community outreach and overall calling efforts in all communities.19
Community outreach efforts have been criticized by
Protestants as omitting contact with certain civil rights
groups.20 Banks have undertaken programs to insure
contact with their entire community. For example, this
year Fifth Third Cincinnati sponsored minority arts
and cultural programs that included the Black Music
Repertory Ensemble; Dr. Martin Luther King, Jr.
Tribute at the School for Creative and Performing
Arts; and the American Negro Spiritual Festival. In
addition, the Fifth Third Foundation has met with 53
community groups this year and made grants in
amounts of approximately $1.3 million.?1 Groups that
have received grants include the Urban League, the
Cincinnati Human Relations Commission and the
YMCA Black Achievers. Banks' CRA officers, banking center managers, and lending officers also maintain
contacts with the business community, including minority businesses, through specific call programs as
discussed in the March Order.22
Fifth Third Cincinnati has formed a Minority Business Development Committee ("Committee") within
the last year and this committee has called on 300
minority-owned businesses to ascertain their banking
needs. On the basis of these calls, the Committee has
identified a need for technical assistance and Fifth
Third Cincinnati's CRA Officer is participating on a
committee with representatives of local financial insti-

19. This year Fifth Third Cincinnati has held six new training
sessions for new customer representatives, five sessions for commercial lenders, two sessions for consumer lenders and forty-one presentations to the banking centers.
20. Fifth Third Cincinnati states that it welcomes meetings with
representative community groups, and in June 1991 senior management officials met with representatives of the Ohio Community
Reinvestment Alliance, the Cincinnati Chapter of the NAACP, and
the Coalition of Neighborhoods.
21. Protestants have suggested that a percentage of Banks' charitable gifts be directed to established black service organizations. The
Board concluded in the March Order that Banks' charitable activities
were consistent with meeting the convenience and needs of communities served by Banks.
22. Approximately 1,000 CRA-related calls have been made by bank
officers this year. Fifth Third Cincinnati denies Protestants' allegation
that calls on black realtors have been discontinued. During the first
quarter of 1991, Fifth Third Cincinnati made approximately 90 calls on
minority realtors or realtors located in targeted neighborhoods.




67

tutions and the Chamber of Commerce to explore the
marketing of various technical assistance programs to
small and minority-owned businesses. The Committee
has also identified the need for certain alternative loan
programs for small and minority-owned businesses,
which Fifth Third Cincinnati is adding to its list of
existing loan programs. In addition, the Committee
has updated Fifth Third Cincinnati's brochure on loan
applications procedures and published this information in minority and small business magazines.
The Board noted in its March Order that there were
some weaknesses in the effectiveness of Banks' advertising efforts in low- and moderate-income communities. 23 Banks have committed to review and strengthen
their efforts in reaching these markets and Banks'
improvement in this regard will be reviewed as part of
Banks' quarterly reporting to the Reserve Bank as
required by the March Order.
Fifth Third Cincinnati has begun to strengthen its
marketing efforts by introducing two major loan campaigns that use billboards and transit advertising to
target low- and moderate-income communities.24 Fifth
Third Cincinnati has also initiated a radio campaign to
inform customers of its Good Neighbor Mortgage
Loan program that targets low- and moderate-income
individuals with income below $35,000.25
Participation in CRA-Related

Programs

Protestants generally allege that Banks' participation
in CRA-related programs is insufficient. Specifically,
Protestants criticize Banks for lack of participation in
local development and redevelopment projects and
programs. In addition, Protestants allege that Banks
have insufficient involvement with minority small business development and that small business lending has
been inadequate. In its March Order, the Board specifically reviewed Banks' participation in CRA-related
programs, including community development projects
and Small Business Administration ("SBA") lending,

23. In response to Protestants' criticism of insufficient advertising in
black media publications, Fifth Third Cincinnati notes that it hired a
minority-owned public relations firm and placed advertisements in
several papers including the Call and Post, East Side Daily News, and
The Report to promote the opening of its Glenville branch, an office
located in a low- and moderate-income neighborhood and under
minority management.
24. The "Right Loan, Right Here, Right N o w " campaign includes
the use of 20 outdoor billboards, 16 external boards on local Metro
buses, advertisements placed in the Cincinnati Herald and Blackbook,
brochures and posters, and television advertisement. In addition,
Fifth Third Cincinnati has initiated a mortgage loan campaign that
uses outdoor advertising in selected low- and moderate-income neighborhoods.
25. As part of this campaign, Fifth Third Cincinnati has pledged to
donate $100 to two local housing organizations for every home run hit
by the Cincinnati Reds baseball team.

748

Federal Reserve Bulletin • September 1991

and found that participation to be consistent with
approval. Since January 1991, Fifth Third Cincinnati
has also committed to lend more than $2.4 million to
local community development and redevelopment
projects in Cincinnati, including several new projects
to provide housing to low- and moderate-income families. 26
Protestants criticize Banks for their lack of participation in various CRA-related programs, including the
Ohio Equity Fund for Housing ("OEFH"), the Cincinnati Minority Enterprise Small Business Investment Company ("MESBIC"), and the Cincinnati Minority and Female Small Business Incubator
("Incubator"). Fifth Third Cincinnati states that it
intends to carefully consider participating in the
OEFH this year and notes that it has recently committed $85,000 to the Dayton and Cincinnati MESBICs.
Fifth Third Cincinnati is also involved in discussions
with the Executive Director of the Incubator.
Discriminatory Lending Practices
Protestants allege without providing any factual basis
that Banks engage in discriminatory lending practices,
including substantial noncompliance with anti-discrimination laws and regulations.27 The Board's March
Order stated that recent examinations of Banks found
no evidence of loan discrimination against individuals
in low- and moderate-income neighborhoods. In addition, these examinations also found no evidence of
substantial noncompliance with anti-discrimination
laws and regulations.
Protestants criticize Banks' lending patterns in lowand moderate-income neighborhoods and allege that
Banks have no review or reporting mechanism to
monitor lending patterns for discriminatory effects. 28

26. These projects include the Lewiston Project in the East End
($790,000), Avondale Redevelopment Project (commitment to participate), and Enterprise Social Investment Corporation ($500,000).
27. Protestants cite a survey by the Deputy Superintendent/Treasurer of the Cincinnati Board of Education of vendors doing business
with the Board of Education to support their allegations that Fifth
Third Cincinnati does not lend to black male and female vendors.
Although the number of loans made by Fifth Third Cincinnati to black
vendors who answered the survey is small, Fifth Third Cincinnati
argues that the response rate of 40 percent of the vendors surveyed
impairs the usefulness of the survey. The survey also does not
distinguish loans made to white females and black females. In addition, the Cincinnati Minority Supplier Development Council has
expressed appreciation for Fifth TTiird Cincinnati's support of its
efforts and the bank's role in building a positive partnership in
minority business development. Under these circumstances, the
Board does not believe that this survey sustains Protestants' allegations of racial discrimination in Fifth Third Cincinnati's lending.
28. Fifth Third Cincinnati states that, as part of enhancing its CRA
performance in response to its last CRA performance examination,
two loan officers must review any commercial loan before the application is denied. In addition, Fifth Third Cincinnati now tracks
annually its credit cards, small business loans, auto loans, and home




The Board's March Order concluded that data under
the Home Mortgage Disclosure Act ("HMDA")
showed some weaknesses in Fifth Third Cincinnati's
pattern of lending in Dayton and in Hamilton and
Middletown Counties and in Fifth Third Columbus's
pattern of lending in Columbus.29 The Board noted,
however, that Banks have committed to take steps to
target additional marketing toward minority and lowand moderate-income communities and to improve
their lending performance to these areas. These steps
include increasing the amount of funds available for
marketing Banks' products in low- and moderateincome neighborhoods and progress on achieving
these goals must be reported quarterly to the Reserve
Bank.
Protestants also believe that portions of the black
community have only limited access to Banks' offices.
In the March Order the Board concluded that Banks'
banking center locations appear to be accessible to all
segments of the community.30 In addition, Fifth Third
Cincinnati received approval in the Board's March
Order to open an additional full-service branch in a
low- and moderate-income and predominately minority area. In this proposal, two of the branches that
Fifth Third Columbus is applying to open will be
located in low- and moderate-income areas.
For the reasons discussed above and in the March
Order, the Board believes that, on balance, and subject to the commitments to address the deficiencies
noted in Banks' performance under the CRA, convenience and needs considerations, including the record
of performance under the CRA of Bancorp and Banks,
are consistent with approval of these applications. The
Board continues to expect Banks to further improve
their record of performance under the CRA and to
equity loans by low-, moderate-, and high-income area zip codes. The
results of the analysis for 1990 are being compiled and this information
will be presented to its CRA committee for future planning.
29. Protestants also allege that Banks' CRA public comment files do
not contain Banks' HMDA data in the form of a Loan Application
Register and that individuals seeking to view the public comment files
were subject to harassment. Although financial institutions are required to make their HMDA Disclosure Statements available upon
request, they are not required to place this information in the public
comment files. Moreover, they are not required to release the HMDA
Loan Application Registers (from which the Disclosure Statements
are derived), only the statements. In addition, the HMDA Disclosure
Statements for 1990, the first reports compiled under the revised
HMDA requirements referred to by Protestants, are not yet available;
their release to the public is expected to take place by November 1,
1991. Finally, Protestants have not alleged any specific instances of
harassment.
30. Fifth Third Cincinnati has 64 full-service offices located throughout its community, four limited-service offices at retirement centers,
two limited-service branches at a large manufacturing plant and 12
automatic teller machines at a chain of grocery stores. Fifth Third
Columbus has 18 branches located in the Columbus Primary Metropolitan Statistical Area. Four are in low- and moderate-income areas
and six are in middle-income areas. Fifth Third Columbus also has
automatic teller machines at a chain of grocery stores.

Legal Developments

report on their progress in addressing the areas of
weakness in their performance as previously discussed. The Reserve Bank will closely monitor this
performance.
Fifth Third Cincinnati and Fifth Third Columbus
have also applied under section 9 of the Federal
Reserve Act (12 U.S.C. § 321 et seq.) to establish
branches at various locations in Cincinnati and Columbus. The Board has considered the factors it is required to consider when reviewing applications for
establishing branches pursuant to section 9 of the
Federal Reserve Act (12 U.S.C. § 322) and finds those
factors to be consistent with approval.
Based on all the foregoing and other facts of record,
the Board has determined that the applications should
be, and hereby are, approved. The Board's approval,
however, is conditioned upon applicants' complying
with all commitments and obtaining all required approvals under applicable state laws. The acquisition of
Farmers shall not be consummated before the thirtieth
calendar day following the effective date of this Order,
or later than three months after the effective date of
this Order, unless such period is extended for good
cause by the Board or by the Federal Reserve Bank of
Cleveland, acting pursuant to delegated authority.
By order of the Board of Governors, effective
July 12, 1991.
Voting for this action: Chairman Greenspan and Governors
Angell, Kelley, and Mullins. Absent and not voting: Governor LaWare.
JENNIFER J. JOHNSON

Associate

Secretary of the Board

Appendix
Fifth Third Columbus will establish the following
branches:
(1) 2161 Eakin Road, Columbus, Ohio;
(2) 7970 Worthington-Galena Road, Columbus,
Ohio;
(3) 1630 Morse Road, Columbus, Ohio;
(4) 1955 West Henderson Road, Columbus, Ohio;
(5) 21 East State Street, Columbus, Ohio;
(6) 155 East Main Street, New Albany, Ohio;
(7) 170 South Hamilton Road, Columbus, Ohio;
(8) 118 B Worthington Square, Worthington, Ohio;
(9) 420 Metro Place South, Dublin, Ohio; and
(10) 1440 Bethel Road, Columbus, Ohio.
Fifth Third Cincinnati will establish the following
branches:
(1) 6677 Pearl Road, Cleveland, Ohio;
(2) 34700 Vine Street, Cleveland, Ohio;



749

(3) 7747 Old Troy Pike, Dayton, Ohio;
(4) 2917 West Alex Bell Road, Dayton, Ohio;
(5) 8588 Princeton-Glendale Road, Union Township, Ohio;
(6) 4530 Eastgate Blvd., Union Township, Ohio;
(7) 1783 Ohio Pike, Amelia, Ohio;
(8) 2250 Shiloh Springs Road, Trotwood, Ohio;
(9) 9689 Montgomery Road, Cincinnati, Ohio;
(10) 3427 Edwards Road, Cincinnati, Ohio;
(11) 6218 Glen way and Parkcrest, Cincinnati, Ohio;
and
(12) 200 West Benson Street, Reading, Ohio.

First Lindsay Corporation
Lindsay, Oklahoma
Order Approving Formation of a Bank Holding
Company
First Lindsay Corporation, Lindsay, Oklahoma
("First Lindsay"), has applied under section 3(a)(1) of
the Bank Holding Company Act ("BHC Act")
(12 U.S.C. § 1842(a)(1)) to become a bank holding
company by acquiring up to 100 percent of the voting
shares of First National Bank of Lindsay, Lindsay,
Oklahoma ("Bank").
Notice of the application, affording interested persons an opportunity to submit comments, has been
published (56 Federal Register 21,493 (1991)). The
time for filing comments has expired, and the Board
has considered the application and all comments received in light of the factors set forth in section 3(c) of
the BHC Act.
First Lindsay is a nonoperating corporation formed
for the purpose of acquiring Bank. Bank, controlling
deposits of approximately $17.6 million, is the 269th
largest commercial banking organization in Oklahoma,
representing less than 1 percent of the total deposits in
commercial banking organizations in the state. 1 Based
on all the facts of record, the Board believes that
consummation of the proposal would have no adverse
effect on the concentration of banking resources in
Oklahoma.
Bank operates in the Garvin County, Oklahoma,
banking market,2 where it controls 8.3 percent of the
total deposits in commercial banks. First Lindsay and
its principals are not affiliated with any other depository institution. Based on all the facts of record,
consummation of the proposed transaction would not
result in any adverse effects on existing or potential
competition, nor would it increase the concentration
1. Data are as of March 31, 1991.
2. The Garvin County banking market is approximated by all of
Garvin County except for the town of Stratford.

750

Federal Reserve Bulletin • September 1991

of banking resources in any relevant banking market.
Accordingly, the Board concludes that competitive
considerations under the BHC Act are consistent with
approval.
The financial and managerial resources and future
prospects of First Lindsay and Bank appear to be
consistent with approval of this application.3 Considerations relating to the convenience and needs of the
community to be served also are consistent with
approval.
Based on the foregoing and other facts of record, the
Board has determined that the application should be,
and hereby is, approved. The Board's approval is
specifically conditioned upon the commitments made
by First Lindsay in this application. The transaction
shall not be consummated before the thirtieth calendar
day following the effective date of this order, or later
than three months after the effective date of this order,
unless such period is extended for good cause by the
Board or the Federal Reserve Bank of Kansas City,
acting pursuant to delegated authority.
By order of the Board of Governors, effective
July 22, 1991.
Voting for this action: Chairman Greenspan and Governors
Angell, Kelley, LaWare, and Mullins.
JENNIFER J. JOHNSON

Associate

Secretary of the Board

Fleet/Norstar Financial Group, Inc.
Providence, Rhode Island
Order Approving the Acquisitions
Company and Banks

of a Bank Holding

Fleet/Norstar Financial Group, Inc., Providence,
Rhode Island ("Fleet"), a bank holding company
within the meaning of the Bank Holding Company Act
(the "BHC Act"), has applied under section 3 of the
BHC Act (12 U.S.C. § 1842) to acquire the New Bank
of New England, N.A., Boston, Massachusetts
("New BNE"), and New Connecticut Bank & Trust
Company, N.A., Hartford, Connecticut ("New Connecticut"). Fleet will establish a new second-tier bank

3. The Board has received comments from six minority shareholders of Bank expressing their concern that the cash amount that First
Lindsay offered for their shares did not equal the full book value of
their shares. First Lindsay contends that its offer was reasonable
because the shareholders could exchange their bank shares for shares
of First Lindsay having an equivalent value to the book value of the
bank shares exchanged. In addition, the minority shareholders are not
required to sell or exchange their bank shares. In Western Bancshares, Inc. v. Board of Governors, 480 F.2d 749 (10th Cir. 1973), the
court concluded that a stock acquisition price offer was not a relevant
factor for consideration by the Board under the BHC Act.




holding company, Fleet/Norstar Holdings, Inc.
("Holdings"), to acquire New BNE and New Connecticut. 1
Fleet Bank of Maine, Portland, Maine, also seeks
approval under section 18(c) of the Federal Deposit
Insurance Act (12 U.S.C. § 1828(c)) (the "Bank
Merger Act") to merge with New Maine National
Bank, Portland, Maine ("New Maine"), and to establish the branches of New Maine set forth in the
Appendix as branches of Fleet Bank of Maine pursuant to section 9 of the Federal Reserve Act
(12 U.S.C. § 321). New BNE, New Maine, and New
Connecticut (together "bridge banks") are bridge
banks created by the Federal Deposit Insurance Corporation ("FDIC") to acquire the assets and assume
the deposits and other liabilities of the three subsidiary
banks of Bank of New England Corporation, Boston,
Massachusetts. 2
Notice of these applications, affording interested
persons an opportunity to submit comments, has been
given in accordance with the BHC Act, the Bank
Merger Act and the Board's Rules of Procedure
(12 C.F.R. 262.3(b)). As required by the Bank Merger
Act, reports on the competitive effects of the merger
were requested from the United States Attorney General, the Comptroller of the Currency, and the FDIC.
The time for filing comments has expired, and the
Board has considered the applications and all comments received in light of the factors set forth in the
BHC Act and the Bank Merger Act.
Douglas

Amendment

Under the Douglas Amendment (section 3(d) of the
BHC Act), the Board may not approve an application
by a bank holding company to acquire control of any
bank located outside of the holding company's home
state unless authorized by the statute laws of the state
in which the bank to be acquired is located. 3 The
Garn-St Germain Act, however, authorizes the Board
to approve the interstate acquisition of a bridge bank
with assets of $500 million. 4 Accordingly, the provi-

1. The acquisitions of New BNE and New Connecticut are subject
to review by the Office of the Comptroller of the Currency ( " O C C " )
and applications under the Bank Merger Act are pending.
2. On April 22, 1991, the FDIC approved in principle Fleet's bid to
acquire certain assets and assume the deposits and the liabilities of the
bridge banks. In order to stabilize the bridge banks during the final
negotiation process, the FDIC entered into interim contracts with
Fleet for the management of the bridge banks. On April 23, the Board
approved Fleet's application to exercise control over the bridge banks
through the interim management contracts. See Fleet/Norstar Financial Group, 77 Federal Reserve Bulletin 483 (1991).
3. Fleet's home state is Rhode Island. 12 U.S.C. § 1842(d). The
bridge banks are located in Massachusetts, Connecticut, and Maine.
4. 12 U.S.C. §§ 1821(n)(8)(b) and 1823(f). Each of the bridge banks
was established by the FDIC pursuant to section ll(n) of the Federal

Legal Developments

sions of the Douglas Amendment do not bar approval
of the proposed acquisitions.
Financial and Managerial

Considerations

In evaluating an application under the Bank Merger
Act and section 3 of the BHC Act, the Board is
required to consider the financial and managerial resources and future prospects of the companies involved, the effect of the proposal on competition, and
the convenience and needs of the communities to be
served. Under the proposal, Fleet will recapitalize
each of the bridge banks and will provide the bridge
banks with new management officials with demonstrated management capability. As a result of these
actions by Fleet, the bridge banks will be able to
continue to provide a full range of services to their
customers and the communities they serve. The Board
notes that Fleet will have raised approximately $600
million in new capital prior to consummating the
acquisition. Based on these and all other facts of
record, the Board concludes that the financial and
managerial resources and future prospects of Fleet, its
subsidiaries, and the bridge banks are consistent with
approval of these applications.
Competitive

Considerations

Fleet is the largest depository organization in Maine,
controlling deposits of $2.9 billion, representing approximately 21.8 percent of deposits in depository
institutions in the state ("state deposits").5 New
Maine is the sixth largest depository organization in
Maine, controlling deposits of $1.0 billion, representing approximately 7.2 percent of state deposits. Upon
consummation of the proposal, Fleet would remain the
largest depository institution in Maine, controlling
deposits of $3.8 billion, representing approximately
28.6 percent of state deposits.
Fleet is the eighth largest depository organization in
Connecticut, controlling deposits of $1.8 billion, representing approximately 2.8 percent of state deposits.
New Connecticut is the second largest depository
organization in Connecticut, controlling deposits of
$6.9 billion, representing approximately 10.5 percent
of state deposits. Upon consummation of the proposal,
Fleet would become the second largest depository
organization in Connecticut, controlling deposits of

Deposit Insurance Act, has total assets in excess of $500,000,000, and
will be acquired by Fleet in an assisted transaction in conformance
with section 13(f) of the FDI Act. Id.
5. State data are as of June 30,1990. Market data are as of March 31,
1991, unless otherwise noted.




751

$8.7 billion, representing approximately 13.3 percent
of state deposits.
Fleet controls one depository organization in Massachusetts that currently has no deposits. New BNE is
the third largest depository organization in Massachusetts, controlling deposits of $9.1 billion, representing
approximately 8.1 percent of state deposits. Upon
consummation, Fleet would become the third largest
depository organization in Massachusetts, controlling
deposits of $9.1 billion, representing approximately
8.1 percent of state deposits.
The Board believes that consummation of this proposal would not have a significantly adverse effect
upon the concentration of commercial banking resources in Maine, Connecticut or Massachusetts.6
Fleet and the bridge banks compete directly in 17
banking markets in New England. Consummation of
the proposal would result in the elimination of a
competitor and in an increase in the concentration in
each market as measured by the HerfindahlHirschman Index ("HHI"). 7 After considering the
competition offered by thrift institutions,8 the number

6. The Board received comments maintaining that the proposal
would result in substantially anticompetitive effects in the state of
Maine. The commenter's analysis, however, is based on product and
geographic market concepts that differ substantially from those employed in the Board's analysis, which is based on the product and
geographic market concepts recently affirmed by the Board in First
Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991). Based on the
facts of record, and for the reasons discussed in this order, the Board
does not believe that the proposal would substantially lessen competition for banking services in the state of Maine as a whole or result in
an undue concentration of banking resources in the State.
This commenter also requested that the Board hold a public hearing
on the competitive issues in this proposal. Under the Board's rules,
the Board may, in its discretion, hold a public hearing or meeting on
an application to clarify factual issues related to the application and to
provide an opportunity for testimony, if appropriate. 12 C.F.R.
262.3(e) and 262.25(d). The Board has carefully reviewed this request.
In the Board's view, the commenter has had ample opportunity to
present submissions, and has submitted written comments that have
been considered by the Board. The record indicates that the commenter disputes the manner of analyzing the competitive effects of the
proposal rather than material facts. In light of these circumstances, the
Board has determined that a public hearing or meeting is not necessary
to clarify the factual record on the issues raised in this comment, or
otherwise warranted in this case. Accordingly, this request for a
public hearing or meeting is denied.
7. Under the revised Department of Justice Merger Guidelines, 49
Federal Register 26,823 (1984), a market in which the post-merger
HHI is above 1800 is considered to be highly concentrated. In such
markets, the Department is likely to challenge a merger that increases
the HHI by more than 50 points. The Department has informed the
Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive
effects) unless the post-merger HHI is at least 1800 and the merger
increases the HHI by more than 200 points. The Justice Department
has stated that the higher than normal HHI thresholds for screening
bank mergers for anticompetitive effects implicitly recognize the
competitive effect of limited-purpose lenders and other non-depository financial entities.
8. The Board previously has indicated that thrift institutions have
become, or have the potential to become, significant competitors of
commercial banks. WM Bancorp, 76 Federal Reserve Bulletin 788

752

Federal Reserve Bulletin • September 1991

of competitors remaining in the markets, the increase
in concentration, and the other facts of record, the
Board has concluded that consummation of the proposal would not result in a significantly adverse effect
in competition in the following 12 banking markets: the
Danielson, Hartford, New London, and Old Say brook
banking markets in Connecticut; the Augusta,9 Brunswick, Farmington, and Lewiston-Auburn banking
markets in Maine; the Boston and Fall River banking
markets in Massachusetts; the Portsmouth banking
market in New Hampshire; and the Providence banking market in Rhode Island.
The remaining banking markets in which Fleet and
New Maine compete include the Presque Isle-Caribou,
Portland, Bangor, and Pittsfield, Maine banking markets, and the Willimantic, Connecticut banking market. The Superintendent of the Maine Bureau of Banking has commented that the proposal would have a
significantly adverse competitive effect in the Bangor
and Pittsfield, Maine banking markets. The Department of Justice ("Department") has commented that
the proposal would have an anticompetitive effect in
these two markets, as well as in the Presque IsleCaribou, Maine banking market. The Maine Attorney
General has raised objections to the proposal in these
markets as well as in the Portland, Maine banking
market.
Presque Isle-Caribou and Portland Banking Markets
The Department and the Maine Attorney General have
commented that a substantial increase in concentration would occur in the Maine banking market of
Presque Isle-Caribou.10 The Department's analysis

(1990); First Union Corporation, 76 Federal Reserve Bulletin 83
(1990); Midwest Financial Group, 75 Federal Reserve Bulletin 386
(1989). During the evolutionary period of the past several years in
which thrifts have begun to act in the marketplace increasingly like
banks, the Board's practice has been to shade down the market share
of banks to account for the growing competition from thrifts. 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., supra.
9. For the reasons discussed in this order, the Board has considered
thrift institutions in Maine as full competitors with commercial banks.
On this basis, consummation of the proposal in the Augusta, Maine
banking market would increase the HHI by 143 points to 1867. If
thrifts were weighted at only 75 percent in this market, the HHI would
increase by 177 points to 2120. In the remaining 11 markets, the
increases in the HHIs would not exceed the threshold standards set
forth in the Department's revised merger guidelines even if thrift
deposits were weighted at 50 percent.
10. The Maine Attorney General has commented on the basis of
anecdotal evidence that non-depository financial institutions, such as
brokerage and mortgage finance companies, compete less effectively
with banks in the Presque Isle-Caribou market, as well as in the
Bangor and Pittsfield markets, than is the case nationally. In his view,
the general standards of the Department's merger guidelines, rather
than the modified standard that the Department applies routinely to
bank acquisitions, should apply to the competitive analysis of the




differs from the cluster of bank products and services
approach used by the Board. For the reasons explained in previous decisions, the Board continues to
believe that competitive analysis of bank expansion
proposals should be based on the availability of the
cluster of banking services to a range of customers in
the local banking market.11 The Department's analysis
also does not account for substantial deposit runoff
that has occurred in this market since June 1990.
Finally, the Department does not include thrifts as
full competitors in this market. The record indicates
that Maine thrift institutions in general compete actively in the full range of banking products and services, providing transaction accounts as well as traditional savings accounts and engaging actively in
commercial and consumer lending. Thrifts in Maine in
fact offer all or virtually all of the cluster of banking
products and services. 12
Thrift institutions in the Presque Isle-Caribou market maintain on average a significantly higher percentage of their assets in commercial loans and consumer
loans than thrift institutions generally. The Board
believes that the actual provision of most of these
products and services by thrifts in Maine as well as the
potential that these institutions will exercise their
existing authority to expand these activities justify
including thrift institutions as full competitors of banks
in the calculation of market share in this market.13
With thrift deposits weighted at 100 percent, Fleet
would control 19.5 percent of market deposits and the
HHI would increase by 186 points to 1981 in the
Presque Isle-Caribou market upon consummation of
the proposal.14 Four commercial banks and three
thrifts would remain as competitors in the market after
consummation of the proposal.
The Maine Attorney General has also commented
that anticompetitive effects would result from the

proposal with respect to these markets. The Maine Attorney General
recognizes, however, that thrifts are significant competitors of banks
in Maine, and argues that credit unions in Maine are also significant
competitors of banks. The Board believes that sufficient alternative
providers of banking services operate in Maine to justify use of the
higher HHI threshold recommended by the Department for review of
bank expansion proposals.
11. See First Hawaiian, Inc., supra; United States v. Philadelphia
National Bank, 374 U.S. 321 (1963).
12. These banking products and services include FDIC-insured
transaction accounts, consumer loans, commercial real estate loans
and other commercial loans, as well as mortgage and home improvement loans.
13. The Board has recognized in other decisions that thrifts in
certain markets compete fully with banks and should be fully weighted
in analyzing the competitive effect of bank expansion proposals. See,
e.g., BanPonce Corporation, 77 Federal Reserve Bulletin 43 (1991);
Fleet Financial Group, Inc., 74 Federal Reserve Bulletin 62 (1988).
14. The Board has also considered the recent de novo entry in 1990
of First Citizens Bank, an institution with $21 million in deposits,
representing 5.7 percent of the market.

Legal Developments

proposal in the Portland, Maine banking market.15 For
the reasons discussed above, the Board believes that
thrifts in the Portland market are full competitors with
commercial banks. With thrifts weighted at 100 percent, Fleet would control 28.5 percent of market
deposits and the HHI would increase by 295 points to
1605.16 The Board has also considered that seven
commercial banks and eight thrifts would remain as
competitors in the market after consummation of the
proposal.
On the basis of these and all of the other facts of
record, the Board believes that consummation of the
proposal would not result in substantially adverse
effects on competition in the Presque Isle-Caribou and
Portland banking markets.
Bangor, Pittsfield and Willimantic Banking Markets
In the Bangor banking market,17 Fleet is the largest of
five commercial banking organizations, controlling deposits of $536.7 million, representing approximately
66.7 percent of the total deposits in commercial banks
in the market. New Maine is the third largest commercial banking organization in the market, controlling
deposits of $71.5 million, representing approximately
8.9 percent of the total deposits in commercial banks
in the market. The Bangor banking market is considered to be highly concentrated and, upon consummation of the proposal, Fleet would control approximately 75.6 percent of the total deposits in commercial
banks in the market. The HHI would increase by 1186
points to 5964. Four commercial banks and two thrift
institutions would remain in the Bangor market as
competitors following consummation of the proposal.
For the reasons previously discussed, the Board
believes that these statistics do not reflect the true
state of competition in this market because they fail to
account for the competition afforded by thrifts. After
including 100 percent of market thrift deposits in the
calculation of market share, upon consummation Fleet

15. The Maine Attorney General has also recommended divestitures
in the towns of York and Wells. These towns are located in the
Portsmouth, New Hampshire banking market. The effects of this
proposal in this market do not appear to justify divestitures in this
market. Upon consummation, over 25 banks and thrift competitors
would remain in the market and the HHI would increase by 129 points
to 819 with thrifts weighted at 50 percent.
16. With thrifts weighted at 75 percent, the HHI would increase by
356 points to 1718.
17. The Bangor banking market is approximated by the Bangor
MSA; the townships of Alton, Amherst, Argyle, Bradford, Bradley,
Carmel, Charlestown, Clifton, Corinth/East Corinth, Dixmont, Etna,
Greenbush, Greenfield, Hudson, LaGrange, Levant, Milford, Newburgh, and Stetson in Penobscot County; Bucksport, Castine, Dedham, Orland, Otis, and Verona in Hancock County; Frankfort,
Prospect, and Stockton Springs in Waldo County; and the unorganized townships T1N.D and T3M.D.




753

would control approximately 49.6 percent of the total
deposits in depository institutions in the market
("market deposits") and the HHI would increase by
510 points to 3271.
In the Pittsfield, Maine banking market,18 Fleet is
the smallest of three commercial banking organizations, controlling deposits of $25.1 million, representing approximately 28.1 percent of the total deposits in
commercial banks in the market. New Maine is the
second largest commercial bank in the market, controlling deposits of $29.0 million, representing approximately 32.4 percent of the total deposits in commercial banks in the market. The Pittsfield banking market
is considered to be highly concentrated and, upon
consummation of the acquisition, Fleet would control
approximately 60.5 percent of the total deposits in
commercial banks in the market. The HHI would
increase by 1818 points to 5218. Two commercial
banks and two thrift institutions would remain in the
Pittsfield market following consummation of the proposal.
The Board believes that, for the same reasons
discussed above, thrift deposits in this market should
be weighted at 100 percent. After including 100 percent of thrift deposits in the calculation of market
share, upon consummation Fleet would control approximately 33.4 percent of market deposits and the
HHI would increase by 556 points to 2605.
In the Willimantic, Connecticut banking market,19
Fleet is the largest of three commercial banking organizations, controlling deposits of $131.3 million, representing approximately 57.6 percent of the total deposits in commercial banks in the market. New
Connecticut is the second largest commercial bank in
the market, controlling deposits of $93.2 million, representing approximately 40.9 percent of the total deposits in commercial banks in the market. Upon consummation of the proposal, Fleet would control
approximately 98.5 percent of the total deposits in
commercial banks in the market and the HHI would
increase by 4713 points to 9707. Two commercial
banks and seven thrift institutions would remain in the
Willimantic banking market after consummation of the
proposal.
The Board has considered the types of commercial
loans and banking products offered by thrifts in this

18. The Pittsfield banking market is approximated by the township
of Burnham in Waldo County; Cambridge, Detroit, Harmony, Hartland, Palmyra, Pittsfield, Ripley, and St. Albans in Somerset County;
Corinna, Dexter, Exeter, Garland, Newport, and Plymouth in Penobscot County; and Wellington in Piscataquis County.
19. The Willimantic banking market is approximated by the City of
Willimantic, with the addition of Mansfield township in Tolland
County and the townships of Chaplin, Hampton, Scotland, and
Windham in Windham County, all in Connecticut.

754

Federal Reserve Bulletin • September 1991

market, and for the same reasons discussed for the
Maine banking markets, the Board believes that thrift
deposits should be weighted in this market at 100
percent. Upon consummation of the proposal, and
with thrift deposits weighted at 100 percent, Fleet
would control deposits representing 38.4 percent of
market deposits and the HHI would increase by 716
points to 2219.20
The increase in concentration in these three markets
resulting from the proposal is in excess of the levels
specified in the Department's revised merger guidelines as indicating that the proposal could have substantial anticompetitive effects. The BHC Act and the
Bank Merger Act provide that the Board may not
approve an acquisition if the effect of the acquisition in
any section of the country "may be substantially to
lessen competition . . . unless [the Board] finds that
the anticompetitive effects of the proposed transaction
are clearly outweighed in the public interest by the
probable effect of the transaction in meeting the convenience and needs of the community to be served." 21
Under applicable law, the Board may approve a proposal that substantially lessens competition in a banking market only if the Board finds that demonstrable
public benefits are likely to result from the proposal
and could not reasonably be expected to result through
other means less injurious to competition.22
Although the effect of Fleet's proposal would be to
increase market concentrations to levels above the
Department's revised merger guidelines in these three
markets, we believe that any lessening of competition
is outweighed by the important and substantial public
benefits resulting from this proposal. Fleet is acquiring
the failed subsidiary banks of the Bank of New England and thereby will insure that these banks will
continue as viable competitors in these markets. In
addition, Fleet's recapitalization of the bridge banks
will enhance their ability to provide credit opportunities and banking services in the communities formerly
served by Bank of New England.23 Fleet's proposal
was selected by the FDIC under the procedures specified by Congress for resolving failed banks. The FDIC
considered this proposal in light of competing proposals submitted by other bidders and determined that
Fleet's bid represented the lowest cost to the Bank

20. The Board notes that the Department has concluded that
anticompetitive effects are unlikely to occur in Willimantic as a result
of Fleet's proposal because of recent substantial new entry and
expansion in Connecticut. The OCC, the primary federal regulator for
Fleet's acquisition of New Connecticut, has also reviewed the proposal and does not object on competitive grounds.
21. 12 U.S.C. §§ 1842(c)(2) and 1828(c)(5)(B).
22. United States v. Third National Bank in Nashville, 390 U.S. 171
(1967).
23. Fleet will provide $233 million in new capital for New Connecticut; $229 million for New BNE; and $40 million for New Maine.




Insurance Fund. On this basis, the Fleet proposal is
the only means before the Board of achieving the
public benefits discussed above. In this regard, the
FDIC has advised the Board that, as required by
statute, it has reviewed the competitive effects of the
Fleet proposal and does not find those effects to be
unacceptable in light of the relevant circumstances.
Under these circumstances, we believe that any
anticompetitive effects of this proposal in the relevant
markets, including any substantial lessening of competition in the Bangor, Pittsfield, and Willimantic
markets, are clearly outweighed in the public interest
by the probable effect of the Fleet proposal in meeting
the convenience and needs of the communities to be
served.
Convenience and Needs

Considerations

In considering the convenience and needs of the
communities to be served by these institutions, the
Board has carefully reviewed the performance of
Fleet's subsidiary banks in light of the Community
Reinvestment Act (12 U.S.C. § 2901) (the "CRA"),
the Board's regulations, and the Statement of the
Federal Financial Supervisory Agencies Regarding the
Community Reinvestment Act (the "Agency CRA
Statement"). The Board notes that each of Fleet's
bank subsidiaries received CRA ratings of satisfactory
or outstanding from their primary supervisors in their
most recent examinations. Fleet's lead bank, Fleet
National Bank, Providence, Rhode Island received a
rating of "outstanding." The Agency CRA Statement
provides that the CRA record of an institution, as
reflected in its examination reports, will be accorded
great weight in the applications process.
As discussed above, the Board believes that the
proposal will result in substantial benefits to the convenience and needs of the communities to be served
by maintaining and enhancing the bridge banks' service to those communities. The Board also notes that
Fleet has announced a $100 million Community Reinvestment Plan for low- and moderate-income neighborhoods and communities in Massachusetts that will
become effective upon Fleet's acquisition of the bridge
banks. According to Fleet, this plan will create over
1,750 affordable homes and help minority-owned and
other small businesses in Boston and other Massachusetts communities.24

24. Fleet will make $91 million available to increase production of
new affordable housing, help rehabilitate properties for use as
affordable housing, and provide low-interest mortgages to first-time
homebuyers or homeowners who were injured by high-cost mortgage lending practices in Boston. Fleet will also provide over $7
million in lines of credit, equity investments, and grants to agencies
helping small businesses in minority and low- and moderate-income

Legal Developments

The Board received comments relating to convenience and needs considerations from a community
group. The community group has requested that Fleet
comply with the community reinvestment provisions
of the Massachusetts interstate banking law and assume BNE's participation in a community investment
plan announced by the Massachusetts Banker's Association in January 1990. Fleet has agreed to continue
implementation of a CRA plan begun by the Bank of
New England in Massachusetts and to comply with the
community reinvestment provisions of the Massachusetts interstate banking statute as part of Fleet's CRA
Plan.25
The Board also received comments regarding
Fleet's proposal in Maine from several individuals
expressing:
(1) dissatisfaction with the bidding process and
Fleet's services and foreclosure policies;
(2) general concerns over the loss of a Maine-based
bank; and
(3) concerns over potential unemployment.
As discussed above, Fleet was selected as the winning
bidder by the FDIC in a process that is within the
exclusive jurisdiction of the FDIC and not subject to
review by the Board. Also as noted above, Fleet's
Maine subsidiary bank has a satisfactory record in
meeting the convenience and needs of its entire community, including low- and moderate-income neighborhoods. These comments do not specify why outof-state ownership of New Maine would prevent it
from serving the credit needs of the community.
Finally, the potential for unemployment at New Maine
is offset by the substantial public benefit to the entire
community of preserving New Maine as a competitor,
employer, and provider of credit opportunities. Accordingly, the Board does not believe that the matters
raised by these comments warrant denial of these
applications under the convenience and needs factor.
On the basis of these and all the facts of record, the
Board believes that considerations relating to the
convenience and needs of the communities to be
served favor approval of these applications.
Other Comments and Request for Public Hearing
The Union Neighborhood Assistance Corporation,
Boston, Massachusetts ("UNAC") has filed com-

areas. Finally, Fleet will provide over $1 million to improve access
to banking products and services to Boston's minority, low- and
moderate-income areas.
25. Another individual commented that a branch of Fleet Bank of
Maine failed to make available the bank's public CRA file. Fleet
maintains that this error was the result of a misunderstanding and has
undertaken to ensure that the bank does not repeat such an error.




755

ments alleging that Fleet's subsidiary banks and its
nonbank mortgage subsidiary, Fleet Finance, Inc.
("Fleet Finance"), financially support mortgage finance companies that engage in abusive lending practices. According to UNAC, these mortgage companies
lend to borrowers, particularly low-income individuals, at inflated interest rates and with substantial loan
charges, even though the borrowers do not have
sufficient income to repay the loans. UNAC alleges
that a disproportionately high number of borrowers
from these finance companies eventually lose their
homes through foreclosure as a result of these practices. 26 UNAC asserts that a public hearing is necessary to develop an adequate factual record to consider
its allegations.27
While Fleet acknowledges that certain of its bank
subsidiaries extended credit to several Massachusetts
mortgage finance companies identified by UNAC,
Fleet maintains that these loans were small and all
lending relationships with these companies were
ended as of March 1990.28 In addition, Fleet has
announced an $11 million Homeowner's Assistance
Plan to aid low-income and minority homeowners who
received burdensome mortgage loans from mortgage
companies that obtained financing from Fleet and
Bank of New England. Fleet plans to:
(1) create a $10 million mortgage refinancing program featuring below-market pricing and customized underwriting criteria;
(2) grant up to $1 million for assistance to homeowners who suffered losses through the actions of the
mortgage finance companies;
(3) contribute $100,000 to a legal defense fund for
homeowners unable to afford legal representation;
and

26. UNAC specifically alleges that Fleet:
(1) lends directly to mortgage finance companies engaged in abusive
practices in Massachusetts; and
(2) purchases loans through Fleet Finance that were made without
proper underwriting standards. UNAC also generally alleges
that Fleet purchases loans in violation of the Truth in Lending
Act and questions Fleet Finance's relationship with certain
"master brokers" based in Georgia. In addition, UNAC generally questions Fleet's lending relationship with all mortgage
companies but has not provided specific facts regarding these
relationships.
27. UNAC also alleges that Fleet controls two insurance subsidiaries that provide credit life insurance and that credit life insurance is
often a requirement for loan applicants. Fleet denies that loan applicants are required to purchase insurance from the Fleet companies as
a condition of any loan. In this regard, the Board notes that the Bank
Holding Company Act and the Board's regulations prohibit tying an
extension of credit to the condition that the borrower purchase credit
insurance from an affiliate. 12 U.S.C. § 1972.
28. UNAC also alleges that Fleet purchases loans from a lender
alleged to have engaged in fraudulent home improvement lending
activities. Fleet states that it has terminated its activities with this
company.

756

Federal Reserve Bulletin • September 1991

(4) support proposed Massachusetts legislation designed to regulate mortgage finance companies and
home improvement contractors that lend to customers.
Fleet also states that it reviews all mortgages that it
purchases from mortgage finance companies for compliance with Fleet's own underwriting standards. According to Fleet, the effectiveness of its underwriting
standards has been verified by a recent securitization
of mortgage loans originated and purchased by Fleet
Finance.29 Fleet denies that Fleet Finance has knowingly purchased loans that violate Truth in Lending
Act and usury laws and states that Fleet Finance
reviews such loans according to established procedures in order to minimize the possibility that Fleet
would acquire mortgage loans from lenders engaged in
illegal or improper activities.30
In this regard, the Board notes that the Federal
Reserve Bank of Boston ("Reserve Bank") has commenced an examination and review of Fleet Finance's
mortgage practices in consultation with the Federal
Trade Commission ("FTC"). The FTC has jurisdiction over any violations of the Truth in Lending Act
and any unfair and deceptive practices by Fleet Finance or the mortgage companies identified by UNAC
as originating the loans. In conjunction with its review,
the Reserve Bank will provide an opportunity to
members of the public to provide information on
matters relating to Fleet's mortgage lending practices.
The Reserve Bank also has offered to hold a meeting
with banks, public officials, and community leaders to
discuss issues relating to mortgage lending practices in
Massachusetts generally. The Board will evaluate the
results of the Reserve Bank's examination and review
to determine whether any supervisory action is appropriate.
The Board expects that this review will take several
weeks to conclude. The FDIC has written the Board,
urging that it act upon these applications as quickly as
possible in light of substantial continuing losses at the
bridge banks and the substantial costs to the FDIC that
will continue until the proposal is consummated. In
view of the FDIC's request and the very substantial

29. Independent sampling of these loans indicates that borrowers
had sufficient current verifiable income to meet debt with an average
installment debt to gross income ratio of approximately 35 percent.
30. Fleet generally requires that:
(1) purchased loans conform with Fleet's own underwriting standards;
(2) selling lenders warrant that each loan complies with all legal
requirements; and
(3) selling lenders agree to repurchase loans that do not comply with
applicable laws. Fleet also reviews the licenses and reputations
of selling lenders and appropriate loan documents to ensure that
the seller complies with relevant laws.




public benefits of this proposal, including the important benefits to the convenience and needs of the New
England communities served by the bridge banks, the
Board believes that it must act promptly on these
applications and will not defer action in order to hold
a public hearing or until the review is completed.31
As previously noted, Fleet's proposal will recapitalize each of the bridge banks, preserving and revitalizing a provider of banking services in numerous communities in New England. By restoring the bridge
banks as effective competitors, Fleet will create the
bases for new credit opportunities in these communities. The Board believes that consummation of the
proposal will be beneficial to the New England banking system and economy.
After carefully considering the facts of record, including UNAC's comments and Fleet's responses, as
well as the significant public benefits that are expected
to result from this proposal, the Board concludes that
UNAC's comments do not warrant denial of these
applications under applicable statutory criteria.
Other Considerations
Fleet Bank of Maine has applied under section 9 of the
Federal Reserve Act (12 U.S.C. § 321 et seq.) to establish branches at the existing sites of the branches of
New Maine. Fleet Bank of Maine meets all the criteria
in the Federal Reserve Act to establish branches.
Accordingly, the application of Fleet Bank of Maine to
establish branches at the existing sites of New Maine
branches is approved.
Based on the foregoing and other considerations
reflected in the record, and subject to the commitments made by Applicants in this case and to Fleet's
obtaining all necessary state approvals, the Board has
determined that the applications should be, and hereby
are, approved. The FDIC has indicated that an emergency exists and has requested that the Board act
expeditiously. Based on these requests and all the
facts of record, the Board finds that an emergency
exists requiring expeditious action. Accordingly, as

31. The Board is not required to hold a public hearing on these
applications under the Bank Merger Act or section 3 of the BHC Act
because the state banking commissioners of Maine, Connecticut and
Massachusetts have not objected to the proposal within the comment
periods specified in those Acts. The Board has provided UNAC and
other interested commenters an opportunity to present information,
and UNAC has submitted two sets of written comments. As noted
above, the Reserve Bank has also commenced an examination of Fleet
Finance and will make its staff available to receive information on this
matter from the public. In light of these efforts, and the statement by
the FDIC that an emergency exists in this case that requires expeditious action on this proposal as well as the substantial public benefits
that would result from consummation of this proposal, the Board has
determined not to exercise its discretion to grant the request by
UNAC for a public hearing, and denies the request.

Legal Developments

provided in section 18(c)(6) of the FDI Act and section
11 of the BHC Act, the transaction may be consummated on or after the fifth calendar day following the
effective date of this order.
By order of the Board of Governors, effective
July 1, 1991.
Voting for this action: Chairman Greenspan and Governor
La Ware. Concurring in this action: Governor Mullins. Voting
against this action: Governors Angell and Kelley.

218 York Street
York, Maine 03909
38 Bangor Street
Augusta, Maine 04330
110 Maine Street
Brunswick, Maine 04011
One Merchants Plaza
Bangor, Maine 04401

JENNIFER J. JOHNSON

Associate Secretary of the Board

Caribou Mall,
Sweden Street
Caribou, Maine 04736

Appendix
181 Center Street
Auburn, Maine 04210
206 Main Street
Biddeford, Maine 04006
21 Armory Street
Agusta, Maine 04330
77 North Main Street
Brewer, Maine 04005
124 State Road
Elliot, Maine 03903
19 North Street
Windham Shopping Center
North Windham, Maine 04062

77 West Maine Street
Ft. Kent, Maine 04743
69 Main Street
Orono, Maine 04473
Union and Limerick
Rockland, Maine 04841
Route 1
Wells, Maine 04090
106 U.S. Route 1
Falmouth, Maine 04105
13 Main Street,
U.S. Route 1
Ogunqui, Maine 03907
351 Main Street
Presque Isle, Maine 04798

1356 Washington Street
Portland, Maine 04104

Main Street
Thomaston, Maine 04561

15 Hinckley Drive
South Portland, Maine 04101

559 Union Street
Bangor, Maine 04401

415 Gorham Road
Mall Plaza
South Portland, Maine 04106

Access Highway Branch
Route 89
Caribou, Maine 04736

Wallingford Square
Kittery, Maine 03904

83 Front Street
Bath, Maine 04530

Forest Avenue
Portland, Maine 04104

Main Street
Dixifield, Maine 04224

215 Maine Street
South Berwick, Maine 03906

Federal Road
Kazar Falls, Maine 04047




757

758

Federal Reserve Bulletin • September 1991

400 Congress Street
Portland, Maine 04104
430 U.S. Route 1
Scarborough, Maine 04074
63 Main Street
Yarmouth, Maine 04096
Commercial Street
Hartland, Maine 04943
27 Main Street
Pittsfield, Maine 04967
108 Congress Street
Rumford, Maine 04276
Plaza Shopping Center
Westbrook, Maine 04092

Concurring Statement of Governor Mullins
I concur in the decision to approve these applications.
In the context of this transaction, I do not believe that
the anticompetitive effects are so serious in any relevant banking market as to warrant either denial or
divestitures. There is no persuasive evidence of anticompetitive pricing or profits in any of the relevant
banking markets that would indicate that the markets
are overly concentrated or would become so upon
consummation of the proposal. In addition, there
would remain an adequate number of bank and thrift
competitors in each of the relevant banking markets,
and there do not appear to be significant barriers to
entry into these markets by other potential competitors. In light of these and the other facts of record and
in the context of this transaction, I believe that the
competitive factors in this case are consistent with
approval.
I concur with the other findings made in the opinion
of Chairman Greenspan and Governor La Ware.
July 1, 1991

Dissenting Statement of Governor Angell and
Governor Kelley
We must reluctantly disagree with the decision of the
majority in this case. We cannot vote to approve
without requiring that the Applicant make certain




limited divestitures to avoid what we believe are
serious anticompetitive effects in three markets. We
wish to emphasize that our point of disagreement
with the majority is on the narrow issue of whether
divestitures, representing less than 1 percent of the
deposits to be acquired in this case, are necessary in
three markets. We are in agreement with the findings
made in the majority opinion on all other aspects of
this case.
In our view, the proposal would have a significantly adverse effect on competition in the Bangor
and Pittsfield, Maine banking markets, and in the
Willimantic, Connecticut banking market. The proposal would result in significant increases in concentration in these already highly concentrated markets.
Upon consummation, Applicant would control at
least 60 percent of deposits in commercial banks and
33 percent of deposits in all banks and thrifts in each
of these markets. These increases, and the corresponding increases in the levels of the HerfindahlHirschman Index in these markets of over 500 points,
exceed the levels in the Department of Justice
Merger Guidelines and previously approved by the
Board in other cases. The anticompetitive effects of
the proposal could, in our judgment, be addressed
through divestitures representing a total for all three
markets of approximately $90 million, out of a total
acquisition of approximately $15 billion.
We recognize that the FDIC has chosen the Applicant as the single winning bidder in this case. However, given the facts of this case and the limited
nature of divestitures necessary, we do not believe
that the Board should approve this proposal without
requiring divestitures that would eliminate the substantial anticompetitive effects of the proposal in the
three markets.
Applicant has given no indication that the limited
amount of divestitures cannot be completed or that
the contemplated divestitures would in any significant respect have affected the bidding process
for the bridge banks. In fact, Applicant has agreed to
make whatever divestitures would be required by
the Board to address anticompetitive effects. Given
these circumstances, we do not believe that the
small amount of divestitures that would be required
to address anticompetitive effects in the three markets would interfere with achievement of the
public benefits of the proposal, which we recognize
are substantial. Accordingly, we must dissent
from the decision of the majority to approve these
applications without divestitures in the three markets.
July 1, 1991

Legal Developments

Orders Issued Under Section 4 of the Bank
Holding Company Act
Swiss Bank Corporation
Basel, Switzerland
Order Approving an Application to Engage in
Trading in Futures, Options, and Options on Futures
Based on U.S. Government Securities and Certain
Money Market Instruments
Swiss Bank Corporation, Basel, Switzerland ("Applicant"), a foreign bank subject to the provisions of
the Bank Holding Company Act (the "BHC Act"),
has applied under section 4(c)(8) of the BHC Act
(12 U.S.C. § 1843(c)(8)) and section 225.23 of the
Board's Regulation Y (12 C.F.R. 225.23), for the
Board's approval to engage through its wholly owned
subsidiary, SBC Government Securities, Inc., New
York, New York ("Company"), in trading, for its own
account, in futures, options, and options on futures
based on U.S. government securities that are permissible investments for national banks ("bank-eligible
securities") and certain money market instruments.1
Notice of the application, affording interested persons an opportunity to submit comments on the proposal, has been published (55 Federal Register 29,896
(1990)). The time for filing comments has expired, and
the Board has considered the application and all
comments received in light of the public interest
factors set forth in section 4(c)(8) of the BHC Act.
Applicant is the 27th largest banking organization in
the world, controlling total consolidated assets of
approximately U.S. $152.2 billion.2 Applicant has
branches in New York, New York; Chicago, Illinois;
and San Francisco, California; and agencies in Atlanta, Georgia; Miami, Florida; and Houston, Texas.
Company is a primary dealer in government securities.
In order to approve an application submitted pursuant to section 4(c)(8) of the BHC Act, the Board is
required to determine that the proposed activity is "so
closely related to banking as to be a proper incident
thereto." 12 U.S.C. § 1843(c)(8). In considering
whether a proposed new activity would be a proper

1. In particular, Applicant has proposed to trade the derivative
instruments listed in Appendix A. Company would hedge its positions
in these instruments with the instruments listed in Appendix B.
The Board has previously determined that bank holding companies
may purchase derivative instruments based on government securities
for the purpose of reducing the holding company's interest rate
exposure. Statement of policy concerning bank holding companies
engaging in futures, forward and options contracts on U.S. Government and agency securities and money market instruments, 12 C.F.R.
225.142 ("Policy Statement").
2. Banking data are as of December 31, 1990.




759

incident to banking, the Board must find that the
proposed acquisition "can reasonably be expected to
produce benefits to the public . . . that outweigh the
possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices."
12 U.S.C. § 1843(c)(8).

A. Closely Related to Banking

Analysis

Under the established test for determining when an
activity is closely related to banking, the Board may
find that an activity is closely related to banking for
purposes of section 4(c)(8) of the BHC Act if:
(1) banks generally do in fact conduct the proposed
activity;
(2) banks generally provide services that are operationally or functionally so similar to the proposed
activity as to equip them particularly well to provide
the proposed services; or
(3) banks generally provide services that are so
integrally related to the proposed service as to
require their provision in a specialized form.3
In this case, the record shows that banks do conduct
the proposed trading activity. The Office of the Comptroller of the Currency ("OCC") has permitted national banks to purchase and sell instruments based on
bank-eligible securities.4 The OCC has approved trading in derivative instruments for the company's own
account through an operations subsidiary of a national
bank, finding the activity incidental to the purchase
and sale of bank-eligible securities, including government securities.5 The OCC required that the bank limit
the use of these instruments to those contracts which
represented securities that a bank may purchase or sell
for its own account.
The Board has approved applications to trade in
derivative instruments based on foreign exchange for
the company's own account for other than hedging

3. See National Courier Association v. Board of Governors, 516
F.2d 1229, 1237 (D.C. Cir. 1975). The Board may also consider any
other factor that an applicant may advance to demonstrate a reasonable or close connection or relationship to banking. 49 Federal
Register 794, 806 (1984); Securities Industry Ass'n v. Board of
Governors, 468 U.S. 207, 210-11 n.5 (1984).
4. See OCC Interpretive Letter No. 260 (June 27,1983), reprinted in
[1983-1984 Transfer Binder] Fed. Banking L. Rep. (CCH) H 85,424.
5. OCC Interpretive Letter No. 422 (April 11, 1988), reprinted in
[1988-89] Transfer Binder Fed. Banking L. Rep. 1 85,645. The OCC
noted that derivative instruments "bear an intrinsic relationship to
their underlying financial instruments inasmuch as a futures contract
represents a commitment to buy or sell the underlying financial
instruments." OCC Interpretive Letter No. 86-13 (August 8, 1986),
reprinted in [1988-89 Transfer Binder] Fed. Banking L. Rep.
(CCH) H 84,019.

760

Federal Reserve Bulletin • September 1991

purposes.6 The Board determined that a bank holding
company may purchase and sell derivative instruments based on foreign exchange under section 4(c)(8)
of the BHC Act because banks may trade in foreign
exchange and the applicant instituted controls to monitor the risks of the trading operations. The Board has
also authorized bank holding companies to act as
futures commission merchants and to offer advice with
regard to futures and options on futures on bankeligible securities, pursuant to sections 225.25(b)(18)
and (b)(19) of the Board's Regulation Y (12 C.F.R.
225.25(b)( 18),(19)).
The Board believes that purchasing and selling
derivative instruments which represent the right to
purchase or sell bank-eligible securities is closely
related to banking.7 The experience gained by banks in
dealing in the securities that underlie these instruments would likewise equip the banks to trade in
instruments based on these securities. In addition, the
derivative instruments based on money market instruments that Applicant proposes that Company trade in
require a market judgment on interest rates. Banks,
through lending and funding activities, have developed
expertise in judging interest rates and predicting future
price movements. In sum, the Board believes that the
proposed activity of trading for Company's own account in derivative instruments based on bank-eligible
securities and certain money market instruments is
closely related to banking for purposes of section
4(c)(8) of the BHC Act pursuant to the standards set
forth in the National Courier case, because banks
conduct the proposed activity, and generally provide
services that are operationally or functionally so similar to the proposed activity as to equip them particularly well to provide the proposed services.

B. Proper Incident to Banking

Analysis

In determining whether an activity is a proper incident
to banking the Board must consider whether the
activity "can reasonably be expected to produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency, that outweigh possible adverse effects, such as undue
concentration of resources, decreased or unfair competition, conflicts of interest, or unsound banking
practices."

6. The Hongkong and Shanghai Banking Corporation, Kellett,
N.V., HSBC Holdings, B.V., and Marine Midland Banks, Inc., 75
Federal Reserve Bulletin 217 (1989).
7. Applicant would not be authorized to purchase derivative instruments based on securities or instruments that a state member bank
may not purchase for its own account.




1. Public Benefits. Applicant maintains that its activities relating to derivative instruments would enhance
its ability to operate efficiently in the government
securities business because of the close correlation
between the markets. Competition in the market
would be increased, because Company would be a
de novo competitor. Using the technology and computer models that Applicant has obtained by entering
into a joint venture with a commodities trading firm,8
Applicant maintains that it may profitably trade in
derivative instruments in a manner that is consistent
with safe and sound banking practices.9
2. Adverse Effects. The Board has previously noted
that trading in derivative instruments for other than
hedging purposes could pose significant financial risks
to the parent bank holding company, raising safety and
soundness concerns. Other adverse effects could involve conflicts of interests between Company's trading activities and any advisory services concerning
these instruments.
The Board notes that, as a primary dealer, Company
has broad experience in trading and monitoring bankeligible securities positions. 10 In addition, Applicant
has developed expertise in dealing in derivative instruments from its trading activities outside the United
States. The resulting familiarity with the operations
and controls associated with these products should
help to ensure prudent operations, since Company
already has the operational, accounting and control
systems in place to properly monitor positions resulting from trading these contracts. Applicant maintains
that these sophisticated risk management controls
would tend to minimize the likelihood of potentially
significant losses resulting from the proposed activities. Applicant would use the instruments listed in
Appendix B to ensure that compliance with the risk
limits established by management would be maintained by Company.
Applicant has also established counterparty credit
risk guidelines, which would limit its exposure to third
parties. As a registered broker-dealer Company would
be required to comply with the Securities and Exchange Commission's net capital rule.11 Applicant and
Company will have comprehensive review procedures
in place to insure that Applicant and Company adhere
to the risk limits established for the trading operation.

8. Swiss Bank Corporation, 11 Federal Reserve Bulletin 126 (1991)
("Swiss Bank").
9. Company would not become a specialist or market-maker with
respect to these instruments.
10. As a primary dealer, Company is subject to regular review and
reporting requirements to allow the Federal Reserve Bank of New
York to monitor Company's performance.
11. 15 C.F.R. 240.15c3-l.

Legal Developments

Company's exposure to risk related to the proposed
activities in respect of options on government obligations will be monitored in connection with hedging and
risk control mechanisms, including risk limits established for the trading operation. The proposed activities would be monitored separately from Company's
activities as a primary dealer. Applicant anticipates
that Company's position in derivative instruments
would be small in comparison with its primary dealer
operations.
Both business management and internal auditing
personnel will monitor Company's compliance with
risk limits. Senior management will be periodically
informed of the potential risk to which Company is
exposed. Auditing personnel will report directly to
senior management to ensure that any violations of
risk limitations are corrected. In addition, in addressing any potential conflicts of interests issues raised
by Applicant's investment advisory activities, the
Board notes that Applicant provides through its joint
venture subsidiary, investment advice on derivative
instruments based on bank-eligible and non-financial
instruments only to Applicant, its affiliates and a
co-venturer commodity trading organization through
the joint venture arrangement. 12 In sum, the record
shows that consummation of this proposal is not
likely to result in any significantly adverse effects,
such as undue concentration of resources, decreased
or unfair competition, conflicts of interests, unsound
banking practices.
The financial and managerial resources of Applicant
are considered consistent with approval. Based on
consideration of all the relevant facts, the Board
concludes that the balance of the public interest factors that it is required to consider under section 4(c)(8)
is favorable. Accordingly, based on all the facts of
record, and subject to the conditions of this Order, the
Board has determined that the proposed application
should be, and hereby is, approved.
The Board's determination is subject to all the
conditions set forth in the Board's Regulation Y,
including those in sections 225.4(d) and 225.23(b), 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.
This transaction shall not be consummated later than
three months after the effective date of this Order,
unless such period is extended for good cause by the

12. Swiss Bank, supra. This joint venture subsidiary would not
provide advice to third parties without prior Board approval. Id.




761

Board or by the Federal Reserve Bank of New York,
pursuant to delegated authority.
By order of the Board of Governors, effective
July 12, 1991.
Voting for this action: Chairman Greenspan and Governors
Angell, Kelley, and Mullins. Absent and not voting: Governor LaWare.
JENNIFER J. JOHNSON

Associate

Secretary of the Board

Appendix A
Applicant has proposed to trade for its own account in
the following instruments:
(i) Options on U.S. Treasury Bond Futures, which
are traded on the Chicago Board of Trade
("CBOT");
(ii) Options on Ten Year U.S. Note Futures, which
are traded on the CBOT;
(iii) Options on Eurodollar Futures, which are
traded on the Chicago Mercantile Exchange
("CME");
(iv) Options on U.S. Treasury Bill Futures, which
are traded on CME;
(v) Options on 30-day LIBOR Futures, which are
traded on the CME;
(vi) Options on 30-Year U.S. Treasury Bonds Specific Issues, which are traded on the Chicago Board
Options Exchange ("CBOE");
(vii) Options on 5-Year U.S. Treasury Notes Specific Issues, which are traded on the CBOE;
(viii) Options on Short Term Treasury Index, which
are traded on the CBOE;
(ix) Options on Long Term Treasury Index, which
are traded on the CBOE;
(x) Options on U.S. Treasury Bills, Notes and
Bonds, which would be traded on the over-thecounter market ("OTC");
(xi) Options on Five Year Treasury Note Futures,
which are traded on the New York Commodities
Exchange ("NYCE");
(xii) Options on Eurodollar Futures, which are
traded on the London International Financial Futures Exchange ("LIFFE"); and
(xiii) Options on U.S. Treasury Bond Futures,
which are traded on the LIFFE. 1

1. Applicant has indicated that SBCGSI would also trade in:
(i) futures contracts on two-year U.S. Treasury notes, which
would be traded on the CBOT;
(ii) options on futures on two-year and five-year U.S. Treasury
notes, which would be traded on the CBOT. These contracts
have not commenced trading on the CBOT.

762

Federal Reserve Bulletin • September 1991

(viii) Five Year Treasury Note Futures, which are
traded on the NYCE;
(ix) U.S. Two Year Treasury Note Futures, which
are traded on the NYCE;
(x) Eurodollar Futures, which are traded on the
LIFFE;
(xi) U.S. Treasury Bond Futures, which are traded
on the LIFFE; and
(xii) Futures and options on futures on The Bond
Buyer Municipal Bond Index, which are traded on
the CBOT.

Appendix B
Applicant would hedge its positions in the contracts
listed in Appendix A through the purchase of the
following exchange-traded contracts:1
(i) U.S. Treasury Bond Futures, which are traded on
the CBOT;
(ii) U.S. Treasury Ten Year Note Futures, which
are traded on the CBOT;
(iii) U.S. Treasury Five Year Note Futures, which
are traded on the CBOT;
(iv) 30-Day Interest Rate Futures, which are traded
on the CBOT;2
(v) Eurodollar Futures, which are traded on the
CME;
(vi) U.S. Treasury Bill Futures, which are traded on
the CME;
(vii) 30-day LIBOR Futures, which are traded on the
CME;

1. Applicant has indicated that Company would use these instruments in accordance with detailed hedging strategies that are designed
to measure and control various price, market and portfolio risks.
SBCGSI would examine the instruments available and make a decision based on quantity, maturity, and its risk analysis. Applicant has
represented that movements in these instruments have a statistically
significant correlation to movements in options on government securities, and thus appear at the present time to be appropriate hedging
devices.
2. The 30-day interest rate futures contract is cash-settled against
the average daily Federal funds rate for the delivery month period.

ORDERS ISSUED UNDER THE FINANCIAL
ACT ("FIRREA
ORDERS ")

Applicant would also purchase and sell the following
OTC contracts for hedging purposes:
(i) U.S. Treasury Bills, Notes and Bonds;
(ii) Warrants and Forward Rate Agreements on
Interest Rates of Major Currencies;3
(iii) Options on Forward Rate Agreements on Interest Rates of Major Currencies;
(iv) Interest Rate or Currency Swaps;
(v) Options on Interest Rate or Currency Swaps;
(vi) Caps, Floors, or Collars on Interest Rates of
Major Currencies; and
(vii) Options on Interest Rate or Currency Caps,
Floors, or Collars.

3. Applicant describes these contracts as interest rate contracts
denominated in a foreign country's currency.

INSTITUTIONS

REFORM, RECOVERY,

AND

ENFORCEMENT

Recent orders have been issued by the Staff Director of the Division of Banking Supervision and Regulation and
the General Counsel of the Board as listed below. Copies are available upon request to the Freedom of
Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington,
D.C. 20551.

Bank Holding Company
BankAmerica Corporation,
San Francisco, California




Acquired
Thrift
Commerce Federal
Savings Association,
San Antonio, Texas

Surviving
Bank(s)
Bank of America
Texas, N.A.,
Houston, Texas

Approval
Date
July 12, 1991

Legal Developments

763

FIRREA Orders—Continued
Acquired
Thrift

Bank Holding Company
First Commercial Corporation,
Little Rock, Arkansas

Rebank Netherlands Antilles
Miami, Florida
Republic Banking Corporation of
Florida
Miami, Florida
Simmons First National
Corporation,
Pine Bluff, Arkansas

APPLICATIONS

APPROVED

Surviving
Bank(s)

First Savings of
Arkansas, F.A.,
Little Rock, Arkansas
(Van Buren, Helena,
Asher, Rodney Parham,
McCain, Home Office
and Cabot Branches)
First Commercial Bank,
N.A.,
Little Rock, Arkansas
Ensign Federal Savings
Bank,
New York, New York
(Kendale Lake, Florida
Branch)
First Savings of
Arkansas, F.A.,
Little Rock, Arkansas
(Fort Smith and Pine
Bluff Branches)

First Commercial
Bank of Lonoke
County,
England, Arkansas

July 26, 1991

Republic National
Bank of Florida,
Miami, Florida

July 19, 1991

Simmons First
National Bank,
Pine Bluff,
Arkansas

July 26, 1991

UNDER BANK HOLDING

COMPANY

Approval
Date

ACT

By the Secretary of the Board
Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon
request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve
System, Washington, D.C. 20551.

Section 4

Applicant(s)
BankAmerica Corporation,
San Francisco, California
First Commercial Corporation,
Little Rock, Arkansas

Rebank Netherlands Antilles,
Miami, Florida
Republic Banking Corporation
of Florida,
Miami, Florida




Bank(s)
BAC Coyote Interim Federal
Savings Bank,
Houston, Texas
Pinnacle Federal Savings and Loan,
Little Rock, Arkansas
Cypress Bayou Federal Savings
and Loan,
England, Arkansas
Republic Federal Interim Bank II,
F.S.B.,
Miami, Florida

Effective
Date
July 12, 1991

July 26, 1991

July 19, 1991

764

Federal Reserve Bulletin • September 1991

Section 4—Continued

Applicant(s)
Simmons First National Corporation,
Pine Bluff, Arkansas

APPLICATIONS

APPROVED

By Federal Reserve

Effective
^

Bank(s)
Simmons Federal Savings and
Loan Association,
Pine Bluff, Arkansas

UNDER BANK HOLDING

COMPANY

July 26, 1991

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)
A.N.B. Holding Company, Ltd.,
Terrell, Texas
Columbia Bancorp-Delaware,
Inc.,
Wilmington, Delaware
Columbus Bancorp, Inc.,
Columbus, Texas

First National Security
Company,
DeQueen, Arkansas
Lisco State Company,
Lisco, Nebraska
First Nebraska Bancs, Inc.,
Sidney, Nebraska
LS Bancorp, Inc.,
La Salle, Illinois
Overton Financial Corporation,
Overton, Texas

Rawlins National
Bancorporation, Inc.,
Denver, Colorado
RCN Holding Company,
Sisseton, South Dakota




Reserve
Bank

Bank(s)

Effective
Date

The American National
Bank of Terrell,
Terrell, Texas
The First State Bank,
Columbus, Texas

Dallas

July 16, 1991

Dallas

July 19, 1991

Columbia BancorpDelaware, Inc.,
Wilmington, Delaware
The First State Bank,
Columbus, Texas
Bank of Waldron,
Waldron, Arkansas

Dallas

July 19, 1991

St. Louis

July 17, 1991

First National Financial
Corporation,
Estes Park, Colorado

Kansas City

July 5, 1991

La Salle State Bank,
La Salle, Illinois
Lindale Bancshares, Inc.,
Lindale, Texas
Lindale State Bank,
Lindale, Texas
The Rawlins National
Bank,
Rawlins, Wyoming
The Roberts County
National Bank of
Sisseton,
Sisseton, South Dakota

Chicago

June 28, 1991

Dallas

July 22, 1991

Kansas City

July 19, 1991

Minneapolis

July 18, 1991

Legal Developments

Section 3—Continued

Applicant(s)
Swatara Bancorp, Inc.,
Jonestown, Pennsylvania

Synovus Financial Corp.,
Columbus, Georgia
TB&C Bancshares, Inc.,
Columbus, Georgia
Synovus Financial Corp.,
Columbus, Georgia
TB&C Bancshares, Inc.,
Columbus, Georgia

Reserve
Bank

Bank(s)
Jonestown Bank and
Trust Company,
Jonestown,
Pennsylvania
Athens Federal Savings
Bank,
Athens, Georgia
CB Bancshares, Inc.,
Fort Valley, Georgia

Effective
Date

Philadelphia

July 23, 1991

Atlanta

July 12, 1991

Atlanta

July 12, 1991

Section 4

Applicant(s)
Bankers Trust New York
Corporation,
New York, New York
BanPonce Corporation,
Hato Rey, Puerto Rico
Brooke Holdings, Inc.,
Jewell, Kansas
Caisse Nationale de Credit
Agricole,
Paris, France
Commercial Banshares, Inc.,
Mitchell, South Dakota
Norwest Corporation,
Minneapolis, Minnesota




Nonbanking
Activity/Company
BT Asset Management,
Inc.,
New York, New York
Spring Financial Services,
Inc.,
Mt. Laurel, New Jersey
Mid America Real Estate
and Insurance,
Phillipsburg, Kansas
Credit Agricole Futures,
Inc.,
Chicago, Illinois
Spectrum Life Insurance
Company,
Omaha, Nebraska
Norwest Financial
Services, Inc.,
Des Moines, Iowa
Norwest Financial, Inc.,
Des Moines, Iowa
Prime Rate Premium
Finance Corporation,
Inc.,
Florence,
South Carolina
Agency Technologies,
Inc.,
Florence,
South Carolina
IFCO, Inc.,
Fayetteville,
North Carolina

Reserve
Bank

Effective
Date

New York

July 16, 1991

New York

July 25, 1991

Kansas City

July 10, 1991

Chicago

July 18, 1991

Minneapolis

July 1, 1991

Minneapolis

July 24, 1991

765

766

Federal Reserve Bulletin • September 1991

APPLICATIONS

APPROVED

UNDER BANK MERGER

ACT

Reserve
Bank

Applicant(s)

Bank(s)

Commercial State Bank Interim
of Orlando,
Orlando, Florida
First Exchange Bank of Madison
County,
Fredericktown, Missouri

Commercial State Bank of
Orlando,
Orlando, Florida
Jackson Exchange Bank
and Trust Company,
Jackson, Missouri

PENDING CASES INVOLVING
GOVERNORS

THE BOARD OF

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.
Hanson v. Greenspan, No. 91-1599 (D.D.C., filed
June 28, 1991). Suit for return of funds and financial
instruments allegedly owned by plaintiffs.
Fields v. Board of Governors, No. 3:91CV069 (N.D.
Ohio, filed February 5, 1991). Appeal of denial of
request for information under the Freedom of Information Act.
State of Illinois v. Board of Governors, No. 90-3824
(7th Circuit, appeal filed December 19, 1990). Appeal of injunction restraining the Board from providing state examination materials in response to a
Congressional subpoena. On November 30, 1990,
the U.S. District Court for the Northern District of
Illinois issued a preliminary injunction preventing
the Board and the Chicago Reserve Bank from
providing documents relating to the state examination in response to the subpoena. The House Committee on Banking, Finance and Urban Affairs appealed the injunction. On July 25, 1991, the court of
appeals dismissed the appeal as moot.
Citicorp v. Board of Governors, No. 90-4124 (2d
Circuit, filed October 4, 1990). Petition for review of
Board order requiring Citicorp to terminate certain
insurance activities conducted pursuant to Delaware
law by an indirect nonbank subsidiary. On June 10,
1991, the Court of Appeals granted the petition and
vacated the Board's order.
Stanley v. Board of Governors, No. 90-3183 (7th
Circuit, filed October 3, 1990). Petition for review of
Board order imposing civil money penalties on five
former bank holding company directors. Oral argument was held May 16, 1991.



Effective
Date

Atlanta

July 12, 1991

St. Louis

June 27, 1991

Sibille v. Federal Reserve Bank of New York and
Board of Governors, No. 90-CIV-5898 (S.D. New
York, filed September 12, 1990). Appeal of denial of
Freedom of Information Act request. On May 13,
1991, the court heard argument on the plaintiff's
motion for a Vaugn index and the Board's motion to
dismiss. On July 9, the court denied the plaintiff's
motion and granted the Board's motion to dismiss.
Burke v. Board of Governors, No. 90-9509 (10th
Circuit, filed February 27, 1990). Petition for review
of Board orders assessing civil money penalties and
issuing orders of prohibition. Oral argument took
place May 7, 1991.
Kaimowitz v. Board of Governors, No. 90-3067 (11th
Cir., filed January 23, 1990). Petition for review of
Board order dated December 22, 1989, approving
application by First Union Corporation to acquire
Florida National Banks. Petitioner objects to approval on Community Reinvestment Act grounds.
Consumers Union of U.S., Inc. v. Board of Governors, No. 90-5186 (D.C. Cir., filed June 29, 1990).
Appeal of District Court decision upholding amendments to Regulation Z implementing the Home
Equity Loan Consumer Protection Act. On July 12,
1991, the Court of Appeals affirmed the majority of
district court decision upholding the Board's regulations, but remanded two issues to the Board for
further action.
Synovus Financial Corp. v. Board of Governors, No.
89-1394 (D.C. Cir., filed June 21, 1989). Petition for
review of Board order permitting relocation of a
bank holding company's national bank subsidiary
from Alabama to Georgia. Awaiting decision.
MCorp v. Board of Governors, No. 89-2816 (5th Cir.,
filed May 2, 1989). Appeal of preliminary injunction
against the Board enjoining pending and future
enforcement actions against a bank holding company now in bankruptcy. On May 15,1990, the Fifth
Circuit vacated the district court's order enjoining
the Board from proceeding with enforcement ac-

Legal Developments

tions based on section 23A of the Federal Reserve
Act, but upheld the district court's order enjoining
such actions based on the Board's source-ofstrength doctrine. 900 F.2d 852 (5th Cir. 1990). On
March 4, 1991, the Supreme Court granted the
parties' cross-petitions for certiorari, Nos. 90-913,
90-914. The Board's brief was filed on April 18, and
MCorp's brief was filed on June 10, 1991.
MCorp v. Board of Governors, No. CA3-88-2693
(N.D. Tex., filed October 10, 1988). Application for
injunction to set aside temporary cease and desist
orders. Stayed pending outcome of MCorp v. Board
of Governors, 900 F.2d 852 (5th Cir. 1990).
White v. Board of Governors, No. CU-S-88-623-RDF
(D. Nev., filed July 29, 1988). Age discrimination
complaint. Board's motion to dismiss or for summary judgment was denied on January 3, 1991.
Awaiting trial date.
FINAL ENFORCEMENT ORDERS ISSUED BY THE
BOARD OF GOVERNORS

C o m m u n i t y National B a n c o r p , Inc.
Staten Island, N e w Y o r k
The Federal Reserve Board announced on July 24,
1991, the issuance of a Cease and Desist Order and an
Order of Assessment of a civil money penalty against
Community National Bancorp, Inc., Staten Island,
New York.




767

J o s e M . Valle
Miami, Florida
The Federal Reserve Board announced on July 24,
1991, the issuance of an Order of Prohibition against
Jose M. Valle, a former employee of the Banco del
Pinchincha, Miami, Florida.

WRITTEN AGREEMENTS
RESERVE
BANKS

APPROVED

BY

FEDERAL

B o c a Bank
B o c a R a t o n , Florida
The Federal Reserve Board announced on July 30,
1991, the execution of a Written Agreement among the
Federal Reserve Bank of Atlanta, the State Comptroller and Banking Commissioner of the State of Florida,
and the Boca Bank, Boca Raton, Florida.

Southeast Banking C o r p o r a t i o n
Miami, Florida
The Federal Reserve Board announced on July 8,
1991, the execution of a Written Agreement between
the Federal Reserve Bank of Atlanta and Southeast
Banking Corporation, Miami, Florida.

A1

Financial and Business Statistics
CONTENTS

WEEKLY REPORTING COMMERCIAL BANKS

Domestic Financial Statistics

Assets and liabilities
A19 All reporting banks
A21 Branches and agencies of foreign banks

MONEY STOCK AND BANK CREDIT

A3
A4
A5
A6

Reserves, money stock, liquid assets, and debt
measures
Reserves of depository institutions, Reserve Bank
credit
Reserves and borrowings—Depository
institutions
Selected borrowings in immediately available
funds—Large member banks

FINANCIAL MARKETS

A22 Commercial paper and bankers dollar
acceptances outstanding
A22 Prime rate charged by banks on short-term
business loans
A23 Interest rates—money and capital markets
A24 Stock market - Selected statistics
A25 Selected financial institutions—Selected assets
and liabilities

POUCY 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
A l l Maturity distribution of loan and security
holdings

FEDERAL FINANCE

All
A28
A29
A29

Federal fiscal and financing operations
U.S. budget receipts and outlays
Federal debt subject to statutory limitation
Gross public debt of U. S. Treasury - Types
and ownership
A30 U.S. government securities
dealers—Transactions
A31 U.S. government securities dealers—Positions
and financing
A32 Federal and federally sponsored credit
agencies—Debt outstanding

MONETARY AND CREDIT AGGREGATES

A12 Aggregate reserves of depository institutions
and monetary base
A13 Money stock, liquid assets, and debt measures
A15 Bank debits and deposit turnover
A16 Loans and securities—All commercial banks

COMMERCIAL BANKING INSTITUTIONS

A17 Major nondeposit funds
A18 Assets and liabilities, last-Wednesday-of-month
series




SECURITIES MARKETS AND
CORPORATE FINANCE

A33 New security issues-State and local
governments and corporations
A34 Open-end investment companies—Net sales
and asset position
A34 Corporate profits and their distribution
A34 Total nonfarm business expenditures on new
plant and equipment
A35 Domestic finance companies—Assets and
liabilities and business credit

2

Federal Reserve Bulletin • September 1991

Domestic Financial Statistics — Continued

A36 Mortgage markets
A37 Mortgage debt outstanding

A55 Foreign official assets held at Federal Reserve
Banks
A56 Foreign branches of U.S. banks—Balance
sheet data
A58 Selected U.S. liabilities to foreign official
institutions

CONSUMER INSTALLMENT CREDIT

REPORTED BY BANKS

REAL ESTATE

IN THE UNITED STATES

A38 Total outstanding and net change
A39 Terms

FLOW OF FUNDS

A40 Funds raised in U.S. credit markets
A42 Direct and indirect sources of funds to credit
markets
A43 Summary of credit market debt outstanding
A44 Summary of credit market claims, by holder

A58
A59
A61
A62

Liabilities to and claims on foreigners
Liabilities to foreigners
Banks' own claims on foreigners
Banks' own and domestic customers' claims on
foreigners
A62 Banks' own claims on unaffiliated foreigners
A63 Claims on foreign countries—Combined
domestic offices and foreign branches

REPORTED BYNONBANKING BUSINESS

Domestic Nonfinancial Statistics

ENTERPRISES IN THE UNITED STATES

SELECTED MEASURES

A64 Liabilities to unaffiliated foreigners
A65 Claims on unaffiliated foreigners

A45 Nonfinancial business activity-Selected
measures
A46 Labor force, employment, and unemployment
A47 Output, capacity, and capacity utilization
A48 Industrial production-Indexes and gross value
A50 Housing and construction
A51 Consumer and producer prices
A52 Gross national product and income
A53 Personal income and saving

International Statistics

SECURITIES HOLDINGS AND TRANSACTIONS

A66 Foreign transactions in securities
A67 Marketable U.S. Treasury bonds and
notes—Foreign transactions

INTEREST AND EXCHANGE RATES

SUMMARY STATISTICS

A68 Discount rates of foreign central banks
A68 Foreign short-term interest rates
A69 Foreign exchange rates

A54 U.S. international transactions-Summary
A55 U.S. foreign trade
A55 U.S. reserve assets

A71 Guide to Tabular Presentation,
Statistical Releases, and Special
Tables




Money Stock and Bank Credit

A3

1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES
Percent annual rate of change, seasonally adjusted 1
1990

1991

1991

Monetary and credit aggregates
Q3

Q4

Q1

Q2

Feb.

Mar.

Apr.

May'

June

2

1
2
3
4

Reserves of depository institutions
Total
Required
Nonborrowed 3
Monetary base

-.5
-.5
3.8
9.1

3.9
1.7
7.8
9.9

9.2
4.7
9.1
14.5

3.4
9.3
3.8
3.9

3.5
12.8
10.5
16.9

-1.1
14.7
-.8
6.0

-4.1
-.6
-3.9
-1.5

16.4
16.7
14.7
3.4

8.7
9.4
7.8
3.8

5
6
7
8
9

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

3.7
3.0
1.6
1.9^
7.1

3.4
2.0
.9
1.7'
5.5

5.9
3.4
4.0
3.3'
4.8

7.4
4.6
1.7
n.a.
4.2

14.1
8.4
10.4r
6.7
6.7

9.5
7.4
2.5'
-.5'
4.3

-1.1
2.8
.4
-9.5'
1.6'

13.5
4.3
.4
-6.2
5.6

9.6
1.3
-2.1
n.a.
n.a.

2.7
-3.8

1.5
-3.5

2.6
6.7r

3.7
-10.7

6.5
18.8

6.7
-17.9'

4.1'
-9.8'

1.2
-16.5

-1.5
-17.1

5.9
8.2
15.5
-2.2

5.2
3.5
11.5
-8.5

10.2
6.1
8.8'
12.0

16.4
16.7
-1.7
-.6

10.7
17.5
7.8'
21.6

15.4
17.8
4.6'
-3.6

18.1
14.8
-7.3
-5.7

14.9
18.6
-5.8
.9

20.4
13.8
1.0
-4.2

-3.3
-7.7
-11.0
-27.3

-7.3
-7.2
-8.6
-26.3

-,5 r
- . 9r
-9.8
-31.9

16.7
21.5
-13.6
-35.3

8.5r
7.5
-li.r
-31.5

14.7'
18.7
-14.2'
-34.5

20.7
23.9
-9.6'
-30.1'

18.1
30.7
-14.7
-47.4

11.9
12.3
-26.3
-42.5

Money market mutual funds
20 General purpose and broker-dealer
21 Institution-only

10.0
21.6

9.8
30.4

18.2
49.9

6.7
23.0

14.6
84.9

17.8
23.3

2.3
30.4

3.0
4.9

-2.6
-23.8

Debt components4
22 Federal
23 Nonfederal

14.4
4.8

11.6
3.7

12.2
2.4

5.4
3.8

15.2
3.9

5.1
4.1

-4.1
3.5'

10.3
4.1

n.a.
n.a.

Nontransaction components
10 In M25
11 In M3 only6

12
13
14
15
16
17
18
19

Time and savings deposits
Commercial banks
Savings
MMDAs
Small-denomination time 8
Large-denomination time '
Thrift institutions
Savings
MMDAs
Small-denomination time
Large-denomination time

1. Unless otherwise noted, rates of change are calculated from average
amounts outstanding in preceding month or quarter.
2. Figures incorporate adjustments for discontinuities associated with regulatory changes in reserve requirements. (See also table 1.20.)
3. 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.
4. Composition of the money stock measures and debt is as follows:
Ml: (1) currency outside the 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 due 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.
M2: Ml plus overnight (and continuing contract) repurchase agreements
(RPs) issued by all depository institutions and overnight Eurodollars issued to
U.S. residents by foreign branches of U.S. banks worldwide, money market
deposit accounts (MMDAs), savings and small-denomination time deposits
(time deposits—including retail repurchase agreements (RPs)—in amounts of
less than $100,000), and balances in both taxable and tax-exempt general
purpose and broker-dealer money market mutual funds. Excludes individual
retirement accounts (IRA) and Keogh balances at depository institutions and
money market funds. Also excludes all balances held by U.S. commercial
banks, money market funds (general purpose and broker-dealer), foreign
governments and commercial banks, and the U.S. government.
M3: M2 plus large-denomination time deposits and term RP liabilities (in
amounts of $100,000 or more) issued by all depository institutions, term Eurodollars held by U.S. residents at foreign branches of U.S. banks worldwide and at all




banking offices in the United Kingdom and Canada, and balances in both taxable
and tax-exempt, institution-only money market mutual funds. Excludes amounts
held by depository institutions, the U.S. government, money market funds, and
foreign banks and official institutions. Also subtracted is the estimated amount of
overnight RPs and Eurodollars held by institution-only money market mutual
funds.
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 mutual fund holdings of these assets.
Debt: Debt of domestic nonfinancial sectors consists of outstanding credit
market debt of the U.S. government, state and local governments, and private
nonfinancial sectors. Private debt consists of corporate bonds, mortgages, consumer credit (including bank loans), other bank loans, commercial paper, bankers
acceptances, and other debt instruments. Data are derived from the Federal
Reserve Board's flow of funds accounts. Data on debt of domestic nonfinancial
sectors are monthly averages, derived by averaging adjacent month-end levels.
Growth rates for debt reflect adjustments for discontinuities over time in the levels
of debt presented in other tables.
5. Sum of overnight RPs and Eurodollars, money market fund balances
(general purpose and broker-dealer), MMDAs, and savings and small time
deposits.
6. Sum of large time deposits, term RPs, term Eurodollars of U.S. residents,
and money market fund balances (institution-only), less a consolidation adjustment that represents the estimated amount of overnight RPs and Eurodollars held
by institution-only money market mutual funds.
7. Small-denomination time deposits—including retail RPs—are those issued
in amounts of less than $100,000. All IRA and Keogh accounts at commercial
banks and thrifts are subtracted from small time deposits.
8. Large-denomination time deposits are those issued in amounts of $100,000
or more, excluding those booked at international banking facilities.
9. Large-denomination time deposits at commercial banks less those held by
money market mutual funds, depository institutions, and foreign banks and
official institutions.

A48 DomesticNonfinancialStatistics • September 1991
1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT
Millions of dollars
Monthly averages of
daily figures

Weekly averages of daily figures for week ending

1991

1991

Factor
Apr.

May

June

May 15

May 22

May 29

June 5

June 12

June 19

June 26

285,272

286,418

291,288

287,157

285,118

286,542

291,731

291,168

290,052

291,196

240,832
608

243,104
298

247,135
527

242,872
663

243,428
0

243,829
477

248,558
0

247,738
0

246,321
0

246,157
1,195

6,314
21
0

6,246
29
0

6,213
98
0

6,250
28
0

6,250
0
0

6,240
76
0

6,213
0
0

6,213
0
0

6,213
0
0

6,213
149
0

69
79
85
541
36,722
11,058
10,018
20,599

60
151
89
492
35,949
11,058
10,018
20,670

201
222
7
402
36,481
11,060
10,018
20,723

52
137
132
278
36,746
11,058
10,018
20,664

44
156
95
177
34,967
11,058
10,018
20,674

107
174
22
326
35,290
11,057
10,018
20,684

31
173
14
600
36,141
11,057
10,018
20,697

167
179
3
286
36,583
11,058
10,018
20,710

44
214
6
465
36,789
11,062
10,018
20,724

84
270
9
99
37,019
11,062
10,018
20,738

287,527
640

288,789
641

290,896
623

288,692
653

288,623
626

289,767
628

290,670
628

290,994
627

290,921
623

290,567
620

4,931
246

5,275
227

6,428
228

4,931
206

5,583
218

4,644
244

5,942
227

5,158
242

5,977
226

5,745
216

3,089
239

3,504
222

3,194
210

3,231
216

3,397
223

3,160
223

3,181
218

3,124
192

3,253
204

3,178
224

8,734

8,241

8,190

23,883

22,412

24,275

SUPPLYING RESERVE FUNDS

1 Reserve Bank credit outstanding
2
3
4
5
6
7
8
9
10
11
12
13
14

U.S. government securities1' 2
Bought outright-system account
Held under repurchase agreements . . .
Federal agency obligations7
Bought outright
Held under repurchase agreements . •.
Acceptances
Loans to depository institutions
Adjustment credit
Seasonal credit
Extended credit
Float
Other Federal Reserve assets
Gold stock
Special drawing rights certificate account .
Treasury currency outstanding
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
capita]
22 Reserve balances with Federal
Reserve Banks3

6,556

7,415

8,288

7,462

7,463

7,640

8,460

23,720

22,091

23,223

23,506

20,734

21,997

24,176

End-of-month figures

Wednesday figures

1991

1991

Apr.

May

June

May 15

May 22

May 29

June 5

June 12

June 19

June 26

288,432

291,168

291,795

288,690

285,005

290,722

292,398

293,500

291,139

294,980

244,493
0

248,111
0

247,484
962

241,778
4,638

243,581
0

244,293
3,342

248,876
0

248,624
0

248,626
0

246,578
4,611

6,250
0
0

6,213
0
0

6,213
477
0

6,250
196
0

6,250
0
0

6,213
534
0

6,213
0
0

6,213
0
0

6,213
0
0

6,213
748
0

55
105
131
913
36,484
11,058
10,018
20,617

20
163
23
457
36,181
11,057
10,018
20,694

1,182
290
7
433
34,747
11,062
10,018
20,752

228
140
58
369
35,032
11,058
10,018
20,664

141
158
101
-334
35,108
11,057
10,018
20,674

58
174
24
618
35,466
11,057
10,018
20,684

22
179
2
780
36,326
11,057
10,018
20,697

307
191
6
1,472
36,687
11,061
10,018
20,710

61
241
8
-711
36,700
11,062
10,018
20,724

68
275
8
-792
37,271
11,062
10,018
20,738

286,766
652

290,507
629

291,563
613

288,859
626

288,995
628

290,666
629

290,841
628

291,142
623

290,907
622

290,941
613

13,682
292

6,619
196

11,822
224

3,835
222

5,319
241

3,945
266

4,915
206

4,519
226

7,483
244

5,419
233

3,174
276

3,185
225

3,283
213

3,231
240

3,397
205

3,160
242

3,181
190

3,125
191

3,253
210

3,178
262

SUPPLYING RESERVE FUNDS

1 Reserve Bank credit outstanding
2
3
4
5
6
7
8
9
10
11
12
13
14

U.S. government securities1, 2
Bought outright-system account
Held under repurchase agreements . . .
Federal agency obligations7
Bought outright
Held under repurchase agreements . . .
Acceptances
Loans to depository institutions2
Adjustment credit
Seasonal credit
Extended credit
Float
Other Federal Reserve assets
Gold stock
Special drawing rights certificate account .
Treasury currency outstanding
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 Banks3

6,826

8,570

7,082

7,302

7,425

7,575

8,419

8,133

7,878

8,107

18,457

23,008

18,826

26,115

20,545

25,998

25,790

27,331

22,346

28,046

1. Includes securities loaned—fully guaranteed by U.S. government securities
pledged with Federal Reserve Banks—and excludes any securities sold and
scheduled to be bought back under matched sale-purchase transactions.
2. Beginning with the May 1990 Bulletin, this table has been revised to
correspond with the H.4.1 statistical release.




3. Excludes required clearing balances and adjustments to compensate for
float.
NOTE. For amounts of currency and coin held as reserves, see table 1.12.
Components may not sum to totals because of rounding.

Money Stock and Bank Credit

A5

1.12 RESERVES AND BORROWINGS Depository Institutions1
Millions of dollars
Monthly averages9

1 Reserve balances with Reserve Banks2
2 Total vault cash3
3 Applied vault cash 5
4 Surplus vault cash
5 Total reserves6
6 Required reserves
7 Excess reserve balances at Reserve Banks'
8 Total borrowings at Reserve Banks
9 Seasonal borrowings at Reserve Banks
10 Extended credit at Reserve Banks

1988

1989

1990

1990

Dec.

Reserve classification

1991

Dec.

Dec.

Dec.

Jan.

Feb.

Mar.

Apr.

May'

June

37,837
28,204
25,909
2,295
63,746
62,699
1,047
1,716
130
1,244

35,436
29,822
27,374
2,448
62,810
61,888
922
265
84
20

30,237
31,777
28,884
2,893
59,120
57,456
1,665
326
76
23

30,237
31,777
28,884
2,893
59,120
57,456
1,665
326
76
23

22,023
33,220
28,969
4,250
50,992
48,824
2,168
534
33
27

19,827
33,477
28,724
4,753
48,551
46,743
1,809
252
37
34

21,734
30,896
26,853
4,043
48,586
47,408
1,179
241
55
53

23,508
30,556'
26,793
3,763'
50,301
49,271
1,030
231
79
86

22,287
30,720
26,776
3,944
49,063
48,033
1,029
303
151
88

23,686
30,524
26,722
3,801
50,409
49,399
1,009
340
222
8

Biweekly averages of daily figures for weeks ending
1991
Mar. 6
1
2
3
4
5
6
7
8
9
10

Reserve balances with Reserve Banks2
Total vault cash3 4
Applied vault cash
Surplus vault cash
Total reserves
Required reserves
Excess reserve balances at Reserve Banks
Total borrowings at Reserve Banks
Seasonal borrowings at Reserve Banks
Extended credit at Reserve Banks

Mar. 20

Apr. 3

Apr. 17

May 1

May 15

May 29

June 12'

June 26

July 10

20,228
32,005
27,629
4,376
47,857
46,637
1,221
426
41
50

22,209
30,286
26,413
3,873
48,622
47,616
1,007
185
51
47

21,949
31,067
26,989
4,078
48,938
47,564
1,374

24,257
30,309
26,762
3,547
51,019
50,218
801
224
70
76

23,061
30,705'
26,781
3,924'
49,842
48,645
1,198
244
92
103

22,907r
30,340
26,532
3,809'
49,438
48,469
970
314
138
128

21,363
31,235'
27,114'
4,121'
48,477
47,358

24,027
29,787
26,115
3,672
50,142
49,411
731
283
176
9

23,344
30,926
27,048
3,878
50,392
49,110

23,860
31,327
27,405
3,922
51,265
50,376
889
601
290
5

1. These data also appear in the Board's H.3 (502) release. For address, see inside front cover.
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 those depository institutions currently
subject to reserve requirements. Dates refer to the maintenance periods in which
the vault cash can be used to satisfy reserve requirements. Under contemporaneous reserve requirements, maintenance periods end 30 days after the lagged
computation periods in which the balances are held.
4. All vault cash held during the lagged computation period by "bound"
institutions (i.e., those whose required reserves exceed their vault cash) plus the
amount of vault cash applied during the maintenance period by "nonbound"
institutions (i.e., those whose vault cash exceeds their required reserves) to




212

68
62

1,12c
299
165
59

1,282

314
242

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. 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 there is with traditional
short-term adjustment credit, the money market impact of extended credit is
similar to that of nonborrowed reserves.
9. Data are prorated monthly averages of biweekly averages.

A48 DomesticNonfinancialStatistics • September 1991
1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS

Large Banks1

Millions of dollars, averages of daily figures
1991, week ending Monday
Maturity and source
Jan. 21
Federal funds purchased, repurchase agreements, and
other selected borrowing in immediately available
funds
From commercial banks in the United States
1 For one day or under continuing contract
2 For all other maturities
From other depository institutions, foreign banks and
foreign official institutions, and U.S. government
agencies
3 For one day or under continuing contract
4 For all other maturities

5
6
7
8

Repurchase agreements on U.S. government and federal
agency securities in immediately available funds
Brokers and nonbank dealers in securities
For one day or under continuing contract
For all other maturities
All other customers
For one day or under continuing contract
For all other maturities

MEMO: Federal funds loans and resale agreements in
immediately available funds in maturities of one day
or under continuing contract
9 To commercial banks in the United States
10 To all other specified customers2

Jan. 28

Feb. 4

Feb. 11

Feb. 18

Feb. 25

Mar. 4

Mar. 11

74,840
17,810

74,301
16,906

81,956
16,423

77,369
16,373

77,708
16,890

74,061
15,830

80,759
15,491

79,628
16,159

28,746
21,015

32,895
21,157

33,366
20,974

31,641
20,923

32,389
20,465

30,568
20,124

31,090
20,826

30,565
20,988

9,343
21,917

9,645
20,821

10,466
21,622

8,867
21,241

9,251
18,651

10,175
17,298

10,522
17,441

10,881
17,643

24,749
11,350

24,779
12,119

25,808
12,145

25,119
11,855

26,218

11,635

25,408
11,292

24,972
11,340

23,766
11,584

40,215
20,612

44,641
18,073

48,386
21,528

42,209
19,334

42,099
19,820

40,092
18,528

46,140
21,409

42,822
17,879

1. Banks with assets of $1 billion or more as of Dec. 31, 1977.
These data also appear in the Board's H.5 (507) release. For address, see inside
front cover.




2. Brokers and nonbank dealers in securities; other depository institutions;
foreign banks and official institutions; and United States government agencies,

Policy Instruments

A7

1.14 FEDERAL RESERVE BANK INTEREST RATES
Percent per year
Current and previous levels
Extended credit2

Adjustment credit
and
seasonal credit1

Federal Reserve
Bank

After 30 days of borrowing3

First 30 days of borrowing

Effective
date

Previous
rate

On
7/26/91

Effective
date

5 Vl

4/30/91
4/30/91
4/30/91
5/1/91
4/30/91
4/30/91

6

5Vi

On
7/26/91

Previous
rate

Effective
date

Previous
rate

Effective date

6.40

On
7/26/91

7/25/91
7/25/91
7/25/91
7/25/91
7/25/91
7/25/91

6.55

7/11/91
7/11/91
7/11/91
7/11/91
7/11/91
7/11/91

4/30/91
4/30/91
4/30/91
5/1/91
4/30/91
4/30/91

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco . . .

5 Vl

4/30/91
5/2/91
4/30/91
4/30/91
4/30/91
4/30/91

6

SVi

4/30/91
5/2/91
4/30/91
4/30/91
4/30/91
4/30/91

-

6

6.40

7/25/91
7/25/91
7/25/91
7/25/91
7/25/91
7/25/91

7/11/91
7/11/91
7/11/91
7/11/91
7/11/91
7/11/91

6.55

Range of rates for adjustment credit in recent years4
Range (or
level)—
All F.R.
Banks

F.R.
Bank
of
N.Y.

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

6
6-6 Vi
6 Vl
bVi-1
7
7-71^4
IV•
7V4
8
8-8^
814
SVi-9Vi
9 Vl

6
6 Vi
6 Vi
1
7
7W
7V4
73/4
8
8Vi
8 Vi
9 Vi
9 Vi

1979--July 20
Aug. 17
20
Sept. 19
21
Oct. 8
10

10
10-10W
10^
10Vi-ll
11
11-12
12

10
10 Vi
10 Vi
11
11
12
12

1980--Feb. 15
19
May 29
30
June 13
16
July 28.
29
Sept. 26
Nov. 17
Dec. 5

12-13
13
12-13
12
11-12
11
10-11
10
11
12
12-13

Effective date

13
13
13
12
11
11
10
10
11
12
13

Effective date

5
8
Nov. ?
6.
Dec. 4

1981-—May
—May

13-14
14
13-14
13
12

1982--July 70
-July
73
Aug. ?
3
16
77
30
Oct. 1?
13
Nov. ??
76
Dec. 14
15
17

11W-12
1 \Vl
11-11 Vl
11
lOVi
lO-lOVi
10
9Vi-\0
9V
5
9-9 Vl
9
8W-9
SVi-9
8 Vl

1984-—Apr. 9
M
Nov. ?1
76
Dec. 74

SVi-9
9
81/2-9
8 Vi
8

1. Adjustment credit is available on a short-term basis to help depository
institutions meet temporary needs for funds that cannot be met through reasonable alternative sources. After May 19,1986, 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.
Seasonal credit is available to help smaller depository institutions meet regular,
seasonal needs for funds that cannot be met through special industry lenders and
that arise from a combination of expected patterns of movement in their deposits
and loans. A temporary simplified seasonal program was established on Mar. 8,
1985, and the interest rate was a fixed rate Vi percent above the rate on adjustment
credit. The program was reestablished for 1986 and 1987 but was not renewed for
1988.
2. Extended credit is available to depository institutions, when similar assistance is not reasonably available from other sources, when exceptional circumstances or practices involve only a particular institution or when an institution is
experiencing difficulties adjusting to changing market conditions over a longer
period of time.
3. For extended-credit loans outstanding more than thirty days, a flexible rate
somewhat above rates on market sources of funds ordinarily will be charged, but




Range (or
level)—
All F.R.
Banks

F.R.
Bank
of
N.Y.
14
14
13
13
12
llVi
im
11
11
10V5
10
10
9Vi
9Vi
9
9
9
m
8 Vl
9
9

m
8

Effective date

Range (or
level)—
All F.R.
Banks

F.R.
Bank
of
N.Y.

1985—May 20
24

lVi-%
IVi

IVi
7 Vl

1986—Mar. 7
10
Apr. 21
July 11
Aug. 21

i-m
i
6Vz-7
6
5Vi-6
5Vi

1
1
6 Vl
6
5W
5Vi

1987—Sept. 4

5Vi-6
6

6
6

1988—Aug. 9

6-6Vl
6 Vi

6Vi
6V2

6'A-7
7

1
1

22

11
11

1989—Feb. 24
27
1990—Dec. 19
1991—Feb.

1
4
Apr. 30
May 2
In effect July 26, 1991

6Vi

6 Vi

6-61/2
6
5Yi— 6
5Vi

6
6
5Vl
5Vi

5 Vi

5 Vi

in no case will the rate charged be less than the basic discount rate plus 50 basis
points. The flexible rate is reestablished on the first business day of each
two-week reserve maintenance period. At the discretion of the Federal Reserve
Bank, the time period for which the basic discount rate is applied may be
shortened.
4. For earlier data, see the following publications of the Board of Governors:
Banking and Monetary Statistics, 1914-1941, and 1941-1970; Annual Statistical
Digest, 1970-1979.
In 1980 and 1981, the Federal Reserve applied a surcharge to short-term
adjustment credit borrowings by institutions with deposits of $500 million or more
that had borrowed in successive weeks or in more than four weeks in a calendar
quarter. A 3 percent surcharge was in effect from Mar. 17, 1980 through May 7,
1980. There was no surcharge until Nov. 17,1980, when a 2 percent surcharge was
adopted; 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 13-week period. The surcharge was eliminated on Nov. 17, 1981.

A48 DomesticNonfinancialStatistics • September 1991
1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1

Type of deposit, and
deposit interval2

Depository institution requirements
after implementation of the
Monetary Control Act
Percent of
deposits

12/18/90
12/18/90
12/27/90

0

12/27/90

4

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 provisions of the Monetary
Control Act, depository institutions include commercial banks, mutual savings
banks, savings and loan associations, credit unions, agencies and branches of
foreign banks, and Edge corporations.
2. The Garn-St Germain Depository Institutions Act of 1982 (Public Law
97-320) requires that $2 million of reservable liabilities of each depository
institution be subject to a zero percent reserve requirement. The Board is to adjust
the amount of reservable liabilities subject to this zero percent reserve requirement each year for the succeeding calendar year by 80 percent of the percentage
increase in the total reservable liabilities of all depository institutions, measured
on an annual basis as of June 30. No corresponding adjustment is to be made in
the event of a decrease. On Dec. 20, 1988, the exemption was raised from $3.2
million to $3.4 million. In determining the reserve requirements of depository
institutions, the exemption shall apply in the following order: (1) net NOW
accounts (NOW accounts less allowable deductions); and (2) net other transaction
accounts. The exemption applies only to accounts that would be subject to a 3
percent reserve requirement.
3. Transaction accounts include all deposits on which the account holder is
permitted to make withdrawals by negotiable or transferable instruments, payment orders of withdrawal, and telephone and preauthorized transfers in excess of




3
12
0

Net transaction accounts3'

Effective date

three per month for the purpose of making payments to third persons or others.
However, MMDAs and similar accounts subject to the rules that permit no more
than six preauthorized, automatic, or other transfers per month, of which no more
than three can be checks, are not transaction accounts (such accounts are savings
deposits).
4. 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 each year. Effective Dec. 18,
1990 for institutions reporting quarterly and Dec. 25, 1990 for institutions
reporting weekly, the amount was increased from $40.4 million to $41.1 million.
5. The reserve requirements on nonpersonal time deposits with an original
maturity of less than 1-1/2 years were reduced from 3 percent to 1-1/2 percent on
the maintenance period that began December 13, 1990, and to zero for the
maintenance period that began December 27, 1990, for institutions that report
weekly. The reserve requirement on nonpersonal time deposits with an original
maturity of 1-1/2 years or more has been zero since October 6, 1983.
6. For institutions that report quarterly, the reserves on nonpersonal time
deposits with an original maturity of less than 1-1/2 years were reduced from 3
percent to zero on January 17, 1991.
7. The reserve requirements on Eurocurrency liabilities were reduced from 3
percent to zero in the same manner and on the same dates as were the reserves on
nonpersonal time deposits with an original maturity of less than 1-1/2 years (see
notes 5 and 6).

Policy Instruments

A9

1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1
Millions of dollars
1991
1989

Type of transaction

1990
Nov.

Apr.

Feb.

Dec.

U . S . TREASURY SECURITIES

Outright transactions (excluding matched
transactions)
1
2
3
4

Treasury bills
Gross purchases
Gross sales
Exchanges
Redemptions

5
6
7
8
9

Others within 1 year
Gross purchases
Gross sales
Maturity shifts
Exchanges
Redemptions

8,223
587
241,876
2,200

14,284
12,818
231,211
12,730

24,739
7,291
241,086
4,400

6,658

0

25,981

2,350
16,939
3,000

0
120
19,747
1,000

1,967
0
21,381
0

0
0

327

425

325

23,854
-24,588

3,531
-4,315

1,991

0

25,638
-27,424

0
0
0
0

0
0
989
-1,326
0

0
2,292
-3,045
0

700
0
413
-1,877
0

0
0
-778
929

0
0
-1,909
2,545

2,950
0
-213
1,877

0
0

350
0
-23
400

-200

-110

0

216

0

0
0

0
0

5,485
800
-17,720
22,515

1,436
490
-25,534
23,250

250

200

0
0

-21,770
25,410

-3,258
3,915

0
200
-1,991
0

14
15
16
17

5 to 10 years
Gross purchases
Gross sales
Maturity shifts
Exchanges

1,579
175
-5,946
1,797

287
29
-2,231
1,934

100
-2,186
789

0
0
0

0
100
0
0

18
19
20
21

More than 10 years
Gross purchases
Gross sales
Maturity shifts
Exchanges

22
23
24

All maturities
Gross purchases
Gross sales
Redemptions

29 Net change in U.S. government securities

0
0

28,848
-25,783
500

0

1 to 5 years
Gross purchases
Gross sales
Maturity shifts
Exchanges

Repurchase agreements2
27 Gross purchases
28 Gross sales

0

908
21,981

2,176

10
11
12
13

Matched transactions
25 Gross sales
26 Gross purchases

313
0

18,808

0

0
0

284

1,398
-188

0

-1,

0

-1,681

1,226

275
18,863
1,562
2,200

1,168,484
1,168,142

25,414
7,591
4,400

16,617
13,337
13,230

127

-212

397

0
0

0
0

50
0

700

0

4,324
-993

0

550

0

-4,214
777

0
0

0
0
-361
100

-400
400

6,983

100

0
2,650
3,000

0
120

2,417
0
0

4,013
0
0

7,397'

1,000

0
0

1,323,480 1,369,052
1,326,542 1,363,434

114,488

125,844
123,442

130,751
131,087'

127,589
127,502

151,0%
151,412

185,662
187,032

116,601

152,613
151,497

129,518
132,688

219,632
202,551

36,457
34,105

45,684
31,022

36,337
38,462

44,688
44,809

23,821
38,589

16,173
16,173

15,872

-10,055

24,886

7,222

6,608

-2,909'

2,209

-10,439

8,768'

640
640

FEDERAL AGENCY OBLIGATIONS

Outright transactions
30 Gross purchases
31 Gross sales
32 Redemptions
Repurchase agreements2
33 Gross purchases
34 Gross sales
35 Net change in federal agency obligations .
36 Total net change in System Open Market
Account

0
0

0
0

442

183

57,259
56,471

38,835
40,411

41,836
40,461

2,774
2,504

2,091

1,021

4,416
3,571

3,546
4,466

2,518
3,784

198

-2,018

1,192

270

1,070

845

-920

-1,266

16,070

-12,073

26,078

7,492

7,678

-2,064'

1,290

-11,705

1. Sales, redemptions, and negative figures reduce holdings of the System Open
Market Account; all other figures increase such holdings. Details may not sum to
totals because of rounding.




0
0

587

8,676'

2. In July 1984 the Open Market Trading Desk discontinued accepting bankers
acceptances in repurchase agreements.

A48

DomesticNonfinancialStatistics • September 1991

1.18 FEDERAL RESERVE BANKS

Condition and Federal Reserve Note Statements1

Millions of dollars
Wednesday
1991

Account
May 29

June 5

End of month
1991

June 12

June 19

June 26

Apr. 30

May 31

June 30

Consolidated condition statement
ASSETS

11,058
10,018
577

11,057
10,018
575

11,061
10,018
582

11,062
10,018
590

11,062
10,018
580

11,058
10,018
643

11,057
10,018
577

11,062
10,018
575

255
0
0

203
0
0

504
0
0

310
0
0

351
0
0

291
0
0

206
0
0

1,479
0
0

Federal agency obligations
7 Bought outright
8 Held under repurchase agreements

6,213
534

6,213
0

6,213
0

6,213
0

6,213
748

6,250
0

6,213
0

6,213
477

U.S. Treasury securities
9 Bought outright2
10 Bills
11 Notes
12 Bonds
13 Held under repurchase agreements
14 Total U.S. Treasury securities

244,293
116,323
96,507
31,463
3,342
247,635

248,876
120,706
96,707
31,463
0
248,876

248,624
120,454
96,707
31,463
0
248,624

248,626
120,457
96,707
31,463
0
248,626

246,578
118,409
96,707
31,463
4,611
251,189

244,493
116,523
96,707
31,263
0
244,493

248,111
119,942
96,707
31,463
0
248,111

247,484
119,314
96,707
31,463
962
248,446

15 Total loans and securities

254,638

255,292

255,341

255,150

258,502

251,035

254,530

256,615

7,625
915

6,387
915

5,547
927

5,542
928

4,871
931

9,640
906

5,531
915

4,859
931

30,002
4,606

30,835
4,604

30,871
4,930

30,945
5,027

31,058
5,346

29,816
5,862

30,835
4,416

28,682
5,379

319,439

319,684

319,277

319,262

322,369

318,978

317,879

318,121

271,188

271,347

271,637

271,395

271,397

267,445

271,019

272,000

29,704
3,945
266
242

29,106
4,915
206
190

29,766
4,519
226
191

25,750
7,483
244
210

32,414
5,419
233
262

22,081
13,682
292
276

26,223
6,619
196
225

22,202
11,822
224
213

34,156

34,417

34,702

33,686

38,328

36,330

33,263

34,460

6,519
2,373

5,501
2,521

4,805
2,680

6,302
2,416

4,537
2,634

8,377
2,277

5,028
2,614

4,579
2,392

314,236

313,786

313,823

313,800

316,895

314,429

311,923

313,431

2,548
2,198
457

2,545
2,377
976

2,547
2,393
514

2,549
2,410
503

2,546
2,423
504

2,513
1,808
228

2,545
2,216
1,195

2,546
2,114
31

33 Total liabilities and capital accounts

319,439

319,684

319,277

319,262

322,369

318,978

317,879

318,121

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

243,789

244,525

245,223

245,333

242,774

241,334

249,523

243,233

1 Gold certificate account
2 Special drawing rights certificate account
3 Coin
Loans
4 To depository institutions
5 Other
6 Acceptances held under repurchase agreements

16 Items in process of collection
17 Bank premises
Other assets
18 Denominated in foreign currencies3
19 All other4
20 Total assets
Liabilities
21 Federal Reserve notes
22
23
24
25

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

26 Total deposits
27 Deferred credit items
^
28 Other liabilities and accrued dividends5
29 Total liabilities
Capital Accounts
30 Capital paid in
31 Surplus
32 Other capital accounts

Federal Reserve note statement
35 Federal Reserve notes outstanding (issued to Bank)
36 LESS: Held by bank
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

315,767
44,579
271,188

316,818
45,471
271,347

318,508
46,871
271,637

320,160
48,765
271,395

323,981
52,584
271,397

312,160
44,716
267,445

315,843
44,824
271,019

325,417
53,450
271,967

11,057
10,018
0
250,113

11,057
10,018
0
250,271

11,061
10,018
0
250,558

11,062
10,018
0
250,315

11,062
10,018
0
250,316

11,058
10,018
0
246,369

11,057
10,018
0
249,944

11,062
10,018
0
250,887

271,188

271,347

271,637

271,395

271,397

267,445

271,018

271,967

1. Some of these data also appear in the Board's H.4.1 (503) release. For
address, see inside front cover. Components may not add to totals because of
rounding.
2. Includes securities loaned—fully guaranteed by U.S. Treasury securities
pledged with Federal Reserve Banks—and excludes securities sold and scheduled
to be bought back under matched sale-purchase transactions.




3. Valued monthly at market exchange rates.
4. Includes special investment account at the Federal Reserve Bank of Chicago
in Treasury bills maturing within 90 days.
5. Includes exchange-translation account reflecting the monthly revaluation at
market exchange rates of foreign-exchange commitments.

Federal Reserve Banks
1.19 FEDERAL RESERVE BANKS

All

Maturity Distribution of Loan and Security Holding

Millions of dollars
Wednesday
1991

Type and maturity grouping

End of month
1991

May 29
1 Loans—Total
2 Within 15 days
3 16 days to 90 days

7
8

16 days to 90 days
91 days to 1 year

9 U.S. Treasury securities—Total
10 Within 15 days'
11 16 days to 90 days
12 91 days to 1 year
13 More than 1 year to 5 years
14 More than 5 years to 10 years
15 More than 10 years
16 Federal agency obligations—Total
17 Within 15 days1
18 16 days to 90 days
19 91 days to 1 year
20 More than 1 year to 5 years
21 More than 5 years to 10 years

June 5

June 12

June 19

June 26

Apr. 30

May 31

June 28

255
227
29
0

202
80
123
0

503
377
127
0

310
287
287
0

351
123
42
0

291
254
38
0

206
106
100
0

351
123
42
0

0
0
0
0

0
0
0
0

0
0
0
0

0
0
0
0

0
0
0
0

0
0
0
0

0
0
0
0

0
0
0
0

247,635
15,009
57,228
76,110
61,989
12,584
24,716

248,876
11,567
62,155
75,401
62,453
12,584
24,716

248,624
7,507
62,914
78,451
62,453
12,584
24,715

248,626
9,700
60,573
78,601
62,453
12,584
24,716

253,189
15,476
57,086
78,876
62,452
12,583
24,189

244,493
10,648
59,405
74,599
61,376
13,789
24,676

248,111
6,562
65,504
76,293
62,453
12,584
24,716

247,483
8,106
62,897
76,727
62,454
12,583
24,715

6,747
836
748
1,507
2,458
1,010
188

6,213
46
1,028
1,483
2,459
1,010
188

6,213
44
1,032
1,475
2,464
1,010
187

6,213
234
842
1,475
2,464
1,010
188

6,962
953
827
1,484
2,498
1,010
187

6,250
99
732
1,763
2,442
1,026
188

6,213
302
748
1,507
2,458
1,010
188

6,213
205
888
1,423
2,498
1,010
188

1. Holdings under repurchase agreements are classified as maturing within 15
days in accordance with maximum maturity of the agreements.




NOTE: Components may not sum to totals because of rounding,

A48

DomesticNonfinancialStatistics • September 1991

1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1
Billions of dollars, averages of daily figures
1990
1987
Dec.

1988
Dec.

1989
Dec.

1990
Dec.

Nov.

1 Total reserves3
Nonborrowed reserves4
.
Nonborrowed reserves plus extended credit5
Required reserves
Monetary base6

45.81
45.03
45.52
44.77
246.28

7
8
9
10

Nonborrowed reserves
Nonborrowed reserves plus extended credit
Required reserves
Monetary base9

Feb.

Mar.

47.73

49.10

48.24

49.10

49.47

49.61

49.57

45.88 47.46
47.12 47.48
46.55 46.81
263.46 274.17

48.78
48.80
47.44
299.79

48.01
48.04
47.30
297.55

48.78
48.80
47.44
299.79

48.93
48.96
47.30
305.15

49.36
49.39
47.80
309.44

49.32
49.38
48.39
310.98

47.60

ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS2

6 Total reserves7

Jan.

Apr.

May

June

49.39

50.07

50.43

49.16 49.IT
49.25 49.85
48.36 49.04
310.60 311.48

50.09
50.10
49.42
312.47

Seasonally adjusted

ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS2

2
3
4
5

Dec.

1991

Not seasonally adjusted
47.04
46.26
46.75
46.00
249.93

49.00

49.18

47.29 48.91
48.53 48.93
47.96 48.26
267.46 278.30

50.58

48.42

50.58

50.76

48.55

48.59

50.30

49.06

50.41

50.25 48.19
50.28 48.21
48.91 47.47
304.04 298.44

50.25
50.28
48.91
304.04

50.22
50.25
48.59
306.03

48.30
48.33
46.74
305.74

48.34
48.40
47.41
308.19

50.07
50.16
49.27
310.86

48.76
48.85
48.03
311.02

50.07
50.08
49.40
314.06

62.05

59.12

50.99

48.55

48.59

50.30

49.06

50.41

58.79 61.82
58.82 61.84
57.46 61.10
313.70 312.69
1.66
.95
.33
.23

58.79
58.82
57.46
313.70
1.66
.33

50.46
50.48
48.82
309.30
2.17
.53

48.30
48.33
46.74
308.53
1.81
.25

48.35 50.07 48.76
48.40 50.16 48.85
47.41 49.27 48.03
311.04 313.95 314.25
1.18
1.03
1.03
.24
.23
.30

50.07
50.08
49.40
317.26
1.01
.34

NOT ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS10

11 Total reserves11
12
13
14
15
16
17

Nonborrowed reserves
^
Nonborrowed reserves plus extended credit
Required reserves
Monetary base12
Excess reserves13
Borrowings from the Federal Reserve

62.14

63.75

1. Latest monthly and biweekly figures are available from the Board's H.3 (502)
statistical release. Historical data and estimates of the impact on required reserves
of changes in reserve requirements are available from the Monetary and Reserves
Projections Section, Division of Monetary Affairs, Board of Governors of the
Federal Reserve System, Washington, D.C. 20551.
2. Figures reflect adjustments for discontinuities or "breaks" associated with
regulatory changes in reserve requirements.
3. Seasonally adjusted, break-adjusted total reserves equal seasonally
adjusted, break-adjusted required reserves (line 4) plus excess reserves (line 16).
4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally
adjusted, break-adjusted total reserves (line 1) less total borrowings of depository
institutions from the Federal Reserve (line 17).
5. Extended credit consists of borrowing at the discount window under
the terms and conditions established for the extended credit program to help
depository institutions deal with sustained liquidity pressures. Because there is
not the same need to repay such borrowing promptly as there is with traditional
short-term adjustment credit, the money market impact of extended credit is
similar to that of nonborrowed reserves.
6. The seasonally adjusted, break-adjusted monetary base consists of (1)
seasonally adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally
adjusted currency component of the money stock, plus (3) (for all quarterly
reporters on the "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).




62.81

61.36 62.03 62.54
61.85 63.27 62.56
61.09 62.70 61.89
266.06 283.00 292.55
1.05
1.05
.92
.78
1.72
.27

59.12

8. To adjust required reserves for discontinuities because of regulatory changes
in reserve requirements, a multiplicative procedure is used to estimate what
required reserves would have been in past periods had current reserve requirements been in effect. Break-adjusted required reserves are equal to break-adjusted
required reserves held against transactions deposits.
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 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. After the introduction of CRR, currency and vault cash
figures are measured over the computation periods ending on Mondays.
13. Unadjusted total reserves (line 11) less unadjusted required reserves (line 14).

Monetary and Credit Aggregates

A13

1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1
Billions of dollars, averages of daily figures
1991
Item2

1987
Dec.

1988
Dec.

1989
Dec.

1990
Dec.
Mar.

Apr.

May

June

Seasonally adjusted
1
2
3
4
5

Ml
M2
M3
L
Debt

6
7
8
9

Ml components
Currency5
Travelers checks*
Demand deposits5
Other checkable deposits6

Nontrqnsaction components
10 In M2 . 8
11 In M3 only

749.7
2,910.1
3,677.4
4.337.0
8.345.1

786.4
3,069.9
3,919.1
4,676.0
9,107.6

793.6
3.223.1
4.055.2
4,889.9
9,790.4

825.4
3.327.6
4.111.7
4,965.5'
10,436.1

843.0
3,374.9'
4,168.8''
5,008.4r
10,563.9

842.2
3,382.8'
4,170.3'
4,968.6'
10,578.0'

851.7'
3,394.9'
4,171.6'
4,943.1
10,627.3

858.5
3,398.6
4,164.3
n.a.
n.a.

196.8
7.0
286.5
259.3

212.0
7.5
286.3
280.7

222.2
7.4
278.7
285.2

246.4
8.4
276.9
293.8

256.7
8.1
277.1
301.0

256.6
7.9
275.7'
302.0

256.8
8.0
278.6'
308.3

257.6
7.8
280.9
312.2

2,160.4
767.3

2,283.5
849.3

2,429.5
832.1

2,502.2
784.1

2,531.9
794.0

2,540.6'
787.5'

2,543.2'
776.7'

2,540.1
765.6

12
13
14
15

Time and savings accounts
Commercial banks
Savings deposits
Money market deposit accounts .
Small time deposits'
Large time deposits10,

178.3
356.4
388.0
326.6

192.1
350.2
447.5
368.0

187.7
353.0
531.4
401.9

199.4
378.4
598.1
386.1

205.8
388.9
607.8
399.9

208.9
393.7
604.1
398.0

211.5
399.8
601.2'
398.3'

215.1
404.4
601.7
396.9

16
17
18
19

Thrift institutions
Savings deposits
Money market deposit accounts .
Small time deposits910
.
Large time deposits

233.7
168.5
529.7
162.6

232.3
151.2
584.3
174.3

216.4
133.1
614.5
161.6

211.4
127.6
566.1
121.0

214.7
130.3
550.5
111.6

218.4
132.9
546.1'
108.8'

221.7'
136.3
539.4
104.5

223.9
137.7
527.6
100.8

Money market mutual funds
20 General purpose and broker-dealer.
21 Institution-only

221.7
88.9

241.1
86.9

313.6
101.9

345.4
125.7

363.5
142.0

364.2
145.6

365.1
146.2

364.3
143.3

1,957.9
6,387.2

2,114.2
6,993.4

2,268.1
7,522.3

2,534.3
7,901.8

2,599.7
7,964.2

2,590.8
7,987.1'

2,613.1
8,014.1

n.a.
n.a.

852.9
3,396.3'
4,179.5'
4,980.C
10,533.4'

841.6'
3,374.3'
4,152.8'
4,928.1
10,582.4

857.8
3,391.6
4,158.8
n.a.
n.a.

Debt components
22 Federal debt
23 Nonfederal debt

Not seasonally adjusted
24
25
26
27
28

Ml
M2
M3
L
Debt

29
30
31
32

Ml components
Currency3
Travelers checks4
Demand deposits5
Other checkable deposits6

Nontrqnsaction components
33 In M2 . . . .„
34 In M3 only8

766.2
2.923.0
3,690.3
4,352.8
8.329.1

804.2
3,083.3
3,931.5
4,691.8
9,093.2

811.9
3,236.6
4,067.0
4,907.4
9,775.9

844.3
3,341.6
4,123.8
4,984.0'
10,423.3

835.0
3,374. T
4,168.1'
5,006.6'
10,518.6

199.3
6.5
298.6
261.8

214.8
6.9
298.9
283.5

225.3
6.9
291.5
288.2

249.6
7.8
289.9
297.0

255.6
7.8
270.1
301.6

256.0
7.5
277.6
311.8

257.4
7.8
271.5
305.0

259.1
8.1
279.5
311.0

2,156.8
767.3

2,279.1
848.2

2,424.7
830.4

2,497.3
782.2

2,539.1
794.1

2,543.5'
783.1'

2,532.7'
778.5'

2,533.9
767.2

35
36
37
38

Time and savings accounts
Commercial banks
Savings deposits
Money market deposit accounts
Small time deposits'....
Large time deposits10, 11

176.8
359.0
387.2
325.8

190.6
353.2
446.0
366.8

186.4
356.5
529.2
400.4

197.7
381.6
596.1
386.1

205.8
391.1
607.4
399.4

209.5
394.0
604.2
395.8'

212.0
395.8
600.9'
397.8

216.5
401.8
602.1
396.4

39
40
41
42

Thrift institutions
Savings deposits
Money market deposit accounts
Small time deposits'.
Large time deposits10

231.4
168.6
529.5
163.3

229.9
151.6
583.8
175.2

214.2
133.7
613.8
162.6

209.6
128.7
564.1
121.1

214.7
131.0
550.1
111.5

219.0
133.0
546.2
108.1

222.3
134.9
539.1'
104.4

225.3
136.8
527.9
100.7

Money market mutual funds
43 General purpose and broker-dealer
44 Institution-only

221.1
89.6

240.7
87.6

313.5
102.8

345.5
127.0

370.0
143.9

368.5
144.1

360.5
145.2

358.0
141.0

Repurchase agreements and eurodollars
45 Overnight
46 Term

83.2
197.1

83.4
227.7

77.3
179.8

74.0
161.5

69.1
154.3

69.1
150.3'

67.2'
146.5'

65.5
143.9

1,955.6
6,373.5

2,111.8
6,981.4

2,265.9
7,509.9

2.532.1
7.891.2

2,602.8
7,915.8

2,593.0
7,940.4'

Debt components
47 Federal debt
48 Nonfederal debt
For notes see following page.




2,609.2
7,973.2

n.a.
n.a.

A48

DomesticNonfinancialStatistics • September 1991

NOTES TO TABLE 1.21
1. Latest monthly and weekly figures are available from the Board's H.6 (508)
release. Historical data are available from the Money and Reserves Projection
Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve
System, Washington, D.C. 20551.
2. Composition of the money stock measures and debt is as follows:
Ml: (1) currency outside the 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 due 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.
M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs)
issued by all depository institutions and overnight Eurodollars issued to U.S.
residents by foreign branches of U.S. banks worldwide, money market deposit
accounts (MMDAs), savings and small-denomination time deposits (time deposits—including retail RPs—in amounts of less than $100,000), and balances in both
taxable and tax-exempt general purpose and broker-dealer money market mutual
funds. Excludes individual retirement accounts (IRA) and Keogh balances at
depository institutions and money market funds. Also excludes all balances held
by U.S. commercial banks, money market funds (general purpose and brokerdealer), foreign governments and commercial banks, and the U.S. government.
M3: M2 plus large-denomination time deposits and term RP liabilities (in
amounts of $100,000 or more) issued by all depository institutions, term Eurodollars held by U.S. residents at foreign branches of U.S. banks worldwide and at all
banking offices in the United Kingdom and Canada, and balances in both taxable
and tax-exempt, institution-only money market mutual funds. Excludes amounts
held by depository institutions, the U.S. government, money market funds, and
foreign banks and official institutions. Also subtracted is the estimated amount of
overnight RPs and Eurodollars held by institution-only money market mutual
funds.
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 mutual fund holdings of these assets.




Debt: Debt of domestic nonfinancial sectors consists of outstanding credit
market debt of the U.S. government, state and local governments, and private
nonfinancial sectors. Private debt consists of corporate bonds, mortgages, consumer credit (including bank loans), other bank loans, commercial paper, bankers
acceptances, and other debt instruments. Data are derived from the Federal
Reserve Board's flow of funds accounts. Debt data are based on monthly
averages.
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 due 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 balances at all depository institutions, credit
union share draft balances, and demand deposits at thrift institutions.
7. Sum of overnight RPs and overnight Eurodollars, money market fund
balances (general purpose and broker-dealer), MMDAs, and savings and small
time deposits.
8. Sum of large time deposits, term RPs, term Eurodollars of U.S. residents,
and money market fund balances (institution-only), less a consolidation adjustment that represents the estimated amount of overnight RPs and Eurodollars held
by institution-only money market funds.
9. Small-denomination time deposits—including retail RPs—are those issued
in amounts of less than $100,000. All individual retirement accounts (IRA) and
Keogh accounts at commercial banks and thrifts are subtracted from small time
deposits.
10. Large-denomination time deposits are those issued in amounts of $100,000
or more, excluding those booked at international banking facilities.
11. Large-denomination time deposits at commercial banks less those held by
money market mutual funds, depository institutions, and foreign banks and
official institutions.

Monetary and Credit Aggregates

A15

1.22 BANK DEBITS AND DEPOSIT TURNOVER1
Debits are shown in billions of dollars, turnover as ratio of debits to deposits. Monthly data are at annual rates.
1991

1990
Bank group, or type of customer

1988

1989

1990
Nov.

Jan.

Dec.

Feb.

Mar.

Apr.

Seasonally adjusted
Demand deposits3
1 All insured banks
2 Major New York City banks
3 Other banks
,
4 ATS-NOW accounts4
5 Savings deposits

219,795.7
115,475.6
104,320.2
2,478.1
537.0

256.150.4
129,319.9
126.830.5
2,910.5
547.5

277,916.3
131,784.0
146,132.3
3,349.6
558.8

294,468.6
140,531.5
153,937.1
3,479.2
565.8

267,479.9
130,154.6
137,325.3
3,368.4
527.2

279,437.8
138,638.1
140,799.7
3,559.1
572.9

280,494.1
138,037.7
142,456.4
3,533.7
551.4

271,546.1
132.697.5
138.848.6
3,245.9
525.5

295,451.1
146,929.3
148,521.8
3,806.6
581.6

622.9
2,897.2
333.3
13.2
2.9

735.1
3,421.5
408.3
15.2
3.0

800.6
3,804.1
467.7
16.5
2.9

857.1
4,320.4
494.9
16.8
2.9

779.5
3,949.1
442.7
16.2
2.7

828.3
4,259.7
461.9
17.0
2.9

817.8
4,125.7
460.2
16.7
2.7

792.4
4,095.8
447.5
15.1
2.6

868.8
4,523.3
482.8
17.7
2.8

DEPOSIT TURNOVER

6
7
8
9
10

Demand deposits3
All insured banks
Major New York City banks
Other banks
ATS-NOW accounts4
Savings deposits

Not seasonally adjusted
Demand deposits3
11 All insured banks
12 Major New York City banks
13 Other banks
14 ATS-NOW accounts4
15 MMDA
16 Savings deposits

219,790.4
115,460.7
104,329.7
2,477.3
2,342.7
536.3

256,133.2
129,400.1
126,733.0
2,910.7
2,677.1
546.9

277,400.0
131,784.7
145,615.3
3,342.2
2,923.8
557.9

277,536.6
133,220.6
144,316.0
3,259.5
2,805.0
505.1

.275,664.8
133,491.9
142,172.9
3,430.2
2,938.6
530.1

283,545.5
136,578.8
146,966.7
3,923.1
3,106.8
589.2

259,372.9
127,287.3
132,085.5
3,237.8
2,512.7
494.9

278,280.4
134,974.7
143,305.7
3,310.7
2,771.6
524.5

294,771.5
145,700.2
149,071.4
3.972.1
2.984.2
627.9

622.8
2,896.7
333.2
13.2
6.6
2.9

735.4
3,426.2
408.0
15.2
7.9
2.9

799.6
3,810.0
466.3
16.4
8.0
2.9

800.0
4,067.4
459.3
15.8
7.4
2.6

765.8
3,760.0
438.2
16.2
7.8
2.7

820.3
3,993.4
471.9
18.4
8.2
3.0

778.7
3,899.0
439.7
15.3
6.6
2.5

835.8
4,378.5
474.3
15.3
7.1
2.6

860.7
4,565.4
480.0
17.8
7.6
3.0

DEPOSIT TURNOVER

17
18
19
20
21
22

Demand deposits3
All insured banks
Major New York City banks
Other banks
ATS-NOW accounts4
MMDAs6
Savings deposits

1. Historical tables containing revised data for earlier periods may be obtained
from the Banking and Money Market Statistics Section, Division of Monetary
Affairs, Board of Governors of the Federal Reserve System, Washington, D.C.
20551.
These data also appear on the Board's G.6 (406) release. For address, see inside
front cover.
2. Annual averages of monthly figures.
3. Represents accounts of individuals, partnerships, and corporations and of




states and political subdivisions.
4. Accounts authorized for negotiable orders of withdrawal (NOW) and accounts authorized for automatic transfer to demand deposits (ATS). ATS data are
available beginning December 1978.
5. Excludes MMDA, ATS, and NOW accounts.
6. Money market deposit accounts.

A16

D o m e s t i c Financial Statistics • September 1991

1.23 LOANS AND SECURITIES All Commercial Banks
Billions of dollars; averages of Wednesday figures
1990
July

Aug.

Sept.

1991
Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

June

Seasonally adjusted
1 Total loans and securities1
2 U.S. government securities
i Other securities
4 Total loans and leases'
3 Commercial and industrial . . . . .
6
Bankers acceptances held . . .
/
Other commercial and
industrial
8
U.S. addressees3
9
Non-U.S. addressees3
10 Real estate
11 Individual
12 Security
13 Nonbank financial
institutions
14 Agricultural
13 State and political
subdivisions
16 Foreign banks
17 Foreign official institutions
18 Lease financing receivables
19 All other loans

2,683.0

2,704.9

2,708.0

2,713.6

2,716.6

2,723.6

2,721.2

2,735.1

2,750.9

2,751.6

2,750.0

2,758.1

442.8
177.3
2,062.9
644.4
7.6

445.7
178.8
2,080.4
645.1
7.4

450.1
178.8
2,079.0
644.7
7.5

453.1
177.8
2,082.7
643.7
7.3

454.0
175.9
2,086.7
646.5
7.4

454.2
175.6
2,093.8
648.1
7.5

454.1
177.7
2,089.4
644.3
7.7

458.0
177.6
2,099.5
643.9
6.9

471.4
177.6
2,102.0
646.0
6.7

479.2
175.7
2,096.7
640.0
6.7'

484.9
173.9'
2,091.1
633.2
6.8'

492.9
173.1
2,092.1
629.7
6.5

636.7
632.5
4.3
814.5
376.4
38.7

637.7
633.4
4.3
818.0
378.2
44.6

637.1
632.6
4.5
822.5
378.6
41.3

636.4
631.7
4.7
827.7
379.7
40.5

639.1
634.0
5.1
832.0
378.7
39.6

640.5
635.3
5.3
836.5
378.9
40.6

636.6
631.1
5.5
837.3
375.9
43.1

637.1
631.5
5.5
842.6
377.7
43.2

639.4
633.7
5.7
846.3
375.5
38.8

633.3'
627.8'
5.5
850.7
374.1
39.8

626.4'
620.6'
5.8
854.7
373.4'
39.8

623.2
617.3
5.9
857.7
371.7
38.3

34.7
31.3

35.0
31.5

35.2
31.8

34.8
32.2

34.6
32.5

34.7
33.0

34.2
33.5

35.3
33.5

36.1
34.0

35.2
33.9

36.1
33.6

36.2
33.0

36.4
7.0
3.2
32.6
43.6

35.8
7.9
3.2
32.7
48.2

35.2
8.1
3.3
32.8
45.5

35.1
9.0
3.2
33.3
43.6

34.8r
8.1
3.2
32.9
43. r

34.3
7.2'
3.2
32.7
44.7'

33.2
6.0'
3.0
32.4
46.4'

33.1
6.1'
3.1
32.8
48.2'

32.8'
7.2'
3.2
33.0
49.1'

32.2
6.9
3.0
32.7
48.2

31.8
6.4
3.0
32.7
46.4

31.0
6.0
3.0
32.8
52.7

Not seasonally adjusted
20 Total loans and securities1

2,677.5

2,700.1

2,707.0

2,715.5

2,720.1

2,730.5

2,721.0

2,737.3

2,748.3

2,751.3

2,749.2

2,758.8

21 U.S. government securities
22 Other securities
23 Total loans and leases'
24 Commercial and industrial . . . . .
23
Bankers acceptances held . . .
26
Other commercial and
industrial
27
U.S. addressees3
28
Non-U.S. addressees3
29 Real estate
30 Individual
31 Security
32 Nonbank financial
institutions
33 Agricultural
34 State and political
subdivisions
33 Foreign banks
36 Foreign official institutions
37 Lease financing receivables
38 All other loans

439.9
176.4
2,061.1
644.6
7.3

444.0
179.1
2,077.1
643.5
7.2

448.2
179.0
2,079.8
640.9
7.5

450.8
178.0
2,086.7
641.2
7.4

454.1
176.6
2,089.3
644.5
7.6

451.5
176.3
2,102.7
648.0
7.7

455.8
177.9
2,087.3
641.1
7.6

463.9
177.3
2,096.1
643.0
7.0

475.8
176.9
2,095.7
648.3
6.6

480.5
175.1
2,095.7
644.7
6.6'

485.1
173.8
2,090.3'
637.1
6.7'

491.5
173.2
2,094.1
632.0
6.6

637.3
632.9
4.4
814.9
374.1
38.6

636.3
631.8
4.5
819.9
377.4
43.9

633.4
628.8
4.6
824.2
380.4
40.3

633.8
629.1
4.7
830.3
380.6
39.5

636.9
631.9
5.0
834.0
379.8
38.5

640.3
635.1
5.2
837.9
383.8
40.0

633.4
628.2
5.3
837.1
380.1
40.9

636.1
630.6
5.5
839.5
377.1
44.7

641.6
636.2
5.4
842.6
372.8
40.1

638.1'
632.2'
5.9
848.1
371.5
41.3

630.4'
624.5'
5.9
853.8
371.8
39.0

625.4
619.4
6.0
857.7
369.7
40.5

34.6
32.1

35.0
32.5

34.9
32.9

34.7
33.1

35.0
32.9

36.1
32.9

34.7
32.8

34.9
32.6'

35.4
32.6

34.8r
32.8

35.7
33.1

36.2
33.3

36.2
7.1
3.2
32.4
43.3

35.7
8.0
3.2
32.6
45.4

35.2
8.2
3.3
32.8
46.8

35.1
9.3
3.2
33.3
46.3

34.7
8.3'
3.2
33.1
45.4'

34.0
7.4'
3.2
32.8
46.7'

33.9'
6.0'
3.0
32.8
44.7'

33.3'
6.V
3.1
32.9
48^

32.8'
6.8'
3.2
32.9
48.2'

32.1
6.7
3.0
32.7
47.9

31.7'
6.3'
3.0
32.6
46.1

31.0
6.1
3.0
32.6
52.0

1. Adjusted to exclude loans to commercial banks in the United States.
2. Includes nonfinancial commercial paper held.




3. United States includes the fifty states and the District of Columbia.

Commercial Banking Institutions

A17

1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1
Billions of dollars, monthly averages
1990
July
Seasonally adjusted
1 Total nondeposit funds2
2 Net balances due to related foreign offices3 —
3 Borrowings from other than commercial banks
in United States4
4 Domestically chartered banks
5 Foreign-related banks
Not seasonally adjusted
6 Total nondeposit funds2
7 Net balances due to related foreign offices'
8 Domestically chartered banks
9 Foreign-related banks
10 Borrowings from other than commercial banks
in United States4
11 Domestically chartered banks
12
Federal funds and security RP
borrowings
13
Other6
14 Foreign-related banks6

Aug.

Sept.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

June

281.1
19.1

283.8
19.0

283.0
21.5

291.8
29.9

292.4
30.1

287.9
34.6

277.1
33.5

265. r
24.9r

264.0
30.2'

262.6
30.7

258.1'
26.0

248.0
19.2

262.0
201.6
60.4

264.8
202.2
62.6

261.5
198.8
62.7

261.9
196.9
65.0

262.2
195.0
67.3

253.2
187.1
66.2

243.6
182.2
61.5

240.2
177.1
63.1

233.8
171.5
62.3

231.8'
170.6'
61.2

232.0
168.8
63.2

228.9
166.3
62.6

277.2
16.6
-5.8
22.4

282.5
18.5
-3.4
21.9

278.6
21.5
-4.2
25.8

288.7
29.6
-1.0
30.6

293.5
30.8
.6
30.2

282.3
37.2
-4.1
41.3

272.5
33.1
-15.2
48.4

268.1
24.8
-15.2
40.0

269.2
29.7'
-6.0
35.6

263.3
28^
-3.5
32.4

266.C
28.6'
-.7
29.2

251.0
19.5
-3.5
23.0

260.6
199.1

264.0
201.7

257.0
195.6

259.2
195.0

262.7
197.6

245.1
182.8

239.4
177.7

243.3
179.4

239.5'
175.8'

234.4'
171.4

237.4
173.5

231.5
167.2

196.2
2.9
61.5

198.1
3.6
62.3

191.6
4.0
61.5

191.7
3.2
64.2

194.7
2.9
65.1

180.0
2.8
62.3

174.4
3.2
61.7

176.6
2.8
63.9

172.6
3.2
63.7

168.5'
2.9
63.0

170.7
2.8
63.9

164.3
2.8
64.3

451.9
450.5

449.2
450.1

443.6
445.4

438.0
440.4

435.2
437.8

431.8
431.8

441.0
439.3

450.6r
449.2

450.9
450.5

450.9
448.6

452.1
451.7

450.5
450.0

15.0
15.2

32.7
23.5

26.0
31.0

22.3
20.9

25.2
19.2

24.4
23.0

25.7
29.4

33.4
39.3

33.8
28.4

21.7
20.4

15.1
19.8

23.2
23.6

MEMO

Gross large time deposits
15 Seasonally adjusted
16 Not seasonally adjusted
U.S. Treasury demand balances at commercial
banks
17 Seasonally adjusted
18 Not seasonally adjusted

1. Commercial banks are those in the fifty states and the District of Columbia
with national or state charters plus agencies and branches of foreign banks, New
York investment companies majority owned by foreign banks, and Edge Act
corporations owned by domestically chartered and foreign banks.
These data also appear in the Board's G.10 (411) release. For address, see
inside front cover.
2. Includes federal funds, repurchase agreements (RPs), and other borrowing
from nonbanks and net balances due to related foreign offices.
3. Reflects net positions of U.S. chartered banks, Edge Act corporations, and
U.S. branches and agencies of foreign banks with related foreign offices plus net
positions with own IBFs.
4. Other borrowings are borrowings through any instrument, such as a




promissory note or due bill, given for the purpose of borrowing money for the
banking business. This includes borrowings from Federal Reserve Banks and
from foreign banks, term federal funds, loan RPs, and sales of participations in
pooled loans.
5. Based on daily average data reported weekly by approximately 120 large
banks and quarterly or annual data reported by other banks.
6. Figures are partly daily averages and partly averages of Wednesday data.
7. Time deposits in denominations of $100,000 or more. Estimated averages of
daily data.
8. U.S. Treasury demand deposits and Treasury tax-and-loan notes at commercial banks. Averages of daily data.

A48

DomesticNonfinancialStatistics • September 1991

1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS

Last-Wednesday-of-Month Series1

Billions of dollars
1990

1991

Account
Aug.

Sept.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

June

2,896.8
597.2
429.1
168.0
29.3
2,270.4
200.1
2,070.3
639.7
820.1
379.4
231.1

2,887.1
601.7
434.5
167.2
21.4
2,264.0
191.0
2,073.0
639.7
825.0
381.2
227.1

2,931.3
604.9
438.0
166.8
27.4
2,299.0
207.9
2,091.2
643.4
831.5
380.8
235.5

2,925.1
603.3
437.6
165.7
25.0
2,296.9
207.0
2,089.8
644.4
833.7
380.5
231.2

2,936.9
605.6
439.6
166.0
22.0
2,309.3
204.0
2,105.3
650.8
838.3
384.7
231.5

2,908.7
612.8
447.6
165.2
24.1
2,271.8
193.3
2,078.6
637.2
836.9
378.6
225.9

2,924.9
614.0
449.5
164.5
26.9
2,283.9
185.0
2,099.0
645.1
840.1
376.4
237.4

2,910.9
628.3
463.3
165.1
23.5
2,259.1
171.8
2,087.3
648.5
842.5
371.5
224.8

2,907.1
628.5
465.1
163.4
24.9
2,253.6
160.7
2,092.9
643.6
849.0
372.0
228.3

2,921.5
634.1
471.8
162.2
24.3
2,263.2
172.5
2,090.6
635.1
855.2
370.7
229.6

2,931.1
638.5
477.8
160.7
27.5
2,265.2
166.8
2,098.5
631.7
857.5
369.5
239.7

207.7
30.0
30.3
77.5

213.7
33.6
29.3
81.1

220.8
29.7
29.4
85.4

216.7
33.0
32.8
78.4

217.9
23.4
32.0
86.0

199.2
16.5
30.4
74.7

204.5
18.1
29.8
79.9

206.1
25.0
28.9
76.9

201.0
23.1
29.1
74.3

224.3
26.2
31.1
87.2

212.3
29.1
29.8
78.2

27.3
42.5

27.0
42.8

28.5
47.8

28.4
44.2

29.6
46.8

28.1
49.6

27.7
49.0

27.6
47.7

26.4
48.1

30.8
49.0

28.3
46.8

220.8

226.6

230.1

226.6

245.1

249.9

259.6

263.1

260.4

264.4

265.6

3,368.5

3,399.9

3,357.8

3,388.9

3,380.1

3,368.5

3,410.3

3,409.0

ALL COMMERCIAL BANKING
INSTITUTIONS2
1
2
3
4
5
6
7
8
9
10
11
12

Loans and securities
Investment securities
U.S. government securities
Other
Trading account assets
Total loans
Interbank loans
Loans excluding interbank
Commercial and industrial
Real estate
Individual
All other

Total cash assets
Reserves with Federal Reserve Banks.
Cash in vault
Cash items in process of collection . . .
Demand balances at U.S. depository
institutions
18
Other cash assets

13
14
15
16
17

19

Other assets

20

Total assets/total liabilities and capital....

3,325.3

3,327.4

3,382.2

21
22
23
24
25
26
27

Deposits
Transaction deposits
Savings deposits
Time deposits
Borrowings
Other liabilities
Residual (assets less liabilities)

2,296.5
589.1
565.6
1,141.8
579.9
226.2
222.8

2,300.1
595.3
563.5
1,141.3
570.9
233.1
223.4

2,332.0
612.1
570.5
1,149.4
591.0
236.0
223.3

2,319.9
598.1
573.1
1,148.8
570.6
255.3
222.7

2,363.4
637.1
573.3
1,152.9
548.7
264.4
223.5

2,334.6
587.9
573.9
1,172.8
529.8
268.8
224.6

2,365.0
594.1
583.5
1,187.3
515.4
282.3
226.2

2,382.5
602.8
594.1
1,185.6
492.3
278.2
227.0

2,381.9
601.3
595.4
1,185.3
494.6
263.9
228.1

2,413.3
617.6
606.2
1,189.5
499.8
267.6
229.6

2,406.1
611.2
610.6
1,184.2
509.9
264.1
228.9

446.3

445.1

454.2

451.9

451.1

459.4

463.7

475.9

479.0

485.0

492.9

176.5

177.5

177.2

176.0

174.5

173.4

173.1

MEMO
28
29

U.S. government securities (including
trading account)
Other securities (including trading
account)

180.2

178.0

178.1

176.4

2,631.8
566.1
414.1
152.0
29.3
2,036.4
153.7
1,882.6
514.0
779.5
379.4
209.8

2,620.5
569.0
417.9
151.2
21.4
2,030.0
146.0
1,884.0
513.2
784.0
381.2
205.7

2,658.4
571.5
420.9
150.6
27.4
2,059.5
164.0
1,895.5
515.4
789.8
380.8
209.5

2,645.1
569.8
420.8
149.1
25.0
2,050.3
157.4
1,892.9
513.4
791.6
380.5
207.4

2,654.2
570.5
421.7
148.8
22.0
2,061.7
160.0
1,901.7
512.7
796.4
384.7
207.9

2,628.0
575.3
426.5
148.7
24.1
2,028.6
151.7
1,876.9
504.2
794.0
378.6
200.2

2,642.3
577.4
429.3
148.2
26.9
2,038.0
150.9
1,887.0
508.4
797.1
376.4
205.1

2,635.6
588.6
440.2
148.5
23.5
2,023.5
148.3
1,875.2
506.3
799.7
371.5
197.7

2,628.9
592.3
445.5
146.8
24.9
2,011.7
134.2
1,877.5
502.4
804.7
372.0
198.4

2,637.8
595.7
449.2
146.5
24.3
2,017.8
144.5
1,873.3
495.0
808.7
370.7
198.8

2,640.8
600.5
455.5
144.9
27.5
2,012.8
139.0
1,873.9
490.5
810.3
369.5
203.6

181.7
28.0
30.3
75.9

187.0
32.1
29.2
79.0

189.3
28.5
29.4
83.6

187.7
31.5
32.8
76.4

188.3
23.0
32.0
83.9

166.6
15.3
30.3
72.9

172.7
17.0
29.8
78.2

177.0
24.0
28.8
74.9

171.6
21.9
29.1
72.6

193.6
25.8
31.1
85.5

184.3
28.3
29.8
76.2

25.0
22.5

25.1
21.5

26.6
21.2

26.2
20.9

27.6
21.8

26.2
22.0

25.8
21.9

25.8
23.4

24.8
23.2

28.8
22.4

26.5
23.6

DOMESTICALLY CHARTERED
COMMERCIAL BANKS3
30
31
32
33
34
35
36
37
38
39
40
41

Loans and securities
Investment securities
U.S. government securities
Other
Trading account assets
Total loans
Interbank loans
Loans excluding interbank
Commercial and industrial
Real estate
Individual
All other

Total cash assets
Reserves with Federal Reserve Banks.
Cash in vault
Cash items in process of collection . . .
Demand balances at U.S. depository
institutions
47
Other cash assets

4?
43
44
45
46

48

Other assets

145.6

152.3

153.6

155.0

167.8

166.9

171.3

167.9

161.9

162.3

164.3

49

Total assets/liabilities and capital

2,959.1

2,959.7

3,001.3

2,987.8

3,010.3

2,961.4

2,986.3

2,980.4

2,962.4

2,993.7

2,989.4

50
51
52
53
54
55
56

Deposits
Transaction deposits
Savings deposits
Time deposits
Borrowings
Other liabilities
Residual (assets less liabilities)

2,214.9
578.8
562.6
1,073.5
404.3
120.7
219.2

2,220.1
584.4
560.4
1,075.3
395.8
124.1
219.7

2,253.8
601.5
567.4
1,085.0
400.4
127.5
219.6

2,243.3
587.7
569.8
1,085.8
394.1
131.5
219.0

2,283.5
626.1
570.0
1,087.4
375.6
131.4
219.8

2,236.2
577.4
570.6
1,088.1
380.1
124.2
220.9

2,255.2
583.8
580.2
1,091.2
371.8
136.8
222.6

2,266.2
592.2
590.6
1,083.4
354.9
136.0
223.4

2,258.8
591.4
591.9
1,075.6
346.5
132.6
224.5

2,280.8
607.5
602.5
1,070.8
355.1
131.9
226.0

2,271.3
600.9
607.1
1,063.4
364.4
128.4
225.3

57
58

Real estate loans, revolving
Real estate loans, other

57.7
721.7

58.6
725.4

60.6
729.2

61.1
730.5

61.7
734.7

62.9
731.1

63.3
733.8

63.6
736.1

64.4
740.3

65.7
743.0

66.6
743.7

MEMO

1. Back data are available from the Banking and Monetary Statistics Section,
Board of Governors of the Federal Reserve System, Washington, D.C., 20551.
These data also appear in the Board's weekly H.8 (510) release.
Figures are partly estimated. They include all bank-premises subsidiaries and
other significant majority-owned domestic subsidiaries. Loan and securities data
for domestically chartered commercial banks are estimates for the last Wednesday of the month based on a sample of weekly reporting banks and quarter-end
condition report data. Data for other banking institutions are estimates made for




the last Wednesday of the month based on a weekly reporting sample of
foreign-related institutions and quarter-end condition reports.
2. Commercial banking institutions include insured domestically chartered
commercial banks, branches and agencies of foreign banks, Edge Act and
Agreement corporations, and New York State foreign investment corporations.
3. Insured domestically chartered commercial banks include all member banks
and insured nonmember banks.

Weekly Reporting Commercial Banks
1.26 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS
Millions of dollars, Wednesday figures

May 15

May 22

May 29'

June 5

June 12

June 19

May 1

May 8

125,763'
194,691
15,432
179,259
83,105'

97,676'
193,915
14,577
179,338
83,095'

113,551'
196,201
16,810
179,391
82,302'

94,742'
193,666'
14,692
178,974'
81,544'

112,566
192,905
13,183
179,722
81,514

103,126
197,559
16,006
181,553
81,358

100,913
15,967
180,643
79,290

101,031
195,695
16,225
179,470
78,402

18,929
42.517
34,709'
58,580
1,365
57,215
27,229
3,711
23.518
29,986
9,435'

19,027
43,706
33,51c
58,547
1,241
57,306
27,242
3,703
23,539
30,064
9,503'

18,649
45,139
33,301'
57,844
1,346
56,498
27,187
3,680
23,508
29,310

19,464
44,426
33,540'
57,594'
1,360
56,234'
27,091
3,656
23,435
29,143'
9,534'

19,658
44,416
34,135
57,615
1,372
56,243
27,093
3,662
23,431
29,150
9,764

20,4%
45,385
34,315
57,984
1,825
56,159
26,921
3,658
23,263
29,238
9,988

20,820
44,974
35,558
57,946
1,939
56,008
26,883
3,654
23,229
29,125
10,020

20,548
45,457
35,063
58,098
2,065
56,033
26,880
3,677
23,204
29,152
10,145

ASSETS

1 Cash and balances due from depository institutions ..
2 U.S. Treasury and government securities
3 Trading account
4 Investment account
5
Mortgage-backed securities'
All other maturing in
6
One year or less
7
Over one through five years
8
Over five years
9 Other securities
10 Trading account
11 Investment account
12
State and political subdivisions, by maturity
13
One year or less
14
Over one year
15
Other bonds, corporate stocks, and securities . . .
16 Other trading account assets
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45

10,216'

1%,610

77,433
75,106
76,258
73,512
63,099
78,327
68,178
86,089
Federal funds sold2
53,995
52,232
54,193
53,098
43,621
55,417
47,446
57,489
To commercial banks in the U.S
20,043
20,063
19,212
17,608
17,329
19,689
17,906
25,298
To nonbank brokers and dealers
3,395
2,811
2,853
2,805
2,149
3,221
2,826
3,303
To others3
1,051,783' 1,045,727' 1,045,776' 1,041,142' 1,042,722 1,038,878 1,034,333 1,035,760
Other loans and leases, gross
310,043
309,459
311,952
312,357
317,849' 315,887' 314,470' 313,328'
Commercial and industrial
1,749
1,691
1,723
1,668
1,595'
1,665'
1,715'
1,648'
Bankers' acceptances and commercial paper
308,294
307,768
310,229
310,689
311,733
312,804
314,172
316,201
All other
306,775
306,412
308,769
309,235
310,323
311,384
312,791
314,828
U.S. addressees
1,519
1,356
1,459
1,453
1,410
1,420
1,381
1,373
Non-U.S. addressees
405,490
405,367
404,731
404,734
404,577' 404,836' 404,519' 404,134'
Real estate loans
38,188
37,766
37,710
37,625
37,538'
37,543'
37,434'
37,366'
Revolving, home equity
367,302
367,601
367,021
367,109
367,210' 367,403' 366,976' 366,5%'
All other
188,266
187,863
188,921
188,758
189,959'
190,426'
190,383'
190,806'
To individuals for personal expenditures
45,418
44,853
46,340
46,921
46,211
47,776
47,018'
47,098'
To depository and financial institutions
20,658
19,779
21,030
21,568
21,727
22,235
21,672'
21,261'
Commercial banks in the United States
2,001
2,077
2,215
2,848
2,122
2,454
2,273'
2,854'
Banks in foreign countries
22,759
22,997
23,095
22,504
22,362
23,088
23,073
22,983
Nonbank depository and otherfinancialinstitutions . . .
11,795
11,527
11,811
13,768
12,708
12,703
12,613
14,462
For purchasing and carrying securities
6,208
6,216
6,198
6,184
6,079
6,055
5,985
5,967
To finance agricultural production
19,273
19,332
19,346
19,910
19,631
19,713
19,711
19,905
To states and political subdivisions
1,134
1,134
1,152
1,224
1,120
1,166
1,193
1,146
To foreign governments and official institutions . . .
21,257
21,683
21,445
21,901
21,019
21,970
21,081
22,898
All other loans4
26,876
26,900
26,982
26,966
26,953
26,978
27,017
27,075
Lease financing receivables
3,976
3,976
3,979
4,020
4,038
4,033
4,038
4,039
LESS: Unearned income
37,544
37,629
37,546
37,355
37,349
37,520
38,124
38,294
Loan and lease reserve3
994,240
992,728
997,352
1,009,450' 1,003,565' 1,004,223' 999,755' 1,001,347
Other loans and leases, net
155,565
153,530
155,182
152,079'
154,231
155,302'
155,345'
157,779'
Other assets
1,586,729' 1,615,663' 1,570,469' 1,601,939 1,597,451 1,588,889 1,590,173
1,641,788'
Total assets

Footnotes appear on the following page.




A19

A48

DomesticNonfinancialStatistics • September 1991

1.26 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS—Continued
Millions of dollars, Wednesday figures
1991
Account
May 1

May 8

May 15

May 22

May 29'

June 5

June 12

June 19

June 26

LIABILITIES

46 Deposits
47 Demand deposits
48
Individuals, partnerships, and corporations
49
Other holders
50
States and political subdivisions
51
U.S. government
Depository institutions in the United States
52
53
Banks in foreign countries
Foreign governments and official institutions
54
55
Certified and officers' checks
56 Transaction balances other than demand deposits
57 Nontransaction balances
58
Individuals, partnerships, and corporations
59
Other holders
60
States and political subdivisions
61
U.S. government
62
Depository institutions in the United States
63
Foreign governments, official institutions, and banks
64 Liabilities for borrowed money5
65 Borrowings from Federal Reserve Banks
66 Treasury tax and loan notes
,
67 Other liabilities for borrowed money
68 Other liabilities (including subordinated notes and
debentures)

1,129,398'' 1,098,050' 1,121,960' 1,089,445' 1,104,345
224,817
248,899' 215,647' 238,422' 211,264'
170,366'
178,361
174,855'
190,625'
193,803'
46,456
40,792'
47,798
40,898
55,095'
7,114
6,864
6,398
7,996
6,033
1,425
1,249
3,660
1,323
3,060
18,528
22,894
17,891'
23,712
25,738'
5,374
4,987
5,186
5,689
5,086
564
694
621
658
690
9,864
8,414
9,802
8,205
11,323
86,695
86,705
88,717
88,366
88,108
792,823
791,782' 794,037' 795,429' 791,486'
754,807
755,316' 756,302' 757,594' 753,582'
37,735'
37,903'
38,016
36,467'
37,835'
31,822
31,527
31,588
31,738
30,376
1,065
1,059
1,037
1,030
1,051
4,582'
4,604
4,687'
4,690'
4,559'
518
532
494
490
507

1,115,569
225,309
183,741
41,568
6,372
1,795
19,826
4,498
582
8,495
91,894
798,366
760,745
37,621
31,534
1,138
4,402
546
265,338
0
3,709
261,629

293,933'
0
29,176'
264,756'

268,331'
0
16,165
252,166'

273,489'
200
4,431'
268,857'

261,413'
0
2,868
258,545'

277,610
0
16,654
260,956

106,347'

107,081'

106,78C

105,701'

105,603

101,877

100,021

99,861

102,804

1,529,678' 1,473,462' 1,502,228' 1,456,559' 1,487,558

1,482,783

1,473,749

1,475,830

1,481,582

114,381

114,667

115,140

114,343

114,150

Total loans and leases, gross, adjusted, plus securities8 .. 1,321,829' 1,306,752' 1,310,712' 1,299,688' 1,301,851
198,312'
197,033'
196,789
198,074'
197,71c
Time deposits in amounts of $100,000 or more
1,032
1,164
1,152
1,149
1,123
Loans sold outright to affiliates, total9
639
554
536
657
590
Commercial and industrial
495
513
568
507
559
Other
24,324
24,406
24,115
24,650
24,397
Foreign branch credit extended to U.S. residents1"
-253
-586
2,925
1,570
-1,867
Net due to related institutions abroad

1,305,444

1,302,005
195,519
1,032
538
494
23,867
-3,697

1,302,478
192,818
1,042
546
496
23,471
-2,803

1,302,696
190,811
1,284
644
641
23,527
-2,551

69 Total liabilities
70 Residual (Total assets minus total liabilities)7

112,110

113,267

MEMO

71
72
73
74
75
76
77

1,111,297 1,100,798 1,095,041
220,574
219,506
223,169
176,974
175,597
181,489
43,600
43,910
41,680
6,284
7,378
7,132
3,514
1,975
1,655
19,215
19,408
19,573
4,535
4,472
4,673
661
509
672
10,204
8,512
8,816
90,102
88,695
87,272
798,027
791,530
788,263
760,786
755,019
751,859
36,404
36,511
37,240
30,625
30,626
31,255
1,167
1,160
1,153
4,207
4,290
4,101
511
518
542

1. Includes certificates of participation, issued or guaranteed by agencies of the
U.S. government, in pools of residential mortgages.
2. Includes securities purchased under agreements to resell.
3. Includes allocated transfer risk reserve.
4. Includes NOW, ATS, and telephone and pre-authorized transfer savings
deposits.
5. Includes borrowings only from other than directly related institutions.
6. Includes federal funds purchased and securities sold under agreements to
repurchase.
7. This balancing item is not intended as a measure of equity capital for use in
capital adequacy analysis.
8. Excludes loans to and federal funds transactions with commercial banks in




113,435

113,910

196,196

1,021
540
482
24,049
-2,682

262,430
286
5,007
257,137

275,170
0
27,315
247,855

283,737
0
27,654
256,083

the United States.
9. Affiliates include a bank's own foreign branches, nonconsolidated nonbank
affiliates of the bank, the bank's holding company (if not a bank), and nonconsolidated nonbank subsidiaries of the holding company.
10. Credit extended by foreign branches of domestically chartered weekly
reporting banks to nonbank U.S. residents. Consists mainly of commercial and
industrial loans, but includes an unknown amount of credit extended to other than
nonfinancial businesses.
NOTE. Data that formerly appeared on table 1.28 Asset and Liabilities of Large
Weekly Reporting Commercial Banks in New York City may be obtained from the
Board's H.4.2 (504) statistical release. For address see inside front cover.

Weekly Reporting Commercial Banks
1.30 LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS
Liabilities

A21

Assets and

Millions of dollars, Wednesday figures
1991
May 1

MEMO

Jun. 19

Jun. 26

15,328'

14,524'

14,777'

14,837'

14,957

14,497

15,074

14,974

15,039

13,656
7,279
11,845'
5,144'
6,702'
135,469
81,68<r

13,366
7,260
8,743'
3,316
5,427'
134,192
81,204'

14,289
7,213
9,837'
3,805'
6,032'
135,361
81,726'

15,338
7,185
8,965'
2,830'
6,135'
134,362'
81,775'

14,671
7,227
11,987
5,223
6,765
135,905
82,132

14,211
7,207
8,845
2,317
6,528
136,422
81,945

14,570
7,195
10,883
4,032
6,851
136,625
82,172

14,310
7,262
9,233
2,139
7,095
135,498
82,567

14,477
7,259
12,864
4,798
8,066
137,161
83,155

1,919
79,761'
77,553'
2,208'
31,090'
18,212
10,771
1,594
5,847
2,275'

2,031
79,173'
76,970'
2,204
31,319r
17,627
10,222
1,648
5,756
2,029

2,165
79,561'
77,381'
2,180
31,361'
18,094
10,212
1,633
6,250
2,178

2,049
79,727'
77,533'
2,194
31,259'
17,093
9,519
1,662
5,912
2,208

2,025
80,107
77,899
2,209
31,457
17,556
9,588
1,630
6,338
2,684

2,032
79,913
77,591
2,321
31,569
17,513
8,692
1,558
7,263
2,578

1,976
80,197
77,897
2,300
31,679
17,566
8,498
1,897
7,172
2,412

1,981
80,586
78,238
2,348
31,843
16,501
8,262
1,549
6,690
2,504

2,021
81,134
78,919
2,215
31,931
17,110
8,415
1,692
7,002
2,830

222
1,989'
29,035'

228
1,786
28,958'

235
1,767
28,898'

206
1,820
28,424'

250
1,826
28,015

253
2,565
28,909

263
2,533
29,075

261
1,821
29,019

278
1,857
28,320

244,295'

250,963'

244,711'

247,413

249,805

250,498

248,326

249,110

83,042
3,947

84,621
3,849

86,8^
4,108'

88,328
3,760

88,371
3,757

88,569
3,611

88,154
3,872

89,128
4,340

2,325
1,622
79,095

2,540
1,309
80,771

2,454'
1,654'
82,701

2,430
1,330
84,568

2,400
1,356
84,615

2,248
1,362
84,958

2,440
1,432
84,282

2,480
1,860
84,788

59,377
19,718

60,666
20,105

61,805
20,896

63,005
21,563

63,424
21,191

64,444
20,514

64,282
19,999

64,426
20,363

91,916
44,109

94,896
47,925

89,514
42,552

88,404
44,305

92,400
49,419

87,990
41,893

92,899
49,595

89,060
44,331

21,537
23,343
46,470

17,988
26,121
47,807

22,660
25,265
46,971

15,391
27,161
46,962

21,508
22,797
44,099

22,241
27,177
42,981

18,270
23,623
46,098

20,610
28,986
43,304

20,320
24,011
44,729

18,278
28,193
28,045'

18,151
29,656
28,278'

17,902
29,070
28,217'

16,650
30,312
27,791'

15,815
28,284
28,148

16,062
26,919
28,529

16,087
30,011
28,105

15,041
28,263
27,928

14,955
29,774
27,874

245,033'
7

Jun. 12

91,350
44,880

39 Total loans (gross) and securities adjusted' .
40 Net due to related institutions abroad

Jun. 5

58,983
19,504

38 Total liabilities6

May 29'

2,789
1,426
78,487

23 Deposits or credit balances due to other
than directly related institutions
24 Demand deposits4
25 Individuals, partnerships, and
corporations
26 Other
27 Nontransaction accounts
28 Individuals, partnerships, and
corporations
29 Other
30 Borrowings from other than directly
related institutions
31 Federal funds purchased3
32 From commercial banks in the
United States
33 From others
34 Other liabilities for borrowed money
35 To commercial banks in the
United States
36 To others
37 Other liabilities to nonrelated parties

May 22

82,701
4,214

22 Total assets3

May 15

245,033'

1 Cash and balances due from depository
institutions
2 U.S. Treasury and government agency
securities
3 Other securities.
4 Federal funds sold1
5 To commercial banks in the United States ..
6 Toothers 2
7 Other loans and leases, gross
8 Commercial and industrial
9
Bankers acceptances and commercial
paper
10
All other
11
U.S. addressees
12
Non-U.S. addressees
13 Loans secured by real estate
14 To financial institutions
15
Commercial banks in the United States.
16
Banks in foreign countries
17
Nonbank financial institutions
18 For purchasing and carrying securities . . .
19 To foreign governments and official
institutions
20 All other
21 Other assets (claims on nonrelated parties) .

May 8

244,295'

250,963'

244,711'

247,413

249,805

250,498

248,326

249,110

152,335'
10,516'

150,024'
3,808'

152,683'
2.64C

153,501'
4,996'

154,980
7,883

155,676
792

156,743
8,757

155,903
1,314

158,547
9,058

1. Includes securities purchased under agreements to resell.
2. Includes transactions with nonbank brokers and dealers in securities.
3. Includes net due from related institutions abroad for U.S. branches and
agencies of foreign banks having a net due from position.
4. Includes other transaction deposits.




5. Includes securities sold under agreements to repurchase.
6. Includes net due to related institutions abroad for U.S. branches and
agencies of foreign banks having a net due to position.
7. Excludes loans to and federal funds transactions with commercial banks in
the U.S.

A48

DomesticNonfinancialStatistics • September 1991

1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING
Millions of dollars, end of period

1986
Dec.

Instrument

1987
Dec.

1988
Dec.

1989
Dec.

1991

1990

1990
Dec.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Commercial paper (seasonally adjusted unless noted otherwise)
331,316

2
3
4
5

530,123

566,688

566,688

569,165r

561,406r

565,734'

541,648

533,091

102,742

159,777

186,343

218,953

218,953

216,148

217,812

224,865

212,337

206,507

1,428

1,248

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

151,897

174,332

194,931

212,640

201,862

201,862

202,784'

197,799'

190,285'

184,703

183,383

40,860

43,173

43,155

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

77,712

6 Nonfinancial companies5

458,464

2,265

Financial companies' 2
Dealer-placed paper
Total
Bank-related (not seasonally
adjusted)
Directly placed paper4
Total
Bank-related (not seasonally
adjusted)

358,997

101,707

1 All issuers

81,923

103,756

131,140

145,873

145,873

150,233

145,795

150,584

144,608

143,201

Bankers dollar acceptances (not seasonally adjusted)6
7 Total

64,974

11
12
13

66,631

62,972

54,771

54,771

56,498

52,831

48,795

47,086

46,438

10,943
9,464
1,479

9,086
8,022
1,064

9,433
8,510
924

9,017
7,930
1,087

9,017
7,930
1,087

10,029
8,539
1,490

10,240
8,391
1,849

9,237
7,569
1,668

8,593
7,599
994

10,138
8,179
1,959

0
1,317
50,234

0
965
58,658

0
1,493
56,052

0
1,066
52,473

0
918
44,836

0
918
44,836

0
927
45,542

0
892
41,699

0
872
38,686

0
934
37,559

0
1,053
35,247

14,670
12,960
37,344

Basis
14 Imports into United States
15 Exports from United States
16 All other

8
9
10

70,565

13,423
11,707
1,716

Holder
Accepting banks
Own bills
Bills bought
Federal Reserve Banks
Own account
Foreign correspondents
Others

16,483
15,227
38,855

14,984
14,410
37,237

15,651
13,683
33,638

13,096
12,703
28,973

13,096
12,703
28,973

14,284
12,870
29,344

13,799
12,082
26,950

12,509
11,500
24,786

12,511
11,219
23,356

12,821
11,511
22,106

1. Institutions engaged primarily in activities such as, but not limited to,
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. Beginning January 1989, bank-related series have been discontinued.
4. As reported by financial companies that place their paper directly with
investors.

5. Includes public utilities and firms engaged primarily in such activities sis
communications, construction, manufacturing, mining, wholesale and retail trade,
transportation, and services.
6. Beginning January 1988, the number of respondents in the bankers acceptance survey were reduced from 155 to 111 institutions—those with $100 million
or more in total acceptances. The panel is revised every January and currently has
about 100 respondents. The current reporting group accounts for over 90 percent
of total acceptances activity.

1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans
Percent per year
Period

Rate
8.75
8.50
9.00
9.50

10.00

10.50
11.00
11.50
11.00
10.50
10.00

9.50
9.00
8.50

Average
rate

1988
1989
1990

9.32
10.87
10.01

1988— Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.

8.75
8.51
8.50
8.50
8.84
9.00
9.29
9.84
10.00
10.00
10.05
10.50

NOTE. These data also appear in the Board's H. 15 (519) and G. 13 (415) releases.
For address, see inside front cover.




Period
1989—Jan. ...
Feb. ..
Mar. ..
Apr. ..
May ...
June ..
July ...
Aug. ..
Sept. ..
Oct. ...
Nov. ..
Dec. ..

Average
rate
10.50
10.93
11.50
11.50
11.50
11.07
10.98
10.50
10.50
10.50
10.50
10.50

Period
1990—Jan. ...
Feb. ..
Mar. ..
Apr. ..
June ..
July ...
Aug. ..
Sept. ..
Oct. ...
Nov. ..
Dec. ..
1991—Jan. ...
Feb. ..
Mar. ..
Apr. ..
May ...
June ..
July

Financial Markets

A23

1.35 INTEREST RATES Money and Capital Markets
Averages, percent per year; weekly, monthly and annual figures are averages of business day data unless otherwise noted.
1991, week ending

1991
1988

Item

1989

1990
Mar.

Apr.

May

June

May 31

June 7

June 14

June 21

MONEY MARKET INSTRUMENTS

1 Federal funds1,2,3
2 Discount window borrowing2,4

7.57
6.20

9.21
6.93

8.10
6.98

6.12
6.00

5.91
5.98

5.78
5.50

5.90
5.50

5.72
5.50

5.91
5.50

5.75
5.50

5.78
5.50

3
4
5

Commercial paper3,5,6
1-month
3-month
6-month

7.58
7.66
7.68

9.11
8.99
8.80

8.15
8.06
7.95

6.48
6.41
6.36

6.08
6.07
6.07

5.91
5.92
5.94

6.06
6.11
6.16

5.91
5.94
5.95

6.02
6.07
6.09

6.10
6.16
6.20

6.05
6.09
6.15

6
7
8

Finance paper, directly placed3,5,7
1-month
3-month
6-month

7.44
7.38
7.14

8.99
8.72
8.16

8.00
7.87
7.53

6.31
6.28
6.20

5.95
5.94
5.91

5.76
5.81
5.72

5.93
5.96
5.75

5.69
5.80
5.72

5.89
5.94
5.72

5.98
6.01
5.73

5.92
5.95
5.72

9
10

Bankers acceptances3,5,8
3-month
6-month

7.56
7.60

8.87
8.67

7.93
7.80

6.24
6.21

5.92
5.92

5.75
5.77

5.94
6.00

5.76
5.80

5.91
5.94

5.98
6.04

5.93
6.01

11
12
13

Certificates <rf deposit, secondary
market9
1-month
3-month
6-month

7.59
7.73
7.91

9.11
9.09
9.08

8.15
8.15
8.17

6.47
6.45
6.50

6.03
6.06
6.16

5.86
5.91
6.03

6.00
6.07
6.26

5.85
5.90
6.04

6.01
6.07
6.18

6.05
6.12
6.31

5.98
6.03
6.25

7.85

9.16

8.16

6.44

6.11

5.94

6.08

5.94

6.01

6.10

6.09

6.67
6.91
7.13

8.11
8.03
7.92

7.50
7.46
7.35

5.91
5.92
6.00

5.65
5.71
5.85

5.46
5.61
5.76

5.57
5.75
5.96

5.46
5.63
5.76

5.58
5.72
5.92

5.58
5.78
6.00

5.58
5.76
5.97

6.68
6.92
7.17

8.12
8.04
7.91

7.51
7.47
7.36

5.91
5.91
6.06

5.67
5.73
5.88

5.51
5.65
5.71

5.60
5.76
5.73

5.46
5.65
n.a.

5.59
5.71
5.73

5.60
5.78
n.a.

5.61
5.79
n.a.

7.65
8.10
8.26
8.47
8.71
8.85
8.%

8.53
8.57
8.55
8.50
8.52
8.49
8.45

7.89
8.16
8.26
8.37
8.52
8.55
8.61

6.40
7.10
7.35
7.77
8.00
8.11
8.29

6.24
6.95
7.23
7.70
7.92
8.04
8.21

6.13
6.78
7.12
7.70
7.94
8.07
8.27

6.36
6.%
7.39
7.94
8.17
8.28
8.47

6.13
6.64
7.07
7.66
7.92
8.06
8.26

6.30
6.85
7.29
7.86
8.08
8.20
8.39

6.40
7.04
7.44
7.97
8.21
8.31
8.50

6.37
6.96
7.41
7.95
8.19
8.31
8.50

8.98

8.58

8.74

8.38

8.29

8.33

8.54

8.33

8.46

8.57

8.57

7.36
7.83
7.68

7.00
7.40
7.23

6.%
7.29
7.27

6.76
7.29
7.10

6.70
7.18
7.02

6.70
7.10
6.95

n.a.
n.a.
7.13

6.77
7.14
6.97

6.74
7.11
7.06

6.85
7.23
7.19

6.87
7.27
7.15

10.18

9.66

9.77

9.43

9.33

9.32

9.45

9.33

9.40

9.48

9.48

9.71
9.94
10.24
10.83

9.26
9.46
9.74
10.18

9.32
9.56
9.82
10.36

8.93
9.21
9.50
10.09

8.86
9.12
9.39
9.94

8.86
9.15
9.41
9.86

9.01
9.28
9.55
9.%

8.87
9.17
9.42
9.85

8.93
9.23
9.51
9.92

9.01
9.31
9.59
10.00

9.05
9.30
9.57
9.98

10.20

9.79

10.01

9.58

9.46

9.45

9.53

9.39

9.55

9.52

9.57

9.23
3.64

9.05
3.45

n.a.
n.a.

8.56
3.26

8.43
3.19

8.21
3.23

8.26
3.23

8.12
3.19

8.27
3.17

8.28
3.23

8.25
3.25

14 Eurodollar deposits, 3-month3,10

18
19
20

U.S. Treasury bills
Secondary market3,5
3-month
6-month
1-year
Auction average3'^
3-month
6-month
1-year

21
22
23
24
25
26
27

Constant maturities12
1-year
2-year
3-year
5-year
7-year
10-year
30-year

15
16
17

U . S . TREASURY NOTES AND BONDS

Composite13
28 Over 10 years (long-term)
STATE AND LOCAL NOTES AND BONDS

Moody's series1*
29 Aaa
30 Baa
31 Bond Buyer series15
CORPORATE BONDS

32 Seasoned issues, all industries16
Rating group
33 Aaa
34 Aa
35 A
36 Baa
37 A-rated, recently offered utility bonds17 .
1

MEMO: Dividends-price ratio *
38 Preferred stocks
39 Common stocks

1. The daily effective federal funds rate is a weighted average of rates on
trades through N.Y. brokers.
2. Weekly figures are averages of 7 calendar days ending on Wednesday of the
current week; monthly figures include each calendar day in the month.
3. Annualized using a 360-day year or bank interest.
4. Rate for the Federal Reserve Bank of New York.
5. Quoted on a discount basis.
6. An average of offering rates on commercial paper placed by several leading
dealers for firms whose bond rating is AA or the equivalent.
7. An average of offering rates on paper directly placed by finance companies.
8. Representative closing yields for acceptances of the highest rated money
center banks.
9. An average of dealer offering rates on nationally traded certificates of
deposit.
10. Bid rates for Eurodollar deposits at 11 a.m. London time.
11. Auction date for daily data; weekly and monthly averages computed on an
issue-date basis.




12. Yields on actively traded issues adjusted to constant maturities. Source:
U.S. Treasury.
13. Unweighted average of rates on all outstanding bonds neither due nor
callable in less than 10 years, including one very low yielding "flower"bond.
14. General obligation based on Thursday figures; Moody's Investors Service.
15. General obligations only, with 20 years to maturity, issued by 20 state and
local governmental units of mixed quality. Based on figures for Thursday.
16. Daily figures from Moody's Investors Service. Based on yields to maturity
on selected long-term bonds.
17. Compilation of the Federal Reserve. This series is an estimate of the yield
on recently-offered, A-rated utility bonds with a 30-year maturity and 5 years of
call protection. Weekly data are based on Friday quotations.
18. Standard and Poor's corporate series. Preferred stock ratio based on a
sample of ten issues: four public utilities, four industrials, one financial, and one
transportation. Common stock ratios on the 500 stocks in the price index.
NOTE. These data also appear in the Board's H. 15 (519) and G.13 (415) releases.
For address, see inside front cover.

A48

DomesticNonfinancialStatistics • September 1991

1.36 STOCK MARKET Selected Statistics
1990
Indicator

1988

1989

1991

1990r
Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

June

Prices and trading (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
6 Standard & Poor's Corporation
(1941-43 = 10)1

149.96
180.83
134.07
72.22
127.41

180.13
228.04
174.90
94.33
162.01

183.58
225.89
158.88
90.71
133.36

168.05
208.58
131.99
87.27
108.01

172.21
212.81
132.96
89.69
113.76

179.57
221.86
141.31
91.56
122.18

177.95
220.69
145.89
88.59
121.39

197.75
246.74
166.06
92.08
141.03

203.56
255.36
166.26
92.29
145.41

207.71
260.16
166.90
92.92
152.64

206.93
260.13
170.77
90.73
151.32

207.32
261.16
177.05
89.01
152.30

265.86

323.05

334.83

307.12

315.29

328.75

325.49

362.26

372.28

379.68

377.99

378.29

7 American Stock Exchange
(Aug. 31, 1973 = 50?

295.06

356.67

338.58

296.67

294.88

305.54

304.08

338.11

353.98

365.02

362.67

366.06

161,509
9,955

165,568
13,124

156,777
13,155

159,590
11,294

149,916
10,368

155,836
11,620

166,323
10,870

226,635
16,649

196,343
15,326

182,510
13,140

170,337
10,995

162,154
11,477

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-dealers3

32,740

34,320

28,210

28,650

27,820

28,210

27,390

28,860

29,660

30,020

29,980

31,280

Free credit balances at brokers4
11 Margin-account'
12 Cash-account

5,660
16,595

7,040
18,505

8,050
19,285

7,245
15,820

7,300
17,025

8,050
19,285

7,435
18,825

7,190
19,435

7,320
19,555

6,975
17,830

7,200
16,650

6,690
18,110

Margin requirements (percent of market value and effective date)6
Mar. 11, 1968
13 Margin stocks
14 Convertible bonds
15 Short sales

June 8, 1968

May 6, 1970

Dec. 6, 1971

Nov. 24, 1972

Jan. 3, 1974

70
50
70

80
60
80

65
50
65

55
50
55

65
50
65

50
50
50

1. Effective July 1976, includes a new financial group, banks and insurance
companies. With this change the index includes 400 industrial stocks (formerly
425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40
financial.
2. Beginning July 5, 1983, the American Stock Exchange rebased its index
effectively cutting previous readings in half.
3. Beginning July 1983, under the revised Regulation T, margin credit at
broker-dealers includes credit extended against stocks, convertible bonds, stocks
acquired through exercise of subscription rights, corporate bonds, and government securities. Separate reporting of data for margin stocks, convertible bonds,
and subscription issues was discontinued in April 1984.
4. Free credit balances are in accounts with no unfulfilled commitments to the
brokers and are subject to withdrawal by customers on demand.
5. New series beginning June 1984.
6. These regulations, adopted by the Board of Governors pursuant to the
Securities Exchange Act of 1934, limit the amount of credit to purchase and carry
"margin securities" (as defined in the regulations) when such credit is collater-




alized by securities. Margin requirements on securities other than options are the
difference between the market value (100 percent) and the maximum loan value of
collateral as prescribed by the Board. Regulation T was adopted effective Oct. 15,
1934; Regulation U, effective May 1, 1936; Regulation G, effective Mar. 11, 1968;
and Regulation X, effective Nov. 1, 1971.
On Jan. 1, 1977, the Board of Governors for the first time established in
Regulation T the initial margin required for writing options on securities, setting
it at 30 percent of the current market-value of the stock underlying the option. On
Sept. 30, 1985, the Board changed the required initial margin, allowing it to be the
same as the option maintenance margin required by the appropriate exchange or
self-regulatory organization; such maintenance margin rules must be approved by
the Securities and Exchange Commission. Effective Jan. 31, 1986, the SEC
approved new maintenance margin rules, permitting margins to be the price of the
option plus 15 percent of the market value of the stock underlying the option.
Effective June 8, 1988, margins were set to be the price option plus 20 percent
of the market value of the stock underlying the option (or 15 percent in the case
of stock-index options).

Financial Markets

A23

1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities
Millions of dollars, end of period
1991

1990
Account

1988

1989
July

Aug.

Sept.

Oct.

Dec.

Jan.

Feb.

Mar.

Apr.

1,084,900

1,066,116

1,054,897

1,042,169

1,027,590

653,472

633,567

624,783

619,725

610,674

608,685

155,616

155,320

151,522

149,433

147,479

143,935

16,918
24,139
48,756

15,169
23,668
48,137

14,636
23,194
47,707

14,495
22,305
47,636

14,082
21,914
46,717

Nov.

SAIF-insured institutions
1 Assets

1,350,500

1,249,055

733,729

1,162,297

689,079

1,156,789

684,936

1,125,653

665,655

2 Mortgages
3 Mortgage-backed
securities
4 Contra-assets to
mortgage assets'
5 Commercial loans
6 Consumer loans
7 Contra-assets to non
mortgage loans
8 Cash and investment
securities
9 Other3

764,513

186,986
129,610

166,053
116,955

150,399
103,226

153,061
102,627

148,058
99,640

10 Liabilities and net worth

1,350,500

1,249,055

1,162,297

1,156,789

971,700
299,400
134,168
165,232
24,216
n.a.

945,656
252,230
124,577
127,653
27,556
23,612

885,286
222,439
106,127
116,312
26,798
27,775

878,736
221,872
105,882
115,990
28,293
27,889

11
12
13
14
15
16

Savings capital
Borrowed money
FHLBB
Other
Other
Net worth

214,587

170,532

158,146

156,398

154,197

1,116,641

662,309
153,469

1,109,032

37,950
33,889
61,922

25,457
32,150
58,685

19,552
28,483
54,666

19,453
27,868
53,387

18,550
26,762
51,874

17,139
26,052
50,746

17,038
25,262
50,177

3,056

3,592

1,989

2,034

1,982

1,769

1,692

1,936

1,699

1,846

1,797

1,747

145,286
97,686

145,998
97,237

146,534
95,439

140,451
94,417

138,819
92,501

139,059
91,309

132,856
89,311

1,125,653

1,116,641

1,109,032

1,084,900

1,066,116

1,054,897

1,042,169

1,027,590

857,688
213,563
101,731
111,832
23,874
30,526

851,810
208,105
100,574
107,531
25,559
31,188

846,822
203,855
100,493
103,362
26,127
32,228

835,4%
197,353
100,391
%,%2
21,305
30,747

823,499
188,937
95,842
93,095
22,154
31,526

816,500
183,672
94,658
89,014
23,319
31,407

817,010
169,428
90,555
78,873
20,286
35,446

806,249
164,273
86,779
77,494
21,711
35,358

SAIF-insured federal savings banks
17 Assets

425,966

498,522

580,847

584,632

591,136

588,880

585,847

576,531

567,373

556,708

552,520

549,319

320,233

316,889

313,880

309,618

311,932

18 Mortgages
19 Mortgage-backed
securities
20 Contra-assets to
mortgage assets'
21 Commercial loans
22 Consumer loans
23 Contra-assets to nonmortgage loans
24 Finance leases plus
interest
25 Cash and investment ..
26 Other

230,734

283,844

328,236

328,895

332,927

332,431

328,122

64,957

70,499

80,474

80,994

82,418

82,219

84,190

81,205

79,451

78,290

77,684

75,147

9,305
18,197
30,421

9,591
17,674
29,933

8,222
17,299
31,179

7,777
17,008
29,292

7,975
16,556
30,586

7,638
16,215
30,433

880
61,029
35,412

1,101
64,538
39,981

n.a.
71,354
44,150

n.a.
73,756
44,129

27 Liabilities and net worth

425,966

498,522

580,847

584,632

28
29
30
31
32
33

Savings capital
Borrowed money
FHLBB
Other
Other
Net worth




13,140
16,731
24,222

13,548
18,143
28,212

9,227
18,810
31,003

9,339
18,662
31,183

9,964
18,767
30,750

9,578
18,458
30,682

889

1,193

870

813

980

572

809

990

770

895

966

951

n.a.
73,602
46,043

n.a.
75,117
45,287

n.a.
72,454
45,319

n.a.
75,940
45,008

n.a.
71,066
44,768

n.a.
67,721
44,210

n.a.
68,157
43,714

n.a.
65,786
43,292

591,136

588,880

585,847

576,531

567,373

556,708

552,520

549,319

436,080
115,472
60,256
55,216
9,063
24,837

436,903
111,270
60,265
51,005
9,824
24,931

434,297
107,270
59,949
47,321
8,193
24,172

428,822
102,313
57,703
44,610
8,356
25,285

422,745
97,089
56,078
41,011
8,721
25,432

425,720
90,692
53,134
37,558
7,700
25,494

422,955
89,310
51,736
37,574
8,211
25,542

298,197
99,286
46,265
53,021
8,075
20,218

360,547
108,448
57,032
51,416
9,041
22,716

423,472
118,393
61,287
57,106
9,245
26,424

424,260
120,592
62,209
58,383
10,128
26,420

434,705
119,991
61,605
58,386
8,253
24,859

A26

Domestic Financial Statistics • September 1991

1.37—Continued
1990
Account

1988

1991

1989
July

Aug.

Sept.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

f

f

f

f

Credit unions4
34 Total assets/liabilities
and capital

174,593

183,688

194,523

196,625

197,272

35
36

114,566
60,027

120,666
63,022

127,564
66,959

128,715
67,910

129,086
68,186

113,191
73,766
39,425
159,010
104,431

122,608
80,272
42,336
167,371
109,653

124,343
81,063
43,280
176,360
115,305

126,156
82,040
44,116
178,081
116,411

127,341
82,823
44,518
177,532
115,469

54,579

57,718

61,056

61,670

62,063

Federal
State

37 Loans outstanding
38 Federal
39 State
40 Savings
41 Federal (shares)
42 State (shares and
deposits)

f

198,206

f

1

1

n.a.

130,073
68,133

n a.

127,132
83,029
44,102
179,974
117,892

1

1

1

1

n.a.

n.a.

n.a.

n.a.

62,082
Life insurance companies5

43 Assets
44
45
46
47
48
49
50
51
52
53
54

Securities
Government....
United States6
State ami local
Foreign"
Business
Bonds
Stocks
Mortgages
Real estate
Policy loans
Other assets

1,299,756

1,387,463

1,411,881

178,141
153,361
9,028
15,752
663,677
538,063
125,614
254,215

202,962
175,156

208,782

15,988
709,470
588,251
121,219
266,063

12,038
16,544
724,603
5%,053
128,550
267,922

39,908
57,439
106,376

44,544
60,641
103,783

44,718
61,562
104,294

11,818

1. Contra-assets are credit-balance accounts that must be subtracted from the
corresponding gross asset categories to yield net asset levels. Contra-assets to
mortgage loans, contracts, and pass-through securities include loans in process,
unearned discounts and deferred loan fees, valuation allowances for mortgages
"held for sale," and specific reserves and other valuation allowances.
2. Contra-assets are credit-balance accounts that must be subtracted from the
corresponding gross asset categories to yield net asset levels. Contra-assets to
nonmortgage loans include loans in process, unearned discounts and deferred loan
fees, and specific reserves and valuation allowances.
3. Includes holding of stock in Federal Home Loan Bank and Finance leases
plus interest.
4. Data include all federally insured credit unions, both federal and state
chartered, serving natural persons.
5. Data are no longer available on a monthly basis for life insurance companies.
6. Direct and guaranteed obligations. Excludes federal agency issues not
guaranteed, which are shown in the table under "Business" securities.




180,200

7. Issues of foreign governments and their subdivisions and bonds of the
International Bank for Reconstruction and Development.
NOTE. Savings Association Insurance Fund (SAIF)-insured institutions: Estimates by the Office of Thrift Supervision (OTS) for all institutions insured by the
SAIF and based on the OTS thrift Financial Report.
SAIF-insured federal savings banks: Estimates by the OTS for federal savings
banks insured by the SAIF and based on the OTS thrift Financial Report.
Credit unions: Estimates by the National Credit Union Administration for
federally chartered and federally insured state-chartered credit unions serving
natural persons.
Life insurance companies: Estimates of the American Council of Life Insurance
for all life insurance companies in the United States. Annual figures are annualstatement asset values, with bonds carried on an amortized basis and stocks at
year-end market value. Adjustments for interest due and accrued and for
differences between market and book values are not made on each item separately
but are included, in total, in "Other assets."

Financial Markets A23
1.38 FEDERAL FISCAL AND FINANCING OPERATIONS
Millions of dollars
Calendar year
Type of account or operation

Fiscal
year
1988

Fiscal
year
1989

Fiscal
year
1990

1991
Jan.

U.S. budget1
1 Receipts, total
2 On-budget
3 Off-budget
4 Outlays, total
5 On-budget
6 Off-budget
7 Surplus or deficit (-), total
8 On-budget
9 Off-budget
Source of financing (total)
10 Borrowing from the public
11 Operating cash (decrease, or increase (-)) . . .
12 Other

Feb.

Mar.

Apr.

May

June

908,166
666,675
241,491
1,063,318
860,627
202,691
-155,151
-193,952
38,800

990,701
727,035
263,666
1,144,020
933,107
210,911
-153,319
-206,072
52,753

1,031,308
749,654
281,654
1,251,766
1,026,701
225,065
-220,458
-277,047
56,590

100,713
70,023
30,690
99,023
79,105
19,918
1,690
-9,082
10,772

67,657
45,594
22,063
93,834
72,667
21,167
-26,177
-27,073
896

64,805
39,011
25,794
105,876
83,340
22,536
-41,071
-44,329
3,258

140,380
108,746
31,634
110,249
90,362
19,887
30,131
18,384
11,747

63,560
41,958
21,602
116,906
95,903
21,003
-53,346
-53,945
599

103,389
76,322
27,067
105,849
90,901
14,948
-2,460
-14,579
12,119

166,139
-7,962
-3,026

141,806
3,425
8,088

264,453
818
-44,813

31,764
-30,627
-2,827

34,611
2,341
-10,775

-9,913
28,473
22,511

-9,399
-16,214
-4,518

41,742
20,362
-8,758

10,715
-15,730
7,475

44,398
13,023
31,375

40,973
13,452
27,521

40,155
7,638
32,517

62,815
27,810
35,006

60,474
23,898
36,577

32,001
10,922
21,078

48,215
13,682
34,533

27,853
6,619
21,234

43,538
11,822
31,761

MEMO

13 Treasury operating balance (level, end of
period)
14 Federal Reserve Banks
15 Tax and loan accounts

1. In accordance with the Balanced Budget and Emergency Deficit Control Act
of 1985, all former off-budget entries are now presented on-budget. The Federal
Financing Bank (FFB) activities are now shown as separate accounts under the
agencies that use the FFB to finance their programs. The act has also moved two
social security trust funds (Federal old-age survivors insurance and Federal
disability insurance trust funds) off-budget. The Postal Service B included as an
off-budget item in the Monthly Treasury Statement beginning in 1990.
2. Includes special drawing rights (SDRs); reserve position on the U.S. quota




in the International Monetary Fund (IMF); loans to the IMF; other cash and
monetary assets; accrued interest payable to the public; allocations of special
drawing rights; 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 loan-valuation adjustment; and profit on sale of gold.
SOURCES. Monthly Treasury Statement of Receipts and Outlays of the U.S.
Government and the Budget of the U.S. Government.

A28 A48 DomesticNonfinancialStatistics • September 1991
1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1
Millions of dollars
Calendar year
Source or type

Fiscal
year
1989

Fiscal
year
1990

1989

1990

1991

H2

HI

H2

HI

Apr.

May

June

RECEIPTS

990,701

1 All sources
2 Individual income taxes, net
3 Withheld
4 Presidential Election Campaign Fund
5 Nonwithheld
6 Refunds
Corporation income taxes
7 Gross receipts
8 Refunds
9 Social insurance taxes and contributions,
net
10 Employment taxes and
contributions
11
Self-employment taxes and
contributions3
12 Unemployment insurance
13 Other net receipts
14
15
16
17

Excise taxes
Customs deposits
Estate and gift taxes 5
Miscellaneous receipts

1,031,308

470,276

548,861

503,123

540,504

140,380

63,560

103,389

445,690
361,386
32
154,839
70,567

466,884
390,480
32
149,189
72,817

218,706
193,296
3
33,303
7,898

243,087
190,219
30
117,675
64,838

230,745
207,469
3
31,728
8,455

232,389
193,440
31
109,405
70,487

77,768
36,428
6
60,246
18,912

20,005
36,958
6
3,067
20,026

44,517
27,449
6
18,681
1,618

117,015
13,723

110,017
16,510

52,269
6,842

58,830
8,326

54,044
7,603

58,903
7,904

15,526
2,229

2,931
899

17,472
932

359,416

380,047

162,574

210,476

178,468

214,303

42,478

34,546

34,758

332,859

353,891

152,407

195,269

167,224

199,727

39,671

27,192

34,152

18,504
22,011
4,546

21,795
21,635
4,522

1,947
7,909
2,260

19,017
12,929
2,278

2,638
8,996
2,249

22,150
12,2%
2,279

12,707
2,435
372

1,604
6,928
426

3,136
251
355

34,386
16,334
8,745
22,839

35,345
16,707
11,500
27,316

16,799
8,667
4,451
13,651

18,153
8,096
6,442
12,106

17,535
8,568
5,333
16,032

20,703
7,488
5,631
8,991

3,842
1,219
1,546
231

3,653
1,244
835
1,245

3,534
1,215
708
2,117

1,144,020

1,251,766

587,394

640,867

647,218

631,737

110,249

116,906

105,849

303,559
9,574
12,838
3,702
16,182
16,948

299,335
13,760
14,420
2,470
17,009
11,998

149,613
5,971
7,091
1,449
9,183
4,132

152,733
6,770
6,974
1,216
7,343
7,450

149,497
8,943
8,081
979
9,933
6,878

122,089
7,592
7,4%
816
8,324
7,684

21,651
1,513
1,369
-40
1,385
2,115

25,069
1,862
1,410
513
1,557
1,638

21,934
496
1,199
180
1,518
597

29,091
27,608
5,361

67,495
29,495
8,466

22,295
14,982
4,879

38,672
13,754
3,987

37,491
16,218
3,939

18,492
14,748
3,552

4,700
2,624
697

3,115
2,631
698

6,924
2,562
503

OUTLAYS

18 All types
19
20
21
22
23
24

National defense
International affairs
General science, space, and technology . . . .
Energy
Natural resources and environment
Agriculture

25
26
27
28

Commerce and housing credit
Transportation
Community and regional development
Education, training, employment, and
social services

29 Health
30 Social security and medicare
31 Income secunty
32
33
34
35
36

Veterans benefits and services
Administration of justice
General government
Net interest6
Undistributed offsetting receipts7

36,694

37,479

18,663

19,537

18,988

21,234

3,319

3,404

3,175

48,390
317,506
136,031

58,101
346,383
148,299

25,339
162,322
67,950

29,488
175,997
78,475

31,424
176,353
75,948

35,608
190,248
88,778

5,882
31,975
16,034

6,059
32,621
16,307

6,917
33,908
9,827

30,066
9,422
9,124
169,317
-37,212

29,112
10,076
10,822
183,790
-36,615

14,864
4,909
4,760
87,927
-18,935

15,217
4,868
4,916
91,155
-17,688

15,479
5,265
6,976
94,650
-19,829

14,326
6,187
5,212
98,556
-18,702

3,200
1,136
419
15,802
-3,531

3,674
1,219
1,266
17,042
-3,180

1,168
930
1,592
15,746
-3,051

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 outlays does not correspond to calendar year data because revisions from
the Budget have not been fully distributed across months.
2. Old-age, disability, and hospital insurance, and railroad retirement accounts.
3. Old-age, disability, and hospital insurance.
4. Federal employee retirement contributions and civil service retirement and
disability fund.




5. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts.
6. Net interest function includes interest received by trust funds.
7. Consists of rents and royalties on the outer continental shelf, U.S. government contributions for employee retirement.
SOURCES. U.S. Department of the Treasury, Monthly Treasury Statement of
Receipts and Outlays of the U.S. Government, and the U.S. Office of Management and Budget, Budget of the U.S. Government, Fiscal Year 1990.

Federal Finance

A29

1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION
Billions of dollars, end of period
1990

1989
Item
June 30

Sept. 30

Dec. 31

Mar. 31

June 30

Mar. 31

Sept. 30

1 Federal debt outstanding .

2.824.0

2,881.1

2,975.5

3,081.9

3.175.5

3.266.1

3,397.3

3,491.7

2 Public debt securities.
3 Held by public
4 Held by agencies ..

2,799.9
2.142.1
657.8

2.857.4
2.180.7
676.7

2,953.0
2,245.2
707.8

3,052.0
2,329.3
722.7

3,143.8
2,368.8
775.0

3,233.3
2,437.6
795.8

3,364.8
2.536.6
828.3

3,465.2
n.a.
n.a.

24.0
23.6
.5

23.7
23.5

22.5
22.4
.1

29.9
29.8

31.7
31.6

.1

2,784.6

2.829.8

2,921.7

9 Public debt securities.
10 Other debt1

2,784.3
.2

2.829.5
.3

2,921.4
.3

11 MEMO: Statutory debt limit,

2,800.0

2,870.0

3,122.7

5 Agency securities ..
6 Held by public...
7 Held by agencies
8 Debt subject to statutory limit.

1. Consists of guaranteed debt ofTreasury and other federal agencies, specified
participation certificates, notes to international lending organizations, and District
of Columbia stadium bonds.

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

32.8
32.6
.2

32.5
32.4

.2

2,988.9

3,077.0

3.161.2

3.281.7

3,377.1

2.988.6
.3

3.076.6
.4

3,160.9
.4

3,281.3
.4

3,376.7
.4

3.122.7

3.122.7

3,195.0

4,145.0

4,145.0

.2

.1

SOURCES. Treasury Bulletin and Monthly Statement of the Public Debt of the
United States.

1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership
Billions of dollars, end of period
1991

1990
Type and holder

1987

1988

1989

1990
Q3

1 Total gross public debt
2
3
4
5
6
7
8
9
10
11
12
13
14

By type
Interest-bearing
Marketable
Bills
Notes
Bonds
Nonmarketable1
State and local2 government series
Foreign issues
Government
Public
Savings bonds and notes...
Government account series
Non-interest-bearing debt
By

holder4

15 U.S. Treasury and other federal agencies and trust funds.
16 Federal Reserve Banks
17 Private investors
18 Commercial banks
19 Money market funds
20 Insurance companies
21 Other companies
22 State and local treasuries
Individuals
23 Savings bonds
24 Other securities
25 Foreign and international5
26 Other miscellaneous investors6

Ql

Q2

2,431.7

2,684.4

2,953.0

3,364.8

3,233.3

3,364.8

3,465.2

3,538.0

2,428.9
1,724.7
389.5
1,037.9
282.5
704.2
139.3
4.0
4.0
.0
99.2
461.3
2.8

2,663.1
1,821.3
414.0
1,083.6
308.9
841.8
151.5
6.6
6.6
.0
107.6
575.6
21.3

2,931.8
1,945.4
430.6
1,151.5
348.2
986.4
163.3
6.8
6.8
.0
115.7
695.6
21.2

3,362.0
2,195.8
527.4
1,265.2
388.2
1,166.2
160.8
43.5
43.5
.0
124.1
813.8
2.8

3,210.9
2,092.8
482.5
1,218.1
377.2
1,118.2
161.3
36.0
36.0
.0
122.2
779.4
22.4

3,362.0
2,195.8
527.4
1,265.2
388.2
1,166.2
160.8
43.5
43.5
.0
124.1
813.8
2.8

3,441.4
2,227.9
533.3
1,280.4
399.3
1,213.5
159.4
42.8
42.8
.0
127.7
853.1
23.8

2,516.1
2,268.1
512.5
1,320.3
411.2
1,248.0
161.0
42.1
42.1
.0
131.3
883.2
21.9

477.6
222.6
1,731.4
201.5
14.6
104.9
84.6
284.6

589.2
238.4
1,858.5
193.8
11.8
107.3
87.1
313.6

707.8
228.4
2,015.8
174.8
14.9
130.1
98.8
338.7

828.3
259.8
2,288.3
n.a.
n.a.
n.a.
n.a.
n.a.

795.8
232.5
2,207.3
188.0
33.6
138.9
114.6
344.0

828.3
259.8
2,288.3
n.a.
n.a.
n.a.
n.a.
n.a.

n.a.

n.a.

101.1
71.3
299.7
569.1

109.6
79.2
362.2
593.4

117.7
98.8
392.9
672.5

126.2
n.a.
n.a.
n.a.

123.9
114.6
404.9
n.a.

126.2
n.a.
n.a.
n.a.

1. Includes (not shown separately): Securities issued to the Rural Electrification Administration; depository bonds, retirement plan bonds, and individual
retirement bonds.
2. Nonmarketable series denominated in dollar and series denominated in
foreign currency held by foreigners.
3. Held almost entirely by U.S. Treasury and other federal agencies and trust
funds.
4. Data for Federal Reserve Banks and U.S. Treasury and other Federal
agencies and trust funds are actual holdings; data for other groups are Treasury




Q4

estimates.
5. Consists of investments of foreign and international accounts. Excludes
non-interest-bearing notes issued to the International Monetary Fund.
6. 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.
SOURCES. Data by type of security, U.S. Treasury Department, Monthly
Statement of the Public Debt of the United States; data by holder, the Treasury
Bulletin.

A48

DomesticNonfinancialStatistics • September 1991

1.42 U.S. GOVERNMENT SECURITIES DEALERS

Transactions1

Millions of dollars, daily averages, par value
1991

1991, week ending

Mar.

Apr.

May

May 1

May 8

32,648

30,498

30,745

29,628

33,033

27,085

35,168
26,889
12,169
14,127

37,426
30,113
11,243
12,905

43,429
24,695
14,556
13,550

44,061
31,206
12,868
12,617

47,402
22,015
19,081
12,324

41,385
25,722
19,923
22,559

4,375
601
644

4,171
566
654

4,198
616
695

4,865
357
594

3,609
698
570

3,661
668
1,084

9,712
1,303

10,588
1,469

9,607
1,499

9,137
1,578

11,514
1,481

76,452

74,699

76,948

77,699

1,559
5,650

1,601
5,762

1,589
5,044

1,807
4,915

44,549

47,486

50,027

4,062
5,365

3,790
6,295

3,921
6,062

4,607

3,782'

1,351
847
1,059
9,023

1,065
740
810
7,735

100
34
36
8,313
1,285

May 15

May 22

May 29

June 5

June 12

June 19

30,818

30,112

36,132

28,990

26,200

30,228

43,357
24,757
10,290
11,621

43,520
24,873
9,789
8,161

38,248
24,969
13,252
12,858

32,478
22,212
11,636
12,736

28,826
23,873
10,114
12,074

32,234
23,335
9,310
9,546

4,444
409
483

4,834
664
509

4,472
808
1,082

3,591
567
623

3,668
476
509

3,878
408
616

10,716
1,611

7,655
1,355

8,620
1,436

9,653
1,736

11,318
1,926

12,075
2,013

10,067
1,854

80,762

83,693

73,008

70,085

77,184

66,456

62,760

65,514

1,434
6,216

1,553
5,690

1,450
3,932

1,825
4,220

1,712
5,400

1,174
5,871

1,282
7,491

1,268
5,690

52,681

53,092

52,981

47,834

46,369

48,275

41,596

38,327

39,139

4,010
5,799

3,444
6,779

3,860
6,637

3,886
5,078

4,182
5,837

4,650
5,989

3,607
7,373

3,370
6,597

3,634
6,231

4,201

5,734'

3,713'

4,390

4,971

3,136

4,927

4,005

5,807

6,841

1,292
569
938
8,030

1,152
1,047
1,002
8,434

1,644
495
851
6,845

1,557
504
1,079
11,873

1,066
696
895
6,943

910
475
619
5,449

1,340
593
1,680
10,348

1,218
704
1,497
10,059

1,323
628
1,582
9,237

1,218
456
828
8,107

56'
25'
41

57
11
26

12
4
120

37
6
70

15
2
7

69
21
11

101
16
5

96
10
11

116
141
22

24
4
18

31
2
28

9,316
1,472

9,536
1,684

8,799
1,532

8,798
1,597

11,677
1,680

11,096
1,336

6,754
2,119

9,456
1,768

11,342
2,143

8,628
1,051

8,942
1,839

June 26

IMMEDIATE TRANSACTIONS2

By type of security
U.S. Treasury securities
Bills
Coupon securities
2
Maturing in less than 3.5 years ..
3
Maturing in 3.5 to 7.5 years
4
Maturing in 7.5 to 15 years
5
Maturing in 15 years or more . . .
Federal agency securities
Debt
6
Maturing in less than 3.5 years ..
7
Maturing in 3.5 to 7.5 years
8
Maturing in 7.5 years or more ..
Mortgage-backed securities
9
Pass-throughs
10
All others .

11
12
13
14
15
16

By type of counterparty
Primary dealers and brokers
U.S. Treasury and Federal
agency securities
Federal agency
Debt securities
Mortgage-backed securities..
Customers
U.S. Treasury and Federal agency
securities
Federal agency
Debt securities
Mortgage-backed securities..
FUTURE AND FORWARD
TRANSACTIONS4

17
18
19
20
21
22
23
24
25
26

By type of deliverable security
U.S. Treasury securities
Bills
Coupon securities
Maturing in less than 3.5 years .
Maturing in 3.5 to 7.5 years
Maturing in 7.5 to 15 years
Maturing in 15 years or more . . .
Federal agency securities
Debt
Maturing in less than 3.5 years ..
Maturing in 3.5 to 7.5 years
Maturing in 7.5 years or more ..
Mortgage-backed securities
Pass-throughs
All others
OPTION TRANSACTIONS5

27
28
29
30
31
32
33
34
35
36

By type of underlying securities
U.S. Treasury securities
Bills
Coupon securities
Maturing in less than 3.5 years .
Maturing in 3.5 to 7.5 years
Maturing in 7.5 to 15 years
Maturing in 15 years or more . . .
Federal agency securities
Debt
Maturing in less than 3.5 years ..
Maturing in 3.5 to 7.5 years
Maturing in 7.5 years or more ..
Mortgage-backed securities
Pass-throughs
All others

2

8

76

5

158

33

151

0

20

45

0

0

1,014
288'
307'
1,786

874
196
226
2,249

1,056
138
245
2,205

1,010
165
127
2,563

1,276
117
165
1,854

598
125
277
3,130

956
95
289
2,903

921
200
226
1,116

2,264
157
362
1,569

2,189
293
296
2,615

1,356
254
349
1,936

2,740
146
140
1,879

1
0
0

3
0
0

1
0
1

8
0
0

0
0
0

4
0
2

0
0
0

0
0
1

2
0
0

0
0
0

0
0
1

0
0
0

297
0

333
9

202
0

195
0

240
0

224
0

212
0

113
0

249
1

443
0

310
0

158
0

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. Averages for transactions are based on the
number of trading days in the period. Immediate, forward, and future transactions
are reported at principal value, which does not include accrued interest; option
transactions are reported at the face value of the underlying securities.
Dealers report cumulative transactions for each week ending Wednesday.
2. Transactions for immediate delivery include purchases or sales of securities
(other than mortgage-backed agency securities) for which delivery is scheduled in
five business days or less and "when-issued" securities that settle on the issue
date of offering. Transactions for immediate delivery of mortgage-backed securities
include purchases and sales for which delivery is scheduled in thirty days or less.
Stripped securities are reported at market value by maturity of coupon or corpus.




3. Includes securities such as collateralized mortgage obligations (CMOs), real
estate mortgage investment conduits (REMICs); interest only (IOs), and principal
only (POs).
4. Futures transactions are standardized agreements arranged on an exchange.
Forward transactions are agreements made in the over-the-counter market that
specify delayed delivery. All futures transactions are included regardless of time
to delivery. Forward contracts for U.S. Treasury securities and federal agency
debt securities are included when the time to delivery is more than five days.
Forward contracts for mortgage-backed securities are included when the time to
delivery is more than thirty days.
5. Options transactions are purchases or sales of put and call options, whether
arranged on an organized exchange or in the over-the-counter market and include
options on futures contracts on U.S. Treasury and federal agency securities.

Federal Finance
1.43 U.S. GOVERNMENT SECURITIES DEALERS

A31

Positions and Financing1

Millions of dollars
1991
it
Mar.

Apr.

May

Apr. 24

May 1

May 8

May 15

May 22

May 29

3,381

6,153

June 5

June 12

June 19

10,685

12,008

Positions2
NET IMMEDIATE3

By type of security
U.S. Treasury securities
1 Bills
Coupon securities
2 Maturing in less than 3.5 years
3 Maturing in 3.5 to 7.5 years
4 Maturing in 7.5 to 15 years
5 Maturing in 15 years or more
Federal agency securities
Debt
6
Maturing in less than 3.5 years
7
Maturing in 3.5 to 7.5 years
8
Maturing in 7.5 years or more
Mortgage-backed securities
9 Pass-throughs
10 All others
Other money market instruments
11 Certificates of deposit
12 Commercial paper
13 Bankers' acceptances

12,824

8,014

1,564
3,892
882
3,735
-4,928 -6,301
-16,065 -12,982

2,907

3,347

-1,704
3,770
2,574
1,808
-4,408 -5,925
-13,156 -11,700

188

2,692

-2,075

9,438

-94
-166 -2,150 -3,657
3,859
559 -5,655 -2,858
3,465
136
2,151
-477
2,835
2,606
811
681
-7,303 -4,544 -4,085 -4,438 -4,006 -4,915 -4,941 -5,278
-12,892 -13,745 -12,787 -12,801 -13,102 -13,947 -14,841 -16,073

4,743
2,620
6,267

3,547
2,466
5,324

4,960
2,484
4,836

4,048
2,354
4,908

2,995
2,543
5,047

5,146
2,916
5,193

4,377
2,441
4,699

5,562
2,293
4,748

4,597
2,340
4,777

6,490
2,263
4,481

5,598
2,196
4,486

6,158
2,304
4,682

23,988
9,000

24,655
9,373

26,165
10,184

26,922
8,465

22,831
10,876

28,555
10,545

28,850
10,304

29,391
9,759

19,464
9,939

22,231
10,492

26,345
10,439

27,745
10,835

2,404
5,769
908

2,336
6,315
1,509

2,439
5,982
1,515

2,390
4,397
1,844

2,813
8,711
2,302

2,240
5,630
1,424

2,820
6,507
1,928

2,188
4,907
1,104

2,438
6,529
1,570

2,497
5,856
1,245

3,290
5,042
1,477

3,058
3,803
1,510

FUTURE AND FORWARD5

By type of deliverable security
U.S. Treasury securities
14 Bills
Coupon securities
15 Maturing in less than 3.5 years
16 Maturing in 3.5 to 7.5 years
17 Maturing in 7.5 to 15 years
18 Maturing in 15 years or more
Federal agency securities
Debt
19
Maturing in less than 3.5 years
20
Maturing in 3.5 to 7.5 years
21
Maturing in 7.5 years or more
Mortgage-backed securities
22 Pass-throughs
23 All others^
Other money market instruments
24 Certificates of deposit
25 Commercial paper
26 Bankers' acceptances

-9,921 -12,209

-18,953 -11,441

-15,348 -16,786 -19,543 -19,811 -21,409 -14,675 -11,880 -11,758

-1,137
-1,194
-181
-3,726

-1,044
-1,688
-200
-6,577

520
-1,254
-433
-4,116

-898
-1,384
-398
-7,020

-515
-759
39
-5,967

743
-835
-241
-6,926

1,076
-1,053
-304
-3,483

607
-1,557
-538
-3,224

-144
-1,767
-850
-3,039

326
-815
29
-2,470

686
842
1,038
-730

544
1,566
714
-1,468

80
123
-29

42
158
-20

187
11
-6

191
97
-86

292
104
95

344
19
-128

281
0
14

7
8
62

160
10
5

-26
-11
22

535
-172
-90

475
-181
-133

-9,464 -11,134
502
1,588
5,024'
-19
0

-13,711 -14,180
752
2,323

3,085r -18,609
157
64
0
0

16,444r
121
0

-8,853 -13,080 -18,049 -16,435
1,092
857
939
781
-2,014
166
0

-8,907 -10,441 -18,140 -19,419
175
1,014
589
1,524

2,741 -11,121 -23,530 -35,842 -50,301 -53,650 -50,260
174
121
122
1%
100
215
149
0
0
0
0
0
0
0
Financing6

27
28
29
30
31
32
33
34
35
36

37
38
39
40

Reverse repurchase agreements
Overnight and continuing
Term
Repurchase agreements
Overnight and continuing
Term
Securities borrowed
Overnight and continuing
Term
Securities loaned
Overnight and continuing
Term
Collateralized loans
Overnight and continuing
Term
MEMO: Matched book7
Reverse repurchases
Overnight and continuing
Term
Repurchases
Overnight and continuing
Term

179,145
224,668

184,273
230,965

190,522
230,051

175,030
236,166

199,952
226,216

186,945
238,628

213,524
218,712

183,406
232,609

178,150
227,947

186,023
240,046

189,701
256,504

188,649
257,295

280,236
195,158

280,196
201,866

274,319
213,240

277,160
205,428

280,539
201,243

257,643
219,019

285,047
205,488

272,492
220,630

276,970
210,103

289,136
211,261

293,647
223,345

295,542
224,131

52,701
23,796

51,440
20,621

60,038
19,025

49,416
21,075

53,447
19,848

53,893
19,441

53,279
18,777

66,698
18,817

66,058
18,743

64,116
19,738

64,762
22,126

66,124
22,543

6,833
982

6,538
874

7,062
724

6,504
1,477

6,851
499

7,038
699

6,979
815

7,516
736

6,723
652

7,133
821

6,889
592

7,202
949

4,198
1,605

4,122
1,967

4,503
2,023

3,974
2,014

4,386
2,036

3,903
2,080

4,515
1,781

4,227
2,160

5,005
2,008

5,825
2,237

5,740
2,100

5,546
2,146

116,036
180,364

116,928
192,791

122,990
189,072

109,659
198,773

129,509
188,946

119,133
198,005

134,482
177,319

122,271
186,329

116,666
190,907

117,661
202,181

114,743
214,468

116,202
213,218

148,269
144,928

154,692
153,202

152,094
163,869

149,403
157,590

166,706
155,498

145,283
170,691

155,959
158,560

148,311
167,094

154,322
161,785

160,535
158,762

161,221
169,004

160,764
170,524

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; monthly figures are averages of weekly data. Data for positions and
financing are averages of close-of-business Wednesday data.
2. Securities positions are reported at market value.
3. Net immediate positions include securities purchased or sold (other than
mortgage-backed agency securities) that have been delivered or are scheduled to
be delivered in five business days or less and "when-issued" securities settle on
the issue date of offering. Net immediate positions of mortgage-backed securities
include securities purchased or sold that have been delivered or are scheduled to
be delivered in thirty days or less.
4. Includes securities such as collateralized mortgage obligations (CMOs), real
estate mortgage investment conduits (REMICs), interest only (IOs), and principal
only (POs).
5. Futures positions are standardized contracts arranged on an exchange.




Forward positions reflect agreements made in the over-the-counter market that
specify delayed delivery. All futures positions are included regardless of time to
delivery. Forward contracts for U.S. Treasury securities and for federal agency
debt securities are included when the time to delivery is more than five business
days. Forward contracts for mortgage-backed securities are included when the
time to delivery is more than thirty days.
6. Overnight financing refers to agreements made on one business day that
mature on the next business day; continuing contracts are agreements that remain
in effect for more than one business day but have no specific maturity and can be
terminated without a requirement for advance notice by either party; term
agreements have a fixed maturity of more than one business day.
7. Matched-book data reflect financial intermediation activity in which the
borrowing and lending transactions are matched. Matched-book data are included
in thefinancingbreakdowns listed above. The reverse repurchase and repurchase
numbers are not always equal because of the "matching of securities of different
values or types of collateralization.

A48

DomesticNonfinancialStatistics • September 1991

1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES

Debt Outstanding

Millions of dollars, end of period
1990
Agency

1987

1989

1988

1990
Dec.

1 Federal and federally sponsored agencies
2 Federal agencies
3 Defense Department' 3
4 Export-Import Bank25 Federal Housing Administration4
6 Government National Mortgage Association participation
certificates5
7 Postal Service6
8 Tennessee Valley Authority
9 United States Railway Association6
7

10 Federally sponsored agencies
11 Federal Home Loan Banks
12 Federal Home Loan Mortgage Corporation
13 Federal National Mortgage Association
14 Farm Credit Banks8
15 Student Loan Marketing Association9
16 Financing Corporation
17 Farm Credit Financial Assistance Corporation"
18 Resolution Funding Corporation12

Jan.

Feb.

Mar.

Apr.

341,386

381,498

411,805

434,668

434,668

445,430

441,440

437,847

432,348

37,981
13
11,978
183

35,668
8
11,033
150

35,664
7
10,985
328

42,159
7
11,376
393

42,159
7
11,376
393

42,141
7
11,376
329

42,191
7
11,376
361

41,149
7

41,107
7

370

365

1,615
6,103
18,089
0

0
6,142
18,335
0

0
6,445
17,899
0

0
6,948
23,435
0

0
6,948
23,435
0

0
6,948
23,481
0

0
6,948
23,499
0

0
6,948
22,638
0

22,601

392,509
117,895
30,941
123,403
53,590
34,194
8,170

403,289
115,402
33,157
125,849
53,717
35,736
8,170

399,249
112,874
32,640
125,974
52,480
35,854
8,170

396,698
113,311
31,425
124,885
51,890
35,761
8,170

391,241
110,691
29,768
124,189
52,049
35,117
8,170

20
21
22
23
24

Lending to federal and federally sponsored agencies
Export-Import6 Bank
Postal Service
Student Loan Marketing Association
Tennessee Valley Authority
United States Railway Association6

Other Lending14
25 Farmers Home Administration
26 Rural Electrification Administration
27 Other

0
6,948
0

345,830
135,836
22,797
105,459
53,127
22,073
5,850
690
0

375,407
136,108
26,148
116,064
54,864
28,705
8,170
847
4,522

392,509
117,895
30,941
123,403
53,590
34,194
8,170
1,261

1,261

1,261

1,261

23,055

23,055

29,996

29,996

29,996

29,996

152,417

142,850

134,873

179,083

179,083

181,062

181,714

181,907

182,708

11,972
5,853
4,940
16,709
0

11,027
5,892
4,910
16,955
0

10,979
6,195
4,880
16,519
0

11,370
6,698
4,850
14,055
0

11,370
6,698
4,850
14,055
0

11,370
6,698
4,850
14,101
0

11,370
6,698
4,850
14,119
0

11,180

11,180

6,698
4,850
13,258
0

6,698
4,850
13,221
0

59,674
21,191
32,078

58,496
19,246
26,324

53,311
19,265
23,724

52,324
18,890
70,896

52,324
18,890
70,896

52,169
18,906
72,968

52,544
18,906
73,227

52,669
18,904
74,348

52,669
18,850
75,240

1. Consists of mortgages assumed by the Defense Department between 1957
and 1963 under family housing and homeowners assistance programs.
2. Includes participation certificates reclassified as debt beginning Oct. 1,1976.
3. On-budget after 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 1969 by the Government
National Mortgage Association acting as trustee for the Farmers Home Administration; Department of Health, Education, and Welfare; Department of Housing
and Urban Development; Small Business Administration; and the Veterans
Administration.
6. Off-budget.
7. Includes outstanding noncontingent liabilities: notes, bonds, and debentures. Some data are estimated.
8. Excludes borrowing by the Farm Credit Financial Assistance Corporation,
shown in 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




11,186

303,405
115,727
17,645
97,057
55,275
16,503
1,200
0
0

MEMO

19 Federal Financing Bank debt13

11,186

1,261

1,261

shown on line 22.
10. The Financing Corporation, established in August 1987 to recapitalize the
Federal Savings and Loan Insurance Corporation, undertook its first borrowing in
October 1987.
11. The Farm Credit Financial Assistance Corporation, established in January
1988 to provide assistance to the Farm Credit System, undertook its first
borrowing in July 1988.
12. The Resolution Funding Corporation, established by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, undertook its first
borrowing in October 1989.
13. The FFB, which began operations in 1974, is authorized to purchase or sell
obligations issued, sold, or guaranteed by other federal agencies. Since FFB
incurs debt solely for the purpose of lending to other agencies, its debt is not
included in the main portion of the table in order to avoid double counting.
14. Includes FFB purchases of agency assets and guaranteed loans; the latter
contain loans guaranteed by numerous agencies with the guarantees of any
particular agency being generally small. The Farmers Home Administration item
consists exclusively of agency assets, while the Rural Electrification Administration entry contains both agency assets and guaranteed loans.

Securities Market and Corporate Finance
1.45 NEW SECURITY ISSUES

A33

Tax-Exempt State and Local Governments

Millions of dollars
1991

1990
Type of issue or issuer,
or use

1990

1989

Apr.

Feb.

May'

June

114,522

113,646

120,339

9,961

12,250

7,230

11,335

10,864

10,916

14,753

13,804

Type of issue
2 General obligation
3 Revenue

30,312
84,210

35,774
77,873

39,610
81,295

3,024
6,937

3,536
8,714

2,343
4,887

4,838
6,497

4,219
6,645

3,771
7,145

4,946
9,807

4,442
9,362

Type of issuer
4 State
i
5 Special district and statutory authority1
6 Municipality, county, and township . . .

8,830
74,409
31,193

11,819
71,022
30,805

15,149
72,661
32,510

1,337
5,879
2,745

1,396
7,032
3,822

713
4,563
1,954

2,027
4,903
4,405

1,195
6,599
3,070

1,199
6,604
3,113

1,890
9,549
3,314

1,529
5,057
7,218

7 Issues for new capital, total

79,665

84,062

103,235

9,058

10,707

6,977

10,403

9,675

10,156

13,924

13,347

Use of proceeds
Education
Transportation
Utilities and conservation
Social welfare
Industrial aid
Other purposes

15,021
6,825
8,496
19,027
5,624
24,672

15,133
6,870
11,427
16,703
5,036
28,894

17,042
11,650
11,739
23,099
6,117
34,607

1,009
727
1,301
1,992
540
4,392

1,418
2,008
776
2,001
933
3,571

1,079
711
1,1%
891
607
2,493

1,579
146
2,046
698
768
4,775

2,583
421

2,001
1,305
2,171
921
319
3,439

2,462
1,642
1,815
3,373
743
3,889

2,684
1.829
2.830
2,455
1,040
2,509

1 All issues, new and refunding1

8
9
10
11
12
13

1,886

2,140
554
2,091

SOURCES. Investment Dealer's Digest beginning April 1990. Securities Data/
Bond Buyer Municipal Data Base beginning 1986. Public Securities Association
for earlier data.

1. Par amounts of long-term issues based on date of sale.
2. Includes school districts beginning 1986.

1.46 NEW SECURITY ISSUES U.S. Corporations
Millions of dollars
1991

1990
Type of issue or issuer,
or use

1990

1988

Oct.

Feb.

Dec.

Mar.

Apr.

May

1 All issues1

410,894

376,744

235,461

20,535

25,058

21,044

17,378'

30,708'

35,830'

33,770'

35,118

2 Bonds2

353,093

318,873

235,461

19,573

23,823

19,255

16,482r

28,906'

31,881'

28,457'

27,700

Type of offering
3 Public, domestic
4 Private placement, domestic .
5. Sold abroad

202,215
127,699'
23,178

181,393
114,629
22,851

188,969
n.a.
23,054

17,708
n.a.
1,865

22,117
n.a.
1,706

18,621'

n.a.
676

15,823'
n.a.
659'

25,737'
n.a.
3,169'

29,502'
n.a.
2,379'

24,60c
n.a.
3,857'

25,200
n.a.
2,500

Industry group
Manufacturing
Commercial and miscellaneous
Transportation
Public utility
Communication
Real estate and financial

70,306
62,790
10,275
20,834'
5,593
183,294'

76,345
49,726
10,105
17,130
8,461
157,107

38,248
11,098
4,926
13,893
4,876
138,987

3,531
548
230
796
378
14,090

6,593
821
457
2,209
693
13,050

2,831
1,061
351
2,032
1,380

11,601

3,375
1,408
711
689
97
10,203'

8,051'
1,821'
563
1,399
669
16,404'

6,969'
1,614'
985
506
988
20,819'

7,435'
2,886'
502'
2,095'
845'
14,694'

6,300
1,200
665
2,700
337
16,498

12 Stocks

57,802

57,870

962

1,235

1,789

896

1,802

3,949

5,313

7,418

Type of offering
13 Public preferred
14 Common
15 Private placement3

6,544
35,911
15,346

6,194
26,030
25,647

3,998
19,443
n.a.

550
412
n.a.

265
970
n.a.

175
1,614
n.a.

0
896
n.a.

150
1,652
n.a.

1,233
2,716
n.a.

543
4,771
n.a.

1,392
6,027
n.a.

Industry group
16 Manufacturing
17 Commercial and miscellaneous
18 Transportation
19 Public utility
20 Communication
21 Real estate and financial

7,608
8,449
1,535
1,898
515
37,798

9,308
7,446
1,929
3,090
1,904
34,028

n.a.
5,026
126
4,229
416
11,055

60
194
7
297
0
400

154
42
0
462
0
574

46
110
5
288
6
1,327

60

183
546
0
335
0
737

564
1,0%
249
354
0

1,7%
1,521
416
71
0
1,510

2,291
1,563
277
573
0
2,714

6
7
8
9
10
11

2

1. Figures which represent gross proceeds of issues maturing in more than one
year, are the principal amount or number of units multiplied by offering price.
Excludes secondary offerings, employee stock plans, investment companies other
than closed-end, intracorporate transactions, equities sold abroad, and Yankee
bonds. Stock data include ownership securities issued by limited partnerships.
2. Monthly data include only public offerings.




18
242
218

n.a.
359

1,686

3. Data are not available on a monthly basis. Before 1987, annual totals include
underwritten issues only.
SOURCES. IDD Information Services, Inc., the Board of Governors of the
Federal Reserve System, and before 1989, the U.S. Securities and Exchange
Commission.

A48

DomesticNonfinancialStatistics • September 1991

1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Asset Position
Millions of dollars
1990
INVESTMENT COMPANIES1

1989

1991

1990
Oct.

Nov.

Dec

Jan.

Feb.

Mar.

Apr,

May

1 Sales of own shares2

306,445

345,780

27,511

25,583

34,553

38,012

30,605

31,597

40,356

36,719

2 Redemptions of own shares3

272,165
34,280

289,573
56,207

23,112
4,399

22,085
3,498

29,484
5,069

27,648
10,364

23,390
7,215

25,372
6,226

32,895
7,461

26,970
9,749

553,871

570,744

538,306

557,676

570,744

590,296

616,472

632,052

647,053

671,763

44,780
509,091

48,638
522,106

51,847
486,459

52,829
504,847

48,638
522,106

53,549
536,747

53,899
562,573

52,895
579,154

52,982
594,071

55,424
616,342

3 Net sales
4 Assets4
5
5 Cash
6 Other position

4. Market value at end of period, less current liabilities.
5. Also includes all U.S. Treasury securities and other short-term debt
securities.
SOURCE. Investment Company Institute. Data based on reports of members,
which comprise substantially all open-end investment companies registered with
the Securities and Exchange Commission. Data reflect 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 investment income dividends. Excludes reinvestment of capital gains distributions and share issue of conversions from one fund
to another in the same group.
3. Excludes share redemptions resulting from conversions from one fund to
another in the same group.

1.48 CORPORATE PROFITS AND THEIR DISTRIBUTION
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1989
1988

Account

1989

1990

1991

1990
Q2

1 Corporate profits with inventory valuation and

Q3

Q4

Q1

Q2

Q3

Q4

Ql'

337.6
316.7
136.2
180.5
110.0
70.5

311.6
307.7
135.1
172.6
123.5
49.1

298.3
304.7
132.1
172.5
133.9
38.7

321.4
314.6
140.8
173.8
122.1
51.7

306.7
291.4
127.8
163.6
125.0
38.6

290.9
289.8
123.5
166.3
127.7
38.6

296.8
296.9
129.9
167.1
130.3
36.8

306.6
299.3
133.1
166.1
133.0
33.2

300.7
318.5
139.1
179.4
135.1
44.3

288.9
304.1
126.5
177.6
137.2
40.4

286.2
281.5
115.1
166.4
137.5
29.0

-27.0
47.8

-21.7
25.5

-11.4
4.9

-23.1
29.9

-6.1
21.4

-14.5
15.6

-11.4
11.3

-.5
7.7

-19.8
2.0

-13.8
-1.4

8.1
-3.5

SOURCE. Survey of Current Business (Department of Commerce).

1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1990

1989
Industry

1989

1990

1991

19911
Q4

Ql

Q2

Q3

Q4

Ql

Q21

Q31

1 Total nonfarm business

507.40

532.96

547.23

519.58

532.45

535.49

534.86

529.02

535.32

544.16

553.52

Manufacturing
2 Durable goods industries
3 Nondurable goods industries

82.56
101.24

82.99
109.79

80.06
110.11

83.41
108.47

86.35
105.02

84.34
110.82

82.67
111.81

78.62
111.52

81.53
108.58

81.53
109.58

79.71
111.74

9.21

9.87

9.88

9.38

9.58

9.84

9.98

10.09

9.85

10.05

9.%

6.26
6.73
5.85

6.41
8.98
6.20

5.44
11.43
7.47

6.80
5.75
5.69

6.45
9.35
6.33

6.66
9.36
5.84

5.60
10.05
5.76

6.90
7.17
6.88

5.60
11.27
6.71

5.15
12.60
7.50

5.81
12.14
7.45

44.81
21.47
229.28

43.98
23.02
241.72

45.92
23.45
253.48

44.66
21.15
234.25

43.37
22.34
243.66

42.62
21.65
244.37

43.63
23.85
241.51

46.31
24.22
237.32

43.21
24.18
244.39

47.10
22.65
248.00

46.16
23.34
257.22

Nonmanufacturing
4 Mining
Transportation
5 Railroad
6 Air
7 Other
Public utilities
8 Electric
9 Gas and other
10 Commercial and other2

1. Anticipated by business.
2. "Other" consists of construction; wholesale and retail trade; finance and




insurance; personal and business services; and communication.
SOURCE. Survey of Current Business (Department of Commerce).

Domestic Finance Companies

A35

Assets and Liabilities1

1.51 DOMESTIC FINANCE COMPANIES

Billions of dollars, end of period; not seasonally adjusted
1991

1989
1988

Account

1989
Q3

Q4

Q1

Q2

Q3

Q4'

ASSETS

Accounts receivable, gross2
1 Consumer
2 Business
3 Real estate
4 Total

141.1
207.4
39.5
388.1

146.2
236.5
43.5
426.2

140.8
256.0'
48.9
445.8r

146.3
246.8
48.7
441.8

140.8
256.0'
48.9
445.8'

137.9
262.9
52.1
452.8'

138.6
274.8'
55.4
468.8'

140.9
275.4
57.7
474.0

136.0
290.8
59.9
486.7

45.3

50.0
7.3

52.0
7.7

52.9
7.7

52.0
7.7

51.9
7.9

54.3

55.1

6.8

8.6

56.6
9.2

336.0
58.3

368.9
72.4

386.1
91.6

381.3
85.2

386.1
91.6

393.0
92.5

406.3
95.5

410.3
102.8

420.9
99.6

394.2

441.3

477.6

466.4

477.6

501.9

513.1

520.6

16.4
128.4

15.4
142.0

14.5
149.5

12.2

147.2

14.5
149.5

13.9
152.9

15.8
152.4

15.6
148.6

19.4
152.7

28.0

137.1
n.a.
n.a.
52.8
31.5

n.a.
n.a.
50.6
137.9
59.8
35.6

n.a.
n.a.
63.8
147.8

n.a.
n.a.
63.8
147.8

n.a.
n.a.
72.8
153.0
66.1
41.8

156.6
68.7
41.6

n.a.
n.a.
82.7
157.0

39.4

n.a.
n.a.
70.5
145.7
61.7
40.7

n.a.
n.a.

39.4

n.a.
n.a.
60.3
145.1
61.8
39.8

394.2

441.3

477.6

466.4

477.6

485.5

501.9

513.1

Less:
5 Reserves for unearned income
6 Reserves for losses
7 Accounts receivable, net
8 All other
9 Total assets

8.2

LIABILITIES AND CAPITAL

10 Commercial paper
11 Bank loans
12
13
14
15
16
17

Debt
Other short-term
Long-term
Due to parent
Not elsewhere classified
All other liabilities
Capital, surplus, and undivided profits

18 Total liabilities and capital

62.6

1. Components may not sum to totals because of rounding.

1.52 DOMESTIC FINANCE COMPANIES

62.6

82.0

66.0

42.8
520.6

515.0

2. Excludes pools of securitized assets.

Business Credit Outstanding and Net Chang.1

Millions of dollars, end of period, seasonally adjusted
1991

1990
Type
Dec.

Jan.

Feb.

Mar.

Apr.

May

234,891

258,957

292,638

292,638

293,383

294,284

294,225

294,569

297,171

37,210
28,185
n.a.

39,479
29,627
698

38,110
31,784
951

38,110
31,784
951

38,016
31,956
911

37,548
32,058
879

36,649
32,332
828

36,652
32,034
777

36,005
32,690
737

Wholesale
Automotive
Equipment
All other
Pools of securitized assets2

32,953
5,971
9,357
n.a.

33,814
6,928
9,985
0

32,283
11,569
9,126
2,950

32,283
11,569
9,126
2,950

32,404
11,299
9,366
2,836

31,428
11,108
9,142
3,353

30,329
10,880
8,868
3,354

30,066
10,937
8,666
2,905

30,055
11,000
8,620
2,855

Leasing
9 Automotive
10 Equipment
11 Pools of securitized assets2

24,693
57,658
n.a.

26,804
68,240
1,247

39,129
75,626
1,849

39,129
75,626
1,849

38,921
76,841
1,854

38,922
79,052
1,810

39,279
80,969
1,868

39,707
82,750
1,765

40,738
84,126
1,700

12 Loans on commercial accounts receivable and factored
commercial accounts receivable
13 AH other business credit

17,687
21,176

18,511
23,623

22,475
26,784

22,475
26,784

21,891
27,089

22,084
26,899

21,666
27,204

21,265
27,045

21,772
26,873

1 Total
Retail financing of installment sales
2 Automotive
3 Equipment
4 Pools of securitized assets
5
6
7
8

Net change (during period)
28,900

24,067

33,681

3,303

745

901

-59

345

2,601

1,070
3,108
n.a.

2,267
1,442
-26

-1,369
2,157
253

-365
877
24

-94
171
-40

-468
103
-32

-900
274
-51

4
-298
-51

-647
656
-40

Wholesale
Automotive
Equipment
All other
Pools of securitized assets

2,883
393
1,029
n.a.

862
958
628
0

-1,531
4,641
-860
2,950

-622
695
-325
109

121
-270
240
-114

-975
-192
-224
517

-1,100
-228
-275
1

-263
57
-201
-449

-11
63
-47
-50

Leasing
22 Automotive
23 Equipment
24 Pools of securitized assets

2,596
14,166
n.a.

2,110
10,581
526

12,326
7,385
602

7,296
-5,192
-35

-209
1,215
5

1
2,211
-44

358
1,917
58

428
1,781
-103

1,031
1,377
-65

-484
4,134

826
3,163

3,964
3,163

922
-82

-585
305

194
-190

-418
305

-401
-158

506
-173

14 Total
Retail financing of installment sales
15 Automotive
16 Equipment
17 Pools of securitized assets
18
19
20
21

25 Loans on commercial accounts receivable and factored
commercial accounts receivable
26 All other business credit

 also appear in the Board's G.20 (422) release. For address, see
1. These data
inside front cover.


2. Data on pools of securitized assets are not seasonally adjusted,

A48

DomesticNonfinancialStatistics • September 1991

1.53 MORTGAGE MARKETS Conventional Mortgages on New Homes
Millions of dollars; exceptions noted.
1990
Item

1988

1989

1991

1990
Dec.

Jan.

Feb.

Mar.

Apr.

May

June

Terms and yields in primary and secondary markets
PRIMARY MARKETS

1
2
3
4
5
6

Terms1
Purchase price (thousands of dollars)
Amount of loan (thousands of dollars)
Loan-price ratio (percent)
Maturity (years)
Fees and charges (percent of loan amount)2
Contract rate (percent per year)

Yield (percent per year)
7 OTS series3 4
8 HUD series

150.0
110.5
75.5
28.0
2.19
8.81

159.6
117.0
74.5
28.1
2.06
9.76

153.2
112.4
74.8
27.3
1.93
9.68

156.3
115.4
74.9
28.6
1.85
9.45

148.3
112.3
77.2
28.1
1.75
9.36

153.2
113.8
76.3
28.3
1.73
9.28

136.7
100.4
74.6
25.7
1.59
9.16

151.4
114.5
76.4
26.8
2.12
9.24

146.8
109.2
75.2
26.1
1.54
9.26

166.7
121.9
74.2
26.8
1.69
9.18

9.18
10.30

10.11
10.21

10.01
10.08

9.76
9.66

9.65
9.53

9.57
9.49

9.43
9.49

9.60
9.51

9.52
9.46

9.46
9.60

10.49
9.83

10.24
9.71

10.17
9.51

9.66
9.08

9.58
8.87

9.57
8.66

9.61
8.75

9.61
8.62

9.62
8.65

9.71
9.04

SECONDARY MARKETS

Yield (percent per year)
9 FHA mortgages (HUD series)5
10 GNMA securities6

Activity in secondary markets
FEDERAL NATIONAL MORTGAGE ASSOCIATION

Mortgage holdings (end of period)
11 Total
12 FHA/VA-insured
13 Conventional

101,329
19,762
81,567

104,974
19,640
85,335

113,329
21,028
92,302

116,628
21,751
94,877

117,445
21,854
95,591

118,284
21,947
96,337

119,196
21,976
97,220

120,074
21,972
98,102

121,798
21,609
100,189

122,806
21,474
101,332

Mortgage transactions (during period)
14 Purchases

23,110

22,518

23,959

2,410

1,781

1,792

1,987

2,942

4,450

3,145

Mortgage commitments1
15 Issued (during period)8
16 To sell (during period)9

n.a.
n.a.

n.a.
n.a.

n.a.
n.a.

2,104
0

1,889
2

1,779
0

3,087
109

3,880
839

3,506
1,066

3,032
841

Mortgage holdings (end of period)9
17 Total
18 FHA/VA-insured
19 Conventional

15,105
620
14,485

20,105
590
19,516

20,419
547
19,871

21,857
518
21,339

22,300
511
21,789

22,855
503
22,352

23,221
499
22,722

23,870
504
21,188

24,525
491
21,843

Mortgage transactions (during period)
20 Purchases
21 Sales

44,077
39,780

78,588
73,446

75,517
73,817

10,637
9,918

5,018
4,438

5,217
4,549

4,549
6,183

7,045
6,226

8,562
7,692'

Mortgage commitments10
22 Contracted (during period)

66,026

88,519

102,401

12,938

8,437

5,579

5,936

10,036

11,334

FEDERAL HOME LOAN MORTGAGE CORPORATION

1. Weighted averages based on sample surveys of mortgages originated by
major institutional lender groups; 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 rates on loans closed, assuming prepayment at
the end of 10 years.
4. Average contract rates on new commitments for conventional first mortgages; from U.S. Department of Housing and Urban Development.
5. Average gross yields on thirty-year, minimum-downpayment, first mortgages, insured by the Federal Housing Administration for immediate delivery in
the private secondary market. Based on transactions on first day of subsequent
month. Large monthly movements in average yields may reflect market adjustments to changes in maximum permissable contract rates.
6. Average net yields to investors on fully modified pass-through securities




n.a.
n.a.
n.a.
n.a.
10,789
n.a.

backed by mortgages and guaranteed by the Government National Mortgage
Association, 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 carrying the prevailing ceiling rate. Monthly
figures are averages of Friday figures from the Wall Street Journal.
7. Includes some multifamily and nonprofit hospital loan commitments in
addition to one- to four-family loan commitments accepted in FNMA's free
market auction system, and through the FNMA-GNMA tandem plans.
8. Does not include standby commitments issued, but includes standby
commitments converted.
9. Includes participation as well as whole loans.
10. Includes conventional and government-underwritten loans. Federal Home
Loan Mortgage Corporation (FHLMC's) mortgage commitments and mortgage
transactions include activity under mortgage securities swap programs, while the
corresponding data for FNMA exclude swap activity.

Real Estate

A37

1.54 MORTGAGE DEBT OUTSTANDING1
Millions of dollars, end of period
1991

1990
Type of holder and of property

1987

1988

1989
Ql

Q2

Q3

Q4

Ql"

3,270,118

3,556,370

3,696,882

3,760,480

3,815,220

3,856,205

3,883,700

1,962,958
278,899
657,036
87,532

2,201,231
291,405
692,236
85,247

2,429,689
303,416
739,240
84,025

2,554,496
305,838
752,688
83,861

2,619,522
301,789
755,212
83,957

2,669,613
302,993
758,362
84,252

2,708,951
304,004
759,306
83,943

2,740,122
303,543
756,349
83,686

1,665,291
592,449
275,613
32,756
269,648
14,432

1,831,472
674,003
334,367
33,912
290,254
15,470

1,931,537
767,069
389,632
38,876
321,906
16,656

1,939,005
786,802
405,009
37,913
327,110
16,771

1,940,366
814,598
431,115
38,420
327,930
17,133

1,932,978
830,868
445,218
37,898
330,426
17,326

1,912,099
843,136
454,851
37,116
333,943
17,225

1,890,344
855,256
462,975
38,021
336,803
17,457

860,467
602,408
106,359
150,943
757
212,375
13,226
22,524
166,722
9,903
29,716

924,606
671,722
110,775
141,433
676
232,863
11,164
24,560
187,549
9,590
37,846

910,254
669,220
106,014
134,370
650
254,214
12,231
26,907
205,472
9,604
45,476

891,921
658,405
103,841
129,056
619
260,282
12,525
27,555
210,422
9,780
45,808

860,903
642,110
97,359
120,866
568
264,865
12,740
28,027
214,024
10,075
47,104

836,047
626,297
94,790
114,430
530
266,063
12,773
28,100
214,585
10,605
49,784

801,628
600,154
91,806
109,168
500
267,335
12,052
29,406
215,121
10,756
48,777

771,948
584,639
85,654
101,187
468
263,139
11,514
28,847
212,018
10,760
49,658

192,721
444
25
419
43,051
18,169
8,044
6,603
10,235

200,570
26
26
0
42,018
18,347
8,513
5,343
9,815

209,498
23
23
0
41,176
18,422
9,054
4,443
9,257

216,146
22
22
0
41,125
18,419
9,199
4,510
8,997

227,818
21
21
0
41,175
18,434
9,361
4,545
8,835

242,695
21
21
0
41,269
18,476
9,477
4,608
8,708

250,762
21
21
0
41,439
18,527
9,640
4,690
8,582

262,167
20
20
0
41,545
18,578
9,792
4,754
8,421

Federal Housing and Veterans Administration
One- to four-family
Multifamily
Federal National Mortgage Association
One- to four-family
Multifamily
Federal Land Banks
One- to four-family
Farm
Federal Home Loan Mortgage Corporation ..
One- to four-family
Multifamily

5,574
2,557
3,017
96,649
89,666
6,983
34,131
2,008
32,123
12,872
11,430
1,442

5,973
2,672
3,301
103,013
95,833
7,180
32,115
1,890
30,225
17,425
15,077
2,348

6,087
2,875
3,212
110,721
102,295
8,426
29,640
1,210
28,430
21,851
18,248
3,603

6,355
3,027
3,328
112,353
103,300
9,053
29,325
1,197
28,128
19,823
16,772
3,051

6,792
3,054
3,738
112,855
103,431
9,424
29,595
1,741
27,854
19,979
17,316
2,663

7,938
3,248
4,690
113,718
103,722
9,996
29,441
1,766
27,675
20,508
17,810
2,697

8,801
3,593
5,208
116,628
106,081
10,547
29,416
1,838
27,577
21,857
19,185
2,672

9,492
3,600
5,891
118,210
107,053
11,157
29,253
1,884
27,368
21,947
19,460
2,487

44 Mortgage pools or trusts6
45 Government National Mortgage Association..
46
One- to four-family
47
Multifamily
48 Federal Home Loan Mortgage Corporation ..
49
One- to four-family
50
Multifamily
51 Federal National Mortgage Association
52
One- to four-family
53
Multifamily
54 Farmers Home Administration
55
One- to four-family
56
Multifamily
57
Commercial
58
Farm

718,297
317,555
309,806
7,749
212,634
205,977
6,657
139,960
137,988
1,972
245
121
0
63
61

811,847
340,527
331,257
9,270
226,406
219,988
6,418
178,250
172,331
5,919
104
26
0
38
40

946,766
368,367
358,142
10,225
272,870
266,060
6,810
228,232
219,577
8,655
80
21
0
26
33

984,811
376,962
366,300
10,662
281,736
274,084
7,652
246,391
237,916
8,475
76
20
0
25
31

1,024,893
385,456
374,960
10,496
295,340
287,232
8,108
263,330
254,811
8,519
72
19
0
24
30

1,060,640
394,859
384,474
10,385
301,797
293,721
8,077
281,806
273,335
8,471
70
18
0
24
29

1,103,950
403,613
391,505
12,108
316,359
308,369
7,990
299,833
291,194
8,639
66
17
0
24
26

1,138,889
412,982
400,322
12,660
328,305
319,978
8,327
312,101
303,554
8,547
63
16
0
23
24

59 Individuals and others7
60 One- to four-family
61 Multifami|y
62 Commercial
63 Farm

410,116
246,061
80,977
63,057
20,021

426,229
259,971
79,209
67,618
19,431

468,569
294,517
81,634
73,023
19,395

556,920
374,143
83,666
79,576
19,536

567,403
382,343
82,040
83,557
19,463

578,908
393,027
80,636
85,865
19,379

589,395
401,685
80,808
87,624
19,278

592,301
403,791
80,448
88,875
19,187

1 All holders
2
3
4
5

One- to four-family
Multifamily
Commercial
Farm

6 Major financial institutions
7 Commercial banks2
8
One- to four-family
9
Multifamily
10
Commercial
11
Farm
12
13
14
15
16
17
18
19
20
21
22

Savings institutions3
One- to four-family
Multifamily
Commercial
Farm
Life insurance companies
One- to four-family
Multifamily
Commercial
Farm
Finance companies4

23 Federal and related agencies
24 Government National Mortgage Association..
25
One- to four-family
26
Multifamily
27 Farmers Home Administration5
28
One- to four-family
29
Multifamily
30
Commercial
31
Farm
32
33
34
35
36
37
38
39
40
41
42
43

2,986,425

1. Based on data from various institutional and governmental sources, with
figures for some quarters estimated in part by the Federal Reserve. Multifamily
debt refers to loans on structures of five or more units.
2. Includes loans held by nondeposit trust companies but not bank trust
departments.
3. Includes savings banks and savings and loan associations. Beginning 1987:1,
data reported by FSLIC-insured institutions include loans in process and other
contra assets (credit balance accounts that must be subtracted from the corresponding gross asset categories to yield net asset levels).
4. Assumed to be entirely one- to four-family loans.




5. Securities guaranteed by the Fanners Home Administration sold to the
Federal Financing Bank were reallocated from FmHA mortgage pools to FmHA
mortgage holdings in 1986:4, because of accounting changes by the Farmers
Home Administration.
6. Outstanding principal balances of mortgage-backed securities insured or
guaranteed by the agency indicated. Includes private pools which are not shown
as a separate line item.
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 other U.S. agencies.

A48

DomesticNonfinancialStatistics • September 1991

1.55 CONSUMER INSTALLMENT CREDIT1 Total Outstanding and Net Change
Millions of dollars, amounts outstanding, end of period
1990
Holder and type of credit

1989

1991

1990
Sept.

Nov.

Oct.

Dec.

Jan.

Feb.

Mar.

Apr/

May

Seasonally adjusted
1 Total

718,863

735,102

735,547

735,433

736,411

735,102

732,962

732,762

732,442

733,621

732,995

2
3
4
5

290,676
199,082
22,471
206,633

284,585
220,110
20,919
209,487

285,627
219,090
21,073
209,758

285,024
220,031
20,680
209,698

284,412
221,690
20,492
209,817

284,585
220,110
20,919
209,487

283,746
219,588
20,459
209,170

282,626
221,556
20,200
208,379

280,689
224,817
20,123
206,813

279,746
225,994
20,098
207,782

276,449
227,440
19,842
209,263

Automobile
Revolving
Mobile home
Other

Not seasonally adjusted
730,901

748,300

738,946

736,091

738,626

748,300

736,399

729,264

725,462

727,907

728,419

By major holder
Commercial banks
Finance companies
Credit unions
Retailers
Savings institutions
Gasoline companies
Pools of securitized assets

342,770
140,832
93,114
44,154
57,253
3,935
48,843

347,466
137,450
92,911
43,552
45,616
4,822
76,483

342,698
140,890
92,996
38,963
50,683
4,723
67,993

341,755
141,329
93,190
38,282
48,055
4,749
68,731

342,882
139,195
92,918
39,095
47,121
4,753
72,662

347,466
137,450
92,911
43,552
45,616
4,822
76,483

341,426
134,965
91,991
40,945
44,939
4,766
77,367

339,282
133,021
91,131
38,864
43,875
4,404
78,687

335,754
131,552
90,772
38,497
42,491
4,296
82,100

336,425
133,462
91,413
37,817
41,707
4,357
82,726

334,801
134,045
92,054
36,782
41,214
4,507
85,016

By major type of credit3
14 Automobile
15 Commercial banks
16 Finance companies
17 Pools of securitized assets2

290,705
126,288
82,721
18,235

284,813
126,259r
74,396
24,537

289,169
128,268
78,116
21,390

287,304
127,667
78,033
20,944

285,379
126,544
75,224
23,475

284,813
126,259
74,396'
24,537

282,214
126,235
72,015
25,123

279,913
124,745
70,287
26,872

277,798
123,411
69,233
27,755

277,508
122,710
70,500
26,875

275,537
121,530
69,689
26,777

18 Revolving
19 Commercial banks
20 Retailers
21 Gasoline companies
22 Pools of securitized assets

210,310
130,811
39,583
3,935
23,477

232,370
132,433
39,029
4,822
44,335

218,279
127,415
34,528
4,723
39,606

218,337
127,108
33,867
4,749
40,798

222,643
129,117
34,657
4,753
42,297

232,370
132,433
39,029
4,822
44,335

223,606
125,814
36,510
4,766
44,773

220,714
125,673
34,509
4,404
44,451

221,400
124,619
34,179
4,296
46,722

222,627
126,009
33,513
4,357
47,116

224,438
126,085
32,458
4,507
49,667

22,240
9,112
4,716

20,666
9,763
5,252

21,195
9,263
5,423

20,773
9,274
5,400

20,472
9,199
5,364

20,666
9,763
5,252

20,614
9,748
5,367

20,362
9,730
5,330

20,030
9,632
5,328

20,052
9,565
5,573

19,767
9,379
5,595

207,646
76,559
53,395
4,571
7,131

210,451
79,011
57,801
4,523
7,611

210,303
77,752
57,351
4,435
6,997

209,677
77,706
57,896
4,415
6,989

210,132
78,022
58,607
4,438
6,890

210,451
79,011
57,801
4,523
7,611

209,965
79,629
57,583
4,435
7,471

208,275
79,134
57,404
4,355
7,364

206,234
78,092
56,991
4,318
7,603

207,720
78,141
57,388
4,304
8,735

208,677
77,807
58,761
4,324
8,572

6 Total
7
8
9
10
11
12
13

23 Mobile home
24 Commercial banks
25 Finance companies
26 Other
27 Commercial banks
28 Finance companies
29 Retailers
30 Pools of securitized assets2

1. The Board's series on amounts of credit covers most short- and intermediate-term credit extended to individuals that is scheduled to be repaid (or has the
option of repayment) in two or more installments.
These data also appear in the Board's G.19 (421) release. For address, see
inside front cover.




2. Outstanding balances of pools upon which securities have been issued; these
balances are no longer carried on the balance sheets of the loan originator.
3. Totals include estimates for certain holders for which only consumer credit
totals are available.

Consumer Installment Credit

A39

1.56 TERMS OF CONSUMER INSTALLMENT CREDIT1
Percent per year unless noted otherwise
1990
Item

1988

1989

1991

1990
Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

INTEREST RATES

1
2
3
4

Commercial banks?
48-month new c a r
24-month personal
120-month mobile home3
Credit card

Auto finance companies
5 New car
6 Used car

10.85
14.68
13.54
17.78

12.07
15.44
14.11
18.02

11.78
15.46
14.02
18.17

11.62
15.69
13.99
18.23

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

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

11.60
15.42
13.88
18.28

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

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

11.28
15.16
13.80
18.22

12.60
15.11

12.62
16.18

12.54
15.99

12.74
16.07

12.86
16.04

12.99
15.70

13.16
15.90

13.14
15.82

13.14
15.82

12.95
15.85

56.2
46.7

54.2
46.6

54.6
46.1

54.6
46.0

54.7
45.8

54.9
47.4

55.2
47.1

55.2
47.2

55.4
47.3

55.5
47.3

94
98

91
97

87
95

85
95

85
94

88
96

88
%

87
97

87
97

87
%

11,663
7,824

12,001
7,954

12,071
8,289

11,986
8,494

12,140
8,530

12,229
8,600

12,081
8,605

12,121
8,763

11,993
8,751

12,204
8,873

OTHER TERMS4

Maturity (months)
7 New car
8 Used car
Loan-to-value ratio
9 New car
10 Used car
Amount financed (dollars)
11 New car
12 Used car

1. These data also appear in the Board's G.19 (421) release. For address, see
inside front cover.
2. Data for midmonth of quarter only.




3. Before 1983 the maturity for new car loans was 36 months, and for mobile
home loans was 84 months.
4. At auto finance companies.

A48

DomesticNonfinancialStatistics • September 1991

1.57 FUNDS RAISED IN U.S. CREDIT MARKETS
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1989
Q3

1990
Q4

1991

Qi

Q2

Q3

Q4

Ql

Nonfinancial sectors
1 Total net borrowing by domestic nonfinancial sectors ..

836.9

687.0

760.8

678.2

641.2

678.8

620.2

808.9

617.6

655.7

482.6

474.7

By sector and instrument
2 U.S. government
3 Treasury securities
4 Agency issues and mortgages

215.0
214.7
.4

144.9
143.4
1.5

157.5
140.0
17.4

151.6
150.0
1.6

272.5
264.4
8.2

173.9
166.8
7.1

185.0
189.6
-4.6

247.3
217.8
29.6

228.2
222.9
5.4

286.1
287.5
-1.3

328.4
329.4
-1.0

204.7
228.7
-24.0

5 Private

621.9

542.1

603.3

526.6

368.7

504.9

435.2

561.6

389.4

369.6

154.2

270.0

By instrument
6 Debt capital instruments
7
Tax-exempt obligations
X
Corporate bonds
9
Mortgages
10
Home mortgages
11
Multifamily residential
12
Commercial
Farm
13

465.8
22.7
126.8
316.3
218.7
33.5
73.6
-9.5

453.2
49.3
79.4
324.5
234.9
24.4
71.6
-6.4

459.2
49.8
102.9
306.5
231.0
16.7
60.8
-2.1

379.8
30.4
73.7
275.7
218.0
16.4
42.7
-1.5

309.3
18.5
64.5
226.4
211.6
3.0
11.9
-.1

369.2
34.1
62.7
272.4
221.0
11.8
40.9
-1.3

347.0
19.1
87.4
240.5
214.3
9.5
19.9
-3.2

391.6
12.4
45.2
334.0
283.5
22.9
27.1
.5

338.7
24.5
83.7
230.5
235.2
-15.7
13.0
-1.9

280.2
28.0
47.7
204.5
183.1
3.8
15.8
1.8

226.9
9.0
81.6
136.3
144.4
.8
-8.2
-.8

264.6
7.1
85.2
172.4
181.0
.2
-9.4
.5

14
15
16
17
18

156.1
58.0
66.9
-9.3
40.5

88.9
33.5
10.0
2.3
43.2

144.1
50.2
39.8
11.9
42.2

146.8
39.1
39.9
20.4
47.4

59.3
14.3
-5.0
9.7
40.3

135.6
37.1
50.8
16.9
30.9

88.2
44.1
7.7
-6.9
43.3

170.0
30.4
21.1
69.6
48.9

50.7
2.8
8.8
-6.2
45.3

89.3
21.3
-15.8
17.3
66.6

-72.7
2.5
-34.0
-41.7
.5

5.4
-23.6
38.7
5.1
-14.9

36.2
293.0
292.7
-16.3
99.2
209.7

48.8
302.2
191.0
-10.6
77.9
123.7

45.6
314.9
242.8
-7.5
65.7
184.6

29.6
285.0
211.9
1.6
50.8
159.5

14.6
254.3
99.8
2.5
11.1
86.2

28.6
290.8
185.4
-2.1
40.2
147.3

16.5
291.8
126.9
8.9
35.0
83.1

8.9
364.7
188.0
6.3
45.5
136.2

17.7
271.5
100.2
-10.8
3.5
107.5

28.5
221.7
119.4
11.6
18.3
89.4

3.1
159.4
-8.3
3.1
-23.0
11.6

7.1
192.6
70.3
5.0
-17.0
82.2

25 Foreign net borrowing in United States
26 Bonds
27 Bank loans n.e.c
28 Open market paper
29 U.S. government loans

9.7
3.1
-1.0
11.5
-3.9

4.5
7.4
-3.6
2.1
-1.4

30.4
8.1
3.7
20.7
-2.1

16.9
-1.0
-4.3
22.2
.1

45.1
1.2
17.4
27.3
-.8

40.2
26.5
14.9
15.3
-16.5

11.7
8.9
-27.7
45.5
-15.0

691.5

673.3

709.2

637.1

2.3
32.7
-6.7
-16.4
-7.3
811.2

41.0
25.8
-2.0
23.1
-5.9

846.6

10.9
5.3
-.1
13.3
-7.5
689.1

32.1
21.6
5.9
12.3
-7.6

30 Total domestic plus foreign

6.3
6.9
-1.8
8.7
-7.5
767.1

658.6

700.8

522.8

486.4

19
20
21
22
23
24

Other debt instruments
Consumer credit
Bank loans n.e.c
Open market paper
Other
By borrowing sector
State and local government
Household
Nonfinancial business
Farm
Nonfarm noncorporate
Corporate

Financial sectors
31 Total net borrowing byfinancialsectors

285.1

300.2

247.6

205.5

203.0

123.9

187.3

191.4

177.5

175.4

267.5

115.1

By instrument
U.S. government related
Sponsored credit agency securities
Mortgage pool securities
Loans from U.S. government

154.1
15.2
139.2
-.4

171.8
30.2
142.3
-.8

119.8
44.9
74.9
.0

151.0
25.2
125.8
.0

167.4
17.0
150.3
.0

124.8
13.2
111.6
.0

156.4
-4.7
161.1
.0

171.7
9.7
162.0
.0

184.0
17.1
166.8
.0

139.2
22.3
116.9
.0

174.6
19.0
155.5
.0

168.0
14.5
153.5
.0

36 Private
37 Corporate bonds
38 Mortgages
39 Bank loans n.e.c
40 Open market paper
41 Loans from Federal Home Loan Banks

131.0
82.9
.1
4.0
24.2
19.8

128.4
78.9
.4
-3.2
27.9
24.4

127.8
51.7
.3
1.4
54.8
19.7

54.5
36.8
.0
1.8
26.9
-11.0

35.6
50.2
.8
.7
8.6
-24.7

-.9
26.7
.3
2.0
11.0
-41.0

30.9
39.6
-.4
4.2
36.3
-48.8

19.7
35.1
-.7
-2.2
9.5
-22.0

-6.5
68.8
.8
-.6
-44.6
-30.9

36.2
20.3
2.6
1.9
41.9
-30.5

93.0
76.7
.5
3.6
27.7
-15.5

-52.9
37.5
1.0
1.0
-64.5
-27.9

By borrowing sector
42 Sponsored credit agencies
43 Mortgage pools
44 Private
45 Commercial banks
46 Bank affiliates
47 Savings and loan associations
48 Mutual savings banks
49 Finance companies
50 Real estate investment trusts (REITs)
51 Securitized credit obligations (SCO)

14.9
139.2
131.0
-3.6
15.2
20.9
4.2
54.7
.8
39.0

29.5
142.3
128.4
6.2
14.3
19.6
8.1
40.8
.3
39.1

44.9
74.9
127.8
-3.0
5.2
19.9
1.9
67.7
3.5
32.5

25.2
125.8
54.5
-1.4
6.2
-14.1
-1.4
46.3
-1.9
20.8

17.0
150.3
35.6
-1.1
-28.0
-31.2
-.5
56.7
-.4
40.1

13.2
111.6
-.9
3.5
16.5
-44.7
-2.3
23.5
-3.1
5.7

-4.7
161.1
30.9
-.7
-3.9
-56.2
.7
52.6
.1
38.2

9.7
162.0
19.7
-4.9
-8.0
-15.8
-8.3
25.3
-.6
32.1

17.1
166.8
-6.5
-7.9
-32.1
-53.5
6.5
27.7
-2.3
55.1

22.3
116.9
36.2
-12.5
-40.4
-31.9
-4.2
96.9
.9
27.5

19.0
155.5
93.0
21.0
-31.6
-23.4
4.0
76.9
.6
45.6

14.5
153.5
-52.9
-22.0
-27.4
-29.1
-2.2
-5.0
.4
32.3

32
33
34
35




Flow of Funds

A41

1.57—Continued
1989
Transaction category or sector

1986

1987

1988

1989

1991

1990

1990
Q3

Q4

Q1

Q2

Q3

Q4

Q1

All sectors
54 Total net borrowing

1,131.7

991.7

1,014.7

894.5

876.3

833.0

824.4

1,002.5

836.1

876.2

790.3

601.5

369.5
22.7
212.8
316.4
58.0
69.9
26.4
56.1

317.5
49.3
165.7
324.9
33.5
3.2
32.3
65.5

277.2
49.8
161.5
306.7
50.2
39.4
75.4
54.4

302.6
30.4
115.8
275.7
39.1
41.5
60.6
28.9

439.9
18.5
136.3
227.1
14.3
1.6
30.7
8.0

298.7
34.1
97.6
272.7
37.1
56.5
48.5
-12.2

341.4
19.1
125.9
240.1
44.1
7.5
51.6
-5.4

419.0
12.4
112.9
333.3
30.4
12.2
62.6
19.6

412.2
24.5
178.3
231.3
2.8
6.2
-27.7
8.5

425.4
28.0
69.3
207.1
21.3
3.5
86.5
35.2

503.0
9.0
184.8
136.8
2.5
-15.6
1.2
-31.4

372.7
7.1
131.6
173.3
-23.6
12.1
-13.8
-57.9

.0

-7.9

10.4

-5.9

8.3

-22.7

-7.3

22.9

-38.1

21.1

27.4

51.8

Totals net of changes in U.S. government cash balances
836.9
64 Net borrowing by domestic nonfinancial
215.0
65 Net borrowing by U.S. government

694.9
152.8

750.4
147.1

684.1
157.5

632.9
264.2

701.6
196.7

627.6
192.4

786.0
224.4

655.7
266.3

634.7
265.1

455.2
301.0

422.9
152.9

55
56
57
58
59
60
61
62

U.S. government securities
State and local obligations
Corporate and foreign bonds
Mortgages
Consumer credit
Bank loans n.e.c
Open market paper
Other loans

63 MEMO: U.S. government, cash balance

External corporate equity funds raised in United States
66 Total net share issues
67 Mutual funds
68 All other
69 Nonfinancial corporations
70 Financial corporations
71 Foreign shares purchased in United States




86.8

10.9

159.0
-72.2
-85.0
11.6
1.2

73.9
-63.0
-75.5
14.6
-2.1

-63.7

11.4

-61.0

14.9

-9.4

47.3

-15.9

23.6

101.3

1.1
41.3
-125.3 -105.1
-129.5 -124.2
3.3
2.4
.9
16.7

61.4
-49.9
-63.0
6.1
6.9

57.9
-118.9
-146.3
-.1
27.5

72.4
-57.6
-79.3
4.5
17.2

47.8
-57.2
-69.0
10.1
1.7

71.0
-23.6
-48.0
.6
23.8

46.1
-62.0
-74.0
13.0
-1.0

80.6
-56.9
-61.0
.9
3.2

87.6
13.7
-17.0
1.9
28.8

-124.2

A48

DomesticNonfinancialStatistics • September 1991

1.58 DIRECT AND INDIRECT SOURCES OF FUNDS TO CREDIT MARKETS
Billions of dollars, except as noted; quarterly data are at seasonally adjusted annual rates.
1989
Transaction category or sector

1986

1987

1988

1989

1990

1991

1990
Q3

Q4

Ql

Q2

Q3

Q4

Ql

1 Total funds advanced in credit markets to domestic
nonfinancial sectors

836.9

687.0

760.8

678.2

641.2

678.8

620.2

808.9

617.6

655.7

482.6

474.7

2 Total net advances by federal agencies and foreign
sectors

280.2

248.8

210.7

187.6

261.0

218.3

203.8

218.6

300.6

324.8

200.0

304.5

3
4
5
6

By instrument
U.S. government securities
Residential mortgages
Federal Home Loan Bank advances to thrifts
Other loans and securities

69.4
136.3
19.8
54.7

70.1
139.1
24.4
15.1

85.2
86.3
19.7
19.4

30.7
137.9
-11.0
30.0

74.4
184.1
-24.7
27.1

115.7
127.7
-41.0
15.8

27.1
178.3
-48.8
47.1

16.4
182.3
-22.0
41.8

99.9
206.7
-30.9
24.8

139.1
160.8
-30.5
55.3

42.1
186.7
-15.5
-13.4

127.6
184.1
-27.9
20.7

7
8
9
10

By lender
U.S. government
Sponsored credit agencies and mortgage pools
Monetary authority
Foreign

9.7
153.3
19.4
97.8

-7.9
169.3
24.7
62.7

-9.4
112.0
10.5
97.6

-2.4
125.3
-7.3
72.1

32.9
166.7
8.1
53.2

-9.3
126.4
-31.2
132.4

5.7
158.4
-4.6
44.2

37.7
184.2
-6.3
3.0

34.2
166.3
40.4
59.8

62.5
165.6
24.4
72.3

-2.8
150.8
-25.9
77.9

31.6
172.3
53.3
47.3

Agency and foreign borrowing not in line 1
11 Sponsored credit agencies and mortgage pools
12 Foreign

154.1
9.7

171.8
4.5

119.8
6.3

151.0
10.9

167.4
32.1

124.8
30.4

156.4
16.9

171.7
2.3

184.0
41.0

139.2
45.1

174.6
40.2

168.0
11.7

13 Total private domestic funds advanced

720.5

614.5

676.2

652.5

579.7

615.7

589.7

764.2

542.0

515.2

497.4

350.0

14
15
16
17
18
19

300.1
22.7
89.7
115.9
212.0
19.8

247.4
49.3
66.9
120.2
155.2
24.4

192.1
49.8
91.3
161.3
201.4
19.7

271.9
30.4
66.1
96.5
176.6
-11.0

365.5
18.5
80.2
30.4
60.5
-24.7

183.0
34.1
65.6
105.1
186.9
-41.0

314.3
19.1
70.6
45.5
91.5
-48.8

402.6
12.4
68.4
124.1
134.9
-22.0

312.3
24.5
97.5
12.8
64.1
-30.9

286.2
28.0
46.7
26.1
97.7
-30.5

460.9
9.0
108.3
-41.5
-54.8
-15.5

245.0
7.1
69.8
-2.9
3.0
-27.9

730.0

528.4

562.3

511.1

421.6

353.9

561.9

449.2

257.8

419.4

560.2

149.4

198.1
107.6
160.1
264.2

135.4
136.8
179.7
76.6

156.3
120.4
198.7
86.9

183.7
177.3
120.1
184.3
-90.9 -145.8 -135.8 -201.9
136.1 205.1
177.9 201.0
170.0 374.5
246.8 246.3

By sources of funds
25 Private domestic deposits and repurchase agreements . . .
26 Credit market borrowing
27 Other sources
28 Foreign funds
29 Treasury balances
30 Insurance and pension reserves
31 Other, net

277.1
131.0
321.8
12.9
1.7
119.9
187.3

162.8
128.4
237.1
43.7
-5.8
135.4
63.9

229.2
127.8
205.3
9.3
7.3
177.6
11.0

225.2
54.5
231.4
-9.9
-3.4
140.5
104.2

58.3
35.6
327.7
35.7
5.3
170.6
116.1

284.4
-.9
70.4
30.4
-19.9
82.6
-22.7

208.0
30.9
323.1
-20.6
5.0
193.9
144.7

125.0
19.7
304.5
46.4
13.1
137.9
107.1

20.4
-6.5
243.8
14.1
-13.4
211.9
31.2

77.8
36.2
305.4
121.2
18.2
162.2
3.8

10.1 231.4
93.0 -52.9
457.0 -29.1
-38.9
38.6
3.4
30.1
170.4
33.9
322.1 -131.6

Private domestic nonfinancial investors
32 Direct lending in credit markets
33 U.S. government securities
34 State and local obligations
35 Corporate and foreign bonds
36 Open market paper
37 Other loans and mortgages

121.5
27.0
-19.9
52.9
9.9
51.7

214.6
86.0
61.8
23.3
15.8
27.6

241.7
129.0
53.5
-9.4
36.4
32.2

195.9
134.3
28.4
.7
5.4
27.1

193.7
144.0
-.5
9.9
18.4
21.9

260.8
188.7
39.0
-4.7
21.4
16.4

58.7
65.8
12.8
14.6
-64.6
30.1

334.7
185.6
-.2
54.8
61.0
33.5

277.8
170.4
12.8
29.0
42.5
23.0

132.0
159.9
15.6
-92.1
7.7
40.9

30.2
59.8
-30.0
48.0
-37.7
-9.8

147.7
121.1
-2.2
-24.6
16.6
36.7

38 Deposits and currency
39 Currency
40 Checkable deposits
41 Small time and savings accounts
42 Money market fund shares
43 Large time deposits
44 Security repurchase agreements
45 Deposits in foreign countries

297.5
14.4
96.4
120.6
43.2
-3.2
20.2
5.9

179.3
19.0
-.9
76.0
28.9
37.2
21.6
-2.5

232.8
14.7
12.9
122.4
20.2
40.8
32.9
-11.2

241.3
11.7
1.5
100.5
85.2
23.1
14.9
4.4

88.0
22.6
1.2
52.5
61.8
-42.7
-14.5
7.0

261.8
6.0
14.7
163.1
116.7
-23.8
13.7
-28.6

230.6
10.1
65.8
109.1
65.6
-13.4
-19.2
12.4

142.1
26.1
2.2
110.7
72.2
-25.2
-34.9
-8.9

56.3
23.1
-19.4
18.2
4.7
-5.5
22.3
12.8

113.6
32.2
15.1
59.7
110.9
-82.6
-25.2
3.6

39.8
9.1
7.0
21.4
59.3
-57.5
-20.1
20.6

243.0
46.0
27.9
103.2
128.5
13.9
-42.2
-34.4

46 Total of credit market instruments, deposits, and
currency

419.0

393.9

474.5

437.2

281.7

522.7

289.3

476.8

334.1

245.6

70.0

390.7

47 Public holdings as percent of total
48 Private financial intermediation (percent)
49 Total foreign funds

33.1
101.3
110.7

36.0
86.0
106.4

27.5
83.2
106.9

27.2
78.3
62.2

38.8
72.7
88.9

30.8
57.5
162.8

32.0
95.3
23.6

27.0
58.8
49.4

45.6
47.6
73.8

46.3
81.4
193.5

38.2
112.6
39.0

62.6
42.7
85.9

Corporate equities not included above
50 Total net issues
51 Mutual fund shares
52 Other equities
53 Acquisitions by financial institutions
54 Other net purchases

10.9

-124.2

-63.7

11.4

-61.0

14.9

-9.4

61.4
57.9
-49.9 -118.9
21.4
6.1
-10.0 -67.1

72.4
-57.6
76.9
-62.1

47.3

-15.9

23.6

101.3

159.0
-72.2
50.9
35.9

47.8
-57.2
41.1
-50.5

71.0
-23.6
72.8
-25.5

46.1
-62.0
-66.2
50.3

80.6
-56.9
37.9
-14.2

87.6
13.7
43.1
58.2

U.S. government securities
State and local obligations
Corporate and foreign bonds
Residential mortgages
Other mortgages and loans
LESS: Federal Home Loan Bank advances

20 Total credit market funds advanced by private financial
institutions
21
22
23
24

By lending institutions
Commercial banking
Savings institutions
Insurance and pension funds
Other finance

188.1
126.1
102.7
63.2
119.3
-56.6 -210.4 -168.6 -147.4 -154.2
160.8
226.8 228.3
188.2
112.6
156.8
115.3 257.0 456.1
71.7

MEMO

86.8

73.9
1.1
41.3
-63.0 -125.3 -105.1
32.0
-2.9
17.2
-21.2 -121.4 -80.9

NOTES BY LINE NUMBER.

1. Line 1 of table 1.57.
2. Sum of lines 3-6 or 7-10.
6. Includes farm and commercial mortgages.
11. Credit market funds raised by federally sponsored credit agencies, and net
issues of federally related mortgage pool securities.
13. Line 1 less line 2 plus line 11 and 12. Also line 20 less line 26 plus line 32.
Also sum of lines 28 and 47 less lines 40 and 46.
18. Includes farm and commercial mortgages.
25. Line 38 less lines 39 and 45.
26. Excludes equity issues and investment company shares. Includes line 19.
28. Foreign deposits at commercial banks, bank borrowings from foreign
branches, and liabilities of foreign banking agencies to foreign affiliates, less
claims on foreign affiliates and deposits by banking institutions in foreign banks.
29. Demand deposits and note balances at commercial banks.




30. Excludes net investment of these reserves in corporate equities.
31. Mainly retained earnings and net miscellaneous liabilities.
32. Line 13 less line 20 plus line 26.
33-37. Lines 14-18 less amounts acquired by private finance plus amounts
borrowed by private finance. Line 37 includes mortgages.
39. Mainly an offset to line 9.
46. Sum of lines 32 plus 38, or line 13 less line 27 plus lines 39 and 45.
47. Line 2 divided by line 1.
48. Line 20 divided by line 13.
49. Sum of lines 10 and 28.
50. 52. Includes issues by financial institutions.
NOTE. Full statements for sectors and transaction types inflowsand in amounts
outstanding may be obtained from Flow of Funds Section, Division of Research
and Statistics, Board of Governors of the Federal Reserve System, Washington,
D.C. 20551.

Flow of Funds

A43

1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING
Billions of dollars; period-end levels.

1986

1987

1988

1991

1990

1989
Transaction category or sector

1989
Q4

Q3

Qi

Q2

Q3

Q4

Ql

Nonfinancial sectors
1 Total credit market debt owed by
domestic nonfinancial sectors

7,646.3

8,343.9

9,096.0

9,805.2

9,605.1

9,805.2

10,075.7

10,234.4

10,393.9

10,560.2

10,634.2

1,815.4
1,811.7
3.6

1,960.3
1,955.2
5.2

2,117.8
2,095.2
22.6

2,269.4
2,245.2
24.2

2,206.1
2,180.7
25.4

2,269.4
2,245.2
24.2

2,360.9
2,329.3
31.6

2.401.7
2.368.8
32.9

2,470.2
2,437.6
32.6

2,568.9
2,536.5
32.4

2,624.7
2,598.4
26.4

5,831.0
3.962.7
679.1
669.4
2,614.2
1.720.8
246.2
551.4
95.8

6.383.6
4,427.9
728.4
748.8
2.950.7
1,943.1
270.0
648.7
88.9

6,978.2
4,886.4
790.8
851.7
3.243.8
2.173.9
286.7
696.4
86.8

7,535.8
5,283.3
821.2
925.4
3,536.6
2,404.3
304.4
742.6
85.3

7,399.0
5,189.9
816.4
903.5
3,470.0
2,347.6
301.2
734.9
86.3

7,535.8
5,283.3
821.2
925.4
3,536.6
2,404.3
304.4
742.6
85.3

7,714.8
5,453.0
822.2
937.1
3,693.6
2,554.5
304.8
750.5
83.9

7,832.6
5,542.3
827.2
958.1
3,757.0
2,619.5
300.6
752.9
84.0

7,923.7
5.618.5
837.4
970.0
3,811.1
2.669.6
301.6
755.6
84.3

7,991.3
5,682.1
839.7
990.4
3,852.0
2,709.0
302.6
756.5
83.9

8,009.5
5,730.5
839.6
1,011.7
3,879.2
2,740.1
302.1
753.4
83.7

Other debt instruments
Consumer credit
Bank loans n.e.c
Open market paper
Other

1,868.2
659.8
666.0
62.9
479.6

1,955.7
693.2
673.3
73.8
515.3

2,091.9
743.5
713.1
85.7
549.6

2,252.6
790.6
763.0
107.1
591.9

2,209.1
771.0
750.7
113.3
574.1

2,252.6
790.6
763.0
107.1
591.9

2,261.8
782.3
749.7
126.0
603.8

2,290.3
789.4
755.7
128.7
616.6

2,305.3
798.7
749.8
131.8
625.0

2,309.2
808.9
751.2
116.9
632.3

2,279.0
782.3
748.9
119.9
628.0

By borrowing sector
State and local government
Household
Nonfinancial business
Farm
Nonfarm noncorporate
Corporate

510.1
2,596.1
2,724.8
156.6
997.6
1,570.6

558.9
2,879.1
2,945.6
145.5
1,075.4
1,724.6

604.5
3,191.5
3,182.2
137.6
1,145.1
1,899.5

634.1
3.501.8
3,400.0
139.2
1.195.9
2,064.8

629.9
3.411.4
3,357.6
139.2
1,183.0
2.035.5

634.1
3.501.8
3,400.0
139.2
1.195.9
2,064.8

634.3
3,650.7
3,429.9
137.3
1,208.3
2,084.3

637.6
3.725.8
3,469.3
138.7
1,208.7
2.121.9

647.8
3,788.2
3,487.7
141.6
1,208.7
2,137.4

648.7
3,846.4
3,496.1
140.5
1,207.0
2,148.7

648.6
3,860.0
3,500.8
139.4
1.203.7
2.157.8

238.3

244.6

253.9

261.5

257.7

261.5

261.8

273.1

283.4

293.7

296.3

74.9
26.9
37.4
99.1

82.3
23.3
41.2
97.7

89.2
21.5
49.9
93.2

94.5
21.4
63.0
82.6

94.2
22.6
57.5
83.4

94.5
21.4
63.0
82.6

103.3
19.0
59.3
80.3

108.4
19.3
65.1
80.3

108.9
23.7
71.5
79.4

116.1
27.3
75.3
75.0

118.9
19.6
87.0
70.7

7,884.7

8,588.5

9,349.9

10,066.8

9,862.8

10,066.8

10,337.5

10,507.5

10,677.3

10,853.8

10,930.5

By sector and instrument
2 U.S. government
3 Treasury securities
4 Agency issues and mortgages
By instrument
5 Private
6 Debt capital instruments
7
Tax-exempt obligations
8
Corporate bonds
9
Mortgages
10
Home mortgages
11
Multifamily residential
12
Commercial
13
Farm
14
15
16
17
18
19
20
21
22
23
24

25 Foreign credit market debt held in
United States
26
27
28
29
30

Bonds
Bank loans n.e.c
Open market paper
U.S. government loans
Total credit market debt owed by nonfinancial
sectors, domestic and foreign

Financial sectors
31 Total credit market debt owed by
financial sectors

1,529.8

1,836.8

2,084.4

2,322.4

2,263.8

2,322.4

2,358.4

2,406.7

2,448.8

2,527.7

2,543.2

36 Private
37 Corporate bonds
38 Mortgages
39 Bank loans n.e.c
40 Open market paper
41 Loans from Federal Home Loan Banks

810.3
273.0
531.6
5.7
719.5
287.4
2.7
36.1
284.6
108.6

978.6
303.2
670.4
5.0
858.2
366.3
3.1
32.8
322.9
133.1

1,098.4
348.1
745.3
5.0
986.1
418.0
3.4
34.2
377.7
152.8

1,249.3
373.3
871.0
5.0
1,073.0
482.7
3.4
36.0
409.1
141.8

1,203.6
370.4
828.2
5.0
1,060.2
472.7
3.5
34.1
398.8
151.1

1,249.3
373.3
871.0
5.0
1,073.0
482.7
3.4
36.0
409.1
141.8

1,288.2
378.1
905.2
5.0
1,070.2
491.7
3.2
33.2
409.1
132.9

1,330.1
381.0
944.2
5.0
1,076.5
509.4
3.5
34.8
402.5
126.3

1,367.9
384.4
978.5
5.0
1,080.9
514.4
4.1
34.9
409.6
117.9

1,418.4
393.6
1,019.9
5.0
1,109.3
533.6
4.2
36.7
417.7
117.1

1,455.3
396.9
1,053.5
5.0
1,087.9
542.5
4.5
34.8
399.2
107.0

By borrowing sector
42 Sponsored credit agencies
43 Mortgage pools
44 Privatefinancialsectors
45 Commercial banks
46 Bank affiliates
47 Savings and loan associations
48 Mutual savings banks
49 Finance companies
50 Real estate investment trusts (REITs)
51 Securitized credit obligations issuers (SCO)

278.7
531.6
719.5
75.6
116.8
119.8
8.6
328.1
6.5
64.0

308.2
670.4
858.2
81.8
131.1
139.4
16.7
378.8
7.3
103.1

353.1
745.3
986.1
78.8
136.2
159.3
18.6
446.1
11.4
135.7

378.3
871.0
1,073.0
77.4
142.5
145.2
17.2
496.2
10.1
184.4

375.4
828.2
1,060.2
77.0
144.0
155.7
17.5
481.2
10.0
174.9

378.3
871.0
1,073.0
77.4
142.5
145.2
17.2
496.2
10.1
184.4

383.0
905.2
1,070.2
73.4
142.0
137.1
15.4
499.1
10.1
193.1

385.9
944.2
1,076.5
73.3
134.3
125.6
16.7
509.8
9.8
206.9

389.4
978.5
1,080.9
70.7
122.9
116.2
16.2
530.9
10.2
213.8

398.5
1,019.9
1,109.3
76.3
114.4
114.0
16.7
552.1
10.6
225.2

401.8
1,053.5
1,087.9
68.1
109.2
102.9
16.4
547.2
10.9
233.2

By instrument
32 U.S. government related
33 Sponsored credit agency securities
34 Mortgage pool securities
35

Loans from U.S. government

All sectors
52 Total credit market debt

9,414.4

10,425.3

11,434.3

12,389.1

12,126.6

12,389.1

12,695.9

12,914.1

13,126.1

13,381.5

13,473.7

53 U.S. government securities .
54 State and local obligations ..
55 Corporate and foreign bonds
56 Mortgages
57 Consumer credit
58 Bank loans n.e.c
59 Open market paper
60 Other loans

2,620.0
679.1
1,031.7
2,617.0
659.8
729.0
384.9
693.1

2,933.9
728.4
1,197.4
2,953.8
693.2
729.5
437.9
751.1

3.211.1
790.8
1,358.9
3.247.2
743.5
768.9
513.4
800.5

3,513.7
821.2
1,502.6
3,540.1
790.6
820.3
579.2
821.4

3,404.7
816.4
1.470.5
3.473.6
771.0
807.4
569.6
813.5

3,513.7
821.2
1,502.6
3,540.1
790.6
820.3
579.2
821.4

3,644.1
822.2
1,532.1
3,696.9
782.3
802.0
594.5
821.9

3,726.9
827.2
1,575.9
3,760.5
789.4
809.8
596.3
828.2

3.833.1
837.4
1.593.2
3,815.2
798.7
808.4
612.9
827.2

3,982.3
839.7
1,640.0
3,856.2
808.9
815.1
609.9
829.3

4.075.0
839.6
1.673.1
3,883.7
782.3
803.3
606.1
810.6




A48

DomesticNonfinancialStatistics • September 1991

1.60 SUMMARY OF CREDIT MARKET CLAIMS, BY HOLDER
Billions of dollars, except as noted; period-end levels.
1990

1989
Transaction category, or sector

1986

1987

1*88

1991

1989
Q3

Q4

Q1

Q2

Q3

Q4

Q1

1 Total funds advanced in credit markets to domestic
nonfinancial sectors

7,646.3

8,343.9

9,096.0

9,805.2

9,605.1

9,805.2

10,075.7

10,234.4

10,393.9

10,560.2

10,634.2

2 Total held by federal agencies and foreign sector ..

1,779.4

2,006.6

2,199.7

2,379.3

2,317.4

2,379.3

2,416.0

2,495.6

2,576.8

2,638.8

2,698.6

By instrument
U.S. government securities
Residential mortgages
Federal Home Loan Bank advances to thrifts
Other loans and securities

509.8
678.5
108.6
482.4

570.9
814.1
133.1
488.6

651.5
900.4
152.8
495.1

682.1
1,038.4
141.8
517.0

668.6
991.1
151.1
506.6

682.1
1,038.4
141.8
517.0

679.0
1,077.7
132.9
526.5

707.3
1,126.5
126.3
535.4

738.9
1,171.8
117.9
548.2

756.5
1,221.0
117.1
544.1

781.1
1,262.4
107.0
548.1

By type of lender
U.S. government
Sponsored credit agencies and mortgage pools . . .
Monetary authority
Foreign

255.3
835.9
205.5
482.8

240.0
1,001.0
230.1
535.5

217.6
1,113.0
240.6
628.5

207.1
1,238.2
233.3
700.6

207.8
1,193.5
227.6
688.5

207.1
1,238.2
233.3
700.6

217.3
1,274.0
224.4
700.2

227.0
1,315.0
237.8
715.8

242.1
1,360.5
240.8
733.5

240.0
1,403.4
241.4
753.9

248.6
1,438.2
247.3
764.4

Agency and foreign debt not in line 1
11 Sponsored credit agencies and mortgage pools . . .
12 Foreign

810.3
238.3

978.6
244.6

1,098.4
253.9

1,249.3
261.5

1,203.6
257.7

1,249.3
261.5

1,288.2
261.8

1,330.1
273.1

1,367.9
283.4

1,418.4
293.7

1,455.3
2%. 3

13 Total private domestic holdings

6,915.6

7,560.4

8,248.5

8,936.8

8,749.0

8,936.8

9,209.8

9,342.0

9,468.5

9,633.5

9,687.2

14
15
16
17
18
19

2,110.1
679.1
606.6
1,288.5
2,339.8
108.6

2,363.0
728.4
674.3
1,399.0
2,528.7
133.1

2,559.7
790.8
765.6
1,560.2
2,724.9
152.8

2,831.6
821.2
831.6
1,670.4
2,923.8
141.8

2,736.1
816.4
814.5
1,657.7
2,875.3
151.1

2,831.6
821.2
831.6
1,670.4
2,923.8
141.8

2,965.1
822.2
850.9
1,781.6
2,922.8
132.9

3,019.5
827.2
873.4
1,793.7
2,954.5
126.3

3,094.2
837.4
885.6
1,799.5
2,969.7
117.9

3,225.8
839.7
912.3
1,790.5
2,982.3
117.1

3,293.9
839.6
931.7
1,779.8
2,949.2
107.0

6,018.0

6,564.5

7,128.6

7,662.7

7,507.8

7,662.7

7,853.1

7,912.3

7,999.3

8,151.7

8,178.6

2,187.6
1,297.9
1,525.4
1,007.1

2.323.0
1,445.5
1.705.1
1,091.0

2,479.3
1.567.7
1.903.8
1.177.9

2.656.6
1.480.7
2,081.6
1.443.8

2,599.6
1,530.3
2,031.6
1,346.2

2.656.6
1.480.7
2,081.6
1.443.8

2.680.4
1,461.3
2.150.5
1,561.0

2.720.7
1,409.5
2,193.4
1.588.8

2.750.6
1,371.2
2,236.8
1.640.7

2,776.6
1,335.0
2,282.6
1,757.5

2,783.0
1,291.0
2,317.0
1,787.6

By sources of funds
25 Private domestic deposits and repurchase
agreements
26 Credit market debt
27 Other sources
28 Foreign funds
29 Treasury balances
30 Insurance and pension reserves
31 Other, net

3,199.0
719.5
2,099.5
18.6
27.5
1,398.5
655.0

3,354.2
858.2
2,352.1
62.3
21.6
1,527.8
740.3

3,599.1
986.1
2,543.5
71.5
29.0
1,692.5
750.5

3,824.3
1,073.0
2,765.5
61.6
25.6
1,826.0
852.3

3,742.5
1,060.2
2,705.1
55.0
30.3
1,785.7
834.0

3,824.3
1,073.0
2,765.5
61.6
25.6
1,826.0
852.3

3,849.6
1,070.2
2,933.4
63.4
16.7
1,859.8
993.5

3.836.4
1.076.5
2,999.4
66.4
32.1
1,904.2
996.8

3,848.2
1,080.9
3,070.2
94.0
36.6
1,920.5
1,019.1

3,882.5
1.109.3
3,159.9
97.3
30.9
1.960.4
1,071.2

3,935.0
1,087.9
3,155.6
95.6
26.3
1,997.5
1,036.2

Private domestic nonfinancial investors
32 Credit market claims
33 U.S. government securities
34 State and local obligations
35 Corporate and foreign bonds
36 Open market paper
37 Other loans and mortgages

1,617.0
848.7
212.6
90.5
145.1
320.1

1,854.1
936.7
274.4
114.0
178.5
350.4

2,106.0
1,072.2
340.9
100.4
218.0
374.4

2,347.1
1,206.4
369.3
130.5
228.7
412.1

2,301.5
1,171.3
363.1
131.1
239.3
396.8

2,347.1
1,206.4
369.3
130.5
228.7
412.1

2,426.8
1,258.5
362.3
157.4
234.0
414.5

2,506.2
1,287.8
368.3
175.6
251.9
422.6

2,550.1
1,329.3
372.1
168.8
251.0
428.9

2.591.1
1.363.2
368.8
176.1
247.1
435.9

2.596.5
1.388.6
360.6
170.3
240.7
436.2

38 Deposits and currency
39 Currency
40 Checkable deposits
41 Small time and savings accounts
42 Money market fund shares
43 Large time deposits
44 Security repurchase agreements
45 Deposits in foreign countries

3,410.1
186.3
516.6
1,948.3
268.9
336.7
128.5
24.8

3,583.9
205.4
515.4
2,017.1
297.8
373.9
150.1
24.3

3,832.3
220.1
527.2
2,156.2
318.0
414.7
182.9
13.1

4.073.6
231.8
528.7
2.256.7
403.3
437.8
197.9
17.6

3,979.0
224.4
486.1
2,224.4
391.0
440.0
200.9
12.1

4.073.6
231.8
528.7
2.256.7
403.3
437.8
197.9
17.6

4,095.9
234.4
504.5
2,286.3
436.7
433.7
188.3
11.9

4,096.6
242.7
510.1
2,286.5
426.3
421.0
192.5
17.5

4,112.2
247.2
500.2
2,295.7
454.5
411.3
186.6
16.8

4,161.5
254.4
529.9
2,306.3
465.0
398.0
183.4
24.6

4,209.3
261.9
511.8
2,336.6
513.3
401.4
172.0
12.3

46 Total of credit market instruments, deposits, and
currency

5,027.2

5,438.0

5,938.2

6,420.7

6,280.5

6,420.7

6,522.7

6,602.8

6,662.2

6,752.6

6,805.8

22.6
87.0
501.3

23.4
86.8
597.8

23.5
86.4
700.1

23.6
85.7
762.3

23.5
85.8
743.5

23.6
85.7
762.3

23.4
85.3
763.6

23.8
84.7
782.2

24.1
84.5
827.5

24.3
84.6
851.2

24.7
84.4
860.0

3,360.6
413.5
2,947.1
974.6
2,385.9

3,325.0
460.1
2,864.9
1,039.5
2,285.5

3,619.8
478.3
3.141.6
1,176.1
2.443.7

4,378.9
555.1
3,823.8
1,492.3
2,886.6

4.395.4
543.9
3.851.5
1,478.5
2,917.0

4,378.9
555.1
3,823.8
1,492.3
2,886.6

4,170.4
550.3
3,620.1
1,434.8
2,735.6

4,336.9
587.9
3.749.0
1.542.1
2,794.8

3,770.7
547.3
3.223.4
1,297.2
2.473.5

3,987.7
579.9
3,407.9
1,406.6
2,581.1

4,550.2
643.0
3,907.2
1,636.9
2,913.4

3
4
5
6
7
8
9
10

U.S. government securities
State and local obligations
Corporate and foreign bonds
Residential mortgages
Other mortgages and loans
LESS: Federal Home Loan Bank advances

20 Total credit market claims held by private financial
institutions
21
22
23
24

By holding institutions
Commercial banking
Savings institutions
Insurance and pension funds
Other finance

MEMO

47 Public holdings as percent of total
48 Private financial intermediation (percent)
49 Total foreign funds
Corporate equities not included above
50 Total market value
51 Mutual fund shares
52 Other equities
53 Holdings by financial institutions
54 Other holdings
NOTES BV LINE NUMBER.

1. Line 1 of table 1.59.
2. Sum of lines 3-6 or 8-11.
6. Includes farm and commercial mortgages.
11. Credit market debt of federally sponsored agencies, and net issues of
federally related mortgage pool securities.
13. Line 1 less line 2 plus line 11 and 12. Also line 20 less line 26 plus line 32.
Also sum of lines 27 and 46 less lines 39 and 45.
18. Includes farm and commercial mortgages.
25. Line 38 less lines 39 and 45.
26. Excludes equity issues and investment company shares. Includes line 19.
28. Foreign deposits at commercial banks plus bank borrowings from foreign
affiliates, less claims on foreign affiliates and deposits by banking in foreign banks.
29. Demand deposits and note balances at commercial banks.




30. Excludes net investment of these reserves in corporate equities.
31. Mainly retained earnings and net miscellaneous liabilities.
32. Line 13 less line 20 plus line 26.
33-37. Lines 14-18 less amounts acquired by private finance plus amounts
borrowed by private finance. Line 37 includes mortgages.
39. Mainly an offset to line 9.
46. Sum of lines 32 plus 38, or line 13 less line 27 plus 39 and 45.
47. Line 2 divided by line 1.
48. Line 20 divided by line 13.
49. Sum of lines 10 and 28.
50-52. Includes issues by financial institutions.
NOTE. Full statements for sectors and transaction types inflowsand in amounts
outstanding may be obtained from Flow of Funds Section, Stop 95, Division of
Research and Statistics, Board of Governors of the Federal Reserve System,
Washington, D.C. 20551.

Selected Measures

A45

2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures
Monthly and quarterly data are seasonally adjusted. Exceptions noted.
1991
1989

Measure

1990
Oct.

Jan.

Nov.

Feb.

Apr/

May'

105.5

106.2

106.9
108.0

104.7'
112.5
101.3'

107.4
109.2
106.4
112.7
104.2

109.6
107.0
112.9
103.1
105.2

106.4

107.1

Mar.

105.7

107.2

1 Industrial production1 (1987=100)

105.4

108.1

109.2

109.9

Market groupings (1987=100)
2 Products, total
3 Final, total
4
Consumer goods
5
Equipment
6 Intermediate
7 Materials

105.3
105.6
104.0
107.6
104.4
105.6

108.6

111.0
112.3
108.6
117.0
107.0
108.3

109.3
110.2
106.5
115.1

107.4

110.1
110.9
107.3
115.5
107.7
107.8

Industry groupings
8 Manufacturing (1987=100)

105.8

108.9

109.9

110.7

83.9

83.9

82.3

82.2

80.7

79.4

78.9

78.0

77.2

77.5

77.7

78.1

166.7

172.9

154. r

147.0

146.0

130.0

132.0

133.0

128.0

145.0

138.0

133.0

128.0

103.4
98.3
93.5
138.3
253.2
244.6
196.5
252.2
228.2

131.5
104.0
98.7
93.8
142.9
272.7
258.9
203.1
270.1
241.7

133.8
102.7
96.8
91.5
146.8
289.0
272.2
205.0
286.1
251.0

133.4
101.5
96.4
91.0
146.7
292.1
274.8
206.0
288.7
253.5

133.1
100.6
95.5
89.9
146.7
293.4
274.8
202.9
290.1
254.3

132.9
100.1
95.2
89.6
146.7
295.1
277.1
205.4
291.6
249.4

132.7
99.3
94.8
89.1
146.6
293.9
275.8'
202.5'
290.6'
246.2

132.4
98.7
94.1
88.3
146.4
294.5

132.1
98.1
93.7
87.9
146.3
295.5'
276.2'

131.9
97.7
93.4
87.7
146.1
295.8
276.7

200.9
291.4'
251.6

200.2'

201.2

292.6'
252.3

292.8
251.4

132.0
97.9
93.6
87.9
146.3
297.3
278.3
202.6
294.4
253.4

131.9
97.6
93.3
87.7
146.3
n.a.
n.a.
n.a.
n.a.
253.0

118.3

124.0
113.6

130.7
119.2

133.5
122.3

133.8
122.9

133.8

134.6
122.3

134.8
121.4'

120.6

135.0

135.2
120.9

135.6
121.7

136.0
121.9

Capacity utilization (percent)2
9

Manufacturing

10 Construction contracts (1982 = 100)3
4

11 Nonagricultural employment, total
12 Goods-producing, total
13
Manufacturing, total
14
Manufacturing, production worker —
15 Service-producing
16 Personal income, total
17 Wages and salary disbursements
18
Manufacturing
19 Disposable personal income3
20 Retail sales6
Prices7
21 Consumer (1982-84 = 100)
22 Producer finished goods (1982 = 100)

108.0

109.1
106.7
112.3
106.8

1. A major revision of the industrial production index and the capacity
utilization rates was released in April 1990. See "Industrial Production: 1989
Developments and Historical Revision" in the Federal Reserve Bulletin, vol. 76
(April 1990), pp. 187-204.
2. Ratios of indexes of production to indexes of capacity. Based on data from
the Federal Reserve, DRI McGraw-Hill Economics Department, U.S. Department of Commerce, and other sources.
3. Index of dollar value of total construction contracts, including residential,
nonresidential and heavy engineering, from McGraw-Hill Information Systems
Company, F.W. Dodge Division.
4. Based on data in Employment and Earnings (U.S. Department of Labor).
Series covers employees only, excluding personnel in the Armed Forces.
5. Based on data in Survey of Current Business (U.S. Department of Commerce).




107.8
109.1
105.6
113.6
103.8
104.8

106.9
108.3
104.7
112.9

106.5'

106.2
106.8

108.4
109.2
105.7
113.6
106.0
105.3

103.9

102.6

106.9
108.7
105.5
112.9
101.3
103.3

108.9

107.5

107.0

106.1

105.2

105.9

122.0

102.6

215.9T

108.1'

102.0

6. Based on U.S. Bureau of Census data published in Survey of Current
Business.
7. Data without seasonal adjustment, as published in Monthly Labor Review.
Seasonally adjusted data for changes in the price indexes may be obtained from
the Bureau of Labor Statistics, U.S. Department of Labor.
NOTE. Basic data (not index numbers) for series mentioned in notes 4, 5,and 6,
and indexes for series mentioned in notes 3 and 7 may also be found in the Survey
of Current Business.
Figures for industrial production for the latest month are preliminary and the
earlier three months have been revised. See "Recent Developments in Industrial
Capacity and Utilization," Federal Reserve Bulletin, vol. 76 (June 1990), pp.
411-35.

A46

D o m e s t i c Nonfinancial Statistics • September 1991

2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT
Thousands of persons; monthly data are seasonally adjusted; exceptions noted.
1991

1990
Category

1988

1989

1990
Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

June

HOUSEHOLD SURVEY DATA

1 Noninstitutional population1

186,837

188,601

190,216

190,854

190,999

191,116

191,248

191,384

191,525

191,664

191,805

2 Labor force (including Armed Forces)1
3 Civilian labor force

123,893
121,669

126,077
123,869

126,954
124,787

126,880
124,723

127,307
125,174

126,777
124,638

127,209
125,076

127,467
125,326

127,817
125,672

127,374
125,232

127,766
125,629

4
5

111,800
3,169

114,142
3,199

114,728
3,186

114,201
3,185

114,321
3,253

113,759
3,163

113,6%
3,222

113,656
3,098

114,243
3,156

113,319
3,272

113,576
3,308

6,701
5.5
62,944

6,528
5.3
62,524

6,874
5.5
63,262

7,337
5.9
63,974

7,600
6.1
63,692

7,715
6.2
64,339

8,158
6.5
64,039

8,572
6.8
63,917

8,274
6.6
63,708

8,640
6.9
64,290

8,745
7.0
64,039

105,536

108,413

110,330

109,761

109,621

109,418

109,160

108,902

108,736r

108,855'

108,805

19,350
713
5,110
5,527
25,132
6,649
25,669
17,386

19,426

19,064
735
5,205
5,838
26,151
6,833
28,209
18,295

18,807

18,749
715
4,911
5,867
25,745
6,733
28,548
18,353

18,671

18,532

18,359

715
4,792
5,834
25,583
6,732
28,583
18,389

18,396'
710'
4,688'
5,814'
25,410'
6,718
28,576'
18,424'

18,418'

713
4,797
5,866
25,680
6,736
28,590
18,365

18,443
714
4,720
5,824
25,483
6,735
28,576
18,407

705
4,710'
5,814'
25,42c
6,709'
28,637'
18,442'

702
4,701
5,814
25,391
6,701
28,706
18,431

Nonagricultural industries
Agriculture
Unemployment
6
Number
7
Rate (percent of civilian labor force)
8 Not in labor force
ESTABLISHMENT SURVEY DATA

9 Nonagricultural payroll employment3
10 Manufacturing
It Mining
12 Contract construction
13 Transportation and public utilities
14 Trade
15 Finance
16 Service
17 Government

700
5,200
5,648
25,851
6,724
27,096
17,769

1. Persons sixteen years of age and over. Monthly figures, which are based on
sample data, relate to the calendar week that contains the twelfth day; annual data
are averages of monthly figures. By definition, seasonality does not exist in
population figures. Based on data from Employment and Earnings (U.S. Department of Labor).
2. Includes self-employed, unpaid family, and domestic service workers.




712
4,962
5,852
25,808
6,740
28,525
18,355

3. Data include all full- and part-time employees who worked during, or
received pay for, the pay period that includes the twelfth day of the month, and
exclude proprietors, self-employed persons, domestic servants, unpaid family
workers, and members of the Armed Forces. Data are adjusted to the March 1984
benchmark and only seasonally adjusted data are available at this time. Based on
data from Employment and Earnings (U.S. Department of Labor).

Selected Measures

A47

2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1
Seasonally adjusted
1991

1990

1991

1990

1991

1990
Series
Q3

Q4

Qlr

Q2

110.5
111.1

2 Manufacturing
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

108.5
109.0

Q4

Ql

Q2

Q4

Q3

Qlr

Q2

Utilization rate (percent)

Capacity (percent of 1987 output)

Output (1987 = 100)
1 Total industry

Q3

79.0

105.8

106.2

131.9

132.8

133.6

134.5

83.7

81.7

79.2

106.1

106.5

134.0

135.0

136.0

136.9

82.9

80.8

78.0

77.8

126.1
139.1

126.8
140.2

127.5
141.3

85.8
81.7

83.0
79.8

79.4
77.5

79.0
77.3

139.0
124.6
127.9
132.7
121.1
156.3
141.4
132.9

139.9
125.0
128.2
133.0
121.3
157.9
142.7
133.4

140.9
125.2
128.6
133.5
121.5
159.5
144.0
134.2

82.3
81.8
87.9
86.3
90.3
83.1
80.3
78.2

79.1
76.8
83.9
82.9
85.3
80.8
77.8
67.2

75.8
73.9
76.4
72.4
82.6
78.8
75.8
60.5

75.7
74.7
75.0
70.3
82.3
77.4
76.6
66.7

Primary processing
Advanced processing

107.6
112.8

104.7
111.0

100.6
108.6

100.7
109.2

125.5
138.0

Durable
Lumber and products
Primary metals
Iron and steel
Nonferrous
Nonelectrical machinery
Electrical machinery
Motor vehicles and parts
Aerospace and miscellaneous
transportation equipment .

113.6
101.5
112.2
114.3
109.2
128.5
112.4
103.7

110.0
95.7
107.3
110.0
103.4
126.4
109.9
89.4

106.1
92.3
97.9
96.3
100.2
124.4
108.1
80.8

106.7
93.6
96.4
93.9
100.0
123.4
110.2
89.5

138.0
124.0
127.7
132.5
120.9
154.7
140.0
132.7

114.5

113.3

109.9

106.6

135.2

136.1

137.0

137.9

84.7

83.3

80.2

77.3

128.9
116.6
115.1
135.9
130.6
121.3

129.9
117.0
115.7
137.1
132.9
121.4

130.9
117.3
116.4
138.4
135.7
121.4

131.9
117.7
117.1
139.7
139.2
121.4

83.8
86.9
93.2
81.5
89.7
90.7

83.0
84.0
91.4
80.4
88.9
88.5

81.0
80.6
88.2
78.8
83.4
88.4

80.5
84.1
86.8
78.1
80.3
88.4

114.5
127.1
122.6

114.0
127.6
123.2

113.8
128.1
123.8

114.3
128.4
124.3

90.3
86.9
92.1

90.4
84.8
90.2

89.6
82.9
88.3

88.4
84.3
91.0

ApK

May r

June p

108.1
101.3
107.2
110.8
117.2
110.0

70
?1 Utilities
22 Electric

107.8
98.2
105.8
110.2
118.1
107.4

106.1
94.6
102.6
109.1
113.2
107.3

103.4
110.5
112.9

Nondurable
Textile mill products
Paper and products
Chemicals and products
Plastics materials
Petroleum products

106.2
99.0
101.7
109.1
111.7
107.3

103.1
108.3
111.2

102.0
106.2
109.3

101.1
108.2
113.1

Previou s cycle
High

Low

Latest cycle
High

Low

1991

1990
June

Nov.

Dec.

Jan.

Feb.

Mar/

Capacity utilization rate (percent)
23 Total industry

89.2

72.6

87.3

71.8

83.8

81.6

80.6

80.0

79.1

78.4

78.6

79.0

79.3

24 Manufacturing

88.9

70.8

87.3

70.0

83.1

80.7

79.4

78.9

78.0

77.2

77.5

77.7

78.1

25
26

Primary processing
Advanced processing

92.2
87.5

68.9
72.0

89.7
86.3

66.8
71.4

85.6
82.0

83.2
79.6

81.5
78.5

80.6
78.2

79.5
77.4

77.9
76.8

78.3
77.2

78.8
77.2

79.8
77.4

77
78
79
30
31
32
33
34
35

Durable
Lumber and products
Primary metals
Iron and steel
Nonferrous
Nonelectrical machinery
Electrical machinery
Motor vehicles and parts
Aerospace and miscellaneous
transportation equipment.

88.8
90.1
100.6
105.8
92.9
96.4
87.8
93.4

68.5
62.2
66.2
66.6
61.3
74.5
63.8
51.1

86.9
87.6
102.4
110.4
90.5
92.1
89.4
93.0

65.0
60.9
46.8
38.3
62.2
64.9
71.1
44.5

82.5
82.5
85.9
83.4
89.7
83.0
81.1
81.5

79.1
76.6
85.3
84.8
85.9
80.8
78.1
64.5

77.2
74.9
81.4
80.8
82.3
79.5
76.6
59.0

76.8
75.4
77.8
74.5
83.0
79.8
75.7
62.3

75.8
73.2
77.6
73.7
83.7
78.8
75.8
59.5

74.9
72.9
73.8
69.1
81.1
77.7
75.9
59.7

75.4
74.0
73.6
68.7
81.2
77.7
76.4
64.3

75.6
74.3
75.1
70.4
82.3
77.3
76.6
66.9

76.1
75.9
76.3
71.7
83.5
77.1
76.7
68.9

77.0

66.6

81.1

66.9

84.5

83.1

82.8

81.1

80.3

79.3

78.1

77.0

76.9

36
37
38
39
40
41

Nondurable
Textile mill products
Paper and products
Chemicals and products
Plastics materials
Petroleum products

87.9
92.0
96.9
87.9
102.0
96.7

71.8
60.4
69.0
69.9
50.6
81.1

87.0
91.7
94.2
85.1
90.9
89.5

76.9
73.8
82.0
70.1
63.4
68.2

83.9
89.0
90.9
81.7
90.0
87.8

82.9
83.3
90.9
80.2
90.2
88.9

82.4
82.1
91.0
79.9
86.5
87.0

81.8
80.2
89.8
79.8
86.2
86.2

81.0
80.4
87.9
78.8
85.0
89.6

80.3
81.3
86.8
77.9
79.0
89.4

80.4
82.7
86.7
78.0
80.5
87.1

80.5
84.4
86.3
77.9
80.6
88.2

80.7
85.2
87.5
78.3
79.7
89.8

94.4
95.6
99.0

88.4
82.5
82.7

96.6
88.3
88.3

80.6
76.2
78.7

89.0
86.6
92.6

90.6
83.8
88.9

90.8
85.1
90.6

89.5
84.1
89.3

90.4
81.6
87.0

89.0
83.0
88.6

88.3
82.3
88.5

87.9
85.5
92.6

89.1
84.9
91.9

47
43 Utilities
44 Electric

1. These data also appear in the Board's G.17 (419) release. For address, see
inside front cover. For a detailed description of the series, see "Recent Developments in Industrial Capacity and Utilization," Federal Reserve Bulletin, vol. 76
(June 1990), pages 411-35.




2. Monthly high 1973; monthly low 1975.
3. Monthly highs 1978 through 1980; monthly lows 1982.

A48

Domestic Nonfinancial Statistics • September 1991

2.13 INDUSTRIAL PRODUCTION

Indexes and Gross Value1

Monthly data are seasonally adjusted
1987
proportion

1990

1991

1990
avg.
June

July

Aug.

Sept.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar/

Apr/

May'

June p

Index (1987 = 100)
MAJOR MARKET

100.0

109.2

110.1

110.4

110.5

110.6

109.9

108.3

107.2

106.6

105.7

105.0

105.5

106.2

106.9

7 Products
Final products
Consumer goods, total
4
5
Durable consumer goods
6
Automotive products
7
Autos and trucks
8
Autos, consumer
9
Trucks, consumer
10
Auto parts and allied goods...
11
Other
12
Appliances, A/C, and TV
N
Carpeting and furniture
14
Miscellaneous home goods . . .
15
Nondurable consumer goods
16
Foods and tobacco
17
Clothing
18
Chemical products
19
Paper products
20
Energy
71
Fuels
Residential utilities
22

60.8
46.0
26.0
5.6
2.5
1.5
.9
.6
1.0
3.1
.8
.9
1.4
20.4
9.1
2.6
3.5
2.5
2.7
.7
2.0

110.1
110.9
107.3
106.2
102.3
97.4
92.2
106.1
109.6
109.4
102.0
104.9
116.4
107.6
105.9
95.7
113.3
119.7
105.9
102.9
107.0

110.9
111.7
107.8
112.1
112.2
112.9
103.8
128.3
111.2
112.0
107.5
107.8
117.2
106.6
104.4
95.7
112.8
118.3
105.3
102.6
106.3

110.9
111.7
107.5
108.3
106.7
104.8
98.0
116.1
109.5
109.5
100.2
106.0
116.9
107.3
105.1
95.6
112.4
120.3
106.7
104.6
107.5

110.9
111.9
107.8
107.4
104.6
101.5
97.2
108.8
109.3
109.6
101.9
104.9
116.8
107.9
105.7
94.6
114.3
119.3
109.0
106.0
110.0

111.4
112.6
108.7
110.4
111.8
113.0
111.5
115.4
110.0
109.3
101.0
106.0
116.1
108.2
105.3
95.3
115.1
121.9
108.0
105.6
108.9

111.0
112.3
108.6
106.9
107.1
107.5
104.6
112.2
106.4
106.8
94.6
103.8
115.5
109.1
106.7
94.2
115.9
123.4
108.8
104.0
110.6

109.3
110.2
106.5
99.4
93.5
84.2
80.7
90.2
107.3
104.1
90.8
99.2
114.6
108.5
107.8
91.7
113.5
122.8
106.4
101.1
108.4

108.4
109.2
105.7
96.0
86.7
74.6
77.2
70.2
104.8
103.4
89.9
100.9
112.5
108.4
107.5
92.1
113.5
122.7
106.6
98.1
109.7

107.8
109.1
105.6
97.6
90.6
79.6
83.2
73.6
107.1
103.2
92.8
100.3
110.8
107.8
106.3
90.6
114.7
122.1
106.5
99.8
109.0

106.9
108.3
104.7
95.2
88.1
74.7
78.6
68.1
108.3
100.7
94.5
92.0
109.8
107.3
105.9
90.8
114.8
121.0
105.2
103.4
105.9

106.5
108.1
104.7
95.9
88.9
76.7
76.3
77.4
107.3
101.4
96.2
93.9
109.2
107.1
105.4
90.4
114.2
122.2
105.5
104.3
105.9

106.9
108.7
105.5
99.2
94.2
85.0
78.3
96.3
108.0
103.1
97.3
97.0
110.3
107.2
105.5
90.6
114.7
122.8
104.4
101.4
105.5

107.4
109.2
106.4
100.8
96.9
89.2
81.9
101.6
108.5
103.8
96.7
97.1
112.0
108.0
106.0
92.2
114.6
121.4
108.5
103.3
110.4

108.0
109.6
107.0
102.9
98.9
92.5
83.8
107.1
108.6
106.0
102.7
98.4
112.7
108.2
105.9
93.0
115.4
121.9
108.0
104.1
109.4

31
32
33

Equipment, total
Business equipment
Information processing and related ..
Office and computing
Industrial
Transit
Autos and trucks
Other
Defense and space equipment
Oil and gas well drilling
Manufactured homes

20.0
13.9
5.6
1.9
4.0
2.5
1.2
1.9
5.4
.6
.2

115.5
123.1
127.2
149.8
115.3
129.9
96.8
118.5
97.3
109.0
90.8

116.8
124.4
126.3
150.6
116.0
137.4
112.2
119.9
97.6
119.5
92.8

117.2
125.0
128.0
152.7
117.2
135.5
103.1
119.2
97.8
116.2
90.0

117.2
125.4
128.5
152.2
117.9
135.4
101.5
119.8
97.7
106.9
93.4

117.8
126.4
129.5
153.6
117.4
140.5
111.0
118.5
97.3
107.4
91.8

117.0
125.4
130.1
155.3
115.4
137.5
106.5
117.0
97.3
107.1
89.0

115.1
122.9
128.8
149.8
115.3
126.3
83.9
117.6
96.2
109.7
87.3

113.6
121.2
127.5
148.9
112.3
123.4
75.3
118.5
95.8
107.3
83.4

113.6
121.6
130.1
155.0
111.5
124.0
79.8
115.0
94.4
106.4
83.1

112.9
120.6
131.6
157.3
109.1
120.3
75.0
112.5
94.5
108.2
77.3

112.5
120.3
131.2
155.1
109.5
120.4
76.7
110.8
93.9
107.7
79.3

112.9
121.4
131.5
155.6
109.6
124.4
84.4
112.7
92.5
105.1
83.1

112.7
121.7
131.9
156.0
108.8
126.2
87.9
112.9
91.6
101.3
86.6

112.9
121.9
131.3
155.9
108.9
128.3
90.8
113.6
91.3
103.0
83.4

34
35
36

Intermediate products, total
Construction supplies
Business supplies

14.7
6.0
8.7

107.7
105.2
109.4

108.3
106.0
109.8

108.4
106.7
109.5

107.9
105.3
109.7

107.4
103.8
109.9

107.0
103.1
109.7

106.2
101.8
109.2

106.0
101.0
109.4

103.8
97.7
108.1

102.6
96.4
106.8

101.3
94.0
106.4

101.3
94.9
105.7

102.0
95.3
106.7

103.1
97.0
107.3

37 Materials, total
38 Durable goods materials
39
Durable consumer parts
Equipment parts
40
41 Other
47
Basic metal materials
43 Nondurable goods materials
44
Textile materials
45
Pulp and paper materials
Chemical materials .. •.
46
47
Other
48 Energy materials
49
Primary energy
Converted fuel materials
50

39.2
19.4
4.2
7.3
7.9
2.8
9.0
1.2
1.9
3.8
2.1
10.9
7.2
3.7

107.8
111.8
104.0
118.1
110.2
111.9
106.0
96.7
106.4
106.8
109.5
102.1
101.3
103.5

108.8
113.8
108.5
119.1
111.8
113.6
106.1
99.4
104.8
107.3
108.8
102.1
101.2
103.9

109.6
114.0
108.1
119.2
112.4
115.5
107.8
100.2
109.0
108.5
109.9
103.3
103.3
103.4

109.7
114.9
110.4
119.4
113.1
116.3
106.8
97.8
106.9
108.0
109.3
103.0
102.1
104.9

109.4
114.1
109.0
119.8
111.6
115.8
106.9
98.1
109.4
106.6
110.1
103.0
101.0
107.0

108.3
112.5
106.0
118.6
110.4
112.0
106.5
97.9
108.6
105.6
110.8
102.3
100.7
105.3

106.8
110.4
98.5
117.4
110.2
112.7
105.6
95.1
107.2
105.8
109.4
101.6
101.4
102.0

105.3
107.5
91.1
116.9
107.4
109.6
104.9
91.4
108.5
105.7
107.6
102.0
101.9
102.1

104.8
106.8
94.2
115.9
105.2
104.6
104.9
89.1
106.0
106.7
109.3
101.1
101.3
100.9

103.9
105.5
90.4
116.2
103.8
104.8
103.6
91.5
104.1
104.1
108.8
101.1
102.1
99.2

102.6
103.3
87.5
114.8
101.0
101.2
102.8
92.7
102.4
102.7
108.8
101.3
101.5
100.8

103.3
104.7
91.9
114.5
102.5
101.3
103.1
94.6
102.0
102.9
109.2
101.0
100.5
101.9

104.2
105.7
95.1
114.7
103.1
102.4
103.5
96.4
101.1
103.1
110.1
102.2
101.4
103.9

105.2
106.7
97.6
114.6
104.3
104.5
104.5
97.2
103.8
104.2
109.8
103.1
102.9
103.5

97.3
95.3

109.5
109.8

110.0
110.2

110.6
110.8

110.7
110.9

110.6
110.7

110.0
110.2

109.0
109.4

108.1
108.6

107.4
107.8

106.6
107.0

105.7
106.2

106.1
106.4

106.7
107.0

107.3
107.6

1 Total index

23
24
25
26
27
28
29
30

SPECIAL AGGREGATES

51 Total excluding autos and trucks
52 Total excluding motor vehicles and parts . . .
53 Total excluding office and computing
machines
54 Consumer goods excluding autos and
trucks
55 Consumer goods excluding energy
56 Business equipment excluding autos and
trucks
57 Business equipment excluding office and
computing equipment
58 Materials excluding energy




97.5

108.2

109.1

109.3

109.4

109.5

108.8

107.3

106.1

105.4

104.4

103.7

104.2

104.9

105.7

24.5
23.3

107.9
107.5

107.5
108.1

107.6
107.6

108.2
107.7

108.4
108.7

108.7
108.6

107.9
106.5

107.6
105.6

107.2
105.5

106.5
104.7

106.4
104.6

106.7
105.6

107.5
106.2

107.9
106.9

12.7

125.6

125.6

127.2

127.8

128.0

127.2

126.8

125.6

125.7

125.0

124.5

125.0

125.0

125.0

12.0
28.4

118.7
110.0

120.2
111.4

120.5
112.1

121.1
112.3

122.0
111.8

120.6
110.6

118.6
108.9

116.7
106.6

116.2
106.2

114.6
104.9

114.6
103.1

115.9
104.2

116.1
105.0

116.4
106.0

Selected Measures

A49

2.13—Continued
Groups

SIC
code

1987
proportion

1991

1990
1990
avg.

June

July

Aug.

Sept.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar/

Apr/

May'

June"

Index (1987 = 100)
MAJOR INDUSTRY
100.0

109.2

110.1

110.4

110.5

110.6

109.9

108.3

107.2

106.6

105.7

105.0

105.5

106.2

106.9

84.4
26.7
57.7

109.9
106.3
111.6

110.8
107.0
112.6

111.1
107.9
112.5

111.1
108.0
112.5

111.2
106.9
113.2

110.7
106.2
112.8

108.9
104.9
110.8

107.5
102.9
109.5

107.0
102.0
109.3

106.1
100.8
108.5

105.2
99.0
108.0

105.9
99.6
108.8

106.4
100.5
109.1

107.1
101.9
109.6

Durable
24
Lumber and products . . .
25
Furniture and fixtures . . .
Clay, glass, and stone
32
products
33
Primary metals
331,2
Iron and steel
Raw steel
333-6,9
Nonferrous
Fabricated metal
34
products
35
Nonelectrical machinery.
Office and computing
357
machines
36
Electrical machinery
Transportation
37
equipment
Motor vehicles and
371
parts
Autos and light
trucks
Aerospace and miscellaneous transportation equipment.. 372- 6,9
38
Instruments
Miscellaneous
39
manufacturers

47.3
2.0
1.4

111.6
101.6
105.9

113.4
102.0
108.7

113.4
103.6
108.0

113.5
100.5
106.7

113.8
100.3
106.9

112.5
98.2
104.4

109.9
95.5
102.3

107.5
93.5
102.0

107.2
94.2
99.0

106.1
91.5
94.9

105.0
91.2
95.4

106.0
92.5
98.3

106.6
93.0
98.6

107.4
95.1
99.8

2.5
3.3
1.9
.1
1.4

105.7
108.4
109.9
109.6
106.2

106.1
109.5
110.3
111.8
108.3

106.0
110.3
110.6
113.9
109.8

106.6
114.6
118.3
118.5
109.4

104.5
111.6
113.9
111.6
108.4

104.4
108.6
110.3
112.8
106.2

103.8
109.1
112.6
109.5
104.1

100.7
104.2
107.3
100.6
99.8

97.2
99.7
99.0
104.7
100.6

98.9
99.5
98.0
97.9
101.6

94.4
94.7
92.0
89.8
98.4

94.8
94.5
91.6
91.0
98.6

94.5
96.5
94.0
88.9
100.0

96.1
98.2
95.9
95.0
101.5

5.4
8.6

105.9
126.5

106.7
127.5

107.7
128.3

107.9
128.8

106.8
128.5

106.4
128.1

104.3
126.3

101.9
124.7

101.7
125.5

99.1
124.5

97.8
123.1

98.1
123.5

99.3
123.3

100.7
123.4

2.5
8.6

149.8
111.4

150.6
112.8

152.7
112.2

152.2
112.5

153.6
112.5

155.3
110.8

149.8
110.4

148.9
108.7

155.0
107.6

157.3
108.2

155.1
108.6

155.6
109.6

156.0
110.3

155.9
110.8

9.8

105.5

111.0

109.3

107.9

111.1

109.2

100.1

96.6

97.6

95.5

95.0

97.3

98.3

99.7

4.7

96.8

108.0

102.7

101.0

107.5

103.8

85.8

78.5

83.0

79.4

79.8

86.2

89.7

92.5

2.3

96.6

111.6

103.8

100.9

112.8

107.1

83.7

74.9

80.1

75.3

76.6

84.0

88.2

91.2

5.1
3.3

113.3
116.8

113.8
115.0

115.2
116.9

114.1
117.5

114.2
118.4

114.0
118.1

113.1
118.1

112.9
117.3

110.8
119.0

110.0
119.3

108.8
118.4

107.4
118.6

106.1
118.1

106.2
117.8

1.2

120.0

119.6

120.4

121.8

121.3

121.5

122.5

119.1

116.1

114.6

115.3

117.4

118.2

118.8

Nondurable
Foods
Tobacco products
Textile mill products
Apparel products
Paper and products
Printing and publishing ..
Chemicals and products .
Petroleum products
Rubber and plastic
products
Leather and products . . .

20
21
22
23
26
27
28
29

37.2
8.8
1.0
1.8
2.4
3.6
6.4
8.6
1.3

107.8
107.6
98.6
100.8
98.8
105.3
111.9
110.3
108.2

107.6
106.1
95.6
103.6
99.3
104.2
112.0
110.3
106.5

108.1
107.1
98.5
102.9
99.2
107.8
111.4
110.4
110.5

108.1
107.7
96.3
100.4
98.8
106.5
110.9
111.1
110.2

108.0
107.6
96.4
100.7
98.4
107.5
111.6
110.9
109.3

108.4
108.8
97.8
101.2
97.2
106.8
112.9
110.7
108.6

107.7
109.6
99.0
97.4
95.5
105.1
112.4
110.0
107.8

107.4
109.1
101.1
96.1
94.9
105.4
112.8
109.9
105.6

106.8
108.3
100.0
94.0
92.9
104.2
112.1
110.1
104.7

106.0
107.6
100.1
94.3
93.1
102.2
110.9
109.1
108.8

105.4
107.4
98.2
95.4
92.5
101.3
110.4
108.2
108.5

105.8
107.5
98.2
97.2
93.2
101.3
110.7
108.7
105.7

106.2
107.8
98.0
99.4
95.2
101.1
110.1
108.9
107.1

106.8
107.7
98.0
100.4
95.6
102.7
110.3
109.8
109.0

30
31

3.0
.3

110.2
100.0

112.8
102.0

110.9
102.5

112.0
99.6

110.3
100.3

110.6
95.3

109.6
89.9

106.9
92.6

108.8
89.6

106.1
90.8

104.4
91.5

106.6
90.0

107.9
89.3

108.9
90.2

10
11,12
13
14

7.9
.3
1.2
5.7
.7

102.6
153.1
113.2
95.5
119.5

102.2
156.7
113.5
94.6
121.1

104.0
164.8
118.5
95.5
121.8

102.4
155.7
110.2
95.8
120.1

103.9
163.6
116.8
95.8
121.7

102.6
146.8
114.7
95.8
118.0

103.3
153.4
112.9
97.3
113.5

103.4
162.0
110.6
96.7
118.9

101.7
143.1
108.4
96.0
119.2

102.9
148.0
112.8
97.2
112.0

101.5
147.6
109.9
96.4
108.0

100.8
143.5
105.9
96.6
107.0

100.5
144.1
103.4
96.4
109.6

102.0
144.7
109.6
97.0
110.9

491,3PT
492,3PT

7.6
6.0
1.6

108.0
110.8
97.3

109.7
113.1
97.4

109.7
112.1
100.7

111.4
113.6
103.3

110.3
112.9
100.9

109.2
112.1
98.1

106.9
109.6
97.0

108.8
111.8
97.6

107.6
110.4
97.5

104.6
107.8
92.8

106.4
109.8
93.6

105.7
109.8
90.4

109.8
115.1
90.1

109.2
114.4
90.1

79.8

110.7

111.0

111.6

111.7

111.4

111.1

110.3

109.1

108.4

107.6

106.7

107.1

107.4

108.0

82.0

108.7

109.6

109.8

109.9

110.0

109.4

107.7

106.2

105.6

104.5

103.7

104.4

104.9

105.7

1 Total index.
2 Manufacturing
3 Primary processing ..
4 Advanced processing

20

23
24
25
26
27
28
29
30
31
32
33

34 Mining
35 Metal
36 Coal
37 Oil and gas extraction
38 Stone and earth minerals .
39 Utilities...
40 Electric.
41 Gas . . . .
SPECIAL AGGREGATES

42 Manufacturing excluding
motor vehicles and
parts
43 Manufacturing excluding
office and computing
machines

Gross va lue (billi ons of li>82 dollars, annual rates)
MAJOR MARKET
1,911.4 1,937.0 1,923.5 1,929.5 1,941.6 1,939.6 1,882.8 1,859.4 1,860.4 1,848.4 1,845.4 1,855.7 1,868.0 1,884.2

44 Products, total

1734.8

45 Final
46 Consumer goods
47 Equipment
48 Intermediate

1350.9 1,497.7 1,523.4 1,508.7 1,516.3 1,529.1 1,523.7 1,470.8 1,450.8 1,459.6 1,452.8 1,455.6 1,466.9 1,476.5 1,485.1
833.4 882.9 893.8 886.0 885.9 895.2 892.7 865.2 857.6 857.9 852.7 857.4 864.8 872.6 879.1
517.5 614.8 629.6 622.7 630.4 633.9 631.0 605.6 593.2 601.7 600.1 598.2 602.0 603.9 606.0
384.0 413.7 413.6 414.9 413.1 412.5 415.9 412.0 408.7 400.8 395.6 389.8 388.8 391.4 399.0

1. These data also appear in the Board's G.17 (419) release. For requests see
address inside front cover.
A major revision of the industrial production index and the capacity




utilization rates was released in April 1990. See "Industrial Production: 1989
Developments and Historical Revision," Federal Reserve Bulletin, vol. 76 (April
1990), pp. 187-204.

A50

Domestic Nonfinancial Statistics • September 1991

2.14 HOUSING AND CONSTRUCTION
Monthly figures are at seasonally adjusted annual rates, except as noted.
1990
Item

1988

1989

1991

1990
Aug.

Sept.

Oct.

Nov.

Dec.

Jan.

Feb/

Mar/

Apr/

May

Private residential real estate activity (thousands of units)
NEW UNITS

Permits authorized
One-family
Two-or-more-family
Started
One-family
Two-or-more-family
Under construction, end of period1 .
One-family
Two-or-more-family
Completed
One-family
Two-or-more-family
Mobile homes shipped

1,456
994
462
1,488
1,081
407
919
570
350
1,530
1,085
445
218

1,339
932
407
1,376
1,003
373
850
535
315
1,423
1,026
396
198

1,111
794
317
1,193
895
298
711
449
262
1,308
966
342
188

1,055
756
299
1,131
835
296
815
517
298
1,307
950
357
193

989
730
259
1,106
858
248
790
503
287
1,314
963
351
184

925
703
222
1,026
839
187
766
497
269
1,275
930
345
186

916
668
248
1,130
769
361
756
486
270
1,246
922
324
181

854
645
209
971
751
220
744
478
266
1,155
878
277
167

802
611
191
847
648
199
717
461
256
1,125
841
284
168

876
695
181
992
788
204
709
457
252
1,096
838
258
157

892
689
203
907
742
165
680
442
238
1,190
881
309
157

913
742
171
977
801
176
673
443
230
1,082
815
267
175

966
760
206
989
836
153
665
446
219
1,055
780
275
174

Merchant builder activity in
one-family units
14 Number sold
15 Number for sale, end of period1 . . . .

675
368

650
363

535
318

525
345

504
338

465
334

480
327

464
318

414
315

488
313

491
308

490
304

474
301

113.3
139.0

120.4
148.3

122.3
149.0

118.4
144.7

113.0
142.1

120.0
153.0

118.9
143.3

127.0
153.4

117.9
148.6

119.9
147.8

122.9
157.4

120.0
149.4

121.9
154.4

18 Number sold

3,594

3,439

3,316

3,410

3,160

3,070

3,150

3,130

2,900

3,160

3,220

3,310

3,540

Price of units sold (thousands
of dollars)2
19 Median
20 Average

89.2
112.5

92.9
118.0

95.2
118.3

97.2
120.7

94.4
116.8

92.9
115.9

92.0
115.6

91.7
114.1

95.6
123.0

94.0
119.7

98.2
125.2

100.3
128.9

101.1
130.6

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

Price of units sold (thousands
of dollars)
16 Median
17 Average
EXISTING UNITS (one-family)

Value of new construction3 (millions of dollars)
CONSTRUCTION

21 Total put in place

432,222' 443,720' 446,433' 449,744' 437,161' 434,559' 431,407' 421,346' 406,502' 410,072 401,883 406,594 403,095

??
?3
24

337,440' 345,416' 337,776' 336,936' 330,323' 324,054' 317,190' 311,349' 303,932' 300,495 293,262 298,370 293,825
198,101 196,551 182,856' 180,631' 175,415' 172,12<r 168,031' 165,014' 161,793' 155,622 152,447 151,495 154,9%
139,339' 148,865' 154,920' 156,305' 154,908' 151,934' 149,159' 146,335' 142,139' 144,873 140,815 146,875 138,829

Nonresidential, total

Other
Public utilities and other

20,412'
65,4%'
19,683'
43,274'

22,433'
53,848'
20,621'
45,237'

23,249
54,023
20,850
46,751

23,089
51,766
20,628
45,332

24,351
54,761
21,845
45,918

21,212
51,078
20,895
45,644

?9 Public
30
31
3? Conservation and development...
33 Other

94,783'
3,579
29,227'
4,739'
57,238'

98,303' 108,655' 112,808' 106,838' 110,505' 114,218' 109,997' 102,570'
2,734'
2,867'
2,520'
1,958'
1,868'
3,520
2,960'
1,868'
28,171' 30,595' 30,295' 29,781' 31,639' 34,304' 33,185' 25,560'
4,795'
4,700'
5,374'
4,989'
4,718'
3,439'
4,901'
6,434'
61,623' 70,608' 74,851' 71,098' 72,208' 72,053' 69,570' 68,708'

109,577
1,723
30,699
5,529
71,626

108,621
1,866
29,9%
4,586
72,173

108,224
1,828
28,626
5,838
71,932

109,271
1,939
28,778
5,572
72,982

23,849'
62,866'
21,591'
46,614'

22,915'
63,768'
22,636'
46,986'

1. Not at annual rates.
2. Not seasonally adjusted.
3. Value of new construction data in recent periods may not be strictly
comparable with data in previous periods because of changes by the Bureau of the
Census in its estimating techniques. For a description of these changes see
Construction Reports (C-30-76-5), issued by the Bureau in July 1976.




22,544'
62,660'
22,705'
46,999'

22,847'
60,208'
22,300'
46,579'

16,451'
64,025'
19,038'
39,825'

75
76
77
28

22,481'
57,764'
22,121'
46,793'

22,999'
56,913'
20,953'
45,470'

SOURCE. Census Bureau 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 16,000 jurisdictions
from 1978 to 1983, and 17,000 jurisdictions beginning in 1984.

Selected Measures

A51

2.15 CONSUMER AND PRODUCER PRICES
Percentage changes based on seasonally adjusted data, except as noted
Change from 12
months earlier

Change from 3 months earlier
(at annual rate)

Item

Change from 1 month earlier
Index
level
June
1991

1990
1990
June

1991
June
Sept.

Dec

Mar.

June

Feb.

Mar.

Apr.

May

June

CONSUMER PRICES2

(1982-84=100)
.2

4.7

8.2

4.9

2.4

5.6
.5
4.9
3.3
5.8

3.9
4.0
5.0
4.1
5.3

4.6
44.2

3.9

2.4
-30.7

3.8
2.3
4.8

6.8

7.9
6.4

3.2
3.2
3.0

3.1
4.7
-3.7
3.8
3.1

3.5

5.1
1.3

-4.5

21.1

3.5
3.2

11.3
2.3
118.7
3.5
3.6

1.3
.7
-7.1
10.5

1 All items
2 Food
3 Energy items
4 All items less food and energy.
5 Commodities
6 Services

6.0

3.3
7.2

18.0

5.1
-1.2

-.2

-4.0
.7

.0

.2
-2.6

1.4
.2

.1

1.0
.6

-.1

.2'

-.5'
.V
-i.r

.2'

-.1'

.3

.2

.3

PRODUCER PRICES

(1982=100)
7 Finished goods
8 Consumer foods
9 Consumer energy
10 Other consumer goods
11 Capital equipment
12 Intermediate materials3
13 Excluding energy
Crude materials
14 Foods
15 Energy
16 Other

3.5
-10.5
-.1

1.0

16.0

-8.0

1.7
.0

-,7r

.6

3.4
3.3

-37.2
5.3
3.2

2.7
1.5

-5.3'
.4

13.4
4.0

4.2
2.3

-9.5
-1.9

-1.4
-1.3

-.9

-1.1

-.1

-.4

-.2

-7.8
305.8
5.9

1.1

-13.5

-18.8
-18.1

-53.5
-3.0

.r
-14.9'
-.r

1.3'
-7.1'
-.9'

-1.0
.0

-14.6

1. Not seasonally adjusted.
2. Figures for consumer prices are those for all urban consumers and reflect a
rental equivalence measure of homeownership after 1982.




-7.3

2.6

-2.6

.2

.2

.4
-.3
.4
-.2

.6
.2

2.4
.2
.6

-.4

-3.2
3.0

-.5

3. Excludes intermediate materials for food manufacturing and manufactured
animal feeds.
SOURCE. Bureau of Labor Statistics.

A48

Domestic Nonfinancial Statistics • September 1991

2.16 GROSS NATIONAL PRODUCT AND INCOME
Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates.
1991

1990

Account

1988

1989

1990

Q1

Q2

Q3

Q4

Ql

GROSS NATIONAL PRODUCT
1

Total

4,873.7

5,200.8

5,465.1

5,375.4

5,443.3

5,514.6

5,527.3

5,557.7

2
3
4
5

By source
Personal consumption expenditures
Durable goods
Nondurable goods
Services

3,238.2
457.5
1,060.0
1,720.7

3,450.1
474.6
1,130.0
1,845.5

3,657.3
480.3
1,193.7
1,983.3

3,588.1
492.1
1,174.7
1,921.3

3,622.7
478.4
1,179.0
1,965.3

3,693.4
482.3
1,205.0
2,006.2

3,724.9
468.5
1,216.0
2,040.4

3,742.8
455.3
1,212.7
2,074.8

747.1
720.8
488.4
139.9
348.4
232.5

771.2
742.9
511.9
146.2
365.7
231.0

741.0
746.1
524.1
147.0
377.1
222.0

747.2
758.9
523.1
148.8
374.3
235.9

759.0
745.6
516.5
147.2
369.3
229.1

759.7
750.7
532.8
149.8
383.0
217.9

698.3
729.2
524.0
142.1
381.9
205.2

660.0
694.1
503.6
139.5
364.1
190.5

26.2
29.8

28.3
23.3

-5.0
-7.4

-11.8
-17.0

13.4
13.0

9.0
6.8

-30.8
-32.4

-34.2
-37.1

6
7
8
9
10
11
12
13

Gross private domestic investment
Fixed investment
Nonresidential
Structures
Producers' durable equipment
Residential structures
Change in business inventories
Nonfarm

14
15
16

Net exports of goods and services
Exports
Imports

-74.1
552.0
626.1

-46.1
626.2
672.3

-31.2
672.8
704.0

-30.0
661.3
691.3

-24.9
659.7
684.6

-41.3
672.7
714.1

-28.8
697.4
726.2

13.5
694.5
681.0

17
18
19

Government purchases of goods and services
Federal
State and local

962.5
380.3
582.3

1,025.6
400.0
625.6

1,098.1
424.0
674.1

1,070.1
410.6
659.6

1,086.4
421.9
664.6

1,102.8
425.8
677.0

1,132.9
437.6
695.3

1,141.5
443.8
697.7

20
21
22
23
24
25

By major type of product
Final sales, total
Goods
Durable
Nondurable
Services
Structures

4,847.5
1,908.9
840.3
1,068.6
2,488.6
450.0

5,172.5
2,044.4
894.7
1,149.7
2,671.2
456.9

5,470.2
2,148.3
939.0
1,209.3
2,864.5
457.4

5,387.2
2,122.8
941.4
1,181.4
2,791.3
473.0

5,429.9
2,133.1
930.1
1,203.0
2,834.2
462.5

5,505.6
2,161.4
943.4
1,218.0
2,889.6
454.6

5,558.2
2,175.9
941.2
1,234.7
2,943.0
439.3

5,591.9
2,170.2
918.5
1,251.7
3,004.0
417.7

26
27
28

Change in business inventories
Durable goods
Nondurable goods

26.2
19.9
6.4

28.3
11.9
16.4

-5.0
-11.1
6.0

-11.8
-21.6
9.8

13.4
.0
13.4

9.0
9.8
-.8

-30.8
-32.5
1.7

-34.2
-42.2
8.0

29

Total GNP in 1982 dollars

4,016.9

4,117.7

4,157.3

4,150.6

4,155.1

4,170.0

4,153.4

4,124.1

MEMO
NATIONAL INCOME
30

Total

3,984.9

4,223.3

4,418.4

4,350.3

4,411.3

4,452.4

4,459.7

4,456.4

31
32
33
34
35
36
37

Compensation of employees
Wages and salaries
Government and government enterprises
Other
Supplement to wages and salaries
Employer contributions for social insurance
Other labor income

2,905.1
2,431.1
446.6
1,984.5
474.0
248.5
225.5

3,079.0
2,573.2
476.6
2,096.6
505.8
263.9
241.9

3,244.2
2,705.3
508.0
2,197.2
538.9
280.8
258.1

3,180.4
2,651.6
497.1
2,154.5
528.8
276.0
252.8

3,232.5
2,696.3
505.7
2,190.6
536.1
279.7
256.4

3,276.9
2,734.2
511.3
2,222.9
542.7
282.7
260.0

3,286.9
2,738.9
518.1
2,220.8
548.0
284.8
263.2

3,299.3
2,742.8
529.8
2,213.0
556.5
290.3
266.2

38
39
40

Proprietors' income1
Business and professional1
Farm1

354.2
310.5
43.7

379.3
330.7
48.6

402.5
352.6
49.9

404.0
346.6
57.4

401.7
350.8
51.0

397.9
355.6
42.4

406.2
357.4
48.8

404.4
355.8
48.5

41

Rental income of persons2

42
43
44
45

Corporate profits1 3
Profits before tax
Inventory valuation adjustment
Capital consumption adjustment

46

Net interest
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.




16.3

8.2

6.9

5.5

4.3

8.4

9.3

5.6

337.6
316.7
-27.0
47.8

311.6
307.7
-21.7
25.5

298.3
304.7
-11.4
4.9

296.8
296.9
-11.4
11.3

306.6
299.3
-.5
7.7

300.7
318.5
-19.8
2.0

288.9
304.1
-13.8
-1.4

286.2
281.5
8.1
-3.5

371.8

445.1

466.7

463.6

466.2

468.3

468.4

460.9

3. For after-tax profits, dividends, and the like, see table 1.48.
SOURCE. Survey of Current Business (Department of Commerce).

Summary Statistics

A53

2.17 PERSONAL INCOME AND SAVING
Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted.
1991

1990
Account

1988

1989

1990
Q1

Q2

Q3

Q4

Q1

PERSONAL INCOME AND SAVING

1 Total personal income

4,070.8

4,384.3

4,645.5

4,562.8

4,622.2

4,678.5

4,718.5

4,735.8

2 Wage and salary disbursements
3 Commodity-producing industries
4
Manufacturing
5 Distributive industries
6 Service industries
7 Government and government enterprises

2,431.1
696.4
524.0
572.0
716.2
446.6

2,573.2
720.6
541.8
604.7
771.4
476.6

2,705.3
729.3
546.8
637.2
830.8
508.0

2,651.6
724.6
541.2
627.0
802.9
497.1

2,696.3
731.1
548.1
637.3
822.2
505.7

2,734.2
735.3
551.8
642.7
844.9
511.3

2,738.9
726.0
546.1
641.9
853.0
518.1

2,742.8
713.0
536.7
639.7
860.3
529.8

225.5
354.2
310.5
43.7
16.3
102.2
547.9
587.7
300.5

241.9
379.3
330.7
48.6
8.2
114.4
643.2
636.9
325.3

258.1
402.5
352.6
49.9
6.9
123.8
680.4
694.8
350.7

252.8
404.0
346.6
57.4
5.5
120.5
670.5
680.9
347.2

256.4
401.7
350.8
51.0
4.3
122.9
678.0
686.7
347.6

260.0
397.9
355.6
42.4
8.4
124.9
685.3
696.4
351.1

263.2
406.2
357.4
48.8
9.3
126.7
687.9
715.1
356.8

266.2
404.4
355.8
48.5
5.6
126.7
682.0
745.4
372.1

8
9
10
11
12
13
14
15
16
17

Other labor income
Proprietors' income1
Business and professional
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

194.1

212.8

226.2

222.9

224.1

228.6

228.9

237.3

4,070.8

4,384.3

4,645.5

4,562.8

4,622.2

4,678.5

4,718.5

4,735.8

591.6

658.8

699.4

675.1

696.5

709.5

716.6

714.6

20 EQUALS: Disposable personal income

3,479.2

3,725.5

3,946.1

3,887.7

3,925.7

3,969.1

4,001.9

4,021.3

21

LESS: Personal outlays

3,333.6

3,553.7

3,766.0

3,696.4

3,730.6

3,802.6

3,834.4

3,852.5

22 EQUALS: Personal saving

145.6

171.8

180.1

191.3

195.1

166.5

167.5

168.7

16,302.4
10,578.3
11,368.0
4.2

16,549.6
10,678.0
11,531.0
4.6

16,535.3
10,665.8
11,509.0
4.6

16,576.4
10,692.4
11,586.0
4.9

16,552.5
10,671.4
11,564.0
5.0

16,562.9
10,711.5
11,511.0
4.2

16,449.4
10,588.7
11,376.0
4.2

16,293.4
10,523.7
11,307.0
4.2

27 Gross saving

656.1

691.5

657.3

664.8

679.3

665.9

619.2

697.1

28
29
30
31

751.3
145.6
91.4
-27.0

779.3
171.8
53.0
-21.7

787.9
180.1
32.2
-11.4

795.0
191.3
36.7
-11.4

806.7
195.1
40.5
• -.5

772.2
166.5
26.5
-19.8

777.8
167.5
25.2
-13.8

793.9
168.7
33.6
8.1

322.1
192.2

346.4
208.0

363.0
212.6

356.7
210.3

359.7
211.4

365.5
213.8

370.3
214.8

375.6
216.0

State and local

-95.3
-141.7
46.5

-87.8
-134.3
46.4

-130.6
-166.0
35.4

-130.2
-168.3
38.1

-127.3
-166.0
38.6

-106.4
-145.7
39.3

-158.6
-184.3
25.7

-96.8
-126.9
30.0

37 Gross investment

627.8

674.4

655.6

665.6

676.1

661.0

619.6

705.3

747.1
-119.2

771.2
-96.8

741.0
-85.5

747.2
-81.6

759.0
-82.9

759.7
-98.7

698.3
-78.7

660.0
45.3

-28.2

-17.0

-1.7

.7

-3.2

-4.9

.4

8.2

19

LESS: Personal tax and nontax payments

MEMO

23
24
25
26

Per capita (1982 dollars)
Gross national product
Personal consumption expenditures
Disposable personal income
Saving rate (percent)
GROSS SAVING

Gross private saving
Personal saving
Undistributed corporate profits1
Corporate inventory valuation adjustment

Capital consumption allowances
32 Corporate
33 Noncorporate
34 Government surplus, or deficit ( - ) , national income and
product accounts
36

38 Gross private domestic
39 Net foreign
40 Statistical discrepancy
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.




SOURCE. Survey of Current Business (Department of Commerce).

A48
3.10

Domestic Nonfinancial Statistics • September 1991
U.S. I N T E R N A T I O N A L TRANSACTIONS

Summary

Millions of dollars; quarterly data are seasonally adjusted except as noted. 1
1991

1990
Item credits or debits
Q1

Not seasonally adjusted .
Merchandise trade balance
Merchandise exports
Merchandise imports
Military transactions, net
Investment income, net
Other service transactions, net
Remittances, pensions, and other transfers .
U.S. government grants (excluding military)
11 Change in U.S. government assets, other than official
reserve assets, net (increase, - )

-126,237

-106,304

-92,123

-126,986
320,337
-447,323
-5,743
5,353

-115,917
361,451
-477,368
-6,203
2,689

-4,437
-10,506

-4,420
-11,071

-108,115
389,550
-497,665
-7,219
11,945
33,595
-4,843
-17,486

16,082

28,618

Q2

Q3

Q4

Q1P

-22,667
-17,223
-27,537
95,244
-122,781
-1,736
3,002
7,636
-1,218
-2,814

-22,178
-20,653
-24,090
97,088
-121,178
-1,558
7
8,156
-1,123
-3,570

-23,881
-29,112
-28,760
96,638
-125,398
-1,683
2,802
8,086
-1,302
-3,024

-23,402
-25,136
-27,728
100,580
-128,308
-2,243
6,133
9,716

10,215
15,395
-18,367
100,861

-8,079

-119,228
-2,182
4,652
9,173
-1,295
18,234

-314

4,759

1,581

-1,092
0
-93
-4
-995

-353
0
31
-341
-43
5,953
23,900

-1,201

2,966

1,320

2,976

-669

12 Change in U.S. official reserve assets (increase, - ) .
13 Gold
14 Special drawing rights (SDRs)
15 Reserve position in International Monetary Fund.
16 Foreign currencies

-3,912
0
127
1,025
-5,064

-25,293
0
-535
471
-25,229

-2,158
0
-192
731
-2,697

-3,177
0
-247
234
-3,164

-216

493
94

1,739
0
363
8
1,368

17 Change in U.S. private 3
assets abroad (increase, - ) .
18 Bank-reported claims
19 Nonbank-reported claims
20 U.S. purchase of foreign securities, net
21 U.S. direct investments abroad, net

-85,112
-56,322
-3,064
-7,846
-17,880

-104,637
-51,255
2,581
-22,575
-33,388

-58,524
5,333
-1,944
-28,476
-33,437

40,993
57,085
1,649
-8,756
-8,985

-33,033
-17,255
-1,760
-11,160
-2,858

-28,114
-9,984
676
-1,014
-17,792

-38,370
-24,513
-2,509
-7,546
-3,802

-9,426
-8,521

22 Change in foreign official assets in United States (increase, +) ..

39,657

8,624

32,425

-7,022

5,805

13,341

20,301

6,534

23
24
25
26
T7
27

41,741
1,309
-568
-319
-2,506

149
1,383

-5,786
-521
-292
-297

11,849
134
-248
1,871
-265

2,220

-126

2,461
346
1,141
2,131
-274

20,119
708

4,976
1,835

28,643
667
1,703
2,998
-1,586

28 Change in foreign private assets in United States (increase, + ) . .
29 U.S. bank-reported liabilities3
30 U.S. nonbank-reported liabilities
31 Foreign private purchases of U.S. Treasury securities, net
32 Foreign purchases of other U.S. securities, net
33 Foreign direct investments in United States, net

181,877
70,235
5,626
20,239
26,353
59,424

207,925
63,382
5,454
29,618
38,920
70,551

53,879
9,975
3,779
1,131
1,781
37,213

-26,059
-43,234
660
-1,151
1,397
16,269

25,452
8,980
699
4,287
2,140
9,346

35,754
26,968
4,260
24
-2,558
7,060

18,732
17,261
-1,840
-2,029
802
4,538

-8,458
-19,419

34 Allocation of SDRs
35 Discrepancy
36 Owing to seasonal adjustments
37 Statistical discrepancy in recorded data before seasonal
adjustment

0
-9,240

0
18,366

0
63,526

18,601

0

0
24,383
105

0
1,475
-6,473

0
19,072
2,007

0
-15,472
4,135

7,948

17,066

-19,607

U.S. Treasury securities
Other U.S. government obligations
Other U.S. government liabilities
Other U.S. liabilities reported by U.S. banks3.
ntUar fnt-ainn nffininl ICCfltp^
Other foreign official assets'

281

4,367

-800

371
0

1,102

-707
-921

-29
987
2,590
766

''3,910
5,026
2,025

18,366

63,526

14,235

-3,912

-25,293

-2,158

-3,177

371

1,739

-1,092

-353

40,225

8,343

30,722

-6,730

4,664

13,589

19,199

5,547

-2,996

10,738

2,163

3,094

193

-1,699

575

1,109

MEMO

Changes in official assets
U.S. official reserve assets (increase, - )
Foreign official assets in United States excluding line 25
(increase, +)
40 Change in Organization of Petroleum Exporting Countries
official assets in United States (part of line 22)
38
39

1. Seasonal factors are not calculated for lines 6, 10, 12-16, 18-20, 22-34, and
38-40.
2. Data are on an international accounts (IA) 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 data and are included in line 6.
3. Reporting banks include all kinds of depository institutions besides commercial banks, 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. Data are from Bureau of Economic Analysis, Survey of Current
Business (Department of Commerce).

Summary Statistics

A55

3.11 U.S. FOREIGN TRADE1
Millions of dollars; exports, F.A.S. value; imports, Customs value; monthly data are seasonally adjusted.
1990
Item

1988

1989

1991

1990
Nov.

1 Exports of domestic and foreign
merchandise excluding grant-aid
shipments, f.a.s. value
2 General imports including merchandise
for immediate consumption plus
entries into bonded warehouses

322,426

363,812

393,592

Dec.

Jan.

Feb.

Mar.

Apr/

Mayp

33,586

33,570

34,144

33,599

34,031

35,632

35,304

440,952

473,211

495,311

43,123

39,895

41,520

39,103

38,100

40,139

39,878

-118,526

3 Trade balance

-109,399

-101,718

-9,536

-6,325

-7,376

-5,504

-4,070

-4,507

-4,574

1. The Census basis data differ from merchandise trade data shown in table
3.10, U.S. International Transactions Summary, because of coverage and timing.
On the export side, the largest adjustment is the exclusion of military sales (which
are combined with other military transactions and reported separately in the
"service account" in table 3.10, line 6). On the import side, additions are made for
gold, ship purchases, imports of electricity from Canada, and other transactions;

military payments are excluded and shown separately as indicated above. As of
Jan. 1,1987 census data are released forty-five days after the end of the month; the
previous month is revised to reflect late documents. Total exports and the trade
balance reflect adjustments for undocumented exports to Canada.
SOURCE. FT900, Summary of U.S. Export and Import Merchandise Trade
(Department of Commerce, Bureau of the Census).

3.12 U.S. RESERVE ASSETS
Millions of dollars, end of period
1990
Type

1987

1988

1991

1989
Dec.

Jan.

Feb.

Mar.

Apr.

May

June"

45,798

1 Total
2 Gold stock, including Exchange
Stabilization Fund1
3 Special drawing rights2'3
4 Reserve position in 2
International
Monetary Fund
5 Foreign currencies4

47,802

74,609

83,316

85,006

82,797

78,297

78,297

78,263

74,940

11,078
10,283

11,057
9,637

11,059
9,951

11,058
10,989

11,058
10,922

11,058
10,958

11,058
10,368

11,058
10,325

11,057
10,515

11,062
10,309

11,349
13,088

9,745
17,363

9,048
44,551

9,076
52,193

9,468
53,558

9,556
51,225

8,910
47,666

8,806
48,108

8,854
47,837

8,629
44,940

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. Gold stock is valued at $42.22 per fine troy ounce.
2. Beginning July 1974, the International Monetary Fund (IMF) adopted a
technique for valuing the special drawing right (SDR) based on a weighted average
of exchange rates for the currencies of member countries. From July 1974 through
December 1980, 16 currencies were used; from January 1981, 5 currencies have

been used. The U.S. SDR holdings and reserve positions in the IMF also are
valued on this basis beginning July 1974.
3. Includes allocations by the International Monetary Fund of SDRs as follows:
$867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710 million on Jan. 1,
1972; $1,139 million on Jan. 1, 1979; $1,152 million on Jan. 1, 1980; and $1,093
million on Jan. 1, 1981; plus transactions in SDRs.
4. Valued at current market exchange rates.

3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS1
Millions of dollars, end of period
1990
Assets

1987

1988

Dec.
1 Deposits
Assets held in custody
2 U.S. Treasury securities2
3 Earmarked gold3

Jan.

Feb.

Mar.

Apr.

May

June p

244

347

589

369

271

329

228

292

196

223

195,126
13,919

232,547
13,636

224,911
13,456

278,499
13,387

286,722
13,377

286,471
13,382

272,505
13,374

271,779
13,363

279,695
13,358

273,893
13,354

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 payable in dollars and in foreign currencies at face value.




1991

1989

3. Earmarked gold and the gold stock are valued at $42.22 per fine troy ounce,
Earmarked gold is gold held for foreign and international accounts and is not
included in the gold stock of the United States.

A56

International Statistics • September 1991

3.14 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data1
Millions of dollars, end of period
1990
Asset account

1987

1991

1989
Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

All foreign countries
518,618

505,595

545,366

558,626

556,925

563,997

560,968

546,491

537,891

529,044

2 Claims on United States
3 Parent bank
4 Other banks in United States
5 Nonbanks
6 Claims on foreigners
7 Other branches of parent bank
8 Banks
9 Public borrowers
10 Nonbank foreigners
11 Other assets

138,034
105,845
16,416
15,773
342,520
122,155
108,859
21,832
89,674
38,064

169,111
129,856
14,918
24,337
299,728
107,179
96,932
17,163
78,454
36,756

198,835
157,092
17,042
24,701
300,575
113,810
90,703
16,456
79,606
45,956

180,938
140,302
12,937
27,699
323,020
135,177
81,440
16,591
89,812
54,668

188,496
148,837
13,296
26,363
312,449
135,003
72,602
17,555
87,289
55,980

183,991
141,498
14,541
27,952
321,247
132,157
81,219
18,260
89,611
58,759

188,174
145,967
12,887
29,320
313,595
124,584
80,030
17,893
91,088
59,199

182,828
142,683
12,268
27,877
307,102
129,529
72,757
17,915
86,901
56,561

180,627
141,580
12,085
26,962
300,456
121,961
72,549
17,825
88,121
56,808

173,051
135,377
10,412
27,262
297,225
118,332
74,190
17,%7
86,736
58,768

12 Total payable in U.S. dollars

350,107

357,573

382,498

371,753

379,479

380,116

380,180

381,848

371,999

362,737

13 Claims on United States
14 Parent bank
15 Other banks in United States
16 Nonbanks
17 Claims on foreigners
18 Other branches of parent bank
19 Banks
20 Public borrowers
21 Nonbank foreigners
22 Other assets

132,023
103,251
14,657
14,115
202,428
88,284
63,707
14,730
35,707
15,656

163,456
126,929
14,167
22,360
177,685
80,736
54,884
12,131
29,934
16,432

191,184
152,294
16,386
22,504
169,690
82,949
48,396
10,961
27,384
21,624

172,336
134,436
12,088
25,812
174,832
95,599
37,795
11,202
30,236
24,585

180,174
142,962
12,513
24,699
174,451
95,298
36,440
12,298
30,415
24,854

175,909
135,793
13,739
26,377
179,762
93,847
41,134
13,136
31,645
24,445

180,601
140,789
12,266
27,546
173,527
87,394
40,785
12,944
32,404
26,052

175,741
137,738
11,757
26,246
180,415
95,106
40,451
13,206
31,652
25,692

173,933
137,343
11,624
24,966
173,044
87,895
40,407
12,9%
31,746
25,022

166,959
131,186
10,020
25,753
171,355
85,359
42,246
12,8%
30,854
24,423

1 Total, all currencies

United Kingdom
23 Total, all currencies

158,695

156,835

161,947

188,182

184,818

184,817

180,211

175,025

168,917

168,646

24 Claims on United States
25 Parent bank
26 Other banks in United States
27 Nonbanks
28 Claims on foreigners
29 Other branches of parent bank
30 Banks
31 Public borrowers
32 Nonbank foreigners
33 Other assets

32,518
27,350
1,259
3,909
115,700
39,903
36,735
4,752
34,310
10,477

40,089
34,243
1,123
4,723
106,388
35,625
36,765
4,019
29,979
10,358

39,212
35,847
1,058
2,307
107,657
37,728
36,159
3,293
30,477
15,078

42,301
38,453
1,088
2,760
124,077
49,499
36,135
3,675
34,768
21,804

45,560
42,413
792
2,355
115,536
46,367
31,604
3,860
33,705
23,722

40,197
36,533
1,095
2,569
121,077
47,857
34,050
3,953
35,217
23,543

41,278
37,662
924
2,692
115,361
41,653
34,518
4,029
35,161
23,572

41,448
38,291
848
2,309
110,329
44,341
30,660
3,943
31,385
23,248

38,136
34,930
1,179
2,027
107,031
40,730
30,608
3,711
31,982
23,750

38,338
34,830
1,104
2,404
105,893
39,077
32,027
3,657
31,132
24,415

34 Total payable in U.S. dollars

100,574

103,503

103,208

115,182

116,762

114,413

113,673

114,347

108,600

105,676

30,439
26,304
1,044
3,091
64,560
28,635
19,188
3,313
13,424
5,575

38,012
33,252
964
3,796
60,472
28,474
18,494
2,840
10,664
5,019

36,404
34,329
843
1,232
59,062
29,872
16,579
2,371
10,240
7,742

37,668
35,614
611
1,443
66,876
39,630
13,915
2,862
10,469
10,638

41,259
39,609
334
1,316
63,701
37,142
13,135
3,143
10,281
11,802

36,120
33,754
771
1,595
67,996
38,120
14,905
3,242
11,729
10,297

37,644
35,345
615
1,684
64,682
33,136
15,840
3,290
12,416
11,347

37,971
36,068
562
1,341
65,034
36,150
15,097
3,220
10,567
11,342

35,058
32,973
976
1,109
62,183
32,842
15,460
3,193
10,688
11,359

35,274
32,771
970
1,533
60,106
31,297
16,102
3,152
9,555
10,798

35 Claims on United States
36 Parent bank
37 Other banks in United States
38 Nonbanks
39 Claims on foreigners
40 Other branches of parent bank
41 Banks
42 Public borrowers
43 Nonbank foreigners
44 Other assets

Bahamas and Caymans
45 Total, all currencies
46 Claims on United States
47 Parent bank
48 Other banks in United States
49 Nonbanks
50 Claims on foreigners
51 Other branches of parent bank
52 Banks
53 Public borrowers
54 Nonbank foreigners
55 Other assets
56 Total payable in U.S. dollars

160,321

170,639

176,006

153,850

162,316

167,306

168,209

163,315

164,565

158,506

85,318
60,048
14,277
10,993
70,162
21,277
33,751
7,428
7,706
4,841

105,320
73,409
13,145
18,766
58,393
17,954
28,268
5,830
6,341
6,926

124,205
87,882
15,071
21,252
44,168
11,309
22,611
5,217
5,031
7,633

106,694
71,416
11,017
24,261
38,669
12,697
16,299
4,775
4,898
8,487

112,989
77,873
11,869
23,247
41,356
13,416
16,310
5,807
5,823
7,971

115,806
78,350
12,877
24,579
42,801
12,292
18,343
6,528
5,638
8,699

118,783
81,888
11,380
25,515
40,363
11,477
16,863
6,484
5,539
9,063

110,727
75,485
10,753
24,489
43,665
13,658
17,571
6,846
5,590
8,923

113,532
79,818
10,063
23,651
41,877
12,364
17,458
6,556
5,499
9,156

108,148
75,367
8,748
24,033
41,368
12,243
17,206
6,279
5,640
8,990

151,434

163,518

170,780

149,754

158,390

162,458

163,533

159,226

160,577

154,826

1. Beginning in June 1984 reported claims held by foreign branches have been
reduced by an increase in the reporting threshold for "shell" branches from $50




million to $150 million equivalent in total assets, the threshold now applicable to
all reporting branches.

Summary Statistics

A57

3.14—Continued
1991

1990
Liability account

1987

1988

1989
Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

All foreign countries
57 Total, all currencies

518,618

505,595

545,366

558,626

556,925

563,997

560,968

546,491

537,891

529,044

58 Negotiable certificates of deposit (CDs)
59 To United States
60 Parent bank
61 Other banks in United States
62 Nonbanks

30,929
161,390
87,606
20,355
53,429

28,511
185,577
114,720
14,737
56,120

23,500
197,239
138,412
11,704
47,123

21,521
171,592
115,519
9,140
46,933

18,060
189,412
138,748
7,463
43,201

19,106
186,312'
134,118
9,341
42,853'

18,595
187,645'
132,227
10,580
44,838'

19,920
185,220'
128,009
10,961
46,250'

19,484
180,243'
123,883'
9,927'
46,433'

17,703
172,147
117,455
8,9%
45,696

63 To foreigners
64 Other branches of parent bank . . .
65 Banks
66 Official institutions
67 Nonbank foreigners
68 Other liabilities

304,803
124,601
87,274
19,564
73,364
21,496

270,923
111,267
72,842
15,183
71,631
20,584

296,850
119,591
76,452
16,750
84,057
27,777

328,534
137,849
72,352
17,9%
100,337
36,979

311,668
139,113
58,986
14,791
98,778
37,785

319,821'
132,214
70,189'
17,343
100,075
38,758

316,522'
124,437
73,773'
16,665
101,647
38,206

305,762'
128,916
63,262'
15,864
97,720
35,589

300,660'
122,542
63,908'
18,398
95,812'
37,504

301,099
119,613
66,005
19,803
95,678
38,095

69 Total payable in U.S. dollars

361,438

367,483

396,613

372,300'

383,522'

384,336'

380,542'

380,812'

372,669'

359,437

14,882
168,772'
117,297'
8,509
42,966

13,208
159,845
110,244
7,666
41,935

70 Negotiable CDs
71 To United States
72 Parent bank
73 Other banks in United States
74 Nonbanks

26,768
148,442
81,783
18,951
47,708

24,045
173,190
107,150
13,468
52,572

19,619
187,286
132,563
10,519
44,204

16,845
156,954'
106,892'
7,686
42,376

14,094
175,654'
130,51c
6,052
39,092

15,141
172,130'
126,008'
7,627
38,495

14,446
174,602'
124,963'
8,715
40,924

15,335
172,841'
120,824'
9,415
42,602

75 To foreigners
76 Other branches of parent bank . . .
77 Banks
78 Official institutions
79 Nonbank foreigners
80 Other liabilities

177,711
90,469
35,065
12,409
39,768
8,517

160,766
84,021
28,493
8,224
40,028
9,482

176,460
87,636
30,537
9,873
48,414
13,248

183,461
95,556
25,022
9,091
53,792
15,040

179,002
98,128
20,251
7,921
52,702
14,772

182,131
94,765
23,661
10,585
53,120
14,934

175,761
87,288
25,536
10,021
52,916
15,733

177,902
93,910
23,769
9,205
51,018
14,734

173,589
88,299
22,892
11,568
50,830
15,426

171,204
85,847
21,689
12,339
51,329
15,180

United Kingdom
158,695

156,835

161,947

188,182

184,818

184,817

180,211

175,025

168,917

168,646

82 Negotiable CDs
83 To United States
84 Parent bank
85 Other banks in United States
86 Nonbanks

26,988
23,470
13,223
1,536
8,711

24,528
36,784
27,849
2,037
6,898

20,056
36,036
29,726
1,256
5,054

17,144
36,500
26,165
1,671
8,664

14,256
39,928
31,806
1,505
6,617

14,872
34,389
25,548
1,861
6,980

14,363
34,070
25,670
1,401
6,999

15,820
34,453
26,213
1,230
7,010

15,162
28,450
21,676
1,175
5,599

13,436
28,618
19,951
1,413
7,254

87 To foreigners
88 Other branches of parent bank
89 Banks
90 Official institutions
91 Nonbank foreigners
92 Other liabilities

98,689
33,078
34,290
11,015
20,306
9,548

86,026
26,812
30,609
7,873
20,732
9,497

92,307
27,397
29,780
8,551
26,579
13,548

113,958
34,406
32,844
9,534
37,174
20,580

108,531
36,709
25,126
8,361
38,335
22,103

113,754
34,547
31,765
10,368
37,074
21,802

110,454
30,978
32,784
9,745
36,947
21,324

105,090
33,084
26,609
8,969
36,428
19,662

103,976
31,860
27,001
11,300
33,815
21,329

104,372
30,155
28,492
12,342
33,383
22,220

102,550

105,907

108,178

114,031'

116,094'

114,308'

112,284'

112,368'

106,568'

104,074

13,291
24,690'
20,391'
848
3,451

11,560
24,245
18,457
1,002
4,786

81 Total, all currencies

93 Total payable in U.S. dollars
94 Negotiable CDs
95 To United States
%
Parent bank
97 Other banks in United States
98 Nonbanks

24,926
17,752
12,026
1,308
4,418

22,063
32,588
26,404
1,752
4,432

18,143
33,056
28,812
1,065
3,179

15,100
31,058'
24,322'
1,318
5,418

12,710
34,697'
29,955'
1,156
3,586

13,387
29,055'
23,886'
1,324
3,845

12,790
29,646'
24,33<K
926
4,390

13,816
30,166'
24,837'
800
4,529

99 To foreigners
100 Other branches of parent bank
101 Banks
102 Official institutions
103 Nonbank foreigners
104 Other liabilities

55,919
22,334
15,580
7,530
10,475
3,953

47,083
18,561
13,407
4,348
10,767
4,173

50,517
18,384
12,244
5,454
14,435
6,462

59,787
23,288
11,911
5,000
19,588
8,086

60,014
25,957
9,488
4,692
19,877
8,673

63,702
24,954
11,539
7,158
20,051
8,164

60,977
21,339
12,976
6,587
20,075
8,871

59,985
24,049
10,112
6,188
19,636
8,401

59,440
22,452
9,931
8,239
18,818
9,147

58,899
21,671
9,704
8,914
18,610
9,370

Bahamas and Caymans
105 Total, all currencies

160,321

170,639

176,006

153,850

162,316

167,306

168,209

163,315

164,565

158,506

106 Negotiable CDs
107 To United States
108 Parent bank
109 Other banks in United States
110 Nonbanks

885
113,950
53,239
17,224
43,487

953
122,332
62,894
11,494
47,944

678
124,859
75,188
8,883
40,788

561
104,086
61,350
5,798
36,938

646
114,738
74,941
4,526
35,271

654
120,691'
80,567
5,655
34,469'

629
122,231'
78,173
7,618
36,440'

729
118,554'
72,314
8,209
38,031'

674
120,961'
73,801
7,543
39,617'

694
114,810
71,180
6,408
37,222

111 To foreigners
112 Other branches of parent bank
113 Banks
114 Official institutions
115 Nonbank foreigners
116 Other liabilities

43,815
19,185
10,769
1,504
12,357
1,671

45,161
23,686
8,336
1,074
12,065
2,193

47,382
23,414
8,823
1,097
14,048
3,087

46,299
25,579
6,569
763
13,388
2,904

44,444
24,715
5,588
622
13,519
2,488

42,850'
23,099
6,030'
811
12,910
3,111

42,472'
22,923
6,105'
728
12,716
2,877

41,375'
22,018
6,232'
674
12,451
2,657

40,042'
21,398
5,837
676
12,131'
2,888

40,481
21,865
5,765
736
12,115
2,521

117 Total payable in U.S. dollars . . .

152,927

162,950

171,250

148,197

157,132

162,118

162,850

158,232

160,343

154,281




A58

International Statistics • September 1991

3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS
Millions of dollars, end of period
1991

1990
Item

1989

1988

Nov/
1 Total1
2
3
4
5
6

Jan/

Feb/

Mar/

Apr/

Mayp

304,132

Latin America and Caribbean
Asia
Africa
Other countries6

312,477

341,594

344,386

352,692

362,260

349,995

344,385

349,206

31,519
103,722

36,4%
76,985

43,444
80,971

39,765
79,447

41,464
83,695

43,309
83,%3

42,266
84,013

38,868
81,110

40,105
82,444

152,429
523
15,939

179,269
568
19,159

195,332
3,765
18,082

202,438
4,491
18,245

205,145
4,521
17,867

212,154
4,550
18,284

200,154
4,580
18,982

201,037
4,610
18,760

203,064
4,642
18,951

123,229r
9,513
10,553r
151,887
1,403
7,548

By type
Liabilities reported by banks in the3 United States'1
U.S. Treasury bills and certificates
U.S. Treasury bonds and notes
Marketable
Nonmarketable4
U.S. securities other than U.S. Treasury securities5

By area
7 Western Europe1
9
10
11
12

Dec/

132,849'
9,482 r
9,313
153,338
1,030
6,469

165,452
8,688
19,318
139,158
1,404
7,576

167,141
8,672
21,115
138,071
1,433
7,955

169,141
8,179
21,957
143,260
1,659
8,497

174,119
7,900
23,716
146,186
1,439
8,897

166,466
8,467
24,649
139,7%
1,802
8,814

162,764
8,454
25,378
137,664
1,171
8,953

165,249
9,433
27,701
136,567
1,184
9,074

1. Includes the Bank for International Settlements.
2. Principally demand deposits, time deposits, bankers acceptances, commercial paper, negotiable time certificates of deposit, and borrowings under repurchase agreements.
3. Includes nonmarketable certificates of indebtedness (including those payable
in foreign currencies through 1974) and Treasury bills issued to official institutions
of foreign countries.
4. Excludes notes issued to foreign official nonreserve agencies. Includes

bonds and notes payable in foreign currencies; zero coupon bonds are included at
current value.
5. Debt securities of U.S. government corporations and federally sponsored
agencies, and U.S. corporate stocks and bonds.
6. Includes countries in Oceania and Eastern Europe.
NOTE. Based on Treasury Department data and on data reported to the
Treasury Department by banks (including Federal Reserve Banks) and securities
dealers in the United States and on the 1984 benchmark survey of foreign portfolio
investment in the United States.

3.16 LIABILITIES TO AND CLAIMS ON FOREIGNERS Reported by Banks in the United States
Payable in Foreign Currencies1
Millions of dollars, end of period
1990
Item

1987

1988

1991

1989
June'

55,438
51,271
18,861
32,410
551
1. Data on claims exclude foreign currencies held by U.S. monetary authorities.




74,980
68,983
25,100
43,884
364

67,835
65,127
20,491
44,636
3,507

Sept/

Dec/

Mar/

68,650
66,780
22,210
44,569
2,612

71,028
68,675
27,206
41,470
2,843

70,276
66,558
29,651
36,907
10,594

64,042
67,428
27,619
39,809
7,357

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

A59

Reported by Banks in the United States1

Millions of dollars, end of period
1991'

1990

Holder and type of liability

1988

1989

1990'

Nov/

Dec/

Jan.

Feb.

Mar.

Apr.

Mayp

1

All foreigners

685,339

736,878

752,916

742,916

752,916

752,864

757,916

747,913

731,060

722,738

2
3
4
5
6

Banks' own liabilities
Demand deposits
Time deposits2
Other.
Own foreign offices

514,532
21,863
152,164
51,366
289,138

577,498
22,032
168,780
67,823
318,864

576,195
21,724
168,245
65,652
320,575

561,237
19,683
162,317
72,269
306,968

576,195
21,724
168,245
65,652
320,575

568,974
19,686
159,248
75,723
314,317

574,913
20,144
162,354
74,016
318,399

569,037
20,268
163,971
71,734
313,063

560,417
19,740
157,171
73,542
309,964

552,052
18,872
152,134
70,358
310,687

170,807
115,056

159,380
91,100

176,721
%,808

181,679
99,862

176,721
%,808

183,890
104,493

183,003
103,948

178,876
102,145

170,643
97,378

170,687
98,087

16,426
39,325

19,526
48,754

17,472
62,441

18,357
63,460

17,472
62,441

17,955
61,442

18,190
60,865

17,485
59,246

16,394
56,871

16,723
55,876

Banks' custody liabilities5
U.S. Treasury bills and certificates6
Other negotiable7 and readily transferable
instruments
Other
10
7
8
9

11

Nonmonetary inteniational and regional
organizations

3,224

4,894

5,918

5,324

5,918

7,908

6,555

6,669

6,237

5,548

12
13
14
15

Banks' own liabilities
Demand deposits
Time deposits
Other.

2,527
71
1,183
1,272

3,279
96
927
2,255

4,540
36
1,050
3,455

3,179
33
783
2,363

4,540
36
1,050
3,455

6,431
67
1,600
4,763

4,092
40
1,684
2,368

4,806
73
2,034
2,700

5,061
76
1,980
3,006

4,167
24
2,142
2,001

698
57

1,616
197

1,378
364

2,145
1,077

1,378
364

1,478
423

2,462
1,620

1,863
1,103

1,176
275

1,381
662

641
0

1,417
2

1,014
0

1,022
46

1,014
0

1,005
50

842
0

760
0

901
0

719
0

135,241

113,481

119,212

124,415

119,212

125,159

127,271

126,280

119,978

122,550

27,109
1,917
9,767
15,425

31,108
2,1%
10,495
18,417

34,792
1,924
14,265
18,603

38,167
1,781
12,929
23,457

34,792
1,924
14,265
18,603

37,345
1,664
11,659
24,022

38,878
1,579
13,426
23,873

38,592
1,645
13,946
23,000

35,903
1,633
13,551
20,719

36,756
1,444
14,318
20,994

108,132
103,722

82,373
76,985

84,420
79,447

86,248
80,971

84,420
79,447

87,814
83,695

88,393
83,%3

87,688
84,013

84,076
81,110

85,794
82,444

4,130
280

5,028
361

4,770
203

4,897
380

4,770
203

3,939
180

4,057
374

3,582
92

2,835
130

3,197
152

Banks' custody liabilities5
U.S. Treasury bills and certificates6
Other negotiable7 and readily transferable
instruments
19
Other
16
17
18

20

Official institutions9

21
22
23
24

Banks' own liabilities
Demand deposits
Time deposits
Other.

Banks' custody liabilities5
U.S. Treasury bills and certificates
Other negotiable and readily transferable
instruments7
Other
28

25
26
27

29

Banks10

459,523

515,275

534,143

516,724

534,143

521,444

527,740

520,069

509,108

498,748

30
31
32
33
34
35

Banks' own liabilities
Unaffiliated foreign banks
Demand deposits
Time deposits
Other.
Own foreign offices4

409,501
120,362
9,948
80,189
30,226
289,138

454,273
135,409
10,279
90,557
34,573
318,864

457,535
136,960
10,053
88,847
38,060
320,575

437,890
130,921
8,999
83,573
38,349
306,968

457,535
136,960
10,053
88,847
38,060
320,575

445,772
131,455
9,003
81,583
40,869
314,317

451,031
132,633
9,522
82,468
40,643
318,399

445,588
132,525
10,050
84,119
38,357
313,063

438,527
128,563
9,067
79,227
40,269
309,964

430,223
119,536
8,688
72,675
38,174
310,687

50,022
7,602

61,002
9,367

76,608
10,634

78,834
11,378

76,608
10,634

75,672
10,174

76,709
11,136

74,481
10,645

70,581
10,026

68,525
8,714

5,725
36,694

5,124
46,510

5,240
60,735

5,730
61,726

5,240
60,735

5,950
59,548

6,351
59,222

6,293
57,543

6,034
54,520

5,729
54,083

Banks' custody liabilities5
U.S. Treasury bills and certificates
Other negotiable and readily transferable
instruments7
39
Other

36
37
38

40

Other foreigners

87,351

103,228

93,642

96,453

93,642

98,352

%,350

94,8%

95,737

95,892

41
42
43
44

Banks' own liabilities
Demand deposits
Time deposits2
Other.

75,396
9,928
61,025
4,443

88,839
9,460
66,801
12,577

79,328
9,711
64,083
5,534

82,001
8,869
65,032
8,100

79,328
9,711
64,083
5,534

79,427
8,952
64,406
6,068

80,911
9,004
64,775
7,132

80,051
8,500
63,873
7,678

80,926
8,%5
62,413
9,548

80,905
8,717
62,999
9,189

11,956
3,675

14,389
4,551

14,314
6,363

14,452
6,436

14,314
6,363

18,926
10,201

15,439
7,230

14,845
6,384

14,810
5,966

14,987
6,267

5,929
2,351

7,958
1,880

6,448
1,503

6,708
1,308

6,448
1,503

7,062
1,664

6,940
1,269

6,850
1,611

6,624
2,221

7,078
1,642

6,425

7,203

7,022

6,466

7,022

6,966

6,720

7,157

7,269

7,511

Banks' custody liabilities5
U.S. Treasury bills and certificates6
Other negotiable and readily transferable
instruments7
Other
48
45
46
47

49

MEMO: Negotiable time certificates of deposit in
custody for foreigners

1. Reporting banks include all kinds of depository institutions besides commercial banks, as well as some brokers and dealers.
2. Excludes negotiable time certificates of deposit, which are included in
"Other negotiable and readily transferable instruments."
3. Includes borrowing under repurchase agreements.
4. U.S. banks: includes amounts due to own foreign branches and foreign
subsidiaries consolidated in "Consolidated Report of Condition" filed with bank
regulatory agencies. Agencies, branches, and majority-owned subsidiaries of
foreign banks: principally amounts due to head office or parent foreign bank, and
foreign branches, agencies, or wholly owned subsidiaries of head office or parent
foreign bank.




-

5. Financial claims on residents of the United States, other than long-term
securities, held by or through reporting banks.
6. Includes nonmarketable certificates of indebtedness and Treasury bills
issued to official institutions of foreign countries.
7. Principally bankers acceptances, commercial paper, and negotiable time
certificates of deposit.
8. Principally the International Bank for Reconstruction and Development, and
the Inter-American and Asian Development Banks. Data exclude "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."

A60

International Statistics • September 1991

3.17—Continued
1990
Area and country

1988

1989

1991

1990
Nov.

Dec.

Jan.'

Feb.'

Mar.

Apr.'

May p

1 Total

685,339

736,878

752,916'

742,916'

752,916'

752,864

757,916

747,913'

731,060

722,738

2 Foreign countries

682,115

731,984

746,998'

737,592'

746,998'

744,956

751,361

741,245'

724,822

717,190

231,912
1,155
10,022
2,200
285
24,777
6,772
672
14,599
5,316
1,559
903
5,494
1,284
34,199
1,012
111,811

237,501
1,233
10,648
1,415
570
26,903
7,578
1,028
16,169
6,613
2,401
2,418
4,364
1,491
34,4%
1,818
102,362

254,460'
1,229
12,399'
1,399'
602
30,946
7,281'
934
17,736
5,375
2,358
2,958
7,544'
1,837
36,915
1,169
109,4%'

247,059'
1,385
11,510
1,773'
422
29,1%
8,1%
949
16,051
6,056
2,330
2,959
7,197'
2,304
34,031
1,358
103,034

254,460'
1,229
12,399'
1,399'
602
30,946
7,281'
934
17,736
5,375
2,358
2,958
7,544'
1,837
36,915
1,169
109,496'

247,705
1,570
12,382
1,115
404
29,371
8,262
895
16,157
5,680
2,181
2,877
8,813
1,290
35,572
1,124
102,363

250,091
1,522
12,559
1,013
489
27,892
9,605
797
17,506
6,397
2,078
2,684
8,073
759
37,209
1,195
103,846

249,956'
1,494
12,238
983'
662
28,211
8,988
747
17,367
6,204
2,121
2,778
9,784'
1,159
38,546
1,480
102,973

241,312
1,147
12,410
945
724
26,822
8,446
808
15,045
6,773
1,099
2,628
10,006
720
36,711
1,490
101,490

236,281
1,008
11,720
988
453
26,314
8,366
785
14,675
6,721
1,168
2,414
10,050
525
35,068
1,633
99,404

529
8,598
138
591

1,474
13,563
350
608

928
11,689'
119
1,546

1,571
15,131'
220
1,388

928
l l ^
119
1,546

1,030
14,352
1%
2,071

959
12,806
88
2,614

848
10,545
106
2,722

1,034
10,138
138
2,740

953
11,067
250
2,721

3 Europe
4 Austria
5 Belgium-Luxembourg
6 Denmark
7 Finland
8 France
9 Germany
10 Greece
11 Italy
12 Netherlands
13 Norway
14 Portugal
15 Spain
16 Sweden
17 Switzerland
18 Turkey
19 United Kingdom
20
21
22
23

Yugoslavia
Other Western Europe1
U.S.S.R
Other Eastern Europe

24 Canada

21,062

18,865

20,332

20,679

20,332

19,218

23,839

23,445

23,254

22,734

25 Latin America and Caribbean
26 Argentina
27 Bahamas
28 Bermuda
29 Brazil
30 British West Indies
31 Chile
32 Colombia
33 Cuba
34 Ecuador
35 Guatemala
36 Jamaica
37 Mexico
38 Netherlands Antilles
39 Panama
40 Peru
41 Uruguay
42 Venezuela
43 Other

271,146
7,804
86,863
2,621
5,314
113,840
2,936
4,374
10
1,379
1,195
269
15,185
6,420
4,353
1,671
1,898
9,147
5,868

311,028
7,304
99,341
2,884
6,351
138,309
3,212
4,653
10
1,391
1,312
209
15,423
6,310
4,362
1,984
2,284
9,482
6,206

326,351'
7,366
107,386'
2,809
5,853
140,720'
3,145
4,492
11
1,379
1,541
257
16,625'
7,381
4,575
1,295
2,520
12,2W
6,779

317,414'
7,664
97,689
2,518
6,470
141,395'
3,422
4,251
9
1,310
1,478
228
16,420'
7,350
4,644
1,327
2,446
12,099'
6,693

326,351'
7,366
107,386'
2,809
5,853
140,720'
3,145
4,492
11
1,379
1,541
257
16,625'
7,381
4,575
1,295
2,520
12, IV?
6,779

332,135
7,659
105,028
3,104
5,975
148,187
3,188
4,466
18
1,359
1,563
224
16,938
7,139
4,345
1,347
2,5%
11,944
7,053

335,679
7,679
102,264
3,008
6,310
154,294
3,063
4,308
8
1,332
1,580
256
17,144
6,970
4,351
1,324
2,639
12,095
7,055

325,786'
7,872
%,289'
2,838
6,489'
150,581'
2,995
3,786
7
1,319
1,617
268
17,405'
6,600
4,454'
1,364
2,509
12,266'
7,127

325,015
7,708
%,307
2,743
5,821
150,522
3,107
4,348
8
1,260
1,571
233
17,501
6,898
4,293
1,428
2,463
11,833
6,969

327,853
7,595
97,276
3,104
5,773
150,746
3,240
4,409
10
1,293
1,595
237
18,657
5,986
4,552
1,413
2,475
12,666
6,825

44

147,838

156,201

136,780'

143,555'

136,780'

135,951

132,375

133,041'

126,784

121,665

1,895
26,058
12,248
699
1,180
1,461
74,015
2,541
1,163
1,236
12,083
13,260

1,773
19,588
12,416
780
1,281
1,243
81,184
3,215
1,766
2,093
13,370
17,491

2,421
11,244'
12,700'
1,233'
1,238
2,767
67,075'
2,280
1,585
1,443
15,829'
16,%5'

2,493
11,397'
13,849'
1,124'
1,261
3,075
69,046'
2,732
1,549
1,681
17,437'
17,912'

2,421
11,244'
12,70C
1,233'
1,238
2,767
67,075'
2,280
1,585
1,443
15,829'
16,%5'

2,866
10,920
14,872
1,472
1,191
2,823
63,452
2,406
1,455
2,228
14,720
17,547

2,720
11,141
14,794
1,628
1,719
2,509
61,093
2,186
1,655
2,148
13,693
17,091

3,030
11,295'
15,748'
1,174
1,941
2,965
56,820
2,213
1,609
2,403
15,642
18,199

2,415
11,001
16,104
986
1,309
2,849
53,170
2,887
1,681
2,571
14,655
17,157

2,498
10,597
15,006
766
1,303
2,609
52,030
2,189
1,521
2,502
14,070
16,575

3,991
911
68
437
85
1,017
1,474

3,824
686
78
206
86
1,121
1,648

4,630
1,425
104
228
53
1,110
1,710

4,390
996
90
283
55
1,288
1,678

4,630
1,425
104
228
53
1,110
1,710

5,173
1,476
107
212
55
1,508
1,815

5,153
1,416
90
317
50
1,528
1,751

4,908
1,449
91
312
52
1,370'
1,634'

4,495
927
89
220
50
1,434
1,776

4,695
1,364
97
202
52
1,140
1,839

64 Other countries
65 Australia
66 All other

6,165
5,293
872

4,564
3,867
697

4,445'
3,807
637'

4,495'
3,804
691'

4,445'
3,807
637'

4,774
3,883
891

4,224
3,434
790

4,109'
3,131
978'

3,963
3,118
845

3,%2
3,232
730

67 Nonmonetary international and regional
organizations
68 International
69 Latin American regional
70 Other regional6

3,224
2,503
589
133

4,894
3,947
684
263

5,918
4,390
1,048
479

5,324
4,203
809
312

5,918
4,390
1,048
479

7,908
6,428
975
506

6,555
4,880
1,235
440

6,669'
5,108'
1,170
391

6,237
4,895
913
429

5,548
4,133
802
614

45
46
47
48
49
50
51
52
53
54
55
56

China
Mainland
Taiwan
Hong Kong
India
Indonesia
Israel
Japan
Korea
Philippines
Thailand
Middle-East oil-exporting countries
Other

57
58
59
60
61
62
63

Egypt
Morocco
South Africa
Zaire
Oil-exporting countries4
Other

1. Includes the Bank for International Settlements and Eastern European
countries that are not listed in line 23.
2. Comprises Bulgaria, Czechoslovakia, Hungary, Poland, and Romania.
3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).




4. Comprises Algeria, Gabon, Libya, and Nigeria.
5. Excludes "holdings of dollars" of the International Monetary Fund.
6. Asian, African, Middle Eastern, and European regional organizations,
except the Bank for International Settlements, which is included in "Other
Western Europe."

Nonbank-Reported

Data

3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States1
Payable in U.S. Dollars
Millions of dollars, end of period
1991'

1990
Area and country

1988

1989

1990
Nov.

1 Total
2 Foreign countries
3 Europe
4 Austria
5 Belgium-Luxembourg
6 Denmark
7 Finland
8 France
9 Germany
10 Greece
11 Italy
12 Netherlands
13 Norway
14 Portugal
15 Spain
16 Sweden
17 Switzerland
18 Turkey
19 United Kingdom
20 Yugoslavia
21 Other Western Europe 2
22 U.S.S.R
23 Other Eastern Europe 3
24 Canada

491,165

534,492

510,078'

Dec.'

Jan.

Feb.

Mar.

Apr.

May"

504,283'

510,078

497,886

509,839

495,614

504,663

498,490

502,357

4%,556

100,260
392
5,462
750
1,173
13,894
3,235
688
5,417
2,230
679
293
3,180
2,115
3,238
1,440
52,492
1,012
1,118
904
548

99,139
220
7,839
909
867
13,552
2,640
762
5,836
1,940
695
322
3,120
1,923
3,486
1,445
50,109
%5
989
936
585

489,094

530,630

505,285'

499,132'

505,285

495,344

505,995

493,114

116,928
483
8,515
483
1,065
13,243
2,329
433
7,936
2,541
455
261
1,823
1,977
3,895
1,233
65,706
1,390
1,152
1,255
754

119,025
415
6,478
582
1,027
16,146
2,865
788
6,662
1,904
609
376
1,930
1,773
6,141
1,071
65,527
1,329
1,302
1,179
921

113,043'
362
5,458
497
1,047
14,466'
3,343'
727'
6,036'
1,751'
782'
292'
2,668'
2,093'
4,200'
1,405
65,147'
1,142
597'
530
499

106,782'
268
6,441
842
846'
13.32C
3,564'
718'
5,098'
1,864'
666'
368
2,494'
2,281'
3,855'
1,346
59,908'
1,160
629'
653
459

113,043
362
5,458
497
1,047
14,466
3,343
727
6,036
1,751
782
292
2,668
2,093
4,200
1,405
65,147
1,142
597
530
499

108,184
248
6,169
567
1,083
15,202
3,361
651
6,094
1,953
706
323
2,864
2,175
2,073
1,377
60,532
1,084
705
505
512

107,614
400
5,905
472
1,364
14,384
3,620
652
5,660
2,108
670
292
2,526
2,336
2,444
1,509
60,397
980
851
501
545

104,180
270
5,665
583
1,157
14,915
3,305
667
6,602
2,119
765
384
3,334
2,330
3,165
1,537
53,8%
991
1,141
781
573

18,889

15,451

16,080'

14,284'

16,080

16,951

19,364

17,062

17,581

17,703
241,161
6,365
78,236
6,897
15,590
104,041
3,037
2,284
0
1,339
200
181
15,166
1,589
1,414
722
615
2,223
1,261

25 Latin America and Caribbean
26 Argentina
27 Bahamas
28 Bermuda
29 Brazil
30 British West Indies
31 Chile
32 Colombia
33 Cuba
34 Ecuador
35 Guatemala4
36 Jamaica 4
37 Mexico
38 Netherlands Antilles
39 Panama
40 Peru
41 Uruguay
42 Venezuela
43 Other Latin America and Caribbean

214,264
11,826
66,954
483
25,735
55,888
5,217
2,944
1
2,075
198
212
24,637
1,306
2,521
1,013
910
10,733
1,612

230,438
9,270
77,921
1,315
23,749
68,749
4,353
2,784
1
1,688
197
297
23,376
1,921
1,740
771
929
9,652
1,726

230,1%'
6,928'
76,49c
4,006
17,994
87,429'
3,271
2,585
0
1,387
191
238
14,845'
7,998
1,471
663
786
2,569'
1,344'

228,445'
7,077'
71,048'
4,291
18,393
86,354'
3,373
2,531
1
1,499
152
265
15,144'
7,386
1,449
730
787
6,565'
1,40C

230,1%
6,928
76,490
4,006
17,994
87,429
3,271
2,585
0
1,387
191
238
14,845
7,998
1,471
663
786
2,569
1,344

231,387
6,781
79,834
1,771
17,956
94,213
3,225
2,555
0
1,361
193
243
14,629
2,194
1,534
656
767
2,118
1,357

237,514
6,655
81,148
3,602
17,935
97,500
3,237
2,528
0
1,361
191
171
14,817
1,599
1,502
691
626
2,254
1,698

233,032
6,535
73,338
3,823
18,319
100,882
3,170
2,441
0
1,325
199
224
15,077
1,298
1,479
697
588
2,168
1,468

238,128
6,420
76,321
4,646
16,525
103,606
3,050
2,334
0
1,326
208
1%
15,601
1,4%
1,475
670
620
2,209
1,424

44 Asia
China
Mainland
46
Taiwan
47 Hong Kong
48 India
49 Indonesia
50 Israel
51 Japan
52 Korea
53 Philippines
54 Thailand
,•
55 Middle East oil-exporting countries^
56 Other Asia

130,881

157,474

138,628'

142,191'

138,628

131,144

134,016

131,273

138,940

131,132

497
1,475
8,792
590
1,081
842
89,8%
6,007
1,261
1,791
12,0%
9,688

723
1,264
9,729
539
1,136
952
84,614
6,217
1,445
1,764
12,386
10,503

641
1,612
10,886
560
1,029
871
91,291
6,171
1,478
1,662
12,286
10,452

566
1,282
9,865
435
984
829
88,618
5,582
1,457
1,747
9,658
10,109

762
4,184
10,143
560
674
1,136
90,149
5,213
1,876
848
6,213
9,122

634
2,776
11,128
621
651
813
111,300
5,323
1,344
1,140
10,149
11,594

620
1,934
10,644
655
933
774
90,679'
5,712'
1,247
1,573
10,749'
13,107'

689
1,586
8,506
540
923
758
99,693'
5,511'
1,175
1,523
10,947
10,339'

620
1,934
10,644
655
933
774
90,679
5,712
1,247
1,573
10,749
13,107

565
1,776
8,250
624
926
964
90,266
5,959
1,230
1,587
8,966
10,031

57 Africa
58 Egypt
59 Morocco
60 South Africa
61 Zaire
62 Oil-exporting countries6
63 Other

5,718
507
511
1,681
17
1,523
1,479

5,890
502
559
1,628
16
1,648
1,537

5,445
380
513
1,525
16
1,486
1,525

5,705
383
519
1,726
19
1,492
1,566

5,445
380
513
1,525
16
1,486
1,525

5,439
384
514
1,517
17
1,467
1,539

5,424
314
511
1,518
21
1,478
1,582

5,488
304
538
1,628
17
1,452
1,547

5,355
304
538
1,627
18
1,372
1,497

5,464
305
603
1,641
18
1,365
1,533

64 Other countries
65 Australia
66 M o t h e r

2,413
1,520
894

2,354
1,781
573

1,893'
1,413'
479

1,726'
1,366'
360

1,893
1,413
479

2,238
1,672
566

2,063
1,547
517

2,079
1,468
611

2,093
1,570
524

1,957
1,470
487

67 Nonmonetary international and regional
organizations

2,071

3,862

4,793

5,151

4,793

2,542

3,844

2,501

2,306

1,934

1. Reporting banks include all kinds of depository institutions besides commercial banks, as well as some brokers and dealers.
2. Includes the Bank for International Settlements and Eastern European
countries not listed in line 23.
3. Comprises Bulgaria, Czechoslovakia, Hungary, Poland, and Romania.
4. Included in "Other Latin America and Caribbean" through March 1978.




5. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
6. Comprises Algeria, Gabon, Libya, and Nigeria.
7. Excludes the Bank for International Settlements, which is included in
"Other Western Europe."

A61

A62

International Statistics • September 1991

3.19 BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the
United States1
Payable in U.S. Dollars
Millions of dollars, end of period
1991r

1990
Type of claim

1988

1989

199C
Nov/

Dec/

Jan.

Feb.

Mar.

497,886
38,872
300,514
116,664
68,564
48,100
41,835

509,839
43,726
306,122
116,509
69,039
47,470
43,483

1 Total

538,689

593,087

576,790

2 Banks' own claims on foreigners
3 Foreign public borrowers
4 Own foreign offices2
5 Unaffiliated foreign banks
6
Deposits
7
Other
8 All other foreigners

491,165
62,658
257,436
129,425
65,898
63,527
41,646

534,492
60,511
296,011
134,885
78,185
56,700
43,085

510,078
41,797
303,054
117,799
65,211
52,588
47,428

47,524
8,289

58,594
13,019

66,712
14,375

66,712
14,375

30,983

42,030

42,030

14,592

10,308

10,308

12,899

13,659

13,659

45,509

43,645

40,788

n.a.

11,766

45,360

498,490
37,807
295,561
117,593
68,863
48,731
47,529

10,995

19,596

504,663
42,234
301,406
112,173
64,963
47,211
48,850

34,533

13,535

May"

62,572
17,044

25,700

Apr.

9 Claims of banks' domestic customers 3 ...
11

Outstanding collections and other

510,078
41,797
303,054
117,799
65,211
52,588
47,428

558,186

Negotiable and readily transferable

12

576,790
504,283
46,695
291,048
120,851
67,265
53,585
45,689

13 MEMO: Customer liability on

Dollar deposits in banks abroad,
reported by nonbanking business
enterprises in the United States5 . . . .

49,026

1. Data for banks' own claims are given on a monthly basis, but the data for
claims of banks' own domestic customers are available on a quarterly basis only.
Reporting banks include all kinds of depository institutions besides commercial
banks, as well as some brokers and dealers.
2. U.S. banks: includes amounts due from own foreign branches and foreign
subsidiaries consolidated in "Consolidated Report of Condition" filed with bank
regulatory agencies. Agencies, branches, and majority-owned subsidiaries of
foreign banks: principally amounts due from head office or parent foreign bank,
and foreign branches, agencies, or wholly owned subsidiaries of head office or

43,645

46,776

42,264

495,614
43,855
296,895
110,497
63,021
47,476
44,368

41,657

parent foreign bank.
3. Assets owned by customers of the reporting bank located in the United
States that represent claims on foreigners held by reporting banks for the account
of their domestic customers.
4. Principally negotiable time certificates of deposit and bankers acceptances.
5. Includes demand and time deposits and negotiable and nonnegotiable
certificates of deposit denominated in U.S. dollars issued by banks abroad. For
description of changes in data reported by nonbanks, see July 1979 Bulletin,
p. 550.

3.20 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States1
Payable in U.S. Dollars
Millions of dollars, end of period
1990
Maturity, by borrower and area

1987

1988

1991

1989
June'

1 Total
2
3
4
5
6
7

8
9
10
11
12
n

By borrower
Maturity of one year or less2
Foreign public borrowers
All other foreigners
Maturity over one year2
Foreign public borrowers
All other foreigners
By area
Maturity of one year or less
Europe
Canada
Latin America and Caribbean

Africa 3
All other
Maturity of over one year2
14 Europe
15 Canada
16 Latin America and Caribbean
17
18 Africa 3
19 All other

Dec/

Mar.

235,130

233,184

238,123

207,906

213,258

206,995

198,492

163,997
25,889
138,108
71,133
38,625
32,507

172,634
26,562
146,071
60,550
35,291
25,259

178,346
23,916
154,430
59,776
36,014
23,762

158,603
20,877
137,726
49,303
28,132
21,171

166,040
21,670
144,369
47,218
26,354
20,864

165,732
19,283
146,450
41,263
22,393
18,870

157,468
21,170
136,298
41,024
22,380
18,644

59,027
5,680
56,535
35,919
2,833
4,003

55,909
6,282
57,991
46,224
3,337
2,891

53,913
5,910
53,003
57,755
3,225
4,541

48,997
5,624
44,312
51,043
2,994
5,633

51,125
5,499
44,010
56,123
2,954
6,330

49,169
5,439
49,674
53,138
3,040
5,273

49,506
5,896
42,282
53,848
3,016
2,919

6,696
2,661
53,817
3,830
1,747
2,381

4,666
1,922
47,547
3,613
2,301
501

4,121
2,353
45,816
4,172
2,630
684

4,201
2,819
33,209
5,864
2,744
465

4,424
3,033
31,284
5,664
2,546
266

3,869
3,291
25,964
5,204
2,374
561

4,326
3,387
24,953
5,424
2,417
517

1. Reporting banks include all kinds of depository institutions besides commercial banks, as well as some brokers and dealers.




Sept/

2. Remaining time to maturity,
3. Includes nonmonetary international and regional organizations.

Nonbank-Reported

Data

A63

3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks 12
Billions of dollars, end of period

1987

1991

1990

1989
Area or country

1988
Mar.

June

Sept.

Dec.

Mar.

June

Sept.

Dec.

Mar.

382.4

346.3

346.3

340.0

346.5

338.8

333.4'

321.4'

331.6'

316.5'

325.5'

159.7
10.0
13.7
12.6
7.5
4.1
2.1
5.6
68.8
5.5
29.8

152.7
9.0
10.5
10.3
6.8
2.7
1.8
5.4
66.2
5.0
34.9

145.5
8.6
11.2
10.2
5.2
2.8
2.3
5.1
65.6
4.0
30.5

145.1
7.8
10.8
10.6
6.1
2.8
1.8
5.4
64.5
5.1
30.2

146.4
6.9
11.1
10.4
6.8
2.4
2.0
6.1
63.7
5.9
31.0

152.9
6.3
11.7
10.5
7.4
3.1
2.0
7.1
67.2
5.4
32.2

146.4'
6.6
10.4'
11.2
5.?
3.1
2.1
6.2r
63.9"
4.7'
32.2'

139.3'
6.2
10.2'
11.2
5.4
2.7
2.3
6.3'
59.8'
5.1'
30.1'

144.3'
6.5
11.1
11.1'
4.4'
3.8
2.3
5.6'
62.5'
5.1
32.0'

131.8'
5.9
10.3'
10.6'
5.0
3.C
2.1
4.4'
60.7'
5.9
23.8'

129.7
6.1
9.7
8.7
4.0
3.3
2.0
3.6
62.6
6.7
22.9

26.4
1.9
1.7
1.2
2.0
2.2
.6
8.0
2.0
1.6
2.9
2.4

21.0
1.5
1.1
1.1
1.8
1.8
.4
6.2
1.5
1.3
2.4
1.8

21.1
1.4
1.1
1.0
2.1
1.6
.4
6.6
1.3
1.1
2.2
2.4

21.2
1.7
1.4
1.0
2.3
1.8
.6
6.2
1.1
1.1
2.1
1.9

21.0
1.5
1.1
1.1
2.4
1.4
.4
6.9
1.2
1.0
2.1
2.1

20.7
1.5
1.1
1.0
2.5
1.4
.4
7.1
1.2
.7
2.0
1.6

23.(y
1.5
1.2'
1.1
2.6
1.7
.4
8.2r
1.3
1.0
2.0
2.1

22.4'
1.5
1.1
.9
2.7
1.4
.8
7.8'
1.4
1.1
1.9
1.8'

23.1'
1.6
1.1
.8
2.8
1.6'
.6
8.4'
1.6
.7
1.9
2.0

22.6'
1.4
1.1
.7
2.7
1.6
.6
8.3'
1.7
.9
1.8
1.8'

23.1
1.4
.9
1.0
2.5
1.5
.6
9.0
1.7
.8
1.8
1.9

17.4
1.9
8.1
1.9
3.6
1.9

16.6
1.7
7.9
1.7
3.4
1.9

16.2
1.6
7.9
1.7
3.3
1.7

16.1
1.5
7.5
1.9
3.4
1.6

16.2
1.5
7.4
2.0
3.5
1.9

17.1
1.3
7.0
2.0
5.0
1.7

15.5
1.2
6.1
2.1
4.3
1.8

15.3
1.1
6.0
2.0
4.4
1.8

14.4
1.1
6.0
2.3
3.3
1.7

12.8'
1.0
5.0
2.7
2.5'
1.7

17.2
.9
5.1
2.8
6.7
1.7

97.8

85.3

85.9

83.4

81.2

77.5

68.8

66.7'

67.1'

65.3'

66.<r

9.5
24.7
6.9
2.0
23.5
1.1
2.8

9.0
22.4
5.6
2.1
18.8
.8
2.6

8.5
22.8
5.7
1.9
18.3
.7
2.7

7.9
22.1
5.2
1.7
17.7
.6
2.6

7.6
20.9
4.9
1.6
17.2
.6
2.9

6.3
19.0
4.6
1.8
17.7
.6
2.8

5.6r
17.5
4.3
1.8
12.8'
.5
2.8'

5.2'
16.7
3.7
1.7
12.6
.5
2.3

5.<T
15.4
3.6
1.8
12.8'
.5
2.4

4.9
14.4
3.5
1.8
13.0'
.5
2.3

4.7
14.0
3.6
1.7
13.1
.5
2.3

.3
8.2
1.9
1.0
5.0
1.5
5.2
.7
.7

.3
3.7
2.1
1.2
6.1
1.6
4.5
1.1
.9

.5
4.9
2.6
.9
6.1
1.7
4.4
1.0
.8

.3
5.2
2.4
.8
6.6
1.6
4.4
1.0
.8

.3
5.0
2.7
.7
6.5
1.7
4.0
1.3
1.0

.3
4.5
3.1
.7
5.9
1.7
4.1
1.3
1.0

.3
3.8
3.5
.6
5.3
1.8
3.7
1.1
1.2

.2
3.6
3.6
.7
5.6
1.8
3.9
1.3
1.1

.2
4.0
3.6
.6
6.2
1.8
3.9
1.5
1.6

.2
3.5
3.3
.5
6.1'
1.9
3.8
1.5
1.7

.4
3.6
3.5
.5
6.7
2.0
3.7
1.6
2.1

Other Africa4

.6
.9
.0
1.3

.4
.9
.0
1.1

.5
.9
.0
1.1

.6
.9
.0
1.1

.5
.8
.0
1.0

.4
.9
.0
1.0

.4
.9
.0
.9

.5
.9
.0
.8

.4
.9
.0
.8

.4
.8
.0
1.0

.4
.8
.0
.8

Other

3.2
.3
1.8
1.1

3.6
.7
1.8
1.1

3.5
.7
1.7
1.1

3.4
.6
1.7
1.1

3.5
.8
1.7
1.1

3.5
.7
1.6
1.3

3.3'
.8
1.4
1.2

2.9
.4
1.4
1.1

2.7
.4
1.3
1.1

2.3
.2
1.2
.9

2.0
.3
1.0
.7

54.5
17.3
.6
13.5
1.2
3.7
.1
11.2
7.0
.0

44.2
11.0
.9
12.9
1.0
2.5
.1
9.6
6.1
.0

48.7
15.8
1.1
12.2
.9
2.2
.1
9.6
6.8
.0

43.2
11.0
.7
10.8
1.0
1.9
.1
10.4
7.3
.0

49.2
11.4
1.3
15.3
1.1
1.5
.1
10.7
7.8
.0

36.6
5.5
1.7
9.0
2.3
1.4
.1
9.7
7.0
.0

42.9
9.2
.9
10.9
2.6
1.3
.1
9.8
8.0
.0

40.0'
8.5
2.2
8.5
2.3
1.4
.1
10.0
7.0
.0

41.8
8.9
4.0
9.0
2.2
1.5
.1
8.7
7.5
.0

40^
2.8
4.3
10.4'
7.9
1.4
.1
7.4
6.5'
.0

49.1'
9.1
4.1
13.C
1.1
1.6
.1
11.3
8.7
.0

23.2

22.6

25.0

27.4

28.7

30.3

33.3

34.5

38.1

40.6

38.1'

1 Total

25 OPEC countries3

Latin America
34

Chile

37

Peru
Asia
China

41

India

43

Korea (South)

Africa

51

55

65

Others®

1. The banking offices covered by these data are the U.S. offices and foreign
branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks.
Offices not covered include (1) U.S. agencies and branches of foreign banks, and
(2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are
adjusted to exclude the claims on foreign branches held by a U.S. office or another
foreign branch of the same banking institution. The data in this table combine
foreign branch claims in table 3.14 (the sum of lines 7 through 10) with the claims
of U.S. offices in table 3.18 (excluding those held by agencies and branches of
foreign banks and those constituting claims on own foreign branches).
2. Beginning in June 1984 reported claims held by foreign branches have been
reduced by an increase in the reporting threshold for "shell" branches from $50




million to $150 million equivalent in total assets, the threshold now applicable to
all reporting branches.
3. This group comprises the 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).
4. Excludes Liberia.
5. Includes Canal Zone beginning December 1979.
6. Foreign branch claims only.
7. Includes New Zealand, Liberia, and international and regional organizations.

A64

International Statistics • September 1991

3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the
United States1
Millions of dollars, end of period
1989
Type and area or country

1987

1988

1990

1989'
Dec.

Mar.'

June'

Sept.'

Dec.

Mar"

1 Total

28,302

32,952

38,017

38,017'

38,076

39,092

43,885

41,788'

39,478

2 Payable in dollars
3 Payable in foreign currencies

22,785
5,517

27,335
5,617

33,211
4,805

33,211'
4,805'

33,705
4,371

34,595
4,496

38,744
5,140

37,406'
4,382'

35,445
4,033

By type
4 Financial liabilities
5 Payable in dollars
6 Payable in foreign currencies

12,424
8,643
3,781

14,507
10,608
3,900

17,690
13,830
3,860

n,69C
13,830'
3,860'

17,134
13,841
3,292

18,715
15,336
3,380

19,616
15,766
3,850

17,538'
14,306'
3,232'

16,485
13,630
2,856

15,878
7,305
8,573
14,142
1,737

18,445
6,505
11,940
16,727
1,717

20,327
7,626
12,701
19,381
945

20,327'
7,626'
12,701'
19,381'
945'

20,942
7,471
13,471
19,864
1,078

20,376
6,968
13,409
19,260
1,117

24,268
10,081
14,188
22,978
1,291

24,251'
10,007'
14,243
23,10C
1,150'

22,992
8,372
14,620
21,815
1,177

8,320
213
382
551
866
558
5,557

9,962
289
359
699
880
1,033
6,533

11,615
340
258
475
944
541
8,846

11,615'
340
258
475'
944'
541
8,846'

11,094
318
271
442
900
528
8,388

11,759
332
171
557
932
552
8,851

11,216
350
470
615
945
632
7,651

9,641'
344
638
630
973
576
5,944'

9,002
285
578
570
928
577
5,497

7 Commercial liabilities
8 Trade payables
9 Advance receipts and other liabilities
10 Payable in dollars
11 Payable in foreign currencies

12
13
14
15
16
17
18

By area or country
Financial liabilities
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom

19

Canada

360

388

601

601'

343

297

301

215

264

20
21
22
23
24
25
26

Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela

1,189
318
0
25
778
13
0

839
184
0
0
645
1
0

1,268
157
17
0
635
6
0

1,268
157
17
0
635
6
0

1,815
272
2
0
1,061
5
0

2,573
249
0
0
1,782
4
0

3,394
368
0
0
2,409
4
0

3,239
344
0
0
2,274
5
4

3,337
342
0
0
2,426
6
4

27
28
29

Asia
Japan
Middle East oil-exporting countries2

2,451
2,042
8

3,312
2,563
3

4,104
3,252
2

4,104'
3,252'
2

3,775
2,737
3

4,027
2,824
5

4,223
3,088
4

4,032'
2,853'
5

3,878
2,805
1

30
31

Africa
Oil-exporting countries3

4
1

2
0

2
0

2
0

3
0

3
1

2
0

2
0

2
0

32

All other4

100

4

100

100

103

55

479

409

2

5,516
132
426
909
423
559
1,599

7,319
158
455
1,699
587
417
2,079

8,952
179
878
1,393
699
641
2,620

8,952'
179
878'
1,393'
699
641'
2,620'

9,198
233
888
1,174
688
604
2,926

8,560
297
1,049
990
608
628
2,439

9,834
248
1,263
1,052
701
728
2,777

10,292'
285
1,26C
1,264'
84C
759'
2,791'

9,782
248
1,209
1,375
715
668
2,713

1,301

1,217

1,124

1,124

1,151

1,179

1,263

1,246'

1,226

864
18
168
46
19
189
162

1,090
49
286
95
34
217
114

1,187
41
308
100
27
304
154

1,187
41
308
100
27
304
154

1,304
37
516
116
18
241
85

1,279
22
412
106
29
285
119

1,555
18
371
126
42
506
120

1,598'
12
538
137
30
421'
121

1,703
21
494
208
35
296
283

6,565
2,578
1,964

6,915
3,094
1,385

7,193
2,917
1,401

7,193'
2,917'
1,401

7,019
2,748
1,393

7,084
3,189
1,125

8,892
3,283
2,321

8,928'
3,606
1,701

8,027
3,284
1,236

574
135

576
202

844
307

844
307

753
263

885
277

1,315
593

789
422

648
225

1,057

1,328

1,027

1,027

1,517

1,390

1,408

1,397

1,606

33
34
35
36
37
38
39

Commercial liabilities
Europe
Belgium-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
49
50

Asia
Japan
Middle East oil-exporting countries •

51
52

Africa
Oil-exporting countries3

53

All other4

1. For a description of the changes in the International Statistics tables, see
July 1979 Bulletin, p. 550.
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).




3. Comprises Algeria, Gabon, Libya, and Nigeria.
4. Includes nonmonetary international and regional organizations.
5. Revisions include a reclassification of transactions, which also affects the
totals for Asia and the grand totals.

Nonbank-Reported
3.23 CLAIMS ON UNAFFILIATED FOREIGNERS
United States1

Data

A65

Reported by Nonbanking Business Enterprises in the

Millions of dollars, end of period

1987

1988

1991

1990

1989
Type, and area or country

1989'
Mar. p

Dec/
1 Total

31,542

Sept/

Dec.

31,542

29,956

31,716

31,086

33,487'

34,903

28,502
2,462

31,654
2,381

29,209
2,334

29,209
2,334

27,802
2,154

29,398
2,318

28,691
2,395

31,038'
2,449'

Payable in dollars
Payable in foreign currencies
Other financial claims
Payable in dollars
Payable in foreign currencies

20,363
14,894
13,765
1,128
5,470
4,656
814

21,869
15,643
14,544
1,099
6,226
5,450
777

17,721
10,400
9,473
927
7,322
6,568
754

17,721
10,400
9,473
927
7,322
6,568
754

16,622
10,461
9,583
878
6,161
5,471
690

18,079
9,885
8,815
1,070
8,194
7,460
733

16,638
10,301
9,107
1,193
6,338
5,685
652

18,109
11,473
10,504
969
6,636
5,769
866

18,540
11,444
10,552
891
7,096
6,380
716

Advance payments and other claims
Payable in dollars
Payable in foreign currencies

10,600
9,535
1,065
10,081
519

12,166
11,091
1,075
11,660
505

13,821
12,203
1,618
13,168
653

13,821
12,203
1,618
13,168
653

13,334
11,704
1,630
12,748
586

13,637
11,909
1,728
13,123
514

14,448
12,653
1,795
13,898
549

15,378r
13,43c
l,948r
14,764'
613'

16,364
14,312
2,052
15,776
587

9,531
7
332
102

10,279
18
203
120

7,044
28
153
192

7,044
28
153
192

6,982
22
203
508

9,619
126
141
93

7,989
27
153
102

8,005
76
366
371

9,462
86
240
481

350
65
8,467

348
218
9,039

303
95
6,035

303
95
6,035

316
122
5,589

340
137
8,556

329
176
6,976

333
325
6,276

448
405
7,555

By type

13
14
15

34,035

June'

32,708
2,195

2 Payable in dollars
3 Payable in foreign currencies

6
7
8
9
10

30,964

Mar/

By area or country
17

Belgium-Luxembourg

19

Germany

20

Netherlands

22

United Kingdom

23

Canada

2,844

2,325

1,904

1,904

1,758

2,036

1,989

2,887

1,833

24

Latin America and Caribbean

7,012
1,994
7
63
4,433
172
19

8,160
1,846
19
47
5,763
151
21

7,590
1,516
7
224
5,431
94
20

7,590
1,516
7
224
5,431
94
20

6,984
1,662
4
79
4,824
152
21

5,479
992
3
84
4,003
153
20

5,661
977
4
70
4,210
158
23

5,751
1,261
3
68
4,031
160
25

5,893
1,640
6
68
3,773
155
28

879
605
8

844
574
5

847
456
8

847
456
8

806
459
7

843
486
6

771
472
9

1,213
875
8

1,027
692
11

65
7

106
10

140
12

140
12

67
11

62
8

49
7

37
0

62
3

33

155

195

195

25

41

179

215

262

4,180
178
650
562
133
185
1,073

5,181
189
672
669
212
344
1,324

6,194
242
963
696
479
305
1,572

6,194
242
963
696
479
305
1,572

6,046
220
964
702
453
270
1,689

6,082
209
924
669
479
235
1,583

6,502
189
1,206
638
492
301
1,674

27
28

Brazil
British West Indies

30

Venezuela

33

Middle East oil-exporting countries2

35

Oil-exporting countries3

36

All other 4

37
38

Europe
Belgium-Luxembourg

43

United Kingdom

44

Canada

45

Latin America and Caribbean

48
49

Brazil
British West Indies

54

Middle East oil-exporting countries2

56

Oil-exporting countries 3

57

All other 4

7,015
221
1,265
855
609
331
1,645

936

983

1,079

1,079

1,148

1,147

1,148

1,05C

1,179

1,930
19
170
226
26
368
283

2,241
36
230
299
22
461
227

2,178
57
323
293
36
510
147

2,178
57
323
293
36
510
147

2,063
22
243
232
38
526
189

2,207
17
284
235
47
582
224

2,399
25
340
253
35
651
225

2,32C
14
246'
323'
4C
646'
19C

2,299
15
232
307
49
656
190

2,915
1,158
450

2,993
946
453

3,560
1,197
518

3,560
1,197
518

3,279
1,074
434

3,446
1,097
417

3,594
1,221
408

4,032'
1,418'
459

5,009
2,456
548

401
144

435
122

419
108

419
108

425
89

390
97

373
72

488
67

390
68

238

333

392

392

372

365

432

395'

472

1. For a description of the changes in the International Statistics tables, see
July 1979 Bulletin, p. 550.
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).




7,094'
211
1,302'
80C
552'
29911,794'

3. Comprises Algeria, Gabon, Libya, and Nigeria.
Includes nonmonetary international and regional organizations.

A66

International Statistics • September 1991

3.24 FOREIGN TRANSACTIONS IN SECURITIES
Millions of dollars
1991
Transactions, and area or country

1989

1991r

1990

r

1990

Jan.May

Nov.

Dec/

Feb.

Jan.

Mar.

Apr.

May"

21,691
20,615

21,763
19,393

20,573
17,437

19,214
15,884

U.S. corporate securities
STOCKS

214,061
204,114

1 Foreign purchases
2 Foreign sales
3 Net purchases, or sales ( - )

93,501
84,384

12,555'"
13,368

13,316
14,573

10,259
11,056

Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East'
Other Asia
Japan
Africa
Other countries

18 Nonmonetary international and
regional organizations

9,946

-15,142

9,117

-812'

-1,257

-797

1,076

2,370

3,137

3,331

10,180

4 Foreign countries
5
6
7
8
9
10
11
12
13
14
15
16
17

173,231
188,373

-15,213

8,926

-808'

-1,267

-798

1,020

2,369

3,059

3,276

481
-708
-830
79
-3,277
3,691
-881
3,042
3,531
3,577
3,330
131
299

-8,498
-1,234
-368
-398
-2,867
-2,992
892
-1,333
-2,435
-3,477
-2,891
-63
-298

1,952
141
-281
-73
34
1,431
1,600
1,533
391
3,436
1,106
100
-86

-582
-80
-14
21
-169
-282
216
2%r
-430
-420
-194
-5
117

-487
-49
-144
-46
-263
149
279
-280
-251
-406
-382
-14
-108

-600
-24
-114
-142
-222
-83
25
233
-279
-1%
-271
33
-13

-1,245
27
-204
-104
-943
27
469
937
675
432
-366
31
-279

846
100
0
119
357
121
284
3
-30
1,223
-2
16
28

1,734
-45
13
30
552
781
110
120
-182
1,149
1,076
0
128

1,217
83
24
25
290
586
712
240
207
828
669
21
51

-234

71

191

9

2

56

1

78

55

-5

BONDS 2

120,550

118,755

56,743

20 Foreign sales

19 Foreign purchases

87,376

101,703

48,976

21 Net purchases, or sales ( - )

33,174

17,052

22 Foreign countries

32,821

23
24
25
26
27
28
29
30
31
32
33
34
35

19,064
372
-238
850
-511
18,123
1,116
3,686
-182
9,025
6,292
56
57

Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East'
Other Asia
Japan
Africa
Other countries

36 Nonmonetary international and
regional organizations

353

11,205

10,216

8,859

8,468

14,802

10,291

14,323

1,111'

7,890

8,575

9,269

10,608

8,945

11,580

7,768

3,429 R

2,326

284

-801

4,194

1,346

2,744

17,523

7,751

3,456

2,329

103

-723

4,093

1,453

2,825

10,3%
373
-377
172
284
10,703
1,906
4,289
76
1,104
747
%
-344

5,165
611
776
173
602
2,493
1,182
821
48
533
560
20
-18

2,046
24
-59
52
148
1,727
93
343
-35
1,033
812
6
-30

1,361
39
-41
110
45
1,680
-85
495
74
486
399
-9
7

-130
31
-54
47
360
-102
71
-17
69
131
308
-15
-5

-1,065
68
78
1
-217
-885
106
439
-2
-209
-214
10
-2

3,271
392
238
20
318
1,633
385
351
-13
81
162
7
10

1,334
34
114
84
-21
900
247
188
-25
-301
-240
8
3

1,755
86
400
21
162
948
374
-142
20
831
544
10
-23

-107

-81

-471

16

-If

-2

181

-78

102

Foreign securities
37 Stocks, net purchases, or sales ( - ) 3

-13,120

-8,952

-12,718

-1,831

-404

-3,177

-3,305

-2,520

-3,313

109,792
122,912

122,600
131,552

44,381
57,100

10,060
8,991'

7,263
9,094

6,230
6,634

10,561
13,738

11,095
14,400

7,937
10,457

8,558
11,871

40 Bonds, net purchases, or sales ( - )
41 Foreign purchases
42 Foreign sales

-5,943
234,320
240,263

-22,322
314,466
336,788

-5,687
145,957
151,644

176'
32,8%'
32,721'

-4,745
33,391
38,136

-173
27,138
27,312

-1,945
37,202
39,146

-991
40,161
41,152

-589
20,785
21,374

-1,989
20,671
22,660

43 Net purchases, or sales ( - ) , of stocks and bonds —

-19,063

-31,273

-18,405

1,244'

-6,576

-577

-5,122

-4,296

-3,109

-5,302

44 Foreign countries

-19,101

-28,600

-16,553

U W

-5,834

-538

-5,166

-2,845

-3,232

-4,773

45
46
47
48
49
50

-17,721
-4,180
426
2,532
93
-251

-7,999
-7,502
-8,959
-3,824
-137
-179

-4,714
-4,601
-1,184
-6,211
68
88

2,017
-1,740
283
712'
-69
16'

-898
-655
-2,810
-1,572
28
74

328
-573
351
-778
22
113

-3,139
-797
314
-1,793
30
218

-340
3
114
-2,494
2
-130

351
-2,290
-311
-987
10
-4

-1,913
-943
-1,652
-159
4
-109

38

-2,673

-1,852

44

-1,451

123

-529

38
39

Foreign purchases
Foreign sales3

Europe
Canada
Latin America and Caribbean
Africa
Other countries

51 Nonmonetary international and
regional organizations

1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait,
Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States).
2. Includes state and local government securities, and securities of U.S.
government agencies and corporations. Also includes issues of new debt securi-




25

-742

-39

ties sold abroad by U.S. corporations organized to finance direct investments
abroad.
3. As a result of the merger of a U.S. and U.K. company in July 1989, the
former stockholders of the U.S. company received $5,453 million in shares of the
new combined U.K. company. This transaction is not reflected in the data above.

Interest and Exchange Rates

A67

3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions
Millions of dollars
1991
Country or area

1989

1990'

Jan.May

1991'

1990'
Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

Mayp

Transactions, net purchases or sales ( - ) during period1
1 Estimated total2

54,203

19,687

19,867

6,410

5,554

3,144

12,922 -15,574

2,954

16,421

2 Foreign countries2

52,301

19,524

20,462

5,999

5,557

4,776

11,462

-14,755

2,575

16,404

3 Europe2
4 Belgium-Luxembourg
Germany2
6 Netherlands
7 Sweden
8 Switzerland
9 United Kingdom
10 Other Western Europe
11 Eastern Europe
12 Canada

36,286
1,048
7,904
-1,141
693
1,098
20,198
6,508
-21
698

19,065
10
5,829
1,077
1,152
112
-1,338
12,202
13
-4,614

5,921
681
-4,689
-745
-712
386
5,259
5,733
8
124

2,344
-64
1,849
-249
276
-6
-1,527
2,069
-5
-468

4,258
-105
571
625
721
200
240
2,006
0
155

3,356
260
-542
300
-661
170
2,829
995
6
-795

2,933
149
-1,691
-85
43
139
-54
4,432
0
-171

-4,535
115
-3,340
-607
-244
470
513
-1,442
0
182

-1,353
37
-549
-292
-410
-622
265
214
5
566

5,520
121
1,433
-61
560
230
1,706
1,534
-3
342

13 Latin America and Caribbean
14 Venezuela
IS Other Latin America and Caribbean
16 Netherlands Antilles
17
18 Japan
19
20 M o t h e r

464
14,980
311
33
4,190
-322
475
10,757
13,297 -11,062
1,681 -14,895
116
313
1,439
842

13,968
-144
10,575
3,537
386
-5,524
205
-142

4,502
132
1,080
3,290
-930
-1,153
8
543

830
1
428
401
-72
-2,407
-3
389

-4,984
-153
-426
-4,405
7,019
2,244
78
102

2,802
-1
1,593
1,210
5,517
1,915
110
269

121
6
765
-650
-9,984
-7,016
0
-540

5,547
2
2,955
2,590
-2,179
-3,379
16
-22

10,481
2
5,687
4,793
12
711
1
48

21 Nonmonetary international and regional organizations
22 International
23 Latin America regional
Memo
24 Foreign countries2
25 Official institutions
26 Other foreign2
27
28

Oil-exporting countries
Middle East3
Africa4

1,902
1,473
231

163
287
-2

-594
-1,099
-2

411
260
0

-4
-119
92

-1,633
-1,571
-202

1,461
1,104
156

-819
-845
5

379
171
225

17
42
-186

52,301
26,840
25,461

19,524
23,169
-3,645

20,462
626
19,835

5,999
5,046
953

5,557
7,106
-1,549

4,776
2,707
2,069

11,462
7,009
4,453

-14,755
-12,000
-2,755

2,575
883
1,692

16,404
2,027
14,377

8,148
-1

-387
0

-1,392
20

-878
0

1,014
0

523
0

644
21

-1,485
-6

-513
5

-562
0

1. Estimated official and private transactions in marketable U.S. Treasury
securities with an original maturity of more than 1 year. Data are based on
monthly transactions reports. Excludes nonmarketable U.S. Treasury bonds and
notes held by official institutions of foreign countries.
2. Includes U.S. Treasury notes, denominated in foreign currencies, publicly
issued to private foreign residents.




3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
4. Comprises Algeria, Gabon, Libya, and Nigeria,

A68

International Statistics • September 1991

3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS
Percent per year
Rate on July 31, 1991

Rate on July 31, 1991
Country
Percent

Oct. 1989
June 1991
July 1991
Jan. 1991

Percent

Month
effective

6.5
7.5
8.94
9.50

Country

Germany, Fed. Rep. o f . . .
Italy
Netherlands

1. As of the end of February 1981, the rate is that at which the Bank of France
discounts Treasury bills for 7 to 10 days.
2. Minimum lending rate suspended as of Aug. 20, 1981.
NOTE. Rates shown are mainly those at which the central bank either discounts

Month
effective

9.0
6.50
11.5
5.5
7.75

Rate on July 31, 1991
Country

Mar. 1990
Feb. 1991
May 1991
July 1991
Feb. 1991

Percent

Month
effective

10.50
6.0

July 1990
Oct. 1989

or makes advances against eligible commercial paper and/or government 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 the
central bank transacts the largest proportion of its credit operations.

3.27 FOREIGN SHORT-TERM INTEREST RATES
Averages of daily figures, percent per year
1991
Country, or type

1988

1989

1990
Jan.

1
i

}

4
S
6
7
8 Italy
9
10

Feb.

Mar.

Apr.

May

June

July

7.85
10.28
9.63
4.28
2.94

9.16
13.87
12.20
7.04
6.83

8.16
14.73
13.00
8.41
8.71

7.23
13.91
11.13
9.25
8.44

6.60
13.20
10.37
8.%
7.81

6.44
12.33
9.97
8.99
8.17

6.11
11.90
9.67
9.08
8.26

5.94
11.48
9.12
8.98
8.10

6.08
11.21
8.83
8.95
7.89

6.01
11.04
8.78
9.06
7.74

4.72
7.80
11.04
6.69
4.43

7.28
9.27
12.44
8.65
5.39

8.57
10.20
12.11
9.70
7.75

9.31
10.14
13.13
9.91
8.18

9.01
9.64
13.31
9.51
8.01

9.04
9.34
12.52
9.28
8.09

9.11
9.21
11.90
9.20
7.%

9.05
9.13
11.46
9.00
7.82

9.08
9.59
11.48
9.08
7.79

9.09
9.46
11.74
9.12
7.56

NOTE. Rates are for three-month interbank loans except for Canada, finance company paper; Belgium, three-month Treasury bills; and Japan, CD rate.




Interest and Exchange Rates

A69

3.28 FOREIGN EXCHANGE RATES1
Currency units per dollar

Country/currency

1988

1989
Apr.

Feb.
1
2
3
4
5
6

Australia/dollar^
Austria/schilling
Belgium/franc
Canada/dollar
China, P.R./yuan
Denmark/krone

7
8
9
10
11
12
13

Finland/markka
France/franc
Germany/deutsche mark
Greece/drachma
Hong Kong/dollar
India/rupee
Ireland/punt2

14
15
16
17
18
19
20

Italy/lira
Japan/yen
Malaysia/ringgit
Netherlands/guilder
New Zealand/dollar2
Norway/krone
Portugal/escudo

21
22
23
24
25
26
27
28
29
30

Singapore/dollar
South Africa/rand
South Korea/won
Spain/peseta
Sri Lanka/rupee
Sweden/krona
Switzerland/franc
Taiwan/dollar
Thailand/baht
United Kingdom/pound2
MEMO

31 United States/dollar 3 ...

78.351
10.416
30.475
1.1549
5.2352
5.6953

77.107
11.341
33.206
1.1572
5.2352
6.1886

77.947
11.977
35.017
1.1535
5.2767
6.5163

77.427
12.104
35.363
1.1499
5.3257
6.5793

75.982
12.538
36.689
1.1439
5.3667
6.8634

3.5941
5.0398
1.4805
158.82
7.7943

3.8512
5.4862

7.8008
16.213
141.80

3.8300
5.4467
1.6166
158.59
7.7899
17.492
165.76

174.16
7.7911
19.243
157.43

3.9925
5.7540
1.7027
184.76
7.7939
19.906
157.12

4.0431
5.8282
1.7199
188.14
7.7798
20.519
155.68

4.2189
6.0483
1.7828
195.03
7.7341
21.062
142.66

1,302.39
128.17
2.6190
1.9778
65.560
6.5243
144.27

1,372.28
138.07
2.7079
2.1219
59.561
6.9131
157.53

1,198.27
145.00
2.7057
1.8215
59.619
6.2541
142.70

1,111.19
130.54
2.6969
1.6689
5.7919
130.45

1,201.96
137.39
2.7418
1.8174
59.389
6.2899
140.97

1,261.57
137.11
2.7498
1.9186
58.909
6.6198
148.00

1,275.67
138.22
2.7573
1.9379
58.647
6.6953
149.59

1,325.09
139.75
2.7810
2.0085
57.645
6.9542
156.37

2.0133
2.2770
734.52
116.53
31.820
6.1370
1.4643
28.636
25.312
178.13

1.9511
2.6214
674.29
118.44
35.947
6.4559
1.6369
26.407
25.725
163.82

1.8134
2.5885
710.64
101.96
40.078
5.9231
1.3901
26.918
25.609
178.41

1.7180
2.5412
723.97
92.61
40.598
5.5516
1.2685
27.109
25.141
196.41

1.7589
2.6636
727.73
100.21
40.750
5.9081
1.3918
27.311
25.447
182.14

1.7688
2.7325
728.36
105.08
40.836
6.1145
1.4399
27.333
25.578
174.97

1.7688
2.7975
727.99
106.45
40.988
6.1578
1.4574
27.282
25.645
172.38

1.7782
2.8625
727.97

92.72

98.60

89.09

82.12

8.12

91.41

92.29

95.18

78.409
12.357
36.785
1.2306
3.7314
6.7412

79.186
13.236
39.409
1.1842
3.7673
7.3210

78.069
11.331
33.424

4.1933
5.9595
1.7570
142.00
7.8072
13.900
152.49

4.2963
6.3802

1.8808
162.60

1.1668

4.7921
6.1899

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) release. For address, see
inside front cover.
2. Value in U.S. cents.
3. Index of weighted-average exchange value of U.S. dollar against the




May

18.860

179.81

60.120

1.6122

111.18

41.211
6.4235
1.5297
27.166
25.766
164.97

currencies of 10 industrial countries. The weight for each of the 10 countries is the
1972-76 average world trade of that country divided by the average world trade of
all 10 countries combined. Series revised as of August 1978 (see Federal Reserve
Bulletin, vol. 64, August 1978, p. 700).

A71

Guide to Tabular Presentation,
Statistical Releases, and Special Tables
GUIDE TO TABULAR PRESENTATION

Symbols and Abbreviations
c
e
p
r
*

Corrected
Estimated
Preliminary
Revised (Notation appears on column heading when about
half of thefiguresin 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)

0
n.a.
n.e.c.
IPCs
REITs
RPs
SMSAs

Calculated to be zero
Not available
Not elsewhere classified
Individuals, partnerships, and corporations
Real estate investment trusts
Repurchase agreements
Standard metropolitan statistical areas
Cell not applicable

General Information
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 obliga-

STATISTICAL RELEASES—List

tions of the Treasury. "State and local government" also includes municipalities, special districts, and other political
subdivisions.
In some of the tables, details do not add to totals because of
rounding.

Published Semiannually, with Latest BULLETIN Reference

Anticipated schedule of release dates for periodic releases
SPECIAL

Issue
June 1991

Page
A82

Issue

Page

TABLES-Published Irregularly, with Latest BULLETIN Reference

Title and Date
Assets and liabilities of commercial banks
June 30,1990
September 30, 1990
December 31,1990
March 31,1991

February 1991
March 1991
May 1991
August 1991

A72
A72
A72
A72

Terms of lending at commercial banks
May 1990
August 1990
November 1990
February 1991

December
December
April
August

1990
1990
1991
1991

A72
All
A73
A78

Assets and liabilities of U.S. branches and agencies of foreign banks
March 31,1990
June 30,1990
September 30,1990
December 31,1990

September 1990
December 1990
February 1991
June 1991

A78
A 82
A78
A72

Pro forma balance sheet and income statements for priced service operations
September 30,1989
March 31,1990
June 30,1990
September 30,1990

March 1990
September 1990
October 1990
August 1991

A88
A82
A72
A82




A72

Federal Reserve Board of Governors
and Official Staff
ALAN GREENSPAN, Chairman
DAVID W . MULLINS, JR., Vice Chairman

WAYNE D . ANGELL
EDWARD W . KELLEY, JR.

OFFICE OF BOARD MEMBERS

DIVISION OF INTERNATIONAL FINANCE

JOSEPH R . COYNE, Assistant to the Board
DONALD J . W I N N , Assistant to the Board
THEODORE E . ALLISON, Assistant to the Board for Federal

EDWIN M . TRUMAN, Staff Director
LARRY J. PROMISEL, Senior Associate Director
CHARLES J. SDEGMAN, Senior Associate Director
DAVID H . HOWARD, Deputy Associate Director
DONALD B . ADAMS, Assistant Director
DALE W . HENDERSON, Assistant Director
PETER HOOPER I I I , Assistant Director
KAREN H . JOHNSON, Assistant Director
RALPH W . SMITH, JR. , Assistant Director

Reserve System Affairs
Special Assistant to the Board
Special Assistant to the Board

BOB STAHLY MOORE,
DIANE E . WERNEKE,

LEGAL DIVISION
J . VIRGIL MATTINGLY, JR., General Counsel
SCOTT G . ALVAREZ, Associate General Counsel
RICHARD M . ASHTON, Associate General Counsel
OLIVER IRELAND, Associate General Counsel
RICKI R . TIGERT, Associate General Counsel
KATHLEEN M . O ' D A Y , Assistant General Counsel
MARYELLEN A . BROWN, Assistant to the General Counsel

OFFICE OF THE SECRETARY
WILLIAM W . WILES, Secretary
JENNIFER J . JOHNSON, Associate
BARBARA R . LOWREY, Associate

Secretary
Secretary

DIVISION OF CONSUMER
AND COMMUNITY AFFAIRS
GRIFFITH L . GARWOOD, Director
GLENN E . LONEY, Assistant Director
ELLEN MALAND, Assistant Director
DOLORES S . SMITH, Assistant Director

DIVISION OF BANKING
SUPERVISION AND REGULATION
WILLIAM TAYLOR, StaffDirector
D O N E . KLINE, Associate Director
FREDERICK M . STRUBLE, Associate

Director
WILLIAM A . RYBACK, Deputy Associate Director
STEPHEN C . SCHEMERING, Deputy Associate Director
RICHARD SPILLENKOTHEN, Deputy Associate Director
HERBERT A . BIERN, Assistant Director
JOE M . CLEAVER, Assistant Director
ROGER T. COLE, Assistant Director
JAMES I. GARNER, Assistant Director
JAMES D . GOETZINGER, Assistant Director
MICHAEL G . MARTINSON, Assistant Director
ROBERT S . PLOTKIN, Assistant Director
SIDNEY M . SUSSAN, Assistant Director
LAURA M . HOMER, Securities Credit Officer




DIVISION OF RESEARCH AND STATISTICS
MICHAEL J. PRELL, Director
EDWARD C . ETTIN, Deputy Director
THOMAS D . SIMPSON, Associate Director
LAWRENCE SLIFMAN, Associate Director
DAVID J. STOCKTON, Associate Director
MARTHA BETHEA, Deputy Associate Director
PETER A . TINSLEY, Deputy Associate Director
MYRON L . KWAST, Assistant Director
PATRICK M . PARKINSON, Assistant Director
MARTHA S . SCANLON, Assistant Director
JOYCE K . ZICKLER, Assistant Director
LEVON H . GARABEDLAN, Assistant Director

(Administration)
DIVISION OF MONETARY AFFAIRS
DONALD L . KOHN, Director
DAVID E . LINDSEY, Deputy Director
BRIAN F. MADIGAN, Assistant Director
RICHARD D . PORTER, Assistant Director
NORMAND R . V. BERNARD, Special Assistant

to the Board

OFFICE OF THE INSPECTOR GENERAL
BRENT L . BOWEN,
BARRY R . SNYDER,

Inspector General
Assistant Inspector General

A73

JOHN P. LAWARE

OFFICE OF
STAFF DIRECTOR FOR MANAGEMENT
S . DAVID FROST, StaffDirector
WILLIAM SCHNEIDER, Special Assignment:

Project Director, National Information Center
PORTIA W . THOMPSON, Equal Employment Opportunity
Programs Officer
DIVISION OF HUMAN RESOURCES
MANAGEMENT
DAVID L . SHANNON, Director
JOHN R . WEIS, Associate Director
ANTHONY V, DIGIOIA, Assistant Director
JOSEPH H . HAYES, JR. , Assistant Director
FRED HOROWITZ, Assistant Director

OFFICE OF THE CONTROLLER
GEORGE E . LIVINGSTON, Controller
STEPHEN J. CLARK, Assistant Controller

(Programs and

Budgets)
DARRELL R . PAULEY,

Assistant Controller (Finance)

DIVISION OF SUPPORT SERVICES
ROBERT E . FRAZIER, Director
GEORGE M . LOPEZ, Assistant Director
DAVID L . WILLIAMS, Assistant Director

OFFICE OF THE DIRECTOR FOR
INFORMATION RESOURCES MANAGEMENT
STEPHEN R . MALPHRUS, Director
MARIANNE M . EMERSON, Assistant Director
EDWARD T. MULRENIN, Assistant Director

DIVISION OF HARDWARE AND SOFTWARE
SYSTEMS
BRUCE M , BEARDSLEY, Director
DAY W . RADEBAUGH, JR. , Assistant Director
ELIZABETH B . RIGGS, Assistant Director

DIVISION OF APPLICATIONS DEVELOPMENT AND
STATISTICAL SERVICES
WILLIAM R , JONES, Director
ROBERT J. ZEMEL, Associate Director
Po KYUNG KIM, Assistant Director
RAYMOND H . MASSEY, Assistant Director
RICHARD C . STEVENS, Assistant Director




DIVISION OF RESERVE BANK OPERATIONS
AND PAYMENT SYSTEMS
CLYDE H . FARNSWORTH, JR., Director
DAVID L . ROBINSON,

Deputy Director (Finance and

Control)
BRUCE J. SUMMERS,

Deputy Director (Payments and

Automation)
CHARLES W . BENNETT, Assistant Director
JACK DENNIS, JR., Assistant Director
EARL G . HAMILTON, Assistant Director
JEFFREY C . MARQUARDT, Assistant Director
JOHN H . PARRISH, Assistant Director
LOUISE L . ROSEMAN, Assistant Director
FLORENCE M . YOUNG, Assistant Director

74

Federal Reserve Bulletin • September 1991

Federal Open Market Committee
and Advisory Councils
FEDERAL OPEN MARKET COMMITTEE

MEMBERS

ALAN GREENSPAN,

Chairman

WAYNE D . ANGELL
ROBERT P. BLACK
ROBERT P. FORRESTAL

E . GERALD CORRIGAN,

SILAS KEEHN
EDWARD W . KELLEY, JR.

Vice Chairman

JOHN P. LAWARE
DAVID W . MULLINS, JR.
ROBERT T. PARRY

ALTERNATE MEMBERS

ROGER GUFFEY
W . LEE HOSKINS

THOMAS C . MELZER

JAMES H . OLTMAN
RICHARD F. SYRON

STAFF
DONALD L . KOHN, Secretary and Economist
NORMAND R . V . BERNARD, Deputy Secretary
JOSEPH R . COYNE, Assistant Secretary
GARY P. GILLUM, Assistant Secretary
J. VIRGIL MATTINGLY, JR., General Counsel
ERNEST T. PATRIKIS, Deputy General Counsel
MICHAEL J. PRELL, Economist
EDWIN M . TRUMAN, Economist
JACK H . BEEBE, Associate Economist

J. ALFRED BROADDUS, JR. , Associate Economist
RICHARD G . DAVIS, Associate Economist
DAVID E . LINDSEY, Associate Economist
LARRY J. PROMISEL, Associate Economist
KARL A . SCHELD, Associate Economist
CHARLES J. SIEGMAN, Associate Economist
THOMAS D . SIMPSON, Associate Economist
LAWRENCE SLIFMAN, Associate Economist
SHEILA T. TSCHINKEL, Associate Economist

PETER D . STERNLIGHT, Manager for Domestic Operations, System Open Market Account
SAM Y. CROSS, Manager for Foreign Operations, System Open Market Account

FEDERAL ADVISORY COUNCIL

PAUL HAZEN, President
LLOYD P. JOHNSON, Vice President

B . KENNETH WEST, Seventh District
DAN W . MITCHELL, Eighth District
LLOYD P. JOHNSON, Ninth District
JORDAN L . HAINES, Tenth District
RONALD G . STEINHART, Eleventh District
PAUL HAZEN, Twelfth District

IRA STEPANIAN, First District
CHARLES S . SANFORD, JR., Second District
TERRENCE A . LARSEN, Third District
JOHN B . MCCOY, Fourth District
EDWARD E . CRUTCHFIELD, Fifth District

E.B. Robinson, Jr., Sixth District




Secretary
Associate Secretary

HERBERT V. PROCHNOW,
WILLIAM J. KORSVDC,

A75

CONSUMER ADVISORY COUNCIL

JAMES W . HEAD, Berkeley, California, Chairman
LINDA K . PAGE, Columbus, Ohio, Vice Chairman

VERONICA E . BARELA, Denver, Colorado
GEORGE H. BRAASCH, Oakbrook, Illinois
TOYE L . BROWN, Boston, Massachusetts
CLIFF E . COOK, Tacoma, Washington
R . B . (JOE) DEAN, JR., Columbia, South Carolina
DENNY D . DUMLER, Denver, Colorado
WILLIAM C . DUNKELBERG, Philadelphia, Pennsylvania
JAMES FLETCHER, Chicago, Illinois
GEORGE C. GALSTER, Wooster, Ohio
E. THOMAS GARMAN, Blacksburg, Virginia
DONALD A . GLAS, Hutchinson, Minnesota
DEBORAH B . GOLDBERG, Washington, D . C .
MICHAEL M . GREENFIELD, St. Louis, Missouri
JOYCE HARRIS, Madison, Wisconsin

JULIA E . HILER, Marietta, Georgia
HENRY JARAMILLO, Belen, New Mexico
BARBARA KAUFMAN, San Francisco, California
KATHLEEN E . KEEST, Boston, Massachusetts
COLLEEN D. HERNANDEZ, Kansas City, Missouri
MICHELLE S. MEIER, Washington, D.C.
BERNARD F. PARKER, JR., Detroit, Michigan
OTIS PITTS, JR., Miami, Florida
VINCENT P. QUAYLE, Baltimore, Maryland
CLIFFORD N. ROSENTHAL, New York, New York
ALAN M . SELBERSTEIN, New York, New York
NANCY HARVEY STEORTS, Dallas, Texas
DAVID P. WARD, Chester, New Jersey
SANDRA L. WILLETT, Boston, Massachusetts

THRIFT INSTITUTIONS ADVISORY COUNCIL

MARION O. SANDLER, Oakland, California, President
LYNN W. HODGE, Greenwood, South Carolina, Vice President

DANIEL C. ARNOLD, Houston, Texas
JAMES L . BRYAN, Richardson, Texas
DAVID L . HATFIELD, Kalamazoo, Michigan
ELLIOT K . KNUTSON, Seattle, Washington
JOHN WM. LAISLE, Oklahoma City, Oklahoma




RICHARD A . LARSON, West Bend, Wisconsin
PRESTON MARTIN, San Francisco, California
RICHARD D. PARSONS, New York, New York
EDMOND M . SHANAHAN, Chicago, Illinois
WOODBURY C. TITCOMB, Worcester, Massachusetts

A76

Federal Reserve Board Publications
For ordering assistance, write PUBLICATIONS SERVICES,
MS-138, Board of Governors of the Federal Reserve System,
Washington, D.C. 20551 or telephone (202) 452-3244 or FAX
(202) 728-5886. When a charge is indicated, payment should
accompany request and be made payable to the Board of
Governors ofthe Federal Reserve System. Paymentfrom foreign
residents should be drawn on a U. S. bank.
THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS.

THE U . S . ECONOMY IN AN INTERDEPENDENT WORLD: A
MULTICOUNTRY MODEL, May 1984. 5 9 0 pp. $ 1 4 . 5 0 each.
WELCOME TO THE FEDERAL RESERVE. March 1 9 8 9 . 1 4 pp.
INDUSTRIAL PRODUCTION—1986 EDITION. December 1 9 8 6 .
4 4 0 pp. $ 9 . 0 0 each.
FINANCIAL FUTURES AND OPTIONS IN THE U . S . ECONOMY.
December 1 9 8 6 . 2 6 4 pp. $ 1 0 . 0 0 each.
FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALYSIS AND POLICY ISSUES. August 1 9 9 0 . 6 0 8 pp. $ 2 5 . 0 0 each.

1984. 120 pp.
ANNUAL REPORT.
ANNUAL REPORT: BUDGET REVIEW, 1 9 9 0 - 9 1 .
FEDERAL RESERVE BULLETIN. Monthly. $ 2 5 . 0 0 per year or
$ 2 . 5 0 each in the United States, its possessions, Canada,
and Mexico. Elsewhere, $ 3 5 . 0 0 per year or $ 3 . 0 0 each.
ANNUAL STATISTICAL DIGEST

1974-78.
1981.
1982.
1983.
1984.
1985.
1986.
1987.
1988.
1980-89.

1980. 305 pp. $10.00 per copy.
1982. 239 pp. $ 6.50 per copy.
1983. 266 pp. $ 7.50 per copy.
1984. 264 pp. $11.50 per copy.
1985. 254 pp. $12.50 per copy.
1986. 231pp. $15.00 per copy.
1987. 288 pp. $15.00 per copy.
1988. 272 pp. $15.00 per copy.
1989. 256 pp. $25.00 per copy.
1991. 712 pp. $25.00 per copy.

SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES

O CHARTS. Weekly. $30.00 per year or $.70 each in the
F
United States, its possessions, Canada, and Mexico.
Elsewhere, $35.00 per year or $.80 each.
THE FEDERAL RESERVE A C T and other statutory provisions
affecting the Federal Reserve System, as amended through
August 1990. 646 pp. $10.00.
REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL
RESERVE SYSTEM.
ANNUAL PERCENTAGE RATE TABLES (Truth in Lending-Reg-

CONSUMER EDUCATION PAMPHLETS
Short pamphlets suitable for classroom use. Multiple copies are
available without charge.
Consumer Handbook on Adjustable Rate Mortgages
Consumer Handbook to Credit Protection Laws
A Guide to Federal Reserve Regulations
A Guide to Business Credit for Women, Minorities, and Small
Businesses
How to File A Consumer Credit Complaint
Series on the Structure of the Federal Reserve System
The Board of Governors of the Federal Reserve System
The Federal Open Market Committee
Federal Reserve Bank Board of Directors
Federal Reserve Banks
Organization and Advisory Committees
A Consumer's Guide to Mortgage Lock-Ins
A Consumer's Guide to Mortgage Settlement Costs
A Consumer's Guide to Mortgage Refinancing
Home Mortgages: Understanding the Process and Your Right
to Fair Lending
Making Deposits: When Will Your Money Be Available?
When Your Home is on the Line: What You Should Know About
Home Equity Lines of Credit

ulation Z) Vol. I (Regular Transactions). 1969.100pp. Vol.
II (Irregular Transactions). 1969. 116 pp. Each volume
$2.25; 10 or more of same volume to one address, $2.00
PAMPHLETS FOR FINANCIAL INSTITUTIONS
each.
Short pamphlets on regulatory compliance, primarily suitable
Introduction to Flow of Funds. 1980. 68 pp. $1.50 each; 10 or
for banks, bank holding companies, and creditors.
more to one address, $1.25 each.
Federal Reserve Regulatory Service. Looseleaf; updated at least
monthly. (Requests must be prepaid.)
Limit offiftycopies
Consumer and Community Affairs Handbook. $75.00 per
The Board of Directors' Opportunities in Community
year.
Reinvestment
Monetary Policy and Reserve Requirements Handbook.
$75.00 per year.
The Board of Directors' Role in Consumer Law Compliance
Combined Construction/Permanent Loan Disclosure and
Securities Credit Transactions Handbook. $75.00 per year.
Regulation Z
The Payment System Handbook. $75.00 per year.
Community Development Corporations and the Federal Reserve
Federal Reserve Regulatory Service. 3 vols. (Contains all four
Handbooks plus substantial additional material.) $200.00
Construction Loan Disclosures and Regulation Z
per year.
Finance Charges Under Regulation Z
Rates for subscribers outside the United States are as follows How to Determine the Credit Needs of Your Community
and include additional air mail costs:
Regulation Z: The Right of Rescission
Federal Reserve Regulatory Service, $250.00 per year.
The Right to Financial Privacy Act
Each Handbook, $90.00 per year.
Signature Rules in Community Property States: Regulation B




A77

Signature Rules: Regulation B
Timing Requirements for Adverse Action Notices: Regulation B
What An Adverse Action Notice Must Contain: Regulation B
Understanding Prepaid Finance Charges: Regulation Z

158. THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIREMENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE

PRODUCTS, by Mark J. Warshawsky with the assistance of
Dietrich Earnhart. September 1989. 23 pp.
159. N E W DATA ON THE PERFORMANCE OF NONBANK SUBSIDIARIES OF BANK HOLDING COMPANIES, by Nellie Liang

STAFF STUDIES: Summaries Only Printed in the

Bulletin
Studies andpapers on economic andfinancial subjects that are of
general interest. Requests to obtain single copies ofthejull text
or to be added to the mailing list for the series may be sent to
Publications Services.
Staff Studies 1-145 are out of print.
146. THE ROLE OF THE PRIME RATE IN THE PRICING OF
BUSINESS LOANS BY COMMERCIAL BANKS, 1 9 7 7 - 8 4 , b y

Thomas F. Brady. November 1985. 25 pp.
147. REVISIONS IN THE MONETARY SERVICES (DIVISIA) INDEXES OF THE MONETARY AGGREGATES, by Helen T. Farr

and Deborah Johnson. December 1985. 42 pp.
148. THE MACROECONOMIC AND SECTORAL EFFECTS OF THE
ECONOMIC RECOVERY TAX ACT: SOME SIMULATION

RESULTS, by Flint Brayton and Peter B. Clark. December
1 9 8 5 . 17 pp.
149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS IN
BANKING BEFORE AND AFTER ACQUISITION, by Stephen

A. Rhoades. April 1986. 32 pp.
150. STATISTICAL COST ACCOUNTING MODELS IN BANKING:
A REEXAMINATION AND AN APPLICATION, by John T.

Rose and John D. Wolken. May 1986. 13 pp.
151. RESPONSES TO DEREGULATION: RETAIL DEPOSIT PRICING
FROM 1983 THROUGH 1985, by Patrick I. Mahoney, Alice

P. White, Paul F. O'Brien, and Mary M. McLaughlin.
January 1987. 30 pp.
152. DETERMINANTS OF CORPORATE MERGER ACTIVITY: A
REVIEW OF THE LITERATURE, by Mark J. Warshawsky.

April 1987. 18 pp.
by Carolyn D. Davis and
Alice P. White. September 1987. 14 pp.

153. STOCK MARKET VOLATILITY,

1 5 4 . THE EFFECTS ON CONSUMERS AND CREDITORS OF
PROPOSED CEILINGS ON CREDIT CARD INTEREST RATES,

155.

by Glenn B. Canner and James T. Fergus. October 1987.
26 pp.
THE FUNDING OF PRIVATE PENSION PLANS, by Mark J.
Warshawsky. November 1987. 25 pp.

156. INTERNATIONAL TRENDS FOR U . S . BANKS AND BANKING

MARKETS, by James V. Houpt. May 1988. 47 pp.
157. M 2 PER UNIT OF POTENTIAL G N P AS AN ANCHOR FOR
THE PRICE LEVEL, by Jeffrey J. Hallman, Richard D.

Porter, and David H. Small. April 1989. 28 pp.




and Donald Savage. February 1990. 12 pp.
160. BANKING MARKETS AND THE USE OF FINANCIAL SERVICES BY SMALL AND MEDIUM-SIZED BUSINESSES, b y

Gregory E. Elliehausen and John D. Wolken. September
1990. 35 pp.
161. A REVIEW OF CORPORATE RESTRUCTURING ACTIVITY,

1980-90, by Margaret Hastings Pickering. May 1991.
21pp.

REPRINTS OF SELECTED Bulletin ARTICLES
Some Bulletin articles are reprinted. The articles listed below
are those for which reprints are available. Most of the articles
reprinted do not exceed twelve pages.
Limit of ten copies
Recent Developments in the Bankers Acceptance Market. 1/86.
The Use of Cash and Transaction Accounts by American
Families. 2/86.
Financial Characteristics of High-Income Families. 3/86.
Prices, Profit Margins, and Exchange Rates. 6/86.
Agricultural Banks under Stress. 7/86.
Foreign Lending by Banks: A Guide to International and U.S.
Statistics. 10/86.
Recent Developments in Corporate Finance. 11/86.
Measuring the Foreign-Exchange Value of the Dollar. 6/87.
Changes in Consumer Installment Debt: Evidence from the 1983
and 1986 Surveys of Consumer Finances. 10/87.
Home Equity Lines of Credit. 6/88.
Mutual Recognition: Integration of the Financial Sector in the
European Community. 9/89.
The Activities of Japanese Banks in the United Kingdom and in
the United States, 1980-88. 2/90.
Industrial Production: 1989 Developments and Historical
Revision. 4/90.
Recent Developments in Industrial Capacity and Utilization.
6/90.
Developments Affecting the Profitability of Commercial Banks.
7/90.
Recent Developments in Corporate Finance. 8/90.
U.S. Exchange Rate Policy: Bretton Woods to Present. 11/90.
The Transmission Channels of Monetary Policy: How Have
They Changed? 12/90.
U.S. International Transactions in 1990. 5/91.

A78

Index to Statistical Tables
References are to pages A3-A69 although the
ACCEPTANCES, bankers (See Bankers acceptances)
Agricultural loans, commercial banks, 19, 20
Assets and liabilities (See also Foreigners)
Banks, by classes, 18-20
Domestic finance companies, 35
Federal Reserve Banks, 10
Financial institutions, 25
Foreign banks, U.S. branches and agencies, 21
Automobiles
Consumer installment credit, 38, 39
Production, 48, 49
BANKERS acceptances, 9,22,23
Bankers balances, 18-20 (See also Foreigners)
Bonds (See also U.S. government securities)
New issues, 33
Rates, 23
Branch banks, 21, 56
Business activity, nonfinancial, 45
Business expenditures on new plant and equipment, 34
Business loans (See Commercial and industrial loans)
CAPACITY utilization, 47
Capital accounts
Banks, by classes, 18
Federal Reserve Banks, 10
Central banks, discount rates, 68
Certificates of deposit, 23
Commercial and industrial loans
Commercial banks, 16, 19
Weekly reporting banks, 19-21
Commercial banks
Assets and liabilities, 18-20
Commercial and industrial loans, 16, 18, 19, 20, 21
Consumer loans held, by type and terms, 38, 39
Loans sold outright, 19
Nondeposit funds, 17
Real estate mortgages held, by holder and property, 37
Time and savings deposits, 3
Commercial paper, 22, 23, 35
Condition statements (See Assets and liabilities)
Construction, 45, 50
Consumer installment credit, 38, 39
Consumer prices, 45,47
Consumption expenditures, 52, 53
Corporations
Nonfinancial, assets and liabilities, 34
Profits and their distribution, 34
Security issues, 33, 66
Cost of living (See Consumer prices)
Credit unions, 26,38. (See also SAIF-insured institutions)
Currency and coin, 18
Currency in circulation, 4,13
Customer credit, stock market, 24
DEBITS to deposit accounts, 14
Debt (See specific types ofdebt or securities)
Demand deposits
Banks, by classes, 18-21




"A"is omitted in this index
Demand deposits—Continued
Ownership by individuals, partnerships, and corporations, 21
Turnover, 15
Depository institutions
Reserve requirements, 8
Reserves and related items, 3, 4, 5, 12
Deposits (See also specific types)
Banks, by classes, 3,18-20,21
Federal Reserve Banks, 4, 10
Turnover, 15
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, 34
EMPLOYMENT, 46
Eurodollars, 23
FARM mortgage loans, 37
Federal agency obligations, 4,9, 10,11, 30, 31
Federal credit agencies, 32
Federal finance
Debt subject to statutory limitation, and types and ownership
of gross debt, 29
Receipts and outlays, 27, 28
Treasuryfinancingof surplus, or deficit, 27
Treasury operating balance, 27
Federal Financing Bank, 27, 32
Federal funds, 6, 17, 19, 20, 21,23, 27
Federal Home Loan Banks, 32
Federal Home Loan Mortgage Corporation, 32, 36, 37
Federal Housing Administration, 32, 36, 37
Federal Land Banks, 37
Federal National Mortgage Association, 32, 36, 37
Federal Reserve Banks
Condition statement, 10
Discount rates (See Interest rates)
U.S. government securities held, 4, 10, 11,29
Federal Reserve credit, 4,5,10, 11
Federal Reserve notes, 10
Federal Reserve System
Balance sheet for priced services, 82
Condition statement for priced services, 83
Federally sponsored credit agencies, 32
Finance companies
Assets and liabilities, 35
Business credit, 35
Loans, 38, 39
Paper, 22, 23
Financial institutions
Loans to, 19,20,21
Selected assets and liabilities, 25
Float, 4, 83
Flow of funds, 40,42,43,44
Foreign banks, assets and liabilities of U.S. branches and
agencies, 21
Foreign currency operations, 10
Foreign deposits in U.S. banks, 4,10, 19, 20
Foreign exchange rates, 69

A79

Foreign trade, 55
Foreigners
Claims on, 56, 58, 61,62, 63, 65
Liabilities to, 20, 55, 56, 58, 59, 64,66,67
GOLD
Certificate account, 10
Stock, 4, 55
Government National Mortgage Association, 32, 36, 37
Gross national product, 52
HOUSING, new and existing units, 50
INCOME, personal and national, 45, 52, 53
Industrial production, 45,48
Installment loans, 38, 39
Insurance companies, 25, 29, 37
Interest rates
Bonds, 23
Consumer installment credit, 39
Federal Reserve Banks, 7
Foreign central banks and foreign countries, 68
Money and capital markets, 23
Mortgages, 36
Prime rate, 22
International capital transactions of United States, 54-68
International organizations, 58, 59, 61,64,65
Inventories, 52
Investment companies, issues and assets, 34
Investments (See also specific types)
Banks, by classes, 18,19,20,21,25
Commercial banks, 3, 16, 18-20, 37
Federal Reserve Banks, 10,11
Financial institutions, 25, 37
LABOR force, 46
Life insurance companies (See Insurance companies)
Loans (See also specific types)
Banks, by classes, 18-20
Commercial banks, 3,16,18-20
Credit unions, 26
Federal Reserve Banks, 4, 5, 7,10, 11
Financial institutions, 25, 37
Insured or guaranteed by United States, 36, 37
MANUFACTURING
Capacity utilization, 47
Production, 47, 49
Margin requirements, 24
Member banks (See also Depository institutions)
Federal funds and repurchase agreements, 6
Reserve requirements, 8
Mining production, 49
Mobile homes shipped, 50
Monetary and credit aggregates, 3,12
Money and capital market rates, 23
Money stock measures and components, 3,13
Mortgages (See Real estate loans)
Mutual funds, 34
Mutual savings banks (See Thrift institutions)
NATIONAL defense outlays, 28
National income, 52
OPEN market transactions, 9
PERSONAL income, 53
Prices
Consumer and producer, 45, 51
Stock market, 24
Prime rate, 22
Producer prices, 45, 51
Production, 45,48
Profits, corporate, 34



REAL estate loans
Banks, by classes, 16,19,20, 37
Financial institutions, 25
Terms, yields, and activity, 36
Type of holder and property mortgaged, 37
Repurchase agreements, 6, 17, 19,20, 21
Reserve requirements, 8
Reserves
Commercial banks, 18
Depository institutions, 3, 4, 5,12
Federal Reserve Banks, 10
U.S. reserve assets, 55
Residential mortgage loans, 36
Retail credit and retail sales, 38, 39,45
SAVING
Flow of funds, 40, 42, 43, 44
National income accounts, 52
Savings and loan associations, 37, 38, 40. (See also SAIF-insured
institutions)
Savings Association Insurance Funds (SAIF) insured institutions, 25
Savings banks, 25, 37, 38
Savings deposits (See Time and savings deposits)
Securities (See also specific types)
Federal and federally sponsored credit agencies, 32
Foreign transactions, 66
New issues, 33
Prices, 24
Special drawing rights, 4,10, 54, 55
State and local governments
Deposits, 19, 20
Holdings of U.S. government securities, 29
New security issues, 33
Ownership of securities issued by, 19,20, 26
Rates on securities, 23
Stock market, selected statistics, 24
Stocks (See also Securities)
New issues, 33
Prices, 24
Student Loan Marketing Association, 32
TAX receipts, federal, 28
Thrift institutions, 3. (See also Credit unions and Savings and
loan associations)
Time and savings deposits, 3,13, 17,18,19,20, 21
Trade, foreign, 55
Treasury cash, Treasury currency, 4
Treasury deposits, 4,10,27
Treasury operating balance, 27
UNEMPLOYMENT, 46
U.S. government balances
Commercial bank holdings, 18, 19,20
Treasury deposits at Reserve Banks, 4,10, 27
U.S. government securities
Bank holdings, 18-20, 21, 29
Dealer transactions, positions, andfinancing,31
Federal Reserve Bank holdings, 4,10,11,29
Foreign and international holdings and transactions, 10,29,
67
Open market transactions, 9
Outstanding, by type and holder, 25,26, 29
Rates, 23
U.S. international transactions, 54-68
Utilities, production, 49
VETERANS Administration, 36, 37
WEEKLY reporting banks, 19-21
Wholesale (producer) prices, 45, 51
YIELDS (See Interest rates)

A80

Federal Reserve Banks, Branches,
and Offices
FEDERAL RESERVE BANK
Chairman
branch, or facility
Zip
Deputy Chairman

President
First Vice President

BOSTON*

02106 Richard N. Cooper
Jerome H. Grossman

Richard F. Syron
Cathy E. Minehan

NEW YORK*

10045 Cyrus R. Vance
Ellen V. Futter
14240 Mary Ann Lambertsen

E. Gerald Corrigan
James H. Oltman

PHILADELPHIA

19105 Peter A. Benoliel
Jane G. Pepper

Edward G. Boehne
William H. Stone, Jr.

CLEVELAND*

44101 John R. Miller
A. William Reynolds
45201 Kate Ireland
15230 Robert P. Bozzone

W. Lee Hoskins
William H. Hendricks

Buffalo

Cincinnati
Pittsburgh
RICHMOND*

23219 Anne Marie Whittemore
Henry J. Faison
Baltimore
21203 John R. Hardesty, Jr.
Charlotte
28230 Anne M. Allen
Culpeper Communications

Vice President
in charge of branch

James O. Aston

Robert P. Black
Jimmie R. Monhollon

Charles A. Cerino1
Harold J. Swart1

Ronald B. Duncan1
Albert D. Tinkelenberg1
John G. Stoides1

and Records Center 22701

ATLANTA
Birmingham
Jacksonville
Miami
Nashville
New Orleans
CHICAGO*
Detroit
ST. LOUIS
Little Rock
Louisville
Memphis
MINNEAPOLIS
Helena
KANSAS CITY
Denver
Oklahoma City
Omaha
DALLAS
El Paso
Houston
San Antonio
SAN FRANCISCO
Los Angeles
Portland
Salt Lake City
Seattle

30303 Larry L. Prince
Edwin A. Huston
35283 Roy D.Terry
32231 Hugh M.Brown
33152 Dorothy C. Weaver
37203 Shirley A. Zeitlin
70161 JoAnnSlaydon

Robert P. Forrestal
Jack Guynn

60690 Charles S. McNeer
Richard G. Cline
48231 Phyllis E. Peters

Silas Keehn
Daniel M. Doyle

63166 H. Edwin Trusheim
Robert H. Quenon
72203 L. Dickson Flake
40232 Lois H.Gray
38101 Katherine H. Smythe

Thomas C. Melzer
James R. Bowen

55480 Delbert W. Johnson
Gerald A. Rauenhorst
59601 James E.Jenks

Gary H. Stern
Thomas E. Gainor

64198 Fred W. Lyons, Jr.
Burton A. Dole, Jr.
80217 Barbara B. Grogan
73125 Ernest L. Holloway
68102 Herman Cain

Roger Guffey
Henry R. Czerwinski

75222 Hugh G. Robinson
Leo E. Linbeck, Jr.
79999 W. Thomas Beard, III
77252 Gilbert D. Gaedcke, Jr.
78295 Roger R. Hemminghaus

Robert D. McTeer, Jr.
Tony J. Salvaggio

94120 Robert F. Erburu
Carolyn S. Chambers
90051 Yvonne B. Burke
97208 William A. Hilliard
84125 D.N.Rose
98124 Judith Runstad

Robert T. Parry
Carl E. Powell

Donald E. Nelson1
FredR. Herr1
James D. Hawkins1
James T. Curry m
Melvyn K. Purcell
Robert J. Musso

Roby L.Sloan1

Karl W. Ashman
Howard Wells
Ray Laurence

John D. Johnson

KentM. Scott
David J. France
Harold L. Shewmaker

Sammie C. Clay
Robert Smith, III1
Thomas H. Robertson

Thomas C. Warren2
Leslie R. Watters
Andrea P. Wolcott
Gerald R. Kelly1

•Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; Cranford, New Jersey 07016; Jericho, New York
11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa
50306; Indianapolis, Indiana 46204; and Milwaukee, Wisconsin 53202.
1. Senior Vice President.
2. Executive Vice President.




A81

The Federal Reserve System
Boundaries of Federal Reserve Districts and Their Branch Territories

Helen,

j
Minneapolis^

i©

jS'l'Like City
I
I Denver

®

X
Kansas

T r s _

I

lx!^"''^.'

.y^Jsa

one*
fichm?!

City

Mahoma CitT

\fAemphis ^ashvilj^
r
T
.
little Rock BirmiHghai^®lgn^

X

"ge/es

Dallas®

r

r ~ " ~ ) |

, HoustonI
Stii Antonio

)

©

Jacks'

IW M "
/ F M*
April 1984

LEGEND

Boundaries of Federal Reserve Districts

®

Federal Reserve Bank Cities

Boundaries of Federal Reserve Branch
Territories

*

Federal Reserve Branch Cities
Federal Reserve Bank Facility

Q

Board of Governors of the Federal Reserve
System




Publications of Interest
FEDERAL RESERVE

REGULATORY

SERVICE

To promote public understanding of its regulatory
functions, the Board publishes the Federal Reserve
Regulatory Service, a three-volume looseleaf service
containing all Board regulations and 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 at least 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. For convenient reference, it also
contains the rules of the Depository Institutions Deregulation Committee.
The Securities Credit Transactions Handbook contains Regulations G, T, U, and X, dealing with extensions of credit for the purchase of securities, together
with all related statutes, Board interpretations, rul-

U.S.

MONETARY

POLICY AND FINANCIAL

MARKETS

U.S. Monetary Policy and Financial Markets by AnnMarie Meulendyke offers an in-depth description of
the way monetary policy is developed by the Federal
Open Market Committee and the techniques employed
to implement policy at the Open Market Trading Desk.
Written from her perspective as a senior economist in
the Open Market Function at the Federal Reserve
Bank of New York, Ann-Marie Meulendyke describes
the tools and the setting of policy, including many of
the complexities that differentiate the process from
simpler textbook models. Included is an account of a
day at the Trading Desk, from morning informationgathering through daily decisionmaking and the execution of an open market operation.
The book also places monetary policy in a broader




ings, and staff opinions. Also included is the Board's
list of OTC margin stocks.
The Consumer and Community Affairs Handbook
contains Regulations B, C, E, M, Z, AA, and BB, and
associated materials.
The Payment System Handbook deals with expedited funds availability, check collection, wire transfers, and risk-reduction policy. It includes Regulation
CC, Regulation J, the Expedited Funds Availability
Act and related statutes, official Board commentary on
Regulation CC, 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. 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 138, Board
of Governors of the Federal Reserve System, Washington, D.C. 20551.

context, examining first the evolution of Federal Reserve monetary policy procedures from their beginnings in 1914 to the end of the 1980s. It indicates how
policy operates most directly through the banking
system and the financial markets and describes key
features of both. Finally, the book turns its attention to
the transmittal of monetary policy actions to the U.S.
economy and throughout the world.
The book is $5.00 a copy for U.S. purchasers and
$10.00 for purchasers outside the United States. Copies are available from the Public Information Department, Federal Reserve Bank of New York, 33 Liberty
Street, New York, N.Y. 10045. Checks must accompany orders and should be payable to the Federal
Reserve Bank of New York in U.S. dollars.

Federal Reserve Statistical Releases
Available on the Commerce Department's
Electronic 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 electronic bulletin board. Computer
access to the releases can be obtained by sub-

scription. For further information regarding a
subscription to the electronic bulletin board,
please call (703) 487-4630. The releases transmitted to the electronic 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.7

Flow of Funds

Quarterly