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Treas.

HJ
10
.A13
P4

v.383

Department of the Treasury

PRESS RELEASES

The following numbers were not used:

840,868,869,889,911,918

The following numbers are not available:

827,950,961

D EPA R T MEN T

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T REA SUR Y

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.................................

OmCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220· (202) 622-2960

ErvrnARGO TIME WILL BE SET

Text as Prepared for Delivery
August I, 2000
DIRECTOR OF THE OFFICE OF MACROECONOMIC ANALYSIS JOHN H. AUTEN
REMARKS TO THE TREASURY BORROWING ADVISORY COMMITTEE
OF THE BOND MARKET ASSOCIATION

When you were here three months ago, the dominant feature of the economic situation
was strong real growth combined with low rates of inflation. Now, three months later, that is
still the case But there has been a change. Growth now seems to be coming down from a peak
rate of over 8 percent late last year on the basis of newly-revised Gross Domestic Product data,
while inflation has been edging up from its recent lows. These developments have been gradual,
and hardly unexpected, but their timing and eventual resolution is not easy to judge. This is a
period in which the behavior of current statistical readings, particularly those with forwardlooking properties, takes on unusual importance
Last week's advance report on second-quarter Gross Domestic Product contained the
usual quota of surprises. Not the least of these was a headline real growth number of 5.2 percent
annual rate, compared to a downward-revised 48 percent rate in the first quarter. But, beneath
the surface, there were signs that a slower pace of real growth might be emerging Real personal
consumption expenditures (two-thirds of Gross Domestic Product) grew at a 3 percent annual
rate in the second quarter, down from more than 7-112 percent in the first quarter. Outlays on
durable goods. particularly motor vehicles, fell in the second quarter for the first time in three
years, admittedly from a very high level.
Partly as a result of the slower pace of consumer spending, an increased rate of inventory
accumulation added a full percentage point to real growth in the second quarter. To the extent
that this accumulation was involuntary, it could serve as a drag on production during the second
half of the year. It should be noted, however, that aggregate inventory-sales ratios remain very
low and survey data do not suggest that inventory holdings are currently regarded as excessive
Second-quarter real growth was boosted about 1 percentage point and first-quarter real
growth was cut by about the same amount by quarterly swings in federal spending. as recorded
in the national income accounts, which are likely to net to a small positive for the year as a
whole. With allowance for these and other special influences, it seems fair to say that there was
LS-8J9

For ressreleases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-20..f{)

some slowdown in the growth of underlying aggregate demand during the second quarter,
despite the recorded rise in real growth from 4.8 to 5.2 percent. From a favorable point of view,
much of the second-quarter strength was in productivity-enhancing private investment
categories. For example, there was a 31 percent annual rate of growth in "information
processing equipment and software" which accounted for about one-third of the total growth in
second-quarter Gross Domestic P r o d u c t . '
Inflation remained relatively moderate in the second-quarter Gross Domestic Product
report, although up somewhat from last year. The Gross Domestic Product chain price index
rose at a 2.5 percent annual rate in the second quarter, down from a 3.3 percent rate in the first
quarter when the Federal pay raise was a special influence. The 2.9 percent annual rate increase
of Gross Domestic Product inflation in the first half of this year compares with a 1.6 percent
increase during 1999. A roughly similar pattern is shown in the core Consumer Price Index
which rose at a 2.6 percent annual rate in the first half of this year, up from 1.9 percent during
1999.
The employment cost index (wages plus benefits) r~se by a seasonally adjusted 1.0
percent in the three months ending in June, a shade below market estimates. Over the twelve
months ending in June, total compensation costs for civilian workers rose by 4.4 percent, up
considerably from 3.2 percent in the same period one year ago and the biggest gain in nearly a
decade. Mounting cost pressure from the benefits component is a major factor along with wage
and salary growth in tight labor markets.
However, this does not necessarily imply much, if any, increased inflationary pressure as
long as productivity growth continues its recent strong performance. Official productivity
estimates for the second quarter are not available yet, but rough estimates on the basis of the
second-quarter Gross Domestic Product results point to another strong gain in productivity,
probably over 4 percent at an annual rate. This should hold any rise in unit labor costs to modest
proportions, consistent with recently observed inflation rates.
Weekly and monthly statistical indicators present a mixed picture and do not yet fully
resolve the uncertainties in the current situation
•

The index of leading indicators dipped by 0 I percent in May and has been down or
about flat for the last four months. Based upon past relationships, this points to sustained
expansion but not at the rapid pace seen earlier Preliminary indications suggest a flat
index or perhaps a slight rise in June

•

Initial claims for unemployment insurance are volatile and difficult to read at this time of
the year because of the auto industry's annual summer downtime. The four-week average
of initial claims has turned up sharply since dipring to a 26-year low at mid-April and
continued claims have risen to levels not seen since last fall These are potential signs of
softening but difficult to reconcile with consumers' very optimistic perception of
employment opportunities

•

The Conference Board index of consumer confidence rebounded in July and is close to its
record high reached in May. Consumers' assessment of the current employment situation
is now extremely favorable, with the share who'believe jobs are "hard to get" at an alltime low. Press reports suggest that the University of Michigan index of consumer
sentiment also remained at a high level in July

•

Orders for durable goods increased by 10 percent in June, driven by large increases in
aircraft orders, both civilian and military. Excluding the volatile transportation category,
orders were up a more modest 0.8 percent. Order backlogs indicate underlying strength
in demand for capital goods.

•

Existing home sales increased for the second consecutive month in June to a relatively
high 5.23 million unit seasonally adjusted annual rate. Mortgage interest rates declined
somewhat and may have given sales a temporary boost. Housing starts and permits, on
the other hand, have begun to show some weakness.

The difficulty currently is in knowing whether the economy is likely to slow down even
further, or whether it is likely to regain whatever forward momentum it may have lost. This
uncertainty can probably only be resolved with the passage of time and further readings on the
key economic variables. But at the present time and on the basis of the information currently
available, the most likely outcome would seem to be the continuation of fairly strong growth,
close to the economy's potential, possibly coupled with some mild increase in inflationary
pressure.
That is a summary of recent economic developments and the near term economic
outlook.

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D EPA R T 1\1 E N T

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•

1789

OFnCE OF PUBUC AFFAIRS • 1500 PENNSVLVANlAAVENUE, N.W. • WASIllNGTON, D.C .• 20220. (202) 622-2960

U.S. International Reserve Position

08/01/00

The Treasury Department today released U.S. reserve assets data for the week ending July 28. 2000.
As indicated in this table, U.S. reserve assets totaled $66,565 million as of July 28,2000, down from
$66,853 million as of July 21, 2000.
(in US millions)
Jul~

TOTAL
1. Foreign Currency Reserves
a. Securities

Jul~

21 1 2000
66,853

I. Official U_S. Reserve Assets

Euro
4.802

Yen
5.891

Of which. issuer headquartered in the U. S.

28 1 2000
66,565

TOTAL

Euro

10.693
0

4.760

19.607

8.142

Yen

TOTAL

5.862

10.623
0

b. Total deposits with:
b.l. Other central banks and SIS
b.ii. Banks headquartered In the U.S.
b.ii. Of which. banks located abroad
b.lii. Sanks headquartered outside the U.S.
b.iii. Of which. banks located in the U.S.

11.387

0
0

19.471
0
0

0
0

15.191

15.142

3. Special Drawing Rights (SDRs) 2

10.314

10.281

~. Gold Stock

11.048

~, IMF Reserve Position

5. Other Reserve Assets

8.220

11.330

11 Indudes holdings of the Treasury's Exchange Stabilization Fund (ESF) and the Federal Reserve's System Open Market Account
(SOMA), valued al current market exchange rates. Foreign currency holdings listed as securities reflect marked-la-market values, and
deposits reflect carrying values.
21 The ilems, "2. IMF Reserve POSition" and "3. Special Drawing Rights (SDRs)." are based on data provided by the IMF and are valued in
dollar terms at the official SDRJdollar exchange rate for the reporting date. The IMF data for July 21 are final. The entries in the table above
for July 28 (shown in italiCS) reflect any necessary adjustments, including revaluation, by the U.S. Treasury to the prior week's IMF data.

31 Gold stock is valued monthly at $42.2222 per fine troy ounce. Values shown are as of May 31, 2000. The April 30, 2000 value was
$11,048 million.

L8-820

u.s. International Reserve Position (cont'd)
II. Predetermined Short·Term Drains on Foreign Currency Assets
July 28, 2000

July 21. 2000
1. Foreign currency loans and securities
12. Aggregate short and long positions in fOlWards and
futures in foreign currencies vis-a-vis the U.S. dollar.
2.a. Short positions
2.b. Long positions
3. Other

o
o
o

III. Contingent Short-Term Net Drains on Foreign Currency Assets
July 21, 2000
1. Contingent liabilities in foreign currency
1.a. Collateral guarantees on debt due within 1 year
1.b. Other contingent liabilities
2. Foreign currency securities with embedded options
3. Undrawn, unconditional credit lines
3.a. With other central banks
3.b. With banks and other financial institutions
headquartered in the U.S.
3.e. With banks and other financial institutions
headquartered outside the U. S.
4. Aggregate short and long positions of options in foreign
currencies vis-a-vis the U.S. dollar
4.a. Short positions
4.a.1. Bought puts
4.a.2. Written calls
4.b. Long positions
4.b.1. Bought calls
4.b.2. Written puts

July 28, 2000

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D EPA R T 1\1 E N T

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THE

T REA SUR Y

NEWS

TREASURY

OFFICE OF PUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220· (202) 622-2960
t

EMBARGO TIME WILL BE SET
Remarks as prepared for delivery
August 2, 2000
UNDER SECRETARY OF THE TREASURY FOR DOMESTIC FINANCE
GARY GENSLER
REMARKS AT THE AUGUST 2000 TREASURY QlJARTERLY REFUNDING

Good morning. I am pleased to be with you today to discuss the government's refunding
needs for the current quarter
By the end of this fiscal year, we will have achieved three straight years of unified budget
surpluses -- a feat unimaginable just a few years ago. The unified surpluses for the three years are
estimated to total over $400 billion. These surpluses cap the longest series of improvements in
budget results in the history of the United States
As the President announced on Monday, this year we will pay down $221 billion of
publicly held debt. This reduction in our publicly held debt consists of a reduction of $210 billion
of privately held marketable debt and $11 billion of nomnarketable debt In all, this will bring us
to a total reduction in publicly held debt of approximately $160 billion in just three years.
Adjustments to Date

Paying down approximately $360 billion in debt in three years is a significant achievement
We have made adjustments to our debt management program to pay down this debt and to
prepare for the years ahead in which we expect to continue running large, unified surpluses,
leading to a paydown of over $200 billion in debt each year
Since 1996, we have decreased bill issuance by 28 percent TIllS has been accomplished
by reducing the size of weekly bill and moving to quaI1erly auctions of one-year bills At the same
time, we have decreased issuance of coupon securities by over ~o percent. based 011 our CUITent
auction schedule We accomplished this by elil11l11ating more than one-tlllrci of coupon auctions
and by instituting a regular schedule of reopenings of flve- ,lI1c1 ten-year nutes and thir1Y-\Car
bonds.
LS-821

Far Fres;f. releases, speeches, public schedules and official biographies, call our 24-hourfax line at (202) 622-2(J.1{J

As a result, the amount of Treasury coupon debt that matures each year has declined from
its peak in 1998. Maturing coupon debt will be relatively stable this year and next. It is forecast,
however, to decline by approximately $80 billion in 2002 to under $400 billion for the year
Maturing debt is forecast to decline even further in 20Q4 to approximately $260 billion, based on
current issuance patterns.

While issuance of coupon debt has decreased significantly, the outstanding coupon debt
has decreased much less dramatically, due to the length of time it takes for previously issued
coupon debt to mature. To date, the outstanding stock of coupon debt has decreased by 14
percent from its peak. In contrast, however, outstanding debt with a remaining maturity of five
years or more has actually increased by eleven percent.

Debt Buybacks
Paying down debt primarily by redeeming maturing debt is inherently asymmetrical, with
the paydown occurring at the short end of the maturity spectrum. Buybacks have the potential to
bring more balance to the paydown of the debt. For this and other reasons. earlier this year we
reinstated buybacks for the first time in seventy years.

We are very pleased with the results of the buyback program to date. We have now
conducted ten buyback operations. To date, we have redeemed securities with a total par value
of$17.5 billion This represents just over halfofthe up to $30 billion of buyback operations that
we plan to conduct this calendar year. The operations have ranged in size from $1 to $3 billion.
For the operations we have conducted thus far, we have purchased securities with remaining
maturities of between 15 and 25 years.

In May, we instituted a regular schedule fl)r buybacks. The buyback operations are
conducted twice each month in the third and fourth weeks of the month, with a one day notice
period We plan to maintain this schedule going forward

\Ve have continued to analyze the buyback results and to discllss the program with
Treasury's Borrowing Advisory Committee The Committee has recommended that we conduct
buybacks of callable securities. This C1uaI1er, we plan to purchase securities with maturities of
approximately ten years or more For the fIrst time. this will include callable securities

Federal Reserve Purchases of Treasuries
Since the last Quarterly Refimding, the Federal Reserve announced changes in the
management of the System Open Market Account, or the SOMA. The Federal Reserve will now
set limits by maturity as to the percentage of each security that they will hold Accordingly, the
Federal Reserve will no longer consistently roll over 100 percent of their maturing securities into
new Issues.
While many things may change over the next 24 months, based on the Federal Reserve s
current holdings and Treasury's current auction sizes, the new procedure could lead to
redemption of $30 billion of maturing coupon securities over this period. In addition, this year
there have been net bill redemptions by the Federal Reserve, primarily due to the reduction in
Treasury's 52-week bill issuance. These bill redemptions were just over $7 billion in the last
quarter and are likely to be somewhat higher this quarter The Federal Reserve would meet their
additional portfolio needs with purchases in the secondary market, subject to the same limits by
maturity as for purchases at auction.
J

We consulted closely with the Federal Reserve concerning these changes, which may
provide Treasury greater flexibility in the future to maintain the size of coupon issuance. We are
pleased that the changes in SOMA portfolio management will meet both the Federal Reserve's
portfolio management needs and Treasury's broad debt management objectives
Looking Ahead

At the present time, we do not believe further changes in the overall pattern of our coupon
debt issuance are necessary This is based on the significant adjustments we have made to date,
the fact that maturing coupon debt is not declining next year, and the additional flexibility we have
gained as a result of the changes made by the Federal Reserve in the management of the SOMA
p0I1folio As we have done historically, we will use bills as an adjustment mechanism, both for
seasonal and other adjustments to our borrowing needs For the balance of the year, we ex peet
the size of the regular weekly bill auctions to increase to meet these needs
We have previously mentioned that we are cOllsidcl-ll1g the elimination of the one-\car bill
In this regard, \ve are pleased with the progress to datc in our discllssions with Congress
concerning revision of the limited number ofstatutor\ pruvisions that reference the one-year hill
for the purpose of settlrlg interest rates
I would like to emphasize that it has been the Treasurv's pulicv to give the market:' ample
notice should we decide to eliminate or cliitail a particular isslle We will continue to follO\\ thl";
practice.

Terms of the August Refunding

I will now turn to the terms of the August refunding We are offering $25 billion of notes
and bonds to refund approximately $25.1 billion of privately held notes maturing on August 15,
paying down approximately $100 million.
The securities are
1

A reopening of the 6-3/4% notes of May 2000, maturing May 15,2005, in an amount of$IO
billion

A I O-year note in an amount of $1 0 billion, maturing August 15, 2010.

3. A reopening of the 6-1/4% bonds of February 2000, maturing May 15,2030 in an amount of
$5 billion.
These securities are scheduled be auctioned on a yield basis at 1:00 p.m. Eastern time on
Tuesday, August 8, Wednesday, August 9, and Thursday, August 10, respectively.
As announced on Monday, July 31,2000, we estimate that we will have a $50 billion cash
balance on September 30 and a $30 billion cash balance on December 30. We expect to issue
cash management bills in mid-August and around the end of the month to bridge seasonal lows in
our cash position.
The next quarterly refunding press conference will be held on November 1, 2000.
-30-

DEPARTMENT

THE

TREASURY

OJo'FICE OF PUBLIC AFFAIRS _1500 PENNSYLVANIA AVENUE, N.W .• WASHINGTON, D.C .• 20220. (202) 622-2960

FOR RELEASE WHEN AUTHORIZED AT PRESS CONFERENCE
August 2, 2000

CONTACT:

Office of Financing
202/691-3550

TREASURY AUGUST QUARTERLY FINANCING
The Treasury will auction $10,000 million of 4-3/4-year 6-3/4% notes,
$10,000 million of 10-year notes, and $5,000 million of 29-3/4-year 6-1/4%
bonds to refund $25,071 million of publicly held securities maturing
August 15, 2000, and to pay down about $71 million.
In addition to the public holdings, Federal Reserve Banks hold $4,063
million of the maturing securities for their own accounts, which may be
refunded by issuing additional amounts of the new securities.
The maturing securities held by the public include $4,001 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.
Treasu~Direct customers requested that we reinvest their maturing
holdings of approximately $288 million into the 4-3/4-year note, $17 million
into the 10-year note, and $426 thousand into the 29-3/4-year bond.

All of the auctions being announced today will be conducted in the
single-price auction format. All competitive and noncompetitive awards will
be at the highest yield of accepted competitive tenders.
NOTE: The net long position reporting threshold amount for only the
29-3/4-year bond is $1 billion.
All of the securities being offered today are eligible for the STRIPS
program.
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, Notes, and Bonds (31 CFR Part 356,
as amended).
Details about the notes and bond are given in the attached offering
highlights.
LS-822

000

Attachment
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040

HIGHLIGHTS OF TREASURY OFFERINGS TO THE PUBLIC
AUGUST 2000 QUARTERLY FINANCING
August 2, 2000
Offering Amount . . . . . . . . . . . . . . . . . . . $10,000 million
Description of Offering:
Term and type of security . . . . . . . . . 4-3/4-year notes {reopening}
Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-2005
CUSIP number . . . . . . . . . . . . . . . . . . . . . . 912827 6D 9
Auction date . . . . . . . . . . . . . . . . . . . . . . August 8, 2000
Issue date . . . . . . . . . . . . . . . . . . . . . . . . August 15, 2000
Dated date . . . . . . . . . . . . . . . . . . . . . . . . May 15, 2000
Maturity date . . . . . . . . '" . . . . . . . . . . May 15, 2005
Interest rate . . . . . . . . . . . . . . . . . . . . . 6-3/4%
Amount currently outstanding ....•.
Yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest payment dates . . . . . . . . . . • .
Minimum bid amount and multiples "
Accrued interest payable
by investor '" . . . . . . . . • . . . . . . . . .

$15,426 million
Determined at auction
November 15 and May 15
$1,000

$16.87500 per $1,000 (from
May 15 to August 15, 2000)
Premium or discount . . . . . . . . . . . . . . . Determined at auction
STRIPS Information:
Minimum amount required . . . . . . . . . . . $800,000
Corpus CUSIP number .. , . . . . . . . . . . . . 912820 ER 4
Due date{s) and CUSIP number{s)
for additional TINT{s)
. . . . . . . . . Not applicable

$10,000 million

$5,000 million

10-year notes
C-2010
912827 6J 6
August 9, 2000
August 15, 2000
August 15, 2000
August 15, 2010
Determined based on the highest
accepted competitive bid
Not applicable
Determined at auction
February 15 and August 15
$1,000

29-3/4-year bonds (reopening)
Bonds of May 2030
912810 FM 5
August 10, 2000
August 15, 2000
November 15, 1999
May 15, 2030
6-1/4%

None
Determined at auction

$15.62500 per $1,000 (from
May 15 to August 15, 2000)
Determined at auction

Determined at auction
912820 FT 9

$32,000
912803 CH 4

Not applicable

$11,269 million
Determined at auction
November 15 and May 15
$1,000

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 for each of the notes and $1 billion
or greater for the bond.
(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 fund. account at a Federal Reserve Bank on issue date, or payment of full par amount
with tender.
TreasuryDirect customers can use the Pay Direct feature which authorizes a charge to
their account of record at their financial institution on issue date.

DEPARTMENT

0.-

THE

TREASURY

NEWS

TREASURY

O ..·,FICE OF PUBLIC AFJ,o'AIRS -1S00 PENNSYLVANIA AVENUE, N.W. - WASH1NGTON, D.C.- 20220 - (202) 622-2960

CONTACT:

EMBARGOED tJNT:tL 2: 3 0 P. M.

Auguae 3, 2000

Offi~e

of riD.Dci~g
202/691.-3550

TREASURY OFFERS 13-WEEJiC AND 26-WEEK BILLS
~e T~easury will auction two series of Treasury bills ~o~ali~g
approximately $18,000 million to refund $16,658 million of publicly held
securities maturing August 10, 2000, and to raise about $1,342 ~llion of new
cash.

hold1ngs, Feae~al Reaerve Banks for their OWD
aecoun~s hold $7,968 ~lllon of the maturing bills, which may be refunded Dt
the highest discOUDe rate of accepted competitive tenders. Amo~S issued
to these accounts will be in addition to the offering &mOUDt.

In addition to the

publi~

The maturing bills held by the public include $3,~73 million beld
by Federal Reserve Banks DS agents for foreign and inte:DatiOD&l monetary
authorities, which may be refunded within the offering amount at the highest
discount rate of accepted competitive ~enders. AdditiODal amounts may be
issued for such accounts if the aggregate amount of new bids exceeds the
aggregate amount o£ matu.ring bi~ls.·
~easur.y.Direct customers requested that we reinvest their maturing holdings of approximately $953 mil~ion into the 13-week ~ill and $871 mdllion into

the

26~ek bil~.

This offering of Treasury securities is governed b.v the ter.ms and co~
Clitions set forth in the oni£o~ O££eri~g Ci~cular for the Sale aDd Zsau.e of
Narketable Book-Entry '1'l:eas~ Bills, Notes, and Bonda (31 en Part 356, as
amended) •
Details about each of the A8W securities are giveD in the attached
offering highlights.
000

Aeeacbmel1t

LS-823

Fo, preu ree.aus,

spuch~s,

public

sch~dule$ lI11d

o/lil;ud biDgraphies, callouT 24-hour fax line at (202) 622-2040

HIGHLIGHTS OF TREASURY OFFERINGS or B7LLS
TO BE I8SUED AUGUST 10, 2000

Augu.t 3, 2000
Offering AMount ••••.•••••••.•••••••••••• $9,500 million
Description of Offering:
Term and type of .ecurity •.••••••••..••• 91-~ bill
CIIS IP nUJnber ••••.••••••••••••••••••••••• 912795 EH 0
Auction dat ••••••••••••••••••••••••••.•• Augu.t 7, 2000
I.sue date •.•••••••••••••.•••••••••••••• Augu.t 10, 2000
~turity dat •••••••••••••••••••••••••••• November 9, 2000
Original i •• ue date ••••••••••••••••.•••• November 12, 1999
Currently out.tanding •••••••.••••••••••• $21,243 million
Minimum bid amount and multipl.s •••••.•• $1,000

$8,500 rai.llion

l8l-day bi.ll
912795 rs 5
August 7, 2000
August 10, 2000
February 8, 2001
August 10, 2000
$1,000

Tbe following rule. apply to all .ecurities mentioned above:
Submission of Bids:
Noncompetitive bids •••••.••• Accepted in full up to $1,000,000 at the highest discount rate of
acc.pted competitive bids.
Competitive bids •••••••••••• (i) 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 rat •• , and the net long
position is $1 billion or greater.
(3) Net long position must be determined aa of one half-hour prior
to the closing time for receipt of competitive tenders.

Maximum Recognized Bid
at a single Rate •••••••••••• 35% of public offering

NaKimwm Award ••••••••••••••••••• 35% of public offering
R.ceipt of Tenders:
Noncompetitive tenders •••••• Prior to 12:00 noon Eastern D~light Saving time on auction day
c~etitive tenders ••••••••• Prior to 1:00 p.m. Eastern Daylight Saving time on auction day
P'yment Terms. By charge to a fund. account at a Federal Reserve Bank on issue date, or payment
of full par amount with tender. ~r.a.u~D1rect oustomers can use the p~ Dir.ct feature which
avthorizeB a charge to their account of record at their financia1 institution on iSBUe date.

PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239

Contact: Peter Hollenbach
(202) 691-3502

FOR RELEASE AT 3:00 PM
August 4,2000

PUBLIC DEBT ANNOUNCES ACTIVITY FOR
SECURITIES IN THE STRIPS PROGRAM FOR JULY 2000

The Bureau of the Public Debt announced activity for the month of July 2000, of securities within the Separate
Trading of Registered Interest and Principal of Securities program (STRIPS).
Dollar Amounts in Thousands
Principal Outstanding
(Eligible Securities)

$1,971.238,508

Held in Unstripped Form

$1,775,434,066
$195,804,442

Held in Stripped Form

$11,525,158

Reconstituted in July

The accompanying table gives a breakdown of STRlPS activity by individual loan description. The balances in
this table are subject to audit and subsequent revision. These monthly figures are included in Table V of the
Monthly Statement of the Public Debt, entitled "Holdings of Treasury Securities in Stripped Form."
The Strips Table along with the new Monthly Statement of the Public Debt is available on Public Debt's
Internet site at: www.publicdebUreas.gov.Awide range of information about Public Debt and Treasury
Securities is also available at the site.
000

http://www.publicdebt.treas.gov

L5-824

T ABLE V • HOLDINGS OF TREASURY SECURITIES IN STRIPPED FORM, JULY 31, 2000 - Continued

Loan Description

Treasury Notes:
Series: Interest Rate:
CUSIP:
8-3/4
C
912827 ZE5
5-1/8
AG
4Q2
AH
4-1/2
4RO
4
AJ
4T6
8-1/2
D
ZN5
5-3/4
X
3M2
AK
4-518
4VV9
AL
4·518
4X7
4-1/2
U
4Z2
A
7-3/4
ZX3
5-3/B
5
3WO
V
5
5C2
W
4-7/8
5DO
X
5
5E8
B
8
A85
T
5-5/8
4E9
5-1/4
5Hl
Y
5-3/4
Z
5J7
AB
5-1/2
5L2
7·7/B
B92
C
5-112
AC
5P3
AD
5-5/8
Sal
5-7/B
AE
5R9
7-112
D
D25
5-7/8
2C5
a
6-lIB
R
2El
6-3/8
R
5X6
6-112
S
6A5
6-112
T
6B3
6-3/8
U
6Cl
7-112
A
F49
6-5/8
V
6E7
6-3/B
W
6F4
6-114
X
6HO
6-3/8
B
G55
5-718
M
3J9
5-3/4
N
3L4
P
5-3/4
303
5-518
359
a
5-112
C
3V2
6-114
A
J7B
5-1/2
D
3Z3
5-1/2
E
4B5
5-314
F
4Dl
5-1/2
4H2
G
5-3/8
4K5
H
5-3/4
L83
S
5-1/4
4N9
J
4-114
4U3
K
5-7/8
A
N81
4-3/4
E
5A6
7-1/4
B
PB9
5-1/4
F
5F5
7-1/4
a88
C
G
6
5MO
7-7/8
0
R87
5-718
H
557
7-1/2
A
586
6-1/2
B
T85
6-3/4
6D9
E
6-112
U83
C
5-7/8
V82
D
5-518
VV81
A
6-7/8
B
X80
C
7
Y55
6-112
0
Z62
6-1/4
8
2JO
6-518
2U5
C
6-1/8
3EO
D
5-1/2
B
3X8
5-518
4FS
C
4-314
4Vl
D
5-112
B
5G3
5N8
C
6
6-112
5Z1
B

Corpus
STRIP
CUSIP

912B20AX5
OFI
DG9
OH7
AY3
CF2
OLB
DM6
DP9
AZO
CPO
OR5
053
DTI
BA4
CX3
DW4
DX2
OYO
BB2
EB9
EC7
ED5
BCO
EG8
EJ2
EL7
EN3
EPa
Ea6
B08
ES2
ETO
EU7
BE6
CC9
CE5
CH8
CKI
CN5
SF3
CS4
CU9
CW5
OA2
DC8
BGI
DE4
OJ3
SH9
007
BJ5
DUB
BK2
DZ7
BlO
EE3
BM8
BN6
ER4
BPI
B09
BR7
BS5
BT3
BUO
BW6
BX4
CA3
C08
CYI
DKO
OV6
EAl
EMS

Principal Amount Outstanding in Thousands
Reconstituted
This Month

Maturity Date
TOlal
Outstanding

B115100
B131100
9130/00
10/31/00
11115/00
11/15/00
11130/00
12131/00
1/31/01
2115101
2115/01
2/28/01
3/31/01
4/30/01
5/15/01
5/15/01
5/31/01
6/30/01
7/31/01
8/15/01
8131/01
9130/01
10/31/01
11/15/01
11130/01
12/31/01
1/31102
212B/02
3/31102
4/30/02
5/15/02

5131102
6130102
7/31/02
8/15102
9/30102
10131/02
11130/02
12131/02
1/31103
2/15103
2/28103
3/31/03
4/30103
5/31103
6/30103
8/15/03
8/15/03

11115/03
2115/04
2/15104
5/15/04
5115/04
8/15104
8/15/04
11115/04
11/15/04
2115/05
5/15/05
5/15/05
8115/05
11/15105
2115/06
5/15/06
7/15/06
10115106
2115/07
5115/07
8/15/07
2115/08
5115/08
11115/08
5115/09
B/15/09
2115/10

Total Treasury Notes ..................... ......
Grand Total... .................................................. ............................. , ........

PortIon Held in
Un stripped Form

11,080.646
20,028,533
19,26B.508
20.524.986
11.519.662
16.036.066
20.157.568
19.474.772
19.777.278
11.312.802
15,367,153
19.586.630
21.605.352
21.033.523
12.398.083
12,873.752
19,B85.985
19.001.309
20.541.318
12.339,185
20.11B.595
18.797.828
19.196.002
24.226.102
33.504.627
31.16S.321
19.381,251
16,563,375
17.237.943
17.390.900
11.714.397
14.871,823
14.320.601
15.064.B64
23.659.015
12,806,814
11.737.284
12.120.580
12.052,433
13.100.640
23.562,691
13.670.354
14.172,B92
12.573.248
13.132.243
13.126.779
28.011.028
19.852.263
18.625.785
12,955,077
17.823.228
14.440.372
18.925.383
13.346,467
18.089.80S
14.373.760
32.658.145
13.834.754
14.739.504
15.425.625
15.002.580
15.209.920
15.513.587
16,015,475
22.740.446
22,459.675
13.103.678
13,958.186
25.636.803
13.5B3,412
27.190.961
25.063.125
14.794.790
27.399.894
23.355,709

6.284.646
20.023,733
19.245.308
20,496.986
5.889.282
16.036.088
20,157.568
19,463.572
19,777.278
6,920.B02
15.367.153
19.566.630
21.562.952
21.033.523
7.647.633
12.873,752
19,785,985
18,999.709
20.086.518
8.251.185
20.118.595
18.276.868
19.196.002
20.145.062
33.504.627
31.11S.721
19.381.251
16,542,575
17.236.343
17.390.900
8,448.237
14.871.B23
14.320,601
15.064.864
21,071,815
12,770,014
11.678.084
11.843.780
11.919.633
13.100.640
22,798.659
13.626.354
14.172.092
12.573.248
13.132.243
13.125.179
27.286.228
19.852.263
18.569.785
12.756.677
17.823.228
14.305.972
18.925.383
12.184.067
18.089.806
14.370.560
32.658.145
13,446.354
14.733.504
15,425.625
15,002.580
15.094.720
15.513.267
15.719.475
22.740.446
22.459.675
12.995.390
13.799.786
25,545.603
13.581.012
27.190.961
25.039.925
14.792.390
27.399.794
23.355.709

1.337,432.193
1.971.238.508

Portion Held in
Stripped Form

4,796.000
4,800
23.200
28.000
5.630,400
0
0
11.200
0
4,392.000
0
0
22,400

a
4.750,450
0
100.000
1.600
454.800
4.088.000
0
520.960
0
4.081.040
0
49.600
0
20.800
1.600
0
3.266.160
0
0
0
2.767.200
36,800
59.200
276,800
132.800
0
764,032
44.000
600
0
0
1.600
724.800

100.000
0
0
0
98.800
0
0
0
0
24.800
0
0
0
0
79.075
0
0
0
0
171.200
0
0

34.720
0
0
0
0
0
0
36,000
0
0

5S,000
198.400
0
134.400
0
1.162.400
0
3,200
0
388.400
6.000
0
0
115,200
320
296.000
0
0
108.288
158,400
91.200
2.400
0
43.200
2.400
100
0

40.000
0
0
0
0
0
16.000
0
0
0
0
0
6,400
0
1.600
6,400
0
26.400
0
23.200
0
1.600
0
20,000
5.200
0
0
0
0
1.600
0
0
0
24.000
0
29.200
0
43.200
0
0
0

1.297.594,843

39,837,350

789.395

1.775,434,066

195.804,442

11.525,158

TABLE V - HOLDINGS OF TREASURY SECURITIES IN STRIPPED FORM, JUL. Y 31, 2000

Corpus
STRIP
CUSIP

Loan Description

Treasury Bonds:
CUSIP:
912810 DM7
D08
DR6
DU9
DN5
DPO
DS4
DT2

11-5/8

12
10-3/4
9-3/8
11-3/4

11-114

DV7

DW5

7·1/4

DX3

7·112

DYI
DZe
EA2
EBO
EC8
ED6
EE4
EFI
EG9
EH7
EJ3
EKO
EL8
EM6
EN4
EP9
EQ7
ES3
ET1
EV6
EW4
EX2
EYO
En
FAl
FB9
FE3

8-3/4
8-7/8

FGB
FJ2
FM5
Total Treasury Bonds

Total
Outstanding

Portion Held In
Un stripped Form

Reconstituted
This Month

Portion Held in
Stripped Form

Interest Rate:

10-5/8
9-7/8
9-1/4

FFO

Principal Amount Outstanding in Thousands
MaturHy Date

9·118
9
8·7/8

8·118
8-112
8·3/4
8-3/4
7-7/8

B-118
B·lIB
8
7-114
7·518
7-1/8

6-114
7-112
7-5/8

6-718
6
6-3/4

6-112
6-5/8
6-3/8
6-1/8

5-112
5-114
5-114
6-1/8
6-1/4
..............

912803AB9
ADS
AG8
AJ2
912800AA7
912803AAI
AC7
AE3
AFO
AH6
AK9
AL7
AM5
AN3
AP8
A06
AR4
AS2
ATO
AU7
AV5

AW3
AX1
AY9
AZ6
BAO
BB8
BC6
BD4
BE2
BF9
BG7
BH5
BJ1
BK8
BL6
BM4
BP7
BV4

BW2
CG6
CH4

11115/04
5/15/05
8/15/05
2115/06
11/15/14
2/15/15
8/15/15
11115/15
2115/16
5/15/16
11/15116
5/15/17
8115/17
5115/18
11/15/18
2115/19
8115/19
2115/20
5/15/20
8/15/20
2115/21

5115121
8115/21
11/15/21
8115/22
11115/22
2/15123

8115123
11/15/24
2115/25

8115125
2/15126
8/15126
11/15/26
2115127

8115127
11/15/27
8/15128
11115/28
2/15129
8/15/29
5/15130

..........

Treasury Inflation-Indexed Notes:
Series: Interest Rate:
CUSIP:
3-5/8
J
9128273A8
3-3/8
A
2M3
3-5/8
A
3T7
3-7/8
A
4Y5
4-1/4
A
5W8

912820 BZ9
BV8
CL9
DN4
EK9

7/15102
1/15107
1/15108
1/15109
1/15/10

Total Inflation-Indexed Notes, .. ". .........
Treasury Inflation-Indexed Bonds:
Interest Rate:
CUSIP:
3-5/8
912810FD5
3-7/8
FH6
Totat Inflation-Indexed Bonds" ............ ,

912803 BN2
CF8

4/15/28
4/15/29

8,301,806
4,260,758

9,269,713
4,755,916
6,005,584
12,023,799
5,745,916
6,155,859
6,867,354
18,823,551
18,844,448
17,264,669
13,364,858
8,263,439
7,859,470
17,611,298
19,877,432
10,003,868
9,118,883
19,633,306

3,858,606
1,684,458
5,420,913
4,622,668
2,044,784
6,757,399
4,243,196
3,960,659
6,441,754
18,306,751
17,562,688
11,037,149
10,992,058

3,173,839
2,877,070
10,217,698
18,622,072
8,134,668
3,684,323
9,342,266
9,657,573
6,776,228
9,697,562
13,583,094
9,255,390
3,947,226
10,611,861
17,890,460
3,860,942
3,519,770

4,443,200
2,576,300
3,848,800
133,248
3,960,800
5,266,400
1,502,720
2,195,200
425,600
516,800
1,281,760
6,227,520
2,372,800
5,089,600
4,982,400
7,393,600
1,255,360
1,869,200
5,434,560
10,291,040
800,000
4,314,560
1,225,920
18,684,100
1,058,400
5,582,400
7,238,400

100,800
50,000
198,400
14,400
176,800
515,680

238,720
649,600
220,800
53,600
102,000
224,960

299,200
144,000
199,600
1,376,000
60,480
402,000
282,240
828,800
41,600
321,280
192,960
1,282,475
50,400
284,800
70,400
25,408

10,457,573
11,090,7BB
10,923,482
32,267,194
10,313,790
9,529626
17,850,261
22,694,044
11,099,662
11,550,170
12,327,007
12,904,916
10,893,818
11,493,177
10,456,071
10,735,756
22,518,539
11,776,201
10,947,052
11,350,341
11,178,580
11,269,069

7,168,607

5,158,400

11,008,816
8,026,618
7,611,977
6,081,671
9,412,556
16,945,739
11,573,801
10,475,052
11,177,541
11,175,380
11,269,069

1,896,100
2,867,200
3,881,200
4,374,400
1,323,200
5,572,800

202,400
472,000
172,800
3,200
0

70,400
189,440
519,000
88,800
514,400
83,200
259,200
225,600
136,400
54,400
0
0
0

519,679,044

363,711,952

155,967,092

10,735,763

17,987,339
17,037,203
17,825,286
16,609,895
11,526,413

0
0

0
0
0
0
0

80,986,137

17,801,691
15,339,443

0
0

33,141,134

4,803,584

7,238,720
8,030,400

0
0

187,520

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
August 07, 2000

CONTACT:

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:

182-Day Bill
August 10, 2000
February 08, 2001
912795FS5

High Rate:

6.060%

Investment Rate 1/:

6.339%

Price:

96.936

All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted 75%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type

Tendered

Competitive
Noncompetitive

PUBLIC SUBTOTAL

19,066,133
1,266,073

20,332,206

Foreign Official Refunded
SUBTOTAL

4,101,133
1,266,073
5,367,206 2/

3,136,800

23,469,006

8,504,006

3,986,845
553,200

Federal Reserve
Foreign Official Add-On
TOTAL

Accepted

28,009,051

13,044,051

Median rate
6.055%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
6.000%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

20,332,206 / 5,367,206

3.79

1/ Equivalent ~oupon-issue yield.
2/ Awards to TREASURY DIRECT ~ $960,842,000

http://www.publicdebt.treas.gov

LS-825

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
August 07, 2000

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:

91-Day Bill
August 10, 2000
November 09, 2000
912795EHO
6.095%

Investment Rate 1/:

Price:

6.278%

98.459

All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted 13%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type
Competitive
Noncompetitive

PUBLIC SUBTOTAL

22,157,612
1,323,623

23,481,235

Foreign Official Refunded
SUBTOTAL

7,843,912
1,323,623
9,167,535 2/

335,800

23,817,035

9,503,335

3,981,416
59,200

Federal Reserve
Foreign Official Add-On
TOTAL

Accepted

Tendered

27,857,651

13,543,951

Median rate
6.070%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
6.060%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
8id-to-Cover Ratio = 23,481,235 / 9,167,535 = 2.56
1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $1,041,401,000

LS-826

http://www.publicdebt.treas.gov

D EPA R TI\,l E N T

0 F

THE

T REA' SUR Y

NEWS

TREASURY

omCE OF PUBUC AFFAIRS • 1500 PENNSVYLVANIA AVENUE, N.W•• WASHINGTON, D.C .• 20220 • (202) 622-2960

•

u.s. International Reserve Position
The Treasury Department today released

August 8, 2000

u.s. reserve assets data for the week ending August 4, 2000.

As indicated in this table, u.s. reserve assets totaled $66,336 million as of August 4, 2000, down from
$66,631 million as of July 28, 2000.
(in US millions)

I. Official U.S. Reserve Assets

July 28, 2000
66,631

TOTAL
1. Foreign Currency Reserves
a. Securities

Euro
4,760

Of which, issuer headquartered in the

Yen
5,862

u.s.

August 4. 2000
66,336
TOTAL

Euro

10,623

4,679

Yen

TOTAL

5,922

10,601

b. Total deposits with:
b.i. Other central banks and BIS
b.ii. Banks headquartered in the U.S.

8,142

11,330

19,471

7,997

11,444

19,441

b.ii. Of which, banks located abroad

b.iii. Banks headquartered outside the U.S.

0
0

0
C
C

15,170

15.025

10,321

').222

11,046

".04-::

b.iii. Of which, banks located in the U.S.

2. IMF Reserve Position

3. Special Drawing Rights (SDRs)
4. Gold Stock

5. Other Reserve Assets

11 Includes holdings of the Treasury's Exchange Stabilization Fund (ESF) and the Federal Reserve's System Open Market Account
(SOMA), valued at current market exchange rates. Foreign currency holdings listed as securities reflect marked-to-market values. and
deposits reflect carrying values.
21 The items, "2. IMF Reserve Posillon" and "3. Special Drawing Rights (SDRs)." are based on data provided by the IMF and are valuec"l
dollar terms at the official SDR/doliar exchange rate for the reporting date. The IMF data for July 28 are final The entries in the ~able a~c .. e
for August 4 (shown in italics) reflect any necessary adjustments, including revaluation, by the U.S Treasury to the prior week's IMF dat2
31 Gold stock is valued monthly at $42.2222 per fine troy ounce. Values shown are as of June 30, 2000. The May 31. 2000 V2 ue was
$11.047 million.

LS-828

:' I

u.s. International Reserve Position (cont'd)
II. Predetermined Short-Term Drains on Foreign Currency Assets
July 28.2000
1. Foreign currency loans and securities

August 4, 2000

(

o
o
o

2. Aggregate short and long positions in forwards and
futures in foreign currencies vis-a-vis the U.S. dollar:
2.a. Short pOSitions
2.b. Long positions
3. Other

o
o

III. Contingent Short-Term Net Drains on Foreign Currency Assets
July 28, 2000
1. Contingent liabilities in foreign currency

August 4, 2000

o
o

1.a. Collateral guarantees on debt due within 1 year
1.b. Other contingent liabilities
2. Foreign currency securities with embedded options
3. Undrawn, unconditional credit lines
3.a. With other central banks
3. b. With banks and other finanCial institutions
headquartered in the U. S.
3.c. With banks and other financial institUtions
headquartered outside the U. S.

14. Aggregate short and long positions of options in foreign
currencies vis-a-vis the U.S. dollar
4.a. Short pOSitions
4.a.1. Bought puts
4.a.2. Written calls
4.b. Long positions
4.b.1. Bought calls
4.b.2. Written puts

PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt· Washington, DC 20239
TREASURY SECURITY AUCTION RES~LTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
Office of Financing
202-691-3550

CONTACT:

FOR IMMEDIATE RELEASE
August 08, 2000

RESULTS OF TREASURY'S AUCTION OF 4-3/4-YEAR NOTES
This issue is a reopening of a note originally issued May 15, 2000.
Interest Rate:
Series:
CUSIP No:
STRIPS Minimum:

Issue Date:
Dated Date:
Maturity Date:

6 3/4%
E-2005
9128276D9
$800,000
High Yield:

August 15, 2000
May 15, 2000
May 15, 2005

Price: 102.787

6.060%

All noncompetitive and successful competitive bidders were awarded
securities at the high yield. Tenders at the high yield were
allotted 78%. All tenders at lower yields were accepted in full.
Accrued interest of $ 16.87500 per $1,000 must be paid for the period
from May 15, 2000 to August 15, 2000.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted

Tendered

Tender Type
Competitive
Noncompetitive

30,068,850
532,092

10,004,362 1/

30,600,942

PUBLIC SUBTOTAL

2,084,74,)
1,100,000

2,084,745
1,100,000

Federal Reserve
Foreign Official lnst.
TOTAL

33,785,687

9,472,270
532,092

13,189,107

Median yield
6.049%:
50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low yield
5.990%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio = 30,600,942 / 10,004,362 = 3.06
1/ Awards to TREASURY DIRECT

$429,080,000

http://www.publicdebt.treas.gov
18-829

PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the

Publi~

Debt • Washington, DC 20239

TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
August 09, 2000

Office ot Financing
202-691-3550

CONTACT;

RESULTS OF TREASURY'S AUCTION OF

5 3/4%
C-2010
9128276J6
CUSIP No:
STRIPS Minimum: $800,000

Interest Rate:
Series:

10-YE~~

NOTES

August IS, 2000
August 15. 2000
August 15, 2010

Issue Date:
Dated Dac@:
Maturity Date:

High Yield:

5.840%

l?rice:

99.326

All noncompetitive an~ successtul competitive bidders were awarded
securities at the high yield.
Tenders at the high yield ~ere
allot:t:ed 77'%;.
All tenders at lower yields were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type

Accepted

Tendered

competitive
Noncompetitive

PUBLIC SUBTOTAL
Federal Reserve
Foreign Official Inst.
TOTAL

19.379.170
77,842

9,924,660
77,842

13,457,012

10,002,502

1,254,200
1, 100,000

1,254,200
1.100,000

:21.811,212

12,356,702

Median yield
5.800%:
50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low yield
5.750%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-~o-Cover

Ratio

= 19,457,012

1/ Awards to TREASURY DIRECT

I 10,002,502 = 1.95
$45,8l0,00C

http://www.publicdebUreas.gov
LS-830

TOTAL P.0l

'IREASURY

NEWS

OFFlCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622.2960

EMBARGOED UNTIL 12:00 A.M. EDT
August 11, 2000

Contact: Steve Posner
(202) 622-2960

TREASURY SHUTS DOWN "SON OF BOSS" ABUSIVE TAX SHELTER

The Treasury Department and the Internal Revenue Service on Friday issued a notice to
shut down another abusive tax shelter that is being marketed and sold. This new scheme is
similar in design to the so-called Bond and Option Sales Strategy, or BOSS tax shelter, which the
Treasury and IRS shut down last December with Notice 99-59.
"Despite these steps, the use of abusive tax schemes will continue to unfairly raise the tax
burden on the American people," Treasury Secretary Lawrence H. Summers said. "Until we
have an overall legislative solution in place, we are sure to see further generations of this and
other abusive tax shelters."
As in the BOSS shelter, this new scheme uses a series of contrived steps (in this case
involving interests in a partnership) to generate artificial tax losses designed to offset income
from other transactions. Notice 2000-44 issued today would deny taxpayers the purported losses
resulting from this shelter transaction because they do not represent bona fide losses reflecting
actual economic consequences as required under the tax law. The notice informs taxpayers and
promoters that appropriate penalties may be imposed on participants in these transactions. The
notice also warns that taxpayers and promoters who participate in these transactions and willfully
conceal their efforts on tax returns may be subject to criminal penalties.

Background
In one variant of this transaction, a taxpayer purchases a call option and simultaneously
writes a similar offsetting call option The offsetting option positions are then transferred to a
partnership. Under the position advanced by the promoters of this arrangement, the taxpayer
purports to have a positive basis in the partnership interest equal to the cost of the purchased call
options, even though the taxpayer's net economic outlay to acquire the partnership interest and
the value of the partnership interest are nominal or zero. This is because they claim that the
taxpayer's basis in the partnership interest is not reduced for the partnership's assumption of the
taxpayer's obligation with respect to the written call options This artificially high tax basis in the
partnership is then used to claim deductible losses (that can be used to shelter other income) by
immediately selling the taxpayer's partnership interest, even though the taxpayer has incurred no
corresponding economic loss
-30-

Ls-831
Far press releasc's, speeches, public schedules and official biographies, call our 24-hol1r fax line at (202) 622-2MO

EMBARGOED UNTIL 12:00 A.M. EDT
August 11, 2000
MODIFICATIONS To TAX SHELTER DISCLOSURE REGULATIONS

The Treasury Department and the Internal Revenue Service on Friday issued modifications to the
tax shelter disclosure regulations issued in February. These modifications take into account
public comments submitted to Treasury and IRS and are designed to clarify several provisions,
address specific practical issues to ease compliance with the regulations, and make certain other
changes relating to the scope of the regulations. Treasury and IRS invite further comments on
these regulations and may make further changes when final regulations are issued.
The key clarifications and changes are as follows:

With respect to taxpayer reporting requirements (under sectioll 6011):
• To limit recordkeeping, the regulations clarify that only documents and records that are
material to an understanding of the facts of a reportable transaction, its expected tax
treatment, or the corporation's decision to participate in the transaction, need to be
maintained.
• The regulations clarify that insurance companies subject to tax imposed under sections 594,
801, or 831 of the Code are subject to the reporting requirements.
With respect to promoter registration requiremel11.'i (under sec/ion 6111 (d)):
• To allow for some appropriate confidentiality, the regulations provide that conditions of
confidentiality do not include limitations reasonably necessary to comply with federal or
state securities laws and exclusivity arrangements that do not involve disclosure restrictions.
The regulations also allow for certain conditions of confidentiality that protect sensitive
business information of the taxpayer who is offered the transaction.
• The regulations also clarify who is required to register a transaction.
With re~pect /() promoter !i.'it mallllellClllce reqlliremel1ls (IInder sectiull 6112):
• To ease compliance, where there are multiple organizers or sellers, the regulations allow the
parties to enter into an agreement to designate one person to maintain the investor list.
• The regulations extend the list maintenance requirement to tax shelters that are sold solely to
individual investors. This is necessary to address the concern that certain types of shelters,
such as Son of BOSS, are being marketed primarily to high-income individuals instead of
corporate taxpayers. However, to remove the need for list maintenance for small transactions
and transactions involving small amounts of tax advice, fee and dollar thresholds are
provided to exclude such situations from the requirements. In particular, an investor is not
required to be listed if (i) the total consideration paid to all organizers and sellers is less than
$25,000, or (ii) the tax benefit resulting from the investment is less than $1 million in any
taxable year (and $2 million overall) for a corporation or corporations, and less than
$250,000 in any taxable year (and $500,000 overall) for an individual or individuals.

Background
On February 28, Treasury and IRS issued temporary and proposed regulations:
•

•
•

requiring corporate taxpayers to disclose when they take part in a large transaction that has
certain identified characteristics common to abusive tax shelters or when they take part in a
transaction previously identified as an abusive tax shelter (under section 6011);
requiring promoters to register with the IRS certain corporate tax shelters marketed under
conditions of confidentiality (under section 6111 (d)); and,
requiring promoters to maintain lists of investors and other pertinent information regarding
potentially abusive tax shelters (under section 6112),

The regulations took effect on the date of issuance, but promoters were provided a six-month
grace period for certain registration and list maintenance requirements,

D EPA R T :\'1 E N T

0 F

THE

TREASURY

T REA S 1I R Y

NEWS

OP7IC'E OF P17ILlC AFUI1S' 1500 'ENNSnVANlA AVI"tTl, N.W•• "ASIONGTON. D.C•• 102.20' (102) Ul.2960

Contact:

EMBARGOED tnn'XL 2: 30 P. K.
August 10, 2000

otf1~e

of Financing

202/691-3550

The Treaaury will auetian approximately $21,000 million of 37-d&y
Treasury cash m&Dagement bills to ha i.aued AUgust 15, 2000.
'renders will DOt be acceptec1 for billa to be zu.i.nta1ne" on the l:>ookentry reeords of tbDepartmant o~ the Treasuxy (Trea.suzy2):!zec:f:).

Addieional 8mOUDta of the hills may he i.sued to Federal A.serve Banks
as agents for fore~~ and international monetary authorities at the highest
discount rate of accepted conp.titi~ tenders.
The auetion being announced to4aY ~ll he conduceed in ~h. .iDg~.-pric.
auceion format. All eampetitive aDd Doncampetitive award_ will be at the
highest discount raee of accepted competitive teDders.
Ccmpetitive bids in cash ~gemant bill auctions must be
as a discount rate ~th two dec~ls, e.g., '.10%.

~:
~ressed

This off.rin~ of Treasury sec:urities is g'cwernac! by ehe tezms and CODcU.tions set forth iD the UlUform Offa.ri:a~ Circular for the SUe and rssue of
Marketable BOOk-Entry Trea~ Bills, Hoees, and Bonds (31 CrR ~art 356, as
amendec!) •
Detail. about the Dew security are given 1.n the
highlights.

at~&ched

offeri.ng

000

Attacl:Daent

L8-832

'Dr prill ,~/~tzJlS,

speuh,s, public ,chld"'., 1It14 a/ficW biograpJai", call 0111' 14-lrollr/tlr Itn~ III (202) 622.2040

E'Ic:m.IGB'l'S OF '1'RZASt7ltY Ol'l'D.%N'C;
OF 37-DAT CASH

IIM'AGEMDI'l'

B%LL

Au;ust 10, 2000

Offering Amount ••••••••••••••••••••• $21,000 mi11ion
~

and

type of .ecuriey........... 37 -~-v
we.

~-sh
~

HADag.ment Bill

COSIP ~er •••••••••••••••••••••••• '12795 FA 4

Auction date ••••••••••••••••••••••••

~gu.t

1', 2000

x.sue da~ ••••••••••••••••••••••••••• AUgust 15, 2000
Maturity aae •••••••••••••••••••••••• Bepe.mbar 21, 2000
Origina1 i.au. dat •••••••••••••••••• March 23, 2000
Current.ly out.t~ing............... $2'5,188 m1.11.iou
M1niDNm bid UIOUZlt and multiple . . . . . $1,000

SUbmissioD of

Bid.~

Honccmpetitive bia••••••••••

~cc.pt.d

full up to $1,000,000 at

th. h,igh•• t

accepted c!isc:ount rate.
Competitive bids •••••••• (1) 'MUst be axpressed as a di.count rate with
two decimals, e.g., 7.10%.
(2) ~.t long position for each bidder must
be report.d when the sum of the total bid

amount, at all ail1count

rate~,

ana the

net lo:g pOl1itio: i . $1 billion or

greater.
(3) Net long POSit:i.OD must be determined a.a
of one half-hour prior to the closing
ttme for receipt of competitive t-=dera.
Max1mu:m

R.eogni~ed

Bid
at. a Single Rate ••••••••••• 35% of public offer:i.ng

~ A~ ••.••••••••••••••

35% of public offering

Reeeipt of Tenderl1:
!lcmcompetitive tender ••••••• Prior to 11:00

a.m. Bastern Daylight
Sav1Dg t1ae on auction day
cempetitive tend.rs ••••••••• Prior to 11:30 a.a. Bastern ~llght
Saving time on auction c!ay

P!Jment

to
fu:ds account at a PederlLl
aeserve Bank OD 1s5Ue date, or pa~t o~
full par amount with ttmder.

'1'e%1U ••••••••••••••••• By charsle

DEPARTl\lENT

TilE

TREASURY

NEWS

OFFICE 0)" PUBLIC AFFA IRS -1500 PENNS,\,LVANIA AVENUE. N.W. e WASHINGTON. D.C.e 20%20 - (20%) 622.2"0

CONTACT:

EMBARGOEtl UNTIL 2 ~ 30 P. M.
August 10, 2000

Office cf Financing
202/691.3550

TREASURY OFFERS l3-WEEK AND 26-WEEK BILLS
The Treasury will auction

~wo

seria. of

Tre~sury

billa totaling

approximately $18,000 million to refund $26,653 million of publicly held
securi~ies maturing Augus~ 17, 2000, ana to pay down about $8,653 million.
In addition to the public holdings, Federal Reserve Banks for their own
accounts hold $11.297 million of the maturing bills, which may be refunded at
the highest discount rate of accepted competitivQ tenders. Amounts issued to

these accounts will be in addition to the offering a=ount.
The maturing bills held by the public include $6,340 million held
by Federal Reserve Banks as agents for foreign and international monetary
authorities. Op to $3,000 million of ehese securieies may be refunded within
the offering amount in each of the auctions 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 such accounts to the extent
that the amount of new bids exceeds $3,000 million.

TreasuryDirect customers requested that we reinvest their maturing holdings of approx~ately $~51 million into the ll-week bill and $1,281 million

into the

~6-week

bill.

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, Notes, and Bonds (31 CFR Part 356, as
amended) •
Details about each of tbe new securities are given in the attached
offering highlights.

LS-833

000

Attachment

F~,. P"~ss

relellus. speeches. public sclredules tlnd Dfficial biog'rapb.ies. call O'u,. 24-ho"' fax line Ilt (202) 622-2040

HIGHLIGHTS OF TREASURY OPFERINGS OF BILLS
TO BB ISSUED AUGUST 17, 2000

August 10, 2000
Offering Amount ....••.••..•...••.•.•... $9,500 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 .•••...

91-day bill
912795 FO 1
AugUBt 14, 2000
August 17, 2000
November 16, 2000
May 18, 2000
$11,294 million
$1,000

$8,500 million

182-day bill

912795 FT 3
August 14, 2000
August 17, 2000
February 15, 2001
August 17, 2000
$1,000

The following rules apply to all securities mentioned above:
Submission of Bidsl
Nonoompetitive bid~ ••••••.. , 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 r~ta 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
ot 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 Rate .•.•••...•.. 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 Savlng time on auction day
Pa~ent Terms:
By charge to a funds account at a Federal Reserve Bank on issue date, or payment
of full par amount with tender. TreasuryDirect customerB can use the Pay Direct feature which
authorizes a charge to their account of rQcord at their financial institution on issue 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
CONTACT:

FOR IMMEDIATE RELEASE
August 10, 2000

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 29-3/4-YEAR BONDS
T;lis i.:;.:;uc

a reopening of a 001ld originally issued Febn..:ary

In~eres~ Ra~e:
6 1/~%
Series:
CUSIP No:
912810FM5
STRIPS Minimum: $32,000

5.697%

2000.

August 15, 2000
May 15, 2000
May 15, 2030

Issue Date:
Dated Date:
Maturity Date:

High Yield:

LJ,

Price: 107.860

All nonco~petitive and successful co~petitivc bidders were awarded
securities at the high yield.
Tenders at the high yield were
allotted 68%.
All tenders at lower yields were accepted in full.
Accrued interest of $ 15.62500 per $1,000 must be paid for the period
from v.ay 15, 2000 to August 15, 2000.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type

Tendered

Competitive
Noncompetitive

PUBLIC SUBTOTAL

18,550,664
15,182

Accepted

18,565,846

Federal Reserve
Foreign Official Inst.

5,000,646 1/

723,700
50,000

TOTAL

19,339,546

4,985,464
15,182

723,700
50,000

5,774,346

Median yield
5.688%:
50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low yield
5.650%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio = 18,565,846 / 5,000,646
1/ Awards to TREASURY DIRECT

3.71

$8,035,000

http://www.publicdebt.treas.gov

LS-834

The U.S. Treasury Department
The Department of Justice
The U.S. Department of Housing and Urban Development
FOR IMMEDIATE RELEASE
August 14, 2000
LS-835

Contact:

Treasury, Bill Buck
(202) 622-2960
Justice, Kara Peterman
(202) 514-2007
HUD, Peggy Johannsen
(202) 708-0980
.

STEPS TO INCREASE FAIR HOUSING ACT COMPLIANCE ANNOUNCED
The Departments of Treasury, Justice, and Housing and Urban Development announced steps
today to ensure that low-income housing tax credit projects are in compliance with the Fair
Housing Act.
"The low-income housing tax credit has led to the creation of more than one million units of
affordable housing for low-income Americans," said Treasury Secretary Lawrence H. Summers.
"This agreement will help to ensure that discrimination is not a barrier to affordable housing for
any American."
"Housing discrimination should not pay," said HUD Secretary Andrew Cuomo. "This
agreement preserves an important source of low-income housing while ensuring that those who
reap the program's financial benefits respect America's fair housing laws."
"No one should face discrimination when trying to find a home," said Attorney General Janet
Reno. "We hope this agreement will help expand housing opportunities by bringing together
Federal agencies to enforce civil rights laws."
Under this agreement, the Departments of Treasury, Justice, and HUD will establish a
monitoring and compliance process to ensure that low-income housing tax credit properties meet
the requirements of the Fair Housing Act. Justice and HUD will provide notice to the IRS and
state housing finance agencies of enforcement actions brought under the Fair Housing Act
involving tax-credit property owners. The IRS, in turn, will notify involved property owners that
a finding of discri mination could result in the loss of tax credits.
The federal agencies will work together and with the private sector so that properties are built
and operated in a manner consistent with the Fair Housing Act. They will also hold annual
meetings to discuss emerging civil rights issues and new methods to increase civil rights
compliance in the tax credit program.

Training and technical assistance, designed to enhance Fair Housing Act compliance practices,
will be made available to state housing finance agencies, developers, property managers, and
other relevant participants in low-income housing tax credit projects from the time of
construction through the operational life of a low-income residential property.
Administered by the Internal Revenue Service with the 50 state housing finance agencies, the
low-income housing tax credit program creates affordable residential rental housing through a
federal income tax credit. The low-income housing tax credit program has led to the
construction, rehabilitation, or acquisition of more than one million units of affordable residential
rental housing for low-income families in the U.S since 1986.
The Fair Housing Act prohibits housing discrimination on the basis ofrace, color, national
origin, sex, religion, disability, and family status. The Departments ofHUD and Justice have
joint responsibility for enforcing the Fair Housing Act. HUD, working with state and local
agencies who administer equivalent fair housing laws, receives, investigates, and attempts to
resolve by settlement more than 6,000 housing discrimination complaints per year. Upon
referral from HUD or where there is a pattern or practice of discrimination, Justice enforces the
Fair Housing Act by filing lawsuits in federal court.

-30-

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
202-691-3550

CONTACT;

FOR IMMEDIATE RELEASE
August 14, 2000

RESULTS OF TREASURY'S AUCTION OF 37-DAY BILLS
37-0ay Bill
August 15, 2000
September 21, 2000
912795FA4

Term:
Issue Date;
Maturity Date:
CUSIP Number:
6.35 %

High Rate;

Price:

6.48 %

Investment Rate 1/

99.347

All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted
6%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted

Tendered

Tender Type
COmget iti'le
NonCOrT:gecicive
TOTAL

5 7 ,909,000
190

57,909,190

2l,Ol3,100
:'.90

21,018,290

Median rate
6.31 %: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
6.20 %;
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

57,909,190 / 21,018,290

2.76

1/ Equivalent coupon-issue yield.

http://www.publicdebt.treas.gov

L8-836

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
August 14, 2000

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
Tern:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:

91-Day Bill
August 17, 2000
November 16, 2000
912795FG1
6.090%

Investment Rate 1/:

6.269%

Price:

98.461

All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted 50%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type
Competitive
Noncompetitive

Tendered
$

22,842,755
1,320,770

Foreign Official Refunded
SUBTOTAL

7,33:;,36:; 2/

1,675,000

25,838,525

9,510,865

5,344,166

Federal Reserve
Foreign Official Add-On
$

6,515,095
1,320,770

2';,163,:;2:;

I?UBLIC SUBTCT.;L

TOTAL

Accepted

31,182,691

14,855,031

3.08

1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $1,047,463,000

hUp:l/www.publicdebLtreas.gov

LS-837

PUBLIC DEBT NEWS
Department of the Treasury' Bureau of the Public Debt· Washington, DC 20239

TREASURY SECURITY AUCTION RESULTS
BUREAU O~ THE PUBLIC DEBT - WASHINGTON DC
CONTACT:

FOR IMMEDIATE RELEASE
August 14, 2000

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182 -Day Bill
August 17, 2000
February 15, 2001
912795FT3

Term:
Issue Date:
Maturity Date:
CUSIP Number:
6.075%

High Rate:

Investment Rate 1/:

6.354%

Price:

96.929

All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted 80%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED

AND

ACCEPTED (in thousands)
Tendered

Tender Type

,=:"oo~

:\oncompecitive

Accepted

r::;s

'..,320,228

Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
TOTAL

1.820,228

16,824,26]

PUBLIC SUBTOTAL

3,10,,<::,53<::

5,506,76] 2/

],000,000

3,000,000

19,824,263

8,506,763

4,576,923
485,000

24,886,186

13,568,686

Median rate
6.060%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate. Low rate
6.000%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

16,824,263 / 5,506,763

3.06

1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $1,374,537,000

http://www .pu b lie debt. treas.gov

18-838

DEPARTMENT

TH'E

TREASURY

OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622.2960

U.S. International Reserve Position

AUGUST 15, 2000

The Treasury Department today released U.S. reserve assets data for the week ending August 11, 2000.
As indicated in this table, U.S. reserve assets totaled $66,511 million as of August 11, 2000, up from
$66,471 million as of August 4, 2000.
(in US millions)

TOTAL
1. Foreign Currency Reserves
a. Securities

August 111 2000
66,511

August 41 2000
66,471

I. Official U.S. Reserve Assets

Euro
4,679

Yen
5,922

Of which, issuer headquartered in the U. S.

Euro

TOTAL
10,601

Yen

TOTAL

4,669

5,957

10,626
0

7,978

11,384

19,362

b. Total deposits with:
b.l. Other central banks and SIS
b.ii. Sanks headquartered in the U.S.
b.ii. Of which. banks located abroad

b.iii. Banks headquartered outside the U.S.
b.iii. Of which, banks located in the U.S.

2. IMF Reserve Position

3. Special Drawing Rights (SDRs)
4. Gold Stock

5. Other Reserve Assets

7.997

11,444

19,441
0
0

0
0

14,994

15,049

10,388

10,427

11,046

11.046

Includes hOldmgs of the Treasury's Exchange Stabilization Fund (ESF) and the Federal Reserve's System Open Market Account
(SOMA), valued at current market exchange rates. Foreign currency holdings listed as securities reflect marked-to-market values, and
deposits reflect carrying values.

21 The items. "2. IMF Reserve Position" and "3. Special Drawing Rights (SDRs): are based on data provided by the IMF and are valued in
dollar terms at the official SDRIdoliar exchange rate for the reporting date. The IMF data for August 4 are final. The entries in the table
above for August
(shown In ItaliCS) reflect any necessary adjustments, including revaluation, by the U.S. Treasury to the prior week's IMF
data.

31 Gold stock is valued monthly at $42.2222 per fine troy ounce. Values shown are as of June 30, 2000. The May 31, 2000 value was
$11,047 million.

LS-839

u.s. International Reserve Position (cont'd)
II. Predetermined Short-Term Drains on Foreign Currency Assets
August 4. 2000
1. Foreign currency loans and securities
2. Aggregate short and long positions in forwards and
futures in foreign currencies vis-ell-vis the U.S. dollar:
2.8. Short positions
2.b. Long positions
3. Other

August 11. 2000

o
o
o

III. Contingent Short-Term Net Drains on Foreign Currency Assets
August 4. 2000
1. Contingent liabilities in foreign currency
1.a. Collateral guarantees on debt due within 1 year
1.b. Other contingent liabilities
2. Foreign currency securities with embedded options
3. Undrawn. unconditional credit lines
3.8. With other central banks
3.b. With banks and other financial institutions
headquartered in the U. S.
3. c. With banks and other financial institutions
headquartered outside the U. S.
4. Aggregate short and long positions of options in foreign
currencies vis-ell-vis the U.S. dollar
4.a. Short positions
4.a.1. Bought puts
4.a.2. Written calls
4.b. Long positions
4.b.1. Bought calls
4.b.2. Written puts

August 11. 2000

o
o

Offical Reserve Assets Worksheet
(actual US dollar amounts)

Enter Dates Here

Last Week
4-Aug-00

This Week
11-Aug-00

Foreign Currency

4-Aug-00

11-Aug-00

$4,679,473,664.86
~5,921 ,585,903.81

$4,669,037,433.34

·10,436,231.52

~5,957,239,814.13

35,653,910.32

$10,601,059,568.67
$7,997,326,889.61
~11 ,443796,504.09
$19,441,123,393.70
$30,042,182,962.37
$0.9075
Y 108.54

$10,626,277,247.47
$7,978,140,433.91
~11 ,383811,687.38
$19,361,952,121.29
$29,988,229,368.76
$0.9046
Y 108.68

Euro Securities
Yen Securities

Sec. Total
Euro Deposits
Yen Deposits
Deposit Total
Total
Euro Rate
Yen Rate

IMF

4-Aug-00

Source: NY Fed

25,217,678.80
-19,186,455.70
-59,984,816.71
-79,171,272.41
-53.953.59361

Source: IMF (fax)

11-Aug-00
(prelim, with adjust.)

Reserve Tranche
GAB

14,994,020,153.20
0.00

15,049,497,153.78
0.00

NAB

0.00
14,994,020,153.20

0.00
15,049,497,153.78

55,477,000.58

10,388,143,277.04

10,426,578,802.05

38,435.525.01

4-Aug-OO

11-Aug-OO

11,046,401,671.79

Total
SDR

55,477,000.58
000
0.00

0.00

as of 6/30/00
Gold

Source: FMS (monthly statement)
0

4-AU9-0~1

11-AU9-O~1

IOther Res.Assets

ITOTAL

Source: (?)
39,958.931.99

66,470,748,064.40

66,510,706,996.39 1

Adjustments to IMF and SDR data, translated at current exchange rates
lj)re"n1:i~j:[)abi------------iN-S-DFts---------------------------------------------------S[)R-rabiior---------------------l
I

lCalculation Section
: Reserve Tranche
IGAB
I
INAB
I
I
I

L~~~~

4-Aug-OO
11,472,839,454
0
0

_________________________

Adjustments

11-Aug-OO
11,472,839,454 0.76234038
0

Q
11,472,839,454

_______________________________

?~~~~~~93~9~~

~,~_~~~_~~~O_~~

Total =
_____ ~~~~_~_

In USD
:
$15,049,497,153.78:
$0.001I
$0.00:
I
$15,049,497,153.781
I
$10,426,578,802. 05

O E P .J\ R T

/VI
I'"
J

rd
I""

f)
. F

C,",

TREASURY

,.Y

($.

t,'
...'

'!" ,r'"

.. _

, \'..

l'."~.K.
T.' "v

NEWS

OFFlCE OF PVBL1C APFAlltS. 150e PENNSYLVANIA. AV£JIIlT£, N.W,. WASJUNGTON r D.C.- 2022&- (:t02)

PUBLIC CORTACT:

EmlARGOED tJR"l':tL 9: 00 A.M.
16, 2000

August:

MEDXA CCD1'l'AC'l':

612,~O

Offi~Q

of Finana£ng
202-691-3550
Bi11 Buck:

202 ... 622-1997

On August 17, 2000, th~ crreasury wi~l buy back ,up to $.1,500 million par
o£ i.t:.s outstanc9.L1g i.ssues that mature between November 2021. all<:l 1iov'eDIb6r
2026. 'l'reasury reserves the right to accept less then the announced: amount.
wi~l

be c:onc1ucted by Treasu.ry1s
us~g ~ts Open Market
operations system. only inst~t.ut.icns that the Federal. lleserve ~ of New
York has approved to conduct Open Market trCUl.sacticm.s may submit offers on
behalf of themselves and their customers. Offers at the highest acc~ed
price for a particular issue may De accepted on a prorated basis, rounded up
to the next $1.00,000. As a result of this rounding, the Treasury may buy
back all mnount slight1y larger than the one annoUnced above.
This debt: buyback (redemption) operation

Fiscal

Agent~

the rederal Reserve Bank of

ma~

York,

Thi.s debt buyback operati.on :i.s governed by the te%mS and condi.tions set
forth :in 31. CFR Part 375 and this announ(;ement.
The debt buyback operatiOl1. regulations are available on the Bureau of
the Public Debt's website at www.public:debt.treas.gov.

Details about the operation and each of the eligible issues are
the attached highlights.

gi~

000

Attacbment

LS-841

For press releases. speeches, public schedules an4 official biographies, call OUT 24-hour fax line at (202) 622-21)40

RIGBLIGBTS OF TREASURY DEBT BtJYBACK OPERATION

August 16, 2000
Par amount to be bought back •• Up to $1, 500

mi~~:lon

Operation date •••••••••••••••• August °17 , 2000
Operation close time .•••...... 1.1:00 a.m. eastern daylight saving time
Sett1emsnt date ••.........•••• Augug~ 21, ~OOO
Mi.n;tmun par offer amount ...•• $100,000
Multiples of par ••••••••••••• $100,000
Format for offers ••••• Expressed in te%mS of price per $100 of par with
tbree decimals. '!'he first two dec:i:mal.s represent
frac:tiona1 321>1is of a dol.~ar. The third decimal.
represents eighths of a 32J>d of a doll.ar, and must
be a 0, 2, 4, or 6.
Del. iv8%Y instructions ..••••••• ABA l!tUmber 021001208 F:RB NYC/ct1ST
TreaSUry issues eligible for debt. buyback operation

(in

millions) :

Par .Amcunt Par Amount
Coupon
Rate (%)
8.000
7.2S0
7.625
7.125
6.250
7.S00
7.625
6.875
6.000
6.750
6.500

"'"

P~r

Maturity
Date
11/15/202l.
08/15/2022
11./1.5/2022
02/15/2023
08/15/2023
11/15/2024.
02/15/2025
08/1.5/2025
02/1.5/:Z026
.08/15/2026
11/1512026

CtJ'SI.P
Number
912810 EL 8
912810 EM 6
912810 EN 4
912810 BP9
912810 EQ 7
912810 ES 3
912810 E'l' 1.
91281.0 EV 6
912810 EW 4
912810 EX 2
912810 EY 0
Total

Par Amount
Outstanding*
32,267
10,314
9,530
17,850
22,694
11,100
11,550
12,327
12,905
10,894
11,493
162,924

Privatel.y
Held*
29,295
9,468
7,929
15,221
21,207
9,569
10,394
10,555
11,790
9,280
9,803
144,511

Be~d

STRI.PS··
18,708
1.,032
5,549
7,270
4,734
7,222
8,077

4,768
1,755
3,023
3,960
66,098

amounts are as of August 15, 2000.

** Par amounts are as of August 14, 2000.

The difference between the par atDOunt out-standing and the par amount
privately beld is the par ~t of those issues h6~d by the Federal
Reserve System.

I
!

OFFlC£ OF PUBLIC AFFAIRS e1500 PENJ'IlSYLVANIA AVEN1JE, N.W•• WASHINGTON. V.C.- 10llO. (lOl) 622-2960

conACT:

DmARGOED llNTI:L 2:30 P.K.

Office of

~inancing

202/691.-3550

August 16, 2000

TREASURY

AUCTION $10.000 MILLION OF 2-YEAR NOTBS

The Treasury will auction $10,000 million o~ 2-year·Dotea to refund $27,'31
million of publicly be1d securU:J.es maturing August 31. 2000, and to pa.y down about
$17,731 ~llioD.

:In adc!itiOZl to the public holdings, J'ederal Reserve BaBka hol.cl $4.220 million
of the maturing securities for their own accounts, which may be re~UAclecl by issuing
an additional amount of the new security.
The ~turing securities held QY the public ~clude $4,392 million held by
Federal Reserve Banks ·as agents for foreign and iuternational monetary authorities.
Amounts bid ~or these accounts by Federal 1eserve BAAks will be added to the
offering.

TreasuryDirect eustamars requested that we reinvest their maturing holdings
of a.pprox±mately $711 million into the 2-year note.
~Ae auc~~on

tive and
tencler/iJ_

will Qe conducted in the ~ingle·price auction format.
All competiawards will be ~t the highest yield of a~=epte~ =ompetitive

uouGgmpe~itiye

The notes beiug offered today are eligible for the STRIPS program.

This offering of Treasury securities is governed ~y the ter.ms and cCDd~~ions
sec fortb in the Uniform OfferiDg Cir~ul~r for tAe Sale and :Isaue of Harketab1e BookEntry Treasury 8111s, Rotes. and BODds (31 CFR part 356, as amended).

Details about the new security are given in the attached offering highlights.
If the auction of 2-year notes to be beld Wednesday, August 23, 2000, results
iu a yield in a range of 6.250 percent tbrough and including 6.374 percent, the
2-year notes wi11 be eonsidered an additional issue of the outstanding 6-l/4~ S-year
notes of Series L-2002 (CVSIP Ho. '~~8~73G5) originally issued September 2, 199'.
The additional issue of the notes would have the same CVSIP Dumber as the outstanding
notes, which are currently outstanding in the amount of $12,732 million.

If the auction results ~n the issuance of an additional amount of the Series
L-2002 notes rather than • new 2-year note, i t will be indicated ~n the Treasury
auction results preas release.
In the event of a reopening, all amounts outstanding
~cr CUS~P Bo. '128273G5, 1~cludiDg the S-year notes issued September Z, 19'7, would
be eligible fer che BTRXPS prcgraa.
000

Attachment

LS-842

__For press ,elelZses, sp.edes. public sde4ules

",,4 offic;fll biog'flphies, ctfll our 2~-ltou"llU li"e lit (202) 622-20~O

EIGKLIGJrl'S OF TUAStJRY Oi'RRING TO nm PUBLIC OF
2-YEAR NOTES TO BE ISSUED AUGOST 31, 2000
August 16, lODO
offering AmQUZlt ••••••••••••••••••• •••••••••••• $10.000 million
Description of Offering:
Term and type of security ••••••••••••••••••.••
Series . . . . . • . . . . . . . • . . . . . . . . . . . . . . . . . . . . . . . . . .
C'trSIP numb.X' ••••••••••••••••••••••••••••••••••
Auction date .•...•••••..••••••••.••.••••••••••
Issue date ••••••.•••••••••••••••.••••••••.•• ~.

2-year notes
Y-2002
912827 61t. 3

23, 2000
31, 2000
31, 2000
31, 2002
Interest rate •••••••••••••••••••.••••••••••••• Deter.mined based on tAe higheet
accepted competitive bid
Yield ..••••••.••.••••••••••••••••••••••••.•••• Determineel at auction
Interest payment dates •••••••••.•••..•••.••••. i'ebruary 28 and August 31
Min~ bid. amount and multiples ••••.•.•.••..• $1,000

AUgust
August
Dated date .••••••••••••••••••••••..••••••••••• Auguat
Maturity date •••••••••••••••••..•••..••..••••• August

Accxoueel interest payable by investor ••.•.••••. None
Premium. or discount ••••••••••••••••••••••••••• Determined at auction
ST~IPS Information:
Minimum amount required ••••••••••.•.•.•••••••• Determined at auction
corpus CUSIP number ..•..•••••.•..••..•••••••• 912820 P't1 6
Due date(s) aud ctJSIP number(a)
for additional TIHT(s) •...•..•.....••••.••.. Bot applicable

Submission of Biels;

Noncompetitive biels:
Accepted in full up to $5,000,000 at the highest accepted yield.
bids:
Must be expresseel as a yield with three decimals, e.g •• 7.123'.
Net long position for each bidder must be ~eported when the sum of the total
bid amoun~, at &11 yiel4s, and the net loug position is $2 billion or greate~.
Net long position must be determine~ as of one ha1f-hour prior to the
closiDg t~e ~or ~eceipt of caapetitive tenders.

Competit~ve

(1)
(2)

(3)

Maximum Recognized Bid at a Single Yield •••••••.••• 3S~ of public offering
Ma.xi:mum Award ..•.•.••••••••••..••••••••••••••••.••. 3 S~ of p\ablic offeriDg
Receipt of Tenders:
Noncampetieiva tenders:
on auction day.

Competitive tenders:
auction day.

Prior to 12:00 nOOn eastern daylight saving time

Prior to 1:00 p.m. eastern dayligbt saving time on

Payment Terms: By charge to a funds account at a Pederal Reserve Bank on issue
elate, or payment of full paX' «mount with tender. ~r.asuryDir.ec customers can use
the Pay Direct feature which authorizes a charge to their account of record at
their financial institution on issue date.

PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239

FOR IMMEDIATE RELEASE
August 16, 2000

Contact: Office of Financing
202-691-3550

TREASURY'S I NFL A TION-INDEXED SECURITIES
SEPTEMBER REFERENCE CPI NUMBERS AND DAILY INDEX RATIOS
Public Debt announced today the reference Consumer Price Index (CPI) numbers and daily index
ratios for the month of September for the following Treasury inflation-indexed securities:
(1) 3-3/8% lO-year notes due January 15, 2007
(2) 3-5/8% 5-year notes due July 15, 2002
(3) 3-5/8% lO-year notes due January 15,2008
(4) 3-5/8% 30-year bonds due Apri115, 2028
(5) 3-7/8% to-year notes due January 15,2009
(6) 3-7/8% 30-yearbonds due April 15, 2029
(7) 4-114% to-year notes due January 15,2010

This information is based on the non-seasonally adjusted U.S. City Average All Items Consumer Price
Index for All Urban Consumers (CPI-U) published by the Bureau of Labor Statistics of the U.S.
Department of Labor.
In addition to the publication of the reference cprs (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 840. The information is also available on the
Internet at Public Debt's website (http://www.publicdebt.treas.gov).
The information for October is expected to be released on September 15,2000.
000

Attachment

L8-843

http://www .publicdebUreas.gov

TREASURY INFLATION-INDEXED SECURITIES

Ref CPI and Index Ratios for
September 2000

Security:
Description:
CUSIP Number:
Dated Date:
Original Issue Date:
Additional Issue Date:

3-3/8% 10-Year Notes
Series A-2007
9128272M3
January 15. 1997
February 6. 1997
April is, 1997

3-518% 5-Year Notes
Series J·2002
9128273A8
July 15. 1997
July 15, 1997
October is, 1997

3-5/8% 10-Year Notes
Series A·2008
9128273T7
January 15, 1998
January 15, 1998
October 15, 1998

3-5/8% 30-Year Bonds
Bonds of April 2028
912810FD5
April 15, 1998
April 15, 1998
July is, 1998

Maturity Date:
Ref CPI on Dated Date:

January 15.2007
158.43548

July 15, 2002
160.15484

January 15, 2008
161.55484

April 15, 2028
161.74000

Date
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

18
19
20
21
22
23
24
25
26
27
28
29
30

2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000

CPI·U (NSA) for:

RefCPI

Index Ratio

172.30000
172.31000
172.32000
172.33000
172.34000
172.35000
172.36000
172.37000
172.38000
172.39000
172.40000
172.41000
172.42000
172.43000
172.44000
172.45000
172.46000
172.47000
172.48000
172.49000
172.50000
172.51000
172.52000
172.53000
172.54000
172.55000
172.56000
172.57000
172.58000
172.59000

1.08751
1.08757
1.08764
1.08770
1.08776
1.08782
1.08789
1.08795
1.08801
1.08808
1.08814
1.08820
1.08827
1.08833
1.08839
1.08846
1.08852
1.08858
1.08865
1.08871
1.08877
1.08883
1.08890
1.08896
1.08902
1.08909
1.08915
1.08921
1.08928
1.08934

1.07583
1.07590
1.07596
1.07602
1.07608
1.07615
1.07621
1.07627
1.07633
1.07640
1.07646
1.07652
1.07658
1.07665
1.07671
1.07677
1.07683
1.07690
1.07696
1.07702
1.07708
1.07715
1.07721
1.07727
1.07733
1.07739
1.07746
1.07752
1.07758
1.07764

1.06651
1.06657
1.06663
1.06670
1.06676
1.06682
1.06688
1.06694
1.06701
1.06707
1.06713
1.06719
1.06725
1.06732
1.06738
1.06744
1.06750
1.06756
1.06763
1.06769
1.06775
1.06781
1.06787
1.06793
1.06800
1.06806
1.06812
1.06818
1.06824
1.06831

1.06529
1.06535
1.06541
1.06548
1.06554
1.06560
1.06566
1.06572
1.06578
1.06585
1.06591
1.06597
1.06603
1.06609
1.06616
1.06622
1.06628
1.06634
1.06640
1.06646
1.06653
1.06659
1.06665
1.06671
1.06677
1.06684
1.06690
1.06696
1.06702
1.06708

May 2000

171.3

June 2000

172.3

July 2000
. -

172.6 I

TREASURY INFLATION-INDEXED SECURITIES

Ref CPI and Index Ratios for
September 2000

Security:
Description:
CUSIP Number:
Dated Date:
Original Issue Date:
Additional Issue Date:

3-7/8% 10-Year Notes
Series A-2009
912B274Y5
January 15, 1999
January 15, 1999
July 15, 1999

3-7/8% 30-Year Bonds
Bonds of April 2029
912810FH6
April 15, 1999
April 15, 1999
October 15, 1999

4-1/4% 10-Year Notes
Series A-2010
9128275W8
January 15, 2000
January 1B, 2000
July 15, 2000

Maturity Date:
Ref CPI on Dated Date:

January 15, 2009
164.00000

April 15, 2029
164.39333

January 15, 2010
168.24516

Date
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept
Sept.
Sept
Sept.
Sept
Sept
Sept
Sept.
Sept.
Sept
Sept.
Sept.
Sept.
Sept.

1
2
3
4
5
6
7
B
9
10
11
12
13
14
15
16
17
1B
19
20
21
22
23
24
25
26
27
28
29
30

2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000

CPI-U (NSA) for:

RefCPI

Index Ratio

1.05061
1.05067
1.05073
1.05079
1.05085
1.05091
1.05098
1.05104
1.05110
1. 05 116
1.05122
1.05128
1.05134
1.05140
1.05146
1.05152
1.05159
1.05165
1.05171
1.05177
1.05183
1.05189
1.05195
1.05201
1.05207
1.05213
1.05220
1.05226
1.05232
1.05238

1.04810
1.04816
1.04822
1.04828
1.04834
1.04840
1.04846
1.04852
1.04858
1.04864
1.04870
1.04877
1.04883
1.04889
1.04895
1.04901
1.04907
1.04913
1.04919
1.04925
1.04931
1.04937
1.04943
1.04950
1.04956
1.04962
1.0496B
1.04974
1.04980
1.04986

1.02410
1.02416
1.02422
1.0242B
1.02434
1.02440
1.02446
1.02452
1.02458
1.02464
1.02470
1.02475
1.02481
1.02487
1.02493
1.02499
1.02505
1.02511
1.02517
1.02523
1.02529
1.02535
1.02541
1.02547
1.02553
1.02559
1.02565
1.02571
1.02577
1.02582

May 2000

171.3

June 2000

172.3

July 2000

172.6

DEPARTIVIENT

TREASURY~

'<'

THE

TREASURY

NEWS

omCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960

For Immediate Release
August 18, 2000

Contact: Public Affairs
(202) 622-2960

TREASURY NAMES COLOMBIAN DRUG KINGPINS TO TRAFFICKERS LIST

The Treasury Department today added the names of Arcangel de Jesus Henao Montoya, a
leader of one of the most powerful drug trafficking groups that comprise Colombia's North Valle
drug cartel, and Juan Carlos Ramirez Abadia, a Cali cartel drug kingpin, to the list of Specially
Designated Narcotics Traffickers (SDNTs). SDNTs are subject to the economic sanctions
imposed against Colombian drug cartels.
The Treasury action blocks,the assets of SDNTs found in U.S. jurisdiction and prohibits
Americans from doing business. with them, thereby further exposing, isolating, and
incapacitating Colombian drug cartels and their agents. The two Colombian drug kingpins named
to the SDNT list today by Treasury are responsible for huge volumes of drugs that have entered
the United States. In addition to the two drug kingpins, Treasury added five businesses and one
associated individual that it has determined are acting as fronts for the North Valle drug cartel.
This action is part of the ongoing interagency effort of the Treasury, Justice and State
Departments to carry out President Clinton's Executive Order 12978, signed on October 21,
1995, which applies economic sanctions against the Colombian drug cartels. With the addition of
the names released today, the assets of a total of 532 businesses and individuals are blocked
under the 1995 Executive Order; and those businesses and individuals are prohibited from
American financial and business dealings.
The list of SDNTs now includes nine kingpins from Colombia's drug cartels, namely Cali
cartel drug kingpins Gilberto Rodriguez Orejuela, Miguel Rodriguez Orejuela, Jose Santacruz
Londono, Helmer Herrera Buitrago, and Juan Carlos Ramirez Abadia; North Coast cartel drug
kingpin Julio Cesar Nasser David; and North Valle cartel drug kingpins Ivan Urdinola Grajales,
Julio Fabio Urdinola Grajales, and Arcangel de Jesus Henao Montoya. The U.S. Government
will continue to identify businesses owned or controlled by Colombian drug cartels and expand
the SDNT list to include additional drug traffickers and their organizations.
The list of businesses and individuals named by Treasury today as SDNTs is attached and
available at www.ustreas.gov/ofac.asis the entire list of SDNTs. The list will be published in
the Federal Register at a later date.
- 30 LS-844

For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-204(/

OFFICE OF PUBLIC AFFAIRS. J500 PENNSYLVANIA AVENUE, N.W .• WASHINGTON, D.C .• 20220. (202) 622-2960

EMBARGOED UNTIL 2:30 P.M.
August 17, 2000

CONTACT:

Office of Financing
202/691-3550

TREASURY OFFERS 13-WEEK AND 26-WEEK BILLS
The Treasury will auction two series of Treasury bills totaling
approximately $18,000 million to refund $16,650 million of publicly held
securities maturing August 24, 2000, and to raise about $1,350 million of new
cash.
In addition to the public ~oldings, Federal Reserve Banks for their own
accounts hold $9,982 million 0"£ 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 $3,478 million held
by Federal Reserve Banks as agents for foreign and international monetary
authorities. Up to $3,000 million of these securities may be refunded within
the offering amount in each of the auctions 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 such accounts to the extent
that the amount of new bids exceeds $3,000 million_
TreasuryDirect customers requested that we reinvest their maturing holdings of approximately $915 million into the 13-week bill and $840 million into
the 26-week bill.

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, Notes, and Bonds (31 CFR Part 356, as
amended) _
Details about each of the new securities are given in the attached
offering highlights.

LS-845

000

Attachment

For press releases, speeches, public schedules and official biographies, call our 24-/tour fax Iinc at (202) 612-2040

HIGHLIGHTS OF TREASURY OFFERINGS OF BILLS
TO BE ISSUED AUGUST 24, 2000
August 17, 2000
Offering Amount . . . . . . . . . . . . . . . . . . . . . . . . $9,500 million

$8,500 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 .......

182-day bill
912795 FU 0
August 21, 2000
August 24, 2000
February 22, 2001
August 24, 2000

92-day bill
912795 FH 9
August 21, 2000
August 24, 2000
November 24, 2000
May 25, 2000
$13,280 million
$1,000

$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.
Maximum Recognized Bid
at a Single Rate . . . . . . . . . . . . 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.
TreasuryDirect customers can use the Pay Direct feature which
authorizes a charge to their account of record at their financial institution on issue 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
August 21, 2000

CONTACT:

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:

92-Day Bill
August 24, 2000
November 24, 2000
912795FH9
6.110%

High Rate:

Investment Rate 1/:

Price:

6.291%

98.439

All noncompetitive and successfu>i:· competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted
8%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted

Tendered

Tender Type

Competitive
Noncompetitive

20,293,961
1,287,216

200,000

21,781,177

9,509,177

5,343,077

Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On

8,021,961
1,287,216
9,309,177 2/

21,581,177

PUBLIC SUBTOTAL

o
$

TOTAL

27,124,254

14,852,254

Median rate
6.090%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
6.060%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

21,581,177 / 9,309,177

2.32

1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $1,003,022,000

LS-846

http://www.publicdebttreas.gov

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
August 21, 2000

CONTACT:

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:

182-Day Bill
August 24, 2000
February 22, 2001
912795FUO
6.090%

Investment Rate 1/:

6.371%

Price:

96.921

All noncompetitive and successfu.J: competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted 25%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type
Competitive
Noncompetitive

Tendered
$

17,115,925

PUBLIC SUBTOTAL
Foreign Official Refunded

4,275,453
1,229,222
5,504,675 2/

3,000,000

SUBTOTAL

3,000,000

20,115,925
4,576,923
230,000

Federal Reserve
Foreign Official Add-On
TOTAL

15,886,703
1,229,222

Accepted

24,922,848

4,576,923
230,000
$

13,311,598

Median rate
6.070%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
6.000%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio = 17,115,925 / 5,504,675

3.11

1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $919,462,000

Ls-847

http://www.publicdebt.treas.gov

DEPAR.TMENT

TIlE

NEWS

TREASURY
OFlIC.E or PUBLIC ArrAntS -1580

EHBAB.GOED OlIrrXL 9 :00 A.M.
August 23, 2000

P£N~SYLVANIA

TREASURY

AVt;NVf.

n.w.• WASHINGTON, D.C.-

20118. (181) 61a'296t

PUBLIC CO~: Office of ~)"aneing
202-691-3550
1ilBJ)u" CO~AC'1':
Bill Buc:lc
202-622-1997

On August 26, 2000, the !l'rea~ will buy back up to $750 million par

of its outstanding callaDle issue. with fina~ ma.turity between Feb~ 2010
and b10vember 201'. Treaanu:y rese:Y'es the ~ight to accept le.s t.han
the ~cad amow::I.t.
'I'his del* buyback (redemptiOA) ope:atioa. will be

c::~uct.a. by

Tz'easu%y" s

Fiscal Agen~, the Federal Reserve Bank of Hew Yo%k, u8iDg it. 0,peA Ha%ket
opera.tioAS system. Only i.Dstitut.iona that the Fede.r&~ Ra.ezve Bank of !lew
York has approved to conduct Open Market tranaactious may submit offers on
behaJ.£ of themselves aDCl their customers. Offers at the highest accepted
prico fo1:' a partic::ulJt.l:' issue may be ac:eep~e4 on a prorated baais, rcundad up
to eha next $100 r OOO. As a result of this rou:di~, the Trea~ may
back an amount slight1.y larger thaA the one a.n.n.ounce<l above.

i'his d.ebt buyback operation i . govexuad by the terms and conditions set:
en P!!Lrl; 375 and this announcement.

forth in 31.

lJuy~ck

oparation regulations are avul.a.ble on the :Bureau of
the PUblic Debt's website at www.publiedebt.treas.gov.
The debt

Details about the opuation and. each of the eligible issues are given
in the a.ttached highlights.

Attacbment

LS-848

For preu releases, spe.chn, public schcdul., alUl offtci41 biographies, caU our 24.hcJur /a.:L

lin~ (It (20~)

6:12-2040

lUGHLI:GBTS OF TREASURY DEBT Bt1YBACX OPERATI:OlII

August 23, 2000

Par amount to be bought baelt •• Up to $750 million
~tion data •••••••••••••••• Augug~ 24, 2000
Opera~ion c10.. ~ime •••••••••• 11: 00 a .m. eall~erA clayli.gh~ n.ving time
Settl~t date ••••••••••••••• Auguat 28, ~OOO
Minimam par offer amount ••••• $100, 000
~tip~ •• of par ••••••••••••• $100,000
Format for offers ••••• Expressed in t8%1llB of price per $100 of par with
three decimals. The first two decimals represent
fractiODal 32'" of a dollar. '!he thinl Clec::imal
represents eightU of a 32114 of a dollar, and. must
be a 0, 2, " or 6.
Delivery instruc:ticcs ••••••••• ABA !I1umbe:r 021001208 FRB NYC/ctJS'r
Treasury issues eligible for debt buyback operation (in millions):

coapo:a.
Rate (%)
11.750
10.000
12.750
13.875
14.000
10.375
12.0pO
13.250
12.500
11.750

MaturityDate

02/15/05-10
05/15/05-10
11/15/05-10
05/15/06-11
11/15/06-11
11/15/07-12
08/15/08-13
05/15/09-14
08/15/09-14
11/15/09-14

paz .Am.ount

C!t7Sl:P

Number
912810 CH 8
91.2810 CP 1
912810 CS 5
912810 CV 8
912810 CY2
912810 DB 1
912810 DF 2
912810 DJ
912810 DL 9
912810 DN 5"·
Total

OUtst~ng"

2,494
2,987
4,736
4,609
',901.

11,032
~',755

5,007
5,128
6,006
61,655

Par Amount:
·Private1.y
Beld*
1,636
1,811
3,476
3,535
3,925
9,250
11,715
4,138

4,223
4,811
48,520

Par amounts are as of August 22, 2000

** This is the only callable security eligible for the
As of August 21, 2000 ,

S~PS prog~.

the par amount held as STRIPS is $3,895 million.

The difference between the. par amount outstanding a.nd the par amount
privately held is the par amount of thoso issues held by the l'edera.l
Reserve System and Federal Government accounts.

NEWS

TREASURY

OFFICE OF PUBUC AFFAIRS. 1500 PENNSYLVANIA AVENUE, N.W.· WASHINGTON, D.C.· 20220· (202) 622-2960

U.S. International Reserve Position
The Treasury Department today released

08/23/00

u.s. reserve assets data for the week ending August 18, 2000.

As indicated in this table, u.s. reserve assets totaled $66,432 million as of August 18,2000, up from
$66,374 million as of August 11,2000.
(in US millions)

I. Official U.S. Reserve Assets

August 11, 2000

August 18, 2000

66,374

66,432

TOTAL
1. Foreign Currency Reserves
a. Securities

Euro
4,669

Yen
5,957

Of which, issuer headquartered in the U. S.

Euro

TOTAL
10,626

4,677

Yen

TOTAL

5,971

10,647
0'

b. Total depOSits with:
b.i. Other central banks and BIS
b.ii. Banks headquartered in the U.S,
b.iL Of which, banks located abroad

b.iii. Banks headquartered outside the U.S.
b.iii. Of which, banks located in the U.S.

7,978

11,384

19,362

8,004

11,410

°
°
0
0

1941~,
0,
GI

eji
C

:iI,2. IMF Reserve Position

14,935

14, 929

10,405

10,3f.! :

!
3, Special Drawing Rights (SDRs)

i
I
I

4. Gold Stock

11,046

1 ~ .(..!.::i:.

5, Other Reserve Assets

21 The items, "2 IMF Reserve Position" and "3. Special Drawing Rights (SDRs)," are based on data provided by the IMF and are valueo dollar terms at the official SDRldollar exchange rate for the reporting date, The IMF data for August 11 are final The entries in tr,e ta81e
above for August 18 (shown In Italics) reflecl any necessary adjustments, including revaluation. by the U.S, Treasury to the prior week's :'.'=
data.
31 Gold stock is valued monthly at 542.2222 per fine troy ounce, Values stlown are as of June 30. 2000. The r,tay 31,2000 V2'L;e was
511,047 million.

LS-S49

u.s. International Reserve Position (cont'd)
II. Predetermined Short-Term Drains on Foreign Currency Assets
August 18. 2000

August 11. 2000
1. Foreign currency loans and securities

0
0
0

2. Aggregate short and long positions in forwards and
futures in foreign currencies vis-a-vis the U.S. dollar:
2.a. Short positions
2.b. Long positions

3. Other

III. Contingent Short-Term Net Drains on Foreign Currency Assets
August 18. 2000

August 11. 2000
1. Contingent liabilities in foreign currency

o
o

c
c

1.a. Collateral guarantees on debt due within 1 year
1.b. Other contingent liabilities
2. Foreign currency securities with embedded options
3. Undrawn, unconditional credit lines
3.a. With other central banks
3.b. With banks and other financial institutions
headquartered in the U. S.

3. c. With banks and other financial institutions
headquartered outside the U. S.

14· Aggregate short and long positions of options in foreign
currencies vis-a-vis the U.S. dollar
4.a. Short positions

4.a.1. Bought puts
4.a.2. Written calls
4.b. Long positions

4.b.1. Bought calls
4.b.2. Written puts

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
August 23, 2000

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 2-YEAR NOTES
Interest Rate:
Series:
CUSIP No:
STRIPS Minimum:

6 1/8%
Y-2002
9128276K3
$1,600,000
High Yield:

Issue Date:
Dated Date:
Maturity Date:
6.204%

Price:

August 31, 2000
August 31, 2000
August 31, 2002

99.854

All noncompetitive and successfu!"'competitive bidders were awarded
securities at the high yield. Tender$ at the high yield were
allotted 37%. All tenders at lower yields were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tendered

Tender Type
Competitive
Noncompetitive

25,560,610
1,384,571

PUBLIC SUBTOTAL

26,945,181

Federal Reserve
Foreign Official Inst.

.3,333,333
1,700,000

TOTAL

31,978,514

Accepted
$

8,619,610
1,384,571
10,004,181 1/
3,333,333
1,700,000

15,037,514

Median yield
6.185%:
50% of the amount of accepted competitive tenders
was tendered at or below that rate. Low yield
6.140%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

26,945,181 / 10,004,181

2.69

1/ Awards to TREASURY DIRECT = $996,573,000

http://www .publicdebttreas.gov

LS-850

D E P .:.\. H. T )1 E N T

{) I<'

THE

TREASURY

T REA S t; R Y

NEWS

OJ/neE OF PUJlLlC AFFAiRS -1500 P£!I."NSYLVANIA AV'CNUE, NtW•• WASHINGTON. D.C •• :ZOllO. (ZOl) 'Z2.l960

EMBAP.GOED tnIl'fXIa 3: 30 P. M.
AUgust 24, 2000

CONTACT: Office of Financing

202/691-3550

'Tbe Treasury wi~~ auct::lOD three series of 'l'reasuzy bills tota1ing
approximately $28,000 million to refund $16,957 ~11ion of publicly be~d
securities maturiug August 31, 2000, and to ~aise about $11,043 mi~liOA of
uew cash.
~ a44iticm. to t~e publ.~c bol(ll.ugs, rede~a1 Reserve Nnks fer thei.r own
accounts hol.d $6,450 m1.11.:i.on of the maturing bills, which may be refunc:led at
the ~ghest discount ~ate of accepted competiti~ tenders. AmoUnts issued
to these accounts will be in addition to the offering amount.

'!'he maturUlg 13- and 26-week bi1.1s hel.d by the publ.ic i.J:I.cl.ude $4,.943
million heJ.d by Pe4era1 )l.eserve BaDka as agents for foreign and inte::uational.
monetary authorities, which may be refunded with.il:L the offer.ing amount at the
highest discount rate of accepted competitive tenders. Additiona1 amounts
may be issued for such accounts if the aggregate amount of new bids exceeds
the aggregate amount of mat.uring bills.
As the~e ~s no 52~ek bill maturing on Angust 31, 2000, up to $3,000

million in bids submitted by foreign and international. moneta;y authorities
through the 7ederal Rese~ Bank of New York will be accepted wi~n the
offering amount of the. 52-week bill. Additional 8:IDOWlts may be :issued to
such accounts to the extent that the amount of Dew bide exceeds $3,000
:tai.lli:on.
TreasuryDirect customers requested that we reinvest their maturing
holdings of approximately $890 million into the 13-week bill, $730 million
into the 26-week bill, and $4.6 milli.on :into the 52-week bill.
This offering of Treasury securities is Q'OTerued by the terms and con-

ditions set forth in the 'Olliform Offering Circul.ar for the Sale ClIl<! Issue of
Ilarketable Book-Entry Treasury Bills, ~ote9, and ~onds (31 CFR Part 356, as
amended) •

Details about each of ehe new securities are given in the attacbed.
o££erin!iJ highl.ights.

LS-8S1

000

Attacbment
FOT

press releases, speeches, public rchedldes and officUzl biog7'tZphUs, c<Z1l our UkolU' fax liM at (202) 622-2040

OF TREASURY OFFERrNGS or BILLS
TO BE ISSU~D AUGUST 31, lOOO

HIGHL~GHTS

August 24, 2000
Offering Amount ...•............... $9,500 mdllion
DesoriRtion of Offering:
Term and type of security •.•......
cusrp number . • . . . . . . . . . . . . . . . . . . . .
Auction date . . . . . . . . . . . . . . . . . . . . . .
Issue date . . . . . . . . . . . . . . . . . . . . . . . .
Maturity date . . . . . . . . . . . . . . . . . . . . . .
Original issue date ...•.........••
Currently outstanding .•..•••....••
Minimum bid amount and multiples .•

91-day bill
912795 lJ'J 5
August 28, 2000
August 31, 2000
November 30, 2000
June 1, 2000
$10,218 million
$1,000

$8,500 million

$10,000 anillion

182-day bill

364-day bill
912795 HL 8
August 29, 2000
August 31, 2000
August 30, 2001
August 31, 2000

912795 B'V 8
August 28, 2000
Auaust 31, 2000
March 1, 2001
March 2, 2000
$1.5,616 m:illion
$1.,000

$1,000

The following rules awly to all securities mentioned above:
8ubmiss~on

of Bids:
Noncompetitive bids ..... Accepted in fu1l up to $1,000,000 at the highest discount rate of accepted
competitive bids.
Competitive bids . . . . . . . . (1) Must be ~reg.ed as a discount rate with three decimals in incrementa
of .005%, e.g., 7.100%, 7.105%.
(2) Net long p08ition for each bidder must be reported when the aum. of the
total bicl8:mount, at a;Ll (Siscount rates, and the Det long'pbsition i .
$1 bi1lion or qreater.
(3) Net long ~osition must be determdned as of one half-hour prior to the
closing tLme for receipt of competitive tenders.

Maximum Reoognized Bid
at a Single Rate ••••.•.. 35% of public offering
Maximum

~ward

....•...•..... 35% of public offering

Receipt of Tenders:
Noncompetitive tenders •• Prior to 12:00 noon eastern daylight saving t~ on auction day
Competitive tenders •••.• Prior to 1%00 p.m. eastern daylight saving time on auction day
Payment far.ms •.•••••••..•.• By oharge to a funda acoount at a ~ederal Reserve Bank on issue date, or
payment of ful1 par amount with tender. ~re4su~Direc~ customers can usa
the p~ Direct feature which Authorizes a charge to their aocount of
reoord at their financial institution on issue date.

TREASURY
OFI'ICf:

O~'

NEWS

P'-"H.IC.· .""FAIRS. iSOO I'ENNSVLVANIA AVENUE. N. W•• WI\SIIIN(:TnN. I).C. l1lUlle110J, 611.1964/

POR IMMEDIATE RELEASE
August 24, 2000

PUBLIC CONTACT: Office of Pinancing
202-691-3550
MEDIA CONTACT: Bill Buck
202-622-1997

TREASURY DEBT BUYBACK OPERATION RESULTS

Today. Treasury completed a debt buyback (redemption) operation for $750.2 million
par of its outstanding callable issues. A total of 10 callable issues with final maturity
between Pebruary 2010 and November 2014 were eligible for this operation. The settlement date
for this operation will be August 28, 2000. Summary results of this operation are
presented below.
(amounts in millions)

Offers Received (Par Amount):
Offers Accepted (Par Amount) :
Total Price Paid for Issues
(Less Accrued Interest):
Number of Issues Eligible:
Par Operation:
For Which Offers were Accepted:
Weighted Average Yield to Call
of all Accepted Offers (\):
Weighted Average Maturity to Call
for all Accepted Securities (in years):

$4.949
750

1.068

10
3

6.112

8.6

Details for each issue accompany this release.

LS-8S2

For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (201) 621-1040

August 24. 2000
TREASURY DBBT BUYBACK OPBRATION RBSULTS

(amounts in millions. prices in decimals)
Table I

Coupon
E~tfl

!~ )

11.750
10.000
12.750
13.875
14.000
10.375
12.000
13.250
12.500
11.750

Par
Amount

Highest
Accepted

Weighted
Average
Accepted

ll.M.fI.

Par
Amount
Off ~ina~ d

Acce~ted

f.Li..a

02/15/05-10
05/15/05-10
11/15/05-10
05/15/06-11
11/15/06-11
11/15/07-12
08/15/08-13
05/15/09-14
08/15/09-14
11/15/09-14

203
600
280
374
304
1.077
1.194
317
546
55

0
0
0
0
0
0
230
173
347
0

N/A
N/A
N/A
N/A
N/A
N/A
136.609
147.718
143.718
N/A

N/A
N/A
N/A
N/A
N/A
N/A
136.594
147.689
143.647
N/A

Lowest
Accepted
Yield
t Q C g 11

Weighted
Average
Accepted
Yield
t Q Cg 11

N/A
N/A
N/A
N/A
N/A
N/A
6.123
6.104
6.097
N/A

N/A
N/A
N/A
N/A
N/A
N/A
6.125
6.108
6.105
N/A

Maturity

Table II

Coupon
R Sl t fI

(%)

11. 750
10.000
12.750
13.875
14.000
10.375
12.000
13.250
12.500
11.750

CUSIP
Numb fir

02/15/05-10
05/15/05-10
11/15/05-10
05/15/06-11
11/15/06-11
11/15/07-12
08/15/08-13
05/15/09-14
08/15/09-14
11/15/09-14

912810CM8
912810CPl
912810CS5
912810CV8
912810CY2
912810DBl
912810DF2
912810DJ4
912810DL9
912810DN5

Maturity

Total Par Amount Offered:
Total Par Amount Accepted:

4,949
750

Note: Due to rounding. details may not add to totals.
·Amount outstanding after operation. Calculated using amounts reported on announcement.

Par Amount
Privately
~

1,636
1,811
3,476
3,535
3,925
9,250
11.485
3,965
3,876
4.811

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
August 28, 2000

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
August 31, 2000
November 30, 2000
912795FJ5

Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:

6.140%

Investment Rate 1/:

6.323%

Price:

98.448

All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted
1%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type
Competitive
Noncompetitive

Tendered
$

PUBLIC SUBTOTAL

23,556,655
1,252,435

24,809,090

Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
TOTAL

Accepted

7,008,245
1,252,435
8,260,680 2/

1,254,200

26,063,290

9,514,880

2,381,611

28,444,901

11,896,491

Median rate
6.110%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
6.090%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio = 24,809,090 / 8,260,680 = 3.00
1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $977,708,000

http://www.publicdebt.treas.gov

LS-853

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
August 28, 2000

CONTACT:

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:

182-Day Bill
August 31, 2000
March 01, 2001
912795FV8
6.100%

Investment Rate 1/:

6.382%

Price:

96.916

All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted 73%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type
Competitive
Noncompetitive

Tendered
$

PUBLIC SUBTOTAL

18,826,313
1,132,726

19,959,039

Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
TOTAL

Accepted
5,901,313
1,132,726
7,034,039 2/

1,470,300

21,429,339

8,504,339

1,041,299

o
$

22,470,638

°
$

9,545,638

Median rate
6.085%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
6.050%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio = 19,959,039 / 7,034,039 = 2.84
1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $806,299,000

http://www.publicdebt.treas.gov

LS-8S4

DEPAR.TMENT

TIlE

TREASURY

NEWS

TREASURY
OFlIC.t: or PUBLIC AFFAlltS -1580 P£N~SYLVANIA AVt;NVf.

2IIBARGOBD 'DIIT:tL 2: 30 P •.11.
29, 2000

n.w.• WASHINGTON, D.C.-

Ccm:t.act:

20118. (181) 61a'296t

office of l'ina.DciDg.

202/691-3550

AU9\lst

file 'rraasm:y will auct.icm appzoxiIDat:al.y $25,000 mllioD. o£ It-4ay
'r.reasury cash maDageaeut: bil.l.s to be issue4 September 1, 2000.

'.rena.ers will 1aOt: be ac:c:epte4 for bi11s to be maintainec1 OD the ))coltentry rec:oms of ~DepU'blent: of the Treasury (~aa.sur,p'D!rec::t:).
AdciitioD&1 ~s of the bills may be issued to I'eclaral RaS8:n'e Danks
as agent.s for foraign and iIltarDaticclal JIIIXlet:;u:y authorities at the Aighest
discount rate ~ aecapt:e4 ccape1::i.t.ive t~~.

The auctio.:a. beiDa" umcnIZlCeci tocJay will. be CODduc:ted in the siD.gle-price
aucticm fO%1lat. All C<aIIIPGtit:l.ve ana DODCOIIIpetit.ive awar4s will. be at the
highest discount ra~e of ac:cepte4 c~titive teD4e~s.
~:
~ressea

CcIIIIIpet.itive bids iD cash 1DalWg'tllll8nt bi1l. auct.ians mu.st be

as a d.f.CC!OUIlt Z'&~. with two 4ec.ima.l.s, e .. g., 7.10%.

1"his offering of fteaS1IZ'Y securities is governed

by thetarms and eoaditicm.s sat:. £~ b t::he VJ:ai£o.z:m Of£eriDg CJ.~u1&r ~or ~ Sa1e a:a4 xssue of
Marketable Bcok-Bntr,v Treasur,y Bills, Kotes, AD4 BoD4s (31 CF.K Part 356, as
amez:aaed) •

Details about the
highlights.

!lew

8ec:uri.~y

are given in the attached offering

000

At:taebm.ent

LS-855

For p,e$S

re~QSes.

speeches, public sclaeduus and official biogrllphiel. call DIU' Z4-"OfU' /tlJl line at (202) 622-2040

HIGHLIGHTS OF TREI.StJRY OPPERDlG
OF 14-!lAY CASE HUTAGJ"IIDrl' BILLS

lWglIst

OfferiDg AmoUnt ••••••••••••••••••••• $25,000

29,

~OOO

~lliOD

Description of Offering,:
Term and type of security •••.••••••• l4-day CaSh Managemeut Bill

COSrP DUmber •••••••••••••..••••••••• 912795 GZ 8
Auction date .••••••.•••..••••••••••. ~gust 31, 2000
I.sua dat •••••••••••••• ~ •••••••••••• Sep~ember 1, 2000
Maturity dat •••••••••••••••••••••••• Se,ptember 15, 2000
Original. issue date ••••••
September 1, 2000
Minimum bid amount ancl multiples •••• $1,000
0

• • • • • • • • • • •

SUbmission of Bids:
Noncompetitive bids ••••••••• Accepted in full ~ to $1,000,000 at
the Alghest accep'ted discount rate.
Competitive bids •••••••• (l) MUst be expressed as a discount rate
with two aec:hna1s, e.g., 7.10%.
(2) Ret l.cmg positiOZl for each bidder must
be reported when the sum of 1:he total
bid iUIQUllt, at all. dJ.SCOUDt rates, and
the Det long position is $1 billion. or

greater.
(3) Met long position must be determined as
of one half-hour p~ior to the closing
time for receipt of competitive tender~.
Maximum ReCognized Bid
at a Single Rate •••••••.••• 35% of public offering
MaxjmJm Award ...•••••••••....• 35% of public offering
Roceipt of Tenders:
Noncompetitive tanQers •••••• Prior to 12:00 noon eastern daylight
sa.ving time 021 auetian day
Competitive tenders .•.....•. Prior to 1:00 p.m. easte~ day11ght
saving t.ime on auction day

a.t a Federal.
Reserve Bank on issue date, or payment of
ful.l par amount with tender.

Payment 'l'e.cI:l.s ••••••••••••••••• By charge to a fWlds account

DEPARTMENT

TREASURY

THE

TREASURY

NEWS

omCE OF PUBUC AFFAIRS. 1500 PENNSYLVANIA AVENUE, N.W•• WASHINGTON, D.C.. 20220. (202) 622-2960

For Immediate Release
August 30, 2000

STATEMENT BY TREASURY UNDER SECRETARY FOR ENFORCEMENT
JAMES E. JOHNSON
Over 27,000 firearms were reported stolen or lost from Federal Firearms Licensees (FFL) or
during shipments in 1998 and 1999. We know that stolen firearms are a significant source of
guns for criminals. Until now there has been no requirement for licensees to routinely inventory
their guns and no one has clearly been responsible for reporting losses in shipment.
That is why I am pleased that we have issued a proposed rule to require FFLs to identify and
report firearms missing from their inventory to the Bureau of Alcohol, Tobacco and Firearms
(ATF), as well as to report losses that occur in shipment.
The proposed rule will help strengthen enforcement of Federal firearms laws and reduce the
avenues in which violent criminals and juveniles acquire illegal firearms. The proposed rule was
among the recommendations accompanied by the Commerce in Firearms Report issued by
Treasury and ATF in February 2000.
- 30 LS-856

For press releases, speeches, public schedules and official biographies, call ollr 24-1lOur fax linc 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
August 29, 2000

CONTACT:

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 52-WEEK BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:

364 -Day Bill
August 31, 2000
August 30, 2001
912795HL8
5.880%

Investment Rate 1/:

6.241%

Price:

94.055

All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted
2%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type
Competitive
Noncompetitive

Tendered
$

PUBLIC SUBTOTAL

21,820,842

Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
TOTAL

21,351,249
469,593

Accepted

7,925,849
469,593
8,395,442 2/

1,610,000

23,430,842

10,005,442

3,027,445

°
26,458,287

o
$

13,032,887

Median rate
5.850%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
5.800%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio = 21,820,842 / 8,395,442 = 2.60
1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $224,988,000

http://www.publicdebt.treas.gov

LS-857

D EPA R T 1\1 E N T

0 F • T· H E

T REA SUR Y

NEWS

TREASURY

OFFlCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960

u.s. International Reserve Position

8/30/00

The Treasury Department today released U.S. reserve assets data for the week ending August 25, 2000.
As indicated in this table, U.S. reserve assets totaled $66,596 million as of August 25, 2000, up from
$66,470 million as of August 18,2000.
(in US millions)

I. Official U.S. Reserve Assets

Foreign Currency Reserves 1
a. Securities

August 25 1 2000
66,596

August 18 1 2000
66,470

TOTAL
Euro

4,677

Yen
5,971

Of which, issuer headquartered in the U. S.

Euro

TOTAL
10,647
0

4,657

19,414
0
0

7,972

Yen

TOTAL

6,041

10,69:

b. Total deposits with:
b.i. Other central banks and SIS
b.ii. Sanks headquartered in the U.S.
b.ii. Of which, banks located abroad

b.iii. Banks headquartered outside the U.S.
b. iii. Of which, banks located in the U,S.

2. IMF Reserve Position

3. Special Drawing Rights (SDRs)

4. Gold Stock

5. Other Reserve Assets

8,004

11,410

11,544

0
0

-14,9::-

10,410

10.3f': ,
,

11,046

. 1,OL:1

21 The items, "2 IMF Reserve POSItIOn" and "3 Special DraWing Rights (SDRs)," are based on data provided by the IMF and are valued In
dollar terms at the official SDRJdoliar exchange rate for the reporting date The IMF data for August 18 are final The entries In the table
above for August 25 (shown in italiCS) reflect any necessary adjustments, Including revaluation, by the U S Treasury to the prior wee,.;·s Ir.IF
data

LS-858

---

14,952

11 Includes holdings of the Treasury's Exchange StabilizatIOn Fund (ESF) and the Federal Reserve's System Open Market Account
(SOMA). valued at current market exchange rates Foreign currency holdings listed as securities reflect marked-to-market values, and
depOSits reflect carrying values

31 Gold stock is valued monthly at $42 2222 per fine troy ounce
$11,046 million.

19,51~

Values shown are as of July 31,2000. The June 30, 2000 value was

u.s. International Reserve Position (cont'd)
II. Predetermined Short-Term Drains on Foreign Currency Assets
August 18, 2000
1 Foreign currency loans and securities
2 Aggregate short and long positions in forwards and
futures In foreign currencies vis-a-vis the U.S. dollar:
2.a Short positions
2 b Long poSItions
3 Other

August 25, 2000

0
0
0

III. Contingent Short-Term Net Drains on Foreign Currency Assets
August 18, 2000

August 25, 2000

1 Contingent liabilities in foreign currency
1.a. Collateral guarantees on debt due within 1 year
1.b. Other contingent liabilities

2. Foreign currency securities with embedded options
3. Undrawn, unconditional credit lines
3.a With other central banks
3.b. With banks and other financial institutions
headquartered in the US
3. c. With banks and other financial institutions
headquartered outside the US
14 Aggregate short and long positions of options in foreign
currenCies vis-a-vis the US. dollar
4 a Short positions
4.a.1 Bought puts
4 a.2 Written calls
4.b. Long positIOns
4 b 1 Bought calls
4 b 2 Written puts

o
o

I) E P .\ l{ T 1\;1 E N T

0 F

THE

T REA SUR Y

NEWS

TREASURY

OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASmNGTON, D.C. - 20220 - (202) 622-2960

FOR IMMEDIATE RELEASE
August 31, 2000

Contact:

Bill Buck
202-622-2960

TREASURY ANNOUNCES STEPS TO INCREASE PRIVACY PROTECTIONS

The Treasury Department announced today that social security numbers will no longer be
visible through the envelope window of checks mailed to more than 14 million Social Security
and Supplemental Security Income recipients beginning with September payments.
"It is a priority at Treasury to protect personal information," said Treasury Under
Secretary Gary Gensler. "By removing social security numbers from the window of the mailings
of Social Security checks, we will help safeguard the privacy of millions of Americans"

Treasury's Financial Management Service (FMS) issues nearly 900 million payments
annually. Although most payments are now made electronically, 270 million of these payments
are still made by check.
In 1998, social security numbers were removed from view in the envelope window used
to mail Internal Revenue Service tax refund checks. Following Y2K preparations, FMS
undertook steps to conceal the numbers from remaining checks. The final phase of the project,
affecting fewer than 10 percent of Treasury check payments, will be completed next spring
Beginning in September, FMS will use the check number rather than the social security
number to identify and retrieve payments that are ineligible for delivery. During 1999, over I
million ineligible Social Security payments with a value of approximately $620 million were
removed from mailings. Pulling these checks prior to mailing eliminates inconvenience for the
recipient or family of the recipient, and avoids a time consuming and costly claims process for
recipients, banks, and the government
Treasury has conducted a nationwide effort to convert all government payments to
electronic transfer through its Electronic funds Transfer campaign. EFT 99 As a result.
approximately 70 percent of all government payments are made electronically today. Treasury
offers direct deposit as a safe and secure means of payment to individuals who maintain an
account at a financial institution.
-30-

LS-859

For press releases, speeches, public schedules and official biographies, call our 24·/wur fax line at (202) 622-2040

D EPA R T 1\1 E N T

0 F

THE

T R E

U R Y

~178~9~. . . . . . . . . . . . . . . . . . . . . ..

........................

OmCE OF PUBUC AFFAIRS -1500 PENNSYLVANlAAVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960

FOR IMMEDIATE RELEASE
August 31, 2000

STATEMENT BY TREASURY SECRETARY LAWRENCE H. SUMMERS

We welcome Mexico's announcement that it has, well ahead of schedule, fully repaid its
outstanding IMF loans of$3.2 billion. Mexico's decision reflects its strong economic
and financial performance under the policies of the Zedillo administration.
Mexico's early repayment is consistent with the reforms that we have pursued in the IMF
that are based on the fundamental premise that IMP lending should support and not
supplant access to the private capital markets.
-30-

LS - 860

For press releases, speeches, public schedules and official biographies, call our 24-1lOllr fax line at (202) 622-2040

D E

ART !\I E N T O t

T H 1::

T It E A SUR Y

NEWS

TREASURY

OFFICE OW PUBLIC AFJ'AIU -1500 HNNSl'I.VANIA. AVENlJl. N.W•• WASHINGTON. D.C ••

2:~0

COm'ACl':

P.II.

~811D. (201)

611.2"0

Office of Fi.D.az.c:~
202/691-3550

~ ~easury .il1 auc~ioD two aeri.. of ~••.ur.r billa ~o~aliDg
app~O¥;me~.ly $18,O~O '~111~ ~o ~.~ $17,65£ .illiOD of pUblicl~ h.ld
••curitie. maturiDcr Sept.mber 7, aooo, aDd to zal.. alMN\; $3" ai.l1icm of De"

caab.
%D. aMi~icm to the public bo14iDga, Federal aeserve Banks for their c:nm
&ccOUII.ta bolA $8,572 aillieD o:! i:h. ...turhg hill., which may be ra£uacled at
th~ high•• ~ 4iscoaDt r.a~e of accepted competiei. . teDders.
~t. issuea to
these acc01Ults will be ill ac1cU.ticm to the of:f~ 8IDCNDt.

T.be maturing hill. held ~ the public iDclu4e $.,283 millioD. he14
Reserve BaDk. as .gen~. for :foreign aDd international monetary
&'\atho:l:':i.t:L... up to $3,000 milliOll. o£ ~l:Le • • • •cuZ'iti•• ~ be 1!'.f1maea wit-kill
the off_riDS amouDt ~' ••ch of ~h• •~c~i~. of 13-week ~111. aDd ~6-w..k

~ reae~al

bills at the b:i.g~e.t ai.c~t rate' of accept.ed competitive teDders. Additiozaal amounts IIA.Y' be i.auK 1~ each aueticm for such. accounts to the ext:e~t
that the amount of :!law bic1a exceeds $3,DOD million.
2'r.A6UqD~r.c:t: CN.Comezo. zoequ••tecl t:Aa~ we Z'.iDv•• ~ t:heir mat:UZ'iDgo ho14in". of approximately $8'& ail110D iD~O the J.3-w.ok ~ill AD4 $773 ai.11iOD i.zlto
the 36-we_ bill.

'l'hia off8%'mg of ~"1IU%l' .ecurities ia SfoverA,.d by the ~ezaa a.nc! COIlaitiODS .at: £orth i~ the UDifo:m Offer~g C~cular for ~e Sale ana Issue of
llarlceellble Book-Imtry ftOAIINZ'Y 8i118, Rot•• , ea4 80DU (31 era .azt :a5C, ••
ameD4ed) •
n.tal1. ~~ each
of~eriuv h1gb.1igh~ ••

o£ the . . . . e~£tle. are giveA iD tAo att&cbec1

000

LS-861

HZGBLZGHTS OF ~SURY OFFERINGS OF 8rLLS
TO 8B ISSUED SEP~R 7. 2000

Augu.t 31. 2000

Offerin, AmouDt ••••••••••••••••.•••••••. $9.500 million
Desoription of Off.rin,:
Te~ .n4 type of •• ourity ••••••.•••••••• 91-day bill
CtJS1P nuznb.r •••••••••••••••••••.••••••••• 912795 mJ ,

Auotion d.t ••••••••••••••••••• ~ •••••••••
Z•• u. 4.t •••••••••••••••••••••••••••••••
•• turity dat ••••••••••••••••••••••••••••
Origin.l i.eu. d.t ••••••••••••••••••••••
CUrrently out.t:en4in' •••••••••••••••••••
.inimum bi4 amount aDd multipl••••••••••

Sept.mb.r 5,2000
S.p tember 7.2000
D.camb.r 7. 2000
D.camb.r 9,19'9
$26,385 .l11ioD
$1,000

sa.500 .lliion
112-day blll
,127'5 " ' •

September 5, 2000
September 1, 2000
llaz'oh "
2001
Sept.ab.r 1, 2000

_.-

$1,000

~h.

followinp rule. apply. to all .eouritie. mentionea above.
Submi •• ion of Sid••
monoampetitiv. bi4 •••••••••• Accept.d in full up to $~,OOO,OOO at the high•• t 4i.couat: rate of
.ccept.d oompetitiv.·bia••
eomp.tl~ive bid••••••••••••• (1) Mu.t be .apr••••a ••• 4i.oount rate with three d.aimal. ia
incrementa of .005~, e.«., 7.100%, 7.105%.
(2) Net lon, po.ition for each bidder MU.t be reporte4 when th• •u.
of the total bi4 amount, at all discount rate., ana the R.t lon,
poaitioa is $1 billion or gr••ter.
(3) Ret lon, position must b. 4.t.~in.4 a. of one half-hoar prior
to the closing tl~ for receipt of cOmpetitive tenl.ra.
Maximum ••comi •• 4 B14
at • sinlle Rate •••••••••••• 35% of publio off.ring
. . . im~ Awar4 ••••••••••••••••• ~. 35% of public offering
aeceipt of ~.nder ••
'NoncoBp.titive t.Dder ••••••••r!o~ to 12,00 Doon eastern 4~ligh~ saving ti. . on auotion 4a!
Competitive tender•••••••••• Prior to 1.00 p ••• e.stern daylight .aving time on auotion day
Payment Terms. By charge to • funds account at a reaeral a•••rve Bank on 1.8ue date, or payment
of full par amount with tender. ~r.a.uryD1r.ct customera can u •• the p~ Direct feature wblcb
authoriz.. a charve to their account of record at their financial institution on i ••ue 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
CONTACT:

FOR IMMEDIATE RELEASE
August 31, 2000

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 14-DAY BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:

14-Day Bill
September 01, 2000
September 15, 2000
912795GZ8
6.44 %

Investment Rate 1/:

6.53 %

Price:

99.750

Tendered

Competitive
Noncompetitive

TOTAL

Accepted

61,503,000

o
61,503,000

25,011,000

Median rate
6.41 %: 50% of the amount of accepted competitive tenders
was tendered at or below that rate. Low rate
6.35 %:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

61,503,000 / 25,011,000

= 2.46

1/ Equivalent coupon-issue yield.

bttp:llwww.publicdebt.treas.gov

LS-862

D EPA R T 1\1 E N T

0 F

T· H E

T REA SUR Y

1789

OmCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622·2960

September 5, 2000

u.s. International Reserve Position
The Treasury Department today released

u.s. reserve assets data for the week ending September 1,2000.

u.s.

As indicated in this table,
reserve assets totaled $66,681 million as of September 1,2000, up from
$66,586 million as of August 25, 2000.
(in US millions)

I. Official U.S. Reserve Assets

1. Foreign Currency Reserves
a. Securities

Se~tember

August 25. 2000
66,586

TOTAL
Euro

4.657

Yen
6,041

Of which, issuer headquartered in the U.S.

1.2000
66,681

TOTAL

Euro

10.698

4,650

Yen

TOTAL

6,121

10,771

b. Total deposits with:
b.l. other central banks and SIS
b.ii. Sanks headquartered In the U.S.

b.iL Of which, banks located abroad
b.iii. Banks headquartered outside the U.S.
b.iii. Of which, banks

2. IMF Reserve Position

located in the U.S.

3. Special Drawing Rights (SDRs)
4, Gold Stock

5. Other Reserve Assets

7,972

11.544

19,516

7,951

11,696

0
0
0

0
0

14,926

14,862

10,399

10,35-!

11.046

11,043

1f Indudes holdings of the Treasury's Exchange Stabilization Fund (ESF) and the Federal Reserve's System Open Market Account
(SOMA), valued at current market exchange rates. Foreign currency holdings listed as securities reflect marked-te-market values, and
deposits reflect carrying values.

21 The items, "2. IMF Reserve Position" and "3. Special Drawing Rights (SDRs): are based on data provided by the IMF and are valued in
dollar terms at the official SDRldoilar exchange rate for the reporting date. The IMF data for August 25 are final. The entries in the table
above for September 1 (shown in italics) reflect any necessary adjustments, including revaluation, by the U.S. Treasury to the prior week's
IMF data.

31 Gold stock is valued monthly at $42.2222 per fine troy ounce. Values shown are as of July 31,2000. The June 30, 2000 value was
$ 1 1,046 million.

LS-863

19,647

U.S. International Reserve Position (cont'd)
II, Predetermined Short-Term Drains on Foreign Currency Assets
August 25, 2000

1 Foreign currency loans and securities
~. Aggregate short and long positions in forwards and
futures in foreign currencies vis-a-vis the U.S. dollar.
2. B ShOlt positions
2.b Long positions

3. Other

September 1, 2000

(

o
o
o

III. Contingent Short-Term Net Drains on Foreign Currency Assets
August 25. 2000
1. Contmgent liabilities in foreign currency

September 1, 2000

1.a. Collateral guarantees on debt due within 1 year

l.b. Other oontingent liabilities

~. Foneign currency securities with embedded options
3. Undrawn, unconditional credit lines
3.8. With other central banks
3.b. With banks and other financial institutions
headquartered in the U.S.
3.c. With banks and other financial institutions
headquartered outside the U.S.

o
o

(

~. Aggregate short and long positions of options in foreign
currencies vis-a-vis the U,S. dol/ar
4.a. Short poSitions

4.a.1. Bought puts
4.a.2. Written calis
4.b. Long positions
4.b.1. Bought calls
4b.2. Written puts

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
September OS, 2000

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
September 07, 2000
December 07, 2000
912795EJ6

Term:
Issue Date:
Maturity Date:
CUSIP Number:
6.065%

High Rate:

Investment Rate 1/:

6.245%

Price:

98.467

All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted 43%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tendered

Tender Type
Competitive
Noncompetitive

26,296,999
1,229,265

27,526,264

PUBLIC SUBTOTAL
Foreign Official Refunded

Federal Reserve
Foreign Official Add-On

8,120,674 2/
1,400,000

28,926,264

9,520,674

4,453,744

6,891,409
1,229,265

400,000

SUBTOTAL

TOTAL

Accepted

33,380,008

o
$

13,974,418

Median rate
6.060%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate. Low rate
6.030%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

27,526,264 / 8,120,674

= 3.39

1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $984,335,000

http://www.publicdebt.treas.gov

LS-864

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
september OS, 2000

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182-Day Bill
September 07, 2000
March 08, 2001
912795FW6

Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:

6.030%

Investment Rate 1/:

6.305%

Price:

96.952

All noncompetitive and successful competitive bidders were awarded
securities at the high rate.
Tenders at the high discount rate were
allotted 14%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tendered

Tender Type
Competitive
Noncompetitive

19,639,924
1,162,046

20,801,970

PUBLIC SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
TOTAL

Accepted

4,929,079
1,162,046
6,091,125 2/

2,415,000

23,216,970

8,506,125

4,117,861

27,334,831

12,623,986

Median rate
6.020%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
5.980%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

= 20,801,970 / 6,091,125 = 3.42

1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $862,526,000

http://www.publicdebt.treas.gov

LS-865

PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239

Contact: Peter Hollenbach
(202) 691-3502

FOR RELEASE AT 3:00 PM
September 7, 2000

PUBLIC DEBT ANNOUNCES ACTIVITY FOR
SECURITIES IN THE STRIPS PROGRAM FOR AUGUST 2000

The Bureau of the Public Debt announced activity for the month of August 2000, of securities within the
Separate Trading of Registered Interest and Principal of Securities program (STRIPS).
Dollar Amounts in Thousands
Principal Outstanding
(Eligible Securities)

$1,985,649,456

Held in Un stripped Fonn

$1,794,045,178

Held in Stripped Form

$191,604,278

Reconstituted in August

$17,621,401

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 V of the
Monthly Statement of the Public Debt, entitled "Holdings of Treasury Securities in Stripped Form."
The Strips Table along with the new Monthly Statement of the Public Debt is available on Public Debt's
Internet site at: www.publicdebttreas.gov.Awide range of information about Public Debt and Treasury
Securities is also available at the site.
000

http://www.publicdebt.treas.gov

LS-866

TABLE V .~LOINGS OF TREASURY SECURITIES IN STRIPPED FORM, AUGUST 31, 2000

Loan Description

Treasury Bonds:
CUSIP:
912810 DM7
008
DR6
DU9
DN5
DPO
DS4
DT2
DV7
OW5
OX3
OYI
DZ8
EA2
EBO
EC8
ED6
EE4
EFI
EG9
EH7
EJ3
EKO
ELB
EM6
EN4
EP9
E07
ES3
ETt
EV6
EW4
EX2
EYO
EZ7
FAI
FB9
FE3
FFO
FG8
FJ2
FM5

Interest Rate:
11-5/8
12
10-3/4
9-3/8
11-3/4
11-1/4
10-5/8
9-7/8
9-114
7-1/4
7-112
8-3/4
8-7/8
9-1/8
9
8-7/8
8-1/8
8-1/2
8-314
8-3/4
7-7/8
8-1/8
8-118
8
7-114
7-5/B
7-1/8
6-114
7-112
7-5/8
6-718
6
6-3/4
6-112
6-5/8
6-3/8
6-1/8
5-112
5-1/4
5-1/4
6-1/8
6-1/4

Principal Amount Outstanding in Thousands

Corpus
STRIP
CUSIP

Maturity Date

912803 AB9
ADS
AG8
AJ2
912800 AA7
912803AAI
AC7
AE3
AFO
AH6
AK9
AL7
AM5
AN3
AP8
A06
AR4
AS2
ATO
AU7
AV5
AW3
AXI
AY9
Al,6
BAO
B88
BC6
B04
BE2
BF9
BG7
BH5
BJI
BK8
BL6
BM4
BP7
BV4
BWl
CG6
CH4

11/15104
5115/05
8/15/05
2115/06
11/15/14
2115/15
8/15/15
11/15/15
2115116
5/15/16
11115/16
5/15/17
8/15/17
5/15/18
11115/18
2/15/19
8/15119
2115120
5115/20
8115120
2115/21
5115121
8/15121
11115/21
8/15122
11115/22
2115123
8/15123
11/15/24
2115125
8115125
2115126
8115/26
11/15126
2115/27
8115/27
11115127
8/15128
11115128
2115/29
8/15/29
5/15130

Total Treasury Bonds .......................... ,
Treasury Inflation-Indexed Noles:
Series: Inlerest Rate:
CUSIP:
3-518
9128273A8
J
3-318
2M3
A
3-5/8
3TI
A
3-7/8
A
4Y5
4-1/4
5WB
A

912B20 BZ9
BV8
CL9
DN4
EK9

7/15102
1115/07
1115/08
1/15/09
1/15110

Totallnnation-Indexed Notes ............ ,...
Treasury Innation-Indexed Bonds:
Interest Rate:
CUSIP:
3-5/8
912810 FD5
3-7/8
FH6
Totallnnation-Indexed Bonds ........ "", ..

912803 BN2
CF8

Reconst~uted

Total
Outstanding

4115/28
4/15/29

Portion Held in
Unstripped Form

This Month

Portion Held in
Stripped Form

8,301,806
4,260,758
9,269,713
4,755,916
6,005,584
12,023,799
5,745,916
6,155,859
6,867,354
18,823,551
18,844,448
17,264,669
13,364,858
8,263,439
7,859,470
17,611,298
19,877,432
10,003,868
9,118,883
19,633,306
10,457,573
11,090,788
10,923,482
31,976,194
10,288,790
9,294,626
17,570,261
22,669,044
10,769,662
11,536,170
12,027,007
12,904,916
10,893,818
11,493,177
10,456,071
10,735,756
22,518,539
11,776,201
10,947,052
11,350,341
11,178,580
17,043,326

3,977,006
1,691,358
5,474,513
4,698,124
2,071,184
6,020,279
3,954,876
3,797,459
6,556,954
18,331,551
17,354,448
11,445,469
10,622,458
3,229,839
3,237,470
10,841,698
18,630,072
8,396,268
3,642,243
9,412,026
9,516,773
6,577,508
9,494,682
13,030,544
9,228,790
3,872,226
10,562,261
17,818,292
3,637,662
3,500,970
7,524,287
11,029,116
7,889,018
7,620,777
6,030,471
9,330,956
16,764,939
11,605,001
10,574,252
11,177,541
11,175,380
17,043,326

4,324,800
2,569,400
3,795,200
57,792
3,934,400
6,003,520
1,791,040
2,358,400
310,400
492,000
1,490,000
5,819,200
2,742,400
5,033,600
4,622,000
6,769,600
1,247,360
1,607,600
5,476,640
10,221,280
940,800
4,513,280
1,428,800
18,945,650
1,060,000
5,422,400
7,008,000
4,850,752
7,132,000
8,035,200
4,502,720
1,875,800
3,004,800
3,872,400
4,425,600
1,404,800
5,753,600
171,200
372,800
172,800
3,200
0

411,200
226,800
328,800
75,456
135,200
186,560
386,240
844,800
141,600
149,600
23,200
1,575,040
137,600
92,800
538,800
1,956,800
198,720
577,200
256,960
916,640
172,BOO
504,000
184,640
1,831,075
49,600
235,200
491,200
182,272
696,960
400,000
971,840
305,000
204,000
510,400
73,600
148,800
510,400
62,000
99,200
0
0
0

523,953,301

368,390,067

155,563,234

15,793,003

18,089,253
17,133,799
17,926,324
16,704,037
11,591,647

18,089,253
17,133,799
17,926,324
16.104,037
11,591,647

0
0
0
0
0

81,445,060

17,902,542
15,426,446

0
0

33,328,988

TABLE V .~LOINGS OF TREASURY SECURITIES IN STRIPPED FORM, AUGUST 31, 2000

loan Description

Treasury Notes:
Series: Interest Rate:
CUSIP:
4-112
AH
9128274RO
4
AJ
4T6
8-1/2
D
ZN5
5-3/4
X
3M2
4-5/8
AK
4W9
4-5/8
4X7
Al
4-112
4Z2
U
7-3/4
A
ZX3
5-318
5
3WO
5
V
5C2
4-718
W
5DO
5
5E8
X
8
B
A85
5-5/8
T
4E9
Y
5-1/4
5Hl
5-314
Z
5J7
5-1/2
AB
5L2
7-7/8
C
B92
5-1/2
AC
5P3
5-518
AD
501
5-7/8
AE
5R9
7-112
0
D25
5-718
2C5
0
6-118
R
2El
6-318
5X6
R
6-112
6A5
5
6-112
T
6B3
6-318
U
6Cl
7-112
F49
A
V
6-518
6E7
6-318
6F4
W
6-114
X
6HO
6-318
G55
B
6-1/8
6K3
Y
5-7/8
3J9
M
5-3/4
314
N
5-314
303
P
5-518
3S9
0
3V2
C
5-112
6-1/4
A
J78
5-112
3Z3
D
5-112
4B5
E
5-3/4
F
401
5-112
4H2
G
5-318
4K5
H
5-314
L83
B
5-114
4N9
J
4-1/4
4U3
K
5-7/8
N81
A
4-314
5A6
E
7-1/4
P89
B
5-114
5F5
F
7-1/4
088
C
6
G
5MO
R87
7-7/8
0
5-7/8
557
H
7-112
S86
A
6-1/2
T85
B
6-314
6D9
E
6-1/2
U83
C
5-7/8
V82
D
5-518
1N81
A
6-7/8
B
X80
7
Y55
C
6-112
Z62
D
6-1/4
2JO
B
6-5/6
2U5
C
6-118
3EO
D
B
5-112
3X8
5-5/6
4F6
C
4-3/4
4Vl
D
5-1/2
5G3
B
6
5N6
C
6-112
B
5Z1
5-3/4
6J6
C

Principal Amount Outstanding in Thousands

Corpus
STRIP
CUSIP

Maturity Date
Total
Outstanding

912820 DG9
DH7
AY3
CF2
Ol8
OM6
OP9
AZO
CPO
DRS
053
DTt
BA4
CX3
OW4
OX2
OYO
BB2
EB9
EC7
E05
BCO
EG8
EJ2
El7
EN3
EP8
E06
BD8
ES2
ETO
EU7
BE6
FU6
CC9
CE5
CH8
CKI
CN5
BF3
CS4
CU9
CW5
OA2
DC8
BGI
OE4
DJ3
BH9
DQ7
BJ5
OU8
BK2
OZ7
BlO
EE3
8M8
BN6
ER4
BPI
B09
BR7
B55
BT3
BUO
BWG
BX4
CA3
C08
CYI
OKO
OV6

9130/00
10131100
11115100

11115100
11130/00

12131100
1/31/01
2115/01
2115/01
2/28/01
3131/01
4130/01
5115/01
5115/01
5131/01
6130/01
7131/01
8/15/01
8131/01
9130/01
10131101
11/15101
11130101
12131/01
1131102
2128/02
3131102
4130/02
5115102

5131/02
6130/02
7131/02
8/15102
8131/02
9130/02
10131/02
11130102
12131102
1131/03
2115/03
2128103

3131/03
4130/03
5131/03
6130/03
8/15103
8/15103
11/15103
2115104
2115104

5/15104
5/15104
8/15104
8/15104
11115104
11115104
2115105

5/15105
5/15/05
8115105
11/15105
2115106

EAl

5/15106
7/15106
10/15106
2115107
5/15107
8/15107
2115108
5/15108
11115/08
5/15109
6/15109

EM5
FT9

6115110

2115110

Total Treasury Notes ............................
Grand Tota!. ...................................... ············ .........

...............................

Portion Held in
Unstripped Form

Portion Held in
Stripped Form

Reconstrtuled
This Month

19,268,508
20,524.986
11,519.682
16.036,088
20,157,568
19,474,772
19,777,278
11,312.802
15,367,153
19.586.630
21,605.352
21,033,523
12,398,083
12,873,752
19,885,985
19,001.309
20,541.318
12.339.185
20,118,595
18,797,828
19,196,002
24,226,102
33,504,627
31,166,321
19,381,251
16.563.375
17,237,943
17,390,900
11,714,397
14,B71 ,823
14,320,609
15,057,898
23,859,015
15,072,640
12,B06,814
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
28,011,028
19,852,263
18.625,785
12.955,077
17,823,228
14,440,372
18.925,383
13.346,467
18,089,806
14.373,760
32,658.145
13.834.754
14,739,504
28,599,001
15,002,580
15,209,920
15,513,587
16,015,475
22,740,446
22,459,675
13,103,678
13,956,186
25,636,803
13,583,412
27,190,961
25.083,125
14,794,790
27,399,894
23,355,709
12,360,035

19,245,308
20,496,986
5,968,482
16.036.088
20,157,568
19,463,572
19,777,278
6,450,402
15.367,153
19.586.630
21,579,752
21,031,923
7,412,483
12,873,752
19,785,985
18,998,109
20,084.118
8,036.785
20,118,595
18,276.868
19,196,002
20,031,222
33,504,627
31,116,721
19,381,251
16.542,575
17,235.543
17,390,900
B,503,437
14,871,823
14,320,609
15,057,898
21,081,415
15,072,640
12,768,414
11,678,084
11,843,780
11,919,633
13,100,640
22,774,435
13,626.354
14,172.092
12,573.248
13,132.243
13,125,179
27,241,428
19,852,263
18,556,985
12,716,677
17.823.228
14,297.172
18,925,383
12,148,067
18,089.806
14,370,560
32.658,145
13,511,234
14,733,504
28,599,001
15,002,580
15,043,520
15.513.267
15.720,115
22,740,446
22,459,675
13,008,990
13,810,986
25,563,203
13,581,012
27,190,961
25.046.325
14.792,390
27,399,794
23,355,709
12,360,035

23,200
28.000
5,551,200
0
0
11,200
0
4,862,400
0
0
25.600
1,600
4,985,600
0
100,000
3,200
457.200
4.302.400
0
520.960
0
4,194,880
0
49,600
0
20,800
2,400
0
3.210,960
0
0
0
2,777,600
0
38,400
59,200
276,800
132,800
0
788,256
44,000
800
0
0
1,600
769,600
0
68.800
238,400
0
143,200
0
1,198,400
0
3,200
0
323,520
6,000
0
0
166,400
320
295,360
0
0
94,688
147,200
73,600
2,400
0
36,800
2,400
100
0
0

0
0
127,200
0
0
0
0
79,200
0
0
0
0
84,350
0
0
0
0
33,600
0
0
0
4,000
0
0
0
0
0
0
106,560
0
0
0
139,200
0
0
0
0
0
0
19,968
0
0
0
0
0
32,800
0
0
8,000
0
0
0
36,000
0
0
0
67,280
0
0
0
1,600
0
5,440
0
0
17,600
41.600
17,600
0
0
6,400
0
0
0
0

1.346,922,107

1.310.881,063

36.041,044

626,396

1,985,649,456

1,794,045,178

191,604,278

17,621,401

E ~ .-\ R T \l EXT

0 F

THE

T REA S V ,~ Y

NEWS

TREASURY

OFFICE 01' PU.L1C ....•...uJlS e 1500 PENNSYLVANIA AVENUE. N.W. e WASIlViGTON, D.C.e

CONTACT:

DmARGOBI> Ulfl'D. 2,30 P .K.
September-'. 2000

un •• (281) n2·~UO

Office of Financing
202/'91-3550

The orr. .sury will auction bIo aeries of Tr....ury hills totaling
approz1mately $18,000 milliOD to ~!UDd $26,035 million of publicly held
• .curiti. . . .turiDg September 14, 2000, aDd to pay down about $8,035 milliou.
%n addition to ~e public holcli.ngs, 'ederal a.serve Banks for their own
account.s holel $13,635 millicm. o~ ~e maturing bills, which may be reftmdeci a.t
~e highest discount rata of acceptacl campatitive teDders.
Amounts i.sued
to these accounts will be in addition to the offering" amount.

Th. matur1~s ~ill. h.ld by the publiC include $6,726 million held
by l'ec1eral Iteserve BaDka as agents for foreign and. int.erna1:ional monetary
authorities. OR to $3,000 ~llion of these securities may be refunded within
tha offering amount in each of the auctions of l)-week bills and 26-week
bills at the highest di8eount rate of aceeReed campetit.ivA tender.. Additional amcu:ts may be i.sued in each auction for such accounts to the extent
that the amount of n.w ~ids axc ••48 $3,000 million.
ings

~reasuryDir.c~ auatom.r8 requastecl
o~ approximately $953 ~llion 1n~o

into

that we reinvest their maturing holdthe 13-•••k bill and $1,231 ~l~~on

26-w••k b11l..

This off.riDs of

~.a.ury

.ecurities is governed by the terms and con-

ditions set ~orth ~ the Ucifor.m Offering Circular for the Sale and Issue of
Hark.table Book-Bntzy !'reasuxy Bill., Hot•• , and Bonds (31 cn Part 356, as
amended) •

Details about: each of the
offering high1.ight••

LS-867

Attachment

.ec:urities are gi.ven in the attached..

000

HIGHLIGHTS or TREASURY OFFBRINGS OW BILLS
TO BB ISSUED 8BPTBMBBR 1t, 2000

Sept.-ber 1, 2000
Otfering Amount ••.••••.••••••••••.•.•••
Description of Otfering.
Term and type of seourity •.•••••....•.•
CUStP nUJRber •••••••.•••.••.••••.•......
Auction.date ••••••••••••••••••••••••..•
Isslle date ••••••••••••••••••••••••...•.
llatllrity date •••••••.•••••.••••••••...•
Original iaaue date ••••••••••••••.••.••
CUrrently outstanding •••' .•••••••.••••••
Minlmum bid ~unt and Dultip1es ••.•.••

$9,500 IIll11ion

$8,500 million

91-day bill
912795 Fit 2
8epteDber 11, 2000
Septeaber 14, 2000
December 14, 2000
JUne 15, 2000
811,711 Million
$1,000

182-day bill
912795 'X t
Septeaber 11. 2000
September 14, 2000
Maroh 15, 2001
SepteRber 14, 2000
,1,000

The following rules apply to all seouritiea mentioned above,
Sub.i.aion of Bid.z
MoncoMpetit~ve bids ••••••••• Acceptea in full up to $1,000,000 at the highest di.count ~ate ot
accepted oo.petitive bids.
Competitive bida •••••••••••• (1) Must be expr••••a as a disoount rate with three deci. .1s in
increments of' .005%, e.g., 7.100\, 7.105'.
(2) Ket long po.ition for each bldder .ust 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) Ret long position must be det.r.m!ned a8 of one halt-hour prior
to the closing t~e for receipt of competitive tenders.
Maximum Recognized Bid
at a Single Rat ••••••••.•••• 35\ of public offering
Maximum Award •••••••••••••.•••• 35\ of public offering
Receipt of Tenders.
loncompatitive tenders •••••• Prior to 12100 noon eastern daylight saving time on auotion day
Competitive tenders ••••••••• Prior to leOO p .•• eastern daylight saving time on auotion day
Payment Terms. By oharge to a funds account at a Pederal Reserve Bank on issue date, or payaent
of full par 'amount with tender. TreasuryDirect customers can use the Pay Direct feature which
authorizes • charge to their account of record at their financial institution on llsue date.

DEPARTlVIENT

THE

TREASURY

NEWS
omCE OF PUBLIC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASIDNGTON, D.C. - 20220 - (202) 622-2960

CONTACT:

FOR IMMEDIATE RELEASE
September l3, 2000

Bill Buck
(202) 622-2960

TREASURY CALLS FOR LARGE POSITION REPORTS
The Treasury is calling for Large Position Reports from those entities whose reportable position in the
5-3/4% Treasury Notes of August 2010 equals or exceeds $2 billion as of close of business Tuesday, September
12,2000. This call for Large Position Reports is a test. Entities with reportable positions in this note equal to or
exceeding this $2 billion threshold must report these positions to the Federal Reserve Bank of New York.
Entities with positions in this note below $2 billion are not required to file Large Position Reports. Reports,
which must include the required position and administrative information, must be received by the Securities
Reports Division of the Federal Reserve Bank of New York before noon Eastern time on Tuesday, September
19,2000. Large Position Reports may be filed by facsimile at (212) 720-5030 or delivered to the Bank at
33 Liberty Street, 1st floor.

Details on Call for Large Position Reports
Security Description:

5-3/4% Treasury Notes of August 2010, Series C-20 10

CUSIP Number:

912827 6J 6

CUSIP Number of STRIPS Principal Component:

912820 FT 9

Maturity Date:

August 15,2010

Date for Which Information Must Be Reported:

September 12,2000 as of COB

Large Position Reporting Threshold:

$2 Billion (Par Value)

Date Report Is Due:

September 19,2000, before noon Eastern time

This call for large position information is made under Treasury's large position reporting rules (17 CFR
Part 420). The notice calling for Large Position Reports is also being published in the Federal Register. This
press release and a copy of a sample Large Position Report, which appears in Appendix B of the rules at 17 CFR
Part 420, can be obtained from Treasury's automated fax system by calling (202) 622-2040 and requesting
document number 870. These documents are also available at the Bureau of the Public Debt's Internet site at the
following address: http://www.publicdebttreas.gov.
Questions about Treasury's large position reporting rules should be directed to Public Debt's Government
Securities Regulations Staff at (202) 691-3632. Questions regarding the method of submission of Large Position
Reports may be directed to the Securities Reports Division of the Federal Reserve Bank of New York at (212)
720-1449.
LS-800
Far ptt!SsrelmMs;

:Jp6e(;h~~,

public schedules and official biographies, call our 24-hour fax line at (202) 622-2040

Appendix B to Part 420 - Sample Large Position Report.
Formula for Determining a Reportable Position
($ Amounts in Millions at Par Value as of Trade Date)

Security Being Reported:
Date For Which Information is Being Reported:
1.

Net Trading Position
(Total of cash/immediate net settled positions; net when-issued positions; net forward
positions, including next day settling; net futures contracts that require delivery of
the specific security; and net holdings of STRIPS principal components of the security.)

Gross Financing Position
(Total of securities received through reverse repos (including forward settling reverse
repos), bonds borrowed, collateral for financial derivative transactions and for other
securities transactions which total may be reduced by the optional exclusion described
in § 420.2(c).)

+$- - - - - -

Net Fails Position
(Fails to receive less fails to deliver. If equal to or less than zero, report 0.)

+$- - - - - -

TOTAL REPORTABLE POSITION

=$------

$_-----

Memorandum: Report one total which includes the gross par amounts of securities delivered through repurchase
agreements, securities loaned, and as collateral for financial derivatives and other securities transactIOns. Not to be
included in item #2 (Gross Financing Position) as reported above.
$_-----

Administrative Information to be Provided in the Report

Name of Reporting Entity:
Address of Principal Place of Business:
Name and Address of the Designated Filing Entity:
Treasury Security Reported on:
CUSW Number:
Date or Dates for Which Information Is Being Reported:
Date Report Submitted:
Name and Telephone Number of Person to Contact Regarding Information Reported:
Name and Position of Authorized Individual Submitting this Report (Chief Compliance Officer; Chief Legal Officer;
Chief Financial Officer; Chief Operating Officer; Chief Executive Officer; or Managing Partner or Equivalent of the
Designated Filing Entity Authorized to Sign Such Report on Behalf of the Entity):
Statement of Certification: "By signing below, I certify that the information contained in this report with regard to the
designated filing entity is accurate and complete. Further, after reasonable inquiry and to the best of my knowledge and
belief, I certify: (i) that the information contained in this report with regard to any other aggregating entitles is accurate
and complete; and (ii) that the reporting entity, including all aggregating entities, is in compliance with the requirements
of 17 CFR Part 420."
Signature of Authorized Person Named Above:

PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239

Contact: Peter Hollenbach
(202) 219-3302

FOR IMMEDIATE RELEASE
September II, 2000

BUREAU OF THE PUBLIC DEBT AIDS SAVINGS BONDS OWNERS
AFFECTED BY WILDFIRES IN MONT ANA
The Bureau of Public Debt took action to assist victims of wildfires in Montana 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
Montana affected by the fires. These procedures will remain in effect through the end of October
2000.
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.
At this time, these counties in Montana are involved: Beaverhead, Broadwater, Carbon,
Cascade, Deer Lodge, Flathead, Gallatin, Glacier, Granite, Jefferson, Judith Basin, Lake, Lewis
and Clark, Lincoln, Madison, Meagher, Mineral, Missoula, Park, Pondera, Powell, Ravalli,
Sanders, Silver Bow, Stillwater, Sweet Grass, Teton and Wheatland and the Flathead Indian and
Blackfeet Indian reservations. Should additional areas be declared disaster areas the emergency
procedures for savings bonds owners will go into effect for those areas.
Public Debt will also expedite the replacement of bonds lost or destroyed. 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.publicdebt.treas.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, and approximate dates of issue, bond
denominations and serial numbers if available. A notary public or an officer of a financial
institution must certify the completed form. 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 "DISASTER" on the front of their envelopes,
to help expedite the processing of claims.

LS-871

000

http://www.publicdebt.treas.gov

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
September 11, 2000

CONTACT:

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182-Day Bill
September 14, 2000
March 15, 2001
912795FX4

Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:

5.955%

Investment Rate 1/:

Price:

6.226%

96.989

Tender Type
Competitive
Noncompetitive

PUBLIC SUBTOTAL

19,130,070
1,686,409

SUBTOTAL

4,160,975

1,686,409

20,816,479

5,847,384 2/

2,658,000

23,474,479

8,505,384

4,576,923

Foreign Official Refunded

Federal Reserve
Foreign Official Add-On
TOTAL

Accepted

28,051,402

13,082,307

Median rate
5.940%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate. Low rate
5.900%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio = 20,816,479 / 5,847,384 = 3.56
1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $1,308,509,000

http://www.publicdebt.treas.gov

LS-872

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
September 11, 2000

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
September 14, 2000
December 14, 2000
912795FK2

Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:

5.945%

Investment Rate 1/:

6.121%

Price:

98.497

All noncompetitive and successful competitive bidders were awarded
securities at the high rate.
Tenders at the high discount rate were
allotted 81%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type

Tendered

Competitive
Noncompetitive

23,606,244
1,291,100

24,897,344

PUBLIC SUBTOTAL

SUBTOTAL

7,704,371 2/
1,800,000

26,697,344

9,504,371

5,349,195

Federal Reserve
Foreign Official Add-On

6,413,271
1,291.100

1,800,000

Foreign Official Refunded

TOTAL

Accepted

32,046,539

14,853,566

Median rate
5.940%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate. Low rate
5.910%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

24,897,344 / 7,704,371

3.23

1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $1,032,809,000

http://www.publicdebt.treas.gov

LS-873

DEPARTMENT

THE

IREASURYi'l

TREASURY

NEW S

OFFICE OFPUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960

FOR IMMEDIATE RELEASE
September 12, 2000

STATEMENT BY TREASURY DEPUTY SECRETARY STUART E. EIZENSTAT

As part of this Administration's commitment to protect biodiversity and tropical forests around
the world, I welcome today' s completion of a debt reduction agreement and a tropical forest
conservation agreement with the Government of Bangladesh. Bangladesh is the first country to
receive debt relief under the Tropical Forest Conservation Act (TFCA).
The TFCA, which enjoys strong bipartisan support -- particularly through the leadership efforts
of Representative Portman, former Representative Hamilton, and Senators Biden and Lugar-provides eligibl~ countries the opportunity to reduce their concessional debts owed to the United
States government, and at the same time generate funds for activities to conserve tropical forests.
The debt agreement I signed with Bangladesh State Minister of Foreign Affairs Chowdhury, and
the Tropical Forest Agreement that Under Secretary of State Loy signed will allow Bangladesh
to save over 10 million in U.S. dollar payments over the next 18 years. In return for the
cancellation of this debt, Bangladesh will set aside over 8.S million (dollar equivalent) in local
currency to endow a tropical forest conservation fund.
This fund will have a Board consisting ofa U.S. government official, a Bangladeshi government
official, and three representatives from Bangladesh's civil society, including environmental
NGOs. It will use its resources to provide grants to groups with the goal of conserving
Bangladesh's tropical forests. One area that should benefit from this program is known as the
Sunderbans. It is recognized as a wetland of international importance, which contains one of the
largest mangrove forests in the world, and is the home to the world's sole genetically viable
population of about 400 Bengal tigers.
The Administration is working to extend the benefits of this environmental program to other
countries, and the President has requested $37 million in FY2001 to help accomplish this goal.
-30-

LS - 874

For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040

() EPA R T 1\ lEN T

.0· F

THE

'IREASURY ((I))

T REA SUR Y

NEW S

178~q~"IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII.

OFllCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASIUNGTON, D.C. - 20220. (202) 622.2960

u.s. International Reserve Position

09/13/00

The Treasury Department today released U.S. reserve assets data for the week ending September 8, 2000.
As indicated in this table, U.S. reserve assets totaled $64,987 million as of September 8, 2000, down from
$65,646 million as of September 1,2000.
(In US millions)

I. Official U.S. Reserve Assets

SeRtember 1. 2000

SeRtember 8. 2000

65,646

64,987

TOTAL
1. Foreign Currency Reserves 1
a. Securities
Of which, issuer headquartered in the U. S.

Euro

4,650

Yen

6,121

TOTAL

Euro

10,n1

Yen

TOTAL

4,478

6.107

10.584
0

7,666

11,669

19,335
0
0
0
0

b. Total deposits with:

b.l. Other central banks and SIS
b.ll. Banks headquartered In the U.S.
bJi. Of which, banks located abroad

b.lii. Banks headquartered outside the U.S.
bjlL Of which, banks located In the U.S.

7,951

11,696

19,647
0
0
0
0

2. IMF Reserve Position 2

13,810

13,718

3. Special Drawing Rights (SDRs) 2

10,371

10,303

14. Gold Stock 3

11,046

5. Other Reserve Assets

1/ Includes holdings of the Treasury's Exchange Stabilization Fund (ESF) and the Federal Reserve's System Open Market Account
(SOMA), valued at current market exchange rates. Foreign currency holdings listed as securities reflect marked-to-market values. and
deposits reflect carrying values.
21 The items. "2. IMF Reserve Position" and "3. Special Drawing Rights (SDRs)," are based on data provided by the IMF and are valued in
dollar terms at the official SDRldoliar exchange rate for the reporting date. The IMF data for September 1 are final. The entries in the table
above for September 8 (shown in italics) reflect any necessary adjustments, including revaluation, by the U.S. Treasury to the prior week's
IMF data.

31 Gold stock is valued monthly at 542.2222 per fine troy ounce. Values shown are as of July 31. 2000. The June 30. 2000 value was
$11,046 million.

LS-875

U.S. International Reserve Position (cont'd)
II. Predetermined Short·Term Drains on Foreign Currency Assets
September i. 2000
1. Foreign currency loans and securities
~. Aggregate short and long positions in forwards and
futures in foreign currencies vis-a-vis the U.S. dollar:
2.a. Short positions
2.b. Long positions

3. Other

September 8. 2000

o
o
o

III. Contingent Short·Term Net Drains on Foreign Currency Assets
September i. 2000

September 8. 2000

1. Contingent liabilities in foreign currency
1.a. Collateral guarantees on debt due within 1 year
1.b. Other contingent liabilities

~. Foreign currency securities with embedded options

o
o

~. Undrawn, unconditional credit lines
3.a. With other central banks
3.b. With banks and other financial institutions
headquartered in the U. S.
3.c. With banks and other financial institutions
headquartered outside the U.S.

:4. Aggregate short and long positions of options in foreign
currencies vis-a-vis the U.S. dollar
4.a. Short positions

4.a.1. Bought puts
4.a.2. Written calls
4.b. Long positions

4.b.1. Bought calls
4.b.2. Written puts

D EPA R T 1\1 E N T

TREASURY

0 F

THE

T REA SUR Y

fW} NEW S

OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960

FOR Th1MEDIATE RELEASE
September 12,2000

TREASURY DEPUTY SECRETARY STUART E. EIZENST AT
STATEMENT ON THE RELEASE OF ALLOCATION AND DISTRIBUTION
PROPOSAL IN SWISS BANK CLASS ACTION SETTLEMENT

I congratulate Special Master Judah Gribetz, as well as Judge Edward Konnan, who has
done so much to guide this settlement, and all the parties to the settlement, on taking this
important step that brings us closer to achieving a measure of justice for Holocaust victims and
their heirs.
We have reviewed the summary of Special Master Gribetz' Report. I believe the
proposed allocation and distribution plan is fair and reasonable. I hope that cooperation among
all whom have participated in this settlement will soon bring payments to the many categories of
claimants who so richly deserve to receive them.
It is clear from Mr. Gribetz's report that developing an allocation plan has not been easy.
The entire process has taken a great deal oftime and energy and has involved great care, painful
reflection, and difficult compromise. It is important to remember, however, that the hurdles we
all have surmounted to achieve agreement are pale in comparison with the fate which befell
victims, survivors, and their families.

I want also to note the positive and important roles the participating Swiss banks and
other entities have played in setting an example for the international community as we bring to a
just and dignified conclusion the unfinished business of a passing and often tragic century. The
settlement their efforts underpin has helped to shape a better, more just Europe and world for the
coming century and millennium.
-30LS-876

Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040

DEPARTMENT

THE

TREASURY

NEWS

TREASURY

OFFICE OF PUBlJC AFFAIRS .1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622-2960

FOR IMNIEDIATE RELEASE
September 13, 2000

STATEMENT BY TREASURY DEPUTY SECRETARY STUART E. EIZENSTAT

We are very pleased by the House passage today oflegislation to repeal and replace the
current FSC regime. We commend the House bipartisan leadership for their efforts on this
important legislation. We especially appreciate the bipartisan efforts of Speaker Hastert,
Minority Leader Gephardt, Chairman Archer, Ranking Member Rangel, their staffs, and the Joint
Committee staff.
This legislation reflects an extraordinary bipartisan, bicameral process to respond to the
WTO Appellate Body decision by repealing the FSC and creating a new regime that neither
entails a subsidy nor is export contingent. Enactment of this law is necessary to avoid an
immediate confrontation with the EU, to ensure that the United States is in compliance with the
WTO, and to avoid possible sanctions that would otherwise be imposed by the EU. This
legislation would ensure that no U.S. companies are disadvantaged.
We look forward to working with the Senate Finance Committee and the other members
of the Senate as we continue to move this legislation toward enactment
-30-

LS-877

For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
)

i8i

·U.S. Government Printing Office 199B· 619·559

DEPARTMENT

THE

TREAStiRY

NEWS

TREASURY

OFFICE OF PUBLIC AFFAIRS elSOO PENNSYLVANIA A"i:NtJE. N.W•• W"SHlNGTON. D.C.e 1.Q228. (102) 622·%96'0

DlBARGOEl)

~:a.

Sepcembe~

16, 2000

2:: 30 P. B.

~~:

Of~ice

of FiDADciDg
202/691-3550

The T%aasu:y will auction two seri.es of 'rrea.sw:y bi"J.ls total.iDg
$18,000 miJ.lien to refund $37,395 million of publ~cly beld
aec::uzoities maturi.:D.g September 21, 2000, r.mG. to pay QO'WD about $19.395 m:1.1J.iOll.
The amount o~ ma'ba'ing publicly held sec:w:.i..ties includes the 37 -clay ea.sb.
managemen~ biJ.ls issued August lS, 2000, in the amouDt of $21,018 mi11i~.
ap~:aKimaee~

In addition to the public holdiDgs, Federal Reserve Banks for tbeir own
accounts hold $8,811 million of ehe matur~g bills, which may be refunded at
the lUghosi; cU.scotm.t :at.e of aeeept.eci cClIIIIp8titj"ve tenders _ Amo1m.ts issued to
these accounes will. be in aGditi~ to the ofierins amouDt.
~e

maturing »111. hela

the publie include $6,003

millio~

hela

Federal Reserve BA"ks as ag~~s for fo~ei§n aDd international monetar,y
autbo:rit:.ies. trp to $3, 000 milJ.ion of these seCU2:itiea !DAY be refunded within
the offering em.oun~ :i.J::r. ecu::h. of the &ucticms of" 13-week bills &lid 26-week
~illa at the highest discount rate o~ ~ccepte4 conpetitive ~en4e:..
Additi~ amounts may be issued in each auction for such accounts to the ~eAt
that the amount of new bids exceeds $3,000 milliolL.

li:eCj[1&esteci ~t: we reinvest:. their maturing hold$907 million into tAe 13-week hi].]. anc! $846 mi11:i.cn iDto

~Elasur.YD.:i.rel;'t: cuat~a

ings of

app~ox;'!Mtely

the 26-week ))ill ..

lPhis of£ering of Treu'Q%Y securities is goveznec! Joy the te:cas and con..
.et:. £c~ 1n Che UDi£ozm Offering Cireu1ar for the Sale aDd Xssue of
Harket~le Bcok-EDtr,y ~eG4U:Y Bills, Rote., aDd Bouds (l1 CFR Part 356, as
d1~10DS

a.menGeCl) •

DetaiJ.s ~ut each of
high1ights.

~e DeW se~lti8s

are

~iven

in the attached

offer~

LS-878
000

Attachment
Fo, press reutUes, speet:h.s, public sclutlules IZlJti Dfficial biognphies, t:1I11 Dar 24-nolU' fa.x liRe At (202) 622-2()4()

HIGHLIGHTS or TREASURY OFFERINGS OF BILLS
TO BS 7SSUED SEPTEMBBR 21, 2000

September 14, ·2000
Off.r!n, Amount ••••••••••••••••••••••••• $9,500 million
»•• orletion of Offe~inq:
T.~ and type of .ecurity ••••••••••••••• 91-day bill
CUSI. number ••••••••••••••..••••••.••••• 912795 J'L 0
Auction dat ••••••••..•.••.•.•••••••.•••• Septembe~ 18,2000
Issue date •••••••••••••••••
Sept8D\ber 21, 2000
Maturity dat •••••••.•..••.••••••••.••.•• D.cember 21, 2000
f

••••••••••••

Orig1nal issu. dat •••••••••••••••••••••• JUu. 22, 2000
Curr.ntly outstanding •••••••••••.••••••• $11,602 million
Hinimum bid amount and mu1tipl.s .•.••••• $1,000

$8,500 m:l.llion
182-&;r bill
912795 I'Y 2
September 18, aooo
September 21, aooo
Haa:ch 22, 2001
September 21, 2000
$1,000

The followinr ~l.Q apply to all seouritie. mentioned abovel
submission of BidBt
NOnoompetitive bids •••••.••• ~c.»t.d in full up to $1,000,000 at the highest discount rate of
aoo.»tea oompetitive bids.
Competitive bid••••••••••••• (1) MU.t b. expressea as a dtsoount rate with three decimals in
increments of .005%, e.g., ',100%, 7.105%.
wet long poaition fo~ each bid4e~ must be r.por~ed when the sum
of the total bid amount, at all disoount rates, ana the net long
position is $1 billion or greater.
(3) Net long position muat be dete~ned a8 of one h.lf~hour prior
to the olosing time for reoeipt of competitive tenders.
(2)

Maximws aeaolnized B14
a~ a Single Rate •••••••••••• 35~ of publia offezing
Maximum Awa~4 •••.••••••••••••••• 35% of publio offering

Receipt of Tenders:
Noncompetitive tenae~a •••••• Prior to 12,00 noon eastern daylight saving time on auotion da~
Competitive tend.rs ••••••.•• Prior to 1,00 p.m. eastern daylight saving time on auotion day
Pay!!Bt W.~I By charge to a funds account at a Federal Reserve Sank on issue dat., or payment
of full par ~ouDt with tender. ~6a8ur,yDlrecb customers oan use the p~ Direot feature which
authori ••• a oharg. to their acoount of reco~ at their financial institution on issua date.

PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Pu blic Debt· Washington, DC 20239

Contact: Office of Financing
202-691-3550

FOR IMMEDIATE RELEASE
September 15,2000

TREASURY'S L~FLATION-INDEXED SECURITIES
OCTOBER REFERENCE CPI NUMBERS AND DAILY INDEX RATIOS
Public Debt announced today the reference Consumer Price Index (CPI) numbers and daily
index ratios for the month of October for the following Treasury inflation-indexed securities:
(1) 3-3/8% 10-year notes due January 15,2007
(2) 3-5/8% 5-year notes due July 15,2002
(3) 3-5/8% 10-year notes due January 15, 2008
(4) 3-5/8% 30-year bonds due April 15,2028
(5) 3-7/8% 10-year notes due January 15, 2009
(6) 3-7/8% 30-year bonds due April 15, 2029
(7) 4-114% I O-year notes due January 15,2010
This information is based on the non-seasonally adjusted U.S. City Average All Items Consumer Price
Index for All Urban Consumers (CPI-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 879. The information is also
available on the Internet at Public Debt's website (http://www.publicdebttreas.gov).
The information for November is expected to be released on October 18, 2000.
000

Attachment

18-81 9
http://www.pubJicdebt.treas.gov

:TREASURY INFLATION-INDEXED SECURITIES
Ref CPI and Index Ratios for
October 2000

Security:
Description:
CUSIP Number:
Dated Date:
Original Issue Date:
Additional Issue Date:

3-3/8% 10-Year Notes
Series A-2007
9128272M3
January 15, 1997
February 6, 1997
April is, 1997

3-518% 5-Year Notes
Series J-2002
9128273A8
July is, 1997
July 15,1997
October is, 1997

3-518% 10-Year Notes
Series A-2008
9128273T7
January is, 1998
January is, 1998
October 15, 1998

3-5/8% 30-Year Bonds
Bonds of April 2028
912810FD5
April 15, 1998
April 15, 1998
July is, 1998

Maturity Date:
Ref CPI on Dated Date:

January 15, 2007
158.43548

July 15, 2002
160.15484

January is, 2008
161.55484

April 15, 2028
161.74000

Date
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31

2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000

CPI-U (NSA) for:

Ref CPI

Index Ratio

172.60000
172.60323
172.60645
172.60968
172.61290
172.61613
172.61935
172.62258
172.62581
172.62903
172.63226
172.63548
172.63871
172.64194
172.64516
172.64839
172.65161
172.65484
172.65806
172.66129
172.66452
172.66774
172.67097
172.67419
172.67742
172.68065
172.68387
172.68710
172.69032
172.69355
172.69677

1.08940
1.08942
1.08944
1.08946
1.08948
1.08950
1.08952
1.08954
1.08957
1.08959
1.08961
1.08963
1.08965
1.08967
1.08969
1.08971
1.08973
1.08975
1.08977
1.08979
1.08981
1.08983
1.08985
1.08987
1.08989
1.08991
1.08993
1.08995
1.08997
1.08999
1.09001

1.07771
1.07773
1.07775
1.07777
1.07779
1.07781
1.07783
1.07785
1.07787
1.07789
1.07791
1.07793
1.01795
1.01797
1.07799
1.07801
1.07803
1.07805
1.07807
1.07809
1.07811
1.07813
1.07815
1.07817
1.07819
1.07821
1.07823
1.07825
1.07827
1.07829
1.07831

1.06837
1.06839
1.06841
1.06843
1.06845
1.06847
1.06849
1.06851
1.06853
1.06855
1.06857
1.06859
1.06861
1.06863
1.06865
1.06867
1.06869
1.06871
1.06873
1.06875
1.06877
1.06879
1.06881
1.06883
1.06885
1.06887
1.06889
1.06891
1.06893
1.06895
1.06897

1.06714
1.06716
1.06718
1.06720
1.06722
1.06724
1.06726
1.06728
1.06730
1.06732
1.06734
1.06736
1.06738
1.06740
1.06742
1.06744
1.06746
1.06748
1.06750
1.06752
1.06754
1.06756
1.06758
1.06760
1.06762
1.06764
1.06766
1.06766
1.06770
1.06772
1.06774

June 2000

172.3

July 2000

172.6

August 2000
--

172.7

TREASURY INFLATION-INDEXED SECURITIES
Ref CPI and Index Ratios for
October 2000

Security:
Description:
CUSIP Number:
Dated Date:
Original Issue Date:
Additional Issue Date:

3-7/8% i0-Year Notes

3-7/8% 30-Year Bonds

4-1/4% i0-Year Notes

Series A-2009
9i28274Y5
January 15, 1999
January 15, 1999
July 15, 1999

Bonds of April 2029
9i28i0FH6
Apr1115,1999
April 15, 1999
October 15, 1999

Series A-201 0
9128275W8
January 15,2000
January 18, 2000
July 15, 2000

Maturity Date:
Ref CPI on Dated Date:

January 15, 2009
164.00000

April 15, 2029
164.39333

January 15, 2010
168.24516

Date
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31

2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000

CPI-U (NSA) for:

Ref CPI

Index Ratio

1.05244
1.05246
1.05248
1.05250
1.05252
1.05254
1.05256
1.05258
1.05260
1.05262
1.05264
1.05266
1.05268
1.05269
1.05271
1.05273
1.05275
1.05277
1.05279
1.05281
1.05283
1.05285
1.05267
1.05269
1.05291
1.05293
1.05295
1.05297
1.05299
1.05301
1.05303

1.04992
1.04994
1.04996
1.04998
1.05000
1.05002
1.05004
, .05006
1.05008
1.05010
1.05012
1.05014
1.05016
1.05018
1.05020
1.05022
1.05023
1.05025
1.05027
1.05029
1.05031
1.05033
1.05035
1.05037
1.05039
1.05041
1.05043
1.05045
1.05047
1.05049
1.05051

1.02588
1.02590
1.02592
1.02594
, .02596
1.02598
1.02600
1.02602
1.02604
1.02606
1.02608
1.02609
1.02611
1.02613
1.02615
1.02617
1.02619
1.02621
1.02623
1.02625
1.02627
1.02629
1.02631
1.02632
1.02634
1.02636
1.02636
1.02640
1.02642
1.02644
1.02646

June 2000

172.3

July 2000

172.6

August 2000

172.7

D EPA R T lVI E N T

0 F

THE

T REA SUR Y

NEWS
omCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASillNGTON, D.C. - 20220 - (202) 622·2960

FOR IMMEDIATE RELEASE
September 14, 2000

STATEMENT BY TREASURY SECRETARY LAWRENCE H. SUMMERS,
CHAIRMAN OF THE PRESIDENT'S WORKING GROUP ON FINANCIAL MARKETS

I salute the leadership of Chairman Rainer and Chairman Levitt in reaching this agreement.
This agreement should make it possible for Congress to enact legislation that will maintain the
competitiveness of American financial markets, reduce systemic risk, and create much needed
legal certainty for over the counter derivatives market.
-30-

LS-880

Far press releases, speeches, public schedules and official biographies, call our 24·hour fax line at (202) 622·2040

NATIONAL CHURCH ARSON TASK FORCE
EMBARGOED UNTIL 1:30 P.M. EDT
September 15,2000

Contacts: (202) 514-2007 Justice
(202) 622-2960 Treasury

NATIONAL CHURCH ARSON TASK FORCE ISSUES FOURTH REPORT
Number of Arsons at America's Houses of Worship Continues to Decline
WASHINGTON, D.C. - The National Church Arson Task Force issued its fourth report
to the President today, highlighting statistics that indicate that the number of arsons at houses of
worship continues to decline. Task Force officials attribute their success, in part, to continued
vigilance, well-publicized arrests and ongoing prevention efforts.
In the year 1996, when the Task Force was created, there were 297 arsons, bombings or

attempted bombings at our nation's houses of worship. In 1997, that number dropped to 209
incidents; in 1998 there were 165 incidents; and in 1999 there were 140. These data represent a
53% decrease in the rate of such incidents between 1996 and 1999. This downward trend
continues into the year 2000. As of August 15,2000, there were 82 incidents.
The Task Force's arrest rate of 36.2% continues to be more than twice the national
average for arson cases. To date, 305 defendants have been convicted in connection with 224
arsons or bombings.
"Four years ago, President Clinton declared church arsons a national priority and directed
his Administration to investigate and prosecute the arsonists, rebuild burned churches and
prevent additional fires," said James E. Johnson, Under Secretary of the Treasury for
Enforcement, and co-chair ofthe Task Force. "Since 1996, the NCATF arrest rate is more than
double the national solve rate for all arsons, and more than 945 church fires have been
investigated. The investigators, prosecutors and state and local authorities should be highly
commended for their vigor and compassion in solving these horrific crimes."
"Fires may have scorched the structures, but they did not sear the spirit of the
communities in which these houses of worship are located," said Bill Lann Lee, Assistant
Attorney General for Civil Rights at the Department of Justice and co-chair ofthe Task Force.
"Nor did they deter law enforcement from investigating and prosecuting each and every one of
these incidents to the fullest extent of the law. For the Federal government, combating attacks on
America's houses of worship will remain a permanent priority."
LS-881

The Task Force's accomplislunents include:
•

opening 945 investigations into arsons, bombings, or attempted bombings that have
occurred at houses of worship between January 1, 1995 and August 15,2000, resulting in
the arrest of 431 suspects in connection with 342 ofthese investigations;

•

a 36.2 % arrest rate in Task Force arson cases - more than double the 16 % rate of arsons
in general;

•

convictions by federal, state and local prosecutors of 305 defendants in connection with
224 arsons or bombings at houses of worship.

The Task Force also reported that on July 11, 2000, Jay Scott Ballinger pleaded guilty to
setting 26 churches on fire in eight states between 1994 and 1999. Sentencing has not yet been
scheduled, but Federal prosecutors are seeking a sentence of more than 42 years in prison. This
sentence would be the longest sentence in U.S. history for a crime of church arson. The Ballinger
plea represents the largest number of fires linked to a single defendant since the Task Force was
created. Ballinger faces additional federal charges related to five church arsons in and around
Atlanta, Georgia.
The Task Force continues to work with the Civil Rights Division, U.S. Attorney's
offices, ATF, the FBI, the Community Relations Service of the Department of Justice and state
and local authorities, and to investigate and prosecute arsons at houses of worship. The
Department of Housing and Urban Development and the Federal Emergency Management
Agency also continue to assist communities affected by these fires by providing rebuilding
assistance and fire prevention information.
The Fourth Year Report is available on the internet at www.at(.treas.govlpub.
###
00-542

NEWS

TREASURY

omCE OFPUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASIDNGTON, D.C. - 20220 - (202) 622-2960

FOR IMMEDIATE RELEASE
September 15, 2000

STATEMENT BY TREASURY SECRETARY LAWRENCE H. SUMMERS

We welcome the agreement announced by the IMF today to reform and streamline its lending
instruments. This agreement is a key step toward the kind of change that we have been
advocating to modernize the IMF in line with the challenges of today IS global financial marketsso that it supports rather than supplants access to private capital markets.
Building on the decision earlier this year to eliminate four facilities, the IMF has agreed to:
•

Shorten the effective duration ofIMF core lending facilities by establishing strong
expectations of early repayment that can be extended only in exceptional circumstances.

•

Confine len9ing under the Extended Fund Facility to limited cases in support of mediumterm reforms.

•

Introduce premium pricing for borrowing beyond certain levels even under the IMF's normal
lending instruments (both Stand-by and Extended Arrangements) - broadening an incentive
mechanism begun under the Supplemental Reserve Facility and Contingent Credit Line.

•

Enhance monitoring of country policies after programs are concluded but while IMF
resources are still outstanding.

•

Strengthen the Contingent Credit Line as a mechanism for encouraging strong policies before
crises hit.

With today's announcement and other steps taken this year, we have seen dramatic progress to
equip the IMF to function in the modern world economy and global capital markets. We look
forward to reviewing this progress and discussing next steps in strengthening the international
financial system at the Annual Meetings in Prague.
-30LS - 882

Far press releases, speeches, public schedules and official biographies, call our 24.izour fax line at (202) 622-2040

DEPART~IENT

'IREASURY

THE

TREASURY

NEWS

omCE OF PUBliC AFFAIRS .1500 PENNSYLVANIA AVENUE, N.W. • WASIllNGTON, D.C. • 20220 • (202) 622-2960

FOR IMMEDIATE RELEASE
September 18, 2000

Contact: Steven Posner
(202) 622-2960

u.s., CANADA PROPOSE TAX TREATY CHANGES
The Treasury Department announced today that the United States and Canada intend to
clarify a provision of the existing u.S.-Canada Income Tax Treaty relating to the residence status
of corporations. This change has been put forward in response to attempts by some corporations
to use the provision in the current treaty to avoid taxes in a manner that was not contemplated by
either country.
The two countries have also agreed to modify the tax treaty to prevent the double taxation
of individuals in certain cases where an individual moves to the other country The two
countries agreed that this change to the treaty, as well as the clarification with respect to the
residence status of corporations, is vital to ensure that international mobility of corporations and
individuals can proceed with the appropriate tax consequences.
The announced measures will be incorporated into the treaty, which will specify that they
will apply as oftoday's date. The U.S. and Canada are continuing to negotiate over other
possible changes to the tax treaty.

Proposed Changes
Clarifying residence language
For corporations, the proposals will clarify the effects on a company's residence of "continuance"
(or "continuation") from one country into the other.
Laws in both countries allow a company incorporated in one jurisdiction to subject itself to
another jurisdiction's corporate law system. A company originally formed in a Canadian
province, for example, could continue into a U.S. state, and be treated for company law purposes
as though it had been incorporated there.
The U.S.-Canada tax treaty treats a company that continues from one country to the other as
thereafter being resident in its new home country. However, it has come to the attention of the
Canadian and U.S. tax authorities that some have asserted inconsistent positions with respect to a
U. S. corporation that has continued into Canada while retaining its status as a U S corporation

Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
'U 5 Governmenl Printing Office. 1998· 6 t 9·559

under U.S. internal law. The argument put forward is that the corporation would, by virtue of the
treaty, be a resident only of Canada, but that it would for other U. S. tax purposes retain its status
as a U.S. corporation under U.S. internal law.
The negotiators agree that it was not contemplated that the continuance provision in the current
treaty would be used to avoid taxes in this manner. Accordingly, the revised provision will
clarify that a company incorporated in one country that continues into the other will still be
treated as a resident of the first country unless that country's internal law no longer treats it as
such. For example, a U.S. corporation that continues into Canada but retains its status as a U.S.
corporation will, under the treaty, become a Canadian resident while remaining a US resident.
Such a corporation will not be entitled to any benefits under the U.S-Canada tax treaty except to
the extent agreed upon by the competent authorities of the two countries.

Preventing double taxation of individuals
For individuals, the changes will ensure the appropriate tax treatment of an emigrant's gains.
Specifically, where one country's tax rules treat an individual as having disposed of a property
immediately before the individual emigrates to the other country, the individual will be able to
choose to be treated under the other country's rules as also having disposed of and reacquired the
property at its fair market value.
In most cases, this will mean that no tax is payable in the destination country on any preemigration gain. Where tax is payable in the destination country - for example, where the
property in question is real estate situated in that country - the new rule will ensure appropriate
tax crediting.

Timing
If approved, the rule for individuals will apply to changes in residence that take place on and
after today's date. Similarly, the rule for corporations will apply to continuances effected on and
after today, although no inference is intended regarding the treatment of such transactions under
current law. These modifications will form part of a package of tax treaty changes that
negotiators expect to finalize in 200 1.
-30-

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
September 18, 2000

CONTACT:

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:

182-Day Bill
September 21, 2000
March 22, 2001
912795FY2
5.935%

Investment Rate 1/:

6.203%

Price:

97.000

Tendered

Competitive
Noncompetitive

19,019,310
1,277,985

20,297,295

PUBLIC SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
TOTAL

Accepted

5,921,045 2/

2,580,000

22,877,295

8,501,045

4,281,131

4,643,060
1,277,985

27,158,426

12,782,176

Median rate
5.920%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate. Low rate
5.900%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

20,297,295 / 5,921,045

3.43

1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $941,019,000

LS-884

http://www.publicdebt.treas.gov

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
September 18, 2000

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
September 21, 2000
December 21, 2000
912795FLO

Term:
Issue Date:
Maturity Date:
CUSIP Number:
5.960%

High Rate:

Investment Rate 1/:

Price:

6.137%

98.493

All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted 20%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)

Competitive
Noncompetitive

24,677,187
1,235,901

Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On

6,482,579
1,235,901
7,718,480 2/

25,913,088

PUBLIC SUBTOTAL

TOTAL

Accepted

Tendered

Tender Type

1. 800,000

1,800,000

27,713,088

9,518,480

4,529,661

32,242,749

o
$

14,048,141

Median rate
5.950%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
5.920%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio = 25,913,088 / 7,718,480 = 3.36
1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $997,841,000

http://www.publicdebt.treas.gov

LS-885

TREASURY

NEWS

ornCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASmNGTON, D.C .• 20220. (202) 622·2960

EMBARGOED UNTil., 10:00 AM EDT
Text as Prepared for Delivery
September 19, 2000

"MAKING THE RIGHT CHOICES FOR AMERICA'S LONG-TERM PROSPERITY"
TREASURY SECRETARY LAWRENCE H. SUMMERS REMARKS TO THE
NORTH CAROLINA DELEGATION

Let me start by thanking Representatives Clayton, Etheridge, Hayes, Jones, McIntyre, and Watt
for inviting me to talk to you today. I am pleased to have the opportunity to talk to this
distinguished group of business and community leaders.
Today I would like to take a broader perspective and focus on what the next Administration regardless of which party is in control - should do to confront the longer-term challenges facing
the American economy.
We come together at a moment of remarkable success for the American economy. But this is not
a moment for complacency. Prosperity and credibility are attributes that are rented, not owned. If
we as a country are to take maximum advantage of this moment then we must face up to the big
choices that will determine whether our long-term future will continue to be prosperous
What are those big choices? Let me focus today on three:
•

First, why it is critical that we make the right fiscal choices for the long-term health of the
economy and why that means we must continue to pay down Federal debt

•

Second, how we should respond to what is "new" about the "new economy" with an etfective
national growth strategy.

•

And third, what we can do to extend the circle of prosperity as widely as possible

The Importance of Continuing to Reduce Government Debt.

During the post-war period, the U S has made a major fiscal choice every decade or two Some
of those choices were made wisely, some less so.

L8-886

For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040

•

After World War II, we chose to redress the expansion of debt that had been used to
finance the war and to bring us out of the Great Depression. The ratio of debt to GDP fell
dramatically, helping to lay the foundation for the strong growth of the following
decades.

•

During the late 1960s we chose to finance expanded outlays on both "guns and butter"
partly by relying on budget deficits. These deficits contributed to the over-heating of the
economy which, in turn, contributed to rising inflation, higher interest rates, and a long
period of slow growth of productivity and real wages starting in the early 1970s.

•

In the 1980s we chose to increase spending significantly while cutting taxes. As a result,
real interest rates increased to record levels, the rate of net investment declined sharply,
productivity growth continued to stagnate and the stock of public debt almost quadrupled.

•

And in the 1990s, rather than continue with the policies of the 1980s we chose to move
strongly in the direction of fiscal discipline. In retrospect, that decision was a crucial
building block for the prosperity that we currently enjoy. By adopting budget discipline,
we have allowed roughly $2.5 trillion that would otherwise have been absorbed by
government borrowing to have been invested in making America's economy more
productive.

We again face major choices today, at a time when record economic strength is giving rise to
substantial budget surpluses and the reduction of national debt held by the public. The question
we face is whether to keep our country on a path toward eliminating publicly held debt, or to
devote the bulk of projected surpluses to alternate uses instead.
The advent of a new economy fundamentally changes the stakes involved in the choice of our
nation's fiscal policy. In a world that is rich with investment opportunities, and where investors
can quickly understand the implications of changes of policies five and ten years out, the
importance of running a surplus and pursuing prudent policies becomes much, much greater.
That is why we have emphasized a multi-year approach, and one that focuses on protecting the
Social Security and Medicare surpluses and paying down the debt
Like tax cuts, reducing publicly held debt also delivers substantial direct benefits to the pocket
books of American families:
•

First, because debt reduction lowers the burden of future payments of interest and
principal. For every dollar borrowed in the 10-year bond market today, taxpayers will pay
a total of$1.61 in interest and principal.

•

Second, because debt reduction helps to put downward pressure on long-term interest
rates. We estimate that, as a consequence of our new path offiscal discipline and the
resulting reduction in interest rates, a typical American family with a mortgage of
$100,000 would save around $2,000 a year on mortgage payments.

Debt reduction can provide these kinds of benefits to American families in a way that also
supports the long-term strength of our economy at a time when the return on investment is
probably greater than it has been in a very long time. The bottom line is that the more we save
through debt reduction, the more that America's businesses will be able to invest in the
technologies that will shape our future.

ll.

Pursuing the Right National Growth Strategy in the New Economy.

At the same time, we must take into account the changing nature of the American economy by
adapting the institutions of our market economy to meet the challenges of the information
revolution -- just as we re-defined these institutions for the industrial revolution more than a
century ago. And that means understanding what is new about the "new economy".
Let me outline three key strategic implications of the new economy.

First, we should invest in people through better education
The most robust empirical finding about the new economy is that the return on investment in
human capital has risen faster than the return on investment in physical capital. If investments in
factories were the most important investments in the industrial age - the most important
investments in an information age are surely investments in the human brain.
As Chairman Greenspan has so often emphasized, in such a world, goods are increasingly valued
for the knowledge that is embodied in them rather than for their physical weight Increasingly,
our economic fortunes are determined by how much we know not how much we can lift
We have an enormous opportunity now to perpetuate our prosperity in a knowledge-based
economy by increasing our investments in the users and producers of information - and the most
important contribution we can make is in education. The digital divide is a very important
problem in America. And the greatest source of the digital divide is the inability to read
•

My children are fortunate enough to attend public schools with good teachers and good
facilities. All kids should have those same opportunities They should not be in schools
where the classrooms are converted closets; where lunch begins at 945 because facilities
are inadequate to serve all kids; and where the average elementary school is now 60 years
old. That is why school construction is so high on the Administration's agenda The
President's proposal currently before Congress provides for the issuance of $24 8 billion
in tax credit bonds over two years to build or renovate up to 6,000 public schools

•

Second, we should make markets as large as possible.
It is a characteristic of the "weightless" goods of this new economy that there will often be very
high initial fixed costs and low, even zero marginal costs In the new economy industries, growth
has a greater potential to snowball. Success may have greater potential to become selfperpetuating, as growth leads to rapid declines in prices, and so to further expansion in the
market and further growth.

This reality - that growing demand and growing markets and networks will tend to reduce costs
and raise efficiency ~ makes successful economic management all the more important. It also
points up the importance of making sure that we function with as large markets as possible.
The crucial implication for those of us in government is that policies that help to expand the size
of markets in any way become that much more important. Deregulation becomes that much more
important, to ensure that government is not preventing or distorting the development of fastgrowing markets. For example, that is why we worked so hard to pass the right kind of Financial
Modernization legislation last year.

Third, we should expand the global market.
Equally important, the information technology revolution highlights the enormous benefits that
will flow from successful global economic integration. We stand at the hub of a world trading
system. And the bigger that world trading system is, the more open it is, the more we will benefit
from our position at its hub.
That is why we need to do all we can to keep our markets open, and to work to ensure that other
countries open theirs:
•

It will be crucial for the US to be a supporter of new trade agreements that is why it was
so important that we passed the Africa Growth and Opportunity Act, and the enhanced
Caribbean Basin Initiative earlier this year. And that is why it is critical that the Senate
follows the House of Representatives in enacting Permanent Normal Trading Relations
status (PNTR) with China.

•

For American global leadership to continue in this new century it will be crucial for to
maintain support for strong and effective International Financial Institutions. At a time
when only 4 percent of the world's population lives in the United States, achieving lasting
and rapid growth in American living standards has to mean supporting development and
higher living standards abroad.

•

And it will be crucial for us to be prepared to respond to new global challenges Notably:
by playing our part in funding the expanded initiative for reducing the debts of the
poorest countries; and by supporting global efforts to promote the development and
dissemination of vaccines to eradicate infectious diseases such as AIDS, malaria and
tuberculosis.

Ensuring that all Americans Benefit from Economic Growth.

Ifwe are to maximize our economy's productive potential, then it is also important that we work
towards a more inclusive prosperity within America. In an economy where for the first time jobs
are looking for people and not people for jobs, ensuring that no American is left behind is as
much an economic as a moral imperative.

It says something about the US labor market today that companies are actually hiring planes to
advertize jobs fairs in the skies over Baltimore Orioles games. It is a different world, indeed,
from the one of a decade ago, when we debated the sources and causes of what was then referred
to as "the jobless recovery." To write the next chapter of America's economic success story most
effectively, we must leverage our nation's latent potential in all neighborhoods - including in the
inner cities and rural areas.
Let me mention three ways in which this Administration is working with Congress to provide a
more inclusive prosperity that will strengthen the economy as a whole
•

First, we have proposed an initiative that would make it much easier for low-income
Americans to open basic electronic accounts. Building on the success of the Electronic
Transfer Account initiative that extended low-cost accounts to recipients of Federal benefits,
the First Accounts initiative, if funded by Congress, would invest $30 million in extending
this opportunity to low and middle-income Americans who do not receive Federal benefits.

•

Second, we have proposed an initiative that would provide incentives for businesses to invest
in our low-income and under-served communities. The New Markets initiative, which has
passed the House and is being considered in the Senate Finance Committee tomorrow, will
leverage over $20 billion of new equity investment in our underserved communities and
encourage investors to tap into the $700 billion in purchasing power that exists in America's
inner cities and rural areas

•

Through its Bank Enterprise Award program, the Treasury's Community Development
Finance Initiative Fund has granted almost $90m to the private sector that has already
leveraged more than $1.8 billion of investment and lending by banks to projects in our lowincome communities. This Fall, we are extending the scope of the BEA program to provide
incentives for banks to offer first-time accounts to customers who do not receive Federal
payments.

IV.

Conclusion.

Let me conclude by emphasizing the importance of using what is new about the new economy to
widen the circle of opportunity for everyone. Technology does provide Americans with
remarkable opportunities. But they are not there for those who lack the basic means to take
advantage of them. And it has been estimated that in America today, a child born of a single
teenage mother who did not finish high school has an 80 percent chance of living in poverty at
the age often. Male life expectancy in Washington, DC is several years below that in Mongolia
or Belarus.

If our success is to continue, if our economy is to be what it has to be, and if it is to be a secure
prosperity that we enjoy, then we as a country have to do more to ensure that all are included.
That is why expanding support for the working poor through the Earned Income Tax Credit is so
important. And that is why we need to expand programs such as Head Start and the Child Health
Insurance Program so that every child starts out in life with the core essentials.
Equally, although technology is transforming our economy and our society we need to recognize
that there are some things that many Americans would like to stay the same. As we work to build
a modem financial system we have also to ensure that every consumer's right to privacy is
properly protected. As we work to build a more global economy we have also to work to prevent
a race to a bottom in the policies and protections that matter to us. As important as new markets,
new technologies, and new global integration are, we have equally to recognize that their full
potential will not be realized without the right kind of public purpose. Thank you.
-30-

lREASURY
omCE OF PUBUC AFFAIRS -1500 PENNSYLVA'NlAAVF.N1.JE..N,W, - WASHlNGTON, D.C. - 20220 - (202) 622-2960

FOR IMMEDIATE RELASE
September 19, 2000

Contac.t: Una Gallagher
(202) 622-2960

MEDIA ADVISORY

The Treasury Department will host it's first Conference on Electronic Financial
Transactions on September 22,2000 in Washington D.C. at the International Trade Center, 1300
Pennsylvania Avenue N.W .• from 8:30 am to 3:30 pm.
The Conference will focus on developments in electronic payment systems and the public
policy and business implications resulting from the growth of e-commerce. The morning
program will concentrate on the current revolution on how businesses and consumers transact
on-line. The afternoon will be devoted to the discussion of security and privacy issues. Under
Secretary Gary Gensler will open the conference followed by an address by Deputy Secretary
Stuart Eizenstat. Panel discussion will be led by business and policy leaders including Vice
Chairman of the Federal Reserve Board, Roger Ferguson, Jr. (Agenda attached)
Media may enter through the 13 111 and Pennsylvania entrance. The conference will take
place in the Amphitheater. The lunch session will be in the Pavilion room in the International
Trade Center. If a representative from your media organization plans on attending the luncheon
session, please RSVP to Alvina McHale, Financial Management Service Public Affairs (202)
874-6604.

-30-

For jn'es$ releases, speeches, public srAedules and officia.l biographies, call our 24-hour flU line at (202) 622·2040
·U.S. GO"'l/l'lmenl Prinilng OHico: 1999·

s1~559

U.S. DEPARTMENT OF THE TREASURY
CONFERENCE ON
ELECTRONIC FINANCIAL TRANSACTIONS
Friday, September 22,2000
International Trade Center, 1300 Pennsylvania Avenue, N.W.
Washington, D.C.

AGENDA
8:00 - 8:30 a.m.

Registration and Coffee

8:30 - 9:00 a.m.

Introductory Remarks -- Gary Gensler
Under Secretary for Domesti~ Finance
Opening Address -- Deputy TreQ.sury Secl'etary Stuarl Eizenstat

The future is now at Treasury: Deputy Secretary Eizenstat will outline Treasury's innovative
developments in closed and open electronic payments systems -- e.g., using smart cards, piloting echecks -- and preview the e-Treasury of the future.
9:00 - 9:45 a.m.

Panell-Moderator:

Predictions: In Ten Years, Payments Systems Will •..
Bob Beard, CNNfn Correspondent

Bold Predictions fat the Future of C'yber Payments: A series of industry leaders will offer their

predictions of how financial transactions will be conducted a decade from now.
Featuring:
•

Governor Roger W. Fergu.fon, Jr., Vice Chairman, Board o/Governors ofthe Federal Reserve

Sysrem
•
•
•

•
•

Catherine A. Allen, CEO, Banking Industry Technology Secretatial (BITS)
Elliott McEntee, President and CEO, National Automated Clearing House Assoc. (NACHA)
Avivah Litan, Research Directot - Payments Systems, Gartner Group
Elon Musk, Founder and CEO, X Com
Daniel J. Weitzner, Director, Technology and Society Activities, World Wide Web Consortium

9:45 - 10:45 a.m.

Panel II ..~
Moderator:

Making Payments: Making Existing Credit, Debit and
ACH Systems Wo,k Bette,
Don Hammon.d, Treasury Fiscal Assistant Secretary

Recent Technological Developments Linked to Legacy Systems: Industry's best efforts with credit

and debit card technologies, electronic bill presentment and payment, and AeH.
Featuring:
• Elan Musk, Founder and CEO, X Com

•

Janet S. Crane, CEO, Billpoinl

•

Paul Walsh, CEO, Clareon Corporation
James J Condon. President (1nd CEO, CyberCash, Inc.

•

10:45 -11:00 a.m.

Coffee break

11:00 a.m. - Noon

Panel III -Moderator:

Payments: New Alternatives/at Making Cyber Payments
John D Hawke, Ir., Comptroller a/the Currency

Innovations ill the Payments Architecture: Industry efforts to introduce and broaden the utility of
new payments mechanisms and systems such as smart cards, digicash, and wireless technologies.

Featuring:
• Sami Siddiqui, CEO, Citigroup Internet Payments Company
• Chtis Jarman, Executive Vice President Mobile-Commerce, 724 Solutions
• Debbie O'Dell, Director a/Corporate Communicalions, eCash Technologies
Noon -1:30 p.m.

(By Invitation Only)
LUDch
LUhcheon Speaker: Whitfield Diffie
Introduction by:
Gregory A. Baer, Assistant Secretary,
Financial Institutions

Whitfield Diffie is the father ofpublic key cryptography, the foundation on which strangers
con securely exchange payments on open systems like the Internet.
The ability to conduct electronic fmancial transactions and much of electronic commerce continues to
depend on the ability to encrypt data reliably. Mr. Diffie will describe enabling technologies -existing and future -- and the potential threats to them.

1:30 - 2:30 p.m.

Panel IV -Moderator:

Building Trust,· Securing Electronic Payments
Gregory A. Baef} Assistant Secretary,
Financial Institutions

Moving money safely and securely. Denial of service attacks and epidemic computer viruses have
heightened awareness of the critical importance of preventing unauthorized access to computer
networks. This panel will examine real world cases; encryption, authentication, and digital
signatures; and the business case for raising security levels.

Featuring:
• John Ryan, President and CEO, Entrust Technologies
• Scott Schnell, Senior VP, RSA Security Inc.
• Warwick Ford, eTO, VeriSign
• Peter Freund, Synchrodyne Networks Inc.

2:30 - 3:30 p.m.

Panel V Moderator:

Privacy: Technology -- F,iend or Foe?
Mi~hQel Be,esik, Depu.ty Assistant Secl'etary
Financial Institutions Policy

The Pros and Cons of Technological Options/or Protecting Personal Ptivacy. Technology presents
new threats to personal privacy, but can also be used to safeguard it. Panelists will discuss
technological advances that could give consumers greater control over their online privacy, and the
public policy issues raised by these developments.
Featuring:
• Robert Lilan, Vice President & Directot, Economic Studies. The Brookings Institution
• Steve Lipner, Director, Security Policies Group, Microsoft
• Daniel J Weitzner, Director, Technology & Society Activities, World Wide Web Consortium
• Phil Zimmermann, creator, Pretty Good Privacy

TOTAL P.04

DEPARTl\'lENT

THE

TREASURY

NEWS
omCE OF PUBliC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960

September 19, 2000

u.s. International Reserve Position
The Treasury Department today released U.S. reserve assets data for the week ending September 15, 2000.
As indicated in this table, U.S. reserve assets totaled $64,456 million as of September 15, 2000, down from
$65,077 million as of September 8, 2000.
(in US millions)

Segtember 8 1 2000
65,077

I. Official U.S. Reserve Assets

TOTAL
1. Foreign Currency Reserves
a. Securities

Euro
4,478

Yen
6,107

Of which, issuer headquartered in the U. S.

Segtember 151 2000
64,456

TOTAL

Euro

10,584
0

4,439

19,335
0
0

7,591

Yen

TOTAL

6,032

10,471
0

b. Total deposits with:
b.i. Other central banks and BIS
b.ii. Banks headquartered in the U.S.
b.ii. Of which, banks located abroad
b.iii. Banks headquartered outside the U.S.
b.iii. Of which, banks located in the U.S.

7,666

11,669

11,529

19,120
0
0

0
0

13,759

13,593

3. Special Drawing Rights (SDRs) 2

10,352

10,226

4. Gold Stock

11,046

2. IMF Reserve Position

5. Other Reserve Assets

2J The items, "2. IMF Reserve Position" and "3. Special Drawing Rights (SDRs)," are based on data provided by the IMF and are valued in
dollar terms at the official SDRldoliar exchange rate for the reporting date. The IMF data for September 8 are final. The entries in the table
above for September 15 (shown in italics) reflect any necessary adjustments, including revaluation, by the U.S. Treasury to the prior week's
IMF data.
31 Gold stock is valued monthly at $42.2222 per fine troy ounce. Values shown are as of July 31,2000. The June 30, 2000 value was
$11,046 million.

LS-888

U.S. International Reserve Position (cont'd)
II. Predetermined Short-Term Drains on Foreign Currency Assets
September 15, 2000

September 8, 2000

1. Foreign currency loans and securities

(

2. Aggregate short and long positions in forwards and
futures in foreign currencies vis-a-vis the U.S. dollar:

o
o
o

2.a. Short positions
2.b. Long positions
3. Other

c
o

III. Contingent Short-Term Net Drains on Foreign Currency Assets
September 8, 2000
1. Contingent liabilities in foreign currency

September 15, 2000

1.a. Collateral guarantees on debt due within 1 year
1.b. Other contingent liabilities
2. Foreign currency securities with embedded options
3. Undrawn, unconditional credit lines

o
o

3.a. With other central banks

14.

3.b. With banks and other financial institutions
headquartered in the U.S.
3.c. With banks and other financial institutions
headquartered outside the U. S.
Aggregate short and long positions of options in foreign
currencies vis-a-vis the U.S. dollar
4.a. Short positions
4.a.1. Bought puts
4.a.2. Written calls
4.b. Long positions
4.b.1. Bought calls
4.b.2. Written puts

DEPARTMENT

THE

TREASURY

~~178~9~. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .

..............................

OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622-2960

EMBARGOED UNTIL 10:00 AM EDT
Text as Prepared for Delivery
September 20, 2000

TREASURY SECRETARY LAWRENCE H. SUMMERS REMARKS ON THE
I1\1PORTANCE OF PASSING SCHOOL CONSTRUCTION CREDITS

First of all let me thank Representative Rangel and Representative Johnson for sponsoring this
critical measure to improve the condition of America's schools. I would also like to thank the
nearly 230 Congressional co-sponsors who have treated this important legislation in the
bipartisan spirit that it deserves. Last week, the President called on Congress to fully enact his
education budget proposals. This measure is an important part of those proposals. By investing
more in our schools, we can help ensure that our children receive the high quality education that
they deserve.
As Chairman Greenspan has so often emphasized, in the new knowledge-based economy,
success depends on how much you know, not on how much you can lift. The most critical
investment we can make in the future of our economy is therefore to ensure that all our children
receive a decent education. And that, first and foremost, means investing in our schools.
There is a lot that is very hard about education policy. There are questions of figuring out what
types of courses and what types of instruction are most effective in helping children to learn
Equally, there are very important questions of standards and accountability and how teachers can
best be motivated and compensated. These are profound issues that we must all confront so that
we can maximize the quality of our educational system. While none of us can know all the
answers, it is important that we work together to reach agreement
But there are some questions where there should be no doubt whatsoever about the answer And
this legislation is an important step forward in providing the right response. If our children are
our most important resource and schools are the most important program affecting our children,
then 11 million American children should not be attending schools that lack proper ventilation
and environmental controls.
The richest, most powerful, country in the world can afford to keep all its schools in a reasonable
condition for its children. Yet today, one in three schools are in bad shape while three out of four
require some kind ofrepair. Research shows what common sense would suggest when kids are
able to learn in decent facilities that are decently maintained that show respect for what they are

1s-890
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doing, they learn much more and they learn better than children who are deprived of such basic
facilities.
At a moment when America's economy is stronger than it has ever been, American children
should not be learning their lessons in classrooms that were once closets. Nor should there be
any school in America where lunch starts at 9.45am because oflack of capacity. Schools should
not be like factories operating on multiple shifts with some kids starting their school day at 4pm.
America is better than this. We can afford to do better. We know how to fix windows in schools.
We know how to make sure that every school has the kind of facilities that are available at the
schools to which many of us here are lucky enough to send our children.
My children are fortunate in attending an excellent public school with beautiful facilities. That is
an option that should be there for every American child. And that is something we as a country
can provide for every American child if we have the will. It is also something we can surely
afford as a nation.
This legislation will provide the resources that will enable state and local authorities to improve
our education facilities by providing $24.8 billion in tax credit bonds to modernize and construct
6,000 schools across America. The President believes it is of critical importance that Congress
passes the bill. It is clear for the support of this measure that a majority of Representatives share
this sentiment. Let me finally reiterate my thanks to those of you who have provided your
support to this important legislation. I look forward to continuing to work toward passage of this
measure. Thank you.
-30-

OJ<'J<'ICE OF PUBLIC AFFAIRS. 1500 PENNSYLVANIA AVENUE, N. W.• WASHINGTON, D.C •• 20220. (202) 622-2960

EMBARGOED UNTIL 9:00 A.M.
September 20, 2000

PUBLIC CONTACT:
MEDIA CONTACT:

Office of Financing
202-691-3550
Una Gallagher
202-622-2960

TREASURY ANNOUNCES DEBT BUYBACK OPERATION
On September 21, 2000, the Treasury will buy back up to $1,500 million
par of its outstanding issues that mature between May 2017 and May 2021.
Treasury reserves the right to accept less than the announced amount~
This debt buyback (redemption) operation will be conducted by Treasury's
Fiscal Agent, the Federal Reserve Bank of New York, using its Open Market
operations system. Only institutions that the Federal Reserve Bank of New
York has approved to conduct Open Market transactions may submit offers on
behalf of themselves and their customers. Offers at the highest accepted
price for a particular issue may be accepted on a prorated basis, rounded up
to the next $100,000. As a result of this rounding, the Treasury may buy
back an amount slightly larger than the one announced above.
This debt buyback operation is governed by the terms and conditions set
forth in 31 CFR Part 375 and this announcement.
The debt buyback operation regulations are available on the Bureau of
the Public Debt's website at www.publicdebt.treas.gov.
Details about the operation and each of the eligible issues are given
in the attached highlights.
000

Attachment

LS-891

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HIGHLIGHTS OF TREASURY DEBT BUYBACK OPERATION
September 20, 2000
Par amount to be bought back •• Up to $1,500 million
Operation date •••••••••••••••• September 21, 2000
Operation close time •••••••••• 11:00 &.m. eastern daylight saving time
Settlement date ••••••••••••••• September 25, 2000
Min~ par offer amount
$100,000
Multiples of par ••••••••••••• $100,000
Format for offers
Expressed in terms of price per $100 of par with
three decimals. The first two decimals represent
fractional 32 nds of a dollar. The third decimal
represents eighths of a 32 nd of a dollar, and must
be a 0, 2, 4, or 6.
Delivery instructions ••••••••• ABA Number 021001208 FRB NYC/CUST
Treasury issues eligible for debt buyback operation (in millions):

Coupon
Rate (%)
8.750
8.875
9.125
9.000
8.875
8.125
8.500
8.750
8.750
7.875
8.125

Maturity
Date
05/15/2017
08/15/2017
05/15/2018
11/15/2018
02/15/2019
08/15/2019
02/15/2020
05/15/2020
08/15/2020
02/15/2021
05/15/2021

CUSIP
Number
912810 DY 1
912810 DZ 8
912810 EA 2
912810 EB 0
912810 EC 8
912810 ED 6
912810 EE 4
912810 EF 1
912810 EG 9
912810 EH 7
912810 EJ 3
Total

Par Amount
Outstanding*
17,265
13,365
8,263
7,859
17,611
19,877
10,004
9,119
19,633
10,458
11,091
144,545

Par Amount
Privately
Held*
14,510
11,307
7,024
7,211
15,596
17,979
8,565
7,617
17,872
9,514
9,473
126,668

Par Amount
Held as
STRIPS**
5,841
2,450
4,901
4,581
6,176
1,272
1,565
5,427
10,474
867
4,338
47,892

* Par amounts are as of September 19, 2000.
** Par amounts are as of September 18, 2000.
The difference between the par amount outstanding and the par amount
privately held is the par amount of those issues held by the Federal
Reserve System.

DEPARTMENT

THE

TREASURY

NEWS

OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622·2960

FOR IMMEDIATE RELEASE
Text as Prepared for Delivery
September 20, 2000

"RISING TO THE CHALLENGE OF GLOBAL ECONOMIC INTEGRATION"
TREASURY SECRETARY LAWRENCE H. SUMMERS REMARKS TO THE
SCHOOL FOR ADVANCED INTERNATIONAL STUDIES
WASHINGTON, DC

We meet on the eve of the Annual Meetings of the World Bank and International Monetary Fund
in Prague. In days gone by, these meetings were veiled in technocratic mystery, and few cared to
look behind that veil. Today, they attract more attention, and rightly so. For, if successful
economic integration between industrial and developing countries is the framing challenge of our
time, then the institutions and policies being discussed in Prague will be at the very forefront of
meeting that goal.
Against this backdrop, let me reflect today on the historic opportunity that globalization presents,
and the implications for the international community as it considers how best to make economic
integration succeed.

Globalization: the Promise and the Challenge

In considering these issues it is important to begin in the right place. It has been a touchstone of
the Clinton Administration since its earliest days that globalization is happening, and that it
offers limitless potential for raising the living standards and quality of life of every American
and the global population as a whole. But we have also stressed that making economic
integration work means making it work for people. In that sense, the question is not whether we
should welcome the emergence of a truly global market economy -- but what kind of global
market economy we should work to build
Today, 1.3 billion people are living on less than a dollar a day. It is a crucial lesson of history
that that number will not decline without rapid growth in the economies of which they are a part
-- and they will not enjoy rapid growth without joining the global market. No country has lifted
itself out of poverty in the past 50 years without substantial growth in exports, supported by
integration with the global economy and coming to accept the norms of the global marketplace.

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In that sense, the rising divergence in national incomes that we see today is not because more
countries are integrating themselves with the global economy; it is because so many countries are
not. But history has also shown that support for globalization need not and must not mean
support for globalization willy-nilly.
th

We discovered in the United States in the 19 century that the invisible hand of economic
integration and markets needs a firm skeleton of rules and institutions to succeed. The spread of
capitalism needs to be tempered by public purpose: by policies to make the process work for all
of our people and by institutions and agreements that can give businesses and people a clear
framework in which to operate. And as we are learning, the same must be true at the global level.
It is too easy to frame the false choice as one between unfettered, unregulated global capitalism,
on the one hand -- and autarky and protectionism on the other. The reality is brighter, but also
more complicated. Ifwe want a vibrant, more truly inclusive global economy there is no
alternative, for individual governments or for the international community, to finding some way
in between these two extremes. There is no alternative to the pursuit of policies and institutions
that will make globalization work, and will make it work for people.
As we have stressed time and again, this challenge is first and foremost a national challenge for
countries. But increasingly, building the right kind of integrated global economy will also
depend on the success of the international community in developing the right broader
institutional framework in which global integration can take place.
Let me emphasize two crucial aspects of this global challenge: maintaining a strong and stable
flow of capital to the developing economies; and ensuring effective support for development in
the poorest countries.

TI.

Ensuring a Strong and Stable Flow of Global Capital

A well-functioning system for ensuring a strong and stable flow of capital to the developing
economies will be a very important part of building a successful, truly global, economy. Access
to global capital helps to finance trade. It is a vehicle for new technology, and a creator of new
economic opportunities. What it must not be, in a more integrated global system, is a specter
over the lives of the world's poor.
Both the economic and the humanitarian imperatives of a stronger international financial
architecture were brought out very clearly in the recent financial crises in Asia and elsewhere In
that period, in very different parts of the world, millions of people who were just going about
their business had their lives turned upside down -- because their countries' financial systems had
been thrown into crisis. As a result, many now have an entirely reasonable conviction that
millions of people should not have to live in fear of typhoons of man's own making
The international community must work to provide maximum assurance that such crises will be
less frequent -- and less costly -- in the future And that, in turn, means having a clear
understanding of what has caused them in the past.

There is now widespread agreement that the financial crises of 1997-9 were caused by two
elements coming together. First, weakness in the fundamentals -- such as a questionable banking
system, a domestic credit bubble supported by large amounts short-term external debt, an
unsustainable exchange rate, or a deteriorating fiscal position -- coupled with a reassessment of
the country's capacity to safely absorb foreign capital. And second, an element of panic, whereby
the mode of domestic and foreign investors shifted from thinking about the economic health of
the country to thinking about who would be the last out.
This understanding of the crisis is increasingly informing the reform of the international financial
architecture. This shows itself in three fundamental ways:

•

More effective means ofpreventing crises, through stronger surveillance, more focused on
preventing the policies that enabled a panic in financial markets to have such effects. These
include: a revolution in transparency that will make surprises less likely; the development of
a wide-ranging framework of international codes and standards to provide benchmarks for
national policies in areas such as bank supervision and securities market regulation; and more
systematic incorporation of indicators ofliquidity and balance sheet risks in Th1F surveillance
reports.

•

Safer poliCies in the emerging market economies, as global understanding and surveillance of
economic risks has increased. Notably: the ratio of external debt to foreign reserves has more
than halved since 1996 in countries that have experienced liquidity crises; short-term debt as
a share of total external debt, among the same group of countries, has fallen from 34 percent
in 1996 to 18 percent in 1999; and some fourteen countries have moved away from unstable
pegged exchange rate systems.

•

An IMF that is better-equippedfor modern crisis response: with the creation of the
Supplemental Reserve Facility and the Contingent Credit Line, and last week's important
Th1F Board agreement on the reform ofIMF facilities, the IMF now has tools that are a match
for the new kind of crises -- but will not, as far as possible, distort the incentives of investors
and governments. The IMF is increasingly oriented toward the provision of short-term,
emergency finance, priced to discourage casual use, and encourage rapid repayment.

Movingforward, let me highlight three isslies that mllst be at the frontier of architectural reform
ill Prague and beyond:
•

First, having moved to reform both the nature of IMF surveillance and its finance, it will be
appropriate to consider the nature of its programs, with a careful review of IMF
conditionality at times of crisis. There are two issues here that are important. The first is the
scope of conditionality -- the scale of our ambition with respect to the areas of policy that
might be included in official programs. The right principle here is easy to state but hard to
apply: it is necessary to include every condition that is essential to restoring confidence, and
necessary not to include what is non-essential. The second issue is the right design of
programs: the substance of the policies adopted in each case, be it the scope for fiscal
stimulus, and the speed with which governments recapitalize the banking system

•

Second, we need to work to deepen connections and involvement between the public sector
and the private sector in this area: notably by increasing the IMF's knowledge of financial
markets~ by increasing the transparency of actions by the IMF and official sector; by
improving means of communication between borrowing countries and their creditors; and by
building on the experience gained in recent cases of debt restructuring -- the case law that has
been developed with respect to private sector involvement in crisis resolution -- with a view
to making the broad guidelines outlined by the G7 earlier this year more fully operational.

•

Third, we need to address more fully the question of financial support recovery programs at a
time of financial crises. The Multilateral Development Banks need to have the capacity to
provide finance in such circumstances: to help cushion the fiscal impact that is often a
necessary element of economic stabilization; to help underpin social programs and protect
the most vulnerable in society~ and to support financial sector recapitalization and
restructuring. To this end, we believe that the MDBs should be considering how to expand
the use of the emergency financial vehicles that they now have in place, and of the pilot
programs they have introduced to make more innovative use of guarantees in support of
policy reforms in emerging market economies.

ID.

Economic Inclusion and Stronger Support for the Poorest Countries

Those who say that the global development effort has failed are badly wrong: in the past two
decades, more people have been lifted out of poverty in China and other parts of Asia than at any
time in world history. And babies born in the developing world today, on average, will live 20
years longer than those born in 1960 -- and are half as likely to die before their fifth birthday.
At the same time, it must today be acknowledged that in too many countries, particularly in SubSaharan Africa, the global development effort has not succeeded. Per capita incomes in Africa in
the late 1990s were lower than they were thirty years ago. Average incomes for a region of600
million are now only 65 cents a day. And across large parts of the continent, children are more
likely to die before their first birthday than to learn to read.
In principle, the "new economy" holds out enormous potential for accelerating the convergence
of the poorest countries, many of which have suffered from natural disadvantages as well as
longstanding policy failures. Information technology could help isolated nations in Africa and
elsewhere overcome the barriers of time and space in competing in global markets; and advances
in biotechnology could help defeat the scourge of infectious disease. But when half of the
world's population has yet to use a telephone, and 40 percent of African adults cannot read, there
is perhaps an equal chance that technology will speed further divergence. We will not see that
more inclusive outcome without concerted public action
With the HIPC debt relief initiative for the poorest countries, and with the focus at the Okinawa
Summit on the development challenge and the role of information technology, the challenge of
integrating the poorest countries into the world economy has begun to receive the kind of
attention that it requires. Issues relating to the poorest countries will be very much a focus of
international financial discussions at Prague and beyond. Let me highlight three priorities that
seem to us to be especially important.

First, maximizing the effectiveness of the HIPC initiative
In the period since the Cologne Summit, the enhanced HIPC initiative to relieve the debt of these
nations has made major progress. But the job is far from over.
Specifically:
We must strengthen international agreement on clear and achievable conditions for the provision
of debt relief, to ensure that funds are provided as rapidly as possible, while ensuring there are
strong safeguards to maximize the chances of success. In that context we support the goal of 20
countries qualifying for the enhanced HIPC program, in accordance with the commitments made
in Cologne and Okinawa, by the end of the year. And we expect that goal to be met.
At the same time, the true measure of the success of HIPC will not simply be whether a country
has received relief, but how those resources are used, and whether the reforms that accompany
RIPC are able to deliver durable poverty reduction and growth. In support of this more
fundamental challenge, we urge the World Bank to move quickly to put in place a new lending
instrument for providing concessional assistance to the poorest countries -- parallel to the IMF's
new Poverty Reduction and Growth Facility -- that will help provide an effective World Bank
vehicle for the priority social and structural conditions embodied in HIPe.
Perhaps most important, we believe that we need to take steps to ensure that countries that
receive debt reduction do not get themselves into the same problem all over again. For this to be
achieved, it is crucial that all of the IFIs get out of the business of defensive lending -- of
providing assistance to countries simply in order that past official loans can be repaid. And that,
in tum, requires that they be much more selective, for an appropriate period, about providing
non-concessionallending to countries that have been recipients ofHIPC relief. In this context we
believe that we should agree on substantially increasing the World Bank's grant capacity in IDA
for appropriate poor country cases.
Of course, none of this is possible without the necessary resources. It must be cause for great
concern today that delays in US funding have already caused the program to stall, denying
finance, today, to countries like Bolivia and Honduras. Let me once again urge Congress to
approve the President's pending requests for HIPC funding and authorization now so that HIPC
can go forward.

Second, increased support for the provision of global Pllblie goods
If there is a dark side of integration, then it is the broad class of cross-border problems that defy
solution by individual governments and markets. Whether it is money laundering and financial
crime, global warming, new killer diseases, or reductions in global bio-diversity - the solutions to
these problems will be global public goods, requiring concerted global cooperation.
Many of these problems pose a particularly great threat to the poorest countries -- and are thus an
especially fruitful area for the World Barik to expand its work. We have had enough successes,

with the Consultative Group on International Agricultural Research (CGIAR) and the Green
Revolution, the campaign to defeat river blindness in Africa, and the eradication of smallpox, to
show that global public goods can be provided. But if the potential of modern science is to be
realized, we will need global public institutions and actions of a kind very ditTerent from the
standard country-by-country programs to which we have all become accustomed.
This is the animating idea behind President Clinton's Millennial Vaccines Initiative, with its
emphasis on creating market incentives for the development of vaccines against the small
number of diseases that account for more than a million fatalities each year, and on expanding
the capacity to disseminate vaccines that already exist, notably through the Global Alliance for
Vaccines and Immunization (GAVI). But vaccines are only one area. Agricultural, educational
and environmental research are just some of the others.
As always, in the provision of public goods, financing will be a major challenge. In this context I
salute the President of the World Bank, James Wolfensohn's commitment to assure that no well
designed mV/AIDS program in sub-Saharan Africa will go unfunded. What is crucial is that the
Bank's shareholders must work to ensure it has the capacity to back up that pledge.
Specifically, while the World Bank's regular lending can continue to address Global Public
Goods at the country level, the Development Grant Facility (DGF) already complements country
lending with grant support for institutions uniquely positioned to contribute in this area, such as
GAVI and CGIAR. We believe that the World Bank should support a multi-year program of
significantly increased DGF funding targeted for global public goods in the areas of infectious
disease prevention, environmental protection and agricultural research.
Third, and more broadly, the world is going to have to do more.
Too often, in recent years, the debate about international development assistance has been
paralyzed by a stand otT between two extreme views:
•

First, that all that stands between the poorest countries and rapid economic growth is
inadequate international financial support.

•

Second, that their economic failures stem only from a lack of commitment and reform in the
countries themselves - a failing that no amount of external support will fix.

It is time that we recognized that both views are right - and both views are wrong. On the one
hand, no country will succeed without the right policies in place. Tempting as it is to believe that
just providing support to governments and letting them use it as they see fit is enough, the
overwhelming lesson of history is that it isn't so. All too often, natural resource windfalls have
flowed into palaces and numbered bank accounts, producing little or no tangible benefit for a
nation's people. Support needs to be targeted to countries and policies with a proven capacity to
deliver results, and that conditions are appropriate when assistance is provided.

At the same time, those who preach self-reliance need to recognize that the most committed
governments in the poorest countries today face problems that they will not come close to

addressing without major outside support. And we all must face up to the fact that there are high
return investments in growth and poverty reduction that are not being pursued in the poorest
countries today, at tremendous human and economic cost, because of alack of official resources
At a time of unprecedented economic prosperity, we recognize that this is a challenge that the
world's richest country has a particular responsibility to confront. Strong support for
development and for international development institutions has been central to a vision of closer
integration of nations and shared global prosperity upon which United States foreign and
economic policy has been based for the bulk of our postwar history. We neglect the long-term
benefits of maintaining that commitment at our peril. Thank you.
-30-

EPA R T 1\1 E N T

0 F

THE

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September 20,2000

Contact: Una Gallagher
(202) 622-2960

REMARKS BY TREASURY ASSISTANT SECRETARY GREGORY A. BAER
BEFORE THE EXCHEQUER CLUB
WASHINGTON, D.C.
I appreciate the opportunity to appear today before the Exchequer Club.
I wanted to begin today by talking about the recently enacted digital signature legislation
and what it means for the financial services industry. I'll then talk about how
developments in the broader world of information technology will only increase the
pressure on the financial services industry, and particularly the banking industry, to use
this authority to develop new mechanisms for the delivery of payments and other
financial services. Finally, I'll highlight some of the challenges these developments will
present to government policymakers.
The ESIGN Commerce Act
That Electronic Signatures in Global and National Commerce Act represents not only a
mighty struggle by its drafters to achieve the acronym "ESIGN" but, more importantly,
an important, even transcendent, piece of legislation for the world of e-commerce in
general and the world of e-finance in particular.
Anyone who doubts the impact of the ESIGN Commerce Act needs only to venture
outside the Beltway, either physically or digitally. Digitally, I was listening the other day
to an analyst call for a major on-line financial institution. The first question from the
analysts was whether the projected cost savings for the institution included savings from
enactment of the ESIGN Commerce Act - the answer was not yet, but that such savings
would be substantial. Indeed, it is uncanny how over the summer people inside the
Beltway offering up congratulations on passing a "good bill" were generally referring to
Glass-Steagall reform; outside the Beltway, the reference was almost invariably to the
ESIGN Act.
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•
·U.S. Government Printing Office: 1998 - 619-559

Why has this legislation failed to generate the media and political attention of its
predecessor? I think that it is equal parts the incredible complexity of the bill, the fact
that it started out as narrower legislation and broadened relatively late in the process, and
finally the fact that it worked its way through Congress in one session, which is a blink of
the eye for financial services legislation.
In some ways, the ESIGN Act is relatively easy to summarize: it generally preempts any
federal or state law that requires contracts to be in paper (as opposed to electronic) form,
as well as any law requiring that paper notices be provided or paper records maintained.
In short, whether two parties wish to transact business in person or on-line is generally up
to them.
Solely by lifting the cloud on the validity of electronic contracts, the bill is vitalizing an
industry dedicated to using digital signatures to allow reliable on-line contracting. For
the uninitiated, a digital signature is a method of encrypting data with sufficient
robustness that each party can be confident of the document's accuracy and integrity and
not fear repudiation by the other party. Some companies already have products lined up
to go into effect on October 2, the day after the law becomes effective.
For the financial services industry, however, the records and notice provisions could
ultimately be more important. Warehouses that currently hold paper copies of mortgages,
for example, can now be replaced with servers the size of your stereo. Mailrooms that
send out thousands of monthly notices can be replaced, as those notices instead are put up
on secure websites, with customers notified bye-mail of their arrival.
In the course of negotiating this bill, the Administration had significant concerns about
how this new authority would affect consumers; particularly those who are less
sophisticated in the on-line world. We were very pleased that the Conference Committee
recognized these concerns, and produced a bill that should protect consumers on-line as
well as off-line. Most importantly, the Act requires that consumers affirmatively consent
to the use of electronic notices, records, and contracts, and that prior to obtaining
consumer consent, the business verify that the consumer will be able to access
electronically the information they will be provided. All of us who have received e-mails
with unreadable attachments marked by big black and yellow question marks know the
importance of this requirement.
From a distance, the ESIGN Act can be seen as the continuation of a trend toward
individual choice in financial products - whether that is individual businesses or
individual consumers. Consumers, for example, not long ago placed their idle funds in
deposits that earned a govemment-fixed interest rate, and bought stock at fixed
commissions from a full-service broker. Today, the individual has the power to search
easily for higher deposit yields, purchase stock at discount commissions, obtain the same
company disclosures at the same time as analysts, and participate in IPOs.
The ESIGN Act will only speed this process by removing legal impediments to real-time,
on-line transactions. The ESIGN Commerce Act is only a beginning however. For

financial service providers, it is akin to an on-line driver's license: it gives them the legal
right to drive, but it won't steer for them, and it won't insure them against loss if they
crash. The stakes for navigating this road are very large. More work by the States and
the courts will be necessary to provide a complete legal landscape. And however well
crafted, the ESIGN Act is only a governmental wave at a fast-moving parade of changes
in the on-line marketplace.
The Broader Environment
Indeed, changes in the broader marketplace will also put pressure on the financial
services industry to provide payment options that match how consumers wish to do
business. Much has been written over the past year about the challenges its business
model poses to copyright in the recording industry and probably next the motion picture
industry. Ultimately, what may be more significant is the release of programs like
Gnutella, which allow file sharing by any two persons with a computer. Unlike web sites
where users can share files, Gnutella is a program that allows such file sharing without
the need for a central, indexed database. It also means that in the world of copyright~
there is no ready target to sue for infringement. Although its main use may currently be
the distribution of pornography, the potential for expansion is profound. As one observer
recently noted with respect to all these technology, it is not enough to ask whether the
genie is out of the bottle: the real question is whether there is even a bottle anymore.
The results of these technologies will be dramatic for our society. For those who earn a
living by creating or distributing such content, the challenge is great, but not insuperable.
As Internet observer John Perry Barlow recently observed, even in a world without
intellectual property rights, content creators can still make a living - but only if they are
able to provide the product quickly and cheaply, and to build a relationship or brand
around that product.
Lest you think I've strayed too far from the financial service realm, I think the
implications for banking are important. Although technology allows two people to meet
on-line, contract on-line, get to know each other on-line, and trade information on-line,
they currently cannot pay each other on-line without involving at least one, and generally
at least two, other parties: their respective banks. One of the last great advantages of the
banking system is its truly unique role in the payment system.
Thus, I personally believe we will soon see a world of small payments for goods, and
eventually a world of micropayments for services and content, where people daily
purchase the intellectual property of others for small amounts of money. Once
micropayments catch on, I would suspect that many - including me - would even prefer
to pay small amounts for access to portals and other currently "free" sites, if in exchange
we could avoid some advertisements and other solicitations. Already, various forms of
such payments are being developed: the use of electronic checks that clear through the
Automated Clearing House Network, the use of ATM networks, the development of
digital cash. As we have already seen with various on-line rewards and gift certificate

programs, and with all the new places to earn and spend frequent flyer miles, such
currencies need not be backed by a government.
Of course, the on-line payments market is currently dominated by the credit card industry
- albeit an industry whose predominant players are owned by the banking industry.
Although some talk of the advantages that credit cards provide in terms of ease of use,
speed of processing, and interest float to the user who pays on time, I believe that the
ubiquity of credit cards as an on-line payment mechanism is largely attributable to
another factor: the contractual right to "charge back" purchases and retain one's funds
during any dispute with a merchant, leaving the burden of proof on the merchant in such
a dispute. While debit card users also have the right to charge back, the funds have
already been removed from the account. Thus, with consumers increasingly dealing with
merchants they do not know and have no reason to trust, this feature of credit cards has
become highly prized, and is why merchants are willing to pay relatively high
interchange costs.
The ability of credit card companies to offer this feature - which really boils down to
insurance against merchant fraud or insolvency-- stems from their considerable scale and
substantial investments in security. These advantages will be difficult to replicate, and
will likely mean that credit cards remain the payment mechanism of choice for major
purchases for the near future. But when the price of the good or service is in the pennies
or fractions of pennies, speed and cost will be far more important than the trivial risk of
non-performance. Neither consumer nor business will be prepared to pay high
interchange costs for additional security in a transaction worth a penny. Thus,
competition should be keen.
So, too, will the desire of banks to leverage this relationship with customers -- to avoid
commoditization of their products by branding and building relationships. The real
question, though, is whether the banking industry will innovate with sufficient speed to
leverage its advantages. Progress has been mixed. A few banks have individually or
collectively entered into the digital authentication business, but not many. According to
recent reports, there is only one bank currently offering special content to broadband
users. There is only one large bank offering the aggregation services that have become
prized by many consumers. And then of course there is the acid test: how many of you
have your bank's web site as your home page? So, the competitive landscape is still wide
open. Consumers should benefit either way.
The Role of Government
Finally, let me note that a world of electronic payments and even micropayments will
present significant challenges to government. I will leave to another day issues of money
laundering, taxation, and monetary policy. Two issues that we are already confronting
are the authorization of new activities and the threat to information security.
First, the connectivity of the Internet will inevitably make decisions about which
activities are financial in nature or incidental thereto extremely difficult. Under the

higher standard of "business of banking," the Comptroller has already approved
authenticating digital signatures and operating a virtual mall as a "finder." The Federal
Reserve, with Treasury's support, is seeking comment on whether acting as a finder
should be permitted for bank affiliates. These decisions are difficult. One would
certainly be surprised to walk into a bank branch and see a wall of books for sale, or a
florist, but seeing links to those same companies on a bank web site has a very different
feel.
A second issue to which my office has devoted considerable resources is information
security, also known as computer network defense, also known as critical infrastructure
defense. Put simply, during past conflicts, we never had to be concerned that our
enemies would send bank robbers into branches all across America, or send paratroopers
onto the floor of the exchanges. By virtue of two large oceans and a diversified financial
and physical infrastructure, United States infrastructure has been relatively immune to
attack since the War of 1812.
We are immune no longer. Information warfare directed to civilian infrastructure is quite
likely to be an important part of future conflicts, and financial infrastructure would likely
be among the first targets. When one considers the damage done by relatively benign
viruses such as I love You and Melissa, one can imagine the potential for harm from an
organized group bent on true destruction.
Accordingly, we at Treasury are working closely with the financial services industry, the
National Security Council, and others to do everything we can to identify vulnerabilities
in the system and take steps to cover them. I am pleased to say that an industry that was
already the most advanced of any in this area has received this attention with enthusiasm.
Most notably, the financial services industry has formed a computer defense center, the
FS/ISAC (for "Financial Services Information Sharing and Analysis Center"), a nonprofit LLC where industry participants can anonymously share real-time information
about cyber threats. The FS/ISAC currently includes thirty-three of the largest firms in
the Nation, and we hope that additional firms will choose to join.
Innovative solutions like this one will be necessary as government adapts to an
increasingly dynamic financial services industry. And the challenges are only beginning.
With that in mind, I'll mention a conference that Treasury is hosting this Friday on
electronic payments and the public policy issues they raise. We'll be hearing from the
leaders of the industry as well as leading thinkers on security and privacy issues. All but
the lunch is open to the public, and for those who can't make it, you can watch it the
following week on my office's website at http://www.treas.gov/ofi/index.htm. The
agenda is posted there now if you're curious.
One final item before I conclude. In the final days of this Congress, we have another
chance to make a difference and pass legislation that will modernize our laws and
regulations relating to OTC derivatives. For the first time, the members of the President's
Working Group on the Financial Markets reached agreement on a set of unanimous
recommendations designed to reform the legal and regulatory framework for the OTC

derivatives markets. The measures advocated by the Working Group would provide
much-needed legal certainty for OTC derivatives. Those recommendations formed the
basis of legislation that has now passed all of the relevant committees in both the House
and the Senate.
Congress should finalize this legislation before the end of this session. The primary
obstacle to moving this legislation forward has been the issue of single stock futures, an
issue that has divided the CFTC and the SEC for eighteen years. Last Thursday, we were
very pleased to announce that the two agencies had reached an historic agreement that
would allow the trading of single stock futures for the first time. The agreement provides
a shared regulatory framework for futures on single stocks and narrow-based indices. It
also provides a clear dividing line between these instruments, which will largely be
treated as securities, and futures on broad-based indices, which will be subject only to
CFTC regulation. There is now truly no reason to delay.
# 30 #

DEPARTMENT

THE

TREASURY

NEWS

TREASURY

OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W. • WASHINGTON, D.C .• 20220. (202) 622-2960

DlBARGOED mI'l':r.L 2: 30 P. H.
Septsmber 20, lOOO

CONTACT:

Office of Financing
202/691-3550

TREASORY TO AtJc:"l':ION $10, 000 M:rLLl:0l5l OF 2 - YEAR NOTES
'l'b8 Treasury wil.l. auctiOD $1.0,000 m:il.llcm of ~-yoar notes ~o :ref'Wld '$~a, 005
million of publ.icl.y hel.d securi.ties IDAturiDg September 30, 2000, and to PAY d.owD
a.eout $1.8, 005 milll~.

in addition to the ~ublic holdings, Federal Reaerve BankA hold $3,275 million
of the m&tur~ sec:urities for their own accounts, whic:b may b8 refunded by issuing
an &dcii.tio:3.&l ~t of the new security.

The maturing securities held by the public inclucle $8,8S4 million held :by
Feder&l Reserve Banks as agents for foreign and intarnatioual moneta.y ~thoriti.s.
Amow:l.ts bid for tlwae accounts by Federal RaIlCJrV6 Banks will be added to the
offering.
~.rea.suryDirece customerll :r.quested that we ~vallt their ZllAturiDg holdings
of approximatel.y $702 mil.lion into the 2-year ~te.

~iV8

The a~t.ion nJ.l. be co:d.uoted in the sinqle-~rice auction fOl:ml:l.t.
All c~ti.
and noncompetitive awards will be at the highest yie1d of accepted ccmpetitive

t~~s.

The notes beinq offered today are eligible for

S'l'lUPS prog'ram.

Thill offering of 'l'ree.aury securities is go"7e%'%18d by the t~ Uld conditiOUB
set forth i%l the 'Onifo:cll Offering Ci:rcul.ar ~or the Bal.e aDd :tallUO of XLrketabl4il·:BookEui:r,y' Treasury Bil1.s, Botes, and:Bo=d.s (3l. C!'R Part 356, as amended).

Detul.s about t:.ha new &.c:urity are given in the attached offeri.ng hiqhlights.
If the aucticc of 2-yeaz notes to ])e held Wednesday, S&];Itamber 2.7, 2000,
reau1ta in a yie~d ill a range of 5.875 percent through and incl.uding 5.999 pttrc8llt,
the 2-yaar Dotes will ])e considered an additi~ issue of the outstanding 5-7/8%
5-year notes of Ser1es K-2002 (COS:IP No. 91.28273J9) origina11y issued Se~tember 30,
1.997. 'l'he additional. issue of tha notes would ha-ve the same CUS:IP l'lWZIber as the
out:lJtlU'1ding uotes, Which are c::urrently outstA:Dding in the amount of $1.2,807 millic:m.
:If the auc:tic:m :resul.ts in the iss'l.t&l1Ce of an addii:iOAa.l amount of the Series
Jf-2002 notes rather t.haD a DeW 2-year ~4il; i t will ])e indicated in the Treasury
auctic:m results press release.
In the event of a r&~, al.l amow:I.ta outstllllJding
for ct7S:IP !ic. 9128273J9, including the 5-year notes issued September 30, 1.997, would
be el.igibl.e for ths STllIPS progrzua..
000

Attachment

LS-894

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lD:GHLIGB'l'S 07 TREASO'RY OPTERDlG 'l'O TEE PlJBL~C:: OF
2 -YEAR SOTES '1'0 BE ISSOED OCTOBER 2, 2000

September 20, 2000
Offeri.ng Amaw:1-t ••••••••••••••••• ~ ••••••••••••• $10,000 miJ.lion
Deserip~ion
T~

of Off~:
and type of security •••••.••••••••••••••• 2-year

no~oa

Seriel!l . . . . . . . . . . . . . . . . . . . . . . . _ .................... Z-2002
CUSIP number •••••••••••••••••••••••••••••••••• 912827 6L 1

•••••••••••••••••••••• _ •••.••••••• September 27, 2000
date ............................ ',~ ••••••• OCtober 2. 2000
~ted date •.•••••••••••••••••••••••••••••••.•• S~ptsmber 30, 2000
Maturity &~e •••••••••••.••••••••••••••••••••• Sept8lllbe.% 30,200:2
Interest ra~e ••••••••••••.•••••••••••••••••••• Determinad based on the highest
accepted campetitive bid
Auce1o~ d&~e

~8Sue

yield .•.•.•.........••..•.....•.•.•.•••••••.•

Det.~ed

aue~iQD

Ute:rest payment dates •.••••••••••••••••••••• March 31 and September 30
Min~ bid amount and ~tip~e8 •••••••••••••• $1,000
Accrued interest payable by ~stor •••••••••• Dete:mined a~ auetion
Premium or discount ••••••••••••••••••••••••••• Deter.mined at aucti~
STRXPS xnfor.mation:
amount required •••••••••.••••••••••••• Det~ at auction
Corpus CUSIP number ••••.••••••••••••••••••••• 91~820 FV 6
Due da~e (s) and etrSI:P number (B)
for additional TXHT{s) •••••••••••••••••••••• 5ct applicable

Mini~

SUbmission of Bids:
Honeompetitiva bids:
Accepted ~ £u2l up to $5,000,000 at the highest accepted yield.
Competitive bids:
(1) Hwlt:be e.xprAJlSlad as .. yield with tl:Lree decimals, e.g., 7.123%.
{2} !let lo=.g position for each bidder Dmat be reported when the sum of the 1:otal.
bid mzaountl at 8..11 yields, a.nd the ne~ long positiOA is $2 bill.icm or greater.
(3) Het long' position mu.st be determined u of one hal.f-hour pri.or to the
clos~ time for recei~t o£ oompe~itiva tenders.
Ml!?dm'lm :R.ecoguized Bid 1St a Sing-Ie Yield ••. _ ••••••• 35% of public offering
Mftxj~

AWlSrQ ••••••••••••••••.•••.••••••••••••.•••• 35% of public offering

Receipt of Tenders;
NonCG1%Ip8tit1ve te.nd~: Prior to ~ :00 DCO!1 GaJltern dayligbt s!!lvinq time
on aucticm day.
CCQP8titive tend~rs: Prior tel 1; 00 p.m. ea.st:ern daylight saving time em.
auction day.

Paym.ent "!'erma: 'By c:h.arge to a' funds aeecnmt at a Pedar&l Reserve ~ on issue
~te, or payment: of fu.1.1 par aJDO'Wlt with te~.
~asuz:yD.!.roct customers can uae
the Pay Direct feature whicb authorizes a charge to their account of record at:
their fiDancial ~1:i~utiaa on issue date.

DEPARTMENT

THE

TREASURY

NEWS

TREASURY

OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W. • WASHINGTON, D.C .• 20220. (202) 622-2960

Contact: Una Gallagher
(202) 622-2960

FOR IMMEDIATE RELEASE
September 29,2000

SECRETARY SUMMERS ANNOUNCES 18 CAIP GRANT AWARDS

Treasury Secretary Lawrence H. Summers today announced the organizations selected to
receive the first round of the newly established Community Adjustment and Investment Program
(CAlP) grants. The eighteen awards totaling $6 million are designed to encourage and foster
economic opportunity and to help individuals create or retain jobs in communities that have
experienced temporary job displacements due to the implementation of the North American Free
Trade Agreement.
The CAIP program, an affiliate of the North American Development Bank (NADBank),
is awarding grants to non-profit and public entities for technical assistance or special projects.
These include community-based efforts to assist workers, attract industry and create jobs. In
total, the grant funding is expected to leverage almost $20 million in outside resources to aid
these worthwhile projects. Applicants estimate that the funded projects, once implemented, will
help to create over 4,100 jobs in eligible communities.
"While free trade provides enormous benefits to our economy overall, programs such as
the CAIP grants are important to ensure that all Americans are able to adjust to and benefit from
free trade," said Secretary Lawrence Summers.
Grant recipients are located in 10 states: Arizona, California, New Mexico, New York,
North Carolina, Oregon, South Carolina, Tennessee, Texas and Washington. A solicitation for a
second round of grant funding is expected later this year and requests for increased funding to
meet the public's strong interest are currently before Congress.
In addition to its grant program, the CAIP also provides direct loans and facilitates loan
guarantees to help create and retain jobs in targeted communities.
-30LS-894~

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;'

DEPARTMENT

THE

TREASURY

NEWS
omCE OFPUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASIDNGTON, D.C. - 20220 - (202) 622-2960

Text as prepared for delivery
September 21, 2000

REMARKS BY TREASURY DEPUTY SECRETARY STUART E. EIZENSTAT
BEFORE THE ANTI-CORRUPTION SUMMIT 2000
I am very happy to be here this morning. I want to add my welcome to those of you who
have come so far from so many countries to attend this Conference. In your own lands, you are
in the forefront of the effort to protect the workings of your government and the honor of your
nation from those who seek to corrupt them. You have my respect for the work you are doing
and my best wishes for your success. I hope that what you take back from these three days will
be of practical use to you.
Until recent decades, nations preferred to deal internally with corruption in government.
The funds which were being stolen and skimmed came, for the most part, from their own citizens
and did not affect their standing abroad. The global economy works very differently today.
Enormous amounts of international capital roam the world searching for safe, attractive places to
invest. Multinational firms seek partners and production facilities in many nations. Many
countries seek financing from the IMF, the World Bank and other international institutions to
support their currency, develop their infrastructure, and meet urgent social needs. Important
contracts for major projects are open to bid by foreign firms. But the global economy also
produces international cartels, with arms and sometimes armies of their own, who seek to corrupt
government officials, including law enforcement officials, to facilitate distribution of their drugs,
arms and other dangerous products. They then seek to launder their dirty money through
legitimate financial channels to conceal it from detection and to "reinvest" it in their criminal
enterprises.
In such a world, every government must recognize that corruption is a malignancy on
their economies and financial institutions. It creates special difficulties for emerging and
transitional nations. It can only be combated in any nation by the creation of transparent and
accountable economic and political systems firmly grounded in the rule of law. As Vice
President Gore said last year when he hosted the first-ever Global Forum on Fighting Corruption:
"Corruption accelerates crime, hurts investment, stalls growth, bleeds the national budget, andworst of all-undermines our faith in freedom. Corruption is an enemy of democracy-for
democracy lives on trust, and corruption destroys our trust."
LS-895

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It is very important to have strong laws and better enforcement against corruption. In this
connection, President Clinton officially announced last week that the U.S. had become the
twentieth nation to ratify the Inter-American Convention Against Corruption. This Convention
binds signatory nations to criminalize a wide range of corrupt acts, including bribery of public
officials, and was the first multilateral agreement against bribery to be adopted anywhere in the
world. As President Clinton said, "It is a victory for good government, fair competition, and
open trade throughout our Hemisphere." The Convention covers bribery of foreign government
officials, a provision my government pressed for as part of our effort to persuade other countries
to adopt legislation similar to our own Foreign Corrupt Practices Act. In addition, 34 nations
have signed and 23 countries, including the U.S., have ratified the Anti-Bribery Convention of
the OECD, which also obligates parties to criminalize the bribery of foreign public officials in
the conduct of international business. This Convention's strong process to monitor governments'
implementation of their commitments has already caused several signatories to prepare new antibribery legislation.

To effectively combat corruption, nations must have clear laws and regulations that can
be equitably and reliably enforced. This requires independent judges and adequately funded
professional law enforcement. Nations must also end unnecessary controls on their economies
and reduce state involvement, for the more the state is involved, without transparent rules, the
more opportunities exist for demanding payoffs for licenses, contracts and tax concessions. The
financial system must be a well-supervised, soundly regulated, competitive and not weakened by
credit decisions based on personal or political connections. The transparency and accountability
of the work of government should be increased. And nations must create a professional civil
service, with strict conflict of interest rules, punishment for malfeasance, and adequate
compensation for its workers. A key part of strengthening the civil service is to create strong,
independent anticorruption investigation units, such as the U.S. Government has in its offices of
Inspector General within our executive department, and in our General Accounting Office for
overseeing the operation of federally-funded programs. In developing and transitional nations,
these measures will help break the culture of corruption that now exists.
One of the most important ways by which the United States and the international
community can combat corruption is by focusing on the financial infrastructure that facilitates
the movement of dirty money around the globe. Money laundering - the act of making criminal
proceeds appear to be the result of legitimate transactions - provides the vital financial lifeblood
for international drug cartels, criminal organizations, terrorist groups, and corrupt government
officials. It is not an exaggeration to say that all of our multilateral efforts to combat corruption
in the end will be largely ineffective if we do not also work to shut down the financial
mechanisms and systems that allow people to hide the profits of their corruption, and thereby
grow wealthy from their crimes. In recent years, the citizens of such diverse places as Nigeria,
Ukraine, and Indonesia have all seen the wealth of their nations stolen by corrupt government officials. They could only do so because various banks in the rest of the world accepted their
funds as if it were money legitimately earned.

The threat we confront from international money laundering is unambiguous with respect
to the facilitation of crime and corruption, but it has wider, more subtle effects as well. Abuses
of the global financial system such as money laundering are what economists would call clear
cases of a "global public bad" - indeed, it is the dark side to international capital mobility.
Money laundering activities have the potential to cause serious macroeconomic distortions,
misallocate capital and resources, increase the risks to a country's financial sector, and hurt the
credibility and integrity of the international financial system.
In many respects, even as we pass international conventions, the money laundering
problem in recent years has grown worse. The reason: technology. Not too long ago, only a few
countries in the world could be considered money laundering havens: places whose bank
secrecy regimes, company incorporation laws, banking regulatory systems, and law enforcement
practices combined to make them very attractive to anyone looking to hide money of dubious
origin. But even as the international community successfully pressed these places to improve
their anti-money laundering regimes, technological advances were undermining those
accomplishments. The same advances in banking and communications technologies that have
done so much for our prosperity have also resulted in a new proliferation of money laundering
havens injust the last few years. Countries that were once too physically remote to be well
integrated into the global financial system are now only a click of the mouse away. Some
countries have found that offering no-questions-asked banking services can quickly create an
extremely lucrative sector. Sadly, some countries have even made this part of their official
development strategies.
Let me give you one of my favorite examples. Perhaps only five years ago, few bankers
likely even heard of Nauru, a small island in the South Pacific. Then Nauru passed laws to
create a strict bank secrecy regime. With today's technology, the result came quickly.
According to the Russian Central Bank, out of the $74 billion in 1998 that was transferred from
Russian banks to accounts in offshore jurisdictions, $70 billion went to accounts in banks
chartered in Nauru. Now, we have no way of knowing exactly how much of that money found
its way back into Russia or how much, if any, constituted money laundering - but the numbers
are certainly surprising and suspicious. Newspaper reports also noted allegations that Nauru
banks were part of the investigation into the $7.5 billion that moved from Russia through the
Bank of New York.
We are addressing this new money laundering problem in two ways. First, by improving
the U.S. anti-money laundering regime here at home. In the last year we have laid out the most
comprehensive approach to the subject ever, in the National Money Laundering Strategy for
2000. We have, for the first time, designated areas within the U.S. for priority anti-money
laundering law enforcement activities, and begun a grant program for state and local law
enforcement. And we have expanded our regulatory regime to bring non-depository financial
institutions such as money services businesses into our efforts to combat money laundering.

These efforts have set the stage for our second new focus, combating foreign money
laundering havens. In the remainder of my time here today, I will describe briefly what we have
done, the impressive results we have seen so far, and what we will do in the near future.
This year, the Financial Action Task Force, a group dedicated to the fight against money
laundering that now has 29 member states from almost every comer of the globe, undertook
lengthy, detailed examinations of29 other jurisdictions' anti-money laundering regimes,
evaluating them against well-established international standards. The jurisdictions that were
examined were given ample opportunity to participate in these reviews, an opportunity of which
almost all took advantage. In June the FATF - as it is called - publicly announced that 15 of the
jurisdictions they had examined were considered "non-cooperative" with the international fight
against money laundering. The places on the F ATF list were diverse in size and region, from
small islands like Dominica in the Caribbean to Nauru in the South Pacific, to sizable financial
centers like the Cayman Islands and Liechtenstein, to trading centers like Panama and the
Philippines, to countries of major geopolitical standing such as Russia and Israel.
Then in July, the G-7 Finance Ministers announced they were each issuing fonnal
advisories to their domestic financial institutions, urging that enhanced scrutiny be given to
transactions involving the 15 countries on the FATF list. The Finance Ministers also made an
unusually strong statement: if the 15 countries in question did not move to bring their antimoney laundering regimes up to international standards, they would consider additional
countenneasures including conditioning or restricting financial transactions with those
jurisdictions and conditioning or restricting support from international financial institutions to
them. President Clinton and the other G-7 Heads strongly endorsed this commitment.
It is just over two months since those advisories were issued, but the results from FATF's
"name and shame" initiative have thus far been very encouraging. Indeed, it is not an
exaggeration to say that, in many respects, we have witnessed more progress in the last few
months than we have in the prior several years.

First, there was a market reaction. For instance, on the day the FATF list was released,
Standard & Poor's announced it was downgrading its rating for a top Liechtenstein bank. In the
financial world, these actions tend to get people's attention. Then there was the diplomatic
reaction. Since the advisories the leaders of Panama, the Bahamas, Russia and the Philippines,
among others, have made 'public pledges to bring their anti-money laundering regimes up to
international standards. For many countries these were not easy statements to make; the Prime
Minister of the Bahamas, for instance, has stressed that he plans to upend decades oftradition by
proposing changes to his country's banking regulations and tax benefit structures. And now we
are beginning to see a real legislative reaction. Again only since the advisories, the Cayman
Islands, Israel and just this week Liechtenstein have passed new anti-money laundering laws.
These are real accomplishments: for the first time customer identification will be mandatory in
the Caymans as it is in other comparable financial centers; for the first time money laundering is
a crime in Israel as it is in other comparable developed countries.
4

These actions are extremely promising and validate the international community's tough
new approach to crack down on money laundering havens. But they are just the first step.
Before FATF can consider removing any country from its list, it must confirm that any new laws
that have been passed fully comply with international standards and do not leave open loopholes
for criminals and corrupt officials to abuse. It must also review the implementing regulations
that bring that law into effect and define how that law will be interpreted. And it must be assured
that the new regulatory and law enforcement provisions are being effectively implemented. The
U. S. will work to ensure that if jurisdictions on the FATF list take the necessary steps to combat
money laundering effectively, the FATF will appropriately act to remove them from its list.
Not every jurisdiction on the FATF list has responded as quickly or constructively as we
might like. For instance, some time ago we received a letter from the President of Nauru. He
noted that because Nauru "has been the victim of unfair adverse media publicity based on
unsubstantiated allegations of money laundering," business had taken a tum for the worse and
they had lost revenue accordingly. The President went on to say that before Nauru could "go
ahead with the implementation of its resolve to reform its offshore financial regime" it would
need money to compensate it for its losses. Specifically, the President asked the United States
for financial assistance "at least in the sum of $1 0 million to make up for Nauru's loss for a
period of two years." Needless to say, Nauru should not expect to receive a big check anytime
soon.
Yet, a few countries aside, this effort has been a great success thus far. But we need to do
more. Indeed, there are three concrete steps we intend to take next.
First, we will expand the work ofFATF. In two weeks, the FATF member countries will
meet in Madrid. Among the items on their agenda are two initiatives that are of great interest to
the U.S. In Madrid, the FATF members will decide which jurisdictions will be included in a
second group to be reviewed in the coming months for possible inclusion on the FATF list.
FATF will also likely begin the process of reviewing and strengthening the international
standards it sets for its own members. This is important, because as FATF holds other countries
up to international scrutiny, it must ensure that the standards the FATF countries apply to
themselves take into account the latest money laundering trends and techniques.
Second, we will push for a stronger role for the IMF, the World Bank and regional
development banks in fighting financial abuse. Tomorrow, Secretary Summers will be leaving
for Prague where he will urge the IMP, the World Bank, and the regional development banks to
intensify their work in combating financial abuses of the global financial system. This new
effort would not represent an expansion of the mandate of these Bretton Woods institutions; on
the contrary we believe that the fight against international money laundering is consistent with
and integral to the responsibilities of the IMF and the MDBs to protect the credibility and
integrity of the international financial system. The IMF and the World Bank already engage in
helping countries develop and reform their financial systems, to adopt good governance and to

fight corruption. We are not asking the Fund or Bank to be policeman. But we believe both can
playa greater role in fighting abuse and preserving the integrity of the international financial
system in areas that are within the scope of their mandates.
We will be asking the Fund and Bank to institutionalize the fight against financial abuse
through various avenues, including technical assistance, surveillance, financial sector
assessments, and lending conditionality, where relevant and appropriate. The Bank and the Fund
are uniquely well placed to perform analytic and diagnostic work on financial abuse issues. We
also believe country programs and loan operations should incorporate appropriate conditions
designed to help countries make real and measurable progress in combating money laundering.
In Prague, Secretary Summers will also call on both the Fund and Bank to prepare a joint paper
on their respective roles in combating financial abuse, for final consideration next Spring.
And third, after expanding the FATF process and improving the work of the IMP and
World Bank, we must stay committed to make good on the pronouncement by the G-7 Finance
Ministers to consider restrictions on international lending or banking transactions to countries on
the FATF list that do not make efforts to improve their anti-money laundering regimes. The U.S.
has already signaled its own commitment: we have argued strongly that the Philippines should
take measures to strengthen its money laundering regime in the context of an IMP program.
That point was not lost on Manila, where the government has told us that they intend to address
the shortcomings that the F ATF has identified.
I suspect that by next year's G-7 Summit we will be in a position to know which
countries on the F ATF list will have decided to ignore the will of the international community.
At that point, we will have to follow through with strong countermeasures. Unfortunately, the
U.S. at present is somewhat hamstrung in this regard. As we have already stated to our
Congress, we do not now have adequate legal authority to condition or narrowly restrict U.S.
financial transactions with money laundering havens, even ones that present plain threats to the
integrity of the U.S. financial system and that facilitate the movement of dirty money from
terrorists, drug cartels, crime groups and corrupt foreign officials.
Earlier this year we worked successfully with the U.S. Congress and the banking
community to draft bipartisan, common-sense legislation that would give us the authority we
need to combat this problem in a graduated, targeted manner, without unduly impacting industry
competitiveness or placing unreasonable new burdens on U.S. banks - and, most importantly,
while continuing to ensure Americans' critical rights to financial privacy. We managed to
accomplish all this and were pleased that the ideologic-ally diverse House Banking Committee
passed the bill overwhelmingly, sending it forward by a vote of31 to 1.
But a handful of Members of Congress have opposed even this bipartisan bill, and
therefore there has been no action to bring the bill to the floor of the House or even hold a
hearing in the Senate. Let me be clear: without the passage of this bill the U.S. will have a much
weaker hand when dealing with recalcitrant money laundering havens. Again, this is not and
6

should not be a partisan issue. There are many Republicans and Democrats on Capitol Hill who
are working alongside the Administration in the fight against money laundering, drugs, terrorism
and foreign corruption. We urge the leadership to bring this bill up for a vote in the House and
to hold hearings in the Senate so that the next President has the tools he needs to continue this
bipartisan effort we have begun this year.
These are the main outlines of the Treasury Department's efforts in this area. Each nation
has its own special challenges in the fight against corruption. You are here because you are
committed to this effort. You want to learn and you want to share your experiences with
delegates from other nations. My Government wants to cooperate in this mutual education, and I
hope that the forthcoming sessions ofthis Summit will make that clear.
Good luck to all of you in the accomplishment of your very important mission.
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DEPARTMENT

lREASURY

THE

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ornCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622-2960

EMBARGOED UNTIL 9:30 AM EDT
Text as Prepared for Delivery
September 21,2000

STATEMENT BY TREASURY SECRETARY LAWRENCE H. SUMMERS
ON ENHANCED HIPC DEBT RELIEF

Let me start by thanking members of Congress from both sides of the aisle who are present
today. Your leadership and support are invaluable and we appreciate all you have done to bring
the cause this far. I would also like to thank the religious community for the tremendous job they
have done in bringing this critical issue of poor country debt relief to the nation's attention. In
addition, I would like to commend Bono's remarkable contribution to this effort.
In little more than two weeks the 106th Congress will conclude. It is absolutely vital that before it
adjourns Congress enables the United States to pay its full part in funding the enhanced HIPC
debt relief initiative for the world's poorest countries that was agreed last year at Cologne The
United States has led the world in fighting world poverty in this Millennium Year. But we cannot
lead if we fail to live up to our commitments.
That is why we are urging Congress to authorize and appropriate $435 million to finance our
share of the debt relief program for those countries that made the reforms necessary to qualify.
Investing just three hundredths of one percent of America's entire FY2001 budget in the future
of some of the poorest countries in the world should not be a difficult decision for us to take.
In addition - crucially - we are requesting that Congress provide authorization for the IMF to
make full use of interest income from off-market gold sales to finance its share of enhanced
RIPC debt relief.
Every day that we fail to fund our commitments to this effort has real human costs.
•

Lack of US funding has already stalled the enhanced HIPC initiative in Latin America.
Bolivia - a model economic reformer and strategic U.S. ally in coca eradication - will not
receive the $850 million in debt relief because of the delay in U. S contribution to the HIPC
Trust Fund. Over two-thirds of the population live in poverty, yet without HIPC debt relief
Bolivia would continue to spend $35 a year per person on debt servicing - more than its per
capita spending on health or education.

L8-896
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·U.S Government Printing Office 1998· 619·559

•

Honduras is one of the poorest countries in our Hemisphere; over half of its people live in
poverty and nearly half of the rural population suffers from malnutrition. Yet for every
dollar the govem!llent spends on health care, its sends $4.00 to its creditors to paying off old
debts. Earlier this month, the international creditors agreed that Honduras met the
qualifications for $556 million in debt relief. Yet Honduras will not be able to put all of
these resources to bear on attacking poverty until Congress acts.

African IllPC countries -- countries that are committed to achieving rapid poverty reduction and
to tackle the scourge of diseases such as mvI AIDs -- will also soon be affected if the US does·
not play its part. Thanks to some initial contributions from the European Union and other
creditors, there is funding for the early African countries to qualify for debt relief. However,
because these donors have based additional contributions to the IllPC Trust Fund on an
American contribution, additional delay in a US contribution to the Trust Fund will also put debt
relief in jeopardy for many of the African countries in the RIPC program.
The United States is the most prosperous and economic successful country that there has ever
been. No country has a greater stake in successful economic development of the poorest
economies. And as the world's leaders gather this week to attend the IMF/World Bank annual
meetings in Prague, the importance of implementing the mpc initiative in support of poverty
reduction and growth in the poorest countries is one issue on which everyone is agreed. The
world is waiting for us to do our full and fair share to keep this initiative going. Thank you.
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D EPA R T IVI E N T

0 F

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lREASURY

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Contact: Public Affairs
(202) 622-2960

FOR Il\tIMEDIATE RELEASE
September 21, 2000

SECRETARY SUMMERS TO HOLD PRE G-7 PRESS CONFERENCE

Treasury Secretary Lawrence H. Summers will hold a pre G-7 press conference at
10:00 a.m. on September 22, in the Treasury Department's Diplomatic Room.
Reporters without Treasury or White House credentials should call (202) 622-2960 with
name, date of birth, social security number and news organization for clearance. All reporters
should enter the Treasury Department from the 15th Street entrance at 1500 Pennsylvania Avenue.

-30-

LS-897

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DEPARTlVIENT

THE

TREASURY

NEWS
omCE OF PUBLIC AFFAIRS -1500 PENNSYLVANIAAVENUE, N.W. - WASIDNGTON, D.C. - 20220 - (202) 622.2960

FOR IMMEDIATE RELEASE
September 21, 2000

Contact: U.S. Embassy Press Office
Phone: (42-02) 2423-1085

TREASURY SECRETARY SUMMERS TO HOLD POST G-7 PRESS CONFERENCE

U.S. Treasury Secretary Lawrence H. Summers will hold a press conference on Saturday,
September 23, following the meeting of the G-7 finance ministers. The press conference,
scheduled to begin at 6:00 p.m., will be held at the U.S. Ambassador's residence located at Dr.
Sigmunda Winterova 3, Prague 6, Czech Republic.
Journalists interested in attending must have IMFIWB Annual Meetings credentials and must
contact the U.S. Embassy Public Affairs office by Friday, September 23, to be cleared into the
residence. Set up will begin at 4:'00 p.m. All press should be in place by 5:30 p.m. Clearance
requests can be faxed to the U.S. Embassy Press office at (42-02) 2422-0983.
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LS- 898

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DEPARTMENT

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TREASURY

O}'}'ICE OF PUBLIC An'AIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C.- 20220 _ (202) 622-2960

EMBARGOED UNTIL 2:30 P.M.
September 21, 2000

CONTACT:

Office of Financing
202/691-3550

TREASURY OFFERS 13-WEEK AND 26-WEEK BILLS
The Treasury will auction two series of Treasury bills totaling
approximately $18,000 million to refund $18,374 million of publicly held
securities maturing September 28, 2000, and to pay down about $374 million.
In addition to the public holdings, Federal Reserve Banks for their own
accounts hold $9,887 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 $6,438 million held
by Federal Reserve Banks as agents for foreign and international monetary
authorities. Up to $3,000 million of these securities may be refunded within
the offering amount in each of the auctions 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 such accounts to the extent
that the amount of new bids exceeds $3,000 million.

TreasuryDirect customers requested that we reinvest their maturing holdings of approximately $866 million into the 13-week bill and $1,234 million
into the 26-week bill.
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, Notes, and Bonds (31 CFR Part 356, as
amended) .
Details about each of the new securities are given in the attached
offering highlights.

000

LS-899
Attachment

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HIGHLIGHTS OF TREASURY OFFERINGS OF BILLS
TO BE ISSUED SEPTEMBER 28, 2000
September 21, 2000
Offering Amount . . . . . . . . . . . . . . . . . . . . . . . . $9,500 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 .......

91-day bill
912795 FM 8
September 25, 2000
September 28, 2000
December 28, 2000
June 29, 2000
$11,549 million
$1,000

$8,500 million
182-day bill
912795 FZ 9
September 25, 2000
September 28, 2000
March 29, 2001
september 28, 2000
$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.
Maximum Recognized Bid
at a Single Rate . . . . . . . . . . . . 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. TreasuryDirect customers can use the Pay Direct feature which
authorizes a charge to their account of record at their financial institution on issue date.

DEPARTMENT

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NEWS
omCE OF PUBliC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASIDNGTON, D.C. - 20220 - (202) 622-2960

Text as prepared for delivery
September 22, 2000
DEPUTY TREASURY SECRETARY STUART E. EIZENSTAT
REMARKS AT U.S. TREASURY DEPARTMENT CONFERENCE ON
ELECTRONIC FINANCIAL TRANSACTIONS
Good morning. And thank you for that warm introduction, Gary. I am pleased to
be here today to kick off the Treasury Department's conference on electronic financial
transactions. Let me first take a moment to thank my colleagues at Treasury who have
worked so hard to make this conference happen: Greg Baer, Don Hammond, Michael
Beresik, Joan Affleck-Smith, Sue Hart, Roger Bezdek, Cathy Donchatz, Joanne Franklin
and Diane Johnson. All these individuals, and many others, deserve our warmest thanks
for organizing this impressive event.
I have looked forward to this conference for quite some time and believe that the
public policy issues being discussed here are important and timely. E-commerce cannot
reach its full potential unless payment systems exist that allow consumers and businesses
to pay for goods and services at the same time that they contract for them, and allow them
to do so securely and reliably.
The Administration's Support for the Information Revolution
We live in an exciting time. New information technologies have ushered in an
th
economic transformation as profound as that of the Industrial Revolution of the 19
century. This Information Revolution has been a driving force behind our nation's
unprecedented prosperity. We are in the midst of the longest economic expansion in our
nation's history. By the end of this fiscal year, we will have achieved three straight years
of unified budget surpluses, totaling just over $400 billion.
When this Administration took office in January 1993, there were fewer that
1,000 web sites on the Internet. Many people had not heard of the World Wide Web, let
alone come to terms with e-mail, URLs or online shopping. Now, of course, these terms
are part of our everyday language and the Internet is an integral part of daily life for
many Americans. The most basic ways in which we interact and transact, educate and
communicate are being transformed by the Information Revolution in ways we are only
beginning to see today.
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The Clinton-Gore Administration has worked hard to create an environment in which
this Information Revolution can flourish, adding efficiencies and dynamism to our
economy.
•

•

We have helped to instill confidence in the Internet by ensuring that appropriate
measures are taken to protect consumers, guard individuals' privacy and safeguard
critical infrastructure components.
We have fostered the legal and regulatory climate necessary to promote the
growth of electronic commerce. On issues such as digital signatures, electronic
payments and Internet taxation, the Administration is ensuring that our laws and
institutions keep pace with the rapid changes in e-commerce technology.
And as part of our efforts to promote the growth of the digital economy, the
Administration has recognized the need to invest in educating and training our
workers to bridge the "digital divide."

E-Government
President Clinton and Vice President Gore have also used the Internet to make
government work better for the American people. We have come a long way since Vice
President Al Gore became the first nationally elected official to participate in a live,
electronic town meeting six years ago. Americans are now using government web sites
to file their taxes with the IRS. Every Cabinet department is online, using web sites to
make information and services available to people at the click of a mouse. You can go
online to apply for student loans, find new jobs and compare Medicare options. People
are tapping into the latest health care research, browsing the vast collection of the Library
of Congress and following NASA missions into outer space.
E-government involves access to government information and services 24 hours a
day, 7 days a week, in a way that is focused on the needs of our citizens and businesses.
Citizens can avoid traveling to government offices, waiting in line or mailing paper
forms. The federal government is saving time and money by transacting business
electronically and providing better services.
As part of the Administration's continuing efforts to shift government services to
the Internet, the White House is launching Firstgov.gov, which President Clinton
announced in his first web cast address in June. This is a customer-focused web site
where citizens can find every online resource offered by the federal government at one
easy-to-use location. This effort introduces a single point of entry to one of the largest
and most useful collections of web pages in the world.

Financial Services
With regard to electronic financial services and transactions, the Administration
has already taken two very important steps to put in place a framework for the future that
lies ahead for the financial industry.

The first step was the landmark financial modernization act signed by the
President last fall. This Act opened the door to greater innovation and competition by
breaking down outdated barriers between banks and other financial service companies. It
also took the first important steps toward the privacy protections necessary in an
increasingly electronic financial world.
The second step was the "digital signatures" bill passed by Congress earlier this
summer. This legislation removes legal impediments to conducting transactions online
by preempting requirements for contracts, notices and records to be on paper, while
preserving the protections that consumers enjoy in the paper world. It is a major
milestone in the development of electronic finance.
Both the financial modernization legislation and the digital signature bill represent
historic steps for the American financial industry. They represent this Administration's
commitment to laying the groundwork for the rapid development of online financial
servIces.

Foreign Policy
The Administration's efforts to promote the growth of e-commerce extend to the
foreign policy realm, as well. The Internet has been a key factor driving the new global
economy by permitting interactions across borders more easily then ever before. While
much of e-commerce to date has focused on the U.S. economy, attention is turning more
and more to the international implications of the Information Revolution. Whereas even a
year ago, we were met with skepticism and fear of the Internet in international fora, this
year both developed and developing countries are eager to embrace the internet and
replicate for their countries some of the prosperity that the U.S. economy has enjoyed.
Yet, it is difficult for e-commerce to flourish in countries where the payment
system is inadequate, government regulatory regimes may be severe, or
telecommunications infrastructures may be outdated. Did you know that mainstream ecommerce companies, such as GAP.com, Nike.com or Walmart.com, often refuse to ship
overseas at all because of the difficulties involved? The enormous potential of the new
global economy and of e-commerce will remain unfulfilled if vast parts of the globe are
left behind.
Toward this end, the Administration, through its "Cross-Sector Initiative," is
identifying and eliminating barriers to international e-commerce by working with foreign
governments to remove often severe regulatory and logistical barriers in the
telecommunications, transportation, customs, payments and delivery service sectors. We
are advising foreign governments that, in order to reap the benefits of the new global
economy, they need to adopt new policies and laws that will encourage innovation,
investment and the efficient delivery of goods ordered electronically. And countries have
been remarkably receptive to this message. Previously, countries might have expressed
little interest in our advice to improve civil aviation landing rights, for example. Now,
when we tell them that such measures are essential to prepare themselves for the new

global economy, they thank us-as one Middle Eastern country recently did-for
providing just the argument needed to motivate their bureaucracies to implement reform.
E-Commerce Successes at Treasury
At the Treasury Department, we recognize that it is important to lead by example,
and thus we have invested much time and many resources in thinking about how we can
adjust the way the government conducts its business to adapt to rapid advances in
information technology. I am pleased to tell you that we have had significant success
using new technologies. In some areas, we are ahead of the private sector.
Treasury, through the Financial Management Service (FMS), runs one of the
largest payment collection systems in the world, with more than $1.5 trillion--or three
out of every four dollars of U.S. government revenue-now collected electronically. In
addition, three-quarters of all government benefit payments are now made electronically.
So are sixty percent of payments to vendors.
Weare the largest issuer of stored value cards in the Western hemisphere. This
year we will issue close to a quarter of a million stored value cards at U.S. military
installations throughout the world. FMS has stored value projects at Army and Air Force
training sites throughout the U.S. And in May, FMS announced a project called
EagleCash whereby stored value cards were issued to soldiers, civilians and contractors
at U.S. peacekeeping bases in Bosnia.
We also are developing or testing a variety of new programs, including digital
cash, secure Internet e-mail for the delivery of digital checks to vendors, and Automated
Clearing House (ACH) debit authorizations over the Internet.
Sales of Treasury debt, both retail and institutional, also take advantage of new
technologies. Auctions of Treasury securities are now entirely electronic, as the last paper
bidders were recently moved to an Internet-based system. Consumers holding Treasury
securities through the Treasury Direct program can make purchases or reinvest on line or
through an automated phone system. Even Savings Bonds can now be purchased over the
Internet.
Electronic Financial Transactions
Let me turn briefly to the specific topic oftoday's conference: electronic financial
transactions. Payment represents both one of the Internet's greatest opportunities, as well
as one of its greatest bottlenecks. Technology could ultimately provide us with the
means to permit safe, secure on-line movement of money. On the other hand, without
this capability, the growth of e-commerce will be hampered. In order for e-commerce to
meet its potential, people need to be able to not only make purchases instantly online, but
also to pay for those goods and services in a way that is convenient, secure and real-time.

We need payment systems that are safe, secure and reliable. We need payment
systems that are viable for the large business-to-business transactions that are projected to
drive the enormous growth projections for e-commerce in the coming years. We need
payment systems for individuals to make purchases, pay their bills or pay one anotherwhether for an online purchase at Ebay or as a convenient way to reimburse a friend for
the cost oflast night's dinner. To date, such electronic forms of payment have not gained
widespread acceptance. Only a limited amount of electronic commerce is actually being
paid for online. In 1999, of the $146 billion in purchases that were either browsed or
ordered online, less than $20 billion of that was paid for online.
Moreover, electronic payments are not limited to the Internet. In Europe, people
are now able to use their mobile phones to pay for parking meters and vending machines
rather than fumble in their pockets for change. Here in the U.S., five McDonald's
restaurants in Santa Ana have reached an agreement with local authorities to allow
motorists to zip through the drive-through lanes and have the customers' Fastrak
electronic toll transponders billed rather than pay with cash. These are the kinds of
exciting advances in digital money and mobile-commerce that will revolutionize our
daily lives. And they are the kinds of exciting advances that you will hear discussed and
debated today.
Conclusion

The rapid advances being made in the area of electronic financial transactions
raise challenging public policy issues-such as privacy, security, standardization and
access. Difficult though they may be, finding solutions to the various challenges of
moving payments securely and efficiently online is essential if we are to see e-commerce
grow to its full potential and see the concomitant benefits for consumers, businesses and
our overall economy.
I hope that today's conference will confront some ofthe important and difficult issues
in the area of electronic financial payments. For example:
•

Credit cards are extremely expensive for merchants and on-line credit card fraud is
nearly ten times that of signature-based credit card retail purchases. Nonetheless,
they are widely desired by consumers and offer protections to consumers. How do
the panelists see this dilemma being resolved?

•

Electronic Check Presentment has been the "killer application" for e-commerce for
the past decade, but has had a disappointing track record. How do the panelists view
the realistic prospects for a viable ECP system?

•

What institution do the panelists envision facilitating the development of products
such as e-cash, e-checks, e-credit, digital signatures, etc.? The Federal Reserve
Bank? A card association? A new institution?

•

What "peer-to-peer" electronic payment mechanism, capable of supporting payments
between individuals where there are no prior relationships, do the panelists envision
emerging in the near future?

Today, you will have a unique opportunity to hear experts from the government and
private sector offer their views on these challenges, as well as their visions for the future
of the Information Revolution. This promises to be an educational and exciting day, and
I am pleased that you could all make the time to be with us for it.
- 30-

DEPARTMENT

THE

TREASURY

omCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622·2960

FOR IMMEDIATE RELEASE
September 22, 2000

STATEMENT OF THE UNITED STATES DEPARTMENT OF THE TREASURY

At the initiative of the European Central Bank, the monetary authorities of the
United States and Japan joined with the European Central Bank in concerted intervention
in exchange markets, because of their shared concern about the potential implications of
recent movements in the Euro for the world economy.
-30-

LS-901

For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
'U S Government Printing Oillee 1998·619·559

DEPARTMENT

'IREASURY

THE

TREASURY

NEWS

OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W. • WASHINGTON, D.C .• 20220. (202) 622-2960

EMBARGO TIME TO BE SET AT PRESS CONFERENCE
Text as Prepared for Delivery
September 22, 2000

STATEMENT OF TREASURY SECRETARY LAWRENCE H. SUMMERS
AT THE PRE-G7 PRESS CONFERENCE

Good morning. While this is no time for complacency, these meetings in Prague come at a time
when global economic conditions are better than they have been for some time.
I expect our discussions to focus on two areas: the global economic situation; and the ongoing
reform of the International Financial Institutions (IFIs).

The Global Economic Outlook

This being the final G7 finance ministers' meeting of the Clinton Administration, it affords some
opportunity to reflect on the first meeting I attended, in London in February 1993. At that time,
slow growth and chronic public borrowing in the US were of major global concern. How
different the picture looks today.
•

Our economy continues to show strong growth with low rates of inflation, and this year
we will have achieved three consecutive years of unified budget surpluses, totaling over
$400 billion. But we must not take our economic expansion for granted. We must
continue to plan prudently: paying down the debt and maintaining fiscal discipline.

Looking beyond the US:
There have been welcome signs of stronger economic growth in all of the other major
industrialized countries. But supportive policies continue to be essential, especially structural
reforms to raise productive potential and investment and realize the opportunities afforded by
new technologies.
The emerging market economies have strengthened since the recent crises, as recovery has taken
hold and financial vulnerabilities reduced. But here too, it will be crucial to avoid complacency.
Strong follow-through on financial sector restructuring and other reforms will be crucial.
LS-902

F(ff press releases, speeches, public schedules and official biographies, call our 24~our fax line at (202) 622-2040
·U S Governmen, Prlnt,nq 01"ee 1998· 619·559

•

While the global fundamentals are sound, recent developments in oil markets are
obviously a concern for consumers and businesses and around the world. I expect that
energy market issues will be among those discussed in Prague this weekend. More stable
prices, in line with historic norms, are in the mutual interest of both oil producers and
consumers.

•

With regard to exchange rates, let me repeat the statement that was released earlier today:

•

"At the initiative of the European Central Bank, the monetary authorities of the United
States and Japan joined with the European Central Bank in concerted intervention in
exchange markets because of their shared concern about the potential implications of
recent movements in the euro for the world economy." The British and Canadian
authorities also took part in this operation, purchasing euros with their currencies.

Our policy on the dollar is unchanged. As I have said many times, a strong dollar is in the
national interest of the United States.

II.

Reform of the International Financial Institutions

Reform of the IMF:
We welcome the recent Board agreement to reform IMF facilities. These changes will help to
establish the more focused and selective financing role for the Fund that the US has strongly
supported. In this context and more broadly, we will also continue our discussions of private
sector involvement in the resolution of crises. And, in line with recent progress toward reducing
financial vulnerabilities in the emerging market economies, we will consider how the IMF could
further integrate indicators of national balance sheet risk into its surveillance and programs.

Reform of the MDBs:
We want to address more fully the provision of support by the MDBs at a time of financial
crises. In particular, we will urge the World Bank to consider how to expand the use of the
emergency financial vehicles that it now has in place, and of the pilot programs they have
introduced to make more innovative use of guarantees in support of proactive policy reform. We
will also address the need for greater institutional accountability and transparency within the
World Bank and the MDBs more generally.

Support for the Poorest Countries:
We continue to be strongly committed to maximizing the effectiveness of the HIPC debt relief
initiative. In Prague we aim to agree on clear and achievable conditions for providing debt relief
that enable the funds to be provided as rapidly as possible, while ensuring there are strong
safeguards to maximize the chances of success. We are also supporting concrete reforms to the
provision of assistance to such nations, so that the recipients ofHIPC relief do not get into the
same difficulties again.

We recognize that the US needs to do its part to keep IDPC moving forward. We are working
hard to obtain Congressional approval of the President's pending requests for IDPC funding and
authorization so that the US can fulfil its commitments.
We will also be calling for enhanced support for the provision of global public goods, such as
vaccines and effective treatments for diseases such as mY/AIDS and malaria, and agricultural
and environmental research - including a multi-year program of increased Development Grant
Facility funding for such projects within the World Bank.
Combating financial crime:
There is now widespread agreement that financial crime has the potential to negatively affect the
international financial system. Given the natural fit between the financial crime agenda and the
IFIs' focus on the integrity of the global financial system, their financial sector work, and their
promotion of good governance, we are working to ensure that both institutions to play their part
in combating this problem. These issues will be firmly on the agenda of both the IMFC and
Development Committee in Prague.
-30-

DEPARTMENT

TREASURY

THE

TREASURY

NEWS

OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W. • WASHINGTON, D.C .• 20220. (202) 622-2960

EMBARGOED UNTIL SATURDAY,
SEPTEMBER 23 AT 10:30 A.M.
Contact: (202) 622-2960, Treasury
(202) 927-8500, ATF
ATF WEB PAGE TO PREVENT USE OF FRAUDULENT FIREARM LICENSES
The Treasury Department and the Bureau of Alcohol, Tobacco and Firearms (ATF) will
announce eZ Check - an online Federal firearms license authenticator web page that federally
licensed firearms dealers (FFLs) can use to make sure that guns are shipped to other licensed
dealers. In addition, ATF will publish a Notice of Proposed Rulemaking to require FFLs to
verify the license by using eZ Check or calling ATF's National Licensing Center, and reporting
invalid licenses to ATF.
"Our goal is simple - to keep guns out of the hands of criminals and our youth," said
Treasury Secretary Lawrence H. Summers. "It is imperative that our Nation's children
experience a childhood free of the threat of firearms violence. FFL eZ Check and ATF's other
programs aimed at reducing illegal firearms trafficking and firearms violence are steps toward
that goal."
FFL eZ Check is the latest of ATF's many approaches to reducing firearms trafficking,
this one involving the firearms industry in the prevention of violent crime. Under current
Federal law, licensed dealers are only permitted to ship firearms to other licensed dealers. In
recent incidents individuals have altered copies of Federal firearms licenses to illegally acquire
and supply firearms to criminals and young people by mail and the Internet. With FFL eZ
Check, a Federal firearms licensee can verify the legitimacy of the licensee with whom he/she is
doing business with before shipping or disposing of the firearm.
A user can access FFL eZ Check through ATF's web site and is given a series of prompts
to verify the information shown on the license. If any piece of information on the license does
not match the information on the screen, FFL eZ Check will instruct the user not to complete the
sale and to contact ATF's National Licensing Center. Federal firearms licensees without Internet
access may call ATF's National Licensing Center at (877) 560-2435 to obtain a verbal validation
of the license.
ATF Director Bradley A. Buckles added, "eZ Check is an innovative cyber-tool to help
reduce illegal access to guns by criminals, juveniles, and gun traffickers. With these steps, the
firearms industry and ATF will be better able to prevent illegal market gun transactions and help
keep our streets safer."
For more information about ATF visit: www.atf.treas.gov
For %~s~~ieases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040

EMBARGOED UNTIL SATURDAY,
SEPTEMBER 23 AT 10:30 A.M.
ATF CASE EXAMPLES
Abuse of the Current License Verification Process
After being infonned by an ATF inspector that he could not renew his FFL because of
local restrictions, Sean TWOMEY altered his expired license to change the expiration
date. TWOMEY also made a second license using an alias. He sent copies of the altered
license and the second false license to various gun distributors. One of the gun
distributors noticed a problem with the license and contacted ATF. TWOMEY
subsequently used the altered license to obtain more than 1,100 guns, which were
trafficked throughout the San Francisco Bay Area. He made guns attractive to criminals,
while concealing the trail to himself, by obliterating the serial numbers on most of the
guns. The ATF Laboratory was able to raise some of the numbers, enabling the ATF
National Tracing Center to provide key trace infonnation leading to TWOMEY. To date,
close to 50 TWOMEY guns have been traced after being recovered at crime scenes and
from criminals. Guns illegally trafficked by TWOMEY have been used in multiple
crimes including murder and bank robbery. TWOMEY is currently serving a 72-month
sentence in Federal prison.
Abuse of the Current License Verification Process Via the Internet
In May of this year, a United Parcel Service (UPS) driver attempted to deliver a package
to a residence in Montclair, New Jersey. He observed that the address was a residence,
not a gun store as the label on the package indicated. Additionally, no adult was present
to sign for the package, as required. The driver returned the package to the UPS facility.
UPS contacted the sender and confinned he was an FFL in Texas.
The Texas FFL contacted the ATF Licensing Center in Georgia to detennine whether the
FFL in New Jersey was valid. Upon being told that it was not, the Texas FFL contacted
ATF in New Jersey and infonned agents of the situation. ATF took control of the
package from UPS and with the assistance of the Essex County Prosecutor's Office,
Postal Inspection Service, and the Montclair Police Department, conducted a controlled
delivery of the package. Two juveniles were arrested after the controlled delivery and a
State search warrant.
ATF learned that the two juveniles in New Jersey altered an FFL they obtained from an
FFL in Florida, whom they were able to dupe into believing they were licensed dealers.
Once they obtained the FFL from the Florida dealer, they placed an order with the Texas
FFL using a fictitious name and the real address of one of the students.
The students admitted to altering a copy of a license and making four additional false
FFLs. The juveniles also admitted to ordering four fireanns via the Internet. Agents and
investigators recovered all four fireanns.
- MORE -

EMBARGOED UNTIL SATURDAY, SEPTEMBER 23 AT 10:30 A.M.

The age of the offenders and the limited federal sentencing options led to the prosecution
of the case in State court, where the sentencing judge has latitude to impose a custodial
sentence. In July of this year, both defendants pled guilty to possession of a firearm by
juvenile, forgery, and conspiracy.
.

Abuse of the Current License Verification Process
In February of 1999, a Tucson area FFL contacted ATF to report Mark S. FISCHER aka
MS Firearms, for using an altered license to obtain a firearm from him. The false FFL
number belonged to an FFL in New Orleans, Louisiana. The company name and
shipping address were altered to reflect FISCHER's information in San Jose, California.
A check of ATF Licensing records showed FISCHER held an FFL from 1988-1994 in
Vancouver, Washington. An investigation revealed that FISCHER placed advertisements
of firearms for sale in a popular firearms catalogue. He obtained FFLs and checks from
prospective buyers for his advertised firearms and then returned the checks to the
prospective buyers claiming some misfortune with the firearms. FISCHER kept the
copies of the FFLs and was in the process of creating new fraudulent FFLs when he was
caught. ATF also learned that FISCHER shipped two firearms directly to a non-licensee
in New Jersey through a common carrier and listed the contents of the package as
"machined parts."
FISCHER signed a plea agreement, pled guilty to one count of Title 18, U.S.C. § 922e (to
knowingly ship a firearm in interstate commerce without written notice to the carrier),
and waived his rights to appeal. FISCHER was sentenced to 24 months Federal
probation.

EMBARGOED UNTIL SATURDAY,
SEPTEMBER 23, 10:30 A.M.

DEPARTMENT

TREASURY

THE

TREASURY

NEWS

OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W. • WASHINGTON, D.C .• 20220. (202) 622-2960

FOR IMMEDIATE RELEASE
September 22, 2000

Contact: Steve Posner
(202) 622-2960

TREASURY AND ms ANNOUNCE NEW INITIATIVES
TO IMPROVE EITC COMPLIANCE

The Treasury Department and the Internal Revenue Service on Friday announced three
new administrative initiatives intended to detect and reduce instances of erroneous Earned
Income Tax Credit (EITC) claims. The Treasury Department also announced new legislative
proposals to improve taxpayer compliance with the EITe.
"The EITC plays a vital role in rewarding work and lifting families out of poverty," said
Treasury Secretary Lawrence H. Summers. "It has helped hundreds of thousands of parents
move from welfare to work and has helped millions of others to provide for their families. It is
critical that we take steps to preserve the integrity of the EITC and better ensure that only
eligible families are receiving the credit. "
Created in 1975, the EITC provides a tax credit to low- and moderate-income working
families, thus reducing the burden of payroll and income taxes. It provides crucial assistance to
taxpayers who might otherwise be dependent on welfare. According to one study, more than 60
percent of the recent increase in the employment of single mothers has been due to expansions of
the EITe. The EITC also lifted 4.3 million people out of poverty in 1998.
About 20 million people claimed more than $30 billion in earned income tax credits on
their 1997 tax returns. A new IRS report indicates that an estimated $7.8 billion in EITC claims
for 1997-or 25.6 percent of total EITC claims-were erroneously paid. However, since that
time, the IRS has launched a variety of additional initiatives to improve EITC compliance.
The administrative initiatives announced today would further improve compliance. They
include:
•
•
•

sending notices to noncustodial parents who claimed the EITC on their 1999 tax returns,
warning these taxpayers that they do not appear to be eligible to claim the EITC;
expanding efforts to educate paid tax return preparers about the EITC eligibility rules, and
penalizing preparers who fail to exercise due diligence when preparing EITC claims; and,
expanding the use of existing authority to deny certain EITC claims, including cases where a
taxpayer's spouse does not have a valid social security number.

L8-904
Far press rel'iQ6fJS, fpeeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040

---------'

The legislative proposals announced today are designed to enhance the IRS's ability to
correct EITC errors and to make complying with the credit easier for taxpayers. The proposals
would:
•
•
•

give the IRS the authority to deny certain questionable EITC claims filed by noncustodial
parents during returns processing, before refunds are paid;
simplify the rule for married taxpayers who have separated from their spouses; and,
simplify the rule for taxpayers who live with their children and with other low-income
persons.

In addition, Treasury continues to urge Congress to pass two simplification proposals
included in the Administration's Fiscal Year 2001 Budget. These include:

•

conforming the definition of earned income for the EITC to that used for the rest of the
individual income tax, by eliminating the use of nontaxable earned income in calculating the
EITC; and,
modifying the definition of a dependent child so that it conforms more closely to the simpler
definition used for the EITe.
-30-

DESCRIPTION OF EITC COMPLIANCE INITIATIVES

New Administrative Initiatives
Immediately NotifY Taxpayers Who Appear to be Non-OualifYing Parents: One
promising new initiative will help to correct the largest source ofEITC errors: taxpayers
claiming children who fail to meet the EITC residency test. The IRS is developing a new
dependent data base, which contains information on custody agreements from the Federal Case
Registry of Child Support Orders and other administrative data. This data base will be the most
reliable source that IRS has to identify EITC claims with residency errors.
Later this year, the IRS will send notices to noncustodial parents who claimed the EITC
on their 1999 tax returns. These notices will explain the EITC residency rule and alert taxpayers
to the fact that they might not be eligible for the credit for tax year 2000. The notice will tell
taxpayers how to correct any errors in the dependent data base, if they are in fact eligible to
receive the EITe.
Improve Compliance Among Paid Preparers: The IRS has implemented EITC education
and enforcement programs aimed at tax return preparers, because paid preparers file about 60
percent of all EITC returns. Last fall, IRS visited thousands of paid preparers who had prepared
at least 100 EITC returns during the previous filing season. In these visits, IRS Revenue Agents
provided instruction on EITC rules and preparers' obligation to exercise due diligence in
preparing EITC claims. In addition, other preparers, who had not met their due diligence
responsibilities, were fined. This year, the IRS will extend the EITC outreach program to highvolume preparers who were not visited last year. The IRS also will revisit some oflast year's
participants to see if they have improved the quality of their preparation, or to determine if
penalties should be imposed this year.
Expand the Use of IRS Authority to Deny Ouestionable Claims: In 1998, Congress
provided the IRS with expanded authority to deny certain questionable EITC claims during the
initial processing of returns, without the need for an audit. Each year since 1998, the IRS has
expanded its use of this process to automatically deny questionable claims. This year, IRS will
deny the EITC unless both the taxpayer and the spouse provide valid social security numbers.
The IRS will also send notices to taxpayers who appear to have social security numbers that are
not valid for employment purposes, advising them that they might not be eligible for the EITC.

New Legislative Proposals
Enhance the Use ofthe Dependent Data Base: The IRS's new dependent data basediscussed above-contains information on custody agreements from the Federal Case Registry
of Child Support Orders. The proposed legislation would allow the IRS to use mathematical
error authority to deny EITC claims if the Federal Case Registry indicates that the taxpayer is the
noncustodial parent of the child claimed on the tax return. This authority would allow the IRS to
deny the claims during the initial processing of the returns, before refunds are paid out, and

without the need for an audit. Taxpayers could still obtain the EITC by responding to the
mathematical error notice and providing evidence of their eligibility for the credit.

Simplify Rule for Married but Separated Taxpayers: The Treasury is also proposing
legislation to simplify the EITC rules for married taxpayers who no longer reside with their
spouses. Under current law, a married taxpayer must generally file jointly with his or her spouse
in order to receive the EITe. If a married taxpayer does not file jointly with his or her spouse,
the taxpayer may receive the EITC only if the taxpayer lived apart from the spouse for the last
half of the year and the taxpayer paid over half the costs of maintaining the home in which they
and their dependent children resided. The household maintenance and dependency support tests
prevent many low-income separated taxpayers from qualifying for the EITC because they are
often receiving help from family members or receiving state benefits through Temporary
Assistance for Needy Families. However, many individuals do not appear to understand the
subtleties of these requirements or may not have been able to afford an attorney and obtain a
legal separation from their estranged spouse.
To reduce unintentional errors, married taxpayers who file separate returns would be
allowed to claim the EITC if they lived with their son, daughter, or stepchild for over six months
during the year, and they lived apart from their spouse for the last six months of the year. The
household maintenance and dependency support tests would not apply in determining eligibility
for the EITe.

SimplifyAGI Tiebreaker Rule for Parents in Low-Income Households: Many taxpayers
live with their children in extended families, and find it difficult to understand the current rule
about which adult in a household should claim the EITe. Under current law, if more than one
person can claim the same child for the EITC, only the person with the highest modified adjusted
gross income (AGI) is allowed to claim the credit. The Treasury is proposing that a parent be
allowed to claim his or her child for EITC purposes even if they live with someone with higher
income, as long as three conditions are met: (1) the taxpayer with the lower income is the parent
of the child; (2) no other taxpayer claims the qualifying child for the EITC; and (3) the higher
income taxpayer does not have income in excess of the maximum cut-off for the EITC for
families with two or more children ($31,152 in tax year 2000).
The IRS Taxpayer Advocate and the American Bar Association have called for similar
reforms of the AGI tiebreaker test.

Simplification Proposals from the Administration's Budget

Simplify Definition ofEamed Income: Treasury has proposed that earned income be the
same for EITC purposes as for the rest of the individual income tax. Thus, nontaxable earned
income (largely 40 l-k plan contributions) would no longer be included in earned income when
computing the EITe.
Simplify Definition of Dependent Child: Treasury has proposed that the definition of
child dependent, used for personal exemptions and child tax credits, be conformed more closely

to the definition of child used for EITC purposes. A simple residency test, like the one currently
used for EITC purposes, would replace the more complicated support test used to determine if a
child is a dependent of the taxpayer.

Administrative Initiatives Underway Since 1997
Since 1997, the IRS has taken numerous steps to prevent EITC erroneous payments.
These steps make it easier for working families to comply with the EITC, enhance the IRS's
ability to detect noncompliance, and prevent erroneous refunds from being paid. These include:
•
•
•
•

development of new data that will help in the detection of the most common EITC errors;
implementation of new procedures to prevent erroneous EITC claims from being paid;
training for paid preparers combined with tougher enforcement for those who fail to meet
standards; and
expansion of educational and outreach programs.

Many of these efforts are still being implemented, and their effects will not be reflected in EITC
compliance studies for several years.

New Data to Detect Errors: The IRS is developing new data that will help in the
detection of the most pervasive types ofEITC errors. Next year, the IRS will begin using a new
dependent data set containing information from the Federal Case Registry of Child Support
Orders, Social Security records, and administrative tax data. Because many EITC errors are due
to taxpayers claiming children who do not reside with them, these data - particularly the
information on child custody arrangements from the Federal Case Registry of Child Support
Orders- will help the IRS to accurately target its enforcement resources.
New Procedures to Prevent Erroneous Refunds: The IRS has broadened its use of socalled "mathematical error" procedures, which will allow it to deny certain types of questionable
EITC claims during processing without initiating costly and burdensome audits.
•

Since 1999, the IRS has used expanded mathematical error authority to deny EITC claims if
children do not meet the credit's age qualifications. Similar authority is also now being used
to deny EITC claims by taxpayers who do not reside with children and who are under 25 or
65 and over.

•

The IRS is also using mathematical error authority to deny EITC claims when the taxpayer
was denied the credit in a previous year and did not follow recertification requirements that
were enacted in 1997.

Paid Preparer Initiative: Last fall, the IRS initiated a large-scale outreach program
aimed at tax return preparers who had recently prepared at least 100 EITC returns. During these
visits, preparers received one-on-one instruction from Revenue Agents on EITC compliance and
preparers' due diligence responsibilities. Because most EITC claimants use paid preparers, this
strategy may prevent both unintentional and intentional errors on tax returns claiming the EITC.

Enhanced Education and Outreach: Finally, the IRS has enhanced its educational and
outreach programs. It has developed partnerships with state and local governments, faith-based
organizations, community groups, business leaders, and other groups that are advocates for lowincome taxpayers.
•

As part of this effort, the IRS redesigned the EITC schedule and instructions. It tested EITC
forms with taxpayer focus groups and revised the tax forms to simplify the EITC schedule
and instructions. For example, beginning with 1999 tax returns, the publications and
instructions now provide a step-by-step process to determine eligibility.

DEPARTlVIENT

THE

TREASURY

NEWS
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W.· WASlDNGTON, D.C. - 20220. (202) 622-2960

FOR IMMEDIATE RELEASE
September 23,2000
LS-905
STATEMENT BY TREASURY SECRETARY LAWRENCE H. SUMMERS
AT THE POST G-7 PRESS CONFERENCE
PRAGUE, CZECH REPUBLIC

Our meeting opened ~oday with a review of developments in t~e world econ.omy, ~ith gl?b~l conditions better than they
have be.en for som~ tIme. We all agr~ed th~t prospects for contInued expanSiOn m mdustnahzed countries generally have
further lillproved smce our last meetmg, WIth a more balanced pattern of growth now emerging.
Nonetheless, important challenges remain. In Europe, while we are encouraged by recent moves toward reform there is
widesI?re~d rec~gnition ?fthe ne~d f?r governments t? press ahead with structural reform to increase productiv~ potential
and .raIse mcentlves for Job-creatIng mvestment. And m Japan, supportive macroeconomic and structural policies,
partIcularly with regard to the reform of the fmancial and corporate sectors, will be crucial to ensuring a durable
recovery.
With respect to exchange rates, let me repeat the statement that was released.
• We discussed developments in our exchange and fmancial markets. We have a shared interest in a strong and
stable international monetary system. At the initiative of the European Central Bank, the monetary authorities of
the United States, Japan, United Kingdom, and Canada joined with the European Central Bank on Friday,
September 22, in concerted intervention in exchange markets, because of the shared concern of Finance Ministers
and Central Bank Governors about the potential implications of recent movements in the Euro for the for the
world economy. In light of recent developments, we will continue to monitor developments closely and to
cooperate in exchange markets as appropriate.
We also shared concern about the adverse effects on the world economy of the recent sharp increase in the world oil
price. It is important that world oil prices return to a level consistent with lasting global economic prosperity and stability
for both oil producing and consuming countries, and in particular for the poor developing countries.
In light of continuing high prices and low levels of stocks it is crucial for the world economy that OPEC and other oil
producing countries take actions to contribute to a reduction in oil prices and greater stability in oil markets. Improved
efficiency in the use of energy in all economies would contribute to that objective. Ministers and Governors also
welcomed the U.S. action to release a limited quantity of its oil reserves in the form of a series of swap transactions. We
agreed to remain in close contact and to continue our discussions with oil producing and consuming countries as we
evaluate measures appropriate to the evolving situation in oil and product markets.

We also welcomed the continued recovery and strengthening fundamentals in emerging market economies, while
stressing the need for further progress on economic reform, in particular to improve underlying fiscal positions and debt
structures and strengthen the fmancial sector.
In addition to our review of the global economy, we focused on three key ongoing issues: reform of the international
fmancial institutions, improving implementation of the enhanced HIPC initiative, and actions against abuse of the global
fmancial system.
IMP Managing Director Koehler joined us for our discussion on reform of the international fmancial architecture and the
IMP. I was struck by the consensus in the room that the international fmancial institutions need to continue to adapt their
activities to the framing reality that private capital flows are now the predominant source of global fmance.

STATEMENT BY TREASURY SECRETARY LA WRENCE H. SUMMERS AT THE POST G-7 PRESS CO..

Page 2 of 2

With respect to the IMF, we welcomed the recent agreement in the IMF Executive Board to help establish a more focused
and selective fmancing role for the Fund, including through a shorter effective maturity for lending under its core
facilities and higher charges. We urged the Fund to speed up its work in strengthening the surveillance role of the IMF,
including by increasing the emphasis on national balance sheet and liability management and enhancing its ability to
identify sources of vulnerability. We emphasized that IMF conditionality needs to be focused to be effective, and, in
cases of fmancial crises, in particular, address issues central to the recovery of confidence and the return of capital market
access. We look forward, in that context, to the upcoming review of conditionality associated with IMF lending. We also
welcomed the establishment of an Evaluation Office that is independent, transparent, and committed to external
consultation.
With respect to the multilateral development banks, we have outlined several important priorities for reform. In
particular, I want to highlight the need to expand the provision of global public goods, initiate comprehensive pricing
policy reviews, and establish performance-based frameworks for the allocation of resources to borrowers.
Second, with respect to the Enhanced HIPC Initiative, we reaffirmed our determination to move forward as quickly as
possible with the provision of debt relief to HIPe countries, while ensuring that the resources that are freed up by debt
relief are targeted to core social investments, such as health, education and other human development priorities. In this
context we also repeated our commitment to relieving 100% of both Official Development Assistance debt to HIPe
countries and eligible commercial claims. At the same time, we must all of us remember that the true measure of HIPC's
success will not be whether or when a country has received relief, but how well those resources are used, and whether the
reforms that accompany HIPe can achieve enduring poverty reduction and growth.
Finally, we re-affirmed our commitment to the fight against fman~ial abuse, including money ~aundering and corruption.
In this context, we called on the IMF, the World Bank and the regIOnal developmen.t banks to mtegrate fully the fight
against fmancial abuse into their su~veillaI.1ce ex~rcises and pr~gr.ams. ~nd we spec~fically u~ged the I!'1F ~nd World
Bank to prepare a joint paper and dISCUSS In commg months wlthm theIr Board~ theIr res~ectJve role~ III .thIS area,
including the possibility of conditioning or restricting support for non-cooperatIve countrIes and temtones.

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DEPARTJ\tIENT

lREASURY

THE

TREASURY

NEWS

OFFlCE OFPUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASIllNGTON, D.C. - 20220 - (202) 622-2960

FOR IMMEDIATE RELEASE
September 24, 2000
LS-906
STATEMENT BY TREASURY SECRETARY LAWRENCE H. SUMMERS
TO THE INTERNATIONAL MONETARY AND FINANCE COMMITTEE
PRAGUE, CZECH REPUBLIC
I would fIrst of all like to thank our hosts of the Czech Republic for the care, organization and hospitality that has
characterized these annual meetings. I am also pleased to join Horst Koehler at his fIrst IMFC meeting.

I. Prospects and Policy Challenges in the World Economy
We meet at a time when the outlook for the global economy is better than it has been for a number of years. But it would
be a mistake to consider the positive outlook as in any way ensured, or to fail to take advantage of the current
environment to address a number of ongoing challenges: the challenge of ensuring sustained, balanced global growth in
the major economies; of reducing vulnerabilities in emerging markets; of supporting continued economic reform and
growth in transition and developing countries; and of strengthening the international monetary system and reforming the
IMF.

In the United States, while healthy growth and low inflation continue, we are mindful that we must not take our
expansion for granted. We continue to direct fiscal policy toward debt reduction and enhancing the long-run solvency of
Social Security and Medicare, but we must do more. We must also make targeted investments that would assist working
families and extend the benefIts of our economic expansion to all segments of our society.
Prospects in the other major industrial countries have also continued to brighten since our last meeting. But it would be a
mistake to yield to complacency. Europe and Japan need to push ahead with reforms that will allow them to lock in their
recent gains, which in turn will help ensure that the major economies continue to support a favorable global environment.
In Europe, the stronger growth and reductions in unemployment long looked for are now arriving. But for better
performance to endure, Europe will require substantial structural reforms to remove barriers to investment opportunities,
including opportunities with respect to new technologies.
We have all been heartened by recent signs of recovery in Japan. But to help ensure that the still-fragile recovery takes
firm hold, it is critical to maintain supportive fiscal and monetary policies. Japan must also keep working to strengthen its
fmancial system - with a special emphasis on disposing of bad assets, improving transparency and disclosure,
strengthening supervision, and adopting effective and flexible resolution techniques - and make further progress on
market-opening deregulation.
Emerging market economies face the challenge of taking full advantage of the more positive environment to implement
policy improvements that will reduce ~lnerability .~d promote s~stained? non-inflati?nary growth. ~.Latin America,
countries need to strengthen further.theIr ~scal pOSItIon~ and cont~ue .the~ e~orts .to Imp~ove the res~lience of~e
region's fmancial sectors by increasmg pnvate ownershIp of fmancial mstItutIons, Improvmg prudentIal regulatIOns and
supervision, and dealing with problem assets.

In emerging Asia, the authorities need to fo~us on fully recapitalizing b~s so they c:re ~e~er positioned to forc.e debtors
to restructure, strengthening bankruptcy regImes to force debt?rs ~o negotIate, and pnvatlZmg ~ter:v~ned ~mancial
institutions. They should also allow for greater market determmatIOn of exchange ra~e.s to. help lImIt inflatIOnary
pressures facilitate the natural adjustment of current account surpluses from post-cnsis highs, and reduce the need for
higher interest rates, which complicate debt restructuring.

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Growth has picked up in the transiti?n econom~es o! Central and S.outh~astern Europe, reflecting both an improved
external enVlf?ru:n en! an? the reduction o.ftenslOns K?sovo, while pnce levels have remained relatively stable. The
Czech Repubhc. IS chmbmg out .of recessl?n. C?untrles. m the CIS are also demonstrating stronger economic
performance, With. a few exceptions. ~ame will post ItS first year of real GDP growth since independence. The Russian
economy has contmued to strengthen, m part because of external factors, providing a stronger foundation to address
~ussia's refo~ chal~enges. ~he government's economic program l~ys out a sound reform strategy. The key is
ImplementatIOn. While Russia has taken a good first step m approvmg tax reform, the sustainability of growth will
depend to a large extent on R~ssia's ability to take action o~ oth~r key su:u,ctural issues as well -- such as strengthening
the rule. of law and th~ fI?anclal systen:t .-- that have been hm~ermg Russia s develop~~nt for years. Combatting money
laundermg and estabhshmg accountablhty and transparency III the central bank are cntlcal in this context.

The transition process has proved more complex and challenging than any of us anticipated, but we are now in a position
to begin making informed judgements about what works and what does not. We know, for example, that as the
government's role in the economy diminishes, and some measure of macroeconomic stability is achieved, countries
should move swiftly to put in place the institutional and policy underpinnings to support a market economy, including
strengthened legal institutions and enforcement, creation of a sound commercial banking system and robust fmancial
markets, privatization, deregulation and trade liberalization, and initiatives to combat corruption. Otherwise, there is real
risk that the transition process will stall, giving vested interests an opportunity to secure their grip on the economy and
undermine competition.
In Sub-Saharan Africa, circumstances vary widely across the continent. Several countries are recovering from devastating
natural disasters, others are dealing with the economic consequences of commodity price shocks, others are emerging
from conflict, and too many are suffering devastating losses due to HIV/AIDS. Despite the difficulties, a considerable
number of countries continue to pursue effective economic reform programs that are paying dividends, and overall
economic prospects have improved. But there is a need to diversify economies to reduce vulnerability to commodity
price shocks; develop stronger agricultural growth strategies based on enhanced productivity and rural poverty reduction;
improve governance and fiscal management; continue lowering trade barriers to attract investment and increase
competition; and increase spending on health and education, especially on HIV/AIDS.
The global community, African and non-African alike, must place much greater emphasis on formulating comprehensive
anti-AIDS strategies, encompassing social awareness campaigns, education, prevention, and community involvement, as
well as public health responses. Finally, we would point to the need for devising and implementing effective peace
agreements in conflict situations, which if left unchecked will undermine much of what Africa has achieved over the past
5 years. Conflict and HIV/AIDS are the most serious threats to Africa's economic future.

II. Strengthening the International Monetary System and Reforming the IMF
The first IMF annual meeting of the new millennium provides a special opportunity to look back at the experience of the
past several years, in particular the events of 1997-1998 when we confronted the challenge of a global fmancial crisis.
While it would be premature to say that the fmallessons have been drawn from that experience, sufficient time has
passed to allow us to reach some basic understandings about it as well as its implications for avoiding future crises and
dealing more effectively with them when they occur.
A core understanding is that these were capital account crises, where significant underlying weaknesses -- unsustainable
budget deficits, short-term external obligations far in excess of reserves, unsustainable exchange rate regimes, and weak
banking systems -- left economies vulnerable to panic. The shift in investor sentiment and the rush by local and foreign
investors to hedge or reduce exposure resulted in waste and upended lives for many innocent people.
This reality has shaped the international community'S response in charting a course for reform of the international
financial architecture. That course has emphasized the importance of three major changes, both at the national and
international level, aimed at avoiding crisis and responding more effectively when it occurs:
1.

Preventive care through safer policies -- At the national level, especially in emerging market economies, this
means, for example, strengthening national balance sheets so as to reduce excessive leverage, and improving
banking regulations, supervision and accounting practices to pave the way for stronger, more efficient fmancial
sectors and deeper capital markets. It also means, crucially, avoiding vulnerable fixed-but-adjustable exchange
rate regimes in favor of arrangements that help a country ride out and adjust to the inevitable tremors and shocks.
Increased transparency and stronger surveillance - To avoid the kind of surprises that spark panic, and to
encourage discipline born of the knowledge that information is being widely shared, countries need to adopt
stronger transparency and disclosure requirements, and, generally commit to a new spirit of openness. To
complement this effort, the international ~om~u~ity needs to complete the deyel?pment of a framework of ..
international codes and standards to prOVide mmImum benchmarks for countries m areas such as bank superVISIOn
and securities market regulation.

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An IMF that is better equippedfor crisis response -- Last week's agreement on reform of IMF facilities is a major
step ~orward towards this goal and compl~f!1ents other imp~ovements of the past several years - notably the
creatIOn of the Supplemental Reserve Faclilty and the Contmgent Credit Line and the elimination of other
facilities. ~aken t?gethe~ t~ese reforms help 'provi~e the. IMF w.ith the tools needed to deal with modem capital
account CrIses while aVOldmg, as far as possible, dlstortmg the mcentives of investors and government.

While there is still m~ch to be done in these and other areas related to strengthening the financial architecture, there are
signs that the ef!1phasls 'p1~c~d on .them over ~he past several years has ~lready led to constructive change. In countries
that have experIenced liqUidity CrIses, the ratIO of external debt to foreign reserves has more than halved since 1996' that
same gr?up of countries has ~een sh~rt~tef?1 d~bt as a sh.are of t.otal external. debt ~all from 34 percent in 1996 to 18'
percent m 1999. Greater foreign partiCipatIOn m domestic bankmg systems IS addmg resilience to the financial sectors of
for example, Argentina, Mexico, Brazil and Korea. And we are seeing evidence that more countries - some 14 at last
'
count -- are moving away from vulnerable exchange rate regimes. In short, while the international financial system has
evolved incrementally and, certainly, needs to continue to evolve, we can already discern a different architecture than we
had even a few years ago.
The IMF has played and will continue to playa central role in this evolution. Along the way, the Fund has evolved
significantly itself. We very much welcome the reforms the management of the Fund has embraced over the last few
years. Going forward, we expect this mutually reinforcing dynamic to continue, especially in the following critical areas.
1. More Selective Financing

Part of redefming the IMF's role has been to make clear that its greatest success will be if it avoids lending - in other
words, if it prevents crises. And if the IMF does lend, it would do so on a short-term basis, encouraging countries to
develop sustained access to private markets and avoid repeated reliance on IMF fmance. Nonetheless, the terms and
conditions of IMF lending are among the core tools that the international community has for encouraging strong policies
both before crises emerge and once countries face balance of payments problems.
In the run-up to these meetings in Prague we have seen a very important step by the Executive Board to change
dramatically the IMF's core lending instruments. I want to commend the Board as well as management for their work.
They have come to terms with the difficult issues of adjusting incentives and restructuring facilities in a way that
provides a framework for fmancial support that is consistent with the modem realities of global capital markets and the
revolving character of IMF fmance. The package of measures agreed - strong early repurchase expectations, limits on
medium-term lending, surcharges for higher levels of access under normal lending instruments, enhancements to the
Contingent Credit Line, and strengthened post-program monitoring - required compromise from all IMF members.
We believe the result will be a stronger and more resilient IMF going forward, one which supports and does not supplant
access to private capital markets. And, importantly, the agreement signals that the institution is indeed capable of and
willing to evolve to equip itself for future challenges. This is vital to preserving the value of the institution and to
maintaining broad-based support for it. We encourage the IMF to follow through on the changes agreed and adapt
ongoing operations to reflect the spirit of this agreement - that IMF finance must be predominantly short-term, priced to
discourage casual or excessive use, and accompanied by incentives to repay as quickly as possible.
With this objective in mind, we propose that the Executive Board undertake quarterly reviews of outstanding obligations
with a focus on countries that have, or have regained, sufficient access to private markets.

2. Better Focused Conditionality
Equally important to the price and other features of IMF lending facilities are the policy conditions on which IMF
programs depend. My view remains that when crises come, there can be no hard and fast rules for an effective response.
As the sources of crises vary, so must the solutions. And the success of programs depends most importantly on countries'
commitment to following through consistently.
The IMF is about to undertake a review of conditionality. This is appropriate and timely, given our recent experiences
with crises as well as the international agenda to equip the IMF for the future. In considering this issue, I believe we
should be guided by the basic principle that, in crises, the effectiveness of IMF ~rograms depends on their being focused
on the conditions necessary for restoring confidence, growth and a return to capital market access, rather than on all those
changes that are desirable for improving economic efficiency. This principle is easy to state yet hard to apply. We can not
afford to exclude, ex ante, issues critical to the financial system, the capacity to enforce contractual arrangements,
systematic corruption or failures of governance, and core social issues where they are relevant to success. But
streamlining and greater focus must be pursued if we are to improve the effectiveness of the IMF.

3. Crisis Prevention through Transparency and Strengthened Surveillance

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~t the spring meetings ~his chair called for a broad commitme~t to.a n~w spirit of openness, involving a qualitative shift
III the nature IMF surveIllance and degree of transparency. ThIS objectIve reflects our conviction that crisis avoidance is
possible only if relevant information is made widely available to the parties most concerned both private and public and
systematically monitored.
"

IMf Transparen,cy an,d Disclosure. Over the past several years, we have seen the IMF move impressively forward in its
polIcy and pract.lce w~th respect to tran~parency. The fact that progress has been incremental, occasionally controversial,
an.d on some POlllts still less than w~at It should b~, does not change the ~act that a quasi-revolution has taken place in
thIS area. Only three years ago, the ltd on IMF poltcy, program and surveIllance documents was virtually closed and the
Fund website was in its infancy. Today, the IMF and member countries publish a broad range of policy, program and
surveillance related documents. I'm pleased to note, for example, that Public Information Notices (PINs) are issued
following Article IV consultations about 80 percent of the time. Nearly 50 countries have released their Article IV staff
reports in contrast to the anticipated 20. Nearly all Letters of Intent are released (90 percent between June 1999 and July
2000). The Fund's rich and constantly updated website receives over 100,000 hits a day. Currently, the biggest lag may
be in the public's awareness of just how much information about the IMF is available.

We welcome in particular the recent decisions taken by the IMF Board to make the pilot project for release of Article IV
staff reports a permanent program, to encourage the publication of staff reports on the use of Fund resources and to adopt
a more systematic approach to the release of policy papers and Public Information Notices following discussions of
policy issues. We also note with appreciation the start in August of the Fund's new practice of publishing its Financial
Transactions Plan on a quarterly basis.
Yet there is more to be done. Broadly speaking, we need to reinforce the notion that standard operating procedure is to
release information unless there is a compelling reason not to do so - and avoid backsliding from this principle. In
particular, we strongly believe that countries benefiting from Fund financial assistance must make public the nature of
their reform programs and commitments, including Letters of Intent, Memoranda of Economic and Financial Policies and
Technical Memoranda of Understanding. We also look forward to wider participation and greater consistency in the
transparency practices of the Fund and member governments - so that there is a steady flow of information across the full
range ofIMF activities, for instance with release of Public Information Notices following all Article IV discussions.
Vulnerability Indicators. Indicators of liquidity and balance sheet risks for countries that have access to international
capital markets are an essential component of IMF surveillance. More widespread use and dissemination of these
indicators will better inform markets and policymakers alike and help to avoid severe crises such as those we have seen
in the last decade.

The IMF has made progress in incorporating indicators of liquidity and balance sheet risk in Article IV staff reports.
However, the scope and consistency of these indicators remain limited, including for the most systemically important
emerging markets. The IMF should move promptly to develop a process for making these indicators more widely
available along with detailed analysis. This requires coming to a conclusion about which indicators are most useful and
formulating the outline and content of a publication for disseminating them. By the spring meetings the Fund should have
this process well underway.
SDDS. One of the key vehicles for promoting the flow of information from governments to markets and investors is the
IMF's Special Data Dissemination Standard (SDDS). We are increasingly hearing from market participants how
important it is for them to have access to the kind of information provided through this and similar channels. We are
therefore pleased to see that more countries are subscribing to the SDDS. At the same time we are concerned that a
number of important countries do not yet subscribe. We are encouraged that Brazil and Russia have committed to
subscribe to the SDDS and are working on improvements to their statistical systems. We look forward to their
subscribing as soon as possible. We urge all subscribers report reserves according to the new template.
Liability Management. One of the key lessons of the recent crises is that particular attention needs to be given to
managing the risks to a government's balance sheet created by a large stock of liabilities with a short residual maturity.
This is especially true if the stock of maturing obligations is large in relation to levels of liquid reserves. We are pleased
that the Executive Board has held a first discussion on a draft set of joint World Bank! IMF debt management guidelines
and look forward to agreement by next spring. These guidelines should recognize that decisions about public debt and
reserve management must take into consideration the country's overall balance sheet. Attention needs to be given, for
example, to the impact that a negative shock to the private financial sector could have on overall liquidity and the
government's own balance sheet.
Codes and Standards. The development of a framework for international codes and standards is, in some respects, the
new frontier for surveillance. This framework will help promote financial stability by setting minimum performance
benchmarks in the key areas of fmancial regulation and supervision, data transparency, macroeconomic policy, and
institutional and market infrastructure. Work has advanced significantly in recent months -- gaps, such as public debt

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management and deposit insurance, a~~ being addres~ed; assessment methodologies are being developed; and
assessments are underway. But the cntIcal task remains: encouraging countries to implement key economic and fmancial
policy codes and standards.
The twelve standards highl.ighted in the Financial Stability Forum's Compendium of Standards serve as minimum
?ench.marks that all c~u~tnes should voluntarily and explicitly seek t? m.eet or. exceed. We welcome the ongoing effort,
In whIch the IMF partICIpates, to develop. a range ofm~rket and officIal incentIves. In this regard, we welcome the recent
report of the Follow-Up SJroup on IncentIves t.o ~oster Implementation of standards. While the official community can
help t? e~coura~e countrIes to m~k~ p~ogress m Iffipl~mentation, market discipline will ultimately prove the most
effectIve mcentIve. For marke~ dlsclplme to be effectIve, and ~or the larger international community to be better informed
of progress made -- or steps stIli needed -- transparency and dIsclosure are required.
As I sai~ when .we ~ast met, assessme~ts are themselves a key incentive for implementation of standards, but they cannot
serve thIs functIOn If they are not aVaIlable to the markets. When the Executive Board revisits the Reports on Standards
and Codes (ROSC) program later this year, we hope to see agreement on a presumption of disclosure. Moreover the
results to date make it clear that this program should grow: more modules from more countries on more standards,
including those relating to market integrity, will be critical to measuring progress in promoting financial stability. With
an increasing number of ROSC modules posted on the IMF website, there is little doubt that, over time, their value as an
important risk assessment and development tool will be proven. In this regard, we welcome the recent outreach efforts
conducted by the IMF, World Bank and Financial Stability Forum in major market centers, and encourage the IFrs and
standard-setting bodies, along with national authorities, to conduct further exercises of this kind.
We attach particular importance to assessment of the quality of bank supervision and securities market regulation, which
are integral elements of strong fmancial systems. The joint IMF -World Bank Financial Sector Assessment Program
(FSAP) provides a critical vehicle for undertaking such assessments and identifying vulnerabilities as well as
developmental needs. We believe it is very important, in the interests of transparency and disclosure, that countries be
allowed to share their Financial System Stability Assessments with a wider audience: it is not in the interests of the IFls,
their membership or the surveillance process to preclude this. As such, we strongly believe that the ROSC and FSAP
programs should become permanent elements of IMF surveillance.
1.

Combating Abuse of the Global Financial System

Abuse of the global financial system is a clear case of a "global public bad" - indeed, it is the dark side to international
capital mobility. The international community has begun to take action against fmancial abuse, including the public
release of three lists of uncooperative or problematic jurisdictions, and has called on the international fmancial
institutions to join in this effort.
Assisting in this effort should be seen as an integral part of the IFls' mandate to protect the integrity of the international
financial system. Money laundering activities have the potential to cause serious macroeconomic distortions, misallocate
capital and resources, increase the risks to a country's fmancial sector, and hurt the credibility and integrity of the
international fmancial system. Both the IMF and the World Bank already help countries develop and reform their
fmancial systems, improve governance and fight corruption. They are therefore well placed to encourage and support
members now on any of the three lists noted above to get off them, and to help keep members off lists in the first place.
This does not mean that the Fund or Bank should engage in law enforcement activities, which are certainly outside their
mandates. But both can playa greater role in fighting abuse and preserving the integrity of the international financial
system.
We therefore urge the IMF and World Bank, consistent with their mandates, to institutionalize the fight against fmancial
abuse and to report on their efforts by the time of the spring meetings. To initiate this effort, the Fund and the Bank
should prepare as soon as possible a joint report on their roles in protecting the integrity of the fmancial system against
abuse. In our view, the Fund could incorporate work on this issue into various activities, including technical assistance,
surveillance, fmancial sector assessments, and lending conditionality, where relevant and appropriate. We believe
country programs and loan operations should incorporate, as appropriate, preconditions and performance criteria
designed to help countries make real and measurable progress in combating money laundering. ROSCs offer a flexible
process for incorporating assessments of countries' observance of the FA TF Forty Recommendations as another separate
module.

5. Market-Based Solutions to Crises
When a modem capital account crisis occurs, the country, its creditors and the international community as a whole have
an enormous stake in the restoration of confidence. Given the scale of private flows in today's global fmancial system, the
IMF always needs to focus on promoting market-based solutions to financial difficulties. Appropriate private sector
involvement in responding to fmancial crises is important because the official sector often cannot and should not handle
the fmancing alone. Several basic presumptions should guide the Fund's approach:

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• Fi~st, those countries .that have establi.shed a. stron~ dialogue with their creditors will be more likely to avoid
CrIses, and better eqUipped to work with their creditors to find cooperative solutions should they become
distressed.
• Second, IMF lending should be a bridge to private sector financing, not a long-term substitute. Official lending
should be a first step towards a more durable solution.
• Third, the IMF's assessment of a country's underlying payment capacity and prospects of regaining market access
should guide the international community's approach.
• Fourth, where appropriate, the official sector should support approaches - as in Korea and Brazil - that enable
creditors to recognize their collective interest in maintaining positions, despite their individual interest in
withdrawing funds.
• Fifth, sometimes it will be necessary for countries to seek to change the profile of their debts to the private sector
to focus on short-term fmancing gaps. Their agreements should do so in a way that does not add to problems
down the road.
• Finally, the I~F should ~e prepare.d to I.en~ into. arrears if a cou~try has sl:lspended payments but is seeking to
work cooperatively and m good faith with Its prIvate sector creditors and IS meeting other program requirements.
Last spring, the IMFC laid out a set of operational guidelines to orient the Fund's approach to those cases where a debt
restructuring is needed. These emphasized the need for the IMF to place strong emphasis on a borrower's medium-term
fmancial sustainability and to aim to strike an appropriate balance between the contributions of official external creditors,
including the IFIs, and private external creditors. Going forward, the Fund needs to work to continue to make this broad
approach operational, focusing in particular on ways to improve the sovereign debt restructuring process, including steps
to make the process more transparent to private creditors, and on developing criteria to help better assess a country's
underlying financial situation, prospects for rapid return to the markets, and medium-term financial sustainability.

6. Modernizing the Structure and Operation of the IMF Itself
If the IMF is to be effective in promoting transparency, accountability, good governance and adjustment among its
member countries, it must continue to evolve in these areas itself. The Fund has clearly shown a capacity to evolve, in
some cases with admirable success, but this is an ongoing process.

Establishment of Independent Evaluation Office. We very much welcome and endorse the Executive Board's agreement
on terms of reference for a standing, independent Evaluation Office. This is an important step forward in strengthening
the transparency, accountability and effectiveness of the IMF. In this regard it will be critical for the office to establish a
track record that demonstrates independence, transparency with respect to work program and results, and a commitment
to external consultation. We look forward to this office's becoming operational as soon as possible and no later than the
spring meetings.
Liaison with Market Participants. We are very pleased that the Capital Markets Consultative Group has been established
and met for the first time earlier this month. This is an important aspect of modernizing the IMF. At a time when the
volume of global capital flows greatly outweighs the resources of the IMF, close contact between the Fund and private
market participants is essential.
Safeguarding IMF resources and misreporting of information to the IMF. We welcome the strengthened framework for
safeguarding IMF resources and dealing with incorrect information provided by member countries in connection with
their use of Fund resources. Early experience with the new mechanism has been broadly encouraging. Now it is essential
to apply it rigorously and uniformly. It is absolutely critical to the credibility of the Fund that, in cases ofmisreporting,
the Executive Board is informed promptly and in advance of consideration of new or ongoing programs, that information
about each case is released promptly to the public, and that an appropriately severe set of remedies or penalties are
applied, including early repurchases.
Governance Structure. We are pleased that work on this important issue has been engaged. If the IMF is to work credibly
and effectively, its governance structure, as a matter of principle, must better reflect the realities of the changing global
economy. The Executive Board's consideration of the Cooper Report was an important step, helping to identify and
highlight certain difficult and complex considerations underlying this issue. We urge the Executive Board to continue its
work on this matter.
Cooperation with Other Institutions. We urge the IMF and World Bank to follow up on the commitments made during
the spring meetings to work with the WTO and other relevant institutions to improve the effectiveness of trade-related
technical assistance, and to more fully integrate policies promoting trade liberalization and trade capacity building into
Fund programs and Bank operations.
We welcome recent steps to increase cooperation between the IMF and the International Labor Organization, including
the inclusion of the ILO as an observer at both the Development and International Monetary and Financial Committees.

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We urge the Fund to cooperate more systematically with the ILO, drawing from the experience of past pilot programs.
III. IMF Support for Poorest Countries
Our main statement on the HI PC Initiative and PRSP process will be conveyed at the Joint IMFC/Development
Committee meeting.
We have a shared desire to see as many countries as possible take the steps needed to reach decision points this year with
credible safeguards to maximize the chances for success. Ultimately, the measure of HIPC's success will not be the
amount of relief provided, or the speed with which it is given, but the extent to which it promotes real, discernible
poverty reduction, more rapid growth, and a durable exit from unsustainable debt.
Regarding financing the IMF's participation in HIPC, I want to emphasize that we are doing everything possible to secure
Congressional authorization to transfer to the PRGF-HIPC Trust the remaining investment income from the IMF's offmarket gold transactions. The President and I will continue to do our utmost to obtain authorization.

PRGF. Last year, both for its own merits and as part of the broader set of enhancements to the HIPC Initiative, we agreed
on the replacement of the Enhanced Structural Adjustment Facility (ESAF) with the Poverty Reduction and Growth
Facility (PRGF). We are still at an early stage in the transition from ESAF to the PRGF. Staff has made a good effort to
support that transition, but there is a great deal of work to be done to ensure that the PRGF's sharper focus on growth and
poverty reduction is reflected in program design.
The sharper focus should be evident, in our view, in the pace, content and sequencing of reforms. It should also be
reflected in the streamlining of conditionality. While there has been some evidence of this evolution, we need to see more
explicit discussion in program documents so as to more clearly demarcate the shift from ESAF to PRGF. We are
convinced that a stronger effort to document operational and programmatic changes will reinforce the intended new focus
of the PRGF and help ensure that the public better understands and fully appreciates it.

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FOR IMMEDIATE RELEASE
September 24, 2000
LS-907
STATEMENT OF TREASURY SECRETARY LAWRENCE H. SUMMERS
AT THE JOINT SESSION OF THE INTERNATIONAL MONETARY AND FINANCE COMMITTEE
AND THE DEVELOPMENT COMMITTEE
PRAGUE, CZECH REPUBLIC
POVERTY REDUCTION STRATEGY PAPERS AND THE HIPC INITIATIVE
Last year, we recognized the importance of enhancements to the HIPC Initiative to provide faster, deeper, and broader
debt relief for countries truly committed to poverty reduction and growth. We also agreed on a new framework for
concessionalloans, linking them to country-driven national poverty reduction and economic growth strategies. The staff
and management of the IMF and World Bank have worked hard to translate these agreements into concrete actions, and a
number of participating countries have made impressive efforts to implement their responsibilities under the new
framework. We recognize and very much appreciate these efforts.
These reforms have been instrumental in addressing our shared desire to see as many countries as possible take the steps
needed to reach decision points this year. We have seen substantial progress in this regard and we hope and expect that
20 countries will qualify under the initiative by the end of the year on the basis of credible commitments to growth and
poverty reduction. As we proceed, however, we need to ensure that we adhere to requirements that will promote real,
discernible poverty reduction, more rapid growth, and a durable exit from unsustainable debt. The true measure of
HIPC's success will not simply be the amount of relief provided, but how those resources are used, and whether the
reforms that accompany RIPC are able to deliver durable poverty reduction and growth. With this objective in mind, I
would underline the need for improvement on four critical points going forward.

1. Agreeing on a framework for rapid, effective debt relief.
The inevitable tension between the speed at which relief is provided and the desire for relief to have maximum impact
will continue to be a major concern in the implementation of the enhanced HIPC initiative. There can be no excuse for
unnecessary delay, but nor can there be an excuse for allowing these crucial resources to be wasted. As we shift from the
strongest performers to more complex cases, it becomes increasingly important to define clear standards for striking the
right balance so that countries qualify for relief as rapidly as possible and effective safeguards are in place.
One of the most pressing gaps relates to the planned use of savings generated by interim relief and the need for
improving tracking systems. More systematic and transparent reporting on the level of expected RIPC savings
throughout the process, clear plans on what the authorities plan to do with these resources, and the establishment at the
decision point of systems to track these commitments -- such as we saw in Uganda -- should be standard to HIPC
documentation and HIPC support.
I-PRSPs must also give more explicit attention to the country's plans to involve the public in th~ dev~lopment of the full
PRSP. Timely publication of, and public access to, PRSPs, HIPC, and IFI program doc~entatIOn wIll go a long way to
support these efforts. In this light, we welcome the recently approved policy that staff wIll not recommend Board
endorsement of an I-PRSP and PRSP without prior publication.

RIPe debt relief will do little to reduce poverty in the absence of a stable macroeconomic environment and a
comprehensive poverty-focussed growth and development strategy. This underscores the importance of maintaining a
credible standard for the establishment of a track record under PRGF/IDA assistance, especially for the most difficult and
highest risk cases. We must carefully consider the impact that measures primarily aimed at speeding up the process have
on each country's overall prospects for robust growth, endu~g poverty redu.ction and debt sustain~bility. When there has
been an interruption in BanklFund programs, we should aVOId any compressIOn that precludes credible assessment of

STATEMEl'U OF TREASURY SECREJARY LAWRENCE H. SUMMERS AT THE JOINT SESSION OF T.. Page 2 of 3

perfonnance against fonnal program criteria immediately prior to the decision point.
I~ is essential that the condit.i<?ns required to su~cessfully reach completion points are transparent, reflect country
Clfcumstances, and are ambItI<?~s, but also achIev~ble. W.e are pleased that th~ Fun~ and Bank increasingly recognize the
need to ensure that these c.ondItIons reflect strategIc ~onsIderatton ?f the ke):' ImpedIments to poverty reduction and
growth and that the Bank mtends to develop mechamsms to allow It to momtor progress in a more systematic way.

2. Establishing core elements of a national poverty strategy.
Th~ PRSP framework holds out th~ prOl!1is~ of a substantial shift in the way the IMF and the World Bank engage with
theIr poorest members. The essentIal ~bJec.tIve, to e~be~ I~F an? Worl~ B~nk operations in a strategic country-driven
agenda for growth and poverty reductIOn, IS compellmg m ItS lOgIC. But ItS Iffiplementation is complex, and we are still at
the early stages in translating this objective into reality.

The experience of the last year shows that the Poverty Reduction Strategy Paper process has, in a number of countries,
advanced a more systematic approach to the development of national poverty reduction goals and strategies, with greater
openness and transparency. At the same time, we've seen a need for greater clarity with regard to the core content of a
PRSP necessary to deliver sustainable results and we are very pleased that the Bank and Fund plan to better focus on core
content for PRSPs. Such clarity will help HI PC governments, civil society and other development partners to better
understand the expectations of the IFIs and should lead to more comprehensive, better targeted, and more credible
PRSPs. In our view, essential elements of a PRSP include:
• Actions to achieve more rapid, job-creating growth, notably in agriculture, that will create income opportunities
for the poor.
• Are-alignment of public expenditures, targeted to support poverty reduction actions, and stronger systems to
track expenditures and measure their impact on poverty reduction.
• Focus on expanding access and improving the quality of basic education and basic health care, with particular
emphasis on HIV / AIDS prevention.
• Actions to improve governance, transparency, and accountability.
• A process for engagement of a broad spectrum of civil society in developing the PRSP and monitoring and
tracking progress in implementing the strategy.

3. Committing to a strong framework for maintaining to ensure debt sustain ability.
A principle objective of the HIPC initiative is to enhance prospects for sustainable debt positions. To achieve this goal,
there is need for a more fully articulated framework for assessing debt sustainability and its implications for the scale and
composition of new lending to HIPCs. This will require, for example, more rigorous and realistic staff assessments of
countries' borrowing capacity, including vulnerability analyses. It should also involve clearer constraints on new public
sector borrowing overall, and non-concessionallending in particular, for a period following debt relief, and greater
recourse to grant fmancing where appropriate.
In this context, the U.S. is committed to pursuing options for greater differentiation in IDA's lending tenns, including the
use of grants for HIPC countries in the IDA-13 replenishment negotiations. A combination of constraints on new
borrowing, increased grant fmance and greater selectivity to ensure resources go to countries best equipped to use them
effectively will serve all stakeholders well.

4. Accelerating operational changes in the Fund and Bank in support of the PRSP framework for analytical work and
lending operations.
While PRSPs must be country-owned, the IFIs have an important supportive role in assisting countries in the fonnulation
of these strategies. As a priority, staff should help countries to evaluate the lessons of past and current policies, avoid a
laundry list approach, move to a more strategic framework to defme, prioritize, and implement fully casted poverty
programs, and analyze the tradeoffs of alternative policy courses. In this regard, we welcome the commitment of the IFIs
to assist countries in more systematic use of ex-ante analysis of the expected poverty reduction impact of such policies.
As the process moves forward, we expect the Country Assistance Strategies (CAS), the new PRSCs, and PRGFs to
articulate how these programs will reflect the priorities and strategies contained in the PRSP.

The Role of the World Bank: We believe the Bank should take the lead in setting the priority social and structural
conditions to operationalize the new development framework set out in a borrower's PRSP (or I-PRSP). We therefore
support the development of the Poverty Reduction Support Credit (PRSC) as the Bank's parallel instrument to the Fund's
PRGF that would set out and be based on the priority social and structural conditions that are now often embodied in the
PRGF. The PRSC should be the principal device for coordination of policy and consolidation of fast-disbursing lending
instruments. In this respect, it should not be additional to the currently programmed level of adjustment lending nor

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result, by itself, in a shift in the mix of Bank operations in favor of a greater share to budget support. Moreover, such an
instrument must be used selectively and with appropriate safeguards. Our Development Committee statement contains
more details on what we consider an appropriate framework for the PRSC.

The Role of the Fund: We are at an early stage in the transition from ESAF to the PRGF, and there is a great deal of
work to be done to ensure that the PRGF's sharper focus on growth and poverty reduction, according to priorities outlined
in PRSPs, is reflected in program design - specifically, in the pace, content and sequencing of reforms. Similarly, we
expect to see a streamlining of structural conditionality. We need to see more explicit discussion of these issues in
program documents with specific examples so as to more clearly demarcate the shift from ESAF to PRGF. We are
convinced that a stronger effort to document operational and programmatic changes will reinforce the intended new focus
of the PRGF and help ensure that the public better understands and fully appreciates it.
Conclusion
The United States has strongly supported and will continue to support the ambitious reforms necessary to enhance the
IMF's and World Bank's capacity to support country-led growth and poverty reduction efforts by their poorest members.
We believe HIPC is a vital part of this agenda and President Clinton and I continue to actively seek Congressional
support for the U.S. contribution to this initiative. We are requesting a total of$435 million in appropriations for HIPC
debt relief through FY2001, including $75 million for our bilateral costs and $360 million for the HIPC Trust Fund (as
the first part of our $600 million commitment to the Fund). We are also actively seeking Congressional authorization of
US support for use of the remaining 5114 of investment income on profits from the IMF off-market gold sales for debt
relief.

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DEPARTMENT

lREASURY

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TREASURY

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omCE OF PUBllCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASmNGTON, D.C. - 20220. (202) 622-2960

FOR IMMEDIATE RELEASE
September 25, 2000
LS-908
STATEMENT OF TREASURY SECRETARY LAWRENCE H. SUMMERS
AT THE DEVELOPMENT COMMITTEE OF THE
WORLD BANK AND THE INTERNATIONAL MONETARY FUND
PRAGUE, CZECH REPUBLIC

Introduction
The global economic environment, so important to the economic fortunes of the developing countries, is stronger today
than it has been in many years, with stronger and more broad-based growth across most of the industrial and emerging
economies. In the m~or industrial countries, low interest rates have been supported by an environment oflow inflation
and improved fiscal policies, especially in the United States. And just two years since what was widely believed to be the
most challenging situation in global financial markets in fifty years, private capital flows are returning to emerging
market economies. Signs of greater differentiation by investors between countries are emerging, and we are seeing a
welcome increase in the share of flows in the form of direct foreign investment.
For all that it would be a serious mistake to consider that all of the risks and challenges were now behind us. Structural
reforms will be needed in many emerging economies for a strong and more inclusive recovery to be sustained. The rise in
the price of oil has the potential to affect the poorest countries adversely. And, perhaps most important, this time of
extraordinary economic prosperity in the US and other countries is still a time when fully half of the world's people live
on less than two dollars a day. The overarching global imperative to work to combat poverty and support successfully
economic development in the poorest countries must gain added urgency today, when HIV/AIDS, conflict and other
catastrophes are helping to reverse years of development gains in many of the poorest countries. Mortality rates in a
number of African countries are now rising rapidly, after several decades of decline, and adult life expectancy is
returning to levels not seen since the 1950s.
It is a central lesson of history that rapid economic growth is absolutely essential to rapid or long-lasting reductions in
poverty. But history also teaches that growth requires more than a stable macroeconomic environment. Three other
elements are also crucial First, governments need to put in place the institutions and rules that will allow markets to
function well. Second, they need to make public investments with particularly high social returns, especially girls'
education and basic health services, including immunization coverage for all children. And third, governments need to
promote an effective rule of law, through good governance, transparency, and support for the emergence of a healthy
civil society. This basic framework for promoting human development can and must be our touchstone as we chart a
course for the development institutions going forward.

Framework for Operational Reforms in the MDBs
The World Bank and the regional development banks remain at the core of the international effort to address the
formidable economic and development challenges facing developing, transition, and emerging economies. The MDBs
have compiled an impressive track record of adapting and improving their operations in ?rder t~ improve their
effectiveness in promoting pov~rty re~~ction and economic growth. The challenge ~ow IS to ~UlI~ o~ that pro~ess and to
press forward with the substantial addItIOnal work necessary to strengthen the capaCIty of the mstItutIOns to delIver
enduring results.
The United States remains committed to working with Management and other members to strengthen the MDBs going
forward, to improve their impact, sharpen their focus, and ensure that the institutions are effectively positioned to meet
new challenges and new expectations. We encourage the Committee to engage on this issue in a collaborative spirit.
We believe the contribution of the MDBs to development progress can be strengthened by a shift in emphasis in several

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key areas:
• The approaches underway to elevate poverty reduction as the overarching objective of their programs in the
poorest countries should be applied consistently and implemented vigorously.
• Prior~ty should be. giv.en to supporting human developmen!, particu!arly through targeting greater resources to
core mvestments m high development returns, such as basIc education and health services, access to clean water
rural development infrastructure, and to building the institutional underpinnings necessary for market-led
'
economic growth.
• We commend President Wolfensohn's pledge to support the Dakar Framework goals by increasing World Bank
lendin~ for p~imary educa!i~n by 50 percent in the coming year~ ~nd providing support to countries in drafting
educatIOn actIOn plans. It IS Important that the Bank report to Mmlsters by the Spring Meetings on the progress
and future plans for assisting countries in this crucial area.
• The MDBs should reinforce their efforts to ensure greater selectivity, both across sectors and countries, and to
substantially improve their performance in delivering clear and monitorable development results. In particular,
performance-based allocation frameworks should largely drive MDB resource commitments for all borrowers.
• The borrowers' policy environment must be fully taken into account, including governance issues and the quality
and components of fiscal expenditures.
• The MDBs' current loan pricing policies should be reexamined with a view to promoting a more selective focus
on investments with the highest development, poverty reduction and transition returns. We look forward to a
comprehensive review by the World Bank of its lending terms, including the scope for greater differentiation of
terms across different investments and borrowers, and the implications of alternatives for its income and balance
sheet.
• Additional steps should be taken to increase MDB transparency and accountability-- including by further
increasing public access to information
• We believe there is substantial scope, in all of the institutions, to strengthen internal fiduciary auditing and budget
procedures, as well as evaluation and supervision capacity.
• Full compliance by the institutions with established safeguard and due diligence policies must be assured, which
will require the establishment of compliance units to ensure more effective mechanisms within the context of each
institution.
• Greater attention should be paid to the environmental impact of core lending, including structural and
programmatic lending.
• Operational collaboration across the MDB system, in concert with other donors, including the UNDP and other
specialized agencies, should be deepened, focusing closely on areas of comparative advantage and value-added.
Within the MDB system there is ample scope for greater collaboration on core diagnostic work, development
effectiveness, evaluation, and the adoption of uniform procurement rules and procedures of the highest standard.

Global Public Goods
We welcome the growing recognition of the need to pay greater attention to development investments providing crossborder benefits. Global Public Goods tend to be underfunded and undersupplied, particularly in those areas where the
most benefits would accrue to developing countries. We believe the World Bank and the regional development banks can
make a major contribution in this area in ways that complement established priorities for poverty reduction.
We believe there is considerable scope to expand MDB investment in three core areas: (1) stemming the spread of
infectious and childhood diseases, (2) protecting the global economic environment, and (3) creating developmentally
relevant knowledge in sectors such as agriculture. To be effective, selection of priority areas for increased Bank
engagement must remain firmly grounded in the traditional criteria -- consensus on need, value added, catalytic role, and
comparative advantage.
HIY/AIDS must certainly be a particularly high priority component of any program to address communicable diseases.
The epidemic'S catastrophic impact now in Africa, where it is reversing the hard-won economic gains of so many
countries, also threatens much of Asia and other regions. We therefore commend recent efforts that will substantially
strengthen the Bank's engagement on this most urgent issue, particularly the World Bank's pledge to triple its lending for
communicable diseases and its recent provision of a $500 million program to combat HIY/AIDS in Africa.
• There is also an urgent need for the Bank and its partners to accord major attention to other more easily
preventable infectious and childhood diseases that continue to pose fundamental health risks and cause early
death, squandered potential, and stunted development.
• Regional and global actions to preserve and protect environmental resources are an integral component of poverty
reduction with major long-term impacts on health and other key aspects of human development.
• Most of the poor live in rural areas, which also tend to have the highest concentrations of extreme poverty. While
it will be very difficult to replicate the scale of the impact international agricultural research had in the. green .
revolution, there is still substantial scope for agricultural research to harness the large untapped potential of thiS
sector for raising growth and incomes.

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The diversity of.institutional arrange~ents needed to ad~ress the variety of iI?portant global public goods is great and
underscores the illlportance of effective donor collaboratIOn. We see responsIble selectivity and partnerships as
fundame!ltal t~ a~ expand in!? progl'll~ of Bank support. ~n assessing it~ options. for sl!ch ~ program, the Bank should
accord high pnonty to workmg With ItS partners to Identify those publIc goods m which It clearly has a comparative
advantage as well as those areas that are best addressed by other institutions, including UN agencies.
While the .~ank's regular lending can continue to addres~ G lo~al Public Goods at the country level, the Development
Grant FacIlIty (DGF) already complements country lendmg With broader effect. We believe it is an appropriate vehicle
for ~xpanding the Bank:s .suppo,"! for core Global Public Goods such as combati~g infectious diseases, protecting the
envIronment, and promlsmg agncultural research. To that end, we see a compellmg case for an early increase in DGF
funding, targeted to these areas, and urge the Bank to identify internal resources for this purpose.
We urge the Executive Board to follow up on our Development Committee discussions with the aim of integrating a
selective but action-oriented Global Public Goods agenda into the Bank Group's Strategic Framework. We would like to
see this issue placed on a "fast track" and suggest an interim Management report to the Board by the end of the year.
We also favor inclusion of the Bank's operational program for Global Public Goods on the agenda of our April 200 1
Committee Meeting as a progress report and with the option remaining open for additional Ministerial consideration.

Intensifying the Fight against Financial Abuse
We accord major importance to greater and more concentrated efforts to combat financial abuse and to strengthen the
role that the World Bank can play in more systematically incorporating fmancial abuse concerns in its work with member
countries. There is a natural fit between the World Bank intensifying its financial abuse work and its mandate in areas of
fmancial sector reform, promoting good governance, and fighting corruption.
Abuses such as money laundering, inadequate bank supervision, and corruption undermine the credibility and efficiency
of the international fmancial system. They also pose a threat to our development agenda in that they lead to distortions in
the allocation of resources, curb productivity growth and incomes, and undermine financial systems and institutions.
Combating these abuses is an integral part of effective development and institutional capacity building that requires
action at both a country and a global level.
The Bank is uniquely well placed to work with the International Monetary Fund, the regional development banks, and
member countries to strengthen its analytical and diagnostic work on fmancial abuse issues, including in its Country
Assistance Strategies, social and structural policy reviews, and stand alone financial sector analyses. The Bank's
engagement in assisting countries design and implement programs of corrective action also provides clear value added,
and it conforms well with the growing international consensus - most recently demonstrated at the APEC Finance
Ministers' meeting in Brunei, the Okinawa Summit in July, and the Western Hemisphere Finance Ministers' meeting last
February in Cancun -- on the need for better coordinated and more effective international programs in this area.
We urge the Bank, Fund, and regional development banks, and all their members, to work with us in helping to
institutionalize efforts to fight fmancial abuse as part of their on-going operations and within the scope of their financial
issues mandates. In this regard, we call on the Fund and Bank to prepare a joint paper on their respective roles in
combating fmancial abuse for discussion by their Boards before the Spring Meetings and ask them to report to the Spring
IMFClDevelopment Committee Meetings on the status of their efforts.

The Bank's Role in the Poorest Countries
The enhanced HI PC Initiative is an integral part of the broader development agenda, and provides a unique opportunity
to encourage reform and improve the economic prospects of those poorest countries committed to sound policies. When
combined with the right economic and social policies, debt relief can make an important difference. The PRSP process is
intended to complement HlPC by establishing the solid policy foundation for HlPC and other poor countries, and their
development partners, to build the growth and poverty reduction frameworks needed to deliver sustainable results.
The enhanced HIPC Initiative and the PRSP process continue to merit our strong support and engagement. We welcome
the very significant progress made in both areas. We also recognize that it takes tir?e to develop. the appro~riate national
policies and the right institutions and pr~ctices to r~a~ the full ~evelopment poter:tlal of debt r.el~ef. There I.S much .at
stake for the poorest countries; it is crucI.al to "get It nght." WhIle I share the deSIre to have el~glble countries quahfy for
debt relief as rapidly as possible, the deSire for speed cannot supersede the need to ensure lastmg development results.
We recognize and very much appreciate the priority and work that the staff and management of bot~ the Bank and the
IMF have given to translating HlPC and PRSPs into positive development outcomes. On my June triP to Sub-Saharan

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Africa, ~ was also !mpress~d by the strong se~se of com.mitment demonstrate.d by the governments of Mozambique and
T~zama to. esta?hs~ credl~le poverty reductl~n strategies, a~d the opportumty the framework has opened for broad civil
society partlcpatlOn m shapmg country strategies. The commitment being shown in other countries such as Bolivia is
also encouraging.
'
,
As the'pr~cess moves forward, it is imp~rtan~ ~ot to lose. sight of the fact that one of HIPC's core objectives is to enhance
countries future prospects for debt sustamablhty. There IS a need for a more fully articulated framework to assess the
implications o.f this debt sustainaJ:>ility for the scale a~d composition of new lending. Clearer constraints on new public
sector borrowmg on non-concesslOnal terms for a penod after HIPC debt relief should be considered. Further restraint on
concessional lending may also be warranted, including through greater recourse to grant financing.
We believe the Bank should take the lead in setting the priority social and structural conditions to operationalize the new
development framework set out in a borrower's PRSP (or I-PRSP). We therefore support in principle the concept ofa
discrete instrument parallel to the Fund's PRGF that would set out and be based on the priority social and structural
conditions that are now often embodied in the PRGF--as long as such an instrument is used selectively and with
appropriate safeguards. The Poverty Reduction Support Credit (PRSC) should be the Bank's principal device for
coordination of policy and consolidation offast-disbursing assistance. It should not be additional to the currently
programmed level of adjustment lending.
We do not believe that it would be appropriate for the introduction of PRSCs to necessarily lead to a strategic shift in
Bank operations to budget support. This would have profound implications for the Bank and poses a major fiduciary
challenge. Administratively, it may be much easier for the Bank to provide budget support than to try to implement
discrete investment programs. But there is no question that the risks of inefficiency and waste, without adequate
accountability, are also higher. Any assistance instrument, including budget support, needs to be appropriate to the
institutional capacity, accountability, and policy environment of both the recipient government and the Bank.
It is therefore crucial that any new lending instrument for providing budget support be carefully structured to:

• phase in (tranche) support based on performance, not just commitments, against a set of credible benchmarks;
• provide for detailed annual reviews by the Board, with Board votes on whether to proceed to the next year's
program and disbursement based on prior year's performance;
• ensure that these reviews specifically examine performance under the PRGF (just as we would expect reasonable
linkage to PRSCs in PRGF reviews);
• integrate and build upon ex-ante due diligence and diagnostic work, including Public Expenditure Reviews,
Country Financial Accountability and Procurement Assessments, Poverty and Environmental Assessments, and
SociaVStructural Reviews, and sectoral policy analysis.
• include a mechanism to track and report on performance of reforms, budget and expenditure shifts, efficiency
gains, and poverty impacts from the operation; and
• be grounded in the Bank's country assistance strategy, which itself must evolve into a more strategic vision for
implementing a credible growth strategy.

World Bank Role and Instruments in Middle Income Countries
We very much support the increased priority the World Bank is giving to reassessing its role in middle income countries
and to determining how it can best assist these countries to address the economic and social weaknesses that constrain
their access to private finance. The Bank's initiative to establish the Task Force on Middle Income Countries is timely
and welcome, and we hope it will lead to a more selective lending framework focused on facilitating graduation. We
expect the Task Force also to consider the potential role for differentiated pricing according both to country and to the
activity being funded.
The Bank retains an important role in supporting long-term development and reform in these countries, but its activities
should be more sharply defmed and more systematically focussed on adding value that the private markets cannot. This
means helping countries to build strong, open fmancial systems, with the institutional and legal framework for well
.
functioning domestic capital markets, insolvency regime.s, and bett;er corporate governanc.e, so that th~y can .reduce thelf
need for official assistance over time. It also means helpmg countries to Improve the effiCiency ofthelf pubhc
expenditures and to strengthen social sector investments and targeting to better address poverty and inequitable lack .of
opportunity. We also believe that the. Bank, and its reg~onal cou.nterpa~s, should ~educe the share.an~ volume ofthelf
lending to the more advanced emergmg market countries over time, With graduatIOn as a clear obJective.
As with low-income countries, budget support/programmatic lending should be based on appropriate fiduciary and
diagnostic work. Before the United States cou~d endorse a sign.ificant ~ovement b!, the Bank in this direction in ~ts
lending operations, we would need to be convmced of the ments of thiS approach m terms of development effectiveness
relative to other forms of lending. Pricing will be a crucial element. We would also want to see a full discussion of the
institutional and operational changes that would be required within the Bank to ensure effective use of resources,

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including the monitoring mechanisms, fiduciary framework, and performance criteria that would accompany such
lending.

The Comprehensive Development Framework
The C.omprehen~ive Deyelopment Framework (CDF) repres~nts .a ~ajor effort by the Bank to increase the development
~ffectIveness of Its lendmg. We have long support~d the basI~ prmclple~ that unde~li~ ~his approach: providing assistance
m the .c?ntext of a clear, lo~g-~erm strategy; ensu~mg bo~?wmg countrIes' responslblhty for making their own choices;
select~vlt):' an~ cl?se coordmatlOn among donors m prov~dm~ support; a.I?-d full accountability for results. Effective donor
coordmatlOn IS VItal to development results, and harmomzatlOn among aId agencies can enhance their effectiveness as
long as it is based on the highest possible standard.

We believe the Bank and its borrowers were prudent in initiating the CDF as a "pilot" in selected countries to determine
how it would wo~k in practice before replicating th~ approach on a more general basis. As the Bank's reports to the Board
and to the CommIttee demo~strate, the chal!e~ge~ he where they always h.aye: on the ~round, in producing enduring
results. Overall, as the Bank s reports note, It IS dIfficult to draw any defimtIve concluslOns about the additional
development impact of the CDF framework. In large part, this reflects the difficulty of measuring implementation and
results, as well as extracting "lessons learned", after only eighteen months of operational experience.
The pilot experience underscores the many difficult and complex operational problems that still have to be to be
addressed before the model can be replicated more generally in Bank operations. These include the major constraints
posed by the lack of government capacity, the lack of involvement and capacity by government units other than fmance
ministries, and the lack of cultures supporting participation in many borrowing countries concerned by the reports'
fmdings on the negative attitudes of some pilot governments regarding the participation of civil society. As to donor
coordination, although many aid agencies have indicated their support in principle for the CDF approach, old attitudes
and ways of doing business strongly persist.
In this connection, we believe a more careful assessment of CDF experience is needed before an informed decision can
be made on use ofthe CDF as the basis for any significant changes in the Bank's organization, policies and procedures,
and resource allocations. We therefore welcome and look forward to the longer-term assessment of the CDF DEC and
OED are preparing.

We specifically disagree with the view that CDF necessarily requires programmatic lending. Such lending will be
effective only in countries with the capacity and fiduciary framework to ensure effective resource use. It is also critical
that the Bank adhere to its own fiduciary and "safeguard" policies and not delegate these to borrowing governments.
Environmental and other safeguard standards, along with an accountable process for monitoring and evaluating
compliance, must be maintained at the highest level.
Finally, I would like to add a note of caution about the concept of "country ownership." There is no question that
countries have the ultimate responsibility for their economic and development management, and that full country
engagement and commitment are vital for aid to have a significant and positive impact. Yet fact that a country "owns" a
particular set of priorities does not in itself automatically validate their economic viability.
It is surely right for the development community to operate with a presumption that countries should not be forced to
adopt policies they carmot support. But it is also essential that we and the Bank, as stewards of scarce development
resources, also own the programs we support and make our own assistance decisions on the basis of a roadmap ensuring
real and sustainable development results. Where that is the case, we will be enthusiastic and supportive partners. When it
isn't, we should direct our efforts and resources elsewhere.

We look forward to further discussions of appropriate steps to take us closer to realizing the CDF vision.

IBRD Financial Capacity
Management and Governors have a shared responsibility to safeguard the Bank's fmancial soundness and its risk bearing
capacity. This is fundamental to our ability to provide effective support for the Bank's evolving development mandate.
We therefore appreciate the Background Note ~pdat~g Ministers on the IBRD's Financial Capacity and are pleased that
the Bank continues to operate on a firm fmanclal baSIS.
We continue to believe that none of the non-concessional MOB windows should expect new capital increases. We
believe that the adoption of more selective, per~orma~ce-based lending programs will pr~vide a large and flexible
contingent fmancial capacity for the IBRD and ItS reglOnal counterparts to respond effectIvely to borrowers affected by
future disruptions in private market fmance.

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We believe MDB financial crisis lending should be limited to exceptional cases: in such cases, MOB support can be
critical to the success of recovery programs by helping to minimize long-term economic damage, sustain and restore
development momentum, and contribute to intensified economic reform and restructuring. We see the MDBs as
particularly well-positioned to provide significant value added in the effort to: (a) avoid unnecessary contractions in
fiscal expenditure; (b) restructure banking and other financial institutions; and (c) minimize the adverse impact of the
crisis on the poor by, for example, strengthening social safety nets.

Conclusion
The challenge of global poverty can be overcome if countries, supported by the international community, make the sound
policy choices available to them. No country will succeed without the right policies in place. And the lesson of history is
that to be effective, external assistance needs to be targeted on countries and policies with a genuine commitment and
proven capacity to deliver results.
The task of poverty reduction remains formidable but awareness and concern around the world on the need to improve
the effectiveness of efforts to address the problem have never been higher. There is also probably more policy agreement
on "the right way forward" than ever before, and commitment to invest in the capacity building needed to enable
countries to apply these approaches in their own country circumstances. The question is how quickly and how effectively
we can all move to translate our knowledge, our concern, and our commitment into action.

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September 26, 2000
LS-909
STATEMENT BY TREASURY SECRETARY LAWRENCE H. SUMMERS
TO THE ANNUAL MEETINGS OF THE IMF AND WORLD BANK
PRAGUE, CZECH REPUBLIC

Chairmen, Governors, Ladies and Gentlemen, Mr Wolfensohn, Mr Kohler, President Havel, people of the Czech
Republic, as we gather for these meetings we can take some satisfaction that the global economic environment is in many
ways more favorable than it has been for some time. Growth in most of the industrial and emerging market economies
has strengthened and become more broad-based, and there is the prospect that the imbalance in global demand that has
prevailed in recent years will recede. This stronger external environment, in tum, must greatly enhance the outlook for
the developing economies in the coming year.
But, we must not let these improvements lull us into complacency. In the near term, the sharp rise in the price of oil is an
important concern for consumers and businesses around the world, and has the potential to hit developing countries
particularly hard. Stability in oil markets, around reasonable long-term prices, is strongly in the mutual interest of both oil
producing countries and oil consuming countries. In that context, we are pleased that these meetings have afforded an
opportunity for countries representing both groups to unite behind this objective.
More broadly, we continue to face the overarching economic and humanitarian challenge of our time: building a
successful, truly global economy that works well for all of our peoples. The World Bank and the IMF are at the forefront
of global efforts to make globalization work and ensure that it reaches the very poorest. Over the years they have made
vital contributions to that goal. But all now recognize that they need to reform and strengthen themselves as institutions
to rise to the new challenges that a 21 st century global economy presents.
Important reform efforts have already begun. This a reflection of the efforts of the directors, shareholders and staff of
these institutions, and the strong leadership of President James Wolfensohn and former-Managing Director Michel
Camdessus. But we all know that there is a great deal more to be done. And we especially welcome Managing Director
Horst Kohler's commitment at these meetings to continuing the work of reform.
Let me briefly address our two central preoccupations as we meet here this week: the creation of a strong and more stable
system for capital to flow between nations and into sustainable investment and growth; and the development imperative
for the world's poorest countries.

r. Reform of the International Financial Architecture
In Prague we have taken important further steps toward building an IMF that is more attuned to the dynamics of modem
capital markets and able to playa more effective role in the prevention and resolution of fmancial crises. We especially
welcome:
• ConfIrmation at of the IMF Board agreement to reform the pricing and structure of IMF facilities to enhance the
focus on very short-term emergency fmance, priced to enhance the incentive to repay.
• The commitment to strengthening further the IMF's surveillance apparatus, with concrete efforts to re-orient
surveillance toward issues of leverage and fmancial soundness that that have been sources of vulnerability in
recent crises.
• Agreement on the need for a review of the scope and nature of conditions in IMF programs, a goal that Managing
Director Kohler's has strongly endorsed.
We have also begun an important discussion on the continued development of the World Bank's role in the emerging

STATEMENT BY TREASURY SECRETARY LAWRENCE H. SUMMERS TO THE ANNUAL MEETINGS .. Page 2 of3

market economies with agreement on an internal review of the Bank's role in these countries. We believe that this should
afford an important opportunity to evaluate the pricing of the Bank's products, and to focus the Bank's activities more
squarely on activities where it can add value that the private markets cannot.
II. The Development Imperative in the Poorest Countries
The debt relief issue has given unprecedented global prominence to the plight of the world's poorest countries. This
moment of heightened moral energy in support of raising the living standards of the poorest is as welcome as it is rare
'
and it is incumbent upon all of us who are committed to the global development effort that we use this moment to
maximum effect.
That is ~hy it is so vitally import.ant that the HIPC.initiative work, a!ld that it make a real difference to people's lives. To
be sure, m order to make a real dIfference, debt rehefhas to be proVIded. To that end we welcome the commitments the
institutions have made here in Prague to doing everything possible to ensure that 20 countries qualify by the end of the
year, and to minimize the risk of needless bureaucratic delay.
At the same time, in order to make a real difference, debt relief has to result in a change of policies and resource flows in
these countries that will actually work to reduce poverty and lay the basis for more enduring and inclusive economic
growth. We would do a grave disservice to all those who believe in this effort and ultimately to these countries' own
people, if debt relief were to be provided without a credible basis for assuring that the savings will be effectively rechanneled into health care, education and other central priorities.
For HIPC to succeed over the longer term it must also represent a change in a country's position in the international
fmancial system. We must ensure that the debt is reduced enough to assure sustainability going forward. That is why
President Clinton, at these meetings in Washington last year, led the call for providing 100 percent relief of bilateral debt
to countries that qualify for HIPC. It is also essential that we assure that countries that have received debt relief are not
burdened with new debts that recreate old problems of sustain ability.
To that end, as we consider how concessional assistance to the poorest countries can best be provided in the future, the
United States is today calling for serious consideration to the creation of a 100 percent concessional window for the
provision of pure grant fmance within IDA. Grant fmance would have three crucial advantages:
• It would obviate concerns about future repayment.

• I would allow for a broader range of channels through which support can be provided in contexts where existing
government institutions are poorly placed to deliver results.
• And it would provide an especially effective way of channeling support to crucial human development projects such as the fight against HIV1AIDS - whose benefits will not be measured in dollars and cents.
More broadly, if we are truly to realize the special significance of this millennial moment, we must re-double our efforts
to ensure that its spirit lives on, not just in the official support that is provide the HIPC countries, but in all our efforts to
support development in the poorest countries going forward.
In that context we believe that the Bank's shareholders need to reaffirm and act on their commitment at the Dakar
education sum~it last April to a global initiative in support of primary education, especially for .girls. The Bank can and
must playa central role in making this initiative a reality. We also welc0I?e the agreement here l!l Pragu~ to e~pand the
Bank's support for global public goods such as the development of effectIve treatments an~ ,,:accme~ for mfectlOus
diseases such as HIV1AIDS and malaria, protecting the environment, and support for promIsmg agrIcultural research. In
that context we call on Ministers to support an early increase in Development Grant Facility (DGF) funding, targeted to
these three areas, and to work to identify internal funds for this vital objective.
III. Concluding Remarks
In these and other ways, we can work to ensure that this renewed global focus on the world's poor has an impact well
beyond the accident of the calendar that ha.s helped give it such force. B~t ~t a time wh~n the broader challenge of
globalization is also much in everyone's mmds, let me end by re-emphasIzmg one cruCial development lesson of the
century just completed.
That lesson is that there can be no single development today with greater potential to set back the prospects of the world's
poorest than a rejection of the goal of successful global economic integration. The world set itself on that course in the
late 1920s and 1930s and countries have spent more than fifty years undoing the effects. The great and troubling

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divergence in national incomes that we see today is not because so many countries are effectively integrating themselves
with the global economy - it is because so many countries are not. That is not an argument for integration without rules or
an argument for allowing people to be left behind: as President Clinton has said many times, we must build a
globalization that works for all of its people. It is the strongest possible argument for our task of making global economic
integration succeed. Thank you.

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FOR IMMEDIATE RELEASE
September 23,2000
LS-9l0
ST ATEMENT OF G-7 FINANCE MINISTERS AND CENTRAL BANK GOVERNORS
(pRAGUE)
1. We, the Finance Ministers ofthe G-7 countries, including the President of the Eurogroup, the Central Bank Governors
o~ Canada, Jap~, the. United States, and th~ United Kingdom and the President of the European Central Bank, met today
WIth the ~anagmgp?,ector of the InternatIOnal Monetary Fund to review. recent developments in the world economy.
We, the.Fmance MmIsters and Central B~ Governors of the G-7 c?untnes together with the Managing Director ofthe

InternatIOnal Monetary Fund and the PreSIdent of the World Bank, dIscussed reform of the international fmancial
institutions. We, the Finance Ministers and Central Bank Governors of the G-7 countries also discussed implementation
issues of the enhanced RIPC initiative, and abuse of the global financial system.

Developments in the G-7 countries
2. Prospects for continued expansion in industrialised countries and the world economy more generally have further
improved in recent months as underlying fundamentals have strengthened. A more balanced and therefore more
sustainable pattern of growth among our economies is emerging. Continued vigilance, however, remains important and
we re-affIrmed our commitment to macroeconomic and structural policies directed at improving conditions for strong
and sustainable growth in each of our economies. More specifically:
• In the United States and Canada, growth remains strong, unemployment low and inflation contained. For a
sustainable rate of growth to be maintained, fiscal policies and monetary policy should continue to be prudent,
and in the United States, national savings should increase.
• In the United Kingdom growth is strong, employment is rising and inflation remains low. Monetary policy,
supported by fiscal policy, should continue to be aimed at meeting the inflation target, while sustaining growth
and employment.
• In the Euro area as well, growth is strong and inflation remains low. Continuation of sound macroeconomic
policies and intensification of structural reforms with a view to raising private investment and increasing
productive potential are important.
• In Japan there are signs of a recovery. Still, macroeconomic policies should remain supportive to ensure a selfsustaining, domestic demand-led recovery. Structural reforms in the fmancial and corporate sector need to be
continued to ensure a durable recovery and an increase in productive potential.

Oil Prices
3. We are concerned about the adverse effects on the world economy of the recent sharp increase in the world oil price. It
is important that world oil prices return to a level consistent with lasting global economic prosperity and stability for both
oil producing and consuming countries, and in particular for the poor developing countries. In light of continuing high
prices and low levels of stocks it is crucial for the world economy that OPEC and other oil producing countries take
actions to contribute to a reduction in oil prices and greater stability in oil markets. Improved efficiency in the use of
energy in all economies would contribute to that objective. We welcome the U.S. action to release a limited quantity of
its oil reserves in the form of swap transactions. We agreed to remain in close contact and to continue our discussions
with oil producing and consuming countries as we evaluate measures appropriate to the evolving situation in oil and
product markets.

Exchange Rates
4. We discussed developments in our exchange and financial markets. We have a shared interest in a strong and stable
international monetary system. At the initiative of the European Central Bank, the monetary authorities of the United

Statement oi!J-7 Finance Ministers

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Page 2 of 4

States, Jap~, Unite.d Kingdom and Canada joined with the European Central B~nk on Friday, September 22, in
concerted mterventIOn m exchange markets, because of the shared concern of Fmance Ministers and Governors about the
pote?tial implic~tions of recent movements in the euro for t~e world economy. In light of recent developments, we will
contmue to momtor developments closely and to cooperate m exchange markets as appropriate.

Emerging Market Economies
5. Recovery in emerging mar~et econom.ies is ~~ll unde~ 'Yay: Macroecono~ic fundamentals have generally
strengthe!led an~ market ~entlID~nt remams POSItIve. Poh~~es m these countrIes must be directed at deepening economic
reforms, m partIcular by lIDprovmg underlymg fiscal pOSItIons and debt structures and by strengthening the fmancial
sector.
Countries should, however, maintain the momentum for reform and address real and potential underlying vulnerabilities.
We stress in particular the need for further progress in corporate and fmancial restructuring in many Asian countries and
the need for policies aimed at reducing vulnerabilities in many Latin American countries.

Russia
6. We are encouraged by the continuing robust growth of the Russian economy this year, combined with a strong revenue
and export performance, a comfortable balance of payments situation and substantial accumulation of foreign reserves.
We welcome the economic programme of the Government of the Russian Federation aiming at creating a legislative
framework to improve the investment climate, structural reform and fmancial stability. The recently approved tax reform
is an encouraging sign of progress in implementing this programme and to achieve sustainable growth. We call upon
Russia to firmly implement other key structural reforms such as securing property rights, enforcing the rule of law,
combating money laundering, improving corporate governance, strengthening accountability and transparency in Russia's
central bank, and creating an efficient fmancial sector to unlock Russia's economic potential. We call upon the
International Financial Institutions and Russia to work together in achieving this common goal.

Strengthening the International Financial Institutions
7. The International Financial Institutions are key players in ensuring that globalisation is a force for good and that the
poorest nations can participate in, and benefit from, the international fmancial system. We welcome the recent joint
statement from the Managing Director of the IMF and the President of the World Bank Group, in particular their
commitment to make these institutions work effectively together to increase the effectiveness and sustained impact of
their operations to reduce poverty, increase growth, and strengthen the stability of the international fmancial system. We
will continue to work together with other members of the international community to further strengthen the global
fmancial system.

IMFReform
8. We welcome the Managing Director's commitment to reform of the IMF and look forward to working with him to
ensure the IMF is well-equipped to face future challenges. We note the progress achieved in strengthening the
surveillance role of the IMF to help prevent crises and promote domestic and international fmancial stability and call on
the Fund to speed up its work in this area. This includes strengthening the Fund's central role in the surveillance of codes
and standards and promoting their implementation, greater transparency of the Fund's activities and members' policies,
increasing the emphasis on national balance sheet and liability management, enhancing its ability to identify sources of
vulnerability and paying close attention to the appropriateness of a country's exchange rate regime. We welcome the
recommendations by the Financial Stability Forum on promoting market and official incentives for the implementation of
standards and codes. We reaffirm the importance of building stronger and more resilient national fmancial systems in
emerging market economies that can withstand the challenges that come with progressive fmancialliberalization. We call
on the IMF to continue its work in this area.
9. We welcome the agreement achieved in the IMF to adapt its lending instruments to reflect better the realities of global
capital markets - encouraging countries to take preventive measures to reduce vulnerabilities and providing temporary
and appropriately conditioned support for balance of payments adjustment and, in defmed circumstances, medium-term
fmance in support of structural reform, while avoiding unduly long, or repeated use of, and deterring large scale access to
IMF resources. We look forward to the upcoming review of conditionality associated with IMF lending, in order to
ensure that it is focused and addresses issues essential to the success of the programme.
10. We welcome progress in developing a framework for private sector involvement in preventing and resolving crises.
Private external creditors, including bond holders, have been more involved in the fmancing of recent IMF-led programs.
We look forward to further progress at the IMF in making operational this approach in the design ofIMF programs so as
to provide greater clarity to countries and market participants. An efficient coordination with the Paris Club is also of

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utmost importance in this regard. We welcome the establishment by the Fund of a Capital Markets Consultative Group
which can play an important role in exchanging information with capital markets.
11. We l':>ok forward to ongoing improvem~nts in the accountability and modernization of the structure and operation of
the IMF Itself. e welcome t~e agreement m the IMF Board on the terms of reference for the Independent Evaluation
Office. We urge Implementation of the IMF's recently strengthened framework for safeguarding resources. In addition
we cal.l on the I~ to e~ance its .cooperation with .other int~rnationa! institutions, includ.ing the WTO and ILO. It is '
essential that IMF s decisIOn-makmg structure and Its operatIOn rem am accountable. In VIew of the importance of having
an allocation ofIMF quotas that reflect developments in the world economy, we take note of the effort now underway in
the IMF to examine the formula for calculating country quotas.

MDB Reform
12. We reaffirm our commitment to MDB reform aimed at helping countries reduce poverty and welcome the substantial
progress that has be~n made.in translating these shared pr~ori!ies into core policies and operational practices. The
~hallenges are to buIld ~m thIS pro~~ess,. to tt:anslate the prmc.lples. of good governance, selectivity and accountability, the
Importance of ownershIp and partICIpatIOn, mto concrete actIOn aImed at a substantive development impact. We call on
the MDBs:
• to increase emphasis on selectivity and results of MDB assistance.
• to establish, performance based frameworks containing benchmark indicators to achieve clear, monitorable and
durable developmental results.
• to provide sustained high levels of support for targeted investments in critical areas such as basic health
education, clean water and rural development.
'
• to submit proposals on how MDBs can expand activities in the provision of Global Public Goods.
• to initiate a comprehensive pricing policy review which should present feasible policy options for a stronger
development impact.
• to present proposals aimed at strengthening internal governance and, in particular, compliance with safeguards
and fiduciary policies.
• to develop Memoranda of Understanding between the World Bank and regional MDBs setting out areas of
specialization and collaboration.

Actions against Money Laundering and the Abuse of the Global Finance System
13. We have made significant progress in recent months in the international fight against fmancial abuse, including
money laundering and corruption, in particular through the work of the Financial Action Task Force on Money
Laundering (FA TF) (establishing a first list of non-cooperative jurisdictions). We re-afflrm our strong support for the
efforts by the OECD (addressing harmful tax practices), and FSF on OFCs, and by the FATF for the inclusion of its
recommendations among the priority international fmancial standards. We commit to pursue the review of additional
non-cooperative countries and territories in the FA TF. We are prepared to provide, where appropriate, our technical
assistance to jurisdictions that commit to making improvements to there regimes. We are committed, where dialogue to
ensure compliance with international standards has demonstrably failed with countries listed as non-cooperative by the
FATF, to defming an appropriate and comprehensive set of counter-measures. These would include the possibility to
condition or restrict fmancial transactions, in order to protect the international fmancial system against abuse and to
condition or restrict assistance by the international fmancial institutions to those jurisdictions. We have already issued
advisories to our banks and other fmancial institutions to demonstrate our commitment in this field. We call on the IMF,
the World Bank and the regional development banks to fully integrate the fight against fmancial abuse in their
surveillance exercises and programs. We urge the IMF and World Bank to prepare a joint paper on their respective roles
in combating fmancial abuse and to protect the international fmancial system, for discussion by their Boards before the
spring meetings and ask them to report to the spring IMFCIDevelopment Committee meetings on the status of their
efforts.

Enhanced HIPC Initiative
14. We note the progress in the implementation of the Enhanced HlPC Initiative, launched last year in Cologne and
reafflrm our strong commitment to achieving further progress in delivering debt relief to HIPC countries committed to
poverty reduction. Thus far, ten countries have reached their decision points and are now receiving substantial cash flow
relief.
By the end of2000, as many as twenty countries are expected to reach their decision points and begin receiving debt
relief. We welcome the initiatives outlined by the Heads of the IMF and the World Bank to improve progress and reduce
poverty. For debt relief to be effective, the implementation of successful economic and social reform is imperative. We
emphasise the importance of country-owned Poverty Reduction Strategy Papers (PRSP) which are a vital way of
ensuring that the proceeds of debt relief and development lead to poverty reduction and growth.

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Statement 01 G- 7 Finance Ministers and ('intra) Bank Governors

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We encourage the countries which have not yet reached their Decision Point to continue reform efforts in order to benefit
from the Enhanced HIPC-Initiative. We call on those countries engaged in military conflict to seek peace and take reform
measures necessary in order to qualify for the HIPC Initiative. We ask the IMF and World Bank to examine as soon as
possible how their activities in conflict countries can better prepare them for possible entry into the HIPC process. We
reaffIrm our commitment to 100% debt relief on ODA and eligible commercial claims and urge other creditors that have
not yet done so to follow suit. We reaffIrm our commitment to secure the required fmancing for the implementation of
the HIPC-Initiative. We welcome the progress made thus far and call upon bilateral and multilateral creditors to meet
their fmancial commitments, with fair burden sharing among creditors.

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September 25,2000

Contact: Steve Posner
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MEDIA ADVISORY - PHOTO OPPORTUNITY

Treasury Secretary Lawrence H. Summers and Internal Revenue Service Commissioner
Charles Rossotti will host a swearing-in ceremony for the new members of the IRS Oversight
Board on Friday, September 29 at 2 p.m. EDT in the Treasury Department's Diplomatic
Reception Room (Room 3311), 1500 Pennsylvania Ave., NW.
The new members of the IRS Oversight Board will meet for the first time on Friday to be
sworn-in and to take part in informational briefings on the IRS. The swearing-in ceremony is
open to still photographers only. Photographers interested in attending should contact the
Treasury Department's Office of Public Mfairs at (202) 622-2960. Photographers without
Treasury or White House press credentials will need to provide the following information: name,
social security number, da.te of birth, and news organization.
The room will be available for pre-set at 1:30 p.m.
-30-

LS-912

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·u.s.

Government Printinq Office: 1998 - 619-559

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EMBAGOED UNTIL 1:00 P.M. EDT
Text as Prepared for Delivery
September 26, 2000

TREASURY TAX LEGISLATIVE COUNSEL JOSEPH MIKRUT TESTIMONY
BEFORE THE HOUSE WAYS AND MEANS SUBCOMMITTEE ON OVERSIGHT

Mr. Chairman, Mr. Coyne, and distinguished Members of the Subcommittee:
Thank you for giving me the opportunity to discuss with you today the tax rules
governing depreciation, research and experimentation, and workforce training in the context of
the "new economy." Over the past 20 years, the U.S. economy has changed significantly. New
industries have emerged, such as cellular communications and the Internet, and the use of
computers has revolutionized production techniques and improved efficiency in more traditional
industries, such as manufacturing. In many industries these developments have increased the
demand for more highly-skilled workers who are more productive and better able to adapt to the
requirements of technological advances. In addition, access to computers and the Internet has
increased significantly, creating opportunities to participate in the new digital economy. In view
of these economic changes, this hearing appropriately focuses on whether Federal tax laws are
keeping pace with the new economy.
My comments today will focus on the results of the Treasury Department's recent
analysis of cost recovery provisions in Report to the Congress on Depreciation Recovery Periods
and Methods. I will also review the tax treatment of research and experimentation expenses and
the tax treatment of the cost of maintaining a skilled workforce. The Administration recognizes
the importance of the research credit for encouraging technological development and has
supported its extension. The Administration's FY 2001 Budget includes proposals that would
encourage individuals and businesses to undertake more education and training. In addition, the
Administration recognizes the need to ensure that residents of inner cities and less affluent rural
communities have full access to the opportunities that symbolize the promise of the new
economy. In that regard, the Budget includes several proposals that will help bridge the digital
divide.

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The Treasury Depreciation Study
The T<LX and Trade Relief Extension Act of 1998 directed the Secretary of the Treasury to
conduct a comprehensive study of the recovery periods and depreciation methods under section
168 of the Internal Revenue Code, and to provide recommendations for determining those
periods and methods in a more rational manner. The explanation of the directive in the 1998 Act
indicates that the Congress was concerned that the present depreciation rules may measure
income improperly, thereby creating competitive disadvantages and an inefficient allocation of
investment capital. The Congress believed that the rules should be examined to determine if
improvements could be made. In developing its study, the Treasury Department solicited and
received comments from numerous interested parties.
In July, 2000 the Treasury Department issued its Report to the Congress on Depreciation
Recovery Periods and Methods. The Report emphasizes that an analysis of the current U.S.
depreciation system involves several issues, including those relating to proper income
measurement, savings and investment incentives, and administrability of the tax system. The
history of the U. S. tax depreciation system has shown that provisions intended to achieve certain
of these goals (for example, attempting to measure income accurately by basing depreciation on
facts and circumstances) may come at the cost of other worthwhile goals (for example, reducing
compliance and raising administrative burdens). Accordingly, the Report identifies issues
relating to the design of a workable and relatively efficient depreciation system, and reviews
options for possible improvements to the current system with these competing goals in mind.
Resolution of the issue of how well the current recovery periods and methods reflect
useful lives and economic depreciation rates would involve detailed empirical studies and years
of analysis. The data required for this analysis would be costly and difficult to obtain. Thus, the
Report does not contain legislative recommendations concerning specific recovery periods or
depreciation methods. Rather, the Report is intended to serve as a starting point for a public
discussion of possible general improvements to the U.S. cost recovery system. We look forward
to working with the tax-writing Committees in this important endeavor.
Current Law
The Internal Revenue Code allows, as a current expense, a depreciation deduction that
represents a "reasonable allowance for the exhaustion, wear and tear (including a reasonable
allowance for obsolescence) -( 1) of property used in a trade or business, or (2) of property held
for the production of income." Since 1981, the depreciation deduction for most tangible property
has been determined under rules specified in section 168 of the Code. The Modified Accelerated
Cost Recovery System, or MACRS, specified under section 168 applies to most new investment
in tangible property.
MACRS tax depreciation allowances are computed by determining a recovery period and
an applicable recovery method for each asset. The recovery period establishes the length of time
over which capital costs are to be recovered, while the recovery method establishes how capital
costs are to be allocated over that time period. All tax depreciation is based on the original,
historical cost of the asset and is not indexed for inflation.

The tax code assigns equipment (and certain non-building real property) to one of seven
recovery periods that range in length from three years to 25 years. This assignment typically is
based on the investment's class life. Class lives for most assets are listed in Rev. Proc. 87-56;
others are designated by statute. Generally, assets with longer class lives are assigned longer
recovery periods.
For equipment, the MACRS recovery period depends either on the type of asset or the
employing industry. Certain assets, such as computers, office furniture, and cars and trucks are
assigned the same recovery period in all industries. To a large extent, however, the current
depreciation system is industry based rather than asset based, so that assets are assigned recovery
periods determined by the employing industry.
The applicable method of depreciation depends on the asset's recovery period. Assets
with a recovery period of three, five, seven or ten years generally use the double declining
balance method. Assets with a fifteen or a twenty-year recovery period generally use the 150
percent declining balance method. Assets with a twenty-five year recovery period use the
straight-line method.
Non-residential buildings generally are depreciated over a 39-year recovery period using
the straight-line method. Nonresidential buildings include commercial buildings, such as office
buildings and shopping malls, as well as industrial buildings such as factories. Residential
buildings (e.g., apartment complexes) are depreciated over a 27.5-year period using the straightline method. The recovery period for buildings is the same regardless of industry. For tax
purposes, a building includes all of its structural components. The cost of these components is
not recovered separately from the building; rather these costs are recovered using the life and
method appropriate for the building as a whole.
Principal Issues and Findings
Based on available estimates of economic depreciation, cost recovery allowances for
most assets are more generous at current inflation rates, on average, than those implied by
economic depreciation. This conclusion, however, is based on estimates of economic
depreciation that may be dated. The findings are discussed more fully in the Report. The
relationship between tax and economic depreciation changes with the rate of inflation because
current law depreciation allowances are not indexed for inflation. Furthermore, the relationship
between tax depreciation and economic depreciation varies substantially among assets. In
general, accelerated cost recovery allowances generate rdatively low tax costs for investments in
equipment, public utility property and intangibles, while decelerated cost recovery allowances
generate high tax costs for investments in other nonresidential buildings. These differences in
tax costs, standing alone, may distort investment decisions, discouraging investment in projects
with high-tax costs, even though they may earn higher pre-tax returns.
The current depreciation system is dated. The asset class lives that serve as the primary
basis for the assignment of recovery periods have remained largely unchanged since 1981, and
most dass lives date back at least to 1962. Entirely new industries have developed in the
interim, and manufacturing processes in traditional industries have changed. These
developments are not reflected in the current cost recovery system, which does not provide for

updating depreciation rules to reflect new assets, new activities, and new production
technologies. As a consequence, income may be mismeasured for these assets, relative to the
measurement of the income generated by properly classified assets. However, this does not
mean that depreciation allowances for assets used in newer industries or for new types of assets
in older industries are necessarily more mismeasured than other assets.
Current class lives have been assigned to property over a period of decades, under a
number of different depreciation regimes serving dissimilar purposes, and with changed
de1initions of class lives. The ambiguous meaning of certain current class lives contributes to
administrative problems and taxpayer controversies. The current system also makes difficult the
rational inclusion of new assets and activities into the system, and inhibits rational changes in
class lives for existing categories of investments.
Policv Options
The replacement of the existing tax depreciation structure with a system more closely
related to economic depreciation is sometimes advocated as the ideal refonn. While perhaps
theoretically desirable, such a reform faces serious practical problems. An approach based on
empirical estimates of economic depreciation is hampered by inexact and dated estimates of
economic depreciation, and by measurement problems that will plague new estimates.
Economic depreciation also requires indexing allowances for inflation. Indexing raises several
concerns, because it would be complex and may lead to undesirable tax shelter activity. Another
concern is its revenue cost; indexing could be expensive at high inflation rates.
Because of other inefficiencies in the tax code, it is unclear that switching to a system
based on economic depreciation would necessarily improve investment decisions. Switching to
economic depreciation could exacerbate some tax distortions at the same time that it alleviated
others. At current inflation rates, switching to economic depreciation would raise the tax cost of
most business investment. Thus, it would reduce overall incentives to save and invest.
However, because current depreciation allowances are not indexed for inflation, at higher
intlation rates switching to economic depreciation would promote both lower and more uniform
ta.xes on capital income.
Comprehensively updating and rationalizing the existing asset classification system
would address several income measurement and administrative problems. For example, it would
allow the proper classitication of new assets and assets that have changed significantly.
Comprehensive reform ofMACRS recovery periods and methods would be possible once the
class-life system has been rationalized. These changes might move the system closer to one
based on economic depreciation, or perhaps provide a more unifonn investment incentive. A
systematic overhaul, however, would be an ambitious project. It would involve a significant
(and costly) effort to collect and analyze data in order to detennine the class lives of new and
existing assets and activities. This would place a large burden on taxpayers required to provide
these data. It also may require granting Treasury the resources and the authority to change class
lives.
Less comprehensive changes could improve the functioning of the current depreciation
system. These changes might address narrower issues, such as the detennination of the
appropriate recovery period for real estate, the possible recognition of losses on the retirement of

building components, or the reduction of MACRS recovery period cliffs and plateaus. These and
other issues are discussed in more detail in the Report.
For many industries, technological obsolescence may be a more important factor in
determining asset depreciation than physical wear and tear. The decline in value of certain assets
may be associated with the introduction of newer, more technologically superior assets that may
cause a rapid disposition of assets of earlier vintage. Moreover, with increased computerization,
technological changes may be occurring more frequently than in the past. In such circumstances
the determination of appropriate tax depreciation may raise the concern that current recovery
periods do not adequately reflect the rapid decline in value due to more frequent replacement or
to other factors. In particular, the development of computers and the integration of computers
into the production process raises the concern that the current recovery period is too long for
computers and for production equipment that increasingly relies on computer technology.
Current law creates a distinction between stand-alone computers and computers used as
an integrated part of technology. Stand-alone computers are given a five-year recovery period.
Computers used as an integral part of other equipment are depreciated on a composite basis as
part of the underlying asset. Consequently, their costs generally are recovered over 5, 7, 10 or
more years.
Some commentators have suggested that, at least in their initial applications, computers
do not generally last for five years. This suggests rapid obsolescence, which some commentators
use to support their argument that the five-year recovery period for computers is too long.
However, the useful economic life of a computer does not end with its initial application. We
are aware of no careful empirical study that clearly substantiates the claim that computers have a
sufficiently short useful economic life to merit a shorter recovery period.
Some industry representatives also argue that computerized equipment may be
depreciated over too long a recovery period. Most class lives for equipment pre-date the
computer revolution. Thus, the class lives may fail to reflect the relatively large cost share
currently accounted for by relatively short-lived computer components. A possible solution to
this problem would be to depreciate assets that encompass integrated circuits or "computers"
using the same 5-year recovery period available to stand-alone computers. While eliminating the
tax distinction between integrated and stand-alone computers has merit, it also raises two serious
concerns. First, integrated circuits are widely used. Consequently, depreciating over the same 5year period all equipment that contains a computer would effectively restore ACRS in that
virtually all equipment would receive the same (short) depreciation write-off. Such a
depreciation system would not be neutral if, in fact, the equipment has different economic lives;
it would favor those industries whose equipment lasts longer than 5 years. Second, restricting
the 5-year recovery period to the cost component represented by computer technology would
raise difficult problems in tax administration. Separating the cost of the integrated computer
from the cost of remainder of the property would be very difficult.
Another issue arises out of the general difficulty the current system has in establishing
and modifying class lives. Because establishing and changing class lives and recovery periods
generally requires Congressional action, it has proven difficult to keep the tax depreciation
system current. One possible solution would give Treasury the authority to establish and modify
class lives. To be effective, Treasury also would need the additional authority to require
taxpayers to collect, maintain, and submit the data necessary to measure economic depreciation

or useful economic lives. The collection, maintenance and provision of these data, however,
would impose a heavy cost on taxpayers, and the data's analysis would require significant
Treasury resources. In addition, a piecemeal approach to modifying class lives may not improve
o\wall neutrality, because depreciation rules would be established or modified only for a subset
of assets.

Tax Treatment of Research and Experimentation
Technological development is an important component of economic growth and our
ability to compete in the global marketplace. However, firms may underinvest in research
hecause it is difficult to capture the full benefits from their research and to prevent their costly
scientific and technological advances from being copied by competitors. Because other firms
and society at large frequently benefit from the spillover of research conducted by individual
firms, the private return to research often is lower than the total return. In this situation,
government action can improve the allocation of resources by increasing research activity.
The tax rules provide a number of incentives for research and experimentation. To
encourage taxpayers to undertake research, and to simplify the administration of the tax laws,
special flexible tax accounting rules are provided for investments in the research and
experimentation. This treatment may be applied to the costs of wages and supplies incurred
directly by a taxpayer, to contract research expenses for research undertaken on behalf of a
taxpayer by another, and to cost sharing research expenses resulting from teclmology sharing
arrangements with related foreign parties.
Taxpayers may elect to deduct currently the amount of research and experimental
expenditures incurred in connection with a trade or business, notwithstanding the general rule
that business expenses to develop or create an asset with a useful life extending beyond the
current year must be capitalized. Expensing of research and experimentation expenditures
provides a tax incentive for such activities and is simple. To encourage investments by start-up
companies in research, this election to deduct research expenses may be applied prior to the time
a taxpayer becomes actively engaged in a trade or business. Under these rules, taxpayers have
the option to elect to defer and amortize research and experimental expenditures over five years,
and this election may be applied for all of a taxpayer's research expenses or on a project by
project basis. Pursuant to a long-standing revenue procedure, the tax accounting rules applicable
to research and experimental expenditures also extend to software development costs.
As a further inducement to the conduct of research, a special five-year depreciation life is
provided for tangible personal property used in connection with research and experimentation.
The research credit fosters new teclmology by encouraging private-sector investment in
research that can help improve U.S. productivity and economic competitiveness. For that reason,
the A.dministration has supported an extension of the research credit.
Cnder present law, the research credit is equal to 20 percent of the amount by which a
ta.xpayer·s qualified research expenditures exceed a base amount. The base amount for the
ta:xable year is computed by multiplying a taxpayer's "fixed-base percentage" by the average

amount of the taxpayer's gross receipts for the four preceding years. Except in the case of
certain start-up firms, the taxpayer's fixed-base percentage generally is the ratio of its total
qualified research expenditures for 1984 through 1988 to its gross receipts for those years. The
base amount cannot be less than 50 percent of the qualified research expenses for the year.
Taxpayers are allowed to elect an alternative research credit regime. Taxpayers that elect
this regime are assigned a three-tiered fixed base percentage (that is lower than that under the
regular research credit) and a lower credit rate. A credit rate of 2.65 percent applies to the extent
that a taxpayer's research expenses exceed a base amount computed using a fixed-base
percentage of 1 percent but do not exceed a base amount computed using a fixed-base percentage
of 1.5 percent. A credit rate of 3.2 percent applies to the extent that a taxpayer's research
expenses exceed a base amount computed using a fixed-base percentage of 1.5 percent but do not
exceed a base amount computed using a fixed-base percentage of 2.0 percent. A credit rate of
3.75 percent applies to the extent that a taxpayer's research expenses exceed a base amount
computed using a fixed-base percentage of2.0 percent.
Qualified research expenditures consist of "in house" expenses of the taxpayer for
research wages and supplies used in research, and 65 percent of amounts paid by the taxpayer for
contract research conducted on the taxpayer's behalf (75 percent for amounts paid to research
consortia). Certain types of research are specifically excluded, such as research conducted
outside the United States, research in the social sciences, arts, or humanities, and research funded
by another person or governmental entity.
A 20-percent research credit also is allowed for corporate expenditures for basic research
conducted by universities and certain nonprofit scientific research organizations to the extent that
those amounts exceed the greater of two prescribed floor amounts plus an amount reflecting any
decrease in non-research donations.
The deduction for research expenses is reduced by the amount of research credit claimed
by the taxpayer for the taxable year. The credit is scheduled to expire on June 30, 2004.

Tax Treatment of the Cost of Maintaining a Skilled Workforce
The skill of America's labor force is crucial to maintaining the U.S. role in the world
economy. Well-educated workers are essential to an economy experiencing technological
change and facing global competition. Not only are better-educated workers more productive,
they are more adaptable to the changing demands of new technologies. A highly skilled labor
force makes possible technological change and its spread throughout the economy. Current tax
law encourages employers to invest in worker training and individuals to invest in their own
skills. Administration proposals would create additional incentives.
Under present law, employers deduct from current income the costs of training and
educating their workers, whether the expenses are paid to third-party providers or to the firms'
own employees who provide formal or informal training. Education and training is deductible
either as a necessary business expense (section 162) if it is related to the employee's current job
position, or as employee compensation if it is unrelated. Although education and training often

contributes to a worker's human capital and provides both the individual and the firm a return for
years to come, such expenses generally are deducted currently rather than capitalized and
depreciated over time as the benefit is produced. This expensing of education and training treats
investment in human capital more generously than most investments in physical capital, which
generally are capitalized and depreciated over time. An investment in human capital would
therefore be more attractive after-tax than an investment in physical capital which produced the
same pre-tax return.
For workers, employer-provided education and training is excluded from their taxable
income, and is therefore tax-free, ifit maintains or improves their skills for their current jobs.
Even if it does not relate to their current jobs, the cost of education (but not graduate-level
courses) up to $5,250 per year provided by an employer under a section 127 education plan may
be excluded from workers' taxable earnings. Educational expenses paid by an employer outside
of a section 127 plan are included in the employee's gross income if the education (1) relates to
certain minimum educational requirements, (2) enables the employee to work in a new trade or
business, or (3) is unrelated to the current job altogether. Section 127, which is scheduled to
expire for courses beginning after December 31, 2001 lowers the cost to the employee of
education and training (relative to paying for it out of after-tax income) and thereby encourages
the worker to undertake more investment in human capital.
Education and training expenses incurred by a student (or by a family on hislher behalf)
generally are not provided special tax treatment. However, an employee's education expenses
needed to maintain or improve a skill required for the taxpayer's current job and not reimbursed
by an employer are deductible to the extent that the expenses, along with other miscellaneous
deductions, exceed two percent of the taxpayer's adjusted gross income. In addition, individuals
may claim a nonrefundable Hope Scholarship credit of up to $1,500 per eligible student for
qualified tuition and related expenses incurred during the fust two years of post-secondary
education. Finally, taxpayers may claim a nonrefundable Lifetime Learning credit for postsecondary or graduate education tuition and related expenses, up to a maximum credit of$I,OOO
per family ($2,000 after 2002). These education credits phase out for certain higher-income
taxpayers.
The Administration's Budget for FY 2001 includes several proposals to further
encourage individuals and employers to undertake more education and training.
(1) The College Opportunity Tax Cut would expand the current-law Lifetime Learning credit by
increasing the credit rate (from 20 percent to 28 percent) and by raising the income range
over which the credit would be phased out (by $10,000 for singles and by $20,000 for joint
returns). It would also allow taxpayers to elect to take an above-the-line deduction for
qualified tuition and expenses in lieu of the Lifetime Learning credit. By lowering the aftertax cost of post-secondary education, the College Opportunity Tax Cut would encourage
families and workers to invest in the training and education they most need to prepare for
and keep up with the demands of the new economy.
(2) The Administration would expand the section 127 exclusion for employer-provided
education to include graduate courses beginning after July 1,2000 and before January 1,

2002. As the economy becomes more technologically advanced, cutting-edge skills and
information necessary for continued growth are increasingly disseminated in graduate-level
courses. Graduate education is an important contributor to the human capital of the labor
force. The Administration also wishes to continue working with Congress to extend section
127 for both undergraduate and graduate courses begirming after 2001.
(3) The Administration has proposed a tax credit for employer-provided education programs in
workplace literacy and basic computer skills. This would allow employers who provide
certain workplace literacy, English literacy, basic education and basic computer training
programs to educationally needy employees to claim a 20-percent credit, up to a maximum
of $1 ,050 per participating employee per year. With the increasing technological level of the
workplace of the 21 st century, workers with low levels of education will fall farther behind
their more educated co-workers and run greater risks of unemployment. Lower-skilled
workers are less likely to undertake needed education themselves, and employers may
hesitate to provide general education because the benefits of basic skills and literacy
education are more difficult for employers to capture than the benefits of job-specific
education. The proposed credit will serve those most in need of help in getting on the first
rung of the technological ladder.
The Administration strongly supports these three proposals as part of its overall efforts to
maintain and enhance the skill of the workforce. These proposals would encourage investment
in human capital so that workers, wherever they fall on the education spectrum and wherever
they are in their working years, can obtain and hone the skills necessary for the economy now
and in the future.

Tax Proposals to Bridge the Digital Divide
Access to computers and the Internet and the ability to use this technology effectively are
becoming increasingly important for full participation in America's economic, political, and
social life. Unfortunately, unequal access to technology by income, educational level, race, and
geography could deepen and reinforce the divisions that exist within American Society. The
Administration believes that we must make access to computers and the Internet as universal as
the telephone is today - in our schools, libraries, communities, and homes.
In recognition of the importance of technology in the new economy, the President's FY
2001 Budget includes a series of tax incentives to ensure that residents of disadvantaged
communities are able to develop the skills that will be essential for labor market success in the
coming years. This initiative, to help "bridge the digital divide," consists of three components.
The first initiative, discussed above, is a credit to employers who provide training in literacy,
basic education, and basic computer skills to educationally disadvantaged workers.
The second measure, designed to encourage corporate donations of computer equipment,
builds upon and extends a similar provision of the Taxpayer Relief Act of 1997. Under the 1997
legislation, a taxpayer is allowed an enhanced deduction, equal to the taxpayer's basis in the
donated property plus one-half of the amount of ordinary income that would have been realized
if the property had been sold. This enhanced deduction, limited to twice the taxpayer's basis,

\\ as made available to donors for a limited three-year period. Without this provision, the
deduction for charitable contributions of such property is generally limited to the lesser of the
taxpayer's cost basis or the fair market value. To qualify for the enhanced deduction, the
contribution must be made to an elementary or secondary school. The Administration proposal
\\ ould extend this special treatment through 2004, as well as expand the provision to apply to
contributions of computer equipment to a public library or community technology center located
in a disadvantaged community.
The third component is a 50 percent tax credit for corporate sponsorship payments made
to a qualitied zone academy, public library, or community technology center located in an
Empowerment Zone or Enterprise Community. The proposed tax credit would provide a
substantial incentive that would encourage corporations to sponsor such institutions. Up to $16
million in corporate sponsorship payments could be designated as eligible for the 50 percent
credit in each of the existing 31 Empowerment Zones (and each of the 10 additional
FmpO\verment Zones proposed in the Administration's FY 2001 Budget). In addition, up to $4
million of sponsorship payments would be eligible for the credit in each Enterprise Community.
This credit could induce over $1 billion in sponsorship payments to schools, libraries and
h:chnology centers, providing innovative educational programs to disadvantaged communities.
The proposed initiatives for employer-provided education programs in workplace literacy
and basic computer skills, corporate sponsorship of qualified zone academies and technology
centers, and corporate donations of computers will help bridge the digital divide. This proposal
\vill help to ensure that low-skilled workers receive the training they need to improve their job
skills, and that disadvantaged communities have access to innovative educational programs and
computer technology.
Conclusion

The Treasury Department's recent depreciation report raised issues that would need to be
addressed in modifying the present cost recovery system and provided possible options for
moditications in the system. We intended that the report would serve as a starting point for a
public discussion of improvements to the cost recovery system. We applaud your efforts, Mr.
Chairman. to begin that discussion with this hearing, and look forward to working with the
Congress on this matter.
The Administration supports the extension of the research tax credit. The Administration
recognizes the importance of technology to our national ability to compete in the global
marketplace. and the research credit fosters new technology. The credit provides incentive for
private-sector investment in research and innovation that can help improve U.S. productivity and
economic competitiveness.
The Administration proposals for education and training - the College Opportunity Tax
Cut. the expansion of employer-provided education assistance to include graduate courses, ~d
the new ta.x credit for workplace literacy and basic computer skills - can help develop the skills
necessary for the economv of the 21 SI century. The additional proposed initiatives to address the
digital divide - the enhan~ed deduction for corporate donations of computers and the credit for

corporate sponsorship payments to qualified zone academies and technology centers - will help
to ensure that low-income communities have access to innovative educational programs and
computer technology.
This concludes my prepared remarks. I would be pleased to respond to your questions.
-30-

DEPARTlVIENT

1REASURY

THE

TREASURY

NEWS

omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N .W.• WASHINGTON, D.C.• 20220 • (202) 622-2960

FOR LMMEDIATE RELEASE
September 26, 2000

REMARKS BY TREASURY ASSISTANT SECRETARY LEWIS A. SACHS
ALEXANDER HAMIL TON AWARDS
NEWYORK,NY
Thank you. It is a pleasure to be here today and to have the opportunity to speak: with
you. This conference and the honors that will be awarded during the next few days to
some of the most creative financial minds in corporate America are aptly named after our
nation's first Secretary of the Treasury, who was among the most creative and important
financial minds in our nation's history. Alexander Hamilton was not only our first
Secretary of the Treasury and one of the founding fathers of our country, but he also laid
the foundations upon which our system of public finance is built. In the years following
the enactment of Hamilton's financial program in 1791, the nation experienced a period
of rapid growth, paying down the national debt by over 40%.
As you know, today our nation is in a period of significant economic growth and
prosperity. We are about to complete our third consecutive year of budget surplusesresults not achieved in over half a century. And we are in the midst of an unprecedented
economic expansion. For the first time in a generation, more Americans are now sharing
in this prosperity. The purchasing power of wages is now rising even for families in the
bottom 20% of wage earners, and unemployment is at its lowest level in 30 years.
Reflecting upon this prosperity and growth, there are three topics I would like to address
today:
•

•

First, a brief examination of some of the factors underlying our nation's current
economic growth;

Next -- since this is a conference of corporate chief financial officers, treasurers, and
other financial officers -- focus on one of those factors - the role of the
government's policy of fiscal discipline, including its direct and indirect impact on
your own efforts to finance corporate growth;
LS-914

For press rele{U2~, "peeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040

-----'

•

And, finally, since I have been asked to provide a "View from Washington", a brief
update on some legislation that is currently pending in Congress that is likely to be of
particular relevance and interest to this group.

The Forces Driving the Virtuous Cycle
We are in the midst of what has been called a virtuous economic cycle - with reduced
public borrowing, lower interest rates and more rapid economic growth leading, in tum,
to even higher budget surpluses and faster economic growth. But this is no time for
complacency. As Secretary Summers has said, "prosperity and credibility are attributes
that are rented, not owned." The decisions that we, as a nation, make now regarding our
economic future will have a tremendous impact on our ability to prolong this virtuous
cycle.
Obviously, a number of factors have contributed to our current economic good fortune.
At the top of the list is the contribution of American businesses and workers. It is hard to
overestimate the value of the entrepreneurship, innovation, and hard work that have
helped to make us world leaders in so many industries.
The dawn of the information age has been another key factor in breaking down old and
constraining paradigms. Information technology has spurred a remarkable increase in
productivity, allowing us to sustain an unprecedented combination of high GDP growth
with low unemployment and inflation.

The Importance of Fiscal Discipline
Although there is much that is new in the New Economy, one thing that is not new is that
business activity - the growth and expansion into new markets, the development and
implementation of new technologies - must be financed. Given the professional roles
played by each of you here today, it seems appropriate to focus upon the financing of our
economic boom and the important national policy of fiscal discipline.
In 1993, the Administration made a decision to reduce the deficit. At that time, the debt
held by the public was $3.2 trillion, and it was projected to grow to $4.8 trillion by the
end of fiscal year 1998. Instead, it peaked in 1997 at $3.8 trillion. Nineteen-ninety eight
brought our first surplus in nearly three decades, and we reduced our national debt by
$51.2 billion. This year, we have achieved our third consecutive surplus, putting us on
track to pay down the debt by over $220 billion this fiscal year, and bringing our three
year total debt reduction to $360 billion - or almost 10% in just three years. Projections
for the future anticipate a continued acceleration of debt reduction, with 0 MB' s MidSession Review estimating that the paydown over the next three years will exceed $600
billion.
Debt reduction benefIts our economy in many ways. Clearly, debt paydown has an
enormous impact on the federal budget. In 1997, at the peak. of our debt levels, the

interest payments totaled $244 billion. Even today, net interest alone costs the federal
government $223 billion per year (or 12 cents of every federal dollar) ~ still the third
largest item in our budget. To put that $223 billion in perspective, this year's budget
(2001 Mid-Session Review) allocated approximately $22 billion for agriculture and $50
billion for transportation.
Debt reduction would free for other purposes the significant resources currently used to
pay interest alone and, as President Clinton has commented, "lift the burden of interest
payments otT our children and grandchildren". And, importantly, as we face the specter
of the retirement of the baby boom generation, debt reduction puts us in the best position
to continue to meet our obligations to our seniors.
Perhaps even more important than the impact of debt reduction on the federal budget are
the many benefits it brings to the American economy more broadly. For American
families, the reduced pressure on credit markets should lower the costs of borrowing for
maj or expenses like homes, cars, and student loans.
For corporations, national tlscal discipline translates into one of the foundations of the
virtuous cycle. As reduced government borrowing continues to make more funds
available for the private sector, the cost of capital should continue to decline relative to
what it would have been in the absence of such policies. The resulting increased national
savings and additional resources flowing into fmancing capital investment should
continue to lead to increased productivity and output growth. This, in turn, fuels job
creation, helps to extend the period of prosperity, and leads to an increased standard of
living.
In 1999, through paying down debt, over $88 billion that would otherwise have been
absorbed by government borrowing became available for more productive use in the
economy. This year, that number is expected to exceed $220 billion. For comparison,
total U.S. corporate long-term issuance in 1999 was approximately $675 billion.
It is worth tak.ing a moment to examine these figures in the context of our capital
markets. In 1992, Treasury debt represented approximately 31 % of U.S. fixed-income
markets. At the end of 1999, that figure had been reduced by one-third to 21 %, as the
borrowing needs of American corporations continued to grow. In 1992, total corporate
borrowing was just over $2.1 trillion. By the end of 1999, it had more than doubled.
Such growth would certainly have been more costly if the government had not been
significantly reducing its own debt over the same period.

Market Implications

Ultimately, this relative reduction in the supply of Treasury securities will lead to an
adjustment by market participants. Treasury securities playa number of important roles
in our capital markets, including serving as a pricing benchmark, a hedging vehicle, and a
low risk investment for both domestic U.S. and international investors.

Today, the market for Treasury securities is the deepest, most liquid securities market in
the world. As the supply of Treasury debt continues to decline, other instruments will
increasingly serve the functions for capital markets that Treasuries currently serve. Such
transitions will not tClke place overnight, but rather will result from gradual adjustments.
Secretary Summers and Chairman Greenspan have often praised our financial markets as
being among the most innovative, competitive, and dynamic in the world. And there can
be little doubt that our markets will successfully adjust to a reduced supply of Treasury
securities.
Indeed, such adjustments are already underway. For example, many of you who tinance
in the bond market have begun to consolidate your issuance into fewer, larger issues. As
such issues become benchmarks in their own right, they will share in the benefits of
benchmark status.
Also, the opportunity exists for the development of new types of low-risk debt
instruments as the supply of risk-free Treasury securities continues to decline. For
example, asset-backed securities professionals for years have been issuing "super senior"
tranches designed to provide an enhanced_degree of safety in order to take advantage of
the premium the market is willing to pay for low risk assets. And it is quite likely that
there are many types of instruments and transactions not yet imagined that will, in the
future, help to fulfill the important roles played by Treasury securities today.
In addition to the new roles these capital market changes may create for corporate and
asset-backed securities, swaps and other derivative instruments are also being
increasingly used as both pricing benchmarks and hedging vehicles. For example,
Eurodollar futures are already used as a primary hedging instrument in the short end of
the yield curve, and interest rate swaps are widely used for pricing and hedging because
oftheir broad availability and liquidity. Further innovations will likely enhance these
roles and allow swaps to perform additional functions in the marketplace.

OTC Derivatives
I am sure that, as CFOs and corporate treasurers, most, if not all of you, use such swaps
and other derivative instruments extensively as part of your risk management strategies. I
know that you all are well aware of the benefits that OTC derivatives can provide, not
only as risk management tools, but also to the economy more broadly, including
increasing the efficiency of capital allocation. You also, no doubt, have recognized the
speed at which this market continues to grow. According to the Bank for International
Settlements, the global OTC derivatives market, in notional terms, exceeded $85 trillion
at year-end 1999.
Given the importance of these markets to you - and to our economy more broadly - I
would like to briefly discuss some important legislation currently pending before the
Congress. Among other things, this legislation would allow the electronic trading and
centralized clearing of derivatives, thereby helping to:
• reduce counterparty credit risk;

•
•
•

promote innovation;
make our markets more competitive, transparent, and efficient; and
reduce the costs of hedging risk and reducing exposure to other markets.

It is important that Congress enact such legislation this year. While the current
framework here in the U.S. remains outdated, markets overseas are developing in legal
and regulatory environments that allow greater innovation. Unless our laws and
regulations relating to derivatives are modernized, we run the risk that innovation will be
stifled by the absence oflegal certainty, depriving the American economy of the benefIts
that direct access to efficient and transparent derivatives markets can provide, and
hampering the dforts of our businesses and markets to compete globally.

Despite the fact that there is little time left on the legislative calendar, we believe that the
final days of this Congress present a unique opportunity to modernize our laws regarding
derivatives. For the first time, the members of the President's Working Group on
Financial Markets - chaired by Secretary Summers and including Chairmen Greenspan,
Levitt, and Rainer - have reached agreement on a set of unanimous recommendations
designed to achieve this goal. Those recommendations formed the basis of legislation that
has now passed all of the relevant committees in both the House and the Senate.
With an agreement reached by the SEC and CFTC on the trading of single-stock futures
just over a week ago, the major obstacles to forming a consensus bill appear to have been
eliminated. It would be unfortunate if we were to miss this historic opportunity to
modernize the regulatory structure of our derivatives markets.

Conclusion
Let me just finish by saying that while we are all encouraged by the state of our economy,
we must not take it for granted. While our businesses, workers, and entrepreneurs are at
the forefront of generating economic growth, it is important that we continue to pursue
policies that promote the virtuous cycle - and particularly, maintain our policy of fiscal
discipline.
Thank you.

DEPARTlVIENT

THE

TREASURY

NEWS

'IREASURY

omCE OFPUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960

u.s. International Reserve Position

09/26/00

The Treasury Department today released U.S. reserve assets data for the week ending September 22, 2000.
A.s indicated in this table, U.S. reserve assets totaled $64-,859 million as of September 22, 2000, up from
$64,448 million as of September 15, 2000.
(in US millions)
Se~tember

TOTAL
1. Foreign Currency Reserves
a. Securities

Se~tember

15 1 2000
64,448

I. Official U.S. Reserve Assets

Euro
4,439

Yen
6,032

22 1 2000
64,859

TOTAL

Euro

10,471

Yen

TOTAL

4,563

5,998

10,561
0

7,794

11,464

19,258
0

Of which, issuer headqua/1ered in the U. S.

b. Total deposits with:
b.i. Other central banks and BIS
b.ii. Banks headquartered in the U.S.
boiL Of which, banks located abroad
b.iii. Banks headquartered outside the U.S.
b.iii. Of which, banks located in the U.S.

2. IMF Reserve Position

3. Special Drawing Rights (SDRs)
4. Gold Stock

5. Other Reserve Assets

7,591

11,529

19,120
0
0
0
0

0
0
0

13,585

13,689

10,226

10,305

11,046

2/ The items, "2. IMF Reserve Position" and "3. Special Drawing Rights (SDRs)," are based on data provided by Ihe IMF and are valued in
dollar terms at the offiCial SDRJdoliar exchange rate for the reporting date. The IMF data for September 15 are final. The entries in the table
above for September 22 (shown in italics) reflect any necessary adjustments, including revaluation, by the U.S. Treasury to the prior week's
IMF data.

31 Gold stock is valued monthly at $42.2222 per fine troy ounce. Values shown are as of July 31, 2000. The June 30, 2000 value was
$11,046 million.

LS-91S

u.s. International Reserve Position (cont'd)
II. Predetermined Short-Term Drains on Foreign Currency Assets
September 15, 2000
1. Foreign currency loans and securities
2. Aggregate short and long positions in forwards and
futures in foreign currencies vis-a-vis the U.S. dollar:

2.a. Short positions
2.b. Long positions
3. Other

September 22, 2000

o
o
o

o
o

III. Contingent Short-Term Net Drains on Foreign Currency Assets
September 15,2000
1. Contingent liabilities in foreign currency
1.a. Collateral guarantees on debt due within 1 year
1.b. Other contingent liabilities
12. Foreign currency securities with embedded options
3. Undrawn, unconditional credit lines
3.a. With other central banks
3. b. With banks and other financial institutions
headquartered in the Us.
3.e. With banks and other financial institutions
headquartered outside the US.
4. Aggregate short and long positions of options in foreign
currencies vis-a-vis the U.S. dollar
4.a. Short positions
4.8.1. Bought puts
4.8.2. Written calls
4.b. Long positions
4.b.1. Bought c811s
4.b.2. Written puts

September 22, 2000

o
o

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
September 25, 2000

CONTACT:

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
September 28, 2000
December 28, 2000
912795FM8

Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:

6.005%

Investment Rate 1/:

6.183%

Price:

98.482

Tendered

Competitive
Noncompetitive

19,358,898
1,160,309

20,519,207

PUBLIC SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
TOTAL

Accepted
5,903,948
1,160,309
7,064,257 2/

2,440,600

22,959,807

9,504,857

5,121,060

o
$

28,080,867

14,625,917

Median rate
5.990%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
5.950%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

20,519,207 / 7,064,257

2.90

1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $942,605,000

L8-916
http://www.publicdebt.treas.gov

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
september 25, 2000

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182 -Day Bill
September 28, 2000
March 29, 2001
912795FZ9

Term:
Issue Date:
Maturity Date:
CUSIP Number:
5.985%

High Rate:

Investment Rate 1/:

Price:

6.258%

96.974

All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
~llotted 33%.
All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted

Tendered

Tender Type
$

Competitive
Noncompetitive

19,347,940
1,634,551

Foreign Official Refunded
SUBTOTAL

3,000,000

23,982,491

8,501,741

4,576,923
51,300

Federal Reserve
Foreign Official Add-On
$

3,867,190
1,634,551
5,501,741 2/

20,982,491

PUBLIC SUBTOTAL

TOTAL

28,610,714

13,129,964

Median rate
5.960%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate. LOW rate
5.900%:
5% of the amount
Jf accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

20,982,491 / 5,501,741 = 3.81

1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $1,324,755,000

http://www .publicdebt. treas.go v

.. S-917

Ql·nCE OF PUBLIC AFFAIRS e1500 PENNSYLVANIA AVENUE, N.W. e WASHINGTON, D.C.e 20220 e (202) 622.2960

EMBARGOED UNTIL 9:00 A.M.
September 27, 2000

PUBLIC CONTACT:
MEDIA CONTACT:

Office of Financing
202-691-3550
Una Gallagher
202-622-2960

TREASURY ANNOUNCES DEBT BUYBACK OPERATION
On September 28, 2000, the Treasury will buy back up to $1,000 million
par of its outstanding callable issues with final maturity between February
2010 and November 2014. Treasury reserves the right to accept less than
the announced amount.
This debt buyback (redemption) operation will be conducted by Treasury's
Fiscal Agent, the Federal Reserve Bank of New York, using its Open Market
operations system. Only institutions that the Federal Reserve Bank of New
York has approved to conduct Open Market transactions may submit offers on
behalf of themselves and their customers. Offers at the highest accepted
price for a particular issue may be accepted on a prorated basis, rounded up
to the next $100,000. As a result of this rounding, the Treasury may buy
back an amount slightly larger than the one announced above.
This debt buyback operation is governed by the terms and conditions set
forth in 31 CFR Part 375 and this announcement.
The debt buyback operation regulations are available on the Bureau of
the Public Debt's website at www.publicdebt.treas.gov.
Details about the operation and each of the eligible issues are given
in the attached highlights.
000

Attachment

LS-919

For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040

HIGHLIGHTS OF TREASURY DEBT BUYBACK OPERATION
September 27, 2000
Par amount to be bought back •• Up to $1,000 million
Operation date .••••••••••••••• September 28, 2000
Operation close time .•.••••..• 11:00 a.m. eastern daylight saving time
Settlement date •••.••••.•••.•• October 2, 2000
Minimum par offer amount
$100,000
Multiples of par ..••...•••••• $100,000
Format for offers ...•. Expressed in terms of price per $100 of par with
three decimals. The first two decimals represent
fractional 32 cdS of a dollar. The third decimal
represents eighths of a 32 cd of a dollar, and must
be a 0, 2, 4, or 6.
Delivery instructions •••••..•• ABA Number 021001208 FRB NYC/CUST
Treasury issues eligible for debt buyback operation (in millions):

Coupon
Rate (%)
11. 750
10.000
12.750
13.875
14.000
10.375
12.000
13.250
12.500
11. 750

Maturity
Date
02/15/05-10
05/15/05-10
11/15/05-10
05/15/06-11
11/15/06-11
11/15/07-12
08/15/08-13
05/15/09-14
08/15/09-14
11/15/09-14

CUSIP
Number
912810 CM
912810 CP
912810 CS
912810 CV
912810 CY
912810 DB
912810 DF
912810 DJ
912810 DL
912810 DN
Total

Par Amount
Outstanding·
2,494
8
2,987
1
4,736
5
4,609
8
2
4,901
1
11,032
14,525
2
4,835
4
4,781
9
5**
6,006
60,906

Par Amount
Privately
Held·
1,636
1,811
3,476
3,535
3,925
9,113
11,484
3,965
3,875
4,811
47,631

Par amounts are as of September 26. 2000

** This is the only callable security eligible for the STRIPS program.
As of September 25, 2000, the par amount held as STRIPS is $3,826 million.
The difference between the par amount outstanding and the par amount
privately beld is the par amount of those issues held by the Federal
Reserve System and Federal Government accounts.

DEPARTlVIENT

THE

TREASURY

NEWS
omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N .W.• WASHINGTON, D.C.• 20220 • (202) 622-2960

FOR IMMEDIATE RELEASE
Text as Prepared for Delivery
September 26, 2000

TREASURY DEPUTY SECRETARY STUART E. EIZENSTA T REMARKS
TO THE BUSINESS COUNCIL FOR INTERNATIONAL UNDERSTANDING
WASHINGTON, DC

I am happy to be here today. For forty one years, this organization has served to facilitate
contacts between our government and the private sector in the United States and abroad. Your
meetings, teleconferences, and your efforts to acquaint foreign service personnel with the needs
of American business abroad, are constructive contributions to a necessary process of dialogue
and mutual education.
Since we are approaching both the adjournment of Congress and the last months of an
Administration. I thought it might be helpful to give you a sense of where we are on some of the
international issues that are important to your companies, as major actors in the global
marketplace, and also important to our mission at Treasury. No matter what happens or fails to
th
happen between now and adjournment, I believe that in this area, the 106 Congress will be
remembered for one historic act: the vote to give PNTR status to China. The Chinese economy
has been growing at a rate of7 to 8 percent a year, and is already our fourth largest trading
partner. The success of its application for membership in the WTO depended in part on the
willingness of Congress to grant it normal status. Had China's application been undermined by a
no vote on PNTR, it would have had adversely affected not only our opportunity to open
markets in that country, but the development of the rules-based trading system upon which
open markets depend. PNTR was not an easy vote. The business community, including many of
you, made a strong effort to inform Members of the merits of the proposal. You did your country
a signal service.
We are also investing a great deal oftime and energy in the proposed new tax regime to
replace FSC. We regard the current dispute between the US and the EU over FSC as a major
test of the rules based system The current FSC stood without challenge for some 15 years
Nonetheless, the EU successfully challenged it beginning in 1998 in the WTD. Notwithstanding
our strong disagreement with the decisions of the dispute settlement panel and the Appellate
Body of the WTO, the US has worked hard to respond to these rulings by developing bipartisan
legislation that completely repeals the FSC and creates a new regime that excludes from taxation
all qualifying foreign-source income, whether the goods are exported or produced abroad in
L8-920
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
/ - -

·U.S Government Printing Office 1998· 619·559

U. S-owned factories. Thisregime neither entails a subsidy nor is export contingent. As a result,
we believe it complies with WTO rules. The Appellate Body has acknowledged that members
are at liberty to tax, or not to tax, revenue as they wish Our proposed legislation excludes from
taxation qualified foreign sales income; such an exclusion is not a subsidy.

Significantly, the proposed legislation represents the first time that the US has changed a
statute to comply with a WTO ruling. It is the product of an extraordinary bicameral and
bipartisan effort whereby both houses of Congress and the Administration have worked together
to draft legislation that enables the country to meet its international obligation to comply with the
WTO decision. The legislation passed the House by an overwhelming majority and was
approved unanimously last week by the Senate Finance Committee. The only difference between
the House and Senate versions has to do with treatment of controlled foreign corporations
through the dividends received deduction. We are working with the staffs of the relevant
committees in both Houses, and with the business community, to find a fair way of dealing with
this issue. The leadership of both House and Senate understand the importance of dealing with
this legislation expeditiously, and we are very hopeful that it will be passed and be signed into
law very soon.
We regret that the European Commission has not accepted our proposal or even agreed to
sit down and work with us to resolve this issue. While it is clear that the US and the Commission
have very different readings of the panel and Appellate Body decisions in this dispute, we
continue to believe-as we have since the EU started the parties down this path-that
negotiation rather than confrontation is the better way forward. We want to meet our WTO
obligations. We want to avoid immediate confrontation with the ED.
Because of the high stakes involved in the FSC dispute, it is critical that we continue working
together to resolve our differences in a creative and consultative manner.
Going forward, these sorts of disputes make it clear that in operating under a rules-based
system, nations need to be more creative in how they solve the complex and difficult issues they
encounter with their trading partners. First, they should not bring disputes to the WTO that might
be better resolved by other means Tax matters such as FSC may more suitably be handled in the
Organization for Economic Co-operation and Development, which already has launched a useful
effort to deal with harmful tax competition issues. Second, we should use mechanisms such as
the US-EU Summit process more effectively to resolve trade disputes that cross into other policy
areas. The US has already used such mechanisms to mitigate EU concerns over unilateral USEU sanctions and to try to diffuse tension regarding trade in genetically modified organisms. At a
recent US-EU summit we reached a Safe Harbor agreement over privacy standards that
safeguard data about consumers. Third, we need to involve the private sector to a greater degree
in efforts to resolve trade issues. Consensus among American and European business leaders, for
example, can be built through the Transatlantic Business Dialogue, which brings together both
governments and their private sectors in order to reduce obstacles to trade. Increased use could
be made of other groups such as the Transatlantic Environment, Consumer and Labor Dialogues.
Another priority for us before adjournment is the provision of funds and authorization for
debt relief for Highly Indebted Poor Countries, or HIPCs as they are called. Because some of
you may not be involved in this issue, I would like to give you some background. At their

meeting in Cologne last year, the G-7 countries, prodded by the United States, agreed to forgive
a portion of the debt owed by the poorest countries in the world to them and to international
lending organizations, on condition that the country is implementing economic reforms and is
using the debt relief savings for health, education and other basic social programs. There are 33
countries expected to benefit from this relief. The total cost of the initiative is $28 billion, of
which the U.S. share, over a four year period, is less than $1 billion.
For banks and firms in the private sector, writing off debts owed by those who will never
be able to repay them is considered sound financial accounting. For countries as well as
companies, an excessive overhang of debt can stifle growth and investment to such an extent that
an economy will never be able to grow out from under it. In that case, discharging or reducing
that burden of debt that will never be repaid stands to benefit debtor and creditor alike. The
alternative is to lend the borrower more money simply to service previous loans, as international
financial institutions have been doing with many of these countries. At best this is simply
running in place.
The G-7 plan now has a new mechanism to ensure that the cash benefits of debt relief
flow directly and reliably into increased national efforts to combat poverty, invest in people and
combat particular threats such as AIDS and environmental degradation. To be eligible for debt
relief, the country governments must prepare, with the help of the World Bank and the IMF,
specific strategy papers, which are precise concerning economic management, transparency and
state targets against which performance can be measured and monitored. These become part of
the conditions for receipt of further international loans.
We are urging Congress to authorize and appropriate $435 million to finance our share of
the debt relief program and to authorize the use of the remaining earnings from off-market gold
sales by the International Monetary Fund to finance that organization's share of the cost of debt
relief Because we have so far failed to provide the requested funding, RIPe debt relief has now
stalled. Several countries which, acting in reliance on our G-7 commitment, met the requirements
of the program have been denied relief for which they have qualified. For example Bolivia-a
model of economic reform and a strategic ally of ours in the fight against cocaine production will
not receive the $850 million in debt relief it has qualified for if the U. S. contribution is further
delayed. Honduras is one of the poorest countries in our Hemisphere. Over half its people live in
poverty. For every dollar the government spends on health care, it sends $4 to its creditors to pay
off old debts. Honduras has qualified for $556 million in debt relief, but without Congressional
action it will not be able to bring all of these resources to bear on attacking poverty.
The United States is the most prosperous and economically successful country that has
ever existed. No country has a greater stake in successful economic development of the poorest
nations. As countries escape from poverty, they become the fastest-growing markets for U. S.
products. Already, developing countries account for some 42 percent ofU S. exports. We also
know that conflicts growing out of poverty and disease tend to spill over boundaries, requiring us
to engage with the rest of the world to protect our own security. That is why we have made debt
relief for the poorest countries part of the overall strategy of promoting US. interests abroad and
we hope Congress will fund this effort so that we can do our part.

These are some of the issues important to us at this time. I would be happy to take
questions on these and other matters, and to hear your views in the time available.

-30-

DEPARTlVIENT

THE

TREASURY

NEWS
omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N .W.• WASHINGTON, D.C.• 20220 • (202) 622-2960

EMBARGOED UNTIL 12:00 P.M. EDT
Text as Prepared for Delivery
September 27, 2000

TREASURY DEPUTY SECRETARY STUART E. EIZENSTAT
REMARKS TO EUROPEAN-AMERICAN BUSINESS COUNCIL
WASHINGTON, DC

Thank you. It is a pleasure to be with you today and to see so many of the people with whom I
have worked so closely over the years on a wide range of matters. This Council makes a
valuable contribution to the European-American relationship, by keeping its members informed
about developments of interest and by representing their views to those who make policy. I have
known and respected Will Berry for many years, and we have worked on many issues of
importance to our economy and in promoting U.S. exports.
One of the great success stories of the last 50 years has been the relationship between the U.S.
and Europe. Our growing bilateral economic relationship is one of the engines of economic
growth; our growing institutional links have helped us to work together to address political and
economic crises around the world.
The United States and Europe have a long tradition of working together to improve the global
economy, ease tension in sensitive regions, and liberalize barriers to trade and investment to the
benefit of our economies. The importance of our bilateral relationship cannot be overemphasized. Nearly 45% of U.S. investment overseas has been in the EU, which also absorbs
one-fifth of U.S. exports. For its part, EU investment in the U.S. has doubled in the past 5 years,
while its exports to the U.S. have grown by 50%, reflecting a substantial interest in continued
close relations with the U.S. business community. With $350 billion in two-way trade and $1.1
trillion in two-way investment, we have much at stake.
Our cooperation extends into the foreign policy realm. Since the December 1995 launch, in
which I participated, of the New Transatlantic Agenda--the framework for US-EU
cooperation~we have worked together to resolve our differences and cooperate in response to
global challenges. We have increased our cooperation in the political and foreign policy arenas
where we share many common objectives and interests. We worked together with European
nations through NATO in Kosovo and Bosnia; we joined together to rebuild the Balkans through
the Stability Pact; and we are cooperating to promote the Middle East peace process and to find
solutions to other regional conflicts.
18-921

For press releases. speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
·U S Government PnntmQ Office 1998 - 619-559

YeL despite our close relationship, trade disputes remain the thorn in the side of the US-EU

relatIOnship. A range of trade disputes-such as beefhonnones, bananas and hush kits-has
raIsed tensions on both sides of the Atlantic. And recently, the European Commission's decision
to challenge the tax treatment of Foreign Sales Corporations (FSC) and to further contest U.S.
cffOlis to revise its tax legislation to comply with the World Trade Organization's Appellate
Body threatens to cloud further the Atlantic relationship.
Much has been said and written about the FSC dispute recently, and 1 think it may be helpful
today to provide a bit of background as to why this tax regime was developed in the first place
and how we came to the conflict we face today.
The FSC was designed to emulate certain aspects of territorial tax systems in its treatment of
foreign source income. The U.S. employs a residence-based, or "worldwide," tax system,
whereby income earned by a resident, such as a corporation incorporated in the U.S., is subject to
tax. Many European countries use a territorial system, whereby only income earned within the
borders of the taxing jurisdiction is subject to tax. It is recognized internationally-and, indeed,
has been acknowledged by the EC in the course of the FSC dispute-that the territorial system
has a tendency to result in exports being taxed more favorably than comparable domestic
transactions. The FSC regime was created to offset, at least partially, this advantage.
As an initial response to this difference, the United States enacted the DISC legislation in 1971,
which provided a special tax exemption for exports. The EC successfully challenged the DISC
in the GATT. The FSC tax regime was then developed in the 1980s as a GATT-legal alternative
to the DISC.
Our effort through the FSC to ensure that U.S. companies are not disadvantaged in the global
economy stood without challenge for more than 15 years. Nonetheless, beginning in 1998, the
EU successfulIy challenged the FSC in the WTO, which determined that the current FSC regime
constituted an illegal export subsidy. I can say that in two and a half years as Ambassador to the
EU, not once did a European company or European business organization or European union
official ever complain about any unfair advantage bestowed on U.S. companies from the FSC.
Indeed, large European companies, through their American subsidiaries, were major users of the
FSC, and many now fear that retaliation could be very damaging to their international trade.
The EU contends that, whereas the WTO found the FSC regime constituted an illegal export
subsidy, the European tax system does not provide export subsidies. Yet, the European
territorial tax system does encourage companies to set up abroad and sell their goods from there.
European firms routinely sell their exports through tax haven sales subsidiaries in locations such
as Bermuda and Hong Kong. Gary Hufbauer of the Institute for International Economics
estimates that such practices could save European companies $10 billion a year in corporate
income tax. By comparison, U.S. companies saved about $3.5 billion last year with the FSC.
~ot\Vithstanding our strong disagreement, the U.S. has worked hard to respond to the decision of
the \VTO Appellate Body by developing bipartisan legislation that completely repeals the FSC
and creates a new regime that neither entails a subsidy nor is export contingent.

In its ruling, the WTO panel raised the following objections:
•

First, the panel found that "but for" the existence of the FSC legislation, revenue that would
otherwise be fully taxable under the Internal Revenue Code enjoyed a lower rate of taxation.
Thus, it found the FSC to be a subsidy because partial tax exemptions accorded by the FSC
provisions represented, in its view, a foregoing of" government revenue that is otherwise
due."

•

Second, the panel found that the FSC provisions constituted a prohibited export subsidy
because only exports receive preferential tax treatment.

Under the proposed replacement legislation, the general rule is that "extraterritorial income"for example, income earned from foreign sales of goods-is not subject to tax. Pursuant to this
general rule, the U.S. does not forego any revenue that is otherwise due, but instead refrains from
subjecting such income to tax in the first place. Accordingly, the proposed replacement regime
is not a subsidy under the test outlined in the· Appellate Body decision, which states that a WTO
Member has the right to decide which categories of income it will and will not tax.
The proposed replacement legislation also is not contingent upon exporting. "Extraterritorial
income," which is not subject to U.S. tax under the proposed replacement regime, is defined
without regard to whether a good is manufactured within or without the United States.
Accordingly, the proposed replacement regime is not export-contingent. The Commission's
contention that a "subsidy" is export contingent if exporters are eligible to use 'it is, in our view,
erroneous as a matter oflaw.
The replacement legislation is similar to the Dutch system and other European exemption
systems because, like the U.S., these systems define a category of income that will not be taxed.
Essentially, we have tried to engraft onto the U.S. tax system certain features of European tax
regimes, and we find it curious that the Commission would not view that as acceptable.
While there are differences between the category of income defined in the rep lacement
legislation and the categories defined in the Dutch system or other European exemption systems,
such differences are not relevant for purposes of the WTO analysis. The Appellate Body
acknowledged that members are at liberty to tax or not to tax revenue as they wish.
With regard to the Commission's specific criticism that the U.S. proposal taxes domestic sales
more heavily than export sales, we do not think this is relevant to the WTO compatibility of the
proposal. In any case, the same assertion can be made of exemption systems in a number of EU
member countries-such as France and the Netherlands-~which tax distribution income from
domestic manufactured goods if sold through a domestic distributor, but not if exported through
a foreign distributor.
Significantly, the proposed legislation is the first time that the U.S. has changed a statute to
comply with a WTO ruling. It is the product of a truly unique bipartisan and bicameral effort,
and we remain confident that Congress will send this bill to the President before it adjourns. We
took an important step in that direction last week when the Senate Finance Committee reported

the hill out of committee by a unanimous vote. Prior to that, the bill passed the U.S. House of
Representatives by a margin of more than three to one.
The only difference between the House and Senate versions has to do with treatment of
controlled foreign corporations through the dividends received deduction. We are working with
the staffs of the relevant committees in both houses, and with the business community, to find a
fair way of dealing with this issue. The House and Senate leadership understands the importance
of dealing with this legislation expeditiously. In order to move forward toward the resolution of
this dispute, it is critical that Congress pass this new legislation promptly. Passage of this
legislation is the only way to meet our obligations in the WTO and avoid an unprecedented
confrontation with the European Union.
We regret that the European Commission has neither accepted our proposal nor been prepared to
either negotiate or offer constructive suggestions. Indeed, Commission officials have already
indicated that they will seek a review in the WTO of our new proposal. The stakes involved in
this dispute are very high. We have heard estimates that the Commission is preparing a
retaliation list of $4 billion or more. For this reason, it is critical that we continue working
together to resolve our differences in a creative and consultative manner.
While it is clear that the U.S. and the Commission have very different readings of the panel and
Appellate Body decisions in this dispute, we continue to believe that negotiation rather than
confrontation is the better way forward. We need to discuss how to use the procedures of the
WTO to resolve our differences over the compatibility of our new proposal with WTO rules.
Toward this end, USTR ami Commission officials recently held procedural discussions about the
sequence by which the Commission might seek a review of our proposal after passage of the
legislation by Congress. These are purely procedural and are premised on the assumption that
Congress will pass FSC replacement legislation. Otherwise, all bets are off. These discussions
are continuing today and tomorrow in Brussels. Yet, let me emphasize again, any potential
procedural agreement reached will be moot if Congress fails to adopt the new legislation.
Following the extraordinary effort on the part of the United States to pass legislation that repeals
the FSC and complies with the WTO decision, any early retaliation by the EU would be most
unfortunate. It would also contrast with the manner in which the United States and Australia
worked out a dispute over Australia's subsidy for automotive leather, which a WTO panel found
\ioiated WTO rules. In that case, we withheld seeking retaliation, based upon the Government
of Australia's good faith efforts, and negotiated until we reached an acceptable agreement. We
believe such a process of negotiation is more fruitful, less confrontational and more helpful to
international business .
.-\s we move into the future, disputes such as FSC make it clear that we need to be more creative
in ho\\' we solve the complex and difficult issues that we will encounter with our partners across
the Atlantic.
First. we need to be careful not to bring disputes to the WTO that might be better resolved by
other means. For example, tax matters such as FSC may be suitably handled in the Organization

for Economic Cooperation and Development, which already has launched a useful effort to deal
with harmful tax competition issues.
Second, we should use the US-EU Summit process more effectively to resolve trade disputes that
cross into other policy areas. We have already used such mechanisms to mitigate EU concerns
over unilateral US-EU sanctions and to try to diffuse tension regarding trade in genetically
modified organisms. Moreover, we recently reached the Safe Harbor agreement at the July USEU summit over privacy standards that safeguard consumer data.
Third, we need to involve our partners in the private sector to a greater degree in efforts to
resolve trade issues. We can build consensus between American and European business leaders
through the Transatlantic Business Dialogue, which brings together both governments and their
private sectors in order to reduce obstacles to trade. We should also make increased use of other
groups such as the Transatlantic Environment, Consumer and Labor Dialogues. The EuropeanAmerican Business Council can also play an important role in avoiding a potentially serious
confrontation.
More broadly, it is important that we not lose sight of the overall economic and political
relationship that is so important to both sides, but rather find innovative solutions to our trade
disputes. We must nurture and strengthen our overwhelmingly healthy and co-operative
relationship that has provided such enormous benefits to our economies and to American and
European businesses.
Thank you.
-30-

DEPARTMENT

THE

TREASURY")

TREASURY·

NEW S

omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C. .20220. (202) 622-2960

FOR IMMEDIATE RELEASE
Text as Prepared for Delivery
September 27,2000

REMARKS OF TREASURY SECRETARY LAWRENCE H. SUMMERS TO THE
KENNEDY SCHOOL OF GOVERNMENT.
Today I want to talk about what is "new" about the new economy; and what the new
economy means for economic policy.
I.

What is New About the New Economy

The new economy is often declared; seldom defined. But if there is one fundamental
change at its heart it must be the move from an economy based on the production of physical
goods to an economy based on the production and application of knowledge.
The switch from old to new is one that is taking place gradually over time. But there can
be little question that the role of knowledge goods is increasing relative to traditional industrial
goods. In this sense, our new economy becomes ever newer - both because of progress in new
industries and because of the replacement of old fOnTIS of output with new.
This has implications for the nature of economic value: for the structure and dynamics of
markets. Let me say a little about these two inter-related changes before considering the
implications for our nation's economic policy.

A new source of value
It used to be that value depended importantly on the mass of what was produced - as with
an ingot of iron or a bushel of wheat. But increasingly today the canonical product is a gene
sequence, a line of computer code or a logo.

As Chairman Greenspan has so often emphasized, in such a world, goods are increasingly
valued for the knowledge that is embodied in them rather than for their physical weight. And the
amount we can contribute to our economy, and the amount it is prepared to compensate us for
our efforts, depend increasingly on how much we know rather than how much we can lift.
LS-922

It is a main characteristic of the new economy that my consumption of a good does not
necessarily detract from your consumption of it. If I am wearing a shoe, you cannot be wearing
my shoe. But if I am informed, if have access to software, you can also have access to that
software. Thomas Jefferson put it less prosaically when he said: "He who receives an idea from
me, receives instruction himself without lessening mine; as he who lights his taper at mine,
receives light without darkening me."

An information-based world is one in which more of the goods that are produced will have
the character of pharmaceuticals or books or records, in that they involve very large fixed costs
and much smaller marginal costs. And it is one in which network effects will be much more
pervasive. Think about a lonely fax machine; it is a hunk of metal that is best used as a door stop.
Now think about 100,000 fax machines; that is 10 billion possible connections. The number of
connections that are possible rises not proportionately with the number that are connected, but by
the square of that number.
A new market dynamic
The greater salience of these characteristics has crucial implications for business and for
the functioning of the economy as a whole. The same characteristics also mean that what
engineers call positive feedback, philosophers call self-fulfilling prophesies, and what others call
rolling snowball effects are increasingly important.
This dynamic is highlighted by the growth of the Internet, where it does not take a change
in the rate of growth to produce an ever-larger absolute effect. Moving from one million Internet
users to two million Internet users has one kind of impact; moving from 2 million to 4 million
has a somewhat greater impact; and going from 4 million to 8 million, a still larger impact. An
increase in the installed base has a larger absolute economic impact than any deceleration in the
rate of innovation at the cutting edge.
An economy of very high fixed costs and very low marginal costs will also be
characterized by positive feedback economy. The old economy is driven by negative feedback:
rising demand leads to higher prices, which leads producers to produce more and consumers to
buy less, which restores equilibrium at a lower level of demand. By contrast, in an information
economy, rising demand will often produce higher efficiency and lower prices, leading to yet
higher demand. In that sense, if the agricultural and industrial economies were Smithian - the
new economy is Schumpeterian.
Another way to capture the distinction would be that the traditional industrial economy
was a Newtonian system of opposing forces, in which disequilibria of demand and supply arose,
only to be equilibrated by adjusting prices. In contrast, the right metaphors for the new economy
are more Darwinian, with the fittest surviving, and, as modem Darwinians have come to
understand, accidents of history casting long and consequential shadows.

II.

Implications for Economic Policy

It is fair to say that the emergence of a new economy has been kind to the United States
economy, with a wide-ranging impact that Vice-President Gore has called the "information
technology supply shock".

Consider:
•

In the 1970s we saw dramatic increases in the price of oil, and what followed was a quite
dramatic deterioration in the economic performance of the United States and many other
nations - along a number of dimensions.

•

Today, we have again seen a sharp rise in the price of oil. But we have also seen, particularly
in the US, the IT supply shock: another dramatic and continuing change in the price of a key
input to the economy, only this time, the direction in prices is down. And in place of
stagflation, we are seeing a combination of rapid growth and relative price stability for which
we have yet to find a name.

Some say that the spread of new technology is a wave. Others -living further west of here,
perhaps - say it is a river. What we can safely affirm is that it would be unwise to take these
good times for granted. Our own experience in the late 1920s and 1930s, and Japan's in the
1990s, remind us that positive supply shocks and stable prices are no armor against economic
downturns. The new economy will need constantly to be renewed. And that will only happen on
the basis of old values.
Let me highlight five core elements of a successful economic strategy and how they relate
to the needs of the new economy.

First, the need to crowd in, not crowd out
Ten years ago we had an economy where we were caught in a kind of vicious cyclehigh deficits led to high interest rates, led to low levels of investment, led to slow levels of
economic growth, led to reduced revenues, led to larger deficits -- and around and around again.
Through the policies that we as a country have pursued during the 1990s, we have crossed a
threshold.
And so today we enjoy a virtuous circle -- a virtuous circle of budget surpluses, lower
interest rates, more investment, more grO\vth, more revenues, larger budget surpluses, more
investment, and around and around again. And that switch from vicious cycle to virtuous circle
has unlocked the energy in this economy that has helped to make this expansion the longest in
our country's history.

This shift in policy has made and will continue to make an important contribution to the
continued development of a new economy. Because a new economy fundamentally changes the
stakes involved in the choice of our nation's fiscal policy. In a world that is rich with investment
opportunities, and where investors can quickly understand the implications of changes of
policies five and ten years out, the importance of running a surplus and pursuing prudent policies
becomes much, much greater. The more that is saved through debt reduction, the more that
America's private sector will be able to invest in the technologies of our future.

Second, the need to accumulate human capital
We hear often, and rightly, these days about the great importance of education. In an era
where the return on investment in human capital is so high, it is doubly important to ensure that
our children receive the best education possible. If investments in factories were the most
important investments in the industrial age - the most important investments in an information
age are surely investments in the human brain.
We have an enormous opportunity now to perpetuate our prosperity in a knowledge-based
economy by increasing our investments in the users and producers of information:
•

My children are fortunate enough to attend public schools with good teachers and good
facilities. All kids should have those same opportunities. They should not be in schools
where the classrooms are converted closets; where lunch begins at 9:45 because facilities
are inadequate to serve all kids; and when the average elementary school is now 60 years
old. That is why major new public investment in school construction is so high on the
Administration's agenda.

•

One million teachers will retire in the next decade. To replace these teachers with the
kinds of teachers we want, we need to make teaching a valued and honored profession
and to pay our teachers well. That is why we are working hard on a bipartisan basis to
support putting more teachers in classrooms. allowing better teachers to go into
education, and reduce class sizes.

Third, the need to make markets as large as possible
Just as orphan drugs cost much more than drugs with a larger market, and bcstsellers cost
much less than academic monographs - when a market is driven by a positive feedback, its
efficiency will be directly related to its size. Success will breed success, because it increases
efficiency and reduces costs by involving larger networks and by achieving larger production
lines over which to amortize the high initial fixed cost. And getting the good lines going and
maintaining a high yield of growth will generate cascading benefits.
The crucial implication for those of us in government is that policies that help to expand
the size of markets in any way become that much more important.

That means that deregulation becomes that much more important, to ensure that
government is not preventing or distorting the development of fast-growing markets. That is we
worked so hard to pass the right kind of Financial Modernization legislation last year. I do not
think it is an accident that the country that has so far realized the greatest benefits from the IT
revolution is also, at least until recently, the only country where you could raise your first $100
million before you have bought your first suit.
And it means that a strong and stable global economy becomes that much more important:
because the greater the potential scale, the more quickly those economies of scale can set in, the
further that prices can fall, and the faster that demand and efficiency can rise. So the economic
and broader benefits to the US of successful international integration are greater today than they
have ever been. Globally:
•

We must work to support global economic growth, by keeping our own economy strong, and
make the case for imports, in all countries, as well exports.

•

We must work to build a stronger, more stable system for the flow of global capital, so that
crises such as those we saw in Asia are less frequent and more effectively contained, and
capital can flow to where it will have the greatest impact on growth.

•

We must work to support strong international financial institutions to promote poverty
reduction and successful economic development in the poorest countries.

And, as recent events in Prague have once again underlined, we must recognize that in an
integrated world, economic and financial issues cannot be divorced from other concerns. As the
President has said: "a legal framework of mutual responsibility and social safety is not
destructive to the market; it is essential to its success." And a crucial part of global integration
must be common agreements to make a global system work for people.

Fourth, support for the production, dissemination and application of know/edge
We know that markets and the spur of competition are the best producers of applied
knowledge. At the same time, the most important innovations that we see today are built on
progress in basic science, everything from group theory to quantum theory. If one asked what
research had made the most important contribution to the navigation of ships since the 1600s, a
good case could be made that it was the pure mathematics involved in the development of
imaginary numbers - such as the square root of negative one - which in tum helped to produce
Maxwell's equations, which in tum helped pave the way for the invention of the radio.
We know from the experience here in Cambridge that this kind of basic science is best
diffused broadly, so production must be supported from the outside. That is why a crucial
component of public policy at this time must be strong support for basic research - an imperative
that this Administration has sought to meet in successive Presidential budgets.

Fifth, the need to make the new economy work/or all
Finally, we need to work to make sure that new technologies and the new markets they
create work well for all of our people. This is a moral imperative, in an economy as prosperous
as ours. But in an economy where jobs are looking for people more than people look for jobs,
and where bottlenecks make it hard to attract and retain workers, it is also an economic
imperative.
One way to achieve this goal is to keep our economy strong, because a strong economy is
the best social policy ever invented. It says something about the U.S. labor market today that
companies are actually hiring planes to advertise jobs fairs in the skies over Baltimore Orioles
games. It is a different world, indeed, from the one of a decade ago, when we debated the sources
and causes of what was then referred to as "the jobless recovery."
Within America and globally, we face a challenge in that new technologies can create
centers of strength that pull away - or they can make possible faster and broader diffusion of
opportunities around the economy. Public policy will have a great deal to do with whether our
new economy follows the more inclusive path.
•

That is why it is so important that this Administration is providing the right kind of training
programs to move people from school to work, and from welfare to work. Welfare rolls have
dropped 56 percent - by nearly 8 million people - since 1993. Under the Welfare to Work
Partnership, private businesses have hired more than 1 million former recipients.

•

It is also why we have worked hard, on a variety of fronts, to provide capital to areas of our
country and groups within our country who traditionally have not had such access: most
recently, through the President's New Markets Initiative.

III.

Concluding Remarks

This is as fortunate a time to be an American as any in our history. And those involved in
the high technology sector stand out in their good fortune relative to other Americans. But it is
not a time to rest on any laurels. For all that has changed in this more information-based
economy, the basic laws of supply and demand have not changed
That is why we must all focus on ensuring that the new economy is built on old virtues and
investments that are attentive to the needs of the new economy and can help markets be as large
and efficient as they can be. Thank you.

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
September 27, 2000

CONTACT:

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 2-YEAR NOTES
Interest Rate:
Series:
CUSIP No:
STRIPS Minimum:

6%
Z-2002
9128276L1
$100,000

Issue Date:
Dated Date:
Maturity Date:

High Yield:

6.002%

Price:

October 02, 2000
September 30, 2000
September 30, 2002

99.995

All noncompetitive and successful competitive bidders were awarded
securities at the high yield. Tenders at the high yield were
allotted 91%. All tenders at lower yields were accepted in full.
Accrued interest of $ 0.32967 per $1,000 must be paid for the period
from September 30, 2000 to October 02, 2000.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type

Tendered

Competitive
Noncompetitive

28,086,495
1,253,480

Accepted
$

10,009,475 1/

29,339,975

PUBLIC SUBTOTAL

3,275,000
1,900,000

Federal Reserve
Foreign Official Inst.
TOTAL

34,514,975

8,755,995
1,253,480

15,1'84,475

Median yield
5.995%:
50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low yield
5.970%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

29,339,975 / 10,009,475

1/ Awards to TREASURY DIRECT

2.93

$942,803,000

http://www.publicdebt.treas.gov

LS-923

DEPARTlVlENT

THE

TREASURY

NEWS

'IREASURY

omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N .W.• WASHINGTON, D.C.• 20220 • (202) 622-2960

EMBARGOED UNTIL 2: 30 F. M.

CONTACT:

september 28, 2000

Office of Financing
202/691-3550

TREASURY OFFERS i3-WEEK AND 26-WEEK BILLS
The Treasury will auction two series of Treasury bills totaling
approximately S20,000 million to refund S16,537 million of publicly held
securities maturing October 5, 2000, and to raise about $3,463 million of new
cash.

In addition to the public holdings, Federal Reserve Banks for their own
accounts hold $8,166 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 $4,453 million held
foreign and international monetary
authorities, which may be refunded within the offering amount at the highest

by Federal Reserve Banks as agents for

discount rate of accepted competitive tender~. ~dditional amounts may be
issued for such accounts if the aggregate amount of new bids exceeds the
aggregate amount of maturing bills.
TreasuryDirect customers requested that we reinvest their maturing holdings of approximately $849 million into the 13-week bill and $823 million into
the 26-week bill.
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, Notes, and Bonds (31 CPR Part 356, as
amended} .
Details about each of the new securities are given in the attached
offering highlights.
000

Attachment

W-924

For press releases, .r;peeches, public schedules a/1d official biographies, call our 24-hour fax lint! at (201) 621-2040

HIGHLIGHTS OF TREASURY OFFBR~NGS OF BILLS
TO BE ISSUED OCTOBER 5, 2000

September 28, 2000
Offering Amount ... " . . . . . . . . . . . . . . . . . . . $10,500 million

$9,500 million

Description of Offering:
Term and typo of socuri ty . . . . . . . . . . . . . . 91-day bi 11

cusrp number . . . . . . . . . . . . . . . . . . . . . . . . . . . 912795 ES 6
Auction date . . . . . . . . . , . . . . . . . . . . . . . . . . .
ISBue date . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ma turi ty date . . . . . . . . , . . . . . . . . . . . . . . . . .
Original issue date . . . . . . . . . • . . . . . . . . . .
Current.ly outs tanding . . . . . . . . . . . . . . . . . .
Minimum bid amount and ITIultiples .•.....

October 2, 2000
October 5, 2000
January 4, 2001
January 6, 2000
$26,251 million

$1,000

182 -day bi 11
912795 GA 3

October
October
AprilS,
October

2. 2000
5, 2000
2001
5,

:JOOO

$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
incr&m&nts of .005%, e.g., 7.100\, 1.105%.
(J} Net long position for each bidder must b~ reported when the sum
of the total bid amount, at all discount ratos. and the net long
position is $1 billion or greater.
(3) Nat long position must be determined as of one half-hour prior
to the closing time for reoeipt of competitive tenders.

Maximum Recognized Bid
at a Single Rate . . . . . . . . . . . . 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 Term9:
By charge to a funds account at a Federal Reserve Bank on issue date, or payment
of full par amount with tender.
TreaBu~Direct customers can use the Pay Direct feature which
authorizes a charge to their account of record at their financial institution on issue date.

PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239

FOR IMMEDIATE RELEASE
September 29, 2000

CONTACT:

Peter Hollenbach
(202) 691-3502

TREASUR Y AUTHORIZES HUD CALL OF
FHA INSURANCE FUND DEBENTURES
The Departments of Treasury and Housing and Urban Development announced today the call of all
Federal Housing Administration (FHA) insurance fund debentures with an interest rate of 6.625
percent or higher outstanding as of September 30, 2000. Debentures issued with a debenture lock
agreement are not subject to the call. Debentures that have been registered on the books of the
Federal Reserve Bank of Philadelphia as of March 31,2000, are considered, "outstanding." The
date of the call for the redemption of approximately $1 00 million in debentures is January 1, 2001,
with the semi-annual interest due January 1, paid along with the debenture principal.
Debenture owners of record as of September 30, 2000, will be notified by mail of the call. Properly
completed transaction requests for the transfer of debentures within the FHA Book-Entry
Debenture system will be processed if received by December 12, 2000. Investors should contact
the Federal Reserve Bank of Philadelphia (215) 574-6154 for more information.

000

http://www . pu blicdebt. treas.gov

L8-925

DEPARTlVIENT

THE

TREASURY

NEWS
omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N .W.• WASHINGTON, D.C.• 20220 • (202) 622-2960

PUBLIC CONTACT: Office of Financing
202-691-3550
MEDIA CONTACT:
Una Gallagher
202-622-2960

R IMMEDIATE RELEASE
~tember 28, 2000

TREASURY DEBT BUYBACK OPERATION RESULTS

Today, Treasury completed a debt buyback (redemption) operation for $1,000 million
r of its outstanding callable issu~s_ A total of 10 callable issues with final maturity
tween February 2010 and November 2014 were eligible for this operation. The settlement date
r this operation will be October 2, 2000. Summary results of this operation are
esented below.
(amounts in millions)

fers Received (Par Amount) :
fers Accepted (Par Amount) :
tal Price Paid for Issues
(Less Accrued Interest) :
mber of Issues Eligible:
For Operation:
For Which Offers were Accepted:
ighted Average Yield to Call
of all Accepted Offers (%):
ighted Average Maturity to Call
for all Accepted Securities (in years) :

$5,660
1,000

1. 394

10
2

6.116

8.1

tails for each issue accompany this release.

-926

For press reLeases, speeches, public schedules and official biographies, call our 24-hour flL" line at (202) 622-2040

Septambe.., 28, 2000
TREASURY DEBT BUYBACK OPERATION RESULTS
(amounts in millions, prices in decimals)
Table I

Coupon
Bst~

{!Ii}

11.750
10.000
12.750
13.875
14.000
10.375
12.000
13.250
12.500
11.750

Maturity
Date

Par
Amount
Off ere d

Par
Amount
Accented

02/15/05-10
05/15/05-10
11/15/05-10
05/15/06-11
11/15/06-11
11/15/07-12
08/15/08-13
05/15/09-14
08/15/09-14
11/15/09-14

234
756
290
389
453
914
1,212
634
469
309

0
0
0
0
0
0
726
274
0
0

Highest
Accepted
Price

Weighted
Average
Accepted
Price

N/A
N/A
N/A
N/A
N/A
N/A
136.343
147.281
N/A
N/A

N/A
N/A
N/A
N/A
N/A
N/A
l36.298
147.248
N/A
N/A

Par Amount
Privately
Held*
1,636
1,811
3,476
3,535
3,925
9,113
10,758
3,691
3,875
4,811

Table II

Coupon
Rate (%l

Maturity
Date

CUSIP
Number

Yieid
to Call

Weighted
Average
Accepted
Yield
to Call

11. 750
10.000
12.750
13.875
14.000
10.375
12.000
13.250
12.500
11.750

02/15/05-10
05/15/05-10
11/15/05-10
05/15/06-11
11/15/06-11
11/15/07 -12
08/15/08-13
05/15/09-14
08/15/09-14
11/15/09-14

912810CM8
912810CP1
912810CS5
912810CV8
912810CY2
912810DB1
912810DF2
912810DJ4
912810DL9
912810DN5

N/A
N/A
N/A
N/A
N/A
N/A
6.111
6.110
N/A
N/A

N/A
N/A
N/A
N/A
N/A
N/A
6.117
6.114
N/A
N/A

Lowest
Acc~pted

Total Par Amount Offered:
Total Par Amount Accepted:

5,660
1,000
Note: Due to rounding, details may not add to totals.
*Amount outstanding after operation. Calculated using amounts reported on announcement.

DEPARTMENT

TREASURY

THE

TREASURY'

NEWS

OFFICE OF PUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960

FOR IMMEDIATE RELEASE
September 30, 2000

Contact: Steve Posner
(202) 622-2960

U.S.- E.U. REACH AGREEMENT ON FSC PROCEDURES

The United States and the European Union today reached an agreement regarding
procedures for reviewing whether the Foreign Sales Corporation (FSC) replacement legislation,
currently pending in Congress, is WTO consistent. In conjunction with the agreement, the U.S.
requested an extension of the compliance period from October 1 to November 1 to allow
Congress to complete passage of legislation to comply with the original WTO ruling.
"We cannot emphasize strongly enough how critical it is that Congress complete action
on the FSC repeal and replacement legislation as expeditiously as possible. Enactment of this
legislation is in our national interest. It is the only way to meet our obligations in the WTO and
avoid an unprecedented and immediate confrontation with the European Union," said Treasury
Deputy Secretary Stuart Eizenstat.
"The U.S. and EU today demonstrated a commitment to avoid escalating trans-Atlantic
trade tensions and managing this WTO trade dispute responsibly, while fully protecting each
parties' legal rights. The U.S. efforts to enact FSC replacement legislation represents a serious
effort and demonstrates our strong and continued commitment to complying with our WTO
obligations," said United States Trade Representative Charlene Barshefsky.
Terms of the Agreement
The agreement signed today sets out procedural steps that will be taken after passage of
the FSC replacement legislation. The procedures agreed to today are similar to those used in the
Canada-Australia salmon dispute. The essential feature of the agreement provides for sequencing
of WTO procedures as follows: 1) a panel will determine the WTO-consistency of FSC
replacement legislation (the parties retain the right to appeal); 2) only after the appeal process is
exhausted would an arbitration over the appropriate level of sanctions be conducted if the
replacement legislation was found WTO-inconsistent. With few exceptions, the time frames set
forth in the Dispute Settlement Understanding (DSU) for such adjudications are ret1ected in this
agreement.
-30LS-927

DEPARTMENT

TREASURY

THE

TREASURY

NEWS

omCE OFPUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960

EMBARGOED UNTIL 10:40 A.M.
Text as Prepared for Delivery
October 2, 2000

TREASURY SECRETARY LAWRENCE H. SUMMERS
REMARKS AT THE PARTNERS IN EDUCATION,
COMPUTERS FOR LEARNING CEREMONY

Thank you Thomas for that kind introduction. Let me also extend my warm thanks to James
Malloy, Rodney Spinks, and Sergeant James Kearney for your invaluable work. Many children
have benefited from your efforts to help integrate digital technology into the classroom.
Today we honor the Treasury volunteers that have given up so much of their personal time to
make the Bureau of Engraving and Printing's Computers for Learning initiative such a success.
And we also honor the principals of the three schools that have had the courage and the vision to
participate in this important initiative.
In that regard, I would like for a few moments to talk about the importance of education in the
new economy and to highlight the vital role that initiatives such as Partnership in Education
(PIE) and Computers for Learning can play in bridging the digital divide in America.

Investing in Our Children.

There have been few trends in the American labor market in recent years that have been more
pronounced than the rise in the returns to education. Twenty years ago, a high school graduate
earned one third more, on average, than someone without a high-school degree. Today, the ratio
is more than two to one.
The same is true at higher levels of education: On average a bachelor's degree is worth some
$17,000 more a year in the workplace than a high school diploma. Over a lifetime, that is a
difference in earnings of approximately $600,000. And the gap is widening all the time.
What is driving these changes?
One large part of the explanation has to be that we are moving from an economy based on the
production of physical goods to one based on the production and application of knowledge.
LS - 928

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·U.S. Government Pronl,ng Office. 1998 - 619-559

As Chairman Greenspan has so often emphasized, in such a world, goods are increasingly valued
for the knowledge that is embodied in them rather than for their physical weight; and the amount
we can contribute to our economy, and what it is prepared to compensate us for our efforts,
depends increasingly on what we know, not how much we can lift.
What is true for individual incomes is also true at the national level. In a new economy,
investment in knowledge will be more and more crucial to promoting and sustaining our national
prosperity
Research shows that children perform better when classroom conditions meet high standards:
that is to say, kids are most likely to learn what they are taught in classrooms rather than in
renovated closets. In the richest, most powerful country there has ever been, there shouldn't be
kids who start the school day at four in the afternoon because the school works on three shifts
due to overcongested conditions. And there shouldn't be in the United States today any school
cafeteria that begins to serve lunch at 9:45 in the morning so that it can accommodate all the
children that need to eat there.
At such a fortunate moment in America's economic history, fixing our schools so that children
can take their lessons in modern schools with modern facilities is surely not beyond our ability to
deliver As President Clinton said recently: "Today the sun is shining on America, and the roofs
that need most fixing in America are the roofs of our nation's schools."
•

That is why major public investment in school construction and modernization is so high on
the Administration's agenda.

•

And that is why we are working hard on a bipartisan basis to support putting more teachers in
classrooms, allowing better teachers to go into education, and reduce class sizes.

11.

Reaching out to Our Communities.

But we can do much more. When De Tocqueville came to the US. in the 1800s, he stressed that
one of the greatest strengths of America was that we come together to solve common problems.
It is the civic attitude demonstrated by those we are honoring today that De Tocqueville so
admired

By reaching out to schools in our communities, you have created new opportunities and provided
new resources for kids that badly need them. That is why it is a priority of this Administration to
encourage government employees to channel their skills and energy towards initiatives such as
Computers for Learning so that classrooms can benefit from new teaching software and from the
educational resources available on the Internet.
By your example, you have shown what can be accomplished by the spirit of volunteerism:
•

The efforts of BEP employees have resulted in the establishment offive computer laboratory
classrooms in schools in this area including the donation of 120 computers.

•

Under the Partnership in Education initiative, Treasury volunteers are helping to establish
two Homework Help Centers within an after-school assignment program where children can
complete homework assignments.

•

And, in partnership with the National Academy Foundation, Treasury staff who have
volunteered to be detailed to the PIE program for a year or two have helped establish schoolto-career academies that equip students for the jobs market beyond school. Treasury now
sponsors eight career academies in DC and New York City with an enrollment of almost
1,000 students.

ill.

Conclusion.

In conclusion, let me say that this is as fortunate a time as any in our history to be American. We
must do all that we can both at the public level and as individuals to ensure that we prolong this
moment of prosperity.
Investing more resources and committing more energy to our public schools is a national priority
not only because it is morally right to equip our children with the resources they need to succeed
in life but because it is also in our economic self-interest to do so. In an economy where jobs are
looking for people as much as people for jobs, it is critical that we expand the supply of skilled
labor in the new economy.
Through your commitment and dedication, you have shown that an enormous amount can be
accomplished by individuals who care about our children's future. Let me commend your efforts
and encourage others to follow your example. Thank you.
-30-

DEPARTMENT

THE

TREASURY

NEWS

TREASURY

OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.· WASHINGTON, D.C .• 20220. (202) 622-2960

FOR IMMEDIATE RELEASE
Text as Prepared for Delivery
October 2, 2000

STA TEMENT BY TREASURY SECRETARY LAWRENCE H. SUMMERS

It is in recognition of the moral and economic imperative of debt forgiveness for the
poorest countries that so many leaders have gathered for this event in the White House today.
The fact that leading members of Congress from both sides of the aisle and so many religious
leaders have joined President Clinton today is a clear demonstration of the broad and deep
national consensus that the Heavily Indebted Poor Countries (mpC) initiative must go forward.
The promise ofHIPC relief has been instrumental in strengthening efforts by many of the
world's poorest countries to promote growth, educate their children and combat AIDS and other
deadly diseases that will contribute to their own stability and to the stability of the world. That is
why we are urging Congress to provide the authorizations and appropriations necessary to
continue this essential international initiative. In an era of unprecedented wealth, investing just
three hundredths of one percent of the United States' FY2001 budget in the future of some of the
poorest countries in the world should not be a difficult decision for us to make.
Urgently needed now are $435 million in pending appropriations requested by the
President. In addition it is crucial that Congress authorize the US. to support use of the
remaining investment income on profits from IMF off-market gold sales to finance its share of
enhanced HIPC debt relief I also urge Congress to act on legislation to provide tax incentives for
the development of vaccines to combat diseases such as HIV/AIDS and malaria that cost
millions oflives every year.
Every day that we fail to fund our commitments to this effort has real human costs. Lack
of US funding has already stalled the enhanced HIPC initiative in Latin America and could soon
jeopardize debt relief in Africa. The United States is the most prosperous and economically
successful country that there has ever been. No country has a greater stake in successful
economic development of the poorest economies. The world is waiting for us to do our full and
fair share to keep this initiative going. Thank you.

-30LS - 929

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'u.s. Government Pnntlng Office

1998· 619·559

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 02, 2000

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
October OS, 2000
January 04, 2001
912795ES6

Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:

6.075%

Investment Rate 1/:

6.257%

Price:

98.464

All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted 38%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted

Tendered

Tender Type
Competitive
Noncompetitive

23,764,890
1,222,384

145,000

25,132,274

10,506,784

3,916,378

Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$

9,139,400
1,222,384
10,361,784 2/

24,987,274

PUBLIC SUBTOTAL

TOTAL

29,048,652

14,423,162

Median rate
6.055%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
6.035%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

24,987,274 / 10,361,784

2.41

1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $948,047,000

http://www.publicdebt.treas.gov

LS-930

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 02, 2000

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182-Day Bill
October 05, 2000
April 05, 2001
912795GA3

Term:
Issue Date:
Maturity Date:
CUSIP Number:
6.040%

High Rate:

Investment Rate 1/:

Price:

6.318%

96.946

All noncompetitive and successful competitive bidders were awarded
securities at the high rate.
Tenders at the high discount rate were
allotted 99%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted

Tendered

Tender Type
Competitive
Noncompetitive

Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$

4,563,940
1,211,980
5,775,920 2/

19,595,970

PUBLIC SUBTOTAL

TOTAL

18,383,990
1,211,980

3,726,000

23,321,970

9,501,920

4,249,180

27,571,150

13,751,100

Median rate
6.030%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
5.950%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

19,595,970 / 5,775,920 = 3.39

1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $916,440,000

htlp:/Iwww.publicdebt.treas.gov

LS-931

DEPARTMENT

THE

TREASURY

NEWS
OWICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASIflNGTON, D.C •• 20220. (202) 622.2960

FOR IMMEDIATE RELEASE
October 3, 2000

TREASURY ASSIST ANT SECRETARY GREGORY A. BAER
HOUSE COMMITTEE ON BANKING AND FINANCIAL INSTITUTIONS
Mr. Chairman, Representative LaFalce, Members of the Committee, I appreciate this
opportunity to submit for the record the Treasury Department's views on the Farm Credit
Administration's recent announcement that it will accept national charter applications
from Farm Credit System associations.

The nation's interest in fostering reliable and competitive sources of credit to agriculture
is strong. Our nation's system of agricultural lenders includes the Farm Credit System, a
government sponsored enterprise established in 1916 to provide a reliable source of
agricultural credit. My testimony will focus on the possible effects of the FCA's national
charter proposal on agricultural credit markets. For broader issues of agricultural policy,
I would defer to my colleagues at the Department of Agriculture.
I will first describe the relevant background and purpose of the Farm Credit System and
then offer some views on the possible effects of national chartering. Through the course
of my statement, I will attempt to answer the questions posed by the Chairman in his
letter of invitation.
Background

Congress established the first components of the Farm Credit System in 1916. At that
time, farmers and ranchers were experiencing difficulty in obtaining both short- and longterm agricultural credit. The Farm Credit System was chartered to serve all creditworthy
farmers and rural residents, not just the most profitable segments of the agricultural credit
market.
GSE Status
The Farm Credit System was established as a government sponsored enterprise. GSEs
are private sector entities created by Congress, and given a special set of benefits by
Congress to accomplish a public purpose. Like other GSEs, the Farm Credit System is
LS- 932

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·U.S. Government Printing Office: 1998 - 619-559

limited to a particular line of business - providing credit and related services m
agricultural communities - and receives various government benefits that lower the
System's operating costs and enable it to borrow at rates much lower than other financial
institutions. Some of these benefits include an exemption from registering securities with
the Securities and Exchange Commission and exemptions from federal, state, and local
taxes (depending on type of System institution). GSEs are an exception to our general
approach of avoiding differential treatment among financial institutions. The potential
benefits that GSEs bring to a particular market must be balanced, therefore, against
potential risks to the financial system and potential effects on market competition.
Today, the Farm Credit System funds about 27 percent of outstanding farm debt and has
total assets of $89 billion. Of that $89 billion, $14 billion is funded by member capital,
while $73 billion is funded by debt issued with the benefits of GSE status. I
The Farm Credit System is unique among GSEs in one important respect. Whereas other
GSEs were created to assist direct lenders - either by providing them a secondary market
in which to sell certain types of loans or providing direct funding for such loans - the
Farm Credit System is itself a retail lender. Because Farm Credit System associations
lend much like banks, it is tempting to think of them as just another competitor in the
agricultural credit market. But they are not just another competitor: they are a lender to
which the government has given significant competitive advantages.
Cooperative Structure
From its outset, the Farm Credit System was organized as a cooperative system under
which the farmers that borrowed funds also owned the funding institutions. Farm Credit
System historian W. Gifford Hoag characterized the creation of the System in the
foiIowing manner: .
The various parts of the cooperative Farm Credit System were authorized by
Congress over a 17-year period - 1916 to 1933 - to meet extremely pressing needs of
farmers, ranchers, and their cooperatives. In overly simplified terms, these needs can
be summed up as having a dependable source of adequate credit, on terms suited to
the particular needs of agriculture, from lenders who understood their problems. 2
The Farm Credit System has a complicated structure that emphasizes centralized, national
funding of its liabilities but local credit judgment with respect to its assets. At the top of
the Farm Credit System organizational structure are the regional Farm Credit Banks and
the Agricultural Credit Bank, which are owned by, and provide funding for, direct
lending associations, which in tum make loans to their farmer and rancher members. 3
Neither the Banks nor the associations issue debt directly; instead they use the Federal
1 The Farm Credit System has other liabilities of approximately $2 billion. These include: accrued interest
payable; other interest-bearing liabilities; liability to repay Treasury for interest advanced; and other
miscellaneous liabilities.
2 Hoag, W. Gifford, "The Farm Credit System A History of Financial Self-Help," p. I, 1976.
3 The Agricultural Credit Bank is also owned by the cooperative organizations that borrow from it, and it
has the authority to make direct loans to a broad range of cooperative agricultural businesses.

Farm Credit Banks Funding Corporation, the System's fiscal agent. The Corporation
issues debt obligations in the capital markets that are the joint and several obligations of
all the Banks.
The FCA has historically granted the System's direct lending associations limited
geographic territories. In most instances, a Farm Credit System customer may do
business only with the Farm Credit System lender that serves the territory in which the
customer conducts operations. As a general rule, existing FCA regulations:
•

prohibit a Farm Credit System institution from serving customers operating beyond
the institution's designated territory unless the Farm Credit System institutions
designated to serve that territory consent;

•

require notice whenever a Farm Credit System institution finances the out-of-territory
activities of an existing borrower who also conducts operations and maintains
headquarters in its chartered territory; and

•

specify that out-of-territory lending should not constitute a significant shift of loan
volume away from the institution's designated service area.

The FCA's National Charter Announcement

The FCA's recent announcement would allow Farm Credit System associations to apply
for a national charter that would generally allow them to lend on a nationwide basis.
Farm Credit System associations that do not apply for national charters would still have
to abide by current out-of-territory lending regulations, but nationally chartered
associations could lend in any territory. Because the FCA is an independent agency, it is
not required to clear policies such as the national charter proposal within the
Administration.
According to a USDA study, Farm Credit System lenders face three notable constraints
on growth: limits on the range of financial services they may offer; capital standards that
in the past made it difficult for new lending to be self-capitalizing; and geographic
restrictions on their activity and growth. 4 The FCA's national charter plan would reduce
the third constraint. The FCA has argued that because not all Farm Credit System
institutions give out-of-territory consent freely upon a customer's request, the process
"impedes the System's ability to serve the needs of eligible customers as Congress
intended."s
The FCA has previously considered conditions under which associations may provide
services outside of their chartered territories. For example, in 1993, the FCA issued a
policy statement allowing System entities to offer financially related services outside of
their assigned territories, provided they obtain the consent of all System institutions
chartered to serve within those territories. In 1998, the FCA issued a proposed rule that
4

United States Department of Agriculture, "Credit in Rural America," p. 94, April, 1997.
63 Fed. Reg. 60219 (Nov. 9,1998).

would have permitted System customers to do business with the System lender of their
choice without prior notification and consent. Thus, this "customer choice" proposal
would have allowed System associations to lend anywhere without charter amendments.
This proposal garnered a strong (and decidedly mixed) reaction from both System
institutions and outside parties and was subsequently rescinded in January 2000.
FCA's recent annOlmcement cites the need for Farm Credit System associations to
operate more efficiently to better serve a changing agricultural marketplace. For
example, an association serving one region would currently face the regulatory barriers
discussed earlier in lending to an agribusiness located in another region. More broadly,
whereas the Internet is nationalizing credit markets by allowing a firm to operate
nationally from one location, a Farm Credit System association also would face those
regulatory barriers in using the Internet to make loans out of its region.
The national charter plan does not attempt to alter the number or extent of the existing
Farm Credit Bank districts. Instead, the plan would allow the associations through which
the Farm Credit Banks make loans to compete for business in another Farm Credit
Bank's district even though the Act maintains a regional structure at the Bank level.
Facilitating such lending may allow the Farm Credit System to operate more efficiently,
and thus we can understand why the FCA would wish to pursue such a policy. Such a
policy, however, also raises serious questions about the proper mission of the System.
Analysis of the FCA's National Charter Announcement

We believe that granting national charters to Farm Credit System assocIatIOns is a
significant step that will accelerate a steady trend towards consolidation of the Farm
Credit System. Even in the absence of national charters, the Farm Credit System has
experienced rapid consolidation since its severe financial problems in the 1980s. Since
enactment of the Agricultural Credit Act in 1987, the Farm Credit System has gone from
37 Federal Land Banks, Intermediate Credit Banks and Banks for Cooperatives to six
Farm Credit Banks and one Agricultural Credit Bank, and from about 400 direct lending
associations to 158.
Proponents of national charters argue that national charters could allow the System to
operate more efficiently. As I will explain, however, such changes may also over time
tend to diminish the local, cooperative nature of that System and have long-term effects
on the competitiveness of the agricultural lending markets. In particular, they will allow
expansion of a government sponsored enterprise - which are traditionally created to
correct a market failure - at a time when markets are functioning competitively and even
growing. Originally intended to complement the banking and thrift industries, the Farm
Credit System may grow to mimic them.

Action Task Force and other groups to name and shame jurisdictions that encourage the dark
side of capital mobility - money laundering, tax evasion and so forth - are examples of
something we should see much more of in the future.

7. A strong and stable global financial .\ystem
At a time when the cost of a large American mall or office building exceeds the private
capital flow to many developing countries, a strong and stable flow of capital from the industrial
world to the developing world will be essential to a successfully integrated global economy. It
bears emphasis in this context that the lesson of the Asian crisis is not that poor countries should
accept less capital - it is that capital flows need to be deepened and better utilized to ensure their
stability.
This is the central objective of the international community's approach to the ongoing
reform of the international financial architecture, which has emphasized transparency, the
improvement of domestic financial infrastructures, and the monitoring and reduction of financial
vulnerabilities that are associated with leveraged national balance sheets. It will be essential to
assure that the IMF continues to have a strong capacity to respond aggressively to financial
crises, while at the same time becoming increasingly selective and short term in its provision of
funds. And the World Bank and the other multilateral development banks will need increasingly
to focus their work on countries and sectors where private capital cannot be expected to go.
In the public as in the private sector, questions of pricing in finance will be central in the
years ahead: central to assuring that finance is properly used, and central to mobilizing the kind
of resources that will be necessary if truly concessional needs are to be met. That is why the
pricing policies of the international financial institutions will be under discussion in Fukuoka this
weekend, and also at the fall meetings in Prague.

8. A realistic approach to debt
The reality that not all loans will be repaid, and provision must be made for writing off
bad ones, is central to any properly functioning financial system That is why countries have
bankruptcy laws, and why private sector involvement has been an important part of discussions
of crisis management. It is also why the enhanced HIPe initiative that has been agreed among
the G7 in the past year is so appropriate.
Beyond good financial practice, writing off bad loans is morally right. The power of
compound interest should not ever be the power to stop children from going to school or from
getting necessary health care. We are committed to ensuring that unsustainable debt burdens do
not stop poor countries from realizing their economic potential. But equally, we are committed to
not repeating the mistakes of the past, and to ensuring that assistance provided through debt
relief heIps the intended beneficiaries - as part of a new framework for providing support that
puts poverty reduction and popular participation at center stage.

9. Enhanced provision qf glohal p1lhlic ~o()ds
5

Second, Congress may wish to consider whether an expansion of the geographic reach of
this GSE is warranted at this time. A 1997 USDA report on credit in rural America
concluded that the farm sector "appears to be well served by a combination of private
institutions, government-sponsored enterprises such as the Farm Credit System, and
public agencies such as the USDA."g
The Farm Credit System differs from the other GSEs in that its growth has been slower
and its market share has decreased during the last 20 years. Since the early 1980s, the
System's share of total farm business debt has declined from 34 percent to 27 percent,
while commercial banks' share has increased from 22 percent to 40 percent. Again,
however, it is crucial to note that the Farm Credit System institutions are government
sponsored entities. Thus, shrinkage in their market share cannot be viewed in the same
light as shrinkage in the market share of other institutions. Indeed, such shrinkage is
clear evidence that there is now a competitive agricultural lending market of the type
whose very absence originally motivated the creation of the System in 1916. Moreover,
this market appears to be one where private sector innovation and efficiencies are
sufficiently high to capture market share from a government-advantaged competitor.
This is unequivocally good news.
Nonetheless, the Farm Credit System still retains roughly a quarter of the agricultural
credit market. National operations and the power ofthe Internet may well allow it to cut
its costs and lower the price for agricultural credit. While in the short term such a
development would certainly be good for farmers and ranchers - or at least those farmers
and ranchers who qualified for such credit - it might well diminish competition and
innovation in the medium- to long-term by driving other competitors from the market.
Although the competitiveness of the banking sector could possibly be maintained even in
an environment of national charters, we are concerned that the advantages of GSE status
could tip the balance in favor of the Farm Credit System.
Let me emphasize that one could conclude that this geographic expansion of the Farm
Credit System is unwise, and still believe that the Farm Credit System has an important
purpose in providing agricultural credit - particularly during hard times when banks and
thrifts may be less willing to lend. In addition, there may be areas of this country where
private sector lenders are not providing adequate agricultural credit, and where the Farm
Credit System serves as an important source of credit (although that outcome may be
more likely with the current, regional System than with a more homogenized, national
system).
I would add one final note. Some have argued that the Farm Credit System needs these
changes to remain competitive with those banks that, through the Gramm-Leach-Bliley
Act of 1999, were given expanded access to funding from another GSE, the Federal
Home Loan Bank System. The Treasury Department cited concerns with the Federal
Home Loan Bank provisions of Gramm-Leach-Bliley throughout the legislative process.
In conducting any review of GSE activities in agricultural credit markets, we urge
Congress also to reconsider the role of the FHLBanks in agricultural credit markets.
8

Ibid., pp. v-vi.

Safety and Soundness
Let me next discuss the etTects of national charters on the Farm Credit System's safety
and soundness. The Farm Credit System experienced severe financial problems in the
mid-1980s. In the 1987 Farm Credit Act, Congress authorized up to $4 billion in
Treasury-guaranteed bonds to assist the System. The Act also required Treasury to
advance some of the interest payments on these bonds. Bonds worth $1.26 billion were
actually issued and are still being repaid along with Treasury interest advances.
In our May 1990 report to Congress on GSEs, Treasury reported that individual Farm
Credit System institutions were limited in their ability to diversify risk because their
charters limit them to providing credit in specified regions. 9 While we recommended at
that time that the Farm Credit System develop a plan to deal with this situation, including
further consolidation of System institutions, we did not recommend national charters or
any form of intra-System competition. Since that time a great deal of consolidation has
taken place within the Farm Credit System.
Other things being equal, individual direct lending associations operating with national
charters would generally be able to achieve broader geographic diversification of
business risk and credit risk than would be available to associations operating within a
limited area. They may also recognize some efficiencies of scale. As associations grow,
however, operations risk may also grow. Achieving overall risk reduction depends upon
associations not entering markets they do not understand and upon the FCA being able to
supervise associations with national operations.
More importantly, we do not believe that diversification at the association level would
provide much if any diversification gains to the System as a whole. Unlike commercial
banks, Farm Credit System Banks are jointly and severally liable for the Systems' debt
obligations, and debt for all the Banks is issued centrally. A central insurance fund
protects creditors from losses at any Bank in the System. From the point of view of the
System's creditors, since the assets backing that credit do not change with national
charters, diversification of individual associations through national charters would not
necessarily reduce risk significantly.

Conclusion
Mr. Chairman, these are important issues that merit the attention you are paying them.
The Treasury Department stands willing to assist you as you continue your consideration
of these issues.

--30-Department of the Treasury, "Report of the Secretary of the Treasury on Government Sponsored
Enterprises," 1990, p. D-15.

DEPARTlVlENT

THE

TREASURY

NEWS
omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N .W.• WASHINGTON, D.C.• 20220 • (202) 622-2960

FOR IMMEDIATE RELEASE
October 3, 2000

Contact: Bill Luecht, CDFI Fund
(202) 622-8042
Una Gallagher, Treasury Department
(202) 622-2960

TREASURY ANNOUNCES $123_6 MILLION IN CDFI FUND AWARDS
Treasury Secretary Lawrence H: Summers announced today more than $123 million in awards to
banks, thrifts and community development financial institutions across the country in support of their
activities in financially underserved communities.
More than 300 banks, thrifts and community development financial institutions across the
country were selected as awardees under the fifth annual round of Community Development Financial
Institutions (CDFI) Fund and Bank Enterprise Award (BEA) Programs.
"CDFI awards are helping financial institutions make a real difference in the lives of the people
in distressed urban and rural communities by providing needed capital and technical assistance,"
Secretary Summers said.
This year's awards - the largest in the CDFI Fund's history - bring the total amount awarded by
the Fund to more than $427 million.
The CDFI Fund's mission is to promote local growth and access to capital by directly investing
in and supporting CDFIs and by encouraging traditional financial institutions to increase their lending,
investment and services within underserved markets.
CDFIs are specialized financial institutions that work in market niches that have not been
adequately served by traditional financial institutions. They provide a wide range of financial products
and services including; mortgage financing for first-time home-buyers, fmancing for needed community
facilities, commercial loans and investments to start or expand small businesses, loans to rehabilitate
rental housing and financial services needed by low-income households and local businesses. In
addition, these institutions provide services to help ensure credit is used effectively, such as technical
assistance to small businesses and credit counseling to consumers. CDFls include community
development banks, credit unions, loan funds, venture capital funds and microenterprise loan funds.
Please visit the Fund's website www.treas.gov/cdfi for a complete listing of the 2000 CDFI Fund
awards.
-30-

LS-933

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DEPARTlVIENT

THE

TREASURY

NEWS
omCEOFPUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960

FOR IMMEDIATE RELEASE
October 3, 2000

STATEMENT BY TREASURY SECRETARY LAWRENCE H. SUMMERS AND
COUNCIL OF ECONOMIC ADVISERS CHAIRMAN MARTIN N. BAILY

The Administration respects the independence of the Federal Reserve in making
decisions about our nation's monetary policy. We share the Federal Reserve's goals of
maintaining healthy economic growth while preserving low inflation.
Supported by sound economic policies, including budget discipline, the economy
continues to grow, with strong investment and higher productivity, creating good jobs and
improved living standards for all Americans. We are committed to sustaining this economic
success into the future.
-30-

LS-934

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·U.S. Government Printing Office 1998· 619·559

DEPARTlVIENT

THE

TREASURY

NEWS
omCE OF PUBliC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASlllNGTON, D.C. - 20220 - (202) 622-2960

U.S. International Reserve Position
The Treasury Department today released

10/04/00

u.s. reserve assets data for the week ending September 29,2000.

As indicated in this table, U.S. reserve assets totaled $66,297 million as of September 29,2000, up from
$64,675 million as of September 22,2000.
(in US millions)
Sept~!Itper 22L

I. Official U.S. Reserve Assets

a. Securities
Of which, issuer headquartered in the US.
b. Total deposits with:
b.i. Other central banks and BIS

Euro
4,563

Yen
5,998

TOTAL

Euro

10,561

4,837

Yen

TOTAL

6,871

11,..\64

19,258

11,708
0

7,794

b.ii. Banks headquartered in the U.S.

September 29, 2000
66,297

64,675

TOTAL
1. Foreign Currency Reserves

ZQQQ

8,918

10,598

19,516
0

b.ii. Of which, banks located abroad

b.W. Banks headquartered outside the U.S.

13,585

13.711

10.226

10,316

11,046

b.iii. Of which, banks located in the U.S.
2. IMF Reserve Position

3. Special Drawing Rights (SDRs)
4. Gold Stock

5. Other Reserve Assets

2J The items, "2. IMF Reserve Position" and "3. Special Drawing Rights (SDRs)," are based on data provided by the IMF and are valued in
dollar terms at the official SDRIdoliar exchange rate for the reporting date. The IMF data for September 22 are final. The entries in the table
above for September 29 (shown in italics) reflect any necessary adjustments, including revaluation, by the U.S. Treasury to the prior week's
IMF data.
31 Gold stock is valued monthly at $42.2222 per fine troy ounce. Values shown are as of July 31, 2000. The June 30, 2000 value was
$11,046 million.

L8-935

u.s. International Reserve Position (cont'd)
II. Predetermined Short-Term Drains on Foreign Currency Assets
September 22, 2000
1. Foreign currency loans and securities

September 29, 2000

o
o
o

2. Aggregate short and long positions in forwards and
futures in foreign currencies vis-a-vis the U.S. dollar:

2.a.

Short positions

2.b. Long positions
3. Other

III. Contingent Short-Term Net Drains on Foreign Currency Assets
September 22, 2000
1. Contingent liabilities in foreign currency

September 29. 2000

o
o

1.a. Collateral guarantees on debt due within 1 year

tb. Other contingent liabilities
~. Foreign currency securities with embedded options

3. Undrawn. unconditional credit lines
3.a. With other central banks
3.b. With banks and other financial institutions
headquartered in the U.S.
3.e. With banks and other financial institutions
headquartered outside the U. s.
~. Aggregate short and long positions of options in foreign
currencies vis-a-vis the U.S. dollar

4. a. Short positions
4.a.1. Bought puts
4~a.2.

Written calls

4.b. Long positions
4.b.1. Bought calls
4.b.2. Written puts

DEPARTMENT

THE

TREASURY

omCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960

FOR IMMEDIATE RELEASE
Text as Prepared for Delivery
October 4, 2000

TREASURY DEPUTY SECRETARY STUART E. EIZENSTAT,
SPECIAL REPRESENTATIVE OF THE PRESIDENT AND SECRETARY OF
STATE FOR HOLOCAUST ISSUES,
REMARKS TO THE VILNIUS INTERNATIONAL FORUM ON HOLOCAUST
ERA LOOTED CULTURAL ASSETS
VILNIUS, LITHUANIA

Mr. President, Mr. Prime Minister, Lord Russell-Johnston and delegates: I am
deeply touched by the opportunity you have given me to keynote the plenary session of
the Vilnius Forum. This gathering of delegates from so many nations can be an important
milestone in the ongoing effort to bring a measure of justice to the victims of the
Holocaust and to restore to them the cultural values that were theirs. This proud nation, in
whose capital we meet today is, after half a century of often brutal occupation, free,
independent, democratic, and resourceful enough to take the lead in focusing the world's
attention on this important quest.

President Adamkus and Prime Minister Kubilius, you have shown time and again,
and particularly in the last year, high moral leadership in speaking about the need for
Lithuanians to deal openly with their complex and difficult history over the last sixty
years. Under your leadership Lithuania has established an historical commission, which
is conducting an active investigation into Nazi and Soviet-era crimes. It has put in place
extensive programs of Holocaust education in its schools and universities, and among the
ranks of its military. Your sponsorship of this Forum is another admirable example. The
Council of Europe, a milestone on the road toward European unification, under the
leadership of Dr. Schwimmer and Lord Russell-Johnston, has taken a keen interest in
issues involving Holocaust assets and in healing the wounds resulting from the most
destructive war in human history. We are most appreciative that the Government of
Lithuania took up the call of the Council of Europe Parliamentary Assembly to host this
international conference.
I also want to thank all of those, from Lithuania and elsewhere, who have worked
so hard to organize this Forum. No assembly of this magnitude can be the work of one

LS - 936
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person But if there was a single vision behind this gathering, if there was one individual
who, with admirable patriotism, believed that Lithuania could be a motivating force for
the return of cultural property, and who pursued that vision with extraordinary energy and
determination, that person is Emmanuelis Zingeris, a Member of the Lithuanian
Parliament ().nd the chairman of the Council of Europe committee on Holocaust -related
cultural assets. We all owe him our gratitude for this achievement.
It is altogether proper that we meet in this place. Although Vilnius is a small city,
it is central to the history of the Jewish people in Europe and to the bitter years of the
Holocaust. For three hundred years, Vilnius was one of the most important centers of
religious culture and religious scholarship in the world. It was called the Jerusalem of the
North. Rabbi Elijah ben Solomon, the Vilna Gaon, was the most authoritative and
important interpreters of the Talmudic tradition in the long history of Jewish scholarship.
By 1939, Vilnius had 100 synagogues, six Hebrew and Yiddish newspapers, three Jewish
libraries, including the Strashun Library of over 7,000 rare volumes, the YlVO Scientific
Research Institute, of which Sigmund Freud and Albert Einstein were honorary members,
and schools of art which trained such scholars as Bernard Berenson, the eminent
authority on the art of Italy. Vilnius was a multinational, cosmopolitan community whose
children could speak several languages including Lithuanian, Polish, Yiddish, and
Russian.

All of that ended with the Nazi invasion, when the Holocaust came to Lithuania.
Over sixty thousand men, women and children were taken to the Paneriai forest, which
you visited yesterday. They were executed and buried in mass graves. The rest of the
population, and Jews from other countries, were rounded up and herded into a walled
ghetto in the old City. They lived several families to a room, with insufficient food and
poor sanitation, and were required to perform forced labor. A major exhibit Emanuelis
Zingeris arranged in Washington and in Lithuania displayed original posters of cultural
events. It showed that even under these unbearable conditions, people still had the
courage to attend concerts, seminars and book reviews.
In 1943, on orders of Heinrich Himmler, the ghetto residents were transported to
the concentration camps and death camps. In 1939, the Jewish population of Vilnius was
90,000. Today it is 2500. No amount of restitution can ever make up for the lives and
cultural values that were destroyed, or for the human dignity that was violated, not only
here in Lithuania but throughout Europe.
Over the past two years the countries represented at this Forum have played a
leading role in international efforts to provide those who survived and their families with
some measure of justice, by discovering and returning their Nazi-confiscated assets.
There have been three major international conferences. The London Conference in 1997
focused on the amount of gold the Nazis confiscated from occupied countries and victims
to support their war effort. In the field of art and cultural properties, the principles
adopted by the Washington Conference on Holocaust-Era Assets in 1998 have come to
be accepted as guidelines for locating and publicizing missing works, investigating their
provenance, and encouraging the prompt and equitable disposition of claims through

appropriate national procedures. They built on the guidelines adopted by the American
Association of Museum Directors. The Stockholm Forum last January focused on
Holocaust education.
We are here this week to take stock of how the Washington Principles have
worked in practice. We seek to determine how far we have come and what we have
learned in getting here. At this Forum, we are asking noted experts. and we are asking
each other, what improvements in techniques, what changes in practice. what new
commitment of resources are needed to accomplish the work that has been started?
In th.e field of art, our nations have pledged themselves to an organized
international effort, voluntary in nature but backed by strong moral commitment. to
research provenance, uncover stolen art, publicize its existence and encourage a just and
fair solution to conflicting claims of ownership. This is a shared enterprise. Every
government should examine its own collections and records. and should urge museums.
libraries, dealers, auctioneers and companies that display art in their offices to do the
same. A significant start has been made in this regard. as will be detailed in the Country
Reports later on the program. but much remains to be done. This plan of action has broad
support among the people of our countries. Time and again, we have seen that no
institution, be it a museum, library. national collection or private institution has insisted
on retaining a work of Holocaust art once a claim has been validly established and
widely publicized, and once the conscience of the community has been aroused.
However, despite commendable activity in many nations, a tremendous inventory
of stolen art, books and cultural property is still unidentified and unclaimed. The number
of instances in the last two years in which works of art or other cultural property have
been restored to their prewar owners, or retained by current owners as a result of a
settlement with these owners is relatively small. This does not mean that the process
embodied in the Washington Principles has been ignored, or that the principles
themselves are flawed, or even that we are not trying hard enough. It is rather that in the
course of applying these principles, we have come across practical problems that need be
addressed to finish the task.
First is the problem of resources. Tracing the chain of ownership of art which
after confiscation found its way into the international art market, searching government
archives for Allied and captured Nazi inventories of postwar compensation claims, is
time-consuming, labor intensive and costly. It often requires work in several different
countries and research in several languages. Most major museums on both sides of the
Atlantic have been able to undertake such research .. However. smaller museums in the
U.S. and elsewhere, especially those not subsidized by their governments, are having
difficulty fitting this demanding work into their budgets. It is very important that
governments allocate funds wherever possible to support this research and train more
researchers. Universities and art schools can also assist by giving course credit for this
research to qualified art history students.

In the US., almost 2,000 works in the holdings of eight large institutions,
including the Metropolitan Museum of Art in New York, the Getty Museum in Los
Angeles, the Art Institute of Chicago, and the Museum of Fine Arts in Boston were found
to have gaps in their Nazi-era provenance and have been posted on websites for the
benefit of potential claimants. Although the transparency and the best methods used in
conducting some of this research as well as making it publicly availabale remain a matter
of dispute among experts, these actions are a strong step forward. The institutions
containing the collections of Germany, Austria and the United Kingdom have conducted
intensive provenance research to discover works that may have been looted and are
publishing their findings on websites. They follow the sterling example France set a few
years ago by displaying on the Internet art returned to that nation after the War but not
yet claimed. The National Gallery of Art in Washington, after years of intensive research
into this era, using captured enemy documents held in the U.S. National Archives, has
made the images of and information about its entire collection available electronically.
The Einsatzstab Reichsleiter Rosenberg, or ERR, was the most important of the
Nazi organizations tasked with stealing the finest art in Europe for the museum Hitler
hoped to build in his birthplace. Research into the archives containing records of the ERR
and other Nazi looting organizations, taken to the Soviet Union by the Red Army at the
end of the War, are critically important for all our efforts at restitution. These archives
can hel p reveal whether thousands of works of art, which have not shown up in the
international art market and are presumed lost, may still exist. To its great credit, the
Russian Federation has established the legal right of victims of National Socialism to
claim their artworks residing in Russia, a right confirmed last May with the passage of
new legislation. During the Washington Conference, the head of the Russian delegation
agreed to open these archives to researchers. But the Russian government has been
candid about the fact that it is not in a financial position to search its museums and
depositories by itself
Private citizens in the United States have expressed their desire to help in the
creation of a special register of displaced cultural assets in Russia and to publish it. Mr.
Stephen Lash, the chairman of Christie's North and South America, has proposed the
creation of a private, nonprofit organization to raise funds, evaluate research proposals
and make grants. I am pleased to announce today that two prominent citizens, Edgar
Bronfman, president of the World Jewish Congress, in his personal capacity, and Ronald
Lauder, former U.S. Ambassador to Austria and chairman of the Museum of Modern Art
in New York, in his capacity as chair of the Commission for Art Recovery, have offered
to begin the process of creating such an organization. They will do so by providing a
budget of $500, 000 to fund a pi lot project to help organize a special register of displaced
art and identify prewar owners through research in Russian archives. In discussions last
week in Moscow, senior officials of the Russian Federation, Russian museums and a
private foundation expressed strong support for this cooperative effort. This is a great
breakthrough. I am confident that in this way Russia will demonstrate its commitment to
the international effort to bring justice long sought for Holocaust victims. We hope that
this positive action by the Russian Federation will be followed by similar action in other
countries in regard to the opening of Holocaust-era archives generally. I note that in the

United States, a new interagency group created by President Clinton is expected to
declassify millions of pages of records over the next two years, many of them relating to
Holocaust-era looted cultural property, in addition to the 2.5 million pages declassified to
date.
A second major problem in applying the Washington Principles is the lack of
agreement on how best to communicate the results of research to those searching for
stolen art. The Washington Conference recognized that the rapid development of
electronic communication made it possible for families that could not afford professional
help to start their search with information posted on the Internet. The Washington
Principles urged that efforts be made to establish a central registry of information. What
we have today is a very large number of web sites belonging to countries, museums and
other institutions that differ, in the nature and quantity of information offered, from
country to country and even from source to source within a country. There is no single
source, on the web or otherwise, which families can consult to see if art they lost has
been identified and if so where it is. This disadvantages the victims.
The Washington Principles proposed creation ofa central registry of information.
Experience has shown this will take far too long and cost far too much to construct. We
are proposing instead the creation of one central website, with hyper-links to all other
sources of information. These hyper-links would connect claimants and researchers to the
information that is available now and will become available in the future concerning
provenance, claims and other essential research both in primary sources and, for larger
collections, in finding aids. This is a concrete, practical and achievable step. This Forum
should designate an appropriate institution to house this central website, such as the
Council of Europe.
The Washington Principles also recommended that if claims made are disputed,
they be resolved where possible through methods that are speedier, less costly and less
confrontational than traditional litigation. I commend the United Kingdom for adopting
this approach in creating its Spoliation Advisory Panel. On the few occasions in which it
has been tried in the United States, we have also seen good results. Earlier this year, the
North Carolina Museum of Art learned that its "Madonna and Child in a Landscape", by
the German master Lucas Cranach, belonged to the heirs of an Austrian victim of the
Holocaust. Using the mediation services of the Holocaust Claims Processing Office of
the State of New York, the Museum decided to return the painting to the heirs and they
agreed to sell it back to the Museum at a reduced price so that it could continue to be
viewed by the public. The Denver Art Museum availed itself of mediation in deciding to
return "The Letter", by the 17 th century Dutch painter Gerard Terborch to the relatives of
a German victim. Nevertheless, the courtroom is, unfortunately, still the forum for the
large majority of art claims, a fact that precludes recovery by the many claimants who
cannot afford the high costs and long delays involved. Our governments should
encourage greater use of the various methods of alternative dispute resolution, and offer
specific instruction in Holocaust era issues to those who practice them.

You are also discussing the important matter of increasing access to archival
sources of information. The full disclosure of the historical record on art and cultural
values, as on other subjects dealing with the Holocaust, requires a continuous effort to
open and make broadly accessible to researchers the wide range of historical sources
from which judgments can be made and justice can arise. Much has been done in recent
years to open the record of the past, but much remains to be done by those governments
and institutions that retain some portion of the shared recollection of these events. There
are files and collections still to be found and identified; there are files and archives to
which access must be made more responsive to the reasonable needs of researchers, and
there are files and collections that must be declassified and exposed to the light of
scholarly study. This Forum should declare that countries that have not so far made their
relevant archives open and accessible in accordance with the Washington Principles will
do so speedily.
Finally, but just as important, we must stress the fact that continuing cooperation
between nations, as well as within nations, is absolutely vital to finding and publicizing
looted cultural property and resolving ownership disputes with speed and fairness.
We must use this Forum to add new vigor to the work of restitution, so that
people who have been deprived of their property for most of their lives can find justice.
The Nazi regime perpetrated the greatest art theft in history. As hard as we try, we can
only return a small proportion of all that was stolen and was never given back .. But what
we accomplish will go well beyond the return of property itself. The successful
negotiations with Germany over forced and slave labor have shown that we can
strengthen relations between nations; we can help reconciliation between people; and, by
reminding the world of the enormity of the damage done to the moral system of the entire
world by the crimes of the Holocaust, we can help create a strong and permanent
int~rnatio~al consensus for justice. I am confident that as a result of these proceedings,
natIOns will redouble their efforts to make progress on all these fronts.
Thank you. I am delighted to be with you. Let us keep working, steadfast in the
k~owledge that we are doing all we can to cap the values of culture and the glo!)' of art
WIth the crown of justice.

-30-

D EPA R T 1\1 E N T

0 F

TilE

TREASURY ~rI))

T REA SUR Y

NEW S

1789

OmCE OF PVBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622.2960

EMBARGOED UNTIL 2: 30 P.M.
October 4, 2000

CONTACT:

Office of Financing

202/691-3550

TREASURY TO AUCTION $5,000 MILLION OF
28-1/2-YEAR 3-7/8% INFLATION-INDEXED BONDS

The Treasury will auction $5,000 million of 2B-l/2-year 3-7/8% inflationindexed bonds to raise cash.
Amounts bid by Federal Reserve Banks for their own accounta and a.s
aqents for forei.gn and :lnternational monetary authorities will be added. to
the offering.

The auction wi.ll be conducted in the single-price auction format.
All competitive and nonc:ompetitive awards wj;ll be at the highest yield of
accepted. competi t.i va tenders.
NOTE:
The net long position report~g threshold amount for the 28-1/2year inflation-indexed bond is $1 billion.

'!'he bonds being offered today are eligible for the STRIPS program.
This offering of 'rraasury securi.ties is governed. by the te:rm.s and conIssue of
Marketable Book-Entry ~reasu.ry Bills 1 Notes, and Bonds (31 CFR Part 356 r as
amended) .
di. tions set forth in the Urciform Offeri.ng Circu1ar for the Sale and

Given tha rev~s~on to the Consumer Price Index announced by the Bureau of
Labor Statistics on Thursday, September 28, the Treasury has decided to reopen
the 3-,/8% bond of Apri~ 2029 to preclude any compu~tiona~ ~SSU8S regar~g

the Ref@rence CPI that would be associated with the issuance of a new
security. The index ratio for the 3-7/8% security on the settlement date,
October 16, 2000, is 1.050.22. A1though this reopening is not a "qualifi.ed.
reopening" for the purposes of Treasury tax regulations, the securities issued
in this offering will be subject to Treasury Reg. Sec_ 1.1275-7 for tax
pu:rposes and. therefore will be treated in the same manner as the c:urrently
outstanding securities.
Details about tha security are given in the attached offering

high~ights.

000

LS-937
Attachment

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Hl:QBLIGH'!'SI OF ~ OFF£RING TO ~HE POBI.~ OF
2e-l/2-~ INFLA1'ION-INOEXED BONDS ~O BE ISSUED OC~OBE.R l6, 2000

October 4. 2000
Offeri.nq Amount
Deserip~

Tan.

ana

......................................

of Offering:

type of sec:u.rity ....•...•••.•.••.

$5,000 aillion

28-1/2-yaar inf~ation-

indexed. bonc!s (reoptuU.ng)

Sari.. . . . . . . . . . . . . . • . . . . . . . • . . . . . . . . • . . . • . Bonds of April. 2029
COSIP n~ •.•..••..••.•.•••.•.••.••••••• 912810 F'H 6 .
Auction date .•...
October 11, 2000
Iasu.a ci.ate •...•....•.•••••...••••.•••.•.•. October 16, 2000
Dated. ~ta ...•..•••.•.••••••••.•••••••..•• April 15, 1999
Maturity date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . April 15, 2029
In~ereat ra.te •••••.•.••••.••....••........ 3-7/8'
Amount cw:-renUy outstandi T l(l ...•...•.••... $14, 721 ~l~on
Adjusted amount currently outatand.:i.ng .•.•. $15,457 mi.l.h.on
"'. -'d ...................................................... ~ OeteT'!l!ineci at: auetioll
~a.1
yl..'=-I..
Interes-e payaent dates •••..•.•.•••.•...... .Ap:iJ. 15 an<i Oct:.ober 15
MiniAum. bid. am.ou.nt and aul. tiple. • ••
$1,000
Accrued in~5t ....•••.•....•...•....•.•• $0.10646 par $1,000 (fraz October 15
to Oetober 16, 2000)
Adjusted a.c:c:u.ed intereat. payabl..e
by investor .......•.••••.•...........•... $0.1118l per $1, 000
Prex:U..um or diseount ••.•••.......•.....•••• Dete%m.!i.neci a.t auetion
oo

•••••••••••••••••••••••

•

oo • • • • • • •

STRIPS Info::ma.tion:
Hin~

amount

re~red

••.•..••.••...••.•. Sl,OOO

Corpus cosrp number ••..................... 912803 CF 8
TIIN Conv9rsion faetor per $1,000 ....•.•.. 1~.78S757974
~ssion

of Bids:

Noncompetitive bids: Accepted. UI. t"ull up to $5,000,000 at the lUghest accepted y:i.elQ.
Competitive bids:
(1)
Mus t be expressed as a real yield with three daeim.al..s.. e - 9"., 3. 123' .
(2)
Net long posi ticn £or eaeh bidcier aust be repo:teci when the $UlII. of the -eotaJ. b;i.r1
amount, at al~ yieJ.ds, and. the net long posi tion is $1. billion or cp:eater.
(3)
Net:. long position must be determined. as of one half"-hou: prior to the c:lo~
tiJne tor receipt of competi.b.ve tenders.
.
Maxau.m. Recoqni%ed Bid
at a Single Y.ial..d .•.. 35% o£ publ...ic offer.ing
Maxizzwm Aware:! ......•••. 35' of public offering
Recaipt of ~enders:
Non compe t i t i va tenders • P:-ioz: 1:0 12: 00 noo~ eastern. daylight sa.ving- time on auction day
Competiuve ~a '" .Pr:i.or to 1:00 p.m. e.aat:.ex:n dayl.:i.ght aa.~ ~ Oft auc:ti.OA <Wi

l'ayme.nt 're:rms: 'B'f c:h.arqe to a f1mds account a1: a. F&dera1.. R&S8%Ve Bank on i.ssue date, 0:
payment:. of full. par aaoun"b with teccier.
~D.irect. euatome.rs can use t:he Pay Dinet
.feature whi.ch author.izea a cba..:ge to thai.r account of z-eeord at their f:i nClncial. institution on .issue d.a1:e.
Indexi.ng InfOr:Lation:
CPI ~Q Rafarenee ~ioc:l •...•
Ref CPI 04/15/1999 .•••........
Ref cpr 10/16/2000 •..•.......•
Inciex Ratio 10/l6/2000 ....•.•.

1982-1984
164.39333
172.64839
1.05022

PUBLIC DEBT NEWS
Department of the Treasury· Bureau of the Public Debt • Washington, DC 20239

FOR RELEASE AT 3:00 PM
October 5, 2000

Contact: Peter Hollenbach
(202) 691-3502

PUBLIC DEBT ANNOUNCES ACTIVITY FOR
SECURITIES IN THE STRIPS PROGRAM FOR SEPTEMBER 2000

The Bureau of the Public Debt announced activity for the month of September 2000, of securities within the
Separate Trading of Registered Interest and Principal of Securities program (STRIPS).
Dollar Amounts in Thousands
Principal Outstanding
(Eligible Securities)

$1,965,058,219

Held in Unstripped Form

$1,775,126,523

Held in Stripped Form

$189,931,696

Reconstituted in September

$15,585,898

The accompanying table gives a breakdown of STRIPS activity by individual loan description. The balances in
this table arc subject to audit and subsequent revision. These monthly figures arc included in Table V of the
Monthly Statement of the Public Debt, entitled "Holdings of Treasury Securities in Stripped Form."
The Strips Table along with the new Monthly Statement of the Public Debt is available on Public Debt's
Internet site at: www.publicdebt.treas.gov.Awide range of information about the public debt and Treasury
securities is also available at the site.
LS-938

000

www.publicdebt.treas.gov

TAiilLE V. HOLDI)I()S OF

Loan Description

Treasury Notes:
Series: Inlerest Rate:
CUSIP:
AJ
9128274T6
4
0
8-1/2
ZN5
5-3/4
X
3M2
4-5/8
AK
41N9
4-5/8
4X7
Al
4-112
4Z2
U
7-3/4
ZX3
A
5-3/8
3WO
S
5
V
SC2
4-718
5DO
W
5
SE8
x
8
A85
B
4E9
5-5/8
T
5-114
Y
5Hl
5-314
Z
SJ7
5-112
AB
512
7-718
C
B92
5-112
5P3
AC
5-5/8
AD
501
5-7/6
5R9
AE
7-112
D25
0
5-7/8
2C5
0
2El
R
6-116
6-3/8
5X6
R
6-112
6AS
S
683
6-1/2
T
6-3/8
6Cl
U
7-112
F49
A
6-5/B
6E7
V
6-3/8
6F4
W
6-114
6HO
X
6-3/B
G55
B
6-1/6
6K3
Y
5-718
3J9
M
314
5-3/4
N
3Q3
5-3/4
P
5-5/8
3S9
Q
3V2
5-112
C
6-1/4
J78
A
3Z3
0
5-112
4B5
E
5-112
F
5-3/4
401
4H2
5-112
G
4K5
5-318
H
l83
B
5-314
4N9
5-114
J
4-114
4U3
K
N81
5-718
A
5A6
4-3/4
E
PB9
7-1/4
B
5F5
5-1/4
F
088
7-1/4
C
5MO
6
G
R87
7-7/8
D
5S7
5-718
H
7-112
S86
A
T85
6-1/2
B
609
6-314
E
U83
6-112
C
V82
5-7/8
0
5-5/8
W81
A
X80
6-718
B
Y55
7
C
6-1/2
Z62
D
2JO
6-114
B
6-518
2U5
C
6-118
3Eo
D
5-112
3X8
B
5-518
4F6
C
4-3/4
4Vl
0
5-112
5G3
8
6
5N8
C
6-112
B
5Z1
5-3/4
6J6
C

Corpus
STRIP
CUSIP

TREASURY SECURITIES IN STRIPPED FORM, SEPTEMBER 30,2000 _ Continued

Principal Amount Outstanding in Thousands
Maturity Date

DH7
AY3
CF2
DL8
OM6
DP9
AZO
CPO
DRS
DS3
DTI
BA4
CX3
DW4
DX2
DYO
BB2
EB9
EC7
ED5
BCD
EG8
EJ2
EL7
EN3
EP8
E06
BD8
ES2
ETO
EU7
BE6
FU6
CC9
CE5
CH8

CKI
CN5
BF3
CS4
CU9
CW5

DA2
DCB

BGI
OE4
DJ3
BH9
007
BJ5
DUB
BK2
DZ7
BlO
EE3
BM8
BN6
ER4
BPI
B09
BR7
BS5
BT3
BUO
BW6
BX4
CA3
CQ8
CYl
DKO
DV6
EAl
EM5
FT9

Total
Outstanding

10/31/00
11/15/00
11/15/00
11130/00
12131100
01/31/01
02115101
02/15101
02128101
03131101
04/30101
05/15101
05115/01
05/31101
06130/01
07/31101
08115/01
08131101
09/30101
10/31101
11115/01
11130101
12131/01
01/31102
02128/02
03/31/02
04/30/02
05/15/02
05131/02
06130102
07/31/02
08/15/02
08131/02
09/30/02
10131/02
11130102
12131/02
01/31/03
02115/03
02128/03
03/31103
04/30103
05/31/03
06/30/03
08/15103
OB/15/03
11/15/03
07115/04
02115/04
05115/04
05/15104
08115/04
08/15104
11115104
11115/04
02115105
05/15105
05/15/05
08/15105
11115/05
02115106
05/15/06
07/15106
10/15/06
02115/07
05/15/07
0811S/07
02115/08
05/15/08
11115/08
05/15/09
08/15/09
02/15/10
08/15/10

20,524,986
11,519,662
16,035,088
20,157,568
19,474,772
19,777,278
11.312.802
15.367.153
19,586.630
21.605.352
21.033.523
12.398.083
12,873,752
19.885,985
19.001,309
20.541,318
12.339.185
20.118.595
18.797.828
19.196,002
24.226.102
33.504.627
31.166.321
19.381,251
16.563.375
17.237.943
17.390.900
11.714.397
14.871.B23
14.320,609
15,057,900
23.859.015
15.072,264
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
28.011.028
19,852.263
18,625.785
12,955.077
17.823.228
14,440.372
18.925.383
13,346,467
18,089.806
14,373.760
32,658.145
13.834,754
14.739.504
28.562.127
15.002,580
15.209,920
15.513,587
16,015,475
22,740,446
22,459,675
13.103.678
13.958.186
25,636.803
13,583,412
27,190.961
25.083.125
14.794,790
27.399,894
23.355,709
12.360.050
1.327.616,366

Total Treasury Noles ...... " ...... " ...... ,,""

Portion Held in
Unstripped Form

20,496,986
6,033,282
15,036,088
20,157,568
19,463,572
19.777,278
6,431,202
15,367,153
19.586.630
21,579.752
21,031.923
7,203,183
12,873.752
19,785.985
18.998.109
20.084.118
7.817.585
20.118,595
18.276.866
19.196,002
19.965.182
33,504.627
31,089,521
19,381.251
16.542.575
17.235.543
17.390.900
7.966,077
14,871.823
14.320.609
15,057.900
21.244.615
15.072.264
12.768,414
11.678.084
11,843,780
11.862,033
13.100,640
22,776.515
13.626,354
14,172.092
12,573.248
13.132,243
13.125,179
27.275.828
19.852.263
18,425.785
12.687.877
17.823.228
14,105.172
18,925.383
12,120.067
18.089,806
14.370.560
32.658,145
13.545,794
14,738.304
28.562.127
15.002.580
15,024.320
15.513.267
15.548.595
22,740.446
22,459,675
13.008.190
13.842.986
25.556.803
13.581.012
27.190.961
25.046.325
14,792,390
27.399,794
23,355,709
12.360,050
1.290.221,542

Reconstituted
This Month

Por1ion Held in
Stripped Form

28,000
5.485,400
0
0
11,200
0
4.881,600
0
0
25.600
1,600
5.194.900
0
100.000
3.200
457.200
4,521,600

0
95,200
0
0
0
0
61.600
0
0

a
0
69.000
0

a
a
0
96.000
0
0
0
40.240
0
0
0
0
0
0
14.080
0
0
0
IS5.600
0
0
0
0
0
0
12.160
0
0
0
0

a
520.960

4.259.920
0
76.800
0
20.800
2.400
0
3,748.320
0
0
0
2.614,400
0
38,400
59.200
276.800
190,400
0
786.176
44,000
800
0
0
1.600
735.200
0
200,000
257.200
0
335.200
0
1.226,400
0
3.200
0
288,950
1.200
0
0
185.600
320
466.B80
0
0
95.488
115.200
80,000
2,400

48.BOO
0
0
Cl

a
36,000

a
36.800
2.400
100
O·
01

I
I

37.394,824

36.800
0
0
0
194.400
4,800
0
0
20.800
0
0
0
0
0
32,000
0
0
0
0

a
0
0

0
947,480

I
Grand Total. ........................ , ....... ·· ....... _.... · .... ···,.-· .. ··· .... ·..

.. _-- ...... , ........

1,965.058,219

1.775.126.523

189.931.696

15.585.898

TABLE V· HOLDINGS OF TREASURY
Corpus
STRIP
CUSIP

Loan Description

Treasury Bonds:
CUSIP:
912810 DM7
D08
DR6
OU9
DNS
OPO
OS4
OT2
OV7
OW5
OX3
OYI
OZ8
EA2
EBO
EC8
ED6
EE4
EFI
EG9
EH7
EJ3
EKO
El8
EM6
EN4
EP9
EQ7
ES3
ETI
EV6
EW4
EX2
EYO
EZ7
FAI
FB9
FE3
FFO
FG6
FJ2
FM5

Interest Rate:
ii·518
12
10-3/4

9-3/8
10

11-3/4
11-1/4

10-5/8
9-7/8
9-114
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

8-118
8-1/8

8
7-1/4
7-5/8
7-1/8
6-1/4
7-1/2
7-5/8
6-7/6

6
6-3/4
6-1/2
6-5/6
6-3/8
6-1/8
5-1/2
5-114

5-1/4
6-1/8
6-1/4

Total Treasury Bonds ........................

SECURITIES IN STRIPPED FORM, SEPTEM8ER 3D, 2000

Principal Amount Outstanding in Thousands
Malurlty Date
Tolal
Outstanding

912803 AB9
ADS
AG8
AJ2
912800 M7
912803Ml
AC7
AE3
AFO

11/15/04
05/15/05

AH6
AK9
Al7
AM5
AN3
AP8
AQ6
AR4
AS2
ATO
AU7
AV5
AW3
AXI
AY9
AZ6
BAO
BB8
BG6
B04
BE2
BF9
BG7
BH5
BJI
BK8
Bl6
BM4
BP7
BV4
BWZ
CG6
CH4

05115/16
11115/16

08115/05
02115106
11115/14
02/15/15
08/15/15
11115/15
02/15/16

05115/17
08115/17
05/15/18
11/15118
02/15119
08115/19
02/15/20
05/15/20
08/15/20
02115121
05115/21
08115/21
11/15/21
08115/22
11115/22
02/15/23
08115/23
11115/24
02115/25
08/15/25
02/15/26
08115/26
11/15/26
02115/27
08115/27
11/15/27
08/15/28
11/15/28
02/15/29
08/15/29
05/15/30

Portion Held in
Unstripped Form

Reconstituted
This Month

Portion Held in
Stripped Form

8.301.806
4,260,758
9,259,713
4,755,916
6.005,584
12,023.799
5.745,915
5.155.859
6,867.354
16,623.551
18,844,446
17,174.659
13.249,856
7,955,439
7,694,470
17.441.298
19,857,432
10,003,868
8.893,883
19.445.306
10,419,573
10.908.788
10.923.482
31.976.194
10.288.790
9.294.626
17.570.261
22,669,044
10,769,662
11,535,170
12,027.007
12,904,916
10,893.818
11,493,177
10,456,071
10,735,756
22.518,539
11,776,201
10,947,052
11,350,341
11.178.580
17,043,162

4.108,206
1,760,208
5,693,713
4,698,124
2,179,184
5,002,359
4.158,316
3,880.659
6,470,554
18.273,951
17,048,048
11,366,189
10,750.658
3.324.439
3,137,670
11.177.298
18.705,112
8,418,668
3.597.563
8,767,866
9,646.773
6.712,948
9,444.762
13,157,244
9,420,790
3,822.625
10,432.661
17,973.524
4.011,022
3.523.370
7,544,447
11,299,816
8.110,618
7.619,977
6,260,871
9,222.156
16,736.139
11,587,001
10.615,852
11,126,341
11,175,360
17,043,162

4.193,600
2.500,550
3,576.000
57,792
3,825,400
6,121.440
1,577,600
2,275,200
396,800
549,600
1,796,400
5.808,480
2,499,200
4.632,000
4,556,800
6.264,000
1.152,320
1,585.200
5.296,320
10.677,440
772,800
4,195,840
1,478,720
18.818,950
868,000
5,472.000
7.137,600
4.595,520
6.758.640
8.012.800
4,482,560
1.605.100
2.783.200
3.873,200
4,195.200
1,513,600
5,782,400
189.200
331,200
224,000
3,200
0

286,400
147.650
438,400
0
160,000
313,920
565,760
673.600
404,800
271,200
108.800
698,080
382,400
452.800
114.200
1.377.600
298,560
296.400
291,520
488,000
217,600
541,120
352,640
1,436.600
228.000
56,000
59.200
376.768
498.080
180.800
240,320
457.600
629,600
310.800
350,400
219,200
560.000
0
89,600
64,000
0
0

522,453,137

369.916.265

152.536,872

14.638.418

18,123,056
17.165,788
17,959,947
16,735,365
11,613,270

18,123,056
17.165,788
17,959,947
16,735.365
11,513,270

0
0
0
0

0
0
0
0
0

81,597,425

17,935.991
15,455.300

17,935,991
15,455.300

0
0

33.391.291

Treasury Inflation-lndexecJ No:es:

CUSIP:
9128273A8
2M3

Series: Interest Rate:
3-5/8
J

3-3/8

3T7

3-5/8

4Y5
5W8

3-7/8

4-114

912820 BZ9
BVB
Cl9
ON4
EK9

07/15/02
01115/07
01115/08
01/15/09
01/15110

Totallnnation-Indexed Notes ................
Treasury Inflation-Indexed Bonds:
Interest Rate:
CUSIP:
912810 FD5
3-5/8
3-718
FH6
Total Inflation-Indexed Bonds ...............

912803 BN2
CF8

04/15/28
04/15/29

D EPA R T 1\1 E N T

0 F

TilE

TREASURY ~rIJ)

T REA SUR Y

NEW S

178~9~~"1I1I1I1I1I1I"1I1I1I1I1I1I"1I1I1I1II

OmCE OF PUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASillNGTON, D.C. - 20220 _ (202) 622.2960

EMBARGOED tlNTIL 2:30 P.M.
October 5, 2000

~Y'

CONTACT:

Office of Fiuanci~g
2Q2/691.-3550

OFFERS 13-Wi:ER AND 26-WEEK BILLS

~he Tre~sury will auction two aeries of Treasury bills tot~1ng
approximately $21,000 milliaft ~o·refund $27,706 mlllion of publi~ly held
securities mAturing October 12, 2000, and to ~y dow.a. about $6,706 million.

In addition to the public hol~gs, Federal Reserve Banks for their own
accounts hold $14,063 million of the maturing bills, which may be refunaed at
the highest discount rate of accepted compet.it.ive tenders. Amo~ts issued
to these accounts will be ~ addition to the offering amount.

The ~turin~ bills
by F~c.eral Reserve Jbsnks

held by the public include $7,586 million held
as ageZlts for foz:oeie and international moDetary
authorities. Up to $3,000 million of these securities may ~ refunded withln
the offering amount in each of the auctions of 13-week bills and. 26-weelt
billa at the highest disCQUAt r8te of accepted competitive tenders. Addi~ional ~unts may be issued in each auction for such accounts to the extent
that: the amount o£ new bids exceeds $3,000 million.
T.rS4~Direct customers requested that we reinvest their maturing holdings of approximately $943 million into the 13-week bill and $1,194 million
i~to

the 36~eek c~l~.

This offering of Treasury securities is governed by the ~e%mS and conditions set forth in the UAifo%1Zl Offering Circular for ehe Sale and :Issue of
Marketable Book-Entr,y Treasur,y Bills, Notes, and Bonds (ll CPR Part 356, as
amended) •

Dete..ils about each of the new securit.ies are given iu the attached
highlightS.

offeri~g

000

LS-939
Attachment

For P1'4SS releases. speecJus, public sclsellll.us and official biog1'aphi~s, eall OU1' 24-holU' faz line ac (202) 622-2040

H7GHLIGHTS OF TREASURY OFFERINGS or BILLS
TO BE ISSUED OCTOBER 11, 2000
october 5, 2000

Offering Amount: •••••.••••••••••••••••••• $11,000 million

$10,000 mill.ion

Deocription of Ofterin~1

Ter.m and type of security •••••••..•••.••
CUSI'P nUD1ber ••••••••••...••••••...••••••
Auotion dat •.••••••••.•.•.••••••••••...•
:Issue dat •••••••••••••••••••••••••••••••
Maturity dat: ••••••••• ~ .•••••••••••••••••
Original issue date ••••••.••••••..••••••
CUrrentlyoutstanding •••••••••••••••••••
Minimum bid amount and multipl.s •.••••••

91-day bill
912195 m 6

October 10,2000
october 1:&, 2000
Januar,y 11, 2001
JUly 13,2000
$11,675 million
$l,OOa

lea-day bill
91:l795 CJD 1.
October 10, 2000
October 12, 2000

April 12, 2.001
October 12, 2000
$1,000

~he

following rules apply to all securities mention.d above:
Submission of Bid8'
Noncompetitive bid~ ••••••••• Acoepted in full up to $1,000,000 at the highest discount rate of
accepted competitive bid ••
Competitive bids ••.•...••••• (1) MUst be expressed as a 4i8~ount rat. w!ch three aecimals in
increments of .005%, e.g., 1.100%, 1.105%.
(2'> Nat long position for eaoh bidder .ust be reported when the aum
of the total bid amount, at all discount rates, and the net long
position 1. $1 billion or greater.
(3) Net long position must be determined a8 of one half-hour prior
to the olosing time for receipt of competitive tenders.
MazLmum Recognized &ld
at a Single Rate ••••••.••••• 35% of public offering
Maximum Award •••••...•••.••.•••• 35% of public offering
Receipt of ~end.r.J
Noncompetitive tenders •.•.•• Prior to 12:00 noon eastern daylight saving time on auotion day
Competitive tenders ••••••••• Prior to 1,00 p.m. eastern daylight saving tLm. on auotion day
Payment ~erms: By charge to a funds account at a rederal aeserve Bank on isaue date, or payment
of full par amount with tender. ~r6asur,yDlr.ct Qustomers can use the Pay Direct feature which
authorizes a charge to their account of reoord at their financial institution on issue 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
october 10, 2000

CONTACT:

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
9l-Day Bill
October 12, 2000
January 11, 2001
912795FN6

Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:

6.075%

Investment Rate 1/:

6.257%

Price:

98.464

All noncompetitive and successful competitive bidders were awarded
securities at the high rate.
Tenders at the high discount rate were
allotted 43%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type
Competitive
Noncompetitive

Tendered
$

PUBLIC SUBTOTAL

25,581,884
1,332,674

26,914,558

SUBTOTAL

8,123,574
1,332,674
9,456,248 2/

1,550,000

28,464,558

11,006,248

6,021,851

Foreign Official Refunded

Federal Reserve
Foreign Official Add-On
TOTAL

Accepted

34,486,409

17,028,099

Median rate
6.065%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
6.050%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio = 26,914,558 / 9,456,248 = 2.85
1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $1,034,116,000

L5-940
http://www.publicdebt.treas.gov

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 10, 2000

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182-Day Bill
October 12, 2000
April 12, 2001
912795GB1

Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:

6.055%

Investment Rate 1/:

Price:

6.333%

96.939

All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted 54%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted

Tendered

Tender Type

Competitive
Noncompetitive

20,393,575
1,625,155

3,000,000

25,018,730

10,003,730

5,384,615
640,000

Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$

5,378,575
1,625,155
7,003,730 2/

22,018,730

PUBLIC SUBTOTAL

TOTAL

31,043,345

16,028,345

Median rate
6.045%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
6.030%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

22,018,730 / 7,003,730

3.14

1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $1,278,638,000

LS-941
http://www.publicdebt.treas.gov

DEPARTl\,'lENT

THE

TREASURY

NEWS
omCE OF PUBliC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASlllNGTON, D.C. - 20220 - (202) 622-2960

u.s. International Reserve Position

10/11/00

The Treasury Department today released U.S. reserve assets data for the week ending October 6,2000.
As indicated in this table, U.S. reserve assets totaled $65,766 million as of October 6, 2000 , down from
$66,297 million as of September 29,2000.
(in US millions)
Se~tember

29, 2000
66,272

I. Official U.S. Reserve Assets

TOTAL
1. Foreign Currency Reserves

a. Securities
Of which, issuer headquartered in the US
b. Total deposits with:
b.i. Other central banks and BIS
b.ii. Banks headquartered in the U.S.
b.ii. Of which, banks located abroad
b.iii. Banks headquartered outside the U.S.

b.iii. Of which, banks located in the U.S.
2. IMF Reserve Position

3. Special Drawing Rights (SDRs)
4. Gold Stock

5. Other Reserve Assets

Euro
4,837

Yen
6,871

October 6, 2000
65,766

TOTAL

Euro

11,708

4,997

Yen

TOTAL

6,814

8,918

10,598

19,516

8,524

10,510

19,034
0

13,685

13,613

10,316

10,262

11,046

11 Includes holdings of the Treasury's Exchange Stabilization Fund (ESF) and the Federal Reserve's System Open Market Account
(SOMA), valued at current market exchange rates. Foreign currency holdings listed as securities reflect marked-to-market values, and
deposits reflect carrying values.
21 The items, "2. IMF Reserve Position" and "3. Special Drawing Rights (SDRs)," are based on data provided by the IMF and are valued in
dollar terms at the official SDRJdoliar exchange rate for the reporting date. The IMF data for September 22 are final. The entries in the table
above for September 29 (shown in italics) reflect any necessary adjustments, including revaluation, by the U.S. Treasury to the prior week's

IMF data.

31 Gold stock is valued monthly at $42.2222 per fine troy ounce. Values shown are as of July 31, 2000. The June 30, 2000 value was
$11,046 million.

LS-942

11,811

u.s. International Reserve Position (cont'd)
II. Predetermined Short-Term Drains on Foreign Currency Assets
September 29. 2000
1. Foreign currency loans and securities

October 6. 2000

o
o
o

2. Aggregate short and long positions in forwards and
futures in foreign currencies vis-a-vis the U.S. dollar:
2.a. Short positions
2.b~

Long positions

3. Other

Ill. Contingent Short-Term Net Drains on Foreign Currency Assets
September 29. 2000
1. Contingent liabilities in foreign currency

October 6, 2000

o
o

1.a. Collateral guarantees on debt due within 1 year
1.b. Other contingent liabilities
2. Foreign currency securities with embedded options
3. Undrawn, unconditional credit lines

3.a. With other central banks
3.b. With banks and other financial institutions
headquartered in the U.S.
3.c. With banks and other financial institutions
headquartered outside the U.S.
4. Aggregate short and long positions of options in foreign
currencies vis-a-vis the U.S. dollar

4. a. Short pOSitions
4.a.1. Bought puts
4.a.2. Written calls
4.b. Long positions
4.b.1. Bought calls
4.b.2. Written puts

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 11, 2000

RESULTS OF TREASURY'S AUCTION OF 28-YR 6-MO

Office of Financing
202-691-3550

INFLAT~ON-=NDEX2D

BONDS

This issue is a reopening of an inflation-indexed bond originally issued
[)ril 15, 1999.
nterest Rate:
3 7/8%
Issue Date:
October 16, 2000
Dated Date:
::ries:
APRIL 2029
October 15, 2000
JSIP No:
912810FH6
Maturity Date:
April 15, 2029
TIIN Conversion Factor per $1,000
rRIPS Minimum: $1,000
11..785757974 1/
High Yield:

3.953%

Adjusted Price: 103.628

All noncompetitive and successful competitive bidders were awarded
=curicies at the high yield.
Tenders at the high yield were
Llotted 71%.
All tenders at lower yields were accepted in full.

Adjusted accrued interest of $ 0.11181 per $1,000
period from October 15, 2000 to Octo~er 16, 2000.

mus~

be paid for

AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tendered

Tender Type

Accepted

Competitive
Noncompetitive

9,907,000
15,684

4,984,400
15,684

TOTAL

9,922,684

5,000,084 2/

Both the unadjusted price of $ 98.673 and the unadjusted accrued interest
$ 0.10646 were adjusted by an index ratio of
1.05022, for the period
om April 15, 1999, through October 16, 2000.
Median yield
3.918%:
50% of the amount of accepted competitive tenders
s tendered at or below that rate.
Low yield
3.850%:
5% of the amount
accepted competitive tenders was tendered at or below that rate.
d-to-Cover Ratio = 9,922,684 / 5,000,084

1.98

This factor is used to calculate the Adjusted Valaes for any TIIN face
amount and will be maintained to 2-decimals on Book-entry systems.
Awards :0 TREASC~Y DIRECT = $6,864,000

LS-943
http://www.publlcdebt.t~ruI.gov

0
<0
(J)

<;J
N
N

federal fincl11c:incJ

FEDERAL FINANCING BANK

<.D

(})

:!:

0..

JULY 31,2000

Kerry Lanham, Secretary, Federal Financing Bank (FFB) ,
announced the following activity for the month of June 2000.
FFB holdings of obligations issued, sold or guaranteed by
other Federal agencies totaled $38.5 billion on June 30, 2000,
posting a decrease of $590.1 million from the level on May 31,
2000.
This net change was the result of a decrease in holdings
of agency debt of $333.8 million, in holdings of governmentguaranteed loans of $156.3 million, and in holdings of agency
assets of $100.0 million.
FFB made 49 disbursements during the
month of June.
The FFB also received 11 prepayments in June, and
extended the maturity of 108 loans guaranteed by the Rural
utilities Service.
Attached to this release are tables presenting FFB June loan
activity and FFB holdings as of June 30, 2000.

LS-944

N
N

20220

L.()

<;J

(})

WASHINGTON, 0 C

Ll..
Ll..

Page 2
FEDERAL FINANCING BANK
JUNE 2000 ACTIVITY
Date

Borrower

Amount
of Advance

Final
Maturity

Interest
Rate

3ENCY DEBT
J.S. POSTAL SERVICE
U.S.
U.S.
U.B.
U.B.
U.e.
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

Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service

6/01
6/01
6/02
6/05
6/09
6/12
6/12
6/13
6/14
6/15
6/16
6/16
6/23
6/23
6/26
6/26
6/27
6/27
6/28
6/28
6/29
6/30

$130,000,000.00
$436,700,000.00
$406,200,000.00
$300,000,000.00
$69,300,000.00
$150,000,000.00
$311,100,000.00
$256,100,000.00
$147,900,000.00
$35,800,000.00
$420,000,000.00
$194,100,000.00
$100,000,000.00
$268,900,000.00
$300,000,000.00
$427,100,000.00
$200,000,000.00
$326,500,000.00
$96,000,000.00
$299,600,000.00
$249,600,000.00
$104,900,000.00

6/02/00
6/02/00
6/05/00
8/31/00
6/12/00
6/13/00
6/13/00
6/14/00
6/15/00
6/16/00
6/19/00
6/19/00
6/26/00
6/26/00
6/27/00
6/27/00
6/28/00
6/28/00
6/29/00
6/29/00
6/30/00
7/03/00

5.999%
5.852%
5.985%
5.787%
6.037%
6.029%
6.051%
6.010%
5.947%
5.956%
5.947%
5.943%
5.936%
5.974%
5.956%
5.947%
5.974%
5.957%
5.947%
5.936%
5.967%
5.995%

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
S/A
S/A
S/A
S/A
S/A
S/A

6/01
6/12
6/13
6/13
6/13
6/13
6/13
6/13
6/20
6/22
6/27
6/29
6/29

$10,689.73
$729,114.00
$7,505.94
$84,342.54
$94,047.00
$14,574.80
$14,448.52
$4,304.55
$62,279.00
$27,276.00
$19,562.07
$15,398.13
$14,803.00

1/02/25
1/30/02
10/01/26
10/01/26
10/01/26
10/01/26
10/01/26
1/30/02
10/01/26
7/31/25
1/30/02
10/01/26
11/02/26

6.496%
6.609%
6.287%
6.287%
6.287%
6.287%
6.287%
6.578%
6.264%
6.373%
6.545%
6.356%
6.355%

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

6/02
6/08

$1,500,000.00
$405,000.00

1/02/35
1/03/34

NERNMENT - GUARANTEED LOANS
GENERAL SERVICES ADMINISTRATION
Memphis IRS Service Cent.
Atlanta CDC Lab
Chamblee Office Building
Chamblee Office Building
Chamblee Office Building
Chamblee Office Building
Ch<?-.rn:Ql~~ Office Building
Atlanta CDC Lab
Chamblee Office Building
'ol~y Square Office Bldg.
Atlanta CDC Lab
Chamblee Office Building
eTC Building
.URAL UTILITIES SERVICE
ild Rice Elec. #633
.gralite Elec. #543

6.061% Qtr.
6.008% Qtr .

Page 3
FEDERAL FINANCING BANK
JUNE 2000 ACTIVITY
Borrower
Clark Energy Coop. #611
Charles Mix Elec. #630
Cumberland Electric #623
Ozark Electric #629
Lake Region Elec. #591
W. Farmer Elec. #444
BARC Electric #581
Central Texas Elec. #520
South Texas Electric #505
Pineland Telephone #403
Bartlett Elec. #535
Allegheny Electric #255
Allegheny Electric #255
Allegheny Electric #255
Allegheny Electric #255
Allegheny Electric #255
Allegheny Electric #908
Allegheny Electric #908
Allegheny Electric #908
Allegheny Electric #908
Allegheny Electric #908
Allegheny Electric #908
Allegheny Electric #908
Allegheny Electric #908
Allegheny Electric #908
Big Sand Elec. #540
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

Date
6/09
6/12
6/12
6/12
6/13
6/15
6/16
6/19
6/19
6/21
6/29
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30

Amount
of Advance
$1,000,000.00
$428,000.00
$5,671,000.00
$7,851,000.00
$500,000.00
$3,551,000.00
$1,036,000.00
$1,000,000.00
$1,385,000.00
$1,700,000.00
$300,000.00
$3,233,744.68
$1,177,381.37
$942,446.71
$4,822,300.82
$1,661,466.58
$843,804.16
$2,581,977.48
$3,797,736.21
$1,235,931.96
$1,518,864.65
$4,199,852.92
$4,033,518.29
$2,388,749.52
$5,095,686.55
$800,000.00
$3,351,763.77
$1,488,712.10
$369,538.61
$852,363.30
$1,112,922.37
$741,136.28
$426,113.49
$796,653.77
$957,820.37
$308,867.20
$224,163.65
$383,393.14
$224,700.57
$160,991.69
$140,255.65
$76,842.19
$116,115.66
$37,373.00
$1,231,807.78
$149,360.48
$246,808.76
$929,818.25
$2,785,188.25
$1,667,973.73

Final
Maturity

Interest
Rate

10/02/00
12/31/30
7/02/01
1/02/35
12/31/29
12/31/24
1/03/34
6/30/04
12/31/24
1/02/24
1/03/34
1/02/01
1/02/01
1/02/01
1/02/01
1/02/01
10/02/00
10/02/00
10/02/00
1/02/01
1/02/01
1/02/01
1/02/01
10/02/00
1/02/01
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00

6.010%
6.058%"
6.194%"
5.996%
6.056%
6.264%
6.021%
6.301%
6.215%
6.261%
6.230%
6.290%
6.290%
6.290%
6.290%
6.290%
5.868%
5.868%
5.868%
6.290%
6.290%
6.290%
6.290%
5.993%
6.290%
5.993%
5.868%"
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%"
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%"

Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
btr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.

Page 4
FEDERAL FINANCING BANK
JUNE 2000 ACTIVITY
Borrower
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
Brazos Electric #437
Brazos Electric #437
Brazos Electric #561
Brazos Electric #561
Citizens Elec. #529
Citizens Elec. #529
Citizens Utilities #387
Farmer's Telephone #459
Farmer's Telephone #459
Farmers Telephone #399
Farmers Telephone #399
Georgia Trans. Corp. #446
Harrison County #532
Inter-County Energy #592
Mountain Parks Elec. #397
New Horizon Elec. #473
New Horizon Elec. #473
New Horizon Elec. #473
New Horizon Elec. #473
New Horizon Elec. #473
New Horizon Elec. #473
New Horizon Elec. #473
Nolin Rural Elec. #528
Nolin Rural Elec. #577
Oglethorpe Power #445
Saluda River Elec. #472
San Miguel Electric #919
San Miguel Electric #919
S. Central Arkansas #605
Shelby Energy Coop. #607
Steele-waseca Coop. #550
Surry-Yadkin Elec. #534
Surry-Yadkin Elec. #534
United Power Assoc. #911
United Power Assoc. #911

Date

Amount
of Advance

Final
Maturity

Interest
Rate

6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30

$999,616.04
$603,543.83
$934,330.10
$507,604.00
$1,464,656.39
$1,764,723.43
$2,065,435.74
$844,978.04
$646,440.66
$428,208.29
$1,148,887.70
$1,492,781.97
$2,454,209.21
$2,626,961. 88
$1,412,827.16
$320,469.05
$1,185,534.57
$11,134,000.00
$5,604,000.00
$1,961,000.00
$2,102,000.00
$8,326,238.30
$167,425.07
$33,026.37
$4,873,348.64
$3,439,904.29
$11,709,974.78
$1,000,000.00
$1,500,000.00
$1,101,409.32
$5,149,133.27
$1,378,918.83
$2,230,670.95
$6,611,230.53
$3,367,007.57
$6,862,139.97
$1,732,357.85
$1,893,000.00
$2,583,000.00
$15,092,348.63
$1,282,047.38
$8,712,712.68
$9,148,450.25
$1,532,000.00
$1,000,000.00
$3,695,000.00
$1,000,000.00
$1,000,000.00
$799,267.75
$577,558.37

10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
7/01/30
10/02/00
1/03/28
1/02/18
1/02/18
7/02/01
7/02/01
10/02/00
10/02/00
10/02/00
7/02/07
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
1/02/01
10/02/00
10/02/00
10/02/00
10/02/00
1/03/34
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00

5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.993%
5.993%
5.993%
5.868%
5.868%
6.160%
5.993%
6.206%
6.226%
6.226%
6.188%
6.188%
5.868%
5.993%
5.868%
6.339%
5.993%
5.993%
5.993%
5.993%
5.993%
5.993%
5.993%
5.993%
6.167%
5.868%
5.993%
5.868%
5.868%
5.984%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%

Page 5
FEDERAL FINANCING BANK
JUNE 2000 ACTIVITY
Date

Borrower
united
united
united
United
United
united
United
united
United
United
United
United
United
United
United
United
United
United
United
United
Upsala

Power
Power
Power
Power
Power
Power
Power
Power
Power
Power
Power
Power
Power
Power
Power
Power
Power
Power
Power
Power
Coop.

Assoc.
Assoc.
Assoc.
Assoc.
Assoc.
Assoc.
Assoc.
Assoc.
Assoc.
Assoc.
Assoc.
Assoc.
Assoc.
Assoc.
Assoc.
Assoc.
Assoc.
Assoc.
Assoc.
Assoc.
Tele.

#911
#911
#911
#911
#911
#911
#911
#911
#911
#911
#911
#911
#911
#911
#911
#911
#911
#911
#432
#433
#429

6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30
6/30

Amount
of Advance
$9,591,212.23
$3,101,095.44
$2,613,043.54
$3,102,046.76
$3,302,447.05
$3,660,389.49
$1,395,077.29
$3,445,949.04
$1,026,436.12
$781,180.60
$593,065.43
$1,018,234.18
$988,152.39
$58,444.08
$449,783.94
$690,547.22
$466,776.81
$986,504.01
$1,545,361.92
$2,550,882.00
$319,253.80

S/A is a Semiannual rate.
Qtr. is a Quarterly rate.
maturity extension or interest rate reset

Final
Maturity

Interest
Rate

10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00
10/02/00

5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.868%
5.993%
5.993%
5.993%

Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.

Page 6

FEDERAL FINANCING BANK HOLDINGS
(in millions of dollars)

Program

June 30. 2000

May 31. 2000

Monthly
Net Change
6/1/00- 6/30/00

Fiscal Year
Net Change
10/1/99- 6/30/00

Agency Debt:
U.S. Postal Service
National Credit Union Adm.-ClF
Subtotal *

$3.904.9
$40.0
$3.944.9

$4.238.7
$40.0
$4.278.7

-$333.8
$0.0
-$333.8

-$2.374.2
$40.0
-$2.334.2

Agency Assets:
FmHA-RDIF
FmHA-RHIF
DHHS-HMO
DHHS-Medical Facilities
Rural Utilities Service-CBO
Subtotal *

$3.410.0
$6.040.0
$1. 7
$3.2
$4,598.9
$14.053.8

$3.410.0
$6.140.0
$1. 7
$3.2
$4,598.9
$14.153.8

$0.0
-$100.0
$0.0
$0.0
$0.0
-$100.0

$0.0
-$1.085.0
$0.0
$0.0
$0.0
-$1.085.0

Government-Guaranteed lending:
DOD-Foreign Military Sales
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-State/local Development Cos.
DOT-Section 511
Subtotal *

$2.454.0
$20.8
$12.2
$1. 348.5
$2,323.7
$15.1
$1. 047.5
$13 .121. 3
$167.3
$3.6
$20.513.8

$2.485.1
$20.8
$12.3
$1.348.5
$2.346.0
$15.1
$1.047.5
$13.220.8
$170.6
$3.6
$20,670.1

-$31.1
$0.0
-$0.1
$0.0
-$22.3
$0.0
$0.0
-$99.5
-$3.3
$0.0
-$156.3

-$156.9
$9.8
-$1.4
-$71.4
-$81. 3
-$1. 0
-$91. 2
-$763.7
-$26.6
-$0.1
-$1.183.9

Grand total*

$38.512.5

$39.102.6

-$590.1

* figures may not total due to rounding
+ does not include capitalized interest

-$4.603.1

'"
C\J

C\J

(f)

C\J
C\J
C\J

~ LL
~
[L

AUGUST

31,2000

Kerry Lanham, Secretary, Federal Financing Bank (FFB),
announced the following activity for the month of July 2000.
FFB holdings of obligations issued, sold or guaranteed by
other Federal agencies totaled $38.1 billion on July 31, 2000,
posting a decrease of $369.8 million from the level on June 30,
2000.
This net change was the result of a decrease in holdings
of agency debt of $104.9 million, in holdings of agency assets of
$284.3 million, and an increase in holdings of governmentguaranteed loans of $19.4 million.
FFB made 48 disbursements
during the month of July.
The FFB also received 19 prepayments
in July.
Attached to this release are tables presenting FFB July loan
activity and FFB holdings as of July 31, 2000.

LS-94S

L{")

t;J
C\J

20220

FEDERAL FINANCING BAN"K

federal finc111cinq
WASHINGTON, DC

<.0

Page 2
FEDERAL FINANCING BANK
JULY 2000 ACTIVITY
Borrower

Date

Amount
of Advance

FlnaI
Maturity

Interest
Rate

:ENCY DEBT
:.S.

POSTAL SERVICE

I.S.
I.S.
I.S.
I.S.
I.S.
I.S.
I.S.
I.S.
I.S.
I.S.
I.S.
I.S.
I.S.
I.S.
I.S.
I.S.
I.S.

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

7/07
7/10
7/10
7/11
7/12
7/13
7/14
7/17
7/21
7/24
7/24
7/25
7/25
7/26
7/26
7/27
7/28

$145,500,000.00
$220,000,000.00
$262,000,000.00
$276,600,000.00
$195,100,000.00
$52,100,000.00
$600,000,000.00
$800,000,000.00
$324,300,000.00
$350,000,000.00
$353,400,000.00
$170,000,000.00
$330,700,000.00
$140,000,000.00
$198,400,000.00
$169,400,000.00
$74,800,000.00

7/10/00
7/11/00
7/11/00
7/12/00
7/13/00
7/14/00
7/17/00
5/31/01
7/24/00
7/25/00
7/25/00
7/26/00
7/26/00
7/27/00
7/27/00
7/28/00
7/31/00

6.162%
6.144%
6.229%
6.229%
6.292%
6.301%
6.287%
6.183%
6.246%
6.301%
6.333%
6.246%
6.323%
6.333%
6.302%
6.343%
6.319%

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
S/A

7/13
7/13
7/17
7/27

$6,825.97
$13,003.87
$103,773.00
$1,113,290.14

10/01/26
1/30/02
10/01/26
1/30/02

6.288%
6.396%
6.287%
6.324%

S/A
S/A
S/A
S/A

7/03
7/05
7/06
7/07
7/07
7/10
7/11
7/12
7/14
7/17
7/18
7/18
7/20
7/20
7/21
7/21

$340,000.00
$1,500,000.00
$285,552.00
$2,026,000.00
$1,190,000.00
$500,000.00
$271,667.00
$1,000,000.00
$2,670,000.00
$3,000,000.00
$250,000.00
$3,294,000.00
$2,920,000.00
$642,600.00
$1,851,144.00
$2,521,000.00

1/03/34
1/02/35
7/01/13
10/01/01
10/01/01
1/02/01
1/02/01
10/01/07
12/31/20
1/02/01
1/03/34
12/31/12
1/02/01
9/30/33
1/02/01
1/03/33

5.994%
5.954%
6.143%
6.236%
6.236%
6.147%
6.182%
6.173%
6.179%
6.231%
6.215%
6.331%
6.275%
6.041%
6.352%
6.048%

Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.

IVERNMENT - GUARANTEED LOANS
:ENERAL SERVICES ADMINISTRATION
:hamblee Off ice Building
.tlanta CDC Lab
~hamblee Off ice Building
.tlanta CDC Lab
~URAL

UTILITIES SERVICE

'ataula Electric #585
~quoketa Valley #636
~ol ton Tele. #526

~ited
~ited

Power Assoc. #432
Power Assoc. #433
:urry- Yadkin Elec. #534
'iedmont Tel. #566
umter Elec. #640
,asin Electric #425
:lark Energy Coop. #611
,elfalls Elec. #542
Pittsburgh Tele. #449
'entral Elec. Power #624
awkeye Tri-County Elec. #643
'armers Telephone #399
.W. Tennessee EMC #510

Page 3
FEDERAL FINANCING BANK
JULY 2000 ACTIVITY
Borrower
:scambia Rl ver Elec. #498
'iedmont Tel. #566
:outh Texas Electric #505
~rrison County #532
'orth Cent ral Elec. #638
~ckson Energy #527
hited Power Assoc. #432
hited Power Assoc. #433
mpire Electric #627
orry Electric Coop. #536
rtited Elec. #519
S/A is a Semiannual rate.
Qtr. is a Quarterly rate.

Date
7/24
7/24
7/25
7/26
7/27
7/28
7/28
7/28
7/31
7/31
7/31

Amount
of Advance
$1,660,000.00
$385,799.00
$208,000.00
$900,000.00
$1,000,000.00
$2,000,000.00
$8,854,000.00
$406,000.00
$375,000.00
$2,000,000.00
$1,200,000.00

FlnaI
Maturity

Interest
Rate

1/03/33
9/30/10
12/31/24
1/02/01
1/02/35
1/02/01
10/01/01
10/01/01
1/03/34
1/03/34
9/30/30

6.030%
5.995%
6.186%
6.344%
5.901%
6.355%
6.163%
6.163%
5.893%
5.893%
6.067%

Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.

Page 4

FEDERAL FINANCING BANK HOLDINGS
(in millions of dollars)

Program

Monthly
Net Change
7/1/00 - 7/31100

Fiscal Year
Net Change
10/1/99- 7131/00

Jul y 31, 2000

June 30, 2000

Agency Debt:
U.S. Postal Service
National Credit Union Adm.-ClF
Subtotal *

$3,800.0
$40.0
$3,840.0

$3,904.9
$40.0
$3,944.9

-$104. 9
$0.0
-$104. 9

-$2,479.1
$40.0
-$2,439.1

Agency Assets:
FmHA-RDIF
FmHA-RHIF
DHHS-HMO
DHHS-Medical Facilities
Rural Utilities Service-CBO
Subtotal*

$3,410.0
$5,760.0
$0.0
$0.6
$4,598.9
$13 ,769.5

$3.410.0
$6.040.0
$1. 7
$3.2
$4,598.9
$14,053.8

$0.0
-$280.0
-$1. 7
-$2.6
$0.0
-$284.3

$0.0
-$1,365.0
-$1. 7
-$2.6
$0.0
-$1, 369.3

$2,441.8
$20.8
$11. 7
$1,348.5
$2.315.2
$14.7
$1,047.5
$13.164.5
$164.9
$3.6
$20.533.2

$2,454.0
$20.8
$12.2
$1,348.5
$2.323.7
$15.1
$1.047.5
$13.121. 3
$167.3
$3.6
$20.513.8

-$12.2
$0.0
-$0.5
$0.0
-$8.4
-$0.4
$0.0
$43.3
-$2.3
$0.0
$19.4

-$169.1
$9.8
-$1.9
-$71.4
-$89.7
-$1.5
-$91. 2
-$720.4
-$28.9
-$0.1
-$1,164.6

Grand total*

$38.142.7

$38.512.5

-$369.8

* figures may not total due to rounding
+ does not include capitalized interest

-$4,973.0

D EPA R T 1\1 E N T

0 F

TilE

TREASURY ~rI1~

T REA SUR Y

NEW S

1789

OmCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASI-UNGTON, D.C .• 20220. (202) 622·2960

EMBARGOED UNTIL 11 :00 AM EDT
Text as Prepared for Delivery
October 12, 2000

"EXPANDING OPPORTUNIIT FOR ALL AMERICANS"
TREASURY SECRETARY LAWRENCE H. SUMMERS REMARKS
TO THE U.S. HISPANIC CHAMBER OF COMMERCE
Thank you. I am glad to be here.
This is as fortunate a moment to be American as any in our history. lfin 1993 I had mentioned
the figure six percent you might have thought I was talking about the rate of unemployment or
inflation. Yet today, six percent is the combined total of both unemployment and inflation in the
United States.
All American communities have benefited from this remarkable economic performance. In
particular. Hispanic-Americans have made enormous progress since 1993. Consider:
•

The Hispanic-American unemployment rate is on track toward the lowest annual average
ever recorded

•

Median income for Hispanic-American households was $30,735 in 1999 - the highest ever
recorded.

These are impressive achievements But we must not become complacent We must make the
most of this moment of prosperity. by setting the right priorities for our future and by prolonging
the economic expansion to the benefit of all Americans
Today, I would like to reflect on what those priorities should be Let me divide my remarks into
three parts
•

First, wby it is critical for all Americans that we continue on the path of fiscal discipline.

•

Second, why we must continue to shape the right kind of conditions for the private sector
to thrive

• Third, why we must strive to achieve a more inclusive prosperity in the United States.
LS - 946
For press releases. speeches, public schedules and official biographies. call our 24~our fax line at (202) 622·2040
·u.s. Government Printing Office.

1998· 619-559

The Importance of Maintaining Fiscal Discipline.

A very clear philosophy of fiscal prudence has guided this Administration' 5 approach since 1993
In the early 19905, we were caught in a kind of vicious cycle - high deficits led to high interest
rates, led to low levels of investment, led to slow rates of economic growth, led to reduced
revenues, led to larger deficits -- and around and around again
Through the policies that we as a country have pursued since then, we have crossed a tipping
point So today we enjoy a virtuous circle -- a virtuous circle of budget surpluses, lower interest
rates, more investment, more growth, more revenues, larger budget surpluses, more investment,
and around and around again. And that switch from vicious cycle to virtuous circle has unlocked
the energy in this economy that has helped to make this expansion the longest in our country's
history.
The benefits of fiscal discipline translate into real gains for American individuals and families It
is because of the productivity growth that has resulted from this virtuous circle that we have been
able to raise the minimum wage to $5.15 an hour, benefiting 1.6 million Hispanic workers. And
it is because of this remarkable expansion that the median inflation-adjusted weekly earnings of
Hispanic-Americans have increased rapidly.
That is why it is critical that we continue to pursue a strategy that emphasizes higher public
saving Ifwe maintain our discipline, we can stay on track to eliminating our national deb! by
~o I ~ And doing that will probably make a greater contribution to the strength of our economy
than any1hing else we can do
Indeed. like a tax cut, debt reduction provides direct benefits to American taxpayers Consider
•

Paying down deb! operates like a tax cut because it reduces the future obligatIOn to pay
taxes for future principal and Interest payments

•

B\ redUCIng the pressure on credit markets, paying dO\vn debt puts money In peoples'
poc~ets directly Each one percentage pOint reduction In interest rates translates into more
than S::;O billion lo\\.er mortgage costs over the next decade

II.

Creating the Right Environment for Businesses to Flourish.

But fiscal discipline on its own is not enough In an era where technology IS transforming the
baSIC dynamic of the economy, government has a critical role in helping businesses and
entrepreneurs to flourish That means a strategy that focuses on letting markets do all the things
that thev can do. and b)' the same to~en ma~es sure that the public sector does the things that it
needs to do
Letting markets operate means continuing to take steps like the one that we took on a bipartisan
basis last year v..·hen we repealed the Glass-Steagall Act and modernized the financial system.
and allQ\.\ed combinations to take advantage of synergIes in the financial sector It means

taking steps to ensure that regulation does not stifle the growth of the Internet and electronic
commerce
Perhaps most importantly, it means providing the right kind of conditions for business to gro\\
Let me highlight two areas of particular importance.
First. helping small business to start-up and grow in all our communities.
Our success as a nation ultimately depends on the vibrancy of the private sector And the health
of the private sector, in turn, hinges critically on the successful creation of small businesses by
entrepreneurs from all our communities.
According to the Small Business Administration, the number of Hispanic-American businesses
grew by 230 percent between 1987 and 1997. That is the fastest rate for any group in America
There are now almost 2 million Hispanic-American small businesses alone. And a large
proportion of these have been created in the last seven-and-a-half years.
Under the leadership of Administrator Aida Alvarez, the SBA has extended critical assistance
to Hispanic and other minority businesses in the United States. For example:
•

Last year the SBA granted nearly 4.000 loans to Hispanic entrepreneurs - nearly three
times the number approved in 1992

•

The SBA recently licensed the first Hispanic-managed venture capital fund

•

And Vice-President Gore has announced an unprecedented agreement between SBA and
the "Big Three" automakers to I11crease subcontracting awards to minority businesses by
nearly $3 billion over the next three ~'ears - a 50 percent increase over current levels

BY' providing both more capital and increasl11gly sophisticated technical advice to small
businesses. \ve can look forward to even greater successes for HispaniC-American and other
ml110fllY entrepreneurs In the years ahead
Sec()nd expalldlllg access to

IIllallal/()lIa/

markl!ls,

There was a time when America really was largely an island in the world, when Impons and
exports together represented only about 10 percent of GOP Today that figure is over 25
percent, and jobs in exponing are among the best Jobs that our economy produces If we
encourage more expons, we are also encouraging the creation of better jobs And we are also
giving small businesses the scope to thm'e
Much of the grov,,1h has come from new trade with Latin America Between 1991 and 1998, total
US trade (exports plus impons) with Latin America grew by 128 percent, substantially more
than the 75 percent increase in U S trade with the rest of the world Clearly, Hispanic-American

businesses are well positioned to further take advantage of the opportunities to expand markets
\"ith our neighbors.
Expanding international markets is critical to the health of our private sector
•

That is why it is important that we continue to work to open foreign markets as we haw
with the passage of the China WTO accession. And it is also why we support a Free Trade
area for the Americas that would establish a western hemispheric trading area

•

And that is why it is important that we recognize that we as a country have an enormous
stake in a successful global economy, because it will be a bigger market for our products,
because it will be a safer world if it is a more prosperous world

Working for a More Inclusive Prosperity.

We need to work to make sure that new technologies and the new markets they create work well
for all of our people This is a moral imperative. But in an economy where jobs are looking for
people more than people look for jobs, and where bottlenecks make it hard to attract and retain
workers, it is also an economic imperative.
To succeed in the new knowledge-based economy, traditional workplace skills are no longer
enough. As Alan Greenspan has said, in the era of information technology, what you know
matters much more than how much you lift Clearly, it is critical that individuals have access to
the knowledge and the capital that they need to succeed in the new economy
In that regard, Hispanic-Americans and other minorities have made enormous progress over the
last few years \Vith the help of the Administration's Hispanic Education Action Plan, the rate of
college attendance among Hispanic Americans has Increased by 50 per cent over the last six
years Over the same period, the Hispanic-American poverty rate has fallen to its lowest level
since 1979
But these dramatic successes only highlight how much more needs to be done Consider
•

Hispanic Americans make up I I percent of our population but hold only four percent of jobs
In Information technology

•

Too many Hispanic-Americans are still excluded from the financial mainstream For
example, about a quarter of Hispanic-American households do not possess a bank account the basic passport to the broader economy

•

Only 45 percent of Hispanics own their o\... n homes compared to 73 5 percent of nonHispanic whites Those families not only lose out on home ownership They also lack the
most baSIC finanCial asset that can be le\;eraged Into funds for education or starting a new
business

Let me mention three areas where we are working to include those who have been left behind in
the circle of prosperity.
First, we are working to raise educational standards m all our communities.

We have an enormous opportunity now to perpetuate our prosperity in a knowledge-based
economy by increasing our investments in the users and producers of information
•

My children are fortunate enough to attend public schools with good teachers and good
facilities. All kids should have those same opportunities. They should not be in schools
where the classrooms are converted closets; where lunch begins at 945 because facilities are
inadequate to serve all kids That is why major public investment in school construction is so
high on the Administration's agenda. And we strongly support the bipartisan Johnson-Rangel
bill that would help meet the construction needs of school districts around the country.

•

One million teachers will retire in the next decade. To replace these teachers with the kinds
of teachers we want, we need to make teaching a valued and honored profession and to pay
our teachers well. That is why we are working hard on a bipartisan basis to support putting
more teachers in classrooms, allowing better teachers to go into education, and reducing class
sizes.

Second, we are takmg steps to boost the level ofpersonal savings.

Recent surveys suggest that more than half of all Americans have little or no idea ho",: much they
need to save for retirement. And, in spite of the fact that Social Security is only intended to
provide a foundation for retirement income, roughly two-thirds of Americans rely on SOCial
Secunty as theIr main source of income and almost a fifth as their sole source of post-retirement
Income
That is why last April, I joined with dozens of major public and private organizations to launch
the !\ational Partners for Financial Empowerment (NPFE) to help improve personal finance
skills. including money management, saving. investing and credit in the United States today
•

In thiS regard, I am pleased to announce that the National Partners are launching a new
Spanish language version of the NPFE website at \v\vwnpfe org/espanol Among other
functions, this site will serve as a ponal to Information on the Internet for Spanish speaking
people

•

As Co-Chair of the President's Task Force on the Economic Development of the Southwest
Border, I am also pleased to announce the formation of the Commlllee on the Border SaFes
fmtlQlive of the NPFE, comprIsed initially of the U S Hispanic Chamber of Commerce, the
U S Mexico Chamber of Commerce, the Latino Credit Union Network, the National Council
of La Raza, the Consumer Federation of America, the American GI Forum, the International
Bank of Commerce. and the League of United LatIn American Citizens This task force will
formulate a financial literacy action plan for the Southwest Border I urge others to
partICipate

Let me also briefly mention Treasury's efforts to encourage Hispanics to buy Savings Bonds.
especially the Series I-Bonds, At a time when it is critical that American individuals save more
and invest wisely, such bonds offer a good and safe return on investment and - in the case of I
bonds - immunity against the uncertainties of inflation, I would like to thank the US Hispanic
Chamber of Commerce for its help in promoting I Bonds and Savings Bonds among HispanicAmericans,
Third. we are working to increase investment in our low-income communities.

The third key pillar of our approach is democratizing access to capital.
•

Under a revitalized Community Reinvestment Act, since 1993 nearly $800 billion in private
capital flowed into low-income communities for home ownership, community development,
and small business growth.

•

And we have helped to expand the reach of the private sector by bolstering Community
Development Financial Institutions that serve markets overlooked by traditional financial
mstltutlons

At the same time, we know that there are other important barriers to attracting or creating
businesses in our disadvantaged communities. Notably, a lack of access to equity and lack of the
technical expertise that firms in the mainstream economy can often take for granted
•

That is why the President launched the New Markets Initiative last year to unlock the
potential of America's inner cities and rural areas at a time when the purchasmg power of
these communities is estimated to be about $700 billion If enacted. New Markets would
unleash $22 bIllion in new equIty In\'estment for busmess growth In these communities

•

That is \vhv this Administration has launched the Southwest Border Task Force to better
le\'erage existing efforts to lay the groundwork conditions for strong growth in the region by
impro\ing access to eqUIty and capnal

•

:\nd that IS why. through BusInessL!:\C, led by \'\ce President Gore. we are encouragmg
larger businesses to act as mentors to smaller firms in inner CIties and rural areas Today I am
pleased to announce the formation of the Southv.'est Border BusinessUNC Coalition that will
work to increase the competitiveness of border entrepreneurs and businesses

Fourth, hy promolll1g mc/usion "all the wczr lip"

Finally 1 would like to emphasize that America's strength is ultimately founded on the fact that it
is a nation of immigrants It is the diversity and talents of America's different communities that
has provided the dri\ing dynamic of our unprecedented economic success And we must work to
ensure that this di\'ersity is reflected In all walks of life By the middle of this century no one
group will be in the majority in the United States

That is why President Clinton has built an Administration that reflects America's diwrsity so
that it can better serve America. Indeed, the Clinton Administration has a much larger proponion
of minorities than any of its predecessors. And just last month, the President issued a
proclamation designation the National Hispanic Heritage Month to celebrate the contributions of
Hispanic-Americans to our society and economy
It is only by encouraging the entrepreneurial skills of all our communities and widening the
circle of prosperity to ensure that no American is left behind that we can maximize America· s
economic potential in the new century It is my hope that we can continue to work together to
achieve this important goal. Thank you

-30-

D EPA R T :\1 E N T

O]i'

TIlE

T R

1-: A SUR Y

NEWS

TREASURY

OfFICE OF PUBLIC AFFAIRS -lS00 PENNSYLVANIA AVENVE. N.W.• WASHINGTON, D.C.e lOllD .(202) 612.19&0

D!BAl\GOED UNTIL 2: 30 P. M.
OctOber 12, 2000

CONTACT:

Office of Financing

202/691-3550

TREASURY OFFERS 13-WEEK AND 26-WEEl\ BILLS

The Treasury wi~~ auction two series of Treasury bills tota1ing
approximately $21,000 million to refund $16,711 mil~ion of publicly he~d
scC'U:ities maturing October 19, 2000, and to raise about $4,299 m.il~:i.on of new
~~.

In addition to the pUb~ic ho1dings, Federal Reserve Banks £or their own
accounts hola $8,990 :aUllion of the »aturing billa, which may be refunded at
the highest discount rate of accepted competitive tenders. Amounts .1ssue<1
to these accounts will be in addi.tion t.o the cfferj.nq amount.
The maturing billo held by the pUblic include $5,302 million held
Bank~ as agents for roreign and international monetary
authorities, whi.ch may be :oefunaed. within the offering amoW'lt:. at the ~ghe:st:.
cUscount rate of accepted competitive tenders. Additional amounta may be
issued for such accounts if the aggregate amount of neW' bicis exceeds the
aggregate amount of maturing Qills.

by Federa1 Reserve

Trea.su::yDi.rec:t customers requested. that we reinvest their mai:.u:d.ng- holdings of approximately $817 m.i.llion .into the 13-weeJr: bi.11 and $662 m.i.~lion ;i.nto
the 26-week bill.

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
Ma=ketable Book-Entry Treasury Bills, Notes I and Bonds (31 CFR Part: 356, as
amendad) .
Details about each of the new Gecur.iti.es are given in the attached
offering highl~ghts.
000

Attachment

LS-947

Fo~ p7~S l't:letlS~,

3peeches, publlc sc/,eduie$ and offlcilJi biogrlJpltiU, call "u,. 24-;'0"1' /(u:' line

lit

(202) 622-2040

HIGHLIGHTS OF TREASURY OFFERINGS OF BILLS
TO BE ISSUED OCTOBER 19, 2000
October 12, 2000
Offering Anlount . . . . . . . . . . . . . . . . . . . . . . . . . $11 ,000 aillion
Description of Offaring:
T&rm and type of security . . . . . . . . . . . . . . . 91-day bill
CUSIP nwnber . . . . . . . . . . . . . . . . . . . . . . . . . . . . 912795 FP 1
Auc t.ion date . . . . . . . . . . . . . . . . . . • . . . . . . . . . Octobor 16, 2000
Iasue data . . . . . . . . . . . . . . .
Ootober 19, 2000
KA turi ty date ..
January 18, 2001
Original issue date ..........
July 20,2000
C~rrently outstanding . . . . . . . . . . . . . . . . . . . $12,436 million
Mjnimum bid amount and multiples ........ $1,000
0

••••••••••••••

••••••••••••••••••••••••

••••••••••

$10,000 m111ion
182-day bill
912'95 GC 9
OotObar 16, 2000
October 19, 2000
April 19, 2001
October 19, 2000
$1,000

Tne following rules apply to all securities mQntioned above:
SUbmission of Bids:
Noncompetitive bids ......•... Accepted in full up to $1,000 / 000 at the highest discount rate ot
accepted Qompetitive bids.
Competitive bids . . . . . . . . . . . . . (1) MU8t be expressed aa a discount rate with three decimals in
increments ot .005%, e.g., '.100%, 7.105%.
(2) Net long position for each bidder must be reported when the aum
oe the total bid amount, at all disoount rates, and the nat 10n9
position is $1 billion or qreater.
(3. Net lonq position must be dete~ined 8S of one half-hour prior
to the olosing time for receipt of competitive tenders.
MsKimum Recognized Bid
at a Single Rate ............. 35% of public afferinq

Maximum Award . . . . . . . . . . . . . . . . . . . 35\ of public offering

Receipt of Tenders:
Noncompetitive tenders ....... Prior to 12:00 noon eastern daylioht saving time on auction day
Competitive tenders .......... Prior to 1:00 p.m. eastarn daylight saving time on auction day
?arment Terms:
By charqe to a funds account at a Federal Reserve Bank on issue date, or payment
of full par amount with tender.
Treas~Direct customers can use the Pay Direct feature which
Authorizes a charge to their account of record at their finanoial institution on issua date.

DEPARTlVIENT

THE

TREASURY

NEWS
omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N .W.• WASHINGTON, D.C.• 20220 • (202) 622-2960

FOR IMMEDIATE RELEASE
Thursday, October 12,2000

Contact: Treasury Public Affairs
(202) 622-2960

MEDIA ADVISORY
u.S. Housing and Urban Development Secretary Andrew Cuomo and U.S. Treasury
Secretary Lawrence H. Summers will unveil revisions to federal lending policies that will
streamline how Native Americans apply for, qualify for, and secure mortgages during a visit on
Friday to Santo Domingo. As a result of the changes, Native Americans will now find it easier
to buy homes on tribal land. The two Administration officials will also review federal inititives
to enhance economic and community development in Indian Country, and participate in a
ribbon-cutting ceremony at the first housing development built on New Mexico Pueblo land
using newly instituted federal tax cuts.

WHO:

HUD Secretary Andrew Cuomo
Treasury Secretary Lawrence H. Summers
Pueblo Governors, Tribal Leaders

DETAILS:

Tour of Traditional Pueblo Housing
10:00 a.m. Friday, October 13,2000
Media to meet at Tribal Headquarters
News Conference/Ribbon Cutting Ceremony
1:00 p.m. Friday, October 13,2000
Media to meet at Tribal Headquarters

NOTE:

Due to cultural considersations, photography
And videography will be restricted. Consult on-site HUD or
Treasury public affairs staff for guidence.
-30-

LS-948

For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
·u.s. Government Printing Oftice:

1998 - 619-559

NEWS
Department of Housing ami Urban Development
Andrew Cuomo, Secretary

HUD No. 00-286
202-708-0685
http://www.hud.gov/news.html

Department Of The Treasury
Lawrence H. Summers, Secretary

Treasury LS-949
202-622-2960
http://www .treasury. gov
FOR RELEASE
Friday, October 13, 2000

HUD, TREASURY EXPAND ACCESS TO CAPITAL IN INDIAN COUNTRY
SANTO DOMINGO PUEBLO, NM - Native Americans will now find it easier to buy homes on
tribal land, thanks to extensive changes in federal lending policies announced today by the U.S. Department
of Housing and Urban Development and the U.S. Department of the Treasury.
HUD Secretary Andrew Cuomo and Treasury Secretary Lawrence H. Summers unveiled a report
today detailing a series of revisions to streamline how Native Americans apply for, qualify for, and secure
mortgages. Cuomo and Summers issued the report during a trip through New Mexico Indian Country.

"The bottom line is we are significantly improving Native Americans' access to mortgage capital,"
Cuomo said. "Thanks to these changes, buying a home on tribal land can be more than just a dream; it can
become reality."
"It takes a village to raise a child, but it takes capital to raise a village," Summers said. "Making
access to capital universal is the central challenge of the 21 st century."

"We appreciate Secretary Cuomo's continued commitment to Indian Country, and we're happy that
he brought Secretary Summers, one of the most influential members of President Clinton's cabinet, to listen
to and understand the critical housing finance needs of our communities," Santo Domingo Governor Tony
Tortalita said.
For more than two years HUD and the Treasury Department have led a coordinated response to a
1998 presidential directive to streamline the mortgage lending process in Indian Country. To achieve the
President's objective, the two departments convened a task force involving nearly 140 tribal, private,
federal, state and local partners. A report on the task force's work is being delivered to the President
today.
-more-

Page

Thus far, the Task Force has implemented key suggested reforms, including:
•

launched two pilot "One Stop" mortgage centers, at the Navajo Nation in Arizona and the Oglala
Sioux Reservation in Pine Ridge, South Dakota~

•

developed a standard lease that will be accepted by all federal agencies as well as adopted by private
lenders to expand the availability of loans in Indian Country;

•

created a model code, including standard procedures governing liens, evictions and foreclosures in
federally sponsored loan programs;

•

established training programs about federally sponsored loan programs for borrowers and lenders;

•

streamlined the process for approving tribes' participation in federally sponsored loan programs;

•

revised the Federal Housing Administration's handbook concerning appraisals of tribal lands held in
trust by the U. S government; and,

•

produced the brochure, Sharf!d Visiolls: (iuide to Creating a Nonprojit Humeuwnership Entity, which
provides step-by-step instructions for tribes to use in creating a one-stop mortgage information center.

The "One Stop" mortgage center pilot sites have confirmed the value of the information centers
cGllcept. In South Dakota, for example, the Oglala Sioux Tribe Partnership for Housing created a
homebuyer program in which almost 200 tribal members participated in credit counseling and another 82
individuals have been pre-qualified for loans through HUD' s Section 184 Indian Loan Guarantee Program.
The program offers a federal guarantee to private lenders for home loans made to tribal members, tribes
and Indian Housing Authorities on tribal and individual allotted trust lands and lands in Indian areas. Some
77') loans have been guaranteed under the program, which began in 1994.
"Change has come slowly to our lands and the Navajo people have suffered because of it," Edward
T Begay, speaker, Navajo Nation Council said "These changes will expand homeownership opportunities
for l\iavajo people. The Navajo Nation has a lot to benefit from if the changes are implemented in a timely
fashion llook fonvard to continuing a close and respectful working relationship with HUD and other
federal agencies on community development and housing issues."
"The 'One Stop Mortgage Shop' concept epitomizes our vision for true partnerships and mutual
respect," Robert Skjonsberg from Wells Fargo Home Mortgage said. "We have a special relationship with
the Oglala Sioux Tribe Partnership for Housing in Pine Ridge. Together, we have made private sector
tinancing a reality for the Oglala Lakota. We are committed to providing all Americans, including the first
Americans, with improved access to private sector financing and we are excited about the opportunity to
expand these types of partnerships in New i'vIexico and throughout Indian Country."
-moreHLD \"0
Page]

OO<~86/Tfeasury

LS-9-+9

"These initiatives will help Native American communities take full advantage of the nation's robust
economy," Summers said.
"By making the mortgage process more user-friendly and accessible to Native Americans and
Alaskan Natives, as well as more attractive to private lenders, we plan to revolutionize homeownership in
Indian Country," Cuomo said. "Never before has there been such an integrated effort involving HUD,
Treasury, tribal governments and the private sector to raise Native American homeownership rates."
Homeownership in Indian Country is historically low. Though nearly 67 percent of Americans now
own their homes, that number is less than 33 percent for Native Americans.
Higher lender transaction costs, higher infrastructure costs and meager savings combined with a lack of
credit history contribute to the low homeownership rate.
While in Santo Domingo, Cuomo and Summers also participated in a ribbon-cutting ceremony to
celebrate the completion of an Indian housing development financed by the Low Income Housing Tax
Credit program. The development contains 20 new rental units, and is the first housing development built
on New Mexico Pueblo land using the tax credits.
##

Note to Editors: The publication, One-Stop Mortgage Center Initiative in Indian Country - A Report
to the President, is posted on the BUD website at http://www.hud.gov/news.html.

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 16, 2000

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
October 19, 2000
January 18, 2001
912795FP1

Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:

6.080%

Investment Rate 1/:

6.261%

Price:

98.463

All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted 99%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type

Tendered

Competitive
Noncompetitive

23,562,330
1,188,465

1,100,000

25,850,795

11,003,295

4,404,594

Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$

8,714,830
1,188,465
9,903,295 2/

24,750,795

PUBLIC SUBTOTAL

TOTAL

Accepted

30,255,389

15,407,889

Median rate
6.065%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
6.040%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

24,750,795 / 9,903,295

2.50

1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $919,633,000

[,8-951

http://www.publicdebt.treas.gov

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 16, 2000

CONTACT:

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182-Day Bill
October 19, 2000
April 19, 2001
912795GC9

Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:

5.990%

Investment Rate 1/:

6.262%

Price:

96.972

All noncompetitive and successful competitive bidders were awarded
securities at the high rate.
Tenders at the high discount rate were
allotted 68%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type

Tendered

Competitive
Noncompetitive

19,252,820
1,083,748

20,336,568

PUBLIC SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
TOTAL

Accepted

5,052,020
1,083,748
6,135,768 2/

3,873,000

24,209,568

10,008,768

4,584,980

28,794,548

14,593,748

Median rate
5.975%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
5.920%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

= 20,336,568 / 6,135,768

= 3.31

1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $742,522,000

LS-952
http://www .publicdebt.treas.gov

PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239

FOR IMMEDIATE RELEASE
October 18,2000

Contact: Office of Financing
202-691-3550

TREASURY'S INFLATION-INDEXED SECURITIES
NOVEMBER REFERENCE CPI NUMBERS AND DAILY INDEX RATIOS
Public Debt announced today the reference Consumer Price Index (CPI) numbers and daily
index ratios for the month of November for the following Treasury inflation-indexed securities:
(1) 3-3/8% 10-year notes due January 15,2007
(2) 3-5/8% 5-year notes due July 15, 2002
(3) 3-5/8% 10-year notes due January 15,2008
(4) 3-5/8% 30-year bonds due April 15, 2028
(5) 3-7/8% lO-year notes due January 15,2009
(6) 3-7/8% 30-year bonds due April 15,2029
(7) 4-114% lO-year notes due January 15, 2010

This information is based on the non-seasonally adjusted U.S. City Average All Items Consumer Price
Index for All Urban Consumers (CPI-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 953. The information is also
available on the Internet at Public Debt's website (http://www.publicdebttreas.gov).
The information for December is expected to be released on November 16, 2000.
000

Attachment

LS-953
http://www.publicdebt.treas.gov

TREASURY INFLATION-INDEXED SECURITIES
Ref CPI and Index Ratios for
November 2000

Security:
Description:
CUSIP Number:
Dated Date:
Original Issue Date:
Additional Issue Date(s):

3-3/8~. 10-Year Notes
Series A-2007
9128272M3
January 15, 1997
February 6, 1997
April 15, 1997

3-5/8% 5-Year Notel
Serlel J-2002
9128273A8
July 15, 1997
July 15,1997
October 15, 1997

3-518% 10-Year Notes
Serlel A-2008
9128273TI
January 15, 1998
January 15, 1998
October 15, 1998

3-5/8% 30-Year Bonds
Bondi of April 2028
912810FD5
April 15, 1998
April 15, 1998
July 15,1998

Maturity Date:
Ref CPI on Dated Date:

January 15, 2007
158.43548

July 15, 2002
160.15484

January 15, 2008
161.55484

April 15, 2028
161.74000

Date
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000

CPI-U (NSA) for:

RefCPI

Index Ratio

172.70000
172.73333
172.76667
172.80000
172.83333
172.86667
172.90000
172.93333
172.96667
173.00000
173.03333
173.06667
173.10000
173.13333
173.16667
173.20000
173.23333
173.26667
173.30000
173.33333
173.36667
173.40000
173.43333
173.46667
173.50000
173.53333
173.56667
173.60000
173.63333
173.66667

1.09003
1.09024
1.09045
1.09066
1.09088
1.09109
1.09130
1.09151
1.09172
1.09193
1.09214
1.09235
1.09256
1.09277
1.09298
1.09319
1.09340
1.09361
1.09382
1.09403
1.09424
1.09445
1.09466
1.09487
1.09508
1.09529
1.09550
1.09571
1.09592
1.09613

1.07833
1.07854
1.07875
1.07896
1.07916
1.07937
1.07958
1.07979
1.08000
1.08020
1.08041
1.08062
1.08083
1.08104
1.08125
1.08145
1.08166
1.08187
1.08208
1.08229
1.08249
1.08270
1.08291
1.08312
1.08333
1.08353
1.08374
1.08395
1.08416
1.08437

1.06899
1.06919
1.06940
1.06961
1.06981
1.07002
1.07022
1.07043
1.07064
1.07084
1.07105
1.07126
1.07146
1.07167
1.07188
1.07208
1.07229
1.07249
1.07270
1.07291
1.07311
1.07332
1.07353
1.07373
1.07394
1.07415
1.07435
1.07456
1.07476
1.07497

1.06776
1.06797
1.06818
1.06838
1.06859
1.06879
1.06900
1.06921
1.06941
1.06962
1.06982
1.07003
1.07024
1.07044
1.07065
1.07085
1.07106
1.07127
1.07147
1.07168
1.07188
1.07209
1.07230
1.07250
1.07271
1.07292
1.07312
1.07333
1.07353
1.07374

July 2000

172.6

Augult 2000

172.7

September 2000

173.7

TREASURY INFLATION-INDEXED SECURITIES
Ref CPI and Index Ratios for
November 2000

Security:
Description:
CUSIP Number:
Dated Date:
Original Issue Date:
Additional Issue Datels):

3-718% 10-Year Notes
Series A-2009
9128274Y5
January 15, 1999
January 15, 1999
July 15, 1999

Maturity Date:
Ref CPI on Dated Date:

January 15,2009
164.00000

Date
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000

CPI-U (NSA) for:

3-718% 3D-Year Bonds
Bonds of April 2029
912810FH6
April 15, 1999
April 15, 1999
October 15,1999
October 15, 2000
April 15, 2029
164.39333

January 15, 2010
168.24516

RefCPI

Index Ratio

1.05305
1.05325
1.05346
1.05366
1.05386
1.05407
1.05427
1.05447
1.05467
1.05488
1.05508
1.05528
1.05549
1.05569
1.05589
1.05610
1.05630
1.05650
1.05671
1.05691
1.05711
1.05732
1.05752
1.05772
1.05793
1.05813
1.05833
1.05854
1.05874
1.05894

1.05053
1.05073
1.05093
1.05114
1.05134
1.05154
1.05175
1.05195
1.05215
1.05235
1.05256
1.05276
1.05296
1.05317
1.05337
1.05357
1.05377
1.05398
1.05418
1.05438
1.05458
1.05479
1.05499
1.05519
1.05540
1.05560
1.05580
1.05600
1.05621
1.05641

1.02648
1.02668
1.02687
1.02707
1.02727
1.02747
1.02767
1.02787
1.02806
1.02826
1.02846
1.02866
1.02886
1.02905
1.02925
1.02945
1.02965
1.02985
1.03004
1.03024
1.03044
1.03064
1.03084
1.03104
1.03123
1.03143
1.03163
1.03183
1.03203
1.03222

July 2000

172.6

August 2000

4-114% 10-Year Notes
Series A-2010
9128275W8
January 15, 2000
January 18, 2000
July 15, 2000

172.7

September 2000
----

173.7

1WlbZZlb II

FrDI:

uepartment Of Ireasury

~OIL~/~1

~~;JI

OfFICE OF PUBUCAFFAlRS -1500PENNSYLVANIAAVENUE. N.W.· WASHINGTON. D.C .• 20220.

page f0 of ff

(202)62~2960

FOR IMMEDlA TE RELEASE
Text as Prepared for Delivery
October 16, 2000

TREASURY DEPUTY SECRETARY STUART E. EIZENSTAT
REMARKS TO THE B'NAI B'RITH INTERNATIONAL
HUMANIATARlAN AWARD DINNER
WASHINGTON 7 D.C.

Thank you all so very much for selecting me to receive your award. I want to say
to my wife....Fran, that the sacrifice you have made while I essentially have held two jobs,
is something I shall always cherish. You, along with our children Jay and Jessica, who
are here, and Brian and Erin, should really be co-recipients of this award, because I never
could have done this work without your support.
I am honored to receive this award because I have always held the work of B' nai
B'rith in high esteem. I grew up in Atlanta, and in my house the mob lynching of Leo
Franks, who had been President of the local chapter ofB'nai B'rirh, was still a chHling
memory even though it had happened years before. That was the hate crime that led
directJy to the creation of the American Defamation League (ADL) in order to combat
anti-Semitism in America. Now ADL stands alert for anti-Semitic outbreaks in
countries. I am gratified that funds from this dinner will be used by the new Center for
Public Policy. for finding and prosecuting other Nazi war criminals -- as you did with
Dinko Sakic of Croatia. for aiding restitution. and for assisting isolated Jewish
communities around the world.

I am gratified to see so many good friends, people who, by their own strong
commitment to B'nai B'rith and to the greater Washington Jewish community, have
served as role models for me and for Fran in our own involvement. It is wonderful to see
so many members of the new generation who are taking leadership roles in our
congregations, our day schools and the other institutions of the community. It is a
magnificent Jewish generation. Their energy, their activism, their commitment makes me
confident that the future will be secure in their hands.
Secretary Summers, you were more than generous in your remarks tonight. When
the late President Kennedy spoke about the need bring into government outstanding
academics who coold also move effectively in Washington and on the world stage, he

LS - 954
For prets relea.rtts, speeches, pub lit schedules Q:IU/. official biogra.phies, call aur 24-hr:nrrf" line at (202) 622-2040
·U.S. OCMl,nmenl Prlnling Ollies: '~!:Ia· 61g..55~

Zfl6ZZlbll

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Dapartment

Of rreasury

08/10/01

0~:31

rage II of 19

was talking about people your with qualities. Secretary Summers, you lead the new
genera~ion ofs.cholar-statesmen and it has been a privilege to work you. You have been a
great Secret~ry of the Treasury, a true friend, and a great supporter of my work. I want to
thank you in front of this audience for taking additional burdens on your own shoulders
so I could continue with my assignment as Special Representative for Holocaust issues.
What I have been doing on behalf of Holocaust survivors and their families has
been my most challenging and most satisfying responsibility. To watch the moral
conscience of the world stir and come to focus on these issues, so long forgotten; to try to
translate that awareness into concrete action on behalf of survivors themselves, has been
an unforgettable experience. I am grateful to President Clinton and Secretary Albright for
giving me this opportunity, and for their support and active involvement at key moments.
Over the last five years, with the cooperation of many other governments and the
strong support of organizations such as B 'nai Brith, we have been able to produce a $1.25
billion Swiss bank settlement~ a $S billion agreement for slave and forced laborers and
others injured by German industry. We have worked for the return of important works of
stolen art a~d seen the beginnings of research by museums the world over, by which
many more works can be identified and returned. We have been able to produce two
massive U.S. government studies on Nazi gold and the role of neutral countries in
supporting the German war effort and secured commitments by several governments to
return confiscated communal and religiQus property to the reviving Jewish communities
in Central a~d Eastern Europe. OUf work has stimulated the creation of an International
Commission to process insurance claims of victims and their families, historical
commissions in 17 countries exploring their role in World War II and in dealing with
Holocaust-related assets. Later this week, I shall be in Vienna at the signing of an
agreement to pay $400million to survivors who performed slave and forced labor in that
country. And we now have a framework for settling the claims of Austrian Jews who
were forced to give up their homes and other property to get exit visas from Austria after
the Anschluss in 1938.
At a ceremony at the United States Holocaust Museum two years ago, Elie Wiesel
asked this question: "Why so late? Why has it taken so long in fulfilling the biblical
command that stolen property must be returned to its owners?" It is hard to explain and
impossible to justify why people who had been deprived of their most precious
possessions had to wait most of their lives -and until many had passed away-for some
measure of justice to be achieved. But we do know some of the reasons why there has
been such a surge of action in recent years -- the advanced age of survivors, the end of
the Cold War. a desire to attend to the unfinished business of World War II at the end of
the Twentieth century, and the globalization of commerce making business firms in one
country subject to the couns of other countries.
I w6uld like to focus tonight on another reason. The fifty years following the
Holocaust have seen the gradual development of an international consensus for justjce
and human rights that did not exist before World War II. It was first applied in the
Nuremberg trials, was carried to the Helsinki Declaration in the 1970s, and can be seen in
2

f1'1II:

oepartment Uf TreaSUry

118/m/l11 I15T3l rn

the war crimes trials that have recently been conducted by an international court in The
Hague. It was on display in the worldwide revulsion over ethnic cleansing in Bosnia;
summary executions at pistol point in Viet Nam; massacres in Chile, Somalia arid
Indonesia; apartheid in South Africa and the use of police dogs against demonstrators in
Birmingham. It shows its force every time an unjust execution is stopped because of
worldwide demonstrations and pleas from religious leaders. It has played a part in the
progress the United States and many other nations have made in the advance of civil
rights, the defense of human rights, and the improvement of the status of women. This
higher moral standard explains the increasing appreciation in the non-Jewish community
of the moraL dimensions of the Holocaust, and the hold that terrible crime still has on the
conscience of the world. Over fourteen million people, the great majority ofthern nonJewish, have visited the Holocaust Museum since it opened Its doors. The efforts to
compensate for stolen Holocaust assets has recelved strong and continued media
attention, not only in Europe where the crimes took place, but around the world.
As the facts were revealed through historical studies and elsewhere about the

complicity of neutral nations in the disposition of Nazi gold, [he extent of the theft of art
and communal property, the unconscionable refusal of insurance companies to make
good on the policies taken out by those who died in the Holocaust, and the conditions
under which 13 million people were put to work as slave and forced workers, a powerful
moral force arose to demand justice. Time and again, just as it looked as if our talks were
breaking down, that force carne to bear upon participants. It made them focus on the
historic nature of what we were doing. It reminded them of the sacrifices that had been
made by the victims. It swept smaller considerations aside, brought negotiations to a
higher ground and paved the way for breakthroughs.
It is critical to remember that the vast majority of those who will benefit from the

German and Austrian agreements are non-Jews, who also suffered, and who have
received sO little in compensation since the end of World War II. It is imperfect and
belated just~ce, for Jews and non-Jews alike, because millions who did survive the war
died before they could receive payments or restitution. But it is justice nonetheless.
We still have not closed the moral circle that began in those dark days when Jews
throughout Europe were robbed, on their way to the death pits and the crematoria, robbed
not only of their precious possessions, but of the clothes on their back and any
distinguishing sign of their human image. I have every confidence that the next
Administration and the next Congress, no matter what their political complexion, will
carry on this work with the same high degree of commitment.
But the final chapter ofthe Holocaust should not be about money, but about
memory. It should give those who perished their rightful place among the Jewish martyrs
and preserve their stories. It should teach the story of the Holocaust in schools throughout
the world to promote tolerance and justice in our own times, by breaking down religious
stereotypes and helping young people appreciate the common humanity that underlies
differences in religions and race. That is why 46 nations signed a Declaration in
3

ZffNrrz&11

FnJII: uepar tllleJlt Ut I red:lUry

Stockholm last January, and why we have organized a ten-nation Task Force to devise
practical ways to make this a reality.
There is a passage in the Psalms which says "the path of the just is as the shining
light, that shineth more and more unto the perfect day." By undertaking a moral
accounting, by completing the historical record 1 by providing restitution to the living and
honoring the memory of the dead, and by educating future generations, we can strengthen
the world's consensus for justice and walk together on the path to that perfect day.

-30-

TOTRL P.04

EPA R T 1\1 E 1\ T

0 F

TilE

T REA SUR Y

NEWS
omCE OFPUBUCAFFAIRS .1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON. D.C.• 20%%0. (20%) 6%2·%960

FOR IMMEDIATE RELEASE
October 19,2000
TREASURY ASSISTANT SECRETARY FOR ECONOMIC POLICY
DA VID W. WILCOX TESTIMONY BEFORE THE HOUSE COMMIITEE ON
COMMERCE, ENERGY AND POWER SUBCOMMITTEE

Mr. Chairman, Mr. Boucher, Members of the Committee, this testimony addresses the
President's decision to swap 30 million barrels of oil out of the Strategic Petroleum Reserve for
replacement next fall.

Let me begin by noting that the overall prospects for the U.S. economy are very good
today, despite the current conditions in world petroleum markets. One clear confirmation of this
fact comes from the latest consensus economic forecast released last week by the Blue Chip
panel of some 50 economists at major businesses, financial institutions, and economic research
organizations. The consensus view is that U.S. economic growth will remain strong in the near
term, and inflation will remain moderate. The Blue Chip forecasters expect real GDP growth to
average 3.3 percent during the second half of this year, and 3.4 percent (fourth quarter to fourth
quarter) during 2001. They forecast CPI inflation at 2.9 percent for the second half of 2000,
slowing to 2.6 percent next year.
In addition, the Blue Chip panel released last week their semi-annual update of the
outlook for the next 10 years. Once again, the picture looks strong. The consensus forecast of
the Blue Chip economists is that real GDP will grow by at an average annual rate of 3.3 percent
from 2002 through 2011. This is up from 3.1 percent in the ten-year forecast compiled last
March and 2.7 percent in the October 1999 forecast. Inflation is expected to remain tame, with
the CPI rising at an average annual rate of only:: 6 percent over the ten-year horizon.
Turning specifically to the issue of the swap from the Strategic Petroleum Reserve, the
Administration believes that this policy has a sound economic rationale
Use of the SPR in response to low inventories of crude oil was a policy option that had
been on the table most of the year. But in the several weeks before the swap announcement, the
world oil market became considerably more unsettled The price of oil surged by more than $3 a
barrel to its highest level since the Gulf War. We saw anecdotal reports of anticipatory
purchasing that seemed to be generated by the expectation of a further price rise.
LS-955

Far press releases, speeches. public schedules and official biographies, call our 24-hour fax line at (202) 622-2040

Most important, domestic stocks of both crude oil and refined products were at an
unusually low level. There was growing concern that we might not have sufficient inventories of
home heating oil to ensure a smooth supply through the winter. In the Northeast, in particular,
stocks of distillates are down by about half from last year's levels. All told, the tightness of the
petroleum markets left very little room to absorb any further shocks, raising the risk of very
unfavorable developments in the months ahead.
The deterioration of market conditions led the President to take a prudent, precautionary
step to reduce the risk of shortages of home heating oil this winter. The President ordered that
about 5 percent of the SPR be made available for the swap, leaving the other 95 percent in
reserve for possible future use. We anticipated that this measured action would have several
favorable effects:
•

First, and most directly, the swap would increase the supply of crude oil and boost oil
inventories.

•

Second, the swap would increase the supply of home heating oil this winter. Although
domestic refineries were operating around 96 percent of capacity in July and August, we
expected that capacity utilization would decline in the early fall, as it usually does, at the
conclusion of the period of peak demand for gasoline. In fact, that decline in utilization
has now occurred - and with utilization around 91 percent, refineries have the capacity to
refine oil from the SPR.

•

Third, the swap could reassure markets that there would be no disruption in the supply of
oil, thereby adding confidence to what could potentially have been a difficult situation.
By rebuilding inventories, we can reduce the likelihood of shortages and spikes in the
price of heating oil and other refined products this winter.

•

Fourth, by using SPR reserves for an exchange rather than an outright sale, we will have
a larger Strategic Petroleum Reserve next fall than we have today, leaving us with an
enhanced energy security in the long run.

While it is too early to observe any increments to inventory levels, the behavior of the oil
market since the swap announcement suggests that we are on the right course:

•

The markets reacted to reports that an exchange was imminent. The I-month futures
price of West Texas Intermediate dropped more than $3 per barrel on rumors of the
pending announcement, and then by more than $] per barrel on the announcement of the
President's decision. Moreover, the price continued to head downward over the
following six calendar days, for a cumulative decline over that period of more than $2 per
barrel. Overall, from the day before to six days after the President's action, the onemonth futures price ofWTI dropped by about $7 per barrel.

•

Im~ortantl~, the one-month futures price of heating oil also declined during this same
pe~lOd.' taking very much the same profile from day to day as crude oil prices. While the
objective of the policy was to address potential issues of supply disruptions and

shortages, we cannot lose sight of the fact that in markets, shortages - and potential
shortages - are reflected as higher prices. Likewise, alleviation of shortages - and
reductions in the risk of shortages - are reflected as reductions in prices.
•

Since that time, a portion of the oil price decline has been reversed. This partial
unwinding appears to be due primarily to additional concerns about instability raised by
recent world events such as the turmoil in the Middle East, a hurricane threatening
production in the Gulf of Mexico, an early cold snap in the Northeast, and Venezuelan oil
workers going on strike.

•

It is noteworthy that, notwithstanding those world events, crude oil prices remain several
dollars a barrel below where they were before the SPR swap announcements. In addition,
the I-month futures price of home heating oil is also well below its level a month ago,
despite substantial volatility arising from these market forces. These readings suggest
that the SPR swap is viewed by market participants as having reduced the pressure in
petroleum markets and the risk of shortages this winter.

In summary, we believe that the swap has given market participants, and U.S. citizens
generally, a measure of confidence they would not otherwise have had that the Federal
government is ready and willing to move aggressively to address issues of supply disruptions. In
a market as tight and unsettled as the world oil market is today, every additional measure of
confidence is extremely valuable. Mr. Chairman, we believe that the U.S. economy is in better
shape today because the President undertook a SPR swap.
Thank you.

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D EPA R T 1\1 E N T

0 F

THE

T REA S V R Y

NEWS

IREASURY

omCE OF PUBliC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C.• 20220. (202) 622-2960

U.S. International Reserve Position

10/18/00

The Treasury Department today released U.S. reserve assets data for the week ending October 13, 2000.
As indicated in this table, U.S. reserve assets totaled $65,805 million as of October 13, 2000, down from
$65,903 million as of October 6, 2000.
(in US millions)

I. Official U.S. Reserve Assets

October 6 1 2000
65,903

TOTAL

1. Foreign Currency Reserves 1
a. Securities
Of which, issuer headquartered in the U. S.

Euro
4,997

Yen
6,814

October 13 1 2000
65,805

TOTAL

Euro

11,811

4,943

Yen

TOTAL

7,813

12,756
0

b. Total deposits with:
b.i. Other central banks and SIS
b.ii. Banks headquartered in the U.S.
b.ii. Of which, banks located abroad
b.iii. Banks headquartered outside the U.S.
b.iii. Of which, banks located in the U.S.

2. IMF Reserve Position

3. Special Drawing Rights (SDRs)
4. Gold .Stock 3

5. Other Reserve Assets

8.524

10,510

19,034

8,422

9,696

0
0

13,696

13,624

10,316

10,262

11,046

11 Includes holdings of the Treasury's Exchange Stabilization Fund (ESF) and the Federal Reserve's System Open Market Account
(SOMA), valued at current market exchange rates. Foreign currency holdings lisled as securities reflect marked-la-market values, and
deposits reflect carrying values.
21 The items. "2. IMF Reserve Position" and "3. Special Drawing Rights (SDRs)," are based on data provided by the IMF and are valued in
dollar terms at the offiCial SDRJdollar exchange rate for the reporting date. The IMF data for October 6 are final. The entries in the table
above for October 13 (shown in italiCS) reflect any necessary adjustments, including revaluation, by the U.S. Treasury to the prior week's IMF
data.
31 Gold stock IS valued monthly at $42-2222 per fine troy ounce. Values shown are as of August 31,2000. The July 31, 2000 value was
$11 ,046 million.

L8-956

18,117

u.s. International Reserve Position (cont'd)

II. Predetermined Short-Term Drains on Foreign Currency Assets

October 13, 2000

October 6, 2000
1 Foreign currency loans and securitJes

0
0

2 Aggregate short and long positions in forwards and
futures

foreign currencies vis-a-VIS the U.S. dollar:

2. a Short poSitions
2 b Long positions

3 Other

III. Contingent Short-Term Net Drains on Foreign Currency Assets

October 13, 2000

October 6, 2000
1. ContJngent liabilities in foreign currency

1.a. Collateral guarantees on debt due within 1 year
1.b ..Other contingent liabilities

12.

Foreign currency securities with embedded options

3. Undrawn. unconditional credit lines
3.a. With other central banks
3. b. With banks and other financial institutions
headquartered in the U. s.
3.c. With banks and other financial institutions

headquartered outside the U. S.
4. Aggregate short and long positions of options in foreign

currencies vis-a-vis the U.S. dollar

4 a. Short positions
4.a.1. Bought puts
4.a.2. Written calls
4 b. Long positions
4.b.1. Bought calls
4.b.2. Wntten puts

EPA R T :\1 E N T

0 F

T Ii J.:

NEWS

TREASURY
OFFICE

T REA SUR Y

or PUBLIC AFFAIRS. 1500 PENNSYL'\IANIA AVENUE, N.W•• WASHINGTON. D.C.e

EMBARGOED DNTl:L 9: 00 A. II •
october 18, 2000

20210. (282) 621.2960

PUBLZC CONTACT:

Office of Financing

MEDn COl\1T'AC'l':

th1a Ga.~ ~agher

202-691-3550
202-622-2960

On Octobar 19, 2000, the Treasury will buy back up to $1,500 million par

:i.~s

outstandi.D.g l ••uea

~eosur.Y

t.ha~ ma~ure be~wee!l.

PebJ:"U&1'!'l' 2015 ancl November 2018.

reserves the right to accept less than the announced amount.

This debt bul"'baek (redempt.iOZl.) operat:ioll will be ceDCN.ctec1 by Treasury's
Fiscal Agent, the Feeleral Reserve Bank of Naw York, using its Open Market
operations system. Onl.y iDStitutions that the Federal ReBerve BaJ:Ut of New
York has approved to conduct Open Market transactions may submit offera on
behalf of themselves and their customers. Offers at the highest accepted
price for a particular issue may be accepted OD a prorated basis, rOUDded up
to th. ~ $100, 000. A8 a result of this :r:ouDCliug, the Treasury may buy
back an amount slightly larger than the ODe announced above.

This debt buyback operation is governed by t.he terms and conditions set
forth in 31 erR Part 375 aDd tbia amlou.noemant.
The debt buyback operation regulations are a~il&ble on the Bureau of
the Public Debt's website at www.publicdebt.treas.gov.

DetAils a.bo'I3.t tbo opO~Gt:i.oZ1 CLZ1d eac:h of the eligible issues are given
in the attachad high1ights.
000

Attachment

LS-957

Foy p,.lfS rel8ases, SpesChllS, public scneflulils and official biographies. eall our 24·hour flU line at (202) 622·2040

october 18, 2QOO
Par IUDOWlt to be bought back •• Up to $1, SOO millioD
Op8ra~io~ date ••••.•.••••••••• OC~Ober 19, 2000
Operation close time •••••••••• 11:00 a.m. eastern daylight a&vin9 time
Settl..ant date ••••••••••••••• October 23, 2000
Kinimwa par offer amount ••••• $100.000
MUltiples of par ••••••••••••• $100,000
Format for offer•••••• 2xpressed in tena.s of price per $100 of paz: with
threo Qoc~18. ~e ~ir8t two 4ec~18 repr.8~
fractioDGl 3 2 ..s. of a dollar. 'l'ba third decimal
repre.ents eighths of a 3~a4 of a dollar, and JJlU,t
Qe a 0, 2, " or 6.
Delivery instructiolU ••••••••• ABA HUmber 021001208 FRS NYC/COS'!

Treasury issues eligible £o~ debt ~yback operation (in DdllioDs):

COUPOQ

Rate

(%>

11.250
10.625
9.875
9.250
7.250
7.S00
8.750
8.875
9.125
~LOOO

Maturity
Date
02/15/2015
08/15/2015
11/15/2015
02/15/2016
05/15/2016
11/15/2016
05/15/2017
08/15/2017
05/15/2018
11/15/2018

COSIP
!!lUmber
913810 DP 0
91281.0 DB 41
912810 D'l'2
912810 f1CI7
912810 OW 5
91.2810 l)X 3
912810 DY 1
912810 DZ 8
912810 EA 2
912810 1m 0
Total

•

Par AIDount
OUtst&A4ing·

12,02"
5,746
6,156
6,867
18,824
18,844
17,175

13.250
7,956
7,694
114,536

-ear Amount Par Amount
P~ivately
Beld ••
STlUPS··
Beld*
10,178
4,579
5,149
5,830
17,724
17,219
14,420
11,192
'.717
6 .. 926
99,934

5,'43

1,74'
2,272
562
490

1,S31
6,021
2,502
4,282
',567
29,919

Par ~t8 are a8 of October 17, 2000.
Par amounts are as of October 16, 2000.

Tb~ di.fference between the par amount outstanding and the par aJDO'Wlt
pr1vately beld is the par aaoUDt of t.hose issues l:Leld by the Fed.Z"a,1

Reserve System.

DEPARTMENT

O}' '("HE TREASliRY

NEWS

TREASURY

OFFICE OF PUBLIC AfFAIRS. 1500 PENNSYLVANIA AVENUE. N. w.• WAJiIlJNCTON. D.C.' 20220. (102) "2-29'0

EMBARGOED UNTIL 2:30 P.M.

CON1'AC1':

October 18, 2000

Office of F1nancing
202/691-3550

'.rR.EASURY TO .AIJC:'l'ION $10, 000 MILLION OD' 2-YEAR NOTES

The Treasury will auc~ion S10,000 million of 2-year notes to refund $28,495
of publicly held securities maturing October 31, 2000, and to pay down about
$19,485 DLJ.llion.

~llion

In addition to the public holdings, Federal Reserve ~anks hold $4,120 mi~lion
of the zaatu:ing sec:u.:rities for their own accounts, which may be refunc1M by issuing
an additional amount of the new security.
~he

maturing securities beld

the pUblic include $5,667 million hold by

Federal Reserve Banks as aganta for foreign and ~neornational moc_tary authori~es.
Amounts bid for these accounts by FedQral Reserve Banks vill be adQQd to the

offering.
T.reasuryDirect customers requested that we reinvest their :aturinq holdings
in~o the 2-year note.

of approximately $547 million

The auction v;i.~l be conducted in the single-price auction format.
Al.l competitive and noncompQtitive awards will be at the highest yield of accepted competitiVQ
tenders.
The notes being offered today are eligible for the STrtIPS program.
"IlU.s offering of Ireasury securities is governed by the terms and conditions
set forth in the Uniform Offering Circular for the Sale and Issue of Marketable BookEntry :treasury B~lls, Notes, and Bonds (31 ern Part 356, as amend9d).

Details about the new security are given in the attached offering

highl~ghts.

If the auction of 2-year notes to be held Wednesday, Oc~ober 25, 2000, results
in a Y1eld in a range of 5.750 percant through and including 5.974 percGnt, the
2-year notes will be considered an additional ~SSue of the outstanding 5-3/4' 5-¥ear
notes of Series N-2002 (COSIP No. 9129273L4) originally issued October 31r 1997.
ThQ
addi~onal issue of the notes would have the same COSIP number as the outstanding
notes, which are currently outstanding in the amount of $11,737 million.
If the auction results in the issuance of an additional amount of the Series
N-2002 notes rather ~an a new 2-year note, i t will be indicated in the Treasury
auction results press release.

000

Attachment

LS-958

For press

Tl!l~a.ses,

spuches, public schedules and official biographies. cull our 24-hour lux line at (202) 622-2lJ40

OFF'ERlNG TO THE PUBLIC OF
0 OCTOBER 31 2000
2-YE.AR NOTES TO BE ISSUE
'
M'

c-H'oy

HIGHLIGHTS OF T~v~

Octobor 19, 2000
Off9rinq Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$10,000 m..i.llj.on

DQ~cription of Offering:
2-year notes
Tgrm and type of se-cur.l. ty . . . . . . . . . . . . . . . . . . . . . AB-2002

Sorios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CUSIP number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ,
.... _
.........
Auction Y4te..... . . . . . . . . . . . . . . . . . . . .
"-t
............. , .
Issue Y 4 • • • • • • • • • • • • • • • • • • • • • •
.••....••••..
:;a \:.ed cia te . . . . . . . . . . . . . . . . . . . . . . ,
....
Maturity date.... . . . . . . . . . . . . . . . . . . . . . . . . .
t
.........
Interest ra e.... ..... ... ... .........

912827 Q'l 9
etoher 25, 2000
0
Oct ber 31,2000
0
tooor
31, 2000
0<:
O<:tober 31, 2002
.

Determl.n

Qd based on thQ ~ghe8t
competitive bid

acc~ed

Determined at auction
Yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ,. ril 30 and October 31
Interest papant. dates . . . . . . . . . . . . . . . . . . • . . . . . np
~n~mum bid amount and multiples '" ........... $1,000
~ccrued interest payable by investor . . . . . . . . . . None
.
Pr~um or discount . . . . . . . . . . . . . . . , .. , . . . . . . . . Daterm1ned at auction
STRIPS Information:

~n~um amount required . . . . . . . . . . . . . . . . . . . . . . . Determl.ned at auction

CO:'''Pus CUSIP number . . . . . . . . . . . . . . . . . . . . . . . . . . 912820 FW 2
Due date (9) and CUSIP number (s)
for additional TINT(s) . . . . . . . . . . . . . . . . . . . . . . Not applicable
Submissl.on of Bids:
Noncompetl.tiva bl.ds:
Accept.ed in full up t.o $5,000,000 at the highest accepted yield.
Compctl. t i va bids:
(1) Must bG expressed as a yield with three de~mals, e.g., 7.123%.
(2) Net long position for each bidder must be reported when the sum of the total
bid amount, a~ all yields, and the ne~ long position i~ $2 billion or greater.
(3) Kgt long po9i tion must be datermined as of one half-hour prior to Ule
closing tiAe for receipt of eompetitivo tenders.
~~im~
~~1mux

Recognized Bid at a Single YiQld . . . . . . . . . . . 35% of public offering
Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35\ of public offering

Receipt of Tenders:
tondars:
Prior to 12: 00 noon eastern daylight saving ti.lrle
on auetion day.
Competitive ~nders:
Prior to l:OO p.m. eastern dayl~ght sav~n9 time on
auct.l.on day.

}o:(,,"'lC'C''lIpet'i ~ve

Paym~nt

Tenns: By eh.arge to a funds ac~u.nt at a Federal Res€!rJe Bank on issue
or paYlllen t of full par amount wi th t:ender.
TreasuzyDirect c:us tomers can use
the Pay Di~Qct featuro ~h~ch authorizes a charge to their account of record at
thel.r f~na~cial institution on issue date.

da. te I

D EPA R T ]\1 E N T

() F

T II E

T REA SUR Y

NEWS
omcr OFPUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W.• WASIflNGTON, D.C. -

20220 - (202) 622·2960

EMBARGOED UNTIL 7:00 PM EDT
Text as Prepared for Delivery
October 18, 2000

TREASURY SECRETARY LAWRENCE H. SUMMERS

REMARKS TO THE CONFERENCE BOARD
NEWYORK,NY
Let me first of all thank Lord Marshall for that kind introduction. I would also like to extend my
congratulations to you on taking up the chairmanship of the Conference Board. In addition, let
me thank Charles Shoemate, the outgoing chairman, and Dick Cavanagh, the chief executive.
What I would like to do this evening is reflect for just a few moments on our economic
situation, why it is as strong as it is, and what the crucial challenges are for the future.

The Positive Supply Shock

If it is a strong economy, why is it so strong? The overwhelming credit has to go to the
American people and to American business for their hard work, skill and innovation - and
especially their capacity to respond to information technology and to take advantage of the
benefits that it can bring.
The new economy thrives in large part on the power of markets and entrepreneurship. And the
United States has traditionally been a country in which both attributes are relatively highly
prized. This must be to be the only place in the world where if you have a sufficiently good
idea, you can raise your first hundred million dolJars before you buy your first suit.
In many ways, this capacity to take advantage of information technology has functioned, in
Vice-President's words, like a reverse supply shock In the 1970s a big increase in the price of
oil, an input that ran through every part of the economy, led to higher inflation, higher
employment and slower productivity growth.
Today, of course, we are seeing another increase in the price of oil. But through the 1990s we
have also seen a very large positive price shock, in the form of a declining price of information
technology -- an input that also flows through every sector of the economy. And that positive
shock has led to the reverse of stagflation: a period of lower unemployment, lower inflation, and
faster productivity growth.

1S-959
For press releases, speeches, public schedules and official biographies, call our 24~our fax line at (202) 622-2040

The Benefits of Fiscal Virtue

So the power of markets, private entrepreneurship and technology is an important part of the
story of America's recent economic success. But there has to be another part of the story as well,
because the American people were creative, hard working and entrepreneurial in the 1970s and
19805 as well.
Another crucial element in our economic success in the 1990s was the progress we made as a
country in moving from budget deficits to substantial budget surpluses.
Ten years ago we had an economy where we were caught in a kind of vicious cycle: high
deficits led to high interest rates, led to low levels of investment, led to slow levels of economic
growth, led to reduced revenues, led to larger deficits, and around and around again.
Through the policies that we as a country have pursued during the 1990s, we have crossed a
kind of tipping point, so that today we enjoy a virtuous circle: from budget surpluses, to lower
interest rates, to more investment, faster growth and higher revenues, leading to still larger
budget surpluses, more investment, and around and around again.
When President Clinton took office the deficit was $290 billion. The latest estimate by the Office
of Management and Budget is that this year we will have a unified surplus of at least $230
billion. At 2.4 percent of GOP, that is the largest unified surplus as a share of the economy since
1948. This year alone we have cut the public debt by $223 billion.
As a result of that switch from vicious cycle to virtuous circle, more than two trillion dollars that,
on the forecasts that were made in 1992, would have been absorbed in government borrowing
has instead been made available for private investments in America's future. It has helped to
unlock the energy and creativity that has helped to make this expansion the longest in our
country's history.

Keeping it Going: Core Priorities for Keeping our Economy Strong

There is no issue more important to us as a country than the capacity to maintain this economic
expansion and to build on our economic progress. That is true in a very direct way because our
economic strength determines how well we are all able to provide for our families and live out our
dreams. And it has a more intangible importance, because our strength in the world ultimately
derives from our economic power and our capacity to produce, and from the power of our
example, which itself depends in large part on the strength of our economy.
There are a number of crucial challenges that US policy makers will face going forward if we
are to keep this economy strong.
•

There is the challenge of an effective public growth strategy that lets markets do aJ] the
things that they can do, but ensures that the public sector does what it needs to do. For
example: ensuring that regulation does not stifle the growth of the Internet and electronic

commerce; while ensuring dramatic increases in the quality and quantity of public
investment in America's schools.
•

There is the challenge of effective engagement with the global economy, because in an age
of integration, the US is not going to continue to succeed without strengthening our
connections with the rest of the global economy, and building larger markets overseas.

•

And there is the challenge of widening the circle of prosperity, not only as a fundamental
moral imperative but an economic one as well. Because, in an economy where the principal
challenges lie in bottlenecks and the inability to attract and retain workers, including every
part of America in the productive economy becomes an important economic priority in its
own right.

These three priorities - building an effective public growth strategy, engaging effectively with
the global economy, and widening the circle of prosperity at home - must be integral to our
strategy of prolonging this economic expansion.
But, I would argue, there will be no more important choices that we face as a nation than the
approach we take to the national budget, and the related question of how we can meet the
challenge of the retirement of the baby boom generation. These are the subjects to which I
would like to devote the remainder of my remarks.

IV.

The Priority of Fiscal Discipline

What fiscal policies would best contribute to strong economic performance in the future? This is
an issue that has stimulated a great deal of debate. But we believe there is a compelling
argument for setting, as a medium term goal the elimination of the net debt held by the public.
Like tax cuts, reducing publicly held debt also delivers substantial direct benefits to the pocket
books of American families:
•

First, because it reduces the burden of future payments on interest and principal. For every
dollar borrowed in the 10-year bond market today, taxpayers will pay a total of$1.61 in
interest and principal. That obligation rises to $2.79 for a dollar borrowed with a 30-year
bond.

•

Second, because it helps to put downward pressure on long-term interest rates. Indeed, we
estimate that as a consequence of our new path of fiscal discipline and the resulting
reduction in interest rates, a typical family with a mortgage of$ 100,000 would save around
$2,000 a year on mortgage payments.

The crucial point is that debt reduction can provide these kinds of benefits to American families
in a way that win also support the long-term strength of the economy. We do not believe that
alternative approaches offer the same prospect.

Paying down the debt also represents the best course for our economy as a whole, for three
reasons.
First, because fully paying down the debt will maximize investment at a time when the reward
for investing is especially great.

As Chairman Greenspan and others have emphasized, the return on investment is probably
greater today than it has been in a very long time, because of the opportunities that new
technologies afford. The more we save through debt reduction, the greater will be the level of
investment in the productive economy.
In contrast, measures that reduce potential national saving threaten to reduce domestic
investment and thereby constrain potential growth. For example, under reasonable assumptions,
a tax cut of $1 trillion over 10 years would reduce business investment in equipment and
software alone by about $350 billion over the same period.

Second, because it will help to increase supply in our economy. rather than demand.

Today, when our challenges are increasingly on the supply side, with businesses struggling to
find workers and to find capacity to expand operations, the priority for policy must be to increase
the supply potential of the economy. Policies that boost demand, without increasing supply
potential, run the risk of higher interest rates, higher inflation and greater economic instability.
A strategy of eliminating net publicly held debt provides the best prospect for maintaining the
expansion, because it better safeguards against the risk that market interest rates will rise sharply
in the future in response to unsustainable growth in demand. By contrast, policies that would use
the surpluses in ways that substantially promote either public or private consumption raise the
risks of economic instability in the future.
And third, because now is a time when we should be prudent in ollr commitments.

We are fortunate in the current strength of the economy and in the current strength of our
economic forecasts. But the experience of businesses is that they most often fail when a period of
strength leads to excessively optimistic plans - and then they grow right out of cash. In the same
way, it is essential we recognize the enormous uncertainty surrounding any budget projections
that are made today. On more than one occasion, budget projections have swung by literally
trillions of dollars within the space of a couple of years. It is therefore essential to avoid making
permanent and irrevocable commitments.
Debt reduction as a strategy has the central virtue of preserving our flexibility and leaving us
with options, not merely if projections turn out as we hope, but also if they do not. Equally, debt
reduction today leaves us room for the automatic stabilizers to provide a counter-cyclical
response in the event of future negative shocks.

The Long-Term Challenge of Social Security and Medicare

So debt reduction should be at the heart of any long-term strategy to maximize our economic
growth. But it also provides a key to solving a major demographic challenge for this nation that
draws nearer every day.
The coming retirement of the baby boom generation combined with rising life expectancy and
the increasing cost of health care will increase pressure on the two cornerstones of our social
policy: Social Security and Medicare. We can and should begin to address these future burdens
today.
The best way we can begin an effective approach to this issue is to assure that the revenues
dedicated to these programs are used only for their intended purpose, by establishing a Social
Security lockbox, and building on that action, by establishing a Medicare lockbox, so that the
revenues earmarked for these two programs are inviolate.
To be sure, establishing a lockbox significantly constrains our ability to cut taxes or to increase
spending. That is why it is so important. Indeed, a crucial test of any budget plan in the years
ahead should be whether it ensures that both Social Security and Medicare are off-budget.
However, the unfortunate reality is that as our society ages the simple act of taking them offbudget will not be sufficient to assure there are adequate resources for paying out benefits in the
future. That is why the President and the Vice-President have proposed transfers to the Social
Security and Medicare Trust Funds based on the savings achieved by paying down national debt
and reducing government interest rate payments.
The President and Vice-President have also proposed supporting the valuable objective of
promoting individual wealth accumulation, through individual accounts financed outside of
Social Security, from inside the non-Social Security and Medicare budget. This approach, then,
adds to the resources available for meeting our commitments to our retirees.
There are, to be sure, alternative approaches that would divert a portion of the Social Security tax
base itself to the creation of individual accounts. There are certainly logical arguments for such
an approach. A comparison of the rate of return for Social Security and financial assets is not one
of them. Why? Because more than 80 percent of Social Security payroll taxes are not invested at
all, but rather go to meet the needs of existing beneficiaries
This points up the other difficulty with diverting revenues from the Social Security tax base. It
robs the Trust Fund of resources that would otherwise be available to pay promised defined
benefits. Indeed, diverting 2 percentage points of the payroll tax would reduce available revenues
by approximately $1 trillion over the next ten years alone. This would lead to an excess of
benefits over tax revenues by 2005, and the total exhaustion of the Trust Fund in the early 2020s,
or within the life span of those retiring this year.
That is why many advocates of individual account proposals call for the use of general revenues.
Those who do not believe in the use of general revenues and who are not prepared to "claw

back," or recapture, a large fraction of individual account withdrawals recognize explicitly the
need for substantial cuts in defined Social Security benefits.
As a matter of fiscal policy, sufficiently large cuts in defined benefits could avert these budget
problems. But as a matter of social policy, such an approach is highly problematic. The lack of
new resources would likely force sizeable reductions in total retirement income, even including
withdrawals from individual accounts -- cuts in the region of 20 percent, by some estimates.
Moreover, the larger cuts in defined Social Security benefits that would be necessary would
expose individuals to large risks, depending on how financial markets perform in the period
preceding their retirement, and it would potentially undermine the progressivity that has been
inherent in Social Security since its inception.
VI.

Conclusion

Let me conclude where I began. We are enjoying a remarkable moment. But this is not the time
for complacency. We owe our unprecedented economic success to many factors. But this
moment of prosperity would not have been possible without the responsible policy of fiscal
discipline that we have pursued over the last seven-and-a-half years, and the broader increase in
confidence and market credibility that such discipline has helped to promote. Just as such
credibility can be won - so too can it be lost. That is why the fiscal choices that we make now
will be so consequential, as they have been at similar crucial moments in the past. Thank you.

-30-

CLIPS
Compiled in the Office of Public Affairs

lXBARGOEl)

~u.

CON'.rACT:

Z: 30 P.M.

OctOber 19, 2000
~

Office of Financing
202/691-3550

OITERS 13-WBE1C: AND 26-W£EK BILLS

The 'rreasury will auction two series of Treasury bills totaling
approx±mately $21,000 million to refund $17,803 million of public1y held
securities maturirlg Octcber 26, 2000, and to raise about $3,191 million. of new
cash.

to the pUblic holdings, FedeJ:a1 ~erve Banks for thtUr own
a.ccounts hol.d $9,58l million of the maturing bills, which may be refunded at
the lti.qheat cU.scount rate of accepted. competitive tenders. Amowlts iasued
to these accounts will be in addit:1OD to the off~iDq amount.
In

add;it;i.oD

The maturing blll.. hel.c:l by the pWUic include $5, SS3 ail.lion hel.cl
):)y i'ecle%-al Ra••3:V8 a.nk. as agents :for fore1.gD and intez:'D&ti.onal. monetary
authori'tiea, which may be refunded within the offering amount at the highest
discount:. rate of accepi:eci competitive tende:a. Addit:i.onal amounts may be
issued for such accounts if the agqzaqa.ta amoun~ of new bids Qxeeaciu t:.he
aggregate amount of maturing bills.
%'reaSU%YD:i.rect; customers requested that we r.nnvest the:i.r maturing holdings of approzimatel.y $913 million into the 13-week bill and $1,220 mill.ion
in to the 2 '-week bill..

Th.i.s offering of 'l'rea.suzy securities is gove:neci by the te:cms and conditions set forth :ion the Uniform Offering Circular for the Sa1e and. Issue of
Marketable Book-2ntry Trea.su.ry Bil.ls, Notes I and Bonds (31 en Part 356, as
amand.ed.) •
Detai~s

about:. eacl... of the new securities are given in the aet:.ached

of£er~ hi~ight:.a.

000
Attachment

LS-960
For press ,d~llSfi, speeehes, pllblit sei~tlul~ lind offiei(1l b;Dg'lIplt;~s, tall our 2l-hDu, /IIX line at (202) 622-2040

HIGHLIGHTS OF TREASURY OrFERINGS OF BILLS
TO BE ISSUED OCTOBBR 26, 2000
Oc~ober

Offering Amount ......................... $11,000 million
Description of Ofterin9:
Term and type of security ............... 91-day bill
CUSIP number ...... , , ... , , ............... 912795 &'Q 9
Auotion date ..... , . , .................... Ootober 23, 2000
Issue date ......•.............•......... OctOber 26,2000
Mat.urity date •••••....••••...•••..•••.•• January 25, 2001
Original issue date: .................. , ,JUly 27,2000
Currantly outstanding .................. ,$12,370 million
Minimum bid amount and multiples ..•..... $1,000

19, 2000

$10,000 million
182-day bill
912795 GD ,
October 23, 2000
October 26, 2000
April 26, 2001
Oatober 26, 2000

.$1,000

The following rules apply to all securities mentioned above:
Submission of Bida:
Nonoompetitive bide ...•...... Accepted in ~ull up to '1,000,000 at~. bighest discount ~at. of
acoepted competitive bids.
Competitive bids ............. (1) MUst be .xpr••••d.s a discount rate with three daai••l . ift
inorementa of .005t, e.9., 7.100t, 7.105'.
(2) Net long position tor each bidder mU8t be reported When tl• •ua
of the total bid amount, ae all discount rate., and the ~.t long
position is $1 billion or 9reater.
(3) Nat 10no position must b. detar.mined a. of one halt-hour ,zior
to the 01081n9 time for receipt of coqpetitive tender••
Maxi~um Reoognised Bid
at a Single Rat! ............. 35' of publio oftering
Maximum Award ................... 35' of publio offering

Receipt of ~.nders:
Noncompetitive tenders., ..•.. Prior to 12:00 noon ••stern daylight saving ti•• on auation day
Competitive t.nder•...•...•.. Prior to 1:00 p.m. eastern daylight saving time on auotion daJ
By charge to a funds account at a Faderal aeseeve Bank on issue date, or payma,t
of full par amount ~itb tender. rr•• sur.vDireot customers oan u •• the Pay Direct ~eatur. whioh
authorizes a oharge to their account ot reoord at their financial institution on isaue date.
Payment Terms:

NEWS
Compiled in the Office of Public Affairs

FOR IMMEDIATE RELEASE
Thursday, October 19,2000

Contact: Una Gallagher
(202) 622-2960

STATEMENT BY TREASURY SECRETARY LAWRENCE H. SUMMERS

Today, the House passed H.R. 4541, the Cornnodities Futu 'es Modernization Act of2000 by an
overwhelming majority. This legislation, if e lacted, would prcfoundly impact the American
financial system by modernizing our legal an 1 regulatory fr ill1~work of over-the-counter (OTe)
derivative transactions and markets. This Bi· i enjoys the ill Lanimous support of the President's
Working Group on Financial Markets.
It is important that this legislation be enacted promptly. It promotes innovation and the
competitiveness of the U.S. fmancial markets and may help to reduce systemic risk.

We applaud the efforts of the House in passing H.R. 4541. We look forward to continuing to
work on a bipartisan basis to achieve a consensus bill and urge the Senate to act expeditiously to
ensure this important legislation is enacted this year.

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DEPARTlVIENT

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FOR IM:MEDIA TE RELEASE
October 19, 2000

STATEMENT BY TREASURY ASSISTANT SECRETARY MICHELLE SMITH

Treasury monitors the Government Sponsored Enterprises (GSEs) on an ongoing basis
and has discussed its concerns about a variety of issues with a number of interested parties,
including the housing GSEs themselves. The measures announced today by Fannie Mae and
Freddie Mac, it fully implemented, are useful ones that have the potential to promote market
discipline and ; 1cr~ase transparency. Of course, there remains a range of issues with respect to
GSEs that wan ant continuing attention from financial authorities, the Congress and their
regulators.

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--------~.

D EPA R T 1\1 E N T

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OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960

REMARKS BY STUART E. EIZENSTAT COMMISSIONER'S
ANNUALA WARDS CEREMONY
UNITED STATES CUSTOMS SERVICE
Washington D.C.
October 20, 2000
Thank you, Commissioner Kelly. It is a privilege to join you and the men and
women of the Customs Service in honoring the recipients of this year's Commissioner's
Awards.

We are very fortunate to have Ray Kelly as Commissioner of Customs. He
has worked extremely hard to make the Customs Service stronger and more productive
than ever before. Secretary Summers and I hold him in the highest regard. I commend
Under Secretary Jim Johnson and Assistant Secretary Elisabeth Bresee for their close
collaboration with the Commissioner and Customs, and for their stewardship of the
Bureaus under their jurisdiction.

I want all of you who work for Customs to know that we at Treasury are pleased
and proud of the way you are perfonning your responsibilities. We thank you for your
dedicated service and for upholding the laws of the United States. Customs is the oldest
and largest law enforcement bureau in this country. It has some of the most difficult
assignments. I have had the opportunity to visit Customs facilities over the past year.
Each of my meetings, whether here or in the field, has increased my admiration for the
work you do. You serve with distinction and pride as the guardians of our country's
borders. You help facilitate the ever-increasing trade in goods which has been such an
important part of our economic success.
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You prevent illegal drugs and other contraband from entering our country. The
seizure of bomb-making materials and capture and arrest of a terrorist at Port Angeles in
the State of Washington the end of last year shows how the Customs Service stands on
the frontlines, protecting our nation.

The success of Operation Journey, the multinational investigation that brought
down one of the largest drug- smuggling organizations ever targeted by law enforcement
shows the way in which Customs is the leading the drug interdiction effort.

But Customs is much more than these high profile missions, important as they
are. To most Americans, and to millions of foreigners who visit our country every year,
Customs is the agency that performs border inspections. Here, too, there have been
impressive improvements in the speed, efficiency, and courtesy of the process. Go to
Miami International, LAX or JFK airports today. You will see a lot of travelers, tired
from a long, uncomfortable flight, surrounded by their baggage and often little children.
They want nothing more than to get home. Listen to the inspectors say "welcome back"
to our citizens. Watch them do their job swiftly, with patience and competence, aided by
up-to-date equipment, separating the millions of law-abiding citizens from the few who
may pose a problem. That is the face Customs shows to Americans today. and all of you
can take pride in what they see. I want to add that your response to the difficult issue of
personal search should be a source of pride to all of you, from the Commissioner on
down. You all have shown that effective law enforcement can go hand in hand with a
thoughtful response to public concerns.

I know you will continue to build on these successes. Everyone on this stage
today realizes that the lion's share of the credit for this outstanding record goes to youthe men and women who work the ports, process the cargo, assess the duties, investigate
the smuggling, and manage a huge agency with a diverse work force. The motto of
Customs is "Tradition, Honor, Service." You have demonstrated an extraordinary
commitment to these principles in your daily work.

Customs is also moving strongly into a new century. A new, national Steel
Center has been opened in Chicago to monitor steel imports. A state-of-the-art
CyberSmuggling Center has opened in Virginia to track Internet crime. A task force has
been created to combat worldwide trafficking of the synthetic drug "ecstasy." The NIPS
profiling system has been deployed to all Field Intelligence Units to spot possible
criminal activity such as money laundering in large-scale movements of currency and
commodities. These are very recent initiatives, and they owe their existence to the hard
work, careful planning and ingenuity of so many of you.

Today we recognize employees who have distinguished themselves through
exceptional perfonnance. Our honorees have, among other accomplishments, helped
shut down major smuggling operations, both inbound and outbound; preserved the
integrity of the Service by investigating sensitive allegations of corruption; developed
innovated procedures and technology to improve port operations; and even saved the life
of a hostage. They and their families can be proud of the recognition they have worked
so hard to achieve.

Only a few employees each year can receive the Commissioner's awards. But all
of you can take satisfaction in the fact that you are able to meet the Bureau's high
standards each and every working day. So on behalf of Secretary Summers and the
Treasury Department, I want to thank all of you for a job well done, and congratulate the
recipients of this year's Commissioner's awards for their outstanding work and for the
example they have set for the entire federal government. Your country is deeply grateful.

Thank you.

DEPARTMENT

~'...

THE

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lREASURY , . J)

TREASURY

NEW S

_ 178~~~"""""""""""""""""".

OmCE OF PUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960

EMBARGOED UNTIL 8:30 AM
Text as Prepared for Delivery
October 21, 2000

TREASURY UNDER SECRETARY FOR ENFORCEMENT
JAMES E. JOHNSON
REMARKS TO THE PACIFIC RIM MONEY LAUNDERING AND
FINANCIAL CRIMES CONFERENCE
VANCOUVER,CANADA

Good morning and welcome to the Pacific Rim Money Laundering and Financial Crimes
Conference. I am honored to have this opportunity to speak with you and I am grateful to all
who have worked so tirelessly to bring us together. My thanks go especially to Kim Clark,
President of the Society for the Study of Criminal Enterprise in the Pacific Rim, for hosting us.
I also extend a thank you to the Royal Canadian Mounted Police, to the Solicitor General of
Canada, to the United States Department of State, to the U.S. Customs Service and to our private
sector partners who have brought us to this beautiful city for what I know will be fruitful and
resonant discussions.
I submit to you that our gathering here is part and parcel of a much larger enterprise.
Last July, when our Treasury Secretary, Lawrence Summers, traveled to New York to address
the United Nations Economic and Social Council. he phrased it this way, " ... in the fire of
argument we can ... glean the beginnings of a new global consensus: growing areas of agreement
on how to build a truly global economy, and how to make it work for all its members." In this
post-Cold War era, at this first light of the new millennium, that is exactly what we are about building a worldwide economy that works for all - not simply integrating the wealthiest
industrialized states but successfully encompassing the poorer and less advantaged as well.
And we, who principally represent law enforcement, banking regulators and private
sector members of the financial services industry, all have a vital role to play in this work. We
have been charged with nothing less than ensuring the security and integrity of the financial
systems that support this new global economy. It is, indeed, a segment of this greater work but
its importance cannot be underestimated. Getting it right will make all the difference. If we
succeed, we can have a global economy that offers all our children better prospects for
development in an increasingly integrated world market. If we fail, the result can be a much less
LS - 965

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promising alternative, a global economy that turns an undifferentiating eye to the sources of
capital, the products of honest versus criminal labors.
Some may argue that money is nothing more than a medium of exchange, colorless and
odorless like some component of the atmosphere conducive to life but morally neutral. In the
last twenty years, we have begun to disavow that notion. We have seen criminal proceeds color
parts of our societies, painting desolate landscapes of addiction, terror and violence. Those
monies carry with them a very rank odor, repugnant to law-abiding citizens everywhere, to their
commerce and to their institutions.
While criminals have long tried to work the proceeds of their illegal acts into the
legitimate economy, money laundering as a crime in and of itself, is fairly new. Just as we are
developing in our understanding of this crime and its pernicious effects - from the financing of
criminal enterprises to undermining the integrity of our financial institutions - so too are we
developing nationally and within the community of nations, what I believe, is a more effective
and comprehensive response. Permit me to detail some key points of that response.
Just over one year ago, the United States produced its first ever National Money
Laundering Strategy. For the first time we had conceived an integrated approach to combating
money laundering, at home and around the world, through both law enforcement and banking
supervision, with government policies as well as public-private partnerships.
This year, we have updated that first strategy with a new edition that contains over sixty
separate action items involving initiatives along a broad range of fronts. It addresses U.S.
attempts to strengthen our domestic enforcement, to enhance measures taken by banks and other
financial institutions, to build stronger partnerships with our state and local governments, to
bolster international cooperation and to work with the Congress of the United States to give our
Treasury and Justice Departments critical new tools to combat international money launderers
and those foreign jurisdictions that are willing to offer them no-quest ions-asked banking
services.
Lest anyone be skeptical, let me assure you that this Strategy of ours is not simply
another government report - announced with fanfare, then shelved and soon forgotten. Each of
its action items identifies the government office, including my own, that is accountable for
implementation and for meeting the specified goals and milestones laid out for the year. Our
Deputy Secretary of the Treasury, Stuart Eizenstat, and our Deputy Attorney General, Eric
Holder, comprise the Strategy's steering committee that monitors and assesses progress. We are
very cognizant of the threat that money laundering poses both to the United States and to the rest
of the world and we are very serious about our responsibility to address it.
American law enforcement has been engaging this threat for about fifteen years now and
we have had some notable successes. You may recaIl a few years ago, we issued invitations to a
very select group to attend an exclusive party as part of the culmination of our Operation
Casablanca. The invitees were mostly narcotics traffickers and their money launderers, and, our
party that wasn't, concluded the largest, most comprehensive narcotics money laundering
investigation in the history ofV.S. law enforcement. It linked twelve of the nineteen largest

Mexican banks and their officials to the laundering of the drug profits generated by the Cali and
Juarez cartels. Coordinated by our Customs and Internal Revenue services, Operation
Casablanca identified and disrupted essential financial functions of two notorious international
criminal enterprises.
In the latter half of 1999, we achieved a breakthrough in our battle against the Black
Market Peso Exchange, probably the largest known money laundering system for drug proceeds
in the Western Hemisphere, with the seizure of over $4 million and the arrests and indictments of
dozens in the United States and Colombia. In this Internal Revenue Service investigation,
known as Operation Cash Back, U.S. computer equipment and other goods were being sold to
Colombian businesses who used discounted, drug tainted dollars to pay for these imports.
Operation Cash Back sent the distinct message that law enforcement will not tolerate businesses
giving drug traffickers and money launderers a free hand to sanitize their illicit profits.
More recently this year you have likely heard a former executive at the Bank of New
York admit her ·guilt in a conspiracy in which she and her husband ran an operation that helped
launder millions of dollars in Russian criminal proceeds. But along with each of these successes,
formidable challenges remain.
Over the years, we who work in the law enforcement community have come to the
realization that an effective response to money laundering must involve more than simply law
enforcement. As a threat to the security and integrity of our financial institutions, money
laundering deserves a system-wide response. Law enforcement, in and of itself, can only do so
much - investigating crimes and assisting prosecutors. When it comes to money laundering, the
other principal stakeholders in the financial system need to recognize and accept their
responsibilities, to see that this is not just a compartmentalized problem for law enforcement, but
a common and mutually assisted effort to make our system less vulnerable to the abuses and
depredations of criminals.
Fortunately, this wider perspective in addressing the money laundering threat is taking
hold. From banking regulators to the financial services industry to the international community
there is a growing understanding of and concern with money laundering.
In the United States, banking regulatory agencies agree that their approach to anti-money
laundering supervision needs to be risk-focused, with resources concentrated upon those
institutions that are most susceptible to money laundering. These agencies either have or are
developing procedures to address high-risk areas such as private banking, payable through
accounts and wire transfer activity. They also either have or are developing procedures to deal
with newer trends such as electronic banking and foreign correspondent accounts. A second
generation of bank examination procedures is being set forth and field-tested. Anti-money
laundering training modules, using information derived from recent cases, offer examiners new
and timely information derived from the actual experiences of regulatory as well as law
enforcement agencies.
By broadening awareness of money laundering as a threat that requires system-wide
attention and counteractions, it is not our intent to punish or impose greater burdens on our

financial services industry. Instead, we want to elicit their participation and support in this
common effort .. We recognize the need for guidance on how to identify and scrutinize activity
occurring through high-risk accounts. The U.S. Department of the Treasury is convinced that a
first step in this process is one of education so that we may develop informed guidance for our
financial institutions.
To draft such guidance, we are working directly with the financial services community.
We want to achieve a consensus as to what kinds of accounts and financial activities are most
susceptible to criminal abuse and how we might better guard against their illicit use. In the end,
we want to be able to say that we have helped our financial service providers more efficiently
deploy their own resources to look for potential money laundering. We see our partnership with
industry as a very critical component of our success here, relying on their help to make sure that
our own house is in order as we go about trying to advise and assist others around the world.
We recognize that only a small portion of the funds that move through our payment
systems each day is linked to crimes. The challenge is to concentrate on those accounts that are
most vulnerable.
We have learned that if we cast too wide a net, we risk imposing costly and unnecessary
burdens upon the financial services community. Worse, we risk infringing upon legitimate
expectations of customer privacy, a concern that must never be forgotten in our zeal to counter
criminality. We are pledged to work with our private sector partners to develop effective
mechanisms, to institute early warnings, if you will, that can avoid these risks while still
providing a secure defense against money laundering abuse.
We are confident of success in pledging to work with industry representatives because we
are certain that the vast majority of corporations desire to fulfill their duties as good corporate
citizens. From regulatory violations, to bribery, to fraud, we all know that corporate crime exists
and that it should be uncovered and punished. But we also know intuitively that it is better to
prevent a crime than to punish one. It is in the long-term self-interest of corporations to obey the
law and conduct business as responsible corporate citizens. Complying with the law often
entails costs but it is the right thing to do. And it will save the corporation substantial pain,
suffering and expense in the long term.
I mentioned earlier how we are growing in our understanding of money laundering as a
criminal threat and we are currently looking at some new areas where we feel it must be
countered. We are intensifying and expanding our efforts to increase the business community's
awareness of the Black Market Peso Exchange System so that it will be better able to discern
patterns of payments that may indicate that a company is being used to facilitate this type of
money laundering. Payments coming from strange sources or unusually large bulk cash
payments can be a cause for concern and may represent the laundering of criminally derived
funds. Employees need to be alert to telling signs and we are helping businesses recognize these
warnings. The United States Customs Service is identifying exporters manipulated by this
system in order to focus outreach and education efforts. Again, we see a business-government
partnership as a critical piece in disrupting this system and in insulating companies from
unwitting complicity.

Another area vulnerable to money laundering is the securities industry. Some of the very
products and services the industry offers - the efficient transfer of funds between accounts, the
ability to conduct international transactions, the liquidity of securities - also provide
opportunities to hide and move criminal proceeds. Our Financial Crimes Enforcement Network
(FinCEN) is consulting with securities regulators, law enforcement, self-regulatory organizations
and industry representatives to come up with an effective and practical system to detect and
report suspicio~s transactions conducted by brokers and dealers.
Finally, and by no means least importantly, this growing understanding of and concern
with the problem of money laundering is taking hold within the international community. Over a
century ago, within the United States, we learned the importance of common rules and
institutions as commerce between our states took off and America's national economy began to
come together. Throughout the ensuing years, politicians in both of our major parties came to
recognize that greater interconnectedness between our states also called for common institutions
and understandings at the national level to offset the downward pressure on local rules and
standards that competition could create.
Increasingly, that same historical imperative now needs to be recognized at a global level.
As President Clinton has noted, "A legal framework of mutual responsibility and social safety is
not destructive to the market: it is essential to its success." In this vein, the action taken by the
Financial Action Task Force (FATF) to publicly identify jurisdictions with serious deficiencies
in their anti-money laundering regimes is a necessary step forward.
When F ATF listed fifteen jurisdictions as non-cooperative in the fight against money
laundering last June, it marked a mi lestone in this international effort. That FATF listing has
focused attention on the issue and for many of those named countries, it has turned their attention
into productive 'actions to address the deficiencies that the FATF identified.
The United States welcomes these positive steps. Since the June FATF report, seven of
the fifteen countries and territories identified - the Bahamas, the Cayman Islands, the Cook
Islands, Israel, Liechtenstein, Panama and St. Vincent and the Grenadines - have taken the
concrete steps of actually enacting one or more pieces of legislation to bolster their anti-money
laundering programs. We are encouraged by these events and are pleased to see momentum for
improvement beginning to build.
In five of the remaining jurisdictions - Dominica, the Marshall Islands, the Philippines,
Russia and St. Kitts and Nevis - we note high level political commitments to undertake necessary
changes. In these cases, we anxiously await the transformation of these commitments into
effective legislation, regulation and practice.
The FATF has not entered into this exercise lightly and the removal of any jurisdiction
from this list will require a careful assessment of corrective measures taken and how effectively
they are being implemented. The recent FATF decision to proceed with a second round of
reviews as part of this non-cooperative countries and territories exercise is also appropriate. The

United States fully supports the ongoing commitment to this etTort to bring countries into
compliance with international anti-money laundering standards.
Another step forward involves the international community's consideration of the role to
be played by its international financial institutions. Because money laundering activities have
the potential to cause serious macroeconomic distortions, to misallocate resources and capital
around the world, and to increase prudential risks to a country's financial sector, with the
potential for negative externalities for the international financial system, these institutions are
well placed to encourage and support countries as they strive to counter this threat. This does not
mean that the World Bank and the International Monetary Fund should now engage in law
enforcement etTorts. It does imply, however, that within the scope of their respective mandates,
the international financial institutions can playa strong role in fighting abuse and preserving the
integrity of the international financial system.
We are gathered here in Vancouver for no small purpose. Global development and
integration is likely the greatest challenge that confronts the community of nations. It is an
immensely difficult and complex question and none of us yet has all of the answers. What is
clear, however, is that we have a vital role to play in structuring the truly global economy that
will best serve development and integration. Our tasking is ensuring the security and integrity of
its financial systems.
As we listen and contribute to the discussions that follow, I urge each of you not to be
dismissive of the importance of what we are about. Money laundering and financial crime
underwrite the often dehumanizing and bloody criminal activity that truncates development and
segregates populations. As we build a rule based global economic system, we must meet
head-on and overcome these darker sides of capital mobility. Doing what needs to be done
requires going beyond those narrow confines that, at times in the past, have segmented our
responses and diminished their etTect.
Remember what is at stake here. I encourage you to bring your thoughts and good will to
bear on this etTort. I am confident in our prospects for success. Thank you.

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FOR IMMEDIATE RELEASE
Text as Prepared for Delivery
October 23, 2000

"RESOLVING FINANCIAL CRISES IN EMERGING MARKET ECONOMIES"
TREASURY UNDERSECRETARY FOR INTERNATIONAL AFFAIRS
TIMOTHY F. GEITHNER
REMARKS BEFORE THE SECURITIES INDUSTRY ASSOCIATION AND
EMERGING MARKETS TRADERS ASSOCIATION
NEW YORK, NY

We have been through a remarkable period of change in the world of emerging market
finance.
Despite the speed and strength of the recovery that followed the recent crises in emerging
market economies, and despite the substantial investment in reforms now underway to reduce the
vulnerability of these economies to future crises, I think its fair to say that managing the
consequences of the growing integration of national economies and financial systems remains
among the defining international economic policy challenges of our time. Central to it is the task
of reducing the incidence and severity of financial crises in emerging markets.
This is a good time to take stock of the changes that have been put in place and to
consider what additional steps could be taken to help contribute to this objective. I thought it
would be useful to outline the basic principles that we believe should guide the international
community's approach to financial crises in emerging economies going forward. And in this
context, I want to outline a set of proposals to improve the process for crisis resolution, including
greater transparency in official policy to help facilitate dialogue and cooperation between the
official sector and the private sector, and between governments in crisis and their creditors.
Progress and Ilew challellges ill emergillg market /illallce

Over the past decade, we have seen a dramatic set of changes in the international
financial markets -- changes that have substantially increased the opportunities available to
emerging market economies to draw on international capital to finance growth. And yet
policymakers a~e still in the early stages of adjusting to the challenges that have accompanied
those changes.
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Among the most conspicuous of those changes are the increase in the scale of resources
available to em~rging markets, the increase in the scale and speed with which capital can move
across national borders in response to shifting perceptions of risk and opportunity, the huge
changes in the composition of financial flows to the emerging markets, the proliferation of new
instruments, the dominance of securitized forms of finance, and the spread of complex
derivatives, the increased fungibility of financial assets, the new diversity of market participants,
both borrowers and investors, the breadth of potential contagion, , the spread of sophisticated
risk management practices that can reinforce market movements in times of stress, the much
greater capacity for leverage in the system, and the general challenges that arise from the greater
disparity between the scale of financial flows that can now move into and out of domestic assets
and the relatively limited depth and breadth of some national financial markets.

It is hard to avoid the conclusion that the system was in some sense behind the curve in
developing the capacity to manage these new sources of pressure and risk. Policymakers in the
emerging markets were behind the curve, and the rest of us were as well.
We have initiated a number of changes over the past few years to help lay the basis for a
stronger, more resilient system:
•

The level of transparency and disclosure has improved substantially.

•

There has been a substantial move toward more resilient and more flexible exchange
rate regimes.

•

The degree of some types of leverage in the official and private balance sheets of
most post crisis economies has been reduced; in particular, the ratio of short term debt
to reserves is now more healthy almost everywhere.

•

There is greater consensus behind eliminating perverse incentives that encourage
certain types of leverage and behind advancing debt management practices that leave
governments less vulnerable to liquidity, exchange rate and interest rate risk.

•

We are starting to see improvements in insolvency regimes at the national level, and
limits on the scope of implicit government guarantees to the financial system that
created significant distortions in capital allocation.

•

There have been important investments in risk management systems in private.
financial institutions and in supervisory policy, both in borrowing countries and in
countries that supply capital.

•

The repair, recapitalization, and restructuring of banking systems in the emerging
markets are progressing, aided by much greater support from the international
financial institutions and regulatory bodies than existed before.

These changes will help reduce the risk of future crises, but they will not eliminate them.
So along with these investments in crisis prevention, we have supported a number of important
changes to the international community's capacity to respond to crisis
•

We have equipped the IMF with new resources and new instruments to provide rapid
large scale access in exceptional circumstances and at a premium price. And as a
complement to this, we have given the World Bank the capacity to lend in
emergencies and to offer a broader set of risk sharing instruments and guarantees to
help bridge to a return to broader capital market access.

•

And we have promoted and supported new approaches for dealing with private claims
in crises. From the rollover commitments and debt exchange by external bank
creditors in Korea to the comprehensive debt exchanges used to restructure and
reprofile bonded debt in cases with more acute financial problems, the market is
gaining experience with a variety of responses to diverse circumstances.

These recent experiences with crisis resolution involving private claims are important for
the evolution and health of the system. They are important not because they were perfect models
of cooperation -- they each provide useful examples of what probably should be avoided in the
future. Nor do they provide viable solutions to all problems. They are important because they
demonstrate different ways in which bonds can be restructured, relatively quickly, without
necessarily causing broad systemic disruption. They are important because they help focus
attention on a country's policy performance, risk profile and other factors affecting its capacity
to meet its obligations in full and on time. They are important because they help reduce the risk
that future investments would be made on the misplaced assumption that they will be protected
by official finance. And they are important because they have helped encourage useful
initiatives in the private sector for dealing with these problems in the future.
O~jectives alld Principles/or

the qfficial Sec/or

The overriding objective that should shape the official sector's approach to emerging
market finance going forward is to build a system that provides for deeper and more durable
flows of private capital to emerging market economies. This requires a strong ofllcial capacity to
act in financial crisis to promote a rapid return to growth and confidence in the diverse cases we
are likely to confront, in ways that are good for the system as a whole and do not increase the
risk of future crises. You cannot have a viable international capital market without recognition
of the importance of contract rights and the equally important recognition that there will be
circumstances where sovereigns will fall into acute distress and will be unable to meet all their
obligations on time or in full.
Our pursuit of these objectives has been, and should continue to be, shaped by a core set of
presumptions:

•

It is a crisis country's capacity to design and carry out credible economic policy that
fundamentally determines its ability to overcome financial crisis

•

The official sector's capacity to differentiate between temporary problems of
confidence and more deep.-seated economic and financial problems is essential to its
ability to catalyze positive outcomes.

•

In a world marked by large flows of private capital, private investors are necessarily
part of the solution to financial distress. Private investors should not expect to be
protected from adverse outcomes by official action.

•

The official sector should be willing and prepared to act forcefully with official
finance in exceptional circumstances when it can help catalyze outcomes that are
good for the country and good for the system. In a world of more mobile capital, the
most effective financial intervention by the official sector may, in some
circumstances, be large in relation to traditional measures of access, such as quota.

•

The most effective solutions are the most voluntary and cooperative ones that are
possible. But it is neither desirable nor feasible to take off the table the possibility
that in extreme circumstances, governments may have to run arrears or suspend
payment on a broad set of claims.

•

If a change in the terms of private financial contracts is unavoidable, the official
sector's systemic interest in well functioning markets is best served if investors have
confidence that they will have access to information, that they will have the
opportunity to engage in a constructive dialogue with the borrower on an appropriate
solution, and that their contract rights will be respected.

•

No one category of private creditors should be regarded as inherently privileged
relative to others in a similar position. Broad equity in the treatment of similarly
situated private claims is likely to be a feature of successful restructurings

In applying these objectives and presumptions to the design of programs in crisis, the
challenge is to find the right combination of policy change, official finance, and the treatment of
private claims that is appropriate to the circumstances at hand.
Flexibility is essential. To provide greater clarity and certainty about crisis response and
help shape the expectations of market participants and policymakers, the G-7 and the IMF have
outlined a set of general principles and guidelines to frame official action, while maintaining the
necessary flexibility to differentiate among cases. The actions we have taken over the past
several years in individual cases also provide a useful guide for the future. But the official sector
must preserve the capacity to design and support solutions that are appropriate to the diversity of
crises we will confront in the future. In the brief span of the last five years, we have seen a rich
mix of crises, from what looked like the classic cases of macroeconomic imbalance caused by
fiscal excess or other macroeconomic policy error, to problems of excessive leverage in the
banking and corporate sectors. These problems have occurred in countries with substantial
differences in payments capacity, in their degree of integration with the international capital
markets, in their prospects for return to market access, and in the nature of the financial claims
affected. And they have occurred at times of varying degrees of stress in the international

financial system. It is not realistic to attempt to design rules or guidelines to provide a
meaningful guide for action in circumstances this varied, much less in the uncertain future.

The national poliGy re~ponse isfimdamental. There is a popular view that many recent
crises were pure short-term liquidity crises precipitated by contagion affecting otherwise
innocent, fundamentally healthy economies. But, in fact, we have not seen a serious financial
crisis that did not have important causes in fundamental weakness in policies and institutions in
the affected country. Even where the long-term financial and economic capacity of the country
seems strong in the face of short-term financial pressure, near-term policy adjustment will be a
necessary part of a solution to restore confidence.
Officialfinance call playa catalytic role. Over the past five years, we have taken a
variety of steps to help strengthen our capacity to mobilize official finance in response to crisis.
In a world of substantially greater capital mobility, it would be both a policy mistake and not be
fully credible to foreswear the capacity to respond to exceptional crises with exceptional
financial force. And because it is critical to minimize the risk that such new financial capacity
will be misused, we have put in place progressively more difficult activation thresholds for
accessing the emergency facilities available in crisis - whether from the INlF's newly expanded
quota resources, the New Arrangements to Borrow, or supplementary bilateral resources.
Several conditions should constrain recourse to exceptional finance:
•

It must be reserved for truly exceptional circumstances, such as where there is a broader

risk to the stability of the financial system.

•

It must be employed only in circumstances when we are confident that exceptional access
is necessary to achieve the desired outcome.

•

It must be used only when we are confident of prospects of repayment, and must be
accompanied by appropriate conditions.

•

It must carry premium interest rates and shorter maturities to encourage the earliest
possible return to private markets.
It will always be difficult to find the right balance between preserving a credible financial

capacity to address exceptional risks and reducing the risk that such capacity distorts financial
decisions by governments and investors. Looking at the level, composition and price oftoday's
flows to the emerging markets, I think it is hard to find evidence that such flows are substantially
distorted by moral hazard. The probability of default on long-term emerging market debt
implied by current EMBI spreads suggests investors do not expect to be protected by official
action. In part, this is true because the markets seem to recognize that the scale of official
resources potentially available for crisis response is always likely to be limited in comparison to
the scale of potential outflows (domestic as well as foreign). In part, this is true because the
availability of official finance cannot compensate for the failure of governments to sustain
policies necessary for recovery. It should be clear that the official sector should not seek to
prevent, even if it could, a country unable to implement a credible economic policy program
from falling off the proverbial cliff.

Private creditors and investors are a necessary part of the solution. The reality of
markets today is that private creditors will necessarily be involved in financial crises in emerging
markets; they will not be and indeed cannot be insulated from the risk of losses during periods of
distress. When crises happen, the official sector and private creditors share a strong interest in
developing ways to resolve collective action problems.
•

Where official finance is effective, it will be so because it supports a set of policy reforms
that can help induce investors to stay in and can help catalyze a return of private flows.

•

In this context, it is encouraging that the private sector was able to agree in 1998 to maintain
exposures and then ultimately restructure their claims into longer dated tradeable instruments
in Korea, and in 1999, to monitor the rollover of short term claims on Brazilian banks. And it
is worth exploring the extent to which market based exchanges for bonded debt could be part
of the solution in similar circumstances in the future.

•

It is also important that borrowing countries and the markets now have a bit more experience
in managing more comprehensive restructurings of sovereign debt, including bonds, in
circumstances where the borrower does not have the resources to meet its obligations on time
or in full, and where a more substantial change in the profile of a sovereign's external debt is
necessary to create a viable financial position going forward.

It should be clear from recent experience that both the appropriate role and scale of
official finance and the nature of the contribution of private investors fundamentally depends on
a judgment about the country's position on a spectrum that ranges from cases marked by aspects
of a run to cases where the country's debt and financial structure is inconsistent with its
underlying fundamentals. It should also be clear that there are only shades of grey on this
spectrum. In the sovereign context, there are no pure cases of pure insolvency: ability to pay
depends in part on will to pay. There are almost certainly no pure cases of pure illiquidity:
countries do not encounter significant, sustained financial pressure without some underlying
economic weaknesses.
The challenge is to design ways that make it possible to achieve viable outcomes without
tilting the system in the direction of encouraging either easy recourse to the practical equivalent
of default or market structures that make it untenable for a sovereign to agree with its creditors
on a restructuring in cases where one is necessary.
There are a few basic tenets that are important to preserving the right balance between
these objectives, and minimizing inevitable tension between them. As I said earlier,
•
•

The most effective solutions are likely to be the ones that are least disruptive to
markets and the most voluntary and cooperative in nature.
Creditors are more likely remain engaged in emerging markets and cooperate if they
have confidence that they will have information in crisis situations, the opportunity to
engage in a meaningful dialogue with the borrower on an appropriate solution, and
the expectation that their contract rights will be respected.

•

No one category of private creditors should be regarded as inherently privileged
relative to others in a similar position.

There will be cases where the extent of the deterioration in a sovereign's financial
position makes dramatic action unavoidable. In such cases, a temporary period of arrears may be
unavoidable as the government works to put in place an economic reform program that could
form the basis for a broader financial solution with its creditors. It is neither desirable nor
feasible to take off the table the possibility that, in extreme circumstances, governments may
have to suspend payment on a broad class of claims.
But it would not be appropriate for the official sector to endorse, much less encourage,
the early imposition of broad payments suspensions as an attractive solution to crises. The
concept, theoretically appealing to some, of a comprehensive standstill as circuit breaker to stem
panics and contagion, applied in a world where capital is as mobile as it is today, would be more
likely to magnify panic and the resulting economic distress. In countries with strong underlying
fundamentals that are adjusting policies to restore confidence, trying to prevent investors from
adjusting positions in a rational reassessment of risk would risk turning temporary quasi liquidity
problems into deeper, more protracted problems of insolvency.
It also would be counterproductive and inappropriate for the official sector to create the
expectation that whenever IMF financial assistance is in prospect, such assistance will come with
the condition that the country imposes a financial solution on its private creditors. And we do .
not think it makes sense to seek to develop a formal capacity in the IMF to protect countries that
run into difficulty from legal action: we do not support modification of Article VIII2.b.

These approaches would severely damage the prospects of creating a more viable market
for emerging market finance and would severely damage capacity of the international
community to respond to and contain the effects of financial crises when they happen. They
would probably increase the scope and severity of crises by precipitating a broader rush for the
exits at the first sign of stress, both in the country immediately affected and the emerging
markets more broadly, reducing the prospect of achieving an efficient, stable market for the
financial assets Df emerging market economies.
Improving the process (l crisis resoliltioll

The complexity of these problems and the inherent uncertainty and rich variety of
sovereign financial crises do not relieve us of the obligation to provide as clear and predictable a
framework as possible for the process of crisis resolution.
Toward this objective, we believe the official community should adopt a series of steps to
establish:
•

a clearer framework for official action, clarifying in particular the respective roles of
the IMF and the Paris Club:

•

more transparency by the official sector in the information and analysis that is
provided to market participants: and
7

•

a system that provides more active encouragement of borrowing countries to engage
in meaningful dialogue with their private creditors and to develop more effective
means of cooperation with their creditors, before, during and after crisis.

The roles oj the IMF and the Paris Club

There is an unfortunate degree of uncertainty among market participants about the
respective roles of the Hv1F and the Paris Club in circumstances where countries run out of
resources and need to reprofile their financial obligations. It is important to note that there will
be many cases which will not involve a Paris Club restructuring, and the I1v1F program will not
need to provide appropriate balance between the expected contributions of Paris Club creditors
and private external creditors. But it is still worth clarifying their respective roles.
The basic judgments at the core of designing an appropriate response to crisis are made
by the Th1F. It is the I1v1F's job, working with the government of the country, to assess the nature
and degree of economic adjustment required, the policies that will contribute to recovery, the
prospects for restoration of market access, the debt profile that is consistent with a country's
medium-term payments capacity, and the appropriate scale of official financial assistance,
including, where relevant, the need for rescheduling by Paris Club creditors. These judgments
are central to an assessment about the scale of resources that the government should be able to
provide its creditors, official and private, and, where the resources are insufficient to pay all
obligations in full, the co.nsistency of the broad terms of any restructuring with the country's
medium term financial viability. The basic presumption underlying the aIlocation of available
financial resources between private and official bilateral creditors is that the two groups should
be paid in rough proportion to their relative shares of obligations coming due in the IMF program
period, with appropriate consideration of factor such as accumulated arrears and sustainable debt
profiles.
These judgments in turn inform the decision by the Paris Club creditors on whether and
how to reschedule their claims, and how to assess compliance with what has been the standard
practice of requesting the sovereign debtor to seek comparable treatment from its private
creditors.
It is neither the IMF's job, nor the Paris Club's, to micromanage the terms of the financial

solution a country seeks with its private creditors, nor to impose a specific form which resolution
should take. But the IMF and the Paris Club should expect that a country, when seeking
comparable treatment, will aim for the inclusion of all material classes of creditors, and engage
in meaningful dialogue with its creditors in the context of achieving a viable payments profile.
TramparellCY alld Discloslire

To help clarify the basis on which these judgments are made and applied, we believe it
would be appropriate for the IMF and the Paris Club to take the foIlowing steps:

•

As a key element in the process, the IMF should be prepared to support the national
authorities in briefing the country's creditors on its financial and economic situation,
its expected financial needs, and the policy content of the country's IMF program.

•

The .official sector should provide for prompt and systematic disclosure of the agreed
key financial terms of Paris Club reschedulings and, where comparability is required,
the financial terms of restructurings agreed with private creditors.

•

The official sector should outline in public the broad factors that will guide a
judgment about comparability going forward.

•

And the official sector should provide to the market regular and timely data about the
scale of Paris Club claims on a country, the repayment profile of those claims, and the
incidence and scale of arrears.

These steps can help provide a greater degree of confidence in markets that material
information will be disclosed more systematically to all creditors. In this context, private
initiatives to make available to borrowers and their creditors a means of communication in crises
are particularly helpful.

Communication and cooperation hetween horrowing countries and their creditors
The official community needs to find a way to encourage all countries to invest in better
mechanisms for dialogue and communication with their creditors, both in good times and bad.
This is not rocket science. There are a number of good models out there for how to do it well.
Good investor relations are obviously in the interest of a country that wants to be able to access
the markets. It should be standard practice across all emerging markets. The IMF can playa
useful role in more systematically promoting the importance of good investor relations in its
normal Article IV consultation with its members.
In crisis, it is even more important that there be better mechanisms in place for
communication and dialogue between a country and its private creditors. The official
community has to be prepared to make it clear in those circumstances that official financial
support will be conditioned on the borrowing country providing creditors with access to all
material information about its economic and financial situation, supplemented by the IMF, and
entering into a meaningful dialogue with its creditors. The form of that interaction will
necessarily vary and should not be mandated by the official sector - it is up to the creditors to
organize themselves in a way they find most effective, and it is up to the sovereign borrowers to
engage responsibly with their creditors however organized. If a critical mass of creditors decides
to form a creditor committee in order to participate cooperatively in the resolution process, it
makes sense for a government to talk to that committee. There will be circumstances when
negotiated solutions may be the most effective path to resolution, and in this situation
committees may be helpful. Other models may be more effective in many circumstances.
When a borrowing country and a critical mass of creditors are cooperating to achieve a
debt restructuring, it is in their collective interest to have the widest possible participation in the
restructuring and to minimize the extent to which a handful of creditors might seek to impede a
9

successful restructuring or to gain unfair advantage over the cooperative majority. Accordingly,
we continue to believe that wider use of contractual provisions such as majority amendment
clauses in international sovereign bonds, notably those governed by New York law, would help
facilitate crisis resolution. We are encouraged that many investors now recognize that the
voluntary use of such provisions is in their long-term interest.

Conclusion
While there is a general recognition of the constraints that make it unrealistic to replicate
for sovereigns the workout procedures that are available in our domestic markets for corporate
borrowers, it makes sense to make some modest changes at the international level to inject a
greater degree ciftransparency and predictability to how the process of crisis resolution should
work. These proposals go some distance in that direction.
But while there are constructive steps that the official sector can take, there also are limits
to what the ot1icial sector can do. What has perhaps been most striking over the past five years
is the diversity of crises we have confronted. The type of trouble that sovereigns encounter will
vary significantly - as will the appropriate responses on the part of the official sector, the private
sector and the crisis country. Yet it is hard to escape the conclusion that, given the small number
of issuers on one side of the market for emerging market sovereign debt, the way each individual
case is handled assumes greater importance than it does in a market with a larger number of
borrowers. Unfortunately, the sovereigns that get into the deepest trouble are also those least
likely to set attractive precedent. Both capacity to pay and capacity to maintain a constructive,
cooperative relationship with investors during a time of distress ultimately depend on the same
things: political will, the choices a government makes, a government's capacity to deliver. It
obviously helps if there is a government with a time horizon of longer than a week, a month or a
year. Politics matters as well as economics. Just as the ot1icial sector cannot force a country to
take a broad range of policy steps that are in its long-term interest, it cannot compel a country to
maintain the type of dialogue with its creditors that is the long-run interest of the country, and in
the interest of the system. Fundamentally, it is the government of the crisis country that must
commit to seebng to resolve its financial problems in a way that lays the basis for its long-run
return to financial health and its reintegration into global markets.

-30-

DEPARTMENT

THE

TREASURY

NEWS
Contact: Public Affairs
(202) 622-2960

FOR IMMEDIATE RELEASE
October 23,2000

MEDIA ADVISORY

Treasury Secretary Lawrence H. Summers will hold a pre G-20 press conference at 9:30
a.m. EDT on Tuesday, October 24,2000 in the Treasury Department's Diplomatic Reception
Room (Room 3311), 1500 Pennsylvania Avenu,~, N.W.
The room will be available for pre-set a 8:30 a.m.
Media without Treasury or White Hous ~ 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 also be faxed to (202)
622-2999.

-30-

LS- 967

1500 PENNSYLVANIA AVENUE, N.W.· WASHINGTON, D.C.· 20220· (202) 622-2960

DEPARTlVlENT

THE

TREASURY

NEWS
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASlllNGTON, D.C .• 20220. (202) 622-2960

FOR llvIMEDIATE RELEASE
October 24, 2000

Treasury Contact: Michelle Smith
(202) 622-2920
OMB Contact: Linda Ricci
(202) 395-7254

JOINT STATEMENT OF
LA WRENCE H. SUMMERS,
SECRETARY OF THE TREASURY,
AND
JACOB J. LEW,
DIRECTOR OF THE OFFICE OF MANAGElVIENT AND BUDGET,
ON
BUDGET RESULTS FOR FISCAL YEAR 2000
SUMMARY
The Administration today is releasing the budget results for Fiscal Year 2000 1 These results
show the actual financial totals for the fiscal year that ended September 30, 2000, as follows:
•

a unified budget surplus of $237 billion;

•

an on-budget surplus (excluding Social Security and Postal Service) of $87 billion;

•

a surplus excluding Medicare as well as Social Security and Postal Service of $58
billion;

•

total outlays of $1,788 billion;

•

total receipts of $2,025 billion; and

•

a $223 billion reduction in the debt held by the public, bringing the debt down to
under 35 percent ofGDP from its peak of nearly 50 percent ofGDP in 1993.
(MORE)

LS-968

1The September 2000 Monthly Treasury Statement of Receipts and Outlays of the United States Government
containing these results can be found on the Financial Management Service website at: www,rms.treas.gov

Far press releases, speeches, public schedules and official biographies, call our 24~our fax line at (202) 622-204-0
·U.S. Government Pnntlnq Office 1998 - 619-559

Table 1. TOTAL OUTLAYS, RECEIPTS AND SURPLUS
(in billions of dollars)

Outlays Receipts

Unified

Surplus
Excluding
Soc. Sec. * Soc. Sec. *

1999 Actual ............... 1,702.9

1,827.3

124.4

0.7

123.7

2000:
February Budget Estimate
1,789.6
Mid-Session Review Estimate . 1,801.6
Actual .................. 1,788.0

1,956.3
2,013.1
2,025.0

166.7
211.5
237.0

18.9
63.3
87.2

147.8
148.2
149.8

NOTE: Detail may not add to totals due to rounding.
*Social Security and Postal Service
SURPLUS
The unified surplus in FY 2000 was $237.0 billion, the largt st ever, in nominal terms and
almost twice as large as in FY 1999. Relative to the size 0 . the Gross Domestic Product
(GDP), this year's surplus at 2.4 percent was the largest sin.::e 1948. This is the first time
there have been three consecutive years of surpluses since 1947-49. Excluding Social
Security and the Postal Service, the on-budget surplus of $87.2 billion was the largest ever
and the first back-to-back annual surplus since 1956-57. Excluding Medicare as well as
Social Security and the Postal Service, the surplus was $57.5 billion. This is the first such
surplus since Medicare began operations in 1966.
This is the eighth consecutive year of improvement in the Federal budget position since the
deficit peaked at $290.4 billion (4.7 percent of GDP) in FY 1992. This is the longest series
of annual improvements in budget outcomes in the history of the United States. Since 1992,
thanks to strong economic growth and a policy of fiscal discipline, outlays have grown at an
average annual rate of only 3.3 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 of 8.0 percent per
year (slightly faster than the 6.4 percent average from 1980 through 1992). Moreover,
federal spending relative to GD P has declined for eight consecutive years under this
Administration, and in FY 2000 was the lowest since 1966. Spending has been reduced from
22.2 percent ofGDP in FY 1992 to 18.2 percent ofGDP in FY 2000.
The change from the Mid-Session Review (MSR) surplus estimate reflects:
a $13.6 billion decrease in outlays; and
an $11.9 billion increase in receipts.

DEBT HELD BY THE PUBLIC

As a result of the unified surpluses over the last three fiscal years, the debt held by the public
was reduced by $362.5 billion, or 9.6 percent - the largest 3-year dollar reduction in history to bring the total debt held by the public down to $3,410.3 billion at the end of FY 2000
(reductions include: $51.2 billion in FY 1998, $88.7 billion in FY 1999, and $222.6 billion in
FY 2000). Relative to GDP, the debt held by the public has declined for seven consecutive
fiscal years - down from 49.5 percent in 1993 to 34.8 percent in FY 2000 - and is now at its
lowest percentage since FY 1984. This string of seven consecutive years of declining debt
relative to GDP is the longest since the period ending in 1967. Moreover, it represents the
largest seven-year reduction in the debt ratio since the period ending in 1958, and reverses
about three-fifths of the rise of the preceding 12 years.

OUTLAYS
Total outlays for FY 2000 were $1,788.0 billion, $13.6 billion lower than the MSR estimate.
The major outl, y changes since the MSR are described below. Table 2 displays actual outlays
as well as estin ate3 from the February Budget and the MSR by agency and major program.
Department of Defense - Military. Actual outlays for the Department of Defense - Military
were $281.2 billion, $3.8 billion higher than the MSR estimate. The difference was primarily
due to increased fuel prices and faster-than-expected execution of procurement programs
Department of Education. Actual outlays for the Department of Education were $33.3
billion, $1.7 billion below the MSR estimate. The major outlay changes were due to lowerthan-anticipated eligibility for student grant aid, slower- than-anticipated spending in special
education, and lower-than-anticipated recipient draw-downs on other grants.
Department of Health and Human Services (HHS). Actual outlays for the Department of
Health and Human Services were $382.6 billion, $7.4 billion below the MSR estimate.
Outlays for Medicare (excluding premiums) were $219.0 billion, $7.0 billion above last year,
but $6.5 billion below the estimate in the MSR Over half of the change from the MSR was
due to an error in the Mid-Session assumptions about the number of managed care payments
in FY 2000 and FY 2001; $3.4 billion of payments that the MSR assumed would be made in
FY 2000 in fact were made at the beginning of FY 2001. The remaining difference was due
to lower-than-expected payments to skilled nursing facilities (SNFs) and inpatient hospitals.
Inpatient hospital spending was lower than anticipated because of the reductions in the
intensity of inpatient hospital cases during FY 2000. The Department and HeF A's efforts
to combat Medicare fraud and abuse also contributed to the decline. Outlays for Medicaid
were $1.0 billion above the estimate in the MSR, generally due to State payment increases
to providers through the upper payment limit (UPL) mechanism. The Administration has
published a Notice of Proposed Rulemaking to curb these payment practices. Outlays for a
number of other HHS programs fell short of the MSR estimates.
3

Department of Housing and Urban Development. Actual outlays for the Department of
Housing and Urban Development were $30.8 billion, $1.3 billion below the MSR estimate.
About half of this difference was due to the timing of rental subsidy payments. Payments
anticipated for the end of fiscal year 2000 did not take place until the beginning of 200 1. The
remaining difference is due to lower-than-anticipated spending for restructuring FHA insured
multi-family mortgages, for public housing capital investments, and for FHA administrative
contract expenses.
Department of Labor. Actual outlays for the Department of Labor were $31.4 billion, $1. 9
billion below the MSR estimate. Outlays for Training and Employment Services were $1 . I
billion below the Mid-Session estimate, due in part to lower-than-expected spending as States
implemented the requirements of the Workforce Investment Act. Outlays for the
Unemployment Trust Fund were $0.6 billion below the Mid-Session estimate, because the
number of people who received benefits and the average weekly benefits were slightly less
than anticipated.
Department of State. Actual outlays for the Department of State were $6.8 billion, $1.6
billion below the MSR estimate. The difference was largely due to a slower-than expected
spend-out of funds for embassy security upgrades and construction. Failure t) enact a
supplemental request for the Contributions to International Peacekeeping, and de ays in the
ability to make contributions to certain peacekeeping programs due to payment restrictions,
account for most of the remaining difference.
Department of Treasury. Actual outlays for the Department of Treasury were $390.8 billion,
$2.0 billion below the MSR estimate. The difference was largely due to higher-thanestimated offsetting receipts (the largest portion of which is the interest received from credit
financing accounts), which were $2.1 billion higher than the MSR estimate.
International Assistance Programs. Actual outlays for International Assistance Programs
were $12.1 billion, $1.6 billion higher than the MSR estimate. Outlays for international
monetary programs were $1. 1 billion. By contrast, due to uncertainties in projecting the
future value of the market basket of currencies in the financial programs, the outlays for these
programs in the Budget and MSR, by convention, are projected to be zero. In addition,
outlays for Foreign Military Financing were $0.9 billion above the MSR estimates, because
of higher outlays to Israel and Egypt. These increases were partly offset by lower-thananticipated outlays for other international assistance programs.

RECEIPTS
Total receipts for FY 2000 were $2,025.0 billion, $11.9 billion higher than the MSR estimate.
Higher-than-expected collections of individual income taxes, corporation income taxes, and
social insurance and retirement receipts were only partially offset by lower-than-expected
collections of other sources of receipts. Table 3 displays actual receipts and estimates from
the Budget and MSR by source.
Individual income taxes were $1,004.5 billion, $5.6 billion higher than the MSR estimate.
Higher-than-estimated payments of non-withheld taxes and lower-than-estimated refunds
were partially offset by unanticipated prior-year accounting adjustments between individual
income tax receipts and the receipts of the Medicare and Social Security trust funds. These
adjustments reduced individual income taxes by $3.5 billion and increased receipts to the
Social Security and Medicare trust funds by the same amount.
Corporation income taxes were $2073 billion, $4.6 billion higher than the MSR estimate.
Higher-than-anticipated payments a ld bwer-than-anticipated refunds account for the increase
in this source of receipts.
Social insurance and retirement rec ~ipts were $652.9 billion, $4.2 billion higher than the MSR
estimate. Unanticipated prior-year adjustments between individual income taxes and the
receipts of the Medicare and Social Security trust funds account for most of the increase in
this source of receipts.
Other sources of receipts, primarily excise taxes and estate and gift taxes, were lower than
estimated by a net of $2.4 billion.

Table 2.--2000 BUDGET OUTLAYS BY AGENCY
(fiscal years; in millions of dollars)

1999
Actual

2000
Estimate
Budget Mid-Session

Actual

Change, 2000 Actual from:
Budget Mid-Session

Outlays 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
Rural Utilities Service. ..........
. .......... . ............ .
Food and Nutrition Service:
Food stamps ...
OtheL ....... .
Forest Service ..
OtheL....
. .......... .
Subtotal, Agriculture
Commerce ..... .
Defense-Military ...
Education:
Office of Elementary and Secondary Education
Office of Special Education and Rehabilitative Services ...
Office of Postsecondary Education ..
Office of Student Financial Assistance.
OtheL.
. ................ .
Subtotal, Education ..
Energy
Atomic energy defense activities ...
Other ..... ...... ...
. ......... .
Subtotal, Energy ..

2,612
3,793

3,197
4,378

2,913
4,087

-284
-291

19,223
285

27,660
937

32,411
937

32,265
1,088

4,605
151

-146
151

1,731
951
-646

2,000
1,493
-2,890

2,085
1,493
-2,890

2,341
925
-1,855

341
-568
1,035

256
-568
1,035

19,005
13,210
3,423
5,657
62,839

19,727
13,802
3,357
5,010
71,096

18,979
13,836
3,357
5,130
75,338

18,295
13,537
3,978
5,153
75,728

-1,432
-265
621
143
4,632

-684
-299
621
23
390

5,036
261,379

8,134
277,476

8,095
277,476

7,931
281,233

-203
3,757

-164
3,757

10,908
7,292
1,032
10,676
2,529
32,435

13,281
8,412
1,642
9,935
3,174
36,444

13,281
8,412
1,642
8,518
3,173
35,026

13,265
7,839
1,258
8,175
2,772
33,308

-16
-573
-384
-1,760
-402
-3,136

-16
-573
-384
-343
-401
-1,718

11,996
4,058
16,054

11,775
3,494
15,269

11,775
3,500
15,275

12,032
2,978
15,010

257
-516
-259

257
-522
-265

Table 2.--2000 BUDGET OUTLAYS BY AGENCY
(fiscal years; in millions of dollars)

1999
Actual
Health and Human Services:
Medicare (gross outlays) .................................................
Medicaid ........................................................................................
State children's health insurance fund.
. . . . . . . . . . . . , .... , ........
Public Health Service ....................................................................
Temporary assistance for needy families and payments to States for
child support enforcement and family support programs ................
Other Administration for Children and Families ..............................
Other.
.................. , ..................... -Subtotal, Health and Human Services ..............................
Housing and Urban Development:
Public and Indian Housing Programs ..
............
Other .....
.............
Subtotal, Housing and Urban Development
Interior ..
" . , . , ...............
.........................
Justice ...
Labor:
.. .............
Training and employment services
Unemployment trust fund ..
. . .. .., ...
Pension Benefit Guaranty Corporation.
.............
. ........... . .
Other ..
Subtotal, Labor.
_

State
Administration of Foreign Affairs
Other.
Subtotal, State ..
Transportation
Federal Highway Administration
Federal Transit Administration ....
Federal Aviation Administration ....
Other.
Subtotal, Transportation.

.. " .. , .........

. . . . . . . . . . . .. - .

2000
Estimate
Budget Mid-Session

Actual

Change, 2000 Actual from:
Budqet Mid-Session

212,019
108,043
565
25,554

224,270
116,117
1,300
28,786

225,502
116,894
1,341
28,886

219,024
117,921
1,220
28,281

-5,246
1,804
-80
-505

-6,478
1,027
-121
-605

16,918
17,579
-20,977
359,700

18,049
19,044
-20,227
387,339

18,653
19,262
-20,488
390,050

18,370
19,049
-21,237
382,627

321
5
-1,010
-4,712

-283
-213
-749
-7,423

22,842
9,894
32,736

23,854
6,222
30,076

24,883
7,294
32,177

23,831
6,998
30,830

-23
776
754

-1,052
-296
-1,347

7,814
18,318

8,397
18,536

8,385
19,935

8,036
19,561

-361
1,025

-349
-374

4,675
24,870
-665
3,579
32,459

fi369
25,250
-1,124
4,491
33,986

5,381
24,799
-1,184
4,211
33,207

4,282
24,149
-1,144
4.068
31,354

-1,087
-1,101
-20
-423
-2,632

-1,099
-650
40
-143
-1,853

4,163
2,300
6,463

5,235
3,167
8,402

5,481
2,921
8,402

4,093
2,756
6,849

-1,142
-411
-1,553

-1,388
-165
-1,553

22,973
4,259
9,507
5,097
41,836

25,713
4,559
9,748
5,905
45,925

25,713
4,559
9,816
5,893
45,981

25,208
5,330
9,561
5,931
46,030

-505
771
-187
26
105

-505
771
-255
38
49

Table 2.--2000 BUDGET OUTLAYS BY AGENCY
(fiscal years; in millions of dollars)

1999
Actual
Treasury:
Exchange Stabilization Fund ......................................................... .
Interest on the debt·.
IRS:
Earned income tax credit.. .................................................... .
Other ........................................................................................ .
Offsetting receipts ..... .
Other......................
................................................................. .
SUbtotal, Treasury ................................................................ .
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 ....
I nternational monetary programs ..
rnh~......

.......... .

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).

2000
Lw';" ,ate
Blirlaet Mid-Session

Actual

Change, 2000 Actual from:
Budget Mid-Session

-1,385
353,511

-1,454
359,045

-1,454
362,067

-1,160
362,118

294
3,073

294
51

25,632
11,455
-16,775
14,265
386,703

25,676
12,252
-18,569
11,462
388,412

26,593
11,520
-18,760
12,894
392,860

26,099
11,887
-20,837
12,705
390,813

423
-365
-2,268
1,243
2,401

-494
367
-2,077
-189
-2,047

18,250
24,919
43,169
4,186
32,008
6,752
416
4,040
-46

18,833
27,890
46,723
4,498
33,008
7,040
267
3,198
525

18,833
27,872
46,705
4,491
33,008
7,040
267
3,373
521

19,664
27,423
47,087
4,334
32,861
7,236
284
3,168
25

831
-467
364
-164
-147
196
17
-30
-500

831
-449
382
-157
-147
196
17
-205
-496

3,356
2,349
-300
2,337
1,857
533
-146
75
10,061

2,949
2,358
277
2,824
1,920
8
16
146
10,498

2,949
2,371
277
2,828
1,920
8
16
146
10,515

3,895
2,463
175
2,622
1,759
-283
1,120
331
12,083

946
105
-102
-202
-161
-291
1,104
185
1,585

946
92
-102
-206
-161
-291
1,104
185
1,568

13,665
3,285
47,515
58

13,447
3,596
49,352
107

13,447
3,596
49,352
-408

13,442
3,487
48,660
-422

-5
-109
-692
-529

-5
-109
-692
-14

337,916

350,982

354,075

353,427

2,445

-648

Table 2.--2000 BUDGET OUTLAYS BY AGENCY
(fiscal years; in millions of dollars)

Disability insurance (off-budget) ................................................... .
Supplemental security income program
Other:
On-budget...............
...... ............... .................. .
Off-budget. ........................................................................ .
Subtotal, Social Security Administration .......................... ..
Other independent agencies
District of Columbia ................. .
Export-Import Bank ..
Federal Communications Commission:
Universal service fund ..
Spectrum auction subsidies ..
Other ....................... " ................................. .
Subtotal, Federal Communications Commission.
Federal Deposit Insurance Corporation
Bank insurance fund .......
Savings association insurance fund ..
FSLlC resolution fund (including RTC) ..
Other FDIC........
..................... .
Su btotal, Federal Deposit Insurance Corporation ........ .
National Credit Union Administration ..
Postal Service:
On-budget. ...... .
Off-budget. .
Subtotal, Postal Service
Railroad Retirement Board ..
Securities and Exchange Commission ..
Tennessee Valley Authority ..
Other (net) ....
Subtotal, other independent agencies ..
Allowances .....
Undistributed offsetting receipts:
Employer share, employee retirement (on-budget) ....
Employer share, employee retirement (off-budget).
Interest received by on-budget trust funds.
I nterest received by off-budget trust funds ..
Rents and royalties on the Outer Continental Shelf lands ..
Sale of major assets ...

1999
Actual
52,142
30,673

2000
Estimate
Budget Mid-Session
55,657
55,629
33,853
33,582

Actual
56,046
33,408

Change, 2000 Actual from:
Budget Mid-Session
389
417
-445
-174

9,905
-10,845
419,790

10,665
-11,692
439,465

12,263
-13,290
442,259

12,233
-13,304
441,810

1,568
-1,612
2,345

-30
-14
-449

-2,690
-159

675
-575

675
-600

585
-743

-90
-168

-90
-143

3,293
1,369
-21
4,641

5,757
-1,779
20
3,998

4,396
-1,779
143
2,760

4,073
-1,822
121
2,372

-1,684
-43
101
-1,626

-323
-43
-22
-388

-1,035
-435
-3,583
28
-5,025
-261

165
-340
-906
34
-1,047
-326

-568
-418
-1,902
34
-2,854
-326

-909
-563
-1,396
30
-2,837
-203

-1,074
-223
-490

-341
-145
506
-4
17
123

29
1,021
1,050
4,830
-255
2
4,810
6,943

100
1,498
1,598
4,977
-264

100
2,029
2,128
4,992
-506
-307
5,044
10,526

-4
-1,790
123

531
530
15
-242
-1
-227
-3,475
-843

442
441
15
-84
-1
-235
-344
-843

14,001
843

100
1,587
1,687
4,977
-422
-306
5,279
10,870
843

-28,209
-7,385
-66,563
-52,071
-3,098

-29,575
-7,860
-71,356
-59,656
-3,550

-30,633
-7,892
-69,518
-60,083
-4,065

-30,214
-7,637
-69,115
-59,796
-4,580

-639
223
2,241
-140
-1,030

419
255
403
287
-515

--"'}Uv

5 271

Table 2.--2000 BUDGET OUTLAYS BY AGENCY
(fiscal years; in millions of dollars)

Disability insurance (off-budget) ................................................... .
Supplemental security income program............. .... .... .
Other:
On-budget.............. ............. ..............
. .......... .
Off-budget............ .....
................... .
Subtotal, Social Security Administration .... .
Other independent agencies:
District of Columbia ..... .
Export-Import Bank..
........... .
Federal Communications Commission:
Universal service fund ..
Spectrum auction subsidies ..
Other ............... .
Subtotal, Federal Communications Commission ..
Federal Deposit Insurance Corporation:
Bank insurance fund ...... .
Savings association insurance fund.
FSLlC resolution fund (including RTC) ..
Other FDiC ........... .
Subtotal, Federal Deposit Insurance Corporation ...
National Credit Union Administration
Postal Service:
On-budget ....
Off-budget.
Subtotal, Postal Service.
Railroad Retirement Board ....
Securities and Exchange Commission.
Tennessee Valley Authority.
Other (net) ...... .
Subtotal, other independent agencies.
Allowances ....
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 ..

1999
Actual
52,142
30,673

2000
Estimate
Budget Mid-Session
55,657
55,629
33,853
33,582

Actual
56,046
33,408

Change, 2000 Actual from:
Budget Mid-Session
389
417
-445
-174

9,905
-10,845
419,790

10,665
-11,692
439,465

12,263
-13,290
442,259

12,233
-13,304
441,810

1,568
-1,612
2,345

-30
-14
-449

-2,690
-159

675
-575

675
-600

585
-743

-90
-168

-90
-143

3,293
1,369
-21
4,641

5,757
-1,779
20
3,998

4,396
-1,779
143
2,760

4,073
-1,822
121
2,372

-1,684
-43
101
-1,626

-323
-43
-22
-388

-1,035
-435
-3,583
28
-5,025
-261

165
-340
-906
34
-1,047
-326

-568
-418
-1,902
34
-2,854
-326

-909
-563
-1,396
30
-2,837
-203

-1,074
-223
-490
-4
-1,790
123

-341
-145
506
-4
17
123

29
1,021
1,050
4,830
-255
2
4,810
6,943

100
1,498
1,598
4,977
-264

100
2,029
2,128
4,992
-506
-307
5,044
10,526

5271
14,001
843

100
1,587
1,687
4,977
-422
-306
5.279
10,870
843

-28,209
-7,385
-66,563
-52,071
-3,098

-29,575
-7,860
-71,356
-59,656
-3,550

-vUV

531
530
15
-242
-1
-227
-3,475
-843

442
441
15
-84
-1
-235
-344
-843

-30,633
-7,892
-69,518
-60,083
-4,065

-30,214
-7,637
-69,115
-59,796
-4,580

-639
223
2,241
-140
-1,030

419
255
403
287
-515

Table 2.--2000 BUDGET OUTLAYS BY AGENCY
(fiscal years; in millions of dollars)

1999
Actual
-1,753

2000
Estimate
Budget Mid-Session
-500
-2,076
-1,352
0
-174,043
-174,073

Actual
-150
-1,352
-172,844

Change, 2000 Actual from:
Budget Mid-Session
350
1,926
-1,352
Q
1,229
1,199

Spectrum auction receipts ............................................................. .
Outer Continental shelf receipts escrow interest and other. ... .
Subtotal, undistributed offsetting receipts...... ...... . ................ .

-159,080

Total, Outlays ................................................................................. .
On-budget. ................................................................................ .
Off-budget. ................................................................................. .

1,702,942
1,382,164
320,778

1,789,562
1,460,633
328929

1,801,618
1,471,592
330,026

1,788,045
1,457,280
330,765

-1,517
-3,353
1,836

-13,573
-14,312
739

124,360
670
123,691

166,690
18,856
147,834

211,487
63,286
148,201

236,993
87,175
149,818

70,303
68,319
1,984

25,506
23,889
1,617

Deficit (-) / Surplus (+) .
On-budget. ..... .
Off-budget. ................. .
NOTE: Detail may not add to totals or changes due to rounding.

*Interest on the debt includes interest payments to the public as well
as interest paid to trust funds and other government accounts.
Outlays for net interest (see table 9 of the Monthly Treasury
Statement), which are net of intragovernmental payments to trust
funds and include other interest transactions with the public, were
$222.8 billion in FY 2000, $0.1 billion above the MSR estimate
($222.7 billion) and $6.9 billion below FY 1999 ($229.7 billion).

:.1

Table 3.--2000 BUDGET RECEIPTS BY SOURCE

(fiscal years; in millions of dollars)

1999
Actual

2000
Estimate
Budget Mid-Session

Actual

Change, 2000 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 ..
......................
Excise taxes.
........... .
Estate and gift taxes.
. ...............
Customs duties ...................
. ..............
Miscellaneous receipts ...
Total, Receipts.
On-budget .................
Off-budget ...........

NOTE

................
.

..............

. ...............

Detail may not add to totals or changes due to rounding.

879,480
184,680

951,586
192,395

998,867
202,692

1,004,461
207,288

52,875
14,893

5,594
4,596

136,411
444,468
580,880
26,480
4,472
611,832

140,775
476,763
617,538
28,188
4,295
650,021

138,619
478,227
616,846
27,188
4,666
648,700

139,865
480,583
620,447
27,641
4,763
652,851

-910
3,820
2,909
-548
468
2,830

1,246
2,356
3,601
453
97
4,151

70,412
27,782
18,336
34,781
1,827,302
1,382,834
444,468

68,384
30,486
20,875
42,505
1,956,252
1,479,489
476,763

70,055
30,081
19,621
43,089
2,013,105
1,534,878
478,227

68,866
29,010
19,913
42,647
2,025,038
1,544,455
480,583

482
-1,476
-962
142
68,786
64,966
3,820

-1,189
-1,071
292
-442
11,933
9,577
2,356

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 23, 2000

CONTACT:

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF I3-WEEK BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:

91-Day Bill
October 26, 2000
January 25, 2001
912795FQ9
6.160%

High Rate:

Investment Rate 1/:

6.344%

Price:

98.443

All noncompetitive and successful competitive bidders were awarded
securities at the high rate.
Tendecs at the high discount rate were
allotted 91%. All tenders at lOWE r rates were accepted in full.
AMOUNTS TENDERED iND ACCEPTED (in thousands)
Tender Type

Tendered

Competitive
Noncompetitive

PUBLIC SUBTOTAL

22,654,332
1,292,505

8,422,332
1,292,505

23,946,837
1,300,000

1,300,000

25,246,837

11,014,837

4,937,616

Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
TOTAL

Accepted

30,184,453

15,952,453

Median rate
6.150%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
6.100%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-cover Ratio

= 23,946,837 / 9,714,837 = 2.46

1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $1,009,258,000

http://www.publicdebt.treas.gov

LS-969

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 23, 2000

CONTACT:

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:

182 -Day Bill
October 26, 2000
April 26, 2001
912795GD7

High Rate:

6.050%

Investment Rate 1/:

6.328%

Price:

96.941

All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted 48%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tendered

Tender Type
Competitive
Noncompetitive

15,422,215
1,592,871

3,420,000

20,435,086

10,002,086

4,643,230

Foreign Official Refunded
SUBTOTAL

4,989,215
1,592,871
6,582,086 2/

17,015,086

PUBLIC SUBTOTAL

Federal Reserve
Foreign Official Add-On
TOTAL

Accepted

o
$

25,078,316

14,645,316

Median rate
6.035%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
5.950%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

= 17,015,086 / 6,582,086 = 2.59

1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $1,294,821,000

htip:llwww.publicdebt.treas.gov

L5-970

DEPARTMENT

THE

TREASURY

NEWS
OFFlCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960

EMBARGO TIME TO BE SET AT PRESS CONFERENCE
Text as Prepared for Delivery
October 24, 2000

STATEMENT BY TREASURY SECRETARY LAWRENCE H. SUMMERS
AT THE PRE-G-20 PRESS CONFERENCE

Today, I will travel to Montreal, Canada for the second meeting of G-20 Finance
Ministers and Ce~1tral Bank Governors.
The mee1 ng will take place in the context of a favorable global econc mic outlook. But
as always when <imes are good, we must guard against complacency<
In the United States, this continues to be a period of remarkable economic performance.
What is crucial is that we not take our good fortune for granted, especially in the choices that we
make with respect to the nationts budget. This moment of prosperity would not have been
possible without the responsible policy of fiscal discipline that we have pursued over the last
seven-and-a-half years, and the broader increase in confidence and market credibility that such
discipline has helped to promote.
We recognize that just as such credibility can be won, so too can it be lost. That is why it
is so important to plan prudently, by continuing to pay down the debt, by avoiding large-scale
and excessive tax cuts, and by preparing our government and our nation for the aging of our
population.
More broadly as one looks around the global economy, there are indeed signs of stronger
growth and greater stability. Emerging market economies have seen recovery take hold and have
taken important steps to reduce their vulnerabilities. But further progress is needed, including on
fmancial sector restructuring and other reforms.
The G-20 meeting tomorrow marks just the second occasion that Ministers and
Governors of this important new group will come together. The group is truly global- including
representatives from all regions, from emerging market economies as well as industrialized
countries. It thus offers a unique opportunity to discuss informally key, cross-cutting issues
affecting the global economy.
LS - 971

lSOO PENNSYLVANIA AVENUE, N.W. a WASHINGTON, D.C.· 20220· (202) 622-2960

In Montreal, we will take the opportunity to address issues of global economic integration
and ways to reduce vulnerability to financial crisis.
I.

Globalization.

Every member of the G20 recognize that economic integration - in the opportunities that
it creates, and the closer ties between nations that it promotes - holds out enormous potential for
improving the lives of the world's people through increased access to goods, services, and ideas.
But we equally recognize that globalization needs to proceed in a constructive way, and that
there need to be institutions and policies that guard against its risks. These include:

II.

•

International financial institutions that are transparent, accountable, and effective in a
world where cross-border capital flows are overwhelmingly private;

•

Increased provision of global public goods in areas such as the environment and
infectious disease;

•

Easing integration of h avily indebted poor countries into the global economy by offering
debt relief under the en lanced HIPe Initiative to countries serious about undertaking
economic reform;

•

And strengthened efforts to combat financial abuse, including money laundering and
corruption.
Reducing Vulnerability to Crisis.

We will also discuss key steps that individual countries can take to reduce their own
vulnerability to crisis.
In the wake of the financial crises in Asia and elsewhere, countries are already moving to
implement safer policies, with demonstrable results. The ratio of external debt to foreign
reserves has more than halved since 1996 in countries that have experienced liquidity crises.
Short-term debt as a share of total external debt, among the same group of countries, has fallen
from 34 percent in 1996 to 18 percent in 1999. And some fourteen countries have moved away
from unstable pegged exchange rate systems.
In Montreal, we hope to deepen the consensus on policies that can reduce vulnerability,
and the commitment to pursue them. This includes prudent liability management by both the
public and the private sectors, and the implementation of international standards and codes in the
development of stronger national financial systems. We expect that a particular focus will also be
the choice of sustainable and sound exchange rate regimes in the emerging market economies.

Countries' choices of exchange rate regimes are centrally important to their own stability,
as well as that of the system as a whole. And some approaches, such as a fixed but adjustable
regime, have now shown themselves to be particularly susceptible to speculative attack - and
thus to raise significantly a country's vulnerability to financial crisis. Nonetheless, this remains a
controversial issue, and it will likely be debated for some time to come.
We also expect to address the issue of involving the private sector in resolving financial
crises, which Under Secretary Geithner addressed at greater length in New York yesterday. As
he noted, we believe that it remains important to preserve flexibility to respond to different
circumstances but think that there are sensible ways to provide creditors, investors and debtors
with greater predictability.

-30-

DEPARTlVIENT

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OFFICE OF PUBliC AFFAIRS -15M PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 _ (202) 622-2960

u.s. International Reserve Position 10/25/00
The Treasury Department today released U.S. reserve assets data for the week ending October 20,2000.
As indicated in this table, U.S. reserve assets totaled 565,349 million as of October 20, 2000, down from
$65,881 million as of October 13,2000.
(in US millions)
LOfficial:U~S;;, Reseore:Assets

(';)(:to b!r: 13;: 2000
65,881

rt11rAL.

):~goreign:Currency, Reserves 1
:a~Securities
':Ofl~bich, is. uerhi3adquarlefedilff'Ct/ie;.UiS,;

E9ro"

Yen

Octobet2Q{' 2000
65,349

TOTAt:

~~~--------~-------

4,943

7,813

. ,; Et,lfO .

12,756

4,848

. :Yen

l:C1TAL

7,716

12,564

bt,Totaf''dep ~sitiiwith=

"b£ OthercJ,mti~l'banks;andB/S~';

8,422

9,696

18,117

8,264

9,574

17,838

',p,;i;EIanks,'leadquarreced1n tli~{;J~S;

'.; "~' b'jt:~Of:which~' bar:ii<s:loCared\~6roail:~~

!4~~:~~·:~~~lt::~~~~~:!:~:i~~!~~~~~

4:. GblaStock :i'
5i,OttTerReserve~ssets.

13,673

13,639

10,288

10,262

11,046

1/ Includes holdings of the Treasury's Exchange Stabilization Fund (ESF) and the Federal Reserve's System Open Market Account
(SOMA), valued at current market exchange rates. Foreign currency holdings listed as securities reflect marked-Io-market values, and
deposits reflect CClrrying values.
21 The items, "2. IMF Reserve Position" and "3. Special Drawing Rights (SDRs)," are based on data provided by the IMF and are valued in
dollar terms at the official SDRldoilar exchange rate for the reporting date, The IMF data for October 13 are final. The enlries in the table
above for OctOber 20 (shown in italics) reflect any necessary adjustments, including revaluation, by the U.S. Treasury to the prior week's IMF
data.

31 Gold stock is valued monthly at $42.2222 per fine troy ounce. Values shown are as of August 31, 2000. The July 31,2000 value was
$11,046 million.

LS-972

u.s. International Reserve Position (cont'd)
II. Predetermined Short-Term Drains on Foreign Currency Assets
October 13.2000
1. Foreign currency loans and securities

October 20. 2000

o
o
o

2. Aggregate short and long positions in forwards and
futures in foreign currencies vis-a-vis the U.S. dollar:
2.a. Short positions
2.b. Long positions
3. Other

III. Contingent Short-Term Net Drains on Foreign Currency Assets
October 20, 2000

October 13, 2000
1. Contingent liabilities in foreign currency

o
o

1.a. Collateral guarantees on debt due within 1 year
1.b. Other contingent liabilities
2. Foreign currency securities with embedded options
3. Undrawn, unconditional credit lines
3.a. With other central banks
3.b. With banks and other financial lstit'ltions
headquartered in the U.S.

3.e. With banks and other financial 1stitutions
headquartered outside the U. 5

14. Aggregate short and long positions of options in foreign
currencies vis-a-vis the U.S. dollar
4.a. Short positions
4.a.1. Bought puts
4.a.2. Written calls
4.b. Long positions
4.b.1. Bought calls
4.b.2. Written puts

D EPA R T :\1 E N T

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FOR IMMEDIATE RELEASE
October 24,2000

TREASURY DEPUTY SECRETARY STUART E. EIZENSTAT
REMARKS AT THE SIGNING OF AUSTRIAN LABOR AGREEMENT
VIENNA, AUSTRIA

Mr. Chancellor, Madame Vice-Chancellor Riess-Passer, Leaders from the Austrian Parliament
including President Dr. Heinz Fischer, Dr. Van der Bellen, Dr. Kostelka, Dr. Kessler
representing the private sector, Ambassador Winkler and Excellencies from Belarus, the Czech
Republic, Hungary, Poland, and Ukraine as well.
The Austrian Government and Austrian companies have courageously come to terms with
injuries to laborers they caused and that have remained largely unaddressed for 55 years. In so
doing, they are providing a measure of justice, however belatedly and albeit for a small fraction
of victims who survived, but justice nevertheless for the elderly survivors of slave and forced
labor in the territory of present-day Austria.
I commend the Austrian Government, under the inspired leadership of Chancellor Schuessel and
my wonderful colleague, Maria Schaumayer - a great Austrian patriot -- for moving swiftly to
draft the legislation establishing the Austrian Reconciliation Fund and to sign the labor
agreement and Joint Statement today. This will lead to the establishment of the Austrian
Reconciliation Fund, which will provide some justice to around 150,000 laborers, the
overwhelming majority non-Jews from Central Europe and elsewhere, even those who worked
for Austrian companies during World War II which are now defunct. I also want to commend the
Austrian government for ensuring that other victims who suffered in labor camps, but who may
not have performed labor, also receive some justice. In particular, I want to cite the specific
inclusion of certain victims:
•

children under the age of 12 who lived in labor camps with a parent,

•

those who sutTered lasting physical damage or psychological damage but did not qualify for
payments under another category, and

•

additional payments to women in maternity facilities or forced to undergo abortions.

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The Austrian companies should also be commended for their willingness to contribute to this
historic endeavor. We hope for the broadest participation by Austrian industry.
This agreement does not, of course, end all moral responsibility for the crimes committed by the
Nazis and their Austrian supporters on the territory of present-day Austria, and the suffering
endured during the Nazi era in the territory of present-day Austria. Nothing can erase the
memory of those who died, of the culture and potential achievements lost, of the suffering of
those who survived, of the lessons the Holocaust, and other injustices ofthe Nazi era; all of these
must teach us about the importance of tolerance and the rule of law, of the need for good people
not to remain silent in the face of evil, of the need for prompt international response to human
rights violations. Nor can we ignore that this historic initiative comes too late for millions of
slave and forced laborers who survived the War but who passed away before this historic
initiative could be implemented. All of this should remain in our hearts and minds as long as
people occupy this planet. But at the same time, this historic agreement will close a chapter for
those who have waited so long for some measure of justice, and it does help to heal wounds left
open during the lifetime of many of the survivors.
One of the most important achievements of our negotiations is to provide belated recognition and
payments to the double victims of the 20th Century's worst evils -- Nazism and Communism,
some one million citizens of Central and Eastern Europe who were forced laborers and in some
cases slave laborers for Nazi industry and agriculture. They were forced to keep the economy
running while Germans and Austrians went to war. They received little or no compensation
since the war and, indeed, while they were working, they were living in harsh conditions during
the war and often in guarded facilities. And as if this were not enough, they then lived for over
four decades after World War II under the iron rule of Communist governments. At last their
suffering is being recognized.
There are also the Romani people who are being recognized today and who also will be paid.
It is important for the Austrian people to know that they and their government are helping a
group of World War II survivors, almost all of whom are non-Jews, who have lived behind the
Iron Curtain, or who otherwise have received little or no postwar benefit from any country.
I want to applaud the representatives of the governments of Belarus, the Czech Republic,
Hungary, Poland, the Ukraine, and, we know, Russia soon, as well as the leaders of their
Reconciliation Foundations, which will handle claims in their countries. You have each written
an important page in your countries' histories.
We should all acknowledge the valuable work of the victims' representatives, especially the
Conference on Jewish Material Claims, and the attorneys in placing these issues on the
international agenda as well as the Jewish community of Austria. It was their research and their
work which helped to highlight old injustices and the need to confront them. Without question,
we would not be here without them.
The six billion Schilling settlement is a fair settlement which will help thousands of victims,
beyond those whom the lawyers represent, live out their declining years in recognition that their

injustices have been recognized. For their dedication and commitment to the victims, we shall
always be grateful to the lawyers and the Claims Conference and to the Austrian Jewish
community.
One of the great disappointments is that this agreement will again come so many years after the
War and that so many who would have been eligible have died. Through this historic effort we
will honor the memories of those who suffered on the territory of present-day Austria, but died
during and after the Nazi period. To those who still survive, we know that no amount of money
can adequately compensate you for the wrongs perpetrated against you. But we hope that the
dignified sums you will receive will serve as a recognition of your suffering and will enable you
to live with less difficulty than would have been the case without these payments.
Why has the U. S. Government taken such a direct role in the settlement of suits brought by
private citizens against private companies in trying to help shape the Austrian Reconciliation
Fund? It is because we were asked by the Austrian Government to work as partners with them in
facilitating this historic initiative, to avoid new tensions in our bilateral relationship, and because
all parties to the litigation agreed to our participation. It is because of President Clinton's
determination expeditiously to help in their lifetimes those who were victims of the Nazi era,
many of whom are American citizens. However, it is also because we share with Austria the
important goal of building a new, democratic and tolerant Europe in this new millennium,
something neither can achieve unless the unfinished moral business of the passing century is
suitably addressed.
Our role has been to work cooperatively with Austria as a catalyst and partner to help achieve
some justice for more people and far more rapidly than could ever be achieved in U.S. courts,
and to create a mechanism to help Austria and Austrian enterprises achieve legal peace in the
United States for Nazi-era forced and slave labor claims arising out of present and future cases.
The unique agreement we sign today recognizes our responsibility to help achieve that result and
indicates the United States' willingness to help make the Austrian Fund a reality.
Before concluding, I would like to recognize the contribution to our negotiations made by Dr.
Maria Schaumayer and her staff I was deeply impressed with her determination to move rapidly
to bring our negotiations to a fair conclusion. She has already had a distinguished career as a
central banker, and she now adds another achievement to her many accomplishments. I would
also like to recognize the contributions of Ambassador Hans Winkler and Martin Eichtinger.
Martin and Hans, you've done wonderful work. Of course, Mr. Chancellor, your contributions
have been beyond any estimate. We would not be here without your courage, your
determination, your vision to confront the past, to do justice and, I know, your personal
negotiating skills for five hours in the next room - even over pizza at 1 am in the morning. We
would not have achieved this labor agreement without your involvement, which has been truly
extraordinary, and your people can be proud of what you have done.
To achieve our goal of assisting the victims in their lifetimes, we have agreed that all interest
earned on the contributions being made by the private sector to the Fund would go to the benefit
of the victims within 30 days of the signing of this agreement. To increase the amount of
available interest, it is essential that contributions be placed in an interest bearing account as

soon as possible, but not later than 30 days from today. It is also critical that the plaintiffs'
attorneys work together with defense attorneys to find the most expeditious way to get the
pending labor claims against Austria and Austrian companies dismissed and dismissed quickly.
We will also do our part as the U.S. government in support ofa mechanism to achieve legal
peace.
Let me be clear. The labor agreement we sign today is historic. It is an important step in
Austria's facing its past courageously. But it is not in the view of the United States the final step
which needs to be taken.
While we are all very pleased with what we have accomplished so far, the larger task cannot be
complete until victims' representatives and the Austrian Government and Austrian companies
have reached agreement on further measures adequately to address Nazi-era property
confiscations. We are therefore very pleased that the Austrian Government again with the
Chancellor's leadership has committed to establish a General Settlement Fund to address all
property issues, including leased properties, and that it has also agreed to make what we and the
victims' representatives have been assured will be a $150 million initial payment to the fund. In
addition, negotiations will commence immediately on an overall capped amount for this Fund to
deal with gaps and deficiencies in Austria's past restitution laws and their implementation.
Every effort will be made to conclude these negotiations by the end of the year. To be
successful, all parties to the negotiations will have to compromise. Victims groups will have to
be flexible and they will have to be realistic, and the Austrian Government and private sector
will be expected to make a reasonable contribution to the General Settlement Fund. It will be
important for the Austrian Government and Austrian enterprises to keep in mind, as they have
done so well during the labor negotiations, the moral dimension as we begin the property
negotiations.
At the same time, we are very much aware that Austria is taking these steps in a season of budget
austerity, and that it has therefore required forthright and praiseworthy political leadership to
bring us to this point, leadership that is represented by not only the government but all the
factions and all the major parties in the Austrian parliament. And I want personally to say,
having lived in the political world for almost all my adult life, the fact that all major parties have,
at a time of this austerity, been willing to make these kinds of contributions, is noted and very
much appreciated. We should all recognize that Chancellor Schuessel and the Austrian
Government are providing that kind of courageous leadership. It is important to recall that
providing these measures of justice for surviving victims is not only a moral imperative but it is
also part of a very practical process for the benefit of the Austrian people. The resolution of
pending legal claims and legal peace which we seek to achieve are of real benefit to the Austrian
economy and to the investment climate in Austria. By engaging in this important endeavor, the
Austrian Government is therefore acting on behalf both of justice and a moral imperative but
also, quite practically, on behalf of the real interests of the people of Austria.
We believe we must set an ambitious schedule of property meetings in order to meet our goal of
concluding these negotiations by the end of the year. This is an important historic task, equally
essential to building and defining the community in which we will all live in the new century.

We have accomplished much in the last several months, in fact a remarkable amount since the
Chancellor took office. We all now bear a heavy responsibility to implement this historic
agreement. The victims have waited 55 years for this day. We cannot let them wait longer.
Thank you all for your roles in this historic endeavor.

-30-

Statement by U.S. Ambassador to Austria Kathryn Walt Hall
at October 24, 2000 signing of Austrian Labor Agreement

Chancellor Schuessel, Secretary Eizenstat, Madam Schaumayer, Excellencies, ladies and
gentlemen.
I would like to recognize the hard work and dedication of all of you in this room who have
made this historic agreement possible ... and especially to you, Chancellor Schuessel, Deputy
Secretary Eizenstat and Madam Schaumayer. Without your vision, your commitment, your
leadership ... we would not be here today.
The agreements we sign today address some of the most difficult and most poignant issues to
be faced by any nation. No action we could take could undo the horrors of the Nazi era, yet
we work - and so many people in this room have worked hard - to provide some measure of
justice to the victims of that dark era. Today's agreement between the United States and
Austria, as well as the agreements between Austria and six Eastern European countries, go far
toward meeting that goal. Former forced and slave laborers, the majority of whom were not
Jewish, who came from Eastern European countries and who were forced during the Nazi
regime to work under inhumane conditions, will not be entitled to individual payments from
Austria's Reconciliation Fund.
Payments to these now elderly victims will be expeditious. They will be funded by a broad
participation of Austrian industry and government. And, the fund itself will be extensively
publicized. This is an extraordinary success, and one achieved in a remarkably short period
of time.

It is fitting that this ceremony occurs during the week of the Austrian national day and on the
eve of the unveiling ofa Holocaust monument on Vienna's Judenplatz.
This is a day to acknowledge the fine, sincere and successful efforts of so many. This is also a
day to recognize that the effort to bring justice is not over. The challenge now is to carry
fOIWard on the basis of today' s success to fill the remaining gaps in past restitution efforts. In
this regard I am pleased to acknowledge that representatives of the Austrian government,
Austrian industry, Nazi era survivors, and the United States in our continuing role of
facilitator will today commence the next stage of discussion on outstanding restitution issues.
We look fOIWard to these negotiations. With the continuing good faith and concern of those
involved, we anticipate a comprehensive settlement and a historical reconciliation by year
end. In so doing, we will send a message of dignity and respect to others so terribly wronged
in the Nazi era, a message long overdue, but hopefully delivered in time for some who
deserve to hear it, to do so.

It is important for the Austrian people to know that they and their government are helping a
group of World War II survivors - almost all of whom are non-Jews -- who have lived behind
the Iron curtain, or who otherwise have received little or no postwar benefit from any country. It
is also gratifying that Romani people and Jehovah's witnesses will also be benefiting.
Immediately following this ceremony, Austria and the victims groups will initiate an effort to
address property restitution and compensation issues that were not adequately addressed in the
past. It is critically important that these talks succeed. We have set an ambitious schedule of
property meetings to achieve success by the end of this year. This is an important historic task,
equally essential to building and defining the community in which we all wish to live in this new
century. We hope President Klestil will continue to add his moral authority to this last effort and
will encourage Austrian industry to broadly participate in the property fund, as they are doing for
the labor fund, with the same prospect for legal peace being provided as we are now providing
for the labor cases. We very much welcome the involvement of Dr. Pichler, representing the
Austrian private sector, who will join Ambassador Sucharipa for the property negotiations. To
be successful, all parties to the negotiations will have to compromise. Victim groups will have to
be flexible and realistic, and the Austrian Government and private sector will be expected to
make a reasonable contribution to the General Settlement Fund. It will be important for the
Austrian Government and Austrian enterprises to keep in mind the moral dimension as we begin
the property negotiations, in the same way as they have done so forthrightly in the labor
negotiations.
At the same time, we are very much aware that Austria is taking these steps in a season of budget
austerity, and that it has therefore required forthright and praiseworthy political leadership to
bring us to this point. We should all recognize that Chancellor Schuessel and the Austrian
Government are providing that leadership and parliamentary President Hans Fischer and all the
parliamentary leaders of the major parties are doing likewise - an extraordinary effort at bipartisanship. It is important to recall that providing these measures of justice for surviving
victims is also part, however, of a very practical process as well. The resolution of pending legal
claims and legal peace which we seek to achieve are also of real benefit to the Austrian economy
and Austria's investment climate. By engaging in this important business, the Austrian
Government is acting both on behalf of justice and a moral imperative and, quite practically, on
behalf of the real interests of the people of Austria.
For almost 50 years, Nazi victims have waited for the rest of mankind to offer some measure of
justice for their suffering, and we all know not enough was done. The recent efforts to assist
survivors is part ofa new stirring of the moral conscience of the world, evident not just regarding
Holocaust issues and other crimes of World War II, but to human rights violations everywhere -in the Balkans, Rwanda, East Timor, or Iraq. As long as crimes against humanity continue,
remembrance of the Holocaust and other injustices and suffering perpetrated by the Nazis is
essential.
The last word on the Nazi era should not be about the money that survivors receive. Rather, it
should be the truth of what happened, how it happened and the roles played by its perpetrators,
as well as those who were not perpetrators but nevertheless profited from millions of Holocaust

victims and others injured during the Nazi era. It should also be about what we do to prevent a
recurrence of such horrific crimes.
So it is not merely the forthcoming property talks that must be concluded by the end of the year,
but also the opening of archives and the completion of historical reports and the acceleration of
art restitution in Austria and around the world. Only by examining the mistakes of the past can
we absorb their lessons and act on them in the future. Only by examining the past can we gain
self-respect as individuals, and collectively as a nation. So we congratulate Austria, with the
leadership of President Klestil, Chancellor Schuessel, and Maria Schaumayer for this historic
step on labor, and we look forward to completing this task with an agreement by year's end on
property with Ambassador Sucharipa.

-30-

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FOR IMMEDIATE RELEASE
October 25,2000

Contact:

Public Affairs
(202) 622-2960

MEDIA ADVISORY

Treasury Secretary Lawrence H. Summers will hold ajoint press conference with
Chinese Finance Minister Xiang Huaicheng following the China-U.S. Joint Economic Council at
5:15 p.m. EDT on Thursday, October 26,2000 in the Treasury Department's Diplomatic
Reception Room (Room 3311), 1500 Pennsylvania Avenue, N.W. The room will be available
for pre-set at 4:00 p.m.
There will also be a pool spray of the open mg session at 9: 15 a.m. in the Treasury
Department's Large Conference Room. For pool information, please contact Treasury Public
Affairs.
Media without Treasury or White House press credentials planning to attend must 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 also be faxed to (202) 622-1999.

-30-

LS- 975

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EMBAROOED tJlq"l':tXo 9; 00 A.H.
October 2S, 2000

PUBLIC

CO~ACT:

MEDIA COlIlTACT:

Office o~ Financ~g
202-691-3550
Una Gallagher
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'l'lU!!AStmy ANJ:lOlnilCES DDT BUYBACK OPERA:T:ION

On October 26, 2000, the Treasury will buy back up to $1,500 million par
of its outstanding issues that z~ture between February 2019 and November
2022. Treasury reserves the J ig~t to accept 1ess than the announced amount.

This deb~ buyback (redem~tiQ~) operaeion w~~1 be conducted by Treasury's
Fiscal Agent, the Federal Res.,rve :sank of New York, using its Open Market
operations system. Only institutions that the Federal Reserve Bank of New
York bas approveCl to cond.uct OpeD Market transactions may sulmlit offers on
behalf of themselves and eheir customers. Offers at the highest acceptea
price for a parti~la~ ~ssue may be accepted on a prorated ~asiB, rounded up
to the nex~ $100,000. As a result of this rouuaing, the Treasury may buy
back an amount slightly larger than tbe one announced above.

This debt buyback operation is gover.uea by the tezms and conditions set
forth in 31 CPR Part 375 ana this az1nouncement.
~he debt buyback ope~ation regu~ations are available on the Bureau of
the Public Debt's website at www.pUblicdebt.treas.gov.

Details about the operation and each of the eligible issues are

gi~en

in tbe attached highlights.
000

AttacbmeDt

LS-976

For press releases~

$peeehe$~pJl.hlic

schedules tUUJ official biographies, call our U-hour fax line tn (202) 622-2040

HIGHLIGHTS OF TREASURY DEBT

BUYBACl~

OPERATION
October 25, 2000

Par amount to be bought back •• trp to $1,500 mi11io:&:l
Operation date •••••••••••••••• Octcber 26, 2000
Operation c~ose t~ .••••.•••• 11:00 a.m. easterD aay1ight saving time
Settlement date ••••••••••••••• Octo~er 30, 2000
Minimum par offer amount ••••• $100,000
HU~tip~es of par
...•.••••.••• $100,000
For.mat for offers ••••• Expressed in ~er.ms of price per $100 of par with
three decimals. The first two dec~ls represent
fractional 32.b of a do11ar. The third dec~l
represents eighths of a 32~ of a dollar, and must
be a 0, 2, 4, or 6.
De~ivery instructions •••.••••• ABA NUmber 02100l.208 :nus NYC/c:rJST
Treasury issues e~iqible for debt buyback operation (in mdllions):

Coupon
(%)
8.875
8.125
8.500
8.750
8.750
7.875
8.125
8.125
8.000
7.250
7.62·5

Ra~9

Maturity
Date
02/1.5/201.9
08/15/2019
02/15/2020
05/15/~020

08/15/2020
02/15/202.1
05/15/:Z02.1

08/15/2021
11/15/2021
08/15/2022
ll/15/2022

Humber
912810 Be
912810 ED
912810 EE
912810 EF
912810 EG
912810 Eli
912810 EJ
912810 EK
912810 EL
912810 EM
912810 EN

'rotal

*.
*

C'Osrp
8

6
4
1.

9
7
3
0
B
Ei

Par Amount
Outst:andiDS'·
17,44l
19,857
10,004
8,894
19.,445
10,420
10,909
10,923
31.,976
10,289
9,295
159,453

Par Amount Par Amount
Private1y
He14 as
He1d*
STRIPS*·
l.S .. 286
6,192
17,924
1,092
8,565
1,639
7,392
5,280
.10,37.9
1',564
.9,476
790
9,291
',310
9,265
1,336
28,908
18,906
.9,415
960
7,694
5,152
140,780
56,036

Par amounts are as of October 24, 2000.
Par amoUDta are as of October 23, 2000.

The differ~ce between the par amount outstanding' and the par amount
privately he14 is the par amount of those issues held by the Federal
Reserve Syste:m-

DEPARTMENT

THE

TREASURY

NEWS
OFFICE OF PUBLIC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C •• 20220. (202) 622·2960

STATEMENT OF THE NORTH AMERICAN FINANCIAL GROUP
MONTREAL, CANADA
October 25,2000
'"

~,,,>

The Central Bank Governors and Treasury/Finance Ministers of Canada, Mexico, and the United
States today convened the sixth annual meeting of the North American Financial Group (NAFG).
The Ministers and Governors reviewed recent financial and economic developments in all three
countries over the past year and agreed that developments have been very favourable. All of their
economies are experiencing strong growth with low or declining inflation.
The MiT isters and Governors noted that Canada's commitment to sound fiscal policies and low
inflatiOl continues to payoff in the form of stronger economic growth and job creation. The
Canadi, n economy grew 4.5 per cent in 1999 and growth has averaged 4.9 per cent over the first
two qutrters of 2000. Solid economic growth has been accompanied by robust job creation that
has pusned the unemployment rate down close to its lowest level in 24 years. Despite the strong
growth, core inflation remains in the lower half of the 1 to 3 per cent target range. The 19992000 fiscal year marked the third consecutive year that the Canadian federal budget was in
surplus, the first time since the late 1940s and early 1950s that three consecutive surpluses have
been recorded. These surpluses have put the debt-to-GDP ratio on a sharp downward track.
The Ministers and Governors noted that, for the fifth consecutive year, economic growth in
Mexico has been strong alongside declining inflation, and rising employment and real wages. In
2000, real GDP growth is forecast to reach around 7 per cent, inflation is expected to be below 9
per cent, and the government deficit is projected to fall below the target of 1.0 per cent of GDP.
In addition, the current account deficit remains moderate and continues to be financed mostly
with foreign direct investment. They welcomed the decision by Mexico to repay all of its
outstanding balances to the Fund and to treat the remaining portion of its IMF agreement as
precautionary, which they agreed was made possible by the strong performance of Mexico's
economy and finances. That performance also prompted a private rating agency to confer
investment grade status on Mexico's long-term sovereign debt for the first time ever.
With respect to the upcoming political transition, the Mexican authorities remarked that their
demonstrated commitment to implement sound fiscal and monetary policies
provides the conditions for an orderly transition to the next administration.

LS-977

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·U.S. Govemment P"n:lng Otllce. 1998 - 619-559

The Ministers and Governors of Canada and the United States support the commitment of the
next Mexican administration to continue to implement prudent macroeconomic policies,
maintain a sustainable growth rate, reduce the budget deficit and pursue supportive policies as
the Bank of Mexico works to lower inflation levels.
With respect to the United States, the Ministers and Governors noted that as the economic
expansion continues for a record 10th year, growth is starting to slow a bit from recent
extraordinary gains to a more sustainable pace. Productivity is growing rapidly, raising standards
of living while keeping inflationary pressures contained. Employment continues to expand and
the lUlemployment rate is holding near a 3D-year low. The strong economy and sound fiscal
policies resulted in a third consecutive federal budget surplus in fiscal year 2000, the first such
occurrence in more than 50 years. As a consequence, the ratio of debt held by the public to GDP
has fallen by 25 per cent over the last three years. The Ministers and Governors observed that to
maintain the momentum of the expansion, fiscal discipline should be maintained, monetary
policy should continue to be prudent, and national saving should increase
The Ministers and Governors exchanged views on the challenges posed [ y the increasing
integration of capital and trade markets, and they also discussed the imp2~t that current
conditions in the oil market might have on the global economy. They re\ iewed the measures
implemented by the three governments in order to contribute to the stabi...ization of international
financial markets and to the promotion of sustainable long-lasting world economic growth.

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 25, 2000

CONTACT:

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 2-YEAR NOTES
Interest Rate:
Series:
CUSIP No:
STRIPS Minimum:

5 3/4%
N-2002
9128273L4
$800,000
High Yield:

Issue Date:
Dated Date:
Maturity Date:
5.845%

Price:

October 31, 2000
October 31, 2000
October 31, 2002

99.823

All noncompetitive and successful competitive bidders were awarded
securities at the high yield.
Tenders at the high yield were
allotted 98%. All tenders at lower YLelds were accepted in full.
This offering was announced on OctJber 18, 2000, as a new 2-YEAR NOTES
of Series AB-2002(CUSIP No. 9128276M9). The interest rate determined in
this auction matches that of an outst~.nding issue with the same maturity and
interest payment dates. ACCORDINGLY, THE SECURITY AUCTIONED TODAY WILL BE
CONSIDERED AN ADDITIONAL ISSUE OF THE 5-YEAR NOTES OF SERIES N-2002
FULLY DESCRIBED ABOVE.
AMOUNTS TENDERED AND ACCEPTED (in thousands)

Competitive
Noncompetitive

25,861,100
959,502

3,333,333
1,500,000

Federal Reserve
Foreign Official Inst.
$

31,653,935

9,046,500
959,502
10,006,002 1/

26,820,602

PUBLI C SUBTOTAL

TOTAL

Accepted

Tendered

Tender Type

14,839,335

Median yield
5.830%:
50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low yield
5.795%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
BID-TO-COVER RATIO = 26,820,602 / 10,006,002 = 2.68
CORPUS CUSIP: 912820CE5. ALL AMOUNTS OUTSTANDING FOR CUSIP 9128273L4,
INCLUDING THE 5-YEAR NOTES ISSUED 10/31/97, ARE AVAILABLE FOR STRIPS.
1/ Awards to TREASURY DIRECT = $738,886,000

http://www.publicdebt.treas.gov

LS-978

D EPA R T [\1 E N T

0 F

THE

T REA SUR Y

NEWS
OFFICE OFPUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASlllNGTON, D.C. - 20220 _ (202) 622-2960

FOR IMMEDIATE RELEASE
Wednesday, October 25,2000

Contact: Jo1m Longbrake
(202) 622-2960

ST ATEMENT BY TREASURY SECRETARY LAWRENCE H. SUMMERS

I am extremely pleased by today's agreement by Congress to fully fund the President's
budget request for the Heavily Indebted Poor Counties debt relief initiative.
Today's action to appropriate $435 million and authorize the use the remaining resourc,~s
from IMF off-market gold sales enables the United States to leverage billions of dollars from
other creditors to finance the debt relief initiative. Thanks to the leadership of President Clinton,
this initiative will help give a fresh start to poor countries throughout Africa and Latin America,
enabling them to translate old debts into new opportunities through education, health care, and
other investments necessary to spur economic growth and reduce poverty.
Debt relief is both a moral and a financial imperative. I would like to congratulate and
thank the unique coalition of Members of Congress from both sides of the aisle, the diverse
group of religious leaders, humanitarian agencies, and business groups that worked so hard to
make this initiative a reality.
I am also pleased that Congress provided substantial funding for the World Bank's
International Development Association and other multilateral development institutions. These
organizations are at the core of international efforts to reduce global poverty by assisting
countries to address their enormous development challenges and improve basic social services.
Finally, I welcome the Congress' support of the Global Environment Facility that provides
assistance to address cross-border environmental challenges in developing countries.

-30-

LS- 979

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·U.S. Government Printing Office: t998· 619·559

D EPA R T l\I E N T

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NEWS
omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W. • WASHINGTON, D.C•• 20220. (202) 622·2960

EMBARGOED UNTIL 2:15 PM EDT
October 26, 2000

TREASURY AND JUSTICE AWARD STATE AND LOCAL
ANTI-MONEY LAUNDERING GRANTS

Treasury Secretary Lawrence H. Summers and Attorney General Janet Reno today
announced the award of$2.3 million to nine State and local law enforcement agencies and
pro~;ecutor' s offices to fight money laundering and related financial crime.
"The C-FIC grants will help our state and local law enforcement partners to develop
inn )vative approaches to attack the scourge of money laundering," Secretary Summers said.
liT Ie fight against money laundering is essential to protect the integrity of our financial systems
and to bolster our assault on the illegal drug trade and organized crime worldwide"
"No national anti-money laundering effort can be successful without the close
cooperation of state and local law enforcement," Attorney General Reno said. "We have actively
encouraged such participation through our Organized Crime Drug Enforcement Task Forces and
other endeavors, and these grants will further this effort."
The grants are the first awarded under the Financial Crime-Free Communities (C-FIC)
Grant Program created by the Money Laundering & Financial Crimes Strategy Act of 1998,
which was sponsored by Senator Charles Grassley and Congresswoman Nydia Velazquez. The
C-FIC grant program is overseen by the Department of Treasury and administered by the
Department of Justice, through the Bureau of Justice Assistance and the Office of Justice
Programs.
C-FIC grants are to be used as seed money for state and local programs that seek to
counter money laundering systems within their jurisdictions, and to detect, prevent, and suppress
money laundering and related financial crimes.
The C-FIC monies will fund additional prosecution efforts; the creation of money
laundering investigation units by state and local law enforcement agencies; a study to determine
how laundered money is laundered out of New York State; and an examination of the domestic
movement of laundered funds through money transmitters and Money Service Businesses The
C-FIC award winners also will collaborate, where appropriate, with the federal-state interagency
action teams in the four High Risk Money Laundering and Financial Crime Areas (HIFCAs)

LS-980
Far press rele~eeches~ublic schedules and official biographies, call our 24-h.our fax line at (202) 622-2040

designated in the 2000 National Money Laundering Strategy -- Los Angeles, New Yorlc/New
Jersey, San Juan, and a IDFCA along the Southwest Border focusing on the smuggling of bulk
cash.
The nine initial C-FIC grant award winners are: the San Bernardino, California Sheriff's
Department; the San Diego, California Police Department; the Arizona Attorney General's
Office; the Texas Attorney General's Office; the New York State Police; the New York Attorney
General's Office; the Illinois State Police; the Chicago, Illinois Police Department; and Florida
State's Attorney's Office for the 15 th Judicial District (West Palm Beach).
-30-

NEWS
omCE OF PUBliC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622·2960

EMBARGOED UNTIL 2:15 P.M. EDT
Text as Prepared for Delivery
October 26, 2000

DEPUTY SECRETARY STUART E. EIZENST AT
REMARKS TO NATIONAL MONEY LAUNDERING CONFERENCE

I want to join with Secretary Summers and Attorney General Reno in showing our
appreciation for the hard, demanding work that law enforcement does each day. The agents and
prosecutors in this room, and the state and local enforcement agencies which have participated in
this Conference, have launched an unprecedented effort to crack down on money laundering at
home and abroad. As co-chair of the Money Laundering Steering Committee with Deputy
Attorney General Holder, I have seen what has been accomplished so far. The IRS Criminal
Investigation Division and the U.S. Customs Service have substantially increased the number of
money laundering cases they have investigated and referred for prosecution. Cases like
Operation Casablanca have had both a domestic and international reach. The types of cases
discussed in the working group sessions of this Conference will have an impact beyond our
country's borders. It is an impressive record, especially since you are working with limited
resources. It is one of which you all can be proud.
Treasury, in close partnership with the Department of Justice, has made a commitment to
help you do an even better job, and to extend our collaboration with financial regulators and
appropriate state and local law enforcement agencies. We believe that designating HIFCAs will
allow all our agencies to work cooperatively and collaboratively to tighten the noose around
those who engage in these crimes. I am told that yesterday's session on the organization and the
goals of the HIFCAs was especially useful. You can be sure that Eric Holder and I will be
watching this program closely as it develops.
One of the most important parts of our national money laundering strategy is that which
seeks to strengthen partnerships between the Federal government and State and local
governments. The C-FIC program is the centerpiece of that effort. C-FIC provides seed capital
for state and local enforcement efforts to detect and prevent money laundering and other
financial crimes, whether related to narcotics crimes or other underlying offenses. C-FIC grants
help states and local communities marshal the information and expertise they need to build
innovative approaches to money laundering control and enforcement.
LS-981

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·U S Governmenl Prlnllng 01llce 1998 - 619-559

The Bureau of Justice Assistance, which administers C-FIC, will require award winners to
coordinate their activities with the HIFCA action teams wherever possible, to create a close
working relationship between the HIFCAs and recipients ofC-FIC grants.
You may have noticed that three of the four HIFCA areas are represented in the first C-FIC
awards: the Southwest border, New YorklNew Jersey, and Los Angeles. We did not receive any
applications from Puerto Rico, and I would like to encourage those of you who serve there to
discuss again the possibility of applying for C-FIC grants with your local colleagues.
I want to give you some examples of how the recipients announced by the Secretary plan to
use their C-FIC funds.
•

The San Diego Police Department will use its award to fund two full-time detectives to work
on money laundering investigations and participate on the existing SAR review team run by
the U.S. Attorney's Office for the Southern District of California. The detectives will
concentrate on casas de cambio and large-scale money laundering operations.

•

The New York State Police will use the funds to create a financial crimes investigation team
to focus on money laundering investigations in upstate New York. It will work with other
State and local law enforcement agencies, regulatory agencies, and financial institutions to
identify suspicious activity and conduct preliminary investigations.

•

The Arizona Attorney General's Office will fund a Southwest Border Money Transmitter
Program to examine the domestic movement of laundered funds through money transmitters
and MSBs.

•

The grant to the Special Crimes Division of the Texas Attorney General's Office will fund a
project to expand the number of bulk cash smuggling investigations and prosecutions. The
project will focus on the movement of the cash through correspondent accounts, money
exchanges, and armored car and other delivery and courier services.

.•

The Illinois State Police will fund a money laundering intelligence and investigations support
unit to provide strategic and tactical analytical support to its investigators. The unit will
cooperate with State regulators to identify emerging patterns and to target suspected money
laundering activity, particularly in the Chicago area.
The Florida State Attorney's Office in West Palm Beach will form a task force to review
Suspicious Activity Reports in order to identify and target significant money laundering
targets in the region.

•

I want to thank our Under Secretary for Enforcement Jim Johnson for heading up the
selection process and the many people at BJA, Justice, and Treasury who worked on launching
this initiative.

You have heard a good deal at this conference about the National Money Laundering
Strategy, the yearly report mandated by the Congress on what we are doing, why we are doing it,
and why it is important. In their March 7, 2000 joint memorandum to the field, Secretary
Summers and Attorney General Reno asked for your help in implementing some of the more
important items in the Strategy. I look forward to receiving a full briefing on the district-bydistrict reports that you have been making this afternoon.

While I have great respect for the headquarters personnel who work so hard on developing
the Strategy, I do not pretend that we in Washington have all the answers or even that we have
covered all the issues.
You have all received copies of the 2000 Strategy. It was an ambitious document and I am
pleased we have achieved a large percentage of the milestones set out in that document. Drafting
of the 2001 Strategy will begin shortly.
We need your input and your participation in preparing it. We welcome your ideas about
what works best. We also need your help to identify the state and local enforcement officials
who might have new ideas. We want the 2001 Strategy to be a collaborative document,
containing the best thinking distilled from all of our experience.
Before I close, let me just say a few words about the domestic anti-money laundering
legislation that Justice and Treasury sent to Congress and that should again be sent to Congress
in January. The bill contained important provisions designed to enhance the ability of law
enforcement to investigate and prosecute domestic money laundering cases. It would have:
• expanded the Bank Secrecy Act to create a new criminal offense of bulk cash
smuggling in amounts exceeding $10,000, and authorized the imposition of a full range of
criminal sanctions when the offense is discovered. As you have discussed at this conference, this
kind of provision would help prevent the flow of illicit cash proceeds out of the United States.
• made it a criminal offense for a courier to transport more than $10,000 of currency in
interstate commerce, knowing that it was unlawfully derived; and
• closed a legal loophole by making it clear that the federal money laundering statutes
apply to both parts of a parallel transaction when only one part involves criminal proceeds. In
other words, if a launderer were to move drug money from Account A to Account B, and then
replenish Account A with the same amount of funds from Account C, the second transaction
would also constitute a money laundering offense.
These are reasonable and sensible provisions that will help you do your jobs even more
effectively, and we hope and expect that the Congress will pass them next year. I also hope the
Congress will again consider our international money laundering legislation and give the
Secretary tools additional tools and flexibility he needs to combat money laundering.
3

Once again, thank you for all your hard work. I am pleased that the Departments of
Treasury and Justice can work together so well in combating money laundering, and I look
forward to even better cooperation and coordination in the future.
As the Secretary said, we have time to answer a few questions.
-30-

D EPA R T 1'1 E N T

0 F

T 1-1 E

T REA SUR Y

NEWS
omCE OF PUBliC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W. • WASHINGTON, D.C. • 20220 • (202) 622-2960

EMBARGOED UNTIL 2:15 P.M. EDT
Text as Prepared for Delivery
October 26, 2000

TREASURY SECRETARY LAWRENCE H. SUMMERS REMARKS AT THE
NATIONAL MONEY LAUNDERING CONFERENCE.

Thank you. It is a pleasure to be with you here this afternoon and to help close out this
conference.
The fight against money laundering is a priority for the Treasury department. I know that
fight could not succeed without the dedication and effort that each of you brings to your job. I
thank those in the Treasury law enforcement bureaus, the Department of Justice law enforcement
bureaus and U.S. Attorneys' offices, and the representatives of State and local enforcement who
are here today for a job well done. You honor us with your service.
Let me thank especially those Treasury agents and supervisors from the Customs Service
and Internal Revenue Service's Criminal Investigation Division here today for their hard work
and success. I also want to recognize the terrific work that Director Jim Sloan and his FinCEN
staff have done to help assist federal and state law enforcement agencies in making money
laundering cases. Treasury is extremely proud of your accomplishments. We recognize that the
fight against money laundering is a team effort. and I am equally proud of the strong working
relationship our bureaus enjoy with their colleagues at the Justice Department and with state and
local agencies.
In the last several years, you have detected. investigated, and prosecuted more money
laundering cases than ever before - and the world has taken notice. The money laundering cases
that you have initiated - from Operation Casablanca to the still ongoing Bank of New York
investigation in the Southern District of New York - illustrate the global nature of the money
laundering problem as well as your commitment to fighting both domestic and international
money laundering. These kinds of cases can and do have an impact on the international financial
system.
LS-982

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'U S Governmenl

P"nlln~

Ol"ce 1998· 619·559

But we can accomplish more. In a world where capital can silently travel the globe with
the push of a button, proceeds of crime can move just as quickly and just as quietly, which makes
it even harder to detect, investigate, and prosecute money laundering.
In my remarks today I would like to discuss two areas where we are working to strengthen our
armory in the fight against money laundering:
•

First, by improving our ability to fight international money laundering.

•

Second, by providing new assistance to state and local enforcement agencies in their war
against dirty money.

Combating International Money Laundering.

In the last 15 months, we at Treasury, and our partners at the Department of Justice, have
produced two National Money Laundering Strategies. Those Strategies set forth a
comprehensive domestic and international approach to combat money laundering.
We recognize that many of you are frustrated by the fact that your cases too often lead you to
targets located in countries that either cannot or will not cooperate with your investigation. To
address this problem, we continue to engage our international partners. The undercover
operations, investigations, and prosecutions that you contribute to every day will only be able to
dismantle the international system of money laundering with the active help of our international
partners. Until we can fight money laundering everywhere, we will not be fully successful in our
efforts here at home.
That is why the Treasury Department has exerted so much time and effort in working
with the 29-country members of the Financial Action Task Force (F ATF) to "name and shame"
those jurisdictions who allow money laundering activity to flourish. We are also working
closely on these issues with our G-7 allies and the major international financial institutions such
as the World Bank and the International Monetary Fund.
We have worked hard with our allies to seek multilateral solutions and apply coordinated
responses to curb the spread of money laundering. For example, the G-7 Finance Ministers
recently pledged to discuss conditioning or restricting financial transactions and aid assistance by
the international financial institutions to those jurisdictions who are not vigilant in the fight
against money laundering.
We are seeing positive results from this work, and hope and expect that you will also see
these results in the field. FATF publicly identified 15 problem jurisdictions in June and the U.S.
issued advisories about these countries to our banks and financial institutions on July 8. In the
past three months, seven of the countries have enacted new or tougher anti-money laundering
laws and five other countries are either drafting new laws or regulations or have expressed a
high-level commitment to do so.
These steps should help your investigations involving these countries.

•

First, banks are likely to file additional suspicious activity reports (SARs) for financial
transactions relating to these countries which should allow you to develop additional leads
and evidence in your cases.

•

Second, foreign law enforcement officials are likely to be more responsive to your MLA T
requests for assistance. If they are not, we want to know about it, and we will express our
concerns internationally at the appropriate level to those countries striving to get off of the
FA TF list and to have our bank advisory modified or rescinded.

We are also working with Congress to ensure that we have all the tools we need to fight
money laundering. As promised in the 2000 Strategy, we submitted two major bills to Congress
to address gaps and shortcomings in our own money laundering laws. Unfortunately, Congress
did not pass either of these important bills despite the nonpartisan nature of the problem and the
bipartisan solution supported by leading members of Congress.
I am heartened that the House Banking Committee voted 31-1 in June 2000 to send the
International Counter-Money Laundering and Foreign Anticorruption Act of2000 to the full
House. I believe that the next Congress will be in a position to pass both this bill and the more
domestically focused Money Laundering Act of 2000 in its next session.

II.

Improving our Ability to Fight Money Laundering at Home.

Combating money laundering everywhere means not only working with our international
partners overseas, but also working with our States and cities to help them address money
laundering in their communities. The Financial Crime-Free Communities (C-FIC) Grant
Program is a key element in this part of our fight against money laundering.
The $2.3 million in C-FIC grants that I am announcing today with the Department of
Justice will help our state and local enforcement colleagues develop innovative approaches to
attack money laundering.
The goal of C-FIC is to provide seed capital for emerging state and local counter-money
laundering enforcement efforts to detect and prevent money laundering and related financial
crimes, whether related to narcotics or other underlying offenses. C-FIC grants can help state and
local communities to marshal infonnation and expertise to build innovative approaches to money
laundering control and enforcement.
The grants will help state and local authorities to fight money laundering in four ways:
•

First by funding additional prosecution efforts.

•

Second, by creating money laundering investigation units.

•

Third, by funding studies into how laundered money is exported out of New York State.

•

And fourth, by funding research into the domestic movement of laundered funds through
money transmitters and Money Service Businesses.

C-FIC grantees will collaborate closely with HIFCAs, where appropriate, to leverage our state
and federal resources in the fight against money laundering.
I am proud to announce these nine inaugural C-FIC grant award recipients with Attorney
General Reno. They are; the San Bernardino, CA Sheriffs Department, the San Diego Police
Department, the Arizona Attorney General's Office, the Texas Attorney General's Office, the
New York State Police, the New York Attorney General's Office, the Illinois State Police, the
Chicago Police Department, and the Florida State's Attorney's Office in West Palm Beach.
Congress has appropriated over $2.5 million for the next round of C-FIC grants, and I
look forward to announcing additional C-FIC recipients in the future.

III.

Conclusion.

In conclusion, let me thank all of you again for your hard work. I am pleased that the
Departments of Treasury and Justice can work so well together in addressing the issue of money
laundering, and I look forward to even more success in the future.

l~ 1~ /'1.

R T i\! E N T

0 F

THE

T REA S CRY

NEWS

TREASURY

OFFICE OF PUBLIC AFFAIRS. 1.500 PENNSYLVANIA AVENUE, N.W•• WASHINCTON. D.c.e 20210. (2.02) 62%-1960

EMBARGOED UNTIL 2: 30 P. M.

Contact:

october 26, 2000

Office of Financing
202/691-3550

TREASURY TO AUCTION CASH MANAGEMENT BILLS

Tbe Treasury W±11 auction approximately $32,000 million of 50-day
Treasury cash management bills to be issued November 1, 2000.
Tenders will

entry records of the

be accepted for bills to be maintained on the bookof the Treasury (~~~Qsur,y.D!r~t).

Departmsn~

Additional amounts of the bills may be issued to Federal Reserve Banks
as agents for foreign and international monetary authorities at the highest
diseount rate of accepted competitive tenders.
The auction being ~ounced t~ will be conducted ~ the single-price
auction format. ~1 competitive and noncompetitive awards will be at the
highest discount rate of accepted competitive tenders.
NOTE:
Competi~ive bids in cash management bill auetions must be
~re~ as a discount rate with ~ deeimals, e.g_, 7.10%.
This offering of Treasury securities is governed by the terms and eonditions set forth in t~e unifor.m Offering Circular for the Sale and Issue of
Marketable Book-Entry Treasury Bills, Notes, and Bonds (31 cn Part 356, as:
amended) •
Details about the new security are given in the aetached offering
highlights.
000

Attacbment

LS-983

For press releases, speecheJ, public schedules and official biographies, call our 24-hour fax line at (202) 622-204()

BXGlILlcm'l'S OF 'l'REASURY OFPumG
OF 50-DAY CASH MANAGEMENT BILL

october 26, 2000
Offering AmoUnt •.. -- .••••.•••••••••• $32,000 million
DescriPtion of Offering:
Term and type of sec:urity ••••••••••• SO-day Cash Management Bill
COSl:]? number •••.•••••. _ ••• ., ••••••••. 91.2795 FL 0
Auction date ..•.••••••••..•••••••••• OceOber 31, 2000
r5GUe d~ta_ •••••••••••••••••••••••••

November

Maturity da~e .••••••..•••.••.••••..•
Original issue date •••••••••••••••••
Currently outstanding ••••••••••••.••
Minimum bid ~unt and multiples ••••

December 21, 2000
June 22, 2000
$25,658 million
$1,000

~ooo

Submission of Bids:
Noncompetitive bids ••••••••• Accepted in full up to $1,000,000 at
the highest accepted discount rata.
Competitive bids .•..•.•• (l.) Must be expressed as a discount rate ~th
two decimals, 8.g., 7.10%.
(2) Net long position for each bidder must
be reported when the sum of the t:otal bid
amount, at all discount rates, aDd· the
net long position is $1 billion or
greater.
<3) Nat long position must be determine4. as
of one half-hour prior to the c10sing
t~e for rece~pt of competitive tenders.

MAx.iJuum ReCOgnized Bid
at a Single Rate_ .•..•.•••• 35% of public offering

Makimum Award .••..•••••••••••• 35% of public offering
Receipt of Tenders:
Noncompetitive tenders •••••.

Prio~

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 pel%' amoUll.t with tenaa.'.

OFnCE OF PUBLIC AFFAIRS USOO PENNSYLVANIA AVENUE, N.W. 8 WASHINGTON. D.C•• 30ZZ0 e(ZOl) 6n.i'60

EHBARGOEO t1m::tL 2: 30 P.M.
october 26, 2000

COIfl'ACT:

TREASURY OFFERS 13 -WEEK

ANt)

Office of Financing
202/691-3550

26 -WEEK B:tLLS

The'Treasury will auction two seriaa o£ Traasw:y l:ai11.s eoeal.:i.D§
million to ~e£UDd $16,922 million of publ.ie1y held
securities matu=iDg November 2, ·2000, 5Dd to raise about $4,078 million of new

~roxtmate1y $21,000
c~sh.

Xn aa41tion to the public holdings, Federal Reserve Banks for their

own

aeccnm.ts ho1d $8·,589 million o£ t:he maturing bills, which DIB¥ be refunded ae
~e highest discount: rate of accepted competit.ive tenc1exoli.
AmoUZLt..s ia,,~ed

to these aCCOUDts will be in addition to the offering amount.
The maturing bills held ~ tbe public include ,5,132 milliOD held
Banks as agents for foreign and international maDetary
may be :e£UDded wiCAi~ the offeriDg amcQDt at t.Ao Aighest
dise~t:. rate of acceptea. compet.itive t.eAGlU:'s.
Mdit.i.oza.al amoUZLta may l::MJ
issued for such ACCounts if the aggregate amount of new bids exceada ~
aggregate amount of maturing ~ills.
Feae~Al aeserve
auehori~i •• , which

~e4sur,yDirect customers requested that we reinvest
ings of ~prox~tely $992 aal1ioD into the 13-week bill
~he 26~eek
~is

~8ir

macuring hold-

aaa $840 millio:

iuto

bill.

offering of

is governed by ~e terms and conOfferiag Circular for the Sale aDd rasue of

Trea~ securi~ies

ditions set forth in the ~nifor.m
Marketable Book-E!l.try ~reasury Billa, Not-•• , aDd Bonda (31 CPR Part: 356, as
amended) _

»etails about eaCh of the new securities are given
offering highlights.

the attached

AttAchment

LS-984

For press Teleases~

spee~he9"

public schedules tUI.d DffICial biogrtlphies~ call OUT 24·hour fax line at (202) 622·2040

HIGHLLGHTS OF TREASURY OFFERINGS

BILLS

TO BB ISSOBD NOVEMBER 2, 2000

October 26, 2000
Offering Amount ••.••..••.•.•••.•..•..... $11,OOO million
Description of Offering:
Tenu and type of security ..••..•.••..... 91-4ay bill
CUSIP number .••••.•••••••.••••••.••.•..• 912795 FR 7
Auction date .•••••••••••.•••••.•.••.••.• Ootober 30,2000
Issue date ••.••••.•••••••..••••••.•.•.•• Novernbezo 2, 2000
Maturity date ••••..•••••.•.•••.••.•...•• F.bruar,y 1, 2001
Original issue date •••.••..•••.••...•.•• Februar,y 3,2000
Currently outstanding ••••••••••••••••••• $28,944 million
Minimum bid amount and multlpl.s •...•.•• $l,OOO
The following rules

~ply

$10,000 million
le2-day bill
912795 Q£ 5
October 30, 2000
November 2, 2000
May 3, 2001
November 2, 2000
$1,000

to all securities m.ntioned above:

Submission of Bids.
NODcompetitive bids •••.••••• Accepted in full up to $1,000,000 at the highest discount rate of
acoepted competitive bids,
Competitive bids •.••••••••.• (1) Must be .apr••• ea as a discount rate with three decimals in
incr...nt. of .005%, 8.9., 7.100%, 7.105%.
(2) Net long position for each bidder must be reported when the 8~
of the total bid amount, at all discount rates, and the net lon~
position 1s $1 billion or greater.
(3) Net long position must bedete~inad as of one half-hour prior
to the closin~ time for reoeipt of competitive tenders.
Ma~imum

ReOognized 81d
at a Bingle Rate ••••••.•••.• 35% of public offering

Maximum Award •••••••••••••.•••.• 35% of public offering
Reoeipt of ~enderB:
Noncompetitive tenders .••••• Prior to 12:00 noon eastern standard ttma on auction day
Competitive tenders ••..••••• Prior to 1tOO p.m. eastern standard time on auction day

By charge to a fu~ds account at a Federal aeserve B~k on issue ~t., or p~ent
of full ,Par amount with tender. ~reaguryD1reot customers can 1Ise the Pay Direct f.ature which
authorizes a charge to their aocount of record at their fi~anci&l institution on issue ~ate.
P&~ent ~erm8'

NEWS
Compiled in the Office of Public Affairs

FOR IMMEDIATE RELEASE
October 26, 2000

PUBLIC CONTACT: Office of Financing
202-691-3550
MEDIA CONTACT: Una Gallagher
202-622-2960

TREASURY DEBT BUYBACK OPERATION RESULTS

Today, Treasury completed a debt buyback (redemption) operation for $1,500 million
par of its outstanding issues. A total of 11 issues maturing between February 2019 and
November 2022 were eligible for this operation. The settlement date for this operation will
be October 30, 2000. Summary results of this operation are presented below.
(amounts in millions)

Offers Received (Par Amount) :
Offers Accepted (Par Amount) :
Total Price Paid for Issues
(Less Accrued Interest) :
Number of Issues Eligible:
For Operation:
For Which Offers were Accepted:
Weighted Average Yield
of all Accepted Offers (%):
Weighted Average Maturity
for all Accepted Securities (in years) :

$5,308
1,500

1,935

5.937

20.0

Details for each issue accompany this release.

For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040

LS-985

october 26, 2000
TREASURY DEBT BUYBACK OPERATION RESULTS

(amounts in millions, prices in decimals)
Table I

Coupon
Rate (%)

Maturity
Date

Par
Amount
Offered

8.875
8.125
8.500
8.750
8.750
7.875
8.125
8.125
8.000
7.250
7.625

02/15/2019
08/15/2019
02/15/2020
05/15/2020
08/15/2020
02/15/2021
05/15/2021
08/15/2021
11/15/2021
08/15/2022
11/15/2022

900
266
282
543
787
77
445
255
782
75
896

Par
Amount
Acc e2 t e d

Highest
Accepted
P r i ce

Weighted
Average
Accepted
Price

380
0
25
250
300
5
160
5
125
0
250

132.500
N/A
129.140
132.281
132.468
122.593
125.781
125.921
124.625
N/A
120.687

132.471
N/A
129.l40
132.255
132.450
122.593
125.777
125.921
124.601
N/A
120.668

Weighted
Average
Accepted
Yield

Par Amount
Private1v Held*

5.939
N/A
5.941
5.939
5.939
5.943
5.936
5.937
5.937
N/A
5.932

14,906
17,924
8,540
7,142
17,264
9,471
9,131
9,260
28,783
9,415
7,444

Table II

Coupon
Rate (%)

Maturity
Date

CUSIP
Number

Lowest
Accepted
Yield

8.875
8.125
8.500
8.750
8.750
7.875
8.125
8.125
8.000
7.250
7.625

02/15/2019
08/15/2019
02/15/2020
05/15/2020
08/15/2020
02/15/2021
05/15/2021
08/15/2021
11/15/2021
08/15/2022
11/15/2022

912810EC8
912810ED6
912810EE4
912810EFl
912810EG9
912810EH7
912810EJ3
912810EKO
912810EL8
912810EM6
912810EN4

5.937
N/A
5.941
5.937
5.938
5.943
5.936
5.937
5.935
N/A
5.931

Total Par Amount Offered:
Total Par Amount Accepted:

5,308
1,500

Note: Due to rounding, details may not add to totals.
*Amount outstanding after operation. Calculated using amounts reported on announcement.

NEWS
omCE or PUBIlC AFFAIRS • 1500 PENNSYLVANlAAVENUE, N.W.• WASHlNGTON, D.C.. 20220. (~02) 622·2960

FOR IMMEDIATE RELEASE

Text as Prepared for Delivery
October 26, 2000

STATEMENT BY TREASURY SECRETARY LAWRENCE B. SUMMERS
AT THE CLOSING PLENARY SESSION OF THE
CHINA-U.S. JOINT ECONOMIC COl\1MITTEE

I am glad to have had this opportunity to co-chai'" this 20 th anniversary session of the USChina Joint Economic Committee with Finance Ministe Xiang. Let me also thank the People's
Bank of China and other members of the Chinese deleg •.tion for their active participation at this
JEC.
This year we have opened a new chapter in the relationship between our two countriesand in China's relations with the rest of the global economy. I remember well the last lEC, a year
ago in Beijing. At that time, the questions of Chinese entry into the World Trade Organization,
and the changes that it would bring, were also very much on all our minds. One year on, with the
signing of our bilateral agreement for Chinese entry into the World Trade Organization, and the
passage of legislation here in the US to grant China Permanent Normal Trading Relations status,
China is closer than ever to becoming an integral member of the world trading community.
But just as this new era for China brings new possibilities, so too does it bring new
challenges - both for China and for the US-Chinese relations. That is where the sharing of
experiences and ideas that we have seen here today can play such a useful role.
In this context we discussed a number of issues today, including economic developments
in the global economy and in the US and China. Let me just briefly highlight three sets of issues
with particular relevance to China's entry imo the WTO, and to the broader question of China' 5
closer integration with the global community.
1.

•

Integration and Structurlll Reforms in China

There was a clear recognition coday on the part of our Chinese interlocutors that the prospect
of closer integration with the world economy had raised the stakes considerably with respect
to the pace and scope of economic reform. It can and must be a spur for continued reform of
the state-owned enterprise sector, the financial sector and social safety nets.. which are all so
important to the sustainability and quality of long-term economic growth.

LS - 986
F(1f" press releases, speeches, public schedules and official biographies, roll QUT 24-hour faA line at (202) 622-2040
<

As the Chinese authorities have suggested, Chinis growing private sector could play an

•

important role in creating jobs as financial and state-owned enterprise reforms intensify. And
in this context we discussed the need for fiJllher hardening of the budget constraints of stateowned enterprises, and the closure of non-viable firms.

•

In the critical area of financial sector strengthening, we welcome China's intention to
liberalize interest rates and also noted the importance of adopting international banking
standards. And we noted that assistance through the World Bank/lNfF Financial Sector
Assessment.Program would provide policy advice in this crucial pan of China's reform
agenda.

•

More generally, we discussed the imporlance of building up strong institutions to underpin
sustainable, market-led growth: particularly the importance of a functioning rule of law, and
of efforts to improve governance and combat cOffiJption.

The Challenge of Combating Financial Crime

•

As gl. )bal integration proceeds, there has been growing international recognition of the need
to co nbat the "dark side" of integration: the fact that technological change and liberalization
can s:Jpport the growth of illegitimate economic activities as much as legitimate ones. In that
sense our discussions on this subject were very timely.

•

Financial abuse and money laundering pose an important threat to all our economies.. But we
were glad to note that this challenge is now a focus of strengthened efforts by the US, China
and the broader international community: as, for example. in the recent agreement to
establish an APEC working group that will conduct a survey of domestic legal and regulatory
frameworks for fighting financial crime. This will provide an opportunity to enhance our
cooperation)n this area.

•

With respect to China, we are pleased to note that OUf Chinese counterparts have welcomed
our offer to increase U. S. technical assistance to Chinese agencies working [0 combat this
problem more directly in China itself

Enforcement Issues of Particular Concern to the US Treasury Department:

•

Our meeting today also provided an opportunity to discuss other imporlant enforcement
issues that wil I continue to be of concern to the US and the broader global community as
China becomes more integrated economically. Two issues that fall into this category that are
a particular concern to the Treasury Department are the implementation of our Memorandum
of Understanding on prison labor imports and enhanced customs cooperation.

•

The issue of prison labor is very importanr to the United States. U.S. law prohibits the
importation of goods made with prison labor. It is critical that China work closely with us to
effectively address this issue under the existing Memorandum of Understanding and the
supplementary Statement of Cooperation.
2

•

IV.

With regard to customs issues, we SUppOr1 the continued progress of the Shanghai Model
Port Project and look forward to its timely completion in the Fall of2001, in time for the
APEC Leaders meeting in Shanghai.
Concluding Remarks

Let me conclude by highlighting the first US-China Financial Dialogue, led by the
deputies from our respective finance ministries and central banks, which will be held tomorrow.
In the past, such dialogues. for example with Japan and Korea., have been a very useful part of
developing our bilateral financial relationship with countries as their economies mature.

The Dialogue will be an independent venue to enhance cooperation between our two
countries on financial and capital market issues and share views and experiences on areas of
common concern. In light of recent experiences in Asian emerging market economies, the
question of ho~ best to benefit from a strong and open financial market - while guarding against
the risks - has emerged as a crucial economic issue for every emerging market. And the US and
the broader global community have an enormous stake in China finding a successful approach.
Thank you
-30-

FINAL

13 TH

JOINT STATEMENT
SESSION OF THE CHINA-U.S. JOINT ECONOMIC COMMITTEE
Washington, DC
October 26, 2000

u.s.

At the invitation of
Treasury Secretary Lawrence Summers, Chinese Finance
Minister Xiang Huaicheng led an official delegation to the United States to co-chair
th
the 13 session of the China-U.S. Joint Economic Committee (JEe) on October 26.
Senior officials had an opportunity to discuss developments in macroeconomic
policies and structural reforms in the two economies, cooperation on enforcement
issues, and initiatives to promote growth in less developed areas in each economy.
Both sides reaffiIIDed their commitment to complete China's accession to the World
Trade Organization. They agreed China's accession would strengthen bilateral trade
relations and provide further impetus to structural refonns in China.
Discussions focused on:

•

Macroeconomic Policies and StructlJ ral Reform. Both sides agreed that the global
economic situation is positive. Inflation remains low, and growth is strong in
most emerging market economies. However, they noted the risks posed by oil
price volatility to the world economic recovery and for developing economies that
are heavily dependent on oil market conditions, and the need to stabilize prices at
sustainable levels.

•

The two sides noted that, in the United States, growth remains strong,
unemployment low and inflation contained. For a sustainable rate of growth to be
maintained, fiscal and monetary policy should continue to be prudent and the
national savings rate should increase.

•

F or China, the economy continued to maintain strong growth this year.
Deflationary pressure has eased. Reform of state-owned enterprises, the social
security system and the financial sector, including strengthening banking
supervision, is ongoing. As a result, economic restructuring necessary to put
China's economy on a sustainable, market-oriented path has been moving
forward. Both sides emphasized that Crona's prospective accession to the WTO in
the near term will further promote China's integration into the world economy and
promote global trade and investment. Both sides stressed the importance of further
steps to increase transparency and improve data dissemination.

•

Given the prospect of China's increased global integration, and the relatively
benign external environment, both sides noted the importance of China's moving.
over time, toward greater exchange rate flexibility, which will facilitate China's
adjustment to ongoing structural changes.

•

They welcomed the establishment of the US-China Financial Dialogue, co-chaired

L8 -

987

by finance and central bank deputies, noting that this mechanism can be a useful
tool for countries modernizing and liberalizing financial sectors.

•

Regional Cooperation. Both sides believe that enhanced regional cooperation. in
the context of economic globalizatio~ contributes posltively to world stability and
growth. In this regard, they noted recent developments in Asia under the
"ASEAN+3" framework. They noted that cooperative financing arrangements at
the regional level designed to complement resources provided by the IFIs m
support ofIMF programs can be effective in crisis prevention and resolution.

• Combating Financial Abuse.

The two sides agreed that abuses such as corruption
and money laundering undermine the credibility and efficiency of the international
financial system. Both sides looked forv.rard to enhancing cooperation in this area
and noted the opportunity provided by the recent agreement to establish an APEC
working group charged with conducting a survey of domestic legal and regulatory
frameworks for fighting financial crime.

•

Enforcement. They discussed ways to strengthen cooperation under eXIStIng
agreements regardingtrade in goods made by prison labor. They discussed the
progress ofthe Shanghai model project and completing it as scheduled.

•

Regional Economic Development Initiatives. They also discussed policies to
address economic disparities among various areas in each of their economies. The
Chinese side described its Western Development Strategy and the U.S. side shared
expenence from its New Markets and other regional economic development

initiatives.
Minister Xiang drew attention to the following developments since the last JEe;

• He stressed the importance of the regUlar meetings between the leaders of the two
countries, which laid the foundation for bilateral cooperation. Particularly, in their
New York's meeting in September, President Jiang Zemin and President Clinton
stressed that both sides should broaden exchanges and enhance cooperation.
•

He pointed out that the Chinese Government has made the proposal of fonnulating
the 10 th Five-Year Plan, which states that development is the theme with the
economic restructuring at the core, reform and opening-up and teclmological
advancement are the driving forces, and improving the living standards of the
Chinese people is the ultimate goal.

•

He pointed out that China's Western Development strategy will improve the
ecological environment of the Western region, and promote balanced regional
growth.

•

He pointed out that U.S economic performance has great impact on the world
economy in general, and On the countries recovering from the crisis in particular.
He urged the U.S. authorities to continue to pursue sound economic and financial
policies. Such policies should further contribute to the economic prosperity of
developing countries and global financial stability.

Secretary Swnmers remarked on several specific issues:
•

He stressed the significance of China's prospective WTO accession and welcomed
the Chinese authorities' intention to let the market play the central role of resource
allocation in the economy. In his view, it is important that the public listing of
SOE shares lead to changes in corporate governance. He noted the progress made
on state-owned enterprise reform, while stressing the importance of further steps,
including the need for hard budget constraints, operational restructuring and the
closing of non-viable finns,

•

He welcomed the publication of a Public Infonnation Notice following China's
July Article IV Review at the IMF.

•

In the critical area of financial sector strengthening, the Secretary welcomed
China's intention to liberalize interest rates. He noted the importance of adopting
international banking standards, and stated that participation in the World
BankJIMF Financial Sector Assessment Program would provide policy advice in
an area crucial to China's fmancial sector reform agenda.

•

He expressed concern about med.ium-tenn fiscal sustaina",ility, particularly in light
of contingent liabilities in the financial sector, likely future outlays for social
safety nets, pensions, infrastructure, and the enviromn mt. He emphasized the
importance of limiting the budget deficit and new non-performing loans in the
banking system.

The two ministers agreed to hold the next session of the JEC in Beijing.
Participation on the U.s. side included representatives from the Treasury, Federal
Reserve, Customs, Office ()f the U.S. Trade Representative, National Economic
Council, Council of Economic Advisors, Department of State and Department of
Commerce. The Chinese Delegation included representatives from the Ministry of
Finance, People's Bank of China, Ministry of Foreign Affairs, State Development
Planning Commission., State Economic and Trade Commission, Ministry of Public
Security, Ministry of Justice, Ministry of Foreign Trade & Economic Cooperation,
General Administration of Customs, China Securities Regulatory Commission, and
China Insurance Regulatory Commission.

Secretary Summers remarked on several specific issues:
•

•

He welcomed the publication of a Public Information Notice following China's
July Article IV Review at the IMF.

•

In the critical area of financial sector strengthening, the Secretary welcomed
China's intention to liberalize interest rates. He noted the importance of adopting
international banking standards, and stated that participation in the World
BankiIMF Financial Se~tor Assessment Program would provide policy advice in
an area crucial to China's fmancial sector reform agenda.

•

He expressed concern about medium-tenn fiscal sustaina")ility, particularly in light
of contingent liabilities in the financial sector, likely future outlays for social
safety nets, pensions, infrastructure, and the envirorun mt. He emphasized the
importance of limiting the budget deficit and new non-performing loans in the
banking system.

The two ministers agreed to hold the next session of the JEC in Beijing.
Participation on the U.S. side included representatives from the Treasury, Federal
Reserve, Customs, Office ()f the U.S. Trade Representative, National Economic
Council, Council of Economic Advisors, Department of State and Department of
Commerce. The Chinese Delegation included representatives from the Ministry of
Finance, People's Bank of China, Ministry of Foreign Affairs, State Development
Planning Commission, State Economic and Trade Commission, Ministry of Public
Security, Ministry of Justice, Ministry of Foreign Trade & Economic Cooperation,
General Administration of Customs, China Securities Regulatory Commission, and
China Insurance Regulatory Commission.

D EPA R T 1\1 E N T

0 F

T.H E

IREASURY{~~W

T REA SUR Y

NE W S

omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASIflNGTON, D.C.. 20220. (202) 622-2960

EMBARGOED UNTIL 3:OOPM
October 30, 2000

CONTACT: Una Gallagher
(202) 622-2960

TREASURY ANNOUNCES MARKET BORROWING ESTIMATES
The Treasury Department announced today that it expects to pay down $23 billion in
marketable debt during the October - December 2000 quarter and to target a cash balance
of $30 billion on December 31. In the quarterly announcement of its borrowing needs on
July 31, 2000, the Treasury announced that it expected to pay down $10 billion in
marketable de bt and to target an end-of-quarter cash balance of $30 billion. The increase
in the paydo'm is primarily due to higher receipts, partially offset by the inclusion of
inflation acc} uals on outstanding inflation-indexed securities and accrued discount /
premium on (lutstanding marketable securities of $2 billion.
The Treasury also announced that it expects to borrow $20 billion in marketable debt
during the January - March 2001 quarter and to target a cash balance of $30 billion on
March 31.
The Treasury paid down $45 billion in marketable debt during the July - September
2000 quarter and ended with a cash balance of $53 billion on September 30. On July 31.
the Treasury announced that it expected to pay down $45 billion in marketable debt and
to target an end-of-quarter cash balance of $50 billion. The improvement was the result
of lower outlays. partially offset by the inclusion of ini1ation accruals on outstanding
inflation-indexed securities and accrued discount / premium on outstanding marketable
securities of $3 billion.
The Quarterly Refunding Press Conference will be held at 9:00AM on Wednesday.
November 1, 2000.

-30-

LS-988

Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-204-0
.
·U.S. Govemment Printing Office 1998· 619·559

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 30, 2000

CONTACT:

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:

182-Day Bill
November 02, 2000
May 03, 2001
912795GE5

High Rate:

6.075%

Investment Rate 1/:

6.354%

Price:

96.929

All noncompetitive and successful competitive bidders were awarded
securities at the high rate.
Tenders at the high discount rate were
allotted 83%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted

Tendered

Tender Type
Competitive
Noncompetitive

Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On

4,580,710
1,182,033
5,762,743 2/

19,422,833

PUBLI C SUBTOTAL

4,250,000

23,672,833

10,012,743

4,518,762

°
$

TOTAL

18,240,800
1,182,033

28,191,595

14,531,505

Median rate
6.070%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
6.020%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

19,422,833 / 5,762,743

3.37

1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $921,970,000

http://www.publicdebttreas.gov

LS-989

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 30, 2000

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
November 02, 2000
February 01, 2001
912795FR7

Term:
Issue Date:
Maturity Date:
CUSIP Number:
6.180%

High Rate:

Investment Rate 1/:

6.365%

Price:

98.438

Competitive
Noncompetitive

20,566,677
1,390,413

780,000

22,737,090

11,014,590

4,070,658

Foreign Official Refunded
SUBTOTAL

8,844,177
1,390,413
10,234,590 2/

21,957,090

PUBLIC SUBTOTAL

Federal Reserve
Foreign Official Add-On
TOTAL

Accepted

Tendered

Tender Type

o
$

26,807,748

15,085,248

Median rate
6.165%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
6.140%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio = 21,957,090 / 10,234,590 = 2.15
1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $1,092,757,000

htlp:llwww.publicdebUreas.gov

LS-990

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NEWS
omCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON. D.C.- 20220 - (202) 622-2960

FOR IMMEDIATE RELEASE
Text as Prepared for Delivery
October 31, 2000

DIRECTOR OF THE OFFICE OF MACROECONOMIC ANALYSIS JOHN H. AUTEN
REMARKS TO THE TREASURY BORROWING ADVISORY COMMITTEE
OF THE BOND MARKET ASSOCIATION

When you were here three months ago, there were signs that a slower pace of growth was
emerging. But this was a slowing from what had been very rapid growth in aggregate demand
throughout last year and into the early months of this year. The difficulty at the time was in
knowing how much the economy might slow down and for how long. On the basis of the
information available, the most likely outcome appeared to be that growth would continue at a
reduced, but still fairly strong pace close to the economy's potential. Last week's advance report
on third-quarter Gross Domestic Product seems to confirm that something like that has been
taking place. Third-quarter real growth fell to a little below 3 percent from a little above
5 percent in the first half of the year.
Indeed, if attention were to be confined exclusively to such broad measures of economic
activity, the tenn "soft landing" would seem to be altogether appropriate. But there have been
changes since you were here three months ago, which introduce elements of uncertainty into the
situation as we now find it. There have been rising crude oil prices, growing tensions in the
Middle East, and a terrorist attack on aU. S. navy vessel. The stock market has been volatile
with weakness spreading from the "new economy" sectors to the general market and broad
indexes recently testing this year's lows. In the fixed income area, Treasury yields have been
drifting down with credit-quality spreads widening against private securities, and widening very
sharply in the case of speculative-grade corporate issues. In addition, commercial banks are
being encouraged by the regulatory authorities to evaluate the credit quality of their portfolios
with extra caution in view of the possible effects of a long business expansion on risk
assessments.
It is difficult to judge the possible significance of these and related developments. While
still modest in size and scope compared to some recent financial adjustments, there is always the
LS-99\

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potential for unwelcome surprises. But, as matters stand, there does not yet seem to be any
clearly-defined threat from the financial side of the equation to the continued advance of the
economy. Certainly, that would appear to be the consensus view. For example, the October
Blue Chip forecast by some 50 economists at major businesses, financial institutions, and
research organizations, which was released earlier this month, called for a slowing in real growth
to 3 percent in the third quarter -- close to what actually occurred. On average, real growth was
projected by the group to rise to about 3-112 percent in the current quarter and then to remain
close to 3-112 percent over the four quarters of next year. None of the panel members predicted
recession.
Last week's decline in the headline real growth number from 5.6 percent annual rate in
the second quarter to 2.7 percent in the third quarter may suggest a more abrupt slowdown in
growth than has actually taken place. A slower pace of growth in the economy was clearly
apparent by the second quarter and did not emerge suddenly in the third. Indeed, real personal
consumption expenditure (two-thirds of GDP) picked up to a 4-1/2 percent annual rate of
increase in the third quarter from about 3 percent in the second. Second quarter growth in real
GDP had been boosted by two special factors. First, there was a sharply higher rate of inventory
accumulation, some of which now appears to have been involuntary. Second, there was a
second-quarter spike in federal purchases associated with Census hiring and a shifting seasonal
pattern of defense purchases. Rough allowance for those two factors would reduce secondquarter real growth closer to a notional 3 percent, not greatly different from the third-quarter
pace. If anything, the quality of growth may have improved in the third quarter with a finner
tone for consumer spending, the apparent end of the second-quarter's rapid inventory buildup,
and a much slower rate of deterioration in net exports.
Another favorable feature of third-quarter developments was the continuation of good
inflation perfonnance. The Gross Domestic Product chain weighted price index increased at a
2.0 percent annual rate in the third quarter, down from 2.4 percent in the second quarter. The
gross domestic purchases price index, which excludes exports and includes imports, rose from
2.1 percent to 2.4 percent.
The employment cost index results for the three months ending in September, also
released last week, were generally favorable. Compensation costs increased a shade less rapidly
than in the prior three-month period, with growth in both wages and salaries and benefit costs,
tapering off a little. Despite the benign performance in the latest quarter, rapid growth in
compensation costs earlier in the year has led to a much larger increase in the employment cost
index over the past 12 months than over the prior twelve-month period. The saving grace has
been rapid increases in productivity which has held labor costs per unit of output to rates of
increase consistent with good price performance. Productivity estimates available later this week
seem likely to confirm that this state of affairs continued in the third quarter.

The third quarter is history by now and we must depend upon scattered statistical
readings and anecdotal reports for a sense of where the economy is heading.
•

Existing home sales fell back a little in September but remained surprisingly high at over
5 million units at a seasonally adjusted rate. Mortgage applications are still high,
inventories of unsold homes are low and home prices are rising. Residential investment
was a negative factor in third-quarter GDP but may be stabilizing.

•

Durable goods orders rose a little more than expected in September, but the key series on
nondefense capital goods excluding aircraft - followed closely by economists as a
leading indicator of business capital spending - edged down for a third successive month.
The National Association of Business Economists has recently reported that an intense
profits squeeze was developing for goods producers in the third quarter and that some
frrms are cutting back on capital spending.

•

The recent behavior of initial claims for unemployment insurance does not point to much
change in the current situation. Labor markets remain tight but the claims data also
reflect the slower economic pace since the spring of the year. The four-week moving
average of initial claims now stands at 307 thousand, some 45,000 above lows near
262 thousand registered in April.

•

Recent press and anecdotal reports suggest some erosion of consumer confidence
recently, although from very high levels. Early reports on retail sales in October speak of
modest gains, in some cases somewhat below plan.

The economy seems to have moved fairly smoothly to a more sustainable pace of growth.
Strong gains in productivity continue to dampen inflationary pressures. There are some financial
and other uncertainties but further economic expansion at a solid pace seems to be the most
likely outcome.
That is a summary of recent economic developments and the near tenn economic
outlook.

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omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W. • WASHINGTON, D.C.• %0%%0. (20%) 6%%.%960

u.s. International Reserve Position 10/31/00
The Treasury Department today released U.S. reserve assets data for the week ending October 27,2000.
As indicated in this table, U.S. reserve assets totaled $65,153 million as of October 27,2000, down from
$65,193 million as of October 20,2000.
(in US millions)

I. Official U.S. Reserve Assets

October 2012000

October 271 2000

65,193

65,153

TOTAL
1. Foreign Currency Reserves
a.Securities
Of which.

Euro
4,648

Yen
7,716

TOTAL

Euro

12,564

4,856

Yen

TOTAL

8,600

issuer headquartered in the U.S.

13,457
0

b. Total deposits with:
b.i. Other central banks and SIS
b.ii. Sanks headquartered In the U.S.
b.ii. Of which, banks located abroad
b.iii. Sanks headquartered outside the U.S.
b.iii. Of which, banks located in the U.S.

2. IMF Reserve Position

3. Specia1 Drawing Rights (SDRs)

14. Gold Stock 3
5. Other Reserve Assets

8,264

9.574

17,838

8,277

8,737

13,553

13,491

10,193

10.146

11,046

21 The items, "2. IMF Reserve Position" and "3. Special Drawing Rights (SDRs)." are based on data provided by the IMF and are valued in
dollar terms at the official SDRJdoliar exchange rate for the reporting date. The IMF data for October 20 are final. The entries in the table
above for October 27 (shown in italics) reflect any necessary adjustments, including revaluation, by the U.S. Treasury to the prior week's IMF
data.

31 Gold stock is valued monthly at $42.2222 per fine troy ounce. Values shown are as of August 31, 2000. The July 31, 2000 value was
$11,046 million.

LS-992

17,013

u.s. International Reserve Position (cont'd)
II. Predetermined Short-Term Drains on Foreign Currency Assets
October 20. 2000
1. Foreign currency loans and securities

October 27.2000

o
o
o

2. Aggregate short and long positions in forwards and
futures in foreign currencies vis-a-vis the U.S. dollar:
2.a. Short positions
2.b. Long positions
3. Other

o
o

III. Contingent Short-Term Net Drains on Foreign Currency Assets
October 27,2000

October 20.2000
1. Contingent liabilities in foreign currency

o
o

1.a. Collateral guarantees on debt due within 1 year
1.b. Other contingent liabilities
2. Foreign currency securities with embedded options
3. Undrawn, unconditional credit lines
3.a. With other central banks
3.b. With banks and other financial institutions
headquartered in the U.S.

3. c. With banks and other financial institutions
headquartered outside the U. S.
~. Aggregate short and long positions of options in foreign

currencies vis-a-vis the U.S. dollar
4.8. Short positions
4.a.1. Bought puts
4.a.2. Written calls
4.b. Long positions
4.b.1. Bought calls
4.b.2. Written puts

Offical Reserve Assets Worksheet
(actual US dollar amounts)

Enter Dates Here
Foreign Currency
Euro Securities
Yen Securities

Last Week
20-0ct-OO

This Week:
27-0ct-00

2Q..Qct-OO

27-Oct-OO

$4,848,073,563.34

$4,856,335,107.05

8.261.54371

p,715,521 ,267.42

~8,600,379,521.84

884,858,254 42

Source: NY Fed

Sec. Total

$12,563,594,830.76

$13,456,714,628.89

893,119.798 13

Euro Deposits
Yen Deposits
Deposit Total

$8,263,683,133.36
~9,574, 187,251.73
$17,837,870,385.09

$8,276,937,999.98
~8,736,551 ,021.87
$17,013,489,02185

-837,636,22986

Total
Euro Rate
Yen Rate

$30,401,465,215.85

$30,470,203,650.74

68,738.434 89

$0.8400

$0.8406

Y 109.04

Y 108.75

20-0ct-OO

27-0ct-OO

IMF

13,254.86662

-824,381,36324

Source IMF (fax)

(prelim, with adjust)

Reserve Tranche
GAB

13,553,216,50955
0.00

13,491,265,136.80
0.00

NAB

0.00
13,553,216,509.55

0.00
13,491,265,136.80

-61.951.37275

10,192,593,231.18

10,146,003,173.26

-46.590,057 92

Total
SDR

-61.951.37275
000
000

000

as of 8/31/00

Gold

20-0ct-OO

27-Oct-OO

11,045,911,216.33

11,045,911,21633

Source FMS (monthly statement)
0

IOther Res.Assets
/TOTAL

20-0ct-O~1
65,193,186,172.91

27-Oct-O~1

Source: (?)
-39,802,995 78

65,153,383,1n.13 1

Adjustments 10 IMF and SDR data, translated at current exchange rates

1---------------------------------------------------------------------------------------------------------------------------r
: Prelim. IMF Data
IN SDRs
SDR rate for
:
I

ICalculation Section
: Reserve Tranche
I
: GAB

INAB
:

20-Oct-OO
10,569,353,916
0

Adjustments
10.569.353.916
0

27-Oct-OO
0783422

Q
10.569,353.916

In USD
:
$13,491,265,136.80:
I
$0.00:

Total =

$0.00:
$13,491.265,136.80:

:SDRS
7.948,602,098
7,948,602,098
SDRs = . $10,146,003.173.26:I
L_____________________________________________________________________________________________________

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 31, 2000

Office of Financing
202-691-3550

RESULTS OF TREASURY'S AUCTION OF 50-DAY BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:

50-Day Bill
November 01, 2000
December 21, 2000
912795FLO

High Rate:

6.38 %

Investment Rate 1/:

6.53 %

Price:

99.114

All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted 97%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted

Tendered

Tender Type
Competitive
Noncompetitive

52,233,000
25

32,020,500
25

TOTAL

52,233,025

32,020,525

Median rate
6.36 %: 50% of the amount of accepted competitive tenders
was tendered at or below that rate. Low rate
6.32 %:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio

52,233,025 / 32,020,525

= 1.63

1/ Equivalent coupon-issue yield.

LS-993

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NEWS
omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASIDNGTON, D.C .• 20220. (202) 622-2960

FOR IMMEDIATE RELEASE
October 31,2000

U.S.-JAPAN FINANCIAL SERVICES TALKS
SAN FRANCISCO, CA

The U.S. Department of the Treasury and the Japanese Ministry of Finance, as co-chairs,
today concluded a round of discussions reviewing implementation of measures under the 1995
financial services agreement and progress in financial liberalization, regulation and reform. The
meetings brought together officials from a range of agencies on both sides, and provided an
opportunity to discuss recent financial policy and supervisory developments in addition to the
measures under the agreement.
Both sides agreed that implementation of the 1995 agreement "Measures by the
Government of the United States and the Government of Japan Regarding Financial Services" has
been highly satisfactory. Liberalization measures implemented under the agreement have
substantially improved commercial opportunities for foreign financial services providers in the
U.S. and Japan.
U.S. and Japanese representatives exchanged views on recent developments in their
respective financial markets. On the U. S. side, representatives explained recent changes related
to passage of the Gramm-Leach-Bliley Act on financial modernization, developments related to
the Community Reinvestment Act, and changes to regulations in the securities market. The
Japanese representatives stressed that the U. S. supervisory authorities should ensure transparency
in the regulation and procedures for financial institutions to establish Financial Holding
Companies (FHCs) and the so-called Section 20 subsidiaries, in order to maintain fair and nondiscriminatory treatment to foreign financial institutions. The Japanese side explained the Big
Bang financial liberalization initiatives and recent changes in the financial laws. The U.S. side
recognized the progress that has been made, and looked forward to the rapid introduction of
defined contribution pensions and of custodial arrangements that would facilitate the holding of
Japanese government bonds by global investors.
The U.S. and Japanese representatives discussed the regulatory challenges that each would
face as a result of financial reform and innovation. The U.S. representatives welcomed the
Japanese authorities' intention to make active use of the "No-Action" letter system now in
LS - 994
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·U.S. Government Printing Office 1998· 6t9·559

operation, and encouraged the Japanese authorities to bring the new arrangements for providing
global risk management and the provision of other shared services into full operation as soon as
possible. The U.S. stressed the importance of openness and transparency in the regulatory
process by financial authorities and self-regulatory organizations. The Japanese side stressed the
importance of consistency in regulation and supervision between states and federal governments
and emphasized the importance of overall openness in regulation and supervision. The Japanese
representatives urged the US to promptly finalize the measures related to abbreviated exams for
Japanese securities representatives. Japan also emphasized the importance of fairness and
nondiscrimination regarding the regulatory use of rating companies.
The U.S. representatives noted the changes underway in Japan's financial system. They
emphasized the importance of follow-on measures to move from stabilization to full recovery such
as early actions to ameliorate weak financial institutions, flexible techniques to deal with failed
financial institutions, continued strengthening of disclosure, aggressive disposal of bad loans, and
the return of underlying assets to the market. The Japanese side pointed out the importance of
the U.S. authorities' vigilance regarding the soundness of U.S. financial institutions' lending in the
continued economic expansion in the United States.
Besides these discussions, the U.S. raised the issue of the future role of the Postal
Financial Institutions in an increasingly open and competitive financial system, stressing the need
for careful attention given their size and nature. The U.S. also expressed the view that consistent
standards of regulation and supervision should apply in principle to all financial institutions. The
Ministry of Finance stated that it would convey the U.S. views to the Ministry of Posts and
Telecommunications.
Deputy Assistant Secretary Mark Sobel led the U.S. delegation and Senior Deputy
Director General Tadashi Iwashita led the Japanese delegation.
-30-

3184 7863 19
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