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Treas.
HJ
10
.A13
P4
v.384
Department of the Treasury
PRESS RELEASES
The following number was not used:
1077
Number 1112 is included in this volume because it
Is dated December 21, 2000
D EPA
I{
T 1'1 E N T
0 F
THE
T REA SUR Y
I
OFFlCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON. D.C. - 20220 - (202) 622-2960
EMBARGO TIME WILL BE SET
November 1,2000
UNDER SECRETARY OF THE TREASURY FOR DOMESTIC FINANCE
GARY GENSLER
REMARKS AT THE NOVEMBER 2000 TREASURY QUARTERLY REFUNDING
Good morning. I am pleased to be with you today to discuss the government's refunding
needs for the current quarter.
Last week, the President announced a budget surplus for fiscal year 2000 of $237 billion,
the largest in American history. As a result of three years of budget surpluses, we have paid
down $363 billion of publicly held debt.
Earlier this week, Treasury announced that we expect to pay down an additional $23
billion in marketable debt during the current quarter. This is the first paydown in publicly held
debt during the fourth calendar quarter in the forty years for which Treasury has records on
quarterly results. This paydown will bring us to a reduction in publicly held debt of almost $390
billion in just over three years.
Buybacks
In this new environment, Treasury's buyback program has become an important debt
management tool. We have now conducted a total of 16 debt buyback operations, redeeming
outstanding securities with a total par value of just over $25 billion and an average remaining life
of 18.6 years. As previously announced. we anticipate completing $30 billion in purchases this
calendar year.
We continue to be pleased with the results to date. Buybacks have been beneficial in a
number a number of ways:
•
First, debt buybacks have helped us manage the maturity structure of Treasury's
outstanding debt, bringing more balance to our debt paydown. This year we paid down
LS - 995
Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
approximately 8 percent of privately held marketable debt. This calendar year, net of
issuance, we will paydown approximately 3 percent of our debt with remaining maturities
of over 10 years. Absent buybacks, all of the paydown would have been in maturing
shorter-term debt. Indeed, to date the average life of outstanding Treasury debt would
have lengthened by an additional 2 months without the buyback program.
Second, buybacks have enabled us to add to the liquidity of our benchmark issues. In
fact, buy backs have enabled us to issue securities that we may not have otherwise been
able to continue issuing.
This past quarter, we were pleased to extend the buyback program to include callable
securities for the first time. We conducted two buy backs of callable bonds. These operations
were very successful and we plan to conduct periodic operations in this sector.
In May, we instituted a regular schedule for buybacks, with announcements made on the
third and fourth Wednesdays of each month for operations conducted the next day. We are
satisfied with the results of using a regular schedule for operations and plan to maintain this
schedule going forward.
Due to the timing of holidays in November and December, however, we will be
announcing our buyback operations one week earlier in each of these months. Specifically, we
will make announcements on November 8 and 15, and on December 6 and 13, for operations the
next day. We expect to buy back just under $5 billion in these operations. In January our
operations will return to the regular schedule.
In addition, we have accepted the recommendation of the Borrowing Advisory
Committee to begin providing information on the estimated size of our buyback operations for
the next calendar quarter. For the January to March quarter. we currently expect to buy back
approximately $9 billion in Treasury debt.
52-Week Bills
Earlier this year. we announced that we were considering eliminating the issuance of 52week bills as our borrowing needs decline. The Borrowing Advisory Committee has
recommended that Treasury take that step. using its existing authority, early next year. We have
worked with Congress to revise a number of statutes that reference the auction yield of the 52week bill, proposing a reference to the one year Constant Maturity Treasury yield.
I am pleased to report that we have made significant progress. We have received
bipartisan support and agreement on the language to be used for these technical and noncontroversial revisions. Language to revise the relevant statutes is now before Congress. We are
optimistic that some. if not all, of the revisions will be completed before Congress adjourns this
seSSIOn. We will continue to work with Congress to minimize any possible disruption from the
2
potential elimination of the 52-week bill.
STRIPS Rules Changes
Today, we are announcing two technical changes to Treasury's STRlPS program to help
improve the liquidity of this market:
•
First, we are expanding the STRlPS program to include all outstanding 5-year notes that
had not previously been eligible for stripping. That is, 5-year notes issued between
November 30, 1995, and September 2, 1997, will now be eligible for the program.
•
Second, we are implementing a change referred to as "STRlPS to the penny." We are
reducing the minimum and multiple limits for stripping all fixed-principal Treasury
securities to $1000 par amount. This will eliminate the high dollar par amounts that have
previously been required to strip certain securities.
Both of these changes should increase the amount of outstanding interest STRlPS
available, making reconstitution of stripped securities easier and improving market liquidity.
The notice concerning these two rule changes is available today at the Federal Register
and press releases will be available at the end of the press conference today. The expansion of
eligible coupon securities will be effective on Friday, November 3. "STRlPS to the penny" will
become effective on March 1, 2001.
35 Percent Rule
Treasury has had a long standing rule that limits the sum of a bidder's net long position
plus its competitive awards to 35 percent of the auction. In the case of a reopening, holdings of
the outstanding security are also counted in the calculation of a bidder's net long position.
Recognizing that we have moved to a policy of regular reopenings, the issue has been raised that
the 35 percent rule may adversely affect the ability of certain market participants to bid in certain
Treasury reopening auctions. The Borrowing Advisory Committee has recommended that we
revise the manner in which we apply the 35 percent limit reopenings. We are studying this issue
and are seriously considering taking the Committee's recommendation to revise this rule.
Terms of the November Refunding
I will now turn to the terms of the November refunding. We are offering $20 billion of
notes to refund approximately $23.9 billion of privately held notes maturing on November 15,
paying down approximately $3.9 billion. The securities are:
A 5-year note in an amount of $12 billion, maturing November 15, 2005. If the auction
of the 5-year note results in a yield in a range of 5.875 percent through and including
3
5.999 percent, the 5-year note will be considered a reopening of the 5-7/8 % lO-year note
originally issued on Nov 15, 1995.
2
A reopening of the 5-3/4 % notes of August 2000, maturing August 15,2010, in an
amount of $8 billion.
These securities are scheduled to be auctioned on a yield basis at 1:00 p.m. Eastern
Standard Time on Tuesday, November 7, and Wednesday, November 8, respectively.
As announced on October 30, 2000, we estimate that we will have a $30 billion cash
balance on December 31 and on March 31. We expect to issue two more cash management bills,
one in mid-November and the second in early December, to mature in mid-December.
The next quarterly refunding press conference will be held on January 31, 200 I.
Closing
Before I close, I would like to say something on a personal note. This will be the last
quarterly refunding of the Clinton Administration.
This truly has been a remarkable period for Treasury debt management. We have gone
from the challenge of funding a deficit of $290 billion to managing a surplus of $237 billion.
That is over half a trillion dollars in improvement in annual budget results. The past seven years
also marks the longest series of consecutive years of fiscal improvement in American history.
As a result of these improvements, our publicly held debt now stands at just 34 percent of
Gross Domestic Product, down from nearly 50 percent at the start ofthe Administration.
We have made significant changes in debt management while consistently maintaining a
focus on our three key goals: sound cash management and achieving the lowest cost funding for
the taxpayer over time, while promoting efficient capital markets.
We eliminated the seven- and three-year notes. We reduced the frequencies and sizes of
our remaining auctions. We initiated a regular schedule of re-openings of our longer-term debt.
We extended uniform-price auctions to all of Treasury's marketable securities. We worked
closely with the Federal Reserve on revisions they made to purchases of Treasury debt for the
System's Open Market account. Most notably, we re-instituted debt buy backs, a practice first
recommended by Alexander Hamilton, after a lapse of seventy years.
At the same time, we have sought to improve investor choices and promote savings by
making Treasury securities more accessible. We introduced inflation-indexed instruments, both
as marketable Treasury securities and as savings bonds. We lowered the minimum purchase
requirement for all marketable Treasury securities to $1,000. We made the Treasury Direct
4
program for individual savers fully electronic and accessible by telephone or the Internet. We
revamped our State and Local Government securities program to reduce costs and provide
greater flexibility. Finally, we made significant changes to the savings bond program to enhance
returns to small savers and improve access, including making savings bonds available over the
Internet.
We would not have been able to achieve these results without the commitment and
professionalism of the staffs of Treasury's Offices of Cash and Debt Management and Market
Finance. The staffs of the Bureau of the Public Debt, other Treasury offices, and of our fiscal
agent, the Federal Reserve Bank of New York, also have been indispensable to our debt
management efforts. I would like to thank all otthem for their hard work and dedication
throughout these eight years, and particularly during the three years I have spent here at
Treasury. Finally, I would also like to thank Treasury's Borrowing Advisory Committee for
their support and counsel over these years, particularly the outgoing Committee chainnan, Ken
deRegt, and the new Chainnan, James Capra. We can all be very proud of our debt management
accomplishments over the last eight years.
Thank you.
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H !'J !' \. R T
~I
E N T
0 F
THE
T REA SUR Y
NEWS
TREASURY
OFFICE OF PUBLIC AFFAIRS .1500 PENNSYLVANIA AVENUE. N.W .• WASHINGTON. D.C.. 10120. (102) 622·2960
FOR RELEASE WHEN AUTHORIZED AT PRESS CONFERENCE
November 1, 2000
CONTACT: Office of Financing
202/691-3550
TREASURY NOVEMBER QUARTERLY FINANCING
The Treasury will auction $12.000 million of 5-year notes and $8,000
million of 9-3/4-year 5-3/4% notes to refund $23,877 million of publicly held
securities maturing November 15, 2000, and to pay down about $3,877 million.
In addition to the public holdings, Federal Reserve Banks hold $3,679
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 $4,421 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 $191 million into the 5-year note and $11 million
into the 9-3/4-year note..
Both 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. The notes being
offered today are eligible for the STRIPS program.
This offering of Treasury securities is governed by the ter.ms and conditions set forth in the Unifor.m 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 are given in the attached offering highlights.
If the auction of 5-year notes to be held Tuesday, November 7, 2000,
results in a yield in a range of 5.875% through and including 5.999%, the 5year notes will be considered an additional issue of the outstanding 5-7/8%
10-year notes of Series D-2005 (CUSIP No. 912827V82) originally issued
November 24, 1995. The additional issue of the notes would have the same
CUSIP number as the outstanding notes, which are currently outstanding in the
amount of $15,210 million. If the auction results in the issuance of an
additional amount of the Series D-2005 notes rather than a new 5-year note. it
wi.ll be indicated in the Treasury's auction results press release.
000
Attachment
LS-996
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
HIGHLIGHTS OP TREASURY OFFERINGS TO THE PUBLIC
NOVEMBER 2000 QUARTERLY FINANCING
November 1, 2000
Offering Amount .•••••••••••.••.••••.••••• $12,000 million
$8,000 million
Description of Offering:
Term and type of security .•.•••...•••••••
Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CUSIP number .••••••••••••••••••••••••••••
Auction date ..............................
Issue date ...•••••••••••••••••••.••••.•••
Dated date •..••••••.••••••••••••••••.•..•
Maturity date ••••••.•.••••••••••.•••••.••
Interest rate ••••••••.••••••.•••••••.••••
9-3/4-year notes (reopening)
C-2010
912827 6J 6
November 8, 2000
November 15, 2000
August 15, 2000
August 15, 2010
Amount currently outstanding •••.••••••.••
Yield ..•.••••••••••••••.••••••.••••.••••.
Interest payment dates •.••.•.••.•••••••••
Minimum bid amount and multiples •.••••.•.
Accrued interest payable by investor •.••
S-year notes
F-200S
912827 6N 7
November 7, 2000
November 15, 2000
November 15, 2000
November 15, 2005
Determined based on the highest
accepted competitive bid
Not applicable
Determined at auction
May 15 and November 15
$1,000
None
Premdum or discount •••••••••••.••.•.•.••. Determined at auction
STRIPS Information:
Minimum amount required .•.•.••.•••.••...• Determined at auction
Corpus CUSIP number ..•.••.••••••.••••.•.• 912820 FX 0
Due date(s) and CUSIP number(s)
for additional TINT{s) ...•.••••.•••••• Not applicable
5-3/4%
$12,360 million
Determined at auction
February 15 and August 15
$1,000
$14.375 per $1,000 (from
August 15 to November 15, 2000)
Determined at auction
$800,000
912820 FT 9
Not applicable
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids
Accepted in full up to $5,000,000 at the highest accepted yield.
Competitive bids •••••••• (1) Must be expressed as a yield with three decimals, e.g., 7.123%.
(2) Net long position for each bidder must be reported when the sum of the total
bid amount, at all yields, and the net long position is $2 billion or greater.
(3) Net long position must be determined as of one half-hour prior to the closing
time for receipt of competitive tenders.
Maximum Recognized Bid
at a Single yield •••• 35% of public offering
Maximum Award ••••••••••. 35% of public offering
Receipt of Tenders:
. Noncompetitive tenders •. Prior to 12:00 noon eastern standard time on auction day
Competitive tenders ••••. Prior to 1:00 p.m. eastern standard time on auction day
Payment Terms ••••••••••• By charge to a funds account at a Federal Reserve Bank on issue date, or payment of full
par amount with tender.
Treasu~Direct customers can use the Pay Direct feature which
authorizes a charge to their account of record at their financial institution on issue date.
DEPARTMENT
OF
THE
TREASURY
1 789
OFFICE OF PUBUC AFFAIRS. 1500 PENNSYLVANIA AVENUE, N.W . • WASlllNGTON, D.C. · 20220 • (202) 622·2960
FOR IMMEDIATE RELEASE
Text as Prepared for Delivery
November 2,2000
REMARKS BY TREASURY DEPUTY SECRETARY STUART E. EIZENSTAT
AT THE SIGNING OF THE PRELIMINARY CULTURAL PRESERVATION
AGREEMENT WITH BULGARIA
I am very happy to be here today to represent my Government in the signing of
this significant agreement, representing the desire of the U~ited States and Bulgaria to
cooperate in the field of cultural preservation.
I am especially pleased that signing on behalf ofth·e government of Bulgaria, is
Ambassador Dimitrov, whose leadership and personal courage were so important to his
nation's transition to a free and democratic society. It is not very often, that a country
sends its former Prime Minister as its envoy to Washington. Mr. Ambassador, we are
honored to have you here. Your presence shows the high importance your government
places on its relations with the United States. For our part, the visit of President Clinton
to Sofia a year ago and the visits of Secretaries Albright and Cohen and other officials
show we place an equal importance on this relationship.
I also want to thank the U.S . Commission for the Preservation of America's
Heritage Abroad for its work in achieving this agreement. My good friend Mike Lewan
and Commissioner Ned Bandler, vice chairman of Freedom House, have worked very
hard to make this possible, as have my former colleagues at the Department of State. The
cultural heritage of nations goes beyond buildings, historic places and sacred sites,
important as they are to preserve and protect. It goes also to the teaching, the learning, the
cultural values that make up the soul of a country. The people of your country, Mr.
Ambassador, are a mosaic of religious and ethnic backgrounds. They have a long and
proud history in the Balkan region . The historian Edward Gibbon noted that in the reign
of King Simeon, during the First Empire in the Ninth Century, "Bulgaria assumed a rank
among the civilized powers of the earth."
The educational and cultural links between our two countries go back over 100
years, symbolized by the American University in Sofia and the extension work of
institutions such as Roberts College. We hope that as a result of this agreement, work can
begin on linking cultural institutions in Bulgaria with others in the United States through
cooperative projects. I understand that members of the Commission will be traveling to
LS - 997
Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
·us . Governm enl Pnnltng Oll,ce'
1998· 6 19·559
Bulgaria to identify priority projects, in addition to strengthening existing educational
relations.
A cultural heritage flourishes, and is best protected, in an atmosphere of freedom,
peace and economic opportunity. For most of the 20th century Bulgaria was not truly free
and independent. Its people lived under conditions that stifled the human spirit by
silencing free speech and expression. Since 1996, your people have shown their
determination to advance toward a fresh destiny of democracy and economic progress, in
which they and all Balkan countries, in close association with your Balkan neighbors and
the other nations of Europe, are able to enter fully into the global economic mainstream
with all the benefits that will bring.
Your Government supported the NATO air campaign against Yugoslavia. Your
troops are participating alongside U.S. and other NATO forces in peacekeeping actions in
Kosovo and Bosnia. You have been helpful in the Stability Pact for Southeast Europe,
NATO's Partnership for Peace and other international efforts to bring democracy to
Serbia and ensure its peaceful co-existence with its neighbors. Just last month, the leaders
of the Balkans welcomed President Kostunica to the summit meeting at Skopje. Your
own President Stoyanov said that summit, and the change of government in Yugoslavia
through free elections, represented "the second historical chance for our region after the
fall of the Berlin Wall."
And so, because we value the role of culture, and because we believe in the future
of the Bulgarian people, I am very happy to come to this Embassy to take this concrete
step in the partnership for cultural preservation and educational progress between our
countries.
Thank you.
-30-
2
"
DEPARTIVIENT
OF
THE
TREAS,URY
,
,
.
,
.
NEWS
omCE OF PUBlJC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C.- 20220. (202) 622·2960
EMBARGQw 0N'l'J:L
movember
~,
2: 30 P • K.
2000
CONTACT:
Of£~ce
of
Financ~g
202/691-3550
'rllE.A.StmY OITEltS 13-WDX AND 2Ei-WUK lULLS
The T:ea~ ~11 auc~ioD ~wo S8r1GS of ~reasur,y b~11s tota1iDg
approx;meto1y $21,000 mi11ion to ~~ $27,571 ~llion of pub~icly held
seeur:ities maturing .ovamber 9, 2000, ancl to pa.y down a.bou1:. $6,571 mill.io:a..
:rn addi tio:a. to
~
public holdings, Federal Reserve Banks for thur ow.a.
accounts hold $13,226 ~11ion of ehe maturiug bills, which may be refunded at
the highest ciisCQI,U1t rate of accepted campetitive t.m:aders. Amounts issued
to these aCCO\lnes will :be in a&Ut;io:a. 1;0 the offering' amaunt.
'l'ha matu;:ing bills held by elle public incluCie $7,291 million held
Fadera1 Reserve Banks as agents for foreign and in~erna~iQnal monetary
authorities. ~ t;o $3,000 million of these securities may be refunded within
the offe~i:g ~t in .~CA of the auctio~8 o~ ll-week bills and 26-week
bills at the ~ghest d~sCQunt rate Qf accep~ed competitive tenders. Additional amounts ~ be issued in each auc:tiou for such accounts to the extent
that the amount of ~ew bids exceeds $3,000 million.
by
~s
2'reasuz:yD:lreee euseCIDArs :request:ed t.hat we reinves't. thei.~ maturi:a.s; holdof appraximately $988 mi~1iOD into the 13-week ~ill &D4 $1,176 ~lliOD
~to
the 26-week
bil~.
~s offering of ~ socurities is governed by' the teDi5 imd conditicms set forth in the thUfona Offering Circular for the Sale ana Issue of
Marketable BoOk-EDt;:y Treasury Bills, Rotes, aDd Bonds (31 CPR Part 356, as
amended) •
Details about a ..eb, of the new securities are given iu the attached
offering highlighes.
LS-998
Attachment
For pnss TeHan" speecMs, public $cMdul., Gild o/Jki41 bWZ11l.phies, call 0 ..' 24-hoUT flU lin,
III
(202) 622·2040
-
OF TREASURY OFFBRXNGS OV BILLS
TO BE XSSUED NOVEMBER 9, 2000
HIGHLIGH~S
.
.
November 2, 2000
Off.rlng~ount';""".""""""""'ll,OOO million
Desarlpt!on of Offering:
Term and type of ••curity ••••••••••••••• 91-4ay bill
CtJSIP nwnber •••••••••••••••••••••••••••• 912795 rs 5
Auction 4at••••••••••••••••••••••••••••• Novemb.r 6, 2000
X••ue dat ••••••••••••••••••••••••••••••• Novcmb.r I, 2000
Maturity 4at ••••••••• ~ •••••••••••••••••••ebruary 8, 2001
Orifina1 t ••u. 4at••••••••..•••••••••••• Augu.~ 10, 2000
CUrr.nt1y out.tanding •••••••••••••••••••• 13,056 million
Minimum bid amount and mu1tipl.s.; ••••••• 1,000
$10,000 lIIil1ion
182-day btll
912795 all' 2
November " 2000
November 9, 2000
Hay 10, 2001
NoveJDber 9, 2000
,1,000
The following rules apply to all .ecurities
mentioned ahove:
:
SubBis.ion of Bidsl
Woncompetitive bid•••••••••• Aocepted in full up to ~l,OOO,OOO at the highest discount ~.te of
accept.d competitive bids.
Camp.tit~ve bi4 •••••••••••••. (1) Must be expr.ssed as a discount rat. with three aecima1. in
incrementa of .005%, •• g., ;.100%, 7.105%.
(2) Ret long position for each bidder mu.t be reported when the sum
of the total bid amount, at all disoount rates, an4 the net long
position i8 $1 billion OE g~eat.r.
(3) Net long position must be aeterDdna4 aa of one half-bour prior
to the closing t~e for recei»t of cODPetitive ~.nder ••
Maximum Recognized Di4
at a Sing1. Rate •••••••••••• 35% of public offering
MaKimum Award ••••••••••••••••••• 35% of publio offering
Receipt of 'l'en4era:
Noncompetitive tenders •••••• Prior to 12: 00 noon eastern standard time on auction 4a¥
Competitive tenders ••••••••• Prior to 1:00 p.m. eastern standard time on auction Bay
payaent Te~.: By charge to a funds account at a Federal Reserve Bank on is.ue date, or p~e~t
of full par amount with tende~. ~rea8ur.vDlrect customers can use the Pay Direct feature whioh
autborizes a charge to their account of record at their financial in.titution on issue date.
NEWS
omCE OF PUBllC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220 • (202) 622-2960
FOR IMMEDIATE RELEASE
November 3, 2000
STATEMENT BY TREASURY SECRETARY LAWRENCE H. SUMMERS
We share the concern expressed by the European Central Bank (EeB) in the context of its action
today in the exchange markets about the implications of the broad movements in the euro for the
world economy. We reaffirm our commitment to the 0-7 statement of September 23, 2000 and
to our longstanding strong dollar policy.
-30-
LS - 999
Far press releases, speeches, public schedules and official biographies, call our 24-hour fax iiTU! at (202) 622-2040
·U S Government Pnntlnq Ofhce 1998· 619-559
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
November 6,2000
PUBLIC DEBT ANNOUNCES ACTIVITY FOR
SECURITIES IN THE STRIPS PROGRAM FOR OCTOBER 2000
The Bureau of the Public Debt announced activity for the month of October 2000, of securities within the
Separate Trading of Registered Interest and Principal of Securities program (STRlPS).
Dollar Amounts in Thousands
Principal Outstanding
(Eligible Securities)
$1,976,895,180
Held in Unstripped Form
$1,788,931,399
$187,963,781
Held in Stripped Form
$16,861,870
Reconstituted in October
The accompanying table gives a breakdown of STRIPS activity by individual loan description. The balances in
this table are subject to audit and subsequent revision. These monthly figures are included in Table 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.
000
PA-474
LS-1000
www.publicdebt.treas.gov
iASLi:v:HOlDINGS OF TREASURY SECURITIES IN STRIPPED FORM, OCTOBER 31, 2000
Principal Amount Outstanding in Thousands
Corpus
Loan Descnption
-Treasury Bonds:
CUSIP:
912810DM7
008
DR6
DU9
DN5
OPO
DS4
012
DV7
DW5
DX3
DYl
DZB
EA.2
EBO
ECa
ED6
EE4
EFl
EG9
EH7
EJ3
EKO
El8
EM6
EN4
EP9
E07
ES3
ET1
EV6
'EW4
EX2
EYO
Interest Rate:
ll-S/8
12
10-3/4
g..3/8
11-3/4
11-1/4
10-5/8
g..718
g..1/4
7-1/4
7-1/2
8-3/4
8-7/8
g..1/8
9
8-7/8
8-1/8
8-112
8-3/4
8-3/4
EZ7
FA1
FB9
FE3
FFO
FG8
FJ2
FM5
Total Treasury Bonds .... _.....
7-7/8
8-1/8
8-1/8
8
7-114
7-518
7-1/8
6-114
7-112
7-518
6-7/8
6
6-3/4
6-1/2
6-5/8
6-3/8
6-1/8
5-1/2
5-114
5-1/4
6-1/8
6-1/4
Maturity Date
912803 AS9
AD5
AG8
AJ2
912800AA7
912803 AA1
AC7
AE3
AFO
AH6
AK9
All
AM5
AN3
AP8
A06
AR4
AS2
ATO
AU7
AV5
AW3
AXl
AY9
AZ6
BAO
BB8
BCG
B04
BE2
BF9
BG7
BH5
BJl
BK8
Bl6
BM4
BP7
.'
BV4
SW2
CG6
CH4
11/15/04
05/15/05
08/15/05
02115/06
11/15/14
02115/15
Total
Outstanding
08115/15
11/15/15
02115/16
05115/16
11115/16
05115117
08115/17
05/15/18
11115/18
02115119
08115/19
02115/20
05115/20
08115/20
02115/21
05115/21
08/15/21
11/15/21
C8/15/22
'1115/22
.'2115/23'
:8/15/23
11/15/24
02115125
08/15/25
02115/26
08/15/26
11115/26
02115/27
08/15/27
11/15/27
08/15128
11/15/28
02115/29
08/15/29
05115130
...............
Total Inflation-Indexed Notes .......
.... , ..
I
Portion Held In
Stnpped Form
l
Reconstituted
This Month
13,132,358
7,616,439
7,689,470
17,061,298
19,857,432
9,978,868
8,643,783
19,145,306
10,414,573
10,748,788
10,918,482
31,851,194
10,288,790
9,044,626
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
10947.052
11,350,341
11,178,580
17,043,162
4,215,406
1,698,808
5,576,913
4,712,524
2,137,584
6,021,079
3,936,916
3,681,059
6,298,354
18,350,751
17,464,688
11,372,749
10,559,558
3,381,239
3,099,070
10,840,498
18,811,672
8,179,268
3,401,063
9,133,146
9,624,173
6.231,988
9,664,722
13,141,519
9,093,590
3,974,226
10,607,061
17,763,284
4,118,462
3,481,770
7.483,327
11,358,916
8,226,618
7,429,177
6,651,271
9,255,756
17,148,939
11 ,634,601
10,598,252
11,135,941
11,175,380
17,043,162
4,086,400
2,561,950
3,692,800
43,392
3,868,000
5,782,720
1,504,000
2,244,800
514,400
472,800
1,359,760
5,593,920
2,572,800
4,235,200
4,590,400
6,220,800
1,045,760
1,799,600
5,242,720
10,012,160
790,400
4,516,800
1,253,760
18,709,675
1,195,200
5,070,400
6,963,200
4,905,760
6,651,200
8,054,400
4,543,680
1,546,000
2,667,200
4,064,000
3,804,800
1,480,000
5,369,600
141,600
348,800
214,400
3,200
0
174,400
224,500
143200
16,000
9,600
972,800
375,360
395,200
433,600
111,200
465,840
830,240
294,400
528.000
181,800
982,400
172,800
316,800
522,560
1,228,160
43,200
439,040
499,840
1,541,550
108,000
587,200
435,200
140,384
367,520
184,000
152,960
341,100
160,000
310,000
566,400
384,000
1,043,200
121,200
23,200
9,600
0
0
519,452,937
369,714,480
149,738,457
15,835,654
18,134,323
17,176,346
17,971,043
16,745,701
11,620,516
18,134,323
17,176346
17,971,043
16,745,701
11,620,516
0
81,647,929
81,647,929
0
0
17,947,084
20,718,308
17,947,084
20,718,308
0
0
0
0
38,665,393
38,665.393
0
0
8,301,806
4,260,758
9,269,713
4,755,916
6,005,584
11,803,799
5,440,916
5,925,859
6,812,754
18,823,551
18,824,448
16,966,669
0
0
0
0
0
0
0
0
0
I
04/15/28
04115/29
912803 BN2
CF3
3-5/8
3-7/8
Total Inflation-Indexed Bonds .......
07115102
01115/07
01/15/08
01115/09
01/15/10
912820 BZ9
BV8
CL9
DN4
EK9
........
Treasury Inflation-Indexed Sonds:
Interest Rate:
CUSIP:
Cortlon Held In
Unstripped Form
I
Treasury Inflation-Indexed Notes:
Series: Interest Rate:
CUSIP:
3-518
9128273A8
J
3-318
A
2M3
3-5/8
A
3T7
3-718
4Y5
A
4-1/4
SlN8
A
912810 FD5
FH6
STRIP
CUSIP
I
DEPARTMENT
OF
THE
TREASURY
1I1I1I~~~1I1I1I1I1I1I1I1I1I1I1I1I1I1I~"""~~7~9~'~~II~IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII.
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960
u.s. International Reserve PositioQ.
The Treasury Department today released
11/08/00
u.s. reserve assets data for the week ending November 3, 2000.
As indicated in this table, U.S. reserve assets totaled $66,009 million as of November 3, 2000, up from
$65,154 million as of October 27,2000.
(in US millions)
Octol:J~r _27.
I. Official U.S. Reserve Assets
TOTAL
1 Foreign Currency Reserves
[
1
.:Of '.Inich, issuel 'leadquarrered
EUlo
...J.,0!JO
a. Secu rities
iTJ
\1
en
8,600
t. Total deposits with:
8,277
b.ii. Banks headquartered in the U.S.
b.li. Of WhiCh, banks loc3ted abroad
b.iii. Banks headquartered outside the U.S.
b.lii. Of which. banks located
In
the U.S.
2. IMF Reserve Position 2
3. Special Drawing Rights (SDRs)
4. Gold Stock
3
5. Other Reserve Assets
2
Euro
TOTAL
13,457
4,981
Yen
TOTAL
8,694
13,675
0
0
thE) US
b.i. Other central banks and BIS
N()\IernQer 3, 20QO
66,009
2000
65,154
8,737
17,013
8,489
8,832
17,321
0
0
0
0
0
0
0
0
13,491
13,679
10,146
10,287
11,046
11,046
0
0
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 October 27 are final. The entries in the table
above for November 3 (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-100l
U.S. International Reserve Position (cont'd)
II. Predetermined Short-Term Drains on Foreign Currency Assets
October 27, 2000
November 3, 2000
o
o
2.a. Short positions
o
2.b. Long positions
o
o
o
o
o
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:
3. Other
III. Contingent Short-Term Net Drains on Foreign Currency Assets
November 3, 2000
October 27,2000
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.
o
o
o
o
o
o
o
o
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
D EPA R T 1\11 E:'N T
TREASURY
0 F
THE
T REA SUR Y
NEWS
omCE OF PUBliC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960
FOR IMMEDIATE RELEASE
Text as Prepared for Delivery
November 7, 2000
"CHALLENGES FACING TAX POLICY IN THE COMING YEARS"
TREASURY ACTING ASSISTANT SECRETARY FOR TAX POLICY
JONATHAN TALISMAN REMARKS TO THE AICPA
NATIONAL CONFERENCE ON FEDERAL TAXES
WASHINGTON, DC
I want to thank Gerry, Ed and the AICPA for inviting me to speak today
Given that others already have discussed the "tax legislative outlook" such as it is, I thought I
would exercise some license to look forward and examine the challenges that the tax system, and
those fortunate enough to have some responsibility for it, will face in the coming years. Some of
these challenges are caused by changes in the economy, such as globalization and e-commerce.
Others involve concerns that must be addressed to preserve the tax base. And finally there are
those that involve taking advantage of opportunities presented by budget surpluses to address
areas of need in the system.
I.
CHANGES IN THE ECONOMY
Much has changed since I entered the government 8-112 years ago. Globalization and
information technologies have ushered in an economic transformation as profound as that of the
Industrial Revolution of the 19th century. The scale of change is enormous, as are the potential
benefits.
Trade barriers are falling, the market for capital is international, and access to information from
around the world is instantaneous. As a result, economies are increasingly interdependent. As
national borders become less relevant, business enterprises will be increasingly global in scale
and mobile with regard to the location of their management and activities. But while capital,
goods, and services increasingly move without regard to borders, national borders will continue
to confine tax authorities.
The implications of this natural tension for tax policy are just beginning to be appreciated. We, at
Treasury, are actively examining and responding to the challenges raised by the emerging global
environment. The challenge is how to tax the activities of our citizens and residents on a neutral
L8-1002
Fur 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
basis when their activities increasingly transcend our borders and thus are more difficult for us to
discover and evaluate. I want to focus today on three areas in particular: harmful tax
competition, tax arbitrage, and the challenges posed by the advent of electronic and information
technology.
A. Harmful Tax Competition
International tax competition occurs when one country provides a tax inducement to attract
capital from another country. When practiced unfairly, tax competition can severely erode the
capital tax base of the losing country. Harmful tax competition also distorts investment decisions
and undermines fiscal stability. Eventually, this means that the losing country may have to make
up the lost tax revenue through higher taxes on the income it still can get a hold of -- like income
from labor. The most aggressive forms of harmful tax competition are practiced by countries we
commonly think of as tax havens.
By tackling these practices, we should help businesses compete on a level playing field and help
encourage investment growth and jobs. It also will play an important role in promoting the
health of the global economy and global financial system.
With respect to tax havens, the United States has pursued a parallel track of advancing unilateral
initiatives and working in multilateral forums such as the GECD For example, our recent "QI"
regulations, which streamline the procedures by which banks can verify the foreign residence of
recipients of interest income from the United States, impose special, more rigorous requirements
on banks based in tax havens. These requirements are geared to ensure that such banks have
access to, and can provide information regarding, the beneficial owners of interest income. We
also have opened a guidance project to consider the imposition of a withholding tax on portfolio
interest paid to accounts or corporations in tax havens, even though such interest paid to
nonresidents generally is exempt from U.S. withholding tax.
On a multilateral basis, we have taken an active role in the OECD's work in the area of harmful
tax competition. The OECD's initiative to identify harmful tax regimes focuses on three
narrowly defined counts:
•
Lack of transparency,
•
Lack of information exchange, or
•
Discrimination between residents and nonresidents.
Because of these identification efforts, over thirty countries already have committed to eliminate
their harmful tax practices and more are expectea to do so in the near future.
The OECD's work is a first step to ensuring that policy objectives of member countries can be
realized without the fear of an eroding tax base and other distortions that could undermine the
benefits of the enhanced capital mobility in today's global economy. Non-member countries
have much to gain from joining such an effort. For example, at a recent 60-nation conference on
tax competition, delegates from developing countries noted that these harmful practices
2
constitute a more severe threat to their countries than to that of developed countries, in part
because tax base erosion can translate directly into increased poverty, These delegates warned
that tax competition could contribute significantly to a backlash against globalization, already
seen in many quarters as benefiting the developed world at the expense of the developing world,
One of our primary interests in the GECD's initiative, which should be shared by the US,
business community, is to eliminate harmful tax competition so it cannot be used as an argument
against globalization.
B. Tax Arbitrage
A similar challenge to tax systems is the use of tax arbitrage. Tax arbitrage involves the
exploitation of differences in the tax laws of two or more jurisdictions, resulting in the lowering
of a taxpayer's worldwide tax liability by ensuring that income is not taxed anywhere.
Tax laws are written based upon certain assumptions, including the principle that income should
not be subject to double taxation. In the cross-border context, this has been implemented
through international conventions that have been widely adopted. For example, interest
generally is deductible by the payor in the source country, but generally is included in income
upon receipt by the investor in the country of residence, In this circumstance, the source country
cedes primary taxing jurisdiction of the interest to the country of residence, Conversely, because
dividends generally represent underlying earnings that have been subject to tax by the source
country and are generally not deductible when paid, the country of residence of the recipient will
generally cede primary taxing jurisdiction to the source country through an exemption or credit
mechanism. In each instance, the ceding of primary taxing jurisdiction by one country is based
on the assumption that the amount is more appropriately taxed in the other country
If, however, both countries characterize a transaction differently, tax arbitrage can arise in which
both countries cede taxing jurisdiction simultaneously and the income is not taxed by any
jurisdiction. Countries may characterize a transaction differently because of a variety of reasons,
including differences in rules with respect to ownership, entity characterization, instrument
characterization, timing, or source.
Some would argue that arbitrage is not troubling because a transaction is characterized correctly
under domestic tax rules. Under this view, as long as a transaction does not rise to the level of
being a tax shelter, taxpayers should obtain the tax results as permitted by each individual
jurisdiction's laws,
At Treasury, however, we believe that tax arbitrage is problematic for several policy reasons. By
creating double non-taxation, tax arbitrage distorts economic behavior because taxpayers will
tend to favor cross-border tax arbitrage transactions over domestic transactions or other types of
cross-border transactions, thereby undermining the principle of neutrality. Furthermore,
taxpayers who do not have access to arbitrage opportunities will have higher costs of operations
and will thus be prejudiced because they will not have the benefit of such de facto subsidies.
Taxpayers who do engage in tax arbitrage transactions tend to be the wealthy and well advised,
because the nature of such transactions often require many resources and the expertise of tax
advisors. Finally, as with harmful tax competition, governments may ultimately need to
3
compensate for a shortfall in revenue by shifting the burden of tax to other constituents, such as
to labor.
c.
Internet Tax Issues
The advent of the electronic and information technology age also poses serious substantive and
administrative challenges for the tax system. These include:
•
Determining who has the jurisdiction to tax companies that are engaged in electronic
commerce or otherwise make use of the Internet. For U.S. federal purposes, the issue
involves, in the tax treaty context, the definition of the concepts "permanent establishment"
and "income attributable to a permanent establishment," and, outside the treaty context, the
definition of the concept "income effecti vel y to a U. S. trade or business."
•
Determining the source of income generatedfrom electronic commerce. This determination
can affect both the taxability of such income (i.e., jurisdiction to tax) and the availability of a
foreign tax credit. For example, income from services is traditionally "sourced" according to
where the services are performed, but determining geographic place of performance with
respect to services provided over the Internet may be difficult.
•
Determining the characterization of income from electronic commerce. This can affect both
jurisdiction and source (and possibly rate of tax). For example, if income from the sale of
downloaded software is characterized as a royalty one set of sourcing and jurisdiction rules
will apply while if such income is characterized as income from the sale of a good or as from
the provision of services, other rules would apply.
•
Applying the anti-deferral rules, such as subpart F of the Us. Internal Revenue Code, to
companies engaged in electronic commerce or that otherwise make use of the Internet. Our
subpart F study, which will be issued shortly, is looking at the extent to which these rules
reflect the way business is done today. It also examines the extent to which the current rules
are being circumvented.
In particular, we are looking at the extent to which the rules may need to change in light of
new technologies, including new communications technologies and electronic commerce.
With respect to services like Internet access, remote database access, remote order processing
and video conferencing, new technologies may make it difficult to determine where the
services are performed. Similarly, new technologies may make it difficult to determine the
place of use, consumption or disposition with respect to electronically delivered products,
such as music and computer software. To the extent the Subpart F rules rely on place of use,
those rules may become increasingly difficult to apply.
Moreover, new technologies increase the ease with which employees of a CFC can be
located outside the CFC's jurisdiction of incorporation and increase the ability of CFCs to
acquire products and services remotely. This increases the opportunities for CFCs to be
incorporated in low- or no-tax jurisdictions while they provide services to others located
elsewhere.
4
•
Identifying "taxing points" to impose tax with respect to e-commerce. In general, tax
compliance is facilitated by identifying key "taxing points" in a transaction that may give rise
to tax. One example would be the transfer of funds through a financial institution.
Electronic commerce, however, often eliminates the need for intermediating institutions.
Elimination of the traditional checkpoints, however, may make tax administration
increasingly difficult.
•
Verifying the identity and location of transactions occurring through a Web site. These
transactions cannot be associated necessarily with a specific taxpayer, nor can the taxpayer's
actual geographic location be easily ascertained. Moreover, while Web sites and e-mail
addresses may be associated with specific individuals, the relationship of those addresses to
the physical world is not fixed as they can be established and accessed from anywhere in the
world where there is a computer linked to the Internet. Thus, even if tax authorities can track
activities or income to a Web site or e-mail address, they may nevertheless not be able to
identity the persons or persons behind the electronic front.
•
Use oj E-Mail. Internet messages, especially secure or encrypted transmissions, create
opportunities for untraceable transfers of assets and other activities that will hinder audits of
taxable activities.
Let me state a few guiding principles to meet these challenges:
•
Any taxation of the Internet and electronic commerce should be clear, consistent, neutral and
non-discriminatory. Neutrality and non:..discrimination must be the fundamental principles
that guide the development of tax rules with respect to electronic commerce. In addition, tax
rules should be consistent across jurisdictions, to minimize the possibility of multiple or no
taxation. The rules should be transparent and easy to administer.
•
Close cooperation and mutual assistance are necessary between the U. S. and its trading
partners to ensure effective tax administration and combat illegal activities on the Internet.
•
The global nature of e-commerce necessitates global consensus on the principles underlying
any e-commerce taxation. In the absence of such consensus, stifling multiple taxation may
result.
ll.
CORPORATE TAX SHELTERS
Another challenge for the system is addressing the problem of "corporate tax shelters." These
transactions are marketed to corporations eager for a positive impact on their financial statements
from a substantial reduction in taxes. A significant feature of these transactions is that they have
little or no business purpose or economic substance, other than the reduction of taxes, and thus,
often involve the artificial shifting of income to foreign affiliates or accommodation parties who
are free from U.S. tax. During my tenure at Treasury, a great deal of time and effort has been
spent addressing specific tax shelters. I will not belabor the point here, having done so many
times in the past. Suffice it to say that I believe the current ad hoc approach is insufficient and
5
must give way to a more global approach that would:
•
Require corporate taxpayers to disclose transactions that meet certain objective criteria;
•
Strengthen penalties applicable to underpayments with respect to such transactions,
particularly in the absence of disclosure;
•
Elevate existing judicial doctrines; and
•
Provide consequences to all the parties to a transaction (including promoters and foreign
"accommodation" taxpayers).
As part of this effort, we still intend to complete our current project to update Circular 230. The
current standards need to be modernized to address the current types of marketed transactions.
We requested comments in May relating to factual due diligence standards, the extent to which
judicial doctrines must be addressed, and whether a contingent fee may be charged. I expect this
project to be completed shortly.
ID.
SOPlllSTICATED FIl'IANCIAL PRODUCTS
Financial products present a.ll of the issues with which our current tax system is concerned,
including: timing, matching, arbitrage, character, source, debt v. equity, principal v. interest, and
entity classification.
Moreover, financial markets act and react faster than the tax guidance and legislative processes.
Traditional tax rules that address the proper treatment of holders and issuers of financial
instruments were developed decades ago.
These traditional rules generally depend on the "cubby-hole" in which a transaction is placed -and that determination is too often based on form. Moreover, the rules applicable to instruments
that are labeled differently are often mutually inconsistent. For example, there is often little
economic difference between unsecured debt and certain types of preferred stock. A forward
contract, a futures contract, and the combination of a written put and a purchased call may all
produce the same exposure to changes in the price of some underlying position, but all have
different tax consequences.
Many of the instruments traded on today's markets -- especially private markets -- may not
comfortably fit under the current rules. Targeted rules designed to address the latest financial
instrument fad soon become outdated and create a quilt work of patches that, at best, complicate
the law and, at worst, present new opportunities to exploit.
Any deviation from the underlying economics of a transaction -- even a deviation that
traditionally favored the Government -- can be leveraged today into a tax-reducing technique.
The only effective governmental response is to tax a transaction according to its economics, but
that goal often runs into practical or legal difficulties.
6
What is needed, therefore, is a fundamental reexamination of the taxation of financial
instruments with the goal of making the rules more consistent and more economically sensitive.
This process may demand significant departures from long-established fundamentals. What we
need may be comprehensive rules and guidance that follow the economics of a transaction and
treat similarly situated financial products and taxpayers equally.
IV.
TAX POLICIES IN A WORLD OF SURPLUS
When I started my career in government, people were preoccupied with -- and tax policy was
captive to -- soaring budget deficits. Now, after two deficit reduction bills (in 1990 and 1993),
nearly a decade of fiscal discipline, technological advancements, and what will soon be the
longest economic expansion in history, we are running surpluses that are forecast to persist for
nearly 50 years.
Before I explore tax policy priorities in a world of surpluses, let me state three important caveats.
First, we must be careful not to fall prey to irrational exuberance. A fundamental question is how
real are the projected surpluses. So far, we have experienced a surplus for just three years,
compared with two decades of deficits. Exuberance may be premature for at least two reasons:
(1) the extraordinary economic conditions that led to the surplus may not persist, and (2)
surpluses in a political environment may tend to be self-correcting.
Second, we must consider other possible uses of the surplus outside the tax realm. The President
would preserve the great bulk of the surpluses for Social Security, Medicare and debt reduction.
Under the President's plan, the national debt would be eliminated by 2012. This has several long
run benefits. Future taxes will be lower, the economy will be stronger, and the Social Security
and Medicare guarantees so important to working people would be absolutely secured. It is also
prudent, given the uncertainty of the long-run surplus projections.
Third, it is important to note that the need for revenue offsets is decreased in an era of surpluses.
Concomitantly, policymakers' appetite for provisions that raise revenue, even if loophole closers,
is diminished. This may make it more difficult to address certain types of structural concerns
with the tax system.
That being said, I believe that budget surpluses provide compelling opportunities to make the tax
system fairer and simpler, and to address serious long-run structural concerns. In the interest of
time, I will discuss only one of them - the alternative minimum tax (AMT) problem. By this, I
do not mean to suggest that other potential uses of the surpluses are not important. For example,
I believe strongly that simplification should be a priority of the next decade. Hank Gutman, in
his recent Woodworth address, suggested that the surplus might be used to craft a more global
solution to the ever-present INDOPCO issue. This is a worthy, albeit difficult, goal.
The AMT Problem
Absent reform, the AMI will hit more and more middle income families. By 2010, 45 percent
offamilies with two children will be subject to the AMT. Millions of taxpayers have to do
complicated calculations to ascertain that they are not subject to the AMI The 1999 provision
7
to allow personal credits against the AMT alleviated this problem considerably, but it did not
solve the threat ofthe AMT to large families. The AMT makes the income tax seem unfair and
complex to many moderate-income people who are trying to play by the rules
The AMT was originally intended to ensure that high-income taxpayers could not eliminate their
income tax through extensive use of special tax breaks or "tax preferences" Because of design
flaws, however, the AMT increasingly applies to middle-income taxpayers, particularly to
families with children. The number of taxpayers subject to the AMT is expected to grow, ifno
change is made, from 1.3 million today to 17 million by 2010. This is due in part because, under
current law, the AMT treats personal exemptions and the standard deduction as "preference
items" in the same category as special tax breaks such as intangible drilling costs and tax shelter
losses. Taxpayers subject to the AMT are denied these deductions. As a result, under current
law, a couple with five children and $70,000 of income that claims the standard deduction would
be subject to the AMT in 2000 The AMT was never intended to affect such families.
The Administration's proposal would address these design flaws in two ways. First, when fully
phased in, the proposal would allow taxpayers to deduct all of their dependent exemptions
against the AMT, thereby ensuring that no taxpayers would become subject to the AMT simply
because they claim personal exemption deductions for their children. This would reduce the
number of taxpayers subject to the AMT in 20 ~ 0 by more than half to 7. 6 million. Second, the
proposal would allow taxpayers to claim the standard deduction for AMT purposes in 2000 and
2001. This proposal is a continuation of the Administration's efforts to provide relief from the
AMT for middle-income taxpayers in a fiscally responsible manner.
v.
CONCLUSION
In closing, I want to stress the importance of continued involvement by all of you in meeting
these important challenges. The AICPA historically has been an active participant in
commenting on legislation and regulations. With the rapid pace of change in our economy, we
will need to rely even more heavily on you, and other similar groups, for your help and guidance.
Thank you for the opportunity to be here.
I would be happy to take a few questions.
-30-
8
:
D EPA R T IVI E
NT
0 F
THE
T REA
S, U
R Y
,
,
,
NEWS
omCE OF PUBlJC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C.- 20220. (202) 622.2960
~GOED
ON'J.'D:. 9: 00 A.H.
PDBt.l:C
COJr.rACT~
November 8, 2000
Office of :ril:l.aAciD.g
202-691-3550
MEDZA CO!i'I'AC'I':
una Gallagher
202-622-2960
CD NO"I'e'Dber 9, 2000, the ~ea.s'U%Y rill buy back up to $1,250 miJ.lion par
of :ots outstaDding issues that mature between Sovember 2022 ale! Aunst 2027.
'l"re.~ reserves the. right to ZLCCapt le88 ,thaD the a..zmow::acec! amount.
'!'his debt bu.rback (2:8demptd.o:) operat=.ion will be co=ducted by ~Z"ealNZ'Y's
Fiscal A51tmt, the Federal Reserve BGDk of Hew York, using its Op811 Harket
operations .:rates. OZlly institutions that ~ J'e4eral tte ••2:""Ie Ba:Ak of New
York bas approved to conduct Open Market transactions may submit offers 011.
behalf of themsel vea and their customers. Offers at the highest: aeeeptecl
price for a partieu1ar issue -.y be accepted on a prorated baais, ~e4 up
to the ZUtXt $100 I 000. As a. J:esul t: of this row:Lding, the, 'rrealN:Y mQY buy
back all amount slightly larger than the one announced alxwe.
'.rhJ.s c:!ebt ~yback operation is SJoVaZ'Zled by the tezms aDd. coz:a.a:i.t:i.oas
forth ia 31 CPR Part 375 Al1d ~. amlO'IUlCemeat:.
~
the
in
debt buyback operatioSl Z'egv.l~ti.OD. ~e available em the liureau o~
Pub~ie
Debe's website ae www.publicdebt.tr8as.gov.
Details about the operation and each of the eligible isaues
aeeached. high1ight:s.
~e
000
ataehment
LS-I003
Bet:
~e '~iven
,
,
-
Hovembezo 8, 2000
PaZ' amcNDt to be lxIught I:Nu:k •• Up to $1,250 millicm
~a~:101l dab •••• • • • • • • • • • • •• ~ 9, 2000
Opera~iOD olos. ~:i-. •••••••••• 11:00 •••• _te:na .taza.dari t;lae
SettlelleDt elate ................ 1IoVwa'be: 13, 2000
paZ" offer ••owlt~ ••••• $100,000
MUltiples of par ••••••••••••• $100,000
I'ozmat for offers ••••• Bx,presaecl ill tezas of price per $100 of paz' with
three decimals. '!'he fi:l:'at two 4eeiaal. ~~.~
fzoactiODal 32-- of a dol1,U. ~ tb:lri aec:i. .l
:l:'8presents e~ghth. of a 32-- of a. dollar, ana mut
M:ini __
be a 0, 2, 4, 0:1:' 6.
l)eliY8:l:'Y izutt:zucticm.a ••••••••• ABA 1I1imbe:l:' 021001208 nB RYC/CUST
'J.'z'easw:y issues eligible for debt buyback ope:N.~iOZl U.D m:lll:i.OQs)
CoupoIl
Ilate C%)
7.625
7.125
6.250
7.500
7.625
6,.875
6,.000
6.750
6.500
6.625
6.375
JIa~~i~y
Date
COSlt'
irumbe1"
11/15/2022
912810 D 4
02/15/2023 '912810 El'.9
08/15/2023 912810 EQ 7
11/15/2024 912810 BS 3
02/15/2025 912810 m 1
08/15/2025 912810 EV 6
02/15/2026 912810 EW 4
08/15/2026 912810 U :2
11/15/2026 912810 BY 0
02/15/2027 912810 ZZ .,
08/15/2027 912810 PA 1
~ta1
•
Par
•• paz-
~t.
.ar~t
Oa.~s~&Ddillg'*
9; 0,",5
17,570
22,669
'"
10,770
11,536
12,027
12,905
10,89'
11,493
10,456
10,736
140,101
=
Par AmeNDt Par ~t
Privately
a.lel .a
Bela-
S'nl!~S*·
7,444
14,935
21,116
',155
10,360
10,228
11,790.
9,280
9,769
5,160
6,957
',830
6,805
8,062
... ,531
1,'541
2,656
9,53.6
3,629
1,534
49,9·56
9,096
122,709
",,251'
are as of Bcnr-mbar 7, 2000 •
of ~ 6, 2000.
aaoazt.~8 tu:'e . .
tbo..
TIl. cU~~ereDCe :betweeD eIle PU' UIO'Wl~ 0u~8t&D.CI;nsr aDd Qe ~ amow:a.t
pzoivatel.y bel.4 i . t:Il. pa% amcnmt o£
isaues bale! J::.y the l'e4ez'al
".e:n'8 System.
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
November 08, 2000
CONTACT:
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 9-3/4-YEAR NOTES
This
~ssue
is a reopening of a note originally issued August 15, 2000.
Interest Rate:
Series:
CUSIP No:
STRIPS Minimum:
Issue Date:
Dated Date:
Maturity Date:
5 3/4%
C-2010
9128276J6
$800,000
High Yield:
Price:
5.865%
November 15, 2000
August 15, 2000
August 15, 2010
99.134
All noncompetitive and successful competitive bidders were awarded
securities at the high yield. Tenders at the high yield were
allotted 30%. All tenders at lower yields were accepted in full.
Accrued interest of $ 14.37500 per $1,000 must be paid for the period
from August 15, 2000 to November 15, 2000.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
Competitive
Noncompetitive
$
20,982,010
47,917
$
8,000,417 1/
21,029,927
PUBLIC SUBTOTAL
1,274,777
800,000
1,274,777
800,000
Federal Reserve
Foreign Official Inst.
$
TOTAL
23,104,704
7,952,500
47,917
$
10,075,194
Median yield
5.845%: 50~ of the amount of accepted competitive tenders
was tendered at or below that rate.
Low yield
5.800%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio
=
21,029,927 / 8,000,417
1/ Awards to TREASURY DIRECT
=
=
2.63
$25,436,000
http://www .publicdebttreas.gov
15-1004
D EPA R T 1\1 E N T
0 F (T H E
I
T REA SUR Y
NEWS
OffiCE OF PUBliC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220 • (202) 622-2960
FOR IMMEDIATE RELEASE
Text as Prepared for Delivery
Thursday, November 9, 2000
REMARKS OF TREASURY SECRETARY LAWRENCE H. SUMMERS TO THE
SECURITIES INDUSTRY ASSOCIATION
BOCA RATON, FLORIDA
Today, America is enjoying a very special moment. There are many reasons for our prosperity:
our fiscal discipline; our success in developing important new technologies; the vitality of
America's entrepreneurs. But I am convinced that an important part of the credit for our
unprecedented economic performance goes to the unparalleled strength and dynamism of our
financial markets:
•
No other country offers such a deep and liquid capital market or such an impressive venture
capital industry.
•
No other financial market is so open to foreign competition or so quick to innovate, whether
it be in the area of securitization, financial derivatives, high-yield debt, or equity finance.
•
And no other financial system has so effectively maintained the appropriate balance between
high-quality regulation and the absence of excessive state interference.
In a very real sense, the financial system is the central nervous system of our economy. And just
as the past dynamism of our financial sector has been central to America's current prosperity, so
the future success of that sector will be very important to the well-being ofthe economy as a
whole.
That future will depend on the continued dynamism of our financial sector players. But it will
also depend, in part, on what the public sector does. Today I will briefly reflect upon the roles
that the public sector can play in helping to promote continued prosperity and economic wellbeing. I will focus upon the important policies that have helped to form the foundations of our
current prosperity induding, first, our sound macroeconomic policies and, second, our strong
LS- 1005
For press releases, speeches, public schedules and official Mographies, call our 24-hour fax line at (202) 622-2040
·u.s.
Govemment Printing Office: 1998· 619·559
legal and regulatory framework of financial markets. Finally I wi 11 briefly tum to the long-term
challenges facing our financial system and the way that the private and public sector can and
must work together to meet those challenges.
I.
The Importance of Providing a Stable Macroeconomic Environment.
The most dynamic financial system in the world has been built on private sector ingenuity. But it
could not have emerged except on a foundation of old virtues.
It is no accident that our economic success over the last few years has coincided with the
emergence of a new national consensus in support of sound macroeconomic policies. Under the
leadership of President Clinton and Vice-President Gore, we have succeeded in moving from an
era of economic uncertainty to one that is built on a sound and sure macroeconomic footing.
Consider:
•
By respecting the independence of the Federal Reserve, we have helped it to focus
successfully on maintaining price stability with continued rapid growth.
•
By recognizing that a strong currency is in our national interest because it has helped to hold
down inflationary pressures and capital costs.
•
Most important of all, by establishing a new paradigm for the management of our nation's
budget, we have helped to usher in an era of prospective surpluses, with enormous
cumulative benefits for our economy and our citizens.
By embracing enhanced fiscal discipline, we have helped turn a vicious cycle into a virtuous
cycle. By moving from an era of budget deficits to one of budget surpluses we have freed up
resources for private sector investment that has raised the level of productivity and the rate of
economic growth and in tum boosted budget surpluses and around again and again in a virtuous
circle.
Like tax cuts, reducing publicly held debt also delivers substantial direct benefits to the pockets
of American families: first, because it reduces the future burden of payments on interest and
principal; and second, because it helps put downward pressure on long-term interest rates.
Indeed, as a result of our new path of fiscal discipline and the resulting downward pressure on
interest rates, a typical American family with a mortgage of $1 00,000 would save $2,000 a year
in interest rates.
As we look to the future, we can surely all agree on the enormous importance of working to
maintain our macroeconomic stability. It is not a question of ideology, but of providing the most
effective framework for the continued success of the New Economy -- to which the financial
sector makes such a significant contribution.
II.
Providing a Strong Legal and Regulatory Framework for the Financial Markets.
2
Once again, the continued vitality of our financial sector depends first on the entrepreneurship
and dynamism of its participants. But the public sector also has its part to play in helping to
maintain the competitiveness of the system as a whole.
The Clinton Administration has taken clear steps to strengthen the integrity of America's
financial system. Let me mention three:
•
First, by breaking down outdated barriers between banks and other financial service
companies, the 1999 Financial Modernization Act opened the door to greater innovation and
competition. We have equipped the financial industry to take advantage of the rapid
technological changes that are taking place, while providing consumers with greater choice
and lower costs.
•
Second, by passing the Electronic Signatures in Global and National Commerce Act earlier
this year, we have helped remove legal impediments to conducting transactions on-line. This
legislation is a major milestone in the development of electronic finance. It provides the
legal certainty for electronic transactions that business needs. And it ensures that consumers
will continue to benefit from the protections they currently enjoy offline.
•
And third, we have made significant progress towards the enactment of legislation that would
reform the legal and regulatory framework affecting the OTe derivatives market. Taken
together, these changes would provide legal certainty, contribute to the reduction of systemic
risk, protect retail customers, stimulate the competitiveness of America's financial markets,
and thereby help to create jobs and lower costs for American consumers and businesses. We
have achieved an extraordinary bipartisan consensus this year on these very complex issues.
Let me take this opportunity to urge Congress to enact these reforms as soon as possible.
III.
Longer-Term Challenges for America's Financial System.
By drawing on a spirit of cooperation between the private sector and the public sector, over the
past 8 years this Administration has worked to provide the right framework for our financial
industry to thrive. Let me focus my remaining remarks on some of the key challenges that the
American financial sector -- and all those with a stake in its continued success -- will be
confronting in the years to come.
First, adapting to a world where boundaries are disappearing.
Combined forces of integration and innovation are bringing us to a world of shifting boundaries
and blurring distinctions: whether those be between countries; between sectors; or between
financial sector products that were once thought to be quite distinct. And policy makers in the
financial sector must address the question of how our national and international regulatory
frameworks should adjust to keep pace.
As innovation and integration proceed, both the desire to maintain a level playing field and the
desire to avoid a race to the bottom between competing jurisdictions are likely to produce
increasing pressure for the development of common standards. These pressures have already
3
?iven rise to quite dramatic regulatory changes in a number of countries: most notably, perhaps,
III the UK, which has combined all of its financial regulators under one umbrella.
None can predict what the right solution for the US will be. But we can predict that these
challenges are likely to increase as the closer integration of different parts of the financial system
- and different national financial systems - gains pace. And we can agree that the goal should be
to avoid excessive regulatory overlap and to achieve greater coherence: for both consumers and
producers.
In this context, the privacy protections of the financial modernization legislation of 1999 are
perhaps worth highlighting, as the first significant set of regulatory restrictions applied to every
financia~ institution, regardless of charter or industry, because we believed they presented the
same pnvacy concerns.
Second, adapting to a world where there is less Treasury debt.
Another fundamental shift are the implications of a declining debt stock. I have already
mentioned the enormous economic benefits that derive from our fiscal discipline. The best way
to continue to enjoy those benefits is to continue to pay down our national debt. This
macroeconomic objective must be central to our fiscal strategy in the years ahead.
At the same time, we recognize that there are micro-economic implications that arise from the
paying down of public debt in America. There can be no question of diluting our broader
macroeconomic objective to avoid facing the micro-economic consequences. However, these
microeconomic challenges can and must be addressed. The key will be to find a way to confront
them in a way that is good for the financial system and good for the economy_
Treasury securities currently serve a number of important functions in the global financial
markets: as a pricing benchmark: as a hedging vehicle; and as a risk free asset. The dual
challenge we face is to promote liquidity, so that Treasury securities play these roles for as long
as possible, at the same time as facilitating the market's longer term adjustment to a world in
which the stock of Treasury debt is substantially reduced.
In the end, it will be the private sector that decides which benchmarks and hedging vehicles will
gradually supplement US Treasuries. Whether individual market participants use swaps,
corporate debt, or other alternative benchmarks, we know that the financial markets have an
impressive capacity to innovate in a changing world. But in a world of declining publicly held
debt, it becomes even more important to ensure that our regulatory and legal structures enable
this innovation to proceed. Indeed, it must add even greater urgency to the need for Congress to
establish legal certainty for the swaps market.
Third, guarding against complacency in the financial markets.
We are enjoying the longest period of economic growth in our history; our markets have
remained a source of opportunity while weathering a series of recent crises; and our financial
sector continues to be the world leader. For these reasons, we are justifiably confident about the
4
strengths of America's financial industry. But we must not allow our confidence to spill over into
a sense of complacency.
As we have learned from experience, market over-confidence can lead to vulnerability. We must
be vigilant as well toward issues such as lack of transparency, the risks that hedging strategies
and models may not live up to their design, and the toxic combination of excessive leverage and
illiquidity .
As I have stated before, it is the private sector, not the public sector, that is in the best position to
provide effective supervision and reduce the likelihood that these issues rise to a level that could
threaten market stability. Market discipline is the first line of defense in maintaining the integrity
of our financial system.
In the past few years, the private sector has risen to meet the challenges posed by recent crises,
and we have seen significant self-correction where excesses had developed. Individual
institutions are taking steps to improve their risk management practices. At the same time,
recent experience has underlined that policy makers and regulators will need to play their part to
assure that complacency does not reverse this progress:
•
First, by working to create an environment in which market discipline can work
effectively. Counterparties and creditors have more knowledge of their counterparts,
more skill in evaluating risk and greater incentives than any public regulator will ever
have. The best approach to regulation designed to address systemic risk is therefore to
maximize the quality of counterparty discipline and to ensure that public activities do not
crowd out the supervision provided by counterparties, creditors and investors.
•
Second, by promoting the maximum degree of transparency, because transparency is the
necessary corollary to counterparty discipline. The government cannot impose
counterparty discipline, but it can help to enhance the effectiveness of market discipline
by creating an environment of greater transparency and disclosure. Indeed, the long
history of transparency in our financial markets has been a source of great strength, and a
leading factor in maintaining the integrity of U.S. markets.
•
Third, by working to maintain the competitiveness of the system as a whole. Just as there
is a sharp distinction between support for the frce enterprise system and support for
individual enterprises, so also the task of public policy must be to ensure the stability and
integrity of the market system rather than to seek to ensure the survival of individual
firms or investors. Regulation must never hold out the prospect that it can eliminate risk
or that it can prevent any individual institution from failing. Any regime that had that
effect would be perverse and counterproductive and undermine market discipline.
There are a number of steps the government can take in fulfilling such roles. We continue to
work with the private sector on a number of specific initiatives. In addition, we are actively
promoting legislation that would contribute to the efficiency, transparency and competitiveness
of American markets, such as the Commodity Futures Modernization Act of 2000, which is
currently before the Congress.
Similarly, we are promoting legislation that would help further reduce systemic risk in our
financial system by allowing the netting of financial contract obligations in instances of
bankruptcy or insolvency. We believe that our markets will not be fail-safe until they are safe for
failure. The provisions of this legislation - that is currently before Congress - would reduce the
likelihood that the failure of anyone institution would pose a threat to the stability of our
financial system more broadly. Rarely does government have the opportunity to take tangible
steps to meaningfully reduce systemic risk. Adopting this legislation is one such step and we
urge Congress to do so at the earliest possible opportunity.
At the same time, the benefits of improving netting procedures go beyond the realm of
bankruptcy to the basic "plumbing" of our financial system. Improving the plumbing may not be
glamorous. But it is a vital part of our objective of minimizing the effects of crises. If these and
other plumbing measures such as the "T+ 1" settlement initiative being promoted by the SIA,
harmonized documentation, and contractual uniformity, had been in place, the financial
environment in September 1998 would have been much more secure.
Measures such as these enable creditors, counterparties, and investors to better play the lead role
that they must in ensuring the integrity of Ollr market-based financial system.
IV.
Concluding Remarks
Let me end where I began. These are prosperous times for America. And these prosperous times
are owed in no small part to the dynamism and ingenuity of our financial sector. What is crucial
is that we do not take these good times for granted. That means all of us working to maintain the
macro-economic and micro-economic foundations of this success - and to respond as prudently
and effectively as possible to the challenges that this fast-changing 21 st century economy brings.
Thank you.
-30-
6
DEPART~IE:,NT
TREASURY
OF
THE
TREASURY
NEWS
omCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASIllNGTON, D.C. - 20220 _ (202) 622-2960
FOR Il\1MEDIA TE RELEASE
November 6, 2000
STATEMENT BY TREASURY SECRETARY LAWRENCE H. SUMMERS
Thank you for those stirring words. Mr. President, thank you for your leadership on this
issue. This issue was gathering force, but it became a gathering storm when you committed the
United States to 100 percent write-off's of all of its debt at the annual World Bank-llvIF meetings
last September.
Gene, thank you for your constant commitment to making sure that
this issue was a priority for all of us.
The president acknowledged the members of Congress who are here and who made great
contributions to this issue. I also want to recognize Senators Daschle, Stevens, Leahy,
McConnelI, Mack, Biden, Helms, Hagel, Dodd, Chafee, and Grams, and Representatives
Gephardt, Armey, Leach, Waters, Callahan, Pelosi, Obey, and Frank, who have also made
terrific contributions to this issue.
I want to say a word about the NGO community. There are, I suspect, those who lobby
issues in Washington who are better paid than the members of the NGO community. Let me say,
after eight years, that there are none who are better informed about the issues they're lobbying,
and more committed to the efforts in which they are engaged. And it has made, over time, on
these issues and many others, an enormous difference.
The United States is a leader on this issue, but it is an international issue, That is why our
contribution is able to leverage so much debt relief around the world. And so I think it is also
appropriate to acknowledge the governments of other countries that are forgiving debt, and to
acknowledge the leadership shown by the international institutions -- Jim Wolfensohn at the
World Bank, first Michel Camdessus and now Horst Koehler at the International Monetary Fund,
who have moved their institutions beyond a traditional financial conception to a recognition of
the moral impol}:ance of what is at stake here.
As Churchill said in a very different context, I think, as we gather today, we are not at the
end and we are not at the beginning of the end, but we are, perhaps, at the end of the beginning
with respect to the profoundly important task of mobilizing American concern around the
LS - 1006
Fvr press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
·U.S. Government Pnnt,nq Office. 1998 - 619-559
poorest people in the world, in fostering a recognition that what is morally right is also
practically sensible as forward defense of our country's interests.
But you know, important and as significant as the signing of this legislation is, ultimately
what will make a difference is what actually happens in the countries involved over time.
And when people look back and ask whether we have seized the promise of this moment -- and it
is a moment of enormous promise -- I believe they willlook at three things.
First, did we work successfully with the countries involved to assure that there was a real
change, that the money saved from removing the obligation for principle and interest was
directly channeled into effective programs to promote education, to promote health care, to
promote popular participation, and to make a difference in people's lives? Did we ensure that the
money was used well?
Second, they will ask, did we move as rapidly as we could to make a difference? Yes,
with all the necessary safeguards to assure that money was well-used, but also to remember that
in a time when there are eight million AIDS orphans in the HIPC countries, there is no time to
lose in moving forward on this issue.
And third, they will ask, did we build on the success of this coalition, on the moral energy
that has been harnessed, to work as a nation and as a global system to create a global economic
environment in which the poorest countries in the world can overcome the tyranny of geography,
the tyranny of hopelessness that has held them down? Did we create a world where modern
science was harnessed to meet the challenge of ancient disease and health problems? Did we
create a world in which the power of information and communication technology was used to
bring nations together, rather than to allow them to separate as some moved ahead?
Relieving debt is removing the most important obstacle to many country's economic
success. But ultimately, we need to do more than remove obstacles; we need to create
opportunities, and that is our challenge for the years ahead.
Few would have thought that a gathering like this could come together this soon to celebrate this
much progress. Our test will be whether we can take advantage of this moment.
Mr. President, once again, thank you for your leadership.
-30-
2
0
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0)
N
S
federal financing
WASHINGTON, D.C. 20220
FEDERAL FINANCING BANK
SEPTEMBER
30, 2000
Kerry Lanham, Secretary, Federal Financing Bank (FFB),
announced the following activity for the month of August 2000.
FFB holdings of obligations issued, sold or guaranteed by
other Federal agencies totaled $38.0 billion on August 31, 2000,
posting a decrease of $102.5 million from the level on July 31,
2000.
This net change was the result of a decrease in holdings
of agency debt of $40.0 million, in holdings of agency assets of
$100.0 million, and an increase in holdings of governmentguaranteed loans of $37.5 million.
FFB made 44 disbursements
during the month of August. The FFB also received 22 prepayments
in August.
Attached to this release are tables presenting FFB August
loan activity and FFB holdings as of August 31, 2000.
LS-1007
0
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V
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Page 2
FEDERAL FINANCING BANK
AUGUST 2000 ACTIVITY
Borrower
Date
Amount
of Advance
Final
Maturity
Interest
Rate
SENCY DEBT
U.S. POSTAL SERVICE
J.S.
J.S.
J.S.
J.S.
J.S.
].S.
].S.
J.S.
J.S.
J.S.
J.S.
J.S.
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
8/07
8/08
8/11
8/11
8/18
8/21
8/21
8/22
8/22
8/23
8/24
8/25
$313,400,000.00
$77,000,000.00
$150,000,000.00
$275,000,000.00
$172,800,000.00
$164,000,000.00
$416,900,000.00
$70,000,000.00
$336,500,000.00
$268,500,000.00
$121,000,000.00
$5,000,000.00
8/08/00
8/09/00
8/14/00
8/14/00
8/21/00
8/22/00
8/22/00
8/23/00
8/23/00
8/24/00
8/25/00
8/28/00
8/04
8/07
8/14
$13,678.39
$7,505.94
$1,717,637.15
1/30/02
10/01/26
1/30/02
6.303% S/A
6.081% S/A
6.371% S/A
8/02
8/02
8/03
8/04
8/08
8/08
8/08
8/10
8/11
8/11
8/11
8/14
8/15
8/15
8/15
8/16
8/17
8/17
8/17
8/18
8/18
8/22
$4,534,000.00
$2,171,000.00
$450,000.00
$750,000.00
$2,700,000.00
$420,000.00
$23,669,000.00
$115,000.00
$1,000,000.00
$1,000,000.00
$1,000,000.00
$936,000.00
$15,666,930.00
$1,502,000.00
$800,000.00
$1,000,000.00
$528,000.00
$477,000.00
$2,000,000.00
$1,200,000.00
$400,000.00
$336,000.00
12/31/25
12/31/25
1/03/34
10/01/01
1/02/35
12/31/12
12/31/30
1/03/34
6/30/28
1/02/35
1/02/01
12/31/24
12/31/25
1/03/34
1/03/34
1/02/35
1/03/34
9/30/30
10/01/01
1/02/35
10/01/29
1/03/34
6.123%
6.123%
6.023%
6.078%
5.839%
6.111%
5.926%
5.840%
5.969%
5.757%
6.229%
5.915%
5.881%
5.778%
5.778%
5.792%
5.818%
5.859%
6.175%
5.792%
5.859%
5.788%
6.407%
6.386%
6.375%
6.413%
6.392%
6.395%
6.429%
6.392%
6.408%
6.418%
6.417%
6.435%
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
)VERNMENT - GUARANTEED LOANS
7ENERAL SERVICES ADMINISTRATION
~tlanta CDC Lab
:hamblee Office Building
~tlanta CDC Lab
~URAL
UTILITIES SERVICE
'ri-State #439
'ri-State #475
,artlett Elec. #535
~rthern Neck Elec. #556
~i-County Elec. Coop. #646
an Horne Coop. Tele. #409
RECI Electric #650
neida-Madison Elec. #582
ohnson County Elec. #500
ynches River Elec. #634
urry-Yadkin Elec. #534
lock Island Power #652
eorgia Trans. Corp. #559
ootenai Elec. #531
ohono O'odham Util. #597
urnter Elec. #640
gralite Elec. #543
EM Electric #537
wen Electric #525
arlboro Elec. #642
~sebud Elec. #555
tsego Electric #653
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Page 3
FEDERAL FINANCING BANK
AUGUST 2000 ACTIVITY
Borrower
Horry Electr~c Coop. #536
Tri-State E.M.C. #503
Central Texas Elec. #520
Consolidated Eled. #658
Fleming-Mason Energy #644
Ozark Electric #629
Polk County #637
S/A is a Semiannual rate.
Qtr. is a Quarterly rate.
Date
Amount
of Advance
Final
Maturity
8/24
8/25
8/28
8/28
8/28
8/28
8/28
$3,000,000.00
$700,000.00
$1,000,000.00
$1,000,000.00
$2,600,000.00
$2,055,000.00
$354,000.00
1/03/34
1/02/01
9/30/04
1/02/01
1/02/01
1/02/35
1/02/35
InteresERate
5. 754'
6.398%
6 .124%
6.277%
6.277%
5.734%
5.734%
d£r
Qtr:
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Page 4
FEDERAL FINANCING BANK HOLDINGS
(in millions of dollars)
Program
Monthly
Net Change
8/1/00 - 8131100
Fiscal Year
Net Change
10/1/99- 8/31/00
August 31, 2000
July 31. 2000
Agency Debt:
U.S. Postal Service
National Credit Union Adm.-ClF
Subtotal*
$3,800.0
$0.0
$3,800.0
$3,800.0
$40.0
$3,840.0
$0.0
-$40.0
-$40.0
-$2,479.1
$0.0
-$2,479.1
Agency Assets:
FmHA-RDIF
FmHA-RHIF
DHHS-HMO
GHHS-Medical Facilities
Rural Utilities Service-CBO
Subtotal *
$3,410.0
$5,660.0
$0.0
$0.6
$4,598.9
$13,669.5
$3,410.0
$5,760.0
$0.0
$0.6
$4,598.9
$13,769.5
$0.0
-$100.0
$0.0
$0.0
$0.0
-$100.0
$0.0
-$1,465.0
-$l. 7
-$2.6
$0.0
-$1.469.3
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*
$2.408.1
$20.8
$11.2
$1. 348.5
$2.317.0
$14.7
$1,047.5
$13,237.9
$161.6
$3.6
$20,570.7
$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
-$33.7
$0.0
-$0.6
$0.0
$1. 7
$0.0
$0.0
$73.4
·$3.4
$0.0
$37.5
-$202.8
$9.8
-$2.5
-$71. 4
-$88.0
-$l. 5
-$91. 2
-$647.1
-$32.3
·$0.1
-$1.127.1
$38,142.7
·$102.5
=====
Grand total*
* figures may not total due to rounding
+ does not include capitalized interest
$38,040.2
=
=====
-$5,075.4
FrOl:
ILOLLLO I I
...
:. '. ., n l: PAR
.
~cttment
'f !\ I E. N T
Of Treasury
0 F
TREASURY
08/31/01 01:22 PM
T tI f..:
tDPl'It. 2:30 P •••
.~ "
2000
The
Tre~
cash
T R E .A S l! R Y
~
.
.
NEWS
J'MB~
'r~eaS\U'Y
Page 27 of 31
COCltac:t : Off1.ce of i"lrmzl':iDg
2D2/G91-3550
wiJ.l aucti,= QPZ'Cmimate.1y ~l2,OOO m:f.l.lion of' 33-4ay
to 1:Ie i811UC .~Z' 15 .. 20ao.
1Mna9'eaell~ ~il.l.B
~8%'8
will uot l:Ms aCC:8p'Cac! for billa to :be maiAtaill8ci 0= 'C.ha bookentl:y r.c:oris of tl:I..Dep~t o.E the 'ZTea.suzy (~r•• ~.i~C!t-).
AcSai. ~i.0D&1 amounts of the b111.s may l;Ia 18sued. 'to Pederal Ileiaarve Bmlks
fa:'e1p aDd. 1.D.~~tiODal :IIIOA8tuy autl1ori:Cies at US JUg'lM.8t
&S ag8Zl'C8 £0%"
4iscOUD~ ~te
of accap:ed campeei'Ci. . :eDders.
na
aw:'Cion bei,ug am::aowx:ecS todl.y will lie cCllldu.cted. iD the single-lilzo!.ce
Al.l cCllDpiltit:ige a:4 DCDeCIIIIPetitive awarc1./3 "ill ~e at t.ha
highest aiscounc rata of aec6.Dte4 compeci~iV8 teDders.
a~c=t.ioD. fO%:llDat.
JfOT£:
eca,petitiv8 .b:l.cls in ca.sl1 JDII.D&SJemeAt bill
a\l.ct;~OI:I.s
*X;preSS84 as a tiscOimt rate wi~b two dec:ilD&ls, •• go.... 7.10%.
must .be
-
ftLis offering of ~aaauzy saeur:l.:t •• is g'OV'enllid by the tezms aDd. COll.cU.eiOZUJ .at fortb a the ~f'o= Offering" C.iZ"C!Vla:r £OZ' t..b. Sa.l.e ana. :t1il1iN. CJ~
Jlaz-ketable ~-2z1t%Y 'rraaslUY Bills,. Jlo~es .. ~ BoDas (31 CJIll Part 356" as
.''UeDl!eci) •
no~ls ~t
hi~hllghts ..
LS-I009
the
DeW
secu:-ityo are
gtv.a. in t.ho
at~acbed
o:ffer1:ie'
Page 28 of 31
08/31/01 01:22 PM
FrOl: Depaftment Of Treasury
16222611
BJ:GBt..:IGB'1'S 01' ~y OrnRING
OF 33-nAY CASZE JDlDGr.rPa!iB'l' BILLS
N~a~
De8C%ipt.icm o£ O:fferag:
Te~ aDd type of G&cu~ity •••
eoS%P
D'mb-r.~~.--
33-~ cash KaDagameDt
••••••.• _.. _. __ .. _ 912795 KD 2
w •••••••
;.- •••••
date .•••••••••• _ •.••••••••••••
MCltiOJ)
c!a.~••••••••••••••••••
lf~·l.,
9, 2000
Bi~~
2000
%S5~e
5~ 15, 2000
MDtg:ity date ••••••••••.•••••••••••• necembQ% 18, 2000
~tg1D&1 1ssue Qat •••• ~ •••••• _ •••••• Hovambar lS, 2000
~ni·Jm bia amount aDd mu1t~les •••• $1,000
full
~ bi~bes~
cc:ape~it;.iVl!!l
!).i.Q5 •••••••• (1) . .ust l:Mt
Up
eo $1,000,000 at
accepted discount rat ••
~r.BS8cl
as a aJ.*C01mt rate
with two decimals, e.g., 7.10%.
(2) Bet loag posit10D fo~ eacb ~i~a~ must
be reported ~Il t.he 5'Iml o:f c.bo total
~td ~C, at all A!8CCGnt rates, an4
the DOt lODg' positiCA ill 51 !)i11icn or
~ter.
(3)
Maxi-zm
a~
a
liet lQZ3g positiCIZL mu..t be cl$teftli ned as
of one balf-l:l.ou: ~r.ior t.o eha cl.osizlg
time for reeebt of cc::apetit,j,,,,,. t:.erders.
lWCog:1Ze4 Bid
S1D,~e
Rate ••••••••••• 35% of public offeriDg
Maximum Award ••••••••••••••••• 35% o£
ao.:eJ..~
~lic D~f.riDg
of '1'lCde:Z;-S-;
3QDCampati~ive
e.Dders .•••••
p~icr
•••••••••
P~lQ~
to 12:g0
DOQD eas~~
standard
C~ CQ .~~tioa.day
c~e~i~~ve
~8D4er8
to 1:0D p.m. aast~
time au a~ct~OD 4a~
8~R~dard
a. fw:u!s acc:lOUZlC at 4- FeQe.z::aJ.
Rase%V(l Bemt OD. 18~ date, or paymeat of
full par UIOWlt with t!.~'.
!.~t '1'e%'7!UI .................. By c:ba~1J8 to
TOTRL P.02
,111611
FrOl: neniltmp.nt. nr Trp~cury
.
.
. .·.:.,.D
C r
,
. ..
\
\
\,
.
~
\
~\
\
R 1 .:--: 1: :, T .
"
T 1-1 E
O.Q1
.
PE~SVLV'ANIA
~e T~ea~
StQc::ut'ities
ma~inq
mil~iOft
..
.
. .
CON'l:ACT;
yill auction
$21,000
oJ}
AVENUE, N.W•• WASHrSGTON. D.C .• Zf)ZlO •
EMBARGOED UNTIL 2: 30 P .N.
Novembe: 9, 2000
app:o~~y
T Jt
Page 29 of 31
NEWS
TREASURY·
OJ'FICE OF l'U'BLlC ,,"'.dR.S -1500
08/31/01 01 :22 PM
(~D2)
622-:!t60
Ot'fice cf I':i.nanc:ing
202/691-3550
of Txeabury bills totaling
$17,009 million of publicly held
2000, ~ ~ raise about $3,991 million
~Q ~eri.~
to
November 16 1
ref~
o~
na. cash.
~ a~t~oD ~o the pub~ic holdings, Federal NeBerYe BanKS for the~~ own
acc=ounb hold $9,148 JIli.l.l.ion of the maturing ))11.15, Wh:Lch may be :r:efunded. at
the highest. diseount rate 9f accepted competi.t.1.ve tenc!ers. Amounts .:i.:Sa!lilJoed.
to tbeae acc:.~t,s will be 1za ad.cii t.ion to dle offering amount.
'the :maturing bi.lls bald. by the: public inc:lud.e $4,470 mi.l.l..ion held
~ i'edazal. R.e.oz:ov_ Banks as agents fo:- £ore1fin and. .international mcnet&%y
.~tho~itie8. which may be .re~cied IF1't:h:in thea offering ilmoWle ·aoc the b.:i.ghest
di.scou.n1:. :rate of accepted. Compet.i.tiv 8 tenciers. A4c:l:i.t:ional uounts may be
iBsued. for such account. iE i:he a9'Jregate amount:. of new bids exce~ the
agg-reqa-e8 amount of maturing bills.
ings
the
~easur.vDi:ect ~5tamers requested ~t we rei~vest their matu:ing holdapproxi=at8~y $972 ~llion into the 13-week bi~~ an~ $794 million +ato
2E;-week ~.ill.
of
~.s o£'fering of Treasuzy seCU%'ities .is gGVerDed. :by the tems all-d eoncti.t:1on.s sat foz-th .in the Oni.form Offering Ci:CUl.a: ~o:r ~e Sa18 a,!).d Issue of
Marketable Book-Entzy TZ'easmy Bills, Notes, and Bond.s (31.
uaendecl) .
en
i'azt JS6, ao
J)et&i1s about eiiCh of the n,", secu::i.ti.e. azoe giveJ'.L in the attac:had
of£~tDg hi~hl~ghts.
000
Attachment.
LS-10IO
HIGHLIGHTS OF ~A8URY OFFERING9 OF BILLS
TO BB.ISSUED NOV&MBBR 16,2000
(j
a'"'"
November 9,
Ofre~tng Amoun~
....•........ , .........•. $11,000 milLion
~UUU
$10,000 million
~cription o~ Off.~~ng:
~
and type Qf aecurity ...........•.•. 91-day bi11
CUlIP number .•.....•........•........... 912795 I"l' 3
Auation date •.........' ......•.•
Novenlber 13, 2000
0
••
,
0
••••
r."ua date •••••...•..••••.....
Novamhe.r 16, 2000
Natul:!ty data ........•.....
I'e.bruary 15, 2001
O~91n.l issue date ..... , .......•......• August 17, 2000
Cu~rantly outstanding .••......•
$13,577 million
Minimum bid amount and multiplea ........ $1,000
0
0
••••
0
~ha
fo11owing
~gle8
,
••••
••••••••••••
••
0
182-day bi.ll
'12795 GG 0
November 13, 2000
November 16, 2000
May 17, 2001
November 16, 2000
...
s
$1,000
I.ffi....
•••••
apply to .11 Becuritias mentioned above:
S~Bsion
of Bids:
Noncompe~it~ve bids .......... Accept.d in full up to $1,OOO,OOO·at the high~st discount rate of
accepted oompetitive bids.
Competitive bids ...... _.....• (1) Must be eKpressed.e a discount rata with three decimals in
increments of .005\, e.g., 7.100~, 7.105t.
(2, Nat long position for eaoh b~dder .ust be reported when tha sua
of the total bid amount, at all discount ra~s, and the net long
position is $1 billion or q~eatar.
(3) Net long ppsition must be determined as of one hal~-hour pl:LOr
to the closing time for receipt of c~titiva tenders.
Muimum Recoqnlaeci Bid
et a Single Rate ........... _.35' of
~imua
'"T"1
~
o
.....
...
-t
~
c:
c.n
...
'"C
~
......
~
pUb~ic
Award ......•.........•.. 35\ of pub1ic
oEfel:inq
~
offe~ing
CSI
..
N
N
a.ceipt of 7endera:
Noncompetitive tenders .•..... erioe to 12~OO n~on eastern 8taRda~d time on auction day
COBPatLt~ve tenders ....•.... _ Prior to 1:00 p .•. ~a8te~n 3tandard time on auction day
~
""C
Federal Reserve Bank on issue date, or payment.
0' full pac ~nt with tender.
Treaa~DLrBct oustomers can use the Pay Direat Leature whicb
atithoriEes • charge to Chair account of record at their financial institution ·on i~sue date.
p'f1!Ient T_EaS:
-I
o
-I
D
r
-u
IS)
I\l
By charge to a funds ac.count at.
III
Q)
'al
(.,.)
CSI
o
.....
(.,.)
~6222611
FrOl: Deotftment Of Treasury
D
r
p .\ 1\. i :d i'.
~
T
0 I,
r
08/31/01 01:22 PM
II I'.
Paqe 31 of 31
T R F ;\ S {l R Y
omCE OF PUBUCAFFAIRS • 1500PENNSYLVANlAAVENUE, N.W.• WASHINGTON, D.C.• 20220. (202) 622-2960
FOR IMMEDIATE RELEASE
Contact: Public Affairs
(202) 622-2960
November 13, 2000
MEDIA ADVISORY
Treasury Deputy Secretary Stuart E. Eizenstat will hold a press conference on the
Austria Property Restitution on Tuesday, November 14, 2000, at 3:30 p.m. in the State
Department's Loy Henderson Audiroriurn, 2201 C Street, NW.
Media without State or Treasury Department press credentials should call
(202) 647-6925 with their name, date of birth, social security number and news organization
for pre-clearance at least 15 minutes prior to the event to enter the bUilding. All
photographers should arri~e at least 30 minutes prior to the event. This information may
also be faxed to (202) 647-5116. All media should enter the State Department from the 23rd
Street entrance between C and D Streets, NW.
-30-
LS-IOll
Far press reletlSeI. sjJeecJ,a, pu.blic sMedul. tPUl oJIicUzl biographies, mil OUT 24-huurJaz line at (202) 622·2040
·U.S G""","metlt Pfmtiog
Otllce~
199B - 8161-559
TOTRL P.01
Fro. Dep~tment Of Treasury
Z6222611
08/31/01 01 :ZZ PM
Page ZZ of 31
Novamber 9, 2000
TREASURY DEBT BUYBAeK OPERlTTOX RESULTS
(amounts in millions. prices in decimals)
Tabla X
Weigh~ed
., .625
7.1.3S
6.2S0
7.500
7.ti25
6.875
6.000
6.750
6.500
6.625
6.375
Par
Higb•• e
Aver~g~
x .. eu.rley
MauDe
Accepted
Ace.pe.d
~
Offered
11J_15n022
02J_15/2023
no
200
393
08L1S}2023
UL15}ZDZ4
02'-1.5J;;Z025
08/15/2025
438
02/15/20:U
08/15/2026
11/15/2026
02/1.5/202'7
oe/l.S/202'7
b:kA
~
119.341
,90
1].9.375
1:13.375
0
'Iil/A
'If/A
403
455
320
517
490
385
2U
60
118.706
120.377
111.04.7
470
1'70
320
1.13.750
Uo, '06
111,062
99.906
1.0!i.718
106.578
1011.265
105.156
Q
l:Ii 1:1
20
n
70
loO
us
113.373
" . eg6
109.696
106.578
108.227
105.117
Table II
.aigheecl
Av.raga
COllPOIi
1:! ... ~...
(Ik)
7.625
7.135
,.~SO
7.500
1.625
i.87S
6.000
6.750
6.500
6.62S
6.3'75
To~sl
Pa~ ~une
rotsl P .. r
Amatme
11/15/2022
02/15/2023
oe/1Sn023
11/15/2024
02115j2025
08/15/2025
02/15/2026
08/15/2026
11/15/2026
02/15/2027
013/15/2027
CDSIP
Ac:eepud
lfUmber
x.t...l..cl
Privaeel3! Hald.
6.027
6.025
'7 244
1.4 .. 845
:n,ll./1
8,912
10 300
10 208
91.2810Rll4
912810BP9
9128].01lQ7
912910B53
912910ZT1
912810BVS
912810BW4
9l281oBX2
91:21110BYO
'12810BZ7
912810P'1.1
6.024
Iii.OZ!'i
14/10.
6.014
6.014
6.0lO
6.006
6.003
5.997
5.995
S.'S!
IV-6.01'7
6.015
6.011
6.007
6.0001
5.997
Far
AIDOUD~
11 723
5.998
9,210
, 759
9 360
5.988
$"17S
Off.r.d:
.AC!I(!~e.d:
TOT8L P.02
DEPARTMENT
OF
THE
TREASURY
~
,
NEWS
TREASURY
OFFICE OF PUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASIllNGTON, D.C. - 20220 - (202) 622-2960
FOR IMMEDIATE RELEASE
November 13,2000
STATEMENT BY TREASURY SECRETARY LAWRENCE H. SUMMERS
We welcome the initiatives by the Argentine authorities to strengthen Argentina's economic
policy framework working with the International Monetary Fund, the World Bank and the InterAmerican Development Bank. In the context of that strengthened policy framework, we will be
prepared to support an enhanced program of financial assistance by those institutions with the
objective of promoting economic growth in Argentina and improving its access to capital
markets.
-30-
LS - 1012
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
?
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT
WASHINGTON DC
FOR IMMEDIATE RELEASE
November 13, 2000
Office of Financing
202-691-3550
CONTACT:
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:
91-Day Bill
November 16, 2000
February 15, 2001
912795FT3
6.185%
High Rate:
Investment Rate 1/:
6.369%
Price:
98.437
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)
Accepted
Tendered
Tender Type
Competitive
Noncompetitive
$
22,077,861
1,380,698
800,000
800,000
24,258,559
11,014,309
4,565,450
4,565,450
Foreign Official Refunded
SUBTOTAL
8,833,611
1,380,698
10,214,309 2/
23,458,559
PUBLIC SUBTOTAL
Federal Reserve
Foreign Official Add-On
TOTAL
$
a
$
28,824,009
°
$
15,579,759
Median rate
6.170%: 50% of the amount of accepted competitive tenders
Nas tendered at or below that rate.
Low rate
6.140%:
5% of the amount
~f accepted competitive tenders was tendered at or below that rate.
3id-to-Cover Ratio
=
23,458,559 / 10,214,309 = 2.30
L/ Equivalent coupon-issue yield.
~/ Awards to TREASURY DIRECT = $1,091,735,000
http://www.publicdebt.treas.gov
LS-I013
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
November 13, 2000
Office of Financing
202-691-3550
CONTACT:
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:
182-Day Bill
November 16, 2000
May 17, 2001
912795GGO
6.070%
Investment Rate 1/:
Price:
6.350%
96.931
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted 72%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tendered
Tender Type
Competitive
Noncompetitive
$
18,773,820
1,136,383
$
19,910,203
PUELI C SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
TOTAL
Accepted
5,393,417
1,136,383
6,529,800 2/
3,471,000
3,471,000
23,381,203
10,000,800
4,582,908
4,582,908
°
°
$
27,964,111
$
14,583,708
Median rate
6.060%: 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
=
19,910,203 / 6,529,800
=
3.05
1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $867,432,000
http://www.publicdebttreas.gov
LS-I014
-
D EPA R T 1\'1 E N T
0 F
I
THE
,
T REA SUR
Y
"
1
NEWS
omCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASlllNGTON, D.C. - 20220
a
(202) 622-2960
Contact: Una Gallagher
(202) 622-2960
EMBARGOED UNTIL 10:00 AM
Tuesday, November 14,2000
TREASURY ANNOUNCEMENT OF REVISED AUCTION PARTICIPATION RULES
FOR FOREIGN AND INTERNATIONAL MONETARY AUTHORITY ACCOUNTS
The Treasury Department today announced a series of technical changes to the rules that apply to
Foreign and International Monetary Authority (FIMA) account participation in Treasury
auctions. These changes will facilitate the continued participation of FIMA accolU1ts in the
auction process, improve the liquidity and efficiency of the Treasury market, and allow the
Treasury to better control the amount of funds raised at auction. These changes have been
developed with the cooperation of the Federal Reserve Board and the Federal Reserve Bank of
New York, and in consultation with major participants in the FIMA program. The Federal
Reserve Bank of New York has already been working with major participants in the FIMA
program to implement these new rules.
The Treasury plans to implement the following policy changes with respect to FIMA accounts,
which will become effective on February 1,2001:
•
Individual Limits: Individual FlMA accounts will be limited to non-competitive bids of no
more than $200 million per account per auction. This limit will apply to both new bids and
"rollovers." This limit will be further reduced to $100 million per account per auction
beginning January 1, 2002.
•
Aggregate Limits: Total non-competitive bids from all FIMA accounts will be limited to
$1 billion per auction per security. These will be included in the total amount of the
announced auction size. There will no longer be "add-ons" to the auction size for FIMA
accounts. Going forward, the publicly announced auction amolU1t will represent the total
amount raised from the public. Purchases by the Federal Reserve's System Open Market
Account will continue to be issued in addition to the public auction amount.
•
Allocation: FIMA account bids will be filled from smallest to largest. A bid that pushes
total FIMA bids over the $1 billion limit will be filled up to the aggregate award limit of $1
billion. The remaining amount will be left unfilled. In the event that bids of the same size
would cause the limit to be exceeded, these bids will be prorated. All other bids of larger
size will be left unfilled.
LS- 1015
For press releases~flpeeches, puhlic 5Chedllk\~nd official biographies, call our 24.Jtour fax line at (202) 622-2040
.-
We anticipate that larger FIMA accounts will participate in the competitive auction, where they
will be subject to the same rules as all other competitive bidders. In particular, these rules
include the following:
•
•
Limits on competitive awards to a single bidder of no more than 35 percent of the public
auction amount (including net long positions).
Requirements to report net long positions under circumstances described in the Uniform
Offering Circular.
Two current restrictions on all non-competitive bidders that also apply to FIMA accounts will
continue to apply:
•
•
Entities bidding non-competitively, including PIMA accounts, will continue to be prohibited
from bidding competitively for their own account in the same auction; and
Entities bidding non-competitively, including FIMA accounts, will be prohibited from
holding when-issued, futures, or forward positions in the security being auctioned.
The size of our auctions will continue to be driven by Treasury's financing needs. We expect
that our publicly announced auction amounts initially will increase by the amount that would
have otherwise been anticipated to be raised through the "add-ons" related to FIMA accounts.
Background
FIMA accounts are primarily foreign central banks and governmental monetary entities, and also
include non-governmental international monetary entities (such as the World Bank and IMF) and
other authorized accounts. Treasury's current policy pemrits FIMA accounts to bid noncompetitively and without limitation as to size in Treasury bill, note and bond auctions. FIMA
non-competitive purchases of coupon securities, and portions ofFIMA non-competitive
purchases of bills, are treated as "add-ons" to Treasury's public auction amounts. This has
resulted in significant issuance of Treasury securities above the publicly announced auction
amounts.
-30-
DEPARTMENT
OF
THE
TREASURY
~~7~9'~. . . . . . . . . . . .. .
. . . . . . . . . . . . . . . .
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960
u.s. International Reserve Position
11/14/00
The Treasury Department today released U.S. reserve assets data for the week ending November 10, 2000.
As indicated in this table, u.s. reserve assets totaled $66,056 million as of November 10, 2000, up from
$65,898 million as of November 3,2000.
(in US millions)
II. Official U.S. Reserve Assets
N~Xc~ fDb E!i) !~QQP
TOTAL
1,. Foce;gn Coccen,y Resceves '
I
a. Securities
NO'lert}ber19--, ~OOO
66,056
65,898
Euro
4,981
Yen
8,694
TOTAL
Euro
13,675
4,992
Yen
TOTAL
9,293
14,285
o
o
Of wl;iciJ. icC suer headqual1ered in the US.
b. Total deposits with:
8,489
b.i. Other central banks and BIS
8,832
17,321
8,508
8,193
16,701
0
0
b.li. Of which, banks located abroad
0
0
b.iii. Banks headquartered outside the U.S.
0
0
0
0
13,508
13,603
10,348
10,421
11,046
11,046
0
0
b.ii. Banks headquartered in the U.S.
b.lii. Of whiCh. banks loc3ted
2. IMF Reserve Position
In
2
3. Special Drawing Rights (SDRs)
4. Gold Stock
the U.S.
3
5. Other Reserve Assets
2
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.
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 SDRJdoliar exchange rate for the reporting date. The IMF data for November 3 are final. The entries in the table
above for November 10 (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 $42.2221 per fine troy ounce, Values shown are as of September 30, 2000. The August 31, 2000 value
was $11,046 million.
LS-1016
u.s. International Reserve Position (cont'd)
: II. Predetermined Short-Term Drains on Foreign Currency Assets
,
November 3" 2000
I
11 Foreion currenc\ 10,lns and securities
I:. ,.'Iggr;g3te sho~ and long positiol1S In forwards anri
i
futures III foreigl1 currencies vis-<'J-vis the US dollar:
I
2.3. Shorr positions
2.b. Long posirions
r]
13. Other
I
III. Co.ntingent S. hO. rt-T.erm Net Drains on Foreign Currency Assets
No~ml?er
3, 20QO
I11. COlltlngent liabilities III foreign currency
la. Collateral gU3r31ltees on debt due within 1 year
l.b. Other contillgent liabilities
~
r
Foreign currency securities With embedded options
rJ
3. Unarawn, unconditional credit lines
3.a. With other central banks
3.b With banks and other financial institutions
headouartered in the US,
3.e. With banks and other financial institutions
headquartered outside the US.
of. Aggregate short and long positions of options in foreign
currenCies vis-a-vis the U.S, dollar
-I-:a. Shorr positions
4.a,1 Bouqht puts
4.a.2. Written calls
..f..b. Long posillons
4.b.1.Bought calls
4.b.2. Written puts
'JI
D EPA R T 1\;1 E N T
0 F
THE
T REA SUR Y
i,
NEWS
TREASURY
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622.2960
FOR IMMEDIATE RELEASE
Tuesday, November 14,2000
Contact: Una Gallagher
(202) 622-2960
TREASURY STATEMENT ON FIRST ACCOUNTS
The Treasury Department today announced that appropriations for fiscal year 2001
enacted to date provide $8 million to the Department for the First Accounts initiative. The
initiative will fund pilot projects to increase the availability of basic financial services in urban
centers and rural Native American areas that lack access to these services.
"Despite the strong national economy, 10 million American families do not own a bank
account - a basic passport to the mainstream economy," said Treasury Secretary Lawrence H.
Summers. 'The First Accounts initiative will finance pilot strategies to help low- and moderateincome Americans benefit from the basic financial services that most of us take for granted."
Today, Treasury is publishing a Request for Information notice to solicit input from
interested organizations on possible structures for First Accounts pilots. Through the First
Accounts initiative, Treasury will support pilot partnerships between financial services providers
and community organizations to provide the "unbanked" with access to low-cost accounts,
A TMs and other electronic banking points, and financial literacy education. The initiative will
build on the success of Treasury's EFT '99 campaign by reaching those lower-income families
who do not receive federal payments but could nonetheless benefit from increased access to
banking services.
-30-
LS-I017
For press releases, speeches, public schedules and official biographies, call aur 24-hour fax line at (202) 622-2040
·U.S. Government Pnntlng Olfice: 1998 - 619-559
DEPARTMENT
OF
THE
TREASURY
,
NEWS
TREASURY
OFFICE OF PUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASIllNGTON, D.C. - 20220 - (202) 622-2960
FOR IMi\.fEDIATE RELEASE
November 14,2000
STATEMENT BY TREASURY DEPUTY SECRETARY STl'ART £. EIZE.\STA T
We are very pleased by the House passage today of legislation to repeal and replace the
current FSC regime This legislation has important consequences for jobs, the national eC(lnlllll\.
and international relations with some of our most important trading partners Toda\'s HOLlse
action clears the way for the legislation to be signed into law by President Clinton
This legislation is absolutely essential to a\'oiding the potential imposition b~ the
European Union of significant sanctions on American industries and to satisf\ing the l'nited
States' obligations in the WTO. We believe that this legislation addresses the concerns raised tl\
the WTO Appellate Body and that it will be found to be \\'TO-compliant. I\loreowr. under a
procedural agreement reached between the European Lnion and the United States. enactmcnt of
this legislation will avoid an immediate confrontation with the Ell by ensuring that the \\orld
Trade Organization must review the new law before an~' decision authorizing retaliatioll Illil\ be
made. We plan to continue working with the EL' to manage this dispute responsibh al1(l10 Z1\llid
any escalation of tensions that could harm our strong bilateral relationship. and \\e rel1l:l1ll open
to further discussions with the EL about resoh'ing tl115 disputc
We commend the House and Senate bipartisan leadership, including Speaker Hastert.
Minority Leader Gephardt, Chairman Archer, Ranking Member Rangel, j\lajorit~ Leader Lott.
Minority Leader Daschle, Chairman Roth, Ranking l\1ember ~ 1oynihan, and their statfs. for their
efforts on this important legislation. We also want to than),; the stafT of the Joint Committee on
Taxation, the House Ways and Means Committee, and the Senate Finance Committee for thell
hard work in fashioning this legislation
-30-
LS-I018
For press releOlc.l, ,lpccchcI'. public schedules and r1Jicial biographics, cal! our 24-hour{axlill{, at (202) 0:!:!.:!()-/()
11/14/00
~ 13: 27 FAX
DOJ Public Affairs
[4J 002
NATIONAL CHURCH ARSON TASKFORCE
CR
FOR I.M:MEDLA..TE RELEASE
Tl.)ESDAY, NOVE1vfBER 14, 2000
VY\VW",USDOIGOV
(202) 514-2007
TDD (202) 514-1888
INDIANA l\1AN SENTENCED TO OVER 42 YEARS FOR
SETTING 26 CH1JRCHES ABLAZE
WASB1NGTON, D.C. - Jay Scott Ballinger, 38, of Yorktown, Indiana, was sentenced to
42 years, 7 months imprisonment by US. District Judge Sara11 E. Barker in Indianapolis today
following his guilty pleas on July 11, 2000, to onc couat of conspiracy to commit arson and
church arson, SLX counts of arson of a. building in interstate corrnnerce, twenty counts of chw·ch
arson, and two counLS of using fire to commit a federal felony announced TiDlothy M Monison,
United States Attorney for the Southern District of Indiana, Bill Lann Lee, Assistant Attorney
General for Civil Rights, and James E, Johnson, Treasury Under Secretary for Enforcement.
This case was the result of a D...'1tionwide investigation conducted by the National Church Arson
Task Force, including investigators from the Bureau of Alcoho~ Tobacco and Firea.nrJ.$ and the
Federal Bureau ofInvestigatioIl, investigators :B:om the Indiana State Fire Marshal's Office, and
numerous state and local Dre investigators around the United States.
Ballinger's sentence was a result of his guilty plea to the following charges:
Southern District ofTndiana
1 count conspiracy to commit arson / church arson.
3 counts arson of a building in interstate commerce
8 counts church arson
2 counts use offire to commit a federal felony
Eastern District 0 f Tennessee
1 count ch.urch arson
Central District of California
1 count arson of a building in interstate commerce
Western District ofKtlltuclcy
4 COllllts church arson
Ea&tem DistricL of Missouri
1 count church arson
LS-101Q
11/ 1V 00
TUf; 13: 27
FM
DOJ Public Affairs
-2-
Disolct of South Carolina
1 count church arson
NOlthern District ofIndiana
1 count arson of a building in interslJ.te comm.erce
2 COWlts church arson
Southern District of Ohio
1 count arson of a building in interstate commerce
1 count church arson
Northern District of Alabama
1 count church arson
Northern District of Ohio
1 count church arson
Except for the case in the Southern District of Indiana, all of the other cases were
previously filed by United States Attorneys Offices .in the dist.ricts listed above. The cases were
coordinated by the :-Jational Church ~Auson Task Force in Washington D.C. and then transferred
to the Southern. District of Indiana wbere Ballinger plead guilty to all of them
"The rampage that resulted from the destructive acts of this one individual has ended,"
said Bill Lann Lee, Assistant Attorney General for Civil Rights, and Co-Ch..1ir of the NeATF. ''}
hope that this sentence will help bring closure to those whose lives were hanned by these hateful
acts, and sends a strong message th..'lt these crimes wi1l not be tolerated. The federal govemment
remains steadfast in our cooperative efforts to contmue to prosecute each and everyone of these
incidents to the fullest ex-tent of the law."
"\Ve welcome today's sentence, which closes the case on the largest number of fires
charged La a single defendant since President Clinton f0l111ed the National Church A.rson Task
Force in J 996," said James E. Johnson., Treasury Under Secretary for Enforcement. "While it
cannot tum back the clock, it brings some measure 0 f justice to the communities that were
impacted by this selial arsonist, and demonstrates the impact of our col1aborative effons, which
have resulted in the investigation of more than 980 arsons and the arrests of 450 defendants."
DOJ Publlc Affalrs
-3According to Assistant United Slates Attorney Susan Heckard Dowd, who prosecuted the
case for the government, Judge Barker also imposed three years supervised release following
BALLINGER's release from imprisonment. Ballinger was also ordered to make restiLution in the
amount of $3,554,388.56 to the victim churches.
Other documents previously filed in the District Court set forth facts of the arson fu-es set
by Ballinger. Ballinger grew' up in tbe Yorktown, Indiana area. Throughout his adult life,
Ballinger traveled extensively throughout the United States, studying and practicing his religious
beliefs as a Luciferi3n. Ballinger frequently expressed his hostility toward organized
Christianity, signed individuals he met to contracts wiili the devil, and tenned himself a
Missionary of Lucifer and a Samt of Hades. In latc 1993, Ballinger met an 18-year-old woman
named Angela 'V\rood with whom be soon entefed into a romantic relationship. Ballinger and
Wood traveled the country together, primarily livjng in motels on a short term basis. Wood
obtained short-term employment as a. nightclub dancer at various 1ocations arOl.md the United
States, in order to suppOli them and pay their living e:x.-penses. Wood also assisted Ballinger in
setting ll1ally of the church fires, primarily acting as a lookout so no one would see Ballinger set
the fires, but also canyiDg gas
caDS
and other supplies for Ballinger while he set the fu·es.
Ballinger's setting of church fires followed a distinct pattem. Most of the fires were set
late at night or early in the morning. Most of the fires were set at isolated rural churches. On
most occasions, Ballinger broke a window at the side or back of the church, pow·ed a flammable
mixture (usually gasoline) into the church, set the flammable minUTe on fire with a lighter, thcn
le ft the area.
The first church arson committed by Ballinger and 'Wood was at the Concord Church of
Cbrist, Lebanon, Indiana, on January 10, 1994. This church was an approximately 100-year-old
11 /1 V 00
1tlE 13: 2 8 FAX
DOJ Public Affairs
-4-
white frame church which was depicted in the opemng scene of the movie "HoosleJ:s." The
rollowing is a listing of each of the 26 church fires for which Ballinger was sentenced today:
January 10, 1994
Concord Churcb of Christ
Lebanon, Indiana
March 1, 1994
Liberty Baptist Church
Kempton, Indiana
July 1,1994
Church of God at Angola
Angola, Indiana
July 8,1994
Maranatba Baptist ChuTch
Versailles, Obio
July II, 1994
First Eminence Baptist Church
Eminence, Indiana
September 25, 1995
South Shore American Baptist Church
Dana Point, California
October 27, 1996
Sunlight Baptist 01uI'ch
Eastaboga, Alabama
December 22, 1996
Ann Oak Baptist CllUfch
Hardeeville, South Carolina
July 28, 1997
Surr..ach United Methodist Church
\V;rrdell, Miss 0 uri
November 13, 1997
Milledgeville United Methodist Church
Milledgeville, Indiana
April 21, 1998
Hawcreek Missionary Baptist ChlllCh
Hope, Indiana.
June 10, 1998
Grace Baptist Church
Coatesville, Indiana
July 25, [998
September 10, 1998
New Liberty Congregational Christian Church
Lynn, Indiana
Ebenezer Presbyteri1n Church
Lewisville, Indiana
(4J () 05
11/14/00
'tW~
13:28 FAX
DOJ Public Affairs
- 5November 20, 1998
~ovember
27, 1998
December 20, 1998
Bethel Missionary Baptist Church
Fillmore, Indiana
Christian Liberty Church
She~id:m, Indiana
Mt. Eden Christian Chw-ch
Little York, Indiana
December 21, 1998
Bolton Schoolhouse i\1jssionary Baptist Church
Bonnieville, Kentucky
December 22, 1998
Little Hurricane Primitive Baptist Church
Manchester, Tennessee
January 17, 1999
Cedar Grove Baptist Church
Franklin, Kentucky
January 18, 1999
Pleasant Hill Metllodist Church
Ell"toD, Kentucky
January 18, 1999
New Harmony Baptist Church
Morgantown, Kentucky
January 23, 1999
Otterbein United Brethren Chw-ch
Rockford, Ohio
January 25, 1999
Stidham United Methodist Church
Lafavette, Indiana
January 30, 1999
Wabash Primitive Baptist ChuTch
Huntington, Indiana
February 6, 1999
Community United Methodist Church
Brookville, Ohio
Ballinger still faces federal charges .in tbe Northern Distlict of Georgia and the NIiddle
District of Georgia for setting iive: churc.b fires in Georgia iu December 1998 and January 1999,
including one in which a firefighter was kiJled \vrulc fighting the fire. Ballinger is cunently
being held in the Marion COUIlty Jail, and will be transported to Georgia to face the charges.
l4J 006
ll/H'OO
n& 13::S FAX
DOJ Public Affairs
-6-
In a related case, Donald Puckett, of Lebanon, Indiana, pled guilty and was sentenced in
September, 1999, to an tlIson cbarge for assisting Ballinger and Wood in setting the Concord
Church of Christ fire in January 1999. Puckett is cunenity serving a 27-monthsentence of
imprisonment for his conviction,
~nd
is cooperating with the government.
Angela Woad pled guilty in November 1999 to one count of conspiracy to commit arson
and church arson, one count of tlIson of a builcting in interstate commerce, foUl" counts of church
arson, and one count of use of fire to commit a federal felony. Wood is cooperating with the
government in the cases agai"'1St Ballinger and will be sentenced by Judge Barker toman-ow,
Novembel- 15, 2000
###
00-659
f4j007
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
FOR IMMEDIATE RELEASE
November 14, 2000
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 33-DAY BILLS
33-Day Bill
November 15, 2000
December 18, 2000
912795KD2
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:
6.37 %
Investment Rate 1/:
Price:
6.50 %
99.416
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted 28%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
Competitive
Noncompetitive
$
36,160,000
225
$
12,035,200
225
TOTAL
$
36,160,225
$
12,035,425
Median rate
6.36 %: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
6.33 %:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-Cover Ratio
=
36,160,225 / 12,035,425
=
3.00
1/ Equivalent coupon-issue yield.
http://www.publicdebt.treas.gov
.. 5-1020
D EPA R T l\I E N T
0 F
THE
T REA SUR Y
NEWS
omCE OFPUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASIllNGTON, D.C. _ 20220 - (202) 622.2960
EMBARGOED UNTIL 9:15 AM EST
Text as Prepared for Delivery
November 15,2000
TREASURY DEPUTY SECRETARY STUART E. EIZENSTAT
REMARKS TO THE U.S.-NORTH AFRICA INVESTMENT CONFERENCE
I am very happy to be here to keynote this Conference, which provides us with the
opportunity to explore groundbreaking trade and investment opportunities in North
Africa. It is a part of our efforts pursuant to the U.S.-North African Economic
Partnership to bolster the relationship between our countries. I hope all the participants
from the U.S. and North Africa will come away with new investment plan.s and a better
understanding of how to take advantage of the myriad opportunities the Maghreb region
offers.
I want to especially commend the U.S. Trade and Development Administration
for the energy and initiative it has shown in organizing this Conference. My good friend
Joe Grandmaison and his team, with the assistance of the State Department, worked
extremely hard over many weeks to make sure all of you will have the greatest possible
opportunity to exchange information about the projects the Maghreb is undertaking and
about the experience and credentials of the American firms that may be interested in
participating.
We are very honored to have with us Ambassador Jazeiry, Ambassador Atallah
and Ambassador el-Maaroufi. Their presence shows the importance the Maghreb nations
place on sound, market-based economic development, on foreign investment and on this
Conference as a vehicle for meeting these goals.
I want to extend a special welcome to those of you who have come here from
North Africa and express my admiration for the work you are doing. You are engaged in
nation building, in the best sense of the term. The projects you are undertaking--power
grids and ports, telecommunications facilities and industrial parks, utilities and
petrochemical projects-- are the sinew and muscle of a successful economy.
I have long advocated closer U.S. commercial ties with the Maghreb region. As
Under Secretary of State in 1998, I proposed the US-North Africa Economic Partnership
as a means to refocus our attention on this critically important region of the world. In my
visits to each of the countries in our Partnership, I have been struck by the desire of
LS - 1021
For press releases, speeches, public schedules and official biographies, call our 24~our fax line at (202) 622-2040
'lJ S Government PnnttnQ Othee. 1998· 619·559
business people and government officials, both in the Maghreb and here in the United
States, to expand our trade and investment links. I am also impressed by the pace and
range of economic reforms that countries in the region had planned or implemented. The
Partnership was created to help broaden the range of economic relations and forge closer
commercial links between the US and the Maghreb.
There is also another, equally important focus of the Partnership: to encourage
regional trade and investment. Morocco, Algeria and Tunisia together comprise an 80
million-person market with a combined GDP of$137 billion. There is great potential for
trade in the region in the agriculture sector, service industries, regional tourism, and the
energy sector. To reach their full potential, it is critical that intra-regional barriers to trade
and investment be reduced. This will enhance your own economic activities, and will
encourage foreign companies to serve the North African market from the Maghreb
countries instead of from elsewhere.
A number of senior U.S. Government officials have visited each of the Maghreb
nations and engaged in high level policy dialogue aimed at promoting economic reform
and liberalization. Since its inception, the Partnership has hosted two Ministerial-level
meetings with the Maghreb countries and formed a Steering Committee, consisting of the
three Ambassadors who are here today to work with senior officials of our government to
monitor progress toward economic reform. This is a cornerstone of the Partnership:
serious and frank dialogue between senior government officials to help put in place the
right kinds of economic policies that will contribute to sustainable economic
development, broader trade and investment, and closer economic cooperation. Our
discussions with senior officials in the region have resulted in specific programs on the
ground, all aimed at improving the Maghreb's investment climate and the region's longer
term macroeconomic policies.
Many of the projects you will be discussing this week were developed through
feasibility studies and other project planning services provided by our Trade and
Development Agency. The US Agency for International Development is in the process
of linking Morocco, Algeria and Tunisia to potential US investors through its
groundbreaking Global Technology Network. Our Treasury Department is providing
technical advice on debt management and has plans for providing technical assistance on
further financial sector reform. The Department of Commerce is helping the region
develop, establish and strengthen investment regulations through the Commercial Law
Development Program. The Office of United States Trade Representative, as some of you
know, is meeting this week with senior Moroccan officials on the Trade and Investment
Framework agreement. There are many other examples of the kinds of targeted programs
we are planning or have on the ground in the region to promote opportunities for foreign
investors and higher standards of living for the Maghreb's people.
This Conference offers a unique and historic opportunity for the Maghreb region
to showcase a wide range of investment opportunities for US companies. The projects
you willieam about over the next two days have been carefully selected to offer
maximum opportunities for investors in some of the most promising sectors. Power grids
2
and ports, telecommunications facilities and industrial parks, utilities and petrochemical
projects are just a few. As these projects are implemented, the region will grow to
accommodate even more economic activity. expand employment, compete in world
markets, improve social services and offer better standards of living. This will create a
virtuous circle that will lead to still higher levels of trade, investment and employment
opportunity.
This Conference and the U.S.-North Africa Economic Partnership underscore the
U.S. commitment to this important region. Our policy is based on helping the Maghreb
help itself through sustainable economic policies, market-based initiatives, and increased
U.S. business investment that will help create growth, prosperity and employment for the
people of the Maghreb. This Conference provides a concrete manifestation of that
policy.
I hope investors here today will give careful consideration to the trade and
investment opportunities that will be on display over the next few days. I have seen
firsthand the Mahgreb countries and each of them is committed to making themselves
more attractive places for investment. They are working to take advantage of the benefits
and opportunities of the information age. They want very strongly to become part of the
New World economy. They have projects planned to bring their telecom facilities into the
21 st century, supply their economies with adequate power, build new industrial areas,
modernize their transportation facilities and their agriculture, and deal with the inevitable
environmental problems of an expanding population. Each country, as you will see, has
sophisticated planners and talented and visionary business people and government
officials who have given much time and effort to the design of the projects that will be
presented here this week.
I would like to conclude with some general observations on development that
apply to the Maghreb as well as other areas of the world. Experience shows that marketbased economic systems provide the best environment for creating jobs, generating
economic activity and raising living standards. But markets themselves do not
necessarily create the conditions needed for them to function well. When it comes to
generating investment by developing a skilled work force, maintaining sound
macroeconomic policies, managing national debt, providing full and accurate information
for private investment decisions and protecting intellectual property rights, government
activity is needed for markets to produce the best results.
Investment capital most often flows to those countries that offer a conducive
investment climate - a predictable and transparent regulatory system, a vibrant and
independent private sector, an established infrastructure to support new business
ventures, and educated workforce, and physical proximity to other buoyant markets. A
business friendly environment is created by forward looking governments that plan and
then enact the necessary reforms-sometimes painful and politically unpopular ones - to
lay the groundwork for sustained growth. This involves reforming and reducing the role
of the state in the economy, liberalizing the trade system by lowering tariffs and other
3
barriers, and investing in a country's human capital through increased spending on
education and health care.
Moreover, the deep-seated reforms required of developing countries sometimes
cause changes that could result, in some short-term dislocation, even when the longerterm results will be higher sustained growth and lower unemployment. If the people of a
country are to be expected to accept these, they must have some confidence that a social
safety net is in place to help them weather the transition and manage the risks of a market
economy. Social programs should be aimed at developing human capital, so that people
have the skills to change occupations and make other adjustments. They should also be
directed toward alleviating substandard living conditions. Economic reform cannot just
show up in statistics. People must be able to see the change in their job opportunities and
the conditions of daily life. So there is an important role for government in creating the
kind of conditions that encourage, in the broadest sense, the foreign investment the
Maghreb nations need and seek.
I believe that, with all the work that has gone into the preparation of this
Conference, it will be a valuable experience for all participants. I hope it will also result
in business people from the US and North Africa working together on projects that will
foster economic growth and development in the Maghreb region and continue to
strengthen the bilateral relationships that have been fostered through the US-North Africa
Economic Partnership. Good luck in your endeavors over the next few days.
Thank you very much.
-30-
4
DEPARTMENT
OF
THE
TREASURY
:
,
NEWS
TREASURY
OFFICE OF PUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASIllNGTON, D.C. - 20220 _ (202) 622-2960
EMBARGOED 'tJII'.rIL 9: 00 A. K.
POBLXC
co~:
-&ovember 15, 2000
mmu
Office
o~ PiDanci~g
202-691-3550
C:0ln'~:
U=.a Gallagher
202-622-2960
0zL RoYember 16. 2000, ~. Tz'easuzy w:i.ll. buy back up to $1.000 mill.ion paz'
of -ita outat&D4iD.g callable issue. ri~ fiDAl aat:uzity beCWama. Fel=ua:y 2010
and NOv~ 201'. ~reasur,y reserves the right to accept lass ~-the
&mlounced amount.
~a debt l:nlyback (reclampticm) operaticm will he conducted by Trea,suzy' ..
J"iae&l. Agent, the Fedezoll.l a.se~ Bank of New York, using its OpeD. Karket
operatiODS ..,atam. only iDst:i.tutlocB ~t the Pederal R.serve Bank of Naw
York haJJ approvecl to ecaGuct 0pezL IlaZlcet tzoan8&ctioJ1S may sul:Imit o££e:. Oil
lMllalf of themselves a.Dd. their customezos.. Of~ers at t;be higb••t accepted
price for a particular issue may Qe ac:::ceptec! em a prorated basis .. %OUDoed upto the ~ext $100, 000. As .. result of this z'ouDc!i.DSJ, the '.l'%aaaUJ:Y may buy
-back ~ amo\mt slightly larger thaD the 0ZI.8 almCNDCea. above.
for~b
Thill debt ~back ope:ation i . govezued. by the tenua aDd conditions set:.
iD 31 CFa part 375 &DQ this &DDOUDC~Dt.
the
The c!ebt buyback operatioD. regulat:lcms are available
Debt'. website at www.publicQebt.ereas.gov.
OIL
the Bu'eau of
Pub~ie
Det&i18 abo\lt the ope:a.tiOlL ancl each of the eligible ialNea are giv~
in the attached high1ights.
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11/15/07-12
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D EPA R T lVl E N T
0 F
THE
T REA S U'R Y
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
November 13, 2000
"IMPORTANCE OF IMPROVING FINANCIAL PROFICIENCY OF YOUNG PEOPLE"
TREASURY ASSISTANT SECRETARY FOR ECONOMIC POLICY DAVID W.
WILCOX REMARKS TO THE FEDERAL RESERVE BANK OF DALLAS
DALLAS, TEXAS
I. Introduction
It is a pleasure to be here with you today. I would like to begin by thanking our hosts, President
McTeer of the Dallas Federal Reserve Bank, and Wayne Hast, the Director of Economic
Education at FRB Dallas. This conference is yet more evidence of your commitment to the
important mission of improving the economic and financial proficiency of our young people. It
can hardly be an accident that four out of the last five National Champion teams in the annual
Fed Challenge - including this year's champion team - have come from Texas.
David Ramsour and the Texas Council on Economic Education also deserve great credit for their
dedication and hard work in this area, and particularly for their role in facilitating this
Conference.
Today, I would like to spend a few minutes putting the question of youth financial literacy in a
broader context, touching specifically on the following questions:
•
Why it is critically important that we redouble our efforts to help families improve the
management of their personal finances;
•
Why part of that effort ought to be directed toward our nation's youth;
•
What one economist hopes a financially proficient graduating senior would understand about
personal finances;
•
What kind of a report card our kids would receive today on their financial proficiency; and
finally,
1S-1023
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
•
What efforts are currently under way outside the classroom that could complement your
efforts as educators inside the classroom in furthering the financial training of your students.
n. The importance of improving the practice of personal finance in America today
Treasury Secretary Summers has set as one of his top priorities that we should work to improve
the practice of personal finance in America today. A few sobering facts illustrate why:
•
Nearly one in ten American households have no checking account, no saving account, and no
place where they could establish a regular saving program. And among minority households,
the fraction of so-called "unbanked" households is closer to one in four.
•
Only about two-thirds of eligible workers choose to participate in the retirement saving plan
sponsored by their employers, even when their employers turbo-charge the plan with a match
on employee contributions.
•
This year, ten years into a record-breaking economic expansion, we are on track toward
having roughly 1.2 million personal bankruptcies declared in the United States. If the
national average applies to this audience, that would mean that 2 of you will have declared
bankruptcy before the year is out.
Clearly, we have a lot of work to do.
But why is this issue a national priority, and a priority for the Treasury Department as well as
many other Federal agencies? Perhaps the most important reason is that greater financial
proficiency very likely would translate into greater national saving. And increasing saving
deserves a prominent place on our list of national priorities, because boosting national saving is
the surest method we know of for boosting our standard of living.
Moreover, families understand that, when times are good, they should save even more than
normal. The same principle applies for the nation as a whole. Yet with the unemployment rate at
a 30-year low and the return to investment apparently unusually high, our national saving rate
last year was only a little above its average over the past 20 years, and lower than it was in any
year between 1950 and 1980, despite the fact that we ran the largest Federal surplus ever.
So at the macro level, increasing saving is a national imperative. But at the micro level, it is
more important than ever that individual families increase their saving, for at least two reasons:
•
First, because we face the happy prospect of financing a longer period of retirement than ever
before. In 1935, when the Social Security system was being established, the average person
retiring at age 65 could expect to live about another 13 years. Today, partly because we are
retiring earlier and partly because we are living longer, the average person leaving the
workforce will spend about half again as much time in retirement.
•
Second, because we have an even greater responsibility to save for our children's education.
In the New Economy, as Alan Greenspan has noted, a worker's value to an employer is more
2
likely to reflect how much he or she knows than how much he or she can lift. If knowledge
and education are more important than ever before, then it is correspondingly more important
that we save for our children's education.
m. The importance of improving the financial proficiency of our youth
If there is a national imperative that we improve our financial proficiency generally, what is the
rationale for focusing part of our efforts on youth in particular?
•
First, children have never had more money of their own, and have never had more influence
over the spending decisions of their families. Children between the ages of four and twelve
directly influence an estimated $190 billion in purchases, and teenagers spend another
$140 billion of their own and their parents' money. With spending power of that magnitude,
kids will inevitably become the targets of enormous marketing pressures. They need to be
equipped to deal with those pressures.
•
Second, habits that are ingrained early on tend to be habits that are kept for a lifetime. One
particularly compelling study by Bernheim, Garrett, and Maki, examined the long-term
influence of high-school financial education courses. Even 15 to 20 years later, individuals
who had taken such courses were still saving at significantly higher rates, and had
accumulated significantly more wealth. What you are doing in the classroom today truly can
have long-lasting effects.
IV. What should a financially proficient high-school senior know?
Ifwe are to mount an effort to improve the practice of personal finance in America today, and if
a part of that effort is to be directed toward kids, then what should our objectives be? In
particular, what should it mean to say that a young person is financially proficient?
There are many people in this room and elsewhere who have devoted enormous amounts of time
and energy to the task of defining what a child should know at each step of his or her educational
development. Rather than presuming to second-guess that good work, let me simply offer one
economist's perspective, in the form of my own list of the top three greatest concepts in personal
finance. Let me emphasize: while I will promote my personal list with conviction, it is just
exactly that - my own personal list.
•
First, the concept of a budget constraint. Every graduating senior should understand that
resources are finite, and accordingly that choices have to be made. A dollar spent on
something today necessarily means either that a dollar less is available for spending on other
items, or that a dollar less is available for saving for a better tomorrow.
•
Second, the concept of present value. Every graduating senior should understand that a
dollar today is worth more than a dollar in the future. This is the fundamental reason why the
time to get started on retirement saving is nmv, regardless of how old you are. Every day of
delay is a day in which the power of compound interest is lost.
3
•
Third, the concept of risk. Every graduating senior should understand that the financial
market is a very uncertain place. You could make more money than you expect, but you also
might lose more than you expect. If something sounds too good to be true, it probably is.
Diversification is a good way to reduce risk, but diversification cannot eliminate risk.
The challenge, as you know far better than I do, is to make these concepts tangible and real in the
lives of your students. But that's where you come in - filling the crucial role of bringing these
ideas to life for your students, and showing them how they apply in their everyday living.
V. Are our children financially proficient?
Unfortunately, an abundance of evidence indicates that our children are not yet making the
financial grade. For example:
•
One survey of kids, the 1999 Youth and Money Survey, sponsored by the American Savings
Education Council, the Employee Benefit Research Institute, and Mathew Greenwald &
Associates, Inc., found that only about half of students between the ages of 16 and 22 feel
that saving money is a very important goal, and only about half are saving regularly.
•
A different survey conducted earlier this year on behalf of the Jump$tart Coalition suggests
that the level of financial proficiency among high-school seniors actually declined a bit
during the past three years. Nearly half of the students surveyed this year knew that
retirement income paid by a company is called a pension, but 30 percent thought it was
called Social Security. Only about a quarter picked stocks as likely to offer the highest return
over the long term, while nearly three-fourths said a savings bond or a savings account would
offer the best return.
•
About two-thirds of our college students have at least one credit card, and many students
have as many as 5 or 6. While most are responsible users of credit, about a fifth run balances
averaging more than $1,000, and only 18 percent pay their balances in full each month.
VI. Some help from outside the classroom
In the face of that sobering reality, the good news is that there is a tremendous amount of
exciting and creative effort being directed at the objective of reaching our children with a
message of personal financial responsibility and proficiency.
•
In an effort to help coalesce some of that effort around common goals and objectives, and to
give the overall undertaking maximum visibility, the Treasury Department has been pleased
to participate in the launch of a new organization called the National Partners for Financial
Empowerment, or NPFE. Treasury Secretary Summers announced this effort in April as a
collaborative undertaking of groups dedicated to helping improve personal finance skills. The
objective of the NPFE is to bolster and support the work of its participating organizations in
promoting the importance of personal financial management to all Americans.
4
•
Working with a number of our partners in the NPFE, we are in the process of helping to form
a Task Force that will focus specifically on the issue of improving the financial proficiency
of our youth. We believe that the potential for positive impact is enormous, and I hope and
expect that at some date not too far in the future, the Youth Task Force will begin to make a
material contribution to your effort to teach kids about personal finances.
The very purpose of this conference is to present to you a wide range of materials that you might
consider using in your classrooms. And without any doubt, formal education in the classroom
will have to be part of the solution.
But you should know that there is also an enormous amount of energy being applied to the
question of what can be done outside the classroom as well Much of this could usefully
reinforce the basic lessons you are teaching in the classroom. To illustrate the wonderful range
of activity, I would like to highlight a few of these efforts, recognizing that this will necessarily
omit a large number of other very worthy endeavors. For example:
•
The Girl Scouts of the USA incorporate financial management skills in many of their
activities for all age groups. Girl Scouts create a budget for their troop, figure out how to use
troop dues for various projects and activities, and set goals for their annual cookie sale. In
addition, various badge activities focus on specific financial skills such as personal budgeting
and business management. And a book called "Money Smarts," produced for the Girl Scouts
by the National Endowment for Financial Education, encourages Girl Scouts to develop
lifelong skills in personal finance, such as creating a budget, starting a business, and
exploring the stock market.
•
The Texas 4-H clubs offer programs to teach wise consumer decision-making about the
purchase of various goods and services, including financial services. They also sponsor a
consumer decision-making contest, in which participants are given a situation and must
decide which of several products will best meet their needs and why.
•
Save for America is a school-based savings program sponsored by banks and run by adult
volunteers, Once a week - either before school or during lunch - students can bring their
money to school to make a deposit. Adult volunteers enter these deposits via the Internet and
give each student a receipt recording his or her deposit. The program also includes a video
that highlights the importance of saving, and discusses the mechanics of saving. Since 1982,
student deposits have totaled more than $46 million, You can find out more about this
program at the Save for America website, http://www,saveforamericaorg.
Vll. Conclusion
Promoting financial proficiency and increasing saving are critical for the well-being of our
nation and for the personal financial security of so many American families,
Youth financial education is crucial to our future. We know that educating youth makes a
difference to their saving behavior, even in today' s culture, And we must make a strong effort to
make this difference.
We believe that with a concerted effort, involving many different participants, we can make a
difference. You, and all who teach and lead our youth are crucial to this undertaking. Let's work
together to make sure our youth get the message and the tools they need to operate responsibly in
the financial marketplace, and to put their financial futures on a secure footing.
-30-
6
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
Contact: Office of Financing
202-691-3550
FOR IMMEDIATE RELEASE
November 16,2000
TREASURY'S INFLATION-INDEXED SECURlTIES
DECEMBER 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 December for the following Treasury inflation-indexed securities:
(1) 3-3/8% lO-year notes due January 15,2007
(2)
(3)
(4)
(5)
(6)
3-5/8% 5-year notes due July 15, 2002
3-5/8% lO-year notes due January 15,2008
3-5/8% 30-year bonds due April 15,2028
3-7/8% lO-year notes due January 15,2009
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 cprs (Ref CPl) 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 1024. The infonnation is also
available on the Internet at Public Debt's website (http://www.publicdebUreas.gov).
The information for January is expected to be released on December 15,2000.
000
Attachment
LS-1024
http://www.publicdebt.treas.gov
TREASURY INFLATION-INDEXED SECURITIES
Ref CPI and Index Ratios for
December 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 Notes
Series J-2002
9126273A8
July 15. 1997
July 15. 1997
October 15, 1997
3-5/6'10 10-Year Notes
Series A-2008
9128273T7
January 15. 1998
January 15, 1998
October 15. 199B
3-5/6% 30-Year Bonds
Bonds of April 2028
912810FD5
April 15. 1998
April 15, 1998
July 15, 199B
Maturity Date:
Ref CPI on Dated Dale:
January 15. 2007
158.43548
July 15, 2002
160.15484
January 15, 2008
161.55484
April 15, 2028
161.74000
Date
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Oec.
Dec.
Dec.
Oec.
Dec.
1
2
J
4
5
6
7
8
9
10
11
12
13
14
15
16
H
16
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
Index Ratio
Index Ratio
Index Ratio
173.70000
113.70968
173.71935
173.72903
173.73871
173.74639
173.75606
173.76774
173.77742
173.78710
173.79677
173.80645
173.81613
173.82581
173.83548
173.84516
173.65484
173.86452
173.87419
173.68387
173.69355
173.90323
173.91290
173.92258
173.93226
173.94194
173.95161
173.96129
173.97097
173.98065
173.99032
1.09635
1.09641
1.09647
1.09653
1.09659
1.09665
1.09671
1.09677
1.09683
1.09690
1.09696
1.09702
1.09706
1.09714
1.09720
1.09726
1.09732
1.09738
1.09744
1.09751
1.09757
1.09763
1.09769
1.09775
1.09781
1.09787
1.09793
1.09799
1.09806
1.09812
1.09818
1.08458
1.08464
1.08470
1.08476
1.08482
1.08468
1.08494
1.08500
1.08506
1.08512
1.08518
1.08524
1.08530
1.06536
1.08542
1.06546
1.08554
1.06560
1.08566
1.08572
1.08578
1.08584
1.08590
1.08597
1.08603
1.08609
1.08615
1.08621
1.08627
1.08633
1.06639
1.07518
1.07524
1.07530
1.07536
1.07542
1.07548
1.07554
1.07560
1.07566
1.07572
1.07578
1.07584
1.07590
1.07596
1.07602
1.07608
1.07614
1.07620
1.07625
1.07631
1.07637
1.07643
1.07649
1.07655
1.07661
1.07667
1.07673
1.07679
1.07685
1.07691
1.07697
1.07395
1.07401
1.07407
1.07413
1.07419
1.07425
1.07430
1.07436
1.07442
1.07448
1.07454
1.07460
1.07466
1.07472
1.07478
1.07484
1.07490
1.07496
1.07502
1.07508
1.07514
1.07520
1.07526
1.07532
1.07538
1.07544
1.07550
1.07556
1.07562
1.07568
1.07574
August 2000
172.7
September 2000
-
-
-
173.7
October 2000
I
174.0
TREASURY INFLATION-INDEXED SECURITIES
Ref CPI and Index Ratios for
December 2000
Security:
Description:
CUSIP Number:
Dated Date:
Original Issue Date:
Additional Issue Date(s):
3-7/8% 10-Year Notes
Series A-2009
9128274Y5
January 15, 1999
January 15, 1999
July 15, 1999
Maturity Date:
Ref cpr on Dated Date:
January 15, 2009
164_00000
Date
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Oec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
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:
3-718% 3D-Year Bonds
Bonds of April 2029
912810FH6
April 15, 1999
April 15, 1999
October is, 1999
October 15, 2000
April is, 2029
164.39333
Index Ratio
Index Ratio
Index Ratio
173.70000
173.70968
173.71935
173.72903
173.73871
173.74839
173.75806
173.76774
173.77742
173.78710
173.79677
173.80645
173.81613
173.82581
173.83548
173.84516
173.85464
173.86452
173.87419
173.86387
173.89355
173.90323
173.91290
173.92258
173.93226
173.94194
173.95161
173.96129
173.97097
173.98065
173.99032
1.05915
1.05921
1.05926
1.05932
1.05938
1.05944
1.05950
1.05956
1.05962
1.05968
1.05974
1.05980
1.05985
1.05991
1.05997
1.06003
1.06009
1.06015
1.06021
1.06027
1.06033
1.06039
1.06044
1.06050
1.06056
1.06062
1.06068
1.06074
1.06080
1.06086
1.06092
1.05661
1.05667
1.05673
1.05679
1.05685
1.05691
1.05697
1.05702
1.05108
1.05714
1.05720
1.05726
1.05732
1.05138
1.05744
1.05750
1.05755
1.05761
1.05767
1.05773
1.05779
1.05785
1.05791
1.05797
1.05803
1.05808
1.05814
1.05820
1.05826
1.05832
1.05838
1.03242
1.03248
1.03254
1.03259
1.03265
1.03271
1.03277
1.03282
1.03288
1.03294
1.03300
1.03305
1.03311
1.03317
1.03323
1.0332S
1.03334
1.03340
1.03346
1.03351
1.03357
1.03363
1.03369
1.03374
1.03380
1.03386
1.03392
1.03396
1.03403
1.03409
1.03415
172.7
September 2000
I
,
I
I
January is, 2010
168.24516
Ref CPI
August 2000
I
4-114% 10.Year Notes
Series A-2010
912827SWB
January 15, 2000
January 18,2000
July 15,2000
173.7
October 2000
---
174.0
D EPA R T '!VI E N T
0 F
THE
T REA SUR Y
NEWS
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASmNGTON, D.C,. 20220. (202) 622-2960
FOR IMMEDIATE RELEASE
Wednesday, November 15,2000
TREASURY DEPUTY ASSISTANT SECRETARY MICHAEL S, BARR
REMARKS TO THE NATIONAL ASSOCIATION OF ATTORNEYS GENERAL
PREDATORY LENDING SUMMIT
PORTLAND, MAINE
I.
Introduction
It's an honor to be here today with my colleagues from Washington before such a distinguished
audience. I'd like to thank Attorney General Ketterer for hosting this summit. This is a unique
and important opportunity for state and federal officials to share inforn1ation and collaborate on
ways to address problems that victimize our nation's most vulnerable consumers.
The state attorneys general have long led the way in rooting out abusive trade practices and
advancing consumer protections. The new laws in North Carolina we heard about earlier today
provide the most recent example of the states' leadership in helping to curb predatory lending
practices. For our part, the federal government has taken an increasing interest in the issue as
evidence has indicated that these types of abuses are growing, and occurring on a national basis.
To that end, as the members of this panel have described and will describe, the federal agencies
represented here have undertaken a series of efforts to better understand the problems that are
occurring in this marketplace, to propose substantive new protections for consumers, and to use
our authorities where applicable to curb predatory practices.
The FTC and the Department of Justice have a long history of working with the states to bring
actions against lenders that have violated federal laws such as HOEPA, TILA, ECOA and the
Fair Housing Act.
Congress gave the Federal Reserve Board important authorities to ensure that consumers receive
clear and consistent information on consumer credit, and to provide substantive protections for
consumers in the high-cost mortgage market where evidence of abuses exists. As we speak, the
LS- 1025
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'U.S Government Pnnllna Office 1998 - 619-559
Board's staff is actively engaged in an effort to propose new consumer protections in this area.
HUD, too, has significant rulemaking and enforcement authority with respect to the mortgage
market through RESPA. In 1998, it joined with the Fed to issue recommendations to streamline
the mortgage lending process and to provide new protections against abusive practices in the
mortgage market.
All this, of course, leaves open the question of why Treasury is part of this panel. While our
financial institution regulatory bureaus - the acc and OTS - have important authorities that 1
will discuss later, our interest in the issue of predatory lending also has a broader policy basis.
Secretary Summers and the rest of us at Treasury believe we have the responsibility of ensuring
that our credit markets operate efficiently and fairly for all Americans. And the area of Treasury
that I represent, Community Development Policy, has the task of advancing policies that
democratize access to capital and credit, especially among the lower-income individuals and
economically distressed communities in our nation that too often lack such access.
It was with these concerns in mind that Secretary Summers joined with HUD Secretary Cuomo
this past spring to convene a National Task Force on Predatory Home Mortgage Lending.
Through discussions across the country with industry, consumer advocates, state and local
government officials, and victims of abuses in the mortgage market, Treasury and HUD gathered
evidence on the incidence and nature of these problems. In June, we wrote a joint report to
Congress offering our recommendations for legislative, regulatory and budgetary remedies to
curb predatory mortgage lending. Our colleagues at FTC, Justice and the bank regulatory
agencies were of great assistance in informing those recommendations.
Based on the research that Treasury did for that report, as well as our ongoing involvement with
fair lending and other issues affecting access to credit, I'd like to discuss three areas this
afternoon:
First, I'd like to describe the characteristics of our nation's credit markets that may be giving
rise to abusive lending practices.
Second, I'll highlight the major issues facing lower-income borrowers, and describe some of
the actions that are being taken to curb abusive practices.
Third, and finally, I'll outline the specific steps that Treasury and others are taking to
improve the credit marketplace as a whole.
I.
The Credit Market Today
I would argue that the first and most important characteristic of the consumer credit market today
is high demand. With each progressive month, statistics reveal that we are less and less a nation
of savers, and more and more a nation of debtors. In July, our nation's personal savings rate
dipped below zero, and it remains there today. At the high end of the income spectrum, this
trend may point to individuals increasing their consumption in response to holding unrealized
capital gains. At the low end of the income spectrum, however, where the abuses we're
concerned about are most likely to occur, increases in household debt may be more problematic.
2
The most recent Survey of Consumer Finances reveals that in 1998, nearly one in five
households with income between $10,000 and $20,000 reported debt payments totaling more
than 40 percent of its income. Increasingly, lower-income families are looking to their home
equity to secure this debt - the median value of home-secured debt for these families increased
by 15 percent from 1995 to 1998, and contributed to their overall decrease in net worth.
Having the ability to tap into home equity to pay for important expenses is crucial. Nonetheless,
this trend is of concern, not only because it represents an increase in debt burden for struggling
families, but also because it means that these families are putting their homes - their most
important assets - at risk in the event of default.
A second important characteristic concerns where these markets operate. When lower-income
families went looking for home equity debt in the past, many may not have been able to find it
due to their limited or poor credit history. With the rise of the subprime lending market,
however, it has become relatively easier for these bonowers to access credit. As the TreasuryHUD report noted, the volume of subprime mortgage originations has increased nearly five times
over in the last five years. As a means for expanding the availability of credit, the development
of this market has represented a signal achievement for our economy.
But because the astounding growth in subprime lending has occuned largely outside the purview
of the heavily regulated banking system - mostly among nondepository mortgage finance
companies - the potential for abuses has grown in tandem with the new opportunities for credit.
The number of players in this market - considering both brokers and lenders - is huge, but the
resources and legal authorities to monitor their activities are limited. This is largely true of the
payday lending industry as well. Some estimate that there are 10,000 companies in operation
today offering payday loans. The overwhelming majority are licensed at the state level, but
subject to no examination and little regulation. The business is growing by leaps and bounds.
Investment analysts predict that payday lending volume will triple over the next three years.
The rise in subprime mortgage and payday lending, however, hasn't been driven by increasing
consumer demand alone. A third characteristic of to day's credit markets is that, while enormous
gains have been made in democratizing access to capital, for many lower-income Americans,
banks, thrifts, and their credit products may still remain relatively inaccessible. Low-income
consumers in struggling neighborhoods may have little choice but to turn to alternative lenders.
Some of the most troubling stories that Treasury and HUD heard in their regional hearings on
predatory lending came from residents of inner-city, predominantly minority neighborhoods - in
Baltimore, in the Bronx and on Chicago's South Side. When these individuals were approached
by a predatory broker or mortgage lender, it never occurred to them that they could seek
financing on better tenns at a bank, thrift or credit union. This is partly an issue of consumer
education, but it is difficult to convince someone that she should seek a mortgage at a traditional
lender when that lender is not serving her neighborhood.
This is not to say that banks and thrifts have done a poor job of serving the hOllsing needs of
lower-income Americans. In fact, as research has shown, quite the opposite is true. According
to statistics from Harvard's Joint Center on Housing Studies, banks, thrifts and their affiliates
3
originated over $580 billion in home mortgages for low- and moderate-income borrowers and
neighborhoods from 1993 to 1999. But evidence that a sizeable percentage of subprime
borrowers could qualify for prime credit, and evidence that many victims of predatory lending
are inner-city residents, suggests that banks and thrifts may be missing an opportunity to
compete for a customer base seeking home equity and home improvement credit.
The problem extends to smaller product offerings as well. The demand for payday loans
highlights a need for short-term consumer credit, and for products like basic savings accounts,
secured credit cards, and checking accounts with overdraft protection. But lower-income
consumers, particularly those with past account problems, often cannot access these products.
II.
Areas for Action
Given these characteristics of the lower-income consumer credit market - high demand from a
population with imperfect or limited credit history, many lightly regulated players and reduced
competition from mainstream lenders - the potential for abuses is ripe. The specific issues are
numerous. Recognizing this, our joint report with HUD proposed a four-part approach to
curbing predatory home mortgage lending, including recommendations to: improve consumer
literacy and disclosure, prohibit harmful sales practices, restrict abusive terms and conditions,
and improve overall market structure.
At the state level, perhaps one of the most important areas to consider is mortgage broker
conduct. Nearly all of the borrowers who gave testimony at the Treasury-HUD regional forums
were taken advantage of not only by a lender but also by an unscrupUlous mortgage broker who
arranged the transaction. The most egregious cases of predatory lending often involved fraud,
deception or misrepresentation of the loan terms on the part of the broker. While such broker
actions are often illegal under state law, state authorities often lack the resources to police the
activities of the thousands of mortgage brokers that may be doing business in their state. One
place to consider curbing abusive broker practices may be at the door - by adopting strict
certification and licensing processes for these brokers at the state level. Ultimately, holding
lenders liable for broker misconduct under certain circumstances may be one of the most
effective ways of reducing broker abuses.
On the federal level, the Fed is taking a careful look at how it might address the harmful sales
practices and abusive terms often associated with high-cost mortgages. Our report asked the Fed
to consider using its authority under HOEP A to prevent such abuses, and we are pleased that the
Fed is considering taking steps in this regard.
OCC and OTS are also taking important steps to prevent abusive practices. In June, using its
authority to enforce the Federal Trade Commission Act, the OCC entered into a settlement with a
national bank that directs the bank to cease deceptive credit card practices and to pay $300
million to consumers harmed by those practices. Those practices included charging consumers
for credit protection coverage they did not request, and charging consumers higher interest rates
than the lower rates that were advertised as "guaranteed." The OCC will be able to take actions
in the future under this authority where evidence confirms that these harmful practices exist.
4
For its part, OTS is continuing to design and implement new modules and overlays in its
examinations of thrifts and their operating subsidiaries to detect predatory practices. The OTS is
also evaluating comments it received on the Advance Notice of Proposed Rulemaking it issued
in March regarding its regulations implementing AMTPA, the Alternative Mortgage Transaction
Parity Act. One area that OTS is looking closely at is whether state housing creditors who
originate alternative mortgages under AMTPA should continue to comply with the same
requirements that federal thrifts, which are subject to OTS supervision, including regular
compliance examinations, must follow in originating mortgages. Placing standard-setting and
licensing back in the same hands might make a good deal of sense. Alternatively, OTS is
considering whether the federal real estate lending guidelines - which implicitly hinder assetbased mortgage lending - should apply to state-licensed lenders originating loans under
AMTPA. OTS is currently consulting with state regulators on the issue to gather information
and feedback.
The regulators are to be commended for taking important steps toward preventing harmful
practices in this marketplace. For the remainder of my remarks, I'd like to focus on consumer
literacy and market structure. Efforts to make improvements in these areas go to the heart of
Treasury's objective to ensure a fair and efficient credit market for all consumers.
III.
Creating a Better Credit Marketplace
Treasury is taking steps - and encouraging the federal banking regulators to take steps - to build
that better marketplace today.
NPFE
While the benefits of improving consumer financial literacy are innumerable, two stand out with
respect to predatory lending. First, helping individuals to better understand credit, and
encouraging them to prepare for financial contingencies through saving, can reduce their demand
for credit altogether. Second, with solid financial skills, consumers who do need credit will be
more likely to consider all of their credit options and avoid" high-cost, high-pressure products like
mortgage refinancings and payday loans.
With these benefits in mind, last April Secretary Summers announced the National Partners for
Financial Empowerment (NPFE)-a broad based coalition made up of over 80 private, nonprofit and government organizations dedicated to raising the level of financial awareness and
improving the personal financial skills of all Americans. The NPFE is working to promote
personal financial skills among all Americans in areas such as saving, investing, budgeting and
managing credit.
Recently, NPFE launched a series of national public service announcements to raise awareness
of the importance of saving for retirement. Too often, the elderly are the targets of unscrupulous
brokers, lenders and home improvement contractors who are all too willing to refinance a
mortgage at a very high cost, and with very little benefit to the borrower. If more Americans
make it a priority to save for their retirement, however, they can accumulate the savings from
which to pay for home repairs or medical expenses, instead of having to tum to a potentially
predatory mortgage loan.
5
First Accounts
Understanding one's finances, of course, goes hand in hand with understanding financial
products. Unfortunately, there are 10 million American families today who lack this
understanding because they have no relationship with a financial institution - not even a bank
account. That's why Treasury is launching the First Accounts initiative. Last month, President
Clinton signed into law legislation that provides Treasury with $8 million to fund pilot projects
that provide lower-income "unbanked" Americans with access to low-cost deposit accounts,
more banking access points in their communities, and basic financial literacy education.
By funding financial literacy efforts, the First Accounts initiative will help to inform lowerincome consumers about the benefits of having a bank account, managing household finances,
and building assets. At the same time, it will help to forge new relationships between the
mainstream financial services sector and residents of the underserved communities that are all
too often the targets of abusive lending practices. These relationships will help lower-income
individuals to build the credit history they need to qualify for a mortgage loan on better terms,
and help them to build the small amounts of savings they need to avoid high-cost payday
lending.
eRA
First Accounts will provide but one example of the sort of innovation that banks should employ
to compete for lower-income consumers with new retail services. The provision of retail
services is an important part of the Community Reinvestment Act, but one need look no further
than the explosion in payday lending to realize that insufficient attention is paid to consumer
needs in this sector. We believe that bank regulators can help by focusing additional attention,
and providing additional guidance, on the CRA services test for large banks. We are
encouraging the regulators to promote further innovation and expanded access in retail services
among the banks and thrifts they regulate.
Serving the credit needs of lower-income borrowers and communities, as intended under the
eRA, also means giving these consumers access to the mortgage products for which they
qualify. However, the anecdotal evidence we gathered at the Task Force hearings, as well as
some empirical evidence on credit scores, suggests that too many lower-income borrowers may
be ending up in a bank's subprime unit, or subprime aftiliate, when in fact they could qualify for
a mortgage on better terms. Banks and thrifts should have in place procedures to "upstream"
these borrowers with good credit histories into their prime mortgage units. As the federal
banking regulators draft their interagency policy statement on predatory lending, we encourage
them to also consider how banks and thrifts might be given eRA credit for "promoting"
borrowers from the subprime to the prime market.
HMDA
An effort to create a fairer credit marketplace also demands that we have access to relevant
information on which to make informed policy decisions. While data required to be reported
under the Home Mortgage Disclosure Act have served a crucial rolc in helping us to understand
mortgage lending patterns, additional data not now collected would help to more completely
describe the mortgage market - the subprime market, in particular.
6
In our June report, we asked the Fed to consider making a series of revisions to its Regulation C,
which implements the Act. Chief among these was a recommendation that the Fed collect new
information on loan price. There is little-to-no publicly available information in this area.
Requiring lenders to report information on APR and the up-front cost of credit would enable
policymakers to assess the size and character of the subprime market, and to identify areas for
potential concern in that market. We also urged the Fed to consider repealing its "10 percent"
rule, which may be exempting some of the fastest-growing subprime mortgage lenders in the
nation from reporting under Reg C.
Federal-State Relationships
Empirical information on the credit market alone, however, will not tell the entire story.
Information on developments in this market need to be shared between those at the federal level
with a "broad-brush" view, and those at the state level who monitor the actual practices of
lenders within their borders. The federal government, for instance, has little access to
information about the thousands of lightly regulated payday lenders operating in the US today.
The federal agencies and the state Attorneys General have built a solid, collaborative relationship
around enforcing our nation's fair lending laws. I believe that there is a great deal that we could
learn from you on the policy side as well, and probably much that you could learn from one
another. I would hope that this summit represents the first of many discussions that the federal
agencies and the state AG's will have on policies to combat predatory lending. I look forward to
your reactions and input, because the right solutions today can create a healthier consumer credit
market for tomorrow, one where abusive practices cannot flourish.
-30-
7
NEWS
omCE OFPUBUC AFFAIRS -1500 PENNSYLVANIA AVENVE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622·2960
FOR IMMEDIATE RELEASE
November 15, 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-I026
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
·U.S Governmen' P"nllng 011 Ice 191e - 619-559
D EPA R T :\. E N T
0 F
T 1I E
T REA SUR Y
~/78~q~. . . . . . . . . . . . . . . . . ..
....................
OmCE OFPUBUCAFFAIRS -1500 PENN SYLVAN lA AVENUE. N.W. - WASIDNGTON, D.C .• 20220. (202) 622·2960
EMBARGOED UNTIL 6:30 PM EST
Text as Prepared for Delivery
November 15, 2000
TREASURY SECRETARY LAWRENCE H. SUMMERS
REMARKS TO THE CONCORD COALITION
NEW YORK, NY
Thank you for this great honor.
We come together at a remarkable moment in our economic history. But prosperity and
credibility are attributes that are rented, not owned Ifwe as a country - families, businesses and
government - are to take maximum advantage of this moment, we must understand how we got
here, not take the current good times for granted, and make prudent choices for our economic
future
Only infrequently does the nation face major fiscal choices. Since World War II, the U.S made a
major fiscal choice every decade or two, Some we have made wisely; others less so.
•
After World War II, we chose to redress the expansion of the 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
sharply, helping to lay the foundation for the 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 contributed to the over-heating of the economy which, in
turn, contributed to rising inflation, higher interest rates, and a long period of slow
productivity and real wage growth starting in the 1970s.
•
In the 19805 we chose to increase defense spending significantly while cutting taxes As a
result, real interest rates increased to record levels, the rate of net private investment declined
sharply, productivity growth continued to stagnate, and the stock of public debt almost
quadrupled
•
And in the \990s, rather than continue with the policies of the 1980s, we chose to move
strongly in the direction of fiscal discipline. That decision was a crucial building block for
the prosperity that we currently enjoy By adopting budget discipline, we have allowed
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roughly $2.5 trillion that would otherwise have been absorbed by government borrowing to
have been invested in making America's economy more productive.
Now with major projected budget surpluses and the approach of the retirement of the baby
boom generation, we face another major choice.
Tonight I would like to discuss the recent sea change in economic thinking regarding budget
deficits and the role of fiscal policies; and then discuss the major fiscal choices that lie ahead:
both with respect to maintaining fiscal discipline and with respect to the challenge of an aging
society and the challenge of Social Security reform.
I.
The Changing Role of Fiscal Policy
Ifwe are to make the right fiscal choices in the years ahea~ it will be important to be guided by
our best understanding of its role.
It is intriguing to track changes in the conventional wisdom regarding fiscal policy over the
years. One benchmark for me is my undergraduate education in economics. Another is my
wife's, since she was a more assiduous student and kept better notes. Our respective educations at
leading American universities in the 1970s had a common thrust:
•
That it was the essence of economic thinking, disputed only by intellectual troglodytes from
the University of Chicago and uninitiated businessmen, that budget deficits operated through
a multiplier effect to stimulate demand, economic growth and the creation of jobs;
•
That it had been a major triumph of economic thinking to induce the pursuit of these policies
to overcome economic stagnation in the 1960s;
•
And that the modem and enlightened approach to fiscal policy recognized the desirability of
fiscal stimulus.
This Keynesian conventional wisdom, that budget deficits can be used to stimulate demand in an
economy producing well short of its capacity, still captures a very important truth about certain
economies at certain times. It was surely the right prescription for the economy of the 1930s and,
indeed, for Japan's economy of today
However, if ever there was a real world example of the old joke about economics examinations - that the questions never change, only the answers -- it must be with regard to the question of
fiscal policy For, today, propelled by the experience of recent years, it has become conventional
wisdom that reducing budget deficits and running surpluses is expansionary, not contractionary;
and that that is the way forward
Why this fundamental change? The new approach reflected a greater recognition of the
importance of three factors that will weigh differently in different circumstances:
2
•
First, there is now a much greater emphasis on the importance of supply factors for long-term
growth. In an economy dose to full capacity, excessive stimulus can increase inflationary
pressures, raise risk premiums, and lead to higher interest rates.
•
Second, financial markets are now seen as much more forward-looking, and more sensitive
to changes in the outlook for fiscal policy. As a result, a change in the budget outlook was
thought likely to provoke a more aggressive and offsetting response from financial markets.
•
Third, there is now greater recognition that capital costs would playa central role in
determining demand for new investment, and fiscal policy, through the market reaction, a
greater role in the determination of capital costs.
Together, these points imply that budget deficit can crowd out investment, slow productivity
growth and lead to a vicious cycle: with higher public borrowing leading to higher interest rates,
lower investment, slower economic growth, and thus still higher budget deficits. In contrast,
budget surpluses can create a virtuous circle of higher investment, faster growth, and bigger
surpluses.
These arguments, which were pushed by many members of the Concord Coalition and embedded
in the 1993 budget agreement, used to be hypotheses, albeit highly credible ones. They now have
the much greater status of having been empirically confirmed. In that sense if the 1964 tax cut
was the exemplar for a generation of budget policy, the deficit reduction actions of the 1990s
have been exemplars for this new generation. With the success of US economic policies, and
their emulation abroad, the new thinking about fiscal policy is an accepted truth, with enormous
potential to improve economic performance around the world.
II.
The Crucial Importance of Continued Fiscal Discipline
Against this broader intellectual backdrop, let me briefly address a number of issues that arise in
considering the most appropriate fiscal policies for our nation in the years ahead
Large annual budget surpluses are now in prospect for the next decade and beyond. This is a
profoundly favorable situation for our country to be in. But all of us here recognize the enormous
uncertainty attached to those projections - uncertainty relating not just to the pace of economic
growth but also to the amount of tax revenue that will be generated by a given rate of economic.
growth.
Some simple calculations based on historical budget projections highlight the magnitude of this
uncertainty:
•
Over the past 15 years, the average error in CBO forecasts of the unified surplus five
years out was equivalent to nearly 2 5 percent of GOP, or, for example, $300 billion in
2005 Neither CBO nor OMB have published 1O-year budget forecasts for long enough to
assess their ultimate accuracy. However, a conservative extrapolation of CBO' s findings
implies that an "average" error over the next 10 years would amount to over $3 trillion in
unified surpluses.
3
•
This uncertainty is also revealed in the magnitude of revisions to cumulative surpluses
over 10-year periods. In the 8 years during which CBO has reported 10-year surplus
projections, the annual revision to those projections - excluding legislative changes - has
averaged nearly $1 trillion. I would note that most of the recent revisions have applied to
tax revenue and health spending in the non-Social Security part of the budget.
Given these uncertainties, one might say that just as complacency with respect to national
security is the greatest risk when the world is most peaceful, so the risk of complacency in fiscal
policy is greatest when the outlook for the budget seems brightest.
What sorts of fiscal policies are appropriate at this moment? I will address the question of Social
Security in more detail in a few moments. But it seems to me that, with respect to the broad
budget picture, there are a number of constructive steps on which we can all agree:
•
First, we should assure that the focus of popular and political debate over the budget surplus
should continue to exclude the Social Security surpluses. The experience of the last two years
has shown that the framing of the political conversation about the budget is crucially
important. Can there be any doubt about the importance of the fact that the current debate
over surpluses is framed in terms of the disposition of $2 trillion in on-budget surpluses
rather than $4 trillion in unified surpluses')
•
Second, and in the same spirit, we should agree to take Medicare out of the budget. Over the
next decade, the balance in the Hospital Insurance Trust Fund is projected to increase by
about $400 billion. We owe it to our seniors to ensure that those Trust Fund accumulations
are backed by government saving, just as we have done for Social Security.
•
Third, we should reserve funds against the possibility that our current projections are not
borne out We should not lock in difficult-to-reverse commitments that would absorb all of
the revenues currently being projected Prudently run institutions do not ratchet up
expenditures in response to possibly transitory changes in their endowments.
•
Fourth, we should be sure always to stress the tangible and real benefits of debt reduction. By
maintaining downward pressure on real interest rates, paying down public debt operates like
a tax cut by putting more disposable income in people's pockets. Furthermore, debt paydown
also operates like a deferred tax cut. In the same way that a purchase reduces one's future
discretionary income whether you pay cash or buy it on a credit card, the contemporaneous
tax burden understates the full tax burden during periods of budget deficit, both in terms of
the annual interest cost, and the eventual cost of paying otTthe debt Of course, during
periods of budget surpluses, like today, the deferred tax burden is that much smaller
III.
Facing up to the Challenge of an Aging America
Of course, another great issue confronting the nation, in addition to broader questions ofbudg~t
policy, is the future of our major entitlement programs: particularly Social Security. You will not
4
be 'surprised to hear that I do not intend to break new ground on this topic here by introducing a
new blueprint for reform.
Clearly, different conceptions of the value of individual reliance versus collective insurance can
point people to different policy recommendations. But I would like to highlight some basic
conceptual issues on which we should all be able to agree:
First, we can only meet the challenge of an aging SOCiety with measures that genuinely increase
our future finanCial resources.
This is a simple point but no less fundamental for that. If we wish to prepare ourselves -- whether
as individuals or as a nation -- for the additional financial demands that will come from aging,
we have to take steps that will provide us with greater financial wherewithal in the future than
we would othenvise have had. At a national level, that can only mean steps that increase our rate
of national saving and thus generate more wealth in the future. Simple reshuffling of financial
assets does not contribute to that objective.
Second, the potential to eliminate 0111' national debt is a golden opportunity to mobilize resources
jor the challenge of aging.
Even in the context of significant demographic change, it does not seem to me as necessary a
proposition as it does to many in this room that we must take steps today that will have the effect
of reducing future Social Security benefits. Under current law, the cost of providing Social
Security benefits in 2030 is expected to equal 2.5 percent more of GDP than it does today. But
this increased burden must be viewed against a backdrop of rising productivity and incomes,
which are likely to make real GDP in 2030 more than twice as large as it is today. If seniors are
going to account for a significantly larger share of our population in thirty years' time, it does not
seem to me unreasonable that they should absorb a greater share of the nation's resources or
Federal outlays.
What is self-evident is that if we wish to fulfill our current commitments to tomorrow's seniors
we will need to earmark the necessary additional resources. Paying down the debt provides us
with a remarkably neat way of doing just that The Social Security financing gap - the
difference between promised benefits and expected tax revenues under current law - grows to
approximately 2.2 percent ofGDP by 2075. But that gap is smaller than the percent ofGDP that
the federal government has devoted to paying interest on the debt held by the public over the past
two decades Therefore, by eliminating the debt, we would improve the financial position of the
government by enough to meet our existing obligations to Social Security beneficiaries
Third, the rales of return
comparable.
011
Social Secnri!)' contrihutions andjillancial assets are not
One can make a number oflogical arguments for diverting a portion of the Social Security tax
base to the creation of individual accounts. But 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 an, but rather go to pay current benefits
5
Fourth, we must raise the level of
us. personal saving.
Vital as Social Security is, we can also agree that it can at most be a foundation stone for a
sustainable national retirement system. It cannot be the entire edifice. And whatever approach we
take to Social Security, it will be essential to meeting the national challenge of aging to raise the
level of personal saving in the United States. Although the level of saving is determined by
many forces acting on millions of American households, we know several steps that we can take
to achieve the goal of raising saving:
•
By improving financial literacy, because we have learned now that saving behavior is as
much a matter of habit formation as it is of economic incentives. If we focus on influencing
people's tastes, creating effective habits, and taking a range of measures that have an
influence on people's behavior, we can provide every American with the understanding they
need to improve their financial situation.
•
By making it easier to save, because study after study shows us that people are much more
likely to save when it is easy to do so. That is one reason why 401(k) plans have become
America's most popular savings vehicle: because much like a Christmas Club, 40 I (k) payroll
deduction is convenient and regular, and the money goes into savings before there is an
opportunity to spend it. I hope it can remain a policy priority to continue to facilitate these
kinds of savings vehicles for all Americans
•
And by targeting new saving incentives at people who presently save least: specifically lowand middle-income Americans to whom the tax system currently provides the least incentive
to save Two thirds of pension tax expenditures go to families in the top 20 percent of the
income distribution, while just 12 percent goes to families in the bottom 60 percent.
IV.
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 past nearly eight 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-
6
o
EPA R T 1\1 E N T
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THE
T REA SUR Y
NEWS
omCE OF PUBliC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622.2960
FOR IMMEDIATE RELEASE
November 14, 2000
Contact: Helaine Klasky
(202) 622-2960
STATEMENT BY TREASURY DEPUTY SECRETARY STUART E. EIZENSTAT
Let me begin by extending the U.S. side's heartfelt
sympathy for Austria as it confronts the tragedy at Kaprun.
Americans also perished in this tragedy, and we very much
share your grief.
We have just concluded two very productive days of
negotiations to discuss the Framework Concerning Austrian
Negotiations Regarding Nazi Era Property/Aryanization
Issues and the establishment of a General Settlement Fund,
which would provide ex gratia payments to certain persons
for Nazi-era property losses on the territory of presentday Austria.
Our goal is to reach agreement by the end of
the year.
PARTICIPANTS
The participants included the Austrian delegation,
very ably led by Ambassador Sucharipa, Austria's special
envoy for Nazi-era property issues.
He was supported by
Ambassador Winkler and a representative of the Austrian
companies, Dr. Pichler.
On the victims' side, there were
the plaintiffs' attorneys, representatives of the
Conference on Jewish Material Claims, and representatives
of the Austrian Jewish Community and Israel's supervision
group of Austrian Jews.
ACHIEVEMENTS OF THE TALKS:
I would like to list the achievement of our talks:
•
All the participants confirmed that the Framework agreed
upon in October remains the basis for our negoti~tions.
•
The Austrian government confirmed its intent to establish
a General Settlement Fund consistent with the Framework,
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2
which will make payments to those who suffered property
losses, under specifically defined circumstances where
there were gaps and deficiencies in past Austrian
restitution efforts.
•
We had an informative discussion regarding the historical
and legal issues concerning both the property losses
during the Nazi era on the territory of present day
Austria and Austria's post-war restitution and
compensation efforts.
•
The participants also discussed a detailed structure for
the General Settlement Fund.
•
We agreed that the General Settlement Fund would be a
capped fund and there would be subcaps for each of the
specific categories, which will be covered by the Fund.
•
We have reviewed a series of property categories that
included movable property related to the Doretheum,
liquidated businesses, real property, insurance, and
financial assets.
•
There were differences expressed among the participants
regarding legal and historical issues.
During the
discussions of businesses, expert studies were quoted
that provided the following information:
•
Among Jewish businesses valued over 5,000 Riechsmarks,
which were requested by the Nazi's to be registered in
1938,
•
o
33,000 existed in 1938, of which,
o
7,000 were destroyed immediately after the Anschluss
by mobs (referred to as "wild Aryanization")
o
4,353 were formally Aryanized
o
the balance (about 21,650) were totally liquidated .
Experts also indicated that the total value of the 26,000
businesses (that remained in existence following the
"wild Aryanization) registered with the authorities in
1938 amounted to 321 million Reichsmarks.
While many of
the Aryanized businesses were to some degree restituted,
3
for liquidated businesses, mainly small entities in most
cases there was neither compensation nor restitution.
There was no formal restitution program for these
businesses.
There were also many other Jewish businesses
liquidated that were not registered because they were
valued at less than 5,000 Reichsmarks.
•
In addition, we had an informative discussion of the
discriminatory taxes Jews were required to pay after the
Anschluss and Austria's post-war efforts to restitute
such taxes to the victims.
The Claims Conference
asserted 181 million Reichsmarks in flight/emigration
taxes and 147 million Reichsmarks in Jewish property
taxes were paid.
Discussions are still ongoing
concerning how the General Settlement Fund might address
this issue.
•
We had already achieved agreement in October that Austria
would provide $150 million. This amoLnt will be
distributed in its entirety on an expedited basis to all
Holocaust survivors originating from or living in
Austria.
This amount will cover 1) apartment and small
business leases; 2) household property; 3) personal
valuables and effects.
•
There is a growing consensus that the Fund would include
both a claims-based and an equity-based component, making
payments to claimants under specifically-defined
circumstances, using relaxed standards of proof.
•
Ambassador Sucharipa and I have called upon all
participants to consider a standstill on any further
legal action, assuming these negotiations continue to be
productive.
New litigation would be inconsistent with
the spirit of achieving a negotiated settlement on these
lssues.
This call seemed to be supported by the
participants.
•
Finally, all participants recognize that our goal in
achieving agreement on a General Settlement Fund would be
to provide a remedy for outstanding property issues.
In
return, the victims ' representatives would need to agree
to dismiss all property-related Nazi era lawsuits against
Austria and Austrian companies, and the USG would be
prepared to take appropriate steps to support legal peace
4
for Nazi-era property issues involving Austria and
Austrian companies.
NEXT MEETING
As you know, these property talks were launched in
Vienna on October 24 immediately following the signing of
an agreement on a slave and forced labor fund.
Last week,
we had two productive meetings that helped pave the way for
our progress today.
We agreed to form a small working
group to accelerate our work.
Our next meeting is scheduled for November 30 December 1 in Vienna.
OTHER PARTICIPANTS
In addition to those participants I have already
mentioned, there were also historical experts advising us
who took part in the meetings.
D EPA R T 1\1 E N T
0 F
THE
TREASURY fg)
T REA SUR Y
NEW S
17SQ
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C.. 20220. (202) 622-2960
EMBARGOED UNTIL 12:30 PM EST
Text as Prepared for Delivery
November 16, 2000
TREASURY SECRETARY LAWRENCE B. SUMMERS REMARKS
TO THE 63 RD ANNUAL CONFERENCE OF THE TAX FOUNDATION
WASHINGTON, DC
Thank: you. It is a pleasure to be here today.
What I would like to do today is briefly reflect on some features of the overall tax system as it
currently stands. Then I will move on to discuss corporate tax shelters, and finally some other
specific tax issues that arise from the trends shaping the new economy.
I.
The American Tax System Today
Over the past few years, the tax system has supported our national economic priorities in many
ways. Let me highlight four salient points:
First, the tax burden for the vast majority of Americans is at its lowest in a generation. As a
result ofa much expanded Earned Income Tax Credit, a Child Tax Credit, targeted education
credits, and other tax changes, the federal income plus payroll tax burden is lower for a median
income family of four today than at any time in the past 20 years, and their federal income tax
burden is the lowest since 1965. For a family of four with half the median income of a family of
four, the federal income plus payroll tax burden is lower today than at any time since 1969. And
even for a four-person family with twice the median income. the federal income tax burden is
lower today than at any time since 1973.
Second, the future tax burden on Americans represented by the national debt has at long last
turned downwards. In the same way that a purchase still reduces one's income, whether you pay
cash or buy it on a credit card, the contemporaneous tax burden understates the full tax burden
during periods of budget deficits, both in terms of the annual interest cost, and the eventual cost
of paying off the debt. This is precisely what happened in the 1980s and early 1990s. In 1983,
when there was a budget deficit of $208 billion, the average American family was effectively
saddled with future income and payroll taxes equal to 35 percent of taxes they actually paid. In
2000, with a budget surplus of$237 billion, we have effectively reduced the future tax burden on
American families by nearly 12 percent.
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Third, where tax burdens have increased relative to GDP, it is in significant part due to fact that
the ability to pay has increased significantly relative to GDP, leaving individuals better off even
in the context of higher tax collections. To put this in some perspective, the after-tax income of
the wealthiest 1 percent of taxpayers almost doubled between 1990 and 1998, compared to a
growth of 54 percent in the after-tax income of the remaining 99 percent of taxpayers. We
estimate that over one-third of the increase in individual taxes relative to GDP in recent years has
been caused by a growth in capital gains receipts.
Fourth, the tax system is doing more to help promote the values of education, work, and saving
Through targeted tax measures, including the Lifetime Learning and the Hope Scholarship
credits, millions more Americans have been given access to higher education. By expanding the
Earned Income Tax Credit by more than 10 times over the cost of the program in the mid-1980s,
millions more low-income working families have been given a strong incentive to work. And by
making it easier for employees to save money through payroll deduction millions of employees
are now savmg.
It is surely right that we continue to use the tax system to promote out national economic
priorities. At the same time, our tax system will increasingly face growing microeconomic
challenges that arise from the New Economy.
D.
Facing the Challenges that a New Economy Presents
We live in an era of rapid change: financial markets are becoming increasingly sophisticated and
efficient at the control and dissemination of risk; economic boundaries are dissolving as
globalization grows in intensity; and competitive market systems are increasingly taking hold
and spreading around the world.
All these trends are overwhelmingly positive. But at the same time they are creating pressures on
our tax system that we need to address: they facilitate more aggressive tax minimization
behavior; they challenge the traditional tax rules relating to the source, timing, and character of
income from financial products; and they make it easier to re-locate income to offshore
domiciles.
In many ways, these phenomena already define an agenda for tax professionals in the years
ahead regardless of how the larger questions of tax policy are resolved.
Let me divide my remarks into two parts:
•
First, the need to adapt our tax rules and tax administration to accommodate an increasingly
sophisticated financial world, most notably by combating abusive tax shelters.
•
And second, a brief summary of some of the other key challenges facing our tax system.
2
1.
Responding to Greater Sophistication in Markets
The growing sophistication of US and global financial markets is delivering enormous benefits
to American individuals and families. By better pricing and spreading of risk these markets are
helping to lower the cost of capital and increase the rate of economic growth. At the same time,
that greater financial sophistication also creates new opportunities for tax avoidance, and new
challenges for tax administration: not least, an ever-increasing variety of abusive corporate tax
shelters.
In the early 1980s widespread abuse of our tax system by wealthy individuals undermined our
tax base and generated cynicism about the fairness of the tax code. Litigation to pursue abusive
shelters also consumed large amounts of IRS time and money. In 1986, Congress responded
appropriately by enacting reforms that went a long way to restoring public trust in the integrity of
the tax code.
Today, we are facing a similar problem: the proliferation of abusive corporate tax shelters. Since
1990, in real terms, the gap between book income and taxable income has more than doubled to
over $90 billion and is now wider than any time since the mid-1980s. Although some of this gap
can be attributed to the use of legitimate tax incentives, there is no doubt that there has been a
striking growth in abusive tax shelters.
Let me be clear: every taxpayer has a right to minimize his or her tax burden by legitimate
means. However, we can and must draw the line at tax engineered transactions that have no goal
other than to reduce a taxpayer's tax liabilities and, in doing so, undermine the integrity of the
tax system. We well remember the words of Learned Hand: "There is nothing sinister in
arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; for
nobody owes any public duty to pay more than the law demands; to demand more in the name of
morals is mere cant."
We must however draw the line at the pursuit of engineered transactions that are devoid of
economic substance. As the American Bar Association, the Joint Committee on Taxation and
other professional bodies have attested, these transactions have no goal other than to reduce a
corporation's tax liabilities and, in doing so, undermine the integrity of the tax system.
Consider:
•
Shelters redl..lce the corporate tax base and thus raise the burden on other taxpayers.
•
Shelters create an atmosphere of cynicism among legitimate taxpayers that could damage the
credibility of our voluntary tax system. Law-abiding companies feel obliged to follow the
lead of competitors who abuse the tax code.
•
Shelters complicate the tax code by forcing legislators to take remedial action. In the past few
years alone, nearly 30 narrow statutory provisions have been adopted in response to abuses
further complicating the tax code.
3
•
And shelters divert resources from productive investment. As a former tax official now head
ofa well known law firm said: "You can't underestimate how many of America's greatest
minds are being devoted to what economists would all say is totally useless economic
activity. "
The Treasury, the IRS, and Congress have taken aggressive action to curb visible shelters. But
tax shelters are like icebergs: only a small proportion is visible. We can and must do more. Last
February, I spoke to the Federal Bar Association about Treasury's growing concern with the
proliferation of abusive shelters. Since that time:
•
First, we have increased the ability of the IRS to tackle abusive shelters, by issuing new
regulations that require corporate taxpayers to disclose more information to the IRS. The IRS
has also set up an Office of Tax Shelter Analysis, which will provide a consistent national
approach to addressing shelter transactions. These steps have already improved our ability to
detect and close down new shelters. Indeed, later today or tomorrow the IRS will be issuing a
notice to close down a shelter transaction involving stock compensation arrangements that
that generates artificial losses. More notices will be forthcoming in the near future.
•
Second, we are improving guidelines for tax practitioners. Before the end of this year,
Treasury and the IRS will issue proposed regulations to revise Circular 230, which sets
standards for professionals practicing before the IRS. The dilemmas of this area have been
exemplified by the recent remark of a tax practitioner, that "writing tax opinions is a choice
between eating and sleeping. I like to eat." We would prefer that he get some rest. That is
why we are revising Circular 230 so that we can modernize opinion standards for the kinds of
tax shelters prevalent today.
•
Third, we continue to pursue legislation that will strengthen our ability to combat tax
shelters. In the FY 2000 and FY 2001 Budgets, this Administration made important
proposals to inhibit the groVvth of tax shelters. We welcome the draft bill released by the
Senate Finance Committee last month and we hope to make progress towards enacting
effective tax shelter legislation in the months ahead.
Combating abusive tax shelters is perhaps the biggest challenge facing our tax administration
system today. But the increasing sophistication of our financial system is also creating new
challenges for the appropriate and consistent tax treatment of financial instruments.
Many of the instruments traded on today's markets may not fit comfortably into the framework
of traditional tax rules. Yet targeted rules designed to address the latest fad in financial
instruments soon become outdated and create a system of ad hoc rules that can complicate the
law and create new loopholes.
This has brought calls from many tax professionals and academics for a thorough review of the
current taxation of financial instruments. In principle, we would support such a review. But of
course, it will be crucial that such a review be even-handed with respect to similarly situated
financial products and taxpayers, and that any new rules that result have minimal disruptive
effect on the markets.
4
2. Meeting the Tax Challenges of a Rapidly Changing World
In a world where cyber-transactions are growing at a rapid pace, tax administrations also face the
challenge of adapting existing tax systems to a more cyber-based world. At the same time, in a
fast-integrating global economy, we have to work ever harder to ensure that the otherwise
positive forces of global capital mobility do not undermine our national interests by facilitating
increased tax evasion or abusive tax avoidancf!. And running through all of these is the challenge
of maintaining an effective tax administration.
Let me discuss each ofthese in tum:
First, meeting the challenge of e-commerce.
The challenges of e-commerce are many and complex: from the application of traditional rules
for determining source of income and jurisdiction, to the risk that sophisticated Internet
encryption methods that are developed to maintain commercial secrecy also be used to hide
information from the authorities.
Like the cyber-world itself, the search for the solution to these challenges is still in its infancy.
But we have worked to establish one guiding principle. This is that our global tax administration
system should provide an environment in which e-commerce can flourish, but it cannot permit
the Internet to undermine the system of revenue collection upon which our public services
depend.
This basic principle has guided us in working with both our DECD and non-DECD partners, in
consultation with the private sector, to build an international consensus on the framework
underlying any taxation of e-commerce, clearly any such consensus must be based on two
pillars:
•
First, that tax rules and tax administration should be neutral and non-discriminatory between
Internet and non-Internet transactions
•
Second, international cooperation should aim to prevent double taxation or unintentional
non-taxation of e-commerce, while maintaining the fiscal sovereignty of participating
countries. A key element of this effort must be to minimize opportunities for arbitrage across
borders.
As I said, this is very much a beginning, not an end. But it is an important start.
Second, combating harmful tax competition.
In a world where capital can silently traverse the globe at the touch of a button, tax evasion and
tax avoidance schemes can be undertaken just as quickly and just as quietly. So, just as we must
ensure that e-commerce does not give rise to distortions in our national tax administrations, so
5
we need to foster a climate of cooperation among nations to ensure that the growth of tax evasion
is avoided.
Let me highlight two areas where we have taken recent steps to further these important goals:
•
First, in June the OECD published a report of its work on harmful tax competition. While the
two lists included in the report have drawn widespread attention, the real story from the
DECD's work is the commitment ofOECD members and six non-DECD members to
cooperate with each other and eliminate those aspects of their own tax frameworks that
facilitate avoidance or international tax arbitrage. Ultimately, this cooperation will provide
new tools that will allow tax administrators to discover and fully evaluate transactions that
may be abusive.
•
Second, at a national level, we recently issued regulations imposing special, and more
rigorous, requirements on banks based in tax havens. These requirements are designed to
ensure that such banks have access to - and can provide information regarding - the
beneficial owners of interest income.
Once again, none of us can look at the challenges to tax administrators that are posed by global
integration -- whether it is the question of multi-national transfer pricing or the appropriate
response to tax havens -- and say that our existing tools for fashioning are up to the job. But in
recent years we have taken important first steps toward ensuring that these challenges can be met
without eroding our tax base or preventing the full benefits of capital mobility from being
realized.
Third, maintaining an effective tax administration.
The common thread linking all of these challenges is the need to ensure an effective tax
administration. That is why it is critical that we continue to push forward with the modernization
and re-organization of the IRS so that it can adapt to the challenges of a rapidly changing world.
In its new mission statement the IRS pledged to focus on two core priorities: "Providing
America's taxpayers with top quality service by helping them understand and meet their tax
responsibilities, and applying the tax law with integrity and fairness to all"
In following through on this pledge, the IRS has been able to take advantage of new technology
to provide a genuinely user-friendly and efficient service. For example:
•
In FY2000 electronic tax filing hit a new record with more than 35 million taxpayers filing
electronically - a 20 percent increase over last year. Over the same period, the number of
taxpayers filing self-prepared tax returns from their home computers grew by 44 percent to
7.6 million.
•
The number of recorded hits on the IRS website rose by 15 percent to over 791 million in the
tax year that ended in May. This makes the IRS website one of the most frequently visited on
the Internet.
6
Clearly, we have much more to accomplish. I believe that under the leadership of Commissioner
Charles Rossotti, the IRS will continue to build effective reforms around the needs and interests
of ordinary and law-abiding taxpayers.
IV.
Conclusion
Let me conclude where I began. It is critical that we think about the challenges facing our tax
system in the years ahead. Such an exercise provides us with a valuable opportunity to think
about what it means to manage our finances in a fiscally responsible way that serves us all. As
Justice Holmes said: "Taxes are the price we pay for civilized society." It is also an opportunity
to confront the microeconomic challenges posed by the New Economy. Working together, I
know that we can meet these challenges without in any way compromising our commitment to
fiscal discipline. Thank you.
-30-
7
,
,
"
DEPARTIVIENT
OF
THE
-
TREAS,URY
,
,
,
,
NEWS
omCE OF PUBlJC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C.- 20220. (202) 622.2960
:sMB.ARGOED UN'l'IL .2: 30 P. H.
Novemhe~
CONTACT:
10, 2000
Office of Financiag
20216.91-3550
'f'lU:A.SURY OFi"ERS 1.3-WEEK AND 26-WEEK BILLS
~e Treasury will auction two series of Treasuzy bills totaling
a:Blprox:i.:mately $21,000 million to refund $18,298 mil~ion of publicly, held
securities maturing November 24,2000, and to 'raise about $2,702 mil~ion of
new cash.
In addition to the public holdings, Pederal Reserve Banks for their own
accounts hold $9,845 million of the maturing bills, which ~ be refunded at
the highest discount rate of accepted competitive teDders. Amounts issued
to these accounts will be in a.ddition to the offering amount.
The maturing
b~lls
held by the public include
$S,20~ ~~lion
held
by Federal Reserve .BZLZ1ks as a.gents for foreign a.%ld international monetary
authorities, which may be refunded within the offering amount at the highest
discount rate of accepeed ccmpetieive tenders. Additional amounes may be
issued £o~ such accounts if the aggreg~te amount of new bids exceeds the
aggregate amount of maturing bi~ls.
T.reasuryDirect customers requested that we reinvest their maturing boldof approx~tely $964 ~!11~on into the i3-week bill and $1,153 million
into tha 2G-week bi.J.~_
~gs
This offering of ~reasury securities is governed by the t~s and conditions set forth in the uniform Offering Circular fo~ the Sale and Issue of
Marketable Book-Entry 'l'reasury Bills, Notes, and .Bonds (31 ern Part 3'56, as
amended) •
Detaiis about each Qf the new securit1es are given in the attached
offering highlights.
LS-I030
000
Attachment
For press releases, speeches, public scheduLes and official biographies. call Our 24-hou, fa:r line at (202) 622-2040_
,
-
HIGHLIGHTS OF TREASURY OPFERINGS OF BILLS
TO BE ISSUED NOVEMBER 24, 2000
November 16, 2000
Offering Amount
0
0' • •
000.
0
•
0.0 ••
~
• • • • •0
••••
$11,000 million
Description of·Off.ring,
~erm and type of security •••••••.•...••• 90-d.y bill
CUSIP nwnber •••••••••
912795 I'U 0
Auction date •••••••.•••••••••••••.•••••• November 20, 2000
Issue date ..••••••...••••• 0 • • o • • • • • ' • • • • • November :;14, 2000
l4aturity dat ............................... February 22, 2001
Original issue dat •.••••••••• ~ ••••• ~ •••• August 24, 2000
Currently outstanding ••••• ·•••••••••••••• '$13,321 million
Minimum bid amount and multipl •••••••••• $l,OOO
0
••••••••••••••••••
$10,000 million
l8l-day bill
912795 GH 8
November 20, 2000
November 2', 2000
May 24, 2001
November 24, 2000
$1,000
The fol'lowing rules apply to all securities mentioned above J
Submissio~
of Bids:
Noncompetitive blds ••••••••• Accepted in full up to $1,000,000 at the highest dlscount r.te of
accepted competitive bids.
Competitive bids •.•••••••••• (1) Mu.t be expressed as a discount rat. with three decimal. in
increments of .005%, e.g., 7.100%, 7.105%.
(2) Net long position fa.r each bidder must be reported when the Bum
of the total bid amount, &t .11 discount rates, and the net long
position is $1 billion or gr~ater.
(3) Net long position must be determined as of one half-hour prlor
to the closing time for receipt of competitive tenders.
Recogni~ed Bid
at a Bingle Rate •••••••••••• 35% of public offering
Maximum
Maximum Award ••••••••••••.•.•••• 35% of public offering
Receipt of Tendersl
.
Noncompetitive tenders ••••.•• Prior to 12:00 noon eastern standard time on auction day
competitive.
Payment
tena.~ •••.••••••
~erms,
By charge to a funds account at a Fede~al aeserve Bank on issue date, or payment
~reAsur.yD!reot customers oan use the P.y Direct featu~e which
a obarua to tb.i~ account o£ record at their finanolal institution on ~.8U. date.
of fu11 par Amount with tender.
au~horiz..
Prior to 1.00 p.m. eaBtern standard time on auction day
"
DEPARTIVIENT
OF
THE
TREAS,URY
,
,
.
,
NEWS
omCE OF PUBlJC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C.- 20220. (202) 622·2960
CONTACT:
PQR DlMED:tATE RELEASE
November 16, 2000
Office of Financing
202/691-3550
'rHAmtSGIVJ:NG HOLIDAY SCHEDULE FOR
TREASURY'S BILL AND NO'l'E ANNOUNCEMENTS
Zn view of the Thanksgiving holiday next week, Treasury wi11
announce its offerings of 13-, 26-, and 52-week bills and of 2-year
notes at 11:30 a.m. on Wednesday, November 22, 2000.
These changes in the
uaua~
announcement SChedule are consistent
with the Bond Market Association's recommendations for an early closing
on Wednesday, November 22, and a full market closing on Thanksgiving
Day.
000
LS-1031
For press releases, speeches, public schedules and official biographies, call our 24·hOllr Icx line
Cl
(202) 622·2040
.
-
TREASURY
NEWS
omCE OF PUBliC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. _ 20220. (202) 622-2960
EMBARGOED UNTIL 9 A.M. (EST)
Text as Prepared for Delivery
Novemher 17, 2000
"THE UNITED STATES AND EUROPE IN A NEW GLOBAL ECONOMY"
REMARKS BY TREASURY SECRETARY LAWRENCE H. SUMMERS
TRANS ATLANTIC BUSINESS DIALOGUE
CINCINNA TI, OHIO
Thank you. I would like today to talk about the new global economy; its
implications for recent and prospective economic performance in the United States and
Europe; and the new challenges that it poses that we need to work together to confront.
I.
A New Global Economy
What is that new global economy? In thinking about that question, there is one
experience that I always come back to. Several years ago a Treasury delegation was in
Africa. We went to visit a small village about two hours outside of Abidjan, in Cote
d'lvoire, in kayak, where I was able on behalf of the US government to open the first
clean water well that that village had ever had. Afterwards, we were going back on the
kayak, and somebody handed me a cell phone. It was Bob Rubin, with a question for me
about the IRS budget. We spoke for a few minutes, and no one thought anything of it.
a
That was in 1997. And afterwards I remembered that in 1988, I was in the back of
a car in Chicago that had a telephone in it. It was a sufficiently remarkable event that I
called my wife to tell her I was in a car with a telephone. That was not an unreasonable
reaction to have in 1988. Nine years from the backseat of a car in Chicago to a canoe two
hours outside Abidjan.
Three things come together in that story:
First, new technology and the opportunities that they create.
Modern advances in technology are taking us to a post-industrial age, with
profound implications for economies and societies. The same power of new technology
we saw on that canoe was at work in Mozambique, when we met a businessman and
LS - 1032
Far 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
asked him how he was doing. He said: "OK, but I'm worried about competition." Then
we asked him what he did. He was the country's only Internet provider. But he was
worried about new competition.
Breakthroughs in information technology, communications technology, and
production technology: taken together, they are pushing out the frontier of the possible,
with enormous implications for our economies and our societies.
Second, the rise of markets.
It was not a public telecommunications company that made that phone call in
Cote d'Ivoire possible. It was entrepreneurs; it was the private sector making a difference.
It cannot be an accident that Soviet-style communism, planning ministries in the
developing world and large US corporations run by command and control all ran into a
brick wall i~ the same decade and had to be restructured. There has been a basic shift in
the balance of economic advantage, toward systems in which economic power and
opportunities are more decentralized - and the skills and ideas of the individual are given
greater weight. This is true at the level of individual businesses. As I will discuss, it is
also true at the level of national economies.
Third, convergence and global intel:,rratiol1.
The most obvious trend that is brought out by that story is in many ways the most
dramatic: the emergence of a global economy that is worthy of the name. When history
books are written 200 years from now about the last two decades of the 20th century, I
am convinced that the end of the Cold War will be the second story. The first story will
be about the appearance of emerging markets - about economies where, taken together,
billions of people live, moving toward the market and seeing rapid growth in incomes.
This is an event, I would argue, whose importance in economic history can be compared
only to the Industrial Revolution and the Renaissance.
Taken together, these three forces have brought about a kind of paradigm shift in
the rules governing global economic success and failure, with profound consequences for
relative national economic performance.
II.
Implications for the Relative Economic Performance of the US
Ten years ago, the joke was that the Cold War was over, and Japan and Germany
had won. Observers looked to the US and saw an economy dogged by slow productivity
growth, corporate downsizing and record budget deficits. And when they looked abroad,
they saw other models of economic organization that the US would do well to emulate.
What a difference a decade makes. Today, it is fair to say that that the tables have
been turned; because the global economic developments of the 1990s have been ones for
which the US turned out to be relatively well equipped.
2
SpecificaIly:
•
The US emphasis on decentralized decision-making and competition has served us
well in an era that puts greater emphasis on markets and puts incentives before
coordination.
•
Our greater readiness to accept radical change has turned out to be a valuable asset at
a time when the very nature of economic value has started to shift. It used to be that a
country's success could be judged by the size of its skyscrapers and steel plants.
Today, Microsoft has a greater market capitalization than the entire American steel,
auto and aerospace sectors combined. And the "short-termist" US capital market had
a lot to do with the fact that large amounts of domestic capital was forced out of the
first sector and into the second. It is striking to consider that nearly one third of our 25
largest companies did not even exist a generation ago.
•
And our continued support for openness and integration has helped expand our
markets and enabled international trade to be the safety valve on a high-pressure
economy. The competition it has brought to consumers, the pressure it has brought
on producers to improve has been an important source of the sharp increase in
productivity growth that we have recently seen.
Aga~nst
this backdrop, the move from fiscal deficit to surplus has turned out to
pay especiaIly large economic dividends. As a result of the deficit reduction that occurred
in the 1990s, more than 2 trillion dollars that in 1993 was forecast to be absorbed by
government borrowing was instead made available for productive private investment.
That fiscal turnaround would probably always have had favorable implications for US
capital costs and the level of private investment. But the benefits have been that much
larger in an environment of burgeoning private creativity and growth.
ID.
The Challenge of The New Economy for Europe
If the move toward greater emphasis on individual effort, entrepreneurship and
competition has been a move in the direction of traditional US strengths, it is fair to say
that it has been a move away from traditional European values such as collectivism,
economic security and coordination. This has made the lesson of recent economic
developments, for Europe, more complex.
•
On the one hand, these trends have helped to strengthen the case for the leading
European projects of this period: notably the creation ofa single market, the birth of
the single currency, and, to a lesser extent, the enlargement of the EU. Each of these
projects offered the potential to enhance Europe's attractiveness to investors and
create a 'larger, more integrated European market.
•
On the other hand, the sheer pace of change in the broader global economy has
magnified the kind of structural and macroeconomic changes that will be necessary to
make these projects a success. And they have posed a difficult conflict between the
exploitation of new opportunities and the preservation of old values.
3
How will this conflict play out? Different countries have responded more quickly
than others. But it is possible that the reforms that have already been achieved will turn
out to have a momentum of their own.
For example:
• Risk-taking and entrepreneurship are perhaps not yet the norm in much of Continental
Europe, where the OECD estimates that it takes 12 times longer to set up a new
business than it does the US, and four times the cost. But that is changing fast, with
the very rapid emergence of a single European financial market, and innovations such
as the German Neuer Markt now making their mark.
•
By any reckoning, the information revolution in much of Europe has not progressed
as far as it has in the US or Japan, with IT accounting for only 4 percent of euro area
GDP last year, compared to 7 percent for the US and 6.5 percent for Japan. But
moves toward Europe-wide deregulation have helped to create the most dynamic and
well-developed mobile phone markets in the world - and have put Europe at the
cutting edge of new economy trends such as "m-commerce".
•
By and large, the Euro area still lags far behind in the creation of jobs, with an
unemployment rate that is higher than any government should accept, and only 67
percent of the working age population in jobs, compared with nearly 80 percent in the
US. But several countries have acted to improve labor market flexibility and thus
potential growth in employment. And those who have gone furthest in this direction,
such as the UK, Netherlands, Ireland and Denmark, have enjoyed sharp declines in
structural unemployment and above-average growth.
So, Europe is changing - in some cases, quite dramatically. The trouble, as
Continental European policy makers know well, is that the world, in many ways, may be
changing even faster. This is perhaps the main reason why very impressive reductions in
European budget deficits have yet to translate into substantial increases in rates of
domestic European investment, or upward revision of private sector estimates of the
European rate of sustainable growth.
IV.
The Importance of Resisting Complacency: in the US or in Europe
Economics is not a discipline that is susceptible to eternal truths. I have argued
that a system that emphasizes decentralized decision-making has turned out to be well
placed to respond to the economic trends of the 1990s. But European systems that
emphasized coordination and cohesion were in many ways weB adapted to the shape of
the world economy in the decades after World War II.
In every period of economic history, economists and others have opined about the
relative merits of different kinds of economic system. And more often than not, the
prevailing wisdom has probably been broadly right. Where the believers in that wisdom
go wrong is in thinking that it will be wise forever. The reality is that economic theories
4
change, because economies do. It may be true, for example, that more cohesive economic
systems make radical changes less easily, and that is a disadvantage for Europe in this
current moment. But such systems also tend to be better at more incremental change. And
none can say that the time of more continuous, incremental change will not return.
The upshot is that it would be very unwise for any of us, least of all in the US, to
take anything about our current economic performance for granted. None of us know
what the next ten years in the global economy will hold. We must simply do what we can
to make our best preparations for the future.
For the US that means:
• Working to preserve our hard-won fiscal discipline and the increased room for
domestically funded investment that such discipline creates. That means continuing to
pay do~n debt and avoiding excessive tax cuts that could put future surpluses in
doubt.
•
Working to tackle our greatest micro- and macro-economic weakness: the very low
rate of private saving. Even with recent improvements, our national saving remains
uncomfortably low - both relative to other industrial economies and to our own
experience in the 1950s and 1960s.
•
And working harder to include every American in the productive enterprise of the
nation, through further expansion of our support for the working poor and stronger
efforts to combat social exclusion: particularly in the quality of our basic public
education, where the US lags behind Europe. This is a moral imperative. It is also an
economic imperative at a time when increasing our productive capacity means a
reduction in future inflationary threats.
Europe, for its part, must guard against a kind of complacency borne of
diminished expectations.
It is not just Europe that has a stake in Europe sustaining achieving a higher
sustainable European growth rate in the years ahead. A more attractive European
investment climate will equally be critical to supporting a more balanced pattern of
global growth, with a reliance on investment-led, rather than export-led, European
growth.
No one knows better than Europe's reforming governments the kind of
commitment and political will that will be needed to complete the transformation now
under way. But the potential is clearly there. It has not escaped notice that the four
countries that have moved furthest with structural reforms, real fixed investment in the
1990s has risen between three and ten times faster than for the Euro-area as a whole. And
certainly, in the recent German and French tax reform proposals we have impressive
signals of the will to press forward with further reform.
5
V.
The.Enhanced Need for US-EU Cooperation
So, the emergence of a new global economy will pose a range of challenges for
national policy to which we will all need to respond. But such a world also throws up
new global challenges that we can only confront together.
For example:
•
Building an effective international financial infrastructure to prevent financial crises
such as those in Asia - and to respond effectively to crises when they occur.
•
Working together to curb the dark side of globalization: the money laundering and
other "crimes without frontiers" that are that much easier in an integrated world.
•
And working to create what President Clinton has called "a global economy with a
human face": a global trading system that supports openness and competition
between nations, but not a worldwide race to the bottom.
There will be no single relationship more crucial to fashioning the right kind of global
response to these challenges than the relationship between the US and Europe.
•
We see the strength of that relationship in the more than $200 billion in US goods and
services that the EU imports every year, fully one-fifth our total exports. And in the
near doubling of flows in the other direction in the past five years alone, which has
helped to keep down prices and offer wider choice to American consumers and
producers.
•
We see it in the fact that more than half of US. investment overseas is in EU
countries - and that EU investment in the US. has itself doubled since 1995, making
EU firms an increasingly common part of our economic landscape. One in twelve
manufacturing jobs in the US. is in a European-owned factory.
•
And of course, we see it in our increasingly close cooperation in the diplomatic arena:
in the liberation of Kuwait; the reconstruction ofKosovo; and several other of the
world's major recent trouble spots.
To be sure, we will have our differences: as we have seen, most recently, with
regard to the FSC. We are pleased that the House this week passed legislation that repeals
the FSC and replaces it with a tax ruling that complies with the WTO ruling. However we
regret that the European Commission has not accepted the new legislation in spite of the
fact that the' new law is neither a subsidy, nor is it export contingent. Nevertheless,
following recent bilateral negotiations, the EU has agreed to a review of the WTOconsistency of the legislation, and to hold in abeyance the imposition of retaliatory
sanctions until the outcome of that review is known. It is critical that we continue to work
together in a cooperative manner to resolve this question.
6
In spite of these occasional differences, I am more than hopeful - indeed, I am
certain - that in a new global economy, the ties between our governments, businesses,
and our peoples that we see reflected here today will only grow stronger in the years
ahead.
-30-
7
DEPARTMENT
OF
THE TREASURY
NEWS
TREASURY
ornCE OF PUBIJCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASlfiNGTON, D.C. - 20220 - (202) 622-2960
FOR IMlVIEDIA TE RELEASE
November 16, 2000
STATEMENT BY TREASURY DEPUTY SECRETARY STUART E. EIZENS'tAT
I welcome today's announcement by former Secretary of State Lawrence S. EagJeburger,
chairman of the International Commission on Holocaust Era Insurance Claims (ICHEIC), that an
agreement has been finalized with the Italian insurance company Assicurazioni Generali to provide
$100 million plus earnings for the payment of Holocaust-era insurance claims. This agreement has
been executed among Generali, the World Jewish Restitution Organization and Allied
Organizations, and ICHEIC, which itself is comprised of representatives of international Jewish
organizations, several European insurance companies, and U.S. state insurance regulators. I
commend Generali, as well as the other parties, for this significant step to bring a measure of justice
to Holocaust survivors and their heirs and move towards reconciliation.
I understand that efforts to secure agreements with the remaining ICHEIC member
companies - the Swiss insurance companies Winterthur and Zurich and French insurer Axa - are
nearing conciusiqn, and Chairman Eagleburger believes he will be able to announce a settlement in
the near future. I encourage these companies to continue to work expeditiously together and within
the ICHEIC so that insurance policies from the Holocaust era are paid. In this regard, I encourage
the German Insurance Association to reach an agreement with ICHEIC as soon as possible on the
processing of all Holocaust era insurance claims against German companies as mandated by the
US-German executive agreement that entered into force on October 19, 2000.
Although we were not a party to, and did not participate in the negotiating of, the agreement,
we hope that the Generali Insurance Association and the ICHEIC will conclude their imp.lementing
negotiations quickly. The U.S. government continues to support and encourage parties, foreign
governments and non-governmental organizations, like ICHEIC, to resolve matters of Holocaustera restitution on a cooperative basis, rather than subject victims and their families to the prolonged
uncertainty and delay that accompany litigation. It has been an important objective of U.S. policy
over the past 50 years to bring some measure of justice to Holocaust survivors and other victims of
the Nazi era who are elderly and are dying at an accelerated rate, in their lifetimes. We have
supported ICHEIC since its inception in 1998 and believe it should be recognized as the exclusive
remedy for resolving all insurance claims that relate to the Nazi era. ICHEIC helps further the
United States' interest in maintaining good relations with Israel and with Western, Central and
Eastern European nations from which many of the those who suffered during the Nazi era and
World War II come.
-30LS - 1033
Frn- press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
}.
)
DEPARTMENT
OF
THE
TREASURY ~.
TREASURY
NEW S
OFFtt"E OF Pl'OLJC AFFAIRS a '!I •• ".;NNS¥LVt\NI" "VENl!l:. N.W. aWASHINGTON. D.C .• lIll. a1202) 1022-2."0
'OR IMMEDIATE RELEASE
lovember 16, 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 $1,000 million.
ar of its outstanding callable issues. A total of 10 callable issues with final maturity
etween February 2010 and November 2014 were eligible for this operation. The settlement date
or this operation will be November 20, 2000. Summary results of this operation are
resented below.
(amounts in millions)
Efers Received (Par Amount):
:fers Accepted (Par Amount):
$4,903
1,000
ltal Price Paid for Issues
(Less Accrued Interest) :
1,313
~er
of Issues Eligible:
For Operation:
For Which Offers were Accepted:
ighted Average Yield to Call
of all Accepted Offers 1\):
ighted Average Maturity to Call
for all Accepted Securities (in years):
10
3
5.903
7.4
:ails for each issue accompany this release.
:-1034
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
November 16. 2000
TREASURY DEBT BUYBACK OPERATION RESULTS
(amounts in millions, prices in decimals)
Table I
Par
Amount
Offered
Par
Amount
Highest
Accepted
Weighted
Average
Accepted
A !;;CilI;l t iI d
~
~
191
564
252
225
260
1,280
1,22B
270
393
240
0
0
0
0
0
5BO
340
80
0
0
N/A
N/A
N/A
N/A
N/A
125.2B9
137.484
14B ,593
N/A
N/A
N/A
N/A
N/A
N/A
N/A
125.267
137.463
14B .593
N/A
N/A
~
CUSIP
Number
Lowest
Accepted
Yield
to Call
Weighted
Average
Accepted
Yield
to Call
02/15/05-10
05/15/05-10
11/15/05-10
05/15/06-11
11/15/06-11
11/15/07-12
OB/15/0B-13
05/15/09-14
08/15/09-14
11/15/09-14
912810CMB
912810CPl
912810CS5
912810CVB
912B10CY2
912810DB1
912810DF2
912B10DJ4
912810DL9
912B10DN5
N/A
N/A
N/A
N/A
N/A
5.905
5.B93
5.B91
N/A
N/A
N/A
N/A
N/A
N/A
N/A
5.908
5.896
5.891
N/A
N/A
Coupon
Rate ('\)
Maturity
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
~
08L15L08 -13
05/15/09-14
OB/15/09-14
11/15/09 -14
Table II
Coupon
Rate (Ik)
11.750
10.000
12.750
13.B75
14.000
10.375
12.000
13.250
12.500
11.750
Maturity
rotal Par Amount Offered:
:otal Par Amount Accepted:
4,903
1,000
rote: Due to rounding, details may Dot 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
8,533
10,418
3,611
3,875
4,811
DEPARTMENT
OF
THE
TREASURY
NEWS
TREASURY
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622-2960
FOR IMMEDIATE RELEASE
November 17,2000
STATEMENT BY TREASURY DEPUTY SECRETARY STUART E. EIZENSTAT AND
UNITED STATES TRADE REPRESENTATIVE CHARLENE BARSHEFSKY
Today the European Union requested a special meeting of the World Trade
Organization's Dispute Settlement Body to consider its request for authority to impose sanctions
in the FSC dispute. That action is consistent with the procedural agreement we reached with the
EU at the end of September regarding the sequencing of procedures in the WTO for this dispute.
Thus, while the EU has requested authority to impose sanctions, no sanctions, if any, will be
imposed until the WTO has had an opportunity to rule on the WTO-consistency of the FSC
replacement legislation (H.R. 4986), which the President signed into law on November 15.
At the same time, we will contest the level of damages alleged by the EU. We do not believe
European companies have been disadvantaged.
Either side may appeal the panel's findings on WTO-consistency to the WTO Appellate
Body. If the FSC replacement legislation is found to be WTO-consistent, that will be the end of
the matter. If the legislation is found to be WTO-inconsistent, the appropriateness of the ED's
proposed level of retaliation will be addressed by an arbitration panel. Under WTO dispute
settlement procedures, these proceedings will take a minimum of7 months.
We regret that the EU has not accepted our new legislation. We continue to strongly
believe that it is WTO-compliant, as it neither constitutes a subsidy nor is it export-contingent.
The EO's view is particularly disappointing given that the legislation represents an extraordinary
bipartisan effort whereby the Administration worked with both houses of Congress to draft
legislation, under an extraordinarily tight schedule, that complies with the ruling of the WTO
Appellate Body. We ask the EU to again consider our new legislation to avoid a confrontation
We would stress the importance of continuing to work together with the EU to manage
this dispute responsibly and avoid any escalation of tensions that could harm our strong bilateral
relationship. We remain open to further discussions with the EU about resolving this dispute.
-30-
LS-I035
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
·U.S Government Printing Qlflce 1998 - 619-559
DEPARTMENT
OF
TREASURY
THE
TREASURY
NEWS
omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622-2960
EMBARGOED UNTIL 5:15 P.M. EST
Text as Prepared for Delivery
November 17, 2000
"CHALLENGES FOR THE NEW ADMINISTRATION IN THE GLOBAL ECONOMY"
TREASURY DEPUTY SECRETARY STUART E. EIZENSTAT
REMARKS AT THE JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY
HOUSTON, TEXAS
Thank you for that warm introduction and thank you for inviting me here today. You
have been a great public servant, a national treasure and a fount of foreign policy wisdom. I
want to congratulate you on all you have done to found this Institute and guide it over the last
several years, following a career as one of the United States' most distinguished diplomats
spanning the administrations of eight U.S. Presidents.
The Institute's eponym, the Honorable James Baker III, said this Institute should "build a
bridge between the world of ideas and the world of action." By involving both policy makers
and scholars, the Institute improves the debate on key policy issues and contributes to the
formulation, implementation and evaluation of both domestic and international policy. The
Baker Institute is a valuable and distinguished center of learning, and I am pleased to be with you
here today to discuss the challenges the next Administration-whichever it may be-will face in
the global economy.
Globalization: The Promise and the Challenge
We live in an exciting time. New information technology has ushered in an economic
th
transformation as profound as that of the Industrial Revolution of the 19 century. Along with
sound fiscal and monetary policies, it has been the largest single factor in our remarkable
increase in productivity, which has given us a high rate of GDP growth with very low
unemployment and low inflation. It has helped make the United States a high performance
economy, powered by technology, driven by ideas, rewarding the value of innovation, flexibility
and enterprise and attaining ever better living standards for its people. Here in the United States,
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 well
over $400 billion.
LS - 1036
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·U.S. Government Pnntlng Ofhce: 1998· 619-559
Information technology has also been a driving force behind globalization. This is the
first time in history that we have had a knowledge-based economy. This has enormous
implications within the United States for how we educate our children, train our workers,
communicate with each other, and do our shopping. It has an impact on businesses, as
knowledge-based products have high fixed costs, yet low marginal costs.
The technology revolution also has profound implications for the world in which we live.
In the new global economy, trade barriers are falling, the market for capital is international,
access to information from around the world is instantaneous, and economies are increasingly
interconnected. Our economy has benefited enormously from our active involvement in the new
global economy. A recurring lesson of the history of international economic affairs is that
countries that open their economies to the outside world enjoy better economic performance than
those that attempt to go it alone do. This lesson was well-understood by this Institute's
namesake, James Baker, who played an important role in launching the 0-7, encouraging
international cooperation and reaching the successful free trade agreement between the U.S. and
Canada.
It has been a touchstone of the Clinton Administration since its earliest days that
globalization is happening, that it cannot and should not be arrested, and that it offers limitless
potential for raising quality of life for the global population as a whole. But this Administration
has also stressed the need to make global economic integration work for all people. Ultimately, a
global economy that fails to benefit large parts of the world will fail everyone of us. In that
sense, the question is not whether we should welcome the emergence of a truly global market
economy-we should-but rather what kind of global market economy we should work to build.
There are those who have genuine concerns about globalization's implications, concerns
manifested by the protests in Seattle and Prague. Some of them say that globalization is not
good for developing countries, for they have not benefited as much as they should have while the
wealthy nations have grown wealthier. Others say that while the economy may be improving,
the environment is suffering. And still others say that while corporations may be getting rich,
working people are not doing so well.
I disagree with all of these assertions and believe that those who argue that globalization
has failed are badly wrong. 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.
Still, those of us who support global development must heed and respond to these
concerns. People in developing countries are at risk of falling further behind i~ a highly
competitive, integrated, knowledge-based global economy. They must not be 19nored. In that
regard, the next Administration will need to address people's fears about .gl?baliza~ion by
.
demonstrating that we can create an interconnected global economy that 1S mcreasmg prospenty
and genuine opportunity for people everywhere.
A successful global economy must respect core labor standards. We cannot ignore this
issue-not when oppressive labor practices and child labor practices are a reality around the
2
world. We must work to protect and improve the environment as we expand trade. We are
committed to finding solutions that are win-win, that benefit both the economy and the
environment, such as cutting-edge clean technologies. Lastly, we must ensure that open trade
does indeed lift living standards in a world where nearly half the human race, 2.8 billion people,
lives on less than $2 a day.
Globalization poses an historic opportunity, yet also many concomitant challenges. Let
me discuss three broad categories of challenges that I believe the next Administration must
address in order to foster continued growth and prosperity in the global economy: first, ensuring
a strong and stable flow of global capital; second, opening borders and markets to increased
global trade; and, third, helping the poorest countries to ensure that no one is left behind.
Ensuring a Strong and Stable Flow of Global Capital
A well-functioning system for ensuring a strong and stable flow of capital to 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.
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
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. Particularly hard hit was the
middle class in Asia, which had developed over the past two decades and was the basis for the
democratic movement in countries from the Philippines and Thailand to South Korea and
Taiwan.
The international community must work to make such crises 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 -98 were caused by
two elements coming together. First, weakness in the fundamentals -- such as questionable
banking systems, domestic credit bubbles supported by large amounts of short-term external
debt, unsustainable exchange rates, or deteriorating fiscal positions -- resulting in 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 countries to thinking about who would be the last out.
This understanding of such crises is increasingly informing the reform of the international
financial architecture, which our Administration has led, 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.
3
•
•
Safer policies in the emerging market economies, as global understanding and
surveillance of economic risks have increased. Notably: the ratio of external debt has
more than halved since 1996 in countries that have experienced liquidity crises and some
fourteen countries have moved away from unstable pegged exchange rate systems.
An IMF that is better equipped for modern crisis re:.ponse. The IMF is increasingly
oriented toward the provision of short-term, emergency finance, priced to discourage
casual use, and encourage rapid repayment.
It is crucial that we remain vigilant and continue to work to put in place policies that will
mitigate the risk of further financial crises. The next Administration will have an opportunity to
continue to build on these efforts to strengthen the global financial system. We can work
together with the international community to meet this challenge to prepare for and protect
against the vicissitudes of the global market economy.
Opening Borders to Increased Trade Flows
Another important element of globalization is the expansion of global trade flows. An
open world trading system is a cornerstone of the new global economy. Opening up once isolated
nations and untapped markets has produced enormous benefits and raised living standards
around the world. Although severe poverty is still a reality for much of the world-particularly
in sub-Saharan Africa-real incomes in developing countries are still fifty percent higher today
than they were 15 years ago. In Asia, even accounting for the 1997-1998 crisis, the number of
people living on less than a dollar a day has fallen by nearly 40 percent in the last ten years.
It will be important for the next administration to continue the Clinton Administration's
commitment to the open world trading system. This commitment has been reaffirmed recently
by the Clinton Administration's leadership, along with a bipartisan group of Senators and
Representatives, in enacting legislation granting China permanent normal trade relations and
legislation enhancing access to our markets for Africa and the Caribbean. The Administration
has also actively negotiated within this hemisphere for a Free Trade Agreement for the
Americas.
The Clinton Administration first made clear its support for lowering trade barriers when
it pushed hard for passage ofNAFTA, an agreement of particular importance here in Texas with
your proximity to Mexico. Though there were many doubters at the time, NAFT A has been an
important ingredient in the economic prosperity our nation has enjoyed during the past eight
years. Here in Houston, state officials estimate that the city receives a yearly economic bonus
from NAFTA of roughly $12 billion. More broadly, U.S. merchandise trade with Mexico since
1993 is up 141 percent, reaching $197 billion in 1999. As a result of the agreement, more than
two-thirds of U.S.-Mexico trade is now duty-free. Of course, we still have work to do on labor,
environmental and other issues. But NAFTA has taught us that we have far more to gain by
working together.
Globalization also has benefits beyond the strictly economic. For example, globalization
makes the world safer by reducing conflict. When people are working together for common
prosperity in a rule-based system, they have enormous incentives to set aside their differences.
4
The world is a better place than it would have been had we not had the last 50 years of increasing
economic cooperation for trade and investment.
Globalization not only affects how countries behave toward one another, but also how
they evolve internally. As a result, we have a profound interest in encouraging countries to open
up to the international community. As countries open their economies, the need increases for a
stronger rule of law, openness and accountability. Ultimately, this strengthens domestic forces
and improves human rights. By engaging China, for example, the world's most populous
country, we increase the chances that it will become a more open, more democratic and more
constructive member of the global community in the 21 5t century.
One of the challenges posed by open trade is the inevitable disputes that will arise from
time to time. Let me take a brief moment to focus upon one such timely issue-the European
Commission's decision to challenge the tax treatment of Foreign Sales Corporations (FSC) and to
further contest U.S. efforts to revise its tax legislation to comply with the World Trade
Organization's Appellate Body decision.
We are pleased that the House of Representatives this week passed legislation that
repeals the FSC and replaces it with a tax regime that complies with the WTO ruling, as it is
neither a subsidy nor is export contingent. The President signed this bill into law late
Wednesday night. We regret that the European Commission has not accepted this legislation.
Nonetheless, following recent bilateral negotiations, the European Commission agreed to pursue
a review of the WTO consistency of this legislation first, and to hold in abeyance the imposition
of retaliatory sanctions until the outcome of that review is known. I have been reassured that the
Commission will adhere to this agreement. The stakes involved in this dispute are very high.
Today, the EU published a general retaliation list of more than $4 billion. But they will now
suspend efforts to retaliate while we seek to persuade the WTO that our new legislation is WTOconsistent. For this reason, it is critical that we continue working together to resolve our
differences in a creative and consultative manner.
Finding ways to cooperatively resolve such trade disputes will continue to be a vital
element in the success of the new global economy. One immediate challenge for the next
Administration should be to resolve long-standing disputes with the EU on beef and bananas.
But of broader importance will be finding the right formula for a new WTO global trade round.
Nothing is more vital to sustaining the global economy than the successful launch and conclusion
of a new Round to further reduce external tariffs, remove trade-distorting agricultural subsidies,
deal with new e-commerce issues, and find ways to address new issues like competition and
investment policy. It is also imperative to respond to labor rights and environmental concerns.
Support for the Poorest Countries
Open markets and open trade are critically important to lifting living standards and
building shared prosperity. But they alone cannot carry the burden of lifting the poorest nations
out of poverty.
5
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. The
challenge is to help ensure the more inclusive outcome by fostering concerted action by the
public sector in both industrial and developing countries, supported by the efforts of the private
sector.
Countries will not be able to pull themselves out of poverty without rapid growth in their
economies - and their economies will not enjoy rapid growth without joining the global market.
The more integrated countries are, the more they will benefit from foreign direct investment and
technology transfers.
Industrial Nation Imperatives
It is important to concentrate greater attention on ways to more effectively address the
development challenges faced by the world's poorest countries. International support needs to be
targeted to countries with the infrastructure, institutions and proven capacity to deliver results.
We know that when policies are good, external support can and does have a significant and
positive impact. Let me touch on three key actions that the internatjonal community can take:
First, more and more effective official external assistance.
Countries committed to implementing the right reform policies will not be able to address
the problems they face without financial assistance. Increasing the quantity, as well as quality,
of global development assistance must be a global humanitarian imperative at a time when the
total per capita health budget in many African nations is less than $5 per year. Yet, net official
foreign assistance transfers per capita to Africa are now more than one third lower, in real terms,
than they were in 1990.
We recognize that this is a challenge that the world's richest country has a particular
responsibility to confront. The U.S. continues to be one of the largest contributors to the global
development effort and the largest market for developing country goods. But Americans should
not be satisfied with what we are now doing. Our defense budget last year was more than a $100
billion lower in real terms than it was in 1989; yet, rather than reinvest a portion of this dividend
in forward defense of U.S. interests through foreign assistance, overall U.S. spending on
international affairs has fallen by 40 percent since the mid-1980s.
Second, a broader reform of International Financial Institutions.
We are working with our 0-7 colleagues and other members ofthe multilateral
development banks on ways to further improve the development effectiveness of these
institutions. Our approach advocates greater selectivity in lending, with increased focus on
6
accelerating growth and reducing poverty in the poorest countries, a strengthened link between
lending allocations and country performance, placing more attention on the provision of global
public goods, and improved donor coordination and collaboration.
In Prague, we won G-7 agreement to press the multilateral development institutions on a
series of proposals, notably (1) to increase substantially resources targeted for priorities such as
education; (2) to increase World Bank funding for global public goods, including research on
treatments and vaccines for HIV / AIDS, tuberculosis and malaria; and (3) a series of measures to
make more effective the marginal dollar of development assistance that the institutions provide.
Third, a realistic approach to debt
One of the most critically important steps that industrial nations can take is to relieve the
world's poorest nations from the burden of massive debt. For the heavily indebted poor
countries, debt relief is a crucial part of establishing a virtuous circle of poverty reduction and
economic development.
The United States went a long way last week to providing the resources to relieve such
debt when the President signed into law a bill to provide funding for the entire $435 million
needed for the United States to do its share in debt relief this year for the world's poorest
countries. It also gives the IMF the authority it needs to do its share, as well. Our nation took
this step because we understand that making the global economy work for everyone is not a
political nicety, but an economic, strategic and moral necessity. This action reinforces the
leadership role of the United States in the global initiative for the Heavily Indebted Poor
Countries-known as the HIPC initiative. Under this program, 32 (thirty-two) of the world's
poorest countries could receive as much as $90 billion in overall debt reduction.
While enactment of legislation supporting the HIPe initiative was a major step forward,
we also need to ensure that real change takes place in these countries. The resources freed up by
debt relief must be used effectively to reduce poverty and promote economic growth. Further,
we need to ensure that countries that receive debt reduction take steps to avoid getting
themselves into the same problem all over again. In that context, Secretary Summers recently
suggested greater recourse to grant financing specifically for eligible HIPC countries to enhance
future prospects for debt sustainability. This would permit us to provide support without saddling
countries with more debt and would allow us to channel support to priorities such as HIV /AIDS
that are not traditional development projects.
Developing Nation Imperatives
Although there is much that we can do, no set of actions taken by those of us in the
industrial world will be sufficient. Developing nations must likewise do their part if our efforts
are to have any chance of succeeding. Let me touch on four elements that are crucial to rapid
economic growth in these countries:
7
•
•
•
•
First, governments need to put in place the institutions and rules that will allow markets to
function well. They must foster open markets, which in turn lead to trade and investment ,
the mechanisms through which managerial know-how and technology are transferred.
Second, they need to make public investment with particularly high social returns such as
health care and education, especially primary education. The Asian Tigers, for example, have
made a priority of investing in people, primarily through education. This has been one of the
major factors accounting for their incredible growth over the last 30 years and for their strong
recovery from the recent Asian crisis.
Third, governments need to promote an effective rule of law, through good governance,
transparency and support for the emergence of a healthy civil society. Problems such as
money laundering, inadequate bank supervision, and corruption undermine the credibility
and efficiency of the international financial system. They also pose a threat to a strong
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 problems is an integral part of effective development and institutional
capacity building that requires action at both a country and a global level. Multilateral
Development Banks must give more attention to encouraging recipient countries to fight
corruption, which drains the societies of developing countries and hinders their sustainable
development.
Fourth, governments must introduce and maintain sound macroeconomic policies in order to
accelerate and sustain economic growth. Developing countries need to keep their budget
balances small, inflation rates low, and their exchange rates at reasonable levels. A stable
macro economy is crucial to establish an environment conducive to long-term investment,
diversified production, and trade with the global economy.
Economic management is especially challenging in developing countries that rely heavily on
natural resource exports, including oil. Sharp price fluctuations - up or down - make fiscal,
monetary, and exchange rate management more difficult, and contribute to both economic
and sometimes political instability in resource-rich countries. Somewhat paradoxically,
resource-rich developing countries have recorded slower rates of growth than resource-poor
countries since 1960. We need to find better ways to help oil-exporting countries manage
their resources effectively, including by providing more transparent opportunities for foreign
investment, while at the same time helping them to diversify into other products in order to
reduce the possibilities for instability.
Both of these ingredients - international financial support and a commitment to reform by
the developing countries -are necessary to achieve the goal of global economic integration and
meet the challenge of poverty reduction in the poorest countries.
Private Sector Imperatives
Yet, the responsibility to extend the benefits of globalization to all people by achieving
the goal of successful global economic integration lies not only with the governments of
industrial and developing nations, but also with our partners in the private sector. Those of us
who believe in the benefits of an open global economy - and multinational corporations are
8
obviously at the leading edge - have a particular responsibility to draw the poor into the global
circle of prosperity.
There are two reasons the private sector ought to take proactive measures to integrate
developing nations into the global economy. First, companies have a social responsibility to act
as good corporate citizens. To this end, the United Nations recently launched its Global
Compact, which was developed with the support of international labor and civil society groups.
Like the Global Sullivan Principles, the Global Compact asks the private sector to adhere to
several core values in the broad areas of human rights, labor and environment.
The second reason for companies to act as good corporate citizens is that it is in their
self-interest to do so. Too many businesses still fail to grasp that there are five times as many
consumers in the developing world as in the developed countries -- and many may be poor, but
they are still a largely untapped market that is already improving dramatically.
The private sector has a real opportunity to join with the public sector in working on a
range of issues that affects everybody from the wealthiest companies to the poorest children.
Working in partnership, we can reduce risk and promote development by bringing the poor from
the margins to the mainstream ofthe new global economy.
Conclusion
The next administration will confront the overarching economic and humanitarian
challenge of our time: how to build a successful, truly global economy that works well for all the
world's people. I am confident we can meet this challenge, with the support of our partners in the
private sector, by continuing to promote open economies and strengthening the rules and
institutions within which they operate, while also protecting those most vulnerable-the poorest
nations, the environment and the rights of workers.
-30-
9
o
EPA R T 1"1 E N T
0 F
THE
T REA SUR Y
NEWS
TREASURY
OFFICE OF PUBliC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASlDNGTON, D.C. - 20220 - (202) 622-2960
FOR IMMEDlA TE RELEASE
November 20, 2000
OFFICE OF FOREIGN ASSETS CONTROL ISSUES VICTIMS OF TRAFFICKING
AND VIOLENCE PROTECTION ACT REQUIREMENTS
The Treasury Department's Office of Foreign Assets Control, today, issued a Federal
Register Notice explaining the requirements and procedures to establish eligibility for payments
under the Victims of Trafficking and Violence Protection Act of2000. The Notice is available
for public inspection at the Federal Register, and it will be published in the Federal Register on
Wednesday, November 22,2000.
The Victims of Trafficking and Violence Protection Act of2000 directs the Secretary of
the Treasury to make payments to persons who hold certain categories of judgments against
Cuba or Iran in suits brought under 28 U.S.c. 1605(a)(7) based on terrorist acts. On November
1, 2000, the Treasury Department published a notice in the Federal Register advising that it
would shortly prescribe procedures to establish eligibility for these payments.
For further information regarding submission of applications, please contact Rochelle E.
Stern, Transactions Analysis Officer, Office of Foreign Assets Control. For legal questions,
please contact Brett D. Barkey, Attorney-Advisor, Office of the Chief Counsel (Foreign Assets
Control) at 202-622-2671.
-30-
LS - 1037
Fm- press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
·U.S. Government Pflntlng Olliee" 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
November 20, 2000
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
181-Day Bill
November 24, 2000
May 24, 2001
912795GH8
Term:
Issue Date:
Maturity Date:
CUSIP Number:
6.050%
High Rate:
Investment Rate 1/:
6.327%
Price:
96.958
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted 71%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
$
Competitive
Noncompetitive
21,728,879
1,512,490
3,371,000
3,371,000
26,612,369
10,026,966
4,888,708
4,888,708
Foreign Official Refunded
SUBTOTAL
5,143,476
1,512,490
6,655,966 2/
23,241,369
PUBLIC SUBTOTAL
Federal Reserve
Foreign Official Add-On
o
o
$
TOTAL
$
31,501,077
$
Median rate
14,915,674
6.045%: 50% of the amount of accepted competitive tenders
Low rate
6.020%:
5% of the amount
)f accepted competitive tenders was tendered at or below that rate.
~as tendered at or below that rate.
3id-to-Cover Ratio
l/
~/
=
23,241,369 / 6,655,966
=
3.49
Equivalent coupon-issue yield.
Awards to TREASURY DIRECT = $1,233,070,000
http://www.publicdebt.treas.gov
LS-1038
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
FOR IMMEDIATE RELEASE
November 20, 2000
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
90-Day Bill
November 24, 2000
February 22, 2001
912795FUO
Term:
Issue Date:
Maturity Date:
CUSIP Number:
6.175%
High Rate:
Investment Rate 1/:
6.360%
Price:
98.456
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted 17%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Competitive
Noncompetitive
$
21,775,342
1,389,042
$
850,000
850,000
24,014,384
11,006,484
4,956,269
4,956,269
Foreign Official Refunded
SUBTOTAL
8,767,442
1,389,042
10,156,484 2/
23,164,384
PUBLIC SUBTOTAL
Federal Reserve
Foreign Official Add-On
TOTAL
Accepted
Tendered
Tender Type
o
$
28,970,653
°
$
15,962,753
Median rate
6.155%: 50% of the amount of accepted competitive tenders
Tas tendered at or below that rate.
Low rate
6.140%:
5% of the amount
)f accepted competitive tenders was tendered at or below that rate.
:id-to-Cover Ratio = 23,164,384 / 10,156,484
=
2.28
/ Equivalent coupon-issue yield.
/ Awards to TREASURY DIRECT = $1,086,492,000
http://www.publicdebt.treas.gov
~S-1039
DEPARTMENT
OF
THE
TREASURY
NEWS
OFFlCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W." WASlllNGTON, D.C.• 20220. (202) 622-2960
u.s. International Reserve Position 11/21/00
The Treasury Department today released
u.s. reserve assets data for the week ending November 17,2000.
As indicated in this table, U.S. reserve assets totaled $65,626 million as of November 17, 2000, down from
$66,015 million as of November 10, 2000.
n us millions)
Novemb_~r
Official U.S. Reserve Assets
10,2000
66,015
TOTAL
I
'f9reign Currency Reserves· 1
a; Securities
Euro
4,992
Yen
9,293
. Ofwhich, i~suw headquartered in the U'S,
November 17, 2000
65,626
TOTAL
Euro
14,285
4,938
Yen
TOTAL
9,206
14,144
0
0
b. Total deposits with:
8,508
b.i. Other central banks and BIS
8,193
16,701
8,408
8,116
16,524
0
0
b.ii. Of which, banks located abroad
0
0
b.iii. Banks.headquarteredoutside the.U.S.
0
0
0
0
13,587
13,548
10,396
10,365
11,046
11,046
0
0
b.ii. Banks headquartered in the U.S.
b.iii. Ofwhich, banks located in the U.S.
IMFReserve Position
2
Special Drawing Rights (SDRs)
30ld Stock 3
)ther Reserve Assets
2
Includes holdings of the Treasury's Exchange Stabilization Fund (ESF) and the Federal Reserve's System Open Market Account
OMA), valued at current market exchange rates. Foreign currency holdings listed as securities reflect marked-to-market values, and
posits reflect carrying values.
The items, "2. IMF Reserve Position" and "3. Special Drawing Rights (SDRs)," are based on data provided by the IMF and are valued in
liar terms at the official SDRJdoliar exchange rate for the reporting date. The IMF data for November 10 are final. The entries in the table
:)Ve for November 17 (shown in italics) reflect any necessary adjustments, including revaluation, by the U.S. Treasury to the prior week's
F data.
Gold stock is valued monthly at $42.2221 per fine troy ounce. Values shown are as of September 30,2000. The August 31,2000 value
s $11,046 million.
-1040
u.s. International Reserve Position (cont'd)
II. Predetermined Short·Term Drains on Foreign Currency Assets
November 10, 2000
1. Foreign currency loans and securities
November 17, 2000
o
o
o
o
o
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
November 17, 2000
November 10, 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
o
o
3. Undrawn, unconditional credit lines
o
o
o
o
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.
L 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
NEWS
TREASURY
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.
FOR IMMEDIATE RELEASE
II
WASHINGTON, D.C •• 20220
II
(202) 622-2960
Contact: Steve Posner
(202) 622-2960
November 21,2000
TREASURY SHUTS DOWN GUAM-BASED TRUST ABUSIVE TAX SHELTER
The Treasury Department and the Internal Revenue Service on Tuesday issued a notice to
shut down another abusive tax shelter that is currently being marketed. The shelter utilizes
Guam-based trusts in an attempt to effectively avoid both U.S. and Guamanian tax liability.
In this scheme, taxpayers claim that section 935 of the Internal Revenue Code applies to a
Guam-based trust in a manner that relieves the trust of all U.S. income tax liability_ In addition,
the trust claims a rebate from Guam of all Guam income taxes paid. Thus, under the scheme, the
trust purportedly is relieved of all income tax liability.
Section 935 was enacted to permit certain individuals who would otherwise be obligated
to file an income tax return with Guam and another return with the United States to file a single
income tax return in Guam and be relieved of any U.S. tax liability. The section was enacted to
eliminate the administrative burden on individuals caused by having to file two income tax
returns.
Notice 2000-61 alerts taxpayers and promoters that section 935 applies to relieve only
individuals of the burden of filing two tax returns. Section 935 does not apply to trusts and thus
does not relieve a Guam-based trust of any U.S. tax liability. The Guam-based trust scheme may
also be challenged on other grounds.
The notice also informs taxpayers and promoters that reporting requirements may apply
and that penalties may be imposed.
-30-
LS-I041
"'or press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
TREASURY
NEWS
OfFICE OF PUBLIC A.PFAJU e1$OO FEl'lNSY LVANIA AVENUE, N.W•• WASHINGTON, D.C•• 20Z~ e (101) 622.2'60
~GOED ~IL 11:30 A.K.
Hovember 22, '2000
~y
OiTERS
CONTACT:
Office of F;inanc:ing
202/69~-3S50
13-~,
26-WEEK, AND 52-WEEK BILLS
~e ~%'easw:y will auction three series of Treasury bills totaling
approximatel.:y $32,000 mllicm to 'refund $16,730 million of public1y hel.d
seCU%'ities maturing Novembe: 30, 2000, and to raise about $15,270
Dew cash.
~licn
of
~n ad.d.i.tion to the publ.ic bol.cU.ng-s, Federal Reserve Banks for their own
accounts hold $5,395 :m:i.l.l:ion of the matu;r:i.ng bil.ls, whi.ch may be . refunded at
the hi9'hes~ discount rate of accepted. competitive tenders. Amounts issued
these accounts .Ul be in add.i tion to the offer:ing amount.
=
The maturiQq 13- and 26-week bills held by the public incl~ $5,479
million held by Fed.eral Boeserve Banks as agents for foral-gIl and. international
mon.tary author:iti.es, wbic::b may be refunded wi.thin the offering amount a.t the
highest c1:i.scount rate of accepted compet.it.ive tenders. Add.iti.o~ amount. may
be issued. for such accounts if the aggregate amount o£ new bids exceeds the
agqregata amount of mat:uring bills.
As there is no 52-week bill maturinq on November 30, 2000, up to $3,000
milli.on in bids s'Ubm.it:ted by foreign and int.ernat.i.onal monetary authorities
through' the Federal Rese%Ve Bank of New York will be accepted. wi thi.n the
offering amount of the 52-week bill. Additional amounts may be issued to such
acoounts to the extant. that the amount of new bids exceeds $3,000 million.
%'%easuzyDirect cwstomers requested that we reinvest thei.r maturing
holdings of approximately $919 million in~ the 13-week bill, $6~1 million.
into the 26-week :b.ill, and $685 thousand into the 52-week bill. .
Th:is offeri.ng of ~ea.sury securiUes i.s g'Ovarftsd by the te:ms and conc:l:i. tions .at fo:th in the Uniform Offering Circ:u.l~ for tha Sale anA Issue of
Huketable Book-Bnt%y TZ'8&8U%Y Bills, Notes, and Bonds (31 CFR Part 3~6, as
amended) •
Details about· each of the new securities are given in the attached.
offuing highlights.
000
Attachment
For pre:ss,reU,llSes. speiches~ public schedules flnd DIlle"' biographies. ClZll Dur Z4..hDUl Ira line tit (102) 622..2040
L8-1042
HIGHLIGHTS OF TREASlmY OFFERINGs OF BILL$
~O BE ISSUED NovEMBER 30, 2000
NOvember 22, 2000
Offering Amount ...•.........•••••.
Desoription of Offering:
Term and type of security . . . • . . • •.
CUSIP number ••. . • . . • • • . . . • . • . • . . •.
Auction d.a te .. , .................. .
Issue date ..................... ., ..
Maturi ty date ..•.....••••.•..•.••.
Oriqinal issue date •...•....•.....
Currently outs tanding ......•.•••••
Minimum bid amoun t and mul t.iples
$12,000 million
$10,000 million
$10,000 adilion
91-day bill
912795 FV 8
November 27, 2000
November 30, 2000
Maroh 1, 2001
Maroh 2, 2000
$25,173 million
$1,000
lB2-day bill
912795 GJ 4
November 27, 2000
November 30, 2000
May 31, 2001
June 1, 2000
$13,616 mi~lion
$1,000
364-da.y bill
912795 11M 6
November 28,
November 30,
November 29,
November 30,
2000
2000
2001
2000
$1,000
following rules apply to all securities mentioned above:
Submission o~ Bids:
Nonoo~etitive bids ...•.• Aocepted in full up to $1,000,000 at the highe8~ discount rate of aooepted
competitive bids.
competitive bids •••••.•. (1) MUst be expressed as a disoount rate with three decimals in increments
of .00st, e.g., 7.100%, 7.105'.
(2) Ne~ long position for each bidder must be reported when the sum of the
total bid amount, at all discount rates, and the net long positionia
$1 billion or greater.
(3) .Ne~ long position must be determined as of one half-hour prior to the
olosinq time ~or ~.o.ipt of competitive tenders,
The
Maximum Reoognized Bid
at a Single Rat ••.•....• 35' of pUblio offering
Maxiaua Avard •••••••••••••. 35' ot publio offering
of Tenders:
tenders •• Prior to 12:00 noon eastern standard time on auction day
Co.petitlve tenders •.••• Prior to 1:00 p ••• eastern 8tanda~d time on auct.ion day
Recaip~
Nonoo~atitive
Payment
~erma
••••••••••••••. Sy oharge to a lunds acoount at a Federal Reserve Bank on i8~a date, or
payment of full par amount with tender. Treasu~Direct customers oan u~.
the Pay Direot feature which authorizes a oharge to their aocount of r806~
a~ th.~r f~nancia1 inat~tution
on issue date.
DEP'ARTMENT
OF
THE
TREASURY
TREASURY
NEWS
OFFICE OF P't)BLIC AFFAIRS -1500 PENNSYLVANIA AVENUE', N.W•• WASHINGTON, D.C.e ZOlZO e (202) 622:-2960
ZllmA!tGOEZ>
~::tl.
11130 A.II.
C01l1TACT:
movember 22, 2000
~y
Office of ~~cing
202/691-3.550
"to AOC'l'ZOH $1.0, 000 Ml:I.L:tOH OP 2-YEAR NO'l'ES
'rhe ~ea.au:y will auct:iOA $10,000 million of 2-year noees to refund $28,401
million. of publiClY heJ.c! ••curit:ies matuzoi.Dw liovembel: 30, 2000, &:Ad to pay ciowz:L about
$18,401 ail.lion.
In addieion eo ehe ~lic holc:tings, !'edcilral Reserve B&=ku bold $4,1.1.4 mil.l.ion
of !:he maturing securities fo:: ehei.r 01m aCCOUAts, whieb may be ::efuDded by :i.ssuiug
an ad.d.itiocal. amount: o~ ~e new aecurio ty.
'l'Ae maturi.nsr .e~iti •• held by ~e public !.Delude $5,587 million hald by
a.serve Bank- . . agents for fo::eign aDd internationa:L monetary authorities.
~t.s bid for 1:Aaae accou:o.ta by Federal Reserve ~ will be added to t:he
Pede::Al
offoriDs'.
~e£6UZYD.trec:i: c:uatcaera ~q\l.ated that
$~63 mi1110n izlto the 2-yea.r
of approxi'MteJ.y
we reinvest their
ma.t~!il
'1'he aue'C1.on n11. l:>e ccmduceed in tAe aizLgle-p::ice auc:tion fo~t.
t.iv. a=d noncompetit.ive awa:ds ~ll be at the ~ghes~ yield of acc:e,pted
tenders.
hoJ.d.iDgs
Dote.
Al.1 ccmpeticompe~itive
.
no ZIoOt..
b~
offerea today are el.igible for the S'l'IUPS program.
Thia offering of 'l'reasury seCUZ'itieB is governed by the terms and condit.ions
set: forth iD the U=:i.fozm Offering c:i.rc:ular for the Sa.le IU1d ZSBue of Harke~le. Boo~
Entzy Treasury :a:i..l.~., Ho~e., aDd Bcmda (31 CI'a Part 356, aa amfimQ.eQ).
~t&11s
about tAe DeW security
~o ~iveA
in the &t.tac~ offering ~g~ights_
:r:f the aueticm of 2-yea:: DOees t.o be. held Wecmesc1ay, November 29, 2000. resul.ts
in a yield. in a. ransre of 5.750 percent. t.hrou~h and iDcluding 5.874 percent, the
2-Y.ar notes vi~l be co=Jide::ed aD additional issue of the out.st-ndiug S-3/~% 5-year
DO~.s 0: Series P-2002 (COS~ 50. 9138373Q3) or~g~a11y ~BBUed necamber 1, ~97.
The
add..i~iOD&l. i.sue of the notes 'WO'Uld have the same ct7SZP n.Wllber as 'Che outstanMmr
",at.s, which are currentl.y out.t.anding .in the amount of $12, 12~ mi~1i.on.
Zi the auct:i.oD ~esu1t. ~ ~e iss~e of an. a~t.ioDal amount. o~ t.he Series
1'-2002 :ete. :r:&ther t,ban a n...w 2-year DOt.e, i t will be i=Aica.ted :i.!1 the 'rrea.suxy
auction results p::eas rele..e.
000
FOT
press reuases, speeches. przblic schedules and official biogTaphies, call our 24-hour fax line at (202) 622-2040
B.tGHLIGB'l'S OP TltEA,StrRY OFFBRD1G TO TIlE I'tllILl:C OF
2-YDll lIJOUS TO BE %S&mm 1IOVEK8i:ll 30, 2000
Offer~g ~t ••••••••••••••••••••••••••••••• $10,000 ~11iOD
De.c:i»ti~ of Offering:
T~ aDd ~ of ••=uricy
••••••••••••••••••••• 2-year DOtes
Seriaa ................................................................... 1C-2002
CtrSXP DlIZIl:>ar .......................................................... 912827 6P 2
Auction date •••••••••••••••••••••••••••••••••• ~ 29, 2000
Is~e date •••...•.•.•.•••••••••.•••••••.•••••••ovamber 30, 2000
Dated 4ate ••••••••••••••••••..••.••.•...•••••• BOYe=bar 30, 2000
Katuri~y date ••••••••••••••••••••.•••••••••••• »~er 30, 2002
~terest rat •••••••••••••••••••••••••••••••••• Det~d Dased CA tAo highest
accepted competiti~ hid
Yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . net~.a at aue~iOD
Intar•• ~ payment dates ••••••••••••••••••••••• Hay 31 aDd Hovember 30
Mjnimnm hid ~t aa4 ~tipl.a •••••••••••••• $1 1 000
Accrued interest payable b.v ~8tor •••••••••• Bon.
I'rem.iam or 4iaco'lZlat •••••••.•••••••••••••••••••• Detez=.iza.d at auction
STlUPS
~o%:1ll&tion:
Mift;mpm smouAt re~rea ••••••••••••••••••••••• Deter.miZled at auctioza
Cor,pus cnSII' number •••••••••••••••••••••••••• 912820 FY 8
I>\1. d&t-Ca) and eosa Jl1DDbar(s)
for .~tiOD&l T~(.) ••••••••••••••••..•••• Hot applicable
Submission of 8ida:
MQQCo=petitive bids;
Accepted i : fu11 up to $5,000,000 at the highest
~ccepted yield.
Campetitive bids:
(1) ltuat M axpreaae4 as & yield with three 4ec.imala, e.g., 7.133%.
(2) Het 10=g posit:!.=. for each bic1c!er aat M repozt:e4 wileD ~ sum of the total
1)i4 UIIOlmt, a.C &l.1 yj.ela., aDa t:Ae "et 1 - . »oait.icn is $2 billicm or gzoeater.
(3) Met long poa! ticm IIWIt :be cietezmined as of one balf -hour prior to the
cloaiA~ tima for receipt of cClllljpeti tiva t.aer••
H~ Raco~:ed
M~um ~
Recoipt of
Bid at a Single Yield ••••••••••• 35% of public offering
•.••••••••••••.•.•••••..•••••••••••••• 35% of public off.~
~.~aer81
I'z'ior to 12: 00 nooza eastern stedard time OA .."ct.:i.cm aa,r.
!'rior to 1:00 p.m. eastezn atandar4 time em auceiOll c!a7.
H~ClDiPetiU..". tODAlers,
COIIIpetit.1ve
te.a.~.,
Terms: By c:l:t.az'sro t.o • f1mQ.a accc:nmc at a Pedaral Jt.eaerva BImk em line
date, or p~t en full p&% ~t wi~ t.eDder. ~zw..uzyD.irecf: cuatcears cu we
~ Pay nirec:t ~. .t1U:'. wA:i.c:A qt.Aoriz. . . . cluLrge to the.i% accC1mt of record at:
Pa~t
their fiDAnc1al
~titut1ca QD
i.aue Qat.••
I) EPA It T '-'I E N T
() F
T Ii E
T
I~
E A S (J R V
NEWS
OFFICE OFPUBUCAFFAIRS • 1500 PENNSYLVANlAAVENUE, N.W.• WASlllNGTON, D.C .• 20220. (202) 622-2960
FOR IMMEDIATE RELEAS:t::
November 22. 2000
STATEMENT BY TREASURY SECRETARY LAWRENCE H. SUMM.ERS
We welcome El Salvador's proposal to use the U.S. dollar as its currency. Combined with a
strong economic policy framework. this step should help contribute to financial stability and
economic growth in EI Salvador and its further integration into the global economy.
-30-
LS - 1044
or press releases, speeches. public schedules and official biographies, call our 24-hOUT fax line at (202) 622-2040
'U,S. Goverf\mool Pri~ling Ofl'ca. 'WB· 61 ~559
DEPARTMENT
OF
THE
TREASURY
NEWS
TREASURY
ornCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASIDNGTON, D.C. - 20220. (202) 622-2960
FOR IMMEDIATE RELEASE
November 22, 2000
STATEMENT BY TREASURY DEPUTY SECRETARY STUART E. EIZENSTAT
In my capacity as the Special Representative of the President and the Secretary of State
for Holocaust Issues, I welcome the decision of the National Gallery of Art to relinquish a
painting after determining that in all probability the Nazis confiscated the painting during the
occupation of France. I was particularly pleased to note that this decision was taken after
examining the provenance of the painting and publicizing the provenance information on its web
site in accordance with the Washington Conference Principles on Nazi - Confiscated Art, as well
as the Guidelines of the Association of Art Museum Directors. In December 1998, the
Washington Conference on Holocaust Era Assets adopted non-binding principles to assist in
resolving issues relating to Nazi - confiscated art. One of the principles calls for an examination
of "gaps or ambiguities in the provenance in light of the passage of time and the circumstances
of the Holocaust era. "
I am also pleased that other American museums are taking an interest in posting on web
sites works of doubtful provenance from the Holocaust era. The eight largest museums in the
United States have identified hundreds of paintings in this category. Likewise, major museums
around the world are taking similar action. The decision by the National Gallery sets a standard
for the return of Nazi-confiscated art that we hope other U.S. museums and museums around the
world will follow.
-30-
LS - 1045
F()T' 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
DEPARTMENT
OF
THE
TREASURY
NEWS
TREASURY
omCE OF PUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622.2960
FOR IMMEDIATE RELEASE
November 22,2000
STATEMENT BY TREASURY DEPUTY SECRETARY STUART E. EIZENSTAT
The United Stated Government, having participated in helping to mediate the resolution
of the Swiss bank cases, welcomes Judge Korman's approval of the allocation plan. The court
has found that the Special Master has fairly balanced the various interests involved. We favor
the earliest pos~ible distribution of the fund to needy survivors.
This important step brings us closer to achieving a measure of justice for Holocaust
victims and their heirs.
I am pleased that the court has found that the proposed allocation and distribution plan is
fair and reasonable. I hope that cooperation among all who have participated in this settlement
will soon bring payments to the many categories of claimants who so richly deserve to receive
them.
I also want to note the positive 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 shape a better, more just Europe and world for the coming century.
-30-
LS - 1046
Far 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
D EPA R T lVl E N T
_ .
L
,
0 F ",' THE " T
>
'/ ,
'
~•
, l
~-, E AS'
~
'IJ R Y
," :' '~'
"
.~
, _ ' ...L
NEWS
TREASURY
omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W .• WASHINGTON, D.C .• 20220. (202) 622-2960
FOR IMMEDIATE RELEASE
November 27,2000
Contact: Una Gallagher
(202) 622-2960
STATEMENT BY TREASURY SECRETARY LAWRENCE H. SUMMERS
I welcome today's statement by the Office of the Comptroller of the Currency and the
Office of Thrift Supervision urging banks and thrifts to look carefully at the risks associated with
payday and auto title lending through third parties. These advisories are an important part of the
Department's ongoing efforts to ensure that abusive or predatory lending practices do not
undermine the important progress we have made in expanding access to capital.
-30-
LS-I047
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_~_
'
.! :;,)
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
FOR IMMEDIATE RELEASE
November 27, 2000
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
November 30, 2000
March 01, 2001
912795FV8
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:
6.160%
Investment Rate 1/:
6.344%
Price:
98.443
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)
Competitive
Noncompetitive
$
29,605,930
1,275,860
$
699,300
699,300
31,581,090
12,044,890
1,886,368
1,886,368
Foreign Official Refunded
SUBTOTAL
10,069,730
1,275,860
11,345,590 2/
30,881,790
PUBLIC SUBTOTAL
Federal Reserve
Foreign Official Add-On
TOTAL
Accepted
Tendered
Tender Type
o
o
$
33,467,458
$
13,931,258
Median rate
6.150%: 50% of the amount of accepted competitive tenders
las tendered at or below that rate.
Low rate
6.140%:
5% of the amount
)f accepted competitive tenders was tendered at or below that rate.
lid-to-Cover Ratio = 30,881,790 / 11,345,590 = 2.72
/ Equivalent coupon-issue yield.
I Awards to TREASURY DIRECT = $1,016,133,000
http://www.publicdebt.treas.gov
,S-1048
P·UBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
November 27, 2000
CONTACT:
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182 -Day Bill
November 30, 2000
May 31, 2001
912795GJ4
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:
6.045%
Investment Rate 1/:
6.322%
Price:
96.944
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)
Tendered
Tender Type
Competitive
Noncompetitive
$
25,157,803
955,233
$
26,113,036
PUBLIC SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
TOTAL
Accepted
$
6,527,578
955,233
7,482,811 2/
2,528,000
2,528,000
28,641,036
10,010,811
1,000,855
1,000,855
o
o
29,641,891
$
11,011,666
Median rate
6.035%: 50% of the amount of accepted competitive tenders
tendered at or below that rate.
Low rate
6.015%:
5% of the amount
E accepted competitive tenders was tendered at or below that rate.
~s
ld-to-Cover Ratio = 26,113,036 / 7,482,811 = 3.49
Equivalent coupon-issue yield.
Awards to TREASURY DIRECT = $739,209,000
http://www.publicdebttreas.gov
-1049
DEP'ARTMENT
OF
THE
TREASURY
NEWS
OFFICE OFPUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. ~ WASIllNGTON, D.C." 20220. (202) 622-2960
u.s. International Reserve Position
11/28/00
The Treasury Department today released U.S. reserve assets data for the week ending November 24, 2000.
As indicated in this table, U.S. reserve assets totaled 56-+,860 million as of November 24, 2000, down from
$65,633 million as of November 17, 2000.
in US millions)
Official U.S. Reserve Assets
November 17, 2000
November 24, 2000
65,633
64,860
TOTAL
Foreign Currency Reserves
I
1
a. Securities
Euro
4,938
Yen
9,206
Of which, issuer headquartered in the U. S.
TOTAL
Euro
14,144
4,867
Yen
TOTAL
9,841
14,708
0
0
b. Total deposits with:
8,408
b.i. Other central banks and BIS
b.ii. Banks headquartered in the U.S.
b.ii. Of which, banks located abroad
bJii. Banks headquartered outside the U. S.
b.iii. Of which, banks located in the U.S.
IMF Reserve Position
2
Special Drawing Rights (SDRs)
Gold Stock
3
Other Reserve Assets
2
8,116
16,524
8,283
7,089
0
0
0
0
0
13,554
13,-+49
10,365
10,285
11,046
11,046
0
0
, The items, "2. IMF Reserve Position" and "3. SpeCial Drawing Rights (SDRs)," are based on data provided by the IMF and are valued in
)lIar terms at the official SDRJdoliar exchange rate for the reporting date. The IMF data for November 17 are final. The entries in the table
Jove for November 24 (shown in italics) reflect any necessary adjustments, including revaluation, by the U.S. Treasury to the prior week's
1F data.
Gold stock is valued monthly at $42.2221 per fine troy ounce. Values shown are as of September 30, 2000. The August 31, 2000 value
$11,046 million.
3-1050
0
0
0
I Includes holdings of the Treasury's Exchange Stabilization Fund (ESF) and the Federal Reserve's System Open Market Account
;OMA), valued at current market exchange rates, Foreign currency holdings listed as securities reflect marked-to-market values, and
eposits reflect carrying values.
3S
15,373
u.s. International Reserve Position (cont'd)
II. Predetermined Short-Term Drains on Foreign Currency Assets
November 17, 2000
1. Foreign currency loans and securities
November 24. 2000
o
o
o
o
o
2. Aggregate short and long positions in forwards and
futures in foreign currencies vis-a-vis the U.S. dollar:
2.8. Short positions
2.b. Long positions
o
o
o
3. Other
III. Contingent Short-Term Net Drains on Foreign Currency Assets
November 24. 2000
November 17.2000
I. Contingent liabilities in foreign currency
o
o
o
o
o
o
o
o
1.a. Collateral guarantees on debt due within 1 year
1.b. Other contingent liabilities
~.
Foreign currency securities with embedded optiohs
I. 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
n
F: P A' R T :\1 E ~ T
TREASURY
0 F
THE
T R E .-\ S CRY
NEWS
omc£ OF PUBLiC AFFAIRS -1$00 PENNSYLVA.NIA AVENUE. N.W. - WASHINGTON,D.C •• 20l111- (%02) 6%Z.Z960
l!'..II:BARGOW tnft':tL 2 :30 P.!!.
November 28, 2000
Con1:.act:
Office of Fl Dancing
202/691-3550
The 'r:reaBU%Y will a.uction app:rcximately $36,0'00 million of 14-day
cash ~nt bills to be issued December 1, 2000.
Trea~
''1'endars will. not be ·accepted for bills to :be JDai%1taineCl on the bookth-;-Depa.rt:meDt of the Treasury (!I're4SU%YD.irec't).
entry recc=ds of
~tione.1
uaounts o£ the bills may ]::)e issued to Federal. Reserve Banks
as agents for fore1911 aDd iAta:naational. monetary author:i.ti·es at the highest
dis~~t rate of accepted competitive teDders.
~
auction being announced t~ will be conducted iQ the single-price
auctioc fOl:!Dat. lUl cOlllpetitive and noncompet.itive awards will be at the
highest discount rate of accepted competitive teDders.
~:
Campetitive :bids in <;lash management bill auc~iO!is must be
as' a discount rate with ~ decimals, e.g., 7.10%.
~reased
This offering of Treasuzy securities is gove%D8d by the terms and cC?D:llticms. set forth in the t7ni~oxm. Offering Cireul.ar for the sale al2d Issue of
!farketable Bock-Entry 'l'reasw:y Bills, Notes, and Bond.s (31 CFR. Part 356. as
mended) •
~ails
about the new security are gi~ in the attached offering
lighlights.
Attac:bm.eut
,S-1051
-
I,
I"
'
For press releases, speeches, public sche~ules and offici41 biog,."phies~ call OUT 24·hour /tl% line at (202) 622.2040
lC:GBLl:GE!'l'S 01' TREAStnlY OPFERDIG
OF 14-DAY CASK DttAGBMERT B:tLLS
N~
Offering Amount •••.••••.•••••••••• ·• $36,000
28, 2000
~l1ion
Descript.ion of Offering:
'1'e%1D aDd type of security........... 14-c!a.y Cash 1laDagemeJ:Lt. Bill.
eo8l:P number •••••••••••••••••••••••• 912795 KB 0
Auction date .•••••' .••••••••••••••••• Noveaiber 30, 2000
l:ssue date •••••••••••••••••••••••••• ~amb~ 1, 2000
Maturity date ••••••••••••••••••••••• December 1S, 2000
Original issUe date ••••••••••••••.•• DeCember 1, 2000
Minimum bid amount and multiples •.•• $1,000
Submission Of Bids:
Noncompetitive bids ••••••••• &cceptea in full up to $1,000,000 at
the higbest acceptea d1scOUDt rate.
Competitive bids •••••••• (l) MUst ~ ~resse4·a8 a 4iscoun~ %ate
with two decimals, e.g., 7.10%.
(2)
Het lcmg :;>ositicm. for eac::h ]:)idder must
be reported when the sum of the total
]:)ic1 amouDt, at. all aisCCUZlt: rates, aDd
t.he net loug position is $1 bi11ioa ~
greater.
(3) !let loag position 1IIDst be detemined as
of one balf-hour prior to the closing
time for ~eceipt of competitive t8D4era.
Maximum Recognized Bid
at a Single Rate ••••.•••••• 35% of pUblic offering
Maximum Award ••••••••••••••••• 35% of public offering
ReceiPt of Tenders:
NODCC:lllUpetitiva tenders...... Prior to 12: 00 nOOD ea.steru standard
time on auction day
Competitive tenciers ......... Prior eo 1:00 p.m. easte2:D standard
time an auction day
Payment Ter.ms ••••••••••••••••• By charge to a funds acc~e at a Fed~
Reserve Bank on issue date, or payment of
full par amount with ~ezder.
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt· Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
FOR IMMEDIATE RELEASE
November 29, 2000
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 2-YEAR NOTES
Interest Rate:
Series:
CUSIP No:
STRIPS Minimum:
Issue Date:
Dated Date:
Maturity Date:
5 5/8%
AC-2002
9128276P2
$320,000
High Yield:
Price:
5.695%
November 30, 2000
November 30, 2000
November 30, 2002
99.869
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 yields were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
$
Competitive
Noncompetitive
30,500,210
940,030
$
10,014,220 1/
31,440,240
PUBLIC SUBTOTAL
3,333,333
1,700,000
3,333,333
1,700,000
Federal Reserve
Foreign Official Inst.
TOTAL
$
36,473,573
9,074,190
940,030
$
15,047,553
Median yield
5.689%:
50% of the amount of accepted competitive tenders
·as tendered at or below that rate. Low yield
5.665%:
5% of the amount
f accepted competitive tenders was tendered at or below that rate.
id-to-Cover Ratio
=
31,440,240 / 10,014,220
/ Awards to TREASURY DIRECT
=
=
3.14
$658,189,000
http://www.publicdebt.treas.gov
['S-1052
DEPARTMENT
OF
THE
TREASURY f~)
TREA'SURY
NEW S
1..2 89
ornCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE. N.W.• WASHINGTON. D.C .• 20220 • (202) 622·2960
FOR IMMEDIATE RELEASE
November 30, 2000
Contact: ATF Public Information Division
(202) 927-8500
TREASURY RELEASES REPORT ON 1999 CRIME GUN TRACES
The Treasury Department today announced the third annual results of the Bureau of
Alcohol, Tobacco and Firearms' (ATF) Youth Crime Gun Interdiction Initiative (YCGII), which
last year traced more than 64,000 crime guns recovered in 38 cities, advanced investigations
leading to the arrests of firearms violators and traffickers, and provided law enforcement officials
the best picture to date of the crime gun problem.
In 1996, President Clinton issued a directive establishing the YCGII, a collaborative
program between ATF, state and local law enforcement and prosecutors, to identify and reduce
the illegal supply of firearms to youth and juveniles. YCGn was developed in response to the
tripling of the juvenile firearms homicide rate from 1985-1994. This year's findings are
published in one national report (covering 32 cities with populations greater than 250,000) and
individual reports specific to each city involved in the program.
"Investments in crime gun tracing by law enforcement are clearly paying off." said
Secretary Lawrence H. Summers. "Firearms tracing has proven itself to be a powerful
enforcement tool that leads ATF agents. inspectors and police nationwide directly to criminals,
gun traffickers, and violent felons"
The reports are a tool for law enforcement and prosecutors to identify local, regional. and
national crime gun trends, and develop enforcement strategies tailored to the needs of specific
areas. They are also useful to federally licensed firearms dealers who can use the information in
the reports to develop sounder and safer business practices The reports' findings also inform the
public about the crime gun problem and the enforcement activities addressing it.
ATF Director Bradley A Buckles said. "Technology has opened a new era in attacking
the criminal misuse of firearms Crime gun and ballistics information gives ATF and our
partners powerful new tools to solve and prevent violent crime."
Findings of this year's reports include
LS - 1053
'or press releases. speeches. public schedules and official biographie5. call our 24-hour fax line at (202) 622·2rHO
~
•
Approximately 43 percent of crime guns traced were recovered from individuals
under 25 years old. Of those traced guns, approximately 9 percent were recovered
from juveniles (ages 17 and under), and 34 percent from youth (ages 18-24).
•
Approximately II percent of traced guns were recovered from possessors who had
purchased those firearms from Federal firearms licensees. About 89 percent of traced
crime guns changed hands at least once before recovery by law enforcement. Such
transactions may be lawful or unlawful.
•
Handguns sold by licensed gun dealers during transactions involving the transfer of
more than one firearm accounted for 22 percent of guns traced in 1999.
•
Newer guns, those manufactured in the U.S. from 1993-1999, account for more than
half of all crime guns traced in YCGII.
•
Semiautomatic pistols are used more frequently in crime than other types of firearms,
and account for 50 percent of all traced guns.
•
Law enforcement recovered approximately 62 percent of aJl traced guns in the state
where the firearms were originally purchased from a licensed firearms dealer.
•
Nationally, there are two major "south to north" trafficking patterns. The first is on
the East Coast, and flows from the South to Washington (DC), Baltimore,
Philadelphia and New York. The second pattern flows from South to Memphis,
St. Louis, and Chicago.
•
Ten firearms, by manufacturer, caliber, and type, accounted for 24 percent of all trace
requests, while over 1,500 firearf}lS and 87 calibers accounted for the remaining crime
guns.
The 38 cities included in the 2000 ATF Crime Gun Reports are Atlanta, Baltimore,
Birmingham, Boston, Bridgeport (CT), Charlotte-Mecklenburg, Chicago, Cincinnati, Cleveland,
Dallas, Denver-Aurora, Detroit, Gary, Houston, Jersey City, Las Vegas, Los Angeles, Louisville,
Memphis, Miami, Milwaukee, Minneapolis, New Orleans, New York, Oakland (CA), Omaha,
Philadelphia, Phoenix, Portland, Richmond, Salinas, San Antonio, San Jose, St. Louis, Seattle,
Tampa, Tucson and Washington, DC
Next year, the YCGII will include trace data from 50 localities. It is anticipated that the
program will include the following new cities Albuquerque, Austin (TX); Baton Rouge; a triad
of Greensboro, Winston-Salem, and High Point (NC), Indianapolis; Jacksonville (FL); a triad of
Long Beach, Anaheim and Santa Ana (C A), Nashville, l'\ewark; Oklahoma City; Pittsburgh; and
Stockton (CA)
The crime gun trace reports are available through ATF' s Public Information Division,
(202) 927-8500, or on the Internet at wwwatftreas.gov
-302
~
The Youth Crime Gun Interdiction Initiative (YCGII)
Crime Gun Trace Reports (1999)
Highlights of the National Report
This is the third year of ATF's Crime Gun Trace Reports. This year, a Natio1lal Report provides
national findings based on 64,637 crime gun traces recovered and submitted in calendar :v~r
1999. These trace requests came from 32 cities with a population of 250,000 or more participating in ATF's Youth Crime Gun Interdiction Initiative. Individual City Repol1s pro\'ide complete
information on the trace results in 36 cities, including all 32 larger cities and four smaller cities.
The National and City Reports are posted on the Internet at www.atf.treas.gov.
Possessors of Crime Guns
Juvenile. About 9 percent of crime guns vv'ere recovered from juveniles (ages 17 & under).
Youth.
About 34 percent of crime guns were recovered from youth (ages 18-24).
• Individuals 19 years of age were the most frequent possessors of traced crime guns,
followed closely by possessors ages 20 and 18.
Adult.
About 57 percent of crime guns were recO\'ered h-om adults (ages 25 & older).
Indicators of Illegal Diversion
FeR Crime Gun Possessors Bought Their Guns Directly from Federally Licensed Gun
Dealers. Onl~ about 11 percent of traced crime guns were recovered from possessors who had
purchased those firearms from Federal firearms licensees (FFLs). About 89 percent of traced
:rime guns changed hands at least once before reco\'en b\ la\\ enforcement as crime guns. Such
ransfers may be lawful or unla\\ful.
~lany
Crime Guns Had Short TIme-to-Crime. ~ot\\ithslanding that most crime guns were
)ought from an FFL by someone other than their criminal rossessor, mam crime guns were
eco\'ered soon after their initial purchase. To the iO\esti~~lt()r, the Sh0l1 time from retail sale to
rime. known as "time-to-crime," su££esh ille£al di\ ersi()n or criminal intent associated with the
etail purchase from the FFL. The ~~dian ti~e-to-criml' tOl' crime guns traced was 5.7 \'ears, but
m enforcement recovered mam crime i!uns much morL' rJridh.
• About 15 percent of crime guns were ITcmereJ l\'Illllll / Icar of their first retail pUIThase.
• 32 percent of crime guns were recc)\ered lI'illlili 3 1('(11' of their first retail purchase.
any Firearms Offenses In\'olvcd !\e\\ Guns. ThL' concentration of crime guns with a reb.'ely short time-to-cri me also indicates that ma n\ f ileaI'm offenses, includi ng violent offenses
ith firearms, imol\'e new guns. This is e\en more so for lTlme guns possessed by youth.
• Almost a third of crime guns (32 percent) reco\'ered in 1999 were purchased in 1996 or later.
• More than 40 percent of crime guns recO\ercd from \outh \\ere purchased in 1996 or later.
• Half of all the semiautomatic pistols reco\'ered from youth \\ere purchased in 1996 or later.
DerZlrtment of the TreaSlll\ • BUl'eau 01 AIc()hol, Tohacco and Firearms
Crime Guns with the Most Investigative Potential
Shon time-to-crime guns ha\'e the most immediate investigative potenti~l for Ia\,' .enforc~ment
officials because the\' are likely to have changed hands less frequently. Tlme-to-cnme \'aned
substantially by fire~rm t~'pe, age of purchaser. and specific model.
Shortest a~d Longest Median TIme-to-Crime by Type. Semiautomatic pistols had the shortest
median time-to-crime, 4 years. Revolvers had the longest median time-to-crime, about 12 ~·ears.
Shortest Median TIme-to-Crime by Manufacturer, Caliber, and Type. The most frequently traced
Clime guns (by manufacturer. caliber. and type), over half of which we~e recovered in 3 years or less.
were all semiautomatic pistols: Bryco Arms 9mm, Bryco Anns .380 calIber. and Ruger 9mm.
• Juveniles. Br\'co Arms 9mm and Lorcin Engineering 9mm semiautomatic pistols recovered
from juveniles' had a median time-to-crime of just 1.6 years.
Shortest Median TIme-to-Crime by Specific Model. Sufficient model information was available
from nine cities. The shortest median time-to-crime guns (by manufacturer. caliber, type, and specific
model) were again all semiautomatic pistols: the Lorcin Engineering L9, the Ruger P95, the Hi-Point
C, and the Bryco Arms 48.
• Youth. Among youth crime guns, the more powerful Smith & Wesson Sigma .40 caliber
semiautomatic pistol had an extremely fast median time-to-crime of 0.8 years.
• Long Guns. Models with the shortest median time-to-crime were the Hi-Point Model 995
9mm carbine and the Maverick Model 88 12 gauge shotgun, 1.2 and 1.6 years median timeto-crime, respectively.
Officer Safety
ATF is providing officer safety information related to crime guns for the first time this year in
order to assist State and local law enforcement managers in assessing potential departmental
safety measures. Trace information on crime gun models from nine cities indicates that the
North China Industries SKS 7.62mm rifle, North China Industries MAK90 7.62mm rifle, and the
Colt AR 15 .223 caliber rifle are encountered more frequentl\ b\ law enforcement officers than
similar rifles. These rifles, as well as most other rifles. will po;e an enhanced threat to law enforcement, in part. because of their ability to expel projectiles at velocities that are capable of
penetrating the type of soft body armor typically \\'orn by the a\'erage police officer.
Geographic Patterns
Crime guns form part of local. regional. and national traffick10g patterns.
In-State sources. About 62 percent of crime gun~ \\l'rc first purchased from FFLs in the State in
\\ hlch the guns \\ere recO\ered b\ Ia\\ enforcement offlClal~. The source FFLs \vere within the same
counties as the recO\ery cities for O\er a qUZlI1er of thl' crime guns (26 percent), and another 9 percent
\\ere In adJacent counties in the same State or a neighbonng Slate.
Regional sources. In the follOWing 16 Cltll'~, the crime gum \\ere originally purchased in signifi·
canl numbers at FFLs in States in the region in "hlch the Clt\ is located: Atlanta, CA,' Baltimore,
\,10: '\C\I' }olk . .\T ,\lel11phis, TN; Sf. Lows, .\10: Cllicago. I L. ,Yew Orlealls, LA,' Dallas, TX; Phi/a·
aelpl11a. PA: Porrlalld, OR; Los Allgeles, C-L Tlicsoll. AI: ell/CIIII/ali, OH: Charlotte-Mecklellbllrg, NC;
Derm[{ . .\1/: and HashzllgtOll, DC.
'ational patterns. T\\"o large national pattern'> ha\e emerged. The most significant interstate
pattern IS a south-nonh pattern along the East Coast. With crime guns first purchased from FFLs
~~t~~l;o~th, ~n~ re.c~\ered b~,Ia\\ enforcement in Hashillgloll, DC; ~altinlO,.e, MD; Plziladelphi~,
. .
.\e\\ }olk . .\}. There IS also a central south-north pattern, With guns first sold by FFLs In
the South be10g reco\'ered 10 Memphis, T\', St. Lollis, AlO; and especially Chicago, IL.
Dep~lItment of the Trea"uI\ • BUIedu ot Alcohol. Tobacco and Firearm~
----..' I_JMi~he Youth Crime Gun Interdiction Initiative
Age of Crime Gun Possessors
Based on trace requests submitted January 1, 1999 to December 31, 1999
Number of Trace Reauest s - - -
2,000
----------
- - - ---._------
I
~
1,500
.
-
.--
-
Juveniles
Youth
Adults
1
J
-
~
1,000
600
1"
I',
~i
I:
500
~ ~ .
~.
200
o
10
..
-.:
15
20
25
. .'
'';
30
35
40
45
50
55
60
€
65
Age of Possessors
Bureau of Alcohol, Tobacco & Firearms, Crime Gun
An:::ll\lcic
Q"inch
70
75
80
__
1
The Youth Crime Gun Interdiction Initiative
Major Crime Gun Types by Possessor Age Group
Based on trace requests submitted January 1, 1999 to December 31, 1999
Percent
'0,' ' Pistol
S~miautomatic _
60 ..
------~---
I. . I Revolver
Rifle
D
Shotgun
40
.,.
"
",
'
',to;.
I
"',J,.'.
"
,
"
,
---
, ) .. f#,
20
;:1-,
~"
"
.. .' , \.'
(''''''
"
.
,
.',
, 'il}
.'-Iir.r'J
"
,j
!
",
,~-
, ~ 1-
,
,'<,:'.~:~
t., ..
1,'';
"
., ..'
...
~
"
"",.
:~.,
:,. . ~
o
'\
Juveniles
Youth
Adult
Age Unknown
All Ages
rhe Youth Crime Gun Interdiction Initiative (YCGII)
rop Ten Juvenile and Youth Crime Guns, 1999
"Follouing the Gun to Enforce Firearl1lS Laws"
These firearms were recovered from juveniles and youth by la\\'
enforcement in significant numbers (50 or more) in 38 cities participating
in the Youth Crime Gun Interdiction Initiative between January 1. 1999 and
December 31. 1999. They moved rapidly from the retail dealer to recoyery bX law
enforcement (median time-to-crime of 3 years or less). This combination of freqo.ent
recovery' and rapid time-to-crime is an indicator of criminal
intent or illegal diversion including firearms trafficking
1. Sturm Ruger & Co. Inc.
occuning subsequent to or associated with the retail
9mm Semiautomatic Pistol
purchase of the firearm.
2. Br.'co Arms
9mm Semiautomatic Pistol
4. Lorcin Engineering
9mm Semiautomatic
Pistol
3. Bn Co Arm~ .380
SemIautomatic PIstol
,.
.,
/
S. Hi-Point Firearms
9mm Semiautomatic Pistol
t>
8. Sturm Ruger & Co. Inc.
.45 Semiautomatic Pistol
GI()l~(JfllhH
-l()
SCmldlll' >111.11 II.
PI,-tol
7. Smith &.: Wesson
.40 Semiautomatic
Pistol
KL·I-TL'C CNC Industries. Inc.
LJIl1Il1
Semiautomatic Pistol
,\1a\erick Arms, Inc
12 GA Shotgun
Department of the Treasury • Bureau of Alcohol, Tobacco and Firearms
The Youth Crime Gun Interdiction Initiative
National Trafficking Patterns, 1999
Number of Recovered Crime Guns Traced to
Federal Firearms licensees in States Outside Local Region, for Each Recovery City
"'-
..£
11Jo\f7
"'N
WI
"'.' Portland
-.I'
WI
Mi~neapolls
'0
'"
,
o"enver
St. loull/
KS
,
II
Lasyeg,.,
,
NM
LiS Angeles
TX
DI"as
•
•
I,)
"' I
San Antonio Houston
(:t~t"
17 N lJIhh'! )
1.199
1.056
2.255
In-Slate
Out-Dr-State
Tolal
(;,~(., ,~ ~-11
5.422
3.646
9.068
(,I,rl"
~"&. '1\1'1
All Ages
•
f.
l'
~emp~
'T.\'.; \ \ 'l
.' \ .
Thcson
Adull
I'
WV
•
~,':
Juvenile
In-Slate
Out-or-State
Total
17 & under)
Youth
t:l~t"
UL241
39.797
Adult
\.
66.2
33.8
61.6
38.4
100.0
100.0
100.0
100.0
•
•
Tampa
•
South to Midwest
South to Northeast
All Ages
59.8
40.2
••
Bureau of Alcohol. Tobacco & Firearms. Crime Gun Analysis Branch
800 - 3000
~OO
- 799
200 - 399
tOO- 199
1 -99
Major Trafficking Patterns
----'
Gun_per
Recovery City
•
tnt'l)
46.8
53.2
011.
•
Atlanta"
ham
New Orleans
[--1
...altlmore
0
I Charlotte
24.504
15.29_~
,
Jwashlngton
m d
I
9.808
5.013
14.821
Lq!t" 2"- &
•
"k//·.
Blrml
~.
I
tIC
Percent
(~~l"
/>~r
~ .. \I Philadelphia
I.
j
Lou!
I.·J'
"''{~,.,
,R i'~
OK
P~oenlx
You! h
•
Boston
t\' '.-:--N~rk':'\
•C~.nd
/
, Clnelnn
'.'
",0
• San Jose
Ju\'cnile
.~,
I
l . ' Gaf'9'
Chicago
O!"aha
Oakland
Number
Detroit
IA
NE
Intrastate and Interstate Sources of Crime Guns
..~.
""
MIITukee
'-Iv
t>\.\\
Miami
~
!The Youth Crime Gun Interdiction Initiative
Participating Cities
r---
. ~*Sa~tt:'-~(r
/~,--)
!ortland, OR
/
\
\
.
(
{
I
:
I
,
i
'
)
I
I
I "
----j
'-I*
Oakla"d, CA
San Jose, CA
\ Salinas, CP-
New York,
'.
Denvrr/Aurora, CO
NY
Omaha, NE
*
I
!
.,'*
~*Phoe~ix,
/ *
- - - - ---
'Las Vegas, NV
I
1
'*Los r'geles. CA
~~
AZ
Tutson. AZ ,.--.---- .
.,J
*
* //
Dallas, TX
San Antonio, TX
r- -
I
I
~
Houston. TX
..
Bureau of Alcohol, Tobacco & Firearms, Crime Gun Analysis Branch
DEPARTMENT
OF
THE
TREASURY
NEWS
TREASURY
OFFICE OF PUBLIC AFFAIRS -1500 PENNSYLVANIA AVENUE, N,W .• WASHINGTON, D.C .• 20220 _ (202) 622-2960
~ARGOED
~ovember
UNTIL 2:30 P.M.
30, 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
lpproximately $22,000 million to refund $27,084 million of publicly held
;ecurities maturing December 7, 2000, and to pay down about $5,084 million.
In addition to the public holdings, Federal Reserve Banks for their own
.ccounts hold $13,285 million of the maturing bills, which may be refunded at
he highest discount rate of accepted competitive tenders. Amounts issued
o these accounts will be in addition to the offering amount.
The maturing bills held by the public include $6,973 million held
y Federal Reserve Banks as agents for foreign and international monetary
uthorities, which may be refunded within the offering amount at the highest
iscount rate of accepted competitive tenders. Additional amounts may be
ssued for such accounts if the aggregate amount of new bids exceeds the
ggregate amount of maturing bills.
TreasuryDirect customers requested that we reinvest their maturing hold19s of approximately $955 million into the 13-week bill and $1,133 million
lt~ the 26-week bill.
This offering of Treasury securities is governed by the terms and conLtions set forth in the Uniform Offering Circular for the Sale and Issue of
lrketable Book-Entry Treasury Bills, Notes, and Bonds (31 CFR Part 356, as
lended) .
Details about each of the new securities are given in the attached
fering highlights.
000
1054
tachment
r press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
HIGHLIGHTS OF TREASURY OFFERINGS OF BILLS
TO BE ISSUED DECEMBER 7, 2000
November 30, 2000
Offering Amount . . . . . . . . . . . . . . . . . . . . . . . . . $12,000 million
Description of Offering:
Term and type of security . . . . . . . . . . . . . . . 91-day bill
CUSIP number . . . . . . . . . . . . . . . . . . . . . . . . . . . . 912795 FW 6
Auction date ...... '" . . . . . . . . . . . . . . . . . . . December 4, 2000
Issue date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 7, 2000
Maturity date . . . . . . . . . . . . . . . . . . . . . . . . . . . March 8, 2001
Original issue date . . . . . . . . . . . . . . . . . . . . . September 7, 2000
Currently outstanding . . . . . . . . . . . . . . . . . . . $12,633 million
Minimum bid amount and multiples . . . . . . . . $1,000
$10,000 million
182-day bill
912795 GK 1
December 4, 2000
December 7, 2000
June 7, 2001
December 7, 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 standard time on auction day
Competitive tenders . . . . . . . . . . Prior to 1:00 p.m. eastern standard time on auction day
Payment Terms:
By charge to a funds account at a Federal Reserve Bank on issue date, or payment
of full par amount with tender.
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
IMMEDIATE RELEASE
)vember 30, 2000
CONTACT:
)R
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 14-DAY BILLS
14-Day Bill
December 01, 2000
December 15, 2000
912795KEO
Term:
Issue Date:
Maturity Date:
CUSIP Number:
6.45 %
High Rate:
Investment Rate 1/:
6.56 %
Price:
99.749
All noncompetitive and successful competitive bidders were awarded
!curities at the high rate.
Tenders at the high discount rate were
lotted 74%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
3
Accepted
Tendered
Tender Type
Competitive
Noncompetitive
$
67,780,000
TOTAL
$
67,780,000
o
$
36,032,900
$
36,032,900
o
Median rate
6.42 %: 50% of the amount of accepted competitive tenders
tendered at or below that rate.
Low rate
6.38 %:
5% of the amount
accepted competitive tenders was tendered at or below that rate.
i-to-Cover Ratio
=
67,780,000 / 36,032,900
= 1.88
Equivalent coupon-issue yield.
http://www.publicdebt.treas.gov
1055
DEPARTMENT
'IREASURY
OF
THE
TREASURY
NEWS
omCE OFPUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASIDNGTON, D.C. - 20220 - (202) 622-2960
FOR IMMEDIATE RELEASE
Text as Prepared for Delivery
December 1, 2000
TREASURY DEPUTY SECRETARY STUART E. EIZENSTAT
STATEMENT AT THE JOINT PRESS CONFERENCE WITH AUSTRIAN
AMBASSADOR ERNST SUCHARIPA
VIENNA, AUSTRIA
Before I begin, allow me to express my displeasure with remarks recently made by one of the
plaintiffs' attorneys participating in this process, Mr. Fagan. He incorrectly asserted that this process
had broken down and, as a result, had endangered the labor agreement we recently signed, and that is
categorically wrong. I unfortunately seem to spend every one of my press conferences starting by
correcting misstatements made by him.
I am pleased to report that this very day the United States and the Austrian Governments will
exchange diplomatic notes to bring into force the recently signed labor agreement concerning the
Austrian Reconciliation Fund. This is a historic achievement of which we shall all be proud. This will
lead to the establishment of the Fund and bring us one step closer to distributing the 6 billion
schillings to some 150,000 elderly survivors, most, by the way, non-Jewish. All plaintiffs' attorneys
who participated in the negotiations and signed the Joint Statement remain committed to dismissing
all of their Nazi-era labor claims against Austria and Austrian companies. That's what they signed,
that's what they agreed to, that's what they will do.
Since the labor issues have been resolved, and we anticipate that the labor claims will soon be
dismissed, we have focused our attention on Nazi-era property restitution. Let me give you an update
of where things stand with respect to property issues.
We had very good discussions over the past 24 hours with Chancellor Schuessel, with
Parliamentary President Fischer, with other Austrian officials, including Ambassador Sucharipa and
Ambassador Winkler, and with victims' representatives.
While we made some progress, much work remains to be done.
An initial proposal for compensation has been conveyed by the victims' representatives.
The victims' representatives made a reasonable opening offer, but as in any negotiation, their
offer is a starting point. It exceeds what Austria feels it should pay.
LS - 1056
r 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
My role in this matter, however, remains to facilitate a fair and expedited resolution of all
property issues. This will require flexibility on all sides.
It will also require that the Austrian Government act on its historical and moral
responsibilities, and that the Austrian private sector do its part.
It will also require that the victims' representatives engage
In
a reasonable process of
negotiation and show flexibility regarding their proposal.
The victims' representatives have made a strong case that there were indeed gaps and
deficiencies in prior Austrian restitution laws. While the Austrians disagree with some of the
contentions, all parties, including the Austrian Government, agree, for example, that liquidated or
destroyed properties were a category not generally covered by prior Austrian restitution and
compensation programs, and need to be addressed in considering a capped amount. With respect to
liquidated properties, some points were made as follows:
•
•
•
The 1938 Austrian business register valued Jewish-owned businesses that were liquidated or
destroyed completely at 321 million Reich Mark or 130 miIlion 1938 U.S. dollars;
Prior restitution laws provided no compensation;
In today's dollars, Jewish-owned businesses liquidated in 1938-1939 would be worth about
$1.3 billion. There were even more such businesses liquidated that were not registered, the
reason being that the Nazi laws required registration only of properties above a given value.
In addition, the victims' representatives made the following assertions:
•
•
•
•
The claimants had to reimburse the "Aryanizer" of property for that Aryanizer's purchase
price, even though the proceeds of the sale had been placed in blocked accounts never
accessible to the original owner and seller.
That amounts paid in "Flight and Discriminatory Taxes" (which were estimated in 1938 to be
328 Million Reich Mark, were often not deducted from purchase prices. The Austrian
Government has confirmed that this was often the case, that is, that they were not deducted and
that the purchaser trying to regain his or her own property had in many cases to repay the very
discriminatory taxes that they were charged.
Claimants often therefore could not afford to reimburse new owners·, some decided not even to
file and/or accepted very unfavorable settlements.
It was also asserted that huge German investments in Austria in war-related industries from
1938-45, partially funded by confiscated Jewish assets, were often converted into Austrian
government-controlled corporations and privatized after the War.
The Austrian negotiators for their part noted that, in their review of the historical record on
restitution and compensation, that they found fewer gaps and deficiencies than those cited by victims'
representatives.
One sho~ld balance this discussion with what Austria has done recently for victims:
2
•
•
In recent years, the Austrian Government provided $150 million to vIctIms of National
Socialist persecution through the Austrian National Fund, although this was not related to
property. It was an important humanitarian gesture.
The government recently agreed to provide nearly $400 million to former forced and slave
laborers.
However, these again were not for property restitution. The only payment thus far for property
restitution would be the $150 million advance payment for losses related to apartment and small
business leases, household property, and personal effects. I was very pleased to learn in my meetings
with the Chancellor and with the President of the Parliament Mr. Fischer that there seems to be a
consensus for the passage of the legislation providing for $150 million for losses related to
apartments, small business leases, household property and personal effects by the end of January.
This, on the other hand, covers only one category of property.
We all recognize that whatever settlement agreement we will finally reach, that that amount
will only be a percentage of the total uncompensated loss suffered by victims of the Nazi-era on the
present-day territory of Austria.
It is important that the Austrian side make a reasonable counter-proposal at our next
negotiating session on December 21 so that we can complete these negotiations early next year, and,
again, that both sides show flexibility. Thank you very much.
-30-
3
DEPARTMENT
OF
THE
TREASURY
NEWS
omCE OF PUBliC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASlUNGTON, D.C.• 20220. (202) 622-2960
FOR IMMEDIATE RELEASE
Text as Prepared for Delivery
December 1, 2000
TREASURY DEPUTY SECRETARY STUART E.EIZENSTA T
REMARKS AT THE EMBASSY OF ROMANIA
WASHINGTON, D.C.
Ambassador Geoana, Mrs. Geoana, distinguished guests - it is a pleasure for me
to be here on the occasion of Romania's National Day celebration.
It was 82 years ago today that Romania achieved unity and independence in
keeping with the principles of national self-determination enunciated by our President
Woodrow Wilson, whose home is just a few blocks from this Embassy. The people of
your country, Mr. Ambassador, have a long and proud history in the heart of Southeast
Europe. They live in one of the most remarkably beautiful regions in the world. In joining
you on this happy occasion, we express the fond hope that your nation and its people will
have a bright future in the new Millennium.
We in the United States are proud of the contribution Americans of Romanian
descent have made to our country, and we appreciate the work your Embassy is doing to
facilitate increased investment in Romania by them and by others.
Today marks the tenth anniversary of the beginning of Romania's transition to
democracy and a market economy. We applaud the progress you have made in such a
short time, and hope to work with you to complete your transition to full integration into
the Euro-Atlantic family. I am glad to have the opportunity to salute Romania as a
valued and important friend.
We are joined together by a common commitment to democratic institutions. It
is a tribute to Romania's dedication to democracy that the recent elections were judged to
be free, fair and transparent. This is not a casual accomplishment, and should be noted
with pride by all Romanians.
The elections have captured everyone's attention, and we will watch with interest
to see the results of the second round of presidential elections on December 10. While
LS - 1057
r;'or press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
·U.S. Government Printing Offrce 1998 - 619·559
the path of reform is never an easy one, Romania has made real progress and is on the
way towards integration with Europe as the start of negotiations with the EU
demonstrate. Romania's friends want to see them succeed in the road toward full
integration in Euro-AtIantic institutions. Ultimately, success in these endeavors will
depend on the Romanian people and the leaders they choose.
The United States hopes to continue its close cooperation with the new Romanian
government. Our ability to do so will depend on the degree to which Romania's
leadership continues to share our commitment to common Euro-AtIantic standards of
democracy, respect for the rule of law, and protection of human rights, including the
rights of minorities.
In the coming year, the United States also looks forward to working with
Romania in a variety of different capacities:
•
First, as·a partner in building democracy and regional cooperation in Southeast
Europe. Having achieved much this year, we need to strive together to further the
accomplishments that have been made to date;
•
Second, as Chair in Office of the OSCE. Chairing the OSCE will offer Romania
major challenges and opportunities - especially the opportunity to help complete our
vision of Europe -- whole, free and at peace. We want to work together to achieve
progress in building democratic institutions; to develop greater respect for the rule of
law; and to protect human rights, including the rights of minorities.
•
Third, as a fellow member in the Partnership for Peace program, where together we
seek to improve cooperation and strengthen the foundations of peace and stability in
Europe.
We will do all we can to support Romania as it takes further steps on the path of
democratic and economic transition. Let us pledge to work together to further our goals
and achieve true progress in the coming years.
-30-
2
DEPARTl\,'lENT
OF
THE
TREASURY
NEWS
omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W. • WASlDNGTON, D.C .• 20220. (202) 622-2960
EMBARGOED UNTIL 12 P.M. EST
Text as Prepared for Delivery
December 4, 2000
"BUILDING THE RIGHT KIND OF GLOBAL ECONOMY"
REMARKS BY TREASURY SECRETARY LAWRENCE H. SUMMERS
OBERLIN COLLEGE
OBERLIN, OHIO
I wanted to speak today about the new global economy, what is new about it, and what
are some of the key global policy challenges that it poses for the years ahead.
I.
What's New About the New Economy?
In thinking about what is new about the new economy, there is one experience that I
always come back to. Several years ago a Treasury delegation was in Africa. We went to visit a
small village about two hours outside of Abdijan, in Cote d'Ivoire, in a kayak, where I was able
on behalf of the US government to turn a switch to provide for the first clean water well that that
village had ever had. Afterwards, we were going back on the kayak, and somebody handed me a
cell phone. It was Bob Rubin, with a question for me about the IRS budget. We spoke for a few
minutes, and no one thought anything of it.
That was in 1997. And afterwards I remembered that in 1988, I was in the back of a car
in Chicago that had a telephone in it. It was a sufficiently remarkable event that I called my wife
to tell her I was in a car with a telephone. That was not an unreasonable reaction to have in
1988. Nine years from the backseat ofa car in Chicago to a canoe two hours outside Abidjan.
Three things come together in that story:
First, new technology and the opportunities that they create.
The same transforming power of technology we saw on that canoe was at work in
Mozambique, when we met a businessman and asked him how he was doing. He said: "OK, but
I'm worried about competition." Then we asked him what he did. He was the country's only
Internet provider. But he was worried about new competition. Modern advances in information
LS - 1058
r press rele~es, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
technology, transportation and communications are taking us to a post-industrial age, with
profound implications for economies and societies.
Secol1d, the rise of markets.
It was not a public telecommunications company that made that phone call possible. It
cannot be an accident that Soviet-style communism, planning ministries in the developing world
and large US corporations run by command and control all ran into a brick wall in the same
decade and had ·to be restructured. Information technology probably has something to do with it.
The breadth of opportunities in the world economy today probably has something to do with it.
But it surely means a shift in the balance of economic advantage in favor of systems in which
economic power and opportunities are more decentralized - and the skills and ideas of the
individual are given greater weight. At the level of individual businesses and of national
economies, flexibility is winning out over rigid controls. And the capacity to respond to change
is winning out over the capacity to dictate it.
7hird, global intet:.rration.
These trends come together in the third and perhaps most dramatic change: the
emergence of a global economy that is worthy of the name. When history books are written 200
yeafs from now about the last two decades of the 20th century, I am convinced that the end of the
Cold War will be the second story. The first story will be about the appearance of emerging
markets - about economies where, taken together, billions of people live, moving toward the
market and seeing rapid growth in incomes. For the first time in human history, living standards
for huge populations have quadrupled or more in a single generation.
This is an event, I would argue, whose importance in economic history can be compared
only to the Indu.strial Revolution and the Renaissance. For business, it means commercial
opportunity on a huge scale. For governments it means managing in a single decade changes in
the balance of economic power that might once have taken half a century. For the world's people
- it is driving improvements in health, literacy, and nutrition that were unthinkable even two
decades ago.
II.
The Case for Successful Global Economic Integration
The case for supporting the emergence of this new kind of global economy rests on three
pillars.
First, there is a compelling economic case. That case emphasizes that no country has
achieved significant and lasting reductions in poverty without rapid economic growth; and no
country has grown rapidly in the past 50 years without substantial growth in exports, supported
by integration with the global economy and a move to accept the norms of the global
marketplace
2
That is the lesson of the fast-growing Asian economies, where even after the recent
crises, the number of Asia's people living on less than a dollar a day is 40 percent, or 175
million, lower than it was in 1990. By contrast, in Sub-Saharan Africa, average income per head
is today somewhat lower than it was in 1970. And the number of people living in such extreme
poverty has risen by 20 percent, or nearly 50 million since 1990. Globally the message has been
repeated again and again. Successful national economic development depends on the promotion
of open and integrated markets, and the institutions and policies that markets need to function
well.
Second, there is a strong national security case for global economic integration, which
emphasizes the strong historical correlation between political and social conflicts, on the one
hand, and economic failures, on the other. Many of the regions in the world that today pose the
greatest problems for the US and the broader international community - be it the conflict in
Eritrea and Ethiopia or the collapse of order in Sierra Leone - have owed a great deal to the
failure of governments to achieve lasting economic progress or stability. Throughout history,
economic insecurity has helped fueled political insecurity, and economic crises have provided
the cover of chaos that extremists need to build their support.
Third, there is a broader humanitarian and moral case for supporting integration, because
countries that develop economically and become more closely integrated with the rest of the
world community tend also to progress on other dimensions of moral importance to the US: be it
the promotion of democratic institutions; the protection of the environment; the emancipation of
women; or support for core labor standards.
Despite all of these arguments, many of those who are the primary carriers of moral
energy in our society - be it the students of our finest universities, those who represent American
workers, or others who stand for the highest moral ideals - have tended to raised serious moral
objections to the process of globalization.
What are those moral objections? There is an international strand and a domestic strand.
The international argument against globalization emphasizes concerns about the exploitation of
foreign workers by global corporations. The more domestic argument emphasizes the economic
and social costs of greater global competition, including the costs to families and communities of
plant closures a!1d corporate restructuring.
Let me comment briefly on each of these objections.
With respect to the questions of exploitation, no one can fail to be appalled by the
working conditions in many a developing country sweatshop or maquiladora. But such
observations only underscore that we are dealing with countries that are extremely poor and
under-developed. They do not tell us very much about the alternatives that such workers would
otherwise face, or the long-term economic and broader impact for the country of becoming part
of the global production chain
The reality of a world in which 1.3 billion people live on less than a dollar is that the
option of working in a sweatshop will often be an improvement on the status quo. And the
3
choice, where there is a choice, will often be between very low wages and no regular pay at all.
In fact, across the developing countries, workers for global exporting companies tend also to be
among the best paid. It is no accident that every country that has achieved very rapid economic
development in the modern age has done so by producing cheap manufacturing exports for the
world market.
With regard to domestic fears of integration, I have tried to reflect on why - during a
period when jobs have been created at record rates, and real wages for working families have
begun to rise - openness and integration continue to attract such limited support.
One important reason is the strong natural tendency that we al1 have, to internalize good news
and externalize bad news.
•
Think about how many people working at a not so successful company with out-dated
technology who lose their job blame it on international trade. Now ask yourself how
many people you have ever met who said, "You know, I was doing an OK job for my
company, but labor was short and there was a surge of export demand, and so I got a
promotion. "
•
We can often see the same dynamic operating higher up the corporate ladder. Think how
often it tS that CEOs talk about the bad things that are happening to their industry because
of trade. Now think about how often they cause a splash talking about the revenue growth
that has come from more open markets overseas or lower cost inputs from abroad. It is
the nature of the trading process that when there are costs, those costs are apparent and
attributed to trade, often much more than is actual1y the case.
•
It is equally true that the benefits of trade are rarely perceived as such. How many people,
returning from their Christmas shopping this year, will be remarking on the fact that they
can buy twice as many toys for their kids than they used to, because of our increased
trade links with very poor countries who can make these things more cheaply? How
many people think about the fact that their children have not had to fight a major war in
this generation, and say "that is why it is so important for us to give strong support for a
new global trade round?"
But to say that globalization is the right way forward, and that the higher morality is on
the side of giving people alternatives rather than stopping them from having those alternativesto say all this is not to say that unfettered globalization is the best way forward.
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
unregulated global capitalism, on the one hand, and a return to autarky, on the other. In many
v.:ays th~t is a national challenge for individual governments. But increasingly, building the right
kmd ofmtegrated 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.
4
Here I would highlight two key priorities:
First, support for the development of a rule-based global ~ystem.
We discovered in the United States in the 19th 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.
This will have a number of dimensions.
•
It will partly be a matter of building the right kind of international financial architecture:
one that emphasizes transparency, both nationally and internationally; one that is less
vulnerable to crises, more effective at responding to crises; and better at protecting the
most vulnerable from their effects.
•
It will partly be a matter of developing the right kind of World Trade Organization: one
that supports closer economic integration but also enables greater public scrutiny of its
activities, and gives a fair hearing to the concerns ofIabor and the environment.
•
And it will partly be a matter of developing new forms of international cooperation in
response to a growing class of trans-border challenges: be it global warming,
international financial crime, or the creation of a global regime for e-commerce.
Second, development assistance for the very poorest.
The overriding global humanitarian imperative today has to be to the provision of more
effective support for the poorest countries. And this year one particularly vital aspect of this
work this year has been obtaining funding for and implementing an enhanced debt relief
initiative for Highly Indebted Poor Countries (HIPC).
That initiative, whose worldwide supporters ranged from the Pope to Bono, is now
moving forward. And I have seen for myself that it is making a difference. For example:
•
In Tanzania, where I visited this year, which will save about $100 million per year in debt
service and will use RIPe debt relief in part to conduct a nationwide campaign to fight
the spread ofHIY/AIDS and to immunize children against infectious diseases.
•
And in Mozambique, which has an annual per capita GDP of barely $200 and an
illiteracy rate of 60 percent, and where recent floods have caused hundreds of millions of
dollars in damage. Despite these obstacles, the Government of Mozambique has designed
an impressive poverty reduction strategy centered around higher spending on health and
5
education, which, in turn, will be funded by the over $100 million in annual debt savings
that it has received from HIPe.
As we go forward we must work to ensure, not only with regard to HIPC but all global
development assistance efforts, that the renewed global focus on the world's poor has an impact
well beyond the accident of the calendar that has helped give it such force. In this context, the
President has worked to draw particular attention and support to the need for global efforts public and private - to support the development of vaccines to eradicate mass killers such as
AIDS, malaria and tuberculosis.
No one can visit, as I did earlier this year, an HIY/ AIDS clinic in Soweto and not come
away profoundl y affected by the enormity of the health crisis that is under way in Mrica today.
AIDS killed ten times more Africans last year than all of the region's military conflicts
combined, yet it is estimated that 90 percent of the illness and death that HIY / AIDS will bring to
Africa are still to come. And we should not forget that this comes on top of the impact of other
infectious diseases. Even before AIDS, it has been estimated that malaria alone reduced the
growth rate of 31 countries in Africa by enough to make their GNP nearly 20 percent lower
today than it would otherwise be.
Finding a cure to these diseases is one of the most cost-effective ways there is to improve
the well being and productivity of the poorest countries. It cannot be right that of the 1233 new
medicines that have been patented in recent years, only 13, or 1 percent, were for the tropical
diseases that afflict 90 percent of the world's population - and that of those 13 new products, only
4 came as a consequence of research projects that were aimed at curing humans.
That is why there has been a mobilization of governments, of foundations, of the
pharmaceutical industry to bring a new focus to this vital issue. We have the technology to
achieve it. We have the beginnings of historic public-private cooperation to bring that technology
to bear on the problem. All that is lacking is the will and the financial commitment. In this area
we can and must do better in the 21 ,1 century than we did in the 20 th
III.
Concluding Remarks: the Perils of Disengagement
Let me end by reiterating one fundamental point: the crucial importance of maintaining
domestic support in the US for successful global economic integration. I am convinced that the
greatest threats to our economic security today may lie within our country, in the form of
economic insecurity that leads some to reject global integration. This is tragic, because a strongly
integrated global economy provides the best, and the most cost-effective, forward defense of
United States core interests that there is.
Once again, a world of prospering, ever-more integrating nations is much more likely to
be a world at peace; a world in which democracy flourishes; and a world that respects the things
we care about, from environmental protection to the dignity of workers and all mankind. For all
of these reasons, the benefits to the United States from international integration with the rest of
the world are greater today than they have ever been. And with so much to lose the risks of
disengagement are surely larger than they have ever been.
'
6
In a democracy, these are choices that we as a people will make. But all of the world1s
people have a stake in our making the right ones. Thank you.
-30-
7
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
R IMMEDIATE RELEASE
cember 04, 2000
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
December 07, 2000
March 08, 2001
912795FW6
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
;urities at the high rate.
Tenders at the high discount rate were
.otted 46%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
$
Competitive
Noncompetitive
23,763,201
1,364,323
2,775,000
2,775,000
27,902,524
12,000,063
6,755,521
6,755,521
Foreign Official Refunded
SUBTOTAL
7,860,740
1,364,323
9,225,063 2/
25,127,524
PUBLIC SUBTOTAL
Federal Reserve
Foreign Official Add-On
TOTAL
$
o
o
$
34,658,045
$
18,755,584
Median rate
5.945%: 50% of the amount of accepted competitive tenders
tendered at or below that rate.
Low rate
5.930%:
5% of the amount
,ccepted competitive tenders was tendered at or below that rate.
·to-Cover Ratio
=
25,127,524 / 9,225,063
=
2.72
lquivalent coupon-issue yield.
,wards to TREASURY DIRECT = $1,072,328,000
http://www .publicdebt. treas.gov
-1059
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:
IR IMMEDIATE RELEASE
Office of Financing
202-691-3550
cember 04, 2000
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182 - Day Bi 11
December 07, 2000
June 07, 2001
912795GKI
Term:
Issue Date:
Maturity Date:
CUSIP Number:
5.840%
High Rate:
Investment Rate 1/:
Price:
6.100%
97.048
All noncompetitive and successful competitive bidders were awarded
:urities at the high rate.
Tenders at the high discount rate were
Lotted 72%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
$
Competitive
Noncompetitive
19,446,617
1,545,597
2,215,000
2,215,000
23,207,214
10,000,887
5,384,615
5,384,615
Foreign Official Refunded
SUBTOTAL
6,240,290
1,545,597
7,785,887 2/
20,992,214
PUBLIC SUBTOTAL
Federal Reserve
Foreign Official Add-On
o
$
TOTAL
$
28,591,829
°
$
15,385,502
Median rate
5.830%: 50% of the amount of accepted competitive tenders
tendered at or below that rate. Low rate
5.800%:
5% of the amount
iccepted competitive tenders was tendered at or below that rate.
·to-Cover Ratio
=
20,992,214 / 7,785,887
=
2.70
;quivalent coupon-issue yield .
.wards to TREASURY DIRECT = $1,214,243,000
http://www.publicdebt.treas.gov
-1060
DEPARTlVIENT
OF
THE
TREASURY
NEWS
'IREASURY
omCE OF PUBliC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W. • WASlflNGTON, D.C.• 20220 • (202) 622·2960
u.s. International Reserve Position
12/5/00
The Treasury Department today released U.S. reserve assets data for the week ending December 1,2000.
As indicated in this table, U.S. reserve assets totaled $65,628 million as of December 1, 2000, up from
564,860 million as of November 24, 2000.
I
us millions)
November 24, 2000
Official U.S. Reserve Assets
64,967
TOTAL
Foreign Currency Reserves
r
1
a. Securities
December
Euro
-1,867
Yen
')8-11
1~QOO
65,678
TOTAL
Euro
1-1.708
5,105
Yen
TOTAL
9,362
o
Of vvhlen, issuer headquartered in the US.
14,967
o
b. Total deposits with:
8.283
b.i. Other central banks and BIS
b,ii. Banks headquartered in the U.S.
7089
15,373
8,670
7,104
0
15,77-1
0
b.ii, Of 'NhICh, banks located abroad
0
G
b.iii. Banks headquartered outside the U.S.
0
0
0
0
13,-176
13,50~
10,365
70,387
11,046
11,046
0
IJ
b.lil, Of which, banks located in the U.S.
MF Reserve Position
2
ipecial Drawing Rights (SDRs)
,old Stock
3
Ither Reserve Assets
2
Includes holdings of the Treasury's Exchange Stabilization Fund (ESF) and the Federal Reserve's System Open Market Account
)MA), valued at current market exchange rates. Foreign currency holdings listed as securities reflect marked-to-market values, and
losits reflect carrying values.
The items, "2. IMF Reserve Position" and "3. Special Drawing Rights (SDRs)," are based on data provided by the IMF and are valued in
ar terms at the official SDRIdoliar exchange rate for the reporting date. The IMF data for November 24 are final. The entries in the table
ve for December 1 (shown in italics) reflect any necessary adjustments, including revaluation, by the U.S. Treasury to the prior week's IMF
3.
30ld stock is valued monthly at $42.2221 per fine troy ounce. Values shown are as of September 30, 2000. The August 31,2000 value
$11,046 million,
:-1061
u.s. International Reserve Position (cont'd)
Predetermined Short-Term Drains on Foreign Currency Assets
November 24, 2000
Foreign currency loans and securities
December 1, 2000
o
o
o
o
o
o
o
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
Other
o
. Contingent Short-Term Net Drains on Foreign Currency Assets
December 1, 2000
November 24, 2000
Contingent liabilities in foreign currency
o
o
o
o
o
o
o
o
.a. Collateral guarantees on debt due within 1 year
.b. Other contingent liabilities
Foreign currency securities with embedded options
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.
\ggregate short and long positions of options in foreign
:urrencies vis-a.-vis the U.S. dollar
I.a. Short positions
4.a.1. Bought puts
4.a.2. Written calls
b. Long positions
4.b.1. Bought calls
4.b.2. Written puts
. ,
D 1: !' :.\ R T. :"j h
~
•
••
..
l~
f
-
0 I,'
~..
-
-.
'J H E T REA S
~
•
.
-
Ii R Y
;e.
••
NEWS
TREASURY
OFFICE OF PUBLIC AFFAIRS elS00 PENNSYLVANlA AVENUE, N.W. e WASHINGTON. D.C •• 10120. (102) 622·2960
BARGOED UNTIL 9: 00 A.M.
eember 6, 2000
PUBLIC CONTACT:
MEDIA CONTACT:
Office of Financing
202-691-3550
Una Gallagher
202-622-2960
TREASURY ANNOUNCES DEBT BUYBACK OPERATION
On December 7, 2000, the Treasury will buy back up to $1,250 million par
its oub-c.ancUng issues that mature between February 2015 and February 2019.
~asury reserves the r.ight to accept less than the announced amount.
This debt buyback
(redemp~ion)
operation will be conducted by Treasury's
seal Agent, the Federal Reserve Bank of New York, using its Open Market
2rations system. Only institutions that' the Fed.eral Reserve Bank of New
~k has approved to conduct Open Market transactions may submi t. offers on
wf
of themselves and their Customers. Offers at. the h.ighest accepteCt
may be accepted on a proratad basis, rounded up
the next $100,000. As a result. of this rOWlding, the Trea.sury may buy
:11: an amount sli.ghtly larger than the one announced above.
Lee for a particular issue
This debt buyback operation i.s governed by the terms and conditions set
~th in 31
Part 375 and thi.s announc:emen t .
eFR
The dabt buyback operation regulations are available on the Bureau of
Public Oebt1s website at www.publicdebt.t.reas.gov.
Details abou~ the ope~&~on
the attached highligbts.
&n~
each of the eliqible issues are given
000
achment
1062
''tess '~JeQses. speeches, public schedules IlIJd official biographies, call our 24-hour fax li"e
41
(202) 622-20~O
HIGHLIGHTS OF TREASURY DEBT BUYBACK OPERATION
Dec~r
6, 2000
Par amount to be bought back ... Up to $1,250 Jlrillion
Operation date . . . . . . . . . . . . . . . . . December 7,2000
Operation close tiJae . . . . . . . . . , .11:00 a.m.. eastern standard time
Settlement date . . . . . . . . . . . . . . . . December 11,2000
Minimum par offer amount . . . . . . $100,000
Multiples of par . . . . . . . . . . . . . . $100,000
Format for offers . . . . . Expressed in terms of price per $100 of par with
three dec.ima~s. '!'he first two decimals represent
fractional 32nd.s of a dollar.
The third decimal
represents eighths of a 32 nc of a do.llar, and must
be a 0, 2, 4, or 6.
Delivery ~nstruct~ons .......... ABA Number 021001208 FRS NYC/COST
Treasury issues
Coupon
Rate (%')
11.250
10.625
9.875
9.250
7.250
7.S00
9.750
8.875
9.125
9.000
8.875
elig~le
Maturl.ty
Date
02/15/2015
08/15/2015
11/15/2015
02/15/2016
05/15/2016
11/15/2016
I 05/15/2017
08/15/2017
05/15/2018
11/15/2018
02/15/2019
for debt buyback operation (in millions):
CUSIP
Number
912810 DP 0
912810 DS 4
912810 DT 2
912810 DV 7
912810 DW 5
912810 DX :3
912810 DY 1
912810 DZ 8
912810 £A2
912810 EB 0
912810 EC 8
Total
Par Amount
Outstandinq*
11,804
5,441
5,926
6,813
18,824
18,824
16,967
13,132
7,616
7,699
17,061
130,097
Par Amount
Privately
Held*
9,958
4,274
4,919
5,776
17,724
17,199
14,212
11,074
6,377
6,921
14,906
113,340
ParAmount
. Held. as
STRIPS*"
5,583
1,578
2,656
606
702
1,288
5,852
2,642
4,214
4,662
5,946
35,729
Par amounts are a~ of December 5, 2000.
** Par amounts are as of December 4, 2000.
The difference between the par amount outstanding and the par amount
privately beld is the par amount of tho$e issues held by the Federal
Reserve system.
DEPARTMENT
OF
THE
TREASURY
TREASURY
NEWS
omCE OF PUBliC AFFAIRS -1500 PENNSYLVANIA AVENUE. N.W.• WASHINGTON, D.C. _ 20220 _ (202) 622-2960
EMBARGOED UNTIL 5 P.M. EST
Text as Prepared for Delivery
December 6, 2000
TREASURY SECRETARY LAWRENCE H. SUMMERS
REMARKS TO THE HAAS SCHOOL OF BUSINESS
UNIVERSITY OF CALIFORNIA,
BERKELEY, CALIFORNIA.
Thank you. It is an honor to be here. What I wanted to speak about today was the
new economy, what is new about it, and maybe not so new about it, and the crucial public
policy challenges it poses for the years ahead.
I.
What's New About the New Economy?
These are revolutionary times. It is inconceivable that anyone running for
President in 1992 thought that they would ever need to have a cloning policy, an internet
privacy policy, an approach to managing domain names, or many of the other public
policy ~hallenges that we have faced over the past eight years. We can only begin to
know the full extent of the policy challenges that technology will put before us in the
years ahead.
The new economy is about technology and innovation. It is about the power of
markets; the fact that all over the world, countries have been reforming their economies
and moving to a market-based system. And it's about global integration: the advent of the
emerging market economies, and with that the beginnings of a global economy worthy of
the name.
These basic elements -- new technology and knowledge, markets, and integration
-- are changing our economy into one in which goods are more valued for the knowledge
that is embodied in them than for their physical weight. And that, in tum, is changing our
conventional concepts in economics.
Why? Because it is a particular characteristic of knowledge-based goods that my
consumption of it does not necessarily detract from your consumption of it. IfI am
wearing a shoe, you cannot be wearing my shoe. But ifI am informed, ifhave access to
LS - 1063
~press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
·u.s. Government Pnntloq Office.
1998 - 619-559
software, you can also have access to that software. Thomas Jefferson put it less
prosaically: IIHe 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 the benefits of
goods to consumers will rise with the number of goods already being used. A lowly fax
machine probably has as its highest and best use, serving as a doorstop. But a hundred
thousand fax machines make ten billion possible connections. With these kinds of
"network effects II , the number of connections that are possible rises not proportionately
with the number that are connected, but by the square of that number.
This greater salience of knowledge, of technology, of low marginal costs, has
some important implications for business strategy and the functioning of the economy as
a whole.
Most notably, I suspect we will see more of that phenomenon that engineers call
positive feedback, philosophers call self-fulfilling prophecy, and others call snowball
effects.
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.
t
Another way to draw the distinction would be to say that the old economy was a
Newtonian system of opposing forces, in which disequilibria of demand and supply
arose, only to be equilibrated by adjusting prices; whereas the new economy is more
Darwinian, with the fittest surviving, and, as modern Darwinians have come to
understand, accidents of history casting long and consequential shadows.
II.
Implications for US Economic Performance
These new economy phenomena have very much been a feature of our own
economy in,recent years, which has benefited from what Vice-President Gore has called
the information-technology supply shock.
Consider:
•
In the 1970s we saw dramatic increases in the price of oil, one crucial input that
flowed through many other sectors of the economy, and what followed was a quite
2
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.
Just as the supply shock from oil in the 1970s turned out to have much worse
consequences for actual economic performance than were easily tracked by conventional
economic models, so too it seems that the positive impact of this information technology
shock has been rather larger than conventional models have been able to account for.
No one can say precisely how long this process will continue. But it is likely that
there are potentially substantial benefits still to come. And it is a feature of exponential
growth that each year's growth has a rising absolute impact. Go from fifty million
Internet users to a hundred million users, that is fifty million more users. Enjoy the same
rate of growth again, and you have an extra hundred million users. So far, in the United
States at least, it appears that the effect of a larger base has been greater than any slowing
in percentage growth, which means that the impact of information technology on the
economy has continued to increase.
ID.
Five Core Policy Priorities for a New Economy
Once again, we cannot know how long this favorable dynamic will continue. But
we do know it provides a remarkable moment of opportunity for us as nation. The critical
question is how we can be,')t take advantage of this moment.
Here let me highlight five crucial priorities.
First, strong fiscal policies to crowd in investment, rather than crowding it out.
Ten years ago, we had an economy that appeared to be caught in a vicious cycle
of high deficits, rising debt, high interest rates, slowing growth, lower tax collections,
higher deficits, and around and around again. Somehow the policy changes brought
about in the early nineties, particularly in 1993, moved us over a kind oftipping point,
where that vicious cycle gave way to a virtuous circle; of rising surpluses, diminishing
debt, lower interest rates, more growth, rising revenues, and around and around again. It
is that change from vicious cycle to virtuous circle that created room for very high levels
of private investment that embodied all this technological change.
This fact has important implications for policy today. For, in an earlier era, when
there were ~ewer profitable investment opportunities, for a large share of the nation's
savings to end up as government borrowing rather than private investment, was maybe
3
less of a problem. But today, when the investment potential is so much greater, the
benefits of increased savings, and reduced government debt will be that much greater.
Conversely, the implications for our long-term national wealth of returning to large-scale
deficits might be that much more severe.
That is way it is an overwhelming imperative that as we make our national
economic choices that we not take for granted our current prosperity or our current
projections, and that we not take steps that would diminish the very substantial room for
private investment that our budget surpluses are now creating.
Second. major investments in human capital and education..
Ifinvestments in factories were the most important investments in an industrial
age, surely the most important investments in an information age are in investments in
education. Few economic trends in the past twenty years have been as pronounced as the
sharp increase in the market return to additional education -- and the widening
differential between those with more education and those with less.
There is much that can be said about the improvement in education that is
necessary in the United States today -- and much that we do not know about how to
improve quality, about how to set standards, provide for choices, and optimize learning.
But there are some things we do know
We do know that in the richest, most powerful country there has ever been,
children in public schools should not have to go to class in renovated closets. There
should not be kids in the richest country there has ever been who start the school day at
four in the afternoon because the school works on three shifts due to overcrowding. There
should not be any school cafeteria that begins to serve lunch at 9:45 in the morning so
that it can accommodate all the traffic.
There are so many stories like these ones. And they stem from problems that we
know how to solve. The right allocation of federal resources, through the right
combination of tax credits, through the right combination of appropriations can give
every kid a classroom that he can be proud of If we want our kids to take their education
seriously, we can take their education seriously too by providing the right kind of
facilities. And the same goes for making teaching a valued and honored profession at a
time when so many of our teachers are going to be coming up for retirement during the
next ten years.
Third, making markets as large as possible.
A positive feedback economy, where there are very high fixed costs to begin with
and very low marginal costs after that, is one in which traditional conceptions of the
relationship between supply and price are turned on their head. That provides a powerful
"new economy" rationale for governments to seek to make markets as large as possible.
4
In the text book diagram, the supply curve slopes upward. But orphan drugs actually cost
much more than drugs than are very widely used. And best sellers cost much less than
academic monographs. Why? Because of more room to spread those fixed costs,
something that comes from larger markets.
How can public policy influence the effective size of such markets? The single
most important step it can take is to open to the global economy. Indeed, the years ahead
I suspect that economists will conclude that the "new economy" benefits of increased
international trade -- the benefits that come from the spreading of fixed costs and greater
product differentiation -- are larger than the traditional "textbook" benefits of trade,
related to the exploitation of comparative advantage. We may also come to understand
that imports as well as exports are helpful in the global economy, and that in many ways
imports have been the safety valve on a high-pressure U.S. economy in recent years,
preventing supply bottlenecks from building up and helping to keep inflation down.
But expanding markets isn't just about the global economy and opening to the rest
of the world. It is also about expanding the scale and potential to take advantage of
efficiency in our markets here in the US. That is why deregulation in key sectors of the
economy -- and particularly key network sectors such as telecommunications and the
financial sector has been such important steps. And certainly, removing barriers that
artificially constrict the size of markets needs to continue to be an important agenda item
in the years ahead.
Fourth, effective investments in the production of hlOwledge.
We know that markets and the spur of competition are the best producers of
applied knowledge. At the same time, the mo~t 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, there is a very strong case for arguing that the most productive
thing that happened was the development in pure mathematics of the concept of the
square root of negative one, which set the stage for Maxwell's equations, which set the
stage for hamasing electricity and magnetism and creating radio. That is one of hundreds
if examples, demonstrating that the production of new knowledge has benefits that go far
beyond anything that's envisioned at the time that the new knowledge is produced.
To take another example, the techniques that keep your credit card number
confidential and private when you buy a book from amazon-dot-com are derived from
research that was in the abstract part of pure mathematics fifteen years ago. And what
can be said about mathematics, can be said about many other fields.
So, a central priority is to recognize that we as a country need to invest
adequately-and that means invest much more in the production of basic knowledge in
the years ahead.
5
Fifth, making sure that every American is included
It has traditionally been a moral priority to work to include every American in our
prosperity - 'and to make sure that no one should be left behind. But today it is not only a
moral issue. It is also an economic issue; because the strength of our economy has created
a situation where we have jobs looking for people as much as people looking for jobs.
My family and I were at a baseball game a few months ago. A plane flew over the
packed stadium with a message, and I assumed that it would be trying to sell some kind
of car or trying to sell something. What the message actually did was announce an
upcoming job fair on behalf of a number of companies, We live in a time when
companies are paying large amounts of money to fly planes over stadiums, telling people
about jobs. That does not happen too frequently in modern economies, and it underscores
that in this kind of high-pressure economy, a crucial potential bottleneck is shortages of
appropriately skilled people.
All of this means that what once would have been considered social policies are
now also macro-economic policies: that is about effective education policies; it is about
policies that move people effectively trom welfare to work are today; it is about working
to create family friendly workplaces so that parents can raise their kids and work as welL
And it is about creating incentives to target demand and investment to the parts of our
national economy, such as our inner cities, where there still are large pools of untapped
talent, and people are still looking for jobs.
IV.
Concluding Remarks
These are historic times for our economy as wel1 as our country. We probably in
the United States have not had as strong an economy over the last century and we
probably have not ever been as strong relative to the rest of the world with the possible
exception of the period right after the second world war. But if hi story teaches us
anything it is that good times do not last automatically and that the world does not stand
stilL That makes it especially important that we do the things necessary to maintain these
good times and use them to build a stronger future.
That is why I've emphasized the importance of the national choices that we will
make with respect maintaining our surplus, with respect to investing in our people, with
respect to integrating with the rest of the world, with respect to producing knowledge,
and with respect to including everyone. Ifwe can do those things right, a great deal else
will follow, Thank you very much.
-30-
6
DEPARTMENT
OF
THE
TREASURY
NEWS
TREASURY
OFFICE OF PUBLIC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622·2960
FOR IMMEDIATE RELEASE
December 6, 2000
STATEMENT BY TREASURY SECRETARY LAWRENCE H. SUMMERS
We welcome the announcement by the Turkish authorities and the International
Monetary Fund (IMF) of a strengthened reform program.
We look forward to strong and immediate implementation by the Turkish authorities of
the steps vital for the restoration of confidence and financial stability.
Turkey's financial stability is important to the United States.
-30-
LS - 1064
lor press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622·2040
·u.s. Government Pnntlnq Office
1998 - 619-559
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt· Washington, DC 20239
FOR RELEASE AT 3:00 PM
December 6,2000
Contact: Peter Hollenbach
(202) 691-3502
PUBLIC DEBT ANNOUNCES ACTIVITY FOR
SECURITIES IN THE STRIPS PROGRAM FOR NOVEMBER 2000
The Bureau of the Public Debt announced activity for the month of November 2000, of securities within the
Separate Trading of Registered Interest and Principal of Securities program (STRIPS).
Dollar Amounts in Thousands
Principal Outstanding
(Eligible Securities)
$2,228,783,790
Held in Unstripped Form
$2,044,601,913
$184,181,877
Held in Stripped Form
$13,129,487
Reconstituted in November
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 Fonn."
The Strips Table along with th~ 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.
000
LS-1065
www.publicdebt.treas.gov
TABLE V. HOlOINGS OF TREASURY SECURlnES IN STRIPPED FOR"', NOveM8ER 30, 2ceo - Con',nued
Corpus
STRI'"
CUSIP
loan Oescnptlol"l
F>nnopa!
Af'T'Ouf'!: :: ... :s:.3Ir'ldl1'lg In
Tnouuncs
Rec.ot\$~luted
Matynty Date
iotal
Ou~~:andjnc
Pcr.:JOf'I
H~t(l 41\
Uns~:\ope-:
Form
ThIs Mont.,
FlOfbon Held rn.
Sl.,cpeJ Forr.'"
Treuury Notes
CUSIP
912327 W40
4X7
was
4Z2
Vl3
3WO
)(23
SC2
X49
500
X64
SE8
A85
4E9
Y22
5Hl
Y48
5J7
Y71
5L2
B92
Z39
5P3
Z54
SOl
Z88
5R9
025
2C5
2El
2G6
5X6
2L5
BAS
21'6
663
2S0
6Cl
F49
2Wl
6E7
2Y7
6F4
3C4
6HO
G55
3G5
6K3
3J9
6Ll
3L4
303
6P2
359
3V2
J78
3Z3
485
401
4H2
4KS
Senes Interest Rate
!>-112
4·5Il!
!>-1I4
4-112
912820 EY9
OM5
S
7·314
>318
F
!>-5/8
AZO
CPO
FAO
ORS
FS8
OS3
FC6
OTI
SA4
CX3
FD4
OW4
FE2
0)(2
FF9
OYO
BS2
FG7
EB9
FH5
EC7
FJl
ED5
6CO
EG8
EJ2
FK8
EL7
FL6
EN3
FM4
EP8
FN2
EQ6
T
AL
E
U
A
V
G
W
H
X
B
T
J
Y
K
Z
l
AS
C
M
AC
5
5-li8
4·118
5-114
5
8
!>-5Il!
5-112
!>-1I4
5-5Il!
!>-314
5-518
!>-112
7·7/8
5-112
!>-112
N
5-318
AO
P
AE
5-114
0
a
R
C
R
0
S
E
T
F
U
A
G
V
H
W
K
X
B
L
Y
!>-5Il!
!>-718
7.112
!>-7/8
5-118
5-114
5-3J8
5-114
5-112
5-5Il!
5-112
5-S!8
5-3J8
7.112
0
5-112
6
C
D
6
C
5-114
6;\~
5-318
6
5-114
5-3J8
6-114
5-1/8
M
!>-7/8
Z
N
P
AC
£>.314
!>-314
a
C
A
6
>5Il!
!>-5/8
!>-112
5-114
0
!>-112
E
F
G
H
B
J
K
!>-112
!>-314
!>-112
!>-318
!>-314
c
5MO
G
6
0
7·7/8
!>-7/8
7·112
5-112
res
609
U8J
VB2
6N7
weI
xeo
Y55
Z62
2JO
2U5
JEO
3X8
4F6
4Vl
5G3
5NB
5Z1
6J6
!>-1/4
4·114
A
!>-7/8
E
6
F
4-lI4
H
A
B
E
C
D
F
A
6
C
7·1/4
!>-1/4
7·114
5-lI4
5-112
!>-718
!>-lI4
!>-518
5-7/8
7
5-518
5-118
£>.112
5-5;8
0
4·314
B
!>-112
C
e
S
C
6-112
!>-3/.
Total Treasury Notes
Grand Total
808
FP7
ES2
Fa5
ETO
FR3
EU7
BE6
FSI
FU6
CC9
FV4
CE5
CH8
FY8
CKl
CN5
BF3
C54
CU9
CW5
DA2
DC8
BGI
DE4
OJ3
6H9
D07
BJ5
OU8
BK2
OZ7
SlO
EE3
6M8
BN6
ER4
BPI
B09
FXO
SR7
S55
BT3
SUO
5-112
5-5Il!
5-114
L83
4N9
4U3
N81
5A6
P89
SF5
a88
R87
557
S86
US
OP9
...... ........ .,.......
BX4
CA3
cae
CVl
DKO
DV6
EAl
EMS
Fr9
,~.e21.0"
04130/01
05115101
05115101
12,821,01 I
19,474,772
12,816.189
19777,278
11,312.802
15.367,153
12.819.771
19.586.630
14.180.740
21,605,352
13.180.470
21,033.523
12.398,083
12,873.752
19.586.630
14.180.740
21,579,752
13.780.470
21031.123
7.120,708
12.873.752
05.'31101
13,721.702
13.721.702
05131101
06130101
19.885,985
14.282,240
19,001,309
14,136,833
lzr.lllOO
12131100
01131101
01131101
02115101
0:/15101
02/28/01
02/28101
03131101
03131101
04130101
06130101
07/31101
07131101
0B/15101
08/3Mll
08/31101
09I30I01
09130101
10/31101
10/31101
11115101
11I30I01
12131101
01131102
01131102
02/28102
02/28102
03131102
03131102
04130102
04130102
05115102
05131102
05131102
06I30I02
06I30I02
07131102
07131102
08115102
08/31102
08131102
09130102
09130102
10131102
11130102
11I30I02
12131102
01131103
02115103
02/28103
03131103
04130103
05131103
06130103
08/15103
08/15103
11115103
02115104
02115104
05115104
05115104
08/15104
08115104
11115/04
11115104
02115105
05115105
05115105
08/15105
11115105
11115105
02115106
05115106
07115106
10115106
02115107
05115107
08115107
0211510a
05115/08
11115108
05115109
08115109
02115110
08/15110
20,541,318
12.339,185
14,000,224
20.118.595
14,518,514
18.797.828
14.839.843
19.196.002
24.226.102
33.504.627
31.186.321
13.453.346
19.381.251
13.799.902
16.563.375
14.301.310
17,237,943
14,474.673
17.390.900
11.714.397
13.S03.89O
14.871,823
13.058.694
14.320.609
12.231.057
15.057.900
23,859.015
12.731.742
15.072.214
12.806.814
15.143.509
26.593.849
12.120.580
15.0SO.989
12.052,433
13,100.640
23562,691
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
13.346467
18.089.806
14.373.760
32,658.145
13.834,754
14.739.504
28.562.369
15.002.580
15,209.920
15,812,265
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
23.355.7C9
22.438.285
19463,572
1:.316.189
19,775.678
5973.602
15.367.153
12.819.771
19.185.935
14.282,240
16,997,309
14.136,833
20,083,318
7.799.985
14.000,224
20118.595
14.518,514
18,297.028
14.639.843
19,194.402
19.456.022
33.504.627
31,087.921
13,453.346
19.381.251
13,799.902
16.540.175
14.301.310
17.235.543
14,474.673
17.390.900
7.801.037
13,S03.89O
14.871.823
13.058.694
14,320.609
12.231.057
15.057.900
21.383.815
12.731.742
15.072.214
12.768.414
15.143.509
26.534.649
11.841.360
15.050.989
11.862,033
13.100,640
22.737.763
13.626.354
14.172.092
12.573.248
13.132.243
13.125.179
27.269.428
19786.663
18.349,785
12.622.277
17.797.628
14.080.372
18.925.383
12.052.867
18089.806
14.368.960
32.658.145
13.511.394
14,738.304
28,562.369
15.002.580
15005,120
15.812,265
15.513.267
15.218.355
22.740 4 46
22,459,675
13.032.606
13873.386
25.574.403
13.578.612
27.190.961
25,038.325
14 790.190
:7.399.194
23355.109
22438.285
0
11,200
0
1600
5,339.200
0
0
0
0
25,600
0
2.400
5,277,375
0
0
100,000
0
4,000
0
458,000
4.539.200
0
0
0
500.800
0
1,600
4.770.080
a
78.400
0
0
0
23,200
0
2.400
0
0
3.913.360
0
0
0
0
0
0
2,475.200
0
0
38.400
0
59.200
279,200
0
190.400
0
824.928
44,000
SOO
0
0
1.600
741.600
65,600
276.000
332.800
25,600
360.000
0
1.293.600
0
_,800
0
0
0
0
0
noco
0
0
0
0
0
0
C
122.3~S
0
0
0
0
0
0
0
344.000
0
0
0
21.760
0
0
53.600
0
0
0
0
0
0
0
0
0
0
35.600
0
0
0
0
0
0
24.000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
9.600
0
30.400
48,000
0
0
0
SO.400
0
0
0
0
0
0
0
0
0
0
26.880
0
0
2.400
0
0
0
0
3.200
0
0
0
0
323.360
1.200
0
0
204.800
0
320
797.120
0
0
11.072
84,800
62.400
4,800
0
44.800
4.000
100
1,589.591.948
1.555.931.033
33.660.915
844.165
2.228.783790 I
20'.601.913
184.181.877
13 129 .87
TABLE V· HOLDINGS OF TREASURY SECURITIES IN STRIPPED FORM, NOVeMBER 30, 2000
Corpus
STRIP
loan OescnpIJon
Pnnopal Amount Outstandmg in Tnousl:ncs
Malunr) Date
CUSIP
Total
Po(\,on Held In
OutsllndlnQ
Un5tf1ooed Form
f:;:econs:.!'.J!e';::
1,'1,S '-;01"'.:''1
Port.c,",\ Hel(l In
StnPDed For"l"l"l
Treasury Bonds
CUSIP
912810 OM,
008
OR6
OU9
ON5
OPO
OS4
012
0V7
OWS
OX3
OYI
OZS
E112
EBO
EC8
Interest Ral.
I1·SIS
'2
'1).).'4
9-318
"-314
11·114
,1).5.'8
9-718
9-,14
7·1/4
7·'12
8-314
e·7I8
9-118
9
8-718
8-lIS
Eoe
EE4
8-1/2
EF,
EG9
EH7
EJ3
EKO
EL8
EM6
EN4
EP9
E07
E53
En
EV6
EW4
8·314
8-314
7·7/8
8·1/8
8-118
8
7·114
7,518
7·118
8-114
7·,12
7·516
6-718
6
6-314
6-,/2
6-518
8-318
8-118
5-,12
5-114
5-114
6-118
6-1/4
EX2
EYO
EZ7
FAI
FB9
FE3
FFO
FOB
FJ2
FM5
9128031199
ADS
A08
AJ2
9'2800 AA7
9'2803 AA'
AC7
AE3
AFO
AH6
AK9
AL7
AM5
AN3
AP8
A06
AR4
AS2
ATO
AU7
AV5
AWl
AXI
AY9
Al6
BAO
BB8
BC6
804
8E2
BF9
B07
BH5
11115104
OSI1!.1OS
08115105
02115106
, 1115/14
02l,Si,5
08l'Si,5
,",Si'5
0211Si16
OSI1Si16
11I1SiI6
OSilSi17
08l,Si17
0511Si18
, 1I1Si18
0211Si,9
0811Si19
021 1s.l20
OSi,s.I20
08l1s.120
0211s.121
0511s.121
08l,s.I2,
1111s.121
08l1s.122
"l1s.122
0211s.123
08l1s.123
, 11 1s.l24
02l1s.125
08l1s.125
02l1s.126
08l,s.I26
BJI
"I,s.I26
BK8
BL6
BM4
8P7
BV4
8Wl
C06
CH4
02l's.I27
08l's.I27
11/1s.127
08l1s.128
'1I,s.I28
02l1s.129
08I1s.129
05115130
TOlal Treasury Bonds ........ ..............
8,301,806
<,260 7S8
9.259.713
<,7SS,9'6
6,005,584
11.803,799
5,440.9'6
5.92S,e59
6,812,754
18.823,551
IS.824.448
'6,966,669
13,l32.3S8
7,6'6.439
7,S89,470
17,061.298
19,857,432
9,978,868
8,643,783
'9. '45,306
10,4'4,573
10.748,788
10,9'8,482
3',851,'94
10,288,790
8,844,626
17,460,261
22,669,044
10,526,662
11,476,170
12,007,007
12,B37,916
10,823,8'8
1',483,177
10,266,071
10,415,756
22,51B,539
11,776,20'
,0,947,052
11,350,:14'
'1,17B,580
17,043,'62
<,169,006
1,827,408
5.560.9'3
'.696.524
2,1 '8,334
6,2'5,959
3.852.116
3.301,859
6.195.954
'8,137, '5'
17 ,536,2S8
11,052.429
10,490,7S8
3.373,239
3,090.670
11,002,098
'8,726,872
B.090,068
3.346,663
9,291,866
9,630,573
6,474,549
9.489,362
'2,647,419
9,453,590
3,961,426
10,318.661
17,965,7'6
4,008,962
3,522,570
7,286,687
11,403,B16
7,980,6'8
7,22B,777
6.858,871
9,082,956
16,816,139
",633,80'
'0,598.252
",141,541
11,172,180
17,036,762
<,132 600
2433,350
3,708800
59.392
3.887.200
5.5878"
uee BOO
2.624.000
6'6.800
686,400
1.2BB, '60
5.914.240
2.64'.SOO
4,243.200
4.598.800
6,059.200
,,130.560
',8ee,BOO
5.297, '20
9,853,440
784.000
4.274.240
1,429,120
19,203.775
835,200
4,883,200
7,'61,600
4}03,328
6,5,7,680
7,953,600
4,720,320
1,434,100
2.843,200
4,254,400
3,427,200
'.332,800
5.702.400
'42,400
:148,800
208,BOO
6,400
6,400
'90 BOO
750.ce:
398.400
243.200
H600
,. '08.800
21.120
150 ace
, 'O.OBO
584.640
57.600
453.440
32.000
',836.350
377.600
315.800
187,200
205.632
487.160
179.200
'34,080
272,600
133,600
122,000
468,800
235.200
817.600
400
800
3',200
0
0
51B,202,937
367,789,472
'50.413,<65
12.285,322
18,236,236
17,272,785
'8,071,912
16,839.684
11,685,724
18.236.236
17,272,785
17,964,415
'6,839,684
11,685,724
0
0
107,497
0
0
0
0
0
0
0
82,'06,342
8,,998,845
'07,497
0
18,047,935
20,8:14,628
lB,047,935
20,B34,628
0
0
0
0
3B,B82,563
38.882,563
0
0
Treasury Innatlon-Indexed Notes
Series: Interest Rate
CUSI?:
9'28273A8
2M3
3T7
4V5
5We
J
A
A
A
A
3-518
3-318
3-518
3-7/8
4·114
ctallnnalion-Indexed Notes ....
9'2820 BZ!
eve
CL9
ON4
EK9
07115102
01/15107
0111!.108
01115109
011,5110
.........
130 000
246.9C0
S8.oeO
0
2B.BCO
520.'60
401 280
'S8 4 OO
687.200
0
Trusury Inflatlor.-Inde.xed Sonds
C USIP:
9128'0 FD5
FH6
Interest Rate:
3-518
3-7/8
Totallnnatlon-Indexed Bonds . ....
912803 eN2
CF8
0411s.128
04/1s.129
0 EPA R T M E ~ T
,
0 F
'T~! j~ '. T R 1-: .\ S
'.
' .
TREASURY
r
R
Jr
.
NEWS
orneE OF PUBLIC A.FrAIRS -1500 PENNSYLVANIA AVENlJE~ N.W.• WASHINGTON, D.C.- lOZZO _ (lOl) 61Z.Z960
EMBARGOED
aNT~L
2:30 P.K.
CONTACT:
:December 7, 2000
Office of Financing
202/691-3550
'l'ha 'hea.sury will auction two series of Treasury 1)ills totaling
approximately $22,000 millica to refund $17.274 million of publicly held
aeeuzitie. maturi~ December 14, 2000, aDd co raise abouc $4,726 million of
:Dew c:a.ab.
:rn adCliticm to tlw public bol4iDgs. Federal . .serve BaDks for thAli:r own
accounts hole! $9,296 million of che m&turiZ)g bills, which may be refunded at
the highest cliscount rate of accepted campetitive tenders. .AmOunts issued
~o tUse acco~ts wil.l. be i.n aclciiti.on to t.ha offering amount.
~ ma.~uring
1)ill& held 1:Iy ~ pul:)lic iDclude $4,442 million held
by FeC~al. aeaerve 3aAks .s ageAts for foreign ~ interDB.ticmal DIOZl~t.a.%7
autho:dties, which may be refu:u!ed witbiA the offering amount at the highest
discount rate of accepted cQllllPGtit.i'Ye teDders. AdditioD&l amount.s may be
iuue4 £or such accounts if the aggregate amou.nt of new bicla exceeds the
awregate iUDCNnt of maturing bills.
fteasuzyD.irec::t custcaers requested that we reiDvest their maturing holdings of approx;ma~aly $966 million in~o the 13-waek bill and $737 milliOD into
tbe 26-weei: bill •.
'1'lU.s offe:rizlg of fteasuxy securit.ies is go\"erne4 by the tums a.nc1 COIlcUtions set. foreh in the tJn.ifo:z:m. Offering 'C:1rc:ular for the Sale and Issue of
Harketable Book-Entr,V Treaaury Bills, motes, aDd BOuds (31 CPR Part 356, as
''''ml4ed) •
Details about: each of the
ZLGW
aec:uzities are given in tlw attachec!
offerU3s' hig-Al.ipts.
000
LS-1066
AttacbmeZlt
-
"
Fo, preft rll,lU's,
spe,claa, publiC JCIa,dules Gild offlCUll bitJr1dphUs, call 0 ..' Z4-hoMr flU line at (Z02) 622·2040
.
BIGBLIGH"l'B 01'" TREASURY OJ"FERIOOS 01' BILLS
TO BE ISSUED DECEMBER 14, 3000
December 7, 2000
Offerln, Amount •••••••••••••••••••••••••• 12,000 million
D~scrlptlon of OfferlDpI
Term an4 type of .ecurity •••••••.••••••• 9I-day bill
CUBIP nUJnber •••••••••••••••••••••••••••• 912795 I'X ,
Auotion date ••••••••• '.•••••••••••••••••• December 11, 2000
Xsaue dat ••••••••••••••••••••••••••••••• December 14, 2000
Ma~urity dat•••••••••••••••••••••••••••••arch 15,2001
Original isaue date •••••••••••••..•••••• Septamber 14,2000
CUrrently outstanding ••••••••••••••••••• $13,090 .il1ion
Mlnimum bid amount and .ultipl•••••••••• $l,OOO
$10,000 .illion
182-4&y bill
912795 GL 9
Dec.a.ber 11, 20,00
Deoemb.r 1', 2000
JUne 14, 2001
December 14, 2000
$1,000
~be
following rule. apply to all securities mentioned above:
Su~ia.lon ot B14s:
NoncomPetitive bids ••••••••• Accepted in full up to $1,000,000 at the highest discount rate of
accepted competitiv. bids.
Competitive bids •••••••••••• (1) MUst be expressed as a discount rate with three dec~mal. In
lncraments of .005%, e.g., 7.100%, 7.105%.
(2) Net long position for each bidder must be reported when the .um
of the total bid amount, at all di.count rates, and the net long
position i. $1 billion or greater.
(3) net long position must be determined .s of one half-hour prior
to the ciosing time for receipt of competitive tender ••
Kaxbnum Recoqni.ea Bi4
at a Si~gl. Rate •••••••••••• 35% of public offering
Maximum Award ••••••••••••••.•••• 35% of public
o£fe~ing
Reoeipt of Tendera.
Moncompetltive tender ••••••• Prior to 12:00 noon eastern standard time on auotion day
Competitive tenders ••••••••• Prior to 1.00 p.m. eastern standard t~. on auction day
Paynent Te~.1 By charge to a funds aocount at a Federal Reserve Sank on iasue date, or payment
of full par amount with tender. ~r.asur,yDjrect customers can.use the P~ Direct feature which
autborlzes a charge to their account of record at their finAncial institution on i.sue date.
DEPARTMENT
OF
TilE
TREASURY~~
TREASVRY
NEW S
PUBLIC CONTACT: Office of Financing
202-691-3550
FOR IMMEDIATE RELEASE
December 7, 2000
MEDIA CONTACT:
Una Gallagher
202-622-2960
TREASURY DEBT BUYBACK OPERATION RESULTS
Today, Treasury completed a debt buyback (redemption) operation for $1.250 million
par of its outstanding issues. A total of 11 issues maturing between February 2015 and
February 2019 were eligible for this operation. The settlement date for this operation will
be December 11, 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:
$4,983
1,250
1,810
11
6
~eighted
Average Yield
of all Accepted Offers (%):
5.656
~eighted
Average Maturity
for all Accepted Securities (in years) :
15.5
)etails for each issue accompany this release.
3-1067
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
December 7. 2000
TREASURY DEBT BUYBACK OPERATION RESULTS
(amounts in millions. prices in decimals)
Table I
Coupon
R ate
(%)
11.250
10.625
9.875
9.250
7.250
7.500
8.750
8.875
9.125
9.000
8.875
Weighted
Average
Accepted
Par
Amount
Accel2ted
Highest
Accepted
~
Par
Amount
Offe 1; ed
~
~
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
02/15/2019
823
702
525
409
250
98
418
470
384
325
580
453
225
0
10
0
0
110
203
249
0
0
154.390
149.296
N/A
136.250
N/A
N/A
132.562
134.156
137.718
N/A
N/A
154.378
149.281
N/A
136.250
N/A
N/A
132.562
134.138
137.710
N/A
N/A
Weighted
Average
Accepted
Yield
Par Amount
Privatel;l Held*
5.630
5.642
N/A
5.658
N/A
N/A
5.676
5.680
5.686
N/A
N/A
9.505
4.049
4.919
5.766
17.724
17.199
14.102
10.871
6.128
6.921
14.906
Maturity
Table II
Coupon
Rate (%)
Maturity
CUSIP
~
~
Lowest
Accepted
Yield
11.250
10.625
9.875
9.250
7.250
7.500
8.750
8.875
9.125
9.000
8.875
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
02/15/2019
912810DPO
912810DS4
912810DT2
.912810DV7
912810DW5
912810DX3
912810DY1
912810DZ8
912810EA2
912810EBO
912810EC8
5.629
5.641
N/A
5.658
N/A
N/A
5.676
5.678
5.685
N/A
N/A
Total Par Amount Offered:
Total Par Amount Accepted:
4.983
1.250
Note: Due to rounding. details may not add to totals.
-Amount outstanding after operation. Calculated using amounts reported on announcement.
DEPARTMENT
OF
THE
TREASURY f~)
TREASURY
NEW S
1789
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANlA AVENUE, N.W. • WASHINGTON, D.C. • 20220. (202) 622·2960
FOR IMMEDIATE RELEASE
Text as Prepared for Delivery
December 8, 2000
"CHALLENGES FOR TAX POLICY IN A GLOBAL ECONOMY"
TREASURY ACTING ASSISTANT SECRETARY FOR TAX POLICY
JONA THAN TALISMAN REMARKS TO THE IRS/GW ANNUAL INSTITUTE
ON CURRENT ISSUES IN INTERNATIONAL TAXATION
WASHINGTON, DC
I thought I would briefly examine the challenges that the tax system, and those fortunate enough
to have some responsibility for it, will face in the coming years caused by changes in the
economy, particularly globalization and e-commerce. Then I will turn briefly to discussing two
other topics of interest, the status of the FSC replacement dispute and the subpart F study.
I.
Changes in the Economy
Much has changed since I entered the Government 8-112 years ago. Globalization and
information technology have ushered in an economic transformation as profound as that of the
Industrial Revolution of the 19th century. The scale of change is enormous, as are the potential
benefits.
Trade barriers are falling, the market for capital is international, and access to information from
around the world is instantaneous. As a result, economies are increasingly interdependent As
national borders become less relevant, business enterprises will be increasingly global in scale
and mobile with regard to the location of their management and activities. But while capital,
goods, and services increasingly move without regard to borders, national borders will continue
to confine tax authorities.
As that great philosopher Dr. Seuss once wrote:
We [as tax administrators] have come to a place where the streets are not marked.
Some windows are lighted, but mostly they're darked.
A place you could sprain both your elbow and chin'
Do you dare to stay out? Do you dare to go in?
How much can you lose? How much can you win?
L8-1068
_ For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622·2040
You can tell that I have three children under the age of 10. Don't worry, I'll return to Seuss
later.
Obviously, we are on our way in and must quickly gain an understanding of the implications of
globalization and e-commerce for tax policy. We, at Treasury, are actively examining and
responding to the challenges raised by the emerging global environment.
Let me be clear at the outset, however, that we do not believe that globalization has changed the
fundamental goals of tax policy: that our revenue needs be met in a fair manner, that we maintain
neutrality and minimize distortions, and that we limit compliance and administrative burdens, to
the extent possible. However, without vigilance, it may significantly increase the impact of other
jurisdictions' choices on our ability to raise revenue in a fair manner. The challenge for us is how
to tax the activities of our citizens and residents on a fair and neutral basis when their activities
increasingly transcend our borders and thus are more difficult for us to discover and evaluate.
We believe this is best achieved by dialogue with other sovereign jurisdictions to ensure that our
practices do not encroach upon each other's ability to make fundamental tax policy choices (such
as foreclosing the ability to tax capital, corporate income, consumption, etc.) and that we do not
limit each other's ability to apply those choices in a fair, non-discriminatory manner.
Critics of the Administration's pursuit of bilateral or multinational solutions to the increasingly
difficult tax policy issues raised by globalization often assert that such solutions necessarily
restrict our freedom to conduct tax policy as we see fit and require that we harmonize our tax
systems with others. Precisely the opposite is true. The status quo is not an option. It is only
through cooperation on an international level that we can maximize the power to conduct tax
policy as we see fit and preserve the availability of tax policy options to our government in the
future.
n.
Harmful Tax Competition
The challenge of maintaining our traditional tax policies in the face of a changing world is most
directly reflected in our initiatives to identify and combat harmful tax competition.
International tax competition occurs when one country provides a tax inducement to attract
capital from another country. The most aggressive forms of tax competition are practiced by
countries we commonly think of as tax havens. When practiced unfairly, tax competition can
severely erode the capital tax base of the losing country. Harmful tax competition also distorts
investment decisions and undermines fiscal stability. Eventually, this means that the losing
country may have to make up the lost tax revenue through higher taxes on the income it still can
get a hold of --like wages or other relatively immobile income.
There has been significant confusion regarding the distinction between fair and unfair tax
competition. This confusion has been fueled by certain opponents of the OECD's harmful tax
competition initiative, who have mischaracterized the efforts as attempts to establish high tax
cartels and establish minimum levels of taxation across the globe. Let me be clear: Countries
are free to choose the method and rate of taxation appropriate to fund their public sectors.
2
However, countries have gone beyond that right when they have regimes that lack transparency,
that are "ring fenced" or shielded from their own economies and core tax base, or with respect to
which there is no information exchange. Tax systems with those features erode other countries'
tax bases and infringe on their ability to implement their own tax policy decisions Thus, the
work at the OEeD is limited to regimes with these harmful features -lack of transparency, lack
of information exchange, or discrimination between residents and nonresidents -- in especially
mobile sectors of the economy, and thus is narrowly targeted at the problem of harmful tax
competition.
By tackling this problem, we should help businesses compete on a level playing field and help
encourage investment growth and jobs. It also will play an important role in promoting the health
of the global economy and global financial system.
We have pursued in this area a parallel track of unilateral initiatives and working in multilateral
forums such as the OEeD. For example, our recent "QI" regulations which streamline the
procedures by which banks can verify the foreign residence of recipients of interest income from
the U.S., impose special, more rigorous requirements on banks based in tax havens. These
requirements are geared to ensure that such banks have access to and can provide information
regarding the beneficial owners of the interest income. We also have opened a regulations
project to consider the imposition of a withholding tax on portfolio interest paid to accounts or
corporations in tax havens even though portfolio interest paid to nonresidents generally is
exempt from u.s. withholding tax.
We believe, however, that an effective response in this area must also include efforts at a
multilateral or global level to establish international standards that countries commit to meet. As
evidenced by initiatives at the EU and the OEeD, there has been a growing international
consensus on the importance of addressing this problem on a multilateral basis. The EU on
November 27 announced that its member countries' Finance Ministers approved a Code of
Conduct whereby 66 preferential tax regimes within the EU are to be eliminated by January 1,
2003. Closer to home, we have taken an active role in the OEeD's work in the area of harmful
tax competition. Over thirty countries already have committed to eliminate their harmful tax
practices within five years and more, including identified tax havens, are expected to do so in the
near future. Indeed, recently, the Netherlands Antilles has committed to eliminate its harmful tax
practices.
The work of the EU and the OEeD is a first step to ensuring that the policy objectives of their
respective member countries can be realized without the fear of an eroding tax base and other
distortions that could undermine the benefits of enhanced capital mobility in today's global
economy. Non-member countries have much to gain from joining such an effort. For example, at
a 60-nation conference on tax competition this past summer, delegates from developing countries
noted that these harmful practices constitute a more severe threat to their countries than to that of
developed countries, in part because tax base erosion can translate directly into increased
poverty. These delegates warned that tax competition could contribute significantly to a backlash
against globalization, already seen in many quarters as benefiting the developed world at the
expense of the developing world. One of our primary interests in the OEeD's initiative, which
3
should be shared by the U.S. business community, is to prevent distortions that could undermine
the substantial benefits that arise from global capital mobility.
The most important lesson from the ongoing work on harmful tax competition is the extent to
which countries have decided that it is in their interest to commit to meet international standards
in the short term in order to maximize their tax policy and economic development options in the
long term. Ifharmful tax practices are allowed to flourish, they could severely constrain the
right of countries like the U. S. to implement their desired tax policies, including tax reduction
policies. For example, a tax haven's secrecy practices may prevent us from finding out about
citizens who hide money offshore. This deprives us of the revenue due on the hidden money and
the income it produces, which constrains our policy options, including the option of reducing
taxes on honest citizens and businesses.
The OECD recently has agreed to co-sponsor multilateral meetings in the South Pacific and the
Caribbean to further the dialogue with tax haven jurisdictions. We are pleased that the OEeD's
work to eliminate harmful tax practices is evolving into the cooperative effort among developed
and developing countries required to resolve the difficult tax policy issues these practices
present.
ID.
Tax Arbitrage
A similar challenge to tax systems is the use of tax arbitrage. Tax arbitrage involves the
exploitation of differences in the tax laws of two or more jurisdictions that result in the lowering
of a taxpayer's worldwide tax liability by ensuring that income is not taxed anywhere.
Tax laws are written based upon certain assumptions, including fundamentally that income
should not be subject to double taxation. In the cross-border context, this has been implemented
through international conventions that have been widely adopted. For example, interest
generally is permitted to be deducted by the payor in the source country but is generally included
in income upon receipt by the investor in the country of residence. In this circumstance, the
source country cedes primary taxing jurisdiction of the interest to the country of residence.
Conversely, because dividends generally represent underlying earnings that have been subject to
tax by the source country and are generally not deductible when paid, the country of residence of
the recipient will generally cede primary taxing jurisdiction to the source country through an
exemption or credit mechanism. In each instance, the ceding of primary taxing jurisdiction by
one country is based on the assumption that the amount is more appropriately taxed in the other
country.
If, however, both countries characterize a transaction differently, tax arbitrage can arise in which
both countries cede taxing jurisdiction simultaneously and the income is not taxed by any
jurisdiction. Countries may characterize a transaction differently because of a variety of reasons
including differences in rules with respect to ownership, entity characterization, instrument
characterization, timing, or source
Some would argue that the arbitrage is not troubling because a transaction is characterized
correctly under domestic tax rules. Under this view, as long as a transaction does not rise to the
4
level of being a tax shelter, the taxpayers should obtain the tax results as permitted by each
individual jurisdiction's laws.
At Treasury, however, we believe that tax arbitrage is problematic for several policy reasons. By
creating double non-taxation, tax arbitrage distorts economic behavior because taxpayers will
tend to favor cross-border tax arbitrage transactions over domestic transactions or other types of
cross-border transactions, thereby undermining the principle of neutrality. Furthermore,
taxpayers who do not have access to arbitrage opportunities will have higher costs of operations
and will thus be prejudiced because they will not have the benefit of such de facto subsidies.
Taxpayers who do engage in tax arbitrage transactions tend to be the wealthy and well advised
because the nature of such transactions often require many resources and the expertise of tax
advisors. Finally, as with harmful tax competition, governments may ultimately need to
compensate for a shortfall in revenue by shifting the burden of tax to other constituents, such as
to labor.
IV.
Electronic Commerce
The Internet and e-commerce pose similar (and sometimes overlapping) fundamental questions
to which we must respond. In a world where cyber-transactions are growing at a rapid pace, tax
administrations face the challenge of adapting existing tax systems to an economy that
increasingly ignores physical borders and that increasingly operates under new business models
and by new business methods.
In such a world, our traditional rules for determining each country's jurisdiction to tax and for
determining the source and character of taxable income will come under increasing pressure.
For example, income from the performance of services traditionally has been taxable in the place
where the services have been performed. New technologies and business methods, such as the
Internet, corporate intranets and other communications and service delivery advances, will make
such determinations more difficult, and may increase the opportunities for manipulation and tax
avoidance.
Similarly, it will be increasingly easy for companies to avoid taxes by taking advantage of
different tax rules and tax systems that do not operate well together. For example, many
countries' tax rules regarding the provision of software products and services are not in
agreement regarding whether such income is a royalty, income from the sale of a good or income
from the sale of service. Such discrepancies may provide inappropriate tax arbitrage possibilities.
Or, I should add, may just as easily result in double taxation.
Additional problems could arise regarding tax collections and tax administration. For example,
the increasing sophistication ofInternet encryption methods, which may be used for valid
reasons of commercial secrecy, can also be used to conceal relevant tax details from tax
administrators.
How can we best respond to these challenges?
Some have argued that we should respond to the challenge of e-commerce and new technologies
by suspending taxes on Internet transactions. Others have suggested that we create new tax rules
5
or even new taxes that specially target certain aspects of the virtual econorny. We reject both
views. Our view is that the current tax policies and rules can continue to provide appropriate
results, albeit with sorne rnodifications. Tax. adrninistrations should provide an environrnent in
which e-commerce can flourish, while at the sarne tirne ensuring that the Internet does not
becorne a tax haven that undermines the revenues that allow public services to function.
This Adrninistration's main objective has been to work with both our OECD and non-OECD
partners, in consultation with the private sector, to build an international consensus on the
frarnework underlying any taxation of e-cornrnerce. We are conducting an on-going dialogue to
this end, with two principles in rnind:
•
Any taxation of the Internet and electronic cornrnerce should be clear, consistent, neutral and
non-discrirninatory. Neutrality and nOll-discrimination rnust be the fundarnental principles
that guide the developrnent of taxation rules with respect to electronic cornrnerce. The rules
should be transparent and easy to adrninister.
•
Close cooperation and rnutual assistance are necessary between the 0. S. and its trading
partners to ensure effective tax adrninistration and cornbat illegal activities on the Internet.
The global nature of e-cornrnerce necessitates global consensus on the principles underlying
any e-commerce taxation. In the absence of such consensus, unintentional non-taxation or
stifling rnultiple taxation may result.
Let rne tum briefly to two other issues of interest.
V.
Foreign Sales Corporations
As you know, President Clinton signed the FSC replacernent legislation into law on Novernber
15. Subsequently, the EU requested a special rneeting of the World Trade Organization's
Dispute Settlernent Body to consider its request for authority to irnpose sanctions in the FSC
dispute worth more than $4 billion annually. That action was consistent with the procedural
agreernent we reached with the EU at the end of Septernber regarding the sequencing of
procedures in the WTO for this dispute. Nonetheless, we contest the level of darnages alleged by
the EO. We do not believe that European cornpanies have been disadvantaged.
Pursuant to our procedural agreernent, the EU agreed to request consultations with the US, and
those consultations were held earlier this week in Geneva. As expected, after the consultation,
the EU has requested the establishrnent of a WTO cornpliance panel to assess whether the new
legislation is WTO-consistent. As the US. and EU agreed at the end ofSepternber, we would
then jointly request that the EU's existing retaliation request be suspended, pending the out corne
of this review.
A final verdict in this case is not expected until the rniddle of next year. If the FSC replacernent
legislation is found to be WTO-consistent, then that will be the end of the rnatter. If the
legislation is found to be WTO-inconsistent, the appropriateness of the EU's request for
retaliation worth rnore than $4 billion will then be addressed by the arbitration panel. Under
WTO dispute settlernent procedures, these proceeding will take a rninirnurn of 7 rnonths. We
6
remain confident that our new legislation will be found WTO-compliant, as it is neither a subsidy
nor is it export-contingent.
VI.
Subpart F Study
The subpart F study is imminent and should be released this month. I apologize for the delay. I
can only explain it by returning to Dr. Seuss:
How did it get so late so soon?
December is here before it's June.
It's night before it's afternoon.
My goodness how the time has flewn.
Let me briefly describe the study's framework. The study begins by examining the events that
led to the introduction of the statute and its legislative history. The study then asks what subpart
F should achieve: how should we tax foreign income in order to maximize our economic
welfare? It asks whether there is continuing validity to the economic views that helped to mold
subpart F forty years ago. In studying this we have been particularly interested in trying to
determine whether new economic research -- particularly that done in the last ten years -- has
affected the validity of the standard analysis that the best policy is to tax domestic income at the
same rates as foreign income. The study also looks at the issue of competitiveness.
Our study also evaluates the extent to which subpart F is achieving what it should be achieving
In other words, are the current rules being easily circumvented? Are they well-suited to the way
business is done today? Are they well-suited to the way business will be done in the new
millennium? In particular, we are looking at the extent to which the rules may need to change in
light of new technologies, including new communications technologies and electronic
commerce.
vn.
Conclusion
The issues I discussed today -- harmful tax competition, tax arbitrage and e-commerce -demonstrate the importance of international coordination in this increasingly global economy.
Such coordination is necessary to set minimum standards for the operation of tax systems, while
at the same time preserving the right of each country to choose its own tax system to the greatest
extent possible. It is important to reiterate that we do not believe that this kind of coordination
requires harmonization, whereby countries adopt similar tax systems. What is important,
however, is that when there are differences in our tax systems, we coordinate on a multilateral
basis to establish and meet certain minimum standards that prevent practices that undermine our
respective tax systems.
I also want to stress the importance of continued involvement by all of you in meeting these
important challenges. With the rapid pace of change in our economy, we will need to rely even
more heavily on those involved in the international tax community for your help and guidance.
Thank you for the opportunity to be here.
-30-
7
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESuLTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
RESULTS
r;~
TREAS1.T?':
AUCTION OF 13 - WEEK BILLS
.::>
91-Day Bill
December 14, 2000
March 15, 2001
912795FX4
Term:
Issue Date:
Maturity Date:
CUSIP Number:
5.900%
High Rate:
Office of Financing
202-691-3550
CONTACT:
'OR IMMEDIATE RELEASE
Jecember 11, 2000
Investment Rate 1/:
Price:
6.071%
98.509
All noncompetitive and successful competitive bidders were awarded
ecurities at the high rate.
Tenders at the high discount rate were
llotted 13%. All tenders at lower rates were accepted in full.
AMOUNTS~~TENDERED
AND ACCEPTED (in thousands)
Competitive
Noncompetitive
$
21,500,962
1,343,274
$
1,84 5 ,000
1,825,000
24,669,236
12,020,386
4,749,496
4,749,496
toreign Official Refunded
SUBTOTAL
8,852,112
1,343,274
10,195,386 2/
22,844,236
PUBLIC SUBTOTAL
Federal Reserve
Foreign Official Add-On
TOTAL
Accepted
Tendered
Tender Type
o
o
$
29,418,732
$
16,769,882
Median rate
5.865%: 50% of the amount of accepted competitive tenders
.s tendered at or below that rate.
Low rate
5.800%:
5% of the amount
accepted competitive tenders was tendered at or below that rate.
d-to-Cover Ratio = 22,844,236 / 10,195,386
=
2.24
Equivalent coupon-issue yield.
Awards to TREASURY DIRECT = $1,063,919,000
http://www.publicdebt.treas.gov
S-1069
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
.OR IMMEDIATE RELEASE
)ecember 11, 2000
CONTACT:
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182-Day Bill
December 14, 2000
June 14, 2001
912795GL9
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:
5.790%
Investment Rate 1/:
6.047%
Price:
97.073
All noncompetitive and successful competitive bidders were awarded
ecurities at the high rate. Tenders at the high discount rate were
.llotted 74%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
Competitive
Noncompetitive
$
17,494,190
1,127,665
$
7,513,855 2/
18,621,855
PUBLIC SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
6,386,190
1,127,665
2,501,000
2,501,000
21,122,855
10,014,855
4,546,572
4,546,572
o
°
TOTAL
$
25,669,427
$
Median rate
14,561,427
5.775%: 50% of the amount of accepted competitive tenders
Low rate
5.740%:
5% of the amount
: accepted competitive tenders was tendered at or below that rate .
is tendered at or below that rate.
.d-to-Cover Ratio
=
18,621,855 / 7,513,855
=
2.48
, Equivalent coupon-issue yield.
, Awards to TREASURY DIRECT = $825,465,000
htlp://www.publicdebt.treas.gov
.S-1070
Page 1 of2
TREASURY NEWS
FROM THE OFFICE OF PUBLIC AFFAIRS
FOR IMMEDIATE RELEASE
December 12, 2000
LS-1071
U.S. International Reserve Position
The Treasury Department today released U.S. reserve assets data for the week ending December 8,
2000. As indicated in this table, U.S. reserve assets totaled $65,957 as of December 8, up from
$65,648 million as of December 1,2000.
(in
us millions)
I. Official U.S. Reserve Assets
TOTAL
1. Foreign Currency Reserves
I
December 1, 2000
Euro
1
5,105
a. Securities
t
65,648
Yen
9,862
ich, issuer headquartered in the U. S.
December 8, 20
65,957
TOTAL
Euro
,wv7
5,158
0
I
-
II
/I
10,694
I
otal deposits with:
Other central banks and BIS
I
'. Banks headquartered in the U.S.
ii. Of which, banks located abroad
12. IMF Reserve Position 2
13. Special Drawing Rights (SDRs) 2
14. Gold Stock 3
15. Other Reserve Assets
I
II
7,104
II
15,774
I
0
0
I
b.iii. Banks headquartered outside the U.S.
Ib,iii. Of which, banks located in the U.S.
8,670
I
I
I
I
I
I
I
I
I
I
I
0
0
13,492
10,369
11,046
0
II
8,750
I
I
I
I
I
1, Foreign currency loans and securities
December 1, 2000
I
I
I
I
0
I
I
2. Aggregate short and long positions in forwards and
6,252
Ir=
c=
c=
c=
c=
C
C
C
II. Predetermined Short-Term Drains on Foreign Currency Assets
I
II
c=
December 8,20
c=
futures in foreign currencies vis-ii-vis the U.S. dollar:
[2.a, Short positions
[2.b. Long positions
@' Other
http://wwwustreas.go¥/pril66/release61p~1071.htm
I
I
I
I
I
I
0
0
0
I
I
I
c=
c=
c=
12115/2000
Page 2 of2
III. Contingent Short-Term Net Drains on Foreign Currency Assets
I
1. Contingent liabilities in foreign currency
December 1, 2000
1.a. Collateral guarantees on debt due within 1 year
December 8, 20
I
0
I"
I
0
0
1
1
1.b. Other contingent liabilities
\2. Foreign currency securities with embedded options
13. Undrawn, unconditional credit lines
1
13.a. With other central banks
c=
c=
c=
13.b. With banks and other financial institutions
1Headquartered in the U. S.
13.e. With banks and other financial institutions
I
1Headquartered outside the U. S.
4. Aggregate short and long positions of options in foreign
Currencies vis-a-vis the U. S. dollar
1
4. a. Short positions
01
c=
4.a.1. Bought puts
~2. _to" ,,'"
. Long positions
4.b.1. Bought calls
I
14.b.2. Written puts
Notes:
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,
2/ 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 SDRIdollar exchange rate for the
reporting date. The IMF data for December 1 are final. The entries in the tab!e above for December 8
(shown in italics) reflect any necessary adjustments, including revaluation, by the U.S. Treasury to
the prior week's IMF data.
3/ Gold stock is valued monthly at $42.2222 per fine troy ounce. Values shown are as of September
30,2000. The August 31, 2000 value was $11,046 million.
Search! Email! Treasury Home
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p~
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12/15/2000
D E
r ,\
R T \1 F N T
() F
THE
T
[~
E 1\ S t r R Y
,
NEWS
TREASURY
or71CE OF PUBLIC AFFA.lltS -1500 PENNSYLVANIA AVENUE, N. w. - WASHINGTON, D.C •• 10llO _ (2,02,) 622.2"0
EMBARGOED tlN'rIL 9:00 A.M.
December 13, 2000
PUBLIC CONTACT:
MEDIA CONTACT:
Office of Financing
202-691-3550
UDa Gal.1agher
202-622-2960
TREASURY ANNOTJNas DEBT BUYBACK OPERATION
On December 14, 2000, the Treasury will buy back up to $1,250 million pal:'
of its out.st.and.ing isaue. that mature ))etween Auguat 2019 aD.ci August 2022.
'r~easury reserves the right to accept less 1:ban the announced. amount.
This debt buyback (redemption) operation will he conducted. by '.l'reasu:y's
Fiscal Aqent, the Federal. Reserve Bank of New York, using its Open Market
operations system. Oftly institutions that the i'ecle~al Reserve Bank o£ New
to~k
has
. '
~~oveci
to conduct Open Maz:kat t"ana.ct1ona may aUbll1 t otfeJ:'a 011.
and their customers. Offers at the higheat aceepted
pr,ice for a partioular issue may be accepted on a prorateci basis, :0\1nCled up
to the next $100,000. As a result 'ot this roI'Dd 1nq, the Treasury may buy
.,.
b~ ot-theIIse~ves
baek an amount slightl.y
l.~ger
than the one announeecl above.
'this deDt Duyback operation is qov£neCi :by the
forth in 31 CFR Part 375 and. this announcement.
't.eDlS and
conditions set
~e
debt buyback operation regulations are available on the Bureau of
:he Public Debt r s websi te at www.publicdebt. treaa . gov.
l)eta1.1s aDout the opuation
and
each of the eligible issues a:e given
i.n the a.ttac:bec1 highlights.
000
LS-1072
or prell rdetsa, $pucltes, publil: schetIlIIQ antI o//iciGl biogrcphieJ, caU Oil' 24-lJolI' /fIX line at (202) 622·2040
!I:!GRLIGlrl'S OF TREASt1RY DEBT BUYBACK OPEltATl:OII
~r
Par amount to be
13, 2000
bough~
back ... Up to $1,250 million
Opera~on eaee ................. December 14,2000
apera~on ~ose time . . . . . . . . . . . 11:00 a.m. eastarD 5~andard ~
Settlement date ................ DeceMber 18,2000
M:i.rdmu:II. par offe-r amount \...... $100,000
MUltiples of par ............•• $100,000
Format for offers ..... Rxpressed in teras of price per $100 of par with
three decima's.
The fust two dec; ... l . ~ep~.sent
frac:tional 3~ o~ a dollar.
The thiN dec:im&l
represents eighths of a 32M of a do~la.r, aNi mw;t
be a 0, 2, 4, or 6.
Delivery ~tructiona .........• ABA Number 021001208 PRB BYe/COST
'rl:easu:y issue:. eligible for
Coupon
Rate
<')
8.125
8.500
8.750
8.750
7.875
8.125
8.125
8.000
7.250
deb~
buyback operation (j.n 1Idllic:m.3) :
Maturity
COSIP
Par Amount
Date
08/15/2019
02/15/2020
05/15/2020
08/15/2020
02/15/2021
05/15/202l.
08/1S/2021
11/15/2021
08/15/2022
N\mber
912810 ED 6
912810 EE 4
912810 EF 1
OUtatanc:ling*
912810 EG
912810 EEl:
912810 BJ
912810 EX
912810 EL
912810 EM
Total.
9
7
3
0
8
6
19,857
9,979
8,644
19,145
10,415
10,749
10,918
31,851
10,289
131,847
Par Amount Par Amount
Privately
Held as
Held*
STRIPS*·
17,924
1,140
8,540
1 r '794
7,142
5,155
17,264
9,894
9,4'7l.
7'76
9,131
4,300
9,260
-1,324
28,783
19,014
9,415
747
116,930
44,144
'*
Par amounts are as of December 12, 2000.
** Par aJIO\Ults are as of December 11, 2000.
The differenee bei:waen the par amount:. outstanding anc1 the par amount
privately hel-d.· i.s the par amount of those issues held. ]:)y the !'ederal
Reserve System.
DEPARTMENT
OF
TH~
'IREASURY ~.)
_
1789
_
TREASURY
NEW S
ornCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASlllNGTON, D.C .• 20220. (202) 622·2960
EMBARGOED UNTIL 8:30 A.M. EST
Text as Prepared for Delivery
December 14, 2000
TREASURY UNDER SECRETARY FOR DOMESTIC FINANCE GARY GENSLER
REMARKS TO THE BOND MARKET ASSOCIATION
NEWYORK,NY
Introduction
It is a pleasure to be here today. I particularly appreciate the efforts of the Bond Market
Association to provide forums, such as this one, for discussion of the important changes in
Treasury's debt management.
These last few years have been a remarkable time for Treasury's debt managers. When
Secretary Rubin asked me in 1997 to join Treasury, the U.S. government was still running
deficits. If he had told me then that one of my jobs would be advising on the paydown of nearly
$400 billion of public debt by the end of the Administration, I would have thought he was
exaggerating greatly, at the very least. But, in fact, that is what has come to pass. Today, I
would like to share with you some of how we approached this challenge. I will then close with
some thoughts about possible future challenges.
During the Clinton Administration, we have moved very quickly from a sustained period of very
large budget deficits to a period of substantial budget surpluses. We have gone from the
challenge of funding a deficit of$290 billion in )992 to managing a surplus of$237 billion this
past year. That is over half a trillion dollars in improvement in annual budget results. In fact, this
represents the longest period of consecutive fiscal improvements in our nation's history. The
results of the last five years are attached in Table I.
Treasury's publicly held debt now stands at roughly a third of the Gross Domestic Product. This
is down from nearly 50 percent at the start of the administration. More relevant to the bond
market, however, is that privately held marketable Treasury debt, now at approximately $2.4
trillion, has been dropping in relation to the domestic debt markets - from 32 percent in 1993 to
18 percent today. In fact, based on current projections, President Clinton will be the first
President since President Truman under whom this debt has not increased during his term of
office.
LS - 1073
~ press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
_
Re-examining our Debt Management Philosophy in an Era of Surpluses
As we moved from deficits to surpluses, one of the first challenges we identified was how we
should articulate Treasury's debt management goals and principles. We realized, in fact, that
Treasury had not prepared a formal statement of its debt management goals in many years. In
reviewing Treasury's past practices and strategies for the future, it became clear that we had a
consistent set of goals and principles appropriate for periods of either deficit or surplus. The
Bond Market Association actually provided the forum to articulate those goals three years ago at
your Annual Meeting. They were as follows:
•
•
•
providing sound cash management;
achieving the lowest cost funding for the taxpayer over time; and
promoting efficient capital markets.
In seeking to achieve these goals, Treasury's debt management had been guided by a consistent
series of debt management principles:
•
•
•
•
•
Preserving the risk free status of Treasury debt;
Maintaining consistent and predictable issuance;
Promoting maricet liquidity;
Financing across the yield curve; and
Maintaining unitary financing for the Federal government.
New Tools for Debt Management
As we moved from the old era of deficits to the new era of surpluses, we had to augment the old
tools of debt management with new tools. As the bud~et deficits declined in 1996 and 1997, we
responded using a traditional tool of debt management, adjusting the size of issuance. In 1997,
for instance, even as coupon issuance increased, net bill issuance decreased by $59 billion.
As surpluses started in 1998, we used two of the other traditional tools, issuance frequency and
actual elimination of an issue. This led to the elimination of the three-year note and the move
from monthly to quarterly five-year notes in May i 998. Subsequent changes have now cut
private coupon issuance in half Treasury's coupon issuance has dropped from more than $560
billion in FY1997 to less than $280 billion in FY2000 (see attached Table 3).
As we entered 1999, it became more likely that we were moving into a period of sustained
surpluses. With this transition, we realized we needed to turn to new debt management tools, as
well. Since then, we have added new debt management tools in three areas: debt buybacks,
regular re-openings, and revisions to Treasury's auction rules. In addition, we worked with the
Federal Reserve on new guidelines for managing their System Open Markets Account
("SOMA").
Buybacks
2
In early 1998, Treasury's Borrowing Advisory Committee recommended that we consider
instituting a debt buyback program to reduce debt while preserving the liquidity of our
benchmark issuance. The Committee cannot take all of the credit for this idea, however, as it
was first recommended by Secretary Alexander Hamilton in his report to Congress in 1795.
Treasury, in fact, has used buybacks throughout our nation's history in periods of sustained
budget surplus, most recently seventy years ago.
We felt the initiation ofa buyback program would be beneficial in a number of ways. We
believed that by allowing more issuance of Treasury securities, it would best promote liquidity.
Debt buybacks, by bringing more balance to our debt paydown, also would help us to manage
the maturity structure of Treasury's outstanding debt.
There were many critical decisions in re-instituting buybacks after such a long period. One of
the greatest challenges was to make sure that buybacks were not caught up in partisanship or
politics in any way. One of the hallmarks of debt management is that, as a core-function of
government, it has been non-partisan. We therefore worked closely with the Office of
Management and Budget and with Congress to ensure that the rules developed for the budget
treatment of buy backs were neutral. This was no small achievement. More than once in the 19th
Century, Treasury had tried and failed for budgetary reasons to obtain the support of Congress
for a debt buyback.
Today, Treasury will have completed the $30 billion of buy backs we targeted forthis year.
We're very pleased with the results of this initial year. Debt buybacks have now become a
regular and predictable part of our debt management program. We have now instituted the
practice of announcing our target buyback amount at our Quarterly Refunding press conference.
At the last refunding, we announced that we would target buybacks of $3 billion each month
through the first calendar quarter of 200 1.
Re-openings
The second new tool was the initiation of regular reopenings. As the size of coupon issuance
shrank it became important to concentrate the remaining issuance on fewer unique offerings.
Treasury had used reopenings from time to time in the past for the long bond and the 10-year
note, but not on a regular basis. We believed, however, that reopenings would allow Treasury to
maintain large, liquid debt issues, while maintaining a quarterly issuance program for longermaturity debt, il)c1uding the five-year note. We believed, also, that reopenings should be a
regular and predictable feature of the market. Interestingly, the most significant challenge to
getting this done was that Treasury had to issue new rules on tax treatment for reopened
securities.
Auction Rules
The third set of new tools has been changes to Treasury's auction rules. First, we changed the
rules to use single price auctions for all marketable debt issuance. This improved auction
participation and reduced the cost of financing Treasury's debt.
3
Second, we announced a series of technical, but important, changes to the rules that apply to
participation by Foreign and International Monetary Authority ("FIMA") account in Treasury
auctions. These changes are intended to bring FlMA accounts more fully into the competitive
auction.
The primary market for Treasury's debt has been segmented into competitive and noncompetitive bidders. As our issuance decreases, we felt it was important to integrate these
segments to the greatest extent possible. Bringing foreign central banks more fully into the
competitive auction will improve the liquidity and efficiency of the Treasury market and allow
the Treasury to better control the amount offunds raised at auction.
System Open Market Account
Lastly, we also worked closely with the Federal Reserve Board and the Federal Reserve Bank of
New York as they have developed new policies for the purchase of Treasury securities for the
System Open Market Account. They set various limits across the yield curve for Federal
Reserve holdings of Treasury securities. These limits would lead the Federal Reserve to have net
redemption in the primary market and therefore to purchase more securities in the secondary
markets through coupon passes. The changes are designed to assist the Federal Reserve in
conducting monetary policy in an environment of declining Treasury issuance. Their policy
change has given us more alternatives, however, as their net redemptions provide us with greater
flexibility. Over the next two years, we estimate that they will have coupon redemptions of $15
to $20 billion each year.
Looking Forward
The reorientation of Treasury's debt management has been a gradual process, much like turning
a battleship, but the battleship has turned. Current forecasts, from both private sector and
government sources, are for annual budget surpluses of at least a quarter of a trillion dollars for
several years. Some forecasters are increasing their surplus projections. While actual budget
outcomes will depend on economic developments and political decisions, it seems likely that
substantial surpluses will persist for some time. The challenge of the next several years,
therefore, will be to pay down more than twice what we already have paid down in the last three
years.
At the same time, the amount of maturing coupon securities will fall substantially. While more
than $425 billion come due in 200 I, the amount of maturing debt is expected to fall to
approximately $300 billion in 2003 and even further in the following year. With this in mind, I
would like to touch briefly now on the three challenges that I see ahead for Treasury's debt
management: tactical debt management decisions, market adjustments, and Federal Reserve
policy on holding Treasury securities.
Tactical Debt Management Decisions
No doubt there will be a number of important tactical debt management decisions with regard to
size and frequency of issuance and buybacks. Treasury's Borrowing Advisory Committee
4
already has recommended that Treasury eliminate issuance of the 52-week bill in February. We
have worked with Congress to revise statutes that reference the auction yield of the 52-week bill,
proposing references to the one-year constant maturity yield. We have received bipartisan
support and we are optimistic that some, if not all, of these revisions will be completed before
Congress finally goes home. Whatever happens in the last days of Congress, elimination of the
52-week is the next appropriate step toward concentrating liquidity into our remaining issues.
As further adjustments to Treasury issuance become necessary, the Borrowing Advisory
Committee has suggested the next adjustment Treasury should consider would be a reduction in
the frequency of issuance of two-year notes from monthly to quarterly. The two-year note
currently represents over half of Treasury's coupon issuance, so it is the most likely next place to
go to cut issuance. Based on current budget projections, however, such an adjustment is not
likely to be needed for the next year or possibly two.
Possible elimination or reduction of the 52-week bill and two-year note are relatively near-term
adjustments. It is possible that, as budget surpluses evolve over the longer term, Treasury may
need to consider additional changes. The challenge of Treasury's debt management, however, is
the inherent variability of forecasts. The need for flexibility in the face of this uncertainty is the
primary reason Treasury has continued to issue 30-year bonds.
If there continues to be a substantial paydown in the debt, no doubt Treasury will examine all
options in the future, including some Treasury's non-marketable debt programs, such as the State
and Local Government Series or "SLGS." While Savings Bonds also are part of non-marketable
debt, the Savings Bond program has a value that goes far beyond the financing it provides to
Treasury. The Savings Bond program represents an important vehicle to facilitate increased
private savings, particularly among small savers. It is more important than ever to encourage
saving as we near retirement of the baby boom generation.
It is also likely that Treasury will need to add even further new debt management tools in the
future. Treasury's Borrowing Advisory Committee already has recommended that Treasury
consider making coupon and principal STRIPS fungible and conducting debt exchanges. These
may be issues for Treasury's debt managers to examine in the future.
Market Adjustments
Continued fiscal discipline has led to significant economic benefits. Further, debt reduction will
lead to macroeconomic benefits of increased national savings and greater availability offunds
for private investment. The decrease in Federal debt has reduced long-term interest rates and
lifted output and incomes in a virtuous circle that has created further surpluses. There are a
number of microeconomic challenges to be faced by the financial markets, however, as the
supply of Treasury securities declines.
We believe that the markets will continue to function efficiently as other instruments
increasingly serve the functions for capital markets that Treasuries currently serve. The
competitiveness, creativity, and innovation of the U.S. financial system will ensure a smooth
5
transItion. The process of adaptation will take time, but the transition period is already well
underway.
It is likely that a variety of instruments will replace Treasury securities with respect to their
various functions. Market participants will determine which instruments or combinations of
instruments best meet their needs. As we continue on the path of debt reduction, the market will
determine what instruments will be most widely used for what purpose in the future.
As the markets tum increasingly to swaps to take on some of the functions played by Treasury
securities, it is ever more important to provide legal certainty for this OTC derivatives. We have
worked vigorously to pass legislation providing legal certainty for swaps under the Commodity
Exchange Act. I am very pleased to announce that we reached agreement late last night with
Congress on such legislation, the Commodity Futures Modernization Act of2000. This
legislation, if enacted, will provide legal certainty, promote innovation, and enhance the
competitiveness of U. S. financial markets.
The government will have some adjustments of its own to make with the reduction in Treasury
debt. As we have seen with the 52-week bill, marketable Treasury securities are used as a
reference in statutes for a variety of public and private purposes. Amongst those purposes are
setting the interest rate on non-marketable Treasury securities issued to the Social Security and
other Federal trust funds.
In the meantime, the market for Treasury securities remains the deepest, most liquid securities
market in the world. Treasury will continue to promote the liquidity of its securities in the
environment of declining debt. To do this, we have sought to integrate the foreign central banks
into the auctions, to concentrate on fewer, larger, uniqlle issues, and to pursue a continuing
buyback program.
Implications for the Federal Reserve
The Federal Re~erve currently holds about $530 billion of Treasury securities, or more than 17
percent of the publicly held marketable debt. They currently are working on a study of the
implications of shrinking Treasury debt issuance on how they implement monetary policy.
Treasury has fully supported their efforts. As Treasure debt has declined, Treasury, the Federal
Reserve, and the markets have benefited from the close working relationship we have developed.
There are a number of possible alternatives they are examining. We believe they will find
effective ways to implement monetary policy in an era of declining debt.
Conclusion
I would like to conclude on a personal note. This has been a wonderful time to be at Treasury.
The economy has been strong. Treasury has had the great leadership of Secretary Rubin and
Secretary Summers and, more importantly, of President Clinton, all of whom have worked hard
to grow the economy, promote fiscal discipline, and enhance the competitiveness of markets.
They have done this while promoting consumer protection and working to ensure that all
Americans share in the benefits of this economy_ It also has been a privilege to be able to work
6
on such interesting challenges. Beyond the challenges of paying down nearly $400 billion debt,
it's been a time when we were able to achieve major legislation repealing Glass-Steagall, to
modernize derivatives regulation, and to lay the foundation for electronic commerce through
passage of the E-Signature Act. We also were able to enact important new consumer financial
privacy legislation and underscore the promise of community development, particularly through
the President's New Markets initiative. I would like to thank the Bond Market Association and
particularly Treasury's Borrowing Advisory Committee for their contributions along the way.
Thank you.
-30-
7
DEPARTMENT
OF
THE
TREASURY
TREASURY (?i.!;fl:
NEW S
J~~ .
~I78~9~. . . . . . . . . . . . . . . . . . . . . .. .
.........................
ornCE OF PUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960
FOR IM:MEDIA TE RELEASE
December 14, 2000
STA TEMENT BY TREASURY SECRETARY LAWRENCE H. SUMMERS
We are pleased with the agreement reached last night on over-the-counter derivatives.
We hope that Congress will now pass this important legislation that will allow the United States
to maintain its competitive position in this rapidly growing sector by providing legal certainty
and promoting innovation, transparency and efficiency in our financial markets.
-30-
LS - 1074
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
DEPARTMENT
'IREASURY
OF
THE
TREASURY
NEWS
OFFICE OF PUBliC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASlllNGTON, D.C. - 20220 - (202) 622·2960
FOR IMMEDIATE RELEASE
Text as Prepared for Delivery
December 7,2000
"WHY HAVEN'T PRICE-LEVEL-INDEXED ANNUITIES
TAKEN THE FINANCIAL WORLD BY STORM?"
TREASURY ASSISTANT SECRETARY FOR ECONOMIC POLICY DAVID WILCOX
REMARKS TO 2000 STANFORD LIFE INSURANCE TAXATION WORKSHOP
WASHINGTON, DC
I.
Introduction
It is a pleasure to be here with you tonight. It is particularly gratifying to have the opportunity to
speak to representatives of and experts about an industry that will be at the leading edge in
creating solutions to the demographic challenge of the retiring baby-boomers.
Back before the dawn of the modern financial era - that is, before the Treasury had issued pricelevel-indexed securities - I did the best I could as a low-level member of the staff at the Federal
Reserve Board to agitate in favor of the. Treasury taking this important step. As you know, in
January 1997, the Treasury did in fact begin issuing these securities (though I strongly suspect
that the correspondence between my agitation and the actions eventually taken by the Treasury
Department was more coincidence than causal). Today, more than $100 billion of the pricelevel-indexed securities have been sold, with maturity dates ranging between 2002 and 2029.
Moreover, I might note that the new inflation-protected I-bond accounts for about a third of our
sales of savings bonds.
Nothing has changed my mind about the wisdom of Treasury having issued price-level-indexed
securities. However, it is the case that one of the arguments that I among many others made in
support of Treasury issuance of the new securities has not come true. In particular, I argued that
Treasury issuance of price-level-indexed securities, by finally providing insurers with a means of
hedging their price-level risk, would allow the introduction of a new class of retail products
offering ironclad protection from inflation. Perhaps the most important of these new products, I
speculated, would be price-level-indexed life annuities.
Nearly four years after the introduction of TIPS, it still hasn't happened. True enough, there
have been one or two exceptions or near-exceptions - perhaps most notably the variable annuity
offered by CREF, with a payout that is tied to the performance of a portfolio invested entirely in
L8-1075
For press releases, speeches, public schedules and official biographies, call our 24~our fax line at (202) 622-2040
·U.S. Government Pr,ntlng O",ce: 1998 . 619-559
TIPS. This contract comes very close to providing payouts with constant purchasing power,
though as I shall note below, the buyer response not exactly been overwhelming.
So what I would like to do tonight is to tell a detective story about the non-emergence of pricelevel-indexed securities, more or less in the manner of an Agatha Christie story. When John
Shoven asked me to give this talk, I thought it might be difficult to come up with plausible
explanations for this "crime." But I'm happy to report that the authorities have been able to
round up a bevy of suspects. So I would like to parade these suspects before you, examine the
evidence on each one, and see if we can convict a culprit.
D.
The Annuity Market Today
Let me set the stage by being clear about exactly what the mystery is that we are investigating.
The essential characteristic of the "missing" product that I have in mind is that the purchasing
power of the payments it would provide would be unaffected by inflation surprises.
This is to be contrasted with - among other things - a fixed annuity in which the distributions to
the policyholder are specified as a fixed number of nominal dollars regardless of their purchasing
power, or a variable annuity in which the distributions depend on the investment performance of
an underlying portfolio.
It is often claimed that a variable annuity tied to the performance of the stock market protects the
annuitant against inflation risk, but history suggests otherwise. Brown, Mitchell, and Poterba,
for example, find that from 1930 through 1997, the correlation between unanticipated inflation
and unanticipated changes in nominal stock prices is actually negative. In other words, when the
inflation news is bad, nominal stock prices tend to fall - just the opposite of what an inflation
hedge should do.
Overall, the facts of annuities seem to be these: a goodly fraction of retirement savings is not
annuitized, and most of the annuities that are purchased are in the form of either fixed or variable
annuities. Almost none of it is in the form of purchasing-power-guaranteed annuities. At TlAACREF, for example, 41 percent of the amount in 1999 that was annuitized was taken in the form
of nominal annuities; another 44 percent was taken in the form of variable annuities, 14 percent
in the form of their so-called graded annuity, and a more 0.2 percent in the form of their
inflation-protected annuity. And that is the puzzle.
It is interesting to note that real annuities are available in a few other countries, including Chile,
Israel, Australia, and the UK. Chile and Israel have plenty of experience with high inflation, so
it is not particularly surprising that their financial institutions might be more oriented toward
dealing with inflation risk. And the UK began issuing index-linked gilt securities in the early
1980s, so its financial sector may be at a later stage of development in this respect than our own,
and might possibly offer us a glimpse of our own future.
2
ill.
Rounding Up The Suspects
With that as background, then let us move to the trial phase of this enquiry. I proceed by calling
each suspect to the dock.
A. All innovation takes time, and this one is no different
A first possibility is that innovation takes time in the financial world, just as it does in any other
realm oflife. By this hypothesis, in other words, "the check is in the mail," though probably not
- as some clever person quipped - in the email. I should say that we ourselves are no strangers
to lags in the development of new financial products. The State of Massachusetts created the
first indexed debt in 1780. And less than three centuries later, the US Treasury followed suitl
Anecdotally, about a decade passed in the UK before a deeper appreciation of the usefulness of
index-linked gilts took firm root.
B. The non-availability ofprice-level-indexed corporate debt
A second possibility is that the introduction of Treasury inflation-protected securities was a good
first step, but that the essential precursor for price-level-indexed annuities is the emergence of a
meaningful market for corporate indexed debt.
The logic of this view runs as follows: The typical portfolio backing a conventional nominal
annuity is mainly invested in corporate debt and mortgage-backed securities. Backing the
annuity obligation with private securities allows the annuity provider to earn 100 or 150 basis
points above the Treasury rate, and therefore to offer a richer annuity contract. By comparison, a
conventional nominal annuity backed entirely by nominal Treasury securities of the same
duration would appear to offer a poor return. And so, by analogy, would a price-level-indexed
annuity backed entirely by TIPS.
C. The fiscal outlook
Another possibility is that potential providers of price-level-indexed annuities have been taking
on board the tremendously favorable fiscal news of the last few years. The latest of those
projections, released last summer, showed the debt held by the public being paid off altogether
by 2012, potentially leaving would-be providers of price-level-indexed annuities with no means
of hedging their inflation risk.
Let me offer two reasons for taking that projection seriously. First, the economic assumptions
that underlie the projection remain conservative, as they have been throughout the Clinton
Administration. Second, the Social Security surpluses alone will be large enough, according to
our most recent projection, to get the job done by about 2015.
D. Nominal illusion
Turning to the demand side of the equation, a fourth admittedly prosaic possibility is that
potential annuitants suffer from what economists refer to as "nominal illusion." Nominal illusion
3
is a form of confusion that derives from an inability to evaluate dollar amounts, interest rates,
and other financial magnitudes in inflation-adjusted terms. For example, when confronted with a
choice between receiving a fixed nominal payment of, say, $1,000 per month for as long as they
live, versus - say - $750 per month indexed to the price level, many people would choose the
former option simply because it involves the higher initial payment. Nominal illusion will make
indexed annuities a tough sell, and will require sustained effort to overcome.
E. Adverse selection
Another demand-side possibility - rather contrary in spirit to the preceding hypothesis - is that
potential annuitants really are sophisticated, and understand that the payments on a real annuity
will be more back-loaded than under a nominal annuity, and therefore subject the real annuity to
even more adverse selection than the nominal one. The presence of greater adverse selection
implies that, for any given potential annuitant, the real contract will look like a worse deal leaving aside, of course, long-term price-level risk - than the nominal one.
And indeed, there is some international evidence of just this sort. For examp Ie, a variety of
studies conclude that the "money's worth" of a typical real annuity in the UK is lower than the
money's worth of a typical nominal annuity.
F. Absence ofprice-level risk
Another possibility that is often mentioned to me is that individuals simply don't believe that
there is enough price-level risk to warrant the purchase of purchasing-power insurance. Let me
be clear that, by "price-level risk," I mean to refer to surprises in either direction in the
purchasing power of a dollar.
It seems to me that this "suspect" runs into two important difficulties. First, the relevant
uncertainty pertains to surprises in the price level at very long forecast horizons - potentially as
far ahead as 20 or 30 years. I don't know a single macroeconomic forecaster who believes that
he or she can predict the price level at that horizon with any confidence. Therefore, it seems to
me that the premise oflow price-level risk - even given today's low inflation environment - is
questionable at best.
Second, suppose we were to grant the premise of low long-term price-level risk. Then it seems
to me we would be driven to the conclusion that insuring against that risk would be very cheap not that we should take out the insurance. On the whole, I am skeptical that this explanation has
much to say about the matter.
G. Tax effects
Lastly, there is the possibility that price-level-indexed securities might be treated less favorably
by the tax code than their nominal cousins. While I am not in a position to deliver a definitive
statement on this issue, at least as a first cut, I can say that if they ever issued inflation-protected
annuities, insurance companies probably would issue them out of their general account, so that
the profits from issuing the contracts would be taxed under the same regime that applies to so-
4
called "fixed" annuities. There are no federal tax-law barriers in this treatment. There may be
state law questions to be answered.
IV.
Judge and Jury
As I mentioned at the outset, when I agreed to give this talk, I worried for a while that I might
not be able to identify any plausible suspects. Now, I feel a bit more like Hercule Poirot on the
Orient Express, with a room full of potential perpetrators of the crime. As Poirot concluded, it
may be that many suspects indeed have had a hand in the crime.
Here is what I take away from the trial we have just conducted: I now suspect that two further
developments may be required for a market for price-level-indexed annuities to become well
established.
•
On the supply side, notwithstanding all the puzzles that it raises, I am inclined to think that
corporations may have to begin issuing price-level-indexed debt, and individuals may have to
borrow to a much greater degree through price-level mortgages.
•
On the demand side, we are going to have to undertake a major public education effort in
order to overcome nominal illusion in particular, and improve financial proficiency
generally. After all, a major social marketing campaign was required to persuade the
American public of the wisdom of wearing one's seatbelt while riding in a car or truck - and
that in a context where the adverse consequences of failure to comply were all to graphically
evident.
In this connection, I should note that the Treasury Department has been pleased to participate in
the launch of a new organization called the National Partners for Financial Empowerment, or
NPFE. The mission of the NPFE is to bolster and support the work of the many groups around
the country that are promoting the importance of personal financial management to all
Americans.
In that undertaking - the effort to educate the public about the wisdom of prudently providing for
one's long-term financial security in retirement - I solicit your continued commitment to a cause
that is essential to helping the nation prepare for the enormous demographic adjustments ahead.
I look forward to addressing this group again in ten years, long after a market for price-levelindexed annuities has taken root and flourished, and having the opportunity to talk with you then
about how your clients finally have a wonderful new financial tool for making their lives in
retirement more financially secure.
-30-
5
NEWS
TREASURY
PUBLIC CONTACT: Office of Financing
202-691-3550
FOR IMMEDIATE RELEASE
December 14, 2000
MEDIA CONTACT:
Una Gallagher
202-622-2960
TREASURY DEBT BUYBACK OPERATION RESULTS
Today, Treasury completed a debt buyback (redemption) operation for $1,250 million
par of its outstanding issues. A total of 9 issues maturing between August 2019 and
August 2022 were eligible for this operation. The settlement date for this operation will
be December 18, 2000. Summary results of this operation are presented below.
(amounts in millions)
Offers Received (Par Amount):
Offers Accepted (Par Amount) :
$4,193
1,250
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) :
9
7
5.567
19.7
Details for each issue accompany this release.
LS-1076
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
December 14, 2000
TREASURY DEBT BUYBACK OPERATION RESULTS
(amounts in mlllions, prices in decimals)
Table I
Coupon
Bii\;!:
(%)
8.125
B.500
B.750
8.750
7.875
B.125
B.125
8.000
7.250
Weighted
Average
Accepted
Par
Amount
Ia..t..e.
Par
Amount
Off ~J::!: d
Highest
Accepted
Acce~ted
~
~
08/15/2019
02/15/2020
05/15/2020
OB/15/2020
02/15/2021
05/15/2021
08/15/2021
11/15/2021
OB/15/2022
804
376
402
540
238
351
429
692
362
262
61
270
273
0
30
235
120
0
129.562
134.359
137.562
137.7B1
N/A
130.B75
131.093
129.765
N/A
129.542
134.314
137.516
137.757
N/A
130.864
131.075
129.723
N/A
Weighted
Average
Accepted
Maturity
Table II
Coupon
Rate (%)
Maturity
CUSIP
Lowest
Accepted
~
~
~
~
B.125
8.500
8.750
8.750
7.B75
8.125
B.125
8.000
7.250
08/15/2019
02/15/2020
05/15/2020
08/15/2020
02/15/2021
05/15/2021
08/15/2021
11/15/2021
OB/15/2022
912B10ED6
912B10EE4
912810EF1
912B10EG9
912B10EH7
912B10EJ3
912810EKO
912B10ELB
912B10EM6
5.559
5.561
5.561
5.564
N/A
5.573
5.572
5.571
N/A
5.560
5.564
5.564
5.566
N/A
5.574
5.573
5.575
N/A
Total Par Amount Offered:
Total Par Amount Accepted:
Par Amount
He1d*
Private1~
4,193
1,250
Note: Due to rounding, details may not add to totals.
*Amount outstanding after operation. Calculated using amounts reported on announcement.
17,663
8,479
6,872
16,991
9,471
9,101
9,025
28,663
9,415
OFFICE OF PUBLIC ArJ'A,4IlS .1500 PENNSYLVA~IA AVENUE. N.W•• WASHINGTON. D.C•• Z0220 • (20l) 612.2960
i1IBAlUIOl!i6) lDftn. 2: 3 0 P .K.
C~:
Decembe: 14, 2000
Office of
~inaneing
202/69l.-3550
'1'lUaSlJRY OPFDB 13-WEU AJU) ~6-WEiZ
, BXLLS
'!he 'rr....w:y will auc=1oll two 8ezoies of 'l'reasu%y hi.1.1a tot:aliDg
approz 1 matel.y
$~2,OOO million to refUDd $'8,84' mill.iOA of pUb1iely he1d
.ac:urities ...~uriDg Dec:8"'iMIr 21, ~OOO, and to pay down about: $26,8'7 millicm.
'!he amount. of maeuriDg pUblicly held securities includes the 50-day cash
maD&g~t.
bills iS8Ue4 November 1, 2000, in the amount of $32,021 million.
Xn a&!.1tion to the publ.ic hol4iDgs; Pederal. Resez:ve Ba:.aks for their cnm
aCC<NAts holc1 $8,832 millioD of the JDaturillg bills, which may be re£u.nQeCi at
the big-best ci1SCOUDt :rate of accepted CCIIIIPetitive teza4ers. Amo\m.ts i.ssua4
to these aCCOWlts will »e ~ aciciitiOA to tha offuiDg' amount.
The ma.turiAg bills beld. by the public inc:luc1e $S, 844 milliOZL bald
Feeral lteS8rV'e - n b as ageDts for foZ'ei~ az:ul inter=.ational 2IIOZI.8tazy
authorities, whic:ll . .y be refunded withilL the offeriz2g amount at -~ hiSfhest
by
cliscOWlt rate of accepteci cCIIIPetitiYe t8Zlders. A4ditiozaa.l amcNDt.S may be
issued. for such acCCWlts :l.f ehe aggregate iUDOUXlt of :DeW bids ex.cee4a the
aggregat:e IalllCNZLt of _turUag ~ills.
ft'USU%Jl'Direce cua~caers r8Cl'1esteci that we reiDv.st tbeizo maturiDsr holc1iAQ's of ~taly .952 ail110D into tlw 13"""- bill a.nd $1, l.~' ailliem
iDto the 26-week bi11.
'l'his offer~ of Treasv.zy securities is govcuec1 by the te2:1U az:ui ccmcliticms set forth in the Unifo:a Offer~ Cixc:ular foZ' the Sa1e aD4 :Issue 'of
Karketabl.e Book-Dtzy ftea8U%Y Bi11s, RQl;es, aAd Bcmda (31 CFR Part 356, as
aencled) •
I)etails aJ:)out eac:h of tbe
offering hiSJhl,ights.
GaW
securities are
000
LS-I078
Attachment
giV8l1
ill the attac:hec:1
HIGHLIGHTS
or
~REASURY
OFFERIUGS
or
BILLS
TO BB ISSUED DECEMBER 21, 2000
Dec.-ber 14, 2aoo
OfferiDg Amount ••••••••••••••••••••••••• $12,000 million
Description of Off.ring:
Tenn and type of ••curity •••••••••••.••• 91-day bill
CU8J:P nUlRber ••••••••••••••••••••••••.••• 91:1795 I'Y 2
Auction dat •••••••••••••••••••••••••.••• December 18, 2000
Xame c1at ••••••••••••••••••••••••••••••• Deoaxnber 21, 2000
Maturity dat ••••••••••••••.••••••••••••• Maroh 22, 2001
Original i.sue d.t ••••••••.••••••••••••• S.ptember 21, 2000
Curr.ntly out.t.n4ing ••••••••••••••••••• $12.793 million
HinLmum bid amount and mu1tipl ••••••••••• l,000
$10,000 adllion
182-day bill
912795
QtJ
Deoamber
D.cember
.lUne 21,
December
7
18. 2000
21, 2000
2001
21, 2000
$1,000
The following rul •• apply to .11 .ecuritiea mentioned above.
Submission of Bids,
'Nonc~.titive bids ••••••••• Accepted in full up to $1,000,000 at the highest discount r.t. oe
accepted competitive bida.
Coapetitive bids ••••••.••••• (1) MUst be espressed •• a diacount rate with three decimals in
increments of .005%. e.g., 7.100%, 7.105%.
(2) Net long position for each bidder must ba reported when the swm
of the total bid amount, at all 4iscount rates, and the nat long
position is t1 billion or gr.ater.
(3) Het long position must be determinea as of one half-hour prior
to the closing time for rec.ipt of competitive tenders.
JlaximWl\ a.cognized 8i4
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 .tandard time on auction day
Caqpetit:lve ten4era ••••••••• prior to 11 00 p·~m. eastern standard time on auction d.y
J
Payment !:erms I By cha.rge to a fund. account at' a Federal a.eserve Bank on issue 4at., or payment
of full par amount with ten4er. ~r.asur.v.Djr.ct customer. can u.e the Pay Direot feature which
authorizes a charge to the1r account of record at their financial institution on is.ue date.
UBLIC DEBT NEWS
Department of the Treasury •
Bureau of the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
December 15,2000
Contact: Office of Financing
202-691-3550
TREASURY'S INFLATION-INDEXED SECURITIES
JANUARY REFERENCE CPI NUMBERS AND DAILY INDEX RATIOS
Public Debt announced today the reference Consumer Price Index (CPl) numbers and daily
index ratios for the month of January for the following Treasury inflation-indexed securities:
(1)
(2)
(3)
(4)
(5)
3-3/8% 10-yearnotes due January 15,2007
3-5/8% 5-year notes due July 15,2002
3-5/8% lO-year notes due January 15,2008
3-5/8% 30-year bonds due April 15,2028
3-7/8% lO-year notes due January 15,2009
(6) 3-7/8% 30-year bonds due April 15,2029
(7) 4-1/4% 10-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 (RefCPI) 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 caning 202-622-2040 and requesting document number 1077. The information is also
available on the Internet at Public Debt's website (http://www.publicdebt.treas.gov).
The infonnation for February is expected to be released on January 17, 2001.
000
Attachment
PA-481
LS-I079
http://Wl'VW .publicdebUreas.gov
TREASURY INFLATION-INDEI(EO SECURITIES
Re' CPt and Index Ratloa for
January 200'
Security:
oucrlptlon:
CUSIP Number:
oaled Dafe:
OfIginaf Issue Date:
Additronlllissue Dale(s):
Naturitv Dale:
Ref CPI on oelM Date:
Date
Jan.
1
Jan.
2
Jan.
Jan.
Jan.
Jan.
Jan.
Jan.
Jan.
Jan.
Jan.
Jan.
Jan.
Jan.
Jan.
3
4
5
Jan.
Jan.
Jan.
Jan.
e
7
e
9
10
11
12
el
1,(
15
16
17
Jan.
18
19
20
21
Jan.
Jan.
22
23
Jlln.
24
25
Jan.
Jan.
Jan,
JaIL
Jan.
Jan.
Jan.
Jan.
26
17
2.8
29
30
31
2001
2001
z001
2001
2001
2001
2001
21)1)1
2G~1
2D01
21101
2001
2001
2001
2001
2001
2001
2001
2001
ZOOI
ZOOI
ZOCl1
2001
2001
2alll
2001
2001
2001
2001
2001
2001
CPl·U (NSA) tor :
3-318% ,o.V'ear Notea
Sarin A-2007
9128272M3
Jllnu&Ty 15, 19117
February 6, l':In
Apnl15, 1997
~W% 5-Year Notes
Series J-2002
912B273A9
JulV 15, 1997
July 15, 11197
October '5,1997
January 15, 1998
JCI11uary 15, 191)3
October 15, 1&98
3-'5/8% 30·Year Bondi
Bondi of April 2028
912810Fl)5
April 15,19911
April 15,1998
July 15,191)3
JanU'ary f5, 21107
July 115, 2002
160.15484
January 15, 2008
161.55484
April 15,2028
161.740110
158.43548
3-618% 10-Year Notea
SaJ1" A.·2008
912827n7
RefCPI
Ind8ll Ratio
Ind&xRmo
Index Ratio
IndeJI Ratio
174.00000
174.0032J
174.Cl064$
174.00!l69
174.111290
174.01813
174.01935
114.02258
174.02581
174.0290)
174.03226
174.03548
174.0l87 I
174.04194
174.04516
174,0483i
174,,05161
174,,05484
I 74.05B06
17....06129
17....0~2
17....06"4
174.07097
f74..07'(19
114..07742
174.080&5
174..08387
174.08710
174.09032
174.093.55
174.09677
1.09624
1.09826
1.08645
1.08647
1.08649
1.08651
1.1l8653
1.118&55
1.CJe657
1.06659
1.08$6'
1.08663
1.0&665
1.08667
1.08669
1.08671
1.08673
1.08675
1.M677
1.08679
1.08681
1.086&3
1.0B645
1.08687
1.08fia9
I.OMSI
1.0869l
1.086115
1.086111
1.07703
1.07705
1.07707
1.07709
1.07711
1.07713
1.07115
1.07717
1.1)7719
1.01721
1.07723
1.07125
1.01727
1.07729
1.07731
1.0773l
1.07735
1.07737
l.on39
1.07741
1.07743
1.07145
1.07147
1.07149
\.017SI
1.01753
1.01755
1.01757
1.017!!!
1.01751
1.07763
1.07580
1.07582
1.07Sfl4
1.07586
1.07588
1.07590
September 2000
1.09a.u
1.09630
1.09&32
1.09834
1.09136
1.1\9&38
1.11!)3411
1.09-342
1.09844
1.00&41.\
t.09848
f.098!0
1.419852
t.09854
'-09856
1.09856
1.09861
1.091363
1.098115
1.09867
1.1J98119
1.09871
1.09813
1.09675
1.09877
1.09819
1.09681
1.098B3
1.098B5
113.7
I.~i
1.08101
1.08703
1.08705
October 2(100
t.07592
1.07594
1.07596
1.07598
1.07600
1.01602
1.07604
1.07606
1.07608
1.0761.0
1.07612
1.07614
1.07616
1.07618
1.07820
'1.07622
1.07624
UJ762e
1.07628
1,07630
1.07632
1.07634
1.07636
I
I
1.075~
1.07640
174.0
November 2000
-
,
I
-
-
-
174.1
TREASURY INFLATION-INDEXED SECURfTlES
Ref CPI and Ind&x Rat\O~ ror
January 2001
SeCUrity:
3-7/8% 1o-Yea, Notes
Settes A·2009
!I1WT4Y5
January 15, 1999
January 15, 1999
July 15, 1999
Description:
CUSIP Number.
Dated02l1Je.:
OrigInal Issue Date:
AddItional lDue Date(.):
Matu rIty Date:
January t!, 2000
164.011000
Rei CPI on Dated Da~:
Date
Jan.
Jan.
Jan.
Jan.
2
3
4
Jan.
S
Jall.
6
7
8
9
10
11
Ja'II.
JoIkl1.
Jan.
Jan.
Jan.
Jan.
Jan.
Jan.
Jan.
Jan.
Jan.
Jan.
Jan.
Jan.
Jan.
Jln.
Jan.
Jan.
Jan.
Jan.
Jan.
Jan.
Jan.
Jan.
Jan.
1
200\
2001
2001
2001
2001
20411
2001
2001
6001
13
14
2001
2001
2001
2001
2<101
Is
2~01
IS
25
26
Z7
18
29
21)01
200'\
2D01
2001
2001
2001
2001
2001
2001
2001
2001
21)01
2001
2001
30
31
200'
200'
tz
17
1e
19
20
21
22
23
24
CPI-V (NSA) lor:
--I
o
--I
:D
r
LI
IS!
:.,J
3-718% 3B-Year Bonda
Bends of April 21129
912810FHS
Aprfl15, 1999
April 15, U99
Octokler 15, 1999
Ow>i»er 15, 2000
Aprll15, 2029
164.39333
.....114% 10·Year NotK
SerIes A·2&10
&I2IlZ75W8
January 15, 2000
January 18, 201)0
July 15, 2000
January 15, 2010
168.14516
RefCPI
Inliu Ratio
IlIdex Ratio
Index Ratio
(74,00000
I 14,OOm
114,00645
1..06098
1..06100
1.06101
1.06103
1.06105
1.06107
1.08109
1.06111
1.06113
1.06115
1.06117
1.06119
1.C18121
1.08123
1.06125
1.06127
1.05844
1.G5846
1.G584a
1.05850
t.05852
1.05854
tOSS!5!
1.05857
1.05859
1.115861
1.03421
1.03422
1.03424
174..00968
1Tot.OlliO
174.01613
174.0f935
174.02258
174.0.Z581
174.0290)
174..03226
174.03548
114.Q3871
114..04194
114.04516
174..048:J.9
114.05161
174.05484
114.05806
174.06\29
174.06452
174.006774
174,070U
174.074U
174,07742
174..08065
174..015387
174.011110
174..OBOal
174..0i35S
114..09677
September 20110
1.06t2~
1.06f31
1.06133
UJ6135
1.06131
1.061"
1.116141
1.06143
1.06145
1.OU47
1.06149
1.06151
1.Q6153
1.06155
1.06151
173.7
1.03426
1.D3428
1.03-430
1.03432
1.03434
1.03436
1.00438
1.03440
1.058&3
1.05865
1.05867
1.03442
1.0344t
1.05869
1.058"
1.1)5873
1.05875
1.05817
1.05879
1.ossa1
'.05883
1.05885
1.115887
1.03445
1.03447
1.03449
".03451
1.0:w53
1.0345'
1.1)3457
1.03459
1.03461
1.03463
1.03465
1.05889
1.05891
1.05893
1.05Q5
1.034E1
1.03466
1.113410
1.D3412
1.03474
1.03476
1.03478
1.~7
1.05a99
1.05901
1.1l6903
Oc:tcber 2000
I
174.0
NowmDer 20110
-
-
--
174.1
TREASUR Y-ANNOUNGBSEFFECTIVE DATES OF PROTOCOL TO GERMAN EST..
9
t
···,.1
17e9
Page 1 of 1
TREASURY NEWS
FROM THE OFFICE OF PUBLIC AFFAIRS
FOR IMMEDIATE RELEASE
December 18, 2000
LS-I080
TREASURY ANNOUNCES EFFECTIVE DATES
OF PROTOCOL TO GERMAN ESTATE AND GIFT TAX TREATY
The Treasury Department today announced that a protocol to the estate and gift tax treaty with
Germany entered into force on December 14,2000. The protocol, to which the U.S. Senate gave
advice and consent to ratification in 1999, amends the existing estate and gift tax treaty between the
United States and Germany, which was signed in 1980.
On December 14, the United States and Germany exchanged instruments of ratification, the final step
required to bring the treaty into force. The treaty applies generally with respect to deaths occurring
after December 14, 2000. However, the estates of certain persons dying after November 10, 1988,
may be eligible for benefits relating to the unified credit and marital deduction, provided that a return
or claim for refund asserting those benefits is filed no later than December 14, 2001, or within the
otherwise applicable period for filing the return or claim under U.S. law.
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Treasury SeCretary Lawrenee H. Summers Remarks to the IMF Advisory CommitteeWash.. Page I of (
FROM THE OFFICE OF PUBLIC AFFAIRS
FOR IMMEDIATE RELEASE
December 18, 2000
LS-1081
TREASURY SECRET ARY LAWRENCE H. SUMMERS REMARKS
TO THE IMF ADVISORY COMMITTEE
WASHINGTON, DC
Thank you. I welcome the opportunity to meet with this Committee today and hear your views about
how reforms are progressing at the International Monetary Fund (IMF).
As you know, this Committee was created as part of the bipartisan agreement to support U.S.
participation in the IMF quota increase in the fall of 1998. At that time, the financial crises that began
in Thailand in the summer of 1997 were still very much with us. And it was widely agreed that while
the experience in responding to those crises had reaffirmed the central importance of the IMF, it had
also shown the need for significant institutional reform. Accordingly, the legislation laid out a range
of policy priorities that needed to be promoted more vigorously at the IMF, many of which were
consistent with reform efforts that the Treasury had pursued within the IMF for some time. These
priorities include: promoting open markets, strengthening financial sectors, reducing corruption,
increasing transparency, advancing core labor standards and establishing a process for evaluating the
IMF.
Over the past fifteen months, Committee members have had the opportunity to examine and discuss
the progress made toward promoting these priorities, and thus enhancing the effectiveness of the
IMF. And the Treasury department has also invested considerable time and effort in monitoring
progress toward the key goals identified in the legislation: including through an internal task force,
focusing specifically on policy mandates relating to the IMF, which has been in operation for nearly
two years.
Just over a year ago in London, following on the measures highlighted by the Congress, I highlighted
several further priority areas for reforming the IMF. The guiding theme of my proposals was to equip
the IMF for the challenges of the modem capital markets: specifically, by increasing the flow of
information to markets, streamlining IMF lending tools, focussing more carefully on financial
vulnerabilities in the emerging market economies, and modernizing the IMF as an institution.
To be sure, we still have a great deal of work to do if we are to build the IMF that we would all like
to see. But we can take some satisfaction from the progress that we have already achieved.
I would like to spend the rest of my today outlining the most recent developments in the reform of the
IMF in six areas that were highlighted in last year's speech in London: enhanced transparency and
accountability; streamlining of IMF lending tools; more effective surveillance of financial
.
vulnerabilities; promoting market-based solutions to crises; and putting growth and poverty reductIOn
at the center of IMF policies.
http://www.treas..gov Lpress/re1eas e sf ps:.1081.htm
2/9/01
Treasury Se~retary LawrenceH.Summers Remarks to the IMF Advisory CommitteeWash .. Page 2 of6
I will cO!lclude by seeking your views on key questions regarding the IMF that the US will need to
address m the years ahead.
I. Progress on Key Reform Priorities
1. Enhanced Transparency and Accountability
There has truly been a revolution in the past few years in the degree of transparency in the IMF. Only
three years ago, alr:tost every document produced by the IMF, whether it related to policies,
programs; or su~eIllance, was shrouded in secrecy and the Fund website had hardly begun. Today,
the web SIte receI.ves more than 100,000 hits a day, and carries a constantly updated range of
documents covenng nearly every aspect of the IMF's activities.
For example:
• Most country Letters of Intent are released (90 percent between June 1999 and July 2000).
• Since 1998, Public Information Notices (PINs) have been issued following Article IV
consultations about 80 percent of the time.
• The IMF publishes its Financial Transactions Plan quarterly.
• IMF officials have also instituted a regular weekly press briefing session.
• As of this summer, IMF has made permanent its pilot project for the release of Article IV staff
reports a permanent program, so as 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
PINs.
This is not to say that our work is done. We continue to press for broader acceptance of the notion
that information should be released unless there is a compelling reason not to do so. In particular, we
strongly believe that all countries benefiting from Fund financial assistance must make public the
nature of their reform programs and commitments, including Letters ofIntent, Memoranda of
Economic and Financial Policies and Technical Memoranda of Understanding.
Accountability - and effectiveness - also depend on a credible mechanism for examining the Fund's
record and identifying lessons for its operations going forward. That is why the creation of an
independent evaluation office has been a key plank of our strategy for reforming the IMF. In this
context I am glad to say that with crucial help and advice from outside experts, including several
American NGOs, we have been able to agree the terms ofreference for such an office, and we expect
it to become operational early next year.
2. Streamlining IMF Lending Tools
It has been a central part of our vision for a modem and effective IMF that it should seek to be
lending only on an emergency short-term, emergency basis, encouraging countries to develop
sustained access to private sources of finance and to avoid repeated reliance on IMF finance.
In line with these goals, we believe that it is important that the terms and conditi~ns of I~F lending
provide both strong incentives for countries to adopt strong policies and are conSIstent WIth both the
modem realities of global capital markets, and the short-term character ofIMF finance.
The streamlining measures that were agreed by IMF Executive Board shortly ~efore t.he Annual
Meetings last September are consistent with these objectives. Among other thmgs, thIS agreement:
• Limits medium-term lending and establishes an expectation that borrowers will repay nonconcessional resources early.
http://www.treas.gQv/pw~~eleaseslpslD81.htm
2/9/01
Treasury Se('J'etary Lawrence ~Sl.oomers Remarks to the IMF Advisory CommitteeWash.. Page 3 of
• Introduces higher interest rates for borrowing above threshold amounts.
• Enhances the Contingent Credit Line as an incentive for countries to adopt strong policies
before crises strike .
• And strengthens post-program monitoring.
We believe the result of these changes will be a stronger and more resilient IMF going forward: one
that supports and d?es n?t sU1?P}ant acc.ess to private capital markets; and that lends, for the most part,
on a short-term basIs, With pncmg to dIscourage casual or excessive use of IMF funds and to enhance
the incentive to repay as quickly as possible.
3. Reducing Financial Vulnerabilities and Preventing Crisis
The IMF's e~gagement with member countries goes well beyond emergency lending. Indeed, it is
almost certaml~ the IMF's other forms of engagement -- its ongoing surveillance and policy advice to
member countnes -- that hold out the best prospect for helping to reduce countries' vulnerability to
crises down the road. To that end, we have advocated a shift in the nature of surveillance to focus
more carefully on a range of financial vulnerabilitie, whose dangers have been highlighted by recent
crises. This is an important complement to ongoing work, in cooperation with the World Bank, to
assess and strengthen financial sectors.
Here let me just highlight progress in three key areas.
First, Vulnerability Indicators
In light of recent crises, we believe that indicators of liquidity and balance sheet risks for countries
that have access to international capital markets need to be an essential component of IMF
surveillance. In large part as a result of US efforts, the IMF has now made progress in incorporating
indicators of these kinds of liquidity and balance sheet risk in Article IV staff reports. However, we
continue to advocate more systematic use of these indicators and greater consistency in their
application across countries - and a process for making the indicators more widely available.
Second, Liability Management
Another key lesson if the need to pay special attention 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: as we saw, for
example, in Mexico, with the increasing resort to issuing dollar-indexed Tesobonos in the lead-up to
crisis, and in Thailand, with the tax breaks for offshore foreign borrowing and the government's
decision to mortgage its reserves on forward markets. In this context I am glad to report that the IMF
and World Bank are working together on a set of debt management guidelines to help countries
recognize and manage these types of risks.
Third, Codes and Standards
In many respects, this is the new frontier for surveillance: to establish a framework of codes ~nd
standards that can lays down minimum performance benchmarks in key areas such as financIal
:egulation and supervision, data transparency, macroeconomic poli~y, and institutional and m~r~et .
mfrastructure. While substantial progress has been made in developmg standards themselves, It IS falr
to say the critical task of encouraging countries to implement them remains.
In the longer term we hope and expect that the most important tool for encouraging countries to
implement codes and standards will be market discipline. But for market discipline to be effect~ve,
and for the larger international community to be better informed of progress made -- or steps st~ll
needed -- transparency and disclosure are required. The IMF coordinates assessments of countnes'
http://www.treas.~/pre••lreleaiei/p.l081.htm
2/9/01
Treasury Secretary LawrenceH.Su1omers Remarks to the IMF Advisory CommitteeWash .. Page 4 of6
performance in this respect through its Reports on Standards and Codes (ROSC). A number of such
ROSCs have been made public, and we are working toward a presumption of disclosure of these
assessments.
In this ~?ntext let me !1?te that we attach particuI.ar importance to assessment ofthe quality of bank
sUpe~!SlOn and secuntIes ma~ket r~gulatIOn, WhICh are integral elements of strong financial systems.
The Jomt Il\1.F -World Bank FmanCIal Sector Assessment Program (FSAP) provides a critical vehicle
for undertakmg such assessments and identifying vulnerabilities as well as developmental needs.
Going forward it is very important that countries be allowed to share their Financial System Stability
Assessments with a wider audience.
4. Promoting Market-based Solutions to Financial Crises
Given the scale of private flows in today's global financial system, the IMF always needs to focus on
promoting market-based solutions to financial difficulties. And appropriate private sector
involvement in responding to financial crises is important, because the official sector often cannot
and should not handle the financing alone.
In this context, the in its Spring meetings laid out a set of operational guidelines to orient its 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 financial 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, we will work within the Fund to make this approach
operational, focusing in particular on improving the process for restructuring offical debt - including
steps to make it 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.
5. Putting Poverty Reduction and Growth at the Heart of IMF Policies
The goal ofIMF programs is not to restore economic stability for its own sake. It is a means to the
ultimate objective of raising economic growth and the living standards of the population as a whole.
And while economic growth is the most potent weapon for combating poverty ever invented,
experience in Asia and elsewhere reaffirmed, and they should be consistent with key global concerns
such as core labor rights and standards or the protection of the environment.
As a result of US pressure, the IMF has sought to ensure that essential adjustments in macroeconomic
policies are mitigated by measures to strengthen a program country's social safety net. We have seen
results of this effort in programs this year: most notably, in Indonesia, Ecuador and Colombia.
A key element of the legislative mandates regarding U.S. policy priorities in the IMF is promotion of
core labor standards (CLS). The United States has built a consistent record of support for CLS and
related issues in the IMF, including in Board discussions as well as policy statements ~t the IM~'s biannual meetings. We have also gained support for CLS and the ILO m recent ~conomIc SummIts.
The IMF has raised labor issues in its policy dialogue with a number of countnes (e.g., Korea,
Indonesia). And we are working toward greater cooperation between the Fund and the ILO. However,
some issues, notably including labor rights and standards, are regarded bY.lT!any at the Fund as ..
outside its expertise and mandate. Thus our success in advan~ing u:~. polICIes depe!1d~ ofol ~ur abIlIty
to convince others that issues are important to macroeconomIC stabIlity and growth m mdIvIdual
country cases. This is not an easy task, but our efforts continue.
Of course these efforts have been accompanied by a broader global effort to put growth and poverty
reduction 'in the poorest countries at the top of the if.iternational commu~i.ty's agenda. T~is effort h~s
been reflected in the creation of the Poverty ReductIOn and Growth F~CI.II.ty; as well as m the Fund s
participation in the enhanced Heavily Indebted Poor Country (HIPC) InItIatIVe.
http://www.trea~govLpressLreleases/psl081.htm
2/9/01
Treasury S~retary Lawrence H-Suromers Remarks to the IMF Advisory CommitteeWash.. Page 5 of 6
While, the ne~ PRGF program is still in its early stages, I am glad to report that we are beginning to
see a sharpenmg o~ focu~ on growth and poverty reduction, with poverty reduction strategies prepared by countnes wIth the help of the World Bank - playing an important role. And as you may
be aware, the IMF and World Bank are making substantial progress in moving ahead with HIPC debt
reduction for qualified countries. In these countries and in the poorest countries more generally, we
have also supported moves toward a more effective division of labor between the two institutions,
with the World Bank taking more of a leadership role.
II. Looking Ahead: Issues for the Future
We all know that building on the progress we have already made will require ongoing engagement
with the IMF and its shareholders and constituents. This makes the input of Committee members,
both with respect to what we have done and what we plan to do, especially valuable. In that spirit, let
me conclude by highlighting a few additional questions for the Committee on some of the central
challenges ahead.
Advancing Us. Priorities in a Consensus-Based Institution
Achieving our goals within the IMF will always be a challenge, because it is an institution based on
consensus, and success depends on our capacity to persuade others of our position. This is a reality of
our participation in the IMF and is a routine part of U.S. engagement in the institution. One way we
have sought to address this is by encouraging others expand their thinking about the role of the IMF.
For example, in advancing labor issues, we have encouraged closer cooperation between the IMF and
the ILO in order to pursue our goals, while at the same time respecting the view of others. Are there
other approaches or strategies that we should explore to enhance our capacity to persuade other
members of the IMF and build a favorable consensus?
Examining Conditionality
The IMF is now undertaking a review of program conditionality. This affords an important
opportunity to learn from experience and better equip the IMF for future challenges. In considering
this issue, we believe we should be guided by the basic principle that the effectiveness of IMF
programs at times of crisis depends on their being focused on the reforms that are necessary for
restoring market confidence and growth, rather than changes that are merely desirable from the
standpoint of long-term efficiency. But clearly, this principle is easier to state than to put into
practice. What are your views about the appropriate balance to be struck in the design of IMF
conditions, between the necessary and the more strictly desirable?
Enhancing Public Understanding of the IMF
The crises of recent years have helped demonstrate the fundamental importance of the IMF -- both for
the stability and strength of the global economy we have today, and the global economy that we are
working to build for the future. Specifically, it seems to us self:eviden~ ~hat s.uc~essful g~obal
economic integration will depend on there being greater finanCIal stabII!ty wlt~m countnes, and a
well-functioning system for the flow of capital between them; and that IS prec.Isely what the I.MF was
created to achieve. Yet it is equally apparent that the role of the IMF ca~ be dIfficult to explam to a
broader audience and often controversial. Do the members of the commIttee have thoughts on how
we might better express to a broader public both the importance of the IMF, and the need to equip it
more effectively for the future?
With that, let me once again thank you for being here today and for all the work you have done over
the past year. I look forward to today's discussion on this crucial topic. Thank you.
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2/9/01
Treasury S\!Cretary Lawrence H. Summers Remarks to the IMF Advisory CommitteeWash .. Page 60f6
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Statement t>¥ Treasury
Secretary Lowrence H. Summers
~Q~
~«'
Page 1 of 1
~ .....l~
m9
TREASURY NEWS
FROM THE OFFICE OF PUBLIC AFFAIRS
FOR IMMEDIATE RELEASE
December 18, 2000
LS-I082
STATEMENT BY TREASURY SECRET ARY LAWRENCE H. SUMMERS
We welcome and support today's agreement between the International Monetary Fund and Argentina
and the announcement of support by the managements of the World Bank and Inter-American
Development Bank.
We encourage the Government of Argentina to fully implement its enhanced commitments under the
new program, which will help position Argentina for a restoration of confidence and renewed growth.
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PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt· Washington, DC 20Z39
TREASURY SECURITY AUCTION RESULTS
OF THE PUBLIC DEBT - WASHINGTON DC
BUREA~
Office of Financing
CONTACT:
'R IMMEDIATE :RELEASE
202-69l-35S0
acember 18, 2000
RESULTS OF TREASURY'S AUCTION OF 13-WEEK SILLS
9l-Day Bill
December 21, 2000
March 22. 2001
Term:
Issue Date:
Maturity Date:
CUSIP Number:
912795FY2
High Rate:
5.770%
Investment Rate 1/:
Price:
5.939%
98.541
All noncompetitive and successful competitive bidders were a~arded
ecurities at the high rate. Tenders at the high discount rate were
llotted
4%. All tenders at lo~er rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
Competi ti ve
NoncornpeticiV'e
$
PUBL! C SUBTOTAL
21,980,665
1,335.561
SUBTOTAL
8,320,225
1,335,561
9,655,786 2/
23,316,226
.2,350,000
2,350,000
25,666,226
12,005,786
4,4GB,700
4,468,700
Foreign Official Refunded
Federal Reserve
Foreign Official Add-On
TOTAL
$
o
o
$
30,134,926
Median rate
5.750%; 50\ of the amount of
las tendered at or l:lelow that rate. Low rate
$
16,474,486
accep~ed
5.700%:
competitive tenders
5% of the amount
)f accepted competitive tenders was tendered at or below that rate.
~id·to-Cover
Ratio
=
23,316,226 / 9,655,786
=
2.41
L/ tquivalent coupon-issue yield..
!/ AWards to TREASURY DIRECT = $1,051,051,000
http://www.pubJicdebt.treas.gov
LS-I083
TOTRL P.01
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt· Washington, DC 20239
TREASURY SECURITY ~UCTION RESULTS
BUREAU OF THE PUBLIC DEET - WASHINGTON DC
office of Financing
CONTACT:
FOR IMMEDIATE RELEASE
December 19, 2000
202-6n-3550
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182-Day Bill
'Term;
Issue Date:
Maturi1:Y Date:
CUSIP NUmber:
High Rate;
December 21, 2000
JllIle 21, 2001
9l279SGM7
5.660%
Investment Rate 1/:
Price:
5.907%
97.139
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted 94%. All tenders at lower rates were accepted in full.
ACCE~~ED
AMOUNTS TENDERED AND
(in thousands>
Accepted
Ten.der Type
competitive
Noncompetitive
$
17,351,073
1.493,204
2,391,000
21.235,277
10,000,277
4,363,708
4.363,708
o
o
A~d-On
TOTAL
7,609,277 2/
2,391,000
For@ign Official Refunded
SUBTOTAL
6,116,073
1,493,204
18,844,277
PUBLIC SUBTOTAL
Federal Reserve
Foreign Official
$
$
25,598,985
$
14.363,985
Meaian rate
5.640%: 50% of the amount of accepted competitive tenders
as tendered at or below that rate. LoW rate
5.580%:
5% of the amount
f accepted competi~ive t@nders was tendered at or below that ra~e.
id-to-Cover ~atio
= 18,644,277
I 7,609,277
~
2.48
I Equivalent coupon- issue yield.
I Awards to TREASURY DIRECT ., $1.199,726,000
bttp!l/www .publicdebt,treas.goy
$-1084
TOTRL P.01
UBLIC DEBT NEWS
Department of the Treasury -
Bureau of the Public Debt - Washington, DC 20239
FOR IMMEDIATE RELEASE
May 20, 1996
CONTACT: Office of Financing
202-21.9-3350
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Tenders for $1.3,616 million of 26-week bills to be issued
May 23, 1996 and to mature November 21, 1.996 were
accepted today (CUSIP: 91.27943P7)_
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
5.1.0%
5.12%
5.11%
Investment
Rate
5.31%
5.33%
5.32%
Price
97.422
97.412
97.417
Tenders at the high discount rate were allotted 1%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED
TOTALS
Type
Competitive
Noncompetitive
Subtotal, Public
Federal Reserve
Foreign Official
Institutions
TOTALS
RR-1085
AND
ACCEPTED (in thousands)
Received
$ 6 3 , 9 04 " 15 8
AcceI2ted
$1.3,615,711.
$56,292,765
1.,208,793
$57,501,558
$6,004,318
1,208,793
$7,213,111
3,500,000
3,500,000
21~02,2QQ
2, !2Q;;L 6QQ
$13,615,711
$63,904,158
1086
Page I of2
FROM THE OFFICE OF PUBLIC AFFAIRS
FOR IMMEDIATE RELEASE
December 19, 2000
LS-I086
U.S. International Reserve Position
The Treasury Department today released U.S. reserve assets data for the week ending December 8,
2000. As indicated in this table, U.S. reserve assets totaled $65,957 as of December 8, up from
$65,648 million as of December 1, 2000.
(in US millions)
J. Official U.S. Reserve Assets
pecember15,2
D~ceJTI~er _8,~000
TOTAL
66,068
65,908
1. Foreign Currency Reserves 1
Euro
a. Securities
5.158
~".' heodq""rte"", ;0 the U. s.
I
Yen
I
10,694
I
6,252
I
TOTAL
I
I
15,852
I
I
I
I
Euro
II
5,256
0
I
15,002
I
8,900
I
Yen
II
10,332
II
6,424
Ie
IC=
c=
Total deposits with:
8,750
and SIS
ii. Sanks headquartered in the U.S.
ii. Of which, banks located abroad
I
iii. Sanks headquartered outside the U.S.
0
Ie:
e:
c=
e:
c=
0
0
0
b.iii. Of which, banks located in the U.S.
2. IMF Reserve Position 2
13,580
3. Special Drawing Rights (SDRs) 2
10,428
4. Gold Stock 3
11,046
0
,5, Other Reserve Assets
I
I
e
e
e
c:=
I
II. Predetermined Short-Term Drains on Fore gn Currency Assets
December 15, 20
December ~,-2000
I
1. Foreign currency loans and securities
I
I
0
I
I
I
I
I
0
I
I
I
I
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
http://www.treas-govlpress/reJeases/psJ086.htm
I
0
0
I
I
2/9/01
Page 2 of2
!
III. Contingent Short-Term Net Drains on Foreign Currency Assets
December 8,2000
I
11. Contingent liabilities in foreign currency
11.a. Collateral guarantees on debt due within 1 year
II
0
I
December 15, 20
I
11.b. Other contingent liabilities
12. Foreign currency securities with embedded options
13. Undrawn, unconditional credit lines
13.a. With other central banks
l3.b. With banks and other financial institutions
1Headquartered in the U.S.
13.C. With banks and other financial institutions
I
1
(
I
0
0
1
I
1
I
1
I
I
Headquartered outside the U.S.
4. Aggregate short and long positions of options in foreign
~rencies vis-a-vis the U.S. dollar
1
01
1
4.a. Short positions
!4.a.1. Bought puts
14.a.2. Written calls
14.b.
Long positions
14.b.1. Bought calls
14.b.2. Written puts
Notes:
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 tenus at the official SDRIdollar exchange rate for the
reporting date. The IMF data for December 8 are final. The entries in the table above for December
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 September
30,2000. The August 31, 2000 value was $11,046 million.
http://www.tre(JSgovlpres s /rel ea Ses/psJ086.htm
2/9/01
STATEM£NT BY TREASURY SB('RETARY LAWRENCE H. SUMMERS AND COU.. Page I of I
is~
. . . _,c J
nS9
TREASURY NEWS
FROM THE OFFICE OF PUBLIC AFFAIRS
FOR IMMEDIATE RELEASE
December 19,2000
LS-lOS7
STATEMENT BY TREASURY SECRET ARY LAWRENCE H. SUMMERS AND COUNCIL
OF ECONOMIC ADVISERS CHAIRMAN MARTIN N. BAILY
Throughout its eight years, the Clinton Administration has respected the independence of the Federal
Reserve in making decisions about our nation's monetary policy. We have shared the Federal
Reserve's goals of maintaining healthy economic growth while preserving low inflation.
Supported by sound economic policies, including fiscal discipline, open markets, and investment in
people, the economy continues to grow, with strong investment and higher productivity, creating
good jobs and improved living standards for all Americans.
http://www.tregsiDvLpress/releaseslps)OS7.htm
2/9/01
"The Fiscal begacYO-ftheClinturr]\dministration" Treasury Assistant Secretary for Econo.. Page 1 of 4
FROM THE OFFICE OF PUBLIC AFFAIRS
FOR IMMEDIATE RELEASE
December 20, 2000
LS-1088
"THE FISCAL LEGACY OF THE CLINTON ADMINSTRATION "
TREASURY ASSISTANT SECRETARY FOR ECONOMIC POLICY DAVID W. WILCOX
REMARKS TO THE SOCIETY OF GOVERNMENT ECONOMISTS
WASHINGTON, DC
I. Introduction
Thank you for inviting me to speak with you today. It is a privilege to address this group at the close
of the Clinton Administration, and to have the opportunity to review the Administration's fiscal
legacy.
One sure indicator of the importance of that legacy is the fact that, in at least four ways, the state of
fiscal policy is fundamentally different today than it was eight years ago. I have organized the bulk of
my remarks today around those four fundamental changes.
But before reviewing those four changes, let me take you back to the beginning, and recall for you
how difficult it was to pass the President's first deficit reduction package in 1993, and how great the
skepticism it encountered as to its economic merits. The deficit reduction package passed the House
of Representatives on August 5, 1993, by a vote of218-216, with all Republicans voting against. The
next day, the Senate passed the bill, on a vote of 50-50, with Vice President Gore casting the tiebreaking vote, again with not a single Republican vote in support of the package.
Much of the commentary in 1993 was, to say the least, skeptical as to the economic merits of the
plan. One member of Congress remarked that "this is really the Dr. Kevorkian plan for our
economy." Another said: "This plan will not work. Ifit was to work, then I'd have to become a
Democrat and believe that more taxes and bigger government is the answer."
Leaving aside the false premise as to the fiscal orientation of the Democratic Party today, we do now
know the outcome as to the recent performance of the macroeconomy: During the Clinton
Administration, we have enjoyed the lowest unemployment rate in 30 years. Inflation declined to the
lowest levels since the Kennedy Administration, and has remained moderate this year despite the runup in energy prices. Productivity growth has averaged 3.0 percent over the last five year~ ~ nearly
double its average rate over the preceding 20 years. And real wages finally have begun nsmg across
the economic spectrum.
Now there has been a lot of debate in recent years about how to parse out the credit for that
macroeconomic performance. To be sure, much of the credit goes to the American people, who ~ave
displayed enormous creativity and entrepreneurial energy, and to the development ofpath-breakmg
new technology. But as Secretary Summers has noted, the American p~ople we:e creative and
entrepreneurial in 1992 as well, and yet the country could not seem to Improve Its lackluster
tp://www.treas.gQv/pr.e ••l.e1eaies.!pslO&8.htm
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"The Fiscal J",egacy of the Clinton Atiministration ll Treasury Assistant Secretary for Econo.. Page 2 of 4
economic conditions. I hope it will not surprise you too greatly if! attribute a share of the credit to
the strategy of sustained fiscal discipline that was put in place by the President and his economic
team.
And notwithstanding the economic outcome, I am not aware of any offer on the part of the member
of Congress I quoted earlier to carry out his promise and vote with the Democrats!
Let me now tum to a more specific discussion of four ways in which fiscal policy has been
transformed during the Clinton Presidency.
II. Facts and Figures
Perhaps the simplest and most obvious way in which the fiscal landscape has been revolutionized is
the stunning change in the numbers:
• In FY 1992 - the year before the Clinton Administration took office - the unified deficit of the
Federal government ran a record $290 billion, or 4.7 percent ofGDP. By contrast, in FY2000the fiscal year just completed - the Federal government set a different and more enviable '
record, with a surplus of $237 billion, or 2.4 percent of GDP.
• In 1992, the debt held by the public was nearly 50 percent as large as the GDP, and projected to
increase to roughly 65 percent of GDP by the end of FY2000. In fact, the debt now is only
35 percent as large as the GDP, and is projected on prudent assumptions to be eliminated by
2012 - even taking account of the President's spending and tax-cut proposals.
This turnaround in the numbers has brought real benefits to individual Americans:
• The net interest payments of the Federal government in FY2000 alone were $125 billion lower
than projected in early 1993. That amounts to more than $1700 for every American family.
• Fiscal consolidation has helped reduce mortgage interest costs: a typical American family with
a mortgage of $1 00,000 might expect to save about $2,000 annually in mortgage costs because
of our new path of fiscal discipline. Low mortgage rates in tum have helped to make housing
more affordable; the homeownership rate increased from 64.2 percent in 1992 to 67.7 percent
in the third quarter of this year.
• The swing in the Federal budget from deficit to surplus has resulted in nearly a doubling of the
net national saving rate, making more funds available for private investment. (And
incidentally, the improvement in the Federal budget deficit - now a surplus - accounts for all of
the improvement in national saving.) Surging investment, especially in equipment
incorporating the latest advances in technology, has contributed to a pickup in workers'
productivity growth - and ultimately, in their wages.
III. Unified budget accounting versus on-budget accounting
A second respect in which the fiscal landscape has been transformed has more to do with the
institutions of the budget process than with the performance of the budget itself.
• Until the past couple of years, the political debate about the budget focused on allocating
unified surpluses - or, to be more precise about it - reducing unified deficits. A few insightful
observers understood that balancing the unified budget should not be the ultimate goal, but
believed that the more ambitious objective of balancing the on-budget account was so far out of
reach that highlighting it as a potential objective might actually undermine our collective
resolve rather than solidify it. And they were probably right.
• But in the summer of 1999, buoyed by the progress of the preceding six years, President
Clinton was able to shift the terms of the political conversation by putting forward a plan for
allocating the projected on-budget surpluses over the succeeding ten years, and for setting aside
all of the off-budget surpluses - the Social Security surpluses - for debt reduction.
http://www.treasgovlpress/releases/psl088.htm
2/9/01
"The Fiscal Legacy of the Clinton--A<1ministration" Treasury Assistant Secretary for Econo.. Page 3 of 4
The pr~c~ica~ impl~cation of this change is that the budgetary debate now focuses on how best to use
$1.9 tnlhon In projected on-budget surpluses rather than $4.2 trillion in unified surpluses. The
beneficial implications for national saving and the perfonnance of the macroeconomy can hardly be
overstated.
IV. Government saving and the trust funds
The shift in the tenns of political debate had an immediate and extremely consequential implication
for the interpretation ofthe Social Security trust fund, which represents a third important change in
the fiscal landscape:
• Back when the budget debate focused on the unified surplus or deficit, changes in the level of
the Social Security trust fund conveyed little infonnation about the extent to which the Federal
government or the nation was preparing for the retirement of the babyboom generation. So long
as balancing the unified budget remained the standard for adequate fiscal perfonnance, a larger
Social Security surplus would tend to be offset by a larger non-Social Security deficit.
Accordingly, an increase in the Social Security trust fund did not imply that the government or
nation was better prepared for the demographic changes of the next few decades.
• But now that the budget debate focuses on balancing the on-budget account, changes in the
level of the Social Security trust fund do reflect incremental government saving. So long as the
on-budget account remains either in balance or in surplus, Social Security surpluses translate
dollar for dollar into improvements in the net financial position of the government. Thus, they
represent preparation that the Federal government is undertaking on behalf of all of us for the
retirement of the babyboom generation.
It is worth digressing here for a moment to address one common misconception about the Social
Security trust fund. A number of critics have attacked the "reality" of the trust fund, on the basis that
the trust fund holds only "government IOUs." This attack is a red herring.
In point of fact, the macroeconomic reality of the trust fund does not hinge on the assets that it holds,
but rather on the issue of whether trust fund accumulations are backed by government saving.
• In the old regime, in which balancing the unified budget was taken to be the standard of
adequate fiscal perfonnance, the trust fund did not have great significance from a
macroeconomic perspective (even though it is very "real" indeed for other purposes). And the
same was true regardless of what assets the trust fund was invested in -- be they gold ingots,
corporate shares, or Treasury securities.
• By contrast, in the new regime, in which the fiscal objective is to balance the budget excluding
the Social Security surpluses, then the trust fund is fully "real" from a mac~oecono~ic
perspective, again without regard to whatever assets the trust fund may be Invested In.
The key is whether changes in the level of the trust fund are backed, dollar for dollar, by government
saving. If they are, then - for my purposes as a macroeconomist - the trust fund is very real indee~.
And this accomplishment - the fact that the Social Security trust fund now ha~ real macr?e.con0!lllC
meaning - is, in my view, one of the most under-rated achIevements of the Clinton AdmInIstratIOn.
V. The near-term implications of out-year fiscal settings
A fourth change in the fiscal landscape is that we now have a much keener appreciation for the nearterm implications of out-year fiscal settings.
• In 1992 the notion that a back-loaded deficit reduction package could be stimulative in the
near te~ was still regarded as somewhat controversial. This new theory held that once a
http://www.treapgovlpress/releases/ps!OSS.htm
2/9/01
"The Fiscal J.,egacy oftheClintoIl Administration" Treasury Assistant Secretary for Bcono.. Page 4 of 4
deficit-reduction program had been announced, the bond market would look ahead, recognize
the future fiscal consoli~ation and its implication for future short-term interest rates, and bring
that back to the present In the form of lower long-term interest rates. Thus, it would be possible
to stimulate business investment and other interest-sensitive forms of spending without
immediately bearing the contractionary consequences of a tighter overall stance of fiscal
policy .
• Today, that view is regarded as conventional wisdom, largely on the basis ofthe experience of
the 1990s. More specifically, over the course of 1993, as the initial deficit reduction package
was working its way through the Congress, interest rates in fact did come down, even as the
economic recovery was gathering strength, consistent with the theory behind the policy.
I should note that there is nothing special about fiscal consolidations, and that the logic of this lesson
applies equally in reverse: a back-loaded fiscal expansion can, in principle, be contractionary in the
near term. The main determining factors include the speed with which the fiscal stimulus is phased
in, and the degree to which fiscal policy becomes more expansionary in the future relative to the
present.
VI. Conclusion
The extent of the fiscal progress of the past eight years is almost difficult to comprehend. Now it is
no longer common to worry about the mounting fiscal burden that we are bequeathing to our
children. Instead, we can realistically look forward to the day when we will have eliminated the debt
held by the public altogether.
But the fiscal agenda is not finished. Let me highlight two items that the Clinton Administration
fought for, but was unable to obtain:
• First, the President and Vice President proposed taking Medicare out of the budget, and thus
giving the Medicare trust fund the same degree of macroeconomic significance now enjoyed by
the Social Security trust fund. Unfortunately, despite some expressions of support for this idea
from both sides of the aisle, Congress did not ratify the suggestion. This will be an important
next step for the new Administration and the new Congress to take.
• Second, of course, the fundamental goals of Social Security reform and Medicare reform
remain unaccomplished. President Clinton put forward a plan that would have extended the
solvency of the Social Security trust fund to 2054, and suggested that a bipartisan process be
put in motion to close the remainder of the 75-year actuarial imbalance. On the Medicare side,
he put forward a detailed proposal for extending the solvency of the trust fund while
introducing real competition into the program - competition not only among Medicare HMO
plans, but also between those plans and the traditional fee-for-service program.
Unfortunately, Congress failed to respond to the President's leadership on either point. But one of the
greatest fiscal legacies of the Clinton Administration is that the resources have been pre.served to
enact those proposed solutions in the future, should the new Congre~s and the new P~esIdent choose
to do so. For the sake of the nation's economic future, I hope they wIll make that chOIce.
St!a!"(:_h I Email I Tre~sury Home P_age I Sitemap
http://www.treasg Dv lpress/reJeaseslpsl088.htm
2/9/01
PUBLIC DEBT NEWS
lepartment of the Treasury • Bureau of the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
Contact: Peter Hollenbach
(202) 691-3502
December 20, 2000
BUREAU OF THE PUBLIC DEBT AIDS SAVINGS BONDS OWNERS
AFFECTED BY TORNADOES IN ALABAMA AND MISSISSIPPI
The Bureau of Public Debt took action to assist victims of severe weather in Alabama and
Mississippi by expediting the replacement or payment of United Stares Savings Bends for owners
in the affected areas. The emergency procedures are effective immediately for paying agents and
owners in those areas of Alabama and Mississippi affected by the storms. These procedures will
remain in effect through January 31, 200 1.
Public Debt's action waives the nonnal six-month minimum holding period for Series EE and
Series I savings bonds presented to authorized paying agents for redemption by residents of the
affected area. Most fmancial institutions serve as paying agents for savings bonds.
Alabama counties involved are Dale, Etowah, Geneva, Henry, Houston, Limetone, Macon, St.
Clair and Tuscaloosa along with Lauderdale County in Mississippi. Should additional counties
be declared disaster areas the emergency procedures for savings bonds owners will go into effect
for those areas.
The replacement of bonds lost or destroyed will also be expedited by Public Debt. Bond owners
should complete form PD-I048, available at most financial institutions or by writing the
Richmond Federal Reserve Bank's Savings Bond Customer Service Department, 701 EasI Byrd
Street, Richmond, Virginia 23219; phone (804) 697~8370. 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, approximate dates of issue, bond
denominations and serial numbers if available. The completed form must be certified by a notary
public or an officer of a financial institution. Complered forms should be forwarded to Public
Debt1s Savings Bond Operations Office located at 200 Third St., Parkersburg, West Virginia
26106-1328. Bond owners should write the word "DISASTER II on the front of their envelopes,
to help expedite the processing of claims.
LS-I089
000
~.publicdebUreas.gov
TOTRL P.01
OFFICE OJ' PUBLIC AFFAIIUI -1500 PENNSYLvANIA 'I\'\1E,NV!. N.W.• WASB!NCTON~ D.C •• 2012.0. (:Ol) '22.UliO
mmuQOIJ) tlfttl. 2 *30 P •••
Peocmeer
2000
C!aI1T~ I
ao.
office of Ph.aAd,J1g
202/U2.-3S50
"r'I.:MSVl.Y TO AVCl'XOW $:1,0.000 x:tr.LtCDl' 01' 2-ftM HOTSS
T.e ~.aB~:y will .u=ttOD $10,000 millioa of 2-yoa~ notel ~o refUAd $27,402
ol pablicly held .8~~lci8. ma~u~iDg noc.ab.~ 31. 2000. aDd to p~ d~ abo~e
~11ioD
.17,t03
milliQ~.
la ac5ditioll to tJ:a. pul:tl:lc ~ltU.D.SP' Pede:&l Reean'e B~S 11014 84.8U ai,lUr=
of the 1I&h~~g 8ecuzoit;ie. for ~1aa1r 0 . . aecO\UIt., wkich My b. refQ!l.d..4 by luui~
alt. a4c!iti.cmal ~t of u.. aew aeeudty.
Tbe aarouris'lg ••cudtie. hela lIy t!le P~U.C induct" $5,803 million uld by
r.4eral &es.:v. Baak••• ag~t. for foreigD aDa iA~.rDat~onal acD.~.r.r autboritio••
~t. hid for ~e.. accouat. hy ,.d.ral a •• arve .SDk. will ~e a44.~ co cbe
oefuiJlg.
ft~UZ'l'1'~=-ec;c
c'O.eCZlll8r1 requ..,ee4 thAt we r.b9tl,t tlle:i.:r matuJ:'iq l:lol.c!iDl'.
Qt &pJI~taly 5588 lII.tll1on i~to the ~ -year 1'lOt:••
Th. a\lCUOZl . i l l :be coDduc:t• .s in Ue
~9.
aDd
t"l"'.
DO~camp.~itiv.
a.a:4.
~ ~ee. ~.iDg off.~e4
w~11 ~e
today
at
a1~1~-p~1c:e auc'tion fozmat:.
All compeU~h. bi9be.~ yield of ac:eep~8d c~.tltive
Are el~gibla
tor
~ S~~IPS p~ow~am.
ot Tr••• UZy securiti•• i . SOV.~.d ~ tA. te~ and t:ODdieiona
eircu1ar rar tba 8ale aDd I ••ue of Ma~etab~. »ookBill. I Xotos, cd Jwlb (31 erR ,ut 35', •• amelUle4).
~. of~.~t~
.at forth
i~ ~h. ~fo~ Ofrer~D~
-~zy i'HUU'y
D.t~ls ~Oue
the
~ew .ecur~~y
ar. givaR
000
LS-I090
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off.~i~ ~lgbligh~s.
l1IG8I.IlrmTS OJ' 'tJtU.SmtY OPS'21I.:cIG '1'0 'l."KB POBLIC OP
2-TIAa ROTZS TO il
ISS~
JAMVAKY 2, 2001
~ecembe~ 20,
J)•• c~ip~i.OIl
To=-
., ......... -.. -................
....,w:t.~
c!tarilli
2000
$10. 000 .oi.l~j,cD
0'£ Offari.!7:
~4 ~c o~
•• eur~er.· .••..•.••..•......•
2-ye~~ ao~ev
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Ct1S1, aaa6% •••••••••••• " •••••••••••••••••••• '138Z1 5Q 0
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J)cr.~.d date ••....••.••.•· •• - ••••.•.•••..•••.•••• I).callber 31. 2000
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lat.reG~
ba.e4 OD ~h. ~i~he.e
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••••••••...••.•.•. ___ ••• Detarmiued at auction
rat•••• • ••••••••• - ••.•••••
Yt.14.··········.···.·
par-ezu:
~t.:res~
--.-~
da~ ••••••••••••••••••
••••••
p.ee~a.4
'.' _ ••••• J1me )0 &!I.d IJec:eml:Ier 31
.mount aDd multiple ••••.••••.••••• Sl.00o
AC~zued ia.eere.t pay@le 1:Iy ':i.DV• • ~O:r •••.• '••.•• P.~eraill.ad at: ",uctiO%i
.iaiaaa
~td
~emiua
or
~s
4i.c~Dt
%Afor.m&c10G1
~
~1r.d
amDUDC
COXJIU8 C:OS%P
~.
..•••.•.•...••. -· ......•... »ot.r.mined at auction
due (.,
~er
~
for additioD&l
••••••.••...... - ...••..
~~t.~ned Q~ aue~ion
••.•••••.•......••.•••.•.• S12iiO
I'Z 5
C"I7ItP aumb.l' (.)
T~(.)
•••••...•..••...•.•.•• Xot a»plicable
Sw.i•• ioa. of Bi-cia;:
Jroll.callllPatitive 1:IiG":
Acc~hd ia full up eo $5, ooa, OOCI
1l1; t~a Iligheat ac.aep~eci v.:i..1.4.
eo.p.~i~ige ~id.;
(1)
~ axpre.De~ •• a yi.14
t~ree decimal., •• g •• 7.123'.
(2) .at lo~ po~itiOD for ea~ ~~dder ~.~ ~. r.,orted .he~ ~he B~ of ~•• ~otal
b14 ~t. ae all yiald•• aBel tb. Aat leftg poaitioD ia $2 bill too gr ~e.~Q~.
(3) Kat lOD9 poeitian ~.t ~e 4et.r.Diaed a. eE.ollo. Aalf-hou~ p~ior to the
~lo.iDl t~ fo~ receipt of eampeeieiva taDde: ••
.uac
.teh
KaXimUM lecop!iae. B14 at a Si1l.21. Yie1d •....••••.. ,S\ gf
~
p~11c of~e~1Dg
of~eriag
Awar4 •.•..•..•••..••••.....•.••.••. - ....... ,S~ of pUblic
lee.i,~ of ~~.r.t
.~ompeeiti.a teA~r.:
C:CIIIIp.~it:'••
tu.deZ'sa
Pl'tor eo 13:00 nOOD e •• ~ar.n a~aD4a:4 time 011. ~uctioll. day.
to 1tOO p ••. e •• ~erG. aUndaZ'Cl t.ime on auc:ti01l d&y.
Pl'io~
l'ayJIct ,..~. Br o~e co a fuo.4u .e~OUlJt at a Feeleral Reaezvt!l Baak an i'Aue
tate. or p&yaeDC of fQll f&~ ~t .i~h teA4e~. rre~.ur,y.Dlk&~t ~U.tome~1 CaD use
~e 'ay ~i:.ct tea~Qra whiCh au~0Z'1se.· a cha:ge to thei: accOUAt of ~.cor4 at
tAeiZ'
fl~UI.C;i.a1 Ul.U~t:~ctl 011. 1I11A"& c!a1:B.
TOTAL P.02
TREASURV ANNOUNCES EFFFCTIVE DATES OF LUXEMBOURG INCOME TAX.. Page 1 of 1
~Q'
~'¥
m.
TREASURY NEWS
FROM THE OFFICE OF PUBLIC AFFAIRS
FOR IMMEDIATE RELEASE
December 20,2000
LS-1091
TREASURY ANNOUNCES EFFECTIVE DATES
OF LUXEMBOURG INCOME TAX TREATY
The Treasury Department today announced that instruments of ratification were exchanged in
Washington on December 20,2000 with respect to a new income tax treaty with Luxembourg. The
new treaty, to which the Senate gave advice and consent to ratification on October 31, 1997, replaces
an existing income tax treaty between the United States and Luxembourg that entered into force in
1963.
In general, the new treaty will have effect, with respect to taxes withheld at source, for amounts paid
or credited on or after January 1, 2001 and, for other taxes, with respect to taxable years beginning on
or after January 1, 2001.
http://www.tre as gov/press/releases/ps1091.htm
2/9/01
D EPA k 'f
LVI
E N T
0 F
THE
'IREASURY !+f.it~
~"~r
'7/1'1
T REA SUR Y
NEW S
•
1500 PENN~ \,LVANL<\ AVENUE, N.W.· WASHINGTON. D.C.· 20220· (202) 622-2960
EMBARGOED UNTIL 2:30 P.M.
May 22, 1996
CONTACT;
Office of Financing
202/219-3350
TREASURY TO AUCTION 2-YEAR AND S-YEAR NOTES
TOTALING $31,250 MILL!ON
~he Treasury will auction $19,750 million of 2-year notes
and $12,500 million of 5-year notes to refund $27,398 million of
publicly-held securities maturing May 31, 1996, and to raise
about $3,950 million new cash.
In addition to the public holdings, Federal Reserve Banks
hold $1,146 million of the maturing securities for their own
accounts, which may he refunded by issuing addition~l amounts
of the new securities.
The maturing securities held by the public include $3,004
million held by Federal Reserve Banks as agents for foreign
and international moneta~ authorities. Amounts bid for these
accounts by Federal Reserve Banks will be added to the offering.
Both the 2-year and S-year note auctions will be conducted
in the single-price auction format. ~l competitive and noncompetitive awards will be at the highest yield of accepted
competitive tenders.
Tenders will be received at Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington. D. C.
This offering of Treasury securities is governed by the terms
and conditions set forth in the Uniform Offering Circular (31 CFR
Part 356) for the sale and issue by the Treasury to the public of
marketable Treasury bille, notes, and bonds.
Details about each of the new securities are given in the
attached offering highlights.
000
Attachment
RR.-I092
HIGHLIGHTS OF TREASURY OFFERINGS TO THE PUBL1C OF
2-YEAR AND 5-YEAR NOTES TO BE ISSUED MAY 31, 1996
Nay 22, 1996
Offering Amount . . . . .
Description of Offering:
Term and type of security
Series
CUs!? number
Auction date
Issue date
Dated date
Maturity date
Interest rate
Yield . . . .., . . .
Irtterest payment dates
Minimum bid amount
Multiples . . . . . . .
Accrued interest
payable by investor .
Premium or discount .
$16,750 million
$12,500 million
2-year notes
AP-1998
5-year notes
912827 X9 a
May 29, 1996
May 314 1996
May 31, 1996
912827 12 2
May 30, 1996
May 31, 1996
May 31, 1996
May 31, 1998
Determined based on the
highest accepted bid
Determined at auction
November 30 and May 31
May 31, 2001
Determined based on the
highest accepted bid
Determined at auction
November 30 and May 31
J-2001
$5,000
$1,000
$1,000
$1,000
None
Determined at auction
None
Determined at auction
The following rules aJ:)ply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids .
Competitive bids
Accepted in full up to $5,000 1 000 at the highest accepted yield
(1) Must be expressed as a yield with three decimals, e.g., 7.123%
(2) Net long position for each bieder must be reported when the
sum of the total bid amount, at all yields, and the net long
position is $2 billion or greater.
(3) Net long position must be determined as of one half-hour prior
to the closing time for receipt of competitive tenders.
Maximym 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
· Prior to 1:00 p.m. Eastern Daylight Saving time on auction day
Competitive tenders
Payment TermS . . . . . . · Full payment with tender or by charge to a funds account at a
Federal Reserve Bank on issue date
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
December 21, 2000
TREASURY SECRETARY LAWRENCE H. SUMMERS
REMARKS AT THE OXFAM 'EDUCATION NOW' AWARD CEREMONY
Thank you very much for this wonderful honor. And thank you for Oxfam' s thoughtful
analysis and skillful advocacy on the debt relief effort
Let me start by sharing an observation from eight years working on international
economic issues at the treasury; namely, that while there are certainly lobbyists who come to
Treasury who are better paid than the representatives ofNGOs who come to talk to me about
development issues, there is none that is better informed than they are. Oxfam, in this regard, is
truly exemplary, and I am deeply honored to be receiving this award today.
In the eighteen months since that momentous G7 agreement in Cologne to expand RIPC
debt relief, Oxfam and others have rightly been very focused on when we would actually deliver:
on whether and when the HIPC countries themselves would see concrete results.
Today, I can give you one kind of encouraging answer to that question. By the end of
this year, twenty-two countries will have reached their decision points to start receiving HIPC
debt relief. In other words, around two-thirds of the countries eligible are likely to have benefited
from the program in its first year, compared to only seven in three years under the original
program. For these twenty-two countries, total debt service savings will average over $1 billion
per year over the next five years.
However, we all know that the measure of the success of this initiative cannot simply be
the speed at which relief is delivered, or even how much debt relief is provided - but rather the
difference it makes to the lives ofthe HlPC countries' poor.
That brings us to a rather different set of questions. Such as:
• Will the debt relief and the broader reforms that are to accompany relief stimulate growth,
which is essential to poverty reduction?
LS· 1093
FCtrprw releases. speeches. public schedules a.nd officia.l biographies, alii ow 24-hmw fa.% line Qt (202) 622.2040
•
Will the new emphasis on civil society participation in decisions on how to use the relief
foster greater accountability by governments to their people?
•
And will the effort to ensure that debt savings are channeled to core social investments lead
to a broader reallocation of budgets in that direction: particularly in favor of education, which
Oxfam has rightly put front and center of the debate in its Education Now campaign.
It is still early days. But we can say that, in part because of Oxfam's efforts, a number of
early qualifiers for HIPC relief -- including the countries that are represented here today -- have
recognized the special importance of education, and are moving in the right direction to
guarantee basic education as both human right and economic necessity.
The leaders of these countries understand that no nation has ever succeeded economically
without major investments in education. They know what an Oxfam worker I met in Tanzania
told me -- that mY/AIDS awareness campaigns have little chance of success if their people
cannot read. And they have seen the research showing that investments in female education are
the highest return investment that a developing country can make. When girls are educated,
they have more economic opportunities. They marry later and are able to take part in household
decisions. They choose to have fewer children and are able to invest more in the health and
development of each child.
Let me offer a few examples of how IDPC is helping to make a difference in education:
• Tanzania is going to save about $100 million a year in debt payments under illPC, which
will now be available for health and education. The government has announced, in response
to priorities expressed by citizens during public consultations, that it will abolish primary
school fees beginning in fiscal year 2001.
• Today, four out often children in Senegal do not go to school. As part of its debt relief
package - amounting to about $800 million over time -- the government has committed to
continue its effort to hire 2,000 new teachers each year. This will help to put Senegal on a
path to meet a target of70% enrollment within the next two years on the way to a goal of
universal access to basic education by 2008.
•
Benin has pledged to abolish school fees in rural areas for ~oth boys and girls and
compensate schools in rural areas for the loss of revenue from school fees. This should be
key in closing the gender gap in rural areas, where on)y one in five girls completes primary
education.
• Uganda used debt relief from the original HIPC program to fulfill it commitment to end
school fees for grade school students. In less than two years, enrollment rates doubled.
• Better education is also the ultimate aim of debt relief in Honduras too, where the
government had pledged to use debt relief to hire 1,000 teachers and extend compulsory
schooling from six years to nine years.
2
While debt relief is essential in many countries, it is only one element in what must be a
broader effort for the wealthiest nations to assist the poorest. Our challenge now is to build on
the momentum of the extraordinary coalition that carne together around debt relief, to help every
country seize the opportunities that a broader and deeper global economic integration affords.
Most notably: just as countries cannot seize those opportunities without educated people,
nor can they without healthy people. Malawi, for example, is losing 5,000 teachers a year to
HIV/AIDS; many more than they can train in the same period. But recent successes in Vietnam,
Senegal, Uganda, and Peru show that tuberculosis, malaria, and TB epidemics are not inevitable,
and the sprea~ ofHIY/AIDS can be slowed.
How? First and foremost, it takes political commitment on the part of governments. But
it also takes strong partnerships between these governments, NGOs, donor agencies, and private
sector actors with special expertise to share. And when governments are committed, the US and
other rich countries must meet them halfv.ray through increased but better targeted development
assistance. That is the essence of the Dakar Education for All platforms for action, which the
United States wholeheartedly committed itself to last April.
That is really what RIPe is about. too. It is about bringing together creditor and debtor
governments, multilateral institutions and civil society organizations to ensure that the totality of
all of our development efforts have a genuine impact on lives of the very poor. And of course,
[hat is what Oxfam has always been about. So, for this award, I thank you. And for all of your
efforts worldwide, I salute you.
-30-
3
TOTAL P.03
OFfICE OJ' P'OBt.11: Ai'FA!llS -1500 PENNSYI,.VANIA AVENfJ),t. N. W•• WASHINCTON" D.C .• ZOZ20. (203) 62~-n'O
J:IIDWlGOPJ) UN"rJ:L 4: 30 P .K.
DeCembar 21, 2000
QaNTACT:
O~ti~e
of Fl~iDg
202/691-3550
two 88:1.& of ~eaau:Y. ~illa ~otaliAg
app:~ta1y $22,000 .il1io~ to refUno'$17,021 mill~~ of publiclY held
lecuri~i.~ ma~~iDg Decamber 28, ~OQO, aD4 tc :ais8 about S4,977 ail lion of
The
T~ea~ ~ll &uc~iQA
J:2.8W casb.~
In a&!ieic:m. to 'the IIQbl:i.c: holdings, Federal :a.serve Bazlks for thair OWA
acewa:ta hold $9,160 million of the maturillSJ ~ills, w1:l5.ch may be ref'\JD4ed. at
the hiSfMS'I:. 4LIiIC01Ul.t Z'ate of aCdS»t.a4 C!aIIJZl8't.i'f:1v9 t&m4e:!I.
AmouAta issued
to these &Ce~~8 w~11 he i~ ad4iti~/tQ the off8~iDg 8mOUDt.
'l'l:la
JDIilt:.~i.z:lg'
)).ills held. :by tbe p-gl)l:i.d Ulc:lua.e ,5,957 :m.ill:i~ hel&!
ageDts for forelg.a aDA 1Dta~t1oDal moD.ta~
~ F.a.~al ae6e~ ~s ~.
authorities, Which
ma:p'
be ref1mdad within
~bEl
offe:r.in; amount
at
the high.at:
Qisc~t
rata of ac:~epte4 c:ompetiti~ ~eDd8rs. Additional amaunt$ may be
iJ;sue.a for B'CJ.c=b aC::CC1mts if tlul aggregate amount. of new bias ezc:eecis ~li:a.e
agg:egaee
amauu~
of matu:iDg billa.
~reasuz.y.D1re~t ~Gtamer8
requested that we reinvest their
il3il's Qf ~oxhet::el.y ,890 million
tl!e 26 ....o.k l:Iill~
in~o
.at~~i~
bold-
Us 13-.eak b.ill lUU! $735 IlLillion i:a.to
'rhis o!feriug of 'l'r8asUty secur:i.ties iii governed by the t&:z:ms aDd. COJ:l.ditiODS set, fo~h in the ODifo%m Offering Circular for the Sale aQd XSsue of '
marketcible Book-Imt.ry Tre~S\l%y Bill's, Notes, ~ SoD45 (31 erR Pa:rt 356, as
aJlen4ed) •
Details
abcu~
each ot the
~ secur1t~es
ara given
~ ~he
attaeh8d
cffez!~ hig~ight8.
oCo
LS-!094
Attacl:lmeD.t
-
F0,. p."n ,.,leGge,. $.,~ech.er, p'ublie JChldlllellll&d Q!fici41IJtog'llJIhies, clJll our :Z4-hollr fax. line tit (202) 622 ..2D4(J
HXOBLXG~B
'1'0 U
OF
~URY or~GS
OF BXLLB
ZBSUIDD DBCDmI!JR 3S _ 2000
Dec~er 21~
Offering Amount ••..••.••••.••••••••••..• $13.000 million
Deaoription of Offer!!r'
Te~ and type of security •••••••....••.• 91-day bill
2000
$10.000 million
casxp nUlllbar ............................. 912'95 H 9
182 -4-ay bi11
.912795 aN 5
Auotion dat.............................. December 26, ~OOO
:t&8U9 aa.te .•••••• , ....................... DecmnheZ' 28, 2000
December 2f, 2000
December 28, lOOO
Mat.uJ:"it.y date ••••••••••••••••••••••.•••• Karch 2,9, 2001
Juna 28, 2001
Original issua Qat •••••••••••••••••.•••• Baptembar 28. 3~DO
Currently outstanding •.•••.•••.•.•.....• S13,~3' ni~lion
Min~um bid amount an4 mu1t~ple8 ••• , ..•• $1,000
DecBBber 28, 2DOO
$1,000
"lba fo11owlna J:1l1e. apply to .11 securi.ties mentioned above:
Subni8sion of Bids1
Nonc~etltive bias ••••••••• Aacepte4 in ful1 up to $1,000,000 at the highest 4iscOUDt. rate a~
accepted c~.t~t1va bids.
Compet.itive bids ..••.••. ~ ••• (1) I4u.st be eHpras.ed &s a d:lsaount rat:e with th~ee. deoima18 in
1ncremen~. of .005%. a.v., 7.100%, 7.105%.
(2) Ret lOIlW po&1tion for each biCl4e~ JlNBt. he rellorted when the swa
of the total bU &III.01Int, at ,,1.1 41scouot rates__ .na the net. long
pos1tion ia $~ billion or greater.
(J) Het lOIlll positioll In.at be 4eta a:mlned a. of one hal:J!-hour prior
to the e10.iDg t~ for receipt of competit~ve ~r ••
MaKim~
Recognised 8!4
at a Slngl. Rate 9' • • • • • • • • •• 35% of
pub~tc
offering
~~
Awa%4 ••.•••••.••••• , •.•• 35% of pub1ig oreering
Receipt
o~~.D4erB:
• • Prio);' to 12~OO Dt)on . . ste!;'n standlU:4 Ume on a.uctiOD day
CoqH)tltJ.vB tenders .......... Prior to 1;00 I).m. eastern stlZldar4 time on auc~iOD day
N'ODcQD\Iletltive ten4ers .... a
P&paDt 'reDDJJf
By dun:"e to " fuua. aCCOUDt. at a i'edara1 aeserve Bank on Is8u8 ute, 0£" pal'R'&Dt
of full par amount wit.h tender.
~.ur.yDtz.eat cu.t.omara caa use the Way Direot featUEe ~ch
authorizes & charge to their aooount of :record at their fln.a.nc.lal lost1t\1tlon on iSGue &!ate.
-l
o
-l
D
r
-u
ISl
~
I
TREASURY DEPUTY SEC~TARY STUART E. EIZENSTAT REMARKS FOLLOWI.. Page 1 of3
FROM THE OFFICE OF PUBLIC AFFAIRS
FOR IMMEDIATE RELEASE
December 21, 2000
LS-1112
TREASURY DEPUTY SECRETARY STUART E. EIZENSTAT REMARKS FOLLOWING
AUSTRIAN SETTLEMENT NEGOTIATIONS
WASHINGTON, DC
We have just concluded another plenary round of negotiations between the Austrian government and
companies on one side, and victims' representatives on the other, concerning "Aryanized" property. I
am pleased to report that we achieved significant progress today.
Ambassador Sucharipa, Austria's Special Envoy for Property, and Ambassador Winkler, put forth an
important and multifaceted proposal to address gaps and deficiencies in past Austrian restitution
programs and resolve all remaining Nazi-era property and Aryanization issues. As you may recall, the
victims' representatives put forward a reasonable proposal at our meeting in Vienna on November 30.
As I indicated in Vienna in my statement, the victims' representatives have made a strong case that
there were gaps and deficiencies in prior Austrian restitution laws. Austria, in its written proposal,
acknowledges its moral responsibility. Let me cite again the facts brought to light at our earlier
negotiating rounds, many of which the Austrian negotiators have confirmed:
• The 1938 Austrian business register valued Jewish businesses at RM 321 million (130 million
1938 U.S. dollars). About one halfofthe total value ofthese businesses were liquidated by the
Nazi regime prior to World War II.
• Prior restitution laws provided no compensation for liquidated businesses, or those destroyed
during Aryanization. This is a very clear gap.
• There were even more such businesses liquidated that were not registered. Those were of
smaller value.
In addition, the victims' representatives offered compelling evidence that following the War, victims
ofthe Nazi era and their heirs faced obstacles to seek restitution of their property, particularly real
estate. The facts they presented included the following:
• Victims often had to reimburse the "Aryanizer" for the latter's purchase price, even though
proceeds of sale had been placed in blocked accounts never accessible to the seller.
• Amounts paid (RM 328 Million) in "Flight and Discriminatory Taxes" were often not deducted
from purchase prices.
• Claimants often therefore could not afford to reimburse new owners; some decided not even to
file and/or accepted very unfavorable settlements.
The Austrian side did not dispute a number of these assertions, although it is clear that there will
never be full agreement on many points of history.
Today, the Austrian side responded with the following proposal:
http://www.treasg ov/pressLrcleases/psI112.htm
2/9/01
TREASURY DEPUTY SECRETARY STUART E. EIZENSTAT REMARKS FOLLOWI.. Page 2 of3
The Austrians agreed to provide $150 million in new money to the proposed General Settlement
Fund that will be established to provide compensation for Nazi-era property losses. In addition, the
Austrian side indicated today that it is prepared to make an additional contribution above that $150
million if necessary to achieve a prompt settlement of property issues. The $150 million, plus an
additional unspecified amount that still has to be negotiated, would be in addition to the $150 million
advance payment promised in October by the Austrian Government to cover claims for losses of
apartments and small business businesses leases, household property, and personal valuables and
effects. This brings the total ofthe proposed General Settlement Fund to $300 million.
Regarding the $150 million advance payment, Chancellor Schuessel assured me yesterday that the
Austrian lower house will complete its work by January 31 st, and shortly thereafter the upper house
will do so as well. Hannah Lessing of the National Fund said that payments could begin in March.
Further, the Austrian side indicated a willingness to improve social benefits for survivors of National
Socialism - benefits that are estimated to have a value of more than $65 million over the next 10
years.
The Austrian side also agreed to consider, on a case-by-case basis, in rem property restitution if the
property is currently in public hands. This proposal would permit the return of Jewish communal
property, or compensation if the return of the property is not practical or possible.
Finally, the Austrian side would also make its best efforts to address the issue of the return of works
of art from Austrian companies and Austrian public entities not covered by the Federal Law.
In making his presentation, Ambassador Sucharipa asked the participants to view his proposal in the
broader context of steps Austria has taken in recent years to provide benefits and compensation to
Holocaust survivors.
I would like to pause here and add a special note ofthanks to Dr. Pichler for his efforts with the
Austrian private sector.
While we have made significant progress today, much work still remains to be done: We need to
determine the "X" or the unspecified amount beyond the $150 million in new money. The victims'
representatives must first study and respond formally to today's Austrian proposal. There are a
number of details that still need to be addressed. However, we are closer to agreement than we were
before and both sides have shown flexibility. We agreed to meet on January 10/11 (changed
~ubsequent1y to Jan 9-10) in Vienna and January 16/17 in Washington to see if we can resolve these
Issues.
One of the most important issues that will need to be resolved is insurance. Unfortunately, we could
not address this issue today because Austrian insurance companies have not been part ofthis process.
It will be critical to the success of this process to ensure that insurance claims are resolved in a
manner that accords with the principles of the International Commission on Holocaust Era Claims.
Let me pause here to summarize for you the elements of the proposal before us:
1. Labor Agreement $370-$400 mn
2. Business & Apart. Leases, other $150 mn
3. Agreement on New Money $150 mn plus
4. Liberalization of Social Benefits $ 65 mn
http://www.tJ:eai·80v!pres;.s;;.!relea s: e sLpsI112.htm
2/9/01
TREAS~Y DEPUTY SECRETARY STUART E. EIZENSTAT REMARKS FOLLOWI.. Page 3 of3
For Holocaust Survivors
5. In rem return of property now held by
the public sector and a process for
Communal Property (amount to be determined)
As I noted, before January 10, we need to concretize this process on addressing in rem property
restitution and communal property issues.
Before turning the podium over to Ambassador Sucharipa, let me make a few general comments:
We are now at a critical stage of this process. I have devoted enormous effort to the quest for
common ground so that victims and their heirs could receive a measure of dignified justice. I have
also been involved in this process so that Austria and its companies can achieve legal peace for
Austrian companies. This legal peace must be achieved on a basis that (1) creates a suitable potential
remedy for Nazi era property and Aryanization claims against Austria and Austrian companies and
(2) addresses suitably Austria's own objectives of facing moral and financial responsibility. Unless
we succeed, the victims themselves, their heirs, and Austria will lose a unique opportunity, and the
enemies of reconciliation will rejoice.
In the last several years, Austria has begun to face its moral responsibility and take a number of
actions in this regard. These actions have accelerated since Chancellor Scheussel has taken office.
The final step in Austria's assumption of its moral responsibility must be to do everything possible to
achieve an agreement on the remaining property issues.
Perhaps this is now a good time for me to stop and tum the floor over to Ambasssador Sucharipa. He
may also wish to list the various steps Austria has taken in recent years, as well as comment on
today's Austrian proposal.
Before I do so, let me reiterate that for this process to succeed, it is critical that Austria find in the
next few weeks a meaningful mechanism for returning publicly-held and communal property, as well
as address insurance claims.
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TREASUPY DEPUTY SECRETARY STUART E. EIZENSTAT REMARKS AT LIGHT .. Page 1 of2
FROM THE OFFICE OF PUBLIC AFFAIRS
FOR IMMEDIATE RELEASE
December 21, 2000
LS-I095
TREASURY DEPUTY SECRETARY STUART E. EIZENSTAT REMARKS
AT LIGHTING OF THE NATIONAL CHANUKAH MENORAH
WASHINGTON, DC
It is an honor and a privilege to come here to the Ellipse again this year to participate in the lighting
of the National Chanukah Menorah. For more than 20 years, due to the leadership of the Chabad
Lubavitch Movement, a menorah has stood here in our nation's capital as a symbol of the pluralism
and religious liberty that are such a precious part of the American heritage.
This joyous Festival of Lights commemorates the rededication of the Jews' Holy Temple and the
rekindling of the Temple's sacred oil lamp. Tonight, we light the first candle of the Chanukah
Menorah. Each night, we will light one additional candle until, on the last night, all eight candles
blaze forth with joy and light. To light the candle, we use the middle or tallest candle, known as the
shamash. Through the shamash, all the other candles of the menorah are kindled.
In a figurative sense, this National Chanukah Menorah serves as a shamash itself, the menorah
through which so many other menorahs are lit this day. We come together each year in this most
visible of places so that through this Menorah's lighting, we can help illuminate menorahs all around
the world. For more than 20 years, this annual tradition-one of the most widely viewed Menorah
lightings in the world-has rekindled candles and hearts in countless Chanukah celebrations.
My wife Fran and I watched our young sons Jay and Brian light the first National Menorah in 1979 in
Lafayette Park with President Jimmy Carter. Since then, I have been privileged to travel across the
globe as an ambassador and representative of my country. As I have done so, I have seen more and
more Menorahs lit each year in places unthinkable when we first lit this menorah more than 20 years
ago. From the former Soviet Union to Eastern Europe to South America and elsewhere, a few more
candles are being kindled each year to celebrate Chanukah as more and more people enjoy the
freedom to worship according to their own conscience-that inalienable right for which Judah and the
Maccabees fought so many years ago.
In 168 B.C.E., the Jews' holy temple was seized and Jewish rituals were banned. Although vastly
outnumbered, the Jews refused to reject their faith in God, their customs and their religious tradition.
Led by Judah Maccabee, they decided to fight back and emerged victorious after three years of
fighting, despite having fewer men and fewer weapons.
The victorious group of soldiers entered the holy Temple on the 25 th day of Kislev 3597 by the
Jewish calendar. A powerful story comes to use from that time. The soldiers cleaned and repaired the
damaged temple and prepared for a rededication ceremony. They discovered, however, that they
could not worship because the ritually pure oils, essential to the service, had been defiled by the
invaders. All that remained intact was one vessel of oil, enough to last for only one day.
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2/9/01
TREASURY DEPUTY SECRE'IAR Y STUART E. EIZENST AT REMARKS AT LIGHT.. Page 2 of 2
Miraculously, that supply of oil lasted for eight days. And so it was decreed that the eight days
th
beginning the 25 of Kislev should be a time of rejoicing and of rededication.
Yet, perhaps even more miraculous than the enduring oil of the Chanukah story was that a small band
of vastly outnumbered soldiers was able to overcome extraordinary odds and defeat much larger
forces of oppression and persecution. Fifty years ago, a small group of Jews again triumphed in the
face of overwhelming odds, and thus the State ofIsrael was born out of the ashes of a decimated
European Jewry. The Clinton Administration has championed the effort to bring a measure of justice
to those who experienced the darkest days of this century by seeking a moral accounting and
providing compensation for those victims of the Holocaust.
Chanukah teaches us that no matter how insurmountable the odds may seem, miracles can come to
those full of faith and courage. The hope of achieving peace in the Middle East, especially amid the
recent internecine violence, has lately seemed as remote a possibility as victory must have seemed to
the Maccabees when they began their revolt just miles north of Jerusalem. Yet, just as they did not
lose faith, let all those who may feel beleaguered in the search for peace draw inspiration from the
Maccabees and from the lights of this festive day. Let the candles of this Menorah be the shamash
that rekindles our commitment, through our prayers and actions, to be the light that casts away the
shadow of despair and reveals the path to an everlasting peace.
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STATEMfiNIBY TREASlIRYSECRETARY LAWRENCE H. SUMMERS
Page I of I
FROM THE OFFICE OF PUBLIC AFFAIRS
FOR IMMEDIATE RELEASE
December 22,2000
LS-I096
STATEMENT BY TREASURY SECRET ARY LAWRENCE H. SUMMERS
Yesterday, the United States joined other members of the IMF in supporting Turkey's strengthened
economic reforms as the basis for the provision of additional resources under Turkey's IMF program.
The United States supports the enhanced IMF program in recognition ofthe progress Turkey has
made and in light of the vital steps Turkey has committed to for the restoration of confidence and
financial stability. As we stated before, we look forward to the strong and immediate implementation
of these steps. Turkey's financial stability is important to the United States.
S~~rch
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TREASURY~AP~ROVES-I>J«}P0SED RULE FOR FINANCIALSUBSIDIARIES TO A..
Page I of I
FROM THE OFFICE OF PUBLIC AFFAIRS
FOR IMMEDIATE RELEASE
December 22,2000
LS-I097
TREASURY APPROVES PROPOSED RULE FOR FINANCIAL
SUBSIDIARIES TO ACT AS REAL ESTATE BROKERS
The Treasury Department yesterday approved a rule proposal seeking public comment on whether to
determine that real estate brokerage and real estate management activities are financial in nature or
incidental to a financial activity and therefore permissible for financial subsidiaries of national banks.
Comments are due by March 2, 2001.
The proposed rule will be published jointly with the Federal Reserve Board. The Board has approved
issuance of the proposed rule for financial holding companies. Publication in the Federal Register is
expected soon.
S~ar~!!
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TREASURY APPROVES TNTERJM RULE ON FINANCIALACTIVITIES FOR FINAN.. Page I of I
FROM THE OFFICE OF PUBLIC AFFAIRS
FOR IMMEDIATE RELEASE
December 22,2000
LS-I098
TREASURY APPROVES INTERIM RULE ON FINANCIAL
ACTIVITIES FOR FINANCIAL SUBSIDIARIES
The Treasury Department yesterday approved an interim rule defining three categories of activities
listed in section 5136A(b)(3) of the Revised Statutes as financial in nature or incidental to a financial
activity and therefore permissible for financial subsidiaries of national banks.
The interim rule will be published jointly with the Federal Reserve Board and will be effective on
January 2,2001. The Board has approved the interim rule for financial holding companies under a
parallel section of the Bank Holding Company Act. Comments will be due 30 days after publication
in the Federal Register, which is expected soon.
The three categories of activities are:
(I) Lending, exchanging, transferring, investing for others, or safeguarding financial
assets other than money or securities;
(2) Providing any device or other instrumentality for transferring money or other
financial assets; or
(3) Arranging, effecting, or facilitating financial transactions for the account of third
parties.
The interim rule solicits comment on whether there are particular activities, not otherwise authorized,
that may be covered by the three categories of activities. The interim rule also contains a procedure
through which financial holding companies and financial subsidiaries of national banks may request
the Board or the Secretary, respectively, to determine that a particular activity falls within one of the
three categories of activities and is not otherwise authorized.
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PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AOCTION RESULTS
BUREAU OF THE PUBLIC DEBT ~ WASHINGTON DC
Office of Financing
202-691-3550
CONTACT;
FOR IMMEDIATE RELEASE
December 26, 2000
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
December 28, 2000
March 29, 2001
Term:
Iesue Date:
Maturity Date:
ct1SII? Number;
Sll279SFZ9
5.700%
High Rate;
Investment Rate 1/!
Price:
5.B64%
9B. 559
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted 37%. All tenders at lower rates were accepted in full.
AMOUNTS
TE~DERED
AND ACCEPTED (in thousands)
Competitive
Noncompetitive
$
15.355,514
1,194,656
$
Foreign Official Refunded
SUBTOTAL
~ederal Reserve
Foreign Official Add-On
8.792,014
1.194,656
9,996,670 2/
16,550,170
PUBLI C SUBTOTAL
TOTAL
Accepted
Tendered
Tend.er 'I'ype
2,024,300
2,024,300
18,574,470
12,010,970
4,664,181
4,Gb4,181
o
o
s
23,238,651
$
16,675,151
Median rat~
5.600%: 50% of the amount of accepted competitive tenders
tendered at or below that rate. Low rate
5.400%:
5% of the amount
of accepted competitive cenders was tendered at or below that rate.
~as
Bid-eo-Cover Ratio = 16,550,170 / 9,986,670 = 1.66
1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = 5969,090,000
bttp :/Iwww.publicdebt.treas.gov
15-1099
TOTAL P.01
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR
IMMEDIAT~
Office of Financing
202-691-3550
CONTACT;
RELEASE
December 26, 2000
RESULTS OF
TR~SURyIS
182-Day Bill
December 28, 2000
June 28, 2001
9l2795GNS
Term:
Issue Date:
Maturity Date:
CUSIP Number:
5.500%
High Rate:
AUCTION OF 26-WEEK BILLS
Investment Rate 1/;
Price:
S.737%"
97.219
All noncompetitive and successful competitive bidders were awarded
securities at the high rate. Tenders at the high discount rate were
allotted 100%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
competitive
Noncompetitive
$
13.303,285
1,018,277
$
Foreign Official Refunded
SUBTOTAL
Federal Reserve
5,678,285
l,Ol8.277
6,696,562 2/
14,321,562
PUBLIC SUBTOTAL
3.312,700
3.312,700
17.634,262
10.009,262
4.495,340
4,495,340
o
o
Foreign Official Add-On
TOTAL
Accepted
Tendered
Tender Type
s
22.129,602
$
14.504,602
Median rate
5.450%: 50% of che amount of accepted competitive tenders
was tendered at or below that rate. Low rate
5.350%:
5% of che amount
of accepted competitive tenders was tendered at or belo llt that rate.
BiQ~to-Cover
Ratio = 14,321,562 / 6,696,562 = 2.14
1/ Equiva.lent coupon-issu@ yield.
2/ Awards to TREASURY DIRECT = $800,603,000
http://www.publicdebt.treas.gov
LS-ll00
TOTAL P.01
1101
Page I of2
FROM THE OFFICE OF PUBLIC AFFAIRS
FOR IMMEDIATE RELEASE
December 26, 2000
LS-llOl
U.S. International Reserve Position
The Treasury Department today released U.S. reserve assets data for the week ending December 22,
2000. As indicated in this table, U.S. reserve assets totaled $66,626 as of December 15, up from
$66,064 million as of December 15, 2000.
millions)
icial U.S. Reserve Assets
December
TOTAL
1. Foreign Currency Reserves
15,~000
66,064
1
a. Securities
Euro
Yen
TOTAL
5,256
10,332
15,588
Of which, issuer headquartered in the U.S.
I
0
December 22, 2
I
I
I
66,626
Euro
5,408
8,900
rat banks and BIS
b.ii. Banks headquartered in the U.S.
Ib.ii. Of which, banks located abroad
6,424
I
I
I
I
15,323
Yen
11,146
"
I
b. Total deposits with:
I" .
I
9,155
II
Ie
Ie:
e:
5,580
IC=
c=
c=
c=
c=
0
0
0
b.iii. Banks headquartered outside the U.S.
0
. Of which, banks located in the U.S.
e
e
e
13,635
2. IMF Reserve Position 2
3. Special Drawing Rights (SDRs)
10,472
2
11,046
4. Gold Stock 3
c=
0
e Assets
II. Predetermined Short-Term Drains on Fore gn Currency Assets
December 22, 20
Dec;ember 15, 2000
1. Foreign currency loans and securities
I
0
I
I
I
0
I
2. Aggregate short and long positions in forwards and
futures in foreign currencies vis-a-vis the U.S. dollar:
12.a. Short positions
[2.b. Long positions
13. Other
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I
I
I
0
0
I
1
I
I
c=
I
2/9/01
1101
Page 2 of2
III. Contingent Short-Term Net Drains on Foreign Currency Assets
I
December 15, 2000
11. Contingent liabilities in foreign currency
11.a. Collateral guarantees on debt due within 1 year
1
0
I
I
1
0
0
1
1
I
I
1
2. Foreign currency securities with embedded options
13. Undrawn. unconditional credit lines
December 22, 20
I
I
11.b. Other contingent liabilities
I
I
I
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
1Headquartered outside the U.S.
14. Aggregate short and long positions of options in foreign
I
I
Currencies vis-a-vis the U.S. dollar
I
01
1
4.a. Short positions
4.a.l. Bought puts
4.a.2. Written calls
4.b. Long positions
II
ught calls
14.b.2. Written puts
1
Notes:
1/ Includes holdings ofthe 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.
2/ 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 SDRIdollar exchange rate for the
reporting date. The IMF data for December 15 are final. The entries in the table above for December
22 (shown in italics) reflect any necessary adjustments, including revaluation, by the U.S. Treasury to
the prior week's IMF data.
3/ Gold stock is valued monthly at $42.2222 per fine troy ounce. Values shown are as of September
30, 2000. The August 31, 2000 value was $11,046 million.
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2/9101
PUBLIC DEBT NE.WS
Department of tbe Treasury • Bureau of tbe Publi~ 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
December 27, 2000
RESULTS OF TREASURY'S AUCTION OF 2-YEAR NOTES
Interest Ra1:e:
series:
CUSIP No:
STRIPS Minimum:
Issue Date:
Dated Date:
Macuri1:Y Dat:e:
5 1/9%
AD-2002
9128276QO
$1. 600, 000
High Yield:
Price:
5.130%
January 02. 2001
December 31, 2000
December 31, 2002
99.990
All noncompetitive and successful competitive bidders were awarded
securities at the high yield. Tend@rs at the high yield were
allotted 47%. All tenders at lower yields were accepted in full.
Accrued interest of $ 0.2B315 per $1,000 must be paid for the period
from December 31. 2000 to January 02, 2001.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Competitive
Noncompetitive
s
24.123,716
'370,525
$
3,333,333
1,500,000
3,333,;'33
1,500,000
Federal Reserve
Foreign Official Inst.
$
29,927,5 7 4
9,029,716
970,525
10,000,241 1/
2S,0.9~,241
PUBLIC SUBTOTAL
TOTAL
Accepted
Tendered
Tender Type
$
14,833,574
Median yield
5.110%; 50t of the amount of accepted competitive tenders
was tendered at or belo~ that rate. Low yield
5.060t:
5% of the amount
of accepted competitive tenders was tendered at or below tha~ rate.
Bid-to·Cover Ratio = 25.094,241 / lO,OOO,241 = 2.51
1/ Awards to TREASURY DIRECT '" $759.087, 000
http://www.publicdebt.treas.gov
1$-1102
TOTRL P.Ol
TREASURY
NEWS
OfFICE OF P\lBUC A IT.... '1l8 auOO PUNSYLVA.lfIA AV8MlIE.1'I. W.• WASBIIIlGTOPil. I).C.- 2f1.21D a (%02), U2.~"O.
JtIU'RGOBD 'CH'lIL 2 s 3 0 P .11.
'Decamber 28, aOQO
caN'l'AC'l':
Office of i'iJ:LanC!:i.Dg
202/"1-3550
'l"lUtAS1JR.Y OPJ'EltS 13 - WEU AJU) 25 -UU BILLS
Tha Treasury vill auetion twa aerias of Treasu~ bills totaliDg
approximately $23.000 m1 1 lion. to ~efUDd Sl7,557 million of publicly hald
securities ut:r,:iDg .:raAuary 4, 2Q01, cd. to pay dClWZl abou~ $4 .. 5i7 m:lllion.
XD add1cion Co ~e pUb11c hcl~G, Federal aeserve Banks for thei~ ~
aeeo=.ts hole! $13,115 aillicll of the macUZ'iAg bills, wh.ie.h may be reflmciec! at
the highest discount rate of accepted ca=petitive tenders. Amounts i'5ued
~c ~•• a aceoUh~s vill ~ in addition to the offering ~unt.
~.
maturing btllG held by the ~lic iDclude $5,842 DdlliOD bolQ
asre.a:a:.s fOJ: foreigD and. in~ernacicmal :mDtJ..ta~
authorities, which aay be z-ef\mCle4' vithiJ:a. the cffering amount at: che b.1gbe8~
di.count rate of accepted campetitive teDders. Additioual amount. ~y he
i.sued for such accOUDt8 if ~8 aggregac& 'amount of n . . ~id5 exceada tAG
aggreg'a~e CQIIOunt of maturi.Dg bills.
by' Federal. Kese.rve Banks as
r.rea.u~jr.ce c~~cm.r'
requasted that we
~e1nyest
their maturing hold-
1Dg's of apprc:Eimately $.938 IIlillioZl iDeo tile 13-"eek bill and $1,250 millicm
into the 26.-.ak bill.
cf Treasury securit1 •• i. ~~ed by the t.~s &ad CODin ~be UDifor.m Offering ~1J:cula~ for ehe Sale and Issue of
larkaeable Bock-BDt:ry Trauury Bills, Kotes, and. Bonds (31 oa put 356, all
lllCU!aci) •
This
offer~
d1t!ODa set
to~~h
»etail. about ••ch of the Dew 88curitiea are iiven in the attached
off8~iDg
highlight ••
000
I.ttachmant
LS-l103
HIGHLJ:GHT8 O. 'l'IIDSVRY On'BRZIIQB 01P BnL8
TO BB tSSUBD
J~Y
4,
200~
Dea.mbar 28. aooo
~llion
810.500 million
91-d&y bill
912795 SA 3
January 2, 2001
.:January t, 2001
April 5 r 3001
October 5, 2000
$13 (757 million
,1,000
182-day bill
912795 RA 2
January 2, 2001
January t, 2001
July 5, 2001
Jan.uary 4, 2001
Oftering Amount •••••.•••••...•....•..•• '12,500
neBeription of Of£eriDgI
~erm and type of aeaurity •...••.•...•••
cosrp nu.ber .••• , ••...
Auction date •..•.•..•••.••..••••.•••.••
Issue date •.•.••.••.••.•••.•• ~ ••.••.•.•
Haturity date .....• , ••..••..•••.......•
Original issue date •..•..• :".•.••••••..•
Currently outst,anding "•...•••••• ' •••• , .••
HtnLroum bid ~t and multiple ••.....•
9
••••••••
,
•••••••
---
,1,000
~e
fo11owing rules apply to all securities mentioned above I
Submission oj BidS:
~oncomp.titive bid •••.•••••. Acoepted in full up to ,1,000.000 at the highest discount ~at. of
accepted ca.petitive bids.
Competitive bids ; •••.•..•••. (1) MUst be expressed·a. a discount rate with three deoimals in
incramenta of .005', a.g., 7.100\, 1.105'.
(2) Het long position for each bidder must be reported when the 8~
of the total bid amount. at all discount rates. and the net long
position 1. $1 billian or greater.
(3) Nat long position must be dete~ined as of one half·hour prior
to the closing time for receipt of competitive tender ••
KaElm~
Recosnilad Bid
at a Single Rate ..•••••...•• 35\ of public offering
M.xLm~
AKard ...•••..•..••..... 35' of public offering
Receipt,ot
Tenda~.:
NODcompeti~ive
-l
o
-l
D
I
"'0
is)
fll
tenders ••.••. Prior to 12,00 noon eastern standard tiaa on auction day
Competitive tenders •••••.•• , Prior to 1100 p.m. eastern standard time on auction day'
Paynent TarmB: 8y charge to a funds account at a Padaral Reserve Bank on issue data, ~r payment
of full par amount with tender. Treas~1rect CUBtO.arS can use the Pay Direct" feat~re which
authori.es a charge to their account of record at their finanoial institution on iaBue date.
NEWS
TREASURY
omCE OJ Pl1Bt.1C AnAl'&5 .1500 PJt!II!tSYLVANI4 A'V'EN'CI. H. W•• WASHING TON, D.C.- ,ZIJ:U.O •
am;aJ1QOED 'tJftlL :2 I: 30
CODtae~:
~ •••
n.c:aber 28, 2000
O~fic:.
(~02)
Ul·U60
of FiD&DeiDg
202/691-3550
~ ~ will &uc~iQD a~~GxtmaealY $30,000 .1Ilian of l'-~
'l'z'e.wzoy each -eag.....t bi11a to _ 151N84 .:raza.uary 2, 2Q01. !fbo aucticm,
_toe is ~•• 4a.Y,
2, 2001 .. aD! tu DaDe.,.titd.Y8 a.Ad c_e~ttt""e .
clo.~ time will ~ 11:DO a.m . . . .terD .t.aDdar4 ~~.
"","-2
'leD&t~a wil1. BOt be 8.l:!cept.eci f~ :b;i.1.1a 'to be .a:i~taine4 c:m. dle hookClDt~ %ec:onb of ~;a;;-De~~ o£ t:M lfz'.a~ (t'Z'IN~i.z.Gt:)_
-=
A4dJ.~ioaal '8JIIOWlts
f~fID.
.. ar-zatll for
di.~~t ~.t.
of tJ:1.e bill. may be t8111a:a4 ~o Fe4az'al Re.en-e ~.
hltenaatloMl III£IQ8t~ autlaoJ:itie. at. the lU.gbest
of .~~G.Pt~ e-.petL~i?e teD4ara.
De auctiCD. being azmouzac:a4 t.0I!a.¥ will. :be cClDClucted. iD the siDQ1.-»ric:e
.~=iOD £ozmaf:.
All cCDpet.:i.t.iva aD4 r:a..cme~.titJ,'V'Q avaZ'48 will !:Ie a~ t.b4l
higbeet 41SCOUDt rate of
acc~.a ~~iti~ t8DQ.~•.
ROrz: CCII;1et:.1tive bid.a iQ. ca.h NMgaBaal1t b.i~l auct.ioua IIIWIt b.
~~ . . . cU.C::OImt ~.t.e w:Ltb two aec:.laal." a.I'., , .10%.
-
'l'!l!s o£:!ciDg of '1'zo8asUJ;y aecu.riti•• is gOYWZne4 1Jy ebe tonaa a=. c:oradit10Ds ••t fo~~ iB the UDifor.a OfferiDg eireul&~·foz ebe Sal. aDd X8sue of
Mlrketabl. ~-BDtry T.reaa~ 8i11., aote., &ad »oo4a (31 CP.R .art 356, as
am'NX'e4) ..
DeUJ.la about u.. new ••C1U;i.~y are f:l.vtm iA tlw
UQ1Il.ipes ..
LS-1104
.t.~aeU4 off.Z"i~
Offer1!g
~t ••••• ~ ••••••••••.•.•.
J)e1lez-!F,iCIIA of Offering:
~ a=4 type o~ .~ity ••••••••.••
CVSIP
m~ ••••••••••••••••••••••••
$30,000 aill10n
1'-~ e&ab MaDagemeAt
912195 XV 7
a~ll
date •.•••••••••••••••••••••• 3aau&r.r 2. 2001
•..••••.•....•••• ~~ 2, 2001. 1:30 p •••
. .turi~ date •.•••.•••••••••••••••.• ~ 16, 2001
~ec1oo
x.sue
d&~e.&D4 t~
Or'icr~ ,i8IN. 4a~ •• - ••••••••••••••• .:r~
In,,;.-,. bi4 UICUt. UId .mltiJIlas •.•• $1,000
2, 2001
SUl:IIILilslon of Bicls:
KODCampetiti.e biae •••••••••
.
BS~ .
iQ '~11 up to $1,000,000 at
tb. ~gb••~ 4ise~~ r.~e of .e~tea
Aa~t.a
~~icl. . ~14s.
Ccapet:.lt£"11"8 :tai4a ••••••••
M expZ'B8aecl a. a 41ac:cnmt. rate
W1eh two clecim.ls. e.g ... 7.10'_
(2) lIet 10Di po.i~iOD for
b.1aae~ IDlllt
1M repo~_ wUG i;:.he . , . of tlaa total
(1)
_.~
-=
bid
~. a~
all
~.CQUD~
rates. aDd
the Qat lODg' pollitiQD is $1 bill.i= or
gzeac.er.
(3) .et long pe.ition must. be c1a~~ ••
of
balf-b.oIu.- »:r1= \:0 t.l:le c:10.bQ
tUla fozo' zoaceipt. of eGIQP.t:.t~i~ ~~••
=e
!as''''' a.oopW.:llie4 Di4
at: a
"yi".
.~1. Ra~e •••••••••• ~3!%
~
of pUblic offericg
................. lS% of pUblic
of~er!Dg
-.ceipt of '.ruders s
lIO:I:IccIIpet.iti"," ce=.rs ••• ~ •• n1oZ' 'to 11: DO ••a. astun 8taradad
t:S.lla 01\ auctl= day
ca.pe~ic1Y8 t~I ••••••••• Prio~
to 11:00 a.a.
tu. em. au.etioo ~
P!f!!!t
~ •••••••••••••••••
"8t~ .t~
*
By Cbarge 'to. luna. acCOUDt. at
Pe4~al
a&SQ.Z'98 Ba:ak O'A iane ate.. cr ~t of
full »&z' IIIICIUnt wiu tanu%'_
TOTAL P.O;
@FedFRASER