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Department of the Treasury
PRESS RELEASES
The following number was not used:
2853
* Numbers 2722- 2728 are on the September list
DEPARTMENT
OF
THE
TREASURY
NEWS
TREASURY
OFFICE OF PUBUC AFFAIRS. 1500 PENNSYLVANIA AVENUE, N.W .• WASHINGTON, D.C.• 20220. (202) 622-2960
Contact Maria Ibanez
(202) 622-2960
EMBARGOED UNTIL 10:30 AM EDT
October 1, 1998
u.s. AND U.K. TO NEGOTIATE NEW INCOME TAX TREATY
The United States and the United Kingdom have scheduled negotiations of a new income
tax treaty in Washington in January, 1999. A new treaty would replace the treaty currently in
force between the two countries, which has been in effect since 1975 The two Governments
have decided that the current treaty needs to be modernized to take account of developments in
both countries' tax systems and policies since then.
The Treasury Department invites comments from the public regarding the upcoming
negotiations. Persons wishing to comment on the proposed treaty are invited to send their written
comments to Joseph H. Guttentag, Deputy Assistant Secretary (International Tax Affairs), Room
1334 Main Treasury, Washington DC 20220. They may also submit comments by fax to (202)
622-0605, or by e-mail toJosephGuttentag({{~treas.sprint.com
-30RR-2721
Far press releases, speeches, public schedules and official biographies, call Ollr 24-hollr fax line at (202) 622-2040
D E P,A R T MEN T
TREASURY
O,F
T ,R E
T REA'S U R Y
NEWS
omCE OF PUBUCAFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622-2960
EMBARGOED UNTIL 1:00 p,m, EDT
Text as Prepared for Delivery
October 1, 1998
TREASURY SECRETARY ROBERT E. RUBIN RElVlARKS TO
THE DOW JONES/w ALL STREET JOURNAL
ANNUAL CONFERENCE ON THE AMERICAS
NEWYORK,NY
I would to thank Peter Kann for that introduction, and Dow Jones and The Wall Street
Journal for hosting this conference, and for inviting me to speak with you today,
I would like to focus my remarks today on a topic of immense importance not only to the
nations of the Americas, but also the rest of the world: the urgent need to adapt and reform the
international financial system for the 21 st century, The backdrop for my discussion is the global
financial crisis, which erupted in Thailand over a year ago, spread throughout Asia, and to Russia,
and now threatens to spread to Latin America, This crisis has presented unprecedented and
enormously complex challenges to the international financial system created fifty years ago;
clearly the time has come to build a stronger system better suited for the challenges of the everchanging modern global economy, And it is a challenge that will be a focus of this weekend's
meetings of the Group of Seven industrialized nations, next week's meeting of the group of G-7
and emerging market economies, and next week's Annual Meetings of the World Bank and
International Monetary Fund, Today I would like to discuss the approach of the United States to
these issues and areas where we believe we must take action,
Any discussion of changes to the global financial system should be, from my perspective,
grounded in a fundamental belief that a market-based global economic system, based on the
relatively free flow of goods, services and capital between nations around the world, will best
promote global economic well being in the decades ahead This system has been embraced by an
increasing number of nations over recent years, and has produced enormous gains in human
welfare The enormous increases in trade and cross border capital flows have very much
contributed to our own economic well-being, and contributed even more to emerging markets, as
great flows of investment capital have helped lift millions of people out of poverty Despite the
RR-2729
For press releases, speeches, public schedules and official biographies, call our 2-1-hollr fax line at (202) 622-2(J...10
recent crisis, most emerging markets across the globe -- in Latin America, Asia and Eastern
Europe -- are far better ofT today than before they embraced the global market-based system. For
example, even with the recent crisis, real per capita incomes in Korea and Thailand are, about 60%
higher than ten years ago.
However, I also believe that the global economy cannot live with the kinds of vast and
systemic disruptions that have occurred over the last year. We must address this challenge in
both the short and long-term.
In the short-term, the international community has worked aggressively to face the
immediate tasks of limiting the damage from what is generally viewed as one of the most serious
financial challenges of the last 50 years and helping the affected emerging markets return to
stability and growth.
I believe the International Monetary Fund -- around which much of this effort has been
centered -- has, on the whole, made sensible policy judgements in the face of complex and in
many ways unprecedented challenges. And the IMF has adjusted those judgements as
circumstances have warranted. The industrialized nations have worked in many ways to support
this strategy, in conjunction with the IMF and the World Bank, and bilaterally. The President has
now advocated in his recent speech moving forward in several other areas Included in these is a
recognition that the balance of risk has shifted, as the G-7 Finance Ministers and Central Bank
Governors stated on the day the President spoke. He also emphasized there is no doubt that we
have much work to do in response to the current crisis. This crisis, as I have said, developed over
many years, and in my view the world is going to have to work through these problems for some
time to come.
For the long term, this crisis illustrates how, while free markets bring enormous benefits,
there are also accompanying problems that markets themselves cannot solve. Dealing with the
problems that markets alone cannot solve is essential to help maintain and expand the free market
system. This was the logic behind the reforms and financial regulatory structure the United States
instituted for domestic markets in the 1930s: the Securities and Exchange Commission; laws
against manipulation; disclosure requirements; and a whole range of other measures, so that our
nation could receive the benefits of open capital markets with the accompanying problems greatly
moderated. At the same time, the United States began the introduction of deposit insurance,
which helped to strengthen confidence in our banking system.
Similarly, the international community is now working toward reforming the global
financial architecture to reduce the frequency and severity of financial instability in the future and,
when instability occurs, to deal with it more efTectively The international community launched a
renewed effort at the 1994 G-7 leaders meeting in Naples At that time, President Clinton,
recognizing that we needed a global financial architecture commensurate with greatly changed
conditions, called for a review of the existing system. Out of that came a series of reforms
adopted at the 1995 G-7 leaders meetings which have been referred to as the Halifax initiatives
2
Six months ago, we expanded on that effort to involve the Finance Ministers and Central Bank
Governors from the G- 7 and key emerging markets to look toward broader and deeper measures.
At that time, the United States laid out a number of proposals in three broad areas for Jhe group
to consider. Now, in a meeting on October 5th, reports reflecting the work of 22 countries will
be presented suggesting concrete steps and proposals for future work to improve transparency,
strengthen country financial systems, and improve management of international financial crises
with private sector involvement.
Now we need to implement the recommendations, move forward on those complex issues
that have not been fully resolved, and, extend the reach of reform to other areas, as President
Clinton said in his speech last month. We must create a modern framework for the global markets
of the 21 st century, though doing so will not be easy or quick, in order to improve and retain the
market-based system that will best promote future global economic well being.
To begin to accomplish these purposes, we need to understand that the responsibility for
these crises does not lie in the emerging markets alone. A combination of factors underlie the
crisis of the last year: the dramatic changes in the global financial markets in recent decades; the
basic dynamics of markets; and the ill-discipline of creditors and investors in the industrial nations,
as well as the macroeconomic imbalances and the flawed financial systems in a number of
emerging market economies.
First, the emerging market economies Although circumstances differ in each of the
nations that have been enveloped in crisis, many shared a problem of underdeveloped and in some
cases badly flawed and poorly regulated financial systems and other structural problems. One key
problem was that banks and corporations in those countries borrowed too much in foreign
currency on a short term basis. In addition, banks in many cases extended credit on an unsound
basis, often as a result of government-directed lending or, non-arms length relationships between
creditors and borrowers Moreover, many of these countries had very serious macroeconomic
imbalances and exchange rate problems. Thus these countries were more vulnerable to excess
injections of outside capital.
Second, the backdrop of dramatic changes in global financial markets in the last three
decades. I began working in these markets in 1966 and I experienced firsthand those changes
Over the last 30 years, global capital flows have increased exponentially. The amount of money
that crosses a trader's desk is enormously greater today then when I left Wall Street six years ago
to say nothing often or twenty years ago, or fifty years ago when the Bretton Woods institutions
were created The speed of flows as a result of changes in technology has vastly increased. So
has the diversity of capital providers. Thirty years ago, providers were almost all banks; today
there are all sorts of providers, from mutual funds to endowments There are also a great variety
of investment instruments, from plain vanilla bonds and stocks to immensely complex derivatives.
Moreover, a very large numbers of developing countries have more recently received large flo\vs
of capital, while 20 or 30 years ago significant capital was going to far fewer emerging market
countries. Anyone of these changes would have been highly consequential. All together, they
have been revolutionary.
But the third major contributing factor was something that has not changed over time -the basic dynamics of markets, and in particular their tendency to go to extremes. This has been a
subject of enormous attention back through the centuries during other famous global crises -such as the Tulip Crisis in Holland in the 17th century, or the South Sea Bubble crisis of the 18th
century, and the Depression of the 1930s. The dynamics of markets, as a very wise man said to
me early in my years on Wall Street, are rooted in the human psyche.
Taken together, this combination of flawed economies, changes in the international
markets and the unchanging human psyche underlying markets helped produce the crisis of the
last year. The crisis did not begin in Thailand, as is often said; Thailand was simply the first
country in which these factors combusted.
I have seen this many times in the course of my career. As creditors and investors in
industrialized countries sought returns during a prosperous market era where spreads
progressively narrowed and risk premium shrunk, they reached for yields and paid less and less
attention to risk -- a common phenomenon during good times. As evidence, just look at the low
level of risk premiums across almost all assets going back a year or two. This included extending
more and more credit to, and investing more and more in, emerging markets in amounts not
justified by the underlying fundamentals.
When you look at all of this, one thing is clear. had the circumstances in the countries
been sounder, or capital flows been less excessive, there would have been problems, but not of the
size and scale that resulted in the current crisis.
From the first eruption in Thailand we said there was some chance that this crisis could
spread across the region and beyond, to envelop an ever increasing number of countries, which
has, of course, happened. We are now seeing this in Latin America, where while much remains to
be done, major nations have made great progress in the last ten years in dealing with
macroeconomic and structural issues. Just as capital once flowed into emerging market countries
without, in too many instances, due regard for proper analysis and weighting of risks, it is now
too often flowing out in a non-discriminatory, overly negative reaction to the fundamentals And
that is leading to a contagion effect in Latin America that is, in my judgement, incommensurate
with the accomplishments of economic policy regimes in many Latin American nations
A good example is Brazil, which has made important strides since President Cardoso
launched the real plan in 1994, helping to end inflation, privatizing key sectors of the economy,
and achieving many other structural reforms While all countries have challenges they need to
meet, President Cardoso's commitment last \veek to accelerate reforms in this time of financial
market turbulence is a next critical step As I said at the time, the United States believes that the
economic well-being of Brazil is critically important not only to our economy, but to the entire
hemisphere. And we are in close consultation with Brazil and the international community about
what we can do to be helpful.
Let me now turn to the long-term -- and the major foundation pieces for the architecture
of the global financial system of the future. Before we consider these long term changes, we must
remember two critical points: first, that this subject be approached with great seriousness of
purpose, and second, that everyone with a stake in the process must do their part.
First, let me say a word about the need for seriousness. In recent months, there has been
no shortage of proposals that on the surface seem attractive. But what is needed with each
proposal is a rigorous analysis and evaluation of all so that serious judgments can be made and the
resulting blueprints and plans can stand the test of time. Moreover, as important as
accomplishing what needs to be done is avoiding what should not be done.
Second, going forward, everyone with a stake in the process -- from governments in both
emerging markets and industrialized nations, to creditors and investors, and to the international
financial institutions -- must do their part. Each of these players will have different responsibilities.
For their part, as the international financial institutions help countries change, they must
also change themselves. I have no doubt that they will be very different institutions in five years
time: more transparent; more open; and more accountable. The IMF and the World Bank must
also examine their programs and policies and change them where needed. For example they must
work harder on providing adequate social support and on reinforcing good governance and
reinforcing political commitment to reform And, I might add, we in the United States must
fulfill our responsibility -- and provide the funding that the President has requested for the IMF.
The international community must have the resources that it needs to deal with this crisis that has
spread to so many emerging economies and threatens the economic well being of the American
people.
The industrialized nations, both individually and as a group, also have significant
responsibilities. Because policy shortcomings in the major industrial economies affect all nations
in the global economy, we must act to maintain stability and growth in our own economies as a
source of strength for the rest of the world In the 1980's and early 1990's, it was the enormous
fiscal deficit of the United States that posed the greatest danger to global economic growth
Going forward today, Japan must urgently implement strong effective measures to lead to
strong, sustained demand led growth, critical not only for its own benefit, but also for recovery
from the global crisis. In the future, industrial nations must work together so that each country
fulfills its responsibilities to promote sound policies and sustain growth. The interdependence of
our economics, and of all members of our global economy, makes this imperative
I also believe that it is in the enlightened self-interest of the industrial nations to greatly
increase international support to help build the foundations of private sector-based economies in
5
developing countries. Developing nations with better education, worker protections, health care,
stronger legal systems and good governance regimes will be better markets for all of us -- and
they will be better able to withstand the vicissitudes of global financial markets. As w~ move
forward, let us not forget about the countries most in need of assistance through programs such as
RIPe. These steps will not be easy politically, but the leaders of the industrial nations, in both the
public and private sectors, must lead their own people to support strong international economic
policy.
Finally, the emerging market economies must also do their part. The greatest challenge for
these countries is to pursue sound macroeconomic policies and implement the reforms necessary
to regain stability and growth. The present crisis has demonstrated yet again that reform can only
work, and confidence thereby be created, in countries that take the political steps to build support
for and then implement reform. Building support for reform is undeniably difficult, but, as the
events of the past year in Indonesia and Russia have so amply demonstrated, the politics of reform
are as important as the policies of reform. In nations where political will and economic reform
have gone hand in hand, such as Korea and Thailand, we are now seeing some progress toward
recovery.
I have thus far discussed a number of central components of a future architecture -reforms of the Uv'fF and the other international financial institutions, G-7 efforts to promote
sound policies and growth, and increased support to help build the foundations of private sectorbased economies in developing countries. Another critical issue is exchange rate regimes. There
is a much controversy about the relative merit of floating versus fixed regimes, but there should be
no controversy -- looking at the experience of recent years -- that whatever regime a nation
chooses, it must be committed to all the policies that are needed to maintain it. Another area
whose importance for the long-term architecture has been reinforced by this crisis is effective
social safety nets and humanitarian aid. As President Clinton said in his recent speech, "If we
want these countries to do tough things, we have to protect the most defenseless people in the
society and we have to protect people who get hurt when they didn't do anything wrong." We-the international community -- must move forward on all these areas.
Let me now outline four additional concrete, mutually reinforcing areas for action. They
are: (1) increased openness in the international financial system; (2) strengthened national
financial systems, particularly in emerging market economies; (3) promotion in industrial nations
of more soundly based capital flows; and (4) developing new ways to respond to crises, including
greater participation by the private sector.
First, a new openness in international finance There are two parts to this challenge
making information more available, and making sure it is used \vell The Working Group report
on transparency and accountability released next week will call for the IMF to examine and
broadly publicize countries' adherence to international standards of transparency -- both of data
and, more broadly, of fiscal and monetary policy. As I have already mentioned, the IMF itself
also needs to be more transparent. The report will further call for international agreements on
6
higher accounting and disclosure standards for private financial institutions -- including sound
practices for loan evaluation, loan-loss provisioning and credit risk disclosure. And it will
recommend private and official sector efforts to look at appropriate disclosure of international
exposures of all types of financial institutions, including hedge funds. As I announced last week,
the President's Working Group on Financial Markets will prepare a careful analysis of these firms
and their practices in the United States.
Second, strengthened national financial systems, focusing on better operation,
management and regulation of recipients of capital in emerging markets. The Working Group's
interim report on this subject will outline new standards and principles for corporate governance,
bank restructuring, deposit insurance, and foreign exchange and interest rate risk management.
Now we are moving forward on ways to support countries' efforts to implement these standards
and to provide incentives for those efforts to be significant. For example, the international
community is supporting a stepped-up financial sector capability at the international financial
institutions, anchored at the IMF. This effort will include greater training for supervisors of
financial institutions. We in the United States are also pressing for new ways for the private
sector to help implement sound market practices, including surveillance -- such as through an
accreditation system for national bank supervisors.
Third, promoting more soundly-based capital flows. The need is for measures that will
effectively encourage providers of portfolio capital and banks to analyze and weigh risks and
rewards in a more disciplined fashion in both good times and bad. Market discipline -- which is
central to a market-based economy encouraging sound policy and allocating capital efficiently -only works if market participants act with discipline. Toward this end, we in the industrialized
countries must provide better regulation and supervision -- including more effective focus on risk
management systems in financial institutions -- and strong prudential standards that pay attention
to the riskiness of different types of investment, through a broad range of financial institutions, not
merely banks. In addition, improved transparency in the financial sectors of emerging markets can
provide investors with information they need to weigh risks, and thereby facilitate market
discipline.
In taking such steps, however, we must avoid actions that may offer short-term relief but
create permanent damage in developed and emerging market countries. While instituting broad
controls on capital outflows, for example, is tempting, they will almost surely not be effective
over time, will deter capital from flowing into a country, and will often tend to be used as a
substitute for real reform. More effective regulation and supervision will be an important part of
preventing future crises and realizing the potential of the global economy But appropriate
regulation of capital markets is one thing, wholesale distortions of them is quite another.
Some say that a special problem is posed by short term speculative capital that in very
large amounts can de-stabilize exchange rates and may even be intentionally used to do so. My
own view is that these \·ery short-term speculative capital t10ws have played a relatively small part
of what >~'.;Jpened in the current crisis, although on an individual day in individual currencies
7
effects may have been significant. Ifeverything else is working right, the ability of this capital to
promote sustained de-stabilization is probably quite limited. However, this issue warrants
additional consideration.
Fourth and finally, responses to crises must include appropriate private sector involvement
and new financing mechanisms to combat contagion. During the current crisis, the international
community has provided assistance conditioned on reform to deal with the problems that gave rise
to the crisis and to create the confidence necessary to attract capital again. And as we recognized
in Korea, in a world where private capital flows dwarf official ones, the private sector must play
its part.
Looking ahead, private sector burden sharing is critical, not only because there will not be
sufficient official money for all circumstances, but also because it is absolutely essential in
inducing market discipline and, lessening the so-called moral hazard issue. In the past -- when
the volume of capital flows was much smaller and when banks accounted for the vast majority of
those flows -- the international community found ways, as, for example, during the 1980s debt
crisis, for the private sector to restructure and where necessary reduce debt burdens, in parallel
with official sector support efforts. Our challenge is to develop new procedures for effective
management of financial difficulties that are suitable to the very different markets we have today,
including the significance of securitized credit provision. Unilateral actions have been seen to be
highly damaging.
The Working Group report on this addresses this exceedingly complicated set of issues. It
calls for concrete reforms to increase the private sector's role in prevention and resolution of
crises, including much-improved insolvency and debtor-creditor regimes and the inclusion of new
creditor coordination clauses in bond contracts among debtors and creditors. As part of the
architecture of the future, we will actively support new forms of private sector involvement,
ranging from the development of innovative financing mechanisms to allow more flexibility in
payments and guard against unexpected shocks, to more direct private sector involvement at
times of crisis with the provision of private liquidity alongside official funds.
Today, we face a key challenge in limiting contagion and promoting an appropriate
recovery of private capital flows For the future architecture, where contagion is the predominant
problem rather than policy issues in the affected country, the emphasis could be on finding new
ways to make liquidity available in ways which do not lead to undue moral hazard effects These
actions will not provide the full change needed on crisis response, but they are important steps in
the development of more permanent change. I believe that these changes will contribute
significantly to the financial architecture of the future with respect to crisis response.
Our belief in markets stems partly from the capacity of markets to discipline governments
to pursue the right policies for solid growth Our goal should be a strong market-based financial
architecture which induces sound decision-making by investors, encourages capital to be used
productively, and rewards governments that pursue sound policies I believe that, with all of the
8
steps I have discussed today -- with reforms of the IMF and other international financial
institutions, with industrialized countries all working together to pursue sound policies; with
intensified support for the countries in crisis and for the poorest nations, and with the concrete
reforms to increase transparency, strengthen financial systems, promote soundly-based capital
flows and improve the response to crises -- with all these steps, we will make enormous headway
toward building that kind of system.
Let me conclude by stating that together we must move energetically to meet the
immediate challenges of the crisis and to build a modern architecture for a market-based system -one that is far less susceptible to systemic instability and more fully able to help us realize the
potential of the global economy for the next century.
\Ve need to be bold in our thinking, but equally we need to be serious in our thinking.
Thank you very much.
-30-
9
NEWS
TREASURY
OFFICE Olf PUDLIC AFFAIRS -1500 PENNSYLVANIA AVENUE, N. W.• WASHINGTON, D.C.- 2022/1- (202) 622·2960
CONTACT:
EMBARGOED UNTIL 2: 3 0 P. M•
October 1, 1998
Office of Financing
202/219-3350
TREASURY OFFERS 13-WEEK AND 26-WEEK BILLS
The Treasury will auction two series of Treasury bills totaling
approxLmately $16,000 ~llion to refund $13,025 million of publicly held
securities maturing october 8, 1998, and to raise about $2,975 million of new
cash.
In addition to the public holdings, Federal Reserve Banks for their own
accounts hold $6,569 million of the maturing bills, which may be refunded at
the weighted average discount rate of accepted competitive tenders. kmounts
issued to these accounts will be in addition to the offering amount.
The maturing bills held by the public include $2,093 million held by
Federal Reserve Banks as agents for foreign and international monetary authorities, which may be refunded within the offering amount at the weighted average
discount rate of accepted competitive tenders. Additional amounts may be issued
for such accounts if the aggregate amount of new bids exceeds the aggregate
amount of maturing bills.
Tenders for the bills will be received at Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington, D.C. This offering
of Treasury securities is governed by the terms and conditions set forth in the
Uniform Offering Circular (31 CFR Part 356, as amended) for the sale and issue
by the Treasury to the public of marketable Treasury bills, notes, and bonds.
Details about each of the new securities are given in the attached offering
highlights.
000
Attachment
RR-2730
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HIGHLIGHTS OF TREASURY OFFERINGS OF BILLS
TO BE ISSUED OCTOBER 9, 1998
October I, 1998
Offering knount . . • . . . . • • . . . . . . . . . . . . . . . . $8, 000 million
Description of Offering:
Term and type of security . . . . . . . . . . . . . . . 91-day bill
CUSIP number . . . . . . . . . . . . • • . . . . . . . . . . . . . . 912795 BS 9
Auction date . . . . . . . . . . . . . . . . . . . . . . . . . . . . October 5, 1998
Issue date . . . . . • . . . . . • . . . . . . . • . . . . . . . . . . October 8, 1998
Maturity date . . . . . . . . . . . . . . . . . . . . . . . . . . . January 7, 1999
Original issue date . . . . . . . . . . . . . . . . . . . . . January 8, 1998
Currently outstanding . . . . . . . . . . . . . . . . . . . $30,018 million
loSinimwn bid amount and mul tiples . . . . . . . . $1, 000
$8,000 million
182-day bill
912795 BO 5
October 5, 1998
October 8, 1998
.April 8, 1999
october 9, 1998
- - $1,000
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids . . . . . . . . . . Accepted in full up to $1,000,000 at the average discount rate of
accepted competitive bids.
Competitive bids . . . . . . . . . . . . . (1) Must be expressed as a discount rate with three decimals in
increments of .005\, e.g., 7.100%, 7.105%.
(2) Net long position for each bidder must be reported when the sum
of the total bid amount, at all discount rates, and the net long
position is $1 billion or greater.
(3) Net long position must be determined as of one half-hour prior
to the closing time for receipt of competitive tenders.
Maximum Recognized Bid
at a Single yield ..... : ...... 35% of public offering
Maximum Award . . . . . . . . . . . . . . . . . . . 35% of public offering
Receipt of Tenders:
Noncompetitive tenders ......• Prior to 12:00 noon Eastern Daylight Saving time on auction day
Competitive tenders ........•• Prior to 1:00 p.m. Eastern Daylight Saving time on auction day
Payment Terms . . . . . . . . . . . . . . . . . . . By charge to a funds account at a Federal Reserve Bank on issue date,
or payment of full par amount with tender.
Treasury Direct customers
can use the Pay Direct feature which authorizes a charge to their
account of record at their financial institution on issue date.
o
EPA R T 1\1 E N T
() F
THE
T REA SUR Y
NEWS
omCE OFPUBUCAFFAIRS e1500PENNSYLVANlAAVENUE, N.W. - WASIDNGTON, D.C.- %0%%0 - (202) 622-2960
EMBARGOED FOR RELEASE UNTIL 6:00 p.m. EDT
T ext as Prepared for Delivery
October I, 1998
"THE GLOBAL ECONOMIC SITUATION AND THE UNITED STATES' APPROACH"
DEPUTY TREASURY SECRETARY LAWRENCE H. SUMMERS
REMARKS TO THE WORLD ECONOMIC DEVELOPMENT CONGRESS
WASHINGTON, DC
Last October the international community was in Hong Kong for the Annual World Bank and
IMF meetings and the discussion was about the collapse of the Thai baht and the potential spread
of financial problems around East Asia. One year on, the setting for the meetings is Washington
and the concerns are global.
The problems of Thailand spread rapidly to neighboring East Asian economies, and in recent
months to Russia and to some extent Latin America. The situation has in turn worsened, and
been worsened by, a further deterioration in conditions in Japan, which just recorded a third
consecutive quarter of negative growth and is facing the largest problems in its banking system of
any major industrial economy in recent memory.
I would like to spend most of my time today reviewing the approach we have taken to these crises
and our efforts going forward, along the lines of Congressional testimony that Secretary Rubin,
Chairman Greenspan and I have given in recent weeks.
I. Causes of the Crises
Economists will be debating the causes of these crises for many years to come. But there is
growing agreement on what the important factors were:
•
financial systems that did not channel capital efficiently, were inadequately regulated and
created an illusion of security that could not ultimately be supported;
RR-2731
1
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•
exchange regimes that attracted capital but were not accompanied by the appropriate
macroeconomic policies and created room for speculative pressures;
•
a worsening global economic environment, especially in Asia, due to the evident
economic problems of Japan;
•
difficulties in some countries -- notably Indonesia and Russia -- in carrying out basic
government functions, such as tax collection and bank regulation, with integrity;
•
and substantial reductions in confidence, as investors began to think more and more about
what other investors were thinking and less and about the underlying fundamentals.
Markets' tendency to excess is age old. The transmission mechanisms are not. If the Mexican
peso crisis was the first 21 st century financial crisis, the second has provided an even clearer
illustration of the scope for the new information technologies and financial instruments to act with
unprecedented speed and force. When we have now seen withdrawals of capital of more than 10
percent ofGDP in the case of several of the Asian economies, and a doubling or more of bond
spreads in many disparate markets, it is difficult to believe that the contagion and generalized
flight from risk has not been exaggerated.
Containing these crises is critically important to America's core interests: it is about safeguarding
American jobs, American savings and American national security. Already:
•
exports to the economies in crisis are down by nearly one third, year-on-year and private
forecasters are suggesting that the crises could add one half, or one percentage point to
our current account deficit;.
•
in recent weeks we have seen substantial declines in many companies' access to both the
equity and debt markets and seen some evidence of contractions in bank lending. And for
now, at least, the junk bond market is a thing of the past.
•
and we have been reminded of the potential security consequences of severe financial
problems overseas. One need only consider the potential fall-out from a prolonged
financial crisis in Russia to see that containing these problems -- and preventing them
from festering -- is forward defense of our core interests.
The goal is clear: to contain this crisis and help to restore growth and stability to the economies
already affected. Let me now say a little about the means.
ll. The United States Approach
Our response to this situation has rested on three pillars.
2
First, that no country will recover against a backdrop of regional deflation and weak demand.
Strengthened policy is needed in the major economies of the region to support growth and
confidence:
•
•
•
the United States must continue to do its part, in particular, by preserving the budget
surplus and thus reducing pressure on global capital markets and on our own trade deficit.
as the Chinese have recognized, their continued commitment to addressing their financial
sector problems and to maintaining a stable currency will also be very important;
and Japan, which even today accounts for more than two-thirds of the Asian economy, has
an especially critical role to play. Immediate and effective measures to strengthen the
financial system and strong fiscal action in Japan that provides a substantial and sustained
economic stimulus are urgently needed for Japan to resume the strong domestically-driven
recovery that it needs - and the world has long waited for.
Second, that while the external environment is important and international support can make a
difference, countries shape their own economic destiny. A strong domestic response by the
countries affected is the absolute first step toward restoring stability -- because any amount of
financial support that goes into an economy will flow right back out if policies are unsound and
governments are not credible.
Third, that conditioned international financial assistance can play an important part where policy
makers are committed to reform but need financial breathing space to put reforms in place.
Financial crises have elements of a self-fulfilling prophecy -- like bank runs, everyone expects
failure or everyone expects everyone else to expect failure, leading to a rush to be the first one out
and, thus, failure. Temporary, conditioned support gives countries a bridge to overcome this selffulfilling prophecy and help restore stability. And here the IMF has a critical role.
This crisis is still a moving story. And there is enormous economic and social distress being felt in
the countries worst affected. That is inevitable given the massive withdrawals of private capital
that have occurred. But it is encouraging that in those countries that were first hit and where
policy has been most determined there has been evidence of containment.
Countries that have consistently followed policies that the IMF were able to endorse and support
-- specifically the Philippines, Korea and Thailand -- have begun to see signs of a return to
stability. In Korea and Thailand the currencies have broadly stabilized, nominal interest rates are
down in the low teens, and real interest rates have fallen to well below pre-crisis levels. At the
same time these countries are now working to expand their fiscal policy to use the room provided
by their sound policies for the fastest possible return to growth.
In debating these crises it is vital not to confuse the doctor with the disease. The distress being
seen in Asia are not a consequence ofIMF policies or IMF finance. These are, rather, attempts to
palliate the true cause of the distress: the withdrawal of capital and decline in confidence that led
3
to that withdrawal. In countries such as Indonesia and Russia, where governments did not carry
through on their programs, inflation, interest rates and output losses will certainly be much higher
-- and the return of confidence is now that much more remote.
To be sure, as countries choose their policies and the IMF makes judgments about what types of
programs it is willing to support financially, difficult questions of balance have inevitably arisen
and provoked vigorous debate:
•
on the one hand, there is the legitimate view that structural defects of national economies
relating to crony capitalism need to be addressed. On the other, people have noted that
pushing too hard for large-scale restructuring risks generating a domestic backlash.
•
on the one hand, there has been a concern for exchange rate stability, given what we have
seen can happen when downward spiraling currencies go out of control. On the other,
many will point to the potential costs of raising interest rates significantly at a time when
the banking and broader financial system is seriously strained.
•
one the one hand, there has been the urgent need to provide confidence at a time when
contagion causing large withdrawals of capital and increases in interest rates in emerging
markets. On the other, many have had legitimate concerns about moral hazard and
irresponsible behavior by investors and governments as a result of this support.
These issues of balance will no doubt continue to be debated and there is no guarantee that the
IMF will get it precisely right on every occasion. But the very breadth of disagreement among
critics about what, precisely, was done wrong provides some confidence that in the bulk of cases
the balance was struck right. I have no doubt the situation over the past year would have been
much worse -- with greater devaluations, more defaults, more contagion, and greater trade
dislocations -- without the programs agreed with the IMF and the finance it has provided.
ID. The Way Ahead
Even in Hong Kong we noted that financial strains being felt in Asia could spread and have far
reaching consequences for the rest of the world financial system. And certainly, financial strains
have increased in recent weeks -- to the point where they may present what President Clinton has
called the one of the most serious financial challenges facing the global community in 50 years. In
this context, the President's remarks last month in New York and the G7 finance ministers and
central bank governors' statement released at the same time showed clearly how our joint efforts
should be carried forward:
First, recognizing that with inflation low or falling in most parts of the world, and the consequent
shift in the balance of risk in the global economy, we are working with our G-7 partners in an
enhanced emphasis on implementing policies to promote sustainable global growth. Going
forward:
4
•
it is especially critical that Japan swiftly infuse public money, on a substantial scale with
appropriate conditions, into its banking system. In our judgment this is the only way both
to maintain stability and provide for growth going forward;
•
and for their part, the countries of the European Union, just now emerging from a long
period of relatively slow growth and high unemployment, must also seize the baton of
supporting regional and global growth, with policies aimed squarely at vigorous growth in
European demand.
Second, we are working to reinforce the capacity of the international community to provide
financing to countries that are pursuing sound policies and are nonetheless affected by contagion.
Where contagion is a serious concern the emphasis must be on finding new ways to make liquidity
available and restore confidence that do not raise undue moral hazard effects.
Adequate funding for the IMF is critical to this effort. Yet today the IMF's resources are at
historic lows. And measures that would secure additional funding are still awaiting Congressional
approval. Let me reiterate that at a time when the markets are looking to see if the international
community has the capacity to deal with these crises, continued delay is a risk the United States
can ill afford to run.
Third, alongside the international financial institutions and the countries in the region, we are
looking at ways to accelerate the pace of comprehensive corporate and financial restructuring in
countries where there is a systemic problem -- notably in Asia where the severe indebtedness of
both the financial and corporate system is a serious barrier to recovery and where addressing the
overhang of domestic debt is essential.
Fourth, we are also working with the Multilateral Development Banks to provide increased social
safety nets in the countries in crisis to help the least advantaged citizens in those countries who
are experiencing hardship. As the President said last week, "if we want these countries to do
tough things, we have to protect the most defenseless people in the society and we have to
protect people who get hurt when they didn't do anything wrong."
Finally, we need to give very serious thought to how the global financial system and its
institutions function with respect to preventing and responding to crises such as these. This has
been an important preoccupation since the Naples Summit in 1994 and has as a crucial element
the bringing together of both traditional and newer players on the international financial scene.
Last year, under President Clinton's leadership, we intensified this effort by convening a meeting
in April of a broader grouping of 22 countries, including key developing and emerging economies.
At that meeting, finance ministers and central bank governors created working groups that will be
coming up with concrete proposals early next week. In a speech in New York earlier today
Secretary Rubin outlined some of the most important priorities:
5
•
increased transparency and disclosure: for example, through the implementation by
governments of international standards of transparency, and adherence by private firms to
new international agreements on higher accounting and disclosure standards.
•
strengthened domestic financial systems. As Secretary Rubin discussed, the key here will
be both to provide governments with best practice standards to follow but to provide them
with adequate support and incentive to implement those standards.
•
more effective burden-sharing arrangements in the response to financial difficulties, in
particular by reducing the scope for individual failures to become systemic failures,
through better debtor-creditor and insolvency regimes in emerging economies.
•
and, critically, reform of the international financial institutions. The IMP needs to be more
transparent and accountable for its policies and programs. It needs to be in a position to
deal with these new kinds financial crises, which stem from capital account rather than
trade account problems. Its programs need to make growth the priority. And it needs to be
focused on issues bearing on the safety and sustainability of capital flows.
Working with the rest of the international community we have made progress on all of these
fronts in recent years. The release of the three Working Group reports we will take us even
further toward our long-term goal: a stronger, more stable international financial system. And as
we go forward this effort will continue to be extended and broadened. The number and variety of
proposals for responding to the short and long- term challenges we face is not in question. What
must now be considered carefully is their effectiveness and long-term durability.
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6
DEPARTMENT
TREASURY
OF
THE
TREASURY
NEWS
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASIDNGTON, D.C. - 20220. (202) 622-2960
Text as Prepared for Delivery
October 1, 1998
GENERAL COUNSEL OF THE TREASURY EDWARDS. KNIGHT
REMARKS TO THE AMERICAN COLLEGE OF INVESTMENT COUNSEL
NEW YORK,NY
Thank you for that very kind introduction. I can't think of a more interesting and
challenging time to be discussing financial institutions policy. The Senate is debating a major
financial reform bill this week. World leaders and finance ministries across the globe have
been working around the clock to seek solutions to the international financial crisis. The New
York Times, in describing the President's meeting with the Prime Minister of Japan noted,
"the mechanics of bailing out banks is not the usual stuff of meetings between prime ministers
and presidents, but the session today is bound to focus on those subjects." Ten days ago, at
the Council on Foreign Relations, the President called this, "the biggest financial chaIienge
facing the world in a half-century," and outlined six steps we should take to help contain
current financial turmoil.
What some of you might have missed is the announcement one week ago by Secretary
Rubin of the issuance of the new 20 dollar note. This new currency incorporates several
security features that have proved effective against would-be counterfeiters: an enhanced
watermark; an enhanced security thread; fine-line printing patterns; color-shifting ink; and a
larger portrait that is the most noticeable change. It is this last feature -- the portrait -- that I
want to use to begin our discussion today of financial modernization here and in Great Britain.
The portrait is of our seventh President, Andrew Jackson. What many people forget is
that President Jackson also fought something now referred to by historians as the "bank wars. "
Jackson was an opponent of the Second Bank of the United States -- which tried to act as a
central bank before we had such an institution in the world of finance. Jackson's concern was
it enjoyed privileges, such as being the repository for U.S. gold and silver, while being
unaccountable to the people. It wielded enormous financial power but answered to no one.
The dispute led to the censure of the President in the Senate by his political opponents. But in
the end, as President Jackson told Martin Van Buren, "the bank, Mr. Van Buren, is tr.ying to
RR-2732
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kill me but I will kill it." And kill it he did.
My point in raising President Jackson is to highlight an issue that is critical to analyzing
HR 10, the Financial Services Act of 1998, currently before Congress. The issue is
accountability -- a subject that our founders struggled with as they put together our three
branches of government-- a structure that differs markedly from the parliamentary system in
which the Financial Services Authority (FSA) operates in Great Britain. It is an issue that was
at the forefront when the founders created the American form of government. Alexander
Hamilton emphasized accountability in the Federalist Papers, as he looked at Great Britain at
that time, "In England the king is the perpetual magistrate ... he is unaccountable for his
administration. "
Most Executive Branch officials, such as myself, are accountable to an elected
President and removable at will by him. Not so with the members of the Federal Reserve
Board; they are independent and not removable by, or necessarily responsive to, an elected
President. If H.R. 10 were enacted, as Secretary Rubin pointed out in his testimony before
the Senate Banking Committee on June 17, the accountability of an elected Administration for
economic policy would be lost with regard to financial institutions policy, as banks would
gravitate from the national banking system to the Fed.
Banks would gravitate to the Fed because H.R. 10, in repealing the provisions of the
Glass-Steagall Act that restricted the ability of banks and securities underwriters to affiliate
with one another, creates the "financial holding company." Only a financial holding company
benefits from the repeal of Glass-Steagall. And financial holding companies are the exclusive
domain of the unelected Federal Reserve Board.
As the Senate Banking Committee report states, "The core of the legislation is the
creation of a new type of bank holding company called a 'financial holding company.' ... The
financial holding company vehicle allows for a broader range of financial services to be
affiliated, including commercial banking, insurance underwriting and merchant banki~g."
The bill closes the door on the Office of the Comptroller of the Currency (OCC),
which is accountable to our elected President, by explicitly nullifying current regulatory
authority for national bank operating subsidiaries to engage in a broader range of financial
activities and by permitting them to engage in such activities only to the extent they act as an
agent.
Arguably, financial institutions policy is the most critical element of our economic
policy. The sound health of the financial system is the basis for American commerce and is
critical to the economic livelihood of the American people. The Administration has been a
consistent proponent of financial modernization, having proposed reforms of its own in 1994
and 1997. But, as Secretary Rubin has explained, the financial services industry can already
engage abroad in the activities at issue in financial modernization legislation here at home.
2
Thus, we have an important issue, but we are currently competitive. The crucial thing is to
get the solution right.
Certainly, as we examine the problems generating the current world economic crisis,
we often find ineffective bank supervision and regulation to be a common problem in emerging
economies. If any area of policymaking should reflect accountability to the people, it should
be this area. And Andrew Jackson is not the only President who has shown us the importance
of this principle.
President Franklin Roosevelt showed us in the first few days of his first term how a
vigorous, accountable Executive could make dramatic and needed economic policy changes
through the banking system at a time of dire threat to the U.S. economy. He did not have to
wait for a board to act -- he acted. Let me take you back to early March 1933-- bread lines,
unemployment of almost 2S percent, scarcely a bank in the country open for business because
of massive runs by depositors, fear loose through the country. On March 12 President
Roosevelt spoke to the American people from an oval room in the basement of the White
House. He began this way: "I want to talk for a few minutes with the people of the United
States about banking .... " He went on to outline in the first "fireside chat" a vigorous'response
to the economic crisis then facing the United States. President Roosevelt had declared a bank
holiday across the land and was explaining why he did that and how the banks would reopen
over time. The program worked, and within three days 4,507 national banks regulated by the
OCC reopened.
This is one of the many examples of how a vigorous executive can operate as
Alexander Hamilton envisioned, when he defended a strong Presidency by saying, "Energy in
the Executive is a leading character in the definition of good government... It is essential to
the steady administration of the laws" .. , and "to the protection of property .... " From a
legal policy perspective, the loss of accountability and energy in distancing financial
institutions policy making from an accountable, vigorous President and placing it under an
independent board is at the heart of the Administration's objections to H.R. 10. I should
emphasize, as Secretary Rubin has, supervision of banks is -- and should be -- apolitical.
Capital standards, reporting requirements, and examination procedures are already uniform
regardless of which federal agency takes the lead. But banking policy is a different matter.
There are other serious problems with this one-size-fits-all, holding company structure
proposed by H.R. 10. The Administration believes financial service firms ought to be able to
organize themselves in a way that makes the most business sense, just as other businesses do
across the economy.
There are good business reasons why one firm may prefer operating through a
subsidiary instead of an affiliate. Holding companies can be expensive to form, particularly
for small banks. Bank management may wish to retain the earnings flows from a new venture
generated by an existing line of the bank business, or use the new venture to diversify
3
earnings. By restricting business choice, H.R. 10 limits the ability of market participants to
make their own judgments about how to lower costs, improve services and provide benefits to
customers.
Not only can flexible operating subsidiaries reduce risk for banks, they also reduce risk
for the federal deposit insurance funds. That is why three former chairs of the FDIC wrote an
editorial supporting Treasury's view of H.R. 10. They pointed out a bank's ownership interest
in a subsidiary is an asset of the bank. Therefore, if the bank were to fail, the FDIC could sell
the bank's stake in the subsidiary and use the proceeds to reduce any loss the FDIC might
otherwise incur. By contrast, the FDIC generally would have no authority to sell assets of a
failed bank's affiliates.
Another serious legal policy objection to the bill is the manner in which it discriminates
against banks and in favor of insurance companies. This discrimination is achieved in part by
depriving the acc of judicial deference afforded other federal agencies under the Supreme
Court's Chevron decision. H.R. 10 essentially reads out this important decision of law from
new legal questions regarding national bank insurance powers. Solicitor General Seth
Waxman, in a recent speech, outlined why the Supreme Court concluded in Chevron that
courts should defer to an Executive agency's interpretation of a vague or ambiguous statute.
First, as I stated earlier, Executive Branch agencies are accountable to the elected President,
whereas the courts are not accountable to either Congress or the President. Second, agencies
have comprehensive fact-finding abilities and expertise on issues involving regulated
industries. Third, and especially important to our financial sector, judicial deference to
agency interpretations will promote uniformity, predictability, and finality in regulatory
decisions.
All of these factors strongly counsel against removing judicial deference to acc
interpretations, especially in one of the most heavily regulated industries, governed by a highly
complex legal framework.
Another unfortunate result of H.R. 10, and the shift of assets out of national banks and
into holding company affiliates, is the adverse impact this will have on the goals of the
Community Reinvestment Act (CRA).
This shifting out of national banks will reduce resources covered by CRA, a key tool in
the effort to expand capital in economically distressed areas. The bill would undermine the
remarkable progress that has been made in the areas of urban economic revitalization and
financing for affordable housing and small businesses. Community groups estimate that over
$397 billion has been pledged since 1992 to needy communities through CRA.
Finally, there are many more technical problems with H.R. 10 that cause concern to
the Administration. For example, Section 118 would limit the ability of the acc and the aTS
to examine, request reports from, and take enforcement action against functionally regulated
4
insurance and securities affiliates of bank holding companies. Under the provision, both the
OTS and the OCC must meet rigid standards to justify an on-site examination or to take an
enforcement action against a regulated subsidiary. Section 118 thus would take away from
regulators one of their most important tools to ensure safety and soundness: the ability to act
promptly to prevent or contain risks to the institutions that they supervise based on their
seasoned judgment.
As Peter has pointed out so well in his remarks, Great Britain has made a remarkable
achievement in the consolidation of financial services regulation in the Financial Services
Authority. But Great Britain is a parliamentary system. The FSA is accountable to a
parliament that is controlled by the Prime Minister's party and whose members include the
Prime Minister and his Cabinet. In fact, FSA members are appointed and removed by the
Treasury.
The U.S. system is much different, of course. We achieve accountability in the
Executive Branch by being appointed and removable at will by an elected President. It is a
good system. One that has stood the test of time -- and now is the oldest, functioning
government on the planet.
In the view of many, it is no coincidence that this form of government has also
generated the globe's strongest economy. The stability and predictability afforded by a strong,
stable Presidency -- the responsiveness ensured by an accountable Executive Branch all
contribute to a system that makes possible the successful "pursuit of happiness" for so many
Americans.
I agree with The Wall Street Journal, which recently emphasized that, "[T]he U.S.
doesn't run on parliamentary system. Its system is based, instead, on the concept of a
powerful president under an equally powerful legislative branch." It went on to quote Bob
Hormats, the former Assistant Secretary of State, who said, liThe U.S. presidency is ~een as a
more stable office than the office of prime ministers anywhere."
We need to retain flexibility, accountability, and stability through any reform of our
financial institutions policy. H.R. 10 is found lacking in these critical areas.
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5
DEPARTMENT
OF
THE
TREASURY
NEWS
'IREASURY
. . . . . . . . . . . . . . . .~8&9. . . . . . . . . . . . . .. .
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622-2960
Contact: Public Affairs
(202) 622-2960
FOR IMMEDIATE RELEASE
October 2, 1998
MEDIA ADVISORY
Treasury Secretary Robert E. Rubin will have a press conference at the Treasury Department on
Friday, October 2, at 1:30 p.m., to discuss the steps the United States is taking to address the
global economic crisis, announced by President Clinton this morning.
DATE:
Friday, October 2, 1998
TIME:
I :30 p.m.
PLACE:
Cash Room
Main Treasury
1500 Pennsylvania Avenue, NW
LOGISTICS:
Media without Treasury, White House, Defense, State or Congressional
press credentials planning to attend should contact Treasury's Office of
Public Affairs at (202) 622-2960 with the following information: name,
social security number and date of birth. This information may be faxed to
(202) 622-1999. The Cash Room will be open for pre-set at 12:30 p.m.
-30-
-2733
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
October 2, 1998
Contact: Peter Hollenbach
(202) 219-3302
TREASURY DIRECT INVESTORS TO BUY BY PHONE OCTOBER 5TH
TreasuryDirecl customers will be able to purchase Treasury bills, notes and bonds using a touch-tone
phone on Monday, October 5, 1998. Beginning with the regular weekly Treasury bill auction that day,
investors will be able to use a touch-tone phone to Buy Direct. To use this new service, all current
TreasuryDirecl customers need do is dial 1-800-943-6864 and follow a simple interactive menu that will
tell them which securities are available and instruct them on how to complete the transaction.
"We expect investors to respond enthusiastically to the convenience of investing by phone. Now, with
just a two-minute, toll-free phone call our customers can add a bill, note or bond to their TreaslllyDirect
account," said Van Zeck, Commissioner of the Public Debt.
Buy Direct services will be available from 8:00 a.m. to 8:00 p.m., Eastern time, Monday through Friday
except on Federal holidays.
The new service is for investors who submit non-competitive tenders only. Most TreasliryDirecl
customers use non-competitive bidding to buy bills, notes and bonds. On auction days the regular Noon.
Eastern time deadline for non-competitive tenders applies to telephone purchases. Investors pay for their
securities by authorizing Public Debt to charge their bank account of record for the purchase price.
Investors will receive a confirmation number during the call and the Bureau will charge their bank account
of record on the day the security is issued.
The new telephone service joins the already popular Internet Buy Direct service that went live on
September 16, 1998. TreaswyDirect customers purchased more than $9 million in bills and notes in the
first two weeks Internet sales were available.
TreasuryDirect is Treasury's direct-hold, book-entry service. It allows investors to buy Treasury bills.
notes, and bonds directly from the governn1ent at original issue and hold them in accounts with the Bureau
of the Public Debt.
It's easy to open a TreaswyDirect account. All an investor need do is fill out a Ne\v Account Request
(PD F 5182) and send it to the nearest Federal Reserve Bank or Branch. In about two \\eeks. a statement
with the account number is sent to the investor. Forms are available on Public Debt's website at:
\\')j'wpublicdebureasgov, or from Federal Reserve Banks or Branches.
000
http://ww',,,.publicdebt.treas.gov
RR-2734
DEPARTMENT
OF
THE
TREASURY
1789
OffiCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASIflNGTON, D.C.• 20220. (202) 622·2960
FOR IMMEDIATE RELEASE
October 2, 1998
Contact Maria Ibanez
(202) 622-2960
U.S. AND CANADA TO CONSULT REGARDING
MODIFICATIONS TO INCOME TAX TREATY
The United States and Canada will consult regarding modifications to the current U.S.Canadian Tax Treaty in Washington, beginning on October 20, 1998. These consultations are
contemplated by Article 20 of the Protocol to the u.S.-Canadian Income Tax Treaty that was
signed on March 17, 1995 and entered into force on November 9, 1995. Discussions are to
include potential reductions in the withholding tax rates provided in the Convention and
modifications to the rules in Article XXIXA of the Treaty regarding Limitation on Benefits.
The Treasury Department invites comments from the public regarding the upcoming
negotiations. Persons wishing to comment on the negotiations are invited to send their written
comments to Philip R. West, International Tax Counsel, Room 4206 Main Treasury, Washington,
D. C. . 20220. They may also submit comments by fax to (202) 622-1772 or by
e-mail toPhiI.West@treas.sprint.com.
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RR-2735
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STATEMENT OF G-7 FINANCE MINISTERS AND CENTRAL BANK GOVERNORS
October 3, 1998
Washington, DC
I)
We, the Finance Ministers and Central Bank Governors of the G-7 countries, met today to
review recent developments in the world economy and flnancial markets. President
Willem Duisenberg of the new European Central Bank participated for the first time in
part of the discussions. We were also joined for parts of the meeting by the Managing
Director of the International Monetary Fund, Michel Camdessus, and by World Bank
President James Wolfensohn.
Developments in the World Economy
2)
We discussed developments and prospects in our own economies and in the rest of the
world. Financial market conditions have deteriorated in many parts of the world, leading
to a further weakening of growth prospects especially in most emerging market countries,
and also more generally. In this context, we reaffirmed our view that the balance of risks
on a global basis has shifted. We agreed that in today's integrated world economy and
financial markets, developments in our economies, while being affected importantly by
economic and financial developments elsewhere, have a significant impact on the rest of
the world. More broadly, we reaffirmed the key importance going forward of each
country in the global economy doing its part to promote recovery and financial stability.
We must continue our efforts to strengthen the open world trading system, with free trade
flows and open capital markets.
G-7 Economies
3)
Inflation in G-7 countries as a whole is low and in some countries has declined further in
recent months. Although growth so far has been sustained in our countries taken as a
whole, the weakening in Asia and some other markets poses increasing downside risks to
economic activity. We reemphasized our commitment to create or sustain conditions for
strong domestic-demand led growth and financial stability in each of our economies. In
this context, we noted the importance of intensified cooperation among us at this
juncture. We also agreed that the challenges that face each of our economies differ.
In the United States, Canada and the United Kingdom, where strong growth has been
flrmly established for some time, the task of policy is to take appropriate action to
maintain conditions for sustainable growth.
The Continental European G-7 countries are expected to achieve stronger growth this
year as their recoveries strengthen. It is important to preserve conditions conducive to
robust domestic demand, to implement urgent structural reforms and reduce
unemployment.
RR-2736
2
Japan's economic challenges have intensified significantly in recent months, with three
consecutive quarters of negative growth and continued weakness in the fmancial sector.
Strong sustainable recovery in the economy is of critical importance to Japan, the Asia
region and the rest of the world. The Japanese authorities outlined their intention to
strengthen the confidence in the financial system by promptly establishing a framework to
maintain the stability of the financial system and to provide sufficient and sustained
stimulus to boost domestic demand-led growth. While noting the steps taken by the
authorities to date, we stress the importance that we attach to the swift and effective
action to strengthen the financial system, including the prompt enactment of measures to
support viable banks with public assistance in sufficient amounts to be provided swiftly
with appropriate conditions.
European Economic and Monetary Union
4)
We discussed the ongoing smooth transition to Economic and Monetary Union in Europe
on January 1, 1999 and looked forward to a successful EMU which contributes to growth,
and to stability in the international monetary system.
Exchange rates
5)
We discussed developments in our exchange and financial markets reaffirming the views
we expressed in our April statement. We will continue to monitor developments in
exchange markets and to cooperate as appropriate.
Russia
6)
We met with representatives of the Russian Federation to discuss recent developments in
Russia's economy and the difficult challenge the government faces in achieving financial
re-stabilization. We agreed on the importance of monetary restraint and fiscal
adjustment, noting the serious risk of inflation and further exchange rate weakening if
revenue collections are inadequate and government expenditures are financed through
central bank money creation. We emphasized the importance for Russia of undertaking
comprehensive financial sector restructuring which would close or merge insolvent
banks, write down problem assets, and greatly enhance supervision. We also agreed that
Russia must accelerate its program of structural reform to promote efficiency and growth
in the real economy. We encouraged Russia to develop sound approaches and to pursue a
constructive dialogue with the IMF on the urgent task of stabilization. We also stressed
the great importance for Russia to pursue a cooperative dialogue with private creditors
3
Emerging Market Economies
7)
Policies countries pursue are a crucial detenninant of their economic perfonnance. We
welcomed the impressive efforts by a number of emerging market economies to
strengthen their domestic policies in light of the financial market pressures that have
spread over the past year. We reaffinned the support expressed in our September 14
statement for exploring ways to reinforce the existing economic programs of economies
facing fmancial crises with accelerated efforts to promote comprehensive programs for
corporate and financial sector restructuring and measures to alleviate the effects of the
crises on the poorest segments of society, including if necessary through the provision of
augmented financial assistance centered in the multilateral development banks.
8)
We reaffirmed our concern about the extent of the general withdrawal of funds from
emerging markets that had occurred without respect to the diversity of prospects facing
those economies or to the significant progress that has been made in many economies in
carrying out strong macroeconomic policies and structural refonns that enhance longterm growth prospects.
9)
More broadly, we reiterated our support for the central role of the IMF in enhancing crisis
prevention, including encouraging refonns through its surveillance process, as well as
providing catalytic financial assistance as needed in support of appropriate policies and
to combat contagion. We emphasized that the private sector also has a key role to play in
crisis resolution.
10)
In this context, we urged the early implementation of the IMF quota increase and the New
Arrangements to Borrow. We drew attention to the possibility, if circumstances so
warrant, of activating the General Arrangements to Borrow, in consultation with other
participants in the arrangements. We agreed to explore a strengthened capacity, based in
the IMF and with the general increase of IMF quotas and establishment of the New
Arrangements to Borrow, to provide more effectively contingent finance to help countries
pursuing sound policies to maintain stability in the face of difficult global financial
conditions.
11)
We stressed the critical role of the World Bank in crisis prevention through support for
strong institutions, good governance and structural reforms, particularly in the financial,
corporate and social sectors. We also underlined our support for an active role for the
World Bank and other MDBs responding to the crisis. We would support the following
steps:
To develop a new emergency capacity with a particular focus on support for the
vulnerable groups in society and for financial sector restructuring;
To use loan guarantees and other innovative means to leverage private sector
4
lending for investment projects in emerging markets, and
To expand their own lending as much as possible for sound operations within
their guidelines to countries now affected by the crisis.
Debt
12)
We also discussed the problems of the poorest countries. We endorse the need to sustain
the momentum of the HIPe initiative. We shall also encourage the IMF and the World
Bank to move forward quickly on further proposals which recognize the special needs of
poor post-conflict countries, especially those with arrears to the IFls.
Strengthening the International Financial System
13)
Looking ahead, we agreed on the importance of adapting the IMF to ongoing changes in
the world economy. This includes a focus on increasing its transparency, the design of
appropriate reform programs, and effective use ofIMF resources. We expect further
progress in these areas in the near future.
14)
We agreed on the need to build upon the work done to date and extend the reach of
international discussions to ensure that the system is equipped to meet the challenges
posed by the increasingly integrated global economy and financial markets. We
committed to work together within the G-7, and with other in~ustrial and key emerging
market economies and with the international financial institutions. to develop approaches
to strengthen the system in the following key areas:
promotion of soundly based capital flows, with better transparency and disclosure
for all types of financial institutions and improved regulatory focus in
industrialized countries on risk management systems and prudential standards;
strengthening existing institutions and bodies to ensure that they work more
closely and cohesively together so as to seek to maintain on an on-going and
regular basis the integrity and stability of the international financial system;
strengthened national financial systems, with measures to increase incentives for
countries to act in this area, including stronger surveillance of financial sector
supervisory and regulatory regimes including the possibility of peer review and
much closer cooperation and coherence between the various international
institutions and groups involved in the financial sector. In this respect, we
welcome the upcoming meeting of the banking surveillance authorities of the G10 Basel group and of emerging economies in Sydney this month;
consideration of the elements required for sustainable exchange rate regimes in
5
emerging market economies in the context of the global economy, backed by
consistent macroeconomic policies;
development of effective mechanisms to involve the private sector in crisis
management, with an appropriate financing role; and
other adaptations of the international architecture, including the possibility of
strengthening the Interim and Development Committees.
15)
The G-7 welcomed the reports of the working groups of the G-7 and key emerging market
economies, and we agreed to work together to implement recommendations in the key
areas of transparency, strengthening fmancial systems and managing crisis with an
appropriate private-sector role, as a matter of urgency. We look forward to a productive
discussion of these and other issues in the Interim and Development Committees and
other meetings, including the meeting with fmance ministers and central bank governors
from key emerging markets. We also called on our deputies to consult in a systematic
way to complete a more detailed work plan, based on the agenda above, and report to us
at a meeting of G-7 Finance Ministers and Central Bank Governors as soon as the work is
completed. We have asked Mr. Tietrneyer, a member of our group who is also the
Chairman of the G-I 0 Central Bank Governors, to consult with other appropriate bodies
and to consider with them the arrangements for cooperation and coordination between the
various international financial regulatory and supervisory bodies and the international
financial institutions interested in such matters, and to put to us expeditiously
recommendations for any new structures and arrangements that may be required.
D EPA R T 1\1 E N T
0 F
1789
THE
T REA SUR Y
NEWS
OffiCE OF PUBtlC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASIllNGTON, D.C. - 20220 - (202) 622·2960
FOR IM:MEDIATE RELEASE
Text as Prepared for Delivery
October 4, 1998
TREASURY SECRETARY ROBERT E. RUBIN
STATEMENT TO THE IMF INTERIM COMMITTEE
The financial crisis which erupted a little over a year ago and continues today represents a
substantial challenge to the global trade and financial system that has been built over the past 50
years. It is clear that the balance of risks has changed, creating new challenges for us. Our
immediate challenge is to continue to do everything sensible to address the current crisis and help
the affected countries return to stability and growth. It is essential to strengthen our response by
improving implementation of sound policies and adopting additional reforms as needed. Also, this
crisis has clearly demonstrated the need to build over the longer term a stronger system better
suited for the challenges of the ever-changing modem global economy. The global economy
cannot continue to thrive with the kinds of vast and systemic disruptions that have occurred over
the last year; our ability to prevent such disruptions better, and to manage them better where,
nevertheless, they occur, is critical to our ability to maintain and expand the free market system,
which has benefitted so many people around the globe.
Strengthening the response to the crisis
The short-term challenge, strengthening as appropriate our immediate response to the
crisis before us, requires all nations to meet their respective responsibilities. We need a strong,
multifaceted program that takes into account the changing circumstances and needs as the crisis in
emerging markets has spread, intensified and affected us all.
Industrial countries, for their part, must pursue policies that support growth. This will
allow them to help lift those parts of the world that are beset by, or vulnerable to, financial
instability.
Among industrial countries, the United States must continue on a path of fiscal discipline
and other sound policies that have underpinned our strong economy. It is a matter of utmost
urgency for us that we complete the procedures for consenting to the quota increase and to our
participation in the New Arrangements to Borrow.
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For its part, Japan must urgently implement effective measures that will stabilize its
financial system and spur strong, sustained domestic demand-led growth. Europe must implement
Economic and Monetary Union in a manner that contributes both to further improvement in
domestic demand and a strong euro.
These steps are in the enlightened self interest of the industrial nations, for both the short
term effort to address the crisis, and the long term needs of global growth and stability. At the
same time, we must pursue the supporting objectives of improved governance, in both the public
and private sector, the creation or maintenance of appropriate social safety nets and policies that
can help strengthen the basis for strong economies, including the promotion of core labor
standards. The forthcoming meeting of the Heads of the IMF, World Bank and ILO presents an
opportunity to advance thinking in this area.
In the more adverse external environment we now face, emerging market and developing
economies, for their part, must help strengthen their commitment to the macroeconomic policies
and related reforms that are critical to growth and financial stability.
The international financial institutions have been and will continue to be at the center of
our efforts to deal with the crisis, providing conditional assistance that is crucial for a nation to
have the breathing room to focus on reform. To buttress the efforts of the international financial
institutions, we must not only provide them with the financial backing they need to do their job,
but also work with them to develop innovative ways to deal with events that are, in a number of
ways, unprecedented.
With this in mind, the United States has put forward for consideration two initiatives.
The first is a strengthened IMF financing mechanism to increase our ability to respond to difficult
global financial conditions which are adversely affecting even those emerging market and
developing countries which are pursuing sound policies. Such a strengthened capacity could take
the form of a contingency line of credit for countries that are pursuing strong reform programs
but, nevertheless, face the threat of destabilization, given the turbulence in today's global markets.
The second proposal is for the World Bank and other MDBs to develop a new emergency
capacity with particular focus on support for the most vulnerable groups in society and financial
sector restructuring. This would involve using loan guarantees and other innovative means
to leverage private sector involvement as a means of helping emerging market and developing
countries attain better access to international capital markets, and to expand their own lending as
m~~h as possible for sound operations within their guidelines to countries now affected by the
cnsls.
Building a stronger architecture
The longer-term challenge is to reform the global financial architecture to better prevent
financial instability, and to allow the system to manage such instability when it occurs with a
minimum of damage and pain to all those affected Beginning in 1994 at the Naples Leaders'
2
Meeting, the international community embarked on this long-term effort. These are enormously
complex issues, requiring great rigor and seriousness. While a great deal remain to be done,
considerable progress has been made in diagnosing the problems, and a broad consensus is
emerging on the basic elements of appropriate remedies. In the view of the United States, there is
a need for action now in four, mutually reinforcing areas: (1) increased transparency and
openness in the international financial system~ (2) strengthened national financial systems,
particularly in emerging market economies~ (3) promotion in industrial nations of more soundly
based capital flows~ and (4) developing new ways to respond to crises, including greater
participation by the private sector.
Transparency: More transparency, on what is happening in our economies and how
policies are formulated, is essential for markets to function efficiently and price risks accurately, to
encourage sound governmental policies that are supported by the public and to foster
accountability by public and private institutions. The IMF has played a leading role in developing
standards on the dissemination of data. The SDDS, to which 46 countries have now subscribed,
represents a significant advance in promoting the publication of comprehensive, timely, high
quality information. In cooperation with other international organizations, the Fund should
complete the current review of the SDDS by the end of the year and broaden the coverage of
required reserve data to include information on the range of reserve-related liabilities which may
impair the availability of a country's reserves. The Fund should also expedite consideration of
measures to monitor short-term capital flows and to include data on short-term external
indebtedness in the SDDS.
The introduction of standards and codes of best practices on monetary and financial
policies and fiscal transparency, which the Fund has developed or is developing, can help to
promote good governance and accountability in the public sector. However, this effort needs to
be complemented by mechanisms for monitoring implementation and compliance to prevent abuse
and to promote improved transparency. The Fund should accord a high priority to putting such a
monitoring mechanism in place at an early date and to publishing its results.
The Fund also has a role to play in promoting policy transparency by building on the
favorable experience with Public Information Notices (PrNs) We strongly believe that IMF
policy should encourage all members to issue PINs following the conclusion of the annual IMF
consultations on economic policies. All countries obtaining IMF loans should also be required to
release their Letters of Intent and, if applicable, Policy Framework Papers, and to agree to issue
PINs on the Executive Board's consideration of their programs.
The IMF and other international financial institutions have a responsibility to make their
activities open and transparent, not least as a means of enhancing accountability. The Executive
Board should move expeditiously to finalize decisions to issue PrNs on Executive Board
discussions ofIMF policy issues; substantially reduce the time period for access to the Fund's
archival material; publish user-friendly information on the IMF's liquidity; and increase the scope,
frequency and accessability of external evaluations.
3
Strengthened Financial Systems: The technologies which have pennitted the emergence
of a global financial market with a vast array of sophisticated new instruments have enabled
investors to diversify risk and provided borrowers more ways to tap foreign savings to increase
domestic investment and growth. But the resulting enormous expansion of cross-border capital
flows has also proven to be extremely sensitive to changes in market sentiment. While the world
has experienced financial crises in the past, including Europe in 1992 and Mexico in 1995, the
current crisis is unprecedented in size, speed, and geographic scope.
A first priority in dealing with today's more volatile global financial markets is to have in
place strong domestic financial systems and a legal and regulatory infrastructure that will enable
the economy to realize the opportunities afforded by open capital markets while reducing the
risks. This requires the further development and implementation of "best practices" for
supervising financial institutions and developing a strong credit culture and risk management
procedures. Countries also need to put in place comprehensive programs to repair and test
institutions' computer codes to ensure that such systems can handle year 2000 dates.
A robust financial system and solid supervisory structure will take time to put in place.
The international community can help by providing technical and financial assistance. More
powerful incentives to encourage reform efforts will also be important. We support a stronger
surveillance mechanism, anchored in the Th1F, which would work with the World Bank and the
international standard-setting bodies could monitor financial systems as a means of encouraging
adoption of best practices and dealing with potential problems.
Care will also be required in establishing the pace, timing and sequence of measures to
integrate economies into the global capital market. In particular, a country should seek to have in
place the institutional structures and prudential capacity commensurate with its degree of
integration to enable the system to respond effectively to the potential volatility associated with
short-term capital flows, particularly interbank transaction. While the current crisis underscores
the need for care in the process of integration, this should not be seen as a reason to reject
integration, but rather as a motivation to accelerate steps to strengthen financial institutions and,
particularly, prudential regulations and supervision.
Promoting more soundly based capital flows. Events of the last year highlight the
importance of measures to more effectively encourage providers of portfolio capital and banks to
analyze and weigh risks and rewards in a more disciplined fashion in both good times and bad.
Market discipline --which is central to a market-based economy through the encouragement of
sound policy and the efficient allocation of capital --only works if market participants act with
discipline. Toward this end, we in the industrialized countries must provide better regulation and
supervision --including more effective focus on risk management systems in financial institutions
--and strong prudential standards that pay attention to the riskiness of different types of
investment, through a broad range of financial institutions, not merely banks In addition,
improved transparency in the financial sectors of emerging markets can provide investors with
information they need to weigh risks, and thereby facilitate market discipline
4
Resolving crises: There is general recognition in the international community that we
need to develop better ways to resolve financial crises. Looking forward, the IMF must continue
to play the central role in resolving crises by supporting members' adjustment efforts, including
through the provision of exceptional financing on a large scale in situations involving systemic
risk. The international community also can playa part in facilitating an orderly resolution of
crises through continued IMF support for the process. For this purpose, we welcome the IMF's
intention to expand its lending into arrears policy as a means of providing continued financial
support to a country's adjustment efforts as it seeks in good faith to negotiate an orderly
resolution with its creditors.
However, in today's world it is neither practical nor desirable for the IMF and other
official lenders to undertake the full financing responsibility. The private sector therefore must
also do its share in forestalling and resolving crises. The manner in which private sector
participation is achieved can have important consequences, both for the country involved and the
system more generally. It is overwhelmingly important that such cooperation be obtained at an
early stage and based on voluntary market-based approaches rather than unilateral restructurings
or debt moratoria that could preclude future market access and increase the risk of contagion.
Such an orderly resolution could be enhanced by encouraging a dialogue between debtors and
creditors to exchange information before a crisis occurs and to facilitate negotiations after its
onset. However, care would need to be taken to avoid the problem of insider information by
undertaking a dialogue in "full sunshine." We also support suggestions to modify the terms of
bond contracts and loan agreements to facilitate collective action by creditors in a world
characterized by much more complex relationships than in earlier, simpler times.
ESAF, HIPC and Post-Conflict Support
As we grapple with the current financial crisis, we must not lose sight of the needs of
those countries which rely on official financing, have unsustainable debt burdens, and are dealing
with the aftermath of war and civil strife. The ESAF has proven to be an effective IMF
instrument for addressing the macroeconomic and structural problems of the poorest countries but
must be strengthened by implementing the recommendations of the recent internal and external
evaluations of its operations. There is a clear need to accelerate structural reforms in the poorest
countries in ways that promote program ownership and provide adequate social safety nets for the
most vulnerable groups. The Bank and the Fund must also improve their collaboration in dealing
with the problems of the poorest countries, beginning with Management's proposals but also
going farther, if necessary, to ensure a truly effective, cooperative approach. In this regard, it is
critical that the Fund take an active and energetic role in promoting core labor standards in
developing countries.
In addressing the needs of post-conflict countries, we are especially interested in a strategy
that will provide significant positive net flows of resources to countries with appropriate policies
and which have enabling political and economic environments. Special attention needs to be
given to the problem ofIFI arrears, with coordinated and equitable participation by all donors.
5
With regard to implementation of the HIPC initiative, a considerable amount of progress has been
made, though it is disappointing that the IFIs have not provided interim relief as urged by the G-7.
Conclusion
Strengthening the response to the current crisis and creating a modern framework for the
global markets of the 21 st century will not be easy or quick, but we must continue to move
forward with care and seriousness. Our goal should be to create a strong market-based financial
architecture which induces sound decision-making by investors, encourages capital to be used
productively, and rewards governments that pursue sound policies. Such a system will be crucial
towards building a global economy less prone to vast disruptions, less unstable when disruptions
occur, and better able to benefit all people.
-30-
6
DEPARTMENT
OF
THE
TREASURY {.~~
TREASURY
NEW S
October 5, 1998
STATEMENT OF TREASURY SECRETARY ROBERT E. RUBIN
AT THE 58th DEVELOPMENT COMMITTEE OF THE
WORLD BANK AND THE INTERNATIONAL MONETARY FUND
The financial crisis that began in Asia more than a year ago has thrust all of us - developed
countries, developing countries and international financial institutions - onto new and difficult
terrain. The immediate challenge is to work together to repair troubled financial systems, address
the profound human consequences resulting from the financial disturbances, and restore financial
stability and growth. Over the longer term, the challenge must be to tackle the basic policy and
governance inadequacies that lie at the root of to day's problems. Each of us - nations and
institutions - must step up these challenges.
Our efforts must be centered on improving preventive measures to reduce the scope and
impact of problems, and better measures to confront problems when they occur. We must make
greater public and corporate transparency and accountability a global reality. We must
aggressively tackle the disease of corruption. And we must intensify efforts to strengthen the
international financial architecture.
The world is still grappling with the financial instability of the past year. But it is not too
soon -- indeed it is past time -- to move more boldly ahead with those steps that we know are
integral to a durable solution.
ELEMENTS OF AN EFFECTIVE RESPONSE
IFls Role In Crisis Countries: The Bretton Woods Institutions (BWls) and the regional
development banks have played a critical role in the international response to the current crisis
and should remain central to a solution. The IFls have devoted enormous resources, both
financial and human, to help the economies in Asia and throughout the world recover from the
crisis. The IFls cannot help countries that are not committed to helping themselves. But where
policy makers are committed, IFI involvement is central to an effective international response.
Of course, adequate funding for the IMF and the multilateral development banks is critical to this
effort, and I will continue to press the U.S. Congress to take action.
There are several immediate actions in which the IMF and World Bank must be engaged:
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•
convincing countries in crisis to stay engaged in the global economy - misguided exchange
and capital controls are not the answer for dealing with the effects of this crisis. While the
loss of confidence and resulting flight of capital from many emerging market economies
has carried with it a heavy cost, measures that would effectively prevent the return of this
capital will only postpone recovery and the restoration of economic growth. Indeed,
countries that use these measures to allow for the adoption of unsound policies or to
insulate companies and banks from competition will in the end pay a heavy price in lost
economic growth.
•
accelerating the pace of comprehensive corporate and financial restructuring in countries
where there is a systemic problem - notably in Asia where the severe indebtedness of both
the financial and corporate system is a serious barrier to recovery and where addressing
the overhang of domestic debt is essential. Progress has been made and frameworks for
dealing with these issues have gradually been put in place, however we remain concerned
that necessary restructuring is proceeding too slowly to restore economic growth quickly
given the systemic nature of the problem and the sheer magnitude of corporate and bank
insolvency.
•
providing increased social safety nets in the countries in crisis to help the least advantaged
citizens in those countries who are experiencing hardship. The World Bank and ADB are
well positioned to provide adequate government spending in the areas of health and
education -- two of the most crucial areas in which the MDBs should focus their
resources. In addition, employment generation plans, support to SMEs, and support in
the development of unemployment insurance and pension plans, is needed.
•
continuing discussion on new instruments for emergency assistance while adhering to
prudential norms of the Bank's financial structure. Led by the World Bank, the
multilateral development banks have played a vital role in providing exceptional assistance
to support priority reforms in countries in crisis. Looking ahead, it is essential for the
institutions to have the capacity to engage substantially and quickly as circumstances
require. Current discussions have been helpful in identifYing ways to strengthen the
Bank's risk-bearing capacity, and creative thinking such as the Bank's proposals for an
Emergency Structural Adjustment Loan (ESAL) are appreciated. Additional steps such as
aggressive use of the Bank's guarantee instrument; measures to strengthen net income and
reserves, including increased charges and elimination of commitment and interest waivers;
and, making use of additional leverage that may be available in the balance sheet should
also be considered.
•
reinforcing good governance and transparency in both public and private sectors -including, but not limited to the financial sector. Key elements of good governance and
transparency should include, at a minimum, international generally accepted accounting
principles, budget transparency, independent audit function, anti-corruption mechanisms
and public participation. The IFls are well positioned to lead on these crucial issues, and
we look to them to exercise that leadership forcefully.
2
IFI RESOURCES
Bank-Fund Cooperation: Financial sectors are highly complex. Hence, a key
challenge for the Bank and Fund is to improve their coordination and effectiveness on financial
sector issues to avoid the problems that have arisen, and to manage overlaps in their respective
roles. At present, the main concrete proposal put forth by both organizations is the creation of
the Financial Sector Liaison Committee, which we support. However, the creation of a
Committee is not enough. Substantial change - including cultural -- is required of both
institutions. It is past time to put aside institutional rivalries unbefitting public institutions with
the same shareholders. We look to the Management of both institutions to deliver this change
and to do so quickly.
Both the Bank and the Fund need to provide their respective Boards with papers
detailing the changes in staffing, budgets, reporting structure, and operational procedures that
they are proposing to adopt to enhance collaboration on financial sector issues and in response
to financial sector crises. We also believe that information should be fully shared between the
Bank and the Fund and would like both institutions to take the steps necessary to make this a
reality. The Bank must develop a more effective internal decision-making structure that allows
it to quickly coordinate its responses with those of the Fund. For its part, the Fund needs to
actively engage the core Bank competencies that it clearly lacks. An action plan to coordinate
effectively with the regional multilateral development banks is also necessary.
Implementation of the HIPC Initiative: Considerable progress has been made under the
HIPC initiative to reduce further the debt burdens of heavily indebted poor countries in support of
sustainable development, economic reform and growth; seven countries have demonstrated a
sustained commitment to policy reform and have received firm commitments for HIPC relief.
Two of these countries have reached the completion point, including most recently Bolivia.
Bolivia's strong record of economic reform since 1985 qualified it for final relief totaling
$760 million in nominal debt service only one year after being declared eligible for RIPC debt
relief. This culminates a process of economic reform and debt relief beginning in 1990 with a 33
percent reduction of eligible debt by the Paris Club that was followed by successively deeper debt
reduction. The debt relief to be provided not only will lighten the debt burden but will enable
Bolivia to intensify social reforms by allowing an increase in social sector spending, particularly
for the most vulnerable.
For the future, we welcome the decision to extend the initial two-year period to allow
more countries to meet the entry requirement that they be pursuing a program of adjustment and
reform. We want to see as many countries as possible qualify for HIPe debt reliefbut note that
the pace of implementation depends on the speed of individual country reform efforts.
In addition, we believe all creditors should follow the example of the World Bank and
Paris Club in providing interim relief as a reward for reforms to date, rather than delaying all debt
relief to the completion point. We urge all IFls to develop mechanisms to provide interim relief
that will ease cash-flow burdens.
3
When the full amount of debt relief to be provided under the HIPC debt initiative is
included, we estimate that the total debt relief provided to the poorest countries since the late
1980s by all creditors will equal $75-80 billion. This is in addition to the grant assistance that has
been provided and it represents a remarkable contribution to the development needs of these
countries.
Post-Conflict: We welcome the preliminary ideas from the World Bank and International
Monetary Fund on providing additional and more timely assistance to post-conflict countries,
particu!arly the innovative thinking by the World Bank. We call on the international community
to build on these ideas and develop a comprehensive strategy to assist financially burdened
countries emerging from crisis, and to share appropriately in the financial burden of providing this
assistance. A post-conflict strategy should not primarily be a debt strategy, but a strategy aimed
at restoring stability and laying the groundwork for sustainable economic growth. Every effort
must be made to provide a significant positive net flow of donor resources to post-conflict
countries that are performing, particularly during the earliest stages of reconstruction. As first
suggested in Birmingham, the Bank's strong role in coordinating a broad framework for postconflict assistance is important. Also important is linkage of such assistance to an IMF program.
DEVELOPMENT EFFECTIVENESS
The past year's developments further highlight the need for substantial improvements in
MDB operations for which we have been pressing for some time, including in the IDA-12
replenishment negotiation now underway.
Governance: There is a clear donor community consensus that Bank lending should be
more closely linked to performance, with increased weight given to the transparency and
accountability of borrower governance, and the quality and costs of the decisions they make.
Specific indicators for governance should include: efforts to meet the IMF's code of conduct for
fiscal transparency, independent audits of security-related expenditures provided to civilian
authorities, demonstration of sound fiscal choices which prioritize social over non-productive
expenditures, public participation in budget and rule-making processes, support for free
association of workers and their rights and actions taken to prevent exploitative child labor.
loint MDB and IMF preparation of comprehensive Public Expenditure Reviews (PER)
would be enormously useful in many cases. PERs, combined with candid assessments of
procurement and financial management capabilities, should be routinely incorporated into IFI
Country Assistance Strategies (CAS). Technical assistance funds should be used to help
countries pursue good governance and anti-corruption initiatives, especially in areas of creating
anti-corruption authorities, strengthening audit functions, improving budget planning and
transparency, assisting countries to meet data reporting standards (SODS, e.g.) and bolstering
public participation mechanisms. Finally, we encourage the MDBs to create lending programs
which more effectively establish the elements of an attractive investment climate in developing
countries, particularly in Africa, and to provide more effective support for regionally based
initiatives.
The IFls themselves must be held to similar standards. We expect openness and full
4
accountability to be the rule in IFI operations; participation by civil society sho'Jld be the norm in
the CAS process, project and program planning and policy design; and, public access to
documents should be broadened to the maximum extent, including project completion reports,
OED studies of internal Bank processes and Inspection Panel reports with the accompanying
Management action plans, all of which are currently withheld. Letting countries determine the
release of Bank strategy documents related to them is no longer acceptable.
The Inspection Panel, a significant means to enforce accountability, should be
strengthened to playa more forceful role in assuring compliance with Bank Group policies and
processes and Panel reports and action plans should be made available to the public. We expect
the Framework Paper of the Board's Working Group to enhance - not dilute -- the role of the
Panel. The Inspection Panel should be expanded to cover IFC and MIGA operations. We have
discussed this issue for long enough -- now is the time to make effective Inspection Panels a
reality.
In the end, IFI tolerance of corruption and poor governance in borrower countries and
inadequate internal IFI controls undermines integrity of and public trust in IFls in general. I am
encouraged by the comments made by President Wolfensohn in his Note to the Development
Committee. But there remains a stark disconnect between statements of intent and operational
reality. For example, decentralization of procurement, disbursement and audit functions is
fundamentally inconsistent with a strong internal control environment.
Finally, we need to dry-up the supply side of corruption. The U.S. will make every effort
to meet the year-end target date for ratification of the OECD Anti-Bribery Convention; I urge
others to do likewise.
Strategic compact: Under the Strategic Compact, the Bank committed to refocus its
development agenda and revamp its institutional capacities. The current economic instability in
emerging markets, however, is requiring the Bank to respond more rapidly than it initially
envisioned .. We are pleased that the Bank is developing new instruments, strengthening its
capacity to assist countries in financial crisis and responding to governments' requests for help in
formulating anti-corruption strategies. These efforts need to be reinforced with a redesigned
human resource policy and improved collaboration with other international financial institutions to
allow the Bank to concentrate on areas where it is more efficient and effective. All of these
efforts will support the Bank's commitment to return its budget to pre-Compact levels in real
terms at the end of the three-year period.
Selectivity and Donor Coordination: Against a background oflimited development
resources, IFls and other donors need to focus their efforts in areas of respective comparative
advantage. This requires thorough knowledge of what all donors are doing in each country in
order to identity where the Bank will intervene (based on comparative advantage), where it will
follow others and where it will not intervene. In this regard, we are encouraged by the Bank's
new Partnership Initiative, elements of which we are beginning to see in CASs, and encourage it
to become routine. Similarly, IFIs must take seriously calls from donors and recommendations
contained in the MDB Task Force Report to find efficiency gains both for themselves and for
their borrowers. For us, this means: finalizing on-going work on a set of best-practice uniform
5
MDB procurement rules and common evaluation methodologies; preparing joint CASs, and
PERs, in the majority of cases; and, conducting joint project supervision missions. Specifically,
under IDA-12 and AfDF-8 negotiations, it means agreeing to a clear division oflabor between the
two institutions on operations in Africa.
Labor: We are encouraged by strengthened efforts at the World Bank and at the other
IFIs to advance respect for core labor standards, including rights to associate, organize and
bargain collectively, the prohibition on forced labor and exploitative child labor, and the principle
of non-discrimination. The first steps towards establishment of a screening process at the World
Bank and other IFIs is commendable. However, the World Bank, the IMF and the other IFI have
more work to do so that basic worker rights are systematically taken into consideration as part of
the policies and programs of the institutions. This important work is consistent with the mission
of these institutions and has the potential to help solidify the long term goals of economic growth
and stability.
Environment and Sustainable Development: Since the last Development Committee
meeting in April, harmonization of public disclosure, social, and environmental standards at the
World Bank Group has moved further toward completion. Issues remain to be resolved on a few
policies, such as involuntary resettlement, information disclosure and the inspection panel. In
recent years the Bank itself has made substantial progress in these important areas and we are
concerned that IFC and MIGA continue to lag behind the Bank. We would appreciate President
Wolfensohn's involvement on this issue to ensure full policy harmonization to the highest
standard. We will take progress on the issues of environmental and social policy harmonization
across the Bank Group and expansion of the Inspection Panel to cover IFC and MIGA into
consideration in replenishing IDA-12 and endorsing the MIGA capital increase.
Equally, we would like to see the Bank address the Global Environment Facility (GEF)
Council Replenishment Policy Statement and the New Delhi Statement of GEF' s 171 participating
countries through mainstreaming environmental activities and values throughout its country
programs, and redoubling its efforts to help countries identify and implement "win-win"
development options that both clean up the environment and support economic growth. In
particular, the Bank needs to expand support for renewable energy and energy efficiency and also
make sure that energy sector reforms create a level playing field for private sector developers of
clean energy.
CONCLUSION
We are living through a period of unprecedented challenges in the global economy. The
global economy and global financial markets have evolved and, now, international financial
institutions such as the IMF and World Bank, must evolve to meet the new demands of the global
economy. All of us must work together to meet these challenges: countries in crisis must sustain
sound reform programs geared to growth and engagement in the world economy; the major
industrialized nations must maintain strong domestic growth and cooperate to spur global growth;
and, international financial institutions must apply the lessons learned from the crisis and adapt to
pursue best-practice models for supervising financial systems. And above all, we must strive for
the global economy to work to the benefit of ordinary citizens.
6
DEPARTMENT
OF
'IREASURY
THE
TREASURY
NEWS
~~/78~9~. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..
....................................
OrnCE OF PUBUC AFFAIRS. 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C. • 20220. (202) 622-2960
Contact Michelle Lynn Bonner
(202) 622-2960
FOR IM1v1EDIATE RELEASE
October 6, 1998
TREASURY STUDY SHOWS STATE EFFECTS OF GLOBAL FINANCIAL SITUATION
The Treasury Department on Tuesday released a state-by-state analysis detailing declines in
exports and specific industry effects in individual states from the global financial situation.
"The study demonstrates the importance of international trade with both Asia and the world's
developing nations to each state," Secretary Rubin said. "Clearly events in Asia, Russia and Latin
America are having a direct impact on the prosperity of America's farmers, workers and businesses
The United States has a very real interest in stemming the tide of global economic turmoil."
"One important way we can act to deal with these threats is to fulfill our responsibility -- and
provide the funding that the President has requested for the Uv1F," Secretary Rubin said. "The
international community must have the resources that it needs to deal with this crisis that has spread
to so many emerging economies and threatens the economic well being of the American people."
The report analyzes the importance of individual state's exports to foreign markets. In
addition, the report examines specific industries within each state with a significant stake in the health
of the global economy.
Some of the highlights of the report include:
Thirty percent of US. exports go to Asia. supporting millions of US jobs. For
a number of states, including Alabama, Florida, New Mexico, Texas and Virginia,
more than 40% of exports go to developing countries.
Forty percent of all ofU S agricultural exports go to Asia, more than to any other
region. In the past year, total U S exports to Asia have decreased
by 11 %.
More American exports mean higher paying Americanjobs Studies have shown
that export-related jobs in the U S pay an average of 15 % more than other jobs.
An important danger of the tinancial crisis is the contagion effect Russia's
economic difficulties and the recent market pressures in Latin America are in part
due to contagion The further dctcrIoration of those economies and others in Asia
could have an even more significant impact on the U S economy
State-by-state data can be obtained at
RR-2739
\1'\I'\I'.lIsfICUS.~(}\'p,.ess
docs K/obu/pdl
-30-
For jJress releases, sjJeeches, public schedules alld ofJicial biographies, call
Ollr
24-hollrfax ii11e at (202) 622-2fHO
PUBLIC DEBT NEWS
Department of the
Treasury • Bureau of the Public Uebt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
Office of Financing
CONTACT:
FOR IMMEDIATE RELEASE
october as, 199B
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
october 08, 1998
Term:
Issue Date:
Maturity Date:
CUSIP Number:
January
07, 1999
91279SBS9
RANGE OF ACCEPTED COMPETI'!'IVE BIOS:
Discount
Rate
Low 2/
-----4.140%
High
Average
Investment.
Rate 1/
Price
------
---------4.240%
4.160\'
4.264%
4.l55%
4.256%
98.954
98.948
98.950
Tenders at the high discount rate were allotted
78%.
AMOUNTS TENDERED AND ACCEPTSD (in thousands)
Tenderej
..• ----------
Tender Type
$
Competitive
Noncompetitive
SUBTOTAL
Bid-to-Cover Ratio
----------------7,670,141
334,200
334,200
----------------28,632,541
8,004,341
2,924,320
2,924,320
o
o
$
= 28,298,341
1,3l1,666
28,298,341
Federal Reserve
Foreign Official Add-On
TOTAL
----------------6,358,475
s
-----------------
PUBLIC SUBTOTAL
Foreign Official Refunded
26,986,675
1,311,666
Accepted
.. -----------
3l,556,861
$
/ 7,670,141 - 3.69
1/ Equivalent coupon-issue yield.
2/ $17,487,000 was accepted at rates below the competitive range.
RR-2740
http://www.publkdebt.treas.gov
10,928,661
PUBLIC DEBT NEWS
Department of the Trea:sury • Bureau of the Public Debt •
Washington. DC 20239
TREASURY SECURITY AtlCTION RESULTS
BUREAU OF THE PUBLIC DEET - WASHINGTON DC
office of Financing
CONTACT:
IMMEDIATE RELEASE
October 05 1 1999
FOR
202-219-3350
BILLS
RESULTS OF TREASURY/S AUCTTON OF 26-WEEK
lB2-Day Bill
Term:
October OS, 1999
April 08, 1999
Issue Date:
Maturity Date:
CUSIP Number:
912795BGS
RANGE OF ACCEPTED COMPE'rITIVE
Discount
Rate
------
Low
High
Average
BIDS:
Investmenl
Rate 1/
Price
-- ... _--
----------
97.992
97.877
97.884
4.319%
4.170%
4.200%
4.185%
4.350%
4.335%
Tenders at the high discount rate were allotted
AMOUNTS TENDERED AND
(in thousands)
Accepced
Tendered
Tender Type
----------------$
Competitive
Noncompetitive
PUBLIC
ACCE~TED
20~.
SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-on
17,246,125
l,16S,228
18,411, 353
6,322,353
1,680,000
1,060,000
20,091,353
6,002,353
3,645,000
3,645,000
-~---------------
$
./
= 18,411,353
5,15',125
l,l65,22S
o
o
TOTAL
lid-to-Cover Ratio
$
23,736,353
/ 6,322,353 - 2.91
Equivalent coupon-issue yield.
RR-2741
http://WWW .pubUcdebUreas.gov
$
11,647,353
FOR ThtIMEDIATE RELEASE
October 5, 1998
RR-2742
Chairmen's Statement
Special Meeting of Finance Ministers and Central Bank Governors
Finance Ministers and Central Bank Governors from a number of economies from around the
world met in \Vashington on October 5 to review progress· made to date in efforts to
strengthen the international financial system. 1
The Ministers and Governors welcomed the opportunity to gather once again on an informal
basis to discuss key issues facing the global economy. They regarded discussions among a
diverse group of countries with varied experience as valuable to increasing understanding and
helping develop consensus about issues of mutual concern.
Ministers and Governors discussed the current crisis and its implications for the global
financial system. They underscored the need for ongoing, urgent efforts to address the
difficulties faced by a number of economies and to stern further contagion. They called for a
particular focus on support for the vulnerable groups in society and for ways to address more
forcefully financial and corporate restructuring. They recognized that intensive work was
underway on these matters in individual countries and appropriate international financial
institutions. In this regard, rvIinisters and Governors strongly emphasized that sound domestic
policies are fundamental to healthy robust national economies and financial sectors and,
increasingly, to the prospects for other countries and the world economy as a whole.
Ministers and Governors welcomed the reports of the three working groups established in
April and thanked the co-chairs of these groups, as well as their participants, for their work.
They praised the efforts undertaken to consolidate views on a broad range of subjects -increasing transparency and accountability, strengthening national financial systems, and
resolving international financial crises. l\Iinisters and Governors called on the INIF, World
Bank, BIS, OECD and other relevant organizations to consider for implementation the
recommendations of the working groups as these organizations endeavor to take steps to
strengthen the international financial architecture.
II
The Managing Director of the Il\I[f, President of the World Bank, General Manager
of the BIS, Secretary General of the OECD, President of the European Central Bank and
Chairmen of the Interim and Development Committees also attended the meeting.
1
-2-
In view of the ongoing need to strengthen the international financial architecture, :Ministers
and Governors agreed to give further attention to a number of additional issues which they
believe to be of great importance. These issues include: promoting soundly based capital
flows; further improvements in transparency and disclosure; strengthening financial systems,
including ways to motivate countries to adopt and enforce international standards; maintaining
sustainable exchange rate regimes backed by consistent macroeconomic policies; and
developing new ways to prevent and respond to crises, including appropriate participation by
the private sector.
:Ministers and Governors agreed to work together in appropriate fora, such as the IMF Interim
Committee, on an expanded review of the international architecture, through a cooperative
and consultative process. This would include external input, particularly from the private
sector, in a number of key areas.
DEPARTMENT
TREASURY
OF
THE
TREASURY
fl) NEW S
OmCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASlllNGTON, D.C. - 20220 - (202)622-2960
EMBARGOED UNTIL 2 P.M.
Text as Prepared for Delivery
October 6, 1998
WRITTEN STATEMENT FOR THE RECORD
TREASURY ACTING DEPUTY TO THE BENEFITS TAX COUNSEL
DEBORAH WALKER
SENATE GOVERNMENTAL AFFAIRS SUBCOMMITTEE
ON OVERSIGHT OF GOVERNMENT MANAGEMENT, RESTRUCTURING, AND
THE DISTRICT OF COLUMBIA
Mr. Chairman and distinguished Members of the Subcommittee
I am pleased to submit the views of the Treasury Department on the Coal Industry Retiree
Health Benefit Act of 1992 ("the Coal Act"), which was enacted as part of the Energy Policy Act
of 1992, P.L. 102-486. In the letter of invitation, Chairman Brownback stated that the subject of
this hearing is "Agency Management of the Implementation of the Coal Act"
In previous testimony before Congress on the Coal Act (before the House Committee on
Ways and Means in September 1993 and June 1995), the Administration has expressed its strong
support for the goal of ensuring adequate funding ofretired miners' health benefits under the Coal
Act. We continue to strongly support this goal.
Background
The Coal Act requires that former employers of retired coal miners finance, in part, the
health benefits that previously were negotiated for those miners and their families by the United
Mine Workers of America ("UMW A").
Prior to the Coal Act, these benefits were provided for retired miners and their families
either by the miner's individual employer or through one of two multiemployer funds -- the 1950
UMW A Health Benefit Fund (the" 1950 Fund") or the 1974 UMWA Health Benefit Fund (the
"1974 Fund"). Contributions to both Funds were required of signatories to the national wage
agreements negotiated between the UMW A and the Bituminous Coal Operators Association, Inc.
("BCOA"). Employers that were not signatories to the national wage agreement also contributed
to the Funds under separate wage agreements negotiated with the UMW A
RR-2743
For press releases, speeches, public schedules and offidal biographies, call our 24-llOur fax line at (202) 622-2040
The 1950 Fund covered miners who had retired as of December 31, 1975, and their
beneficiaries. Miners who retired after 1975 generally received health benefits under the single
plan of their former employer. However, if the employer went out of business or left the coal
industry, the employer's retirees and their beneficiaries were covered by the 1974 Fund. As a
result, all of the retirees and their beneficiaries covered under the 1974 Fund were "orphans" for
whom no contributions were being made by their former employers. About half of the retirees
and their beneficiaries in the 1950 Fund were orphans
Beginning in the late 1980's, the Funds began to experience serious financial difficulties.
As of March 3 1, 1992, the combined deficit of the Funds reached $140 million and was projected
to grow dramatically if no changes were made. The deficit was caused by a number of factors,
including medical inflation and the trustees' inability to impose certain kinds of containment
mechanisms under the Funds. Moreover, the contribution base of the Funds was eroding. In the
early 1980's, for example, approximately 2,000 employers contributed to the Funds. That number
had fallen to about 300 in 1992.
In March 1990, as part of a compromise that helped settle the Pittston Coal Company
strike, the Coal Commission was established to study the Funds. In its report, published in
November 1990, the Coal Commission agreed that the problems of the Funds could not be solved
through private bargaining alone. The Coal Commission recommended establishing a statutory
obligation to contribute to the Funds. Although the Coal Commission was divided as to how this
obligation should be implemented, there was general agreement that it should cover all thencurrent signatory employers (companies that had signed the 1988 collective bargaining
agreement), as well as certain other employers who had signed previous collective bargaining
agreements.
In response to the Coal Commission Report, and amid growing concerns about the
continued viability of the Funds and the security of the retirees' benefits, legislation to address
retired miners' health benefits was introduced in Congress. Ultimately, Congress passed the Coal
Act as part of the Energy Policy Act of 1992.
The Coal Act
The Coal Act created two new benefit funds: (1) the UMW A Combined Benefit Fund (the
"Combined Fund"), which services beneficiaries receiving health benefits from the 1950 and 1974
Fund as of July 20,1992; and (2) the UMWA 1992 Benefit Plan (the "1992 Plan"), which
services certain employees who retired between July 20, 1992, and September 30, 1994, and
whose last signatory employer is not providing them with benefits. Employees retiring after
September 20, 1994, are not covered under the provisions of the Coal Act, but rather their
coverage is dependent on the provisions of later bargaining agreements.
2
Under the Coal Act, any employer that signed a wage agreement with the UMW A since
1950 and has retirees who benefit under the Funds could be obligated to pay premiums for the
health benefits of those retirees and their beneficiaries In addition, such signatory employers are
obligated to finance the health benefits of "orphans" in the Combined Fund whose former
employers are no longer in business. Each signatory employer's share of orphans is proportional
to the number of the employer's retirees who receive health benefits under the Combined Fund.
The Coal Act thus imposed a statutory liability for financing the retiree health benefits not
only on the operators that had signed the last union wage agreement prior to the passage of the
Coal Act (the 1988 wage agreement), but also operators that had signed previous agreements.
The Coal Act assigned retirees to operators in a priority that distinguished between signatories to
the 1978 and later wage agreements and those operators that had only signed wage agreements
prior to the 1978 wage agreement. This reflects in part the liability under the "evergreen" clause
of signatories to the 1978 and later agreements for contributions. The evergreen clause, which
was first included under the 1978 wage agreement, was incorporated into the agreement so that
signatories would be required to contribute as long as they remained in the coal business,
regardless of whether they signed a subsequent agreement. Under the evergreen clause, the
Funds could "reach back" to operators that were not signatories to the current union wage
agreement for contributions. To the extent that the Coal Act has codified this reach back
financing mechanism, signatories to 1978 and later wage agreements that are not signatories to a
current union wage agreement are often referred to as "reachback" operators; signatories only to
agreements before the 1978 agreement are referred to as "super reachback" operators.
In order to reduce the premiums associated with orphan beneficiaries, the Coal Act
authorized three annual transfers of $70 million each from the excess assets of the UMW A 1950
pension plan. In addition, beginning October 1, 1995, annual transfers of up to $70 million have
come from the interest earnings! of the Abandoned Mine Land Reclamation fund ("AML fund")
to cover the costs of orphans. The AML fund is financed by fees assessed on all coal mining
comparues.
Under the Coal Act, responsibilities for administering the Combined Fund are divided
among three separate entities, as described below:
(1) The Social Security Administration (SSA) -- The SSA is responsible for assigning
each coal industry retiree receiving benefits to a former employer or related party. The SSA also
calculates the annual per-beneficiary premium charged to each former employer. Following
assignment of beneficiaries to employers, the SSA is responsible for informing the former
employers and the trustees of the Combined Fund of the assignments. Finally, the SSA is
responsible for reviewing appeals raised by employers regarding assignments of retirees, and
reassigning the retirees when appropriate.
The aggregate total amount transferred under this provision is limited to the interest
earned and paid to the fund after September 30, 1992 and before October 1, 1995.
I
3
(2) Trustees of the Combined Fund -- As established by the Coal Act under section 9702
of the Internal Revenue Code, the Combined Fund is a private multi-employer plan, The Coal Act
provides for the Board ofTrustees 2 who are required, among other duties, to establish the
Combined Fund, to determine benefits to be paid from the Combined Fund J , to establish and
maintain accounts of the premiums that are required to be paid to the Combined Fund, to collect
the premiums, and to provide information to the SSA, as necessary, for carrying out the SSA's
duties under the Coal Act.
(3) Department of the Treasury -- Section 9707 of the Internal Revenue Code imposes a
penalty upon an assigned operator for failure to pay a required premium. The statute states that
the penalty "shall be treated in the same manner as the tax imposed by section 4980B" and thus
the IRS, as part of its general tax administration duties, is responsible for collecting the penalty,
The Coal Act does not address the reporting of delinquent operators by the Combined
Fund to the IRS. The IRS has established a mechanism with the Combined Fund to ensure that
information regarding delinquent payers is obtained when the Combined Fund determines that
there has been willful nonpayment. To date, no referrals have been received from the Fund,
Supreme Court Decision in Eastern Enterprises 1'. Apfel
The United States Supreme Court issued a decision on June 25, 1998, Eastern Enterprises
v. Apfel4 , holding the Coal Act unconstitutional as applied to Eastern Enterprises, a coal mine
operator that did not sign the 1974 or 1978 wage agreements, a so-called super reachback
company. We understand that the testimony of Marilyn O'Connell, Associate Commissioner for
Program Benefits, SSA, discusses the effect of this decision on the Fund's operation,
Reimbursements of Overpayments of Premiums.
The statutory language of the Coal Act does not include a procedure for the United States
Section 9702(b) of the Internal Revenue Code provides for the appointment of a board
of seven trustees. One trustee is designated by the BCOA to represent employers in the coal
mining industry; one trustee is designated by the three reachback companies with the greatest
number of eligible employees; and two trustees are designated by the UMW A These four
trustees select the other three,
2
Under 9703(b) of the Internal Revenue Code, the trustees of the Combined Fund are
generally directed to provide health care benefits "substantially the same as (and subject to the
same limitations of) coverage" provided under 1950 and 1974 Funds as of January 1, 1992.
3
4
118 S. Ct. 2131, 141 L. Ed, 451, 66 U. S, L. W, 4566,
4
to refund overpayments of premiums' The IRS has no role in the initial collection of the
premiums, which are paid directly to the Combined Fund. Notwithstanding that, the United
States District Court for the Eastern District ofYirginia held in Pills/oil \'. U.S., 1998 U.S Dist
LEXIS 10175, Civil Action Number 3.97CY294, that the government is liable for refund ofa
portion of the premiums imposed under the Coal Act (The refund claim concerned the
overpayment of premiums based on a determination by the Illh Circuit in Natiollal Coal
6
Association v. Chater that the level of premiums set by S SA exceeded the level authorized under
the statutory language of the Coal Act) The government is currently considering whether to
appeal the district court's holding that the government is liable for refunding a portion of the
premium. Subsequently, the court ordered that the Combined Fund indemnifY the US for the
reimbursements of overpayments made under the prior ruling
Conclusion
The primary policy goal of the Coal Act is to ensure that the benefits promised to retired
union miners and their families continue to be paid without interruption. The Administration
strongly supports this goal. In prior testimony, the Administration has expressed its concern
regarding amendments that could potentially weaken or undercut the contribution base from
which retiree's benefits are funded. The Supreme Court decision, by holding unconstitutional the
assignment of retired miners to a single super reachback coal operator, may reduce the number of
employers required to pay premiums to the Combined Fund. We understand that testimony by
Kathy Karpan, Director of the Department of Interior's Office of Surface Mining, suggests that
the current sources of funding may be adequate to address changes in retiree assignments and
other costs charged against the Combined Fund resulting from the J~as/ern decision.
There are many factors that could affect the ability of the Fund to continue to provide the
health benefits promised to the retired miners, including the number of employers responsible for
benefit payments, the level of the statutorily determined premiums, especially any increase in the
health costs for the retirees' relative to the medical inflation index factor provided under the Coal
Act, and the number and health of retirees and their families. We understand that the Combined
Fund continues to collect premiums from those responsible for funding retiree health benefits
under the Act. We would be happy to work with Congress to ensure that the security of the
funds and the health benefits for retired miners and their beneficiaries are not jeopardized.
Section 9706(f) provides for a procedure for an assigned operator to appeal the
assignment of a retiree, if it is believed that the information on which the assignment is based is
incorrect. In cases where the assignment is in error, the trustees are directed to reduce the
premiums of the operator by (or if there are not such premiums, repay) all premiums paid with
respect to the miner.
5
681 F.3d 1077 (lIth Cir. 1996)
- 30 -
5
PUBLIC DEBT N·EWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
Contact: Peter Hollenbach
(202) 219-3302
EMBARGOED FOR RELEASE AT 3:00 PM
October 6. 1998
PUBLIC DEBT ANNOUNCES ACTIVITY FOR
SECURITIES IN THE STRIPS PROGRAM FOR SEPTEMBER 1998
The Bureau of the Public Debt announced activity figures for the month of September 1998, of
securities within the Separate Trading of Registered Interest and Principal of Securities program
(STRIPS).
Dollar Amounts in Thousands
Principal Outstanding
(Eligible Securities)
$1,495,512,444
Held in Unstripped Form
$1,267,231,283
$228,281,161
Held in Stripped Form
$14,732,924
Reconstituted in September
The accompanying table gives a breakdown of STRIPS activity by individual loan description. The
balances in this table are subject to audit and subsequent revision. These monthly figures are included
in Table VI of the Monthly Statement of the Pliblic Debt, entitled "Holdings of Treasury Securities in
Stripped Form."
The STRIPS data along with the new Monthly Statement of the Public Debt, is available on Public
Debt's Internet homepage at: www.publicdebt.treas.gov.Awide range of information about the
public debt and Treasury securities is also available on the homepage.
000
RR-2744
http://www.publlcdebt.treas.gov
TABLE VI - HOLDINGS OF TREASURY SECURITIES IN STRIPPED FORM, SEPTEMBER 30, 1998
Corpus
STRIP
CUSIP
loan Description
Treasury Bonds
CUSIP.
912810DM7
008
DR6
DU9
DN5
DPO
DS4
DT2
DV7
DW5
OX3
OYI
OZ8
EA2
EBO
EC8
E06
EE4
EFI
EG9
EH7
EJ3
EKO
El8
EM6
EN4
EP9
E07
ES3
ETI
EV6
EW4
EX2
EYO
EZ7
FAI
FB9
FE3
Total Treasury Bonds,
Principal Amount Outstanding In Thousands
Maturity Date
Total
Outstanding
Par1lon Helll In
Unstnpped Form
POr1lon Held In
Stripped Form
Reconstituted
This Month
Interest Rate
11-5/8
12
10-3/4
9-3/8
11-3/4
11-1/4
10-5/S
9-7/8
9-1/4
7-1/4
7-1/2
8-3/4
8-7/8
9-1/8
9
8-7/8
8-118
8-112
8-3/4
8-3/4
7-7/8
8-1/8
8-1/8
8
7-1/4
7-5/8
7-1/8
6-1/4
7-1/2
7-5/8
6-7/8
6
6-3/4
6-112
6-5/8
6-3/8
6-1/S
5-112
912803 AB9
AD5
AG8
AJ2
912800 M7
912803 Ml
AC7
AE3
AFO
AH6
AK9
Al7
AM5
AN3
AP8
A06
AR4
AS2
ATO
AU7
AV5
AW3
AXI
AY9
Al6
BAO
BB8
BC6
BD4
BE2
BF9
BG7
BH5
BJI
BKS
Bl6
BM4
BP7
11/15/04
05/15/05
08/15/05
02115/06
11/15/14
02/15/15
08/15/15
11115/15
02115/16
05115/16
11115/16
05115/17
08115/17
05115/18
11/15/18
02115/19
08/15/19
02/15/20
05115/20
08115/20
02115/21
05115/21
08115/21
11/15/21
08115/22
11115/22
02115/23
08115/23
11115/24
02115/25
08115/25
02115/26
08115/26
11/15/26
02115/27
08115/27
11115/27
08/15/28
8,301,806
4,260.758
9,269,713
4,755,916
6,005,584
12,667,799
7,149,916
6,899,859
7,266,854
18,823,551
18,864.448
18,194,169
14,016,858
8,708,639
9,032,870
19,250,798
20,213,832
10,228,858
10,158,883
21.418,606
11,113,373
11,958,888
12,163,482
32,798,394
10,352,790
3.654.400
1,851,650
2,236,000
8,000
3,536,000
1,677,120
161,600
1,784,000
208,800
512,800
778,320
9,930.400
5,174.400
6,014.400
6,966,800
14,008,000
1,599,680
4,222,000
7,365,440
16,339,040
1,014.400
6,452,480
3,688,960
21,737,225
1,472,000
7,776,000
7,020,800
3,908,768
11,776,201
4,647,406
2.409,108
7,033,713
4,747,916
2.469,584
10,990,679
6,988,316
5,115,859
7,058,054
18,310,751
18086,128
8,263,769
8,842,458
2,694,239
2,066,070
5,242,798
18,614,152
6,006,868
2,793.443
5,079,566
10,098,973
5,506,408
8.474,522
11,061,169
8,880,790
2,923,626
11,353,561
19,000,276
2,677,662
3,096,370
9,300,247
12,684,616
9.494,618
10,531,577
8.424,071
10.404,556
22.427,339
11,776,201
492.435,002
325,577.459
166,857,543
10,699,626
18,374,361
22,909,044
11.469,662
11,725,170
12,602,007
12,904,916
10,893,818
11,493,177
10,456,071
10,735,756
22,518,539
8,792,000
8,628,800
3,301,760
220,300
1,399,200
961,600
2,032,000
331,200
91,200
0
340.800
217,300
127,200
0
419.200
572.480
446.400
1,561,600
0
0
122.640
1,008,640
444.800
24,000
75,000
556,800
754.560
544,800
280,320
505,280
4,800
581,760
580,160
876,650
416,000
30.400
179,200
414,368
463,120
632,000
133.440
383,100
288,000
38,800
148,800
33,600
0
0
13,206,018
TABLE VI
Loan Des:;"'";:;:
HOLDINGS OF TREASURY SECURITIES IN STRIPPED FORM. SEPTEMBER 30. 1998 .. Continued
Principal Amount Outs landing In Thousands
Co'PUS
STRIP
CUS.?
~I"I
Matunty Date
r
Ser,es
912827W1V8
XU
A
C
3H3
AK
3K6
Unstnpped Form
Slrlpped Farm
B
AL
0
AM
8·7'8
8· 7'8
9-'18
8
5-314
5-518
7.7 18
I
I
l1i15198
ARe
AS6)
02/15199
9902875
9719623
05115.99
10.047103
AT41
08/15199
CB11
09130199
~~~I
10131199
10163644
17.487.287
16.823.947
11115199
10.773960
CGO
11130199
17.051.198
AN
5·5/8
16.747060
Y
5·318
8·112
5·112
{~~II
12131199
01131100
17.502026
10.673.033
17.776.125
17.206.376
15.633.855
10.496.230
16.580.032
A
Z
4A7
4C3
Y'lV6
4G4
4J8
AB
AC
B
AD
AE
4Ml
AF
ZE5
C
402
4RO
ZN5
AG
AH
3M2
X
ZX3
3WO
A85
4E9
A
S
B
T
B92
C
025
F49
D
A
G55
3J9
3L4
B
M
N
0
303
P
3S9
3V2
0
C
J78
A
3Z3
4B5
0
E
CR6
CT2
5·1/2
5·518
8·718
5·112
5·318
5·318
8·314
5·118
4·112
8·112
5-314
7·314
5-318
8
5·518
7·718
7·112
7-112
6·318
5·7/8
5·314
5-314
5·518
5·112
6·114
5-112
5·112
5·314
5·112
5·318
5·314
5-114
5·718
7·114
02115100
02129100
03/31/00
CV7
04130100
AWl
CZ8
OBO
05/15100
05131100
14.939057
006
06/30100
07/31100
AX5
OFl
08115100
08131100
11.080.646
OG9
09130100
AY3
11/15100
19.268.785
11.519.682
CF2
11/15100
16036.088
AlO
CPO
02115101
BA4
CX3
05115101
05115101
BB2
08/15/01
11.312.802
15.367.153
12.398.083
12.873.752
12.339.185
BCO
BD8
11/15/01
24.226.102
05/15/02
7.699.202
08/15/02
10/31/02
CH8
11/30/02
12.120580
CKl
CN5
12131102
12.052433
12.052.433
01/31/03
13.100640
BF3
02115103
23.562.691
CS4
CU9
02128/03
13.670.354
03/31/03
CW5
04/30103
0A2
05/31/03
OC8
06/30/03
8Gl
08/15/03
OE4
08/15/03
14.172892
12.573.248
13.132.243
13.126.779
28.011.028
19.852.123
13.100.640
22.925.187
13.626.354
14.172.892
12.573.248
13.132.243
13.126.779
BH9
02115104
12.955077
16.015.475
09/30102
F
4K5
L83
4N9
N81
P89
088
H
B
A
B
C
R87
0
586
A
T85
U83
V82
B
C
0
W81
X80
Y55
A
B
C
6·718
7
Z62
0
6·1/2
2JO
B
C
BW6
BX4
02115107
2U5
05/15/07
3EO
3X8
4F6
0
B
C
6·114
6-518
6-118
CA3
08115/07
5-112
C08
5·5/8
CYl
02115108
05/15/08
27.547.028
5008 000
34 ',2800
5038400
4.353875
:i
89600
107200
44800
115000
217.600
o
219200
o
4.177600
41.600
o
o
o
185600
99.200
o
2.967.600
47.600
o
o
o
o
o
o
5.267.200
14400
o
o
o
o
o
o
3.897.760
63.200
o
o
o
o
4.564.000
34.800
o
50.400
3.613.600
4.800
o
o
3.894.575
152.050
o
o
3.312.000
4.861.360
44.800
207.600
2.302000
55.600
1.548.800
51.200
35.200
61.600
o
o
o
200.800
o
o
637,504
44.000
128.416
o
o
o
o
o
o
o
o
o
464.000
o
o
156.000
o
o
195.200
32.000
14,409.172
31.200
124.800
12.723.267
14.373.760
13.827.554
14.739.504
623.200
o
o
19.852.123
12.759.877
BN6
BPl
B09
05/15/05
BR7
BS5
02115106
05/15/06
14.440.372
13.346.467
14.373.760
13834.754
14.739.504
15.002.580
15.209.920
15.513.587
16.015,475
BTl
07/15/06
22.740.446
22.740,446
BUO
o
o
10/15/06
22.459675
13.103.678
13.958.186
25.636.803
13.583.412
22.459.675
13.043.294
13.926.186
60.384
32.000
25.616.003
20.800
13.583,412
27.190.971
o
27.190.971
o
o
o
944.254.725
882331.107
61.423.618
1.526.906
17.136.381
16.231 183
8,495.566
17.136.381
16.231.183
8.495.566
41.863.130
41.863.130
16.959.586
16.959.586
16.959.586
16.959.586
1495512444
1267.231.283
BJ5
05/15/04
7·1/4
BK2
7·718
7·112
6·112
6·112
BlO
BM8
08/15/04
11/15/04
02115105
08/15/05
11/15/05
Total Treasury Noles
Treasury Infiatlon·lndexed Notes
CUSIP
Senes Interest Rate
9128273A8
J
3-5;8
2M3
A
3·3/8
3T7
A
3-5/8
15.633.855
5229030
16.580.032
14.939.057
18.683.295
7.182.886
20028533
19.268.785
6.955.682
15.985.688
BE6
CC9
CE5
G
5·5/8
20.028.533
17.206.376
11.714.397
23.859015
12.806.814
11.737284
4H2
5·7/8
18.683.295
4894875
6.306 823
5 008 703
5 799.769
17.269687
16.604.747
6596360
16.865.598
16.647.860
17.502.026
7.705.433
17.776.125
15.367.153
8.503 508
12.873.752
9.027.185
19.364.742
9,412.397
22.310.215
12.771.614
11.675.684
11.919.780
02115/01
401
J
Th,S Monlh
I
II
912820 AOOi
5·5/8
YN6
3Y6
Reconstituted
i
ir:ereSl Rate I
0
XN7
XW7
YES
3P5
3Rl
3U4
Outslandlng
I
Treasur, Notes
C.;:>
Ii
L--""""'T,-o-la-:I---r----P.co-rt=-,-on-.H:-::e7"ld7'"'-=n--:I-'po;o::::rt;:,o;:;n:;-:;h-;;e;;:.a~'-;;n-!I
912820 BZ9
07/15/02
BV8
01115107
Cl9
01/15/08
Total InRatlon·lndexed Notes
15.002.580
15.205.120
15.509.427
o
7.200
6.640
o
o
o
o
o
4.800
o
4.160
o
o
o
o
o
4.800
o
o
o
o
o
o
o
o
o
o
o
o
o
Treasury Infiallon·lndexed Bands
CUSIP
Inle'est Rate
912810 F05
3-5.8
912803 BN2
Total {nfiatlon·lndexed BcrdS
Grand Total
N"'e On tr-e 4:r. 'AoOr'l(;oa .. o' ea..:.."" "".:~:n TaDle"
PwD:,': ::;e~[ 5 webs·te a:
"':-:= •...w ..
C':.Jb!,Cdet:t
ft'11i
04/15/28
228.281.161
14.732.924
De a¥apaOle a~er 3 00 p m eastem time on tne Commerce Department s EconomiC Bulle[Jn Board \EBB) and on tne Bureau of the
~eas gov ~'jr <;"lore Informatlon about ESB call :2']2,482.1966 The balances In t1"u5 table are sutaect to audit and SubseQuent adjustments
I
DEPARTMENT
OF
THE
TREASURY
~~/78~9~. . . . . . . . . . . . . . . . . . . . . .. .
........................
OFFICE OF PUBUCAFFAIRS. 1500 PENNSYLVANlAAVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622·2960
EMBARGOED UNTIL 2:30 P.M. EDT
T ext as Prepared for Delivery
October 7, 1998
ASSISTANT SECRETARY OF THE TREASURY FOR ECONOMIC POLICY
DA VID W. WILCOX REMARKS AT THE ANNUAL MEETING OF THE
NATIONAL ASSOCIATION FOR BUSINESS ECONOMICS
WASHINGTON, DC
Thank you. It's a pleasure to be here today with a group that includes so many of our
profession's foremost observers of both the US and global economies.
I'd like to use this opportunity for three purposes First, to outline the current domestic
macroeconomic environment in the United States; second, to describe the effects on the US.
economy thus far of the global financial crisis; and third, to sketch the outlook for the American
economy going forward.
Recent weeks have witnessed a remarkable shift in sentiment among observers of the US.
economy, due in no small part to events growing out of the overall global financial crisis. We
must not underestimate the risks that situation poses to our economy; but it would be equally
wrong to allow those events to obscure the remarkable recent performance of the US.
macroeconomy. With that in mind, I'd like to offer a little context about where things currently
stand on the domestic front.
In the eighth year of the current expansion, the fundamentals of the U.S. economy remain
sound. Thus far, domestic demand has proven sufficiently robust to keep the economy on a
course of solid growth, even in the face of economic turmoil abroad. And when we closed the
books on the fiscal year that ended one week ago, the Federal government recorded a budgetary
surplus for the first time since 1969. As a reminder, it's worth reviewing a number of the most
recent indicators:
•
First and foremost, unemployment is at 4.6 percent, and has been below 5 percent for 15
months running - the longest such period since 1970 For college-educated workers, the
joblessness rate is a remarkably low 1.6 percent. During the first nine months of 1998
alone, nearly two million new jobs have been created, extending the total since the Clinton
Administration took office in lanuary 1993 to 16.7 million
RR-2745
1
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622·2040
•
Real incomes are rising. Over the past 12 months, averane
hourly. earnings have increased
t)
2.8 percent in real terms - the largest such increase since the early 1970's. Earlier in the
expansion, real wages had been stubbornly sluggish, and a common complaint about the
U.S. economy was that it was generating an ample number of jobs, but meager gains in
real income. No longer so.
•
During 1996 and 1997, real GDP grew nearly 4 percent per year, the fastest annual
increases in a decade. In the first quarter of this year, the pace of growth jumped to
5.5 percent at an annual rate, before easing backto 1.8 percent in the second quarter.
Throughout 1998, domestic final demand has remained strong. The slowdown during the
second quarter was in large part due to a slowdown in inventory investment to a pace that
should be more sustainable.
•
One of the most encouraging features of the current expansion has been the strong
performance of private investment. Real business fixed investment grew at a 10 percent
annual rate over the five years ending in the second quarter of 1998, the best performance
since the mid-1960s. As a share ofreal GDP, real investment has risen to a
post-World War II record in recent years. And given our recent move from fixed-weight
national income accounting to chain-weighted, this is a record that will not be revised
away.
•
Buoyed by strong real income growth and the drop in interest rates over the past year, the
housing market has been booming. The 1.6 million pace for housing starts so far this year
is the highest in more than a decade.
~
Even with all of the forward momentum in the domestic economy, there are few signs so
far that inflationary pressures are building to any significant extent. Indeed, as Chairman
Greenspan noted here this morning, inflation remains low, if not declining. That, in itself, is
remarkable, given the length and pace of the expansion and the relatively low level to which the
unemployment rate has been driven.
•
"Core" CPI inflation (excluding food and energy) remains near the low level of the mid1960s. To be sure, a fraction of the recent favorable readings reflects changes in
measurement methodology, but the bulk reflects genuine slowing in the overall trend in
inflation.
•
The core PPI showed no increase in 1997, the first time that has happened since the series
began in 1974. The core index has risen only moderately so far in 1998.
•
The chain-weighted GDP price index increased at less than a 1.0 percent annual rate in the
first half of the year, down from 1.7 percent over the four quarters of 1997. This was the
first time that inflation by this measure has been below I percent since the early 1960s.
2
The real proof comes not in these backward-looking measures, but in forward-looking
indicators, and inflation expectations over the next five years remain remarkably low. The
University of Michigan's survey of consumer sentiment finds that inflation expectations have
continued to edge down over the past year despite the low level of the unemployment rate.
Why has the recent inflation experience been so favorable,) Many observers of labor
markets believe that the Nonaccelerating Inflation Rate of Unemployment (NAIRU) - the
theoretical level of unemployment below which the economy generates inflation - has fallen in
recent years, to around 5-112 percent or perhaps even less. A lower NAIRU implies less
inflationary pressure for any given level of the actual unemployment rate.
Another factor that has probably played a role in the recent low inflation results has been
the healthy pace of productivity growth over the past two years or so. There are even some hints
in the data that trend productivity may be inching up, boosted by strong investment spending.
Indeed, output per hour as officially measured, using the output side of the national income and
product accounts, has risen at a 1.3 percent annual rate since the business cycle peak in the third
quarter of 1990 - slightly faster than the 1.1 percent trend rate of growth since 1973. And if
calculated (as it used to be) using data from the income side of the national accounts, productivity
has risen at a 1.5 percent annual rate since the 1990 peak
As a result of the strong economy, as well as President Clinton's 1993 deficit reduction
package and the bipartisan budget package enacted in 1997, we have just recorded the first
budget surplus in 29 years. The Federal budget deficit, which reached an all-time high of
$290 billion in fiscal year 1992, is no more. Thanks to a commitment to fiscal discipline and the
strong economy, the Federal government ran an estimated $70 billion budget surplus in fiscal year
1998. This is no small accomplishment.
The longer-run fiscal outlook is also encouraging, with surpluses forecast as far as the eye
can see. I never thought I would see the day when serious market commentators furrowed their
brows over the issue of whether there would be sufficient supplies of Treasury securities to
support a deep and liquid market.
One long-run challenge that we do face is dealing with the demographic strains on the
Social Security system, but as many of you know, President Clinton has made clear his
determination to address this issue now, and to reserve the budget surpluses, in their entirety, until
we have arrived at a solution. Indeed, the President is prepared to veto any bill the Congress
sends him that would threaten to squander the surplus before Social Security reform is in place.
The Administration's position on this issue is easy to remember, because it is summed up in the
simple phrase that the President first used in his State of the Union Address earlier this year:
"Save Social Security First."
The lesson I take away from all of this is that, if we must enter a period of heightened
global financial turmoil and greater macroeconomic risk, which we clearly are doing, then we are
3
starting from a remarkably favorable position. Output and employment are at a high level and
retain forward momentum. Inflation is under control. A major step toward getting our fiscal
house in order has been taken, with the achievement of the first balanced budget in 29 years And
a process for shoring up the long-term finances of the Social Security system has been put in
place.
That said, the financial and international environment clearly has grown less hospitable of
late, and poses decided risks to our economy. Indeed, we concur with the 57 percent of
respondents to the latest NABE Economic Policy Survey who identify fallout from the
international financial crisis as posing the most serious risk to the US economy.
Beginning with the devaluation of the Thai baht in July 1997, Asia, Russia, and, more
recently, Latin America have come under varying degrees of financial pressure. At the same time,
the situation in Japan has deepened in severity. The effect on the U. S. has evolved slowly, and
although it is too early to know for sure what the ultimate scope of that impact will be, it is clear
- if this question had ever been in doubt - that the effects on our economy will be important.
Thus far, the most noticeable effect on the domestic real economy has been on our balance
of trade. The continued strength of the US. economy relative to the rest of the world - most
notably East Asia - has led to a significant increase in our current account deficit. Thus far, the
shift in the balance of trade has mainly been a story about exports. Indeed, total U.S. exports in
real terms actually declined 2.8 percent at an annual rate in the first quarter of this year, and 7.7
percent at an annual rate in the second - a sharp contrast to the almost 10 percent average
annual growth in real exports over the preceding four years. Meanwhile, real imports into the
United States have not accelerated thus far; in fact, they rose at a slightly slower pace in the first
half than they did in 1997.
Overall, the decline in net exports took about 2 percentage points off the growth of real
GDP in the United States in the first half of this year. And while we expect that effect to diminish
going forward, we agree with the majority of respondents to the NABE Survey forecast who
expect that our trade deficit will remain a net drag on the macroeconomy for at least the next few
quarters. Moreover, if the turmoil continues to spread, we run the risk of additional impact on
our economy.
A fascinating aspect of the last year or so is that several aspects of the international
situation acted to buffer the American economy from what could have otherwise been a more
severe impact. Interest rates have been lower, giving a boost to home building and car buying.
And import prices and oil price have been lower than they otherwise would have been, helping to
hold down our overall inflation rate.
More recently, however, some aspects of this situation have become less benign. For
example, as Chairman Greenspan discussed with you at some length this morning, yield spreads
between Treasuries and other securities have widened, in some cases dramatically. This appears
4
to reflect both an increased appetite for liquidity, pure and simple, and an increased aversion to
credit risk.
•
As evidence of the increased appetite for liquidity, witness the widening of the so-called
on-the-run premium for Treasury securities - that is, the spread between the yield on the
most recently-issued security of a given maturity, and its nearest, slightly more aged
neighbor. For 30-year bonds, this spread has widened from an average of about 5 basis
points over the full span of 1998 thus far, to recent readings of about 13 basis points.
•
At the same time, the market has sharpened the distinctions it is drawing between
borrowers with different risk profiles. While spreads over Treasury rates have increased
even for the most highly-rated borrowers, certainly the most dramatic increases in relative
borrowing costs have occurred on below-investment-grade bonds. And, not surprisingly,
net issuance of bonds and stocks has slowed - and, in the case of high-yield debt - very
sharply so.
•
Thus far, the best evidence we have, which comes from the Fed's Senior Loan Officers'
Survey, is that terms on bank loans have been tightened mainly for large customers, but
not much yet for smaller businesses, or for individuals.
Evidence of the impact of the global financial crisis on the US economy - as well as
other economies throughout the world - underscores the importance of Congress approving full
funding for the International Monetary Fund. Failure to do so puts American prosperity at risk.
As we face what could be the world's greatest economic challenge in half a century - one in
which the nations of the world are looking to the United States for leadership - disengaging
from the increasingly interdependent global arena simply ought not be an option. As President
Clinton said last month: "History teaches us that at a time of worldwide difficulty, it would be
folly to retreat into a protectionist shell."
Let me conclude by commenting briefly on the near term economic outlook for the United
States. The sharp downward adjustments taking place in many foreign economies and the
widespread appreciation of the dollar in recent years are leading to expectations for moderated
growth rates in the U.S. economy.
Such a tempering in growth does not on its face pose a major threat to the longevity of the
current expansion and has, in fact, been expected for some time now. Let me be clear: Although
the precise impact of the global financial crisis on the US economy is at this point uncertain, the
latest evidence available to us makes a strong case that the current expansion will continue. The
unemployment rate continues to hover at historically low levels And corporate balance sheets
remain generally healthy, with high profit levels relative to interest costs and manageable debt.
With inflation in both the US. and other G-7 countries as a whole low, and in some cases
declining further in recent months, there is clearly latitude to focus on what President Clinton has
5
identified as the number one priority, namely generating sustainable and appropriate growth
At the same time, we expect to stay on the responsible path of strict fiscal discipline
charted by this Administration almost six years ago. According to the Office of Management and
Budget's Mid-Session Review, the budgetary outlook is bright. OMB forecasts that the surplus
will grow over the next four years to $148 billion by 2002. By 2008, OMB forecasts a surplus of
just over $340 billion. Such surpluses would likely lead to higher savings and investment and
continued low interest rates. Moreover, provided we can maintain the kind of fiscal discipline that
we've been able to muster over the past few years, there is every prospect of continued sound
fiscal policy for many, many more years.
The current strength of the U. S. economy is in large part the result of a combination of
sound policies: deficit reduction, open markets, and investing in our people Our commitment to
these sound policies benefits both our domestic economy and the global economy With the
fundamentals of the U. S. economy strong - and with an outlook for continued strength in the
domestic economy - the United States is in a position both to continue to generate solid
economic growth at home and to playa leading role by working with industrialized and emerging
nations, as well as the international financial institutions, to encourage responsible reforms and
measures to stem the tide of the contagion effect in economies around the world.
- 30 -
6
10-07-96
I'UDllC AUairs
PUBLIC DEBT NEWS
Department 01 the Treaaury • Bureau 01 the Public Debt • Washington, DC 20239
TREASURY SECURIT~ AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
FOR IMMEDIATE RELEASE
October 07, 1998
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 9-YR 3 -MO INFLATION- INDEXED NOTES
This issue is a reopening of an inflation-indexed note originally issued
January 15, 1998.
Interest Rate:
Series:
CUSIP No:
STRIPS Minimum:
Issue Date:
Dated Date:
Maturity Date:
3 5/8\
A-2008
9128273T7
$1,600,000
High Yield:
October 15, 1998
July 15, 1998
January 15, 2008
Adjusted Price: 100.969
3.650t
All noncompetitive and successful competitive bidders were awarded
securities at the high yield. All tenders at lower yields were
accepted in full.
Tenders at the high yield were allotted
88\.
Adjusted accrued interest of $ 9.15983 per $1,000 must be paid for
the period from July 15, 1998 to October 15, 1998.
AMOUNTS
TENDERED AND ACCEPTED
(in
thousands)
Accepted
Tendered
Tender Type
15,320,850
23,808
$
Competitive
Noncompetitive
PUBLIC SUBTOTAL
8,000,:;)9
400,000
400,000
15,744,658
$
7,976,730
23,808
15,344,658
Federal Reserve
TOTAL
$
$
8,400,538
Both the unadjusted price of $ 99.797 and the unadjusted accrued interest
of $ 9.06250 were adjusted by an index ratio of
1.01074, for the period
from January 15, 1998, through October 15, 1998.
Median yield
3.559%: 50\ of the amount of accepted competitive
tenders was tendered at or below that rate.
Low yield
3.250\:
5\ of the amount of accepted competitive
tenders was tendered at or below that rate.
Bid-to-Cover Ratio
= 15,344,658 I
8,000,538
=
1.92
bUp;//WWW,pubUcdcbt,treM.P
RR-2746
2:08pm
p.
0:
DEPARTMENT
OF
THE
TREASURY
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220 • (202) 622·2960
Monthly Release of U.S. Reserve Assets
October 7, 1998
The Treasury Department today released U.S. reserve assets data for the month of
September 1998.
As indicated in this table, U.S. reserve assets amounted to $75.678 million at the end
of September 1998, up from $73,544 million in August 1998.
End
of
Month
Total
Reserve
Assets
Gold
Stock 1/
Special
Drawing
Rights 2.1 3./
Foreign
Currencies 1/
ESF System
August
73,544
11,046
9,891
13,939 17.507
21.161
September
75,678p
11,046p
10,106
14,529 18,353
21,644
Reserve
Position
in IMF 2.1 'jj
1998
II Valued at $42.2222 per fine troy ounce.
'Z.I Beginning July 1974, the IMF adopted a technique for valuing the SDR based on a
weighted average of exchange rates for the currencies of selected member countries. The
U.S. SDR holdings and reserve position in the IMF also are valued on this basis
beginning July 1974.
3.1 Includes allocations of SDRs by the IMF plus transactions in SDRs.
4/ Includes holdings of Treasury and Federal Reserve System; beginning November 1978.
these are valued at current market exchange rates or, where appropriate. at such other
rates as may be agreed upon by the parties to the transactions.
51 Includes $483 million of loans to the IMF under the General Arrangements to Borrow
(GAB) in July 1998.
p Preliminary
r
Revised
RR-2747
TREASURY
NEWS
omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C. • 20220. (202) 622-2960
EMBARGOED UNTIL 9:30 A.M. EDT
Text as Prepared for Delivery
October 8, 1998
ASSISTANT SECRETARY OF THE TREASURY (FINANCIAL MARKETS)
GARY GENSLER
HOUSE SUBCOMMITTEE ON DOMESTIC AND
INTERNATIONAL MONETARY POLICY
Good morning Mr. Chairman, Congresswoman Waters and Members of the
Subcommittee.
I am pleased to be here today to discuss the implications of European Monetary Union
on U.S. currency policy, specifically on higher denomination notes. This is a timely topic,
and I thank the Chairman for holding this hearing to discuss these important issues. I am glad
to be joined by Theodore Allison, Assistant to the Board of Governors of the Federal Reserve
System. Mr. Allison and I serve as members of the Advanced Counterfeit Deterrence Steering
Committee, which is an interagency committee composed of officials from the Treasury
Department, Secret Service, Bureau of Engraving and Printing, and the Federal Reserve. The
Steering Committee was established in 1982 to coordinate the counterfeit deterrent activities of
the various government agencies.
The European Union has decided to issue 500 Euro notes, which, at today's exchange
rates, would be worth close to $600. As way of background, I'd like to review the history of
higher denomination notes in this country and make some observations about the use of the
$100 note. Then I will turn to some important law enforcement considerations that would be
raised by any proposal to reissue higher denomination U.S. currency.
Currently, the $100 note is the highest denomination note we issue. Under legislation
passed in 1918, however, we are authorized to issue currency in denominations of $500,
$1,000, $5,000 and $10,000. These larger denomination notes were issued primarily for
RR-2748
D
ieases,
p
biooraphies, call our 24-hour fax line at (202) 622-2040
ror
press re
s eech es, Pu blz'c schedules and oihcial
'JJ<~'.
interbank transactions. We stopped printing these denominations in 1946, and ceased issuing
them in 1969. At the time, Treasury and the Federal Reserve said, "Use of these larger
denominations has declined sharply over the last two decades and the need for them appears
insufficient to warrant the added cost of production and custody of new supplies.
II
Since 1969, the amount of U . S. currency in circulation has grown from approxi matel y
$50 billion to more than $450 billion. Over the same time, the proportion of U.S. currency
held overseas has grown from one half to two thirds. Close to $300 billion of our currency
circulates outside our borders. We study the reasons why people outside this country hold our
currency. In accordance with the Antiterrorism Act of 1996, Treasury is to conduct a survey
every three years as to the reasons for U.S. currency use globally. Our first report is due next
fall. Our work to date shows that there are a variety of reasons for use of our currency.
These include use of dollars for trade purposes and as a store of value. This is particularly
true in countries subject to hyperinflation or where the local banking system is
underdeveloped .
There are a number of benefits we derive from foreigners holding our currency. First,
it is a convenience to Americans traveling and doing business abroad. Second, the Federal
Reserve earns interest on the assets it holds to support U.S. currency. This interest is then
paid over to the Treasury for the benefit of U.S. taxpayers.
The dollar currently has competition from high denomination currency. Within the
G-7, Germany, Italy and Canada all have notes now in circulation with values higher than
$100. Germany issues a DM 1,000 note, with a current value slightly more than $600; Italy
issues a 500,000 lire note, with a current value of about $300, and Canada issues a C$1 ,000
note worth more than $650.
Despite the existence of these higher denomination notes, demand for $100 notes has
continued to grow at about 5 percent per year for the past ten years. Most of the U.S.
currency that is held abroad is $100 bills, and we estimate that approximately 75 percent of
$100 bills are held abroad. In comparison, we estimate that there is only somewhat more than
$50 billion of German currency circulating outside Germany and not a significant amount of
Italian or Canadian currency outside those countries. The extent of the potential competition
from higher denomination Euro notes is therefore uncertain.
If, however, higher denomination Euro notes were to be used instead of dollars as a
store of value, it would reduce the amount of the Fed's earnings, and therefore increase
Treasury's need to raise money publicly. There is not enough information, however, to
estimate what the effect might be on our borrowing costs.
The Treasury Department also has concerns that the issuance of $500 bills could
facilitate money laundering. Money laundering involves the placement, layering, and
reintegration of illicit proceeds derived from criminal activity into the financial system. With
2
Congress's support, Treasury has used investigative and regulatory tools to fight the placement
of the proceeds of crime into the financial system. For example, Currency Transaction
Reports provide information to law enforcement on large cash transactions at financial
institutions in the U. S.
When criminals are deterred from placing illicit proceeds directly into the U.S.
financial system, they often seek to hide it and transport it for placement in the financial
system outside the United States. One practical deterrent has been that large physical
quantities of cash are difficult to transport and to place within the financial system. At today's
prices, $1 million worth of cocaine weighs about 44 pounds, but the cash paid, usually in $5s,
$ lOs and $20s, for that cocaine can weigh up to 250 pounds, and is quite bulky. In $100 bills,
the weight of $1 million is about 22 pounds.
If criminals had access to $500 bills, $1 million could weigh as little as 4.4 pounds,
less than the average bag of sugar or flour available at the grocery store. Higher denomination
notes would make it easier for criminals to transport and hide cash, making the money
laundering process cheaper and more likely to evade detection. As a result, the net cost of
committing many crimes could decline, as would the government's ability to punish and deter
such crime.
Let me conclude by saying that we have no plans to reissue $500 notes.
If there were a proposal to do so, we would have to carefully balance the concerns I
have outlined. We have time, however, to evaluate carefully any proposal to reissue $500
notes. Euro notes will not come into existence until January 2002. The Bureau of Engraving
and Printing estimates it would take 12 to 18 months to design and issue a new $500 bill if we
were to decide to do so.
That concludes my statement, Mr. Chairman. I would be happy to answer your
questions.
-30-
3
DEPARTMENT
OF
THE
TREASURY
()FI~JCE
TREASURY
NEWS
0.' PUBLIC AFl'AIRS. 1500 rEN~SYL"A:'\IA AVENUE. ri.W •• \\'ASI1JS(:TO~, D.C.t ZOllO t (202) 6ll·ZY60
CONTACT:
EMBARGOED UNTIL 2:30 P.M.
October S, 1998
Office of Financing
202/219-3350
TREASURY OFFERS 13-WEEK, 26-WEEK, AND 52-WEEK BILLS
The Treasury will auction three series of Treasury bills totaling approximately $27,000 mill~on to refund $25,453 million of publicly held securieies
maturing October 15, 1998, and to raise about $1,547 million of new cash.
In addition to the public holdings, Federal Reserve Banks for their own
accounts hold $13,'02 million of the maturing bills, which may be refunded at
the weighted average discount rate of accepted competitive tenders. Amounts
issued to these accounts will be in addition to the offering amount.
The maturing bills held by the public include $3,123 million held by
Federal Reserve Banks as agents for foreign and international monetary authorities, which may be refunded within the offering amount at the weighted average
discount rate of accepted competitive tenders. Additional amounts may be issued
for such accounts if the aggregate amount of new bids exceeds the aggregate
amount of maturing bills. For purposes of determining such additional amounts,
foreign and international monetary authorities are considered to hold $l,863
million of the original l3- and 26-week issues, and $1,260 million of the
original 52-week issue.
Note that for the 52-week hill auction the Doncompehitjv~ closing time
will be 11:QO a.m. and the competitive closing time will be 11;)0 a.m. Easteru
Daylight Saving time. The noncompetitive and competitive closing times for
the 13- and 26-week bills will be the normal 12:00 noon and 1:00 p.m. Easteru
Daylight Saving time. respectively.
Tenders for the bills will be received at Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington, D.C. This offering
of Treasury securities is governed by the terms and conditions set forth in the
Unifor.m Offering Circular (31 eFR Part 356, as amended) for the sale and issue
by the Treasury to the public of marketable Treasury bills, notes, and bonds.
Details about each of the neW securities are given in the attached offering highlights.
RR-2149
000
Attachl%lent
FDr press reielucs, speeches, public .fchcduie:,' and official billgraphies, call our lJ-hour fa:" line Ilt (202) 622-1040
HIGHLIGHTS OF TREASURY OFFBRINGS OF BXLLS
TO BE ISSUED OCTOBER 15, 1998
October 8, 1.998
Offering Amount ........•••••..•..• $8,000 million
Pescription pf Offering:
Ter.m and type of security ••••....•
CUSIP number ......•.•..••.•......•
Auction date . . . . . . . . . . . • . . . • . . . . . .
Issue date ••.••...•.•......••.....
'olaturi ty date. . . . . • . • . . • • • • • • . . . ..
Original issue date •.....•.•..•.••
Currently outstanding ....•...•••..
loIinimum bid amount and mUltiples
~llowing
91-day bill
912795 AX 9
October 13, 1998
October 15, 1998
January 14, 1999
July 16, 1998
$11,213 million
$1,000
rul§s apply to all segur1ties mentioned
$8,000 million
$11,000 million
182-day bill
912795 BH 3
October 13, 1998
October 15, 1998
April 15, 1999
October 15, 1998
364-day bill
912795 CC 3
October 13. 1998
October 15. 1998
October 14. 199'
October 15, 1998
$1,000
$1,000
abov~:
Submission of Bids:
Noncompetitive bids ....•• Accepted in full up to $1,000,000 at the average discount rate of accepted
competitive bids.
Competitive bids .....••. (1) Must be expressed as a discount rate with three decimals in increments
of .005%, e.g., 7.100%, 7.105%.
{2} Net long position for each bidder must be reported when the sum of the
total bid amount, at all discount rates, and the net long position is
$1 billion or greater.
(3) Net long position must be determined as of one half-hour prior to the
closing time for receipt of competitive tenders.
Maximwm Recognized Bid
at a Single Yield . . . . . . . 35% of public offering
Maximum Award •..........•.. 35% of public offering
R~c:; e i p t
Q L1'.sm~hu:.:t
:
52-week bill:
Noncompetitive tenders
Competitive tenders ... :-.
~.§:_week bill.e:
Noncompetitive tenders ..
Competitive tenders .....
fayment
Ter.m~ •••••••••••••••
Prior to 11:00 a.m. Eastern Daylight Saving time on auction day
Prior to 11:30 a.m. Eastern Daylight Saving time on auction day
Prior to 12:00 noon Eastern Daylight Saving time on auction day
Prior to 1:00 p.m. Eastern Daylight Saving time on auction day
By charge to a funds account at a Federal Reserve Bank on issue date, or
payment of full par amount with tender. Treasury Direct customers can use
the Pay Direct feature which authorizes a charge to their account of record
at their financial institution on issue date.
DEPARTMENT
OF
THE
TREASURY
~~J78~q~. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .
..............................
OFFlCE OF PUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASlllNGTON, D.C. - 20220 - (202) 622-2960
FOR IMMEDIATE RELEASE
October 8, 1998
Contact: Hamilton Dix
(202) 622-2960
RUBIN ACCEPTS FIRST FIVE STATES' QUARTER DESIGN RECOMMENDATIONS
Treasury Secretary Robert E. Rubin Thursday accepted the circulating state quarter
design recommendations of Delaware, Pennsylvania, New Jersey, Georgia and Connecticut that
will appear on the tails (reverse) side of the quarter starting in 1999.
From January 1999 through 2008, the circulating state quarters will be minted in lieu of
the current quarter design. This marks the first change to U.S. quarters in more than 20 years.
The Fifty States Commemorative Coin Program Act directed the Treasury Department to
redesign the tails (reverse) side of the quarter with designs emblematic of each of the 50 states.
The law provides for five states to be featured each year beginning in 1999, in the order in which
the states ratified the U.S. Constitution or were admitted into the Union. The five states to have
their designs appear on the quarter in 1999 are Delaware, Pennsylvania, New Jersey, Georgia and
Connecticut.
"The circulating state quarters will honor the unique contributions of each state,"
Secretary Rubin said. "This program will encourage all of us to discover more about our own
state and the history of all 50 states."
Secretary Rubin established the design selection process in January. Governors were
invited to submit design concepts or themes representing their states. The designs were reviewed
by the Mint, the Citizens Commemorative Coin Advisory Committee and the Fine Arts
Commission. Secretary Rubin approved three to five candidate designs for each state and
resubmitted them to the respective governor for the state's final selection. Each governor
determined the state's design-selection process. Final design approval rests with Secretary
Rubin.
Delaware's quarter will depict Caesar Rodney on horseback making his historic ride to
Independence Hall on July 2, 1776, to cast the tie-breaking vote among Delaware Delegates for
independence from the British Crown. Delaware Governor Thomas R. Carper encouraged state
residents to submit design concepts to the Delaware Arts Council and conducted a telephone and
e-mail based opinion poll for the state's final selection.
RR-2750
For press releases, speeches, public schedules and official biographies, call our 24.1zour fax line at (202) 622-2040
Pennsylvania's design features "Commonwealth," the statue that sits atop Pennsylvania's
Capitol dome and an outline of the state of Pennsylvania. Pennsylvania Governor Tom Ridge
invited all Pennsylvanians to submit design concepts to the Commemorative Quarter Committee,
established by the governor to provide leadership to review possible designs for the state's
quarter. Additional petitions and Internet web site visits raised the participation level further.
Governor Ridge selected his state's final design recommendation.
New Jersey's design is a rendition of Emmanuel Leutze's 1851 painting Washington
Crossing the Delaware on his way to attack the British at Trenton, New Jersey. The New Jersey
Assembly established the New Jersey Commemorative Coin Design Commission who selected
five designs to submit for their state's quarter. The commission, with the approval of New Jersey
Governor Christine Todd Whitman, selected the final New Jersey quarter design.
Georgia's design displays an outline of the state of Georgia, a Georgia peach, sprigs of
the state's official tree, the live oak and the state motto "Wisdom, Justice, Moderation." Georgia
Governor Zell Miller asked the Council for the Arts to develop and select the Georgia quarter
design. The council submitted five design concepts and the governor and the council made the
final selection.
Connecticut's design depicts the state's Charter Oak, the white oak tree that was used by
Captain Joseph Wadsworth to hide the Connecticut Charter from British troops in 1687.
Connecticut Governor John G. Rowland held the Connecticut Coin Design Competition and
encouraged all state residents to send their concepts to the Connecticut Commission on the Arts.
Five renditions of a single design concept were selected and the Connecticut Commemorative
Coin Design Competition Review Committee with the governor's approval selected the final
state design.
Minor changes were also made to the locations of some of the inscriptions on the quarter
in accordance with legislation to allow more room for the state design. "United States of
America" and the designation of value "quarter dollar" were moved from the tails side to the
heads side of the quarter and the year of minting from the heads side to the tails side.
For more information about the circulating state quarters program, consumers can call the
Mint's customer service center at (202) 283-2646 or visit the Mint's website: www.usmint.gov.
-30-
DEPARTMENT
OF
THE
TREASURY
~~/78~9~. . . . . . . . . . . . . . . . . . . . . . . . . . . .. .
..............................
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960
FOR IMMEDIATE RELEASE
T ext as Prepared for Delivery
October 7, 1998
DEPUTY ASSISTANT SECRETARY FOR INTERNATIONAL TAX AFFAIRS
JOSEPH H. GUTTENTAG
OECD BUSINESS/GOVERNMENT DIALOGUE ON
TAXATION AND ELECTRONIC COMMERCE
"USING TECHNOLOGY TO IMPROVE TAXPAYER SERVICE
TODA Y AND TOMORROW"
OTTAWA, CANADA
ELECTRONIC COMMERCE AND THE DEFINITION OF "ROYAL TIES"
Thank you for the opportunity to discuss with you the important issue of the
characterization of income derived from electronic commerce. I would also like to bring you
current as to what the OEeD and the U. S. have done and are doing with respect to software
transfers. I present this work also as an example of how we can proceed on many other issues we
face. As I hope becomes apparent during the discussion, this issue of characterization must be
resolved not only within each taxing jurisdiction but also between each taxing jurisdiction, and
thus is an issue that the OEeD should playa major role in resolving.
Background
A little background. Today's technology permits text, images and sounds to be
"digitized", that is, converted into digital or numeric form. Any information that is capable of
being digitized can be made available over the Internet or similar technologies. There already
exists a substantial market for access to digital products, such as electronic magazines, news
broadcasts, stock information, photographs, software, videos, and sound recordings. Today's
technology also permits a myriad of services to be delivered over the Internet, from investment
advice and stock trading to travel information and booking services.
As technology improves and as the telecommunications, cable and television industries
converge, it can be expected that the market for digitized information and on-line services will
increase dramatically, as will the tax issues that need to be addressed: Among those issues,
characterization issues will be primary.
RR-2751
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
Characterization Issues
The ability to digitize data and provide it over the Internet, for a fee, presents issues under
income characterization rules. For example, is the income from the provision of digitized
information a royalty? Is it income from the sale of a good') Or is it income from the provision of
services? Of course, characterization questions are raised as well in the context of more
traditional transactions. However, such questions are made more difficult in the context of
electronic commerce generally, and in the context of digitized information specifically, because of
the varying uses to which digital products can easily be put. For example, a photograph may
previously have been made available to a consumer through the purchase of a physical copy of the
photograph. The consumer may now purchase a digital copy of the photograph, downloaded
from the Internet: Once the consumer has the digital copy, he may simply view an electronic
image of the photograph on his computer screen, he may copy it onto a disk, incorporate it into
another digital product or he may print out a physical copy on his printer. Payments for the rights
to use the digital product in those different ways may be characterized differently for tax
purposes. Again, such issues are raised in more traditional commerce: a purchaser of a physical
copy of a photograph may make photocopies or scan the purchased photo to produce a digital
copy. However, the high-quality of downloaded information and the ease with which it can be
put to varying uses increases the likelihood that consumers will put the information to varied uses
and, more importantly, that vendors will include the rights to such use along with the provision of
the digitized product.
General Principles
Our analysis of these electronic commerce characterization issues must be governed by
those same principles that apply to characterization issues generally. To do otherwise would
violate the principle of neutrality, which requires that economically similar transactions be taxed
similarly. That principle is one of the bedrock principles agreed to in Electronic Commerce:
Taxation Framework Conditions to be released at the Ministerial meeting later this week.
In general, the character for tax purposes of any payment depends on the nature of the
transaction that gives rise to the payment. A payment might be characterized as a payment for the
supply of goods, for the provision of services, or for the use of or the right to use an intangible,
depending on the rights or property transferred. That very general principle should guide us in
determining the characterization of payments in electronic commerce. Thus, for example, we
should resist the temptation to settle on answers that represent oversimplifications and overgeneralizations, such as, for example, the conclusion that the provision of digitized information is
in all cases the provision of services and not the provision of goods or the right to use an
intangible.
Solution Requirements
Any solution reached to these difficult issues should not impede the further development
of electronic commerce.
Any solution must take into account the fact that strict, unbending application of the
definition of "royalties" may lead to inappropriate results, whereby, for example, minor
differences in the method of delivery may produce significantly different tax results.
2
Any solution must be neutral between forms of electronic commerce and between
conventional commerce and electronic commerce.
And, perhaps most importantly, any solution reached must achieve international
consensus. If the international community cannot reach consensus on classification issues, there is
high likelihood of either double taxation or tax avoidance, which can both hamper growth of this
exciting new method of commerce and in appropriately shrink national revenue. The global
nature of electronic commerce necessitates that characterization issues be considered in a global,
international context and it will be imperative to seek an internationally accepted view on
characterization. Promoting consensus is the area in which the OEeD has a comparative
advantage over other institutions. Why? Because of:
•
the combination of OEeD member countries with the countries and organizations
that are part of the OEeD outreach program, which is exemplified by the
attendance here today by all member countries and many non-member countries
and other organizations;
•
the commitment from both business and government to have their tax experts
participate in the DEeD;
•
the OEeD's reputation for success, earned through its work in such areas as
harmful tax competition, bribery, transfer pricing and model tax treaties; and
•
last, but not least, a highly skilled Secretariat.
Software
As a "case study" or example of the characterization issues and possible resolutions, let us
consider the distribution of computer software. A software distributor, in addition to offering for
sale "shrink-wrapped" physical software packages deliverable by mail or at a retail location, could
electronically store software on servers accessible through its Web page. The stored software
could, for the payment of an appropriate fee, be:
•
•
•
•
•
•
•
downloaded for viewing;
downloaded for the purposes of provisional use (a "test drive") of the
software by a consumer;
downloaded for full use by the consumer;
downloaded for the purpose of copying to other computers, for example,
to other computers linked by in a local area network (LAN); or
downloaded for the purpose of modification by the consumer;
downloaded after consumer-directed modification by the distributor
("customization");
downloaded for copying for resale.
,
3
Downloading
Downloading of digitized information to a consumer's computer generally involves the
copying of material to the hard drive of the computer or a diskette or CD. In the case of
downloaded computer software, the right to download will ordinarily be accompanied by a license
to operate the program, subject to various restrictions.
In many respects, downloading digital products is simply another method of delivering
goods. What the consumer is seeking to acquire is the content of the book or the photograph or
the sound recording or the software. A consumer who creates a physical product from the
electronic product that has been downloaded--a consumer who prints out a downloaded image,
for example--is in much the same position as a consumer who purchased a physical copy of the
image and took delivery by more traditional means. In the case of software, what the consumer
generally seeks is not a physical product-such as a diskette-but the electronically coded set of
instructions that can operate his computer as desired-that is, the computer program. The
purchaser likely will be indifferent as to the method of delivery of the purchased product.
Some take the view, therefore, that the characterization of the payments in the two
cases-physical delivery and downloading-should not be affected simply because the method of
delivery was different. That is the conclusion that both the OECD and the United States have
reached with respect to computer programs.
Others, however, take the view that the difference in the method of delivery is relevant
because in the case of the purchased downloaded digitized information there generally is also
included the right to reproduce the digitized information, at least one time. In most jurisdictions,
the copyright laws will protect digitized information in the same way as physical text, images or
sound recordings, and thus the right to modify or reproduce the digitized information will vest
exclusively in the copyright holder. It is therefore arguable that where the copyright holder
permits others for a fee to exploit those exclusive rights, the payments should, at least in part, be
regarded as payments for the right to use the copyright and thus as royalties for tax purposes.
A major challenge facing tax policy makers in relation to the transfer of digitized products
will be to decide whether to take an "economic equivalence" approach-that is, to characterize
payments for downloaded information in the same manner as payments for information delivered
by more traditional methods-or whether to take account of the copyright use that might be
inherent in downloading and characterize at least some portion of the payment as a royalty.
OECD Approach to the Characterization of Payments for Computer Software
The OECD has already begun the process of forming an international consensus on the
issue of the characterization of payments for computer software. The revised Commentary to
Article 12 of the Model Treaty released today provides that "[ t ]he character of payments received
in transaction involving the transfer of computer software depends on the nature of the rights that
the transferee acquires under the particular arrangement regarding the use and exploitation of the
program." The Commentary further provides that "[t]he method of transferring the computer
program to the transferee is not relevant. For example, it does not matter whether the transferee
acquires a computer disk containing a copy of the program or directly receives a copy of the hard
4
disk of her via a modem connection."
U.S. Approach to the Characterization of Payments for Computer Software
The United States as well has addressed the issue of the characterization of cross-border
payments for computer software, including digitized computer software.
The regulations, which were issued last week, generally require that a transaction
involving a computer program be treated as being within one of four possible categories:
(i)
transfer of copyright rights;
(ii)
transfer of a copyrighted article;
(iii)
provision of services;
(iv)
provision of "know-how".
The rules of the regulations are based on the principle that functionally equivalent
transactions should be treated similarly. In addition, the regulations provide that copyright law
classifications should be a factor in classifying transactions for tax purposes but should not be
determinative. For example, even if a shrink-wrap license were a valid license for copyright law
purposes, we would treat the transaction as the sale of a good. Likewise, the determination of
whether a transaction involving a newly developed or modified computer program is treated as
the provision of services is to be based all the facts and circumstances of the transaction,
including, but not limited to, the copyright law aspects of the transactions.
Future Work
As I've previously stated, it is imperative that we work on the classification issues I've
been discussing not only within our respective countries but among our respective countries,
within the OECD and in consultation with other international organizations and with business.
The international aspects of this task can best be accomplished, I think, by addressing these
classification issues within the context of the OECD Model Tax Convention. As you will note,
this is an item on the post-Ottawa agenda. The OECD recognizes, as does the United States, that
the principles underlying the treatment of software discussed above may be relevant is considering
the treatment of electronic commerce transactions involving digitized content generally. Just as
with respect to other taxation issues raised by electronic commerce, it is my firm belief that our
current systems and principles are adequate to deal effectively with the characterization issues
electronic commerce raises. It is important, however, that we agree on the application of those
principles and systems and I thank you again for the opportunity to talk to you and, I hope, to
further that process of agreement.
- 30 -
5
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
Office of Financing
CONTACT:
FOR IMMEDIATE RELEASE
october 1), 199B
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 52-WEEK BILLS
364 -Day Bill
October 15, 199B
October 14, 1999
Term:
Issue Date:
Maturity Date:
CUSIP Number:
912795CC3
RANGE OF ACCEPTED COMPETITIVE BIDS:
Discount
Rate
------
Low
High
Average
Investment
Rate 1/
----------
4.030%
4.065%4.055%
Price
------
95.925
95.890
95.900
4.215%
4.253%
4.242%
Tenders at the high discount rate were allotted
27%".
AMOUNTS TENDERED AND ACCEPTED (in thousands)
22,946,075
717,159
----------------23,663,234
$
Competitive
Noncompetitive
PUBLIC SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$
TOTAL
Bid-to-Cover Ratio
=
23/663,234 /
1/ Equivalent coupon- issue yield.
RR-2752
Accepted
Tendered
Tender Type
$
9/211/725
717,159
9,928,884
1,075,500
1,075,500
24,738.734
11,004,384
5,650,000
5,650,000
o
o
30,388,734
9,928,884 = 2.38
$
16,654.384
PUBLIC DEBT NEWS
Department of the Treasury. Bureau of the Public Debt. Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
OR IMMEDIATE RELEASE
ctober 13, 1998
Office of Financing
202 - 219-3350
RESULTS OF TREASURY'S AUCTI)N OF 13-WEEK BILLS
91-Day Bill
October 15, 1998
January 14, 1999
912795AX9
Term:
Issue Date:
Maturity Date:
CUSIP Number:
RANGE OF ACCEPTED COMPETITIVE BIDS:
Discount
Rate
------
Low 2/
High
Average
3.880%
3.920%3.90S%-
Investment
Rate 1/
----------
Price
------
99.019
99.009
99 . 013
3.97~%
4.015%
3. S98't
Tenders at the high discount rate were allOl..ted
54%.
AMOUNTS TENDERED AND ACCEPTED (. ~ n thousands)
Accepted
Tender Type
22,018,280
1,139,314
$
Competitive
Noncompetitive
7,839,694
16';',314
166,314
----------------23,523,908
8,006,008
Foreign Official Refunded
:3 ,946, ,l60
7,('.86
Federal Reserve
Foreign Official Add-On
i- to-Cover Ratio
27,477,854
$
TOTAL
=
6,500,380
1,339,314
23,3'1 ,7 .594
PUBLIC SUBTOTAL
SUBTOTAL
$
23,357,594 / 7,839,694
3,946,860
7,086
$
2.98
Equivalent coupon-issue yield.
$1, SOO, 000 was accepted at rates below the cot:1 pet i ti ve range.
RR-2753
,ubllcd
11,959,954
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt. Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
FOR IMMEDIATE RELEASE
October 13, 1998
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182-Day Bill
October 15, 1998
April 15, 1999
Te:nn:
Issue Date:
Maturity Date:
CUSIP Number:
912795BH3
RANGE
OF ACCEPTED COMPETITIVE BIDS:
Rate
Investment
Rate 1/
Price
------
----------
------
Discount
Low
High
Average
97.953
97.922
97.932
4.191%
4.256%
4.235%
4.050%
4.110%
4.090\
Tenders at the high discount rate were allotted
AMOUNTS
TENDERED AND ACCEPTED
$
SUBTOTAL
Federal Reserve
Foreign Official Add-On
TOTAL
Equivalent coupon-issue yield.
RR-2754
1B,540,764
$
5,176,514
1,133,871
19,674,635
6,310,385
1,691,946
----------------21,366,581
1,691,946
4,105,000
73,054
----------------25,544,635
$
4,105,000
Bid-to-Cover Ratio = 19,674,635 / 6,310,385
1/
Accepted
1,133,871
PUBLIC SUBTOTAL
Foreign Official Refunded
(in thousands)
Tendered
Tender Type
Competitive
Noncompetitive
77%.
3.12
8,002,331
73,054
$
12,180,385
DEPARTMENT
OF
THE
TREASURY
~~/78~q~. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..
....................................
OmCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C.• 20220. (202) 622·2960
EMBARGOED FOR RELEASE UNTlL 4:30 p.m. EDT
Text as Prepared for Delivery
October 14, 1998
"THE GLOBAL ECONOMIC SITUATION AND THE UNITED STATES' APPROACH"
DEPUTY TREASURY SECRETARY LAWRENCE H. SUMMERS
REMARKS TO THE PHILADELPHIA BAR ASSOCIATION
PHILADELPHIA, PA
Thank you. I am glad to be here to discuss the crises in emerging markets and the short and longer
term challenges they present
Let me start by underlining the importance of these issues to the United States. By wide
agreement, what used to be called the Asian financial crisis is now a global financial market
problem as serious as any the international community has faced since World War 1 There has
been what Federal Reserve Chairman Alan Greenspan has called a "very dramatic change in the
whole risk profile of the world" -- with implications for every American.
The economic crises and large-scale withdrawal of capital from emerging markets in Asia, Russia
and elsewhere have already affected US exports and the job growth that goes with those exports.
More than a third of the world economy is already in recession and most others are revising
downwards their growth forecasts.
Most recently -- and perhaps most troubling -- our own financial markets are now being seriously
affected. In the wake of the Russian crisis in August, almost across the board financial institutions
have been running toward quality and away from risk. As a result:
•
even the most respected American companies are finding it more costly to raise funds on
equity or debt markets;
•
major financial institutions are revising their profit estimates and downsizing their payrolls;
•
banks are tightening capital standards and collateral requirements;
RR-2755
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
•
and short-term financing is in vogue -- with important implications for consumer finance
and home mortgages. American home buyers are not sharing in the benefits of lower short
term interest rates. Since August the gap between the interest rate on a generic 30 year
mortgage and treasuries has widened by nearly three-quarters of a percentage point.
That these events will affect the American financial system and our broader economy is not in
doubt. The question is how large -- and long-lasting -- the impact will be. The passage of
additional funding for the IMF is an important step toward containment and prevention -- and I am
now very hopeful that we will finally see this achieved this week. But we have more to do to
contain these problems and build a stronger global financial system for the next century.
I would like to spend most of my time today on the short and long-term imperatives we face in
responding to these crises. But first, a word or two about some of the underlying causes.
I. Causes of the C."ises
Like most financial problems, these difficulties have their roots in a combination ofleverage and
illiquidity. Absent borrowing on a substantial scale, the drying up of funds for borrowers is not a
big problem. But equally, absent severe illiquidity, substantial borrowing is not a problem:
•
we see this in the Asian economies, where inefficient financial systems, inadequate
financial supervision and regulation and macroeconomic imbalances perpetuated a long
period of excessive borrowing by financial institutions and companies -- and where
citizens are now bearing the heavy economic costs ofthe withdrawal of that capital and
evaporation of domestic liquidity.
•
and we see the same problem at work in the institutions who now find themselves in
serious trouble in crucial markets, where risk management systems that were thought to
limit risks have turned out to have created them, and financial instruments that seemed to
create liquidity in the good times seem now to be accelerating its withdrawal.
As several commentators have pointed out, financial historians would recognize in these problems
the hallmarks of the traditional credit cycle. Exciting new investment opportunities beget credit
expansion, beget excess borrowing, beget financial distress, and, ultimately, something
approaching panic, as investors begin to think more and more about what other investors are
thinking and less and about the underlying fundamentals.
So it is a classic credit cycle, but -- I would argue -- one with some late 20th century novelties:
•
first, the problems have been aggravated by severe institutional and political problems in
some of the emerging economies, notably in Indonesia and Russia, where economic
"emergence" turns out to have outpaced the institutional capacity to carry out core
functions -- such as tax collection and bank regulation -- and to implement key reforms.
2
•
second, these old-style problems have been transmitted with unprecedented speed and
force by new information technologies and financial instruments. Indeed, when we have
now seen withdrawals of capital of more than 10 percent of GDP in some cases, and a
trebling or more of bond yields in many disparate markets, it is difficult to believe that the
contagion and generalized flight from risk has not been exaggerated.
ll. The United States Approach
Our priority today is the same as it has been since the beginning of the crisis: to restore growth and
confidence to the troubled economies and help prevent further contagion in international markets.
As financial strains have increased so have we stepped up the pressure to forge a broad-based
international response.
The core elements of a strategy for containing the immediate crisis are now broadly accepted
among the G7 and were outlined by President Clinton in his remarks in New York last month and,
most recently, during the Annual Meetings of the World Bank and International Monetary Fund in
Washington last week. This strategy rests on three pillars.
1. Strengthened poliCies in the major industrial economies.
With inflation low or falling in most parts of the world, and the consequent shift in the balance of
risk in the global economy, we are working with our G-7 partners in an enhanced emphasis on
implementing policies to promote sustainable global growth:
•
the United States must continue to do its part, in particular by preserving the budget
surplus and thus reducing pressure on global capital markets and on our own trade deficit.
•
the countries of the European Union, just now emerging from a long period of relatively
slow growth and high unemployment, must also take hold of the baton of supporting
regional and global growth. Private forecasters are now suggesting that, as a result of these
crises, our current account deficit could rise from 1.9 percent to 2.8 percent ofGDP this
year, or around $235 bilIion, By contrast, little or no change is expected in last year's
current account surplus of the European continental economies of 1.8 percent ofGDP, or
roughly $110 billion.
•
Japan, which even today accounts for more than two-thirds of the Asian economy, has the
most important task of all. Immediate and effective measures to strengthen the financial
system and strong fiscal action in Japan that provides a substantial and sustained economic
stimulus are urgently needed for Japan to resume the strong domestically-driven recovery
that it needs -- and for which the world has long waited, In recent days there have been
encouraging steps with the passage of key banking reform legislation. But after so much
delay, observers will be forgiven for waiting to see the speed and effectiveness of its
implementation.
3
2. Effective policies in the cOlin tries most a./I'ected.
While the external environment is important and international support can make a difference,
countries shape their own economic destiny. And no amount of external support will save a
country if governments lack the will to take the steps needed to revive confidence at home.
That means sound macroeconomic policies aimed at the fastest possible return of growth. That
means strong structural reforms to scale back crony capitalism and support the operation of
markets. And it means policies that increase political stability and build the government's
domestic credibility.
A special priority in recent months -- and a focus of United States efforts within the international
financial institutions -- is to find ways to accelerate the pace of comprehensive corporate and
financial restructuring in countries where there is a systemic problem. This is particularly pressing
in Asia where the severe indebtedness of both the financial and corporate system is a serious
barrier to recovery and where addressing the overhang of domestic debt is essential.
To be sure, as countries choose their policies and the IMF makes judgments about what types of
programs it is willing to support financially, difficult questions of balance have inevitably arisen.
For example, programs must balance the need to stabilize exchange rates that are in free-fall
against the risks of raising interest rates significantly at a time when the banking and broader
financial system is seriously strained. And they have to balance the need to address the structural
defects associated with crony capitalism against the need to avoid the danger that large-scale
restructuring will generate a domestic backlash.
These questions will no doubt continue to be debated and there is no guarantee that the IMF will
get it right on every occasion. But in debating the response to these crises it is vital not to confuse
the doctor with the disease. The distress and difficult outcomes being seen in Asia are not a
consequence ofIMF policies or IMF finance. These are, rather, the attempts to palliate the true
cause of the distress: the withdrawal of private capital and declines in domestic confidence that led
to that withdrawal.
This crisis is still a moving story. But it is encouraging that in those countries that were first hit
and where policy has been most determined there have been signs of containment. By contrast, in
countries such as Indonesia and Russia, where governments did not carry through on their policy
programs, inflation, interest rates and output losses are still rising and the return of confidence is
more remote.
Countries that have consistently followed policies that the IMF were able to endorse and support - specifically, the Philippines, Korea and Thailand -- have begun to see signs of a return to
stability. In Korea and Thailand the currencies have broadly stabilized, nominal interest rates are
now close to single digits, and real interest rates have fallen to well below pre-crisis levels.
4
For his part President Cardoso's recognition of the importance of strong Brazilian policies going
forward has been appropriate and encouraging and the international community has made clear its
preparedness to support Brazil going forward.
3. Condin'oned Internalional Support
International support, centered around the IMF, is vital because even strong domestic policies can
fail where markets are in a tailspin and countries lack the financial breathing space to implement
reform. Financial crises have elements of a self-fulfilling prophecy -- like bank runs, everyone
expects failure or everyone expects everyone else to expect failure, leading to a rush to be the first
one out and thus causing failure. Temporary, conditioned support gives countries a bridge to
overcome this self-fulfilling prophecy and help restore stability.
Adequate funding for the IMF is critical to all of these efforts. The IMF operates much like an
international credit union. We and other countries provide a line of credit, and when the IMF
draws on our commitments, we receive a liquid, interest bearing offsetting claim on the IMF. That
is why there are no direct budget costs. That is why our contribution does not increase the deficit,
or impact other spending priorities.
The IMF's resources are today at historic lows. And for some months now measures that would
secure additional funding have been awaiting Congressional approval. But I am very hopeful that
in the coming few days this issue will finally be resolved in ways that carry forward the reforms
that the United States has already achieved at the IMF -- reforms that have made it more
accountable, more transparent, more closely focused on growth, and better-placed to respond
appropriately to new-style financial crises that begin in the capital account not the trade balance.
Going forward, we need to build on this new funding for the IMF to work to reinforce the capacity
of the international community to provide financing to countries that are pursuing sound policies
and are nonetheless affected by contagion. Where contagion is a serious concern the emphasis
must be on finding new ways to make liquidity available and restore confidence which do not raise
undue moral hazard effects.
We will also be working with the Multilateral Development Banks to provide substantially
increased funding for social safety nets in the countries in crisis to help the least advantaged
citizens in those countries who are experiencing hardship. As the President said recently, if we
want these countries to do tough things, we have to protect the most defenseless people in the
society and we have to protect people who get hurt when they didn't do anything wrong.
ID. The Longer Te.·m Challenge
The fires are still burning and the risks remain very real. But in the drive to forge an immediate
response to these events we cannot afford to forget the longer term challenge they pose.
I am convinced that any effort to close down the global capital market in response to these events
would make it worse rather than better. I am equally convinced that openness offers the surest
5
route to increasing opportunity and prosperity around the world. But to say this is not to say that
we must be happy with the global capital market we have now.
When the actions taken by one company or group of investors can mean that one day a worker on
the other side of the world is going about his business, the next he has been thrown out of work,
the price of his daily bread has tripled and his children are not in school but on the street -- when
we are seeing scenes like these every day in the world in which we live, it is fairly clear that
something has to give.
We have seen too many financial crises in these last years of the century, crises that have come at
unacceptable costs for the people in the countries affected by them. Quite simply, if we do not find
a way to do it better we will not in the next century have the truly global financial system in which
we all have such an enormous stake.
To be sure, we don't yet have all the answers and some of those we do have continue to be a
subject for debate. But there is now a broad consensus on three of the most important areas for
reform. These were highlighted in concrete proposals put forward last week by international
working groups involving finance ministries and central banks from key industrial and emerging
nations that were established under President Clinton's leadership earlier this year:
•
first, increased transparency and disclosure. If one were writing a history of the American
capital market I would suggest to you that the single most important innovation shaping that
capital market was the idea of generally accepted accounting principles. We need that
internationally, and we need it at the level of individual companies and financial institutions.
•
second, strengthened domestic financial systems. The Working Group began to outline
new standards and principles for corporate governance, bank restructuring, deposit
insurance, and foreign exchange and interest rate risk management. Now we must devise
effective ways to support countries' efforts to implement these standards and provide
incentives for those efforts to be significant.
•
third, more effective burden-sharing arrangements in the response to financial difficulties,
particularly at the domestic level, so as to reduce the scope for individual failures to
become domestic, systemic failures -- and for national crises to become international ones.
That means much-improved insolvency and debtor-creditor regimes and the inclusion of
new creditor coordination clauses in bond contracts among debtors and creditors.
Going forward, we need to find new ways to deal effectively with the emergencies we have seen in
recent months and the contagion that these can cause. We need to strengthen governments'
capacity to opt for cooperation over costly, often counterproductive, unilateralism. And we must
find ways to restore confidence and overcome collective action problems at the times when it is no
one's interests to be last in the room -- but no one's interest to be crushed in a stampede out.
The problems we have seen in financial systems in the United States and other industrial
economies over the years speak to the difficulty of addressing these issues effectively. And I don't
6
need to remind this audience of the difficulties involved in making legal and regulatory reforms
translate into improved behavior and making new institutions come to life. Due diligence is one
thing. True diligence quite another. And when times are good it can be a brave financial officer
who forces the chairman to look at the small print.
And yet, if these crises are a reminder of the challenge that these issues present, to industrial
nations as well as emerging ones, they are no less a reminder of the critical importance of
resolving them if we are to build the strong and stable, truly global economy in which we all have
such an enormous stake. Supporting globalization and the benefits it offers is important. But it is
not enough. If the global economy is to continue to grow and to realize its true potential we need
to lay it on more stable foundations. And most critically, we need to make sure that it serves all
of its members. Thank you.
-30-
7
o
federal financing
WASHINGTON, DC
20220
bankNEWS
September 30. 1998
FEDERAL FINANCING BANK
Charles D. Haworth, Secretary, Federal Financing Bank (FFB) ,
announced the following activity for the month of August 1998.
FFB holdings of obligations issued, sold or guaranteed by
other Federal agencies totaled $42.4 billion on August 31, 1998,
posting a decrease of $211.9 million from the level on
July 31, 1998. This net change was the result of an increase in
holdings of agency debt of $212.7 million, a decrease in holdings
of agency assets of $415.0 million, and a decrease in holdings of
agency guaranteed loans of $9.6 million. FFB made 23
disbursements during the month of August. FFB also received 19
prepayments in August.
Attached to this release are tables presenting FFB August
loan activity and FFB holdings as of August 31, 1998.
RR-2756
Ie
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N
N
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N
Ol
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N
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II')
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Page 2 of 3
FEDERAL FINANCING BANK
AUGUST 1998 ACTIVITY
BORROWER
INTEREST
RATE
DATE
AMOUNT
OF ADVANCE
FINAL
MATURITY
8/25
8/25
$300,000,000.00
$200,000,000.00
11/15/27
5/15/08
5.606% S/A
5.426% S/A
AGENCY DEBT
U.S. POSTAL SERVICE
U.S. Postal Service
U.S. Postal Service
GOVERNMENT - GUARANTEED LOANS
GENERAL SERVICES ADMINISTRATION
Foley Square Office Bldg.
Atlanta CDC Office Bldg.
Chamblee Office Building
Memphis IRS Service Cent.
Foley Services Contract
Chamblee Office Building
S/A
S/A
S/A
S/A
S/A
S/A
8/3
8/5
8/5
8/5
8/13
8/25
$16,061. 00
$200,000.00
$322,300.93
$2,017.64
$94,201. 55
$1,844,819.92
7/31/25
9/2/25
4/1/99
1/2/25
7/31/25
4/1/99
5.847%
5.778%
5.405%
5.776%
5.734%
5.281%
8/20
$4,163,740.36
11/2/26
5.730% S/A
8/20
8/21
$1,162,316.43
$402,819.45
9/1/27
9/1/27
5.728% S/A
5.685% S/A
8/3
8/3
8/3
8/7
8/11
8/13
8/13
8/13
8/20
8/24
8/24
8/26
$1,680,000.00
$3,378,689.00
$3,378,689.00
$450,000.00
$450,000.00
$9,000,000.00
$9,000,000.00
$385,000.00
$1,200,000.00
$377,000.00
$3,066,000.00
$695,000.00
1/3/33
9/30/08
9/30/08
1/2/24
9/30/99
12/31/19
12/31/19
12/31/24
1/3/23
12/31/31
9/30/99
1/2/18
5.806%
5.607%
5.593%
5.745%
5.344%
5.655%
5.620%
5.692%
5.687%
5.581%
5.291%
5.716%
GSA/PADC
rCTC Building
DEPARTMENT OF EDUCATION
Bethune Cookman
Bethune Cookman
RURAL UTILITIES SERVICE
Red River Valley #484
West Carolina Tele. #406
West Carolina Tele. #406
Pineland Telephone #403
Rush County Elec. #464
Coop. Power Assoc. #450
Coop. Power Assoc. #450
South Texas Electric #463
Colorado Valle¥ #422
Coastal Electr1c #460
San Miguel Power
#492
Marshalls Energy Co. #458
S/A is a Semi-annual rate:
Qtr. is a Quarterly rate.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Page 3 of 3
FEDERAL FINANCING BANK HOLDINGS
(in millions)
Program
Net Change
Fiscal Year
Net Change
811-8/31/98
10/1/97 -8131/98
August 31, 1998
July 31,1998
EXIM
RTCIFDIC
TVA
USPS
$0.0
$0.0
$0.0
$1,750.0
$0.0
$287.3
$0.0
$1,250.0
$0.0
($287.3)
$0.0
$500.0
($1,294.6)
($1,375.0)
$0.0
($2l3.5)
sub-total*
$1,750.0
$1,537.3
$212.7
($2,883.0)
FmHA-ACIF
FmHA-RDIF
FmHA-RHIF
DHHS-HMO
DHHS-Medical Facilities
Rural Utilities Service-CBO
Small Business Administration
$0.0
$3,675.0
$9,755.0
$3.1
$7.2
$4,598.9
$0.0
$0.0
$3,675.0
$10,170.0
$3.1
$7.2
$4,598.9
$0.0
$0.0
$0.0
($415.0)
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
($3,775.0)
($1.3)
($5.8)
$0.0
$0.0
sub-total*
$18,039.2
$18,454.2
($415.0)
($3,782.1 )
DOD-FMS
DoEd-HBCU
DHUD-Community Dev. Block Grant
DHUD-Public Housing Notes
General Services Administration+
DOl-Virgin Islands
DON-Ship Lease Financing
Rural Utilities Service
SBA-Small Business Investment Cos.
SBA-StatelLocal Development Cos.
DOT-Section 511
$2,845.5
$4.6
$30.7
$1,491.4
$2,469.9
$17.5
$1,224.9
$14,284.1
$0.0
$236.4
$3.9
$2,879.1
$3.0
$32.5
$1,491.4
$2,463.3
$17.5
$1,224.9
$14,263.4
$0.0
$239.4
$3.9
($33.7)
$1.6
($1.7)
$0.0
$6.6
$0.0
$0.0
$20.7
$0.0
($3.0)
$0.0
($202.8)
$3.9
($5.3)
($70.0)
$50.3
($1.2)
($83.1)
($534.7)
$0.0
($38.5)
($0.1)
Agency Debt:
Agency Assets:
Government-Guaranteed Lending:
sub-total *
grand total *
* figures may not total due to rounding
+ does not include capitalized interest
$22,608.9
$22,618.4
---------------
---------------
$42,398.1
$42,609.9
($9.6)
---------------
($211.9)
($881.6)
---------------
($7,546.7)
DEPARTMENT
OF
THE
TREASURY
NEWS
on'ICE OF PlIRI.!e A.· ...\IR~ -15110 PF/I(N~YL"'\NIA A"F. .... lIE.
EMBARGOED UNTIL 2: 30 P.M.
October 15, 1998
"'.w.• \\',\SHI"lGT()~. I>.C.-
CONTACT:
2U220 _ (2(121 (,22·2~61l
Office of Financing
202/219-3350
TREASURY OFFERS 13-WEEK AND 26-WEEK BILLS
The Treasury will auction two series of Treasury bills totaling
approximately $16,000 million to refund $13,088 million of publicly held
securities maturing October 22, 1998, and to raise about $2,912 million of
new cash.
In addition to the public holdings, Federal Reserve Banks for their own
accounts hold $6,911 million of the maturing bills, which may be refunded at
the weighted average discount rate of accepted competitive tenders. Amounts
issued to these accounts will be in addition to the offering amount.
The maturing bills held by the public include $2,461 million held by
Federal Reserve Banks as agents for foreign and international monetary authorities, which may be refunded within the offering amount at the weighted average
discount rate of accepted competitive tenders. Additional amounts may be
issued for such accounts if the aggregate amount of new bids exceeds the
aggregate amount of maturing bills.
Tenders for the bills will be received at Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington, D.C.
This offering
of Treasury securities is governed by the terms and conditions set forth in the
Uniform Offering Circular (31 CFR Part 356, as amended) for the sale and issue
by the Treasury to the public of marketable Treasury bills, notes, and bonds.
Details about each of the new securities are given in the attached
offering highlights.
000
Attachment
RR-2757
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
HIGHLIGHTS OF TREASURY OFFERINGS OF BILLS
TO BE ISSUED OCTOBER 22, 1998
October 15, 1998
Offering Amount .......................... $8,000 million
Description of Offering:
Ter.m and type of security ................
CUSIP number ..............................
Auction date ..............................
Issue date ................... '.............
Maturity date .............................
Original issue date ......................
Currently outstanding ....................
Min~ bid amount and multiples ........
91-day bill
912795 AY 7
October 19, 1998
October 22, 1998
January 21, 1999
July 23, 1998
$11,135 million
$1,000
$8,000 million
182-day bill
912795 BJ 9
October 19, 1998
October 22, 1998
April 22, 1999
October 22, 1998
$1,000
The following rules apply to all securities mentioned above:
of Bids:
Noncompetitive bids ......... Accepted in full up to $1,000,000 at the average discount rate of
accepted competitive bids.
Competitive bids ............. (1) Must be expressed as a discount rate with three decimals in
increments of .005%, e.g., 7.100%, 7.105%.
(2) Net long position for each bidder must be reported when the sum
of the total bid amount, at all discount rates, and the net long
position is $1 billion or greater.
(3) Net long position must be determined as of one half-hour prior
to the closing time for receipt of competitive tenders.
Stib~ssion
Recognized Bid
at a Single Yield ........... 35% of public offering
Max~
Maximum Award .................... 35% of public offering
Receipt of Tenders:
Noncompetitive tenders ...... Prior to 12:00 noon Eastern Daylight Saving time on auction day
Competitive tenders ......... Prior to 1:00 p.m. Eastern Daylight Saving time on auction day
Payment Terms
By charge to a funds account at a Federal Reserve Bank on issue date, or payment
of full par amount with tender.
Treasury Direct customers can use the Pay Direct feature which
authorizes a charge to their account of record at their financial institution on issue date.
Memorandum
To:
From:
Re:
Fax Recipients
Office of Financing
Bureau of the Public Debt
Faxing of Marketable Securities Press Releases
The Office of Financing will discontinue faxing press releases
within the next month. If you wish to continue receiving this
information and have Internet access, please sign up for any or all
of our three Internet mailing lists. Signing up for these lists will
provide you with the Internet address(es) necessary to obtain the
actual press release(s). The sign-up address for this service is:
http://www.publicdebt.treas.gov/cgi-bin/cgiwrap/-www/signup.cgi
Further details about the termination of the faxing program will be
given as the date approaches. If you have any questions, please
contact Rachel Hershenson or Larry Morris at 202-219-3350.
DEPARTMENT
TREASURY
OF
THE
TREASURY
NEWS
OFFICE OF PUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960
FOR IMMEDIATE RELEASE
October 15, 1998
Contact: John Longbrake
(202) 622-2960
TREASURY RECOGNIZES NATIONAL DIRECT DEPOSIT WEEK BY
SPONSORING 13 EVENTS NATIONALLY
The Treasury Department, in conjunction with consumer and community organizations
and members of the financial community, is sponsoring events in 13 cities across the country
to spotlight National Direct Deposit Week, October 12-16.
The events and National Direct Deposit Sign-Up Day, Oct. 14,- elements of National
Direct Deposit Week - are designed to encourage the use of Direct Deposit and give recipients
of government payments an opportunity to meet with agency officials and financial institutions
and to highlight the benefits of receiving payments electronically.
"Direct Deposit is safe, simple and secure," Under Secretary of the Treasury John D.
Hawke, Jf. said. "We encourage all payment recipients to consider the benefits offered by
Direct Deposit."
On September 25, 1998, Treasury issued guidelines under the Debt Collection
Improvement Act of 1996 requiring most federal payments to be made electronically after Jan.
1, 1999. The regulation provides that recipients are not required to sign up for Direct Deposit
if it would cause a hardship due to financial, geographical, physical or language barriers. The
regulation also paves the way for the establishment of low cost accounts for recipients without
existing savings and checking accounts that will enable recipients to receive payments by direct
deposit.
With Direct Deposit, payments are sent directly from Treasury to a recipient'S checking
or savings account where the money is available on the payment date. Statistics show that
recipients are 20 times more likely to have a problem with a paper check than with a Direct
Deposit transaction. Each year, the Treasury replaces more than 800,000 checks that are lost,
stolen or damaged during delivery. In addition, the government annually deals with $60
million in forged checks, $1.8 million in counterfeit checks and $3.3 million in altered checks
that would be eliminated by using Direct Deposit.
RR-2758
Fm- press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
National Direct Deposit Sign-Up Day and National Direct Deposit Week are being cosponsored by the Treasury, the Social Security Administration, the Federal Reserve and the
National Automated Clearinghouse Association. Events are being held this week in: Baton
Rouge, LA; Birmingham, AL; Boston, MA; Chicago, IL; Cincinnati, OH; Los Angeles, CA;
Miami, FL; New York, NY; Philadelphia, PA; San Antonio, TX; Seattle, WA; St. Louis,
MO; and Tacoma Washington.
-30-
2
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
October 16, 1998
Contact: Office of Financing
(202) 219-3350
TREASURY'S INFLATION-INDEXED SECURITIES
NOVEMBER REFERENCE CPI NUMBERS AND DAILY INDEX RATIOS
Public Debt announced today the reference Consumer Price Index (Cpn numbers and daily
index ratios for the month of November for the following Treasury inflation-indexed securities:
(1) the 3-3/8% lO-year notes due January 15,2007, (2) the 3-5/8% 5-year nores due July 15,2002,
(3) the 3-5/8% 10-year notes due January 15,2008, and (4) the 3-5/8% 30-year bonds due April 15,
2028. This information is based on the non-seasonally adjusted U.S. City Average All Items
Consumer Price Index for All Urban Consumers (Cpr-U) published by the Bureau of Labor
Statistics of the U.S. Department of Labor.
In addition to the publication of the reference CPI's (Ref CPI) and index ratios, this
release provides the non-seasonally adjusted CPI-U for the prior three-month period.
This information is available through the Treasury's Office of Public Affairs automated fax
system by calling 202-622-2040 and requesting document number 2759 the information is also
available on the Internel at Public Debt's website (hup:l/www.publicdebt.treas.gov).
The information for December is expected to be released on November 17, 1998.
000
Attachment
RR-2759
http://www.publicdebt-treas.gov
TREASURY INFLATION·INDEXED SECURInES
Ref CPI and Index Ratio, for
Novomber 199B
Socurlty:
Description:
CUSIP Number:
Dated Dale:
Orlglnallssue Data:
Additlona' Issue Dala:
3-318% 10·Year Note,
3~a% S·Year Notas
Series A·2007
91282721113
January 15, 1997
April '5, 1997
Serlee J-2002
912B273AB
Jull' 15, 1997
July 15, 1997
October 15, 1'097
3·5(8% i0.Year Notes
SerIes A·200S
912B27JT7
January 15, 199B
January Hi, 199B
C :ober 16, 199B
3-51S% 3D·Year Bonds
Bonds of April 2028
912810F06
Aprtl15,1996
April 15, 1998
Jull' 15, 1998
Maturlly Dale:
Ref CPI on Dated Date:
January 15, 20{)7
158.435-48
July 15, 200~
160.15484
January 16,2008
161.55484
April 15, 2026
161.74000
Date
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
No....
No ....
No ....
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
1
2
J
4
5
6
7
a
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
Z7
28
29
30
1998
1998
1998
1998
1998
1998
1998
1998
1998
1998
1998
1998
1998
1998
199B
1998
1998
1998
1998
1998
1998
1998
199B
1998
1996
1998
1998
1998
1998
1998
CPI·U (NSA) ror :
Fobruary 6, t997
Rer CPI
Index Rallo
Indol( Rallo
Indox Ratio
Indsx Ratio
163.40000
163.40667
163.41333
163.42000
16:1.42667
163.4333J
163.44000
163M667
163..45333
163.46000
163.46667
163.473:1:1
163ABOOO
163.411667
163..49333
163.50000
163.50667
163.51333
163.52000
163.52667
1G3.S3333
t63.54(}{)0
163.54667
163.55333
163.56000
163.56667
1.03133
1.03138
1.03142
1.03146
l.OJ1S<l
1.03155
1.03159
1.03163
1.03167
1.03171
1.03176
1.03160
1.03164
1.00188
1.03192
1.03197
1.03201
1.03205
1.03209
1.03213
1.Ol218
1.00222
1.01226
1.03230
1.0l2:!4
1.0l2:19
16U73~
1.0)243
163.58000
103.56667
163.59333
1.03247
1.03251
1.03255
1.02026
1.020:10
1.02035
1.02039
1.02043
1.02047
1.02051
1.02055
1.02060
1.02064
1.02068
1.02072
1.02076
1.02080
1.02085
1.02089
1.02093
1.02097
1.02101
1.02105
1.02110
1.02114
1.02118
1.02122
1.02126
1.02130
1.02134
1.02139
1.02143
1.02147
1.01142
1.01146
1.01150
1.01155
1.01159
1.01163
1.01167
1.01171
1.01175
1.01179
1.0t183
1.01188
1.01192
1.01196
1.01200
1.012B4
1.01206
1.01212
1.01216
1.01221
1.01225
1.01229
1.01233
1.01237
1.01241
1.01245
1.01249
t.01254
1.012S8
1.01262
1.01026
1.01030
1.01035
1.01039
1.01043
1.01047
1.01051
1.01055
1.01059
1.01063
1.0 lOGS
1.01072
1.01076
1.01080
1.01064
1.01088
1.01092
1.01096
1.0t101
1.01105
1.01109
1.01113
1.01117
1.01121
1.01125
1.01129
1.01134
1.01138
1.01142
1.01146
July le9S
163.2
AUgu811998
163.4
SlIptomtxJr 199~
----
163.6
o
CD
federal financing
WASHINGTON. D.C. 20220
bankNEWS
FEDERAL FINANCING BANK
October 16, 1998
Charles D. Haworth, Secretary, Federal Financing Bank (FFB),
announced the following activity for the month of September 1998.
FFB holdings of obligations issued, sold or guaranteed by
other Federal agencies totaled $46.0 billion on September 30,
1998, posting an increase of $3,556.9 million from the level on
August 31, 1998. This net change was the result of an increase
in holdings of agency debt of $3,946.1 million, a decrease in
holdings of agency assets of $255.0 million, and a decrease in
holdings of agency guaranteed loans of $134.2 million.
FFB made
16 disbursements during the month of September and extended the
maturities of 93 RUS-guaranteed loans. FFB also received 13
prepayments in September.
During the fiscal year 1998, FFB holdings of obligations issued,
sold, or guaranteed by other Federal agencies posted a net
decrease of $3,989.8 million from the level on September 30,
1997. This net change was the result of an increase in holdings
of agency debt of $1,063.1 million, a decrease in holdings of
agency assets of $4,037.1 million, and a decrease in holdings of
agency guaranteed loans of $1,015.7 million.
Attached to this release are tables presenting FFB September
loan activity and FFB holdings as of september 30, 1998.
RR-2760
en
0
If)
C\J
'¢
C\J
N
N
CD
N
C\J
C\J
CD
o
C\J
N
0
'"
C\J
(fJ
Q)
a:
CO
u..
u..
Page 2 of 5
FEDERAL FINANCING BANK
SEPTEMBER 1998 ACTIVITY
BORROWER
INTEREST
RATE
DATE
AMOUNT
OF ADVANCE
FINAL
MATURITY
9/15
9/18
9/30
9/30
9/30
9/30
9/30
$200,000,000.00
$200,000,000.00
$246,100,000.00
$400,000,000.00
$200,000,000.00
$2,500,000,000.00
$200,000,000.00
5/15/08
5/15/08
10/1/98
11/16/98
11/16/98
10/1/98
10/1/98
4.981%
4.910%
4.491%
4.667%
4.667%
4.667%
4.667%
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
AGENCY DEBT
U.S. POSTAL SERVICE
U.S.
U.S.
U.S.
U.S.
U.S.
Postal
Postal
Postal
Postal
Postal
u.s. Postal
U.S. Postal
Service
Service
Service
Service
Service
Service
Service
GOVERNMENT - GUARANTEED LOANS
GENERAL SERVICES ADMINISTRATION
Memphis IRS Service Cent.
Memphis IRS Service Cent.
Chamblee Office Building
Chamblee Office Building
9/3
9/3
9/14
9/15
$1,436.57
$3,448.41
$2,902,133.81
$163,074.88
1/2/25
1/2/25
4/1/99
4/1/99
5.498%
5.498%
4.996%
5.051%
9/23
$4,131,533.77
11/2/26
5.300% S/A
9/9
9/16
9/17
9/25
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
$700,000.00
$3,170,000.00
$3,898,000.00
$944,000.00
$3,464,502.86
$4,949,907.51
$911,027.52
$2,787,675.98
$4,049,506.41
$2,560,838.14
$17,412,225.43
$3,594,862.66
$1,596,686.38
$394,037.09
$908,870.56
$1,186,703.35
$790,269.78
$454,362.61
$849,467.79
12/31/31
10/2/00
9/30/05
1/2/18
3/31/99
3/31/99
12/31/98
12/31/98
12/31/98
3/31/99
12/31/20
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
5.442%
4.827%
4.908%
5.491%
4.734%
4.734%
4.542%
4.542%
4.542%
4.734%
5.104%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
GSA/PADC
rCTC Building
RURAL UTILITIES SERVICE
Canoochee Elec. #461
Brazos Electric #437
Okefenoke Elec. #486
Marshalls Energy Co. #458
*Allegheny Electric #255
*Allegheny Electric #255
*Allegheny Electric #908
*Allegheny Electric #908
*Allegheny Electric #908
*Allegheny Electric #908
*Basin Electric #425
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
S/A is a Semi-annual rate: Qtr. is a Quarterly rate.
* maturity extension or interest rate reset
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Page 3 of 5
FEDERAL FINANCING BANK
SEPTEMBER 1998 ACTIVITY
BORROWER
DATE
AMOUNT
OF ADVANCE
FINAL
MATURITY
$1,016,064.62
$327,649.15
$237,794.84
$404,844.13
$237,272.65
$169,999.23
$148,103.00
$81,141.53
$122,612.40
$39,464.04
$1,295,395.08
$477,447.48
$588,431. 05
$260,617.79
$977,816.49
$2,928,962.73
$1,754,076.38
$1,051,217.35
$634,699.43
$450,312.87
$1,208,194.55
$1,569,841.02
$2,580,898.20
$2,762,568.56
$543,853.71
$17,597.35
$927,830.20
$3,039,698.86
$2,379,739.54
$4,332,044.78
$6,363,636.28
$464,100.40
$3,598,714.58
$3,210,125.29
$3,620,131. 65
$3,095,506.56
$1,999,230.73
$20,741,816.54
$1,373,050.60
$3,132,000.00
$3,771,000.00
$350,000.00
$2,287,917.99
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
10/2/00
10/2/00
10/2/00
10/2/00
10/2/00
10/2/00
12/31/13
1/2/24
12/31/19
12/31/19
12/31/19
12/31/19
9/30/05
12/31/14
1/3/17
12/31/12
12/31/12
12/31/31
1/2/24
INTEREST
RATE
GOVERNMENT - GUARANTEED LOANS
RURAL UTILITIES SERVICE
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #917
*Brazos Electric #437
*Coop. Power Assoc. #130
*Georgia Trans. Corp. #446
*Georgia Trans. Corp. #446
*Georgia Trans. Corp. #446
*Georgia Trans. Corp. #446
*Georgia Trans. Corp. #446
*Glades Elec. Coop. #380
*Hoosier Energy Elec. #901
*Hoosier Energy Elec. #901
*N. Pittsburgh Tele. #449
*N. Pittsburgh Tele. #449
*Orange County Elec. #466
*Oglethorpe Power #445
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
Qtr. is a Quarterly rate.
* maturity extension or interest rate reset
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.443%
4.443%
4.443%
4.443%
4.567%
4.567%
4.873%
5.164%
4.948%
4.948%
4.948%
4.948%
4.615%
4.718%
4.821%
4.721%
4.721%
5.191%
5.082%
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
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Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Page 4 of 5
FEDERAL FINANCING BANK
SEPTEMBER 1998 ACTIVITY
BORROWER
DATE
AMOUNT
OF ADVANCE
FINAL
MATURITY
$30,656,131.37
$17,846,493.39
$15,260,201. 32
$5,509,374.67
$9,318,344.24
$6,720,347.43
$6,837,605.39
$5,474,939.97
$2,855,329.67
$849,610.20
$1,551,102.02
$552,165.76
$1,805,107.52
$9,290,320.32
$9,754,945.01
$396,339.84
$852,255.05
$10,227,059.81
$3,306,681.99
$2,786,274.77
$3,307,696.36
$3,521,382.15
$3,903,054.30
$1,094,483.52
$832,968.82
$507,811. 27
$1,046,492.50
1/2/18
12/31/19
12/31/19
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/19
12/31/98
12/31/98
1/2/18
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
12/31/98
INTEREST
RATE
GOVERNMENT - GUARANTEED LOANS
RURAL UTILITIES SERVICE
*Oglethorpe Power #445
*Oglethorpe Power #445
*Oglethorpe Power #445
*Plains Elec. #918
*Plains Elec. #918
*Plains Elec. #918
*Plains Elec. #918
*Plains Elec. #918
*Plains Elec. #918
*Plains Elec. #918
*Plains Elec. #918
*Plains Elec. #918
*South Texas Electric #322
*San Miguel Electric #919
*San Miguel Electric #919
*Sho-Me Power #913
*United Power Assoc. #911
*United Power Assoc. #911
*United Power Assoc. #911
*United Power Assoc. #911
*United Power Assoc. #911
*United Power Assoc. #911
*United Power Assoc. #911
*United Power Assoc. #911
*United Power Assoc. #911
*United Power Assoc. #911
*United Power Assoc. #911
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
9/30
Qtr. is a Quarterly rate.
* maturity extension or interest rate reset
4.869%
4.948%
4.948%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
5.074%
4.542%
4.542%
4.808%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
4.542%
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
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Page 5 of 5
FEDERAL FINANCING BANK HOLDINGS
(in millions)
Fiscal Year
Net Change
1011/97-9/30/98
September 30, 1998
August 31, 1998
Net Change
9/1-9/30/98
EXIM
RTCIFDIC
USPS
$0.0
$0.0
$5,696.1
$0.0
$0.0
$1,750.0
$0.0
$0.0
$3,946.1
($1,294.6)
($1,375.0)
$3,732.6
sub-total *
$5,696.1
$1,750.0
$3,946.1
$1,063.1
FmHA-RDIF
FmHA-RHIF
DHHS-HMO
DHHS-Medical Facilities
Rural Utilities Service-CBO
$3,675.0
$9,500.0
$3.1
$7.2
$4,598.9
$3,675.0
$9,755.0
$3.1
$7.2
$4,598.9
$0.0
($255.0)
$0.0
$0.0
$0.0
$0.0
($4,030.0)
($1.3)
($5.8)
$0.0
sub-total*
$17,784.2
$18,039.2
($255.0)
($4,037.1)
Government -Guaranteed Lending:
DOD-FMS
DoEd-HBCU
DHUD-Community Dev. Block Grant
DHUD-Public Housing Notes
General Services Adrninistration+
DOI-Virgin Islands
DON-Ship Lease Financing
Rural Utilities Service
SBA-StatelLocal Development Cos.
DOT -Section 511
$2,829.0
$4.6
$30.4
$1,491.4
$2,473.1
$17.5
$1,224.9
$14,166.5
$233.4
$3.8
$2,845.5
$4.6
$30.7
$1,491.4
$2,469.9
$17.5
$1,224.9
$14,284.1
$236.4
$3.9
($16.5)
$0.0
($0.3)
$0.0
$3.2
$0.0
$0.0
($117.6)
($3.0)
($0.0)
($219.3)
$3.9
($5.6)
($70.0)
$53.5
($1.2)
($83.1)
($652.3)
($41.5)
($0.1)
Program
Agency Debt:
Agency Assets:
sub-total*
grand total *
* figures may not total due to rounding
+ does not include capitalized interest
$22,474.7
$22,608.9
($134.2)
---------------
---------------
---------------
$45,955.0
$42,398.1
$3,556.9
($1,015.7)
---------------
($3,989.8)
DEPARTMENT
OF
THE
TREASURY
NEWS
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASlDNGTON, D.C. - 20220 - (202) 622·2960
FOR IMMEDIATE RELEASE
October 16, 1998
Contact: John Longbrake
(202) 622-2960
TREASURY RELEASES CAPITAL ACCESS PROGRAM REVIEW
The Treasury Department released Friday the first national report summarizing the
1997 nationwide performance of state-run Capital Access Programs (CAPs) as cumulative
lending to small businesses neared $1 billion.
The report details the 27 percent growth in national CAPs loan volume in the 20 states
and two municipalities that operate CAPs. In addition, the review covers CAPs performance
in encouraging lending to minority-owned businesses and businesses in low and moderate
income communities.
First developed in Michigan in 1986 as a method to increase the availability of credit to
small businesses, CAPs allow banks to use their own underwriting standards for eligible loans.
CAPs require little administrative cost for banks, borrowers, or governments. Under CAPs,
banks and borrowers pay into a reserve fund, matched by the state, to enable the bank to make
more difficult small business'loans.
The Treasury Department has proposed legislation to support the start-up of new state
CAPs and the expansion of existing ones. Currently the following states and municipalities
operate CAPs: Arkansas, California, Colorado, Connecticut, Illinois, Indiana, Massachusetts,
Michigan, Minnesota, New Hampshire, New York City, North Carolina, Ohio (Akron),
Oklahoma, Oregon, Pennsylvania, Texas, Utah, Vermont, Virginia, West Virginia and
Wisconsin.
-30-
RR-2761
Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
DEPARTMENT
OF
THE
TREASURY
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASIDNGTON, D.C .• 20220. (202) 622-2960
EMBARGOED UNTIL 1: 15PM EDT
Remarks as Prepared for Delivery
October 17, 1998
TREASURY SECRETARY ROBERT E. RUBIN
YALE LAW SCHOOL
It is a pleasure to be here this afternoon. Let me begin by expressing my deep gratitude to
Yale Law School for this honor.
Alumni weekends and class reunions are usually an opportunity for looking back and
reminiscing. But, I would like to take a different tack, and offer some reflections on a very
contemporary situation, very much in the headlines these days: the global financial crisis of the
past year. Most of what has been written about this crisis concerns economic policy issues and
judgments. However, of equal importance, but less discussed, are the political and legal issues
involved. One of the reinforced lessons of the past year and halfin that all these -- economic,
legal and political issues -- must be addressed effectively as the international community works
to meet the two great challenges posed by what is often being described as the greatest financial
crisis of the past 50 years; these two challenges being, firstly, dealing with the immediate crisis
to restore financial stability and growth, and secondly, revising the framework or architecture of
the global financial system to make it as modem as the markets.
At the heart of both of these challenges is the gap -- and the question of how to bridge the
gap -- between the sovereignty of nations on the one hand, and the demands of the transnation
global economy on the other hand. This gap, and the economic interdependence of all nations in
today's global economy, was expanded rather tellingly the other day by a Latin American finance
minister, who told me how difficult it is to explain to his people why their currency is under
pressure and their interest rates are higher because the Russian Duma failed to raise taxes, but
that is precisely what happened when global market confidence was badly shaken by Russia's
failed economic policy actions.
This tension between sovereignty and the global economy is all the more important as a
result of enormous changes, greatly increasing the economic interdependence of nations; that
have occurred in the international economy over recent decades, changes that I experienced
firsthand -- as I'm sure many of you did -- during my 26 years on Wall Street. Since I first
RR-2762
1
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
started working at a trading desk over thirty years ago, global capital flows have incr~ased
exponentially. as has the speed of flows as a result of changes in techn.olo~y: And capItal
providers have become more diverse. with the traditional bank role being JOined by enonnous
flows into securities of all types. including highly complicated derivatives. Moreover. a very
large number of developing countries have recently received large flows of capi.tal. while 20 or
30 years ago significant capital was going to far fewer emerging market countnes. T~e.
combination of all of these changes has been truly revolutionary, benefitting tens of mIllIons of
people around the globe. but also creating new risk.
Against that backdrop, the world is now experiencing its most serious financial crisis in
many respects of the last fifty years. While it is often said that the crisis began in Thailand, that
is not so. Thailand was simply the first country in which crisis erupted, the result of a
combustible mix of problems that developed over many years: the excesses in investment and
credit extension from developed nations into developing nations, without adequate weighting of
risk and, in the developing nations, badly flawed financial systems, various other structural
problems and macroeconomic policy imbalances. And, just as capital once flowed into
emerging market countries without, in too many instances, due regard for proper analysis and
weighting of risks, it is now too often flowing out in a non-discriminatory, overly negative
reaction to the risks.
This crisis presents unprecedented and enonnously complex challenges to the nations
involved and the international community. I have no doubt that over the next ten or fifteen years,
there will be a vast number of articles, books and graduate theses analyzing this crisis, providing
at least some insights that don't exist today. Having said that, I believe that we have a good
understanding of the crisis, what needs to be done, and the components of an effective
architecture for the future global financial system. However, there are no magic wands or easy
answers; a crisis that is a product of problems that developed over many years will take time to
work out; and working out requires that each nation -- industrial and developing and each
international financial institution -- do its part. With this in mind, let me make some
observations about the political and legal dimensions of crisis response and architectural refonn
which are too often under appreciated.
First, the politics. There are two aspects to the political dimension to this crisis:
generating broad public and political support for effective economic policies, and providing
strong leadership for sound economic policy.
Generating broad support for effective economic policies requires getting the
stakeholders to buy into these policies, to feel that this is in their interest; this is true in both
ind~~trial and developing cou~tries. The experience of Korea demonstrates how generating
polItlc~1 suppo.rt and effectuating economic refonn must go hand in hand. The new government
of PreSident KIm Dae-lung, a remarkable leader who had been in prison for his beliefs and then
eventually became President, pulled together companies and labor unions to build support for
refonn. Now, short tenn interest rates have fallen from 25% to 7%; the currency has
2
substantially strengthened. A similar process occurred in Thailand, though in both cases great
challenges remain ahead. In Russia and Indonesia, on the other hand, as you all know well, the
political systems never took ownership of reform, the economic policy decision in the proposed
reform programs consequently became irrelevant, and the economics are in dire straits.
Just as generating support for effective policies is critical in developing countries, so is it
a critical in industrialized countries. In Japan, for example, the absence of strong public support
for bank reform and fiscal stimulus has led to seven years of extremely slow growth and three
quarters now of recession, which in turn has affected not only the people of Japan but has been a
central problem for the rest of Asia and the entire global economy. And in the United States we
have just completed a year long struggle to approve funding for the IMF, a funding which we
could have well used some time ago, and we still must payoff our arrears to the United Nations,
and support trade liberalization at a time when protectionist pressure may be building.
Let me also add that a key part of building support for reform in developing countries is
to help those most affected by the crisis, as for example, through assistance from the
international community.
Leadership is also critical in making the politics of reform equal the policies of reform -political leaders who understand the nature of economic problems and have the political courage
and ability to make and sustain decisions that are often very difficult politically. A good
example is how President Clinton reacted when we met with him in the Oval Office on a
Monday night in 1995 to discuss the Mexico relief package in response to the peso crisis. I told
the President that a poll published that day showed that the great majority of the American public
was opposed to support for Mexico, but I than said that without that support, there was a real
chance that the economy of Mexico could collapse, and crisis spread elsewhere in Latin America
and beyond. Without hesitation he told us to go ahead with the package, and today Mexico is
back on the path toward stability and growth, though with many challenges still to face.
One of the great political challenges in the decades ahead, in developing and industrial
countries, is for democracies to be able to make the unpopular economic decisions requisite for
success in a transnational, interdependent global economy. Another, similar challenge, is for
sovereign nations to make the political decisions on economic cooperation necessary for the
global economy of the 21 st century. It is critical to global economic well being and social and
political stability that these challenges be met.
Let me tum now to another major factor not often discussed with respect to the
challenges of dealing with the current crisis and building an architecture for the future -- legal
systems, institutions, and processes.
A strong legal system is essential for a strong economy. Indeed, a key factor in the crisis
in many countries was a failure of the legal system -- pervasive corruption, a lack of clear laws
and an ineffective judicial process. Building a sound legal and judicial framework includes
3
establishing the rule of law, transparency, court systems and mechanisms by which disputes can
be resolved quickly and fairly and combating corruption. An example that may seem somewhat
acentric but is central to dealing with crisis is having effective bankruptcy laws and processes.
Recovery in Korea and Thailand has been hampered by the inability to work out the widespread
debt problems of the banking and corporate sectors.
In many respects, these political and legal challenges are ones that governments have
faced for a long time. What is different is how much it all matters in an interdependent global
economy, where events in each country affect other countries vastly more than ten or fifteen
years ago. It used to be, for example, that few in this country knew about the exchange rate of
the Thai Baht, or declines in the Hong Kong stock exchange; now these events make front page
news in papers across the globe and affect us all. Because of this interdependence there is an
enormously heightened importance, first, of each country taking the right actions internally, and
second, creating international mechanisms that encourage countries to make the right decisions,
and that deal effectively with the over-arching issues of the global economy. At the core of these
challenges is reconciling the sovereignty of nations with the transnational nature of the global
economy.
Looking at all of this, some have argued that in today's world of huge global markets,
government has, in essence, become largely irrelevant. I think that's exactly wrong.
Government decisions will greatly affect how these markets will treat a country's economy.
Moreover, decisions a country makes are all the more important because they can so
substantially affect other economies.
The central organizing principle for our market based system is its tendency to reward
companies and countries for good behavior, punish companies and countries for bad behavior,
and allocate capital efficiently. But for markets to exercise this discipline, they must act with
discipline. I've already referred to the excesses in lending and investing, stemming from an ever
greater tendency to underweight risk as good times continued, that contributed so much to this
crisis. Moreover, markets by their nature simply will not or cannot deal with some problems. If
we are going to maintain and expand a market-based economic system, we are going to have to
deal with these shortcomings of that system. Similar consensus motivated the reforms in the
financial regulatory structure the United States has instituted for its domestic markets in the
twentieth century, such as the creation of the Federal Reserve in 1913, and the '33 and '34 Acts
during the Depression.
Similarly, this concern underpins the international community's ongoing but now greatly
intensified focus on reforming global financial architecture for the 21 st century. This involves
enormously complex issues such as creating overarching surveillance of national financial
system regulators, overcoming the effectiveness of countries that choose to provide safe havens
from regulation, a potential problem, for example, with respect to the possible regulation of
hedge funds, and making lenders and creditors part of the solution when crisis hits so that they
bear the consequences of the risks they take. This last is especially important, since there is no
4
international bankruptcy law and the debtors are often sovereign nations.
It is critical to remember, in designing new architecture, that broadly, the new global
economy and global financial markets have produced enormous gains in human welfare. in
countries around the world, including our own. And in my view, a market broad economic
system and relatively free global trade in goods and services and flow of capital are the systems
most likely to promote global economic well being going forward. But the world cannot live
with the kinds of disruptions we have experienced over the last year. So, to retain this system we
must make it less prone to instability, and more effective in dealing with the instability that does
occur. And, we must make it a system that provides a real opportunity for all if the system is to
have sustained political support.
So, considered fully, the critically important and intense efforts to deal with today's
financial crisis and to design the architecture of tomorrow lie at the intersection of laws, politics,
and policy-- the intersection where Yale Law School has lived intellectually for many decades, as
manifested in the integration of law, policy and politics in the international arena so strongly
advocated by Myers McDougal. It seems to me that this Law School is exceedingly well
positioned to contribute to the understanding and intellectual work product requisite to
addressing these great and important challenges arising from the global financial crisis. This
might not be as interesting as arguing the question whether evil is an absolute or subjective
matters but it is of enormous importance to the world we all live on in the years ahead, and a
fitting subject for the School that long housed Myers McDougal.
In closing, it is nice to be back in New Haven and to remember the intellectual fervor of
my years here and the enduring friendships that Judy and I formed in those years. So again, for
all the Yale Law School has meant for my family and to me, and for this honor, thank you.
-30-
5
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
Office of Financing
202-219-3350
CONTACT:
FOR IMMEDIATE RELEASE
october 19, 1998
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
October 22, 1998
January 21, 1999
912795AY7
Term:
Issue Date:
Maturity Date:
CUSIP Number:
RANGE OF ACCEPTED COMPETITIVE BIDS:
Discount
Rate
------
Low 2/
High
Average
3.840%
3.860%
3.850%
Investment
Rate 1/
---------3.933%
3.953%
3.941%
Price
99.029
99.024
99.027
16%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
----------------25,004,185
1,099,853
----------------26,104,038
$
PUBLIC SUBTOTAL
SUBTOTAL
Federal Reserve
Foreign Official Add-On
1/
=
26,104,038 / 7,826,838
7,826,838
186,500
26,290,538
8,013,338
3,215,500
3,215,500
29,506,038
°
$
3.34
Equivalent coupon-issue yield.
2/ $18,750,000 was accepted at rates below the competitive range.
RR-2i63
6,726,985
1,099,853
o
$
TOTAL
$
186,500
Foreign Official Refunded
Bid-to-Cover Ratio
Accepted
Tendered
Competitive
Noncompetitive
,I
"
I
------
Tenders at the high discount rate were allotted
Tender Type
,
11,228,838
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
Office of Financing
202-219-3350
CONTACT:
FOR IMMEDIATE RELEASE
October 19, 1998
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182-Day Bill
October 22, 1998
April 22, 1999
912795BJ9
Term:
Issue Date:
Maturity Date:
CUSIP Number:
RANGE OF ACCEPTED COMPETITIVE BIDS:
Discount
Rate
Investment
Rate 1/
------
----------
3.855%
3.865\'
3.865%
Low 2/
High
Average
Price
-----98.051
98.046
98.046
3.986%
3.997%
3.997%
Tenders at the high discount rate were allotted 100%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
$
Competitive
Noncompetitive
PUBLIC SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$
TOTAL
Bid-to-cover Ratio
Accepted
Tendered
Tender Type
=
23,461,897 / 5,858,897
1/ Equivalent coupon-issue yield.
22,518,901
942,996
$
23,461,897
5,858,897
2,142,500
2, 142,500
25,604,397
8,001,397
3,695,000
3,695,000
o
o
29,299,397
$
4.00
2/ $2,501,000 was accepted at rates below the competitive range.
RR-2764
4,915,901
942,996
11,696,397
NATIONAL CHURCH ARSON TASK FORCE
•
P. O. Bn.: 65798
Waxhingwn. D. C. 20530
FOR IMl\1EDIATE RELEASE
October 21, 1998
Contact: Beth Weaver (202) 622-2960
Christine DiBartolo (202) 6}6·2777
roSTICE AND TREASURY TO RELEASE SECOND YEAR CHURCH ARSON REPORT
The National Church Arson Task Force will hold a press briefing to release the Second
Year Report for the President tomorrow, October 22, at 11;00 a.m. in Conference Room B ofthe
Justice Depa.rtment, 10th and Pennsylvania Streets, N.W. Cameras may set up at 10:00 a.m.
Task Force co-chairs James E. Johnson, Treasury Under Secretary for Enforcement and
Bill Lann Lee, Acting Assistant Attorney General, Civil Rights Division will announce the results
of the Administration's response to the nation's church fires problem.
-30-
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TOTAL P.01
DEPARTMENT
OF
THE
'IREASURY
TREASURY
NEWS
EMBARGOED FOR RELEASE UNTIL 8:30 p.m. EDT
Remarks as Prepared for Delivery
October 20, 1998
TREASURY SECRETARY ROBERT E. RUBIN
REMARKS TO WOODROW WILSON INTERNATIONAL CENTER FOR SCHOLARS
It is a pleasure to speak tonight at your Woodrow Wilson Center, which has a welldeserved reputation for scholarship on public policy issues of importance to this country. I have
experienced this first hand. David Lipton, who served with extraordinary distinction as Under
Secretary of Treasury for International Affairs in dealing with the current global financial crisis,
came to Treasury from the Wilson Center. Let me also add that I appreciate this opportunity join
you in honoring Dana Mead, with whom we have worked most constructively over the past few
years, especially on international economic issues.
Tonight I would like to offer some reflections on the global financial crisis. which has
presented two challenges to the international community. The first challenge is to address the
crisis itself, doing all that is sensible to help the affected countries return to stability and growth
and to limit contagion. A second challenge, one that must be pursued simultaneously, is to build
a new architecture for the international financial system. Most of what has been written about this
crisis and these two challenges concerns economic policy issues and judgments. However, of
equal importance, but much less discussed, are the political and legal issues involved and I'd like
to focus on these this evening.
At the heart of both, addressing the current crisis and building a new architecture, is the
tension -- and the question of how to resolve that tension -- between the sovereignty of nations on
the one hand, and the demands and dynamics of the transnational global economy on the other
hand. That seems to me a profoundly important dichotomy that will occupy us for a long time to
come.
The current crisis is, in many respects, the most serious international financial disruption of
the last fifty years. While it is often said that the crisis began in Thailand, in my view, that is not
RR-2766
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so. Thailand was simply the first country in which financial institutions erupted. This crisis is the
result of problems that developed over many years: in industrial nations, great excesses in credit
extension and investment into developing countries with increasingly inadequate weighting of risk
as good times continued; and in developing nations, badly flawed financial systems, various other
structural problems and macroeconomic policy imbalances. And, just as capital once flowed into
emerging market countries without, in too many instances, proper analysis of risks, it is now too
often flowing out in a non-discriminatory, overly negative reaction to the risks.
This crisis presents enormously complex and in many ways unprecedented issues. There
are no magic wands or easy answers and a crisis that is a product of problems that developed over
many years will take time to work out. With this in mind, let me make some observations about
the political and legal dimensions of crisis response and architectural reform, which have received
far too little attention relative to the intense focus on the economic dimensions.
First, the politics, in particular, providing strong leadership on the often unpopular
components of sound economic policy and generating broad public and political support for such
economic policy.
The politics of good economic policy starts with leadership -- political leaders who
understand the economic problems of our complex world and have the political courage and
ability to make and pursue decisions that are often very difficult politically. I have seen a lot of
political leaders over the past six years, and this combination is not so easy to find, though there
have been some outstanding instances. A good example is President Clinton's reaction when we
met with him in the Oval Office on a Monday night in 1995 to discuss the Mexico relief package
in response to the peso crisis. I told the President that a poll published that day showed that the
great majority of the American public was opposed to support for Mexico, but I then said that
without that support there was a real chance that the economy of Mexico could collapse, and that
a Mexican crisis could spread elsewhere in Latin America and beyond. Without hesitation he told
us to go ahead with the package, and today Mexico is back on the path toward stability and
growth, though with many challenges still to face.
Coupled with strong leadership is the need to create broad public and political support for
effective economic policies, and that requires getting all stakeholders to conclude that these
policies are in their interest. In Korea, the new leadership brought together unions and companies
to build support for reform. Now, short-term interest rates have fallen from 25% to 7% and the
currency has substantially strengthened. A similar process occurred in Thailand, though in both
cases enormous challenges remain ahead. In Russia and Indonesia, on the other hand, as you all
know well, the political system never took ownership of reform and both economies are in dire
straights.
Just as the politics of effective economic policy is critical in developing countries, so is it
critical in industrialized countries. In Japan, for example, the absence of strong political support
for bank reform and fiscal stimulus has led to seven years of extremely slow growth and three
2
quarters now of recession, which in turn has affected not only the people of Japan but has been a
central problem for the rest of Asia and the entire global economy.
I believe that the ability of democracies to make politically difficult economic decisions -both with respect to their own economic policies and with respect to effective international
organizational activity -- will be central to the success of democracy and to the success of the
global economy in the decades ahead.
Another major factor not often discussed with respect to this crisis and to future
architecture is a strong legal system. A key factor in the crisis in many countries was a failure of
the legal system -- pervasive corruption, a lack of clear laws and an ineffective judicial process.
Building a sound legal and judicial framework includes establishing the rule oflaw, transparency,
court systems and mechanisms by which disputes can be resolved quickly and fairly, and
combating corruption.
In some respects, these political and legal challenges are ones that governments have faced
for a long time. One difference now is how much it all matters in the interdependent global
economy, where decisions can affect not only the country involved, but to a far greater extent
than before other countries around the globe. Moreover, while some have argued that in this
world of huge global markets, government has become largely irrelevant, this crisis demonstrates
how wrong that is. These huge markets, including bank credit extension, powerfully reward sound
policy and punish unsound policy, and these policy regimes of nations are set by governments.
For all of these reasons, there is now a heightened importance of each country taking the right
actions internally, as well as of nations working together to create international mechanisms that
encourage countries to make the right decisions, and that deal effectively with over-arching issues
of the global economy. And, central to meeting the needs of the global economy, as I said earlier,
is reconciling the sovereignty of nations with the transnational nature of the global economy.
These are the kind of issues the international community will continue grappling with as it
works on improving the architecture of the global economy, and that architectural reform is
critical, because, in my view at least, if we are going to maintain and expand a market-based
economic system, which I believe is the best path forward for the global economy, we must work
towards a system that is far less prone to instability, more effective in dealing with the instability
that does occur, and provides a real opportunity for all to share in the benefits of global growth.
Let me conclude by saying a word about the challenge we face in our own country in
building support for international economic policies and leadership.
Congress, after a year long debate, is finally on the verge of approving IMF funding with
tomorrow morning's Senate vote on the budget. But we still have not paid our arrears to the
United Nations, we still lack the authority to negotiate new trade agreements, even though
expanding trade is very much in our interest, and protectionist pressures seem to be building. I
am deeply concerned that public support for forward-looking international economic policies may
3
be waning at a time when our country's economic, national security and geopolitical interests
require just the opposite.
In recent years, we have seen both an erosion of the traditional bipartisan base of support
for international economic engagement and, at the same time, a re-ignition of one historical strain
in American thought, a rejection of the outside world. This has occurred for at least two reasons:
anxiety brought by the rapidity of change in this era of the global economy and dramatic
technological developments; and the end of the Cold War, which caused the foreign policy
consensus to lose its centerpiece -- the effort to contain Communist expansionism.
The response to all of this, however, ought not to be to turn inward, or to try to dismantle
the global economy that has benefited so many. The response should be to improve the workings
of the institutions of the global economy and to implement sound economic policy at home,
including fiscal discipline, and promoting our competitiveness through education, research and the
like.
For our country to respond in this constructive mode, however, public understanding of
the benefits to our economic well being of a market based global economy and of strong US.
leadership in that global economy must be greatly increased. And contributing to the heightened
understanding is another area, in addition to scholarship, where the Woodrow Wilson Center can
and should continue to playa very important role. All of us -- public sector officials, the business
community, foreign policy experts -- must work together on this challenge. The business
community has an especially important role to play, since it understands the importance of US.
leadership, and has the means and incentive to convey that understanding in a systematic fashion
in the public domain so, it is fitting that you have honored Dana Mead, both for what he has
already done and for what, as head of the Business Roundtable, he will be doing going forward.
The new global economy offers great opportunities for our country and all the nations of
the globe as we enter the 21 st century, but, to realize those opportunities, the United States, as
the world's leading economy, must meet the domestic and international economic policy
challenges of that new global economy. That in turn, will require all of us public officials, the
Woodrow Wilson Center, your honoree and the Business Roundtable that he heads-to redouble
our commitment to the development of informed, broad-based public support for meeting those
challenges. Thank you very much.
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4
DEPARTMENT
OF
THE
TREASURY
NEWS
omCE OF PUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE. N.W. - WASlflNGTON, D.C. - 20220 - (202) 622·2960
EMBARGOED FOR RELEASE UNTIL 8:30 p.m. EDT
Remarks as Prepared for Delivery
October 21, 1998
TREASURY SECRETARY ROBERT E. RUBIN
REMARKS TO CONCORD COALITION DINNER
It is a pleasure to speak with you this evening. Let me begin by expressing my deep
gratitude to you for honoring me with the Paul Tsongas Award. The decision last year to rename
this award after Paul Tsongas was a fitting way to honor a man who deserves so much credit for
focusing attention on the importance of deficit reduction. And the Concord Coalition has done an
invaluable service to our country by advancing the message of the importance of fiscal discipline,
the message Paul Tsongas worked so hard to convey.
By honoring me, you honor President Clinton's entire economic policy team, and, most
importantly, the President himself I remember in January of 1993, during the transition, I
traveled with the rest of the economic team to Little Rock, to visit then President-Elect Clinton to
discuss the plan to cut the deficit, a plan that was tough, but necessary in order to put our fiscal
house in order. One of the President's political advisors said that politically this will be very
difficult to do, and that there is a reason why it had not been done already. After a relatively brief
discussion, the President said we have to do it, because he said the deficit was the threshold
economic issue facing the country, and without successfully addressing that issue we would not
be able to focus on other priorities such as education and training.
At the time we were meeting in Little Rock, the government was running a deficit of $290
billion -- an all time high. The federal debt had quadrupled from 1980 to 1992. The forecasts at
the time were for continued ballooning of the deficit. These huge deficits kept interest rates high,
diminished confidence, lowered investment and stifled growth. We have come a long way. In a
few days, we will be told officially that during this fiscal year just ended, the Federal government
recorded a budgetary surplus for the first time in 29 years.
RR-2767
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In my judgment, the indispensable factor in this historic accomplishment was the 1993
deficit reduction plan. This deficit reduction increased confidence and helped bring interest rates
down, and that in turn, helped generate and sustain the economic recovery, which in tum, reduced
the deficit further. The result was a healthy, mutually reinforcing interaction of deficit reduction
policy and consequent economic growth.
Moreover, the dynamics oftoday's global capital markets greatly heighten the importance
offiscal discipline. These markets confer great benefits on countries with sound policies -- lower
interest rates, greater confidence, more stable flows of capital -- and conversely, impose severe
penalties on countries with unsound policies. In times of financial instability, it is particularly
important to have sound policies. For example, while the U.S. economy has felt some effects
from the recent financial crisis, that impact would have been much more severe had our economy
not attained sound fundamentals over the last five and a half years.
Having discussed the importance of fiscal discipline, which as I said, has been absolutely
central to our economy's success over the last six years, we must not let the progress we have
made mask the challenges we face in building a prosperous economy and society for the years and
decades ahead.
It seems to me there are four central pieces of an economic strategy going forward.
First, we must remain diligent in keeping our nation's fiscal house in order. One of the
biggest fiscal chalIenges we face, as you welI know, is addressing the long term health of our
Social Security system. The President has fought for what I believe is a sensible proposal to leave
the surplus intact until we address Social Security reform. Over the past 10 months, the President
has worked to foster debate and discussion to lead to a consensus. The Concord Coalition has
contributed greatly by helping to organize three national forums on the topic this year with the
President and Vice President and by raising the country's awareness of the chalIenges that this
issue presents. In December, the President will convene a White House conference as a final step
in this year of national dialogue. Soon after the turn of the year, the President wants to work with
Congress to produce a bipartisan plan to put this program on a sound footing for the long term.
As the Concord Coalition has so effectively argued, fiscal discipline is not an easy path, but it is
the essential path. We must not flag in our commitment to it.
Our second key challenge is to continue to work to improve education in all of its aspects,
but especially our public school system. I have found it interesting that even in meetings with
Finance Ministers and Central Bank Governors we often discuss the critical importance of
education in today's global economy to productivity, competitiveness and economic success.
Third, we face the challenge of tremendous social costs and loss of productivity that
results from having millions of Americans left out of the economic mainstream -- a problem that is
most closely associated with our inner cities. Even if one does not view this as a moral or social
issue -- although I happen to think it is -- it makes good economic sense. This is a problem that
2
affects all of us, no matter where we live or what our incomes may be. At Treasury we have used
our expertise in capital markets to help attract capital to distressed economic areas through
various programs, and as a member of the President's budget team, I have had the opportunity to
work to emphasize Head Start and other programs that promote education, public safety and the
other requisites for giving the residents of distressed areas a real opportunity to join the economic
mainstream.
Addressing these problems -- education, the inner cities and other matters central to our
economic and social well-being -- is not in conflict with fiscal discipline. Instead, we must set
priorities soundly within a framework of fiscal discipline.
Fourth and finally, we must continue to be deeply engaged in providing leadership on the
issues of international economic policy. A successful strategy on these issues to promote
American prosperity in the global economy includes three components: first, opening markets
and trade liberalization~ second, promoting growth and reform in the developing world and
transitional countries; and third, dealing with the problems of financial instability and crisis like we
are now experiencing. Let me say a word about this last point for a moment.
The current financial crisis may be, in many respects, the most serious global financial
crisis of the last fifty years. It has presented two sets of challenges to the international
community. The first is to address the current crisis and help the affected countries return to
stability and growth and limit contagion. And that is no simple matter. This crisis is a product of
problems that developed over many years. There are no magic wands or easy answers and we
will have to work our way through this over time. But, in my view, we are on the right track.
The key is for all nations -- developed and developing -- to meet their respective challenges in
pursuing sound economic policies, promoting growth, and working together.
There have been some important developments in recent days, which in my view are in
part a product of increased energy and greater emphasis on growth stemming from the President's
speech on the global economy in New York a few weeks ago, from the G-7 Finance Ministers and
Central Bank Governors statement that followed, and from the various international meetings in
Washington two weeks ago. The United States, after a year long debate, finally approved funding
for the International Monetary Fund, and will continue to pursue fiscal discipline and other
policies to promote growth in our nation. Japan has just passed important legislation reforming
its banking sector and the key is to implement it quickly and strongly and put in place appropriate
fiscal measures that will promote demand-led growth. And Europe seems be on a stronger
growth path; the key is for the nations of Europe to move forward on the requisites for strong,
sustained growth. For the developing countries, we have seen some signs of progress in nations
that have taken ownership of reform. In Korea, short-term interest rates have fallen from 25% to
7% and the currency has substantially strengthened, and Thailand has made similar progress,
though clearly there are enormous challenges ahead, in both countries. Recovery will take time,
the road may be bumpy, and there are great challenges for all to meet, but, as I said a moment
ago, I believe we are on the right track.
3
The second challenge is to build a new architecture for the international financial system
for the 21 st century, something which this crisis demonstrates we urgently need. The global
economy cannot live with the kinds of vast and systemic disruptions that have occurred over the
last year. For better prevention of financial instability, and better response when it does occur, is
critical to our ability to maintain and expand the free market system, which has benefitted so many
people around the globe.
A critical challenge in our own country is to greatly increase public understanding of the
importance to our economic well being of strong U. S. engagement and leadership on the issues of
the global economy. Although Congress finally approved funding for the International Monetary
Fund today, we are the only major country in arrears to the United Nations, we still lack the
authority to negotiate new trade agreements, even though expanding trade is very much in our
interest, and protectionist pressure seems to be increasing.
In recent years, we have seen both an erosion of the traditional bipartisan base of support
for international economic engagement and, at the same time, a re-ignition of one historical strain
in American thought, a rejection of the outside world. This has occurred for at least two reasons:
anxiety brought by the rapidity of change in this era of the global economy and dramatic
technological developments; and the end of the Cold War, which caused the foreign policy
consensus to lose its centerpiece -- the effort to contain Communist expansionism.
I am deeply concerned that public support for forward-looking international economic
policies may be waning at a time when our country's economic, national security and geopolitical
interests require the opposite. Many of your members, including Pete Peterson, have worked
hard to address this challenge.
The Concord Coalition has played a crucial role in building understanding of the
importance of fiscal discipline. We need a similar effort with respect to the importance of u.s.
leadership on the issues of the global economy. I know that this is outside your traditional
purview, but it is critical important to our economic well being. All of us -- public sector officials,
the business community, foreign policy experts -- must work together to develop broad-based
public support for strong, forward looking American international economic policy. Our success
in meeting this critical challenge is imperative as we approach a new century.
Again, I thank you for this honor, and I look forward to working with you in the future.
-30-
4
J)EPARTMEXT
OF
THE
TREASURY
TREASURY
NEWS
OFFICE OF PUBLIC AFFAIRS • ISOU PENNSYLVANIA AVENUE, N.W•• WASHINGTON, D.C.e 20ll0. (202) 622·2960
CONTACT: Office of Financing
202/219-3350
EMBARGOED UNTIL 2 t 3 0 P.}If.
october 21,
1~98
'TREASURY TO AUCTION $16, 000 MILLION OF 2-YEAR NOTBS
The Treasury will auction S16,000 million of 2-year notes to refund
$31,781 million of publicly held securities maturing October 31, 1998, and to
pay down about $l5,781 million.
In addition to the public holdings,' Federal Reserve Banks hold $2,463
million of the maturing securities for their own accounts, which may be
refunded by issuing an additional amount of the new security.
The maturing securities held by the public include $5,054 million held
~d international monetary
authorities. Amounts bid for th••• accounts by Federal Reserve Banks will
be added to the offering.
by Federal Reserve Banks as agents for foreign
The auction will be conducted in the single-price auction format. All
competitive and noncompetitive awards will be at the highest yield of accepted
competitive tenders.
The 2-year notes being offered today are eligible for the STRIPS program.
Tenders will be received ac Federal Reserve Banks and Branches and at
the Bureau of the Public Debt, Washington, D. C. This offering of Treasury
securities is governed by the terms and conditions set forth in the Uniform
Offering Circular (31 CFR Pare 356, as amended) for the sale and issue by
Che Treasury to the public of marketable Treasury bills, notes, and bonds.
Details about the new security are given in the attached offering
highlights.
000
Attacbment
RR-2168
HIGHLIGHTS OF TREASURy OFFERING TO THE PUBLIC OF
2-YBAR NOTES TO BE ISSUED NOVEHBBR 2, 1998
October 21, 1998
Offering Amount .••...••.••.•..•.••.••.•.•. $16,000 million
Description of Offering:
Ter.= and type of security ••.•••••••••.•••• 2-year notes
Series .............................................. AJ-2000
COSIP number •...•..•..•....•..•........... 912827 4T 6
Auction date •••••.••................•..•.. October 28,
Issue date .•..............•.........•..•.. November 2,
Dated date .•••••.••••.•••.••.••••••.••.••• October 31,
Maturity date •• ',' ••...•.••....•....•...... October 31,
1998
1998
1998
2000
Interest rate ••• '••....•••.••.•.••.••.•.••• Determined based on the highest
accepted competitive bid
Yield •.•••.••••••••....•..•.•....•.......• Determined at auc tion
Interest payment dates .••••...••.•.•.....• April 30 and October 31
Min~ bid amount and multiples ••.•.•...• $1,000
Accrued interest payable by investor ••..•• Deter.mined at auction
Premium or discount ••....••....•...••.••.. Determined at auction
STRIPS Information:
amount required .•.......•..•.•.••. Determined at auction
corpus CUSIP number ••.••.••.•.••.•••••••• 912820 DH 7
Due date(s) and CtrSIP number(s)
for additional TINT(s) ••.••.•.••.•..•.•• Not applicable
Min~
Submission of Bids:
Noncompetitive bids:
Accepted in full up to $5,000,000 at the highest
accepted yield.
Competitive bids:
(1) MUst be expressed as a yield with three decimals, e.g., 7.123%.
(2) Net long position for each bidder must be reported when the sum
of the total bid amount, at all yields, and the net long pOSition
is $2 billion or greater.
(3) Net long position must be determined as of one half-hour prior to
the closing time for receipt of competitive tenders.
Maxtmum Recognized Bid at a Single yield •.•..• 35\ of public offering
Maxtmum Award •. ·····••·············· ......•..• 35% of public offering
Receipt of Tenders:
Noncompetitive tenders: Prior to l2:00 noon Eastern Standard time on
auction day.
Competitive tenders: Prior to l:OO p.m. Eastern standard tLroe on
auction day.
Payment Terms: By charge to a funds account at a Federal Reserve Bank on
issue date, or payment of full par amount With tender. Treasury Direct
customers can use the Pa~ Di~ect ~eat~r8 which authorizes a charge to their
account of record at the~r f~nanc1al 1nstitution on issue date.
DEPARTMENT
OF
THE
TREASURY
NEWS
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASillNGTON, D.C. - 20220 - (202) 622-2960
FOR IMMEDIATE RELEASE
Remarks as Prepared for Delivery
October 22, 1998
TREASURY UNDER SECRETARY FOR ENFORCEMENT JAMES E. JOHNSON
SECOND YEAR CHURCH ARSON TASK FORCE REPORT
Good morning. My name is James Johnson. I am the Treasury Under Secretary for
Enforcement and, along with my partner Acting Assistant Attorney General Bill Lann Lee, am a
co-chair of the National Church Arson Task Force. I'm pleased to be here today to review the
Administration's success in response to the problem of arsons at America's houses of worship.
To many, houses of worship are havens, places of comfort and inspiration. They are often
the cornerstone of their community. Two years ago, the images of churches burning around the
country struck a wellspring of national concern. President Clinton launched a three-pronged
strategy to meet this challenge. He committed his Administration to investigating and prosecuting
the arsonists, rebuilding burned houses of worship and preventing additional fires. He created the
National Church Arson Task Force to investigate and prosecute the arsonists.
Our enforcement efforts have made tremendous progress. I am happy to report that the
number of fires being reported has decreased. We believe that this is due to a number of factors
including increased vigilance, well-publicized arrests and prosecutions and prevention efforts. As
set forth in our Report, the Task Force has opened 670 investigations into arsons, bombings and
attempted bombings at houses of worship. Three hundred and eight suspects have been arrested
in connection with 230 of the 670 investigations. Two hundred thirty-five defendants have been
convicted in connection with 173 fires at houses of worship. While federal authorities have
responded to all reported fires, many of the prosecutions have been on state charges. The arrest
rate -- 34 percent -- is more than double the 16 percent national rate for arrests in all arson cases.
Arsons are an extremely difficult crime to solve. Vigorous law enforcement efforts and
increased coordination among federal, state and local agencies have been vital to our success.
Our task would have been much more difficult without the bipartisan support provided by
the Congress. We would like to thank in particular Senators Kennedy and Faircloth,
Representatives Hyde and Conyers, the sponsors of the Church Arson Prevention Act of 1996,
and the members of the Congressional Black Caucus. Given the level of state involvement in the
RR-2769
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investigations and prosecutions, we relied heavily on the support of many governors and state and
local officials throughout the nation. We were also helped by civil rights and religious groups
who helped law enforcement reach out to the affected communities. We thank them for their
leadership.
The Task Force drew upon the resources of its constituent agencies and the experience of
state and local officials to address the problem we faced. ATF and FBI agents have worked side
by side with prosecutors, US Attorneys, Community Relations Service personnel and state and
local police and fire authorities in responding to the fires.
A number of important lessons have been distilled from the work of the Task Force and
are set forth in the report we are issuing today. Among other things, our success hinged on a
clear statement of mission from President Clinton, Vice President Gore, Secretary Rubin and
Attorney General Reno, close coordination on the ground between investigators and prosecutors
and constructive outreach to the affected communities. With these lessons in mind, the Federal
Government has reaffirmed its commitment to expending the time, resources and effort necessary
to solve church arsons and prosecute those who are responsible.
-30-
DEPARTMENT
OF
THE
TREASURY
~/78~9~. . . . . . . .1I....................
..............................
OffiCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W .• WASHINGTON, D.C. .20220. (202) 622-2960
Embargoed for 9 a.m. EDT release
Remarks as prepared for delivery
October 22, 1998
"BUILDING AN INTERNATIONAL FINANCIAL ARCHITECTURE FOR THE 21ST
CENTURY"
DEPUTY TREASURY SECRETARY LA'VRENCE H. SUMMERS
REMARKS TO THE CATO INSTITUTE
Building a successful global financial architecture for the next century will involve a great many
challenges -- for example, establishing the role of the Euro, and expanding the WTO. Today I
want to focus on just one of these challenges: creating a safe and sustainable system for the flow
of capital from the developed to developing countries.
This is not an CJ.SY problem. Tht: r.:ost rose-tinted consideration of the record of investing in
developing countries would admit that it has a checkered past. Ever since the South Sea Bubhle
there have been recurrent episodes where investors' initial enthusiasm turned to panic -- and
boom turned to bust.
The postwar history of global capital 11o\\s can be summarized as several decades of little or no
international c;)pital 11o\\s, followed by a wave of petrodollar lending that halted in Mexico City
in 1982. followed ;)fter a pause by the flood of capital to emerging economies in the 1990s -- a
flood which we no\\ see turned into reverse.
So the problem of how to establish the me~ms for safe and sustain;)ble capital 110ws to the less
developed countries is not one to whic;, the \\orld was alerted with the collapse of the Thai baht _ or the NIexic;)n peso. But we tace this challenge tod;))! ;)t a time '.'.hen it has taken on
unprecedented desirability and importance for the world's aging population.
The devdoped countries are now crossing the threshold into an era of increasing rates of
retirement and;) much lower rate of grov"th in the laber force. Negative population growth is
already a fact in some European countries and the investment of retirement saving is becoming a
critical concern. When all of the world's popubtion growth over the next 25 ye~1rs -- and the
:;on's sh;)re o:-its gro\\th in productivit: -- will take T'1:~ce in the developin~ countries \\e arL
heading into a perioJ \vhen ;::cre will be e:,\ceptiona. :;lobal benefits to the transfer of capitaL
I\.::', -::: 77 0
For press releases, ,~p('('('hl's, public schedules alld official bio.!.,lJ"aphics, call our 24-1lOur fax /ill(, at (202) 622-2040
expertise and know-how from the developed world to the developing world.
We have lately had a taste of the potential this offers. When history books are written 200 years
from now about the last two decades of the 20th century, I am convinced that the end of the Cold
War will be the second story. The first story will be about the appearance of emerging markets -about the fact that developing countries where more than three billion people live have moved
toward the market and seen rapid growth in incomes. For the first time in human history, living
standards for huge populations have quadrupled or more in a single generation.
If the degree of convergence between developing and developed countries in recent years stands
out in 20th century economic history it is hard to believe that it is not related to the very
substantial increases in economic integration that have occurred, and that increases in foreign
investment, trade finance, and portfolio investment are not an important aspect of integration.
I. Ongoing Reform of the International Financial Architecture
Building a more effective international financial architecture that can ensure that capital flows
are sustainable as well as strong is of profound importance around the world. It matters for
economic growth in the developing world and, as we saw in the 1980s in a very powerful way, it
matters for the stability of our own financial system.
This has been a priority for the United States and the other industrial countries since President
Clinton's call for reform at the Naples Summit. And there have been some significant results,
including:
•
the norm of transparency has come to be more widely accepted with the development and
continued refinement of the IMF international data dissemination standards and
international agreement. for example. on the need for better information on the true state
of central banks' balance sheets.
•
emerging countries have been brought into a broad-based initiative to raise the quality of
banking supervision and regulation in emerging economies, with the development of the
Basel core principles for effective banking supervision and similar international standards
for securities firms and others.
•
the Bretton Woods system has been recapitalized with an increase in IMF quotas and the
creation of the New Arrangements to Borrow. And these institutions have made
important innovations. with moves to hecome more transparent and accountable, with
premium rate lending on large IMF loans and with a new recognition at the World Bank
of the importance of issues such as good governance, social safety nets and the prevention
of corruption.
These are important developments but we have seen too many financial crises in recent years to
let matters rest there. President Clinton joined the meeting of finance ministers and central bank
governors of key industrial and emerging nations held during the IMF and World Bank meetings
in Washington two weeks ago. The reports presented there will carry work forward on
transparency, financial stability and crisis resolution.
II. Major Questions Going Fonvard
Economists and historians will debate what caused the crises in Asia and Russia for many years
to come. But it is fair to say that the debate has focused on four key problems:
•
weak domestic financial systems;
•
imprudent borrowing and lending;
•
inconsistent macroeconomic and exchange rate policies;
•
and, in face of difficulties, problems of confidence and lack of liquidity in markets.
Each of these factors point to areas that the international community will need to address going
forward.
1. How to Build Sound Domestic Financial Systems in Emerging Economies
Empty office buildings in Houston, record levels of non-performing loans in Japan, and the need
for nationalization of most banks in sober Scandinavia remind us that no one has figured out hov·"
to regulate financial systems soundly or is well positioned to offer definitive answers.
That said, if there is a common element in the emerging market financial crises we have seen, it
is a large amount of short-term borrowing inefficiently intermediated into low-return investments
because financial systems functioned poorly. This. in turn. was the precursor to major confidence
problems later on.
Among other things, making these systems work better \vill involve:
•
pressing for greater opening of domestic financial market to foreign providers of financial
services -- and the experience and greater diversification that they afford. Hungary was a
pioneer in moving to encourage foreign entry to its market in 1989 and has since reaped
the benefits to build probably the deepest. most diversified financial system in Central
Europe. Argentina's experience since J 995 holds similar lessons.
•
following up on the agreement of the Basel Principles. with effective surveillance of
national authorities' progress toward implementing these principles and building more
effective systems. In improving surveillance and regulation going forward it may be that
market-based approaches such as subordinated debt requirements need to be given
consideration as potential supplements to traditional regulatory approaches.
•
curtailment of domestic moral hazard in emerging economies, which in turn means the
creation of more effective domestic deposit insurance systems, better domestic'
bankruptcy laws, and a much greater emphasis on arms-length transactions. Inflows in
search of fairly valued economic opportunities is one thing. Inflows in search of government
guarantees or undertaken in the belief that they are immune from the standard risks are quite
another.
It is easier to say how emerging markets should improve their financial systems than it is for their
governments to bring about change or to figure out how the surveillance of the IMF and other
institutions can best be used to motivate change. These issues will require considerable thought
going forward.
2. Reducing Imprudent Borrowing and Lending
Domestic financial systems can and must be improved. But the root cause of crises is not so
much the weakness of financial systems as it is the inflow of capital that is excessive relative to
the maturity of the system in which it must be absorbed. This raises a variety of more
macroeconomic questions about the flow of international capital.
Countries need to calibrate their efforts to seek capital to the capacity of their domestic financial
systems. It bears emphasis that where foreign capital has contributed in a measurable way to the
onset of these crises it has not been a matter of countries swamped by unrequited foreign inflows -but of countries positively digging a path to their own door:
•
we saw this in Mexico, with the increasing resort to issuing dollar-denominated Tesohonos
in the lead-up to the crisis in 1994:
•
we saw it in Thailand, in the tax breaks on off-shore foreign borrowing which helped
encourage Thai banks to take on excessive foreign debt;
•
we saw it in Korea, where discriminatory controls kept long-term capital out, and ushered
short-term capital in;
•
we saw it in Russia, with the government's increasing efforts to attract foreign investors
to the domestic market for GKOs.
While excessive efforts to attract hot money can clearly end in disaster it would be a mistake to
infer that restrictions on securitization. illiquidity or the resistance of financial innovation
necessarily promotes stability. Those with a tendency to blame problems on hot money and shortterm speculation need to confront the observation that the largest financial sector crisis we have
seen in the 1990s -- that of Japan -- has occurred in a system that has historically been most closed
and "long-termist" in its approach. And they need to reckon with the fact that the most reliable
source of major financial disturbances in the modern era has been the market for real estate -- one of
the most illiquid and long-term assets around.
There are are a variety of difficult issues that arise in relation to the proper pacing of capital account
liberalization and effecctive prudential management. And there is no question that stronger
prudential management will involve measures that will have the effect of preventing flows that
might otherwise have occurred:
But we should all be able to agree on the danger of approaches to joining the global financial which
involve denying a country's own citizens the capacity to convert their own currency and invest
abroad. Such measures represent substntial intrusions on freedom. They make unsustainable policy
errors more tempting. They repel new capital inflows. And in an age of the internet they are unlikely
to be successful in the long run.
Of course it is important to recognize, in situations where more money is borrowed than can be
well used, that every credit has both a lender and a borrower. And certainly the last few months
have been chastening to developers of risk management systems everywhere. In this context I have
wondered lately what advice a sophisticated value at risk analysis would offer based on past
correlations about the need to anticipate two major league baseball players hitting more than 65
home runs in a single season.
As we consider how to build more effective international supervision systems and the continued
evolution of risk-weighting within the Basel system of capital standards -- it will be important to
think about how these tools can best be attuned to systemic stability. But at a time when
international integration is so important -- it will be critical not to take steps that will dramatically
raise the obstacles to international lending relative to similar-risk domestic investments.
Properly pacing capital inflows with the development of a country's financial system is important
for stability. But the best outcomes will come with rapid strengthening of financial systems and
substantial capital inflows over time. And with the right kinds of prudential regulation and risk
management the volumes of capital we have seen in recent years can be sustainable. After all, as
Alan Taylor's work as shown, as a share of both borrowers' and lenders' GOP, the flow of
capital to developing countries was substantially greater a century ago than it is today.
3. The Right Kind of Exchange Rate Regimes
The kind of economists that migrate to the Cato institute are united on many tenets of economic
theory and practice yet divided on the management of money in its international aspect. Some
are with Milton Friedman in treating exchange rates as a price -- and a price that should be
flexible for the same reasons that others arc. For others. money and its exchange is a promise -one that should be fixed and that should not hc hroken or devalued.
The choice between these two poses enormous difticulties. But we can all agree that where it is a
promise, the promise should be maintained -- and that trcating it as a promise, then breaking it, is
probably the worst of all options. There is no single answcr to exchange rate dilemmas. Indeed,
the core proposition of monetary economics is a trilcmma: that capital mobility, an independent
monetary policy and the maintenance of a fixed exchange rate objective are mutually
incompatible. I suspect this means that as capital market integration increases, countries will be
forced increasingly to more pure floating or more purely fixed regimes.
To be sure, the grass is always greener elsewhere. Some fixed rates have built up pressure like a
dam -- and wreaked devastation on the economic landscape on breaking. Yet the present
enthusiasm in Mexico for the notion of dollarization underlines that floating rates are fine. except
for where they float to.
In light of the difficulties we have seen in recent years the question facing the supporters of free
floating rates going forward will be how to find a way for governments establish disciplined,
clear policy framework without the clarity of an exchange rate signal -- particularly in a postcrisis environment. And the question for those who see no alternative in these settings must be
how to reconcile that need for stability with the fact that all the work done by years of exchange
rate commitments to markets can be undone by four days trading in exchange markets.
While there is no single answer I suspect that the European experiment with economic and
monetary union will influence views and choices that are made in the future. What is important
going forward will be the recognition that the contagion caused by discontinuities gives the
international community an even larger stake in the right choices being made -- and that the
approach that the international community takes will be very important to their success.
4. The Right Systems for Crisis Response
It is important always to remember that far and away the best response to a financial crisis is to
prevent it. We should not hold out too much hope that any mechanism for crisis response will
every offer anything approaching complete palliation of the adjustment costs of investors
deciding that at current prices they wish to move 10 percent of GOP out of a country tomorrow.
Crisis response mechanisms have an ex post aspect, in that we want to respond well to crises,
and an ex ante aspect because the decisions people make will be influenced by the fact that they
exist.
In this context there is perhaps a useful analogy to be made between the dilemmas involved in
responding to financial crises of countries and those involved in responding to the difficulties of
individual institutions:
•
on the one hand, the danger of bank runs, multiple equilibria, and self-fulfilling
prophecies provides a case for providing liquidity where credit shortages are not fully
justified by the fundamentals. That is why the Federal Reserve was established. And that
is why deposit insurance of some kind is a feature of almost every national financial
system.
•
on the other, market discipline is the best means the world has found to ensure that capital
is well used. And the inevitable byproduct of the confidence instilled by the availability
of emergency capital -- indeed, in a sense the goal of mechanisms such as deposit
insurance -- will be some blunting of investor discipline, and some greater preparedness
to leave money invested when prudence might otherwise have dictated taking it out.
In a sense, moral hazard is the mirror image of contagion. When the availability of a supply of
capital raises confidence and investment, it can either be called confidence that reduces
contagion, or it can be called moral hazard.
Closely related to this is the notion that it is essential to distinguish problems of liquidity from
problems of insolvency. When liquidity elements are dominant, it is the irony of financial crises
that while the problem may have been caused by too much lending, the solution may lie in more
lending taking place. Of course, where the solvency element is dominant, more lending is wrong
and the challenge is to allocate burdens among creditors and write down down debts accordingly.
~
In academic models the distinction between liquidity and solvency crises is clear. In the real
world, the distinction is difficult to draw even in hindsight -- and even more difficult to draw in
advance. It is not surprising, therefore, that the actual response to financial crises often involves a
combination of subordination of old claims and their extension or reduction, and the provision of
new finance.
How best this process should be managed in the future and how these elements should be
combined is a central issue in thinking about how the IMF should function and what its scale
should be. Even with the recent increase, it is striking to recall that if IMF quotas represented the
same share of GDP today as when it was founded they would be five and a half times larger than
they are.
Two recent developments have strengthened the IMF's capacity for responding to financial crisis
problems: the Supplementary Reserve Facility providing that when large quantities of finance are
provided to respond to pressure from capital inflows, a premium will be charged; and the recent
agreement that in certain very specific circumstances the IMF could lend into arrears. And
presently discussions are under way about the the possibility of providing contingent finance to
countries to help contain contagion.
Suggestions that the IMF should pre-commit to provide finance to countries that conform to
various standards of macroeconomic conduct and financial prudence have lately attracted
considerable attention. Among the many questions they raise are a problem akin to those raised
by narrow banking proposals -- about the credibility of promises not to support important
institutions or countries outside the system -- and important concerns about moral hazard.
In the real world it is perhaps inevitable that ex post conditionality will fill the gap between the
promise not to reward imprudence and the realities of contagion. But in imposing conditions ex
post there is the challenge of providing confidence to markets while at the same time providing a
spur to necessary reforms. This will involve a difficult balance, both in the setting of conditions
and the timing of disbursements.
Concluding Remarks
I have stressed the international financial architecture, which is obviously is very important for
the way the global economy functions. But no one should lose sight of the fact that the most
important determinant of every country's fortunes is the policy choices of its people and its
government. We can seek to create the best structure and best environment possible, and the
international community can make a contibution when problems come. But none of this is a
substitute for strong determined action of countries to maintain stability and to addres instability
when it comes.
I have touched on a number of the economic issues involved in thinking about the financial
system of the future. But it may be that the most profound issue is a political one. Just as much
greater integration in Europe has led to pressures for more pan-European decision-making, it is
inevitable that at the global level tensions between integration and sovereignty will arise. But if
recent events are a testament to the challenges which such tensions present -- they are no less a
confirmation of the critical importance of their being overcome. Thank you.
DEPARTMENT
TREASURY
OF
THE
TREASURY
NEWS
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C. • 20220. (202) 622-2960
FOR IMMEDIATE RELEASE
October 23, 1998
Contact: Maria Ibanez
(202) 622-2960
SLOVENIA AND THE UNITED STATES
TO OPEN INCOME TAX TREATY NEGOTIATIONS
The United States and the Republic of Slovenia will begin negotiation of an income tax
treaty in Washington on November 30, 1998. If successful, these negotiations will lead to the
first income tax treaty between the two countries.
The negotiations will be based on the U. S model treaty and Slovenia treaty policy, both of
which draw on the Organisation for Economic Co-Operation and Development (OECD) model
treaty. The treaty will deal with the taxation of income, from business activities, investment and
personal services, derived by residents of one country from the other country. It will contain
provisions to avoid double taxation, to ensure non-discrimination and to prevent abuse of the
treaty. It will also provide for exchange of information and other administrative cooperation
between the tax authorities of the two countries.
The Treasury Department invites comments from the public regarding the upcoming
negotiations. Persons wishing to comment on the proposed treaty are invited to send their written
comments to Joseph H. Guttentag, Deputy Assistant Secretary (International Tax Affairs), Room
1334 Main Treasury, Washington, D.C. 20220. They may also submit comments by fax to (202)
622-0605, or bye-mail to joseph.guttentag@treassprintcom
- 30 RR-2771
For press releases, speeches, public schedules and official biographies, call our 24...1zour fax line at (202) 622-2040
IJ EPA R T 1\ 1 E N T
0 F
THE
TREASURY
T I~ E .-\ S
tJ It
y
NEWS
O"'f"ICF. OF Pl'Rl.fC AFtI,\)RS· 15110 P!l:JIoiIllSYJ.Y,\NIA .WF.:"ltlF.. N.W.• ",,'MHIrN(:TON,. 1),(:,. 2U220. (202., fj2Z.19tiO
EMBARGOED 'ONT IL 2::3 0 P. M.
October 22, 1999
CONTACT:
Office of Financing
202/219-3:350
TREASURY OFFERS 13-WEEK AND 26-WE2K BILLS
The Treasury wi11 auct~on two series of Treasury bi11s totaling
approximately $16,000 mi1lion to refund $13,177 mi11ion of pub1iely he1d
securities maturing October 29, 1996, and to raise about $2,923 md11ion of
new cash.
In ~tion to the public holdings, Federal Reserve Banks for their own
accounts hold $6,793 mi1lion of ~he maturing bi11s, which may be refunded at
the weighted average discount rate of accepted oompetitive tender$. Amounts
issued ~o these accounts will be in addition to the of~ering amount.
The maturing bills held by the puh1ic include $2,919 million held by
Federal Reserve Banks as agents for foreign and interna~ion~ monetary authorities, which may be refunded within the offering amount at the weighted average
discount rate of accep~ed competitive tenders. Additional amounts may be
issued for such accounts if the aggregate amount of new bids exceeds the
aggregate amount of maturing bi11s.
Tenders for the bills w11l be ~eee1ved at Federal Reserve Banks and
Branches and at the Bureau of the PUblic Debt, Washington, D.C.
This offeri.ng
of Treasury secur~ties is governed by the terms and conditi.ons set forth in the
Uni£or.m Offering c~rcu1ar (31 CFR Part 356, as amended) for the sa1e and issue
by the Treasury to the pub1~c of marJcetab1e Treasury bills, notes, and bonds.
Detai1s about each of the new securities are given in the attachea
offering highlights.
000
Attachment
RR-2772
For press rti!l~ase5J Ip~~che9J pu.blic schethtlu and official biographit!s, call our 24-h4)U' fax lint! ai (202) 622-2040
HIGHLIGHTS OF TREASURY OFFERINGS OF BILLS
TO BE ISSUED OCTOBER 29 r 1998
October 22, 1998
Offering Amount .......................... $8 ,000 million
Description of Offering:
TeDm and type of security ................
CUSIP number ..............................
Auction date ..............................
Issue date ................................
Maturity date .............................
Original issue date ........•.............
Currently outstanding ....................
~n~bid amount and multiples .. ~ .....
$8,000 mi.ll.ion
91-day bill
912195 AZ 4
October 26, 1999
October 29, 1998
January. 28, 1999
July 30, 1999
$11,562 m.illion
192-day bill
912195 B'W
October 26, 1998
$1,000
$1,000
°
October 29, 1998
April 29, 1999
April. 30, 1998
$15,344 million
The following rules apply to all securities mentioned above:
Submdssion of Bids:
Noncompetitive bids ......... Accepted in full up to $1,000,000 at the average discount rate of
accepted competitive bids.
Competitive bids ............. (1) MUst be expressed as a discount rate with three decimals in
inorements of .005i, e.g., 1.100%, 1.1051.
(2) Net long position for each bidder must be reported when the sum
of the total bid amount, at all. discount rates, and the net l.ong
position is $1 bil.lion or greater.
(3) Net long position must be deter.mined as of one half-hour prior
to the cl.osing time for receipt of competitive tenders.
Max~
Recognized Bid
at a Single Yield ........... l5i of publio offerinq
Maximwn ANard .................... 35& of public
offer~ng
Receipt of Tenders:
Noncompetitive tenders ...... Prior to 12~OO noon Eastern Standard time on auction day
Competitive tenders ......... Prior to 1:00 p.m. Eastern Standard time on auction day
Payment Terms: By charge to a funds account at a Federal Reserve Bank on issue date, or payment
of full par amount with tender. Treasury Direct customers can use the Pay Direct feature which
authorizes a charge to their account of record at their financial institution on issue date.
MEMORANDUM
M
Q
0...
~
To:
From:
Re:
Fax Recipients
Office of Financing
Bureau of the Public Debt
Faxing of Marketable Securities Press Releases
The Office of Financing will discontinue faxing press releases
within the next month. If you wish to continue receiving this
information and have Internet access, please sign up for any or all
of our three Internet mailing lists. Signing up for these lists will
provide you with the Internet address(es) necessary to obtain the
actual press release(s). The sign-up address for this service is:
http://www.publicdebt.treas.gov/cgi-bin/cgiwrapJ-wwwJsignup.cgi
Further details about the termination of the faxing prog ram will be
given as the date approaches. If you have any questions, please
contact Rachel Hershenson or Larry Morris at 202-219-3350.
a:
f-
o
f-
DEPARTMENT
OF
THE
TREASURY
~~178~9~. . . . . . . . . . . . . . . . . . . .. .
......................
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W .• WASIDNGTON, D.C .• 20220. (202) 622-2960
FOR IMMEDIATE RELEASE
October 23, 1998
Contact: Treasury Public Affairs
(202) 622-2960
STATEMENT BY U.S. TREASURY ASSISTANT SECRETARY HOWARD SCHLOSS
In recent days there has been some confusion in the Seattle and Tacoma areas of Washington
State about the newly redesigned $20 note and the older series $20 notes. Older series $20 notes will
never be recalled or devalued and will continue to be accepted and recirculated as long as they remain
in good condition. The new $20 notes will replace older notes gradually.
As Federal Reserve Chairman Alan Greenspan said earlier this year, the United States has
never recalled its currency.
The continuing introduction of redesigned notes is a critical component of the Federal
government s anti-counterfeiting effort. The new series aims to maintain the security of the nation s
currency as computerized reprographic technologies such as color copiers, scanners and printers
become more sophisticated and more readily available.
I
I
The new $20 note entered circulation last month. It is commonly used in daily commerce and
is the bill most often dispensed by Automated Teller Machines (ATMs). The $20 note is the third in
the U.S. currency series to include new and modified security features to deter counterfeiting. The
Series 1996 $100 was issued in March 1996 and the redesigned $50 in October 1997.
-30-
RR-2773
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
DEPARTMENT
OF
THE
TREASURY
178~9~~"""""""""""""""".
OmCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622-2960
John Longbrake
(202) 622-2960
FOR IMMEDIATE RELEASE
October 23, 1998
RUBIN ANNOUNCES NATIONAL CAPITAL REVITALIZATION CORPORATION
Treasury Secretary Robert E. Rubin on Friday announced $25 million in funding for a
new National Capital Revitalization Corporation for the District of Columbia.
"We worked with Congress during the budget negotiations to provide $25 million for a
new National Capital Revitalization Corporation for the District of Columbia," Secretary
Rubin said. "The Corporation will help to spur new business activity, create jobs and help
revitalize economically distressed neighborhoods in our Nation's capital."
The Corporation will be headed by a board of directors comprised of leading private
and public sector individuals. It will encourage development activities in the District and help
to coordinate various D.C. government and private sector revitalization efforts. In addition to
the $25 million provided by the Federal government, the Corporation will seek private sector
and local investments, employ or promote Federal and local tax incentives passed as part of the
President's Revitalization Plan last year and help facilitate economic growth in the District.
-30-
RR-2774
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt. Washington, DC 20239
FOR IMMEDIATE RELEASE
October 23, 1998
Contact: Peter Hollenbach
(202) 219-3302
BUREAU OF THE PUBLIC DEBT AIDS SAVINGS BONDS OWNERS
AFFECTED BY FLOODING IN TEXAS
The Bureau of Public Debt took action to assist victims of flooding in Texas by expediting the
replacement or payment of United States Savings Bonds for owners in the affected areas. The
emergency procedures are effective immediately for paying agents and owners in those areas of
Texas affected by the storms. These procedures will remain in effect through November 30,
1998.
Public Debt's action waives the normal six -month minimum holding period for Series EE and
Series I savings bonds presented to authorized paying agents for redemption by residents of the
affected area. Most financial institutions serve as paying agents for savings bonds.
Texas counties involved are Bastrop, Bexar, Burelson, Caldwell, Calhoun, Colorado, Comal,
DeWitt, Fayette, Goliad, Gonzales, Guadalupe, Hays, Jackson, Karnes, Refugio, Travis,
Victoria, Wharton and Wilson. Should additional counties be declared disaster areas the
emergency procedures for savings bonds owners will go into effect for those areas.
The replacement of bonds lost or destroyed will also be expedited by Public Debt. Bond owners
should complete form PD-I048, available at most financial institutions or by writing the Kansas
City Federal Reserve Bank's Savings Bond Customer Service Department, 925 Grand
Boulevard, Kansas City, Missouri 64198; phone (816) 881-2000. This form can also be
downloaded from Public Debt's website at: www.publicdebureas.gov. Bond owners should
include as much information as possible about the lost bonds on the form. This information
should include how the bonds were inscribed, social security number, approximate dates of
issue, bond denominations and serial numbers if available. The completed form must be
certified by a notary public or an officer of a financial institution. Completed forms should be
forwarded to Public Debt's Savings Bond Operations Office located at 200 Third St..
Parkersburg, West Virginia 26106-1328. Bond owners should write the·word "STORMS" on
the front of their envelopes, to help expedite the processing of claims.
RR-2775
000
PUBLIC DEBT NEWS
Department of the Treasury. Bureau of the Public Debt eWashington. DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
FOR IMMEDIATE RELEASE
October 26, 1998
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182-Day Bill
October 29, 1998
April 29, 1999
912795BWO
Term:
Issue Date:
Maturity Date:
CUSIP Number:
RANGE OF ACCEPTED COMPETITIVE BIDS:
Discount
Rate
-----Low
4.~40%
High
4.160%
4.155%
Average
Investment
Rate 1/
Price
------
----------
97.907
97.897
97.899
4.287%
4.308%
4.304%
Tenders at the high discount rate were allotted
22%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type
Competitive
Noncompetitive
PUBLIC SUBTOTAL
Foreign Official Refunded
Tendered
----------------23,182,600
$
1,048,247
----------------24,230,847
TOTAL
RR-2776
1,899,946
26,130,793
8,015,993
3,230,000
30,054
3,230,000
30,054
----------------29,390,847
$
=
5,067,800
1,048,247
6,116,047
-----------------
lid-to-Cover Ratio -= 24,230,847 / 6,116,047
.J Equivalent coupon-issue yield.
$
1,899,946
SUBTOTAL
Federal Reserve
Foreign Official Add-On
Accepted
3.96
$
11,276,047
DEPARTMENT
OF
THE
TREASURY
~/78~9~. . . . . . . . . . . . . . . . . . . . . . . . . . . .. .
..............................
OFFlCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASmNGTON, D.C .• 20220. (202) 622·2960
EMBARGOED UNTIL 3:00PM
October 26, 1998
CONTACT: John Longbrake
(202) 622-2960
TREASURY ANNOUNCES MARKET BORROWING ESTIMATES
The Treasury Department announced on Monday that its net market borrowing for the
October - December 1998 quarter is estimated to be $30 billion with a cash balance of $15 billion
on December 31. The Treasury also announced that its net market borrowing for the January March 1999 quarter is estimated to be in the range of $15 billion to $20 billion with a cash
balance of $20 billion on March 31.
In the quarterly announcement of its borrowing needs on August 3, 1998, the Treasury
estimated net market borrowing for the October - December quarter to be in the range of $10
billion to $15 billion with a cash balance of $20 billion on December 31. The expected increase
in net market borrowing is the result of lower receipts and a smaller net issuance of State and
Local Government Series securities.
Actual net market borrowing for the July - September 1998 quarter was a pay down of
$38.8 billion with an end-of-quarter cash balance of $38.9 billion. On August 3, the Treasury
estimated net market borrowing for the July - September quarter to be a pay down of $45 billion
with a cash balance of $40 billion on September 30. The lower-than-expected pay down is the
result of lower receipts and higher outlays.
The regular quarterly Press Conference will be held at 9:00AM on Wednesday,
October 28, 1998.
-30-
RR-2777
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
DEPARTMENT
OF
THE
TREASURY
~178~9~. . . . . . . . . . . . . . . . . . . . . . . .. . .
..........................
OmCE OF PUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C. - 20220 _ (202) 622.2960
FOR IMMEDIATE RELEASE
Text as Prepared for Delivery
October 27, 1998
DIRECTOR OF THE OFFICE OF MACROECONOMIC ANALYSIS
JOHN H. AUTEN
REMARKS TO THE TREASURY BORROWING ADVISORY COMMJTTEE
OF THE PUBLIC SECURITIES ASSOCIATION
When you were here three months ago, real growth had shaded down to a little above
3-112 percent annual rate in the first half of this year. The quarterly pattern of growth had
been irregular: 5-112 percent annual rate in the first quarter and less than 2 percent in the
second. But that reflected a swing in inventory investment. Domestic final demand was about
equally strong in both the first and second quarters, more than offsetting the drag from an
absolute decline in our exports to Asia and elsewhere.
Some key inflation measures actually edged lower in the first half of the year and
others showed only modest upward drift. Strong growth and low inflation continued to
coexist, despite low rates of unemployment and tightening labor markets. The Asian ~ituation
and the possibility of even broader financial contagion were recognized as a threat. But
domestic considerations alone seemed to suggest a path of somewhat slower but healthy
expansion in the second half of this year and beyond.
The domestic economic situation has evolved closely in line with expectation over the
last three months. It is events in financial markets both here and abroad that have moved more
rapidly and unpredictably than one could have anticipated. Inevitably, this introduces an
element of uncertainty into the near term economic outlook that was not present to nearly the
same degree when you were here three months ago. The basic difficulty is in knowing how
much the process of financial deleveraging, which seems to be well underway, will exert an
adverse and unwanted effect on real economic activity.
RR-2778
Some of the recent financial turmoil may have little lasting adverse impact, to the
extent that it amounts to a zero-sum game with someone gaining what someone else has risked
and lost. A heightened respect for risk may even have some beneficial consequences. But
where leverage has been so excessive as to affect the functioning of markets, the situation must
be taken very seriously. There is always the possibility that the pendulum may swing too far.
After virtually disappearing, credit-quality spreads have widened sharply and credit availability
has at least been temporarily interrupted in some markets. There is in such circumstances the
potential risk that a market-induced process of credit restraint -- a private credit crunch, if you
will -- could snowball and go farther than anyone desires. It is encouraging that some spreads
have narrowed recently and that markets may be in the process of stabilizing.
One aspect of the current situation suggests that a favorable outcome is far more likely
than might otherwise seem to be the case. Past episodes of credit excess and quality
deterioration have typically occurred because of an inflationary environment and eventually
only been brought to an end by monetary tightening. The current difficulties, whatever their
ultimate origins, are occurring in a low-inflation environment within which the monetary
authorities have already made offsetting moves toward ease. This may not completely forestall
some adverse impact from the deleveraging process, but it would seem greatly to reduce the
likelihood of any serious credit-dampening influence that might threaten the continuation of the
current economic expansion.
As matters stand, the economy seems to be expanding at a rate fairly close to its
longer-run potential, after a period of above-trend growth in the last two years. Unfortunately,
we are viewing the recent past in the flow of current and immediately forthcoming official
statistics. For example, the third-quarter was concluded a month ago. Yet we will not have
the first look at third-quarter GDP until later this week. Obviously, those results will predate
much of the recent financial turmoil and will tell us where the economy has been, rather than
necessarily where it is going. But even that is worth knowing and may provide some guidance
as to future developments.
The economy seems to have downshifted in the third quarter to a slower rate of
expansion, from the first haIr s 3.7 percent annual rate, perhaps to something closer to
2 percent. Inventories had been a big swing item during the first half but will apparently exert
a relatively neutral influence in the third quarter. More importantly, inventory-sales ratios
remain at historically-low levels and there is little indication of the types of inventory·
imbalance that have sometimes given trouble in the past. Real personal consumption
expenditure (two-thirds of GDP) seems to be on a sustainable track. The 6 percent annual rate
increases in the first and second quarters were associated with a sharply falling personal saving
rate and with some special factors (unusually mild winter weather in the first quarter and heavy
discounting of autos and light trucks in the second quarter). If consumer spending were to
have tapered down to a 3 percent annual rate of growth in the third quarter, as it may have,
this would not signify any collapse in consumer spending but simply a return to a more
sustainable path of expansion.
2
Rising anxiety about international turmoil is beginning to chip away a little at consumer
confidence. Both the University of Michigan's index of consumer sentiment and the
Conference Board's consumer confidence index have backed off from their peaks earlier in the
year. But the declines are from very high levels and may not translate into as much consumer
retrenchment as would a clear threat to the continued growth of domestic employment and
income.
Up to now, the most obvious consequence of the global financial crisis has been
reduced demand for U.S. exports, largely but not entirely due to Asia, and a noticeable
weakening in U.S. manufacturing activity since the beginning of the year. Increases In our
manufacturing production have dwindled despite strong investment and consumer spending in
this country. Excluding motor vehicles, where production has been distorted by the GM
strike, manufacturing output slowed from growth of 6 percent over the four quarters of 1997
to less than half that in the first half of 1998 and to a small negative in the third quarter. As
production has slowed, there has been a growing weakness in manufacturing employment as
well. Factory jobs have fallen by about 150,000 since January after rising by more than
250,000 in 1997. These developments and their implications for the capital spending outlook
will need to be followed closely.
So there have been significant shocks to both the U.S. real economy and to its financial
markets. But the economy remains robust and there continues to be good forward mOJ11entum.
The most probable outcome going forward would appear to be growth somewhere near the
economy's potential and the continuation of low rates of inflation.
That is a summary of recent economic developments and the near term economic
outlook.
-30-
3
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
October 26, 1998
CONTACT:
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
October 29, 1998
January 28, 1999
912795AZ4
Term:
Issue Date:
Maturit.y Dat.e:
CUSIP Number:
RANGE OF ACCEPTED 'COMPETITIVE BIDS:
Low 2/
High
Average
Discount
Rate
Investment
Rate 1/
Price
------
----------
------
4.000%
4.095%
4.070%
98.989
98.965
98.971
4.097%
4.195%
4.170%
Tenders at the high discount rate were allotted
30%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Competitive
Noncompetitive
$
PUBLIC SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
TOTAL
Accepted
Tendered
Tender Type
18,996,940
1,185,816
$
20,182,756
6,982,756
1,019,454
1,019,454
21,202.210
8,002,210
3,562.815
3,562,815
16,346
16.346
$
24,781,371
$
Bid-to-cover Ratio = 20,182,756 / 6,982,756 '" 2.89
1/ Equivalent coupon-issue yield,
2/ $1,107,000 was accepted at rates below the competitive range.
RR- 2779
5.796.940
1,185,816
11,581,371
DEPARTMENT
OF
THE
TREASURY rg+)
TREASURY
NEW S
1789~~"""""""""""""""""
OmCE OF PUBliC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960
Treasury Contact: Michelle Smith
(202) 622-2920
OMB Contact: Linda Ricci
(202) 395-7254
FOR IMMEDIATE RELEASE
October 28, 1998
JOINT STATEMENT OF
ROBERT K RUBIN,
SECRETARY OF THE TREASURY,
AND
JACOB 1. LEW,
DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET,
ON
BUDGET RESULTS FOR FISCAL YEAR 1998
SUMMARY
The Administration is today releasing the September Monthly Treasury Statement of
Receipts and Outlays of the United States Government. The statement shows the actual
fmancial totals for the fiscal year that ended September 30, 1998, as follows:
a surplus 0[$70_0 billion;
total receipts of $1,721.4 billion; and
total outlays of $1 ,651.4 billion.
NOTE: Detail may not add to totals or changes due to rounding.
(MORE)
RR-2780
For press reierues, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
Table 1. TOTAL RECEIPTS, OUTLAYS AND DEFICIT/SURPLUS
(in billions of dollars)
1997 Actual
Receipts
. 1,579.0
Outlays
1,600.9
Deficit(-)/
Surplus
-22.0
1,657.9
1,703.8
1,721.4
1,667.8
1,664.7
1,651.4
-10.0
39.1
70.0
1998:
February Budget Estimate .......... .
Mid-Session Review Estimate ....... .
Actual ......................... .
SURPLUS
The actual FY 1998 smplus is $70.0 billion, or 0.8 percent of GDP. This is the first surplus
since 1969, and the largest as a percentage of GDP since 1956. In dollar terms, it is the
largest ever. The surplus marks the sixth consecutive year of improvement in the Federal
budget balance since the deficit peaked at $290.4 billion, or 4.7 percent ofGDP, in FY 1992.
Since FY 1992, thanks to strong and continuing economic growth and Federal Government
downsizing and spending control, outlays have grown at an average rate of only 3.0 percent
per year, less than half the average of 7.3 percent per year over the preceding 12 years, while
receipts have advanced at a rate of7.9 percent per year, faster than the 6.4 percent average
of 1980 through 1992, resulting in steady reductions in the deficit and the realization of a
surplus. Because of this progress in eliminating the budget deficit, the debt held by the
public has been reduced for the first time in 29 years. As a share of the economy, the debt
held by the public has declined for five consecutive fiscal years, and is now below its 1991
level.
The change from the MSR surplus estimate reflects:
-- a $13.3 billion decrease in outlays; and
-- a $17.6 billion increase in receipts.
OUTLAYS
Total outlays were $1,651.4 billion, $13.3 billion lower than the MSR estimate, continuing
the spending restraint and slower outlay growth that have occurred since the beginning of
this Administration. The major outlay changes since the MSR are described below. Table
2 displays actual outlays and estimates from the February Budget and the MSR by agency
and major program.
2
Department of Agriculture. Actual outlays for the Department of Agriculture were $54.0
billion, $0.9 billion below the MSR estimate. The major differences were in the following
areas:
•
Food Stamp outlays were $1.2 billion lower than the MSR estimate due primarily to
larger-than-projected declines in the Food Stamp caseload resulting in part from the
strong economy.
•
Commodity Credit Corporation (CCC) outlays were $0.8 billion higher than the MSR
estimate, reflecting the difficulties in parts of the agriculture sector this year. Almost
$0.5 billion was paid to farmers in loan deficiency payments due to market prices being
below the CCC marketing loan rate, which was not assumed in the MSR. In addition,
many farmers delayed repaying their previous year's loans, and over $0.2 billion more
in marketing loans were disbursed to farmers for their 1998 crops than forecasted.
•
The increase in CCC outlays was partially offset by lower-than-forecasted expenditures
for the Conservation Reserve and Export Enhancement Programs, the working capital
fund, and other programs.
Department of Defense - MilitaIy. Actual outlays for the Department of Defense - Military
were $256.1 billion, $2.8 billion above the MSR estimate. The difference was due to
higher-than-expected outlays for procurement, particularly by the Air Force.
Department of Education. Actual outlays for the Department of Education were only $0.3
billion below the MSR estimate. However, a $1.3 billion increase in outlays for the Office
of Elementary and Secondary Education was more than offset by a $1.3 billion decrease in
the Office of Post Secondary Education outlays and a $0.2 billion decrease in outlays for
other education programs. The Office of Elementary and Secondary Education experienced
a higher rate of grant disbursements than estimated in the MSR. The decrease in the Office
of Post Secondary Education was due to receiving fewer Pell Grant applications and
receiving greater FFEL offsetting collections than anticipated.
Department of Health and Human Services. Actual outlays for the Department of Health and
Human Services were $350.6 billion, $7.0 billion below the MSR estimate. The major
differences were in the following areas:
•
Outlays for the Medicare program were $213.6 billion, $4.7 billion below the MSR
estimate. The MSR overestimated hospital outlays, specifically payments for
inpatient services. In addition, a portion of the difference was due to a temporary
slowdown in home health expenditures due to billing and computer systems changes
required by the Balanced Budget Act of 1997.
3
•
Outlays for the Temporary Assistance for Needy Families (TANF) and related
programs were $15.5 billion, $1.7 billion below MSR estimates. The difference was
due primarily to slower-than-anticipated outlays during implementation of the new
TANF law and larger-than-projected declines in state welfare caseloads due to the
strong economy.
Department of the Interior. Actual outlays for the Department of the Interior were $7.2
billion, $0.7 billion below the MSR estimate. Outlays for the Bureau of Reclamation and
land acquisition through the Land and Water Conservation Fund were less than projected,
in part because the Congress did not release all of the funds appropriated for FY 1998.
Department of Justice. Actual outlays for the Department of Justice were $16.1 billion, $0.7
billion above the MSR estimate. As a result of a Departmental initiative to obligate grant
dollars more quickly, outlays for the Crime Reduction Trust Fund were higher than
previously experienced.
Department of Labor. Actual outlays for the Department of Labor were $30.0 billion, $0.6
billion below the MSR estimate. Nearly half of the net shortfall was due to lower-thananticipated claims activity in the unemployment insurance program. About another 30
percent was due to slower spending under grants to States and local areas for helping
dislocated workers and disadvantaged youth and adults train for or find jobs.
Department of State. Actual outlays for the Department of State were $4.6 billion, $0.7
billion below the MSR estimate. Outlays for payments to international organizations were
$0.2 billion lower than expected due to the failure to enact authorizing legislation for United
Nations arrearage payments and to an end-of-year reprogramming notification. Outlays for
diplomatic and consular programs were $0.2 billion lower than expected primarily due to
improved collection and settlement of prior year receivables from other government
agencies. Other outlay shortfalls were primarily due to an accounting adjustment for foreign
buildings programs.
Department of Transportation. Actual outlays for the Department of Transportation were
$39.5 billion, $1.0 billion below the MSR estimate. Outlays for the Federal Highway
Administration were $20.4 billion, $1.1 billion below the MSR estimate, largely because
projects were delayed during the lapse in authorization for the highway program.
Department of the Treasmy. Actual outlays for the Department of the Treasury were $390.1
billion, $1.3 billion above the MSR estimate. Interest on the public debt, which includes
interest paid to the other government accounts as well as interest paid to the public, was
$363.8 billion, $1.4 billion above the MSR estimate. This difference was due primarily to
interest paid to trust funds, which was $1.2 billion higher than the MSR estimates because
of higher trust fund balances and slightly higher interest rates than were assumed in the
MSR Higher interest paid to trust funds is offset by higher interest received by trust funds,
4
so this difference does not affect total outlays. Interest paid to the public was $0.2 billion
above the MSR estimate due to slightly higher interest rates, partly offset by the impact of
the higher surplus.
Department of Veterans Affairs. Actual outlays for the Department of Veterans Affairs were
$41.8 billion, $1.3 billion below the MSR estimate. Veterans Health Administration outlays
were $0.6 billion less than anticipated, because higher-than-expected medical insurance
collections were retained for future obligations. Outlays for all other Veterans programs
were $0.7 billion below the MSR estimate due to a lower-than-anticipated number of claims
for veterans disability compensation and lower-than-expected mortality in the National
Service Life Insurance programs.
Federal Emergency Management Agency. Actual outlays for the Federal Emergency
Management Agency were $2.1 billion, $1.1 billion below the MSR estimate. This
difference reflected lower-than-estimated flood insurance claims, slower disbursements for
the repair and restoration of public facilities damaged in disasters, and higher-than-projected
cancellations and reductions in previously approved disaster assistance.
Federal Communications Commission. Actual outlays for the Federal Communications
Commission were $0.1 billion below the MSR estimate. However, this difference
represented a $1.6 billion decrease in outlays for the Universal Service Fund (USF) and a
$1.5 billion increase in subsidies for spectrum auction sales. The decrease in USF outlays
resulted from a delay in the disbursement of the fund for schools and libraries and a
reduction in available funds, because contributions to the USF were $0.5 billion lower than
anticipated. The increase in spectrum auction subsidy outlays reflected higher-than-projected
subsidy rates and modifications of loan terms.
United States Postal Service. Actual net outlays for the United States Postal Service were
$0.3 billion, $1.3 billion below the MSR estimate. Outlays forecast for several major
programs did not occur as planned, contributing to a $1.7 billion reduction in operating
disbursements. In addition, estimated capital outlays of $0.5 billion did not occur in FY
1998. These outlay shortfalls were partly offset by a $0.9 billion shortfall in receipts due to
a delay in implementing new postage rates.
Undistributed offsetting receipts. Offsetting receipts are deducted from gross outlays in
calculating net outlays; therefore, increases in these figures reduce the surplus and vice-versa.
The m~jor differences were in the following areas:
•
Interest received by on-budget trust funds was $67.2 billion, $1.2 billion higher than
the MSR estimate. As indicated in the paragraph above on the Department of the
Treasury, this difference is offset by higher interest paid on the public debt by
Treasury and does not affect total outlays.
5
•
Spectrum auction receipts were $2.6 billion, $0.5 billion lower than the MSR
estimate. Auctions expected to generate $0.3 billion in receipts were rescheduled
from FY 1998 to FY 1999. The remaining $0.2 billion difference was due to the fact
that proceeds from numerous auctions were different than anticipated.
RECEIPTS
Actual FY 1998 receipts were $1,721.4 billion, $17.6 billion higher than the MSR estimate.
This larger-than-expected improvement in receipts follows on similar results over the
preceding four years, in which the economy outperformed the Administration's forecasts.
Table 3 displays actual receipts as well as estimates from the budget and MSR by source.
Changes in Receipts by Source
•
Individual income taxes were $828.6 billion, $18.1 billion higher than the MSR
estimate of $810.5 billion.
Most of the difference is attributable to
higher-than-estimated withholding of $6.6 billion, higher-than-estimated
non-withheld payments of $5.3 billion and lower-than-estimated refunds of $2.7
billion. Higher-than-anticipated net adjustments into individual income taxes from
the social security trust funds account for the remaining increase relative to the MSR
estimate.
•
Corporation income taxes were $188.7 billion, $1.0 billion higher than the MSR
estimate. Higher-than-anticipated payments from corporations, offset in part by
higher-than-anticipated refunds paid to corporations, account for the increase in this
source of receipts.
•
Social insurance and retirement receipts were $3.5 billion lower than the MSR
estimate of $575.4 billion. Higher-than-anticipated net adjustments into individual
income taxes from the social security trust funds, higher-than-anticipated refunds of
social security taxes and lower-than-estimated unemployment insurance receipts
account for most of the net decrease in this source of receipts relative to the MSR
estimate.
•
Excise taxes were $2.0 billion higher than the MSR estimate. Most of this amount
appears to be associated with taxpayers not taking full advantage of a Taxpayer
Relief Act of 1997 deposit rule change, which shifted the due date for the deposit of
certain Highway Trust Fund taxes, otherwise due after July 31, 1998 and before
October 1, 1998, to October 5, 1998.
•
Miscellaneous receipts were $32.3 billion, $1.3 billion lower than the MSR estimate
of$33.6 billion. Lower-than-anticipated deposits of earnings by the Federal Reserve
6
System, reflecting lower-than-expected asset values on securities denominated in
foreign currencies, reduced miscellaneous receipts $0.5 billion relative to the MSR.
Lower-than-anticipated contributions to the Universal Service Fund of$0.5 billion
account for most of the remaining n~t decrease in this source of receipts.
Other receipts, which include estate and gift taxes and customs duties, were $42.4
billion, $1.4 billion higher than the MSR estimate. Estate and gift taxes were $1.0
billion higher than the MSR estimate, reflecting higher-than-anticipated numbers and
values of taxable estates. Customs duties were $0.4 billion above the MSR estimate,
in large part because of higher-than-anticipated taxable activity.
7
Table 2.··1998 BUDGET OUTLAYS BY AGENCY
(fiscal years; in millions of dollars)
1998
s:.,timate
1997_ _-=---==.c~-=:
Mid-Session
Bw1get
Actual
Actual
2,362
3,259
2,855
3,719
2,879
3,719
2,543
3,463
-312
-256
-336
-256
7,256
160
8,566
20
9,323
43
10,143
278
1,577
258
1320
235
1,026
456
1,397
, 665
1,397
665
1,274
591
-123
-74
-123
-74
22,857
12,555
3,209
22,416
13,142
3,526
21,370
13,142
3,572
20,141
12,833
3,399
·2,275
·309
-127
·1,229
-309
-173
Change, 1998 Actual from:
Mid-Session
.Budget
Qutlays by Major Agency
Legislative Branch .....................................................................
The Judiciary .............................................................................
Agriculture:
Farm Service Agency:
Commodity Credit Corporation .......................................... .
Other..................................................................................
Risk Management Agency (Federal Crop Insurance
Corporation) .........................................................................
Foreign Agricultural Service ...................................................
Food and Nutrition Service:
Food stamps .................................................................... ..
Other..................................................................................
Forest Service ....................................................................... .
Other......................................................................................
Subtotal, Agriculture ......................................................... .
5.283
~
6
~
52,549
55,015
54,836
53,950
-1,065
-886
Commerce .................................................................................
Defense-Military ........................................................................
3,780
258,330
4,065
251,385
4,065
253,360
4,047
256,136
-18
4,751
-18
2,776
9,619
12,260
9,371
12,285
9,371
12,285
10,685
10,957
1,314
-1,328
1,314
-1,328
Education:
Office of Elementary and Secondary Education .................... ..
Office of Postsecondary Education ........................................ .
Other.......................................................................................
Subtotal, Education .............................................................. .
Energy:
Atomic energy defense activities ............................................ .
Other.......................................................................................
Subtotal, Energy ...................................................................
Health and Human Services:
Medicare (gross outlays) ........................................................
Medicaid .................................................................................
Public Health Service ........................................................... ..
Temporary assistance for needy families, family support
payments to States, and JOBS .......................................... ..
Other Administration for Children and Families .................... ..
Other......................................................................................
Subtotal, Health and Human Services ............................ ..
5Jl2.9
5.289
~
9.Q91
9.Q91
~
30,747
30,747
8.85.0
~
30,014
30,492
-255
-255
11,276
11,521
11,521
11,181
-340
-340
3JM
2M5
M53
ill
14,470
14,366
U63
210
14,574
14,444
78
-130
210,437
95,552
21,755
218,807
100,960
24,232
218,275
101,260
23,935
213,569
101,234
23,670
-5,238
274
-562
-4,706
-26
-265
15,516
15,833
18,330
16,816
17,168
16,816
15,503
17,087
·2,827
271
·1,665
271
~..552
~
~
~
~
~
339,541
359,106
357,531
350,563
-8,543
-6,968
Table 2.·-1998 BUDGET OUTLAYS BY AGENCY
(fiscal years; in millions of dollars)
1998
1997
Estim=a~te==--:-=_--;--.
Mid:~ssiQI]
Ac.tuaJ
Change, 1998 Actual from:
Budget
~.ssion
&tu.al
B!ti:lge.l
4,517
4,589
4,621
-368
32
2.5.588
25..6.M
~51
16
27,525
4,989
~
30,950
30,177
30,224
-726
47
QutlaysJ;)¥--MajorAgency
Housing and Urban Development:
Community development grants ............................................ .
Other ..................................................................................... .
Subtotal, Housing and Urban Development... ................. ..
23Jm8
Interior ...................................................................................... .
Justice ...................................................................................... .
Labor:
Training and employment services ........................................ .
Unemployment trust fund ..................................................... ..
Pension Benefit Guaranty Corporation ................................. ..
Other ..................................................................................... .
Subtotal, Labor ................................................................ ..
6,722
14,315
7,937
15,474
7,969
15,474
7,234
16,129
-703
655
-735
655
4,432
24,299
-1,197
2J126
30,461
4,990
24,744
-1,286
4,818
23,685
-1,286
4,644
23,408
-1,218
-346
-1,336
68
-174
-277
68
3..61Z
3M5
3.169
~
::116
32,125
30,562
30,002
-2,123
-560
Stale ........................................................................................ ..
5,245
5,261
5,261
4,585
-676
-676
20,798
4,581
8,815
21,992
4,150
8,979
21,452
4,150
9,235
20,350
4,297
9,242
-1,642
147
263
-1,102
147
7
Transportation:
Federal Highway Administration ........................................... ..
Federal Transit Administration ........................ ,.................... ..
Federal Aviation Administration .............. ,............................. ..
Other..................................................................................... .
Subtotal, Transportation ................................................... .
Treasury:
Exchange Stabilizalion Fund ................................................ ..
Interest on the public debt.. ................................................. .
IRS:
Earned income tax credit... ............................................... ..
Other ............................................. ·· ...... ·· .... ···· ............. ,.... .
Other .................................................. ·.................................. .
Subtolal, Treasury ............................................................ .
5M1
~
M82
M.Z9
235
~
39,835
40,465
40,419
39,468
-997
-951
-1,007
355,796
-1,378
362,120
-1,178
362,409
-1,236
363,824
142
1,704
-58
1,415
21,856
9,530
~
379,345
22,295
10,001
23,341
10,001
23,239
9,914
944
-87
-102
-87
:5.816
~2
:M.41
ill
111
387,222
388,761
390,100
2,878
1,339
Table 2.··1998 BUDGET OUTLAYS BY AGENCY
(fiscal years; in millions of dollars)
1997
Ac.tuaJ
1998
Estimate
Budget
Mid-Session
Ac.tuaJ
Change, 1998 Actual from:
Budget
Mid-Session
Qutlays by Major Agency
Department of Veterans Affairs:
Veterans Health Administration ............................................ ..
Other......................................................................................
Subtotal, Department of Veterans Affairs ........................ ..
Corps of Engineers ....................................................................
Other defense civil programs .................................................. ..
Environmental Protection Agency ............................................ .
Executive Office of the President.. ............................................
Federal Emergency Management Agency.............................. ..
General Services Administration ............................................. ..
International Assistance Programs:
International Security Assistance:
Foreign Military Financing .................................................. .
Economic Support Fund ..................................................... .
Other...................................................................................
Agency for International Development.. ................................ .
Multilateral assistance ........................................................... .
Military sales programs ..........................................................
International monetary programs .......................................... .
Other ......................................................................................
Subtotal, International Assistance Programs .................. ..
National Aeronautics and Space Administration ..................... ..
National Science Foundation ....................................................
Office of Personnel Management.. .......................................... ..
Small Business Administration ................................................ ..
Social Security Administration:
Old age and survivors insurance (off-budget) ...................... ..
Disability insurance (off-budget) ........................................... ..
Supplemental security income program ................................ .
Other:
On-budget. ..........................................................................
Off-budget. ......................................................................... .
Subtotal, Social Security Administration .......................... ..
Other independent agencies:
Major deposit insurance agencies:
Federal Deposit Insurance Corporation:
Bank insurance fund .......................................................... .
Savings association insurance fund .................................. .
17,052
18,174
18,174
17,615
-559
2U2.6
2UOQ
2UOQ
~.i6Q
~
~
39,277
3,599
30,282
6.167
219
3,326
1,083
43,074
4,064
31,494
6,440
240
3,698
944
43,074
4,168
31,494
6,440
240
3,246
944
41,776
3,833
31,215
6,300
213
2,101
1,136
-1,298
-231
-279
-140
-27
-1,597
192
-1,298
-335
-279
-140
-27
-1,145
192
2,960
2,226
-783
2,814
2,141
-107
787
3,213
2,421
-603
2,618
1,858
3,213
2,421
-593
2,618
1,858
-43
24
3,118
2,462
-630
2,457
1,850
-163
-151
'91
121
121
5.6
10,128
9,609
9,619
9,000
-95
41
-27
-161
-8
-120
-175
:63
-609
-95
41
-37
-161
-8
-120
-175
:63
-619
14,358
3,131
45,404
334
13,729
3,165
46,418
-62
13,723
3,165
46,418
-62
14,206
3,188
46,307
-78
477
23
-111
-16
483
23
-111
-16
318,569
46,701
28,717
330,865
50.644
29,781
329,812
49,658
29,512
329,769
49,459
29,747
-1,096
-1,185
-34
-43
-199
235
-43
24
-559
6,221
8,860
8,805
8,388
-472
-417
::6.B98
:9.6Z.O
~
:9JJ2Q
S1D
~
393,309
410,480
408,172
408,202
-2,278
30
-4,025
-4,554
-1,684
-327
-1,051
-327
-1,219
-448
465
-121
-168
-121
Table 2.--1998 BUDGET OUTLAYS BY AGENCY
(fiscal years; In millions of dollars)
1997~_---= Estimate
Actual
Budget
1998
------- ---
Mid-Session
Aclu~
Qullays by Mai~
FSLlC resolution fund (including RTC) .............................. .
Other FDiC ... ,.... ,.... ,.. ,.... ,., .... ,....... ,., .. ,................... ,., .. ,..... .
Subtotal, Federal Deposit Insurance Corporation ............... .
National Credit Union Administration ................................. ..
Subtotal, major deposit insurance agencies .................... ..
District of Columbia ......................................................... ,.. ,.. .
Export-Import Bank .. ,........... ,................... ,.... ,.............. "., .... ,.
Federal Communications Commission:
Universal service fund ........................................... ,........... ..
Spectrum auction subsidies ............................................... .
Other. ,.... ,......... ,., ....... ,., .. ' ...... ,....... ,........... ,...... ,' .... ,......... ..
Subtotal, Federal Communications Commission ................. ..
Postal Service:
On-budget. .. ,.... ,......... ,., .. " ... ,., ................ ,... ,,." .. ,.... ,.... ,..... .
Off-budget. .. ,.... ,.... ,., .. ,......... ,...... ,.. ,.... ,.. ,................ ,.... ' ..... .
Subtotal, Postal Service .................................................... .
Railroad Retirement Board ................................................... ..
Securities and Exchange Commission ................................. ..
Tennessee Valley Authority ................................ ,................. ..
U.S. Enrichment Corporation, ................... ,........................... .
Other (net)." .... ,.... ,.... ,.... ,................... ,................... ,.............. .
Subtotal, other independent agencies ............................. ..
Undistributed offsetting receipts:
Employer share, employee retirement (on-budget) ............... .
Employer share, employee retirement (off-budget) ............... .
Interest received by on-budget trust funds ........................... ..
Interest received by off-budget trust funds ............................ .
Rents and royalties on the Outer Continental Shelf lands .... ..
Sale of major assets .................... ,.............. ,................... ,...... .
Spectrum auction receipts .................................. ,................. ..
Other, .... ,... " ,... ,.... ,...... ,.. ,.... ,.............. ,........... ,...................... .
Subtotal, undistributed offsetting receipts ........................ .
~
~
-154,970
Total, Outlays ........ ,...... ,.. ,.... ,..................... ,.......................... ,...
On-budge\. .......... ,.............. ' ........ ,..... ,.... ,..................... ,....... .
Off-budge\. ....... , ....... ,.... ' .... '" ., .......... ,.... ,,... ,.. ,........... ,.... ' .... .
Deficit (-) , Surplus
On-budget.. ,......... ,.... ,.... ,................... ,... " ....... ,... ,.. ,.... ,....... ,..
Off-budget.., ......... ,.............. ' .............. ,...... ,., .......... ,.... ' ........ ..
NOTE: Detail may not add to totals or changes due to rounding.
-5,603
-2,335
-2,325
Q
Change, 1998 Actual from:
Bud9-el Mid-Session
-2,484
-149
29
2.9
-159
2.9
-14,181
-169
-14,350
704
-114
-4,346
-186
-4,532
811
-34
-3,703
-186
-3,889
811
-34
-4,122
-212
-4,334
768
-208
224
-26
198
-43
-174
-419
-26
-445
-43
-174
1,001
940
3,336
3,295
3,336
3,295
1,769
4,769
Q
6,538
-1,567
1,474
-1,567
1,474
:.13
:.15
:.15
1,927
6,616
6,616
15
15
-78
-78
126
86
86
86
0
0
::4.9
U21
1A61
211
-.1..50.4
~
77
4,870
-20
-337
-102
1,807
4,923
-62
-839
7
1,553
4,923
-62
-839
7
303
4,837
-231
-784
-46
-1,504
-86
-169
55
-53
-1,250
-86
-169
55
-53
4.a5I
5.3QQ
5..30.9
4.I91
-.5Q3
:.512
-2,489
13,997
14,395
11,639
-2,358
-2,756
-27,773
-6,483
-63,778
-41,214
-4,711
-27,908
-7,155
-65,951
-46,730
-4,663
-4,424
-2,216
-27,907
-7,054
-66,057
-46,639
-4,987
-4,870
-3,132
-27,819
-7,052
-67,208
-46,630
-4,522
-5,158
-2,642
89
103
-1,257
100
141
-734
-426
88
2
-1,151
9
465
-288
490
-.3
1.111
-.3
-160,167
-160,646
-161,035
-868
-389
1,600,911
1,290,287
310,624
1,667,815
1,348,140
319,675
1,664,724
1,347,095
317,629
1,651,383
1,334,781
316,602
-16,432
-13,359
-3,073
-13,341
-12,314
-1,027
-21,957
-103,322
81,365
-9,957
-106,273
96,316
39,061
-63,131
102,192
70,039
-29,160
99,198
79,996
77,113
2,882
30,978
33,971
-2,994
-11,006
Table 3.··1998 BUDGET RECEIPTS BY SOURCE
(fiscal years; In millions of dollars)
1997
ActuaL
1998
Estimate
Budget
Mid·Session
Actual
Change, 1998 Actual from:_
Budget Mid·Session
Receipts by Source
Individual income taxes .............................................................
Corporation income taxes ..........................................................
Social insurance and retirement receipts:
Employment and general retirement:
On·budget. ...........................................................................
Off· budget. ...........................................................................
Subtotal, Employment and general retirement... .............. .
Unemployment insurance ...................................................... .
Other retirement contributions ............................................... .
Subtotal, Social insurance and retirement receipts ........ .
737,466
182,294
767,768
190,842
810,516
187,712
828,597
188,677
60,829
·2,165
114,761
391,989
506,750
28,202
122,133
415,991
538,124
28,922
123,260
419,821
543,081
27,941
124,215
415,800
540,016
27,484
2,082
955
=191
:4.021
1,892
·1,438
·3,065
·457
ti1B
4..328
4.328
4.335
Z
Z
539,371
571,374
575,350
571,835
461
·3,515
Excise taxes ..............................................................................
Estate and gift taxes ................................................................. .
Customs duties..........................................................................
Miscellaneous receipts ............................................................. .
Total, Receipts ................................................................ .
On·budget. ................................................................... .
Off·budget. ....................................................................
56,926
19,845
17,927
55,540
20,436
18,363
55,642
23,091
17,879
57,669
24,076
18,297
2,129
3,640
·66
2,027
985
418
NOTE: Detail may not add to totals or changes due to rounding.
18,081
965
25.12Z
33.535
3M95
32.2ZO
::1.265
::1.lli
1,578,955
1,186,965
391,989
1,657,858
1,241,867
415,991
1,703,785
1,283,964
419,821
1,721,421
1,305,621
415,800
63,563
63,754
·191
17,636
21,657
·4,021
Final Monthly Treasury Statement
of Receipts and Outlays
of the United States Government
For Fiscal Year 1998 Through Septmeber 30, 1998, and Other Periods
Highlight
This issue includes the final budget results and details the surplus of $70.0 billion for Fiscal
Year 1998. The last fiscal year surplus was $3.2 billion in 1969.
RECEIPTS, OUTLAYS, AND SURPLUS/DEFICIT
THROUGH SEPTEMBER 1998
1800
Contents
1600
B
I
1400
L
L
1200
I
800
0
N
S
Summary, page 2
Receipts, page 6
Outlays, page 7
1000
Means of financing, page 20
Receipts/outlays by month, page 28
600
Federal trust funds/securities, page 30
400
Receipts by source/outlays by
function, page 30
200
0
Explanatory notes, page 31
-200
Compiled and Published by
Department of the Treasury
Financial Management Service
Introduction
of receipts are treated as deductions from gross receipts; revolving and manage.
ment fund receipts, reimbursements and refunds of monies previously expended are
treated as deductions from gross outlays; and interest on the public debt (pubIjc
issues) is recognized on the accrual baSis. Major information sources inclUde
accounting data reported by Federal entities, disbursing officers, and FedenII
Reserve banks.
The Monthly Treasury Statement of Receipts and Outlays of the United States
Government (MTS) is prepared by the Financial Management Service, Department of
the Treasury, and after approval by the Fiscal Assistant Secretary of the Treasury, is
normally released on the 15th worKday of the month following the reporting month.
The publication is based on data provided by Federal entities, disbursing officers,
and Federal Reserve banks.
Triad of Publications
The MTS is part of a triad of Treasury financial reports. The Daily TreasU/}'
Statement is published each worKing day of the Federal Government. It provides
data on the cash and debt operations of the Treasury based upon reporting of the
Treasury account balances by Federal Reserve banks. The MTS is a report of
Government receipts and outlays, based on agency reporting. The U.S. GOV6lTlfT/6flt
Annual Report is the official publication of the detailed receipts and outlays of the
Government. It is published annually in accordance with legislative mandates given
to the Secretary of the Treasury.
Audience
The MTS is published to meet the needs of: Those responsible for or interested
in the cash position of the Treasury; Those who are responsible for or interested in
the Government's budget results; and individuals and bUSinesses whose operations
depend upon or are related to the Government's financial operations.
Disclosure Statement
This statement summarizes the financial activities of the Federal Government
and off-budget Federal entities conducted in accordance with the Budget of the U.S.
Government, i.e., receipts and outlays of funds, the surplus or deficit, and the means
of financing the deficit or disposing of the surplus. Information is presented on a
modified cash basis: receipts are accounted for on the basis of collections; refunds
Data Sources and Information
The Explanatory Notes section of this publication provides information conoerning the flow of data into the MTS and sources of information relevant to the MTS.
Table 1. Summary of Receipts, Outlays, and the Deficit/Surplus of the U.S. Government, Fiscal Years 1997 and 1998,
by Month
[$ millions]
Period
Receipts
Outlays
Deficit/Surplus (-)
FY 1997
October
November ............................... .
December ............................... .
January .................................. .
February ................................. .
March ................................... .
April ..................................... .
May ..................................... .
June ..................................... .
July ...................................... .
August .................................. .
September .............................. .
99,656
97,850
148,488
150,718
90,293
108,074
228,588
94,493
173,361
109,178
103,483
174,772
139,461
135,728
129,999
137,354
134,303
129,397
134,649
142,988
118,726
134,802
138,672
'124,832
39,805
37,878
-18,490
-13,364
44,010
21,323
-93,939
48,494
-54,635
25,624
35,189
-49,940
Year-to-Date ...... , .................. ..
21,578,955
21,600,911
221,957
October ................................. .
November ............................... .
December ............................... .
January .................................. .
February ................................. .
March .......... ,. ....................... .
April ..................................... .
May ..................................... .
June ..................................... .
July ...................................... .
August .................................. .
September .............................. .
114,898
103,481
168,000
162,610
97,952
117,930
261,002
95,278
187,860
119,723
111,741
180,947
150,866
120,830
154,361
137,231
139,701
131,743
136,400
134,057
136,754
143,807
122,907
142,725
35,968
17,349
-13,639
-25,379
41,750
13,813
-124,603
38,779
-51,106
24,084
11,166
-38,222
Year-to-Date ......................... ..
1,721,421
1,651,383
-70,039
FY 1998
'Outlays have been decreased by $6 million in September 1997 to reflect a prior periOd
adjustment by the Financial Management Service.
2Jhe receipt, outlay and defiCit figures differ from the FY 1999 Budget, released by the Office
of Management and Budget on February 2,1998 by $14 million due mainly to revisions in the data
follOWIng the release of the Final September Monthly Treasury Statement.
Note: Details may not add to totals due to rounding.
2
Table 2. Summary of Budget and Off-Budget Results and Financing of the U.S. Government, September 1998 and
Other Periods
[$ millions]
Current
Fiscal
Year to Date
This
Month
Classification
Total on-budget and off-budget results:
Total receipts
Budget
Estimates
Full Fiscal
Year'
Prior
Fiscal Year
to Date
(1997)
Budget
Estimates
Next Fiscal
Year (1999)'
180.947
1.721.421
1.703,785
1,578.955
1.784,271
149.737
31.210
1.305,621
415.800
1.283.964
419.821
1.186.965
391,989
1.344,641
439.630
142.725
1.651.383
1,664.724
1,600.911
1.730,043
107,911
34.814
1.334.781
316.602
1.347.095
317,629
1.290.287
310,624
1.403.911
326.132
+38.222
+70,039
+39.061
-21,957
+54,228
+41,826
-3,604
-29.160
+99.198
-63,131
+102,192
-103,322
+81,365
-59,270
+113,498
Total on-budget and off-budget financing
-38.222
-70,039
-39.061
21,957
-54,228
Means of financing:
Borrowing from the publ'lc ...
Reduction of operating cash. increase (-)
. ............
By other means .
-46,413
-2,451
10,642
-51,050
4.743
-23,732
-24,411
3,621
-18.271
38,185
603
-16,832
-32.589
On-budget receipts .
Off-budget receipts
Total outlays ...
on-budget outlays
Off-budget outlays
",
... , ...
,
Total surplus (+) or deficit (-)
On-budget surplus (+) or deficit (-) ........
Off-budget surplus (+) or deficit (-) .
....
... No Transactions.
Note: Details may not add to totals due to rounding.
'These figures are based on the Mid-SeSSion ReView of the FY 1999 Budget. released by the
Office of Management and Budget on May 26. 1998.
Figure 1. Monthly Receipts, Outlays, and Budget Deficit/Surplus of the U.S. Government, Fiscal Years 1997 and 1998
$ billions
Outlays
250
Deficit (-)/Surplus
_100~~~~--r-.--r-.-.--.-'--r~~--r-~~-r~--~~'-~~
Oct.
FY
FY
98
97
3
-21,639
Figure 2. Monthly Receipts of the U.S. Government, by Source, Fiscal Years 1997 and 1998
$ billions
300~--------------------------------------------------------~
Total Receipts
150
97
98
Figure 3. Monthly Outlays of the U.S. Government, by Function, Fiscal Years 1997 and 1998
$ billions
1
1
Total Outlays
1
1
1
20
INet Interest
0
Oct.
Dec.
Feb.
Apr.
Jun.
Aug.
Oct.
FY
FY
97
98
4
I
Dec.
Feb.
Apr.
Jun.
AugSep.
Table 3.
Summary of Receipts and Outlays of the U.S. Government, September 1998 and Other Periods
[$ millions]
This Month
Current
Fiscal
Year to Date
90.479
36,800
828,597
188,677
737,466
182,294
810,516
187,712
31.210
11,330
206
333
2,961
2,356
1.701
3,572
415,800
124.215
27,484
4,335
57,669
24,076
18,297
32,270
391,989
114,761
28,202
4,418
56,926
19,845
17,927
25,127
419,821
123,260
27.941
4,328
55.642
23,091
17,879
33,595
Total Receipts ....••..•••.....••••.•.•..••••••••••••...........
180,947
1.721,421
1,578,955
1,703,785
(On-budget, ................................................. .
149,737
1,305,621
1,186,965
1,283,964
(Off-budget) .................... _........................... .
31,210
415,800
391,989
419,821
283
303
6,158
402
23,574
2.738
1,375
29,011
3.990
781
1,037
2,227
370
4,225
2,543
3,463
53,950
4.047
256,136
30,492
14,444
350,563
30,224
7,234
16,129
30.002
4,585
39,468
2.362
3.259
52,549
3,780
258,330
30,014
14,470
339,541
27,525
6,722
14.315
30,461
5,245
39,835
2,879
3,719
54,836
4,065
253,360
30,747
14,574
357,531
30,177
7,969
15.474
30,562
5,261
40,419
20.878
-2,129
3,467
460
2,590
608
11
226
-126
666
1.335
289
4.083
-443
34.309
8,944
363,824
26,276
41,776
3,833
31,215
6,300
213
2,101
1,136
9.000
14,206
3,188
46,307
-78
408,202
11,639
355,796
223,549
39,277
3,599
30,282
6,167
219
3,326
1.083
10,128
14,358
3,131
45,404
334
393,309
-2,489
362,409
26.352
43,074
4.168
31,494
6,440
240
3,246
944
9,619
13,723
3,165
46,418
-62
408,172
14,395
-1,006
-7,909
-113,838
-47,197
-104,992
-49.978
-112,696
-47,950
Total outlays ................................................. ..
142,725
1,651,383
1,600,911
1,664,724
(On-budget) ..... " ...................................... , .. ..
107,911
1,334,781
1,290,287
1,347,095
Classification
Comparable
Prior Period
Budget
Estimates
Full Fiscal Year 1
Budget Receipts
Individual income taxes
.............. .
Corporation income taxes
........... .
Social insurance and retirement receipts:
Employment and general retirement (off-budget)
Employment and general retirement (on-budget)
Unemployment insurance
Other retirement ........ .
Excise taxes ....... .
Estate and gift taxes
Customs duties ....... .
Miscellaneous receipts ...
. ................. .
Budget Outlays
Legislative Branch
Judicial Branch ....
Department of Agriculture ..
Department of Commerce
Department of Defense-Military
.......... .
Department of Education
............ .
Department of Energy ...
. ......... .
Department of Health and Human Services .............. .
Department of Housing and Urban Development .. .
Department of the Interior
Department of Justice
Department of Labor .. .
Department of State ..... .
Department of Transportation
Department of the Treasury:
Interest on the Public Debt
Other ............ .
Department of Veterans Affairs ... .
Corps of Engineers .............. .
Other Defense Civil Programs ............ .
Environmental Protection Agency ......... .
Executive Office of the President
Federal Emergency Management Agency
General Services Administration
...................... .
International Assistance Program ....... .
National Aeronautics and Space Administration ...
National Science Foundation .................. .
Office of Personnel Management ................ .
Small BUSiness Administration ................. .
Social Security Administration ...... .
Other independent agencies
Undistributed offsetting receipts:
Interest ..........
. ........... .
Other . . . . . . . . ............. .
(Off-budget) ..... , ..... , ....... , ........ , .................. ..
34,814
316,602
310,624
317,629
Surplus (+) or deficit (-) .................................. ..
+38,222
+70,039
-21,957
+39,061
(On-budget) ........................ " ...................... ..
+41,826
-29,160
-103,322
-63,131
+99,198
+81,365
+102,192
(Off-budget) ................................................ .
-3,604
2()utlays have been decreased by $6 million in September 1997 to reflect a prior period
adjustment by the Financial Management Service.
Note: Details may nol add to totalS due to rounding
'These figures are based on the Mid-Session Review of the FY 1999 Budget. released by Ihe
Office of Management and Budget on May 26. 1996.
5
Table 4. Receipts of the U.S. Government, September 1998 and Other Periods
[$ millions)
Classification
Gross
Receipts
I
Refunds
(Deduct)
Prior Fiscal Year to Date
Current Fiscal Year to Date
This Month
I
Receipts
Gross
Receipts
1
Refunds
(Deduct)
I
Receipts
Individual income taxes:
Gross
Receipts
I
RefundS'
(Deduct) RecelpII
580,207
67
250,751
646,483
63
281,527
Other ........................................................ .
'53,353
1
'39,853
Total-Individual income taxes ........................ .
93,207
2,729
90,479
928,074
99,476
828,597
831,025
93,559
737,488
Corporation income taxes .................................. ..
38,928
2,128
36,800
213,270
24,593
188,677
204,492
22,199
182,2M
'25,471
'3,264
1,778
23,693
3,264
340,188
20,379
-5
1,778
338,410
20,379
-5
319,524
18.070
30
895
318,628
18,070
(* *j
(* *)
Withheld
................................................... .
Presidential Election Campaign Fund ...................... .
Social insurance and retirement receipts:
Employment and general retirement:
Federal old-age and survivors ins. trust fund:
Federal Insurance Contributions Act taxes ........... .
Self-Employment Contributions Act taxes ............ .
Deposits by States .................................... .
(* *j
(* *j
30
Other ................................................... .
(* *j
(* *j
Total-FOASI trust fund ............................ .
28,735
1,778
26,957
360,562
1,778
358,784
337,624
895
336,728
Federal disability insurance trust fund:
Federal Insurance Contributions Act taxes ........... .
Self-Employment Contributions Act taxes ............ .
Deposits by States .................................... .
'4,052
'494
293
3,759
494
54,076
3,233
293
53,783
3,233
52,381
158
Total-FDI trust fund ............................... .
4,545
293
52,223
3,044
-6
55,261
Federal hospital insurance trust fund:
Federal Insurance Contributions Act taxes ........... .
Self-Employment Contributions Act taxes ............ .
Receipts from Railroad Retirement Board ............ .
Deposits by States .................................... .
("j
-1
'9,070
'1,936
293
(* 'j
3,044
-1
-6
57,016
55,419
158
-3
4,253
57,309
9,070
1,936
110,455
9,029
381
-2
110,455
9,029
381
-2
103,500
6,844
380
-17
11,006
119,863
119,863
110,707
-3
110,710
103,503
6,844
380
-17
Total-FHI trust fund ............................... .
11,006
Railroad retirement:
Rail industry pension fund ............................ .
Railroad Social Security equivalent benefit ........... .
167
156
(* *j
(. *j
167
156
2,599
1,782
16
12
2,583
1,770
2,447
1,616
7
5
2,440
1,611
540,016
507,812
1,062
506,750
21,047
6,369
68
27,484
22,071
6,208
28
105
22,071
6,103
28
28,307
105
28,202
Total-Employment and general retirement: ....... .
44,611
2,071
42,540
542,114
2,098
Unemployment insurance:
State taxes depoSited in Treasury ...................... .
Federal Unemployment Tax Act taxes .................. .
Railroad unemployment taxes ........................... .
180
30
4
180
26
111
(* *j
21,047
6,479
68
206
27,595
111
(* *j
Total-Unemployment insurance ...................... .
210
Other retirement:
Federal employees retirement - employee share ...... .
Non-federal employees retirement ....................... .
327
6
327
6
4.261
74
4.261
74
4.344
74
4,344
74
Total-Other retirement ............................... .
333
333
4.335
4.335
4.418
4,418
Total-Social insurance and retirement
receipts ............................................ .
45,154
2,075
43,079
574,044
2,209
571,835
540,538
1,167
539,371
Excise taxes:
Miscellaneous excise taxes2 •...••.•.•....•...•...•.•....•••
Airport and airway trust fund .............................. .
Highway trust fund ......................................... .
Black lung disability trust fund ............................ .
34,178
3-276
'-304
68
621
13
73
24,524
7.556
26.515
636
59,231
714
43
805
29,368
4.044
24,665
614
931
37
798
28.437
4,007
23,867
614
4
Total-Excise taxes .••• " ••.•• " .••.•.•...•••.•••..•••.•
3,667
706
3.557
-289
-376
68
2,961
1,562
23,810
7,513
25,710
636
57,669
58,690
1,765
56,926
Estate and gift taxes ........................................ .
2,405
49
2,356
24,631
555
24,076
20,356
511
19,845
Customs duties .............................................. .
1,784
84
1,701
19,689
1,392
18,297
19,872
1,945
17,927
Miscellaneous Receipts:
Deposits of earnings by Federal Reserve Banks ......... .
All other .................................................... ,
2.599
978
4
2.599
974
24.540
7.776
46
24.540
7,730
19,636
5,516
25
19,636
5,491
3,572
32,316
46
32,270
25,152
25
25,127
Total -
Miscellaneous receipts ....................... .
3,576
4
Total -
Receipts ....................................... .
188,722
7,775
180,947 1,851,255
129,834 1,721,421 1,700,126
121,171 1,578,955
Total -
On-budget , ..... , ............. , ............ , .. ..
155,441
5,704
149,737 1,433,384
127,763 1,305,621 1,307,083
120,118 1,186,965
Total -
Off-budget ..•....••...•..•••..••..•••..••.••..••
33,281
2,071
'In accordance with the Social Security Act as amended: "Individual income taxes. Withheld"
have been increased and "Federal Insurance Contribution Act Taxes" correspondingly decreased
by $4,697 million 10 cooect estimates for the quarter ending September 30. 1997. "Individual
income taxes, Withheld.. have also been increased and .. Federal Insurance Contribution Act
Taxes" correspondingly decreased by $59 million 10 cooect estimales for calendar year 1997 and
prior. "Individual income taxes, Other .. have been decreased and "SeIf-Employmenl Contribution
Act Taxes" correspondingly increased by $691 milion 10 cooect estimales for calendar year 1995
and prior.
Itncludes amounts for the wind1all profits tax pursuanl 10 P.L. 96-223.
31,210
417,871
2,071
415,800
393,043
1,053
391,989
'''Miscellaneous excise taxes" have been increased and the "Airport and airway trust fIJId"
has been correspondingly decreased by $276 million 10 correct estimates for the quarter ending
March 31. 1998. "Miscellaneous excise taxes" have also been increased and the "Highway trust
fund" has been correspondingly decreased by $605 million to cooect estimates for the quIJ1Ilr
ending March 31, 1998.
... No Transactions.
(••) Less than $500,000.
NOle: Details may
6
not add to totals due 10 rounding.
Table 5. Outlays of the U.S. Government, September 1998 and Other Periods
[$ millions]
Classification
Legislative Branch:
Senate
House of Representatives
Joint items
Congressional Budget Office
Architect of the Capitol
Library of Congress .
Govemment Printing Office
General Accounting Office ..
United States Tax Court
Other Legislative Branch agencies
proprietary receipts from the public ...
Intrabudgelary transactions
...........
Current Fiscal Year to Date
Prior Fiscal Year to Date
Gross IAPPlicablel Outlays
Outlays
Receipts
Gross jAPPlicablel
Outlays
Receipts
Outlays
Gross IAPPlicablel 0 tl
Receipts
u ays
Outlays
45
66
7
2
15
126
-5
30
3
1
..
(
(
..
)
)
..1)
(
-3
Total-Legislative Branch ................................
Judicial Branch:
Supreme Court of the United States
Courts of Appeals. District Courts. and other judiCial
services
Other
Total-Judicial Branch
This Month
...................................
Department of Agriculture:
......................
Agricultural Research Service "
Cooperative State Research. Education. and Extension
Service:
Research and education activities
. ..........
Extension activitres ...
Other
Animal and Plant Health Inspection Service
Food Safety and Inspection Service , .....
Agricultural Marketing Service .. ............
Risk Management Agency:
Administrative and operating expenses
Federal crop insurance corporation fund
Farm Service Agency:
Salaries and expenses
Commodity Credit Corporation ......
Agricultural credit insurance fund
Other
...........
Total-Farm Service Agency
286
3
2
44
66
7
2
14
125
-5
30
3
1
-1
-3
-33
283
2,562
454
784
90
23
166
583
108
345
32
10
2
1
8
4
3
20
452
783
90
23
157
579
108
345
32
10
-3
-33
-32
2,543
2,381
30
28
424
758
84
23
164
497
87
332
32
11
2
8
8
19
422
757
84
23
156
497
87
332
32
11
-8
-32
2,362
2
30
295
5
(. OJ
295
5
3,283
162
11
3.271
162
3,090
148
8
3,082
148
303
(OW)
303
3,474
11
3,463
3,267
8
3,259
70
70
782
782
770
770
46
38
5
51
48
12
46
38
5
51
48
12
430
413
61
526
597
668
3
430
413
61
526
597
665
402
420
49
508
574
713
3
402
420
49
508
574
710
15
207
243
1,566
535
243
1.031
53
1.465
493
53
972
714
10.143
-527
92
10,421
756
14.966
574
119
7.709
1.289
756
7.256
-715
119
16.414
8.998
7.417
605
221
89
580
637
235
102
633
15
236
28
100
3.006
299
28
927
64
100
2.079
235
28
714
18.875
672
92
8.732
1.199
3.432
991
2.442
20,352
9.931
29
19
9
50
605
221
89
580
28
Natural Resources Conservation Service:
Conservation operations
WaterShed and flood prevention operations
............ ,
Other
...........................
Rural Development
Rural Utilities Service:
Rural electrification and telecommunications fund
Rural Development insurance fund
Other
Rural Housing Service:
Rural housing insurance fund
...........
Rental assistance program
Other
Foreign Agricultural Service ..
1.126
39
11
440
45
40
686
-6
-29
3.287
629
80
2.953
598
232
334
31
-152
2.663
647
520
3.310
503
603
-647
144
-83
154
44
43
55
188
-34
2.091
533
126
591
2.274
-183
533
126
591
2,877
512
124
456
2.320
558
512
124
456
FOOd and Nutrition Service:
Food stamp program .. ............
...........
Child nutrition programs
Women. infants and children programs
Other" .....
1.507
378
278
23
1.507
378
278
23
20.141
8.565
3.902
366
20.141
8.565
366
22.857
8.265
3.866
424
22.857
8.265
3.866
424
2.186
2.186
32.975
32.975
35.413
35.413
112
120
27
104
112
120
27
104
1.467
577
334
1,022
1.467
577
334
1.022
1.260
734
372
842
1.260
734
372
842
364
364
3,399
3,399
3.209
3.209
3
271
87
-271
-5
639
604
-969
-5
611
2,006
6,158
71,479
53,950
70,002
Total-Food and Nutrition Service
Forest Service:
National forest system
Wildland fire management
Forest service permanent appropriations
. ..........
Other ..
Total-Forest Service
...........
Other
Proprietary receipts from the public
Intrabudgetary transactions
Total-Department of Agriculture
.. . . . . . . . . .
89
44
43
55
-5
. ........ ............
~
29
19
9
50
"
8,164
7
3.902
35
969
-5
17,529
637
235
102
633
34
1.190
577
-1.190
-5
17,453
52,549
-5
Table 5. Outlays of the U.S. Government, September 1998 and Other Periods-Continued
[$ millions]
Current Fiscal Year to Date
This Month
Classification
Gross IApplicable
Outlays Receipts
Outlays
J
Gross IAppllcablel Outlays
Outlays Receipts
Prior Fiscal Year to Date
G~s
Outlays
IAppllcabiel
Receipts OutIaya
Department of Commerce:
Economic Development Administration ......................
Bureau of the Census .......................................
Promotion of Industry and Commerce ......................
41
45
32
40
45
32
393
542
364
8
385
542
364
429
282
342
18
410
282
342
Science and Technology:
National Oceanic and Atmospheric Administration .......
National Institute of Standards and Technology .........
Other .......................................................
218
51
15
2,126
668
43
17
31
2,108
668
12
2,014
681
142
23
2
218
51
13
30
1,991
681
112
........................
284
3
281
2,837
49
2,788
2,837
53
2,784
Other .........................................................
Proprietary receipts from the public .........................
Intrabudgetary transactions ..................................
15
1
11
14
-11
106
4
135
102
-135
94
3
130
(' ')
(' ')
(' ')
(' ')
(' ')
91
-130
(' ')
.......................
417
402
4,242
4,047
3,984
205
3,780
Department of Defense-Military:
Military Personnel:
Department of the Army ..................................
Department of the Navy ..................................
Department of the Air Force ..............................
2,176
2,059
1,629
2,176
2,059
1,629
25,809
24,116
19,051
25,809
24,116
19,051
25,799
24,773
19,151
25,799
24,773
19,151
................................
5,864
5,864
68,976
68,976
69,722
69,722
Operation and Maintenance:
Department of the Army ..................................
Department of the Navy ..................................
Department of the Air Force ..............................
Defense agencies ..........................................
2,812
2,849
2,301
1,914
2,812
2,849
2,301
1,914
22,498
24,413
24,168
21,805
22,498
24,413
24,168
21,805
23,067
25,064
23,576
20,758
23,067
25,064
23,576
20,758
..................
9,877
9,877
92,883
92,883
92,465
92,465
Procurement:
Department of the Army ..................................
Department of the Navy ..................................
Department of the Air Force ..............................
Defense agencies ..........................................
840
1,711
2,242
387
840
1,711
2,242
387
8,243
18,200
18,052
3,691
8,243
18,200
18,052
3,691
8,167
18,303
17,911
3,310
8,167
18,303
17,911
3,310
.....................................
5,179
5,179
48,186
48,186
47,691
47,691
Research, Development, Test, and Evaluation:
Department of the Army ..................................
Department of the Navy ..................................
Department of the Air Force ..............................
Defense agencies ..........................................
518
712
1,290
1,125
518
712
1,290
1,125
4,881
7,837
14,499
10,207
4,881
7,837
14,499
10,207
4,859
8,220
14,040
9,907
4,859
8,220
14,040
9,907
3,646
3,646
37,423
37,423
37,026
37,026
Military Construction:
Department of the Army ..................................
Department of the Navy ..................................
Department of the Air Force ..............................
Defense agencies ..........................................
22
92
120
416
22
92
120
416
914
785
1,063
3,286
914
785
1,063
3,286
896
578
1,034
3,680
896
578
1,034
3,680
.............................
649
649
6,046
6,046
6,188
6,188
138
142
118
17
138
142
118
13
1,288
1,429
1,054
162
1,288
1,429
1,054
99
1,392
1,377
1,156
146
1,392
1,377
1,158
79
-72
203
-116
1,514
-116
1,514
-62
568
1
-834
-8
-753
-314
-753
-317
2,420
-246
(")
(")
1
3
41
3
27
12
262
3
27
1
262
(")
1
2
41
Total-Science and Technology
Total-Department of Commerce
Total-Military Personnel
Total-Operation and Maintenance
Total-Procurement
Total-ResearCh, Development, Test, and Evaluation
Total-Military Construction
Family Housing:
Department of the Army ..................................
Department of the Navy ..................................
Department of the Air Force ..............................
Defense agencies ..........................................
Revolving and Management Funds:
Department of the Army ..................................
Department of the Navy ..................................
Department of the Air Force ..............................
Defense agencies:
Working capital fund ....................................
Other .....................................................
Trust funds:
Department of the Army ..................................
Department of the Navy ..................................
Department of the Air Force ..............................
Defense agencies ..........................................
Proprietary receipts from the public:
Department of the Army ..................................
Department of the Navy ..................................
Department of the Air Force ..............................
Defense agencies ..........................................
15
4
-72
203
-834
-8
(")
477
22
65
-104
8
-477
-22
-65
104
195
63
3
(")
11
123
748
410
442
-123
-748
-410
-442
25
15
224
67
-62
588
1
2,420
7
-253
..
( )
3
14
468
109
454
451
22
1
224
-488
-109
-454
-451
Table 5. Outlays of the U.S. Government, September 1998 and Other Periods-Continued
($ millions]
This Month
Classification
Current Fiscal Year to Date
Gross /APPlicable / Outlays
Outlays
Receipts
Department of Defense-Military:-Continued
Intrabudgetary transactions:
Department of the Army
Department of the Navy
Department of the Air Force
Defense agencies .'
Offsetting governmental receipts:
....... .........
Department of the Army
-77
-750
-84
-12
-77
-750
-84
-12
Outlays
Gross IAPPlicable / 0 II
Outlays
Receipts
u ays
-30
-32
-32
-111
-111
-164
-164
-3
468
23,574
257,942
6
-6
1.806
256,136
259,913
746
7,818
700
1,366
55
746
7,818
700
1,366
55
431
7,199
656
1,276
56
431
7,199
656
1,276
56
837
10,685
10,685
9,619
9,619
24,042
Department of Education:
Office of Elementary and Secondary Education:
Education reform
..............
Educatoon for the disadvantaged
............
Impact aid.
School improvement programs
Other
67
611
22
134
4
67
611
22
134
4
837
Total-Office of Elementary and Secondary
Education
I
-30
3
.............
Total-Department of Defense-Military
Gross /APPlicable
Outlays Receipts
Prior Fiscal Year to Date
11
-11
1,583
258,330
Office of Bilingual Education and Minority Languages
. .............
Affairs ....
Office of Special Education and Rehabilitative Services:
...................
Special education
Rehabilitation services and disability research ......
Special institutions for persons with disabilities
Office of Vocational and Adult Education
13
13
207
207
181
181
303
181
10
160
303
181
10
160
3,658
2,482
133
1,451
3,658
2,482
133
1,451
3.305
2,462
129
1,402
3,305
2,462
129
1,402
Office of Postsecondary Education:
College housing and academiC facilities loans ........ , ..
Student financial assistance ...............
............
............
Higher education ....
Howard University . . . . . . . . . . . .
Federal direct student loan program
Federal family education loans .......
-3
999
82
17
46
38
9
-13
999
82
17
46
38
-2
7,934
785
206
876
1,254
96
-98
7,934
785
206
876
1,254
4
7,248
877
199
659
3,320
47
-43
7,248
877
199
659
3,320
1,178
9
1,169
11,054
96
10,957
12,307
47
12,260
36
30
514
404
514
404
340
413
99
340
413
-99
145
30,014
Total-Office of Postsecondary Education .....
Office of Educational Research and Improvement
Departmental Management
Proprietary receipts from the public ...... .............
Total-Department of Education
........................
Department of Energy:
Atomic Energy Defense Activities:
Weapons activities ...........
Defense environmental restoration and waste
management .........................
Defense facilities closure projects
Other defense activities . . . . . . . . . .
..............
Defense nuclear waste disposal
Energy Programs:
...........
Science
...........
Energy supply .'
Non-defense environmental management
Fossil energy research and development .........
Energy conservation ..
Strategic petroleum reserve
Uranium enrichment decontamination and
decommissioning fund
Other
Total-Energy Programs
Power Marketing Administration
Departmental Administration
Proprietary receipts from the public .
Intrabudgetary transactions
Offsetting governmental receipts ...
36
30
(""J
r ")
9
2,738
30,589
326
326
339
73
182
11
200
65
74
21
71
19
2,748
Total-Department of Energy ............................
30,159
3,953
3,953
3,951
3,951
339
73
182
11
4.444
863
1,691
230
4,444
863
1,691
230
5,571
5,571
1,584
171
1,584
171
200
65
74
21
71
19
2,239
1,241
496
351
621
233
2,239
1,241
496
351
621
233
1,022
2,992
1,022
2,992
421
572
242
421
572
242
6
-109
-9
6
-99
222
448
11
222
437
180
641
7
180
635
347
-9
356
5,851
11
5,840
6,071
7
6,065
622
-63
250
1,982
141
1,910
1.795
10
72
141
-1,590
-1,190
-10
1,878
156
10
372
-63
-134
-76
-10
46
83
156
-2.179
-885
-46
385
1,375
3,521
14,444
18,497
4,027
14,470
134
...........
30,492
96
-76
1,760
9
1,590
-1,190
17,965
2,179
-885
Table 5. Outlays of the U.S. Government, September 1998 and Other Periods-Continued
[$ millions]
Classification
Department of Health and Human Services:
Public Health Service:
Food and Drug Administration """""" .. """"""""""""""""""""
Health Resources and Services Administration """""""""""
Indian Health Services """""""""""""""""""""""""""""""""""""
Centers for Disease Control and Prevention """""""""""""
National Institutes of Health """""""""""""""""""""""""""""""
Substance Abuse and Mental Health Services
Administration """""""""""""""""""""""""""""""""""""""""""""
Agency for Health Care Policy and Research """"""""""""
This Month
Current FiSCIII Year to Date
Prior FiSCIII Year to Date
Gross IApPllcable' OuaaVs
OuaaVs Receipts
Gross lAppllcablel ouaavs
OuaaVs Receipts
Grose IApPlicablel
OuaaVa Recelpta
OuUeVI
42
275
141
208
1,166
(••J
15
206
9
41
260
141
208
1,166
842
3,492
2,146
2,401
12,501
206
2,236
9
n
2,032
23,694
4
20
24
838
3,472
2,146
2,401
12,501
878
3,556
2,176
2,249
11,199
2,236
77
1,622
110
23,670
21,790
5
31
873
3,526
2,176
2,249
11,199
1,622
110
35
21,755
Total-Public Health Service""""""""""""""""""""""""""""
2,048
Health Care Financing Administration:
Grants to States for Medicaid """"""""""""""""""""""""""""
Payments to health care trust funds """""""""""""""""""""
8,719
5,684
8,719
5,684
101,234
65,184
101,234
65,184
95,552
63,722
95,552
63,722
Federal hospital insurance trust fund:
Benefit payments """"""""""""""""""""""""""""""""""""""""
Administrative expenses """""""""""""""""""""""""""""""""
11,125
101
11,125
101
135,487
1,203
135,487
1,203
136,175
1,203
136,175
1,203
Total-FHI trust fund """""""""""""""""""""""""""""""""
11,226
11,226
136,690
136,690
137,378
137,376
Health care fraud and abuse control """""""""""""""""""""
32
32
608
608
506
506
Federal supplementary medical insurance trust fund:
Benefit payments """"""""""""""""""""""""""""""""""""""""
Administrative expenses """""""""""""""""""""""""""""""""
6,129
113
6,129
113
74,837
1,435
74,837
1,435
71,133
1,420
71,133
1,420
Total-FSMI trust fund """""""""""""""""""""""""""""""
6,242
6,242
76,272
76,272
72,553
72,553
Other""" """" """"""""" """"""""""""""""""""""" """"""""""""""""
27
27
-37
-37
2
2
Total-Health Care Financing Administration"""""""""""
31,931
31,931
379,950
379,950
369,714
369,714
1,201
314
65
29
1,201
314
65
29
13,284
2,171
1,132
326
48
2,028
13,284
2,171
1,132
326
48
2,028
9,726
5,345
1,221
323
445
1,398
9,726
5,345
1,221
323
445
1,396
1,095
2,441
5,329
909
2,572
5,122
909
2,572
5,122
Administration for Children and Families:
Temporary assistance for needy families"""""""""""""""""
Family support payments to States "" " " " " " " " " " " " " " " " " " " " "
low income home energy assistance """"""""""""""""""""
Refugee and entrant assistance """"""""""""""""""""""""""
Job opportunities and basic skills training program """"""
Child care entitlement to States """"""""""""""""""""""""""
Payments to States for the child care and development
block grant """ " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " "
Social services block grant """"""""""""""""""""""""""""""""
Children and families services programs " " " " " " " " " " " " " " " " "
Payments to States for foster care and adoption
assistance """""""""""""""""""""""""""""""""""""""""""""""""
Other"""""""""""""""""""""""""""" """""""""""""""""""""""""""
15
1
1
111
111
66
142
66
142
434
434
1,095
2,441
5,329
306
14
306
14
4,451
286
4,451
286
4,047
241
4,047
241
Total-Administration for Children and Families """""""
2,683
2,683
32,591
32,591
31,349
31,349
Administration on Aging """"""""""" " " " " " " " " " " " " " " " " " " " " " " " " " "
Other """""""""""""""""""""""""""""""" """""""""""""""""""""""""
Proprietary receipts from the publiC """""""""""""""""""""""""
Intrabudgetary transactions:
Payments for health insurance for the aged:
Federal supplementary medical insurance trust fund ""
Payments for tax and other credits:
Federal hospital insurance trust fund """"""""""""""""""
77
33
77
33
-2,062
828
506
828
506
-21,799
828
430
430
-5,013
-5,013
-59,919
-59,919
-59,471
-59,471
~70
~70
-5,264
-5,264
-4,249
-4,249
29,011
372,386
350,563
360,390
Total-Department of Health and Human Services
2,062
31,088
2,078
10
21,799
21,823
826
20,813
20,849
-20,613
339,541
Table 5. Outlays of the U.S. Government, September 1998 and Other Periods-Continued
[$ mllllonl]
Classification
Department of Housing and Urban Development:
Housing Programs:
PubliC enterprise funds ........... ................
Credit accounts:
Federal housing administration fund
Housing for the elderly or handicapped fund
Other .. , ..................
Rent supplement payments .... , .......
Homeownership assistance ..
Rental housing assistance .............
Rental housing development grants
Low-rent public housing ......
Public housing grants ."
College housing grants .......
Lower income housing assistance
Section 8 contract renewals
Other ...............
Current Fiscal Yaar to Date
Prior Fiscal Year to Date
Gross IAPPlicablel Oullays
Outlays Receipts
Grols IAPPlicabl1
Outlays
Receipts
Outlays
Gross !APPlicable! 0 tI
Oullays
Receipts
u ays
62
70
-9
98
123
-25
113
108
5
5,374
54
2,677
126
2,698
-72
17,122
364
16,432
690
-362
21,270
720
-2,760
-141
818
57
129
603
)
(00)
(00)
4
3
56
54
74
618
54
74
618
18,509
579
818
57
129
603
845
21
2
1
845
(" 0)
(00)
137
617
-39
17
'9,140
2
1,737
617
-39
17
9,140
2
1,737
626
3,736
16
8,846
6,233
2,321
3,686
29,802
17,280
12,522
42,586
22,097
20,489
Public and Indian Housing Programs:
Low-rent public housing-loans and other expenses
Payments for operation of low-income housing
..............
. ..... , ...........
projects
Community Partnerships Against Crime ..................
.................
Other ...............
230
188
42
298
177
122
3,116
281
10,815
1,529
291
206
...
188
14,255
2,324
177
Govemment National Mortgage Association:
Management and liquidating functions fund
Guarantees of mortgage-backed securities ..
Total-Government National Mortgage ASSOCiation
Community Planning and Development:
Community development grants .............
Home investment partnerships program .........
...........
Other .............
Total-Community Planning and Development
, .............
Management and Administration ...
Other ., ........ , ... ...............
Proprietary receipts from the public .
Offsetting governmental receipts .........
,
Total-Department of Housing and Urban
Development .............................................
..
(
(' ")
4
3
56
137
2,872
r
0)
311
25
1,451
311
25
1,451
3,116
281
'10,815
(0 0)
(" 0)
626
3,736
16
8,846
6,233
2,321
1,529
291
206
(00)
1,788
14,443
609
50
559
788
845
-57
204
796
-592
50
559
788
845
-57
204
796
-592
9
382
110
14
4,621
1,286
265
90
4,621
1,286
176
4,517
1,211
328
101
4,517
1,211
227
9
505
6,172
90
6,082
6,056
101
5,955
413
55
3,030
16
413
55
-3,030
-16
474
59
2,578
26
3
-2,578
992
15
474
59
-992
-15
5,509
3,990
51,673
21,449
30,224
51,703
24,178
27,525
15
592
648
688
562
705
737
12
562
693
737
331
319
2,259
2,323
586
211
736
42
504
374
714
67
1,576
1,659
(00)
609
382
110
23
515
26
3
9,499
41
263
59
41
263
59
592
663
688
31
31
331
Total-Land and Minerals Management
394
393
2,274
72
59
57
3
586
390
736
42
192
1,755
Total-Water and Science ............
..)
1,788
Department of the Interior:
Land and Minerals Management:
Bureau of Land Management:
Management of lands and resources
Other .......................................
Minerals Management Service ..............
Office of Surlace Mining Reclamation and
Enforcement ..... , .............. ...............
Water and Science:
Bureau of Reclamation:
Water and related resources ..................
Other ........ ... , ..............
United States Geological Survey
. ........... , .........
Other ..
726
(
21
2
6,559
Total-Housing Programs
Total-PubliC and Indian Housing Programs
This Month
72
74
57
3
207
16
16
2,147
(00)
15
179
179
319
12
161
161
2,312
504
213
714
67
1,498
Fish and Wildlife and Parks:
United States Fish and Wildlife Service
National Park Service ...................
142
156
142
156
1,341
1,726
1,341
1,726
1,250
1,601
1,250
1,601
Total-Fish and Wildlife and Parks
298
298
3,067
3,067
2,851
2,851
11
Table 5. Outlays of the U.S. Government, September 1998 and Other Periods-Continued
[$ millions]
This Month
Current Fiscal VHr to Dete
Prior Fiscal Veer to Data
Gran IAppilcabiel Outleys
Outlays Receipts
Gross IAPpilcablel Outleys
Outleys Receipts
Gron IAppilcablel
Outleys Receipts OutlaY'
Clesslflcatlon
Department of the Intartor:-continued
80
1,791
84
84
32
14
32
308
476
147
3
83
Bureau of Indian Affairs ................................... ..
Departmental Offices:
Insular affairs ............................................. .
Office of Special Trustee for American Indians ....... '"
Other ...................................................... .
Proprietary receipts from the public ........................ .
Intrabudgetary transactions ................................ ..
-47
Total-Department of the Interior .•••••••••••••.••••••••
1,065
5
260
284
9
-260
-47
-253
781
9,565
12
20
2,105
2,331
1,779
1,788
308
476
127
-2,105
-253
335
-330
7,234
9,130
7
335
354
354
149
1,782
4
2,224
145
-2,224
-330
2,408
6,722
Department of Justice:
General Administration ...................................... .
Legal Activities and United States Marshals:
United States Attorneys ................................. ..
Other ...................................................... .
Federal Bureau of Investigation ........................... ..
Drug Enforcement Administration .......................... ..
Immigretion and Naturalization Service ..................... .
Federal Prison System ...................................... .
Office of Justice Programs:
Violent crime reduction programs ........................ .
Community oriented policing services .................... .
Other ..................................................... ..
Other ....................................................... ..
Intrabudgetary transactions ................................ ..
Offsetting governmental receipts .......................... ..
-24
-24
286
286
288
288
97
20
244
149
392
-22
97
20
1,021
1,885
2,949
1,099
3,593
2,858
982
1,765
2,700
969
2,770
3,108
982
1,765
2,700
969
2,770
176
1,021
1,885
2,949
1,099
3,593
2,682
1,172
616
969
425
1,075
1,477
968
978
318
-51
-1,075
Total-Department of Justice .......................... .
1,187
1.251
16,129
15,671
4,432
4,432
401
283
4,644
16
448
283
312
401
312
219
219
75
75
15
15
244
15
149
392
-37
1,477
968
978
318
-51
112
70
112
70
84
84
72
135
72
-5
-135
150
1,037
17,380
416
416
5
32
25
5
32
25
4.644
16
-8
-8
-5
169
2,939
1,186
1,172
616
969
425
-93
-1,186
1,355
14,315
-93
Department of Labor:
Employment and Training Administration:
Training and employment services ....................... .
Welfare to work jobs ..................................... .
Community service employment for older Americans ... .
Federal unemployment benefits and allowances ........ .
State unemployment insurance and employment service
operations ................................................ .
Advances to the unemployment trust fund and other
funds .................................................... ..
Unemployment trust fund:
Federal-5tate unemployment insurance:
State unemployment benefits ........................ .
State administrative expenses ........................ ..
Federal administrative expenses ....................... .
Veterans employment and training .................... .
Other .................................................... .
1.425
309
10
16
1,425
309
10
16
(
(
448
)
19,933
3,085
204
183
3
20,829
3,087
208
172
3
20.829
..
19,933
3,085
204
183
3
1,760
1.760
23.408
23,408
24,299
24,299
8
8
89
89
82
82
Total-Employment and Training Administration ...... .
2.238
2.238
29.106
29.106
29.615
29,615
Pension Benefit Guaranty Corporation ..................... .
Employment Standards Administration:
Salaries and expenses .................................. ..
Special benefits .......................................... ..
Black lung disability trust fund .......................... ..
Other " ................................................... ..
Occupational Safety and Health Administration ............ .
Bureau of Labor Statistics ................................ ..
98
-228
1.064
-1.218
969
33
33
-421
-421
536
15
28
39
307
56
993
148
339
320
472
307
283
95
995
142
Total-Unemployment trust fund .................... .
Other
Other ....................................................... ..
..
)
327
536
15
28
39
38
..
(
Proprietary receipts from the public ........................ .
Intrabudgetary transactions ................................ ..
-50
Total-Department of Labor ............................ .
2,554
)
327
12
..38
(
)
2.281
56
993
148
339
320
3
-50
-517
2,227
32,287
2,285
3,087
208
172
3
2.165
283
95
995
142
320
320
320
320
464
472
-3
-517
-573
30,002
32,631
-1.197
464
5
-5
-573
2,170
30,481
Table 5.
Outlays of the U.S. Government, September 1998 and Other Periods-Continued
[$ millions]
This Month
Current Fiscal Vear to Date
Prior Fiscal Vear to Date
Gross /APPlicablel
Outlays
Receipts
Outlays
Gross IAPPIiCable1
Outlay.
Receipts
Outlay.
Gross /APPlicable I
Outlays
Receipts
Outlays
Classification
Department of State:
Administration of Foreign Affairs:
Diplomatic and consular programs ........................
Security and maintenance of United States missions
Payment to Foreign Service retirement and disability
................. ......... , .... ,
fund
Foreign Service retirement and disability fund ...
..........................
Other ....
Total-Administration of Foreign Affairs
International Organizations and Conferences
Migration and refugee assistance .... ..................
Other ........................ .................
Proprietary receipts from the public .
Intrabudgetary transactions .................. ..............
Total-Department of State ..............................
256
58
256
58
1.464
235
1,464
235
1,575
469
1,575
469
43
-116
43
-116
214
517
479
214
517
479
230
499
435
230
499
435
242
242
2,909
2,909
3,208
3,208
("')
(
100
36
100
36
997
722
224
1,361
718
247
1,361
718
247
-289
-289
..
(
)
-7
370
(* *)
..
..
)
-7
-266
997
722
224
-1
-266
370
4,586
4,585
5,245
5,245
2.603
341
623
230
6
2,603
341
623
224
6
3,790
(
)
Department of Transportation:
Coast Guard:
Operating expenses
..........................
Acquisition. construction, and improvements ... , ..
Retired pay ................
Other ........................
225
48
62
36
225
48
62
35
2,655
352
647
269
6
2,655
352
647
263
..
371
370
3,923
6
3,917
3,796
255
255
3,352
3,352
3.142
3,142
188
245
24
162
188
245
24
162
1,511
2,226
203
1,929
1,511
2,226
203
1.929
1,489
2,310
218
1.661
1,489
2.310
218
1,661
618
618
5,868
5.868
5,678
5,678
Total-Coast Guard
Federal Aviation Administration:
Operations .................
. ...............
Airport and airway trust fund:
Grants-in-aid for airports .......
. .. - ...........
Facilities and equipment ...........
. ............
Research, engineering, and development ..
Trust fund share of FAA operations .......
Total-Airport and airway trust fund
........
. ..........................
("')
2
-2
25
4
21
-1
4
-5
.................
873
2
871
9,245
4
9.242
8.819
4
8,815
(. *)
2,384
15
7
19,967
129
263
9
19.967
120
263
20,467
162
186
16
................. -
2.384
15
7
20,467
146
186
Total-Federal Highway Administration ...........
2,406
(* *j
2,406
20,359
9
20,350
20,815
16
20.798
.......
24
24
304
304
285
(. *)
Other ......... , ......
Total-Federal Aviation Administration
Federal Highway Administration:
Highway trust fund:
Federal-aid highways
Other ............
Other programs " - ,
....... , .........
National Highway Traffic Safety Administration
Federal Railroad Administration:
Grants to National Railroad Passenger Corporation
Other ........................................... ............
Total-Federal Railroad Administration
Federal Transit Administration:
Formula grants ..
Major capital Investments ..
Trust fund share of expenses
Other ........
.......
Maritime Administration ............... ..............
Other ................................... .................
Proprietary receipts from the public
..............
Intrabudgetary transactions ............
Offsetting govemmental receipts ....... ................
Total-Department of Transportation
91
-3
94
479
613
4
479
609
613
535
16
613
519
91
-3
94
1,092
4
1,089
1,148
16
1,132
160
197
160
197
24
24
-181
1,873
2,260
345
-181
1,873
2,260
345
540
2.004
1.659
378
540
2,004
1,659
378
381
381
4,297
4,297
4,581
4,581
1
1
6
63
25
-6
597
255
707
334
4
-4
112
199
242
-23
-36
-112
12
4,225
589
39,468
40,478
(. *)
...........
Total-Federal Transit Administration
...................
285
64
26
398
13
23
-36
4,236
13
40,037
455
12
22
112
251
322
-22
-6
-112
643
39,835
-6
Table 5. Outlays of the U.S. Government, September 1998 and Other Periods-Continued
[$ millions)
Classification
Oepartment of the Treasury:
Departmental Offices:
Exchange stabilization fund ...............................
Other .......................................................
This Month
Current Fiscal Year to Date
Gross IAppilcablel Outlays
Outlays Receipts
Gross -fAppilcable\
Outlays Receipts Outlays
49
58
72
-23
58
-371
465
864
Prior Fiscal Year to Date
Gross
Outlays
JApplIC8b1j
Receipts
Outlays
-1.236
465
-237
391
192
2.328
3,436
678
71
202
2.328
1.997
1.035
62
202
2.328
1.997
1.035
62
770
-1.007
391
Financial Management Service:
Salaries and expenses ............. . . . . . . . . . . . . , . . . . . . . .
Payment to the Resolution Funding Corporation .........
Net interest paid to loan guarantee financing accounts
Claims. judgements, and relief acts . . . . . . . . . . . . . . . . . . . . . .
Other .......................................................
17
17
2,408
62
24
2,408
62
24
192
2.328
3.436
678
71
..................
2.511
2.511
6.705
6.705
5.624
5.624
Federal Financing Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bureau of Alcohol. Tobacco, and Firearms:
Salaries and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intemal revenue collections for Puerto Rico ..............
United States Customs Service .............................
Bureau of Engraving and Printing ...........................
United States Mint ...........................................
Bureau of the Public Debt ..................................
755
755
865
865
r '}
( )
45
20
186
-7
227
50
45
20
186
-7
267
50
496
230
2.052
45
941
270
496
230
2.052
45
-96
270
467
205
1.949
12
636
295
467
205
1.949
12
17
295
281
220
145
281
220
145
2.690
3.146
1,363
2.690
3.146
1.363
1.852
4.082
1.255
1.852
4.082
1.255
113
681
24
113
681
24
23.239
2.599
126
21.856
2.341
21.856
2.341
10
23.239
2.599
116
(")
(")
( )
........................
1.464
1.464
33.163
10
33.153
31.385
(")
31.386
United States Secret Service ................................
Comptroller of the Currency .................................
Office of Thrift Supervison ..................................
52
27
12
52
33
11
655
357
139
389
143
655
-32
-3
623
353
137
377
145
623
-24
-8
Interest on the public debt:
Public issues (accrual basiS) ..............................
Special issues (cash basis) ................................
19.339
1.540
19.339
1.540
241.567
122.256
241.567
122.256
244.598
111.198
244.598
111.198
. . . . . . . . . . . . . . . .. . . . .
20.878
20.878
363.824
363.824
355.796
355.796
.
.
9
9
-5.250
-2.227
125
84
-84
1.240
125
-8.887
-7.291
-1.240
59
5.250
18,749
402,670
12,570
390.100
1.473
34
17.271
572
227
58
11
-8
1.713
69
1.150
1.609
556
20.289
1.310
117
1
14
-10
1.210
12
161
73
.
Total-Financial Management Service
Intemal Revenue Service:
Processing, assistance, and management . . . . . . . . . . . . . . . .
Tax law enforcement ......................................
Information systems .......................................
Payment where eamed income credit exceeds liability
for tax ....................................................
Refunding intemal revenue collections. interest ..........
Other .......................................................
Total-Intemal Revenue Service
Total-Interest on the public debt
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proprietary receipts from the publiC . . . . . . . . . . . . . . . . . . . . . . . .
Intrabudgetary transactions ..................................
Offsetting governmental receipts ............................
-40
-6
1
-2.227
........................
24,111
5,362
Oepartment of Veterans Affairs:
Veterans Health Administration:
Medical care ...............................................
Other .......................................................
1,473
54
20
Total-Department of the Treasury
Veterans Benefits Administration:
Public enterprise funds:
Guaranty and indemnity fund
Loan guaranty revolving fund
Insurance funds:
National service life .....................................
United States Govemment Ufe .........................
Veterans special life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other .......................................................
117
1
17
'-10
...............
2.137
172
1.965
26.372
Construction ..................................................
Departmental Administration .................................
Proprietary receipts from the public:
National service life ........................................
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intrabudgetary transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44
3
(")
44
3
523
893
19
59
'26
-19
-59
26
-11
.................
3.737
3.467
45.620
Total-Veterans Benefits Administration
Total-Department of Veterans Affairs
3
270
14
..
59
-7.n3
1.286
-7.384
-1.286
390.313
10,969
379,345
17.271
344
16.602
644
194
16.602
450
1.079
-39
-13
20.289
1.310
1.265
599
323
19.389
1.288
179
1.210
12
-18
73
1.227
13
150
120
2.467
23.905
)
523
893
217
933
-217
-933
-11
-15
41,n6
43.113
-7.291
58
129
43
1.713
69
618
27.773
8.887
...........................
...........................
Other .....................................................
Compensation and pensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Readjustment benefits .....................................
119
51
1.037
..
71
1.648
570
..
(
3,845
-7.384
745
513
317
521
86
6
19.389
1.288
1.227
13
180
-30
24.375
1.756
22.619
597
911
("')
597
911
231
1.655
-231
-1.655
-15
3,835
39,%17
120
Table 5. Outlays of the U.S. Government, September 1998 and Other Periods-Continued
[$ millions]
This Month
Classification
Gross lAPPlicable
Outlays
Receipts
Corps of Engineers:
Construction, general
Operation and maintenance. general
Flood control
Harbor maintenance trust fund
Other
proprietary receipts from the public
181
194
66
41
-6
Total-Corps of Engineers ..............................
Other Defense Civil Programs:
Military Retirement:
Payment to military retirement fund
Military retirement fund
Educational Benefits
Other
Proprietary receipts from the public .
Intrabudgetary transactions
...........
,,'
Total-Other Defense Civil Programs ...... , ............
Environmental Protection Agency:
............
SCience and technology
Environmental programs and management
State and tribal aSSistance grants
Hazardous substance superfund
............
Other
Proprietary receipts from the public "
Intrabudgetary transactions
Offsetting governmental receipts
"
Total-Environmental Protection Agency ...............
Executive Office of the President:
Compensation of the President and the White House
Office
Office of Management and Budget
Other
Total-Executive Office of the President ..............
Federal Emergency Management Agency:
Public enterprise funds
.............
Disaster relief
Emergency management planning and assistance
. . . . .. . . . . .
Other
Proprietary receipts from the public .
............
Offsetting governmental receipts
Total-Federal Emergency Management Agency
General Services Administration:
Real Property Activities
Supply and TechnOlogy ActiVities
General Activities
Proprietary receipts from the public
Total-General Services Administration
476
Intemational Assistance Program:
International Security Assistance:
Foreign military loan program
Foreign military financing program
Econornic support fund
Other
Proprietary receipts from the public
Outlays
Prior Fiscal Year to Date
Gross lAPPlicable 1
Outlays
Outlays Receipts
Gross jAPPlicablej 0 It
Outlays
Receipts
u ays
1,177
1,328
433
497
705
16
181
194
66
41
-6
-16
16
460
4,140
2,620
3
9
-40
-15,316
2,591
2,590
31,227
44
155
237
167
51
44
155
237
167
51
-45
528
1,857
2,597
1,437
479
(' ')
45
948
1,280
436
536
618
307
1,177
1,328
433
497
705
-307
307
3,833
3,818
15,119
31,142
152
130
-12
-15,316
15,151
30,188
158
125
-15,326
31,215
30,297
493
1,741
2,719
1,433
356
9
528
1,857
2,597
1,437
460
-320
-250
-9
348
6,300
6,492
39
56
125
39
56
125
219
15,119
31,142
152
130
2,620
3
9
-1
-40
12
12
19
320
-250
-1
653
4
1
7
46
(' ')
6,648
4
46
49
118
(' ')
46
49
118
213
219
-416
1,998
253
273
789
2,551
183
314
7
..
11
(' 'J
11
213
67
214
29
13
97
-30
214
29
13
359
1,998
253
273
775
..
(
324
97
226
2,884
1,039
-11
129
)
(' ')
8
-8
783
2,101
3,837
219
3,599
1
14
15
836
96
160
15,151
30,188
158
124
-14
-15,326
30,282
9
493
1,741
2,719
1,433
353
-313
-250
-9
325
6,167
3
313
477
25
9
312
2,551
183
314
-25
-9
512
3,326
16
-60
-57
6
-16
21
1,039
-11
129
-21
9
836
96
160
-9
-110
16
-126
1,157
21
1,136
1,092
9
1,083
25
25
372
35
43
-18
25
372
35
-10
358
3,118
2,462
250
521
389
2,960
2,226
217
517
717
-163
3,118
2,462
250
-717
872
-128
2,960
2,226
217
-872
403
6,188
1,238
4,951
5,792
1,389
4,403
1,227
307
608
1,227
307
608
2,141
2,141
10
53
Total-International Security Assistance
456
Multilateral Assistance:
Contribution to the International Development
.. ..... ....
Association
International organizations and programs
Other
2
60
2
60
1,029
300
535
14
1,029
300
522
62
62
1,864
14
1,850
Total-Multilateral Assistance
219
948
1,280
436
536
618
-219
-250
608
( )
-60
-57
6
................
I
Current Fiscal Year to Date
15
Table 5. Outlays of the U.S. Government, September 1998 and Other Periods-Continued
[$ millions]
This Month
Classification
International Assistance Program:-Continued
International Development Assistance:
Agency for International Development:
Economic assistance loans ............................ .
Sustainable development assistance program ......... .
Assistance for Eastern Europe and the Baltic States
ASSistance for the new independent States of the
Former Soviet Union .................................. .
Development fund for Africa ........................... .
Operating expenses .................................... .
Payment to the Foreign Service retirement and
disability fund .......................................... .
Other .................................................... .
Proprietary receipts from the public ................... .
Intrabudgetary transactions ............................ .
Gross IApPlicable' Outlays
Outlays
Receipts
oJ
Current Fiscal Year to Date
Prior Fiscal Year to Date
'APPli~ble'
ReceIpts
Gross 'APPlicable' 0utIa
Outlays
Receipts
va
Gross
Outlays
(0
oJ
1,214
Outla s
y
66
107
-114
66
107
1,370
471
-1,215
1,370
471
13
1,162
539
54
21
93
54
21
93
627
247
496
627
247
496
724
565
455
122
44
513
-3
-3
(0
140
114
18
94
1
-3
44
44
418
321
-1
924
539
724
565
455
44
82
-1
-3
-3
-911
1,162
239
1
-3
Total-Agency for International Development ...... .
478
133
345
3,766
1,309
2,457
3,819
1,005
2,814
Overseas Private Investment Corporation ............... .
Peace Corps .............................................. .
Other ...................................................... .
23
17
14
39
-17
17
14
106
217
65
330
-224
217
65
75
226
82
295
oJ
-220
226
82
Total-International Development Assistance ......... .
532
172
360
4,153
1,639
2,514
4,202
1,300
2,902
International Monetary Programs ........................... .
Military Sales Programs:
Special defense acquisition fund ......................... .
Foreign military sales trust fund ......................... .
Kuwait civil reconstruction trust fund .................... .
Proprietary receipts from the public ..................... .
Other ........................................................ .
-448
-448
-151
-151
787
10
1,347
-10
1,347
14
14,010
14
15,096
1,047
-1,047
-39
14,010
1
-14,135
Total-International Assistance Program ...•..•...••..•
1,948
National Aeronautics and Space Administration:
Human space flight ......................................... .
Science. aeronautics, and technology ...................... .
Mission support ............................................ ..
Other ........................................................ .
Total-National Aeronautics and Space
Administration ........................................... .
(0
oJ
1
(*
89
oJ
15,128
-75
15,096
(* *J
-15,128
2
9,000
28,035
5,551
6,015
2,483
157
5,551
6,015
2,483
157
5,656
5,889
2,478
335
5,656
5,889
2,478
335
1,335
14,206
14,206
14,358
14,358
2,248
576
64
80
145
64
364
2,248
576
364
2,159
576
395
2,159
576
395
289
289
3,188
3,188
3,131
3,131
697
21,357
3,661
135
1,550
31
697
21,357
3,661
-301
31
4,099
21,357
43,058
1,635
17,176
55
4,099
21,357
43,058
-1.344
466
55
4,000
21,254
41,723
1,732
16,596
75
-21,357
-2
-21,357
-28
-21,357
-28
-21,254
-27
4,083
65,996
46,307
64,099
r oJ
666
26,079
567
519
220
29
567
519
220
29
1,335
National Science Foundation:
Research and related activities ............................ ..
Education and human resources ........................... .
Other ....................................................... ..
80
145
Total-National Science Foundation .................. ..
Total-Office of Personnel Management .............. .
14,135
787
r oJ
oJ
Office of Personnel Management:
Government payment for annuitants. employees health,
and life insurance benefits ............................... ..
Payment to civil service retirement and disability fund .... .
Civil service retirement and disability fund ................. .
Employees life insurance fund .............................. .
Employees and retired employees health benefits fund ... .
Other ................................................ .
Intrabudgetary transactions:
Civil service retirement and disability fund:
General fund contributions ............................ ..
Other .................................................... .
53
(0
(0
oJ
(0
1,282
138
1,851
-21,357
-2
6,072
1,989
16
-2
17,079
2,979
16,710
19,689
2
17,906
10,128
4.000
2,767
15,928
21,254
41.723
-1.034
668
75
-21.254
-27
18,694
45,404
Table 5. Outlays of the U.S. Government, September 1998 and Other Periods-Continued
[$ millions)
Classification
Small Business Administration:
Public enterprise funds:
Business loan fund
........................ .
Disaster loan fund ........................................ .
Other .............................................. .
Other ............................................ .
Total-Small Business Administration
SOcial Security Administration:
Payments to SOCial security trust funds ................... .
Special benefits for disabled coal miners ..
Supplemental security income program .................... .
Office of the Inspector General ............................ .
Federal old-age and survivors insurance trust fund (offbudget):
Benefit payments
........................ .
Administrative expenses .................................. .
Payment to railroad retirement account
Total-FOASI trust fund ....
Federal disability insurance trust fund (oN-budget):
Benefit payments ................................ .
Administrative expenses ........................ .
Payment to railroad retirement account
Other ....................
.. ............ .
Total-FDI trust fund ...................... ..
Proprietary receipts from the public:
On-budget ................. .
ON-budget ................ .
Intrabudgetary transactions:
OH-budget3 .................. .. ........................ ..
Total-Social Security AdminIstration
Other independent agencies:
Appalachian Regional Commission ......................... .
Corporation for National and Community Service
Corporation for Public Broadcasting ........... .
District of Columbia:
Courts ......
Corrections ..................
. .................... ..
General and special payments .......................... ..
Rnancing . ...................
. ..................... .
Equal Employment Opportunity Commission ............... .
Export-Import Bank of the United States .................. .
Federal Communications Commission:
Universal service fund .................................. ..
Spectrum auction subSidies .......... . .................. .
Other
............................................... .
This Month
Current Fiscal Year to Date
Prior Fiscal Year to Date
Gross lApPllcable!
Outlays
Recelpta
Outlays
Gross /APPlicablel
Outlays Receipts
Outlays
Gross /APPlicablel 0 tI
Outlays
Receipts
u ays
418
869
-451
781
232
2
-206
17
214
1.255
252
-474
169
14
..
2
)
1,521
-63
586
274
12
225
523
419
17
247
..
)
5
247
-78
1,206
872
334
2
(. *)
)
-206
421
16
225
Ba8
-443
1,443
2.679
9
18
48
2.679
9
9.141
592
29.747
17
9.141
592
29.747
17
6.880
630
28,717
6.880
630
28.717
5
5
27.387
224
27.387
224
324.274
1.832
3.662
324.274
1.832
3.662
312.880
2.001
3,688
312.880
2,001
3.688
27.611
27.611
329.769
329.769
318.569
318.569
4.093
4.093
85
47,739
1.564
157
47.739
1,564
157
45,430
1.211
59
45,430
1,211
59
446
..
(
18
48
85
(
..
..
(
4,178
4.178
..
215
(
)
-18
34,524
16
46
216
..
(
)
..
(
-18
-9.140
34,309
409,584
1,382
15
46
191
592
3
-1
-1
)
(' ')
46.701
46.701
1.295
18
408,202
394,621
1,313
393,309
188
244
564
260
2
242
564
260
146
471
201
146
471
201
-50
2
1,076
717
-12
231
-114
1.001
940
25
38
1.001
940
-13
717
12
1
244
738
-208
233
962
1,769
4.769
32
32
1.769
4.769
(..)
(
100
19
-31
246
530
2
188
4.769
-138
-6.880
-6.880
250
19
-1,295
-18
-9.140
592
50
..
(
-1.362
-20
250
69
188
4.769
-136
)
49.459
1.362
20
)
-1
)
(
49.459
-215
-1
..
)
(
145
Federal Deposit Insurance Corporation:
Bank insurance fund ........ . ................. .
Savings association insurance fund ....... .
FSUG resolution fund:
Resolution Trust Corporation closeout
Other ................................................... ..
Office of Inspector General ............... .
126
6
151
-25
45
-38
1.243
81
2,462
529
-1.219
-448
1,112
301
5,137
4.854
-4.025
-4.554
12
4
'-46
221
-208
358
-71
141
2.527
456
744
110
-4,460
-1.143
-46
29
-2.169
-314
29
5,203
75
Total-Federal Deposit Insurance Corporation ........ .
103
491
-388
1.852
5.974
-4.122
2,267
Legal Services Corporation ................................ ..
National Archives and Records Administration ............. .
National Credit Union Administration
................ .
24
13
8
24
13
-10
285
210
464
285
210
-212
282
(")
18
17
252
..
(
1.254
)
199
218
(" ')
16,448
-14,181
1
282
198
387
-169
Table 5. Outlays of the U.S. Government, September 1998 and Other Periods-Continued
[$ millions]
Classification
Other independent agencies:-Continued
National Endowment for the Arts .......................... .
National Endowment for the Humanities ................... .
Institute of Museum and Ubrary Services ................. .
National Labor Relations Board ............................ .
Nuclear Regulatory Commission ............................ .
Panama Canal CommisSion ................................. .
Postal Service:
Public enterprise funds (off-budget) ...................... .
Payment to the Postal Service fund ..................... .
Railroad Retirement Board:
Federal Windfall subsidy .................................. .
Federal payments to the railroad retirement accounts '"
Railroad unemployment insurance trust fund:
Benefit payments ..................... . ................ .
Administrative expenses ................................ .
Rail industry pension fund:
Benefit payments ....................................... .
Advances from FOASDI fund .......................... .
OASDI certifications .................................... .
Administrative expenses ................................ .
Interest on refunds of taxes ........................... .
Other .................................................... .
Supplemental annuity pension fund:
Benefit payments ....................................... .
Interest on refund of taxes ............................ .
Railroad Social Security equivalent benefit account:
Benefit payments ....................................... .
Interest on refund of taxes ............................ .
Other ...................................................... .
Intrabudgetary transactions:
Payments from other funds to the railroad retirement
trust funds ............................................ .
Other .................................................. · ..
This Month
Current Fiscal Year to Date
Prior Fiscal Year to Date
Gross IAPPlic.able! Outlays
Outlays Receipts
Gross !APplic.ablej Outlays
Outlays Receipts
Gross IAPpilcablel
Outlays Receipts Outfays
66
62
8
9
9
13
-27
12
97
110
153
177
492
688
5,269
3,693
60,971
86
8
9
9
13
39
73
8,962
455
739
60,754
201
254
106
124
159
175
510
661
217
86
59,384
126
201
254
216
238
216
73
2
73
2
2,901
-1,117
1,117
86
2
4
2,901
-1,117
1,117
16
16
(' ')
(")
..
5
5
59
59
)
(")
(")
(")
240
-93
93
8
240
-93
93
8
2,905
-1,124
1.124
87
2,905
-1,124
1,124
87
(
(")
1
3
3
5
(
..
)
1
5
106
97
110
153
177
38
-50
124
459
663
159
175
51
-3
59,434
-49
126
238
86
2
4
7
7
79
79
82
82
(")
(' ')
(")
(")
(")
(")
423
423
( )
(")
5.316
2
5,316
2
5.248
2
5,248
(
(")
(")
(")
(' ')
-3,819
-254
-3,819
-254
-3,747
-238
-3,747
..
..
)
(. ')
2
-238
Total-Railroad Retirement Board .................. .
700
700
4,837
4,837
4.870
4,870
Securities and Exchange Commission ..................... .
Smithsonian Institution ...................................... .
Tennessee Valley Authority ................................. .
United States Enrichment Corporation Fund ............... .
United States Information Agency .......................... .
Other ........................................... '" .......... .
-154
72
805
-154
72
-87
-231
9,788
1,154
9.056
1,613
8
314
-784
-46
1.150
867
-20
491
8,719
1.511
1,166
1,166
-20
109
82
-231
488
9.004
1,108
1.151
1,181
6,910
8,944
92,108
80,469
11,639
87,058
..
(")
3
-3
Total-Other independent agencies
(")
109
90
15,853
Undistributed offsetting receipts:
Other interest ............................................... .
Employer share. employee retirement:
Department of Health and Human Services:
Federal hospital insurance trust fund:
Federal employer contributions ...................... .
Postal Service employer contributions .............. .
Payments for military service credits .. , ............ .
Department of State:
Foreign Service retirement and disability fund ........ .
Other Defense Civil Programs:
Military retirement fund ................................ .
Office of Personnel Management:
Civil service retirement and disability fund ............ .
Social Security Administration (off-budget):
Federal old-age and survivors insurance trust fund:
Federal employer contributions ...................... .
Payments for military service credits ............... .
Federal disability insurance trust fund:
Federal employer contributions ...................... .
Payments for military service credits ............... .
Other
............................ .
Total-Employer share, employee retirement ......... .
892
(")
(")
(
)
..
(
)
488
1
491
-337
(")
-102
1.166
356
811
89,547
-2,488
6
-6
-159
-50
-159
-50
-1,825
-607
-67
-1.825
-607
-67
-1,790
-605
-70
-1.790
-7
-7
-109
-109
-111
-111
-868
-868
-10,421
-10.421
-11,102
-11.102
-4,402
-4,402
-14,791
-14,791
-14,096
-14.096
-502
-502
-5,843
-243
-5,843
-243
-5,315
-267
-5.315
-267
-80
-80
-927
(")
-868
-39
-33
-33
-1
-927
-39
-1
-868
(")
-1
-1
-34,872
-34,872
-34,257
-34,257
6,067
6,067
18
-605
-70
Table 5. Outlays of the U.S. Government, September 1998 and Other Periods-Continued
[$ millions]
This Month
I
Classification
Applicable
Receipts
Gross
Outlays
Undistributed offsetting recelpts:-Continued
Interest received by trust funds:
Judicial Branch:
Judicial survivors annuity fund ...... .
Department of Health and Human Services:
Federal hospital insurance trust fund ..... .
Federal supplementary medical insurance trust fund
Department of Labor:
Unemployment trust fund ...................... .
Department of State:
Foreign Service retirement and disability fund
Department of Transportation:
Oil spill liability trust fund
Airport and airway trust fund
.............................. .
Highway trust fund
Department of Veterans Affairs:
National service life insurance fund ............. .
United States government life insurance fund
Corps of Engineers ...
Other Defense Civil Programs:
Mifitary retirement fund
.......... .
Educational benefits fund
Armed Forces Retirement Home ..................... .
Environmental Protection Agency
................. .
National Aeronautics and Space Administration .. .
Office of Personnel Management:
Civil service retirement and disability fund
Social Security Administration (off-budget):
Federal old-age and survivors insurance trust fund
Federal disability insurance trust fund
Independent agencies:
Railroad Retirement Board
Other.
. ................... .
Other
................................ .
Total-Interest received by trust funds
..
(
Current Fiscal Year to Date
I Outlays
Gross jAPPlicablel
Receipts
Outlays
Outlays
Prior Fiscal Year to Date
Gross jAPPlicable
Outlays
Receipts
I
Outlays
)
(")
-11
-11
-19
-19
-22
-14
-22
-14
-9,154
-2,606
-9,154
-2,606
-9,758
-2,192
-9,758
-2,192
-13
-13
-4,304
-4,304
-3,713
-3,713
'J
-695
-695
-668
-668
-6
-17
-431
-68
-543
-2,004
-68
-543
-2,004
-64
-481
-1,440
-64
-481
-1,440
-977
-6
-44
-1,015
-6
-72
-1,015
-6
-72
-11,920
-36
-8
-58
-1
(
..
)
r
-6
-17
-431
-3
-3
(* *)
(")
42
42
-977
-6
-44
-117
-117
(
)
-12,358
-40
-8
-67
-1
-12,358
-40
r ')
..
..
-67
-1
-11,920
-36
-8
-58
-1
-82
-82
-31,766
-31,766
-30,4B3
-30,483
-60
-8
-60
-8
-42,197
-4,432
-42,197
-4,432
-37,688
-3,526
-37,68B
-3,526
-277
-277
(")
9
(")
9
-2,017
-30
-508
-2,017
-30
-508
-1,234
-31
-577
-1,234
-31
-577
-1.006
-1,006
-113,838
-113,838
-104,992
-104,992
(
(* *J
-2
-6
)
-2
-6
Rents and royalties on the outer continental shelf lands ..
Sale of major assets .. '
Spectrum auction proceeds ................................. .
354
-354
-8
4,522
5,158
2,642
-4,522
-5,158
-2,642
4,711
-4,711
11,006
-11,006
1,487
-1,487
Total-Undistributed offsetting receipts ........•...•...
-7,074
1,842
-8,915 -148,709
-139,249
15,722
-154,970
Total outlays ................ , ............................... .
172,905
30,180
142,725 1,874,620
223,238 1,651,383 1,835,890
234,979
1,600,911
Totar on-budget .......................................... .
132,822
24,911
107,911 1,497,244
162,463 1,334,781 1,465,814
175,527
1,290,287
40,083
5,269
Total off-budget .......................................... .
377,376
34,814
60,774
316,602
370,076
+41,826
-29,160
-103,322
-3,604
+99,198
+81,365
Total on-budget .......................................... .
Total off-budget ......................................... ..
MEMORANDUM
Receipts offset against outlays
[$ millions1
Current
Fiscal Year
to Date
Comparable Period
Prior Fiscal Year
68,963
274,216
5,574
348,752
61,500
260,796
14,138
336,434
... No Transactions.
(•• ) Less than $500,000.
Note: Details may not add to totals due to rounding
19
310,624
-21,957
+38,222
'Includes prior period adjustment.
'Outlays have been decreased by $6 million in September 1997 to reflect a prior period
adjustment by the Financial Management Service.
'Includes FICA and SECA tax credits. non-contributory military service credits, special benefits
for the aged, and credit for unnegotiated OASI benefit checks.
59,452
+70,039
Total surplus (+) or deficit .............................. ..
Proprietary receipts .......... .
Intrabudgetary transactions
Govemmental receipts
Total receipts offset against outlays
12,326 -161,035
Table 6. Means of Financing the Deficit or Disposition of Surplus by the U.S. Government, September 1998 and Other Periods
[$ millions]
Assets and Liabilities
Directly Related to
Budget Off-budget Activity
Net Transectlons
(-) denotes net reduction of either
liability or asset accounts
Flscel Year to Date
This Month
This Year
Uability accounts:
Borrowing from the public:
Public debt securities, issued under general Financing authorities:
Obligations of the United States, issued by:
United States Treasury ............................................ .
Federal Financing Bank ............................................ .
I
Account Balances
Currant Fiscel Year
Beginning ot
Prior Year
Close of
This month
This Year -' This Month
188,335
5,398,146
15,000
5,413,146
5,549,553
15,000
5,564,553
5,511,193
15,000
5,526,193
648
864
44
-1,255
1,553
78,187
2,218
79,629
2,202
79,051
-37,799
112,831
189,634
5,336,514
5,487,143
5,449,345
-252
-3,814
-1,857
33,187
29,625
29,372
Total federal securities .............................................. ..
-38,051
109,017
187,777
5,369,700
5,516,768
5,478,717
Deduct:
Federal securities held as investments of government accounts
(see Schedule D) ............................................... .
Less discount on federal securities held as investments of
government accounts ....................................... ..
8,443
163,938
150,950
1,605,559
1,761,054
1,769,497
81
3,872
1,357
7,000
10,790
10,872
-38,360
113,047
188,335
Total. public debt securities ..................................... .
-38,360
113,047
Plus premium on publiC debt securities ...................... .
Less discount on public debt securities ...................... .
-16
-578
Total public debt securities net of Premium and
discount .................................................... .
Agency securities, issued under special financing authorities (see
Schedule B. for other Agency borrowing, see Schedule C) ......... .
Net federal securities held as investments of government
accounts .................................................... .
8,362
160,066
149,593
1,598,559
1,750,264
1,758,625
Total borrowing from the public ........................ ..
-46,413
-51,050
38,185
3,771,141
3,766,504
3,720,092
Accrued interest payable to the public .................................. ..
Allocations of special drawing rights .................................... ..
Deposit funds ............................................................. .
Miscellaneous liability accounts (includes checks outstanding etc.) ..... .
8,801
204
-89
2,523
-635
30
-765
-15
478
-363
-413
1,447
46,083
6,689
6,800
'3,938
36,647
6,515
6,125
1,399
45,448
6,719
6,036
3,922
-34,973
-52,434
39,333
3,834,651
3,817,190
3,782,217
-1,753
4,204
2,451
-2,740
-2,003
-4,743
-8
-595
-603
7,692
35,930
43,621
6,704
29,722
36,427
4,952
33,926
38,878
Special drawing rights:
Total holdings ......................................................... .
SDR certificates issued to Federal Reserve Banks ................. .
307
108
307
108
9,997
-9,200
797
9,799
-9,200
Balance ............................................................ ..
-180
518
338
599
10,106
-9,200
906
772
27
1
162
7,204
6
-1,967
748
-4
31,762
4,453
-22,087
-91
31,762
3,843
-14,911
-86
31,762
4,615
-14,884
-85
Balance ............................................................. .
-323
476
-262
7,110
-160
-1,383
9
14,045
70
20,678
-253
21,155
Loans to International Monetary Fund ................................. .
Other cash and monetary assets ...................................... .
11
-1,322
495
3,381
(00)
-3,166
'22,778
484
27,481
495
26,159
Total liability accounts
Asset accounts (deduct)
Cash and monetary assets:
U.S. Treasury operating cash: 2
Federal Reserve account ............................................ ..
Tax and loan note accounts ........................................ ..
Balance ............................................................. .
Reserve position on the U.S. quota in the IMF:
U.S. subscription to International Monetary Fund:
Direct quota payments ............................................ ..
Maintenance of value adjustments ................................ .
Letter of credit issued to IMF ...................................... ..
Dollar deposits with the IMF ........................................ ..
Receivable/Payable (-) for interim maintenance of value
adjustments .......................................................... .
Total cash and monetary assets .................................... .
1,923
6,350
-4,814
81,242
85,670
87,592
Net Activity. Guaranteed Loan Financing ................................ .
Net Activity, Direct Loan Financing ...................................... .
Miscellaneous asset accounts ............................................ .
1,161
1,380
1,325
515
11,514
-205
-143
21,033
1,774
-13,905
53,816
'120
-12,229
63,950
-1,410
-13,390
65,330
Total asset accounts ................................................ .
3,467
18,174
17,849
121,273
135,980
139,447
+3,713,378
+3,681,210
+3,642,770
351
569
+3,681,562
+3,643,339
Excess of liabilities (+) or assets (-) .................................. ..
38,440
70,608
+21,484
Transactions not applied to current year's surplus or deficit (see
Schedule a for DetailS) ..................................................... .
218
569
472
Total budget and oft-budget federal entities
(financing of deficit (+) or disposition of
surplus (-)) .............................................................. ..
-38,222
-70,039
+21,957
, IncludeS a prior period adjustment.
'MajOr sources of information used to determine Treasury's operating cash income include
Federal Reserve Banks. the Treasury Regional Finance Centers. the Internal Revenue Service
Centers. the Bureau of the Public Debt and various etectronic systems. Deposits are refJected as
received and withdrawals are reflected as processed.
+3,713,378
... No Transactions.
(' ') Less than $500,000.
Note: Details may not add to totals due to rounding.
20
-85
Table 6.
Schedule A-Analysis of Change in Excess of Liabilities of the U.S. Government, September 1998 and
Other Periods
[$ milliOns]
Fiscal Year to Date
Classification
This Month
I
This Year
.. .
liabilities
Excess of
beginning of period .
Based on composition of unified budget in preceding period
Adjustments during current fiscal year for changes in composition
of unified budget:
Revisions by federal agencies to the prior budget results
3,681,078
3,713,893
Prior Year
3,691,636
132
-515
258
3,681,210
3,713,378
3,691,894
Budget surplus (-) or deficit:
Based on composition of unified budget in prior fiscal year
Changes in composition of unified budget .....
. ......... .
-38,222
-70,039
21,957
Total surplus (-) or deficit (Table 2)
-38,222
-70,039
21,957
Excess of liabilities beginning of period (current basis)
Total-on-budget (Table 2)
-41,826
29,160
103,322
Total-off-budget (Table 2)
3,604
-99,198
-81,365
-218
(' .)
-562
-7
-465
-7
-218
-569
-472
3,642,770
3,642,770
3,713,378
Transactions not applied to current year's surplus or deficit:
.......... .
Seigniorage
Profit on sale of gold
.............. ..
Total-transactions not applied to current year's surplus or
deficit.
.. ............ ..
Excess of liabilities close of period .. " " ..•. " .. ""."" ........... .
Table 6. Schedule B-Securities Issued by Federal Agencies Under Special Financing Authorities, September 1998 and
Other Periods
[$ millions]
Net Transactions
(-) denotes net reduction of
liability accounts
Account Balances
Current Fiscal Year
Classification
Fiscal Year to Date
This Month
This Year
Agency securities, issued under special financing authorities:
Obligations of the United States, issued by:
Export-Import Bank of the United States ............................. .
Federal Deposit Insurance Corporation:
FSLlC resolution fund ............ .
Obligations guaranteed by the United States, issued by:
Department of HOUSing and Urban Development:
Federal Housing Administration
............. .
Department of the Interior:
Bureau of Land Management
.................. .
Department of Transportation:
Coast Guard:
Family Housing mortgages
Obligations not guaranteed by the United States, issued by:
Legislative Branch:
Architect of the Capitol
Department of Defense:
Homeowners assistance mortgages ...........
. ......... .
Independent agencies:
Farm Credit System Financial Assistance Corporation ...... .
National Archives and Records Administration
Postal Service
.. . .. . . . . .. . . .. .. . ... ..,
Tennessee Valley Authority ... ..............
. ........... .
18
I
Beginning of
Prior Year
This Year
Close of
This month
1
This Month
(")
(")
(")
-32
-32
95
63
63
105
-14
68
155
174
13
13
13
(")
(")
(")
179
176
177
-2
-2
..)
(
Total, agency securities ......................... " ... "",,.,,""
... No Transactions.
(. ') Less than $500,000.
Note: Details may not add to totals due to rounding.
21
-450
178
-5
-3,181
-701
-4
-508
-1,297
1,261
286
3,898
27,386
1,261
281
1,167
26,507
1,261
281
717
26,685
-252
-3,814
-1,857
33,187
29,625
29,372
Table 6, Schedule C (Memorandum)-Federal Agency Borrowing Financed Through the Issue of Public Debt Securities,
September 1998 and Other Periods
[$ millions]
Account Balances
Current Fiscal Year
Transactions
Classification
Baginning of
Fiscal Year to Date
1
This Month
This Ye.r
Borrowing from the Treasury:
Department of Agriculture:
Farm Service Agency:
Commodity Credit Corporation ....................................... .
Agricultural credit insurance fund .................................... .
Natural Resources Conservation Service .............................. .
Rural Utilities Service:
Rural water and waste disposal fund ............................... .
Rural communication development fund ............................. .
Rural electrification and telecommunications fund ................... .
Rural telephone bank ................................................ .
Rural development insurance fund ................................... .
Rural Housing Service:
Rural community facility loans fund ................................. .
Rural housing insurance .............................................. .
Self-help housing land development fund ........................... .
Rural Business - Cooperative Service:
Rural business and industry loans ................................... .
Rural development loan fund ........................................ .
Rural economic development loan fund ............................. .
Foreign Agricultural Service ........................ . .................. .
Department of Commerce:
National Oceanic and Atmospheric Administration:
Fisheries finance ................................. .
Fishing vessel obligations ............................................ .
Department of Education:
Federal direct student loan program ....................... . .......... .
Federal family education loan program ................................ .
College housing and academic facilities loans ......................... .
Department of Energy:
Bonneville Power Administration fund ...................... . .......... .
Department of Housing and Urban Development:
Housing Programs:
Federal Housing Administration .................. . .................. .
Housing for the elderly and handicapped ........................... .
Public and Indian housing:
Low-rent public housing .............................................. .
Department of Interior:
Bureau of Reclamation loan fund ...................................... .
Helium fund ............................................................. .
Bureau of Indian Affairs ................................................ .
Department of Justice:
Federal Prison Industries, Incorporated .................... .. ........ ..
Department of State:
Repatriation loans .................................. .
Department of Transportation:
Minority business resource center fund ................................ .
Federal Aviation Administration:
Aircraft purchase loan guarantee program .......................... .
Federal Highway Administration:
High priority corridors loan fund .................................... ..
Federal Railroad Administration:
Alameda corridor project ............................................. .
Railroad rehabilitation and improvement loan fund .................. .
Amtrak corridor improvement loans ................................ ..
Other .................................................................. .
Department of Treasury:
Community development financial institutions fund .................... .
Federal Financing Bank revolving fund ............ .. ................ ..
Department of Veterans Affairs:
Guaranty and indemnity fund ...................... .. ................ ..
Loan guaranty revolving fund .......................................... .
Direct loan revolving fund .............................................. .
Native American veteran housing fund ................................ .
Vocational rehabilitation loan fund ..................................... .
Corps of Engineers:
Washington aqueduct ........ . ......................................... .
Environmental Protection Agency:
Abatement, control, and compliance loan program .................... .
Federal Emergency Management Agency:
National insurance development fund ...................... . .......... .
Disaster assistance loan fund ......................................... ..
This Ye.r
Prior Ye.r
I
Close of
This month
This Month
2,735
-521
9,794
324
6,402
143
7,748
2,066
4
14,808
2,911
4
17.543
2.390
4
-27
1,541
565
-282
-41
250
-45
-1,375
115
-57
-30
990
25
8,982
477
2,451
2,557
25
9,515
473
1,076
2.530
25
9.232
432
·1.076
-19
-223
409
723
118
420
202
6,474
630
7,420
611
7.197
..
)
..
)
(
..
)
(
..
(
)
(* ')
(
2
3
2
-28
17
18
11
-28
9
32
3
24
9
110
38
670
24
125
46
670
26
128
49
642
..
)
30
8
25
1
25
2
55
10
55
10
-1,284
-237
-68
12,384
-237
-68
10,493
-326
-34
22,713
354
465
36,382
354
465
35.097
117
396
)
43
2,499
2,492
2.499
2,941
-881
516
-735
3,639
6,174
5,114
5,293
6.579
5.293
(
7
1,466
..
(
-37
37
5
15
21
(' 0)
-1
2
..
(
)
..
-10
..
(
)
)
(
..
(
-5
)
60
252
28
65
252
28
20
20
20
..
)
(
-3
)
(
)
..
..
)
( )
19
9
(
14
..
..
(
50
252
28
..
(
)
-34
128
..
128
120
)
(
-3
..
(
)
..
..
120
120
248
..
( )
(
)
(
)
( )
..
1
-909
4
-12,102
4
34,944
5
5
6,638
27,398
34.036
-338
-1,411
107
-2,028
1,152
758
1,652
2,028
2,097
1,411
1.759
(
(
(
(
(
..-4
)
-2
..-8
)
..
(
)
..
)
11
-2
..
)
23
1
13
-33
22
-395
-13
..
)
19
3
15
1
11
13
-2
38
38
38
291
-97
920
62
525
82
525
50
Table 6. Schedule C (Memorandum)-Federal Agency Borrowing Financed Through the Issue of Public Debt Securities
'
September 1998 and Other Periods-Continued
[$ millions]
Account Balances
Current Fiscal Year
Transactions
Classification
Beginning of
Fiscal Year to Date
This Month
I Prior Year
This Year
Borrowmg from the Treasury. Contmued
General Services Administration:
Land aquisition and development fund
International Assistance Program:
International Security Assistance:
Foreign military loan program
Military debt reduction
Agency for International Development·
International debt reduction
HOUSing and other credit guaranty programs
Microenterprise and small enterprise development
Overseas Private Investment Corporation
Small Business Administration:
Business loan fund
Disaster loan lund
Independent agencies:
District of Columbia
EKport-lmport Bank of the United States
Federal Communications Commission
Spectrum auction loan fund
Railroad Retirement Board:
Rail industry pension fund
Social Security equivalent benefit account
Smithsonian Institution:
John F. Kennedy Center parking facilities
Tennessee Valley Authority
Total agency borrowing from the Treasury
financed through public debt securities issued
-85
-177
-1
134
3
-13
85
I This Month
..
(
)
(
.. )
274
3
1,408
3
1.718
7
1.542
6
6
234
85
2
85
234
72
2
68
..)
-38
(
(")
-17
-17
11
234
110
2
85
8
145
53
542
391
9.015
399
9.160
399
9.160
13
-223
815
-156
405
223
3,140
3.943
3,956
-3.073
-2.563
7.007
7,120
7,631
4.558
267
-45
21
2,128
2,911
2,128
2.598
2,128
2,865
20
150
20
150
20
150
...................
Borrowing from the Federal Financing Bank:
Department of Agriculture:
Rural Utilities ServIce:
Rural electrification and telecommunications fund
Rural development insurance fund
Rural Housing Service:
Rural housing insurance fund
Department of Defense:
Department 01 Navy ....
Defense agencies
Department of Education:
Historically Black college and university capital
financing fund
Department of Health and Human Services:
Medical facilities guarantee and loan fund
Health maintenance organIzation loan and
loan guarantee fund
Department 01 Housing and Urban Development:
Low rent housing - loans and other expenses
Community development grants
Department of Interior
Assistance to terrrtories
Department of Transportation:
Railroad rehabilitation and improvement loan fund
General Services Administration:
Federal buildings fund
Pennsylvania avenue activities
International Assistance Program:
Foreign military financing program
Small Business AdministratIon:
Business loan fund
Independent agencies:
E><port-Import Bank of the United States
FSLlC resolution fund:
Resolution Trust Corporation closeout
Postal Service
Total borrowing from the Federal Financing Bank
This Year
Close of
This month
..
)
3,418
20,854
16,009
133,301
150,737
154,155
-118
-652
-1.931
19,418
3.675
18,884
3,675
18,766
3.675
-255
-4,030
-5.170
13.530
9.755
9,500
-83
-75
1,624
-316
1,624
-399
1,624
-399
5
5
4
..)
(
..
(
)
-6
-6
13
7
7
-1
-2
4
3
3
-70
-6
-65
-3
1,561
36
1,491
30
1,491
30
-1
-1
19
17
17
..
..
(
)
-9
4
4
4
-1
4
-33
87
-62
150
1,794
626
1,761
709
1,760
713
-16
-219
-199
3.048
2.845
2,829
-3
-41
-43
275
236
233
-1.295
-527
1,295
3.946
-1,375
3.733
-4.621
464
1,375
1,964
1,750
5,696
3,557
-3,990
-12,102
49,945
42,398
45,955
(
.................
(
)
No Transactions.
C ") Less than $500,000
Note' Details may nol add to lotals due to rounding.
Nole: This table includes lending by Ihe Federal Financing Bank accomplished by the purchase
of agency financial assets, by the acqulsllion of agency debt securitIes, and by direct loans on
behalf of an agency. The Federal Financing Bank borrows from Treasury and Issues Its own
securities and in turn may loan these funds to agencies In lieu of agencIes tlorrowlng directly
through Treasury or Issuing their own securities
23
Table 6. Schedule O-Invesbnents of Federal Government Accounts in Federal Securities, September 1998 and
Other Periods
[' millions]
Securities Held as Investments
Current FIscal V..r
Net Purehe... or Sales (-)
Clallificatlon
BegInnIng of
FIscal V..r to Da..
thIs Month
I
ThIs V..r
thIs Vear
PrIor V..r
Federal funds:
Department of Agriculture ................................................ .
Department of Commerce ................................................ .
Department of Defense-Military:
Defense cooperation account .......................................... .
Department of Energy .................................................... .
Department of Housing and Urban Development:
Housing Programs:
Federal Housing Administration fund ................................ .
Government National Mortgage Association:
Guarantees of mortgage-backed securities .......................... .
Other .................................................................... .
Department of the Interior ................................................ .
Department of Labor ...................................................... .
Department of Transportation ............................................ .
Department of the Treasury .............................................. .
Department of Veterans Affairs:
Canteen service revolving fund ........................................ .
Veterans reopened insurance fund ..................................... .
Servicemen's group life insurance fund ................................ .
Independent agencies:
Export-Import Bank of the United States ............................. .
Federal Deposit Insurance Corporation:
Bank insurance fund ................................................. .
Savings association insurance fund .................................. .
FSLlC resolution fund ................................................ .
National Credit Union Administration ................................... .
Postal Service ........................................................... .
Tennessee Valley Authority ............................................. .
(* *)
5
-1
-7
9
9
12
23
Close of
ThIs month
I
thIs Month
14
17
14
16
(* *)
(* *)
1
5.320
1
1.339
1
-26
7.129
12.475
1
12.449
-1.506
875
5.738
13,475
15.855
14.350
-550
68
5.382
168
3.876
7.835
145
15.875
5.999
169
4.077
8.557
142
16,491
5.449
4.052
8.783
142
16.389
38
520
4
38
516
4
-25
226
1
-102
514
610
10
236
1.230
19
3.731
-4
-5
-4
-4
(* *)
(* *)
38
521
4
64
-426
481
954
464
528
-15
-72
71
1.116
337
281
211
140
4.143
4.589
1.112
187
27.460
9.673
2.017
3.895
1.399
27.445
9.602
2.087
3.906
(* *)
26.329
9.265
1.806
3.695
860
2.092
3.851
2.308
4.283
2.668
4.203
-1
11
-399
176
948
-3
168
1.000
Other .................................................................... .
Other ...................................................................... .
360
-81
575
351
-951
221
464
Total public debt securities .......................................... .
-2.050
10.475
23.173
103.333
115.859
113.809
-2,050
10,475
23,173
103,333
115,859
113,801
28
6
36
Total Federal funds
Trust funds:
Legislative Branch:
Ubrary of Congress .................................................... .
United States Tax Court ............................................... .
-1
Other .................................................................... .
Judicial Branch:
Judicial retirement funds ................................................ .
Department of Agriculture ................................................ .
Department of Commerce ................................................ .
Department of Defense-Military:
Voluntary separation incentive fund .................................... .
9
1
(* *)
(* *)
19
6
(* *)
1
1
34
29
6
36
-3
46
-1
19
1
353
7
401
17
398
862
66
909
65
873
-11
6
(* *)
Other .................................................................... .
24
-36
11
50
-1
-2
-1
64
Table 6. Schedule D-Investments of Federal Government Accounts in Federal Securities, September 1998 and
Other Periods-Continued
[$ millions]
Securities Held as Investments
Current Fiscal Vear
Net Purchases or Sales (-)
Classification
Fiscal Vear to Date
This Month
Beginning of
1
This Vear
Prior Vear
This Year
I This Month
Close of
This month
Trust Funds-Continued
Department of Health and Human Services:
Federal hospital insurance trust fund ................... .
Federal supplementary medical insurance trust fund ............ .
. ................... .
Other .........................
Department of the Interior
Department of Justice
Department of Labor:
Unemployment trust fund
Other ........................ .
Department of State:
Foreign Service retirement and disability fund ..... .
Other .......... .
Department of Transportation:
Airport and airway trust lund
Highway trust lund ............... .
Other .............................. .
Department of Treasury ............ .
Department of Veterans AHairs:
General post fund. national homes .......... .
National service life insurance ...... .
United States government life insurance fund
Veterans special lile insurance fund
Corps of Engineers ........ .
Other Defense Civil Programs:
Military retirement fund ..... .
Other ........................ .
Environmental Protection Agency ...
Federal Emergency Management Agency ...... .
National Aeronautics and Space Administration
Office of Personnel Management:
Civil service retirement and disability fund:
Public debt securities
...................... .
Agency securities ..................................................... .
Employees life insurance fund .................. . .
. ............ .
Employees and retired employees health benefits fund ............... .
Social Security Administration:
Federal old-age and survivors insurance trust fund
Federal disability insurance trust fund ..... .
Independent agencies:
Harry S. Truman Memorial Scholarship trust fund ........... .
Japan-United States Friendship Commission
....................... .
Railroad Retirement Board .........
. ............... .
Other .............
. ....................... .
1.298
-77
-17
57
-9,184
7,289
160
90
116.621
34.464
1.270
422
(' ')
1.629
5.037
28
-25
94
116.952
39.578
1.315
339
94
118.250
39.502
1.298
397
94
-1.503
24
8.718
-12
8.031
-12
61.923
67
72.144
32
70.641
55
-35
572
582
7
8,978
-6
9
9.585
3
9.550
3
-26
2.189
-4.415
28
36
-1.322
1.157
112
23
6.360
22.341
2.111
273
9.635
27.665
2.143
336
8.550
17.926
2.138
309
-3
-99
8
-3
-14
16
48
12.108
87
1.642
1.647
45
12.008
86
1.628
1.621
135.390
679
6.438
133.843
693
6.529
-1.085
-9.739
-5
-1
-14
-27
-6
-7
18
141
30
279
37
12.023
92
1.610
1,479
-1.547
13
91
7.821
52
-448
9.134
47
-498
126,022
640
6.977
..
-1
)
-1
1
(")
(")
1
1
16
17
17
22.939
-450
295
32.353
-3.181
1.338
-522
28.961
-508
1.077
-1.396
414.404
7.098
18.038
6.787
423.818
4.367
19.376
5,969
446.757
3.917
19.377
6.265
266
110
85.837
13.434
68.041
13,462
567.445
63.562
653.016
76.886
653.282
76.996
..-1
(
(
....
)
)
(")
( )
..
55
88
-8
2.572
121
2.117
20
16
19.239
498
56
16
21.723
628
55
16
21.811
620
10.943
-450
156.643
-3.181
128.286
-508
1,495.128
7.098
1.640.828
4.367
1.651.771
3.917
Total trust funds ................................................ .
10,493
153,462
127,717
1.502.226
1,645.195
1.655.688
Grand total ................................................................ ..
8.443
163.938
150,950
1.605,559
1,761,054
1,769.497
Total public debt securities
Total agency securities ........................ .
(
(' ')
(
)
Note: Investments are in public debt securities unless otherwise noted.
Note: Details may not add to totals due to rounding.
No Transactions.
(' ') Less than $500.000
25
..
(
)
Table 60 Schedule E-Net Activity, Guaranteed and Direct Loan Financing, September 1998 and Other Periods
[$ millions]
Net Transections
(-) denotes net reduction ot
asset accounts
Account Balances
Current FiICaI Vear
Classificetlon
Beginning ot
Fiscal Vear to Date
This Month
I
This Vear
Prior Vear
This Vear
TThis Month
Close of
This month
Guaranteed Loan Financing Activity:
Department of Agriculture:
Farm Service Agency:
Commodity Credit Corporation export fund .......................... .
Agricultural credit insurance fund ..................................... .
Rural Utilities Service:
Rural water and waste disposal fund ................................ .
Rural Housing Service:
Rural community facility loans ........................................ .
Rural housing insurance fund ......................................... .
Rural Business-Cooperative Service:
Rural business and industry loans .................................... .
Department of Commerce:
National Oceanic and AtmospheriC Administration:
Fishing vessel obligations ............................................. .
Department of Defense-Military .......................................... .
Department of Education:
Office of Postsecondary Education:
Federal family education loans ........................................ .
Department of Health and Human Services:
Health Resources and Services Administration:
Health education aSSistance loans .................................... .
Department of Housing and Urban Deveiopment:
Public and Indian Housing Programs:
Indian housing loans ................................................... .
Community Planning and Development:
Community development loans ........................................ .
Housing Programs:
FHA-Mutual mortgage insurance loans ............................... .
FHA-General and special risk fund ................................... .
Government National Mortgage ASSOCiation:
Guarantees of mortgaged-backed securities .......................... .
Department of the Interior:
Bureau of Indian Affairs ................................................. .
Department of Transportation:
Maritime Administration .................................................. .
Department of Veterans Affairs:
Veterans Benefits Administration:
Guaranty and indemnity fund ......................................... .
Loan guaranty revolving fund ......................................... .
International Assistance Program:
Agency for International Development:
Ukraine export credit insurance fund ................................. .
Loan guarantees to Israel ............................................. .
Urban and environmental credit guaranteed loans ................... .
Microenterprise and small enterprise development ................... .
Overseas Private Investment Corporation ............................... .
Small Business Administration:
Business loan fund ...................................................... .
Independent agencies:
Export-Import Bank of the United States ............................... .
Net ActiVity, Guaranteed Loan Financing
22
-101
-339
-88
-321
58
-159
-169
-521
-156
-499
-256
oJ
(* *J
(* *J
-24
-24
-24
(*
-1
-1
1
-2
-2
-7
-9
-7
-71
-74
-3
-80
-5
-13
-8
-17
-24
-30
-3
8
8
(* *J
-3
-7,957
-6,955
-7,011
-21
-251
-266
-262
-3
-1
-2
-4
-4
-1
-5
-2
-2
-6
-7
143
-444
2,166
-231
1,159
136
2,903
140
4,925
353
5,069
-90
-236
-269
-28
-155
-188
-424
(* *J
-1
5
-18
-19
-19
-49
-62
-18
-184
-197
-246
-319
-467
633
-3,150
-3,298
-3,618
(* *J
-1
-1
-1
-25
-56
-26
-486
-28
-515
-49
(* *J
11
-3
-3
-57
945
-377
4
-11
-1
-2
-2
-29
-10
-118
-12
-2
-26
-397
-37
(* *J
-1
(* *J
-20
-2
-3
-3
-93
-75
-182
-255
-275
253
104
-57
-1,313
-1,462
-1,209
-39
-300
-984
-1,138
-2,825
-3,509
-3,810
-1,161
515
-143
-13,905
-12,229
-13,310
90
254
247
1,798
1,963
2,053
(* *J
2
2
-5
-3
-4
164
221
15
473
848
24
550
657
1,005
3,774
143
1,065
1,315
4,400
152
1,065
1,479
4,621
Direct Loan Financing Activity:
Department of Agriculture:
Farm Service Agency:
Agricultural credit insurance fund ..................................... .
Natural Resources Conservation Service:
Agricultural resource conservation demonstration program .......... .
Rural Utilities Service:
Rural water and waste disposal loans ., ............................. .
Rural electrification and telecommunications fund .................... .
Rural telephone bank .................................................. .
Rural development insurance fund .................................... .
Rural Housing Service:
Rural community facility loans fund .................................. .
Rural housing insurance fund ......................................... .
Self-help housing land development fund ............................ .
26
-3
167
1,065
35
474
101
703
128
698
281
6,542
316
7,017
(* *J
214
6,313
(* *J
(* *J
(* *J
(* *)
(* *)
Table 6. Schedule E-Net Activity, Guaranteed and Direct Loan Financing, September 1998 and Other Periods-Continued
[$ millions]
Net Transactions
(-) denotes net reduction of
asset accounts
Classification
Account Balances
Current Fiscal Year
Fiscal Year to Date
Beginning of
This Month
I Prior Year
This Year
..
Direct Loan Financing Activity. Continued
Department of Agriculture:-Continued
Rural Business-Cooperative Service:
Rural business and industry loan fund
Rural development loan fund ....
Rural economic development loan fund
Foreign Agricultural Service:
P.L. 480 direct loan fund ..
............. .
International debt reduction
P.L. 480, title 1, Food for progress credits
Department of Commerce:
National Oceanic and Atmospheric Administration:
Fisheries finance
Department 01 Education:
Office of Postsecondary Education:
............................. .
Federal direct student loan program
College housing and academic facilities loans ................. .
Historically Black college and university capital financing fund
Department of Housing and Urban Development
Housing Programs:
FHA-Mutual mortgage insurance loans
FHA-General and special risk fund
Department of the Interior:
Bureau of Reclamation
Bureau of Indian Affairs
Department of State:
Administration of Foreign Affairs:
Repatriation loans
Department of Transportation:
Office of the Secretary:
Minority business resource center
Federal Highway Administration:
High priority corridors loan fund ...
Federal Railroad Administration:
Alameda corridor project ......
. .......... ..
Railroad rehabilitation and improvement loan fund .'
Amtrak corridor improvement loans ...................... .
Department of the Treasury:
Departmental Offices:
Community development financial institutions fund
Financial Management Service .
. ........... .
Department of Veterans Affairs:
Veterans Benefits Administration:
Guaranty and indemnity fund
Loan guaranty fund
............... .
.. . . . . . . . .. . . . . .. . ........... .
Direct loan fund
Native American veteran housing fund ....... .
Vocational rehabilitation loan fund ....
Environmental Protection Agency:
Abatement, control, and compliance loan program
Federal Emergency Management Agency:
Disaster assistance loan fund
......................................... .
Intemational ASSistance Program:
Intemational Security Assistance:
Foreign military loan program ................ .
Military debt reduction
... .
Agency for Intemational Development:
Intemational debt reduction
Microenterprise and small enterprise development
Overseas Private Investment Corporation ......... .
Small BUSiness Administration:
Business loan fund
Disaster loan fund .......... .
Independent agencies:
District of Columbia .....
Export-Import Bank of the United States
Federal Communications Commission:
Spectrum auction loan fund .. . ......... .
Net Activity, Direct Loan Financing ................................. ..
This Year
I
Close of
This month
This Month
1
7
2
16
20
7
3
23
5
3
84
32
18
96
37
19
103
39
23
2
12
33
2
-3
13
5
-3
336
41
186
347
41
171
369
43
183
12
26
(' .)
(. 0)
14
26
3,024
-2
10,894
1
4
10,336
2
(' .)
21,902
13
1
29,772
16
5
32,796
14
5
..-1)
1
("')
( )
(0 ')
(' .)
( )
..
(
)
(
..-1)
(
(" .)
20
-2
(
("')
r .)
..
..
)
26
52
24
64
24
r .)
..16
..
(
)
-2
-2
-2
..
)
-2
5
6
5
3
3
-36
-3
-3
128
128
120
(
(" 0)
( )
..-3
120
2
-1
120
2
-1
248
2
-1
(
..3)
(
..3
(
..3)
(H)
254
179
663
555
326
555
(' 0)
(. 0)
380
555
..
)
14
1
14
1
15
1
11
-1
..
)
-54
1
(
..
-336
1
(
)
3
44
)
("')
4
..
(
)
r .)
('0)
3
-2
-2
38
33
36
-15
-16
-33
56
54
39
101
95
3
303
3
1,278
3
1,272
6
1,373
6
-42
1
11
186
2
70
178
1
-60
-1
-28
42
126
1
42
-1
181
-8
195
-1
347
97
4,019
90
4,033
90
4,214
-37
-223
905
-156
411
223
2,402
3,344
3,308
-2,971
-2,566
6,996
7,110
7,514
4,544
1,380
11,514
21,033
53,816
63,950
65,330
("')
..
-52
(
)
(
1
expenses and subsidy payments are reported on a cash basis and included within each program's
budgetary totals in Table 5.
... No Transactions
0) Less Ihan $500,000
Note: Details may not add to lotals due 10 rounding
Note: Federal credil programs provide benefits to the public in Ihe form of direct loans and loan
guarantees. This table reflects cash Iransactions and balances of the nonbudgetary financing fund
accounts thai result from the disbursement of loans, collect,on of fees, repayment of principle, sale
of COllateral, interest, and subsidy received from the credit program accounts at net present value
'" aCCOrdance with the Credit Reform Act of 1990. Unreimbursed cosls such as administrative
r
27
Table 7. Receipts and Outlays of the U.S. Govemment by Month, Fiscal Year 1998
[$ millions]
Oct.
Classification
Nov.
Dec.
Jan.
March
Feb.
April
May
June
July
Aug.
Sept.
Fiscal
VHr
To
Oete
Comparable
Pertod
Prior
F.V.
Receipts:
Individual income taxes .................
Corporation income taxes ...............
Social insurance and retirement receipts:
Employment and general retirement ..
Unemployment insurance .............
Other retirement .. ...................
Excise taxes ... ........................
Estate and gift taxes ..................
Customs duties ..........................
Miscellaneous receipts . .................
Total-Receipts this year
...........
60,680
3,254
46,596
3,913
69,060
44,037
95,798
4,407
42,209
829
39,662 158,284
19,491 27,361
29,974
3,259
81,587
39,785
58,969
4,072
55,300
1,468
90,479
36,800
828,597
188,677
737,466
182,294
36,928
1,443
414
5,090
2,198
1,802
3,089
39,629
2,526
334
5,204
1,510
1,323
2,447
44,297
425
427
5,176
1,498
1,416
1,663
50,395
1,036
333
4,683
1,808
1,387
2,764
41,825
2,589
335
4,796
1,500
1,454
2,414
47,389
301
337
4,499
1,845
1,412
2,994
42,560
8,273
406
4,841
1,845
1,297
2,823
54,807
292
369
5,370
1,775
1,568
2,307
41,130
2,301
385
6,127
1,825
1,777
3,135
41,973
3,502
331
3,181
1,718
1,732
2,535
42,540
206
333
2,961
2,356
1,701
3,572
540,016
27,484
4,335
57,669
24,076
18,297
32,270
506,750
28,202
4,418
56,926
19,845
17,927
25,127
95,278 187,860 119,723 111,741 180,947 1,721,421
......
......
......
114,898 103,481 168,000 162,610
56,544
4,589
332
5,742
4,198
1,428
2,525
97,952 117,930 261,002
(On-budget) ...•.......•.....•••••••
87,082
73,689 135,343 123,368
65,051
80,647 216,988
61,791 144,972
87,819
79,134 149,737 1,305,821
(Off-budget) ••.............••••••.••
27,816
29,792
32,900
37,283
33,488
31,903
32,606
32,657
39,243
44,014
31,210
415,600
94.493 173,361 109,178 103.483 174,772
...... 1,578,955
63,146 135,922
79,600
70,902 138,849
...... 1,186,965
40,591
31.347
37.439
29,578
32,580
35,923
. .....
391,989
179
240
194
230
172
283
215
239
191
422
132
304
283
303
2,543
3,463
2,362
3,259
-164
3,624
319
-103
3,918
281
-36
3,314
296
-634
3,340
291
-84
4,046
439
-234
3,628
389
1,225
3,341
369
2,134
4,024
402
10,734
43,216
4,047
7,713
44,836
3,780
5,561
7,225
3,438
5,650
7,134
3,522
3,366
8,263
4,495
5,664
8,450
4,000
5,836
7,722
3,853
5,965
7,299
3,601
8,436
7,978
4,171
3,503
7,257
3,690
5,864
9,877
5,179
68,976
92,883
48,186
69,722
92,465
47,691
3,735
494
300
2,835
532
282
2,390
425
290
3,668
419
305
2,738
453
330
3,522
417
301
2,912
439
322
3,207
483
339
2,607
512
418
3,646
649
412
37,423
6,046
3,869
37,026
6,188
4,004
558
-100
87
-39
-740
--64
20,832
614
-12
8
-55
-201
-381
-710
-1,342
22,189
21,140
24,566
17,405
23,574
329
-1,576
256,136
2,674
-1,441
19,459
-854
-352
19,310
827
-289
25,787
76
-107
19,842
258,330
2,752
1,399
3,142
1,155
4,799
997
1,183
1,070
2,403
1,283
1,197
1,144
2,281
1,257
1,836
1,363
2,859
1,038
2,738
1,375
30,492
14,444
30,014
14,470
1,834
1,960
2,127
1,863
1,825
2,021
1,984
2,190
2,002
1,962
2,032
23,670
21,755
9,443
12,990
7,445
8,972
8,715
13,472
8,536
10,764
7,631
11,167
8,421
10,513
8,893
12,127
7,872
10,693
8,967
10,962
8,467
14,479
8,124
9,324
8,719
11,226
101,234
136,690
95,552
137,378
7,599
5,096
5,030
5,038
7,716
5,310
6,622
6,542
6,046
4,801
5,575
5,219
6,567
7,076
6,346
5,015
6,837
5,780
6,541
5,076
5,152
5,058
6,242
5,744
76,272
65,754
72,553
64,230
2,267
--6,532
2,870
--6,568
2,807
--6,929
2,822
-8,127
2,860
--6,478
3,162
2,837
-7,126 -8,760
2,289
--6,472
2,729
-7,450
2,846
--6,931
2,419
--6,639
2,683
-7,636
32,591
-85,647
31,349
-83,276
3,535
625
1,110
1,707
465
1.220
2,116
952
1,543
3,205
535
1,263
1,904
591
1,423
1,926
544
1,320
2,702
527
1,245
2,242
399
1,263
2,599
531
1,664
3,056
762
1,569
1,242
523
1,473
3,990
781
1,037
30,224
7,234
16,129
27,525
6,722
14,315
1,677
727
457
1,435
580
206
1,995
105
879
2,439
419
332
2,174
239
368
2,411
302
370
2,095
740
391
1,694
697
308
1,811
774
229
2,032
775
419
1,884
770
256
1,760
467
370
23,408
6,595
4,585
24,299
6,162
5,245
2,159
1,755
1,575
1,438
1,667
2,036
1,254
1,529
1,204
1,540
1,338
1,610
1,351
1,368
1,539
1,429
1,656
1,739
1,994
1,611
1,951
1,499
2,398
1,826
20,087
19,381
20,612
19,223
21,771
933
26,407
631
67,795
1,496
21,176
748
21,609
10,591
21,781
6,857
21,212
3,118
27,448
1,166
68,937
1,255
20,832
1,407
23,977
203
20,878
-2,129
363,824
26,276
355,796
23,549
3,160
73
1
2,025
90
71
1
1.686
3,204
75
1
1,640
1,666
81
1
1,575
1,718
81
1
1,576
154
106
1
1,608
1,734
91
1
2,216
1,700
83
1
1,812
1,713
72
1
1,568
3,282
77
1
1,606
155
87
1
1,514
1,713
98
1
1,655
20,289
994
12
20,480
19,389
Total-Receipts prior year ...........
99,656
97.850 148,488 150,718
90.293 108.074 228,588
(On budget) .. .................. .....
73.644
70,019 119,527 113.841
59,673
73,844 187,997
...
26.012
27.831
28,961
36,877
30.620
34,230
Legislative Branch .......................
Judicial Branch ..........................
Department of Agriculture:
Commodity Credit Corporation and
Foreign Agricultural Service .........
Other ..................................
Department of Commerce ...............
373
299
213
363
210
185
191
223
188
372
2,670
3,607
294
1,471
3,097
324
2,492
3,518
419
1,997
3,758
224
8,246
7,477
3,749
3,319
6,280
3,173
7,564
7,921
5,315
3,764
575
304
2,400
649
266
804
383
25,302
-142
783
16,729
2,369
1,249
2,933
1,113
1,870
(Off budget) ... . . . . . . . . . . . . . .....
42,888
Outlays
Department of Defense:
Military:
Military Personnel ...................
Operation and Maintenance ........
Procurement ........................
Research, Development, Test, and
Evaluation .........................
Military Construction ................
Family Housing .....................
Revolving and Management
funds ..............................
Other
.............................
Total Military ...................
Department of Education ................
Department of Energy ...................
Department of Health and Human
Services:
Public Health Service .................
Health Care Financing Administration:
Grants to States for Medicaid .....
Federal hospital ins. trust fund ....
Federal supp. med. ins. trust
fund ...... ........................
Other . . . . . . . .......................
Administration for Children and
........ ...................
Families
Other .. ....... ......................
Department of Housing and Urban
Development ..... .....................
Department of the Interior ..............
Department of Justice ...................
Department of Labor:
Unemployment trust fund .............
Other ..... ......... ..................
Department of State ..... ..............
Department of Transportation:
Highway trust fund ...................
Other ..... ....... ....................
Department of the Treasury:
Interest on the public debt ...........
.........
. . . . . .. .
Other.
Department of Veterans Affairs:
Compensation and pensions ..........
.................
National service life
United States Govemment ute .. ....
...................
Other .
28
996
13
18,879
Table 7. Receipts and Outlays of the U.S. Government by Month, Fiscal Year 1998-Continued
[$ millions]
Oct.
Classification
Nov.
Dec.
Jan.
Feb.
March
April
May
June
July
Aug.
Sept.
Fiscal
Year
To
Date
Comparable
Period
Prior
F.Y.
Outlays-Continued
......
Corps of Engineers
.....
Other Defense Civil Programs
...... .....
Environmental protection
Executive Office of the President . ...
Federal Emergency Management
............. ........ ..,.
Agency
General Services Administration .........
Intemational Assistance Program:
International Security Assistance .....
Multilateral Assistance .. ...... . .....
Intemational Development
Assistance ... ..... ..... .... . .....
...
. ...
Other.
National Aeronautics and Space
.....
Administration ...
.....
National Science Foundation
Office of Personnel Management
.....
Small Business Administration .. .......
Social Security Administration:
Federal Old-age and survivors ins.
trust fund (off-budget) ... ...... ....
Federal disability ins. trust fund (off.... .. ....... ... . . . . . . .
budget)
O1her . . . . . . . .... ........ .... . ....
Independent agencies:
Fed. Deposit Ins. Corp:
Bank insurance fund
... ....
Savings association insurance
fund . . . . . . . . . . . ...... ...
FSlIC resolution fund:
ATC closeout ....
. .......
Olher . .....
Office of Inspector General
....
Postal Service:
Public enterprise funds (Offbudget) .
...
. . . . . . .. ..
Payment to the Postal Service
fund ...... .... ...... ...... . ....
Tennessee Valley Authority ..
...
Other independent agencies ...
Undistributed offsetting receipts:
Employer share, employee
retirement ..................
....
Interest received by trust funds
...
Rents and royalties on outer
continental shelf lands .
Sale of major assets ...... .......
Other.
......
'"
'
273
2,532
493
18
339
2,568
413
16
427
2,569
612
228
486
310
2,616
479
20
242
2,628
535
17
215
2,627
527
31
300
2,627
509
19
314
2,608
593
9
388
2.616
17
266
2,617
446
14
106
-775
195
533
146
404
122
-487
225
461
224
603
210
589
127
345
242
2
3,014
1
153
319
142
69
22
136
107
535
300
-346
187
279
294
544
146
-221
-120
-226
267
271
1,254
226
3,744
-6
1.209
230
3,746
50
1,422
263
3,920
21
1,025
275
3,834
148
1,001
254
3.493
14
26,616
26,607
26,954
27,163
3.953
4.559
3,926
159
4,037
4.629
-71
-199
-42
16
299
2,617
514
22
460
2.590
608
11
3,833
31,215
6.300
213
3,599
30.282
6.167
219
177
511
134
-1,058
107
-5
226
-126
2.101
1.136
3.326
1.083
270
27
150
21
22
302
299
30
403
62
4,951
1,850
4.403
2,141
313
179
150
101
249
-300
142
-198
226
-236
360
-159
2,514
-314
2.902
682
1.196
242
4,060
20
1,177
259
3,922
20
1,149
231
3,655
10
1,170
285
3,995
39
1,179
330
4,014
22
1.086
303
3,840
24
1,335
289
4,083
-443
14,206
3,188
46.307
-78
14.358
3,131
45,404
334
27,219
27,299
27,201
27.316
31.024
27,483
27,275
27,611
329,769
318.569
4,075
2.331
4,061
2.353
4.126
134
4,137
2,422
4,177
2.412
4.406
2,509
4,237
4.711
4,147
235
4,178
2.520
49,459
28,974
46,701
28,039
-21
-42
-169
-264
-107
-221
-49
191
-242
-25
-1,219
4,025
7
-65
1
-57
-48
-41
-16
-60
-32
-57
-38
-448
-4,554
-244
-27
-103
-28
-174
-11
-34
-11
-134
-17
-473
-30
....
-81
-19
6
-49
-19
....
. ...
-95
-144
.. . , . .
-208
-71
-46
-2,169
-314
29
-4,460
-1.143
("')
-439
86
64
-294
-441
3.693
217
-49
23
-139
1,380
-1
99
2.066
-87
5,726
86
-784
16,243
126
-337
11.953
-2,579
-359
-482
-6
572
. ...
."
-134
-22
4
-535
-166
-257
-945
-715
1,019
-84
-651
-405
n
22
58
1,081
..
. .... '
-107
800
-14
1,113
18
-2.257
22
-37
1,296
......
-197
1,485
22
3
1.098
. ..
-175
1.213
-208
1,241
-2,413 -2.635
-5,635 -47,009
-2.499
-167
-2,575
-1,487
-2.582
-358
-2,562
-279
-2.728 -2,622
-6.080 -49.113
-3,037
-37
-2,573
-2,307
-5
-247
-482
-306
-3,185
-495
-1,885
-1
-206
-82
-361
-48
-994
n
,
-118
-786
...
.. . ..
-70
-1
n
-6,067 -34,872 -34,257
-1,006 -113,838 -104,992
-354
-4,522
-5,158
-2,645
-11,011
150,866 120,830 154,361 137,231 139,701 131,743 136,400 134,057 136,754 143,807 122,907 142,725 1,651,383
......
(00)
...
.. ...
-152
-1
r")
.....
-572
"
••
0
•
n
,',
-1,488
-4,711
Totals this year:
Total outlays
(On-budget)
.........................
........................
(On-budget) ............ , ...... , ....
.....
........................
Total-surplus (+) or deficit (-)
(On-budget)
(Off-budget) ... , ....................
Total borrowing from the public
....
Total·outlays prior .~ear
(On-budget)
......
(Off-budget) .
TOlal-surplus (+) or deficit (-) prior
year.
. ...
(On-budget)
-
(Off-budget) .
123,866
91,326 146,649 108,844 109,393 101,967 108,570 102,382 125,605 115,713
92,555 107,911 1,334,781
......
30,353
34,814
316,602
......
-35,968 -17,349 +13,639 +25,379 -41,750 -13,813 r+- 124,603 -38,779 +51,106 -24,084 -11,166 +38,222
+70,039
......
-36,784 -17,637 -11,307 +14.524 -44,342 -21.320 r+- 108.419 -40,591 +19,367 -27,894 -13,420 +41.826
27,000
+816
6,315
29,504
7,711
28,388
30,308
29,775
27,830
31.675
11,149
28,094
+287 +24,946 +10,855
+2,592
+7,508 +16,184
+1,812 +31,739
-1,771 -24,801
30,565
20.137 -60,587
-8.597 -12,618 -16,370
29.108
+3,809
-29,160
......
-3.604
+99,198
......
33.989 -46,413
-51.050
+2,254
38,185
139.461 135,728 129.999 137,354 1J4.30J 129.397 1J4,649 142.988 118.726 134.802 138.672 124.832
1.600.91/
113,282 106,328 120,762 /10,551 104.964 100.401 107.842 11 },626 105.267 107.050 /09,810
91,403
U90.::S7
33,429
310.6]4
26.179
29,400
9.237
26,803
29.339
28.995
26,807
30.362
13,459
27.752
28.862
-39,805 -37.878 +18.490 + 13.364 -44.010 -21.323 +93. 939 -48.494 +54.635 -25.624 -35.189 +49.940
-}1.957
+3.289 -45,291 -26,558 +80.155 -49,479 +30,655 -27,450 -38.908 +47,446
-IOJ,'?:!:!
-39.638 -36,309
-167
-1,234
-},569 +19.724 + 10,075
+1.281
... No transactions.
(. 0) Less than $500,000.
Note: Details may not add to totals due to rounding.
29
+5.234 +13.784
+985 +23,980
+1.826
+3.719
+2.494
+81.365
Table 8. Trust Fund Impact on Budget Results and Investment Holdings as of September 30, 1998
[$ millions]
Securities held as Investments
Current Fiscal Year
Fiscal Year to Date
This Month
Classification
Beginning of
Receipts
Outlays
Excess
Receipts
Outlays
Excess
This Year
Trust receipts. outlays, and investments held:
Airport and airway . ..........................
Black lung disability ..........................
Federal disability insurance ...................
Federal employees life and health ...........
Federal employees retirement ................
Federal hOSpital insurance ...................
Federal old-age and survivors insurance ....
Federal supplementary medical insurance
Hazardous substance superfund .............
Highways .....................................
Military advances .............................
Military retirement ............................
Railroad retirement ...........................
Unemployment ................................
Veterans life insurance .......................
All other trust .................................
73.375
138.203
415.687
81.955
979
27.715
14.135
37.898
10.443
32.297
1.202
3.795
5.872
993
49.459
-878
43.600
137.298
329.769
76.272
1.437
24.480
14.010
31.142
8.396
23.466
1.204
7.003
2.184
-355
13.496
878
29.776
905
85.919
5.683
-458
3.235
125
6.756
2.046
8.831
-3
-3.208
15,914
909,333
265.271
753,523
265.271
155,810
29.715
15.914
644.063
488.253
155.810
138,810
517
116,502
517
22,308
1,114,934
1.123
1,200,708
1.123
-85,772
Federal fund receipts and outlays on the
basis of Table 4 & 5 .........................
138.294
115.986
22.308
1.113.812 1.199.583
-85.772
...........
2.976
2.976
Net budget receipts & outlays ...................
180,947
142,725
26.182
12.040
27.535
6.665
73
55
1.047
985
601
269
21
230
618
536
4.178
-303
3.706
11.259
27.611
6.242
167
2.618
1.347
2.620
678
1.766
131
757
-890
-467
165
303
22.476
781
-76
423
-93
-2.563
-300
-1.634
-78
-1.497
-110
-527
Total trust fund receipts and outlays and
investments held from Table 6-0 ..........
Less: Interfund transactions ....................
79,843
34.214
63,929
34.214
Trust fund receipts and outlays on the basis
of Tables 4 & 5 ...............................
45.629
Totsl Federal fund receipts and outlays
Less: Interfund transactions ..................
Less: Offsetting proprietary receipts
-272
68
4.342
38,222
8.056
638
62.955
36.454
36.454
1,721,421
1,651,383
This Month
Close of
This Month
6.360
9.635
8,550
63.562
24.825
430.839
116.621
567.445
34,464
5.877
22.341
76.886
25.346
438.177
116.952
653.016
39.578
5.228
27.665
76.996
25.641
460,629
118,250
653,282
39.502
5.296
17.926
126.022
19.239
61.923
13.724
8.983
135.390
21.723
72.144
13.837
9.619
133.843
21.811
70,641
13.722
9.601
1,502,226
1,645,195
1,855,888
70,039
such transactions is offset against bugdet outlays. In this table. Interfund receipts are Shown as an
adjustment to arrive at total receipts and outlays of trust funds respectively.
Note: Interfund receipts and outlays are transactions between Federal funds and trust funds
such as Federal payments and contributions. and interest and profits on investments in Federal
securities. They have no net effect on overall budget receipts and outlays since the receipts side of
Table 9.
I
Summary of Receipts by Source, and Outlays by Function of the U.S. Government, September 1998
and Other Periods
[$ millions]
This Month
Fiscal Year
To Date
Comparable Period
Prior Fiscal Year
Individual income taxes ........................................... .
Corporation income taxes ......................................... .
Social insurance and retirement receipts:
Employment and general retirement ............................ .
Unemployment insurance ....................................... .
Other retirement ................................................. .
Excise taxes ....................................................... .
Estate and gift taxes ............................................. .
Customs duties .................................................... .
Miscellaneous receipts ............................................. .
90.479
36.800
828.597
188.677
737.466
182.294
42.540
206
333
2.961
2.356
1.701
3.572
540.016
27,484
4.335
57.669
24.076
18.297
32.270
506.750
28.202
4.418
56.926
19.845
17.927
25.127
Total .........•.•.......•••......•••......•••.•......••..••...
180,947
1,721,421
1,578,955
National defense ................................................... .
Intemational affairs ................................................ .
General science. space. and technology ......................... .
Energy ............................................................. .
Natural resources and environment ............................... .
Agriculture ......................................................... .
Commerce and housing credit .................................... .
Transportation ..................................................... .
Community and regional development ............................ .
Education. training. employment and social services ............ .
Health .............................................................. .
Medicare ........................................................... .
Income security .................................................... .
Social security ..................................................... .
Veterans benefits and services ................................... .
Administration of justice ........................................... .
General government ............................................... .
Net interest .... . .................................................. .
Undistributed offsetting receipts .................................. .
24.748
1.123
1.824
892
2.115
2.780
8.147
3.997
1.115
4.455
11.293
15.758
17.309
31.797
3.432
1.675
2.199
15.976
-7.909
270.407
13.144
19.632
1.359
21.897
14.306
907
36.610
10.437
52.214
131.015
192.820
232.949
379.226
41.782
22.612
13.903
243.353
-47.194
270.473
15.228
17.174
1.483
21.369
9.032
-14.624
40.767
11.005
53.008
123.504
190.016
230.886
365.257
39.313
20.197
12.783
244.013
-49.973
Total ........................................................ .
142,725
1,651,383
1,600,911
Classification
NET RECEIPTS
NET OUTLAYS
... No transactions.
Note: Details may not adj to totals due to rounding.
30
Explanatory Notes
1. Flow of Data Into Monthly Treasury Statement
The Monthly Treasury Statement (MTS) is assembled from data in the
central accounting system. The major sources of data include monthly
accounting reports by Federal entities and disbursing officers. and daily
reports from the Federal Reserve banks. These reports detail accounting
transactions affecting receipts and outlays of the Federal Government
and off-budget Federal entities, and their related effect on the assets and
liabilities of the U.S. Government. Information is presented in the MTS on
a modified cash basis.
Outlays are stated net of offsetting collections (including receipts of
revolving and management funds) and of refunds. Interest on the public
debt (public issues) is recognized on the accrual basis. Federal credit
programs subject to the Federal Credit Reform Act of 1990 use the cash
basis of accounting and are divided into two components. The portion of
the credit activities that involve a cost to the Government (mainly
subsidies) is included within the budget program accounts. The remaining
portion of the credit activities are in non-budget financing accounts.
Outlays of off-budget Federal entities are excluded by law from budget
totals. However. they are shown separately and combined with the onbudget outlays to display total Federal outlays.
2. Notes on Receipts
Receipts included in the report are classified into the following major
categories: (1) budget receipts and (2) offsetting collections (also called
applicable receipts). Budget receipts are collections from the public that
result from the exercise of the Government's sovereign or governmental
powers, excluding receipts offset against outlays. These collections, also
called governrnental receipts, consist mainly of tax receipts (including
social insurance taxes), receipts from court fines, certain licenses, and
deposits of earnings by the Federal Reserve System. Refunds of receipts
are treated as deductions from gross receipts.
Offsetting collections are from other Government accounts or the
public that are of a business-type or market-oriented nature. They are
classified into two major categories: (1) offsetting collections credited to
appropriations or fund accounts. and (2) offsetting receipts (i.e., amounts
deposited in receipt accounts). Collections credited to appropriation or
fund accounts normally can be used without appropriation action by
Congress. These occur in two instances: (1) when authorized by law,
amounts collected for materials or services are treated as reimbursements to appropriations and (2) in the three types of revolving funds
(public enterprise, intragovernmental, and trust); collections are netted
against spending, and outlays are reported as the net amount.
Offsetting receipts in receipt accounts cannot be used without being
appropriated. They are subdivided into two categories: (1) proprietary
receipts-these collections are from the public and they are offset against
outlays by agency and by function. and (2) intragovernrnental fundsthese are payments into receipt accounts from Governmental appropriation or funds accounts. They finance operations within and between
Government agencies and are credited with collections from other
Govemment accounts. The transactions may be intrabudgetary when the
payment and receipt both occur within the budget or from receipts from
off-budget Federal entities in those cases where payment is made by a
Federal entity whose budget authority and outlays are excluded from the
budget totals.
Intrabudgetary transactions are subdivided into three categories:
(1) interfund transactions, where the payments are from one fund group
(either Federal funds or trust funds) to a receipt account in the other fund
group; (2) Federal intrafund transactions, where the payments and
receipts both occur within the Federal fund group; and (3) trust intrafund
transactions, where the payments and receipts both occur within the trust
fund group.
Offsetting receipts are generally deducted from budget authority and
outlays by function, by subfunction, or by agency. There are four types of
receipts, however. that are deducted from budget totals as undistributed
offsetting receipts. They are: (1) agencies' payments (including payments
by off-budget Federal entities) as employers into employees retirement
funds. (2) interest received by trust funds. (3) rents and royalties on the
Outer Continental Shelf lands. and (4) other interest (Le .. interest collected
on Outer Continental Shelf money in deposit funds when such money is
transferred into the budget).
4. Processing
The data on payments and collections are reported by account symbol
into the central accounting system. In turn, the data are extracted from
this system for use in the preparation of the MTS.
There are two major checks which are conducted to assure the
consistency of the data reported:
1. Verification of payment data. The monthly payment activity reported by
Federal entities on their Statements of Transactions is compared to the
payment activity of Federal entities as reported by disbursing officers.
2. Verification of collection data. Reported collections appearing on
Statements of Transactions are compared to deposits as reported by
Federal Reserve banks.
5. Other Sources of Information About Federal Government
Financial Activities
• A Glossary of Terms Used in the Federal Budget Process, January
1993 (Available from the U.S. General Accounting Office, P.O. Box 6015,
Gaithersburg, Md. 20877). This glossary provides a basic reference
document of standardized definitions of terms used by the Federal
Government in the budgetmaking process.
• Daily Treasury Statement (Available from GPO, Washington, D.C.
20402, on a subscription basis only and on the Internet at
http://www.fms.treas.govl). The Daily Treasury Statement is published
each working day of the Federal Government and provides data on the
cash and debt operations of the Treasury.
• Monthly Statement of the Public Debt of the United States
(Available from GPO, Washington, D.C. 20402 on a subscription basis
only and on the Internet at http://www.publicdebUreas.govlopdlopd.htm).
This publication provides detailed information concerning the public debt.
• Treasury Bulletin (Available from GPO, WaShington, D.C. 20402, by
subscription
or
single
copy
and
on
the
Internet
at
http://www.fms.treas.gov/). Quarterly. Contains a mix of narrative. tables.
and charts on Treasury issues, Federal financial operations, international
statistiCS, and special reports.
• Budget of the United States Government, Fiscal Year 19 _
(Available from GPO, Washington. D.C. 20402 and on the Internet at
http://access.gpo.govl).This publication is a single volume which provides
budget information and contains:
-Budget of the United States Government, FY 19 _
-Appendix, The Budget of the United States Government, FY 19_
-Analytical Perspectives
-Historical Tables
-Citizens Guide to the Federal Budget
3. Notes on Outlays
Outlays are generally accounted for on the basis of checks issued,
electronic funds transferred, or cash payments made. Certain outlays do
not require issuance of cash or checks. An example is charges made
against appropriations for that part of employees' salaries withheld for
taxes or savings bond allotments - these are counted as payments to
the employee and credits for whatever purpose the money was Withheld.
• United States Government Annual Report and Appendix (Available
from FinanCial Management Service, U.S. Department of the Treasury,
Washington. D.C. 20227). This annual report represents budgetary
results at the summary level. The appendix presents the individual receipt
and appropriation accounts at the detail level.
31
Scheduled Release
The release date for the October 1998 Statement
will be 2:00 pm EST November 23, 1998.
For sale by the Superintendent of Documents, U.S. Govemment Printing
Office, Washington, D.C. 20402 (202) 512·1800. The subscription price is
$38.00 per year (domestic), $47.00 per year (foreign).
No single copies are sold.
The Monthly Treasury Statement is now available on the Department of Commerce's Economic Bulletin Board.
For information call (202) 482-1986.
Intemet service subscribers can access the current issue of the Monthly Treasury Statement through the
Financial Management Service's horne page:
http://www.fms.treas.gov/
D EPA R T 1\1 E N T
0 F
THE
T REA SUR Y
omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASlDNGTON, D.C .• 20220 • (202) 622.2960
EMBARGOED UNTIL 9PM EST
Remarks as Prepared for Delivery
October 27,1998
TREASURY SECRETARY ROBERT E. RUBIN
UNITED NATIONS ASSOCIATION DINNER
NEW YORK, NEW YORK
It is a pleasure to be with you this evening. Let me start by expressing my deep gratitude
for the Global Leadership Award. It is especially rewarding to receive an award from the United
Nations Association, a group dedicated to U.S. leadership and engagement in international affairs.
Moreover, by honoring me, you honor President's Clinton entire international economic policy
team, and most importantly, you honor the President himself, who from the first moment he
stepped into the Oval Office in January 1993 he has acted on a deeply held views that we live in a
global economy, where our economic well-being is inextricably linked to the rest of the world.
But as we speak tonight, the global economy facing what may be, in many respects, its
most serious crisis of the past fifty years. This crisis presents two challenges to the international
community. The first challenge is to do all that is sensible to help the affected countries return to
stability and growth and to limit contagion. A second challenge, one that must be pursued
simultaneously, is to build a new architecture for the international financial system so that we can
better prevent crises in the future, or better manage them when they do occur.
At the heart of these challenges is the question of how to reconcile the sovereignty of
nations on the one hand with the economic interdependence of all nations and the transnational
character and needs of the global economy on the other hand. A couple of weeks ago, I had
dinner with Kofi Annan and several of his United Nations colleagues. We spoke of how the
United Nations and its supporters have long understood this quandary, and how global
interdependence has long underscored the activities of the United Nations in all its activities, most
notably promoting peace but also protecting the environment, dealing with refugees, and
combating disease. Now, the tension between sovereignty and the need for international
cooperation has been heightened as a result of the development of a global economy and global
financial markets.
Today, the importance to all nations of each nation pursuing sound economic policies is
greater than ever, The global capital markets reward countries that pursue sound policies, and
RR2781
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punish those that do not, far more than used to be the case, and the failures of one nation can now
affect others to a far greater degree than in the past. Moreover. the international community must
devise better ways to deal with the overarching issues of the global economy better.
With respect to dealing with the immediate crisis. the problems developed over many
years, there are no easy answers, and working our way through it will involve multiple difficulties
and will take time. But, I believe we are on the right track and the key is for each nation and each
international institution is to do its part. Moreover, in part stemming from the increased energy
and shared concern around this crisis coming out of the various meetings in Washington during
the annual fall meetings of the IMF and World Bank, there have been a number of significant
developments in the past few weeks, including Congress providing IMF funding, passage of
Japanese banking legislation, and greater emphasis on promoting growth in the industrial nations.
At the same time as the international community deals with the current crisis, it is also
intensely focused on the complex issues of global financial market architecture. In addition to
issues like transparency, where real progress has been made in developing proposals, the
international community will have to deal with extraordinarily complex issues around exchange
rate regimes, financial system issues in both lending and borrowing countries, overarching
surveillance of national financial system regulators, countries that choose to provide safe havens
from regulation, and making lenders and creditors bear more of the consequences of the risks they
took when crisis hits and so part of the solution, something that is difficult since there is no
international bankruptcy law and the debtors are often sovereign nations.
As the international community works its way through these issues, in my view. we must
not lose sight of a very important point: the market based system has produced enormous
benefits for tens of millions of people around the globe. However, we must greatly reduce the
susceptibility to financial crisis, and we must do a better job of seeing that the benefits are broadly
shared. This latter point is why it is critically important to provide a strong social safety net and
humanitarian aid to those in need, and to promote growth in developing countries. As you well
know, these are two areas where the United Nations has long played a key role, and must
continue to do so going forward.
I also believe that Africa deserves special focus by the international community. This past
summer I visited a number of countries in Sub-Saharan Africa, and I observed first hand many of
the chaIlenges--and they are great-- and the opportunities--also great-- facing countries in that
region. I left intrigued with Africa, and impressed by many of the people I met and by the untold
story of economic reform and success in a number of countries. Helping the nations of Africa
attain better education, better health care, stronger legal systems. good governance regimes and
the other underpinnings for economic success is not only the right thing to do, it is in the
enlightened self-interest of the industrial nations. An Africa that succeeds economically, that is at
peace internally. and that protects its environment, will contribute to a better and more
prosperous world for all of us.
2
To return to the global economy, meeting all of these challenges-- addressing the
immediate crisis, building the new architecture, and promoting growth in developing countries -requires difficult political decisions in both the industrial and the developing nations and in the
international institutions. That, in tum, depends on wise and strong leadership on what are often
complicated and politically difficult issues. We have seen that kind of leadership in the example of
Kim Dae-Jung of Korea, who, like Nelson Mandela, spent years in prison for his beliefs, and who
is now leading his nation through a period of difficult economic reform. Although there are still
great challenges ahead, Korea's short-term interest rates have fallen from 25% to 7% and the
currency has substantially strengthened. And we have seen that kind ofleadership in the example
of people who serve the United Nations, such as Maitre Blondin-Beye, who drove the Lusaka
peace process for Angola, and whose untimely death is sorely felt.
Providing strong leadership must be coupled with generating broad public and political
support for politically difficult policies, which, in tum, requires broadening public understanding
and helping people see that these policies are in their interest. Kofi Annan has set an example for
all of us through his activity all over the globe, and this is a critical function of the United Nations
Association in the United States, where broad based support for international policy continues to
present a very serious challenge.
After a year-long debate, Congress has now approved funding for the International
Monetary Fund. This is critical to our capacity to address the current financial crisis, but much
remains to be done. Congress has not passed a bill that the President can sign to pay our arrears
to the UN. We also lack the authority to negotiate new trade agreements, even though expanding
trade is very much in our interest, and protectionist pressure seems to be increasing in our
country. After almost six years in government, I have become deeply concerned that public
support for forward-looking international economic policies may be waning just at a time when
our country's economic, national security and geopolitical interests require the opposite.
In recent years, we have seen both an erosion of the traditional bipartisan base of support
for international economic engagement and, at the same time, a re-ignition of one historical strain
in American thought, a rejection of the outside world. This has occurred for at least two reasons:
anxiety brought by the rapidity of change in this era of the global economy and dramatic
technological developments; and the end of the Cold War, which caused the foreign policy
consensus to lose its centerpiece -- the effort to contain Communist expansionism.
The history of this century has clearly demonstrated the folly of our turning inward. For
our country to achieve the opportunities of the global economy, and not turn inward, we must
build greater public understanding of the benefits to our economic well being of a market based
global economy and of strong U.S. leadership in that global economy. The United Nations
Association has long been at the forefront of efforts to build support for U.S. international
engagement, but all of us -- public sector officials. the business community, foreign policy experts
-- must redouble our efforts, especially given the greatly heightened importance of strong United
States international engagement in an era of a far more interdependent global economy. Our
3
success in meeting this critical challenge is imperative as we approach a new century. Thank you
very much.
-30-
4
NEWS
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASlllNGTON, D.C .• 20220 • (202) 622-2960
EMBARGO TIME WILL BE SET
October 28, 1998
CONTACT: John Longbrake
TELEPHONE: (202)622-2690
REMARKS BY GARY GENSLER
ASSISTANT SECRETARY FOR FINANCIAL MARKETS
NOVEMBER 1998 TREASURY QUARTERLY REFUNDING
Good morning. I am pleased to be with you today to announce the November quarterly
refunding. I will also take this opportunity to discuss some other debt management matters,
including uniform-price auctions, and our continuing efforts to encourage saving and to
broaden access to our securities.
We are privileged to be here at a remarkable turning point in our nation's financial
history. In the last fiscal year, Treasury debt managers made the transition from financing a
deficit, to managing a surplus. We paid down $110 billion in marketable debt in FY 1998.
This compares to net borrowing of $187 billion just three years ago. Our privately held
marketable debt outstanding has declined to $2.857 trillion, compared to a peak of $3.010
trillion in September 1996.
The fiscal discipline imposed during the Clinton Administration has been critical to
achieving this success. The net pay-down attributable to the surplus, combined with our
financing and other accounts, and net of changes in our cash balance, accounted for
approximately $55 billion of the pay-down. The rest of the pay-down was financed by our
issuance of about $55 billion in non-marketable securities, primarily the State and Local
Government Series (or "SLGS"). SLGS are a very cost-efficient form of financing for us.
The $110 billion reduction in privately held marketable debt was a significant accomplishment.
Uniform- Price Auction
Before I turn to the terms of the quarterly refunding, I would like to announce that
Treasury has decided to expand the use of uniform-price auctions to the sale of all marketable
Treasury securities. This will include all bills, notes and bonds. We will begin implementing
this change with the cash management bill to be auctioned on Monday. The Borrowing
Advisory Committee was strongly in favor of adopting this change.
RR-2782
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
2
We have been using the uniform-price auction technique for 2- and 5-year note auctions
since September 1992. For our bills and other coupon securities, we have been using a
multiple-price approach. Based on our experience, we believe that there are several
advantages to using uniform-price auctions: First, we have found that single-price auctions
result in a broader distribution of auction awards. Second, the shift to uniform-price auctions
will bring consistency to our auction procedures and techniques. And third, we have found
that, consistent with auction theory, auction participants may bid more aggressively in
uniform-price auctions. This is because successful bidders in uniform-price auctions are able
to avoid the "winner's curse." They pay only the price of the lowest accepted bid, rather than
the actual price they bid, as in the multiple-price approach. Thus, we believe that using
uniform-price auctions will promote improved efficiency in the markets, and will reduce the
costs of financing the Federal debt.
Terms of the Noyember Refunding
I will tum now to the terms of the quarterly refunding. We are offering $38 billion
of notes and bonds to refund $27 billion of privately held notes and bonds maturing on
November 15, and to raise approximately $11 billion of cash.
The securities are:
•
First, a 5-year note in the amount of $16.0 billion, maturing on November 15,
2003. This note is scheduled to be auctioned on a yield basis at 1:00 p.m.
Eastern time on Tuesday, November 3.
•
Second, a 1O-year note in the amount of $12.0, maturing on November 15,
2008. This note is scheduled to be auctioned on a yield basis, at 1:00 p.m.
Eastern time on Wednesday, November 4.
•
Third, a 3D-year bond in the amount of $10.0 billion, maturing on November
15,2028. This bond is scheduled to be auctioned on a yield basis at 1:00 p.m.
Eastern time on Thursday, November 5.
We are also announcing a cash management bill in the amount of $25 billion, to be
auctioned on Monday, November 2, at 11 :30 Eastern time, and to be settled on November 3.
The bills will mature on January 21.
As announced on Monday, October 26, we estimate that our net market borrowing will
total $30 billion in the October- December quarter. This is based on a conservative estimate
that there will be no net new issuances of SLGS, which is a significant change for us. The
borrowing estimate also assumes a $15 billion cash balance at the end of December.
Including the securities we are announcing today, we have raised $10 billion of cash from
sales of marketable securities. See the attachment for details.
Looking forward to the January-March quarter, we estimate that the Treasury will
borrow between $15 and $20 billion in marketable securities during that quarter, assuming a
$20 billion cash balance on March 31.
3
Sayings Bonds
Next, I would like to say a few words about our continuing efforts to encourage
savings, and to broaden access to U.S. savings bonds and marketable securities for all
investors. I will start with an update on our savings bond program.
Today, we are announcing EasySaver, a new, convenient way to make regular
investments in our Series I and Series EE savings bonds. Beginning Monday, November 2, an
investor will be able make regular and automatic investments in savings bonds by authorizing
direct transactions between the Treasury and the investor's bank. By completing a simple
order form, the investor can authorize Treasury to charge the investor's bank account for the
purchase of savings bonds, on any months and days specified by the investor. The only
condition is that the investor must purchase at least two bonds per year per recipient - either
for the investor or for a family member. The order form may be requested on the Public Debt
website, or by a toll-free telephone call. See the separate EasySaver press release for details.
We are very pleased to have with us today, John Fickewirth, who heads up the savings
bond volunteer sales effort in Ventura County, CA. John is a small businessman who wanted
to find a way to make it easy to enjoy the benefits of regular savings. He came to us with the
basic idea that evolved into the EasySaver program. We would like to thank lohn for taking
the initiative and bringing his idea to our attention.
I am also happy to report that the new inflation-indexed Series I savings bonds got off
to a strong start. As many of you may recall, the new I Bonds went on sale on September 1.
In the first month, sales hit $17.4 million, and we have sold $18.6 million more through
October 22.
We are pleased with these initial results. The I Bond is a new type of investment for
small investors - it is an affordable Treasury security that protects the purchasing power of
their principal and provides an attractive return over and above inflation. We look forward to
continued growth in I Bond sales, especially as more investors learn about these new
securities.
Marketables for Smaller Inyestors
In addition to making changes to our savings bond program, we have recently taken
several steps to broaden investor access to our marketable securities. In August, we lowered
the minimum purchase amount for all marketable securities to $1,000. We are pleased to
report that in September, we received over 3,000 tenders for amounts below the old minimum
levels for bills and notes in Treasury DIRECT, accounting for 14 percent of all Treasury
DIRECT tenders.
4
On September 14, we modified Treasury DIRECT to allow investors to purchase
marketable securities over the Internet at the Bureau of the Public Debt's website. Since the
program's inception, more than 1,3(){) Treasury DIRECT customers have bought $31 million
in bills and notes over the Internet.
Finally, our new telephone purchase program for Treasury DIRECT investors, which
began on October 5, has also been successful. Treasury DIRECT customers are now able to
put their tenders into the auction by touch-tone telephone. In less than three weeks, we
received 1, 7(){) telephone tenders for $65 million of bills and 2-year notes.
Thank you for your attention. The next quarterly refunding will be announced on
February 3, 1999.
5
CASH RAISED
Including the securities that we are announcing today, we have raised $10 billion in
sales of marketable securities.
This was accomplished as follows:
•
raised $8.4 billion from the 30-year inflation-indexed notes issued on October
15;
•
paid down $10.3 billion in the 7-year notes maturing October 15;
•
paid down $3.9 billion from the 2-year notes to be issued November 2;
•
will pay down a total of $33.9 billion in the 5-year notes maturing October 31,
November 30, and December 31;
•
raised $15.8 billion in the regular weekly bills including those to be issued
tomorrow;
•
paid down $2.1 billion in the 52-week bills issued October 15;
•
raised $11.0 billion with the notes and bonds announced today; and
•
raised $25 billion with 79-day cash management bills announced today.
-30-
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
October 28, 1998
Contact: Peter Hollenbach
(202)219-3302
TREASURY INTRODUCES NEW EASYSAVER PLAN FOR SA VINGS BONDS
Treasury is making it easier for Americans to enjoy the benefits of regular savings with its new EasySaver Plan for
U.S. Savings Bonds. Beginning Monday, November 2, 1998, millions of Americans who don't have access to
payroll savings plans wilL for the first time, be able to buy bonds automatically for themselves or their families. All
an EasySaver customer needs to do is to complete a simple order form authorizing Treasury to charge their bank
account for the price of the bond.
Investors choose the dates to charge their account for their savings bond purchases. The only condition is that
investors must purchase at least two bonds each year. Customers can purchase the popular Series EE bond or the
new inflation-indexed I Bond.
"EasySaver is the latest innovation that we have introduced to encourage savings and to broaden access to Treasury
securities," Assistant Secretary Gary Gensler said. "With EasySaver, we have simplified the process for 120 million
more Americans to buy savings bond"s on a regular basis."
EasySaver was developed in response to consumer research showing that nearly one in five respondents were
interested in buying bonds regularly through authorized debits to their bank accounts. Employees of smaller
businesses were particularly interested in an automatic purchase plan like EasySaver as it gives them access to a
regular saving plan like the 7 million Americans who buy bonds through payroll savings plans at work.
To enroll, a purchaser simply completes the order form which is available at the Bureau of the Public Debt's website
at www.easysaver.gov or by calling 1-877-811-SAVE, and mails it to the Federal Reserve Bank of Richmond. The
Richmond Federal Reserve is operating EasySaver for Public Debt.
In about four weeks, customers receive written confirmation that their EasySaver accounts are active, and they will
begin receiving bonds as requested. Bonds are then issued as the customer requested. Customers don't need to do
anything else and bonds will be issued automatically until they cancel the enrollment.
Series EE bonds, which sell for half their face value, will be available through EasySaver in $50, $75. $100, S200,
$500 and $1,000 denominations. Series I, inflation-indexed, savings bonds, which sell for face value, \vill be
available in $50, $75, $100, $500 and $1,000 denominations. When the new $200 denomination I Bond is
introduced in May 1999, it will be available through EasySavcr.
RR-2783
000
http://www.publicdebt.treas.go v
Market Research Results: The U.S. Savings Bonds EasySa ver Plan
Sources: Savings Bonds marketing survey by HayGroup, April-June 1997, a representative
sample of U.S. adults age 18 and older; with Census Bureau and other data sources ..
•
18% of all respondents chose the EasySaver Plan as a purchase I1?ethod that they were likely or
very likely to use.
•
18% of small-business employees chose the EasySaver Plan, a level of interest identical to that
among the general population.
Small-business employees were significantly more likely than the general population to cite
unavailability of a payroll savings plan as their reason for choosing EasySaver.
Small-business employees are significantly less likely to have access to company-provided
pension and 401(k) savings plans.
•
28% of respondents aged 25-34 showed an interest in EasySaver.
24 % of persons for whom ease of saving is a primary savings product quality expressed
interest. Both of these figures are significantly higher than for the general population.
•
Regular saving and convenience were the primary attractions of the new plan.
•
121 million adult Americans lack access to a regular method of purchasing savings bonds.
56 million work for small businesses without payroll savings plans.
8 million are self-employed.
33 million are retired.
24 million work for larger employers (250+ employees) without payroll savings plans.
Profile of Current Savings Bond Purchasers
15 % of the general population currently buy savings bonds. Here is how various U.S. population
segments compare with that overall figure. Differences are not statistically significant except as noted.
•
Americans at all income levels buy savings
bonds. Higher-income groups are slightly
more likely to buy bonds, but only the lowestincome group and those earning $50,00075,000 are significantly different.
F\:rcent buying savIngs bona;
o
Nalional average
10
20
15
.~_ _ _
25
15%
Under S 10,000
$10,000-20,000
10%
2' 520,000-30,000
10%
~
~
$30,000-40,000
$40.000·50.000
550,000-75,000
575,000-100,000
'J.S 100,000+
13%
18%
21%
•
Savings bond
ownership also
cuts across all but
the lowest
education level:
Rlrcent buying savings
National average
iii
~
ill
•
•
25
25
15%
Nati anal average
15%
25-34
6%
19-24
H gh Schooi/GED
6,
16%
Some college
A5s:ldate's Degree
«
16%
17%
55-64
15%
65+
17%
Employment affects the likelihood of buying
bonds in only a few instances, such as
availability of a payroll savings plan ...
17%
45-54
16%
Graduate degree
13%
35-44
14%
Bachelo(s Degree
Only the youngest
Americans are
significantly less
likely to buy
savings bonds:
20
7%
Less than hi gh s:hool
.5
Rlrcent buying savings I:x:lrds
bonds
15
10
5
0
N3tional average
i~I
,=r:!
Payroll pan availalle
pan nct availal)e •
.. .employment
with a large
company, and
membership in
the military
service:
F\;lrcent buying savings bonds
Rlrcent buying savings bonds
0
5
15
10
National average
<25 employees
CI>
.1:;
III
1:-
§
25-49
5()'99
100·199
200-499
20
25
0
15%
10·
National average
10%
i
110;0
13%
15%
18%
500+
•
12%
22%
20
17%
12%
Pan·time civilian
Military
~
Not employed
40
15%
Full·time civilian
~
30
33%
10%
Retired
13%
Student
Persons planning for major financial goals are also
more likely to buy savings bonds:
Percent buying savings bonds
o
National average
c;;
Education
g,
Travel/vacation
5
10
15
20
15%
%
VI
.~ Other major purchare
>
'"
III
>-
~
it
Retirement
Financial recurity
Emergencies
Special event
Home purchare
25
18%
17%
17%
16%
QUESTIONS AND ANSWERS
EasySaver: The New, Easy Way to Buy U.S. Savings Bonds
1. What is the U.S. Savings Bonds EasySaver Plan?
EasySaver is a new, easy way to buy U.S. Savings Bonds
on a regular, recurring basis. EasySavcr is simple and
convenient. The investor submits an enrollment form to
the U.S. Treasury Department to select the amount and
frequency of the bond purchases. After that, savings
bonds purchases follow the schedule provided by the
customer. The bonds are paid for by an electronic
transfer of funds from the customer's bank account via an
Automated Clearing House (ACH) debit. Approximately
two weeks later, the customer receives the bond in the
mail.
2. Why is this new way to buy savings bonds being
introduced?
There are 120 million Americans who have no convenient
way of buying savings bonds in a systematic, recurring
manner. This is a much larger number than the 45 million
\vho have access through their jobs to payroll savings
plans to purchase savings bonds. The Treasury
Department is offering EasySaver to provide more
Americans a convenient, simple way to save regularly.
EasySaver allows customers to buy savings bonds for
personal savings or gifts in the amounts they want and on
the schedule they choose.
3. How does EasySaver work?
There are no setup or maintenance fees for EasySaver.
There is an enrollment form that customers submit before
beginning to purchase savings bonds through Easy Saver.
This form is available by calling toll free, 877-81 I -SA VE.
The form can also be downloaded from the website,
www.savingsbonds.gov, or by writing: u.s. Savings
Bonds EasySaver, P.O. Box 802, Parkersburg, WV
26102-0802. A photocopy of the fonn can be submitted
but it must have an original signature. Treasury debits the
customer's account on the day specified and mails the
bond(s) to the customer or to the person designated, such
as a child or grandchild.
The system and operations for EasySaver will be
maintained for Treasury by the Federal Reserve (FRB)
Bank of Richmond, one of the five processing sites which
offer savings bonds services to financial institutions. The
Richmond FRB, as the Treasury DepartmeTlt fiscal agent,
will work directly with EasySaver customers to establish
maintain and service their accounts.
'
An EasySaver account may be canceled at any time and
there is no charge. To cancel call the toll free number
shown on the confirmation notice or send a written
request to U.S. Savings Bonds EasySaver Plan, PO Box
85003, Richmond, VA 23285-5003.
4. How many enrollment forms are needed?
One enrollment fonn is needed for each different bond
owner. Bonds may be registered with either a single
name or with two names on them; the first being the
owner and the second either a coowner or a beneficiary.
If customers have enrollment questions on EasySaver
they can call 1-804-697-8959 between 8:00 a.m. and 5:00
p.m. Eastern Time. When calls are made outside business
hours, leave a recorded message and the call will be
returned the next business day.
5. When can the first EasySaver purchase be made?
After completing and mailing an EasySaver enrollment
form, allow four weeks before the first debit date to
purchase a bond. This allows time to establish the
account and resolve any ACH debit processing problems.
Customers will receive a written notice that their account
has been established.
6. What is the minimum amount that can be deducted
from a bank account when purchasing savings bonds
through EasySaver?
The minimum amount is a debit of $25 at a time, with at
least two account debits a year. Each debit must be the
full purchase price of tile savings bond. Remember Series
EE bonds are purchased for half their face value and I
Bonds, which are inflation-indexed, are purchased for
their full face value.
Series EE and I Bonds are available to EasySa\er
cllstomers in $50, $75, $100, $200.(thi5 I Bond
denomination available in 5/99). $500, and $ 1.000
denominations ..
If there is not enough money in a customer's account to
debit the full price of the savings bond specified, no
deduction will be made and no bond will be purchased or
issued.
older Americans may not want to buy bonds for
themselves, but still consider them a good' long term
investment for younger members of their families.
If there are still insufficient funds on the next debit date
specified on the enrollment fonn, the EasySaver account
will be closed and the customer notified.
10. What should be done if a savings bond does not
arrive?
7. Who can participate in EasySaver?
EasySaver customers need to have an existing account in
a bank, credit union or other financial institution that can
be debited by ACH (Automated Clearing House), in
addition to the usual criteria for savings bonds purchases
(U.S. residency and a Social Security number). It would
also be a good idea for customers to contact their bank or
credit union to verify that it will process electronic debits
for the type of accounts you intent to use for EasySaver
purchases.
8. Would EasySaver be a good savings plan for small
business employees?
Yes. Employees of small businesses are significantly less
likely to have access to automatic methods of saving, such
as payroll savings for savings bonds ~r methods of saving
for retirement. Research has shown that small business
employees have expressed interest in buying savings
bonds through EasySaver as a way to invest in their
future.
9. Could retired and older Americans buy savings
bonds through EasySaver?
Yes. Many retirees and older Americans are well
infonned about savings bonds having purchased them in
the past through payroll deduction plans at their jobs or as
gifts from banks or other financial institutions for their
grandchildren. Few retirees have access to the automatic
purchasing plans for bonds they had at their jobs. Also,
If a customer has not received the savings bond within 30
days of the debit date, call the toll free, account service
number within six months of the debit date which is
provided when the account is opened. After six months,
write to the Bureau of the Public Debt, Parkersburg, WV
26106-1328.
11. How are changes made to EasySaver accounts?
change banks? accounts? address?
For all changes, call the toll free number listed on your
account confirmation notice to initiate these changes.
Customers may be asked to complete a new enrollment
form indicating their changes.
12. Where can questions on EasySaver and savings
bonds be directed?
For general questions on EasySaver call, 1-804-697-8959.
For inquiries about a customers Ea.sySaver account, call
the toll free number on your account confirmation form.
For answers to general questions on savings bonds,
customers can visit Public Debt's website at
www.publicdebt.treas.gov; telephone the nearest financial
institution or nearest Federal Reserve Bank (FRB) that
processes savings bonds (Buffalo FRB: 716-849-5165;
Kansas city FRB: 816-881-2919; Minneapolis FRB: 612204-7000; Pittsburgh FRB: 412-261-7800; Richmond
FRB: 804-697-8370); or write to the Savings Bond
Operations Office, Parkersburg, WV 26106-1328.
DEPARTMENT
OF
THE
TREASURY
1789
OmCE OF PUBliC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. _ 20220 - (202) 622.2960
FOR RELEASE WHEN AUTHORIZED AT PRESS CONFERENCE
October 28, 1998
CONTACT:
Office of Financing
202/219-3350
TREASURY NOVEMBER QUARTERLY FINANCING
The Treasury will auction $16,000 million of 5-year notes, $12,000 million
of 10-year notes, and $10,000 million of 3D-year bonds to refund $26,996 million
of publicly held securities maturing November 15, 1998, and to raise about $11,004
million of new cash.
The Treasury will also auction a 79-day cash management bill.
Details about the cash management bill are given in a separate announcement.
In addition to the public holdings, Government accounts and Federal Reserve
Banks, for their own accounts, hold $3,730 million of the maturing securities, which
may be refunded by issuing additional amounts of the new securities.
The maturing securities held by the public include $2,520 million held by
Federal Reserve Banks as agents for foreign and international monetary authorities.
Amounts bid for these accounts by Federal Reserve Banks will be added to the offering.
All of the auctions being announced today--the 79-day cash management bill, the
5-year and le-year notes, and the 30-year bond--will be conducted in the single-price
auction format. All competitive and noncompetitive awards will be at the highest yield or
discount rate, as applicable, of accepted competitive tenders.
Effective with this
offering, all Treasury marketable security auctions will be conducted in the single-price
auction format.
The S-year and lO-year notes and the 30-year bond being offered today are eligible
for the STRIPS program.
Tenders will be received at Federal Reserve Banks and Branches and at the Bureau
of the Public Debt, Washington, D. C.
This offering of Treasury securities is governed
by the terms and conditions set forth in the Uniform Offering Circular (31 CFR Part 356,
as amended) for the sale and issue by the Treasury to the public of marketable Treasury
bills, notes, and bonds.
Details about the notes and bond are given in the attached offering highlights.
000
:=::=:-2781.
Attachment
For press releases, speeche.s, puhlic schedules and official hio/iraphies, call our 24-Jrour fax li"e al (202) 622-1040
HIGHLIGHTS OF TREASURY OFFERINGS TO THE PUBLIC
NOVEMBER 1998 QUARTERLY FINANCING
October 28, 199
Offering Amount '"
. . . . . . . . . . . . . . . . $16,000 million
Description of Offering:
Term and type of security . . . . . . . . .
Series . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CUSIP number . . . . . . . . • . . . . . . . . . . . . .
Auction date . • . . . . . . • . . . . . . . . . . . . .
Issue date . . . . . . . . . . . . . . . . . . . . . . . .
Dated date . . . • . . . . . . . • . . . . . . . . . . . .
Maturity date . . . . . . . . . . . . . . . • . . . . .
Interest rate . . • . . . . . . . . . . . . . . . . . .
5-year notes
K-2003
912827 4U 3
November 3, 1998
November 16, 1998
November 15, 1998
November 15, 2003
Determined based on the highest
accepted competitive bid
Yield •.••••.........•..........•.. Determined at auction
Interest payment dates . . . . . . . . . . . . May 15 and November 15
Minimum bid amount and multiples .. $1,000
Accrued interest payable
by investor ...•..........•••.•.. Determined at auction
Premium or discount .•........•.•.. Determined at auction
STRIPS Information:
Minimum amount required ........... Determined at auction
Corpus CUSIP number . . . . . . . . . . . . . . . 912820 DJ 3
Due date(s) and CUSIP number(s)
for additional TINT(s) ......... Not applicable
$12,000 million
$10,000 million
10-year notes
D-2008
912827 4V 1
November 4, 1998
November 16, 1998
November 15, 1998
November 15, 2008
Determined based on the highest
accepted competitive bid
Determined at auction
May 15 and November 15
$1,000
30-year bonds
Bonds of November 2028
912810 FF 0
November 5, 1998
November 16, 1998
November 15, 1998
November 15, 2028
Determined based on the highest
accepted competitive bid
Determined at auction
May 15 and November 15
$1,000
Determined at auction
Determined at auction
Determined at auction
Determined at auction
"Determined at auction
912820 DK
Determined at auction
912803 BV 4
May 15, 2028--912833 WQ 9
November 15, 2028--912833 WR 7
°
Not applicable
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids •....... Accepted in full up to $5,000,000 at the highest accepted yield.
Competitive bids ........... (1) Must be expressed as a yield with three decimals, e.g., 7.123\.
(2) Net long position for each bidder must be reported when the sum of the total bid amount,
at all yields, and the net long position is $2 billion or greater.
(3) Net long position must be determined as of one half-hour prior to the closing time
for receipt of competitive tenders.
Maximum Recognized Bid
at a Single Yield .......... 35\ of public offering
Maximum Award . . . . . . . . . . . . . . . . 35\ of public offering
Receipt of Tenders:
Noncompetitive tenders ..... Prior to 12:00 noon Eastern Standard time on auction day
Competitive tenders ........ Prior to 1:00 p.m. Eastern Standard time on auction day
Payment Terms . . . . . . . . . . . . . . . . By charge to a funds account at a Federal Reserve Bank on issue date, or payment of full par amount
with tender. Treasury Direct customers can use the Pay Direct feature which authorizes a charge to
their account of record at their financial institution on issue date.
DEPARTMENT
OF
THE
FOR RELEASE WHEN AUTHORIZED AT PRESS CONFERENCE
october 28, 1998
TREASURY
Contact:
Office of Financing
202/219-3350
TREASURY TO AUCTION CASH MANAGEMENT BILLS
The Treasury will auction approximately $25,000 million of 79-day Treasury cash
management bills to be issued November 3, 1998.
Competitive and noncompetitive tenders will be received at all Federal Reserve
Banks and Branches.
Tenders will not be accepted for bills to be maintained on the
book-entry records of the Department of the Treasury (Treasury Direct)
Tenders will
not be received at the Bureau of the Public Debt, Washington, D.C.
Additional amounts of the bills may be issued to Federal Reserve Banks as agents
for foreign and international monetary authorities at the highest discount rate of
accepted competitive tenders.
All of the auctions being announced today--the 79-day cash management bill, the
5-year and 10-year notes, and the 30-year bond--will be conducted in the single-price
auction format. All competitive and noncompetitive awards will be at the highest
discount rate or yield, as applicable, of accepted competitive tenders.
Effective with
this offering, all Treasury marketable security auctions will be conducted in the
single-price auction format.
This offering of Treasury securities is governed by the terms and conditions set
forth in the Uniform Offering Circular (31 CFR Part 356, as amended) for the sale and
issue by the Treasury to the public of marketable Treasury bills, notes, and bonds.
NOTE:
Competitive bids in cash management bill auctions must be expressed as a
discount rate with two decimals, e.g., 7.10%.
Details about the new security are given in the attached offering highlights.
000
Attachment
For press relell.\es,\peeches, public .schedllle.s (.Jilt/official hio~rapllies, call (lur 24-I/olIr fax
lilll! lit
(202) fl22-2()40
HIGHLIGHTS OF TREASURY OFFERING
OF 79-DAY CASH MANAGEMENT BILL
October 28, 1998
Offering Amount ....•.....•..•...•..•.... $25,000 million
Description of Offering:
Term and type of security ••....•.•.•.•.•
CUSIP number .•••••..•••.•••.•.•••.•••.••
Auction date ..•.•.•.••••.•....•..•••..••
Issue date •.•..•..•••••••.•.•••••.••••.•
Maturity date •.•••.•••.••..••••••..•.•••
Original issue date •••.•••••••.••.••..••
currently outstanding ••..••.••.••..••.••
Minimum bid amount and multiples •...••.•
79-day Cash Management Bill
912795 AY 7
November 2, 1998
November 3, 1998
January 21, 1999
July 23, 1998
$22,375 million
$1,000
Submission of Bids:
Noncompetitive bids •••••••••••. Accepted in full up to $1,000,000 at
the highest accepted discount rate.
Competitive bids .•...•.... (1) Must be expressed as a discount rate with
two decimals, e.g., 7.10%.
(2) Net long position for each bidder must
be reported when the sum of the total bid
amount, at all discount rates, and the net
long position is $1 billion or greater.
(3) Net long position must be determined as of
one half-hour prior to the closing time for
receipt of competitive tenders.
Maximum Recognized Bid
at a Single yield . . . . . . . . . . . . . 35% of public offering
Maximum Award . . . . . . . . . . . . . . . . . . . . 35% of public offering
Receipt of Tenders:
Noncompetitive tenders ......... Prior to 11:00 a.m. Eastern Standard time on
auction day
Competitive tenders . . . . . . . . . . . . Prior to 11:30 a.m. Eastern Standard time on
auction day
Payment Terms . . . . . . . . . . . . . . . . . . . . By charge to a funds account at a Federal
Reserve Bank on issue date, or payment of
full par amount with tender.
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington. DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
October 28, 1998
CONTACT:
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 2-YEAR NOTES
Interest Rate:
4%
Series:
AJ-2000
CUSIP NO:
912B274T6
STRIPS Minimum: $50,000
High Yield:
Issue Date:
Dated Date:
Maturity Date:
Price:
4.025%
November 02, 1998
October 31, 199B
October 31, 2000
99.952
All noncompetitive and successful competitive bidders were awarded
securities at 'the high yield. All tenders at lower yields were
accepted in full.
Tenders at the high yield were allotted
69%.
Accrued interest of $ 0.22099 per $1,000 must be paid for the period
from October 31, 1998 to November 02, 1998.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tendered
Tender Type
Competitive
Noncompetitive
$
PUBLIC SUBTOTAL
Federal Reserve
Foreign Official lnst.
TOTAL
$
30.693.000
906,060
Accepted
$
31,599,060
16,001,760
2,462,900
2,050,000
2,050,000
36,111,960
2,462,900
$
Median yield
3.997~: 50% of the amount of accepted competitive
tenders was tendered at or below that rate.
Low yield
3.900~:
5% of the amount of accepted competitive
tenders was tendered at or below that rate.
Bid-to-cover Ratio
RR-2786
=
31,599,060 /
16,001,760
15,095,700
906,060
1.
97
20,514,660
D EPA R T 1\1 E N T
0 F
THE
T REA SUR Y
NEWS
omCE OFPUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASIllNGTON, D.C. - 20220 - (202) 622-2960
Contact: Dan Israel
(202) 622-2960
FOR IMMEDIATE RELEASE
October 28, 1998
STATEMENT BY TREASURY SECRETARY ROBERT E. RUBIN ON BRAZIL
We welcome Brazil's announcement of a strong fiscal adjustment program to strengthen
Brazil's public finances It is essential that Brazil implement their program promptly and
convincingly.
Confidence and stability in Brazil is very important to American economic interests and to
the economy of the hemisphere and the world. We look forward to working with the
international community to support Brazil's economic program.
-30-
RR-2787
-
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D EPA R T 1\1 E N T
0 F
IREASURY
THE
T REA SUR Y
NEWS
OFFlCE OF PUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960
FOR IMMEDIATE RELEASE
October 28, 1998
Contact: Dan Israel
(202) 622-2960
TREASURY SECRETARY ROBERT E. RUBIN AND
LABOR SECRETARY ALEXIS M. HERMAN JOINT STATEMENT
ON THE HIGH-LEVEL DIALOGUE BETWEEN THE WORLD BANK, IMF AND ILO
The United States has vigorously promoted greater international dialogue on fundamental
worker rights issues and encouraged more active engagement on these issues by the international
financial institutions. We welcome today's meeting of the top officials of the International Labor
Organization (ILO), the World Bank and the International Monetary Fund (Il\1F). We believe
high-level dialogue on the importance of advancing core labor standards in the policies, programs
and operations of the international financial institutions is invaluable.
The World Bank and the IMF are continuing their efforts to systematically incorporate
consideration of basic worker rights We believe the Bank's strategy to combat child labor and
the IMF's encouragement of greater dialogue with labor unions in country programs are welcome
steps. Today's meeting is a clear sign that active collaboration and cooperation are increasing.
The United States looks forward to greater systematic collaboration among these organizations in
the future to make concrete progress in improving the status of workers around the world
-30-
RR-2788
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Fm- press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
OFFICE OF P(IRl.fC AFF.\IRS. ISflO PFNNSYLV,\NI:\ .H'PHIE. fIj.W .• "V,\SHI"IGTON. D.C.e 20220. (2021 (112.1960
EMBARGOED UNTIL 2:30 P.M.
October 29, 1998
CONTACT:
Office of Financing
202/219-3350
TREASURY OFFERS 13-WEEK AND 26-WEEK BILLS
The Treasury will auction two series of Treasury bills totaling approximately
$16,000 million to refund $13,677 million of publicly held securities maturing
November 5, 1998, and to raise about $2,323 million of new cash.
In addition to the public holdings, Federal Reserve Banks for their own
accounts hold $7,293 million of the maturing bills, which may be refunded at
the highest discount rate of accepted competitive tenders. Amounts issued to these
accounts will be in addition to the offering amount.
The maturing bills held by the public include $1,972 million held by Federal
Reserve Banks as agents for foreign and international monetary authorities, which
may be refunded within the offering amount at the highest discount rate of accepted
competitive tenders. Additional amounts may be issued for such accounts if the
aggregate amount of new bids exceeds the aggregate amount of maturing bills.
Please note:
The 13- and 26-week bill auctions being announced today will be
conducted in the single-price auction format. All competitive and noncompetitive
awards will be at the highest discount rate of accepted competitive tenders. As
announced at the Treasury's Quarterly Financing Press Conference on October 28,
1998, all Treasury marketable security auctions will be conducted in the singleprice auction format.
Tenders for the bills will be received at Federal Reserve Banks and Branches
and at the Bureau of the Public Debt, Washington, D.C.
This offering of Treasury
securities is governed by the terms and conditions set forth in the Unifor.m Of£ering
Circular (31 CFR Part 356, as amended) for the sale and issue by the Treasury to the
public of marketable Treasury bills, notes, and bonds.
Details about each of the neW securities are given in the attached offering
highlights.
000
Attachment
RR-2789
For press releases, speeches, public schedules and official biographies, call our
24~hour
fax line at (202) 622-2040
HIGHLIGHTS OF TREASURY OFFERINGS OF BILLS
TO BE ISSUED NOVEMBER 5, 1998
October 29, 1998
Offering Amount .......................... $8,000 million
Description of Offering:
Term and type of security ................
CUSIP number ..............................
Auction date ..............................
Issue date ................................
Maturity date ............................ ,
Original issue date ......................
Currently outstanding ....................
~n~ bid amount and multiples .. ~ .....
91-day bill
912795 BT 7
November 2, 1998
November 5, 1998
February 4, 1999
February 5, 1998
$31,157 million
$1,000
$8,000 million
182-day bill
912795 BK 6
November 2, 1998
November 5, 1998
May 6, 1999
November 5, 1998
$1,000
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids ......... Accepted in full up to $1,000,000 at the highest discount rate of
accepted competitive bids.
Competitive bids ............. (1) Must be expressed as a discount rate with three decimals in
increments of .005%, e.g., 7.100%, 7.105%.
(2) Net long position for each bidder must be reported when the sum
of the total bid amount, at all discount rates, and the net long
position is $1 billion or greater.
(3) Net long position must be determined as of one half-hour prior
to the closing time for receipt of competitive tenders.
Recognized Bid
at a Single Yield ........... 35% of public offering
Max~
Maximum Award .................... 35% of public offering
Receipt of Tenders:
Noncompetitive tenders ...... Prior to 12:00 noon Eastern Standard time on auction day
Competitive tenders ......... Prior to 1:00 p.m. Eastern Standard time on auction day
Payment Te~: By charge to a funds account at a Federal Reserve Bank on issue date, or payment
of full par amount with tender. Treasury Direct customers can use the Pay Direct feature which
authorizes a charge to their account of record at their financial institution on issue date.
MEMORANDUM
To:
From:
Re:
Fax Recipients
Office of Financing
Bureau of the Public Debt
Faxing of Marketable Securities Press Releases
The Office of Financing will discontinue faxing press releases
within the next month. If you wish to continue receiving this
information and have Internet access, please sign up for any or all
of our three Internet mailing lists. Signing up for these lists will
provide you with the Internet address(es) necessary to obtain the
actual press release(s). The sign-up address for this service is:
http://www.publicdebt.treas.gov/cgi-bin/cgiwrap/-www/signup.cgi
Further details about the termination of the faxing program will be
given as the date approaches. If you have any questions, please
contact Rachel Hershenson or Larry Morris at 202 .. 219·3350.
TREASURY
NEWS
~8~q~. . . . . . . . . . . ._
. . . . . . . . . . . . . .
OrnCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASIDNGTON, D.C .• 20220. (202) 622-2960
EMBARGOED FOR RELEASE UNTIL 8:45 p.m. EST
Text as Prepared for Delivery
October 29, 1998
TREASURY SECRETARY ROBERT E. RUBIN
REMARKS TO AFRICARE ANNUAL DINNER
Let me start by thanking Renee Poussaint for that introduction. It is a pleasure to join you
this evening in honoring Andrew Young, who is not only an important leader in the United States,
but an important leader in US-Africa relations. It is also good to speak with a group that has a
commitment to fighting poverty and broadening opportunity for Africans -- a commitment that I
think is of enormous importance to all of us, no matter where we live. Helping the nations of
Africa attain better education, better health care, stronger legal systems, good governance regimes
and the other underpinnings for economic success is not only the right thing to do, it is in the
enlightened self-interest of the industrial nations An Africa that succeeds economically, that is at
peace domestically, and that protects its environment, will contribute to a better and more
prosperous world for all of us
Even as the Administration has been intensely focused on the current global financial
crisis, we have continued to focus on the enormous importance of fostering growth and
development in Africa I remember meeting with President Clinton in the Oval Office soon after
his return from Africa He spoke with enormous enthusiasm of his trip, particularly about the
people he met there, and what enormous potential Africa had. And he very much wanted his
Administration to intensify engagement with African nations to work on areas of mutual concern
and to help convey to Americans an accurate and balanced picture of the many countries of
Africa.
This summer, I traveled to Africa for the first time, as a follow up to the President's trip.
It was truly a remarkable experience I visited Cote d'Ivoire, South Africa, Mozambique and
Kenya, and met with the SADC Finance Minister in Namibia I met with a wide diversity of
people -- business leaders, village leaders, students, government officials, and representatives from
non-governmental organizations -- all of v.dlOm gave me a deeper understanding of the
opportunities and challenges facing African nations. Like the President, I was very impressed by
so many of the people I met and by their understanding of their nations' issues.
RR-2790
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
They clearly believe -- and we strongly believe -- that while Africa's challenges are
enormous, so too are its opportunities. Take, for example, Mozambique, a nation once beset by
years of Marxist mis-rule and civil war. While I was there, the Minister of Finance, part of a
government committed to economic reform, announced that the Mozambican economy grev,l at a
double digit rate the previous year, the fifth consecutive year of solid growth, albeit from an
extremely low base. And that progress has not gone unnoticed. Most of a small group of
American CEOs that I invited to lunch to discuss Africa before departing were contemplating the
possibility of investments of one kind or another in Mozambique.
But clearly, there are enormous challenges ahead in all the nations of Africa. On my trip, a
key area of discussion was how to create the economic conditions for attracting private
investment. While foreign investors have begun to notice Sub-Saharan Africa, the region still
drew less than 3 percent of total private capital flows to developing countries last year. The
region remains heavily dependent on concessional loans and grants from multilateral and bilateral
donors. Moreover, Africa's share of global trade and investment has actually declined over the
last thirty years. Ironically, Sub-Saharan Africa's relative lack of integration with the global
economy has actually insulated it from the financial market effects of the current financial crisis,
although many countries have been affected by the declining commodity prices that have resulted
from the crisis.
But let me be clear countries cannot develop in isolation from the global economy It is
important to remember that many Asian nations have had twenty to thirty years of strong growth,
lifting millions from poverty. They accomplished this in part by opening to trade and investment
with the world. Countries like the Phillippines, Korea, Thailand, Malaysia, and Singapore -- and
the list goes on -- are far better off today than they were before the process of integration began,
even taking into account the effects of the financial crisis Their creation of an environment to
attract private sector capital has been -- and will continue to be -- absolutely essential to fostering
long term economic growth
While the situation in Africa obviously differs from country to country, let me mention five
challenges for creating an environment to attract private sector capital, challenges that I focused
on during my trip
First is political, social and economic stahility While many countries in Africa have
become more stable in recent years, it is still a challenge facing many others. And all three aspects
of stability -- political, social, and economic -- are key with respect with external private sector
investment
Second is openness to trade and investment l\1an)' African countries have begun to make
significant progress in this regard by lowering tariffs, simplifying investment regulations, and
privatizing state enterprises A very important factor here are Africa's regional economic
arrangements. I visited representatives from three regional organizations on my trip. It was
striking that perhaps the deepest international monetary union in the world is not found in Europe,
2
but among the francophone West African states. We believe regional arrangements can be very
useful to achieve economies of scale, larger markets, and more efficient use of resources, and
even to promote policy stability. Regionalism, however, must be part of a larger strategy of
global integration, and not an instrument for erecting new trade and investment barriers toward
the global economy.
Third is a well supervised, regulated, and competitive financial system. One reason that
South Africa's financial system has weathered the global crisis as well as it has is sound regulation
and management practices However, along with these merits, South Africa's financial system
also highlights a pressing problem in African financial systems generally: Inadequate service to
the many groups of society that have been underserved historically. I met small scale
entrepreneurs in Soweto who could not get access to credit in the formal banking system. Some
were able to turn instead to micro finance institutions, which I think offer a lot of promise in
Africa and elsewhere. I visited a day-care facility in Soweto whose owner received small loans
from a US AID-sponsored micro-enterprise organization after being denied credit from a bank
She now has a business that is profitable, creates jobs, and provides useful services.
Fourth is investment in people. I visited a number of schools during my trip, and they
manifested the commitment, in the face of a terrible paucity of resources, to providing the
education requisite to promoting growth and opportunity. In the village of Assinie in Cote
d'Ivoire I visited a newly built school, the first with electric lighting in that community, clearly the
best constructed building in the village. The residents of the village were enormously excited
about the opportunities this school presented. It was also significant to me because the village
named it after a Treasury colleague, working at the African Development Bank, who tragically
died nearby two years earlier.
Fifth is a focus on good governance. That means courts that can resolve justice, decide
disputes efficiently and fairly, legal systems with transparency, and public servants that implement
laws impartially and honestly. In Kenya, 1 gave a speech arguing that corruption is a major cost
that developing countries can ill afford and a major impediment to attracting outside investment
The CEO of a major American company told me just the other day about a large, boldly needed
project in a developing country that has been held up for over three years because of substantively
meaningless approaches that wont be granted without pay-off that his company will not pay
While most of the audience agreed, in discussion afterwards, they were clearly struggling with
how to deal with this most difficult, but most important issue. Corruption was an impolite subject
for discussion until recent years, but it is rightly front and center in the focus of reformers in
developing nations and of the international tInancial institutions.
The burden for meeting all these challenges lies with the African nations themselves But
the United States is committed to helping African nations, specifically Africa's boldest reformers,
achieve these goals. Our efforts focus on three areas
First, we are working to mobilize the international financial institutions such as the African
Development Bank and the International Monetary Fund to make better use of their resources
We have worked to sharpen their focus internally, to focus more on Africa's reformers, and to be
more effective by emphasizing activities that take advantage of each institution's special strengths.
I am pleased to note that the, budget which was passed last week includes full funding of our
$800 million request for IDA, the World Bank's concessionallending window, which now
provides roughly forty percent of its loans to Africa, plus $128 million for the African
Development Fund.
Second, we are working to reduce the indebtedness of Africa's poorest and heavily indebted
reformers to sustainable levels. As I was told at a recent meeting with SADC finance ministers,
debt relief is critically important for these countries, both to free up resources to invest in people
and to improve the credit environment. A1though not widely known, the international community
has reduced debt among African nations by more than $35 billion in the last decade, with another
$40 billion expected under current programs and we will continue to focus on appropriate
adjustments in this area
Finally, we are promoting Africa's development and integration with the world through the
President's Partnership for Growth and Opportunity Much of this program -- increased dialogue,
USAID assistance, and debt relieffor the strongest reformers; OPIC and Export-Import Bank
coverage for more African nations; and technical assistance to help Africans implement reform -is now underway, and while it is most unfortunate that Congress failed to pass the Africa trade bill
this year, the Administration will push for its passage next year and I think there is a good chance
for success.
Let me conclude with this thought Far too many Americans perceive Africa only as a
continent beset by serious problems, such as war. famine and environmental devastation, As you
well know, these problems do exist, and are \'ery serious, but there is another part of Africa. It is
the Africa I saw on my trip nations that are in the midst of transformations, nations with
enormous potential
We in this Administration will continue working on all fronts to promote economic growth,
political stability, and improved social conditions in Africa We will further advance these efforts
in December, when I and several of mvcabinet colleal!LJes will be meeting with our counterparts
from 17 African nations in the first US-Africa Economic forum As a group with a keen
understanding of the importance of Africa. :\fflcare will play an especially important role in
maintaining focus on Africa and moving fOf\\ ard on a const ructive path for Africa And success
in meeting these challenges is important not onh tn the future of the nation of Africa, but to our
own future as well Thank you very much
-3(J-
4
NEWS
TREASURY
omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE. N.W. • WASIDNGTON. D.C .• 20220. (202) 622-2960
FOR 1M MEDIA TE RELEASE
October 30. 1998
Contact: Treasury Public Affairs
(202) 622-2960
STATEMENT BY U.S. TREASURY ASSISTANT SECRETARY HOWARD SCHLOSS
In recent days there has been some confusion in the Greenville and Spartanburg areas of South
Carolina about the newly redesigned $20 note and the older series $20 notes. Older series $20 notes
will never be recalled or devalued and will continue to be accepted and recirculated as long as they
remain in good condition. The new $20 notes will replace older notes gradually.
As Federal Reserve Chairman Alan Greenspan said earlier this year, the United States has
never recalled its currency.
The continuing introduction of redesigned notes is a critical component of the Federal
government's anti-counterfeiting effort. The new series aims to maintain the security of the nation's
currency as computerized reprographic technologies such as color copiers, scanners and printers
become more sophisticated and more readily available.
The new $20 note entered circulation last month. It is commonly used in daily commerce and
is the bill most often dispensed by Automated Teller Machines (ATMs). The $20 note is the third in
the U.S. currency series to include new and modified security features to deter counterfeiting. The
Series 1996 $100 was issued in March 1996 and the redesigned $50 in October 1997.
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RR-2791
-
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
DECLARATION
GOVERNORS
OF
G7 FINANCE
MINISTERS AND CENTRAL BANK
The financial problems which began in Asia last year have exposed
weaknesses in emerging market countries and In the international financial
system.
2.
At our meeting in Washington on 3 October, we, the Finance Ministers
and Central Bank Governors of the G7 countries, agreed on the importance of
intensified co-operation among us in meeting the challenges of the current
situation and on the need to work together quickly on a wide range of reforms to
strengthen the international financial system. Today our Leaders announced
agreement on a number of follow up steps to this end which we will be
implementing as rapidly as possible.
MEETING THE CHALLENGES OF THE CURRENT SITUATION
3.
We welcome the positive developments since our meeting on 3 October.
As we said following that meeting, we reaffirm our commitment to create or
sustain the conditions for strong, domestic demand-led growth and financial
stability in each of our economies. The authorities will continue to be vigilant in
the light of the shift in the balance of risks on a global basis. There has also
been important progress in a number of other areas:
(i)
we welcome the positive steps that have been taken towards the
implementation of the IMF Quota increase and the New
Arrangements to Borrow. We call for these to be implemented as
soon as possible. Together they will provide additional resources of
$90 billion for the I MF which should be used to ensure the stability
of the international financial system;
( ii)
in consultation with our partners, we further commit ourselves to
supplement the Fund's resources where necessary through the
activation of the New Arrangements to Borrow and the General
Arrangements to Borrow;'
( iii)
in Europe, it will be necessary to push forward with structural
reforms and, in continental Europe, prepare for the euro, and reduce
RR-2792
unemployment to sustain conditions conducive to robust domestic
demand;
(iv)
in Japan, legislation has now been passed on the banking sector, a
major step forward in the process of strengthening the financial
system. The Japanese authorities have made clear their intention
that the essential swift and effective action to complete the process,
including the recapitalisation of banks, with appropriate conditions,
will be taken as a matter of urgency. This action, together with a
sustained boost to domestic demand, is a key precondition for the
restoration of market confidence and growth not just in Japan but in
the whole Asian region;
(v)
in the US, it will be important to continue to maintain sound policies
which promote solid growth and low infiation;
(vi)
the policy commitments by the Government of Brazil, which we will
work with the international community to support;
(vii)
the progress made in many countries in Asia toward establishing the
foundation for recovery;
(viii) in response to the current exceptional circumstances in the
international capital markets, we are agreed that strengthened
arrangements for dealing with contagion are needed;
the central element would be the establishment of an
enhanced IMF Facility which would provide a contingent
short-term line of credit for countries pursuing strong IMF
approved policies. This facility could be drawn upon in times of
need and would entail appropriate interest rates along with
shorter maturities;
the facility would be accompanied by appropriate private
sector Involvement;
Office Memorandum
To:
The Managing Director
Members oftbe Executive Board
From:
Ms. Lissakers (U.S.) and Messrs. Bernes (Canada), Esdar (Germany), Grilli
(Italy), Milleron (France), Pickford (U.K.), and Yoshimura (Japan)
October 30, 1998
Subject: Work Program OD Strengthening the Anbincture of the International
Monetary System
The leaders of our countries and our Finance MiniSters and Central Bank Governors
have issued statements today OIl. the world economy and reforms to the international financial
system. As representatives of our cotmtries io tile 00, we would like to take this
opportunity to propose some priority reforms for consideration as we develop the work
program of the Executive Board to address these issues. Working ill close cooperation with
other members of the Executive Board, we will support and act to implement the following
reforms to improve the effectiveness of the IMF. including ttarlspareney and accountability of
the institution and its lending policies.
St2l1dards
The importance of standards and codes of good practice in improving the
functioning of markets and promoting transparency and good governance in the public seC10r
is widely recognized. The IMF plays a leading role in developing standards on data
dissemination and monetary, :fi.wmcial and fiscal policies. We look forwud to decisions by
year end on strengthening the Special Data Dissemination Standard (SODS), particularly the
publication of timely, accurate and comprehensive information on official foreign exchange
reserves, including fOI'Vw"ilId positions. We should also complete work on the proposed code
on monetary and financial policy by the spring 1999 meetings. Finally, the Executive Board
should consider the pUblication, in a timely and systematic way, the results of IMF
surveillance of the degree to which each of its member countries meets internationally
recognized eodes and standards of transparency and disclosure in the form ofa transparency
report.
Transpuf1Icy and sccQunubilib::
There is growing awareness thaI public institutions. including the IMF and other
!FIs, need to enhance their accountability throug,b. greater transparency about their operations,
objectives and decision-making processes. We believe that, as a general principle, the IMF
RR-2793
- 2-
should adopt a presumption in favor of the release of infOl'TTUtion, except where release mi a hr
compromise confidentiality. The Fund should establish, announce and periodically reviewoan
agreed definition of the areas in which confidentiality should apply and the criteria for
applying it in order to facilitate the release ofinfc%mation.
The Interim Committee has endorsed increased IMF transparency, including '-1.ider
use of Public Information Notices (pINs), broader publication of Letters of Intent (LOI) and
Policy Framework Papers (PFPs). and more public infOImatiOIl on and evaluations of the
Fund's operations and policies. The discussions in the Executive Board suggest that concrete
actions are both desirable and feasJ.ole which could build on the substmtial progress achieved
in recent years to make the Fund a more opOl institution. To this end, Fund policies should
provide that full written summaries on a broader range of Executive Board meetings are
ma.de available to the public by issuing PINs following a discussion of: an IMF program or
program review in which there is a LOI, Memorandum of Understanding (MOU) or PFPj
changes in general Fund policy; and Article IV consultations. Fund policies should nlso
make provision for the timely release of LOis, MOUs, or PFPs following Board
consideration.
The concerns which ha.ve been raised i.e. previous discussions about the po~tial
effects of a wider publication policy could be addressed by providing flexibility in the timing
of PINs and relevant docum.e.tlt release, possibly involvi:cg delays of up to three months
following the Board discussion, and by deleting market sensitive, national security or
proprietary information.
The 11vIF should also develop a fonnal mechanism far systematic evaluation,
involving eXternal input, of the effectiveness of its operations, programs, policies and
procedures.
Ierms and CQnditiolls OD IMF LQans
The pursuit of sound monetary, fiscal and exchange rate pOlicies is an essential
prerequisite for crisis prevention and resolution. However. recent experienc.e demonstrates
that structural reforms and a solid instirutiona.l framework are also needed to make markets
more flexible and open to competition; to eliminate systemic government subsidies and
regulations whicb distort the allocation of resources; and to provide a well-functioning
financial infrastructure.
The IMF plays an important role in this effort both through its consultations and
surveillance activities as well as its financial support. The recent review of Fund programs
indicated, inter alia, that greater emphasis needs to be given to reducing trade b~~r~ and
unproductive eA-penditures. Moreover, one of the key lessOIlS from the ~.cnt cnSIS IS the:
importance of having robust insolvency arrangemems as a means ofa.chievmg an orderly and
equitable resolution of debt problems. Therefore, the policies on the use ofIMF resources
-3-
should include requirements that the borrower, in accordance with 3 schedule for action,
adopt policies to:
o
liberalize restrictions 00 trade in goods and services, consistent with the
terms of all international trade agreements of which the borrov,-er is a
signatory;
o
eHrninate the systemic practice or policy of govmunent-directed le:ndillg
on non-commercial terms or provision of market-distorting subsidies to
favored industries. enterprises, parties or institutions; and,
o
provide a legal basis for non-discriminatory treatment in insolvency
proceedings between domestic and foreign creditors and for debtors and
other concerned persons.
All members, including our countries, should be encouraged to adopt such policies.
Achieving greater involvement of the private sector is also of critical importance
both in preventing and resolving financial crises. We recognize that the issues involved in
this area are complex but believe it will be essential to develop effective mechanisms to
involve the private sector in crisis management, with an appropriate financing role. In this
connection, the Executive Board should consider how to, under carefully designed conditions
and on a case-by-case basis, extend the Fund's policy on lending into arrears.
The tenns on which the IMF e>.."tends financing can also help to reduce moral
bazard. provide an incentive for early Th-!F repayment and encourage a return to private
market financing. Therefore, Fund policies to provide loans from general resources to
countries experiencing balance of payments difficulties due to a large sbort-tenn financing
need resulting from a sudden and disruptive loss of market confidence should provide for the
imposition of a surcharge of at least 300 basis points as an adjustment for risk and sborter
maturities of 1-2
~
years.
COll£lu~iou
We look fOJWard to working closely with you to strengthen the Fund's capacity to
deal with the
chaJlen~s
facing the world economy.
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
November 02, 1998
CONTACT:
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 79-DAY BILLS
Term:
79-Day Bill
Issue Date;
Maturi ty Date:
CUSIP Number:
November 03, 1998
January 21, 1999
912795AY7
High Rate:
4.67 %
Investment Ratel/:
4.78 %
Price:
98.975
All noncompetitive and successful competitive bidders were awarded
securities at the high rate.
All tenders at lower rates were accepted in full.
Tenders at the high discount rate were allotted
AMOUNTS
TENDERED
27%.
AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
Comper it i ve
Noncompetitive
$
TOTAL
$
53,969,000
7,620
$
53,976,620
$
7,620
Median rate
4.64~: sot of the amount of accepted competitive
tenders was tendered at or below that rate.
Low rate
4.60 %:
5\ of the amoun~ of
tenders was tendered at or below that rate.
Bid-to-cover Ratio
= 53,976,620
/ 25,000,370
1{ Equivalent coupon- issue yield.
RR-2794
accep~ed
=
2.16
24,992,750
competitive
25,000,370
PUBLIC DEBT NEWS
Department of the Treasury. Bureau of the Public Debt. Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT;
FOR IMMEDIATE RELEASE
November 02, 1998
Office of Financing
202-/,19-3350
RESULTS OF TREASURY'S AUCTION OF I3-WEEK BILLS
91-Day Bill
November OS, 1998
February 04, 1999
912795BT7
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:
4.425%-
Investment Rate1/:
4.539%'
Price:
98.8B1
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. All tenders at lower rates were accepted in full.
Tenders at the high discount rate were allotted
46\.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
Competitive
Noncompetitive
$
PUBLIC SUBTOTAL
23,844,989
1,321,145
Federal Reserve
Foreign Official Add-On
TOTAL
$
7,823,592
177,585
177,585
25,343,719
8,001,177
3,358,010
31,215
3,358,010
28,732,944
31,215
$
Median rate
4.420%: 50% of the amount of accepted competitive
t~ders was tendered at or below that rate.
Low rate
4.350%:
5% of the amount of accepted competitive
tenders was tendered at or below that rate.
Bid-la-Cover Rallo;:;: 25,166,134
I
7,823,592 ;
6,502,447
1. 321, 145
25,166,134
Foreign Official Refunded
SUBTOTAL
$
3.22
1/ Equivalent coupon-issue yield.
RR-2795
http://www.publlcdebLtreu·loV
11,390,402
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt. Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
November 02,
CONTACT:
~998
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Term:
Issue Date;
182-Day Bill
November 05, 1998
Maturi ty Date:
May 06,
CUSIP
1999
91279SBK6
Number:
High Rate:
4.360%
Investment Rate1/:
4.520%
Price:
97.796
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. All tenders at lower rates were accepted in full.
Tenders at the high discount rate were allotted
66%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
competiti ve
Noncompetitive
PUBLIC
Accepted
Tendered
Tender Type
$
SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-on
TOTAL
19,747,870
1,158,564
$
20,906,434
6,286,634
1,721,715
1,721,715
22,628,149
8,008,349
3,935,000
3,935,000
302,285
302,285
$
26,865.434
$
Median rate
4.330%: 50% of the amount of accepted competitive
tenders was tendered at or below that rate.
Low rate
4.280%:
5% of the amount of accepted competitive
ltenders was tendered at or below that rate.
~id·to-Cover Ratio = 20,906,434 / 6,286,634 = 3.33
l/ Equivalent coupon-issue yield.
RR-2796
5,128,070
1,158,564
12,245.634
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington. DC 20239
FOR IMMEDIATE RELEASE
November2, ]998
Contact: Peter Hollenbach
(202)219-3302
~v~
t>"P~~
.tIC
I BONDS BOUGHT FROM NOVEMBER 1998 THROUGH APRIL 1999
TO EARN 3.3% OVER AND ABOVE INFLATION
Series I, inflation-indexed savings bonds purchased from November 1998 through April 1999 will earn a
3.3 percent fixed rate of return over and above inflation. The 3.3 percent fixed rate applies for the 30-year life of
I Bonds purchased during this six-month period.
Treasury's new inflation-indexed I Bonds are designed to offer all Americans a way to save that protects the
purchasing power of their investment by assuring them a real rate of return over and above inflation. I Bonds have
features that make them attractive to many investors. They are sold at face value in denominationsof$50, $75,
$100, $500, $1,000, and $5,000 and earn interest for as long as 30 years. Two new denominations, $200 and
$10,000, will go on sale in May 1999. I Bond earnings are added every month and interest is compounded
semiannually. They are State and local income tax exempt, and Federal income tax on I Bond earnings can be
deferred until the bonds are cashed or they stop earning interest after 3 0 years. Investors cashing I Bonds before
five years are subject to a 3-month earnings penalty.
I BOND EARNINGS RATE - 5.05%
The earnings rate for I Bonds is a combination of a fixed rate, which will apply for the life of the bond, and the
inflation rate. The 5.05 percent earnings rate for I Bonds bought from November 1998 through April 1999 will
apply for the first six months after their issue. The earnings rate combines the 3.30 percent fixed rate of return with
the 1.72 percent annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers
(CPI-U). The CPI-U increased from 162.2 to 163.6 from March to September 1998, a six-month increase ofO.86
percent.
EARNINGS RATES FOR ALL I BONDS
Earnings rates and actual yields for I Bonds are shown in the I Bond Earnings Report on the back of this release.
MORE INFORMA nON
Get the latest information about [ Bonds and Series EE bonds at Public Deht's savings bond website at
www.sal'illgsbollds.gov. Download the Savings Bond WizardT\\ a free easy to use program that lets you keep
track of all your savings bonds and calculate the value of your portfolio. The latest Uniled Slates Savings
Bonds/Noles Earnings Report, containing rate and yield information for Series E, EE and I bonds along with
Savings Notes, is also available at the website or by mail. Send a postcard asking for·the "Earnings Report" to
the Bureau of the Public Debt, 200 Third Street, Parkersburg, WY 26] 06-1328.
000
RR-2797
From: TREASURV PUBLIC AFFAIRS
To: 20009
1-26-99 3:06pm
p. 4 of 16
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
FOR TMMEDIA TE RELEASE
November 2, 1998
Contact: Peter Hollenbach
(202) 219-3302
BUREAU OF THE PUBLIC DEBT ANNOUNCES SERIES EE SAVlNGS BOND RATE
FOR NOVEMBER 1998 TBROUGH APRIL 1999
The Bureau of the Public Debt announced toda)'the rate for SeriesEE savings bonds issued on or after May I, 1997
SERIES EE SAVINGS BOND RATE - 4.60%
The 4.60 percent Series EE savings bond rate is in effect for bonds issued on or after May 1, 1997, that enter
sem iannuaI earnings periods from November 1998 through April 1999. The rate is 90 percent of the average 5-year
Treasury securities yields for the preceding six months. A new interest rate is announced effective each May I and
November]. A 3-month interest penalty is applied to these bonds if redeemed before five years. The Series EE bonds
on sale now increase in value monthly. The bond's interest rate is compounded semiannually.
SERIES EE BONDS ISSUED BEFORE MAY 1997
The 4.01 percent Short·Term Series EE savings bond rate is in effect for bonds issued from May 1995 through Apri I
1997 for bonds that enter semiannual earnings periods from November 1998 through April 1999. See the table on the
back of this release for earnings on Series EE bonds issued from January 1980.
MATURED SERlES E SAVINGS BONDS AND SAVINGS NOTES
Series E savings bonds and Savings Notes continue to reach finaJ maturity and stop earning interest. Bonds issued
from May] 94 f through October 1958, along with those issued from December 1965 through October 1968, have
stopped earning interest. Savings Notes, issued from May 1967 through October 1968, have stopped earning interest.
Bonds and Notes with issue dates shown here will reach final maturity in the next six months.
Bonds !Notes Stop Earning Interest
BondlNote Issue Dates
November 1958 through April 1959
November t 968 through April 1969
November 1998 through April 1999
November 1998 through April 1999
MORE JNFORMATION
The latest United States Savings BondslNotes Eamings Repor' and other useful information about savings bonds is
available at Publ ic Debt's Internet website at. wlllw.savillgsbonds.goJl Download the Savings Bond Wizard ™ an easy
to use program that lets you keep track of your savings bonds and calculate the vallie of your portfolio. The table on the
back of this bulletin shows actual yields for Series EE bonds. The Earnings Report, which contains rate and yield
information for Series E&.E:E bonds and Savings Notes, is also available by mail from Public Debt Send a postcard
asking for "Earnings Report" to Bureau of the Public Debt, 200 Third Street, Parkersburg, WV 26 [06-1328.
RR-2798
000
TOTAL P.01
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
CONTACT:
November 03, 1998
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 5-YEAR NOTES
Interest Rate:
Series:
Issue Date:
Dated Date:
Maturity Date:
4 1/4%
K-2003
CUSIP No:
9128274U3
STRIPS Minimum:
$800, 000
High Yield:
price:
4.340%
November 16, 1998
November 15, 1998
November 15, 2003
99.599
All noncompetitive and successful competitive bidders were awarded
securities at the high yield.
All tenders at lower yields were
accepted in full.
Tenders at the high yield were allotted
31%.
Accrued interest of $ 0.11740 per $1,000 must be paid for the period
from November 15, 1998 to November 16, 1998.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Compet i t i ve
$
Noncompetitive
PUBLIC SUBTOTAL
Federal Reserve
Foreign Official Inst.
TOTAL
Accepted
Tendered
Tender Type
$
28/486,305
293,728
$
15/707,820
293,728
28/780.033
16,001,548
1,518,385
1,518,385
1,100,000
1,100,000
31,398,418
$
Median yield
4.300%: 50% of the amount of accepted competitive
tenders was tendered at or below that. rate_
4 .~:
250"
S!!-o of the amount of accepted competitive
. Id
Low Yle
tenders was cendered at or below thaL rat:.e.
Bid-to-cover Ratio = 28,780,033 / 16,001,548 = 1.80
RR-2i99
http://www.pubUcdcbt.trea.s.gov
18,619,933
PUBLIC DEBT N·EWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
November 3, 1998
Contact: Peter Hollenbach
(202) 219-3302
BUREAU OF THE PUBLIC DEBT AIDS SAVINGS BONDS OWNERS
AFFECTED BY FLOODING IN OKLAHOMA
The Bureau of Public Debt took action to assist victims of flooding in Oklahoma by expediting
the replacement or payment of United States Savings Bonds for owners in the affected areas. The
emergency procedures are effective immediately for paying agents and owners in those areas of
Oklahoma affected by the storms. These procedures will remain in effect through December 31,
1998.
Public Debt's action waives the normal six-month minimum holding period for Series EE and
Series I savings bonds presented to authorized paying agents for redemption by residents of the
affected area. Most financial institutions serve as paying agents for savings bonds.
Oklahoma counties involved are Alfalfa, Grant and Kay. Should ad9itional counties be declared
disaster areas the emergency procedures for savings bonds owners will go into effect for those
areas.
The replacement of bonds lost or destroyed will also be expedited by Public Debt. Bond owners
should complete form PD-1048, available at most financial institutions or by writing the Kansas
City Federal Reserve Bank's Savings Bond Customer Service Department, 925 Grand
Boulevard, Kansas City, Missouri 64198; phone (816) 881-2000. This form can also be
downloaded from Public Debt's website at: www.publicdebureas.gov. Bond owners should
include as much information as possible about the lost bonds on the form. This information
should include how the bonds were inscribed, social security number. approximate dates of
issue, bond denominations and serial numbers if available. The completed form must be
certified by a notary public or an officer of a financial institution. Completed forms should be
forwarded to Public Debt's Savings Bond Operations Office located at 200 Third St ..
Parkersburg, West Virginia 26106-1328. Bond owners should write the word "FLOODING" on
the front of their envelopes, to help expedite the processing of claims.
.
RR-28oo
000
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
November 3, 1998
Contact: Peter Hollenbach
(202) 219-3302
BUREAU OF THE PUBLIC DEBT AIDS SAVINGS BONDS OWNERS
AFFECTED BY FLOODING IN KANSAS
The Bureau of Public Debt took action to assist victims of flooding in Kansas by expediting the
replacement or payment of United States Savings Bonds for owners in the affected areas. The
emergency procedures are effective immediately for paying agents and O\vners in those areas of
Kansas affected by the stonns. These procedures will remain in effect through December 31,
1998.
Public Debt's action waives the nonnal six-month minimum holding period for Series EE and
Series I savings bonds presented to authorized paying agents for redemption by residents of the
affected area. Most financial institutions serve as paying agents for savings bonds.
Kansas counties involved are Butler, Chase, Cowley and Sedgwick.: Should additional counties
be declared disaster areas the emergency procedures for savings bonds owners will go into effect
for those areas.
The replacement of bonds lost or destroyed will also be expedited by Public Debt. Bond owners
should complete form PD-1048, available at most financial institutions or by writing the Kansas
City Federal Reserve Bank's Savings Bond Customer Service Department, 925 Grand
Boulevard, Kansas City, Missouri 64198; phone (816) 881-2000. This form can also be
downloaded from Public Debt's website at: www.publicdebureas.gov. Bond owners should
include as much information as possible about the lost bonds on the form. This information
should include how the bonds were inscribed, social security number, approximate dates of
issue, bond denominations and serial numbers if available. The completed form must be
certified by a notary public or an officer of a financial institution. Completed forms should be
forwarded to Public Debt's Savings Bond Operations Office located at 200 Third St.,
Parkersbur2: West Vir2:inia 26106-1328. Bond owners should write the word "FLOODING" on
the front of their envelopes, to help expedite the processing of claims.
~,
~
RR-2801
000
DEPARTMENT
OF
THE
~
lREASURY
-.. . )
TREASURY
NE W S
1789~"""""""""""""""""'"
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASIDNGTON, D.C .• 20220. (202) 622.2960
FOR IMMEDIATE RELEASE
Contact: Dan Israel
(202) 622-2960
November 4, 1998
STATEMENT BY TREASURY SECRETARY ROBERT E. RUBIN
ON NEW RELEASE OF IMF FINANCIAL DATA
The release today of the first monthly liquidity table by the International Monetary Fund
(IMF) represents another significant step forward in the IMF's continuing efforts to open more of
its books and operations to the public. I commend the IMF Executive Board for its decision to
publish these data on a regular basis. The United States firmly supports this decision, and we will
continue our strong advocacy of greater transparency and openness by the rtvIF.
-30-
RR-2802
--------------------------------------------------------------------------------Pm-press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622·2040
---------------------------~-----------------------------
--------
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
EMBARGOED FOR RELEASE AT 3:00 PM
November 5, 1998
Contact: Peter Hollenbach
(202) 219-3302
PUBLIC DEBT A~NO(TNCES ACTIVITY FOR
SECURITIES IN THE STRIPS PROGRAM FOR OCTOBER 1998
The Bureau of the Public Debt announced activity figures for the month of October 1998, of
securities within the Separate Trading of Registered Interest and Principal of Securities program
(STRIPS).
Dollar Amounts in Thousands
Principal Outstanding
(Eligible Securities)
S 1,504,081 ,076
Held in Unstripped Form
$ 1.276.091,109
Held in Stripped Form
$227,989,967
$16.659,298
Reconstituted in October
The accompanying table gives a breakdown of STRIPS activity by individual loan description. The
balances in this table are subject to audit and subsequent revision. These monthly figures are included
in Table VI of the Monthly Statement a/the Public Debt, entitled "Holdings of Treasury Securities in
Stripped Form.
II
The STRIPS data along with the new Monthly Statement a/the Public Debt, is available on Public
Debt's Internet homepage at: www.publicdebt.treas.go\: A wide range of information about the
public debt and Treasury securities is also available on the homepage.
RR-2803
000
hUp:llwww.publlcd~bt.tna5.gov
TABLE VI. HOLDINGS OF TREASURY SECURITIES IN STRIPPED FORM. OCTOBER 31,1998·· Continued
Corpus
STRIP
CUSIP
Loan DescriptIOn
Treasury Notes
Series Inte,est Rate
CUS.P
8·7/8
0
912827'NN8
8·718
XE7
A
9·118
XNl
8
8
XV'n
C
5·314
3H3
AK
5·518
3K6
AL
7·718
YE6
0
5·518
3P5
AM
5·518
AN
3R1
5·318
Y
3U4
A
8·112
YN6
5·112
3Y6
Z
5-112
4A7
A6
5·518
AC
4C3
8·7/8
YW6
6
4G4
5·1/2
AD
AE
5·3/8
4J8
5-318
4Ml
AF
8·314
ZE5
C
4Q2
5·1/8
AG
AH
4·112
4RO
8·112
ZN5
0
5·314
X
3M2
7·314
A
ZX3
3WO
5·318
S
8
A85
8
5·518
T
4E9
892
7·7/8
C
7·112
025
D
F49
A
7·112
G55
6·318
B
5·7/8
3J9
M
5·3/4
314
N
5·314
303
P
359
a
5·5/8
5.112
3V2
C
J78
6·114
A
5·112
3Z3
D
5.112
465
E
481
5·314
F
4H2
5·112
G
4K5
H
5·3/8
5·3/4
L83
B
4N9
J
5·114
5·718
N81
A
7·114
P89
B
088
7·114
C
R87
7·718
D
A
7·112
586
6·112
T85
6
U83
C
6·112
5·718
V82
0
W81
A
5·518
6·7/8
X80
B
7
Y55
C
6·112
Z62
0
6·1/4
2JO
B
6·5:8
2U5
C
6·118
3ED
0
3XB
8
5·112
5·5,8
4F6
C
I
Total
Outstanding
Tolallnflatlon·lndexed Notes
ass
BT3
BUO
BW6
8X4
CA3
CQ8
CYl
9902875
9.719.623
10047103
10.16.3 644
17.487.287
16.823.947
10.773.960
17.051.198
16.747.060
17.502,026
10.673.033
17.776.125
17.206.376
15.633.855
10.496.230
16580.032
14.939.057
18.683.295
11.080646
20028533
19.268.438
11.519.682
16.036.088
11.312.802
15.367.153
12.398.083
12.873.752
12.339.185
24.226.102
11.714.397
23.859.015
12.806.814
11,737.284
12.120.580
12.052.433
13.100.640
23.562.691
13.670.354
14.172.892
12.573.248
13.132.243
13.126.779
28011.028
19.852.263
12.955.077
14.440.372
13.346.467
14.373.760
13.834.754
14.739.504
15.002.580
15.209.920
15.513587
16.015475
22.740446
22.459.675
13.103.678
13.958.186
25.636.803
13.583412
27.190961
11/15/98
02115199
05/15/99
08115199
09130/99
10131199
11115199
11130/99
12131199
01131100
02115/00
02129/00
03131/00
04130100
05115100
05131/00
06130100
07131100
08/15100
08131100
09130100
11115100
11115100
02115101
02115/01
05115101
05115101
08115/01
11115101
05115102
08115/02
09130102
10131102
11130102
12131/02
01131103
02115/03
02128103
03131/03
04130103
05/31103
06/30103
08/15103
08115/03
02115104
05/15/04
08115/04
11115104
02/15105
05115/05
08115105
11115/05
02115106
05/15106
07115/06
10115/06
02115107
05115/07
08115/07
02115/08
05115/08
912820 BZ9
eV8
CL9
07/15102
01115/07
01115108
.......
Treasury In(fallon·lndexed BondS'
Inte'est Rate
CUSIP
3·518
912810 FD5
912803 BN2
04/15128
Tolal Inflation· Indexed Bonas
/'
",rand TOlal
I
POr1ICC reid In
Unstrlcce.~.Form
POrtIOI"') He':1
S:r:coe~
In
Ii
For,..,
Fe::-s'~"~ec
Tr,~ l.~':"·h :
I!
912820 AQO
AR8
AS6
AT4
CBl
CD7
AUl
CGO
CJ4
CM7
AV9
CR6
CT2
CV7
AV'n
CZ8
OBO
006'
AX5
DF1
OG9
AY3
CF2
AZO
CPO
BA4
CX3
BB2
BCO
BD8
BE6
CC9
CE5
CH8
CKl
CNS
BF3
CS4
CU9
CWS
OA2
DCB
8Gl'
DE4
BH9
BJ5
BK2
BLO
BM8
8N6
BPl
B09
8R7
Total Treasury Notes
Treasury Inflat,on·lndexe= No:es
Series Intecest Rate
CUSIP
3·5/8
9128273AB
J
3·318
A
2M3
A
3·5i8
3T7
I:
PnnClpal Amourt OutstanClng In Thousar,ds
Maturtty Date
,
--'-
I
4 898 075
6482 823
4914.303
5 '521.119
17.269.687
16504}47
6445960
16865.598
16647.860
17.502.026
7.682.633
17 776 125
17206.376
15 633.855
5213.030
16580.D32
14.939057
18 683.295
7.124.006
20 028 533
19258438
7054 882
16036088
7.823.202
15367.153
8201.558
12 873.752
9107.185
1S 259.782
9271.197
22259.015
12771.614
11.675.684
11.919.780
12052.433
13 100.640
22889507
13.62635~
14.172.892
12573248
13.132.243
13126779
27560628
19852263
12737.477
14409172
12664067
14373760
13806914
14739.504
15002580
15205 120
15509427
16015475
22740446
22 459 675
800 '1
.3 226 800 :1
5 132 800
4 482 525 I
217 600 :
~ 0~4
I
219200
4.328000
185600
I
99.200
0
2990,400
0
01
S28320~ I
0'
0
0
3.956640
0
0
4.464.800
0
3.489.600
0
4.196.525
0
3.232.000
4.966.320
2.443.200
1.600.000
35.200
61.600
200.800
0
0
673.184
44.000
0
0
0
0
450.400
a
217.600
31.200
682.400
0
27.840
0
0
4.800
4.160
0
76
ec.s
2C::
:60CO
174975
0
0
16000
24~
a
0
0
44.000
0
0
0
32 000
0
0
0
29 9~0
0
a
150.400
50.400
196.BOO
0
100.575
0
280000
231.360
6.880
4.800
0
0
0
0
0
28.576
0
0
0
0
0
73 600
0
0
0
16.800
0
20.560
0
0
a
0
13926186
25 612.803
13583412
27.190961
0
60384
32000
24.000
0
0
0
0
0
0
3.200
0
0
0
944.254.508
882 175.730
62.078,778
1.838446
17.157.403
16251.038
17.002.865
17.157.403
16251.038
11.002 865
0
0
0
0
0
0
50.411.306
50411.306
0
0
16.980261
16980.261
0
0
16.980.261
16950.261
a
0
227.989967
16659298
1.504081076
13043.294
1 : 6 091 109 I
a
CorpLS
STRIP
CUS:;;
Loan DeScflptlan
Treasury Bonds
CUSIP
9128100M7
008
OR6
DUg
ON5
OPO
OS4
OT2
0V7
OW5
OX3
OYI
DZ8
EA2
E80
EC8
W6
EE4
EFI
EG9
EH7
EJ3
EKO
EL8
EM6
EN4
EP9
E07
ES3
ETI
EV6
EW4
EX2
EYO
EZ7
FAI
F89
FE3
Interest Rate
11-5/8
12
10-314
9-3/8
11-3/4
11-114
10-5/8
9-7/8
9-1/4
7-114
7-112
B-3/4
8-71B
9-1/8
9
8-7/8
8-118
8-1/2
8-3/4
8-3/4
7-7/8
8-1/8
8-1/8
8
7-1/4
7-5/B
7-1/8
6-1/4
7-1/2
7-5/8
6·7/8
6
6·3/4
6·112
6-5/8
6·3/8
6·1/8
5·112
Total Treasury Bonds.:.' ...........
912803 !-89
,t.D5
J.Ge
;'J2'
912800 J.P.7
912803 J.Al
;'.C7
AE3
AFO
AH6
AK9
AL7
AM5
I-N3
AP8
A06
AR4
AS2
ATO
;'U7
AV5
A'N3
AXl
AY9
;'eAO
25\
638
6e6
eD4
8E2
8F9
BG7
8H5
BJI
BKe
BL6
8M4
8P7
Pnnclpal Amount 0Uls:a·~,ng ,n Tnousands
Maturity Date
Total
Outstanding
11115/04
05/15/05
OB/15/05
02/15/06
11/15/14
02115/15
08/15/15
11115/15
02115/16
05115/16
11/15/16
05115/17
08115/17
05115/18
11/15118
02115/19
08/15/19
02115/20
05115/20
08115/20
02115/21
05115/21
08115/21
11/15/21
08/15/22
11115/22
02115/23
08115/23
11115/24
02115/25
08/15/25
02115/26
08115/26
11/15/26
02115/27
08115/27
11/15/27
08/15/28
POMlon
"e , ,n
UnstrlPoe~
.orm
Res~"s: :":e~
I
,m,J
8.301.806
4.260.758
9.269.713
4.755.916
6.005.584
12.667,799
7,149,916
6,899,859
7,266,854
18,823,551
16864,448
18.194,169
14,016,858
8.708,639
9,032,870
19,250,798
20,213.832
10,228,868
10,158,883
21,418,606
11,113373
11.958,888
12.163,482
32.798.394
10,352,790
10,699,626
18,374,361
22,909,044
11.469.662
11,125,170
12,602.007
12904,916
10,893,818
11,493,177
10,456,071
10.735,756
22.518.539
11,776,201
4 U7.916
2 So2 784
11.1c5.239
6977,436
5711.055
7,081.254
18 475,551
17.774,288
8.185849
9 135.258
24;1,839
2124.870
4.805.998
18 S- 3.672
5 8~4,068
2418563
542e526
10078.173
6052648
8 517 562
11.e ~ 5.119
8 775.190
2525826
11.318361
15079.220
2447,022
2776.370
9.012.247
12669.616
9,545.816
10.5'1.177
8401,671
10.399.756
22427,339
11,773,801
492,435.002
326523.813
23:2208
6 C;'2 913
I
PaMlao HeiO ,n
$tflDoe:: For ..,
Tn,s Mon:".
"
i'
3S11.2CC
1 959 55C
2 320 soc
8 ceo
3012%0
1.482.56J
1724BO .
1.188800 :
185 SOD'
348 000 ,i
I
,::::;;: I
4881.600
6276.800 i
6 90B.000 1\
14444.800 ,I
1.300.160 '.
4414800 :1
7.740320 I
15 990.080 Ii
1.035200 I
5906240 I
3625.920 "
21 183275 ,I
1,577.600 I
7.772 BOO i
7056 000 I
3829 8241
9022640
8.948,800
3.589760
235.300
1 348,000
952.000
2054400
336.000
91,200
2400
165.911,189
2544CG
ES SCJ
2Sa 88::;
0
778400
414720
85120
776.000
179.200
196 OCO
198320
930400
723200
70400
180800
1.380 BOO
708 160
572 8CO
152 160
816.320
107.200
916800
4B7.360
1.443000
124,000
99.200
337600
202432
439.760
252.800
310.400
93000
428.000
229.600
564.600
30,400
0
2.000
14.820.852
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
CONTACT:
November 04, 1998
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 10-YEAR NOTES
Interest Rate:
series:
CUSIP No:
STRIPS Minimum:
4 3/4%
Issue Date:
Dated Date:
Maturity Date:
D-2008
9128274V1
$800,000
High Yield:
4.825%
Price:
November 16, 1998
November 15, 1998
November 15, 2008
99.410
All noncompetitive and successful competitive bidders were awarded
securities at the high yield. All tenders at lower yields were
accepted in full.
Tenders at the high yield were allotted
Accrued interest of $
from November 15,
82%.
0.13122 per $1,000 must be paid for the period
1998 to November 16,
1998.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Competitive
Noncompetitive
$
PUBLIC SUBTOTAL
Federal Reserve
Foreign Official Inst.
TOTAL
Accepted
Tendered
Tender Type
$
18,201,345
54,863
$
18,256,208
12,000,708
1,135,000
350,000
1,135,000
350,000
19,741,208
$
Median yield
4.760%: 50% of the amount of accepted competitive
tenders was tendered at or below that rate.
Low yield
4.620%:
5% of the amount of accepted competitive
tenders was tendered at or below that rate.
Bid-to-cover Ratio == 18,256,208 / 12,000,708 == 1.52
RR-2804
11,945,845
54,863
13,485,708
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
CONTACT:
November 05, 1998
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 3D-YEAR BONDS
Interest Rate: 5 1/4%
Series:
CUSIP No:
912810FFO
STRIPS Minimum: $800,000
High Yield:
Issue Date:
Dated Date:
Maturity Date:
Price:
5.300\"
November 16, 1998
November 15, 1999
November 15, 2028
99.253
All noncompetitive and successful competitive bidders were awarded
securities at the high yield. All tenders at lower yields were
accepted in full.
Tenders at the high yield were allotted
51%.
Accrued interest of $ 0.14503 per $1,000 must be paid for the period
from November 15, 1998 to November 16, 1998.
AMOUNTS TENDERED AND
ACCEPTED (in thousands)
Tender Type
Competitive
$
Noncompetitive
PUBLIC SUBTOTAL
Federal Reserve
TOTAL
Median yield
Accepted
Tendered
$
16,215,097
66,594
$
16,281,691
10,001,164
945,000
945,000
17,226,691
$
5.240%: sot of ~he amount of accepted competitive
tenders was tendered at or below that rate.
Low yield
5.180%:
5% of the amount of accepted competitive
tenders was tendered at or below that rate_
Bid·to-cover Ratio
RR-2805
=
9,934,570
66,594
16,281,691 / 10,001,164 = 1.63
10,946,164
OFFICE
or PVBLIC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON. D.C •• 20220. (101) 622.2960
DlBAJtQOE.D tm'l'IL 2: 30 l' .111.
JIlovember 5, 1998
'l'REAS'C'a.'Y' OFnRS l3-WEBK,
office of FiDaDcing
202/219-3350
CONTAC'::
26-WE:Elt, JWD
S2-~
B:ILLS
Tbe Treaaury ~11 auction three aeries of Treasury billa ~o~aling a~p~tely
$27,000 million to refUD4 $26,207 millioD of publicly held securi~ies maturing
No~ember 12, 1998, aDd to raise about $793 milliOD of new cash.
Xu aaaitio: to ~e public holdings, reaeral Reserve BaDkB for their OWD accoUDts
hold $12,959 ~lliOD of the maturing bills, which may be refundea at the higbest
discount rate of accepted competitive tenders. Amounts issued to these accoUDts will be
~ .dQitio~ to the off.r~Ag amo~t.
Tbe maturing bills held by the public include $3,852 million held by Federal
BaDks as a~ts for foreig: aDd inter.aatiocal mcaetary authorities, which may be
refunded within the offering amount at the highest discount rate of accepted competitive
teDders. Additional amcunts m4Y be issued for such accounts if the aggregate ~t of
new bids exceeda the aggregate amount of maturing bills. For purposes of deter.mia;ng
such additioa&l amounts, foreign and iD~erDa~ioDal monetary authorities are considered
to hold $2,402 million of the original 13- and 26-week issues, and $1,450 milliOD of the
o~i~iD&l 52--.ek i.sue.
~.serge
Sote that for the S2-week bill auceioA tba noncompetitive closing time will ~e
11:00 a.m. and the cc!petitive closing time will be 11:30 a.m. Eastern StaDaard time.
The DOZlcampetitive and competitive elosiug tilDes for the 13- and 26-week billa rill be
the normal 12:00 nOOD and 1:00 p.m. Eastern stanard time, respectively.
~l
of the auctions will be cODducted in the siDg1e-~rice auctioD format. A1l
and DODcompee1tive awards will be at the higheat discount rate of accepted
eompetiti~e tender ••
eoepet~eive
Tenders for the bills will be received at Federal Reserve Banks &Dd Branches and
at the Bureau of the Public Debt, Washington, D.C. This offering of Treasur,ysacurities
is governed DY' the te%1DS and co~Q;i.tioDa set forth in the lnlifoZ"lll Offering Circular
(31 CPR part 356, as ameAded) for the sale and issue b,y the Treasu~ to the public of
marketable Treasury ~illa, Dot •• , and Donds.
Details About each of the new securities are given in the
highligbts.
a~tached
offering
000
Att.ebm.at
RR-2806
For press rele4us, sp.ech,s. public schedul,s 4114 officittl biographi,s, call our 24·ltou,. fu
li,,~
at (202) 622.2040
HIGHLIGH~S O~
TRBASURY OPPBRINOS
O~
BILLS
TO BZ XSSuaD NOVENBKR 12, 1998
Off.ria, Amouat •••••••••••••••••••••••• 8,000 million
D•• cri,tioa of Offering,
Te~ an4 type of •• curity ••••••••••••• 91-day bill
CUSI. numb.r •••••••••••••••••••••••••• 912795 SA •
Auction aata •••••••••••••••••••••••••• Rov.mb.r 9, 199.
X••u. elate •••••••••••••••••••••••••••• Rovenaber la. 19'.
Maturity date ••••••••••••••••••••••••• r.bruary 11. 19"
Original i ••ue date ••••••••••••••••••• Augu.t 13, 19'8
CUrrently outatanding ••••••••••••••••• $11,&57 million
KiDimwa bid amount aDd multlpl •••••••• $1,000
$8,000 million
November
$11.000 a1llioll
182-aay bill
t127'S BL •
Hov.nber 9. 1'98
November 12, 1"8
Nay 13,
.ov~ar 12, 1998
36S-day bill
912795 CD 1
November 9. 19'.
November 12, 1'9'
Novemb.r 12, 1999
Novemb.r 12, 1998
$1,000
$1,000
1'"
5. I'"
~ha ~ollowin'
rule. apply to .11 .ecuritie. mentioned above:
Subm1 •• ioa of ald.,
BODco.petitiva bid ••••••••• Acc.pt.d in full up to $1,000,000 at th. high.st discount rate of accepted
oompetitive bia••
Competitive bid •••••••••••• (1) Mu.t b • •xpr•••• d a • • discount rat. with thr.e aecimals in incr. . .nt. of .005%,
a.g., 7.100%, 7.105%.
(2) Hat long position for each bidder must b. r.ported wh.n the aua of the total bid
amount, at all discount rat.s, and the net long 'Q.~tion is $1 billion or
greater.
(3) Net long ,olition mu.t ba det.rmined a. of one half-hour ,rior to the
c~o.inlJ tilR8 for r.c.ipt of coawetitiva t.enders.
Maximum Recognised Bld
at a Single Yield ••••••
35% of public offering
Maximum Award ••••••••••••••••• 35% of ;ublic offering
4
•••
of Tanaeca.
52-week billa
Nonoompetitiv. tender ••••.•
Compatitive t.nder •••••••••
13- and 16-week bills.
HODcompetitive tenders •••••
Competitive teDder8 ••••••••
~eceipt
Par-ent
T.~••••••••••••••••••
Prior to 11:00 a.m • •a.tern Standar« time on auction
Prior to 11130 a.m. S •• tern Standard time on auctioD
~
d~
Prior to 12.00 noon.Ba.tera Standard time on auction day
Prior to 1,00 p.m. aa.tern Standard time on auction d.v
By charge to. fund. account at a ~ederal B•••rve,Baal an i ••ue date, or payment of
full par amouat witb tender. ~r••8ury Direct cu.tome¥8 can u •• the .ay Direct
fe.ture whioh authori.e. a oharge to their account of reaord at their finanaial
ia8titution on i.sue date.
DEPARTMENT
OF
THE
TREASURY
TREASURY,,) NEW S
OrnCE OF PUBUC AFFAIRS -1500 PENNSYLVANlAAVENUE, N.W. - WASHINGTON. D.C .• 20220. (202) 622-2960
EMBARGOED FOR RELEASE AT NOON EST
Text as Prepared for Delivery
November 6, 1998
"TRANSATLANTIC IMPLICATIONS OF THE EURO AND
GLOBAL FINANCIAL STABILITY"
DEPUTY TREASURY SECRETARY LAWRENCE H. SUMMERS
REMARKS TO THE TRANSATLANTIC BUSINESS DIALOGUE
CHARLOTTE, NC
Thank you. I am glad to have this opportunity briefly to address European economic and
monetary union and its implications for the United States. Let me state my conclusion at the
outset: we have everything to gain and little to lose from the success of this momentous project.
Now more than ever, America is well served by having an integrated and prosperous trading
partner on the other side of the Atlantic. Europe will benefit greatly from a single currency that
supports these ends -- and if Europe benefits, this will greatly benefit the United States.
Three questions arise in thinking about EMU what its effect will be on the economies of Europe;
what implications the Euro might have for the dollar; and how EMU will affect Europe's role in
the world and its relations with the United States.
I. European Economic Policy After EMU
Economic integration in Europe took off toward the end of the 1980s and it has not looked back
since. In diverse markets, barriers have come down and standards have been harmonized, yielding
considerable benefits for European business and for United States companies with operations, or
aspirations, across the Atlantic. Most recently, in the preparations for EMU there has also been
remarkable convergence in interest rates and inflation performance, substantial cumulative
reductions in fiscal deficits and a recovery in European confidence and growth.
The fundamental long-term challenge facing Europe can be summarized in a single sentence:
establishing a strong and stable foundation for job-creating growth. As the Europeans themselves
RR-2807
-
For press releases, speeches, public schedules and official biographies, call our 24--hour fax line at (202) 622-2040
have recognized, this becomes a more pressing issue after EMU. Because the governments of
"Euroland" will not then have the same capacity to respond to shocks down the road when
governments no longer have the old monetary and exchange rate levers in their hands.
When trouble hits Texas, several things happen automatically. People move out to find jobs
elsewhere, capital moves in to take advantage of lower costs, the federal tax take goes down -and federal spending on government programs goes up. The question Europe is coming to grips
with is which of these margins for adjustment will operate in Euroland.
In so many ways, the answer to this question is going to depend on European governments'
efforts to press ahead with structural reforms to give labor product markets the flexibility and
dynamism to adjust quickly and effectively to shocks. Indeed, it is the fundamental paradox of
EMU that while it has often seemed to distract policy makers from the structural agenda, their
success in addressing Europe's structural challenges will be critical to the success of monetary
union itself.
Europe entered the 1990s with three deficits weighing down on rapid long-term growth -- a fiscal
deficit, a jobs deficit and an investment deficit. Impressive progress has been made on the fiscal
side. But as European governments know well, the shortfalls in investment and jobs remain:
•
despite the recent upturn, average unemployment in the EU last year was roughly twice
what it was in 1979 -- and more than twice the rate in the United States;
•
meanwhile, by some measures, real domestic capital investment is no higher today, in real
terms, than it was in 1991.
Reviving private investment will be a major part of reviving employment -- and the key to both
will lie in structural reforms to provide a more attractive environment for that investment, whether
it comes from within Europe or from abroad. Indeed, it will be particularly important in this
context to maintain open markets and support closer integration of Europe, not merely between
European countries but between Europe and the rest of the world.
The countries that have made the deepest structural reforms, such as the Netherlands, Ireland and
Portugal, have recently enjoyed the most vigorous recoveries of the EMU countries. Here as
elsewhere, EMU has the potential to open up new opportunities for private investment and
employment, with hugely beneficial opportunities for European and American business and for
global growth.
If EMU is a success, this may well fuel ever closer cooperation in other areas, particularly when it
comes to fiscal policy and deeper regional integration of regulations and standards. And America
and American business would benefit from this bringing together of European nations for the
same reasons that we have benefited from the development of the single market. The challenge
will be to combine this integration with reforms that help give European product and labor
markets the flexibility and dynamism of which we all k.now they are capable.
2
ll. Implications for the International Financial System
The advent of the Euro is potentially very important to the international financial system. One
sometimes hears the view that the Euro will be so strong and robust that it will displace the dollar
as the world's reserve currency of first resort At other times -- though not always, it must be
said, from other people -- one hears the view that the Euro will decline in value so far that it will
substantially raise European competitiveness at the United States' expense.
No doubt currencies will fluctuate in the future as they have in the past. But I am convinced that
the best prospect for maintaining a sound currency is to maintain strong fundamentals. The
Administration has always held to the view that the buck stops -- and starts -- with us. In the end,
the dollar's relative standing in the international financial system will always depend more on
developments here than on events overseas. If we stick to strong and credible policies, the dollar
will remain a sound currency.
Now more than ever, the effects of the Euro will be extremely complicated and it is difficult to
predict with any certainty what the role of the new currency will be. On the one hand, there will
certainly be implications for the demand for Euros. And many will point to the fact that the
standing of the dollar is presently disproportionate to the size of our economy or the United
States share in global trade.
And yet, there will also obviously be effects on the supply side of the equation as European
financial markets start to become deeper and more liquid. The total value of equities in US
markets last year was close to $11 trillion, compared to around $5 trillion for the Euro eleven.
The bottom line is that the attractiveness of the Euro will ultimately depend on the same factors
that determine the attractiveness of the dollar: the long-term credibility of the policies
underpinning the currency and the efficiency of financial markets.
ill. Europe's Global Role
Europe is already an economic superpower With a successful move to EMU, and the integrating
forces that EMU could unleash, many Europeans look forward to the day when Europe will more
fully punch its weight in international policy-making, not merely in economic issues but in the
broader global arena.
By far the most pressing question today relates to Europe's capacity to respond to the financial
crises in Asia -- and work with the United States to support global stability and growth. As the
Vice-President has said here today, by continuing the policies we have pursued in the United
States over the past five years -- policies that have delivered a balanced budget, lower interest
rates, low inflation and strong growth -- we have made and will continue to make a major
contribution to supporting growth and financial confidence around the globe. But we cannot carry
the burden alone. And Europe has a particularly important role to play.
3
It is striking that private forecasts are now suggesting that the United States current account deficit
could rise from l. 9 percent to 2.8 percent of GOP this year, or around $235 billion. By contrast,
forecasters are predicting little or no change in last year's current account surplus of the European
continental economies of 1.8 percent of GDP, or roughly $110 billion.
It goes without saying that the global economy's adjustment to the shocks of the Asian crises will
be smoother, the more widely it is shared. What perhaps needs to be said more often is how well
such an adjustment would fit the longer term economic needs of Europe itself. For as its policy
makers recognize, Europe's large current account surplus is simply the flip-side of the low
domestic private investment mentioned earlier.
European leaders have already committed themselves to working closely with the United States
and others to resolve the present crisis, and to create strong mechanisms for helping to prevent
the next one. But perhaps the largest contribution that Europeans could make to the continued
stability of the global market system today would be to take the structural reform steps needed for
a rapid upturn in private investment.
Alone among the major regional economic blocs, Europe has the capacity to increase domestic
investment levels substantially. And with the advent of EMU it has the clear and compelling
reasons to do so: namely, reducing unemployment and, more broadly, ensuring that the recent
recovery in European growth will be sustained. Truly, by acting to improve Europe's capacity to
respond to external shocks on a regional level -- they would also be taking a major step toward
containing them at a global level
Looking ahead, EMU has of course raised important issues about the future evolution of the G-7,
and Europe's participation in organizations such as the International Monetary Fund. We will
continue to monitor progress and engage with the EU on these matters as the starting date draws
near. In this context the proverbial American question -- of which number to call when you want
to call Europe -- will take on even greater salience as Europe seeks to establish the respective
roles of the European Central Bank, European Commission and various national authorities.
Some have argued that a Europe with a single number in the global directory might ultimately
pose a threat to the United States. But in a global economy, the United States has infinitely less to
fear from an open and integrated Europe, that continues to take its share in global responsibilities,
than a Europe that turns inward and seeks insulation This has been true since the very start of the
European project in the early 1950s and it is true today.
The United States has an enormous stake in Europe emerging under EMU with the capacity to
playa more active and constructive role on the world stage -- and with the capacity to be an even
stronger economic aIIy to the United States in the century to come. As ever, Europe is a partner,
not a rival. And as our partner succeeds, so will we Thank you.
-30-
4
DEPARTlVlENT
OF
TREASURY
THE
TREASURY
NEWS
omCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASIDNGTON, D.C. - 20220 • (202) 622-2960
EMBARGOED FOR 9 AM. EST RELEASE
November 9, 1998
"The New Economy and the Global Economy"
Remarks by Deputy Treasury Secretary Lawrence H. Summers
Chemical Manufacturers' Association
I am delighted to have this opportunity to discuss our economic future with the leaders of
an industry that will play an enormous -- and enormously under-estimated -- role in that future.
In the late 20th century economy, an industry's visibility is less and less correlated with its
importance -- and the weight of its products an ever poorer gauge of their economic value. In no
sector is this more true than the chemical industry. American consumers stand in much the same
relationship to your industry as they do to the air they breath, one of far-reaching dependence and
almost as far-reaching disregard:
•
we are a country of proud home and car owners But I doubt many Americans realize
when they buy a new home that they have bought nearly $13,000 worth of chemical
products before even the carpet is laid -- or that many drivers stop to count the more than
$2,000 worth of chemical products and chemical processing contained in their new car.
_
we take pride in our information revolution But we measure it largely in bits and bytes.
We rarely stop to consider the new life in chemistry that has been at the vanguard the
technological breakthroughs in your industries that have revolutionized every inch of our
lives, from fertilizers to finger-printing, from new fabrics to better photo-processing.
_
we know that the American economy has become part of a global economy. Yet few
would probably guess that the chemical industry, long our largest export sector, has also
recently been about the most successful, with $167 billion in cumulative trade surpluses in
the past ten years, and buyers from Tierra del Fuego to Timbuktu.
It may be little exaggeration to say that where American chemical manufacturers go, so
goes the country. But the reverse is even more true -- you have an enormous stake in the state of
the domestic economy and that of the broader global economy. And looking around the world,
there are today enormous reasons for concern.
RR-2808
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
I. Risks Facing the Global Economy
By wide agreement, what used to be called the Asian financial crisis is now a global
financial market problem that may be as serious as any the international community has faced since
the World War ll. There has been what Federal Reserve Chairman Alan Greenspan has called a
"very dramatic change in the whole risk profile of the world" -- with implications for every
American.
The economic crises and large-scale withdrawal of capital from emerging markets in Asia,
Russia and elsewhere have already affected US exports and the job growth that goes with those
exports. Petrochemical exports to Japan and emerging Asia for the year-to-date are down by nearly
one-quarter, and private forecasters are suggesting that the crises could add one percentage point
or more as a share ofGDP to our overall current account deficit
No less troubling has been the recent impact of these crises on American financial markets.
In the wake of the Russian crisis in August, almost across the board financial institutions have
been running toward quality and away from risk. As a result, even the most respected American
companies have found it more costly to raise funds on equity or debt markets and major financial
institutions are revising their profit estimates and downsizing their payrolls.
Our goal is clear: to work to restore stability and growth in Asia and Russia and prevent
further contagion in other markets. Our strategy for achieving this will rest on three critical pillars:
•
first, strengthened policies in the major industrial economies;
•
second, strong policies in the emerging economies;
•
and third, global leadership and support for effective containment of these crises and
prevention of possible future ones.
II. Strengthened Policy in the Industrial Economies
The United States
Let me start here at home. In a month or two we will be enjoying the longest peacetime
expansion in American history. It has been a low inflation expansion and it has been an expansion
that -- to a greater degree than any other of the past 40-odd years -- has been led by exports and
investment In the chemical sector alone, both real investment in plant and equipment and export
volumes have grown by ten percent a year on average in the past decade.
Why this success? Two reasons stand out First, the competitive ~rive, creativity ~n.d .
flexibility of American companies. It cannot be an accident that commUnIsm, plannIng mlnIS~neS
throughout the developing world and large corporations run by command and control all ran mto a
brick wall in the same decade and had to be restructured New technologies In all areas of mdustry
have forced pr~found changes in the way economic and financial life is organized -- changes for
2
which we are fortunate that our economy is superbly well adapted.
If you want to talk about patient capital look not abroad where too often the same old
money was invested in companies using the same old technologies in the same old industries.
Look right here in your own industries, where millions are invested in pathbreaking technologies
before revenues, let alone profits, come, and molecular biologists such as Kary Mullis can be set
on the road to hundreds of millions of revenues and a Nobel prize, before the notion of polymerase
chain reaction had spawned a single marketable product.
The second major reason is prudent, pro-growth policies: policies that have put the federal
government in surplus for the first time in a generation. As a result of the deficit reductions of the
past decade, more than one trillion dollars in capital that would otherwise have been invested in
the sterile asset of government paper has instead been invested in America's future: in research and
development and plant and equipment, in our workers, in our cities and in our homes.
I am confident that the dynamic duo of competitive industry and prudent policy leave
America well-placed to face future shocks and that the momentum of the recovery can be
sustained, albeit perhaps at a slower pace than has been true most recently. But as strong as you
are and as well-equipped as you are to respond to changing global conditions -- as the VicePresident said last week -- economic growth that is global requires economic leadership that is
global. The United States cannot be the importer of only resort.
Continental Europe
For too long, perhaps, too many American analysts have considered Europe to be trapped
in the past. To be sure, the structural challenges facing Europe have lately loomed large.
Unemployment in Europe is today double what it was in 1979, and more than double the rate in
the United States. By some measures, real investment in the continental economies has been
stagnant since 1991.
As the Europeans themselves have recognized, the structural reform agenda becomes a
more pressing issue with the advent of European economic and monetary union -- an enterprise
that, if successful, has enormous potential to pull countries and markets together and make
Europe a stronger and more prosperous trading partner for the United States.
European governments' success in addressing Europe's structural challenges will be
critical to the success of monetary union itself And their efforts can only take on greater urgency
at a time when strong European growth will be so critical to global growth and stability. But
from the factory floor to the highest levels of officialdom -- particularly in France and Germany -I have detected a wind of change running through Europe not unlike that blew through American
business in the late 1980s. And let me be clear: if EMU works for Europe, it will work for the
United States and for American business.
Japan
In Japa,?, it is not so long ago that books were being written about the advent of the
3
Japanese sup,erstate, ~nd commentators were making much of the fact that the land occupied by
the Emperor s palace In Tokyo was worth more than the whole of California. What a difference 5
or 6 years can make. Japan is now in a severe economic recession, the most protracted in its
postwar history, the financial system is burdened with upwards of $1 trillion in bad debts and the
very best banks in Japan are paying substantial premia to borrow in yen
I do not need to remind this audience that Japan's success in dealing with its problems will
carry major implications for the region and for the global economy as a whole. In this context we
welcome the Diet decision to make available a significant amount of public funds to strengthen
Japan's banks -- provided that these funds are used forcefully and with appropriate conditions.
Yet, given the depth of Japan's recession, we believe it would also be appropriate and
beneficial if Japan increased government spending, deepened the size of its tax cuts, and moved
forward with effective policies for stabilizing the financial system and getting bad assets offbank
balance sheets. President Kennedy once said that problems that are made by man can be solved
by man. But even when solutions are known and recognized, they need to be implemented if they
are to work.
ill. Strong Policies in the Emerging Market Economies
Emerging Asia
If there has been an even larger surprise in the global economy in the past year it is surely
the decline of the Asian "tigers". As you know, these crises are still a moving story and the
countries concerned are undergoing severe economic and social distress. But in those nations that
were first hit and where policy has been most determined, there has been evidence of containment
Countries that have consistently followed policies that the Il\1F were able to endorse and
support -- specifically the Philippines, Korea and Thailand -- have begun to see signs of a return
to stability. In Korea and Thailand the currencies have broadly stabilized, nominal interest rates
are down in the low teens, and real interest rates have fallen to well below pre-crisis levels. At the
same time these governments are now working to expand their fiscal policy to use the room
provided by their sound policies for the fastest possible return to growth.
In Indonesia, as has become increasingly apparent this past year, the major problems have
been more political than economic. Its experience has underlined that democracy is very
important. But it has underlined even more forcefully that every bit as important as democracy is
belief in personal safety and in the security of property rights and free contract.
China has been the fastest growing economy in history since reform began in 1980 -- to
the point where, by some calculations, it is now the second largest economy in the world. This has
brought China new and deserved weight in the economic arena. But that same success has also
added urgency to the need to build a stronger long-term foundation f?r market developmen~. As
the Chinese have recognized, their continued commitment to addressmg deep-seated finanCial
4
se~tor problems and maintaining a stable currency will be the key to their own growth and stability
gomg forward -- and to the growth and stability of the region as a whole.
Latin America
Turning to Latin America, it is a huge tribute to what has been achieved in Argentina and
Mexico in recent years that we have had a major crisis in emerging market economies -- and each
of these nations has weathered the storm to a degree that would have surprised many
commentators even a year ago. Many feared that the Mexican crisis of 1994 would spur an
inwards tum in the region. The reality was that it served as a wake-up call, and has led to a
strengthening of policy in most of Latin America. As we have seen recently in Brazil, this has not
inoculated the region against Asia and Russia's ills, but it has afforded an important degree of
protection.
Brazil has faced serious pressures in recent months, pressures that have underlined the
need for the country's longstanding fiscal vulnerabilities to be addressed. In the plan recently
presented to Parliament, President Cardoso has committed the government to a fiscal adjustment
program that -- decisively implemented -- can provide a foundation for future growth and
stability. And as we go forward the United States and the international community have expressed
our desire to support these efforts, in whose success we all have such an important stake.
Central and Eastern Ellrope and Russia
F or central and eastern Europe, the very real question for the coming months and years
will be which way the magnetism is stronger -- toward the west, and all the markets and
prosperity they afford -- or to the East and to Russia. Nothing in life is certain. And we have
learnt in the past ten years that the transition to a market economy is not a straight and narrow
path. But if we look to Poland, and if we look to the Czech Republic -- and the steps that its
government has taken in response to recent market pressures -- I think we see grounds for
thinking that the winds of change in this part of the Continent will continue to blow westward.
Turning to Russia, the situation is difficult. Since the reform process began in Russia the
market reformers had been running a race to lay the foundations for a successful market economy,
a race in which they were squeezed between, on the one hand, the forces of oligarchy and crony
capitalism and on the other, the more retrograde elements of the Duma.
If the oil price had not fallen so dramatically, if the government had been more successful
in performing core functions such as tax collection and bank regulation, if there had not been a
major crisis in Asian emerging markets, and ifYeltsin had not fallen iU-- if any ~r all ~fthese
things had not happened, the reformers might have won their race. But these thmgs dId happen
and in August the government's time ran out.
The new government of Prime Minister Primakov will have to make its way as it deals
5
with ~he proble~s which that failure has wrought The United States stands ready to support the
RussIan people m the months to come -- as shown by last week's agreement to provide an
emergency food aid package But while we can do an enormous amount with the support that we
and the rest of the int.ernational community provide, the same truth applies to Russia that applies
to every other emergmg economy. We cannot want change more than the country itself does. We
stand willing to support a viable economic program in Russia in the future as we have done in the
past. But ultimately Russia will make her own destiny.
IV. The Need to Think -- and Act -- Globally
The third and major pillar of our strategy is continued American engagement with the
international community as we work to respond effectively to these crises and build a stronger
system in the future:
•
the passage of new funding for the Th1F was an important step forward in our ongoing
efforts to improve the IMF's capacity to respond to crises. Going forward we must
continue to work within the IMF, with our G7 colleagues and with others to explore how
this progress can be continued;
•
more broadly, we will need to build on recent efforts to build a global financial architecture
for the 21 st century -- one that is better equipped to prevent crises and in which those
crises that do occur will be less costly for the countries concerned and for their neighbors;
•
and in all this, we must remember that the greatest contribution that the United States can
make to the global economy will always be the continued strength and dynamism of our
own economy -- an economy that still accounts for more than one fifth of global GDP.
Like never before, the United States is truly -- as President Clinton has said -- the world's
indispensable nation. But to repeat -- to say we are indispensable is not to say we can carry the
burden alone. At the APEC summit in Kuala Lumpur in a few weeks' time and to other
international fora it will be critical for every country to do its part to ensure the global momentum
toward open markets is continued and cooperative efforts to promote short and longer term
stability are sustained.
After the difficult years of the first half of this century, the world swung decisively toward
international institutions, cooperation and open markets. That is the path that has helped create the
global economy in which American companies and workers now have such an enormous stake.
And it is the path that we can and must work to strengthen and encourage all nations to follow as
we face the many challenges to come. Thank you.
6
TREASURY
NEWS
~8~q~. . . . . . . . . . . ._
. . . . . . . . . . . . . .
OmCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W .• WASIflNGTON, D.C .• 20220. (202) 622-2960
Monthly Release of U.S. Reserve Assets
November 9, 1998
The Treasury Department today released U.S. reserve assets data for the month of
October 1998.
As indicated in this table, U.S. reserve assets amounted to $79,186 million at the end
of October 1998, up from $75,676 million in September 1998.
U.S. Reserve Assets
(in millions of dollars)
End
of
Month
Total
Reserve
Assets
Gold
Stock II
Special
Drawing
Rights 2.1
September
75,676r
1l,044r
October
79,186p
1l,044p
Foreign
Currencies 1:1
ESF
System
Reserve
Position
in IMF 2.1
10,106
14,529 18,353
21,644
10,379
16,007 19,478
22,278
'J.I
~I
1998
II Valued at $42.2222 per fine troy ounce.
'JI Beginning July 1974, the IMF adopted a technique for valuing the SDR based on a
weighted average of exchange rates for the currencies of selected member countries. The
U. S. SDR holdings and reserve position in the IMF also are valued on this basis
beginning July 1974.
J..I Includes allocations of SDRs by the IMF plus transactions in SDRs.
~I
Includes holdings of Treasury and Federal Reserve System; beginning November 1978,
these are valued at current market exchange rates or, where appropriate, at such other
rates as may be agreed upon by the parties to the transactions.
S,I Includes $483 million of loans to the IMF under the General Arrangements to Borrow
(GAB) in July 1998.
p
Preliminary
RR- 2809
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt. Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
November 09, 1998
CONTACT;
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 52-WEEK BILLS
365-Day Bill
November 12, 1998
November 12, 1999
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:
912795CDI
4.400%
Investment Rate1/:
4.616%
Price:
95.539
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. All tenders at lower rates were accepted in full.
Tenders at the high discount rate were allotted
AMOUNTS TENDERED
AND
ACCEPTED (in thousands)
$
PUBLIC SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
TOTAL
Accepted
Tendered
Tender Type
Competitive
Noncompetitive
50%.
28,636,520
$
618,379
29,254,899
10,132,629
883,600
883,600
30,138,499
11,016,229
5,225,000
5,225,000
o
o
s
35,363,499
$
Median rate
4.390%: 50% of the amount of accepted competitive
tenders was tendered at or below that rate.
Low rate
4.350%:
5% of the amount of accepted competitive
tenders was tendered at or below that rate.
Bid-to-cover Ratio = 29,254,899 / 10,132,629 = 2.89
1/ Equivalent coupon-issue yield.
RR-2810
9,514,250
618,379
16,241,229
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt. Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
FOR IMMEDIATE RELEASE
Office of Financing
202-219-3350
November 09, 1998
RESULTS OF TREASURY'S AUCTION OF 13 -WEEK BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:
91-Day Bill
November 12, 1998
February 11, 1999
912795BA8
High Rate:
4.470%
Investment Ratel/:
4.584%
Price:
98.870
All noncompetitive and successful competitive bidders were awarded
securities at the high rate.
All tenders at lower rates were accepted in full.
Tenders at the high discounc rate were allotted
38%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender
Competitive
Noncompetitive
PUBLIC
Accepted
Tendered
Type
$
SUBTOTAL
23,326,562
Federal Reserve
Foreign Official Add-On
24,620,287
,,691,611
328,100
328.100
24,948,387
8,019,711
3,934,485
3.934.485
o
o
$
TOTAL
28,882,872
$
Median rate
4.460%: sot of the amount of accepted competitive
tenders was tendered at or below that rate.
Low rate
4.450%:
5~ of the amount of accepted competitive
tenders was tendered at or below that rate.
Bid-to-cover Ratio
= 24,620,287 / 7,691,611
1/ Equivalent coupon-issue yield.
RR-2811
6,397,886
1.293.725
Foreign Official Refunded
SUBTOTAL
$
1,293,725
3.20
11,954,196
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
November 09, 1998
CONTACT:
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Term;
Issue Date:
Maturity Date:
CUS I P Number:
182-Day Bill
November 12, 199B
May 13, 1999
912795BL4
High Rate:
4.500%
Investment Ratel/:
4.669%
Price:
97.725
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. All tenders at lower rates were accepted in full.
Tenders at the high discount rate were allotted
43%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
Competitive
Noncompetitive
$
PUBLIC SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$
21,284,343
6,110,743
1,900,000
1,900,000
23,184,343
8,010,743
3,800,000
3,800,000
o
26,984,343
$
Median rate
4.490%: 50% of the amount of accepted competitive
tenders was tendered at or below that rate.
Low rate
4.470%:
5% of the amount of accepted competitive
tenders was tendered at or below that rate.
Bid.-to-Cover Ratio
=
21,284,343 / 6,110,743
1/ Equivalent coupon-issue yield.
RR-2812
5,022,765
1,087,978
o
$
TOTAL
20,196,365
1,087,978
3.48
11,810,743
DEPARTMENT
TREASURY
OF
THE
TREASURY
NEWS
~~17819~. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
....................................
OmCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASIDNGTON, D.C. - 20220 - (202) 622-2960
FOR IMMEDIATE RELEASE
November 9, 1998
JOINT STATEMENT BY THE DEPARTMENTS OF TREASURY AND JUSTICE
While we are disappointed that the Supreme Court did not grant certiorari, it is important
to remember, as Justice Ginsburg emphasized in her dissent, that the Court's ruling "does not in
any sense constitute a ruling on the merits of the issue presented." Even the U.S. Court of
Appeals for the D.C. Circuit agreed that "ensuring the physical safety of the President is a public
good of the utmost importance."
As the Court of Appeals suggested, we look fOf\vard to working with Congress on
legislation next year regarding the protective function privilege.
-30-
RR-2813
D
rQr
I
h
press re eases, speec es,
P bZ'·
II
Ie
hedules and official biooraphies, call our 24-h 011 r fax line at (202) 622-2(}40
sc
'JJ'
b'
NEWS
~8~9. . . . . . . . . . . . . .. .
. . . . . . . . . . . . . . . .
OmCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASlUNGTON, D.C. - 20220 - (202) 622-2960
Remarks as prepared for delivery
November 12, 1998
ASSISTANT SECRETARY OF TIIE TREASURY FOR FINANCIAL INSTITUfIONS
RICHARD CARNELL REMARKS AT TIIE FEDERALIST SOCIETY
FINANCIAL INSTITUTIONS PRACTICE GROUP
WASHINGTON, DC
Real Financial Modernization
During the course of this session, we may hear a lot about "financial modernization."
Let's keep in mind what financial modernization really is.
Financial modernization is the process by which our financial system evolves in
response to competition, innovation, and consumer preferences. Real financial
modernization is a business process, not a political process. It occurs in the marketplace,
not in the halls of Congress. The question for policy makers is how to respond to the
financial modernization that is already occurring in this country and around the world.
Yet some people, including some here in Washington, lose sight of this point. They
equate "financial modernization" with the legislative process -- as though the whole exercise
were a gigantic game of "Simon Says," in which market participants couldn't move forward
without Simon's say-so. Fortunately, that is not the case.
I say "fortunately" because over the years the progress of legislation intended to
facilitate financial modernization has been torturously slow. Like a game of "Simon Says,"
it has often involved two steps forward and one step back, two steps forward and three steps
back. Unlike a game of" Simon Says," it has also involved a lot of self-defeating behavior -the equivalent of shooting yourself in the foot or holding your breath till you're blue in the
face.
RR-2814
Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
The Circular Firing Squad
And that brings me to my topic this morning: "Business Freedom and the Circular
Firing Squad." Let's start with the firing squad.
The federal laws governing what companies can affiliate with banks -- notably the
Glass-Steagall Act and the Bank Holding Company Act -- are badly outdated. They permit
only limited affiliations between banks and other financial services firms. But changing
these laws has proved difficult. Congress tried to do so in 1984, 1988, 1991, 1995, and
1997-98. Each time the process came to grief. And each time saw a great deal of selfdefeating behavior.
I've often likened the process to a circular firing squad -- in which everyone hits the
target but no one comes out ahead.
Business Freedom: The Subsidiary Option
A broad consensus has emerged in favor of allowing banks to affiliate with companies
engaged in the full range of financial activities. But disagreement remains over what
freedom a financial services firm that includes a bank should have in organizing itself.
Indeed, when the past Congress debated H.R. 10, this proved to be one of the most divisive
issues in a divisive process. I'm now going to examine that controversy more closely as a
case study in business freedom and the dynamics of H.R. 10. I would note that it happens to
be an issue in which the Administration has a strong interest.
The Administration believes that financial services firms should have a choice about
where to conduct financial activities like securities underwriting, merchant banking, and
insurance underwriting -- activities that banks, and companies affiliated with banks, have
generally not been allowed to conduct in the past. The Administration proposed allowing
financial services firms to conduct such activities through holding company affiliates or
through subsidiaries of banks. This approach received support from the FDIC, the banking
industry, the New York Times, the Washington Post and most independent economists who
considered the issue.
2
BANK HOLDING COMPANY
I
I
BANK
AFFILIATE
I
SUBSIDIARY
But some participants in the debate took a different view. They insisted that
Congress allow such new activities only in holding company affiliates. They evidently felt
so strongly about this that they preferred to have no legislation at all rather than legislation
that pennitted the subsidiary approach. And they did this even though they had much to
gain from H.R. 10, and much to lose if there were no legislation.
So let's look at the merits of the subsidiary approach. In particular, let's look at the
arguments raised against it.
Opponents of the subsidiary approach raise six basic objections. First, they
characterize it as an untried experiment -- a radical leap into the dark. Second, they brand it
as overly risky. Third, they conjure up the specter of the thrift debacle and suggest that the
subsidiary approach would produce a similar catastrophe. Fourth, they stress some possible
accounting consequences of the subsidiary approach. Fifth, they assert that a subsidiary,
because of its association with a federally insured bank, would receive a subsidy that is not
available to an affiliate of that same bank. And sixth, they suggest that the subsidiary
approach would somehow thwart functional regulation of securities and insurance activities.
Let's take a quick look at each of these objections.
1. Radical, Untried Experiment?
The first objection depicts the subsidiary as a radical, untried experiment.
But if you survey the financial systems of other developed countries, you'll find that
organizational flexibility is the norm rather than the exception. No other country in the
Group of Ten, and no country in the European Union, forces securities underwriting and
3
dealing into a holding company affiliate. And virtually every such country that permits
affiliations between banks and insurance underwriters allows subsidiaries of banks to
underwrite insurance.
Nor is the subsidiary form a radical new experiment for U.S. banks. U.S. banks
have had several decades of experience conducting nonbanking activities through
subsidiaries. Such subsidiaries have for years engaged overseas in investment banking -including underwriting and dealing in corporate debt and equity securities -- and merchant
banking. All told, securities and merchant banking subsidiaries of U.S. banks have .over
$250 billion in assets, and insurance underwriting subsidiaries have some $4 billion in
assets. So we should have a healthy skepticism about the doomsaying to which I will now
tum.
2. Overly Risky?
The second objection is that the subsidiary approach would pose excessive risk to the
parent bank and the federal deposit insurance funds.
In making this argument, critics ignore a fundamental, longstanding, and unifonn
rule of corporate law: that a parent corporation is generally not liable for the obligations of
a separately incorporated subsidiary. If the subsidiary fails, the parent stands to lose no
more than its investment in the subsidiary. The parent can be held liable for obligations of
the subsidiary only under extraordinary circumstances, such as fraud by the parent.
We would reinforce this corporate separateness with rigorous safeguards on a bank's
exposure to a subsidiary. For a subsidiary to engage in new financial activities, the bank
would have to remain well capitalized and well managed. Every dollar of the bank's equity
investment in the subsidiary would be deducted from the bank's capital -- and the bank
would have to remain well capitalized even after the deduction.
These and other safeguards we propose would help assure that conducting an activity
in a subsidiary posed no greater risk than conducting it in an affiliate. The rules governing
extensions of credit, guarantees, and asset purchases would be exactly the same. The rules
governing equity investments would be equivalent. A bank could invest in a subsidiary only
the amount that it could pay as a dividend (e.g., to its parent holding company). And the
bank would have to deduct from its own regulatory capital the entire amount of the
investment. Thus, if the bank made an equity investment in a subsidiary, the effect on
capital would be the same as if the bank had paid a dividend to its parent holding company
and the holding company had invested the proceeds in an affiliate. In either case, the
amount invested would no longer count as part of the bank's capital.
4
The current Chair of the FDIC and three of her predecessors all agree that the
subsidiary approach is fully consistent with safety and soundness and the protection of the
deposit insurance funds. Indeed, they believe that the subsidiary approach is, if anything,
superior to the affiliate approach. A subsidiary's earnings accrue directly to the benefit of
the parent bank, and help diversify the bank's earnings. If the bank ever gets into trouble,
the bank's ownership interest in the subsidiary is among the assets available to the bank and
the FDIC. By contrast, forcing assets out of the bank and into a holding company affiliate
generally puts those assets beyond the reach of the FDIC and deprives the bank of the
earnings from those assets.
Moreover, the notion that banks conduct safe "banking" activities whereas other
financial service providers conduct dangerous "nonbanking" activities is antiquated, as
Chainnan Greenspan has explained:
"[T]he pressures unleashed by technology, globalization, and deregulation ha'Ve
inexorably eroded the traditional institutional differences among financial finns.
On the bank side, the economics of a typical bank loan syndication do not differ
essentially from the economics of a best-efforts securities underwriting. Indeed,
investment banks are themselves becoming increasingly important in the syndicated
loan market. With regard to derivatives instruments, the expertise required to manage
prudently the writing of over-the-counter derivatives, a business dominated by banks,
is similar to that required for using exchange-traded futures and options, instruments
used extensively by both commercial and investment banks. The writing of a put
option by a bank is economically indistinguishable from the issuance of an insurance
policy. The list could go on. It is sufficient to say that a strong case can be made
that the evolution of financial technology alone has changed forever our ability to
place commercial banking, investment banking, insurance underwriting, and
insurance sales into neat separate boxes."
3. Another Thrift Debacle?
The third objection is that the subsidiary option would lead to a financial catastrophe
like the thrift debacle. This argument is heavy on emotion but light on logic.
The thrift debacle had mUltiple causes, and resulted in part from allowing insolvent or
weakly capitalized thrift institutions to expand rapidly into risky new activities for which
they had little or no experience. Far from having to remain well-capitalized, thrifts faced no
effective capital discipline. No capital deduction requirement applied. Since the thrifts in
question had little or no real capital of their own, they essentially funded their investments
with federally insured deposits. And far from being well-managed, these thrifts were illequipped to manage the risks involved.
5
By contrast, under the Treasury's proposal, a bank would in effect have to fund every
dollar invested in a subsidiary with money that could otherwise go to the bank's own
shareholders. The bank would have to remain not only well capitalized but well managed,
which would include having internal controls adequate for the risks it faces.
Regulators exacerbated the thrift debacle by devising regulatory accounting rules for
thrifts far less stringent than generally accepted accounting principles in order to mask
problems for which they lacked the will and the fmancial resources to correct. Under our
approach, by contrast, standards much stricter than GAAP would apply to the computation
of regulatory capital whenever a bank engaged in new financial activities through a
subsidiary .
4. Accounting as Reality?
The fourth objection to our approach points to generally accepted accounting
principles that require consolidated reporting by the bank and any subsidiary. Thus, critics
argue, because a subsidiary's losses would appear on the bank's books, the bank would feel
pressure to prop up the subsidiary.
But accounting does not dictate liability. Consolidated accounting does not c~ange
the rule against holding a parent corporation liable for a subsidiary's obligations. The fact is
that bank holding companies -- not banks -- issue the most heavily relied upon, publicly
reported GAAP-based financial statements. And the fact is that those financial statements
consolidate the bank with all of its affiliates as well as with all of its subsidiaries. So poor
performance by an affiliate could concern investors and depositors just as easily as poor
performance by a subsidiary. Thus, if a bank has a GAAP-induced incentive to prop up a
subsidiary, it has the same incentive to prop up an affiliate. And under the Treasury's
proposed safeguards on capital, lending, and investments, a bank would have no greater
ability to support a troubled subsidiary than to support a troubled affiliate.
5. Imparting Subsidy Not Available to Affiliate?
The fifth objection is that a subsidiary, because of its association with a federally
insured bank, would receive a subsidy that is not available to an affiliate of that same bank.
Now if subsidiaries have a significant subsidy advantage over affiliates, you would
expect subsidiaries to dominate the lines of business in which both engage -- such as
mortgage banking. In fact, that is not the case: affiliates hold their own in this area:
In any event, if any significant subsidy does exist, our proposed safeguards would
prevent it from being transmitted to a subsidiary any more readily than it could be
6
transmitted to an affiliate. Every dollar that the bank could invest in a subsidiary could just
as readily be paid out as dividends to the holding company in order to capitalize an affiliate.
And the limits on a bank's loans, guarantees, and the like would be exactly the same for a
subsidiary as for an affiliate.
6. Thwarting Functional Regulation?
The sixth objection involves functional regulation of securities and insurance.
activities. Critics assert that allowing such activities in subsidiaries of banks would
somehow undercut functional regulation and prevent securities and insurance regulators from
carrying out their duties.
This is no reason whatsoever why this need be the case. Congress can specify that
securities and insurance regulators would have exactly the same authority over a subsidiary
as they do over an affiliate.
Conclusion
Our legal system gives businesses considerable flexibility in organizing themselves.
That business freedom should be limited only to the extent demonstrably necessary to further
the public interest.
The opponents of the subsidiary approach have failed to make a coherent -- much less
a compelling -- case for denying financial services firms the option of that approach. On the
contrary, U.S. banks have considerable experience conducting financial activities through
subsidiaries. As we have proposed it, the subsidiary approach poses no greater risk.than the
affiliate approach, involves no greater potential for transmitting subsidies, gives banks the
benefits of diversification, provides greater protection to the FDIC, and is fully consistent
with functional regulation.
Thus one could quite reasonably view the subsidiary as superior to the affiliate from
the standpoint of the public interest. Yet the Treasury has not sought to turn the subsidiary
approach into a governmental mandate. We have been content to let financial services firms
choose the structure that they believe makes the best business sense. But during
Congressional consideration of H.R. 10, the partisans of the affiliate approach insisted on
the affiliate as the only permissible vehicle for new activities. Not only did they persist in
opposing the subsidiary option, but they evidently preferred to have no bill at all rather than
include such a choice in H.R. 10.
Once again, the circular firing squad went about its work with gusto. Once again, its
members hit the target. And once again, there were few winners.
-30-
7
DEPARTMENT
OF
THE
FOR INTh1EDIATE RELEASE
November 12, 1998
TREASURY
Contact: (202) 622-2960
STATEMENT BY TREASURY SECRETARY ROBERT E. RUBIN
Upon the announcement today of the retirement of Lewis C. Merletti as Director of the
United States Secret Service, we gratefully acknowledge his leadership of the Secret Service and
his many contributions to this nation.
Over the course of three decades, Lew Merletti has provided invaluable service to this
Nation. After enlisting in the Army in 1967, Director Merletti served in Vietnam in the Special
Forces. His citations include the Bronze Star and the Combat Medical Badge. He joined the
Secret Service in 1974 and served in many posts critical to Secret Service's mission. Among
other things, he was on the protective details of Presidents Reagan, Bush and Clinton and rose to
be the Special Agent in Charge of the Presidential Protection Division. His service to Treasury
extended beyond the Secret Service. He led the investigative team at Treasury that examined the
Waco incident in 1993 and recommended internal reforms that proved invaluable.
The Secret Service plays a vital role in American law enforcement. Its responsibilities are
as diverse as they are critical -- from protecting the President and Vice President, to protecting
the currency from counterfeiting and other financial crimes investigations, to protecting the public
through counter terrorism efforts.
A law enforcement bureau charged with these vital responsibilities requires a leader of
great experience, judgment, and talent. Lew MerIetti proved to be such a leader.
The Treasury Department will miss Director Merletti's long service and many
contributions to this nation, and we wish him well in his future endeavors.
- 30-
RR-2815
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington. DC 20239
FOR IMMEDIATE RELEASE
November 12, 1998
Contact: Peter Hollenbach
(202) 219-3302
WE'RE LOOKING FOR 52 TALENTED KIDS .... TO WIN $1,000 IN U.S. SAVINGS BONDS
Today the U.S. Treasury's Bureau of the Public Debt announced the Eighth Annual V.S. Savings Bonds
Poster Contest where students in grades 4 through 6 can enter their creative posters to win valuable savings
bonds prizes. Winners will be selected from each of the 50 states, the District of Columbia, and for the first
time from Puerto Rico. The 52 first place winners will each win $1,000 in U.S. Savings Bonds and
automatically be entered into the national competition. The three national winners will be flown to Washington,
D.C. and win thousands more in U.S. Savings Bonds.
Poster Theme:
• The posters should show how savings bonds can help goals and dreams come true. Also the campaign's
theme should be on the poster: "U.S. Savings Bonds -- Creating a New Century of Savings."
Awards:
• A $1,000 savings bond is given to the first place winning poster in each state, the District of Columbia, and
Puerto Rico. Second place winners receive a $500 savings bond and third place a $200 bond.
•
The first, second; and third place national winners receive, respectively, $5,000, $2,000'and $1,000 savings
bonds at the national ceremony in Washington, D.C.
•
Accommodations and transportation to and from Washington, D.C., are provided for the three national
winners and a parent or guardian. While in Washington, winners are invited to tour the historic Treasury
Building and meet the Treasurer of the United States, visit the U.S. Capitol, and go see the Bureau of
Engraving and Printing where currency is made.
Deadline:
• All entries for the state contest must be postmarked by February 5, 1999. The 52 first place winners from
each state, the District of Columbia, and Puerto Rico arc automatically entered into the national competition.
Contest brochures were mailed to over 75,000 elementary schools nationwide in November.
For More Information:
• Visit our web site: W"ww.savingsbonds.gov
•
Write to: National Student Poster Contest, Bureau of the Public Deht, Savings Bonds Marketing Offlce.
Room 309, 999 ESt., N.W., Washington, D,C. 20226.
000
RR-28 16
Mtp://www.pubiicdebLtreas.go v
BACKGROUND INFORMATION: NATIONAL STUDENT POSTER CONTEST
Judging:
• Posters are judged on originality, poster design, visual appeal, and how well they convey the savings bond
theme.
• State and national entries are judged by panels which include representatives from state art councils, the
news media, sponsoring organizations, and members of the U.S. Savings Bonds Volunteer Committee.
Where Winning Posters Are Displayed:
• The first place national winner's poster will be used for the 2000 U.S. Savings Bonds Campaign and,
therefore, seen all over the country.
• The 52 first place winning posters are on exhibit in Washington, D.C. for several months.
• Photographs of the winning posters with the artist and school's name are displayed in major airports across
the United States.
• Images of the posters are shown on the Bureau of the Public Debt's savings bonds web site:
www.savingsbonds.gov
Savings Bonds Facts For Kids:
• 55 million Americans own U.s. savings bonds.
• U.S. savings bonds are the single most widely-held security in the world.
• In 1941 President Franklin D. Roosevelt bought the first Series E savings bond launchi"ng the most
successful savings campaign in American history.
• Interest earned on savings bonds is exempt from state and local income tax.
• Series EE bonds and the new inflation-indexed I Bonds are available in $50, $75, $100, $200, $500, $1,000,
$5,000, and $10,000 denominations. Series EE bonds sell for half their face value, and I Bonds sell for face
value.
• Both Series EE and I Bonds can be purchased at most financial institutions, payroll savings plans through
many companies, and the new EasySaver Plan.
• Posters have helped to promote the sale of savings bonds for over 50 years.
Endorsed by:
• The American Association of School Administrators, American Federation of Teachers, National
Association of Elementary School Principals, and National School Public Relations Association.
•
Metropolitan Life Insurance Company is the national sponsor of the 1999 contest.
000
DEPARTMENT
OF
THE
TREASURY
NEWS
<H'FICF. OF PlIRI.(' An-.\lR~. 15110 Pl<:I'IN~YJ,VANIA AVE'llIE. lIo.W,. \\,\SHI"'CTON. D,C.- 2U220. (211!1 f.22.2,flIl
EMBARGOED UNTIL 2: 30 P.M.
November 12, 1998
CONTACT:
Office of Financing
202/219-3350
TREASURY OFFERS 13-WEEK AND 26-WEEK BILLS
The Treasury wi~~ auction two series of Treasury bi~~s totaling approximate~y
$16,000 mi~~ion to refund $13,469 mi~lion of publicly he~d securities maturing
November 19, 1998, and to raise about $2,531 mi~~ion of new cash.
In addition to the pub~ic holdings, Federal Reserve Banks for their own
accounts ho~d $7,442 mi~lion of the maturing bi~ls, which may be refunded at
the highest discount rate of accepted competitive tenders. Amounts issued to these
accounts wil~ be in addition to the offering amount.
The maturing bills held by the public include $1,991 mi~lion he~d by Federal
Reserve Banks as agents for foreign and international monetary authorities, which
may be refunded within the offering amount at the highest discount rate of accepted
competitive tenders. Additional amounts may be issued for such accounts if the
aggregate amount of new bids exceeds the aggregate amount of maturing bills.
The 13- and 26-week
auction format.
bi~~
auctions
wil~
be conducted in the
sing~e-price
Tenders for the bills will be received at Federal Reserve Banks and Branches
and at the Bureau of the Public Debt, Washington, D.C.
This offering of Treasury
securities is governed by the terms and conditions set forth in the Uniform Offering
Circular (31 CFR Part 356, as amended) for the sale and issue by the Treasury to the
pUblic of marketable Treasury bills, notes, and bonds.
Details about each of the new securities are given in the attached offering
highligh ts .
000
Attachment
RR-2817
For press releases, speeches, public schedules and official biographies, call our U-hour fax line at (202) 622-2040
HIGHLIGHTS OF TREASURY OFFERINGS OF BILLS
TO BE ISSUED NOVEMBER 19, 1998
November 12, 1998
Offering Amount .......................... $8,000 million
Description of Offering:
Term and type of security ................
CUSIP number ..............................
Auction date ..............................
Issue date ................................
Maturity date .............................
Original issue date ......................
Currently outstanding ....................
~n~ bid amount and multiples ........
91-day bill
912'195 BB 6
November 16, 1998
Nov.ember 19, 1998
February 18, 1999
Auqust 20, 1998
$11,863 million
$1,000
$8,000 million
182-day bill
!H2195 BM 2
November 16, 1998
November 19, 1998
May 20, 1999
November 19, 1998
$1,000
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids ......... Accepted in full up to $1,000,000 at the highest discount rate of
accepted competitive bids.
Competitive bids ............. (1) MUst be expressed as a discount rate with three decimals in
increments of .005%, e.g., '1.100%, '1.105%.
(2) Net long position for each bidder must be reported when the sum
of the total bid amount, at all discount rates, and the net long
position is $1 billion or greater.
(3) Net long position must be deter.mined as of one half-hour prior
to the closing time for receipt of competitive tenders.
Recognized Bid
at a Single Yield ........... 35% of public offering
Max~
Maximum Award .................... 35% of publiC offering
Receipt of Tenders:
Noncompetitive tenders ...... Prior to 12:00 noon Eastern Standard time on auction day
Competitive tenders ......... Prior to 1:00 p.m. Eastern Standard time on auction day
Payment Terms:
By charge to a funds account at a Federal Reserve Bank on issue date, or payment
of full par amount with tender.
Treasury Direct customers can use the Pay Direct feature which
authorizes a charge to their account of record at their financial institution on issue date.
MEMORANDUM
To:
From:
Re:
Fax Recipients
Office of Financing
Bureau of the Public Debt
Faxing of Marketable Securities Press Releases
The Office of Financing will discontinue faxing press releases
within the next month. If you wish to continue receiving this
information and have Internet access, please sign up for any or all
of our three Internet mailing lists. Signing up for these lists will
provide you with the Internet address(es) necessary to obtain the
actual press release(s). The sign-up address for this service is:
http://www.publicdebt.treas.gov/cgi-bin/cgiwrap/-www/signup.cgi
Further details about the termination of the faxing program will be
given as the date approaches. If you have any questions, please
contact Rachel Hershenson or Larry Morris at 202-219-3350.
13 November 1998
Statement of Finance Ministers and Central Bank Governors l
The Government of Brazil and IMF management today announced the completion of negotiations
on IMF financial support for Brazil's economic program, In addition, the managements of the
World Bank and Inter-American Development Bank announced that they will recommend that
their institutions participate in this international effort as well. These actions are being taken in
conjunction with the commitments of the Brazilian authorities to address their underlying fiscal
imbalances,
Because of the importance we attach to a successful Brazilian program and to the contribution of
that program to international financial stability, we have chosen to supplement the substantial
resources that are expected to be made available by the international financial institutions to
Brazil. In an effort to strengthen the international capacity to help countries ward off financial
market contagion, our governments or central banks will support the provision of additional
financing to Brazil, expected to total approximately $14 5 billion, alongside financing from the
IMF This financing is being arranged in collaboration with the Bank for International
Settlements, in most cases through guarantees of BIS lending, We expect that these arrangements
will be completed shortly and that the BIS will make a disbursement alongside the I.MF's initial
disbursement following approval of Brazil's program by the IMF Executive Board,
The financial community shares a common interest in the success of Brazil's program. So as to
achieve this, the Brazilian authorities will be presenting their program to their domestic financial
community and to the private international financial community over the course of the next few
days
RR-2818
I
Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland,
Italy, Japan, Luxembourg, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, The
United Kingdom, The United States
DEPARTMENT
OF
THE
TREASURY
OffiCE OFPUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C .• 20220. (202) 622.2960
FOR IM:MEDIATE RELEASE
November 13, 1998
Contact: Dan Israel
(202) 622-2960
TREASURY SECRETARY ROBERT E. RUBIN STATEMENT ON BRAZIL
We welcome today's agreement between the International Monetary Fund and Brazil and
the announcement of support by the managements of the World Bank and Inter-American
Development Bank. Brazil's economic program -- fully implemented and with international
support -- provides a solid basis for restored confidence and renewed growth
Today the United States and nineteen other countries announced a program of bilateral
support to augment resources from the IM:F and the multilateral development banks. Bilateral
lenders will be prepared to provide approximately $14.5 billion in short-term financing for Brazil,
in most cases through guarantees of lending by the Bank for International Settlements. The
United States' portion of this support will be to guarantee, through the Exchange Stabilization
Fund, up to $5 billion. We anticipate that the first disbursement of the bilateral support will take
place once Brazil's program is approved by the IMF Executive Board and will be alongside the
first IMF disbursement.
The structure of the financial assistance that will be available to Brazil is in line with the
enhanced IMF facility now under development that was proposed by President Clinton last month
and was recently endorsed by the Group of Seven.
Our decision to provide bilateral support reflects our commitment to strengthen the
international financial system, guard against financial market contagion, and protect America's
economic interests. The success of Brazil's program is very important to the United States and the
international community.
-30-
RR-2819
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622·2040
International Support for Brazil
November 13, 1998
1.
IMF --The I"NfF assistance to Brazil totals approximately $18 billion. The stru,cture of the
package is in line with the enhanced Uv1F facility proposed by President Clinton last month
and recently endorsed by the G- 7. Of the $18 b. total, 70% will be provided through a
Supplemental Reserve Facility at interest rates 300-500 basis points above normal IMF
lending rates, and 30% will be provided via a 3-year stand-by arrangement.
Total IMF contribution
I $18.0 billion
First disbursement amount
[After approval of Brazil's program by the
IMF Executive Board]
$5.25 billion
SRF-$4.25 billion
SBA-$0.75 billion
Second disbursement amount
[Contingent on successful IMF review by
February, 1999]
$5.25 billion
SRF-$4.25 billion
SBA-$0.75 billion
2.
Multilateral Development Banks -- The World Bank and Inter-American Development
Bank contributions will provide assistance to Brazil to support improved social safety nets
and banking reform, among other things:
World Bank
Inter-American
Development Bank
Total contribution
$45 billion
$4.5 billion*
Disbursed by end-1998
$1375 billion
-
Disbursed by end-1999
$3.0 billion
I
$3.7 billion * *
* includes $1.1 billion loan approved in Sept. 1998.
** includes $300 million of the $1.1 billion loan.
3.
Bilateral financing -- Twenty countries will provide financing, in most cases to guarantee
credits extended to Brazil by the Bank for International Settlements (BIS). The total
amount is approximately $14.5 billion, of which the U.S. contribution will be $5 billion.
We anticipate the following countries will offer bilateral support.
Austria
Belgium
Canada
Denmark
Finland
France
Germany
RR-2820
Greece
Ireland
Italy
Japan
Luxembourg
Netherlands
Norway
Portugal
Spain
Sweden
Switzerland
U.K.
U.S.
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt. Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
November 16, 1998
CONTACT;
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF I3-WEEK BILLS
91-Day Bill
November 19 I 1998
February 18, 1999
Term:
Issue Date:
Maturity Date:
CUSIP Number:
912795BB6
High Rate:
4.400%"
Investment Ratel/:
4.510\-
Price:
98.888
All noncompetitive and successful competitive bidders were awarded
All tenders at lower rates were accepted in full.
securities at the high rate.
Tenders at the high discount rate were allotted
16%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
$
Competitive
Noncompetitive
PUBLIC SUBTOTAL
30,430,215
1,245,713
Federal Reserve
Foreign Official Add-On
1,245,713
7,872,345
148,400
148,400
31,824,328
8,020,745
3,586,564
3,586,564
o
o
$
TOTAL
35,410,892
$
Median rate
4.390%: 50% of the amount of accepted competitive
tenders was tendered at or below that rate.
Low rate
4.360%:
5% of the amount of accepted competitive
tenders was tendered at or below that rate.
Bid-to-Cover Ratio
=
31,675,928 I 7,872,345
6,626,632
31,675,928
Foreign Official Refunded
SUBTOTAL
$
4.02
1/ Equivalent coupon-issue yield.
"RR-2821
bttp:/Iwww.pubUcdebt.trc:as.gov
11,607,309
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
Office of Financirig
CONTACT:
FOR IMMEDIATE RELEASE
November 16, 1998
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182-Day Bill
November 19, 1998
May 20, 1999
912795BM2
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:
4.430%
4.595%
Investment Ratel/:
Price:
97.760
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. All tenders at lower rates were accepted in full.
Tenders at the high discount rate were allotted
3%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tendered
Tender Type
-----------------
$
Competitive
Noncompetitive
22,165,380
1,118,4]8
-----------------
PUBLIC SUBTOTAL
Foreign Official Refunded
Federal Reserve
Foreign Official Add-on
$
TOTAL
$
-----------------
6,403,068
1,605,800
24,B89,618
1,605,800
----------------8,00B,868
3,855,000
3,855,000
o
o
-------------
----------------11,863,868
$
28,744,618
Median rate
4.400~: 50% of the amount of accepted competitive
tenders was tendered at or below that rate.
Low rate
4.350%:
5% of the amount of accepted competitive
tenders was tendered at or below that rate.
Bid-to-Cover Ratio _ 23,28),818 / 6,403,068 = 3.64
1/
Equivalent coupon-issue yield.
RR-2822
5,284,630
1,118,438
23,283,818
-----------------
SUBTOTAL
Accepted
-----------------
bttp://www.publkdebt.treaa.gov
I>EPARTl\IENT
OF
THE
TREASURY
TREASURY
NEWS
OFFICE OF FUBLIC A.FFAIRS -1500 PF.NNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C.e 1IJ220. (201) 6l1-1960
EMBARGOED UNTIL 2;30 P.K.
CONTACT:
November 19, 1998
'rRF.ASO'Ry ANNOUNCES
BOL~DAY
Office of Financing
202/219-3350
SCHEDtTL::rNG
SiDce the regular announcement day for weekly bills Dext week falls on
T.hanksgiviDg Day, the offering details for the 13-week and 2G-week bills to be
issued
OD
December 3, 1998 will be announced on Tuesday, November 24, 1998, at
2: 30 p.m. Eastern Standard
titr&e_
000
RR-2823
F; press releases, speeches, public .chedulu and officitJ.l biographus, call our 24.hour Ita Ii". at (202) 622·2040
-
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of tbe Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
Contact: Office of Financing
(202) 219-3350
November 17, 1998
TREASURY'S INFLATION-INDEXED SECURITlES
DECEMBER REFERENCE CPI NUMBERS AND DAILY INDEX RATIOS
Public Debt announced today the reference Consumer Price Index (CPI) nwnbers and daily
index ratios for the month of December for the following Treasury inflation-indexed securities:
(1) the 3-3/8% lO-year notes due January 15,2007, (2) the 3-5/8% 5-year notes due July 15,2002,
(3) the 3-5/8% IO-year notes due January 15,2008, and (4) the 3-5/8% 30-year bonds due April 15,
2028. This information is based on the non-seasonally adjusted U.S. City Average All Items
Conswner Price Index for All Urban Consumers (CPI-U) published by the Bureau of Labor
Statistics of the U.S. Department of Labor.
]n addition to the publication of the reference CPI's (Ref CPI) and index ratios, this
release provides the non-seasonally adjusted CPI-U for the prior three-month period.
This infonnation is available through the Treasury's Office of Public Affairs automated fax
system by calling 202-622-2040 and requesting docwnent nwnber 2823. The information is
also available on the Internet at Public Debt's website (http://Vvww.publicdebt.treas.gov).
The information for January is expected to be released on December 15, 1998.
000
Artachrnent
g
RR-2824
TREASURY INFLAnON-INDEXED SECURmES
Ref CPI and Index Ratios for
December 1998
Security:
Duc:rlpUon:
CUSIP Number:
D.tedDate:
Original "sue Date:
AddltJonallssue Dete:
3-318% 1o-Year Not. .
Series A-2007
8128272M3
January 15, 11197
February 6,11197
April lS, 11197
Uaturlty Date:
Ref CPI on Dated Date:
January 15, 2001
Date
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
1
2
3
4
6
6
7
8
S
10
11
12
13
14
16
16
17
18
111
20
21
22
23
24
26
26
27
28
29
30
31
1888
1998
1996
1996
1998
1998
11198
1998
11198
11198
11198
1998
1998
1998
1998
1998
1998
11198
11198
1998
1998
1998
1998
1998
1998
11198
11198
1998
1888
1998
1996
CPl-U (NSA) tor:
- -
168.43648
Serl88 J-2002
9128273A8
July 16,1997
July 15, 1997
October IS, 1997
3-518% IO-Year Note,'Series A-2oo8
8128273T7
January 15,1998
January 15. 1998
October 15. 1998
3-518% 3O-Year Bonda
Bonda of April 2028
812810F06
April 1S. 1998
April 15. 1998
July IS, 1998
July 15, 2002
160.15484
January 15. 2008
161.65484
April 16. 2028
161.74000
3-5Ir/. SoYear Notes
Rat CPI
Index Ratio
Index Ratio
183.60000
183.612110
183.62581
183.83671
183.65161
183.68462
183.8n42
183.69032
183.70323
183.71613
183.72903
183.74194
183.75484
163.76774
163.78065
163.79366
183.80645
183.81935
183.83226
183.84516
163.85806
163.87097
163.88387
163.89677
163.90968
183.92268
183.93648
183.94839
183.96129
163.97418
163.98710
1.03260
1.03268
1.03278
1.03264
1.03292
1.03300
1.03309
1.03317
1.03325
1.03333
1.03341
1.03349
1.03357
1.03366
1.03374
1.03382
1.03390
1.03398
1.03406
1.03414
1.03423
1.03431
1.034311
1.03447
1.03456
1.03463
1.03471
1.03480
1.03488
1.03496
1.03504
1.02161
1.02159
1.02167
1.02175
1.02183
1.021111
1.02199
1.02208
1.02216
1.02224
1.02232
1.02240
1.02248
1.02256
1.02264
1.02272
1.02280
1.02288
1.02296
1.02304
1.02312
1.02320
1.02328
1.02336
1.02345
1.02353
1.02361
1.02369
1.023n
1.02385
1.02393
Augu.t 11198
183.4
September 1~98
Index Ratio
1.01266
1.01274
1.01282
1.01290
1.01298
. 1.01306
1.01314
1.01322
1.01330
1.01338
1.013-46
1.013&4
101362
1.01370
1 01378
1.01386
1.01394
1.01402
1.01410
1.01418
1.01426
1.01434
1.01442
1.01450
1.01458
1.01466
1.01474
1.01482
1.01490
1.01496
1.01~
1636
Index Ratio
1.01150
1.01168
1.01166
1.01174
1.01182
1.01190
1.01198
1.01208
1.01214
1.01222
1.01230
1.01238
1.01246
1.01254
1.01262
1.01270
1.01278
1.01286
1.01294
1.01302
1.01310
1.01318
1.01326
1.01333
1.01341
1.01349
1.01357
1.01365
1.01373
1.01381
1.01389
Oclobet 11198
164.0
D EPA R T 1\ lEN T
0 F
TilE
T R E :\ S II
I~
Y
NEWS
rIREASURY
omCE OF PtTnUc AFFAIRS • 1500 PENNSYLVANIAAVENllE, N.W.• WASInNGTON, D.C. • 20220 • (202) 622·2960
FOR IMMEDIATE RELEASE
November 18, 1998
Contact: John Longbrake, Treasury
(202) 622-2016
Helen Szablya, CDFI Fund
(202) 622-8401
SECRETARY RUBIN TO RECOGNIZE 1998 CDF1 AWARD RECIPIENTS
Treasury Secretary Robert E. Rubin will honor the recipients of the 1998 Community
Development Financial Institutions (CDFI) Fund's program awards on Thursday, November
19, at 10:00 a.m. in the Treasury Department Cash Room. Representatives from the 190
institutions, Treasury Under Secretary John D. Hawke, Jr. and CDFI Director Ellen Lazar will
also be in attendance.
Since 1996, the CDPI Fund has provided $182 million to promote community and
economic development and encourage private sector investment to under-served markets. In
1998, CDP! Fund awarded a total of $75 million to 190 institutions--banks and Community
Development Financial Institutions--through the CDFr s Core and Technical Assistance
components and its Bank Enterprise Award program.
Reponers without Treasury, White House, State Department, Congressional, Justice or
Defense credentials, should call (202) 622-2960 with their name, date of birth, social security
number and news organization for clearance to enter the building. All reporters should enter
the Treasury Department from the 15th Street entrance at 1500 Pennsylvania Avenue.
-30-
For press releases, speeches, public sduulules and official biographies, caU our 24-hour fax line at (202) 622·2040
-
TOTAL P.01
DEPARTMENT
OF
THE
TREASURY
1789
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W .• WASHINGTON, D.C.. 20220. (202) 622·2960
FOR IMMEDIATE RELEASE
November 19, 1998
Contact: John Longbrake
(202) 622-2960
TREASURY UNVEILS ATTRIBUTES OF PROPOSED ELECTRONIC ACCOUNT
The Treasury Department announced Thursday the proposed attributes for an Electronic
Transfer Account (ETA) that is intended to provide all Federal payment recipients access to a lowcost account at a Federally-insured financial institution for the purpose of receiving payments by
electronic Direct Deposit.
Once the ETA attributes are finalized, recipients of Federal payments will have the option
to sign up for an ETA, receive Direct Deposit through another commercially available account
of their choice, or elect to continue receiving a paper check.
"Working with consumer groups and financial institutions and conducting independent
market research has been essential to developing an ETA program that will be broadly supported,"
said Treasury Fiscal Assistant Secretary Donald Hammond. "Working together, we can create
access to Direct Deposit for up to 10 million Americans who do not have accounts today."
The ETA will only be available through Federally-insured financial institutions, including
banks, thrifts and credit unions. Treasury will encourage, but not require, financial institutions
to offer the ETA and is proposing to reimburse the institutions for the one-time cost of setting up
an ETA in the amount of $12.60 per account. Financial institutions choosing to offer the ETA
will enter into a contractual agreement (ETA Financial Agency Agreement) with the Treasury
Department. Under the voluntary agreement, Treasury would require that the ETA:
•
•
be an individually owned account at a Federally-insured financial institution;
be available to any individual who receives a Federal benefit, wage, salary, or
•
•
•
retirement payment;
accept only electronic Federal payments;
be subject to a maximum price of $3 per month;
have a minimum of four cash withdrawals per month, to be included in the
monthly fee through any combination of proprietary ATM and/or over-the-counter
transactions;
RR-2826
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
•
•
•
•
provide the same consumer protections that are available to other account holders
at the tinancial institution;
allow access to point-of-sale (POS) networks, if available;
require no minimum balance, except as required by Federal or State law; and
provide a monthly statement.
Additionally, Treasury seeks comments on three other features that are not currently part
of the basic ET A proposal. These features are: 1) paying interest on account balances; 2) allowing
for additional deposits; and 3) providing for third-party debit transactions or electronic bill
payment. Treasury will determine whether participating financial institutions, at their own
discretion, should be permitted to incorporate any of the above features into the ETA.
The ETA is the next step in implementing provisions of the Debt Collection Improvement
Act (DCIA) of 1996, which calls for the Treasury Department to assure that Federal payment
recipients have access to a reasonably priced account in order to receive electronic payments.
Treasury published the final rule governing Electronic Funds Transfer (EFT) on Sept. 25,
1998. The final rule provides for the ETA and details the conditions under which recipients can
continue to receive paper checks if electronic deposit would cause hardship. The final rule
emphasizes recipient choice and the importance of ensuring that recipients are not disadvantaged
or forced into making a choice that is not right for their circumstances.
In order to encourage financial institutions to offer ETAs, Treasury is taking several steps,
including working with bank regulators to clarify how banks can receive credit under the
Community Reinvestment Act for offering ETAs. On October 26, Treasury's Community
Development Financial Institutions (CDFI) Fund issued a Notice of Funds Availability for its 1999
Core Program under which CDFls offering deposit services such as ETAs could be eligible for
funding. Additionally, the CDFI Fund plans to issue guidance concerning how banks may apply
for Bank Enterprise Awards for offering deposit services, including ETAs.
The Treasury Department will receive public comment on the proposed ETA account for
45 days. After the com ment period ends, the Treasury Department will review and take into
consideration those comments when finalizing the ETA Financial Agency Agreement with
financial institutions.
-30-
2
DEPARTMENT
OF
THE
TREASURY
NEWS
OffiCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE. N.W. - WASIllNGTON. D.C. - 20220 - (202) 622-2960
EMBARGOED UNTIL 11 :30 A.M. (EST)
Text as Prepared for Delivery
November 19, 1998
ASSISTANT SECRETARY FOR ECONOMIC POLICY DAVID W. WILCOX
WA YS & MEANS COMMITTEE
Mr. Chairman, Members of this Committee, I thank you for this opportunity to meet with
you to discuss the vitally important issue of restoring Social Security to sound financial footing. I
know that Secretary Rubin, Deputy Secretary Summers, and others in the Administration look
forward to working with you and the other Members of the Committee on this issue.
During my remarks today, I would like to touch on four issues: first, the reasons why it is
important to move expeditiously next year to secure a bipartisan agreement to preserve and
strengthen Social Security; second, what we have learned during the national dialogue of the past
year; third, the principles that the President has put forth to guide Social Security reform; fourth, how
to best move forward to reach a bipartisan agreement that puts Social Security on solid financial
ground for future generations.
The Importance of Social Security
As we begin this important undertaking, it is worth returning to fundamentals and reminding
ourselves why it is so important that we move with dispatch to\vard achieving a bipartisan agreement.
The case for rapid action rests on two key propositions.
First, the sooner we move, the more we can take advantaL!e of the economy's extraordinary'"
performance achieved under President Clinton's economic strategy. Right now our economy is
remarkably strong and our budget is the healthiest it has been in a generation.
' - . . .
Unemployment has been at or below 5 percent for 19 months.
Inflation is low and stable.
Real incomes are rising again, breaking out of the pattern of stagnation that had persisted
since the 19705.
And for the first time since 1969. the Federal go\"t~rnmellt has posted a unified budget surplus.
RR-2827
For press releases, speeches, public schedules and official biographies, roll our 24-hour fax line at (202) 622-2040
But we may not always be in such a strong position. And we will likely never be in a stronger
position to face the major challenges ahead of us associated with an aging society. One key fact
illustrates the dramatic demographic developments that lie ahead: In 1960, the number of American
workers for every Social Security beneficiary was 5.1 to 1. Today it is 3.3 to 1. In a little more than
30 years' time, when there will be twice as many elderly as there are today, the ratio will be 2 to L
and falling.
Second, the sooner we move to place Social Security on a sound financial basis, the less we
have to do to restore balance. The cost of waiting will mean we will be confronted with a more
painful set of choices down the road.
The President's National Dialogue on Social Security
As you will recall, the President in his State ofthe union speech last January called for a year
of national dialogue on Social Security. That year is now almost over. The President and
Vice-President have contributed an enormous amount of their personal time and energy in this
enterprise. The Administration conducted three regional forums to discuss Social Security with the
American people. Each forum involved Members of both parties. serving to broaden the range of
ideas explored, and giving concrete evidence of the Administration' s commitment to a bipartisan
process. These forums were jointly sponsored by the Concord Coalition and the American
Association of Retired Persons, in conjunction with Americans Discuss Social Security. In addition,
many Members of Congress held forums in their own states.
During this process, we have heard from the American people about their concerns, hopes,
and fears about retirement, and their views on Social Security. What we have learned has been
critical to the process and will help guide us from here. One of the main lessons from these national
forums is that the American people - both young and old - are concerned about the health ofthe
Social Security system and are supportive of efforts to ensure that the system will provide benefits
not only for them, but for their children and grandchildren as well. These forums have laid the
groundwork for the next stage of the retornl process. incl uding next month's White House conference
on Social Security.
In the remainder of my remarks. I \,,'ould like to outline some of the Administration views and
objectives for building on the national dialogue.
The President's Principles
This year of dialogue has provided many opportunities tor us to improve our understanding
of the myriad issues involved. Through this process. three themes have been especially clear.
First, the final reform package will no doubt assimilate a lot of good thinking from many
different quarters, and we should be receptive toward taking that thinking on board. The
Administration believes the many proposals put forward by the Members of Congress, think tanks,
2
academics, and interest groups have been constructive in fostering this year of bipartisan discussion.
Second, it makes little sense to judge specific policy options in isolation. They can only be
adequately assessed in combination with all the clements that \vould be required to accomplish the
full job.
Third, the Administration believes that any plan should be consistent with the five principles
that the President articulated at the first Social Security forum in Kansas City.
•
First, refonn should strengthen and protect Social Security for the 21 st Century. Proposals
should not abandon the basic program that has been one of our nation's greatest successes.
The importance of Social Security can hardly be overstated. Eighteen percent of our seniors
- more than one in six - receive all of their income from Social Security. The bottom
two-thirds of the aged population, in terms of income. receive half oftheir income from Social
Security. Without Social Security, nearly 50 percent of aged Americans would be in poverty.
•
Second, refonn should maintain the universality and fairness of Social Security. For half a
century, Social Security has been a progressive guarantee for citizens. It should be kept this
way.
•
Third, Social Security must provide a benefit people can depend on. Regardless of economic
ups and downs, Social Security must provide a sol id and dependable foundation of retirement
security.
•
Fourth, Social Security must continue to provide financial security for disabled and
low-income beneficiaries. Unfavorable comparisons are often made between the returns on
contributions offered by Social Security and the returns offered by the market, but Social
Security is much more thanjust a retirement program. We must never forget that roughly one
out of three Social Security recipients is not a retiree. Any reform must ensure that Social
Security continues playing these other important roles in the future.
•
Finally, Social Security reform must maintain Amcrica's fiscal discipline. Six years ago the
deficit reached a record $290 billion. In the just-ended fiscal year we achieved a record
surplus of$70 billion in the unified budget. In choosing the \vay forward on Social Security
reform, we will need to continue that strong record.
Moving Forward Toward a Bipartisan Agreement
Another step in the year of national dialogue will be the White House Conference, scheduled
to take place on December 8th and 9th. The Administration views this conference as an outgrowth
ofthe public discussions and consultations that we have been haying with Members of Congress from
both sides of the aisle throughout the past year. In the time ahead. we intend to broaden and deepen
both aspects of this communication.
We fully intend the conference to be bipartisan. to include representatives of the public. and
to include experts holding all views. The President has always believed that the only way to achieve
Social Security refonn will be on a bipartisan basis. and we intend tor this conference to reflect that
view.
Throughout the year, a number of observers have asked whether the Administration might
be putting forward a plan of its own for Social Security rdorm. and if so, when. The bottom-line
answer here is that the Administration is committed to whatever course will be most conducive
toward arriving at a bipartisan agreement that assures the American people of a stronger Social
Security system. It has been the President' s judgment thus far that for us to put out a plan would not
have been helpful and could have served to polarize the dehate. He will continue to review on an
ongoing basis whether proposing a specific plan would help move the process forward. We will
obviously be consulting heavily with Members of Congress from both parties on this important issue.
Finally, with regard to engaging with Congress on our shared objective of achieving a
bipartisan agreement, the President has consistently stated his intention to begin ongoing bipartisan
discussions early next year. The Administration recognizes the important role that the Ways and
Means Committee will play on this crucial issue. Consultation with aH the Members of Congress will
be important, but consultation with this Committee will be especially so, and I fully expect the
Administration to pursue such consultation vigorously as we work toward the objective of forging
a bipartisan solution to this challenge.
Mr. Chainnan, today virtually every working man and woman in America is protected by
Social Security. As we debate which policies will best strengthen the Social Security program, there
should be no question of the importance of restoring financial balance to the system in a bipartisan
manner as early as possible. The Administration looks forwnrd to working with the Members of this
Committee and with others in Congress as we take on this criticnl challenge. Thank you. and I would
now welcome your questions.
- 30 -
4
l)
EPA R T 1\1 E N T
0 F
T BET REA SUR Y
TREASURY
NEWS
OFFICE OF PUBLIC AFFAIRS -.1500 PENNSYLVANIA I\Vt:NlIE. N.W.-WASHINGTON, D.C.e 20220e(202) 622-1960
CONTACT: Office of FiQancing
202/219-3350
EMBARGOED omI:L 2:30 P.M.
November 18, 1998
~y
TO AUCTION $16,000 MILLION OF 2-YEAa NOTES
The Treasury ~ll auction $16.000 million of 2-year notes to refund
$30,615 million of publicly held securities maturing November 30, 1998, and
to pay down about $14,615 Ddllion.
7n additioD to the public holdings, Federal Reserve Banks hold $2,032
million of the maturiDg securities for their own accounts, which may be
refunded by issuing An additional amount of the new security.
The maturing securities held by the public include $5,278 ~llion held
c:L8 agents for foreign and international monetary
authorities. AmoUDts bid for these accounts by Federal Reserve Banks will
be added to the offering.
by Federal Reserve Banks
The auction will be conducted in the single-price auction for.mat. All
competitive and noncompetitive awards will be at the highest yield of accepted
competitive tenders.
The
no~es
being offered today are eligible for the STRIPS program.
Tenders will be received at Federal Reserve Banks and BrAnches and ~t
the Bureau of the Public Debe, Washington, D. C. This offering of Treasury
aecuri~ies is governed by the terms and conditions set forth in the Uniform
Offer~g Circular (31 CFR Part 356, as amended) for the sale aad issue bY
the Treasury to the public of marketable Treasury bills, notes, and bonds.
Details about the new security are given in the
highlights.
RR-2828
~ttacbed
offering
000
FOT press rdeases, spuches, public schedul~s and officilll biographie$, call (JUT 24-houl" Ita line at (202) 622-2040
Bl:GBL%mrrs OF TBEASURT OFFBRDIG '1'0 ~ .um.%c: OF
2-YDR. NOTES IJ.'O BE ISSUED lI1O'VEMBD 30, 1998
Rovambar 18. 1998
Offering
~0UD~ ••••••••••••••••••••••••••• $16,OOO
million
Description of OfferiDg~
Ter.m aDd type of security ••••••••••••.•••• 2-year notas
SaZ'i.s . _ ...•.•......•.......... ". .......... ~-2000
cosrp ~umb.r •••••••••••••••••.•..••....••. 912827 4W 9
Auction aate •••••••••••••••••••••••••.•••• November 24, 1998
Xssue date ••••••••••••••••••••••••••...••. Novamber 30, 1998
Dated date •••••.•••••••••••••••••••••.••.. Novamber 30, 1998
Maturity dat ••••••••••••••••••••••.•...••. Novamber 30, 2000
~Dtere8t rate •••••••••••••••••••••••..•.•• Determined based on the highest
accepted compet~t~ve b~4
Yield •••••••••••••••••••••••••••••••..•••• Deter.Mined at auction
Xnterest p~t dates ••••••••••••••...•.• May 31 and November 30
Min~ bid amount and multiples •••••.•••• $l,OOO
Accrued interest payable by investor ..•... Rone
Premium or discount . . . . . . . . . . . . . . . . . . . . . . . DGtarmined at auctioD
STRXPS Xn£ormation~
Min~
amount required ••••••••••••......• Determined at auction
Corpus CUSXP number •••••••••••••••....••• 912820 DL 8
Due date(s) and'CUSrp ~umber(s)
for additional TINT(s) •••••••••••....••• Not applicable
SUbmissioD of Bids:
Noncompetitive bids:
Accepted in full up to $5,000,000 at the highest
accepted·yiel.d.
Campetitive bids;
(1) MUst be expressed as a yield with three decimals, e.g., 7.123%.
(2) Net long position for eaCh bidder must be reported when the sum
of the total bid amount, at all yields, and the net long position
is $2 billion or greater.
(3) Net long position must be determined as of one half-hour prior to
the closing time for receipt of cOmpetitive tenders.
Max~
Recognized Bid at a Single yield ••.•.• 35% of public offering
Maximum Award ••••••••••••.••••••••••....•••... 35% of public offering
Reeeipt of TeDders:
Noncompetitive tenders: Prior to 12:00 noon Eastern Standard t~ on
auction day.
,-,Competitive tenders: Prior to 1:00 p.m. Eastern Standard time on .. - ...
auction day.
Payment Terms: By charge to a funds account at ill Federal Reserve Bank on
issue date, or payment of full par amount with tender. Treasury Direct
customers can use the Pay Direct feature which authorizes a charge to their
account of record at their financial institution on issue date.
·'
.' '.
'
'. ,.: '
'. i :
\
If: i
: 11 ~
"i~. t,
\. " t· h: Y
.~.
~
. ...
.
NEWS
TREASURY
OffiCE. OF 'V_LlC A.fFA.IRS. 150. rENNSYLVANIA AVENUE, N.W•• WASHINCTON. D.C •• 2.12 •• (11%) U%-1J'O
U»1'1L 2,30
2',. 1118
"",aBQOKD
Ro.
mv.r
».IiI.
Offi.ce o~ 1'1 D"Z'Ci DIll'
202/219-3350
The Trea8ury will aucticm. two .eri•• of 'l'reasury bill. tot.aliDQ apprcrlwetaly
$16,000 aillioc to refund $13,168 adllion ot publicly bald securiti •• aaturiDg
nec_bu: 3, 1998, UI4 to rai •• about,.$Z,832 ailliOD of new cuh.
".erN
xu a.c14iticm to 1:he pUl,ic: hol4iDa., 1'eUzoa1
Ba"k- f~ their __
accOUDts bo14 $6,925 ail1iOA of the mat.uriDcr bill., which may be refttndecl at tM
Ais;rhast d.i.C01Ult rate o:f accepted cCMpetiti.... teDders. Amount.. issued to tha ••
accOWlta wil.l be iD. a4dition to the off.riDer UIO\Dlt.
'l'be . .t~iD8 bills h814 by ebe PUblic: izaclude $2, '"
llillion hale! b.r ~
authoJ:iti. . , whid:I.
ma:r be r.f"""'·« withiu the offering ..ount at the higheat cii.C01I.Dt nta ~ accepte4
c~t.iti. . t~r..
Additional amountli ~ be iSRed for such acc:o.mt.. if t!Ie
aggzegate ..ouAt of new bida exc:eedJI the aggregate .-cnmt of _turiDQ' bill ••
'''serve
Ban'g . .
ag.nts for foreign aAd iDterD&tioaal
DnMtary
The 13- aDd 26-week bill auctiexur will be cOD4uc:ted .in the a1Dgle-pric8
auction focaat.
'1'eZI4eZ'. lor tM bill. will be received at. Federal Re.erve Banke and JlrHM:he.
D.C.
Thi. olfariDg of ~
••curiti. . i . ~ by the t:.erma and conditiQD.8 .et ·fotth in the DnifO%Dl
Offering Ci~ar (3l CPR Part 356, a • ...aded) for the sal. and issue by the
Trea.ury to the public of markeeable Tre.sury bil18, notes, and bonda.
Im4 at: ~ ~u of t:.hAI Public Debt, •• e"1"'~OD,
Detai~.
about each of the
n8W
securities are given in the attached offeriDg
high1i.ghts •
000
Attachment
RR-2829
For pnss rdetUel. spelch.f, public sch.dll.lu and offiCial bwgraphies, call our 24-1I0"r fax line III (202) 622---2040
o. TRElBURY OrrBRXNQS or BILLS
BE 18SUBD DBCBKBER 3, 1"8
RIORLIQR~B
~o
November l4, ,1998
Offering Amount •••••••••••••••••••••••• $8,000 million
Description of Offering'
~.~ anA type of •• ourlty •••••••••••••• 91~ bill
cus~,
number •••••••••••••.••••••••••••• '12'95
Auotion dat•••••••••••••..•.•••••••••••
I.sue date •••••••••••••••••••••••••••••
Maturity d&t •••••••••••••••••••••••••••
Original l • .a. date ••••••••••••••••••••
Currentlyout.tanding ••••••••••••••••••
H!n~ bid aMOUnt and multipl •••••••••
au •
Rov.ab.r 30, li98
Dec.ab.r 3, 1998
Harch. , 1999
Harch 5, 1998
$29,'" million
$1,000
$8,000 million
182-day bill
912795 BN 0
Nov.mber 30, 1998
December 3, 1998
June 3, 1999
D.cember 3, 1998
$1,000
The followi!f rul•• !pply to all ••curlti•• m.ntione4 abov••
Submis.ion of Bid.1
Nonoa.petitiv. bids ••.•••••. Acc.pt.d in full up to $1,000,000 at the highest discount rata of
aocept.a comp.titiv. bid••
Competitive bia••••••.•••••. (1) mu.t b • •xpr••••d aa a di.count rate with three decimals in
inor. . .nt. of .005%, e.g., 7.100%, 7.105%.
(2) R.t long po.ition for .ach bIdder must be reported when the awm
of th. total bi4 ..ount, at all aiscount rate., and the net long
po.ition i .
billion or greater.
(3) Wet long po.ition must be determined aa of one half-hour prior
to the cloaing time for receipt of competitive tend.rs.
'1
M&Kimwm ••cognized Bi4
at a Bingle Yield ••••••••••• 35% of public offering
Haxiaum ~ ••••••••••.••••••• 35% of publio offering
Receipt of ,.na.r••
monoo~etitive t.nders •••••••rior to 12100 noon S.et.rn Standard time on auction day
Competitive tender •••••••••• »rior to 110~ p ••• Eastern Stan4ar4 time on auction day
Payment ~~I By charge to a fund. account at a re4aral Re •• rve Bank on i •• ue date, or payment
01 full par aMOUnt ~th t.naer. ~r..sur,y Direot ou.tomer. oan u.e the p~ Direct feature which
avthori.e. a charge to their account of record at their financial institution on issue date.
DEPARTMENT
OF
THE
IREASURY ~')
TREASURY
NEW S
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W. • WASIDNGTON. D.C .• 20220. (202) 622·2960
FOR IMMEDIATE RELEASE
November 19, 1998
Contact: John Longbrake, Treasury Department
(202) 622-2960
Helen Szablya, CDFI Fund
(202) 622-8401
SECRETARY RUBIN RECOGNIZES 1998 CDFI AWARD RECIPIENTS
Treasury Secretary Robert E. Rubin on Thursday honored the recipients of the
Community Development Financial Institutions (CDFI) Fund's 1998 awards.
The awards, totaling $75 million, were awarded to 190 banks, thrifts and community
development financial institutions through the CDFI's Bank Enterprise Award Program and the
CDFI Core Program and Technical Assistance Component.
"The CDFI Fund is an important part of the Administration's strategy to promote
private sector growth in economically distressed areas," Secretary Rubin said to representatives
of more than 100 of the recipients. "Filling niches in the private financing market and drawing
mainstream financial institutions into low income communities through partnerships, CDFls,
banks and thrifts makes our financial system work better for all Americans. "
The CDFI Fund's mission is to promote local economic growth and access to capital by
directly investing in and supporting community development financial institutions and
expanding financial service organizations' lending, investment, and services within
underserved markets. For fiscal year 1999, Congress increased the CDFI Fund's
appropriations to $95 million from $80 million in 1998. Since 1996, the CDFI Fund has
provided $182 million to promote community and economic development and encourage
private sector investment to underserved markets.
The CDFI Program leverages Federal dollars by requiring that each CDFI provide at
least a one-to-one match with funds from non-Federal sources for each dollar of assistance it
receives. In addition, CDFI award recipients are held to performance standards that help
ensure that the CDFI Fund's investment will result in a significant community impact. Under
the CDFI Fund, local organizations make the decisions about how to best meet community
needs.
-30RR-2830
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
f)
E P :\ R T !\I E N T
0 F
T 1-1 E
TREASURY
T REA S
e uy
NEWS
OFFTC£ OF PUBLIC AFFAIRS -150U PF:NNSYLVANJA ,\VENUE, N.W.' WASHINGTON. D.C.- 10220. (202) 622.2960
EMBARGOED tJ'N'l'IL 2: 30 P. M.
CO~ACT:
November 19, 1998
~y
Office of Financing
2021219-3350
OFFERS 13-WEEK AND 26-WEEK BILLS
The ~ea8ury will auction two series of ~reasury bills totaling
approx~tely $16,000 ~llion to refund $13,117 million of publicly held
securities maturing November 27, 1998, and to raise about $2,883 million of
new cash.
%n addition to the public holdings, Federal Reserve Banks for their own
accounts hold $7,263 million ot the maturing bills, which may be refunded at
the highest discount rate of accepted c~etitive tenders. Amounts issued to
these accounts ~ll be in addition to the offering amo~t.
~e maturing billa held by the public include $3,104 million held by
Federal Reserve Banks as agents for foreign and international monetary authorities, which may be refunded within the offering amount at the highest discoun~
rate of accepted competitive tenders. ~dditioD&l amounts may be issued for such
aceounts if the ~ggregAte amount of new bids exceeds the aggregAte amount of
maturing bills.
The bill auctions will be conducted in the
sing~.-price
auction format.
Tenders for the bills will be received at Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington, D.C. This of£ering
of Treasury securities is governed by the terms ADd conditions set forth in the
Uhifor.m Offering Circular (31 CFR Part 356, as amended) for the sale ADd issue
by t:he 'rreA8UZY 1:0 the public of marketable Treasury bills, notes, and bonds.
Details about each of the new securities are given in the attached
highlights.
o££er~g
000
Attachment
RR-2831
--
Fo, press releases. speeches. public $che4u/~i lind officic,l b'ograph~s. call our 24·hour five line or (202) 622·2040
RIGHLZGHTB OP TREASURY OFFERINGS OF BILLS
'0 BB ZSSUED NOVEMBER 27, 1998
Novembe~
Offering Amount ••••••••••••••••••••••••• $8,000 million
Description of Offering:
T.~ ana type of .ecurity ••••••••••••••• 90-day bill
CUSI' Dumb.r •••••••••••••••••••••••••••• 912795 BC 4
Auction dat ••••••••••••••••••••••••••••• Novemher 23, 1998
Z•• u. dat ••••••••••••••••••••••••••••••• November 27, 1998
Maturity dat•••••••••••••••••••••••••••• P.bruary 25, 1999
Original issu. date ••••••.•••••••••.•••• Augu.t 27, 1998
CUrrently out.tanding ••••.•••••••••••••• $11,299 million
Minimum bid ~ount and multiple ••.•.••.• $l,OOO
19, 1998
$8,000 million
lel-day bill
912795 BX 8
November 23, 1998
November 27, 1998
May 27, 1999
May 28, 1998
$15,540 million
$1,000
~he
following rule. apply to all securities mentioned abovel
Submi.sion of Bid.:
Noncompetitive bids ••••.••.• Accepted in full up to $1,000,000 at the highest discount rate of
accepted competitive bids.
Comp.titive bid••••••••••••• (1) Must be expre.sed as a di.count rate with three decimals in
incrementa of .005%, e.g., 7.100%, 7.105%.
(2) Net long position for each bidder m~st be reported when the awm
of the total bid amount, at all discount rates, and the net long
position ia $1 billion or greater.
(3) Net long position mu.t be aetermined a. of one half-hour prior
to the closing time for receipt of competitive tender ••
Maximum aecognized Bld
at a Single Yield ••••••••••• 35% of public offering
Maximum Award ••••••••••••••••••• 35% of public offering
Reoeipt of !Wnderaf
Noncompet1tive tender••••••• Prior to 12:00 noon Eastern Standard time on auctioD day
Competitive tenders ••••••••• Prior to 1:00 p.m. Eastern Standard time on auction day
P.~ent
Terms: By oharge to a funds account at a rederal ae.erve Bank on i.sue date, or payment
of full par amount with tend.~. Tre••ur,y Di~eot customers can use the 'ay Direct feature whioh
authorize. a charge to their account of record at their finanoial institution on i.sue date.
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington. DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
November 23, 1998
CONTACT:
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF I3-WEEK BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:
90-Day Bill
November 27, 1998
February 25, ~999
912795BC4
High Rate:
4.450%
Investment Rate1/:
4.560\
Price:
98.888
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. All tenders at lower rates were accepted in full.
Tenders at the high discount rate were allotted
ll~.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
21,127,417
1,228,318
$
Competitive
Noncompetitive
PUBLIC SUBTOTAL
Federal Reserve
Foreign Official Add-On
7,543,485
457,100
457,100
22,812,835
B,000,585
3,663,180
3,663,180
o
o
26,476,015
$
TOTAL
$
Median rate
4.420%: 50% of the amount of accepted competitive
tenders was tendered at or below that rate.
Low ra t e
4 . 380 "~:
5Q..b of the amount of accepted competitive
tenders was tendered at or below that rate.
Bid-to-Cover Ratio
=
22,355,735 / 7,543,485
:=
6,315,167
1,228,318
22,355,735
Foreign Official Refunded
SUBTOTAL
$
2.96
1/ Equivalent coupon-issue yield.
RR-2832
http://www.Dubltcdebt.tn-.... vov
ll,663,765
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington. DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
November 23, 1998
CONTACT:
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Term:
18i-Day Bill
November 27, 1998
May 27, :1999
91279SBX8
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:
4.430%
Investment Racel/:
4.593%
Price:
97.773
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. All tenders at lower rates were accepted in full.
Tenders at the high discount rate were allotted
73%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tendered
Tender Type
Compet.itive
Noncompetitive
$
PUBLIC SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$
TOTAL
Accepted
25,516,600
994,109
$
26,510,709
6,233,928
1,767,600
1,767,600
28.278.309
8,001,528
3,600,000
3,600,000
o
o
31,878,309
$
Median rate
4.425~: 50% of the amount of accepted competitive
tenders was tendered at or below that rate.
5~
of the amount of accepted competitive
4 . 385 ~:
~
Low ra t e
tenders was tendered at or below that rate.
0
Bid-to-Cover Rat.io
1/
=
26,510,709 / 6,233,928
4.25
Equivalent coupon-issue yield.
RR-2833
5,239,819
994,109
http://www.publlcdebt.treas.gov
11,601,528
DEPARTMENT
OF
THE
TREASURY (&f~'
\~~i)
TREASURY
NEW S
~~/78fq~. . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..
................................
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. _ 20220 _ (202) 622.2960
FOR IMMEDIATE RELEASE
November 24, 1998
Contact: Office of Public Affairs
(202) 622-2960
TREASURY STATEMENT CONCERNING LETTERS ADDRESSING·
VIOLATIONS OF NONCOMPETITIVE BIDDING RULES
FOR TREASURY AUCTIONS
Treasury released today letters exchanged between Treasury and a securities firm
concerning violations of the rules governing noncompetitive bidding in auctions of U. S. Treasury
securities. Treasury is releasing these letters to emphasize the importance of the auction rules and
the seriousness with which it views compliance with them. All Treasury auction participants are
expected to be knowledgeable about the applicable requirements of the auction rules and to
maintain policies and procedures that will ensure that these requirements are met. Auction
participants must exercise vigilance to prevent auction rule violations, must promptly report to the
Treasury any violations that do occur, and must take remedial action to address the underlying
causes of violations as quickly as possible. The management offirms participating in auctions is
expected to supervise the personnel responsible for Treasury auction bidding.
The Uniform Offering Circular for Treasury Securities requires that, prior to a specified
deadline, noncompetitive bidders in Treasury auctions may not enter into any agreement to
purchase or sell or otherwise dispose of the securities they are acquiring in an auction. Prior to
January 28, 1998, the applicable deadline for this prohibition was the designated closing time for
receipt of competitive bids. Effective January 28, 1998, this deadline was extended so that
prearranged sales may not be entered into before the time that the results of the auction are
announced. Treasury permits noncompetitive bidding as a means of encouraging broader
participation in Treasury auctions by providing relatively small investors an avenue for
participating successfully in Treasury auctions. Given this goal, the prohibition on prearranged
sales, and a similar rule relating to positions in v,,'hcn-issued trading or futures or forward
contracts, are designed to minimize the use of noncompetitive bidding by bidders that more
appropriately should bid competitively.
-30-
ATTACHMENT
RR-2834
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622·2040
Wheat First Securities, Inc.
Ross M. Annable
President
NC0600
One First Union Center, DC8
Charlotte, North Carolina 28288-0600
November 24, 1998
John D. Hawke, Jr.
Under Secretary for Domestic Finance
Department of the Treasury
1500 Pennsylvania Avenue, NW
Suite 3312
Washington, DC 20220
Re: Certain Treasury Auction Practices
Dear Me. Hawke:
I am writing on behalf of Wheat First Securities, Inc., successor by merger to First
Union Capital Markets Corp. (collectively "the firm" or "WFSI"), with regard to certain
Treasury auction practices of the firm.
In response to a written request from Roger Anderson, Deputy Assistant Secretary
(Federal Finance), the firm conducted an inquiry into its practices regarding noncompetitive bids in Treasury auctions submitted by the firm on behalf of certain customers,
from January, 1995 through May, 1998. The firm discovered that, on certain occasions, it
had violated §356.12(b)(2) of the Uniform Offering Circular for Marketable Treasury
Securities, by accepting customer market orders to liquidate Treasury positions before the
time-frames prescribed in §356.12(b)(2).
These violations occurred as a result of a trading strategy developed by employees
at the firm and introduced to a limited number of sophisticated high net-worth individuals
who are regular customers of the firm. Pursuant to this trading strategy, WFSI would accept
and submit a customer order in the non-competitive bidding process. As part of the
strategy, most customers would sell the secunties immediately in the secondary market. In a
number of instances, the customers would make a subsequent phone call immediately after
the deadline for competitive tenders in order to place a sell order. After the deadline, WFSI
would execute the customer's market order at the prevailing market price. However, on
occasion, to enable the sale of securities as soon as possible after the end of an auction and
thereby eliminate the risk of not being able to contact the broker or because of the
customer's unavailability, customers at the tIme of the buy order would ask WFSI to agree to
sell the securities at the earliest possible time after the deadline for competitive tenders.
WFSI would thus accept the customer's liquidating market order, to be executed later. In all
instances, at the time of the order, the WFSI customer was subject to full market risk, and all
John D. Hawke
November 24, 1998
Page 2
transactions were effected at prevailing market prices after the deadline for competitive
tender offers.
The firm's investigation of this matter confirmed that these violations were the result
ofa lack of awareness on the part of the firm's salespeople of the applicable Treasul)' rules
and regulations. There was no intent to circumvent the Treasul)' auction rules, and the
WFSI employees involved in the transactions felt they were acting in good faith in assisting
their customers with this trading strategy.
Following this internal review, the firm carefully examined and strengthened its
policies and procedures with respect to its participation in Treasul)' auctions. Specifically,
the firm has accomplished the following:
•
The firm's Compliance Department provided additional training to appropriate
personnel, ensuring that the traders and salespeople fully understand applicable
Treasul)' rules and regulations, in general, and with regard to the timing of accepting
liquidating orders in particular. The Compliance Department provides ongoing or
"refresher" training on these rules to all traders and salespeople on an as-needed
basis and annually as part of its Continuing Education programs.
•
The firm has enhanced its policies and procedures relating to Treasul)' auction
practices for both non-competitive and competitive auctions, including the rules and
regulations relating to the timing of accepting liquidating orders.
•
The firm has strengthened its compliance coverage of its participation in Treasul)'
auctions; currently all transactions are reviewed by the Compliance Department
following each auction in which the firm participates.
Compliance reviews since April, 1998 have demonstrated the firm's compliance
with applicable Treasul)' auction rules.
As we have indicated, we Sincerely regret these errors. All employees of the firm
take seriously the importance of the Treasul)"s auction rules and our responsibility to abide
by those rules in all respects. As indicated, we believe that the firm has significantly
improved its auction procedures in general, and we have taken and will continue to take all
steps possible to help ensure that such violations do not occur again. Our Compliance
Director or his designee would be pleased to participate in seminars or training programs
offered by Treasul)' relating to compliance with applicable auction rules and regulations.
We appreciate the courtesies you have shown during this process, and pledge to
continue to strive for compliance with the Treasul)' auction rules. Please let us know if we
can provide any additional information, or if there is anything else we can do to assist
John D. Hawke, Jr.
November 24, 1998
Page 3
you in your efforts to maintain the integrity of the Treasury auction process.
Ross M. Annable
President
Wheat First Securities, Inc.
FULNC:51457
DEPARTMENT OF THE TREASURY
WASHINGTON
UNDER SECRETARY
November 24, 1998
Mr. Ross M. Annable
President
Wheat First Securities, Inc.
NC0600
One First Union Center, DC8
Charlotte, North Carolina 28288-0600
Dear Mr. Annable:
Thank you for your letter of November 24, 1998, in which you discuss certain violations of the
rules governing auctions of U.S. Treasury securities that involve Wheat First Securities, Inc.,
successor by merger to First Union Capital Markets Corp. ("Wheat First") and certain of its
customers. As you relate in your letter, you were requested by Roger Anderson, Deputy
Assistant Secretary (Federal Finance), to provide information regarding the firm's submission of
noncompetitive bids in Treasury auctions for a specified period of time. This request was made
after an initial telephone inquiry conducted by Michael Sunner, Deputy Assistant Commissioner,
Bureau of the Public Debt.
You indicate that the firm conducted an inquiry into its practices regarding noncompetitive bids
submitted on behalf of certain customers, from January 1995 through May 1998. As a result of
this inquiry, the firm discovered that, on certain occasions, the firm accepted customer orders to
liquidate positions in the Treasury securities acquired through the noncompetitive bids before the
time frames specified in section 356. 12(b)(2) of the Uniform Offering Circular for Marketable
Treasury Securities. You indicate that trus practice occurred as a result of a trading strategy
developed by Wheat First and introduced to a limited number of sophisticated high net-worth
individuals who are regular customers of the firm. The strategy involved acquiring securities
through noncompetitive bids in Treasury auctions on behalf of these customers and subsequently
selling them immediately in the secondary market. You indicate that, on occasion, Wheat First
would accept a customer's order to sell the securities at the time the customer placed the buy
order. You indicate that the transactions were effected at the prevailing market price after the
relevant deadline in section 3 56.12(b )(2) of the Uniform Offering Circular.
This section of the Uniform Offering Circular prohibits a bidder that bids noncompetitively from
entering into any agreement to purchase or sell or otherwise dispose of the securities it is
acquiring in an auction prior to a specified deadline. Before January 28, 1998, the applicable
deadline for this prohibition was the designated closing time for receipt of competitive bids.
Effective January 28, 1998, this deadline was extended so that such agreements could not be
entered into prior to the announcement by Treasury of the results oftne auction In the
circumstances you describe, in which Wheat First entered into agreements to sell customer
2
securities acquired through noncompetitive bidding before the applicable deadline, the agreements
violated section 356. 12(b)(2) of the Uniform Offering Circular.
You also indicate in your response that the firm's investigation of the noncompetitive bidding
practices confirmed that the violations resulted from a lack of awareness on the part of the finn s
salespeople of the applicable Treasury rules and regulations and that there was no intent to
circumvent the Treasury auction rules. Following the finn's internal review Wheat First has taken
measures to strengthen its policies and procedures with respect to participation in Treasury
auctions. These steps include additional training for traders and salespeople both annually and on
an as-needed basis; enhanced policies and procedures for both noncompetitive and competitive
bidding; and increased compliance reviews of all auction transactions following each auction in
which the finn participates.
l
Based on the infonnation you have provided, and in light of the remedial steps that Wheat First
has taken and the commitment to continue to take all steps possible to ensure that such violations
do not occur again, Treasury does not anticipate taking any further actions with regard to this
matter. We do wish to take this opportunity, however, to emphasize the importance to Treasury
of full compliance with its auction rules. Wheat First and all other Treasury auction participants
are expected to be knowledgeable about the applicable requirements of the auction rules and to
maintain policies and procedures that will ensure that these requirements are met. Auction
participants must exercise vigilance to prevent auction rule violations, must promptly report to the
Treasury any violations that do occur, and must take remedial action to address the underlying
causes of violations as quickly as possible. The management of any finn participating in auctions
is expected to supervise the personnel responsible for Treasury auction bidding
We appreciate Wheat First's willingness to take an active role in seminars or training programs on
the necessity of, and techniques for, compliance with Treasury auction rules. We believe that
your firm's experience in investigating this matter and in designing improvements to the firm's
policies and procedures, particularly with respect to noncompetitive bidding in Treasury auctions,
will be instructive to other auction participants.
We will continue our vigilance with respect to Treasury auctions and win inquire actively
whenever we have information that may signal a possible rule violation by any auction participant.
If you have any questions. please do not hesitate to contact me.
Sincerely,
9f.:H~~,J'
Under Secretary for
Domestic Finance
l..
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NEWS
OPFICE OF PUBLIC AffAIRS. ISOt PENNSYLV.ANU, AV£NUi. N.W,. WA.SHINCTON. D.C.- 20128. (211) 6l2-DU
nasa-GOlm
mo. -her
UIITXL 2130 p •••
COl1ta~:
2'.. 1""
o~tice
of :r;p.nct . .
202/219-:USO
'!"he 'h'tNUr-azy ri:U auctiOll apprcn.ately fll,OOO llillicm. of U-4aY ~ ca.h
~t bi~~.
to be iaaued December 1, 19'8.
Cc:apetiti... &Ad noncc..,Mi::i.tive ttmcier. will be rec.i'V'eCl at &1.1 l"ea..z...1 . . .~
BaDks __ ~... orend.zo. rill DOt be acC:~M: for hUl.a to ~ JU..iDt-iped c:. tJ:aa
hook-ezatz-r reeorcla ~ the ~Tof the ~ (~~). '1'~ wUl
~ be ree.iYeCl at: the ~eau of the ~ie ~, W-bbgtoa, D.C.
Ad4iticm&l --=nm.t. of the hi11 • .ay be i ••~ to reeler.l P.e.~ sau. .. • g~.
foZ' f~p aD4 UCe%DatiODal -=R&Z'7 autborit.i.. at the highest cli.COUAt rat. of
accepted c~titi... ten4ez-a.
Bf'f.cti.... with ~asury" umO\mC888Zit OIl OCtober 28, 1998, 411 '1'!'!!!!Z7
marketable .eGUZ'~ty auc:t101W will be ccmc!ucte4 in the 'iIlIJ1e-pric:e .uct:iOll foz.at.
'l'billl of'f'ering of 'l'reaaw:y .ecuriti•• i. gvve~ by the tenul &Jld cOD4it.1~ .et
forth in th. ~fo%a Offer:i.Dg Circ:ul.u- (31 en ~&rt 356, •• Ull8Ddecl) for tU ~ &A4
iBBua by the '1'r. . .uzy to tbe pUblic of ~ket&bl. ~~ hill., ~.'r ~ bond-.
NOTE: CCllllpet:itive bia. in caaA a&A&gemeAt bill auct10us ZlNSt be
diacount:rat:. with ~ dec~., e.g., 7.10%.
e~re.ae4
.a a
000
Attachment
RR-2835
FOT p"us ,.d~tJs~s, sp~lChes. public sc:Ja~dul~s Ilnd official biog'aphi~i, caU ou, 24-hour fQJ: lin. aJ (202) 621,.2040
.~
O!fertDg' vnt ••••••••••••••••••••••••• $23.000
Deaczoi.p:i.aG
24, 1"8
~liOD
o~ Of'f~g'1
~eza aDA ~
of ••cur1~Y ••.••••.••••••• L&-~ ~ Men-g ••• Dt Bill
CUSX» rnnPber •••••••••••••••••••••••••••• 9127'S
4a~e
aa~
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••••••••••••••••••••••••••••
••••.••...•.•.•.....•......•...
~ 9
~ 30, 1998
Dec~ 1, 1991
. .curi~ 4ate ••••••••••••••••• ~ ••••••••• Dec.mber lS, 1998
origiDal 1a.ue 4at•••••••••••••••••••••• Dec~ 1, 1998
Kiftiwqe ~i4 am mAt aDd aa1tipl •••••••••• $1,000
~aa1OD
of 8i48,
!jjjipeciti... ~ia. ............ AGoepteci iD full. 1IiP ~ $1,000,000 G
t.U A:i.g:beac aao..,t.a .uaCtOallt ~.te.
cc:apeUd". 1d.4a •••••••••• (1) IIWIt lHl ..,r. . . . . . . ti.coaAt :-ate wi~
t.wo a..ciIIIa1., e. go., 7 .10%.
(2) Wet lOZW po.i~i.OID. f~ . .
bi4c1er aut
be ~pofte4 . . . . t:ha . , . of the eotal. w.a
1IJIIamlt., at 611 4i8COUAt ~t•• , IUI4 tlae na~
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.....0
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aucticm
COIIIpetit.i.".. teDders •••••••••••• ~rior to 11:30 a.a. aaecerD St.~ ~
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••••••••••••••••••.• By charge to a fuD48 account at a
~e.erYe DaDk
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full par amount wi~h teuder.
OD
OlD.
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
November 24,
CONTACT:
~998
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 2-YEAR NOTES
Interest Rate:
Series:
4 5/8%
AK-2000
Issue Date:
Dated Date:
CUSIP No;
912827~W9
Maturity Date:
November 30, 1998
November 30, 1998
November 30, 2000
STRIPS Minimum: $1,600,000
High Yield:
price:
4.629\
99.9~2
All noncompetitive and successful competitive bidders were awarded
securities at the high yield. All tenders at lower yields were
accepted in full.
Tenders at the high yield were allotted
60%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
Competit.ive
Noncompetitive
$
PUBLIC SUBTOTAL
Federal Reserve
Foreign Official Inst.
$
16,014.345
2,032,200
2.032,200
2,100,000
38,788,545
$
Median yield
4.600\: 50% of the arr.ount of accepted competitive
tenders was tendered at or below that rate.
4 . 510~'" :
5~
'b
of the amount of accerted
competitive
r
tenders was tendered at or below that rate.
'ld
Low y:te
Bid-to-Cover Ratio = 34,656,345 / 16,014,345
RR-2836
15.199,130
815.215
34/656,345
2,100,000
$
TOTAL
33,B41,130
815,215
2.16
20.146.545
DEPARTMENT,OF- THE
TREASURY
NEWS
TREASURY
ornCE OF PUBUC AFFAIRS. 1500 PENNSYLVANIA AVENUE, N.W.• WASIDNGTON, D.C .• 20220 • (202) 622-2960
Contact: Maria Ibanez
(202) 622-2960
FOR IMMEDIATE RELEASE
December 1,1998
UNITED STATES AND ITALY INITIAL NEW INCOME TAX TREATY
The Treasury Department announced Tuesday that delegations from the United States and Italy
have reached agreement on a new income tax treaty. The new treaty is intended to replace the
1984 treaty currently in force between the two countries.
The text of the new treaty was initialed in Washington. D.C., on Nov. 25. 1998, by Joseph H.
Guttentag, Treasury Deputy Assistant Secretary for International Tax Affairs, and Michele del
Giudice, Director General of Italy's Ministry of Finance, The initialing confirms a mutual
commitment to move forward as quickly as possible to signature and ratification of the new
treaty.
The new treaty updates the existing treaty to ref1ect current tax policies in the United States and
Italy. Among other issues, the new treaty addresses the replacement of the Italian local income
tax (l'imposta locale suI redditi) (ILOR) by the new Italian regional tax on productive activities
(l'imposta regionale sulle attivata produttive) (IRAP), revises the withholding rates for passive
investment income for residents of each country. and strengthens the administrative provisions.
The U.S. Internal Revenue Service announced on March 31. 1998 that the U.S. and Italian
authorities reached a temporary mutual agreement under the current treaty regarding the coverage
and creditability against U.S. income taxes of IRAP. The initialing of the new treaty ensures that
the treatment of IRAP provided in that agreement will continue for an appropriate amount of time
to allow the new treaty and protocol to enter into force.
"The new tax agreement reflects the importance of the economic rebtionship bet\veen the United
States and Italy," said Treasury Assistant Secretary for Tax Policy Donald C. Lubick. "It is a part
of our continuing efforts to ensure that our tax treaty network relkcts ever-changing conditions in
order to remove all unfavorable barriers to desirable cross-border economic activities."
The text of the new treaty will be publicly avadablc after ~ignaturc.
- 3() RR-2837
For press releases, speeches, public schedules a1ld official biographies, call our 24-h011 r fax line at (202) 622-2040
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
CONTACT;
November 30. 1998
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 14-DAY BILLS
14-Day Bill
December 01, 1999
December 15, 1998
Term:
Issue Date:
Maturity Date:
CUSIP Number:
912795EM9
4.86 %
High Rate:
Investment Ratel!:
4.94 %
Price:
99.811
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. All tenders at lower rates were accepted
Tenders at the high discount rate were allotted
~n
full.
82%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
Competitive
Noncompetitive
$
TOTAL
$
42,917,000
2,050
$
42,919,050
$
2,050
Median rate
4.83 \; 50\ of the amount of accepted competitive
tenders was tendered at or below that rate.
Low rate
4.76 %:
5% of the amount of accepted competitive
tenders was tendered at or below that rate.
Bid-to-cover Ratio
1/
=
42,919,050 I 23,012,050
1. B7
Equivalent coupon-issue yield.
RR-2838
http://WWW.pubHcdebLtl'eU.IOv
23,010,000
23,012,050
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
November 30, 1998
CONTACT:
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
December 03, 1998
March 04, 1999
912795BU4
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:
4.43S%'
Investment Ratel/:
4.547\
Price:
98.879
All noncompetitive and successful competitive bidders were awarded
;ecurities at the high rate. All tenders at lower rates were accepted in full.
Tenders at the high discount rate were allotted
AMOUNTS TENDERED
AND
20\.
ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
competitive
Noncompetitive
21,605,700
1,234,439
$
PUBLIC SUBTOTAL
Federal Reserve
Foreign Official Add-On
7,760,139
240,000
240,000
23,080,139
8,000,139
3,084,955
3,084,955
o
o
26,165,094
$
TOTAL
$
Median rate
4.410%: 50% of the amount of accepted competitive
tenders was tendered at or below that rate.
Low rate
4.380%:
5% of the amount of accepted competitive
tenders was tendered at or below that rate.
Bid-to-COVf~r
Ratio = 22,840,139 / 7,760,139
Equivalent coupon-issue yield.
RR-28~~
=
6,525,700
1,234,439
22,840,139
Foreign Official Refunded
SUBTOTAL
$
2.94
11,085,094
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt. Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
November 30, 1998
Office of Financing
CONTACT:
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182-Day Bill
December 03, 1998
June 03, 1999
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:
912795BNO
4.0410%
Investment Ratel/:
4.572%
Price:
97.771
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. All tenders at lower rates were accepted in full.
Tenders at the high discount rate were allotted
75\.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
competitive
Noncompetitive
$
PUBLIC SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$
TOTAL
24,OlB,300
1,023,162
4,721,750
1,023,162
25,041,462
5,744,912
2,269,400
2,269,400
27,310,862
8,014,312
3,840,000
3,840,000
o
o
31,150,862
$
$
Median rate
4.400%: sot of the amount of accepted competitive
tenders was tendered at or below that rate.
Low rate
4.370%:
5\ of the amount of accepted competitive
tenders was tendered at or below that rate.
Bid-to-Cover Ratio = 25,041,462 / 5,744,912 = 4.36
1/
Equivalent coupon-issue yield.
RR-2840
http://www.pubUcdebLtreal.gov
11,854,312
DEPARTMENT
~~~~~~
....
OF
THE
TREASURY
~~1789~~~
....................
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..
OFFlCE OF PUBUC AFFAIRS. 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C. • 20220 • (202) 622·2960
Text as Prepared for Delivery
December 2, 1998
ASSISTANT SECRETARY OF THE TREASURY (FINANCIAL INSTITUTIONS)
RICHARD S. CARNELL
REMARKS BEFORE THE AMERICAN ENTERPRISE INSTITUTE
WASHINGTON, DC
During the first half of this year, the Federal Home Loan Bank System issued $1.2
trillion in debt securities and supplanted the U.S. Treasury as the world's largest issuer of
debt. That's quite a distinction, considering that most Americans have no awareness of the
System. One can criticize the $1.2 trillion figure as misleading because the System does much
short-term, even overnight, borrowing-and uses the proceeds to fund much short-term, even
overnight, lending. But I'm curious: has anyone here ever wanted, or known someone who
wanted, an overnight home mortgage? And so our story begins.
The Home Loan Bank System is a so-called "government-sponsored enterprise." It's a
privately owned company, or set of twelve companies, chartered by the federal government.
It exists to further a public purpose centered on housing finance. And, in return, the
government gives it benefits not available to fully private businesses.
Let's take a quick look at some of those benefits. The Home Loan Bank System has its
own line of credit at the Treasury. It is exempt from federal corporate income tax. It is
exempt from state and local corporate income taxes, and so is interest on its debt securities. It
is exempt from registering its securities with the Securities and Exchange Commission. Public
funds can be invested in those securities. Those securities can serve as collateral for
government deposits. Those securities are issued and transferred through the Federal
Reserve's electronic book-entry system, just like Treasury bonds.
All that brings us to the most important benefit of all. Capital market participants,
looking at these and other specific benefits, evidently believe that the government implicitly
stands behind the System. These market participants accordingly lend the System hundreds of
billions of dollars at rates only slightly above those on Treasury securities-rates below those
available to even the highest-rated private borrowers.
RR-2841
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
The Home Loan Banks have played an important role in developing the residential
mortgage market as we know it today. They continue to provide some valuable services to
their member institutions. They offer their members a reliable source of funds, and assist
members in managing interest-rate risk and remaining competitive in housing finance. Their
Affordable Housing Program has won excellent reviews for helping lower-income people
become homeowners. Yet much has changed since the System was created in 1932, near the
depth of the Great Depression.
Today I'll talk about the meaning of those changes. My remarks have three main
parts. First, I'll identify the logical foundation of the Home Loan Bank System and describe
how that foundation has eroded. Second, I'll explain how that erosion raises questions about
the System's reason for being. And third, I'll outline the sorts of reforms we at the Treasury
believe are necessary to assure that the System furthers a meaningful public purpose.
The Logical Foundation of the Home Loan Bank System Has Eroded
Let's begin by looking at why Congress created the Home Loan Bank System. Anyone
who has seen the holiday classic It's a Wonderful Life has a good sense of the problems
besetting local housing finance during the early 1930s. Jimmy Stewart's character, George
Bailey, faced almost insurmountable obstacles in keeping his building and loan association in
business. When times got tough, depositors ran for their money. Yet, as George pointed out,
that money wasn't sitting in the vault; he had used it to make loans to the depositors' friends
and neighbors. To keep his institution afloat, George had to pay depositors out of his own
pocket and lock horns with the town's sinister banker. George could have avoided many of his
problems if he had just had access to a reliable outside source of funds.
Enter the Home Loan Bank System. The financial problems of the Bailey Building and
Loan Association correspond closely to the reasons why Congress created the System.
"[M]ortgage credit ha[d] dried up," according to the House Banking Committee's report on the
Federal Home Loan Bank Act, and Congress sought "to place long-term funds in the hands of
local institutions" and to counteract any Depression-related "drift of money away from
home financing activities."
The Federal Home Loan Bank Act sought to encourage the use of long-term, selfliquidating mortgages, to overcome geographic impediments to the flow of mortgage credit,
and to give thrift institutions access to a lender of last resort. The Act's implicit premise-its
basic operating assumption, its logical foundation-was that by providing low-cost funding to a
depository institution that had made home loans in the past, the System could induce that
institution to make more home loans in the future. In 1932, a combination of three
circumstances rendered this basic premise logical. First, the System made advances only to
thrift institutions. Second, thrifts generally had narrow charters that permitted them to invest
in little more than residential mortgage loans. And third, thrifts generally lacked reliable
2
outside funding sources and suffered from severe liquidity problems. Given those combined
circumstances, Home Loan Bank advances necessarily supported housing finance.
Over time, each of those three circumstances has dramatically changed-thereby
eroding the basic premise of the System.
First, thrift institutions have expanded far beyond home mortgage lending. They can
and do engage in the full range of retail financial services. They can also deal in derivative
instruments and make commercial loans and commercial real-estate loans.
Second, Home Loan Bank membership is no longer restricted to thrifts, much less
housing-focused thrifts. Commercial banks and credit unions have been free to join since
1989. In fact, a depository institution can become a member even if it has never made a home
mortgage-and can remain a member even if it never makes such a mortgage. If you're a
depository institution and you want to join, you need only wear a small fig leaf for an instant
of time. You can just put 10 percent of your assets into mortgage-backed securities, which
you buy in the multi-trillion-dollar mortgage-related securities market. Once you sign up for
membership, you can immediately sell those securities. And then, under current law,. you'll
have all the connection to housing that you'll ever need to remain a Home Loan Bank member
in good standing. You can be morbidly allergic to home loans, but as long as you have
eligible collateral on your books-and that includes any sort of U.S. government or agency
securities-you can take out advances, use the proceeds for any lawful purpose, and rejoice in
the generosity of Congress and the fungibility of money.
Third, residential mortgage lenders no longer suffer from a general lack of liquidity.
Capital markets have grown deeper, wider, and more efficient; and they are now truly national
markets. An enormous secondary market for mortgages has arisen, in which mortgage lenders
can readily convert mortgages into cash or other liquid assets. Karen Shaw Petrou has
summarized the changes as follows: "In the 60 years since the system was created, capital
markets have become so efficient and mortgage securitization so effective that even the
smallest bank or thrift can fund itself with a flick of a computer key.
It
A Crisis of Legitimacy
What, then, is the System's reason for being? Making secured loans to depository
institutions with eligible collateral isn't much of a public purpose. Lots of private firms gladly
do that every day, without a government subsidy. So what exactly does the System db that
would not otherwise get done? And how exactly does it earn its valuable governmentconferred privileges?
Let's look now at key activities of the System: making advances; running the
affordable housing and community investment programs; holding a large investment portfolio;
3
making the so-called REFCorp payments; and conducting the new programs that have begun to
proliferate.
Advances
The erosion of the System's basic premise has, as just discussed, taken a conspicuous
toll on the System's core function of making advances to member institutions. Institutions of
any size with eligible collater~ can get advances and use them for any purpose. And
advances-far from remaining a vital source of liquidity for member institutions-have become
one of many available funding options.
The vast majority of advances involve short-term, even overnight, funding-which is
unlikely to be used to make mortgage loans. For example, of the new advances made during
the twelve months ending in October 1998, over 70 percent had maturities ofless than one
month. Such short-term funding is readily available from fully private sources.
Not only are advances predominantly short-term but they go predominantly to large
institutions that generally have ready access to the capital markets. Small banks and
thrifts-although presumably having less direct access to those markets, and correspondingly
greater need for advances-receive only a small proportion of advances. As of the second
quarter of 1998, institutions with $500 million or more in assets had 85 percent of all
outstanding advances, and institutions with $1 billion or more in assets had 77 percent. The
top five users of advances account for less than 0.1 percent of System membership but almost
21 percent of all advances. The top 50 users account for less than 1 percent of the Sy~tem's
membership but almost 57 percent of all advances.
Affordable Housing Program and Community Investment Program
The System's Affordable Housing Program subsidizes both rental and owner-occupied
housing for low-income households. Lenders often combine an AHP subsidy with assistance
from other governmental and private programs. By all accounts, the program is a winner.
But it amounts to only the greater of $100 million a year or 10 percent of the System's net
income.
The System's Community Investment Program makes loans at cost to finance the
purchase or rehabilitation of homes, and commercial and economic development projects, that
assist low-income households. Last year the System made $3.2 billion in CIP advances, yet
had $202 billion in total advances outstanding at year-end.
So the AHP and CIP are good, but represent only a tiny fraction of what this $420
billion System does.
4
Investment Portfolio
Over the course of this decade, the System has developed an enormous investment
portfolio. As of October 31, 1998, this portfolio stood at $150 billion-equal to 36 percent of
the System's total assets and 41 percent of the System's outstanding debt. One way to think
about it is that the System never loans to its member institutions 41 cents of every dollar that it
borrows-and borrows at low rates because of its perceived government backing. Instead, the
System invests that money in Fed funds, mortgage-backed securities, commercial paper,
reverse repurchase agreements, and the like. In so doing, the System conducts a massive
arbitrage between the government-sponsored enterprise debt market and the private debt
market. The System then pockets the difference between its own cost of funds and th~ returns
on its investments.
The System's arbitrage investments further no public purpose. The markets for those
investments are deep, liquid, and extremely efficient. They don't need the System; they'd
work perfectly well without it. Even the System's holdings of mortgage-backed securities do
nothing appreciable to expand homeownership. Although those holdings averaged $47 billion
in 1997, they represent less than 3 percent of the $1.7 trillion in outstanding governmentrelated mortgage-backed securities. The System adds no value to the mortgage-backed
securities market and was not intended to do so.
REFCorp Payments
Then what about the System's role in making payments on the so-called REFCorp
bonds? In 1989, the Bush Administration persuaded Congress to finance part of the thrift
clean-up with these off-budget bonds and have the Home Loan Banks pay $300 million a year
toward the interest on those bonds. This was intended as a sort of continuing tax on the thrift
industry. Little did policy makers suspect that commercial banks would so quickly come to
dominate the System's membership. And little did they suspect that the System would soon
develop a massive arbitrage portfolio not only to pay for the REFCorp tax but to help-itself to
an extra serving of government subsidy.
Some System insiders refer to the REFCorp payments as the System's "fiscal mission."
Quite a mission. The System, exempt from all corporate income taxes, uses its relationship
with the government to reap arbitrage profits and then share some of those profits with the
government. Not bad so far, but there's more. Some people believe that if Congress were to
abolish or privatize the System, any lost REFCorp payments would trigger the pay-as-you-go
requirement in the Congressional Budget Act and thus require offsetting tax increases or
spending cuts (which could go beyond applying the corporate income tax to a privatized
System). Yet one may doubt whether the REFCorp payments actually make the government
better off, since it stands to reason that the System's arbitrage borrowing-at rates close to
those on Treasury securities-may increase the cost of financing the public debt by increasing
the supply of competing securities. In any event, the REFCorp obligation does not justify the
5
System's investment arbitrage portfoli~any more than Congressional cost-cutting would
justify a federal agency in sponsoring a mutual fund and using the income to replace money
that Congress had chosen not to appropriate.
New Programs
In seeking to sum up this review of the System's activities, we might say: The System
is big; the System is busy; but most of what the System does would get done anyway. The
status quo hardly makes a ringing case for the System's government-conferred privileges.
The System has accordingly sought to expand into new activities (and to promote
existing activities as though the System sought to become the lender of first resort). New
activities help perpetuate the System in several ways. By expanding the System's business
lines, they give depository institutions additional reasons to become members. These activities
can also help extend the System's political network. And in some cases the activities may help
meet some significant,unmet needs.
In a recent example of dubious expansion, the Federal Housing Finance Board
broadened the Home Loan Banks' authority to issue financial guarantees in the form of standby
letters of credit. The Home Loan Banks could use this authority for a wide array of purposes
that do little or nothing to expand homeownership, such as credit-enhancing municipal bonds
and asset backed securities. The market for such guarantees is already highly competitive.
But expanded credit-enhancement offers member institutions another carrot and may also help
cultivate additional constituencies for the System.
More broadly, just because a government-sponsored enterprise has some capability to
conduct a given activity doesn't mean it should do so. From the Treasury's standpoint,
proposals to expand the Home Loan Bank System raise questions about whether a
demonstrable market failure exists and, if so, whether the proposal is the best way to correct
it.
Real Home Loan Bank Refonn
If the Home Loan Bank System did not exist today, no one would seriously propose to
create a government-sponsored enterprise with anything like the System's current mix of
activities. Still, the System does some good and could do more. We at the Treasury would
support legislation that preserves a Home Loan Bank System genuinely reformed and
refocused on a meaningful public purpose. In that context, I'd like to suggest three process
principles and three policy principles.
The process principles are easily stated and deceptively simple. First, do no harm.
Second, get the job done right. And third, do not preempt needed reforms.
6
Mindful of these considerations, we oppose piecemeal changes that would dissipate
pressure for real reform and, in some cases, create perverse incentives never to undertake such
reform. For example, if Congress in piecemeal fashion gives the System's insiders the
relatively few things they seem to want from Congress (e.g., devolving management authority
from the Finance Board to the Home Loan Banks, or liberalizing borrowing rights and
membership terms for depository institutions with less than $500 million in assets), it removes
the incentive to go along with other reforms. Thus piecemeal change can preempt real reform.
But piecemeal change could do worse than that; it could actually obstruct real reform.
Proposals to reallocate the REFCorp obligation among the 12 Home Loan Banks provide a
case in point. Current law requires the System to contribute a fixed $300 million a year
toward REFCorp interest payments, and arbitrarily allocates that obligation among the 12
Banks. Reform proposals would commonly replace the fixed dollar obligation with a
requirement that each Home Loan Bank contribute a specified percentage of its net income
toward REFCorp payments. Such a change would make eminent sense-in the context of
broader reform. But if made piecemeal-in particular, without curtailing the System's swollen
investment portfolio-such a change could conceivably impede real reform. Because once
restated as a percentage of income, the REFCorp obligation might be construed to create
powerful budget incentives to expand the System. Specifically, pay-as-you-go rules might
treat legislation curtailing the System's arbitrage portfolio (and thus shrinking the System's net
income) as revenue-losing, even if it would actually protect the taxpayers by reducing the
liabilities covered by the System's perceived government guarantee. Those rules might also
treat legislation expanding the System (and thus increasing the System's net income) as
revenue-raising, even if the System had no good policy reason to conduct the expanded
activity.
In addition to the three process principles I've just outlined, I would also propose three
substantive policy principles. First, any legislation should tightly connect advances (and other
activities) with the System's public purpose.
Second, any legislation should include objective, enforceable limits on the System's
investment portfolio. We have endorsed generally limiting the total dollar amount of bonds a
Home Loan Bank can have outstanding (the so-called consolidated obligations) to the total
dollar amount of the Home Loan Bank's outstanding advances. We WOUld, in effect, limit a
Home Loan Bank's investments to its capital plus its member deposits, which would still let
the System hold a sizeable investment portfolio ($45 billion as of October 31, 1998). Thus the
System could raise funds at government-subsidized rates only if it advanced those funds to its
members.
Third, legislation should embody the principle of equal rights and responsibilities for
all Home Loan Bank members and preserve the desirable aspects of the System's current
capital structure. We believe that the current structure-a single class of redeemable -
7
stock-would, with only modest changes, 1 be adequate even in the context of voluntary
membership for all institutions (which we support). The current structure lets capital expand
and contract along with demand for advances. It fits the System's cooperative character. And
it would also facilitate additional changes if Home Loan Banks decided to undertake them.
Conclusion
The Home Loan Bank System's original reason for being has eroded and left the
System seeking ways to make itself useful-and justify its continued existence. Yet the System
is not a fully private business; its various privileges amount to a significant govemmettt
subsidy. The System should not have free rein to expand into lines of business for which
reasonably effective private markets already exist. Congress-not the System-should decide
whether to expand the System's activities. And Congress should permit such expansion only
after a rigorous process in which it ascertains that a market failure exists and concludes that the
System is the best way to correct that failure.
- 30-
1 We do support modest changes to increase the pcnnanence of the System's capital: e.g.,
lengthening the stock redemption period, particularly if a Home Loan Bank faced large capital outflows;
requiring the Finance Board to reduce (i.e .. impose a haircut on) any redemption by the member's pro rata
share of any capital deficiency at the Home Loan Bank; and measuring capital net of all pending stock
redemptions.
8
DEPARTMENT
OF
THE
TREASURY
NEWS
OFFICE OF PUBliC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W.• WASlflNGTON, D.C .• 20220 - (202) 622·2960
FOR IMMEDIATE RELEASE
December 3, 1998
Contact: Hamilton Dix
(202) 622-2960
u.s. TREASURER TO STRIKE FIRST NEW CIRCULATING COIN IN 22 YEARS
U.S. Treasurer Mary Ellen Withrow and Mint Director Philip Diehl will strike the first
Circulating Commemorative Quarter at 11 :30 a.m. on Monday, December 7, at the U.S. Mint,
151 North Independence Mall East, Philadelphia. This quarter will honor the state of Delaware,
the first state to ratify the U.S. Constitution.
Delaware Governor Thomas Carper and Delaware Congressman Michael N. Castle,
chairman of the House Banking Subcommittee on Domestic and International Monetary Policy,
will join the ceremony.
The Fifty States Commemorative Coin Program Act provides for the redesign of the tails
(reverse) side of the quarters with designs emblematic of each of the 50 states. The law provides
for five states to be featured each year beginning in 1999, in the order in \vhich the states ratified
the U.S. Constitution or were admitted into the Union. This is the first new U.S. circulating coin
since the bicentennial quarter.
Cameras may begin setting up at 9:30 a.m. Media wishing to attend must provide name,
address, date of birth, location of birth and social security number by calling Diana Heide (212)
546-1321 or Tim Grant (215) 408-0110.
-30-
RR-2842
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
D E P.-\ R T \1 E l' T
0 F
T H f.
T R E .\ S CRY
NEWS
TREASURY
OfFICE Of PUBLIC AFFAUtS e1500 PENNSYLVANIA AVENUE. N.W. -WASHINGTON,D.C.- 28220. (202) al:l;;;~t~
ENBARGOED tIN'l'XL l: 30 P. II •
CONTACT:
December 3, 199B
TREASURY OFFERS l3-WBBK, 26-WBKK,
Am)
Office of Financing
202/219-3350
52-WEn Bl:LLS
The Treasury will auction three series of Treasury bills totaling approximately
$27,00D ~llion to refund $25,518 million of publicly held securities maturing
December 10. 1998, and to raise about $1,482 million of new cash.
In addition to the public holdings, Vederal Reserve Banks for their own accounts
hold $13,112 million of the maeuring bills, which may be refUDd.d ae ebe highese
~scount rate of accepted competitive tenders.
Amounts issued to these accounts ~ll he
~n addition to the offering amount.
The maturing bills held by the public include $3,217 ~llion held by Federal
Reserve B~s as agents for foreign and international monetary authorities, which may be
refunded ~ehin the offering amount at the highest discount rata of accepted competitive
tenders. Additional amounts may be issued for such accounts if ;he aggregate amount of
new bids exceeds the aggregace amounc of maturing billa. Por purposes of de~.rzn1Ding
such additional amounts, foreign And international mo~.tary authorities are conSidered
to bold $1,712 ~llion of th. origin&l 13- and 26-week issues, and $1,505 million of the
original 52-week issue.
A1l of the auctions will be condueted in the single-price auction format. All
competitive and noncompetitive awards will be at the highest discount rate of accepted
competitive tenders.
Tenders for the bills will be received at Hederal Reserve Banks and Branches and
at the Bureau of the Public Dabt, Washington, D.C.
This offering of Treasury securities
is gov&rned by the terms and conditions eet fortb in the Uniform Offering Circular
(31 CFR Part 356, as ~end8d) for ~e sale and issue by the Treasury to tbe public of
marketable Treasury bills, notes, and bonds.
Details about each of the nwv •• curities are given in the attacbed offering
highlights.
000
Attachment
RR-2843
For prns releas~s. JPuches. public IChedliles Qlfd OffiCial biographies. call our 24·hour fax lin~ fit (202) 622-2040
HIGHLIGHTS OF TRBASURY OVFBRINGS OF BILLS
TO BK ISSUED DBCBMSBR 10, 1998
December 3, 1998
Offering Amount •••••••••••••••••••.••• $8,000 mil1ion
De.cription of Offering:
and type of •• cuTity ••••••.••••.•
CUSIP number •••••••••••••••••.•.••••..
Auction date ••••••••••••••••••.•••••.•
I ••ue date ..••••••••••••••••••.•••••••
Maturity date •••••••••••.•••••••••••••
Original issue date •••••••••••..••••.•
Currently outst.nding ••••••••...••••..
Minimum bid amount and multiples ••••.•
Te~
91-day bil1
912795 DD 2
December 7, 1998·
December 10. 1998
March 11, 1999
September 10, 1998
$11,326 million
$1,000
$8,000 million
$11,000 million
182-day bill
912795 BP 5
December 7, 1998
December 10, 1998
June 10, 1999
December 10, 1998
912795 CS 9
December 8, 1998
December 10, 1998
December 9, 1999
December 10, 1998
$1,000
$1,000
364-day bill
the following rules apply to all securities mentioned above:
Submission of Bidsl
Noncompetitive bids ••...••.. Acc.pted in full up to $1,000,000 at the highest discount rate of accepted
competitive bids.
Competitiv~ bids ...••...••.. (1) Must be expressed as a discount rate with three decimals in increments of .005\,
•. g., 7.100%, 7.105\.
(2) N.t long position for each bidder must be reported when the sum of the total bid
amount, at all discount rates, and the net long position is $1 billion or
greater.
(3) Net long position must be d.termin.d a8 of one half-hour prior to the
cl08ing time for receipt of competitive tenders.
Maximum Recognized Bid
at a Single Yi.ld ........... 35\ of public offering
Maximum Award •.•.•.....•...•... 35\ of public off.ring
R.ceipt of Tendersr
Noncompetitiv. tenders ...•.. Prior to 12z00 noon Eastern Standard time on auction day
Competitive tenders ••••.••.• Prior to l:OO p.m. Eastern Standard time on auction day
Payment
~erms
•••.••..••••••.•.• By charge to a funds account at a V.deral Reserve Bank on issue date, or payment of
full par amount with tender. Treasury Direct customers can use the Pay Direct
feature which authorizes a charg. to their account of record at their financial
institution on issue dat •.
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
EMBARGOED FOR RELEASE AT 3:00 PM
Contact: Peter Hollenbach
(202) 219·3302
December 4, 1998
PUBLIC DEBT ANNOUNCES ACTIVITY FOR
SECURITIES IN TH F.. STRIPS PROGRAM FOR NOVEMBER 1998
The Bureau of the Public Debt announced activily figures for the month of November 1998, of
securities within the Separate Trading of Reg,istl,Tl.:d Interest and Principal of Securities program
(STRIPS).
pollar Amounts in Thousands
Principal Outstanding
(Eligible Secwities)
$1,578,004,562
Held in UnstrippedForm
$1,352,174,538
Held in Stripped Form
$225,830,024
Reconstituted in November
$5,831,751
The accompanying table gives a breakdown of S I"RlPS activity by individual loan description. The
balances in this table are subject to aurJit and sllbs~quent revision. These monthly figures are included
in Table VI of the Monthly Statemenf vlrhe PuNir: Debt, entitled "Holdings of Treasury Securities in
Stripped Form."
The STRlPS data along with the m;w Arloruhly S/( Itemenl of the Public Debt, is available on Public
Debt's Internet homepage at: lVww. p ublicdebt t reas.gov. A wide range of information about the
public debt and Treasury securities is also avaibhle on the homepage.
000
RR-2844
TABLE \/I. HOLDINGS OF TREASURY SECUrllTIES IN STRIPPED FORM, NOVEMBER 30. 1998
-=-
.~.
OOrpus
STRIP
CUSIP
Loan OC$Cl'lption
!"ritlcfOal Amount Outst.:lnding in Thousands
MClturrty Date 1--._.
~ecDnstiwted
l"t..Ii
Oul","Ming
Tressul'f Bond$:
CUSIP:
1112810DM7
Portion Held in
Un~ll'ioped Form
Ponion Held In
StriPped Form
This Mon!'l
IMer~t
OQ8
Asle.
11..&18
12
ORG
I0-3J4
Due
WI8
11-3.14
912B03AB9
11·1/4
1(>.518
912803 AAI
, 111 Sf04
05115/05
08/1510S
02/15106
11/15114
0211 SflS
A.c:7
06/15/1 S
AE3
,,,,5/15
02115118
AHG
AK9
Al7
AMS
O~15/16
028
EA.2
9·718
9·1141
7·11..
7·112
S·3I4
&-718
9·1/S
EeO
9
EC8
ED6
5-718
8o11S
EE4
EF1
~1/2
ONS
OPO
OS4
on
01(1
OWS
DX3
DVI
EGg
ADS
AGe
AJ2
912800AA7
w.O
AN3
AP8
AQ6
AR4
AS2
ATO
AU?
AVS
8·314
11-314
\ \/1S118
0511~17
1~,194.189
08115117
05"511$
11/15/18
02/15119
01)/l!:>118
I~016.8S8
((1.213.832
02115120
10 ~2S.ae8
05/1S120
03115/20
21~18.S06
0211~2'
11.113.373
05115/21
I 1.~~S.&88
I:' 163.482
7·718
8-lIe
EKO
Am
8-1/5
AXI
EUI
EM6
EN4
8
AY9
7·1/4
AZe
BAO
08/15122
BBS
02/1Sf23
8C6
1004
06/1S!23
EP9
7·118
6·1/4
1266,&54
1;1.823.551
11.1864,&48
EH7
EJ3
7·Sfa
It 301,808
4.260.756
').269.713
41,755,916
foj,005,584
,< 667.799
7. '49.91S
1;,899,859
06115/21
11115/21
11/15n:c
EO?
ES3
ETI
7,'12
7.518
Eve
e~
6-71a
EW4
6
G-!J4
BF9
BG7
,,1\5124
02/15125
OSl15125
02l1S/28
BHs
08/15/.26
u 70e,$39
'J 032.870
1~1.250.79S
10.ISS,S83
31.798,394
10.:>52.190
10699.626
ltJ14.361
2;>. !)09 .0"4
, ''''69,682
1 1.725.170
11fi02,OO?
1;[.904,916
10.1l93,818
".'193,117
10456.071
EX2
EYO
6·1/2
BJ1
111\5I2S
EZ7
6-5JB
02115127
FA1
OS/1SI27
H).n~.7S6
FB9
6-3J8
6-118
8KS
SLS
SMA
1111 S/2?
FE'
>112
BP7
eV4
0811 51;?8
22 <'18,$39
11 77F;.201
10947.052
!iOJ;18Z.0S4
FFO
TObl Trea&IIfl' 8onds. . ... "
5-1/4
.................
'
11flSf2e
4.602.606
2.237.408
6.951,313
4.70lil7.918
2.916.784
11,065.879
6.971.356
5,1119,859
7,182.9$0lil
18,561,951
17.880,688
8,330.169
a.906.458
2.569.439
2.070.070
4.914,798
18.702.152
5.711.668
2.42U23
5,379.406
10,052.573
6.20l,44e
8,361,562
, 1 ,578.6.&4
8,715.$50
2,&13,226
11.071,961
1S.01US2
2.450.302
2.757.170
3.699.200
2.023.350
2.318.400
8.000
3.0SIl,aOO
I,G01.~0
17e.5GO
1,080.000
8',000
261.600
983,760
9,864,000
5,110,400
6,139.200
e.962,eoO
14,336,000
1.511,680
4.S17.20D
7,730.5&0
16.039,200
'.OSO,SOO
5.757.440
229.600
170,400
184,000
394.400
60.800
1&0,000
97,000
27~,400
125,120
22A.OOO
250.880
3n,800
225,600
164,BOO
~.801.920
ue.480
2S8.0~
1.636,800
7.896.400
7.202,400
3.896.192
9.019,360
sUeD
a.gea.ooo
8,826.327
3.n5,680
270.300
1.600,000
1,3&3,600
2, 1~3.200
34o.eOO
126,400
lAOO
0
"7.710,072
10.947.052
0
38.D80
20,800
171,200
21,219.750
12,634.616
9,m.S18
10.109.577
8.332,871
10.394,956
22.392.139
11,773.801
3:15.671.982
81.600
45.050
120.800
0
11.200
163.200
46.336
90.no
131.200
152.320
0
97.600
4.aoo
0
0
D
0
0
4,G68.011
TABLE VI • HOLDINGS OF TREASURY SECIJRITIES ... S 1 ~IPPEO FORM. NOVEM8ER 30. 1918 - Continued
r>Iinci~ Amount
Corpus
STRIP
Lacs" o.WlpCiOfl
M&lulily Oate
~.--
TC~I~I
CUSIP
O,ul~l;flldlnCl
Outstll1dinlJ in TIIOI.ISlf'ld$
Pol'tton Held In
Vnstriooed Form
Reconstituted
This Montll
Portion Held in
StriDoed Form
Treuuty Not=.
Series: Inliere'st Ra18,
CUSIP
g12a27 XfJ
XN7
X,WI
3H3
31<6
A
B
C
AK
YES
No
B-7/B
9-118
B
S-lJ04
S-Sl5
7·718
5-518
5-Sf8
5-318
912820 AR8
ASS
AT4
CBl
C07
AUI
02l15~9
OM 5199
!I.719.62.3
1U047.103
10163.644
09130/99
11487.287
10/31199
11/15199
11130199
12/S'/9'
01131100
05/1$/99
6.2841.423
4.717.503
5,755,169
17.269.681
16.604.747
6.002,760
'6,8SS.59S
16.647.860
17.502.02G
7.555,433
H35.200
5.329.600
4.406.475
Z17.600
219.200
4,171.200
185,600
89.200
0
3.117.600
17.n8,125
0
'7.206,376
0
0
5,300.600
0
0
31>5
0
AM
3R'
AN
3U4
YN6
A
&-112
AV9
02115/00
Z
5"12
5'1/2
CRG
02l~9100
CT'2
CV7
AWT
03/31100
lG,£!23.947
10.773.960
I/.OS1.191.1
H; 147.060
1/,1,02.026
HI 673.033
1("76,125
1I,20S,376
0"30/00
I ~),e;J',IISS
15.e3~.es5
OS/IS/OO
10496,230
l!;520.032
14139,057
5,195,430
16.580.032
14,9'9.057
18.683.295
7.060.006
20,028,533
3VI>
41'.7
4C3
YWS
4G4
Y
AS
AC
8
AO
>SIS
8-7IS
S-112
5-31a
CGO
CJ4
CM7
CZ!
05/31/00
06/30/00
006
AX5
07l~lICO
1~683,29S
08/15100
1'.0ll0,G46
oe/~"oo
'0028,533
091JO/00
1926e,488
.0,57.4,986
11.:'.19.652
eso
4J8
4""
Ae
US
402
C
At:.
A/"I
5-3/S
9-3.14
5-lIe
.... ,12
OF'
OGe
AJ
4
0117
0
X
e,.'12
AY3
5-3/4
4-51S
7-3/4
CF2
4RO
4TC
ZN5
AF
3M2
4wg
AK
lX3
A
31M)
5
AIlS
e
s-lIS
B
4E9
B92
T
5-SIa
7·71f!
C
11)/31100
11115/00
1111 5/00
OLS
, t/30/00
AlO
02115/01
02115/01
05115101
CPO
8M
CX3
BB2
05115/01
O!l1S/01
1(.036.068
20.15B,'36
11.J12.802
IS 367.153
1),:J9S.0ell
ll.I){J,752
'~:l39, las
025
0
7-112
BCO
A
806
GSS
S
7-112
6-318
l111Sl01
05/15/02
2~n6,102
F49
BES
oa/15/02
2~
3J9
31.A
M
N
P
5·7/8
CC9
CEs
CH8
CK1
09/30/02
10/31102
11/30/02
l~e06,61"
eNS
01/31/03
02/15/0.3
5-314
359
a
:lV2
C
5-314
5-518
5-112
303
12/31/02
, 1.114,J97
!!59,015
11137,2!4
" 120.580
1;1052.433
\~.100.640
J7&
A
&-114
BFS
3Z3
0
465
E
F
G
H
C54
CU9
0:?J31103
''''7(,$92
OWs
04I~0(03
DA2
OSl~1I03
e
5-112
5-112
6-3/4
5-112
5-3/e
$-3(4
Dee
J
K
5-114
OE4
.. ,/4
OJ3
8H9
6JS
8K2
81,0
8MS
BNI>
06130/03
08115/0J
08/,5/03
11115103
02/15104
" ~73.248
'3,132,243
13.1ze.77'S
2111'>11.028
';',1152,263
40'
4H2
4K5
L83
4N9
4US
Ne1
A
B
~718
C
7.114
7-1104
7.718
sa6
0
A
7-112
T85
6-112
PS9
OSS
RII7
US3
B
C
V82
0
X80
BG'
O'I?e103
OSlI~/04
03116/01
11115/04
02/,Sl05
05115105
'-H62.691
13 670,)64
10,02(;,535
12 'J~S,077
H,1'10.372
1 J J4ft,467
14)73.760
13,"3~,7S4
14/39.504
lS.002.580
15,;>09,920
19.2&~.488
a
4.020,640
0
0
0
20,524,986
7.094,882
16,03S,Oas
20,156,136
7,793.602
15.367,153
8.217,358
12.273.752
9,036,7&5
19.«8,022
4,4S4.eoo
0
0
3,519.200
0
4,1eO.725
0
3,302,400
4.773.080
9,249,997
2.464,400
22.2S5,S15
12.771.61.
11.675,6&4
11,019,780
12,052,.'3
13.100,$40
22,895.043
13.626,3S4
14,172,a92
12,573,2.48
13,132,243
13. 126.n9
27.563,828
19.852.263
18.625.535
12.7S7,477
14.3e5,9n
12,$19,267
14,S13.760
13.806.914
'4.739,504
15.002.SII0
15.20S,120
1.803.200
SS,200
61.600
200,eoo
0
0
667.648
44.000
0
0
0
0
447,200
0
0
217.6DO
54,400
827.200
0
27,840
0
0
4,800
4,160
123.2GO
134.400
139.700
0
0
20.800
0
0
0
23.600
0
0
0
86,400
0
0
0
56,960
0
0
0
42,400
0
0
3S.400
0
54.200
0
72000
Z70.400
36.160
411.600
0
0
0
0
0
7,520
0
0
0
0
0
3.200
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
4,800
0
0
0
0
1.163.740
O~'SJOP'
'~,!, 1:).~87
1~.'09.427
6·71S
8S5
05115/06
16 ()15,475
YSS
A
B
C
BPI
B09
SR7
06/IS/OS
5-7/8
s.5J8
7
8T3
07flSI06
22.140,.... 6
Z62
0
6-112
SUO
2JO
ZUS
B
C
&.1/.4
B'MI
10115/06
02115107
6-516
8X4
0511S!07
3EO
0
8
6-1fS
CA3
5·1/2
C
5-518
CQS
CY1
08l1~0'
02115108
0
4-314
OKe
2;>,.r,9.67S
13.1UJ,S7S
f:U:'8,186
25,GJ4,eQ3
13 r,A3,412
27,1<;0.961
134/18,035
1,007,1'&0,375
16,015.475
22.7"0,446
22,459,615
13,043,2114
94M2S,423
0
59,119,952
17,178,425
16770,893
17.1>,3.7,2
50~ 13.029
17.178.425
16,ZTO,893
17,023,712
50.473.029
0
0
0
0
0
11.0(11,103
17.00','03
17.001, ,03
0
0
0
0
we,
3X8
4FS
4V1
6-'12
11115/05
OSI1SIOe
11/15!OS
Total Troe5Uty Notes ............... "',, .......
Treasury Inflalion.J"dexed NOIel:;
s.ries: Interest Raile:
J
9'2a27 JAS
3·513
2M3
A
3-3/8
317
A
J..5Ie
13.922,9~
25.612,803
13,5a3.412
27,190,961
13.488,035
a
0
0
60,384
3$,200
24,000
O.
0
CUSIP:
912a20 BZ9
BV8
CL9
07115102
01/1$107
01115/08
TotaIlntlsllOftolndc:xed No~" .............
0
0
0
Trusury 'nnaUon-I"d~ Bonds:
CUSIP:
9'2810 F05
,,,West Rate:
3-5/8
9'28Q36N2
04/1~8
..
.......•.. ... " ..... ............. ............... . .....
17.001103
ToQIlnn81lon-Inde:Jll8d Bon4£ ... " .....
5.831 751
225.830024
1 ,3~ 174,538
l,s7e 004,562
Gr.Ind TotsI, ...........
No"" On 111114111 wOllCly ;I tiC/! mon1/'! T~Dt. VI wUl tie ~~nI1Dle ener 3,00 pm, ,ast.", l11nO 0,' II, .. Cornmeroa ~/t'I'Ien\" eoonomoc IluIloM ilOl1tC (EBa)"" all II,. BUI'II"u /tI ....
PllDllt: o.o~ ....lIcile 0' 1ICp.l_,pUCII'Geouresa,gOlt, For mofe inform"~(111 800vl ES8, :0111 ,'1)") ~.1_. nle bc!~IICQ' In 11\0& table ora ~eet III :lUGn ana "'1:Iee~uan'I D"'U""''''~,
.
DEPARTMENT
IREASURY
OF
THE
TREASURY
NEWS
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220. (202) 622-2960
FOR IMMEDIATE RELEASE
December 7, 1998
Contact: Hamilton Dix
(202) 622-2960
RUBIN NAMES BEP DIRECTOR AND DEPUTY DIRECTOR
Treasury Secretary Robert E. Rubin Monday named Thomas A. Ferguson as the director of
Treasury's Bureau of Engraving and Printing and Thomas C. Harris as the deputy director. The BEP
produces all U.S. currency, government securities and more than half of the nation's postage stamps at
two facilities in Washington, D.C., and Forth Worth, Texas.
As BEP director, Ferguson will work to position the bureau to meet the challenges ofthe next
century and to assure the bureau's resources are appropriate to meet costumer agency demand. Harris,
as deputy director, will manage day-to-day BEP operations and lead in policy development.
At BEP for more than 24 years, Ferguson has served as BEP deputy director since November
1997, and has been acting director since January 1998. He also served as BEP's associate director
(management) and as the director of the bureau's Securities Technology Institute. During his tenure,
the Securities Technology Institute directed the counterfeit deterrence program and the new currency
design process. He chaired the New Currency Design Task Force which recommended the security
features being incorporated in the new Series 1996 currency.
Ferguson received a B.A. in economics from Lafayette College, Easton, Pa., and a master's
degree in public administration from the University of Southern California. He was born in Trenton,
N.J. He, his wife and two daughters reside in Howard County, Md.
Thomas C. Harris has been Acting Associate Director for Operations. responsible for
operations at both BEP printing facilities, since July 1998, He served as the plant manager of BEP' s
Western Currency Facility in Fort Worth from 1996-98, Previously, Harris was president and chief
executive officer of his own consulting company in the security printing field. He also served as \'ice
president of government sales at the American Bank Note Company. Harris held several other
management positions in 15 years at BEP.
Mr. Harris holds a B.S. in business administration (labor relations) fr0111 the University of
Maryland and master's degrees (public administration) from the University of Southern California and
George Washington University, Harris was born in Washington, D.C. He and his vvife ha\e five
children and five grandchildren and live in Annapolis, Md.
RR-2845
-30Far press releases, speeches, public schedules and official biographies, call our 24-hour fax liue at (202) 622-2040
DEPARTl\tlENT
lREASURY
OF
THE
TREASURY
NEWS
omCE OFPUBUCAFFAIRS -1500 PENNSYLVANlAAVENUE, N.W. - WASHINGTON, D.C .• 20220. (202) 622·2960
EMBARGOED UNTIL 7:45PM EST
Remarks as prepared for delivery
December 7, 1998
TREASURY SECRETARY ROBERT E. RUBIN
REMARKS BEFORE THE NATIONAL FOREIGN TRADE COUNCIL
NEW YORK, NEW YORK
It is a pleasure to be with you this evening. Let me begin by thanking the National
Foreign Trade Council for inviting me. Tonight I would like to speak with you about the
importance for the economic well being of all nations, including the United States, of remaining
open and engaged in the global economy, despite increased suggestions to do otherwise in
response to the economic disruption over the last year and a half And, I will also speak about the
imperative to build and strengthen public support for that economic philosophy of openness and
engagement, in the face of this increased opposition.
Let us first spend a moment on the crisis itself. The financial crisis of the last 18 months
has often been referred to as in some ways the most significant financial crisis of the last 50 years.
It has presented enormous challenges to the international community, and just as the problems
that gave rise to the crisis took years to develop, re-establishing financial stability and growth in
the affected nations will also take time and much effort. While interest rates have fallen and
currencies strengthened in Korea and Thailand, nations that have taken ownership of reform,
these nations still face enormous challenges ahead. And the nations that have failed take
ownership of reform face severe difficulties.
More broadly, there have been a number of significant positive developments over the last
few months. For example, the Japanese have passed important banking legislation to provide
over $500 billion in public funds for its banking sector, though effective implementation of that
legislation still lies ahead, the U.S. Congress approved funding for the International Monetary
Fund, and there has been a greater emphasis by the developed nations on promoting their own
growth.
In recent months, as a result of the massive disruptions that have occurred, voices around
the globe opposed to globalization and open markets have grown louder. Recently a developing
RR-2846
For press releases, speeches, public schedules and official biographies, call our 24.nour fax line at (202) 622-2040
:s told me oJarkets told me of the greatly increased
vs and capitnflows and capital outflows. And, in the
the United s. In the United States, as our trade deficit
: imports, thasing imports, there are increased
, despite ourkets, despite our healthy economy,
6 years in ttl the 6 years in the Administration, I
~r this perio(e over this period -- toward a global
he global ecvith the global economy as the best path
cefully challe forcefully challenged. Having said that, I
m and globcsystem and global integration is the best
for vast nunefits for vast numbers of people around the
i.
Thailand, S)rea, Thailand, Singapore, and the list goes
wth, lifting g growth, lifting millions from poverty, in
nd investmade and investment. That notwithstanding,
and it is imrisis, and it is imperative that the
strengthenins on strengthening social safety nets as a
Iping nationeveloping nations around the globe have
ide, and attr in trade, and attracting private sector capital
:ontinuing tnem continuing to do so.
nefitted frorly benefitted from the development of the
'ith the rest ent with the rest of the world. Expanding
llt less widelty, but less widely recognized is that
19. America! being. Americans, as consumers, benefit
vide; AmeriG provide; American producers similarly
Jroductivityand productivity is enhanced through
Lme. The wim game. The whole world benefits when
Imparative ats comparative advantage is greatest.
~d
its best ecnjoyed its best economic conditions in a
~nt now at 4:>yment now at 4-112 percent, and rising real
hat our ope:iew that our open markets have contributed
dispositive, not dispositive, it is interesting to compare
onomic perfle economic performance of other
; result in hiftions result in higher prices and less
ogical devel:hnological development and all change, also
Igrams to hfg programs to help those who are dislocated
successfully re-enter the economy as rapidly as possible, both to minimizd
economic costs and also to help sustain political support for open market sf
that trade not only be open but fair, to make the system work best for all rY
does not obtain, we must vigorously enforce our trade laws.
While the market system does offer the best path to economic weill
the global economy, it is clear that the global financial crisis has provided ts
for opposing voices. Against that backdrop, let me offer three suggestiomt
market system and, strengthening public and political support for that syst~
First, we must substantially improve the architecture of the internatt
to better prevent crises in the future, or better manage them when they do ;1
began several years ago, and has greatly intensified since the current crisis 1
many of these issues are extremely complex -- for example, how to accomf
private sector burden sharing when a crisis occurs -- and the thinking, the cl
international consensus, and the implementation on the large host of issues 1
on for a long time to come.
Second, we must greatly broaden participation amongst the people:
the benefits of the global economy. That is a complex subject unto itself, irj
industrial nations, and involves education and the other requisites for succe;]
economy; appropriate social safety nets; workers rights; and the list goes orl
the right thing to do economically, it is absolutely requisite to building and t
support for open markets that the great preponderance of our people feel ttc
economy works in their interest.
Third, and finally, we need to greatly increase understanding here atl
importance of American leadership on the issues of the global economy to It
being, and of the importance of trade-exports and imports -- to our economAlthough the Congress finally approved IMF funding this fall, we are still thi
arrears to the United Nations, and we lack fast track authority to negotiate,
even though expanding trade is very much in our interest. After almost six y
have become deeply concerned that public support for forward-looking inte~
policies may be waning at a time when our country's economic, national sea
interests require just the opposite.
There needs to be a redoubled effort by all of us -- public sector offie
community, foreign policy experts -- to communicate with the American putt
dynamics of the new global economy, and the importance to our economy oC
and leadership on issues like dealing with financial crisis abroad and promoti"
developing nations. Unless there is broad public understanding of these matj
backward, with potentially serious economic and national security consequ6
3
The National Foreign Trade Council, and its members, have been a strong and important
voice in a number of debates related to international economics: approval of the IMF funding, the
use of unilateral trade sanctions, and a host of other important international economic issues. But
in the world today, your active participation has never been more needed -- as individuals, in the
businesses and firms for which you work, and as an organization -- in developing public support
for forward looking economic policy. The history of this century has clearly demonstrated the
folly of our turning inward. Let us work together so that we do not turn inward, but instead
realize the opportunities of the global economy to the benefit of all our people. Thank you very
much.
-30-
4
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
December 07, 1998
CONTACT:
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:
91-Day Bill
December 10, 1998
March 11, 1999
912795BD2
4.320%
Investment Rate1/:
4.428%
Price:
98.908
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. All tenders at lower rates were accepted in full.
Tenders at the high discount rate were allotted
41%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
$
Competitive
Noncompetitive
PUBLIC SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$
TOTAL
26,306,052
1,277,493
$
27,583,545
7,718,575
293,289
293,289
27,876,834
8,011,864
3,851,780
147,211
3,851,780
147,211
31,875,825
$
Median rate
4.310%: 50% of the amount of accepted competitive
tenders was tendered at or below that rate.
Low rate
4.280%:
5% of the amount of accepted competitive
tenders was tendered at or below that rate.
Bid-to-Cover Ratio
1/
= 27,583,545 / 7,718,575
6,441,082
1,277,493
3.57
Equivalent coupon-issue yield.
RR-2847
http://www.publlcdebt.treaa.gov
12,010,855
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
R IMMEDIATE RELEASE
cember 07, 1998
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182-Day Bill
December 10, 1998
June 10, 1999
912795BP5
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:
4.375%
4.537%
Investment Rate1/:
97.788
Price:
All noncompetitive and successful competitive bidders were awarded
:urities at the high rate. All tenders at lower rates were accepted in full.
Tenders at the high discount rate were allotted
30%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
-----------------
Competitive
Noncompetitive
$
21,454,108
1,096,111
$
-----------------
PUBLIC SUBTOTAL
Foreign Official Refunded
22,550,219
6,602,719
1,398,111
1,398,111
-----------------
-----------------
23,948,330
8,000,830
3,900,000
701,889
3,900,000
701,889
SUBTOTAL
Federal Reserve
Foreign Official Add-On
----------------$
TOTAL
28,550,219
$
Median rate
4.350%: 50% of the amount of accepted competitive
lders was tendered at or below that rate.
5% of the amount of accepted competitive
4.320%:
Low rate
lders was tendered at or below that rate.
l-to-Cover Ratio
= 22,550,219 I 6,602,719
3.42
Equivalent coupon-issue yield.
-2848
5,506,608
1,096,111
http://www.publlcdebt.t:reas.gov
12,602,719
PUBLIC DEBT NEWS
Department of the Treasury· Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
FOR IMMEDIATE RELEASE
Office of Financing
December 08, 1998
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 52-WEEK BILLS
364-Day Bill
December 10, 1998
December 09, 1999
Tenn:
Issue Date;
Maturity Date:
CUSIP Number:
High Rate:
912795CE9
4.305%
Investment Rate1/:
4.S13\'
Price:
95.647
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. All tenders at lower rates were accepted in full.
Tenders at the high discount rate were allotted
91%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tendered
Tender Type
$
Competitive
Noncompetitive
PUBL:tC SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Accepted
26,099,015
$
750 / 293
750,293
26,649,308
10,269,543
734,300
7~4/300
27,583,608
11,003.843
5,360,000
5,360,000
o
o
Foreign Official Add-on
----------------32,943,608
$
TOTAL
$
Median rate
4.2S0\': 50% of the amount of accepted competitive
tenders was tendered at or below that rate.
Low rate
4.250%:
5% of the amount of accepted competitive
tenders was tendered at or below that rate.
Bid-to-cover Ratio; 26,849,308 / 10,269,543
1/
Equivalenc coupon-iesuc
RR-2849
9,519,250
2.61
yie~d.
http://www.publicdebt.treas.go v
16,363,843
DEPARTMENT
OF
THE
TREASURY
NEWS
1789
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W.• WASIDNGTON, D.C .• 20220 - (202) 622-2960
Monthly Release
01
U.S. Reserve Assets
December 8, 1998
The Treasury Department today released U.S. reserve assets data for the month of
November 1998.
As indicated in this table, U.S. rese{ve assets totaled $77,683 million at the end of
November 1998, down from $79,183 in October 1998.
u.s. Reserve Assets
(millions ot US dollars)
1998
Total
Reserve
Assets
Gold
Stock II
Special
Drawing
R'Ig hts 2/3/
Foreign
41
Currencies
ESF
SOMA
Reserve
Position in
IMF 2/5/
October
79,183
11,041
10,379
16,007
19,478
22,278
November
77,683
11,041
10,393
15,354
18,846
22,049
II
Gold stock is valued at $42.2222 per fine troy ounce. Values shown are as of October 31, 1998. The
September 30, 1998 value was $11,044 million.
21 Beginning July 1974, the IMF adopted a technique for valuing the SDR based on a weighted average
of exchanae
rates for the currencies of selected member countries. The U.S. SDR holdings and reserve
b
position in the IMF are also valued on this basis.
3/ Includes allocations of SDRs by the IMF plus transactions in SDRs.
4/ Includes holdings of the Treasury's Exchange Stabilization Fund (ESF) and the Federal Reserve's
System Open Market Account (SOMA). These holdings are valued at current market exchange rates
or, where appropriatc, at such other rates as may be agreed upon by the par1ics to the transactions.
5/ Includes SDR 361 million loan to the IMF under thc General Arrangemcnts to
1998.
RR-2850
[30ITO\\
(GAB) in July
DEPARTMENT
OF
THE
TREASURY
NEWS
OfflCE OF PUBliC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960
FOR IMMEDIATE RELEASE
December 9, 1998
Contact: Beth Weaver
(202) 622-2960
TREASURY REMINDS RETAILERS AND SHOPPERS TO KNOW THEIR MONEY
DURING THE HOLIDAY SEASON
The Treasury Department today reminded cashiers and consumers to take a moment to
authenticate their money during the busy holiday shopping season. Currency usage is highest
during November and December and attempted counterfeit usage increases proportionately.
Counterfeiters may try to take advantage of the busy season and the public's lack of familiarity
with the new notes.
"Counterfeiters often strike when stores are at their busiest, when cashiers are trying to
work quickly, and customers are rushed," said James E. Johnson, Treasury Under Secretary for
Enforcement. "So this holiday season it will be especially important to take a closer look at the
currency they handle."
A redesigned $20 note with improved security features to deter counterfeiting was issued
in September 1998. The note's release followed new $100 and $50 notes in 1996 and 1997. The
$10 and $5 will be issued simultaneously during 2000.
Under Secretary Johnson encouraged cashiers and holiday shoppers to use the new
security features in the new $100, $50 and $20 notes that distinguish a genuine bill from a
counterfeit. He advised them to check a number of key features, for example:
•
Watermark and Security Thread
Hold the bill up to a light to see a watermark portrait in the space to the right of the
engraved portrait, and a security thread embedded in the paper. The thread will glow
green under an ultraviolet light. A security thread also appears in Series 1990, 1993 and
1995 notes.
•
Color Shifting Ink
Tilt the bill back and forth to see the lower right numeral change from green to black to
green.
•
Fine Line Printing
Look for fine line printing patterns behind the portrait on the front and building on the
back of the note. These lines should be clear and parallel to each other, not distorted.
RR-2851
Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
Because there are thousands of seasonal cashiers on the job during the holiday season,
Treasury encourages business owners and loss prevention managers to train these cashiers how to
authenticate currency. The U.S. Secret Service offers training to cash-handlers in the nation's
retail and banking industries throughout the year.
With the newly-designed $20 bill joining older-series notes still in circulation, Treasury
also reminded cashiers and shoppers to look carefully at all the bills they exchange at the register
and ensure they are thoroughly familiar with both the security features and the portraits on all
U.S. currency.
Under Secretary Johnson noted that the Secret Service, together with Treasury's Bureau
of Engraving and Printing and the Federal Reserve System, are working to meet the challenge
posed by changing trends in counterfeiting. Sophisticated computer technology has been used
more frequently to generate counterfeit notes. In Fiscal Year 1998 (October 1, 1997-September
30, 1998), notes printed from inkjet printers accounted for 43 percent of counterfeits passed, up
from only 0.5 percent in Fiscal Year 1995. In response, the Secret Service has increased its
enforcement efforts, increasing counterfeit arrests by 62 percent in the past three years, from
1,865 to 3,011.
Despite the dramatic shift in how criminals counterfeit, only $40 million in counterfeit
currency was passed on the American public in Fiscal Year 1998, and $29.9 million was seized by
law enforcement before entering circulation domestically. Outside the U.S., $3.2 million was
passed and $78.8 million seized. This amounts to a total of$153 million in counterfeit currency-less than 311 00 of one percent of the nearly $480 billion in genuine currency and coin in
circulation worldwide.
For more information on the Series 1996 currency, visit the Bureau of Engraving and
Printing's website at www.moneyfactory.com or the U.S. Secret Service's website at
www.ustreas.gov/usss.
-30-
J)
E
(10
A " T [\1 E ~ T
0 F
THE
TREASURY
T
-
I{
E A S II R Y
NEWS
OFFICE OF PUBLIC AFFAIRS e1500 PENNSYLVANIA AVENUE. N.W. e WASHINGTON. D.C.- 20220. (%02) 622.%960
EMBARGOED UNTXL 2: 30 P. M.
December 10, 1998
CONTACT:
Office of pinancing
202/219-3350
TREASURY OFFERS l3-WEElt AND 26-WEU BILLS
The Treasury will auction two series of Treasury bills totaling apprcxima~ely
$16,000 million to refund $13,392 million of public~y beld securities maturing
December 17, 1998. and to raise about $2,608 million of new cash.
In addition to the public holdings. Pederal Reserve Banks for their own
&ccounts hold $7,169 million of the maturing bills, Which may be refunded at the
~ighest discount raee of accepted competitive tenders • . Amounts issued to these
~ccounts will be in addition to the offering ~ount.
The maturing billa held by the public include $2,196 BdllioD h.ld by Pederal
leserve Banks as agents for foreign an4 international monatary autho~itie8, wh1eb
~y be refunded within the offering ~ount at the highest discount rate of accepted
:ampetitive tenders. Additional amounts may be issued for such accounts if the
tggregate amount of Dew bids exceeds the aggregate amount of maturing bills.
The :bill auctions will be conducted in the single-price auction format.
:ampetitive and noncompetitive awards will be at the highest discount rate of
Ic:c:epted c:ompeti tive tenders.
All
~enders for the b~lls will be received at Federal Reserve Banks and Branebes
Ad at the ~ureau of the public Debt, washington, D.C. This offering of Tre&sury
ec:urities is governed by the te~ and conditions set forth in the ~nifor.m
'ffering Cireular (31 CFR Part 356. as amended) for the sale and issue by the
'reasury to the public of market&ble ~r.asury bills, notes, and bonds.
Details about each of the new •• curities are given in the
ighligbts.
at~ached
offering
000
ttac:llment
RR-2852
For pr~JS
rd~Qsa.
JpeecJres, public scludule$ alld official biographies, call our 24·hoUf fax line III (202) 622-2040
HIGHLIGHTS OF TRBASURY OFFERINGS OF BILLS
TO BB ISSUBD DECIMBER 17, 1998
December 10, 1998
Offering Amount •••.•.•••••••••••••.••••• $8,OOO million
De8cription of Offering I
Term and type of security ••••••••••••.•. 'I-day bill
CUSIP number ••••••••••••..•••••••••••.•• 912795 BE 0
AuctioD d.te •.•••••••••••••••••.•••••••• D.cember 14, 1998
I.lue date •••••••••••••••••••••••••••••• DeceJaber 17, 1998
Maturity date .•••••••••••.•••••.•••••••• March 18, 1999
Original issue date ••••••••••..•.••••••• Septemher 17, 1998
CUrrently out.tanding ••••.••••..•••••••• $11,388 million
Minimum'bid amount and multiples •.•.•••• $1,OOO
$8,000 million
182-day bill
912795 DO 3
14, 1998
17, 1998
1999
17, 1998
December
December
June 17,
December
$1,000
The fgllowing rules apply to all securities mentioned above:
Submi •• lon of Bidsl
Noncompetitive bids ..•.•..••• Accepted in full up to $1,000,000 at the highest discount rate of
accepted competitive bids.
Competitive bids ...•.•.•..••• (1) Must be expreBsed 8S a discount rate with three decimals in
increments of .OOS\, e.g .• 7.100\, 7.10S\.
(2) Net long position for each bidder ~U8t be reported when the sum
of the total bid amount, at all discount rates, and the net long
position is $1 billion or greater.
(3) Net long position must be determined as of one half-hour prior
to the closing time for receipt of competitive tenders.
Maximum Recognized Bid
at a Single yield •••••.•••.•• 35\ of public offering
Maximum Aw.rd •••.••••.•.•.•.•••• 35\ of public offering
Receipt of Tenders:
Noncompetitive tenders .••.••. Prior to 12:00 noon Bastern Standard ti~e on auction day
Competitive tenders •••.•••.•• Prior to 1:00 p.m. Eastern Standard tl~e on auction day
Payment Terms: By charge to a funds account at a Vederal Reserve Bank on issue date, or payment
of full par amount with tender. Treasury Direct customers can use the Pay Direct feature which
a¥thorlzea • charge to their account of record at their financial institution on issue date.
DEPARTMENT
OF
THE
TREASURY
NEWS
lREASURY
omCE OFPUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960
FOR IMMEDIATE RELEASE
December 14, 1998
Contact: Maria Ibanez
(202) 622-2960
UNITED STATES AND GERMANY SIGN PROTOCOL TO
ESTATE, GIFT AND INHERITANCE TAX CONVENTION
The Treasury Department announced that U.S. Deputy Assistant Secretary of State for
International Finance and Development Barbara Griffiths and German Ambassador Juergen
Chrobog signed today in Washington a Protocol to the estate, gift and inheritance tax Convention
between the United States and Germany. The Protocol amends the existing Convention, which
was signed in 1980.
The Protocol addresses two major issues relating to legislative changes made in the
Technical and Miscellaneous Revenue Act of 1988 (TAMRA). First, the Protocol provides a
U.S. estate tax marital deduction for certain estates of limited value where the surviving spouse is
not a U.S. citizen. Second, the Protocol provides a pro rata unified credit to the estate of a
German domiciliary for purposes of computing the U.S. estate tax. The amount of this pro rata
unified credit varies, based on the extent to which the assets of the estate are situated in the
United States. These two provisions are similar to relief provided in a 1995 protocol to the U.S.Canada income tax treaty.
The Protocol also makes other changes to the Convention to reflect more closely current
U.S. treaty policy. For example, the Protocol extends the period of time during which a citizen of
one country can be domiciled in the other country without becoming subject to the primary taxing
jurisdiction of the other country. The Protocol also extends the United States' ability to tax
domiciliaries and certain former citizens and long-term residents under the saving clause of the
Convention.
The Protocol generally is effective with respect to decedents dying after the date of entry
into force. However, the provisions regarding the marital deduction for estates of limited value,
the pro rata unified credit, and the United States' ability to tax under the saving clause are
effective with respects to decedents dying after November 10. 1988 (the effective date of
TAMRA).
The Protocol will enter into force after the countries ha\'l.~ exchanged instruments of
ratification. Copies of the Protocol are available on the Internet at \\\v\v.treas.gov/press or from
the Office of Public Affairs, Treasury Department. Room 2321. Washington. D.C. 20220.
- 30 RR-2854
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
D EPA R T J\tl E N T
0 F
THE
T REA SUR Y
NEWS
omCE OF PUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASlDNGTON, D.C. - 20220 - (202) 622-2960
Text as Prepared for Delivery
December 11, 1998
TREASURY ASSISTANT SECRETARY OF TAX POLICY DONALD C. LUBICK
REMARKS BEFORE THE GWU/IRS ANNUAL INSTITUTE ON CURRENT ISSUES
IN INTERNATIONAL TAXATION
I.
Introduction
I would like to talk today about some recent and current international tax developments
in a broad tax policy context. Some of the areas I will cover include Subpart F, the increased
focus on harmful tax and regulatory regimes, including tax havens, international corporate tax
shelters, and developments in electronic commerce.
II.
Subpart F
Following events of the past year, including the controversies over Notice 98-11, the
active fmancing exception to subpart F, and other matters, we have decided to undertake a reexamination of our deferral rules. We hope this reexamination will be useful to the tax writing
committees in their deliberation of international tax issues next year.
It has been suggested that, at least in some respects, the current deferral rules have
failed to adequately take into account significant developments since their enactment. We at
Treasury take these comments seriously, and. as we announced in Notice 98-35, we plan to study
the extent to which changes in our deferral rules are warranted.
We intend to conduct this study in a comprehensive manner. relying on evidence and
thorough analysis and without a preconceived agenda. We shall neither be bound to, nor ignore,
the policies that have guided us for the past three decades. Upon completion, we expect to set
forth whatever conclusions a tabula rasa review of the evidence leads us to. We intend to release
our study for public comment as the basis for an organized discussion of views on the issues to
take place by this summer. Of course, taxpayers will also have the opportunity for public
comment on the regulations that we indicated in the Notice vvould be proposed.
RR-2855
'or press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
There are a number of principles that seem to have long guided policymakers in
determining the appropriate taxation of international income and that will have to be considered in
the study. Although there are differences over the application and relative weight to be given
to them, these policy goals in the international tax area have been generally recognized.
1.
2.
3.
4.
5.
Meet the revenue needs determined by Congress in a fair manner
Minimize compliance and administrative burdens
Minimize distortion by. and maintain neutrality ot: tax considerations in
making of investment decisions
Take due account of the competitive needs of U.S. multinational business
Conform with international norms. to the extent possible.
The first three goals apply to income taxation in general.
Raising Revenue Fairly. The first goal is of primary importance. The credibility of our tax
system depends upon the perception that revenue is being raised fairly and that the intended tax
base is protected from avoidance.
Application of the concept of fairness, however. inevitably produces disagreement. For
example, what is a fair tax burden on foreign business income compared to the tax burden on
business income from domestic investment? And should there be a lower rate of tax imposed on
income from business activities than the rate of tax imposed on income from labor? These
fairness questions must be answered with significant popular satisfaction of some significant
majority.
Minimizing Compliance and Administrative Burdens. The second goal, minimizing
compliance and administrative burdens and avoiding complexity. receives universal acceptance, or
at least lip service. The trouble is that simplification frequently comes with a cost.
For example, we might be able to drastically simplify subpart F. by adopting an alternative
rule which eliminates the need to distinguish passive business income from active business income
and mobile income from non-mobile income. To accomplish this. subpart F could be limited to
situations where the effective rate of foreign tax on foreign income is below a threshold, and
would not apply if the income is subject to foreign tax at or in excess of the threshold. Of course,
the attractiveness of this relative simplification would largely depend upon the threshold rate.
Neutrality and Competitiveness. The goals of neutrality and competitiveness call for
particular attention, because much of the debate about subpart F has revolved around these
objectives. The objectives are sometimes in conflict. for example if reducing undue burdens on
competitiveness requires reducing tax on foreign income. To what extent can this be
accomplished without distorting investment decisions by favoring foreign investment over
domestic investment?
Initially, however, it should be noted that like "conJ(mnity with international norms",
"competitiveness" means different things to ditlerent people. To quote a 1991 Congressional
Joint Committee on Taxation Report, "although the term compctitiveness is used frequently, it
does not have a consistent definition." The Vice President of the Federal Reserve Bank of Boston
recently stated that lobbyists need to provide better evidence of competitive disadvantages to
policymakers when seeking special tax incentives. 1
Regardless of any definition of competitiveness, before agreeing to any particular tax
result, we have to be satisfied that on balance, it helps the U.S. economy overall. And in
determining the long-term interests of the United States, economists tell us that we must consider
the effects upon the rest of the world.
If an economic benefit resulted from any particular proposal, we still should then consider
whether such a benefit is best conferred through the tax code. In many situations, the tax code
may be an inefficient place to address competitive disadvantage and one should look to see if
there are other ways to accomplish the result.
Conforming to International Norms. The goal of conforming with international norms is
one that can mean different things to different people. As traditionally conceived, conformity
requires, not rigid conformity of rates and base among countries. but that we adopt policies, such
as a foreign tax credit, that have historically been adopted by dcveloped countries to avoid double
taxation. Some, however, would interpret conformity as requiring that we adopt policies that
would facilitate world-wide escape from taxation. We do not accept the lowest common
denominator as setting the standard in the areas of bribery. elwironmental regulation or fair labor
laws, and we should not accept it in the tax area either.
Having discussed some of the relevant policy principles. I should mention just some of the
developments that have occurred over the last three decades that may affect these policy issues.
They include:
•
•
•
•
•
•
•
•
•
changes in the mobility of capital (both equity and portfolio)
growth in foreign direct investment
changes in the mobility and importance of corporate situs,
growing dependence of U.S. multinationals on foreign markets,
decline in the prominence of U.S. multinationals vis-a-vis foreign groups,
developments in entity use and classification.
developments in electronic commerce.
developments in how tax advice is provided. including the growth in international
corporate tax shelters, and
The increased use of harmful tax and regulatory regimes, including tax havens,
Bureau of National Affairs, Daily Tax Report at G-3 (November 16, 1998).
,.,
-'
The study will address these and other developments. but tor now I will deal with the last
three.
•
The Increased Use of Harmful Tax and Regulatory Regimes. Including Tax Havens
The first is the increased use of harmful tax and regulatory regimes. A number of recent
developments have focused the attention of both tax and nontax policymakers around the world
on this increased use. The focus of policy makers goes well beyond tax avoidance and includes
international money-laundering criminal and regulatory issues. Ettorts in this regard include:
o
The current OEeD effort combating harmful tax competition, in which the
Treasury Department is playing a leadership role. and a similar effort in the
European Union
o
The recent formal recognition by the G-7 countries that financial fraud and tax
evasion are closely linked, and that countermeasures by concerted international
action in this area must be encouraged;
o
Several high-profile reports on offshore financial centers issued recently to the
U.K. government and by the United Nations;
o
Efforts to curb the use of offshore vehicles and financial services by high net
worth individuals, to improperly avoid tax: and
o
Several measures taken by the Administration to prevent the funneling of profits to
tax havens and other harmful regimes, including Notice 98-35 and the line-item
veto of the so-called "active financing" exception to subpart F.
As you know, in June of this year, the Supreme Court held the line-item veto
unconstitutional, thus reinstating the one-year, active tinancing provision of the 1997 Act. That
provision generally exempted from subpart F much of the income of U.S.-owned foreign banks,
securities dealers, insurance companies and finance companies. The provision was recently
modified and expanded. The policy concerns that induced the President to exercise his line-item
veto are still raised by the current modified version.
We are concerned that the new provision (like the prior version) continues to present
significant opportunities for income to be shifted to tax havens or countries with preferential tax
regimes, despite detailed rules designed to ensure that income is taxed where economically
earned.
Secondly, although the provision is designed to defer U.S. tax on active income, some of
the thresholds that apply to the insurance industry would allow passive income to escape current
U.S. taxation. Similar problems are created through the delinition of a "finance company," which
4
could encompass the incorporated pocket-book of a high net \\orth individual or a pool of
offshore passive assets.
Not only are the policies flawed, but the revenue cost is extremely high. Treasury has
estimated the revenue loss for this one-year temporary provision at approximately $1.4 billion.
We want to work with these industries toward a balanced regime that recognizes the
increasing importance of service industries to our global economy and their unequal treatment
compared to other industries, but also properly accounts tl1r the mobility of their income,
identifies which of their income is passive, and recognizes their increasing sophistication in
financial innovation.
Now of course financial innovation can be used for good. United States business has
been in the lead and has generated tremendous benefits to the world economy through financial
innovation. We have been working to ensure that our tax rules remain current and do not
inappropriately impede the development of these industries. For example, I refer to our
recently issued global trading rules. To preserve the integrity of our income tax, however, we
must ensure that our taxpayer friendly rules do not encourage unintended tax avoidance. This,
of course, brings us to the subject of corporate tax shelters.
•
International Corporate Tax Shelters
As I said last year, some may view the existence of codified rules as an invitation to
interpret the rules as aggressively as possible. Under this line of thinking, if codified language
does not specifically prohibit a tax benefit, it's allowable.
As the ACM case has recently shown, the opinion of Lerned Hand in Gregory still
represents solid tax law. He said
It is quite true ... that as the articulation of a statute increases, the room for
interpretation must contract; but the meaning of a sentence may be more than that of
the separate words, as a melody is more than the notes, and no degree of particularity
can ever obviate recourse to the setting in which all appear, and which all collectively
create.
We also rely on the good judgment of responsible practitioners to distinguish the
intended from the unintended. We are heartened when we see them stand up to competitive
pressures. We need to all work together, taxpayers, professional associations, Treasury and
the IRS to insure that our ethical and practice rules as well as our procedural and substantive
tax rules assure our continued ability to administer the best tax system for the U.S.
Leasing. Practitioners have been calling our attention to certain leasing transactions in
which there is little going on other than the U.S. Treasury paying a foreign person a rebate on
5
the price of some asset, and paying a U.S. person a risk-free return on its investment. These
so-called "lease-in, lease-out", or LILO structures, present serious tax policy concerns.
Loss Generation and Attribute Trafficking. The December 14 issue of Forbes magazine
described other classes of problematic transactions. We identified in our budget last year a
class of loss-generating transactions described in the article, and Chairman Archer has
announced an intention to close them down through amendments to section 357(c). As you
heard yesterday from Phil West, our International Tax Counsel, we are examining measures to
address still greater problems of loss generation and attribute trafficking.
Cross-Border Tax Arbitrage and Check-the-Box. A broad class of transactions about
which we are concerned is the class of cross-border arbitrage transactions, which exploit the
discontinuities between our system of taxation and the tax systems of other countries.
For example, we are now considering a series of transactions facilitated by check-thebox that we never foresaw nor intended, and that may give rise to results inconsistent with the
purposes of the statutes they seek to exploit. We are currently determining how best to
address them.
•
Electronic Commerce
Before concluding, let me say a few words about electronic commerce. We continue to
believe, as we first expressed in the 1996 Treasury paper on global electronic commerce, that
current tax principles and systems can continue to apply to electronic commerce, albeit with
some necessary modifications and clarifications.
We also recognize that governments and government agencies as well must adapt if
they are to thrive in this new technological environment and if they are not to become sand in
what President Clinton has called "the engine of tomorrow's economy".
Commissioner Rossotti spoke yesterday of the improvements to taxpayer service that
new technologies make possible. We are cognizant as welL however, that technological
developments that facilitate virtually instantaneous - and anonymous - international
communications and commercial and financial activities, can also facilitate - and even
encourage - illegal activities. We will therefore continue our aggressive efforts to raise
awareness in other nations of the abusive uses to which these new technologies can be put and
will continue to promote the use of international tax information exchange to discourage not
only tax avoidance and evasion, but also criminal tax fraud. money laundering, illegal drug
trafficking, and other criminal activity.
Treasury has been equally aggressive in seeking to promote a global tax environment in
which electronic commerce can achieve its proper position in the global marketplace. In
consultation with the business community, we have concluded that uncertainty about the
6
taxation of electronic commerce and the fear of duplicative taxation act as significant
impediments to the continued growth of electronic commerce.
Therefore, we have been working, primarily within the OECD and with our treaty
partners, toward ensuring that any taxation of the Internet or electronic commerce be neutral,
clear and certain, and based fundamentally upon the same principles that guide us with respect
to more traditional commerce.
I should be clear, however, that our advocacy of a "reasonable and non-discriminatory
tax policy" does not translate into "no taxation of electronic commerce". One of the principles
that we endorsed at the recent OECD Conference on electronic commerce in Ottawa was that
of "effectiveness"; in other words, our taxation systems must impose and collect with respect
to electronic commerce the right amount of tax at the right time. We must not allow the
Internet to become a tax haven that erodes the tax base and deprives governments - federal,
state and local - of the revenue they need to invest in education and infrastructure and to
provide essential services.
We will continue in this area, as in the other areas I have just spoken about, to defend
the integrity of the tax system we believe works best and most efficiently, and not be driven to
accept second-best solutions, simply because of the challenges presented by either new
technologies or new tax planning techniques.
•
Conclusion
These are just a few of the important international issues that the Office of Tax Policy
is dealing with now. Obviously, the international work in OTP is critical and increasingly
important. There is no doubt that the difficulty, importance and number of the issues facing us
in the international area will continue to grow. They will stretch our resources mercilessly.
Therefore we hope we can rely on you and other practitioners to continue to provide input to
promote values that will further the position of the United States as a leader in securing a
smooth functioning global economy.
- 30 -
7
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
December 14, 1998
CONTACT:
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:
91-Day Bill
December 17, 1998
March 18, 1999
912795BEO
High Rate:
4.385%
Investment Rate1/:
4.494%
Price:
98.892
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. All tenders at lower rates were accepted in full.
Tenders at the high discount rate were allotted
11%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tendered
Tender Type
Competitive
Noncompetitive
27,640,499
1,289,378
$
PUBLIC SUBTOTAL
Federal Reserve
Foreign Official Add-On
337,521
337,521
29,267,398
8,002,598
3,394,310
67,479
3,394,310
67,479
$
Median rate
4.380%: 50% of the amount of accepted competitive
tenders was tendered at or below that rate.
Low rate
4.340%:
5% of the amount of accepted competitive
tenders was tendered at or below that rate.
Bid-to-Cover Ratio
1/
=
28,929,877 / 7,665,077
=
3.77
Equivalent coupon-issue yield.
RR-2856
6,375,699
1,289,378
7,665,077
32,729,187
$
TOTAL
$
28,929,877
Foreign Official Refunded
SUBTOTAL
Accepted
http://www.pubJicdebt.treas.gov
11,464,387
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
December 14, 1998
CONTACT:
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182-Day Bill
December 17, 1998
June 17, 1999
912795BQ3
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:
4.390%
Investment Rate1/:
4.551%'
Price:
97.781
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. All tenders at lower rates were accepted in full.
Tenders at the high discount rate were allotted
21%'.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
24,900,033
1,034,296
$
Competitive
Noncompetitive
PUBLIC SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
6,329,829
1,672,729
1,672,729
27,607,058
8,002,558
3,775,000
334,671
3,775,000
334,671
$
Median rate
4.380%: 50% of the amount of accepted competitive
tenders was tendered at or below that rate.
Low rate
4.345%':
5% of the amount of accepted competitive
tenders was tendered at or below that rate.
Bid-to-Cover Ratio = 25,934,329 / 6,329,829
=
4.10
1/ Equivalent coupon- issue yield.
RR-2857
5,295,533
1,034,296
25,934,329
31,716,729
$
TOTAL
$
http://www.publicdebt.treas.gov
12,112,229
PUBLIC DEB·T NEWS
epartmeat of the Treasury • Bureau of the Public Debt • WuhlngtoD. DC 20139
EOR ll\1MEDlAIE RELEA~~
Comact: Office of Financing
(202) 219..3350
December 15, 1998
TREASURY'S ll\FLATION-INDEXED SECURITIES
JANUARY REFERENCE CPI NUMBERS AND DAILY INDEX RATIOS
Public Debt announced today the reference Consumer Price Index (CPl) numbers and daily
index ratios for the month of January for the following Treasury inflation-indexed securities:
(1) the 3-3/8% 10-year notes due January 15, 2007. (2) the 3-5/8% S.year notes due July 1S, 2002,
(3) the 3-5/8% IO-year notes due January 15.2008, and (4) the 3-5/8% 30-year bonds due AprillS~
2028. This information is based on the non-seasonally adjusted U.S. City Average All Items
Consumer Price Index for All Urban Consumers (CP].U) published by the Bureau of Labor
Statistics of the U.S. Department of Labor.
In addition to the publication of the reference CPr's (RefCPI) and index ratios. this
release provides the non-seasonally adjusted CPI-U for the prior three-month period.
This information is available: throug.h the Treasw1s Office of Public Affairs automated fax
system by calling 202·622·2040 and requesting document number 28S8. Tbcinfonnation is
also available: on the Internet at Public Debt's Wl.!bsite (http://www.l'ublicdebt.t:reas.gov).
The: information for February is expectt:J to be released on Ja.nuary 14, 1999.
000
Attachment
RR-2858
hllp:llwww.publicdeb1.treas.gov
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1.0111.
UtSI4
UtS1'
Ul5t.
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101:'111
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1-26-99 3:10pm
p. 12 of 16
~ ~
ederal finanl.Jng
WASHINGTON, D.C. 20220
FEDERAL FINANCING BANK
s
DE~ember
10, 1998
Charles O. Haworth, Secretary, Federal Financing Bank (FFB),
announced the following activity for the month ~f October 199B.
FFB holdings of obligations issued, sold or guaranteed by
other Federal agencies totaled $45.0 billion on october 31, 1998,
posting a decrease of $1,002.7 million from the level on
September 30, 1998. This net chanqe was the result of a decrease
in holdings of agenoy debt of $1,008.8 million, and an increase
in holdings of agency guaranteed loans of $6.1 million. FFB made
95 disbursements during the month of october. FFB also received
25 prepayments in october.
Attached to this release are tables presenting FFB October
loan activity and FFB holdings as of October 3l, 1998.
RR-2859
~·ct
~ ~
~ ~
N
~
~
N
ID
a:J
ct I:t
From: TREASURY PUBLIC AFFAIRS
1-26-99 3:11pm
p. 13 of 15
Page 2 of
FEDERAL FINANCING BANK
OCTOBER 1998 ACTIVITY
BORROWER
AMOUNT
FINAL
DATE
OF ADVANCE
MATURITY
10/1
10/1
10/1
10/2
10/2
10/210/2
10/5
10/5
10/5
10/5
10/6
10/6
10/7
10/8
10/8
10/8
10/9
10/9
10/9
10/9
$74,100,000.00
$100,000,000.00
$1,450,000,000.00
$88,100,000.00
$2,150,000,000.00
$100,000,000.00
$50,000,000.00
$78,100,000.00
$2,450,000,000.00
$100,000,000.00
$50,000,000.00
$2,300,000,000.00
$100,000,000.00
$2$150,000,000.00
230,100,000.00
$1,650,000,000.00
$50,000,000.00
$187,000,000.00
$1,500,000,000.00
$125,000,000.00
$50,000,000.00
$189,700,000.00
$1,300,000,000.00
$150,000,000.00
$50,000,000.00
$112,700,000.00
$1,225,000,000.00
$150,000,000.00
$77,900,000.00
10/2/98
10/2/98
10/2/98
10/5/98
10/5/98
10/5/98
10/5/98
10/6/98
10/6/98
10/6/98
1.0/6/98
10/7/98
11/15/27
10/8/98
10/9/98
10/9/98
10/9/98
10/13/98
10/13/98
10/13/98
10/13/98
10/14/98
10/14/98
10/14/98
10/1.4/9B
10/15/98
10/15/98
10/1.5/98
10/16/98
10/16/98
10/16/9B
10/16/98
10/19/98
10/19/98
10/19/98
10/19/98
10/20/98
10/20/98
10/20/98
10/20/98
10/21./98
10/21/98
10/21/98
INTEREST
RATE
AGENCY DEBT
u.S.
u.s.
U.S.
u.S.
U. s.
U.S.
U.S.
U.S.
u.s.
u.S.
U.S.
U.s.
U.S.
u.s.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.s.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
u.s.
U.S.
U.S.
U.s.
U.S.
U.S.
U.s.
U.s.
U.S.
U.S.
U.s.
U.S.
U.S.
POSTAL SERVICE
postal
Postal
Postal
Postal
Postal
postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
postal
postal
Postal
Service
Service
Service
service
Service
Service
service
Service
Service
service
Service
Service
service
Service
Service
Service
service
Service
Service
Service
Service
Service
Service
service
Service
service
Service
Service
service
service
Service
service
Service
service
Service
service
Service
Service
Service
service
service
U.S.
U.S. posta~ service
U.S. Postal Service
S/A is a Semi-annual rate.
~0/1.3
10/13
10/1.3
10/13
10/14
10/14
10/14
10/15
10/15
10/15
10/15
10/16
10/16
10/16
10/16
10/19
10/19
10/19
10/1.9
10/20
10/20
10/20
$l~OOO,OOO,ooo.oo
150,000,000.00
$50,000,000.00
$146,200,000.00
$1,775,000,000.00
$150,000,000.00
$50,000,000.00
$42,800,000.00
$2,150,000,000.00
$150,000,000.00
$50,000,000.00
$152,000,000.00
$1,925,000,000.00
$125,000,000.00
4.356%
4.491%
4.491%
4.344%
4.356%
4.356%
4.356%
4.357%
4.344%
4.344%
4.344%"
4.357%
4.836%
4.305%
4.015%
4.274%
4.274%
4.003%
4.015%
4.015%
4.015%
4.119%
4.003%
4.003%
4.003%
4.150%
4.119%
4.1.19%
4.273%
4.150%
4.150%
4.150%
3.766%
4.273%
4.273%
4.273%
4.067%
3.766%
3.766%
3.766%
4.077%
4.067%
4.067%
S/A
Sf A
Sf A
S/A
S/A
S/A
S/A
S/A
Sf A
Sf A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
Sf A
S/A
S/A
B/A
S/A
S/A
B/A
S/A
S/A
Sf A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
~
To:
From: TREASURY PUBLIC AFFAIRS
Z000~
1-26-99 3:12pm
p. 14 of 16
Page 3 of
FEDERAL FINANCING BANK
OCTOBER 1998 ACTIVITY
DATE
BORROWER
AMoUNT
FINAL
INTEREST
OF ADVANCE
MATURITY
RATE
$159,200,000.00
$1,700,000,000.00
$150,000,000.00
$50,000,000.00
$93,000,000.00
$1$600,000,000000
150,000,000.00
$50,000,000.00
$83,900,000.00
$1,525,000,000.00
$150,000,000.00
$50,000,000.00
$178,500,000.00
$1$300,000,000.00
150,000,000.00
$50,000,000.00
10/22/98
10/22/98
10/22/98
10/22/98
10/23/98
1.0/23/98
10/23/98
10/23/98
10/26/98
10/26/98
10/26/98
10/26/98
10/27/98
10/27/98
10/27/98
10/27/98
10/28/98
10/28/98
10/28/98
10/28/98
10/29/98
10/29/98
10/29/98
10/29/98
10/30/98
10/30/98
10/30/98
11/2/98
11/2/98
1~/2/98
4.129%
4.077%
4.077%
4.077%
4.097%
4.129%
4.129%
4.129%
4.086%
4.097%
4.097%
4.097%
4.181%
4.086%
4.086%
4.086%
4.181%
4.181%
4.181%
4.181%
4.408%
4.181%
4.181%
4.181%
4.408%
4.408%
4.408%
4.458%
4.449%
4.449%
9/2/25
7/31/25
7/31/25
1/2/25
1/2/25
4.975%
5.342%
5.241%
5.305%
5.230%
AGENCY DEBT
U.S. POSTAL SERVICE
U. S. postal Service
u.s.
u. S.
U.S.
U.S.
u.s.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
u.s.
U.S.
u.s.
U.S.
U.S.
U. S.
U.S.
U.S.
U.S.
u.s.
U.s.
u.s.
U.S.
u.S.
U.s.
U.S.
u.S.
Postal
Postal
Postal
Postal
postal
Postal
Postal
Postal
Postal
Postal
postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Service
Service
Service
Service
Service
service
Service
Service
Service
Service
Service
Service
Service
Service
servioe
Service
Sexvice
Service
Service
Service
Service
Service
Service
service
Service
Service
Service
service
service
10/21
10/21
10/21
10/21
10/22
1.0/22
10/22
10/22
10/23
10/23
10/23
10/23
10/26
10/26
10/26
10/26
10/27
10/27
10/27
10/27
10/28
10/28
10/28
10/28
10/29
10/29
10/29
10/30
10/30
10/30
$22~,400,OOO.OO
$1,025,000,000.00
$150,000,000.00
$50,000,000.00
$123,500,000.00
$950,000,000.00
$150,000,000.00
$50,000,000.00
$850,000,000.00
$150,000,000.00
$50,000,000.00
$37,300,000.00
$1$650,000,000.00
150,000,000.00
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
B/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
B/A
S/A
S/A
GOVERNMENT - GUARANTEED LOANS
GENERAL SERVICES ADMINISTRATION
Atlanta CDC Office Bldg.
Foley Services Contract
FOley Square Office Bldg.
Memphis IRS Service cent.
Memphis IRS Service Cent.
S/A is a Semi-annual rate.
10/8
10/14
10/16
1.0/23
10/28
$4,081.74
$136,401.98
$16,158.00
$92,498.12
$9,175.53
S/A
S/A
S/A
S/A
B/A
From: TREASURY PUBLIC AFFAIRS
ro: Z000"!J
1-25-99 3:12pm
p. 15 of 15
Page 4 of
FEDERAL FINANCING BANK
OCTOBER 1998 ACTIVITY
BORROWER
DATE
AMOUNT
OF ADVANCE
FINAL
MATURITY
INTERESf
RATE
GOVERNMENT - GUARANTEED LOANS
GSA/PACC
ICTC Building
10/26
$1,512,927.36
10/13
10/23
10/26
$362,963.4:4
$222,512.40
$28,050.00
10/8
10/8
South Texas Electric #463 10/15
Warren Elee. Coop. #477
10/16
Arizona Electric #427
10/19
south Miss. Elec. #421
10/19
Natchez Trace Elec. #487 10/20
Metlakatla Elec. #448
10/23
North Star Elae.
#495
10/28
North star Elec.
#495
1.0/28
Johnson county Elec. #482 10/29
Marshalls Energy Co. #458 10/29
Carroll Elec. #488
10/30
$527,000.00
$7,258,000.00
$215,000.00
$1,200,000.00
$7,800,000.00
$867,000.00
$1,500,000.00
$140,906.00
$680,000.00
$1,190,000.00
$2,500,000.00
$350,000.00
$500,000.00
11/2/26
5.355% S/A
9/1/27
9/1/26
9/1/26
5.357% S/A
5.310% S/A
5.356% S/A
1/3/33
12/31/12
12/31/24
1/2/29
12/31/20
12/31/18
1./3/33
1/2/07
1/3/33
1/3/33
12/31/31
1/2/18
12/31/08
4.941%
4.343%
5.190%
5.191%
5.023%
4.935%
5.1.11.%
4.452%
6.081%
DEPARTMENT OF EDUCATION
Bethune Coolanan
W.Va. state College
W.Va. state College
RURAL UTILITIES SERVICE
Burke-David Elee. #494
N. pittsburqh Tele. #449
S/A is a semi-annual rate:
Qtr. is a Quarterly rate.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
6.081% Qtr.
5.219% Qtr ..
6.230% Qtr.
4.636% Qtr.
Page 5 of :If)
lSI
<0
......
FEDERAL FINANCING BANK HOLDINGS
+-
o
Q..
(in millions)
<0
-.J
<I
f0
f-
-<
D.
E
c.
(T)
-<
Net Change
(T)
Program
10/1-10131198
Fiscal Yea
Net Changf
1011198-10131191
October 31, 1998
September 30, 1998
$4,687.3
$5,696.1
($1,008.8)
($l,008.~
sub-total *
$4,687.3
$5.696.1
($1,008.8)
($1.008.~
$3,675.0
DHHS-Medical Facilities
Rural Utilities Service-CBO
$3,675.0
$9,500.0
$3.1
$7.2
$4 t 598.9
$9,500.0
$3.1
$7.2
$4,598.9
$0.0
$0.0
$0.0
$0.0
$0.0
$O.C
$0.0
$0.0
$0.0
$0.0
sub-total*
$l7,784.2
$17.784.2
${).O
$0.0
$2.826.4
$5.2
$15.5
$1,491.4
$2,474.9
$2.829.0
$4.6
($2.7)
$0.6
$30.4
($14.9)
$1.491.4
$2,473.1
$0.0
$1.8
($2.7
$0.6
($14.9·
$0.0
$1.8
$0.0
$0.0
$24.7
($3.4:
$0.0
O""l
cr>
I
to
N
I
-<
(/)
Q::
H
<C
u..
u..
<C
u
H
Agency Debt:
USPS
Agency Assets:
FmHA-RDIF
FmHA-RHIF
DHHS-HMO
---'
CD
::::J
0...
>c::
::::J
VI
<C
u.J
Q::
I-
E
o
c...
u...
Government-Guaranteed Lending:
DOD-FMS
DoEd-HBCU
DHUD-Community Dev. Block Grant
DHUD-Public Housing Notes
General Services Adrninistration+
DOl-Virgin Islands
DON-Ship Lease Financing
Rural Utilities Service
SBA-StatelLocal Development Co~.
$17.5
$17.5
$1,224.9
$14.191.2
$230.0
$3.8
$1,224.9
$14,166.5
$233.4
$3.8
sub-total*
$22,480.8
grand total*
$44,952.3
S22A74.7
---$45,955.0
DOT-Section 511
* figures may not total due to rounding
+ does not include capitalized interest
---
----
$0.0.
$0.0
$24.7
($3.4)
$0.0
$6.1
--
($1,002.7)
$6.1
----
($1,002.7)
DEPARTMENT
OF
THE
TREASURY
NEWS
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. _ 20220 _ (202) 622.2960
EMBARGOED UNTIL 9:00 A.M. EST
Text as Prepared for Delivery
December 16, 1998
DEPUTY ASSISTANT SECRETARY OF THE TREASURY (FEDERAL FINANCE)
ROGER L. ANDERSON TESTIMONY BEFORE THE
SENATE COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY
Thank you, Mr. Chairman and members of the Committee. I appreciate the
opportunity to represent the Secretary of the Treasury, who is the Chairman of the President's
Working Group on Financial Markets, before this Committee. I would like to report on the
progress of two studies the Working Group is undertaking - the first on derivatives and the
second on hedge funds - and to discuss some of the issues that the studies will address. I
know that Secretary Rubin, Deputy Secretary Summers, and the rest of the Working Group
look forward to working with you on these matters.
Two major events in the past six months underscore the necessity for action to resolve
the legal and jurisdictional uncertainties that attach to over-the-counter ("OTC") derivatives
and, more generally, to improve the workings of our financial markets and further the twin
goals of providing legal certainty and mitigating systemic risk.
The first event occurred when the Commodity Futures Trading Commission ("CFTC")
issued a concept release on OTC derivatives. The concept release raised many important
questions about the derivatives market. It also, however, implicitly raised questions about the
legality of portions of the OTC derivatives market, thereby highlighting troublesome ambiguity
in the Commodity Exchange Act ("CEA "). The concept release, and the controversy it caused
this summer, underscore the need to resolve the legal and jurisdictional uncertainties relating to
OTC derivatives.
The derivatives study was requested by you, Mr. Chairman, along with Chairman
Smith of the House Agriculture Committee and several other members of Congress. In this
connection, let me emphasize that the CFTC's issuance of the concept release was opposed by
other members of the Working Group because of the questions it implicitly raised about the
RR-2860
Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
legality of portions of the OTC derivatives market, not because of the questions it asked
explicitly. We always agreed that there were important aspects of the derivatives market that
deserved study, and we are happy to be able to address those questions in a format that does
not increase legal uncertainty.
The second event was the near collapse of Long-Term Capital Management ("LTCM"),
an investment partnership commonly known as a "hedge fund. The LTCM experience
highlights the issue of systemic risk in global financial markets. It raises issues as to how
regulators here and abroad can further the goal of mitigating systemic risk without imposing
unnecessary and poteritially harmful requirements on market participants. Following !he near
collapse of LTCM, the Secretary and various members of Congress called for a study of the
potential implications of the operations of firms such as LTCM and their relationships with
their creditors.
II
Staff from each of the members of the Working Group have been working assiduously
on both these studies. The agencies have been collecting information, which is being shared
and discussed with all of the other agencies. The process is quite cooperative. We hope that
these studies will assist the Congress and regulators in moving toward our mutual goal of
improving the workings of our financial markets, and I would like to brief you on our progress
to date.
In the derivatives study, we are analyzing how the markets work, how they are
regulated, and what changes, regulatory or legislative, may be appropriate to reduce systemic
risk, to eliminate legal uncertainty, to curtail regulatory arbitrage, and to address the potential
use of derivatives for fraud or manipulation.
One of the issues the derivatives study will address is how to clarify the jurisdictional
reach of the CEA. A .separate set of issues being studied concerns what, if anything, should
and can be done to reduce systemic risk associated with the OTC derivatives market. -We are
focusing our attention on questions involving the reduction of systemic risk by decreasing legal
uncertainty and on questions relating to whether derivatives trading poses special systemic risk
and other market issues that should be addressed.
Let me emphasize that the goals of reducing the legal ambiguities of the CEA and of
reducing systemic risk are not mutually exclusive. We believe there is a growing consensus on
the need for greater legal certainty regarding the derivatives market, but precisely how to
resolve the ambiguities remains a challenging question for the study. The importance of the
issues, however, gives the agencies no alternative but to try to reach that goal.
An example of a source of legal uncertainty is the lack of a bright line in the law
distinguishing a futures contract from a forward contract. Yet the consequences under current
law are drastically different. An OTC forward contract is not subject to the CEA, while a
futures contract, unless exempted, can be traded only on a designated exchange. Absent some
2
exemption or the exclusion provided by the Treasury Amendment, an off-exchange futures
contract is illegal and unenforceable. The consequence of trading what you think is a forward
contract, but is later determined to be an illegal off-exchange futures contract, is that the
contract is null and void. This is a drastic remedy for crossing what is a vague and uncertain
line.
It was for this reason - providing certainty that swaps contracts would be legal and
enforceable - that Congress, in 1992, granted the CFTC the legal authority to promulgate the
Swaps Exemption, without ever deciding whether swaps are subject to the CEA in the first
place. The protection of the Swaps Exemption, however, is incomplete.
In addition to the legal uncertainty overhanging the swaps market, the current legal
uncertainty may impede certain initiatives, such as the development of clearinghouses, which
can reduce systemic risk. In addition, there is controversy concerning whether or not the
regulatory playing field for futures exchanges is level and whether changes in the law should
be made so that they are better able to compete with the OTe market.
Another important group of questions we are addressing in the derivatives study
concerns leverage. We believe that many market participants have an appetite for risk out of
proportion to their capital and that this can pose risks to global financial markets and
ultimately could prove damaging to the economies of the U.S. and other countries.
With respect to the hedge fund study, we are looking at a number of issues, including
the issues of disclosure and leverage. There is a question whether LTCM's creditors made
some decisions based upon insufficient information or inadequate analysis of information, and
there is a broad consensus that creditors need to reexamine how they make such decisions.
More disclosure of information by entities such as hedge funds, particularly to their
counterparties and creditors, would be useful and appropriate. We understand that market
participants are already demanding more disclosure from hedge funds. This is a positive
development.
Among the disclosure questions we are exploring are: what additional disclosure is
needed, to whom such disclosures should be made (some or all of counterparties, creditors,
investors, regulators, and the public), and whether the government needs to do more to require
disclosure. Additional disclosure may be one way to help lessen the chance of another LTCM
situation.
The hedge fund study will also focus on the issue of leverage. It is clear that the
degree of leverage in LTCM allowed the risks in its portfolio to be transmitted more rapidly to
other market participants. One of the questions we are asking is whether the degree of
leverage in LTCM is typical of hedge funds. We also are evaluating how the risks of what
may appear to be excess leverage in financial markets can be minimized. We understand that
creditors to hedge funds, and indeed creditors across the derivatives market broadly, are
3
reducing the amount of leverage they are willing to provide. Again, we believe this is a
positive development. There also seems to be a consensus among U.S. banking regulators that
they need to employ their existing regulatory tools to encourage banks to make more ~rudent
decisions.
Along these lines, we are asking whether the government needs to do more to
discourage excessive leverage and, if so, what the appropriate steps might be.
We also are considering the international aspects of these questions, and various of the
Working Group agencies are participating in several international studies.
It is fair to say that the Working Group has yet to achieve consensus on these somewhat
provocative and complex questions. Even within Treasury, we have not yet formulated a view
on many of these questions. We are working quickly, however. We expect to complete the
hedge fund study this winter and the derivatives study later in the spring.
We expect to find common ground on some issues in both studies, but it would not be
surprising if the agencies are not able to reach complete agreement on all the issues. We
intend to provide a comprehensive assessment of the issues in both studies in order to make
them meaningful tools for future action by Congress. We look forward to working with
Chairman Lugar, this Committee, and others in Congress on these issues.
Thank you, Mr. Chairman and members of the Committee. I would be happy to
answer any questions you may have.
-30-
4
DEPARTMENT
OF
THE
TREASURY
NEWS
lREASURY
OFFICE OF PUBUC AFFAIRS .1500 PENNSYLVANIA AVENUE, N.W.• WASlllNGTON, D.C .• 20220. (202) 622-2960
Weekly Release of U.S. Reserve Assets
December 16, 1998
The Treasury Department today released U.S. reserve assets data for the week
ending December 11, 1998.
As indicated in this table, U.S. reserve assets totaled $79,505 million as of
December 11, 1998, up from $78,381 as of December 4, 1998.
U.S. Reserve Assets
"
(millions of US dollars)
",>
1998
Total
Reserve
Week Ending
Assets
Special
Gold
Stock
II
Foreign
Reserve
31
Drawing
R Ig ht S 21
ESF
SOMA
Position in
IMF 21.11
Currencies
December 4, 1998
78,381
11,041
10,393
15,713
19,186
22,049
December 11, 1998
79,505
11,041
10,530
16,038
19,569
22,327
11
Gold stock is valued monthly at $42.2222 per fine troy ounce. Values shown are as of October 31,
1998. The September 30, 1998 value was $11,044 million,
2/ SDR holdings and the reserve position in the IMF are based on IMF data and revalued in dollar terms
at the official SDRIdollar exchange on the reporting date. IMF data are as of December 4, 1998.
3/ Includes holdings of the Treasury's Exchange Stabilization Fund (ESF) and the Federal Reserve's
System Open Market Account (SOMA). These holdings are valued at current market exchange rates
or, where appropriate, at such other rates as may be agreed upon by the parties to the transactions
4/ Includes SDR 36 I million loan to the IMF under the General Arrangements to Borro\\ (GAD) in .luly
1998.
RR-2861
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
-
D E P .-\ R T '1 E :\ T
0 F
THE
TREASURY
T REA S t' n-Y
NEWS
OFne! or PUBLIC AFFAIRS e1500 PENNSYLVANIA. AVENUE, N.W.eWASHINCrON, D.C.- 20nO a (202) ,12.2KI
EMBARGOED t1N'rXL 2: 30 P. M.
CONTACT:
December 17, 1998
Office of Financing
202/21.9-3350
'tREASURY OFFERS 13-WEBK AND 26-WEElt BILLS
The 'treasury will auction two series of Treasury bills totaling
approximately $15,000 million to refund S16,361 million of publicly held
securities maturing December 24, 1998, and to pay down about $1,361 million.
In addition to the publiC holdings. Federal Reserve Banks for their own
accounts hold $6,684 million of the maturing bills, which may be refunded at
the highest discount rate of accepted competitive tenders.
these accounts will be in addition to the offering amount.
Amounts issued to
The maturing bills held by the public include $3,663 ~11ioD held by
Federal Reserve Banks as agents for foreign and i~ternational monetary authorities, which may be refunded witbin the offering amount at the highest discount
rate of accepted competitive ~enders. Additional amounts may be issued for aucb
accounts if the aggregate amount of new bids exceeds
the aggregate amount of
,
maturing bills.
~he
bill auctions will be conducted in the Single-price auction format.
Tenders for the billa will be received at Federal Reserve Banks and
Brancbes and at the Bureau of the Public Debt, washington, D.C. This offeriDg
of Treasury securities is governed by the terms and conditions set forth in the
Ociform Offering Circular for the sale and Issue of Marketable Book-En~ry
Tr8.aury Bills, Notes, and Bonds (31 CFR Part 356, as amended).
Details about each of the new securities are given in the attached
offerin~
bighlights.
000
RR-2862
A.ttachment
Fot pteu uletUes. speeches, pllblic Idedilies (It.d offidal biogtllplliu, CIIII DIU 24-hDllt f/IX line III (202) 622.2fUO
HIGHLIGHTS OP TREASURY OPFBRINGS or BILLS
TO BB IBSUBD DBCEMBER 24, 1998
December 17, 1998
Offerina Amount •••..•••••••.•••••••••••• $7,500 million
$7,500 .11110n
p •• oription ot OfferingJ
T.rm and type of aecurity ••••••••••••••• 91-day bill
CUSIP number ••••••...•••••..•••••••••••• 912795 BP 7
Auotion date ••••••••••••.••••••••••••••• Dec.mber 21, 1998
Isau. date •••••••••••••••••••••••••••••• December 24, 1998
Maturity date ••••••.••••.••••••.•••••••• March 25, 1999
Original iS8u, dat •.•••••..•••••••.••••• Septeaber 24, 1998
Currently out8tanding •••• ~ •••..••••••••• $11,302 million
Minimum bid amount and multiple8 •••••••• $1,OOO
lbe following rule, apply
1e2-day btll
.912795 BY ,
December 21, 1998
December 24, 1'98
June 24, 19"
JUne 25, 1998
$15,093 million
$1,000
to all securities mentioned above:
lyb~is81on
of Bid,:
Noncompetitive bids .......... Accepted ir. full up to Sl,OOO,OOO at the hlgheat discount rate at
accepted competitive bids.
Competitive bids ....•........ (1) Must be expres8ed 88 • discount rat. wlth three deci~alB in
incre~ent8 of .005\, •. g., 7.100\, 7.10S\.
(2) Net long position for each bidder .Ult b. reported wnan the .u~
of the total bid auount, at all dilcount rat •• , and the n.t long
position Is $1 billion or gre8ter.
(3) Net long position must be determined al ot one balt-hour prior
to tbe closing time for receipt of competitive t.nders.
Maxlaum Recognized Bid
at a Single yield .•••••...••• 35\ of public offering
Maximum Aw,rd •.•••..••••.•••.••. 35\ of public offering
Receipt of Tenders:
Noncompetitive tenders •...... Prior to 12:00 noon Bastern Standard time on auction day
Competitive tenders •.••...•.. Prior to 1:00 p.m. Rastern Standard time on auction day
Payment Termsa By charge to a funds account at a Federal Reserve Bank on issue date, or pa~ent
of full par amount with tender. Treasury Direct customers can use the Pay Direct feature which
authorizes a charge to their account of record at their financlal inst1tution on issue date.
J)
E P " R T ;\1 E N T
0 F
TREASURY
T JE E
T 1< E \ S tJ i~ Y
NEWS
on'ICE OF PUBLIC An"AIRS -1500 '~NNSYLVANJA ,\vI~Nt7E, N.W•• WASHINGTON, D.C •• lOZlG. (202) 621-2960
CONTACT:
EMBARGOED UNTIL 2: 30 P.M.
December 17, 1998
Office of Pinancing
202/219-3350
TREASURY ANNOUNCES HOLIDAY SCHEDULING
The offering details for the 13- and 26-week bills to be issued
on December 31, 1998, will be announced cn Wednesday, December 23,
1998, instead of the regularly scheduled date of December 24.
the offering
de~ails
Also,
for the 13-, 26-, and 52-week bills to be issued
on January 7, 1999, will he announced on Wednesday, December 30, 1998,
instead of the regularly schedu1ed date of necember 31.
000
RR-2863
For p,us releases. speeches, public sch~tlllllS alld u/fici"t biogrGphiel, CGlI 0'" 24-hour/ru: line III (202) 622-2040
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
December 21, 1998
CONTACT:
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
December 24, 1998
March 25, 1999
912795BF7
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:
4.440%
Investment Rate1/:
4.551%
Price:
98.878
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. All tenders at lower rates were accepted in full.
Tenders at the high discount rate were allotted
22%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tendered
Tender· Type
Competitive
Noncompetitive
$
PUBLIC SUBTOTAL
23,827,496
1,255,921
Federal Reserve
Foreign Official Add-On
$
TOTAL
$
7,022,079
488,904
488,904
25,572,321
7,510,983
3,674,235
6,096
3,674,235
6,096
29,252,652
$
Median rate
4.430%: 50% of the amount of accepted competitive
tenders was tendered at or below that rate.
Low rate
4.395%:
5% of the amount of accepted competitive
tenders was tendered at or below that rate.
Bid-to-Cover Ratio = 25,083,417 / 7,022,079 = 3.57
1/
Equivalent coupon-issue yield.
RR-2864
5,766,158
1,255,921
25,083,417
Foreign Official Refunded
SUBTOTAL
Accepted
http://www.publicdebt.treas.gov
11,191,314
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
December 21, 1998
CONTACT:
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:
182-Day Bill
December 24, 1998
June 24, 1999
912795BY6
4.440%-
Investment Rate1/:
4.606%
Price:
97.755
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. All tenders at lower rates were accepted in full.
Tenders at the high discount rate were allotted
99%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tendered
Tender Type
Competitive
Noncompetitive
$
PUBLIC SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$
TOTAL
21,806,007
973,920
Accepted
$
22,779,927
4,425,804
3,074,536
3,074,536
25,854,463
7,500,340
3,010,000
38,664
3,010,000
38,664
28,903,127
$
Median rate
4.430%: 50% of the amount of accepted competitive
tenders was tendered at or below that rate.
5% of the amount of accepted competitive
Low rate
4.395%:
tenders was tendered at or below that rate.
Bid-to-Cover Ratio = 22,779,927 / 4,425,804
1/
5.15
Equivalent coupon-issue yield.
RR-2865
3,451,884
973,920
http://www.publicdebt.treas.gov
10,549,004
OFFICE Of PUBLIC ArrAntS .1500 PENNSYLVANIA AVENtlE, N.W•• WASHINGTON, D.C.e 20120. (202) 622-1"0
•
BMBAItGOBD tJN'l'IL 2: 30 P. II.
December 23, 1998
CONTACT:
Office o~ Financing
202/219-3350
TREASURY OpnRS 13-WBBX AIm 26-NBEJt lULLS
The Treasury will auction two series of Treasury bills totaling
$15,000 ~111on to refund $16,521 million of pUblicly held
securities maturiug December 31, 1998, aDd ~o pay down about $1,521 million.
appro~mately
In addition to ehe public holdings, Pederal ae ••rYe B~s for their own
accounts hold $7,50l ~llioD of the maturing bills, which may be refunded at
the highest discount rate of accepted competitive teDders. Amount. issued to
these accounts will be in addition to the offering amount.
a.
The maturinq bills held by the public include ",330 million held by
Pederal Rel.rve Saaka
aqent. for foreign and international monetary authorities. VP to $3,000 million of these seeurities may be refunded within the
offering amount in each of the auctiops of 13-week bills and 26-week bills at
the highest discount rate of accepted competitive tenders. Additional amounts
may be issued in each auction for guch account. to the extent that the amount of
new bids exceeds S3,OQQ million.
The bill
aue~1ons
w11l be conducted in the siDgle-price auction format.
Tenders for the bills will be received at Pederal Reserve Banks and
Branches and at the Bureau of the Public ~ebt, washington, D.C. This offering
of Treasury securities i8 governed by the terms and conditions set forth in the
onifor.m Offering Circular for the Sale and Issue of Marketable Book-Entry
Treasury Bills, Note., and Bonds (31 en Part 356, as amended).
Details about each of the new securities are given in the attached offering
highlights.
000
Attachment
RR-2866
For PTess relellses, speeches, pllblic scltedllia (l1Id ofJidld biogr"phles,
Cliff Oil'
24·"011' flU II"e lit (202) 622-2040
or-TRBASURY OrFBRINGS OF BILLS
TO DB ISSUBO DBCBMBBR 31, 1998
HIGHLIGH~S
D.c • .b.r 23, 1998
Offeripg Amount •••••••.•.••..••••••••••• $1,500 million
Qe.cription of Oftering:
'I.nI and. type DC .ecurity •••••••••.••••• 9i-d.y bill
COIIP num.r •••••••••••••••••••••••••••• 912195 BV 2
Aaction dat ••••••••••••••••••••••••••••• D.cemb.r 28, 1998
•
I ••u. d.te ••••••.••••••••••••••••••••••• Deouber 31. 1998
Maturity dat •••••••••••••••••••••••.•••• April 1,1999
~lgio.l i.au. d.t •.•••••••••••••••••••• Aprl1 2,1998
CUrrently out.t.nding •••••••••••••••••••• 28,012 .lllion
~ni.um bid • .aunt .nd multip1e •••••••••• l,OOO
~b.
$1,500 million
182-d.y bill
912195 Ba 1
December 28, 1998
D.c.mber 31, 1998
July 1, 1999
Deceab.r 31, 1998
$1,000
Col.owinq rule. apply to all .,curiti •• mention.d aboye:
,lbmi •• ioQ of Bids.
Honcompetitive bid•.••••••••• Acc.pt.d in full up to $1,000,000 .t tbe highe.t discount rat. of
acc'pted competitive bid•..
competitive bid •••••••••••••• (1) Ku.t b. expr••••d a. a discount rat. with three decimal. in
incr...nt. of .005\, •• g., 1.100\, '7.105'.
(2) .et long po.ition for each bidder aU8t b. r.port.d when the au.
of th. tot.l bid amount, at all diacount rat •• , .nd the net long
position i.
billion or great.r.
- (3) H.t long polition mu.t b. deterain.d a. of one half-hour prior
to the clo.ing time for receipt of competitiv. tend.rs.
,1
MlXiaum 'e90gnl ••4 Bid
at a 81ngl. Yi.ld •••••
"axi.~
'0' • • • • •
35' of publio off.ring
Aw.rd •••••.••••.•••••••• 35' of public off.ring
Rec.ipt of T.nder.:
Nonoompetitive tender•••••••• Prior to 12:00 noon Sa.tern Stand.rd time on auction d.y
Ca.p.titiv. t.nders ••.••.•••• Prior to 1.00 p.m. Bastern Standard time on auction day
PI~nt Term.:
By cbarge to • funds account at a Peder.l Re.erve Baok on issue dat., or payment
of £ull par amount with tender. Tre••ury Direct customer. qan us. the Pay Direct fe.tur. whioh
.uthorize• • charg. to thelr .ccount of record .t their finanoial institution on i18U' dat •.
OFFICI: OJ' PUBI.IC UPAI •• eutO PENNSYI.VANlA AVENO£, N.W. e WASHINGTON. D.C.- 2022. e (202) U2·2"0
CONTACT: Office of Financing
EMBARGOED tnn'IL 2 :30 P.K.
December 23, 1"8
202/21'-3350
'l'UAStJRY TO AUCTION $15~000 MILL:rON 0" 2-YSAR NOTES
The Treasury will auction $15,000 million of 2-year not•• to refund
$30,504 million of publicly held securities aaturing December 31, 1"8, and
to pay down about $15,504 million.
addition to the public holdings, Pedera1 Reserve Banks hold $2,555
million of the maeuriDg securities for their owu accounts, which may be
refunded by issuing an additional amount of tbe new security.
In
The maturing securities held by the public include $4,696 million held
by Pederal Reserve Banks a. ag~nt. for foreign and international monetary
authoriti... Amount. bid for th••• accounts by red.ral Reserv. Banks will
be added eo tbe offering.
The auction will be conducted in the single-price auction format. All
and noncompetitive awards will be at ehe highe.t y~.ld of accepted
competitive tenders.
campeti~ive
The notes being offered today are eligible for the STRIPS program.
Tenders will be received at Federal R•• erve Banks
the Bureau of the Public Debt, Washington, D. c. Thia
securi"tiea is governed by the terms and condi tiona set
Oftering Circular for the Sale and Issue of Marketable
Sills, Notea, and Bonds (31 CPR Part 356, a8 amended).
Detail. about the
higblighta.
~ew
and Branches and at
ottering of Treasury
forth iD tbe uniform
Book-Entry Trea.ury
security are given in the attached offering
000
Ateachment
RR-2861
For
"US ,dalD,
1JI~~cIIaw pllblic Jdt~dllies
lI"d Dffici.' b'Dfrap/del, cilli ollr 14-"0.'/u line .t (202) 622-2040
HIGBLXGBTS OF ~y 01'l'ERDfG TO TO PUBLIC OP
2-YBAR BOTBS TO .B %SSUBD DECBMB2R 31, 199.
Offeripg
Amount •...••.••......••.•.••.....
p•• eriptioa of
~.~
$15,000
~lliOD
9fferipg~
aDd type of s.curity ••.•••••••••••••• 2-year DOt••
Serie ••.................................•. AL-2000
CUSIP Dumb.r •••••••••••••.••••••••••••••••
Auction date ••••••••••••••••••••••••••••••
Issue date •••.••••••••••••••••••••••••••••
Dated date •••••••••••••••••••••.••••••••••
Maturity date •••••••.•••••••••••••••••.••.
912827 4% 7
Dcc.-ber 29,
December 31,
Decemb.r 31,
December 31,
199.
1998
1998
2000
Int.rest rat •••••••••••••••••••••••••••••• »ece~n.d ~a••d on the h~ghest
accept.d competitive bid
Yi.ld •••••••••••••••••••••••••.••••••••••• ~.t.~e4.~ auction
Int.r.st payment-dat•••••••••••••••••••••• Jun. 30 and December 31
Minimum bid amount and multipl•••••••••••• $1,000
Accrued intere.t payabl. by inve.tor •••••• None
Premium or ~.coUDt •••••••• ~ •••••••••••••• Determined at auction
SIRIPS InfOrmation:
KiDimum amount r.quir.d ••••••••••••••••••• D.termined at auction
COrpU8 CUSIP number •••••••••••••••••••••• 912820 OM 6
Due date (a) and. CtJSXP numb~r (a)
for additional T%HT(.) •••••••••••••••••• Not applicabl.
Submission of Bids:
Noncomp.t~tive bids:
Accepted i~ full up to $5,000,000 at the high•• t
accepted yield..
Competitive bids:
(1) MUat be expressed as a yiel4 with tbree decimal., e.g., 7.123'.
(2) •• t long p08ition for each hidder must be reported when the sum
of the total bid amount, at all yields, and tbe net long po.ition
ia $2 billion or greater.
(3) Net 10ag' position muat be detenUDed as of one half-hour prior to
the c10aing t~ for receipt of competitive tenders.
Max~
M!Xtmum
Recognized Bid at a Single yield .••.•. 35' of public offering
Award •••• •••··••••••••••••·•·•····•••• 35' of public offering
Receipt of Tepders:
Noncompetitive tenders: Prior to 12:00 DOOD Bastern Standard ~tme
auction day.
Competitive tenders: Prior to 1:00 p.m. Eastern Standard ttme OD
auctiOD day.
OD
Payment Tenu: By c:harge to a func!a account at a F.deral Iteserve Bank on
issue dat., or payaeu.t of full par amount "i th teDc!er. Treasury Direct
customer. CaD ~e the ray Direct feature which authorizes a charge to their
account of record at their financial institution on issue elate.
DEPARTMENT
OF
THE
1REASURY
TREASURY
NEWS
OFFICE OF PUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960
Weekly Release of U.S. Reserve Assets
December
28, 1998
The Treasury Department today released U.S. reserve assets data for the week
ending December 18, 1998.
As indicated in this table, U.S. reserve assets totaled $79,787 million as of
December 18, 1998, up from $79,505 as of December 11, 1998.
,
U.S. Reserve Assets
(millions of US dollars)
1998
Reserve
Week Ending
Special
Total
Assets
Gold
Stock
\1
Reserve
Foreign
Currencies
31
Drawing
R·Ig ht S 21
ESF
SOMA
Position in
IMF 2141
December 11, 1998
79,505
11 ,041
10,530
16,038
19,569
22,327
December 18, 1998
79,787
11,041
10,553
16,068
19,513
22,612
11
Gold stock is valued monthly at $42.2222 per fine troy ounce. Values shown are as of October 31,
1998. The September 30, 1998 value was $11,044 million.
2/ SDR holdings and the reserve position in the IMF are based on IMF data and revalued in dollar terms
at the official SDRJdollar exchange on the reporting date. IMF data are as of December 11. 1998.
3/ Includes holdings of the Treasury's Exchange Stabilization Fund (ESF) and the Federal Reserve's
System Open Market Account (SOMA). These holdings are valued at current market exchange rates
or, where appropriate, at such other rates as may be agreed upon by the parties to the transactions.
4/ Includes SDR 361 million loan to the IMF under the General Arrangements to Borro\\' (GAB) in July
1998.
RR-2868
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
December 28, 1998
CONTACT:
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:
91-Day Bill
December 31, 1998
April 01, 1999
912795BV2
High Rate:
4.520%
Investment Ratel/:
4.638%
Price:
98.857
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. All tenders at lower rates were accepted in full.
Tenders at the high discount rate were allotted
61%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tendered
Tender Type
$
Competitive
Noncompetitive
PUBLIC SUBTOTAL
23,642,398
1,174,736
Federal Reserve
Foreign Official Add-On
$
TOTAL
$
6,887,534
620,000
620,000
25,437,134
7,507,534
3,962,430
3,962,430
o
o
29,399,564
$
Median rate
4.510%: 50% of the amount of accepted competitive
tenders was tendered at or below that rate.
Low rate
4.480%:
5% of the amount of accepted competitive
tenders was tendered at or below that rate.
Bid-to-Cover Ratio
1/
=
24,817,134 / 6,887,534
3.60
Equivalent coupon-issue yield.
RR-2869
5,712,798
1,174,736
24,817,134
Foreign Official Refunded
SUBTOTAL
Accepted
http://www.publicdebt.treas.gov
11,469,964
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
December 28, 1998
Office of Financing
202-219-3350
CONTACT:
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:
182-Day Bill
December 31, 1998
July 01, 1999
912795BR1
High Rate:
4.525%
Investment Rate1/:
4.696%
Price:
97.712
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. All tenders at lower rates were accepted in full.
Tenders at the high discount rate were allotted
40%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tendered
Tender Type
Competitive
Noncompetitive
$
PUBLIC SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
Accepted
24,321,820
980,967
$
25,302,787
5,511,287
2,000,000
2,000,000
27,302,787
7,511,287
3,540,000
3,540,000
o
$
TOTAL
30,842,787
°
$
Median rate
4.520%: 50% of the amount of accepted competitive
tenders was tendered at or below that rate.
Low rate
4.480%:
5% of the amount of accepted competitive
tenders was tendered at or below that rate.
Bid-to-Cover Ratio
1/
=
25,302,787 / 5,511,287
4.59
Equivalent coupon-issue yield.
RR-2870
4,530,320
980,967
http://www.publicdebt.treas.gov
11,051,287
D E P ,\ H T ]\1 E N T
THE
0 F
T REA S
R Y
(J
NEWS
lREASURY
omCE OF PUBUC AFFAIRS • 1500 PENNsYLVANIA AVENUE. N.W.· WASHINGTON, D.C•• 20220.
Weekly Release of U.S. Reserve A~sets
(~~) 622-2960
December
~9,
1998
The Treac;ury Department today relea::;~d u.s. re~el've a.~sets data for the week
ending December 24, 1998 (given the December 2S holiday).
As indic.ated in this table, U.S. reserve assets totaled $81,129 million as of
December 24, 1998. up from $79,786 as of December 18, 199~ .
. ._-
u.s. RcseNe,:Assets
(rL11lliOllS~0I1US
1998
Total
Re~C!:nrc
Gold,
dollars)
Special
Foreign
C urrencles
. 31
ESF
SOMA
Position in
IMF 2i4/
Reserve
A~~cts
Stock 11
Drawing
Rights 21
December 18~ 1998
79,786
11.041
10,553
16,068
19,513
22,612
December 24, 1998
81,129
11,041
10,5R6
15,973
19,357
24,173
WeekEnding
11
Gold stock is valued monthly at $4:'..1222 per fine troy ounce. Values shuwn lin: as ofNovtmber 30,
1998. The October 31, 1!-.I'.,Il:( value wa'l $1 1,041 mitlion.
21 SDR holdings and Lhe reservc position in the IMF are based on rMF data and revalued in dollar tenns
at the official SDRldollar exchange on the reporting date. IMF data are as of December 18, 1998.
3/ Include:; holdings ofthe Tl'easury's Exchange StabHi2:ation Fund (ES}o") and the Federl'll R.eserve's
Systcm Open Mnrl,et Account (SOMA). These holdings are valued at currcnt market cxehange l'8te.':1
ur, where appropriate, at such other rates as Ina), be a:;reed upon by lhe parLies to [hc transaclions.
41 Includes SDR 361 million 10;ln to the rMF under the General Arrangements to Borrow (GAB) in July
1998. Data reflected for December 24, 1998 also includes an SDR 619 million loan to the 1MF under the
New Arrangeml::nls to Borfow (NAB) in December 1998.
RR-28Tl
For pres.co releases, speeches, puhlic .tchedulel and official biographies, coIlllUr 24-hour fax line at (202) 622-2040
DEPARTMENT
OF
THE
TREASURY
NEWS
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIAAVENVE, N.W.• WASmNGTON, D.C .• 20220. (202) 622-2960
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
December 29, 1998
CONTACT:
Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 2-YEAR NOTES
Interest Rate:
4 5/8%
Series:
AL-2000
CUSIP No:
9128274X7
STRIPS Minimum: $1,600,000
High Yield:
Issue Date:
Dated Date:
Maturity Date:
Price:
4.690%
De cembe r 3 1, 1998
December 31 ,':_~1998
De cembe r 3 1, 2000
99.877
All noncompetitive and successful competitive bidders were awarded
securities at the high yield.
All tenders at lower yields were
accepted in full.
Tenders at the high yield were allotted
97%.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tendered
Tender Type
Competitive
Noncompetitive
$
PUBLIC SUBTOTAL
Federal Reserve
Foreign Official Inst.
TOTAL
$
37,417,200
1,094,789
Accepted
$
13,906,67C
1,094,78S
38,511,989
15,001,45S
2,554,662
1,910,000
2,554,662
1,910,00C
42,976,651
Median yield
4.674%: 50% of the amount of accepted
tenders wa3 tendered at or below that rate.
$
19,466,12::'
co~peti:ive
5% of the amount of accepted c01T'.D::::::iti-.-:::
4.650%:
tenders was tendered at or below that rate.
Lenv yie ld
Bid to-Cover Ratio = 38,511,989 /
15,001,459
2.57
RR-2872
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
DEPARTMENT
OF
THE
TREASURY
NEWS
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W.• WASlflNGTON, D.C .• 20220 - (202) 622·2960
EMB).ROOED ONTlt. 2 = 3 a P. M.
December 30, '1998
CONTACT:
Office of Financing
202/219-3350
TREASt1J.Y TO, A'O'CTION $8,000 MJ:LLION OF
lO-YEAR INFLATION-INDEXED NOTES
The Treasury will auct10n $8,000 million of lO-year inflation-indexed
no~es to raise cash.
Amounts b14 by Federal Reserve Banks for
agent~ for fgreign and international monetary
to the offering.
The ~uction will be conducted in the
A11 compet1t1ve and noncompetitive awards
~heir
awn accounts and as
au~hcr1~1es
s1ngle~pr1oe
~ill
will be 'added
auction format.
be at the highest yield
of accepted compee1tive tenders.
The notes being offered today are eligible
f~r
the STRIPS program.
Tender. will be received at Federal Reserve Banks and Branches and at
the Bureau of the Public Debt, WashingtDn, D. C. This offering of Treasury
securities is governed by the terms and conditions set forth in the Uniform
Offering Circular for the sale and Issue of Marketable Book~Entry Treasury
Bills', Nota.:. and Bonds (31 CPR
~al"t
356, as amencied).
Details about the security are given in the attached
highlights.
offerin~
000
Attachment
RR-28T3
,
*
From: TREASURY PUBLIC AFFAIRS
2-2-99 4:11pm
p. 3 of 8
8:EGBLIGBTS OF '1'JlBUl]RY OPI'D%W TO '1'BB POBLIC 01'
lO-YBAR 'INPLA.TION--DIJ)BltBI)
wms
TO BB ISSTJBD
~y
15, 1'99
December 30, 1998
!mount· ........•... sa.ooo
ott,ripg
million
iTiiPS ;rpfg;ma;i9D~
Reac;riptigp At Qf:'-~.dBsl:
Tenl azul t)rPe ot ~.cur1~y .•• 10-year 1Dflation...
t)Ue dat. •• and c:asIP nuN:len
tar TDrrS:
91 2 111
ws 5
July 15, 1999
1f'l'l
3acuary 15. 20ao
iIlde:Jted. notea;
s.rt........................ A-l009
CCSIP
................ 91282?
=~~
4Y $
dace •..•...•... --- .• J~~ry 0.1999
I..ue dat••.•••....••..•...• J~~ 1S. 1'"
o&ce4 date •••..••........... January 15, 1999
Ha~~cy dat••••••..•..•.••. J~~ lS, 2009
tnc.~e.c r.te ......
DeeermiDed ba.ed on cbe
hiShNt aacepeeci bi.d
~cc1QD
1
••••••••
Real yi.ld .................. Det.~d at
a~t1OD
lD~ere8t
paYJMDt dat. •••••••• .JUly 15 and JUI;uary 15
Minimum b14 ~e
and MU1tipl ••••••••••••••• $1,OOO
Accrued
1Dcere.~
~rem;i,.= ~
•......•..•.•cne
418eount •...••..• :Det.U1Ii.Ped at au.cc1ca.
.. p
STRXP, +nformat.ioa:
Mizl.imum UIIOWI.C r.¢Hd •••.• DecezmiDea at auct;i*
OOrpue ec8IP
Dumbe~ •••••••••
§ubmdl.igp pt Bid.;
NoD.compet:l.c:i.ve bidtl ~
accllf'e.ed yield.
eomp.~~c:!ve
'12.20 Da
4
July 15, 200D
JaDuary 15, 2001
wt70
VIVa
J\l.l.y 15 1 2001
J~ary 15, 2002
July 15, 2002
January 15. 2003
WW5
wx"
WY2
WZ 9
XAl
July lS, 2003
JaDuazy 15, aoo~
JUly 15, Jp04
XB~
XC9
XD'
1$, 2005
July 15. :200$
January· 1.5, 200'
July 15.. 2006"
January·15, 2001
July 15, 2007
J&D~ 15, 2001
JUly 1.5·, ~OO.
J8..J:I'\M.ry 15, a 00'
Jan~ry
XBS
U2
mo
DB
mol
U!L
XLI
xtt7
Accepted in full llP to $S. 000,000 at the higb.elt
bida:
exp~e••• c1 U
a l:'e.~ yield. w:l.t:h ti1rIO d.eci1U.l.., •• g., 3.l.23~.
(2) Net lcmg'" po~ic.iol1 fCl% each b:i.dcie¥" tIlWIt be reported Wen. eM .wn at ~ total.,.
b:f.cl alllO\mc-. at. .11 yi~~, -.r&d the Dee. 1009" ~.it1.OIl ~s $2 bill.i= or sr-eu.
(3) Wet l~ poaiticm 'lUWiit·~ 4etendn.d. as of QIlil :b&lf ..holU' p~io~ eo tha alo.~
(1) M\Wt; :be
~tm.
MAximum
for receipt of
c~titive
Becqqn 11 cd Bid ae 4 aiRSls
teDders.
X'.14 ...............
Haximwaapard ..........................................
Boccia;
of ~.rF;
.on~ompet.itive tenders:
pl"io~
COlllp.~:Lt;;'..,. e.ua.c:lara ~
Pl'ior to
lSt of public
35' of ~~ia
of~~
aff~~
'Co l~: 00 noon Bastern Sea=4art! et. . em. auction day.
1,00 p ••• 8 •• tel'A scaDdaz"r:1. t.t_ ~ av.aUi. . My.
IllYDFPt II!'M: By chiirge co a ~ aC:C!QUnt at a. Faderal Re.srve Ba=k em 1 ••ue 4atCli.
or payal8llC of tull P"~ &ar.O\Ult:. with ~g4e~.
Tre&.8IUO"]fD.trecc c:wI~om.ra alA ua* the Pay
Dire~'C feat~
~t1t\1ti.c=.
Ip4p;Lpq
=
wb1ch .uthcrizee a
issue o.~e ..
c~
to their
acco~t
of
reco~d a~
cheir
f~eial
:rnfQmJI,~i9P;
CPZ B•••
ae~erenCl. P.~10Q., •...... _ .•••• 19a2-1'e4
01/1!/lJ9' ••••.........•••••.•.. 1'4.00000
:Ddax . .~i~ ~/~~/~, ••••• · ••• • •• ········1.00000
~.f CP~
TOTAL P.02
2-2-99 4:12pm
From: TREASURY PUBLIC AFFAIRS
To: 20009
B)
E P \ !{ T
1\ lEN
T
() Jo'
T II L
TREASURY
T f{ E \ S
(I
n
p. 4 of 8
Y
NEWS
OFFICE OF PUBLIC A.FFAIRS -1500 PENNSYLVANIA AVENUE, N.W•• WASHINGTON,
CONTACT:
EMBARGOED UNTXL 2;30 P.M.
n.eember 30, 1998
n.C .• 202:0. (202) Cil2-296j)
Office of Financing
202/219 ... 3350
TREASt7l\Y OFFERS 13-WEEIt, 26-WEEX, un 52-WEEK BXLLS
The "l'r.a8u~ will auctiOD ~bree seriea of ~~easury
.pproxtma~ely $25,000 million to refund $28,163 million
bills totaling
of publicly held
decuri~i •• maturing Januar,y 7, 1999, and to pay down &bout $3,163 million.
In addition to the public holding., Federal Reserve Banks for their own
accounts hold $12,809 ~llion of the matu~ing billa, Wbieh may be re£un4e4 at
the highest discount rate of accepted competitive ~eD4er8. Amounts i.suea to
these accounta ~ll ba iu addition ~o the offering amount.
The . .turing bills held b,y the public include $3,273 million hela by
F.deral Reserve Banks as agaDts for foreign an4 1nternational monetary authorities, which may be ~efunded w1th1n the offering mmount at the bighest discount
rate of acceptea competitive ~eDders. Ad41tiona1 amounts may be issued for such
accounta If ehe aggregAte amount of new bids exceedsehe aggregate amoun~ of
maturing ~ill.. For purposes of deter.mining such additional &mOunts, foreign
ana ineernational monetary authorities are considered to hold $2,373 million of
the original 13- aDd 26-week issues, and $900 million of the original 52·week
1s8ue.
The bill auctions will be
co~4ucted
in the single-price auction format.
Tenders for ehe bills will ~e received at Federal Reserve Banks and
and a~ ehe Bureau of the Public Debt, Washington, D.C. Thia offering
of T~easury s.curities i8 governed b,y the terms and conditions set forth in the
unifo~ Of£ering Circular for the Sale and Xssue of Marketable Book-Entry
Trea8Ur,y Bills, Rotes, and Bonds (31 CFR Part 356, as ~nded).
Brancbe~
Details about each of the new securities are given ift the attached offering highlights.
000
Attachment
For press releales, speeches, public schedules and official biographies, call our 24.. hour lax line at (202) 622.2040
H7GBL7GBTS OF TREASURY OFFERXNGS OF BILLS
TO BE ISSUED JANUARY 7, 1999
December 30, 1998
Offering Amount •••••••••••••••••••• $7,500 million
Description of Offering:
Te~ ana type of security •••••••••• 91-day bill
CUSIP numher ••••••••••••••••••••••• 912795 BG S
Auction date ••••••••••••••••••••••• Januar,y 4, 1999
Isaue date •.••••••••••••••••••••••• Janu~ 7, 1999
Maturity date •••••••••••••••••••••• April 8, 1999
Original issue date •••••••••••••••• October B, 1998
Currently out.tanding •••••••••••••• $11,672 million
Hintmwm bid amount and multiples ••• $1,000
$7,500 million
$10,000 million
1B2-day bill
912795 CF 6
Janua:z:y 4, 1999
January 7, 1999
JUly 8, 1999
January 7, 1999
364-day bill
912795 DB 4
January 5, 1999
January 7, 1999
January 6, 2000
January 7, 1999
.$1,000
$1,000
""T'1
-,
o
3
~
following rules apply to all securities mentioned above:
SUbmission of Bids:
Noncompetitive bid••••••• Accepted in full up to $1,000,000 at the highest discount rate of accepted
competitive bids.
Competitive bids ••••••••• {l) Must b. expressed aa a discount rate with three decimals in increments
of .005%, e.g., 7.100%, 7.105%.
(2) Net long position for each bidder must be reported when the sum of the
total bid amount, at all discount rates, and the net long position is
$1 billion or greater.
(3) Net long position must be deter.mined as of one half-hour prior to th~
closing ttme for receipt of competitive tenders.
--I
::0
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t/)
c=
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::0
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c=
CD
r-
......
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......
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t/)
MaxLmum Recognized Bid
at a Single Yield •••••••• 3S% of public offering
HaximwD Award ••••••••••.•••• 35% of public offering
Receipt of Tenders:
Honcompetitive tenders ••• Prior to 12:00 noon Eastern Standard time on auction day
Competitive tenders •••••• Prior to 1:00 p.m. Eastern Standard time on auction day
-i
o
-i
f2
""0
(SI
f\)
Payment Tacms ••••••••••••••• By charge to a funds account at a Federal Reserve Bank on issue date, or
payment of full par amount with tender. ~reaBur,yDirect customers can use the
Pay Direct feature which authorizes a charge to their account of record at
their financial institution on issue date.
N
I
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I
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~
.......
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....,
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