Full text of Federal Reserve Bulletin : September 1996
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VOLUME 8 2 •
NUMBER 9 •
SEPTEMBER 1 9 9 6
FEDERAL RESERVE
BULLETIN
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D . C .
PUBLICATIONS COMMITTEE
Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood • Donald L. Kohn
• J. Virgil Mattingly, Jr. • Michael J. Prell • Richard Spillenkothen • Edwin M. Truman
The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed
except in official statements and signed articles. It is assisted by the Economic Editing Section headed by S. Ellen Dykes, the Graphics Center under the direction of
Peter G. Thomas, and Publications Services supervised by Linda C. Kyles.
Table of Contents
791 DERIVATIVES DISCLOSURES BY MAJOR U.S.
BANKS, 1995
This review of the 1995 annual reports of ten
major U.S. commercial banks shows that public
disclosure about derivatives activities continues
to improve. Compared with reports for earlier
years, banks are providing more types of information in greater depth and in ways that make
the information more easily understood by readers of public financial statements. These large
banks, in response to standards and recommendations promulgated by various groups as well
as by shareholder concerns, have made significant strides in increasing the transparency of
their derivatives activities.
8 0 2 TREASURY AND FEDERAL
FOREIGN
EXCHANGE
RESERVE
OPERATIONS
Over the second quarter of 1996, the dollar
appreciated 3.2 percent against the German
mark, 2.2 percent against the Japanese yen, and
1.6 percent on a trade-weighted basis against the
other Group of Ten currencies. The U.S. monetary authorities did not undertake any intervention operations in the foreign exchange market
during the quarter.
8 0 6 INDUSTRIAL PRODUCTION
UTILIZATION FOR JULY
AND
1996
CAPACITY
Industrial production edged up 0.1 percent in
July, to 126.2 percent of its 1987 average, after
an upward revised gain of 0.6 percent in June.
Industrial capacity utilization decreased 0.2 percentage point, to 83.2 percent.
8 0 9 STATEMENTS
TO THE
CONGRESS
Herbert A. Biern, Deputy Associate Director,
Division of Banking Supervision and Regulation, discusses actions that the Federal Reserve
has taken over the past several years to address
the problem of "prime bank" financial instruments and says that the Board believes that
continuing successful prosecution of cases
involving fraudsters selling these instruments is
crucial and that new statutory authority enhanc-
ing law enforcement's ability to prosecute
wrongdoers may prove useful, before the Senate
Committee on Banking, Housing, and Urban
Affairs, July 17, 1996.
811 Alan Greenspan, Chairman, Board of Governors, discusses the performance of the U.S.
economy in the first half of 1996 and the conduct of monetary policy and says that even
though the U.S. economy is using its productive
resources intensively, inflation has remained quiescent and that looking forward, there are a
number of reasons to expect demands to moderate and economic activity to settle back toward a
more sustainable pace in the months ahead,
before the Senate Committee on Banking, Housing, and Urban Affairs, July 18, 1996. [Chairman Greenspan presented identical testimony
before the Subcommittee on Domestic and International Monetary Policy of the House Committee on Banking and Financial Services on
July 23, 1996.]
815 Janet L. Yellen, member, Board of Governors,
discusses trends in consumer lending and the
Federal Reserve Board's view of how recent
developments in this sector are affecting U.S.
commercial banks and says that although the
recently emerging trend of higher delinquencies
and personal bankruptcies has prompted the
Federal Reserve to devote more attention to the
monitoring of consumer loan exposures, both on
and off balance sheets, and to the evaluation of
risk-management practices, the industry's condition is strong in terms of its profitability, capital
ratios, loss reserves, and overall asset quality,
before the Subcommittee on Financial Institutions and Regulatory Relief of the Senate Committee on Banking, Housing, and Urban Affairs,
July 24, 1996.
819 Chairman Greenspan addresses certain recent
reports on the Federal Reserve's operations, in
particular some issues raised by the General
Accounting Office (GAO) with respect to the
management of the Federal Reserve System, and
says that in summary, although the Board
believes that much of the GAO's analysis and
recommendations have merit, the Board takes
exception to the broad implication of the GAO
report that the Federal Reserve has not exercised
appropriate budget constraint and that it has not
adequately addressed the changing technological and financial environment in which it operates; Chairman Greenspan says that in his
experience the Federal Reserve is as well run an
organization as any with which he has been
associated, private or public, before the Senate
Committee on Banking, Housing, and Urban
Affairs, July 26, 1996.
824
ANNOUNCEMENTS
Nominations sought for appointments to the
Consumer Advisory Council.
Final rule amending Regulation K.
Extension of comment period on proposal to
amend Regulation E; proposal to modify the
conditions under which section 20 subsidiaries
of bank holding companies may underwrite and
deal in securities.
Availability of the revised lists of over-thecounter stocks and of foreign stocks that are
subject to margin regulations.
OPEN
8 2 6 MINUTES OF THE FEDERAL
MARKET COMMITTEE
MEETING
HELD ON MAY 21,
1996
At its meeting on May 21, 1996, the Committee
adopted a directive that called for maintaining
the existing degree of pressure on reserve positions and that did not include a presumption
about the likely direction of any adjustments to
policy during the intermeeting period.
8 3 3 LEGAL
DEVELOPMENTS
Various bank holding company, bank service
corporation, and bank merger orders; and pending cases.
A 1 FINANCIAL
AND BUSINESS
STATISTICS
These tables reflect data available as of
July 29, 1996.
A 3 GUIDE
TO TABULAR
PRESENTATION
A4 Domestic Financial Statistics
A42 Domestic Nonfinancial Statistics
A50 International Statistics
A 6 3 GUIDE TO STATISTICAL
SPECIAL
TABLES
RELEASES
A 7 6 INDEX
TO STATISTICAL
TABLES
A 7 8 BOARD
OF GOVERNORS
A 8 0 FEDERAL
OPEN
MARKET
STAFF; ADVISORY
A 8 2 FEDERAL
A 8 4 MAPS
AND
RESERVE
STAFF
COMMITTEE
AND
COUNCILS
BOARD
OF THE FEDERAL
A 8 6 FEDERAL RESERVE
AND
OFFICES
AND
PUBLICATIONS
RESERVE
BANKS,
SYSTEM
BRANCHES,
Derivatives Disclosures
by Major US. Banks, 1995
Gerald A. Edwards, Jr., and Gregory E. Eller, of the
Board's Division of Banking Supervision and Regulation, prepared this article. Terrill Garrison provided
research assistance.
The use of derivative contracts has grown rapidly
during the 1990s. These off-balance-sheet instruments, whose market value (and cash flow) changes
with that of an underlying variable (such as an interest rate, a foreign currency exchange rate, an equity
price, or a commodity price), are a powerful tool
for companies in managing their exposure to risk.1
The increasing importance of derivatives to financial institutions (including banks that are dealers of
these instruments), as well as to other enterprises, has
heightened the need to understand them better.
Public awareness of these instruments has also
grown, a consequence of highly publicized losses
by some large businesses and municipalities that had
entered into derivative contracts. In a few instances,
the losses were blamed on derivatives even though
they had in fact resulted from the trading of traditional financial instruments. Nevertheless, these
events illustrate the need for firms entering into
contracts, shareholders of these firms, policymakers,
and the public to understand derivative instruments
more fully.
The risks associated with derivatives are no different from the risks that firms have always had to
recognize and control (see box "Risks Associated
with Derivatives"). All financial contracts carry some
degree of risk. Nonderivative contracts, in fact, can
be riskier and more complex than derivatives. For
example, a junk-rated bond that is tied to a foreign
interest rate and is convertible into the issuer's common stock carries credit and market risk that would
be difficult to quantify. In contrast, the risks of some
derivatives, such as futures contracts, can be easily
assessed because prices are observable from trading
on exchanges and cash changes hands daily to maintain collateral, mitigating credit risk. Nonetheless,
derivatives can be highly complex in their design,
and their pricing can be opaque, making their risks
difficult to understand, measure, and manage.
One approach to increasing public understanding
of derivatives has been the implementation of more
comprehensive accounting practices and disclosure
requirements. In particular, these two tools are helpful in characterizing more accurately the effects of
these instruments on firms' financial performance
and in explaining those effects through public financial reporting. The benefits of these tools are not
limited to derivatives, however. They should also
lead to better understanding of how firms manage
risks arising from nonderivative financial contracts as
well as from other sources. The goals are to demystify derivatives, to facilitate the assessment of firms'
derivatives activities by readers of financial statements, and thereby to help improve the allocation of
capital by financial markets.
Many groups have been involved in bringing about
changes in derivatives accounting and reporting:
authorities that set accounting standards, regulators
and bank supervisors, and industry associations.
These groups have set various regulatory requirements and have made numerous recommendations
(see box "Requirements and Recommendations for
Public Disclosure"). As a result, the nature of the
information publicly disclosed by firms has been
evolving in several ways, including the amount and
type of information disclosed and the way information is presented.
The published annual reports to shareholders and
other public financial reports of banks and other companies play an important role in disseminating information to investors, creditors, and other stakeholders
in the enterprises. The information they convey about
derivatives has improved significantly in the past few
years. A survey of the annual reports of the top ten
U.S. banks that deal in derivatives showed that their
1994 reports were substantially more "transparent"
than their 1993 reports, with more discussion and
analysis of, and more quantitative information about,
their use of these instruments.2
1. See box "Classes of Derivatives" for an explanation of the
different types of derivatives and the ways they are used.
2. Gerald A. Edwards, Jr., and Gregory E. Eller, "Overview of
Derivatives Disclosures by Major U.S. Banks," Federal Reserve
Bulletin, vol. 81 (September 1995), pp. 817-31.
792
Federal Reserve Bulletin • September 1996
Classes of Derivatives
Derivatives are contracts that derive their market values by
reference to a physical commodity, another contract (such
as a debt or equity instrument), or an interest rate or equity
index (collectively referred to as "goods"). Some derivative contracts may be settled either by delivery of the
contracted-for good or by the payment of cash, while others
are settled only in cash. Derivative contracts make reference
to a notional amount. The amount is "notional" because it
is only an artifice for calculating the amount of cash due
periodically. There are two basic classes of derivatives,
forwards and options. Both types of instruments are used as
a means of transferring, between the parties to the contract,
risk associated with possible changes in prices.
Swap Contracts. An interest rate swap can be viewed as a
contract that bundles a series of forward rate agreements
into a single instrument, with one FRA for each swap
payment through maturity of the swap contract. In a simple
interest rate swap, one party agrees to make fixed cash
payments (equivalent to a fixed rate of interest based on a
notional principal amount) and the other party agrees to
make variable cash payments (equivalent to a floating-rate
index such as the London Interbank Offered Rate, LIBOR).
Besides interest rates, the structure of exchanging a fixed
payment for a floating payment has been applied to such
goods as foreign exchange, precious metals, and bulk
commodities.
Forward Contracts
Option Contracts
A forward contract is a bilateral agreement in which one
party, the buyer, is obligated to purchase the contracted-for
good and the second party, the seller, is obligated to sell the
good to the buyer. At the inception of the forward contract,
the quantity and grade of the good, the price to be paid, and
the date and location of delivery are fixed. The price to be
paid in the future under a new forward contract will be
closely related to the good's current market price (its spot
price), with adjustments to cover the costs of carrying an
inventory of the good during the interim period, such as the
costs of storage, insurance, and interest.
An option contract is a unilateral agreement in which one
party, the option writer, is obligated to perform under the
contract if the option holder exercises his or her option. The
option holder pays a fee, or "premium," to the writer for
this privilege. The option holder is under no obligation,
however, and will exercise the option only when the exercise price is favorable relative to current market prices. If,
on the one hand, prices move unfavorably for the option
holder, the holder loses only the premium. If, on the other
hand, prices move favorably for the option holder, the
holder gains (a theoretically unlimited amount) at the
expense of the option writer. In an option contract, the exercise (or "strike") price, the delivery date, and the quantity
and quality of the commodity are fixed.
Options can be either calls or puts. A call option grants
the holder of the contract the right to purchase a good from
the option writer, while a put option grants the holder the
right to sell the underlying good to the option writer.
Interest rate caps and floors can be viewed as a series of
call options packaged into a single financial instrument in
which the underlying good is an interest rate index. For
example, a borrower arranges to borrow at a variable rate
reset quarterly at LIBOR. He also purchases a 6.5 percent
rate cap. If LIBOR rises to 9 percent, the borrower pays his
creditor 9 percent and receives from the cap writer 2.5 percent (9 percent minus the 6.5 percent option exercise price).
The borrower has effectively limited his interest expense to
a maximum of 6.5 percent plus the premium paid for the
interest rate cap.
Under a floor contract, the borrower writes an option in
which he agrees to pay the difference between the strike
price and the interest rate index specified in the contract.
The premium received offsets a portion of the overall interest expense of the obligation; however, the debtor retains
exposure to higher interest rates and forgoes the benefit of
lower interest rates on his floating-rate obligation.
Futures. A futures contract is a type of forward that
has standard commodity-unit and delivery terms and
is traded on an organized exchange. A clearinghouse normally serves as counterparty to both the buyer and the
seller. This arrangement reduces credit risk because the
parties look to the clearinghouse for performance. Clearinghouses typically reduce their credit risk by requiring that the
counterparties put up collateral and by marking to market
frequently. Futures are available for agricultural products
and other commodities, bonds and other interest-bearing
instruments, equity interests, and foreign exchange.
Forward Rate Agreements (FRAs). An FRA is a forward
contract between two parties seeking to fix a future interest
rate. The parties agree on an interest rate for a specified
period associated with a specified notional principal amount
(though no commitment to lend or borrow that amount
is made). The contract is settled in cash; the payment
amount is equal to the product of the notional principal
amount and the difference between a spot market rate and
the contractual forward rate. If the spot rate on the maturity
date is higher than the contracted rate, the seller pays the
difference; if the spot rate is lower, the buyer pays the
difference.
Derivatives Disclosures by Major U.S. Banks, 1995
793
Risks Associated with Derivatives
The risks associated with derivative contracts are no different from those associated with other bank financial instruments. The major categories of risk are described here.
Credit risk is the possibility of loss from the failure of a
counterparty to fully carry out its contractual obligations.
The types of information about credit risk associated with
derivatives that institutions might disclose include the
following:
• Gross positive market value—the gross replacement
cost of a contract, excluding the effects of any netting
arrangements
• Current credit exposure—the fair value on a given date
of contracts that are favorable to the holder (that is, are
assets)
• Potential credit exposure—a statistical measure of the
possible future value of contracts held today if prices or
rates move favorably for the holder before the contracts
mature
• Credit risk concentrations—indicators of diversification by geographic area or industry group
• Collateral and other credit enhancements that may
reduce credit risk
• Counterparty credit quality, nonperforming contracts,
and actual credit losses.
Market risk is the possibility that the value of a financial
contract (or of a real asset, for that matter) will adversely
change before the contract can be liquidated or offset with
This article follows up on the previous survey by
reviewing the 1995 annual reports of the top ten
banks that deal in derivatives. Although disclosure
requirements did not change during the intervening
period, banks nonetheless improved their reporting of
derivatives activities in 1995 compared with 1994. In
particular, they expanded their discussions of derivatives activities and provided more quantitative information. The vastly greater amount of information
presented in the 1995 reports is especially evident
when they are compared with the financial statements
issued for 1992, in which banks typically disclosed
little more than the total value of their trading assets
and liabilities, their total trading profits, their overall
net credit exposure across all counterparties, and the
notional amounts of their derivative contracts.3 Regulators and industry groups that have advocated fuller
disclosure have clearly had significant influence in
3. The notional amount is the face amount of a contract to which an
interest rate, a price, or a rate of exchange is applied to determine the
contractual cash payments or receipts. In general, the notional amount
is not exchanged and does not reflect the risk of a transaction.
other positions. The value of these contracts may change
because of changes in interest rates (interest rate risk),
foreign exchange rates (foreign exchange rate risk), or
commodity prices or other indexes.
For some larger institutions, disclosure of information
about internal value-at-risk measures and methodology can
help financial statement readers understand the institution's
exposure to market risk. Using value-at-risk methods
involves the assessment of potential losses in portfolio
value resulting from adverse movements in market risk
factors for a specified statistical confidence level over a
defined holding period.
Liquidity risk has two broad types: market liquidity risk
and funding risk. Market liquidity risk arises from the
possibility that a position cannot be eliminated quickly
either by liquidating it or by establishing offsetting positions. Funding risk arises from the possibility that a firm
will be unable to meet the cash requirements of its contracts.
Operational risk is the possibility that losses may occur
because of inadequate systems and controls, human error, or
mismanagement.
Legal risk is the possibility of loss that arises when a
contract cannot be enforced because of, for example, poor
documentation, insufficient capacity or authority of the
counterparty, or uncertain enforceability of the contract in a
bankruptcy or insolvency proceeding.
improving the overall quality of reporting about
derivatives activities.
REVIEW
OF 1995
ANNUAL
REPORTS
The institutions whose annual reports were surveyed
for this article were the ten U.S. commercial banks
having the greatest credit risk exposure from derivatives on December 31, 1995 (taking into account the
effects of netting agreements) (table l). 4 Nine of the
4. In this article, "bank" refers to a banking organization, comprising bank holding companies, their banking affiliates, and other subsidiaries that are consolidated for purposes of public financial reporting.
Credit risk exposure as of a particular date (current credit exposure)
is a measure of the potential loss resulting from a hypothetical default
by a counterparty. It is the fair value on the date of measurement of
those contracts that are favorable to the bank (that is, those that are
assets). If a legally enforceable bilateral netting agreement is in place,
credit risk exposure is the net fair value of all contracts subject to the
agreement. For example, if a bank has two contracts with a counterparty, one worth $10 and the other worth - $ 6 , the bank's credit risk
exposure is $10. If, however, the bank and its counterparty have
agreed to net their contracts, the bank's credit risk exposure is $4
794
Federal Reserve Bulletin • September 1996
Ten U.S. commercial banks with the greatest exposure
to credit risk from derivatives on December 31, 1995
Billions of dollars
Institution
J.P. Morgan & Company
Chase Manhattan Corporation2
Bankers Trust New York Corporation ..
BankAmerica Corporation
First Chicago NBD Corporation
NationsBank Corporation
Republic New York Corporation
State Street Boston Corporation
Bank of New York
Credit risk
exposure1
Total notional
amount of
derivatives
outstanding
33.6
28.0
19.4
12.1
8.3
3,403
4,728
2,301
1,742
1,515
7.3
3.3
3.0
.6
.6
801
1,006
268
58
56
1. Exposure taking into account the effects of legally enforceable bilateral
netting agreements.
2. Pro forma combination for Chemical Banking Corporation and Chase
Manhattan Corporation.
SOURCE. Publicly available regulatory reports filed by bank holding companies with the Federal Reserve.
ten banks were also included in the survey of 1994
annual reports. Two of the 1994 banks, Chemical
Banking Corporation and Chase Manhattan Corporation, merged in 1996 and published a combined
annual report for year-end 1995. Moving into the
group for 1995 was State Street Boston Corporation.5
These ten banks dominate the banking industry's
share of the derivatives market: Collectively, they
accounted for more than 95 percent of the derivatives
held or issued by all U.S. banks at year-end 1995 in
terms of notional amounts; they accounted for a
similar share of the industry's trading portfolios in
terms of fair value (table 2). Of the derivatives they
held or had issued as of year-end, approximately
two-thirds were interest rate contracts and one-third
were foreign exchange contracts, with a small amount
of equity and commodity exposures. The ten banks
also accounted for nearly 90 percent of the profits
from trading that were earned by all U.S. banks in
1995.
In their annual reports, banks disclose information
about derivative instruments on a consolidated basis
(that is, combining all legal entities that make up the
enterprise). The information is usually presented in
two main sections of the report:
($10 - $6). Note that the current credit exposure of the ten banks on
December 31, 1995, was approximately 1 percent of the total notional
amount of their outstanding derivative contracts (see table 1).
5. Also included in the tables in this article, to provide a baseline
for assessing the extent of change, are data on disclosures in the 1993
annual reports of the top ten banks. The group of banks for that year
was essentially the same as in 1994. Continental Bancorp, which was
ranked in the top ten in 1993, was acquired by BankAmerica Corporation in 1994. It was replaced in the 1994 survey by Bank of New York,
which had been eleventh in 1993.
• Management's discussion and analysis provides,
in narrative form supported by tabular or graphical
data, an analysis of the bank's financial condition and
performance. As part of its analysis, management
typically describes the bank's exposures to risk and
its techniques for managing risk. This section is not
usually audited by independent accountants.
• The annual financial statement presents statements of financial position, income, changes in
stockholders' equity, and cash flow. The financial
statement and any accompanying footnotes are typically audited by independent accountants.
This survey considered disclosures in both sections
of the annual reports. The analysis was "binary,"
with coverage judged to be either present or not
present, and the decision about whether or not a
particular disclosure was present was in many
instances subjective. Information on derivatives used
for trading purposes was analyzed separately from
information on derivatives intended for risk management or other end-user purposes. Because groups
that set disclosure standards also recommend that
firms report on their trading of nonderivative financial instruments and nonfinancial items (such as
precious metals or other physical commodities), we
2. Derivatives positions and trading activity of the top ten
banks and all U.S. banks, 1995
Billions of dollars
Item
Top ten banks
All banks
Notional amount
of derivatives outstanding
as of year-end
TYPE OF DERIVATIVE INSTRUMENT
Interest rate contracts
Foreign exchange contracts
Equity, commodity, or other contracts
Total
10,231
5,286
361
15,878
10,800
5,366
361
16,527
Fair value as of year-end
POSITIONS IN TRADING PORTFOLIO
Trading assets
Derivatives
255
95
275
100
Trading liabilities
Derivatives
159
97
169
102
Total trading positions (absolute value)
Derivatives
414
191
444
202
Trading profit
from all sources for year
TYPE OF RISK ASSUMED TO E A R N PROFIT
Interest rate
Foreign exchange
Equity, commodity, or other
Total
2.9
2.0
3.3
2.4
.8
5.7
6.5
SOURCE. Publicly available regulatory reports filed by bank holding companies with the Federal Reserve.
Derivatives Disclosures by Major U.S. Banks, 1995
also reviewed the reports for disclosures about those
instruments. A look at the trading books of the ten
banks gives some perspective on the extent of the use
of derivatives as a trading vehicle: Derivatives
accounted for less than half of the fair value of their
trading assets and liabilities on December 31
(table 2). In this article, information for all trading
account items is presented to give a more complete
picture of trading.
795
3. Number of top ten banks discussing their management
objectives and the risks of derivatives in their annual
reports, 1993-95
Number of banks disclosing
Type of qualitative disclosure
1993
1994
1995
4
4
9
10
10
10
7
10
10
6
6
4
1
9
9
6
3
10
10
9
3
DISCUSSION OF M A N A G E M E N T
OBJECTIVES A N D STRATEGIES
For trading activities
For nontrading activities
DISCUSSION OF RISKS A N D
M A N A G E M E N T TECHNIQUES
QUALITATIVE
INFORMATION
Managers give qualitative information in the narrative portions of their annual reports in which they
identify the risks presented by their business activities and their methods for measuring and controlling
those risks. The depth of these narratives on risk has
increased substantially over the past few years. The
banks' 1993 reports typically had only limited discussions about trading and perfunctory information
about derivatives. The 1994 reports had much richer
disclosure on these topics. The overriding characteristics of the 1995 annual reports were refinement of
methods of disclosure first used in 1994 and further
diffusion of these methods among the top ten banks;
for example, whereas a 1994 report might have discussed overall value at risk, the 1995 report broke
down value at risk into its elements and discussed
exposure to different kinds of risk.6
Discussion
of Specific
Risks
Although nearly all of the banks described credit and
market risk in 1994, the 1995 reports contained fuller,
more coherent explanations of exposures to those
risks (table 3). The 1995 reports as a rule broadened
the approaches used in 1994 to frame discussions and
analyses of other products (such as bonds) and other
lines of business (such as selling foreign currency to
customers or trading for the firm's own account as
opposed to marketmaking). Also, the reports generally integrated discussions of derivatives into clearer
discussions of identical risks inherent in traditional
banking books; in contrast, disclosures about market
and credit risk in some of the 1994 reports focused
solely on derivatives. In 1995, as in earlier years, the
6. Value at risk is a method of measuring risk by estimating
potential losses in portfolio value that could result from adverse
movements in market prices and other risk factors. The method is
based on statistics in which a confidence level and a portfolio holding
period are specified.
Placed in context with balance sheet
Credit risk
Market risk
Liquidity risk
Operating and legal risks
depth of discussion was roughly commensurate with
the importance of trading profits to the institution's
overall income. For example, some banks earned
more on deposit account service charges than they
did from trading, and the limited level of disclosure
about trading may have reflected that priority.
Similarly, banks' discussions of funding liquidity
risk at their institutions and their means of controlling
it were generally more informative in 1995. Banks
summarized their processes for identifying their funding requirements, their procedures for predicting cash
needs, and contingency plans for unexpected cash
demands. None of the banks, however, discussed the
market liquidity of their financial instrument portfolios.
Disclosures of operating and legal risks were
somewhat more detailed in 1995, but discussions of
management techniques for controlling these risks
remained rather shallow. This shallowness may
reflect the difficulty of reliably quantifying these
risks. However, it is noteworthy that the roots of
some of the more notorious trading debacles in recent
years can be traced to operating or legal problems;
therefore, more discussion of these risks might have
been appropriate.
Most of the ten banks described their processes for
controlling the risks arising from trading and other
business activities by identifying the management
group responsible for setting trading policies and by
describing the managerial functions responsible for
ensuring compliance with those policies. The typical
report gave an overview of risk management that
sketched the bank's business objectives and its
management philosophies (for example, by describing the extent to which its management responsibilities are centralized or diffuse). Most banks also
briefly described the information systems and
796
Federal Reserve Bulletin • September 1996
Requirements and Recommendations for Public Disclosure
Although authorities that set accounting standards, regulators, and industry groups have long recognized that there
are deficiencies in accounting practices for and disclosure
of financial instruments in general, the growing use of
derivatives has brought these deficiencies into sharp focus.
The Financial Accounting Standards Board (FASB), the
organization that sets accounting standards, in 1986 created
a task force on financial instruments to address these deficiencies. After some study, the FASB decided that the
accounting issues surrounding derivatives would be best
addressed by first establishing minimum disclosure requirements and then devising consistent accounting methods.
The FASB has so far published three statements of accounting standards (SFAS) affecting disclosures about derivatives and other financial instruments. Financial statements
that conform to generally accepted accounting principles
necessarily follow these standards.
SFAS 105, Disclosure of Information about Financial
Instruments with Off-Balance-Sheet Risk and Financial
Instruments with Concentrations of Credit Risk, became
effective with 1990 annual reports. It requires the disclosure
of the basic contractual terms of certain derivative contracts
and discussion of their market and credit risks. It also
requires the disclosure of large concentrations in credit risk
and, for certain derivative instruments, the disclosure of the
loss the firm could incur if counterparties were to default on
their obligations.
SFAS 107, Disclosure about Fair Value of Financial
Instruments, requires the disclosure of the fair value of
derivatives (as well as that of most traditional banking
instruments). The standard first applied to 1992 annual
reports; it was amended by SFAS 119 for the purpose of
making fair value disclosures better organized and more
understandable to readers of financial statements.
SFAS 119, Disclosure about Derivative Financial Instruments and Fair Value of Financial Instruments, became
effective for 1994 annual reports. It requires firms to differentiate in their disclosures between derivatives used for
trading purposes and those used for risk management or
other "end-user" purposes.
• Trading activities. For derivatives used for trading,
firms must report the fair value of their derivatives positions (both as of year-end and as an annual average) and
must report their profits from the trading of derivatives
separately; these trading profits may be reported as a total or
may be broken down by, for example, line of business (such
as sales of foreign currency) or exposure to market risk
(such as interest rate or foreign exchange risk).
• End-user activities. Firms must explain their objectives
in using derivatives for hedging or other risk-management
purposes and must discuss their strategies for achieving
those objectives. They must also indicate where in thenfinancial statements end-user derivatives are presented and
give certain details about derivatives used to hedge
anticipated transactions (such as the amount of gains or
losses that were deferred). The fair values of end-user
derivatives must be disclosed separately from the fair
values of items hedged by the derivatives. Encouraged but
not required is the disclosure of quantitative information
that managers use as a basis for controlling risk exposure.
Proposed Requirements
Disclosures in the 1995 annual reports were influenced by
requirements formally proposed in December 1995 by the
Securities and Exchange Commission (SEC), the agency
responsible for administering federal securities laws and
for regulating accounting and disclosure by publicly traded
companies. The SEC has delegated much of its authority
for setting accounting standards for publicly traded companies to the Financial Accounting Standards Board, but it
also occasionally issues supplemental guidance. The proposed amendments to current requirements focus on the
disclosure of market risk. If adopted, they would become
effective for 1996 annual reports.
The SEC proposal requires more detailed disclosure of
quantitative and qualitative information about the market
risks associated with derivatives. Quantitative information
could be disclosed by means of (1) a table showing contract terms and other information, including fair value,
expected cash flows, and effective rates and prices; (2) a
sensitivity analysis of a hypothetical loss of earnings, fair
values, or cash flows resulting from an arbitrary change in
current interest rates, foreign exchange rates, or commodity or other prices; or (3) a statement of value at risk
expressing the companywide (that is, in trading as well as
in other lines of business) loss of fair values, earnings, or
cash flows of market-risk-sensitive instruments that might
arise from price movements of a given likelihood of occurrence over some time interval, with a separate estimate of
value at risk for each type of market risk to which the firm
is exposed. Also required would be the disclosure of limitations that might cause the quantitative information about
market risk to not fully reflect the overall market risk to the
company.
The SEC proposal also requires that companies disclose
more detail than currently required by the FASB about
their procedures for accounting for derivatives, including
information about the accounting methods used, the types
of derivatives to which each method was applied, and the
criteria for choosing which method to apply.
Recommendations
In the past two years, several industry groups and regulators, either individually or in association with other agencies, have called for additional disclosure of derivatives
activities. These groups have generally stressed the advisory nature of their recommendations, in an effort to encour-
Derivatives Disclosures by Major U.S. Banks, 1995
797
Requirements and Recommendations for Public Disclosure—Continued
age firms to develop better ways of informing readers of
financial statements and of enhancing market discipline.
Their recommendations, though nonbinding, appear to have
influenced disclosures in the 1994 and 1995 annual reports.
Euro-currency Standing Committee
In 1994, a working group of the Euro-currency Standing
Committee of the Group of Ten central banks (ECSC)
recommended that firms disclose quantitative information
about their market and credit risk exposures and their success at managing those risks, to provide a framework for
their qualitative discussions. At a minimum, quantitative
information about the market risk of the trading portfolio
should be disclosed; also desirable is similar disclosure
about the consolidated portfolio (that is, about derivatives
and financial instruments relating to traditional banking
activities as well as to trading). The information should
reveal the portfolio's riskiness by indicating the volatility of
its market value.
The ECSC also recommended that firms increase the
transparency of their disclosures about credit risk. Suggestions include the reporting of current and potential credit
exposure and the quantification of the variability of credit
exposure over time. Reporting of actual credit losses,
arrangements for collateral, and other credit enhancements
were suggested to give an indication of the quality of the
firm's risk-management practices.
Basle Supervisors Committee and
International Organisation of Securities Commissions
In November 1995, the Basle Supervisors Committee (BSC)
and the International Organisation of Securities Commis-
management tools used to assess the results of their
efforts to control risk.
Explanation of the
Financial Presentation
of
Derivatives
Under generally accepted accounting principles,
firms have long been required to describe their
accounting policies in general terms. More recently
they have had to disclose their means of determining
the fair value (sometimes called the fair market value)
of many financial instruments they hold or issue. For
derivatives, firms must describe not only the way
they determine fair value but also the accounting
methods under which they recognize income and
expense and the legal techniques that underlie their
presentation of net credit exposure in financial
reports. In meeting these requirements, all ten banks
sions (IOSCO), international associations of national regulators, made several recommendations for the disclosure of
more qualitative and quantitative information about trading
and derivatives activities and their effect on credit risk and
earnings. The groups agreed on using a common set of data
provided by regulated enterprises to assess the use of
derivatives by these enterprises. The recommendations
were issued in connection with a survey of disclosures in
the 1994 annual reports of seventy-nine large international
banks and securities firms in the Group of Ten (G-10)
countries. The 1994 and 1995 annual reports described in
this article provided virtually all the data recommended by
these groups.
Other Information about
Available to the Public
Derivatives
Regulators have long required that banking organizations
report notional amounts and fair values of the derivative
instruments they hold or have issued. Since 1995, the
Federal Reserve and the other federal banking agencies,
under the auspices of the Federal Financial Institutions
Examination Council (FFIEC), have required that notional
amounts and fair values be reported by risk exposure and
management objective. Information about trading revenues
and the effects of end-user derivatives on accrual-basis
income has also been required since 1995, as has the
past-due status of derivative contracts and actual credit
losses. This information is available to the public. The
information required in these regulatory reports appears to
have influenced the disclosures made by the larger of the
top ten banks in their 1995 annual reports.
discussed their reasons for using derivatives, identified where in the financial statement information
about derivatives was presented, and explained how
derivatives were accounted for (that is, by fair value
or on an accrual basis; see box "Accounting for
Derivative Contracts"). In general, their 1995
descriptions were better organized and more specific
than those in earlier reports. The 1995 reports also
provided much more detailed and more useful
descriptions of the methods and assumptions used
in valuing financial instruments that did not have
observable market prices.
QUANTITATIVE
INFORMATION
Quantitative information illuminates management's
discussion of the firm's financial performance. With
respect to derivatives and trading, these data give
798
Federal Reserve Bulletin • September 1996
Accounting for Derivative Contracts
Derivative instruments, like some other financial instruments such as traditional loan commitments, are executory
contracts. That is, the two parties to the contract have made
mutual promises but have not carried out all the obligations
specified in the contract. Under generally accepted accounting principles, an executory contract is reported in a financial statement only after some economic performance (in
what may be a series of requirements) has taken place—
under a firm commitment to lend, for example, when funds
are drawn. The commitment is "off balance sheet" until
some performance occurs. When the cash disbursement is
reported as a loan, the financial contract can be said to be
"on balance sheet."
In keeping with this accounting principle for executory
contracts, the accounting treatment of derivative instruments may reflect only the next required contractual performance during the period covered by the financial statement
(such as the accrual of a cash receipt or disbursement
characterized as income or expense). Under this procedure,
an example of accrual accounting, even though a party to a
derivative contract—an interest rate swap, for example—
could be obligated to make a series of cash payments over a
number of years if interest rates change adversely, these
potential future obligations are not reflected on the balance
sheet. Hence, the derivative contract is "off balance sheet,"
and its potential risks and rewards are obscure. Also, when
derivative contracts are used as hedges, losses or gains on
them may be deferred to match revenue from loans or
interest expenses on deposits or other items being hedged.
readers of financial statements an indication of the
levels of market and credit risk assumed by the bank
and finer detail on the profit the organization earned
by taking those risks.
Future benefits or obligations associated with off-balancesheet contracts, then, are not well captured in financial
statements and therefore lack transparency.
Although executory contracts may not be recognized for
accounting purposes, they nonetheless have economic
value. For example, an interest rate swap entitling a firm to
receive a fixed rate of 8 percent is more valuable than one
entitling the firm to receive 7 percent, even though the
comparative benefit does not appear on the balance sheet. In
some financial reporting situations (such as in reporting
trading activities), using economic value is more relevant
than using accrual accounting conventions to represent
derivatives. The accounting practice of estimating economic value, called marking to market, involves determining the fair value of the contract (by market quote, if
available; otherwise through estimation techniques), recording that value on the balance sheet, and recognizing the
change in value as a gain or a loss. When derivative
contracts are marked to market, their fair value is reflected
in accounting statements at a point in time (the balance
sheet date) and their volatility is demonstrated through the
change in fair value reported in earnings.
Accountants may disagree about which procedure—
marking to market or accruing cash flows—more faithfully
represents a particular transaction. However, they do agree
that more thorough disclosure of the contractual terms of
derivative contracts and discussion by management of their
hedging programs and the results of those efforts improve
the transparency of off-balance-sheet instruments.
and, for interest rate contracts held for trading purposes at year-end, detailed schedules of interest rates
and maturities.
Disclosures
Basic
Information
on Derivatives
Positions
The top ten banks continued in 1995 to disclose the
general contractual terms of their derivative contracts
(table 4). All ten reported the notional amounts of
such contracts, in all cases distinguishing derivatives
used in trading from those intended for other (so
called end-user) purposes. Most of the ten provided
details on their annual average and year-end trading
positions, giving the dollar values of assets and
liabilities in their trading portfolios disaggregated
among the different classes of derivatives and other
items therein. Some types of information published
in 1994 appeared less frequently in 1995: gross positive and negative fair values of derivatives positions
about Traded
Derivatives
Most of the ten banks gave more detail about their
trading positions and trading revenues in 1995 than
had been done in 1994. This enhancement follows a
significant change in the 1994 reports: For that year,
generally accepted accounting principles for the first
time required that firms separate the fair values of
derivative contracts in a gain position (assets) from
those in a loss position (liabilities), under much more
stringent rules for netting for accounting purposes. 7
These details were supplemented in 1995 with more
information on the types of instruments, both deriva-
7. As a result of this accounting change, the assets and liabilities of
one of the ten banks increased $14 billion. The change had no effect
on income, however.
Derivatives Disclosures by Major U.S. Banks, 1995
4. Number of top ten banks disclosing the general terms
of their derivative contracts in their annual reports,
1993-95
Number of banks disclosing
Type of quantitative disclosure
1993
1994
1995
NOTIONAL A M O U N T S
Dealer (trading account) positions . . .
End-user (nontrading account)
positions
Derivatives traded over the counter
separated torn those traded
on an exchange
5
9
10
10
10
10
3
4
Maturity schedule
Dealer (trading account) positions . . .
End-user (nontrading account)
positions
Combined
1
6
2
7
2
10
1
8
3
Contract rates
Receive or pay rates
Receive or pay notional amounts
3
2
10
10
4
4
7
0
7
6
4
4
0
10
10
0
0
8
6
10
7
0
0
9
7
10
7
9
9
10
6
2
9
6
6
4
FAIR VALUE D A T A
Gross positive fair value
Gross negative fair value
Trading account
Trading assets separated from
trading liabilities
Nonderivative instrument detail
End-of-period fair value
Average-for-period fair value
Derivative instrument detail
End-of-period fair value
Average-for-period fair value
End-user positions
Overall fair value
By related asset or liability being
hedged
By type of derivative contract
tive and nonderivative, that made up the year-end fair
value (and annual average fair value) of the trading
portfolio.
799
volatility during the year of their credit exposures
resulting from their trading activities.
Reflecting a general shortcoming of annual financial statements—one that is not limited to the reporting of derivatives—the ten banks furnished only
limited data on the credit quality of the financial
instruments they held or their portfolios as a whole.
Five banks disaggregated credit exposures for their
derivatives portfolios according to whether or not the
counterparty was investment grade (as rated by an
outside agency or internally), but banks generally did
not publish this information for loan or investment
portfolios. Disclosure about geographic concentration was less common in 1995 than in 1994. The
extent of disclosure of nonperforming contracts was
unchanged: Six banks either quantified their actual
credit losses and their derivative contracts for which
payments were past due or explicitly stated that the
amounts were immaterial. In most instances, losses
were reported in the context of a discussion of losses
incurred from traditional banking activities.
As a supplement to their disclosures of credit risk
and capital adequacy, seven banks reported the
risk-based-capital credit-equivalent amount of their
off-balance-sheet contracts in describing their riskweighted assets and risk-based capital ratios.9
9. The risk-based-capital credit-equivalent amount is a measure
resulting from the conversion of off-balance-sheet contracts into an
equivalent balance sheet asset. Regulatory calculations of risk-basedcapital amounts and ratios are used by supervisors to assess capital
adequacy.
5. Number of top ten banks disclosing in their annual
reports data on credit risk relating to derivatives they
trade, 1993-95
Credit risk
Number of banks disclosing
Type of quantitative disclosure
The state of disclosure about credit risk in 1995
compared with 1994 was mixed (table 5). As in 1994,
all ten banks reported their current credit exposure
taking into account the effects of bilateral netting
agreements. However, additional information about
credit risk exposure was generally lacking. Six banks
showed how much their gross credit risk exposure on
December 31 had been reduced through bilateral
netting agreements. Of these six, three also quantified
the potential credit exposure of their positions.8 None
of the banks gave a quantitative measure of the
8. Potential credit exposure is a measure of the probable loss to the
bank if the contracts held on a certain date were to become more
valuable before they mature because of favorable market price
changes and then counterparties were to default.
Current credit exposure (net)
Reduction of exposure attributed to
bilateral netting agreements ..
Potential credit exposure
Volatility of credit exposure
Counterparty credit quality
By counterparty type (for
example, bank, other
corporation, government)
By internal or external credit
rating of counterparty
Concentration
Exposure by geographic area
Exposure by industry group or
government entity
Collateral and other credit
enhancements
Actual credit losses
Nonperforming contracts
Risk-based-capital credit equivalent
for derivatives
1993
1994
1995
10
10
10
7
1
7
2
6
3
0
0
0
4
4
1
0
1
5
4
4
1
4
6
5
0
2
1
4
6
6
1
6
6
4
7
7
800
Federal Reserve Bulletin • September 1996
Market risk
Most of the ten banks reported details of their
measurements of market risk in their 1995 annual
reports. Seven reported using value at risk as a means
of assessing market risk and gave daily, monthly, or
quarterly data. These seven gave varying amounts of
detail on the assumed holding period, the high, low,
and average value at risk, and portfolio performance
versus management's intended limits on losses that
could result from market risk exposure (table 6). One
bank gave portfolio performance figures without
giving details of management's limits on losses. Four
reported both management's limits and actual trading
profits and losses. The disclosure of numerical details
on value at risk was a significant innovation in the
1994 reports and became more widespread in the
1995 reports. Indeed, inclusion of these details is
the single most remarkable development in annual
report disclosures over the past two years. In their
1993 reports, several institutions indicated that they
relied on a value-at-risk method but did not disclose
value-at-risk data, and in their 1992 reports they were
largely silent about how they managed market risk
and gave little or no measure of their market risk
exposure.
Several banks included in their 1995 reports additional data on value at risk that reflected a recent
proposal by the Securities and Exchange Commission regarding market risk disclosures (see box
6. Number of top ten banks disclosing in their annual
reports data on the management of market risk relating
to derivatives, 1993-95
Number of banks disclosing
Type of quantitative disclosure
1993
1994
1995
0
0
0
5
7
4
6
5
7
0
3
4
0
4
5
0
0
6
0
7
4
1
8
2
8
0
8
3
5
6
0
3
1
TRADING ACTIVITIES
Value-at-risk information
High and low value at risk for the
Average daily value at risk
Daily change in value of portfolio . . .
Average daily change in value
of portfolio
Frequency of changes in
portfolio value exceeding
value-at-risk limit
Confidence interval used in
value-at-risk analysis
Aggregation across risk factors
E N D - U S E R ACTIVITIES
Effect of derivatives on duration1 ...
Effect of derivatives on gap positions .
Scenario analysis—Impact of rate
shock
Value at risk for nontrading
portfolio
1. Duration is a method of measuring interest sensitivity that is based on
financial instrument cash flows weighted by the time to receipt or payment.
"Requirements and Recommendations"). These
banks not only described the market risks of their
trading portfolios in terms of value at risk but also
published data on their exposure to specific kinds of
market risk (for example, interest rate and foreign
exchange) as well as a measure of how these risks
interacted or correlated to reduce overall market
exposure through diversification.
The larger dealers among the ten banks wove these
quantitative details into their discussions of riskmanagement policies, giving some flavor of the
dynamics of their risk-taking during the year by
disclosing their actual trading portfolio results relative to their risk measurements and their risk-control
objectives. Several banks used graphics to more fully
convey information about their trading portfolios in
general, about daily value at risk, and about daily
changes in portfolio value.
Liquidity risk
Quantitative information about liquidity risk was limited in the 1995 annual reports, as it was in the 1994
reports. The topic generally was addressed through
discussion of overall institutional liquidity requirements and policies.
Disclosures
about End-User
Derivatives
The most common disclosure about end-user derivatives was general information about positions:
notional amounts, maturities, and fair values
(table 4). The most prevalent means of conveying
information about how derivatives were used to manage a bank's interest rate risk continued to be a gap
position schedule (table 6). 10 All banks publishing a
gap schedule cautioned that it represented only a
point in time and did not capture option and other
dynamic characteristics of the balance sheet. In several reports the gap schedule was supplemented
either by a discussion of the effect of a hypothetical
rate shock on capital or earnings or by a discussion of
earnings-at-risk methods applied to nontrading portfolios. Publishing these alternatives to gap analysis
was new in the 1994 reports and became more
widespread in 1995. Most banks, in varying detail,
10. Gap analysis is a method used to estimate interest rate risk in
which financial instruments are categorized by maturity in a series of
time bands. Liabilities are subtracted from assets in each time interval,
and the magnitude of the difference gives an indication of interest
sensitivity. Banks can use derivatives to adjust their sensitivity to
interest rate risk.
Derivatives Disclosures by Major U.S. Banks, 1995
described whether the derivatives were linked to specific components of the balance sheet or were used to
manage overall, or macro, exposures. Reflecting the
expansion of value-at-risk methods to activities not
related to trading, one bank furnished quantitative
information on the value at risk related to its nontrading portfolios.
As a result of minor changes in generally accepted
accounting principles, the 1994 annual reports contained clearer, more understandable information
about the fair value of the financial instruments in the
firms' portfolios. Firms were required to disclose the
fair value of financial assets and liabilities carried at
historical cost separately from the fair value of
derivatives used to hedge these instruments. This
approach makes it much more obvious whether an
instrument was favorable (that is, an asset from which
the bank could expect to receive cash) or unfavorable
(a liability on which the bank probably would pay
cash), given year-end prices or interest rates. The
1995 reports showed little change in how this information was presented.
801
in which most banks gave only the minimum
required information (that is, they reported only about
derivatives). As a result, the 1995 reports gave a
more complete picture of profits and risks from
trading both derivative and nonderivative financial
instruments.
In contrast, fewer banks gave details about the
effects of end-user derivatives on accrual-basis
accounting income and expense. Only four banks
reported the effect on operating income of derivatives
accounted for on an accrual basis, compared with
eight in 1994. And only three banks disclosed gains
or losses from end-user derivatives that had been
deferred and provided details on when the deferrals
would be reflected in future earnings, down from five
in 1994. The absence of these details makes it somewhat more difficult to assess the accounting consequences of a bank's hedging activities (for example,
whether income will decrease in future years when
losses that had been deferred are recognized.)
CONCLUSION
Disclosures
about
Earnings
For 1995, all ten banks disaggregated their trading
revenues: Nine reported their results according to
line of business or risk exposure with little differentiation between derivative and other instruments, and
one reported about derivatives only (table 7). These
numbers compare favorably with the 1994 reports,
7.
Number of top ten banks disclosing data on income
relating to derivatives in their annual reports, 1993-95
Number of banks disclosing
Type of quantitative disclosure
1993
1994
2
5
9
8
7
1
5
6
4
1995
INCOME FROM TRADING ACTIVITIES
Disaggregation of income
By risk exposure or line of business .
By specific instrument (for
example, interest rate swaps) ..
By derivative versus nonderivative
instruments
INCOME RELATED TO
E N D - U S E R ACTIVITIES
Effect of derivatives on income from
operations
Amount of deferred gains or losses ..
Amortization period for deferred
gains or losses
Unrealized gains or losses on
derivatives
4
8
4
6
5
3
2
5
3
7
10
10
The detail and clarity of information about derivatives and trading published by the top ten U.S. dealer
banks continues to improve. The banks that had the
more innovative annual reports in 1994 also led the
group in 1995, reporting more quantitative details on
value at risk and the results of their trading activities.
Also as was the case in 1994, the disclosures of those
banks whose trading revenues make up a larger share
of their income tended to be more informative about
derivatives and trading. Institutions with larger traditional banking segments devoted more attention to
those lines of business than to trading.
The experimentation in better approaches to disclosure that has been encouraged by standards setters
and others is evident in the variety of methods used
to present information about derivatives activities—
and also in the discarding of some information that
was provided in 1994. None of the reports can be
singled out as the best; most of the banks had a novel
approach to reporting on some aspect of their derivatives activities that was not used by the others. Disclosures about market risk have been greatly
improved, but it appears to us that credit risk disclosures are lagging and need more depth. Further
experimentation should be encouraged, as these private efforts have made significant strides in increasing the transparency of derivatives activities.
•
802
Treasury and Federal Reserve
Foreign Exchange Operations
During the second quarter of 1996, the dollar traded
in a relatively narrow range against the Japanese yen,
fluctuating between ¥104 and ¥110. Against the
mark, the dollar appreciated early in April, then proceeded to trade between DM 1.51 and DM 1.55 for
the duration of the quarter. Throughout the period the
dollar was supported by expectations of an increase
in U.S. interest rates by the end of 1996. Meanwhile,
evolving market views of the likely course of German
and Japanese monetary policy contributed to fluctuations within the trading range. Over the quarter, the
dollar appreciated 3.2 percent against the German
mark, 2.2 percent against the Japanese yen, and
1.6 percent on a trade-weighted basis against other
Group of Ten (G-10) currencies.2 The U.S. monetary
1. The charts for the report are available on request from Publications Services, Mail Stop 127, Board of Governors of the Federal
Reserve System, Washington, DC 20551.
2. The dollar's movements on a trade-weighted basis against ten
major currencies are measured using an index developed by staff of
the Board of Governors of the Federal Reserve System.
This quarterly report describes Treasury and System
foreign exchange operations for the period from April
through June 1996. It was presented by Peter R.
Fisher, Executive Vice President, Federal Reserve
Bank of New York, and Manager for Foreign Operations, System Open Market Account. Daniel Katzive
was primarily responsible for preparation of the
report.1
1. Foreign exchange holdings of U.S. monetary authorities, based on current exchange rates
Millions of dollars
Quarterly changes in balances by source
Balance,
Mar. 31, 1996
Item
Net purchases
and sales'
Impact of
sales2
Investment
income
Currency
valuation
adjustments3
0
0
103.4
4.0
-387.3
-143.3
Balance,
June 30, 1996
FEDERAL RESERVE
13,266.0
6,636.6
Deutsche marks
Japanese yen
Interest receivables6
Other cash flow from investments7
75.7
7.1
0
0
.
74.0
.5
19,985.4
Total
12,982.1
6,497.3
19,553.9
U . S . TREASURY
EXCHANGE STABILIZATION F U N D
Deutsche marks
Japanese yen
Mexican pesos4
— ,3
Interest receivables6
Other cash flow from investments7
Total
,
6,715.5
9,730.5
10,500.0
0
0
-235.3
272.7
7.5
27,226.2
NOTE. Figures may not sum to totals because of rounding.
1. Purchases and sales include foreign currency sales and purchases related to
official activity, swap drawings and repayments, and warehousing.
2. Calculated using marked-to-market exchange rates; represents the difference between the sale exchange rate and the most recent revaluation exchange
rate. Realized profits and losses on sales of foreign currencies, computed as the
difference between the historic cost-of-acquisition exchange rate and the sale
exchange rate, are shown in table 2.
3. Foreign currency balances are marked to market monthly at month-end
exchange rates.
4. See table 4 for a breakdown of Mexican swap activities. Note that the
investment income on Mexican swaps is sold back to the Bank of Mexico.
0
0
0
51.7
6.1
235.3
-196.0
-213.3
05
6,571.2
9,523.3
10,500.0
277.3
4.4
26,876.2
5. Valuation adjustments on peso balances do not affect profit and loss
because the effect is offset by the unwinding of the forward contract at the
repayment date. Note that the ESF does not mark to market its peso holdings,
but the Federal Reserve System does.
6. Interest receivables for the ESF are revalued at month-end exchange rates.
Interest receivables for the Federal Reserve System are carried at cost and are
not marked to market until interest is paid.
7. Cash flow differences from payment and collection of funds between
quarters.
803
authorities did not undertake any intervention operations in the foreign exchange market during the
quarter.
In June, the dollar became increasingly entrenched
in tight ranges, pinned between DM 1.51 and
DM 1.54 and between ¥107.60 and ¥110. After the
first week of June, the dollar's Friday closing levels
against the mark and yen never varied more than
1 percent from the preceding week's close. In this
environment, implied volatility on dollar-mark and
dollar-yen one-month options declined to levels
seldom seen. The probability distribution of future
exchange rates implied by one-month currency option
prices became notably tighter during the second
quarter, reflecting expectations of lower exchange
rate volatility and market participants' greater willingness to bear the risks of selling options.
SUPPORT
FOR THE DOLLAR
EXPECTATIONS
FROM
OF A HIKE IN U.S.
RATES
Throughout the quarter U.S. economic data releases
led many market participants to anticipate a nearterm Federal Reserve tightening. Most notably, nonfarm payroll reports for March and April provided
evidence that the U.S. labor market remained strong.
Initial reports (although later revised down) that firstquarter gross domestic product (GDP) had grown at a
2.8 percent year-on-year rate reinforced the perception of strength in the economy. Expectations of
monetary tightening were reflected in forward rates,
with three-month rates on December Eurodollar
futures rising nearly 60 basis points from April 1 to
mid-June.
The perception of underlying economic strength in
the United States prompted dollar buying during episodes of dollar weakness, providing support for the
dollar at the bottom of its trading range. In the last
week of the second quarter, expectations of an imminent Federal Reserve tightening were sharply scaled
back after several press and market research reports
suggested that a change in policy in the near term
was unlikely. The dollar had little reaction to these
late developments, with foreign exchange market
participants focusing instead on developments in
Germany and Japan.
Shifting expectations about U.S. monetary policy
caused sporadic disturbances in U.S. asset markets.
Declines in U.S. stock and bond prices, which had
weighed on the dollar in previous periods, did not
significantly weaken the dollar during this quarter.
THE DOLLAR BENEFITS AGAINST THE MARK
IN APRIL AND MAY FROM
EXPECTATIONS
OF GERMAN MONETARY
EASING
Early in the period, expectations of a further easing
of money market rates by the German Bundesbank
were supported by official policy actions. On
April 18, the Bundesbank announced that it would
cut its discount and Lombard rates, effectively lowering the range within which German money market
rates fluctuate. Although the key repurchase rate
remained fixed at 3.3 percent, the change in official
rates spurred expectations that cuts in the repurchase
rate would follow in subsequent weeks.
These perceptions were bolstered by weak economic data and by downward revisions of projections
for 1996 growth made by several German economic
institutes. Consumer price index data released in late
April for western Germany confirmed that inflationary pressures remained subdued; together with
Bundesbank officials' hints that scope for easing
existed, this development appeared to reinforce the
prospects of an ease.
In this environment the dollar broke above the
trading range in which it had been contained for
much of March. After decisively breaking DM 1.50
on April 11, the U.S. currency continued to appreciate, closing on May 28 at a high for the quarter of
DM 1.5470.
RETREAT OF THE DOLLAR
FROM ITS HIGHS AGAINST
IN JUNE
THE MARK
The Bundesbank did not, in fact, reduce money market rates during the second quarter, and the repurchase rate remained fixed at 3.3 percent. Anticipation
of additional Bundesbank easing during the cycle had
begun to fade by late May as indicators of improved
business sentiment were released. Stronger-thanexpected industrial orders and continued growth of
M3—well above the 7 percent ceiling of the Bundesbank's target range in April and May—further dampened expectations. By mid-June, prices in German
credit markets began to reflect an expectation of
Bundesbank rate hikes by the autumn of 1996, and
forward rate agreement (FRA) rates for three-month
Euromark deposits three months out moved sharply
higher than cash rates, after having traded in a range
roughly equal to or lower than that of cash rates for
most of the quarter.
Dissipating expectations of German monetary easing weighed on the dollar-mark exchange rate. The
dollar's continued failure to break through DM 1.55
804
Federal Reserve Bulletin • September 1996
prompted market participants to scale back long dollar positions, and the U.S. currency retreated from its
highs in May to close at a low for June of DM 1.5122
on June 18. Apparently capped at DM 1.55 but well
supported above DM 1.51, the dollar proceeded to
trade in a narrow corridor, and implied volatility on
one-month dollar-mark options approached record
lows. At the same time, although the dispersion of the
probability distribution of the future dollar-mark
exchange rate implied by currency options declined,
it became increasingly skewed toward a weaker
dollar.
EXPECTATIONS
INTEREST
EXCHANGE
OF A HIKE IN
RATES
JAPANESE
WEIGH ON THE
DOLLAR-YEN
RECOVERY
OF THE DOLLAR
AGAINST
THE YEN
RATE
Early in the second quarter, the dollar fell against the
yen as sentiment grew that the Bank of Japan's
accommodative monetary policy stance could end
as early as the later part of the quarter. This perception was supported by data released in April that
suggested recovery in the retail, manufacturing, and
housing sectors of the economy. Official comments
also fueled interest rate anxieties. Market participants
were particularly wary of April comments from Governor Matsushita, of the Bank of Japan, suggesting
that rising rates were "natural" in a recovering economy and noting the link between Japan's easy money
2.
policies of the 1980s and the ensuing "bubble
economy."
At the peak of these concerns and with December
Euroyen futures contracts reflecting three-month rates
nearly 90 basis points above cash rates, at the end
of April the dollar traded to the bottom of its range
for the quarter. The dollar briefly traded below ¥104,
and dollar-yen one-month implied options volatility
spiked to a high of 11.25 percent for the quarter. The
dollar was supported at these levels by a market
perception that the Japanese monetary authorities
would not tolerate a weaker dollar because this might
jeopardize Japan's economic recovery.
Net profits or losses (-) on U.S. Treasury
and Federal Reserve foreign exchange operations,
based on historical cost-of-acquisition exchange rates
Millions of dollars
Federal
Reserve
U.S. Treasury
Exchange
Stabilization
Fund
Valuation profits and losses on
outstanding assets and liabilities,
Mar. 31, 1996
Deutsche marks
Japanese yen
2,505.9
1,487.9
859.5
2,188.9
Total
3,993.8
3,048.3
Realized profits and losses
from foreign currency sales,
Mar. 31, 1996-June 30, 1996
Deutsche marks
Japanese yen
.0
.0
.0
.0
Total
Period and item
.0
.0
Valuation profits and losses on
outstanding assets and liabilities,
June 30, 1996>
Deutsche marks
Japanese yen
2,118.7
1,337.5
663.5
1,968.3
Total
3,456.1
2,631.7
NOTE. Figures may not sum to totals because of rounding.
1. Valuation profits or losses are not affected by peso holdings, which are
canceled by forward contracts.
By early June, anticipation of an imminent Japanese
rate hike began to ebb. Analysts concluded that ongoing problems in Japan's financial sector and the
absence of compelling evidence that Japan's economic recovery could sustain itself without fiscal
stimulus precluded such a step. That perception
became more prevalent on May 15 after Governor
Matsushita said that Japan's recovery was not "selfsustaining." The Bank of Japan's Tanken survey,
released on June 7, was somewhat stronger than
expected but still too weak to alter these expectations.
Forward rates declined in this environment, and the
dollar recovered against the yen, appreciating from
its early-May lows to trade above ¥109 in early June.
The June 18 announcement that Japan's annualized
first-quarter GDP growth rate was 12.7 percent
briefly revived speculation that a Bank of Japan tightening might be imminent, and the dollar traded off its
highs to below ¥108 in tandem with a sell-off in
Japanese credit markets. The dollar and Japanese
bonds recovered, however, as market participants
ultimately concluded that the strong GDP figure
would not in itself prompt a rate hike.
In the final week of the quarter, remaining anticipation of a Bank of Japan tightening by summer's end
subsided with the release of weaker-than-expected
industrial production figures and reports that in May,
unemployment had surged to a record high of 3.5 percent. December Euro-yen contracts ended the quarter
reflecting three-month rates only 53 basis points
above cash rates, and the dollar rose to close the
quarter at a twenty-nine-month high of ¥109.65.
As in preceding quarters, Japan reported declining
trade surpluses and sharp contractions of its trade
surplus with the United States. These data releases
provided support for the dollar throughout the period,
although immediate reaction to individual data
Treasury and Federal Reserve Foreign Exchange Operations
releases was muted. Data for March, April, and May
indicated that, in each month the bilateral surplus had
declined more than 30 percent from the previous
year's level.
WEAKENING
CONCERNS
OF THE MEXICAN
ABOUT
PESO
A POSSIBLE
amid continued positive news on the Mexican economy. Waning expectations of an imminent Federal
Reserve tightening in the final week of the quarter
also benefited the peso, and the currency partially
recovered, closing the quarter at NP 7.58.
AMID
U.S. RATE
HIKE
TREASURY AND FEDERAL
EXCHANGE
Through April and May, the Mexican peso traded
against the dollar in a steady range between NP 7.40
and NP 7.55 despite a backup in U.S. bond yields. In
June, growing concerns about a possible U.S. monetary tightening sparked a correction, pushing the peso
out of its recent range to trade above NP 7.60 against
the dollar.
Toward the end of the period, markets reacted
positively to the Mexican authorities' announcement
that in August they intended to repay a substantial
portion of the $10.5 billion outstanding under the
U.S. Treasury's Exchange Stabilization Fund (ESF)
medium-term swap facility. This announcement came
3. Currency arrangements
Millions of dollars
Amount of
facility
Outstanding,
June 30, 1996
FEDERAL RESERVE
RECIPROCAL CURRENCY
ARRANGEMENTS
Austrian National Bank
National Bank of Belgium
Bank of Canada
National Bank of Denmark
Bank of England
Bank of France
Deutsche Bundesbank
Bank of Italy
Bank of Japan
Bank of Mexico1
Netherlands Bank
Bank of Norway
Bank of Sweden
Swiss National Bank
2,000
250
3,000
2,000
6,000
3,000
5,000
3,000
500
250
300
4,000
Bank for International Settlements
Dollars against Swiss francs
Dollars against other authorized
European currencies
1,250
Total
250
0
1.000
600
32,400
Total1
1,000
0
3,000
0
FOREIGN
The U.S. monetary authorities did not undertake any
intervention operations this quarter. At the end of the
quarter, the foreign currency reserve holdings of the
Federal Reserve System and the ESF were valued at
$19.5 billion and $16.1 billion, respectively, and consisted of German marks and Japanese yen.
The U.S. monetary authorities invest all their foreign currency balances in a variety of instruments
that yield market-related rates of return and have a
high degree of liquidity and credit quality. A significant portion of these balances is invested in German
and Japanese government securities that are held
directly or under repurchase agreement. As of
June 30, outright holdings of government securities
by U.S. monetary authorities totaled $4.6 billion and
included investments in Japanese treasury bills and
German government bonds.
Japanese and German government securities held
under repurchase agreement are arranged either
through transactions executed directly in the market
or through agreements with official institutions. Government securities held under repurchase agreements
by the U.S. monetary authorities totaled $12.3 billion
at the end of the second quarter. Foreign currency
reserves are also invested in deposits at the Bank for
International Settlements and in facilities at other
official institutions.
In addition, the ESF held $10.5 billion equivalent
in nonmarketable Mexican government securities in
connection with the ESF's medium-term swap
arrangement.
•
4.
Drawings/rollovers and repayments (-) by Mexican
monetary authorities
Millions of dollars
Item
OH) i
Outstanding,
Mar. 31,
19%
Apr.
May
June
Outstanding,
June 30,
1996
0
10,500
0
0
0
0
0
0
0
10,500
10,500
10,500
1. Facilities available to Mexico comprise short-term swaps between the
Bank of Mexico and both the Federal Reserve and the ESF, as well as mediumterm swaps and government guarantees between the government of Mexico and
the ESF. The total amount available from both medium-term swaps and government guarantees is $20 billion, less any outstanding drawings on the shortterm facilities.
RESERVE
RESERVES
t^MPllli^l 0
U . S . TREASURY
EXCHANGE STABILIZATION F U N D
CURRENCY ARRANGEMENTS
Deutsche Bundesbank
Bank of Mexico1
Regular swaps
United Mexican States'
Medium-term swaps
805
Currency arrangements
with the US. Treasury
Exchange Stabilization
Fund
Bank of Mexico
Regular
Medium-term
NOTE. Data are on a value-date basis.
806
Industrial Production and Capacity Utilization
for July 1996
Released for publication August 15
Industrial production edged up 0.1 percent in July
after an upward revised gain of 0.6 percent in June.
A 4.3 percent gain in the output of motor vehicles
and parts was mostly offset by a 1.8 percent decrease
in the output of utilities in July; output in other
categories was unchanged, on balance. The gain in
the production of motor vehicles and parts was led
by an increase in car and truck assemblies to a
seasonally adjusted annual rate of 13.4 million units;
the decrease at utilities reflected cooler-than-normal
weather on the East Coast. At 126.2 percent of its
1987 average, total industrial production in July was
3.8 percent higher than it was in July 1995. Industrial
capacity utilization decreased 0.2 percentage point, to
83.2 percent.
When analyzed by market group, the data show
that the production of consumer goods increased
0.3 percent because of the strength in the output of
Industrial production indexes
Twelve-month percent change
Twelve-month percent change
Capacity and industrial production
Ratio scale, 1987 production = 100
— Total industry
Capacity
-
140
^
-
^
Ratio scale, 1987 production = 100
120
-
Production
100
80
1
1
1
1
1
1
1
Percent of capacity
Total industry
90
Utilization
80
70
1
1982
1
1
1984
1
1
1986
1
1
1988
1
1
1990
1
1
1992
1
1
1994
1
1996
1982
1984
1986
All series are seasonally adjusted. Latest series, July. Capacity is an index of potential industrial production.
1988
1990
1992
1994
1996
807
Industrial p r o d u c t i o n and c a p a c i t y utilization, July 1 9 9 6
Industrial production, index, 1987= 100
Percentage change
1996
Category
19961
Apr.'
Mayr
Juner
Julyp
Total
124.5
125.2
126.0
126.2
Previous estimate
124.5
125.1
125.7
Major market groups
Products, total2
Consumer goods
Business equipment
Construction supplies
Materials
120.8
115.9
166.3
109.2
130.3
121.2
116.1
166.2
110.4
131.4
121.8
116.1
168.5
112.8
132.5
122.0
116.5
169.3
112.8
132.6
Major industry groups
Manufacturing
Durable
Nondurable
Mining
Utilities
126.5
138.3
113.5
100.4
126.4
127.2
139.2
114.0
100.2
127.9
128.1
141.2
113.8
101.9
125.9
128.6
142.0
113.8
101.6
123.6
Apr.r
Mayr
Juner
.8
.5
.6
.7
.5
.5
.6
.5
2.2
-2.1
.9
.3
.2
-.1
1.1
.8
1.1
2.0
-.1
-.7
-1.3
.5
.6
.4
-.2
1.2
July f
.1
3.8
.5
.0
1.4
2.2
.8
.2
.3
.5
.0
.1
3.3
1.6
8.7
5.2
4.5
.7
1.4
-.2
1.7
-1.5
.3
.6
-.1
-.3
-1.8
4.3
8.0
-.4
.8
.8
MEMO
Capacity utilization, percent
1996
1995
Average,
1967-95
Total
Low,
1982
High,
1988-89
Apr/
May
Juner
JulyP
83.0
83.2
83.4
83.2
3.9
82.9
83.1
83.2
81.9
80.4
85.5
89.7
92.7
82.0
80.3
86.0
89.6
93.7
82.3
80.6
86.5
91.1
92.2
82.3
80.7
86.2
90.9
90.3
4.4
5.1
2.5
-.1
1.3
82.1
71.8
84.9
83.3
81.4
80.7
82.6
87.4
86.9
70.0
71.4
66.8
80.6
76.2
85.2
83.5
89.0
86.5
92.6
82.4
80.6
86.7
90.0
90.8
NOTE. Data seasonally adjusted or calculated from seasonally adjusted
monthly data.
1. Change from preceding month.
automotive products. Production of other durable
consumer goods edged down 0.1 percent, and output
of nondurable consumer goods decreased 0.3 percent.
Apart from a drop in the residential use of electricity,
output of nondurables was little changed: Production
gains in chemical and paper products were offset by
declines in foods, tobacco, and fuels.
The output of business equipment increased
0.5 percent. The gain in motor vehicle assemblies
boosted the output of transit equipment, but the production of other types of transit equipment was little
changed. The output of industrial equipment declined
0.2 percent, its fifth consecutive monthly decrease.
This string of declines is the most pronounced cumulative drop in this grouping since 1991. Despite a
1.7 percent rise in the production of computers and
office equipment, the output of information processing equipment edged up only 0.2 percent; the production of some types of communications equipment and
instruments fell. The output of construction supplies
held steady after increasing substantially in the preceding two months; the production of goods in this
Capacity,
percentage
change,
July 1995
to
July 1996
July
Previous estimate
Manufacturing
Advanced processing
Primary processing .
Mining
Utilities
July 1995
to
July 1996
2. Contains components in addition to those shown,
r Revised,
p Preliminary.
grouping has risen 5.2 percent during the past twelve
months.
The output of industrial materials edged up despite
the drop in electricity generation. The output of durable goods materials advanced 0.4 percent, reflecting
gains in computer parts and semiconductors. A
rebound in paper and paperboard production helped
the output of nondurable goods materials post a
0.2 percent increase.
When analyzed by industry group, the data show
that manufacturing production increased 0.3 percent;
excluding motor vehicles and parts, the gain was
0.1 percent. Although the output of durable goods
advanced 0.6 percent, the gain was concentrated in
electrical machinery and in office and computing
equipment in addition to motor vehicles and parts.
The production indexes for lumber, furniture, primary metals, instruments, miscellaneous manufactures, and stone, clay, and glass products declined
x
h percent or more. The output of nondurable goods
edged down 0.1 percent. Among nondurable goods,
only the paper and products industry posted more
808
Federal Reserve Bulletin • September 1996
than negligible gains; the output of food, tobacco,
apparel, petroleum products, and leather and products
fell V2 percent or more. Mining output decreased
0.3 percent.
The factory capacity utilization rate held steady at
82.3 percent. The operating rate for the advancedprocessing grouping edged up 0.1 percentage point,
to 80.7 percent, but the rate for the primaryprocessing grouping fell 0.3 percentage point, to
86.2 percent. Capacity utilization in manufacturing is
little changed from its level a year ago. As was the
case a year ago, the rate for advanced-processing
industries stood at its 1967-95 average in July. The
rate for primary-processing industries has slipped
0.5 percentage point since July 1995, but it remains
3.6 percentage points above its long-run average. The
operating rate for mining decreased 0.2 percentage
point in July, and the rate for utilities fell 1.9 percentage points; rates for both of these sectors remain
more than 3 percentage points above their 1967-95
averages.
This release and the history for all series published here are available on the Internet at
http://www.bog.frb.fed.us, the Board of Governors'
World Wide Web site.
1996
ANNUAL
REVISION
During the fourth quarter, the Federal Reserve will
publish revisions of its measures of industrial production (IP), capacity, capacity utilization, and industrial
use of electric power; the current target month for the
release is November. The revisions of IP, capacity,
and capacity utilization will incorporate updated
source data for recent years and will feature a change
in the method of aggregating the indexes. From 1977
onward, the value-added proportions used to weight
individual series will be updated annually rather than
quinquennially. In addition, the IP indexes and the
capacity measures will be rebased so that 1992 actual
output equals 100. Capacity utilization, the ratio of IP
to capacity, will be recomputed on the basis of
revised IP and capacity measures.
The aggregate IP indexes will be constructed with
a superlative index formula similar to that introduced
by the Bureau of Economic Analysis as the featured
measure of real output in its January 1996 comprehensive revision of the National Income and Product
Accounts. At present, the aggregate IP indexes are
computed as linked Laspeyres indexes, with the
weights updated every five years. Because of the
rapid fall in the relative price of computers and
peripheral equipment, that periodic updating of
weights is too infrequent to provide reliable estimates
of current changes in output, capacity, and capacity
utilization. With the publication of the revision,
value-added proportions will be updated annually,
and the new index number formula will be applied
to all aggregates of IP, capacity, and gross value of
product. For the most part, relative price movements
among the 260 individual components of the IP index
are likely to have little visible effect on total IP.
However, the more frequent updating of the relative price of the output of the computer industry
could lower overall IP growth in some years by as
much as xh percentage point; in other years, the
updating of weights will have virtually no effect.
Because the new index number formula will slow
capacity growth as well as IP growth, the effect of the
reaggregation on overall capacity utilization should
be small.
The regular updating of source data for IP will
include the introduction of annual data from the 1994
Annual Survey of Manufactures and selected 1995
Current Industrial Reports of the Bureau of the Census. Available annual data on mining for 1994 and
1995 from the Department of the Interior will also be
introduced. Revisions to the monthly indicators for
each industry (physical product data, production
worker hour, or electric power usage) and revised
seasonal factors will be incorporated back to 1992.
The statistics on the industrial use of electric power
will be revised back to 1972. These revisions stem
from three basic sources. First, the new figures incorporate more complete reports received from utilities
for the past few years. Second, an updated panel of
reporters on cogeneration will be fully integrated into
our survey of electric power use. Third, the levels of
the monthly electric power series for manufacturing
industries will be benchmarked to indexes derived
from data published in the Census Bureau's annual
surveys and censuses of manufactures. These indexes
will also be revised so that 1992 electric power usage
equals 100.
More detail on the plans for this revision is available on the Internet at http://www.bog.frb.fed.us.
Once the revision is published, the revised data will
be available at that site and on diskettes from the
Board of Governors of the Federal Reserve System,
Publications Services, 202-452-3245. The revised
data will also be available through the Economic
Bulletin Board of the Department of Commerce,
202-482-1986. In addition to the data currently provided, the time series of implicit prices necessary for
a user to aggregate IP and capacity under the new
methodology will be provided by the Industrial Output Section, 202-452-3151.
•
809
Statements to the Congress
Statement by Herbert A. Biern, Deputy Associate
Director, Division of Banking Supervision and Regulation, before the Committee on Banking, Housing,
and Urban Affairs, U.S. Senate, July 17, 1996
I am pleased to appear before the Committee on
Banking, Housing, and Urban Affairs to discuss
actions that the Federal Reserve has taken over the
past several years to address the problem of "prime
bank" financial instruments and related illegal financial schemes. The Federal Reserve has taken an
active role in alerting the banking industry and the
public about the illicit activities of individuals trying
to peddle nonexistent financial instruments here in
the United States and abroad, and we have worked
closely with the law enforcement community to assist
their efforts to investigate and prosecute these
wrongdoers.
"PRIME
BANK"
SCHEMES
AND
ADVISORIES
In late 1993, Federal Reserve staff members were
alerted by domestic and foreign banking organizations that their names were being used for apparently
unlawful purposes in connection with the attempted
sale of questionable financial instruments. We were
also contacted by individuals who had been
approached to purchase questionable, highly complex
investment-type instruments.
The transactions that were brought to our attention
involved notes, guarantees, letters of credit, debentures, or other seemingly legitimate types of financial
instruments being issued by an unidentified "prime
bank" or by a domestic or foreign banking organization that was said to be keeping the issuance of the
instruments secret. The various proposals that
involved "prime bank"-related financial instruments
had similar characteristics:
1. The investor could realize extremely high rates
of return on an instrument described as risk free.
2. The investor was buying a part of a large
tranche of securities or financial instruments that was
almost fully subscribed by other investors or was part
of a "roll program" that automatically put the investor into an investor group of some sort.
3. The financial instrument that was being purchased was traded on a worldwide secret exchange.
4. The documentation related to a "prime bank"
investment was extremely complex and difficult to
comprehend.
5. A secure escrow account maintained at a
"prime bank" or by an attorney would be used to
hold the investors' funds, and payments into this
account would be made by some sort of "key tested
telex" message.
6. The financial instruments being issued were in
formats purportedly approved by the International
Chamber of Commerce or fully sanctioned by the
Federal Reserve, the World Bank, or some other
known international organization.
Some "prime bank" schemes appeared to be targeted to individuals and companies who needed
loans. These potential borrowers were advised that
their loans would be funded by a "prime bank"
provided they paid a large, up-front fee to secure
the funding. Board staff members believed that the
proposed payment of unrealistic rates of return was
indicative of a fraudulent scheme and contacted
several banks to make sure that legitimate banking
organizations were not referring to themselves as
"prime banks" or using financial instruments that in
any manner referred to "prime banks." Once assured
that there was no legitimate use of the term "prime
bank" or lawful use of a "prime bank" instrument,
we drafted an interagency advisory on "prime bank"
schemes and began to work through the Department
of Justice's Interagency Bank Fraud Working Group
to issue the pronouncement. Coordination efforts to
address the problem were also initiated with some of
the other twelve agencies participating in the Working Group, including the Securities and Exchange
Commission (SEC), as well as with international law
enforcement authorities, including Britain's Scotland
Yard and Department of Trade and Industry.
On October 21, 1993, the Federal Reserve and the
other federal banking agencies issued the first interagency advisory entitled "Warning Concerning
'Prime Bank' Notes, Guarantees, and Letters of
Credit and Similar Financial Instruments." The advisory, which is attached to my prepared statement,
informed banking organizations and the public that
the Federal Reserve and the other regulators know of
810
Federal Reserve Bulletin • September 1996
no legitimate use of any "prime bank"-related financial instrument.1 The advisory also asked the public
to contact agency representatives if approached to
invest in a "prime bank" instrument or pay an
advance fee to secure a loan funded by a "prime
bank" note, letter of credit, or other type of questionable financial instrument. The banking agencies committed to refer cases of potential illegal conduct associated with supposed "prime bank" documents to a
senior official in the Washington, D.C., office of the
SEC and to the local offices of the Federal Bureau of
Investigation because almost all "prime bank"
schemes appeared to involve fraud, including securities fraud.
The advisory prompted numerous calls and letters
about "prime bank" matters. Between late 1993 and
mid-1995, hundreds of inquiries were received from
individuals who had been solicited to purchase
"prime bank" financial instruments, from investment
advisers considering potential investments on behalf
of clients, and from banking organizations that
had received faxed solicitations. Calls and letters
came from as far away as South Africa, Germany,
Australia, France, and Singapore. The correspondents
were highly suspicious of the proposed schemes, and
many indicated they wanted to check with the government "to be sure" that their suspicions were justified. During this period, Board staff members assisted
federal prosecutors in New Jersey, Oklahoma,
Virginia, and in other districts to investigate and
eventually convict individuals for "prime bank"associated federal criminal law violations.
Calls and letters to the Federal Reserve regarding
"prime bank" scams began to slow in late 1995 and
early 1996 but, unfortunately, began again in recent
months. The new inquiries have focused on the role
of the Federal Reserve itself, with callers asking
whether the Federal Reserve registers agents in certain European countries, licenses traders on secret
"prime bank" exchanges, clears the transfers of
"prime bank" securities, or oversees investment
plans comprising "prime bank" instruments.
The Federal Reserve responded with a new advisory, released on June 11, 1996, to dispel any miscon1. The attachment to this statement is available from Publications
Services, Mail Stop 127, Board of Governors of the Federal Reserve
System, Washington, DC 20551.
ceptions that the Federal Reserve plays a role in
"prime bank"-related investments. The recent advisory is also included with my statement.
THE
EFFECT
OF
"PRIME
BANK"
SCHEMES
The Federal Reserve is not aware that banking
organizations supervised by the Board or any other
federal banking agency have engaged, or otherwise
knowingly participated, in any illegal "prime bank"related conduct. We know of no domestic bank that
has suffered losses from "investments" in "prime
bank" financial instruments or from any other enterprise involving such instruments. Most "prime bank"
scams entail multimillion dollar investments, and as
such we are not aware of losses to individual, as
opposed to institutional, investors. Some well-known
organizations, however, have suffered large losses
because of their investments in phony "prime bank"
financial instruments.
In criminal matters involving "prime bank"
schemes, U.S. Attorney's Offices have prosecuted
and won cases under existing criminal statutes, and
the SEC has been able to freeze accounts of wrongdoers and obtain other injunctive relief.
LEGISLATION
The committee has asked the Federal Reserve to
comment on the need for additional legislation
addressing misconduct by fraudsters selling these
instruments. The Board generally defers to the law
enforcement community and to the securities regulators regarding legislative proposals such as S.1009,
the "Financial Instruments Anti-Fraud Act of 1995"
proposed by Senator D'Amato. It is our view, however, that continuing successful prosecution of these
cases is crucial in sending a message to potential
"prime bank" fraudsters. Thus, new statutory authority enhancing law enforcement's ability to prosecute
wrongdoers may prove useful.
I am happy to address any questions you may have
about the Federal Reserve's efforts to address the
problems associated with these illegal financial
schemes.
Statements to the Congress
Statement by Alan Greenspan, Chairman, Board of
Governors of the Federal Reserve System, before the
Committee on Banking, Housing, and Urban Affairs,
U.S. Senate, July 18, 1996
Before I take this opportunity to discuss the performance of the U.S economy and the conduct of
monetary policy, I would first like to thank the chairman and the other members of this committee for
their support during my confirmation process.1 I am
grateful for the opportunity to serve the nation in this
capacity for another term.
REVIEW
OF
THE
FIRST
HALF
OF
1996
Nineteen ninety-six has been a good year for the
American economy. By all indications, spending and
production were robust in the first half of this year.
Gross domestic product increased at a 2XA percent
annual rate in the first quarter. Partial data suggest a
significantly stronger increase in the second quarter,
as the economy, as expected, accelerated out of its
soft patch around the turn of the year. During the
second quarter, industrial production rose at an annual
rate of 5V2 percent, and manufacturers are currently
running their plant and equipment at utilization rates
that are a touch above their postwar averages. About
1.4 million workers have been added to nonfarm
payrolls in the first six months of the year, and the
unemployment rate fell to 5.3 percent in June.
Even though the U.S. economy is using its productive resources intensively, inflation has remained quiescent. The core inflation rate, measured by the consumer price index less food and energy prices, at a
2.8 percent annual rate over the first six months of the
year, is about V2 percentage point slower than the
same period one year ago. While increases in energy
prices have boosted the overall CPI inflation rate to
3.5 percent thus far in 1996, a partial reversal of the
jump in petroleum product prices observed in the first
half appears to be in train. I shall be discussing in
greater detail later some possible reasons for this
favorable inflation experience and offering some
thoughts about how long it might last.
Economic activity thus far this year has turned out
to be better than many analysts expected. An important supporting factor, as I pointed out in February,
was favorable conditions in financial markets in the
latter part of 1995 and early 1996. Intermediate- and
1. See "Monetary Policy Report to the Congress,"
August 1996 issue of the Bulletin, pp. 701-16.
in the
811
longer-term interest rates were low. Among the influences accounting for this were optimism about prospective budget-deficit reduction, small easings of
the stance of monetary policy in the second half of
1995 and early 1996, and the possibility of a further
moderation in credit demands owing to a potentially
soft economy. Credit remained readily available, with
banks and other lenders in financial markets generally pursuing credit opportunities aggressively. And a
rising stock market reduced the cost of capital to
businesses and bolstered household balance sheets.
Looking forward, there are a number of reasons to
expect demands to moderate and economic activity to
settle back toward a more sustainable pace in the
months ahead.
First, the bond markets have taken a turn toward
restraint this year as they have responded to incoming
data depicting an economy that was stronger than had
been anticipated. Intermediate- and longer-term interest rates have risen from 1 percentage point to
1 lA percentage points since January.
Second, the value of the dollar on foreign exchange
markets has appreciated significantly on a tradeweighted basis against the currencies of other industrial countries over the past year or so. This appreciation importantly reflects the market perception that
the U.S. economy has been performing better than
those of many of our major trading partners. The rise
in the dollar helps to keep down price pressures, but
it also tends to divert domestic demand toward
imported goods and damp exports some.
Third, the support to economic growth provided by
expenditures on durable goods, both for household
consumption and business fixed investment, is likely
to wane in coming quarters. Consumer spending in
the past few years has been boosted as households
have made up for the purchases of big-ticket items
that they had deferred during the recession and the
early, weaker phase of the recovery. Five years after
the business cycle trough, however, we should expect
that this pent-up demand has been largely exhausted.
Moreover, many households have built up sizable
debt burdens in recent years, and coping with debt
repayments could hold down their spending. The
business sector has been adding considerably to
capacity; opportunities to invest profitably in new
capital should be increasing less rapidly as final
demand slows some.
While these are all good reasons to anticipate that
economic growth will moderate some, the timing and
extent of that downshift are uncertain. We have not,
as yet, seen much effect of the rise in interest rates
on, for example, the housing market. In many other
aspects, financial market conditions remain quite sup-
812
Federal Reserve Bulletin • September 1996
portive to domestic spending, and the economies of
many foreign countries are showing signs of achieving more solid growth, which should help support our
export sales. Moreover, and perhaps of most relevance, a desire to build inventories could add significantly to production in the near term. Data available for 1996 through May show that inventories
were reduced relative to sales and are now fairly lean
in many important industries. Although the use of
just-in-time inventory and production systems
encourages purchasing managers to keep stocks lean,
any evidence that deliveries of previously ordered
goods are being delayed for extended periods would
quickly alert companies to the need for higher safety
stocks. Indeed, indications of some mounting delivery delays in June do raise warning flags in this
regard. The reversal of earlier draw-downs in inventories, of course, could potentially impart an important boost to incomes and production as we enter the
second half of the year. The economy is already
producing at a high level—and some early signs of
pressures on resources are emerging, especially in the
labor market.
THE RECENT
BEHAVIOR
OF
INFLATION
There are, to be sure, legitimate questions about how
much margin in resource utilization currently exists.
Historically, current levels of slack, measured in
terms of either the unemployment rate or capacity
utilization, have often been associated with a gradual
strengthening of price and wage pressures. Yet, the
recent evidence of such pressures is scant. I have
already noted the lack of a distinct trend in the
growth rate of the so-called core CPI. Increases in
more comprehensive, and perhaps more representative, chain-weighted measures of consumer prices,
based on the national income and product accounts,
actually have continued to edge lower. The same is
true of a still broader measure of price change, the
chain-weighted price index for gross domestic purchases, which covers both consumers and businesses.
Although nominal wage rates have accelerated
recently, the rate of increase has been lagging significantly behind that predicted on the basis of historical
relationships with unemployment and past inflation.
And domestic profit margins have held up far later
into this economic expansion than is the norm.
Have we moved into a new environment where
inflation imbalances no longer threaten the stability
and growth of our economy in ways they once did?
The simple answer, in our judgment, is no. But the
issue is not a simple one.
As we have discussed before, powerful forces have
evolved in the past few years to help contain inflationary tendencies. An ever-increasing share of our
nation's work force uses the tools of new technologies. Microchips embodied in physical capital make
it work more efficiently, and sophisticated software
adds to intellectual capital. The consequent waves of
improvements in production techniques have quickly
altered the economic viability of individual firms and
sometimes even entire industries, as well as the
market value of workers' skills. With such fast and
changeable currents, it is not surprising that workers
may be less willing to test the waters of job change.
Indeed, voluntary job leaving to seek other employment appears to be quite subdued despite evidence of
a tight labor market. Because workers are more worried about their own job security and their marketability if forced to change jobs, they are apparently
accepting smaller increases in their compensation at
any given level of labor market tightness. Moreover,
a growing share of all output competes in an increasingly global marketplace, allowing fixed costs to be
spread over ever-broader markets, promoting greater
specialization and efficiency and enhancing price
competition.
As I indicated in February, these forces, to the
extent that they are operative, exert a transitory, not
permanent, effect in reducing wage and price inflation. These trends leave the level of both wages and
prices lower than historical relationships would predict. But, at some point, greater job security will no
longer be worth the further sacrifice of gains in real
wages. The growth of wages will then again be more
responsive to tightness of labor markets, potentially
putting pressure on profit margins and ultimately
prices. Moreover, the reductions in unit costs that are
a consequence of the ever-expanding global reach of
many companies must ultimately be bound by the
limits of geography. To be sure, production and sales
will continue to be diversified across geographic
areas, but the world can only figuratively shrink so
far. At some point, possibly well into the future,
increasing returns from ever-greater globalization
must also ebb.
Perhaps reflecting these unusual influences, we
have yet to see early signs in prices themselves of
intensifying pressures, despite anecdotal and statistical evidence that the amount of operating slack in our
economy has been at low levels by historical standards for some time. Among the encouraging indicators, industrial commodity prices have remained
roughly flat, and the list of reported shortages of
materials has been exceptionally small. This pattern
is consistent with the view that American businesses,
Statements to the Congress
by and large, have felt comfortable that inflation has
been subdued, and it offers little evidence of the
advance buying and expanded commitments that
would come if businesses were expecting significant
price pressures in the reasonably near future.
Nonetheless, there are early indications that this
episode of favorable inflation developments, especially with regard to labor markets, may be drawing
to a close. The surprising strength in the employment
cost index for wages and salaries in the first quarter
raises the possibility that workers' willingness to
surrender wage gains for job security may be lessening. Wage data since March have been somewhat
difficult to read. Average hourly earnings clearly
accelerated in the second quarter. However, in looking at those figures, one must be mindful that they
can reflect not only changes in wage rates but also
shifts in the composition of employment. And in
recent months, a significant part, although not all of
the pickup, has been accounted for by a tendency for
employment to shift to relatively high-pay industries,
such as durable goods manufacturing. Whether such
shifts also imply a correspondingly higher level of
output per worker will determine whether unit labor
costs also accelerated to impart upward pressures to
price inflation. Increases in pay, of course, are not
inflationary so long as they are matched by gains in
productivity. Without question, we would applaud
such trends, which increase standards of living. However, wage gains that increase unit costs and are eaten
up by inflation help no one and ultimately place
economic growth in jeopardy.
Clearly, in this environment, the Federal Reserve
has had to become especially vigilant to incipient
inflation pressures that could ultimately threaten the
health of the expansion. The relatively good inflation
performance of the past few years, as best we can
judge, owes, in part, to transitional forces that are
only temporarily damping the wage-price inflation
process. We cannot be confident that we can ascertain
when that process will come to an end. This makes
policy responses more difficult than usual because, as
always, the impact of policy will be felt with a
significant lag. Of course, if the economy grows so
strongly as to strain available resources, transitional
forces notwithstanding, history persuasively indicates
that imbalances will develop that will bring the
expansion to a halt.
THE FOMC's
OF 1996 AND
OUTLOOK
FOR THE
REMAINDER
1997
The forecasts of the governors of the Federal Reserve
Board and presidents of the Federal Reserve Banks
813
for economic performance over the remainder of this
year and the next reflect the view that sustainable
economic growth is likely in store. The growth rate
of real GDP is most commonly seen as between
2V2 percent and 23/4 percent over the four quarters of
1996 and 13A percent to 2lA percent in 1997. Given
the strong performance of real GDP in the last two
quarters, this outcome implies slower growth in the
second half of this year. Nonetheless, for the remainder of this year and the next in these projections, the
unemployment rate remains in the range of the past
1V2 years. Inflation, as measured by the four-quarter
percentage change in the consumer price index, is
expected to be 3 percent to 3lA percent in 1996. The
governors and bank presidents, however, view the
prospects for inflation to be more favorable going
forward. The expected reversal of some of the recent
run-up in energy prices would contribute to that
result, but policymakers' forecasts also reflect their
determination to hold the line on inflation. The central tendency of their inflation forecasts for 1997 is
23/4 to 3 percent, returning to the range from 1991 to
1995.
THE PURSUIT
OF PRICE
STABILITY
We at the Federal Reserve would welcome faster
economic growth, provided that it were sustainable.
As I emphasized last February, we do not have firm
judgments on the specific level or growth rate of
output that would engender economic strains. Instead,
we respond to evidence that those strains themselves
are developing. Whatever the long-run potential for
sustainable growth, we believe that a necessary condition for achieving it is low inflation. As a consequence, the Federal Reserve remains committed to
preventing a sustained pickup in inflation and ultimately achieving and preserving price stability.
Price stability is an appropriate and desirable goal
for policy, not only because it allows financial markets and the economy to work most efficiently but
also because it most likely raises productivity and
living standards in the long run. Specifically, in an
inflationary environment, business managers are distracted from their basic function of building profits
through prudent investment and cost control. My
own observation of business practices over the years
suggests that the inability to pass cost increases
through to higher prices provides a powerful incentive to firms to increase profit margins through
innovation and greater efficiency, which boosts productivity and ultimately standards of living over time.
Holding the line on inflation, thus, does not impose a
814
Federal Reserve Bulletin • September 1996
speed limit on economic growth. On the contrary, it
induces the private sector to focus more on efforts
that yield faster long-term economic growth.
In this context, we can readily understand why
financial markets welcome sustained low inflation.
Uncertainty about future inflation raises the risks
associated with investing for that future. Lowering
that uncertainty by keeping inflation down diminishes those risks, so that all commitments concerning
future income become more valuable. During periods
of low inflation, stock and bond prices tend to reflect
the higher valuation that comes from harnessing our
physical plant more efficiently to provide improved
opportunities in the future, including higher wages
and profits. What investors fear, what all Americans
should fear, are inflationary instabilities. They diminish our ability to provide the wherewithal for the
standards of living of the next generation and the
retirement incomes of our current work force. The
interests of investors as expressed in bond and stock
markets do not conflict with those of average
Americans—they coincide.
In order to realize the benefits of low and declining
inflation, Federal Reserve policy has, for some time
now, been designed to act preemptively—as I indicated earlier—to look beyond current data readings
and base action on its assessment of where the economy is headed. Policy restraint initiated in February
1994 followed from the judgment that unchanged
policy would encourage subsequent inflationary
imbalances that would ultimately cut short the economic expansion. The three easing steps in the past
year were instituted when we anticipated that inflationary imbalances would be less threatening and that
lower rates would be compatible with promoting
sustainable economic expansion. Similarly, I am confident that the Federal Open Market Committee
would move to tighten reserve market conditions
should the weight of incoming evidence persuasively
suggest an oncoming intensification of inflation pressures that would jeopardize the durability of the
economic expansion.
THE RANGES
FOR THE DEBT AND
MONETARY
AGGREGATES
The Committee selected provisional ranges for the
monetary aggregates in 1997 that once again encompass the growth rates associated with conditions of
approximate price stability, provided that these aggregates act in accord with their historical relationships
with nominal income and interest rates. These ranges
are identical to those endorsed for 1996—1 percent to
5 percent for M2 and 2 percent to 6 percent for M3.
The Committee reaffirmed its range of 3 percent to
7 percent for the debt of the domestic nonfinancial
sectors for this year and chose the same range provisionally for next year. The Committee's expectations
for inflation and nominal GDP expansion in 1996 and
1997 suggest growth of the monetary aggregates at
the upper ends of their benchmark ranges as a distinct
possibility this year and next, though debt should be
in the middle portion of its range.
The experience of the first part of the 1990s—
when money growth diverged from historical relationships with income and interest rates—severely
set back most analysts' confidence in the usefulness
of M2. Recently, there have been tentative signs that
the historical relationship linking the velocity of
M2—or the ratio of nominal GDP to the money
stock—to the cost of holding M2 assets has reasserted itself. For now, though, the Committee is
satisfied with watching these developments carefully,
waiting for more compelling evidence that M2 has
some predictive content in forecasting current and
prospective spending. Such evidence, however, at
best will only accumulate gradually over time.
BUDGETARY
POLICY
Monetary policy is, of course, only one factor shaping the macroeconomic environment. I thus would be
remiss if I did not again emphasize the critical importance to our nation's economic welfare of continuing
to reduce our federal budget deficit. We have made
significant and welcome progress on this score in
recent years. But unless further legislative steps are
taken, that progress will be reversed. Inevitably, such
changes will require addressing the consequences for
entitlement spending of the anticipated shift in the
nation's demographics in the first few decades of the
next century. Lower budget deficits are the surest and
most direct way to increase national saving. Higher
national saving would help to lower real interest
rates, spurring spending on capital goods so as to put
cutting-edge technology in the hands of more American workers. With a greater volume of modern equipment at their disposal, American workers will be able
to produce goods that compete even more effectively
on world markets.
The rally in capital markets last year that trimmed
as much as 2 percentage points from longer-term
Treasury yields was almost surely, in part, a response
to the developing positive dialogue on deficit reduction. While the backup in intermediate- and longerterm market interest rates this year has mostly
Statements to the Congress
reflected the unexpected vigor of economic activity,
market participants must also have been struck by the
dying out of serious discussions that might lead to a
bipartisan agreement to eliminate the budget deficit
over time.
CONCLUSION
Our economy is now in its sixth year of economic
expansion. The staying power of the expansion has
owed importantly to the initial small size and rapid
815
correction of emerging imbalances, reflected in part
in the persistence of low inflation.
To be sure, the economy is not free of problems.
But as we address those problems, policymakers also
need to recognize the limitations of our influence and
the wellspring of our success. The good performance
of the American economy in the most fundamental
sense rests on the actions of millions of people, who
have been given the scope to express themselves in
free and open markets. In this, we are a model for the
rest of the world, which has come to appreciate the
power of market economies to provide for the public's long-term welfare.
Chairman Greenspan presented identical testimony before the Subcommittee on Domestic and International
Monetary Policy of the Committee on Banking and Financial Services, U.S. House of Representatives,
July 23, 1996.
Statement by Janet L. Yellen, Member, Board of
Governors of the Federal Reserve System, before the
Subcommittee on Financial Institutions and Regulatory Relief, Committee on Banking, Housing, and
Urban Affairs, U.S. Senate, July 24, 1996
I am pleased to appear before this subcommittee
today to discuss trends in consumer lending and the
Federal Reserve Board's view of how recent developments in this sector are affecting U.S. commercial
banks. As the subcommittee knows, consumer delinquencies on nonmortgage debt have increased in
recent periods and are beginning to affect profit margins at some financial institutions. The Federal
Reserve has been monitoring these conditions and
discussing their implications with individual banking
organizations and industry groups. However, given
the generally strong financial condition of the institutions most affected by these developments and that
of the U.S. banking system, we believe that these
adverse trends do not currently present a material
threat either to individual banking organizations or to
the overall banking system.
In my remarks, I would like to begin with an
overview of the economic developments that have
caused the Federal Reserve to devote greater attention
to consumer lending matters. I shall then turn to the
emerging—and still well-contained—consequences
that these developments are having on the banking
organizations that are most affected and on the industry overall. Because current concerns are predominantly centered on revolving credit portfolios, I shall
focus my comments on a discussion of credit card
lending activities. Finally, I shall discuss the steps
taken by the Federal Reserve throughout the past
year to caution its examiners, state member banks,
and bank holding companies about the risks inherent
in weakening credit standards and to ensure that
financial institutions are taking appropriate action to
address emerging problems in consumer loan
portfolios.
ECONOMIC
TRENDS
Economic conditions in the United States have in
recent years been favorable to growth in spending
and borrowing by the household sector and to
strong growth in consumer lending by U.S. banks.
Just since early 1992, nonfarm payroll employment
has increased nearly IIV2 million, driving the U.S.
unemployment rate to 5.3 percent in June of this year,
its lowest level in six years. As one consequence,
personal income has risen substantially. The dramatic
rise in stock and bond prices in recent years has also
produced sharp gains in wealth for some households.
During this same time period, rates and fees on
consumer financing products have been coming
down. Average credit card rates, which stood at about
W/4 percent in late 1991, declined to less than
151/2 percent by May of this year. At the same time,
annual fees on credit cards were dropped by many
institutions. In addition, declining residential mortgage rates throughout most of this interval contrib-
816
Federal Reserve Bulletin • September 1996
uted to a significant reduction in monthly payments
on such debts. While mortgage rates have recently
backed up, the relatively low mortgage rates of the
early 1990s precipitated a refinancing boom that
allowed many consumers to significantly reduce their
monthly mortgage obligations.
Combined, these generally favorable developments
have given consumers the confidence and financial
foundation to incur additional debt to finance major
purchases. Nevertheless, some concerns remain about
the increase in consumer debt. Aggregate statistics do
not address conditions in individual households, an
important consideration because the economic expansion has not affected all households equally. Further,
while for some households the use of credit in making a purchase is simply a matter of convenience or a
means of managing liquidity, for others borrowing
may be a means of sustaining consumption through a
period of household economic distress.
Nonmortgage consumer debt has grown at doubledigit rates over the past two to three years. This rapid
pace is not unusual for a period of economic expansion. Indeed, as the economy emerged from recession
in 1991, growth in nonmortgage consumer debt was
much slower than typical, reflecting sluggish spending on durable goods and lingering fears about longterm layoffs and other threats to job security. However, by 1994, consumer confidence had recovered
considerably, and demand for autos and other durable
goods had strengthened. Nonmortgage consumer debt
grew about 15 percent that year and the next, but
even this rapid pace remained below that of a decade
earlier. Lower inflation in recent years can account
for some of the difference.
Recently, revolving credit—primarily credit card
debt—has been, by far, the fastest growing component of consumer debt, averaging annual increases of
20 percent over the past two years. However, that
performance—rapid growth during an expansion—is
also typical of the past two decades. The cumulative
effect has been a dramatic rise in the relative importance of revolving credit. In 1977, when first reported
separately to the Federal Reserve, revolving debt of
U.S. consumers totaled $30 billion, or 14 percent of
all consumer debt. In May of this year, the amount
outstanding was $444 billion, or nearly 40 percent of
the total. Surveys show that 80 percent of U.S. households now have at least one credit card.
A consequence of the increase in consumer borrowing of recent years is that debt-servicing
requirements—that is, the amount of scheduled payments of principal and interest—have consumed a
bigger share of disposable income. Our staff estimates that this ratio, which includes both mortgage
and nonmortgage payments, peaked in late 1989 at
about YlVi percent and then declined over the next
four years to about \5Vi percent in 1993, as households curtailed their borrowing and average interest
rates on their debts fell. Since then, the ratio has risen
to about 163/4 percent. This standard measure is based
on aggregates that include households without debt
and uses estimates of scheduled payments. The Survey of Consumer Finances, conducted periodically
by the Federal Reserve, suggests that the median
ratio of actual debt payments to pretax income of
debt-holders was relatively constant from 1989 to
1995, as was the proportion of the debt-holders that
had very high debt repayment to income ratios. What
has tended to rise over time is the proportion of
low-income households with an unusually high fraction of their income absorbed by debt repayments.
Unfortunately, the latest data—which are still
preliminary—are a year old.
To be sure, some of the increase in consumer debt
is merely a reflection of the greater prevalence of
convenience use of credit cards as a substitute for
cash or check payment, with card balances paid in
full each month. This trend has been reinforced in
recent years by a variety of incentives, such as the
availability of frequent flier miles. But—as our Survey of Consumer Finances suggests—there are also
signs that some households have let their debts build
up to the point where they may have difficulty servicing them: Loan delinquency rates and personal bankruptcies are both up.
Generally speaking, delinquency rates on nonmortgage consumer loans have been trending up for the
past year, with some of the increase in delinquency
rates merely the result of the "seasoning" of recently
underwritten loans, a typical pattern. However, for
credit cards, the widely followed statistics of the
American Bankers Association show that the delinquency rate by number of accounts is historically
high. The more comprehensive figures from the official bank Call Reports based on the dollar volumes of
loan balances, however, show a much milder upturn
in delinquencies—but still one warranting our
attention.
CREDIT
BANKS
CARD LENDING
BY
COMMERCIAL
These economic and market developments have had
clear effects on banks. As a percentage of total bank
loans, consumer debt (including mortgages) has been
increasing steadily for some time—from 33 percent
of total bank loans in 1980 to roughly 40 percent five
Statements to the Congress
years ago and about 44 percent today. This shift in
asset allocation by banks reflects several factors, not
the least of which is a declining market share of the
credit extended to commercial customers. In part, it
also reflects substantial growth in credit card debt.
Since late 1991, credit card debt has risen about twice
as fast as total loans. If one adds back estimates of the
outstanding securitized credit card debt of banks,
such credit has risen almost three times as fast as
total loans at banks.
The industry's total increase in credit card loans
has come about with the growing popularity of cards,
supported by their aggressive marketing by some
banks. Marketing campaigns typically involve broadbased, regional, or nationwide solicitations and often
include pre-approved lines of credit based on the
results of "credit scoring" models that statistically
evaluate an individual's creditworthiness. In addition, banks' success in securitizing consumer debt
instruments for resale in capital markets has increased
both their willingness and their ability to make such
loans.
Also encouraging more aggressive competition
have been heavy investments in the technological
infrastructure needed to evaluate, originate, and
manage effectively such credits. Indeed, the major
competitors have increasingly used special promotions offering reduced fees and rates to obtain market
share and maximize the scale economies of their
operations. Some have also been more willing to take
on greater risk in the interest of increasing loan
volumes. Such competitive zeal all too often attracts
weak or otherwise marginal borrowers. The resultant
adverse selection of credit risks has contributed to a
decline in asset quality at some banks.
While these problems have eroded returns at individual institutions, a critical factor that continues to
contribute to the emphasis on such lending has been
the significant, overall long-term profitability of the
credit card business. This is not irrelevant for a
banking system whose largest institutions had been
under earnings pressure through much of the 1980s
because of their exposures to developing countries,
energy sector borrowers, and commercial real estate
markets.
One indication of the profitability of credit card
lending can be seen in analyzing the so-called credit
card banks (defined here to include banks with more
than $1 billion in assets and with credit card balances
comprising more than 50 percent of total assets). For
various legal, tax, and operating reasons, most large
banking organizations find it convenient to establish
such banks, separate from their other operations, as a
vehicle for booking most, if not all, of their credit
817
card loans. These roughly thirty entities most recently
reported an average return on assets of 2 percent,
compared with 1.1 percent for all insured commercial
banks. They also maintained average equity to asset
and loan-loss reserve to total loan ratios well above
industry averages.
The strong earnings profiles of the credit card
banks, and their associated capital and reserve allocations, are reflections of the risks associated with this
form of lending. Higher risk and higher return go
hand in hand, and the higher capital and reserves
associated with this form of credit are required to
balance the risk. Put another way, lenders active in
the credit card business are conscious of higher
potential loss rates and expect returns that will fully
absorb these losses and still provide an adequate
profit margin. They are also aware of the necessity to
take steps to assure that the variance in returns on
these loans does not create significant solvency concerns for their organizations.
INCREASED
INCIDENCE
OF
PERSONAL
BANKRUPTCY
On several occasions during the past year or so,
various industry and professional groups have
expressed concern about perceived weakening of
credit standards within consumer lending, including
the aggressive marketing of credit cards. At these
meetings, some of the private sector participants
have given anecdotal evidence of practices that
they believe to be potentially harmful in the long
run, either to financial institutions or to the consumer lending market in general. Similar, and still
anecdotal, indications of declining standards and
increased competition have been provided by various
state banking delegations that periodically visit the
Federal Reserve and other bank regulatory agencies.
One concern cited with increased frequency is a
higher incidence of borrowers with substantial credit
card debt declaring bankruptcy, without any previous
record of missed or delinquent payments. Bankers
often cite borrowers who have tens of thousands of
dollars of outstanding loans on a number of credit
card accounts with various financial institutions. Such
borrowers may not always be readily detected by
controls and monitoring procedures and could contribute to increased charge-offs at card issuers.
Several factors are said to be contributing to higher
rates of personal bankruptcy, including greater social
acceptability of the practice, changes in law that have
made bankruptcy less onerous for individuals, and
increased advertising by bankruptcy attorneys. What-
818
Federal Reserve Bulletin • September 1996
ever the underlying causes, it is a reality that credit
card issuers and others must address. Moreover,
banks and nonbanks that issue credit cards and other
consumer lines of credit should also consider the
extent to which the trend is fueled by their willingness to lend to individuals whose credit history is
dubious. One may not wish to foreclose the possibility of renewed credit access to those who have been
forced by uncontrollable circumstances to seek the
protection of bankruptcy, but it should be recognized
that undue generosity on this score only encourages
greater use of the bankruptcy remedy and consequent
chargeoffs.
SUPERVISORY
RESPONSE
In response to these and other indications that terms
of credit and credit standards may have been declining, about a year ago the Federal Reserve issued
an advisory letter to its examiners and supervised
banking organizations cautioning them about the risk
of weakening standards. This advisory also requested
Federal Reserve examiners to discuss any questionable easing of standards with bank management,
regardless of whether quantitative measures of problem loans had begun to increase.
Since March 1995, the Federal Reserve has also
been conducting a quarterly survey of its most senior
examiners to track their assessments of conditions in
the banking market, including their assessments of
any changes in lending terms and conditions for
consumer loans. To supplement these surveys, regular discussions are conducted with bankers and supervisory officials at the Reserve Banks to ascertain their
opinions on current lending conditions.
The Federal Reserve has also recently undertaken a
number of initiatives to focus its examinations more
tightly on the activities exposing financial institutions
to significant risks and to heighten its emphasis on
evaluating management processes to identify, measure, monitor, and control the risk of banking activities. We believe that these enhancements to our
supervisory procedures will further improve our ability to detect nascent problems—such as those arising
from the increased and more accommodating consumer lending of recent years—and will foster appropriate responses by bank management. Consistent
with these initiatives, an inter-District task force of
Federal Reserve examiners is currently conducting a
comprehensive review of the retail credit and creditscoring operations of several large bank holding
companies.
Earlier this year, we also implemented procedures
whereby examiners assign specific ratings to an institution's overall risk-management processes, including its internal controls. This requirement, we
believe, further highlights the importance of sound
management practices and should help to provide
more specific feedback to senior management of the
examined institution. In the context of consumer
lending, such assessments generally address a banking organization's operating strategies for increasing
market share, its goals, and the controls in place to
maintain credit standards, including ongoing review
of the credit strength of its loan portfolio. Examiners
also typically evaluate the adequacy of the institution's information systems and the appropriateness
of the information provided to directors and senior
managers.
Recently, our supervisory activities, surveys of
examiners, and discussions with bankers all have
supported the view that banks are recognizing weaknesses in the consumer lending market and are
actively adjusting their underwriting and monitoring
procedures for these loans. Some banks have also
increased their levels of reserves for these loans in
recent months.
I should also note that in each of the two most
recent Federal Reserve Senior Loan Officer Surveys,
approximately one-quarter of the respondent banks,
on net, had tightened underwriting standards for
approving new credit card applications. More
broadly, the proportion of respondents less willing to
make consumer installment loans slightly exceeded
the proportion that was more willing to lend, for the
first time since 1991. Such a revisiting of current
credit standards and practices seems well considered,
given the length of the current period of economic
expansion and the signs of weakness in some elements of consumer finances that we have seen.
CONCLUSION
To sum up, the rapid growth in consumer lending by
banks, particularly that involving credit card loans,
reflects a natural evolution of banking activities
toward the household sector and has generally
enhanced consumer convenience and produced significant profits for banks. In recent years, this growth
has been caused, in part, by aggressive solicitations
of credit card customers by a relatively small number
of large bank and nonbank organizations and by an
active market for securitized credit card debt.
The recently emerging trend of higher delinquencies and personal bankruptcies has certainly increased
Statements to the Congress
819
the costs of making consumer credit card loans and
is forcing some institutions to review and modify
their marketing strategies and underwriting standards. It has also prompted the Federal Reserve to
devote more attention to the monitoring of consumer
loan exposures, both on and off bank balance sheets,
and to the evaluation of risk-management practices,
including internal controls, for these activities. Nevertheless, the industry's condition is strong when
measured in terms of its profitability, capital ratios,
loss reserves, and overall asset quality. Moreover,
banks price and reserve for credit card loans with the
expectation of occasional periods of relatively high
rates of loss. Therefore, unless future conditions deteriorate dramatically, we believe that the industry is
well positioned to absorb any problems resulting
from the competitive consumer underwriting practices of the recent past.
Statement by Alan Greenspan, Chairman, Board of
Governors of the Federal Reserve System, before the
Committee on Banking, Housing, and Urban Affairs,
US. Senate, July 26, 1996
changing environment with some foresight and as
effectively as possible. To that end, in 1995 we
formalized our strategic focus by establishing a System Strategic Planning Coordinating Group to assess
how the Federal Reserve can most effectively meet
its public policy objectives into the next century.
Our strategic focus is also reflected in recent significant changes that the Federal Reserve has made
in the way it carries out its major responsibilities.
For example, we have undertaken a major redesign
and upgrade of our computer systems, communications networks, and critical software applications to
improve reliability, respond more quickly to changing business requirements, and improve our disasterrecovery capabilities. We have placed an increasing
reliance on automation to provide a more flexible
approach to bank examinations—an approach that is
risk-oriented, cost-effective, and sensitive to the burden placed on banks. We have also consolidated
certain fiscal agency functions that we provide for the
government in order to improve cost-effectiveness
and quality, and a Reserve Bank policy committee
has been established to coordinate the provision of
Federal Reserve financial services.
In addition, the Federal Reserve already had under
way several specific initiatives related to recommendations made by the GAO. For example, we recently
engaged an independent accounting firm to audit and
certify the combined financial statements of the
Reserve Banks. The firm issued an unqualified opinion on the 1995 financial statements, as prepared in
accordance with the financial accounting manual for
the Reserve Banks. In addition, we are actively
reviewing the appropriate infrastructure for providing
certain financial services, taking into consideration
both cost-efficiency and service quality. One difficult
issue that has confronted, and will confront, the Federal Reserve Board in our oversight of the System is
the appropriate degree of consolidation of various
activities. Certain Systemwide activities do appear to
be more cost-effective if consolidated. For example,
I appreciate this opportunity to appear before the
Banking Committee today to address certain recent
reports on the Federal Reserve's operations. Of most
relevance, the General Accounting Office (GAO) has
raised some significant issues with respect to the
management of the Federal Reserve System. Both the
GAO and the Congress deserve our full response.
We are strongly committed to ensuring that the
Federal Reserve System is managed efficiently and
effectively. It is most important to us at the Federal
Reserve Board and the Reserve Banks not only to run
a "tight ship" but to foster the attitudes and processes that will ensure continuous improvement in
the effectiveness of the Federal Reserve's operations.
We recognize that spending nonappropriated funds
places a special obligation on us to be particularly
diligent in the use and application of those funds.
Accordingly, even though we may ultimately disagree with some of the specific suggestions of the
GAO, we welcome all of them and their insights
because they require us to rethink our positions and
change them if appropriate. Certain GAO recommendations for review of specific aspects of our management clearly have merit, and reviews of a number of
issues highlighted in the GAO's report are currently
under way. These reviews may lead to changes in the
Federal Reserve's administration that will further
enhance our effectiveness.
It is most important for any organization, including
the Federal Reserve, periodically to reassess its
businesses and how they are carried out. Strategic
planning is particularly critical given our rapidly
changing environment in which technology is
advancing at an extraordinary pace and the financial
services industry is becoming ever more complex. It
is essential that the Federal Reserve adapt to this
820
Federal Reserve Bulletin • September 1996
we anticipate that the consolidation of our critical
electronic payment applications will reduce our costs
of providing these services. But it is also evident that
the element of autonomy that is accorded to the
Reserve Banks has created an environment within
the Federal Reserve that attracts highly qualified
staff who contribute importantly to the effectiveness
and efficiency of the Federal Reserve System over the
long run. The advantages of this environment must
be balanced against the possible savings from
consolidation.
FEDERAL
RESERVE'S
SERVICE
PROVIDER
ROLE
AS
Many of our resources are devoted to providing
priced payment services. The Federal Reserve has
played an integral role in the nation's payments system since the System's inception. Indeed, one of the
Congress's original goals in establishing the Federal
Reserve System was to improve the efficiency of
check clearing. Before the passage of the Monetary
Control Act (MCA) in 1980, the Federal Reserve
provided payment services to its member banks; the
banks paid for these services implicitly with noninterest-bearing reserves rather than through explicit
fees. The MCA fundamentally changed the manner
in which the Federal Reserve provided and received
payment for these services.
Because the act expanded reserve requirements to
all depository institutions, it also required that the
Federal Reserve offer its payment services to all
depository institutions. To offset the act's reduction
in the level of required reserves, as well as to broaden
and level the competitive market for interbank payment services, the Congress required us to price our
services at full cost with a rate of return comparable
to that of private firms. I believe that the increased
competition resulting from the MCA requirements
has benefited the payments system.
The GAO has recommended that we review our
future role in providing payment services. We are
in the process of conducting such a review in the
context of our overall strategic plan. In general, we
view our role as a payments service provider as
crucial in carrying out our overall central bank
mission. We believe it is important for the Federal
Reserve to foster the integrity, efficiency, and accessibility of the U.S. dollar payments system, which
in turn is important to maintain financial stability and
maximize sustainable economic growth. The
provision of services by the Federal Reserve has
contributed directly to these goals. In addition, the
knowledge and operational expertise we have gained
as a service provider strengthens our efforts in containing systemic risks and is crucial in managing
potential financial crises.
We regard the wholesale payments services we
provide, such as Fedwire and net settlement, as essential central bank services and important in limiting
payments system risk. Our role in providing these
services probably will not change significantly as the
marketplace evolves, although the nature of the services themselves might.
It is quite possible, if not likely, that as changes
occur in the financial services marketplace over time,
or owing to other considerations, our role in providing other services, such as check collection, may
change as well. In this regard, we must be sensitive to
the fact that, as the nation's central bank, we have an
unsurpassable credit rating that must not be used to
unfairly compete with private-sector providers. We
are continually assessing our available means of
achieving our payments system goals, including our
regulatory authority and our role as a direct participant in the payments system, with our public service
role always kept paramount. For example, the Federal Reserve has adopted regulations that have fostered competition and efficiency in the provision of
check collection services, even though they resulted
in a reduction in the Federal Reserve's direct participation in the check system. At the same time, the
Federal Reserve has encouraged other efficiencies in
the payments system through innovations in its service offerings. To the extent that we can achieve our
payments system goals most effectively through our
direct participation, our continued provision of these
services will remain appropriate.
FEDERAL
RESERVE
COST-EFFECTIVENESS
In considering the cost structure of the Federal
Reserve, it is necessary to keep in mind the unique
combination of responsibilities that have been
assigned to this institution. The Federal Reserve is
responsible for conducting monetary policy, supervising and regulating certain financial institutions, promoting the efficiency and integrity of the payments
system, and providing fiscal agency services to the
Treasury and other government agencies at their
direction.
Different factors affect the cost structure of each of
these functions. For example, priced services are
subject to the inherent discipline of the marketplace,
as the Federal Reserve must control costs in order to
meet the statutory directives for cost recovery in the
Statements to the Congress
Monetary Control Act. On the other hand, in providing depository and fiscal services to the Treasury, the
Federal Reserve must respond to the instructions of
the Treasury. We endeavor to carry out the Treasury's directives in a cost-effective manner but cannot refuse legitimate requests because of their effect
on our costs or because they are inconsistent with
other Federal Reserve plans. In the areas of monetary
policy and financial institution supervision, there are
fewer external constraints on our expenses. Here we
must be particularly vigilant.
Given the critical nature of the Federal Reserve's
responsibilities, particularly in the areas of monetary
policy, financial stability, and financial institution
supervision, our major initiatives must be judged not
only in terms of cost but also in the context of risk
management and the appropriate level of resources to
be devoted to each function. For example, the Congress, in enacting the Foreign Bank Supervision
Enhancement Act in 1991, clearly concluded that the
additional costs of expanding the Federal Reserve's
supervisory responsibilities for U.S. operations of
foreign banks were justified by the greater financial
stability and protection that the enhanced supervision
would bring.
We focus our banking examination resources based
on risk assessments, with the expectation that areas
not covered extensively in the examinations will not
become serious problems. Had we devoted more
resources to Daiwa, and perhaps less elsewhere,
would we have uncovered its wrongdoing at an early
stage? We can't know for sure, but the odds would
have been higher. But if we had had the foresight
to divert these resources from other activities, would
we have increased our risk exposure elsewhere?
As another example, the Federal Reserve's recent
investment in a major upgrade of our computer
systems and personnel to adapt our surveillance
and payments technologies to the major changes
that have occurred in private financial markets
was also driven in large part to improve risk management. While the costs of these improvements were
not trivial, they have enhanced our ability to ensure
the smooth functioning of the financial markets, even
during periods of financial or operational disruptions.
To hold the risk of systemic crises to acceptably
low levels in both U.S. markets and U.S. dollar
markets abroad requires some redundancy of
resources. Given the vast scale of the value of
payment transactions that flow through our systems—
our Fedwire volume alone averages almost $1.5 trillion a day—we believe that the benefits of this
redundancy far exceed the associated incremental
costs.
821
The risk-management decisions that we make concerning the way we provide payment services to
depository institutions are tested directly in the marketplace. These services comprise more than onethird of the Federal Reserve Banks' total budget, and
the Monetary Control Act requires that, over the long
run, we price these services to recover their costs as
well as costs that would be borne by private businesses, such as taxes and a return on equity. If we
provide these services inefficiently, we price ourselves out of the market.
Over the past decade, our track record has been
good. The Reserve Banks have recovered 101 percent
of their total cost of providing priced services, including the targeted return on equity. I should also note
that, by recovering not only our actual costs but also
the imputed costs that a private firm would incur, the
Federal Reserve's priced services have consistently
contributed to the amount we have transferred to
the Treasury. During the past decade, priced services revenue has exceeded operating costs by almost
$1 billion.
Our fiscal agency services, which comprise another
one-sixth of the Reserve Banks' total budget, are
provided at the direction of the Treasury and other
federal government agencies for whom we provide
these services and whose reimbursements to us are
made primarily with appropriated funds. Here our
difficulty has been in obtaining full reimbursement
over the years. We understand that, as part of its
funding request for fiscal year 1997, the Treasury
sought a permanent indefinite appropriation, similar
to that in place for the Bureau of the Public Debt, for
services provided to its Financial Management Service. The Federal Reserve and our fiscal principals
continue to work closely to identify and implement
initiatives that improve further the efficiency of these
operations.
With respect to staff compensation and some other
aspects of our infrastructure that are necessary to
support our varied responsibilities, only indirect
market criteria are available to judge the Federal
Reserve's costs. For example, we try to set salary
structures that can attract and retain the personnel
with skills necessary to run the Federal Reserve System in a highly effective manner. To acquire and hold
such personnel, we strive to provide salaries and
benefits competitive with local private- and publicsector markets, tempered by the willingness of many
professionals to accord a nonmonetary premium to
Federal Reserve employment. Although the GAO
report suggests that the Federal Reserve does not
adequately review Federal Reserve employee salary
and benefit levels to determine whether they continue
822
Federal Reserve Bulletin • September 1996
to be justified, I can assure the committee that these
costs are scrutinized regularly to ensure that they are
appropriate.
We believe that the GAO's comparison of growth
in Federal Reserve employee benefits with those of
the federal government is incorrect. The problem is
that although we accrue such benefits according to
generally accepted accounting principles, the federal
government does not. Were the federal government
to use accrual accounting, presumably the comparisons would be straightforward. The federal government, however, employs an outmoded cash accounting system, which makes it difficult for us to reverse
our accruals in a manner consistent with it. As best
we can judge, when calculated on a comparable basis
using federal government accounting principles, the
cost of benefits per employee for the Federal Reserve
and the federal government increased by approximately the same percentage during the 1988 to 1994
period—64 percent and 62 percent respectively. We
believe the GAO significantly overstated the increase
in Federal Reserve benefit costs by including the cost
of future pension benefits related to Federal Reserve
early retirement plans on an accrual basis without
considering the associated future savings attributable
to those programs. Each of the early retirement programs has a positive net present value, indicating a
net cost savings from such plans. Including the
present value cost of early retirement plans without
considering the present value of cost savings skews
any comparison of the increase in total benefits costs
for the Federal Reserve and the federal government.
Applying peer analysis more broadly, during the
1988 to 1994 period reviewed by the GAO, the
increase in Federal Reserve operating costs was
slightly less than the 51 percent increase in federal
discretionary nondefense spending, which has been
subject to increasing congressional restraint in recent
years. The GAO makes this as one of its comparisons. The Federal Reserve effectively contained its
costs despite a significant expansion in its mandated
responsibilities and expanded resources required to
monitor and contain the financial market turmoil of
that period. To also compare, however, as the GAO
did in its report, the rate of our expense increases
with that of total federal discretionary outlays, which
are dominated by the major post-cold war retrenchment in defense, is clearly inappropriate. Moreover,
with the significant expansion of our computer systems now close to completion and our adjustment to
our expanded supervisory mandates reaching fruition, our costs during the past two years and those
projected for the immediate future are definitely on a
flattening trajectory.
More generally, we believe that the GAO is
mistaken in its notion that the Federal Reserve does
not regularly assess certain ongoing programs to
determine whether they are reasonable and justified.
In particular, we do not use a "current services"
approach to develop the Board and Reserve Bank
budgets. The significant reallocation of System
resources among the various responsibility areas during recent years clearly demonstrates that this is not
the case.
In summary, although the Board believes that much
of the GAO's analysis and recommendations have
merit, we take exception to the broad implication of
the GAO report that the Federal Reserve has not
exercised appropriate budget constraint and that it
has not adequately addressed the changing technological and financial environment in which it operates. In my experience, the Federal Reserve is as well
run an organization as any with which I have been
associated, private or public, over the decades. Is
there nonetheless room for improvement? Certainly. I
am not aware of any complex organization for which
this is not the case. In particular, the Board plans
to review several specific areas highlighted by
the GAO related to management of health care
benefits, Reserve Bank procurement and contracting
procedures, and Reserve Bank travel reimbursement
policies.
THE FEDERAL
RESERVE
SURPLUS
One area discussed in the GAO report—the elimination or reduction of the Federal Reserve's surplus—
has received substantial, and often misleading, media
coverage. I agree with the assessment of the Conference Report on the fiscal 1997 budget resolution on
this matter. The report concluded that a transfer of the
Federal Reserve's surplus to the Treasury would be a
"gimmick" that "has no real economic impact on the
deficit." While a transfer of Federal Reserve surplus
would increase "unified receipts" (because the Federal Reserve, for technical reasons, is not included in
the unified budget), it would nonetheless be an
intragovernmental transfer that would not change the
government's true economic and financial position
with respect to the private sector.
The Federal Reserve holds government securities
as the asset counterpart to its surplus, interest on
which it returns to the Treasury. If the Federal
Reserve decreased its surplus, it would do so by
selling government securities and transferring the
proceeds to the Treasury. Consequently, the Federal
Reserve's future payments to the Treasury would
Statements to the Congress
decline permanently by the foregone amount of interest on the surplus funds transferred, exactly offsetting
the Treasury's savings on gross interest payments.
The surplus is part of our capital account. In that
context, I believe retention by the Federal Reserve of
some level of surplus is desirable, but I acknowledge
that the appropriate level of the Federal Reserve's
surplus is debatable. We would welcome the opportunity to work with the Congress to review this issue.
OTHER RECENT
INQUIRIES
I would like to conclude my testimony by commenting on several recent inquiries into certain aspects of
the Reserve Banks' operations—specifically, the
management of our Interdistrict Transportation System (ITS) and cash statistical reporting problems
experienced by the Los Angeles Branch of the Federal Reserve Bank of San Francisco.
Earlier this year, Representative Henry Gonzalez
issued a report on the administration of the Federal
Reserve's ITS network. The report asserts that the
Federal Reserve may have violated the Monetary
Control Act to the extent that it does not fully recover
the costs of ITS through revenue attributable to its
use. The GAO and the courts reviewed this issue in
the mid-1980s and concluded that such cost recovery
was not required by the act.
No integrated company in the private sector (such
as one that provides check collection services) prices
individual segments of its operation to achieve a
uniform rate of return. Optimum profitability, that is,
minimum consolidated costs, is enhanced through
transfer pricing flexibility. Even aside from the imprecisions associated with allocating fixed costs, it would
not make sense for us to separately recover the costs
of each input to a service, such as transportation, data
processing, or labor, as implied by Representative
Gonzalez. Rather, all of the costs the Reserve Banks
incur in providing check services to depository institutions, including ITS costs (which represent less
than 5 percent of the costs of our check service), are
recovered through fees for their various check
products.
Representative Gonzalez's report also alleges that
certain contracting practices used by the Boston
Reserve Bank in managing ITS were improper and
wasteful. Administration of ITS requires Federal
Reserve management to make numerous, rapid, and
complex business decisions every day, constantly
823
balancing efforts to improve service, reduce float, and
control operating costs. In hindsight, are there some
decisions that should have been made differently?
Almost surely. But from a broad perspective, ITS has
been managed effectively in our judgment.
Finally, I would like to put in context the errors
made by the Los Angeles Branch of the Federal
Reserve Bank of San Francisco in reporting certain
statistical cash information to the Federal Reserve
Board. Unfortunately, the press coverage of this matter, in our judgment, has significantly overstated the
problem.
First, these reports are used for informational purposes only. No taxpayer money has been lost. No key
decisionmaking has been compromised. The errors
have not affected the usefulness of the information
derived from the Federal Reserve's financial statements, nor have they affected the Federal Reserve's
calculation of the money supply, its conduct of monetary policy, or the amount of shipments of currency
and coin to or from the Branch.
Second, although there were reports of mistakes
amounting to $178 million, the errors changed the
Branch's reported production volume by less than
one-half of 1 percent. If the mistakes had not been
discovered, at worst there would have been slight
errors in forecasting future currency demand, which
could have caused a slight increase to the Federal
Reserve's order to the Treasury to print new currency. The cost of this higher currency print order
would have been offset, however, by a lower print
order in the following year.
Third, the Los Angeles Branch had identified the
problems internally and was in the process of resolving them before Representative Gonzalez began his
inquiry. The Los Angeles Branch is working diligently to ensure that all of the data used to prepare
the cash statistical reports transmitted to the Board
are accurate.
In closing, let me state that we appreciate the
GAO's review in that it assists us in our ongoing
evaluation of the Federal Reserve's structure and
functions and our efforts to continually improve
operations. As I noted, many recommendations are
useful, and we are pursuing them. In my opinion,
however, the general tenor of the report does not
reflect the high level of effectiveness with which the
Federal Reserve has fulfilled its mission. While, as is
likely the case with any organization, the Federal
Reserve has opportunities for further improvement, I
believe these opportunities should be put in the context of our significant accomplishments.
•
824
Announcements
NOMINATIONS
SOUGHT
THE CONSUMER
FOR APPOINTMENTS
ADVISORY
TO
COUNCIL
The Federal Reserve Board announced on July 2,
1996, that it is seeking nominations of qualified individuals for eight appointments to its Consumer Advisory Council.
The Consumer Advisory Council consists of thirty
representatives of consumer and community interests
and of the financial services industry. The council
was established by the Congress in 1976, at the
suggestion of the Board, to advise the Board on the
exercise of its responsibilities under the Consumer
Credit Protection Act and on other matters on which
the Board seeks its advice. The council by law
represents the interests both of consumers and
of the financial community. The group meets in
Washington, D.C., three times a year.
Eight new members will be selected to serve threeyear terms that will begin in January 1997. The
Board expects to announce the selection of new members by year-end 1996.
Nominations must be submitted in writing and
should include information about nominees' past and
present positions held and about their special knowledge, interests, or experience related to community
reinvestment, consumer credit, or other consumer
financial services.
Nominations must be received by August 31, 1996,
and should be addressed to Dolores S. Smith, Associate Director, Division of Consumer and Community
Affairs, Board of Governors of the Federal Reserve
System, Washington, DC 20551.
REGULATION
K: FINAL
RULE
The Federal Reserve Board announced on July 23,
1996, a final rule amending Regulation K (International Banking Operations) regarding the management of offshore offices by U.S. branches and agencies of foreign banks. The final rule was effective
August 28, 1996.
The rule implements a provision of the RiegleNeal Interstate Banking and Branching Efficiency
Act of 1994 that amended the International Banking
Act of 1978 by adding a new provision regarding the
management of shell branches of foreign banks by
such banks' U.S. offices.
The provision prohibits foreign banks from using
their U.S. branches or agencies to manage types of
activities through offshore offices that could not be
managed by a U.S. bank at its foreign branches or
subsidiaries. This prohibition applies with respect to
those offshore offices that are "managed or controlled" by a foreign bank's U.S. branches or
agencies.
PROPOSED
ACTIONS
The Federal Reserve Board on July 11, 1996,
extended the comment period from August 1 to September 6 on its proposal to amend Regulation E
(Electronic Fund Transfers).
The Federal Reserve Board on July 31, 1996,
requested comment on three proposals to modify the
conditions under which section 20 subsidiaries of
bank holding companies may underwrite and deal in
securities.
The first proposal would increase the amount of
revenue that a section 20 subsidiary may derive from
underwriting and dealing in securities from 10 percent to 25 percent of its total revenue. Comments on
this proposal were requested by September 30, 1996.
The second proposal would amend or eliminate
three of the prudential limitations, or firewalls,
imposed on the operations of the section 20 subsidiaries as listed below:
• The prohibition on director, officer, and
employee interlocks between a section 20 subsidiary
and its affiliated banks or thrift institutions (the interlocks restriction)
• The restriction on a bank or thrift institution
acting as an agent for, or engaging in marketing
activities on behalf of, an affiliated section 20 subsidiary (the cross-marketing restriction)
• The restriction on the purchase and sale of financial assets between a section 20 subsidiary and its
affiliated bank or thrift institution (the financial assets
restriction).
825
The third proposal would clarify, in an accounting
change to the revenue limit, that the Board will not
consider interest income earned on securities that a
member bank could hold for its own account toward
a section 20 subsidiary's revenue limit.
Comments on the second and third proposals were
requested by September 3, 1996.
AVAILABILITY OF REVISED LISTS OF
OVER-THE-COUNTER
STOCKS AND OF
MARGIN
STOCKS
FOREIGN
The Federal Reserve Board on July 26, 1996, published a revised list of over-the-counter stocks that
are subject to its margin regulations (OTC list). Also
published was a revised list of foreign equity securities (foreign list) that meet the margin criteria in
Regulation T (Credit by Brokers and Dealers). The
lists became effective August 12, 1996, and supersede the previous lists that were effective May 13,
1996. The next revision of the lists is scheduled to be
effective November 1996. These lists are published
for the information of lenders and the general public.
The changes that were made to the revised OTC
list, which now contains 4,614 OTC stocks, are as
follows:
• Two hundred eighty-two stocks have been
included for the first time, 233 under National Market
System (NMS) designation.
• Sixty-one stocks previously on the list have been
removed for substantially failing to meet the requirements for continued listing.
• Sixty-seven stocks have been removed for reasons such as listing on a national securities exchange
or involvement in an acquisition.
The OTC list is composed of OTC stocks that have
been determined by the Board to be subject to margin
requirements in Regulations G (Securities Credit by
Persons Other Than Banks, Brokers, or Dealers), T,
and U (Credit by Banks for Purchasing or Carrying
Margin Stocks). It includes OTC stocks qualifying
under Board criteria and also includes all OTC stocks
designated as NMS securities. Additional NMS securities may be added in the interim between quarterly
Board publications; these securities are immediately
marginable upon designation as NMS securities.
The foreign list specifies those foreign equity securities that are eligible for margin treatment at brokerdealers. The Board recently amended Regulation T,
effective July 1, 1996, to provide that foreign stocks
may be included on the foreign list either by meeting
the existing Regulation T criteria for foreign securities or by being deemed to have a "ready market" for
purposes of the net capital rule of the Securities and
Exchange Commission (SEC). Since 1993, the SEC
has effectively treated all stocks included in the
Financial Times/Standard & Poor's Actuaries World
Indices as having a "ready market" for capital purposes. The Board is therefore adding 1,261 foreign
stocks currently included on the World Indices List
that were not on the previous foreign list. The revised
foreign list now contains 1,961 securities displayed
by order of country.
•
826
Minutes of the
Federal Open Market Committee Meeting
Held on May 21, 1996
A meeting of the Federal Open Market Committee
was held in the offices of the Board of Governors of
the Federal Reserve System in Washington, D.C., on
Tuesday, May 21, 1996, at 9:00 a.m.
Present:
Mr. Greenspan, Chairman
Mr. McDonough, Vice Chairman
Mr. Boehne
Mr. Jordan
Mr. Kelley
Mr. Lindsey
Mr. McTeer
Ms. Phillips
Mr. Stern
Ms. Yellen
Messrs. Broaddus, Guynn, Moskow, and Parry,
Alternate Members of the Federal Open Market
Committee
Messrs. Hoenig and Melzer, and Ms. Minehan,
Presidents of the Federal Reserve Banks of
Kansas City, St. Louis, and Boston respectively
Mr. Kohn, Secretary and Economist
Mr. Bernard, Deputy Secretary
Mr. Coyne, Assistant Secretary
Mr. Gillum, Assistant Secretary
Mr. Mattingly, General Counsel
Mr. Baxter, Deputy General Counsel
Mr. Prell, Economist
Mr. Truman, Economist
Messrs. Lang, Lindsey, Mishkin, Promisel, Rolnick,
Rosenblum, Siegman, Simpson, and Stockton,
Associate Economists
Mr. Fisher, Manager, System Open Market Account
Mr. Ettin, Deputy Director, Division of Research and
Statistics, Board of Governors
Mr. Slifman, Associate Director, Division of
Research and Statistics, Board of Governors
Mr. Madigan, Associate Director, Division of
Monetary Affairs
Ms. Low, Open Market Secretariat Assistant,
Division of Monetary Affairs, Board of
Governors
Mr. Rives, First Vice President, Federal Reserve
Bank of St. Louis
Mr. Beebe, Ms. Browne, Messrs. Davis, Dewald,
Eisenbeis, Goodfriend, and Hunter, Senior
Vice Presidents, Federal Reserve Banks of
San Francisco, Boston, Kansas City, St. Louis,
Atlanta, Richmond, and Chicago respectively
Mr. Altig, Mses. Chen and Rosenbaum,
Vice Presidents, Federal Reserve Banks of
Cleveland, New York, and Atlanta respectively
By unanimous vote, the minutes of the meeting
of the Federal Open Market Committee held on
March 26, 1996, were approved.
The Manager of the System Open Market Account
reported on developments in foreign exchange markets during the period March 26 through May 20,
1996. There were no open market transactions in
foreign currencies for System account during this
period, and thus no vote was required of the
Committee.
The Manager also reported on developments in
domestic financial markets and on System open market transactions in government securities and federal
agency obligations during the period March 26
through May 20, 1996. By unanimous vote, the Committee ratified these transactions.
The Committee then turned to a discussion of the
economic and financial outlook and the implementation of monetary policy over the intermeeting period
ahead. A summary of the economic and financial
information available at the time of the meeting and
of the Committee's discussion is provided below,
followed by the domestic policy directive that was
approved by the Committee and issued to the Federal
Reserve Bank of New York.
The information reviewed at this meeting suggested that economic activity had expanded moderately on balance in recent months. Final demand,
which had been quite robust early in the year, was
showing some signs of slowing in recent data. Consumer spending appeared to be growing at a moderate pace; business expenditures on durable equipment
had registered further large gains, though new orders
827
had flattened out; and housing demand seemed to
be holding up well despite the increase in mortgage
interest rates this year. Business inventories, most
notably in the automotive industry, had been brought
into better alignment with sales, and industrial production and employment had risen appreciably.
Upward pressures on food and energy prices
accounted for somewhat larger increases in consumer
prices.
Nonfarm payroll employment was essentially
unchanged in April after rising substantially in the
first quarter; part of the slowdown resulted from an
unwinding of special factors that had boosted job
growth in the first quarter. Payrolls continued to
expand in April in retail trade; finance, insurance, and
real estate; and the services industries. In contrast,
employment in construction fell sharply, reversing
much of the large first-quarter gain. In manufacturing, employment declined further in April despite the
settlement of a major strike in the automotive sector
and the return of affected workers to their jobs. The
civilian unemployment rate fell to 5.4 percent.
Industrial production rebounded in April from an
appreciable decline in March. The changes in industrial output over the two-month period largely
reflected fluctuations in motor vehicle assemblies
associated with a strike and its subsequent settlement.
Manufacturing of products other than motor vehicles
rose moderately in April on the strength of further
large advances in the output of office and computing
equipment and of construction supplies. Utilization
of total industrial capacity, which had varied in recent
months in concert with movements in production,
climbed in April to a rate slightly above that of the
fourth quarter of 1995.
Retail sales declined somewhat in April after posting a strong gain in the first quarter. Sales of durable
goods, which had increased substantially in the first
quarter, retraced part of that advance in April; the
drop more than offset a further rise in sales of nondurable goods. Housing activity was well sustained
in April, with the run-up in mortgage rates that began
in February having had little perceptible effect to
date. Single-family housing starts were up considerably in April, and sales of new and existing homes
remained brisk in March (latest data available).
Business fixed investment accelerated sharply in
the first quarter of 1996 following three quarters of
relatively moderate expansion; however, recent data
on orders and contracts pointed, on balance, to some
deceleration in business spending on both durable
equipment and nonresidential structures. Much of the
first-quarter pickup reflected stronger spending for
durable equipment; purchases of computing equip
ment remained robust and spending on other durable
equipment increased. Nonresidential construction
activity also advanced further in the first quarter;
however, construction of office buildings continued
to lag, and construction of other commercial buildings slowed after recording strong gains for several
years.
Business inventories declined in March after rising
appreciably on average over January and February;
inventory accumulation over the quarter as a whole
was of modest proportions, as firms sought to bring
stocks into better balance with sales. In manufacturing, inventories changed little in March and the ratio
of stocks to sales was not far above historical lows.
In the wholesale sector, inventories declined a little
further in March, reflecting a reduction in stocks
of motor vehicles, and the inventory-sales ratio
remained near the middle of its range in recent years.
Retail inventories also declined in March, with cuts
in stocks of motor vehicles more than accounting for
the drop. The inventory-sales ratio for the retail sector was near the low end of its range in recent years.
The nominal deficit on U.S. trade in goods and
services in the first quarter was substantially larger
than in the fourth quarter of last year. The value of
imports increased sharply in the first quarter after
declining in the two previous quarters. Moreover,
growth in the value of exports slowed considerably in
the first quarter from the pace of other recent quarters. Available data indicated that the performance of
the economies of the major foreign industrial countries was mixed in the first quarter. The recovery in
Japan was still under way while economic activity
in continental Europe remained generally weak, with
the German economy apparently having contracted
further and the French economy exhibiting signs of
only a modest upturn after a fourth-quarter decline.
Moderate further expansion in economic activity
evidently was occurring in Canada and the United
Kingdom.
Rising crude oil and, to a lesser extent, food prices
led to somewhat larger increases in consumer and
producer price indexes in March and April. For nonfood, non-energy items, however, consumer prices
rose only slightly in April after three months of
somewhat faster advances; over the twelve months
ended in April, this measure of consumer inflation
increased a little less than the rise over the comparable year-earlier period. At the producer level, prices
of finished goods other than food and energy items
recorded a third straight small increase in April. Over
the twelve months ended in April, this measure of
producer prices rose slightly less than over the comparable year-earlier period. Hourly compensation of
828
Federal Reserve Bulletin • September 1996
private industry workers expanded in the first quarter
at the average rate for all of 1995; the growth was
associated with a decline in benefit costs and a sharp
rise in wages and salaries.
At its meeting on March 26, 1996, the Committee
adopted a directive that called for maintaining the
existing degree of pressure on reserve positions and
that did not include a presumption about the likely
direction of any adjustments to policy during the
intermeeting period. The directive stated that in the
context of the Committee's long-run objectives for
price stability and sustainable economic growth, and
giving careful consideration to economic, financial,
and monetary developments, slightly greater reserve
restraint or slightly lesser reserve restraint would be
acceptable during the intermeeting period. The
reserve conditions associated with this directive were
expected to be consistent with moderate growth in
M2 and M3 over coming months.
Open market operations were directed toward
maintaining the existing degree of pressure on reserve
positions throughout the intermeeting period, and the
federal funds rate averaged near 5lA percent, the level
expected to be associated with that unchanged policy
stance. Other short-term market interest rates changed
little over the period, and because the Committee's
decision had been largely anticipated in financial
markets, longer-term rates also were little changed
initially. Over the remainder of the period, however,
intermediate- and long-term rates came under upward
pressure when incoming economic data were seen by
market participants as pointing to stronger growth in
output and employment and therefore to a somewhat
tighter monetary policy stance than previously had
been expected. Despite the increase in bond yields,
most indexes of stock prices rose on balance over the
intermeeting period, apparently reflecting generally
favorable first-quarter earnings reports and the
improved economic outlook.
In foreign exchange markets, the rise of U.S. interest rates contributed to a considerable appreciation of
the trade-weighted value of the dollar in terms of the
other G-10 currencies. The dollar was particularly
strong against the German mark, reflecting incoming
data that suggested continued weakness in economic
activity in Germany and, accordingly, a greater likelihood of further monetary policy easing by the
Bundesbank. The dollar rose less against the yen,
partly owing to information indicating a strengthening of the economic recovery in Japan and heightened market expectations of a near-term tightening of
monetary policy by the Bank of Japan.
Growth of M2 and M3 slowed substantially in
April after having recorded sizable increases earlier
in the year. Weakness in demand deposits after
unusually rapid first-quarter expansion and sluggishness in currency demand were factors in the slowdown. In addition, the rise in market interest rates in
recent months, which had increased the opportunity
costs of holding retail deposits, likely had a restraining effect on these deposits. For the year through
April, both aggregates grew at rates somewhat above
the upper bounds of their respective ranges for the
year. Expansion in total domestic nonfinancial debt
remained moderate on balance over recent months,
and this aggregate stayed near the middle of its
monitoring range for the year.
The staff forecast prepared for this meeting suggested that the economy would remain generally
around its estimated potential. Consumer spending
was expected to grow in line with disposable income;
the favorable effect of higher equity prices on household wealth and the still-ample availability of credit
were expected to outweigh persisting consumer concerns about job security and the influence of alreadyhigh household debt burdens. Homebuilding was
projected to decline a little in response to the recent
backup in residential mortgage rates but to remain at
a relatively high level because of generally supportive employment and income conditions and the stillfavorable cash flow affordability of homeownership.
Business spending on equipment and structures was
expected to grow less rapidly in light of the projected
moderate growth of sales and profits and the lower
rate of utilization of production capacity now prevailing. The external sector was projected to exert a
small restraining influence on economic activity over
the projection period, even though an anticipated
firming of economic activity abroad would bolster
demand for U.S. exports. Little additional fiscal contraction was anticipated over the projection period.
Inflation recently had been lifted by adverse developments in the energy market and was projected to
remain above the levels of recent years, given the
high level of resource utilization and the effects of
tight grain supplies on food prices. Further risks of
inflationary pressure were associated with a possible
elevation of the federal minimum wage.
In their discussion of current and prospective economic conditions ^ members commented that the
economy had been stronger this year than they had
anticipated and appeared to be growing at a quite
robust pace. However, they generally expected the
expansion to slow, keeping the economy close to its
potential. Views differed to some extent with regard
to the risks surrounding such an outlook. Some saw
those risks as fairly evenly balanced, given prospective restraint from the rise in bond yields and the
Minutes of the Federal Open Market Committee
foreign exchange value of the dollar since early this
year. Others expressed concern that economic growth
might continue at a pace that could increase pressures
on resources, with adverse implications for inflation
in an economy already operating in the neighborhood
of its estimated long-term potential. Moreover, faster
increases in energy and food prices could contribute
to higher overall inflation, both directly and by boosting inflationary expectations, and the proposed
increase in the minimum wage would add to cost
pressures if it were enacted into law. Nonetheless,
while the chances of a pickup in inflation later had
risen to some extent, a number of members emphasized that no firm evidence had surfaced thus far to
signal that labor compensation was increasing at a
faster rate or that core inflation was worsening, and
even the early signs of increased pressures on costs
and prices were mixed. The past few years had witnessed significantly lower cost pressures and more
subdued inflation than typically would have been
experienced in earlier years with similar rates of
resource utilization, but whether this favorable outcome would persist was an open question.
Members observed that the stronger-than-expected
performance of the economy thus far this year
reflected relatively rapid growth in final demand.
Favorable financial conditions, notably the relatively
low interest rates of the latter part of 1995 and early
1996 and increases in wealth stemming from sizable
advances in stock market prices, evidently were
undergirding the expansion. Indications of improving
or continuing high levels of economic activity were
widespread across the nation according to recent
anecdotal reports and regional data, though agricultural conditions in many areas were cited as a significant exception. While the economy appeared to have
solid and balanced momentum that pointed to sustained growth, a number of factors were seen as
likely to foster more moderate expansion beginning
in the second half of the year. These included the
effects of higher intermediate- and long-term interest
rates on interest-sensitive sectors of the economy
such as housing, consumer durables, and business
fixed investment. The appreciation of the dollar over
the past year and near-term moderation in federal
government spending also were expected to exert
some restraint on economic activity over the forecast
horizon. Some members also questioned the sustainability of the performance of the stock market; a
correction in this market would help to restrain aggregate demand. Nonetheless, the continued strength in
economic activity raised questions about whether
these developments would damp demand sufficiently
to keep resource utilization at sustainable levels.
829
In their review of recent developments and the
outlook for key sectors of the economy, members
noted that consumer spending had strengthened considerably this year after a period of sluggish growth
in late 1995. The recent data on consumer spending
were reinforced by anecdotal reports from various
parts of the country. The wealth effects from the
further gains that had occurred in stock market prices,
along with sustained increases in employment and a
ready availability of consumer financing, were seen
as playing a positive role in boosting consumer
expenditures. Barring changes in these underlying
factors, continued growth in consumer spending
seemed likely, although members referred to developments that could begin to slow such growth over the
months ahead. The latter included the satisfaction of
much of the earlier pent-up demand for consumer
durables and fairly elevated levels of consumer debt.
On balance, moderate expansion in consumer expenditures, perhaps in line with the growth in incomes,
seemed likely over the projection period.
Business fixed investment was believed likely to
remain a source of considerable strength in the expansion, though growth in this sector of the economy
also was expected to moderate from the elevated pace
thus far this year. The desire of many business firms
and other users of capital equipment to take advantage of new, more effective, and less expensive computer and other technologies and more generally to
add further to capital in an effort to reduce costs in
highly competitive markets would continue to underpin investment spending. In addition, equity and other
financing remained available on relatively attractive
terms. On the other hand, the rise in business investment in recent years had brought capital stocks into
more acceptable alignment with expected sales,
damping the need for further sizable additions.
Business firms appeared to have completed, or
nearly completed, their efforts to bring inventories
into better balance with sales, including the rebuilding of motor vehicle stocks after the strike at a major
manufacturer was settled in March. On the basis of
recent experience, subdued growth in inventories
could be anticipated in the context of the projected
expansion of overall economic activity at a pace near
the economy's long-run potential. It was suggested,
however, that such an expectation implied relatively
restrained inventory investment in comparison with
past cyclical patterns. Accordingly, much stronger
growth in such investment could occur, with concomitant effects on incomes and the growth of overall
spending.
With regard to the outlook for housing, the rise in
mortgage rates in the past few months could be
830
Federal Reserve Bulletin • September 1996
expected to retard residential construction activity to
some extent. Thus far, however, increased interest
costs did not appear to have had any perceptible
effects on housing sales or construction. Indeed, the
housing sector was continuing to display a good deal
of strength in many parts of the country. Some members observed that the appreciable momentum in
housing activity reflected strength in the underlying
fundamentals, including continued afifordability, that
seemed likely to sustain a high level of housing
construction for a considerable period of time despite
somewhat higher mortgage rates.
In the area of fiscal policy, legislative agreement
had not yet been reached on how to implement the
objective of a balanced federal budget over time, but
decisions covering the nearer term implied continued
budget restraint. On the foreign trade side of the
economy, an anticipated firming of economic conditions abroad would provide impetus to real net
exports. At the same time, however, imports were
expected to rise appreciably in response to the expansion of domestic economic activity and the appreciation of the dollar, and on balance the external sector
probably would not be boosting real GDP.
The outlook for inflation was of key importance to
the formulation of monetary policy at this time, but it
was clouded by substantial uncertainty. One source
of uncertainty was the behavior of food and energy
prices. Increases in these prices largely accounted for
the more rapid rise in consumer prices thus far this
year, and they likely would continue to add to inflation in the months ahead. Retail energy prices had
risen appreciably, but at least some of that increase
was expected to be reversed over the near term.
Retail food prices did not yet display any significant
effects from the sizable rise in grain prices in recent
months, and while some effects on retail prices were
likely, their extent and duration were difficult to
gauge at this point. Moreover, it was difficult to
anticipate how much the higher food and energy
prices might affect inflation expectations and wage
demands and thereby potentially become embedded
more generally in the price structure.
Also of concern to the members were the possible
effects on inflation of continued pressures on
resources, especially if the current pace of the expansion should fail to moderate as much as projected. In
recent years, the relationship between resource use
and inflation had not followed earlier patterns. In
particular, increases in labor compensation had been
comparatively subdued over an extended period of
what seemed to be relatively full employment highlighted by anecdotal reports of scarcities of various
types of labor in numerous parts of the country. In
part, worker willingness to accept comparatively
limited increases in compensation could be attributed
to the apparent rise in insecurity about the permanence of jobs or the availability of alternative jobs,
but the reasons were not fully understood. From the
standpoint of the inflation outlook, it therefore was
uncertain how long the period of relatively restrained
increases in labor compensation would last. Against
this background, a number of members indicated that
they perceived an appreciable risk of rising labor
costs and related inflation, even though there was
little evidence to date of such developments; others
noted that they could not rule out the possibility that
the favorable experience would be extended.
In the Committee's discussion of policy for the
intermeeting period ahead, all the members supported
a proposal to maintain an unchanged degree of pressure in reserve markets. The members agreed that the
balance of risks on inflation had shifted substantially
since early in the year. At that time, the economy had
seemed sluggish and inflation was seen as possibly
easing, but more recent developments indicated that
the economy was stronger and rising inflation down
the road could not be ruled out. Nonetheless, while
policy might need to be firmed at some point to head
off emerging inflation pressures, financial conditions
were not so obviously stimulative as to counsel a
need for any immediate tightening of policy. The real
federal funds rate probably was not greatly out of line
with its appropriate level, and the rise in longer-term
interest rates and the exchange rate meant that financial conditions were now exerting more restraint than
earlier this year. More information might provide a
better sense of how the higher interest rates were
affecting aggregate demand and perhaps also
help—to a small degree—to shed light on the considerable uncertainties surrounding the relationship of
output to inflation. In any event, actual inflation
data—apart from food and energy prices—and many
of the usual early warning signs of mounting price
pressures did not yet indicate a pickup in the underlying trend of prices. Accordingly, the members
viewed policy as appropriately positioned under current circumstances, though ongoing developments
would need to be reassessed at the upcoming meeting
in early July. Some members noted that the Committee would need to anticipate, and act to preclude, a
rise in the core rate of inflation that, if it were to
materialize, would be difficult and costly to reverse.
In this regard, the view was expressed that a firming
in policy sooner rather than later was likely to end up
promoting stability in output and prices.
In the Committee's discussion of possible intermeeting adjustments to policy, all the members indi-
Minutes of the Federal Open Market Committee
831
cated at least some preference for retaining a symmetric directive. Members commented that the
probability of developments during this period that
would warrant a change in policy before the next
meeting was quite low. Moreover, symmetry did not
rule out an intermeeting adjustment, and the Chairman could call for a Committee consultation should
the incoming information raise questions about the
stance of monetary policy. Some members felt that it
was especially appropriate that a policy action that
represented a reversal of the previous move be made
with a full discussion at a regular meeting. Some
members also commented that an asymmetric directive toward restraint would imply a predisposition on
the part of the Committee to tighten policy at some
point, possibly at the next meeting. While they would
be prepared to take such a step if the evidence warranted, their preference was to come into the July
meeting without such a presumption.
At the conclusion of the Committee's discussion,
all the members indicated a preference for a directive
that called for maintaining the existing degree of
pressure on reserve positions and that did not include
a presumption about the likely direction of any
adjustments to policy during the intermeeting period.
Accordingly, in the context of the Committee's longrun objectives for price stability and sustainable economic growth, and giving careful consideration to
economic, financial, and monetary developments, the
Committee decided that slightly greater or slightly
lesser reserve restraint would be acceptable during
the intermeeting period. The reserve conditions contemplated at this meeting were expected to be consistent with moderate growth in M2 and M3 over coming months.
At the conclusion of the meeting, the Federal
Reserve Bank of New York was authorized and
directed, until instructed otherwise by the Committee, to execute transactions in the System Account
in accordance with the following domestic policy
directive:
ing a strong gain in the first quarter. Single-family housing
starts rose considerably in April. Orders and contracts
point to some deceleration in spending on business equipment and nonresidential structures after a very rapid expansion in the first quarter. The nominal deficit on U.S. trade in
goods and services widened significantly in the first quarter
from its rate in the fourth quarter of last year. Upward
pressures on food and energy prices have led to somewhat
larger increases in the consumer price index over recent
months.
Short-term market interest rates have changed little
while long-term rates have risen somewhat further since
the Committee meeting on March 26. In foreign exchange
markets, the trade-weighted value of the dollar in terms of
the other G-10 currencies has appreciated considerably
over the intermeeting period.
Growth of M2 and M3 slowed substantially in April
after recording sizable increases earlier in the year. For the
year through April, both aggregates grew at rates somewhat above the upper bounds of their respective ranges for
the year. Expansion in total domestic nonfinancial debt
remained moderate on balance over recent months.
The Federal Open Market Committee seeks monetary
and financial conditions that will foster price stability and
promote sustainable growth in output. In furtherance of
these objectives, the Committee at its meeting in January
established ranges for growth of M2 and M3 of 1 to
5 percent and 2 to 6 percent respectively, measured from
the fourth quarter of 1995 to the fourth quarter of 1996.
The monitoring range for growth of total domestic nonfinancial debt was set at 3 to 7 percent for the year. The
behavior of the monetary aggregates will continue to be
evaluated in the light of progress toward price level stability, movements in their velocities, and developments in the
economy and financial markets.
In the implementation of policy for the immediate future,
the Committee seeks to maintain the existing degree of
pressure on reserve positions. In the context of the Committee's long-run objectives for price stability and sustainable economic growth, and giving careful consideration to
economic, financial, and monetary developments, slightly
greater reserve restraint or slightly lesser reserve restraint
would be acceptable in the intermeeting period. The contemplated reserve conditions are expected to be consistent
with moderate growth in M2 and M3 over coming months.
The information reviewed at this meeting suggests that,
on balance, economic activity has grown moderately in
recent months. Nonfarm payroll employment changed little
in April after rising substantially in the first quarter; the
civilian unemployment rate fell to 5.4 percent. Industrial
production increased sharply in April, largely reflecting a
rebound in motor vehicle assemblies after a strike in
March. Retail sales declined somewhat in April after post-
It was agreed that the next meeting of the Committee would be held on Tuesday-Wednesday, July 2-3,
1996.
The meeting adjourned at 1:15 p.m.
Votes for this action: Messrs. Greenspan,
McDonough, Boehne, Jordan, Kelley, Lindsey, McTeer,
Ms. Phillips, Mr. Stern, and Ms. Yellen. Votes against
this action: None.
Donald L. Kohn
Secretary
833
Legal Developments
ORDERS ISSUED UNDER BANK HOLDING
COMPANY
ACT
Orders Issued Under Section 3 of the Bank Holding
Company Act
Banco Santander, S.A.
Madrid, Spain
Order Approving the Acquisition of a Bank
Banco Santander, S.A., Madrid, Spain ("Santander"), a
foreign bank subject to the Bank Holding Company Act
("BHC Act"), has requested the Board's approval under
section 3 of the BHC Act (12 U.S.C. § 1842) to acquire
99.2 percent of the voting shares of Banco Central Hispano
Puerto Rico, Hato Rey, Puerto Rico ("BCH-PR").
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(61 Federal Register 19,626 (1996)). The time for filing
comments has expired, and the Board has considered the
application and all comments received in light of the
factors set forth in section 3(c) of the BHC Act.
On the basis of all the facts of record, the application is
approved for the reasons set forth in the Board's Statement,
which will be released at a later date. The Board also has
denied a request for a public hearing or meeting on this
proposal. The Board's approval is specifically conditioned
on compliance by Santander with all the commitments
made in connection with this application. For purposes of
this action, the commitments and conditions relied on by
the Board in reaching its decision are deemed to be conditions imposed in writing by the Board in connection with
its findings and decisions and, as such, may be enforced in
proceedings under applicable law.
The proposed acquisition shall not be consummated
before the fifteenth 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 New York,
acting pursuant to delegated authority.
By order of the Board of Governors, effective July 31,
1996.
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Kelley, Lindsey, Phillips, Yellon, and Meyer.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
Statement by the Board of Governors of the Federal
Reserve System Regarding the Application by Banco
Santander, SA., to Acquire Banco Central Hispano
Puerto Rico
By Order dated July 31, 1996, the Board approved the
application of Banco Santander, S.A., Madrid, Spain
("Santander"), a foreign bank subject to the Bank Holding
Company Act ("BHC Act"), under section 3 of the BHC
Act (12 U.S.C. § 1842) to acquire 99.2 percent of the voting shares of Banco Central Hispano Puerto Rico, Hato
Rey, Puerto Rico ("BCH-PR"). 1 The Board hereby issues
this Statement regarding its approval Order.
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(61 Federal Register 19,626 (1996)). The time for filing
comments has expired, and the Board has considered the
application and all comments received in light of the
factors set forth in section 3(c) of the BHC Act.
Santander, with total consolidated assets equivalent to
approximately $136 billion, is the largest banking organization in Spain.2 Santander is the second largest commercial banking organization in Puerto Rico, controlling total
deposits of approximately $3.1 billion, representing
14 percent of total deposits in commercial banks in the
Commonwealth.
BCH-PR is the fourth largest commercial banking organization in Puerto Rico, controlling deposits of approximately $1.7 billion, representing 7.6 percent of total deposits in commercial banks in the commonwealth. On
consummation of the proposal, Santander would remain
the second largest commercial banking organization in
Puerto Rico, controlling deposits of approximately
$4.8 billion, representing 21.6 percent of total deposits in
commercial banks in the commonwealth.
1. Santander's subsidiary bank, Banco Santander Puerto Rico, San
Juan, Puerto Rico ("BS-PR"), also proposes to purchase substantially
all the assets and assume substantially all the liabilities of BCH-PR in
a transaction subject to approval by the Federal Deposit Insurance
Corporation ("FDIC") under section 18(c) of the Federal Deposit
Insurance Act (12 U.S.C. § 1828(c) ("FDI Act")) (the "Bank Merger
Act"). Immediately after this transaction, BCH-PR would be liquidated and all minority shareholders of BCH-PR would receive a
pro rata distribution of proceeds from the purchase and assumption
transaction.
2. Asset data are as of December 31, 1995. Deposit data are as of
June 30, 1995.
834
Federal Reserve Bulletin • September 1996
Competitive Considerations
The BHC Act prohibits the Board from approving an
application under section 3 of the BHC Act if the proposal
would result in a monopoly or if the effect of the proposal
may be substantially to lessen competition in any relevant
market, unless the Board finds that the anticompetitive
effects of the proposal are clearly outweighed in the public
interest by the probable effect of the proposal in meeting
the convenience and needs of the community to be served.
In evaluating the competitive effect of a proposed transaction, the Board must determine the appropriate product
market and the relevant geographic market.3 Based on all
the facts of record, the Board concludes that the appropriate geographic markets for analyzing the combination of
Santander and BHC-PR are the Aguadilla, Mayaguez,
Ponce, and San Juan banking markets as defined in the
Appendix.4 In reaching this decision, the Board has, as in
previous cases, considered the location of the relevant
banks, worker commuting patterns (as indicated by census
data), and other indicia of economic integration and the
transmission of competitive forces among depository institutions.5
The traditional product market for analyzing the competitive effects of a bank acquisition or merger is the cluster of
banking products and services approximated by market
deposits.6 Using this approach, consummation of this proposal would not have a significantly adverse effect on
competition in any relevant banking market. In the Mayaguez and Ponce banking markets, the proposal would not
exceed the threshold levels of market concentration as
measured by the Herfindahl-Hirschman Index ("HHI")
under the Department of Justice Merger Guidelines.7 The
3. Chemical Banking Corporation,
82 Federal Reserve
Bulletin
239, 241 (1996) ("Chemical Order"); See United States v. Philadelphia National Bank, 374 U.S. 321, 357 (1963). United States v.
Phillipsburg National Bank, 399 U.S. 350 (1969).
4. Based on the factors discussed below, which the Board believes
are the appropriate delineators of the market, the relevant market is
not the entire island of Puerto Rico, as argued by Santander, or small
geographic areas, as argued by Inner City Press/Community on the
Move ("Protestant").
5. For a detailed discussion of the methodology and commuting data
used in defining the banking markets, see David Holdsworth, "Definition of Banking Markets in Puerto Rico," manuscript, Federal Reserve
Bank of N e w York, February 1995. In defining the scope of the
Aguadilla banking market, the Board has included the municipality of
Rincon. Rincon is located approximately 13 miles from the city of
Aguadilla and approximately 30 percent of its residents reported that
they commute to the Aguadilla M S A or to the municipalities of
Isabela and San Sebastian within the Aguadilla banking market.
6. Chemical Banking Corporation,
82 Federal Reserve
Bulletin
239, 241 (1996) ("Chemical Order")-, See United States v. Philadelphia National Bank, 374 U.S. 321, 357 (1963).
7. The HHI would increase for the Mayaguez banking market by
147 points to 2096 and for the Ponce banking market by 51 points to
2412. Under the revised Department of Justice Merger Guidelines,
49 Federal Register 26,823 (June 29, 1984), a market in which the
post-merger HHI is above 1800 is considered to be highly concentrated. In such markets, the Department of Justice is likely to challenge a merger that increases the HHI by more than 50 points. The
Department of Justice has informed the Board that a bank merger or
thresholds would be exceeded in the San Juan and Aguadilla banking markets.8
The Board notes that HHI thresholds are only guidelines
that are used by the Board, the Department of Justice, and
the other banking agencies to help identify cases in which a
more detailed competitive analysis is appropriate to ensure
that the proposal would not have a significantly adverse
effect on competition in any relevant banking market. A
proposal that fails to pass the HHI market screen may
nevertheless be approved because other information may
indicate that the proposal would not have a significantly
adverse effect on competition. In this case, the Department
of Justice has reviewed the proposal and advised the Board
that consummation of the proposal would not likely have
any significantly adverse competitive effects in the San
Juan and Aguadilla banking markets or in any other relevant banking markets. The Puerto Rico banking commissioner and the FDIC also have not objected to the proposal.
The Board believes that a number of factors mitigate the
potential anticompetitive effects of the proposal in the San
Juan and Aguadilla banking markets. Sixteen commercial
banks and two thrifts (together, "depository institutions")
would remain in the San Juan banking market, and six
commercial banks would remain in the Aguadilla banking
market following consummation of this proposal.
In addition, 55 savings and credit union cooperative
societies ("cooperatives") compete in the San Juan banking market and six cooperatives compete in the Aguadilla
banking market.9 The Board has previously recognized that
cooperatives are significant competitors of commercial
banks in Puerto Rico.10 Cooperatives are commonwealthinsured depository institutions that are unique to Puerto
Rico. Although cooperatives are membership organizations, few impose membership restrictions, and cooperatives are authorized to provide a full range of products and
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 200 points. The
Department of Justice has stated that the higher than normal HHI
thresholds for screening bank mergers for anticompetitive effects
implicitly recognize the competitive effect of limited-purpose lenders
and other nondepository financial entities.
Market share data are contained in the appendix and are as of June
30, 1995. These data are based on calculations in which the deposits
of thrift institutions are included at 50 percent. The Board previously
has indicated that thrift institutions have become, or have the potential
to become, significant competitors of commercial banks. See Midwest
Financial Group, 75 Federal Reserve Bulletin 386 (1989); National
City Corporation, 70 Federal Reserve Bulletin 743 (1984).
8. The HHI would increase for the San Juan banking market by 231
points to 1896 and for the Aguadilla banking market by 253 points to
3001.
9. Cooperatives in the Aguadilla banking market control 31.7 percent of total deposits in insured depository organizations.
10. For a detailed discussion of the activities of cooperatives,
incorporated herein by reference, see BanPonce Corporation,
77
Federal Reserve Bulletin 43, 45 (1991) ("BanPonce Order"). There
are 180 cooperatives controlling approximately $2.2 billion in deposits, representing approximately 8.9 percent of deposits in depository
institutions in Puerto Rico. All data for cooperatives are as of December 31, 1995.
Legal Developments
services to nonmembers.11 Cooperatives provide transaction accounts and are authorized to lend to both members
and nonmembers for any purpose, including home purchases and improvements and business purposes. In addition, the Puerto Rico Inspector of Cooperatives is authorized to grant broad lending authority, and cooperatives
were recently authorized by statute to make small business
loans to individuals.12 If cooperatives are factored into the
calculation of the market indexes, the proposal does not
exceed the thresholds in the Department of Justice Merger
Guidelines in the San Juan or Aguadilla banking markets.13
The Board has considered Protestant's contention that
consummation of this proposal would have a significantly
adverse effect on competition for small business loans in
areas of Puerto Rico. Based on an analysis of the record,
the Board concludes that this proposal would not have a
significantly adverse effect on small business lending even
if that product were analyzed apart from the cluster of
banking products and services. Available data indicate that,
upon consummation of this transaction, the HHI for small
business lending in San Juan would increase by 440 points
to 3095. However, the effect of the proposal on small
business lending would be significantly mitigated by a
number of factors. A large U.S. bank holding company
with a substantial branch network in Puerto Rico has
recently entered the market for small business lending and
has already rapidly increased its share of small business
lending. In 1994, several large thrift institutions headquartered in Puerto Rico converted to commercial banks and
also entered the market for small business loans. In addition, cooperatives are authorized to make small business
loans to individuals and provide a meaningful amount of
small business credit. Moreover, there are a large number
of other commercial banks in the relevant markets with
significant capacity, as measured by deposits, that could be
used to make small business loans.
11. Deposits in cooperatives are insurd to a maximum of $50,000
per person under the Shares and Deposits Insurance Program, an
agency of the commonwealth. See P.R. Stat. Ann. tit. 7, § 1151(b).
12. The record indicates that cooperatives were a significant source
of small business credit even before the legislation was enacted
because many personal loans were used to purchase or repair equipment and provide working capital.
13. Protestant contends that deposits in cooperatives should be
weighted at 25 percent, and Santander contends that these deposits
should be weighted at 100 percent. The Board has not weighted
cooperatives at 100 percent because of their limited ability to make
medium- and large-sized commercial loans. Based on the asset composition of cooperatives, the Board believes that cooperatives are at
least as significant as thrift institutions as competitors of commercial
banks, and should be weighted at 50 percent. If deposits of cooperatives are weighted at 50 percent, the HHI would increase for the San
Juan banking market by 215 points to 1761, and for the Aguadilla
banking market by 167 points to 2212. If deposits of cooperatives are
weighted at 25 percent, the HHI would increase for the San Juan
banking market by 223 points to 1831, and for the Aguadilla banking
market by 203 points to 2429.
835
Other Factors Under the BHC Act
The BHC Act also requires the Board to consider the
financial and managerial resources and future prospects of
the companies and banks involved, the convenience and
needs of the community to be served, and certain other
supervisory factors.
A. Supervisory Factors
The Board previously has determined that Santander is
subject to comprehensive supervision or regulation on a
consolidated basis by its home country supervisor.14 The
Board also has carefully considered the financial and managerial resources and future prospects of Santander,
BS-PR, BCH-PR, and BCH-PR's parent company, Banco
Central Hispanoamericano, S.A., Madrid, Spain ("Banco
Central"), as well as other supervisory factors in light of
all the facts of record.15 These facts include supervisory
reports of examination assessing the financial and managerial resources of the organizations and confidential managerial and financial information provided by Santander.16
Based on these and all other facts of record, the Board
concludes that all the supervisory factors under the BHC
Act, including financial and managerial resources, weigh in
favor of approving this proposal.17
14. See First Fidelity Bancorporation
and Banco Santander; S.A.,
79 Federal Reserve Bulletin 622 (1993). The Board has determined
that Santander has provided adequate assurances of access to information necessary to determine compliance with U.S. law.
15. Protestant maintains that Santander has violated the terms of
certain passivity commitments made in connection with its acquisition
of a minority interest in First Union Corporation, Charlotte, North
Carolina ("First Union") by making public statements regarding the
value of this investment and implying that its passive investments in
other bank holding companies are of greater importance. See Banco
Santander, S.A., 81 Federal Reserve Bulletin 1139 (1995) ("Santander
Order"). Protestant also argues that Santander, through a representative on the First Union board of directors authorized under the
commitments, is exercising a controlling influence over First Union's
expansion strategies as evidenced by the board's decision to enter a
market favored by the Santander representative. Santander denies any
violations of the commitments. Based on all the facts of record, the
Board does not believe that Protestant's allegations support the conclusion that Santander has violated its passivity commitments.
16. The Board has reviewed comments from several minority shareholders of BCH-PR criticizing the performance of bank's management in a number of areas, including allegations that bank's management has not provided them enough information on the proposal, has
not provided an adequate return on their investment, and has diminished the value of their investment by selling the bank's branches
before this proposal. The Board has considered these comments in
light of reports of examination assessing the managerial resources of
BCH-PR and the fact that the bank's management will be substantially replaced by Santander managers after consummation of the
proposal. The Board also believes that complaints concerning the
value of their investment do not relate to factors specified in the BHC
Act and are therefore beyond the jurisdiction of the Board to consider
in reviewing applications under section 3 of the BHC Act. See
Western Bancshares, Inc. v. Board of Governors, 480 F.2d 749 (10th
Cir. 1973).
17. Protestant has provided publicly available information regarding
possible violations of securities laws in connection with Santander's
836
Federal Reserve Bulletin • September 1996
B. Convenience and Needs Factor
The Board has long held that consideration of the convenience and needs factor includes a review of the records of
the relevant depository institutions under the Community
Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). As
provided in the CRA, the Board has evaluated this factor in
light of examinations by the primary federal supervisor of
the CRA performance records of the relevant institutions.
The Board also has carefully considered comments from
Protestant criticizing Santander's record of performance
under the CRA in meeting the credit needs of the delineated community of its branch in New York.
An institution's most recent CRA performance evaluation is a particularly important consideration in the applications process because it represents a detailed on-site evaluation of the institution's overall record of performance
under the CRA by its primary federal supervisor.18 In
addition, the Board considers an institution's policies and
practices for compliance with applicable fair lending laws.
The Board also takes into account information on an institution's lending activities that assist in meeting the credit
needs of low- and moderate-income neighborhoods, including programs and activities initiated since its most
recent CRA performance examination.
Performance Examinations. BS-PR received an "outstanding" rating for CRA performance from its primary
federal supervisor, the Federal Deposit Insurance Corporation ("FDIC"), as of September 18, 1995 ("FDIC Examination"). In addition, the New York branch of BS-PR
("Branch") received a "satisfactory" rating for CRA performance from its primary supervisor, the New York State
Banking Department ("Department"), as of November 22,
1995 ("Department Examination").19 BCH-PR also re-
purchase of stock in First Fidelity Bancorporation, Lawrenceville,
New Jersey, prior to First Fidelity's acquisition by First Union. The
Board has carefully reviewed this information in light of all facts of
record, including information provided by federal regulatory agencies,
and concludes that all supervisory factors relating to Santander are
consistent with approval. Protestant also asserts that Santander's relationship with The Royal Bank of Scotland Group pic, Edinburgh,
Scotland ("Royal Bank"), is inconsistent with approval of this proposal. The Board approved Santander's retention of its minority
interest in Royal Bank under section 3 of the BHC Act. See Banco de
Santander, S.A., 78 Federal Reserve Bulletin 60 (1992).
18. The Board notes that the Statement of the Federal Financial
Supervisory Agencies Regarding the Community Reinvestment Act
provides that a CRA examination is an important and often controlling
factor in the consideration of an institution's CRA record and that
reports of these examinations will be given great weight in the
applications process. 54 Federal Register 13,742, 13,745 (1989).
19. Protestant's criticisms of the Department Examination were
considered by the Board in the Santander Order, and for the reasons
discussed in the Santander Order and incorporated herein by reference, the Board believes that the examination is sufficient. See Santander Order, 81 Federal Reserve Bulletin at 1141 n. 19 (1995).
Protestant also maintains that Branch makes an inadequate amount of
loans within its delineated service area. Branch, with total assets of
approximately $67 million, has no retail banking operations and meets
community credit needs by supporting the community development
projects of community-based organizations and financial intermediar-
ceived a "satisfactory" rating for CRA performance from
the FDIC, as of August 15, 1994.20
CRA performance record of BS-PR. After consummation
of the proposal, Santander will implement its policies and
programs in the communities previously served by
BCH-PR. The FDIC Examination found that BS-PR engaged in extensive efforts to ascertain and serve the credit
needs of all segments of its community, including low- and
moderate-income areas. For example, BS-PR's Pequenas y
Medianas Empresas program ("PYMES"), developed
jointly with the University of Puerto Rico and the United
Retailers Center, provided small- and medium-sized businesses with free technical, administrative, and financial
advice. PYMES used a touring bus and a toll-free telephone number to reach additional members of the community, and met with local government officials in all
78 municipalities in Puerto Rico. During 1994, through
PYMES, BS-PR made $65 million of small business loans,
provided financial advice to 1,261 small businesses, and
developed loan programs to meet specific small business
requirements. BS-PR also is a Small Business Administration preferred lender and originated more than $10 million
of SB A guaranteed loans between October 1993 and September 1994. In addition, BS-PR participated with several
commonwealth housing agencies during 1994, and extended 13 residential construction loans for $83.8 million.
The FDIC Examination found that CRA performance
was a management priority of BS-PR and noted favorably
the close supervision of CRA programs by the bank's
board of directors, the bank's extensive fair lending training, monitoring, and compliance auditing programs, and
the incorporation of CRA objectives into strategic marketing decisions. Several forms of mass media and direct
advertising were used to promote retail banking products
in all areas of the bank's delineated community, including
consumer loan products specifically developed for lowand moderate-income borrowers.21 The bank's branches
were considered to be readily accessible by all areas of its
delineated community, and 27.7 percent of all loans were
originated in low- and moderate-income areas. Examiners
found no evidence of any practices intended to discourage
ies serving low- and moderate-income neighborhoods, such as Neighborhood Housing Services of N e w York City, Inc., and the National
Federation of Community Development Credit Unions. Through its
community development contacts, Branch has committed $1 million
toward the rehabilitation of a foreclosed property in the Bronx in order
to produce approximately 20 new housing units, and maintains a
$100,000 certificate of deposit in an institution in Brooklyn that
engages in community development activities. In addition, total loans
by Branch within its delineated community exceed $12.4 million,
including $ 1.2 million in loans to businesses owned by minorities.
20. The New York branch of Banco Central received a "needs to
improve" rating in its most recent CRA performance evaluation from
the FDIC. The branch is separately owned by BCH-PR's foreign bank
parent and would not be acquired in connection with this proposal.
Protestant argues that a current management interlock between the
branch and BCH-PR would adversely affect Santander's CRA performance after consummation of the proposal.
21. BS-PR made 30,324 consumer loans totalling $270.6 million in
1994.
Legal Developments
or prescreen applicants, and no violations of fair lending
laws were noted.
Branch Closings. Santander has identified three branches
of BCH-PR located in low- or moderate-income census
tracts that would be closed as a result of this proposal. Two
of these branches are located less than one-tenth of a mile
from BS-PR branches. The third branch is within one-half
mile of a BS-PR branch that is also equipped with an
automated teller machine. The Board notes that all branch
closings resulting from this proposal would be subject to
Santander's branch closing policy and the Joint Agency
Policy Statement on Branch Closings ("Joint Policy Statement"). 22
Santander's branch closing policy at BS-PR has been
reviewed by FDIC examiners and found to be satisfactory.
Under the policy, the impact of any proposed branch closing on the ability of the bank to serve its community,
including low- and moderate-income areas, is assessed.
This assessment includes meeting with representatives of
affected communities and considering alternatives that
minimize the adverse impact of the proposed branch closing. The FDIC Examination found that the two branches
closed and seven branches consolidated under this policy
during the period covered by the examination did not
adversely affect the availability of banking products and
services in the communities involved. The Board also
notes that any branch closings by BS-PR, particularly in
low- and moderate-income neighborhoods, would be assessed by examiners as part of the institution's future CRA
performance evaluations, and would be reviewed by the
Board in future applications to acquire a depository facility.
Conclusion on Convenience and Needs Factor. The
Board has carefully considered the entire record in its
review of the convenience and needs factor under the BHC
Act. Based on all the facts of record, including information
22. Protestant contends that Santander should be required, in connection with the proposal, to determine all branches of the resulting
institution that would be closed within the next 12 months and submit
this list. Santander has not yet determined all the branches of the
resulting institution that would be closed. As discussed above, the
Board has carefully reviewed the policies that Santander applies in
determining whether to close a branch. In addition, under the FDI Act,
all insured depository institutions are required to submit a notice of
any proposed branch closing to the appropriate federal banking agency
no later than 90 days before the date of closure that contains:
(1) The identity of the branch to be closed and the proposed
closing date;
(2) A detailed statement of the reasons for the decision to close the
branch; and
(3) Statistical or other information supporting the reasons for closure, consistent with the institution's written policy for branch
closings.
Movement of branches within the same immediate neighborhood
that do not substantially affect the nature of the business or the
customers served are considered consolidations or relocations under
the Joint Policy Statement and, as such, do not require prior notice.
See section 228 of the Federal Deposit Insurance Corporation Improvement Act of 1991, which added a new section 4 2 to the FDI Act
(12 U.S.C. § 1831r-l). See also Joint Policy Statement, 58 Federal
Register 49,083 (1993).
837
provided by Santander and CRA performance examinations, the Board concludes that the efforts of Santander and
BCH-PR to help meet the credit needs of all segments of
the communities served, including residents of low- and
moderate-income areas, are consistent with approval. In
this light, the Board concludes that convenience and needs
considerations, including the CRA performance records of
Santander, BS-PR, and BCH-PR, are consistent with approval.23
Conclusion
Based on the foregoing and all other facts of record, the
Board has determined that the application should be, and
hereby is, approved.24 The Board's approval is specifically
conditioned on compliance by Santander with all the commitments made in connection with this application. For the
purpose of this action, the commitments and conditions
relied on by the Board in reaching its decision are deemed
to be conditions imposed in writing by the Board in connection with its findings and decisions and, as such, may be
enforced in proceedings under applicable law.
August 1, 1996
JENNIFER J. J O H N S O N
Deputy Secretary of the Board
23. Protestant also has requested that the Board hold public hearings
or meetings in Puerto Rico and New York to consider public testimony concerning the convenience and needs and managerial factors.
Section 3(b) of the BHC Act does not require the Board to hold a
public hearing or meeting unless the appropriate supervisory authority
for the bank to be acquired makes a timely written recommendation of
denial of the application. In this case, neither the FDIC nor the Puerto
Rico banking commissioner has recommended denial.
Under the Board's rules, the Board may, in its discretion, hold a
public hearing or meeting on an application to clarify factual issues
related to the application and to provide an opportunity for testimony,
if appropriate. 12C.F.R. 262.3(e) and 262.25(d). The Board has
carefully considered Protestant's request in light of all the facts of
record. In the Board's view, Protestant has had ample opportunity to
submit its views and has, in fact, submitted substantial materials that
have been considered by the Board in acting on the application.
Protestant fails to demonstrate why its written submissions do not
adequately present its allegations and what, if any, additional matters
would be addressed in a public hearing or meeting. Based on all the
facts of record, the Board has determined that public hearings or
meetings are not necessary to clarify the factual record or otherwise
warranted in this case. Accordingly, Protestant's request for public
hearings or meetings on the application is denied.
24. Protestant requests that action on this proposal be delayed
pending an on-site investigation of the competitive effects of this
proposal, an investigation of Santander's compliance with its passivity
commitments, and an on-site investigation of the New York branch of
Banco Central (or until the results of a forthcoming FDIC examination
of the branch are made available for public comment). The Board is
required under applicable law and its processing procedures to act on
applications submitted under the BHC Act within specified time
periods. Based on all the facts of record, and for the reasons discussed
above, the Board concludes that the record is sufficient to act on the
proposal at this time and that delay or denial of this proposal on the
grounds of informational insufficiency is not warranted.
838
Federal Reserve Bulletin • September 1996
Appendix
Banking Markets in Puerto Rico
Aguadilla Aguadilla Metropolitan Statistical Area and
the municipalities of Isabela, Rincon, and San Sebastian.
Santander is the third largest depository institution in the
market, controlling deposits of approximately $93.4 million, representing 16.2 percent of deposits in depository
institutions in the market ("market deposits"). BCH-PR is
the fourth largest depository institution in the market,
controlling deposits of approximately $45.1 million, representing 7.8 percent of market deposits. On consummation
of the proposal, Santander would remain the third largest
depository institution in the Aguadilla banking market,
controlling deposits of approximately $138.5 million, representing 24 percent of market deposits.
Mayaguez Mayaguez Metropolitan Statistical Area and
the municipalities of Lajas, Las Marias, and Maricao.
Santander is the fourth largest depository institution in
the market, controlling deposits of approximately
$118.9 million, representing 9.9 percent of market deposits. BCH- PR is the fifth largest depository institution in the
market, controlling deposits of approximately $88.7 million, representing 7.4 percent of market deposits. On consummation of the proposal, Santander would become the
third largest depository institution in the Mayaguez banking market, controlling deposits of approximately $207.8
million, representing 17.3 percent of market deposits.
Ponce Ponce Metropolitan Statistical Area and the municipalities of Adjuntas, Arroyo, Coamo, Guanica,
Guayama, Patillas, Salinas, and Santa Isabel.
Santander is the third largest depository institution in the
market, controlling deposits of approximately $176.5 million, representing 11.4 percent of market deposits. BCHPR is the ninth largest depository institution in the market,
controlling deposits of approximately $35 million, representing 2.3 percent of market deposits. On consummation
of the proposal, Santander would remain the third largest
depository institution in the Ponce banking market, controlling deposits of approximately $211.5 million, representing
13.7 percent of market deposits.
San Juan San Juan-Caguas-Arecibo Consolidated Metropolitan Statistical Area and the municipalities of Aibonito, Barranquitas, Ciales, Jayuya, Lares, Maunabo, Orocovis, Quebradillas, Utuado, and Vieques.
Santander is the second largest depository institution in
the market, controlling deposits of approximately
$2.7 billion, representing 14.3 percent of market deposits.
BCH-PR is the fourth largest depository institution in the
market, controlling deposits of approximately $1.5 billion,
representing 8.1 percent of market deposits. On consummation of the proposal, Santander would remain the second
largest depository institution in the San Juan banking market, controlling deposits of approximately $4.2 billion,
representing 22.4 percent of market deposits.
Hibernia Corporation
New Orleans, Louisiana
Order Approving the Merger of Bank Holding
Companies
Hibernia Corporation, New Orleans ("Hibernia"), a bank
holding company within the meaning of the Bank Holding
Company Act ("BHC Act"), has requested the
Board's approval under section 3 of the BHC Act
(12 U.S.C. § 1842) to merge CM Bank Holding Company,
Lake Charles ("CM Company") into Hibernia, and thereby
indirectly acquire CM's subsidiary bank, Calcasieu Marine
National Bank of Lake Charles, Lake Charles ("Calcasieu
Bank"), all in Louisiana.1
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(61 Federal Register 29,101 (1996)). The time for filing
comments has expired, and the Board has considered the
proposal and all comments received in light of the factors
set forth in section 3 of the BHC Act.
Hibernia, with total consolidated assets of approximately
$7.5 billion, operates Hibernia Bank in Louisiana.2 Hibernia is the second largest commercial banking organization
in Louisiana, controlling approximately $6.3 billion in
deposits, representing approximately 17 percent of the total
deposits in commercial banks in the state ("state deposits"). 3 CM Company is the eighth largest commercial
banking organization in Louisiana, controlling $624.6 million in deposits, representing approximately 1.7 percent of
state deposits. On consummation of the proposal, Hibernia
would become the largest commercial banking organization in Louisiana, controlling approximately $7.1 billion in
deposits, representing approximately 19.3 percent of state
deposits.4
Competitive Considerations
Section 3 of the BHC Act prohibits the Board from approving an application if the proposal would result in a monopoly, or would substantially lessen competition in any relevant market unless such anticompetitive effects are clearly
1. Calcasieu Bank would be merged with and into Hibernia National Bank, New Orleans, Louisiana ("Hibernia Bank") immediately
after the merger of the parent holding companies. The Office of the
Comptroller of the Currency ("OCC") has approved the merger of the
banks under section 18(c) of the Federal Deposit Insurance Act
(12 U.S.C. § 1828(c) (the "Bank Merger Act").
2. Total consolidated assets data are as of June 30, 1996.
3. Asset and state deposit data are as of March 31, 1996.
4. These data reflect the pending acquisition of St. Bernard Bank &
Trust Co., Arabi, Louisiana.
Legal Developments
outweighed in the public interest by the probable effects of
the transaction in meeting the convenience and needs of
the community to be served. Hibernia and CM Company
do not compete in any banking market. In light of all the
facts of record, the Board has concluded that consummation of the proposal would not result in any significantly
adverse effect on competition or the concentration of banking resources in any relevant banking market.
Other Factors Under the BHC Act
The BHC Act also requires the Board to consider the
financial and managerial resources and future prospects of
the companies and banks involved, the convenience and
needs of the community to be served, and certain other
supervisory factors.
A. Supervisory Factors
The Board has carefully considered the financial and managerial resources and future prospects of Hibernia, CM
Company, and their respective subsidiaries, as well as
other supervisory factors, in light of all the facts of record.
These facts include supervisory reports of examination
assessing the financial and managerial resources of the
organizations and confidential financial information provided by Hibernia. The Board notes that Hibernia would
not incur or assume any debt in connection with the proposal and would conform the loan and investment portfolios of Calcasieu Bank to Hibernia's lending and investment policies. Based on these and all the facts of record,
the Board concludes that all the supervisory factors under
the BHC Act, including financial and managerial resources,
weigh in favor of approving this proposal.
B. Convenience and Needs Factor
The Board has long held that consideration of the convenience and needs factor includes a review of the records of
the relevant depository institutions under the Community
Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). As
provided in the CRA, the Board has evaluated this factor in
light of examinations by the primary federal supervisor of
the CRA performance records of the relevant institutions.
The Board also has carefully considered the comments
from the Plaisance Development Corporation ("Protestant") that maintain that Hibernia and its subsidiary bank,
Hibernia Bank, have failed to meet the banking needs of all
segments of the bank's delineated communities,5 particularly communities with predominately African-American
5. Hibernia's delineated communities include Greater New Orleans
(Orleans, Jefferson, Lafourche, St. Tammany, St. Bernard, St. Charles,
St. John the Baptist, Terrebone and Washington Parishes), South
Central Louisiana (East Baton Rouge, Lafayette, Livingston, Ascension, Vermillion, Iberia and St. Mary Parishes), Northeast Louisiana
(Avoyelles, East Carroll, Morehouse, Madison, Ouachita, Rapides and
West Carroll Parishes), and Northwest Louisiana (Caddo and Bossier
Parishes).
839
residents, and to comply with fair lending laws.6 Protestant
also contends that Hibernia Bank's 1992 and 1993 lending
data reported under the Home Mortgage Disclosure Act
(12 U.S.C. § 2801 et seq.) ("HMDA") indicate disparities
in the rates of home-related loan applications from and
loan originations to African Americans compared to those
for nonminority residents, and contends that these data
demonstrate that Hibernia Bank engages in illegal discriminatory practices.7
An institution's most recent CRA performance evaluation is a particularly important consideration in the applications process because it represents a detailed on-site evaluation of the institution's overall record of performance
under the CRA by its primary federal supervisor.8 In addition, the Board considers an institution's policies and practices for compliance with applicable fair lending laws. The
Board also takes into account information on an institution's lending activities that assist in meeting the credit
needs of low- and moderate-income neighborhoods, including programs and activities initiated since its most
recent CRA performance examination.
Performance Examinations. Hibernia Bank received a
"satisfactory" rating from its primary federal supervisor,
the OCC, at its most recent CRA performance examination
as of August 10, 1995 ("1995 Examination"). Calcasieu
Bank also received a "satisfactory" rating from the OCC
at its most recent CRA performance examination as of
January 9, 1995.
The 1995 Examination found no evidence of prohibited
discrimination or any practices or procedures that discour-
6. Protestant alleges that Hibernia and Hibernia Bank have failed to:
(1) Develop and implement CRA policies that assist African
Americans;
(2) Provide capital and financing to African-American homeowners;
(3) Provide funds, grants, and loans to African-American community organizations;
(4) Provide capital to businesses owned by African Americans;
(5) Participate in community development projects to improve
economic opportunities in African-American communities; and
(6) Locate branches in African-American communities.
7. Protestant believes that several factors contribute to the alleged
failure to comply with fair lending laws, including the following:
(1) Delineation of service areas to exclude the African-American
community;
(2) Solicitation of real estate agents and developers serving
predominately nonminority residential areas;
(3) Employment of few African-American loan officers;
(4) Use of a compensation program for lending officers that
provides incentives to solicit and originate mortgages only on
higher-priced homes;
(5) Failure to use media and images oriented to the AfricanAmerican community in advertising its loan products; and
(6) Infrequent marketing of its Federal Housing Administration,
Veterans Administration, and Small Business Administration
loan products in the African-American community.
8. The Board notes that the Statement of the Federal Financial
Supervisory Agencies Regarding the Community Reinvestment Act
provides that a CRA examination is an important and often controlling
factor in the consideration of an institution's CRA record and that
these examinations will be given great weight in the applications
process. 54 Federal Register 13,742, 13,745 (1989).
840
Federal Reserve Bulletin • September 1996
aged applications for available credit from any segment of
Hibernia Bank's delineated communities. As part of the
examination, OCC examiners conducted a fair lending
review of home improvement loan files and found no
evidence of illegal discrimination or other illegal credit
practices.9 In addition, examiners noted that Hibernia Bank
has in place written policies, audit and review procedures,
and regularly scheduled training programs for all employees to ensure compliance with fair lending laws and regulations. Hibernia Bank also has a second review process for
all housing-related and small commercial loan applications
that are recommended for denial to ensure that all relevant
information has been considered and that there are no
alternative means of extending credit to the applicant.
Hibernia Bank recently established a pilot second review
program for all consumer loan applications that are recommended for denial.
The OCC examiners found that the community delineations of Hibernia Bank were reasonable and did not exclude any low- and moderate-income areas. Examiners
also reported that the geographic distribution of Hibernia
Bank's loan applications, approvals, and denials represented a reasonable penetration of all segments of its
delineated communities. The 1995 Examination stated that
Hibernia Bank's efforts to ascertain credit needs and to
solicit credit applications from all segments of its community had been effective.10 In addition, Hibernia Bank's
branch network, with 25 percent of the bank's branches
located in low- and moderate income ares, were considered
to be reasonably accessible to all segments of its delineated
community.
Lending activities. Examiners noted that Hibernia Bank
participated in a variety of housing-related and other lending programs that assist in meeting the credit needs of all
its communities, including areas with low- and moderateincome and predominately minority residents. For example, Hibernia Bank initiated its Affordable Home Program
in May 1995 to assist low- and moderate-income families
to purchase their first homes in all of its delineated communities by offering flexible underwriting criteria and below
market interest rates.11 As of May 31, 1996, the program
originated approximately 630 loans totalling approximately
$38 million. The bank also made a number of loans through
the Federal Housing Administration ("FHA"), Veterans
9. Examiners previously conducted a fair lending examination of
Hibernia Bank's residential mortgage loan applications as part of the
bank's 1993 CRA performance examination and found no evidence of
illegal discrimination.
10. The 1995 Examination noted that Hibernia's marketing efforts
included advertising in newspapers and on radio stations that focused
on communities with predominately low- and moderate-income and
minority residents. Hibernia's advertising campaigns also have used
minority models.
11. In connection with the program, Hibernia worked closely with
several non-profit housing organizations that offer homebuyer training
and education programs for low- to moderate-income residents, including the New Orleans Neighborhood Development Foundation,
Alexandria Budget Management Services, Monroe Homeownership,
Inc., and St. Tammany Community Housing Resource Board.
Administration ("VA"), and Farmers Home Administration ("FmHA") loan programs. In 1995, Hibernia originated 599 FHA, VA, and FmHA loans, totalling more than
$37 million, including 157 loans totalling $8.5 million to
African-American borrowers.
The 1995 Examination also discussed two affordable
housing programs in the New Orleans area. In January
1995, Hibernia Bank initiated a Community Lending Program ("CLP"), which uses flexible underwriting standards
in evaluating consumer loan applications from low- and
moderate-income applicants, as a pilot lending program in
the Greater New Orleans area. As of May 31, 1996, Hibernia had originated through the program 2,882 loans totalling approximately $17.6 million. In addition, Hibernia
Bank participated in the East Baton Rouge Mortgage Finance Authority ("EBRMFA"), which provides funding to
low- and moderate-income home buyers. Hibernia Bank
serves as the master servicer and lead lender in the
EBRMFA bond program for low- and moderate-income,
first-time home buyers. Hibernia Bank was a participant in
a $21 million bond issue for home mortgages through
EBRMFA and, as of June 30, 1995, Hibernia Bank funded
through this program 71 loans totalling $3.5 million.
Hibernia Bank created the Small Business Banking Division in 1992 to enhance its services to small businesses,
and OCC examiners noted a number of Hibernia Bank's
small business lending activities. For example, Hibernia
Bank made 68 Small Business Administration ("SBA")
loans totalling $8.7 million, in 1994, and in the first two
quarters of 1995, Hibernia Bank made 32 SBA loans
totalling more than $5 million. Hibernia also participates in
the Lafayette Capital Certified Development Company
("LCCDC"), which makes direct loans to businesses under the SBA 504 program. Since April 1993, Hibernia has
made over $5 million in loans through this program in the
Acadiana region of Louisiana. Hibernia also is involved
with the Regional Loan Corporation ("RLC"), a nonprofit, government-sponsored organization offering small
business loans to stimulate the economy and create jobs.
Hibernia has made several small business loans through
this program under the SBA 504 Loan Program. By
May 31, 1996, Hibernia had made 10 loans under the
program, totaling $1.4 million. Hibernia has established
programs to facilitate lending to small businesses, and has
invested in loan pools for economic development corporations and foundations in each of its designated regions. As
of June 1996, loans closed through these economic development corporations and foundations were approximately
$8 million.
Hibernia Bank also actively participated in programs
that focus on lending to businesses owned by minorities
and businesses in low- and moderate-income areas.12 Hi-
12. Hibernia supports a number of organizations that provide training, educational seminars and technical expertise to small businesses,
including businesses owned by minorities. Hibernia participates in the
Economic Freedom Association, New Orleans Minority Business
Development Center, Northwestern State University Small Business
Legal Developments
bernia Bank invested $300,000 in the Gulf Coast Business
and Industry Development Corporation ("Gulf Coast"), a
minority-owned and operated company that provides mezzanine financing to existing small businesses, including
minority-owned businesses. By June 24, 1996, Gulf Coast
had funded nine loans for approximately $1.2 million.
OCC examiners also noted that Hibernia Bank supported
a variety of community development organizations. Hibernia Bank donated more than $100,000 to the New Orleans
and Baton Rouge offices of the Local Initiatives Support
Corporation ("LISC"), a national non-profit organization
that assists in organizing community development companies to redevelop low- and moderate-income neighborhoods.13 Hibernia also provided funding and other support
to the Holy Cross CDC, Creole Cottage Coalition, and the
Highland Area Partnership to finance the renovation of
homes located in low- and moderate-income communities,
and to the Baton Rouge Mid City Fix-Up and the
ShreveCorp, two community organizations that focus on
neighborhood clean-up, renovation and beautification
projects.
The Board has carefully reviewed HMDA data covering
the period 1993 through 1995 in light of Protestant's
contentions that Hibernia illegally discriminates on the
basis of race. These data show that, as a percentage of total
applications, Hibernia's applications from AfricanAmerican applicants, from minority census tracts, and from
low- to moderate-income areas, has increased over the
1993-1995 period. In 1995, Hibernia's percentage of total
applications from minority census tracts and from low- to
moderate-income tracts approximated that of the aggregate
of other lenders. In other respects, however, the data show
disparities in the denial rates to minority loan applicants as
compared to nonminority applicants.
The Board is concerned when the record of an institution
indicates disparities in lending to minority applicants, and
believes that all banks are obligated to ensure that their
lending practices are based on criteria that assure not only
safe and sound lending, but also assure equal access to
credit by creditworthy applicants, regardless of race. The
Board recognizes, however, that HMDA data alone provide
an incomplete measure of an institution's lending in its
community because these data cover only a few categories
of housing-related lending and provide limited information
about the covered loans.14 HMDA data therefore have
limitations that make the data an inadequate basis, absent
other information, for concluding that an institution has
engaged in illegal lending discrimination. Because of the
Development Center, Central Louisiana Business League, and several
chambers of commerce.
13. Hibernia has provided funding and other assistance to several of
the community development corporations that have received LISC's
support. As of June 24, 1996, Hibernia had made ten loans through
LISC.
14. For example, these data do not provide a basis for an independent assessment of whether an applicant who was denied credit was in
fact creditworthy. Thus, credit history problems and excessive debt
levels relative to income—reasons most frequently cited for credit
denial—are not available from the HMDA data.
841
limitations of HMDA data, the Board has carefully reviewed other information, particularly examination reports
that provide an on-site evaluation of compliance by Hibernia with fair lending laws as discussed above.
Conclusion on Convenience and Needs Factor
The Board has carefully reviewed the relevant CRA examination information, the programs implemented by the relevant institutions, the policies in place to ensure fair lending, relevant HMDA and other lending data, comments and
concerns raised by Protestants, and other facts of record in
its consideration of the effect of this transaction on the
convenience and needs of the community. Based on this
review, and for the reasons discussed above, the Board
concludes that convenience and needs considerations, including Hibernia's record of performance and its plans for
operating Calcasieu Bank, are consistent with approval of
the application.
Conclusion
Based on the foregoing and all the other facts of record, the
Board has determined that the application should be, and
hereby is, approved.15 The Board's approval is expressly
conditioned on Hibernia's compliance with all the commitments made in connection with this application. For purposes of this action, these commitments and conditions in
this order shall be deemed to be conditions imposed in
writing by the Board in connection with its findings and
decision, and, as such, may be enforced in proceedings
under applicable law.
This transaction shall not be consummated before the
fifteenth calendar day following the effective date of this
order, or later than three months after the effective date of
this order, unless such period is extended for good cause by
the Board or by the Federal Reserve Bank of Atlanta,
acting pursuant to delegated authority.
15. Protestant believes that Hibernia's record of employing AfricanAmerican loan officers and originators is insufficient. Because Hibernia employs more than 50 people, serves as a depository of government funds, and acts as agent in selling or redeeming U.S. savings
bonds and notes, it is required by Department of Labor regulations to:
(1) File annual reports with the Equal Employment Opportunity
Commission ("EEOC"); and
(2) Have in place a written affirmative action compliance program
which states its efforts and plans to achieve equal opportunity in the
employment, hiring, promotion, and separation of personnel. See
41 C.F.R. 60-1.7(a), 60-1.40.
The EEOC has jurisdiction to investigate and determine whether
companies are in compliance with federal equal employment laws.
The Board has noted that unsubstantiated allegations of improper
actions under a statute administered by another federal agency are
beyond the scope of the Board's review under the factors specified in
the BHC Act. On the other hand, substantiated improper actions may
be considered by the Board in light of all the facts of record of an
application under the factors in the B H C Act or in the context of the
Board's general supervisory authority over bank holding companies.
See Norwest Corporation,
82 Federal Reserve Bulletin 580, 582
(1996).
842
Federal Reserve Bulletin • September 1996
By order of the Board of Governors, effective July 31,
1996.
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Kelley, Lindsey, Phillips, Yellen, and Meyer.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
Hibernia Corporation
New Orleans, Louisiana
Order Approving the Acquisition of a Bank
Hibernia Corporation, New Orleans ("Hibernia"), a bank
holding company within the meaning of the Bank Holding
Company Act ("BHC Act"), has requested the
Board's approval under section 3 of the BHC Act
(12 U.S.C. § 1842) to acquire St. Bernard Bank & Trust
Co., Arabi ("St. Bernard Bank"), both in Louisiana.1
Notice of this proposal, affording interested persons an
opportunity to submit comments, has been published
(61 Federal Register 29,101 (1996)). The time for filing
comments has expired, and the Board has considered the
proposal and all comments received in light of the factors
set forth in section 3 of the BHC Act.
Hibernia, with total consolidated assets of approximately
$7.5 billion, operates Hibernia Bank in Louisiana.2 Hibernia is the second largest commercial banking organization
in Louisiana, controlling approximately $6.3 billion in
deposits, representing approximately 17 percent of the total
deposits in commercial banks in the state ("state deposits"). 3 St. Bernard Bank is the 15th largest commercial
banking organization in Louisiana, controlling $231.7 million in deposits, representing less than one percent of state
deposits. On consummation of the proposal, Hibernia
would become the largest commercial banking organization in Louisiana, controlling $7.1 billion in deposits, representing approximately 19.3 percent of state deposits.4
Hibernia Bank and St. Bernard Bank each operate offices
in the New Orleans banking market.5 On consummation of
this proposal, Hibernia Bank would remain the second
largest commercial bank or thrift ("depository institution")
1. Hibernia would merge St. Bernard Bank, a state member bank,
with and into a wholly owned interim state chartered bank. Immediately after this merger, St. Bernard Bank would merge with and into
Hibernia National Bank, New Orleans, Louisiana ("Hibernia Bank").
The Office of the Comptroller of the Currency ("OCC"), has approved the merger of St. Bernard Bank and Hibernia Bank under
section
18(c)
of
the
Federal
Deposit
Insurance
Act
(12 U.S.C. § 1828(c)) (the "Bank Merger Act"). In light of all the
facts of record, the Board believes that no regulatory purpose would
be served by requiring an application under the Bank Merger Act for
the interim merger.
2. Total consolidated assets data are as of June 30, 1996.
3. Asset and state deposit data are as of March 31, 1996.
4. These data reflect the pending acquisition of CM Bank Holding
Company, Lake Charles, Louisiana.
5. The New Orleans banking market is comprised of Jefferson,
Orleans, Plaquemines, St. Bernard, St. Charles, St. John the Baptist,
and St. Tammany Parishes, all in Louisiana.
in the New Orleans banking market, controlling market
deposits of approximately $3.1 billion, representing approximately 24.2 percent of total deposits in depository
institutions in the market ("market deposits").6 The market
would remain moderately concentrated, as measured by the
Herfindahl-Hirschman Index ("HHI"), 7 and numerous
competitors would remain in this market. Based on all the
facts of record, the Board concludes that consummation of
this proposal would not result in any significantly adverse
effect on competition or concentration of banking resources in the New Orleans or any other relevant banking
market.
The Board has carefully considered the financial and
managerial resources and future prospects of Hibernia and
St. Bernard Bank as well as other supervisory factors in
light of all the facts of record. These facts include supervisory reports of examination assessing the financial and
managerial resources of the organizations and confidential
financial information provided by Hibernia. The Board
notes that Hibernia would not incur or assume any debt in
connection with the proposal and would conform the loan
and investment portfolios of St. Bernard Bank with Hibernia's lending and investment policies. Based on these and
all the facts of record, the Board concludes that all the
supervisory factors under the BHC Act, including financial
and managerial resources, weigh in favor of approving this
proposal. The Board also concludes that considerations
relating to the convenience and needs of the community to
be served, are also consistent with approval.8
6. Market data are as of June 30, 1995. Market share data are based
on calculations in which the deposits of thrift institutions are included
at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant
competitors of commercial banks. See Midwest Financial
Group,
75 Federal Reserve Bulletin 386 (1989); National City
Corporation,
70 Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly
included thrift deposits in the calculation of market share on a
50-percent weighted basis. See, e.g., First Hawaiian, Inc., 77 Federal
Reserve Bulletin 52 (1991).
7. The HHI would increase by 81 points to 1783. Under the revised
Department of Justice Merger Guidelines (49 Federal Register 26,823
(June 29, 1984)), a market in which the post-merger HHI is between
1000 and 1800 is considered to be moderately concentrated. The
Justice Department has informed the Board that a bank merger or
acquisition generally will not be challenged (in the absence of other
factors indicating anti-competitive effects) unless the post-merger
HHI is at least 1800 and the merger increases the HHI by 200 points.
The Justice Department has stated that the higher than normal HHI
thresholds for screening bank mergers for anti-competitive effects
implicitly recognize the competitive effects of limited-purpose lenders
and other non-depository financial entities.
8. The Board received comments from the Plaisance Development
Corporation criticizing Hibernia's record of performance under the
Community Reinvestment Act and fair lending laws. These comments
are identical to the comments considered by the Board in Hibernia's
application to acquire CM Bank Holding Company ("CM Company"), and thereby indirectly acquire Calcasieu Marine National Bank
of Lake Charles, both in Lake Charles, Louisiana. In light of all the
facts of record, and for the reasons stated in the Board's order
approving the CM Company acquisition dated today, which are incorporated herein by reference, the Board concludes that all the factors
required to be considered under the BHC Act are consistent with
approving the St. Bernard Bank acquisition.
Legal Developments
Based on the foregoing and all the other facts of record,
the Board has determined that the application should be,
and hereby is, approved. The Board's approval is expressly
conditioned on Hibernia's compliance with all the commitments made in connection with this application. For purposes of this action, these commitments and the conditions
in this order shall be deemed to be conditions imposed in
writing by the Board in connection with its findings and
decision, and, as such, may be enforced in proceedings
under applicable law.
This transaction shall not be consummated before the
fifteenth calendar day following the effective date of this
order, or later than three months after the effective date of
this order, unless such period is extended for good cause by
the Board or by the Federal Reserve Bank of Atlanta,
acting pursuant to delegated authority.
By order of the Board of Governors, effective July 31,
1996.
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Kelley, Lindsey, Phillips, Yellen, and Meyer.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
NVE Bancorp, MHC
Englewood, New Jersey
NVE Bancorp, Inc.
Englewood, New Jersey
Order Approving the Formation of Bank Holding
Companies
NVE Bancorp, MHC ("MHC"), and its wholly owned
subsidiary NVE Bancorp, Inc. ("Bancorp") have requested
the Board's approval under section 3 of the BHC Act
(12 U.S.C. § 1842) to become bank holding companies by
acquiring all the voting shares of NVE Savings Bank
("NVE Bank"), 1 all of Englewood, New Jersey.
Notice of this proposal, affording interested persons an
opportunity to submit comments, has been published
(61 Federal Register 17,703 (1996)). The time for filing
comments has expired, and the Board has considered the
proposal and all comments received in light of the factors
set forth in section 3 of the BHC Act.
MHC is a company organized in mutual form, and it
would become a bank holding company by acquiring all
the voting shares of Bancorp, which in turn would acquire
all the voting shares of NVE Bank. NVE Bank is the 54th
largest depository institution in New Jersey, controlling
approximately $339.2 million in deposits, representing less
than 1 percent of all deposits in depository institutions in
1. N V E Bank currently operates as a mutual savings bank, and has
applied to the Federal Deposit Insurance Corporation ("FDIC") to
convert to a stock savings bank.
843
the state.2 Based on all the facts of record, the Board
concludes that consummation of this proposal would not
have a significantly adverse effect on competition or on the
concentration of banking resources in any relevant banking
market, and that competitive considerations are consistent
with approval.
In every application under section 3 of the BHC Act, the
Board is required to consider the financial and managerial
resources and future prospects of the companies and banks
concerned, and the convenience and needs of the communities to be served. The Board previously has noted that
ownership of stock in a converted mutual bank by a mutual
bank holding company and minority shareholders could
raise significant issues under the managerial and convenience and needs factors in the BHC Act, if this structure
was used to transfer economic value from the mutual
holding company to the minority shareholders.3 Although
there are no minority shareholders in this proposal and
applicants have no current plans to issue additional shares
in Bancorp or NVE Bank, stock issuances are contemplated for the future. Under the proposed structure, therefore, the potential exists that shares owned by minority
shareholders could raise the same concerns as those identified in Northwest.
In order to address those concerns, MHC and Bancorp
have made a number of commitments,4 including the following:
(1) MHC and Bancorp will obtain prior Board approval
for the issuance of securities by Bancorp or NVE Bank
to third parties and for the conversion of MHC from
mutual to stock form; and
(2) In any subsequent transfer or issuance of shares to
shareholders other than MHC, the depositors of NVE
Bank will be accorded the same share purchase priorities
as if MHC were a mutual savings bank converting to
stock form.
These constraints would give the Board the opportunity to
review any future conversion or issuance of securities in
light of the concerns discussed above. Accordingly, based
2. All banking data are as of June 30, 1995. In this context,
depository institutions include commercial banks, savings banks, and
savings and loan associations.
3. See Northwest Bancorp, MHC, 80 Federal Reserve Bulletin 1131
(1994) {"Northwest").
In Northwest, the Board concluded that a
waiver of dividends by the mutual holding company shareholder
could have the effect of transferring economic value from the mutual
holding company to the minority shareholders and depriving the
holding company of resources necessary to serve as a source of
strength for the bank. The decision to waive the dividends would be
made by the trustees of the mutual holding company, who were also
minority shareholders of the bank, and the decision would not be
reviewable by the mutual owners of the holding company. The Board,
therefore, viewed this potential conflict of interest as raising adverse
considerations under the factors in the BHC Act. The Board relied on
a number of commitments to address these issues, including commitments to ensure that any dividends waived by the mutual holding
company would be retained by the bank and would not inure to the
benefit of the bank's minority shareholders.
4. The commitments are listed in the Appendix.
844
Federal Reserve Bulletin • September 1996
on all the facts of record, including commitments made by
MHC and Bancorp, the Board concludes that the financial
and managerial resources and future prospects of MHC,
Bancorp, and NVE Bank, and other supervisory factors the
Board must consider under section 3 of the BHC Act, are
consistent with approval, as are considerations relating to
the convenience and needs of the communities to be
served.
Based on the foregoing and other facts of record, the
Board has determined that the applications should be, and
hereby are, approved. The Board's approval of this proposal is expressly conditioned on compliance with all the
commitments made by Applicants in connection with these
applications, and is conditioned on receipt by Applicants
and NVE Bank of all necessary approvals from all relevant
regulators, and compliance with the requirements imposed
by those regulators. For purposes of this action, the commitments and conditions relied on by the Board in reaching
this decision are deemed to be conditions imposed in
writing and, as such, may be enforced in proceedings under
applicable law.
This proposal shall not be consummated before the thirtieth calendar day after the effective date of this order or
later than three months after the effective date of this order,
unless such period is extended for good cause by the Board
or by the Federal Reserve Bank of New York, acting
pursuant to delegated authority.
By order of the Board of Governors, effective July 15,
1996.
(3) In connection with Commitments 1 and 2, Applicant
agrees with the following:
(A) In any sale, transfer or issuance of shares of Bank or
Bancorp to any person other than the MHC, the depositors of Bank will be accorded the same stock purchase
priorities given to depositors of a mutual savings association in connection with such association converting to
stock form. In making such sale, or transferring or
issuing such shares, Applicants and their management
will comply with any fiduciary duty they owe.
(B) The Board will take into account the extent to which
the proposed transactions conform with the provisions
and purpose of the regulations of the Office of Thrift
Supervision ("OTS") (12 C.F.R. Part 563b and 575) and
the Federal Deposit Insurance Corporation ("FDIC")
(12 C.F.R. 303.15 and 333.4), as currently in effect at the
time the Board reviews the required materials related to
the proposed transactions. Any nonconformity with
those provisions will be closely scrutinized. Conformity
with the OTS and FDIC requirements, however, will not
be sufficient for Board regulatory purposes if the Board
determines that the proposed transaction would pose a
risk to the institution's safety and soundness, violate any
law or regulation or present a breach of fiduciary duty.
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Kelley, Lindsey, Yellen, and Meyer. Absent and not voting:
Governor Phillips.
Perryton Bancshares, Inc., ("Perryton"), has requested the
Board's approval under section 3 of the Bank Holding
Company Act ("BHC Act") to become a bank holding
company by acquiring all the voting shares of Perryton
National Bank, both in Perryton, Texas ("Bank"). 1
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(61 Federal Register 21,113 (1996)). The time for filing
comments has expired, and the Board has considered the
application and all comments received in light of the
factors set forth in section 3 of the BHC Act.
Perryton is a nonoperating corporation formed for the
purpose of acquiring Bank. Bank is the 417th largest
commercial banking organization in Texas, controlling deposits of approximately $41.5 million, representing less
than 1 percent of total deposits in commercial banking
JENNIFER J. JOHNSON
Deputy Secretary of the Board
Appendix
(1) After the reorganization, the NVE Bancorp MHC
("MHC") will not sell, transfer, or otherwise dispose of
any of its shares in NVE Bancorp, Inc., ("Bancorp") or
NVE Savings Bank ("Bank") (together "Applicant") to
any person (including Employee Stock Ownership Plan)
and Bancorp will not sell, transfer or otherwise dispose of
any of its shares of Bank without the prior approval of the
Board of Governors of the Federal Reserve System (the
"Board"). If, subsequent to the reorganization, Bancorp or
Bank issues equity securities or any securities that would
accord the holder the right to acquire equity securities or
that would bestow upon the holder an interest in the
retained earnings of the issuer to persons other than MHC,
MHC and Bancorp will make prior application to the
Board for approval for the issuance of the securities.
(2) In any conversion of the MHC from mutual to stock
form, the holding company will file an application for
approval of the conversion with the Board (to the extent
the mutual holding company is a bank holding company).
Perryton Bancshares, Inc.
Perryton, Texas
Order Approving Formation of a Bank Holding Company
1. Perryton proposes to acquire Bank by chartering a wholly owned
interim national bank ("Interim Bank") and merging Bank with and
into Interim Bank with Interim Bank surviving under the title of
Perryton National Bank. On June 12, 1996, the Office of the Comptroller of the Currency ("OCC") approved the merger of Bank and
Interim Bank under the provisions of section 18(c) of the Federal
Deposit Insurance Act (the "Bank Merger Act", 12 U.S.C. § 1828(c)).
On consummation of the merger and conversion of shares, Perryton
would own all the voting stock of Interim Bank. Bank shareholders
would be entitled to receive cash or to tender their Bank stock in
exchange for the number of Perryton shares set forth in the merger
agreement. Untendered Bank stock would represent evidence of the
shareholder's ownership of Perryton shares.
Legal Developments
organizations in the state.2 In this light, the Board concludes
that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration
of banking resources in any relevant banking market and that
competitive considerations are consistent with approval.
The Board has also considered the other factors set forth
in the BHC Act in light of all the facts of record, including
the reasonableness of the financial projections for satisfying the debt to be acquired by Perryton, and the reports of
examination by Bank's primary federal supervisor, the
OCC, that assess the financial and managerial resources of
Bank and its record of performance under the Community
Reinvestment Act. Based on all these facts, the Board
concludes that the financial and managerial resources and
future prospects of Perryton and Bank are consistent with
approval, as are convenience and needs considerations and
other supervisory factors that the Board is required to
consider under section 3 of the BHC Act.3
Based on the foregoing and all the other facts of record,
the Board has determined that the application should be,
and hereby is, approved.4 The Board's approval is ex-
2. All banking data are as of June 30, 1995.
3. The Board has carefully reviewed comments received from a
minority shareholder and director of Bank ("Commenter") maintaining that there are no valid reasons for forming a bank holding
company and that he should be permitted to retain his Bank stock.
Commenter also contends that the proposal would adversely affect his
personal finances. Applicant asserts that a bank holding company
provides tax advantages to shareholders and operational flexibility to
engage in nonbanking activities. Bank's shareholders must approve
the formation of the bank holding company and, as noted, the merger
transaction approved by the OCC over the objections of Commenter
would convert Commenter's Bank stock into a right to receive Perryton stock. Commenter may also exercise dissenting shareholder rights
under the procedures provided in the National Bank Act if he believes
that the consideration offered for his Bank stock (cash or Perryton
shares) is unreasonable. See 12 U.S.C. §§ 215 and 215a. The Board,
moreover, is limited to considering specific statutory factors in reviewing applications under section 3 of the BHC Act, and courts have
determined that the Board does not have the authority to consider
share pricing and similar matters unless they directly relate to a factor
specified in the BHC Act. See Western Bancshares, Inc. v. Board of
Governors, 480 F.2d 749 (10th Cir. 1973). In light of all the facts of
record, and for the reasons discussed above, the Board concludes that
these factors are consistent with approval.
4. Commenter has requested the opportunity to speak if a public
meeting or hearing is held in connection with the application. Section 3(b) of the BHC Act does not require the Board to hold a public
meeting or hearing unless the appropriate supervisory authority for the
bank to be acquired makes a timely written recommendation of denial
of the application. As noted, the OCC has approved the merger of the
national banks involved in the transaction. The Board may also, in its
discretion, hold a public meeting or hearing on an application under
its Rules of Procedure 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 notes that Commenter
has had ample opportunity to submit his views and has, in fact,
submitted comments that have been carefully considered by the Board.
The record fails to demonstrate why Commenter's written submissions do not adequately present his allegations or why a public
meeting or hearing is otherwise warranted in this case. After a careful
review of all the facts of record, the Board concludes that a public
meeting or hearing is not necessary to clarify the factual record in the
application and is not otherwise warranted in this case.
845
pressly conditioned on compliance with all the commitments made by Perryton in connection with the proposal.
The commitments and conditions relied on by the Board in
reaching this decision are deemed to be conditions imposed in writing by the Board in connection with its
findings and decision, and, as such, may be enforced in
proceedings under applicable law.
The transaction shall not be consummated before the
fifteenth calendar day following the effective date of this
order, or later than three months after the effective date of
this order, unless such period is extended for good cause by
the Board or by the Federal Reserve Bank of Dallas, acting
pursuant to delegated authority.
By order of the Board of Governors, effective July 22,
1996.
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Lindsey, Yellen, and Meyer. Absent and not voting: Governors Kelley and Phillips.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
Texas Financial Bancorporation, Inc.
Minneapolis, Minnesota
First Bancorp, Inc.
Denton, Texas
First Delaware Bancorp, Inc.
Dover, Delaware
Order Approving the Acquisition of a Bank
Texas Financial Bancorporation, Inc., Minneapolis, Minnesota ("Bancorporation"), and its subsidiaries, First Bancorp, Inc., Denton, Texas ("Texas Company"), and First
Delaware Bancorp Inc., Dover, Delaware ("Delaware Bancorp") (collectively, "Applicants"), bank holding companies within the meaning of the Bank Holding Company
Act ("BHC Act"), have requested the Board's approval
under section 3 of the BHC Act (12 U.S.C. § 1842) to
acquire all the voting shares of Riverside National Bank,
Grand Prairie, Texas ("Riverside Bank").1
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(61 Federal Register 18,731 (1996)). The time for filing
comments has expired, and the Board has considered the
1. Bancorporation owns 87.8 percent of the voting shares of Texas
Company which owns all of the voting shares of Delaware Bancorp.
Texas Company would acquire all the voting shares of Riverside Bank
and then contribute the bank's stock to Delaware Bancorp. After
consummation of these transactions, Riverside Bank would merge
with and into First State Bank of Denton, Denton, Texas ("Denton
Bank"), a wholly owned subsidiary of Applicants. The merger is
subject to the approval of the Federal Deposit Insurance Corporation
("FDIC") under section 18(c) of the Federal Deposit Insurance Act
(the "Bank Merger Act", 12 U.S.C. § 1828(c)).
846
Federal Reserve Bulletin • September 1996
proposal and all comments received in light of the factors
set forth in section 3 of the BHC Act.
Applicants, with total consolidated assets of $1.3 billion,
operate subsidiary banks in Illinois and Texas.2 Applicants
are the 23d largest commercial banking organization in
Texas, controlling approximately $952 million in deposits,
representing less than 1 percent of all deposits in commercial banking organizations in the state ("state deposits").3
Riverside Bank is the 468th largest commercial banking
organization in Texas, controlling approximately $40 million in deposits. After consummation of the proposal, Applicants would remain the 23d largest commercial banking
organization in Texas, controlling approximately $993 million in deposits, representing less than 1 percent of state
deposits.
Considerations under the BHC Act
Applicants and Riverside Bank compete in the Dallas,
Texas, banking market ("Dallas banking market").4 On
consummation of the proposal, Applicants would operate
the 12th largest commercial banking organization in the
Dallas banking market, controlling deposits of approximately $644.6 million, representing 2.1 percent of total
deposits in depository institutions in the market.5 The
market would remain moderately concentrated, as measured by the Herfindahl-Hirschman Index ("HHI"), 6 and
numerous competitors would remain in the market. Based
on all the facts of record, the Board concludes that consummation of the proposal would not result in any significantly
2. Asset data are as of March 31, 1996.
3. State deposit data are as of June 30, 1995. Data has been updated
for structural changes in commercial banking organizations that have
occurred through May 15, 1996.
4. The Dallas banking market is approximated by McKinney and
Piano in Collin County, Denton and Lewisville in Denton County, the
northern half of Rockwall County, the communities of Forney and
Terrel in Kaufman County, Midlothian, Waxahachie, and Ferris in
Ellis County, and Grapevine and Arlington in Tarrant County, all in
Texas.
5. Market data are as of June 30, 1995. Market share data are based
on calculations in which the deposits of thrift institutions are included
at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant
competitors of commercial banks. See Midwest Financial
Group,
75 Federal Reserve Bulletin 386 (1989); National City
Corporation,
70 Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly
included thrift deposits in the calculation of market share on a
50-percent weighted basis. See, e.g., First Hawaiian, Inc., 77 Federal
Reserve Bulletin 52 (1991).
6. On consummation of this proposal, the HHI would remain
unchanged at 1330 points. Under the revised Department of Justice
Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), a
market in which the post-merger HHI is between 1000 and 1800 is
considered moderately concentrated. The Justice Department has informed the Board that a bank merger or acquisition 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 threshold for an
increase in the HHI when screening bank mergers and acquisitions for
anticompetitive effects implicitly recognizes the competitive effects of
limited-purpose lenders and other non-depository financial entities.
adverse effects on competition or concentration of banking
resources in the Dallas banking market or any other relevant banking market.
The Board has carefully considered the financial and
managerial resources and future prospects of Applicants,
Riverside Bank, and their respective subsidiaries, and other
supervisory factors in light of all the facts of record. These
facts include supervisory reports of examination assessing
the financial and managerial resources of the organizations.
Based on these and all other facts of record, the Board
concludes that all the supervisory factors under the BHC
Act, including financial and managerial resources and future prospects of the institutions involved, weigh in favor
of approving this proposal.
The Board has long held that consideration of the convenience and needs factor includes a review of the records of
the relevant depository institutions in assisting to meet the
credit needs of all the communities served by an institution, including low- and moderate-income communities,
under the Community Reinvestment Act (12 U.S.C. § 2901
et seq.) ("CRA"). As provided in the CRA, the Board has
evaluated the convenience and needs factor in light of
examinations by the primary federal supervisor of the CRA
performance records of the relevant institutions.
The Board also has carefully reviewed this factor in light
of comments from the African American Council for Empowerment ("Protestant") which contends that Riverside
Bank has not adequately assisted in meeting the housingrelated and small business credit needs of the Dalworth
community in Grand Prairie, Texas.7 As noted, Riverside
Bank would be merged with and into Denton Bank, Applicants' lead subsidiary bank in Texas, and Applicants have
committed to implement the CRA-related policies, procedures, and programs of Denton Bank in the communities
now served by Riverside Bank, including the Dalworth
community. The Board has carefully considered Denton
Bank's record of performance under the CRA in this light.
An institution's most recent CRA performance evaluation is a particularly important consideration in the applications process because it represents a detailed on-site evaluation of the institution's overall record of performance
under the CRA by its primary federal supervisor.8 Denton
Bank, which comprises approximately 40 percent of Bancorporation's consolidated assets, received an "outstanding" rating from the Federal Deposit Insurance Corporation ("FDIC") in its most recent evaluation for CRA
performance in 1994 ("Denton Examination").9 The Den7. Dalworth is a low- and moderate-income community with a
predominately minority population that encompasses parts of Dallas
County census tract 161.00 and Tarrant County census tract 1130.02.
8. The Board notes that the Statement of the Federal Financial
Supervisory Agencies Regarding the Community Reinvestment Act
provides that a CRA examination is an important and often controlling
factor in the consideration of an institution's CRA record and that
reports of these examinations will be given great weight in the
applications process. 54 Federal Register 13,742, 13,745 (1989).
9. Bancorporation's other subsidiary banks all received a CRA
performance rating of "satisfactory" or "outstanding" in their most
recent examinations by their primary federal supervisor.
Legal Developments
ton Examination found that the Bank's delineated community is reasonable and did not exclude any low- and
moderate-income areas. The geographic distribution of
Denton Bank's credit extensions, applications, and denials
also were found to be reasonable. Examiners noted that
senior management of the bank maintained ongoing contact with community leaders and government officials and
used written surveys to ascertain the credit needs of the
community. According to the examination, the bank's
strong marketing program which utilized publications that
reach all areas of the community, including AfricanAmerican and low- and moderate-income residents, indicated that Denton Bank affirmatively solicits applications
from all segments of its community.
A fair lending review conducted in connection with the
Denton Examination did not reveal any evidence of discriminatory or other illegal credit practices. Denton Bank
has developed policies and procedures to prevent illegal
discrimination, and examiners noted that Denton Bank had
audit and review procedures to ensure compliance with
anti-discrimination laws and regulations. The examiners
noted that the bank also conducted a second review of all
credit denials.
After consummation of the merger with Riverside Bank,
Denton Bank will ascertain the credit needs of the bank's
new communities with the assistance of the Denton Bank
Community Reinvestment Act Advisory Board, and will
expand the lending programs currently offered by Riverside Bank. For example, Denton Bank will initiate the
following lending programs to assist low- and moderateincome borrowers:
(1) Urban Homesteading Program, which offers home
improvement loans to eligible low- and moderateincome residents;
(2) Federal National Mortgage Association's Community Homebuyer's Program, which offers alternative underwriting standards for eligible applicants; and
(3) Homebuyer Assistance Program, which lends money
to eligible low- and moderate-income, first-time home
buyers who have received municipal government assistance to pay the down payment and closing costs to
purchase a home.10
Denton Bank also will offer loans sponsored through the
Small Business Administration.
Riverside Bank received a "satisfactory" rating in its
most recent evaluation from its primary supervisor, the
Office of the Comptroller of the Currency, for CRA perfor10. As a member of the Federal Home Loan Bank of Dallas, Denton
Bank also would be eligible to participate in the Community Investment Program ("CIP") and the Affordable Housing Program
("AHP"). CIP funds help finance affordable housing, small businesses, industrial development, health care facilities, and the revitalization of downtown business and shopping areas. AHP funds help
finance the construction or rehabilitation of low- and moderateincome housing, and finance closing costs, partial down payments, or
reduced interest rates for low- and moderate-income individuals. Both
of these programs would be available to assist Denton Bank in
addressing ascertained credit needs in Riverside Bank's communities.
847
mance as of 1995 ("Riverside Bank Examination"). Examiners found that the bank made reasonable efforts to ascertain the credit needs of the community and to market its
products and services in newspapers that focus on AfricanAmerican and Hispanic communities. According to the
examination, the geographic distribution of loans within
the community reflected a reasonable penetration of all
segments within the community. For calendar year 1995,
Riverside Bank originated 86 loans in low- and moderateincome areas totalling approximately $6.8 million and 115
small business loans totalling approximately $9.8 million.
In addition, Riverside Bank offered loans with flexible
underwriting guidelines that allowed consideration of utility and rent payment records for customers without formal
credit histories. The Riverside Bank Examination noted
that the bank solicited credit applications from all segments of its local community, including low- and
moderate-income neighborhoods, and that the bank was in
compliance with anti-discrimination laws and regulations.11
The Board has carefully reviewed all the facts of record
in light of the convenience and needs factor, including
Protestant's comments, the banks's most recent evaluations for CRA performance and other supervisory information provided by their primary federal supervisors, and the
policies and programs of Denton Bank to be implemented
after its merger with Riverside Bank. Based on this review,
the Board concludes that considerations relating to convenience and needs, including the CRA performance records
of the relevant institutions, are consistent with approval of
the application.
Conclusion
Based on the foregoing and all other facts of record, the
Board has determined that the proposal should be, and
hereby is, approved. The Board's approval is expressly
conditioned on compliance by Applicants with all the
commitments made in connection with the proposal. For
purposes of this action, the commitments relied on by the
Board in reaching this decision are deemed to be conditions imposed in writing and, as such, may be enforced in
proceedings under applicable law.
11. Protestant alleges that Riverside Bank's management lacks
racial diversity which has significantly impaired its ability to serve the
credit needs of its communities, particularly the Dalworth community.
Based on all the facts of record and for the reasons discussed above,
the Board does not believe that Protestant's allegations of poor performance by Riverside Bank in helping to meet the credit needs of all its
communities, including low- and moderate-income areas, are supported by the record. The Board also notes that Riverside Bank would
be merged with and into Denton Bank, and Denton Bank is required
under regulations of the Department of Labor to file annual reports
with the Equal Employment Opportunity Commission and to have in
place a written affirmative action compliance program which states the
bank's efforts to achieve equal opportunity in the employment, hiring,
promotion, and separation of personnel. See 41 C.F.R. 60-1.7(a),
60-1.40.
848
Federal Reserve Bulletin • September 1996
This proposal shall not be consummated before the fifteenth calendar day following the effective date of this
order or later than three months following the effective date
of this order, unless such period is extended for good cause
by the Board or by the Federal Reserve Bank of Dallas,
acting pursuant to delegated authority.
By order of the Board of Governors, effective July 22,
1996.
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Lindsey, Yellen, and Meyer. Absent and not voting: Governors Kelley and Phillips.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
Orders Issued Under Section 4 of the Bank Holding
Company Act
cards, and other documents evidencing a prepayment for
goods or services.1
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(61 Federal Register 27,352 (1996)). The time for filing
comments has expired, and the Board has considered the
proposal and all comments received in light of the factors
set forth in section 4(c)(8) of the BHC Act.
Applicants are large commercial banking organizations
headquartered in Ohio and Pennsylvania, and engage directly and through subsidiaries in a broad range of banking
and permissible nonbanking activities in the United States.2
EPS currently provides data processing and transmission
services to banks and retail merchants that are members of
its branded ATM and point-of-sale ("POS") networks.
EPS also is engaged in developing and providing a variety
of electronic payment, benefit transfer, and data interchange services.3
Proposed Activities
Banc One Corporation
Columbus, Ohio
CoreStates Financial Corp
Philadelphia, Pennsylvania
PNC Bank Corp.
Pittsburgh, Pennsylvania
KeyCorp
Cleveland, Ohio
National City Corporation
Cleveland, Ohio
Order Approving a Proposal to Engage in Certain Data
Processing Activities
Banc One Corporation, Columbus, Ohio; CoreStates Financial Corp, Philadelphia, Pennsylvania; PNC Bank Corp.,
Pittsburgh, Pennsylvania; KeyCorp, Cleveland, Ohio; and
National City Corporation, Cleveland, Ohio (collectively,
"Applicants"), bank holding companies within the meaning of the Bank Holding Company Act ("BHC Act"), have
requested the Board's approval under section 4(c)(8) of the
BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.23(a)
of the Board's Regulation Y (12 C.F.R. 225.23(a)) for their
joint subsidiary, Electronic Payment Services, Inc., Wilmington, Delaware ("EPS"), to engage in certain data
processing activities pursuant to section 225.25(b)(7) of
Regulation Y (12 C.F.R. 225.25(b)(7)).
Applicants, through EPS, would provide data processing
and related services to banks and other automated teller
machine ("ATM") owners ("ATM Deployers") in connection with the distribution through ATMs of tickets to concerts and other events, gift certificates, prepaid telephone
EPS proposes to provide data processing services to ATM
Deployers in connection with the distribution through
ATMs of tickets, gift certificates, prepaid telephone cards,
and other documents evidencing a prepayment for goods or
services.4 EPS would provide the software and telecommunications channels necessary to transmit cardholder requests and card issuer authorizations, and related switching
and account reconciliation services.5
1. For purposes of this order, ATM Deployers include depository
financial institutions, retail merchants, and independent sales organizations that package and sell ATM services to merchants. In addition, a
financial institution means a bank, bank holding company, thrift
institution, thrift holding company, and subsidiaries of any of these
companies.
2. Asset and deposit information for each of the Applicants is
contained in the Appendix.
3. See Banc One Corporation et al., 79 Federal Reserve
Bulletin
1158 (1993).
4. The tickets contemplated by this proposal would include public
transportation tickets and tickets to entertainment events. Gift certificates and prepaid telephone cards would be issued in fixed denominations for a specific merchant or group of merchants, and would
evidence prepayment of the purchase price of merchandise or services
to be selected by the bearer at some time in the future. ATM Deployers also would sell products that could be offered for sale directly by a
financial institution such as mutual fund shares or insurance policies
where permitted by applicable law.
5. Specifically, EPS would provide "terminal driving services"
which include:
(1) Establishing and maintaining an electronic link between an
ATM and a telecommunications switch to transmit cardholder requests and card issuer authorizations; and
(2) Operating the feature and function displays on an ATM screen
using computer software to permit an ATM to dispense various
products in addition to currency.
EPS also would provide switching services and transaction processing to transmit account debiting, transaction authorization, and
settlement between the ATM Deployer, or its bank, and the cardholder's bank. In certain cases, some of these services may be provided by
third-parties, such as national ATM networks or third-party processors.
Legal Developments
In a typical transaction, an ATM cardholder would select
a particular product from a menu offered at an ATM.
Electronic commands transmitted by EPS would verify that
the deposit account or line of credit designated by the
cardholder holds sufficient funds to make the purchase.
After the authorization is received, the ATM then would
dispense the product and a receipt in accordance with the
Board's Regulation E (Electronic Fund Transfers).6 Finally, the card-issuing bank would debit an amount equal
to the cost of the purchase from the cardholder's designated account and transfer the funds to the account of the
merchant or ATM Deployer, as appropriate, using settlement procedures established by the ATM network.
849
that support the use of credit cards by consumers in the
direct purchase of goods and services from merchants.10
The data processing activity proposed in this case involves providing the same type of data processing support
as the Board previously has approved for credit card transactions and other more traditional types of ATM transactions. Based on all the facts of record, the Board has
concluded that the activities proposed by EPS in this case
are permissible data processing and transmission services
encompassed within the Board's data processing regulation
and, therefore, the activities are closely related to banking
within the meaning of the BHC Act.
Proper Incident to Banking Analysis
Closely Related to Banking Analysis
Section 4(c)(8) of the BHC Act provides that a bank
holding company may, with Board approval, engage in any
activity that the Board determines to be "so closely related
to banking or managing or controlling banks as to be a
proper incident thereto."7 The Board previously has determined by regulation that processing and transmitting financial, banking, or economic data are activities that are
closely related to banking and, therefore, permissible for
bank holding companies under section 4(c)(8) of the BHC
Act.8 The Board also has specifically determined that a
bank holding company may provide data processing and
related services necessary to permit customers to use an
ATM card to debit a deposit account or line of credit at an
ATM terminal for cash and credit transactions, and for the
purchase of travelers checks, money orders, and postage
stamps.9 In addition, the Board has determined that a bank
holding company may provide data processing services
6. 12 C.F.R. 205.
7. 12 U.S.C. § 1843(c)(8). See National Courier Association
v.
Board of Governors, 516 F.2d 1229, 1237 (D.C. Cir 1975). In addition, the Board may consider any other basis that may demonstrate
that the proposed activity has a reasonable or close connection or
relationship to banking or managing or controlling banks. See Board
Statement Regarding Regulation Y, 49 Federal Register 806 (1984);
Securities Industry Association v. Board of Governors, 468 U.S. 207,
2 1 0 - 1 1 , n.5 (1984).
8. See 12 C.F.R. 225.25(b)(7). Regulation Y also requires that the
data processing services be provided pursuant to a written agreement
and places certain limitations on the facilities and hardware provided
with the data processing services. Specifically, the facilities must be
designed, marketed, and operated for the processing and transmission
of financial, banking, or economic data; hardware must be provided
only in conjunction with permissible software; and general purpose
hardware must not constitute more than 30 percent of the cost of any
packaged offering. EPS has committed that it will provide the proposed services pursuant to a written agreement and will provide
facilities and hardware within the limitations established by Regulation Y.
9. See The Bank of New York Company, et al., 80 Federal Reserve
Bulletin 1107, 1109 (1994). EPS currently conducts these activities.
See Letters dated February 13, 1996, from the Federal Reserve Bank
of Cleveland to Phyllis Dietz, Esq., and from the Federal Reserve
Bank of Philadelphia to John F. Stefanowicz, CoreStates Financial
Corp.
In order to approve this proposal, the Board also must
determine that the proposed activities are a proper incident
to banking; that is, that the proposal "can reasonably be
expected to produce benefits to the public, such as greater
convenience, increased competition, or gains in efficiency,
that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition,
conflicts of interests, or unsound banking practices."11
As part of its review of these factors, the Board has
considered the financial and managerial resources of Applicants and their respective subsidiaries and the effect the
proposal would have on such resources.12 Based on all the
facts of record, the Board has concluded that financial and
managerial considerations are consistent with approval of
this proposal.
The Board expects that the proposed activities would
result in benefits to consumers, merchants, and ATM Deployers. The proposed activities would allow consumers to
purchase products at additional locations and during nonbusiness hours, and would facilitate convenient payment
for such products. The proposed activities also would
enhance the ability of merchants to distribute products
through new channels and would provide ATM Deployers
with additional sources of transaction volume and resulting
fee income. In addition, the proposed activities would
increase the level of competition among existing providers
of these services.
There is no evidence in the record that consummation of
this proposal would result in any significantly adverse
effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or
unsound banking practices, that are not outweighed by the
public benefits of this proposal. Accordingly, and based on
all the facts of record, the Board has concluded that the
balance of the public interest factors it is required to
consider under the proper incident to banking standard of
10. See Banc One Corporation,
81 Federal Reserve Bulletin 492
(1995); Citicorp, 76 Federal Reserve Bulletin 549 (1990); and Barclays Bank PLC, 71 Federal Reserve Bulletin 113 (1985).
11. 12 U.S.C. § 1843(c)(8).
12. See 12 C.F.R. 225.24. See also The Fuji Bank, Limited, 75
Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73
Federal Reserve Bulletin 155 (1987).
850
Federal Reserve Bulletin • September 1996
section 4(c)(8) of the BHC Act is favorable and consistent
with approval of this proposal.
Conclusion
Based on the foregoing and all the facts of record, the
Board has determined to, and hereby does, approve this
proposal subject to all the terms and conditions set forth in
this order. The Board's determination also is subject to all
the terms and conditions set forth in Regulation Y, including those in sections 225.7 and 225.23(g) (12 C.F.R. 225.7
and 225.23(g)), and to the Board's authority to require
such modification or termination of the activities of a bank
holding company or any of its subsidiaries as the Board
finds necessary to assure compliance with, and to prevent
evasion of, the provisions of the BHC Act and the Board's
regulations and orders issued thereunder. The Board's decision is specifically conditioned on compliance with all the
commitments made in connection with this proposal. These
commitments and conditions shall both be deemed to be
conditions imposed in writing by the Board in connection
with its findings and decision, and, as such, may be enforced in proceedings under applicable law.
This transaction shall not be consummated later than
three months after the effective date of this order, unless
such period is extended for good cause by the Board or by
the Federal Reserve Banks of Cleveland or Philadelphia,
acting pursuant to delegated authority.
By order of the Board of Governors, effective July 1,
1996.
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Kelley, Lindsey, Phillips, Yellen, and Meyer.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
Appendix
Asset and Deposit Data as of December 31, 1995.
Banc One Corporation, with $90.2 billion in total consolidated assets, is the tenth largest commercial banking organization in the United States, controlling $67.4 billion in
deposits. Banc One operates subsidiary banks in Ohio,
Kentucky, Indiana, Michigan, Illinois, Wisconsin, Texas,
Colorado, Arizona, California, Oklahoma, Utah, and West
Virginia.
CoreStates Financial Corp, with $29.7 billion in total
consolidated assets, is the 31st largest commercial banking
organization in the United States, controlling $21.5 billion
in deposits. CoreStates operates subsidiary banks in Pennsylvania, New Jersey, and Delaware.
PNC Bank Corp., with $73.5 billion in total consolidated
assets, is the 12th largest commercial banking organization
in the United States, controlling $21.5 billion in deposits.
PNC operates subsidiary banks in Pennsylvania, Ohio,
Kentucky, Indiana, New Jersey, Massachusetts, and Delaware.
KeyCorp, with $66.3 billion in total consolidated assets,
is the 14th largest commercial banking organization in the
United States, controlling $47.3 billion in deposits. KeyCorp operates subsidiary banks in Ohio, Indiana, Michigan, New York, Washington, Maine, Oregon, Idaho, Utah,
Colorado, Wyoming, and Alaska.
National City, with $36.2 billion in total consolidated
assets, is the 24th largest commercial banking organization
in the United States, controlling $25.2 billion in deposits.
National City operates subsidiary banks in Ohio, Indiana,
and Kentucky.
Dresdner Bank AG
Frankfurt, Germany
Order Approving Notice to Engage in Nonbanking
Activities
Dresdner Bank AG, Frankfurt, Germany ("Dresdner"), a
foreign banking organization subject to the provisions of
the Bank Holding Company Act ("BHC Act"), has requested Board approval under section 4(c)(8) of the BHC
Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of the
Board's Regulation Y (12 C.F.R. 225.23) to retain its ownership interest in the United States operations of Kleinwort
Benson Group pic, London, England,1 and thereby engage
in the following activities:
(1) Underwriting and dealing in, to a limited extent, all
types of debt and equity securities other than interests in
open-end investment companies through Dresdner
Kleinwort Benson North America LLC, New York, New
York ("Company");
(2) Acting as agent in the private placement of all types
of securities, and buying and selling all types of securities on the order of customers as a "riskless principal"
through Company;
(3) Providing securities brokerage services pursuant to
12 C.F.R. 225.25(b)(15) through Company;
(4) Providing investment advisory services pursuant to
12 C.F.R. 225.25(b)(4) through Company and Kleinwort
Benson Investment Management ("KBIMA"); Kleinwort Benson (USA), Inc.; and KB-LPL Holdings, Inc.,
all of New York, New York;
(5) Serving as general partner for unregistered limited
partnerships now existing or to be established in the
future; and
(6) Leasing personal or real property or acting as agent,
broker, or adviser in leasing such property, pursuant to
12 C.F.R. 225.25(b)(5) through Pare Tec Inc., New York,
New York.
1. Dresdner previously received approval under section 4(c)(9) of
the BHC Act to retain temporarily the United States operations of
Kleinwort Benson. See Letter dated July 13, 1995, from Jennifer J.
Johnson, Deputy Secretary of the Board, to David M. Huggin, Esq.
Legal Developments
Dresdner would establish Company through the merger
of Kleinwort Benson North America Inc. ("KBNAI") and
Dresdner Securities (USA), Inc. ("DSI"), both of New
York, New York. KBNAI and DSI are, and Company
would be, registered as a broker-dealer with the Securities
and Exchange Commission ("SEC") under the Securities
Exchange Act of 1934 (15 U.S.C. § 78a et seq.).2 Accordingly, Company would be subject to the recordkeeping and
reporting obligations, fiduciary standards, and other requirements of the Securities Exchange Act of 1934 and the
SEC.
Notice of this proposal, affording interested persons an
opportunity to submit comments, has been published
(60 Federal Register 62,093 (1995)). The time for filing
comments has expired, and the Board has considered the
notice and all comments received in light of the factors set
forth in section 4(c)(8) of the BHC Act.
Dresdner, with total consolidated assets of approximately $338 billion, is the second largest banking organization in Germany.3 In the United States, Dresdner operates
branches in New York, New York, and Chicago, Illinois,
and an agency in Los Angeles, California.4 Dresdner also
controls several subsidiaries that engage in various nonbanking activities in the United States. Kleinwort Benson
Group pic, with total consolidated assets of $14.2 billion, is
a merchant bank based in the United Kingdom that engages in a variety of securities-related, advisory and other
nonbanking activities worldwide.
Activities Approved by Regulation
The Board previously has determined by regulation that
the proposed investment advisory, leasing and securities
brokerage activities are closely related to banking for purposes of section 4(c)(8) of the BHC Act.5 Dresdner proposes to conduct these activities in accordance with the
Board's regulations and prior Board decisions relating to
these activities.6
2. Dresdner currently operates DSI pursuant to grandfather rights
established by section 8(c)(1) of the International Banking Act of
1978 ("IBA"). 12 U.S.C. § 3106(c). Dresdner's grandfather rights
with respect to DSI will terminate on the merger of DSI with and into
Company.
3. Asset and ranking data are as of December 31, 1995, and use
exchange rates then in elfect.
4. Deutsche-Suedamerikanische Bank AG, Hamburg, Germany, a
wholly owned subsidiary of Dresdner, also operates an agency in
Miami, Florida.
5. See 12 C.F.R. 225.25(b)(4), (5) and (15).
6. Because Company would provide investment advisory and brokerage services with respect to ineligible securities that it may hold as
a principal, Dresdner has committed that Company would inform its
customers at the commencement of the relationship that, as a general
matter, it may be a principal or may be engaged in underwriting with
respect to, or may purchase from an affiliate, those securities for which
brokerage or advisory services are provided. In addition, Dresdner has
committed that the confirmations sent by Company to customers
would state whether Company acted as agent or as principal in the
transaction. See PNC Financial Corp., 75 Federal Reserve Bulletin
396 (1989); Bankers Trust New York Company, 74 Federal Reserve
Bulletin 695 (1988). The Board also notes that Company would be
851
Underwriting and Dealing in Bank-Ineligible Securities
The Board has determined that, subject to the prudential
framework of limitations established in previous decisions
to address the potential for conflicts of interests, unsound
banking practices, or other adverse effects, the proposed
activities of underwriting and dealing in bank-ineligible
securities are so closely related to banking as to be a proper
incident thereto within the meaning of section 4(c)(8) of
the BHC Act.7 Dresdner has committed that Company will
conduct the proposed underwriting and dealing activities
using the same methods and procedures and subject to the
same prudential limitations established by the Board in the
Section 20 Orders.
The Board also has determined that the conduct of these
securities underwriting and dealing activities is consistent
with
section
20 of
the Glass-Steagall
Act
(12 U.S.C. § 377), provided that the company engaged in
the underwriting and dealing activities derives no more
than 10 percent of its total gross revenue from underwriting and dealing in bank-ineligible securities over any twoyear period.8 Dresdner has committed that Company will
conduct its underwriting and dealing activities in bankineligible securities subject to the 10-percent revenue test.9
registered as an investment adviser under the Investment Advisers Act
of 1940 (15 U.S.C. § 80b-1 et seq.) ("Advisers Act"). Pursuant to the
Advisers Act, if Company provides advice to a customer on the
purchase or sale of a security for which Company is acting as
principal, Company must disclose to the client that it is acting as a
principal in the transaction and obtain the client's written consent
before the transaction occurs. See 15 U.S.C. § 80b-6(3); Investment
Advisers Act Release No. 40, reprinted in 6 Fed. Sec. L. Rep. (CCH)
56,374 (Jan. 5, 1940).
7. See Canadian Imperial Bank of Commerce, et al., 76 Federal
Reserve Bulletin 158 (1990); J.P. Morgan & Co. Incorporated, et al.,
75 Federal Reserve Bulletin 192 (1989), aff'd sub nom. Securities
Industry Ass'n v. Board of Governors of the Federal Reserve System,
900 F.2d 360 (D.C. Cir. 1990); Citicorp, et al., 73 Federal Reserve
Bulletin 473 (1987), aff'd sub nom. Securities Industry Ass'n v. Board
of Governors of the Federal Reserve System, 839 F.2d 47 (2d Cir.
1988), cert, denied, 486 U.S. 1059 (1988) (collectively, "Section 20
Orders").
8. See Section 20 Orders. Compliance with the 10-percent revenue
limitation shall be calculated in accordance with the method stated in
the Section 20 Orders, as modified by the Order Approving Modifications to the Section 20 Orders, 75 Federal Reserve Bulletin 751
(1989); the Order Approving Modifications to the Section 20 Orders,
79 Federal Reserve Bulletin 226 (1993); and the Supplement to Order
Approving Modifications to Section 20 Orders, 79 Federal Reserve
Bulletin 360 (1993) (collectively, "Modification Orders"). In light of
the fact that Dresdner acquired a going concern, the Board believes
that allowing Company to calculate compliance with the revenue
limitation on an annualized basis during the first year after consummation of the acquisition and thereafter on a rolling quarterly basis would
be consistent with the Section 20 Orders. See Dauphin
Deposit
Corporation, 77 Federal Reserve Bulletin 672 (1991). The Board
notes that Dresdner has not adopted the Board's alternative indexedrevenue test to measure compliance with the 10-percent limitation on
bank-ineligible securities activities, and, absent such election, will
continue to employ the Board's original 10-percent revenue test.
9. As an incident to the proposed underwriting and dealing activities, Company would participate in certain derivative transactions for
hedging purposes in accordance with the Board's policy statement on
derivative transactions. See 12 C.F.R. 225.142. The Board also notes
852
Federal Reserve Bulletin • September 1996
Private Placement and "Riskless Principal" Activities
Private placement involves the placement of new issues of
securities with a limited number of sophisticated purchasers in a nonpublic offering. A financial intermediary in a
private placement transaction acts solely as an agent of the
issuer in soliciting purchasers and does not purchase the
securities and attempt to resell them. Securities that are
privately placed are not subject to the registration requirements of the Securities Act of 1933, and are offered only to
financially sophisticated institutions and individuals and
not to the public. Company will not privately place registered securities and will only place securities with customers that qualify as accredited investors.
"Riskless principal" is the term used in the securities
business to refer to a transaction in which a broker-dealer,
after receiving an order to buy (or sell) a security for a
customer, purchases (or sells) the security for its own
account to offset a contemporaneous sale to (or purchase
from) the customer.10 Riskless principal transactions are
understood in the industry to include only transactions in
the secondary market. Thus, Company would not act as a
riskless principal in selling bank-ineligible securities at the
order of a customer that is the issuer of the securities to be
sold, or in any transaction where Company has a contractual agreement to place the securities as agent of the issuer.
Company also would not act as a riskless principal in any
transaction involving a bank-ineligible security for which it
or an affiliate makes a market.
The Board has determined that, subject to the limitations
established by the Board in prior orders, the proposed
private placement and riskless principal activities are so
closely related to banking as to be a proper incident thereto
within the meaning of section 4(c)(8) of the BHC Act.11
The Board also has determined that acting as agent in the
private placement of securities, and purchasing and selling
securities on the order of investors as a riskless principal,
do not constitute underwriting and dealing in securities for
purposes of section 20 of the Glass-Steagall Act, and that
revenue derived from these activities is not subject to the
10-percent revenue limitation on bank-ineligible securities
underwriting and dealing.12
that Company may engage in activities that are necessary incidents to
the proposed underwriting and dealing activities, provided that they
are treated as part of the bank-ineligible securities activities, unless
Company has received specific approval under section 4(c)(8) of the
BHC Act to conduct the activities independently. Until such approval
is obtained, any revenues from the incidental activities must be
counted as ineligible revenues subject to the 10-percent revenue
limitation.
10. See SEC Rule 10b-10(a)(8)(i) (17 C.F.R. 240.10b-10(a)(8)(i)).
The Board notes that Company, as a registered broker-dealer, must
conduct its riskless principal activities in accordance with the customer disclosure and other requirements of the federal securities laws.
11. See J.P. Morgan & Company Incorporated, 76 Federal Reserve
Bulletin 26 (1990) ("J.P. Morgan"); Bankers Trust New York Corporation, 75 Federal Reserve Bulletin 829 (1989) ("Bankers Trust").
12. See Bankers Trust.
Dresdner has committed that Company will conduct its
private placement activities using the same methods and
procedures and subject to the same prudential limitations
as those established by the Board in Bankers Trust and J.P.
Morgan,13 including the comprehensive framework of restrictions imposed by the Board in connection with underwriting and dealing in bank-ineligible securities, which
were designed to avoid potential conflicts of interests,
unsound banking practices, and other adverse effects.
Dresdner also has committed that Company will conduct
its riskless principal activities subject to the limitations
previously established by the Board.14
Other Activities
Dresdner also proposes that Company act as general partner of, and maintain an equity interest in, limited partnerships that now exist or that may be established in the future
("Partnerships").15 Interests in Partnerships would be exempt from the registration and prospectus requirements of
the Securities Act of 1933 (15 U.S.C. § 77a et seq.) and the
Partnerships would be exempt from registration as investment companies under the Investment Company Act of
1940 (15 U.S.C. § 80a-1 et seq.).16
13. Among the prudential limitations discussed more fully in Bankers Trust and J.P. Morgan are that Company will not privately place
open-end investment company securities or securities of investment
companies that are advised by Dresdner or any of its affiliates. In
addition, Company will make no general solicitation or general advertising for securities it places.
14. See The Bank of New York Company, Inc., 82 Federal Reserve
Bulletin 748 (1996). Neither Company nor its affiliates will hold
themselves out as making a market in the bank-ineligible securities
that Company buys and sells as riskless principal, or enter quotes for
specific bank-ineligible securities in any dealer quotation system in
connection with Company's riskless principal transactions, except that
Company and its affiliates may enter bid or ask quotations, or publish
"offering wanted" or "bid wanted" notices on trading systems other
than NASDAQ or an exchange, if Company or the affiliate does not
enter price quotations on different sides of the market for a particular
security for two business days. In other words, Company or its affiliate
must wait at least two business days after entering a "bid" quote on a
security before entering an "ask" quote on the same security and vice
versa. Company will not act as riskless principal for registered investment company securities or for any securities of investment companies that are advised by Dresdner or its affiliates. In addition, because
Company proposes to provide riskless principal services in combination with investment advisory services, Company will conduct its
riskless principal activities in accordance with the limitations established by the Board for the full-service brokerage activities of bank
holding companies. See 12 C.F.R. 225.25(b)(15)(ii).
15. DSI currently serves as general partner of a single Partnership
with 20 limited partners. Dresdner may hold a small equity interest in
a Partnership to enable the Partnership to be treated as a partnership
for tax purposes.
16. Dresdner also proposes that Company act as investment adviser
to the Partnerships and privately place interests in the Partnerships
with institutional customers. As discussed above, the Board has approved these activities by regulation or order and Dresdner will
conduct the activities in accordance with the limitations previously
established by the Board with respect to such activities. See 12 C.F.R.
225.25(b)(4); J. P. Morgan; and Bankers Trust.
Legal Developments
The Board previously has determined that Dresdner's
proposed Partnership activities are permissible, and Dresdner has committed to conduct those activities subject to the
limitations established by the Board in its prior decisions.17
For example, the Partnerships, together with Dresdner and
its affiliates, will hold not more than 5 percent of any class
of voting securities of any issuer and not more than
25 percent of the total equity, including subordinated debt,
of any issuer. In addition, Dresdner has committed that no
directors, officers, or employees of Dresdner or its affiliates
will serve as directors, officers, or employees of any issuer
of which the Partnerships, Dresdner and its affiliates hold
more than 10 percent of the total equity.18
Financial Factors, Managerial Resources, and Other
Considerations
Under the proper incident to banking standard of section
4(c)(8) of the BHC Act, in order to approve this notice, the
Board must determine that the performance of the proposed activities by Dresdner can reasonably be expected to
produce public benefits that would outweigh possible adverse effects. As part of the Board's evaluation of these
factors, the Board considers the financial and managerial
resources of the notificant and its subsidiaries and the effect
the transaction would have on such resources.19 The Board
notes that Dresdner's capital ratios satisfy applicable riskbased standards under the Basle Accord, and are considered equivalent to the capital levels that would be required
of a United States banking organization. The Board also
has reviewed the capitalization of Dresdner and Company
in accordance with the standards set forth in the Section 20
Orders and finds the capitalization of each to be consistent
with approval. The determination of the capitalization of
Company is based on all the facts of record, including
Dresdner's projections of the volume of Company's underwriting and dealing activities in bank-ineligible securities.
The Federal Reserve Bank of New York ("Reserve Bank")
has reviewed the operational and managerial infrastructure
of Company, including its computer, audit, and accounting
systems and internal risk management procedures and controls, with respect to the proposed underwriting and deal-
17. See Meridian Bancorp, Inc., 80 Federal Reserve Bulletin 736
(1994). Because Dresdner would indirectly serve as general partner of
the Partnerships, Dresdner would be required, for regulatory purposes,
to hold capital and present financial information relating to Company
and the Partnerships on a consolidated basis. See The Bessemer
Group, Incorporated, 82 Federal Reserve Bulletin 569 (1996).
18. The Partnerships will not invest in futures contracts or options
on futures contracts on any financial or nonfinancial commodity, or
knowingly acquire debt securities that are in default at the time of
acquisition, without prior approval from the Federal Reserve System.
The Partnerships, however, might invest in futures contracts based on
foreign exchange, U.S. Government and agency securities, and money
market instruments solely for hedging purposes and in conformance
with the Board's policy statement on derivative transactions. See
12 C.F.R. 225.142.
19. See 12 C.F.R. 225.24; see also The Fuji Bank, Limited, 75
Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73
Federal Reserve Bulletin 155 (1987).
853
ing in debt and equity securities, and has determined that
Company has established an adequate operational and managerial infrastructure to ensure compliance with the requirements of the Section 20 Orders. On the basis of the
Reserve Bank's review and all the facts of record, the
Board concludes that financial and managerial considerations are consistent with approval of this proposal.
In evaluating the public interest factors in this case, the
Board considered that Dresdner, through Dresdner-NY Incorporated, New York, New York ("DNY"), engages in
bank-ineligible securities activities in the United States
pursuant to grandfather rights established by section 8(c)(1)
of the IBA.20 Dresdner, however, has committed that DNY
and the operations of Dresdner authorized under section 4
of the BHC Act will remain completely separate and will
not engage in any business with or on behalf of each
other.21
In light of these commitments, and under the framework
and conditions established by the Board in the Section 20
Orders and this order, the Board concludes that consummation of this proposal is not likely to result in significantly
adverse effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of interest, or
unsound banking practices, and that Dresdner would not
gain an unfair competitive advantage in conducting its
grandfathered activities. Moreover, the Board expects that
consummation of the proposal would provide added convenience to Dresdner's customers and would increase the
level of competition among existing providers of these
20. DNY acts as a specialist for certain stocks listed on the New
York Stock Exchange ("NYSE"). Although DNY currently operates
as a subsidiary of DSI, Dresdner does not propose to merge DNY into
Company, and Dresdner would continue to hold DNY as a separate
subsidiary pursuant to section 8(c)(1) of the IBA after consummation
of the proposal. The IBA authorizes Dresdner to retain its interest in
DNY unless the Board, after notice and opportunity for a hearing,
finds that the continuation of the activities would give rise to adverse
effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest, or unsound banking practices in the
United States.
21. In furtherance of this commitment, and not in limitation thereof,
Dresdner also has committed that there will be no director, officer or
employee interlocks of any kind between DNY and Dresdner's U.S.
subsidiaries authorized under section 4 of the BHC Act; there will be
no joint marketing efforts between DNY and Dresdner's subsidiaries
authorized under section 4 of the BHC Act; and DNY and Dresdner's
subsidiaries authorized under section 4 of the BHC Act will not share
fees, profits or customer information with, will not make customer
referrals to, and will not engage in cross-marketing with, each other.
Dresdner has requested that the Board permit Dresdner's subsidiaries
authorized under section 4 of the BHC Act to execute trades through
DNY on the NYSE in stocks for which DNY acts as a specialist. The
Board notes that DNY is the only specialist on the NYSE for the
stocks at issue. Dresdner has committed that all transactions effected
by DNY for its affiliates authorized under section 4 will be conducted
on an arm's length basis and on terms no more favorable than those
offered to unaffiliated third parties. In light of the unique facts of this
case and the limited nature of the proposed relationship between DNY
and its affiliates authorized under section 4 of the BHC Act, the Board
concludes that Dresdner's request is consistent with the public interest
factors the Board must consider in this case. The Board expects
Dresdner to ensure that DNY and its affiliates authorized under section 4 are operated entirely separately in all other respects.
854
Federal Reserve Bulletin • September 1996
services. The Board has determined, therefore, that the
performance of the proposed activities by Dresdner can
reasonably be expected to produce public benefits that
outweigh possible adverse effects under the proper incident
to banking standard of section 4(c)(8) of the BHC Act.
Accordingly, and for the reasons set forth in this order
and in the Section 20 Orders, the Board has concluded that
Dresdner's proposal to engage in the proposed activities is
consistent with the Glass-Steagall Act, and that the proposed activities are so closely related to banking as to be
proper incidents thereto within the meaning of section
4(c)(8) of the BHC Act, provided that Dresdner limits
Company's activities as specified in this order and the
Section 20 Orders, as modified by the Modification Orders.
On the basis of all the facts of record, the Board has
determined to, and hereby does, approve this notice subject
to all the terms and conditions discussed in this order and
in the Section 20 Orders, as modified by the Modification
Orders. The Board's approval of this proposal extends only
to activities conducted within the limitations of those orders and this order, including the Board's reservation of
authority to establish additional limitations to ensure that
Company's activities are consistent with safety and soundness, avoiding conflicts of interests, and other relevant
considerations under the BHC Act. Underwriting and dealing in any manner other than as approved in this order and
the Section 20 Orders, as modified by the Modification
Orders, is not authorized for Company.
The Board's determination also is subject to all the terms
and conditions set forth in Regulation Y, including those in
sections 225.7 and 225.23(g) (12 C.F.R. 225.7 and
225.23(g)), and to the Board's authority to require modification or termination of the activities of a bank holding
company or any of its subsidiaries as the Board finds
necessary to assure compliance with and to prevent evasion of the provisions of the BHC Act and the Board's
regulations and orders issued thereunder. The Board's decision is specifically conditioned on Dresdner's compliance
with all the commitments made in connection with this
notice, including the commitments discussed in this order
and the conditions set forth in the Board regulations and
orders noted above. The commitments and conditions shall
be deemed to be conditions imposed in writing by the
Board in connection with its findings and decisions, and
may be enforced in proceedings under applicable law.
This transaction shall not be consummated later than
three months after the effective date of this order unless
such period is extended for good cause by the Board or the
Reserve Bank, acting pursuant to delegated authority.
By order of the Board of Governors, effective July 15,
1996.
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Kelley, Lindsey, Yellen, and Meyer. Absent and not voting:
Governor Phillips.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
First Southern Bancorp, Inc.
Stanford, Kentucky
Order Approving the Acquisition of a Savings
Association
First Southern Bancorp, Inc., Stanford, Kentucky ("First
Southern"), a bank holding company within the meaning
of the Bank Holding Company Act ("BHC Act"), has
applied for the Board's approval under section 4 of the
BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of
the Board's Regulation Y (12 C.F.R. 225.23) to acquire
Lincoln Financial Bancorp, Inc. ("Lincoln"), and thereby
acquire Lincoln Federal Savings Bank ("Lincoln FSB"),
also in Stanford, Kentucky.1
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(61 Federal Register 21 fill (1996)). The time for filing
comments has expired, and the Board has considered the
notice and all comments received in light of the factors set
forth in section 4 of the BHC Act.
The Board has determined that the operation of a savings
association by a bank holding company is closely related to
banking for purposes of section 4(c)(8) of the BHC Act.2
The Board requires savings associations acquired by bank
holding companies to conform their direct and indirect
activities to those permissible for bank holding companies
under section 4(c)(8) of the BHC Act and Regulation Y.
First Southern has committed to conform all activities of
Lincoln FSB to those requirements.3
First Southern is the 34th largest commercial bank or
thrift institution ("depository institution") in Kentucky,
controlling deposits of approximately $172.4 million, representing less than 1 percent of total deposits in depository
1. First Southern proposes to transfer the main office and one branch
of Lincoln FSB, accounting for 84 percent of the thrift's total deposits,
to First Southern's subsidiary bank, First Southern National Bank of
Lincoln County, Hustonville, Kentucky ("First Southern Bank").
Lincoln FSB would continue to operate at the location of its single
remaining branch. The transaction is subject to the approval of the
Office of the Comptroller of the Currency ("OCC") under section 18(c) of the Federal Deposit Insurance Act ("FDI Act")
(12 U.S.C. § 1828(c) (the "Bank Merger Act")) and section 5(d)(3) of
the FDI Act. Lincoln also has granted First Southern an option to
purchase up to 19.9 percent of the voting shares of Lincoln under
certain circumstances. The option would be cancelled on consummation of the proposal.
2. See 12 C.F.R. 225.25(b)(9).
3. First Southern has committed that all impermissible real estate
activities will be divested within two years of consummation of the
proposal, that no new impermissible projects or investments will be
undertaken during this period, and that capital adequacy guidelines for
Lincoln FSB will be met excluding impermissible real estate investments. First Southern also has committed that all impermissible
insurance activities will be divested or terminated within two years of
consummation of the proposal and that no new impermissible insurance activities will be undertaken during this period except for the
renewal of existing insurance policies. In addition, First Southern has
committed that all impermissible securities activities will cease on or
before consummation of the proposal.
Legal Developments
institutions in the state.4 Lincoln is the 169th largest depository institution in Kentucky, controlling deposits of approximately $40.8 million. On consummation of the proposal, First Southern would become the 27th largest
depository institution in Kentucky, controlling deposits of
approximately $213.2 million, representing less than
1 percent of total deposits in depository institutions in the
state.
855
Under section 4(c)(8) of the BHC Act, the Board is required to consider whether a proposal is likely to result in
any significantly adverse effects, such as undue concentration of resources or unfair competition, conflicts of interests, or unsound banking practices. First Southern, through
its two subsidiary banks, and Lincoln compete directly in
the Danville, Kentucky, banking market ("Danville banking market").5 In addition, the Board has approved First
Southern to acquire up to 24.9 percent of the voting shares
of Casey County Bancorp, Inc., Liberty, Kentucky ("Casey
County"), which also competes in the Danville banking
market, as a noncontrolling passive investment.6 The Board
has noted previously that one company need not acquire
control of another in order substantially to lessen competition between them. It is possible, for example, that the
acquisition of a substantial ownership interest in a competitor or a potential competitor of the acquiring firm may
alter the market behavior of both firms in such a way as to
weaken or eliminate independence of action between the
organizations and increase the likelihood of cooperative
operations.7
When the deposits of Casey County are combined with
First Southern, First Southern is the largest depository
institution in the market, controlling deposits of approximately $171.7 million, representing 27.8 percent of total
deposits in depository institutions in the market ("market
deposits").8 Lincoln is the tenth largest depository institu-
tion in the market, controlling deposits of approximately
$40.8 million, representing 3.3 percent of market deposits.
On consummation of the proposal, First Southern would
remain the largest depository institution in the market,
controlling deposits of approximately $212.5 million, representing 33.3 percent of market deposits. Market concentration, as measured by the Herfindahl-Hirschman Index
("HHI"), would increase 272 points to 1914.9
The Board notes, however, that HHI levels are only
guidelines that are used by the Board, the Department of
Justice, and the other banking agencies to help identify
cases in which a more detailed competitive analysis is
appropriate to assure that the proposal would not have a
significantly adverse effect on competition in any relevant
market. A proposal that fails to pass the HHI market screen
may nonetheless be approved because other information
may indicate that the proposal would not have a significantly adverse effect on competition. The Department of
Justice has reviewed the proposal and advised the Board
that consummation of the proposal would not likely have
any significantly adverse competitive effects in the Danville banking market or any other relevant banking market.
In addition, a number of factors indicate that the market
concentration as measured by the HHI tends to overstate
the competitive effects of the proposal. After consummation of the proposal, for example, ten competitors would
remain in a relatively small banking market.10 Six of these
competitors are commercial banking organizations, two of
which each control more than 10 percent of market deposits and three others of which each control more than
5 percent of market deposits. In addition, two of these
commercial banking organizations are large regional bank
holding companies.
Based on these and all the other facts of record, the
Board concludes that consummation of the proposal is not
likely to have a significantly adverse effect on competition
or the concentration of banking resources in any relevant
banking market.
4. Deposit data are as of June 30, 1995.
5. The Danville banking market is approximated by Boyle and
Lincoln Counties, the Lancaster and Bryantsville census divisions of
Garrard County, and the northern portion of Casey County, all in
Kentucky.
6. See First Southern Bancorp, Inc., 82 Federal Reserve Bulletin
424 (1996). In connection with acquiring the interest in Casey County,
First Southern agreed to abide by certain commitments, set forth in the
appendix to the Board's order, that previously had been relied on by
the Board in cases involving passive minority investments. See, e.g.,
Mansura Bancshares, Inc., 79 Federal Reserve Bulletin 37 (1993)
("Mansura"). First Southern has acquired approximately 5.3 percent
of the voting shares of Casey County.
7. First Banks, Inc., 80 Federal Reserve Bulletin 34 (1994); Mansura, supra.
8. Market share data are based on calculations in which the deposits
of thrift institutions are included at 50 percent. The Board previously
has indicated that thrift institutions have become, or have the potential
to become, major competitors of commercial banks. See Midwest
Financial Group, 75 Federal Reserve Bulletin 386 (1989); National
City Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the
Board has regularly included thrift deposits in the calculation of
market share on a 50 percent weighted basis. See, e.g., First Hawai-
ian, Inc., 77 Federal Reserve Bulletin 52 (1991). Because the deposits
of Lincoln FSB would be controlled by a commercial banking organization after consummation of the proposal, they have been included at
100 percent in the calculation of the market share of First Southern
after consummation of the proposal. See Norwest Corporation, 78
Federal Reserve Bulletin 452 (1992); First Banks, Inc., 76 Federal
Reserve Bulletin 669, 670 n.9 (1990).
9. 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 highly concentrated.
The Department of Justice has informed the Board that a bank merger
or acquisition generally will not be challenged (in the absence of other
factors indicating anticompetitive effects) unless the post-merger HHI
is at least 1800 and the merger increases the HHI by at least 200
points.
10. The Danville banking market has a population of 56,700 residents and total deposits in depository institutions of approximately
$617 million.
Competitive Considerations
856
Federal Reserve Bulletin • September 1996
Other Considerations
Orders Issued Under Sections 3 and 4 of the Bank
Holding Company Act
The Board also concludes that consummation of the proposal would result in a broader financial network through
which First Southern could serve its customers and former
Lincoln customers. Former Lincoln customers would have
increased services, including access to Small Business
Administration loans, and, for the majority of depositors
whose accounts would be transferred to First Southern
Bank, expanded access to automated teller machines in the
Danville banking market. The Board also concludes that
the financial and managerial resources of First Southern
and Lincoln FSB are consistent with approval of the proposal. In light of all the facts of record, the Board finds that
consummation of the proposal is not likely to result in any
significantly adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of
interest, or unsound banking practices that would outweigh
the public benefits of the proposal. Accordingly, the Board
has determined that the performance of the proposed activities by First Southern can reasonably be expected to
produce public benefits that outweigh possible adverse
effects under the proper incident to banking standard of
section 4(c)(8) of the BHC Act.
Conclusion
Based on the foregoing and all the facts of record, the
Board has determined that this notice should be, and hereby
is, approved. The Board's approval is specifically conditioned on compliance by First Southern with all commitments made in connection with this notice. The Board's
determination is also subject to all the conditions in Regulation Y, including those in sections 225.7 and 225.23(g)
(12 C.F.R. 225.7 and 225.23(g)) and to the Board's authority to require such modification or termination of the
activities of a holding company or any of its subsidiaries as
the Board finds necessary to assure compliance with, or to
prevent evasion of, the provisions and purposes of the
BHC Act and the Board's regulations and orders issued
thereunder. These commitments and conditions relied on
by the Board in reaching this decision are deemed to be
conditions imposed in writing by the Board in connection
with its findings and decision, and, as such, may be enforced in proceedings under applicable law.
The transaction shall not be consummated later than
three months following the effective date of this order,
unless such period is extended for good cause by the
Federal Reserve Bank of Cleveland, acting pursuant to
delegated authority.
By order of the Board of Governors, effective July 22,
1996.
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Lindsey, Yellen, and Meyer. Absent and not voting: Governors Kelley and Phillips.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
Bank of Boston Corporation
Boston, Massachusetts
Order Approving the Acquisition of a Bank Holding
Company
Bank of Boston Corporation, Boston, Massachusetts
("Bank of Boston"), a bank holding company within the
meaning of the Bank Holding Company Act ("BHC Act"),
has requested the Board's approval under section 3 of the
BHC Act (12 U.S.C. § 1842) to acquire BayBanks, Inc.
("BayBanks"), also in Boston, Massachusetts.1 Bank of
Boston would indirectly acquire the subsidiary banks of
BayBanks, BayBank, N.A., Boston, Massachusetts ("BayBank MA"), and BayBank NH, National Association,
Derry, New Hampshire ("BayBank NH"). 2
Bank of Boston also has requested the Board's approval
under section 4(c)(8) of the BHC Act (12 U.S.C.
§ 1843(c)(8)) and section 225.23(a) of the Board's Regulation Y (12 C.F.R. 225.23(a)) to:
(1) Acquire all the voting shares of BayBank FSB,
Nashua, New Hampshire ("BayBank FSB"), and
thereby engage in the operation of a savings association
pursuant to section 225.25(b)(9) of Regulation Y
(12 C.F.R. 225.25(b)(9)); and
(2) Increase Bank of Boston's ownership interest from
6 percent to 16.53 percent of the voting shares of NYCE
Corporation, Hackensack, New Jersey ("NYCE Corporation"), which engages in operating retail electronic
funds transfer networks and data processing activities
pursuant to section 225.25(b)(7) of Regulation Y
(12 C.F.R. 225.25(b)(7)).3
Notice of the proposals, affording interested persons an
opportunity to submit comments, has been published
(61 Federal Register 14,308 (1996)). The time for filing
comments has expired, and the Board has considered the
proposals and all comments received in light of the factors
set forth in sections 3(c) and 4(c)(8) of the BHC Act.
1. Bank of Boston also has requested the Board's approval to
acquire options for up to 19.9 percent of the voting stock of BayBanks, and BayBanks has requested the Board's approval to acquire
options for up to 19.9 percent of the voting stock of Bank of Boston.
2. Bank of Boston proposes to merge its wholly owned subsidiary
Boston Merger Corp., Boston, Massachusetts, into BayBanks with
BayBanks to be the surviving company. Bank of Boston would be
renamed BankBoston Corporation. After consummation of this proposal, Bank of Boston would merge BayBank MA with and into Bank
of Boston's lead subsidiary bank, The First National Bank of Boston,
Boston, Massachusetts ("FNBB"). The bank merger is subject to the
approval of the Office of the Comptroller of the Currency ("OCC")
under the Bank Merger Act (12 U.S.C. § 1828(c)).
3. Bank of Boston also has provided notice of its intention to
acquire a branch of BayBank MA located in the Cayman Islands,
B.W.I., pursuant to the Board's Regulation K (12 C.F.R. 211.3(a)(3)).
Legal Developments
Bank of Boston, with total consolidated assets of
$47.4 billion, operates subsidiary banks in Massachusetts,
Connecticut, Florida, and Rhode Island, and a special
purpose bank in Maine that provides cash management
services.4 Bank of Boston is the 17th largest commercial
banking organization in the United States and the largest
commercial banking organization in Massachusetts. Bank
of Boston controls deposits of $16.8 billion in Massachusetts, representing 16.5 percent of all deposits in depository
institutions in the state ("state deposits").5 Bank of Boston
also engages in a number of permissible nonbanking activities nationwide.
BayBanks, with total consolidated assets of $12.1 billion, operates a subsidiary bank in Massachusetts, and a
subsidiary bank and a thrift institution in New Hampshire.6
BayBanks is the 51st largest commercial banking organization in the United States and the third largest commercial
banking organization in Massachusetts. BayBanks controls
deposits of $9.2 billion in Massachusetts, representing
approximately 9 percent of state deposits.
On consummation of this proposal, Bank of Boston
would become the 15th largest commercial banking organization in the United States, with total consolidated assets of
$59.5 billion and would control less than 1 percent of the
total deposits in banks and savings associations insured by
the Federal Deposit Insurance Corporation ("FDIC"). On
consummation of this proposal and completion of the proposed branch divestitures, Bank of Boston would remain
the largest commercial banking organization in Massachusetts, controlling $25.1 billion in deposits, representing
approximately 24.7 percent of state deposits.
Interstate Analysis
Section 3(d) of the BHC Act allows the Board to approve a
proposal by a bank holding company to acquire control of
a bank located in a state other than the home state of such
bank holding company, if certain conditions are met. For
purposes of the BHC Act, the home state of Bank of
Boston is Massachusetts, and BayBanks operates banks
located outside Massachusetts.7 The conditions for an interstate acquisition under section 3(d) are met in this case.8 In
4. Asset data are as of December 31, 1995.
5. Depository institutions include commercial banks, savings banks,
and savings associations. State deposit data are as of June 30, 1995,
adjusted to reflect acquisitions and sales consummated by Bank of
Boston through June 30, 1996.
6. BayBank MA operates two branches in Connecticut.
7. 12 U.S.C. § 1842(d). Pub. L. No. 103-328, 108 Stat. 2338 (1994).
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.
8. 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B).
Bank of Boston is adequately capitalized and adequately managed.
The subsidiary banks of BayBanks have been in existence and continuously operated for the minimum periods of time required under
applicable state law. In addition, on consummation of this proposal,
Bank of Boston and its affiliates would control less than 10 percent of
the total amount of deposits of insured depository institutions in the
857
view of all the facts of record, the Board is permitted to
approve this proposal under section 3(d) of the BHC Act.9
Competitive Considerations
The BHC Act prohibits the Board from approving an
application under section 3 of the BHC Act if the proposal
would result in a monopoly, or if the proposal would
substantially lessen competition in any relevant banking
market, unless such anticompetitive effects 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. Bank of Boston and BayBanks
compete directly in nine banking markets in New England.10 The Board has carefully considered the effects that
consummation of this proposal would have on competition
in these banking markets in light of all the facts of record,
including characteristics of each market,11 the increase in
United States and less than 30 percent of the total amount of deposits
of insured depository institutions in the relevant states. On consummation of this transaction, which includes the divestiture of approximately $860 million in deposits in Massachusetts, Bank of Boston
would control less than 25 percent of the total deposits of all state- and
federally-chartered banks in Massachusetts. See M.G.L.A. c. 167, §
2 (Supp. 1996). The Board's determination on this proposal is specifically conditioned on Bank of Boston obtaining approval under applicable state law.
9. BayBanks has filed several applications with the OCC for permission to merge BayBank FSB into BayBank NH, relocate the main
office of BayBank NH a distance of less than 30 miles into Massachusetts, and merge BayBank NH into BayBank MA, with BayBank MA
retaining BayBank NH's New Hampshire branches. The New Hampshire Bank Commissioner ("New Hampshire Commissioner") contends that these applications would permit BayBank MA illegally to
establish interstate branches, and has joined a lawsuit filed in the
Federal District Court for the Northern District of Texas to challenge
the OCC's approval of these types of relocation and merger transactions for national banks. On May 22, 1996, the district court ruled that
upon the relocation of the main office of a national bank, the bank is
authorized to establish an interstate branch only to the extent authorized under state law. Ghiglieri v. Ludwig, No. 3:95-CV-2001-H, 1996
U.S. Dist. LEXIS 8321, at *49 (N.D. Tex. May 22, 1996). The Board
notes that the OCC has not approved the BayBanks relocation, branching, and merger applications, and that this matter is solely within the
OCC's jurisdiction to consider in light of all applicable legal precedent. If the OCC disapproves the applications, or if the OCC's
approval of the applications is later overturned by a court, Bank of
Boston would nevertheless be permitted to own BayBank NH as a
separate New Hampshire bank under section 3(d) of the BHC Act.
The Board has forwarded the New Hampshire Commissioner's comments to the OCC.
10. The banking markets are described in the Appendix. Market
share data are as of June 30, 1995.
11. Based on the particular characteristics of the institutions and
markets involved, the Board previously has determined that certain
savings associations in New England offer significant competition to
commercial banks in the provision of the full range of financial
services, and has weighted the deposits of those savings associations
at more than 50 percent in calculating market share. See Fleet Financial Group, Inc., 82 Federal Reserve Bulletin 50 (1996); Fleet/Norstar
Financial Group, Inc., 77 Federal Reserve Bulletin 750 (1991); Cenvest, Inc., 74 Federal Reserve Bulletin 807 (1988); and Hartford
National Corporation, 73 Federal Reserve Bulletin 720 (1987). The
Board has determined to include the deposits of savings associations
in Connecticut, Massachusetts, New Hampshire, and Rhode Island
858
Federal Reserve Bulletin • September 1996
the concentration of total deposits in depository institutions
in these markets as measured by the Herfindahl-Hirschman
Index ("HHI"), and the HHI levels set out in the revised
Department of Justice Merger Guidelines ("DOJ Guidelines").12 As part of this proposal, Bank of Boston would
divest a total of 20 branches of the subsidiary banks of
Bank of Boston and BayBanks in the Boston metropolitan
area. These branches represent deposits of approximately
$860 million.13
Consummation of this proposal would not exceed the
DOJ Guidelines in any relevant banking market and numerous competitors would remain in each market.14 The
Department of Justice has reviewed the proposal and advised the Board that, subject to completion of the proposed
divestitures, the proposal would not likely have any significantly adverse effects on competition in any banking market.15 The Office of the Massachusetts Attorney General
has reached the same conclusion on the competitive effects
of this proposal in the Massachusetts banking markets. In
this light, and based on all the facts of record, the Board
concludes that consummation of this proposal is not likely
banking markets at up to 100 percent based on a number of factors
indicating their commitment to commercial lending, including their
ratio of commercial and industrial loans (other than those secured by
real estate) to total assets, percentage of small business loans in the
market, resources committed to commercial lending, and the legal
authority of the association to make commercial loans.
12. Under the DOJ Guidelines, 49 Federal Register 26,823 (June 29,
1984), a market in which the post-merger HHI is less than 1000 is
considered unconcentrated and a market in which the post-merger
HHI is between 1000 and 1800 is considered moderately concentrated. A market in which the post-merger HHI is above 1800 is
considered to be highly concentrated. In such markets, the Department
of Justice is likely to challenge a merger that increases the HHI by
more than 50 points. The Department of Justice has informed the
Board that a bank acquisition or merger generally will not be challenged (in the absence of other factors indicating anti-competitive
effects) unless the post-merger HHI is at least 1800 and the merger or
acquisition increases the HHI by at least 200 points. The Department
of Justice has stated that the higher than normal threshold for anticompetitive effects implicitly recognizes the competitive effect of
limited-purpose lenders and other non-depository financial entities.
13. Bank of Boston has committed to execute a sales agreement to
accomplish this divestiture before consummation of this proposal and
to complete the divestiture within 180 days of consummation. Bank of
Boston also has committed that, if it is unsuccessful in completing the
divestiture within 180 days of consummation, it will transfer the
unsold branches to an independent trustee that is acceptable to the
Board and that will be instructed to sell the assets promptly. In
addition, Bank of Boston has committed to submit to the Board,
before consummation of the acquisition, an executed trust agreement
acceptable to the Board stating the terms of the divestiture.
14. Based on all the facts of record, including the proposed divestitures, the HHI increases in the banking markets in which Bank of
Boston and BayBanks compete would be as follows: in Massachusetts, Amherst-Northampton (141 points to 1723); Boston (423 points
to 1467); Cape Cod (74 points to 1597); New Bedford (27 points to
2819); Springfield (219 points to 1356); Taunton (156 points to 2558);
and Worcester (171 points to 2258); in the Hartford, Connecticut,
banking market (7 points to 3011); and in the Providence, Rhode
Island, banking market (30 points to 3277). The HHI calculations in
the Boston, Massachusetts, banking market include the deposits of
BayBank FSB.
15. The OCC also has not objected to the proposal.
to have a significantly adverse effect on competition or
concentration of banking resources in any relevant banking
market.
Other Factors Under the BHC Act
The BHC Act also requires the Board to consider the
financial and managerial resources and future prospects of
the companies and banks involved, the convenience and
needs of the community to be served, and certain other
supervisory factors.
A. Supervisory Factors
The Board has carefully considered the financial and managerial resources and future prospects of Bank of Boston
and BayBanks and their respective subsidiaries, and other
supervisory factors, in light of all the facts of record. These
facts include supervisory reports of examination assessing
the financial and managerial resources of the organizations,
and confidential financial information provided by Bank of
Boston. Bank of Boston would incur no additional debt in
connection with this proposal and has sufficient financial
and managerial resources to accomplish this transaction
without impairing these resources. After consummation of
this proposal, Bank of Boston's subsidiary banks all would
remain well capitalized. Based on these and all the facts of
record, the Board concludes that the supervisory factors
under the BHC Act, including financial and managerial
resources, weigh in favor of approval of this proposal.16
B. Convenience and Needs Factor
The Board has long held that consideration of the convenience and needs factor includes a review of the records of
the relevant depository institutions under the Community
Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). As
provided in the CRA, the Board has evaluated this factor in
light of examinations by the primary federal supervisor of
the CRA performance records of the relevant institutions.
The Board also has carefully considered all comments
submitted on this proposal, including comments from the
Rhode Island Community Reinvestment Association
("RICRA") criticizing the CRA performance record of
16. The Board has received comments from an individual contending, without providing any supporting evidence, that mergers of local
banking organizations have a number of adverse effects, including
decreased competition, increased risk of failure to the banking system,
increased collusion to set fees for banking products and services, and
higher fees for fewer services to customers, particularly small businesses. The Board considered identical comments made by this commenter in connection with its evaluation of Bank of Boston's acquisition of The Boston Bancorp and its subsidiary South Boston Savings
Bank, both in Boston, Massachusetts. See Bank of Boston Corporation, 82 Federal Reserve Bulletin 733 (1996) ("South Boston Order").
This commenter has presented no new considerations relevant to the
BayBanks proposal. The Board has incorporated the analysis and
findings discussed in the South Boston Order in its consideration of
this transaction.
Legal Developments
Bank of Boston's subsidiary bank, Rhode Island Hospital
Trust National Bank, Providence, Rhode Island ("Hospital
Trust"), in serving the credit needs of low- and moderateincome ("LMI") areas, particularly in Providence. In addition, RICRA maintains that Hospital Trust does not adequately support community initiatives through charitable
contributions. RICRA and other individual commenters
also speculate that branch closings resulting from the proposal would have an adverse effect on LMI areas throughout New England.17
An institution's most recent CRA performance evaluation is a particularly important consideration in the applications process because it represents a detailed on-site evaluation of the institution's overall record of performance
under the CRA by its primary federal supervisor.18 In
addition, the Board considers an institution's policies and
practices for compliance with applicable fair lending laws.
The Board also takes into account information on an institution's lending activities that assist in meeting the credit
needs of LMI neighborhoods, including programs and activities initiated since its most recent CRA performance
examination.
Performance Examinations. Bank of Boston's subsidiary banks all received ratings of "outstanding" or "satisfactory" in their most recent examinations for CRA performance by their primary federal supervisors. Bank of
Boston's lead subsidiary bank, FNBB, received an "outstanding" rating from its primary federal supervisor, the
OCC, as of December 1994.19 Hospital Trust also received
an "outstanding" rating from the OCC, as of December
17. RICRA and other commenters contend that projected job losses
resulting from the proposal also would adversely effect LMI areas.
The BHC Act specifically enumerates the factors the Board may
consider in reviewing a proposal under that Act. As previously noted,
these factors relate to the effect of the proposal on competition, the
financial and managerial resources of the institutions involved, certain
supervisory factors, and the convenience and needs of the communities served by the institutions involved. The effect of the proposed
acquisition on employment in a community is not among the factors
the Board is required to consider under the BHC Act. The convenience and needs factor, moreover, has been consistently interpreted
by the federal banking agencies, the courts, and Congress to relate to
the effect of a proposal on the availability and quality of banking
services in the community. See Wells Fargo & Company, 82 Federal
Reserve Bulletin 445, 457 (1996). The Board notes that Bank of
Boston has taken several steps to minimize any adverse effects of this
proposal on employment or the economy in New England, and has
indicated that it will provide support to displaced employees. For
example, Bank of Boston and BayBanks initiated a hiring freeze in
January 1996 that has reduced the combined workforce of BayBanks
and Bank of Boston by 700 employees. Bank of Boston also established an Enhanced Severance Program, in which certain employees
are offered early retirement and other employees whose jobs are
eliminated receive enhanced severance and transition assistance.
18. The Board notes that the Statement of the Federal Financial
Supervisory Agencies Regarding the Community Reinvestment Act
provides that a CRA examination is an important and often controlling
factor in the consideration of an institution's CRA record and that
reports of these examinations will be given great weight in the
applications process. 54 Federal Register 13,742, 13,745 (1989).
19. The Board reviewed in detail FNBB's CRA performance record
in the South Boston Order and that review is incorporated herein.
859
1994 ("Hospital Trust Examination").20 All the subsidiary
banks and thrifts of BayBanks received ratings of "outstanding" or "satisfactory" in their most recent examinations for CRA performance by their primary federal supervisors, and BayBanks's lead subsidiary bank, BayBank
MA, received an "outstanding" rating from the OCC, as of
March 1996.21
Record of CRA Performance in Rhode Island. The Hospital Trust Examination reflects substantial efforts by the
bank to help address the housing, consumer, and small
business credit needs of all its communities, including LMI
areas. Examiners found that Hospital Trust solicited credit
applications from all segments of its community, and that
there was no evidence of illegal discriminatory credit practices in the bank's lending activities. The bank also has in
place effective policies, procedures, and training to support
equal treatment of applicants in lending and credit activities.
The Hospital Trust Examination noted that Hospital
Trust had developed credit products specifically designed
to address the credit needs of LMI individuals and geographies. The bank developed the "First Step" residential real
estate lending products, including a purchase money mortgage loan offering flexible terms and low down payments
for first-time home buyers, and a home improvement loan
providing extended loan terms, lower repayment requirements, and flexible underwriting criteria.22 In addition,
Hospital Trust created "First Community Bank" which is
a special program with marketing and retail strategies
focused on providing credit and banking needs to predominantly LMI communities in Rhode Island.
Examiners also indicated that Hospital Trust actively
participated in local-based lending programs designed to
address the credit needs of LMI individuals, including
those sponsored by the Rhode Island Housing and Mort-
20. Bank of Boston's subsidiary bank in Connecticut, Bank of
Boston, Connecticut, Hartford, Connecticut ("BKB CT"), received an
"outstanding" rating from its primary federal supervisor, the FDIC, as
of June 1994. Bank of Boston, Florida, N.A., a trust-oriented institution received a "satisfactory" rating from the OCC, as of February
1995. Bank of Boston (Maine), N.A., Portland, Maine, a cash disbursement bank with no public operations, has not been evaluated for
CRA performance. FNBB, Hospital Trust, and BKB CT together
account for 99.84 percent of the total assets held by Bank of Boston's
subsidiary banks.
21. BayBank NH and BayBank FSB have not been examined for
CRA performance since they were acquired by BayBanks. In its most
recent examination for CRA performance, however, BayBank NH
received a "satisfactory" rating from the FDIC, as of May 1994
(BayBank NH, formerly known as Cornerstone Bank, recently converted from a state-chartered bank to a national bank). The two
savings associations that merged to become BayBank FSB (NFS
Savings Bank, FSB, Nashua, New Hampshire; and Plaistow Cooperative Bank, FSB, Plaistow, New Hampshire) received "outstanding"
and "satisfactory" ratings from the Office of Thrift Supervision, as of
July 1994 and May 1993, respectively. See BayBanks, Inc., 81 Federal Reserve Bulletin 723 (1995).
22. Since 1989, Hospital Trust has approved First Step mortgage
loans totalling $58.8 million.
860
Federal Reserve Bulletin • September 1996
gage Finance Corporation ("RIHMFC"). 23 The Hospital
Trust Examination indicated that Hospital Trust also was
actively involved in FHA and VA guaranteed mortgage
programs through its affiliate mortgage company, BancBoston Mortgage Corporation, Boston, Massachusetts.
Hospital Trust offers traditional consumer products such
as home equity and auto loans, and a "First Step" personal
loan program that provides unsecured loans for LMI borrowers. Furthermore, the Hospital Trust Examination indicated that the bank offered a wide variety of small business
loans throughout its delineated community and has increased its involvement with the Small Business Administration through direct lending programs and through loan
pools with other financial intermediaries.24
The Hospital Trust Examination also indicated that Hospital Trust designed programs to market its products and
services to its entire community, including LMI areas. In
addition, Hospital Trust participated in local community
development projects to improve LMI areas, including
projects that emphasize affordable housing and job creation. Examiners specifically found that Hospital Trust
maintained a high level of participation in development
and redevelopment programs in the local community, including projects sponsored by organizations such as The
Business Development Corporation of Rhode Island, East
Providence Housing Services, Inc., and Local Initiatives
Support Corporation.25
Branch Closings. Bank of Boston has stated that it
continues to evaluate whether branches in close proximity
could be combined in the interest of efficiency without
disrupting existing customer relationships or the ability of
the combined organization to continue to serve its communities, including LMI communities.26 The Board notes that
23. RICRA's comments primarily focus on data filed under the
Home Mortgage Disclosure Act (12 U.S.C. § 2801 et seq.) ("HMDA")
for RIHMFC's loan programs. These data were previously considered
by the Board in connection with Bank of Boston's acquisition of
Bank Vermont Corporation, Burlington, Vermont. See Bank of Boston
Corporation, 75 Federal Reserve Bulletin 35 (1989) ("BankVermont
Order").
RICRA also has provided updated HMDA data for
RIHMFC's loan programs in selected census tracts. The Board notes
that since the BankVermont Order, Hospital Trust has become one of
RIHMFC's top three mortgage originators. In addition, Hospital Trust
was a partner with RIHMFC in 1993 in introducing the "Opening
Doors" program for minority first-time home buyers, and allocated
$1 million to this program in 1993, 1994, and 1995. The Board also
notes that HMDA data for 1993 and 1994 indicate that Hospital Trust
compares favorably to its competitors in the percentage of loans
originated to borrowers in LMI areas and individuals in its delineated
community.
24. Examiners indicated that Hospital Trust's volume of residential
mortgage, housing rehabilitation, home improvement, and small business loan originations or purchases was significant throughout Rhode
Island.
25. Bank of Boston indicates that at least 30 percent of grants made
by Hospital Trust are to non-profit community development organizations that support local economic development and affordable housing
initiatives, banking and credit education programs for consumers and
small businesses, and other financing and technical assistance programs.
26. In response to RICRA's concerns about branch closings in
Rhode Island, Bank of Boston notes that BayBanks has no branches in
all branch closings resulting from this proposal would be
subject to Bank of Boston's branch closing policy and the
Joint Agency Policy Statement on Branch Closings ("Joint
Policy Statement").27
Bank of Boston's Corporate Branch Closing Policy,
particularly at FNBB and Hospital Trust, has been reviewed by examiners and found to be satisfactory. Before
proposing to close a branch, under this policy, Bank of
Boston would evaluate whether it or BayBanks had other
branches in the community, the plans of either institution to
open additional offices (including supermarket branches) in
the community, and other relevant factors. Bank of Boston
also would consult with community leaders to determine
ways to minimize any adverse impact of a branch closure.
The Board also notes that any branch closings by Bank of
Boston, particularly in LMI neighborhoods, would be assessed by examiners as part of the institution's CRA performance evaluation, and would be reviewed by the Board in
future applications to acquire a depository facility.
Conclusion on the Convenience and Needs Factor. The
Board has carefully considered the entire record in its
review of the convenience and needs factor under the BHC
Act. Based on all the facts of record, including information
provided by Bank of Boston and the commenters in this
case, CRA performance examinations and other information from the primary federal supervisors of Bank of Boston and BayBanks, and for the reasons discussed above and
in the South Boston Order, the Board concludes that the
efforts of Bank of Boston and BayBanks to help meet the
credit needs of all segments of the communities served,
including LMI neighborhoods, are consistent with approval.28 In this light, the Board concludes that convenience
Rhode Island and that Hospital Trust has no plans to close any of its
branches that serve LMI neighborhoods.
27. See section 228 of the Federal Deposit Insurance Corporation
Improvement Act of 1991, which added a new section 42 to the
Federal Deposit Insurance Act (12 U.S.C. § 1831r-l). See also Joint
Policy Statement, 58 Federal Register 49,083 (1993). Under these
provisions, all insured depository institutions are required to submit a
notice of any proposed branch closing to the appropriate federal
banking agency no later than 90 days before the date of closure that
contains:
(1) The identity of the branch to be closed and the proposed closing
date,
(2) A detailed statement of the reasons for the decision to close the
branch, and
(3) Statistical or other information supporting the reasons, consistent with the institution's written policy for branch closings.
Movement of branches within the same immediate neighborhood
that do not substantially affect the nature of the business or the
customers served are considered consolidations or relocations under
the Joint Policy Statement and, as such, do not require prior notice.
28. RICRA alleges that Hospital Trust charges higher fees for basic
banking services than its competitors. Bank of Boston disputes this
allegation and states that Hospital Trust has a competitive fee structure that provides consumers, including residents in LMI areas, with
various options to meet individual deposit and credit needs. The
record indicates that Hospital Trust has an established record of
providing a full range of banking services in its delineated communities, including substantial lending services and a full range of retail
banking services. Examiners noted, for example, that the bank offered
low-cost basic banking services, did not charge for cashing govern-
Legal Developments
and needs considerations, including the CRA performance
records of the companies and banks involved in this proposal, are consistent with approval.29
Other Considerations
Bank of Boston also has requested the Board's approval
under section 4(c)(8) of the BHC Act to acquire BayBank
FSB and thereby engage in the operation of a savings
association pursuant to section 225.25(b)(9) of Regulation Y, and to increase its ownership interest in NYCE
Corporation, a joint venture with other banking organizations, that operates retail electronic funds transfer networks
and engages in other data processing activities. The Board
has determined that the operation of a savings association
by a bank holding company is closely related to banking
for purposes of section 4(c)(8) of the BHC Act.30 The
Board also has determined that the activities of NYCE
Corporation are closely related to banking within the meaning of section 4(c)(8) of the BHC Act.31 Bank of Boston
has committed to conduct these activities in accordance
with, and subject to the limitations of, the Board's regulations and orders approving these activities for bank holding
companies.32
ment checks, and processed food stamps. The record also does not
support the conclusion that the fees charged by Hospital Trust for
checking accounts or other banking services are based in any way on a
factor prohibited by law. Based on all the facts of record, RICRA's
allegations regarding the bank's fees do not raise adverse considerations under the convenience and needs factor.
29. RICRA has requested that the Board hold a public meeting or
hearing on the proposal and several of the individual commenters
have expressed their interest in attending if such a hearing or meeting
were scheduled. The Board notes that a hearing is required under
section 3(b) of the BHC Act (12 U.S.C. § 1842(b)) only if the appropriate supervisory authority for the bank to be acquired makes a
timely written recommendation of denial. The subsidiary banks of
BayBanks that would be acquired by Bank of Boston are national
banks and the OCC has not recommended denial of this proposal.
Generally, under the Board's Rules of Procedure, the Board may, in its
discretion, hold a public meeting or hearing on an application to
clarify factual issues related to the application and to provide an
opportunity for testimony, if appropriate. 12 C.F.R. 252.3(e) and
262.25(d). All interested parties have had an opportunity to present
their views and several commenters, including RICRA, have submitted comments that have been considered by the Board. On the basis of
all the facts of record, the Board has determined that a public meeting
or hearing is not necessary to clarify the factual record in this proposal
or otherwise warranted in this case. Accordingly, RICRA's request for
a public meeting or hearing on this matter is denied.
30. See 12 C.F.R. 225.25(b)(9). The Board requires savings associations acquired by bank holding companies to conform their direct and
indirect activities to those permissible for bank holding companies
under section 4(c)(8) of the BHC Act and Regulation Y. Bank of
Boston has committed that all activities of BayBank FSB will conform to those requirements.
31. See The Bank of New York Company, Inc., et al., 80 Federal
Reserve Bulletin 1107 (1994); 12 C.F.R. 225.25(b)(7).
32. Bank of Boston also has requested the Board's approval to
acquire three inactive subsidiaries of BayBanks. Bank of Boston has
committed that it will not reactivate these subsidiaries without the
prior approval of the Federal Reserve System.
861
In order to approve this proposal, the Board also must
determine that the acquisition of the nonbanking subsidiaries of BayBanks and the performance of the proposed
activities by Bank of Boston "can reasonably be expected
to produce benefits to the public . . . that outweigh possible
adverse effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of interests, or
unsound banking practices."33
Bank of Boston and BayBank FSB compete directly in
the Boston, Massachusetts, banking market. As noted
above, consummation of this proposal would not result in
concentration levels in that market that would exceed the
threshold standards of market concentration, as measured
by the HHI under the DOJ Guidelines. Based on all the
facts of record, the Board concludes that the acquisition of
BayBank FSB by Bank of Boston would not result in any
significantly adverse effects on competition or the concentration of banking resources in the Boston, Massachusetts,
banking market or any other relevant banking market.
The Board also has further determined that the acquisition of BayBank FSB and the increased investment in
NYCE Corporation by Bank of Boston would not result in
any significantly adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts
of interests, or unsound banking practices. Bank of Boston
indicates that consummation of the proposed transaction
would result in benefits to the public. In particular, the
proposed transaction would combine the retail strength of
BayBanks with the corporate and global banking operations of Bank of Boston. The combined institution would
be able to provide a large customer base with a broader
range of products and services. In addition, Bank of Boston
maintains that the proposal would improve the risk profile
of the combined institution and achieve significant cost
savings. Accordingly, the Board has determined that the
balance of public interest factors it is required to consider
under section 4(c)(8) of the BHC Act is favorable and
consistent with approval.34
Conclusion
Based on the foregoing, including the commitments made
to the Board by Bank of Boston in connection with this
proposal, and in light of all the facts of record, the Board
has determined that this proposal should be, and hereby is,
approved. The Board's approval is specifically conditioned
on compliance by Bank of Boston with all commitments
made in connection with this proposal as well as the
conditions discussed in this order.
The Board's determination on the nonbanking activities
to be conducted by Bank of Boston is subject to all the
conditions in the Board's Regulation Y, including those in
33. 12 U.S.C. § 1843(c)(8).
34. Bank of Boston also has provided notice of its intention to
establish a branch in the Cayman Islands, B.W.I., at the location of the
current branch of BayBank MA under the Board's Regulation K
(12 C.F.R. 211.3(a)(3)).
862
Federal Reserve Bulletin • September 1996
sections 225.7 and 225.23(g) (12 C.F.R. 225.7 and
225.23(g)), and to the Board's authority to require such
modification or termination of the activities of a bank
holding company or any of its subsidiaries as the Board
finds necessary to assure compliance with or to prevent
evasion of the provisions and purposes of the BHC Act and
the Board's regulations and orders issued thereunder. The
commitments and conditions relied on by the Board in
reaching this decision are deemed to be conditions imposed in writing by the Board in connection with its
findings and decision, and as such may be enforced in
proceedings under applicable law.
The acquisition of the subsidiary banks of BayBanks
shall not be consummated before the fifteenth calendar day
after the effective date of this order, and the banking and
nonbanking transactions shall not be consummated later
than three months after the effective date of this order,
unless such period is extended for good cause by the
Board, or by the Federal Reserve Bank of Boston, acting
pursuant to delegated authority.
By order of the Board of Governors, effective July 10,
1996.
Voting for this action: Chairman Greenspan and Governors Kelley,
Lindsey, Yellen, and Meyer. Absent and not voting: Vice Chair Rivlin
and Governor Phillips.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
Appendix
Description of Local Banking Markets in Which Bank of
Boston and BayBanks Compete
Massachusetts
AmherstNorthampton
Boston
Cape Cod
New Bedford
Springfield
Taunton
Worcester
Amherst Ranally Metropolitan Area
("RMA") plus Northampton RMA plus
the towns of Chesterfield, Cummington,
Deerfield, Goshen, Plainfield, Shutesbury,
Westhampton, and Whaley
Boston RMA plus the New Hampshire
towns of Greenville, Lyndeboro, Mason,
and New Ipswich
Barnstable County
New Bedford RMA plus the town of
Wareham
Springfield RMA plus the towns of
Blandford, Chester, Granville, Hardwick,
Otis, Tolland, Ware, Warren, and Worthington
Taunton RMA
Worcester RMA plus the towns of Hubbardston, New Braintree, Oakham, and
West Brookfield
Connecticut
Hartford
Hartford RMA plus the Windham County
township of Ashford, the Hartford County
township of Hartland, and the Tolland
County township of Union
Rhode Island
Providence
Providence-Warwick RMA plus the
towns of Charlestown and West Greenwich
ORDERS ISSUED
UNDER INTERNATIONAL
BANKING
ACT
CBG Compagnie Bancaire Geneve
Geneva, Switzerland
Order Approving Establishment of a Representative
Office
CBG Compagnie Bancaire Geneve ("Bank"), Geneva,
Switzerland, a foreign bank within the meaning of the
International Banking Act ("IBA"), has applied under section 10(a) of the IBA (12 U.S.C. § 3107(a)) to establish a
representative office in Miami, Florida. The Foreign Bank
Supervision Enhancement Act of 1991 ("FBSEA"), which
amended the IBA, provides that a foreign bank must obtain
the approval of the Board to establish a representative
office in the United States. Notice of the application, affording interested persons an opportunity to submit comments,
has been published in a newspaper of general circulation in
Miami, Florida (The Miami Herald, January 4, 1996). The
time for filing comments has expired, and all comments
have been considered.
Bank, with total consolidated assets of approximately
$288 million,1 provides private banking and related commercial banking services from offices in Switzerland.
Banque Cantonale de Geneve, Geneva, Switzerland
("Banque Cantonale"), owns 40 percent of the shares of
Bank.2 The remaining shares are controlled by two individuals who together own directly and indirectly 60 percent of
the shares of Bank.3
1. Asset data are as of December 31, 1995.
2. The Canton of Geneva, the City of Geneva and 44 municipalities
located in the Canton of Geneva own all of the registered shares of
Banque Cantonale, representing more than 82 percent of the voting
rights of Banque Cantonale. The remaining shares of Banque Cantonale, representing less than 18 percent of voting rights, are held in
bearer form.
3. Mr. Rene de Picciotto owns directly 7.6 percent of the shares of
Bank, and an additional 34.7 percent through Covest Holding, S.A.,
Luxembourg ("Covest"), a company wholly owned by Mr. de Picciotto. Mr. Philippe Setton holds directly 3.4 percent of the shares of
Bank, and another 14.3 percent through Phos Holding S.A., Luxembourg ("Phos"), a company wholly owned by Mr. Setton.
Legal Developments
Bank operates two branches and one nonbanking subsidiary in Switzerland and a representative office in London,
England. Bank provides asset management and investment
advisory services, primarily to customers who reside outside Switzerland, and also engages in foreign exchange
operations and precious metals trading. Bank's primary
purpose for establishing the proposed representative office
is to provide enhanced service to its existing customers in
South America and the Caribbean and to facilitate the
expansion of its private banking business in those markets.
The proposed representative office would perform representational and administrative functions related to Bank's
private banking activities at the direction of Bank's head
office in Geneva.
In acting on an application to establish a representative
office, the IBA and Regulation K provide that the Board
shall take into account whether the foreign bank engages
directly in the business of banking outside of the United
States and has furnished to the Board the information it
needs to assess the application adequately. The Board also
shall take into account whether the foreign bank and any
foreign bank parent is subject to comprehensive supervision or regulation on a consolidated basis by its home
country supervisor (12 U.S.C. § 3105(d)(2); 12 C.F.R.
211.24). The Board may also take into account additional
standards as set forth in the IBA and Regulation K
(12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)).
The Board previously has stated that the standards that
apply to the establishment of a branch or agency need not
in every case apply to the establishment of a representative
office, because representative offices do not engage in a
banking business and cannot take deposits or make loans.4
In evaluating an application to establish a representative
office under the IBA and Regulation K, the Board will take
into account the standards that apply to the establishment
of branches and agencies, subject generally to the following considerations. With respect to supervision by home
country authorities, a foreign bank that proposes to establish a representative office should be subject to a significant
degree of supervision by its home country supervisor.5 A
foreign bank's financial and managerial resources will be
reviewed to determine whether its financial condition and
performance demonstrate that it is capable of complying
with applicable laws and has an operating record that
would be consistent with the establishment of a representative office in the United States. Finally, all foreign banks,
whether operating through branches, agencies or representative offices, will be required to provide adequate assurances of access to information on the operations of the
bank and its affiliates necessary to determine compliance
with U.S. laws.
Mr. de Picciotto and Mr. Setton are parties to an agreement among the
shareholders of Bank.
4. See 58 Federal Register 6348, 6351 (1993).
5. See Citizens National Bank, 79 Federal Reserve Bulletin 805
(1993). See also Promstroybank of Russia, 82 Federal Reserve Bulletin 599 (1996) (addressing standards applicable to representative
offices with limited activities).
863
In this case, the Board has considered the following
information with respect to the issue of supervision by
home country authorities. Bank is supervised and regulated
by the Swiss Federal Banking Commission ("SFBC").
The SFBC is responsible for the prudential supervision and
regulation of credit institutions. The Board previously has
determined, in connection with an application involving
another Swiss bank, Coutts & Co., AG ("Coutts"), that
Coutts was subject to home country supervision on a
consolidated basis.6 Based on the information provided by
Bank and the SFBC, the Board has determined that Bank is
subject to substantially similar supervision by the SFBC.
Consequently, based on all the facts of record, the Board
has determined that factors relating to the supervision of
Bank by its home country supervisor are consistent with
approval of the proposed representative office.
The Board also has taken into account the additional
standards set forth in section 7 of the IBA (see 12 U.S.C.
§ 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). The SFBC has
indicated that it has no objection to the establishment of the
proposed representative office.
With respect to the financial and managerial resources of
Bank, taking into consideration Bank's record of operations in its home country, its overall financial resources,
and its standing with its home country supervisors, the
Board also has determined that financial and managerial
factors are consistent with approval of the proposed representative office. Bank appears to have the experience and
capacity to support the proposed representative office and
also has established controls and procedures for the proposed representative office to ensure compliance with U.S.
law.
Finally, with respect to access to information about
Bank's operations, the Board has reviewed the restrictions
on disclosure under applicable law, and has communicated
with relevant government authorities about access to information. Bank, Banque Cantonale, Covest and Phos have
committed to make available to the Board such information on the operations of Bank and any affiliate of Bank
that the Board deems necessary to determine and enforce
compliance with the IBA, the Bank Holding Company Act,
as amended, and other applicable federal law. To the extent
that the provision of such information may be prohibited
by law, Bank, Banque Cantonale, Covest and Phos have
committed to cooperate with the Board to obtain any
necessary consents or waivers that might be required from
third parties for disclosure. In addition, subject to certain
conditions, the SFBC may share information on Bank's
operations with other supervisors, including the Board. In
light of these commitments and other facts of record, and
subject to the condition described below, the Board concludes that Bank has provided adequate assurances of
6. See Coutts & Co., AG, 79 Federal Reserve Bulletin 636 (1993).
See also Union Bank of Switzerland, 82 Federal Reserve Bulletin 370
(1996); Swiss Bank Corporation, 82 Federal Reserve Bulletin 690
(1996).
864
Federal Reserve Bulletin • September 1996
access to any necessary information the Board may request.
On the basis of all the facts of record, and subject to the
commitments made by Bank, as well as the terms and
conditions set forth in this order, the Board has determined
that Bank's application to establish a representative office
should be, and hereby is, approved. Should any restrictions
on access to information on the operations or activities of
Bank and its affiliates subsequently interfere with the
Board's ability to obtain information to determine and
enforce compliance by Bank or its affiliates with applicable
Federal statutes, the Board may require termination of any
of the Bank's direct or indirect activities in the United
States. Approval of the application is also specifically
conditioned on Bank's compliance with the commitments
made in connection with the application and with the
conditions in this order.7 The commitments and conditions
referred to above are conditions imposed in writing by the
APPLICATIONS
APPROVED
UNDER BANK HOLDING
COMPANY
Board in connection with its decision, and may be enforced
in proceedings under 12 U.S.C. § 1818 or 12 U.S.C. § 1847
against Bank, its offices, and its affiliates.
By order of the Board of Governors, effective July 29,
1996.
Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and
Governors Kelley, Lindsey, Phillips, Yellen, and Meyer.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
7. The Board's authority to approve the establishment of the proposed representative office parallels the continuing authority of the
Florida Department of Banking and Finance to license offices of a
foreign bank. The Board's approval of the application does not
supplant the authority of the State of Florida, and its agent, the Florida
Department of Banking and Finance, to license the proposed representative office of Bank in accordance with any terms or conditions that
the State of Florida may impose.
ACT
By the Secretary of the Board
Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to
the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System,
Washington, D.C. 20551.
Section 3
Applicant(s)
Bank(s)
Effective Date
CU Bancorp,
Encino, California
Home Interstate Bancorp,
Signal Hill, California
Home Bank,
Signal Hill, California
Carlisle Bancshares, Inc.,
Little Rock, Arkansas
Citizens Bank and Trust Company,
Carolisle, Arkansas
First Bank of Arkansas,
Brinkley, Arkansas
Hazen First State Bank,
Hazen, Arkansas
Workingmens Capital Holdings, Inc.,
Bloomington, Indiana
Workingmens Federal Savings Bank,
Bloomington, Indiana
July 24, 1996
First United Banc shares, Inc.
El Dorado, Arkansas
Old National Bancorp,
Evansville, Indiana
July 1, 1996
July 12, 1996
Legal Developments
865
By Federal Reserve Banks
Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to
the Reserve Banks.
Section 3
Applicant(s)
Bank(s)
Reserve Bank
Effective Date
ABC Bancorp,
Moultrie, Georgia
Central Bankshares, Inc.,
Cordele, Georgia
Central Bank & Trust,
Cordele, Georgia
First National Financial Corporation,
Albany, Georgia
First National Bank of South Georgia,
Albany, Georgia
Gilmer County Bank,
Ellijay, Georgia
Mercantile Bank of Batesville, N.A.,
Batesville, Arkansas
Bank of Lucedale,
Lucedale, Mississippi
The Bradford National Bank of
Greenville,
Greenville, Illinois
Nevada Community Bancshares, Inc.,
Nevada, Iowa
First Community Bank,
Gastonia, North Carolina
SC Acquisition Corp.,
Huntington Beach, California
Atlanta
July 5, 1996
Atlanta
July 18, 1996
Atlanta
July 24, 1996
St. Louis
July 18, 1996
Atlanta
June 28, 1996
St. Louis
July 10, 1996
Chicago
July 12, 1996
Richmond
July 19, 1996
San Francisco
July 22, 1996
Inland Empire National Bank,
Riiverside, California
Farmers State Bank,
Northwood, Iowa
FNB Bancshares, Inc.,
Springfield, Georgia
Minneapolis
June 21, 1996
Chicago
July 25, 1996
Atlanta
July 18, 1996
Comban Shares, Inc.,
Warr Acres, Oklahoma
Crawford Bancorp, Inc.,
Robinson, Illinois
LGF Bancshares, Inc.,
Dover, Delaware
The First National Bank of La Grange,
La Grange, Texas
First National Bank,
St. Marys, Georgia
Inland Empire Bank,
Hermiston, Oregon
Kansas City
July 24, 1996
Chicago
June 25, 1996
Dallas
June 21, 1996
Atlanta
July 18, 1996
San Francisco
June 28, 1996
Southwest Banks, Inc.,
Naples, Florida
Cleveland
July 12, 1996
ABC Bancorp,
Moultrie, Georgia
Appalachian Bancshares, Inc.,
Ellijay, Georgia
Arkansas Banking Company,
Jonesboro, Arkansas
Bancorp of Lucedale, Inc.,
Lucedale, Mississippi
Bradford Bancorp, Inc.,
Greenville, Illinois
Carroll County Bancorporation, Inc.,
Carroll, Iowa
Centura Banks, Inc.,
Rocky Mount, North Carolina
Dartmouth Capital Group, Inc.,
Encinitas, California
Dartmouth Capital Group, L.P.,
Encinitas, California
Duke Financial Group, Inc.,
St. Paul, Minnesota
Farmers State Bancshares, Inc.,
Mason City, Iowa
First Banking Company of
Southeast Georgia,
Statesboro, Georgia
First Fidelity Bancorp, Inc.,
Oklahoma City, Oklahoma
First Financial Corporation,
Terre Haute, Indiana
First La Grange Bancshares, Inc.,
La Grange, Texas
First National Banc, Inc.,
St. Marys, Georgia
First Savings Bank of Washington
Bancorp, Inc.,
Walla Walla, Washington
FNB Corporation,
Hermitage, Pennsylvania
866
Federal Reserve Bulletin • September 1996
Section 3—Continued
Applicant(s)
Bank(s)
Reserve Bank
Effective Date
Frontier Financial Corporation,
Everett, Washington
The M.B. and I.M. Hampton Family
Partnership, Ltd.,
Mt. Pleasant, Texas
Washington Banking Corporation,
Oak Harbor, Washington
Morris County Bankshares, Inc.,
Naples, Texas
Morris County National Bank,
Naples, Texas
Hills Bank Kalona,
Kalona, Iowa
Home National Bank,
Scottsdale, Arizona
Hometown Bancorporation, Inc.,
Darien, Connecticut
The Bank of Darien,
Darien, Connecticut
First Security Bank of Belgrade,
Belgrade, Montana
Alpine Bancorporation, Inc.,
Rockford, Illinois
Alpine Bank of Illinois,
Rockford, Illinois
The First National Bank of La Grange,
La Grange, Texas
The Liberty National Bank in Paris,
Paris, Texas
Bank of Eastman,
Eastman, Georgia
San Francisco
July 9, 1996
Dallas
July 17, 1996
Chicago
July 10, 1996
Kansas City
July 16, 1996
New York
July 19, 1996
Minneapolis
July 9, 1996
Chicago
July 23, 1996
Dallas
June 21, 1996
Dallas
July 2, 1996
Atlanta
June 25, 1996
The First National Bank of Clifton
Forge,
Clifton Forge, Virginia
First Lansing Bancorp, Inc.,
Lansing, Illinois
The Greenville Banking Company,
Greenville, Georgia
Community Bank,
Nevada, Iowa
Richmond
July 19, 1996
Chicago
June 21, 1996
Atlanta
July 25, 1996
LNB Financial Corp.,
Dover, Delaware
The Liberty National Bank in Paris,
Paris, Texas
Missouri Valley Bancshares, Inc.,
Kansas City, Missouri
Dallas
M&H Financial Services, Inc.,
Miller, South Dakota
Platte Valley National Bank,
Scottsbluff, Nebraska
Commerce Security Bank,
Sacramento, California
SDN Bancorp, Inc.,
Encinitas, California
Minneapolis
July 23, 1996
Kansas City
July 8, 1996
San Francisco
July 22, 1996
Hills Bancorporation,
Hills, Iowa
HNB Corporation,
Arkansas City, Kansas
HUB CO, Inc.,
Mahwah, New Jersey
Inter-Mountain Bancorp, Inc.,
Bozeman, Montana
Landmark Financial Group, Inc.,
Belvidere, Illinois
LGF Bancshares, Inc.,
Dover, Delaware
LNB Financial Corp.,
Dover, Delaware
Magnolia Midlands Bankshares,
Inc.,
Eastman, Georgia
MainS treet BankGroup
Incorporated,
Martinsville, Virginia
Mercantile Bancorp, Inc.,
Hammond, Indiana
Meriwether Bank Shares, Inc.,
Greenville, Georgia
Nevada Community Bancshares,
Inc.,
Nevada, Iowa
Paris Bancshares, Inc.,
Paris, Texas
Pembroke Bancshares, Inc.,
Kansas City, Missouri
Union Bancshares, Inc.,
Kansas City, Missouri
Peterka Family Partnership,
Miller, South Dakota
Platte Valley Banc, Inc.,
Scottsbluff, Nebraska
SC Acquisition Corp.,
Huntington Beach, California
July 12, 1996
July 2, 1996
July 16, 1996
Legal Developments
Section 3—Continued
Applicant(s)
Bank(s)
Reserve Bank
Effective Date
Texas Financial Bancorporation,
Inc.,
Minneapolis, Minnesota
Thera Holding Partners, Ltd.,
Houston, Texas
Community Bank of Arizona,
Wickenburg, Arizona
Dallas
June 21, 1996
Citizens Bankers, Inc.,
Baytown, Texas
Citizens Banks of Delaware, Inc.,
Wilmington, Delaware
Baytown State Bank,
Baytown, Texas
Citizens Bank & Trust Company,
Baytown, Texas
Pasadena State Bank,
Pasadena, Texas
TIB Bank of the Keys,
Key Largo, Florida
Country Bancshares, Inc.,
Hull, Illinois
Dallas
July 5, 1996
Atlanta
June 24, 1996
Chicago
June 28, 1996
King George State Bank, Inc.,
King Georgia, Virginia
The Bank of Franklin,
Franklin, Virginia
The Bank of Sussex and Surry,
Wakefield, Virginia
Ireton Bancorp,
Ireton, Iowa
Security Savings Bank,
Ireton, Iowa
Richmond
July 25, 1996
Richmond
July 10, 1996
Chicago
July 3, 1996
Applicant(s)
Nonbanking Activity/Company
Reserve Bank
Effective Date
BancFirst Ohio Corp.,
Zanesville, Ohio
Bankers Trust New York
Corporation,
New York, New York
County Savings Bank,
Newark, Ohio
Wolfensohn & Co., Inc.,
New York, New York
Fuji-Wolfensohn International,
New York, New York
BT Securities Corporation,
New York, New York
CIBC Inc.,
New York, New York
Cleveland
July 12, 1996
New York
July 19, 1996
New York
June 27, 1996
San Francisco
June 28, 1996
TIB Financial Corp.,
Key Largo, Florida
UnionBancorp, Inc.,
Streator, Illinois
Prairie Bancorp, Inc.,
Princeton, Illinois
Union Bancorp, Inc.,
Bowling Green, Virginia
United Community Bankshares,
Inc.,
Franklin, Virginia
Vogel Bancshares, Inc.,
Orange City, Iowa
Section 4
Canadian Imperial Bank of
Commerce,
Toronto, Ontario, Canada
Canadian Imperial Holdings Inc.
New York, New York
Capital Corp of the West,
Merced, California
Town and Country Finance and Thrift
Company,
Turlock, California
867
868
Federal Reserve Bulletin • September 1996
Section 4—Continued
Applicant(s)
Nonbanking Activity/Company
Reserve Bank
Effective Date
FBOP Corporation,
Oak Park, Illinois
Regency Savings Bank, F.S.B.,
Naperville, Illinois
FCFT, Inc.,
Princeton, West Virginia
Torrance Bank, S.S.B.,
Torrance, California
Chicago
June 26, 1996
South Oakwood Plaza Limited
Partnership, III,
Princeton, West Virginia
American Financial Mortgage Corp.,
Decatur, Georgia
FSB Mortgage Services, Inc.,
Lithonia, Georgia
Independent Bankers Life Insurance
Company of Indiana,
Phoenix, Arizona
Liberty Leasing Corporation,
Tampa, Florida
Northrn Illinois Financial Services,
LLC,
Willowbrook, Illinois
Serve Corps Mortgage Services, LLC,
Downers Grove, Illinois
J.P. Morgan Trust Company of Illinois,
Chicago, Illinois
To engage in making and servicing
loans
EastPoint Technology, Inc.,
Bedford, New Hampshire
Prolmage, Inc.,
Macon, Georgia
Richmond
July 16, 1996
Atlanta
July 22, 1996
Chicago
July 5, 1996
Atlanta
July 25, 1996
Chicago
July 23, 1996
New York
July 1, 1996
Chicago
July 11, 1996
Chicago
July 19, 1996
Atlanta
July 12, 1996
Financial Services of the South, Inc.,
Lafayette, Louisiana
Commerce Finance Company,
Germantown, Tennessee
TAC Bancshares, Inc.,
Miami, Florida
Atlanta
June 27, 1996
Richmond
June 24, 1996
Richmond
June 27, 1996
Atlanta
June 28, 1996
Minneapolis
July 9, 1996
First Southern Bancshares, Inc.,
Lithonia, Georgia
Friendship Bancorp,
Friendship, Indiana
Gulf West Banks, Inc.,
St. Petersburg, Florida
Hinsbrook Bancshares, Inc.,
Willowbrook, Illinois
Hinsbrook Bank and Trust,
Willowbrook, Illinois
J.P. Morgan & Co., Incorporated,
New York, New York
Libertyville Bancorp, Inc.,
Lake Forest, Illinois
Marshall & Ilsley Corporation,
Milwaukee, Wisconsin
Middle Georgia Bankshares, Inc.,
Unadilla, Georgia
Macon Bank & Trust,
Macon, Georgia
Provesa, Inc.,
Macon, Georgia
MidSouth Bancorp, Inc.,
Lafayette, Louisiana
Nationsbank Corporation
Charlotte, North Carolina
NationsBank Corporation,
Charlotte, North Carolina
NationsCredit Consumer
Corporation,
Allentown, Pennsylvania
NB Holdings Corporation,
Charlotte, North Carolina
Newnan Holdings, Inc.,
Newnan, Georgia
Norwest Corporation,
Minneapolis, Minnesota
Chase Federal Bank, FSB,
Miami, Florida
Newnan Financial Services, Inc.,
Newnan, Georgia
Citizens Mortgage Group, Inc.,
Newnan, Georgia
DUMAE Insurance Agency, Inc.,
Dell Rapids, South Dakota
Legal Developments
Section 4—Continued
Applicant(s)
Nonbanking Activity/Company
Reserve Bank
Effective Date
Otto Bremer Foundation,
St. Paul, Minnesota
Bremer Financial Corporation,
St. Paul, Minnesota
Palos Bancshares, Inc.,
Palos Heights, Illinois
Palos Bank and Trust Company,
Palos Heights, Illinois
To engage de novo in making,
acquiring, and servicing loans and
other extensions of credit; and leasing
personal and real property
Northern Illinois Financial Services,
LLC,
Willowbrook, Illinois
Serve Corps Mortgage Services, LLC,
Downers Grove, Illinois
To engage de novo directly in
community development activities
To engage de novo in making equity
and debt investments in corporations
or projects designed primarily to
promote community welfare
Bonnet Finance Corporation,
Winnie, Texas
To engage de novo in making and
servicing loans
Minneapolis
July 5, 1996
Chicago
July 23, 1996
San Francisco
June 19, 1996
New York
July 10, 1996
Dallas
July 12, 1996
Chicago
June 26, 1996
Cleveland
July 10, 1996
Richmond
July 17, 1996
Richmond
June 20, 1996
Atlanta
July 10, 1996
Chicago
July 16, 1996
Cleveland
July 18, 1996
San Francisco
July 10, 1996
Santa Barbara Bancorp,
Santa Barbara, California
Societe Generale,
Paris, France
Southeast Bancorp of Texas, Inc.,
Winnie, Texas
Southwest Financial Group of Iowa,
Inc.,
Red Oak, Iowa
Star Banc Corporation,
Cincinnati, Ohio
Summit Financial Corporation,
Greenville, South Carolina
Summit Financial Corporation,
Greenville, South Carolina
Synovus Financial Corp.,
Columbus, Georgia
TB&C Bancshares, Inc.,
Columbus, Georgia
B&C Bancshares, Inc.,
Columbus, Georgia
UnionBancorp, Inc.,
Streator, Illinois
WesBanco, Inc.,
Wheeling, West Virginia
West Coast Bancorp,
Lake Oswego, Oregon
DJJ Leasing Ltd.,
Cincinnati, Ohio
Academy Finance, Inc.,
Lake City, South Carolina
Berkeley Loans, Inc.,
Moncks Corner, South Carolina
Canterbury Trust Company,
Birmingham, Alabama
LaSalle County Collections, Inc.
Ottawa, Illinois
WesBanco Mortgage Company,
Wheeling, West Virginia
Universal Mortgage Company,
Bridgeport, West Virginia
West Coast Trust Company, Inc.
Salem, Oregon
Sections 3 and 4
Applicant(s)
Nonbanking Activity/Company
Reserve Bank
Effective Date
Finlayson Bancshares, Inc.,
Finlayson, Minnesota
Wood Lake Bancorporation,
Wood Lake, Minnesota
Minneapolis
July 12, 1996
869
870
Federal Reserve Bulletin • September 1996
APPLICATIONS
APPROVED
UNDER BANK MERGER
ACT
By the Secretary of the Board
Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to
the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System,
Washington, D.C. 20551.
Applicant(s)
Bank(s)
Effective Date
Home Bank,
Signal Hill, California
California United Bank, N.A.,
Encino, California
July 24, 1996
APPLICATIONS
APPROVED
UNDER BANK MERGER
ACT
By Federal Reserve Banks
Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to
the Reserve Banks.
Applicant(s)
Bank(s)
Reserve Bank
Effective Date
Centura Bank,
Rocky Mount, North Carolina
DeMotte State Bank,
DeMotte, Indiana
F & M Bank-Hallmark,
Springfield, Virginia
First Community Bank,
Gastonia, North Carolina
NBD Bank, N.A.,
Indianapolis, Indiana
F & M Bank-Potomac,
Herndon, Virginia
Fairfax Bank & Trust Company,
Fairfax, Virginia
First Bank of Texas,
Tomball, Texas
National Bank of Commerce,
Memphis, Tennessee
Richmond
July 19, 1996
Chicago
July 23, 1996
Richmond
July 10, 1996
Dallas
July 11, 1996
Atlanta
July 18, 1996
Silsbee State Bank,
Silsbee, Texas
Tri-City Bank & Trust Company,
Blountville, Tennessee
PENDING
CASES INVOLVING THE BOARD OF
GOVERNORS
This list of pending cases does not include suits against the
Federal Reserve Banks in which the Board of Governors is not
named a party.
Long v. Board of Governors, No. 96-9526 (10th Cir., filed
July 31, 1996). Petition for review of Board order dated
July 2, 1996, assessing a civil money penalty and cease and
desist order for violations of the Bank Holding Company
Act.
Esformes v. Board of Governors, No. 96-1916 (S.D. Fla., filed
July 12, 1996). Complaint challenging Board denial of
administrative request for confidential supervisory information. On July 12, 1996, plaintiffs moved for an expedited
hearing on the complaint.
Board of Governors v. Interamericas Investments, Ltd., No.
96-7108 (D.C. Cir., filed June 14, 1996). Appeal of district
court ruling granting, in part, the Board's application to
enforce an adminstrative investigatory subpoena for documents and testimony. Appellants filed a motion for a stay of
the district court ruling on July 17, 1996; the Board's
opposition was filed on July 23, 1996.
Interamericas Investments, Ltd. v. Board of Governors, No.
96-60326 (5th Cir., filed May 8, 1996). Petition for review
of order imposing civil money penalties and cease and
desist order in enforcement case. Petitioners' brief was filed
on July 26, 1996.
Kuntz v. Board of Governors, No. 96-1137 (D.C. Cir., filed
April 25, 1996). Petition for review of a Board order dated
March 25, 1996, approving an application by CoreStates
Financial Corp., Philadelphia, Pennsylvania to acquire Meridian Bancorp, Inc., Reading, Pennsylvania. The Board's
motion to dismiss was filed on June 3, 1996.
Kuntz v. Board of Governors, No. 96-1079 (D.C. Cir., filed
March 7, 1996). Petition for review of a Board order dated
February 7, 1996, approving applications by The Fifth
Third Bank, Cincinnati, Ohio, and he Firth Third Bank of
Columbus, Columbus, Ohio, to acquire certain assets and
assume certain liabilities of 25 branches of NBD Bank,
Columbus, Ohio. Petitioner has moved to consolidate the
Legal Developments
case with Kuntz v. Board of Governors, No. 95-1495. On
April 8, 1996, the Board filed a motion to dismiss the
action.
Henderson v. Board of Governors, No. 96-1054 (D.C. Cir.,
filed February 16, 1996). Petition for review of a Board
order dated January 17, 1996, approving the merger of First
Citizens BancShares, Inc., Raleigh, North Carolina, with
Allied Bank Capital, Inc., Sanford, North Carolina. Petitioners' motion for a stay was denied on March 7, 1996.
Research Triangle Institute v. Board of Governors, No.
1:96CV00102 (M.D.N.C., filed February 12, 1996). Contract dispute. On May 3, 1996, the Board filed a motion to
dismiss the action.
Inner City Press/Community on the Move v. Board of Governors, No. 96-4008 (2nd Cir., filed January 19, 1996). Petition for review of a Board order dated January 5, 1996,
approving the applications and notices by Chemical Banking Corporation to merge with The Chase Manhattan Corporation, both of New York, New York, and by Chemical
Bank to merge with The Chase Manhattan Bank, N.A., both
of New York, New York. Petitioners' motion for an emergency stay of the transaction was denied following oral
argument on March 26, 1996. The case has been consolidated for oral argument and decision with Lee v. Board of
Governors, No. 95-4134 (2d Cir.).
Menick v. Greenspan, No. 95-CV-01916 (D. D.C., filed October 10, 1995). Complaint alleging sex, age, and handicap
discrimination in employment.
Kuntz v. Board of Governors, No. 95-1495 (D.C. Cir., filed
September 21, 1995). Petition for review of Board order
dated August 23, 1995, approving the applications of The
Fifth Third Bank, Cincinnati, Ohio, to acquire certain assets
and assume certain liabilities of 12 branches of PNC Bank,
Ohio, N.A., Cincinnati, Ohio, and to establish certain
branches. The Board's motion to dismiss was filed on
October 26, 1995.
Lee v. Board of Governors, No. 95-4134 (2nd Cir., filed
August 22, 1995). Petition for review of Board orders dated
July 24, 1995, approving certain steps of a corporate reorganization of U.S. Trust Corporation, New York, New York,
and the acquisition of U.S. Trust by Chase Manhattan
Corporation, New York, New York. On September 12,
1995, the court denied petitioners' motion for an emergency
stay of the Board's orders. The Board's brief was filed on
April 16, 1996.
Beckman v. Greenspan, No. 95-35473 (9th Cir., filed May 4,
1995). Appeal of dismissal of action against Board and
others seeking damages for alleged violations of constitutional and common law rights. The appellants' brief was
filed on June 23, 1995; the Board's brief was filed on July
12, 1995.
Money Station, Inc. v. Board of Governors, No. 95-1182
(D.C. Cir., filed March 30, 1995). Petition for review of a
Board order dated March 1, 1995, approving notices by
Bank One Corporation, Columbus, Ohio; CoreStates Financial Corp., Philadelphia, Pennsylvania; PNC Bank Corp.,
Pittsburgh, Pennsylvania; and KeyCorp, Cleveland, Ohio,
to acquire certain data processing assets of National City
871
Corporation, Cleveland, Ohio, through a joint venture subsidiary. On April 23, 1996, the court vacated the Board's
order. On July 31, 1996, the full court granted the Board's
suggestion for rehearing in banc, and vacated the April 23
panel decision.
In re Subpoena Duces Tecum, Misc. No. 95-06 (D.D.C., filed
January 6, 1995). Action to enforce subpoena seeking predecisional supervisory documents sought in connection with
an action by Bank of New England Corporation's trustee in
bankruptcy against the Federal Deposit Insurance Corporation. The Board filed its opposition on January 20, 1995.
Oral argument on the motion was held July 14, 1995.
Board of Governors v. Pharaon, No. 91-CIV-6250 (S.D. New
York, filed September 17, 1991). Action to freeze assets of
individual pending administrative adjudication of civil
money penalty assessment by the Board. On September 17,
1991, the court issued an order temporarily restraining the
transfer or disposition of the individual's assets.
FINAL ENFORCEMENT
BOARD
OF
DECISIONS
ISSUED BY THE
GOVERNORS
In the Matter of
Cedar Vale Bank Holding Company, Inc.,
Wellington, Kansas
Docket Nos.
91-027-B-HC
91-027-B-I1
91-027-CMP-I1
Final Decision and Order
This is an administrative proceeding initiated by the Board
of Governors of the Federal Reserve System (the "Board")
on February 7, 1994, by the issuance of a Notice of
Charges and of Hearing Pursuant to Section 8(b) of the
Federal Deposit Insurance Act, as Amended ("FDI Act"),
and Notice of Assessment of Civil Money Penalty Pursuant to Section 8(b) of the Bank Holding Company Act, as
Amended (the "BHC Act") (the "Notice") against Cedar
Vale Bank Holding Company, Inc., Wellington, Kansas
("Cedar Vale") and W.C. Long, Jr. ("Long"), Cedar Vale's
chairman, president and sole shareholder.1 The Notice alleged that Cedar Vale, at Long's direction, violated sections 3(a)(1) and 4 of the BHC Act, and Regulation Y
(12 C.F.R. Part 225), by its unlawful acquisition of Sumner
County Bancshares, Inc. ("Sumner County"), its subsidiary bank, the Bank of Commerce and Trust Company (the
1. The Notice of Assessment of Civil Money Penalty was also
issued against James J. Long ("J. Long"), Cedar Vale's attorney and
W.C. Long's son. On June 12, 1995, J. Long consented to the issuance
of an Order of Assessment of Civil Money Penalty in settlement of the
Board's proceeding against him.
872
Federal Reserve Bulletin • September 1996
"Bank"), and Tri-County Financial Corporation ("TriCounty"), an insurance agency. The Notice sought the
entry of a cease and desist order prohibiting Long and
Cedar Vale from further violations of law and requiring
Cedar Vale and Long to correct Cedar Vale's violations by
reversing the unauthorized acquisitions, and sought a
$300,000 civil money penalty from Long.
Upon review of the administrative record, including all
post-hearing submissions of the parties, the Board hereby
makes its Final Decision, assessing a civil money penalty
against Long in the amount of $717,941 and ordering that
Long be prohibited from future violations of the BHC Act.
ular, Long argued that the ALJ erred in his penalty determination because he failed to apply the civil money penalty
matrix used by the Board; incorrectly concluded that Long
or Cedar Vale benefitted as a result of the violation and that
Long acted in bad faith; and failed to consider the benefit
to the Bank as a result of the merger. Long's exception to
the finding that Cedar Vale illegally retained control of
Tri-County was based on his contention that Board approval was not required because Tri-County was a dormant
company.
Procedural History
Section 3(a) requires prior Board approval before a company can become a bank holding company.
12 U.S.C. § 1842(a). A "bank holding company" is any
company that has control over any bank or over any
company that is or becomes a bank holding company.
12 U.S.C. § 1841(a)(1). Section 11(a) of the Board's Regulation Y implements this statutory provision by requiring
a prior application to the Board for the formation of a bank
holding company. 12 C.F.R. 225.11(a). Section 4 of the
BHC Act requires prior Board approval before a bank
holding company may acquire or retain control of any
company which is not a bank or which engages in nonbanking activities. 12 U.S.C. §§ 1841(a) and (c)(8). Section 21(a) of the Board's Regulation Y implements this
section by providing that a bank holding company or a
subsidiary may only engage in activities that are closely
related to banking when it obtains prior Board approval for
such activities. 12 C.F.R. 225.21(a). Any company that
violates, and any individual who participates in a violation
of, the BHC Act may be assessed a penalty of up to
$25,000 per day for each day the violation continues. 12
U.S.C. § 1847(b)(1).
Following the issuance of the Notice, Board Enforcement
Counsel ("Enforcement Counsel") and Respondents filed
cross-motions for summary disposition. On February 21,
1994, Administrative Law Judge Walter J. Alprin (the
"ALJ") issued a partial summary disposition order in favor
of Enforcement Counsel finding that Cedar Vale violated
section 3 of the BHC Act and Regulation Y by acquiring
Sumner County and the Bank without Board approval and
section 4 of the BHC Act and Regulation Y by retaining
control of Tri-County without Board approval. The ALJ
further found that Long caused Cedar Vale's violations of
the BHC Act and Regulation Y. The ALJ recommended
summary disposition on the cease and desist relief sought
in the Notice, but found that there were issues of fact
regarding the assessment of a civil money penalty that
required adjudication at hearing.
Thereafter, a formal adjudicatory hearing to determine
the appropriateness and amount of a penalty was held
before the ALJ in Wichita, Kansas from June 12-15, 1995.
After receiving the parties' post-hearing briefs, the ALJ
issued his Recommended Decision on November 21, 1995,
including his proposed Findings of Fact and Conclusions
of Law. The Recommended Decision incorporated the
findings of the ALJ's summary disposition order that Cedar Vale violated the BHC Act and that Long caused such
violations. Based on his finding that Long had received a
benefit of at least $567,941 as a result of the violations, the
ALJ recommended a civil money penalty in the amount of
$717,941.
The ALJ also recommended that a cease and desist order
be issued prohibiting Cedar Vale and Long from further
violations of the BHC Act. The ALJ did not recommend a
reversal of the unlawful transactions because none of the
original entities remained.2
On January 31, 1996, Long filed Exceptions to the
Recommended Decision pursuant to Section 263.39(a) of
the Uniform Rules of Practice and Procedure, 12 C.F.R.
263.39(a). Long's Exceptions were directed only to the
amount of the penalty and the finding of a violation with
respect to the retention of control of Tri-County. In partic-
2. In January 1995, Long merged Cedar Vale, Sumner County and
Tri-County into the Bank.
Statutory and Regulatory Authority
Summary of Findings of Fact
The Board adopts the ALJ's Recommended Decision and
Recommended Findings of Fact and Conclusions of Law,
except as specifically supplemented or modified herein.
At all relevant times to the Notice, Long was the president and chairman of Cedar Vale, Sumner County, the
Bank and Tri-County, as well the sole shareholder of Cedar
Vale, Sumner County and Tri-County. Prior to his ownership of Cedar Vale and Sumner County, Long had extensive experience in the banking industry dating back to
1955 that included running, owning and serving as a director for several other banks. Long also had prior experience
with the Federal Reserve's application process, having
filed other applications, including his 1976 application
seeking approval for Sumner County to become a bank
holding company and engage in permissible insurance
activities, and his 1984 change-of-control notice in connection with his acquisition of Cedar Vale.
When Long acquired Cedar Vale in 1984, he financed
the acquisition with bank financing (the "Debt") for which
Cedar Vale was the principal obligor and Long and Sumner
Legal Developments
873
County were guarantors. From 1985 to 1989, Long himself
serviced the debt using personal funds, including dividends
paid to him by Sumner County. In 1988, Cedar Vale's sole
subsidiary bank, Cedar Vale State Bank, failed and was
closed by the Kansas State Banking Department. This
caused Cedar Vale to cease to be a bank holding company,
since it no longer controlled a bank. Cedar Vale was left
with Debt with a principal amount of approximately
$904,000 and no source of income with which to service it.
In 1989, Long was required to change his status from
guarantor to co-maker of the Debt.
Due to its heavy losses prior to the failure of Cedar Vale
State Bank, Cedar Vale had accumulated $1.3 million in
net operating loss carry-forwards ("NOLs"). NOLs can be
used to offset taxable income and thereby reduce corporate
income tax liability. With no source of income, however,
Cedar Vale was unable to use its NOLs.
Accordingly, Long sought a means of utilizing the NOLs
and creating a source of repayment of the Debt by causing
Cedar Vale to acquire an income-producing subsidiary. In
January 1989, Long began a series of contacts with the
Federal Reserve Bank of Kansas City (the "Reserve
Bank") with regard to merging Cedar Vale and Sumner
County. Long advised the Reserve Bank staff that such a
merger would allow Sumner County to assume Cedar
Vale's debt and also generate over $400,000 in tax savings.3 Early on in these discussions, the Reserve Bank
advised Long that it could not sanction a merger of Cedar
Vale into Sumner County because Sumner County's assumption of Cedar Vale's debt would hamper Sumner
County's ability to serve as a source of strength to the
Bank. Several months later, in June 1989, Long filed an
application (the "June Application") with the Reserve
Bank for approval for Cedar Vale to acquire and then
merge with Sumner County, with Cedar Vale as the surviving corporation. The Reserve Bank returned the application
advising Long that it had several concerns which made
approval of the application "highly unlikely."4
Thereafter, on or about August 29, 1989, Cedar Vale
filed another application, this time under section 3(a)(1) of
the BHC Act to become a bank holding company by
acquiring 90.5 percent of the stock of the Bank. Cedar Vale
also filed an application under section 4(c)(8) of the BHC
Act for approval to engage in non-banking activities by
acquiring all of the shares of Tri-County, which according
to Cedar Vale's representations to the Board had been
engaged in the business of selling insurance to customers
of the Bank. In the application, Long falsely represented
that he personally owned all of Tri-County's voting shares,
when in fact he had previously transferred all of its shares
to Cedar Vale in mid-1989.
The Reserve Bank advised Long that the chances for
approval of his applications were poor because the staff
had the same concerns as they did with his earlier application. Although the Reserve Bank advised him that he could
withdraw the applications without prejudice to refiling if
the Bank's condition improved, Long elected to have the
applications processed as filed. In later providing notice to
Long that the applications had been accepted, the Reserve
Bank stated in a letter that the applications would be
processed according to a 60-calendar day schedule and that
"a decision regarding your application will be forthcoming
on or before December 22, 1989, unless you are notified to
the contrary." Reserve Bank staff continued to communicate with Long and his son regarding the applications.5
On December 28, 1989, having received no decision on
his applications, Long held special meetings of the shareholders and directors of Sumner County and Cedar Vale at
which resolutions approving the merger of Sumner County
into Cedar Vale were unanimously ratified. The following
day, Long received an undated letter from Board staff,
postmarked December 26, 1989, informing him that the
Board needed additional time to evaluate the financial and
policy issues raised by the applications, and that the Board
would act within the 91-day period set forth in Regulation Y. Upon receipt of the letter, J. Long telephoned Board
staff and stated his view that the applications had been
approved by operation of law by virtue of the Board's
failure to act within the 60 day period set forth in the
Reserve Bank's letter. Board staff explained that the 60-day
period referenced in the Reserve Bank's letter was only an
internal processing period and that an application is only
granted by operation of law if the Board fails to act within
91 days of receipt of a complete application.6 Board staff
told J. Long that the proposed transactions should not be
consummated because the Board had not acted on the
applications. J. Long thereafter reported to his father that
Board staff did not agree with their view that the transactions had been approved because the 60 day period had
passed.
The day following Board's staff instructions not to consummate the transactions, Long announced at meetings of
Sumner County's and Cedar Vale's boards of directors that
he would be transferring his shares of Sumner County to
3. According to Long, he planned for Sumner County to pay Cedar
Vale's debt with income derived from the Bank, as well as deduct
Cedar Vale's NOLs from its income, thus reducing the merged entity's tax liability.
4. The Reserve Bank's letter dated June 26, 1989 explained that the
proposed transaction was inconsistent with the Board's policy regarding the formation of small one-bank holding companies because the
debt which would be incurred as a result of the transaction had not
been used to acquire the proposed subsidiary bank, the Bank. The
Reserve Bank also stated that, in light of the Bank's financial condition, the Board would likely have concerns about the Bank's ability to
service the Debt.
5. In one such conversation in November 1989, Respondent informed Board and Reserve Bank staff that the purpose of the applications was to enable Cedar Vale to utilize the NOLs and that he
anticipated tax savings of approximately $435,000 as a result of the
NOLs.
6. The 91 -day rule is a statutory requirement which provides that if
the Board fails to act within 91 days of the date when the Board has
received the complete application under sections 3 or 4(c)(8) of the
BHC Act, the application is deemed approved by operation of law.
12 U.S.C. §§ 1842(b)(1), 1843(c).
874
Federal Reserve Bulletin • September 1996
Cedar Vale.7 He did so four days later, on January 3, 1990.8
Long never notified the Board or Reserve Bank staff that he
had consummated the transaction, although he continued to
communicate with both staffs with respect to their requests
for additional information needed in the Board's consideration of the applications. During this same period, J. Long
wrote a letter to Board staff suggesting that the acquisitions
had not yet occurred.9 In response, Board staff again advised J. Long, by letter dated January 30, 1990, that "Cedar Vale should not take any action to consummate either
of the transactions represented in Cedar Vale's applications
until the Board has taken final action on Cedar Vale's
applications and Cedar Vale has received notice of the
Board's decision in these matters."10
On February 9, 1990, the Board issued an order denying
Cedar Vale's applications. The Cedar Vale Bank Holding
Company, 76 Federal Reserve Bulletin 257 (1990). The
Board found, among other things, that Cedar Vale would
not have sufficient financial resources or flexibility to service the outstanding debt without straining the resources of
the combined organization and the Bank.11 Although Long
received the Board's order, he neither reversed the transfers nor informed the Board or Reserve Bank that the
transfers had occurred. On February 15, 1990, Cedar Vale
requested reconsideration of the Board's order but did not
challenge the Board's finding that its action on the applications had been timely. Nor did Cedar Vale disclose it had
already acquired Sumner County. The Board denied the
request for reconsideration and no judicial review was
sought.
The transaction went undetected until May 1990 when
Reserve Bank examiners, during an inspection of Sumner
County, discovered that Long had transferred the Sumner
County shares to Cedar Vale on January 3, 1990. At an
inspection the following year, examiners discovered that
Long had transferred his ownership of Tri-County to Cedar
Vale before the end of 1989, when the applications were
still outstanding. Starting in June 1990, and on a number of
7. This transaction was essentially that described in the June Application which had been returned to Long by the Reserve Bank. The
application before the Board involved the acquisition by Cedar Vale
of the stock of the Bank, not of its parent, Sumner County. Thus, even
if the application had been approved by operation of law, the transaction effected by Long would have been unapproved.
8. Long testified that he wanted to transfer the shares at the
beginning of 1990 so that he could get a full year's tax benefits from
the NOLs.
9. In his letter dated January 24, 1990, J. Long stated that because,
in his view, the Board's 91-day period had expired, he would be
advising his clients to "proceed with and consummate [the] acquisition."
10. The Board's letter further stated that "[consummation of the
proposed transactions without the prior approval of the Board and
prior to the expiration of the statutory ninety-one day period would
constitute a violation of the BHC Act and would subject Cedar Vale
and its principals to possible penalties under the Act."
11. The Board considered and rejected Long's contention that the
applications had been approved by operation of law, finding that in
light of the Board's receipt of information necessary to its decision on
the applications as late as January 19, 1990, the 91-day period had not
expired. 76 Federal Reserve Bulletin at 258 n.9.
occasions thereafter, the Reserve Bank and Board staff
instructed Long that his actions violated the BHC Act and
that if his transfers were not reversed he could face substantial penalties. Long took no action to reverse the transfers. On January 1, 1995, during the course of this proceeding, Long merged Cedar Vale into Tri-County, and then
Tri-County and Sumner County into the Bank. Long took
these actions without consulting the Board. As a result, as
of January 1, 1995, Cedar Vale, Tri-County and Sumner
County ceased to exist.
Between 1990 and 1994, as a result of the violations,
Cedar Vale/Sumner County saved $567,941 in federal
taxes as a result of being able to deduct Cedar Vale's NOLs
from Sumner County's taxable income.12 The violations
also enabled Cedar Vale, rather than Long, to service the
Debt by using estimated tax payments and dividends that it
received from the Bank, thereby reducing Long's liability
as a co-maker on the Debt.13
Violations of the BHC Act and Regulation Y
The Board adopts the ALJ's finding that Cedar Vale violated section 3(a)(1) of the BHC Act, and Regulation Y
thereunder by becoming a bank holding company without
Board approval through its acquisition of all of the shares
of Sumner County, a registered bank holding company, on
January 3, 1990. Cedar Vale remained an illegal bank
holding company until January 1, 1995. The Board also
finds, as the ALJ did, that by transferring all of Sumner
County's shares to Cedar Vale on January 3, 1990, Long
participated in Cedar Vale's violations of section 3(a)(1) of
the BHC Act and Regulation Y within the meaning of
section 8(b)(1) of the BHC Act.
The ALJ also concluded that Cedar Vale violated section
4 of the BHC Act and Regulation Y by retaining control of
Tri-County, without Board approval, after January 3, 1990,
the day when Cedar Vale effectively became an illegal
bank holding company. Long has objected to that finding
based on his contention that Board approval was not required because Tri-County was a "dormant" company, not
engaged in any activities, after January 3, 1990.
The Board finds that Long's objection is without merit
because the record does not demonstrate that Tri-County
was a dormant company. Just four months prior to the time
Long claims Tri-County was dormant, Long had represented that Tri-County was actively engaged in the insur-
12. The ALJ found that between 1990 and 1994, Sumner County's
stand-alone taxable income would have been $1,684,330. Its total tax
liability on this income would have been $567,941. However, because
the violations enabled the combined Cedar Vale/Sumner County entity to offset Sumner County's taxable income with Cedar Vale's
NOLs, the combined entity paid no taxes between 1990 and 1994.
Accordingly, the tax benefit accruing to the combined entity through
1994 totalled $567,941. In his Exceptions, Long does not take issue
with these tax calculations.
13. From January 3, 1990 through December 31, 1994, Cedar Vale
made payments totalling $956,205 on the Debt, consisting of $282,205
of interest and $674,000 of principal. The outstanding principal
amount of the Debt was thereby reduced to $230,000.
Legal Developments
ance business and would continue to sell insurance.14 TriCounty also had income and some assets, as Long admitted
at the hearing. Moreover, even if there had been an interruption in its active operations in January 1990, Tri-County
could have resumed its insurance sales at the whim of
Long, who was a licensed insurance agent.
Accordingly, the Board finds that Cedar Vale, through its
retention of control of Tri-County without Board approval,
violated section 4 of the BHC Act and Regulation Y. The
Board also adopts the ALJ's finding that Long participated
in Cedar Vale's violations of section 4 of the BHC Act and
Regulation Y within the meaning of section 8(b)(1) of the
BHC Act by failing to reverse the transfer of Tri-County's
shares to Cedar Vale after Cedar Vale became a bank
holding company on January 3, 1990.
Imposition of A Civil Money Penalty
Finding that Long's violations subject him to the penalty
provisions of the BHC Act, the Board now considers the
appropriateness and amount of such penalty. Under applicable law, an individual who participates in a violation of
the BHC Act may be assessed a civil money penalty of up
to $25,000 per day for each day the violation continues.
12 U.S.C. § 1847(b)(1). The violations were outstanding
for 1824 days between January 3, 1990 and January 1,
1995. Accordingly, the maximum penalty that may be
assessed under the BHC Act is $45,600,000.
In determining the appropriate amount of a penalty, the
applicable statutes require the Board to "take into account" the financial resources and good faith of the person
charged, the gravity of the violation, the history of previous violations, and such other matters as justice may require. 12 U.S.C. §§ 1847(b)(2), 1818(i)(2)(G). The Board's
regulations require that it also consider the "economic
benefit derived by the person from the misconduct."
12 C.F.R. 263.62 (1995). In addition, the Board has
adopted an Interagency Policy Regarding Assessment
of Civil Money Penalties ("Policy Statement"),
1 F.R.R.S. § 3-1605 at 3.635-37 (1995), which provides
additional guidance on the proper assessment of penalties.15 The Policy Statement states that the agencies believe
that in determining the amount of a civil money penalty,
14. Cedar Vale's application to acquire Tri-County, dated August
29, 1989, stated: "[Tri-County] is now engaged and, upon [consummation] of the proposed acquisition, will continue to engage in, the
insurance business (SIC Code 641) from the offices of the Bank of
Commerce & Trust Co., in Wellington, Kansas. The types of insurance being and to be offered are credit life, accident and health and
crop insurance written in connection with loans to bank customers."
15. The Policy Statement includes thirteen factors (the "Policy
Statement Factors") to be used by the banking agencies in determining whether a violation is of sufficient gravity to warrant the initiation
of civil money penalty assessment proceedings. Those factor are:
evidence of wilfulness or disregard of the law or the consequences to
the institution; frequency of the violation and the length of time the
violation has been outstanding; whether the violation continued after
respondent became aware of it; failure to cooperate with the agency in
effecting an early resolution of the problem; evidence of concealment
875
a significant consideration should be the financial or economic benefit the respondent obtained from the violation . . . .
The removal of economic benefit will, however, usually be
insufficient by itself to promote compliance with the statutory
provisions. The penalty may, therefore, in appropriate circumstances reflect some additional amount beyond the economic
benefit derived to provide a deterrent to future conduct. Id.
In his Exceptions, Long argues that the ALJ erred in his
penalty assessment because he failed to apply a civil
money penalty matrix included in an "SR Letter" issued
by Board staff in 1991.16 Long contends that the matrix
must be used in determining the amount of civil money
penalties. The Board finds no merit in this argument. First,
contrary to Long's assertion, the SR Letter was not "promulgated by the Board" but was issued by Board staff to
the staff of the Federal Reserve Banks for their use in
evaluating proposed civil money penalty assessments. Consequently, it has no binding effect on the Board.17 Moreover, the SR Letter states that the matrix does not include
consideration of the amount of gain to the respondent, and
that this factor "must be considered separately before
setting the final penalty amount." SR 91-13 (FIS) at 4.
Finally, the matrix and the suggested civil money penalty
assessments it includes relate to so-called "tier 1" penalties under section 8(i)(2)(A) of the FDI Act,
12 U.S.C. § 1818(i)(2)(A). Tier 1 penalties are set at $5,000
per day, in contrast to the $25,000 per day penalties permitted for the violations of the BHC Act found in this case.
Thus, even if the Board were required to consider the
matrix, which it is not, the penalty amount recommended
by the ALJ would be permissible under that matrix.18
The Board notes that the civil money penalty recommended by the ALJ exceeds that assessed in the Notice. It
is undisputed that the Board has the authority to increase
the penalty amount from that originally assessed. Section
8(i)(2)(F) of the FDI Act, applicable to this proceeding
under section 8(b)(2) of the BHC Act, expressly permits
the Board to "compromise, modify or remit any penalty"
assessed. 12 U.S.C. § 1818(i)(2)(F). The Board's rules for
assessments of civil money penalties also explicitly authorize the Board to "modify the amount of the penalty
of the violation or its voluntary disclosure; threat of or actual loss or
harm to the institution; whether respondent received a financial or
other gain or benefit; evidence of restitution; history of prior violations; previous criticisms by regulators for similar violations; presence
or absence of a compliance program and its effectiveness; tendency to
create an unsafe or unsound banking practice or a breach of a fiduciary
duty; and the existence of agreements, commitments or orders intended to prevent the subject violations. 1 F.R.R.S. § 3-1605 at 3-637.
16. An "SR letter" is a supervisory memorandum issued by the staff
of the Board's Division of Banking Supervision and Regulation to
provide guidance to the supervisory staffs of the Federal Reserve
Banks. The matrix included in SR Letter 91-13 (FIS), to which Long
refers, identifies most of the statutory and Policy Statement factors
and provides for a numerical weight to be given to each factor.
17. See Rapp v. Office of Thrift Supervision, 52 F.3d 1510 (10th Cir.
1995) (Office of Thrift Supervision is not bound by methodology of
civil money penalty matrix).
18. Long concedes that even under his calculations the matrix yields
a penalty—exclusive of his gain—in excess of $100,000.
876
Federal Reserve Bulletin • September 1996
specified in the notice of assessment" following a hearing.
12 C.F.R. 263.63. See Lovgren v. Byrne, 787 F.2d 857, 867
(3d Cir. 1986) (where agency decision-maker took into
account the required statutory factors, no abuse of discretion in increasing penalty following hearing).
Such an increase may be particularly appropriate where
evidence is available at the time of the hearing that was not
available when the notice was issued. In this case, the facts
leading to the ALJ's recommendation of an increase in the
penalty principally involve the tax benefits derived from
the illegal transaction. Those benefits for the years 1993
and 1994 were unknown at the time the Notice was issued
in February 1994. Accordingly, the Board may appropriately increase the penalty from that originally assessed to
take into account the full record with respect to the benefits
derived from the transaction.
With respect to the statutory factors that the Board is
required to consider, the record indicates that Long, whose
net worth as of March 10, 1994 was $2,342,700, has
considerable financial resources.19 The Board views Long's
conduct, in knowingly transferring the shares of Sumner
County to Cedar Vale without Board approval, attempting
to hide the transaction, and blatantly disregarding the regulators' instructions to unwind the transfer, to be egregious.
Although there is no history of previous violations, the
violations continued over five years, despite repeated notices to reverse the violative transactions.
Under both the statutory and Policy Statement factors,
the Board is required to consider is whether respondent
acted in good faith. Long objected to the ALJ's finding of
bad faith, claiming that his actions were based on his good
faith belief that the applications had been approved by
operation of law.
After careful review of the record, the Board adopts the
ALJ's finding that Long acted in bad faith. It is uncontroverted that before Long transferred Sumner County to
Cedar Vale, he saw the Board's letter stating that more
time would be needed to consider the applications. In
addition, prior to the transfer Board staff had instructed
Cedar Vale not to complete the transactions. Furthermore,
Long testified that his motivation in transferring the shares
in January 1990 was to get the tax benefits of the transaction for the full year.
The record is also replete with other instances of Long's
bad faith. Most notable are Long's concealment of the
transaction and his disregard of Board and Reserve Bank
staff's instructions to correct the violations.20 In short, the
19. Long claims in his brief accompanying his Exceptions that there
was no analysis of the liquidity of his assets. The statute does not
require the Board to consider only liquid assets in determining the size
of a respondent's financial resources. Moreover, the record reflects
that Long holds over $3 million in stocks and bonds.
20. The Board finds Long's claim that he failed to reverse the
transactions because of the adverse consequences that would have
resulted to be meritless. The only adverse consequences evident from
the record are that Long would not have enjoyed the tax benefits that
the Board's denial order withheld from him. In addition, Long's claim
that he did not reverse the transactions because he was following
advice of counsel is not supported by the record. The discussions with
Board concludes that Long's willful and deceptive conduct, motivated by personal gain, overwhelmingly demonstrates that his actions were in bad faith.
The statute also requires the Board to consider "such
other matters as justice may require." As noted above, the
Board gives considerable weight in assessing penalties to
the financial or economic benefit derived by the respondent
from the illegal activity. The Policy Statement provides
that a civil money penalty should require the respondent to
disgorge the benefits from the violation, and in appropriate
circumstances, the penalty may include an additional
amount in order to provide a deterrent to future misconduct. 1 F.R.R.S. § 3-1605 at 3-637.
The ALJ found that Long, at a minimum, directly benefitted from the $567,941 that Cedar Vale saved in taxes as a
result of his status as its sole shareholder. Long argues that
the ALJ erred in such finding because Cedar Vale's "paper" tax savings did not result in any "actual monetary
benefit" to Long.21
The Board finds that the record supports the ALJ's
determination that Long benefitted in an amount of at least
$567,941. As the ALJ found, Long's equity investment
increased in value because of the $567,941 in tax savings
and the resulting additional funds that accrued to the combined entity. Furthermore, as the sole shareholder, chairman and president of the bank holding company, Long had
direct control of how those additional funds were spent.22
In addition to the benefits stemming from the $567,941
in tax savings, Long derived other benefits from the violation. Long benefitted from Cedar Vale's ability to service
the $904,000 Debt, thus relieving Long, as co-maker, of
this obligation.23 Only as a result of the illegal transaction
was Cedar Vale able to service the Debt through its receipt
of the Bank's dividends and estimated tax payments, which
were Cedar Vale's principal source of income between
1990 and 1994. During this time, the principal on the Debt,
counsel that Long is relying on came after Long had consummated the
transactions. Moreover, these discussions do not evidence that Long
was advised to disregard the Board's order denying the applications or
the Board's staff's instructions to reverse the transactions. Accordingly, the Board need not consider whether such a defense has merit,
as the record in this case is insufficient.
21. Long also argues that Cedar Vale had no benefit from the tax
savings because it could have achieved similar results by using the
NOLs in some other way. Long failed to present any evidence suggesting a realistic alternative available to him to utilize the NOLs. Had
such alternatives existed, it seems likely that Long would have availed
himself of them to avoid engaging in the illegal transaction found
here. Consequently, the Board rejects this argument.
22. Long could further control how Cedar Vale's funds were spent
through his control of its board of directors, which consisted of him,
his son and one other family member.
23. Long claims that Sumner County, as guarantor of the Debt, and
not Long, would have been liable on the Debt had Cedar Vale not
been able to make the Debt payments. Long's argument obliterates the
distinction between the primary liability of a principal debtor and the
secondary liability of a guarantor. Accordingly, the Board rejects this
contention.
Legal Developments
for which Long was liable, was reduced by $674,000.24
Thus, had the violations not occurred, Long would have
been responsible for making those payments, as he had
done from 1985 through 1989.
Moreover, Cedar Vale's ability to pay the Debt using
funds derived from the Bank resulted in additional tax
savings to Long. In the absence of the illegal transaction,
had Long been required to service the Debt, he would have
had to have done so, at least in part, with after-tax income
derived from Sumner County dividends.25 Thus, in addition to the dollar amount needed to service the Debt, Long
would have had to pay income tax on the dividend income
from Sumner County. Instead, the illegal transaction allowed Long to satisfy Cedar Vale's Debt with funds from
the Bank transferred tax free to Sumner County.26 In sum,
the Board finds that Long derived a benefit in an amount of
at least $567,941.
In addition to the factor of personal gain, the other
Policy Statement factors also weigh heavily in favor of
assessment of a significant penalty. The violation was, as
discussed above, intentional. It was outstanding for five
years, during which time Long was not only aware of the
violation but was repeatedly urged to correct it. Long's
actions in the application process indicate concealment of
the violation. Finally, the illegal transaction tended to create an unsafe or unsound practice. The Board's Order
denying Cedar Vale's application noted that the Bank
might not have the financial strength to service the Debt
without undue strain on its resources. The Board's concern
was borne out in the record, which indicates that examination reports for the Bank evidenced concern that the large
dividends paid by the Bank to service the Debt adversely
affected its capital.
In his Exceptions, Long argues that the Bank benefitted
from his illegal transactions and that his penalty should be
reduced as a result. The Board rejects this contention. In
brief, Long asserts that because of the tax benefits associated with the availability of Cedar Vale's NOLs and the
fact that Cedar Vale could service the Debt with before-tax
earnings, the transaction "in fact reduced financial pressures on the Bank's holding company and reduced the
amount of [Bank] funds necessary to service the Cedar
Vale debt." Exceptions at 6. This argument ignores the fact
that neither the Bank nor its parent, Sumner County, was
liable on the Debt. The Debt was incurred to permit Long
to acquire a separate bank, Cedar Vale State Bank. The
Bank obtained no benefit from Long's acquisition of Cedar
Vale, and was in no way responsible for servicing the Debt.
Any financial pressures that might have been placed on the
24. The reduction in Cedar Vale's underlying debt would have had a
corresponding effect of increasing the value of Long's equity investment in Cedar Vale.
25. The record reflects that the payments on the Debt made by Long
between 1985 and 1989 were funded at least in part by Sumner
County dividends.
26. Had Long been required to pay off the Debt and used only
dividends from Sumner County, he would have incurred $292,857 in
personal income taxes.
877
Bank to service the debt would have been inappropriate,
and the removal of such inappropriate pressures can hardly
be counted as a benefit.
The Board believes this is an appropriate case for substantial penalties to assure that the respondent does not
benefit from his wrongdoing and is deterred from such
action in the future. Long sought to combine Cedar Vale
and Sumner County through his application to the Board in
order to utilize Cedar Vale's NOLs and reduce his obligation on the Debt. The Board refused to permit the transaction, citing its concern about the effect of such a combination on the Bank. Long nonetheless proceeded with the
transaction and reaped substantial benefits as a result. It is
entirely fitting that he should be deprived of those benefits
and that some additional penalty should be imposed to
deter such action in the future.
Accordingly, the Board also affirms the additional
$150,000 penalty that the ALJ recommended in order to
deter others from engaging in similar conduct. As a general
rule, the Board accords considerable weight to the recommendations of administrative law judges with respect to
penalties.27 This is appropriate here where the ALJ had the
opportunity to assess Long's credibility and demeanor.
Moreover, the Board finds that severity of Long's conduct
supports the additional $150,000 penalty. Although Long
argues that his conduct was "neither outrageous nor incomprehensible," the Board cannot agree. The Board views
Long's conduct as demonstrating a total disregard for the
regulatory process entrusted to the Board. Furthermore, the
Board finds that $150,000 penalty is justified because Long
had benefits in addition to the $567,941 in tax savings.
For these reasons, the Board affirms the ALJ's penalty
determination and assesses a civil money penalty against
Long in the amount of $717,941.
Cease and Desist Order
The ALJ recommended that Long and Cedar Vale be
prohibited from engaging in future violations of the BHC
Act. However, the ALJ did not order that the violative
transactions be reversed because Cedar Vale, Sumner
County and Tri-County no longer exist as independent
entities. The Board adopts the ALJ's recommendation with
respect to Long. As Cedar Vale no longer exists, it cannot
be subject to a cease and desist order.
Conclusion
For the foregoing reasons, the Board orders that the attached Combined Order to Cease and Desist and of Assessment of Civil Money Penalty issue against Long.
27. See In the matter ofEvco, Inc., 76 Federal Reserve Bulletin 679
(1990); In the Matter ofCBC, Inc., 79 Federal Reserve Bulletin 247
(1993); In the Matter of Vic Sather & Associates, Inc., 79 Federal
Reserve Bulletin 160 (1993).
878
Federal Reserve Bulletin • September 1996
By Order of the Board of Governors, this 2nd day of
July, 1996.
Board of Governors of the
Federal Reserve System
WILLIAM W. WILES
Secretary of the Board
Combined Order to Cease and Desist and of
Assessment of Civil Money Penalty
WHEREAS, the Board of Governors of the Federal Reserve System (the "Board of Governors"), on February 7,
1994, issued a Notice of Charges and Hearing and of
Assessment of Civil Money Penalties (the "Notice")
against, inter alia, Cedar Vale Bank Holding Company,
Inc., Wellington, Kansas ("Cedar Vale") and W. C. Long,
Jr. ("Long"), an institution-affiliated party of Cedar Vale,
as defined by sections 3(u) and 8(b)(3) of the Federal
Deposit Insurance Act, as amended (the "FDI Act")
(12 U.S.C. §§ 1813(u) and 1818(b)(3));
WHEREAS, the Notice alleged that Cedar Vale, with the
direct participation of Long, violated sections 3(a)(1) and 4
of the Bank Holding Company Act of 1956, as amended
(the "BHC Act") (12 U.S.C. §§ 1842(a)(1) and 1843) by
failing to obtain prior approval of the Board of Governors
before acquiring control of a bank, and thereby becoming a
bank holding company, and by retaining control of a nonbank subsidiary;
WHEREAS, on January 1, 1995, Cedar Vale was merged
into the Bank of Commerce and Trust Company, Wellington, Kansas;
WHEREAS, on June 12-15, 1995, a public administrative hearing was conducted in Wichita, Kansas, before an
administrative law judge (the "ALJ") concerning the matters alleged in the Notice, and, thereafter, the ALJ certified
to the Board of Governors the record of this proceeding,
including his Recommended Decision dated November 21,
1995, proposed findings of fact and conclusions of law;
WHEREAS, upon consideration of the record in this
proceeding, the Board of Governors is of the opinion, for
the reasons set forth in the accompanying Final Decision in
this matter, that this Combined Order to Cease and Desist
and of Assessment of Civil Money Penalty (the "Order")
should be issued against Long.
NOW, THEREFORE, IT IS HEREBY ORDERED, pursuant to section 8(b)(2) and (3) of the FDI Act
(12 U.S.C. §§ 1818(b)(2) and (3)) and section 8(b) of the
BHC Act (12 U.S.C. 1847(b)), that:
1. Long shall not, directly or indirectly, engage in any
violation of the BHC Act.
2. Long is assessed and shall forfeit and pay a civil
money penalty of $717,941.
3. No portion of the civil money penalty assessed by this
Order shall be, directly or indirectly, paid, advanced,
reimbursed or otherwise funded by the Bank of Com-
merce and Trust, Wellington, Kansas, or any successors
or assigns.
4. The penalty assessed by this Order shall be remitted in
full on or before the thirtieth day following the effective
date of the Order. Payment of the penalty shall be made
to the "Board of Governors of the Federal Reserve
System," and shall be forwarded to William W. Wiles,
Secretary, Board of Governors of the Federal Reserve
System, Washington, D.C. 20551, who shall make remittance of the same to the Treasury of the United States, as
required by statute.
5. The provisions of this Order shall not bar, estop, or
otherwise prevent the Board of Governors, or any other
federal or state agency or department, from taking any
other action affecting Long.
6. This Order, and each and every provision thereof, is
and shall remain fully effective and enforceable until
expressly stayed, modified, terminated or suspended in
writing by the Board of Governors.
7. This Order shall become effective upon service.
By Order of the Board of Governors, this 2nd day of
July, 1996.
Board of Governors of the
Federal Reserve System
WILLIAM W. WILES
Secretary of the Board
In the Matter of
United Security Bancorporation
Lincoln, Nebraska
Docket Nos.
94-031-B-HC
94-031-B-I1
94-031-B-I2
Final Decision
This is an administrative enforcement proceeding instituted
by the Board of Governors of the Federal Reserve System
(the "Board") pursuant to section 8(b) of the Federal
Deposit Insurance Act (the "FDI Act") against United
Security Bancorporation, Lincoln, Nebraska, a registered
bank holding company ("United"), and Harold S. Myers
and David C. Myers, United's principal officers, directors
and controlling shareholders (collectively, "the Myers").
On March 20, 1995, the Board issued a Notice of Charges
and of Hearing alleging, inter alia, that respondents violated section 23A of the Federal Reserve Act,
12 U.S.C. § 371c, by selling low quality assets to Security
National Bank of Superior, Superior, Nebraska ("Security"
or "the Bank"), United's bank subsidiary. The Notice
Legal Developments
sought a cease and desist order against the respondents
prohibiting further violations of section 23A.
In a Recommended Decision issued on February 15,
1996, Administrative Law Judge Arthur L. Shipe (the
"ALJ") recommended that the Board grant, in part, a
motion for summary disposition filed by the enforcement
staff of the Board ("Enforcement Counsel"). The ALJ
found that the respondents violated section 23A, but recommended that the Board limit a cease and desist order to
United because the Office of the Comptroller of the Currency ("OCC") had already issued a similar order against
Security.1
Respondents filed exceptions to the Recommended Decision arguing that the Board does not have authority under
the FDI Act to issue a cease and desist order against
respondents for violations of section 23A. Enforcement
Counsel did not file exceptions to the ALJ's Recommended Decision.
Upon review of the administrative record, the Board
hereby makes its Final Decision and adopts the ALJ's
Recommended Decision, Recommended Findings of Fact,
and Recommended Conclusions of Law as they relate to
the section 23A violations, except as specifically supplemented or modified herein. The Board therefore determines that the attached Cease and Desist Order shall issue
against the respondents prohibiting further violations of
section 23A.
879
the ALJ's recommended decision with the Board, and the
Board makes final findings of fact, conclusions of law and
determination whether to issue a cease and desist order.
12 C.F.R. 263.40.
B. Standards for Summary Disposition
The Rules of Practice specifically provide that where there
is no genuine issue as to any material fact and a moving
party is entitled to a decision in its favor as a matter of law,
the ALJ shall recommend that the Board issue a final
decision granting a party's motion for summary disposition. 12 C.F.R. 263.29. The ALJ's decision may be based
on undisputed pleadings, admissions, affidavits, stipulations, documentary evidence, matters as to which official
notice may be taken, and any other evidentiary materials
properly submitted in connection with a motion for summary disposition.
Motions for summary disposition should be decided by
essentially the same standards as motions for summary
judgment under Rule 56(c) of the Federal Rules of Civil
Procedure.2 The nonmovant's evidence is to be accepted as
true and all justifiable inferences are to be drawn in its
favor. Eastman Kodak Co. v. Image Technical Services,
Inc., 504 U.S. 451 (1992). In general, summary disposition
should be granted where the evidence is so one-sided that
one can reasonably arrive at only one conclusion.3
Statement of the Case
Findings and Conclusions
A. Standards for Cease and Desist Orders
A. Findings
The FDI Act provides that the appropriate Federal banking
agency may issue a cease and desist notice against a
depository institution or institution-affiliated party within
its jurisdiction if it has reasonable cause to believe that the
institution or party has engaged in an unsafe or unsound
practice, or has violated a law, rule, regulation, or certain
conditions imposed in writing. 12 U.S.C. § 1818(b)(1).
The FDI Act further provides that the Board is the appropriate Federal banking agency with respect to bank holding
companies, 12 U.S.C. § 1813(q)(2), and that the notice and
cease and desist provisions of subsection (b)(1) shall apply
to any bank holding company in the same manner as they
apply to a State member insured depository institution.
12 U.S.C. § 1818(b)(3).
After the Board issues a Notice under the FDI Act, the
Board's Rules of Practice assign responsibility to an ALJ
to hear the matter and make a recommended decision to the
Board. 12 C.F.R. 263.5. The parties may file exceptions to
1. The ALJ also recommended that the Board grant summary
disposition for Enforcement Counsel in connection with certain unsafe and unsound practices that were alleged in the Notice. The Board
has remanded that portion of the case to the ALJ pursuant to a separate
Order. Therefore, this Decision and the Cease and Desist Order issued
pursuant to it constitute the Board's final determination and order only
in connection with the issues relating to respondents' section 23A
violations.
1. Relevant Individuals and Business Entities. United is a
registered bank holding company which is owned and
controlled by Harold S. Myers and David C. Myers. Its
primary asset is the stock of Security, its sole bank subsidiary. Security is a small rural community bank that had
assets of approximately $41.7 million as of December 31,
1994. At all times relevant to this case, United's only
operations were through Security.
At all times relevant to this case, the Myers controlled
United through their ownership of 96 percent of its stock
and their power to vote all of its shares. Harold Myers
served as United's president and director, and David Myers
served as United's vice president, secretary and director.
United had one other director and no other officers. The
Myers also served as directors of Security.4
2. United's Sale of Loans to Security. On November 11,
1990, Security sold loans to United for $200,000. On
March 18, 1991, United sold the loans back to the Bank for
$163,000. At the time of the resale to the Bank, the loans
2. Accord, In the Matter of David L. Paul, OTS Order No. 93-104,
n.27 (Dec. 15, 1993).
3. E.g., Allstate Ins. Co. v. Brown, 920 F.2d 664, 668 (10th Cir.
1990).
4. At all times relevant to this case, Harold Myers served as
Chairman of Security.
880
Federal Reserve Bulletin • September 1996
were on a nonaccrual status and were, by definition, "low
quality assets" under the terms of section 23A of the
Federal Reserve Act. 12 U.S.C. § 371c. United repurchased
these loans from the Bank on April 4, 1994.
Respondents do not challenge the ALJ's conclusion that
they violated section 23A when they resold loans to Security in 1991. The record establishes that the loans were on
nonaccrual status and section 23A by its terms defines such
an asset as a "low quality asset" that may not be transferred to a bank by a company controlling the bank.
12 U.S.C. § 371c(b)(10). Instead, respondents have excepted to the ALJ's conclusions that the Board has authority under section 8(b)(3) of the FDI Act to issue a cease
and desist order against institution-affiliated parties of bank
holding companies, and argue that because the Bank has
agreed with the OCC not to violate section 23A in the
future, the issue of a cease and desist order against the
Myers and United is "moot." The Board rejects these
arguments.
Section 8(b)(3) of the FDI Act, 12 U.S.C. § 1818(b)(3),
provides, among other things, that the provisions of section
8(b)(1), authorizing cease and desist proceedings against
depository institutions and their institution-affiliated parties, "shall apply to any bank holding company . . . in the
same manner as they apply to a State member insured
depository institution." Respondents argue that this provision only supports cease and desist actions against the bank
holding company itself, and does not authorize such actions against institution-affiliated parties like the Myers.
It is not disputed that the term "institution-affiliated
party" ("IAP") includes directors, officers, agents, and
employees
of
bank
holding
companies.
See
12 U.S.C. § 1813(u) (definition of IAP); In the Matter of
Interamericas Investments, Ltd., 82 Federal Reserve Bulletin 609 at n.l (1996).5 Accordingly, respondents' sole
contention here is that section 8(b)(3) of the FDI Act,
which applies a number of provisions of section 8 to "any
bank holding company . . . in the same manner as they
apply to a State member insured depository institution,"
does not extend the remedies of section 8 to IAPs of bank
holding companies.
The Board finds that this reading is inconsistent with the
purpose of the statute and would render some of its provisions a nullity. Congress enacted section 8(b)(3) in 1974 to
make the Board's existing cease and desist authority with
respect to State member banks equally applicable to bank
holding companies and their nonbank subsidiaries. S. Rep.
No. 902, 93rd Cong., 2d Sess. 10 (1974), reprinted in,
1974 U.S.C.C.A.N. 6128. Congress later amended section 8(b)(3) so that the suspension, removal, and prohibition provisions contained in sections 8(e), (f), and (g) were
also made applicable to bank holding companies and their
nonbank subsidiaries in the same manner that they previously applied to State member banks.6 Because the provisions of sections 8(e), (f), and (g) deal exclusively with
actions against persons affiliated with depository institutions, as opposed to the institutions themselves, the amendments making these sections applicable to bank holding
companies would have been meaningless if they were not
intended to permit actions against individuals affiliated
with bank holding companies.
The Board has on a number of occasions issued enforcement orders against persons affiliated with bank holding
companies under the authority of section 8(b)(3). See, e.g.,
Interamericas, supra, 82 Federal Reserve Bulletin at 620
(cease and desist order against bank holding company
IAP); In the Matter of Northwest Indiana Bancshares, Inc.
(orders dated September 7, 1990), affirmed sub nom., Stanley v. Board of Governors, 940 F.2d 267 (7th Cir. 1991)
(civil money penalties against bank holding company IAPs
based in part on section 8(i) of FDI Act); In the Matter of
EVCO, Inc. (orders dated January 30, 1990), affirmed sub
nom., Burke v. Board of Governors, 940 F.2d 1360 (10th
Cir. 1991) (prohibition orders against bank holding company IAPs).
Accordingly, the Board declines to adopt the reading of
section 8(b)(3) advanced by respondents, and holds that
that section authorizes the Board to take the same enforcement measures identified in the section against IAPs of
bank holding companies that it may take against IAPs of
State member banks.
Finally, respondents argue that the Board is without
authority to issue a cease and desist order based on the
section 23A violations because Security has already agreed
not to purchase assets from United pursuant to a written
agreement with the OCC. Respondents contend that the
OCC agreement effectively precludes further section 23A
violations by the Myers and their corporate interests, and
that Enforcement Counsel's request for an order directing
United to cease and desist from the same conduct is now
moot. The Board disagrees.
A review of the written agreement between Security and
the OCC reveals that it does not provide complete protec-
5. See also 12 U.S.C. § 1847(c), which explicitly applies the IAP
definition in 12 U.S.C. § 1813(u) to "an institution-affiliated party . . .
with respect to a bank holding company." Respondents argued before
the ALJ that the term "institution-affiliated party" in the FDI Act did
not apply to persons affiliated solely with bank holding companies.
That argument has been abandoned in respondents' exceptions, which
urge only that section 8(b)(3) of the FDI Act does not authorize the
Board to seek cease and desist orders "against institution affiliated
parties like the Myers." Brief in Support of Respondents' Exceptions,
at 7.
6. In 1978, Congress amended section 8(b)(3) to make the suspension and removal provisions of section 8(e) applicable to bank holding
companies and their subsidiaries. Pub. L. 95-630, § 107(b). See,
S. Rep. 95-323, 95th Cong., 1st Sess. (1977) at 19 ("The amendment
further makes it clear that the Board of Governors has similar powers
with respect to bank holding companies and their officers, directors,
employees, and agents."). In 1989, Congress again amended section
8(b)(3) so that the provisions of section 8(g) relating to the suspension
or removal of a person charged with a felony were made applicable to
these entities. Pub. L. 101-73, § 902(a)(1)(A).
B. Conclusions
Legal Developments
tion against further violations of section 23A by either
United or the Myers. The written agreement prohibits the
Bank from acquiring low-quality assets from the Myers or
United. The written agreement does not, and cannot, govern the conduct of United, which is beyond the OCC's
jurisdiction. Nor does it purport to govern the conduct of
the Myers individually. The cease and desist order entered
by the Board, by contrast, prevents United and the Myers
from engaging in violations of section 23A with Security
or any other institution.7
Therefore, the Board rejects respondents' argument that
the OCC's action divested the Board of authority to take
enforcement action. For similar reasons, the Board rejects
the ALJ's suggestion that a cease and desist order solely
against United would be appropriate.
Conclusion
For the foregoing reasons, the Board orders that the attached Cease and Desist Order prohibiting further violations of section 23A shall issue against the respondents.
By Order of the Board of Governors, this 15th day of
July, 1996.
Board of Governors of the
Federal Reserve System
WILLIAM W. WILES
Secretary of the Board
Cease and Desist Order
WHEREAS, on March 20, 1995, the Board of Governors
of the Federal Reserve System (the "Board of Governors"), issued a Notice of Charges and Hearing (the "Notice") against United Security Bancorporation ("United"),
a registered bank holding company, which owns and controls the Security National Bank of Superior, Superior,
Nebraska (the "Bank"), and Harold S. Myers ("H.S. Myers") and David C. Myers ("D.C. Myers"), United's principal officers, directors and controlling shareholders;
WHEREAS, the Notice alleged, inter alia, that United,
H.S. Myers and D.C. Myers caused a violation of section 23A of the Federal Reserve Act (the "FR Act")
(12 U.S.C. 371c) as a result of United's sale of low quality
assets to the Bank;
WHEREAS, on February 15, 1996, pursuant to section 263.29 of the Uniform Rules of Practice and Procedure, upon consideration of Board Enforcement Counsel's
motion for summary disposition, the Administrative Law
Judge determined that Board Enforcement Counsel was
entitled to summary disposition of the matters alleged in
the Notice relating to the alleged violations of section 23A
7. In addition, the Order would be enforceable in United States
district court pursuant to 12 U.S.C. § 1818(i)(l) while the OCC's
written agreement would not.
881
of the FR Act and submitted a recommended decision to
that effect to the Board;
WHEREAS, the Board of Governors has determined,
upon review of the record, that United and H.S. Myers and
D.C. Myers, institution-affiliated parties as defined by sections 3(u) and 8(b)(3) of the FDI Act (12 U.S.C. §§ 1813(u)
and 1818(b)(3)), have engaged in, and will continue, unless
restrained, to engage in certain violations of law;
IT IS HEREBY ORDERED, pursuant to section 8(b) of
the Federal Deposit Insurance Act (the "FDI Act")
(12 U.S.C. § 1818(b)) that United and its institutionaffiliated parties and H.S. Myers and D.C. Myers cease and
desist and take affirmative action as follows:
1. United shall take all actions necessary to ensure that
all transactions entered into with the Bank, or with any
bank subsidiary that it directly or indirectly controls, fully
comply with the requirements of section 23A of the FR
Act, and shall not, directly or indirectly, engage in any
violations of section 23A of the FR Act.
2. H.S. Myers and D.C. Myers shall take all actions
necessary to ensure that United does not violate section
23A of the FR Act, and shall not directly or indirectly
engage in any violations of section 23A of the FR Act.
3. All communications regarding this Order shall be sent
to:
(a) Mr. James H. Jonson
Vice President
Federal Reserve Bank of Kansas City
925 Grand Boulevard
Kansas City, Missouri 64198
(b) Mr. Harold S. Myers
President
United Security Bancorporation
635 South 14th, Suite 320
Lincoln, Nebraska 68508
(c) Mr. Harold S. Myers
United Security Bancorporation
635 South 14th, Suite 320
Lincoln, Nebraska 68508
(d) Mr. David C. Myers
United Security Bancorporation
635 South 14th, Suite 320
Lincoln, Nebraska 68508
4. The provisions of paragraph 1 this Order shall be
binding upon United and each of its institution-affiliated
parties in their capacities as such, and their successors and
assigns; the provisions of paragraph 2 of this Order shall be
binding upon H.S. Myers and D.C. Myers in their individual capacities.
5. Each provision of this Order shall remain effective
and enforceable until stayed, modified, terminated or suspended by the Board of Governors.
6. The provisions of this Order shall not bar, stop or
otherwise prevent the Board of Governors, or any federal
or state agency or department, from taking any other action
affecting H.S. Myers, D.C. Myers or United or any of
United's current or former institution-affiliated parties or
their successors or assigns.
882
Federal Reserve Bulletin • September 1996
By Order of the Board of Governors of the Federal
Reserve System, effective this 15th day of July, 1996.
teeny, a former officer of Somerset Trust Company, Somerset, Pennsylvania.
Board of Governors of the
Federal Reserve System
WILLIAM W. WILES
Scott A. Noyes
Colorado Springs, Colorado
Secretary of the Board
FINAL ENFORCEMENT ORDERS ISSUED BY THE BOARD
OF GOVERNORS
Bangkok Metropolitan Bank, PCL.
Bangkok, Thailand
The Federal Reserve Board announced on July 25, 1996,
the issuance of an Order to terminate United States Banking Activities against the Bangkok Metropolitan Bank,
PCL., Bangkok, Thailand. The Order was issued jointly
with the New York State Banking Department and the
California State Banking Department.
William B. Black, III
Houston, Texas
The Federal Reserve Board announced on July 1, 1996, the
issuance of an Order of Assessment of a Civil Money
Penalty against William B. Black, III, the Chairman of the
Board and President of The State Bank of Texas, Houston,
Texas.
Mark E. Marteeny
Somerset, Pennsylvania
The Federal Reserve Board announced on July 3, 1996, the
issuance of an Order of Prohibition against Mark E. Mar-
The Federal Reserve Board announced on July 29, 1996,
the issuance of a combined Order of Prohibition and Order
of Assessment of a Civil Money Penalty against Scott A.
Noyes, a former vice president and secretary/treasurer of
Peoples Bancshares, Inc., Colorado Springs, Colorado.
TERMINATION OF ENFORCEMENT
ACTIONS
The Federal Reserve Board announced on July 1, 1996, the
termination of the following enforcement actions:
Merchants Bancshares, Inc.
Burlington, Vermont
Written Agreement dated February 18, 1994—terminated
June 3, 1996.
First Bancorp of Oklahoma, Inc.
Tonkawa, Oklahoma
Written Agreement dated June 30, 1992—terminated
May 6, 1996.
A1
Financial and Business Statistics
A3
GUIDE
TO TABULAR
DOMESTIC
FINANCIAL
STATISTICS
Money Stock and Bank Credit
A4
A5
A6
A6
Reserves, money stock, liquid assets, and debt
measures
Reserves of depository institutions, Reserve Bank
credit
Reserves and borrowings—Depository
institutions
Selected borrowings in immediately available
funds—Large member banks
Policy Instruments
A7
A8
A9
Federal Finance
PRESENTATION
Federal Reserve Bank interest rates
Reserve requirements of depository institutions
Federal Reserve open market transactions
Federal Reserve Banks
A10 Condition and Federal Reserve note statements
A l l Maturity distribution of loan and security
holdings
Monetary and Credit Aggregates
A12 Aggregate reserves of depository institutions
and monetary base
A13 Money stock, liquid assets, and debt measures
A15 Deposit interest rates and amounts outstanding—
commercial and BIF-insured banks
A16 Bank debits and deposit turnover
A25
A26
A27
A27
Federal fiscal and financing operations
U.S. budget receipts and outlays
Federal debt subject to statutory limitation
Gross public debt of U.S. Treasury—
Types and ownership
A28 U.S. government securities
dealers—Transactions
A29 U.S. government securities dealers—
Positions and financing
A30 Federal and federally sponsored credit
agencies—Debt outstanding
Securities Markets and Corporate Finance
A31 New security issues—Tax-exempt state and local
governments and corporations
A32 Open-end investment companies—Net sales
and assets
A32 Corporate profits and their distribution
A33 Domestic finance companies—Assets and
liabilities, and consumer, real estate, and business
credit
Real Estate
A34 Mortgage markets
A35 Mortgage debt outstanding
Consumer Installment Credit
A36 Total outstanding
A3 6 Terms
Flow of Funds
Commercial Banking Institutions
A17 Assets and liabilities, Wednesday figures
Weekly Reporting Commercial Banks—
Assets and liabilities
A19 Large reporting banks
A21 Branches and agencies of foreign banks
A37
A39
A40
A41
Funds raised in U.S. credit markets
Summary of financial transactions
Summary of credit market debt outstanding
Summary of financial assets and liabilities
DOMESTIC
NONFINANCIAL
STATISTICS
Selected Measures
Financial Markets
A22 Commercial paper and bankers dollar
acceptances outstanding
A22 Prime rate charged by banks on short-term
business loans
A23 Interest rates—money and capital markets
A24 Stock market—Selected statistics
A42 Nonfinancial business activity—
Selected measures
A42 Labor force, employment, and unemployment
A43 Output, capacity, and capacity utilization
A44 Industrial production—Indexes and gross value
A46 Housing and construction
A47 Consumer and producer prices
2
Federal Reserve Bulletin • September 1996
DOMESTIC
NONFINANCIAL
STATISTICS-
CONTINUED
Selected
Measures—Continued
A48 Gross domestic product and income
A49 Personal income and saving
INTERNATIONAL
Summary
STATISTICS
Statistics
A50
A51
A51
A51
U.S. international transactions—Summary
U.S. foreign trade
U.S. reserve assets
Foreign official assets held at Federal Reserve
Banks
A52 Selected U.S. liabilities to foreign official
institutions
Reported by Nonbanking Business
Enterprises in the United States
A58 Liabilities to unaffiliated foreigners
A59 Claims on unaffiliated foreigners
Securities Holdings and Transactions
A60 Foreign transactions in securities
A61 Marketable U.S. Treasury bonds and
notes—Foreign transactions
Interest and Exchange Rates
A61 Discount rates of foreign central banks
A61 Foreign short-term interest rates
A62 Foreign exchange rates
A 6 3 GUIDE
TO STATISTICAL
SPECIAL
TABLES
SPECIAL
TABLES
RELEASES
AND
Reported by Banks in the United States
Liabilities to and claims on foreigners
Liabilities to foreigners
Banks' own claims on foreigners
Banks' own and domestic customers' claims on
foreigners
A56 Banks' own claims on unaffiliated foreigners
A57 Claims on foreign countries—
Combined domestic offices and foreign branches
A52
A53
A55
A56
A64 Assets and liabilities of U.S. branches and agencies
of foreign banks, March 31, 1996
A68 Residential lending reported under the Home
Mortgage Disclosure Act, 1995
A 7 6 INDEX
TO STATISTICAL
TABLES
A3
Guide to Tabular Presentation
SYMBOLS
c
e
n.a.
n.e.c.
p
r
*
0
. . .
ATS
BIF
CD
CMO
FFB
FHA
FHLBB
FHLMC
FmHA
FNMA
FSLIC
G-7
GENERAL
AND
ABBREVIATIONS
Corrected
Estimated
Not available
Not elsewhere classified
Preliminary
Revised (Notation appears on column heading
when about half of the figures in that column
are changed.)
Amounts insignificant in terms of the last decimal
place shown in the table (for example, less than
500,000 when the smallest unit given is millions)
Calculated to be zero
Cell not applicable
Automatic transfer service
Bank insurance fund
Certificate of deposit
Collateralized mortgage obligation
Federal Financing Bank
Federal Housing Administration
Federal Home Loan Bank Board
Federal Home Loan Mortgage Corporation
Farmers Home Administration
Federal National Mortgage Association
Federal Savings and Loan Insurance Corporation
Group of Seven
G-10
GNMA
GDP
HUD
IMF
IO
IPCs
IRA
MMDA
MSA
NOW
OCD
OPEC
OTS
PO
REIT
REMIC
RP
RTC
SAIF
SCO
SDR
SIC
VA
Group of Ten
Government National Mortgage Association
Gross domestic product
Department of Housing and Urban
Development
International Monetary Fund
Interest only
Individuals, partnerships, and corporations
Individual retirement account
Money market deposit account
Metropolitan statistical area
Negotiable order of withdrawal
Other checkable deposit
Organization of Petroleum Exporting Countries
Office of Thrift Supervision
Principal only
Real estate investment trust
Real estate mortgage investment conduit
Repurchase agreement
Resolution Trust Corporation
Savings Association Insurance Fund
Securitized credit obligation
Special drawing right
Standard Industrial Classification
Department of Veterans Affairs
INFORMATION
In many of the tables, components do not sum to totals because of
rounding.
Minus signs are used to indicate (1) a decrease, (2) a negative
figure, or (3) an outflow.
"U.S. government securities" may include guaranteed issues
of U.S. government agencies (the flow of funds figures also
include not fully guaranteed issues) as well as direct obligations of the Treasury. "State and local government" also includes municipalities, special districts, and other political
subdivisions.
A4
1.10
DomesticNonfinancialStatistics • September 1996
RESERVES, MONEY STOCK, LIQUID ASSETS, A N D DEBT MEASURES
Percent annual rate of change, seasonally adjusted1
1995
1996
1996
Monetary or credit aggregate
1
2
3
4
Reserves of depository
Total
Required
Nonborrowed
Monetary base 3
5
6
7
8
9
Concepts of money, liquid assets, and debt4
Ml
M2
M3
L
Debt
Nontransaction
10 In M2 5
11 In M3 only 6
Q3
Q4
Q1
Q2
Feb.
-1.5
-2.5
-2.4
1.7
-6.9
-7.7
-6.4
2.7
-7.9
-8.5
-6.5
1.5
-6.4
-5.7
-7.6
2.1
-16.4
-2.7
-16.3
-4.2r
-1.5
6.9
8.0
9.1
4.9 r
-5.1
4.1
4.5
5.9
4.7 r
-2.7
5.9
7.2
5.1
4.7'
-.5
4.1
5.5
n.a.
n.a.
10.9
12.1
8.3
6.3
9.7
12.6r
Mar.
Apr.
May
June
19.2
13.2
19.6
8.9'
-11.7
-11.6
-13.2
-,6r
-20.8'
-15.4
-21.6r
1.0
-2.5
-9.2
-8.2
5.7
-2.0
5.4
io.r
4.4
6.6r
10.0
11.7
11.r
12.6r
6.0 r
-3.1
2.0
1.9r
4.6 r
4.6 r
-6.5r
-1.6
3.r
-.9
3.7
-.4
5.6
4.7
n.a.
n.a.
6.2
10.6
8.6
28.6 r
12.4
9.0 r
4.2
1.5r
.6
21.4 r
8.2
1.4
institutions'
components
Time and savings deposits
Commercial banks
Savings, including MMDAs
Small time 7
Large time 8 ' 9
Thrift institutions
15
Savings, including MMDAs
16
Small time 7
17
Large time 8
9.0
11.0
13.0
13.1
4.8
19.4
22.6
2.5
8.9r
12.7
-2.7
17.4
16.5
-1.2
20. l r
25.2
-4.5
27.4
8.8
-3.5
7.8r
4.2 r
-2.3
19.9r
12.3
1.0
16.6
-7.3
4.1
13.7
-2.8
5.0
8.0
-.3
-2.5r
6.2
8.1
-3.4
-2.8
6.0
,0r
1.6
5.7
-8.4r
-9.5
14.3
-1.7
1.6
4.9
-2.7
-9.5
2.9
-3.1
6.4
Monev market mutual funds
18 Retail
19 Institution-only
36.9
27.6
16.5
10.3
14.7
27.9
11.5
8.7
15.6
69.2
32.6
21.6
2.7
-13.0
-3.2
-10.3
21.2
29.1
Repurchase agreements and Eurodollars
20 Repurchase agreements 10
21 Eurodollars 10
-5.0
9.4
-14.6
-6.7
1.3
17.0r
5.4
11.9
11.7
12.6r
-13.5
—29.8r
-7.8
35.7 r
80.0r
18.6r
-67.0
11.0
2.7
5.4r
n.a.
n.a.
7.6
6.3 r
11.2
4.1 r
3.6r
4.9 r
1.8
4.4
n.a.
n.a.
12
13
14
Debt components4
22 Federal
23 Nonfederal
4.6
5.0 r
1. Unless otherwise noted, rates of change are calculated from average amounts outstanding during preceding month or quarter.
2. Figures incorporate adjustments for discontinuities, or "breaks," associated with
regulatory changes in reserve requirements. (See also table 1.20.)
3. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally
adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency
component of the money stock, plus (3) (for all quarterly reporters on the "Report of
Transaction Accounts, Other Deposits and Vault Cash" and for all weekly reporters whose
vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference
between current vault cash and the amount applied to satisfy current reserve requirements.
4. Composition of the money stock measures and debt is as follows:
M l : (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of
depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all
commercial banks other than those owed to depository institutions, the U.S. government, and
foreign banks and official institutions, less cash items in the process of collection and Federal
Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of
withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions,
credit union share draft accounts, and demand deposits at thrift institutions. Seasonally
adjusted Ml is computed by summing currency, travelers checks, demand deposits, and
OCDs, each seasonally adjusted separately.
M2: Ml plus (1) savings (including MMDAs), (2) small-denomination time deposits (time
deposits—including retail RPs—in amounts of less than $100,000), and (3) balances in retail
money market mutual funds (money funds with minimum initial investments of less than
$50,000). Excludes individual retirement accounts (IRAs) and Keogh balances at depository
institutions and money market funds. Seasonally adjusted M2 is calculated by summing
savings deposits, small-denomination time deposits, and retail money fund balances, each
seasonally adjusted separately, and adding this result to seasonally adjusted M l .
M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more), (2)
balances in institutional money funds (money funds with minimum initial investments of
$50,000 or more), (3) RP liabilities (overnight and term) issued by all depository institutions,
and (4) Eurodollars (overnight and term) held by U.S. residents at foreign branches of U.S.
banks worldwide and at all banking offices in the United Kingdom and Canada. Excludes
2.3
5.5r
amounts held by depository institutions, the U.S. government, money market funds, and
foreign banks and official institutions. Seasonally adjusted M3 is calculated by summing large
time deposits, institutional money fund balances, RP liabilities, and Eurodollars, each
seasonally adjusted separately, and adding this result to seasonally adjusted M2.
L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury
securities, commercial paper, and bankers acceptances, net of money market fund holdings of
these assets. Seasonally adjusted L is computed by summing U.S. savings bonds, short-term
Treasury securities, commercial paper, and bankers acceptances, each seasonally adjusted
separately, and then adding this result to M3.
Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial
sectors—the federal sector (U.S. government, not including government-sponsored enterprises or federally related mortgage pools) and the nonfederal sectors (state and local
governments, households and nonprofit organizations, nonfinancial corporate and nonfarm
noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and
corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data,
which are derived from the Federal Reserve Board's flow of funds accounts, are breakadjusted (that is, discontinuities in the data have been smoothed into the series) and
month-averaged (that is, the data have been derived by averaging adjacent month-end levels).
5. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail
money fund balances, each seasonally adjusted separately.
6. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities
(overnight and term) issued by depository institutions, and (4) Eurodollars (overnight and
term) of U.S. addressees, each seasonally adjusted separately.
7. Small time deposits—including retail RPs—are those issued in amounts of less than
$100,000. All IRA and Keogh account balances at commercial banks and thrift institutions
are subtracted from small time deposits.
8. Large time deposits are those issued in amounts of $100,000 or more, excluding those
booked at international banking facilities.
9. Large time deposits at commercial banks less those held by money market funds,
depository institutions, the U.S. government, and foreign banks and official institutions.
10. Includes both overnight and term.
Money Stock and Bank Credit
1.11
A5
RESERVES OF DEPOSITORY INSTITUTIONS A N D RESERVE BANK CREDIT 1
Millions of dollars
Average of
daily figures
Apr.
May
418,391
416,807
Average of daily figures for week ending on date indicated
May 15
May 22
May 29
June 5
June 12
June 19
June 26
415,263
416,944
416,366 r
420,290
417,340
422,869
420,635
382,495
3,086
SUPPLYING RESERVE FUNDS
1 Reserve Bank credit outstanding
U.S. government securities 2
Bought outright—System account
2
Held under repurchase agreements
3
Federal agency obligations
Bought outright
4
Held under repurchase agreements
5
Acceptances
6
Loans to depository institutions
Adjustment credit
7
Seasonal credit
8
9
Extended credit
Float
10
Other Federal Reserve assets
11
12 Gold stock
13 Special drawing rights certificate account
14 Treasury currency outstanding
420,910
378,891
4,566
380,178
1,983
382,000
4,456
379,272
727
380,634
2,315
380,439
2,176
380,367
5,772
380,762
2,402
382,857
5,418
2,492
180
0
2,442
503
0
2,401
524
0
2,444
2
0
2,444
876
0
2,439
686
0
2,428
1,118
0
2,414
511
0
2,388
256
0
2,388
747
0
57
33
0
315
31,857
24
106
0
517
31,054
185
190
0
384
30,769
27
92
0
867
31,832
26
113
0
393
30,143
25
133
0
156r
30,313
12
142
0
73
30,378
7
152
0
642
30,451
586
193
0
312
30,861
22
227
0
730
30,941
11,052
10,168
24,330 r
11,051
10,168
24,408 r
11,051
10,168
24,469
11,051
10,168
24,400 r
11,051
10,168
24,414 r
11,051
10,168
24,428 r
11,051
10,168
24,442
11,051
10,168
24,456
11,051
10,168
24,470
11,050
10,168
24,484
418,294 r
312
420,043 r
276
423,432
281
419,451 r
265
419,729 r
265
422,170 r
264
423,021
269
423,295
288
423,204
285
423,290
279
7,318
187
5,938
370
12,813
18,709
5,714
196
6,188
362
12,885
16,771
6,162
177
6,161
330
13,224
16,830
5,673
185
6,037
381
12,930
15,961
5,127
224
6,006
365
12,929
17,932
5,175
196
6,714
348
12,971
14,176r
4,276
171
6,237
311
13,153
18,515
5,697
179
6,123
330
13,088
14,016
6,022
173
6,117
336
13,304
19,117
7,184
171
6,184
332
13,252
15,646
ABSORBING RESERVE FUNDS
15 Currency in circulation
16 Treasury cash holdings
Deposits, other than reserve balances, with
Federal Reserve Banks
Treasury
17
Foreign
18
Service-related balances and adjustments
19
Other
20
21 Other Federal Reserve liabilities and capital
22 Reserve balances with Federal Reserve Banks' . . .
Wednesday figures
End-of-month figures
Mar.
Apr.
May
May 15
May 22
May 29
June 5
June 12
June 19
June 26
416,892
420,959 r
425,289
418,328
423,609
419,893 r
422,764
418,454
433,333
421,389
381,806
0
381,346
5,704
383,914
7,086
380,134
5,089
380,661
7,903
381,789
3,365
379,748
7,412
382,860
2,160
382,761
12,711
382,522
4,226
2,444
0
0
2,428
1,350
0
2,388
0
0
2,444
15
0
2,444
1,867
0
2,428
850
0
2,428
1,428
0
2,388
95
0
2,388
195
0
2,388
0
0
21
71
0
821
31,728
8
148
0
—342r
30,318
388
248
0
-178
31,443
23
103
0
573
29,948
18
124
0
62
30,529
22
139
0
649 r
30,652
6
137
0
1,215
30,391
2
170
0
189
30,590
3,644
207
0
92
31,334
17
241
0
919
31,076
11,052
10,168
24,372 r
11,051
10,168
24,442 r
11,050
10,168
24,498
11,051
10,168
24,400r
11,051
10,168
24,414 r
11,051
10,168
24,428 r
11,051
10,168
24,442
11,051
10,168
24,456
11,051
10,168
24,470
11,050
10,168
24,484
417,746 r
288
422,397 r
265
424,767
280
420,447 r
265
421,086 r
264
423,794 r
265
423,832
288
424,231
287
423,817
279
424,817
280
11,042
166
6,055
360
12,559
14,268
3,757
160
6,237
300
13,148
20,357 r
7,701
183
6,172
326
13,374
18,203
4,079
229
6,037
376
12,712
19,803
4,906
175
6,006
353
12,805
23,648
5,381
180
6,714
357
12,781
16,067r
5,588
164
6,237
329
12,896
19,090
5,562
166
6,123
336
13,093
14,332
6,142
167
6,117
326
13,141
29,033
7,290
163
6,184
326
13,024
15,009
SUPPLYING RESERVE FUNDS
1 Reserve Bank credit outstanding
U.S. government securities 2
Bought outright—System account
2
Held under repurchase agreements
3
Federal agency obligations
Bought outright
4
Held under repurchase agreements
5
Acceptances
6
Loans to depository institutions
Adjustment credit
7
8
Seasonal credit
9
Extended credit
Float
10
Other Federal Reserve assets
11
12 Gold stock
13 Special drawing rights certificate account
14 Treasury currency outstanding
ABSORBING RESERVE FUNDS
15 Currency in circulation
16 Treasury cash holdings
Deposits, other than reserve balances, with
Federal Reserve Banks
Treasury
17
18
Foreign
19
Service-related balances and adjustments
Other
20
21 Other Federal Reserve liabilities and capital
22 Reserve balances with Federal Reserve Banks 3
..
1. Amounts of cash held as reserves are shown in table 1.12, line 2.
2. Includes securities loaned—fully guaranteed by U.S. government securities pledged
with Federal Reserve Banks—and excludes securities sold and scheduled to be bought back
under matched sale-purchase transactions.
3. Excludes required clearing balances and adjustments to compensate for float.
A6
DomesticNonfinancialStatistics • September 1996
1.12
RESERVES A N D BORROWINGS
Depository Institutions'
Millions of dollars
Prorated monthly averages of biweekly averages
Reserve classification
1
2
3
4
5
6
7
8
9
10
Reserve balances with Reserve Banks"
Total vault cash 3
Applied vault cash 4
Surplus vault cash 5
Total reserves 6
Required reserves
Excess reserve balances at Reserve Banks 7
Total borrowings at Reserve Banks 8
Seasonal borrowings
Extended credit 9
1993
1994
1995
1995
Dec.
Dec.
Dec.
Dec.
Jan.
Feb.
Mar.
Apr.
May
June
29,374
36,818
33,484
3,334
62,858
61,795
1,063
82
31
0
24,658
40,378
36,682
3,696
61,340
60,172
1,168
209
100
0
20,440
42,088 r
37,460
4,628 r
57,900
56,622
1,278
257
40
0
20,440
42,088 r
37,460
4.628 r
57,900
56.622
1,278
257
40
0
17,763
44,676 r
39,170
5,506 r
56,934
55,449
1,485
38
7
0
16,792
42,115 r
36,957
5,158 r
53,749
52,898
851
35
7
0
18,426
40,892 r
36,458
4,435 r
54,884
53,747
1,137
21
10
0
19,181
40,889 r
36,688
4,20 r
55,869
54,750
1,120
91
34
0
16,753
41,146
36,382
4,764
53,135
52,275
860
127
105
0
16,593
41,979
37,095
4,883
53,688
52,534
1,155
386
192
0
1996
Biweekly averages of daily figures for two week periods ending on dates indicated
1996
1
2
3
4
5
6
7
8
9
10
Reserve balances with Reserve Banks 2
Total vault cash"1
Applied vault cash 4
Surplus vault cash 5
Total reserves 6
Required reserves
Excess reserve balances at Reserve Banks 7
Total borrowings at Reserve Banks 8
Seasonal borrowings
Extended credit 9
Feb. 28
Mar. 13
Mar. 27
Apr. 10
Apr. 24
May 8
May 22
June 5 r
June 19
July 3
17,938
40.242 r
35,468
4,774 r
53,406
52,436
970
47
8
0
18,192
41,461 r
36,845
4,616 r
55,037
53,926
1,111
15
8
0
18,492
40,362 r
36,011
4,352 r
54,502
53.346
1,156
20
12
0
18,954
40,903 r
36,767
4,136 r
55,721
54,567
1,154
47
16
0
20,331
40,398 r
36,417
3,98 l r
56,748
55,629
1,119
122
30
0
16,876
42,013 r
37,190
4,823 r
54,065
53,002
1,063
92
71
0
16,946
40,823 r
36,091
4,732 r
53,037
52,201
836
129
103
0
16,341
40,879
36,117
4,762
52,458
51,743
715
156
138
0
16,565
42,824
37,747
5,078
54,311
53,234
1,078
469
173
0
16,743
41,403
36,712
4,692
53,455
52,003
1,451
386
241
0
1. Data in this table also appear in the Board's H.3 (502) weekly statistical release. For
ordering address, see inside front cover. Data are not break-adjusted or seasonally adjusted.
2. Excludes required clearing balances and adjustments to compensate for float and
includes other off-balance-sheet "as-of' adjustments.
3. Total "lagged" vault cash held by depository institutions subject to reserve
requirements. Dates refer to the maintenance periods during which the vault cash may be used
to satisfy reserve requirements. The maintenance period for weekly reporters ends sixteen
days after the lagged computation period during which the vault cash is held. Before Nov. 25,
1992, the maintenance period ended thirty days after the lagged computation period.
4. All vault cash held during the lagged computation period by "bound" institutions (that
is, those whose required reserves exceed their vault cash) plus the amount of vault cash
applied during the maintenance period by "nonbound" institutions (that is, those whose vault
cash exceeds their required reserves) to satisfy current reserve requirements.
1.13
5. Total vault cash (line 2) less applied vault cash (line 3).
6. Reserve balances with Federal Reserve Banks (line 1) plus applied vault cash
(line 3).
7. Total reserves (line 5) less required reserves (line 6).
8. Also includes adjustment credit.
9. Consists of borrowing at the discount window under the terms and conditions established for the extended credit program to help depository institutions deal with sustained
liquidity pressures. Because there is not the same need to repay such borrowing promptly as
with traditional short-term adjustment credit, the money market effect of extended credit is
similar to that of nonborrowed reserves.
SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS
Large Banks'
Millions of dollars, averages of daily figures
1996, week ending Monday
Source and maturity
1
2
3
4
5
6
7
8
Federal funds purchased, repurchase agreements, and other
selected borrowings
From commercial banks in the United States
For one day or under continuing contract
For all other maturities
From other depository institutions, foreign banks and official
institutions, and U.S. government agencies
For one day or under continuing contract
For all other maturities
Repurchase agreements on U.S. government and federal
agency securities
Brokers and nonbank dealers in securities
For one day or under continuing contract
For all other maturities
All other customers
For one day or under continuing contract
For all other maturities
Apr. 2 9
May 6
May 13
May 2 0
May 2 7
June 3
June 10
June 17
June 24
81,920
17,657
90,634
17.658
90,281
18,091
87,271
17,719
83.461
18.158
85,577
18,873
82,179
17,876
80,092
18,253
73,503
18,306
19,054
19,418
19.876
21.270
26,513
21,738
22,613
21,868
21,793
23,296
21,158
22,206
19,602
21,054
17,394
21,183
24,776
21,932
16.707
40,479
19,490
41.910
20.268
44.427
24,202
38,923
21,354
40,445
22,706
39,758
20,440
39,534
19,331
38,917
19,183
38,173
35,314
13,962
36,149
13,732
37,594
14.125
38,331
14,259
39,166
14,130
39,439
13,652
38,153
13,611
37,560
14,195
35,588
14,362
68,117
26,548
74,721
29,922
68.708
26,396
65,644
26,432
65,153
25,647
68,874
27,136
68,559
25,847
70,490
27,762
66,112
24,775
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 customers"
1. Banks with assets of $4 billion or more as of Dec. 31, 1988.
Data in this table also appear in the Board's H.5 (507) weekly statistical release. For
ordering address, see inside front cover.
2. Brokers and nonbank dealers in securities, other depository institutions, foreign banks
and official institutions, and U.S. government agencies,
Policy Instruments
1.14
A7
FEDERAL RESERVE BANK INTEREST RATES
Percent per year
Current and previous levels
Extended credit 3
Seasonal credit'
Adjustment credit
Federal Reserve
Bank
On
8/2/96
On
8/2/96
On
8/2/96
Boston
New York. . . .
Philadelphia. .
Cleveland
Richmond. . . .
Atlanta
2/1/96
1/31/96
1/31/96
1/31/96
2/1/96
1/31/96
Chicago
St. Louis
Minneapolis . .
Kansas City . .
Dallas
San Francisco.
2/1/96
2/5/96
1/31/96
2/1/96
1/31/96
1/31/96
Effective date
8/1/96
8/1/96
8/1/96
8/1/96
Previous rate
Range of rates for adjustment credit in recent years
Range (or
level)—All
F.R. Banks
F.R. Bank
of
N.Y.
9
20
11
12
3
10
21
22
16
20
1
3
6-6.5
6.5
6.5-7
7
7-7.25
7.25
7.75
8
8-8.5
8.5
8.5-9.5
9.5
6.5
6.5
7
7
7.25
7.25
7.75
1979—July 20
Aug. 17
20
Sept. 19
21
Oct. 8
10
10-10.5
10.5
10.5-11
Effective date
1981—Nov.
In effect Dec. 31, 1977
1978—Jan.
May
July
Aug.
Sept.
Oct.
Nov.
12
12
12
15
19
May 29
30
June 13
12-13
13
12-13
13
13
13
12
11
July 28
29
Sept. 26
Nov. 17
Dec. 5
8
1981—May 5
10-11
16
10
11
12
12-13
13
13-14
14
11
10
10
11
12
13
13
14
14
13
13
12
11.5
11.5
11
11
10.5
10
10
9.5
9.5
9
9
9
8.5
8.5
9
13
Nov. 21
26
Dec. 24
8.5-9
9
8.5-9
8.5
8
9
9
8.5
8.5
8
1985—May 20
24
7.5-8
7.5
7.5
7.5
1986—Mar.
7-7.5
7
6.5-7
6.5
6
5.5-6
5.5
7
7
6.5
6.5
6
5.5
5.5
5.5-6
6
6
6
7
10
Apr. 21
23.
July 11
Aug. 21
22
Range (or
level)—All
F.R. Banks
F.R. Bar
of
N.Y.
9
11
6-6.5
6.5
6.5
6.5
1989—Feb. 24
27
6.5-7
7
7
7
Effective date
1988—Aug.
1990—Dec. 19
6.5
6.5
1
4
30
2
13
17
6
7
20
24
6-6.5
6
5.5-6
5.5
5-5.5
5
4.5-5
4.5
3.5^.5
3.5
6
6
5.5
5.5
5
5
4.5
4.5
3.5
3.5
2
7
3-3.5
3
1994—May 17
18
Aug. 16
18
Nov. 15
17
3-3.5
3.5
3.5-4
4
4-4.75
4.75
3.5
3.5
4
4
4.75
4.75
1
9
4.75-5.25
5.25
5.25
5.25
1996—Jan. 31
Feb. 5
5.00-5.25
5.00
5.00
5.00
5.00
5.00
1991—Feb.
Apr.
May
Sept.
Nov.
Dec.
1992—July
1995—Feb.
In effect Aug. 2, 1996
1987—Sept.
4
11
1. Available on a short-term basis to help depository institutions meet temporary needs for
funds that cannot be met through reasonable alternative sources. The highest rate established
for loans to depository institutions may be charged on adjustment credit loans of unusual size
that result from a major operating problem at the borrower's facility.
2. Available to help relatively small depository institutions meet regular seasonal needs for
funds that arise from a clear pattern of intrayearly movements in their deposits and loans and
that cannot be met through special industry lenders. The discount rate on seasonal credit takes
into account rates charged by market sources of funds and ordinarily is reestablished on the
first business day of each two-week reserve maintenance period; however, it is never less than
the discount rate applicable to adjustment credit.
3. May be made available to depository institutions when similar assistance is not
reasonably available from other sources, including special industry lenders. Such credit may
be provided when exceptional circumstances (including sustained deposit drains, impaired
access to money market funds, or sudden deterioration in loan repayment performance) or
practices involve only a particular institution, or to meet the needs of institutions experiencing
difficulties adjusting to changing market conditions over a longer period (particularly at times
of deposit disintermediation). The discount rate applicable to adjustment credit ordinarily is
charged on extended-credit loans outstanding less than thirty days; however, at the discretion
13-14
13
12
F.R. Bank
of
N.Y.
11.5-12
11.5
11-11.5
11
10.5
10-10.5
10
9.5-10
9.5
9-9.5
9
8.5-9
8.5-9
8.5
1984—Apr.
10
11
12
11-12
11
2
6
4
10.5
10.5
9.5
9.5
11-12
1980—Feb.
Dec.
1982—July 20
23
Aug. 2
3
16
27
30
Oct. 12
13
Nov. 22
26
Dec. 14
15
17
11
11
10
Range (or
level)—All
F.R. Banks
3
3
of the Federal Reserve Bank, this time period may be shortened. Beyond this initial period, a
flexible rate somewhat above rates charged on market sources of funds is charged. The rate
ordinarily is reestablished on the first business day of each two-week reserve maintenance
period, but it is never less than the discount rate applicable to adjustment credit plus 50 basis
points.
4. For earlier data, see the following publications of the Board of Governors: Banking and
Monetary Statistics, 1914-1941, and 1941-1970; and the AnnuaI Statistical Digest, 19701979.
In 1980 and 1981, the Federal Reserve applied a surcharge to short-term adjustment-credit
borrowings by institutions with deposits of $500 million or more that had borrowed in
successive weeks or in more than four weeks in a calendar quarter. A 3 percent surcharge was
in effect from Mar. 17, 1980, through May 7, 1980. A surcharge of 2 percent was reimposed
on Nov. 17, 1980; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and to
4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981,
and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981, the formula for applying the
surcharge was changed from a calendar quarter to a moving thirteen-week period. The
surcharge was eliminated on Nov. 17, 1981.
A8
DomesticNonfinancialStatistics • September 1996
1.15
RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS 1
Requirement
Type of deposit
1
Net transaction accounts2
$0 million-$52.0 million 3
1. Required reserves must be held in the form of deposits with Federal Reserve Banks
or vault cash. Nonmember institutions may maintain reserve balances with a Federal
Reserve Bank indirectly, on a pass-through basis, with certain approved institutions. For
previous reserve requirements, see earlier editions of the Annual Report or the Federal
Reserve Bulletin. Under the Monetary Control Act of 1980, depository institutions
include commercial banks, mutual savings banks, savings and loan associations, credit
unions, agencies and branches of foreign banks, and Edge Act corporations.
2. Transaction accounts include all deposits against which the account holder is permitted
to make withdrawals by negotiable or transferable instruments, payment orders of withdrawal, or telephone or preauthorized transfers for the purpose of making payments to third
persons or others. However, money market deposit accounts (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 may be by check, draft, debit card, or similar order)
are savings deposits, not transaction accounts.
3. The Monetary Control Act of 1980 requires that the amount of transaction accounts
against which the 3 percent reserve requirement applies be modified annually by 80 percent of
the percentage change in transaction accounts held by all depository institutions, determined
as of June 30 of each year. Effective Dec. 19, 1995, the amount was decreased from $54.0
million to $52.0 million.
Under the Garn-St Germain Depository Institutions Act of 1982, the Board adjusts the
amount of reservable liabilities subject to a zero percent reserve requirement each year for the
Percentage of
deposits
Effective date
3
10
12/19/95
12/19/95
0
12/27/90
0
12/27/90
succeeding calendar year by 80 percent of the percentage increase in the total reservable
liabilities of all depository institutions, measured on an annual basis as of June 30. No
corresponding adjustment is made in the event of a decrease. The exemption applies only to
accounts that would be subject to a 3 percent reserve requirement. Effective Dec. 19, 1995,
the exemption was raised from $4.2 million to $4.3 million.
4. The reserve requirement was reduced from 12 percent to 10 percent on
Apr. 2, 1992, for institutions that report weekly, and on Apr. 16, 1992, for institutions that
report quarterly.
5. For institutions that report weekly, the reserve requirement on nonpersonal time deposits
with an original maturity of less than 1 xfi years was reduced from 3 percent to 1 l /i percent for
the maintenance period that began Dec. 13, 1990, and to zero for the maintenance period that
began Dec. 27, 1990. For institutions that report quarterly, the reserve requirement on
nonpersonal time deposits with an original maturity of less than 1 years was reduced from 3
percent to zero on Jan. 17, 1991.
The reserve requirement on nonpersonal time deposits with an original maturity of 1 'A
years or more has been zero since Oct. 6, 1983.
6. The reserve requirement on Eurocurrency liabilities was reduced from 3 percent to zero
in the same manner and on the same dates as the reserve requirement on nonpersonal time
deposits with an original maturity of less than 1 l /i years (see note 5).
Policy Instruments
1.17
A9
FEDERAL RESERVE OPEN MARKET TRANSACTIONS 1
Millions of dollars
1995
Type of transaction
and maturity
1993
1994
1996
1995
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
May
U.S. TREASURY SECURITIES
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Outright transactions (excluding
transactions)
Treasury bills
Gross purchases
Gross sales
Exchanges
Redemptions
Others within one year
Gross purchases
Gross sales
Maturity shifts
Exchanges
Redemptions
One to five years
Gross purchases
Gross sales
Maturity shifts
Exchanges
Five to ten years
Gross purchases
Gross sales
Maturity shifts
Exchanges
More than ten years
Gross purchases
Gross sales
Maturity shifts
Exchanges
All maturities
Gross purchases
Gross sales
Redemptions
matched
Matched transactions
25 Gross purchases
26 Gross sales
Repurchase agreements
27 Gross purchases
28 Gross sales
29 Net change in U.S. Treasury securities
17,717
0
332,229
0
17,484
0
376,277
0
10,932
0
398,487
900
4,271
0
39,057
0
0
0
31,535
0
0
0
31,476
0
0
0
39,332
0
0
0
30,556
0
88
0
32,218
0
0
0
40,467
0
1,223
0
31,368
-36,582
0
1,238
0
0
-21,444
0
390
0
0
0
0
0
0
6,108
-4,937
0
390
0
0
0
0
0
0
2,048
-3,287
1,228
0
0
2,746
-7,575
0
0
0
0
0
0
35
0
3,511
-4,824
787
0
0
5,107
-5,448
0
10,350
0
-27,140
0
9,168
0
-6,004
17,801
4,966
0
0
0
0
0
-5,292
3,237
2,317
0
0
0
0
0
-2,048
3,287
0
0
-1,908
5,175
0
0
0
0
1,899
0
-3,511
4,824
0
0
-4,049
3,748
4,168
0
0
0
3,818
0
-3,145
2,903
1,239
0
0
0
400
0
-816
1,700
0
0
0
0
0
0
0
0
0
0
-818
1,500
0
0
0
0
479
0
0
0
0
0
-1,058
1,700
3,457
0
0
0
3,606
0
-918
775
3,122
0
0
0
0
0
0
0
1,884
0
0
0
0
0
0
0
0
0
-20
900
0
0
0
0
1,065
0
0
0
0
0
0
0
36,915
0
767
35,314
0
2,337
20,649
0
2,376
4,671
0
0
4,591
0
0
0
0
1,228
0
0
0
0
0
0
3,566
0
787
0
0
0
1,475,941
1,475,085
1,700,836
1,701,309
2,197,736
2,202,030
226,340
228,419
227,858
228,071
260,425
259,186
274,290
275,979
251,623
251,086
253,482
251,510
259,135
259,595
475,447
470,723
309,276
311,898
331,694
328,497
44,569
39,876
34,325
28,546
16,040
28,802
6,230
6,230
31,602
27,706
48,869
50,345
30,688
23,703
41,729
29,882
17,175
7,285
10,157
-12,751
-1,689
4,433
3,274
6,525
0
0
774
0
0
1,002
0
0
1,303
0
0
120
0
0
58
0
0
0
0
0
0
0
0
108
0
0
82
0
0
16
35,063
34,669
52,696
52,696
36,851
36,776
3,763
3,973
2,888
1,788
9,793
10,893
765
765
5,640
4,640
2,372
3,372
5,222
3,122
-380
-1,002
-1,228
-330
1,042
-1,100
0
892
-1,082
2,084
-1,689
5,325
2,192
8,609
FEDERAL AGENCY OBLIGATIONS
Outright transactions
30 Gross purchases
31 Gross sales
32 Redemptions
Repurchase agreements
M Gross purchases
34 Gross sales
35 Net change in federal agency obligations
36 Total net change in System Open Market A c c o u n t . . .
41,348
28,880
15,948
1. Sales, redemptions, and negative figures reduce holdings of the System Open Market
Account; all other figures increase such holdings.
6,955
11,199
-13,851
A10
1.18
DomesticNonfinancialStatistics • September 1996
FEDERAL RESERVE BANKS
Condition and Federal Reserve Note Statements'
Millions of dollars
Account
May 2 9
June 5
Wednesday
End of month
1996
1996
June 12
June 19
June 26
Apr. 3 0
May 31
June 30
Consolidated condition statement
ASSETS
1
2
3
Gold certificate account
Special drawing rights certificate account
4
5
6
Loans
To depository institutions
Other
Acceptances held under repurchase agreements
7
8
Federal agency obligations
Bought outright
Held under repurchase agreements
9
Total U.S. Treasury securities
Bought outright"
Bills
Notes
13
Bonds
14 Held under repurchase agreements
10
n
i?
15
Total loans and securities
16
17
Items in process of collection
Bank premises
18
19
Other assets
Denominated in foreign currencies 3
All other 4
20
Total assets
11,051
10,168
538
11,051
10,168
529
11,051
10,168
538
11,051
10,168
542
11,050
10,168
536
11,052
10,168
574
11,051
10,168
552
11,050
10,168
552
161
0
0
142
0
0
172
0
0
3,851
0
0
258
0
0
93
0
0
155
0
0
636
0
0
2,428
850
2,428
1,428
2,388
95
2,388
195
2,388
0
2,444
0
2,428
1,350
2,388
0
385,154
387,160
385,020
395,472
386,748
381,806
387,050
391,000
381,789
185,244
150,102
46,443
3,365
379,748
183,203
150,102
46,443
7,412
382,860
186,315
150,102
46,443
2,160
382,761
186,216
150,102
46,443
12,711
382.522
185,978
150,102
46,443
4,226
381,806
185,262
150,102
46,443
0
381,346
184,801
150,102
46,443
5,704
383,914
187,370
150,102
46,443
7,086
388,593
391,159
387,675
401,906
389,394
384,343
390,983
394,025
8,200
1,170
7,708
1,171
6,098
1,181
6,384
1,182
6,162
1,182
8,452
1,158
4,007
1,171
4,152
1,182
19,737
9,693
19,567
9,589
19,574
9,780
19,583
10,524
19,591
10,328
19,705
10,760
19,561
9,538
19,554
10,726
449,151
450,941
446,065
461,339
448,412
446,211
447,032
451,409
LIABILITIES
21
Federal Reserve notes
400,169
400,208
400,599
400,168
401,149
394,236
398,773
401,101
22
Total deposits
28,579
31,494
26,672
42,090
28,845
31,975
30,901
32,804
23
24
25
26
Depository institutions
U.S. Treasury—General account
Foreign—Official accounts
Other
22.660
5,381
180
357
25,412
5,588
164
329
20,608
5,562
166
336
35,456
6,142
167
326
21,067
7,290
163
326
20,407
11,042
166
360
26,685
3,757
160
300
24,594
7,701
183
326
27
28
Deferred credit items
Other liabilities and accrued dividends 5
7,622
4,153
6,343
4,411
5,701
4,391
5,940
4,415
5,393
4,314
7,441
4,061
4,210
4,542
4,130
4,464
29
Total liabilities
440,523
442,456
437,363
452,614
439,701
437,713
438,426
442,499
4,100
3,966
562
4,155
3,966
364
4,139
3.966
598
4,147
3,966
611
4,138
3,966
607
4,023
3,957
518
4,154
3,960
492
4,138
3,966
806
449,151
450,941
446,065
461,339
448,412
446,211
447,032
451,409
553,973
563,166
561,601
553,403
549,345
550,662
556,832
551,797
CAPITAL ACCOUNTS
30
31
32
Capital paid in
Surplus
Other capital accounts
33
Total liabilities and capital accounts
MEMO
34
Marketable U.S. Treasury securities held in custody for
foreign and international accounts
Federal Reserve note statement
35
36
37
Federal Reserve notes outstanding (issued to Banks)
LESS: Held by Federal Reserve Banks
Federal Reserve notes, net
513,943
113,774
400,169
514,449
114,241
400,208
516,488
115,889
400.599
518,280
118,112
400,168
518,513
117,364
401,149
507,928
113,691
394,236
514,098
115,325
398,773
519,234
118,133
401,101
38
39
4C
41
Collateral held against notes, net
Gold certificate account
Special drawing rights certificate account
Other eligible assets
U.S. Treasury and agency securities
11,051
10,168
0
378,950
11,051
10,168
0
378,989
11.051
10,168
0
379,380
11,051
10,168
0
378,949
11,050
10,168
0
379,931
11,052
10,168
0
373,017
11,051
10,168
0
377,554
11,050
10,168
0
379,883
42
Total collateral
400,169
400,208
400,599
400,168
401,149
394,236
398,773
401,101
1. Some of the data in this table also appear in the Board's H.4.1 (503) weekly statistical
release. For ordering address, see inside front cover.
2. Includes securities loaned—fully guaranteed by U.S. Treasury securities pledged with
Federal Reserve Banks—and excludes securities sold and scheduled to be bought back under
matched sale-purchase transactions.
3. Valued monthly at market exchange rates.
4. Includes special investment account at the Federal Reserve Bank of Chicago in Treasury
bills maturing within ninety days.
5. Includes exchange-translation account reflecting the monthly revaluation at market
exchange rates of foreign exchange commitments.
Federal Reserve Banks
1.19
FEDERAL RESERVE BANKS
All
Maturity Distribution of Loan and Security Holding
Millions of dollars
Type of holding and maturity
Wednesday
End of month
1996
1996
May 29
June 5
June 12
June 19
June 26
Apr. 30
May 31
June 30
1 Total loans
161
143
172
3,851
258
92
156
249
2 Within fifteen days'
3 Sixteen days to ninety days
148
12
31
112
37
135
3,833
19
245
13
59
33
75
80
231
18
385,154
387,160
385,020
395,472
386,748
381,806
381,346
383,914
20,249
92,031
109,536
91,676
32,941
38,721
15,453
93,546
114,805
91,694
32,941
38,721
14,548
89,860
117,256
91,694
32,941
38,721
21,867
93,144
117,106
91,694
32,941
38,721
18,573
92,629
112,191
91,694
32,941
38,721
15,945
91,464
111,381
91,995
32,299
38,721
2,926
98,950
116,114
91,694
32,941
38,721
4,410
99,558
116,591
91,694
32,941
38,721
11 Total federal agency obligations
3,278
3,856
2,483
2,582
2,387
2,443
2,428
2,388
12
13
14
15
16
17
1,222
473
575
512
472
25
1,458
770
610
512
472
25
95
800
612
485
467
25
465
530
612
485
467
25
307
493
612
485
467
25
154
685
577
512
492
25
372
473
575
512
472
25
307
495
610
485
467
25
4 Total U.S. Treasury securities
5
6
7
8
9
10
Within fifteen days'
Sixteen days to ninety days
Ninety-one days to one year
One year to five years
Five years to ten years
More than ten years
Within fifteen days'
Sixteen days to ninety days
Ninety-one days to one year
One year to five years
Five years to ten years
More than ten years
1. Holdings under repurchase agreements are classified as maturing within fifteen days in
accordance with maximum maturity of the agreements.
NOTE. Total acceptances data have been deleted from this table because data are no longer
available.
A12
1.20
DomesticNonfinancialStatistics • September 1996
AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS A N D MONETARY BASE 1
Billions of dollars, averages of daily figures
1995
Item
1992
Dec.
1993
Dec.
1994
Dec.
Nov.
Total reserves 3
Nonborrowed reserves 4
Nonborrowed reserves plus extended credit 5
Required reserves
Monetary base 6
Dec.
Jan.
Feb.
Mar.
Apr.
May r
June
54.85
54.81
54.81
54.00
433.67
55.73
55.71
55.71
54.59
436.87 r
55.18
55.09
55.09
54.06
436.64 r
54.23
54.10
54.10
53.37
437.00
54.12
53.73
53.73
52.96
439.07
Seasonally adjusted
ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS-
1
2
3
4
5
1996
1995
Dec.
54.37
54.24
54.24
53.21
351.24
60.52
60.44
60.44
59.46
386.88
59.36
59.16
59.16
58.20
418.72
56.36
56.11
56.11
55.09
435.01
56.33
56.13
56.13
55.39
433.21
56.36
56.11
56.11
55.09
435.01
55.61
55.57
55.57
54.12
435.18 r
Not seasonally adjusted
6
7
8
9
10
Total reserves 7
Nonborrowed reserves
Nonborrowed reserves plus extended credit'
Required reserves 8
Monetary base J
56.06
55.93
55.93
54.90
354.55
62.37
62.29
62.29
61.31
390.59
61.13
60.92
60.92
59.96
422.51
58.02
57.76
57.76
56.74
439.03
56.57
56.37
56.37
55.63
433.22
58.02
57.76
57.76
56.74
439.03
56.95
56.91
56.91
55.47
436.01
53.80
53.77
53.77
52.95
430.29
54.97
54.95
54.95
53.84
434.86 r
56.00
55.90
55.90
54.88
437.12 r
53.29
53.16
53.16
52.43
436.13
53.87
53.49
53.49
52.72
439.87
56.54
56.42
56.42
55.39
360.90
1.16
.12
62.86
62.78
62.78
61.80
397.62
1.06
.08
61.34
61.13
61.13
60.17
427.25
1.17
.21
57.90
57.64
57.64
56.62
444.45
1.28
.26
56.40
56.19
56.19
55.45
438.19
.94
.20
57.90
57.64
57.64
56.62
444.45
1.28
.26
56.93
56.90
56.90
55.45
441.96
1.49
.04
53.75
53.72
53.72
52.90
436.26
.85
.04
54.88
54.86
54.86
53.75
440.77 r
1.14
.02
55.87
55.78
55.78
54.75
442.96 r
1.12
.09
53.14
53.01
53.01
52.28
442.16
.86
.13
53.69
53.30
53.30
52.53
445.93
1.16
.39
NOT ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS 1 0
11
12
13
14
15
16
17
Total reserves"
Nonborrowed reserves
Nonborrowed reserves plus extended credit 5
Required reserves
Monetary base 1 Excess reserves 13
Borrowings from the Federal Reserve
1. Latest monthly and biweekly figures are available from the Board's H.3 (502) weekly
statistical release. Historical data starting in 1959 and estimates of the effect on required
reserves of changes in reserve requirements are available from the Money and Reserves
Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve
System, Washington, DC 20551.
2. Figures reflect adjustments for discontinuities, or "breaks," associated with regulatory
changes in reserve requirements. (See also table 1.10.)
3. Seasonally adjusted, break-adjusted total reserves equal seasonally adjusted, breakadjusted required reserves (line 4) plus excess reserves (line 16).
4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally adjusted,
break-adjusted total reserves (line 1) less total borrowings of depository institutions from the
Federal Reserve (line 17).
5. Extended credit consists of borrowing at the discount window under the terms and
conditions established for the extended credit program to help depository institutions deal
with sustained liquidity pressures. Because there is not the same need to repay such
borrowing promptly as with traditional short-term adjustment credit, the money market effect
of extended credit is similar to that of nonborrowed reserves.
6. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally
adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency
component of the money stock, plus (3) (for all quarterly reporters on the "Report of
Transaction Accounts, Other Deposits and Vault Cash" and for all those weekly reporters
whose vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted
difference between current vault cash and the amount applied to satisfy current reserve
requirements.
7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) plus excess
reserves (line 16).
8. To adjust required reserves for discontinuities that are due to regulatory changes in
reserve requirements, a multiplicative procedure is used to estimate what required reserves
would have been in past periods had current reserve requirements been in effect. Breakadjusted required reserves include required reserves against transactions deposits and nonpersonal time and savings deposits (but not reservable nondeposit liabilities).
9. The break-adjusted monetary base equals (1) break-adjusted total reserves (line 6), plus
(2) the (unadjusted) currency component of the money stock, plus (3) (for all quarterly
reporters on the "Report of Transaction Accounts, Other Deposits and Vault Cash" and for all
those weekly reporters whose vault cash exceeds their required reserves) the break-adjusted
difference between current vault cash and the amount applied to satisfy current reserve
requirements.
10. Reflects actual reserve requirements, including those on nondeposit liabilities, with no
adjustments to eliminate the effects of discontinuities associated with regulatory changes in
reserve requirements.
11. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy reserve
requirements.
12. The monetary base, not break-adjusted and not seasonally adjusted, consists of (1) total
reserves (line 11), plus (2) required clearing balances and adjustments to compensate for float
at Federal Reserve Banks, plus (3) the currency component of the money stock, plus (4) (for
all quarterly reporters on the "Report of Transaction Accounts, Other Deposits and Vault
Cash" and for all those weekly reporters whose vault cash exceeds their required reserves) the
difference between current vault cash and the amount applied to satisfy current reserve
requirements. Since the introduction of contemporaneous reserve requirements in February
1984, currency and vault cash figures have been measured over the computation periods
ending on Mondays.
13. Unadjusted total reserves (line 11) less unadjusted required reserves (line 14).
Monetary and Credit Aggregates
1.21
A13
MONEY STOCK, LIQUID ASSETS, A N D DEBT MEASURES 1
Billions of dollars, averages of daily figures
1996
Item
1992
Dec.
1993
Dec.
1994
Dec.
1995
Dec.
Mar.
Apr.
May
June
Seasonally adjusted
1
2
3
4
5
Measures2
Ml
M2
M3
L
Debt
6
7
8
9
Ml components
Currency 3
Travelers checks 4
Demand deposits 5
Other checkable deposits 6
1,128.6
3,494.1
4,249.6
5,164.5
12,517.4r
1,148.7
3,509.4
4,319.7
5,303.7
13,159.3r
1,124.9
3,662.6
4,576.0
5,685.5
13,894.8r
1,126.6
3,729.9
4,686.2 r
5,785.2 r
14,080.9r
1,123.7
3,736.2'
4,693.7'
5,807.3'
14,134.3'
1,117.6'
3,731.2'
4,705.8'
5,803.1
14,178.2
1,117.2
3,748.7
4,724.4
n.a.
n.a.
292.9
8.1
339.1
384.2
322.4
7.9
384.3
414.0
354.9
8.5
382.4
402.9
373.2
8.9
389.8
353.0
375.2
8.9
407.1
335.4
376.0'
8.9
406.3
332.6
377.1'
8.7
409.6'
322.1
379.4
8.6
413.6
315.6
2,414.3
748.6
2,365.4
755.6
2,360.7
810.3
2,537.7
913.4
2,603.3
956.3 r
2,612.4
957.5'
2,613.6
974.6'
2,631.5
975.7
Commercial banks
12 Savings deposits, including MMDAs
13 Small time deposits 9
14 Large time deposits 10- "
754.1
509.3
286.6
785.0
470.4
272.3
751.9
505.4
298.7
775.0
578.5
342.4
821.0
578.1
354.2 r
827.0
576.4
356.5'
829.9'
575.3
362.4'
838.4
575.8
367.4
Thrift institutions
15 Savings deposits, including MMDAs
16 Small time deposits 9
17 Large time deposits 10
433.0
361.9
67.1
433.8
317.6
61.5
397.0
318.2
64.8
359.5
359.6
75.0
362.1
354.5
75.5
366.4
354.0
75.6
367.9
353.2
75.0
368.8
352.3
75.4
Money market mutual funds
18 Retail
19 Institution-only
356.0
199.8
358.7
197.9
388.1
183.7
465.1
227.2
487.6
248.3
488.7
245.6
487.4
243.5
496.0
249.4
Repurchase agreements and Eurodollars
20 Repurchase agreements 12
21 Eurodollars' 2
128.1
66.9
157.5
66.3
180.8
82.3
177.6
91.2
184.1
94.2 r
182.9
97.0'
195.1'
98.5'
184.2
99.4
3,068.6
8,812.0 r
3,328.3
9,189.1 r
3,497.6
9,661.7 r
3,644.6
10,250.2r
3,696.0
10,384.9r
3,707.0'
10,427.3'
3,712.6
10,465.6
n.a.
n.a.
1,104.4'
3,716.6
4,690.6'
5,783.9
14,070.0
1,113.3
3,747.0
4,721.6
n.a.
n.a.
Nontransaclion
10 In M2 7
11 In M3 only 8
1,024.4
3,438.7
4,187.3
5,075.8
1 l,880.5 r
components
Debt components
22 Federal debt
23 Nonfederal debt
Not seasonally adjusted
24
25
26
27
28
Measures2
Ml
M2
M3
L
Debt
29
30
31
32
Ml components
Currency 3
Travelers checks 4
Demand deposits 5
Other checkable deposits 6
1,046.0
3,455.1
4,205.3
5,103.1
ll,881.5 r
1,153.7
3,514.1
4,271.3
5,194.2
12,509.6'
1,174.2
3,529.8
4,341.5
5,333.2
13,150.2'
1,150.7
3,682.3
4,597.1
5,715.0
13,878.0''
1,115.9
3,722.7
4,676. l r
5,786.0 r
14,032.7'
1,130.1'
3,749.1'
4,698.5'
5,812.9'
14,061.0'
295.0
7.8
354.4
388.9
324.8
7.6
401.8
419.4
357.5
8.1
400.1
408.4
376.1
8.5
407.9
358.1
374.3
8.6
397.5
335.6'
375.8
8.6
406.1
339.6'
377.5
8.6
399.5
318.7
380.5
8.9
409.8
314.2
2,409.1
750.2
2,360.4
757.1
2,355.6
811.7
2,531.5
914.8
2,606.8
953.4'
2,619.0
949.4'
2,612.3
974.0'
2,633.7
974.6
Commercial banks
35 Savings deposits, including MMDAs
36 Small time deposits 9
37 Large time deposits 10, "
752.9
507.8
286.2
784.3
468.2
272.1
751.6
502.5
298.5
775.0
574.5
342.3
819.0
579.3
352.6
826.0
578.3
353.8'
827.9'
577.4
364.7'
840.1
577.9
368.1
Thrift institutions
38 Savings deposits, including MMDAs
39 Small time deposits 9
40 Large time deposits 10
432.4
360.9
67.0
433.4
316.1
61.5
396.9
316.4
64.8
359.5
357.1
75.0
361.2
355.2'
75.2
365.9
355.2
75.0
367.0
354.5
75.5
369.6
353.5
75.5
Money market mutual funds
41 Retail
42 Institution-only
355.1
201.1
358.3
199.4
388.2
185.5
465.4
229.4
492.1
248.7
493.5
242.8
485.5
241.1
492.5
244.5
Repurchase agreements and Eurodollars
43 Repurchase agreements' 2
44 Eurodollars' 2
127.2
68.7
156.6
67.6
179.6
83.4
176.1
91.9
182.3
94.6'
182.3
95.6'
195.4'
97.3'
187.9
98.6
3,069.8
8,811.7 r
3,329.5
9,180.1 r
3,499.0
9,651.2'
3,645.9
10,232. l r
3,698.1
10,334.5'
3,699.5'
10,361.5'
3,692.1
10,378.0
Nontransaclion
33 In M2 7
34 In M3 only 8
components
Debt components
45 Federal debt
46 Nonfederal debt
Footnotes appear on following page.
n.a.
n.a.
A14
DomesticNonfinancialStatistics • September 1996
NOTES TO TABLE 1.21
1. Latest monthly and weekly figures are available from the Board's H.6 (508) weekly
statistical release. Historical data starting in 1959 are available from the Money and Reserves
Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve
System, Washington, DC 20551.
2. Composition of the money stock measures and debt is as follows:
M l : (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of
depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all
commercial banks other than those owed to depository institutions, the U.S. government, and
foreign banks and official institutions, less cash items in the process of collection and Federal
Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of
withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions,
credit union share draft accounts, and demand deposits at thrift institutions. Seasonally
adjusted Ml is computed by summing currency, travelers checks, demand deposits, and
OCDs, each seasonally adjusted separately.
M2: Ml plus (1) savings deposits (including MMDAs), (2) small-denomination time
deposits (time deposits—including retail RPs—in amounts of less than $100,000), and (3)
balances in retail money market mutual funds (money funds with minimum initial investments of less than $50,000). Excludes individual retirement accounts (IRAs) and Keogh
balances at depository institutions and money market funds. Seasonally adjusted M2 is
calculated by summing savings deposits, small-denomination time deposits, and retail money
fund balances, each seasonally adjusted separately, and adding this result to seasonally
adjusted M l .
M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more)
issued by all depository institutions, (2) balances in institutional money funds (money funds
with minimum initial investments of $50,000 or more), (3) RP liabilities (overnight and term)
issued by all depository institutions, and (4) Eurodollars (overnight and term) held by U.S.
residents at foreign branches of U.S. banks worldwide and at all banking offices in the United
Kingdom and Canada. Excludes amounts held by depository institutions, the U.S. government, money market funds, and foreign banks and official institutions. Seasonally adjusted
M3 is calculated by summing large time deposits, institutional money fund balances, RP
liabilities, and Eurodollars, each seasonally adjusted separately, and adding this result to
seasonally adjusted M2.
L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury
securities, commercial paper, and bankers acceptances, net of money market fund holdings of
these assets. Seasonally adjusted L is computed by summing U.S. savings bonds, short-term
Treasury securities, commercial paper, and bankers acceptances, each seasonally adjusted
separately, and then adding this result to M3.
Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial
sectors—the federal sector (U.S. government, not including government-sponsored enterprises or federally related mortgage pools) and the nonfederal sectors (state and local
governments, households and nonprofit organizations, nonfinancial corporate and nonfarm
noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and
corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data,
which are derived from the Federal Reserve Board's flow of funds accounts, are breakadjusted (that is, discontinuities in the data have been smoothed into the series) and
month-averaged (that is, the data have been derived by averaging adjacent month-end levels).
3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of depository
institutions.
4. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers.
Travelers checks issued by depository institutions are included in demand deposits.
5. Demand deposits at commercial banks and foreign-related institutions other than those
owed to depository institutions, the U.S. government, and foreign banks and official institutions, less cash items in the process of collection and Federal Reserve float.
6. Consists of NOW and ATS account balances at all depository institutions, credit union
share draft account balances, and demand deposits at thrift institutions.
7. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail
money fund balances.
8. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities
(overnight and term) issued by depository institutions, and (4) Eurodollars (overnight and
term) of U.S. addressees.
9. Small time deposits—including retail RPs—are those issued in amounts of less than
$100,000. All IRAs and Keogh accounts at commercial banks and thrift institutions are
subtracted from small time deposits.
10. Large time deposits are those issued in amounts of $ 100,000 or more, excluding those
booked at international banking facilities.
11. Large time deposits at commercial banks less those held by money market funds,
depository institutions, the U.S. government, and foreign banks and official institutions.
12. Includes both overnight and term.
Monetary and Credit Aggregates
1.22
Commercial and BIF-insured saving banks 1
DEPOSIT INTEREST RATES A N D A M O U N T S OUTSTANDING
1996
1995
Item
1993
1994 R
Dec.
Dec.
Oct.
A15
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
May
June
Interest rates (annual effective yields) 2
INSURED COMMERCIAL BANKS
1
2
3
4
5
6
7
Negotiable order of withdrawal accounts
Savings deposits 3
1.86
2.46
1.96
2.92
1.91
3.11
1.93
3.13
1.91
3.10
1.90
3.01
1.91
2.98
1.85
2.91
1.89
2.91
1.88
2.89
1.90
2.85
Interest-bearing time deposits with balances of
less than $100,000, by maturity
7 to 91 days
92 to 182 days
183 days to 1 year
More than 1 year to 2 l/i years
More than 2 Vi years
2.65
2.91
3.13
3.55
4.28
3.79
4.44
5.12
5.74
6.30
4.11
4.75
5.15
5.31
5.56
4.13
4.74
5.11
5.27
5.49
4.10
4.68
3.99
4.45
4.79
4.89
5.10
4.02
4.49
4.83
4.94
5.19
4.01
4.51
4.86
5.17
5.40
4.02
4.57
4.91
5.03
5.26
5.03
5.28
3.99
4.51
4.89
5.11
5.36
4.55
4.94
5.18
5.46
1.87
2.63
1.94
2.87
1.98
2.96
1.94
2.99
1.91
2.98
1.85
2.95
1.84
2.92
1.83
2.86
1.84
2.85
1.82
2.84
1.80
2.85
2.81
3.02
3.31
3.67
4.62
3.80
4.89
5.52
6.09
6.43
4.32
5.05
5.31
5.51
5.68
4.43
5.02
5.28
5.47
5.64
4.43
4.95
5.18
5.33
5.46
4.38
4.86
5.06
5.22
5.34
4.26
4.77
4.91
5.10
5.24
4.37
4.76
4.89
5.15
5.24
4.42
4.77
4.91
5.23
5.32
4.49
4.83
4.96
5.25
5.38
4.54
4.91
5.02
5.35
5.51
5.02
4.05
BIF-INSURED SAVINGS B A N K S 4
8 Negotiable order of withdrawal accounts
9 Savings deposits 3
10
11
12
13
14
Interest-bearing time deposits with balances of
less than $100,000, by maturity
7 to 91 days
92 to 182 days
183 days to 1 year
More than 1 year to 2[A years
More than 2 Vl years
Amounts outstanding (millions of dollars)
INSURED COMMERCIAL BANKS
15 Negotiable order of withdrawal accounts
16 Savings deposits 3
17
Personal
18
Nonpersonal
19
20
21
22
23
Interest-bearing time deposits with balances of
less than $100,000, by maturity
7 to 91 days
92 to 182 days
183 days to 1 year
More than 1 year to 21/2 years
More than 2 Vi years
24 IRA and Keogh plan deposits
305,237
767,035
598,276
168,759
304,896
737,068
580,438
156,630
258,175
745,936
585,896
160,040
257,098
753,139
588,995
164,144
248,417
776,466
615,113
161,353
245,749
768,071
612,321
155,750
242,930
784,035
623,110
160,925
218,604
827,666
661,919
165,748
228,736
805,431
640,003
165,428
208,881'
839,457'
670,124'
169,333'
202,948
844,223
673,452
170,771
29,362
109,050
145,386
139,781
180,461
32,265
96,650
163,062
164,395
192,712
29,906
93,390
187,727
206,579
199,471
31,093
95,513
184,704
208,315
199,389
32,170
93,941
183,834
208,601
199,002
33,783
95,350
184,046
212,394
199,254
35,719
97,219
184,095
210,493
198,922
35,377
97,141
186,158
208,915
198,980
34,076
96,064
190,045
208,277
197,797
33,414 r
96,264'
193,021'
207,826'
196,542'
30,636
93,809
195,384
210,216
199,405
144,011
144,155
150,101
149,647
150,546'
150,366
149,965
150,496
150,586
150,084'
150,537
11,191
80,376
77,263
3,113
11,175
70,082
67,159
2,923
10,789
67,732
64,432
3,300
11,088
68,345
64,932
3,413
11,918
68,643
65,366
3,277
11,139
66,702
63,377
3,325
11,597
67,614
64,524
3,090
11,703
67,276
64,208
3,068
11,492
66,808
63,559
3,249
11,744
67,715
64,199
3,516
11,234
66,886
63,554
3,331
2,746
12,974
17,469
16,589
20,501
2,144
11,361
18,391
17,787
21,293
1,691
10,790
24,006
26,678
22,411
1,819
11,394
24,833
27,149
22,552
2,001
12,140
25,686
27,482
22,866
2,009
12,334
26,304
26,582
22,449
2,131
13,247
26,863
26,945
21,819
2,140
13,477
26,534
25,934
22,646
2,179
13,911
27,265
25,684
22,526
2,345
13,934
28,079
25,422
22,638
2,226
13,702
27,907
25,492
22,568
19,791
19,013
21,042
21,231
21,321'
20,827
20,845
20,615
20,553
20,543
20,709
BIF-INSURED SAVINGS B A N K S 4
25 Negotiable order of withdrawal accounts
26 Savings deposits 3
27
Personal
28
Nonpersonal
29
30
31
32
33
Interest-bearing time deposits with balances of
less than $100,000, by maturity
7 to 91 days
92 to 182 days
183 days to 1 year
More than 1 year to
years
More than 2Vi years
34 IRA and Keogh plan accounts
1. BIF, Bank Insurance Fund. Data in this table also appear in the Board's H.6 (508)
Special Supplementary Table monthly statistical release. For ordering address, see inside
front cover. Estimates are based on data collected by the Federal Reserve System from a
stratified random sample of about 425 commercial banks and 75 savings banks on the last day
of each month. Data are not seasonally adjusted and include IRA and Keogh deposits and
foreign currency-denominated deposits. Data exclude retail repurchase agreements and deposits held in U.S. branches and agencies of foreign banks.
2. As of October 31, 1994, interest rate data for NOW accounts and savings deposits
reflect a series break caused by a change in the survey used to collect these data.
3. Includes personal and nonpersonal money market deposits.
4. Includes both mutual and federal savings banks.
A16
1.23
DomesticNonfinancialStatistics • September 1996
BANK DEBITS A N D DEPOSIT TURNOVER 1
Debits are in billions of dollars; turnover is ratio of debits to deposits; monthly data are at annual rates
1996r
1995
Bank group, or type of deposit
19932
Nov.
Dec.
4 Other checkable deposits 4
5 Savings deposits (including MMDAs) 5
Feb.
Mar.
Apr.
Seasonally adjusted
DEBITS
Demand deposits3
1 All insured banks
2
Major New York City banks
3
Other banks
Jan.
334,784.1
171,224.3
163,559.7
369,029.1
191,168.8
177,860.3
397,649.3
201,161.4
196,487.9
409,460.9
204,484.0
204,976.9
397,538.3
203,977.5
193,560.8
430,421.2
229,379.2
201,042.0
447,869.0
238,538.4
209,330.6
422,696.7
224,066.5
198,630.2
463,745.4
245,449.1
218,296.3
3,481.5
3,497.4
3,798.6
3,766.3
4,207.4
4,507.8
4,891.5
5,679.4
4,595.5
5,703.6
4,975.7
6,029.4
5,034.6
6,397.6
5,023.9
6,340.6
5,355.8
7,325.5
785.9
4,198.1
424.6
817.4
4.481.5
435.1
874.1
4,867.3
475.2
905.5
5,222.3
496.3
852.7
5,069.7
454.4
916.8
5,368.0
471.1
950.6
5,852.3
486.4
881.0
5,608.2
451.6
970.1
5,884.4
500.3
11.9
4.6
12.6
4.9
15.4
6.1
19.1
7.5
18.6
7.4
20.8
7.7
21.6
8.1
22.1
7.8
23.6
9.0
DEPOSIT TURNOVER
Demand deposits3
6 All insured banks
7
Major New York City banks
8
Other banks
9 Other checkable deposits 4
10 Savings deposits (including MMDAs) 5
Not seasonally adjusted
DEBITS
Demand deposits3
11 All insured banks
12
Major New York City banks
13
Other banks
14 Other checkable deposits 4
15 Savings deposits (including MMDAs) 5
334,899.2
171,283.5
163,615.7
369,121.8
191,226.0
177,895.7
397,657.8
201,182.6
196.475.3
398,219.1
202,744.5
195,474.6
411,802.7
210,780.0
201,022.7
429,213.3
227,293.7
201,919.6
414,819.1
222,007.5
192,811.6
442,977.6
236,954.2
206,023.4
457,392.9
238,335.3
219,057.6
3,481.7
3,498.3
3,795.6
3,764.4
4,202.6
4,500.8
4,566.6
5,388.7
4,784.8
6,013.9
5,402.5
6,302.9
4,638.5
5,790.7
5,072.5
6,503.7
5,659.7
7,657.1
786.1
4,197.9
424.8
818.2
4,490.3
435.3
874.6
4,873.1
475.4
860.5
5,046.6
462.5
847.5
4,900.9
453.9
895.4
5,109.7
464.3
900.9
5,427.5
459.6
947.0
6,060.5
480.6
956.6
5,774.9
501.4
11.9
4.6
12.6
4.9
15.3
6.1
17.8
7.1
19.0
7.8
22.1
8.1
19.9
7.3
22.2
8.0
24.4
9.4
DEPOSIT TURNOVER
Demand deposits3
16 All insured banks
17
Major New York City banks
18
Other banks
19 Other checkable deposits 4
20 Savings deposits (including MMDAs) 5
1. Historical tables containing revised data for earlier periods can be obtained from the
Publications Section, Division of Support Services, Board of Governors of the Federal
Reserve System, Washington, DC 20551.
Data in this table also appear in the Board's G.6 (406) monthly statistical release. For
ordering address, see inside front cover.
2. Annual averages of monthly figures.
3. Represents accounts of individuals, partnerships, and corporations and of states and
political subdivisions.
4. As of January 1994, other checkable deposits (OCDs), previously defined as automatic
transfer to demand deposits (ATSs) and negotiable order of withdrawal (NOW) accounts,
were expanded to include telephone and preauthorized transfer accounts. This change
redefined OCDs for debits data to be consistent with OCDs for deposits data.
5. Money market deposit accounts.
Commercial Banking Institutions
1.26
A17
ASSETS A N D LIABILITIES OF COMMERCIAL BANKS 1
Billions of dollars
Wednesday figures
Monthly averages
Account
1995
1995
June
Dec.
Jan. r
Feb/
Mar/
ALL COMMERCIAL
BANKING INSTITUTIONS
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit2 . . .
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security 3
Other
Interbank loans4
Cash assets5
Other assets 6
Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From nonbanks in the U.S
Net due to related foreign offices
Other liabilities8
27 Total liabilities
28 Residual (assets less liabilities)
Apr/
May r
June
June 5
June 12
June 19
June 26
Seasonally adjusted
16 Total assets 7
17
18
19
20
21
22
23
24
25
26
1996
1996
9
3,515.1
987.8
709.9
277.9
2,527.3
692.1
1,052.9
77.8
975.2
478.6
88.0
215.7
188.0
211.2
223.7
3,606.1r
991.5r
710.9r
280.6r
2,614.6r
716.6
1,079.3
79.1
1,000.2
495.7
83.8r
239. l r
196.8
223.7
239.6
3,631.8
991.0
703.0
288.0
2,640.8
722.6
1,086.4
79.7
1,006.7
499.5
85.0
247.3
204.0
233.1
237.0
3,642.0
996.6
715.9
280.6
2,645.5
725.5
1,089.4
79.9
1,009.6
499.2
85.8
245.5
194.2
219.1
242.6
3,632.5
980.3
705.1
275.1
2,652.2
723.2
1,094.0
79.9
1,014.1
502.1
85.0
247.8
205.7
215.6
241.6
3,647.8
978.1
704.5
273.7
2,669.7
729.1
1,095.2
80.0
1,015.2
504.6
86.1
254.7
212.9
221.7
244.1
3,651.9
984.8
713.2
271.5
2,667.2
731.3
1,096.6
79.7
1,016.9
502.2
82.7
254.3
212.4
218.5
243.3
3,656.8
976.6
706.8
269.8
2,680.2
734.0
1,099.5
79.2
1,020.3
507.7
82.2
256.7
209.5
215.8
253.4
3,643.8
978.5
706.4
272.1
2,665.3
730.7
1,096.4
78.9
1,017.5
506.6
80.9
250.7
215.8
210.8
261.4
3,666.0
982.9
708.7
274.2
2,683.1
733.8
1,100.1
78.9
1,021.2
508.3
86.1
254.9
207.5
214.2
253.2
3,651.2
971.4
703.6
267.8
2,679.9
733.6
1,100.2
79.1
1,021.1
507.0
81.6
257.4
208.6
222.0
250.4
3,661.0
976.2
708.1
268.1
2,684.8
736.8
1,099.9
79.8
1,020.1
507.8
79.7
260.5
210.3
219.2
248.5
4,081.2
4,209.7r
4,249.1
4,241.4
4,238.8
4,269.7
4,269.4
4,278.5
4,275.0
4,284.1
4,275.5
4,282.0
2,587.0
782.2
1,804.8
397.7
1,407.2
675.1
187.0
488.1
244.9
222.8
2,659.2
773.9
1,885.3
421.3
1,464.0
690.5
198.4
492.2
262.6
239.5r
2,687.2
783.3
1,903.9
421.7
1,482.1
704.4
207.3
497.1
270.1
231.9
2,681.0
766.6
1,914.4
425.8
1,488.6
690.1
194.2
495.9
276.5
235.2
2,701.3
768.3
1,933.0
428.3
1,504.8
686.2
206.6
479.7
261.3
226.3
2,717.8
772.0
1,945.8
432.5
1,513.3
708.0
209.3
498.7
254.4
234.1
2,715.9
758.1
1,957.8
439.1
1,518.7
707.0
208.5
498.5
255.8
222.3
2,720.1
752.2
1,967.9
444.4
1,523.5
697.5
203.8
493.7
255.0
228.9
2,719.7
751.8
1,967.9
443.0
1,524.9
685.0
211.1
473.9
248.2
238.6
2,721.3
753.7
1,967.6
444.0
1,523.6
692.9
203.5
489.4
254.2
231.3
2,711.8
751.3
1,960.5
443.6
1,516.8
708.8
199.8
509.0
260.0
228.0
2,727.9
766.8
1,961.0
443.1
1,517.9
708.2
204.8
503.4
253.6
222.4
3,729.9
3,851.8r
3,893.7
3,882.7
3,875.3
3,914.2
3,901.0
3,901.4
3,891.5
3,899.7
3,908.7
3,912.0
351.3
357.9""
355.4
358.6
363.5
355.4
368.4
377.0
383.4
384.4
366.8
369.9
Not seasonally adjusted
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit2 . . .
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security 3
Other
Interbank loans 4
Cash assets5
Other assets 6
44 Total assets 7
45
46
47
48
49
50
51
52
53
54
Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From nonbanks in the U.S
Net due to related foreign offices
Other liabilities8
55 Total liabilities
56 Residual (assets less liabilities)'
Footnotes appear on following page.
3,514.0
990.5
710.7
279.8
2,523.5
694.8
1,051.7
77.7
974.0
475.1
86.0
215.8
184.5
209.5
223.1
3,613.8r
981.7'
1063'
215.4'
2,632. l r
714.8r
1,084. l r
79.2
1,004.9
501.5
87.7r
244.0
209.2
238.4
239.3
3,622.5
978.7
697.7
281.0
2,643.9
719.6
1,086.1
79.5
1,006.6
504.1
86.9
247.1
213.0
240.6
237.7
3,633.7
991.6
711.3
280.3
2,642.1
723.7
1,086.3
79.4
1,006.9
499.8
88.8
243.6
196.1
219.9
242.0
3,626.9
984.8
709.5
275.3
2,642.0
727.1
1,088.4
79.1
1,009.3
497.9
84.9
243.6
203.6
208.4
240.1
3,649.0
983.5
710.6
272.9
2,665.5
735.0
1,091.4
79.5
1,011.9
501.8
86.9
250.5
209.9
216.2
241.6
3,648.8
989.2
714.1
275.1
2,659.6
736.8
1,093.5
79.6
1,014.0
500.5
78.5
250.3
205.7
215.9
244.2
3,653.6
977.8
706.9
270.8
2,675.8
737.0
1,098.1
79.2
1,019.0
504.0
80.1
256.6
205.7
213.8
252.9
3,646.7
985.3
709.2
276.1
2,661.5
734.7
1,094.1
78.7
1,015.4
503.3
77.4
252.0
215.6
214.1
262.4
3,660.4
984.1
708.9
275.2
2,676.4
734.5
1,099.0
78.8
1,020.2
504.1
85.0
253.8
207.2
207.0
251.4
3,651.5
973.6
704.9
268.7
2,677.9
737.4
1,098.1
79.0
1,019.1
503.1
82.4
256.8
200.7
222.4
247.7
3,649.3
974.6
706.8
267.8
2,674.7
738.6
1,098.5
79.9
1,018.7
504.7
75.3
257.6
198.0
204.8
246.2
4,074.2
4v244.0r
4.2573
4,235.1
4,222.2
4,260.1
4,257.8
4,268.9
4,281.9
4,269.0
4,2653
4,241.4
2,583.9
775.9
1,808.0
397.7
1,410.3
685.3
188.4
496.9
238.3
223.3
2,690.4
809. l r
1,881.2
420.3
1,461.0
695.2
211.4
483.8
263.8
234.6r
2,694.0
795.1
1,898.9
418.8
1,480.1
691.3
214.3
477.0
277.2
233.7
2,672.0
759.4
1,912.6
426.4
1,486.2
684.1
195.9
488.2
278.2
235.7
2,687.6
753.5
1,934.1
429.8
1,504.3
677.9
201.7
476.2
262.1
227.8
2,714.6
770.9
1,943.7
432.4
1,511.3
693.6
208.0
485.5
254.7
230.4
2,705.5
745.7
1,959.8
444.5
1,515.3
704.2
205.6
498.7
258.3
224.9
2,716.9
745.7
1,971.2
444.3
1,527.0
707.0
205.4
501.7
247.5
229.7
2,737.3
757.7
1,979.5
447.1
1,532.5
700.2
215.6
484.6
237.4
241.0
2,724.4
746.5
1,977.9
446.9
1,530.9
698.0
207.1
490.8
245.6
232.8
2,702.9
740.3
1,962.6
443.6
1,519.0
719.8
200.7
519.2
248.6
226.5
2,685.0
729.8
1,955.2
440.4
1,514.9
712.6
198.7
513.9
254.2
223.8
3,730.9
3,883.9r
3,896.2
3,870.0
3,855.5
3,8933
3,893.0
3,901.0
3,915.8
3,900.8
3,897.9
3,875.6
343.3
360. r
361.0
365.2
366.8
366.9
364.9
367.8
366.1
368.2
367.4
365.8
A18
1.26
Domestic Financial Statistics • September 1996
ASSETS A N D LIABILITIES OF COMMERCIAL BANKS 1 -Continued
Billions of dollars
Monthly averages
Account
1995
1995
June
Dec.
1996
Jan. r
Feb. r
Mar.r
DOMESTICALLY CHARTERED
COMMERCIAL BANKS
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit2
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security 3
Other
Interbank loans4
Cash assets5
Other assets 6
72 Total assets 7
73
74
75
76
77
78
79
80
81
82
Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From nonbanks in the U.S
Net due to related foreign offices . . . .
Other liabilities8
83 Total liabilities
84 Residual (assets less liabilities)9
Wednesday figures
1996
Apr/
May r
June
June 5
June 12
June 19
June 26
Seasonally adjusted
3,099.2
857.0
645.9
211.0
2,242.2
518.8
1,014.7
77.8
936.9
478.6
54.4
175.7
165.5
184.6
169.8
3,176.5r
855.0
644.0r
211.0r
2.321.5r
535.3r
1,043.0
79.1
963.9
495.7
56.2
191.2
173.7
193.6
184.4
3,197.0
854.6
640.2
214.4
2,342.4
540.2
1,051.1
79.6
971.5
499.5
55.6
196.0
182.2
202.0
182.6
3,195.2
853.3
643.5
209.8
2,341.9
540.6
1,055.1
79.8
975.3
499.2
52.3
194.7
173.5
189.8
186.0
3,195.8
843.6
635.5
208.1
2,352.2
540.8
1.060.7
79.8
980.9
502.1
51.4
197.1
184.9
188.3
186.6
3,207.0
841.5
634.6
206.9
2,365.5
545.4
1,062.0
80.0
982.0
504.6
53.1
200.4
191.9
195.5
189.2
3,209.1
845.3
637.1
208.3
2,363.7
547.5
1,063.5
79.7
983.9
502.2
50.8
199.6
191.0
192.4
187.9
3,206.5
835.8
629.3
206.5
2,370.7
547.7
1,066.7
79.2
987.5
507.7
46.9
201.6
187.1
190.6
201.2
3.200.1
836.8
629.5
207.3
2,363.3
546.3
1,063.9
78.9
985.0
506.6
47.5
199.0
190.9
184.9
205.6
3,207.8
837.4
630.0
207.4
2,370.4
546.7
1,067.4
78.9
988.5
508.3
47.4
200.6
185.4
189.2
198.1
3,204.0
832.5
626.7
205.9
2,371.4
547.7
1,067.6
79.1
988.6
507.0
47.3
201.8
180.9
196.4
199.7
3,210.3
837.2
631.0
206.3
2,373.1
549.0
1,066.8
79.8
987.0
507.8
45.5
204.0
192.6
194.4
198.9
3,562.3
3,671.8r
3,707.0
3,687.9
3,699.0
3,726.7
3,723.7
3,728.5
3,724.7
3,723.7
3,724.2
3,7393
2,424.9
772.8
1,652.1
247.4
1,404.6
562.6
168.5
394.1
90.8
142.6
2,491.8r
763.4
1,728.4
270.1
1,458.3
577.5
179.9
397.6
91.0
155.3
2,523.3
772.6
1,750.7
272.1
1,478.7
590.1
185.9
404.3
93.0
153.5
2,516.2
755.9
1,760.3
273.9
1,486.4
572.4
174.7
397.7
90.5
155.7
2,533.4
758.5
1,774.9
272.5
1,502.4
574.4
186.1
388.4
81.2
149.7
2,548.2
761.4
1,786.8
274.8
1,511.9
588.6
186.1
402.4
84.6
157.6
2,543.3
747.1
1,796.1
278.5
1,517.6
582.1
185.1
397.0
88.0
149.2
2,548.0
741.3
1,806.7
282.1
1,524.5
577.5
183.5
393.9
79.7
157.8
2,546.2
740.7
1,805.5
280.2
1,525.3
565.7
187.7
378.0
72.9
164.1
2,547.6
742.8
1,804.8
280.8
1,524.0
568.9
183.2
385.7
79.7
156.1
2,540.7
739.9
1,800.7
282.0
1,518.8
588.0
180.0
408.0
80.7
159.5
2,558.6
756.3
1,802.3
282.5
1,519.8
589.0
184.3
404.7
81.5
154.6
3,221.0
3,315.7
3360.0
3,334.7
3338.7
3378.9
3362.5
3362.9
3,348.8
33523
3368.9
3,383.7
341.3
356. l r
346.9
353.2
360.3
347.8
361.2
365.5
375.8
371.4
355.2
355.6
Not seasonally adjusted
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit2
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security 3
Other
Interbank loans4
Cash assets5
Other assets6
100 Total assets 7
101
102
103
104
105
106
107
108
109
110
Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From nonbanks in the U.S
Net due to related foreign offices . . . .
Other liabilities8
111 Total liabilities
112 Residual (assets less liabilities)9
3,100.9
861.0
647.6
213.5
2,239.9
521.1
1,013.5
77.7
935.8
475.1
54.7
175.4
163.2
182.1
169.5
3,182.5r
848.5
640.2
208.3r
2,334.0r
533.3r
l,047.8r
79.2
968.6
501.5
56.9
194.5
184.7
208.5
183.7
3,185.3
843.6
633.0
210.5
2,341.7
537.1
1,051.0
79.5
971.5
504.1
54.0
195.6
189.9
209.8
183.5
3,187.1
849.4
639.4
210.0
2,337.7
539.8
1,051.8
79.4
972.5
499.8
53.3
193.0
177.2
191.7
184.9
3,188.7
847.0
638.7
208.3
2,341.8
543.9
1,055.0
79.1
975.9
497.9
51.4
193.5
183.5
181.4
185.9
3,209.8
846.8
640.3
206.4
2,363.1
551.3
1,058.6
79.4
979.1
501.8
54.0
197.3
189.7
190.6
188.4
3,209.4
848.6
638.7
209.9
2,360.8
553.0
1,060.6
79.5
981.1
500.5
49.7
197.0
184.2
190.1
188.1
3,206.7
839.1
630.5
208.6
2,367.6
550.1
1,065.4
79.2
986.2
504.0
47.1
201.0
185.0
187.8
200.9
3,205.7
843.7
633.3
210.3
2,362.0
550.1
1,061.6
78.7
983.0
503.3
47.5
199.5
193.5
187.9
206.1
3,208.7
842.0
631.8
210.1
2,366.7
548.1
1,066.3
78.8
987.5
504.1
49.1
199.0
187.1
181.1
195.9
3,206.2
837.2
628.7
208.5
2,369.0
550.9
1,065.4
79.0
986.4
503.1
48.8
200.7
177.9
196.0
197.6
3,203.0
838.1
630.6
207.5
2,364.9
550.1
1,065.6
79.8
985.7
504.7
43.4
201.2
178.9
179.0
197.3
3,558.8
3,702.7r
3,712.0
3,6843
3,682.9
3,722.0
3,715.2
3,723.4
3,736.2
3,715.8
3,720.7
3,701.4
2,419.4
766.8
1,652.6
247.3
1,405.3
569.1
168.6
400.5
89.6
142.7
2,522.1
798.3
1,723.8
265.8
1,458.1
584.0
191.8
392.2
89.3
153.3
2,529.2
784.2
1,744.9
269.4
1,475.5
580.8
192.8
388.0
92.9
154.2
2,507.5
748.8
1,758.7
275.3
1,483.4
571.2
177.2
394.0
92.3
154.1
2,519.3
743.8
1,775.4
273.0
1,502.5
566.7
181.1
385.6
84.5
151.5
2,547.4
760.9
1,786.5
276.2
1,510.3
573.2
185.8
387.5
85.0
155.6
2,531.5
735.4
1,796.1
281.8
1,514.3
581.1
183.8
397.2
93.2
150.6
2,542.6
735.1
1,807.5
282.0
1,525.5
582.8
183.5
399.3
78.5
158.2
2,560.6
747.2
1,813.4
282.7
1,530.7
577.3
190.7
386.6
73.0
165.2
2,547.4
736.3
1,811.1
282.6
1,528.5
570.1
184.5
385.7
79.5
156.6
2,529.4
729.5
1,799.9
281.9
1,518.0
594.1
179.7
414.4
77.2
158.6
2,513.1
719.2
1,794.0
280.0
1,514.0
591.0
178.1
412.9
82.8
154.9
3,220.8
3348.8
3357.1
3325.1
3322.0
3361.2
3356.4
3362.0
3376.1
3,353.6
3359.4
3,341.8
337.9
353.9r
355.0
359.2
360.9
360.8
358.9
361.4
360.0
362.2
361.3
359.6
1. Covers the following types of institutions in the fifty states and the District of
Columbia: domestically chartered commercial banks that submit a weekly report of condition
(large domestic); other domestically chartered commercial banks (small domestic); branches
and agencies of foreign banks; New York State investment companies, and Edge Act and
agreement corporations (foreign-related institutions). Excludes international banking facilities. Data are Wednesday values, or pro rata averages of Wednesday values. Large domestic
banks constitute a universe; data for small domestic banks and foreign-related institutions are
estimates based on weekly samples and on quarter-end condition reports. Data are adjusted
for breaks caused by reclassifications of assets and liabilities.
2. Excludes federal funds sold to, reverse repurchase agreements with, and loans to
commercial banks in the United States.
3. Consists of reserve repurchase agreements with broker-dealers and loans to purchase
and carry securities.
4. Consists of federal funds sold to, reverse repurchase agreements with, and loans to
commercial banks in the United States.
5. Includes vault cash, cash items in process of collection, demand balances due from
depository institutions in the United States, balances due from Federal Reserve Banks, and
other cash assets.
6. Excludes the due-from position with related foreign offices, which is included in lines
25. 53, 81, and 109.
7. Excludes unearned income, reserves for losses on loans and leases, and reserves for
transfer risk. Loans are reported gross of these items.
8. Excludes the due-to position with related foreign offices, which is included in lines 25,
53, 81, and 109.
9. This balancing item is not intended as a measure of equity capital for use in capital
adequacy analysis.
Weekly Reporting Commercial Banks
1.27
A19
ASSETS A N D LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS
Millions of dollars, Wednesday figures
1996
Account
May l r
May 8
May 15
May 22
May 29
June 5
117,983
281,227
18,987
262,240
116,013
118,580r
283,773
21,981
261,792
115,626
119,739r
284,139
23,863
260,276
116,568r
lll,089r
280,103
22,017
258,086
116,008'
122,997r
279,703
22,965
256,737
115,61 r
114,726
277,713
21,150
256,563
115,964
110,322
273,645
18,954
254,691
115,590
125,851
271,603
18,345
253,258
114,558
110,485
272,833
17,982
254,851
115,923
35,918
62,094
48,215
124,004
2,014
63,379
18,941
4,083
14,857
44,438
58,611
35,602
62,703
47,860
123,818r
1,830
63,387
18,800
4,037
14,762
44,588
58,600 r
33,388 r
62,704 r
47,616 r
124,623r
2,481
63,557
18,789
4,016
14,773
44,768
58,586 r
32,719 r
61,837 r
47,523 r
122,294
1,123
63,397
18,815
4,032
14,784
44,581
57,775
33,333 r
60,857 r
46,937 r
123,354
1,237
63,411
18,829
4,019
14,811
44,582
58,706
33,750
59,892
46,956
124,631
1,657
63,475
18.444
3,909
14,535
45,030
59,499
34,018
57,885
47,198
124,182
1,794
63,743
18,543
3,915
14,627
45,200
58,645
33,613
57,577
47,510
123,464
2,360
64,111
18,775
3,995
14,779
45,336
56,992
33,645
59,462
45,821
122,014
2,242
63,689
18.845
4,012
14,833
44,844
56,084
17 Federal funds sold 2
18
To commercial banks in the United States
19
To nonbank brokers and dealers in securities
20
To others 3
21 Other loans and leases, gross
?.?.
Commercial and industrial
Bankers acceptances and commercial paper
23
24
All other
25
U.S. addressees
26
Non-U.S. addressees
27
Real estate loans
28
Revolving, home equity
29
All other
30
To individuals for personal expenditures
31
To depository and financial institutions
32
Commercial banks in the United States
Banks in foreign countries
33
Nonbank depository and other financial institutions
34
35
For purchasing and carrying securities
36
To finance agricultural production
37
To states and political subdivisions
38
To foreign governments and official institutions
39
All other loans
Lease-financing receivables
40
41 LESS: Unearned income
Loan and lease reserve 3
42
43 Other loans and leases, net
44 All other assets
126,298
87,625
34,526
4,146
1,302,972
363,164
1,499
361,665
358,868
2,797
506,452
48,816
457,636
250,435
74,328
42,512
4,099
27,717
15,885
6,694
10,189
1,124
28,794
45,907
1,805
33,111
1,268,056
145,869
121,656
83,777
33,468
4,412
1,297,559
360,605 r
1,489
359,117 r
356,309 r
2,807 r
506,655 r
48,095
458,560 r
250,763
74,70 r
42,332
3,813
28,556 r
14,031
6,762
10,260
1,080
26,235 r
46,467
1,869
33,228
1,262,462
147,118r
119,912
87,610
26,860
5,443
1,295,818r
360,776 r
1,432
359,343 r
356,52 l r
2,822
505,46 l r
48,097 r
457,363 r
249,910 r
73,416 r
42,673
2,877
27,866 r
14,604r
6,814
10,359
1,117
26,748 r
46,614
1,877
33,181
l,260,760 r
149,016r
112,698
78,385
28,966
5,348
l,293,796 r
359,043 r
1,373
357,670 r
354,857 r
2,812
503,656 r
47,990 r
455,665 r
250,274 r
72,467 r
41,619
3,532
27,316r
16,701r
6,902
10,507
1,096
26,443 r
46,707
1,880
33,087
l,258,829 r
140,917r
106,695
74,940
26,801
4,953
l,296,133 r
356,856 r
1,418
355,438 r
352,663 r
2,775
504,150 r
48,04 r
456,109 r
251,668 r
75,176 r
43,517
3,780
27,879 r
15,105r
6,913
10,461
1,086
27,838 r
46,880
1,865
33,033
l,261,235 r
143,508r
112,854
81,728
26,224
4,902
1,298,990
355,609
1,369
354,240
351,643
2,597
506,019
48,092
457,927
253,104
75,897
44,109
3,174
28,614
15,356
6,833
10,384
1,095
27,321
47,373
1,935
33,291
1,263,764
169,655
115,303
82,091
28,326
4,885
1,298,139
353,369
1,401
351,968
349,359
2,609
507,727
48,135
459,592
254,143
75,821
43,194
3,456
29,171
15,196
6,893
10,163
1,106
25,707
48,013
1,987
33,244
1,262,908
155,524
110,919
79,256
26,292
5,371
1,305,751
357,817
1,390
356,427
353,791
2,637
508,668
48,594
460,074
253,398
75,057
43,189
3,339
28,529
17,183
7,065
10,392
1,207
26,479
48,486
2,002
33,284
1,270,465
158,979
111,917
83,254
22,608
6,055
1,306,656
357,599
1,324
356,274
353,669
2,605
508,198
48,854
459,343
255,344
75,479
43,596
3,254
28,629
15,602
7,243
10,520
1,066
26,723
48,883
2,003
33,153
1,271,500
157,831
45 Total assets
2,063,437
2,057,405 r
2,058,189 r
2,025,931 r
2,037,492 r
2,063,343
2,041,883
2,061,280
2,046,580
June 12
June 19
June 26
ASSETS
1 Cash and balances due from depository institutions
2 U.S. Treasury and government securities
Trading account
3
Investment account
4
Mortgage-backed securities'
5
All others, by maturity
One year or less
One year through five years
7
8
More than five years
9 Other securities
10
Trading account
11
Investment account
State and local government, by maturity
12
One year or less
13
14
More than one year
Other bonds, corporate stocks, and securities
15
Other trading account assets
16
ft
Footnotes appear on the following page.
A20
1.27
DomesticNonfinancialStatistics • September 1996
ASSETS A N D LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS—Continued
Millions of dollars, Wednesday figures
1996
Account
May l r
May 8
May 15
May 22
May 29
June 5
June 12
June 19
June 26
46 Deposits
Demand deposits
47
48
Individuals, partnerships, and corporations
Other holders
49
States and political subdivisions
50
U.S. government
51
Depository institutions in the United States
52
53
Banks in foreign countries
54
Foreign governments and official institutions
55
Certified and officers' checks
Transaction balances other than demand deposits 4
56
57
Nontransaction balances
Individuals, partnerships, and corporations
58
Other holders
59
States and political subdivisions
60
61
U.S. government
62
Depository institutions in the United States
Foreign governments, official institutions, and banks . .
63
1,232,707
322,792
274,470
48,322
9,846
3,107
21,821
5,042
663
7,844
80,873
829,042
799,967
29,075
22,815
4,014
1,941
306
l,215,603 r
301,004 r
258,108 r
42,896
8,264
1,731
20,457
5,293
594
6,557
80,250
834,349
804,613
29,736
23,440r
4,019
1,966
310
l,236,838 r
322,941 r
275,635 r
47,306
8,914
3,075
22,383
5,443
691
6,800
76,766
837,131
807,569
29,562
23,261
4,042
1,948
311
l,202,154 r
294,012 r
252,286 r
41,726'
8,303
1,740r
19,637
5,004
590
6,452
71,437
836,705
806,910
29,795
23,478
4,040
1,958
318
1,221,199'
315,480'
267,745'
47,735'
8,535
1,471'
24,101
5,546
776
7,306
72,032
833,687
804,219
29,468
23,225
4,040
1,884
319
1,238,748
317,013
271,951
45,061
8,238
2,147
22,222
5,172
564
6,718
73,194
848,541
818,924
29,618
23,619
4,030
1,669
300
1,230,539
311,611
267,381
44,230
7,790
2,432
20,565
5,933
588
6,922
72,100
846,828
817,297
29,531
23,587
4,014
1,631
299
1,230,209
311,034
262,712
48,323
9,318
4,319
21,596
5,464
569
7,057
73,684
845,491
816,880
28,611
22,663
4,009
1,633
305
1,221,262
305,247
260,886
44,361
9,059
2,095
19,480
5,892
555
7,279
72,220
843,795
815,778
28,017
21,938
4,050
1,724
306
64 Liabilities for borrowed money 5
Borrowings from Federal Reserve Banks
65
Treasury tax and loan notes
66
Other liabilities for borrowed money 6
67
68 Other liabilities (including subordinated notes and debentures) . . .
411,596
0
24,225
387,371
224,157
421,002
0
14,238
406,764
225,60 l r
406,865
0
3,648
403,217
219,273 r
405,249 r
0
2,782
402,467 r
222,648 r
406,708'
0
3,355
403,353'
213,367'
408,777
0
580
408,197
218,946
400,126
0
2,710
397,416
213,405
419,678
3,522
24,581
391,575
213,780
413,207
0
22,963
390,244
214,996
1,868,461
l,862,206 r
l,862,976 r
l,830,051 r
l,841,274 r
1,866,471
1,844,069
1,863,667
1,849,464
194,977
195,199
195,213r
195,880'
196,218'
196,872
197,814
197,613
197,115
1,704,364
121,493
1,080
268
812
27,527
91,145
l,700,696 r
123,988
1,056
268
789
27,113
93,087
l,694,209 r
125,319
1,048
268
780
28,057
83,508
1,688,888'
125,591
1,039
268
771
27,880
97,840
1,687,427'
124,714
1,032
268
765
28,262
87,464
1,688,351
126,160
1,020
264
755
28,415
68,820
1,685,983
126,540
1,014
264
750
28,332
74,965
1,689,292
126,910
1,000
264
736
29,051
72,643
1,686,570
126,032
989
263
725
28,633
78,224
LIABILITIES
69 Total liabilities
70 Residual (total assets less total liabilities) 7
MEMO
71
72
73
74
75
76
77
Total loans and leases, gross, adjusted, plus securities8
Time deposits in amounts of $100,000 or more
Loans sold outright to affiliates9
Commercial and industrial
Other
Foreign branch credit extended to U.S. residents 10
Net owed to related institutions abroad
1. Includes certificates of participation, issued or guaranteed by agencies of the U.S.
government, in pools of residential mortgages.
2. Includes securities purchased under agreements to resell.
3. Includes allocated transfer risk reserve.
4. Includes negotiable order of withdrawal (NOWs) and automatic transfer service (ATS)
accounts, and telephone and preauthorized transfers of savings deposits.
5. Includes borrowings only from other than directly related institutions.
6. Includes federal funds purchased and securities sold under agreements to repurchase.
7. This balancing item is not intended as a measure of equity capital for use in capitaladequacy analysis.
8. Excludes loans to and federal funds transactions with commercial banks in the
United States.
9. Affiliates include a bank's own foreign branches, nonconsolidated nonbank affiliates of
the bank, the bank's holding company (if not a bank), and nonconsolidated nonbank
subsidiaries of the holding company.
10. Credit extended by foreign branches of domestically chartered weekly reporting banks
to nonbank U.S. residents. Consists mainly of commercial and industrial loans, but includes
an unknown amount of credit extended to other than nonfinancial businesses.
Weekly Reporting Commercial Banks
1.28
A21
LARGE WEEKLY REPORTING U.S. BRANCHES A N D AGENCIES OF FOREIGN BANKS
Assets and Liabilities
Millions of dollars, Wednesday figures
1996
Account
June 5
June 12
June 19
June 26
May 1
May 8
May 15
May 22
May 29
15,133
15,613
15,215
15,727
15,991
15,943
15,613
15,994
15,533
50,413
42,793
30,215
6,078
24,138
188,543
120,539
5,066
115,473
109,233
6,241
20,201
50,018
40,347
29,399
7,787
21,612
190,727
121,100
4,887
116,214
109,935
6,279
20,294
49,962
40,278
27,389
6,285
21,104
190,777
121,958
4,969
116,989
109,927
7,061
20,438
ASSETS
1 Cash and balances due from depository
institutions
2 U.S. Treasury and government agency
securities
3 Other securities
4 Federal funds sold'
To commercial banks in the United States
5
6
To others 2
7 Other loans and leases, gross
Commercial
and industrial
8
Bankers acceptances and commercial paper .
9
All other
10
U.S. addressees
11
Non-U.S. addressees
12
Loans secured by real estate
13
Loans to depository and financial
14
institutions
Commercial banks in the United States
15
Banks in foreign countries
16
Nonbank financial institutions
17
For purchasing and carrying securities
18
To foreign governments and official
19
institutions
All other
20
21 Other assets (claims on nonrelated parties)
22 Total assets 3
47,839
43,659 r
29,435 r
7,079
22,356 r
185,595
119,407
4,735
114,671
108,344
6,327
20,322
49,834
42,162 r
27,443 r
6,889
20,554 r
183,506
118,350
4,792
113,558
107,269
6,288
20,374
48,825
43,153 r
21,673r
5,720
15,954r
185,905
119,599
4,787
114,812
108,613
6,199
20,389
49,549
43,239 r
25,940 r
7,242
18,697r
187,250
119,906
4,756
115,150
108,953
6,197
20,612
49,983
43,942 r
28,270 r
10,570
17,700r
187,162
119,734
4,912
114,823
108,625
6,197
20,533
49,899
43,525
26,267
7,320
18,947
186,845
120,260
4,942
115,318
109,080
6,239
20,195
33,015 r
2,138
3,271
27,605 r
5,818 r
33,129 r
2,171
3,089
27,868 r
4,667 r
33,789r
2,466
3,328
27,995r
4,758 r
33,874 r
2,627
3,008
28,239 r
5,475 r
34,332 r
2,895
3,021
28,417 r
5,186 r
33,676
3,100
3,062
27,514
5,387
35,306
3.253
3,075
28,978
5,143
35,978
3,007
3,075
29,896
5,742
36,044
2,735
3,129
30,181
4,994
575
4,462
38,649
585
4,423
39,085
584
4,687
40,867
601
4,685
39,636
596
4,684
39,469
587
4,656
39,804
599
4,666
38,917
791
4,712
34,646
783
4,531
33,640
395,636
393,997
394,132
397,039
401,131
397,261
398,942
391,895
388,800
108,436
4,202
3,481
721
104,234
75,123
29,110
108,354
4,253
3,422
831
104,100
74,808
29,293
109,334
4,203
3,550
652
105,131
77,091
28,040
111.375
4,104
3,510
594
107,271
79,368
27,903
112,528
4,355
3,573
783
108,172
79,222
28,951
111,088
4,325
3,617
708
106,763
78,147
28,616
110,595
4,145
3,487
658
106,450
77,787
28,663
108,608
4,462
3,563
899
104,146
75,870
28,276
108,311
4,380
3,684
696
103,931
76,005
27,927
88,351
55,066
16,175
38,890
33,285
4,068
29,218
60,558
85,024
50,405
10,602
39,804
34,619
4,221
30,398
60,368
83,075
49,206
13,804
35,402
33,869
4,201
29,667
62,440
82,707
46,632
8,888
37,744
36,075
4,472
31,604
60,571
79,485
45,657
8,760
36,897
33,828
4,100
29,728
61,855
81,729
49,330
11,993
37,337
32,399
3,812
28,587
61,982
86,177
52,350
11,234
41,116
33,827
3,970
29,856
61,878
84,714
50,509
11,002
39,507
34,206
4,024
30,181
55,315
81,610
49,987
10,202
39,786
31,623
4,241
27,382
56,293
395,636
393,997
394,132
397,039
401,131
397,261
398,942
391,895
388,800
297,312
102,966
293,884
103,897
291,371
100,790
296,109
106,688
295,893
110,949
296,117
107,485
302,634
107,845
299,696
112,493
299,386
111,364
LIABILITIES
23 Deposits or credit balances owed to other
than directly related institutions
4
24 Demand deposits
Individuals, partnerships, and corporations . . . .
25
Other
26
27 Nontransaction accounts
Individuals, partnerships, and corporations . . . .
28
Other
29
30 Borrowings from other than directly
related institutions
31 Federal funds purchased 5
From commercial banks in the United States . .
32
From others
33
34 Other liabilities for borrowed money
To commercial banks in the United States
35
36
To others
37 Other liabilities to nonrelated parties
38 Total liabilities 6
MEMO
39 Total loans (gross) and securities, adjusted 7
40 Net owed to related institutions abroad
1. Includes securities purchased under agreements to resell.
2. Includes transactions with nonbank brokers and dealers in securities.
3. For U.S. branches and agencies of foreign banks having a net "due from" position,
includes net due from related institutions abroad.
4. Includes other transaction deposits.
5. Includes securities sold under agreements to repurchase.
6. For U.S. branches and agencies of foreign banks having a net "due to" position,
includes net owed to related institutions abroad.
7. Excludes loans to and federal funds transactions with commercial banks in the United
States.
A22
DomesticNonfinancialStatistics • September 1996
1.32
COMMERCIAL PAPER A N D BANKERS DOLLAR ACCEPTANCES OUTSTANDING
Millions of dollars, end of period
Year ending December
1995
1996
Item
1991
1992
1994
1993
1995
Dec.
Jan.
Feb.
Mar.
Apr.
May
Commercial paper (seasonally adjusted unless noted otherwise)
1 All issuers
528,832
545,619
555,075
595,382
674,904 r
674,904 r
685,791 r
687,669
695,201
710,749
719,116
Financial companies'
2
Dealer-placed paper 2 , total
3
Directly placed paper 3 , total
212,999
182,463
226,456
171,605
218,947
180,389
223,038
207,701
275,815 r
210,829 r
275,815 r
210,829 r
288,368
208,159 r
293,313
208,046
292,533
208,880
303,567
211,833
302,709
221,463
133,370
147,558
155,739
164,643
188,260
188,260
189,264
186,310
193,788
195,349
194,944
n.a.
n.a.
n.a.
4 Nonfinancial companies
4
Bankers dollar acceptances (not seasonally adjusted)
5 Total
6
7
8
9
10
By holder
Accepting banks
Own bills
Bills bought from other banks
Federal Reserve Banks 6
Foreign correspondents
Others
By basis
11 Imports into United States
12 Exports from United States
13 All other
43,770
38,194
32,348
29,835
11,017
9,347
1,670
10,555
9,097
1,458
12,421
10,707
1,714
11,783
10,462
1,321
1,739
31,014
1,276
26,364
725
19,202
410
17,642
12,843
10,351
20,577
12,209
8,096
17,890
10,217
7,293
14,838
10,062
6,355
13,417
1. Institutions engaged primarily in commercial, savings, and mortgage banking; sales,
personal, and mortgage financing; factoring, finance leasing, and other business lending;
insurance underwriting; and other investment activities.
2. Includes all financial-company paper sold by dealers in the open market.
3. As reported by financial companies that place their paper directly with investors.
4. Includes public utilities and firms engaged primarily in such activities as communications, construction, manufacturing, mining, wholesale and retail trade, transportation, and
services.
1.33
PRIME RATE CHARGED B Y BANKS
29,242
n.a.
n.a.
n.a.
n.a.
5. Data on bankers dollar acceptances are gathered from approximately 100 institutions.
The reporting group is revised every January. Beginning January 1995, data for Bankers
dollar acceptances will be reported annually in September.
6. In 1977 the Federal Reserve discontinued operations in bankers dollar acceptances for
its own account.
Short-Term Business Loans 1
Percent per year
Date of change
1993—Jan.
1
6.00
1994—Mar.
Apr.
May
Aug.
Nov.
24
19
17
16
15
6.25
6.75
7.25
7.75
8.50
1995—Feb.
1
July 7
Dec. 20
9.00
8.75
8.50
1996—Feb.
8.25
1
Period
Rate
Average
rate
1993
1994
1995
6.00
7.15
8.83
1993—Jan
Feb
Mar.
Apr
Mav
June
July
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
Sept
Oct
Nov
Dec
Average
rate
Period
1994—Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
:
6.00
6.00
6.06
6.45
6.99
7.25
7.25
7.51
7.75
7.75
8.15
8.50
Period
1995—Jan
Feb
Mar.
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
8.50
9.00
9.00
9.00
9.00
9.00
8.80
8.75
8.75
8.75
8.75
8.65
1996—Jan
Feb
8.50
8.25
8 25
8.25
8.25
8.25
8.25
Apr
May
June
July
1. The prime rate is one of several base rates that banks use to price short-term business
loans. The table shows the date on which a new rate came to be the predominant one quoted
by a majority of the twenty-five largest banks by asset size, based on the most recent Call
Average
rate
Report. Data in this table also appear in the Board's H.15 (519) weekly and G.13 (415)
monthly statistical releases. For ordering address, see inside front cover.
Financial Markets
1.35
INTEREST RATES
A23
Money and Capital Markets
Percent per year; figures are averages of business day data unless otherwise noted
1996, week ending
1996
Item
1993
1994
1995
Mar.
Apr.
May
June
May 31
June 7
June 14
June 21
June 28
MONEY MARKET INSTRUMENTS
1 Federal funds 1 ' 2 ' 3
2 Discount window borrowing 2,4
4.21
3.60
5.83
5.21
5.31
5.00
5.22
5.00
5.24
5.00
5.27
5.00
5.19
5.00
5.33
5.00
5.24
5.00
5.45
5.00
5.21
5.00
3.17
3.22
3.30
4.43
4.66
4.93
5.93
5.93
5.93
5.39
5.31
5.26
5.40
5.39
5.38
5.38
5.39
5.42
5.45
5.49
5.57
5.38
5.38
5.41
5.42
5.44
5.49
5.43
5.50
5.60
5.46
5.50
5.60
5.50
5.51
5.61
3.12
3.16
3.15
4.33
4.53
4.56
5.81
5.78
5.68
5.29
5.18
5.04
5.31
5.28
5.20
5.29
5.29
5.23
5.35
5.37
5.35
5.27
5.28
5.24
5.32
5.32
5.29
5.34
5.38
5.38
5.36
5.39
5.37
5.38
5.40
5.38
3.13
3.21
4.56
4.83
5.81
5.80
5.21
5.17
5.28
5.28
5.29
5.31
5.38
5.47
5.30
5.33
5.34
5.42
5.40
5.49
5.39
5.48
5.40
5.49
3.11
3.17
3.28
4.38
4.63
4.96
5.87
5.92
5.98
5.31
5.29
5.30
5.34
5.36
5.42
5.32
5.36
5.47
5.37
5.46
5.64
5.31
5.36
5.47
5.35
5.42
5.59
5.36
5.48
5.67
5.36
5.47
5.65
5.39
5.49
5.66
3.18
4.63
5.93
5.28
5.36
5.36
5.46
5.35
5.43
5.48
5.45
5.48
3.00
3.12
3.29
4.25
4.64
5.02
5.49
5.56
5.60
4.96
4.96
5.06
4.95
5.06
5.23
5.02
5.12
5.33
5.09
5.25
5.48
5.04
5.14
5.39
5.09
5.22
5.46
5.11
5.30
5.52
5.09
5.25
5.48
5.09
5.22
5.47
3.02
3.14
3.33
4.29
4.66
5.02
5.51
5.59
5.69
4.96
4.96
4.98
4.99
5.08
5.17
5.02
5.12
5.31
5.11
5.26
5.56
5.03
5.14
5.32
5.09
5.21
n.a.
5.16
5.34
n.a.
5.08
5.27
n.a.
5.10
5.23
5.56
3.43
4.05
4.44
5.14
5.54
5.87
6.29
6.59
5.32
5.94
6.27
6.69
6.91
7.09
7.49
7.37
5.94
6.15
6.25
6.38
6.50
6.57
6.95
6.88
5.34
5.66
5.79
5.97
6.19
6.27
6.74
6.60
5.54
5.96
6.11
6.30
6.48
6.51
6.98
6.79
5.64
6.10
6.27
6.48
6.66
6.74
7.11
6.93
5.81
6.30
6.49
6.69
6.83
6.91
7.22
7.06
5.70
6.17
6.34
6.55
6.69
6.77
7.09
6.93
5.78
6.26
6.44
6.63
6.77
6.85
7.16
6.99
5.86
6.36
6.56
6.77
6.93
6.99
7.30
7.13
5.82
6.32
6.50
6.73
6.87
6.95
7.25
7.10
5.79
6.25
6.44
6.63
6.76
6.86
7.16
7.02
6.45
7.41
6.93
6.72
6.94
7.08
7.20
7.07
7.14
7.28
7.23
7.14
5.38
5.83
5.60
5.77
6.17
6.18
5.80
6.10
5.95
5.33
5.72
5.79
5.62
5.94
5.94
5.75
5.97
5.98
5.67
5.98
6.02
5.70
6.01
5.94
5.15
5.75
5.94
5.89
6.18
6.12
5.72
6.02
6.06
5.90
5.96
5.97
7.54
8.26
7.83
7.65
7.80
7.91
8.00
7.89
7.95
8.07
8.03
7.96
7.22
7.40
7.58
7.93
7.46
7.97
8.15
8.28
8.63
8.29
7.59
7.72
7.83
8.20
7.86
7.35
7.52
7.68
8.03
7.75
7.50
7.68
7.83
8.19
7.90
7.62
7.77
7.94
8.30
8.02
7.71
7.87
8.02
8.40
8.13
7.61
7.75
7.92
8.27
8.08
7.67
7.81
7.98
8.34
8.12
7.78
7.93
8.09
8.47
8.20
7.74
7.90
8.04
8.44
8.20
7.66
7.83
7.97
8.36
7.97
2.78
2.82
2.56
2.22
2.24
2.21
2.21
2.22
2.17
2.22
2.22
2.22
paper3,5,6
3
4
5
Commercial
1-month
3-month
6-month
6
7
8
Finance paper, directly
1-month
3-month
6-month
placed3'5'7
9
10
Bankers acceptances3,5,8
3-month
6-month
11
12
13
Certificates of deposit, secondary
1-month
3-month
6-month
market3,9
14 Eurodollar deposits, 3-month 3,10
18
19
20
U.S. Treasury bills
Secondary market 3 ' 5
3-month
6-month
1-year
Auction average 3 ' 5 '"
3-month
6-month
1-year
21
22
23
24
25
26
27
28
Constant maturities'2
1-year
2-year
3-year
5-year
7-year
10-year
20-year
30-year
15
16
17
3.02
3.00
U . S . TREASURY NOTES AND BONDS
Composite
29 More than 10 years (long-term)
STATE AND LOCAL NOTES AND BONDS
Moody's series'3
30 Aaa
31 Baa
32 Bond Buyer series 14
CORPORATE BONDS
33 Seasoned issues, all industries 15
34
35
36
37
38
Rating group
Aaa
Aa
A
Baa
A-rated, recently offered utility bonds' 6
MEMO
Dividend-price ratio17
39 Common stocks
1. The daily effective federal funds rate is a weighted average of rates on trades through
New York brokers.
2. Weekly figures are averages of seven calendar days ending on Wednesday of the
current week; monthly figures include each calendar day in the month.
3. Annualized using a 360-day year for bank interest.
4. Rate for the Federal Reserve Bank of New York.
5. Quoted on a discount basis.
6. An average of offering rates on commercial paper placed by several leading dealers for
firms whose bond rating is AA or the equivalent.
7. An average of offering rates on paper directly placed by finance companies.
8. Representative closing yields for acceptances of the highest-rated money center banks.
9. An average of dealer offering rates on nationally traded certificates of deposit.
10. Bid rates for Eurodollar deposits at approximately 11:00 a.m. London time. Data are
for indication purposes only.
11. Auction date for daily data; weekly and monthly averages computed on an issue-date
basis.
12. Yields on actively traded issues adjusted to constant maturities. Source: U.S. Department of the Treasury.
13. General obligation bonds based on Thursday figures; Moody's Investors Service.
14. State and local government general obligation bonds maturing in twenty years are used
in compiling this index. The twenty-bond index has a rating roughly equivalent to Moodys'
Al rating. Based on Thursday figures.
15. Daily figures from Moody's Investors Service. Based on yields to maturity on selected
long-term bonds.
16. Compilation of the Federal Reserve. This series is an estimate of the yield on recently
offered, A-rated utility bonds with a thirty-year maturity and five years of call protection.
Weekly data are based on Friday quotations.
17. Standard & Poor's corporate series. Common stock ratio is based on the 500 stocks in
the price index.
NOTE. Some of the data in this table also appear in the Board's H.15 (519) weekly and
G.13 (415) monthly statistical releases. For ordering address, see inside front cover.
A24
1.36
DomesticNonfinancialStatistics • September 1996
STOCK MARKET
Selected Statistics
1995
Indicator
1994
1993
1996
1995
Nov.
Oct.
Dec.
Jan.
Feb.
Mar.
Apr.
May
June
Prices and trading volume (averages of daily figures)
Common stock prices (indexes)
1 New York Stock Exchange
(Dec. 31, 1965 = 50)
2
Industrial
3
Transportation
4
Utility
5
Finance
249.71
300.10
242.68
114.55
216.55
254.16
315.32
247.17
104.96
209.75
291.18
367.40
270.14
114.61
238.48
311.78
389.63
291.16
123.59
265.12
317.58
398.66
300.06
119.49
266.12
327.90
412.11
303.53
123.95
273.36
329.22
413.05
300.43
127.09
274.96
346.46
435.92
315.29
135.51
290.97
346.73
439.55
324.77
122.83
290.44
347.50
441.99
326.42
122.44
287.92
354.84
452.63
334.66
124.86
290.43
358.32
458.30
331.57
123.60
294.42
6 Standard & Poor's Corporation
( 1 9 4 1 - 4 3 = 10)1
451.63
460.42
541.72
582.92
595.53
614.57
614.42
649.54
647.07
647.17
661.23
668.50
7 American Stock Exchange
(Aug. 31, 1973 = 50) 2
438.77
449.49
498.13
530.26
529.93
538.01
540.48
562.34
565.69
580.60
600.93
591.99
263,374
18,188
290,652
17,951
345,729
20,354
365,108
17,672
360,199
16,724
384,310
21,085
416,048
21,069
434,607
27,107
426,198
22,988
419,941
24,886
404,184
28,127
392,413
23,903
Volume of trading (thousands of shares)
8 New York Stock Exchange
9 American Stock Exchange
Customer financing (millions of dollars, end-of-period balances)
10 Margin credit at broker-dealers 3
60,310
61,160
76,680
75,005
77,875
76,680
73,530
77,090
78,308
81,170
86,100
87,160
Free credit balances at brokers4
11 Margin accounts 5
12 Cash accounts
12,360
27,715
14,095
28,870
16,250
34,340
14,753
29,908
15,590
30,340
16,250
34,340
14,950
32,465
15,840
34,700
15,770
33,113
15,780
33,100
16,890
33,760
16,600
32,930
Margin requirements (percent of market value and effective date) 6
13 Margin stocks
14 Convertible bonds
15 Short sales
Mar. 11, 1968
June 8, 1968
May 6, 1970
Dec. 6, 1971
Nov. 24, 1972
70
50
70
80
60
80
65
50
65
55
50
55
65
50
65
1. In July 1976 a financial group, composed of banks and insurance companies, was added
to the group of stocks on which the index is based. The index is now based on 400 industrial
stocks (formerly 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and
40 financial.
2. On July 5, 1983, the American Stock Exchange rebased its index, effectively cutting
previous readings in half.
3. Since July 1983, under the revised Regulation T, margin credit at broker-dealers has
included credit extended against stocks, convertible bonds, stocks acquired through the
exercise of subscription rights, corporate bonds, and government securities. Separate reporting of data for margin stocks, convertible bonds, and subscription issues was discontinued in
April 1984.
4. Free credit balances are amounts in accounts with no unfulfilled commitments to
brokers and are subject to withdrawal by customers on demand.
5. Series initiated in June 1984.
6. Margin requirements, stated in regulations adopted by the Board of Governors pursuant
to the Securities Exchange Act of 1934, limit the amount of credit that can be used to
purchase and carry "margin securities" (as defined in the regulations) when such credit is
Jan. 3, 1974
50
50
50
collateralized by securities. Margin requirements on securities other than options are the
difference between the market value (100 percent) and the maximum loan value of collateral
as prescribed by the Board. Regulation T was adopted effective Oct. 15, 1934; Regulation U,
effective May 1, 1936; Regulation G, effective Mar. 11, 1968; and Regulation X, effective
Nov. 1, 1971.
On Jan. 1, 1977, the Board of Governors for the first time established in Regulation T the
initial margin required for writing options on securities, setting it at 30 percent of the current
market value of the stock underlying the option. On Sept. 30, 1985, the Board changed the
required initial margin, allowing it to be the same as the option maintenance margin required
by the appropriate exchange or self-regulatory organization; such maintenance margin rules
must be approved by the Securities and Exchange Commission. Effective Jan. 31, 1986, the
SEC approved new maintenance margin rules, permitting margins to be the price of the option
plus 15 percent of the market value of the stock underlying the option.
Effective June 8, 1988, margins were set to be the price of the option plus 20 percent of the
market value of the stock underlying the option (or 15 percent in the case of stock-index
options).
Federal Finance
1.38
A25
FEDERAL FISCAL A N D FINANCING OPERATIONS
Millions of dollars
Fiscal year
Calendar year
Type of account or operation
1996
1993
U.S. budget1
1 Receipts, total
2
On-budget
3
Off-budget
4 Outlays, total
5
On-budget
6
Off-budget
7 Surplus or deficit ( - ) , total
8
On-budget
9
Off-budget
Source of financing (total)
10 Borrowing from the public
11 Operating cash (decrease, or increase ( - ) )
12 Other 2
1994
1995
Jan.
Feb.
Mar.
Apr.
May
June
1,153,535
841,601
311,934
1,408,675
1,142,088
266,587
-255,140
-300,487
45,347
1,257,737
922,711
335,026
1,460,841
1,181,469
279,372
-203,104
-258,758
55,654
1,355,213
1,004,134
351,079
1,519,133
1,230,469
288,664
-163,920
-226,335
62,415
142,922
110,615
32,307
123,647
98,057
25,591
19,274
12,558
6,716
89,349
60,912
28,437
133,644
105,711
27,933
-44,295
-44,799
504
89,011
56,677
32,334
136,286
108,365
27,921
-47,275
-51,688
4,413
203,386
160,774
42,612
130,993
105,131
25,862
72,393
55,643
16,750
90,044
60,106
29,938
143,342
114,486
28,856
-53,298
-54,380
1,082
151,919
116,718
35,201
117,818
104,161
13,657
34,101
12,557
21,544
248,619
6,283
238
185,344
16,564
1,196
171,288
-2,007
-5,361
-4,747
-16,959
2,432
47,022
6,297
-9,024
39,189
9,283
-197
-35,466
-26,449
-10,478
20,633
43,809
-11,144
-8,619
-33,519
8,037
52,506
17,289
35,217
35,942
6,848
29,094
37,949
8,620
29,329
37,454
8,210
29,243
31,157
5,632
25,525
21,874
7,021
14,853
48,323
11,042
37,281
4,514
3,757
757
38,033
7,701
30,332
MEMO
13 Treasury operating balance (level, end of
period)
14
Federal Reserve Banks
15
Tax and loan accounts
1. Since 1990, off-budget items have been the social security trust funds (federal old-age
survivors insurance and federal disability insurance) and the U.S. Postal Service.
2. Includes special drawing rights (SDRs); reserve position on the U.S. quota in the
International Monetary Fund (IMF); loans to the IMF; other cash and monetary assets;
accrued interest payable to the public; allocations of SDRs; deposit funds; miscellaneous
liability (including checks outstanding) and asset accounts; seigniorage; increment on gold;
net gain or loss for U.S. currency valuation adjustment; net gain or loss for IMF loanvaluation adjustment; and profit on sale of gold.
SOURCE. Monthly totals: U.S. Department of the Treasury, Monthly Treasury Statement of
Receipts and Outlays of the U.S. Government; fiscal year totals: U.S. Office of Management
and Budget, Budget of the U.S. Government.
A26
1.39
DomesticNonfinancialStatistics • September 1996
U.S. BUDGET RECEIPTS A N D OUTLAYS'
Millions of dollars
Fiscal year
Calendar year
Source or type
1994
1994
1995
1996
1996
1995
H2
HI
H2
HI
Apr.
May
June
RECEIPTS
1 All sources
2 Individual income taxes, net
3
Withheld
4
Nonwithheld
5
Refunds
Corporation income taxes
6
Gross receipts
7
Refunds
8 Social insurance taxes and contributions, net . . .
9
Employment taxes and contributions 2
10
Unemployment insurance
11
Other net receipts 3
12
13
14
15
Excise taxes
Customs deposits
Estate and gift taxes
Miscellaneous receipts 4
1,257,737
1,355,213
625,556
710,542
656,402
766,631
203,386
90,044
151,919
543,055
459,699
160,433
77,077
590,244
499,927
175,855
85,538
273,315
240,063
42,029
8,787
307,498
251,398
132,001
75,959
292,393
256,916
43,100
10,058
347,285
264,177
162,782
79,735
107,513
38,930
89,392
20,822
29,914
45,399
6,352
21,850
60,816
35,941
26,926
2,061
154,205
13,820
461,475
428,810
28,004
4,661
174,422
17,418
484,473
451,045
28,878
4,550
78,393
7,747
220,140
206,615
11,177
2,349
92,132
10,399
261,837
241,557
18,001
2,279
88,302
7,518
224,269
211,323
10,702
2,247
96,480
9,704
277,767
257,446
18,068
2,254
26,912
1,975
60,588
56,615
3,628
346
3,647
1,077
48,676
38,104
10,155
417
37,950
992
45,583
44,888
400
295
55,225
20,099
15,225
22,274
57,484
19,301
14,763
31,944
30,178
11,041
7,067
13,169
27,452
8,848
7,425
15,750
30,014
9,849
7,718
11,374
25,682
8,731
8,775
11,620
4,577
1,388
2,704
1,680
4,113
1,427
1,415
1,929
4,310
1,450
1,141
1,663
OUTLAYS
16 All types
1,460,841
1,519,133
752,150
760,824
752,511
785,730
130,993
143,342
117,818
17
18
19
20
21
22
National defense
International affairs
General science, space, and technology
Energy
Natural resources and environment
Agriculture
281,642
17,083
16,227
5,219
21,064
15,046
272,066
16,434
16,724
4,936
22,105
9,773
141,885
11,889
7,604
2,923
11,911
7,623
135,648'
4,797
8,611
2,358'
I0,273 r
4,039'
132,954
6,994
8,810
2,203
12,633
3,062
133,516
8,074
8,897
1,355
10,238
71
22,725
988
1,534
17
1,660
-249
26,609
1,165
1,584
216
1,757
-175
19,769
837
1,536
822
1,543
-124
23
24
25
26
Commerce and housing credit
Transportation
Community and regional development
Education, training, employment, and
social services
-5,118
38,066
10,454
-14,441
39,350
10,641
-4,270
21,835
6,283
-13,937
18,193'
5,073'
-4,412
19,931
6,085
-7,334
18,291
5,160
-1,741
2,864
1,026
256
3,324
826
-1,368
3,185
896
46,307
54,263
27,450
25,893'
24,894
26,137
4,014
3,961
3,903
27 Health
28 Social security and Medicare
29 Income security
107,122
464,312
214,031
115,418
495,701
220,449
54,147
236,817
101,806
59,057'
251,975
117,190'
57,078
251,387
104,078
59,957
264,649
121,032
10,458
44,216
21,417
11,201
46,727
21,407
9,762
44,731
11,332
30
31
32
33
34
37,642
15,256
11,303
202,957
-37,772
37,938
16,223
13,835
232,173
-44,455
19,761
7,753
7,355
109,434
-20,066
19,269'
8,051'
5,796'
116,169
-17,631'
18,684
8,117
7,621
119,350
-26,994
18,164
9,021
4,641
120,579
-16,716
2,974
1,585
-25
20,463
-2,932
5,254
1,683
180
20,359
-2,991
1,570
1,327
1,755
18,977
-2,636
Veterans benefits and services
Administration of justice
General government
Net interest 5
Undistributed offsetting receipts 6
1. Functional details do not sum to total outlays for calendar year data because revisions to
monthly totals have not been distributed among functions. Fiscal year total for receipts and
outlays do not correspond to calendar year data because revisions from the Budget have not
been fully distributed across months.
2. Old-age, disability, and hospital insurance, and railroad retirement accounts.
3. Federal employee retirement contributions and civil service retirement and
disability fund.
4. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts.
5. Includes interest received by trust funds.
6. Rents and royalties for the outer continental shelf, U.S. government contributions for
employee retirement, and certain asset sales.
SOURCE. Fiscal year totals: U.S. Office of Management and Budget, Budget of the U.S.
Government, Fiscal Year 1997; monthly and half-year totals: U.S. Department of the Treasury, Monthly Treasury Statement of Receipts and Outlays of the U.S. Government.
Federal Finance
1.40
A27
FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION
Billions of dollars, end of month
1994
1995
1996
Item
June 30
Sept. 30
Dec. 31
Mar. 31
June 30
Sept. 30
Dec. 31
Mar. 31
June 30
1 Federal debt outstanding
4,673
4,721
4,827
4,891
4,978
5,001
5,017
5,153
5,197
2 Public debt securities
3
Held by public
4
Held by agencies
4,646
3,443
1,203
4,693
3,480
1,213
4,800
3,543
1,257
4,864
3,610
1,255
4,951
3,635
1,317
4,974
3,653
1,321
4,989
3,684
1,305
5,118
3,764
1,354
5,161
n.a.
n.a.
28
27
0
29
29
0
27
27
0
27
26
0
27
27
0
27
27
0
28
28
0
36
28
8
36
n.a.
n.a.
4,559
4,605
4,711
4,775
4,861
4,885
4,900
5,030
5,073
4,559
0
4,605
0
4,711
0
4,774
0
4,861
0
4,885
0
4,900
0
5,030
0
5,073
0
4,900
4,900
4,900
4,900
4,900
4,900
4,900
5,500
5,500
5 Agency securities
6
Held by public
7
Held by agencies
8 Debt subject to statutory limit
9 Public debt securities
10 Other debt 1
MEMO
11 Statutory debt limit
1. Consists of guaranteed debt of U.S. Treasury and other federal agencies, specified
participation certificates, notes to international lending organizations, and District of Columbia stadium bonds.
1.41
GROSS PUBLIC DEBT OF U.S. TREASURY
SOURCE. U.S. Department of the Treasury, Monthly Statement of the Public Debt of the
United States and Treasury Bulletin.
Types and Ownership
Billions of dollars, end of period
1995
Type and holder
1 Total gross public debt
2
3
4
5
6
7
8
9
10
11
12
13
14
By type
Interest-bearing
Marketable
Bills
Notes
Bonds
Nonmarketable'
State and local government series
Foreign issues 2
Government
Public
Savings bonds and notes
Government account series 3
Non-interest-bearing
By holder 4
15 U.S. Treasury and other federal agencies and trust funds
16 Federal Reserve Banks
17 Private investors
Commercial banks
18
Money market funds
19
20
Insurance companies
21
Other companies
22
State and local treasuries 5,6
Individuals
Savings bonds
23
24
Other securities
25
Foreign and international 7
Other miscellaneous investors 6 ' 8
26
1992
1994
1996
1995
Q3
Q4
Q1
Q2
4,177.0
4,535.7
4,800.2
4,988.7
4,974.0
4,988.7
5,117.8
5,161.1
4,173.9
2,754.1
657.7
1,608.9
472.5
1,419.8
153.5
37.4
37.4
.0
155.0
1,043.5
3.1
4,532.3
2,989.5
714.6
1,764.0
495.9
1,542.9
149.5
43.5
43.5
.0
169.4
1,150.0
3.4
4,769.2
3,126.0
733.8
1,867.0
510.3
1,643.1
132.6
42.5
42.5
.0
177.8
1,259.8
31.0
4,964.4
3,307.2
760.7
2,010.3
521.2
1,657.2
104.5
40.8
40.8
.0
181.9
1,299.6
24.3
4,950.6
3,260.5
742.5
1,980.3
522.6
1,690.2
113.4
41.0
41.0
.0
181.2
1,324.3
23.3
4,964.4
3,307.2
760.7
2,010.3
521.2
1,657.2
104.5
40.8
40.8
.0
181.9
1,299.6
24.3
5,083.0
3,375.1
811.9
2,014.1
534.1
1,707.9
96.5
40.4
40.4
.0
183.0
1,357.7
34.8
5,126.8
3,348.4
773.6
2,025.8
534.1
1,778.3
97.8
37.8
37.8
.0
183.8
1,428.5
34.3
1,047.8
302.5
2,839.9
294.4
79.7
197.5
192.5
563.3 r
1,153.5
334.2
3,047.4
322.2
80.8
234.5
213.0
605.9 r
1,257.1
374.1
3,168.0
290.1
67.6
240.1
226.5
483.4 r
1,304.5
391.0
3,294.9
280. l r
71.3
252.6 r
228.8 r
343.8 r
1,320.8
374.1
3,279.5
289.0
64.2
249.8 r
224.1
384.9 r
1,304.5
391.0
3,294.9
280. l r
71.3
252.6 r
228.8 r
343.8 r
1,353.8
381.0
3,382.8
281.0
87.3
254.5
229.0
343.0
157.3
131.9
549.7
673.5r
171.9
137.9
623.0
658.3 r
180.5
150.7
688.6
840.5r
185.0
162.7
861.8
908.8'
183.5
162.4
848.1
873.5 r
185.0
162.7
861.8
908.8'
185.8
161.4
930.1
910.7
1. Includes (not shown separately) securities issued to the Rural Electrification Administration, depository bonds, retirement plan bonds, and individual retirement bonds.
2. Nonmarketable series denominated in dollars, and series denominated in foreign currency held by foreigners.
3. Held almost entirely by U.S. Treasury and other federal agencies and trust funds.
4. Data for Federal Reserve Banks and U.S. government agencies and trust funds are actual
holdings; data for other groups are Treasury estimates.
5. Includes state and local pension funds.
6. In March 1996, in a redefinition of series, fully defeased debt backed by nonmarketable
federal securities was removed from "Other miscellaneous investors" and added to "State and
local treasuries." The data shown here have been revised accordingly.
1993
n a.
7. Consists of investments of foreign balances and international accounts in the United
States.
8. Includes savings and loan associations, nonprofit institutions, credit unions, mutual
savings banks, corporate pension trust funds, dealers and brokers, certain U.S. Treasury
deposit accounts, and federally sponsored agencies.
SOURCE. U.S. Treasury Department, data by type of security, Monthly Statement of the
Public Debt of the United States; data by holder, Treasury Bulletin.
A28
1.42
DomesticNonfinancialStatistics • September 1996
U.S. GOVERNMENT SECURITIES DEALERS
Transactions'
Millions of dollars, daily averages
1996
1996, week ending
Item
Mar.
Apr.
May
May 1
May 8
May 15
May 22
May 29
June 5
June 12
June 19
June 26
OUTRIGHT TRANSACTIONS 2
By type of security
1 U.S. Treasury bills
Coupon securities, by maturity
2
Five years or less
3
More than five years
4 Federal agency
5 Mortgage-backed
By type of counterparty
With interdealer broker
U.S. Treasury
Federal agency
Mortgage-backed
With other
9
U.S. Treasury
10
Federal agency
Mortgage-backed
11
6
7
8
56,391
55,901
47,278
54,108
46,741
46,521
40,748
50,427
57,129
53,849
55,294
47,770
107,071
49,903
27,395
42,087
97,216 r
41,971 r
28,936
34,788
94,636
49,383
29,131
35,929
86,613
43,591
35,186
28,855
108,826
60,332
28,211
53,716
94,074
52,906
30,051
42,084
83,123
46,403
28,324
23,317
92,097
38,724
28,629
23,526
98,440
44,864
29,123
35,943
108,694
48,800
30,317
56,857
96,599
42,796
35,178
31,260
92,456
36,010
35,464
21,376
124,458
671
16,622r
112,758
795
11,979r
111,032
661
13,422r
107,725
907
9,199 r
126,461
616
18,940r
113,545
824
14,839
98,482
710
8,941
104,682
474
10,361
111,907
496
15,522
126,241
752
19,210
113,458
828
11,399
101,372
707
8,498
88,907
26,725
25.465 r
82,330r
28,141
22,808 r
80,265
28,470
22,507 r
76,586
34,279
19.655r
89,438
27,595
34,777 r
79,956
29,227
27,245
71,792
27,615
14,376
76,566
28,155
13,165
88,526
28,626
20,421
85,103
29,565
37,647
81,230
34,350
19,861
74,864
34,757
12,878
FUTURES TRANSACTIONS 3
By type of deliverable security
12 U.S. Treasury bills
Coupon securities, by maturity
13
Five years or less
14
More than five years
15 Federal agency
16 Mortgage-backed
487
369
410
131
426
859
96
256
481
779
866
121
2,055
14,824
0
0
1,203
11,717
0
0
1,550
12,854
0
0
876
10,736
0
0
1.645
17.060
0
0
1,532
12,218
0
0
1,327
10,771
0
0
1,598
10,765
0
0
2,158
14,370
0
0
2,064
15,346
0
0
1,946
13,997
0
0
1,026
8,484
0
0
OPTIONS TRANSACTIONS 4
By type of underlying security
17 U.S. Treasury bills
Coupon securities, by maturity
18
Five years or less
19
More than five years
20 Federal agency
21 Mortgage-backed
0
0
0
0
0
0
0
0
0
0
0
0
2,775
3,073
0
1,125
1,582
3,773
0
1,110
2,294
4,057
0
1,046
1,526
3.391
0
868
1,328
4.099
0
1.565
3,217
3,982
0
1,417
2,640
4,878
0
625
2,126
2,987
0
541
2,255
4,562
0
971
4,289
5,585
0
1,288
2,502
4,753
0
467
2,329
3,252
0
510
1. Transactions are market purchases and sales of securities as reported to the Federal
Reserve Bank of New York by the U.S. government securities dealers on its published list of
primary dealers. Monthly averages are based on the number of trading days in the month.
Transactions are assumed evenly distributed among the trading days of the report week.
Immediate, forward, and futures transactions are reported at principal value, which does not
include accrued interest; options transactions are reported at the face value of the underlying
securities.
Dealers report cumulative transactions for each week ending Wednesday.
2. Outright transactions include immediate and forward transactions. Immediate delivery
refers to purchases or sales of securities (other than mortgage-backed federal agency securities) for which delivery is scheduled in five business days or less and "when-issued"
securities that settle on the issue date of offering. Transactions for immediate delivery of mortgagebacked agency securities include purchases and sales for which delivery is scheduled in thirty business
days or less. Stripped secunties are reported at market value by matunty of coupon or corpus.
Forward transactions are agreements made in the over-the-counter market that specify
delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt
securities are included when the time to delivery is more than five business days. Forward
contracts for mortgage-backed agency securities are included when the time to delivery is
more than thirty business days.
3. Futures transactions are standardized agreements arranged on an exchange. All futures
transactions are included regardless of time to delivery.
4. Options transactions are purchases or sales of put and call options, whether arranged on
an organized exchange or in the over-the-counter market, and include options on futures
contracts on U.S. Treasury and federal agency securities.
NOTE, "n.a." indicates that data are not published because of insufficient activity.
Major changes in the report form filed by primary dealers induced a break in the dealer data
series as of the week ending July 6, 1994.
Federal Finance
1.43
U.S. GOVERNMENT SECURITIES DEALERS
A29
Positions and Financing1
M i l l i o n s of d o l l a r s
1996
1996, week ending
Apr.
Mar.
May
May 1
May 8
May 15
May 22
May 29
June 5
June 12
June 19
Positions 2
NET OUTRIGHT POSITIONS 3
1
2
3
4
5
By type of security
U.S. Treasury bills
Coupon securities, by maturity
Five years or less
More than five years
Federal agency
Mortgage-backed
20,889
17,119
15,447
11,554
12,031
16,296
14,951
15,433
28,159
22,380
8,845
6,296
-24,377
25,754
36,887
7,771
-27,702
26,566
32,583
2,210
-23,291
23,921
34,206
6,523
-26,268
31,139
32,543
6,242
-25,003
28,135
30,376
1,796
-23,338
23,321
35,251
-462
-22,041
24,464
35,657
1,554
-22,635
19,096
35,190
—961
-22,315
22,655
36,270
-3,042
-21,501
24,935
35,104
-10,342
-21,006
22,365
35,001
-2,842
-3,560
-4,625
-4,547
-4,610
-4,898
-4,563
-4,765
-3,484
-2,941
-1,157
623
-4,361
0
0
1,073
-4,285
0
0
632
-3,598
0
0
788
-5,351
0
0
1,062
-2,783
0
0
1,267
-2,466
0
0
401
-4,541
0
0
-45
-3,975
0
0
7
-4,910
0
0
466
-5,945
0
0
1,617
-5,821
0
0
NET FUTURES POSITIONS 4
6
7
8
9
10
By type of deliverable security
U.S. Treasury bills
Coupon securities, by maturity
Five years or less
More than five years
Federal agency
Mortgage-backed
NET OPTIONS POSITIONS
11
12
13
14
15
By type of deliverable security
U.S. Treasury bills
Coupon securities, by maturity
Five years or less
More than five years
Federal agency
Mortgage-backed
0
0
0
0
0
0
0
0
0
0
0
1,381
177
0
4,949
1,542
1,081
0
4,435
-139
-703
0
3,902
1,023
429
0
4,808
691
-1,491
0
4,570
676
-1,366
0
3,688
-307
688
0
3,603
-1,287
-797
0
3,741
-1,868
-735
0
3,465
-2,276
235
0
3,479
-3,099
70
0
2,941
Financing 5
Reverse repurchase agreements
16 Overnight and continuing
17 Term
258,213
435,402
256,694
467,590
251,988
453,182
252,381
478,354
245,232
499,560
271,735
416,344
252,858
448,774
242,766
451,521
235,548
428,448
238,277
470,543
248,074
471,190
Securities borrowed
18 Overnight and continuing
19 Term
172,347
66,212
166,490
67,330
173,105
63,987
166,473
69,357
168,222
69,339
175,434
62,296
178,128
62,976
168,867
62,021
182,616
58,906
181,178
61,003
182,894
60,316
4,477
65
3,275
53
2,488
52
2,241
27
2,063
39
2,487
29
2,446
41
2,414
102
4,501
47
4,446
91
5,423
112
Repurchase
agreements
22 Overnight and continuing
23 Term
557,094
393,406
577,949
399,259
559,390
392,946
567,907
413,066
560,778
426,042
577,866
357,241
564,022
392,652
534,374
401,719
556,952
362,346
561,144
403,262
545,801
415,376
Securities loaned
24 Overnight and continuing
25 Term
5,202
2,362
4,728
2,611
4,804
3,094
4,812
3,242
4,803
3,223
4,579
3,086
4,769
n.a.
4,841
2,952
5,577
n.a.
5,711
n.a.
5,890
n.a.
Securities pledged
26 Overnight and continuing
27 Term
40,936
8,343
37,160
8,518
41,591
6,797
36,547
8,465
36,965
8,025
41,397
6,738
43,031
6,163
44,627
6,249
45,317
6,016
45,388
6,063
47,466
6,060
Collateralized loans
28 Overnight and continuing
29 Term
30 Total
n.a.
n.a.
12,176
n.a.
n.a.
14,045 r
n.a.
n.a.
12,091
n.a.
n.a.
10,602 r
n.a.
n.a.
13,316
n.a.
n.a.
12,567
n.a.
n.a.
12,697
n.a.
n.a.
9,708
n.a.
n.a.
13,097
n.a.
n.a.
13,550
n.a.
n.a.
12,200
MEMO: Matched book 6
Securities in
31 Overnight and continuing
32 Term
239,030
433,861
244,480
464,018
244,668
441,772
245,137
480,346
236,730
488,139
259,949
407,901
250,282
437,150
233,953
436,335
236,593
413,953
236,204
459,074
250,199
453,905
Securities out
33 Overnight and continuing
34 Term
328,321
338,096
348,557
349,263
334,416
337,119
344,315
365,614
341,079
372,213
345,621
303,369
334,007
332,831
314,633
343,905
337,593
309,423
356,820
345,288
350,654
360,676
Securities received as pledge
20 Overnight and continuing
21 Term
1. Data for positions and financing are obtained from reports submitted to the Federal
Reserve Bank of New York by the U.S. government securities dealers on its published list of
primary dealers. Weekly figures are close-of-business Wednesday data. Positions for calendar
days of the report week are assumed to be constant. Monthly averages are based on the
number of calendar days in the month.
2. Securities positions are reported at market value.
3. Net outright positions include immediate and forward positions. Net immediate positions include securities purchased or sold (other than mortgage-backed agency securities) that
have been delivered or are scheduled to be delivered in five business days or less and
"when-issued" securities that settle on the issue date of offering. Net immediate positions for
mortgage-backed agency securities include securities purchased or sold that have been
delivered or are scheduled to be delivered in thirty business days or less.
Forward positions reflect agreements made in the over-the-counter market that specify
delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt
securities are included when the time to delivery is more than five business days. Forward
contracts for mortgage-backed agency securities are included when the time to delivery is
more than thirty business days.
4. Futures positions reflect standardized agreements arranged on an exchange. All futures
positions are included regardless of time to delivery.
5. Overnight financing refers to agreements made on one business day that mature on the
next business day; continuing contracts are agreements that remain in effect for more than one
business day but have no specific maturity and can be terminated without advance notice by
either party; term agreements have a fixed maturity of more than one business day. Financing
data are reported in terms of actual funds paid or received, including accrued interest.
6. Matched-book data reflect financial intermediation activity in which the borrowing and
lending transactions are matched. Matched-book data are included in the financing breakdowns given above. The reverse repurchase and repurchase numbers are not always equal
because of the "matching" of securities of different values or different types of collateralization.
NOTE, "n.a." indicates that data are not published because of insufficient activity.
Major changes in the report form filed by primary dealers induced a break in the dealer data
series as of the week ending July 6, 1994.
A30
1.44
DomesticNonfinancialStatistics • September 1996
FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES
Debt Outstanding
Millions of dollars, end of period
1995
Agency
1
1992
Federal and federally sponsored agencies
Federal agencies
Defense Department'
Export-Import Bank 2 ' 1
Federal Housing Administration 4
Government National Mortgage Association certificates of
participation 5
7
Postal Service 6
8
Tennessee Valley Authority
9
United States Railway Association 6
2
3
4
5
6
10
11
12
13
14
15
16
17
18
Federally sponsored agencies 7
Federal Home Loan Banks
Federal Home Loan Mortgage Corporation
Federal National Mortgage Association
Farm Credit Banks 8
Student Loan Marketing Association 9
Financing Coiporation10
Farm Credit Financial Assistance Corporation"
Resolution Funding Corporation 12
1993
1994
1996
1995
Dec.
Jan.
Feb.
Mar.
483,970
570,711
738,928
844,611
844,611
836,820
840,384
846,807
41,829
7
7,208
374
45,193
6
5,315
255
39,186
6
3,455
116
37,347
6
2,050
97
37,347
6
2,050
97
37,273
6
2,050
31
31,986
6
2,050
35
31,284
6
2,015
52
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
10,660
23,580
9,732
29,885
8,073
27,536
5,765
29,429
5,765
29,429
5,765
29,421
300
29,595
300
28,911
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
442,141
114,733
29,631
166,300
51,910
39,650
8,170
1,261
29,996
523,452
139,512
49,993
201,112
53,123
39,784
8,170
1,261
29,996
699,742
205,817
93,279
257,230
53,175
50,335
8,170
1,261
29,996
807,264
243,194
119,961
299,174
57,379
47,529
8,170
1,261
29,996
807,264
243,194
119,961
299,174
57,379
47,529
8,170
1,261
29,996
799,547
234,664
120,868
297,657
58,659
47,673
8,170
1,261
29,996
808,398
233,404
123,777
304,159
57,536
49,495
8,170
1,261
29,996
815,523
239,253
124,278
306,815
59,428
45,723
8,170
1,261
29,996
154,994
128,187
103,817
78,681
78,681
78,512
68,037
66,725
7,202
10,440
4,790
6,975
5,309
9,732
4,760
6,325
Apr.
n a.
242,437
136,185
306,361
60,815
n a.
8,170
1,261
29,996
MEMO
19
Federal Financing Bank debt 1 3
20
21
22
23
24
Lending to federal and federally sponsored
Export-Import Bank 3
Postal Service 6
Student Loan Marketing Association
Tennessee Valley Authority
United States Railway Association 6
25
26
27
Other lending14
Farmers Home Administration
Rural Electrification Administration
Other
agencies
2,044
5,765
2,044
5,765
2,044
5,765
2,044
300
2,009
300
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3,200
3,200
3,200
3,200
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
42,979
18,172
64,436
38,619
17,578
45,864
33,719
17,392
37,984
21,015
17,144
29,513
21,015
17,144
29,513
1. Consists of mortgages assumed by the Defense Department between 1957 and 1963
under family housing and homeowners assistance programs.
2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976.
3. On-budget since Sept. 30, 1976.
4. Consists of debentures issued in payment of Federal Housing Administration insurance
claims. Once issued, these securities may be sold privately on the securities market.
5. Certificates of participation issued before fiscal year 1969 by the Government National
Mortgage Association acting as trustee for the Farmers Home Administration, the Department
of Health, Education, and Welfare, the Department of Housing and Urban Development, the
Small Business Administration, and the Veterans Administration.
6. Off-budget.
7. Includes outstanding noncontingent liabilities: notes, bonds, and debentures. Includes
Federal Agricultural Mortgage Corporation; therefore details do not sum to total. Some data
are estimated.
8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, which is
shown on line 17.
9. Before late 1982, the association obtained financing through the Federal Financing Bank
(FFB). Borrowing excludes that obtained from the FFB, which is shown on line 22.
3,449
8,073
n.a.
21,015
17,026
29,462
21,015
17,040
27,638
n.a.
21,015
17,049
26,352
10. The Financing Corporation, established in August 1987 to recapitalize the Federal
Savings and Loan Insurance Corporation, undertook its first borrowing in October 1987.
11. The Farm Credit Financial Assistance Corporation, established in January 1988 to
provide assistance to the Farm Credit System, undertook its first borrowing in July 1988.
12. The Resolution Funding Corporation, established by the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, undertook its first borrowing in October 1989.
13. The FFB, which began operations in 1974, is authorized to purchase or sell obligations
issued, sold, or guaranteed by other federal agencies. Because FFB incurs debt solely for the
purpose of lending to other agencies, its debt is not included in the main portion of the table to
avoid double counting.
14. Includes FFB purchases of agency assets and guaranteed loans; the latter are loans
guaranteed by numerous agencies, with the amounts guaranteed by any one agency generally
being small. The Farmers Home Administration entry consists exclusively of agency assets,
whereas the Rural Electrification Administration entry consists of both agency assets and
guaranteed loans.
Securities Market and Corporate Finance A31
1.45
N E W SECURITY ISSUES
Tax-Exempt State and Local Governments
Millions of dollars
1996
1995
Type of issue or issuer,
or use
1993
1994
1995
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
May
June
1 All issues, new and refunding 1
279,945
153,950
143,101
16,839
16,978
11,545
11,598
15,244
13,199
14,991
16,533
By type of issue
2 General obligation
3 Revenue
90,599
189,346
54,404
99,546
55,737
86,555
6,194
10,645
5,489
11,489
6,074
5,471
2,063
9,535
4,846
10,398
5,083
8,116
5,476
9,515
6,493
10,040
By type of issuer
4 State
5 Special district or statutory authority 2
6 Municipality, county, or township
27,999
178,714
73,232
19,186
95,896
38,868
14,215
91,419
36,658
1,491
10,736
4,612
951
11,678
4,349
1,630
7,052
2,863
695
7,820
3,083
904
10,141
4,199
926
9,571
2,702
2,807
9,824
2,360
1,047
9,899
5,587
91,434
105,972
94,412
11,415
11,070
6,517
6,383
10,621
9,487
9,594
13,864
16,831
9,167
12,014
13,837
6,862
32,723
21,267
10,836
10,192
20,289
8,161
35,227
24,926
11,887
9,618
18,612
6,566
26,518
3,377
1,469
554
2,177
650
3,188
2,968
1,178
1,664
1,614
1,325
2,321
2,065
573
439
935
322
2,183
2,226
359
582
904
110
2,202
1,847
1,417
892
2,715
785
2,965
2,142
682
592
1,669
751
3,651
2,442
778
1,368
1,764
302
2,940
3,453
1,390
974
3,152
414
4,481
beginning
January
7 Issues for new capital
8
9
10
11
12
13
By use of proceeds
Education
Transportation
Utilities and conservation
Social welfare
Industrial aid
Other purposes
1. Par amounts of long-term issues based on date of sale.
2. Includes school districts.
1.46
N E W SECURITY ISSUES
SOURCE. Securities
Data
Dealer's Digest before then.
Company
1993;
Investment
U.S. Corporations
Millions of dollars
1996
1995
Type of issue, offering,
or issuer
1 All issues'
2 Bonds
2
By type of offering
3 Public, domestic
4 Private placement, domestic 3
5 Sold abroad
6
7
8
9
10
11
By industry group
Manufacturing
Commercial and miscellaneous
Transportation
Public utility
Communication
Real estate and financial
12 Stocks 2
By type of offering
13 Public preferred
14 Common
15 Private placement
16
17
18
19
20
21
By industry group
Manufacturing
Commercial and miscellaneous
Transportation
Public utility
Communication
Real estate and financial
1993
1994
1995
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
May
769,088
583,240
n.a.
52,112
55,349
40,149
47,499 r
60,784 r
54,980 r
45,000 r
59,890
646,634
498,039
n.a.
43,452
47,568
34,619
42,743 r
51,624 r
47,587 r
32,500
46300
487,029
121,226
38,379
365,222
76,065
56,755
408,806
n.a.
76,910
36,692
n.a.
6,760
43,336
n.a.
4,232
32,219
n.a.
2,399
33,982 r
n.a.
8,761
44,969 r
n.a.
6,656
40,763'
n.a.
6,824'
27,000
n.a.
5,500
39,300
n.a.
7,000
88,160
58,559
10,816
56,330
31,950
400,820
43,423
40,735
6,867
13,322
13,340
380,352
42,950
37,139
5,727
11,974
18,158
369,769
3,397
3,532
187
1,241
2,389
32,706
4,017
4,178
225
485
3,333
35,330
3,205
3,099
1,240
685
648
25,742
3,809
2,151
664
1,821
748
33,550 r
2,472
2,601
584
955
2,691
42,323 r
3,335'
3,852
137'
678
2,073'
37,512'
2,210
3,064
120
465'
535
26,106'
5,646
4,810
565
611
1,187
33,481
122,454
85,155
n.a.
8,660
7,781
5,530
4,756
9,160
7,393
12,500r
13,590
18,897
82,657
20,900
12,570
47,828
24,800
10,964
57,809
836
7,824
n.a.
2,210
5,571
n.a.
890
4,640
n.a.
2,167
2,589
n.a.
3,258
5,902
n.a.
967
6,426
n.a.
2,000
10,500'
n.a.
1,660
11,930
n.a.
22,271
25,761
2,237
7,050
3,439
61,004
17,798
15,713
2,203
2,214
494
46,733
1,815
4,628
39
60
0
2,118
2,209
3,274
97
36
0
2,166
681
2,632
156
322
0
1,739
295
2,521
38
115
200
1,588
1,543
2,659
141
809
122
3,719
2,036
3,577
232
319
100
1,130
3,968'
4,122'
37
149
144
4,079'
2,777
5,349
322
147
1,205
3,789
n.a.
1. Figures represent gross proceeds of issues maturing in more than one year; they are the
principal amount or number of units calculated by multiplying by the offering price. Figures
exclude secondary offerings, employee stock plans, investment companies other than closedend, intracorporate transactions, equities sold abroad, and Yankee bonds. Stock data include
ownership securities issued by limited partnerships.
Oct.
2. Monthly data cover only public offerings.
3. Monthly data are not available.
SOURCE. Beginning July 1993, Securities Data Company and the Board of Governors of
the Federal Reserve System.
A32
1.47
Domestic Financial Statistics • September 1996
OPEN-END INVESTMENT COMPANIES
Net Sales and Assets 1
Millions of dollars
1995
Item
1994
1996
1995
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.r
May
1 Sales of own shares2
841,286
871,415
72,730
70,499
94,719
112,332
90,370
93,856
101,310
96,501
2 Redemptions of own shares
3 Net sales3
699,823
141,463
699,497
171,918
56,174
16,556
52,727
17,772
67,945
26,774
75,354
36,978
60,398
29,972
65,748
28,108
81,005
20,305
69,419
27,082
4 Assets4
1,550,490
2,067,337
1,963,496
2,032,958
2,067,337
2,143,185
2,181,711
2,212,517
2,293,491
2,356,307
5 Cash5
6 Other
121,296
1,429,195
142,572
1,924,765
133,653
1,829,843
141,489
1,891,470
142,572
1,924,765
150,772
1,992,414
144,520
2,037,191
142,697
2,069,820
148,777
2,144,713
145,554
2,201,752
1. Data on sales and redemptions exclude money market mutual funds but include
limited-maturity municipal bond funds. Data on asset positions exclude both money market
mutual funds and limited-maturity municipal bond funds.
2. Includes reinvestment of net income dividends. Excludes reinvestment of capital gains
distributions and share issue of conversions from one fund to another in the same group.
3. Excludes sales and redemptions resulting from transfers of shares into or out of money
market mutual funds within the same fund family.
1.48
4. Market value at end of period, less current liabilities.
5. Includes all U.S. Treasury securities and other short-term debt securities.
SOURCE. Investment Company Institute. Data based on reports of membership, which
comprises substantially all open-end investment companies registered with the Securities and
Exchange Commission. Data reflect underwritings of newly formed companies after their
initial offering of securities.
CORPORATE PROFITS A N D THEIR DISTRIBUTION
Billions of dollars; quarterly data at seasonally adjusted annual rates
1994
Account
1 Profits with inventory valuation and
capital consumption adjustment
2 Profits before taxes
3 Profits-tax liability
4 Profits after taxes
5 Dividends
6 Undistributed profits
7 Inventory valuation
8 Capital consumption adjustment
1993
1996
1995
1995
Q2
Q3
Q4
Ql
Q2
Q3
Q4
Ql
464.5
464.3
163.8
300.5
197.3
103.3
526.5
528.2
195.3
332.9
211.0
121.9
588.6
600.8
218.7
382.1
227.4
154.7
531.5
523.2
192.8
330.4
208.8
121.7
549.8
547.5
203.4
344.1
212.5
131.6
568.9
570.4
213.5
356.8
218.5
138.3
559.6
594.1
217.3
376.8
221.7
155.1
561.1
588.4
214.2
374.1
224.6
149.6
614.9
609.6
224.5
385.1
228.5
156.6
618.6
611.0
218.7
392.3
234.7
157.6
652.0
649.0
233.4
415.6
239.9
175.7
-6.6
6.7
-13.3
11.6
-28.1
15.9
-9.8
18.1
-16.5
18.8
-22.8
21.3
-51.9
17.4
-42.3
15.0
-9.3
14.6
-8.8
16.5
-17.4
20.4
SOURCE. U.S. Department of Commerce, Survey of Current Business.
1994
Securities Markets and Corporate Finance
1.51
DOMESTIC FINANCE COMPANIES
A3 3
Assets and Liabilities 1
Billions of dollars, end of period; not seasonally adjusted
1994
Account
1993
1994
1996
1995
1995
Q3
Q4
Q1
Q2
Q3
Q4
Q1
ASSETS
1 Accounts receivable, gross 2
2
Consumer
3
Business
4
Real estate
482.8
116.5
294.6
71.7
551.0
134.8
337.6
78.5
614.6
152.0
375.9
86.6
524.1
130.3
317.2
76.6
551.0
134.8
337.6
78.5
568.5
135.8
351.9
80.8
586.9
141.7
361.8
83.4
594.7
146.2
362.4
86.1
614.6
152.0
375.9
86.6
623.3
153.2
381.0
89.1
50.7
11.2
55.0
12.4
63.2
14.1
51.1
12.1
55.0
12.4
58.9
12.9
62.1
13.7
61.2
13.8
63.2
14.1
61.8
14.2
7 Accounts receivable, net
8 All other
420.9
170.9
483.5
183.4
537.3
210.7
460.9
177.2
483.5
183.4
496.7
194.6
511.1
198.1
519.7
198.1
537.3
210.7
547.3
211.6
9 Total assets
591.8
666.9
748.0
638.1
666.9
691.4
709.2
717.8
748.0
758.9
25.3
159.2
21.2
184.6
23.1
184.5
21.6
171.0
21.2
184.6
21.0
181.3
21.5
181.3
21.8
178.0
23.1
184.5
23.5
184.8
42.7
206.0
87.1
71.4
51.0
235.0
99.5
75.7
62.3
284.7
106.2
87.2
50.0
228.2
95.0
72.3
51.0
235.0
99.5
75.7
52.5
254.4
102.5
79.7
57.5
264.4
102.1
82.5
59.0
272.1
102.4
84.4
62.3
284.7
106.2
87.2
62.3
291.4
105.7
91.1
591.8
666.9
748.0
638.1
666.9
691.4
709.2
717.8
748.0
758.9
5 LESS; Reserves for unearned income
Reserves for losses
6
LIABILITIES AND CAPITAL
10 Bank loans
11 Commercial paper
12
13
14
15
Debt
Owed to parent
Not elsewhere classified
All other liabilities
Capital, surplus, and undivided profits
16 Total liabilities and capital
1. Includes finance company subsidiaries of bank holding companies but not of retailers
and banks. Data are amounts carried on the balance sheets of finance companies; securitized
pools are not shown, as they are not on the books.
1.52
DOMESTIC FINANCE COMPANIES
2. Before deduction for unearned income and losses,
Consumer, Real Estate, and Business Credit1
Millions of dollars, amounts outstanding, end of period
1996
1995
Type of credit
1993
1994
1995
Dec.
Feb.
Mar.
Apr.
May
700,977
703,398 r
708,343 r
710,367
203,280
89,502
410,616 r
205,184
89,943
413,216 r
207,027
90,180
413,160
Jan.
Seasonally adjusted
1 Total
2 Consumer
3 Real estate 2
4 Business
546,103
160,227
72,043
313,833
615,618
176,085
78,910
360,624
691,616
198,861
87,077
405,678
691,616
198,861
87,077
405,678
696,099
200,162
88,084
407,853
202,548
88,188
410,241
Not seasonally adjusted
5 Total
6 Consumer
Motor vehicles
7
8
Other consumer 3
9
Securitized motor vehicles 4
10
Securitized other consumer 4
11 Real estate 2
12 Business
Motor vehicles
13
14
Retail 5
Wholesale 6
15
Leasing
16
17
Equipment
18
Retail
Wholesale 6
19
Leasing
20
Other business 7
21
Securitized business assets 4
22
23
Retail
Wholesale
24
Leasing
25
550,751
620,975
697,340
697,340
697,312
701,576
705,650 r
710,762 r
712,429
162,770
56,057
60,396
36,024
10,293
71,727
316,254
95,173
18,091
31,148
45,934
145,452
35,513
8,001
101,938
53,997
21,632
2,869
10,584
8,179
178,999
61,609
73,221
31,897
12,272
78,479
363,497
118,197
21,514
35,037
61,646
157,953
39,680
9,678
108,595
61,495
25,852
4,494
14,826
6,532
202,101
70,061
81,988
33,633
16,419
86,606
408,633
133,277
25,304
36,427
71,546
177,297
48,843
10,266
118,188
65,363
32,696
4,723
21,327
6,646
202,101
70,061
81,988
33,633
16,419
86,606
408,633
133,277
25,304
36,427
71,546
177,297
48,843
10,266
118,188
65,363
32,696
4,723
21,327
6,646
201,774
71,420
81,186
32,128
17,040
88,495
407,043
132,062
25,906
34,198
71,958
175,984
48,737
9,260
117,987
66,643
32,354
4,467
21,130
6,757
202,108
73,312
81,214
30,364
17,218
88,520
410,948
132,153
26,591
33,386
72,176
176,461
48,660
8,914
118,887
68,070
34,264
4,252
23,460
6,552
202,337
72,129
79,779
31,093
19,336
89,056
414,257 r
134,098'
27,140 r
33,910
73,048
177,285
48,696
9,213
119,376
69,497
33,377
4,067
22,622
6,688
203,532
73,810
79,489
30,476
19,757
89,975
417,255 r
134,500'
27,954'
32,155
74,391
178,507
47,913
9,663
120,931
69,193
35,055
4,367
24,327
6,361
205,678
74,327
80,435
31,435
19,481
90,182
416,569
134,196
27,151
31,360
75,685
178,151
46,941
10,386
120,824
68,112
36,110
4,790
25,028
6,292
1. Includes finance company subsidiaries of bank holding companies but not of retailers
and banks. Data are before deductions for unearned income and losses. Data in this table also
appear in the Board's G.20 (422) monthly statistical release. For ordering address, see inside
front cover.
2. Includes all loans secured by liens on any type of real estate, for example, first and junior
mortgages and home equity loans.
3. Includes personal cash loans, mobile home loans, and loans to purchase other types of
consumer goods such as appliances, apparel, general merchandise, and recreation vehicles.
4. Outstanding balances of pools upon which securities have been issued; these balances
are no longer carried on the balance sheets of the loan originator.
5. Passenger car fleets and commercial land vehicles for which licenses are required.
6. Credit arising from transactions between manufacturers and dealers, that is, floor plan
financing.
7. Includes loans on commercial accounts receivable, factored commercial accounts, and
receivable dealer capital; small loans used primarily for business or farm purposes; and
wholesale and lease paper for mobile homes, campers, and travel trailers.
A34
1.53
DomesticNonfinancialStatistics • September 1996
MORTGAGE MARKETS
Mortgages on New Homes
Millions of dollars except as noted
1996
1995
Item
1993
1995
Dec.
Jan.
Feb.
Mar.
Apr.
May
June
Terms and yields in primary and secondary markets
PRIMARY MARKETS
1
2
3
4
5
Terms1
Purchase price (thousands of dollars)
Amount of loan (thousands of dollars)
Loan-to-price ratio (percent)
Maturity (years)
Fees and charges (percent of loan amount)2
Yield (percent per year)
6 Contract rate'
7 Effective rate 1,3
8 Contract rate (HUD series)4
163.1
123.0
78.0
26.1
1.30
170.4
130.8
78.8
27.5
1.29
175.8
134.5
78.6
27.7
1.21
181.7
140.9
79.1
27.6
1.21
179.2
135.8
77.3
27.7
1.07
181.7
143.2
80.3
27.8
1.24
184.5
141.5
77.8
26.4
1.30
175.2
133.2
78.4
27.1
1.17
179.5
137.6
79.3
27.2
1.16
180.1
139.4
78.7
25.8
1.31
7.03
7.24
7.37
7.26
7.47
8.58
7.65
7.85
8.05
7.20
7.40
7.30
7.15
7.32
7.23
7.00
7.20
7.56
7.25
7.49
7.97
7.57
7.76
8.22
7.61
7.80
8.34
7.75
8.05
8.37
7.46
6.65
8.68
7.96
8.18
7.57
7.52
6.82
7.11
6.71
7.57
6.85
8.09
7.40
8.52
7.63
8.57
7.81
8.55
7.91
SECONDARY MARKETS
Yield (percent per year)
9 FHA mortgages (Section 203)5
10 GNMA securities6
Activity in secondary markets
FEDERAL NATIONAL MORTGAGE ASSOCIATION
Mortgage holdings (end of period)
11 Total
190,861
23,857
167,004
222,057
27,558
194,499
253,511
28,762
224,749
253,511
28,762
224,749
255,619
28,622
226,997
257,970
28,502
229,468
262,014
28,744
233,270
263,809
29,132
234,677
267,330
30,442
236,888
270,042
30,936
239,106
14 Mortgage transactions purchased (during period)
92,037
62,389
56,598
6,243
4,810
5,371
7,681
5,339
6,720
5,421
Mortgage commitments (during period)
15 Issued7
16 To sell8
92,537
5,097
54,038
1,820
56,092
360
4,765
0
5,750
3
7,013
0
6,293
29
5,599
0
5,228
13
5,280
0
55,012
321
54,691
72,693
276
72,416
107,424
267
107,157
107,424
267
107,157
111,143
226
110,917
114,793
223
114,570
117,420
220
117,200
119,520
216
119,304
121,058
212
120,846
123,806
212
123,594
Mortgage transactions (during period)
20 Purchases
21 Sales
229,242
208,723
124,697
117,110
98,470
85,877
13,108
11,712
13,357
11,624
10,891
9,733
11,984
11,384
12,740
11,958
12,385
11,904
10,266
9,969
22 Mortgage commitments contracted (during period)9
274,599
136,067
118,659
14,609
12,765
10,378
14,520
13,009
11,075
11,164
12
FHA/VA insured
13
Conventional
FEDERAL HOME LOAN MORTGAGE CORPORATION
Mortgage holdings (end of period f
17 Total
18
FHA/VA insured
19
Conventional
1. Weighted averages based on sample surveys of mortgages originated by major institutional lender groups for purchase of newly built homes; compiled by the Federal Housing
Finance Board in cooperation with the Federal Deposit Insurance Corporation.
2. Includes all fees, commissions, discounts, and "points" paid (by the borrower or the
seller) to obtain a loan.
3. Average effective interest rate on loans closed for purchase of newly built homes,
assuming prepayment at the end of ten years.
4. Average contract rate on new commitments for conventional first mortgages; from U.S.
Department of Housing and Urban Development (HUD). Based on transactions on the first
day of the subsequent month.
5. Average gross yield on thirty-year, minimum-downpayment first mortgages insured
by the Federal Housing Administration (FHA) for immediate delivery in the private
secondary market. Based on transactions on first day of subsequent month.
6. Average net yields to investors on fully modified pass-through securities backed by
mortgages and guaranteed by the Government National Mortgage Association (GNMA),
assuming prepayment in twelve years on pools of thirty-year mortgages insured by the
Federal Housing Administration or guaranteed by the Department of Veterans Affairs.
7. Does not include standby commitments issued, but includes standby commitments
converted.
8. Includes participation loans as well as whole loans.
9. Includes conventional and government-underwritten loans. The Federal Home Loan
Mortgage Corporation's mortgage commitments and mortgage transactions include activity
under mortgage securities swap programs, whereas the corresponding data for FNMA
exclude swap activity.
Real Estate
1.54
A35
MORTGAGE DEBT OUTSTANDING 1
Millions of dollars, end of period
1995
Type of holder and property
1992
1996
1994
1993
Ql
Q2
Q3
Q4
Qlp
1 All holders
4,092,984
4,268,420
4,473,100
4,515,854
4,584,566
4,663,864
4,715,884
4,773,998
By type of property
2 One- to four-family residences
3 Multifamily residences
4 Nonfarm, nonresidential
5
3,037,408
274,234
700,604
80,738
3,227,134
270,796
689,296
81,194
3,430,023
275,303
684,803
82,971
3,465,065
276,398
690,988
83,403
3,524,378
280,390
695,947
83,850
3,593,966
284,238
701,241
84,420
3,634,698
288,090
708,467
84,629
3,682,610
292,448
713,751
85,189
1,769,187
894,513
507,780
38,024
328,826
19,882
627,972
489,622
69,791
68,235
324
246,702
11,441
27,770
198,269
9,222
1,767,835
940,444
556,538
38,635
324,409
20,862
598,330
469,959
67,362
60,704
305
229,061
9,458
25,814
184,305
9,484
1,815,810
1,004,280
611,697
38,916
331,100
22,567
596,199
477,499
64,400
54,011
289
215,332
7,910
24,306
173,539
9,577
1,841,815
1,024,854
625,378
39,746
336,795
22,936
601,777
483,625
63,778
54,085
288
215,184
7,892
24,250
173,142
9,900
1,868,175
1,053,048
648,705
40,593
340,176
23,575
599,745
482,005
64,404
53,054
282
215,382
7,911
24,310
173,565
9,596
1,895,285
1,072,780
662,126
43,003
343,826
23,824
604,614
489,150
63,569
51,604
291
217,892
8,006
24,601
175,643
9,643
1,890,539
1,080,373
663,588
43,846
349,109
23,829
596,789
482,765
61,926
51,809
288
213,377
7,833
24,070
171,855
9,619
1,895,878
1,087,174
666,306
45,201
351,736
23,931
595,903
484,020
60,494
51,089
299
212,801
7,815
24,013
171,445
9,528
286,263
30
30
0
41,695
16,912
10,575
5,158
9,050
12,581
5,153
7,428
32,045
12,960
9,621
9,464
0
0
0
0
0
0
137,584
124,016
13,568
28,664
1,687
26,977
33,665
31,032
2,633
327,014
22
15
7
41,386
15,303
10,940
5,406
9,739
12,215
5,364
6,851
17,284
7,203
5,327
4,754
0
14,112
2,367
1,426
10,319
0
166,642
151,310
15,332
28,460
1,675
26,785
46,892
44,345
2,547
319,401
6
6
0
41,781
13,826
11,319
5,670
10,966
10,964
4,753
6,211
10,428
5,200
2,859
2,369
0
7,821
1,049
1,595
5,177
0
178,059
162,160
15,899
28,555
1,671
26,885
41,786
38,956
2,830
317,753
15
15
0
41,857
13,507
11,418
5,807
11,124
10,890
4,715
6,175
9,342
4,755
2,494
2,092
0
6,730
840
1,310
4,580
0
177,615
161,780
15,835
28,065
1,651
26,414
43,239
40,105
3,134
315,722
7
7
0
41,917
13,217
11,512
5,949
11,239
10,098
4,838
5,260
6,456
2,870
1,940
1,645
0
6,039
731
1,135
4,173
0
178,462
162,674
15,788
28,005
1,648
26,357
44,738
41,477
3,261
319,923
2
2
0
41,858
12,914
11,557
6,096
11,291
9,535
4,918
4,617
4,889
2,299
1,420
1,170
0
5,015
618
722
3,674
0
182,229
166,393
15,836
28,151
1,656
26,495
48,243
44,809
3,434
320,828
2
2
0
41,791
12,643
11,617
6,248
11,282
9,809
5,180
4,629
1,864
691
647
525
0
4,303
492
428
3,383
0
183,782
168,122
15,660
28,428
1,673
26,755
50,849
46,997
3,852
322,131
2
2
0
41,594
12,327
11,636
6,365
11,266
8,439
4,228
4,211
0
0
0
0
0
5,553
1,848
560
3,145
0
183,531
167,895
15,636
28,891
1,700
27,191
54,120
50,058
4,062
1,434,264
419,516
410,675
8,841
407,514
401,525
5,989
444,979
435,979
9,000
38
8
0
17
13
162,217
140,718
6,305
15,194
0
1,564,571
414,066
404,864
9,202
447,147
442,612
4,535
495,525
486,804
8,721
28
5
0
13
10
207,806
173,635
8,701
25,469
0
1,718,297
450,934
441,198
9,736
490,851
487,725
3,126
530,343
520,763
9,580
19
3
0
9
7
246,150
194,451
14,925
36,774
0
1,731,468
454,401
444,632
9,769
492,194
489,114
3,080
533,262
523,903
9,359
14
2
0
7
5
251,597
198,040
15,743
37,814
0
1,759,091
457,101
446,855
10,246
498,216
495,182
3,034
543,669
533,091
10,578
13
2
0
6
5
260,093
202,718
17,281
40,094
0
1,795,041
463,654
453,114
10,540
503,370
500,417
2,953
559,585
548,400
11,185
12
2
0
5
5
268,420
207,679
18,903
41,838
0
1,853,613
472,298
461,453
10,845
515,051
512,238
2,813
582,959
569,724
13,235
11
2
0
5
4
283,294
214,635
21,279
47,380
0
1,895,309
475,823
464,644
11,179
524,326
521,721
2,605
599,546
585,527
14,019
10
1
0
5
4
295,604
220,022
24,477
51,104
0
603,270
447,871
64,688
75,441
15,270
609,000
455,676
65,397
73,917
14,009
619,592
461,157
69,601
76,153
12,681
624,819
465,111
70,305
76,667
12,736
641,578
480,447
71,050
77,284
12,796
653,615
491,463
71,897
77,384
12,872
650,904
486,660
73,243
78,152
12,850
660,680
494,495
74,354
78,861
12,970
By type of holder
6 Major financial institutions
7
Commercial banks2
8
One- to four-family
Multifamily
9
10
Nonfarm, nonresidential
11
Farm
12
Savings institutions3
13
One- to four-family
14
Multifamily
15
Nonfarm, nonresidential
16
Farm
17
Life insurance companies
18
One- to four-family
Multifamily
19
20
Nonfarm, nonresidential
21
Farm
22 Federal and related agencies
Government National Mortgage Association
23
24
One- to four-family
Multifamily
25
26
Farmers Home Administration4
27
One- to four-family
Multifamily
28
29
Nonfarm, nonresidential
30
Farm
31
Federal Housing and Veterans' Administrations
32
One- to four-family
Multifamily
33
34
Resolution Trust Corporation
One- to four-family
35
Multifamily
36
37
Nonfarm, nonresidential
38
Farm
39
Federal Deposit Insurance Corporation
40
One- to four-family
41
Multifamily
Nonfarm, nonresidential
42
43
Farm
44
Federal National Mortgage Association
45
One- to four-family
Multifamily
46
47
Federal Land Banks
48
One- to four-family
49
Farm
50
Federal Home Loan Mortgage Corporation
51
One- to four-family
Multifamily
52
53 Mortgage pools or trusts5
54
Government National Mortgage Association
55
One- to four-family
Multifamily
56
57
Federal Home Loan Mortgage Corporation
58
One- to four-family
Multifamily
59
60
Federal National Mortgage Association
61
One- to four-family
Multifamily
62
63
Farmers Home Administration
64
One- to four-family
Multifamily
65
66
Nonfarm, nonresidential
Farm
67
68
Private mortgage conduits
69
One- to four-family
70
Multifamily
Nonfarm, nonresidential
71
72
Farm
73 Individuals and others6
74
One- to four-family
Multifamily
75
76
Nonfarm, nonresidential
77
1. Multifamily debt refers to loans on structures of five or more units.
2. Includes loans held by nondeposit trust companies but not loans held by bank trust
departments.
3. Includes savings banks and savings and loan associations.
4. FmHA-guaranteed securities sold to the Federal Financing Bank were reallocated from
FmHA mortgage pools to FmHA mortgage holdings in 1986:Q4 because of accounting
changes by the Farmers Home Administration.
5. Outstanding principal balances of mortgage-backed securities insured or guaranteed by
the agency indicated.
6. Other holders include mortgage companies, real estate investment trusts, state and local
credit agencies, state and local retirement funds, noninsured pension funds, credit unions, and
finance companies.
SOURCE. Based on data from various institutional and government sources. Separation of
nonfarm mortgage debt by type of property, if not reported directly, and interpolations and
extrapolations, when required for some quarters, are estimated in part by the Federal Reserve.
Line 69 from Inside Mortgage Securities.
A36
1.55
DomesticNonfinancialStatistics • September 1996
CONSUMER INSTALLMENT CREDIT'
Millions of dollars, amounts outstanding, end of period
1995
Holder and type of credit
1993
1994
1996
1995
Dec.
Jan.
Feb.
Mar.
Apr.
May
Seasonally adjusted
1 Total
844,118
966,457
1,103,164
1,103,164
1,113,509
1,124,253
1,133,642
1,140,181
1,145,061
2 Automobile
3 Revolving
4 Other2
279,786
287,011
277,321
317,182
339,337
309,939
351,052
413,894
338,218
351,052
413,894
338,218
352,461
419,030
342,018
354,810
425,778
343,666
356,310
431,196
346,136
359,507
438,460
342,214
360,539
444,389
340,133
Not seasonally adjusted
5 Total
863,924
990,247
1,131,747
1,131,747
1,123,813
1,121,348
1,123,315
1,129,433
1,135,310
By major holder
Commercial banks
Finance companies
Credit unions
Savings institutions
Nonfinancial business3
Pools of securitized assets4
399,683
116,453
101,634
37,855
77,229
131,070
462,923
134,830
119,594
38,468
86,621
147,811
507,414
152,624
131,939
40,106
85,061
214,603
507,414
152,624
131,939
40,106
85,061
214,603
502,400
152,606
131,257
40,000
80,733
216,817
500,140
154,365
130,839
40,000
78,138
217,866
499,762
151,749
130,837
40,000
76,681
224,286
504,652
153,299
131,873
39,999
73,765
225,845
503,951
154,762
133,354
40,000
74,680
228,563
By major type of credit
12 Automobile
13
Commercial banks
14
Finance companies
15
Pools of securitized assets4
281,538
122,000
56,057
39,561
319,715
141,895
61,609
36,376
354,260
149,094
70,626
44,616
354,260
149,094
70,626
44,616
351,969
148,186
71,420
42,569
352,583
147,703
73,312
41,755
352,634
148,455
72,129
42,868
355,073
150,455
73,810
40,596
357,868
151,038
74,327
41,021
16 Revolving
Commercial banks
17
18
Nonfinancial business3
Pools of securitized assets4
19
302,201
149,920
50,125
80,242
357,307
182,021
56,790
96,130
435,674
210,298
53,525
147,934
435,674
210,298
53,525
147,934
426,024
200,080
50,520
151,640
424,657
198,886
48,613
153,390
425,823
196,836
47,416
157,690
431,733
201,858
44,526
161,185
438,507
205,011
45,182
163,774
20 Other
21
Commercial banks
22
Finance companies
Nonfinancial business3
23
24
Pools of securitized assets4
280,185
127,763
60,396
27,104
11,267
313,225
139,007
73,221
29,831
15,305
341,813
148,022
81,998
31,536
22,053
341,813
148,022
81,998
31,536
22,053
345,820
154,134
81,186
30,213
22,608
344,108
153,551
81,053
29,525
22,721
344,858
154,471
79,620
29,265
23,728
342,627
152,339
79,489
29,239
24,064
338,935
147,902
80,435
29,498
23,768
6
7
8
9
10
11
1. The Board's series on amounts of credit covers most short- and intermediate-term credit
extended to individuals that is scheduled to be repaid (or has the option of repayment) in two
or more installments. Data in this table also appear in the Board's G.19 (421) monthly
statistical release. For ordering address, see inside front cover.
2. Comprises mobile home loans and all other installment loans that are not included in
automobile or revolving credit, such as loans for education, boats, trailers, or vacations. These
loans may be secured or unsecured.
1.56
3. Includes retailers and gasoline companies.
4. Outstanding balances of pools upon which securities have been issued; these balances
are no longer carried on the balance sheets of the loan originator.
5. Totals include estimates for certain holders for which only consumer credit totals are
available.
TERMS OF CONSUMER INSTALLMENT CREDIT1
Percent per year except as noted
1995
Item
1993
1994
1996
1995
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
May
INTEREST RATES
Commercial banks2
1 48-month new car
2 24-month personal
8.09
13.47
8.12
13.19
9.57
13.94
9.36
13.80
n.a.
n.a.
n.a.
n.a.
9.12
13.63
n.a.
n.a.
n.a.
8.93
13.52
Credit card plan
3 All accounts
4 Accounts assessed interest
n.a.
n.a.
15.69
15.77
16.02
15.79
15.81
15.71
n.a.
n.a.
n.a.
n.a.
15.82
15.41
n.a.
n.a.
n.a.
15.44
15.41
Auto finance companies
5 New car
6 Used car
9.48
12.79
9.79
13.49
11.19
14.48
10.84
13.98
10.52
13.83
9.74
13.27
9.86
13.28
9.77
13.19
9.64
13.26
9.37
13.49
54.5
48.8
54.0
50.2
54.1
52.2
54.5
52.2
53.6
51.8
51.8
52.2
52.3
52.1
51.8
52.0
51.5
51.8
50.8
51.7
91
98
92
99
92
99
92
99
92
99
92
99
91
98
91
98
91
99
91
99
14,332
9,875
15,375
10,709
16,210
11,590
16,583
12,012
17,034
12,152
16,698
12,059
16,627
11,990
16,520
11,934
16,605
12,024
16,686
12,233
OTHER TERMS 3
Maturity (months)
1 New car
8 Used car
Loan-to-value ratio
9 New car
10 Used car
Amount financed (dollars)
11 New car
12 Used car
1. The Board's series on amounts of credit covers most short- and intermediate-term credit
extended to individuals that is scheduled to be repaid (or has the option of repayment) in two
or more installments. Data in this table also appear in the Board's G.19 (421) monthly
statistical release. For ordering address, see inside front cover.
2. Data are available for only the second month of each quarter,
3. At auto finance companies,
Flow of Funds
1.57
A37
FUNDS RAISED IN U.S. CREDIT MARKETS 1
Billions of dollars; quarterly data at seasonally adjusted annual rates
1994
Q3
1995
Q4
01
Q2
1996
Q3
Q4
Ql
Nonfinancial sectors
1 Total net borrowing by domestic nonfinancial sectors....
481.7
543.0
628.5
618.9
732.9
587.6
634.8
880.4
888.3
584.8
578.2
863.5
By sector and instrument
2 U.S. government
3 Treasury securities
4
Budget agency issues and mortgages
278.2
292.0
-13.8
304.0
303.8
.2
256.1
248.3
7.8
155.9
155.7
.2
144.4
142.9
1.5
135.6
132.8
2.9
150.1
155.7
-5.7
266.8
268.0
-1.2
202.8
201.2
1.6
65.8
65.4
.4
42.4
37.2
5.1
288.7
291.0
-2.3
5 Private
203.5
239.0
372.3
463.1
588.5
452.0
484.7
613.6
685.6
519.1
535.9
574.8
87.8
78.8
158.4
173.6
-5.5
-10.0
.4
-13.7
-40.9
-18.4
-48.5
30.5
67.6
130.9
187.6
-10.4
-47.8
1.4
5.0
-13.7
8.6
10.1
74.8
75.2
157.2
187.9
-6.0
-25.0
.5
61.5
3.8
10.0
-10.2
-29.3
23.3
194.3
202.4
1.3
-11.1
1.8
124.9
73.1
21.4
55.4
-41.3
73.3
237.5
204.7
11.0
20.1
1.7
142.9
103.0
18.1
54.9
-58.4
15.4
205.5
210.3
5.6
-12.7
2.2
133.8
92.1
28.5
35.1
-53.8
6.2
210.6
216.8
-4.2
-3.4
1.4
141.8
76.7
30.7
72.4
-45.8
53.0
222.5
196.8
2.7
21.2
1.7
138.3
152.5
12.3
80.8
-4.3
98.4
239.6
207.2
14.2
16.3
1.8
156.9
96.8
39.1
59.1
-107.4
59.8
290.5
256.8
13.7
17.7
2.3
158.5
76.8
13.9
27.1
-7.6
82.0
197.4
157.8
13.6
25.2
.8
118.2
86.0
7.2
52.7
-6.4
58.9
285.4
250.1
15.6
17.4
2.2
121.7
52.8
37.9
24.5
183.8
-61.9
2.1
-53.0
81.6
198.4
19.5
1.3
-16.0
34.1
21.1
249.1
61.0
2.0
7.0
52.0
62.3
362.2
144.3
2.8
12.1
129.3
-43.4
383.5
250.6
2.0
35.9
212.7
-45.7
385.3
132.1
2.4
8.8
120.9
-65.4
392.4
160.8
-2.0
16.5
146.3
-68.5
358.6
300.1
.9
51.3
247.9
-45.1
393.0
303.6
3.6
34.4
265.6
-11.1
448.1
181.5
4.3
29.8
147.4
-110.6
334.5
217.4
-.8
28.2
190.0
-16.0
387.7
190.7
.9
29.3
160.5
-3.7
23 Foreign net borrowing in United States
74
Bonds
25 Bank loans n.e.c
26
Commercial paper
27
Other loans and advances
14.8
15.0
3.1
6.4
-9.8
22.6
15.7
2.3
5.2
-.6
68.8
81.3
.7
-9.0
-4.2
-20.3
7.1
1.4
-27.3
-1.6
67.7
46.5
8.5
13.6
-.8
19.6
20.8
4.7
-8.1
2.2
33,5
27.7
-.5
5.9
.4
61.4
13.5
8.1
37.9
1.9
40.4
49.9
5.6
-11.1
-4.0
94.1
52.1
8.2
30.9
2.9
75.1
70.6
11.9
-3.4
-4.1
36.9
45.4
8.7
-13.8
-3.3
28 Total domestic plus foreign
496.S
565.6
697.3
598.6
800.7
607.2
668.3
941.8
928.8
678.9
653.3
900.4
6
7
8
9
10
11
1?
13
14
15
16
By instrument
Municipal securities
Corporate bonds
Mortgages
Home mortgages
Multifamily residential
Commercial
Faim
Consumer credit
Bank loans n.e.c
Commercial paper
Other loans and advances
17
IS
19
20
21
22
By borrowing sector
Household
Noniinancial business
Farm
Nonfarm noncoiporate
Corporate
State and local government
-11.0
Financial sectors
29 Total net borrowing by financial sectors
15S.6
240.0
291.1
467.9
444.9
428.7
536.8
273.1
436.1
490.0
580.4
313.6
By instrument
30 U.S. government-related
Government-sponsored enterprise securities
31
32 Mortgage pool securities
33
Loans from U.S. government
145.7
9.2
136.6
.0
155.8
40.3
115.6
.0
164.2
80.6
83.6
.0
288.6
176.9
116.5
-4.8
205.1
106.9
98.2
.0
250.3
152.1
98.3
.0
321.2
249.0
72.2
.0
89.4
62.9
26.4
.0
192.1
127.2
64.9
.0
221.4
101.5
119.9
.0
317.5
136.1
181.4
.0
147.2
37.4
109.8
.0
9.8
69.9
.5
8.8
-32.0
-37.3
84.2
82.7
.6
2.2
-.7
-.6
126.9
120.1
3.6
-13.0
-6.2
22.4
179.2
117.5
9.8
-12.3
41.6
22.6
239.8
185.5
5.3
3.0
42.6
3.4
178.3
103.9
12.0
-11.7
41.3
32.8
215.6
84.9
4.9
1.9
85.9
38.1
183.7
167.5
5.2
-3.0
38.5
-24.5
244.0
182.3
5.2
21.2
34.0
1.3
268.6
208.1
5.2
7.1
43.3
4.9
262.9
184.0
5.6
-13.4
54.7
32.0
166.4
136.2
5.5
7.6
22.6
-5.5
9.1
136.6
9.8
-10.7
-2.5
-6.5
-44.7
.0
.0
17.7
-2.4
1.2
3.7
54.0
40.2
115.6
84.2
7.7
2.3
13.2
-7.0
.0
.0
-1.6
8.0
.3
2.7
58.5
80.6
83.6
126.9
4.6
8.8
2.9
11.3
.2
.2
.2
.0
3.4
12.0
83.3
172.1
116.5
179.2
9.9
10.3
24.2
12.8
.2
.3
50.2
-11.5
13.7
.5
68.5
106.9
98.2
239.8
8.1
14.4
32.0
2.6
-.1
-.1
51.6
-2.1
5.4
-5.0
133.0
152.1
98.3
178.3
23.9
11.5
47.3
14.8
.5
.0
16.3
-7.0
18.8
-7.6
59.8
249.0
72.2
215.6
4.1
16.0
11.1
36.1
.2
1.3
57.3
1.1
6.3
19.3
62.8
62.9
26.4
183.7
6.3
16.3
61.5
-18.9
-.3
.0
83.1
-7.4
5.2
-29.5
67.6
127.2
64.9
244.0
18.2
20.8
21.7
-7.2
-.1
.1
57.2
14.8
5.2
-.1
113.2
101.5
119.9
268.6
8.8
28.2
52.1
5.1
.1
-.1
6.5
4.0
5.2
2.1
156.5
136.1
181.4
262.9
-.9
-7.8
-7.3
31.5
.0
-.4
59.6
-20.0
6.0
7.7
194.5
37.4
109.8
166.4
-4.8
-25.8
26.6
10.9
-.1
2.5
50.0
.7
5.9
-31.8
132.2
34
35
36
37
38
39
Corporate bonds
Mortgages
Bank loans n.e.c
Open market paper
Other loans and advances
By borrowing sector
40 Government-sponsored enterprises
41 Federally related mortgage pools
47 Private financial sectors
43
Commercial banks
44
Bank holding companies
45
Funding corporations
46
Savings institutions
47
Credit unions
48
Life insurance companies
49
Finance companies
Mortgage companies
50
51
Real estate investment trusts (REITs)
57 Brokers and dealers
53
Issuers of asset-backed securities (ABSs)
A38
1.57
DomesticNonfinancialStatistics • September 1996
FUNDS RAISED IN U.S. CREDIT MARKETS'—Continued
1994
Transaction category or sector
1991
1992
1993
1994
1996
1995
1995
Q3
Q4
Q1
Q2
Q3
Q4
Q1
All sectors
54 Total net borrowing, all sectors
652.1
805.6
988.4
1,066.5
1,245.6
1,035.9
1,205.2
1,214.8
1,364.9
1,169.0
1,233.7
1,214.0
55
56
57
58
59
60
61
62
424.0
87.8
163.6
158.9
-13.7
-29.1
-44.0
-95.6
459.8
30.5
166.0
131.5
5.0
-9.3
13.1
8.9
420.3
74.8
276.6
160.8
61.5
-8.5
-5.1
8.0
449.3
-29.3
147.9
204.1
124.9
62.2
35.7
71.7
349.5
-41.3
305.3
242.8
142.9
114.5
74.3
57.5
386.0
-58.4
140.1
217.5
133.8
85.1
61.7
70.2
471.3
-53.8
118.8
215.5
141.8
78.1
122.5
356.2
-45.8
234.0
227.7
138.3
157.6
88.8
58.1
394.9
-4.3
330.6
244.8
156.9
123.7
61.9
56.5
287.2
-107.4
320.0
295.7
158.5
92.1
88.1
34.9
359.9
-7.6
336.7
202.9
118.2
84.5
58.5
80.6
435.9
-6.4
240.5
290.9
121.7
69.0
46.6
15.7
U.S. government securities
Municipal securities
Corporate and foreign bonds
Mortgages
Consumer credit
Bank loans n.e.c
Open market paper
Other loans and advances
111.0
Funds raised through mutual funds and corporate equities
63 Total net share issues
209.4
294.9
442.1
150.8
159.3
113.2
-81.1
40.0
156.7
196.1
244.3
273.4
64 Mutual funds
65 Corporate equities
66
Nonfinancial corporations
67
Financial corporations
68
Foreign shares purchased by U.S. residents
147.2
62.2
18.3
13.3
30.7
209.1
85.8
27.0
28.1
30.7
323.7
118.4
21.3
36.6
60.5
128.9
21.9
-44.9
24.1
42.7
173.9
-14.7
-74.2
12.3
47.2
129.7
-16.4
-50.0
10.5
23.1
-12.6
-68.5
-118.0
16.3
33.2
78.5
-38.5
-60.0
8.7
12.8
173.3
-16.6
-71.3
17.7
37.0
195.3
.7
-92.8
9.7
83.9
248.6
-4.3
-72.8
13.3
55.3
290.9
-17.6
-118.0
11.5
89.0
1. Data in this table also appear in the Board's Z. 1 (780) quarterly statistical release, tables
F.2 through F.5. For ordering address, see inside front cover.
Flow of Funds
1.58
A39
SUMMARY OF FINANCIAL TRANSACTIONS 1
Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates
1994
Transaction category or sector
1991
1992
1993
1994
1995
1996
1995
Q3
Q4
Q1
Q2
Q3
Q4
QL
NET LENDING IN CREDIT MARKETS 2
1
Total net lending in credit markets
Private domestic nonfinancial sectors
Households
4
Nonfarm noncorporate business
5
Nonfinancial corporate business
6
State and local governments
7 U.S. government
8 Rest of the world
9 Financial sectors
10
Government sponsored enterprises
11
Federally related mortgage pools
12
Monetary authority
Commercial banking
13
14
U.S. chartered banks
Foreign banking offices in United States
15
Bank holding companies
16
17
Banks in U.S. affiliated areas
Funding corporations
18
19
Thrift institutions
20
Life insurance companies
21
Other insurance companies
22
Private pension funds
23
State and local government retirement funds
24
Finance companies
Mortgage companies
25
Mutual funds
26
27
Closed-end funds
28
Money market mutual funds
29
Real estate investment trusts (REITs)
30
Brokers and dealers
Asset-backed securities issuers (ABSs)
31
32
Bank personal trusts
2
3
652.1
805.6
988.4
1,066.5
1,245.6
1,035.9
1,205.2
1,214.8
1,364.9
1,169.0
1,233.7
1,214.0
105.2
29.0
-5.3
30.7
50.8
10.5
13.3
523.1
15.1
136.6
31.1
80.8
35.7
48.5
-1.5
-1.9
8.2
-146.1
86.5
30.0
35.4
41.1
-9.2
11.2
80.1
12.8
32.7
-.7
17.5
50.0
10.0
87.9
81.7
-.1
27.8
-21.5
-11.9
98.2
631.5
68.8
115.6
27.9
95.3
69.5
16.5
5.6
3.7
17.7
-61.3
78.5
6.7
41.1
23.0
7.5
.1
126.2
18.2
4.7
1.1
-1.3
53.7
8.0
65.6
52.2
.6
9.1
3.7
-18.4
128.3
812.8
90.2
83.6
36.2
142.2
149.6
-9.8
.0
2.4
-19.4
-1.7
100.9
27.7
45.9
19.8
-9.0
.0
159.5
11.0
20.4
.6
14.8
80.8
9.5
258.9
304.7
.7
48.1
-94.6
-24.2
134.4
697.4
119.1
116.5
31.5
163.4
148.1
11.2
.9
3.3
-27.4
34.9
66.3
24.9
47.0
29.0
68.2
-22.9
-7.1
-5.5
30.0
4.7
-44.2
61.9
7.1
-84.8
51.5
1.0
-3.5
-133.7
-21.3
271.7
1,080.0
94.7
98.2
12.7
266.3
186.6
75.4
-.3
4.7
6.2
8.7
98.7
21.4
61.3
21.4
63.6
-3.4
52.5
5.8
86.5
1.8
90.1
112.3
-18.8
213.4
292.3
.7
37.3
-117.0
-11.3
137.5
696.3
121.9
98.3
29.7
183.4
155.6
22.9
2.7
2.2
-43.4
53.8
89.5
25.3
42.5
-11.1
63.8
-14.0
-29.3
-13.6
57.7
5.5
-21.9
50.6
7.7
227.8
343.4
.9
53.2
-169.7
-24.4
210.9
790.8
171.4
72.2
30.0
174.5
174.2
-5.6
-2.4
8.3
-4.2
32.4
79.4
30.4
74.7
36.6
81.7
2.1
-70.4
-10.0
53.9
.2
-8.0
42.6
1.4
35.3
170.8
.5
-41.1
-94.9
-13.2
241.2
951.6
28.2
26.4
16.3
343.1
183.4
158.8
-1.5
2.4
39.8
28.2
132.4
19.2
58.9
62.4
92.5
-14.4
-15.1
3.5
53.1
1.8
30.5
55.5
-10.8
-142.3
-77.2
1.1
39.5
-105.7
-24.3
326.1
1,205.3
97.5
64.9
20.8
315.6
222.4
83.9
5.3
4.0
-3.5
9.7
131.2
21.7
57.2
3.2
65.7
29.9
21.5
6.4
135.2
1.8
146.2
100.9
-20.6
-54.9
203.2
1.1
-50.2
-209.0
-23.9
358.0
889.8
61.5
119.9
-11.1
248.9
227.5
24.1
-9.6
7.0
5.5
43.6
77.0
21.8
50.5
6.8
43.7
7.3
52.0
8.4
33.2
1.8
-1.8
144.6
-23.7
-177.3
-90.7
1.2
37.6
-125.3
-23.9
161.7
1,273.1
191.7
181.4
24.7
157.7
112.9
35.0
4.6
5.2
-17.0
-46.8
54.3
22.8
78.5
13.2
52.7
-36.4
151.5
5.0
124.6
1.9
185.6
148.0
-20.2
-133.6
-103.6
1.2
52.7
-83.9
-24.6
327.6
1,044.5
42.3
109.8
14.3
130.7
85.9
51.1
-5.3
-.9
154.9
-2.1
122.1
22.2
77.8
87.3
56.7
1.7
62.9
-1.2
170.1
1.9
-101.1
112.2
-18.1
RELATION OF LIABILITIES
TO FINANCIAL ASSETS
33
Net flows through credit markets
652.1
805.6
988.4
1,066.5
1,245.6
1,035.9
1,205.2
1,214.8
1,364.9
1,169.0
1,233.7
1,214.0
34
35
36
3/
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
Other financial sources
Official foreign exchange
Special drawing rights certificates
Treasury currency
Life insurance reserves
Pension fund reserves
Interbank claims
Checkable deposits and currency
Small time and savings deposits
Large time deposits
Money market fund shares
Security repurchase agreements
Foreign deposits
Mutual fund shares
Corporate equities
Security credit
Trade payables
Taxes payable
Noncorporate proprietors' equity
Investment in bank personal trusts
Miscellaneous
-5.9
.0
.0
25.7
198.2
-3.4
86.3
1.5
-58.5
41.6
-16.5
-26.5
147.2
62.2
51.4
31.0
-7.4
.5
16.1
278.2
-1.6
-2.0
.2
27.3
238.6
49.4
113.5
-57.2
-73.2
4.5
43.1
-3.5
209.1
85.8
4.6
46.6
9.7
16.7
-7.1
280.5
.8
.0
.4
35.2
247.3
50.5
117.3
-70.3
-23.5
20.2
71.2
-18.5
323.7
118.4
61.4
54.4
5.2
3.4
1.6
364.6
-5.8
.0
.7
34.0
248.0
89.7
-9.7
-40.0
19.6
43.3
78.3
45.8
128.9
21.9
-.1
111.0
3.2
22.6
18.8
236.8
8.8
2.2
.6
49.9
258.5
10.1
-12.5
96.5
65.6
142.3
110.7
5.8
173.9
-14.7
26.7
106.0
1.3
38.7
-47.7
461.9
.2
.0
.8
67.7
238.0
4.1
-66.0
-51.8
84.0
56.4
86.0
28.1
129.7
-16.4
-59.3
97.2
10.2
46.0
23.6
264.8
-8.6
.0
.7
21.6
293.4
99.9
-40.5
-46.9
36.5
86.5
51.9
97.9
-12.6
-68.5
37.1
149.4
4.2
23.1
11.9
303.4
17.8
.0
.7
54.0
302.5
-13.6
42.8
18.1
116.8
59.9
161.8
39.2
78.5
-38.5
-10.7
113.6
15.3
26.9
-44.3
327.2
10.3
.0
.7
49.9
310.7
25.2
133.5
112.0
69.2
233.5
130.7
90.6
173.3
-16.6
30.8
30.5
-4.3
33.5
-45.6
505.1
9.0
8.6
.8
29.9
223.0
-43.2
-151.5
142.2
76.3
121.2
85.1
-63.8
195.3
.7
35.4
183.2
4.0
48.6
-63.9
347.6
-1.9
.0
.0
66.0
197.7
71.8
-75.0
113.6
.3
154.8
65.2
-42.8
248.6
-4.3
51.3
96.8
-9.8
45.7
-37.1
667.6
-2.1
.0
.0
56.0
301.5
-80.9
51.7
174.7
52.0
225.6
-31.6
-32.0
290.9
-17.6
80.3
129.7
9.5
53.1
-47.3
466.0
54
Total financial sources
1,473.9
1,790.4
2,351.7
2,113.5
2,730.1
1,979.2
2,245.7
2,482.9
3,237.8
2,357.5
2,842.3
2,893.5
55
56
57
Floats not included in assets (—)
U.S. government checkable deposits
Other checkable deposits
Trade credit
-13.1
4.5
36.1
.7
1.6
11.3
-1.5
-1.3
-6.6
-4.8
-2.8
-7.8
-6.0
-3.8
-14.8
7.4
-3.3
12.6
-24.4
-2.3
-44.0
13.2
-3.7
79.5
-16.3
-3.9
12.7
3.5
-3.5
-44.1
-24.3
-4.2
-107.3
17.8
-3.9
-71.6
58
59
60
61
62
63
Liabilities not identified as assets (—)
Treasury currency
Interbank claims
Security repurchase agreements
Foreign deposits
Taxes payable
Miscellaneous
-.6
26.2
-9.5
-24.0
-2.2
9.7
-.2
-4.9
3.6
-2.8
11.9
-.1
-.2
4.2
34.3
-7.0
11.1
-126.1
-.2
-2.7
31.5
36.9
8.6
-138.7
-.5
-3.1
11.0
-1.5
8.7
-29.8
-.2
10.1
-53.5
39.5
10.8
-44.3
-.2
-1.7
86.7
55.7
-.9
-107.3
-.2
.8
64.4
45.6
-8.9
-230.6
-.4
8.2
-47.3
81.6
31.6
-36.9
-.3
7.6
39.6
-93.6
10.8
-4.8
-1.0
-29.1
-12.7
-39.5
1.4
153.1
-.9
12.4
-76.7
-41.5
-24.0
123.3
64
Total identified to sectors as assets
1,446.8
1,769.3
2,444.9
2,193.7
2,769.8
2,000.1
2,284.2
2,522.7
3,208.3
2,442.4
2,905.9
2,958.8
1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables
F.6 and F.7. For ordering address, see inside front cover.
2. Excludes corporate equities and mutual fund shares.
A40
1.59
Domestic Financial Statistics • September 1996
SUMMARY OF CREDIT MARKET DEBT OUTSTANDING 1
Billions of dollars, end of period
1994
1995
1996
lyyz
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Nonfinancial sectors
1 Total credit market debt owed by
domestic nonfinancial sectors
11,894.5
12,537.8
13,163.0
13,895.9
12,965.8
13,163.0
13,339.3
13,548.4
13,707.8
13,895.9
14,072.1
By sector and instrument
2 U.S. government
Treasury securities
3
4
Budget agency issues and mortgages
3,080.3
3,061.6
18.8
3,336.5
3,309.9
26.6
3,492.3
3,465.6
26.7
3,636.7
3,608.5
28.2
3,432.3
3,404.1
28.2
3,492.3
3,465.6
26.7
3,557.9
3,531.5
26.4
3,583.5
3,556.7
26.8
3,603.4
3,576.5
26.9
3,636.7
3,608.5
28.2
3,717.2
3,689.6
27.6
5 Private
8,814.2
9,201.3
9,670.7
10,259.2
9,533.6
9,670.7
9,781.4
9,964.9
10,104.4
10,259.2
10,354.9
6
/
8
y
10
11
12
13
14
15
16
By instrument
Municipal securities
Corporate bonds
Mortgages
Home mortgages
Multifamily residential
Commercial
Farm
Consumer credit
Bank loans n.e.c
Commercial paper
Other loans and advances
1,302.8
1,154.5
4,088.7
3.037.4
272.5
698.1
80.7
802.4
672.2
107.1
686.5
1,377.5
1,229.7
4,260.0
3,227.6
267.8
683.4
81.2
863.9
676.0
117.8
676.3
1,348.2
1,253.0
4,454.4
3,430.0
269.1
672.3
83.0
988.8
749.0
139.2
738.0
1,307.0
1,326.3
4,691.8
3,634.7
280.2
692.4
84.6
1,131.7
852.0
157.4
792.9
1,362.6
1,251.5
4,400.5
3,374.6
270.2
673.1
82.6
933.9
724.9
138.7
721.6
1,348.2
1,253.0
4,454.4
3,430.0
269.1
672.3
83.0
988.8
749.0
139.2
738.0
1,335.4
1,266.3
4,495.8
3,465.1
269.8
677.6
83.4
989.3
782.8
149.8
762.0
1,331.7
1,290.9
4,563.2
3,524.4
273.3
681.6
83.9
1,029.7
810.6
162.9
775.8
1,309.9
1,305.8
4,641.2
3,594.0
276.8
686.1
84.4
1,077.5
825.6
163.3
781.2
1,307.0
1,326.3
4,691.8
3,634.7
280.2
692.4
84.6
1,131.7
852.0
157.4
792.9
1,304.1
1,341.0
4,748.6
3,682.6
284.1
696.7
85.2
1,123.3
861.9
173.2
802.7
17
18
19
20
21
22
By borrowing sector
Household
Nonfinancial business
Farm
Nonfarm noncorporate
Corporate
State and local government
4.021.4
3,696.8
136.3
1,122.9
2,437.6
1,095.9
4,272.9
3,770.3
138.3
1,129.9
2,502.0
1,158.2
4,634.7
3,921.1
141.2
1,142.0
2,638.0
1,114.8
5,018.3
4,171.8
143.2
1,178.0
2,850.7
1,069.1
4,515.1
3,885.6
143.1
1,137.4
2,605.0
1,132.8
4,634.7
3,921.1
141.2
1,142.0
2,638.0
1,114.8
4,676.5
4,002.7
138.9
1,154.5
2,709.2
1,102.2
4,784.1
4,084.0
142.8
1,163.3
2,777.8
1,096.8
4,908.0
4,122.3
144.9
1,170.4
2,807.0
1,074.1
5,018.3
4,171.8
143.2
1,178.0
2,850.7
1,069.1
5,063.2
4,224.8
140.9
1,185.0
2,898.9
1,066.9
23 Foreign credit market debt held in
United States
313.1
381.9
361.6
429.4
352.4
361.6
376.8
387.6
409.9
429.4
438.5
24
2b
26
27
146.2
23.9
77.7
65.3
227.4
24.6
68.7
61.1
234.6
26.1
41.4
59.6
281.1
34.6
55.0
58.7
227.6
26.3
39.9
58.6
234.6
26.1
41.4
59.6
237.9
28.2
50.9
59.8
250.4
29.6
48.1
59.5
263.4
31.6
55.8
59.0
281.1
34.6
55.0
58.7
292.4
36.8
51.5
57.8
12,207.6
12,919.7
13,524.6
14,325.3
13,318.3
13,524.6
13,716.1
13,935.9
14,117.7
14,325.3
14,510.7
Bonds
Bank loans n.e.c
Commercial paper
Other loans and advances
28 Total credit market debt owed by nonfinancial
sectors, domestic and foreign
Financial sectors
29 Total credit market debt owed by
financial sectors
30
31
32
33
34
36
37
38
39
By instrument
U.S. government-related
Government-sponsored enterprises securities
Mortgage pool securities
Loans from U.S. government
Private
Corporate bonds
Mortgages
Bank loans n.e.c
Open market paper
Other loans and advances
By borrowing sector
40 Government-sponsored entetpnses
41 Federally related mortgage pools
42 Private financial sectors
43 Commercial banks
44 Bank holding companies
45 Funding corporations
46 Savings institutions
47 Credit unions
48 Life insurance companies
49 Finance companies
50 Mortgage companies
51 Real estate investment trusts (REITs)
52 Brokers and dealers
53 Issuers of asset-backed securities (ABSs)
3,025.0
3,321.5
3,794.6
4,242.1
3,656.2
3,794.6
3,861.4
3,971.8
4,093.9
4,242.1
4,317.1
1,720.0
443.1
1,272.0
4.8
1,305.1
738.4
5.4
80.5
394.3
86.6
1,884.1
523.7
1,355.6
4.8
1,437.4
858.5
8.9
67.6
393.5
108.9
2,172.7
700.6
1,472.1
.0
1,621.9
973.5
18.7
55.3
442.8
131.6
2,377.8
807.5
1,570.3
.0
1,864.3
1,158.9
24.0
58.3
488.1
135.0
2,093.3
638.3
1,454.9
.0
1,563.0
949.5
17.5
53.4
420.5
122.0
2,172.7
700.6
1,472.1
.0
1,621.9
973.5
18.7
55.3
442.8
131.6
2,196.2
716.3
1,479.9
.0
1,665.2
1,012.3
20.0
53.4
454.1
125.4
2,247.1
748.1
1,499.0
.0
1,724.7
1,056.4
21.3
58.4
462.8
125.7
2,300.1
773.5
1,526.6
.0
1,793.8
1,110.2
22.6
60.3
473.6
127.0
2,377.8
807.5
1,570.3
.0
1,864.3
1,158.9
24.0
58.3
488.1
135.0
2,416.6
816.9
1,599.7
.0
1,900.6
1,189.6
25.4
59.1
492.8
133.6
447.9
1,272.0
1,305.1
80.0
114.6
161.6
88.4
.0
.0
390.4
30.2
13.9
21.7
404.3
528.5
1,355.6
1,437.4
84.6
123.4
169.9
99.6
.2
.2
390.5
30.2
17.4
33.7
487.6
700.6
1,472.1
1,621.9
94.5
133.6
199.3
112.4
.5
.6
440.7
18.7
31.1
34.3
556.1
807.5
1,570.3
1,864.3
102.6
148.0
233.9
115.0
.4
.5
492.3
16.6
36.5
29.3
689.1
638.3
1,454.9
1,563.0
92.6
129.6
200.6
103.4
.4
.3
420.9
18.5
29.5
29.4
537.7
700.6
1,472.1
1,621.9
94.5
133.6
199.3
112.4
.5
.6
440.7
18.7
31.1
34.3
556.1
716.3
1,479.9
1,665.2
95.0
137.7
221.0
107.7
.4
.6
456.7
16.9
32.4
26.9
570.0
748.1
1,499.0
1,724.7
99.9
142.9
229.9
105.9
.3
.6
467.2
20.6
33.7
26.8
596.8
773.5
1,526.6
1,793.8
102.0
150.0
240.0
107.2
.4
.6
471.9
21.6
35.0
27.4
637.8
807.5
1,570.3
1,864.3
102.6
148.0
233.9
115.0
.4
.5
492.3
16.6
36.5
29.3
689.1
816.9
1,599.7
1,900.6
100.5
141.6
244.6
117.8
.4
1.1
499.8
16.8
38.0
21.4
718.8
All sectors
54 Total credit market debt, domestic and foreign....
55
56
57
58
59
60
61
62
U.S. government securities
Municipal securities
Corporate and foreign bonds
Mortgages
Consumer credit
Bank loans n.e.c
Open market paper
Other loans and advances
15,232.6
16,241.2
17,319-2
18,567.4
16,974.5
17,319.2
17,577.5
17,907.8
18,211.5
18,567.4
18,827.8
4,795.5
1,302.8
2,039.0
4,094.1
802.4
776.6
579.0
843.1
5,215.8
1,377.5
2,315.6
4,269.0
863.9
768.2
580.0
851.1
5,665.0
1,348.2
2,461.0
4,473.1
988.8
830.4
623.5
929.1
6,014.6
1,307.0
2,766.3
4,715.9
1,131.7
944.9
700.4
986.6
5,525.6
1,362.6
2,428.6
4,418.0
933.9
804.5
599.2
902.2
5,665.0
1,348.2
2,461.0
4,473.1
988.8
830.4
623.5
929.1
5,754.1
1,335.4
2,516.5
4,515.9
989.3
864.4
654.7
947.2
5,830.6
1,331.7
2,597.7
4,584.6
1,029.7
898.6
673.8
961.0
5,903.5
1,309.9
2,679.5
4,663.9
1,077.5
917.4
692.7
967.1
6,014.6
1,307.0
2,766.3
4,715.9
1,131.7
944.9
700.4
986.6
6,133.8
1,304.1
2,823.1
4,774.0
1,123.3
957.8
717.6
994.2
1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables
L.2 through L.4. For ordering address, see inside front cover.
1.60
Flow of Funds
A41
1995
1996
SUMMARY OF FINANCIAL ASSETS AND LIABILITIES'
Billions of dollars except as noted, end of period
1994
Transaction category or sector
1992
1993
1994
1995
Q3
Q4
Ql
Q2
Q3
Q4
Ql
16,974.5
17,319.2
17,577.5
17,907.8
18,211.5
18,567.4
18,827.8
2,935.1
1,974.3
39.9
302.8
618.1
197.1
1,402.6
13,372.9
698.6
1,499.0
375.7
3,409.8
2,963.7
396.0
19.3
30.8
137.4
1,177.4
1,557.1
458.5
693.6
482.1
586.9
41.4
724.8
75.6
508.0
14.2
137.5
555.2
240.2
2,942.2
2,048.3
40.2
290.4
563.4
191.2
1,493.1
13,585.1
714.0
1,526.6
370.6
3,474.2
3,023.7
401.1
16.9
32.5
143.1
1,188.9
1,575.5
464.4
706.2
481.8
594.7
43.2
739.2
77.7
505.7
14.7
137.0
593.2
234.2
2,930.4
2,041.3
40.4
316.1
532.5
185.2
1,527.5
13,924.3
761.8
1,570.3
380.8
3,520.6
3,056.1
412.6
18.0
33.8
138.3
1,176.3
1,585.7
471.9
725.9
487.7
614.6
34.1
771.3
78.9
545.5
15.1
183.4
632.9
229.2
2,858.6
2,001.8
40.7
306.6
509.4
179.0
1,617.8
14,172.5
771.7
1,599.7
379.6
3,541.4
3,068.8
422.3
16.7
33.6
174.9
1,174.6
1,619.2
478.1
745.3
508.2
623.3
34.5
791.7
78.6
595.6
15.6
158.2
657.6
224.7
CREDIT MARKET DEBT OUTSTANDING 2
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
Total credit market assets
Private domestic nonfinancial sectors
Households
Nonfarm noncorporate business
Nonfinancial corporate business
State and local governments
U.S. government
Rest of the world
Financial sectors
Government-sponsored enterprises
Federally related mortgage pools
Monetary authority
Commercial banking
U.S. chartered banks
Foreign banking offices in United States
Bank holding companies
Banks in U.S. affiliated areas
Funding corporations
Thrift institutions
Life insurance companies
Other insurance companies
Private pension funds
State and local government retirement funds
Finance companies
Mortgage companies
Mutual funds
Closed-end funds
Money market mutual funds
Real estate investment trusts (REITs)
Brokers and dealers
Asset-backed securities issuers (ABSs)
Bank personal trusts
15,232.6
16,241.2
17,319.2
18,567.4
2,671.6
1,618.5
38.1
257.8
757.2
235.0
1,022.8
11,303.2
457.8
1,272.0
300.4
2,948.6
2,571.9
335.8
17.5
23.4
162.5
1,134.5
1,309.1
389.4
571.7
417.5
496.4
60.5
566.4
67.7
408.6
8.1
122.7
378.0
231.5
2,730.1
1,658.9
38.8
271.5
760.8
230.7
1,146.6
12,133.8
548.0
1,355.6
336.7
3,090.8
2,721.5
326.0
17.5
25.8
149.2
1,132.7
1,420.6
422.7
617.6
437.3
482.8
60.4
725.9
78.6
429.0
8.6
137.5
458.8
240.9
3,019.3
1,993.9
39.5
319.7
666.3
206.5
1,255.7
12,837.7
667.1
1,472.1
368.2
3,254.3
2,869.6
337.1
18.4
29.2
129.5
1,167.6
1,487.0
446.4
664.6
466.3
551.0
37.5
718.8
73.1
459.0
13.3
93.3
520.7
248.0
2,930.4
2,041.3
40.4
316.1
532.5
185.2
1,527.5
13,924.3
761.8
1,570.3
380.8
3,520.6
3,056.1
412.6
18.0
33.8
138.3
1,176.3
1,585.7
471.9
725.9
487.7
614.6
34.1
771.3
78.9
545.5
15.1
183.4
632.9
229.2
2,900.6
1,857.7
39.3
295.3
708.3
212.6
1,240.7
12,620.6
624.3
1,454.9
356.8
3,203.9
2,822.3
335.5
19.0
27.1
130.2
1,160.4
1,470.7
439.1
645.9
454.3
524.1
37.0
741.8
75.6
437.9
13.3
95.3
507.3
247.7
3,019.3
1,993.9
39.5
319.7
666.3
206.5
1,255.7
12,837.7
667.1
1,472.1
368.2
3,254.3
2,869.6
337.1
18.4
29.2
129.5
1,167.6
1,487.0
446.4
664.6
466.3
551.0
37.5
718.8
73.1
459.0
13.3
93.3
520.7
248.0
2,984.8
2,013.6
39.6
291.0
640.6
203.2
1,324.4
13,065.2
673.5
1,479.9
367.1
3,327.8
2,906.5
373.6
18.0
29.8
140.8
1,173.4
1,523.1
451.8
679.3
480.7
568.5
33.9
719.3
74.0
480.6
13.8
101.0
531.5
245.3
15,232.6
16,241.2
17,319.2
18,567.4
16,974.5
17,319.2
17,577.5
17,907.8
18,211.5
18,567.4
18,827.8
51.8
8.0
16.5
433.0
4,055.1
138.5
5,050.2
1,134.4
2,293.5
415.2
539.5
399.9
267.7
992.5
217.7
995.1
79.7
660.6
4,785.2
53.4
8.0
17.0
468.2
4,471.6
189.3
5,154.9
1,251.7
2,223.2
391.7
559.6
471.1
257.6
1,375.4
279.0
1,049.4
84.9
691.3
5,165.2
53.2
8.0
17.6
502.2
4,693.9
280.0
5,296.0
1,242.0
2,183.3
411.2
602.9
549.4
307.1
1,477.3
279.0
1,160.5
88.0
699.4
5,397.3
63.7
10.2
18.2
552.1
5,499.6
290.7
5,704.4
,229.5
2,279.7
476.9
745.3
660.1
312.9
1,852.8
305.6
1,266.5
89.3
767.4
5,769.9
55.5
8.0
17.5
496.8
4,677.0
250.1
5,212.4
1,205.0
2,199.1
402.6
578.7
548.1
278.9
1,515.8
263.9
1,099.8
87.1
701.1
5,373.0
53.2
8.0
17.6
502.2
4,693.9
280.0
5,296.0
1,242.0
2,183.3
411.2
602.9
549.4
307.1
1,477.3
279.0
1,160.5
88.0
699.4
5,397.3
64.1
8.0
17.8
515.7
4,895.7
273.0
5,389.5
1,193.9
2,200.1
441.1
634.0
603.4
316.9
1,553.3
269.5
1,159.8
94.3
719.7
5,459.7
67.1
8.0
18.0
528.1
5,095.4
265.9
5,572.4
1,246.3
2,222.4
456.2
678.5
629.3
339.6
1,661.0
277.9
1,174.2
89.2
739.7
5,537.2
65.1
10.2
18.2
535.6
5,318.1
267.4
5,615.3
1,200.4
2,255.6
477.4
702.7
655.6
323.6
1,782.0
286.2
1,217.3
91.9
758.6
5,626.9
63.7
10.2
18.2
552.1
5,499.6
290.7
5,704.4
1,229.5
2,279.7
476.9
745.3
660.1
312.9
1,852.8
305.6
1,266.5
89.3
767.4
5,769.9
62.1
10.2
18.2
566.1
5,745.6
266.2
5,799.1
1,183.8
2,336.4
490.6
816.9
666.5
304.9
2,004.8
318.3
1,269.7
94.2
781.6
5,836.4
RELATION OF LIABILITIES
TO FINANCIAL ASSETS
33 Total credit market debt
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
Other liabilities
Official foreign exchange
Special drawing rights certificates
Treasury currency
Life insurance reserves
Pension fund reserves
Interbank claims
Deposits at financial institutions
Checkable deposits and currency
Small time and savings deposits
Large time deposits
Money market fund shares
Security repurchase agreements
Foreign deposits
Mutual fund shares
Security credit
Trade payables
Taxes payable
Investment in bank personal trusts
Miscellaneous
53 Total liabilities
32,716.4
35,248.7
37,271.6
40,757.9
36,732.4
37,271.6
37,997.6
38,941.9
39,804.3
40,757.9
41,600.4
Financial assets not included in liabilities (+)
54 Gold and special drawing rights
55 Corporate equities
56 Household equity in noncorporate business
19.6
5,462.9
2,458.3
20.1
6,278.5
2,476.3
21.1
6,293.4
2,564.6
22.1
8,345.4
2,657.7
21.0
6,228.7
2,550.9
21.1
6,293.4
2,564.6
22.7
6,835.8
2,576.7
22.9
7,393.0
2,607.0
22.1
8,013.8
2,619.3
22.1
8,345.4
2,657.7
22.1
8,820.5
2,669.9
Floats not included in assets (—)
57 U.S. government checkable deposits
58 Other checkable deposits
59 Trade credit
6.8
42.0
-251.1
5.6
40.7
-251.4
3.4
38.0
-260.1
3.1
34.2
-274.9
1.2
30.6
-323.2
3.4
38.0
-260.1
4.2
33.3
-297.1
2.0
35.7
-315.8
.6
27.3
-331.3
3.1
34.2
-274.9
.0
29.6
-356.1
-4.9
-9.3
43.0
217.6
25.2
-514.5
-5.1
-4.7
77.3
218.4
26.8
-667.2
-5.4
-6.5
108.8
258.7
25.0
-830.5
-5.8
-9.0
119.8
257.2
33.7
-859.2
-5.3
-3.4
100.7
241.3
22.8
-688.2
-5.4
-6.5
108.8
258.7
25.0
-830.5
-5.4
-2.7
132.9
270.1
10.0
-892.2
-5.5
-2.9
114.5
290.5
25.6
-878.5
-5.6
.1
136.4
267.1
28.7
-884.9
-5.8
-9.0
119.8
257.2
33.7
-859.2
-6.0
-2.5
108.7
246.8
13.5
-896.0
41,102.3
44,583.2
46,819.3
52,483.9
46,156.5
46,819.3
48,179.7
49,699.2
51,221.1
52,483.9
53,975.0
60
61
62
63
64
65
Liabilities not identified as assets ( —)
Treasury currency
Interbank claims
Security repurchase agreements
Foreign deposits
Taxes payable
Miscellaneous
66 Total identified to sectors as assets
1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables
L.6 and L.7. For ordering address, see inside front cover.
2. Excludes corporate equities and mutual fund shares.
A42
2.10
Domestic Nonfinancial Statistics • September 1996
NONFINANCIAL BUSINESS ACTIVITY
Selected Measures
Monthly data seasonally adjusted, and indexes 1987=100, except as noted
1995
Measure
1 Industrial production
1
1993
1994
1996
1995
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.r
May r
June
111.5
118.1
121.9
122.2
122.6
122.8
122.5
124.2
123.6
124.5
125.1
125.7
110.0
112.7
109.5
117.5
101.8
113.8
115.6
118.3
113.7
125.3
107.3
122.0
118.3
121.4
115.1
131.4
109.0
127.4
118.3
121.3
114.9
131.5
109.2
128.1
118.8
121.9
115.9
131.4
109.3
128.4
119.2
122.1
115.7
132.3
110.1
128.4
118.6
121.9
114.6
133.7
108.5
128.5
120.7
124.5
116.6
137.3
109.3
129.4
120.0
123.4r
115.3
136.5r
I09.6 r
129.1r
120.7
124.8
115.8
139.2
108.6
130.2
121.1
125.1
116.1
139.6
109.1
131.2
121.5
125.5
116.2
140.6
109.5
132.3
112.3
119.7
123.9
124.4
124.5
124.8
124.5
126.2
125.2
126.5
126.9
127.6
80.6
83.3
83.0
82.2
82.0
81.9
81.4
82.3
81.3
81.8
81.8
82.0
10 Construction contracts 3
105.l r
114.2
118.3r
120.0
122.0r
117.0r
119.0
113.0
125.0r
126.0
122.0
118.0
11 Nonagricultural employment, total 4
12
Goods-producing, total
13
Manufacturing, total
14
Manufacturing, production workers
15
Service-producing
16 Personal income, total
Wages and salary disbursements
17
18
Manufacturing
19
Disposable personal income 5
20 Retail sales 5
108.6
94.6r
95.l r
95.3
113.1r
141.3
136.0
119.3
142.4
134.7
112.0
96.9 r
96.4 r
97.5 r
116.8'
148.3
142.6
125.0
149.2
144.8
115.0
98.T
97.2 r
98.7 r
120.3'
157.4
150.5
129.3
157.8
152.2
115.5
97.9
96.7
98.1
121.1
159.6
153.0
129.5
160.0
153.0
115.6
97.8
96.6
98.0
121.3
160.1
152.9
129.5
160.6
154.3
115.9
97.9
96.7
98.1
121.6
161.1
153.7
129.8
161.7
155.3
115.8
97.7
96.4
97.7
121.6
161.2
153.5r
128.6r
161.6r
155.3
116.3
98.3
96.5
97.8
122.1
162.4r
155.2r
130.0r
162.6r
158.6
116.5
98.1
96.2
97.4
122.3
163.0r
155.9r
129.3r
163.l r
159.3
116.7
98.1
96.2
97.5
122.6
163.8
156.7
131.6
162.3
159.1
117.0
98.3
96.3
97.5
123.0
164.5
157.6
132.0
164.4
160.4
117.2
98.4
96.3
97.5
123.3
Prices6
21 Consumer (1982-84=100)
22 Producer finished goods (1982=100)
144.5
124.7
148.2
125.5
152.4
127.9
153.7
128.7
153.6
128.7
153.5
129.1
154.4
129.4
154.9
129.4
155.7
130.2
156.3
130.8
156.6
131.0
156.7
131.6
2
3
4
5
6
/
Market groupings
Products, total
Final, total
Consumer goods
Equipment
Intermediate
Materials
Industry groupings
8 Manufacturing
9 Capacity utilization, manufacturing (percent) 2 ..
1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. For
the ordering address, see the inside front cover. The latest historical revision of the industrial
production index and the capacity utilization rates was released in November 1995. See "A
Revision to Industrial Production and Capacity Utilization, 1991-95," Federal Reserve
Bulletin, vol. 82 (January 1996), pp. 16—25. For a detailed description of the industrial
production index, see "Industrial Production: 1989 Developments and Historical Revision,"
Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204.
2. Ratio of index of production to index of capacity. Based on data from the Federal
Reserve, DRI McGraw-Hill, U.S. Department of Commerce, and other sources.
3. Index of dollar value of total construction contracts, including residential, nonresidential, and heavy engineering, from McGraw-Hill Information Systems Company, F.W. Dodge
Division.
4. Based on data from U.S. Department of Labor, Employment and Earnings. Series covers
employees only, excluding personnel in the armed forces.
2.11
n.a.
n.a.
n.a.
160.0
5. Based on data from US. Department of Commerce, Survey of Current Business.
6. Based on data not seasonally adjusted. Seasonally adjusted data for changes in the price
indexes can be obtained from the U.S. Department of Labor, Bureau of Labor Statistics,
Monthly Labor Review.
NOTE. Basic data (not indexes) for series mentioned in notes 4 and 5, and indexes for series
mentioned in notes 3 and 6, can also be found in the Survey of Current Business.
Figures for industrial production for the latest month are preliminary, and many figures for
the three months preceding the latest month have been revised. See "Recent Developments in
Industrial Capacity and Utilization," Federal Reserve Bulletin, vol. 76 (June 1990), pp.
411-35. See also "Industrial Production Capacity and Capacity Utilization since 1987,"
Federal Reserve Bulletin, vol. 79 (June 1993), pp. 590-605.
LABOR FORCE, EMPLOYMENT, A N D UNEMPLOYMENT
Thousands of persons; monthly data seasonally adjusted
1995
Category
1993r
1994r
1996
1995r
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.r
May r
June
HOUSEHOLD SURVEY DATA 1
1 Civilian labor force 2
Employment
2
Nonagricultural industries3
3
Agriculture
Unemployment
4
Number
5
Rate (percent of civilian labor force)
129,200
131,056
132,304
132,471
132,352
132,903
133,018
133,655
133,361
133,910
133,669
117,144
3,115
119,651
3,409
121,460
3,440
121,739
3,323
121,656
3,325
121,698
3,529
122,143
3,519
122,664
3,487
122,726
3,368
122,971
3,491
123,228
3,382
8,940
6.9
7,996
6.1
7,404
5.6
7,409
5.6
7,371
5.6
7,677
5.8
7,355
5.5
7,504
5.6
7,266
5.4
7,448
5.6
7,060
5.3
110,730
114,172
117,203
117,899
118,136
118,070
118,579
118,737
118,928
119,293
119,532
18,075
610
4,668
5,829
25,755
6,757
30,197
18,841
18,321
601
4,986
5,993
26,670
6,896
31,579
19,128
18,468
580
5,158
6,165
27,585
6,830
33,107
19,310
18,353
569
5,211
6,233
27,778
6,871
33,546
19,338
18,367
570
5,223
6,249
27,832
6,887
33,661
19,347
18,309
569
5,234
6,254
27,780
6,894
33,694
19,336
18,332
573
5,349
6,270
27,869
6,919
33,902
19,365
18,282
574
5,340
6,289
27,891
6,932
34,035
19,394
18,283
573
5,353
6,294
27,972
6,942
34,114
19,397
18,299
576
5,383
6,315
28,037
6,963
34,270
19,450
18,292
576
5,406
6,331
28,124
6,974
34,369
19,460
ESTABLISHMENT SURVEY D A T A
6 Nonagricultural payroll employment 4
7
8
9
10
11
12
13
14
Manufacturing
Mining
Contract construction
Transportation and public utilities
Trade
Finance
Service
Government
1. Beginning January 1994, reflects redesign of current population survey and population
controls from the 1990 census.
2. Persons sixteen years of age and older, including Resident Armed Forces. Monthly
figures are based on sample data collected during the calendar week that contains the twelfth
day; annual data are averages of monthly figures. By definition, seasonality does not exist in
population figures.
3. Includes self-employed, unpaid family, and domestic service workers.
4. Includes all full- and part-time employees who worked during, or received pay for, the
pay period that includes the twelfth day of the month; excludes proprietors, self-employed
persons, household and unpaid family workers, and members of the armed forces. Data are
adjusted to the March 1992 benchmark, and only seasonally adjusted data are available at this
time.
SOURCE. Based on data from U.S. Department of Labor, Employment and Earnings.
Selected Measures
2.12
A43
OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1
Seasonally adjusted
1995
1995
1996
1995
1996
1996
Series
Q3
Q4
Ql r
Q2
Q3
Q4
Ql
Q2
Capacity (percent of 1987 output)
Output (1987=100)
Q4
Q3
Qlr
Q2
Capacity utilization rate (percent)2
1 Total industry
122.3
122.5
123.4
125.1
146.3
147.7
149.1
150.6
83.6
82.9
82.8
2 Manufacturing
124.1
124.6
125.3
127.0
150.2
151.9
153.5
155.1
82.6
82.0
81.6
81.9
Primary processing3
Advanced processing4
117.1
127.5
117.1
128.1
116.7
129.4
117.8
131.3
135.2
157.5
136.1
159.5
136.9
161.5
137.8
163.5
86.6
80.9
86.1
80.3
85.2
80.1
85.6
80.3
5
6
7
8
9
10
11
12
13
Durable goods
Lumber and products
Primary metals
Iron and steel
Nonferrous
Industrial machinery and equipment
Electrical machinery
Motor vehicles and parts
Aerospace and miscellaneous
transportation equipment.. .
133.0
104.6
118.2
121.3
113.9
178.9
178.4
140.7
134.2
105.8
118.8
121.3
115.3
186.8
182.9
140.5
136.0
104.6
118.9
122.6
113.8
195.3
186.3
132.6
139.3
108.7
118.9
122.2
114.4
201.3
189.1
144.7
161.7
119.8
128.8
132.9
123.3
206.1
206.3
176.8
164.2
120.9
129.5
133.5
124.0
212.0
213.9
179.2
166.7
121.7
130.3
134.4
124.8
218.1
221.8
181.3
169.4
122.4
131.4
135.7
125.5
224.5
229.9
182.9
82.3
87.3
91.8
91.3
92.4
86.8
86.5
79.6
81.7
87.5
91.8
90.9
93.0
88.1
85.5
78.4
81.6
85.9
91.2
91.2
91.2
89.5
84.0
73.2
82.2
88.8
90.5
90.0
91.1
89.7
82.3
79.1
86.9
79.0
84.0
86.2
130.1
129.3
128.6
128.1
66.8
61.1
65.3
67.3
14
15
16
17
18
19
Nondurable goods
Textile mill products
Paper and products
Chemicals and products
Plastics materials
Petroleum products
114.3
110.9
119.5
124.6
118.3
109.2
113.9
109.4
118.1
126.4
123.1
107.7
113.5
106.4
114.6
126.9
126.9
109.7
113.5
108.5
118.6
126.0
138.4
132.8
133.9
156.5
137.1
116.6
139.0
133.7
134.9
157.5
138.6
116.8
139.6
134.2
135.8
158.5
117.1
83.0
84.3
90.0
80.1
87.3
93.8
82.3
82.4
88.2
80.7
89.7
92.4
81.7
79.6
85.0
80.6
91.6
93.9
81.3
80.8
87.3
79.5
109.7
137.7
131.6
132.8
155.6
135.4
116.4
100.2
124.7
125.0
98.2
124.1
123.7
98.7
126.7
126.4
101.3
127.6
128.2
111.9
135.2
132.5
111.9
135.6
133.0
111.9
136.0
133.4
111.8
136.5
133.9
89.5
92.3
94.3
87.8
91.5
93.1
88.2
93.2
94.8
90.6
93.5
95.7
1973
1975
Previous cycle5
High
Low
High
3
4
20 Mining
21 Utilities
22
Electric
Low
Latest cycle6
High
Low
93.7
1996
1995
June
83.1
Jan.
Feb.
Mar.r
Apr.'
May
Junep
83.2
Capacity utilization rate (percent)2
1 Total industry
89.2
72.6
87.3
71.8
84.9
78.0
83.5
82.4
83.3
82.6
82.9
83.1
2 Manufacturing
88.9
70.8
87.3
70.0
85.2
76.6
82.7
81.4
82.3
81.3
81.8
81.8
82.0
92.2
87.5
68.9
72.0
89.7
86.3
66.8
71.4
89.0
83.5
77.9
76.1
87.0
80.8
85.4
79.7
84.9
81.1
85.3
79.6
85.3
80.4
85.6
80.2
85.7
80.4
Durable goods
Lumber and products
Primary metals
Iron and steel
Nonferrous
Industrial machinery and
equipment
Electrical machinery
Motor vehicles and parts
Aerospace and miscellaneous
transportation equipment
88.8
90.1
100.6
105.8
92.9
68.5
62.2
66.2
66.6
61.3
86.9
87.6
102.4
110.4
90.5
65.0
60.9
46.8
38.3
62.2
84.0
93.3
92.8
95.7
88.7
73.7
76.1
74.2
72.0
75.2
82.1
86.5
91.5
89.9
93.6
81.3
84.8
93.5
95.6
90.7
82.5
84.8
89.8
88.9
91.0
80.9
88.2
90.3
89.1
91.8
82.1
89.2
90.7
90.4
91.0
82.1
88.3
90.2
89.3
91.3
82.4
88.8
90.7
90.4
91.1
96.4
87.8
93.4
74.5
63.8
51.1
92.1
89.4
93.0
64.9
71.1
44.5
84.0
84.9
85.1
71.8
77.0
56.6
86.2
85.9
79.7
88.8
83.2
75.0
89.9
85.1
77.9
89.9
83.7
66.7
89.6
82.6
79.1
89.6
82.0
78.8
89.9
82.2
79.5
77.0
66.6
81.1
66.9
88.4
78.8
67.5
63.8
65.5
66.7
67.0
67.3
67.6
Nondurable goods
Textile mill products
Paper and products
Chemicals and products
Plastics materials
Petroleum products
87.9
92.0
96.9
87.9
102.0
96.7
71.8
60.4
69.0
69.9
50.6
81.1
87.0
91.7
94.2
85.1
90.9
89.5
76.9
73.8
82.0
70.1
63.4
68.2
86.7
92.1
94.8
85.9
97.0
88.5
80.3
78.8
86.7
79.0
74.8
84.6
83.3
84.4
90.8
80.3
90.2
93.4
81.4
78.0
85.3
80.8
90.8
93.3
81.9
79.4
84.1
80.7
91.3
94.3
81.6
81.4
85.4
80.1
92.6
94.0
81.4
80.7
87.7
79.5
93.4
93.7
81.4
80.6
87.6
79.4
81.3
81.2
86.7
79.6
93.7
93.6
94.4
95.6
99.0
88.4
82.5
82.7
96.6
88.3
88.3
80.6
76.2
78.7
86.5
92.6
94.8
86.1
83.1
86.7
90.2
89.7
91.6
86.8
92.4
94.2
87.6
93.1
94.9
90.3
94.0
95.2
89.9
92.4
94.0
90.3
94.6
97.2
91.7
93.3
95.9
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Primary processing3
Advanced processing4
20 Mining
71 Utilities
22 Electric
1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. For
the ordering address, see the inside front cover. The latest historical revision of the industrial
production index and the capacity utilization rates was released in November 1995. See "A
Revision to Industrial Production and Capacity Utilization, 1991-95," Federal Reserve
Bulletin, vol. 82 (January 1996), pp. 16-25. For a detailed description of the industrial
production index, see "Industrial Production: 1989 Developments and Historical Revision,"
Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204.
2. Capacity utilization is calculated as the ratio of the Federal Reserve's seasonally adjusted
index of industrial production to the corresponding index of capacity.
3. Primary processing includes textiles; lumber; paper; industrial chemicals; synthetic
materials; fertilizer materials; petroleum products; rubber and plastics; stone, clay, and glass;
primary metals; and fabricated metals.
4. Advanced processing includes foods; tobacco; apparel; furniture and fixtures; printing
and publishing; chemical products such as drugs and toiletries; agricultural chemicals; leather
and products; machinery; transportation equipment; instruments; and miscellaneous manufactures.
5. Monthly highs, 1978-80; monthly lows, 1982.
6. Monthly highs, 1988-89; monthly lows, 1990-91.
A44
2.13
Domestic Nonfinancial Statistics • September 1996
INDUSTRIAL PRODUCTION
Indexes and Gross Value1
Monthly data seasonally adjusted
1992
proportion
1995
1996
1995
avg.
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.r
Apr/
May
June p
Index (1987 = 100)
MAJOR MARKETS
1 Total index
100.0
121.9
121.4
121.5
122.7
122.8
122.2
122.6
122.8
122.5
124.2
123.6
124.5
125.1
125.7
2 Products
Final products
3
4
Consumer goods, total
Durable consumer goods
6
Automotive products
Autos and trucks
7
8
Autos, consumer
y
Trucks, consumer
Auto parts and allied goods
10
Other
n
12
Appliances, televisions, and air
conditioners
Carpeting and furniture
13
Miscellaneous home goods
14
Nondurable consumer goods
15
Foods and tobacco
16
Clothing
17
Chemical products
18
Paper products
19
Energy
20
Fuels
21
22
Residential utilities
60.6
46.3
28.6
5.6
2.5
1.6
.9
.7
.9
3.0
118.3
121.4
115.1
124.2
130.7
131.4
103.1
181.7
127.8
118.6
117.9
121.1
114.8
122.3
129.1
129.5
99.2
183.6
126.8
116.3
118.0
121.2
114.6
121.4
125.3
123.9
101.0
163.9
126.6
118.1
119.2
122.4
115.9
124.0
130.7
132.0
100.6
188.2
126.6
118.1
119.4
122.6
116.0
125.8
132.9
133.1
102.6
187.7
130.8
119.6
118.3
121.3
114.9
123.4
128.5
128.6
100.2
179.1
126.7
118.9
118.8
121.9
115.9
124.9
130.5
129.8
100.2
182.8
130.2
119.9
119.2
122.1
115.7
126.3
132.8
132.1
99.5
190.6
132.7
120.5
118.6
121.9
114.6
120.3
125.9
124.1
92.8
180.4
128.1
115.5
120.7
124.5
116.6
125.1
133.1
133.5
99.7
194.4
130.7
118.1
120.0
123.4
115.3
119.3
120.3
111.1
77.0
173.1
137.2
118.5
120.7
124.8
115.8
125.4
133.6
135.9
104.1
192.7
127.5
118.2
121.1
125.1
116.1
125.6
134.2
135.4
106.2
187.3
130.0
118.2
121.5
125.5
116.2
127.7
136.1
138.2
109.2
189.5
130.2
120.3
.7
.8
1.5
23.0
10.3
2.4
4.5
2.9
2.9
.9
2.1
135.5
105.8
118.2
112.9
111.3
94.8
131.3
106.6
116.5
108.8
119.6
131.4
101.8
118.0
113.1
113.1
94.6
128.6
106.3
115.8
108.8
118.7
132.2
107.9
117.4
113.0
112.8
93.6
128.6
107.6
116.1
108.2
119.4
135.8
104.4
118.0
113.9
111.8
93.9
132.6
106.7
122.3
108.4
128.2
139.4
106.9
117.8
113.7
111.6
93.4
134.0
107.3
119.0
111.4
122.2
140.1
105.6
116.9
112.9
111.1
92.9
135.7
106.6
113.1
107.3
115.4
145.3
104.1
117.6
113.8
110.9
91.5
135.0
108.4
121.1
108.2
126.6
141.9
107.4
118.3
113.2
110.6
89.7
136.5
106.3
119.5
108.6
124.1
132.2
101.1
116.2
113.3
110.6
88.2
138.1
104.9
121.0
108.6
126.1
137.5
103.4
117.7
114.5
112.0
90.3
138.1
106.0
122.6
111.8
127.2
138.3
105.7
116.9
114.4
112.3
88.9
136.7
105.8
123.9
112.2
128.8
138.8
104.6
116.6
113.6
112.0
88.8
134.0
106.1
121.7
111.5
126.0
135.1
105.4
117.9
113.8
111.4
89.2
134.1
107.1
124.8
112.4
130.0
143.6
105.4
118.4
113.4
111.1
89.3
134.5
106.2
122.4
110.9
127.2
23
24
25
26
27
28
29
30
31
32
33
Equipment
Business equipment
Information processing and related
Computer and office equipment
Industrial
Transit
Autos and trucks
Other
Defense and space equipment
Oil and gas well drilling
Manufactured homes
17.7
13.7
5.7
1.4
4.0
2.6
1.2
1.4
3.3
.6
.2
131.4
155.7
198.1
373.5
127.5
136.3
140.1
123.2
65.9
87.1
152.7
131.2
155.1
196.0
363.2
126.2
140.3
139.5
122.6
66.8
86.8
149.6
131.6
155.7
197.2
371.7
127.1
139.8
139.9
122.6
66.5
88.4
148.6
132.9
157.5
201.0
379.6
129.1
138.0
141.3
122.2
66.1
89.5
155.9
133.1
158.2
203.0
390.0
128.7
137.9
143.3
123.3
65.2
88.3
158.0
131.5
156.5
206.5
402.9
128.6
122.3
135.7
120.9
64.4
83.5
158.9
131.4
156.9
208.1
417.8
129.1
119.6
134.2
121.4
62.9
83.1
161.8
132.3
158.4
209.4
431.7
129.5
124.5
135.3
121.7
62.0
83.8
164.4
133.7
160.5
213.3
442.9
129.6
128.1
129.1
122.1
61.6
85.1
158.1
137.3
164.8
220.5
463.3
131.3
133.2
136.0
123.5
63.1
89.7
157.8
136.5
162.7
221.6
476.0
130.3
121.2
113.6
122.5
64.2
96.3
168.2
139.2
166.4
225.0
491.9
130.1
136.1
140.0
122.1
64.0
100.6
170.7
139.6
166.5
226.4
503.5
130.1
135.3
138.2
120.5
64.4
104.3
170.4
140.6
168.3
230.3
513.6
130.1
136.6
138.4
120.7
63.9
102.3
34
35
36
Intermediate products, total
Construction supplies
Business supplies
14.3
5.3
9.0
109.0
108.2
109.6
108.2
107.2
109.1
108.5
107.3
109.5
109.4
107.0
111.0
109.5
108.4
110.3
109.2
108.3
109.9
109.3
108.7
109.9
110.1
110.5
110.0
108.5
107.2
109.6
109.3
109.3
109.5
109.6
111.5
108.6
108.6
109.5
108.2
109.1
110.6
108.4
109.5
111.5
108.4
37 Materials
38
Durable goods materials
39
Durable consumer parts
Equipment parts
40
41
Other
42
Basic metal materials
Nondurable goods materials
43
44
Textile materials
45
Paper materials
46
Chemical materials
47
Other
Energy materials
48
Primary energy
49
Converted fuel materials
50
39.4
20.8
4.0
7.5
9.2
3.1
8.9
1.1
1.8
3.9
2.1
9.7
6.3
3.3
127.4
141.5
138.5
163.0
126.2
125.7
119.8
109.2
120.5
124.4
116.5
106.6
101.9
116.0
126.8
139.7
135.8
161.7
124.5
123.5
120.4
109.0
121.0
125.2
117.4
107.2
103.0
115.5
126.8
140.2
133.9
164.4
124.4
124.9
118.9
102.6
123.9
124.4
113.8
107.5
102.3
118.1
128.1
142.3
138.4
167.1
124.9
123.1
118.8
109.2
120.4
123.1
114.6
108.5
101.4
122.8
128.1
144.1
139.8
169.1
126.8
127.0
117.8
106.2
117.0
123.3
115.1
105.8
101.2
115.0
128.1
143.9
138.6
169.4
126.5
124.3
118.7
107.3
121.4
122.9
114.6
105.5
101.7
113.1
128.4
145.3
140.1
171.0
127.9
128.1
116.6
104.8
114.3
122.7
114.1
105.7
100.8
115.4
128.4
144.8
139.3
170.8
127.2
126.6
117.4
103.3
115.2
121.9
118.9
106.0
101.0
116.2
128.5
145.8
140.6
171.7
128.2.
125.7
115.7
100.3
113.4
121.8
115.2
105.9
100.6
116.6
129.4
147.3
141.1
176.3
127.8
123.7
116.1
101.8
113.4
121.3
117.1
106.1
101.3
115.5
129.1
145.5
132.5
176.8
127.4
124.4
116.3
103.0
113.7
121.6
116.4
108.2
103.9
116.7
130.2
147.5
142.3
177.5
126.8
123.8
118.3
104.9
118.9
122.4
117.8
106.8
103.1
114.2
131.2
148.6
142.5
179.3
127.8
124.1
118.3
105.5
118.2
122.6
117.6
108.6
104.6
116.5
132.3
150.1
144.0
181.9
128.5
125.3
118.5
106.2
116.3
123.2
118.6
109.3
105.8
116.2
97.2
95.2
121.5
120.9
121.1
120.5
121.2
120.7
122.3
121.7
122.4
121.8
121.9
121.3
122.3
121.7
122.5
121.9
122.4
121.9
123.8
123.3
123.9
123.7
124.1
123.5
124.7
124.1
125.3
124.7
98.2
27.0
25.7
118.2
114.0
114.9
117.8
113.9
114.7
117.8
114.0
114.5
118.9
114.8
115.1
118.9
114.9
115.7
118.1
114.0
115.1
118.4
115.0
115.3
118.5
114.7
115.3
118.0
114.0
113.9
119.5
115.5
115.9
118.7
115.6
114.3
119.5
114.5
115.2
120.0
114.9
115.1
120.5
114.7
115.5
12.5
157.0
156.5
157.2
158.9
159.5
158.4
159.0
160.5
163.5
167.5
167.5
168.9
169.2
171.1
12.2
29.7
133.0
134.9
133.2
133.8
133.2
133.7
134.4
135.1
134.3
136.1
131.6
136.2
130.8
136.6
131.3
136.4
132.6
136.6
135.5
137.8
132.3
136.6
134.9
138.6
134.2
139.3
135.2
140.5
SPECIAL AGGREGATES
51 Total excluding autos and trucks
52 Total excluding motor vehicles and parts
53 Total excluding computer and office
equipment
54 Consumer goods excluding autos and trucks .
55 Consumer goods excluding energy
56 Business equipment excluding autos and
trucks
57 Business equipment excluding computer and
office equipment
58 Materials excluding energy
Selected Measures
2.13
INDUSTRIAL PRODUCTION
Group
Indexes and Gross Value 1 —Continued
1992
proportion
SIC
code
A45
1995
avg.
July
Aug.
Sept.
Mar.r
Apr/
May
June p
Index (1987 = 100)
MAJOR INDUSTRIES
100.0
121.9
121.4
121.5
122.7
122.8
122.2
122.6
122.8
122.5
124.2
123.6
124.5
125.1
125.7
85.4
26.6
58.9
123.9
117.6
126.8
123.3
117.1
126.3
123.3
116.9
126.3
124.2
116.6
127.8
124.9
117.8
128.2
124.4
117.0
127.9
124.5
117.1
128.0
124.8
117.3
128.4
124.5
116.7
128.2
126.2
116.3
131.0
125.2
117.1
129.0
126.5
117.3
130.9
126.9
117.9
131.1
127.6
118.3
132.0
24
25
45.0
2.0
1.4
132.5
104.5
111.6
131.5
103.0
111.3
131.5
103.7
111.1
133.2
103.7
110.9
134.4
106.2
112.0
133.5
105.7
110.9
134.3
104.8
109.8
134.8
106.9
109.3
134.9
103.1
109.3
137.5
103.3
110.5
135.6
107.5
107.7
138.4
108.9
109.0
139.0
108.1
111.4
140.4
108.9
110.8
32
33
331,2
331PT
333-6,9
34
2.1
3.1
1.7
.1
1.4
5.0
104.1
119.2
122.4
114.7
114.8
113.9
103.8
117.5
119.2
112.9
114.9
113.7
103.2
118.3
119.3
111.5
116.5
112.4
103.0
115.4
117.7
114.2
111.9
114.3
103.8
121.0
127.0
118.6
113.2
115.1
104.5
115.7
115.1
111.3
115.8
114.0
104.9
120.8
126.1
116.4
113.8
114.5
104.3
120.0
122.7
118.0
116.2
115.0
105.5
121.5
128.1
113.9
113.0
115.6
104.1
117.1
119.5
112.5
113.6
117.0
102.9
118.0
120.2
114.9
114.8
116.1
103.1
118.8
122.3
112.9
114.0
115.6
104.0
118.5
121.2
113.2
114.6
116.3
104.8
119.5
123.1
1146
117.0
59 Total index
60 Manufacturing
61 Primary processing
62 Advanced processing
35
8.0
177.8
174.4
176.0
179.5
181.3
183.8
186.5
190.1
191.9
196.1
197.8
199.1
201.1
203.7
357
36
37
371
371PT
1.8
7.2
9.5
4.8
2.5
373.5
174.9
113.3
141.9
131.3
363.2
173.0
113.4
139.7
129.2
371.7
175.7
111.6
136.7
124.3
379.6
178.7
114.1
142.1
131.6
390.0
180.8
114.1
143.3
132.8
402.9
182.4
109.3
139.7
128.4
417.8
183.6
108.6
140.7
129.6
431.7
182.8
109.7
141.2
131.5
442.9
182.4
108.3
135.5
123.5
463.3
188.7
112.1
141.1
132.8
476.0
187.9
103.1
121.3
109.9
491.9
187.6
114.6
144.3
135.5
503.5
188.5
114.6
144.1
135.3
513.6
191.3
115.6
145.8
138.2
79
80
Durable goods
Lumber and products
Furniture and fixtures
Stone, clay, and glass
products
Primary metals
Iron and steel
Raw steel
Nonferrous
Fabricated metal products.. .
Industrial machinery and
equipment
Computer and office
equipment
Electrical machinery
Transportation equipment. . .
Motor vehicles and parts .
Autos and light trucks .
Aerospace and
miscellaneous
transportation
equipment
Instruments
Miscellaneous
372-6,9
38
39
4.7
5.4
1.3
85.8
110.7
122.7
88.1
110.9
123.1
87.6
110.2
121.4
87.2
111.4
122.4
85.9
111.3
122.9
80.0
111.4
122.2
77.7
111.5
123.3
79.4
109.7
123.5
82.2
111.0
122.1
84.2
113.4
124.0
85.7
112.9
124.0
85.9
112.8
122.6
86.2
113.0
122.9
86.5
113.7
124.1
81
82
83
84
85
86
87
88
89
90
91
Nondurable goods
Foods
Tobacco products
Textile mill products
Apparel products
Paper and products
Printing and publishing
Chemicals and products . . . .
Petroleum products
Rubber and plastic products .
Leather and products
" ' 20
21
22
23
26
27
28
29
30
31
40.5
9.4
1.6
1.8
2.2
3.6
6.8
9.9
1.4
3.5
.3
114.3
115.3
90.2
112.6
95.7
119.8
99.4
125.0
108.3
139.4
81.3
114.3
116.1
96.4
110.4
95.5
119.9
98.6
124.4
108.6
137.8
81.2
114.3
115.3
99.1
109.9
94.8
121.3
99.0
124.0
109.0
137.7
78.7
114.3
115.5
91.3
112.4
94.5
118.6
100.5
124.4
108.5
138.7
80.8
114.4
115.5
90.2
110.5
94.5
118.5
99.8
125.3
110.0
139.8
80.5
114.3
115.4
88.2
111.1
93.3
119.7
98.9
126.7
106.9
139.7
79.7
113.7
114.8
88.9
108.9
92.4
116.2
99.3
126.0
107.4
140.3
78.2
113.8
114.8
88.4
108.3
91.5
118.2
98.8
126.5
108.9
139.3
76.8
113.1
114.8
87.1
104.1
89.2
114.9
97.9
127.1
108.9
139.0
75.6
113.8
116.0
90.9
106.2
90.9
113.5
98.7
127.1
110.2
139.7
77.1
113.6
115.6
92.6
109.0
89.7
115.5
96.7
126.5
109.9
140.5
76.7
113.4
115.4
94.2
108.1
90.1
118.8
96.2
125.8
109.6
137.6
76.2
113.6
115.1
91.1
108.2
90.6
119.1
96.5
125.8
109.7
141.0
75.7
113.6
114.6
92.0
109.2
90.9
118.0
96.5
126.4
109.7
141.3
76.5
10
12
13
14
6.9
.5
1.0
4.8
.6
99.9
169.3
112.9
91.9
112.3
101.0
166.8
112.2
93.6
111.9
100.7
172.2
117.0
91.9
113.5
100.0
172.1
109.7
92.4
111.6
100.0
170.8
116.2
91.2
113.1
98.2
178.3
112.3
89.2
112.4
98.3
175.9
109.5
90.1
110.9
98.1
172.8
108.5
90.1
112.4
97.1
159.5
103.3
90.8
108.9
98.0
157.1
108.0
90.2
117.2
101.1
166.1
114.8
92.6
117.4
100.5
163.0
109.5
93.3
115.5
101.0
165.4
111.9
93.6
113.2
102.5
167.5
113.2
95.0
115.9
491,493PT
492.493PT
7.7
6.1
1.6
122.0
122.1
121.7
121.0
121.2
120.6
122.7
122.2
124.5
128.8
130.0
124.3
122.7
122.7
122.4
121.6
123.7
113.6
125.4
123.6
132.5
125.1
123.9
129.9
125.6
125.5
125.6
126.6
126.6
126.3
128.0
127.1
131.5
126.0
125.7
126.9
129.2
130.2
125.0
127.6
128.7
123.2
80.6
122.8
122.3
122.5
123.1
123.8
123.4
123.6
123.9
123.9
125.4
125.4
125.4
125.9
126.6
119.6
119.6
119.7
119.3
120.7
119.5
120.6
120.9
121.5
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
92 Mining
93
Metal
94 Coal
95
Oil and gas extraction
96 Stone and earth minerals
97 Utilities
98 Electric
99 Gas
SPECIAL AGGREGATES
100 Manufacturing excluding motor
vehicles and parts
101 Manufacturing excluding office
and computing machines . . .
83.7
119.5
119.1
118.9
119.8
120.3
Gross value (billions of 1992 dollars, annual rates)
MAJOR MARKETS
102 Products, total
2,002.9 2,245.6
2,239.1
2,238.8
2,257.8
2,268.1
2,240.3
2,255.8
2,265.7
2,248.9
2,293.1
2,269.5
2,300.2
2,304.5
2,310.7
103 Final
104 Consumer goods
105 Equipment
106 Intermediate
1,552.2
1,033.4
518.8
450.7
1,748.7
1,130.5
618.3
496.9
1,745.6
1,128.4
617.1
493.5
1,743.2
1,124.0
619.2
495.6
1,760.5
1,135.7
624.8
497.3
1,768.2
1,141.1
627.1
499.9
1,741.9
1,125.1
616.7
498.4
1,756.8
1,139.3
617.5
499.0
1,761.9
1,139.0
622.9
503.8
1,753.0
1,124.7
628.4
495.9
1,794.2
1,148.4
645.8
498.8
1,766.8
1,129.5
637.3
502.7
1,801.2
1,144.2
656.9
499.0
1,804.6
1,145.7
658.9
499.8
1,808.7
1,145.7
663.0
502.0
1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. For
the ordering address, see the inside front cover. The latest historical revision of the industrial
production index and the capacity utilization rates was released in November 1995. See "A
Revision to Industrial Production and Capacity Utilization, 1991-95," Federal Reserve
Bulletin, vol. 82 (January 1996), pp. 16-25. For a detailed description of the industrial
production index, see "Industrial Production: 1989 Developments and Historical Revision,"
Federal Reserve Bulletin, vol. 76, (April 1990), pp. 187-204.
2. Standard industrial classification.
A46
2.14
Domestic Nonfinancial Statistics • September 1996
HOUSING AND CONSTRUCTION
Monthly figures at seasonally adjusted annual rates except as noted
1995
Aug.
Oct.
Sept.
1996'
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
May
Private residential real estate activity (thousands of units except as noted)
N E W UNITS
1
2
3
4
5
6
7
8
9
10
11
12
13
Permits authorized
One-family
Two-family or more
Started
One-family
Two-family or more
Under construction at end of period1
One-family
Two-family or more
Completed
One-family
Two-family or more
Mobile homes shipped
14
15
Merchant builder activity in
one-family units
Number sold
Number for sale at end of period1
16
17
Price of units sold (thousands
of dollars)2
Median
Average
18
Number sold
1,199
987
213
1,288
1,126
162
680
543
137
1,193
1,040
153
254
1,372
1,068
303
1,457
1,198
259
762
558
204
1,347
1,160
187
304
1,332
997
335
1,354
1,076
278
776
547
229
1,313
1,066
247
340
1,379
1,046
333
1,401
1,135
266
772
547
225
1,247
1,019
228
344
1,427
1,079
348
1,401
1,130
271
783
555
228
1,267
1,009
258
352
1,393
1,050
343
1,351
1,109
242
781
560
221
1,320
1,039
281
354
1,450
1,073
377
1,458
1,129
329
790
562
228
1,360
1,081
279
355
1,487
1,123
364
1,425
1,150
275
800
569
231
1,225
1,003
222
352
1,378
1,056
322
1,453
1,146
307
803
569
234
1,403
1,113
290
352
1,417
1,087
330
1,514
1,183
331
800
565
235
1,328
1,052
276
341
1,423
1,097
326
1,439
1,163
276
816
581
235
1,391
1,112
279
364
1,459
1,115
344
1,511
1,209
302
828
592
236
1,345
1,067
278
378
1,452
1,098
354
1,461
1,141
320
836
598
238
1,366
1,087
279
369
666
293
670
337
665
372
707
349
684
350
673
360
679
368
683
372
743
370
784
355
727
366
770
366
828
360
126.1
147.6
130.4
153.7
133.4
157.6
134.9
162.0
130.0
155.6
135.2
156.2
137.0
160.7
138.6
165.6
131.9
155.3
139.4
163.7
136.8
161.2
139.9
168.7
135.0
162.3
3,800
3,946
3,801
4,050
4,090
4,070
4,000
3,870
3,720
3,940
4,200
4,200
4,280
106.5
133.1
109.6
136.4
112.2
138.4
117.6
144.5
114.8
140.2
113.2
138.7
114.3
139.5
113.9
138.7
114.8
141.2
114.0
138.7
115.7
140.1
116.5
141.9
117.6
144.4
EXISTING UNITS ( o n e - f a m i l y )
Price of units sold (thousands
of dollars)2
19 Median
2 0 Average
Value of new construction (millions of dollars) 3
CONSTRUCTION
21
Total put in place
482,737 r
527,063 r
547,079 r
542,324 r
550,467 r
549,952 r
549,745 r
555,701 r
558,952
544,577
556,983
568,334
563,352
22
23
24
25
26
27
28
Private
Residential
Nonresidential
Industrial buildings
Commercial buildings
Other buildings
Public utilities and other
362,587'
210,455
152,132'
26,482'
53,375'
26,219'
46,056'
400,007'
238,873'
161,134'
28,947'
59,728'
26,961'
45,498'
410,197'
236,598'
173,599'
32,301'
67,528'
26,923'
46,847'
405,911'
234,464'
171,447'
31,809'
67,911'
26,475'
45,252'
411,326'
237,663'
173,663'
32,427'
67,660'
27,340'
46,236'
410,550'
237,952'
172,598'
31,422'
67,259'
27,899'
46,018'
411,015'
239,938'
171,077'
32,032'
65,555'
27,418'
46,072'
417,191'
243,104'
174,087'
31,996'
66,447'
28,197'
47,447'
418,896
242,474
176,422
32,495
66,475
28,103
49,349
411,248
238,558
172,690
30,792
66,461
27,470
47,967
419,726
245,881
173,845
30,593
65,503
27,884
49,865
427,707
251,920
175,787
30,285
67,424
27,339
50,739
420,192
248,904
171,288
28,805
65,524
27,561
49,398
29
30
31
32
33
Public
Military
Highway
Conservation and development
Other
120,151'
2,454
34,342'
5,908'
77,447'
127,056'
2,319
37,673'
6,370'
80,694'
136,884'
3,005'
38,161'
6,389'
89,329'
136,413'
3,131'
38,809'
7,003'
87,470'
139,140'
3,218'
38,209'
6,212'
91,501'
139,402'
2,295'
40,125R
5,222'
91,760'
138,729'
3,217'
38,344'
5,888'
91,280'
138,510'
3,211'
40,402'
6,014'
88,883'
140,056
3,554
39,444
5,352
91,706
133,329
3,982
40,956
5,455
82,936
137,257
3,126
39,527
5,811
88,793
140,627
3,182
39,866
5,173
92,406
143,160
3,017
38,875
4,755
96,513
1. Not at annual rates.
2. Not seasonally adjusted.
3. Recent data on value of new construction may not be strictly comparable with data for
previous periods because of changes by the Bureau of the Census in its estimating techniques.
For a description of these changes, see Construction Reports (C-30-76-5), issued by the
Census Bureau in July 1976.
SOURCE. Bureau of the Census estimates for all series except (1) mobile homes, which are
private, domestic shipments as reported by the Manufactured Housing Institute and seasonally adjusted by the Census Bureau, and (2) sales and prices of existing units, which are
published by the National Association of Realtors. All back and current figures are available
from the originating agency. Permit authorizations are those reported to the Census Bureau
from 19,000 jurisdictions beginning in 1994.
Selected Measures
2.15
A47
CONSUMER AND PRODUCER PRICES
Percentage changes based on seasonally adjusted data except as noted
Change from 12
months earlier
Change from 3 months earlier
(annual rate)
Item
1996
1995
1995
June
Change from 1 month earlier
Index
level,
June
1996 1
1996
1996
June
Sept.
Dec.
Mar.
June
Feb.
Mar.
Apr.
May
June
CONSUMER PRICES 2
(1982-84=100)
3.0
2.8
1.6
2.4
4.0
3.1
.2
.4
.4
.3
.1
156.7
3.1
3.4
3.0
1.2
3.8
3.2
3.5
2.7
1.5
3.2
2.7
-10.5
2.8
2.0
3.0
1.9
1.9
2.2
1.7
2.5
3.2
15.8
3.5
2.6
3.4
4.6
8.4
2.2
-.3
3.9
.1
.4
.2
-.1
.3
.6
1.4
.3
.4
.2
.3
3.2
.1
-.1
.3
.1
1.1
.2
.0
.3
.7
-2.2
.2
.0
.3
152.6
113.1
165.2
141.0
179.0
7 Finished goods
8
Consumer foods
9
Consumer energy
Other
consumer goods
10
11
Capital equipment
2.1
1.2
4.0
2.0
1.6
2.7
4.6
4.1
2.0
1.2
1.6
8.8
-10.2
2.3
1.8
4.4
4.4
10.8
3.4
2.9
2.5
.3
17.8
.3
-.3
1.9
5.3
.0
2.0
.0
-.1
-.2
-.9'
.1
,0r
.5
.1'
2.6'
.1
,0r
.4
-.3
2.8
.0
.2
-.1
.0
-.6
.1
-.1
.2
1.6
-2.1
.3
-.1
131.6
133.3
84.7
144.5
138.0
Intermediate materials
12 Excluding foods and feeds
13 Excluding energy
7.0
7.4
-.6
-1.2
-.6
1.5
-.6
-2.9
-1.0
-3.2
.0
-.3
-,5r
-A'
.2'
-A'
.3
-.2
.2
.2
-.6
-.1
125.9
134.1
-5.3
-4.9
18.5
26.1
8.3
-13.8
• 34.8
-21.0
-17.6
20.8
33.9
-18.4
-3.8
38.1
-10.2
57.5
-6.0
-8.3
— ,7r
5.9r
-.2'
.2'
-5.0'
-2.2'
4.0
10.9
-.5
6.3
-3.8
-.3
1.4
-7.7
-1.4
128.7
77.4
155.7
1
All items
?.
3 Energy items
4 All items less food and energy
5
Commodities
6
Services
PRODUCER PRICES
(1982=100)
Crude materials
14 Foods
15 Energy
16 Other
1. Not seasonally adjusted.
2. Figures for consumer prices are for all urban consumers and reflect a rental-equivalence
measure of homeownership.
SOURCE. U.S. Department of Labor, Bureau of Labor Statistics.
A48
2.16
Domestic Nonfinancial Statistics • September 1996
GROSS DOMESTIC PRODUCT AND INCOME
Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates
1995
Account
1993
1994
1996
1995
Ql
Q2
Q3
Q4
Ql
GROSS DOMESTIC PRODUCT
1 Total
6,550.2
6,931.4
7,245.8
7,147.8
7,196.5
7,298.5
7,340.4
7,417.8
4,454.1
530.7
1,368.9
2,554.6
4,698.7
580.9
1,429.7
2,688.1
4,924.3
606.4
1,486.1
2,831.8
4,836.3
593.0
1,471.6
2,771.7
4,908.7
604.0
1,486.9
2,817.9
4,960.0
615.8
1,491.4
2,852.8
4,992.3
612.8
1,494.8
2,884.7
5,062.7
625.2
1,522.6
2,914.9
871.1
850.5
598.8
171.8
427.0
251.7
1,014.4
954.9
667.2
180.2
487.0
287.7
1,065.3
1,028.2
738.5
199.7
538.8
289.8
1,072.0
1,013.9
723.6
194.5
529.0
290.4
1,050.3
1,016.3
734.4
197.6
536.8
281.9
1,074.8
1,036.6
746.3
202.5
543.8
290.3
1,064.0
1,046.2
749.7
204.0
545.7
296.5
1,068.9
1,070.7
769.0
208.4
560.6
301.7
Change in business inventories
Nonfarm
20.6
26.8
59.5
48.0
37.0
39.6
58.1
60.8
34.0
36.1
38.2
41.5
17.8
19.9
-1.7
2.7
14 Net exports of goods and services
15
Exports
16
Imports
-64.9
660.0
724.9
-96.4
722.0
818.4
-102.3
804.5
906.7
-106.6
778.6
885.1
-122.4
796.9
919.3
-100.8
812.5
913.3
-79.3
829.9
909.2
-97.5
832.2
929.7
17 Government consumption expenditures and gross investment
18
Federal
19
State and local
1,289.9
522.1
767.8
1,314.7
516.3
798.4
1,358.5
516.7
841.7
1,346.0
519.9
826.1
1,359.9
522.6
837.3
1,364.5
516.7
847.7
1,363.5
507.8
855.7
1,383.7
518.6
865.1
By major type of product
20 Final sales, total
21
Goods
22
Durable
23
Nondurable
24
Services
25
Structures
6,529.7
2,400.9
1,013.8
1,387.2
3,581.7
547.0
6,871.8
2,534.2
1,085.9
1,448.3
3,742.4
595.3
7,208.8
2,660.3
1,144.9
1,515.4
3,920.9
627.6
7,089.7
2,617.3
1,118.6
1,498.7
3,852.6
619.8
7,162.5
2,642.3
1,134.0
1,508.3
3,904.5
615.7
7,260.3
2,684.5
1,162.5
1,522.1
3,943.2
632.6
7,322.6
2,697.1
1,164.5
1,532.6
3,983.1
642.3
7,419.6
2,749.1
1,191.4
1,557.7
4,019.1
651.4
20.6
15.7
4.9
59.5
31.9
27.7
37.0
34.9
2.2
58.1
54.4
3.7
34.0
28.5
5.4
38.2
29.2
9.1
17.8
27.3
-9.4
-1.7
12.3
-14.0
6,383.8
6,604.2
6,739.0
6,701.6
6,709.4
6,768.3
6,776.5
6,812.7
By source
Personal consumption expenditures
Durable goods
Nondurable goods
Services
2
3
4
5
6 Gross private domestic investment
7
Fixed investment
8
Nonresidential
9
Structures
10
Producers' durable equipment
11
Residential structures
12
13
26 Change in business inventories
27
Durable goods
28
Nondurable goods
MEMO
29 Total GDP in chained 1992 dollars
NATIONAL INCOME
30 Total
5,194.4
5,495.1
5,799.2
5,697.7
5,738.9
5,849.2
5,911.1
6,001.4
31 Compensation of employees
32
Wages and salaries
33
Government and government enterprises
34
Other
35
Supplement to wages and salaries
36
Employer contributions for social insurance
37
Other labor income
3,809.4
3,095.2
584.2
2,511.0
714.2
333.3
380.9
4,008.3
3,255.9
602.5
2,653.4
752.4
350.2
402.2
4,209.1
3,419.7
621.7
2,797.9
789.5
365.5
424.0
4,141.6
3,363.0
616.3
2,746.6
778.6
360.8
417.7
4,178.9
3,393.3
619.6
2,773.6
785.6
363.6
422.0
4,235.9
3,442.3
624.1
2,818.2
793.7
367.8
425.9
4,280.2
3,480.1
626.9
2,853.2
800.1
369.8
430.2
4,325.7
3,521.6
634.0
2,887.6
804.1
375.0
429.1
420.0
388.1
32.0
450.9
415.9
35.0
478.3
449.3
29.0
472.0
443.5
28.5
474.7
447.1
27.6
479.6
451.5
28.1
486.7
454.9
31.8
499.5
461.1
38.4
41 Rental income of persons2
102.5
116.6
122.2
120.6
121.6
120.9
125.8
126.9
42 Corporate profits1
43
Profits before tax3
44
Inventory valuation adjustment
45
Capital consumption adjustment
464.5
464.3
-6.6
6.7
526.5
528.2
-13.3
11.6
588.6
600.8
-28.1
15.9
559.6
594.1
-51.9
17.4
561.1
588.4
-42.3
15.0
614.9
609.6
-9.3
14.6
618.6
611.0
-8.8
16.5
652.0
649.0
-17.4
20.4
46 Net interest
398.1
392.8
401.0
403.9
402.6
397.8
399.7
397.3
38 Proprietors' income1
39
Business and professional1
40
Farm1
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.
3. For after-tax profits, dividends, and the like, see table 1.48.
SOURCE. U.S. Department of Commerce, Survey of Current Business.
Selected Measures
2.17
A49
PERSONAL INCOME AND SAVING
Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates
1996
1995
Account
1993
1994
1995
Q1
Q2
Q3
Q4
Q1
PERSONAL INCOME AND SAVING
1 Total personal income
5,479.2
5,750.2
6,101.7
5,995.5
6,061.9
6,135.6
6,213.9
6,288.4
2 Wage and salary disbursements
3
Commodity-producing industries
4
Manufacturing
5
Distributive industries
6
Service industries
7
Government and government enterprises
3,090.6
781.3
593.1
698.4
1,026.6
584.2
3,241.1
825.0
621.3
739.3
1,074.3
602.5
3,419.7
858.7
642.8
787.9
1,151.3
621.7
3,361.6
856.2
643.4
768.8
1,120.2
616.3
3,393.3
855.0
640.5
778.6
1,140.0
619.6
3,442.3
859.9
642.9
795.4
1,162.8
624.1
3,481.5
863.5
644.5
808.9
1,182.2
626.9
3,520.2
866.2
643.0
821.6
1,198.4
634.0
380.9
420.0
388.1
32.0
102.5
186.8
647.3
910.7
444.4
402.2
450.9
415.9
35.0
116.6
199.6
661.6
956.3
472.9
424.0
478.3
449.3
29.0
122.2
214.8
714.6
1,022.6
507.4
417.7
472.0
443.5
28.5
120.6
209.5
701.9
1,002.4
497.6
422.0
474.7
447.1
27.6
121.6
212.2
713.9
1,016.8
505.1
425.9
479.6
451.5
28.1
120.9
215.8
717.5
1,029.9
510.7
430.2
486.7
454.9
31.8
125.8
221.7
725.2
1,041.4
516.1
429.1
499.5
461.1
38.4
126.9
226.6
724.2
1,063.0
529.9
8
9
10
11
12
13
14
15
16
17
Other labor income
Proprietors' income1
Business and professional1
Farm1
Rental income of persons2
Dividends
Personal interest income
Transfer payments
Old-age survivors, disability, and health insurance benefits
LESS: Personal contributions for social insurance
18 EQUALS: Personal income
259.6
278.1
294.5
290.2
292.7
296.2
298.8
301.0
5,479.2
5,750.2
6,101.7
5,995.5
6,061.9
6,135.6
6,213.9
6,288.4
689.9
731.4
794.3
770.0
801.5
798.4
807.2
824.9
20 EQUALS: Disposable personal income
4,789.3
5,018.8
5,307.4
5,225.5
5,260.4
5,337.2
5,406.7
5,463.5
21
LESS: Personal outlays
4,572.9
4,826.5
5,066.7
4,972.2
5,049.0
5,104.6
5,140.9
5,214.7
22 EQUALS: Personal saving
216.4
192.4
240.8
253.3
211.4
232.6
265.8
248.8
24,724.1
16,807.4
18,075.0
25,332.7
17,150.5
18,320.0
25,613.7
17,402.2
18,757.0
25,559.1
17,280.4
18,672.0
25,540.2
17,391.6
18,634.0
25,695.9
17,465.4
18,794.0
25,668.7
17,477.5
18,926.0
25,747.1
17,592.7
18,988.0
4.5
3.8
4.5
4.8
4.0
4.4
4.9
4.6
19
LESS: Personal tax and nontax payments
MEMO
Per capita (chained 1992 dollars)
23 Gross domestic product
24 Personal consumption expenditures
25 Disposable personal income
26 Saving rate (percent)
GROSS SAVING
27 Gross saving
938.4
1,055.9
1,141.6
1,110.5
1,092.3
1,155.7
1,207.9
1,207.5
28 Gross private saving
964.5
1,006.0
1,062.5
1,039.9
1,007.3
1,076.1
1,126.6
1,123.6
29 Personal saving
30 Undistributed corporate profits1
31 Corporate inventory valuation adjustment
216.4
103.4
-6.6
192.4
120.2
-13.3
240.8
142.5
-28.1
253.3
120.6
-51.9
211.4
122.3
-42.3
232.6
162.0
-9.3
265.8
165.2
-8.8
248.8
178.7
-17.4
Capital consumption allowances
32 Corporate
33 Noncorporate
417.0
223.1
441.0
237.7
454.0
225.2
444.4
220.2
451.3
222.4
456.9
224.7
463.6
233.4
465.6
229.1
-26.1
-186.5
68.2
-254.7
160.5
65.6
94.9
49.9
-119.3
70.6
-189.9
169.2
69.4
99.7
79.1
-88.8
73.8
-162.6
167.9
72.9
95.0
70.5
-99.9
73.5
-173.3
170.4
71.4
99.0
85.0
-86.3
74.2
-160.5
171.3
72.3
99.0
79.6
-87.7
73.8
-161.6
167.3
73.4
93.9
81.3
-81.1
73.8
-154.9
162.4
74.3
88.1
83.9
-82.2
73.2
-155.5
166.1
75.1
91.0
41 Gross investment
993.5
1,087.2
1,146.1
1,146.7
1,113.9
1,150.7
1,173.0
1,168.0
42 Gross private domestic investment
43 Gross government investment
44 Net foreign investment
871.1
210.6
-88.2
1,014.4
212.3
-139.6
1,065.3
221.9
-141.1
1,072.0
219.1
-144.4
1,050.3
223.7
-160.1
1,074.8
224.7
-148.9
1,064.0
220.1
-111.0
1,068.9
228.8
-129.8
55.1
31.3
4.5
36.2
21.6
-5.0
-34.9
-39.5
34 Gross government saving
35
Federal
36
Consumption of fixed capital
37
CuiTent surplus or deficit ( - ) , national accounts
38
State and local
39
Consumption of fixed capital
40
Current surplus or deficit ( - ) , national accounts
45 Statistical discrepancy
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.
SOURCE. U.S. Department of Commerce, Survey of Current Business.
A50
3.10
International Statistics • September 1996
U.S. INTERNATIONAL TRANSACTIONS
Summary
Millions of dollars; quarterly data seasonally adjusted except as noted1
1995
Item credits or debits
1 Balance on current account
2
Merchandise trade balance 2
3
Merchandise exports
4
Merchandise imports
5
Military transactions, net
6
Other service transactions, net
7
Investment income, net
8
U.S. government grants
9
U.S. government pensions and other transfers
10
Private remittances and other transfers
11 Change in U.S. government assets other than official
reserve assets, net (increase, - )
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
17 Change in U.S. private assets abroad (increase, - )
18
Bank-reported claims 3
19
Nonbank-reported claims
20
U.S. purchases of foreign securities, net
21
U.S. direct investments abroad, net
22 Change in foreign official assets in United States (increase, +)
23
U.S. Treasury securities
24
Other U.S. government obligations
25
Other U.S. government liabilities 4
26
Other US. liabilities reported by U.S. banks 3
27
Other foreign official assets 5
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
34 Allocation of special drawing rights
35 Discrepancy
36
Due to seasonal adjustment
37
Before seasonal adjustment
1993
1994
1996
1995
-99,936
-132,609
456,832
-589,441
881
59,690
9,742
-16,823
-4,081
-16,736
-148,405
-166,121
502,463
-668,584
1,963
59,779
-4,159
-15,816
-4,544
-19,506
-342
Qi
Q2
Q3
Q4
Qlp
-148,154
-173,424
575,940
-749,364
3,585
64,775
-8,016
-10,959
-3,420
-20,696
-39,054
-44,923
138,551
-183,474
628
14,780
-900
-2,846
-758
-5,035
-40,976
-47,927
142,983
-190,910
859
15,244
-862
-2,381
-967
-4,942
-37,688
-42,548
144,984
-187,532
1,120
17,093
-4,361
-2,933
-964
-5,095
-30,435
-38,026
149,422
-187,448
978
17,657
-1,890
-2,799
-731
-5,624
-35,588
-42,738
150,019
-192,757
628
17,758
-395
-4,340
-1,026
-5,475
-341
-280
-154
-179
252
-199
52
-1,379
0
-537
-44
-797
5,346
0
-441
494
5,293
-9,742
0
-808
-2,466
-6,468
-5,318
0
-867
-526
-3,925
-2,722
0
-156
-786
-1,780
-1,893
0
362
-991
-1,264
191
0
-147
-163
501
17
0
-199
-849
1,065
-192,889
29,947
1,581
-146,253
-78,164
-155,700
-8,161
-32,804
-60,270
-54,465
-297,834
-69,146
-34,219
-98,960
-95,509
-56,275
-29,114
-4,537
-7,571
-15,053
-105,398
-41,236
-22,904
-23,011
-18,247
-37,954
8,476
7,500
-35,839
-18,091
-98,206
-7,272
-14,278
-32,539
-44,117
-55,801
4,510
-33,492
-26,819
72,153
48,952
4,062
1,713
14,841
2,585
40,253
30,745
6,077
2,344
3,560
-2,473
109,757
68,813
3,734
1,082
32,862
3,266
21,822
10,132
1,126
-331
10,630
265
37,380
25,208
1,326
235
7,662
2,949
39,186
20,489
518
-71
18,478
-228
11,369
12,984
764
1,249
-3,908
280
51,582
55,600
52
-195
-3,664
-211
178,843
20,859
10,489
24,381
80,092
43,022
245,123
111,842
-7,710
34,225
57,006
49,760
314,705
25,283
34,578
99,340
95,268
60,236
69,173
3,860
9,076
29,969
15,480
10,788
78,041
10,200
7,285
30,368
20,496
9,692
79,630
-21,542
6,945
37,269
31,971
24,987
87,860
32,765
11,272
1,734
27,321
14,768
47,234
-29,449
0
9,806
6,519
3,287
0
33,854
-266
34,120
0
-41,533
-7,407
-34,126
0
29,420
1,153
28,267
0
-7,496
6,365
-13,861
0
0
0
43,550
13,724
31,548
43,550
i 3,724
31,548
i 1,734
35,437
29,512
MEMO
Changes in official assets
38 U.S. official reserve assets (increase, —)
39 Foreign official assets in United States, excluding line 25
(increase, + )
40 Change in Organization of Petroleum Exporting Countries official
assets in United States (part of line 22)
-1,379
5,346
-9,742
-5,318
-2,722
-1,893
191
17
70,440
37,909
108,675
22,153
37,145
39,257
10,120
51,777
-3,717
-1,529
3,959
-412
-341
6,147
-1,435
-1,417
1. Seasonal factors are not calculated for lines 12-16, 18-20, 22-34, and 38-40.
2. Data are on an international accounts basis. The data differ from the Census basis data,
shown in table 3.11, for reasons of coverage and timing. Military exports are excluded from
merchandise trade data and are included in line 5.
3. Reporting banks include all types of depository institutions as well as some brokers and
dealers.
4. Associated primarily with military sales contracts and other transactions arranged with
or through foreign official agencies.
5. Consists of investments in U.S. corporate stocks and in debt securities of private
corporations and state and local governments.
SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current
Business.
Summary Statistics
3.11
A51
U.S. FOREIGN TRADE 1
Millions of dollars; monthly data seasonally adjusted
1995
Item
1993
1994
1996
1995
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
May p
1 Goods and services, balance
2
Merchandise
3
Services
-72,037
-132,607
60,570
-104,381
-166,123
61,742
-105,064
-173,424
68,360
-6,098
-12,324
6,226
-6,399
-12,601
6,202
-9,686
-15,505
5,819
-6,654
-12,784
6,130
-8,012
-14,450
6,438
-9,606
-15,585
5,979
-10,877
-16,860
5,983
4 Goods and services, exports
5
Merchandise
6
Services
642,953
456,834
186,119
698,301
502,462
195,839
786,529
575,939
210,590
67,997
49,777
18,220
68,088
50,120
17,968
66,493
48,645
17,848
69,163
50,883
18,280
69,277
50,490
18,787
68,990
50,740
18,250
69,762
51,292
18,470
7 Goods and services, imports
8
Merchandise
9
Services
-714,990
-589,441
-125,549
-802,682
-668,585
-134,097
-891,593
-749,363
-142,230
-74,095
-62,101
-11,994
-74,487
-62,721
-11,766
-76,179
-64,150
-12,029
-75,817
-63,667
-12,150
-77,289
-64,940
-12,349
-78,596
-66,325
-12,271
-80,639
-68,152
-12,487
1. Data show monthly values consistent with quarterly figures in the U.S. balance of
payments accounts.
3.12
SOURCE. FT900, U.S. Department of Commerce, Bureau of the Census and Bureau of
Economic Analysis.
U.S. RESERVE ASSETS
Millions of dollars, end of period
1995
Asset
1 Total
2 Gold stock, including Exchange
Stabilization Fund1
3 Special drawing rights2'3
4 Reserve position in International Monetary
Fund2
5 Foreign currencies4
1992
1993
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
May
June p
71,323
73,442
74,335
85,755
85,832
82,717
84,270
84,212
83,710
83,468
83,455
11,056
8,503
11,053
9,039
11,051
10,039
11,050
11,034
11,050
11,037
11,052
10,778
11,053
11,106
11,053
11,049
11,052
10,963
11,051
11,037
11,050
11,046
11,759
40,005
11,818
41,532
12,030
41,215
14,572
49,099
14,649
49,096
14,312
46,575
14,813
47,298
15,249
46,861
15,117
46,578
15,227
46,153
15,282
46,077
1. Gold held "under earmark" at Federal Reserve Banks for foreign and international
accounts is not included in the gold stock of the United States; see table 3.13, line 3. Gold
stock is valued at $42.22 per fine troy ounce.
2. Special drawing rights (SDRs) are valued according to a technique adopted by the
International Monetary Fund (IMF) in July 1974. Values are based on a weighted average of
exchange rates for the currencies of member countries. From July 1974 through December
1980, sixteen currencies were used; since January 1981, five currencies have been used. U.S.
3.13
1996
1994
SDR holdings and reserve positions in the IMF also have been valued on this basis since July
1974.
3. Includes allocations of SDRs by the International Monetary Fund on Jan. 1 of the year
indicated, as follows: 1970—$867 million; 1971—$717million; 1972—$710million; 1979—
$1,139 million; 1980—$1,152 million; 1981—$1,093 million; plus net transactions in SDRs.
4. Valued at current market exchange rates.
FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS 1
Millions of dollars, end of period
1995
Asset
1992
1993
Nov.
1 Deposits
Held in custody
2 U.S. Treasury securities2
3 Earmarked gold 3
Dec.
Jan.
Feb.
Mar.
Apr.
May
June p
205
386
250
194
386
165
209
191
166
160
182
314,481
13,118
379,394
12,327
441,866
12,033
522,950
11,702
522,170
11,702
532,776
11,702
559,741
11,689
573,435
11,590
573,924
11,445
578,608
11,339
572,839
11,296
1. Excludes deposits and U.S. Treasury securities held for international and regional
organizations.
2. Marketable U.S. Treasury bills, notes, and bonds and nonmarketable U.S. Treasury
securities, in each case measured at face (not market) value.
1996
1994
3. Held in foreign and international accounts and valued at $42.22 per fine troy ounce; not
included in the gold stock of the United States.
A52
3.15
International Statistics • September 1996
SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS
Millions of dollars, end of period
1995
Item
1 Total1
4
5
6
By type
Liabilities reported by banks in the United States2
U.S. Treasury bills and certificates3
U.S. Treasury bonds and notes
Marketable
Nonmarketable4
U.S. securities other than U.S. Treasury securities5
7
8
9
10
11
12
By area
Europe1
Canada
Latin America and Caribbean
Asia
Africa
Other countries
2
3
1993
Nov/
Dec/
Jan/
Feb/
Mar/
Apr.
May p
482,915
520,934
632,860
630,775
644,570
670,229
682,952
687,277
689,773
69,721
151,100
73,386
139,571
109,646
171,366
107,258
168,534
103,919
173,949
103,242
191,188
103,994
198,382
111,079
186,638
104,993
188,321
212,237
5,652
44,205
254,059
6,109
47,809
291,033
6,449
54,366
293,684
6,491
54,808
306,299
6,120
54,283
314,980
6,159
54,660
319,728
6,199
54,649
327,981
6,236
55,343
334,463
5,898
56,098
207,034
15,285
55,898
197,702
4,052
2,942
215,374
17,235
41,492
236,824
4,180
5,827
228,180
19,535
62,474
311,638
6,086
4,945
222,314
19,473
66,720
310,966
6,296
5,004
223,569
19,078
70,281
320,512
6,924
4,204
231,389
18,850
70,497
338,999
6,574
3,918
242,589
20,846
73,039
335,006
6,584
4,886
241,161
20,878
71,135
341,360
7,388
5,353
244,294
21,670
67,799
343,418
7,173
5,417
1. Includes the Bank for International Settlements.
2. Principally demand deposits, time deposits, bankers acceptances, commercial paper,
negotiable time certificates of deposit, and borrowings under repurchase agreements.
3. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official
institutions of foreign countries.
4. Excludes notes issued to foreign official nonreserve agencies. Includes current value of
zero-coupon Treasury bond issues to foreign governments as follows: Mexico, beginning
March 1988, 20-year maturity issue and beginning March 1990, 30-year maturity issue;
3.16
1996
1994
LIABILITIES TO, AND CLAIMS ON, FOREIGNERS
Payable in Foreign Currencies
Venezuela, beginning December 1990, 30-year maturity issue; Argentina, beginning April
1993, 30-year maturity issue.
5. Debt securities of U.S. government corporations and federally sponsored agencies, and
U.S. corporate stocks and bonds.
SOURCE. Based on U.S. Department of the Treasury data and on data reported to the
department by banks (including Federal Reserve Banks) and securities dealers in the United
States, and on the 1989 benchmark survey of foreign portfolio investment in the United
States.
Reported by Banks in the United States1
Millions of dollars, end of period
1995
Item
1 Banks' liabilities
2 Banks' claims
3
Deposits
4
Other claims
5 Claims of banks' domestic customers2
1992
72,796
62,799
24,240
38,559
4,432
1. Data on claims exclude foreign currencies held by U.S. monetary authorities.
1993
78,259
62,017
20,993
41,024
12,854
1996
1994
89,284
60,689
19,661
41,028
10,878
June
Sept.
Dec.
Mar.
106,621
77,042r
28,909
48,133r
10,244
102,147
69,48 l r
25.712
43,769r
6,624
112,556
74,830r
22,688
52,142r
6,145
109,620
69,522r
22,220
47,302r
6,064
2. Assets owned by customers of the reporting bank located in the United States that
represent claims on foreigners held by reporting banks for the accounts of the domestic
customers.
Nonbank-Reported
3.17
LIABILITIES TO FOREIGNERS
Payable in U S . dollars
Data
A53
Reported by Banks in the United States1
Millions of dollars, end o f period
1995
Item
1993
1994
1996
1995
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
May p
B Y HOLDER AND TYPE OF LIABILITY
1 Total, all foreigners
926,672
1,014,808
l,095,568 r
1,104,705
l,095,568 r
l,098,719 r
l,101,991 r
l,100,530 r
1,100,720
1,096,433
2 Banks' own liabilities
Demand deposits
3
4
Time deposits 2
3
Other
5
Own foreign offices 4
6
626,919
21,569
175,106
111,971
318,273
718,440
23,386
186,512
112,984
395,558
749,448 r
24,460
192,700r
139,780r
392,508r
755,089
23,114
193,719r
154,280r
383,976
749,448 r
24,460
192,700'
139,780r
392,508 r
747,540 r
22,182
198,513
141,963
384,882 r
733,oor
23,507
192,195r
149,009r
368,290 r
729,909 r
23,371 r
193,653r
138,31 r
374,574 r
735,880
23,958
192,179
146,539
373,204
723,994
23,337
181,579
144,332
374,746
299,753
176,739
296,368
162,908
346,120
197,341
349,616
201,845
346,120
197,341
351,179
203,478
368,990
223,395
370,621
228,705
364,840
217,106
372,439
220,802
36,289
86,725
42,532
90,928
52,246
96,533
49,969
97,802
52,246
96,533
46,973
100,728
43,404
102,191
40,483
101,433
44,823
102,911
49,618
102,019
10,936
5,639
15
2,780
2,844
8,606
8,176
29
3,298
4,849
11,039
10,347
21
4,656
5,670
9,794
8,339
33
3,631
4,675
11,039
10,347
21
4,656
5,670
10,622
9,628
30
4,385
5,213
11,109r
10,314r
43
3,479
6,792 r
9,476
8,558
16
3,527
5,015
11,216
10,390
28
3,979
6,383
11,914
11,127
34
3,482
7,611
5,297
4,275
430
281
692
350
1,455
962
692
350
994
764
795
555
918
564
826
426
787
376
1,022
0
149
0
341
493
0
341
1
230
0
230
10
298
56
400
0
390
21
220,821
64,144
1,600
21,653
40,891
212,957
59,935
1,564
23,511
34,860
275,792 r
83,31 r
2,098
30,716r
50,497 r
281,012
85,681
1,690
30,597 r
53,394'
275,792'
83,311 r
2,098
30,716 r
50,497 r
277,868
85,040
1,522
28,069
55,449
294,430
84,077
1,655
29,904 r
52,518 r
302,376 r
88,537 r
1,423
32,404 r
54,710 r
297,717
91,664
1,679
36,487
53,498
293,314
81,961
1,504
32,656
47,801
156,677
151,100
153,022
139,571
192,481
168,534
195,331
171,366
192,481
168,534
192,828
173,949
210,353
191,188
213,839
198,382
206,053
186,638
211,353
188,321
5,482
95
13,245
206
23,603
344
23,610
355
23,603
344
18,532
347
18,138
1,027
14,970
487
19,065
350
22,661
371
592,171
478,755
160,482
9,718
105,262
45,502
318,273
678,367
563,466
167,908
10,633
111,171
46,104
395,558
687,458 r
563,883 r
171,375r
11,756
103,554r
56,065r
392,508 r
687,285
561,985
178,009
11,232
105,266r
61,51 LR
383,976
687,458 r
563,883 r
171,375r
11,756
103,554r
56,065 r
392,508 r
687,259 r
559,030 r
174,148
10,247
110,515
53,386
384,882 r
670,806 r
541,500 r
173,210
10,948
104,309
57,953
368,290 r
666,843'
539,761 r
165,187r
10,971r
101,117
53,099'
374,574 r
665,596
537,533
164,329
11,453
96,540
56,336
373,204
662,308
533,016
158,270
10,660
89,543
58,067
374,746
113,416
10,712
114,901
11,251
123,575
15,869
125,300
16,687
123,575
15,869
128,229
15,992
129,306
17,947
127,082
15,967
128,063
16,801
129,292
17,596
17,020
85,684
14,505
89,145
13,035
94,671
13,070
95,543
13,035
94,671
13,590
98,647
12,094
99,265
11,864
99,251
10,814
100,448
11,738
99,958
102,744
78,381
10,236
45,411
22,734
114,878
86,863
11,160
48,532
27,171
121,279r
91,907 r
10,585
53,774 r
27,548r
126,614
99,084
10,159
54,225
34,700
121,279r
91,907 r
10,585
53,774 r
27,548 r
122,970
93,842
10,383
55,544
27,915
125,646
97,110
10,861
54,503
31,746
121,835r
93,053'
10,961'
56,605'
25,487
126,191
96,293
10,798
55,173
30,322
128,897
97,890
11,139
55,898
30,853
24,363
10,652
28,015
11,805
29,372
12,588
27,530
12,830
29,372
12,588
29,128
12,773
28,536
13,705
28,782
13,792
29,898
13,241
31,007
14,509
12,765
946
14,633
1,577
15,267
1,517
12,796
1,904
15,267
1,517
14,621
1,734
12,942
1,889
13,351
1,639
14,544
2,113
14,829
1,669
17,567
17,895
9,099
9,837
9,099
10,479
10,544
10,005
8,306
9,284
7 Banks' custodial liabilities 5
U.S. Treasury bills and certificates 6
8
Other negotiable and readily transferable
9
instruments 7
Other
10
8
11 Nonmonetary international and regional organizations . . .
Banks' own liabilities
12
Demand deposits
13
Time deposits 2
14
Other 3
15
16
17
18
19
Banks' custodial liabilities5
U.S. Treasury bills and certificates 6
Other negotiable and readily transferable
instruments 7
Other
20 Official institutions 9
Banks' own liabilities
21
22
Demand deposits
Time deposits 2
23
Other 3
24
25
26
27
28
Banks' custodial liabilities 5
U.S. Treasury bills and certificates 6
Other negotiable and readily transferable
instruments 7
Other
29 Banks 10
Banks' own liabilities
30
Unaffiliated foreign banks
31
32
Demand deposits
Time deposits 2
33
34
Other 3
Own foreign offices 4
35
36
37
38
39
Banks' custodial liabilities5
U.S. Treasury bills and certificates 6
Other negotiable and readily transferable
instruments 7
Other
40 Other foreigners
Banks' own liabilities
41
Demand deposits
42
Time deposits 2
43
Other 3
44
45
46
47
48
Banks' custodial liabilities 5
U.S. Treasury bills and certificates 6
Other negotiable and readily transferable
instruments 7
Other
1
MEMO
49 Negotiable time certificates of deposit in custody for
foreigners
1. Reporting banks include all types of depository institutions as well as some brokers and
dealers. Excludes bonds and notes of maturities longer than one year.
2. Excludes negotiable time certificates of deposit, which are included in "Other negotiable and readily transferable instruments."
3. Includes borrowing under repurchase agreements.
4. For U.S. banks, includes amounts owed to own foreign branches and foreign subsidiaries consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory
agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists
principally of amounts owed to the head office or parent foreign bank, and to foreign
branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank.
5. Financial claims on residents of the United States, other than long-term securities, held
by or through reporting banks for foreign customers.
6. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official
institutions of foreign countries.
7. Principally bankers acceptances, commercial paper, and negotiable time certificates of
deposit.
8. Principally the International Bank for Reconstruction and Development, the InterAmerican Development Bank, and the Asian Development Bank. Excludes "holdings of
dollars" of the International Monetary Fund.
9. Foreign central banks, foreign central governments, and the Bank for International
Settlements.
10. Excludes central banks, which are included in "Official institutions."
A54
3.17
International Statistics • September 1996
LIABILITIES TO FOREIGNERS Reported by Banks in the United States'—Continued
1995
1993
1994
1996
1995
May p
Nov.
Dec.
1,104,705
L,095,568R
L,098,719 R
L,101,991 R
L,100,530 R
L,100,720 R
1,096,433
1,094,911
L,084,529
R
R
R
R
L,089,504R
1,084,519
384,013
4,755
28,357
3,418
2,315
40,415
26,798
2,265
10,759
15,317
1,287
2,718
8,979
10,809
3,720
41,178
4,010
148,384
171
28,358
362,786
3,537
24,842
2,921
2,831
39,204
24,035
2,011
10,875
13,724
1,394
2,761
7,950
10,012
3,245
43,627
4,124
139,127
177
26,389
370,58 l r
2,848
25,584
2,876
1,768
41,332 r
25,229
1,966
11,475
12,839
1,034
2,843
9,321
18,976
2,256
39,083
4,103
144,136 r
143
22,769
375,575'
3,477
27,572
2,787
2,203
41,354'
24,854
1,714
10,178
12,397
915
2,529
8,798
19,548
3,943
36,805
4,453
146,612'
145
25,291
367,874
3,624
25,955
2,645
2,188
39,690
23,950
1,665
11,045
12,578
828
1,858
7,260
19,010
2,410
37,099
4,669
146,385
146
24,869
Jan.
Feb.
Mar.
Apr.
AREA
50 Total, all foreigners
926,672
1,014,808
L,095,568 R
51 Foreign countries
915,736
1,006,202
L,084,529
R
52 Europe
53
Austria
54
Belgium and Luxembourg
55
Denmark
56
Finland
57
France
58
Germany
59
Greece
60
Italy
61
Netherlands
62
Norway
63
Portugal
64
Russia
65
Spain
66
Sweden
67
Switzerland
68
Turkey
69
United Kingdom
70
Yugoslavia"
71
Other Europe and other former U.S.S.R. 12
377,911
1,917
28,670
4,517
1,872
40,316
26,685
1,519
11,759
16,096
2,966
3,366
2,511
20,496
2,738
41,560
3,227
133,993
372
33,331
390,710
3,588
21,877
2,884
1,436
44,361
27,109
1,393
10,885
16,033
2,338
2,846
2,726
14,675
3,094
40,515
3,341
163,795
245
27,769
362,786
3,537
24,842
2,921
2,831
39,204
24,035
2,011
10,875
13,724
1,394
2,761
7,950
10,012
3,245
43,627
4,124
139,127
177
26,389
72 Canada
L,088,097
368,325
3,437
24,881
2,979
2,421
39,697
25,988
1,998
9,616
11,350
1,067
3,055
7,858
11,838
2,555
40,806
4,350
152,654
163
21,612
L,090,882
374,048
2,996
27,182
3,861
2,409
41,099
24,695
2,063
12,468
12,173
1,246
2,931
9,180
11,589
2,813
42,010
4,559
146,985
163
23,626
L,091,054
20,235
24,768
26,373
27,450
26,373
33,012 r
32,03 l r
31,500'
31,285'
33,178
362,238
14,477
73,820
8,117
5,301
193,699
3,183
3,171
33
880
1,207
410
28,019
4,686
3,582
929
1,611
12,786
6,327
423,830
17,203
104,002
8,424
9,145
229,599
3,127
4,615
13
875
1,121
529
12,227
5,217
4,551
900
1,597
13,985
6,700
440,216
12,236
94,991
4,897
23,797
239,083
2,825
3,666
8
1,315
1,275
481
24,555
4,672
4,265
974
1,835
11,810
7,531
436,580
13,031
87,719
6,561
27,364
240,353
2,696
3,443
8
1,307
1,210
447
20,993
5,644
4,287
916
1,912
11,622
7,067
440,216
12,236
94,991
4,897
23,797
239,083
2,825
3,666
8
1,315
1,275
481
24,555
4,672
4,265
974
1,835
11,810
7,531
435,703
13,524
96,850
4,633
22,715
233,383
2,978
3,505 r
7
1,236
1,058
500
23,643
4,448
4,030
1,025
1,799
12,662
1,101'
422,029
11,764
91,203
4,702
21,761
227,438
2,772
3,682 r
7
1,201
1,075
495
23,899
4,461
4,166
1,092
1,726
12,611
7,974 r
433,703'
11,985
88,091
5,035
21,489
240,605'
2,815
3,637'
7
1,274
1,060
503
24,577'
4,402
4,026
962
1,908
13,255
8,072'
431,051'
14,117
85,887'
4,262
20,222'
239,129'
2,882'
3,790'
13'
1,265
1,085
516
23,330
5,272
3,887'
1,081
1,748
14,244
8,321'
433,385
11,650
86,671
4,998
20,105
243,088
2,867
3,430
8
1,284
1,073
550
23,214
4,722
3,846
1,064
1,757
14,672
8,386
144,527
154,334
240,740 r
232,222
240,740'
238,175
249,447
241,958'
237,705'
235,906
4,011
10,627
17,132
1,114
1,986
4,435
61,466
4,913
2,035
6,137
15,822
14,849
10,066
9,844
17,104
2,338
1,587
5,157
62,981
5,124
2,714
6,466
15,482
15,471
33,750
11,714
20,303 r
3,373
2,708
4,073
109,193
5,749 r
3,089
12,279
15,582
18,927 r
29,875
11,365
20,287
3,272
2,485
4,090
105,546
5,593
2,880
12,144
16,238
18,447
33,750
11,714
20,303 r
3,373
2,708
4,073
109,193
5,749'
3,089
12,279
15,582
18,927 r
35,733
12,311
20,307
3,263
2,011
4,348
106,728
5,092
2,394
13,121
14,417
18,450
32,200
12,955
22,286
3,527
2,349
5,780
113,361
5,607
2,366
13,389
13,491
22,136
24,430
15,513
20,187
3,990
2,169
5,344
117,325'
5,875
2,336
12,158
13,741
18,890'
25,861
14,953
18,379'
3,752
2,627
5,450
111,635'
5,860
2,467'
12,905
14,895
18,921
24,857
14,598
18,605
3,938
2,374
5,123
111,498
5,664
2,897
13,387
14,234
18,731
105 Africa
106
Egypt
107
Morocco
108
South Africa
109
Zaire
110
Oil-exporting countries 1 4
111
Other
6,633
2,208
99
451
12
1,303
2,560
6,524
1,879
97
433
9
1,343
2,763
7,641
2,136
104
739
10
1,797
2,855
7,793
1,907
60
1,206
9
1,826
2,785
7,641
2,136
104
739
10
1,797
2,855
7,679
1,848
99
1,217
11
1,774
2,730
7,818
2,375
52
665
8
1,968
2,750
7,089
2,057
65
413
9
1,706
2,839
7,832
2,002
114
1,001
8
1,904
2,803
7,404
1,873
113
745
16
1,887
2,770
112 Other
113
Australia
114
Other
4,192
3,308
884
6,036
5,142
894
6,773
5,644
1,129
6,853
5,758
1,095
6,773
5,644
1,129
5,203
4,326
877
5,509
4,503
1,006
6,223
5,239
984
6,056
4,896
1,160
6,772
5,757
1,015
10,936
6,851
3,218
867
8,606
7,537
613
456
11,039
9,300
893
846
9,794
8,470
371
953
11,039
9,300
893
846
10,622
9,639
349
634
ll,109r
10,075 r
292
742
9,476
7,938
758
780
11,216
9,932
422
862
11,914
10,547
594
773
73 Latin America and Caribbean
74
Argentina
75
Bahamas
76
Bermuda
77
Brazil
78
British West Indies
79
Chile
80
Colombia
81
Cuba
82
Ecuador
83
Guatemala
84
Jamaica
85
Mexico
86
Netherlands Antilles
87
Panama
88
Peru
89
Uruguay
90
Venezuela
91
Other
92 Asia
China
93
People's Republic of China
94
Republic of China (Taiwan)
95
Hong Kong
96
India
97
Indonesia
98
Israel
99
Japan
100
Korea (South)
101
Philippines
102
Thailand
103
Middle Eastern oil-exporting countries 1 3
104
Other
115 Nonmonetary international and regional organizations.
116
International 15
117
Latin American regional 1 6
118
Other regional 17
11. Since December 1992, has excluded Bosnia, Croatia, and Slovenia.
12. Includes the Bank for International Settlements. Since December 1992, has
included all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia.
13. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab
Emirates (Trucial States).
14. Comprises Algeria, Gabon, Libya, and Nigeria.
15. Principally the International Bank for Reconstruction and Development. Excludes
"holdings of dollars" of the International Monetary Fund.
16. Principally the Inter-American Development Bank.
17. Asian, African, Middle Eastern, and European regional organizations, except the Bank
for International Settlements, which is included in "Other Europe."
Nonbank-Reported
3.18
Data
BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States1
Payable in U.S. Dollars
Millions of dollars, end of period
1996
1995
Area or country
1993
1994
1995
Nov.
Dec.
Jan.
Feb.
Mar.r
Apr.
Mayp
1 Total, all foreigners
488,497
483,242
525,836r
533,891
525,836r
527,317r
520,790r
529,485
524,889
516,734
2 Foreign countries
486,092
478,651
523,905r
532,470
523,905r
525,015r
518,011r
525,671
522,173
513,240
123,741
412
6,532
382
594
11,822
7,724
691
8,834
3,063
396
834
2,310
3,717
4,254
6,605
1,301
62,013
473
1,784
123,380
692
6,738
1,129
512
12,146
7,608
604
6,043
2,959
504
938
973
3,530
4,098
5,746
878
66,846
265
1,171
130,315r
565
7,599
403
1,055
14,798r
8,864
449
5,364
5,051
665
888
660
2,166
2,060
7,074
785
67,388
147
4,334
131,660
639
10,691
602
1,097
15,259
8,431
378
5,390
4,909
1,376
862
949
3,191
2,362
5,925
926
66,911
237
1,525
130,315r
565
7,599
403
1,055
14,798r
8,864
449
5,364
5,051
665
888
660
2,166
2,060
7,074
785
67,388
147
4,334
133,923
683
8,365
541
1,397
12,253
8,072
555
5,010
4,305
1,098
853
678
3,811
2,315
4,613
732
75,147
481
3,014
138,574
773
8,519
599
1,313
13,161
8,774
603
4,838
4,722
1,408
743
775
4,041
2,151
4,016
707
78,040
118
3,273
137,465
792
5,778
398
1,782
13,740
9,260
507
5,855
5,565
1,016
773
868
5,420
2,056
4,841
810
73,191
120
4,693
134,379
1,083
8,678
293
1,305
11,404
8,647
622
5,696
6,276
793
889
741
5,092
3,514
6,370
973
68,571
208
3,224
133,087
1,072
8,711
232
1,282
11,591
8,003
554
6,166
5,548
933
813
482
3,158
2,506
8,713
867
69,136
204
3,116
18,617
18,490
16,095
17,000
16,095
3 Europe
4
Austria
5
Belgium and Luxembourg
6
Denmark
7
Finland
8
France
9
Germany
10
Greece
11
Italy
12
Netherlands
13
Norway
14
Portugal
Russia
15
16
Spain
17
Sweden
18
Switzerland
19
Turkey
20
United Kingdom
21
Yugoslavia2
22
Other Europe and other former U.S.S.R.3
23 Canada
20,068r
18,421r
r
17,540
21,661
20,485
24 Latin America and Caribbean
25
Argentina
26
Bahamas
27
Bermuda
Brazil
28
29
British West Indies
30
Chile
31
Colombia
32
Cuba
Ecuador
33
34
Guatemala
Jamaica
35
36
Mexico
Netherlands Antilles
37
38
Panama
Peru
39
40
Uruguay
41
Venezuela
42
Other
225,238
4,474
63,353
8,901
11,848
99,319
3,643
3,181
0
681
288
195
15,879
2,683
2,894
657
969
2,910
3,363
223,523
5,844
66,410
8,481
9,583
95,741
3,820
4,004
0
682
366
258
17,749
1,396
2,198
997
503
1,831
3,660
256,910
6,439
58,770r
5,111'
13,297
123,914
5,024
4,550
0
825
457
323
18,028
9,229
3,018
1,829
466
1,661
3,363
266,635
6,090
60,030
8,096
12,984r
129,468r
4,775
4,516
0
847
424
285
16,829r
12,048
3,049
1,577
434
1,695
3,488
256,910
6,439
58,770r
5,111'
13,297
123,914
5,024
4,550
0
825
457
323
18,028
9,229
3,018
1,829
466
1,661
3,363
257,146
6,185
60,284
5,011
13,252
122,759
4,996
4,622
0
841
439
299
17,114
11,043
2,845
1,762
422
1,575
3,697
248,483r
6,057
63,240r
4,742
13,915
108,833
4,593
4,492
0
842
461
362
17,167
12,973
2,820
1,928
463
1,572
4,023
252,727
6,216
65,628
4,829
13,813
113,239
4,559
4,547
0
977
465
332
16,953
10,902
2,612
1,936
623
1,559
3,537
245,186
6,187
54,251
5,031
14,175
118,599
4,605
4,518
0
959
473
335
17,071
8,728
2,503
2,042
579
1,376
3,754
237,512
6,034
55,475
2,993
14,190
110,924
4,363
4,523
0
942
460
345
16,857
8,674
2,397
2,348
602
1,279
5,106
43 Asia
China
44
People's Republic of China
45
Republic of China (Taiwan)
Hong Kong
46
47
India
48
Indonesia
49
Israel
50
Japan
Korea (South)
51
52
Philippines
53
Thailand
54
Middle Eastern oil-exporting countries4
55
Other
111,775
107,079
115,391r
111,438
115,391r
108,989
107,056r
111,390
114,841
115,954
2,271
2,625
10,828
589
1,527
826
60,032
7,539
1,410
2,170
15,115
6,843
836
1,448
9,161
994
1,470
688
59,151
10,286
662
2,902
13,748
5,733
1,023
1,713
12,895
1,846
1,678
739
61,308
14,119r
1,350
2,599r
9,639
6,482
1,069
1,484
10,713
1,823
1,578
728
60,522
14,115
789
2,538
9,604
6,475
1,023
1,713
12,895
1,846
1,678
739
61,308
14,119r
1,350
2,599r
9,639
6,482
1,014
1,407
13,254
1,864
1,458
668
55,897
14,501
814
2,397
8,053
7,662
1,351
1,404
13,867
1,859
1,478
683
55,077
15,523r
779
3,256
6,410
5,369
2,439
1,729
15,545
1,869
1,604
665
52,776
17,362
1,202
3,060
7,145
5,994
3,405
1,626
15,329
1,787
1,526
642
54,657
17,061
779
2,970
7,252
7,807
2,857
1,514
14,738
1,786
1,539
615
54,685
17,854
836
3,015
8,976
7,539
56 Africa
57
Egypt
58
Morocco
59
South Africa
60
Zaire
61
Oil-exporting countries5
62
Other
3,861
196
481
633
4
1,129
1,418
3,050
225
429
671
2
856
867
2,727
210
514
465
1
552
985
2,732
268
433
462
1
578
990
2,727
210
514
465
1
552
985
2,798
208
514
483
1
589
1,003
2,879
237
561
520
1
526
1,034
2,884
247
585
567
1
516
968
2,743
225
594
493
1
501
929
2,691
217
628
458
11
478
899
63 Other
64
Australia
65
Other
2,860
2,037
823
3,129
2,186
943
2,467
1,622
845
3,005
1,969
1,036
2,467
1,622
845
2,091
1,822
269
2,598
2,243
355
3,665
2,645
1,020
3,363
2,620
743
3,511
2,333
1,178
66 Nonmonetary international and regional organizations 6 .. .
2,405
4,591
1,931
1,421
1,931
2,302
2,779
3,814
2,716
3,494
1. Reporting banks include all types of depository institutions as well as some brokers and
dealers.
2. Since December 1992, has excluded Bosnia, Croatia, and Slovenia.
3. Includes the Bank for International Settlements. Since December 1992, has included all
parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia.
r
4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab
Emirates (Trucial States).
5. Comprises Algeria, Gabon, Libya, and Nigeria.
6. Excludes the Bank for International Settlements, which is included in "Other Europe."
A55
A56
3.19
International Statistics • September 1996
BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS
Payable in U.S. Dollars
Reported by Banks in the United States1
Millions of dollars, end of period
1995
1996
Type of claim
Nov.
Dec/
Jan/
Feb/
527,317
23,148
305,118
97,240
35,520
61,720
101,811
520,790
24,383
295,217
98,139
37,565
60,574
103,051
1 Total
575,818
599,521
648,603r
2 Banks' claims
3
Foreign public borrowers
4
Own foreign offices2
5
Unaffiliated foreign banks
6
Deposits
/
Other
8
All other foreigners
488,497
29,228
285,510
100,865
49,892
50,973
72,894
483,242
23,416
283,183
109,228
59,250
49,978
67,415
525,836r
22,522
303,397r
98,702r
37,343
61,359r
101,215'
87,321
41,734
116,279
64,829
122,767
58,519
122,767
58,519
125,891
68,800
31,186
36,008
44,161
44,161
39,274
14,401
15,442
20,087
20,087
17,817
7,920
8,427
8,410
8,410
9,026
29,150
32,796
30,717
9 Claims of banks' domestic customers3
10
Deposits
11
Negotiable and readily transferable
instruments4
12
Outstanding collections and other
claims
525,836
22,522
303,397
98,702
37,343
61,359
101,215
May p
524,889
25,205
298,235
99,368
37,411
61,957
102,081
516,734
21,753
300,405
96,553
35,318
61,235
98,023
32,309
n.a.
655,376
648,603
533,891
19,368
308,660r
99,556r
42,905
56,65 l r
106,307r
Apr.
Mar/
529,485
27,759
297,601
101,654
41,609
60,045
102,471
MEMO
13 Customer liability on acceptances
14 Dollar deposits in banks abroad, reported by
nonbanking business enterprises in the
United States5
31,355
27,830
32,777
33,113
principally of amounts due from the head office or parent foreign bank, and from foreign
branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank.
3. Assets held by reporting banks in the accounts of their domestic customers.
4. Principally negotiable time certificates of deposit, bankers acceptances, and commercial
paper.
5. Includes demand and time deposits and negotiable and nonnegotiable certificates of
deposit denominated in U.S. dollars issued by banks abroad.
1. For banks' claims, data are monthly; for claims of banks' domestic customers, data are
for quarter ending with month indicated.
Reporting banks include all types of depository institution as well as some brokers and
dealers.
2. For U.S. banks, includes amounts due from own foreign branches and foreign subsidiaries consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory
agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists
3.20
30,717
BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS
Payable in U.S. Dollars
Reported by Banks in the United States1
Millions of dollars, end of period
1995
Maturity, by borrower and area2
1 Total
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
By borrower
Maturity of one year or less
Foreign public borrowers
All other foreigners
Maturity of more than one year
Foreign public borrowers
All other foreigners
By area
Maturity of one year or less
Europe
Canada
Latin America and Caribbean
Asia
Africa
Allother 3
Maturity of more than one year
Europe
Canada
Latin America and Caribbean
Asia
Africa
All other3
1992
1993
June
Sept.
Dec.
Mar.
195,119
202,566
200,042
220,289
216,966
222,338
231,746
163,325
17,813
145,512
31,794
13,266
18,528
172,662
17,828
154,834
29,904
10,874
19,030
168,331
15,435
152,896
31,711
7,838
23,873
186,312
15,822
170,490
33,977
7,892
26,085
178,666
14,192
164,474
38,300
8,220
30,080
176,172r
15,015
161,157r
46,166r
7,506
38,660r
191,958
19,569
172,389
39,788
8,110
31,678
53,300
6,091
50,376
45,709
1,784
6,065
57,413
7,727
60,490
41,418
1,820
3,794
55,742
6,690
58,877
39,851
1,376
5,795
60,323
7,838
68,630
43,945
1,447
4,129
52,045
7,135
71,319
42,536
1,261
4,370
53,897
6,089
72,393r
40,133
l,271 r
2,389
56,656
4,973
84,297
40,332
1,302
4,398
5,367
3,287
15,312
5,038
2,380
410
5,310
2,581
14,025
5,606
1,935
447
4,203
3,505
15,717
5,318
1,583
1,385
4,240
3,685
17,557
6,058
1,389
1,048
4,594
3,571
20,224
7,373
1,389
1,149
4,885
2,731
27,81 l r
8,023
1,430'
1,286
6,827
2,563
19,532
8,461
1,474
931
1. Reporting banks include all types of depository institutions as well as some brokers and
dealers.
1996
1994
2. Maturity is time remaining until maturity,
3. Includes nonmonetary international and regional organizations.
Bank-Reported Data
3.21
CLAIMS ON FOREIGN COUNTRIES
A57
Held by U.S. and Foreign Offices of U.S. Banks1
Billions of dollars, end of period
1994
Area or country
1992
1996
1995
1993
Mar.
June
Sept.
Dec.
Mar.
June
Sept.
Dec.
Mar.p
344.7
407.7
475.7
484.8
485.7
495.6
540.9
525.0
526.3
549.2r
568.8
131.3
.0
15.3
9.1
6.5
.0
2.3
4.8
59.7
6.3
18.8
161.8
7.4
12.0
12.6
7.7
4.7
2.7
5.9
84.3
6.9
17.6
177.8
7.9
16.6
29.7
15.6
3.8
2.9
4.5
69.4
7.8
19.6
172.4
8.6
18.6
24.7
14.0
3.4
3.0
5.4
64.0
9.9
20.7
182.2
9.6
20.7
24.0
11.6
3.4
2.6
5.5
78.1
10.2
16.5
189.9
7.0
19.1
24.7
11.8
3.6
2.7
5.1
85.2
10.0
20.7
210.1
10.2
19.8
31.2
10.6
3.5
3.1
5.7
89.4
10.5
25.9
201.6
9.4
19.3
29.8
10.7
4.3
3.0
6.2
85.9
11.1
22.1
196.6
10.7
17.4
27.2
12.6
4.1
2.7
6.3
79.8
11.9
24.0
203.7
13.5
19.2
26.8
11.5
3.4
2.7
6.3
82.4
9.4
28.5
201.3
10.5
17.9
31.5
13.1
3.0
3.2
5.2
84.8
9.2
22.9
13 Other industrialized countries
14
Austria
15
Denmark
16
Finland
17
Greece
18
Norway
19
Portugal
20
Spain
21
Turkey
22
Other Western Europe
23
South Africa
24
Australia
24.0
1.2
.9
.7
3.0
1.2
.4
8.9
1.3
1.7
1.7
2.9
25.6
.4
1.0
.4
3.2
1.7
.8
9.9
2.1
2.6
1.1
2.3
42.0
1.0
1.0
1.0
3.7
1.6
1.2
13.2
2.4
3.1
1.2
12.7
42.5
1.0
1.1
.8
4.6
1.6
1.1
12.6
2.1
2.8
1.2
13.7
42.5
1.0
.9
.8
4.2
1.6
1.0
14.0
1.8
1.0
1.2
15.0
45.0
1.1
1.3
.9
4.4
2.0
1.2
13.6
1.6
2.7
1.0
15.4
43.9
.9
1.7
1.1
4.8
2.4
1.0
14.1
1.4
2.5
1.5
12.6
43.1
.7
1.1
.5
4.9
1.8
1.2
13.3
1.4
2.6
1.4
14.3
50.0
1.2
1.8
.7
5.0
2.3
1.9
13.3
1.9
3.0
1.3
17.4
50.0
.9
2.6
.8
5.6
3.2
1.3
11.6
1.8
4.7
1.2
16.4
60.7
1.2
3.1
.7
5.5
2.1
1.6
17.5
1.9
3.8
1.7
21.7
25 OPEC2
26
Ecuador
27
Venezuela
28
Indonesia
29
Middle East countries
30
African countries
15.8
.6
5.2
2.7
6.2
1.1
17.4
.5
5.1
3.3
7.4
1.2
22.9
.6
4.6
3.4
13.2
1.1
21.6
.5
4.4
3.2
12.4
1.1
21.6
.4
3.9
3.3
13.0
1.1
23.8
.5
3.7
3.8
15.0
.8
19.5
.5
3.5
4.0
10.7
.7
20.2
.7
3.5
4.1
11.4
.5
22.4
.7
3.0
4.4
13.6
.6
22.1
.7
2.7
4.8
13.3
.6
21.1
.8
2.9
4.7
12.3
.5
31 Non-OPEC developing countries
72.6
83.1
94.5
94.7
93.1
95.9
98.4
103.6
104.0
112.5
116.2
6.6
10.8
4.4
1.8
16.0
.5
2.6
7.7
12.0
4.7
2.1
17.8
.4
3.1
8.7
12.7
5.1
2.1
19.0
.6
2.9
9.8
12.0
5.1
2.4
18.6
.6
2.7
10.5
9.3
5.5
2.4
19.8
.6
2.8
11.2
8.4
6.1
2.6
18.4
.5
2.7
11.4
9.2
6.4
2.6
17.8
.6
2.4
12.3
9.9
7.1
2.6
17.6
.8
2.6
10.9
13.6
6.4
2.9
16.3
.7
2.6
12.9
13.7
6.8
2.9
17.3
.8
2.8
12.7
17.2
6.4
2.9
16.1
.9
3.1
.7
5.2
3.2
.4
6.6
3.1
3.6
2.2
3.1
2.0
7.3
3.2
.5
6.7
4.4
3.1
3.1
3.1
.8
7.6
3.4
.4
14.1
5.2
3.4
3.0
3.1
.8
7.1
3.7
.4
14.3
5.2
3.2
3.3
3.2
1.0
6.9
3.9
.4
14.4
3.9
2.9
3.5
3.4
1.1
9.2
4.2
.4
16.2
3.1
3.3
2.1
4.7
1.1
8.5
3.8
.6
16.9
3.9
3.0
3.3
4.9
1.4
9.0
4.0
.7
18.7
4.1
3.6
3.8
3.5
1.7
9.0
4.4
.5
18.0
4.3
3.3
3.9
3.7
1.8
9.4
4.4
.5
19.1
4.4
4.1
4.9
4.5
3.3
9.7
4.7
.5
19.4
4.7
3.9
5.2
4.3
.2
.6
.0
1.0
.4
.7
.0
.8
.3
.8
.0
1.1
.4
.7
.0
1.0
.3
.7
.0
.9
.3
.6
.0
.8
.4
.6
.0
.7
.4
.9
.0
.6
.4
.8
.0
.7
.4
.7
.0
.9
.2
.7
.0
.7
3.1
1.9
.6
.6
3.2
1.6
.6
.9
3.8
1.6
.5
1.6
3.2
1.3
.5
1.4
3.0
1.1
.5
1.5
2.7
.8
.5
1.4
2.3
.7
.4
1.2
1.8
.4
.3
1.0
3.4
.6
.4
2.3
4.2
1.0
.3
2.8
6.2
1.4
.3
4.5
56 Offshore banking centers
57
Bahamas
58
Bermuda
59
Cayman Islands and other British West Indies
60
Netherlands Antilles
61
Panama6
62
Lebanon
63
Hong Kong
64
Singapore
65
Other'
58.1
6.9
6.2
21.5
1.1
1.9
.1
13.9
6.5
.0
73.0
10.9
8.9
18.0
2.6
2.4
.1
18.7
11.2
.1
78.5
13.7
8.8
17.8
3.4
2.0
.1
19.7
13.0
.0
80.5
13.3
6.5
23.8
2.5
2.0
.1
21.8
10.6
.0
77.1
13.8
6.0
21.5
1.7
1.8
.1
20.3
11.8
.0
71.3
10.3
8.4
19.9
1.3
1.3
.1
19.9
10.1
.1
84.3
12.5
8.6
19.4
.9
1.1
.1
22.4
19.1
.0
82.1
8.4
8.3
23.7
2.4
1.3
.1
23.1
14.8
.0
85.9
12.6
6.1
23.4
5.5
1.2
.1
23.7
13.3
.1
99.0r
11.0r
6.3
32.1
9.9
1.4
.1
25.1
13.1
.1
100.2
13.4
5.3
28.5
10.7
1.1
.1
25.6
15.4
.1
66 Miscellaneous and unallocated8
39.7
43.4
55.9
69.6
65.7
66.6
82.2
72.3
63.9
57.4
62.5
1 Total
2 G-10 countries and Switzerland
3
Belgium and Luxembourg
4
France
5
Germany
6
Italy
7
Netherlands
8
Sweden
9
Switzerland
10
United Kingdom
11
Canada
12
Japan
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
Latin America
Argentina
Brazil
Chile
Colombia
Mexico
Other
Asia
China
People's Republic of China
Republic of China (Taiwan)
Korea (South)
Malaysia
Philippines
Thailand
Other Asia
Africa
Egypt
Morocco
Other Africa3
52 Eastern Europe
53
Russia4
54
Yugoslavia5
55
Other
1. The banking offices covered by these data include U.S. offices and foreign branches of
U.S. banks, including U.S. banks that are subsidiaries of foreign banks. Offices not covered
include U.S. agencies and branches of foreign banks. Beginning March 1994, the data include
large foreign subsidiaries of U.S. banks. The data also include other types of U.S. depository
institutions as well as some types of brokers and dealers. To eliminate duplication, the data
are adjusted to exclude the claims on foreign branches held by a U.S. office or another foreign
branch of the same banking institution.
These data are on a gross claims basis and do not necessarily reflect the ultimate country
risk or exposure of U.S. banks. More complete data on the country risk exposure of U.S. banks
are available in the quarterly Country Exposure Lending Survey published by the Federal
Financial Institutions Examination Council.
2. Organization of Petroleum Exporting Countries, shown individually; other members of
OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United
Arab Emirates); and Bahrain and Oman (not formally members of OPEC).
3. Excludes Liberia. Beginning March 1994 includes Namibia.
4. As of December 1992, excludes other republics of the former Soviet Union.
5. As of December 1992, excludes Croatia, Bosnia and Hercegovinia, and Slovenia.
6. Includes Canal Zone.
7. Foreign branch claims only.
8. Includes New Zealand, Liberia, and international and regional organizations.
A58
International Statistics • September 1996
3.22
LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in
the United States
Millions of dollars, end of period
1994
Type of liability, and area or country
1992
1993
1995
1996
1994
Dec.
Mar.
June
Sept.
Dec.
Mar.p
1 Total
45,511
50,597
54,309
54,309
50,187
49,973
47,673
46,448r
49,608
2 Payable in dollars
3 Payable in foreign currencies
37,456
8,055
38,728
11,869
38,298
16,011
38,298
16,011
35,903
14,284
34,281
15,692
33,908
13,765
33,903r
12,545
36,314
13,294
By type
4 Financial liabilities
Payable in dollars
5
6
Payable in foreign currencies
23,841
16,960
6,881
29,226
18,545
10,681
32,954
18,818
14,136
32,954
18,818
14,136
29,775
16,704
13,071
29,282
15,028
14,254
26,237
13,872
12,365
24,24 l r
12,903r
11,338
26,225
13,826
12,399
7 Commercial liabilities
8
Trade payables
Advance receipts and other liabilities
9
21,670
9,566
12,104
21,371
8,802
12,569
21,355
10,005
11,350
21,355
10,005
11,350
20,412
9,844
10,568
20,691
10,527
10,164
21,436
10,061
11,375
22,207
11,013
11,194
23,383
10,815
12,568
10
11
Payable in dollars
Payable in foreign currencies
20,496
1,174
20,183
1,188
19,480
1,875
19,480
1,875
19,199
1,213
19,253
1,438
20,036
1,400
21,000
1,207
22,488
895
12
13
14
15
16
17
18
By area or country
Financial liabilities
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
13,387
414
1,623
889
606
569
8,610
18,810
175
2,539
975
534
634
13,332
21,703
495
1,727
1,961
552
688
15,543
21,703
495
1,727
1,961
552
688
15,543
17,541
612
2,046
1,755
633
883
10,764
18,223
778
1,101
1,589
530
1,056
12,138
16,401
347
1,365
1,670
474
948
10,518
15,622
369
999
1,974
466
895
10,138
16,605
483
1,679
2,161
479
957
10,241
19
Canada
20
21
22
23
24
25
26
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
27
28
29
30
31
32
33
34
35
3b
37
38
39
Japan
Middle Eastern oil-exporting countries'
Africa
Oil-exporting countries2
All other3
Commercial liabilities
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
544
859
629
629
1,817
893
797
632
1,166
4,053
379
114
19
2,850
12
6
3,359
1,148
0
18
1,533
17
5
2,034
101
80
207
998
0
5
2,034
101
80
207
998
0
5
2,065
135
149
58
1,068
10
5
1,950
81
138
58
1,030
3
4
1,904
79
144
111
930
3
3
l,783 r
59r
147r
57
866r
12
2
1,876
78
126
57
946
16
2
5,818
4,750
19
5,956
4,887
23
8,403
7,314
35
8,403
7,314
35
8,156
7,182
27
8,023
7,141
25
6,947
6,308
25
5,988
5,436
27
6,390
5,980
26
6
0
133
123
135
123
135
123
156
122
151
122
149
122
150
122
131
122
33
109
50
50
40
42
39
66
57
7,398
298
700
729
535
350
2,505
6,827
239
655
684
688
375
2,039
6,773
241
728
604
722
327
2,444
6,773
241
728
604
722
327
2,444
6,642
271
642
482
536
327
2,848
6,776
311
504
556
448
432
2,902
7,263
349
528
660
566
255
3,351
7,700
331
481
767
500
413
3,568
8,444
370
648
870
659
432
3,525
40
Canada
1,002
879
1,037
1,037
1,235
1,146
1,219
1,040
960
41
42
43
44
45
46
47
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
1,533
3
307
209
33
457
142
1,658
21
350
214
27
481
123
1,857
19
345
161
23
574
276
1,857
19
345
161
23
574
276
1,368
8
260
96
29
356
273
1,836
3
397
107
12
420
204
1,607
1
219
143
5
357
175
1,740
1
205
98
56
416
221
2.114
28
570
129
10
470
243
10,594
3,612
1,889
10,980
4,314
1,534
10,741
4,555
1,576
10,741
4,555
1,576
10,151
4,110
1,787
9,978
3,531
1,790
10,275
3,475
1,647
10,421
3,315
1,912
10,496
3,726
1,747
48
49
50
Japan
Middle Eastern oil-exporting countries1
51
52
Africa
Oil-exporting countries2
568
309
453
167
428
256
428
256
463
248
481
252
589
241
619
254
708
254
53
Other3
575
574
519
519
553
474
483
687
661
1. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab
Emirates (Trucial States).
2. Comprises Algeria, Gabon, Libya, and Nigeria.
3. Includes nonmonetary international and regional organizations.
Nonbank-Reported Data
3.23
CLAIMS ON UNAFFILIATED FOREIGNERS
the United States
A59
Reported by Nonbanking Business Enterprises in
Millions of dollars, end of period
1994
Type of claim, and area or country
1992
1993
1996
1995
1994
Dec.
Mar.
June
Sept.
Dec.
Mar.p
1 Total
45,073
49,159
57,888
57,888
52,218
58,051
53,424
52,509r
55,398
2 Payable in dollars
3 Payable in foreign currencies
42,281
2,792
45,161
3,998
53,805
4,083
53,805
4,083
48,425
3,793
54,138
3,913
49,696
3,728
48,71 r
3,798r
50,999
4,399
By type
4 Financial claims
5
Deposits
6
Payable in dollars
7
Payable in foreign currencies
8
Other financial claims
9
Payable in dollars
10
Payable in foreign currencies
26,509
17,695
16,872
823
8,814
7,890
924
27,771
15,717
15,182
535
12,054
10,862
1,192
33,897
18,507
18,026
481
15,390
14,306
1,084
33,897
18,507
18,026
481
15,390
14,306
1,084
29,606
17,115
16,458
657
12,491
11,275
1,216
34,574
22,046
21,351
695
12,528
11,370
1,158
29,891
17,974
17,393
581
11,917
10,689
1,228
27,398
15,133
14,654
479
12,265
10,976
1,289
30,810
17,595
17,044
551
13,215
11,328
1,887
11 Commercial claims
12
Trade receivables
13
Advance payments and other claims
18,564
16,007
2,557
21,388
18,425
2,963
23,991
21,158
2,833
23,991
21,158
2,833
22,612
20,415
2,197
23,477
21,326
2,151
23,533
21,409
2,124
25,lllr
22,998r
2,113r
24,588
22,077
2,511
14
15
Payable in dollars
Payable in foreign currencies
17,519
1,045
19,117
2,271
21,473
2,518
21,473
2,518
20,692
1,920
21,417
2,060
21,614
1,919
23,08 r
2,030r
22,627
1,961
16
17
18
19
20
21
22
By area or country
Financial claims
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
9,331
8
764
326
515
490
6,252
7,299
134
826
526
502
530
3,585
7,936
86
800
540
429
523
4,649
7,936
86
800
540
429
523
4,649
7,630
146
808
527
606
490
4,040
7,927
155
730
356
601
514
4,790
7,840
160
753
301
522
530
4,924
7,609
193
803
436
517
498
4,303
8,929
159
1,015
320
486
470
5,568
1,833
2,032
3,581
3,581
3,848
3,705
3,526
2,851
5,269
13,893
778
40
686
11,747
445
29
16,224
1,336
125
654
12,699
872
161
19,536
2,424
27
520
15,228
723
35
19,536
2,424
27
520
15,228
723
35
16,109
940
37
528
13,531
583
27
21,159
2,355
85
502
17,013
635
27
15,345
1,552
35
851
11,816
487
50
14,500
1,965
81
830
10,393
554
32
13,865
1,588
77
1,943
9,164
461
40
864
668
3
1,657
892
3
1,871
953
141
1,871
953
141
1,504
621
4
1,235
471
3
2,160
1,404
4
1,579
871
3
1,890
1,171
13
83
9
99
1
373
0
373
0
141
9
138
9
188
6
276
5
277
5
505
460
600
600
374
410
832
583
580
8,451
189
1,537
933
552
362
2,094
9,105
184
1,947
1,018
423
432
2,377
9,540
213
1,881
1,027
311
557
2,556
9,540
213
1,881
1,027
311
557
2,556
8,947
199
1,790
977
324
556
2,388
9,200
218
1,669
1,023
341
612
2,469
8,862
224
1.706
997
338
438
2,479
9,824r
231
1,830
1,070
452
520
2,656r
9,757
247
1,803
1,407
442
575
2,607
23
Canada
24
25
26
27
28
29
30
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
31
32
33
Asia
Japan
Middle Eastern oil-exporting countries'
34
35
Africa
Oil-exporting countries2
36
37
38
39
40
41
42
43
All other3
Commercial claims
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
44
Canada
1,286
1,781
1,988
1,988
2,010
2,003
1,971
1,951r
2,044
45
46
47
48
49
50
51
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
3,043
28
255
357
40
924
345
3,274
11
182
460
71
990
293
4,117
9
234
612
83
1,243
348
4,117
9
234
612
83
1,243
348
4,140
17
208
695
55
1,106
295
4,370
21
210
777
83
1,109
319
4,359
26
245
745
66
1,026
325
4,364r
30
272
898r
79
993r
285
4,147
30
273
808
106
868
308
52
53
54
Asia
Japan
Middle Eastern oil-exporting countries'
4,866
1,903
693
6,014
2,275
704
6,982
2,655
708
6,982
2,655
708
6,200
1,911
689
6,516
2,011
707
6,826
1,998
775
7,312r
l,870 r
974
7,078
2,009
1,024
55
56
Africa
Oil-exporting countries
554
78
493
72
454
67
454
67
468
71
478
60
544
74
654
87
667
107
57
Other
3
364
721
1. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab
Emirates (Trucial States).
910
910
847
910
971
2. Comprises Algeria, Gabon, Libya, and Nigeria.
3. Includes nonmonetary international and regional organizations.
l,006
r
895
A60
3.24
International Statistics • September 1996
FOREIGN TRANSACTIONS IN SECURITIES
Millions of dollars
1996
Transaction, and area or country
1994
1995
1996
1995 R
Jan.May
Nov.
Dec/
Jan.r
Feb/
Mar.r
Apr.
May p
U.S. corporate securities
STOCKS
1
2
Foreign purchases
Foreign sales
3
4
350,593
348,716
462,950
451,710
259,987
250,747
42,003R
39,071
46,479
44,372
43,574
41,948
52,260
51,083
55,281
54,450
53,047
48,774
55,825
54,492
Net purchases, or sales (—)
1,877
11,240
9,240
2,932r
2,107
1,626
1,177
831
4,273
1,333
Foreign countries
1,867
11,445
9,263
2,943r
2,109
1,623
1,306
877
4,129
1,328
6,714
-201
2,110
2,251
-30
840
-1,160
-2,111
-1,142
-1,234
1,162
29
771
4,912
-1,099
-1,837
3,507
-2,283
8,066
-1,517
5,814
-337
2,503
-2,725
2
68
3,340
17
425
1,070
1,299
34
724
3,906
-1,069
2,388
691
-63
37
l,020R
-58
-131
230
227
609 R
405
1,361
-63
342
-406
-26
-96
1,028
-382
-11
373
191
1,277
-175
219
148
883
1,231
-1
7
1,954
164
239
660
639
-165
645
-487
-507
-40
94
6
52
-1,072
-161
-37
20
-441
-223
518
2,694
-285
-336
-131
-62
-151
1,377
661
86
208
566
-241
-90
-318
-33
-291
-749
-44
276
1,429
-336
174
237
618
345
52
808
-6
1,852
1,446
31
-37
-348
-311
-37
-55
-83
318
-401
1,209
-238
1,203
31
6
-103
10
-205
-23
-11
-2
3
-129
-46
144
5
289,586
229,665
293,533
206,951
157,617
108,783
31,642
20,741
22,020
21,117
26,598
17,726
32,759
23,608
39,808
25,113
24,107
18,693
34,345
23,643
Europe
France
V Germany
Netherlands
8
9
Switzerland
United Kingdom
10
11 Canada
12 Latin America and Caribbean
1
13 Middle East
14 Other Asia
Japan
15
16 Africa
1 / Other countries
5
6
18
Nonmonetary international and
regional organizations
BONDS 2
19
20
Foreign purchases
Foreign sales
21
Net purchases, or sales (—)
59,921
86,582
48,834
10,901
903
8,872
9,151
14,695
5,414
10,702
22
Foreign countries
59,036
87,036
48,747
10,948
875
8,830
9,230
14,607
5,383
10,697
23
24
25
26
2/
28
29
30
31
32
33
34
35
Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East1
Other Asia
Japan
Africa
Other countries
37,065
242
657
3,322
1,055
31,642
2,958
5,442
771
12,153
5,486
-7
654
70,318
1,143
5,938
1,463
494
57,591
2,569
6,141
1,869
5,659
2,250
234
246
32,202
2,721
3,799
777
76
21,419
1,749
9,778
-264
5,639
1,578
137
-494
9,759
101
894
219
101
6,999
20
1,426
188
-705
-899
240
20
1,631
137
236
101
-381
1,247
181
-848
187
-293
-904
86
-69
5,631
839
-26
163
56
3,854
104
2,096
-194
1,272
338
-16
-63
8,968
314
1,859
365
-86
6,280
235
-713
-334
1,161
336
-40
-47
6,476
670
467
-66
-38
4,745
149
7,140
13
831
245
37
-39
3,947
785
721
-52
-144
2,264
359
33
122
1,085
126
49
-212
7,180
113
778
367
288
4,276
902
1,222
129
1,290
533
107
-133
36
Nonmonetary international and
regional organizations
885
-454
87
-47
28
42
-79
88
31
5
Foreign securities
37
38
39
40
41
42
Stocks, net purchases, or sales (—)
Foreign purchases
Foreign sales
Bonds, net purchases, or sales (—)
Foreign purchases
Foreign sales
43
Net purchases, or sales (—), of stocks and bonds
44
-48,071
386,106
434,177
-9,224
848,368
857,592
-50,291
345,540
395,831
-48,545
889,471
938,016
-32,239
187,773
220,012
-12,477
436,517
448,994
— L,718 R
30,317 R
32,035 R
-6,519R
78,647 R
85,166 R
-6,602
32,369
38,971
-4,050
80,328
84,378
-6,434
33,481
39,915
-4,584
84,638
89,222
-5,704
37,464
43,168
-1,404
95,201
96,605
-10,345
36,115
46,460
-6,038
93,345
99,383
-6,706
37,764
44,470
-153
81,256
81,409
-3,050
42,949
45,999
-298
82,077
82,375
-57,295
-98,836
-44,716
—8,237r
-10,652
-11,018
-7,108
-16,383
-6,859
-3,348
Foreign countries
-57,815
-98,031
-44,460
-8,159 r
-10,711
-11,049
-6,983
—16,387
-6,802
-3,239
45
46
4/
48
49
50
51
Europe
Canada
Latin America and Caribbean
-3,516
-7,475
-18,334
-24,275
-17,427
-467
-3,748
-48,125
-7,952
-7,634
-34,056
-25,072
-327
63
-11,441
-4,230
-6,839
-19,354
-10,111
-740
-1,856
—4,699 R
-494
-377R
-L,992R
-L,389R
19
-616'
-5,926
-14
-802
-4,391
-3,687
-44
466
-4,068
-2,668
-3
-4,685
-3,427
-96
471
-2,552
-58
-1,031
-2,557
-1,592
-161
-624
-4,508
-1,865
-2,582
-5,756
-3,224
-436
-1,240
-1,949
614
-1,190
-4,094
-950
-14
-169
1,636
-253
-2,033
-2,262
-918
-33
-294
52
Nonmonetary international and
regional organizations
520
-805
-256
59
31
-125
4
-57
-109
Japan
Africa
Other countries
....
1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar,
Saudi Arabia, and United Arab Emirates (Trucial States).
-78
2. Includes state and local government securities and securities of U.S. government
agencies and corporations. Also includes issues of new debt securities sold abroad by U.S.
corporations organized to finance direct investments abroad.
Securities Holdings and Transactions /Interest and Exchange Rates A61
3.25
MARKETABLE U.S. TREASURY BONDS AND NOTES
Foreign Transactions'
Millions of dollars; net purchases, or sales (—) during period
1995
1996
Area or country
1994
Jan.—
May
78,801
1 Total estimated
2 Foreign countries
3
4
5
6
7
8
9
10
11
Europe
Belgium and Luxembourg
Germany
Netherlands
Sweden
Switzerland
United Kingdom
Other Europe and former U.S.S.R
Canada
17
13
14
15
16
17
18
19
Latin America and Caribbean
Venezuela
Other Latin America and Caribbean
Netherlands Antilles
Japan
Africa
Other
20 Nonmonetary international and regional organizations
71
International
22
Latin American regional
1996
1995
133,991
66,243
Nov.
Dec.
15,307
Oil-exporting countries
76 Middle East 2
27
Mar.
Apr.
May p
14,018r
15,451
7,025r
15,742
14,007
r
16,192
6,414r
17,117
13,770
78,637
133,552
67,206
14,936
-9,016
13,713
38,542
1,098
5,709
1,254
794
481
23,365
5,841
3,491
50,000
591
6,136
1,891
358
-472
34,778
6,718
252
36,165
363
7,680
-3,330
1,758
2,235
14,510
12,949
4,862
821
81
52
833
-30
-568
1,309
-856
-43
-1,120
171
452
381
-285
-664
-4,377
3,202
208
7,291r
149
1,385
807
-45
76
l,177 r
3,742
1,867
8,462
-120
1,829
354
803
84
1,644
3,868
1,863
4,083r
81
958
-1,597
372
65
2,270r
1,934
35
8,712
399
1,833
-2,137
286
1,329
6,070
932
1,766
7,617
-146
1,675
-757
342
681
3,349
2,473
-669
-10,383
-319
-20,493
10,429
47,317
29,793
240
-570
48,609
-2
25,152
23,459
32,319
16,863
1,464
908
-9,799
-314
5,939
-15,424
35,017
15,074
928
33
13,496
232
3,723
9,541
-107
1,316
458
311
3,762
61
4,710
-1,009
-11,843
-5,695
252
-275
-2,648
-142
8,922
-11,428
6,920
2,619
515
-232
-2,931
-93
-1,896
-942
8,616
3,069
-100
282
-4,985
-44
-2,696
-2,245
6,941
2,443
311
29
1,984
4
3,856
-1,876
4,478
2,382
250
-73
-1,219
-39
-2,247
1,067
8,062
4,561
-48
27
164
526
-154
439
9
261
-963
125
-1,286
371
368
-43
-438
-347
-115
305
210
-45
-741
-308
-254
611
647
12
-1,375
-414
-1,008
237
-10
9
78,637
41,822
36,815
133,552
39,625
93,927
67,206
40,779
26,427
14,936
-915
15,851
-9,016
2,651
-11,667
13,713r
12,615
l,098 r
16,192
8,681
7,511
6,414'
4,748
l,666 r
17,117
8,253
8,864
13,770
6,482
7,288
-38
0
3,075
2
3,615
2
-826
0
-1,085
0
-658
0
122
1
1,127
0
863
0
2,161
1
1. Official and private transactions in marketable U.S. Treasury securities having an
original maturity of more than one year. Data are based on monthly transactions reports.
Excludes nonmarketable U.S. Treasury bonds and notes held by official institutions of foreign
countries.
3.26
Feb.
-9,454
MEMO
73 Foreign countries
74
Official institutions
Other foreign
25
Jan.
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab
Emirates (Trucial States).
3. Comprises Algeria, Gabon, Libya, and Nigeria.
DISCOUNT RATES OF FOREIGN CENTRAL BANKS'
Percent per year, averages of daily figures
Rate on July 31, 1996
Rate on July 31, 1996
Country
Country
Month
effective
Apr.
Apr.
July
Apr.
July
2.5
2.5
4.75
3.25
3.55
Austria...
Belgium. ,
Canada. ..
Denmark .
France2 ..
1996
1995
1996
1996
1996
1. Rates shown are mainly those at which the central bank either discounts or makes
advances against eligible commercial paper or government securities for commercial banks or
brokers. For countries with more than one rate applicable to such discounts or advances, the
rate shown is the one at which it is understood that the central bank transacts the largest
proportion of its credit operations.
3.27
Germany . . .
Italy
Japan
Netherlands .
Switzerland .
2.5
8.75
.5
2.5
1.5
2. Since February 1981, the rate has been that at which the Bank of France discounts
Treasury bills for seven to ten days.
FOREIGN SHORT-TERM INTEREST RATES1
Percent per year, averages of daily figures
1996
Type or country
1
2
3
4
5
6
7
8
9
10
Eurodollars
United Kingdom
Canada
Germany
Switzerland
Netherlands
France
Italy
Belgium
Japan
1993
3.18
5.88
5.14
7.17
4.79
6.73
8.30
10.09
8.10
2.96
1994
4.63
5.45
5.57
5.25
4.03
5.09
5.72
8.45
5.65
2.24
1995
5.93
6.63
7.14
4.43
2.94
4.30
6.43
10.43
4.73
1.20
1. Rates are for three-month interbank loans, with the following exceptions: Canada,
finance company paper; Belgium, three-month Treasury bills; and Japan, CD rate.
Jan.
Feb.
Mar.
Apr.
May
June
July
5.40
6.31
5.58
3.51
1.65
3.20
4.56
10.05
3.47
.55
5.14
6.13
5.22
3.26
1.61
3.00
4.29
9.90
3.23
.61
5.28
6.02
5.23
3.25
1.68
3.09
4.14
9.82
3.25
.60
5.36
5.97
5.03
3.22
1.68
2.83
3.87
9.60
3.23
.61
5.36
6.03
4.82
3.19
1.99
2.61
3.78
8.88
3.19
.62
5.46
5.80
4.87
3.29
2.53
2.81
3.85r
8.73
3.23
.57
5.49
5.69
4.76
3.29
2.52
2.99
3.73
8.72
3.29
.67
A62
3.28
International Statistics • September 1996
FOREIGN EXCHANGE RATES1
Currency units per dollar except as noted
1996
Country/currency unit
2
1
2
3
4
5
6
7
8
9
10
Australia/dollar
Austria/schilling
Belgium/franc
Canada/dollar
China, P.R./yuan
Denmark/krone
Finland/markka
France/franc
Germany/deutsche mark
Greece/drachma
11
12
13
14
15
16
17
18
19
20
Hong Kong/dollar
India/rupee
Ireland/pound2
Italy/lira
Japan/yen
Malaysia/ringgit
Netherlands/guilder
New Zealand/dollar2
Norway/krone
Portugal/escudo
21
22
23
24
25
26
27
28
29
30
Singapore/dollar
South Africa/rand
South Korea/won
Spain/peseta
Sri Lanka/rupee
Sweden/krona
Switzerland/franc
Taiwan/dollar
Thailand/baht
United Kingdom/pound2
1993
1994
1995
Feb.
Mar.
Apr.
May
June
July
78.566
10.580
30.902
1.3592
8.3583
79.122
10.755
31.433
1.3658
8.3424
5.8941
4.6710
5.1787
1.5282
241.75
78.974
10.576
30.947
1.3697
8.3409
5.8014
4.5812
5.0881
1.5025
237.65
67.993
11.639
34.581
1.2902
5.7795
6.4863
5.7251
5.6669
1.6545
229.64
73.161
11.409
33.426
1.3664
8.6404
6.3561
5.2340
5.5459
1.6216
242.50
74.073
10.076
29.472
1.3725
8.3700
5.5999
4.3763
4.9864
1.4321
231.68
75.557
10.321
30.115
1.3752
8.3338
5.6749
4.5532
5.0440
1.4669
242.21
77.136
10.391
30.371
1.3656
8.3495
5.7074
4.6066
5.0583
1.4776
241.54
4.7288
5.1049
1.5048
242.00
79.700
10.782
31.502
1.3693
8.3479
5.9160
4.7541
5.1855
1.5324
243.27
7.7357
31.291
146.47
1,573.41
111.08
2.5738
1.8585
54.127
7.1009
161.08
7.7290
31.394
149.69
1,611.49
102.18
2.6237
1.8190
59.358
7.0553
165.93
7.7357
32.418
160.35
1,629.45
93.96
2.5073
1.6044
65.625
6.3355
149.88
7.7323
36.595
158.10
1,570.00
105.79
2.5487
1.6424
67.495
6.4103
152.49
7.7325
34.485
157.21
1,562.43
105.94
2.5417
1.6540
68.079
6.4277
152.93
7.7345
34.320
156.51
1,565.60
107.20
2.5113
1.6805
68.242
6.4901
154.51
7.7363
35.025
156.29
1,556.71
106.34
2.4936
1.7135
68.571
6.5748
157.54
7.7404
35.100
158.31
1,542.30
108.96
2.4967
1.7120
67.650
6.5376
157.40
7.7379
35.667
160.31
1,526.82
109.19
2.4915
1.6862
69.001
6.4465
154.56
1.6158
3.2729
805.75
127.48
48.211
7.7956
1.4781
26.416
25.333
150.16
1.5275
3.5526
806.93
133.88
49.170
7.7161
1.3667
26.465
25.161
153.19
1.4171
3.6284r
772.69r
124.64
51.047
7.1406
1.1812
26.495
24.921
157.85
1.4115
3.7420
780.12
123.65
53.716
6.8775
1.1967
27.485
25.250
153.60
1.4095
3.9293
781.31
124.39
53.748
6.7318
1.1959
27.400
25.251
152.71
1.4082
4.2130
780.42
125.49
54.163
6.7141
1.2180
27.188
25.290
151.60
1.4074
4.3679
780.86
127.97
54.868
6.7984
1.2539
27.352
25.289
151.52
1.4090
4.3519
798.45
128.87
55.529
6.6807
1.2579
27.674
25.354
154.16
1.4160
4.3963
813.03
126.96
55.293
6.6394
1.2320
27.573
25.355
155.30
86.41
86.57
87.46
88.28
88.16
87.25
s.sostf
MEMO
31 United States/dollar3
93.18
91.32
84.25
1. Averages of certified noon buying rates in New York for cable transfers. Data in this
table also appear in the Board's G.5 (405) monthly statistical release. For ordering address,
see inside front cover.
2. Value in U.S. cents.
3. Index of weighted-average exchange value of U.S. dollar against the currencies of ten
industrial countries. The weight for each of the ten countries is the 1972-76 average world
trade of that country divided by the average world trade of all ten countries combined. Series
revised as of August 1978 (see Federal Reserve Bulletin, vol. 64 (August 1978), p. 700).
A63
Guide to Statistical Releases and Special Tables
STATISTICAL RELEASES—List Published Semiannually, with Latest Bulletin Reference
Anticipated schedule of release dates for periodic releases
Issue
June 1996
Page
A72
SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference
Title and Date
Issue
Page
Assets and liabilities of commercial banks
March 31, 1993
June 30, 1993
September 30, 1993
December 31,1993
August
November
February
May
1993
1993
1994
1994
A70
A70
A70
A68
Terms of lending at commercial banks
August 1995
November 1995
February 1996
May 1996
November
February
May
August
1995
1996
1996
1996
A68
A68
A68
A64
Assets and liabilities of U.S. branches and agencies of foreign banks
June 30, 1995
September 30, 1995
December 31, 1995
March 31,1996
November
February
May
September
1995
1996
1996
1996
A72
A72
A72
A64
August
October
January
July
1995
1995
1996
1996
A76
All
A68
A64
Assets and liabilities of life insurance companies
June 30, 1991
September 30, 1991
December 31, 1991
September 30, 1992
December
May
August
March
1991
1992
1992
1993
A79
A81
A83
All
Residential lending reported under the Home Mortgage Disclosure Act
1994
1995
September 1995
September 1996
A68
A68
Pro forma balance sheet and income statements for priced service operations
March 31, 1995
June 30, 1995
September 30, 1995
March 31, 1996
A66
4.30
Special Tables • September 1996
ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, March 31, 1996'—Continued
Millions of dollars except as noted
All states2
Item
1 Total assets4
Total
including
IBFs 3
New York
IBFs
only 3
Total
including
IBFs
California
Illinois
IBFs
only
Total
including
IBFs
IBFs
only
Total
including
IBFs
IBFs
only
759,735
289,394
583,365
236,590
71,880
29,215
60,322
14,505
2 Claims on nonrelated parties
Cash and balances due from depository institutions
4
Cash items in process of collection and unposted debits
5
Currency and coin (U.S. and foreign)
6
Balances with depository institutions in United States
7
U.S. branches and agencies of other foreign banks
(including IBFs)
8
Other depository institutions in United States (including I B F s ) . . . .
Balances with banks in foreign countries and with foreign central
9
banks
10
Foreign branches of U.S. banks
11
Other banks in foreign countries and foreign central banks
12
Balances with Federal Reserve Banks
675,492
115,640
2,543
22
66,078
145,316
85,737
0
n.a.
44,771
516,839
102,963
2,452
15
58,960
119,807
74,694
0
n.a.
38,842
66,936
5,305
11
1
2,987
12,738
4,720
0
n.a.
2,462
55,529
5,472
53
1
3,438
6,774
5,043
0
n.a.
3,100
61,730
4,349
43,592
1,179
55,233
3,727
37,740
1,102
2,700
287
2,462
0
3,296
142
3,033
67
46,666
2,094
44,572
330
40,967
1,174
39,793
n.a.
41,355
1,859
39,496
181
35,852
962
34,890
n.a.
2,268
1
2,267
38
2,258
0
2,258
n.a.
1,967
201
1,766
14
1,943
201
1,742
n.a.
13 Total securities and loans
419,467
47,150
288,767
33,955
56,924
7,452
41,152
1,445
97,210
29,197
26,354
9,554
n.a.
n.a.
89,261
28,053
25,780
8,438
n.a.
n.a.
4,075
605
392
644
n.a.
n.a.
3,299
420
61
452
n.a.
n.a.
41,658
13,405
28,254
9,554
4,338
5,216
35,427
12,061
23,366
8,438
3,846
4,592
3,078
690
2,388
644
261
384
2,818
571
2,247
452
211
240
46,236
9,982
7,825
28,430
8,870
4,236
81
4,553
43,112
8,999
7,309
26,804
8,384
4,038
71
4,275
564
402
79
83
124
124
0
0
1,701
252
174
1,276
20
0
0
20
322,398
141
322,257
37,606
9
37,597
199,589
83
199,506
25,523
5
25,517
52,895
47
52,848
6,810
2
6,808
37,857
4
37,853
994
0
994
32,495
34,585
13,406
12,102
1,304
74
21,105
463
20,642
34,449
204
21,945
7,394
7,126
268
0
14,551
347
14,204
804
19,107
21,768
7,801
6,890
912
74
13,893
373
13,520
27,433
50
13,356
3,929
3,720
209
0
9,427
339
9,088
531
9,387
6,817
4,713
4,571
142
0
2,104
0
2,104
2,415
152
5,055
3,159
3,119
40
0
1,896
0
1,896
88
2,041
977
516
340
176
0
461
0
461
3,837
0
535
255
241
14
0
280
0
280
94
199,177
172,087
27,090
518
72
446
12,540
80
12,460
39
0
39
112,649
93,301
19,348
250
47
202
9,593
46
9,546
37
0
37
33,379
30,336
3,043
112
15
97
1,467
29
1,438
0
0
0
29,376
28,110
1,266
102
0
101
357
1
356
0
0
0
3,250
10,010
6,090
1,785
142
120
2,755
9,833
4,001
1,678
142
109
164
86
507
48
0
0
84
43
1,394
8
0
0
1,824
1,272
552
50,443
43,705
9,339
6,814
2,525
34,366
84,243
84,243
28
0
28
290
3,267
n.a.
n.a.
n.a.
3,267
144,079
n.a.
1,794
1,242
552
44,963
37,035
6,636
4,551
2,085
30,399
66,525
66,525
28
0
28
262
2,512
n.a.
n.a.
n.a.
2,512
116,783
n.a.
27
27
0
629
3,514
1,926
1,760
166
1,588
4,944
4,944
0
0
0
21
422
n.a.
n.a.
n.a.
422
16,477
n.a.
3
3
0
4,851
2,352
469
334
135
1,884
4,793
4,793
0
0
0
8
258
n.a.
n.a.
n.a.
258
7,731
n.a.
14 Total securities, book value
15
U.S. Treasury
16
Obligations of U.S. government agencies and corporations
17
Other bonds, notes, debentures, and corporate stock (including state
and local securities)
Securities of foreign governmental units
18
19
All Other
20 Federal funds sold and securities purchased under agreements to
resell
21
U.S. branches and agencies of other foreign banks
22
Commercial banks in United States
Other
23
24 Total loans, gross
25
LESS: Unearned income on loans
26
EQUALS: Loans, net
Total loans, gross, by category
27 Real estate loans
28 Loans to depository institutions
29
Commercial banks in United States (including IBFs)
30
U.S. branches and agencies of other foreign banks
31
Other commercial banks in United States
32
Other depository institutions in United States (including IBFs)
33
Banks in foreign countries
34
Foreign branches of U.S. banks
Other banks in foreign countries
35
36 Loans to other financial institutions
37 Commercial and industrial loans
38
U.S. addressees (domicile)
39
Non-U.S. addressees (domicile)
40 Acceptances of other banks
41
U.S. banks
42
Foreign banks
43 Loans to foreign governments and official institutions (including
foreign central banks)
44 Loans for purchasing or carrying securities (secured and unsecured) . . .
45 All other loans
46
47
48
49
50
51
52
53
54
55
56
57
Lease financing receivables (net of unearned income)
U.S. addressees (domicile)
Non-U.S. addressees (domicile)
Trading assets
All other assets
Customers' liabilities on acceptances outstanding
U.S. addressees (domicile)
Non-U.S. addressees (domicile)
Other assets including other claims on nonrelated parties
Net due from related depository institutions5
Net due from head office and other related depository institutions 5 ...
Net due from establishing entity, head offices, and other related
depository institutions5
n.a.
144,079
n.a.
116,783
n.a.
16,477
n.a.
7,731
58 Total liabilities4
759,735
289,394
583,365
236,590
71,880
29,215
60,322
14,505
59 Liabilities to nonrelated parties
619,156
271,325
518,575
222,329
46,489
27,864
34,720
13,246
U.S. Branches and Agencies
4.30
A65
ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, March 31, 1996 —Continued
Millions of dollars except as noted
All states2
Item
60 Total deposits and credit balances
61
Individuals, partnerships, and corporations
67,
U.S. addressees (domicile)
63
Non-U.S. addressees (domicile)
64
Commercial banks in United States (including IBFs)
65
U.S. branches and agencies of other foreign banks
66
Other commercial banks in United States
Banks in foreign countries
67
68
Foreign branches of U.S. banks
Other banks in foreign countries
69
70
Foreign governments and official institutions
(including foreign central banks)
71
All other deposits and credit balances
Certified and official checks
72
73 Transaction accounts and credit balances (excluding IBFs)
Individuals, partnerships, and corporations
74
U.S. addressees (domicile)
75
76
Non-U.S. addressees (domicile)
Commercial banks in United States (including IBFs)
77
U.S. branches and agencies of other foreign banks
78
79
Other commercial banks in United States
80
Banks in foreign countries
81
Foreign branches of U.S. banks
Other banks in foreign countries
82
Foreign governments and official institutions
83
(including foreign central banks)
84
All other deposits and credit balances
85
Certified and official checks
86 Demand deposits (included in transaction accounts
and credit balances)
Individuals, partnerships, and corporations
87
88
U.S. addressees (domicile)
89
Non-U.S. addressees (domicile)
Commercial banks in United States (including IBFs)
90
91
U.S. branches and agencies of other foreign banks
92
Other commercial banks in United States
93
Banks in foreign countries
94
Foreign branches of US. banks
Other banks in foreign countries
95
96
Foreign governments and official institutions
(including foreign central banks)
All other deposits and credit balances
97
Certified and official checks
98
99 Nontransaction accounts (including MMDAs, excluding IBFs)
100
Individuals, partnerships, and corporations
101
U.S. addressees (domicile)
102
Non-U.S. addressees (domicile)
103
Commercial banks in United States (including IBFs)
104
U.S. branches and agencies of other foreign banks
105
Other commercial banks in United States
Banks in foreign countries
106
Foreign branches of U.S. banks
107
Other banks in foreign countries
108
109
Foreign governments and official institutions
(including foreign central banks)
All other deposits and credit balances
110
111 IBF deposit liabilities
Individuals, partnerships, and corporations
112
113
U.S. addressees (domicile)
Non U.S. addressees (domicile)
114
115
Commercial banks in United States (including IBFs)
116
U.S. branches and agencies of other foreign banks
Other commercial banks in United States
117
Banks in foreign countries
118
Foreign branches of U.S. banks
119
Other banks in foreign countries
120
Foreign governments and official institutions
121
(including foreign central banks)
122
All other deposits and credit balances
Footnotes appear at end of table.
Total
excluding
IBFs3
IBFs
only3
New York
Illinois
California
Total
excluding
IBFs
IBFs
only
Total
excluding
IBFs
IBFs
only
Total
excluding
IBFs
IBFs
only
168,711
113,077
98 718
14,359
31,091
17,836
13,254
9,182
2,527
6,655
204,044
15,226
130
15,096
44,766
41,555
3,211
114,929
5,338
109,591
144,088
94,628
86,380
8,248
26,491
15,272
11,219
8,704
2,526
6,178
185,231
10,407
130
10,277
42,073
39,211
2,861
106,692
4,137
102,555
5,790
4,891
3,250
1,641
483
127
356
192
0
192
5,8 38
677
0
677
1,431
1,222
209
2,825
297
2,528
9,421
6,055
5,312
743
2,822
1,574
1,248
39
0
39
6,550
59
0
59
1,113
990
123
3,962
859
3,103
5,126
9,963
272
29,080
44
4,742
9,294
229
26,037
23
202
3
19
85
20
18
480
8
1,415
1
8,280
6,513
4,618
1,895
90
8
82
770
12
758
6,622
5,138
3,982
1,156
86
7
79
604
11
593
367
303
227
76
2
0
1
35
0
35
338
311
307
5
0
0
0
16
0
16
386
249
272
324
240
229
5
3
19
2
0
8
7,634
6,094
4,441
1,653
80
8
72
750
12
738
6,250
4,973
3,877
1,096
77
7
70
586
11
575
312
251
189
62
1
0
0
35
0
35
325
298
294
4
0
0
0
16
0
16
n a.
n.a.
n.a.
366
72
272
319
66
229
5
2
19
2
0
8
160,431
106,564
94,100
12,464
31,001
17,828
13,172
8,412
2,515
5,897
137,466
89,490
82,398
7,092
26,405
15,265
11,140
8,099
2,515
5,584
5,422
4,5 88
3,023
1,565
482
127
355
156
0
156
9,083
5,744
5,006
738
2,822
1,574
1,248
23
0
23
4,740
9,714
4,418
9,054
197
0
15
479
n.a.
204 044
15,226
130
15,096
44,766
41,555
3,211
114,929
5,338
109,591
29,080
44
n.a.
185 231
10,407
130
10,277
42,073
39,211
2,861
106,692
4,137
102,555
26,037
23
n.a.
5,8 38
677
0
677
1,431
1,222
209
2,825
297
2,528
85
20
n.a.
n.a.
6,5 50
59
0
59
1,113
990
123
3,962
859
3,103
1,415
1
A66
4.30
Special Tables • September 1996
ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, March 31, 1996'—Continued
Millions of dollars except as noted
All states2
Item
m
Federal funds purchased and securities sold under agreements to
repurchase
124
U.S. branches and agencies of other foreign banks
125
Other commercial banks in United States
176
127 Other borrowed money
178 Owed to nonrelated commercial banks in United States (including
IBFs)
129
Owed to U.S. offices of nonrelated U.S. banks
no
Owed to U.S. branches and agencies of nonrelated
foreign banks
n i Owed to nonrelated banks in foreign countries
137
Owed to foreign branches of nonrelated U.S. banks
133
Owed to foreign offices of nonrelated foreign banks
134 Owed to others
135 All other liabilities
136
Branch or agency liability on acceptances executed and
outstanding
137
Trading liabilities
138
Other liabilities to nonrelated parties
139 Net due to related depository institutions5
140
Net owed to head office and other related depository institutions . . .
141
Net owed to establishing entity, head office, and other related
depository institutions5
Total
including
IBFs 3
California
New York
IBFs
only3
Total
including
IBFs
Illinois
IBFs
only
Total
including
IBFs
IBFs
only
Total
including
IBFs
IBFs
only
72,301
10,363
9,086
52,852
93,377
14,486
3,045
89
11,352
48,745
61,605
7,805
5,409
48,391
55,297
11,844
1,990
37
9,816
21,867
5,859
1,854
2,832
1,172
25,577
1,519
790
15
714
20,113
4,406
687
627
3,092
10,069
1,014
257
35
722
5,476
26,963
7,873
13,206
1,161
12,707
4,723
4,491
323
10,979
2,208
7,142
725
1,968
419
1,110
19,090
35,773
1,644
34,129
30,641
12,044
32,678
1,345
31,333
2,862
7,985
18,252
507
17,744
24,338
4,168
15,579
448
15,131
1,797
8,771
12,390
680
11,710
2,207
6,418
12,284
665
11,619
687
1,549
4,204
428
3,777
3,896
1,038
3,9 88
232
3,756
378
80,723
4,050
72,353
3,387
3,426
394
4,275
206
9,626
40,429
30,668
n. a.
Ill
3,939
6,879
37,542
27,932
n.a.
83
3,304
1,927
530
969
n.a.
21
373
472
2,335
1,468
n.a.
6
200
140,579
140,579
18,069
n.a.
64,790
64,790
14,261
n.a.
25,392
25,392
1,351
n.a.
25,601
25,601
1,259
n a.
n.a.
18,069
n.a.
14,261
n.a.
1,351
n.a.
1,259
n
MEMO
142 Non-interest-bearing balances with commercial banks
in United States
143 Holding of commercial paper included in total loans
144 Holding of own acceptances included in commercial and
industrial loans
145 Commercial and industrial loans with remaining maturity of one year
or less
146
Predetermined interest rates
147
Floating interest rates
148 Commercial and industrial loans with remaining maturity of more
than one year
149
Predetermined interest rates
150
Floating interest rates
1,037
1,462
0
0
849
1,253
80
15
0
I
49
174
5,266
3,719
1,359
72
115,858
65,688
50,170
64,602
36,110
28,492
20,394
11,367
9,026
18,040
12,586
5,454
82,638
20,319
62,319
n a.
47,670
11,889
35,782
n.a.
12,866
2,795
10,071
n.a.
11,324
3,912
7,413
0
n.a.
U.S. Branches and Agencies
4.30
A67
ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, March 31, 1996 —Continued
Millions of dollars except as noted
All states2
Item
151 Components of total nontransaction accounts,
included in total deposits and credit balances of
nontransaction accounts, including IBFs
152
Time CDs in denominations of $100,000 or more
153
Other time deposits in denominations of $100,000
or more
154
Time CDs in denominations of $100,000 or more
with remaining maturity of more than 12 months
Total
excluding
IBFs 3
IBFs
only3
1
1
164,025
123,150
33,013
New York
n.a.
7,863
All states2
155 Immediately available funds with a maturity greater than one day
included in other borrowed money
156 Number of reports filed6
IBFs
only
1
J
141,967
105,410
29,562
n.a.
6,995
New York
Total
excluding
IBFs
Illinois
IBFs
only
i
1
5,575
3,740
1,283
n.a.
552
Total
excluding
IBFs
1
1
9,043
7,408
1,411
n.a.
225
California
IBFs
only
Illinois
Total
including
IBFs
IBFs
only
Total
including
IBFs
IBFs
only
Total
including
IBFs
IBFs
only
Total
including
IBFs
IBFs
only
53,779
511
n.a.
n.a.
26,734
250
n.a.
n.a.
20,155
114
n.a.
n.a.
5,424
45
n.a.
n.a.
1. Data are aggregates of categories reported on the quarterly form FFIEC 002, "Report of
Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks." The form was first
used for reporting data as of June 30, 1980, and was revised as of December 31, 1985. From
November 1972 through May 1980, U.S. branches and agencies of foreign banks had filed a
monthly FR 886a report. Aggregate data from that report were available through the Federal
Reserve monthly statistical release G. 11, last issued on July 10, 1980. Data in this table and in
the G. 11 tables are not strictly comparable because of differences in reporting panels and in
definitions of balance sheet items.
2. Includes the District of Columbia.
3. Effective December 1981, the Federal Reserve Board amended Regulations D and Q to
permit banking offices located in the United States to operate international banking facilities
(IBFs). Since December 31, 1985, data for IBFs have been reported in a separate column.
These data are either included in or excluded from the total columns as indicated in the
headings. The notation "n.a." indicates that no IBF data have been reported for that item,
Total
excluding
IBFs
California
either because the item is not an eligible IBF asset or liability or because that level of detail is
not reported for IBFs. From December 1981 through September 1985, IBF data were
included in all applicable items reported.
4. Total assets and total liabilities include net balances, if any, due from or owed to related
banking institutions in the United States and in foreign countries (see note 5). On the former
monthly branch and agency report, available through the G . l l monthly statistical release,
gross balances were included in total assets and total liabilities. Therefore, total asset and total
liability figures in this table are not comparable to those in the G.l 1 tables.
5. Related depository institutions includes the foreign head office and other U.S. and
foreign branches and agencies of a bank, a bank's parent holding company, and majorityowned banking subsidiaries of the bank and of its parent holding company (including
subsidiaries owned both directly and indirectly).
6. In some cases two or more offices of a foreign bank within the same metropolitan area
file a consolidated report.
A68
4.34
Special Tables • September 1996
RESIDENTIAL LENDING ACTIVITY OF FINANCIAL INSTITUTIONS COVERED BY HMDA, 1982-95
Number
Item
1983
1984
1985
1986
1987
1988
1989
19901
1991
1992
1993
1994
1995
1 Loans or applications
(millions)2
1.71
1.86
1.98
2.83
3.42
3.39
3.13
6.59
7.89
12.01
15.38
12.19
11.23
2 Reporting institutions
3 Disclosure reports
8,050
10,970
8,491
11,799
8,072
12,567
8,898
12,329
9,431
13,033
9,319
13,919
9,203
14,154
9,332
24,041
9,358
25,934
9,073
28,782
9,650
35,976
9,858
38,750
9,539
36,611
1. Before 1990, includes only home purchase, home refinancing, and home improvement
loans originated by covered institutions; beginning in 1990 (first year under revised reporting
system), includes such loans originated and purchased, applications approved but not accepted by the applicant, applications denied or withdrawn, and applications closed because
information was incomplete.
4.35
2. Revised from preliminary data published in Glenn B. Canner and Dolores S. Smith,
"Home Mortgage Disclosure Act: Expanded Data on Residential Lending," Federal Reserve
Bulletin, vol. 77 (November 1991), p. 861, to reflect corrections and the reporting of
additional data.
SOURCE. FFIEC, Home Mortgage Disclosure Act.
APPLICATIONS FOR HOME LOANS REPORTED UNDER HMDA
By Type of Dwelling, Purpose of Loan, and Loan Program, 1995
Thousands
One- to four-family dwellings
Multifamily
dwellings1
Loan program
Home purchase
1
2
3
4
FHA
VA
FmHA
Conventional
5 Total
Home improvement
All
699.7
272.5
14.8
4497.3
93.7
50.5
.5
2548.1
168.8
3.0
1577.4
962.2
326.0
15.4
8622.8
28.5
962.5
326.0
15.4
8651.3
5484.3
2692.8
1749.3
9926.4
28.7
9955.2
*
*Fewer than 500.
1. Multifamily dwellings are those for five or more families.
4.36
All
Home refinancing
*
*
*
SOURCE. FFIEC, Home Mortgage Disclosure Act.
HOME LOANS ORIGINATED BY LENDERS REPORTING UNDER HMDA
By Type of Dwelling, Purpose of Loan, and Type of Lender, 1995
Percent
One- to four-family dwellings
FHA-insured
1
2
3
4
Multifamily
dwellings1
Home purchase
Type of lender
Commercial bank
Savings association. . . .
Credit union
Mortgage company 2 .. . .
5 Total
MEMO
Distribution of loans
6 Number
7 Percent
VAguaranteed
Conventional
Home
improvement
All
All
All
8.7
9.7
.2
81.5
9.6
9.4
1.7
79.2
17.1
13.5
.2
69.2
25.2
22.0
1.8
51.1
21.7
19.3
1.5
57.5
30.5
17.2
4.1
48.1
68.9
7.5
11.8
11.8
31.7
16.8
3.9
47.6
51.4
42.3
.5
5.8
31.8
16.9
3.9
47.4
100
100
100
100
100
100
100
100
100
100
538,697
8.8
210,379
3.4
10,548
.2
2,736,125
44.5
3,495,749
56.8
1,638,858
26.6
997,395
16.2
6,132,002
99.7
19,234
.3
6,151,236
100.0
*Less than 0.05 percent.
1. Multifamily dwellings are those for five or more families.
FmHAinsured
Home
refinancing
2. Comprises all covered mortgage companies, including those affiliated with a commercial bank, savings association, or credit union.
SOURCE. FFIEC, Home Mortgage Disclosure Act.
Home Mortgage Disclosure
4.37
A69
APPLICATIONS FOR LOANS FOR ONE- TO FOUR-FAMILY HOMES REPORTED UNDER HMDA
By Purpose of Loan and Characteristics of Applicant and Census Tract, 1995
Home purchase
Home refinancing
Home improvement
Government-backed
Characteristic
Number
Racial/ethnic identity
1 American Indian or
Alaskan Native . . .
2 Asian or Pacific
Islander
3 Black
4 Hispanic
5 White
6 Other
7 All
MEMO
MEMO
Percentage of
characteristic's
home purchase
loans
Percentage of
characteristic's
home purchase
loans
9,617
.7
1.4
1.2
2.0
20,414
171,075
115,237
1,054,827
14,633
25,527
2,206,226
100.0
1,411,330
100.0
73.9
70.9
74.8
87.7
541,331
272,217
251,248
885,912
27.8
14.0
12.9
45.4
482,376
196,614
174,783
496,706
35.7
14.6
12.9
36.8
100.0
79.1
1,950,708
100.0
1,350,479
100.0
1,562,872
641,595
518,268
168,716
108,084
52.1
21.4
17.3
5.6
3.6
84.1
77.5
71.6
72.5
70.7
975,894
396,944
366,150
155,564
163,603
47.4
19.3
17.8
7.6
7.9
617,724
233,098
228,549
103,062
135,092
46.9
17.7
17.3
7.8
10.3
21.0
2,999,535
100.0
79.0
2,058,155
100.0
1,317,525
100.0
26.1
23.6
15.3
409,030
1,500,430
1,092,905
13.6
50.0
36.4
73.9
76.4
84.7
358,685
1,033,298
674,890
17.4
50.0
32.7
296,817
694,042
349,440
22.1
51.8
26.1
1,340,299
100.0
606,417
765,234
44.2
55.8
4,051
.4
12.9
27,351
.6
87.1
10,578
15,172
146,717
106,687
643,050
5,933
32,652
1.6
15.4
11.2
67.4
.6
3.4
11.1
31.0
29.3
15.7
12.6
25.7
121,089
325,849
257,826
3,462,366
41,107
94,386
2.8
7.5
6.0
80.0
.9
2.2
88.9
69.0
70.7
84.3
87.4
74.3
65,964
189,379
128,399
1,740,552
27,321
44,033
5.8
78.9
954,262
100.0
18.1
4,329,974
100.0
81.9
314,092
172,951
126,099
189,610
39.1
21.5
15.7
23.6
26.1
29.1
25.2
12.3
890,953
420,408
374,235
1,357,489
29.3
13.8
12.3
44.6
802,752
100.0
20.9
3,043,085
295,903
186,689
206,070
64,117
44,770
37.1
23.4
25.8
8.0
5.6
15.9
22.5
28.4
27.5
29.3
797,549
100.0
Income
20 Low or moderate
21 Middle
22 Upper
144,546
463,961
197,731
17.9
57.5
24.5
23 Total
806,238
100.0
Location 4
24 Central city
25 Non-central city
379,043
439,447
46.3
53.7
26 Total
818,490
100.0
8 Total
9
10
11
12
Income (percentage of
MSA median)2
Less than 80
80-99
100-119
120 or more
13 Total
3.0
8.6
12.1
8.2
74.7
1.0
1.8
CENSUS TRACT
14
15
16
17
18
Racial/ethnic
compostion
(minorities as
percentage of
population)
Less than 10
10-19
20-49
50-79
80-100
19 Total
3
24.2
18.9
1,186,518
1,886,593
3,073,111
NOTE. Lenders reported 9,926,444 applications for home loans in 1995. Not all characteristics were reported for all applications; thus the number of applications being distributed by
characteristic varies by characteristic.
1. Loans backed by the Federal Housing Administration, the Department of Veterans
Affairs, or the Farmers Home Administration.
2. MSA median is median family income of the metropolitan statistical area (MSA) in
which the property related to the loan is located.
3. Census tracts are categorized by the median family income for the tract relative to the
2,066,873
3,002,365
38.6
61.4
75.8
81.1
833,506
1,276,772
2,110,278
39.5
60.5
1,371,651
median family income for the MSA in which the tract is located. Categories are defined as
follows: Low or moderate income, median family income for census tract less than 80 percent
of median family income for MSA; Middle income, median family income at least 80 percent
and less than 120 percent of MSA median; Upper income, median family income 120 percent
and greater of MSA median.
4. For census tracts located in MSAs.
SOURCE. FFTEC, Home Mortgage Disclosure Act.
A68
4.38
Special Tables • September 1996
APPLICATIONS FOR LOANS FOR ONE- TO FOUR-FAMILY HOMES REPORTED UNDER HMDA
By Purpose of Loan, with Denial Rate, and by Characteristic of Applicant, 1995
Home purchase
Home refinancing
Applicant
characteristic 1
Government-backed 2
Distribution
1
2
3
4
5
American Indian or Alaskan Native
One male
Two males
One female
Two females
One male and one female
6 Total3
1
8
9
10
11
Asian or Pacific Islander
One male
Two males
One female
Two females
One male and one female
12 Total3
13
14
15
16
17
Black
One male
Two males
One female
Two females
One male and one female
18 Total3
19
20
21
22
23
Hispanic
One male
Two males
One female
Two females
One male and one female
24 Total3
25
26
27
28
29
White
One male
Two males
One female
Two females
One male and one female
30 Total3
31
32
33
34
35
All
One male
Two males
One female
Two females
One male and one female
36 Total3
Denial rate
Distribution
Denial rate
Distribution
Denial rate
Distribution
Denial rate
32.30
1.60
25.90
2.90
37.20
12.40
15.40
14.40
9.40
13.50
27.20
1.70
27.60
2.40
41.20
42.10
35.30
43.30
43.10
39.80
27.50
1.50
22.70
1.80
46.50
21.10
17.20
22.00
15.90
17.40
28.90
1.40
27.60
1.20
41.00
35.30
28.70
36.50
29.80
27.90
100.00
13.30
100.00
41.40
100.00
19.70
100.00
32.60
20.70
3.70
13.10
2.30
60.20
9.70
10.10
9.00
8.90
8.00
18.60
3.00
13.60
1.90
62.90
15.20
14.90
15.20
14.80
10.50
15.80
1.90
13.70
1.70
67.00
21.00
19.30
21.90
18.10
18.40
22.50
1.40
16.10
1.10
59.00
36.80
33.50
34.10
33.30
24.90
100.00
8.70
100.00
12.50
100.00
19.30
100.00
29.40
26.80
1.00
30.60
2.80
38.90
14.90
14.00
14.20
16.60
16.20
25.00
1.00
34.60
2.90
36.50
40.80
40.80
42.20
45.80
38.10
23.40
.70
30.70
2.00
43.20
25.80
25.00
25.80
26.80
23.70
26.60
.50
36.80
1.80
34.30
40.10
42.10
40.70
44.20
35.50
100.00
15.30
100.00
40.50
100.00
24.90
100.00
38.80
21.00
6.80
11.00
2.20
59.10
9.70
6.60
10.20
9.10
9.70
24.70
3.80
15.00
2.00
54.40
34.00
28.10
31.00
31.40
26.90
19.20
1.70
16.30
1.50
61.30
23.80
28.00
22.80
26.80
23.70
28.90
1.30
21.30
1.10
47.40
43.60
42.00
45.20
44.40
35.40
100.00
9.50
100.00
29.50
100.00
23.70
100.00
40.10
23.10
1.40
15.00
1.10
59.40
8.90
9.00
7.80
9.60
8.50
20.80
1.50
16.00
1.20
60.50
25.70
21.00
24.40
27.90
17.60
18.10
1.20
14.00
.80
65.90
16.60
13.40
15.10
15.40
12.00
21.20
.60
17.20
.80
60.10
24.30
24.20
24.10
27.90
17.90
100.00
8.50
100.00
20.60
100.00
13.30
100.00
20.40
23.50
2.00
17.00
1.50
56.00
10.10
8.50
9.90
11.60
9.50
21.30
1.60
17.40
1.40
58.20
27.60
22.70
27.50
30.70
19.00
18.60
1.20
15.60
1.00
63.50
18.20
15.60
17.60
18.60
13.60
22.60
.70
20.00
1.00
55.70
28.90
28.90
30.10
33.40
20.70
100.00
9.80
100.00
22.60
100.00
15.20
100.00
24.60
1. Applicants are categorized by race of first applicant listed on Loan Application Register,
except for joint white and minority applications, which are not shown in this table.
2. Loans backed by the Federal Housing Administration, the Department of Veterans
Affairs, or the Farmers Home Administration.
Home improvement
Conventional
3. Includes all applicants from racial or ethnic group regardless of whether gender was
reported.
SOURCE. FFIEC, Home Mortgage Disclosure Act.
Home Mortgage Disclosure
4.39
APPLICATIONS FOR HOME LOANS REPORTED UNDER HMDA
A71
By Loan Program and Size of Dwelling, 1995
Percent
One- to four-family dwellings
1
2
3
4
5
Home refinancing
Home purchase
Type of loan
Approved
and
accepted
Approved
but not
accepted
Denied
Withdrawn
File closed
Total
Approved
and
accepted
Approved
but not
accepted
Denied
Withdrawn
File closed
Total
77.0
77.2
71.2
60.8
63.7
1.5
1.3
1.7
8.0
6.8
9.8
10.0
15.1
22.6
20.3
10.2
10.2
10.5
7.2
7.7
1.6
1.4
1.5
1.3
1.3
100
100
100
100
100
68.6
76.9
51.3
60.3
60.9
4.1
3.0
.4
6.1
5.9
8.2
6.0
39.4
19.9
19.2
14.0
11.1
8.4
11.7
11.8
5.2
3.0
.6
2.1
2.2
100
100
100
100
100
Approved
but not
accepted
Denied
Withdrawn
File closed
Total
12.0
14.8
7.3
11.1
8.3
10.2
10.1
FHA
VA
FmHA
Conventional
All
One- to four-family dwellings
Home improvement
1
2
3
4
5
Approved
and
accepted
Approved
but not
accepted
Denied
Withdrawn
File closed
Total
Approved
and
accepted
33.1
32.3
64.0
59.6
57.0
13.4
8.9
2.2
7.7
8.2
41.6
42.2
22.5
27.3
28.7
10.8
16.4
7.9
4.7
5.3
1.0
.2
3.4
.7
.7
100
100
100
100
100
79.4
74.1
91.7
66.8
67.0
FHA
VA
FmHA
Conventional
All
NOTE. Loans approved and accepted were approved by the lender and accepted by the
applicant. Loans approved but not accepted were approved by the lender but not accepted by
the applicant. Applications denied were denied by the lender, and applications withdrawn
were withdrawn by the applicant. When an application was left incomplete by the applicant,
the lender reported file closed and took no further action. >
*
.9
*
3.8
3.7
*
17.4
17.4
*Less than 0.05 percent,
1. Multifamily dwellings are those for five or more families,
SOURCE. FFIEC, Home Mortgage Disclosure Act.
*
.4
*
1.8
1.8
100
100
100
100
100
A68
4.40
Special Tables • September 1996
APPLICATIONS FOR ONE- TO FOUR-FAMILY HOME LOANS REPORTED UNDER HMDA
By Disposition of Loan and Characteristics of Applicant and Census Tract, 1995
A.
Home Purchase Loans
Percent
Government-backed
1
Conventional
Characteristic
Approved
Denied
Withdrawn
File closed
Total
Approved
Denied
71.9
79.4
71.1
77.6
81.1
76.7
79.1
13.3
8.7
15.3
9.5
8.5
10.7
10.1
12.7
10.6
11.4
11.2
9.1
10.8
9.6
2.1
1.4
2.2
1.6
1.3
1.9
1.2
100
100
100
100
100
100
100
50.7
75.9
51.1
60.2
71.8
59.4
68.5
41.4
12.5
40.5
29.5
20.6
29.6
22.4
79.1
10.9
8.8
1.3
100
63.1
72.4
14.1
11.1
2.4
100
52.6
79.0
72.1
79.1
82.0
76.2
77.8
83.6
9.6
15.6
10.0
9.2
12.0
12.3
7.6
10.2
10.4
9.4
7.9
10.2
8.9
7.8
1.2
1.9
1.5
1.0
1.6
1.0
1.0
100
100
100
100
100
100
100
78.0
10.2
10.5
1.4
82.9
77.2
81.6
85.8
80.8
83.2
84.7
7.4
11.8
8.2
6.3
9.3
8.4
6.8
8.8
9.4
9.1
7.1
8.9
7.6
7.6
1.0
1.6
1.1
.8
1.0
.8
.9
77.5
9.4
11.8
1.3
84.0
78.0
82.0
86.8
79.4
84.5
84.4
6.0
11.3
7.4
5.7
9.1
7.1
6.4
8.7
9.3
9.5
6.8
9.8
7.8
8.2
1.2
1.4
1.1
.7
1.7
.7
.9
80.5
7.6
10.3
1.6
83.6
79.1
80.7
86.5
81.9
84.0
6.7
10.5
7.0
5.4
7.1
7.2
8.8
8.9
11.1
7.3
9.5
8.0
.9
1.5
1.2
.8
1.5
.8
84.4
82.7
80.1
76.8
74.5
7.4
8.0
9.3
11.1
11.6
7.3
8.3
9.4
10.6
11.8
.9
1.0
1.2
1.6
2.1
Income4
45 Low or moderate
46 Middle
47 Upper
77.6
82.4
83.0
10.9
8.3
7.4
10.0
8.2
8.7
Location5
48 Central city
49 Non-central city
80.5
82.7
9.5
7.8
8.8
8.5
Withdrawn
File closed
Total
6.8
9.7
6.7
8.3
6.5
8.9
7.7
1.1
1.9
1.7
2.0
1.1
2.0
1.3
100
100
100
100
100
100
100
29.9
5.9
1.1
100
40.8
5.5
1.1
100
73.6
54.2
59.1
65.5
54.3
57.4
74.0
16.5
37.3
32.4
28.4
37.4
35.6
18.0
8.2
6.6
6.8
5.2
6.9
6.0
6.8
1.7
1.8
1.8
.9
1.4
1.0
1.2
100
100
100
100
100
100
100
100
64.8
26.4
7.7
1.1
100
100
100
100
100
100
100
100
78.2
61.8
65.7
76.5
67.3
68.0
77.7
11.2
27.9
24.6
16.4
22.7
24.1
13.9
9.0
8.4
7.9
6.1
8.3
6.7
7.2
1.6
1.9
1.8
1.0
1.6
1.1
1.2
100
100
100
100
100
100
100
100
69.2
19.6
9.6
1.6
100
100
100
100
100
100
100
100
78.7
64.8
67.2
80.3
69.8
74.2
82.2
10.4
23.9
22.4
12.3
19.2
17.5
8.7
9.2
9.0
8.5
6.4
9.1
7.1
7.9
1.6
2.2
1.9
1.0
2.0
1.2
1.2
100
100
100
100
100
100
100
100
74.7
13.4
10.4
1.5
100
100
100
100
100
100
100
79.0
70.7
72.2
84.2
73.7
79.9
9.5
17.5
15.6
7.6
13.6
10.7
9.8
9.6
10.1
7.3
10.5
8.3
1.7
2.1
2.2
1.0
2.2
1.2
100
100
100
100
100
100
100
100
100
100
100
79.2
74.7
69.6
65.2
59.5
13.2
16.1
20.8
24.0
28.1
6.6
7.9
8.2
8.9
9.9
.9
1.2
1.5
1.9
2.5
100
100
100
100
100
1.6
1.0
.9
100
100
100
64.4
73.9
80.8
26.3
18.0
10.1
7.7
6.9
8.0
1.6
1.1
1.1
100
100
100
1.2
1.0
100
100
73.4
75.9
17.6
15.7
7.6
7.2
1.3
1.1
100
100
APPLICANT
1
2
3
4
5
6
7
Racial or ethnic identity
American Indian or
Alaskan Native
Asian or Pacific Islander. .
Black
Hispanic
White
Other
Joint 2
Income ratio (percentage
of MSA median)3
8 Less than 80
9
American Indian or
Alaskan Native . . .
10
Asian or Pacific
Islander
11
Black
12
Hispanic
13
White
14
Other
15
Joint 2
16 80-99
17
American Indian or
Alaskan Native . . .
18
Asian or Pacific
Islander
19
Black
20
Hispanic
21
White
22
Other
23
Joint 2
24 100-119
25
American Indian or
Alaskan Native . . .
26
Asian or Pacific
Islander
27
Black
28
Hispanic
29
White
30
Other
31
Joint 2
32 120 or more
33
American Indian or
Alaskan Native . . .
34
Asian or Pacific
Islander
35
Black
36
Hispanic
37
White
38
Other
39
Joint2
CENSUS TRACT
40
41
42
43
44
Racial or ethnic
composition
(minorities as
percentage of
population)
Less than 10
10-19
20-49
50-79
80-100
Home Mortgage Disclosure
4.40
A73
APPLICATIONS FOR ONE- TO FOUR-FAMILY HOME LOANS REPORTED UNDER HMDA
By Disposition of Loan and Characteristics of Applicant and Census Tract, 1995—Continued
B.
Home Refinancing and Home Improvement Loans
Percent
Home improvement
Home refinancing
Characteristic
Approved
Denied
Withdrawn
File closed
Total
Approved
Denied
Withdrawn
File closed
Total
62.4
66.2
58.9
60.5
75.9
55.1
70.8
19.7
19.3
24.9
23.7
13.3
25.3
17.7
15.0
12.0
13.1
13.0
8.8
16.6
9.4
2.9
2.5
3.0
2.9
1.9
3.0
2.1
100
100
100
100
100
100
100
62.0
62.7
56.4
54.9
75.2
54.0
71.2
32.6
29.4
38.8
40.1
20.4
33.7
23.6
4.7
6.0
4.2
4.1
3.8
11.4
4.4
.7
1.9
.6
.9
.5
.9
.7
100
100
100
100
100
100
100
59.3
26.5
12.2
2.0
100
55.6
38.7
5.0
.7
100
59.4
23.6
14.4
2.6
100
55.7
39.1
4.5
.8
100
60.1
56.2
56.1
71.1
47.4
62.5
67.1
24.1
28.3
28.9
18.0
32.7
25.7
20.0
13.0
12.8
12.3
9.1
17.0
9.8
10.9
2.8
2.7
2.7
1.8
2.9
2.0
2.0
100
100
100
100
100
100
100
51.4
50.7
48.3
67.3
48.2
55.9
64.8
41.4
44.6
46.5
28.3
41.6
38.8
29.6
5.4
4.1
4.2
3.9
9.1
4.7
4.9
1.8
.6
.9
.5
1.0
.6
.7
100
100
100
100
100
100
100
APPLICANT
1
2
3
4
5
6
7
Racial or ethnic identity
American Indian or
Alaskan Native
Asian or Pacific Islander. .
Black
Hispanic
White
Other
Joint 2
Income ratio (percentage
of MSA median)3
8 Less than 80
9
American Indian or
Alaskan Native . . .
10
Asian or Pacific
Islander
11
Black
12
Hispanic
13
White
14
Other
15
Joint 2
16 80-99
17
American Indian or
Alaskan Native . . .
18
Asian or Pacific
Islander
19
Black
20
Hispanic
21
White
22
Other
23
Joint 2
24 100-119
25
American Indian or
Alaskan Native . . .
26
Asian or Pacific
Islander
27
Black
28
Hispanic
29
White
30
Other
31
Joint 2
32 120 or more
33
American Indian or
Alaskan Native . . .
34
Asian or Pacific
Islander
35
Black
36
Hispanic
37
White
38
Other
39
Joint 2
64.3
19.8
14.3
1.7
100
68.6
25.7
5.2
.5
100
67.3
59.8
59.5
76.7
57.9
69.8
69.7
19.4
24.6
25.9
13.3
24.1
18.8
18.0
11.2
12.7
11.7
8.2
14.4
9.0
10.4
2.1
2.9
2.9
1.7
3.6
2.4
1.8
100
100
100
100
100
100
100
60.7
58.0
54.5
74.7
54.5
65.9
68.4
30.9
37.4
39.9
21.2
33.9
28.9
25.9
6.7
4.0
4.6
3.6
10.9
4.5
5.0
1.7
.6
1.0
.5
.6
.8
.7
100
100
100
100
100
100
100
65.2
18.4
14.1
2.2
100
70.1
23.6
5.5
.8
100
68.9
61.3
59.9
78.4
59.7
70.8
73.7
18.4
23.8
25.3
12.1
23.8
18.7
14.7
10.6
12.3
12.0
7.9
13.2
8.7
9.7
2.1
2.6
2.8
1.6
3.4
1.7
1.9
100
100
100
100
100
100
100
63.4
60.5
55.9
77.7
52.1
72.0
74.3
28.1
35.0
38.5
18.2
33.7
23.6
19.9
6.6
4.0
4.7
3.6
13.6
3.9
4.8
1.8
.4
.9
.5
.5
.5
.9
100
100
100
100
100
100
100
66.3
15.6
15.2
2.8
100
73.9
19.9
5.4
.8
100
69.1
62.4
66.1
79.6
62.1
73.3
17.4
22.9
19.4
10.8
21.8
16.0
10.9
11.9
11.9
7.9
13.0
8.8
2.5
2.8
2.6
1.7
3.1
1.9
100
100
100
100
100
100
69.6
65.8
62.7
82.3
60.4
77.1
22.5
29.5
33.1
13.6
26.1
18.0
5.8
4.1
3.3
3.5
12.0
4.2
2.1
.6
.9
.7
1.4
.8
100
100
100
100
100
100
73.7
67.4
61.6
55.5
51.1
14.8
18.7
22.6
27.0
30.3
9.7
11.5
13.2
14.8
15.8
1.8
2.4
2.6
2.7
2.8
100
100
100
100
100
74.1
66.4
59.4
52.4
48.2
20.7
27.3
33.9
40.9
45.1
4.6
5.3
5.6
5.6
5.8
.5
1.0
1.1
1.1
1.0
100
100
100
100
100
Income4
45 Low or moderate
46 Middle
47 Upper
56.2
68.1
71.8
26.9
18.6
15.5
14.5
11.1
10.6
2.5
2.2
2.2
100
100
100
54.2
67.1
71.9
39.9
27.3
21.8
5.1
4.9
5.2
.8
.7
1.0
100
100
100
Location5
48 Central city
49 Non-central city
63.8
69.7
21.2
17.5
12.7
10.7
2.4
2.1
100
100
62.1
68.4
32.1
25.8
5.0
5.0
.8
.7
100
100
CENSUS TRACT
40
41
42
43
44
Racial or ethnic
composition
(minorities as
percentage of
population)
Less than 10
10-19
20-49
50-79
80-100
NOTE. Applicant income ratio is applicant income as a percentage of MSA median. MSA
median is median family income of the metropolitan statistical area (MSA) in which the
property related to the loan is located.
1. Loans backed by the Federal Housing Administration, the Department of Veterans
Affairs, or the Farmers Home Administration.
2. White and minority.
3. MSA median is median family income of the metropolitan statistical area (MSA) in
which the property related to the loan is located.
4. Census tracts are categorized by the median family income for the tract relative to the
median family income for the MSA in which the tract is located. Categories are defined as
follows: Low or moderate income, median family income for census tract less than 80 percent
of median family income for MSA; Middle income, median family income at least 80 percent
and less than 120 percent of MSA median; Upper income, median family income 120 percent
and greater of MSA median.
5. For census tracts located in MSAs.
SOURCE. FFIEC, Home Mortgage Disclosure Act.
A74
4.41
Special Tables • September 1996
HOME LOANS SOLD
By Purchaser and Characteristics of Borrower and Census Tract, 1995
Fannie Mae
Ginnie Mae
Freddie Mac
FmHA
Commercial bank
Characteristic
Number
Percent
Number
Percent
Number
Percent
Number
Percent
Number
Percent
974,528
100.0
630,742
100.0
589,130
100.0
4,832
100.0
109,889
100.0
3,300
33,327
39,457
48,216
716,818
6,444
19,379
.4
3.8
4.6
5.6
82.7
.7
2.2
1,984
7,648
64,647
50,380
329,672
2,961
15,860
.4
1.6
13.7
10.6
69.7
.6
3.4
1,566
16,320
18,289
20,412
458,543
3,370
10,639
.3
3.1
3.5
3.9
86.7
.6
2.0
13
116
299
516
3,224
30
85
.3
2.7
7.0
12.0
75.3
.7
2.0
384
1,996
9,931
7,427
75,839
710
2,151
.4
2.0
10.1
7.5
77.0
.7
2.2
866,941
100.0
473,152
100.0
529,139
100.0
4,283
100.0
98,438
100.0
153,849
112,007
110,791
359,305
20.9
15.2
15.1
48.8
135,399
83,691
65,105
98,646
35.4
21.9
17.0
25.8
80,395
60,698
63,857
212,033
19.3
14.6
15.3
50.8
1,197
711
352
499
43.4
25.8
12.8
18.1
23,040
14,534
12,920
40,296
25.4
16.0
14.2
44.4
735,952
100.0
382,841
100.0
416,983
100.0
2,759
100.0
90,790
100.0
427,204
168,129
130,785
42,855
26,561
53.7
21.1
16.4
5.4
3.3
200,880
127,528
136,795
41,075
27,526
37.6
23.9
25.6
7.7
5.2
271,474
90,454
62,239
16,789
9,162
60.3
20.1
13.8
3.7
2.0
1,779
983
702
175
134
47.2
26.1
18.6
4.6
3.6
46,625
19,570
17,851
5,291
4,681
49.6
20.8
19.0
5.6
5.0
20 Total
795,534
100.0
533,804
100.0
450,118
100.0
3,773
100.0
94,018
100.0
Income
21 Low or moderate
22 Middle
23 Upper
80,537
397,045
317,978
10.1
49.9
40.0
88,904
315,846
135,715
16.4
58.4
25.1
38,772
228,226
183,183
8.6
50.7
40.7
638
2,223
916
16.9
58.9
24.3
12,459
47,562
35,158
13.1
50.0
36.9
24 Total
795,560
100.0
540,465
100.0
450,181
100.0
3,777
100.0
95,179
100.0
Location
25 Central city
26 Non-central city
299,737
496,568
37.6
62.4
242,436
298,320
44.8
55.2
158,869
291,712
35.3
64.7
979
2,799
25.9
74.1
37,672
57,636
39.5
60.5
27 Total
796,305
100.0
540,756
100.0
450,581
100.0
3,778
100.0
95,308
100.0
1 All
BORROWER
2
3
4
5
6
7
8
Racial or ethnic identity
American Indian or Alaskan Native . . . .
Asian or Pacific Islander
Black
Hispanic
White
Other
Joint
9 Total
10
11
12
13
Income ratio (percentage of MSA
median)
Less than 80
80-99
100-119
120 or more
14 Total
CENSUS TRACT
15
16
17
18
19
Racial or ethnic composition (minorities
as percentage of population)
Less than 10
10-19
20-49
50-79
80-100
Home Mortgage Disclosure
4.41
HOME LOANS SOLD
By Purchaser and Characteristics of Borrower and Census Tract, 1995—Continued
Savings bank or savings and loan
association
Affiliate
Life insurance company
Characteristic
Number
Percent
Number
Percent
Number
Percent
Number
44,587
100.0
6,433
100.0
389,980
100.0
1,036,012
86
766
2,782
1,568
33,549
233
753
.2
1.9
7.0
3.9
84.4
.6
1.9
18
123
726
406
4,757
34
128
.3
2.0
11.7
6.6
76.8
.5
2.1
1,741
7,530
26,491
18,268
279,339
3,356
7,628
.5
2,2
7.7
5.3
81.1
1.0
2.2
4,193
24,089
94,321
70,252
716,203
10,302
25,228
39,737
100.0
6,192
100.0
344,353
100.0
944,588
8,377
5,361
5,036
17,606
23.0
14.7
13.8
48.4
1,605
968
843
2,246
28.3
17.1
14.9
39.7
71,678
34,586
29,687
123,716
27.6
13.3
11.4
47.6
236,104
127,709
104,946
307,577
36,380
100.0
5,662
100.0
259,667
100.0
776,336
24,295
6,498
4,562
1,448
1,253
63.8
17.1
12.0
3.8
3.3
3,069
1,214
928
359
252
52.7
20.9
15.9
6.2
4.3
156,068
65,387
47,479
12,651
8,038
53.9
22.6
16.4
4.4
2.8
362,771
188,767
176,808
57,415
49,423
20 Total
38,056
100.0
5,822
100.0
289,623
100.0
835,184
Income
21 Low or moderate
22 Middle
23 Upper
4,573
18,334
15,302
12.0
48.0
40.0
783
3,076
1,956
13.5
52.9
33.6
36,422
137,963
119,015
12.4
47.0
40.6
132,639
436,930
269,138
24 Total
38,209
100.0
5,815
100.0
293,400
100.0
838,707
Location
25 Central city
26 Non-central city
12,941
25,314
33.8
66.2
2,181
3,641
37.5
62.5
115,675
177,954
39.4
60.6
345,319
494,282
27 Total
38,255
100.0
5,822
100.0
293,629
100.0
839,601
1 All
BORROWER
1
3
4
5
6
7
8
Racial or ethnic identity
American Indian or Alaskan Native . . . .
Asian or Pacific Islander
Black
Hispanic
White
Other
Joint
9 Total
10
11
12
13
Income ratio (percentage of MSA
median)
Less than 80
80-99
100-119
120 or more
14 Total
CENSUS TRACT
15
16
17
18
19
Racial or ethnic composition (minorities
as percentage of population)
Less than 10
10-19
20-49
50-79
80-100
Note. Includes securitized loans. See also notes to table 4.40.
Fannie Mae—Federal National Mortgage Association
Ginnie Mae—Government National Mortgage Association
Freddie Mac—Federal Home Loan Mortgage Corporation
FmHA—Farmers Home Administration
Affiliate—Affiliate of institution reporting the loan
SOURCE. FFIEC, Home Mortgage Disclosure Act.
A75
A76
Index to Statistical Tables
References are to pages A3-A75 although the prefix "A" is omitted in this index
ACCEPTANCES, bankers (See Bankers acceptances)
Agricultural loans, commercial banks, 19, 20
Assets and liabilities (See also Foreigners)
Banks, by classes, 17-21
Domestic finance companies, 33
Federal Reserve Banks, 10
Financial institutions, 25
Foreign banks, U.S. branches and agencies, 21, 64-67
Automobiles
Consumer installment credit, 36
Production, 44, 45
Deposits—Continued
Interest rates, 15
Turnover, 16
Discount rates at Reserve Banks and at foreign central banks and
foreign countries (See Interest rates)
Discounts and advances by Reserve Banks (See Loans)
Dividends, corporate, 32
BANKERS acceptances, 10, 11, 19-22, 23
Bankers balances, 17-21, 64-67. (See also Foreigners)
Bonds (See also U.S. government securities)
New issues, 31
Rates, 23
Branch banks, 21
Business activity, nonfinancial, 42
Business loans (See Commercial and industrial loans)
FARM mortgage loans, 35
Federal agency obligations, 5, 9, 10, 11, 28, 29
Federal credit agencies, 30
Federal finance
Debt subject to statutory limitation, and types and ownership
of gross debt, 27
Receipts and outlays, 25, 26
Treasury financing of surplus, or deficit, 25
Treasury operating balance, 25
Federal Financing Bank, 30
Federal funds, 6, 19, 20, 21, 23, 25
Federal Home Loan Banks, 30
Federal Home Loan Mortgage Corporation, 30, 34, 35
Federal Housing Administration, 30, 34, 35
Federal Land Banks, 35
Federal National Mortgage Association, 30, 34, 35
Federal Reserve Banks
Condition statement, 10
Discount rates (See Interest rates)
U.S. government securities held, 5, 10, 11, 27
Federal Reserve credit, 5, 6, 10, 11
Federal Reserve notes, 10
Federally sponsored credit agencies, 30
Finance companies
Assets and liabilities, 33
Business credit, 33
Loans, 36
Paper, 22, 23
Financial institutions, loans to, 19, 20, 21
Float, 5
Flow of funds, 3 7 ^ 1
Foreign banks, assets and liabilities of U.S. branches and agencies,
20, 21, 64-67
Foreign currency operations, 10
Foreign deposits in U.S. banks, 5, 20
Foreign exchange rates, 62
Foreign trade, 51
Foreigners
Claims on, 52, 55, 56, 57, 59
Liabilities to, 20, 51, 52, 53, 58, 60, 61
CAPACITY utilization, 43
Capital accounts
Banks, by classes, 17
Federal Reserve Banks, 10
Central banks, discount rates, 61
Certificates of deposit, 23
Commercial and industrial loans
Commercial banks, 19, 20
Weekly reporting banks, 19-21
Commercial banks
Assets and liabilities, 17-21
Commercial and industrial loans, 17-21
Consumer loans held, by type and terms, 36
Deposit interest rates of insured, 15
Loans sold outright, 20
Real estate mortgages held, by holder and property, 35, 74
Time and savings deposits, 4
Commercial paper, 22, 23, 33
Condition statements (See Assets and liabilities)
Construction, 42, 46
Consumer installment credit, 36
Consumer prices, 42
Consumption expenditures, 49, 50
Corporations
Profits and their distribution, 32
Security issues, 31, 61
Cost of living (See Consumer prices)
Credit unions, 36
Currency in circulation, 5 , 1 3
Customer credit, stock market, 24
DEBITS to deposit accounts, 16
Debt (See specific types of debt or securities)
Demand deposits
Banks, by classes, 17-21
Ownership by individuals, partnerships, and
corporations, 20, 21
Turnover, 16
Depository institutions
Reserve requirements, 8
Reserves and related items, 4, 5, 6, 12
Deposits (See also specific types)
Banks, by classes, 4, 17—21
Federal Reserve Banks, 5, 10
EMPLOYMENT, 42
Eurodollars, 23
GOLD
Certificate account, 10
Stock, 5, 51
Government National Mortgage Association, 30, 34, 35
Gross domestic product, 48
HOME Mortgage Disclosure Act
Applications for home loans, 68-73
Home loans by lenders, 68, 74, 75
Residential lending by financial institutions, 68, 71, 74, 75
Housing, new and existing units, 46
A77
INCOME, personal and national, 42, 48, 49
Industrial production, 42, 44
Installment loans, 36
Insurance companies, 27, 35
Interest rates
Bonds, 23
Consumer installment credit, 36
Deposits, 15
Federal Reserve Banks, 7
Foreign central banks and foreign countries, 61
Money and capital markets, 23
Mortgages, 34
Prime rate, 22
International capital transactions of United States, 50-61
International organizations, 52, 53, 55, 58, 59
Inventories, 48
Investment companies, issues and assets, 32
Investments (See also specific types)
Banks, by classes, 17-21
Commercial banks, 4, 17-21
Federal Reserve Banks, 10, 11
Financial institutions, 35
LABOR force, 42
Life insurance companies (See Insurance companies)
Loans (See also specific types)
Banks, by classes, 17-21
Commercial banks, 17-21, 74, 75
Conventional, 68, 71
Fannie Mae, 74
Federal Reserve Banks, 5, 6, 7, 10, 11
FHA, 68, 71
Financial institutions, 35
FmHA, 68, 71, 74
Freddie Mac, 74
Ginnie Mae, 74
Home purchase, 72
Insured or guaranteed by United States, 34, 35
VA, 68, 71
MANUFACTURING
Capacity utilization, 43
Production, 43, 45
Margin requirements, 24
Member banks (See also Depository institutions)
Federal funds and repurchase agreements, 6
Reserve requirements, 8
Mining production, 45
Mobile homes shipped, 46
Monetary and credit aggregates, 4, 12
Money and capital market rates, 23
Money stock measures and components, 4, 13
Mortgages (See Real estate loans)
Mutual funds, 32
Mutual savings banks (See Thrift institutions)
NATIONAL defense outlays, 26
National income, 48
OPEN market transactions, 9
PERSONAL income, 49
Prices
Consumer and producer, 42, 47
Stock market, 24
Prime rate, 22
Producer prices, 42, 47
Production, 42, 44
Profits, corporate, 32
REAL estate loans
Banks, by classes, 19, 20, 35
Terms, yields, and activity, 34
Type of holder and property mortgaged, 35
Repurchase agreements, 6
Reserve requirements, 8
Reserves
Commercial banks, 17
Depository institutions, 4, 5, 6, 12
Federal Reserve Banks, 10
U.S. reserve assets, 51
Residential mortgage loans, 34, 68-75
Retail credit and retail sales, 36, 42
SAVING
Flow of funds, 37-41
National income accounts, 48
Savings institutions, 35, 36, 37
Savings deposits (See Time and savings deposits)
Securities (See also specific types)
Federal and federally sponsored credit agencies, 30
Foreign transactions, 60
New issues, 31
Prices, 24
Special drawing rights, 5, 10, 50, 51
State and local governments
Deposits, 19, 20
Holdings of U.S. government securities, 27
New security issues, 31
Ownership of securities issued by, 19, 21
Rates on securities, 23
Stock market, selected statistics, 24
Stocks (See also Securities)
New issues, 31
Prices, 24
Student Loan Marketing Association, 30
TAX receipts, federal, 26
Thrift institutions, 4. (See also Credit unions and Savings
institutions)
Time and savings deposits, 4, 13, 15, 17-21
Trade, foreign, 51
Treasury cash, Treasury currency, 5
Treasury deposits, 5, 10, 25
Treasury operating balance, 25
UNEMPLOYMENT, 42
U.S. government balances
Commercial bank holdings, 17-21
Treasury deposits at Reserve Banks, 5, 10, 25
U.S. government securities
Bank holdings, 17-21, 27
Dealer transactions, positions, and financing, 29
Federal Reserve Bank holdings, 5, 10, 11, 27
Foreign and international holdings and
transactions, 10, 27, 61
Open market transactions, 9
Outstanding, by type and holder, 27, 28
Rates, 23
U.S. international transactions, 50-62
Utilities, production, 45
VETERANS Administration, 34, 35
WEEKLY reporting banks, 17-21
Wholesale (producer) prices, 42, 47
YIELDS (See Interest rates)
A78
Federal Reserve Board of Governors
and Official Staff
A L A N GREENSPAN, Chairman
ALICE M . RIVLIN, Vice Chair
E D W A R D W . K E L L E Y , JR.
OFFICE
DIVISION OF INTERNATIONAL FINANCE
EDWIN M . TRUMAN, Staff Director
LARRY J. PROMISEL, Senior Associate Director
CHARLES J. SIEGMAN, Senior Associate Director
DALE W . HENDERSON, Associate Director
DAVID H . HOWARD, Senior Adviser
DONALD B . ADAMS, Assistant Director
THOMAS A . CONNORS, Assistant Director
PETER HOOPER III, Assistant Director
KAREN H . JOHNSON, Assistant Director
CATHERINE L . MANN, Assistant Director
RALPH W. SMITH, JR., Assistant Director
OF BOARD
LAWRENCE B . LINDSEY
MEMBERS
JOSEPH R . COYNE, Assistant to the Board
DONALD J. WINN, Assistant to the Board
THEODORE E . ALLISON, Assistant to the Board for
Federal
Reserve System Affairs
LYNN S. FOX, Deputy Congressional Liaison
WINTHROP P. HAMBLEY, Special Assistant to the Board
BOB STAHLY MOORE, Special Assistant to the Board
DIANE E . WERNEKE, Special Assistant to the Board
PORTIA W. THOMPSON, Equal Employment Opportunity
Programs Adviser
LEGAL
DIVISION
J. VIRGIL MATTINGLY, JR., General Counsel
SCOTT G . ALVAREZ, Associate General Counsel
RICHARD M . ASHTON, Associate General Counsel
OLIVER IRELAND, Associate General Counsel
KATHLEEN M . O'DAY, Associate General Counsel
ROBERT DEV. FRIERSON, Assistant General Counsel
KATHERINE H . WHEATLEY, Assistant General Counsel
OFFICE OF THE SECRETARY
WILLIAM W. WILES, Secretary
JENNIFER J. JOHNSON, Deputy Secretary
BARBARA R . LOWREY, Associate Secretary
and Ombudsman
DIVISION OF BANKING
SUPERVISION AND REGULATION
RICHARD SPILLENKOTHEN, Director
STEPHEN C . SCHEMERING, Deputy Director
WILLIAM A . RYBACK, Associate Director
HERBERT A . BIERN, Deputy Associate Director
ROGER T. COLE, Deputy Associate Director
JAMES I. GARNER, Deputy Associate Director
HOWARD A . AMER, Assistant Director
GERALD A . EDWARDS, JR., Assistant Director
STEPHEN M . HOFFMAN, JR., Assistant Director
JAMES V. HOUPT, Assistant Director
JACK P. JENNINGS, Assistant Director
MICHAEL G . MARTINSON, Assistant Director
RHOGER H PUGH, Assistant Director
SIDNEY M . SUSSAN, Assistant Director
MOLLY S. WASSOM, Assistant Director
WILLIAM SCHNEIDER, Project Director,
National Information Center
DIVISION OF RESEARCH AND STATISTICS
MICHAEL J. PRELL, Director
EDWARD C . ETTIN, Deputy Director
DAVID J. STOCKTON, Deputy Director
MARTHA BETHEA, Associate Director
WILLIAM R . JONES, Associate Director
MYRON L . KWAST, Associate Director
PATRICK M . PARKINSON, Associate Director
THOMAS D . SIMPSON, Associate Director
LAWRENCE SLIFMAN, Associate Director
MARTHA S. SCANLON, Deputy Associate Director
PETER A . TINSLEY, Deputy Associate Director
FLINT BRAYTON, Assistant Director
DAVID S. JONES, Assistant Director
STEPHEN A . RHOADES, Assistant Director
CHARLES S. STRUCKMEYER, Assistant Director
ALICE PATRICIA WHITE, Assistant Director
JOYCE K . ZICKLER, Assistant Director
JOHN J. MINGO, Senior Adviser
GLENN B . CANNER, Adviser
DIVISION
OF MONETARY
AFFAIRS
DONALD L . KOHN, Director
DAVID E . LINDSEY, Deputy Director
BRIAN F. MADIGAN, Associate Director
RICHARD D . PORTER, Deputy Associate Director
VINCENT R . REINHART, Assistant Director
NORMAND R.V. BERNARD, Special Assistant to the
DIVISION
AND
OF
COMMUNITY
CONSUMER
AFFAIRS
GRIFFITH L . GARWOOD, Director
GLENN E . LONEY, Associate Director
DOLORES S. SMITH, Associate Director
MAUREEN P. ENGLISH, Assistant Director
IRENE SHAWN MCNULTY, Assistant Director
Board
S U S A N M . PHILLIPS
LAURENCE H . MEYER
JANET L. YELLEN
OFFICE
STAFF
OF
DIRECTOR
DIVISION
FOR MANAGEMENT
S. DAVID FROST, Staff Director
SHEILA CLARK, EEO Programs
DIVISION
OF HUMAN
Director
RESOURCES
MANAGEMENT
DAVID L . SHANNON, Director
JOHN R. WEIS, Associate 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
DIVISION
OF INFORMATION
RESOURCES
MANAGEMENT
STEPHEN R . MALPHRUS, Director
MARIANNE M . EMERSON, Assistant Director
Po KYUNG KIM, Assistant Director
RAYMOND H . MASSEY, Assistant Director
EDWARD T. MULRENIN, Assistant Director
DAY W. RADABAUGH, JR., Assistant Director
ELIZABETH B . RIGGS, Assistant Director
RICHARD C . STEVENS, Assistant Director
AND
OF RESERVE
PAYMENT
BANK
OPERATIONS
SYSTEMS
CLYDE H . FARNSWORTH, JR., Director
DAVID L . ROBINSON, Deputy Director (Finance
LOUISE L . ROSEMAN, Associate Director
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
FLORENCE M . YOUNG, Assistant Director
and Control)
OFFICE OF THE INSPECTOR GENERAL
BRENT L . BOWEN, Inspector General
DONALD L. ROBINSON, Assistant Inspector General
BARRY R . SNYDER, Assistant Inspector General
80
Federal Reserve Bulletin • September 1996
Federal Open Market Committee
and Advisory Councils
FEDERAL
OPEN
MARKET
COMMITTEE
MEMBERS
ALAN GREENSPAN,
Chairman
EDWARD G . BOEHNE
JERRY L . JORDAN
EDWARD W . KELLEY, JR.
WILLIAM J. MCDONOUGH,
LAWRENCE B . LINDSEY
ROBERT D . MCTEER, JR.
LAURENCE H . MEYER
SUSAN M . PHILLIPS
ALTERNATE
J. ALFRED BROADDUS, JR.
JACK GUYNN
Vice Chairman
ALICE M . RIVLIN
GARY H . STERN
JANET L . YELLEN
MEMBERS
MICHAEL H . MOSKOW
ROBERT T. PARRY
ERNEST T. PATRIKIS
STAFF
DAVID E . LINDSEY, Associate Economist
FREDERIC S. MISHKIN, Associate Economist
LARRY J. PROMISEL, Associate Economist
ARTHUR J. ROLNICK, Associate Economist
HARVEY ROSENBLUM, Associate Economist
CHARLES J. SIEGMAN, Associate Economist
THOMAS D . SIMPSON, Associate Economist
MARK S. SNIDERMAN, Associate Economist
DAVID J. STOCKTON, Associate Economist
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
THOMAS C . BAXTER, JR., Deputy General Counsel
MICHAEL J. PRELL, Economist
EDWIN M . TRUMAN, Economist
RICHARD W . LANG, Associate Economist
PETER R . FISHER,
Manager, System Open Market Account
FEDERAL ADVISORY COUNCIL
RICHARD G . TILGHMAN, President
FRANK V. CAHOUET, Vice President
ROGER L . FITZSIMONDS, Seventh District
THOMAS H . JACOBSEN, Eighth District
RICHARD M . KOVACEVICH, Ninth District
CHARLES E. NELSON, Tenth District
CHARLES T. DOYLE, Eleventh District
WILLIAM F. ZUENDT, Twelfth District
WILLIAM M . CROZIER, JR., First District
WALTER V. SHIPLEY, Second District
WALTER E. DALLER, JR., Third District
FRANK V. CAHOUET, Fourth District
RICHARD G . TILGHMAN, Fifth District
CHARLES E. RICE, Sixth District
Secretary Emeritus
Co-Secretary
KORSVIK, Co-Secretary
HERBERT V. PROCHNOW,
JAMES ANNABLE,
WILLIAM J.
A81
CONSUMER
ADVISORY
COUNCIL
KATHARINE W. MCKEE, Durham, North Carolina, Chairman
JULIA M . SEWARD, Richmond, Virginia, Vice Chairman
ERROL T. LOUIS, Brooklyn, New York
WILLIAM N. LUND, Falmouth, Maine
RONALD A. PRILL, Minneapolis, Minnesota
LISA RICE-COLEMAN, Toledo, Ohio
JOHN R . RINES, Detroit, Michigan
MARGOT SAUNDERS, Washington, D.C.
ANNE B. SHLAY, Philadelphia, Pennsylvania
REGINALD J. SMITH, Kansas City, Missouri
GEORGE P. SURGEON, Arkadelphia, Arkansas
GREGORY D. SQUIRES, Milwaukee, Wisconsin
JOHN E . TAYLOR, Washington, D.C.
LORRAINE VANETTEN, Troy, Michigan
THEODORE J. WYSOCKI, JR., Chicago, Illinois
LILY K. YAO, Honolulu, Hawaii
RICHARD S. AMADOR, LOS Angeles, California
THOMAS R. BUTLER, Riverwoods, Illinois
ROBERT A. COOK, Baltimore, Maryland
ALVIN J. COWANS, Orlando, Florida
ELIZABETH G . FLORES, Laredo, Texas
HERIBERTO FLORES, Springfield, Massachusetts
EMANUEL FREEMAN, Philadelphia, Pennsylvania
DAVID C. FYNN, Cleveland, Ohio
ROBERT G . GREER, Houston, Texas
KENNETH R. HARNEY, Chevy Chase, Maryland
GAIL K . HILLEBRAND, San Francisco, California
TERRY JORDE, Cando, North Dakota
FRANCINE JUSTA, New York, New York
EUGENE I. LEHRMANN, Madison, Wisconsin
THRIFT
INSTITUTIONS
ADVISORY
DAVID
COUNCIL
E . LEE BEARD, Hazleton, Pennsylvania, President
F. HOLLAND, Burlington, Massachusetts, Vice President
BARRY C. BURKHOLDER, Houston, Texas
MICHAEL T. CROWLEY, JR., Milwaukee, Wisconsin
GEORGE L. ENGELKE, JR., Lake Success, New York
DOUGLAS A. FERRARO, Englewood, Colorado
BEVERLY D . HARRIS, Livingston, Montana
CHARLES R. RINEHART, Irwindale, California
JOSEPH C. SCULLY, Chicago, Illinois
RONALD W. STIMPSON, Memphis, Tennessee
LARRY T. WILSON, Raleigh, North Carolina
WILLIAM W. ZUPPE, Spokane, Washington
A82
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A83
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168. THE ECONOMICS OF THE PRIVATE EQUITY MARKET, b y
Gregory E. Elliehausen and John D. Wolken. September
1990. 35 pp.
George W. Fenn, Nellie Liang, and Stephen Prowse. November 1995. 69 pp.
161. A REVIEW OF CORPORATE RESTRUCTURING ACTIVITY,
1 9 8 0 - 9 0 , by Margaret Hastings Pickering. May 1991.
169. BANK MERGERS AND INDUSTRYWIDE STRUCTURE, 1 9 8 0 - 9 4 ,
21pp.
162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM MORTGAGE LOAN RATES IN TWENTY CITIES, by Stephen A .
Rhoades. February 1992. 11 pp.
by Stephen A. Rhoades. February 1996. 32 pp.
A84
Maps of the Federal Reserve System
1
MMMMg^J
MINNEAPOLIS
12
•
WMSMBBBB.
—
^
W
A
^
•
l l p l l II
I
I
i
CHICAGO •
A
^
^
CLEVELAND
10 .
SAN FRANCISCO
4
„
KANSAS CITY H
• NEW YORK
PSLADELPHIA
g
5
RICHMOND
^
ST. LOUIS
O
JM
BO^ON
I!IIIIHISPIS;BSri!:
iiilllillllliilll IIIIIIIH1
11 •
^ATLANTA
DALLAS
ALASKA
HAWAII
LEGEND
Both
pages
• Federal Reserve Bank city
• Board of Governors of the Federal
Reserve System, Washington, D.C.
Facing
page
• Federal Reserve Branch city
—
Branch boundary
NOTE
The Federal Reserve officially identifies Districts by number
and Reserve Bank city (shown on both pages) and by letter
(shown on the facing page).
In the 12th District, the Seattle Branch serves Alaska,
and the San Francisco Bank serves Hawaii.
The System serves commonwealths and territories as
follows: the New York Bank serves the Commonwealth
of Puerto Rico and the U.S. Virgin Islands; the San
Francisco Bank serves American Samoa, Guam, and the
Commonwealth of the Northern Mariana Islands. The
Board of Governors revised the branch boundaries of the
System most recently in December 1991.
A85
1-A
2-B
MA
I
jtf
Buffalo
^
5-E
Baltimore MD
VA
CT
i
VT
NH
4-D
3-C
/
/
/
•
•Cincinnati
I
NY
NJ
CT
NEW YORK
BOSTON
CLEVELAND
PHILADELPHIA
6-F
7-G
RICHMOND
8-H
•Nashville
KY
Birmingham^
*
M
,
" ')
MS
LA
Jacksonville
/
in
Louisville
•Memphis
Little
New Orleans
> Miami
CHICAGO
ATLANTA
9-1
ST. LOUIS
MT
MINNEAPOLIS
10-J
12-L
WY
1w
Omaha*
lu
Denver
KS
^
MO
ALASKA
W A
•
Seattle
Oklahoim City
Portland
OK
OR
)
KANSAS CITY
D>
N V L
11-K
U
Salt iSke City
K
(
GJGG
•T os Anp
HAWAII
*
AZ
DALLAS
SAN FRANCISCO
A86
Federal Reserve Banks, Branches,
and Offices
FEDERAL RESERVE BANK
Zip
branch, or facility
Chairman
Deputy Chairman
President
First Vice President
BOSTON*
02106
Jerome H. Grossman
William C. Brainard
Cathy E. Minehan
Paul M. Connolly
NEW YORK*
10045
John C. Whitehead
Thomas W. Jones
Joseph J. Castiglia
William J. McDonough
Ernest T. Patrikis
Buffalo
14240
Carl W. Turnipseed 1
PHILADELPHIA
19105
Donald J. Kennedy
Joan Carter
Edward G. Boehne
William H. Stone, Jr.
CLEVELAND*
44101
Jerry L. Jordan
Sandra Pianalto
Cincinnati
Pittsburgh
45201
15230
A. William Reynolds
G. Watts Humphrey, Jr.
John N. Taylor, Jr.
John T. Ryan III
RICHMOND*
23219
J. Alfred Broaddus, Jr.
Walter A. Varvel
Baltimore
Charlotte
Culpeper
21203
28230
22701
Claudine B. Malone
Robert L. Strickland
Michael R. Watson
James O. Roberson
Hugh M. Brown
Daniel E. Sweat, Jr.
Donald E. Boomershine
Joan D. Ruffier
R. Kirk Landon
Paula Lovell
Lucimarian Roberts
Jack Guynn
Patrick K. Barron
Robert M. Healey
Lester H. McKeever, Jr.
Florine Mark
Michael H. Moskow
William C. Conrad
John F. McDonnell
Susan S. Elliott
Janet M. Jones
John A. Williams
John V. Myers
Thomas C. Melzer
W. LeGrande Rives
Jean D. Kinsey
David A. Koch
Lane W. Basso
Gary H. Stern
Colleen K. Strand
Herman Cain
A. Drue Jennings
Peter I. Wold
Barry L. Eller
LeRoy W. Thorn
Thomas M. Hoenig
Richard K. Rasdall
Cece Smith
Roger R. Hemminghaus
Patricia Z. Holland-Branch
Issac H Kempner III
Carol L. Thompson
Robert D. McTeer, Jr.
Helen E. Holcomb
Judith M. Runstad
James A. Vohs
Anita E. Landecker
Ross R. Runkel
Gerald R. Sherratt
George F. Russell, Jr.
Robert T. Parry
John F. Moore
ATLANTA
Birmingham
Jacksonville
Miami
Nashville
N e w Orleans
30303
35283
32231
33152
37203
70161
CHICAGO*
60690
Detroit
48231
ST. LOUIS
63166
Little Rock
Louisville
Memphis
72203
40232
38101
MINNEAPOLIS
55480
Helena
K A N S A S CITY
Denver
Oklahoma City
Omaha
DALLAS
El Paso
Houston
San Antonio
S A N FRANCISCO . . . .
Los Angeles
Portland
Salt Lake City
Seattle
59601
64198
80217
73125
68102
75201
79999
77252
78295
94120
90051
97208
84125
98124
Vice President
in charge of branch
Charles A. Cerino 1
Harold J. Swart 1
William J. Tignanelli 1
Dan M. Bechter 1
Julius Malinowski, Jr.2
James M. Mckee 1
Fred R. Herr 1
James D. Hawkins 1
James T. Curry III
Melvyn K. Purcell
Robert J. Musso
David R. Allardice 1
Robert A. Hopkins
Thomas A. Boone
John P. Baumgartner
John D.Johnson
Carl M. Gambs 1
Kelly J. Dubbert
Harold L. Shewmaker
Sammie C. Clay
Robert Smith, III 1
James L. Stull 1
Mark Mullinix 1
Raymond H. Laurence 1
Andrea P. Wolcott
Gordon Werkema 3
•Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; East Rutherford, New Jersey 07016; Jericho,
New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311;
Des Moines, Iowa 50306; Indianapolis, Indiana 46204; Milwaukee, Wisconsin 53202; and Peoria, Illinois 61607.
1. Senior Vice President.
2. Assistant Vice President.
3. Executive Vice President
Publications of Interest
FEDERAL RESERVE CONSUMER CREDIT PUBLICATIONS
The Federal Reserve Board publishes a series of pamphlets covering individual credit laws and topics, as
pictured below.
Three booklets on the mortgage process are available:
A Consumer's Guide to Mortgage Lock-Ins, A Consumer's Guide to Mortgage Refinancings, and A Consumer's
Guide to Mortgage Settlement Costs. These booklets
were prepared in conjunction with the Federal Home
Loan Bank Board and in consultation with other federal
agencies and trade and consumer groups. The Board
also publishes the Consumer Handbook to Credit Protection Laws, a complete guide to consumer credit protections. This forty-four-page booklet explains how to
shop and obtain credit, how to maintain a good credit
rating, and how to dispute unfair credit transactions.
A Consumer's
Guide to
Mortgage
Lock-Ins
Shop . . . The Card You Pick Can Save You Money is
designed to help consumers comparison shop when
looking for a credit card. It contains the results of the
Federal Reserve Board's survey of the terms of credit
card plans offered by credit card issuers throughout the
United States. Because the terms can affect the amount
an individual pays for using a credit card, the booklet
lists the annual percentage rate (APR), annual fee, grace
period, type of pricing (fixed or variable rate), and a
telephone number for each card issuer surveyed.
Copies of consumer publications are available free
of charge from Publications Services, Mail Stop 127,
Board of Governors of the Federal Reserve System,
Washington, DC 20551. Multiple copies for classroom
use are also available free of charge.
A fiWMWMNNftl
Business
Credit
for W o m e n ,
Minorities, and
Small Businesse
SHOP
The Card You Pick
Can Save You Money
Publications of Interest
FEDERAL
RESERVE REGULATORY
SERVICE
To promote public understanding of its regulatory functions, the Board publishes the Federal Reserve Regulatory Service, a four-volume loose-leaf service containing all Board regulations as well as related statutes,
interpretations, policy statements, rulings, and staff
opinions. For those with a more specialized interest in
the Board's regulations, parts of this service are published separately as handbooks pertaining to monetary
policy, securities credit, consumer affairs, and the payment system.
These publications are designed to help those who
must frequently refer to the Board's regulatory materials. They are updated monthly, and each contains citation indexes and a subject index.
The Monetary Policy and Reserve Requirements
Handbook contains Regulations A, D, and Q, plus
related materials.
The Securities Credit Transactions Handbook contains Regulations G, T, U, and X, dealing with extensions of credit for the purchase of securities, together
with related statutes, Board interpretations, rulings,
and staff opinions. Also included are the Board's list
of marginable OTC stocks and its list of foreign margin
stocks.
The Consumer and Community Affairs Handbook
contains Regulations B, C, E, M, Z, AA, BB, and DD,
and associated materials.
GUIDE
TO THE FLOW OF FUNDS
ACCOUNTS
A recent Federal Reserve publication, Guide to the Flow
of Funds Accounts, explains in detail how the US.
financial flow accounts are prepared. The accounts,
which are compiled by the Division of Research and
Statistics, are published in the Board's quarterly Z.l
statistical release, "Flow of Funds Accounts, Flows and
Outstandings." The Guide updates and replaces Introduction to Flow of Funds, published in 1980.
The 670-page Guide begins with an explanation of
the organization and uses of the flow of funds accounts
and their relationship to the national income and
product accounts prepared by the U.S. Department of
Commerce. Also discussed are the individual data
series that make up the accounts and such proce-
The Payment System Handbook deals with expedited
funds availability, check collection, wire transfers, and
risk-reduction policy. It includes Regulations CC, J, and
EE, related statutes and commentaries, and policy
statements on risk reduction in the payment system.
For domestic subscribers, the annual rate is $200 for
the Federal Reserve Regulatory Service and $75 for
each Handbook. For subscribers outside the United
States, the price including additional air mail costs is
$250 for the Service and $90 for each Handbook.
The Federal Reserve Regulatory Service is also available on diskette for use on personal computers. For a
standalone PC, the annual subscription fee is $300. For
network subscriptions, the annual fee is $300 for 1 concurrent user, $750 for a maximum of 10 concurrent
users, $2,000 for a maximum of 50 concurrent users,
and $3,000 for a maximum of 100 concurrent users.
Subscribers outside the United States should add $50
to cover additional airmail costs. For further information, call (202) 452-3244.
All subscription requests must be accompanied by a
check or money order payable to the Board of Governors of the Federal Reserve System. Orders should be
addressed to Publications Services, mail stop 127, Board
of Governors of the Federal Reserve System, Washington, DC 20551.
dures as seasonal adjustment, extrapolation, and
interpolation.
The balance of the Guide contains explanatory tables
corresponding to the tables of financial flows data that
appeared in the September 1992 Z.l release. These
tables give, for each data series, the source of the data or
the methods of calculation, along with annual data for
1991 that were published in the September 1992 release.
Guide to the Flow of Funds Accounts is available for
$8.50 per copy from Publications Services, Board of
Governors of the Federal Reserve System, Washington,
DC 20551. Orders must include a check or money order,
in U.S. dollars, made payable to the Board of Governors
of the Federal Reserve System.
@FedFRASER