Federal Reserve Bulletin April 1999

Volume 85 • Number 4 • April 1999

Federal Reserve

BULLETIN

Board of Governors of the Federal Reserve System, Washington, D.C.

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents

217 HIGHLIGHTS OF DOMESTIC OPEN MARKETOPERATIONS DURING 1998

The Trading Desk at the Federal Reserve Bankof New York uses open market operations toimplement the policy directives of the FederalOpen Market Committee (FOMC). The FOMCexpresses its short-term objective for open mar-ket operations as a target level for the federalfunds rate—the interest rate at which depositoryinstitutions lend balances at the Federal Reserveto other depository institutions. To keep the fed-eral funds rate near the level specified by theFOMC, the Desk uses open market operationsto bring the supply of balances at the FederalReserve into line with the demand for them. In1998, the level of balances that depository insti-tutions were required to hold at the FederalReserve continued to decline, to historic lows.The primary reason for this was the ongoingproliferation of retail "sweep" programs, whichtransfer depositors' funds from transactionaccounts that are subject to reserve requirementsinto other deposit accounts that are not.

In past years, declines in required balanceshad been associated with greater volatility in thefederal funds rate because depository institu-tions have less flexibility in managing their dailybalance positions. However, through the firstthree quarters of 1998, the funds rate behavedmuch as it had in 1997, even though requiredbalances were lower. In the final quarter of1998, funds rate volatility rose when marketparticipants evinced greater concerns about thecredit quality of their counterparties at a time ofincreased uncertainty in financial markets.

236 INDUSTRIAL PRODUCTION AND CAPACITYUTILIZATION FOR FEBRUARY 1999

Industrial production increased 0.2 percent inFebruary, to 132.6 percent of its 1992 average.Overall capacity utilization in February slipped0.1 percentage point, to 80.3 percent, a levelPA percentage points below its long-term aver-age and 2'/i percentage points below its Febru-ary 1998 level.

239 STATEMENTS TO THE CONGRESS

Edward M. Gramlich, member. Board of Gover-nors, discusses social security reform and testi-fies that the broad objective of the ClintonAdministration's budget—to preserve most ofthe projected surpluses—seems responsible andappropriate. However, Governor Gramlich testi-fies further that the additional proposal by theAdministration to transfer general revenues tothe social security trust fund undermines thefiscal discipline imposed by the need to ensurethat income earmarked for social security issufficient to meet the entire cost of the program,both in the short run and long run. (Testimonybefore the Senate Committee on Finance, Febru-ary 9, 1999. Governor Gramlich presented iden-tical testimony before the House Committee onWays and Means on February 23, 1999.)

240 Alan Greenspan, Chairman, Board of Gover-nors, presents the views of the Federal Reserveon the need to enact legislation to modernize theU.S. financial system; he testifies that only theCongress can establish the ground rulesdesigned to ensure the maximum net publicbenefits, protect the safety and soundness of ourfinancial system, create a fair and level playingfield for all participants, and ensure the contin-ued primacy of U.S. financial markets. For thesereasons, the Federal Reserve supports and urgesprompt enactment of the financial moderniza-tion contained in H.R. 10. (Testimony before theHouse Committee on Banking and FinancialServices, February 11, 1999)

243 Chairman Greenspan presents the FederalReserve's semiannual report on monetary policyand testifies that over the past year the U.S.economy again performed admirably, despite thechallenges presented by severe economic down-turns in a number of foreign countries and epi-sodic financial turmoil abroad and at home. Hetestifies further that a continuation of respon-sible fiscal and monetary policies should affordAmericans the opportunity to make considerablefurther economic progress over time. (Testi-mony before the Senate Committee on Banking,


Housing, and Urban Affairs, February 23, 1999.Chairman Greenspan presented identical testi-mony before the House Committee on Bankingand Financial Services on February 24, 1999.)

250 Chairman Greenspan testifies that in designingfinancial modernization legislation, the FederalReserve believes that the Congress should focuson achieving two essential and indivisible objec-tives: removing outdated, competitively stiflingrestrictions on financial affiliations and, mostimportant, adopting a framework for this mod-ernization that promotes the safety and sound-ness of our banking and financial system andprevents the extension of the federal subsidy.Further, Chairman Greenspan states that theFederal Reserve urges prompt enactment offinancial modernization legislation that achievesthese two central and indivisible objectives.(Testimony before the Senate Committee onBanking, Housing, and Urban Affairs, Febru-ary 23, 1999)

252 Edward W. Kelley, Jr., member, Board of Gover-nors, testifies on behalf of the Board of Gover-nors on the Federal Reserve Board RetirementPortability Act and provides information on theFederal Reserve retirement system. He furthertestifies that the Board strongly supports thislegislation, which would allow certain employ-ees who leave the Board to work for otheragencies and who then retire under the FederalEmployees Retirement System to receive pen-sions reflecting all of their federal service,including post-1988 service at the Board. (Testi-mony before the Subcommittee on Civil Ser-vice of the House Committee on GovernmentReform and Oversight, February 25, 1999)

256 ANNOUNCEMENTS

Proposed changes to Regulation CC to providemore flexibility to depository institutions toexperiment with methods to return unpaidchecks electronically.

Addition of supplementary tables to the Z.Istatistical release on the flow of funds accounts.

Publication by an interagency task force of aconsumer brochure Looking for the Best Mort-gage: Shop, Compare, Negotiate.

Availability of the List of Foreign MarginStocks.

Enforcement actions.

Revisions to the money stock data.

263 LEGAL DEVELOPMENTS

Various bank holding company, bank servicecorporation, and bank merger orders; and pend-ing cases.

A1 FINANCIAL AND BUSINESS STATISTICS

These tables reflect data available as ofFebruary 24, 1999.

A3 GUIDE TO FABULAR PRESENTATION

A4 Domestic Financial StatisticsA42 Domestic Nonfinancial StatisticsA50 International Statistics

A63 GUIDE TO STATISTICAL RELEASES ANDSPECIAL FABLES

A64 INDEX TO STATISTICAL FABLES

A66 BOARD OF GOVERNORS AND STAFF

A68 FEDERAL OPEN MARKET COMMITTEE AND

STAFF; ADVISORY COUNCILS

A70 FEDERAL RESERVE BOARD PUBLICATIONS

A72 MAPS OF THE FEDERAL RESERVE SYSTEM

A74 FEDERAL RESERVE BANKS, BRANCHES,AND OFFICES


PUBLICATIONS C O M M I T T E E

Lynn S. Fox, Chair • S. David Frost . ! Karen H. Johnson '. Donald L. Kohn• J. Virgil Mattingly, Jr. • Michael J. Prell "J Dolores S. Smith J Richard Spillenkothen

The Federal Reseme Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible lor opinions expressedexcept in official statements and signed articles It is assisted by the F.conomic Editing Section headed by S. Ellen Dykes, the Multimedia Technologies Centerunder Ihe direction of Christine S. Griffith, and Publications Services supervised by Linda C. Kyles.


Highlights of Domestic Open Market Operationsduring 1998

This article is adapted from a report to the FederalOpen Market Committee by Peter R. Fisher, Execu-tive Vice President of the Federal Reserve Bank ofNew York and Manager of the System Open MarketAccount. Spence Hilton, Assistant Vice President,Federal Reserve Bank of New York, prepared thisarticle. Angela Goldstein and Wendy Wong providedresearch assistance.

The Trading Desk at the Federal Reserve Bank ofNew York uses open market operations to implementthe policy directives of the Federal Open MarketCommittee (FOMC). The FOMC expresses its short-term objective for open market operations as a targetlevel for the federal funds rate—the interest rate atwhich depository institutions lend balances at theFederal Reserve to other depository institutions. Tokeep the federal funds rate near the level specified bythe FOMC, the Desk uses open market operations tobring the supply of balances at the Federal Reserveinto line with the demand for them.

In 1998 the level of balances that depository insti-tutions were required to hold at the Federal Reservecontinued to slip, to historic lows. The primary rea-son for this decline was the ongoing proliferation ofretail "sweep" programs, which transfer depositors'funds from transaction accounts that are subject toreserve requirements into other deposit accounts thatare not.1 The decline in required balances encourageddepository institutions to hold more excess reservesduring the year.2

In past years, declines in required balances hadbeen associated with greater volatility in the federalfunds rate because depository institutions have less

1. Past annual reports on open market operations have discussedthe growth of sweep accounts and other developments surrounding theDesk's operations, and these remained themes in 1998. The annualreport for 1998 and those from other recent years are availableon the web site of the Federal Reserve Bank of New York(http://www.ny.frb.org).

2. Depository institutions hold balances at the Federal Reserve tosatisfy reserve and other balance requirements. Some institutions alsohold additional balances—called excess reserves—to guard againstunanticipated debits to their accounts at the Federal Reserve that couldleave the account overdrawn at the end of the day or short of the levelneeded to satisfy their requirements.

flexibility in managing their daily balance positions.With lower requirements, a depository institution isless able to substitute balances across days of themaintenance period to meet its balance requirement,which must be met by the average of its holdingsover the period, because the risk of overdrawing itsaccount at the end of the day is greater.3 However,through the first three quarters of 1998, the fundsrate behaved much as it had in 1997, even thoughrequired balances were lower. In the final quarterof 1998, funds rate volatility and levels of excessreserves rose when funds market participants evincedgreater concerns about the credit quality of theircounterparties at a time of increased uncertainty infinancial markets. These heightened credit concernsupset normal trading relationships among institu-tions in the federal funds market, and market partici-pants were more wary of approaching the FederalReserve's discount window to borrow for fear ofbeing perceived as being in unsound financial condi-tion, even though the identity of any institution thatborrows is strictly confidential. In this environment,many depository institutions bid aggressively for bal-ances at the Federal Reserve, thus lifting the fundsrate, especially early in the day, but often with theresult that the rate fell off in later trading after bor-rowers became confident that their demand for bal-ances would be satisfied. The Desk responded to theupward rate pressure it saw on many mornings byelevating the levels of excess reserves it provided.

The Desk's selection of open market operations in1998 was influenced by changing market circum-stances, such as the ongoing decline in required bal-ances. With the backdrop of falling required bal-ances, the Desk in managing reserve supply increasedits reliance on very short-term operations. It alsoadopted a somewhat different approach to addressingdeep seasonal reserve shortages around the end of the

3. For further detail on the operating practices and techniques usedby the Trading Desk, see Cheryl L. Edwards, "Open Market Opera-tions in the 1990s," Federal Reserve Bulletin, vol. 83 (November1997) pp. 859-74; Ann-Marie Meulendyke, US. Monetary Policy andFinancial Markets (Federal Reserve Bank of New York, 1998); andM. A. Akhtar. Understanding Open Market Operations (FederalReserve Bank of New York, 1997).


218 Federal Reserve Bulletin • April 1999

year—an approach designed to take advantage ofits new authority granted by the FOMC to arrangetemporary transactions with maturities of up to sixtydays. Largely as a consequence, fewer reserves wereadded on a permanent basis in 1998 than in 1997.

IMPLEMENTATION OF MONETARY POLICYIN 1998

Directives of the Federal Open MarketCommittee

In 1998 the Federal Open Market Committee(FOMC) continued to express its operating objectivefor monetary policy as a specific level of the over-night federal funds rate—the interest rate on inter-bank loans of balances held on deposit at the FederalReserve. After each of its policy meetings, the FOMCissued a written directive to the Trading Desk,instructing it to foster conditions in reserve marketsconsistent with maintaining the federal funds rate atan average around the target rate.4 Beginning inSeptember 1998, the FOMC lowered its target levelfor the federal funds rate on three occasions beforethe end of the year, each time by 25 basis points. Ontwo of these occasions the Board of Governors alsoapproved an equal reduction in the discount rate, theinterest rate that the Federal Reserve charges deposi-tory institutions for borrowing at its discount windowfacility (table 1). The reduction in the funds rate inSeptember was the first time that the FOMC hadchanged its target rate since March 1997.

4. The directive is released along with the minutes of each FOMCmeeting shortly after the conclusion of the next regularly scheduledFOMC meeting. The minutes, which contain the directives, arereprinted in the Federal Reserve Bulletin and are available on theBoard's web site (http://www.federalreserve.gov).

Maintenance Periods and the Desk'sNonborrowed Reserve Objective

Each depository institution is required to hold reserves,either in the form of vault cash or balances at the FederalReserve, in a fixed proportion to certain of its depositliabilities. Two-week computation periods establish thetime frame over which institutions' deposit levels areaveraged for the purpose of calculating their reserverequirements. Two-week maintenance periods define thetime frame over which institutions can accumulate dailybalances at the Federal Reserve to meet the portion oftheir period-average reserve requirements that is not metwith vault cash.

The nonborrowed reserve objective, or "path," that theDesk estimates for each maintenance period is a measureof the level of nonborrowed reserves—vault cash andreserve balances created through sources other than bor-rowing at the Federal Reserve's discount window—thatis associated with maintaining the federal funds ratearound the target. This path captures the average demandfor reserves for that period arising from reserve require-ments plus the estimated demand for excess reserves, lessan allowance for expected discount window borrowingassociated with the funds rate remaining at its objective.

Reserve requirements are known at the start of eachmaintenance period based on deposit information thatbanks provide to the Federal Reserve, but demand forexcess reserves and borrowing from the discount windoware estimated or anticipated on the basis of experience.The difference between the path and estimates of averagereserve supply for the period provides a general indica-tion of the overall need for open market operations tobring reserve supply in line with demand over the main-tenance period. The specific operations chosen by theDesk are driven largely by the estimated daily patternsof both demand and supply and the observed behavior ofthe funds rate. As a maintenance period progresses, theallowances for excess reserves and borrowing are revisedwhen incoming information suggests that they are incon-sistent with maintaining the funds rate around theFOMC's target.

1. Changes in the federal funds rate specified in directivesof the Federal Open Market Committee,March 25, 1997-November 17, 1998Percent

Date of change

March 25, 1997

September 29, 1998

October 15, (998

November 17,1998

Expectedfederal funds

rate

Associateddiscount rate

5.50 5.00

5.25 5.00

5.00' 4.75

4.75 4.50

I. Firsl change made between regular Federal Open Market Committee(FOMC) meetings since April 18. 1994.

Overview of Operating Proceduresand Practices

In attempting to achieve the FOMC's target for thefederal funds rate, the New York Trading Desk triesto align the supply of reserve balances with the levelof demand believed consistent with maintaining thefunds rate around its target level (see box "Mainte-nance Periods and the Desk's Nonborrowed ReserveObjective"). The Desk is able to alter reserve bal-ances by engaging in open market operations withprimary dealers of government securities. If the open


Highlights of Domestic Open Market Operations during 1998 219

market operation is intended to add reserve balances,the Desk agrees to buy securities from one or moredealers. When the dealers deliver the agreed-uponsecurities to the Desk, it credits the dealers' accountsat their clearing banks, a process that creates reservebalances. If the operation is intended to drainreserves, the Desk sells securities, and reserve bal-ances are extinguished.

Each morning the Desk considers whether an openmarket operation is needed on the basis of estimatesof the demand for and supply of reserves. Any opera-tion designed to alter reserve balances that same dayis typically arranged shortly thereafter. Reserve needsin upcoming days and weeks are also considered andsometimes influence the choice of operations, as doesan assessment of possible errors in the forecasts ofdemand for and supply of reserves. Current tradingconditions in the funds market, which can shed lighton reserve imbalances, also play a role in determin-ing the structure of open market operations. Whenselecting open market operations, the Desk views itsobjective as keeping the funds rate on current andfuture days as close to the target as possible, but itdoes not target an average rate over any preset timeframe and thereby try to create high rates to offsetlow rates on past days, or vice versa.

New Developments in 1998

Two important changes in 1998 affected the Desk'sconduct of open market operations. The Board ofGovernors approved a return to lagged reserverequirements (LRR) beginning with the maintenanceperiod ended August 12, J998. LRR replaced con-temporaneous reserve requirements (CRR), whichhad been in place since 1984. LRR are designed toimprove the Desk's ability to estimate the demand forreserves to meet requirements and thus help it cali-brate open market operations. Under LRR, a deposi-tory institution's reserve requirement depends on itsaverage reservable deposit liabilities in a two-weekcomputation period that ends seventeen days beforethe start of the corresponding reserve maintenanceperiod. At the same time, the computation period forapplied vault cash, which was lagged one period evenunder CRR, was shifted back further to coincide withthe computation period for reservable deposit liabili-ties. Thus, under LRR, the Desk knows with virtualcertainty the aggregate level of reserve requirementsat the outset of each maintenance period, and eachdepository institution knows the average level ofrequired reserve balances it must hold over theperiod.

The second change involved the maximum lengthof repurchase agreements (RPs) permitted by theFOMC in its authorization for domestic open marketoperations. At its November meeting, the FOMCextended the maximum maturity of RPs that the Deskmay arrange to sixty calendar days from the previousfifteen-day limit.5 RPs are agreements that the Deskmakes with government securities dealers to pur-chase securities and then to sell the same securitiesback to the dealers on a specified date at a predeter-mined price. These operations are useful for increas-ing reserves on a temporary basis. The lengthening ofthe maturity limit provides the Desk with additionalmeans for addressing reserve shortages that are tem-porary but that are certain to exceed in length thefifteen-day maturity previously set for RPs. The useof long-term RPs in 1998 is discussed later in thisarticle.

Sweep Programs and Total. Required Balances

Since 1994 depository institutions have used retailsweep programs to reduce the amount of balancesthey must hold at the Federal Reserve to meet reserverequirements. Under these programs, depository insti-tutions shift their customers' funds from checkingaccounts that are reservable into special-purposemoney market deposit accounts that are not reserv-able. Thus, depository institutions can decrease thelevel of their deposits subject to reserve requirementsand, with no change in their vault cash holdings, theirtotal required balances, on which they earn no inter-est. Sweep programs are profitable because deposi-tory institutions can invest the balances that they areno longer required to hold in interest-bearing assets.6

The adoption of sweep programs over the past fewyears has led to a significant decrease in requiredreserves and required balances.7

In 1998, the spread of sweep programs slowed asthe proportion of deposit accounts not already cov~

5. The authorization is reprinted in the Federal Reserve Bulletinwith the minutes from the first FOMC meeting each year. For the textof the authorization in place at the end of 1998, see "Minutes ofthe Federal Open Market Committee Meeting Held on Novem-ber 17, 1998," Federal Reserve Bulletin, vol. 85 (February 1999),pp. 122-23.

6. For further information on sweep programs, see Edwards, "OpenMarket Operations in the 1990s," p. 870.

7. Total required balances consist of required reserve balances andrequired clearing balances. Required reserve balances are the portionof a depository institution's reserve requirement that is not satisfiedwith vault cash. Required clearing balances are balances depositoryinstitutions agree in advance to hold at the Federal Reserve, usually tofacilitate payments.



Deposits affected by new or expanded sweep programs, 1995-98

Billions of dollars

• Demand deposit accounts• NOW accounts

I - • • •

— 300

— 250

— 200

— 150

— 100

— 50

I I1995 1996 1997 1998

NOTE. Data are monthly averages.

ered by these programs diminished and as the expan-sion of sweep programs became less profitable forinstitutions that began to meet their entire reserverequirement with vault cash. The level of depositsaffected by new or expanded sweep programs in 1998rose $60 billion, an increase that was nearly $25 bil-lion less than that of 1997 and about half that of 1996(chart I).8 Demand deposits and other checkabledeposits fell moderately, by $34 billion, as the depres-sing effect of sweeps was partly countered by higherdemand for liquid balances arising from the morerapid growth of income and declining opportu-nity costs of holding money.9 As a result, requiredreserves fell $3'/2 billion on balance between thefinal maintenance period of 1997 and that of 1998(chart 2). Also during this period, applied vault cashfell $1 billion and required clearing balances werelittle changed, so that total required balances dropped$2'/2 billion.

The decline in total required balances in 1998 wassimilar in size to the $2% billion drop of 1997, butmuch less than the $6 billion fall in 1996. However,comparing changes in these reserve measures in 1998with changes in earlier years is complicated by theswitch to LRR, which altered the lags between move-ments in required reserves and applied vault cash andthe underlying seasonal swings in demand depositsand currency around the year-end.10 Absent this

8. These figures apply to deposits initially swept by banks at thestart of a program or when the coverage was expanded. The data arenot updated to include any later changes in the underlying depositbalances included in an existing program.

9. The change in deposits is measured using not seasonallyadjusted data from December 1997 to November 1998. The declineover this period best correlates with the change in reserve require-ments over the year because the switch to LRR created a lag of aboutone month between deposit levels and reserve requirements.

10. The shift to LRR left the level of reserve requirements in thefinal maintenance period of 1998 about $2 billion below the level itwould have been under CRR because the seasonal rise in requirements

effect, total required balances would have shown amuch smaller decline in 1998.

The slowing pace of decline in total required bal-ances reflects both the ebbing in the spread of sweepprograms and the fact that an increasing number ofnew sweep programs were byproducts of efforts toreduce vault cash holdings and were not intended toreduce required reserve balances."

that typically occurred in the final maintenance period of the yearunder CRR occurs about two maintenance periods later under LRR.For related reasons, the move to LRR left the level of applied vaultcash in the final maintenance period of the year about $% billionhigher than it otherwise would have been.

11. A bank can profit by reducing its vault cash holdings because itearns no interest on ihese assets. If the eliminated vault cash had beenused to meet reserve requirements, the bank can use a sweep programto reduce its reserve requirements simultaneously; without the sweepprogram the bank would have to hold more non-interest-bearingbalances at the Federal Reserve in place of vault cash to meet itsreserve requirements.

2. Reserve measures, 1995-9

Billions of dollars

Required clearing balances

1995 1996 1997 1998

NOTE. All figures are mainlenance-period averages calculated a( Iwo-weekintervals. Required reserves are Ihe sum of required reserve balances andapplied vault cash. Total required balances are ihe sum of required reservebalances and required clearing balances.



OUTRIGHT TRANSACTIONS FOR THE SYSTEMOPEN MARKET ACOVNT

In 1998 the portfolio of domestic securities heldin the System Open Market Account (SOMA) grew$25 billion, to $473 billion at year-end (chart 3).12

Most of the expansion was achieved through outright(permanent) purchases of securities made by the Deskin the market, with a small portion obtained throughpurchases from foreign accounts.

Changes in the Size of the System OpenMarket Account

The Desk increased the SOMA portfolio to offset theeffect of movements in operating factors on nonbor-rowed reserve supply. Operating factors (listed intable 2), which are sometimes called technical fac-tors, are items on the Federal Reserve's balance sheetother than loans and holdings of domestic securitiesthat can affect the supply of reserves available todepository institutions. Movements in these factorstypically prompt the Desk to arrange open marketoperations to negate their effect on reserve supply.The growth in the SOMA this past year was wellbelow the record $41 billion expansion of 1997,largely because of differences in the mix of tem-porary and permanent operations used to addressreserve shortages at year-end.13

12. All figures on SOMA holdings in this article are par valuesunless otherwise stated and exclude any securities held under out-standing RPs. Reported Treasury bill holdings include the portionsold to foreign accounts under matched sale-purchase agreements.Reported changes and levels of Treasury coupon securities do notinclude the accrual of compensation for the effects of inflation on theprincipal of inflalion-indexed issues. At the end of 1998, these accrualstotaled $79 million, $56 million higher than one year earlier.

13. The attribution of changes in the portfolio from year-end toyear-end either to factor movements over the year or to year-endreserve management strategies is based on the accounting identity:

PORTenim - PORTcvi91 = /?/>Md97 - - DFACTORS9i

where PORT is the size of the portfolio, RP is the value of RPagreements outstanding, ER is the level of excess reserves, BR isdiscount window credit, and RjR is the level of reserve requirements,each for the end of the indicated year. DFACTORS reflects the neteffect of changes over 1998 in all operating factors on reserve supply.Changes in discount window borrowing, which affect reserve supply,and excess reserve demand were not substantial relative to otherfactors during the year and are not considered explicitly in the text. Inthe tables and charts in this article, values for the portfolio are takenfrom year-end dates while values for RPs outstanding and changes infactors are based on averages taken from maintenance periods at theyear-end.

3. System portfolio of Treasury and federal agencysecurities, 1980-98

Billions of dollars

Levels• Federal agencies• Treasury coupons• Treasury bills

— 400

— 300

— 200

— 100

Net changes

— 10

I I I I I 1 I. I I I I I I I I 1 t I I I I I1980 1985 1990 1995

NOTE. Values for the portfolio are taken from year-end dales.

2. Required reserves and factors affecting nonborrowedreserves, 1997-98Billions of dollars

Item

R e q u i t e d r e s e r v e s . . . .

Factors affectingnonborrowedreserves'Currency in

circulationForeign currencyForeign RP poolGold and foreign

depositsFloatTreasury balance . . . .Applied vault cash . . .Required clearing

balancesAll other items3

Net changes innonborrowedfactors

Outstanding RPs1

Par valuePremium

Levels in maintenanceperiod ending

Jan. 1,1997

Dec. 31,1997

Dee. 30,1998

Effect ofchange on

reserve supply

1997 1998

50.6 47.4 44.0 3.2 3.4

448.1 479,3 514.0 -31.3 -34.716.2 16.6 17.4 .4 .814.0 17.0 19.4 -3.0 -Z4

20.6 20.1 20.1 -J5 02.0 .8 2.6 -1.2 1.86.0 4.9 63 1.1 -1.4

38.1 37.7 36.7 -.4 -.9

6.6 6.7 6.6 -.1 024.3 23.3 25.4 -1.0 2.1

-36.0 -34.7

16.3 10.1 15.2 -6 .2 5.11.4 .5 1.1 -.8 .6

NOTE. A decline in required reserves is counted as a rise in reserve supply.1. Values for changes in faclors and repurchase agreements (RPs) outstand-

ing are based on averages taken from maintenance periods at the year-end.2. The category "All olher ilems" equals all olher assets minus all oiher

liabilities nol listed in Ihe table and excludes ihe premium on RPs.


222 Federal Reserve Bulletin LJ April 1999

Factors Affecting the Need for a Changein the SOMA Portfolio

Changes in the Supply of and Demand forNonborrowed Reserves

The expansion of the portfolio in 1998 was drivenprimarily by the need to offset the reserve draincaused by continued strong growth of currency incirculation, which increased nearly $35 billion duringthe year and reduced reserve supply by an equivalentamount (table 2). On balance, the other factors affect-ing supply were little changed over the year. The$3'/2 billion decline in required reserves reduced thedemand for reserves and lessened the need to offsetall of the decline in supply with open market opera-tions. Altogether, these movements in operating fac-tors and required reserves deepened reserve shortagesa little more than $30 billion in 1998, slightly lessthan their net effect in 1997.

The Effect of Year-End Reserve ManagementStrategies

Despite the similarity in net movements in operatingfactors in 1997 and 1998, the increase in the SOMAportfolio in 1998 was much smaller than in 1997because of shifts in year-end reserve managementstrategies. Over the year-end period in each of thepast three years, the Desk has used very differ-ent combinations of outright purchases and RPs toaddress seasonal reserve shortages, which typicallydeepen leading up to the year-end and then recedeafter the year-end.

Over the 1998 year-end, about $6 billion more ofRPs were used to address reserve shortages than wereused over year-end 1997 (table 2). Total outstandingRPs over the year-end 1998 period included $8 bil-lion of long-term operations with maturities longerthan fifteen days. These long-term RPs addressedsome of the deep year-end shortages that wereexpected to recede early in 1999. In the absence ofthese long-term RPs, more outright purchases wouldlikely have been undertaken to cover a greater por-tion of the year-end deficiency.

In 1996 the Desk had also made relatively fewoutright purchases to address year-end reserve short-ages, preferring to use more short-term RPs. As aresult of this strategy, outright purchases that other-wise would have been made late in 1996 weredeferred until early 1997, after the RPs matured. Thispostponement of purchases also elevated the totalquantity of outright purchases made in 1997 relativeto the amounts in other recent years.

Outright Market Activity Affecting the SOMAPortfolio

Virtually all of the expansion of the portfolio in1998 was achieved through $26.4 billion of outrightpurchases—entirely of Treasury coupon securities—made in the market (chart 4). Because of the rela-tively low level of Treasury bill issuance over thepast two years, the Desk refrained from making pur-chases of bills in the market out of concern that anyreduction in the supply of bills held by the publicmight further diminish bill market liquidity. At thesame time, existing bill holdings in the portfolio wereviewed as sufficient for addressing any contingency.

In purchasing Treasury coupon securities in themarket, the Desk continued to segment its purchasesinto separate tranches covering different portions ofthe yield curve. Beginning in October, the Desk tooksteps to reduce further the price effect of its opera-tions by narrowing the maturity range of issues con-sidered for any one operation. This step was intendedto limit the number of issues and thereby the totalnumber of offerings or propositions by the Desk's

4. System portfolio of Treasury and federal agencysecurities, year-end holdings, 1995-98

Billions of dollars

• Purchases from foreign accounts53 Purchases in the market• Redemptions — 30

— 20

— 10

Treasurybills

1995Treasurycoupons

Federalagencies

Treasurybills

1996Treasurycoupons

Federalagencies

Treasurybills

1997Treasurycoupons

Federalagencies

Treasurybills

1998Treasurycoupons

Federalagencies

NOTE. Purchases are positive values; redempiions are negative values.



counterparties—the primary dealers—that wouldhave to be evaluated in the selection process. Thetotal value of purchases made in each operation wasreduced accordingly. This modification permittedfaster turnaround times, which is a factor in thecompetitiveness of the propositions the Desk re-ceives, and also helped to reduce further any effect ofthe Desk's operations on market prices. At the sametime, in the messages announcing operations that aresent to the primary dealers, the Desk began to specifythose issues within the maturity range that it wouldnot purchase because of portfolio considerations.Specifying these issues in the announcements simpli-fied the submission and selection process further forthe Desk's counterparties.

In November, the Desk limited one of the tranches,to Treasury inflation-indexed securities (TIISs) forthe first time. The Desk judged that the different assetcharacteristics and market trading dynamics of TIISswarranted their separation from the operations innominal coupon issues. Previously, the Desk hadconsidered propositions on TIISs and nominal cou-pon issues together so long as they were in thespecified maturity range of a tranche, and it hadpurchased $100 million of inflation-indexed securi-ties in one operation in 1997. But the Desk had foundit difficult to make relative value judgements betweeninflation-indexed and nominal coupon issues duringthe process of selecting propositions.

Other Activity Affecting the Size of the SOMAPortfolio

Besides its market purchases, the Desk acquired secu-rities through transactions with foreign accounts, andit shrank some of its securities holdings throughredemptions. Many foreign central banks and inter-national organizations have custodial accounts at theFederal Reserve Bank of New York, and the FOMCauthorizes the Desk to transact with these foreignaccount holders. When the foreign account holdershave securities to sell, the Desk may purchase thesesecurities if doing so is consistent with reserve needs.The Desk accquired $3.6 billion of Treasury billsthrough such purchases in 1998.

The SOMA portfolio contains publicly offered U.S.Treasury securities. When these securities mature,the Desk is permitted to exchange them for newsecurities that settle on the same day. In 1998, whenmore than one auction for new securities settled onone of these dates, the distribution of issues newlyacquired by the Desk was proportional to the amountsthe Treasury was issuing to the public. The Desk canalso tender for fewer securities than mature on an

auction settlement date, but it cannot tender for more.Early in 1998, the Desk redeemed $2 billion inTreasury bills by letting them mature without replace-ment to address seasonal reserve surpluses. It alsoredeemed a portion of its holdings of original-issueseven-year notes (which are no longer issued). TheDesk held $4.3 billion of such notes that maturedduring the year, all on dates when new Treasuryinflation-indexed securities settled. Altogether, theDesk exchanged $1.6 billion of the maturing seven-year notes for TIISs, equal in value to 5 percent of theamount issued to the public, while the remaining$2.7 billion of the maturing notes was redeemed.

About $300 million of federal agency securitieswas redeemed in 1998 as part of the SOMA's ongo-ing reduction of its holdings of agency securities. TheDesk also sold $25 million of agency debt back to theoriginal issuer as part of that agency's program toretire or replace a portion of its outstanding debt. Atthe end of the year, SOMA agency holdings hadfallen to a little more than $300 million.

SOMA Portfolio Management

As in 1997, the overall expansion of the domesticportfolio in 1998 was in holdings of Treasury couponsecurities. The declining share of short-term Treasurybills held in the portfolio increased the average matu-rity of all Treasury issues in the SOMA at year-endto forty-seven months, compared with forty-threemonths at year-end 1997 (table 3). At the end of1998, 14 percent of the volume of all outstandingmarketable Treasury debt was held in the SOMAportfolio, up a bit from 13 percent one year earlier.

3. Weighted-average maturity of marketable Treasury debt,selected years, 1960-98Monlhs

Year-End

1960196519701975198019851990

19911992199319941995

199619971998

Holdings ia tbe SystemOpen Market Account Total outslanding debt

19 5516 SO24 4031 S355 4849 5841 68

31 6S36 671$ 6538 6639 S3

41 6343 US47 6S

NOTE. The effects of all outstanding temporary transactions on System OpenMarket Account (SOMA) holdings are excluded from the calculation. Thematurity of total outstanding Treasury debt for 1998 is as of the end of the fiscalyear.



The percentage of all outstanding Treasury bills thatwas held in the portfolio increased to 31 percentat the end of 1998 from about 30 percent in 1997,reflecting the decline in the volume of bills outstand-ing. A little more than 9 percent of the total outstand-ing volume of coupon issues, including TIISs, washeld in the portfolio at the end of 1998, about 1 per-centage point more than a year earlier.

TEMPORARY TRANSACTIONS FOR THE SYSTEMOPEN MARKET ACCOUNT

Period-Average Reserve Needs and Revisions

The difference between the path and the estimatedsupply of nonborrowed reserves at the outset of eachtwo-week maintenance period, after incorporating theeffects of any outright operations arranged previ-ously, indicates the need for open market operationsduring that period. In 1998 the estimates of theperiod-average reserve needs made at the start ofeach maintenance period—in absolute value to allowfor temporary reserve surpluses—averaged $5.3 bil-lion, down from $8.0 billion in 1997 (chart 5).14 Thedecline in the average was partly the byproduct of thehigher volume of outright purchases made in 1997,which left smaller reserve imbalances early in 1998than had existed early in 1997.

Revisions to estimates of operating factors affect-ing the supply of or demand for reserves during a

period affect the actual size of temporary operationsneeded during that maintenance period. Therefore,the Desk must allow for the possibility of such revi-sions in structuring its operations as it goes through aperiod. Net revisions to operating factors affectingthe supply of reserve balances over an entire periodtended to be less in 1998 than in other recent years,largely reflecting smaller Treasury balance revisions(table 4). At the same time, revisions to key determi-nants of the demand for balances at the FederalReserve—required reserves and applied vault cash—were virtually eliminated with the advent of LRR inAugust. Before the introduction of LRR, sizable revi-sions to required reserves and applied vault cashsometimes were made relatively late in a period,which was a major source of uncertainty. Thus theDesk had to take the uncertainty in these estimatesinto account when structuring its operations late in aperiod.

Daily Volatility of and Projection Errors forthe Supply of and Demand for Reserves

The decline in total required balances resulting fromthe implementation of sweep programs over the pastseveral years has increased depository institutions'exposure to overdrafts arising from unanticipatedshifts in their daily reserve positions. As a result, boththe day-to-day swings in factors affecting the supply

14. Some of these initial estimated reserve needs were reduced bytemporary term RPs that were arranged in an curlier maintenanceperiod and extended into later periods.

5. Open market operations needed to hit the nonborrowedreserve path, 1995-98

Billions of dollars

— 15

10

1995 1996 1997 1998

NrOTK Estimates are from [he lirst day of each maintenance period. Positivenumbers indicate a need to add reserves.

4. Revisions to estimates of open market operations neededto hit the nonborrowed reserve path, 1997-98Millions of dollars, maintenance-period averages

Item

Factor* affecting the supplyoj rexen'e balancesat the Federal ReserveTreasury balanceCurrency in circulationForeign RP poolFloat. .Ncl factor revision

Factors affecting the demandfor reserve balancesat the Federal Reserve'Required reserves

Before LRRAfter LRR

Applied vault cashBefore LRRAfter LRR

Requited reserves-applied vault cashBefore LRR .After LRR

1997

1.002361500227

1.413

443

231

1998

506500381312

1.034

35322

31612

18225

Nor£. Data arc average absolute revisions to initial estimates ofmaintenance-period-average values. Projection errors are based on estimates bythe staff of the Federal Reserve Bank of New York.

1. All revisions in 1997 were before the introduction of lagged reserverequirements (LRR); revisions in 1998 through the period ending July 29 werebefore LRR.



5. Daily changes and forecast errors in key determinants of reserve balance supply, 1995-98Millions of dollars, average and maximum of absolute values

Item

Daily changesTreasury balanceCurrency in circulationForeign RP poolFloatNet value ,

Daily forecast errorTreasury balanceCurrency in circulationForeign RP poolFloatNet value

1995

Average Maximum

1996

Average Maximum

1997

Average Maximum

1998

Average Maximum

1.233 12.639 1.002 9.780 1,484 17,393 1,413 22,571655 1.582 646 2,016 679 2,474 709 2,788486 3,955 369 3,017 542 6,989 500 6,193515 3,748 790 8,154 548 4,605 791 5,449

1,491 11,470 1,413 11.787 1,896 18,366 1,751 23,727

642 4,188 732 4.921 726 5,969 620 3,407206 932 213 932 200 980 217 999124 617 113 617 203 1,433 150 935284 1,903 371 3,768 312 3,433 383 2,386743 4,139 898 5,042 848 5,991 744 3,664

NOTE. Projection errors are based on estimates by the staff of ihe FederalReserve Bank of New York.

of reserve balances and the potential for error in theprojections of these factors have taken on a greaterrole in the Desk's daily reserve management delibera-tions.15 For the same reason, the day-to-day volatilityin the demand for excess reserves and the potentialfor error in the judgment of daily excess demandhave also become more important considerations inthe Desk's management of reserves.

Recent experience with daily changes and forecasterrors of key operating factors that determine thesupply of balances at the Federal Reserve—the Trea-sury balance at the Federal Reserve, Federal Reservefloat, currency in circulation, and the foreign RPpool—is summarized in table 5. The average of theabsolute daily net changes in reserve balances arisingfrom movements in the four key operating factorsapproached $2 billion in both 1997 and 1998, high-lighting the importance of the Desk's temporaryoperations for smoothing out daily reserve patterns.To some degree, the average was driven by outliers,which topped out at about $20 billion in each of thepast two years, thus illustrating the potential for hugeswings. The biggest swings tended to be associatedwith movements in the Treasury balance around keytax dates.

Average absolute daily forecast errors underscorethe risks in managing reserve supply. The average ofthe absolute daily net forecast error for the sum ofthese same four operating factors in 1998 was about$750 million, somewhat less than the errors in thepreceding two years but still of the same general

15. The reserve supply projections presented in this section arethose of the Federal Reserve Bank of New York staff. In makingreserve management decisions, the Desk also uses estimates made bythe Board for all factors and by the Treasury for the Treasury balance.Differences among the staff estimates underscore the risks inherent inthese daily estimates.

order of magnitude. The largest daily miss in 1998was more than $3'/2 billion. The Treasury balanceis usually the single most difficult factor to estimate,and it, along with float, were the sources of thebiggest daily errors.

Comparable measures of changes in the dailydemand for excess reserves consistent with the fundsrate target and of errors in the daily estimation ofexcess demand are not available. Important determi-nants of the intraday pattern of the demand for excessreserves are discussed later.

Temporary Open Market Operations Arrangedin 1998

The Desk typically relies on a mix of term andovernight RPs to meet reserve shortages (chart 6).16

With total required balances remaining low in 1998,the Desk continued to use overnight RPs extensivelyto address reserve shortages to take into accountthe daily volatility of operating factors and of excessreserve demand and also potential projection errors.For the same reasons, a term RP was rarely intendedto address entirely the reserve shortages estimatedbeyond the initial date, and frequently an overnightoperation was arranged on the same day as a termoperation. Term RPs were usually designed to leavereserve shortages of at least moderate size in subse-quent days to be addressed with additional RPs. Thisapproach allowed the Desk to tailor the total amountof all RPs outstanding on any day to fit the mostup-to-date estimates of the daily reserve pattern.

16. The expression overnight is used to denote any operation thatmatures on the next business day.



6. System temporary operations, by type, 1995-9

• 1995~ O 1996_ • 1997

• 1998

~ •

Tent) rcpoichaseagreements1

IJ |• |I III

Ovcnsijilwrepurchaseagreements*

Term matchedsale-purchusc

agreements

.dl •i l 1 1Overnightmatched

sale-purchaseagreements

Number

— 140

— 120

— 100

— 80

— 60

— 40

| — 20

1. Includes fixed and withdrawable repurchase agreements.2. Includes system and customer repurchase agreements.

The frequency with which term RPs were arrangedwas down a bit from 1997, partly reflecting thesmaller reserve shortages that occurred in 1998.Three fixed-term operations with maturities rangingfrom thirty days to forty-five days were arranged inDecember, using the Desk's new authority for long-term RPs, to address that portion of the year-endreserve shortages that was expected to recede signifi-cantly in January 1999. These term RPs were amongthe few such RPs that were set to mature in a main-tenance period beyond the one in which they werearranged.

The Desk used matched sale-purchase agreements(MSPs) in 1998 for the first time since May 1996.These agreements, under which the Desk first sellssecurities and then purchases them at a predeter-mined price from dealers at a later date, are used toaddress temporary reserve surpluses. The first two ofthese operations took place in the January 14 period,when huge upward revisions were made to weather-related float after term RPs had been put in place toaddress what were expected to be reserve shortages.Most of the MSPs were arranged in May, after earlierprojections of potentially huge reserve shortages dur-ing the April-May tax season proved inaccurate (seebox "The Management of Reserves around theApril 15 Tax Season").

Technique of Intervention

The Desk retained its practice of normally arrangingtemporary open market operations no more than oncea day, shortly after 10:30 a.m. when a complete set of

reserve estimates first becomes available. For the newlong-term RPs that were used in 1998, operationswere arranged earlier in the day, around 8:30 a.m.,because the Desk wanted to take advantage of themore liquid financing market that an earlier entrytime would offer. Moreover, these RPs were notnecessarily intended to meet all of the reserve short-age estimated for the day on which they werearranged, so there was no need to wait for a completeset of reserve estimates. For the three long-termoperations arranged in 1998, propositions werestrong—measured in total volume and in rates offeredrelative to current market quotes.

The Desk was always prepared to depart from itsusual practices as circumstances warranted. It enteredthe market ahead of the usual intervention time onnumerous occasions apart from the three long-termRPs. These early entries were motivated either by aview that the expected reserve shortage on the dayrequired taking advantage of the greater marketliquidity that exists earlier in the morning or by abelief that the firm financing pressures that existed atthe time needed to be addressed promptly. On oneoccasion, an early entry was followed up with anotheroperation at the usual market intervention time.

EXCESS RESERVES

Period-Average Excess Reserves

The uptrend in period-average levels of excessreserves that became evident in 1997 and that hasbeen associated with the decline in total required

7. Excess reserve holdings, by bank category, 1995-98

Millions of dollars

Other institutionsAll institutions

1,800

1,200

600

1995 1996 1997 1998

NOTE. Data are maintenance-period averages. Total excess reserves averaged$1,012 million in 1995. $1,120 million in T996, $1,322 million in 1997. and$1,548 million in 1998.

1. "Other institutions" include small banks and thrift institutions, foreign-related institutions, and nonreporters.



The Management of Reserves around the April 15 Tax Season

The Desk's initial reserve management strategy around theApril 15 tax date reflected its experience in April-May1997. Tax receipts in April-May 1997 far exceeded pro-jected inflows, and the resulting reserve shortages thatthe Desk had to address with temporary operations wereunprecedented. Tax receipts in April-May 1998 wereexpected to exceed their level of the previous year by asubstantial amount, and the Treasury's balance at the Fed-eral Reserve was expected to surge again, even though theTreasury had arranged to have $64 billion in cash manage-ment bills mature in mid-April ($14 billion more than in1997) in order to control the buildup in its general cashposition.

To prepare for the expected surge in Treasury receipts,the Desk purchased $13.2 billion of securities outright inMarch and April, much more than it had acquired duringthat time in 1997, to limit the reserve shortages that wouldhave to be addressed with RPs. Even so, sizable RPs werestill expected to be needed through mid-May to meetreserve shortages that, according to the highest estimates,were expected to peak at nearly $60 billion in late April.Only after the planned outright operations were completeddid it become evident that reserve deficiencies would besignificantly less than initially anticipated. To a largedegree, this projection error reflected the success that theTreasury had in promoting participation in its Treasury Tax& Loan (TT&L) program after it broadened the types ofcollateral it accepted for this purpose. TT&L capacity wasmore than $15 billion higher than anticipated, and thishigher capacity reduced the cash balance that had to be heldin the Federal Reserve account by a similar amount once theTreasury's total cash position exceeded the holding capac-ity at private banks. At the same time, total corporate andindividual taxes fell about $20 billion short of the high endof the set of estimates.

After making its outright purchases in April, the Deskunexpectedly found itself having to drain reserves as aresult of the higher TT&L capacity and Treasury's lowertotal cash position. Large RPs were still needed to addreserves in late April when the Treasury balance at theFederal Reserve was at its peak. But for a few days before abrief surge in cash holdings and again starting at the veryend of the month when large government outlays andpaydowns brought Treasury's cash position down, matchedsale-purchase agreements were used to drain reservesurpluses.

Reserve deficiencies (reserve requirements less reservesupply) and temporary open market operationsin April and May

B Reserve effect of Atemporary / \operations / '

— /

— /

1 1 1 I I 1 ! I I 1 !15 16 17 20 21 22 23 24 27 28 29

April

Billions

EstimatedL reserve deficiencies1

\1 Actual levelsI of deficiencies'

[jrimmuiiVrHitiui

df dollars

— 50

— 40

— 30

— 20

V— 10

IsL—

1 130 1 4 5 6 7 8 11 12 13 14 15

May

NOTE. Actual and projected reserve deficiencies include all outright opera-tions arranged through mid-May. A positive value denotes a level or reservesupply below reserve requirements and a need to add reserves; a negativevalue indicates a level of supply above requirements.

1. Reserve deficiencies are estimated as of April 14 by the staff of theFederal Reserve Bank of New York.

2. Levels before temporary open market operations.

balances intensified in 1998.17 However, the increasein 1997 was observed broadly across differentclasses of depository institutions, whereas in 1998the increase in the underlying demand for excessreserves occurred away from large institutionsand was concentrated among other institutions, nota-

17. The Desk attempts to meet depository institutions' demand forexcess reserves both for every maintenance period and for each day ina period. For this reason, absent a true measure of excess demand,actual levels of excess reserves can be taken as an approximation ofdemand, notwithstanding the surprises to reserve supply and misjudg-ments the Desk may make about demand that can cause actual excesslevels to diverge from true demands on any given day. For a discus-sion of the uptrend in excess reserves in 1997, see Virginia Cheng,Spence Hilton, and Ted Tulpan, "Open Market Operations during1997," Federal Reserve Bulletin, vol. 84 (July 1998). pp. 523-25.

bly small commercial banks and thrift institutions(chart 7).18

The link between excess reserve levels and totalrequired balances of small commercial banks andthrifts can be seen in chart 8. From 1995 to themiddle of 1997, the period of greatest decline in totalrequired balances for small commercial banks andthrifts, only a small fraction of this decline wasreflected in higher excess levels for these institutions.

18. The "large" bank category for which the Federal Reservecollects reserve information includes about 130 of the largest deposi-tory intilutions. The Federal Reserve also collects reserve informationseparately for small commercial banks, thrift institutions, foreign-related institutions, and nonreporting banks. In this article, these fourcategories are sometimes aggregated into a grouping labeled "otherinstitutions."



i. Total required balances and excess reserves at smallbanks, thrift institutions, and nonreporters, 1995-98

Millions of dollars

5,000 j / L . i^Jj

4,000 — '

3$U0w •"•'""

Required balances

'VIVl i

*m - Excess re*™* f V'XJ

1,000 M . MJ

1 11995

1 11996 1997

Millions of dollars

10,000

9,000

8,000

A M U — 7l000

TV/P^A 6,000

I1998

NOTE. Data are maintenance-period averages. Total required balances arereserve requirements plus required clearing balances less applied vault cash.Excess reserves at these institutions averaged $810 million in 1995, $847 mil-lion in 1996, $951 million in 1997, and $1,207 million in 1998. The measures ofexcess reserves and total required balances in this and the charts thai follow aredrawn from internal data sources that reflect only revisions to the data madewithin (he first five weeks after a maintenance period has ended.

From the middle of 1997 through 1998, even thoughthe pace of decline in required balances slowed, atthe margin the further decline had a greater effect onexcess reserve levels.

The link between excess reserves and total re-quired balances among large depository institutionsas a group was less clear in 1998. The pace of declinein total required balances at these institutions alsoslowed around the middle of 1997. Although requiredbalances have fallen a bit since then, the averagelevel of excess reserves at these institutions wasunchanged on balance in 1998, after having risen in1997 (chart 9).

Lower levels of total required balances have led tohigher excess reserve levels in two ways. Somedepository institutions working with lower requiredbalances have consistently chosen to hold a higherlevel of excess reserves at the end of each day as aprecaution against contingencies that could reducetheir balances and send them into overdraft. Thisbehavior—an increase in precautionary demands forexcess reserves—is more characteristic of some insti-tutions, especially smaller entities, that have limitedaccess to funding markets. However, among largerbanks and even some smaller institutions that havethe ability to adjust their balances throughout the dayby trading in the federal funds market, higher excessreserve levels have been the byproduct mostly ofunanticipated late-day payment inflows. Unintendedhigh excess levels that individual institutions occa-

sionally have been left with on some days have beenharder to offset fully with negative excess positionson remaining days within the same maintenanceperiod because required balances have been so low.That is, depository institutions in general have beenmore prone to becoming "locked in" inadvertently toholding an undesirably high level of excess reservesunder low required balances.

In making its allowance for excess reserve demandin a maintenance period, the Desk allows for ele-vated precautionary demands, and it takes stock ofany lock-ins that arise as a maintenance periodprogresses. But the Desk does not provide higherexcess reserve levels as it goes through a period inanticipation of undesired lock-ins that have not yetarisen, even if these are now seen as more likely todevelop at some point. Doing so would risk leavingdepository institutions holding undesired reserve sur-pluses at the end of the period if they succeed inavoiding lock-ins

In 1998 in recognition of recent trends, the allow-ances in the nonborrowed reserve objective that theDesk made at the start of each maintenance period forperiod-average excess demand rose from about$1 billion, a level that had prevailed for many years,to levels that were often close to $l'/2 billion. How-ever, the Desk treated any initial allowance veryflexibly, making more frequent informal modifica-tions as a period unfolded in response to actualpatterns of excess holdings and to the observedbehavior of the funds rate. To aid in its judgment, theDesk used daily reports of excess holdings at small

9. Total required balances and excess reservesat large banks, 1995-98

Millions of dollars Millions of dollars

4,000

3,000

2,000 —

1,000

16,000

14,000

12,000

10,000

8,000

1995 1996 1997 1998

NOTE. Data are maintenance-period averages. Total required balances arereserve requirements plus required clearing balances less applied vault cash.Excess reserves at these institutions averaged S126 million in 1995, $190 mil-lion in 1996, $267 million in 1997, and $247 million in 1998.



10. Average levels of daily excess reserve holdings,by day in a maintenance period, 1995-98

Millions of dollars

Thins. F i t Mon. Tues. Wed. Ttara.

Week One

Fri. Mon. Toes.

Week Two

Wed.

In 1998, the Desk provided even higher levels ofexcess reserves than it had in previous years on dayswhen payment flows were heaviest and most unpre-dictable (chart 11). These days include the first andlast business day of each month, tax dates, and majorTreasury auction settlement dates. Most, but not all,of the increase in excess reserves provided by theDesk wound up at larger banks. In providing evenhigher levels of excess reserves on high paymentflow days, the Desk looked for other occasions withinthe same maintenance period to leave fewer excessreserves, consistent with depository institutions'period-average demands, with the attendant risk thatunexpected reserve shortfalls on those days couldleave the actual level of balances for the bankingsystem precariously low.

and large institutions to evaluate their levels ofdemand. It also used daily reports containing reserveinformation for about twenty-five individual largebanks to determine whether any of these banks werelocked into holding excess reserves in a maintenanceperiod.

Daily Patterns of Excess Reserves

The preference that depository institutions haveshown for years for concentrating reserve balanceholdings late in a maintenance period was againevident in 1998 (chart 10). This skewed pattern wasmost pronounced at large banks, where cumulativeaverage excess positions were usually negativethroughout the period until the final day.

11. Excess reserves on high payment flow days, 1995-98

Millions or dollars

D At other institutions• At large banks

, I 1

— 4,0001 1

_

— 3.000

— 2,000

Excess Reserve Developmentsin October-December

The trends noted in the previous discussion, both forhigher period-average excess levels and for elevatedlevels on high payment flow days, were reinforcedlate in the year by the Desk's reaction to recurringbouts of rate firmness that emerged in overnightfunding markets. The background for these pressuresis discussed more fully in the following section,which reviews the behavior of the federal fundsrate late in 1998. The Desk often responded to anyupward rate pressure in the morning by providing ahigher level of excess reserves for that day. Thesefunds market pressures were typically most intensearound high payment flow days, so that the Desk wasparticularly careful to leave total balances high onthose days. Sometimes suitable opportunities to workoff the resulting high excess levels did not arisebecause the funds rate often remained firm even inthe presence of the accumulation of excess reserves.As a result, average excess levels for some periodsin October and November were particularly elevated.But the trend toward higher excess levels previouslydescribed was evident even before the final quarter ofthe year.

— 1,000

1995 1996 1997 1998

NOTE. Data are annual averages. High payment flow days include the firstand last business day of each month (excluding quarter-end dales), major taxdates, and midquaiier settlement dates for Treasury refundings. The quarter-ends are dropped even though payment flows are extremely heavy on these daysbecause the levels of excess reserves some banks held on these days forbalance-sheet-statement purposes was very volatile.

THE BEHAVIOR OF THE FEDERAL FUNDS RATE

Daily behavior of the federal funds rate is measuredby the absolute deviation of the effective (trade-weighted average) rate from the target rate specifiedin FOMC directives and by the standard deviation ofthe rates on each day's transactions around the effec-tive rate. Through the first three quarters of 1998, the



Absolute values of deviations of the daily effective federal funds rate from target and the standard deviationsof the daily effective funds rate, all business days, 1997-98

Standard deviation (basis points)

All business days in 1997

• o o o o o o • • • •0

•• Median absolute deviation of effective rate from target = 7 basis points' O Jan. 1-Sepi. 28• Sept. 29-Dec. 3 i

o o o a — 50

— 40

- - 30

— 20

= 10Median standard deviation = 9 basis points

10 20 30 40 50 60 70

-8-o

o

°a8

88oSl

All business days in 1998

a • • • o to •

« 1997 median absolute deviation of ieffective rate from target = 7 basis points #

— 50

— 40

— 30

— 20

| * 8 c _— 101997 median standard deviation = 9 basis points

10 20 30 40 50Absolute value of effective target rate (basis points)

60 70

NOTE. Daily observations form a discrete rather than a continuous distribu-tion. For this reason, when calculating the percentage of days that fell eitherabove or below a median value, observations having values equal to the medianare apportioned equally above and below the median. All values have beenrestricted to fit on a reduced scale to provide more detail at the lower valueswhere most observations arc concentrated.

In 1997 the percentage of days on which ihe deviation of the effective fundsrate from the target and the standard deviation were both either above or belowihe median values are the following:

Both below medianBoth above median

Jan. 1-Sept. 28(percent)

3535

Sept. 29-Dcc. 31(percent)

.1132

In 1998 ihe percentage of days on which (lie deviation of the effective fundsrate from the target and the standard deviation were both either above or belowthe median values are the following:

Both below 1997 medianBoth above 1997 median

1. Average absolute deviation o( effective rate from target is 12 basis points.

Jan. 1-Sept. 28(percent)

2932

Sept. 29-Dec. 31(percent)

1073

daily behavior of the federal funds rate was similar tothat of 1997 (chart 12). But both the deviations fromtarget and the intraday standard deviations increasedperceptibly during the final quarter of the year whenpressures associated with volatility in other financialmarkets began to affect financing flows and the trad-ing behavior of participants in the federal fundsmarket.19

19. In this article, the persistence of higher daily volatility in thefunds market is dated as having begun on Septetnber 29. although itsactual emergence was somewhat more gradual.

Daily Deviations and Volatility of the FederalFunds Rate in 1998

Data needed to calculate the absolute deviations ofthe effective funds rate from target and the standarddeviation of each day's rates are compiled everymorning by the Desk from a broad sample of brokerswho arrange transactions between participants in thefederal funds market. Each of these statistics capturessomewhat different aspects of the behavior of thefunds market. For example, the deviation of the dailyeffective rate from target is often strongly influencedby participants' expectations about whether reserve



6. Deviations of the daily effective federal funds rate fromtarget and the daily standard deviation of the funds rate,1997-98Basis points

Item

Median of standard deviations

Median of absolute deviationsof the effective ratefrom target

Average of absolute deviationsol the effective ralefrom targe!

1997 199S

1998

Jan. 1-Sept. 28

Sept. 29-Dec. 31

9 12 10 22

7 8 6 16

12 13 10 22

supply will prove to be either scarce or plentiful onany day. Such expectations, which may be formedlargely on the basis of past experience, often estab-lish the rate at which transactions will be arrangedthrough most of the day. The daily standard deviationwill capture shifts in these expectations during theday, and it is influenced, as is the effective rate, byactual reserve conditions as they become apparent inlate-day trading. Changes in underlying reserve con-ditions and the behavior of market participants areoften reflected in changes in the behavior of thesetwo daily statistics.

From January through late September 1998, themedian values for both the standard deviations anddeviations of the effective rate from target werewithin 1 basis point of their median values for 1997(table 6),20 This similarity in behavior of the fundsrate held despite the further modest decline in thelevel of total required balances in 1998. Still, volatil-ity in these measures remained above the levels thatprevailed before 1996, when the rapid decline in totalrequired balances first began to have a notable effecton the daily behavior of the funds rate.

By late September, heightened aversion to creditrisk and accompanying dislocations in other financialmarkets began to affect the funding needs and behav-ior of key participants in the federal funds market.Some depository institutions encountered reducedaccess to term funding, and their demand for over-night funding rose as a result. Lenders in the over-night federal funds and Eurodollar markets in somecases cut credit lines to certain borrowers. At the

same time, banks' aversion to borrowing at the dis-count window appears to have intensified out ofconcern that borrowing might be seen as a sign ofpoor financial health.

The intraday trading strategies many market par-ticipants adopted often lent a very firm bias to ratesin the morning as highly risk-averse borrowers bidaggressively for funds early in the day. Their actionssometimes lifted the entire rate structure paid by allborrowers for much of the day, especially as lendersin the market came to recognize this caution. Thispattern was most prevalent on days characterized byhigh payment flows, when uncertainties about dailyreserve positions are typically greatest.

The Desk responded to these conditions by provid-ing higher excess reserves on days when these financ-ing pressures were most e/ident. This response rein-forced the tendency of the funds rate to fall off latein the day when the level of balances left in placeproved higher than final demands. Furthermore, thehigh period-average levels of excess reserves thatresulted also encouraged very soft conditions in thefunds rate on several maintenance period settlementdays in October and November. The funds marketwent through several cycles of firmness sustainedover several days, often triggered by high paymentflow dates, followed by periods of softness.21 By lateNovember, the Desk's provisions of added reservesand the adjustments made by some regular borrowersin the funds market to reduce their reliance on over-night financing helped ease these upward rate pres-sures, but they remained a feature of the funds marketthrough the year-end.

The volatile rate environment created by marketparticipants' defensive trading strategies and theDesk's response to them was reflected in both largerdeviations of the effective daily funds rate from targetand higher daily standard deviations. The medianvalue of the daily standard deviations was 22 basispoints from late September through December, andthe median absolute deviation of the funds rate was16 basis points, both well above the correspondinglevels for all of 1997 and through the first three

20. In making comparisons between different time periods, medianvalues are used instead of means because of the possible influence of asmall number of very large outliers on the calculation of the mean. Allcalculations are based on business day observations, with no adjust-ment for the effect of holidays or weekends on the calculation ofeffective rates averaged over longer time periods.

21. Softer rates sometimes emerged after participants began toincorporate expectations, which were often incorrect, that the Deskwas going out of its way to make generous reserve provisions. Onmany days when these expectations were not accurate, the funds ratenonetheless remained soft as participants at first traded on the expecta-tion or perception of Desk generosity and then as actual levels ofexcess reserves, even if quite low, still proved sufficient to coverend-of-day needs. Conversely, market expectations or perceptions oflow levels of liquidity kept the funds rate firm on some days whenexcess levels were high.


232 Federal Reserve Bulletin U April 1999

quarters of 1998 (table 6).22 While the degree ofvolatility observed in the daily behavior of the fundsrate during the final quarter was likely aggravated byrequired balance levels, which hovered near historiclows, the immediate cause was the changed marketclimate.

Average Levels of the Federal Funds Rate

Because of these pressures on the funds rate latein 1998, the Desk was less successful in maintainingthe average daily effective rate around the target(chart 13). For the maintenance periods that coveredthe fourth quarter, the absolute deviations of theperiod-average effective rates from target averaged10 basis points.23 The average absolute deviationfrom target of the period-average effective funds ratewas 5 basis points for earlier periods in 1998, and itwas 4 basis points in 1997.

Intraperiod Patterns of the Federal Funds Rate

Intraperiod patterns of the effective funds rate, mea-sured by the deviation of the effective rate from targetaveraged separately for each day in a maintenanceperiod, were similar to those in preceding years(chart 14). For example, soft conditions continued to

14. Average levels of the daily effective federal funds rateless the target rate, by day in a maintenance period,1995-98

22. Historically, the funds rate has tended to be a bit more volatilein the fourth quarter of a year compared with the preceding threequarters. However, median values of the standard deviations and ofthe absolute deviations of the effective rate from target in the finalquarter were never more than a couple of basis points higher than inthe first three quarters in any year from 1995 through 1997.

23. This calculation is based on the seven maintenance periodsrunning from the period ended October 7 through the period endedDecember 30.

13. Maintenance period averages of the effective federalfunds rate versus the target rate, 1995-98

Basis, pmnls

• Average of absolute differences betweenperiod effective rates and the target

H Average of differences between periodeffective rates and the target

— 20

— 10

Times. Fri. Mon, Tues.Week One

1995 1996 1997 I99S Jan.-Sepl. Ocl.-Dei:.1998 1998

prevail on many Fridays. The sharpest departure frompast patterns appeared on settlement Wednesdays, thelast day of a maintenance period. The effective rateon those days in 1998 was, on average, below target.However, the low average for settlement days in1998 to a large degree reflected developments thatoccurred late in the year. During the final threemonths of 1998, the funds rate on settlement Wednes-days averaged 27 basis points below the target level.This development reinforces the judgment that theperiod-average levels of excess reserves in thesemaintenance periods exceeded demands. Over thefirst three quarters of 1998, the effective rates fromthese settlement days averaged 6 basis points abovetarget, similar to their average deviation in 1997.

SUMMARY

The conduct of open market operations throughout1998 was influenced by the continued growth ofsweep programs, which reduced further the level oftotal required balances, and late in the year by height-ened aversion to credit risk in financial markets,which affected the activity of some participants in thefederal funds market. Both developments contributedto higher levels of excess reserves in the bankingsystem and reinforced the Desk 's growing relianceon very short-term operations to balance daily swingsin reserve supply and demand. Through the first threequarters of 1998, intraday volatility in the federalfunds rate and deviations in the daily effective ratefrom target were similar to those of the previous year.But late in the year, funds rate volatility rose with thegrowing aversion to credit risk among financial mar-ket participants. LJ



APPENDIX

A.I. U.S. Treasury bills in the System Open Market

Account, December 31, 1998

Thousands of dollars except as noted

A.2. U.S. Treasury bonds in the System Open MarketAccount, December 31, 1998Thousands of dollars except as noied

Maturity date ofissue outstanding

1/07/99'1/14/99' . .1/21/99'1/28/99 . .2/04/992/11/992/18/992/25/993/04/993/U/993/18/993/25/994/01/994/08/994/15/994/22/99 . . . . . . .4/29/995/06/995/13/995/20/995/27/996/03/996/10/996/17/996/24/997/01/997/22/998/19/999/16/99

10/14/99 .11/12/9912/09/99

Total Treasury bills

Net change since12/31/97

Holdings,12/31/98

109,320156.860

6.533.3907,342,815

14,018,0107.534,4857.621,5647 688,180

13,214,9557.591,7807,304,3106,954,235

12,662,4303,645.0004.105,0003,695,0008,440.0003,935,0003,800,0003,855.0009.090.0003,840,0003,900,0003 775.0007,925.0003,540.0005.305,0005.565.0005,390.0005.650.0005 225,0005,360.000

194,772334'

-2,350,364

Percentageof totalissue

outstanding

.3

.713.831.826.032.232.533.532.532.632.030.932.131.333.731.631.732.132.232.533.532.430.931.230.932.033.735.334.93.3.932.232.8

Issue outstanding

NOTE. Data are on a slalernent-date basis.1 Holdings of Treasury bills were reduced by the following amounts of

matched snie-purchase agreements, which are returned the next day:$12,700,000 of Jan. 7 Treasury bills, $7,700,000 of Jan. 14 Treasury bills, and$527,110 of Jan. 21 Treasury bills.

Coupon

11.75013.12513.37515.75014.25011.62510.75010.75011.12511.87512.37513.75011.6258.230

12.00010.7509.3757.6257.8758.3758.7509.125

10.37511.75010.00012.7501.3.87514.00010.37512.00013.25012.50011.75011.25010.6259.8759.2507.2507.5008.7508.8759.1259.0008.8758.1258.5008.7508.7507.8758.1258.1258.0007.2507.6257.1256.2507.5007.6256.8756.0006.7506.5006.6256.3756.1255.5005.250

Matured in 1998 ..

Total Treasurybonds

Maturitydate

Holdings,12/31/98


outstanding

Net changesince

12/31/97

2/15/015/15/018/15/0111/15/012/15/0211/15/022/15/035/15/038/15/0311/15/035/15/048/15/0411/15/045/15/055/15/058/15/052/15/062/15/0711/15/078/15/0811/15/085/15/0911/15/092/15/105/15/1011/15/105/15/1111/15/1111/15/128/15/135/15/148/15/1411/15/142/15/158/15/1511/15/152/15/165/15/16

11/15/165/15/178/15/175/15/18

11/15/182/15/198/15/192/15/205/15/208/15/202/15/215/15/218/15/21

11/15/218/15/22

11/15/222/15/238/15/23

11/15/242/15/258/15/252/15/268/15/26

11/15/262/15/278/15/27

11/15/278/15/28

11/15/28

165,803166.926256,092172.904184,800347.850739.250380,800514,300870,340769,786528,000994,600

1.513,660728.476

1.187.000133,000

1,396,164378,500788,500

1.588,500921.205

1.075.939717.400

1.176.5561.260,8651.073,542

975,0911.611.7413.040.772

869.450905.720

1.195,0001.335.7331,167,400

941.500880,000

1.098.0001.378,0001.855.0001.494,000

728,900304.000

1,224.0001.735,9001.095.8791.211,6001,366,600

830.5001.103.000

940,0001.695.000

605.000810,000

1,981.0001.447.000

565.000875,000

1,345.000999.000

1.050,0001.470.000

530.000730.000

2,505,0001.771.808

945,000

68,642,352

U.O9.5

14.69.9

10.512.624.611.714.712.020.513.212.035.817.112.82.8

33.025.337.530.420.025.628.839.426.623.319.914.620.617.417.719.910.516.313.612.15.87.3

10.210.78.43.46.48.6

10.711.912.57.59.27.75.25.87.6

10.86.34.97.5

10.77.79.6

12.85.16.8

11.115.08.6

5.0001.200

25.000

49.800

119,000

47.400

113.000

103.000115,000405,000585.000232,00048.000

291.00045,000

135.000145.000

55.000165,000260.000545.000145,000150,000568.000412.000

60.00060.000

140,00065.00085.000

50.000

I..325.0001.771.808

945.000-30,750

9,235,458

NOT li. Dala arc on a statement-date basis.



A.3. U.S. Treasury notes in the System Open MarketAccount, December 31, 1998Thousands of dollars except as noted

A.3.—Continued

Issue outstanding

Coupon

6.3755.0005.8755.0008.8755.5005.8755.8756.2507.0006.3756.5006.3759.1256.2506.7506.0006.7506.3755.8756.8756.0008.0005.8756.8755.7507.1256.0005.6257.5005.8757.8755.6257.7505.6257.7506.3755.3757.7505.8758.5005.5007.1255.5006.8755.5005.6256.7506.3758.8755.5006.2505.3755.8755.3756.1256.0008.7505.1256.2504.5006.1254.0005.7505.7508.5004.6255.625

Maturitydate

Holdings.12/31/98

Percentageof total issueoutstanding

Net changesince

12/31/97

Issue outstanding

1/15/991/31/991/31/992/15/992/15/992/28/992/28/993/31/993/31/994/15/994/30/994/30/995/15/995/15/995/31/995/31/996/30/996/30/997/15/997/31/997/31/998/15/998/15/998/31/998/31/999/30/999/30/9910/15/9910/31/9910/31/9911/15/9911/15/9911/30/9911/30/9912/31/9912/31/991/15/001/31/001/31/002/15/002/15/002/29/002/29/003/31/003/31/004/15/004/30/004/30/005/15/QO5/15/005/31/005/31/006/30/006/30/007/31/007/31/008/15/008/15/008/31/008/31/009/30/009/30/0010/31/0010/31/0011/15/0011/15/00lt/30/00U/30/00

892,045848,000

i,917,0003.644,1401.048,600915,000

1.656,0001,875,0001.420,0001,073,7001,545,0001,324,6202.869.1241,637,5001,020,900871.990839.435

1,644,820409,000

1,421,9701.531,4002,676,110943,600

1,439,6301,101.480667.380

1,349.752406,115732.000

1,1073152.790,968814.000

1,131.1751,408,145795.780

1,379,665689.545

1.140,7301.125.4401,232,7961,204.0001,497,3201,477,2901,998,2201.401.510368,000

1,321,0001.524,2502,807,000480,000

1,321,000911,460

1,383.000740,100

1,976,750698,000

2.147,8451.212,4002,994300721,000

2,241,5001,009,0002.462,900729.430

1.888,200882,300

2.032.200878.200

8.56.69.916.610.87.78.314.77.210.68.010.812.316.35.57.14.712.64.18.512.411.89.38.48.93.810.63.94.49.212.27.66.711.94.811.16.86.59.36.011.38.411.911.610.73.58.512.313.54.68.07.29.35.910.65.711.910.915.06.111.68.412.06.011.87.710.17.1

91,0001,172.000

97,000200,000457,000

320.000105.000

282.900185.000195,000

60.000325,000

444.00085.000135.000150,00025.000

271,000

230.000549,000

583,000232,000

1.140.730261,000386.000218.000

1.497,320155,000

1.998.22060.0008.000

1,321,000500,000

1,321,00068.000

1,383,000

1,976.750243.000837,90054.000

2,994,30071.000

2,241.500

2,462,900192,000237.000

1,3002,032,200

232.000

Coupon

4.6255.5005.2505.3757.7505.6256.3756.2505.6258.0006.5006.6256.6257.8756.5006.3756.2507.5005.8756.1256.2506.2506.6256.6257.5006.5006.2506.0006.37S6.2505.8755.7505.7505.6255.5006.2505.5005.5005.7505.5005.3755.2505.7504.2505.8757.2507.2507.8757.5006.5006.5005.8755.6256.8757.0006.5006.2506.6256.125S.SOO5.6254.750Matured in 1998 .

Total Treasurynotes

Maturitydate

Holdings,12/31/98

Percentageof total issueoutstanding

Net changesince

12/31/97

12/31/0012/31/001/31/012/15/012/15/012/28/013/31/014/30/015/15/015/15/015/31/016/30/017/31/018/15/018/31/019/30/01

10/31/01U/15/0111/30/0112/31/011/31/022/28/023/31/024/30/025/15/025/31/026/30/027/31/028/15/028/31/029/30/02

10/31/0211/30/0212/31/021/31/032/15/032/28/033/31/034/30/035/31/036/30/038/15/038/15/03

11/15/032/15/045/15/048/15/04

11/15/042/15/055/15/058/15/05

11/15/052/15/065/15/067/15/06

10/15/062/15/075/15/078/15/072/15/085/15/08

11/15/08

2,554,662891.000800,000

1,532,560993.500

1,061,0001,630,0001,257,5002,270,1171,473.0001,074,9001,175.000

957,0001,469,4001,041,3001,144,100

949.0002,824,000

729,000900,000

1.105,000944.400

1.400,9001.292,5001341,0091,132.000

867.000442,000

2.612,000942.000635.000710.000644.000700.000802.000

2.160.0001,199.0001.385.0001.010,0001,115,0001309,0002,834,0003.685,0001,518.385

650.0001.940.550

835.0001,753,0401.291.6002,000.0001,800,0001,700.0001,708,0002,075,0002,724,7522,577,800

840.0001,750,0002,518,0001,420.0004,084.0001,135,000

184,960,020

13.17.06.2

10.08.88.3

11.59.1

17.711.97.88.26.8

11.97.57.96.5

11.75.26.48.26.99.89.0

11.58.46.63.6

11.07.45.06.1535.86.19.28.89.88.08.5

10.014.313.28.25.0

13.56.3

12.39.4

13.612.011.211.013.012.011.56.4

12.59.8

10.515.08.4

2.554,662

1.53W6064.000

160.00030,000

319,0002,270,117

316.000163,000

'84.00094,400

181,000107,10066,000

383.000253,000275.000328,000141,400420,000257,500325.000183,00081.000

147.000365,000241,000175,000320,000244,000115,000802,000

15,0001.199.0001,385.0001,010,0001,115.0001309.0002,834.000

1,518,385

35.00025,000

141,600

208,000

459.000145.000300.000

343.0001.420,0004.084,0001.135.000

-52,079,735

12,427,009

NOTL. Data are on a slatement-dale basis.



A.4. U.S. Treasury inflation index bonds and inflation indexnotes in the System Open Market Account,December 31, 1998Thousands of dollars except as noted

Issue outstanding

Coupon

Treasury inflationindex bonds (1IB)3.625Matured in 1998

Total Treasury IIB

Treasury inflationindex notes (UN)3.6253.3753.625Matured in 1998

Total Treasury UN

Total Treasury bonds,notes, UN, andIIB1

Maturitydate

Holdings,12/31/98


outstanding

Net changesince

12/31/97

4/15/28 820.000 4.9 820.000

820,000 . . . 820.000

7/15/02 900.000 5.41/15/07 832,000 5.3 82,0001/15/08 1,135,000 6.8 1.135.000

2,867,000 . . . 1,217,000

257,289,372

NOTE. Data are on a statement-date basis.1. Total amounts of Treasury bonds and notes are from tables A.2 and A.3

respectively.

A.5. U.S. federal agency holdings in the System OpenMarket Account, December 31. 1998Thousands of dollars except as noted

Agency and issue outstanding

Coupon

Federal NationalMortgage Association(FNMA)

9.5508.7008.4508.3506.1009.0509.2006.6256.4505.8007.5508.2506.8506.700

10.3508.200

Matured in 1998 . . . .

Total. FNMA .

Federal Home LoanBanks (FHLBanks)9.3008.6008.4508.6O08.3758.6O0

Malured in 1998 . . . .

Total.FHLBanks . . .

Farm CreditAdministration(FCA)8.650

Matured in 1998

Total, FCA

Total agency issues .

Total Treasury andagency issues: .

Maturitydate

Holdings,12/31/98


outstanding

Net changesince

12/31/97

3/10/996/10/997/12/9911/10/992/10/004/10/009/li/OO4/10/036/10/03

12/10/036/10/0410/12/049/12/0511/10/0512/10/153/10/16

1/25/996/25/997/26/998/25/9910/25/991/25/00

10/01/99

25.00023.0005.0007,000

25,00010.00010.000

10.00024,65030.00020.000100,000

289.650

2,0003,9005.000

11,00010.0006,000

37.900

10.000

10.000

337350

452,399,256

3.62.81.0.4

5.01.32.5001.33.17.55.0

25.000

.61.22.04.53.72.0

2.9

-30.000'-25,0001

-10,000-15,000

-328.000

-328.000

-19.000

-19,000

-347,000

NOTE. Data are on a statemenl-date basis.1. Called issue.2. Toutls for Treasury issues are from tables A. I. A.2. A.3. and A.4.


236

Industrial Production and Capacity Utilizationfor February 1999

Released for publication March 16

Industrial production increased 0.2 percent in Feb-ruary. Mining production rose 0.4 percent, thefirst increase in a year, while production at utili-ties decreased 0.6 percent. Manufacturing outputincreased 0.2 percent, the fifth consecutive month of

increase in that industry group. At 132.6 percent ofits 1992 average, industrial production in Februarywas 1.9 percent higher than it had been in February1998. Overall capacity utilization in February slipped0.1 percentage point, to 80.3 percent, a level P/4 per-centage points below its long-term average and2VA percentage points below its February 1998 level.

Industrial production and capacity utilization

Industrial production

~~ Manufacturing

1 1 1 1 1 1

Ratio scale, 1992 =

Total industry

1 1 1 1

100

—

-

-

130

120

110

100

Capacity

f

utilization

Total industry

VV

i i i i

Percent ot capacity

" Manufacturing >̂

1 1 1 1 1 1

- 85

- 80

1990 1992 1994 1996 1998 1988 1990 1992 1994 1996 1998

Industrial production, market groupsRatio scale

Consumer goods

Durable ,. /\A/^

•f^\~\^T\f Nondurable

V 1

, 1992

\

= 100

-

135

125

115

105

- 95

175

160

145

130

115

100

85

1990 1992 1994 1996 1998 1990 1992

All series are seasonally adjusted. Latest series, February. Capacity is an index of potential industrial production.

Ratio scale,

_ Intermediate products

/ ^Construction supplies y ' S v ^ ' ^~f~

Hr^vv^ Business supplies

1 1 1 1 1 1 1 1 1

1992 =

^

100

-

-

_

Equipment

-

_ Defense and space

1 1 1 1

Business

1 1

Ratio scale,

I i I

1992 = 100

-

Materials

—

1

Durable goods

1

Ratio scale, 1992 =

^r^- ~

Nondurable goods and energy

1 1 I 1 1

100

-

—

135

125

115

105

- 95

175

160

145

130

115

- 100

- 85

1994 1996 1998


237

Industrial production and capacity utilization, February 1999

Category

Total

Previous estimate

Major market groupsProducts, total2

Construction suppliesMaterials

Major industry groupsManufacturing

DurableNondurable

Utilities

Total

Primary processingMiningUtilities

1998

Nov.'

132.2

132.3

124.5114.8168.1129.6144.6

136.4161.0111.6101.1110.6

Average,1967-98

82.1

81.180.582.487.587.4

Dec '

132.4

132.5

124.4115.0167.5131.1145.3

136.6161.2111.7100.0112.5

Low,1982

71.1

69.070.466.280.375.9

Jan.'

132.4

132.5

124.5115.1167.5131.6145.2

136.7161.5111.697.0

114.6

High,1988-89

85.4

85.784.288.988.092.6

Industrial production, index,

1999

Feb.?

132.6

124.5115.1

' 167.8131.5145.7

136.9162.3111.497.4

114.0

1998

Nov.'

-.2

— 1

-.3-.4-.6

.9

.1

2-.1

.7-.9

-5.1

Capacity utilization, percent

1998

Feb.

82.6

81.880.784.789.986.6

1998

Nov.'

80.8

80.9

80.179.482.483.887.3

1992=100

Percentage change

Dec '

.2

.2

.0

.2-.31.1.4

.1

.2

.1-1.0

1.7

Dec '

80.7

80.8

79.978.982.882.988.7

1999'

Jan.'

.0

.0

.0

.1

.0

.4

.0

.1

.2-.1

-3.01.9

1999

Jan.'

80.4

80.5

79.678.583.080.390.4

Feb.n

.2

.0

.0

.2-.1

.3

.2

.5-.2

.4-.6

Feb."

80.3

79.578.482.680.589.8

Feb. 1998

Feb. 1999

1.9

1.7_ 26.94.62.2

2.45.4

-1.2-9.4

4.5

MEMOCapacity,

per-centagechange,

Feb. 1998to

Feb. 1999

4.8

5.36.42.71.1.8

NOTE. Data seasonally adjusted or calculated from seasonally adjustedmonthly data.

1. Change from preceding month.

2. Contains components in addition to those shown,r Revised,p Preliminary.

MARKET GROUPS

The output of durable consumer goods increased0.9 percent, a rise buoyed by large increases in theproduction of appliances and home electronics. Incontrast, the production of automotive products edgeddown 0.1 percent after a strong gain in January. Theoutput of nondurable consumer goods excludingenergy decreased for the third consecutive month;part of the decline is attributable to softness forclothing and paper products. The output of consumerenergy products, which has been volatile recently,fell 1.1 percent, reversing only part of the 2.8 percentgain in January.

The production of business equipment increased0.2 percent after having been flat in January. Declinesin the output of industrial equipment and transitequipment were more than offset by gains in informa-tion processing equipment and other equipment. Thegain in the other equipment group resulted from ajump in farm equipment, although output of the latter

remains below its level in the first half of 1998. Theoutput of construction supplies edged down 0.1 per-cent after four consecutive months of increases. Theproduction of business supplies was flat.

A strong increase in the production of semiconduc-tors contributed to the 0.6 percent increase in theproduction of durable goods materials. The output ofbasic metals fell 0.1 percent, and the level of produc-tion remained more than 6 percent less than in Feb-ruary 1998. The production of nondurable materialsslipped 0.3 percent, a decline reflecting weaknessin chemicals and paper materials. The production ofenergy materials edged up 0.2 percent.

INDUSTRY GROUPS

Manufacturing output grew 0.2 percent, with a V2 per-cent gain in the production of durable goods anda slight pullback in the production of nondurablegoods. Durable goods industries that posted increases



in production included furniture and fixtures, indus-trial machinery, electrical machinery, and instru-ments. Those in which output fell included lumber;aircraft, which continued to edge down from the veryhigh level achieved last year; and motor vehicles andparts, which slipped again although remaining at ahigh level. The production of nondurable goodsedged down 0.2 percent after having declined 0.1 per-cent in January. Losses were widespread; gains wereposted in tobacco products, chemicals, and rubberand plastic products. Mining production increased, asgains in coal output outweighed losses elsewhere.

The factory operating rate slid 0.1 percentagepoint, to 79.5 percent—2 lA percentage points belowthe level of February 1998. The utilization rate foradvanced-processing industries inched down just0.1 percentage point, while the utilization rate forprimary-processing industries fell 0.4 percentagepoint. The utilization rate for mines edged up 0.2 per-centage point but remained well below its long-termaverage. Temperatures were relatively warm, as hasbeen the case all winter, and the operating rate forutilities dipped to 89.8 percent.

NOTICE

The capacity estimates in this month's release incor-porate a small change in the method used to interpo-late the annual estimates of capacity growth to themonthly frequency. The previous monthly capacityfigures were computed assuming that capacity growthis constant from the beginning of a year to the end,with potentially abrupt changes in growth ratesbetween the last months of one year and the firstmonths of the next. The new procedure allows capac-ity growth rates to change smoothly over time; it hasbeen applied to data beginning with October 1998. Atthe most detailed industry level, the new capacityestimates maintain the same fourth quarter overfourth quarter growth rates that were calculated underthe previous procedure. Table 4 now shows fourthquarter over fourth quarter growth rates instead ofDecember over December rates. •


239

Statements to the Congress

Statement by Edward M. Gramlich, Member, Boardof Governors of the Federal Reserve System, beforethe Committee on Finance, U.S. Senate, February 9,1999.

(Governor Gramlich presented identical testimonybefore the Committee on Ways and Means, U.S. Houseof Representatives, February 23, 1999.)

I appreciate the opportunity to appear before youtoday to discuss social security reform. I speak formyself, as past chair of the 1994-1996 QuadrennialAdvisory Council on Social Security, and not in mycurrent status as a member of the Federal ReserveBoard.

As you are all well aware, the U.S. population isaging. Today there are 3.4 workers per retiree; by2030 it is projected that there will be only two. Thisfundamental change in the demographics of ourpopulation poses a large challenge: How can weprovide adequate health and retirement benefits toour retired population without imposing undue bur-dens on tomorrow's workers?

Clearly, the answer to this question is that we mustact now to increase the total amount of resources tobe available in the future. By increasing the size ofour economy, we can devote a greater share of outputto the retired population without reducing the con-sumption of the working population. The only way toachieve this critical objective is for us to build up thestock of productive capital by increasing our rateof national saving. Indeed, in the current expansion,investment has expanded at a rapid clip withoutinducing a rise in interest rates. This investmentboom, and the accompanying step-up in the growthof the capital stock, is partly attributable to anincreased rate of national saving. Between 1992 and1998, national saving increased from 3.7 percent to7.5 percent of net national product. While private andstate and local government saving actually dippedduring this period, this decline was more than offsetby increased saving by the federal governmentthrough deficit reduction.

The stellar performance of the economy overrecent years provides the nation a unique opportunityto begin to tackle its long-run problems. In particular,the large budget surpluses that are projected over

the next fifteen years or so, if they are permitted tomaterialize, will significantly improve our fiscal andeconomic position as the baby boom starts to retire.From the government's perspective, using those sur-pluses to pay down the federal debt will reduce futureinterest payments and free up future tax revenue;from the macroeconomic perspective, the increase innational saving represented by the increase in govern-ment saving will lead to a larger capital stock, higherproductivity, and an improved standard of living.

From this standpoint, the broad objective of theClinton Administration's budget—that is, to preservemost of the projected surpluses—seems to me bothresponsible and appropriate. The Administrationwould devote about $1.4 trillion of the projected$4.9 trillion of current law surpluses over the nextfifteen years to new spending and use the remainderto pay down our national debt. According to theAdministration's calculations, the ratio of debt heldby the public to gross domestic product would fallfrom its current 44 percent to 7 percent by 2014. Ifsuch an outcome were to materialize, it would repre-sent a dramatic improvement in the fiscal position ofthe nation.

Under current law, the social security revenuesexceed outlays, creating surpluses that are credited tothe social security trust fund. Without any legislativechanges, the social security trust fund will continueto accumulate funds, reaching a peak in 2020 of$3.8 trillion, or almost 16 percent of GDP. Thesesurpluses both reduce the national debt and improvethe long-run fiscal condition of social security. Thisclaim does not stem from any accounting gimmickry:By reducing future interest payments, these surplusesdo indeed free up future revenues.

In addition to this accumulation already scheduledunder current law, the Administration is proposingto transfer $2.8 trillion of general revenues to thesocial security trust fund. While the Administration'srationale for these transfers is to ensure that thesurpluses actually materialize, the transfer of generalrevenues represents a major shift from past practice,under which social security has been financed almostentirely from dedicated payroll taxes.

During the deliberations of the 1994-1996 Qua-drennial Advisory Council on Social Security, weconsidered whether general revenues should be used



to help shore up the social security program. Thisidea was unanimously rejected, for a number of rea-sons. First, using general revenues to fund socialsecurity puts the social security system in competi-tion with other spending programs during the budgetcycle. But social security is a long-range program—people pay dedicated taxes today toward benefits thatmay not be received for thirty or forty years—andmany feel that it should not be part of an annualbudgetary allocation process.

Perhaps more important, using general revenues tofund social security undermines the fiscal disciplineimposed by the need to ensure that income earmarkedfor social security is sufficient to meet the entire costof the program, both in the short run and long run.Without a long-range budget constraint on socialsecurity, it will be much more difficult to limit futurebenefit growth. And, notwithstanding the large sur-pluses being projected, some reductions in benefitsare almost certain to be necessary as the U.S. popula-tion ages.

It is important to remember that the aging of thepopulation will bring pressures to programs otherthan social security. The trustees of the Medicaretrust fund project that Medicare expenditures as a

share of GDP will more than double—from 2.7 per-cent today, to more than 5.8 percent in 2030, andMedicaid spending on long-term care likely will facesimilar increases. Because under the current budgetsystem, Medicare Part B and Medicaid are financedwith general revenues, there is much less pressure totake measures now to improve their long-run financ-ing. But these programs too will put significantdemands on government resources in the future. Ifwe use the projected surpluses as a rationale for notmaking hard choices in social security, finding theresources to provide Medicare and Medicaid to ouraging population will prove that much harder.

Thus, there are serious drawbacks to relaxingsocial security's long-run budget constraint throughgeneral revenue transfers. I would prefer social secu-rity reforms that maintain the link between dedicatedtaxes and benefits and maintain the value of long-range actuarial analysis. This discipline is essential ifwe are to limit the impending explosion of entitle-ment spending. The President's budget proposal, bypreserving future surpluses and paying down ournational debt, makes an important contribution toraising national saving. But to me the proposal lookseven better without the general revenue transfer.

Statement by Alan Greenspan, Chairman, Board ofGovernors of the Federal Reserve System, before theCommittee on Banking and Financial Services, U.S.House of Representatives, February 11, 1999

It is a pleasure to appear before the committee topresent the views of the Federal Reserve on the needto enact legislation to modernize the U.S. financialsystem. The Federal Reserve continues to supportstrongly the enactment of such legislation andbelieves that H.R. 10 contains the fundamental prin-ciples that should be included in such legislation.I commend the committee for taking up this vitalmatter so promptly.

THE NEED FOR FINANCIAL REFORM

U.S. financial institutions are today among the mostinnovative and efficient providers of financial ser-vices in the world. They compete, however, in amarketplace that is undergoing major and fundamen-tal change driven by a revolution in technology, bydramatic innovations in the capital markets, and bythe globalization of the financial markets and thefinancial services industry.

For these reasons, we support, as we have formany years, major revisions, such as those includedin H.R. 10, to the Glass-Steagall Act and the BankHolding Company Act to remove the legislative bar-riers against the integration of banking, insurance,and securities activities. There is virtual unanimityamong all concerned—private and public alike—thatthese barriers should be removed. The technologi-cally driven proliferation of new financial productsthat enable risk unbundling have been increasinglycombining the characteristics of banking, insurance,and securities products into single financial instru-ments. These changes, which are occurring all overthe world, have also dramatically altered the wayfinancial services providers operate and the way theydeliver their products.

In the United States, our financial institutions havebeen required to take elaborate steps to develop anddeliver new financial products and services in a man-ner that is consistent with our outdated laws. Thecosts of these efforts are becoming increasingly bur-densome and serve no useful public purpose. Unlesssoon repealed, the archaic statutory barriers to effi-ciency could undermine the global dominance ofAmerican finance, as well as the continued competi-tiveness of our financial institutions and their ability


Statements to the Congress 241

to innovate and to provide the best and broadestpossible services to U.S. consumers.

We believe that it is important that the rules for ourfinancial services industry be set by the Congressrather than, as too often has been the case, by bank-ing regulators dealing with our outdated laws. Onlythe Congress has the ability to fashion rules that arecomprehensive and equitable to all participants andthat guard the public interest.

The market will continue to force change whetheror not the Congress acts. Without congressionalaction, changes will occur through exploitation ofloopholes and marginal interpretations of the law thatcourts feel obliged to sanction. This type of responseto market forces leads to inefficiencies and inconsis-tencies, expansion of the federal safety net, poten-tially increased risk exposure to the federal depositinsurance funds, and a system that will undermine thecompetitiveness and innovative edge of major seg-ments of our financial services industry. Delay inacting on financial modernization legislation limitsthe Congress's options as these developments prolif-erate and complicate, increases the difficulty of enact-ing the safeguards included in H.R. 10 to protectsafety and soundness and the public interest, anddenies to consumers the benefits that immediatechanges in our outdated banking laws will surelybring.

H.R. 10 also recognizes another dimension of thechanging nature of banking and financial markets:that financial modernization means more than autho-rizing new powers and affiliations. Not only are weexperiencing a revolution in financial products andtheir delivery, but the United States is also at ahistoric crossroads in financial services regulation. Itis becoming increasingly evident that the dramaticadvances in computer and telecommunications tech-nologies of the past decade have so significantlyaltered the structure of domestic, indeed, globalfinance as to render our existing modes of supervi-sion and regulation of financial institutions increas-ingly obsolescent.

The volume, sophistication, and rapidity of finan-cial dealings will inevitably lead to supervisoryemphasis on oversight of risk management of finan-cial institutions and a marked scaling back of out-moded loan file and balance sheet surveillance. Aswe move into the twenty-first century, the remnantsof nineteenth-century bank examination philosophieswill fall by the wayside. Banks, of course, will stillneed to be supervised and regulated, in no small partbecause they are subject to the safety net. My pointis, however, that the nature and extent of that effortneed to become more consistent with market reali-

ties. Moreover, affiliation with banks need not—indeed, should not—create bank-like regulation ofaffiliates of banks.

This shift in supervisory mode, which is alreadyunder way, is market driven. It is not the resultof some potentially reversible ideology. Such anapproach is captured in H.R. 10 in many of theso-called "Fed-light" provisions, and we at the Fedstrongly support this approach.

H.R. 10 also, in our judgment, has chosen theappropriate structure to combine banking, securities,and insurance firms using financial service holdingcompanies. While we enthusiastically support thenew powers granted to financial service holding com-panies, we just as strongly believe that they shouldbe financed by the marketplace, not by instrumentsbacked by the sovereign credit of the United States.The requirement that the new powers be conductedthrough holding company affiliates minimizes theexpansion of the use of the subsidies arising from asafety net backed by the U.S. taxpayer and serves topromote the safety and soundness and stability of ourbanking and financial system.

The rejection of expanded powers for subsidiariesof commercial banks, at least those conducted asprincipal, is a decision that will inhibit the wide-spread employment of federal subsidies over a widerange of activities. These activities, if conducted inbank subsidiaries, would accord banking organiza-tions an unfair competitive advantage over compa-rable insurance and securities firms operating inde-pendently or as bank holding company subsidiaries.

Even more important, to inject the substantial newsubsidies that would accrue to operating subsidiariesof banks into the currently mushrooming domesticand international financial system could distort capi-tal markets and the efficient allocation of both finan-cial and real resources that has been so central toAmerica's current prosperity. The choice of requiringthe new powers to be harbored in affiliates of hold-ing companies, not in the so-called op-subs of theirbanks, will significantly fashion the underlying struc-ture of twenty-first-century finance.

Another twenty-first-century issue is whether weshould move beyond affiliations among financial ser-vice providers and allow the full integration of bank-ing and commerce. As technology increasingly blursthe distinction among various financial products, itis already beginning to blur the distinctions betweenpredominately commercial and banking firms. Wecannot rule out whether sometime in our future fullintegration may occur, potentially with increased effi-ciencies. But how the underlying subsidies of depositinsurance, discount window access, and guaranteed



final settlement through Fedwire are folded into acommercial firm, should the latter purchase a bank, iscrucially important to the systemic stability of ourfinancial system.

It seems to us wise to move first toward the integra-tion of banking, insurance, and securities as envi-sioned in H.R. 10 and employ the lessons we learnfrom that important step before we consider whetherand under what conditions it would be desirable tomove to the second stage of the full integration ofcommerce and banking. Nothing is lost, in my judg-ment, by making this a two-stage process. Indeed,there is much to be gained. The Asian crisis last yearhighlighted some of the risks that can arise if relation-ships between banks and commercial firms are tooclose and make caution at this stage prudent in ourjudgment. In line with these considerations, the Boardcontinues to support elimination of the unitary thriftloophole, which currently allows any type of com-mercial firm to control a federally insured depositoryinstitution.

These principles, which we see as fundamental tofinancial modernization, are embodied in H.R. 10. Asin all such major legislation, there are, and will be,numerous provisions only indirectly associated withthe legislation's core principles that often foster dis-agreements. These surrounding details are doubtlessimportant, but not so important that they should beallowed to defeat the consensus that has developedaround the key principles embodied in H.R. 10. Itwould be a disservice to the public and the nation if,in the fruitless search for a bill that pleases everyonein every detail, the benefits of this vital consensus arelost or further delayed.

The decision to use the holding company structure,and not the universal bank, as the appropriate struc-ture to allow new securities and insurance affiliationsis strongly driven by several key principles embodiedin H.R. 10. These principles include that new powersand affiliations should be financed by the market andnot by the sovereign credit of the United States, andthat supervision of nonbank affiliates must not use theexhaustive bank examination method.

Importantly, that decision also prevents the spreadof the safety net that would inevitably lead to aweakening of the competitive strength of large seg-ments of our financial services industry because thosesecurities, insurance, and other financial services pro-viders that do not operate as subsidiaries of bankswould be at a serious disadvantage to similar firmsowned by banks. By fostering a level playing fieldwithin the financial services industry, we contributeto full, open, and fair competition as we enter thenext century.

This choice of the holding company structure isalso critical to the way in which the financial servicesindustry will develop because it provides better pro-tection for, and promotes the safety and soundness of,our banking and financial system without damagingthe national or state bank charters or limiting in anyway the benefits of financial modernization. Theother route toward full-powered commercial bankoperating subsidiaries and universal banking would,in our judgment, lead to greater risk for the depositinsurance funds and the taxpayer. It is for thesereasons that the Federal Reserve, Securities andExchange Commission, many state functional regula-tors, and many in the affected industries have sup-ported the holding company framework and haveopposed the universal bank approach.

In virtually every other industry, the Congresswould not be asked to address issues such as these,which are associated with technological and marketdevelopments; the market would force the necessaryinstitutional adjustments. Arguably, this differencereflects the painful experience that has taught us thatdevelopments in our banking system can have pro-found effects on the stability of our whole economy,rather than the limited impact we perceive from diffi-culties in most other industries.

Moreover, as a society we have made the choice tocreate a safety net for depository institutions, notonly to protect the public's deposits but also to mini-mize the impact of adverse banking developments onour economy. Although we have clearly been suc-cessful in doing so, the safety net has predictablyshielded bank shareholders from the full conse-quences of the risks their banks take. Moreover, sincethe sovereign credit of the United States fosters thestability of the banking system and guarantees theclaims of insured depositors, bank creditors do notapply the same self-interest monitoring of banks toprotect their own position as they would withoutdiscount window access and deposit insurance. As aconsequence, to redress the balance of risk-taking,entities with access to the safety net are requiredto be supervised and regulated. In this way, theU.S. government protects its own—that is, thetaxpayers'—interest, which is the cost of makinggood on the guarantee.

Put another way, the safety net requires that thegovernment replace with law, regulation, and super-vision much of the disciplinary role that the marketplays for other businesses. Our experience in the1980s with insured thrift institutions illustrates thenecessity of avoiding expanding risks to the depositinsurance funds and lax supervisory policies andrules. But this necessity has an obvious downside:



These same rules limit innovative responses and theability to take the risks so necessary for economicgrowth. The last thing we should want, therefore, isto widen or spread this unintended, but neverthelesscorrosive, dimension of the safety net to other finan-cial and business entities and markets. It is clear thatto do so would not only spread a subsidy to newforms of risk-taking but would ultimately require theexpansion of bank-like supervision as well.

In our judgment, the holding company approachupon which H.R. 10 is premised avoids this pitfall;the universal bank approach cannot.

While financial modernization represents muchneeded reform, we should not forget that this modern-ization will, by itself, introduce dramatic changes inour financial services industry. We feel confident thatthe risks of this type of reform are manageable withinthe holding company framework set out in H.R. 10.

There is a final point I want to make because itappears to have driven Treasury's opposition to lastyear's version of H.R. 10. H.R. 10 would not dimin-ish the ability of the executive branch to continue toplay its meaningful role in the development of bank-ing or economic policy. Currently, the executivebranch influences such policy primarily through itssupervision of national banks and federal savingsassociations. H.R. 10 would not alter the executivebranch's supervisory authority for national banks orfederal savings associations, nor would it result inany reduction in the predominant and growing shareof this nation's banking assets controlled by nationalbanks and federal savings associations. Indeed, as ofSeptember 1998, nearly 58 percent of all banking

assets were under the supervision of the Comptrollerof the Currency, up from 55.2 percent at the end of1996. Moreover, after controlling for mergers of like-chartered banks, the number of national banks hasincreased over the period 1996-98 and the number ofstate banks has declined.

Furthermore, the Congress for sound public policyreasons has purposefully apportioned responsibilityfor this nation's financial institutions among theelected executive branch and independent regulatoryagencies. H.R. 10 retains this balance, and the Fed-eral Reserve does not believe it would serve anyuseful purpose to alter it. Such action would becontrary to the deliberate steps that the Congress hastaken to ensure a proper balance in the regulation ofthis nation's dual banking system.

CONCLUSION

The markets are demanding that we change outdatedstatutory limitations that stand in the way of moreefficiently and effectively delivering financial ser-vices to the public. Many of these changes will occureven if the Congress does not act, but only theCongress can establish the ground rules designed toensure the maximum net public benefits, protect thesafety and soundness of our financial system, create afair and level playing field for all participants, andensure the continued primacy of U.S. financial mar-kets. For these reasons, the Federal Reserve supportsand urges prompt enactment of the financial modern-ization contained in H.R. 10.

Statement by Alan Greenspan, Chairman, Board ofGovernors of the Federal Reserve System, before theCommittee on Banking, Housing, and Urban Affairs,U.S. Senate, February 23, 1999.

(Chairman Greenspan presented identical testimonybefore the Committee on Banking and Financial Ser-vices, U.S. House of Representatives, February 24,1999.)

I appreciate the opportunity to present the FederalReserve's semiannual report on monetary policy.

The U.S. economy over the past year again per-formed admirably. Despite the challenges presentedby severe economic downturns in a number of for-eign countries and episodic financial turmoil abroadand at home, our real gross domestic product grew

about 4 percent for a third straight year. In 1998,2% million jobs were created on net, bringing thetotal increase in payrolls to more than 18 millionduring the current economic expansion, which latelast year became the longest in U.S. peacetime his-tory. Unemployment edged down further to a 4 ]A per-cent rate, the lowest since 1970.

And despite taut labor markets, inflation also fellto its lowest rate in many decades by some broadmeasures, although a portion of this decline owed todecreases in oil, commodity, and other import pricesthat are unlikely to be repeated. Hourly labor com-pensation adjusted for inflation posted further impres-sive gains. Real compensation gains have been sup-ported by robust advances in labor productivity,which in turn have partly reflected heavy investmentin plant and equipment, often embodying innovativetechnologies.



Can this favorable performance be sustained? Inmany respects the fundamental underpinnings of therecent U.S. economic performance are strong. Flex-ible markets and the shift to surplus on the books ofthe federal government are facilitating the buildupin cutting-edge capital stock. That buildup in turnis spawning rapid advances in productivity that arehelping to keep inflation well behaved. The newtechnologies and the optimism of consumers andinvestors are supporting asset prices and sustainingspending.

But after eight years of economic expansion, theeconomy appears stretched in a number of dimen-sions, implying considerable upside and downsiderisks to the economic outlook. The robust increase ofproduction has been using up our nation's spare laborresources, suggesting that recent strong growth inspending cannot continue without a pickup in infla-tion unless labor productivity growth increases sig-nificantly further. Equity prices are high enough toraise questions about whether shares are overvalued.The debt of the household and business sectors hasmounted, as has the external debt of the country as awhole, reflecting the deepening current account defi-cit. We remain vulnerable to rapidly changing condi-tions overseas, which, as we saw last summer, can betransmitted to U.S. markets quickly and traumati-cally. I will be commenting on many of these issuesas I review the developments of the past year and theprospects going forward. In light of all these risks,monetary policy must be ready to move quickly ineither direction should we perceive imbalances anddistortions developing that could undermine the eco-nomic expansion.

RECENT DEVELOPMENTS

A hallmark of our economic performance over thepast year was the continuing sharp expansion ofbusiness investment spending. Competitive globalmarkets and persisting technological advances bothspurred the business drive to become more efficientand induced the price declines for many types ofnew equipment that made capital spending moreattractive.

Business success in enhancing productivity and theexpectation of still further, perhaps accelerated,advances buoyed public optimism about profit pros-pects, which contributed to another sizable boost inequity prices. Rising household wealth along withstrong growth in real income, related to better pay,slower inflation, and expanding job opportunities,

boosted consumption at the fastest clip in a decadeand a half. The gains in income and wealth last year,along with a further decrease in mortgage rates, alsoprompted considerable activity in the housing sector.

The impressive performance of the private sectorwas reflected in a continued improvement in thefederal budget. Burgeoning receipts, along with con-tinuing restraint on federal spending, produced thefirst unified budget surplus in thirty years, allowingthe Treasury to begin to pay down the federal debtheld by the public. This shift in the federal govern-ment's fiscal position has fostered an increase inoverall national saving as a share of GDP to 17'A per-cent from the 14'/2 percent low reached in 1993. Thisrise in national saving has helped to hold down realinterest rates and to facilitate the financing of theboom in private investment spending.

Foreign savers have provided an additional sourceof funds for vigorous domestic investment. The coun-terpart of our high and rising current account deficithas been ever-faster increases in the net indebtednessof U.S. residents to foreigners. The rapid wideningof the current account deficit has some disquietingaspects, especially when viewed in a longer-termcontext. Foreigners presumably will not want to raiseindefinitely the share of their portfolios in claimson the United States. Should the sustainability ofthe buildup of our foreign indebtedness come intoquestion, the exchange value of the dollar may welldecline, imparting pressures on prices in the UnitedStates.

In the recent economic environment, however, thewidening of the trade and current account deficits hadsome beneficial aspects. It provided a safety valvefor strong U.S. domestic demand, thereby helpingto restrain pressures on U.S. resources. It also cush-ioned, to some extent, economic weakness in ourtrading partners.

Moreover, decreasing import prices, which partlycame from the appreciation of the dollar throughmidsummer, contributed to low overall U.S. inflation,as did ample manufacturing capacity in the UnitedStates and lower prices for oil and other commoditiesstemming from the weak activity abroad. The markeddrop in energy prices significantly contributed tothe subdued, less than 1 percent, increase in the priceindex for total personal consumption expendituresduring 1998. In addition, supported by rapid accumu-lation of more efficient capital, the growth of laborproductivity picked up last year, allowing nominallabor compensation to post another sizable gain with-out putting added upward pressure on costs andprices. I shall return to an analysis of the extraor-dinary performance of inflation later in my remarks.



The Federal Open Market Committee (FOMC)conducted monetary policy last year with the aim ofsustaining the remarkable combination of economicexpansion and low inflation. At its meetings fromMarch to July, the inflation risks accompanying thecontinued strength of domestic demand and the tight-ening of labor markets necessitated that the FOMCplace itself on heightened inflation alert. Althoughthe FOMC kept the nominal federal funds rateunchanged, it allowed the real funds rate to rise withcontinuing declines in inflation and, presumably,inflation expectations. In August, the FOMC returnedto an unbiased policy predilection in response to theadverse implications for the U.S. outlook of worsen-ing conditions in foreign economies and in globalfinancial markets, including our own.

Shortly thereafter, a further deterioration in finan-cial market conditions began to pose a more seri-ous threat to economic stability. In the wake of theRussian crisis and subsequent difficulties in otheremerging-market economies, investors perceived thatthe uncertainties in financial markets had broadenedappreciably, and as a consequence, they becamedecidedly more risk averse. Safe-haven demands forU.S. Treasury securities intensified at the expense ofprivate debt securities. As a result, quality spreadsescalated dramatically, especially for lower-ratedissuers. Many financial markets turned illiquid, withwider bid-asked spreads and heightened price volatil-ity, and issuance was disrupted in some private secu-rities markets. Even the liquidity in the market forseasoned issues of U.S. Treasury securities dried up,as investors shifted toward the more actively traded,recently issued securities and dealers pared inven-tories, fearing that heightened price volatility posedan unacceptable risk to their capital.

Responding to losses in foreign financial marketsand to pressures from counterparties, highly lever-aged investors began to unwind their positions, whichfurther weighed on market conditions. As creditbecame less available to business borrowers in capi-tal markets, their demands were redirected to com-mercial banks, which reacted to the enlarged bor-rowing and more uncertain business prospects bytightening their standards and terms on such lending.

To cushion the domestic economy from the impactof the increasing weakness in foreign economies andthe less accommodative conditions in U.S. financialmarkets, the FOMC, beginning in late September,undertook three policy easings. By mid-November,the FOMC had reduced the federal funds rate from5V2 percent to 43/4 percent. These actions were takento rebalance the risks to the outlook, and, in theevent, the markets have recovered appreciably. Our

economy has weathered the disturbances withremarkable resilience, though some yield and bid-asked spreads still reflect a hesitancy on the partof market participants to take on risk. The FederalReserve must continue to evaluate, among otherissues, whether the full extent of the policy easingsundertaken last fall to address the seizing-up of finan-cial markets remains appropriate as those distur-bances abate.

To date, domestic demand and hence employmentand output have remained vigorous. Real GDP isestimated to have risen at an annual rate exceeding5!/2 percent in the fourth quarter of last year.Although some slowing from this torrid pace is mostlikely in the first quarter, labor markets remain excep-tionally tight, and the economy evidently retains agreat deal of underlying momentum despite theglobal economic problems and the still-visible rem-nants of the earlier financial turmoil in the UnitedStates. At the same time, no evidence of any upturnin inflation has, as yet, surfaced.

Abroad the situation is mixed. In some East Asiancountries that, in recent years, experienced a loss ofinvestor confidence, a severe currency depreciation,and a deep recession, early signs of stabilization andeconomic recovery have appeared. This is particu-larly the case for Korea and Thailand. Authorities inthose countries, in the context of International Mone-tary Fund (IMF) stabilization programs, early onestablished appropriate macroeconomic policies andundertook significant structural reforms to buttressthe banking system and repair the finances of thecorporate sector. As investor confidence has returned,exchange rates have risen and interest rates havefallen. With persistence and follow-through onreforms, the future of those economies has promise.

The situations in some other emerging marketeconomies are not as encouraging. The Russian gov-ernment's decision in mid-August to suspend pay-ments on its domestic debt and devalue the ruble tookmarkets by surprise. Investor flight exacerbated thecollapse of prices in Russian financial markets andled to a sharp depreciation of the ruble. The earlierdecline in output gathered momentum, and by latein the year, inflation had moved up to a triple-digitannual rate. Russia's stabilization program with theIMF has been on hold since the financial crisis hit,and the economic outlook there remains troubling.

The Russian financial crisis immediately spilledover to some other countries, hitting Latin Americaespecially hard. Countering downward pressure onthe exchange values of the affected currencies, inter-est rates moved sharply higher, especially in Brazil.As a consequence of the high interest rates and



growing economic uncertainty, Brazil's economicactivity took a turn for the worse. Higher interestrates also had negative consequences for the fiscaloutlook, as much of Brazil's substantial domesticdebt effectively carries floating interest rates. Withbudget reform legislation encountering various set-backs, market confidence waned further and capitaloutflows from Brazil continued, drawing down for-eign currency reserves. Ultimately, the decision wastaken to allow the real to float, and it subsequentlydepreciated sharply.

Brazilian authorities must walk a very narrow,difficult path of restoring confidence and keepinginflation contained with monetary policy while deal-ing with serious fiscal imbalances. Although the sit-uation in Brazil remains uncertain, there has beenlimited contagion to other countries thus far. Appar-ently, the slow onset of the crisis has enabled manyparties with Brazilian exposures to hedge those posi-tions or allow them to run off. With the net exposuresmaller, and increasingly held by those who bothrecognized the heightened risk and were willing tobear it, some of the elements that might have contrib-uted to further contagion may have been significantlyreduced.

THE ECONOMIC OUTLOOK

These recent domestic and international develop-ments provide the backdrop for U.S. economic pros-pects. Our economy's performance should remainsolid this year, though likely with a slower pace ofeconomic expansion and a slightly higher rate ofoverall inflation than last year. The stocks of businessequipment, housing, and household durable goodshave been growing rapidly to quite high levels rela-tive to business sales or household incomes duringthe past few years, and some slowing in the growth ofspending on these items seems a reasonable prospect.Moreover, part of the rapid increase in spending,especially in the household sector, has resulted fromthe surge in wealth associated with a run-up in equityprices that is unlikely to be repeated. And the pur-chasing power of income and wealth has beenenhanced by declines in oil and other import prices,which also are unlikely to recur this year. Assumingthat aggregate demand decelerates, underlying infla-tion pressures, as captured by core price measures, inall likelihood will not intensify significantly in theyear ahead, though the Federal Reserve will need tomonitor developments carefully. We perceive stableprices as optimum for economic growth. Both infla-tion and deflation raise volatility and risks that thwartmaximum economic growth.

Most governors and Reserve Bank presidents fore-see that economic growth this year will slow to a2'/2 percent to 3 percent rate. Such growth wouldkeep the unemployment rate about unchanged. Thecentral tendency of the governors' and presidents'predictions of consumer price index (CPI) inflationis 2 percent to IVz percent. This level represents apickup from last year, when energy prices were fall-ing, but it is in the vicinity of core CPI inflation overthe last couple of years.

This outlook involves several risks. The continuingdownside risk posed by possible economic and finan-cial instability around the world was highlighted ear-lier this year by the events in Brazil. Although finan-cial contagion elsewhere has been limited to date,more significant knock-on effects in financial marketsand in the economies of Brazil's important tradingpartners, including the United States, are still pos-sible. Moreover, the economies of several of our keyindustrial trading partners have shown evidence ofweakness, which if it deepens could further depressdemands for our exports.

Another downside risk is that growth in capitalspending, especially among manufacturers, couldweaken appreciably if pressures on domestic profitmargins mount and capacity utilization drops further.And it remains to be seen whether corporate earningswill disappoint investors, even if the slowing of eco-nomic growth is only moderate. Investors appear tohave incorporated into current equity price levelsboth robust profit expectations and low compensationfor risk. As the economy slows to a more sustainablepace as expected, profit forecasts could be paredback, which together with a greater sense of vulner-ability in business prospects could damp appetites forequities. A downward correction to stock prices andan associated increase in the cost of equity capitalcould compound a slowdown in the growth of capitalspending. In addition, a stock market decline wouldtend to restrain consumption spending through itseffect on household net worth.

But on the upside, our economy has proved surpris-ingly robust in recent years. More rapid increases incapital spending, productivity, real wages, and assetprices have combined to boost economic growth farmore and far longer than many of us would haveanticipated.

This "virtuous cycle" has been able to persistbecause the behavior of inflation has also been sur-prisingly favorable, remaining well contained at lev-els of utilization of labor that in the past would haveproduced accelerating prices. That it has not done soin recent years has been the result of a combinationof special one-time factors holding down prices and



more lasting changes in the processes determininginflation.

Among the temporary factors, the sizable declinesin the prices of oil, other internationally traded com-modities, and other imports contributed directly toholding down inflation last year and also indirectlyby reducing inflation expectations. But these pricesare not likely to fall further, and they could begin torise as some Asian economies revive and the effectsof the net depreciation of the dollar since midsummerare felt more strongly.

At the same time, however, recent experience doesseem to suggest that the economy has become lessinflation prone than in the past, so that the chancesof an inflationary breakout arguably are, at least fornow, less than they would have been under similarconditions in earlier cycles.

Several years ago 1 suggested that worker inse-curity might be an important reason for unusuallydamped inflation. From the early 1990s through 1996,survey results indicated that workers were becomingmuch more concerned about being laid off. Workers'underlying fear of technology-driven job obsoles-cence, and hence willingness to stress job securityover wage increases, appeared to have suppressedlabor cost pressures despite a reduced unemploy-ment rate. More recently, that effect seems to havediminished in part. So while job loss fears probablycontributed to wage and price suppression through1996, it does not appear that a further heightening ofworker insecurity about employment prospects canexplain the more recent improved behavior ofinflation.

Instead, a variety of evidence, anecdotal and other-wise, suggests that the source of recent restrainedinflation may be emanating more from employersthan from employees. In the current economic set-ting, businesses sense that they have lost pricingpower and generally have been unwilling to raisewages any faster than they can support at currentprice levels. Firms have evidently concluded thatif they try to increase their prices, their competitorswill not follow, and they will lose market share andprofits.

Given the loss of pricing power, it is not surprisingthat individual employers resist pay increases. Butwhy has pricing power of late been so delimited?Monetary policy certainly has played a role in con-straining the rise in the general level of prices anddamping inflation expectations over the 1980s and1990s. But our current discretionary monetary policyhas difficulty anchoring the price level over time inthe same way that the gold standard did in the lastcentury.

Enhanced opportunities for productive capitalinvestment to hold down costs also may have helpedto damp inflation. Through the 1970s and 1980s,firms apparently found it easier and more profitableto seek relief from rising nominal labor costs throughprice increases than through cost-reducing capitalinvestments. Price relief evidently has not been avail-able in recent years. But relief from cost pressureshas. The newer technologies have made capitalinvestment distinctly more profitable, enabling firmsto substitute capital for labor far more productivelythan they would have a decade or two ago.

Starting in 1993, capital investment, especially inhigh-tech equipment, rose sharply beyond normalcyclical experience, apparently the result of expectedincreases in rates of return on the new investment.Had the profit expectations not been realized, onewould have anticipated outlays to fall back. Instead,their growth accelerated through the remainder of thedecade.

More direct evidence confirms improved under-lying profitability. According to rough estimates,labor and capital productivity has risen significantlyduring the past five years. It seems likely that thesynergies of advances in laser, fiber optic, satellite,and computer technologies with older technologieshave enlarged the pool of opportunities to achieve arate of return above the cost of capital. Moreover, thenewer technologies have facilitated a dramatic fore-shortening of the lead times on the delivery of capitalequipment over the past decade, presumably allowingbusinesses to react more expeditiously to an actual orexpected rise in nominal compensation costs than,say, they could have in the 1980s. In addition, thesurge in investment not only has restrained costs, buthas also increased industrial capacity faster thanfactory output has risen. The resulting slack in prod-uct markets has put greater competitive pressure onbusinesses to hold down prices, despite taut labormarkets.

The role of technology in damping inflation ismanifest not only in its effects on U.S. productivityand costs but also through international trade, wheretechnological developments have progressivelybroken down barriers to cross-border trade. Theenhanced competition in tradable goods has enabledexcess capacity previously bottled up in one countryto augment worldwide supply and exert restraint onprices in all countries' markets. The resulting pricediscipline also has constrained nominal wage gainsin internationally tradable goods industries. As work-ers have attempted to shift to other sectors, gains innominal wages and increases in prices in nontrade-able goods industries have been held down as well.



The process of price containment has potentiallybecome, to some extent, self-reinforcing. Lowerinflation in recent years has altered expectations.Workers no longer believe that escalating gainsin nominal wages are needed to reap respectableincreases in real wages, and their remaining sense ofjob insecurity is reinforcing this. Because neitherfirms nor their competitors can count any longer ona general inflationary tendency to validate decisionsto raise their own prices, each company feels com-pelled to concentrate on efforts to hold down costs.The availability of new technology to each com-pany and its rivals affords both the opportunity andthe competitive necessity of taking steps to boostproductivity.

It is difficult to judge whether these significantshifts in the market environment in which firms func-tion are sufficient to account for our benign overallprice behavior during the past half decade. Undoubt-edly, other factors have been at work as well, includ-ing those temporary factors I mentioned earlier andsome more lasting I have not discussed, such asworldwide deregulation and privatization, and thefreeing-up of resources previously employed to pro-duce military products that was brought about by theend of the cold war. There also may be other con-tributory forces lurking unseen in the wings that willonly become clear in time. Over the longer run, ofcourse, the actions of the central bank determine thedegree of overall liquidity and hence rate of inflation.It is up to us to validate the favorable inflationdevelopments of recent years.

Although the pace of productivity increase haspicked up in recent years, the extraordinary strengthof demand has meant that the substitution of capitalfor labor has not prevented us from rapidly depletingthe pool of available workers. This worker depletionconstitutes a critical upside risk to the inflation out-look because it presumably cannot continue for verymuch longer without putting increasing pressure onlabor markets and on costs.

The number of people willing to work can beusefully defined as the unemployed component of thelabor force plus those not actively seeking work, andthus not counted in the labor force, but who nonethe-less say they would like a job if they could get one.This pool of potential workers aged sixteen to sixty-four currently numbers about 10 million, or just53A percent of that group's population—the lowestsuch percentage on record, which begins in 1970, and2Vi percentage points below its average over thatperiod. The rapid increase in aggregate demand hasgenerated growth of employment in excess of growthin population, causing the number of potential work-

ers to fall since the mid-1990s at a rate of a bit lessthan 1 million annually. We cannot judge with preci-sion how much further this level can decline withoutsparking ever-greater upward pressures on wages andprices. But, should labor market conditions continueto tighten, there has to be some point at which the risein nominal wages will start increasingly outpacingthe gains in labor productivity, and prices inevitablywill begin to accelerate.

RANGES FOR MONEY AND CREDIT

At its February meeting, the Committee elected toratify the provisional ranges for all three aggregatesthat it had established last July. Specifically, the Com-mittee again has set growth rate ranges over the fourquarters of 1999 of 1 percent to 5 percent for M2,2 percent to 6 percent for M3, and 3 percent to7 percent for domestic nonfinancial debt. As in previ-ous years, the Committee interpreted the ranges forthe broader monetary aggregates as benchmarks forwhat money growth would be under conditions ofprice stability and sustainable economic growth,assuming historically typical velocity behavior.

Last year, these monetary aggregates far overshotthe upper bounds of their annual ranges. Althoughnominal GDP growth did exceed the rate likely con-sistent with sustained price stability, the rapid growthof M2 and M3 also reflected outsized declines in theirvelocities, that is, the ratio of nominal GDP to money.M2 velocity dropped about 3 percent, while M3velocity plunged 5Vi percent.

Part of these velocity declines reflected some re-duction in the opportunity cost of holding money;interest rates on Treasury securities, which representan alternative return on nonmonetary assets, droppedmore than did the average of interest rates on depositsand money market mutual funds in M2, drawingfunds into the aggregate. Even so, much of last year'saberrant behavior of broad money velocity cannotreadily be explained by conventional determinants.Although growth of the broad aggregates was strongearlier in the year, it accelerated in the fourth quarterafter credit markets became turbulent. Perhaps robustmoney growth late in the year partly reflected areaction to this turmoil by the public, who beganscrambling for safer and more liquid financial assets.Monetary expansion has moderated so far this year,evidently in lagged response to the calming of finan-cial markets in the autumn. Layered on top of theseinfluences, though, the public also may have beenreapportioning their savings flows into money bal-ances because the huge run-up in stock prices in



recent years has resulted in an uncomfortable portionof their net worth in equity.

For the coming year, the broad monetary aggre-gates could again run high relative to these ranges. Tobe sure, the decline in the velocities of the broaderaggregates this year should abate to some extent, asmoney demand behavior returns more to normal, andgrowth in nominal GDP should slow as well, assuggested by the governors' and presidents' centraltendency. Both factors would restrain broad moneyexpansion relative to last year. Still, the growth of M2and M3 could well remain outside their price-stabilityranges this year. Obviously, considerable uncertaintycontinues to surround the prospective behavior ofmonetary velocities and growth rates.

Domestic nonfinancial debt seems more likely thanthe monetary aggregates to grow within its range forthis year. Indeed, domestic nonfinancial debt alsocould grow more slowly this year than last year's6Vi percent pace, which was in the upper part of its3 percent to 7 percent annual range. With the federalbudget surplus poised to widen further this year,federal debt should contract even more quickly thanlast year. And debt in each of the major nonfederalsectors in all likelihood will decelerate as well fromlast year's relatively elevated rates, along with theprojected slowing of nominal GDP growth.

THE FOMC'S DISCLOSURE POLICY

The FOMC at recent meetings has discussed not onlythe stance of policy but also when and how it commu-nicates its views of the evolving economic situationto the public. The FOMC's objective is to release asmuch information about monetary policy decision-making, and as promptly, as is consistent with main-taining an effective deliberative process and avoidingroiling markets unnecessarily. Since early 1994, eachchange in the target nominal federal funds rate hasbeen announced immediately with a brief rationalefor the action. The FOMC resolved at its Decembermeeting to take advantage of an available, but unusedpolicy, originally stated in early 1995, of releasing,on an infrequent basis, a statement immediately aftersome FOMC meetings at which the stance of mone-tary policy has not been changed. The FederalReserve will release such a statement when it wishesto communicate to the public a major shift in itsviews about the balance of risks or the likely direc-tion of future policy. Such an announcement need notbe made after every change in the tilt of the directive.Instead, this option would be reserved for situationsin which the consensus of the Committee clearly had

shifted significantly, though not by enough to changecurrent policy, and in which the absence of an expla-nation risked misleading markets about the prospectsfor monetary policy.

YEAR 2000 ISSUES

Before closing, I'd like to address an issue that hasbeen receiving increasing attention—the century datechange. While no one can say that the rollover to theyear 2000 will be trouble free, I am impressed bythe efforts to date to address the problem in thebanking and financial system. For our part, the Fed-eral Reserve System has now completed remediationand testing of 101 of its 103 mission-critical applica-tions, with the remaining two to be replaced by theend of March. We opened a test facility in June atwhich more than 6,000 depository institutions to datehave conducted tests of their Y2K compliant sys-tems, and we are well along in our risk mitigation andcontingency planning activities. As a precautionarymeasure, the Federal Reserve has acted to increasethe currency in inventory about one-third to approxi-mately $200 billion in late 1999 and has other contin-gency arrangements available if needed. Although wedo not expect currency demand to increase dramati-cally, the Federal Reserve believes it is importantfor the public to have confidence in the availability ofcash in advance of the rollover. As a result of thesekinds of activities, I can say with assurance that theFederal Reserve will be ready in both its operationsand planning activities for the millennium rollover.

The banking industry is also working hard, andwith evident success, to prepare for the event. By theend of the first quarter, every institution in the indus-try will have been subject to two rounds of on-siteY2K examinations. The Federal Reserve, like theother regulators, has found that only a small minorityof institutions has fallen behind in their preparations,and those institutions have been targeted for addi-tional follow-up and, as necessary, formal enforce-ment actions. The overwhelming majority of theindustry has made impressive progress in their reme-diation, testing, and contingency planning efforts.

CONCLUDING COMMENT

Americans can justifiably feel proud of their recenteconomic achievements. Competitive markets, withopen trade both domestically and internationally,have kept our production efficient and on the expand-ing frontier of technological innovation. The deter-



mination of Americans to improve their skills andknowledge has allowed workers to be even moreproductive, elevating their real earnings. Macroeco-nomic policies have provided a favorable setting forthe public to take greatest advantage of opportunitiesto improve its economic well-being. The restrainedfiscal policy of the Administration and the Congress

has engendered the welcome advent of a unifiedbudget surplus, freeing up funds for capital invest-ment. A continuation of responsible fiscal and, wetrust, monetary policies should afford Americans theopportunity to make considerable further economicprogress over time.

Statement by Alan Greenspan, Chairman, Board ofGovernors of the Federal Reserve System, before theCommittee on Banking, Housing, and Urban Affairs,U.S. Senate, February 23,1999

The committee has asked that, in addition to myreport on the economy, I present today the viewsof the Federal Reserve on the need for legislationto modernize the U.S. financial system. The FederalReserve continues to support strongly the enactmentof such legislation, and I commend the committee fortaking up this vital matter so promptly.

NEED FOR FINANCIAL MODERNIZATION

U.S. financial institutions are today among the mostinnovative and efficient providers of financial ser-vices in the world. They compete, however, in amarketplace that is undergoing major and fundamen-tal change driven by a revolution in technology, bydramatic innovations in the capital markets, and bythe globalization of the financial markets and thefinancial services industry.

The technologically driven proliferation of newfinancial products that enable risk unbundling hascreated new financial instruments that increasinglycombine the characteristics of banking, insurance,and securities products. These changes, which areoccurring all over the world, have also dramaticallyaltered the way financial services providers operateand the way they market and deliver their products.

In the United States, our financial institutions havebeen required to take elaborate steps to develop anddeliver new financial products and services in a man-ner that is consistent with our outdated laws. Thecosts of these efforts are becoming increasingly bur-densome and serve no useful public purpose. Unlesssoon repealed, the archaic statutory barriers to effi-ciency could undermine the competitiveness of ourfinancial institutions, their ability to innovate and toprovide the best and broadest possible services toU.S. consumers, and ultimately, the global dominanceof American finance.

Without congressional action to update our laws,the market will force ad hoc administrative responsesthat lead to inefficiencies and inconsistencies, expan-sion of the federal safety net, and potentiallyincreased risk exposure to the federal deposit insur-ance funds. Such developments will undermine thecompetitiveness and innovative edge of major seg-ments of our financial services industry. We believethat it is important that the rules for our financialservices industry be set by the Congress rather than,as too often has been the case, by banking regulatorsdealing with our outdated laws. Only the Congresshas the ability to fashion rules that are comprehensiveand equitable to all participants and that guard thepublic interest.

For these reasons, we support removal of the leg-islative barriers that prohibit the straightforwardintegration of banking, insurance, and securitiesactivities. There is virtual unanimity among allconcerned—private and public alike—that these bar-riers should be removed.

In designing financial modernization legislation,we firmly believe that the Congress should focus onachieving two essential and indivisible objectives:removing outdated, competitively stifling restrictionson financial affiliations and, most important, adoptinga framework for this modernization that promotes thesafety and soundness of our banking and financialsystem and prevents the extension of the federalsubsidy.

FRAMEWORK FOR FINANCIAL MODERNIZATION

The first objective is achieved by amending theGlass-Steagall Act and the Bank Holding CompanyAct to permit financial affiliations and broader finan-cial activities.

In our judgment, the other objective of preservingsafety and soundness and preventing the spread of thefederal subsidy is best achieved by allowing banks,securities firms, and insurance companies to combinein the financial service holding company structure.While we enthusiastically support the new powers



granted to financial service holding companies, wejust as strongly believe that they should be financedby the marketplace, not by instruments backed by thesovereign credit of the United States. The require-ment that the new powers, at least those conducted asprincipal, be conducted through holding companyaffiliates minimizes the expansion of the use of thesubsidies arising from a safety net backed by the U.S.taxpayer.

The choice of requiring the new powers to beharbored in affiliates of holding companies, not inoperating subsidiaries of their banks, will signifi-cantly fashion the underlying structure of twenty-firstcentury finance. To inject the substantial new subsi-dies that would accrue to operating subsidiaries ofbanks into the currently mushrooming domestic andinternational financial system could distort capitalmarkets and the efficient allocation of both finan-cial and real resources that has been so central toAmerica's current prosperity.

New affiliations, if allowed through bank subsidi-aries, would accord banking organizations an unfaircompetitive advantage over comparable insuranceand securities firms—both those operating indepen-dently and those that are bank holding companysubsidiaries. By fostering a level playing field withinthe financial services industry, we contribute to full,open, and fair competition.

This choice of the holding company structure isalso critical to the way in which the financial servicesindustry will develop because it provides better pro-tection for and promotes the safety, soundness, andstability of our banking and financial system. At thesame time, it accomplishes much-needed financialmodernization without damaging the national or statebank charters or limiting in any way the benefits offinancial modernization. The other route toward full-powered commercial bank operating subsidiaries anduniversal banking would, in our judgment, lead togreater risk for the deposit insurance funds and thetaxpayer.

In addition, the holding company structure pro-motes effective supervision and the functional regula-tion of different activities. The United States is at ahistoric crossroads in financial services regulation. Itis becoming increasingly evident that the dramaticadvances in computer and telecommunications tech-nologies of the past decade have so significantlyaltered the structure of domestic, indeed, globalfinance as to render our existing modes of supervi-sion and regulation of financial institutions increas-ingly obsolescent.

The volume, sophistication, and rapidity of finan-cial dealings should continue to lead to supervisory

emphasis on oversight of risk management of finan-cial institutions and a marked scaling back of out-moded loan file and balance sheet surveillance. Forthe same reasons, affiliation with banks need not—indeed, should not—create bank-like regulation ofaffiliates of banks. A constructive approach to super-vision for the twenty-first century is captured in theso-called "Fed-light" provisions of various bills,which focus on and enhance the functional regulationof securities firms, insurance companies, insureddepository institutions, and their affiliates. We at theFed strongly support this approach.

BANKING AND COMMERCE

A twenty-first century issue that has become a part ofthe financial modernization debate is whether weshould move beyond affiliations among financial ser-vice providers and allow the full integration of bank-ing and commerce. As technology increasingly blursthe distinction among various financial products, it isalready beginning to blur the distinctions betweenpredominately commercial and banking firms. Buthow the underlying subsidies of deposit insurance,discount window access, and guaranteed final settle-ment through Fed wire are folded into a commercialfirm, should the latter affiliate with a bank, is cru-cially important to the systemic stability of our finan-cial system. It seems to us wise to move first towardthe integration of banking, insurance, and securitiesand employ the lessons we learn from that importantstep before we consider whether and under whatconditions it would be desirable to move to thesecond stage of the full integration of commerce andbanking.

Nothing is lost, in my judgment, by making this atwo-stage process. Indeed, there is much to be gained.The Asian crisis highlighted some of the risks thatcan arise if relationships between banks and commer-cial firms are too close and makes caution at thisstage prudent in our judgment. In line with theseconsiderations, the Board continues to support elimi-nation of the unitary thrift loophole, which currentlyallows any type of commercial firm to control afederally insured depository institution.

PRESERVATION OF EXECUTIVE BRANCHINFLUENCE

There is a final point I want to make because itappears to have driven the Treasury's opposition tofinancial modernization legislation considered last



year. That legislation would not have altered theexecutive branch's supervisory authority for nationalbanks or federal savings associations; nor would ithave resulted in any reduction in the predominant andgrowing share of this nation's banking assets con-trolled by national banks and federal savings associa-tions. Indeed, as of September 1998, nearly 58 per-cent of all banking assets were under the supervisionof the Comptroller of the Currency, up from 55.2 per-cent at the end of 1996. Moreover, after havingcontrolled for mergers of like-chartered banks, thenumber of national banks has increased over theperiod 1996-98 and the number of state banks hasdeclined.

Furthermore, the Congress for sound public policyreasons has purposefully apportioned responsibilityfor this nation's financial institutions among theelected executive branch and independent regulatoryagencies. Action to alter this balance would be con-trary to the deliberate steps that the Congress hastaken to ensure a proper balance in the regulation ofthis nation's dual banking system.

CONCLUSION

In virtually every other industry, the Congress wouldnot be asked to address issues such as these, which

are associated with technological and market devel-opments; the market would force the necessaryinstitutional adjustments. Arguably, this differencereflects the painful experience that has taught us thatdevelopments in our banking system can have pro-found effects on the stability of our whole economy,rather than the limited impact we perceive from diffi-culties in most other industries.

Moreover, as in all major legislation, there are, andwill be, numerous provisions only indirectly associ-ated with the legislation's core objectives that oftenfoster disagreements. These surrounding issues aredoubtless important, but not so important that theyshould be allowed to defeat the consensus that hasdeveloped around these key goals. It would be adisservice to the public and the nation if, in thefruitless search for a bill that pleases everyone inevery detail, the benefits of this vital consensus arelost or further delayed.

The markets are demanding that we change out-dated statutory limitations that stand in the way ofmore efficiently and effectively delivering financialservices to the public. The Federal Reserve agreesand urges prompt enactment of financial moderniza-tion legislation that achieves the two central andindivisible objectives that I have outlined today.

Statement by Edward W. Kelley, Jr., Member, Boardof Governors of the Federal Reserve System, beforethe Subcommittee on Civil Service of the Committeeon Government Reform and Oversight, U.S. House ofRepresentatives, February 25,1999

I am pleased to testify on behalf of the Board ofGovernors on the Federal Reserve Board RetirementPortability Act and to provide the subcommittee withinformation on the Federal Reserve retirement sys-tem. The Board strongly supports this legislation.The bill would allow certain employees who leavethe Board to work for other agencies and who thenretire under the Federal Employees Retirement Sys-tem (FERS) to receive pensions reflecting all of theirfederal service, including post-1988 service at theFederal Reserve Board. On behalf of the Board andits employees, let me particularly thank you, Chair-man Scarborough, and Representatives Cummings,Morella, Mica, Waxman, Norton, Davis, Hoyer, andMoran for introducing this important legislation.

By way of background, the Federal Reserve Sys-tem has its own defined benefit retirement plan,

which has two benefit structures: the Board Plan,covering Board employees hired pre-1984, which ismodeled on the Civil Service Retirement System(CSRS); and the Bank Plan, covering Board employ-ees hired after 1983 and all employees of the FederalReserve Banks. The Board Plan and the CSRS havehistorically had reciprocity with regard to servicecredit portability. However, as a result of an oversightthat occurred when the FERS statute was first passed,post-1988 service at the Federal Reserve Board byemployees enrolled in the Bank Plan and, in somelimited situations, those enrolled in the Board Plan, isnot creditable service under the FERS.

SERVICE CREDIT PROBLEM

The Board gains and loses employees in transfersbetween the Board and other government agencieseach year. In particular, transfers between the Boardand the other bank regulatory agencies—the FederalDeposit Insurance Corporation, the Office of theComptroller of the Currency, and the Office of ThriftSupervision—are common. The Board grants credit



under its retirement plan to newly hired employeeswith previous CSRS and FERS service if the em-ployee renounces benefits under the previous retire-ment plan (to prevent dual credit). Thus, there isservice portability when employees come to theBoard. And, generally, there has been portabilitybetween the Board and other government agencies increditing Board Plan service under CSRS. However,because of the oversight mentioned above, post-1988Bank Plan service at the Federal Reserve Board is notcreditable under FERS.

As a result, if a Board employee hired after 1983(and participating in the Bank Plan) leaves the Boardto work for another federal agency and then retiresfrom that agency under FERS, that employee wouldreceive a reduced pension that would not reflect all ofthat employee's federal government service. Thisproblem also affects any employee who participatedin the Board Plan, did not complete five years ofservice before 1987, and left the Board and reenteredfederal employment after a break in service of morethan one year. In this situation, under current law,the employee would be placed under FERS with nocredit for post-1988 Board service. My testimonywill refer to these situations as the "service credit"problem.

Under current law, an employee affected by theservice credit problem could receive two pensions:the reduced pension from FERS and, if he or she hadworked long enough to be vested, a pension from theBoard. In this case, because of the way the pensionsare calculated, the sum of those pensions wouldusually be less than a single FERS pension that gavecredit for all of the individual's federal governmentservice. Alternatively, if the employee was not vestedat the Board, he or she would receive only thereduced FERS pension.

Thus, current law creates a dollars-and-cents prob-lem in retirement security. Depending on the indi-vidual's final average salary and years of other fed-eral service, the lack of portability of post-1988Board service can mean the loss of hundreds orthousands of dollars a year in retirement income.

We have identified about fifty former employees ofthe Board who have gone to work for other federalagencies and who will have this service credit prob-lem when they retire under FERS. In addition, thoseof the Board's current workforce covered by theBank Plan (about two-thirds of the staff) would havethe same problem if they should go to another federalagency and retire under FERS. Over time, a growingpercentage of Board staff could encounter similarproblems since virtually all new hires will have ser-vice that is not creditable under FERS.

The service credit problem has festered withoutresolution since the FERS statute was enacted in1986. Employees at the Board are very aware of it.The problem is damaging to employee morale, and,just as important, some Board employees are deterredfrom making sound career moves because their pen-sions will suffer. And, government agencies' effortsto recruit these employees are hampered.

The bill before the subcommittee would correct theunidirectional service credit problem. It would amendthe FERS statute to make post-1988 Board servicecreditable service under FERS. As a result, whenaffected former Board employees retire under FERS,their pensions will reflect all their federal governmentservice.

To receive credit for post-1988 Board serviceunder FERS, the bill appropriately requires theemployee to do two things. First, the employee wouldhave to renounce the entitlement (if any) to receive apension from the Board. This would prevent receiptof credit for post-1988 Board service under bothFERS and the Bank Plan.

Second, the bill requires the employee to make acontribution to FERS that, in effect, would "buy"FERS credit for his or her Board service. This contri-bution would equal the amount the employee wouldhave contributed to FERS if he or she had beencovered by FERS during the service in question, plusinterest to the date of payment. This contributionis appropriate because all FERS participants arerequired to contribute toward their pension benefit.

These two requirements mirror provisions in cur-rent law that provide service credit for employeeswith previous service under the Foreign Service pen-sion program.

We believe that virtually all affected employeeswould be better off with this legislation than undercurrent law. This includes the Bank Plan employeewho transfers to another agency and is placed underFERS, as well as the Board Plan employee who hascompleted five years service (but not before 1987)and who was placed under FERS after a break inservice of more than one year. As FERS employees,they will receive service credit for their post-1988Board service. Future government hires in the secondsituation (prior Board Plan) would be placed in CSRSOffset as a result of the legislation, where their post-1988 Board service would be creditable.

To ensure that no one is inadvertently hurt, the billwould, in effect, allow affected employees to choosewhether or not to get FERS credit for their post-1988Board service. With that option, the employeecould make whichever choice would be moreadvantageous.



In conclusion, the Board and its employeesstrongly support this legislation, and we hope that theCongress can approve it quickly.

I would now like to respond to the subcommittee'srequest for an overview of the Federal ReserveRetirement Plan and information on the managementof pension plan assets.

OVERVIEW OF THE FEDERAL RESERVERETIREMENT PLAN

The Federal Reserve System Retirement Plan is agovernmental defined benefit plan that is qualifiedunder section 401 (a) of the tax code. The plan pro-vides retirement benefits for virtually all employeesof the Federal Reserve Board and Reserve Banks.(Exceptions are approximately thirty employees atthe Board who are in FERS or CSRS.) Plan benefitsare determined under two separate benefit structures:the Board Benefit Structure (Board Plan), which cov-ers approximately 600 Board employees; or the BankPlan, which covers all eligible Reserve Bank staff(about 23,000 employees) and approximately 1,000Board employees. There are approximately 500 annu-itants receiving payments from the Board Plan andapproximately 12,000 annuitants receiving paymentsfrom the Bank Plan, with another 5,000 who haveearned a benefit but have not yet begun drawingpayments.

The Federal Reserve Banks and the Board, asemployers, are responsible to ensure the fundingrequired to pay the benefits promised to participantsand have contributed to the plan at varying levelsthroughout the years as determined necessary by theplan actuary. Since 1986, the actuary has determinedthat no employer contributions are required. Cur-rently, the Retirement Plan's assets exceed both theplan's accrued liability as well as total liability ascalculated by the plan actuary. Plan assets based on afive-year moving average as of January 1, 1998, were$4.0 billion. The total benefit obligation—whichincludes both future service and future salaryincreases—was $3.5 billion. Accrued benefits—based on service and salary up to the date of thevaluation—were valued at $2.8 billion. The value ofplan assets at the end of 1998 was $5.8 billion.

The Board Plan covers Board employees hiredbefore 1984; its plan design is nearly identical to thatof the Civil Service Retirement System. Participantsdo not pay social security tax but have contributed tothe Board Plan at the same rate as CSRS participantsover the years (except that the Board did not increasethe employee contribution rate from 7.0 percent

to 7.25 percent in 1999 as CSRS did). The benefitfeatures of the Board Plan mirror those of CSRS inmost important respects. The most significant differ-ences are as follows: The Board Plan credits FederalReserve Bank service, while CSRS does not; theBoard Plan has adopted a benefit formula for employ-ees with part-time service after April 6, 1986, that isdifferent from the CSRS; and the Board Plan does notallow incorporation of retired military pay into theBoard Plan annuity as allowed by CSRS. A detailedlisting of the differences between the two plans isfound in attachment A.'

The Bank Plan covers all eligible employees of theFederal Reserve Banks. When the Congress passedlegislation requiring that federal employees hiredafter 1983 be subject to social security tax, the Boarddecided to place all newly hired Board employees inthe Bank Plan as well. Unlike the Board Plan, theBank Plan does not require employee contributions,but all Bank Plan participants are covered undersocial security and thus are subject to the FICAwithholding requirement. The basic annuity formulafor the Bank Plan is integrated with social security.The annuity formula is based on years of creditableservice and the average of the five highest earningyears of the employee's career. The benefit formulaprovides 1.3 percent of High-5 salary up to the socialsecurity integration level times the number of yearsof creditable service plus 1.8 percent of High-5 salaryabove the integration level times years of creditableservice.

While the Bank Plan is similar to FERS in that it isdesigned to work together with social security, theplan design features differ. For example, the BankPlan requires no employee contributions as FERSdoes; it uses the highest five years of earnings tocompute the pension benefit rather than the highestthree years under FERS; and it provides for annuityreductions for retirements before age sixty, whileFERS allows unreduced retirement below age sixty ifthe participant has thirty years of service. A detailedcomparison of the plan features of FERS and theBank Plan are provided in attachment B.

The Federal Reserve Thrift Plan is the System'sdefined contribution plan comparable to the govern-ment's Thrift Savings Plan (TSP). Both Board Planand Bank Plan employees are eligible to participateand receive employer matching funds. The FederalReserve Thrift Plan differs from TSP in that it offersboth pretax and after-tax savings components and a

1. The attachments to this statement are available from Publica-tions Services, Mail Stop 127, Board of Governors of the FederalReserve System, Washington, DC 20551. and on the Board's site onthe World Wide Web (http://www.federalreserve.gov).



wider variety of investment options. It also allowshigher contribution rates from participants (up to20 percent of salary), subject to IRS limitations.

MANAGEMENT OF PENSION PLAN ASSETS

The Federal Reserve System, composed of the Boardof Governors and twelve Reserve Banks, vests fidu-ciary responsibility for the investments of its definedbenefit (pension) and defined contribution (savings)plans in a committee of five senior System officers.The System's investment oversight committee is cur-rently composed of three Reserve Bank presidents,one member of the Board, and the first vice presidentof the New York Reserve Bank. The pension andsavings plans had investments valued at $8.1 billionas of year-end 1998, with $5.8 billion representingpension plan assets. I represent the Board on thiscommittee and have done so since 1994. The commit-tee is chaired by one of the Reserve Bank presidents(currently Gary Stern of the Minneapolis ReserveBank). Day-to-day oversight of the investments is theresponsibility of a small staff (three) in New Yorkdirected by our Chief Investment Officer, Paul Lip-son, CFA.

Our oversight committee has long sought to dis-tance itself from asset allocation decisions becausesuch activity might bring with it the appearance ofa conflict of interest for the System. Instead, thecommittee functions as a manager-of-managers—selecting independent investment firms and givingthem a common balanced investment mandate. Thatmandate is set forth in our Investment Objectives andGuidelines document, which has been provided to thesubcommittee. This document is part of the invest-

ment advisory agreement with each firm and dele-gates to them asset allocation decisions (within broadparameters set by the committee), securities selectiondecisions, and the voting of proxies.

Currently, eight firms are retained to manage our$5.8 billion in pension assets (of which about two-thirds were invested in equities as of year-end 1998).Those balanced accounts range in size from $350 mil-lion to $1 billion. Managers are selected by cri-teria that include past performance, desired equityand fixed-income investment "styles," trading andresearch capabilities, expense levels, and so on. Man-agement expenses for the entire plan are less thanone-quarter of 1 percent of invested assets. No pen-sion assets are managed in-house. The staff in NewYork monitors portfolio activity and performance,reporting on both to the committee on a monthlybasis. The committee meets with its portfolio manag-ers at least once a year; the staff meets with most ofthem quarterly. No consultants are retained for anyaspect of the investment process, although the staff inNew York makes extensive use of generally availableanalytical software to assess returns and various mea-sures of risk.

Performance of invested assets is measured againstthree benchmarks: versus the expected long-term rateof return for plan investments used in actuarial valua-tion (currently 9 percent), versus a trailing thirty-six-month composite return (60 percent Standard &Poor's 500/40 percent Lehman Bros. Aggregate), andin comparison to the plan's peer group in the WilshireTrust Universe Comparison Service, the largest tax-exempt institutional performance database in theUnited States. I am pleased to report that the plan hasmet or exceeded each of those benchmarks overmany years. •


256

Announcements

PROPOSED ACTION

The Federal Reserve Board on February 22, 1999,requested comment on proposed changes to its Reg-ulation CC (Availability of Funds and Collectionof Checks) that would provide more flexibility todepository institutions to experiment with methods toreturn unpaid checks electronically. Comments arerequested by April 30, 1999.

ADDITION OF SUPPLEMENTARY TABLES TO THEFLOW OF FUNDS ACCOUNTS

The Federal Reserve Board on February 17, 1999,announced that it will include in future issues ofthe Flow of Funds Accounts of the United States(Z.I statistical release) supplementary tables thatcombine the assets and liabilities of all governmententities in the United States. The title of the newtables is "Consolidated Statement for Federal, State,and Local Governments," and they will be num-bered F.106.C for financial flows and L.106.C foroutstanding amounts of financial assets and liabilitiesat the end of the periods shown. The release willcontinue to show separately the assets and liabili-ties of the federal government and state and localgovernments.

The inclusion of table F.106.C and table L. 106.C ismotivated by the International Monetary Fund's Spe-cial Data Dissemination Standards (SDDS), whichwere established in 1996 to provide guidance on thedissemination of economic and financial data forcountries that have, or might seek, access to inter-national capital markets. The United States is a sub-scriber to the IMF's SDDS.

The Z.I statistical release, "Flow of FundsAccounts of the United States," is updated about tenweeks after the end of a quarter. The release isavailable from the Board's Publications Services(Mail Stop 127, Board of Governors of the Fed-eral Reserve System, Washington, DC 20551)and electronically on the Board's web site(http://www.federalreserve.gov/releases/Zl).

PUBLICATION BY AN INTERAGENCY TASKFORCE OF A CONSUMER BROCHURE ABOUTSHOPPING AND NEGOTIATING FOR THE BESTMORTGAGE

The federal Interagency Task Force on Fair Lendinghas published a brochure for consumers Looking forthe Best Mortgage: Shop, Compare, Negotiate. Thebrochure notes that shopping around for a home loanor mortgage is similar to shopping for a car—consumers should obtain information on all costs ofthe loan and negotiate for the best deal.

The brochure describes how comparing and negoti-ating interest rates, fees, and other payment terms onloans may help consumers get the best financing andpossibly save thousands of dollars, whether it is ahome purchase loan, a refinancing, or a home equityloan. It advises consumers to do the following:

• Obtain information from several lenders• Make sure to obtain all important cost

information• Negotiate for the best deal.

For example, the brochure notes that on any givenday, lenders and brokers may offer different prices forthe same loan to different consumers, even if consum-ers have the same loan qualifications. These differentprices may result because loan officers and brokersare often allowed to keep some or all of the differ-ence between the lowest available price and anyhigher price that the consumer agrees to pay. Thiscompensation arrangement helps explain why it isimportant for consumers to ask questions about costsand negotiate for the best deal. The brochure containsa worksheet consumers can use to compare costswhile shopping. The worksheet lists commonlycharged fees and closing costs and includes a usefullist of questions consumers may wish to ask lenderswhen they shop for a loan.

The brochure outlines common sources for homeloans and explains the difference between rates,points, and fees. It highlights some of the laws thatprotect consumers from unfair lending practices. Italso emphasizes that even consumers with past credit


257

problems should shop around and negotiate for thebest deal. Finally, the brochure includes a mortgageloan shopping form that consumers can use to recordloan data quoted by two or more lenders or brokersand then compare that data to help identify or negoti-ate the best deal.

The members of the Interagency Task Forceinclude the Department of Housing and Urban Devel-opment, the Department of Justice, the Department ofthe Treasury, the Federal Deposit Insurance Corpora-tion, the Federal Housing Finance Board, the FederalReserve Board, the Federal Trade Commission, theNational Credit Union Administration, the Office ofFederal Housing Enterprise Oversight, the Officeof the Comptroller of the Currency, and the Office ofThrift Supervision.

Single copies of the brochure are available free ofcharge from the Board's Publications Services, MailStop 127, Board of Governors of the Federal ReserveSystem, Washington, DC 20551; it is also on theBoard's web site (http://www.federalreserve.gov).Single copies are also available free of chargefrom other members of the Interagency Task Force.The brochure is available at 50 cents per copy fromthe Consumer Information Center, Pueblo, CO81009, or from the center's web site (http://www.pueblo.gsa.gov).

AVAILABILITY OF THE LIST OF FOREIGNMARGIN STOCKS

The Federal Reserve Board on February 22, 1999,initiated semiannual publication of its List of ForeignMargin Stocks. The list, which was effective March 1and supersedes the November 9, 1998, list, is the lastto be accompanied by a press release. Future lists(the next is scheduled for September 1999), willbe published directly on the Board's Internet site(http://www.federalreserve.gov).

Stocks on the list meet the Board's criteria insection 220.11 of Regulation T (Credit by Brokersand Dealers) and are eligible for margin treatment atbrokers and dealers on the same basis as domesticmargin stocks. Other foreign stocks are also eligibleif they are deemed by the Securities and ExchangeCommission (SEC) to have a "ready market" forpurposes of the SEC's net capital rule. The foreignstocks on the Financial Times/Standard & Poor'sActuaries World Indices (FT/S&P list) are notincluded in the Board's list, but they all qualify formargin treatment under an SEC "no action" letter,

which effectively treats these securities as having aready market.

With the Board's December 23, 1997, amendmentsto its margin regulations, all brokers and dealersbecame able as of January 1, 1999, to offer margincredit on all stocks trading in the Nasdaq StockMarket. Therefore the Board ceased publication of itsquarterly List of Marginable OTC Stocks with theNovember 9, 1999, list.

It is unlawful for any person to cause any represen-tation to be made that inclusion of a stock on the Listof Foreign Margin Stocks indicates that the Board orthe SEC has in any way passed upon the merits ofany such stock or transaction therein. Any referencesto the Board in connection with the list or any stocksthereon in any advertisement or similar communica-tion is unlawful.

ENFORCEMENT ACTIONS

The Federal Reserve Board on February 5, 1999,announced the execution of a written agreement byand among First Utah Bancorporation, the FirstUtah Bank, and Premier Data Corporation, all ofSalt Lake City, Utah, and the Federal Reserve Bankof San Francisco. The written agreement includesprovisions addressing Year 2000 readiness.

On February 11, 1999, the Federal Reserve Boardannounced the issuance of a prompt corrective actiondirective against the Zia New Mexico Bank, Tucum-cari, New Mexico.

REVISIONS TO THE MONEY STOCK DATA

Measures of the money stock were revised in Feb-ruary of this year to incorporate the results of theannual benchmark and seasonal factor review. Datain tables 1.10 and 1.21 in the statistical appendix tothe Federal Reserve Bulletin reflect these changesbeginning with this issue.

The revisions had no effect on the annual growthrate of M2 over 1998, but they raised the annualgrowth rate of Ml by 0.1 percentage point and low-ered that of M3 by 0.1 percentage point over the pastyear.

The benchmark incorporates minor revisions todata reported on the weekly and quarterly depositreports, and it takes account of deposit data from callreports for banks and thrift institutions that are notweekly or quarterly deposit reporters. These revisions



to deposit data start in 1992. The benchmark alsoincorporates historical data for a number of moneymarket mutual funds that began reporting for the firsttime during 1998, raising the level of M3 over theyears by amounts that cumulate to $5 billion by theend of 1998. Historical revisions have also beenmade to repurchase agreement (RP) and Eurodollarseries to reflect better estimates of the holdings ofmoney market mutual funds, which must be nettedfrom the gross RP and Eurodollar series to avoiddouble counting in M3. The RP series was revised upby a maximum of $17.5 billion (in the third quarter of1997) and the Eurodollar series by a maximum ofabout $15 billion (in the fourth quarter of 1989).

Seasonal factors for the monetary aggregates havebeen revised, using the benchmarked data throughDecember 1998. For the first time, the X-12-ARIMAprocedure was used to derive monthly seasonal fac-

tors. As usual, the revisions due to seasonal factorsslightly changed the pattern of quarterly growth ratesof Ml, M2, and M3 in 1998. The annual growth ratesof Ml and M2 were unchanged, but that of M3 waslowered a bit.

Complete historical data are available in printedform from the Money and Reserves Projection Sec-tion, Mail Stop 72, Board of Governors of the FederalReserve System, Washington, DC 20551, or phone(202) 452-3062. Historical data for the monetaryaggregates and their components are available eachweek in statistical release H.6 on the Board's website (http://www.federalreserve.gov) under Domesticand International Research, Statistical Releases, andalso from the Economic Bulletin Board of the U.S.Department of Commerce. Call (202) 482-1986 ortoll-free (800) 782-8872 for information on how toaccess the Commerce Department's bulletin board.

1. Monthly seasonal factors used to construct Ml, January 1998-March 2000

Year and month

1998—JanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovemberDecember

1999—JanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovemberDecember

2000—JanuaryFebruaryMarch

Currency Nonbank travelerschecks

.9983

.9973

.9984

.9987

.9993

.99811.0010.9991.9974.9986

1.00231.0108

.9996

.9977

.9986

.9989

.9978

.99821.0009.9985.9969.9996

1.00221.0119

.9986

.9977

.9992

Demand depositsOther checkable deposits'

Total At banks

.0265 1.0097 1.0114 1.0186

.0262 .9803 .9945 .9996

.0166 .9867 1.0034 1.0036

.0137 1.0005 1.0223 1.0193

.0106 .9843 .9946 .9941

.9918 .9950 .9990 .9977

.9623 .9991 .9935 .9907

.9603 .9986 .9905 .9892

.9773 .9951 .9933 .9925

.9908 .9960 .9919 .9906

.0145 1.0127 .9974 .9964

.0209 1.0393 1.0078 1.0080

.0229 1.0125 1.0109 1.0178

.0237 .9811 .9945 .9992

.0159 .9860 1.0039 1.0039

.0148 1.0003 1.0225 1.0192

.0114 .9843 .9950 .9945

.9943 .9957 .9991 .9982

.9635 1.0000 .9936 .9908

.9588 .9961 ,9905 .9893

.9777 .9944 .9930 .9922

.9902 .9984 .9920 .9908

.0110 1.0105 .9975 .9966

.0195 1.0398 1.0076 1.0078

.0218 1.0121 1.0107 1.0174

.0235 .9809 .9945 .9990

.0165 .9859 1.0040 1.0039

1. Seasonally adjusted other checkable deposits at thrift institutions arederived as the difference between total other checkable deposits, seasonally

adjusted, and seasonally adjusted other checkable deposits at commercial banks.


Announcements 259

Monthly seasonal factors used to construct M2 and M3, January 1998-March 2000

Year and month

1998—January . . .February ..MarchAprilMayJuneJulyAugustSeptember .October ..November .December .

1999—January . . .February ..MarchAprilMayJuneJulyAugustSeptember .October . . .November .December .

2000—January . . .February ..March

Savings andMMDAdeposits'

.9956

.99601.00711.01161.00041.00281.0011.9999.9953.9933.9972.9974

.9959

.99681.00801.01291.00101.00281.0007.9993.9946.9927.9968.9974

.9960

.99721.0083

Small-denominationtime deposits'

1.00091.00201.00131.0004.9985.9985.9999.9994.9993

1.00091.0003.9990

1.00111.00221.00141.0002.9980.9978.9997.9993.9995

1.00121.0006.9991

1.00121.00221.0014

Large-denominationtime deposits1

Money market mutual funds

.9765

.99191.0067.9999

1.00991.0085.9996

1.00061.00091.00631.0040.9933

.9749

.99151.00851.00141.01101.0103.9995

1.00041.00081.00521.0032.9925

.9740

.99131.0095

In M2 In M3 only

1.00271.00801.01701.0130.9841.9856.9898

1.00201.0008.9980.9990.9999

1.00231.00861.01781.0134.9843.9849.9884

1.00111.0013.9986.9994.9997

1.00231.00901.0178

1.02551.03311.0178.9960.9862.9863.9791.9866.9807.9923

1.00211.0136

1.02771.03291.0165.9967.9884.9863.9769.9849.9788.9926

1.00371.0140

1.02881.03331.0157

RPs

1.0024.9988

1.00571.00781.02231.0033.9915.9951.9968.997'I

1.0017.9754

1.0048.9985

1.00881.00941.0219.9994.9911.9941.9957.9954

1.0029.9771

1.0060.9979

1.0104

Eurodollars

1.03371.0178.9947.9884.9952.9831.9769.9899.9916.0051.0027.0251

.0344

.0180

.9934

.9860

.9929

.9802

.9762

.9914

.99271.00511.00461.0277

1.03511.0175.9927

1. Seasonal factors are applied to deposits data at both commercial banks and thrift institutions.

3. Weekly seasonal factors used to construct Ml, December 7, 1998—April 3, 2000

Week ending

1998—December 7142128

1999—January 4 . .111825

February 181522 '.

March 181521

29

April 5121976

May 310172431

142128

July 5121926

Currency

1.00541.00651 01191.0203

1.01081.0033.9993.9942

.9930

.99941.0000.9963

.99531.0016.99979984.9967

1.00171.0028.9981.9946

.99591 0006.9968.9972.9954

I 0007.99939975.9963

1.00561.0032.9993.9968

Nonbank travelerschecks

1.02311.02181 02061.0193

1.01801.02031.02261.0248

1.02711.02571.02421.0228

1.02131.01921.01711 01501.0129

1.01081.01291.01501.0170

1.01911 01571.01231.00891.0056

I (X)I3.99719929.9887

.9846

.9739

.9635

.9533

Demand deposits

1.0156.0222.0465.0519

.0897

.0246

.0031

.9830

.9945

.9804

.9812

.9725

.9895

.9822

.99149741.9825

1.01051.0088.0167.9783

.9959

.9761

.9864

.96321.0011

.98941.00439783.9946

1.0365.9973.9960.9786

Other checkable deposits1

Total

1.0036.99121 00601.0133

1.04341.01431.0073.9991

1.0055.9960.9878.9909

1.00311.0013.99619990

1.0097

1.02351.01931.03691.0193

1.0166.9974.9880.98331.0007

.9997

.9961

.9947

.9992

1.0088.9917.9880.9866

At banks

.9931

.98831 00871.0232

1.04491.01771.01311.0108

1.0156.9991.9899.9988

1.0080.9964.99441 00161.0143

1.01331.01341.03701.0232

1.0098.9908.9886.98941.0033

.9935

.9916

.99671.0044

.9985

.9860

.9873

.9902



3. Weekly seasonal factors used to construct Ml, December 7, 1998-April 3, 2000—Continued

Week ending

1999—August 2 .9

16 ..2330

132027

111825

November I8

15 ..2229

13 ..2027 . . .

2000—January 310172431

February 7142128

132027

April 3

Currency

.99751.00371.0002.9967.9936

1.0017.9991.99609942

.99751.0022.9993.9967

.9971100361.00191.000510041

1.00621.00761.01261.0201

1.01101.0033.9991.9940.9922

.99871.0002.99729955

1.001710002.99839964

1.0016

Nonbank travelerschecks

.9434

.9497

.9561

.96269692

.9760

.9769

.97799789

.9799

.9847

.9896

.9945

.99951 00401.00871.01331 0180

1.02281.02101.01931.0176

1.01581.01841.02111.02381.0264

1.02531.02421.02311 0219

1.02081 01851.01621.0139

1.0116

Demand deposits

1.0148.9884.9970.9846

1 0023

.99381.0009.99269874

1.0159.9834

1.0007.9865

1.01659910

1.0059.9984

1 0386

1.01031 01941.04621.0554

1.08911.01601.0054

99111.0013

.9822

.9795

.97029882

.98469960.98269752

1.0092

Other checkable deposits'

Total At banks

1.0041 1.0024.9902 .9841.9850 .9823.9846 .98739952 .9985

.9964 .9876

.9916 .9879

.9904 .99429893 .9947

1.0022 .9956.9861 .9809.9884 .9879.9870 .9925

1.0052 1.00579962 .9908.9932 .9904.9925 .9969

10039 1.0052

1.0023 .99239920 .9895

1.00451.0132

1.04271.01551.0082

99951.0058

.9954

.9874

.99001 0020

.0074

.0209

.0454

.0166

.0137

.0118

.0161

.9989

.9890

.99751.0072

1.0010 .99719969 .9962

1.0001 1.00351 0103 1.0150

1.0232 1.0140

1. Seasonally adjusted other checkable deposits at thrift institutions arederived as the difference between total other checkable deposits, seasonally

adjusted, and seasonally adjusted other checkable deposits at commercial banks.

4. Weekly seasonal factors used to construct M2 and M3, December 7, 1998-April 3, 2000

Week ending

1998—December 7142128

1999—January 4

1825

February 18

1522

March 18

152229

April 5121926

Savings andMMDAdeposits'


Large-denominationtime deposits'

Money market mutual funds

In M2 In M3 onlyRPs

1.0137 1.0002 1.0036 1.0017 1.02191.0068 .9997 1.0025 1.0054 1.0378.9925 .9988 .9925 1.0019 1.0090.9792 .9977 .9834 .9970 1.0054

.9927 .9982 .9735 .9854 .96851.0096 1.0006 .9773 1.0027 1.03191.0048 1.0016 .9741 1.0076 1.0383.9855 1.0019 .9735 1.0057 1.0440

.9839 1.0021 .9756 1.0024 1.02421.0074 1.0024 .9814 1.0058 1.03271.0012 1.0024 .9922 1.0070 1.0341.9885 1.0022 .9942 1.0113 1.0352

.9913 1.0019 1.0017 1.0114 1.03051.0197 1.0020 1.0068 1.0207 1.02621.0164 1.0016 1.0105 1.0194 1.02311.0039 1.0011 1.0086 1.0174 1.0169.9958 1.0008 1.0092 1.0149 1.0037

1.0273 1.0013 1.0075 1.0171 .99721.0299 1.0012 1.0035 1.0298 1.01831.0156 1.0002 .9986 1.0196 .9938.9886 .9993 .9960 1.0047 .9860

Eurodollars

.9910 1.0180

.9852 1.0294

.9738 1.0204

.9592 1.0307

.9586 1.0292

.9979 1.0202

.0096 1.0337

.0189 1.0434

.0184 1.0372

.0115 1.0205

.0011 1.0203

.9892 1.0127

.9883 1.0156

.9991 .9915

.0100 .9930

.0178 .9908

.0120 .9960

.0058 .9910

.0073 .9829

.0072 .9763

.0097 .9918


Announcements 261

4. Weekly seasonal factors used to construct M2 and M3, December 7, 1998-April 3, 2000—Continued

Week endingSavings and

MMDAdeposits'


Large-denominationtime deposits'

Money marke

In M2

.9847

.9842

.9813

.9864

.9852

.9889

.9868

.9844

.9806

.9806

.9909

.9897

.9908

.9878

.99731.00221.00351.0045

1.00591.00851.0030.9946

.9867

.99591.00191.0036

1.0001.9999.99881.0020.9965

1.00311.00591.0031.9961

.98441.00111.00801.00551.0022

1.00571.00731.01101.0105

1.01871.02051.01811.0154

mutual funds

In M3 onlyRPs

.9826 1.0208

.9921

.9900

.9881

.9859

.9956

.9936

.0262

.0224

.0200

.0194

.0131

.0042.9799 .9950.9801 .9887

.9734 .9889

.9826 .9859

.9759 .9906

.9796 .9951

.9702 .9957

.9848 .9979

.9855 .9963

.9890 .9873

.9843 .9941

.9869 .9966

.9859 .9975

.9755 .9970

.9727 .9941

.9679 .9900

.9894 .9898

.9946 .9917

.9991 .9994

1.0025 1.0051.9919 1.00621.0017 1.00561.0069 1.00441.0121 .9973

1.0194 .98731.0331 .97971.0153 .97471.0110 .9692

.9758 .97541.0286 .99991.0383 1.01091.0440 .01291.0267 1.0134

1.0324 1.00701.0345 1.00151.0356 .99111.0316 .9916

1.0272 1.00071.0239 1.00991.0184 1.01731.0059 1.0148

Eurodollars

.9918

.9803

.98641.00201.0033

.9884

.9810

.9737

.9799

.9731

.9734

.9718

.9806

.9831

.9783

.9831

.99631.0095

.9952

.9903

.9890

.9950

.99611.00231.00361.0092

1.0110.9987.99891.00281.0155

1.01521.02471.02501.0351

1.0433.0359.0350.0344.0314

.0173

.0178

.0168

.0210

.9972

.9936

.9879

.9929

1999—May

June

July

August

310172431

7142128

5121926

2

9162330

October 4111825

February 7 . .14 . .21 . .28 . .

.99681.00861.0036.9940.9947

1.02011.0155.9987.9825

1.01501.0108.9995.9848

.99021.01641.0084.9907.9813

September 6132027

.0170,0107

November 18

152229

December 6132027

2000—January 310172431

March 6132027

.9674

.9953

.0058

.9977

.9804

.9782

.0119

.0100

.9897

.9777

.0138

.0086

.9933

.9810

.9916

.0073

.0036

.9858

.9843

.0063

.0015

.9900

.9918

.0162

.0129

.0016

.9952

April 3 1.0258

.9990

.9987

.9981

.9975

.9972

.9976

.9977

.9975

.9979

.99961.0001.9999.9995

.9994

.9997

.9994

.9992

.9990

.9992

.9992

.9992

.9994

.0012

.0020

.0013

.0010

.0005

.0008

.00071.00051.0003

1.0003.9999.9990.9979

.9985

.0010

.0016

.0015

.0017

.0024

.0024

.0022

.0020

.0020

.0017

.0013

.0008

1.0013

1.00461.01091.01161.01191.0121

1.01591.01641.00951.0043

.9938

.99631.00041.0028

1.00411.0037.9982

1.0002.9983

1.00021.00201.0015.9994

1.00121.01061.00721.0046

.99971.00301.00401.00191.0041

1.00441.0043.9930.9827

.9705

.9772

.9743

.9729

.9731

.9795

.9903

.99251.0004

1.00711.01161.00981.0099

1.0079 1.0157 .9971 1.0059 .9923

1. Seasonal factors are applied to deposits data at both commercial banks and thrift institutions.


Legal Developments

263

FINAL RULE — AMENDMENTS TO RISK-BASEDCAPITAL STANDARDS

The Office of the Comptroller of the Currency ("OCC"),the Board of Governors of the Federal Reserve System("Board"), the Federal Deposit Insurance Corporation("FDIC"), and the Office of Thrift Supervision ("OTS")(collectively, "the agencies"), are amending 12 C.F.R.Parts 3, 208, 325, and 567, their respective risk-based andleverage capital standards for banks and thrifts (institu-tions).1 This final rule represents a significant step inimplementing section 303 of the Riegle Community Devel-opment and Regulatory Improvement Act of 1994, whichrequires the agencies to work jointly to make uniform theirregulations and guidelines implementing common statu-tory or supervisory policies. The intended eifect of thisfinal rule is to make the risk-based capital treatments forconstruction loans on presold residential properties, realestate loans secured by junior liens on 1- to 4-familyresidential properties, and investments in mutual fundsconsistent among the agencies. It is also intended to sim-plify and make uniform the agencies' Tier 1 leveragecapital standards.

Effective April 1, 1999, 12 C.F.R. Parts 3, 208, 325, and567 are amended as follows:

Part 3 — Minimum Capital Ratios; Issuance ofDirectives

1. The authority citation for Part 3 continues to read asfollows:

Authority: 12U.S.C. 93a, 161, 1818, 1828(n), 1828 note,183In note, 1835, 3907 and 3909.

2. In section 3.6, paragraph (c) is revised to read asfollows:

Section 3.6 Minimum capital ratios.

* * * * *

(c) Additional leverage ratio requirement. An institutionoperating at or near the level in paragraph (b) of thissection should have well-diversified risks, including noundue interest rate risk exposure; excellent control sys-

1. An amended risk-based capital standard for bank holding compa-nies is included in a separate Board notice; references to "institu-tions" in this final rule generally do not apply to bank holdingcompanies.

terns; good earnings; high asset quality; high liquidity; andwell managed on- and off-balance sheet activities; and ingeneral be considered a strong banking organization, ratedcomposite 1 under the Uniform Financial Institutions Rat-ing System (CAMELS) rating system of banks. For all butthe most highly-rated banks meeting the conditions setforth in this paragraph (c), the minimum Tier 1 leverageratio is 4 percent. In all cases, banking institutions shouldhold capital commensurate with the level and nature of allrisks.

3. In Appendix A to part 3, section 3, the second undesig-nated paragraph and paragraphs (a)(3)(iii) and (a)(3)(iv)introductory text are revised to read as follows:

Appendix A to Part 3 — Risk-Based CapitalGuidelines

Section 3. Risk Categories/Weights for On-BalanceSheet Assets and Off-Balance Sheet Items

Some of the assets on a bank's balance sheet may representan indirect holding of a pool of assets, e.g., mutual funds,that encompasses more than one risk weight within thepool. In those situations, the bank may assign the asset tothe risk category applicable to the highest risk-weightedasset that pool is permitted to hold pursuant to its statedinvestment objectives in the fund's prospectus. Alterna-tively, the bank may assign the asset on a pro rata basis todifferent risk categories according to the investment limitsin the fund's prospectus. In either case, the minimum riskweight that may be assigned to such a pool is 20 percent. Ifa bank assigns the asset on a pro rata basis, and the sum ofthe investment limits in the fund's prospectus exceeds100 percent, the bank must assign the highest pro rataamounts of its total investment to the higher risk category.If, in order to maintain a necessary degree of liquidity, thefund is permitted to hold an insignificant amount of itsassets in short-term, highly-liquid securities of superiorcredit quality (that do not qualify for a preferential riskweight), such securities generally will not be taken intoaccount in determining the risk category into which thebank's holding in the overall pool should be assigned. Theprudent use of hedging instruments by a fund to reduce therisk of its assets will not increase the risk weighting of theinvestment in that fund above the 20 percent category.However, if a fund engages in any activities that are



deemed to be speculative in nature or has any other charac-teristics that are inconsistent with the preferential riskweighting assigned to the fund's assets, the bank's invest-ment in the fund will be assigned to the 100 percent riskcategory. More detail on the treatment of mortgage-backedsecurities is provided in section 3(a)(3)(vi) of this Appen-dix A.

(a)* * *(3)* * *

(iii) Loans secured by first mortgages on one-to-fourfamily residential properties, either owner-occupied or rented, provided that such loans arenot otherwise 90 days or more past due, or onnonaccrual or restructured. It is presumed thatsuch loans will meet prudent underwriting stan-dards. If a bank holds a first lien and junior lienon a one-to-four family residential property andno other party holds an intervening lien, thetransaction is treated as a single loan secured bya first lien for the purposes of both determiningthe loan-to-value ratio and assigning a riskweight to the transaction. Furthermore, residen-tial property loans made for the purpose of con-struction financing are assigned to the 100 per-cent risk category of section 3(a)(4) of thisAppendix A; however, these loans may be in-cluded in the 50 percent risk category of thissection 3(a)(3) of this Appendix A if they aresubject to a legally binding sales contract andsatisfy the requirements of section 3(a)(3)(iv) ofthis Appendix A.

(iv) Loans to residential real estate builders for one-to-four family residential property construction,if the bank obtains sufficient documentationdemonstrating that the buyer of the home intendsto purchase the home (i.e., a legally bindingwritten sales contract) and has the ability toobtain a mortgage loan sufficient to purchase thehome (i.e., a firm written commitment for per-manent financing of the home upon completion),subject to the following additional criteria:

Part 208 — Membership of State BankingInstitutions in the Federal Reserve System(Regulation H)

1. The authority citation for Part 208 is revised to read asfollows:

Authority: 12 U.S.C. 24, 36, 92a, 93a, 248(a), 248(c), 321-338a, 371d, 461, 481-186, 601, 611, 1814, 1816, 1818,1820(d), 1823(j), 1828(o), 1831o, 1831p-l, 1831r-l,1835a, 1882, 2901-2907, 3105, 3310, 3331-3351, and3906-3909; 15 U.S.C. 78b, 781(b), 781(g), 781(i), 78o-

4(c)(5), 78q, 78q-l, and 78w; 31 U.S.C. 5318; 42 U.S.C.4012a, 4104a, 4104b, 4106, and 4128.

2. In Appendix A to Part 208, section III. A., footnote 21 isrevised to read as follows:

Appendix A to Part 208 - Capital AdequacyGuidelines for State Member Banks: Risk-BasedMeasure

III. * * *A * * *2I

3. In Appendix A to part 208, section II1.C.3., footnote 34is revised to read as follows:

* * *Q * * *

3 * * * 34

4. In Appendix A to Part 208, section III.C.3. is amendedby adding a new sentence to the end of the first paragraphof footnote 35 to read as follows:

21. An investment in shares of a fund whose portfolio consistsprimarily of various securities or money market instruments that, ifheld separately, would be assigned to different risk categories, gener-ally is assigned to the risk category appropriate to the highest risk-weighted asset that the fund is permitted to hold in accordance withthe stated investment objectives set forth in its prospectus. A bankmay, at its option, assign a fund investment on a pro rata basis todifferent risk categories according to the investment limits in thefund's prospectus. In no case will an investment in shares in any fundbe assigned to a total risk weight less than 20 percent. If a bankchooses to assign a fund investment on a pro rata basis, and the sum ofthe investment limits of assets in the fund's prospectus exceeds100 percent, the bank must assign risk weights in descending order. If,in order to maintain a necessary degree of short-term liquidity, a fundis permitted to hold an insignificant amount of its assets in short-term,highly liquid securities of superior credit quality that do not qualifyfor a preferential risk weight, such securities generally will be disre-garded when determining the risk category into which the bank'sholding in the overall fund should be assigned. The prudent use ofhedging instruments by a fund to reduce the risk of its assets also willnot increase the risk weighting of the fund investment. For example,the use of hedging instruments by a fund to reduce the interest raterisk of its government bond portfolio will not increase the risk weightof that fund above the 20 percent category. Nonetheless, if a fundengages in any activities that appear speculative in nature or has anyother characteristics that are inconsistent with the preferential riskweighting assigned to the fund's assets, holdings in the fund will beassigned to the 100 percent risk category.

34. If a bank holds the first and junior lien(s) on a residentialproperty and no other party holds an intervening lien, the transactionis treated as a single loan secured by a first lien for the purposes ofdetermining the loan-to-value ratio and assigning a risk weight.


Legal Developments 265

III. * * *C. * * *

2 * * * 35

4. In Appendix B to Part 208, section Il.a. is revised to readas follows:

Appendix B to Part 208 — Capital AdequacyGuidelines for State Member Banks: Tier 1Leverage Measure

(2) For all but the most highly-rated institutionsmeeting the conditions set forth in paragraph(b)(l) of this section, the minimum leveragecapital requirement for a bank (or for an insureddepository institution making an application tothe FDIC) shall consist of a ratio of Tier 1capital to total assets of not less than 4 percent.

3. In Appendix A to part 325, section U.S., paragraph 1. isrevised to read as follows:

a. The minimum ratio of Tier 1 capital to total assets forstrong banking institutions (rated composite " 1 "under the UFIRS rating system of banks) is 3.0percent. For all other institutions, the minimum ratioof Tier 1 capital to total assets is 4.0 percent. Bank-ing institutions with supervisory, financial, opera-tional, or managerial weaknesses, as well as institu-tions that are anticipating or experiencing significantgrowth, are expected to maintain capital ratios wellabove the minimum levels. Moreover, higher capitalratios may be required for any banking institution ifwarranted by its particular circumstances or risk pro-file. In all cases, institutions should hold capitalcommensurate with the level and nature of the risks,including the volume and severity of problem loans,to which they are exposed.

Part 325 — Capital Maintenance


Authority: 12U.S.C. 1815(a), 1815(b), 1816, 1818(a),1818(b), 1818(c), 1818(t), 1819(Tenth), 1828(c), 1828(d),1828(i), 1828(n), 1828(o), 1831o, 1835, 3907, 3909, 4808;Pub. L. 102-233, 105 Stat. 1761, 1789, 1790 (12U.S.C.183 In note); Pub. L. 102-242, 105 Stat. 2236, 2355, 2386(12U.S.C. 1828 note).

2. Paragraph (b)(2) in 325.3 is revised to read as follows:Section 325.3 Minimum leverage capital requirement.

(b)*

35. * * * Such loans to builders will be considered prudentlyunderwritten only if the bank has obtained sufficient documentationthat the buyer of the home intends to purchase the home (i.e., has alegally binding written sales contract) and has the ability to obtaina mortgage loan sufficient to purchase the home (i.e., has a firmwritten commitment for permanent financing of the home upon com-pletion). * * *

Appendix A to Part 325 — Statement of Policy onRisk-Based Capital

B * * *1. Indirect Holdings of Assets. Some of the assets on

a bank's balance sheet may represent an indirectholding of a pool of assets; for example, mutualfunds. An investment in shares of a mutual fundwhose portfolio consists solely of various securi-ties or money market instruments that, if heldseparately, would be assigned to diiferent riskcategories, generally is assigned to the risk cate-gory appropriate to the highest risk-weighted as-set that the fund is permitted to hold in accor-dance with the stated investment objectives setforth in its prospectus. The bank may, at its op-tion, assign the investment on a pro rata basis todifferent risk categories according to the invest-ment limits in the fund's prospectus, but in nocase will indirect holdings through shares in anymutual fund be assigned to a risk weight less than20 percent. If the bank chooses to assign its in-vestment on a pro rata basis, and the sum of theinvestment limits in the fund's prospectus exceeds100 percent, the bank must assign risk weights indescending order. If, in order to maintain a neces-sary degree of short-term liquidity, a fund is per-mitted to hold an insignificant amount of its assetsin short- term, highly liquid securities of superiorcredit quality that do not qualify for a preferentialrisk weight, such securities will generally be dis-regarded in determining the risk category to whichthe bank's holdings in the overall fund should beassigned. The prudent use of hedging instrumentsby a mutual fund to reduce the risk of its assetswill not increase the risk weighting of the mutualfund investment. For example, the use of hedginginstruments by a mutual fund to reduce the inter-est rate risk of its government bond portfolio willnot increase the risk weight of that fund above the20 percent category. Nonetheless, if the fund en-gages in any activities that appear speculative innature or has any other characteristics that areinconsistent with the preferential risk weighting



assigned to the fund's assets, holdings in the fundwill be assigned to the 100 percent risk category.

4. In Appendix A to Part 325, section II.C, footnotenumber 26 is revised to read as follows:

II. * * *Q * * * 26 * * *

Part 567 — Capital


Authority: 12 U.S.C. 1462,1462a, 1463, 1464, 1467a, 1828(note).

2. Section 567.1 is amended by adding a new sentencefollowing the third sentence in the definition of qualifyingmortgage loan, revising paragraphs (l)(ii) and (l)(iii) intro-ductory text in the definition of qualifying residential con-struction loan and adding the definitions of Tier 1 capitaland Tier 2 capital as follows:

Section 567.1 — Definitions.

* * * * *

Qualifying mortgage loan. * * * If a savings associationholds the first and junior lien(s) on a residential propertyand no other party holds an intervening lien, the transactionis treated as a single loan secured by a first lien for thepurposes of determining the loan-to-value ratio and theappropriate risk weight under section 567.6(a).

* * * * *

Qualifying residential construction loan.

( 1 ) * * *(ii) The residence being constructed must be a \-4

family residence sold to a home purchaser;(iii) The lending savings association must obtain

sufficient documentation from a permanentlender (which may be the construction lender)demonstrating that:

Tier 1 capital. The term Tier 1 capital means core capitalas computed in accordance with section 567.5(a) of thispart. Tier 2 capital. The term Tier 2 capital means supple-mentary capital as computed in accordance with section567.5 of this part.

3. Section 567.2(a)(2)(ii) is revised to read as follows:

Section 567.2 — Minimum regulatory capitalrequirement.

(a)* * *(2) Leverage ratio requirement. * * *

(ii) A savings association must satisfy this require-ment with core capital as defined in section567.5(a) of this part.

* * * * *

26. If a bank holds the first and junior lien(s) on a residentialproperty and no other party holds an intervening lien, the transactionsare treated as a single loan secured by a first lien for purposes ofdetermining the loan-to-value ratio and assigning a risk weight.

4. Section 567.6(a)(l)(vi) is revised to read as follows:

Section 567.6 Risk-based capital credit risk-weightcategories.

(a)* * *(1)***

(vi) Indirect ownership interests in pools of assets.Assets representing an indirect holding of a poolof assets, e.g., mutual funds, are assigned torisk-weight categories under this section basedupon the risk weight that would be assigned tothe assets in the portfolio of the pool. An invest-ment in shares of a mutual fund whose portfolioconsists primarily of various securities or moneymarket instruments that, if held separately,would be assigned to different risk-weight cate-gories, generally is assigned to the risk-weightcategory appropriate to the highest risk-weighted asset that the fund is permitted to holdin accordance with the investment objectives setforth in its prospectus. The savings associationmay, at its option, assign the investment on apro rata basis to different risk-weight categoriesaccording to the investment limits in its pro-spectus. In no case will an investment in sharesin any such fund be assigned to a total riskweight less than 20 percent. If the savings asso-ciation chooses to assign investments on a prorata basis, and the sum of the investment limitsof assets in the fund's prospectus exceeds100 percent, the savings association must assignthe highest pro rata amounts of its total invest-ment to the higher risk categories. If, in order tomaintain a necessary degree of short-term li-quidity, a fund is permitted to hold an insignifi-cant amount of its assets in short-term, highlyliquid securities of superior credit quality thatdo not qualify for a preferential risk weight,such securities will generally be disregarded indetermining the risk-weight category into whichthe savings association's holding in the overallfund should be assigned. The prudent use ofhedging instruments by a mutual fund to reducethe risk of its assets will not increase the riskweighting of the mutual fund investment. For



example, the use of hedging instruments by amutual fund to reduce the interest rate risk of itsgovernment bond portfolio will not increase therisk weight of that fund above the 20 percentcategory. Nonetheless, if the fund engages inany activities that appear speculative in natureor has any other characteristics that are inconsis-tent with the preferential risk-weighting as-signed to the fund's assets, holdings in the fundwill be assigned to the 100 percent risk-weightcategory.

5. Section 567.8 is revised to read as follows:

Section 567.8 — Leverage ratio.

(a) The minimum leverage capital requirement for a sav-ings association assigned a composite rating of 1, as de-fined in section 516.3 of this chapter, shall consist of a ratioof core capital to adjusted total assets of 3 percent. Thesegenerally are strong associations that are not anticipatingor experiencing significant growth and have well-diversified risks, including no undue interest rate risk expo-sure, excellent asset quality, high liquidity, and good earn-ings.(b) For all savings associations not meeting the conditionsset forth in paragraph (a) of this section, the minimumleverage capital requirement shall consist of a ratio of corecapital to adjusted total assets of 4 percent. Higher capitalratios may be required if warranted by the particular cir-cumstances or risk profiles of an individual savings associ-ation. In all cases, savings associations should hold capitalcommensurate with the level and nature of all risks, includ-ing the volume and severity of problem loans, to whichthey are exposed.

FINAL RULE—AMENDMENT TO REGULATION Y

The Board of Governors of the Federal Reserve System(Board) is amending 12C.F.R. Pan 225, its Regulation Y(Risk-Based Capital Standards; Construction Loans on Pre-sold Residential Properties; Junior Liens on 1- to 4-FamilyResidential Properties; and Investments in Mutual Funds).The intended effect of this final rule is to keep the Board'sbank holding company risk-based capital standards forconstruction loans on presold residential properties, realestate loans secured by junior liens on 1- to 4-familyresidential properties, and investments in mutual fundsconsistent with the risk-based capital standards for banksand thrifts.

Effective April 1, 1999, 12C.F.R. Part 225 is amendedas follows:

Part 225 — Bank Holding Companies and Changein Bank Control (Regluation Y)


Authority: 12U.S.C. 1817(j)(13). 1818, 1828(o). 1831i,1831p-l, I843(c)(8), 1844(b), 1972(1), 3106, 3108, 3310,3331-3351,3907, and 3909.

2. In Appendix A to Part 225, section III.A., footnote 24 isrevised to read as follows:

Appendix A to Part 225 — Capital Adequacy Guidelinesfor Bank Holding Companies: Risk-Based Measure

III. * * *^ * * * 2*

* * * * *

* * * *3. In Appendix A to Part 225, section ITI.C.3. footnote 37 isrevised to read as follows:

* * * * *III. * * *

Q ***J * * * 37

4. In Appendix A to Part 225, section III.C.3. is amendedby adding a new sentence to the end of footnote 38 to readas follows:

24. An investment in shares of a fund whose portfolio consistsprimarily of various securities or money market instruments that, ifheld separately, would be assigned to different risk categories, gener-ally is assigned to the risk category appropriate to the highest risk-weighted asset that the fund is permitted to hold in accordance withthe stated investment objectives set forth in the prospectus. An organi-zation may, at its option, assign a fund investment on a pro rata basisto different risk categories according to the investment limits in thefund's prospectus. In no case will an investment in shares in any fundbe assigned to a total risk weight of less than 20 percent. If anorganization chooses to assign a fund investment on a pro rata basis,and the sum of the investment limits of assets in the fund's prospectusexceeds 100 percent, the organization must assign risk weights indescending order. If. in order to maintain a necessary degree ofshort-term liquidity, a fund is permitted to hold an insignificantamount of its assets in short-term, highly liquid securities of superiorcredit quality that do not qualify for a preferential risk weight, suchsecurities generally will be disregarded when determining the riskcategory into which the organization's holding in the overall fundshould be assigned. The prudent use of hedging instruments by a fundto reduce the risk of its assets will not increase the risk weighting ofthe fund investment. For example, the use of hedging instruments by afund to reduce the interest rate risk of its government bond portfoliowill not increase the risk weight of that fund above the 20 percentcategory. Nonetheless, if a fund engages in any activities that appearspeculative in nature or has any other characteristics that are inconsis-tent with the preferential risk weighting assigned to the fund's assets,holdings in the fund will be assigned to the 100 percent risk category.

37. If a banking organization holds the first and junior lien(s) on aresidential property and no other party holds an intervening lien, thetransaction is treated as a single loan secured by a first lien for thepurposes of determining the loan-to-value ratio and assigning a riskweight.


268 Federal Reserve Bulletin • April

III. * * *C * * *

3 * * * 38

ORDERS ISSUED UNDER BANK HOLDING COMPANYACT

Orders Issued Under Section 3 of the Bank HoldingCompany Act

First Banks, Inc.Creve Coeur, Missouri

First Banks America, Inc.Clayton, Missouri

Order Approving Acquisition of a Bank HoldingCompany

First Banks, Inc., and First Banks America, Inc. (collective-ly, "First Banks"), bank holding companies within themeaning of the Bank Holding Company Act ("BHC Act"),have requested the Board's approval under section 3 of theBHC Act (12 U.S.C. § 1842) to acquire Redwood Bancorp("Redwood"), and thereby indirectly acquire Redwood'ssubsidiary bank, Redwood Bank ("Bank"), both inSan Francisco, California.

Notice of the proposal, affording interested persons anopportunity to submit comments, has been published(63 Federal Register 55,389 (1998)). The time for filingcomments has expired, and the Board has considered theproposal and all comments received in light of the factorsset forth in section 3 of the BHC Act.

First Banks, with total consolidated assets of approxi-mately $4.3 billion, operates subsidiary banks in Missouri,California and Texas.1 First Banks is the 37th largestcommercial banking organization in California, controllingdeposits of $974.4 million, representing less than 1 percentof total deposits in commercial banking organizations inthe state. Redwood is the 74th largest commercial bankingorganization in California, controlling deposits of$384 million, representing less than 1 percent of totaldeposits in commercial banking organizations in the state.On consummation of the proposal. First Banks wouldbecome the 28th largest commercial banking organizationin California, controlling deposits of $1.36 billion, repre-senting less than 1 percent of total deposits in the state.

38. * * * Such loans to builders will be considered prudentlyunderwritten only if the bank holding company has obtained sufficientdocumentation that the buyer of the home intends to purchase thehome (i.e., has a legally binding written sales contract) and has theability to obtain a mortgage loan sufficient to purchase the home (i.e.,has a firm written commitment for permanent financing of the homeupon completion).

Interstate Analysis

Section 3(d) of the BHC Act allows the Board to approvean application by a bank holding company to acquirecontrol of a bank located in a state other than the homestate of such bank holding company if certain conditionsare met.2 For purposes of the BHC Act, the home state ofFirst Banks is Missouri, and First Banks proposes to ac-quire a bank in California. All conditions for an interstateacquisition enumerated in section 3(d) are met in this case.3

In light of all the facts of record, the Board is permitted toapprove this proposal under section 3(d) of the BHC Act.

Competitive Factor

Section 3 of the BHC Act prohibits the Board from approv-ing a proposal that would result in a monopoly, or wouldbe in furtherance of any attempt to monopolize the busi-ness of banking.4 The BHC Act also prohibits the Boardfrom approving a proposal that would substantially lessencompetition in any relevant banking market, unless theBoard finds that the anticompetitive effects of the proposalin that banking market are clearly outweighed in the publicinterest by the probable effect of the proposal in meetingthe convenience and needs of the community to be served.5

First Banks and Redwood compete directly in theSan Francisco-Oakland-San Jose banking market.6 TheBoard has carefully reviewed the competitive effects ofthe proposal in this banking market in light of all the factsof record, including the characteristics of the market andthe projected increase in the concentration of total depositsin depository institutions7 in the market ("market depos-

1. All banking data are as of June 30, 1997.

2. 12 U.S.C. § 1842(d). A bank holding company's home state isthat state in which the operations of the bank holding company'sbanking subsidiaries were principally conducted on July 1, 1966, orthe date on which the company became a bank holding company,whichever is later.

3. 12 U.S.C. §§ 1842(d)(l)(A) and (B) and 1842(d)(2)(A) and (B).First Banks meets the capital and managerial requirements establishedby applicable law. On consummation of the proposal, First Banks andits affiliates would control less than 10 percent of the total amount ofdeposits of insured depository institutions in the United States, andless than 30 percent of the total amount of deposits in California. SeeCal. Financial Code § 3753 (West 1999). All other requirements ofsection 3(d) of the BHC Act also would be met on consummation ofthe proposal.

4. 12 U.S.C. § 1842(c)(l)(A).5. 12 U.S.C. § 1842(c)(l)(B).6. The San Francisco-Oakland-San Jose banking market is approxi-

mated by the San Francisco-Oakland-San Jose Ranally MetropolitanArea, including the city of Pescardero.

7. For this purpose, depository institution includes all insured banks,savings banks, and saving associations. Market share data are basedon calculations that include the deposits of thrift institutions at50 percent. The Board previously has indicated that thrift institutionshave become, or have the potential to become, significant competitorsof commercial banks. See, e.g., Midwest Financial Croup, 75 FederalResen'e Bulletin 386 (1989); National City Corporation, 70 FederalReserve Bulletin 743 (1984). Thus, the Board has regularly includedthrift deposits in the calculation of market share on a 50-percentweighted basis. See, e.g., First Hawaiian, Inc., 77 Federal ReserveBulletin 52 (1991).



its") as measured by the Herfindahl-Hirschman Index("HHI") under the Department of Justice Merger Guide-lines ("DOJ Guidelines").8 Consummation of the proposalwould be consistent with the DOJ Guidelines and priorBoard precedent in the San Francisco-Oakland-San Josebanking market.9 The HHI would remain unchanged at1579. The DOJ has reviewed the proposal and advised theBoard that consummation of the proposal would not likelyhave a significantly adverse competitive effect in theSan Francisco-Oakland-San Jose banking market or anyother relevant market.

Based on these and all the facts of record, the Boardconcludes that consummation of the proposal would notresult in any significantly adverse effects on competitionor on the concentration of banking resources in theSan Francisco-Oakland-San Jose banking market, or in anyother relevant banking market, and that competitive factorsare consistent with approval of the proposal.

Financial, Managerial and Other Considerations

The BHC Act also requires the Board to consider thefinancial and managerial resources and future prospects ofthe companies and banks involved in the proposal, theconvenience and needs of the communities to be served,and certain supervisory factors. The Board has reviewedcarefully these factors in light of all the factors of record,including supervisory reports of examination assessing thefinancial and managerial resources of the organizations andconfidential financial information provided by First Banks.Based on these and all the other facts of record, the Boardconcludes that the financial and managerial resources andfuture prospects of First Banks, Redwood and their subsid-iary banks are consistent with approval, as are the othersupervisory factors that the Board must consider undersection 3 of the BHC Act.10

8. Under the DOJ Guidelines, 49 Federal Register 26,823 (1984), amarket in which the post-merger HHI is between 1000 and 1800 isconsidered to be moderately concentrated. The Department of Justice("DOJ") has informed the Board that a bank merger or acquisitiongenerally will not be challenged (in the absence of other factorsindicating anticompetitive effects) unless the post-merger HHI is atleast 1800 and the merger or acquisition increases the HHI by at least200 points. The DOJ has stated that the higher than normal HHIthresholds for screening bank mergers or acquisitions for anticompeti-tive effects implicitly recognize the competitive effects of limited-purpose lenders and other nondepository financial institutions.

9. On consummation of the proposal, First Banks would become the31st largest depository institution in the San Francisco-Oakland-San Jose banking market, controlling deposits of $205 million, repre-senting less than 1 percent of market deposits. The HHI would remainunchanged at 1579.

10. The Board has received a letter from a director of Bankrequesting an indefinite suspension of the acquisition. The directorstates that he was placed on the board of directors of Bank as arepresentative of the Republic of the Philippines (the "Philippines")in accordance with a consent order issued by a United States DistrictCourt. The director requested that the processing of the application besuspended until the appropriate authorities in the Philippines havereviewed the transaction. The Board has contacted the appropriate

In considering the convenience and needs factor, theBoard has reviewed the records of First Banks's subsidiarybanks and Bank under the Community Reinvestment Act("CRA").U The Board notes that First Banks does notintend to make any material changes in the products andservices provided by Bank. The Board has evaluated theconvenience and needs factor in light of examinations ofthe CRA performance records of First Banks's subsidiarybanks and Bank. Each of First Banks's subsidiary banksreceived a rating of "satisfactory" at its most recent exam-ination for CRA performance in 1998 from its federalsupervisory agency. Bank received a rating of "satisfacto-ry" at its most recent examination of CRA performance asof March 4, 1997, by the Federal Deposit Insurance Corpo-ration. Based on all the facts of record, the Board con-cludes that convenience and needs considerations, includ-ing the CRA performance records of the relevantinstitutions, are consistent with approval of the proposal.

Conclusion

Based on the foregoing, and in light of all the facts ofrecord the Board has determined that the applicationsshould be, and hereby, are approved. Approval of theapplications is specifically conditioned on compliance byFirst Banks with all the commitments made in connectionwith the proposal. For purposes of this order, the commit-ments and conditions referred to above shall be deemed tobe conditions imposed in writing by the Board in connec-tion with its findings and decision and, as such, may beenforced in proceedings under applicable law.

The acquisition of Redwood shall not be consummatedbefore the fifteenth calendar day after the effective date ofthe order, or later than three months after the effective dateof this order, unless such period is extended for good causeby the Board, or by the Federal Reserve Bank of St. Louisacting pursuant to delegated authority.

By order of the Board of Governors, effective Febru-ary 12, 1999.

Voting for this action: Chairman Greenspan, Vice Chair Rivlin, andGovernors Kelley, Meyer, Ferguson, and Gramlich.

ROBERT DEV. FRIERSONAssociate Secretary of the Board

The Bane CorporationBirmingham, Alabama

Order Approving the Acquisition of a SavingsAssociation

The Bane Corporation ("TBC"), a bank holding companywithin the meaning of the Bank Holding Company Act

authorities in the Philippines and has considered the director's com-ments in light of information provided by the Philippines government.

11. 12U.S.C. §2901 etseq.



("BHC Act"'), has requested the Board's approval undersection 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8))and section 225.24 of the Board's Regulation Y (12 C.F.R.225.24)) to merge with Emerald Coast Bancshares, Inc.and thereby acquire its wholly owned savings association.Emerald Coast Bank, both of Panama City Beach, Florida("Emerald") after that institution's conversion from astate-chartered savings bank to a federally chartered sav-ings association.1

Notice of the proposal, affording interested persons anopportunity to submit comments, has been published(63 Federal Register 68,768 (1998)). The time for filingcomments has expired, and the Board has considered theproposal and all comments received in light of the factorsset forth in section 4 of the BHC Act.

TBC currently operates one subsidiary bank in Alabama,with total consolidated assets of $104 million. TBC is the73rd largest commercial banking organization in Alabama,controlling approximately $93 million in deposits, repre-senting less than 1 percent of total deposits in commercialbanking organizations in the state ("state deposits").2 Em-erald is the 173rd largest depository institution in Florida,controlling $31 million in deposits, representing less than1 percent of state deposits.3 TCB and Emerald do notcompete in any relevant banking markets.

The Board previously has determined by regulation thatthe operation of a savings association by a bank holdingcompany is closely related to banking for purposes ofsection 4(c)(8) of the BHC Act.4 In making this determina-tion, the Board requires that savings associations acquiredby bank holding companies conform their direct and indi-rect activities to those permissible for bank holding compa-nies under section 4 of the BHC Act. TBC has committedto conform all of Emerald's activities to those permissibleunder section 4(c)(8) of the BHC Act and Regulation Y.

In order to approve the proposal, the Board must deter-mine that the proposed activities are a proper incident tobanking, that is, that the proposal "can reasonably beexpected to produce benefits to the public, such as greaterconvenience, increased competition, or gains in efficiency,that outweigh possible adverse effects, such as undue con-centration of resources, decreased or unfair competition,conflicts of interests, or unsound banking practices."5 Inassessing the balance of public benefits and adverse effectsof this proposal, the Board has considered comments sub-mitted by the Director of Banking of the Florida Depart-ment of Banking and Finance ("Director"). The Directorexpressed concern that TBC's proposal to convert Emerald

1. The conversion of Emerald from a bank to a savings associationwould occur before the merger. The Office of Thrift Supervision("OTS") approved the conversion of Emerald from a bank to asavings association on December 16, 1998.

2. Asset and deposit data, including rankings, are as of Septem-ber 30, 1998.

3. Deposit data and rankings are as of June 30, 1997. In this context,depository institutions include commercial banks, savings banks, andsavings associations.

4. 12 C.F.R. 225.28(b)(4).5. 12 U.S.C. § 1843(cj(8).

to a savings association and acquire it pursuant to section 4of the BHC Act was designed to evade Florida's interstatebanking statute, which requires a Florida bank to be inexistence and continuously operating for more than threeyears before it can be acquired by an out-of-state holdingcompany.6

The Board has reviewed the Director's comments inlight of the factors that the Board must consider undersection 4 of the BHC Act. The Board concludes that aviolation of law is a factor it must consider in determiningwhether a proposal under section 4(c)(8) would producenet public benefits. In this case, however, the Board doesnot believe that the acquisition of Emerald as a savingsassociation would result in a violation of law. Unlikesection 3 of the BHC Act, section 4 does not apply aminimum age limitation on the ability of out-of-state bankholding companies to acquire savings associations.7 Inaddition, once Emerald has converted to a savings associa-tion, the minimum operating requirement that applies tothe acquisition of banks under Florida state law does notapply. Moreover, TBC has stated that it plans to acquireand operate Emerald as a savings association, and that ithas no plans to convert Emerald back to a bank. TBC maynot operate Emerald as a bank without prior Board ap-proval under section 3 of the BHC Act and without meet-ing the requirements of section 3(d) of the Act. TBC hascommitted that it will maintain Emerald as a savingsassociation until August 31, 1999.

The Board also has considered the financial and manage-rial resources of TBC, its subsidiaries, and Emerald and theeffect the transaction would have on such resources in lightof all the facts of record.8 The Board has reviewed, amongother things, confidential reports of examination and othersupervisory information received from the appropriate su-pervisory authorities for the organizations. Based on all thefacts of record, the Board concludes that the financial andmanagerial resources of the organizations involved in thisproposal are consistent with approval.

The record indicates that consummation of the proposalwould produce benefits for consumers. TBC states that theproposed acquisition of Emerald would allow TBC to offera wider range of deposit accounts and loan products andwould result in improved automated services available toEmerald customers. In addition, the Board has recognizedthat there are public benefits to be derived from permittingcapital markets to operate so that banking organizationsmay make potentially profitable investments in nonbankingcompanies and allocate their resources in the manner theybelieve to be most efficient when such investments areconsistent, as in this case, with the relevant considerations

6. Fla. Stat. Ann. § 658.295(8)(a). Emerald began operations onAugust 30, 1996.

7. Section 3(d) of the BHC Act specifically authorizes a state toenact laws that limit the ability of an out-of-state bank holdingcompany to acquire a bank in that state by requiring that the bank tobe acquired be in existence for a minimum period of time, as long asthat period does not exceed five years. 12 U.S.C. § 1842(d).

8. See 12 C.F.R. 225.26.



under the BHC Act.9 The Board believes that the conductof the proposed activities within the framework establishedin Regulation Y is not likely to result in significantlyadverse effects, such as an undue concentration or re-sources, decreased or unfair competition, conflicts of inter-ests, or unsound banking practices that would outweigh thepublic benefits of the proposal, such as increased consumerconvenience. Accordingly, the Board has determined thatthe balance of factors considered under the proper incidentto banking standards of section 4(c)(8) of the BHC Act isconsistent with approval.

Conclusion

Based on the foregoing and all the facts of record, theBoard has determined that the notice should be, and herebyis, approved. The Board's approval of the proposal isspecifically conditioned on compliance by TBC with thecommitments made in connection with the notice. TheBoard's determination also is subject to all the conditionsin Regulation Y, including those in sections 225.7 and225.25(c) (12C.F.R. 225.7 and 225.25(c)), and to theBoard's authority to require such modification or termina-tion of the activities of a holding company or any of itssubsidiaries as the Board finds necessary to ensure compli-ance with, or to prevent evasion of, the provisions andpurposes of the BHC Act and the Board's regulations andorders issued thereunder. The commitments and conditionsrelied on by the Board in reaching this decision are deemedto be conditions imposed in writing by the Board in con-nection with its findings and decision, and, as such, may beenforced in proceedings under applicable law.

The transaction shall not be consummated later thanthree months after the effective date of this order, unlesssuch period is extended for good cause by the Board or bythe Federal Reserve Bank of Atlanta, acting pursuant todelegated authority.




BankAmerica CorporationCharlotte, North Carolina

BancWest CorporationHonolulu, Hawaii

BB&T CorporationWinston-Salem, North Carolina

First Union CorporationCharlotte, North Carolina

SunTrust Banks, Inc.Atlanta, Georgia

Wachovia CorporationWinston-Salem, North Carolina

Zions BancorporationSalt Lake City, Utah

Order Approving Notices to Conduct Certain DataProcessing Activities and Other Nonbanking Activities

BankAmerica Corporation, BancWest Corporation, BB&TCorporation, First Union Corporation, SunTrust Banks,Inc., Wachovia Corporation, and Zions Bancorporation(collectively, "Notificants"), bank holding companieswithin the meaning of the Bank Holding Company Act("BHC Act"), have requested the Board's approval undersection 4(c)(8) of the BHC Act (12 U.S.C. 1843(c)(8)) andsection 225.24 of the Board's Regulation Y (12C.F.R.225.24) to acquire and merge Honor Technologies, Inc.,Maitland, Florida, and Star Systems, Inc., San Diego, Cali-fornia, and to engage in providing data processing services,pursuant to section 225.28(b)(14) of Regulation Y(12 C.F.R. 225.28(b)(14)).' In addition, Notificants,through H&S, would engage in providing check verifica-tion services, in accordance with section 225.28(b)(2) ofRegulation Y (12 C.F.R. 225.28(b)(2)), and managementconsulting services related to the activities of H&S, inaccordance with section 225.28(b)(9) of Regulation Y(12C.F.R. 225.28(b)(9)).

Currently, Honor Technologies, Inc. operates two elec-tronic funds transfer ("EFT") networks under the servicenames HONOR and HONOR West (collectively,"HONOR"), and Star Systems, Inc. operates the Star EFTnetwork ("Star"). These EFT networks provide data pro-cessing and transmission services to financial institutionsand merchants that are members of their respective brandedautomated teller machine ("ATM") and point of sale("POS") networks.2 H&S would engage through HONORand Star in certain nonbanking activities related to theoperation of ATM and POS networks, including variousdata processing and transmission services, in accordance

9. See Bane One Corporation, 84 Federal Reserve Bulletin 553(1998).

1. Notificants would form a de novo company, H&S HoldingCompany, Maitland, Florida ("H&S"), that would indirectly acquireall the voting shares of the two companies to be acquired. Notificantsare shareholders or members of the companies to be acquired and,under the proposal, each would receive, directly or indirectly, morethan 5 percent of the voting shares of H&S.

2. In general, an ATM network is an arrangement whereby morethan one ATM and more than one depository institution (or thedepository records of such institutions) are connected by electronic ortelecommunications means to one or more computers, processors orswitches for the purpose of providing ATM services to retail custom-ers of the depository institutions. POS terminals are generally locatedin merchant establishments. POS terminals accept ATM or similarcards from retail customers and, using an ATM network or a parallelPOS-only network, provide access to a retail customer's account totransfer funds to a merchant's account.



with section 225.28(b)(14) of Regulation Y (12C.F.R.225.28(b)(14)).

Notice of the proposal, affording interested persons anopportunity to submit comments, has been published(63 Federal Register 67,693 and 70,131 (1998)). The timefor filing comments has expired, and the Board has consid-ered the notice and all comments received in light of thefactors set forth in section 4(c)(8) of the BHC Act. As insimilar cases, the Board also sought comments from theDepartment of Justice on the competitive effects of theproposal. The Department of Justice indicated that it hadno objection to consummation of the proposed transaction.

Notificants are large commercial banking organizationswith headquarters in Georgia, Hawaii, North Carolina, andUtah. Notificants each engage directly and through subsid-iaries in a broad range of banking and permissible non-banking activities in the United States.3

Section 4(c)(8) of the BHC Act provides that a bankholding company may, with Board approval, engage in anyactivity that the Board determines to be "so closely relatedto banking or managing and controlling banks as to be aproper incident thereto." The Board previously has deter-mined that all the activities proposed in the notice areclosely related to banking within the meaning of sec-tion 4(c)(8) of the BHC Act.4 Notificants would conductthe proposed activities in accordance with Regulation Yand previous Board decisions.5

The Board also must consider whether the performanceof the proposed activities by Notificants through H&S"can reasonably be expected to produce benefits to thepublic . . . that outweigh possible adverse effects, such asundue concentration of resources, decreased or unfair com-petition, conflicts of interests, or unsound banking prac-tices."6 As part of this review under section 4(c)(8) of theBHC Act, the Board considers the financial and managerialresources of Notificants, their subsidiaries, and any com-pany to be acquired and the effect of the proposal on thoseresources.7 Based on all the facts of record, includingreports of examination and other supervisory information,the Board concludes that financial and managerial consid-erations are consistent with approval of the proposal. Inaddition, there is no evidence in the record that the pro-posal would result in conflicts of interests or unsoundbanking practices.

3. Asset and deposit data for each Notificant are set forth in theAppendix.

4. See 12C.F.R. 225.28(b)(2), (9), and (14); 12C.F.R. 225.131(permissible consulting services); Barnett Banks of Florida, Inc.,65 Federal Reserve Bulletin 263 (1979) (check verification services);Compagnie Financiere de Paribas, 82 Federal Reserve Bulletin 348(1996) (fraud detection services); Bank of New York Company, Inc..80 Federal Reserve Bulletin 1107 (1994) ("InfiNet Order") (ATMnetwork services); Bane One Corporation , 81 Federal Reserve Bulle-tin 492 (1995) ("EPS Order") (ATM network services).

5. The Board notes that ATM activities must be conducted inaccordance with applicable federal and state laws, including applica-ble branching laws.

6. See 12U.S.C. 1843(c)(8).l.See 12 C.F.R. 225.26.

Competitive Considerations

The proposal would result in the combination of two EFTnetworks, one operating primarily in the mid-Atlantic andsoutheastern states and the other operating primarily in thewestern states.8 A number of other large regional networksand national networks that link financial institutions andlocal and regional networks nationwide would continue tooperate in these areas.

To determine whether a particular transaction is likely todecrease competition, the Board traditionally has consid-ered the area of effective competition between parties. Thearea of effective competition has been defined by referenceto the line of commerce or product market involved and ageographic market. In this case, the Board has carefullyconsidered the relevant product and geographic markets inwhich to analyze the competitive effects of the proposal inlight of all the facts of record, including information pro-vided by Notificants and the geographic scope of andservices provided by existing EFT networks and otherproviders of EFT services.

The Board previously has identified three distinct prod-ucts that are typically offered by EFT networks:

(1) Network access (access to an EFT network identi-fied by a common trademark or logo displayed onATMs, POS terminals, and access cards);

(2) Network services (operation of a "network switch"to receive and route electronic messages betweenATMs, POS terminals, and data processing facili-ties used by depository institutions to authorizeEFT transactions and the provision of "gateway"access to other networks); and

(3) ATM/POS processing (data processing and trans-mission used to drive ATMs and POS terminals,monitor their activity, authorize ATM and POStransactions, and reconcile accounts).9

HONOR provides all three services to its network mem-bers. Star directly provides only network access; a thirdparty provides network services and ATM/POS processing.Under the proposal, H&S would not acquire the facilitiesto provide network services or ATM/POS processing ser-vices to the Star network or any other network or the rightto provide these services. Accordingly, the relevant productmarket in which to examine the competitive effects of theproposal is the market for network access.

The Board previously has determined that the geo-graphic market for network access is an area significantlylarger than local banking markets and has considered themarket area of an EFT network to consist of regions

8. HONOR and Star are among the largest EFT regional networks inthe United States. Star has the largest number of ATMs, POS termi-nals, and EFT transactions per month, and HONOR has the secondlargest number of ATMs and EFT transactions per month and the thirdlargest number of POS terminals. HONOR has the largest number andStar has the seventh largest number of financial institutions participat-ing in a network. Sources: EFT Network Data Book (1999); BankNetwork News (September 25, 1998).

9. See EPS Order at 493-94.Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis


comprising several states.10 Based on all the facts of record,the Board believes that HONOR has a significant competi-tive presence in the mid-Atlantic and southeastern states(Alabama, Florida, Georgia, Maryland, North Carolina,South Carolina, Tennessee, Virginia, and the District ofColumbia) and, to a lesser extent, in Kansas and Missouri.Star's primary service area is located in the western UnitedStates (Arizona, California, Colorado, Hawaii, Idaho,Nevada, Oregon, Utah, and Washington). Thus, the pri-mary service areas for HONOR and Star do not overlap.

There are a number of areas outside these primary ser-vice areas in which HONOR and Star somewhat overlap inproviding network access. Changes in market concentra-tion in these other areas would not be significant, however,and in each area a number of other networks, includingother large regional networks, and third party processorswill continue to operate and to provide both direct andpotential competition for HONOR and Star." Nationalnetworks also offer an alternative to regional networks forsome financial institutions, particularly in the southeastregion served by HONOR, where relatively fewer financialinstitutions are members of any regional EFT network andnational networks appear to be increasing their competitivepresence.12

The Board also has considered the proposed operatingrules for HONOR and Star.13 The rules appear to facilitatecompetition and to ensure access to the network for alldepository institutions. For example, all depository institu-tions would be able to participate in HONOR and Star on anondiscriminatory basis, to join other regional networks,and to co-brand their cards and ATM terminals. Eachmember of the network would be able to set for itself thefees it charges its retail customers for ATM or POS transac-tions.14 The operating rules also would permit the use ofthird-party processors and unbranded subswitching oftransactions.15 The Board notes that transactions initiatedat an ATM in the HONOR or Star network and routedthrough a national network to another network would notbe required to pass through the HONOR or Star gateway.In addition, H&S's proposed corporate structure ensures

10. See EPS Order at 494.11. The Board also notes the rapid growth in recent years in the

volume of POS transactions, which serve as an alternative for certainATM transactions, and the presence of a number of competitors thatprovide POS network services across regional boundaries.

12. See Bamett Banks, Inc., 83 Federal Resent Bulletin 131,133 n.20 (1997) ("HONOR/Most Order"). In October 1998, Visabegan operations of its Visa Check II card, a debit card offeringissuers higher fees for POS transactions but prohibiting co-brandingwith other networks.

13. The Board previously has determined that ATM network operat-ing rules are an important consideration in assessing the competitiveimpact of a proposal under the section 4(c)(8) factors. See InfiNetOrder: EPS Order.

14. See HONOR/Most Order at 132.15. "Subswitching" refers to the routing of transactions between

members of the same regional network without accessing that net-work, and, therefore, without paying the network's switch fee. Typi-cally, this is accomplished by routing the transaction through a third-party processor that provides ATM processing services for bothnetwork members.

that its board of directors would represent a wide range ofinterests and that H&S's policymaking would not be domi-nated by the organizations with the largest shareholdings.16

The proposal, therefore, would provide services to Noti-ficants' subsidiary banks, other shareholders of H&S, andother financial institutions that participate in HONOR orStar under operating rules that would promote open accessto the network.17 Smaller financial institutions would havethe opportunity to provide their customers with greateraccess to their deposit accounts and thereby could competewith larger, multistate organizations for retail deposit fundswithout substantial investments in their own proprietaryATM networks. In addition, the operating rules of HONORand Star would promote competition between the HONORand Star networks and alternative providers of EFT-relatedservices, including national ATM and POS networks, otherregional networks, and third-party providers of EFTswitching and processing services, and thereby encourageprice and other competition for the services provided byHONOR and Star.

In this light, and based on all the facts of record, theBoard concludes that the proposal would not result inadverse effects such as undue concentration of resources orunfair competition. For these reasons, and based on all thefacts of record, the Board concludes that consummation ofthe proposal is not likely to have a significantly adverseeffect on competition in any relevant market.

Public Benefits

Section 4(c)(8) of the BHC Act requires that, in order toapprove a proposal, the Board must determine that thepublic benefits that could reasonably be expected from theproposal would outweigh potential adverse effects. This isa balancing process that takes into account the extent of thepotential for adverse effects, which, for the reasons indi-cated above, the Board does not believe to be significant inthis case.

Consumers would benefit from the added account avail-ability and convenience resulting from consummation ofthe proposal. In particular, an ATM network with a largenumber of financial institution members and that providesnetwork access at more locations over a broad geographi-cal area would have greater value to network cardholdersbecause they would have broader and more convenientaccess to their deposit accounts. In this case, the geo-graphic markets served by H&S would include all thesouthern United States and the Pacific northwest states and,accordingly, the proposal would enhance benefits to con-

16. The proposed bylaws of H&S provide that the board of directorswould consist of 30 members, and this number may not be changedexcept by the affirmative vote of two-thirds of the directors or share-holders. No more than one director may be an affiliate of or have anymaterial business relationship with any one shareholder, and votingfor directors is cumulative. No shareholder may hold more than19 percent of H&S voting shares. See also HONOR/Most Order at133 n.21.

17. See HONOR/Most Order at 132-33.



sumers in these areas, particularly as consumer travel in-creases and business activity continues to grow.18

In addition, H&S would offer services to all financialinstitutions, and smaller financial institutions would havethe opportunity to provide their customers with greateraccess to their deposit accounts. As noted, membership inthe H&S networks would enable smaller financial institu-tions to compete with larger, multistate organizations toretain deposit funds without having to make substantialinvestments in branch systems or their own proprietaryATM networks.

Consummation of the proposal also would result in otherpublic benefits. The proposal is expected to produce econ-omies of scale, for example, and to reduce average costsfor the combined networks.19 Members of each networkalso would benefit from the technical expertise and theexpanded research and development programs of the othernetwork. Star network members would have access to abroader array of products and services, including cardproduction and website design and maintenance. HONORnetwork members would benefit from the introduction of aservice provided by Star that permits bill payments bytelephone without the use of a personal identification num-ber.

For the foregoing reasons, and after careful consider-ation of all the facts of record, the Board has determinedthat consummation of the proposal can reasonably be ex-pected to produce public benefits that would outweigh anypossible adverse effects under the proper incident to bank-ing standard of section 4(c)(8) of the BHC Act.

Conclusion

Based on all the facts of record, the Board has determinedthat the notices should be, and hereby are, approved. TheBoard's approval is specifically conditioned on Notifi-cants' compliance with the commitments made in connec-tion with these notices and the conditions referred to in thisorder. The Board's determination also is subject to all theterms and conditions set forth in Regulation Y, includingthose in sections 225.7 and 225.25(c) (12 C.F.R. 225.7 and225.25(c)), and to the Board's authority to require modifi-cation or termination of the activities of a bank holdingcompany or any of its subsidiaries that the Board findsnecessary to ensure compliance with, or to prevent evasionof, the provisions and purposes of the BHC Act and theBoard's regulations and orders issued thereunder. For pur-poses of this action, the commitments and conditions shallbe deemed to be conditions imposed in writing by theBoard in connection with its findings and decision and, assuch, may be enforced in proceedings under applicablelaw.

This proposal shall not be consummated later than threemonths after the effective date of this order, unless suchperiod is extended for good cause by the Board, or theFederal Reserve Banks of Atlanta, Richmond or San Fran-cisco, acting pursuant to delegated authority.



ROBERT DEV. FRIERSON

Associate Secretary of the Board

Appendix

Asset and Deposit Data for Notificants1

BankAmerica Corporation, with approximately $594.7 bil-lion in total consolidated assets, is the second largestcommercial banking organization in the United States,controlling $287.6 billion in deposits. BankAmerica Cor-poration operates subsidiary banks in 23 states and theDistrict of Columbia. Bane West Corporation, with approx-imately $8.2 billion in total consolidated assets, is the63rd largest commercial banking organization in the UnitedStates, controlling $5.9 billion in deposits. BancWest Cor-poration operates subsidiary banks in five states.

BB&T Corporation, with approximately $33.9 billion intotal consolidated assets, is the 27th largest commercialbanking organization in the United States, controlling$20.6 billion in deposits. BB&T Corporation operates sub-sidiary banks in four states and the District of Columbia.

First Union Corporation, with approximately $234.6 bil-lion in total consolidated assets, is the sixth largest com-mercial banking organization in the United States, control-ling $134 billion in deposits. First Union Corporationoperates subsidiary banks in 12 states and the District ofColumbia.

SunTrust Banks, Inc., with approximately $86.6 billionin total consolidated assets, is the 11th largest commercialbanking organization in the United States, controlling$53.3 billion in deposits. SunTrust Banks, Inc., operatessubsidiary banks in six states and the District of Columbia.

Wachovia Corporation, with approximately $65.6 billionin total consolidated assets, is the 17th largest commercialbanking organization in the United States, controlling$37 billion in deposits. Wachovia Corporation operatessubsidiary banks in six states.

18. See HONOR/Most Order at 134.19. Notificants expect that any network services and ATM pro-

cessing that are consolidated in the future would result in economiesof scale for computer facilities, operations personnel, programmingstaff, and other support services and would likely reduce the cost ofoperation of the HONOR and Star networks.

1. Asset data are as of September 30, 1998, and deposit data are asof June 30, 1998, and are adjusted to reflect acquisitions consummatedafter that date.



Zions Bancorporation, with approximately $12.4 billionin total consolidated assets, is the 53rd largest commercialbanking organization in the United States, controlling$8.1 billion in deposits. Zions Bancorporation operatessubsidiary banks in eight states.

htituto Bancario San Paolo di Torino-IstitutoMobiliare Italiano S.p.A.Turin, Italy

Order Approving Notice to Engage in NonbankingActivities

Istituto Bancario San Paolo di Torino-Istituto MobiliareItaliano S.p.A. ("San Paolo-IMI"), a foreign banking orga-nization subject to the provisions of the Bank HoldingCompany Act ("BHC Act"),1 has requested the Board'sapproval to engage through Mabon Securities Corp. ("Ma-bon") and, in certain cases, through Mabon's whollyowned subsidiary, Cedar Street Securities Corp. ("CedarStreet"), both of New York, New York,2 in the followingnonbanking activities:

(1) Extending credit and servicing loans, in accordancewith section 225.28(b)(l) of Regulation Y(12 C.F.R. 225.28(b)(l));

(2) Engaging in activities related to extending credit, inaccordance with section 225.28(b)(2) of RegulationY (12 C.F.R. 225.28(b)(2));

(3) Providing financial and investment advisory ser-vices, in accordance with section 225.28(b)(6) ofRegulation Y (12 C.F.R. 225.28(b)(6));

(4) Providing securities brokerage, riskless principal,private placement, futures commission merchant,and other agency transactional services, in accor-dance with section 225.28(b)(7) of Regulation Y(12 C.F.R 225.28(b)(7));

(5) Underwriting and dealing in government obliga-tions and money market instruments in which statemember banks may underwrite and deal under12 U.S.C. §§ 335 and 24(7) ('-bank-eligible securi-ties"), engaging in investing and trading activities,and buying and selling bullion and related activi-ties, in accordance with section 225.28(b)(8) ofRegulation Y (12 C.F.R. 225.28(b)(8)); and

(6) Underwriting and dealing in, to a limited extent, alltypes of debt and equity securities, except owner-

1. As a foreign banking organization operating a branch in theUnited States, San Paolo-IMI is subject to certain provisions of theBHC Act pursuant to section 8(a) of the International Banking Act of1978. 12 U.S.C. § 31O6(a).

2. San Paolo-IMI was formed in November 1998 through themerger of Istituto San Paolo di Torino S.p.A., Turin, Italy ("SanPaolo"), and Istituto Mobiliare Italiano S.p.A., Rome, Italy ("IMI").In connection with this merger, San Paolo-IMI received approvalunder section 4(c)(9) of the BHC Act to retain temporarily the UnitedStales subsidiaries of IMI. See Letter dated July 27.1998, from RobertdeV. Frierson, Associate Secretary of the Board, to Randal K. Quarles,Esq.

ship interests in open-end investment companies("bank-ineligible securities") through Mabon.3

Notice of the proposal, affording interested persons anopportunity to submit comments, has been published(63 Federal Register 67,693 (1998)). The time for filingcomments has expired, and the Board has considered thenotice and all comments received in light of the factors setforth in section 4(c)(8) of the BHC Act.

San Paolo-IMI, with total consolidated assets of approx-imately $200 billion, is the largest banking organization inItaly.4 In the United States, San Paolo-IMI operates afederally licensed branch in New York, New York, and arepresentative office in Los Angeles, California.5 Mabonengages in securities transactions in the United States onbehalf of San Paolo-IMI's European affiliates and providesresearch and investment management services to both U.S.and foreign investors. Mabon and Cedar Street are and willcontinue to be broker-dealers registered with the Securitiesand Exchange Commission ("SEC") under the SecuritiesExchange Act of 1934 (15 U.S.C. § 78a et seq.) and mem-bers of the National Association of Securities Dealers. Inc.("NASD"). Accordingly, Mabon and Cedar Street are andwill continue to be subject to the recordkeeping and report-ing obligations, fiduciary standards, and other requirementsof the Securities Exchange Act, the SEC, and the NASD.

Underwriting and Dealing in Bank-Ineligible Securities

The Board previously has determined-subject to the frame-work of prudential limitations established in previous deci-sions to address the potential for conflicts of interests,unsound banking practices, or other adverse effects-that

3. Cedar Street currently is an inactive subsidiary of Mabon. SanPaolo-IMl has indicated that in the future Cedar Street may com-mence the activities listed above, except underwriting and dealing inbank-ineligible securities. San Paolo-IMI has agreed to consult withthe Federal Reserve System before Cedar Street commences anybank-ineligible underwriting and dealing activities so that it can bedetermined whether an additional notice pursuant to section 4(c)(8) ofthe BHC Act would be required.

4. Asset and ranking data are as of June 30, 1998.5. Compagnia di San Paolo (the "Foundation"), an Italian public

law foundation, previously controlled a majority of the voting sharesof San Paolo. See Istituto Bancario San Paolo di Torino, S.p.A..82 FederalResene Bulletin 1147 (1996). The Foundation has signifi-cantly reduced its ownership interest in San Paolo over time andcurrently owns approximately 16 percent of the voting shares of SanPaolo-IMI. One director and two other representatives of the Founda-tion also serve on San Paolo-IMF s current 17-member board ofdirectors. Italian law requires that the Foundation terminate its direc-tor interlock with San Paolo-IMI by April 15, 1999, and prohibits theFoundation from being involved in the management of San Paolo-IMIafter November 18, 1999. The Foundation also has entered into ashareholders' agreement that permits the Foundation to vote only5 percent of San Paolo-IMI's shares al the next election ofSan Paolo-IMI's board of directors. San Paolo-IMI has representedthat the Foundation will not have the right or ability to independentlyelect any director to the future boards of directors of San Paolo-IMI.Based on these and all other facts of record, including the limitednature of the continuing business relationships between the Founda-tion and San Paolo-IMI, the Board has determined that the Foundationis not required to join this notice.



underwriting and dealing in bank-ineligible securities is soclosely related to banking as to be a proper incident theretowithin the meaning of section 4(c)(8) of the BHC Act.6

The Board also has determined that underwriting and deal-ing in bank-ineligible securities is consistent with sec-tion 20 of the Glass-Steagall Act (12 U.S.C. § 377), pro-vided that the company engaged in the activity derives nomore than 25 percent of its gross revenues from underwrit-ing and dealing in bank-ineligible securities.7

San Paolo-IMI has committed that Mabon will conductits underwriting and dealing activities using the methodsand procedures and subject to the prudential limitationsestablished by the Board in the Section 20 Orders.San Paolo-IMI also has committed that Mabon will con-duct its bank-ineligible securities underwriting and dealingsubject to the Board's revenue restriction. As a conditionof this order, San Paolo-IMI is required to conduct itsbank-ineligible securities activities subject to the revenuerestrictions and Operating Standards established for section20 subsidiaries ("Operating Standards").8

Other Activities Approved by Regulation

The Board previously has determined that credit and credit-related activities; financial and investment advisory activi-ties; securities brokerage, riskless principal, private place-

6. See J.P. Morgan & Co., Incorporated, et ai, 75 Federal ReserveBulletin 192 (1989), aff'd sub nom. Securities Industry Ass'n v. Boardof Governors of the Federal Resen'e System, 900 F.2d 360 (D.C. Cir.1990); Citicorp, et al., 73 Federal Reserve Bulletin 473 (1987), aff'dsub nom. Securities Industry Ass'n v. Board of Governors of theFederal Reserve System, 839 F.2d 47 (2d Cir.), cert, denied, 486 U.S.1059 (1988); as modified by Review of Restrictions on Director,Officer and Employee Interlocks, Cross-Marketing Activities, and thePurchase and Sale of Financial Assets Between a Section 20 Subsid-iary and an Affiliated Bank or Thrift, 61 Federal Register 57.679(1996); Amendments to Restrictions in the Board's Section 20 Orders,62 Federal Register 45,295 (1997); and Clarification to the Board'sSection 20 Orders, 63 Federal Register 14,803 (1998) (collectively,"Section 20 Orders").

7. Compliance with the revenue limitation shall be calculated inaccordance with the methods stated in the Section 20 Orders, asmodified by the Order Approving Modifications to the Section20 Orders, 75 Federal Reserve Bulletin 751 (1989); 10 PercentRevenue Limit on Bank-Ineligible Activities of Subsidiaries of BankHolding Companies Engaged in Underwriting and Dealing in Securi-ties, 61 Federal Register 48,953 (1996); and Revenue Limit on Bank-Ineligible Activities of Subsidiaries of Bank Holding Companies En-gaged in Underwriting and Dealing in Securities, 61 Federal Register68,750 (1996) (collectively, "Modification Orders"). In light of thefact that Mabon was a going concern on the date of the merger of SanPaolo and IMI, the Board believes that allowing Mabon to calculatecompliance with the revenue limitation on an annualized basis duringthe first year after the date that the merger of San Paolo and IMI wasconsummated and thereafter on a rolling quarterly basis is consistentwith the Section 20 Orders. See, e.g., Dresdner BankAG, 82 FederalReserve Bulletin 850 (1996): Dauphin Deposit Corporation, 77 Fed-eral Reserve Bulletin 672 (1991).

8. 12C.F.R. 225.200. Mabon may provide services that are neces-sary incidents to the proposed underwriting and dealing activities.Unless Mabon receives specific approval under section 4(c)(8) of theBHC Act to conduct the activities independently, any revenues fromthe incidental activities must be treated as ineligible revenues subjectto the Board's revenue limitation.

ment, and other agency transactional activities;underwriting and dealing in bank-eligible securities; invest-ing and trading activities; and buying and selling bullionand related activities are all closely related to bankingwithin the meaning of section 4(c)(8) of the BHC Act.9

San Paolo-IMI has committed that it will conduct theseactivities in accordance with the limitations set forth inRegulation Y and the Board's orders and interpretationsrelating to each of these activities.

Other Considerations

In order to approve the notice, the Board also must deter-mine that performance of the proposed activities is a properincident to banking, that is, that the proposed activities"can reasonably be expected to produce benefits to thepublic, such as greater convenience, increased competition,or gains in efficiency, that outweigh possible adverse ef-fects, such as undue concentration of resources, decreasedor unfair competition, conflicts of interests, or unsoundbanking practices."10 As part of its evaluation of thesefactors, the Board considers the financial condition andmanagerial resources of the notificant and its subsidiariesand the effect of the proposed transaction on those resourc-es.11 San Paolo-IMI's capital ratios satisfy applicable risk-based standards under the Basle Accord and are consideredequivalent to the capital levels that would be required of aUnited States banking organization. The Board also hasreviewed the capitalization of San Paolo-IMI and Mabon inaccordance with the standards set forth in the Section 20Orders and finds the capitalization of each to be consistentwith approval. This determination is based on all the factsof record, including San Paolo-IMI's projections of thevolume of Mabon's bank-ineligible underwriting and deal-ing activities. The Board also has reviewed the managerialresources of San Paolo-IMI and Mabon in light of relevantreports of examination and all the facts of record. Based onthe foregoing, the Board has concluded that financial andmanagerial considerations are consistent with approval ofthe notice.

The Board also has carefully considered the competitiveeffects of the proposal. Prior to its merger with IMI,San Paolo did not engage in the United States in thenonbanking activities conducted by Mabon. Furthermore,the Board notes that the markets for the proposed activitiesare unconcentrated and there are numerous existing andpotential competitors. As a result, consummation of theproposal would have a de minimis effect on competition,and the Board has concluded that the proposal would notresult in a significantly adverse effect on competition inany relevant market.

The Board expects that continuation of the proposedactivities would provide added convenience to the ex-

9. See 12 C.F.R. 225.28(b)(l), (2). (6), (7), and (8).10. 12 U.S.C. § 1843(c)(8).11. See 12 C.F.R. 225.26(b); see also The Fuji Bank, Limited,

75 Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG,73 Federal Reserve Bulletin 155 (1987).



panded customer base of San Paolo-IMI. San Paolo-IMIalso has indicated that it intends to expand the product andservice offerings of Mabon, thereby increasing competitionin the relevant product markets. The Board also has recog-nized the public benefits of permitting capital markets tooperate so that banking organizations may make poten-tially profitable investments in nonbanking companies andallocate their resources in the manner they believe is mostefficient when such investments are consistent, as in thiscase, with the relevant consideration under the BHC Act.12

Under the framework and conditions established in thisorder and the Section 20 Orders, and based on all the factsof record, the Board concludes that the performance of theproposed activities by San Paolo-IMI can reasonably beexpected to produce public benefits that outweigh anyadverse effects of the proposal. Accordingly, the Board hasdetermined that the performance of the proposed activitiesby San Paolo-IMI is a proper incident to banking forpurposes of section 4(c)(8) of the BHC Act.

Conclusion

On the basis of the foregoing and all other facts of record,the Board has determined that the notice should be, andhereby is, approved, subject to all the terms and conditionsdiscussed in this order and in the Section 20 Orders, asmodified by the Modification Orders. The Board's ap-proval of the proposed underwriting and dealing activitiesextends only to activities conducted within the limitationsof those orders and this order, including the Board's reser-vation of authority to establish additional limitations toensure that Mabon's activities are consistent with safetyand soundness, avoidance of conflict of interests, and otherrelevant considerations under the BHC Act. Underwritingand dealing in any manner other than as approved in thisorder and the Section 20 Orders (as modified by the Modi-fication Orders), is not within the scope of the Board'sapproval and is not authorized for Mabon.

The Board's approval of the proposal to underwrite anddeal in all types of bank-ineligible securities is conditionedon a determination by the Board that San Paolo-IMI andMabon have established policies and procedures to ensure

12. See Bane One Corporation, 84 Federal Reserve Bulletin 553(1998).

compliance with the Operating Standards and the otherrequirements of this order, the Section 20 Orders, and theModification Orders, including computer, audit, and ac-counting systems, internal risk management controls, andthe necessary operation and managerial infrastructure forunderwriting and dealing in all types of debt and equitysecurities. San Paolo-IMI proposes to expand the existingbank-ineligible securities activities of Mabon, and has re-quested a delay in conducting the infrastructure review toallow San Paolo-IMI to develop enhanced policies andprocedures for the proposed expanded bank-ineligible se-curities activities of Mabon. As part of the request,San Paolo-IMI has committed not to expand the scope ofMabon's current bank-ineligible securities activities untilthe Board determines that a satisfactory infrastructure is inplace.

The Board's determination also is subject to all termsand conditions set forth in Regulation Y, including those insections 225.7 and 225.25(c) (12C.F.R. 225.7 and225.25(c)), and to the Board's authority to require modifi-cation or termination of the activities of a bank holdingcompany or any of its subsidiaries as the Board findsnecessary to ensure compliance with, and prevent evasionof, the BHC Act and the Board's regulations and ordersissued thereunder. The Board's decision is specificallyconditioned on compliance with all the commitments madein connection with the notice, including the commitmentsdiscussed in this order and the conditions set forth in thisorder and the Board's regulations and orders noted above.The commitments and conditions are deemed to be condi-tions imposed in writing by the Board in connection withits findings and decision and, as such, may be enforced inproceedings under applicable law.

The proposal shall not be consummated later than threemonths after the effective date of this order, unless suchperiod is extended for good cause by the Board or by theFederal Reserve Bank of New York, acting pursuant todelegated authority.




INDEX OF ORDERS ISSUED OR ACTIONS TAKEN BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM(OCTOBER 1, J998-DECEMBER 31, 1998)

Applicant Merged or Acquired Bank or Activity Date of Approval

BulletinVolumeand Page

Bank One Corporation,Chicago, Illinois

CAB Holding, LLC,Wilmington, Delaware

EquiServe Limited Partnership,A Delaware limited partnership

The Chinese American Bank,New York, New York

November 16, 1998 85, 65

November 30, 1998 85, 51



Index of Orders—Continued



CFBanc Holdings, Inc.,Washington, D.C.

CFBanc Corporation,Washington, D.C.

Charter One Financial, Inc.,Cleveland, Ohio

Charter-Michigan Bancorp, Inc.,Cleveland, Ohio

Chinatrust Commercial Bank, Ltd.,Taipei, Taiwan

City Holding CompanyCharleston, West Virginia

Cooper Life Sciences,New York, New York

Greater American Financial Group,New York, New York

Credit Suisse,Zurich, Switzerland

Erste Bank dersterreichischen SparkassenAktiengesellschaft,Vienna, Austria

Firstar Corporation,Milwaukee, Wisconsin

FirstMerit Corporation,Akron, Ohio

KeyCorp,Cleveland, Ohio

City First Bank of D.C,Washington, D.C.

ALBANK Financial Corporation,Albany, New York

ALBANK Commercial,Albany, New York

ALBANK, F.S.B.,Albany, New York

To establish a state-licensed branch inNew York, New York

Horizon Bancorp, Inc.,Beckley, West Virginia

Bank of Raleigh,Beckley, West Virginia

First National Bank in Marlinton,Marlinton, West Virginia

Greenbrier Valley National Bank,Lewisburg, West Virginia

National Bank of Summers,Hinton, West Virginia

The Twentieth Street,Huntington, West Virginia

The Berkshire Bank,New York, New York

To establish representative offices inMiami, Florida; New York, New York;and Houston, Texas

To establish a federally-licensed branch inNew York, New York

Star Bane Corporation,Cincinnati, Ohio

Star Bank, N.A.,Cincinnati, Ohio

Signal Corp.,Wooster, Ohio

Signal Bank, N.A.,Wooster, Ohio

Summit Bank, N.A.,Akron, Ohio

First Federal Savings Bank of NewCastle,New Castle, Pennsylvania

McDonald & Company Investments, Inc.,Cleveland, Ohio

McDonald & Company Securities, Inc.,Cleveland, Ohio

November 9, 1998

October 28, 1998

October 5, 1998

November 30, 1998

December 14, 1998

November 23, 1998

October 14. 1998

October 28, 1998

December 7, 1998

October 21, 1998

85,52

84, 1079

84, 1121

85,53

85, 125

85. 68

84, 1123

84, 1083

85, 128

84, 1075



Index of Orders—Continued



Norwest Corporation,Minneapolis, Minnesota

WFC Holdings Corporation,San Francisco, California

Peoples Heritage Financial Group, Inc.,Portland, Maine

Peoples Heritage Merger Corp.,Portland, Maine

PNC Bank Corp.,Pittsburgh, Pennsylvania

Popular, Inc.,Hato Rey, Puerto Rico

Banco Popular de Puerto Rico,Hato Rey, Puerto Rico

Popular Transition Bank,Hato Rey, Puerto Rico

Poteau State Bank,Poteau, Oklahoma

Sulphur Springs Bancshares, Inc.,Sulphur Springs, Texas

Sulphur Springs Delaware FinancialCorporation,Dover, Delaware

SunTrust Banks, Inc.,Atlanta, Georgia

Susquehanna Bancshares, Inc.,Lititz, Pennsylvania

U.S. Bancorp,Minneapolis, Minnesota

Valley View Bancshares, Inc..Overland Park, Kansas

Wells Fargo & Company,San Francisco, California

Wells Fargo Bank, N.A.,San Francisco, California

SIS Bancorp, Inc.,Springfield, Massachusetts

Springfield Institution for Savings,Springfield, Massachusetts

Glastonbury Bank & Trust CompanyGlastonbury, Connecticut

PNC Capital Markets, Inc.,Pittsburgh, Pennsylvania

Banco Popular, New York,New York, New York

Spiro Interim Bank,Spiro, Oklahoma

First National Bank,Sulphur Springs, Texas

Crestar Financial Corporation,Richmond, Virginia

Crestar Bank,Richmond. Virginia

Cardinal Bancorp, Inc.,Everett, Pennsylvania

First American National Bank ofPennsylvania,Everett, Pennsylvania

Northwest Bancshares, Inc.,Vancouver. Washington

Northwest National Bank,Vancouver, Washington

Paola-Citizens Bancshares, Inc.,Paola, Kansas

Citizens State Bank,Paola, Kansas

October 14, 1998

November 4, 1998

84, 1088

85. 55

November 16, 1998 85, 66

November 16, 1998 85, 59

December 2, 1998 85, 131

December 16, 1998 85, 126

October 28, 1998 84, 1115

November 23, 1998 85, 61

October 26, 1998 84, 1073

November 30, 1998 85, 64



APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACTBy the Secretary of the Board

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

Section 4

Applicant(s) Bank(s) Effective Date

Bank One Corporation,Chicago, Illinois

Popular, Inc.,Hato Rey, Puerto Rico

Popular International Bank, Inc.,Hato Rey, Puerto Rico

Popular North America,Mount Laurel, New Jersey

Popular Cash Express,Orlando, Florida

Themis Capital Corporation,Dallas, Texas

Valley Check Cashers, Inc.,San Fernando, California

February 11, 1999

February 9, 1999

By Federal Reserve Banks

Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request tothe Reserve Banks.

Section 3

Applicant(s) Bank(s) Reserve Bank Effective Date

Atlantic BancGroup, Inc.,Jacksonville Beach, Florida

Avondale Financial Corp.,Chicago, Illinois

Cameron Bancshares, Inc.,Cameron, Texas

Cameron Bancshares of Delaware,Wilmington, Delaware

Capital Bancorp, Inc.,Delhi, Louisiana

Central Bancshares, Inc.,Houston, Texas

Central Bank,Houston, Texas

Chelsea Bancshares, Inc.,Chelsea, Oklahoma

Coast Community Bancshares, Inc.,Biloxi, Mississippi

Oceanside Bank,Jacksonville Beach, Florida

Coal City Corporation,Chicago, Illinois

Manufacturers Corporation,Chicago, Illinois

Manufacturers Bank,Chicago, Illinois

First National Bank in Cameron,Cameron, Texas

Commercial Capital Bank,Delhi, Louisiana

Caldwell Bancshares, Incorporated,Caldwell, Texas

Atlanta

Chicago

Dallas

Dallas

Dallas

January 29, 1999

February 8, 1999

February 24, 1999

February 3, 1999

February 10, 1999

Bank of Chelsea,Chelsea, Oklahoma

Coast Community Bank,Biloxi, Mississippi

Kansas City February 16, 1999

Atlanta February 25, 1999



Section 3—Continued


Community Bancshares ofMississippi, Forest, Mississippi

Farmers State Bancshares, Inc..Bangor, Wisconsin

First DuPage Bancorp, Inc.,Westmont, Illinois

First Merchants Corporation,Muncie. Indiana

First Personal Financial Corp.,Orland Park, Illinois

Fountain View Bancorp, Inc.,Sigourney, Iowa

Fox River Valley Bancorp. Inc.,Appleton, Wisconsin

Grand Bancorp, Inc.,Kingston, New Jersey

Greenville Community FinancialCorporation,Greenville. Michigan

Intervest Bancshares Corporation,New York, New York

J.R. Montgomery Bancorporation,Lawton, Oklahoma

LNCB Coiporation,Labanon, Ohio

MemphisFirst Corporation.Memphis, Tennessee

Nationwide Bankshares. Inc.,West Point, Nebraska

Pacific Continental Corporation,Eugene, Oregon

Regions Financial Corporation,Birmingham, Alabama

Standard Bancshares, Inc.,Evergreen Park, Illinois

Coast Community Bancshares, Inc., AtlantaBiloxi, Mississippi

Coast Community Bank,Biloxi, Mississippi

Farmers State Bank,Bangor, Wisconsin

First DuPage Bank,Westmont, Illinois

Jay Financial Corporation,Portland, Indiana

The First National Bank of Portland,Portland, Indiana

First Personal Bank,Orland Park, Illinois

Keokuk County Bankshares, Inc.,Sigourney, Iowa

First Business Bank of the Fox RiverValley,Appleton, Wisconsin

First Business Bancshares. Inc.,Madison, Wisconsin

Grand Bank, N.A.,Kingston, New Jersey

Greenville Community Bank,Greenville, Michigan

Intervest National Bank, AtlantaNew York, New York

The Fort Sill National Bank, Kansas CityFort Sill, Oklahoma

The Lebanon Citizens National Bank, ClevelandLebanon, Ohio

MemphisFirst Community Bank, St. LouisMemphis, Tennessee

FNB Insurance Agency, Inc.. Kansas CityWalthill. Nebraska

Pacific Continental Bank, San FranciscoEugene, Oregon

Arkansas Banking Company, AtlantaJonesboro, Arkansas

The Arkansas Bank,Jonesboro, Arkansas

The Arkansas Bank,Walnut Ridge, Arkansas

The Planters Bank,Osceola, Arkansas

The Arkansas Bank, N.A.,Batesville, Arkansas

Norton Capital Corporation, ChicagoMorris, Illinois

Exchange Bank.Gardner, Illinois

February 25, 1999

Minneapolis February 18, 1999

Chicago February 2, 1999





New York February 3, 1999

Chicago January 28, 1999

February 2, 1999

February 10, 1999

February 11, 1999

February 25, 1999

February 11, 1999

February 22, 1999

February 25, 1999

February 2, 1999



Section 3—Continued

Applicant! s) Bank(s) Reserve Bank Effective Date

State National Bancshares, Inc..Lubbock, Texas

Waukesha Bancshares, Inc.,Wauwatosa, Wisconsin

Valley Bancorp, Inc.,El Paso, Texas

Montwood National Bank,El Paso, Texas

Sunset Bank & Savings,Waukesha, Wisconsin

Dallas

Chicago

February 9, 1999

February 17, 1999

Section 4

Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date

The Bank of New York Company,Inc.,New York, New York

BNY Capital Markets, Inc.,New York, New York

Community Trust Financial ServicesCorp.,Hiram, Georgia

Community Loan Company,Hiram, Georgia

Fortis (B),Brussels, Belgium

Fortis (NL) N.V.,Utrecht, The Netherlands

Great Southern Bancorp. Inc.,Springfield, Missouri

Merit Holding Corporation,Tucker, Georgia

National Westminster Bank, Pic,London, England

State Street Corporation,Boston, Massachusetts

Wrightsville Bancshares, Inc.,Wrightsville, Georgia

Everen Securities, Inc.,Chicago, Illinois

Everen Capital Corporation,Chicago, Illinois

First Family Financial Services ofGeorgia, Inc.,Atlanta, Georgia

Fortis SA NV,Brussels, Belgium

Generale de Banque,Brussels, Belgium

Generale (USA) Finance LLC,New York, New York

Gauranty Federal Bancshares, Inc.,Springfield, Missouri

Guaranty Federal Savings Bank,Springfield, Missouri

Source Capital Group I, Inc.,Atlanta, Georgia

To engage de novo in certain dataprocessing and related activities

FutureSource/Bridge LLC,Boston, Massachusetts

WBS Financial Services, Inc.,Wrightsville, Georgia


Atlanta

St. Louis

February 17, 1999


February 18, 1999

Atlanta

New York

Boston

Atlanta

January 29,

February 12

February 25

February 12

1999

, 1999

, 1999

, 1999

Sections 3 and 4


Bay View Capital Corporation,San Mateo, California

Bay View Bank,San Mateo, California

Bay View Bank, N.A.,San Mateo, California

Regent Financial Corporation,San Mateo, California

Bay Commercial Finance Group,San Mateo, California

San Francisco February 2, 1999



Sections 3 and 4—Continued


M&T Bank Corporation.Buffalo, new York

Olympia Financial Corporation,Buffalo, New York

Troy Financial Corporation,Troy, New York

FNB Rochester Corp.,Rochester, New York

First National Bank of Rochester,Rochester, New York

The Troy Savings Bank,Troy, new York

The Family Investment Services Co.,Troy, New York

T.S. Real Property, Inc.,Troy, New York



APPLICATIONS APPROVED UNDER BANK MERGER ACT

By Federal Reserve Banks

Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request tothe Reserve Banks.


Baylake Bank,Sturgeon Bay, Wisconsin

F&M Bank-Northern Virginia.Fairfax, Virginia

First Liberty Bank & Trust,Jermyn, Pennsylvania

First Virginia Bank-Southwest.Roanoke, Virginia

Manufacturers and Traders TrustCompany,Buffalo, New York

Baylake Bank, N.A., ChicagoPoy Sippi, Wisconsin

Security Bank Corporation, RichmondManassas. Virginia

NBO National Bank, PhiladelphiaOlyphant. Pennsylvania

First Virginia Bank-Clinch Valley, RichmondTazewell, Virginia

First Virginia Bank-Piedmont,Lynchburg, Virginia

First Virginia Bank-Franklin county,Rocky Mount, Virginia

First National Bank of Rochester, New YorkRochester, New York

February 5, 1999

February 17, 1999

February 12, 1999

February 11. 1999

February 22, 1999

PENDING CASES INVOLVING THE BOARD OF GOVERNORS

This list of pending cases does not include suits against theFederal Reserve Banks in which the Board of Governors is notnamed a party.

Folstad v. Board of Governors, No. 1:99 CV 124 (W.D. Mich.,filed February 17, 1999). Freedom of Information Act com-plaint.

Nelson v. Greenspan, No. l:99CV00215 (EGS) (D.D.C., filedJanuary 28, 1999). Employment discrimination complaint.

Fraternal Order of Police v. Board of Governors, No.l:98CV03116 (D.D.C., filed December 22, 1998). Declara-tory judgment action challenging Board labor practices.

Inner City Press/Community on the Move v. Board of Gover-nors, No.98-9604 (2d Cir., filed December 3, 1998). Appeal

of district court order dated October 6, 1998, grantingsummary judgment for the Board in a Freedom of Informa-tion Act case.

Attorneys Against American Apartheid v. Board of Governors,No. 98-1483 (D.C. Cir., filed October 21, 1998). Petition forreview of denial of reconsideration of a Board order datedAugust 17, 1998, approving the merger of NationsBankCorporation, Charlotte, North Carolina, and BankAmerica.Corporation, San Francisco, California. On December 7,1998, the Board filed a motion to dismiss the petition. Thecourt of appeals granted the motion on January 19, 1999.

Independent Bankers Association of America v. Board of Gov-ernors, No. 98-1482 (D.C. Cir., filed October 21, 1998).Petition for review of a Board order dated September 23,



1998, conditionally approving the applications of TravelersGroup, Inc., New York, New York, to become a bankholding company by acquiring Citicorp, New York. NewYork, and its bank and nonbank subsidiaries.

Jones v. Board of Governors, No. 98-30138 (5th Cir., filedFebruary 9, 1998). Appeal of district court dismissal ofcomplaint alleging violations of the Fair Housing Act. OnNovember 19, 1998, the court dismissed the appeal.

Cunningham v. Board of Governors, No. 98-1459 (D.C. Cir.,filed September 30, 1998). Petition for review of a Boardorder dated September 23, 1998, conditionally approvingthe applications of Travelers Group, Inc., New York, NewYork, to become a bank holding company by acquiringCiticorp, New York, New York, and its bank and nonbanksubsidiaries. On December 4, 1998, the Court granted theBoard's motion to dismiss the petition.

Clarkson v. Greenspan, No.98-5349 (D.C. Cir., filed July 29,1998). Appeal of district court order granting Board's mo-tion for summary judgment in a Freedom of InformationAct case. On September 14, 1998, the Board filed a motionfor summary affirmance of the district court dismissal.

Board of Governors v. Carrasco, No. 98 Civ. 3474 (LAIC)(S.D.N.Y., filed May 15, 1998). Action to freeze assets ofindividual pending administrative adjudication of civilmoney penalty assessment by the Board. On May 26, 1998,the court issued a preliminary injunction restraining thetransfer or disposition of the individual's assets and appoint-ing the Federal Reserve Bank of New York as receiver forthose assets.

Board of Governors v. Pharaon, No. 98-6101 (2d Cir., filedMay 4, 1998). Appeal and cross-appeal of district courtorder granting in part and denying in part the Board'smotion for summary judgment seeking prejudgment interestand a statutory surcharge in connection with a civil moneypenalty assessed by the Board. On February 24, 1999, thecourt granted the Board's appeal and denied the cross-appeal, and remanded the matter to the district court fordetermination of prejudgment interest due to the Board.

Fenili v. Davidson, No. C-98-O1568-CW (N.D. California,filed April 17, 1998). Tort and constitutional claim arisingout of return of a check. On June 5, 1998, the Board filed itsmotion to dismiss.

Logan v. Greenspan, No. l:98CV00049 (D.D.C., filed Janu-ary 9, 1998). Employment discrimination complaint.

Goldman v. Department of the Treasury, No. 98-9451 (1 lthCircuit, filed November 10, 1998). Appeal from a DistrictCourt order dismissing an action challenging Federal Re-serve notes as lawful money.

Kerr v. Department of the Treasury, No. CV-S-97-01877-DWH (D. Nev., filed December 22, 1997). Challenge toincome taxation and Federal Reserve notes. On Septem-ber 3, 1998, a motion to dismiss was filed on behalf of allfederal defendants.

Towe v. Board of Governors, No. 97-71143 (9th Cir., filedSeptember 15, 1997). Petition for review of a Board orderdated August 18, 1997, prohibiting Edward Towe andThomas E. Towe from further participation in the bankingindustry. On February 23, 1999, the court affirmed theBoard's order.

Bettersworth v. Board of Governors, No. 97-CA-624 (W.D.Tex., filed August 21, 1997). Privacy Act case.

FINAL ENFORCEMENT DECISION ISSUED BY THE

BOARD OF GOVERNORS

In the Matter ofIncus Co., Ltd.Tortola, British Virgil Islands AndCarlos Hank RhonAn Institution-Affiliated Party ofIncus Co., Ltd., andLaredo National BancsharesLaredo, Texas

Docket Nos. 98-038-B-FHC, 98-038-B-I,98-038-CMP-FHC, 98-038-CMP-I, 98-038-E-I

Determination on Request for Private Hearing

Background

This is an enforcement proceeding brought by the Board ofGovernors of the Federal Reserve System (the "Board")against Incus Co., Ltd., and Carlos Hank Rhon (the "Re-spondents") pursuant to the Federal Deposit Insurance Act(the '"FDI Act"). Hank Rhon is the registered owner ofIncus, an offshore shell bank holding company that con-trols Laredo National Bancshares ("LNB"). In a Notice ofIntent to Prohibit and Notice of Charges and of Hearing(the "Notice") issued December 16, 1998, the Board al-leged that Hank Rhon used nominees to secretly acquireadditional LNB stock without Board approval, that hetransferred significant equity interests in Incus to his fatherand two business associates in violation of commitmentsand representations made to the Board, and that he causedLaredo National Bank, LNB"s principal subsidiary, to en-gage in lending and other transactions with affiliates thatviolated commitments made to the Board. The Noticeseeks an order of prohibition against Hank Rhon, a ceaseand desist order requiring divestiture of Incus's interest inLNB, and significant civil money penalties against bothRespondents.

In accordance with section 8(u)(2) of the FDI Act,12U.S.C. § 1818(u)(2), the Notice advised the Respon-dents that any hearing held in this matter would be public,unless the Board determines that an open hearing would becontrary to the public interest. The Notice informed Re-spondents that they could submit a statement detailing anyreasons why the hearing should not be public. On Janu-ary 11, 1999, Respondents duly filed a motion with theBoard seeking a private hearing in this matter. BoardEnforcement Counsel opposed the motion.

Respondents make three principal arguments in supportof their request for a closed hearing. First, they assert thatthe safety and soundness of the financial institutions in-volved could be jeopardized as a result of a public hearing.They note that Hank Rhon is currently the chairman of the



board of LNB and is active in its management, and expressconcern that the allegations lodged against Hank Rhon"could well affect the public's confidence in the involvedinstitutions." Second, they assert that a public hearingwould compromise substantial individual privacy and repu-tational interests, not only of the Respondents themselvesbut also of the other individuals whose private dealingswith Hank Rhon and Incus would be made part of thepublic proceedings. Third, they suggest that Mexican andU.S. cross-border investments could be adversely affectedby a public hearing. Specifically, they argue that publiciz-ing "private and personal business affairs" could act as adisincentive for foreign investors, with unidentified reper-cussions in Mexico.

Discussion

In 1990, Congress amended the FDI Act to provide that allhearings held on the record in enforcement cases such asthis "shall be open to the public, unless the agency, in itsdiscretion, determines that holding an open hearing wouldbe contrary to the public interest." 12 U.S.C. § 1818(u)(2).Simultaneously, Congress required that a transcript of alltestimony and documentary evidence be prepared and thatthe transcripts of all public hearings be made availablethrough the Freedom of Information Act, 12 U.S.C.§ 1818(u)(4), provided that the agency may file a docu-ment under seal in an administrative proceeding "if disclo-sure of the document would be contrary to the publicinterest," 12 U.S.C. § 1818(u)(6), and required agencies toprovide Congress with a written report of any determina-tion to close a hearing, 12 U.S.C. § 1818(u)(3).

These amendments, which reversed the prior presump-tion in favor of closed hearings, reveal a congressionalbelief that the public benefits of open hearings wouldgenerally outweigh the disruptions inherent in them. In theMatter of Zbinden, 80 Federal Reserve Bulletin 360, 361(1994). As the Chairman of the Senate Banking Committeeobserved at the time, publicity is "the greatest disinfec-tant." 136 Cong. Rec. SI7,599 (daily ed. October 27,1990).

Accordingly, before the Board exercises its discretion toclose a hearing, there should be a substantial basis forconcluding that the case reflects unusual circumstances thatovercome the presumption in favor of open hearings. Ingeneral, in light of the congressional requirement that theproceedings be open unless "contrary to the public inter-est," those circumstances should involve serious safety andsoundness concerns flowing from a public hearing. Gener-alized claims of a possible loss of confidence or a "run onthe bank," or claims of impairment of the privacy orreputational interests of respondents and third parties,should not be sufficient to result in a closed hearing.Rather, a party seeking a closed hearing should be requiredto demonstrate how the effects of this proceeding differ sosignificantly from those involving other banks in terms ofthe public interest as to warrant special treatment. See Inthe Matter of Citizens Bank of Clovis, FDIC-91-^06b, 2FDIC Enf. Dec. (P-H) 8012 (March 2, 1992).

The arguments advanced by Respondents do not meetthis standard. Although Respondents speculate that thepublic's confidence in LNB's subsidiary banks may beadversely affected by an open proceeding, they provide noevidence to support their argument and no basis for theBoard to distinguish this case from any other case involv-ing an open institution. The Board has previously rejectedsuch conclusory and speculative arguments as a basis forclosing an enforcement hearing. See In the Matter of Na-tional Bank of Pakistan, No. 92-065-B-FB (August 20,1992). Moreover, the Board and other banking agencieshave held public enforcement hearings without a seriouseffect on public confidence in open institutions, includingenforcement actions involving the ownership and controlof the bank involved. E.g., Interamericas Investments, Ltd.,v. Board of Governors of the Federal Reserve System, 111F.3d 376 (5th Cir. 1997).

Similarly, the privacy interests of the Respondents andthird parties do not implicate the "public interest" neces-sary to justify a closed hearing. As the Board observed inIn the Matter of Zbinden, "Enforcement proceedings, bytheir nature, involve allegations that, if made public, couldadversely affect a respondent's reputation or career. Never-theless, in establishing a statutory presumption in favor ofopen hearings, Congress implicitly determined that thepublic benefit from conducting proceedings in the openoutweighs the privacy interests of the individuals in-volved." In the Matter of Zbinden, 80 Federal ReserveBulletin 361 (1994). As in Zbinden, the Board here "doesnot believe that the disruptions cited by Respondents],which are a normal consequence of such proceedings, aresufficient to overcome the statutory presumption favoringpublic hearings." Id. at 361-62.' The same is true forasserted privacy interests of third parties. In the Matter ofInterbank Holding Company, et al, No. 96-018-B-HC(August 14, 1996) (rejecting claim that potential harm tothird parties justifies closing enforcement hearing).

Respondents have provided no evidentiary support fortheir final argument, that an open hearing would inhibitMexican and U.S. cross-border investment. In particular,they offer no reason why Mexicans who are willing tocomply with U.S. laws would be reluctant to do so if theirdealings were made public. Foreign nationals who invest inregulated industries in the United States are subject toUnited States laws and are not entitled to special treatmentreflecting their differing "business customs and practices."As one federal court put it, the argument that nationalitycan act as a predicate for different standards for BHC Actliability is "beyond frivolous." Interamericas Investments,Ltd., I l l F.3dat384.

In short, because Respondents have not shown that anopen hearing is contrary to the public interest, the requestfor a private hearing in this matter must be denied.

Respondents' separate request that all documents relatedto this proceeding be kept confidential is also denied. Asnoted above, the FDI Act provides that the Board may filea particular document or part of a document under seal "ifdisclosure of the document would be contrary to the publicinterest." 12 U.S.C. § 1818(u)(6). Pursuant to the Board's



Rules of Practice for Hearings, this authority has beendelegated to Board Enforcement Counsel, who has thediscretion to determine which documents, if any, should befiled under seal. 12 C.F.R. 263.33(b). If Respondents haveparticular concerns about public disclosure of a specificdocument or part of a document, they may address theseconcerns to Board Enforcement Counsel. In the Matter ofZbinden, 80 Federal Reserve Bulletin 362-63 (1994).

By Order of the Board of Governors, this 12th day ofFebruary, 1999.

BOARD OF GOVERNORS OF THEFEDERAL RESERVE SYSTEM

Jennifer J. JohnsonSecretary of the Board

FINAL ENFORCEMENT ORDERS ISSUED BY THEBOARD OF GOVERNORS

Hogi Patrick HyunFormer Employee of BT Singapore

The Federal Reserve Board announced on February 25,1999, the issuance of a combined Order to Cease andDesist and of Assessment of a Civil Money Penalty againstHogi Patrick Hyun, a former employee of BT Singapore, awholly owned nonbank subsidiary of Bankers Trust NewYork Corporation, New York, New York.

Daniel K. WalkerLong Beach, California

The Federal Reserve Board announced on February 25,1999, the issuance of a Consent Order against Daniel K.

Walker, senior vice-president, a director, and an institution-affiliated party of the Farmers and Merchants Bank of LongBeach, Long Beach, California, a state member bank.

Kenneth G. WalkerLong Beach, California

The Federal Reserve Board announced on February 25,1999, the issuance of a Consent Order against Kenneth G.Walker, president, chairman of the board of directors, chiefexecutive officer, and institution-affiliated party of theFarmers and Merchants Bank of Long Beach, Long Beach,California, a state member bank.

Zia New Mexico BankTucumcari, New Mexico

The Federal Reserve Board announced on February 11,1999, the issuance of a Prompt Corrective Action Directiveagainst the Zia New Mexico Bank, Tucumcari, New Mex-ico.

WRITTEN AGREEMENTS APPROVED BY FEDERALRESERVE BANKS

First Utah BancorporationSalt Lake City, Utah

The Federal Reserve Board announced on February 5,1999, the execution of a Written Agreement by and amongFirst Utah Bancorporation, the First Utah Bank, PremierData Corporation, all of Salt Lake City, Utah, and theFederal Reserve Bank of San Francisco.


Al

Financial and Business Statistics

A3 GUIDE TO TABULAR PRESENTATION

DOMESTIC FINANCIAL STATISTICS

Monev Stock and Bank Credit

A4 Reserves, money stock, liquid assets, and debtmeasures

A5 Reserves of depository institutions and Reserve Bankcredit

A6 Reserves and borrowings—Depositoryinstitutions

Policy Instruments

A7 Federal Reserve Bank interest ratesA8 Reserve requirements of depository institutionsA9 Federal Reserve open market transactions

Federal Reserve Banks

A10 Condition and Federal Reserve note statementsA 11 Maturity distribution of loan and security

holding

Monetary and Credit Aggregates

A12 Aggregate reserves of depository institutionsand monetary base

A13 Money slock, liquid assets, and debt measures

Commercial Banking Institutions—Assets and Liabilities

A15 All commercial banks in the United StatesA16 Domestically chartered commercial banksA17 Large domestically chartered commercial banksA19 Small domestically chartered commercial banksA20 Foreign-related institutions

Financial Markets

A22 Commercial paper and bankers dollaracceptances outstanding

A22 Prime rate charged by banks on short-termbusiness loans

A23 Interest rates—Money and capital marketsA24 Stock market—Selected statistics

Federal Finance

A25 Federal fiscal and financing operationsA26 U.S. budget receipts and outlaysA27 Federal debt subject to statutory limitation

Federal Finance—Continued

All Gross public debt of U.S. Treasury—Types and ownership

A28 U.S. government securitiesdealers—Transactions

A29 U.S. government securities dealers—Positions and financing

A30 Federal and federally sponsored creditagencies—Debt outstanding

Securities Markets and Corporate Finance

A31 New security issues—Tax-exempt state and localgovernments and corporations

A32 Open-end investment companies—Net salesand assets

A32 Corporate profits and their distributionA32 Domestic finance companies—Assets and

liabilitiesA33 Domestic finance companies—Owned and managed

receivables

Real Estate

A34 Mortgage markets—New homesA35 Mortgage debt outstanding

Consumer Credit

A36 Total outstandingA36 Terms

Flow of Funds

A37 Funds raised in U.S. credit marketsA39 Summary of financial transactionsA40 Summary of credit market debt outstandingA41 Summary of financial assets and liabilities

DOMESTIC NONFINANCIAL STATISTICS

Selected Measures

A42 Nonfinancial business activityA42 Labor force, employment, and unemploymentA43 Output, capacity, and capacity utilizationA44 Industrial production—Indexes and gross valueA46 Housing and constructionA47 Consumer and producer pricesA48 Gross domestic product and incomeA49 Personal income and saving


A2 Federal Reserve Bulletin • April 1999

INTERNATIONAL STATISTICS

Summary Statistics

A50 U.S. international transactionsA51 U.S. foreign tradeA51 U.S. reserve assetsA51 Foreign official assets held at Federal Reserve

BanksA52 Selected U.S. liabilities to foreign official

institutions

Reported by Banks in the United States

A52 Liabilities to, and claims on, foreignersA53 Liabilities to foreignersA55 Banks' own claims on foreignersA56 Banks' own and domestic customers' claims on

foreignersA56 Banks' own claims on unaffiliated foreignersA57 Claims on foreign countries—Combined

domestic offices and foreign branches

Reported by Nonbanking Business

Enterprises in the United States

A58 Liabilities to unaffiliated foreignersA59 Claims on unaffiliated foreigners

Securities Holdings and Transactions

A60 Foreign transactions in securitiesA61 Marketable U.S. Treasury bonds and

notes—Foreign transactions

Interest and Exchange Rates

A62 Foreign exchange rates

A63 GUIDE TO STATISTICAL RELEASES AND

SPECIAL TABLES

A64 INDEX TO STATISTICAL TABLES


Guide to Tabular Presentation

A3

SYMBOLS AND ABBREVIATIONS

cen.a.Pr

0

ATSBIFCDCMOCRAFFBFHAFHLBBFHLMCFmHAFNMAFSLICG-7

CorrectedEstimatedNot availablePreliminaryRevised (Notation appears on column heading

when about half of the figures in that columnare changed.)

Amounts insignificant in terms of the last decimalplace shown in the table (for example, less than500,000 when the smallest unit given is millions)

Calculated to be zeroCell not applicableAutomatic transfer serviceBank insurance fundCertificate of depositCollateralized mortgage obligationCommunity Reinvestment Act of 1977Federal Financing BankFederal Housing AdministrationFederal Home Loan Bank BoardFederal Home Loan Mortgage CorporationFarmers Home AdministrationFederal National Mortgage AssociationFederal Savings and Loan Insurance CorporationGroup of Seven

G-10GNMAGDPHUD

IMFIOIPCsIRAMMDAMSANOWOCDOPECOTSPMIPOREITREMICRPRTCSCOSDRSICVA

GENERAL INFORMATION

In many of the tables, components do not sum to totals because ofrounding.

Minus signs are used to indicate ( D a decrease, (2) a negativefigure, or (3) an outflow.

"U.S. government securities" may include guaranteed issuesof U.S. government agencies (the flow of funds figures also

Group of TenGovernment National Mortgage AssociationGross domestic productDepartment of Housing and Urban

DevelopmentInternational Monetary FundInterest onlyIndividuals, partnerships, and corporationsIndividual retirement accountMoney market deposit accountMetropolitan statistical areaNegotiable order of withdrawalOther checkable depositOrganization of Petroleum Exporting CountriesOffice of Thrift SupervisionPrivate mortgage insurancePrincipal onlyReal estate investment trustReal estate mortgage investment conduitRepurchase agreementResolution Trust CoiporationSecuritized credit obligationSpecial drawing rightStandard Industrial ClassificationDepartment of Veterans Affairs

include not fully guaranteed issues) as well as direct obliga-tions of the Treasury.

"State and local government" also includes municipalities,special districts, and other political subdivisions.


A4 Domestic Financial Statistics • April 1999

.10 RESERVES, MONEY STOCK, LIQUID ASSETS. AND DEBT MEASURES

Percent annual rate of change, seasonally adjusted1

Monetary or credit aggregate

Rewires <<f depositor mstitutions1

1 Total '2 Required3 Nonborrowed4 Monetary base"

Concepts of m<me\. liquid assets, and debt*5 Ml6 M27 M.I8 Debt

Nonlransaetion components9 In M2S

K) In MJ only'1

Time and savings depositsConnnereial banks

1 1 Savings, including MMDAs12 Small time'1 3 Large lime '

Thrift institutions14 Savings, including MMDAs15 Small t i m e 7 . . . . '16 Large time8

Money market mutual binds17 Retail18 Institution-only

Repurclwse agreement* and Eurodollar*19 Repurchase agreements111

20 Eurodollars1 '

Debt components*21 Federal22 Nonfedcral

19981

Ql

-1.9- I . R- .66.8

1.27.6

10.36.2

9.1IS.6

12.81.0

18.1

5.7-.58.6

19.220.9

22.912.0

.0S.3

- 3 S-2.5-4.3

5.3

1.07.5

10 16.1

9.S1 7 8

13.4.1

16.4

10.8- 4 . 4-4 .5

20.934.7

14.5-3 .3

-1 .48.6

Q3

- 7 4-<P.ll- 8 . 4

6.8

- 2 06.98.66.0

9.91.1.5

15.8

.13.5

9.0- 7 . 2

.5

19.026.6

11.721.7

-1 .58.5

Q4

-1 .6-2.3- 48.9

5.011.011.26.4

n.o19.6

17.6.4

7.4

10.1- 6 . 910.4

28.441.8

16.47.1

-2 .09.1

1998'

Sept.

-11.0-16.1-10.5

9.8

2.812.4n.i6.0

15.715.1

19 9.6.2

8.1-4 .714.0

37.035.1

15.97.0

- 3 . 18.9

Oct.

-5 .4-2 .5- 3 . 3

8.4

6.411.613.26.6

13.317.5

15.9- . 41.8

12.5— 2.515.2

29.048.5

.412.4

-3 .19 6

Nov.

5.03.87.58.8

9.110.614.16.9

11.023.9

16.41.5

16.1

10.9-10.9

2.7

20.542.2

25 41.5

- . 59.2

Dec.

9.010.58.18.3

4 610.012.26.0

11.818.5

19.2-4 212.8

10.8-6.616.4

22.129.5

34.0-24.6

- . 47.9

1999

Jan.

- . 9.6

-3 .28.4

-3.16 14.4

n.a.

9.2- . 4

11.6-8.021.7

14.5- 5 226.9

23.2-2 .8

-25.0-39.2

n.a.u a.

1. Unless otherwise noted, rates of change are calculated from average amounts outstand-ing during preceding month or quarter.

2. Figures incorporate adjustments tor discontinuities, or "breaks," associated withregulator) changes in reserve requirements. (See also cable 1.20.1

3. The seasonally adjusted, break-adjusted monetary base consists of ( h seasonallyadjusted, break-adjusted total reserves (line 1). plus (2) the seasonally adjusted currencycomponent of the money stock, plus (3) (for all quarterly reporters on the "Report otTransaction Accounts, Other Deposits and Vault Cash" and for all weekly reporters whosevault cash exceeds their required reserves) the seasonally adjusted, break -adjusted differencehetweeu current vault cash and the amount applied to satisfy current reserve requirements.

4. Composition of the money stock measures and debt is as follows:Ml: (I) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of

depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at allcommercial banks other than those owed to depository institutions, the U.S. government, andforeign banks and official institutions, less cash items in the process ot" collection ant! FederalReserve float, and (4) other checkable deposits (OCDs). consisting of negotiable order ofwithdrawal (NOW) and automatic transfer service (ATS) accounts al depository institutions,credit union share draft accounts, and demand deposits al thrift institutions. Seasonallyadjusled Ml is computed by summing currency, travelers checks, demand deposits, andOCDs, each seasonally adjusted separately.

M2: Ml plus (1) savings (including MMDAs). (2) sniall-denominaiion time deposit (timedeposits—including retail RPs—in amounts of less than $100,000), and (3) balances in retailmoney market mutual funds. Excludes individual retirement accounts (IRAs) and Keoghbalances al depository institutions and money market funds. Seasonally adjusted M2 iscalculated by -dimming savings deposits, small-denomination time deposits, and retail moneyfund balances, each seasonally adjusted separate Iv, .Hid adding (his result to seasonallyadjusted Ml

M3: M2 plus (I) large-dcnominalion lime deposits (in amounts of S 100,000 or more). (2)balances in instituiional money funds. (}) RP liabilities (overnight and term) issued by all

depository institutions, and (4) Eurodollars (overnight and term) held by U.S. residents atforeign branches of U.S. banks worldwide and at all banking offices in the United Kingdomand Canada Excludes amounts held by depository institutions, ihe U.S. government, moneymarket funds, and foreign banks and official institutions. Seasonally adjusted M3 is calculatedby summing large time deposits, institutional money fund balances, RP liabilities.and Eurodollars, each seasonally adjusted separately, and adding this result to seasonallyadjusted M2.

Debt; The debt aggregate is the outstanding credit market debt of the domestic nonfinancialsectors—the federal sector (U.S. government, not including government-sponsored enter-prises or federally related mortgage pools) and the nonfederal sectors (state and localgovernments, households and nonprofit organizations, nonfinancial corporate and nonfarmnoncoiporatc businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt andcorporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data,which arc derived from (he Federal Reserve Board's flow of funds accounts, are break-adjusted uhiit is. discontinuities in the data have been smoothed into the series) andmonth-averaged (tnat is. the data have been derived by averaging adjacent month-end levels)

5. Sum of (1) savings deposits (including MMDAs). (2) small time deposits, and (3) retailmoney fund balances, each seasonally adjusted separately.

6. Sum of (1) large time deposits, (2) institutional money fund halances. (3) RP liabilities('overnight and term) issued by depository institutions, and (4) Eurodollars (overnight andterm) of U.S. addressees, each seasonally adjusted separately.

7. Small time deposits—including retail RPs—are those issued in amounts of less than$100,000. All IRA and Keogh account balances at commercial banks and thrill institutionsare subtracted from small time deposits.

8. Large time deposits are those issued in amounts of $100,000 or more, excluding thosebooked at international banking facilities

9. Large tune deposits at commercial banks less those held by money market funds,depository institutions, the U.S. government, and foreign banks and official institutions.

10. Includes both overnight and term.


Money Stock and Bank Credit A5

1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT'

Millions of dollars

Factor

SUPPLYING RESERVE FUNDS

1 Reserve Bank credit outstandingU.S. government securities2

2 Bought outright—System account1

3 Held under repurchase agreements

Federal agency obligations4 Bought outright5 Held under repurchase agreements6 Acceptances

Loans to depository institutions7 Adjustment credit8 Seasonal credit9 Extended credit

10 Float1 1 Other Federal Reserve assets

12 Gold stock13 Special drawing rights certificate account14 Treasury currency outstanding

AHSORRINC; RESERVE FUNDS

5 Currency in circulation16 Treasury cash holdings

Deposits, other than reserve balances, withFederal Reserve Banks

17 Treasury18 Foreign19 Service-related balances and adiustmeuls . . . ."'O Other21 Other Federal Reserve liabilities and capital22 Reserve balances with Federal Reserve Banks4

SUPPLYING RESERVE F I N D S

1 Reserve Bank credit outstandingU.S. government securities"

2 Bought outright—System account1

3 Held under repurchase agreementsFederal agency obligations

4 Bought outright5 Held under repurchase agreements6 Acceptances

Loans to depository institutions7 Adjustment credit8 Seasonal credit9 Extended credit

10 Float11 Other Federal Reserve assets

12 Oold slock13 Special diawttig rights certificate account14 Treasury currency outstanding

ABSORBING RESERVE FUNDS

15 Currency in circulation16 Treasury cash holdings

Deposits, other than reserve balances, withFederal Reserve Banks

7 Treasury18 Foreign9 Service-related balances and adjustments

20 Other21 Other Federal Reserve liabilities and capital22 Reserve balances with Federal Reserve Banks4

Average ofdaily figures

1998

Nov.

495.325

•151.6293.391

3733,864

0

4835

0544

35.440

11,0419.200

26.1.18'

502.704'92

5.135188

6,867403

17,4768.839'

Dec

504,025'

453,9117,685

1465,371

0

90150

1,617'34,989'

11,0419.200

26.225'

510,724'89

5,923178

6,850322

16.9359,470'

1999

Jan.

504,486

453,3337,056

3374.670

0

20160

2,31336,570

11,0469,200

26.296

510.10487

6.597186

7,618443

16,7119,281

End-of-month ligures

Nov.

504.546

45!,99I8,970

3686,172

0

115

0462

34.567

11.0419,200

26,182'

507,130'99

5,219

7.211337

16,57914.182

Dec

522,252'

452.14119.674

338I0 7IP

0

1160

1,636'37,744'

1 1.0469.200

26.270'

517.484'85

6.086167

7,044'1,605

16,35419.941'

Jan.

498.740

454.4394,485

3362,5.35

0

5550

16436.721

1 1.0489.200

26,326

505,45798

7.621234

7,830246

16 2697.556

Average of daily figures for week ending on date indicaled

1998

Dec. 16

503.105

454,0196.909

3386,380

0

25130

57534,846

11,0419,200

26,217'

507.775'87

6.324195

6.703290

17,11311,077'

Dec. 23

504,231'

453.1118.098

3385,767

0

8160

1.747'35.147

11,0419.200

26.235'

511.453'84

5.434194

6,977231

17,1979,136'

Dee. 30

510.958'

454,19111,000

3385,570

0

345200

3.390'36,103

11,0439,200

26,252'

516.782'85

7.195174

6,852235

17,1528,978'

1999

Jan. 6

515,752

452,32114,991

3388,174

0

24120

2.78.137.109

11,0469,200

26.270

516,89485

5,992169

7.0441,400

16.39714.287

Jan. 13

500.410

JM6903.820

3383,256

0

69760

1,62435,979

11,0469,20(1

26,284

511,46585

5,423189

7,892207

16,8744,803

Jan. 20

505,981

452,8186,291

1386,046

0

2240

4.18736,275

11,0469,200

26,298

508.95786

7,296181

7,468212

16.87111.452

Jan. 27

500,962

452,7256,281

3373.226

0

10550

1,38136,903

11,0469 200

26.312

506.72588

6,963184

7,865237

16,8408,616

Wednesday figures

Dec. 16

503.843

455,0355.702

3187,181

0

145140

72934,699

11.0419.200

26.217'

509.911'84

8.628170

6,70326!

16,9657.578'

Dec. 23

508.064'

454,6577,845

3385.742

0

21210

4.187'35.254

11,(Ml9,200

26.235'

515.739'85

1.817175

6.977175

16.96910,583'

Dec. 30

517,601'

454,77215.549

33K7,388

0

1.642270

873'.37,013

11,0469.200

26.2521

518,332'85

10,174166

6.852164

16.95711,371'

Jan. 6

504.136

455.6454.507

3381.353

0

10160

4,32035,864

11,0469.200

26,270

515,17685

4 960170

7.045162

16.4666,588

Jan. 13

503.126

456,4113.700

3384,472

0

14570

1,93836,115

11.0469.200

26,284

510.26986

5,006214

7,892200

16,6139.376

Jan. 2(1

505,507

453,8686,140

3383,958

0

75.10

4,69036.435

11.0469,200

26.298

508,61686

7.466177

7,468206

16,62611.405

Jan. 27

506,928

454,5389,891

3364.027

0

750

43537.689

11.0469,200

26.312

506,82498

7,038168

7.865217

16.61014,666

1. Amounts of cash held as reserve.-* are shown in table 1.12. line 2.2. Includes securities loaned—fully guaranteed by U.S. government securities pledged

with Federal Reserve Banks—and excludes securities sold and scheduled to be bought backunder matched sale-purchase lrans;ic!ions.

3. Includes compensation that adjusts for the effects of inflation on the principal ofinflation-indexed securities.

4. Excludes required clearing balances and adjustments ID compensate for float.



1.12 RESERVES AND BORROWINGS Depository Institutions'

Millions of dollars

Reserve classification

1 Reserve balances with Reserve Banks2 Total vault cash3

3 Applied vault cash4

5 Total reserves6

7 Excess reserve balances at Reserve Banks8 Total borrowings at Reserve Banks*

10 Extended credit9

1 Reserve balances with Reserve Banks"2 Total vault cash3

4 Surplus vault cash5

7 Excess reserve balances at Reserve Banks7

9 Seasonal borrowings10 Extended credit9

Prorated monthly averages of biweekly averages

1996

Dec,

13.39544,52537,8486,678

51,24249,819

1.423155680

1997

Dec,

10,67344,740'37,206

7,534'47,88046,196

1.683324790

1998

Dec.

9,022'44.30535,997

8.30845.019'43,435'

1,584'117150

Biweekly avert

1998

July

9,64642,030'34.9547,075'

44,60043.235

1,365258215

0

ges of daily

Aug.

9,68242,123'35.0257,098'

44,70743,194

1,513271242

0

Sept.

9,28442,524'34,9097,614'

44,19342,509

1.684251178

0

Oct.

9.02643,268'35,090

8,178'44,11542,544

1.572174107

0

Nov.

8,85543,104'35,297

7,807'44,15242,527

1,62484370

Dec.

9,022'44,30535,997

8,30845,019'43,435r

1,584'117

150

igures for two week periods ending on dates indicated

1998

Oct. 7

9,58842,821'34,9057,916'

44 49342,514

1,978379152

0

Oct. 21

8.40043,995'35,321

8,674'43 72042,520

1.200122105

0

Nov. 4

9.S0942.565'34,8977,668'

44 40542.599

1.806103790

Nov. 18

8,52043,08034,935

8,1454145541,913

1,5428240

0

Dec. 2

9,02843,31335,853

7,46044,88043,221

1,65979200

Dec. 16

8,94943,23035,2737,957

44 22242,917

1.30426130

Dec. 30'

9.05745,47036,7488,722

45 80543,999

1,806195

180

1999

Jan.

9,65945,49936,674

8,82546,33344,801

1,532206

70

1999

Jan. 13'

9.55145.02335,9119,113

45 46243.240

2.221370

90

Jan. 27

10,02544,83836,845

7.99346,87045,880

99068

50

Feb. 10

8,72849,36438,55610,80847 28446,099

1,184158

80

1. Data in this table also appear in the Board's H.3 (502) weekly statistical release. Forordering address, see inside front cover. Data are not break-adjusted or seasonally adjusted.

2. Excludes required clearing balances and adjustments to compensate for float andincludes other off-balance-sheet "as-of' adjustments.

3. Vault cash eligible to satisfy reserve requirements. It includes only vault cash held bythose banks and thrifts that are not exempt from reserve requirements. Dates refer to themaintenance periods in which the vault cash can be used to satisfy reserve requirements.

4. All vault cash held during the lagged computation period by "bound" institutions (thatis, those whose required reserves exceed their vault cash) plus the amount of vault cashapplied during the maintenance period by "nonbound" institutions (that is, those whose vaultcash exceeds their required reserves) to satisfy current reserve requirements.

5. Total vault cash (line 2) less applied vault cash (line 3).6. Reserve balances with Federal Reserve Banks (line 1) plus applied vault cash

(line 3).7. Total reserves (line 5) less required reserves (line 6).8. Also includes adjustment credit.9. Consists of borrowing at the discount window under the terms and conditions estab-

lished for the extended credit program to help depository institutions deal with sustainedliquidity pressures. Because there is not the same need to repay such borrowing promptly aswith traditional short-term adjustment credit, the money market effect of extended credit issimilar to that of nonborrowed reserves.


Policy Instruments A 7

1.14 FEDERAL RESERVE BANK INTEREST RATES

Percent per year

Current and previous levels

Federal ReserveBank

Adjustment credit1

On3/12199

Seasonal credit"

On3/12/09

Extended credit

On3/12/99

Effective dale Previous rale

BostonNew York. . . .Philadelphia. .Cleveland. .RichmondAtlanta

ChicapoSt. Louis . . . .Minneapolis .Kansas City . .DallasSan Francisco.

11/18/9811/17/9811/17/9811/19/9811/18/9811/18/98

11/19/9811/19/9811/19/9811/18/9811/17/9811/17/98

Range of rates for adjustment credit in recent years'1

Effective date

In effect Dec. 31, 1977

1978—Jan. 920

May 1112

Julv 310

Aug. 21Sept. 22Oct. 16

20Nov. 1

3

1979—July 20Aim. 17

20Sept. 19

21Oel. 8

10

1980— Feti. 519

May 29.10

June 1316

July 2829

.Sept. 26Nov. 17Dec. 5

81981 —May 5

8

Range (orlevel)—AllF.R. Banks

6

6-6 56 5

6.5-77

7-7.257.257.75

X8-8.58.5

8.5-9.59.5

1(110-10.5

10.510.5-11

1111-12

12

12-1313

12-1312

11-121 1

10-1110) |12

12-1313

13-1414

F.R. Bankof

N Y

6

6.5rSS777.257.257.7588.58.59.59.5

1010.510.511II1212

1313131211II1010II1213131414

Effective date

1981—Nov. 26

Dec 4

1982—Julv 2023

Aug. 23

162730

Oct. 1213

No% 2226

Dec. 141517

1984—Apr 9

nNov. 2126

Dec. 24

1985—May 2024

1986—Mar. 710

Apr. 2123

July IIAug. 21

22

1987—Sept. 41 j

Range (orlevel)—AllF.R Banks

13-141312

11.5-1211.5

11-11.511

10.510-10.5

109.5-10

9.59-9.5

98.5-98.5-9

8.5

8.5-99

8 5-98.58

7.5-87.5

7-7.57

6.5-76.56

5.5-65.5

5.5-6

F.R. Bankof

NY.

131312

11.511.51 ]1110.510109.59.59998.58.5

998.58.58

7.57.5

776.56.565.55.5

6

Effeclivc date

1988—Alii!. 9] |

1989—Feb 2427

1990—Dec. 19

1991—Feb. 14

Apr. 30May 2Sept. 13

17Nov. 6

7Dec. 20

24

1992—July 27

1994—May 1718

Aug. 1618

Nov. 1517

1995—Feh. 19

1996—Jan 31Feb. 5

1998—Oct. 15Oct. 16

1998—Nuv 17Nov. 19

In effect Mar. 12, 1999

Range (orlevel)—AllF.R. Banks

6-6.56.5

6.5-77

6.5

6-6.5(i

5.5-65.5

5-5.5s

4.5-54 5

3.5 -4<i3.5

3-3.5}

3-3.53.5

3.5^t4

4—1.754.75

4.75-5.255.25

5.00-5255.0(1

4.75-5.004.75

4.50-4.754.50

4.50

F.R. Bankof

N.Y.

6.56.5

77

6.5

665.55.5554.54.53.53.5

3 53.5444.754.75

5.255 25

5.005 (10

4.754.75

4.504.50

4.50

I Available on a .short-term basis to help depository institutions meet temporary needs forfunds that cannot be met through reasonable alternative sources. The highest rate establishedfor loans to depository institutions may be charged on adjustment credit loans of unusual size(hat result from a major operating problem at the borrower's facility.

2. Available to help relatively small depository institutions meet regular seasonal needs forfunds that arise from a clear pattern of intrayearly movements in their deposits and loan1; andthat cannot be met through special industry lenders. The discount rate on seasonal credit Likesinto account rates charged by market sources of funds and ordinarily is reestablished on thefirst business day of each two-week reserve maintenance period; however, it is never less thanthe discount rate applicable to adjustment credit.

3. May be made available K> depository institutions when similar assistance is notreasonably available from olber sruuees, inchiding special industry lenders. Such credit maybe provided when exceptional circumstances (including sustained deposit drains, impairedaccess to money market funds, or sudden deteri oral ion in loan repayment performance) orpractices involve only a particular institution, orlo meet the needs of institutions experiencingdifficulties adjusting to changing market conditions over a longer period (particularly at timesof deposit disinicrnieduuioni The discount rate applicable to adjustment credit ordinarily ischarged on extended-credit loans outstanding less than thirty days; however, at the discretion

of the Federal Reserve Bank, this time period may be shortened. Beyond this initial period, aflexible rale somewhat above rates charged on market sources of funds is charged. The rateordinarily is reestablished on the first business day of each two-week reserve maintenanceperiod, but it is never less than the discount rate applicable to adjustment credit plus 50 basispoints.

4. For earlier data, see the following publications of the Board of Governors: Banking andMonetary StunntU-y 1914-1941. and 1941-1970; and the Annual Statistwal Digest, 197(1-1979.

In 1980 and 1981, the Federal Reserve applied a surcharge to short-term adjustment-creditborrowings by institutions with deposits of $500 million or more that had borrowed insuccessive weeks or in more than four weeks in a calendar quarter. A 3 percent surcharge wasin effect from Mar. 17, 19X0. through May 7, 19X0. A surcharge of 2 percent was reimposedon Nov. 17, 1^80; the surcharge was subsequently raised to 3 percent on Dec. 5. 1980, and to4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981,and to 2 percent effective Oct 12, 1981. As of Oct. I, 1981, the formula for applying thesurcharge was changed from a calendar quarter to a moving thirteen-week period Thesurcharge was eliminated on No\ 17, 1981



1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS'

Type of deposit

Net transaction accounts2

1 $0 million-$46.5 million3

2 More than $46.5 million4

3 Nonpersonal time deposits'1

4 Eurocurrency liabilities6

Requirement

Percentage ofdeposits

310

0

0

Effective date

12/31/9812/31/98

12/27/90

12/27/90

1. Required reserves must be held in the form of deposits with Federal Reserve Banksor vault cash Nonmember institutions may maintain reserve balances with a FederalReserve Bank indirectly, on a pass-through basis, with certain approved institutions. Forprevious reserve requirements, see earlier editions of the Annual Report or the FederalReserve Bulletin. Under the Monetary Control Act of 1980, depository institutionsinclude commercial banks, savings banks, savings and loan associations, credit unions,agencies and branches of foreign banks, and Edge Act corporations.

2. Transaction accounls include all deposits against which the account holder is permittedto make withdrawals by negotiable or transferable instruments, payment orders of with-drawal, or telephone or preauthorized transfers ior the purpose of making payments to thirdpersons or others. However, accounts subject to the rules that permit no more than sixpreauthorized, automatic, or other transfers per month (of which no more than three may beby check, draft, debit card, or similar order payable directly to third parties) are savingsdeposits, not transaction accounts.

X The Monetary Control Act of 1980 requires that the amount of transaction accountsagainst which the 3 percent reserve requirement applies be modified annually by 80 percent ofthe percentage change in transaction accounls held by all depository institutions, determinedas of June 30 of each year. Effective with the reserve maintenance period beginningDecember 31, 1998, for depository institutions that report weekly, and with the periodbeginning January 14, 199°, for institutions thai report quarterly, the amount was decreasedfrom $47.8 million to $46.5 million.

Under the Garn-St Germain Depository Institutions Act of 1982, the Board adjusts theamount of reservable liabilities subject to a zero percent reserve requirement each year for the

succeeding calendar year by 80 percent of the percentage increase in the total reservableliabilities of all depository institutions, measured on an annual basis as of June 30. Nocorresponding adjustment is made in the event of a decrease. The exemption applies only toaccounls that would be subject to a 3 percent reserve requirement. Effective with the reservemainienance period beginning December 31, 1998, for depository institutions that reportweekly, and with the period beginning January 14, 1999, for institutions that report quarterly,the exemption was raised from $4.7 million to $4.9 million.

4 The reserve requirement was reduced from 12 percent to 10 percent onApr. 2. 1992. for institutions that report weekly, and on Apr 16. 1992. for institutions thatreport quarterly.

?. For institutions that report weekly, the reserve requirement on nonpersonal time depositswith an original maturity of less than 1 '/2 years was reduced from 3 percent to 1 '/i percent forthe maintenance period that began Dec. 13, 1990. and to zero for the maintenance period thatbegan Dec. 27, 1990. For institutions that report quarterly, the reserve requirement onnonpersonal lime deposits with an original maturity of less than 1 Vi years was reduced from 3percent to zero on Jan. 17, 1991.

The reserve requirement on nonpersonal time deposits with an original maturity of 1 [/iyears or more has been zero since Oct. 6, 1983.

6. The reserve requirement on Eurocurrency liabilities was reduced from 3 percent to zeroin the same manner and on the same dates as the reserve requirement on nonpersonal timedeposits with an original maturity of less ihan 11/2 years tsee note 5).


Policy Instruments A9

1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS'

Millions of dollars

Type of transactionand maturity

US. TREASURY SECURITIES2

Outright transactions (excluding matchedtransactions)

Treasury bills1 Gross purchases2 Gross sales3 Exchanges4 For new bills5 Redemptions

Others within one year6 Gross purchases7 Gross sales8 Maturity shifts9 Exchanges

10 RedemptionsOne lo five years

1 Gross purchasesL2 Gross sales13 Maturity shifts14 Exchanges

Five to ten years15 Gross purchases16 Gross sales17 Maturity shifts18 Exchanges

More than ten years19 Gross purchases20 Gross sales21 Maturity shifts22 Exchanges

All maturities23 Gross purchases24 Gross sales2? Redemptions

Marched transactions26 Gross purchases27 Gross sales

Repurchase agreements28 Gross purchases29 Gross sales

30 Net change in U.S. Treasury securities

FEDERAL AGENCY OBLIGATIONS

Outright transactions31 Gross purchases32 Gross sales33 Redemptions

Repurchase agreements34 Gross purchases35 Gross sales

36 Net change in federal agency obligations

37 Total net change in System Open Market Account. . .

1996

9.9010

426,928426.928

0

5240

30.512-41,394

2.015

3.8980

-25.02231.459

1,1160

-5,4696,666

1.6550

-103.270

17.0940

2.015

3 092 3993,094,769

457.568450.359

19,919

00

409

75,35474.842

103

20.021

1997

9.1470

436,257435.907

0

5.5490

41,716-27,499

1.996

19,6800

-37,98720,274

3,8490

-1,9545.215

5.8970

-1.7752.360

44,1220

1.996

3 577 9543.580.274

810,485809,268

41,022

00

1.540

160,409159.369

-500

40,522

1998

3,5500

450,835450,835

2,000

6,2970

46,062-49,434

2,676

12,9010

-37,77737,154

2,2940

-5,9087,439

4,8840

-2,3774,842

29,9260

4.676

4,395,4304,399,330

512,671514.186

19.835

02S

322

284,316276,266

7.703

27,538

June

00

32.83032,830

0

00

1.520-5.084

0

00

- 1,5205.084

0000

0000

000

369 " 8370.569

57.09841,414

14,473

00

25

14,54812.913

1.610

16.083

July

00

40,31240.312

0

00

2,638-2,242

1,311

00

-2,6381,842

0000

000

400

00

1,311

W285371.142

52.11663.531

-10.584

0I)0

11,23612.341

-1.105

-11,689

Aug.

00

34,60734,607

0

9860

b.367-8.964

0

5350

-2,1685,828

3030

-3.4111.364

1.7690

-7891,772

3.59300

446 245348.318

39.07838.402

2,196

0

50

33,43130,625

2.731

4.927

1998

Sept.

00

33,14033,140

0

1,0380

2,301-2.242

0

3,9890

-2,3012,242

351000

0000

5,37700

380 594382.063

63,92459,731

8.101

00

48

18,48619.953

-1,515

6.586

Oct.

00

40.71240.712

0

7410

2.423-400

602

7250

-2,4230

000

400

1,674000

3.1400

602

402.581400.995

40,82348,672

-3,725

00

15

51,47150,0.32

1.424

-2,301

Nov.

00

34,95734,957

0

6620

5,444-8,093

0

2,3970

-4,5746,013

8620

7181,135

6980

-1.589945

4.61900

358,438359,256

23,88419,200

8,484

00

20

51,41948,785

2,614

11,098

Dec.

00

41,39341,393

0

00

2,539- 2.555

0

00

- 2,5392.555

0000

00(10

000

418,538420,397

49,29638.592

8,845

00

30

48,81544.285

4,500

13,345

1. Sales, redemplions. and negaine figures reduce holdings of ihe S\siem Open MarketAccount, all other figures increase such holdings

2. Transactions exclude changes in compensation for the effects of" inflation on the principalof inflation-indexed securities.



1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1

Millions of dollars

Account

ASSETS

1 Gold certificate account2 Special drawing rights certiticate account3 Coin

4 To depository institutions5 Other6 Acceptances held under repurchase agreements

Federal agency obligations7 Bought outright8 Held under repurchase agreements

11 Bills12 Notes . . . .13 Bonds14 Held under repurchase agreements

15 Total loans and securities

16 Items in process of collection17 Bank premises

Mm assets 118 Denominated in foreign currencies"19 All other'1

20 Total assets

LIABILITIES

21 Federal Reserve notes

22 Total deposits

23 Depository institutions

25 Foreign—Official accounts26 Other

27 Deferred credit items28 Other liabilities and accrued dividends5

29 Total liabilities

CAPITAL ACCOUNTS-

31 Surplus32 Other capital accounts

33 Total liabilities and capital accounts

MEMO34 Marketable U.S. Treasury securities held in custody for

foreign and international accounts

35 Federal Reserve notes outstanding (issued to Banks)36 LESS. Held by Federal Reserve Banks37 Federal Reserve notes, net

Collateral held against notes, net38 Gold certificate account39 Special drawing rights certificate account40 Other eligible assets41 U.S. Treasury and agency securities

42 Total collateral

Wednesday

1998

Dec. 30

1999

Jan. 6 Jan. 13 Jan. 20 Jan. 27

End of month

1998

Nov. 30 Dec. 31

1999

Jan. 31

Consolidated condition statement

11,0469,200

360

1.66900

3387,388

470,321

454,772197,404187.89569,47415,549

479,716

8,8951,297

18,98016 829

546,322

492,524

29,435

18,93110.174

166164

7,4064.464

533,829

5,9515,2461,296

546,322

594,076

11,0469,200

35.3

10800

3383,353

460,152

455,645198,277187,89569,4744,507

463,951

13,0601,300

19,77614 748

533,434

489.345

19,062

13,7654,960

170162

8,5614,089

521,057

5,9605,952

465

533,434

599,947

11,0469,200

386

15200

3384.472

460 111

456,411199,042187,89569.474

3,700

465,073

10.1141,300

19.78414 995

531,897

484.456

23,150

17,7305,006

214200

7,6784,194

519,478

5,9605,952

507

531,897

600,099

11,0469.200

410

7800

3383,958

460,008

453,868196,992187,40369.474

6,140

464.382

16,2781,300

19,79315 331

537,740

482,814

27,308

19,4597,466

177206

10,9914,226

525,340

5,9645,952

484

537,740

605,156

11,0469,200

439

1200

3364.027

464,429

454,538197,662187,40369,4749,891

468,804

7,2891.301

19,80216 548

534,429

481,049

29,985

22,5637,038

168217

6,7854,192

522,011

5,9555,952

511

534,429

600,443

11,0419,200

391

1700

3686,172

462,961

453,991196,631187.88869.472

8,970

469,517

2,8991.294

18,94314,456

527,740

4K 1,438

27.260

21,4935,219

337

2,4634,456

515,617

5,9315.205

987

527,740

596,157

11,0469,200

358

1700

33810,702

471,815

452,141194,772187,89569,47419,674

482,872

6,9331,300

19,76716,625

548,101

491,657

34,165

26.3066,086

1671,605

5,9244,450

536,197

5,9525,952

0

548,101

594,076

11,0489,200

459

6000

3362,535

458.924

454,439196,948187.40370.0894.485

461.855

5 3251,299

19.23516 165

524,586

479.689

23,682

15 5777,623

234246

4.9484,183

512,501

5.9555.943

188

524,586

600,443

Federal Reserve note statement

612,055119,530492,524

11,0469,200

0472,278

492,524

613,734124,390489,345

11,0469,200

0469,099

489,345

617,857133,400484,456

11,0469,200

0464.211

484,456

621,030138,216482,814

11,0469.200

0462,569

482,814

623,737142,688481,049

11,0469.200

0460,803

481,049

601,253119.815481,438

11.0419.200

0461.197

481,438

611.688120,030491,657

11,0469,200

0471,412

491,657

625.230145,541479,689

11,0489.200

0459.441

479,689

1. Some of the data in ihis table also appear in the Board's H.4 ! (503) weekly statisticalrelease. For ordering address, see inside from cover.

2. Includes securities loaned—fully guaranteed by U.S. Treasury securities pledged withFederal Reserve Banks—and includes compensation that adjusts for the effects of inflation onthe principal of inflation-indexed securities. Excludes securities sold and scheduled to bebought back under matched sale-purchase transactions.

3. Valued monthly at market exchange rates4. Includes special investment account at the Federal Reserve Bank of Chicago in Treasury

bills maturing within ninety days.5. Includes exchange-translation account reflecting the monthly revaluation at market

exchange rales of foreign exchange commitments.


1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding

Millions of dollars

Federal Resei-ve Banks A11

Type of holding and maturity

Wednesday

Dec. 30 Nov. 30

2 Within fifteen days'

3. Sixteen days to ninety days

4 Total U.S. Treasury securities2

5 Within fifteen days'6 Sixteen days to ninety days7 Ninety-one days to one year8 One year to live years9 Five years to ten years

10 More than ten years11 Total federal agency obligations

12 Within fifteen days'13 Sixteen days to ninety days14 Ninety-one days to one year. . . .15 One year to five years16 Five years to ten years17 More than ten vears

1,669

1,6681

465,814

23,47097,252

137,252107,35044,82255,668

4,373

4,035277561

1750

108

1054

458,877

17,251102,434130,973107,73044,82255,669

2,966

2,628277561

1750

1484

460,111

12,752103,096136.043107.73044.82255.669

4,810

4,474257561

1750

78

780

457,933

16,54398,021

i35,438107,04045,22255.669

3,706

3,370257561

1750

120

464,429

23,51397,932

135,053107,04045.22255.669

4,362

4,027258155

1750

16

412

462,961

16,007100,695138,427107,34844,81755,666

6440

6 2022

10051

1850

467,308

16,32599,127

143,635107,73044,82255,668

7,687

7,349277561

1750

1430

458,924

10,051110,149130,178107,04045,22256,284

2,871

2,535258155

1750

1. Holdings under repurchase agreements are classified as maturing within fifteen days inaccordance with maximum maturity of the agreements.

2 Includes compensation thai adjusts for the effects of inflation on the principal ofinflation-indexed securities.



1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1

Billions of dollars, averages of daily figures

ADJUSTED FORCHANGES IN RESERVE REQUIREMENTS-

I Total reserves3

2 Nonborrowed reserves4

3 Nonborrowed reserves plus extended credit^4 Required reserves . . . .5 Monetary base6

6 Total reserves7

7 Nonborrowed reserves8 Nonborrowed reserves plus extended eredit"9 Required reserves*

NOT ADJUSTRD FORCHANGES IN RESERVE REQUIREMENTS'"

12 Nonborrowed reserves13 Nonborrowed reserves plus extended credit1"

15 Monetary base12

17 Borrowings from the Federal Reserve

1995Dee.

19%Dec.

1997Dec.

1998Dei-.

June July Aug.

1998

Sept. Oct. Nov. Dec.

1999

Jan.

Seasonally adjusted

56.4056.1456.1455.12

434.03'

58.0257.7657.7656.74

439.02'

57 9057.6457.6456 61

444.44'1 28.26

50.0849.9349.9348.66

45l.60r

51.5251.3751.3750.10

456.71'

51 2451.0951.0949 8 '

463.48'1 A"1

.16

46 6746.3546.3544.99

479.39'

47.9747.6547.6546.29

485.05'

47 8847.5647.5646 20

491.86'1 68.32

44.9144.7944 7943.32

512.99'

45.17'45.0645.1)643 si

518.29'

45 0244.90'44.90'43 44'

525.02'1 58'.12

45.3945.1445.1443.77

492.40'

44.8144.5644.5643.45

494.62'

Nol sci.sona

45.1744.9244.9243.55

491.11'

45 1044.8444.844148

497.87'1 62.25

44.6944.4344.4343.32

495.28'

44 6044 3444.3443 24

502.13'1 17.26

45.0044.7344.7343.48

498.17'

44.5944.3344.3342.90

502.24'

lly adjusted

44.8144.5444.544.3.30

497.49'

447144.4444.4443.19

504.39'1 51.27

44.3144.0644.0642.63

500.99'

44 1943.9443.9442 51

507.80r

1 68.25

44.3944.2144.2142.81

505.77'

44 2444.0744.0742.67

504.51'

44 1">419443.9442 54

511.36'1 57

17

44.5744.4944.4942.95

509.49'

44 2944.2144.2142.67

510.17'

44 1544.0744.0742.53

516.94'1.62

(18

44.9144 7944.7943.32

512.99'

45.17'45.0645.0643.59

518.29'

45.0244.90'44.90'43.44'

525.02'1.58'.12

44.8744.6744.6743.34

516.57

46.3346.1246.1244.80

519.93

46 3346.1346.1344.80

527.511.53.21

1. Latest monthly and biweekly figures are available from the Board's H.3 (502) weeklystatistical release. Historical data starting in 1959 and estimates of Ihe effect on requiredreserves of changes in reserve requirements arc available from the Money and ReservesProjections Section, Division of Monetary Affairs. Board of Guvextiors of the Federal ReserveSystem, Washington. DC 20551.

2. Figures reflect adjustments for discontinuities, or "breaks," associated with regulatorychanges in reserve requirements. (See also table J.JO.)

3. Seasonally adjusted, break-adjusted tola! reserves equal seasonally adjusted, break-adjusled required reserves (line 4) plus excess reserves (line 16).

4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally adjusted,break-adjusted total reserves (line 1) less total borrowings of depository institutions from theFederal Reserve (line 17).

5. Extended credit consists of borrowing at the discount window under the terms andconditions established for the extended credit program to help depository inslitutions dealwith sustained liquidity pressures. Because there is not the same need lo repay suchborrowing promptly as with traditional short-term adjustment credit, the money market effectof extended credit is similar to that of nonborrowed reserves.

6. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonallyadjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currencycomponent of the money stock, plus (3) (for all quarterly reporters on the "Report ofTransaction Accounts, Other Deposits and Vault Cash" and for all those weekly reporterswhose vault cash exceeds their required reserves) the seasonally adjusted, break-adjusteddifference between current vault cash and the amount applied to satisfy current reserverequirements.

7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) plus excessreserves (line 16).

8. To adjust required reserves for discontinuities that are due to regulatory changes inreserve requirements, a multiplicative procedure is used to estimate what required reserveswould have been in past periods had current reserve requi b i fl B k

j q gy greserve requirements, a multiplicative procedure is used to estimate what required reserveswould have been in past periods had current reserve requirements been in cfleet. Break-adjusted required reserves include required reserves against transactions deposits and nonper-sonal lime and savings deposits (bul nol rescrvable nondeposit liabilities).

O Thp hrpfil'-fiHmcT^H iv\fsi\£»t i r \ i K'*t-*> •^jm^lc I M hr^^jL -'iHiiict^ri t(M?al r^cr»n;pc flirts Al nine

LLjUIJ L. JIIL 111 -̂

10, Reflects actual reserve requirements, including those on nondeposit liabilities, with noadjustments to eliminate ihe effects of discontinuities associated with regulatory changes inreserve requirements.

11. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy reservxiuirements.

LUILLj.llllJlH.lll [JCIHJU^ l_[IUUIg Ull IVIUllUiiyS.

!3. Unadjusted toial reserves (line 1 1) lest, unadjusted required (line 14).


Monetary and Credit Aggregates A13

1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1

Billions of dollars, averages of daily figures

Memutet1

1 Ml2 M 2 . . .3 M34 Debt

Ml components5 Currency1

6 Travelers checks"1

7 Demand deposits5

8 Other checkable deposits6

Nontrunsucllon components9 In M27

10 In M.I only"

Commercial banks11 Savings deposits, including MMDAs12 Small time deposits9

13 Large time deposits10' "

Thrift institutions14 Savings deposits, including MMDAs15 Small time deposits'16 Large time deposits'"

17 Relail18 Institution-only

Repurchase agreements and Eurodollars19 Repurchase agreements'2

^0 Eurodollars'2

Debt components21 Federal debt22 Nonfederal debt

Measures23 M124 M225 M326 Debt

Ml components27 Currency1

28 Travelers checks4

29 Demand deposits5

30 Other checkable deposits6

Nontninsaction components31 In M27

32 In M3 only"

Commercial hanks33 Savings deposits, including MMDAs .34 Small lime deposits''35 Large time deposits"1 "

Thrift institutions36 Savings deposits, including MMDAs37 Small lime deposits38 Large time deposits'"

Mone\ market mutual funds39 Retail . . .40 Institution-only

Repurchase agreements and Eurodollars41 Repurchase agreements'"42 Eurodollars'2

Debt components4.3 Federal debt44 Nonfederal debl

1995Dec.'

1996Dec.'

1997Dec.1

1998Dec.'

1998'

Oct. Nov. Dec.

1999

Jan.

Seasonally adjusted

1.126.73.649.14.618.5

11 695 6

372.38.3

389.4356.7

2.5224969.4

775.3575.0346.6

356.774.5

455.5255.9

198.79^7

3.638.910.056.7

1,081.33.823.94,955.6

14 424 1

394.18.0

403.0276.2

2.742.61,131.7

905.2593.7414.8

367.1353.878.4

522.8313.3

211.3113 9

3,780.610,643.5

1.074.94,046.65,404.7

15 167 2

424.57.7

396.5246.2

2,971.81,358.0

1,022.9626.1490.2

377.3"<4V2

859

602.3379.9

252.8149 ">

3.798.411,368.8

1,093.04,401 56,005 9

16 128 1

459.27.8

377.3248.7

3.308.41,604.5

1,189.8626.1548.5

415.2325.789.1

751.6516.2

297.7153 0

3.747.J12.380.8

1.080.44,327.05,876.3

15 956 7

453.38.3

374.7244.2

i.246.61,549.3

1,155.3627.5535.5

407.8330.587.7

725.5486.7

283.5156 0

3.750 312,206.4

1,088.84.365.15,945.3

16 048 3

456.47.9

376.8247.6

3,276.31,580.2

1,171.1628.3542.7

411.5327.587.9

737.9503.8

289.5156"1

3.748.812.299 5

1.093.04,401 56.005.9

16 P 8 1

459.27.8

377.3248.7

1.W8.41.604.5

1,189.8626.1548.5

415.2325.789.1

751.6516.2

297.7153 0

3 747.412,3808

1.090.24.424.06,027.9

462.67.8

370.7249 2

3.333.81.604.0

1,201.3621.9558.4

420.2324.391.1

766.1515.0

291.5148 0

n.an.a.

Not seasonally adjusted

1,152.43,671.74,638.0

13,697.0

376.285

407.2360.5

2,519.3966.4

774.1.573.8345.8

359.2355.9

74 3

45b. 1257 7

193 894 9

3,645.910,051 1

1,104.93,843.74,972.5

14.424.4

397.98.3

419 9278.8

2.738.91.I28.S

903.3592.7413.3

366.3353.278.1

523.2316.0

205.7115 7

3,787.910.636.5

1.097.44.064.85,420.8

15.166.8

428.97.9

412.3248.3

2.967.41.356.0

1,020.4

487.7

376.4342.885.4

602.5384.5

246.1152 3

3.805.811.361.0

1.115.04,418.36,022.0

16,128.5

464.18.0

392.1250.7

3,303.31.603.8

1,186.7625.5544.9

414.1325 488.5

751.6523.3

290.3156 8

3,754.912,373.5

1,076.24.311.85.861.3

15.918.3

452.68.2

373.2242.2

3.235.61.549.5

1,147.6628.1538.9

405.13.30.888.2

724.1482.9

282.6156 8

3,727.812.190.5

1,094.14,365.55,950.2

16.030.4

457 58.1

381.6247.0

3,271.41,584.6

1.167.9628.4544.9

410.4327.688.3

737.2504.9

290.0156 6

3.746.612.283.9

1.115.04,418.36.022.0

16.128.5

464.18.0

392.1250.7

3,303.31.60.3.8

1.186.7625.5544.9

414.1325.4

88.5

75 1.6523.3

290.3156 8

3.754.912.373.5

1,097.54.427 46.1)358

n.a

462.479

375.3251.9

3,329 91,608.4

1.196.3622.6544 4

418.5.324.6

88.8

767.8529.3

292.9153 1

n.a.n.a.

Foe-moles appear on following page.



NOTES TO TABLE 1.21

1. Latest monthly and weekly figures are available from the Board's H.6 (508) weeklystatistical release. Historical data starting in 1959 are available from the Money and ReservesProjections Section, Division of Monetary Affairs. Board of Governors of the Federal ReserveSystem, Washington, DC 20551.

2. Composition of the money stock measures and debt is as follows:Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of

depository institutions, (2) travelers checks of notibank issuers, (3) demand deposits at allcommercial banks other than Iliose owed to depository institutions, the U.S. government, andforeign banks and official institutions, less cash items in the process of collection and FederalReserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order ofwithdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions,credit union share draft accounts, and demand deposits at thrift institutions. Seasonallyadjusted Ml is computed by summing currency, travelers checks, demand deposits, andOCDs, each seasonally adjusted separately.

M2: Ml plus (1) savings deposits (including MMDAs), (2) small-denomination timedeposits (time deposits—including retail RPs—in amounts of less than $100,0001. and (})balances in reiail money market mutual funds. Excludes individual retirement accounts(IRAs) and Keogh balances at depository institutions and money market funds. Seasonallyadjusted M2 is calculated by summing savings deposits, small-denomination time deposits,and retail money fund balances, each seasonally adjusted separately, and adding this result toseasonally adjusted Ml.

M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more)issued by all depository institutions, (2) balances in institutional money funds. (3) RPliabilities (overnight and term) issued by all depository institutions, and (4) Eurodollars(overnight and term) held by U.S. residents at foreign branches of U.S. banks worldwide andat all banking offices in the United Kingdom and Canada. Excludes amounts held bydepository institutions, the U.S. government, money market funds, and foreign banks andofficial institutions. Seasonally adjusted M3 is calculated by summing large time deposits,institutional money fund balances, RP liabilities, and Eurodollars, each seasonally adjustedseparately, and adding this result to seasonally adjusted M2.

Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancialsectors—the federal sector (U.S. government, not including government-sponsored enter-

prises or federally related mortgage pools) and the nonfederal sectors (state and localgovemmems, households and nonprofit organizations, nonfinanual corporate and nonfarmnoncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt andcorporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data,which are derived from the Federal Reserve Board's flow of funds accounts, are break-adjusted (that is, discontinuities in the data have been smoothed into the series) andmonth-averaged (that is, the data have been derived by averaging adjacent month-end levels).

3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of depositoryinstitutions.

4 Outstanding amount of U.S. dollar-denominated travelers checks of notibank issuers.Travelers checks issued by depository institutions are included in demand deposits.

5. [)emand deposits at commercial banks and foreign-related institutions other than thoseowed to depository institutions, the U.S. government, and foreign banks and official institu-tions, less cash items in the process of collection and Federal Reserve float.

6. Consists of NOW and ATS account balances at all depository institutions, credit unionshare draft account balances, and demand deposits at thrift institutions.

7. Sum of (1) savings deposits (including MMDAs). (2) small lime deposits, and (3) retailmoney fund balances.

8. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities(overnight and term) issued by depository institutions, and (4) Eurodollars (overnight andIcnn) of U.S. addressees.

9. Small time deposits—including retail RPs—are those issued in amounts of less than$100,000. All IRAs and Keogh accounts at commercial banks and thrift institutions aresublrauted from small time deposits.

10. Large time deposits are those issued in amounts of $100,000 or more, excluding thosebooked at international banking facilities.

11. Large time deposits at commercial banks less those held by money market funds,depository institutions, the U.S. government, and foreign banks and official institutions.

12. Includes both overnight and term.


Commercial Banking Institutions—Assets and Liabilities A15

1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1

A. All commercial banks

Billions of dollars

Monthly averages

1998

July Aug. Sept. Nov.r Dec/ Jan.

Wednesday figures

Jan. 13 Jan. 20

Seasonally adjusted

Assets1 Bank credit2 Securities in bank credit3 U.S. government securities4 Other securities5 Loans and leases in bank credit2 . . .6 Commercial and industrial7 Real estate8 Revolving home equity9 Other

10 Consumer11 Security1

12 Other loans and leases13 Interbank loans14 Cash assets4

15 Other assets5

16 Total assets6

Liabilities17 Deposits18 Transaction19 Nontransaction20 Large time21 Other22 Borrowings23 From banks in the US24 From others25 Net due lo related foreign offices26 Other liabilities


28 Residual (assets less liabilities)7

Assets29 Bank credit30 Securities in bank credit31 U.S. government securities32 Other securities33 Loans and leases in bank credit2 . . .34 Commercial and industrial35 Real estate36 Revolving home equity37 Other38 Consumer39 Security5


43 Other assets5

44 Total assets6

Liabilities45 Deposits46 Transaction47 Nontransaction48 Large time49 Other50 Borrowings51 From banks in the US52 From others53 Net due to related foreign offices54 Other liabilities



MEMO57 Revaluation gains on off-balance-sheet

items8

58 Revaluation losses on off-balance-sheet items8

4,155.4'1,110.4

762.9347.5

3,045.0864.2

1,234.298.0

1,136.2503.5117.6325.6201.8261.2295.4

4357.0'

3,121.1682.4

2,438.7645.9

1,792.9828.1290.9537.1235.0298.2

4,482.4

374.6r

4.280.51,130.4

760.7369.8

3,150.1897.7

I,271.9r

97.51,174.4'

496.01

131.9352.5213.2243.5312.7

3,191.2664.7

2,526.5668.1

1,858.3857.7295.3562.5187.6322.1

4358.6

433.7

4,341.61,156.5

771.2385.3

3,185.1'906.3'

1281.5'97.6

1,183.8'494.5'137.7365.1'206.1251.6318.1

5,0602

3,221.7665.3

2,556.4680.3

1,876.0859.9298.1561.9203.8334.9

439.8'

4,398.91,177.1

767.4409.7

3221.8'918.5'

1,283. /97.9

1,185.8'497.4'142.9379.4'219.8253.3323.3

5,1373'

3,244.2675.1'

2,569.2'685.8'

1,883.3888.8308.4580.4202.7344.2

4^80.0'

457.8'

4,488.31,217.9

774.6443.3

3,270.5939.1

1,287.896.9

1,190.9496.7158.9388.1220.3242.9322.7

5,2163

3,267.9665.9

2,602.0697.4

1,904.6939.4318.6620.8226.1358.6

4,792.0

424.5

4,528.21,226.7

791.0435.7

3301.5947.2

1,309.397.3

1,212.0498.7152.5393.8219.8249.6327.1

5,266.7

3310.9665.7

2,645.2709.0

1,936.1978.3327.9650.3218.5340.3

4347.9

418.8

4,549.11,235.9

793.1442.8

3,313.2945.1

1323.097.2

1,225.8501.7151.4392.0214.9249.9328.9

5,284.7

3,319.2664.7

2,654.5702.0

1,952.5987.4325.2662.2217.1342.0

43*5.7

419.0

4,523.11,216.6

793.9422.7

3,306.6942.2

1,324.496.7

1227.8503.1152.7384.1217.0263.5333.2

5,278*

3,339.4661.7

2,677.7713.4

1,964.3973.4321.2652.2214.5341.0

43683

410.6

4^20.31,216.0

794.1421.8

3304.3939.8

1324.596.6

1227.9500.2153.3386.4209.1258.5330.4

5,2*0.4

3341.1647.8

2,693.3709.8

1,983.4965.0319.9645.0212.7341.0

4,859.8

400.6

4,526.91,219.8

795.1424.7

3307.1941.2

1329.596.6

1233.0502.5150.1383.8213.9256.8331.8

5,271.3

3,332.4648.7

2.683.7713.3

1,970.4974.5325.7648.7213.6343.5

4,864.1

407.3

4,532.41,218.8

792.2426.6

3,313.5944.6

1323.496.7

1226.7504.3158.3382.9220.0279.5337.6

53113

3,353.7684.2

2,669.5715.1

1,954.3987.1320.5666.6209.6347.0

43974

414.1

4318.71217.5

796.7420.8

33013942.8

1,318.896.8

1,222.0504.5152.5382.6221.5262.9332.4

5,277.7

3326.3672.7

2,653.6713.3

1,940.4977.0320.6656.4213.7337.6

4354.6

423.2


4,162.41,110.7

759.5351.2

3,051.7861.8

1,234.398.2

1,136.1'510.2117.8327.6208.7272.1293.8

43803

3,127.2694.4

2,432.8644.1

1,788.7834.5294.4540.1235.6298.2

4495.6

385.O1

94.4

95.9

4,274.41,124.8

756.8368.0

3,149.6'897.3

1274.0*97.6

1,176.4'494.1'129.7354.5'206.8239.1314.0

4.V76.6

3,183.7659.8

2323.8664.8

1,859.0862.1295.4566.6189.1321.4

4356J

420.3

92.?

90.6

4,328.0'1,147.9

766.3381.6

3,180.1'900.3'

1285.O1

97.81,187.3'

496.2'133.2365.4'199.0239.3320.0

5,028.9

3.211.5'651.9

2.559.6679.4

1,880.2852.6294.1558.6'203.6334.9

4.602.6

426.21

96.1'

96.4'

4,385.7'1,164.9

762.3402.6

3,220.99ll.Cf

1,288.6'98.6

1,190.1'500.21

139.5379.5'214.2251.2324.5

5,1173r

3248.4670.4'

2378.0*687.6

1,890.5892.0'307.2584.8'202.3343.9

4,686.6

431.2'

110.4'

110.6'

4,491.812142

772.0442.1

3277.7937.0

1294.597.8

1,196.8498.5159.3388.3216.4246.7321.9

5219.0

3271.7661.9

2,609.7701.4

1,908.3935.4314.5620.8223.7358.3

4,789.0

430.0

130.7

128.0

4,536.61,226.3

792.2434.1

3,310.3945.8

1316.098.0

1218.0501.2153.8393.6226.3258.9328.2

5,291.8

3,329.4676.4

2,653.0715.2

1,937.8974.1328.2645.9216.6341.6

4361.7

430.0

110.6

109.3

4359.81231.0

791.7439.4

3,328.8943.1

1,326.697.5

1,229.1508.0154.3396.9224.8268.2329.0

5,323.6

3,351.2698.4

2,652.8707.2

1,945.6982.5329.3653.2218.2342.9

43948

428.9

117.2

115.0

4,532.31218.9

791.3427.6

3313.4939.3

1,324.496.9

1,227.5509.9153.1386.7224.0274.2331.2

53040

3,344.3673.2

2,671.2711.5

1,959.7979.7324.8654.9216.1341.1

43813

422.6

111.6

107.6

4344.61,220.7

792.1428.6

3,323.9940.5

1,326.797.2

1229.5510.5152.2393.92222274.8330.2

5314.1

3,383.1687.2

2,695.8708.8

1,987.0955.6318.6637.0212.6340.7

4391.9

422.2

111.3

107.4

4,539.91,221.2

793.1428.0

3318.7937.2

1,332.597.0

1,235.6510.9151.6386.4224.4268.2328.9

53033

3,354.2669.3

2,684.9711.9

1.973.0971.1327.0644.2214.5343.2

4383.0

420.5

110.5

107.3

433621217.6

789.2428.4

3,318.6940.7

1,323.297.0

1,226.3510.7158.0386.0226.4307.4334.1

5,3463

3,361.3700.3

2,661.0712.0

1,949.01,004.6

328.0676.6211.8346.8

4»245

422.0

112.4

107.7

4,514.41,217.1

791.9425.1

3297.4938.1

1,315.996.9

1,219.1509.5152.4381.4220.0257.5329.2

5,2633

3,288.2653.0

2,635.2711.4

1,923.8992.8326.5666.3219.7338.4

4339.1

424.7

111.1

107.0

Footnotes appear on p. A21.



1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities'—Continued

B. Domestically chartered commercial banks

Billions of dollars

Account

Assets1 Bank credit2 Securities in bank credit3 L'.S. government securities4 Other securities5 Loans and leases in bank credit1

6 Commercial and industrial7 Real estate8 Revolving home equity9 Other

10 Consumer11 Security1


15 Other assets5

16 Total assets6

Liabilities17 Deposits18 Transaction ^19 Nontransaction20 Large time21 Other22 Borrowings25 From banks in the US24 From others25 Net due to related foreign offices . . . .26 Other liabilities


2 8 R e s i d u a l ( a s s e t s l e s s l i a b i l i t i e s ) ' . . . .

Assets29 Bank credit30 Securities in bank credit31 U.S. government securities32 Other securities33 Loans and leases in bank credit2

34 Commercial and industrial35 Real estate36 Revolving home equity37 Other38 Consumer39 Security3


43 Other assets^

44 Total assets6 . . .

Liabilities45 Deposits46 Transaction47 Nontransaction48 Large time49 Other50 Borrowings51 From banks in the US52 From others53 Net due to related foreign offices . . .54 Other liabilities


56 Residual (assets less liabilities)7 . . . .

MEMO57 Revaluation gains on off-balance-sheet

items*58 Revaluation losses on off-balance-

sheet items8

59 Mortgage-backed securities9

Monthly averages

1998

Jan.

1998

July Aug. Sept. Oct.' Nov.' Dec'

1999

Jan.

Wednesday figures

1999


Seasonally adjusted

3,580.5910.8'679.3231.4

2,669.8642.6

1 206.698.0

1,108.6503.561.3

255.8173.5227.8254.7

4,180.0'

2.844.0670.7

2.173.4'383.8

1,789.6678.5267.2411.3

90.8201.2

3,814.5

365.4

3,708.4929.3669.6259.6

2,779.1683.6

1,247.9'97.5

l,150.4r

496.0'69.9

281.6192.3208.5278.7

4,330.4

2.893.6651.0

2.242.6385.1

1,857.5690 1'269.5420.5

79.8228.6

3,892.0

438.4

3,753.2944.1677.1266.9

2,809.1'692.2'

1,257.6'97.6

1,160.0'494.5'

73.5291.2'186.1217.8282.4

4,382.6

2,915.8653 1

2,262.7385.1

1,877.7694.7276.1418.6'

93.6235.5

3,939.7'

443.0

3.794.3'961.66S5.2276 5

2,832.7700.5'

1,260.1'97.9

1,162.3'497.4'

75.2299.4'191.4219.3285.5

4,433.3

2,929.7659.8'

2,270.0384.2'

1,885.7709.9'278.2431.7'105.6240.2

3,985.4

447.9

3,863.6995.9694.4301.5

2,867.7715.3

1,264.596.9

1,167.6496.7

89.3302.0194.9207.6283.5

4,492.0

2,949.1650.7

2,298.3397.4

1,900.9753.9286.6467.3116.9251.2

4,071.1

420.9

3.908.01,002.8

710.5292.2

2,905.3723.3

1,287.397.3

1,190.0498.7

87.6308.4193.3216.1290.5

4,550.2

2,995.6653 4

2.342.2410.3

1,932.0792.7294.5498.2116.3237.9

4,142.5

407.6

3,948.01,019.1

712.1307.0

2,928.8727.1

1 302 397.2

1,205.1501.7

85.4312.3187.8216.0289.8

4,583.8

3,011.9654.0

2,357.9409.0

1,948.9808.0296.7511.3114.8241.2

4,175.9

407.9

3,927.6997.3709.7287.6

2,930.3729.0

1,303.796.7

1,207.0503.1

84.0310.6188.8228.3295.1

4,582.0

3,023.2649.3

2,373.9412.3

1,961.6Till297.1500.6115.3243.8

4,180.0

401.9

3,930.1999.2711.4287.9

2,930.8729.2

1,304.096.6

1,207.3500.2

85.7311.8184.2223.4292.5

4,572.4

3,029.8636.0

2,393 S414.1

1,979.77926298.0494.6110.9244.4

4,177.8

394.7

3,931.81,001.0

711.8289.2

2.930.8728.8

1.308.696.6

1.212.0502.5

81.0309.8186.9220.8293.5

4,575.1

3.014.00.369

2,377.2409.9

1,967.2800.5301.5498.9114.7245.2

4,174.3

400.8

1.934.3999.4708.6290.7

2,934 9730.2

1,302.896.7

1,206.1504.3

87.4310.3189.3241.7297.5

4,605.2

3.035.3671.5

2,363.8411.8

1,952.0806.0296.2509.8II 1.0249.7

4,201.9

403.3

3,916.0994.6710.0284.6

2,921.4728.5

1,298 196.8

1,201.4504.5

82.1308.2192.3229.5295.8

4,576.1

3,010.5660.1

2,350.4412.1

1,938.3799.4296.4503.0119.2240.0

4,169.0

407.1


3,590.9'916.6678.0238.6

2,674.3639.4

1.206.798.2

1,108.5'510.2

61.4256.6180.4238.7252.7

4,206.4

2,852.1682.8

2,169.3383.1

1,786.2684.9270.6414.2

86.5201.2

3,824.8

381.7'

49.9

52.7289.9

3,699.5920.9666.1254.8

2,778.6683.5

1,250.3'97.6

1,152.7'494.1'

68.3282.4185.9204.2280.3

4,312.4

2,887.9646.0

2,241.9384.0

1,857.9694.4269.7424.7

84.9228.6

3,895.8r

416.7

51.0

50.4293.0'

3,737.2931.3671.5259.8

2,805.9687.3'

1,261.3'97.8

1,163.5'496.2'

69.8291.3'179.1205.5283.5

4,347.9'

2,906.9639.7

2,267.2387.4'

1,879.8687.4272.1415.3'

96.7235.5

3,926.6r

421.4'

51.9

54.2301.2'

3,786.4952.8680.1272.8

2,833.5'696.1'

1,265.1'98.6

1,166.5'500.2'72.2

300.0'185.8217.1286.7

4,418.4

2,932.3654.4

2,277.9'387.7'

1,890.2713.0277.0436.0'106.8240.2

3,992.3

426.0'

61.7

65.1313.7'

3,867.8991.9691.3300.6

2,875.9713.4

1,271 097.8

1.173.2498.5

89.6303.4190.9211.1283.6

4,495.8

2,953.3646.7

2,306.6400.8

1,905.8749.9282.6467 3115.5251.2

4,069.9

425.9

78.7

80.5336.0

3,924.01,007.7

710.8296.9

2,916.3722.2

1,293.798.0

1,195.7501.2

89.)310.1199.8224.5291.1

4,581.5

3,015.1664.1

2,351.1415.3

1,935.7788.5294.8493.7113.7237.9

4,155.3

426.1

62.7

65.1346.3

3,960.2 •1,018.4

711.0307.5

2.941.7724.2

1.305.897.5

1.208.3508.0

87.2316.6197.7232.7289.2

4,621.9

3.040.7687.2

2,353.5409.4

1,944.1803.1300.8502.3111.3241.2

4,196.4

425.5

69.1

70.5345.9

3.940.71.005.8

709.3296.5

2,934.9725.2

1.303.696.9

1.206.7509.9

84.2311.9195.8239.1292.6

4,610.7

3,030.4660.9

2.369.5411.3

1,958.2804.1300.8503.3112.8243.8

4,191.0

419.7

65.7

65.5342.0

3,955.81,009.7

711.2298.5

2,946.1727.5

1,305.997.2

1.208.8510.5

B4.3317.9197.2239.2291.8

4,626.7

3,073.5675.2

2,398.3412.8

1.985.5783.2296.7486.5106.5244.4

4,207.6

419.1

65.4

65.4346.0

3,948.11,007 8

711.2296 6

2.940.272.1.8

1,311 697.0

1.214.6510.9

82.6311.4197.4232.2289.9

4.610.0

3,038.5657.6

2,381.0409.5

1,971.4797.1302.8494.4111.6245.2

4,192.4

417.6

63.8

64.4343.7

3.944.21,005.9

707.8298.1

2.938.3725 8

1,102 697 0

1,205 6510.7

87.03122195.8270.0294.1

4,646.6

3,046.0687.6

2,358.4411.0

1.947.4823.5303.7519.8109.0249.7

4,228.2

418.4

66.7

65.5338.6

3,918.41,001.6

708.8292.7

2,916.8723.5

1,295.496.9

1.198.5509.5

82.4306.1190.8224.4292.2

4,568.6

2,973.5640.8

2,332.7410.5

1,922.2815.2302.4512.8118.3240.0

4,147.0

421.7

65.8

65.4338.7

Footnotes appear on p, A21.




C. Large domestically chartered commercial banks

Billions of dollars

Account

Assets1 Bank credit2 Securities in bank credit3 U.S. government securities4 Trading account5 Investment account6 Other securities7 Trading account8 Investment account9 State and local government .

10 Other11 Loans and leases in bank credit' , . ,12 Commercial and industrial13 Bankers acceptances14 Other15 Real estatelb Revolving home equity17 Other18 Consumer19 Security'20 Federal funds sold to and

repurchase agreementswith broker-dealers

21 Other22 State and local government23 Agricultural24 Federal funds sold to and

repurchase agreementswith others

25 All other loans26 Lease-financing receivables27 Interbank loans28 Federal funds sold to and

repurchase agreements withcommercial banks

29 Other30 Cash assets4

31 Other assets5

32 Total assets6

Liabilities33 Deposits34 Transaction35 Nontransaction36 Large time37 Other18 Borrowings39 From banks in the U.S40 From others41 Net due to related foreign offices42 Other liabilities


44 Residua] (assets less liabilities)7

Monthly averages

1998

Jan.

2,199.7'513.5'366.5'

29.1337.4'147.069.677.422.554.9

1,686.2'465.4

1.2464.2'673.6'

69.8603.8'301.8'

56.0

39.616.411.69.9

8.074.385.5

122.4

81.2'41.2

164.7'196.7

2,645.9'

1,612.5'386.6'

1,225.9"219.8'

1.006.1'528.9'198.33106'86.5

173 7

2y401.6r

244.3'

1998

July

2215Q521.6'355.5'20.4

335.1'166.181.185.022.462.6

1,753.3'497.6

1.3496.4'686.9'68.7

618.2'294.7'63.9

44.919.011.110.0

8.983.996.3

124.0'

70.153.8

143.9215.8'

2,720.6'

1.620.6'367.9'

1.252.7216.2'

1,036.6'526.7'190.5336.2'

76.1198.5

1422.0 '

298.7'

Aug.

2,305.7'532.3'361.4'

21.3340.1'170.9

83.187.722.665.1

1,773.4'5O3.O1

1.3501.7688.1 '

68.6619.5'295.9

67.4

48.019.411.510.0

10.088.998.7

115.7

62.553.2

151.3'219.3

2,754.6'

1.628.3'369.4'

1.258.91

2]5.Cf1.043.9'

531.9"197.6'334.3'

89.9204.9

299.7

Sept.

2,336.8'547.1'361.9

22.0345.9179.289.589.823.266.6

1,789.6'508.9

1.3507.7'685.9

68.8617.1}298.8'

68.9

50.118.811.510.0

12.493.2

100.0117.6'

M.253.4

151.3219.9'

2,788.0"

1,628.7'373.1

1,255.6'209.9"

1.045.7'544.6'198.4346.2101.8209.6

2y4843r

303,2

Oct.'

2,3926572.7371.9

20.9351.0200.8109.191.723.967.8

1,819.8521.6

1.2520.3686.5

68.0618.5299.6

82.7

64.718.011.69.9

12.993.5

101.4119.0

73.645.4

141.0215.9

1,640.2366.7

1,273.5221 S

1,052.0579 6203.5176 1112.1219.9

2^52.0

278.6

Nov.' D e c '

Seasonally adjusted

2,412.7569.5380.2

23.4356.8189.392.896524.671.9

1,843.2527.9

1.2526.6698967.7

631.230O.6

80.8

63.617.311.910.0

12.497.9

102.8119.3

75.344.0

147.9218.2

23603

1.666.8368.3

1,298,52104

1,068.1610.4207.74027112.7205.8

2595.7

264.6

24347577.8376.7

24.0352.7201.1101.799.325.074.4

1,856.9529.7

1.2528.5706.3

67.5638.8301.7

79.0

62.816.311.610.1

16.296.5

105.7120.6

73.746.9

148.3216.4

2382.1

1.673.2367.4

1.305.8230.2

1,075.6621.8209.0412.8111.2209.2

2,615.4

266.7

1999

Jan.

2.413.5555.7375.4

26.3349.1180.382.198.225.073.2

1,857.8531.3

1.3530.1703.0

67.3635.7305.477.9

61.716.211.610.2

12.697.5

108.2122.0

77.944.1

158.4220.6

2376.6

1,671.2363.0

1,308,1230.0

1.078.1614.6214.54001112.3212.7

2,610.7

266.0

Wednesday figures

1999

Jan. 6

2,409.3554.3374.5

26.8347.7179.880.499.425.274.1

1,855.0531.3

1.3531.6703 0

66.9636.1301.0

79.4

61.917.411.510.2

13.997.5

107.2117.4

74.443.0

155.5217.1

2361.4

1,676.6355.6

1,321.0212.0

1,089.0605.4212.3393.1107.4212.8

2.602.3

259.1

Jan. 13 Jan. 20

2.417.3558.1376.1

28.3347.9182.082.799.324.974.4

1.859.2531.1

1.3529.9708.9

67.2641.7305.2

74.9

59715.111.810.2

12.697.0

107.5120.7

76.943.8

152.3217.4

2369.7

1,663.8355.3

1,308.6227.7

1.080.8617.9219.1398.8111.6213.7

2^07.0

262.7

2,421.7558.9375.2

27.1348.1183.786.097.725.072.7

1,862.8532.2

1.3530.9702.2

67 4634.8306.8

81.4

63.118.311.610.2

12.398.4

107.7122.3

79.542.8

169.6223.3

2399.I

1,682.6380.9

1,301.7229.4

1,072.3621.2213.2409.9108.3218.8

2,632.9

266.2

Jan. 27

2.405.7555.3377.327.6

349.7178.181.196.925.072.0

1,850.4531.2

1.2529.9697.3

67.6629.8307.176.3

61.215.111.510.2

12.196.5

108.1124.5

78.546.1

158.6222.4

2373.5

1,658.3366.1

1,292.2229.7

1.062.5617.5214.9402.6116.4209.1

2.601J

272.1





C. Large domestically chartered commercial banks—Continued

Account

Assets45 Bank credit46 Securities in bank credit47 US. government securities48 Trading account49 Investment account50 Mortgage-backed securities51 Other52 One year or less53 One to five years54 More than five years . . .55 Other securities56 Trading account57 Investment account58 State and local government . .59 Other60 Loans and leases in bank credit- . .61 Commercial and industrial62 Bankers acceptances63 Other64 Real estate65 Revolving home equity . . .66 Other67 Commercial68 Consumer69 Security'70 Federal funds sold to and

repurchase agreementswith broker-dealers . . . .

71 Other72 State and local government73 Agricultural74 Federal funds sold to and

repurchase agreementswith others

75 All other loans76 Lease-financing receivables . . . .77 Interbank loans78 Federal funds sold to and

repurchase agreementswith commercial banks

79 Other80 Cash assets4

81 Other assets5

82 Total assets6

Liabilities83 Deposits84 Transaction85 Nontransaction86 Large time87 Other88 Borrowings89 From banks in the U S90 From nonbanks in the U.S91 Net due to related foreign offices . . .92 Other liabilities



M E M O

95 Revaluation gains on off-balance-sheet items*


97 Mortgage-backed securities1'98 Pass-through securities99 CMOs, REMICs, and other

mortgage-backed securities100 Net unrealized gains (losses) on

available-for-sale securities10 .101 Offshore credit to U.S. residents" . .

Monthly averages

1998

Jan.

2,215.3'521.0'366.6'

28.23.38.4'22.5.5'113.028.955.7'28.3

154.476.378.122.555.6

1,694.3'463.0'

1.2461.8'676.7'

70.1369.O/236.6'306.8'

56.1

39.616.411.59.9

8.075.087.3

127.8

85.142.7

174.5196.7

2,677.1'

1,622.0'396.3'

1,225.6'219.1'

1.006.6'534.4'201.3333.1'

82.3173.7

2,4124'

264.7'

49.9

52.7244.8'164.2'

80.6'

3.035.5

1998

July

2,268.0'514.6'353.3'

19.9333.4'219.0'114.4'30.452.131.9

161.377.084.322.362.1

1.753.4'497.7

1.2496.5689.2'68.9

383.4'236.91

294.5'62.3

43.918.511.110.3

8.983.595.8

122.9

69.453.5

140.2215.8'

2,708.9r

1.620.6'365.7'

1,254.9'215.0

1,039.8'531.0*190.5340.5'

81.2198.5

2,4313'

277.7'

51.0

50.4242.9"l58.Or

84.9*

3.535.3

Aug.

2,290.2'520.6'356.6'21.2

335.4'225.8'109.729.048.931.8

164.076.887.222.764.6

1,769.5'499.6'

1.3498.3691.4'

68.9384.91

237.6'297.4'63.7

45.118.611.510.3

10.088.297.5

113.2'

60.752.5

141.2'219.3

2,726.1r

1,625.9'360.3'

1,265.7'217.4'

1,048.3'523.2'192.7330.5"92.9

204.9

2,447.0'

279.1

51.9

54.2249.6'161.3'

88.3'

3.135.6

Sept.

2,326.7'539.1'363.2'21.9

341.3'236.4'10H.927.744.233.0

175.986.489.423.266.2

1,787.6'506.0

1.3504.7'689.1'69.4

380.8'239 o"3018 '65.8

47.618.211.610.3

12.492.798.9

116.4'

63.752.7

149.8219.9'

2,774.9r

1,634.8'370.0

1,264.7'213.3

1,051.4'544.4'196.1'348.3103.0209.6

2,491.8'

283.1'

61.7

65.1260.5'167.3'

93.2'

3.736.8

Oct.'

2,396.9571.7371.1

21.9349.1255.29.3.926.137.230.6

200.7108.891.924.067.9

1,825.2521.3

1.3520.0690.568.6

382.8239.0300.583.1

65.217.911.710.1

12.994.1

101.0116.2

71.045.2

144.6215.9

2,835.7

1,646.5364.5

1,282.0224.9

1.057.1575.1200.0375.1110.9219.9

2,552.4

283.4

78.7

80.52807189 5

91 1

4.438.5

Nov.1"

Not seasona

2,429.4577.8383.324.6

358.7258.2100.627.238.235.2

194.596.897.724.673.)

1,851.7528.0

1.3526.6703.268.4

393.9240.9301.582.3

65.017.312.010.1

12.499-4

102.8121.4

77.044.4

154.1218.2

2^85.0

1,680.1375-0

1,305.1235.4

1,069.7606.8209.1397.7110.1205.8

2,602.7

282.3

62 7

65.1287.0196.6

90.3

3.139.1

D e c '

lly adjusted

2,446.5579 0J77.2

23.6353.6253.5100.126.638.435.2

201.8101.5100.425.075.4

1,867.5527.3

1.3526.0708.967.8

398.4242.6305.7

80.8

63.717.111.710.1

16.2100.6106.0125.7

77.548.2

161.7216.4

1,694.7390.5

1.304.2230.7

1,073.5616.2213.1403.1107.7209.2

2,627.8

284.5

69.1

70.5284.0194.8

89 2

.3.038.5

1999

Jan.

2,432.2565.7376.325.5

350.8250.0100.827.437.535.9

189.490.399.124.974.2

1,866.5528.4

1.3527.2706.267.7

393.9244.7310.678.2

62.016.211.610.1

12.698.2

110.5127.3

81.745.5

168.1220.6

2,910.5

1.679.9372 5

1.307.5229.0

1.078.5620.2217.7402.4109.8212.7

2,622.5

288.0

65.7

65.5279.6191.9

87.7

3.038.9

Wednesday figures

1999

Jan. 6

2,442.1567.7376.725.6

351.125.3.697.525.936.634.9

191.190.2

100.925.275.6

1,874.3530.3

1.3529.1708.567.7

397.3243.5310.377.9

60.817.211.510.4

13.9101.8109.5124.1

79.544.6

167.0217.1

2,912.7

1,711.1380.8

1,330.2230.7

1,099.6601.0213.3387.8103.0212.8

2,627.9

284.8

65.4

65.4283.3194.5

88.8

3.239.3

Jan. 13 Jan. 20

2,438.1566.0376.427.3

H9.0251.497.720.236.1.35.4

189.689.2

100.424.875.6

1,872.1527.2

1.3525.9714.867.7

403.0244.1311.676.5

61.215.211.810.2

12.697.5

110.0127.2

81.945.3

162.8217.4

2,907,7

1,686.0370.7

1.315.4227.3

1.088.0614.5220.3394.2108.5213.7

2,622.7

285.0

63.8

64.4281.1192.7

88.4

3239.0

2,436.4566.3375.3

26.8348.5246.2102.428.737.835.9

191.092.598.524.973.6

1,870.152S.7

1.3527.5705.267.7

192.9244.6311.381.1

62 718.311.610.0

12.399.7

110.2128.7

83.844.8

194,3223.3

2^(45.1

1,694.6394.7

1,299 92286

1,071.3637.4219.1418.2106.3218.8

2,657.1

288.0

66.7

65.5276.2189 4

86.8

2.839.0

Jan. 27

2,413.056.3.2.177.2

26.5350.7247.3103.428.238.736.5

186.088.697.324.972.4

1,849.9527.1

1.25Z5.9697.8

67.7384.8245.3310.076.6

61.315.311.510.0

12.194.5

110.3126.7

79.547.2

156.6222.4

2,881.4

1.636.3356.5

1,279.8228.1

1.051.7629.1218.9410.2115.5209.1

2,590.1

291.3

65.8

65.4276.6191.1

85.4

2.838.2

Fooinotes appear on p. A21.


1.26 COMMERCIAL BANKS IN THE UNITED STATES

D. Small domestically chartered commercial banks

Billions of dollars


Assets and Liabilities1—Continued

Monthly averages

July Aug. Sept. Oc Nov. Dec.

Wednesday figures

Seasonally adjusted

Assets1 Bank credit2 Securities in bank credit3 U.S. government securities .4 Other securities5 Loans and leases in bank credit2

6 Commercial and industrial .7 Real estate8 Revolving home equity9 Other

10 Consumer11 Security'12 Other loans and leases13 Interbank loans14 Cash assets4

15 Other assets5

16 Total assets6

Lutbitilies17 Deposits18 Transaction19 Nontransaction20 Large time21 Other22 Borrowings23 From banks in the U.S24 From others25 Net due to related foreign offices26 Other liabilities


28 Residual {assets less liabilities)7

1534.0

1.231.5284.1947.5164.0783.5149.668.980.74.2

27.5

M12.9

121.1

1,433.4407.6314.293.5

1,025.8186.0561.128.8

532.2201.3

6.07!.468.364.662.9

1.609.7

1,273.0283.19S9.9168.9820.9163.379.084.4

3.730.1

1,470.1

139.7

1,447.5411.8315.7

96.11,035.7

189.2569 5

29.0540.5198.7

6.172.270.466.663.1

1,628.0

1,287.5283.7

1,003.8170.1833.8162.978.684.33.7

3C.7

1,484.8

143.2

1,457.5414.5317.397.3

1,043.0191.6574.329.0

545.3198.5

6.372.373.968.065.6

1,645.2

1,301.0286.6

1,014.4174.3840.0165.379.885.4

3730.6

1500.6

144.6

1,471.0423.1322.4100.7

1,047.9193.7578.1

•>9.0549.1197.1

6.572.575.966.567.6

1,661.4

1,308.8284.0

1,024.8175.9848.9174.383.191.24.7

31.4

1519.1

142.3

1,495.3433.3130.3103.0

1,062.1195.5588.4

29.6558.8198.1

6.773.474.068.172.3

1,689.8

1,328.8285.0

1.043.8179.9863.8182.386.895.5

3.6

1346.8

143.0

1,513.2441.4335.4106.0

1,071.9197.4596.0

29.7566 3200.0

6.472.267.367.773.4

1,701.7

1,338.7286.6

1,052.1178.7873.4186.287.698.5

3.632.1

15605

141.1

1,514.0441.6334.3107.2

1.072.5197.6600.7

29.4571.1197.7

6.070.466.769.974.5

1.7053

1,352.1286.3

1,065.8182.3883.4183.182.6

100.510

31.1

1569J

136.0

1.520.8444.9336.8108.1

1,075.9197.9600.9

29.7571.2199.3

6.371.566.867.975.4

1,711.0

1.353.2280.4

1,072.8182.1890.6187.285.7

101.53.5

31.6

1575.5

135.6

1.514.5443.0335.7107.2

1,071.6197.6599.729 4

570.3197.3

6.170.766.268.476.1

1,7055

1,350.2281.6

1.068.6IS2.2886.4182.682.4

100 13.1

31.5

1567.4

138.1

1,512.6440.5133.4107.1

1,072.1198.0600.629.3

571.3197.4

6.070.167.072.174.3

1,706.2

1,352.7290.5

1.062.1182.4879.7182.882.999.9

2730.9

1569.0

137.1

1.510.3439.3332.8106.5

1,071.1197.3600.829.2

571.6197.4

5.869.867.870.973.4

1.70Z6

1,352.2294.0

1.058.2182.4875.8181.981.5

100.42.8

30.8

1567.7

134.9

Assets29 Bank credit30 Securities in bank credit11 U.S. government securities32 Other securities33 Loans and leases in bank credit2

34 Commercial and industrial35 Real estate36 Revolving home equity37 Other38 Consumer39 Security1


43 Other assets'

44 Total assets*

Liabilities45 Deposits46 Transaction47 Nontransaclion48 Large nine49 Other50 Borrowings51 From banks in the U.S52 From others53 Net due t-.i related foreign offices54 Other liabilities


5 6 R e s i d u a l ( a s s e t s l e s s l i a b i l i t i e s ) 7 . . . .

MEMO57 Mortgage-backed securities4


1.375.6395.6311.484.2

980.0176.4530.0

28.1501.9203.4

53M.952.564.256.0

1529.4

1,230.1286.4943.7164.0779.7I W S69 38124.2

27.5

14124

117.0

45.1

1.431.5406.3312.9935

1.025.2185.8561.1

28.7532.4199.6

6.072.763.064.064.6

1,6035

1,267.4280.4987.0168.9818.1163.479.284.2

3.730.1

1,4645

139.0

50.1

1,447.0410.7314.995.8

1,0.16.1187.7569.9

28.9541.01988

6 173865.964.364.2

1.621.8

1,281.0279.5

1,001.5170.1S31.5164.279.484.8

1730.7

1,479.6

142.2

51.6

1.459.7413.8316.996.9

1.045.9190.1576.029.2

546.8199.4

6.374.269.567.266.8

1,6435

1,297.6284.4

1,013.2174.3838.8168.681.087.7

3.730.6

15005

143.0

53.2

1,470.8420 1320.299.9

1,050.7192 0580.529.1

551.4198.0

6.571774.866.467.8

1,660.1

1.306.8282.2

1,024.6175.9848.8174.782.692.2

4.731.4

1517.6

142.5

55.3

1,494.6430.0327.5102.5

1.064.6194.3590.529.6

560.9199.7

6.773.478.470.472.9

1,696.4

1.335.1289.1

1.046.0179.9866.1181.885.796.1

3.632.2

1552.6

143.8

59.3

1,513.7439.4333.8105.6

1,074.3196.8596.929.6

567.3202.2

6.472.072.071.072.8

1,709.6

1.346.0296.7

1,049.3178.7870.6186.987.799.2

3.632.1

1568.6

141.0

61.9

1.508.6440.1333.0107.1

1,068.4196.8597.4

29.3568.1199.4

6.068.968.571.072.0

1,700.2

1.350.4288.4

1,062.0182.3879.7183.983.0

100.93.0

31.1

15685

131.7

62.5

1,513.7442.0334.5107.5

1,071.8197.2597.4

29.4568.0200.1

6.370.773.172.274.8

1,714.0

1,362.4294.4

1,068.0182.1885.9182.283.498.7

3.531.6

1579.7

134.3

62.7

1.510.0441.9334.9107.0

1.068.1196.6596.829.3

567.5199.3

6.169.370.269.572.4

l,702J

1,352.5286.9

1,065.6182.2883.4182.682.5

100.13.1

11.5

1569.7

132 6

62.7

1,507.8439.6132.5107.0

1.068.2197.0597.429.3

568 1199.4

6068.567.175.770.8

1,7015

1,351.4292.9

1,058.5182.4876.2186.284.6

101.62.7

30.9

1571.1

130.4

62.4

1.505.4438.4331.71067

1,067 0196.4597.629 2

568.3199.5

5.867.864.167.869.8

1,687.2

1,337.2284.3

1,052.9182.4870.5186.183.5

102.62.8

30.8

1556.9

130.4

62.1

Foolnotes appear on p. A21.




E. Foreign-related institutions

Billions of dollars

Monthly averages

July Sept. Oct. Nov. Dec.

1999

Jan.

Wednesday figures

1999

Jan. 6 Jan. 13

Seasonally adjusted

Assets1 Bank credit2 Securities in bank credit3 U.S. government securities . . .4 Other securities5 Loans and leases in bank credit6 Commercial and industrial . . .7 Real estate8 Security1


12 Other assets5

13 Total assets6

Liabilities14 Deposits15 Transaction16 Nontransaction17 Borrowings18 From banks in the U S19 From others20 Net due to related foreign offices21 Other liabilities


23 Residual (assets less liabilities)7 . .

Assets24 Bank credit25 Securities in bank credit26 U.S. government securities27 Trading account28 Investment account29 Other securities30 Trading account31 Investment account32 Loans and leases in bank credit2 . .33 Commercial and industrial34 Real estate35 Security3


39 Other assets5

40 Total assets6

Liabilities41 Deposits42 Transaction43 Nontransaction44 Borrowings45 From banks in the US46 From others47 Net due to related foreign offices48 Other liabilities



MEMO

51 Revaluation gains on off-balance-sheetitems8


574.9199.683.5

116.1375.2221.6

27.656359.828.333.440.7

677 A

277.111.7

265.4149.623.8

125.8144.396.9

6675

9.1

572.1201.191.0

110.1371.0214.1

23.962.070.921.035.034.1

661.9

297.613.7

283.9167.725.8

141.9107.893.5

666.6

-4.7

588.4212.494.1

118.4376.0214.1

23.964.273.920.033.835.7

677.6

305.912.3

293.6165.221.9

143.3110.299.3

680.7

-3.1

604.6215.482.2

133.2389.2218.0

23.667.680.028.434.037.9

704.6

314.515.3

299.2178.930.2

148.897.1

104.0

694.6

10.0

624.8'222.r/

80.2141.8r

402.8223.823.369.686.125.435.439.2

7245

318.915.2

303.7185.532.0

153.5109.1107.4'

720.91-

620.2'223.9

80.5143.4396.3'223.922.065.085.426.533.536.6

716.5'

315.2'12.3

302.9'185.633.4

152.2102.2'102.3

7054'

II.1

601.2'216.8'

81.0135.8'384.4218.0

20.766.079.727.133.939.1

701.0r

307.310.7

296.6179.428.5

150.9102.3100.8'

689.8

11.2

595.6219.3

84.1135.1376.3213.220.868.873.528.235.238.1

696.9

316.212.4

303.8175.624.0

151.699.297.2

688J

590.2216.882.8

134.0373.4210.6

20.667.674.625.035.138.0

688.0

311.311.8

299.5172.421.9

150.5101.896.6

682.0

595.1218.883.2

135.5376.4212.520.969.073.927.036.038.3

318.411.9

306.5174.024.2

149.899.098.3

689.7

598.1219.4

83.6135.9378.6214.4

20.771.072.630.737.840.1

706J

318.412.8

305.6181.124.3

156.898.797.3

695.5

602.7222.886.6

136.2379.9214.4

20.770.574.429.233.436.6

701.7

315.812.6

303.2177.624.2

153.594.597.6

685.6


571.5194.181.514.766.8

112.670.4'42.2

377.5222.4

27.656.471.028.333.441.1

674.1

275.111.6

263.5149.623.8

125.8149.197.0

670.8

3.3

44.5

43.2

574.9203.990.725.3'65.4'

113.270.7'42.5'

371.1213.9

23.761.472.121.034.833.7

664.2

295.813.8

282.0167.725.8

141.9104.292.8

6605

41.9'

40.2

590.8216.694.83I.0F63.8'

121.776.5'45.2'

374.3213.023.763.474.220.033.836.5

680.9

304.612.2

292.4165.221.9

143.3106.999.3

676.0

44.2'

42.2'

599.3212.0

82.220.6'61.6'

129.884.8'45.0'

387.3216.923.567.479.528.434.137.9

6994

316.115.9

300.1178.930.2

148.895.6

103.7

694.3

48.7'

45.4'

624.1'222.3'80.816.7'64.1'

141.591.8'49.8'

401.8'223.723.569.784.825.435.738.3

7233r

318.415.2

303.1185.532.0

153.5108.1107.1'

7i9.r

52.0'

47.6'

612.6'218.6'81.414.4'67.01

137.2'84.3'52.8'

394.0223.6'22.364.783.5'26.534.437.0

710Jr

314.2'12.3

302.0185.633.4

152.2102.9'103./

7064r

47.91

44.2'

599.7'212.6

80.715.665.2

131.979.652.3

387.0218.9

20.867.180.327.135.539.8

701.8'

310.511.2

299.3179.428.5

150.9106.9101.7

6984

48.1

44.5

591.6213.1

82.017.964.1

131.179.851.3

378.5214.120.868.874.828.235.138.6

6933

314.012.3

301.7175.624.0

151.6103.497.3

690.3

46.0

42.1

588.8211.0

80.916.864.1

130.177.552.6

377.8213.0

20.768.076.125.035.538.3

6874

309.612.0

297.6172.421.9

150.5106.196.3

684J

3.1

45.9

42.0

591.8213.381.917.964.0

131.479.651.8

378.5213.521.069.075.027.036.039.0

6915

315.711.8

303.9174.024.2

149.8103.098.0

690.6

2.9

46.7

42.9

592.0211.781.316.964.5

130.478.751.7

380.3214.920.771.073.730.737.440.0

699.9

315.312.7

302.6181.124.3

156.8102.897.1

696J

3.6

45.7

42.2

596.0215.583.119.763.4

132.482.450.0

380.5214.6

20.670.075.329.233.137.0

695.1

314.712.2

302.5177.624.2

153.5101.498.4

692.1

45.4

41.6




NOTES TO TABLE 1.26

NOTE. Tables 1.26, 1.27, and 1.28 have been revised to reflect changes in the Board's H.8statistical release, "Assets and Liabilities of Commercial Banks in the United States." Table1.27, "Assets and Liabilities of Large Weekly Reporting Commercial Banks," and table 1.28,"Large Weekly Reporting U.S. Branches and Agencies of Foreign Banks," are no longerbeing published in the Bulletin. Instead, abbreviated balance sheets for both large and smalldomestically chartered banks have been included in table 1.26, parts C and D. Data are bothmerger-adjusted and break-adjusted. In addition, data from large weekly reporting U.S.branches and agencies of foreign banks have been replaced by balance sheet estimates of allforeign-related institutions and are included in table 1.26, part E These data are break-adjusted.

The not-seasonally-adjusted data for all tables now contain additional balance sheet items,which were available as of October 2, 1996.

1. Covers the following types of institutions in the fifty states and the District ofColumbia: domestically chartered commercial banks that submit a weekly report of condition(large domestic), other domestically chartered commercial banks (small domestic); branchesand agencies of foreign banks, and Edge Act and agreement corporations (foreign-relatedinstitutions). Excludes International Banking Facilities. Data are Wednesday values or prontta averages of Wednesday values. Large domestic banks constitute a universe; data forsmall domestic banks and foreign-related institutions are estimates based on weekly samplesand on quarter-end condition reports. Data are adjusted for breaks caused by ^classificationsof asselsand liabilities.

The data for large and small domestic banks presented on pp. A17-19 are adjusted toremove the estimated effects of mergers between these two groups. The adjustment formergers changes past levels to make them comparable with current levels. Estimatedquantities of balance sheet items acquired in mergers are removed from past data for the bank

group that contained the acquired bank and put into past data for the group containing theacquiring bank. Balance sheet data for acquired banks are obtained from Call Reports, and aratio procedure is used to adjust past levels.

2. Excludes federal funds sold to, reverse RPs with, and loans made to commercial banksin the United States, all of which are included in "Interbank loans."

3. Consists of reverse RPs with brokers and dealers and loans to purchase and carrysecurities.

4. Includes vault cash, cash items in process of collection, balances due from depositoryinstitutions, and balances due from Federal Reserve Banks.

5. Excludes the due-from position with related foreign offices, which is included in "Netdue to related foreign offices."

6 Excludes unearned income, reserves for losses on loans and leases, and reserves fortransfer risk. Loans are reported gross of these items.

7. This balancing item is not intended as a measure of equity capital for use in capitaladequacy analysis. On a seasonally adjusted basis this item reflects any differences in theseasonal patterns estimated for total assets and total liabilities.

8. Fair value of derivative contracts (interest rate, foreign exchange rate, other commodity andequity contracts) in a gain/loss position, as determined under FASB Interpretation No. 39.

9. Includes mortgage-backed securities issued by U.S. government agencies, U.S.government-sponsored enterprises, and private entities.

10. Difference between fair value and historical cost for securities classified as avaiiable-for-sale under FASB Statement No. 115. Data are reported net of tax effects. Data shown arerestated to include an estimate of these tax effects.

11. Mainly commercial and industrial loans but also includes an unknown amount of creditextended to other than nonfmancial businesses.



1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING

A. Commercial Paper

Millions of dollars, seasonally adjusted, end of period

Item

1 All issuers

Financial companies1

2 Dealer-placed paper2, total3 Directly placed paper3, total

4 Nonfinancial companies4

Year ending December

1994Dec.

555,075

218,947180,389

155,739

1995Dec.

595,382

223,038207,701

164,643

1996Dec.

674,904

275.815210,829

188,260

1997Dec.

775,371

361.147229,662

184,563

1998Dec.

966,699

513,307252,536

200.857

1998

July

1,091,554

597,193276,476

217,885

Aug.

1,102,307

616,382266,022

219.904

Sept.

1,119,816

606.355281,927

231,534

Oct.

1,152,337

639,571271,526

241,239

Nov.

1,150,213

627,170289,184

233,859

Dec.

1,159,027

621,246304,545

233,236

1. Institutions engaged primarily in commercial, savings, and mortgage banking; sales,personal, and mortgage financing; factoring, finance leasing, and other business lending;insurance underwriting; and olher investment activities.

2. Includes all financial-company paper sold by dealers in the open market.

3. As reported by financial companies that place their paper directly with investors.4. Includes public utilities and firms engaged primarily in such activities as communica-

tions, construction, manufacturing, mining, wholesale and retail trade, transportation, andservices.

B. Bankers Dollar Acceptances1

Millions of dollars, not seasonally adjusted, year ending September2

Item

1 Total amount of reporting banks* acceptances in existence

2 Amount of other banks' eligible acceptances held by reporting banks3 Amount of own eligible acceptances held by reporting banks (included in item 1)4 Amount of eligible acceptances representing goods stored in, or shipped between, foreign countries

(included in item 1)

1995

29,242

1.24910,516

11,373

1996

25,832

7097,770

9,361

1997

25,774

7366,862

10,467

1998

14,363

5234,884

5,413

1. Includes eligible, dollar-denominated bankers acceptances legally payable in the UnitedStates. Eligible acceptances are those that are eligible for discount by Federal Reserve Banks;that is, those acceptances that meet the criteria of Paragraph 7 of Section 13 of the FederalReserve Act (12 U.S.C. §372).

2, Data on bankers dollar acceptances are gathered from approximately 65 institutions;includes U.S. chartered commerical banks (domestic and foreign offices), US branches andagencies of foreign banks, and Edge and agreement corporations. The reporting group isrevised every year.

1.33 PRIME RATE CHARGED BY BANKS Short-Term Business Loans1

Percent per year

Date of change

1996—Jan. 1Feb. 1

1997—Mar. 26

1998—Sept. 30Oct. 16Nov. 18

Rate

8.508.25

8.50

8.258.007.75

Period

199619971998

1996—JanFebMarAprMayJuneJulyAugSeptOctNov.Dec

Averagerate

8.278.448.35

8.508.258.258.258.258.258.258.258.258.258.258.25

Period

1997—JanFebMarApr.MayJuneJulyAugSeptOctNov.Dec

Averagerate

8.258.258.308.508.508.508.508.508.508.508.508.50

Period

1998—JanFebMar.Apr.MayJuneJulyAugSeptOctNovDec

1999—Jan

Averagerate

8.508.508.508.508.508.508.508.508.498.127.897.75

7.75

1. The prime rate is one of several base rates that banks use to price short-term businessloans. The table shows the date on which a new rate came to be the predominant one quotedby a majority of the twenty-five largest banks by asset size, based on the most recent Call

Report. Data in this table also appear in the Board's H.15 (519) weekly and G.13 (415)monthly statistical releases. For ordering address, see inside front cover.


Financial Markets A23

1.35 INTEREST RATES Money and Capita! Markets

Percent per year; figures are averages of business day data unless otherwise noted

Item

MONEY MARKET INSTRUMENTS

1 Federal funds121

2 Discount window borrowing2'4

Commercial paper56

Nonfinancial

4 2-month

Financial

7 2-month8 3-month

Commercial paper (historical)9 1 -month

10 3-month

Finance paper, directly placed (historical)'""

13 3-month14 6-month

Bankers acceptances'"15 3-month

Certificates of deposit, secondary marker1'^

18 3-month19 6-month

20 Eurodollar deposits, 3-month3'"

U.S. Treasury billsSecondary market^

22 6-month

Auction high35 l2

25 6-month26 1-year

U.S. TREASURY NOTES AND BONDS

Constant maturities^27 1-year28 2-year29 3-year30 5-year31 7-year32 10-year33 20-year .34 30-year . . .

Composite35 More than 10 years (long-term)

STATE AND LOCAL NOTES AND BONDS

Moody's series14

37 Baa

CORPORATE BONDS

39 Seasoned issues, all industries

Rating qraup40 Aaa41 Aa42 A43 Baa

MEMODividend-price ratio17

1996

5.305.02

n.a.

n.a.n.a.

5.435.415.42

5.315.295.21

5.315.31

5 155.395.47

5.38

5.015.085.22

5.025.095.23

5.525.845.996.186 346.446.836.71

6.80

5 525.795 76

7.66

7.377 557.698.05

2.19

1997

5.465.00

5 575.575.56

5 595.595.60

5.545.585.62

5.445.485.48

5.545.57

5 545.625.73

5.61

5.065.185.32

5.075.185.36

5.635.996.106.226 336.356.696.61

6.67

5 325.505 52

7.54

7.277 487.547.87

1.77

1998

5.354.92

5 405.385.34

5 425.405.37

n.a.n.a.

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

5.395.30

5 495.475.44

5.45

4.784.834.80

4.814.854.85

5.055.135.145.155 285.265.725.58

5.69

4 935.145 09

6.87

6.536 806.937.22

1.49

1998

Oct.

5.074.86

5.145.085.04

5 185.125.09

n.a.n.a.

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

5.124.88

5.245.214.99

5.17

3.964.053.95

4.084.154.06

4.124.094.184.184.464.535.305.01

5.24

4 765.104 93

6.77

6.376 706.857.18

1.59

NQV.

4.834.63

5005.145.06

5045.195.15

n.a.n.a.

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

5.154.92

5 165.245.07

5.21

4.414.424.33

4.444.434.40

4.534.544.574.544 784.835.485.25

5.43

4 875.155 03

6.87

6.416 796.957.34

1.43

Dec.

4.684.50

5 245.125.00

5315.135.04

n.a.n.a.

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

5.084.91

5 475.145.01

5.13

4.394.404.32

4.424.434.31

4.524.514.484.454.654.655.365.06

5.29

4 835.174 98

6.72

6.226.656.807.23

1.37

1999

Jan.

4.634.50

4.804.784.77

4 834.814.81

n.a.n.a.

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

4.804.73

4.894.894.90

4.88

4.344.334.31

4 344.364.34

4.514.624.614.604.804.725.455.16

5.39

4.855.215.01

6.76

6.246 686.847.29

1.30

1999, week ending

Jan. 1

4.484.50

5 245.024.95

5 215.045.02

n.a.n.a.

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

5.144.99

5.295.095.03

5.06

4.444.454.38

4.524.53

4.594.614.604.594.754.705.425.12

5.36

4.865.19500

6.77

6.266 686.837.27

1.33

Jan. 8

4.304.50

4814.804.78

4 854.844.84

n.a.n.a.

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

4.854.78

4 944.934.93

4.93

4.364.384.35

4.384.424.34

4.554.644.634.634.814.765.475.20

5.42

4 895.215.05

6.81

6.286.736.887.34

1.27

Jan. 15

4.754.50

4814.794.79

4 854.844.84

n.a.n.a.

n.a.n.a.

4.804.73

4 904.914.92

4.90

4.354.334.30

4.394.41

4.514.614.614.614.834.755.495.17

5.43

4915.215 02

6.78

6.266.716.867.30

1.31

Jan. 22

4.644.50

4 784.774.76

4 804.794.79

n.a.n.a.

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

4.764.68

4.864.874.88

4.84

4.264.304.29

4.284.31

4.494.634.624.604.804.705.445.14

5.38

4.855.225.01

6.74

6.226 666.827.27

1.29

Jan. 29

4.664.50

4 794.764.75

4 814.774.78

n.a.n.a.

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

4.784.72

4.864.864.87

4.83

4.354.304.30

4.314.28n.a.

4.514.594.584.564.744.675.395.12

5.32

4.755.194.96

6.71

6.196.636.797.24

1.31

1. The daily effective federal funds rate is a weighted average of rates on trades throughNew York brokers.

2. Weekly figures are averages of seven calendar days ending on Wednesday of thecurrent week; monthly figures include each calendar day in the month.

3. Annualized using a 360-day year or bank interest.4. Rate for the Federal Reserve Bank of New York.5. Quoted on a discount basis.6. Interest rates interpolated from data on certain commercial paper trades settled by the

Depository Trust Company. The trades represent sales of commercial paper by dealers ordirect issuers to investors (that is, the offer side). See Board's Commercial Paper Web pages(http://www.federalreserve.gov/releases/cp) for more information.

7. An average of offering rates on commercial paper for firms whose bond rating is AA orthe equivalent. Series ended August 29, 1997.

8. An average of offering rates on paper directly placed by finance companies. Seriesended August 29, 1997.

9. Representative closing yields for acceptances of the highest-rated money center banks.10. An average of dealer offering rates on nationally traded certificates of deposit.

11. Bid rates for Eurodollar deposits collected around 9:30 a.m. Eastern time. Data are forindication purposes only.

12. Auction date for daily data; weekly and monthly averages computed on an issue-datebasis. On or after October 28, 1998, data are stop yields from uniform-price auctions. Beforethat, they are weighted average yields from multiple-price auctions.

13. Yields on actively traded issues adjusted to constant maturities. Source: U.S. Depart-ment of the Treasury.

14. General obligation bonds based on Thursday figures; Moody's Investors Service.15. State and local government general obligation bonds maturing in twenty years are used

in compiling this index. The twenty-bond index has a rating roughly equivalent to Moodys'Al rating. Based on Thursday figures.

16. Daily figures from Moody's Investors Service. Based on yields to maturity on selectedlong-term bonds.

17. Standard & Poor's corporate series. Common stock ratio is based on the 500 stocks inthe price index.

NOTE. Some of the data in this table also appear in the Board's H.15 (519) weekly andG.13 (415) monthly statistical releases. For ordering address, see inside front cover.



1.36 STOCK MARKET Selected Statistics

Indicator

Common slock prices (indexes)1 New York Stock Exchange

(Dec. 31, 1965 = 50)

3 Transportation4 Utility

6 Standard & Poor's Corporation(1941-43 = 10)2

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

Volume of trading (thousands of shares)8 New York Stock Exchange9 American Stock Exchange

10 Margin credit at broker-dealers4

Free credit balances at brokers^11 Margin accounts6

13 Margin stocks14 Convertible bonds15 Short sales

1996 1997 1998

1998

May June July Aug. Sept. Oct. Nov. Dec.

1999

Jan.

Prices and trading volume (averages of daily figures)1

357.98453.57327.30126.36303.94

670.49

570.86

409,74022,567

456.99574.97415.08143.87424.84

873.43

628.34

523,25424.390

550.65684.35468.61190.52516.65

1,085.50

682.69

666,53428,870

574.46712.39505.02198.25551.28

1,108.42

735.02

569,23927,004

569.76731.01492.98188.26548.57

1.108.39

704.59

605,57625.447

586.39718.54503.89189.95579.67

1,156.58

724.83

639,74426.473

539.16665.66441.36186.24511.22

1.074.62

655.67

712,71032.721

506.56629.51408.75186.17454.28

1.020 64

621.48

790,23833.331

511.49636.62396.61195.09448.12

1.032.47

607.16

808,81631,946

564.26704.46442.95206.2950145

1.144.43

667.60

668.93227.266

576.05717.14456.70215.57510.31

1,190.05

660.76

680,39728.756

595.43741.43479.72224.75523.38

1,248.77

704.22

847,13531,015

Customer financing (millions of dollars, end-of-period balances)

97,400

22,54040,430

126,090

31,41052.160

140,980

40,25062,450

143,600

26,20047,770

147,700

29.84051.205

154,370

31,82053,780

147,800

3S.46053,850

137,540

41,97054,240

130,160

43,50054,610

139,710

40.62056.170

140,980

40,25062,450

153,240

36,88059,600

Margin requirements (percent of market value and effective date)7

Mar. 11. 1968

705070

June 8. 1968

806080

May 6, 1970

655065

Dec 6. 1971

555055

Nov. 24. 1972

655065

Jan. 3, 1974

505050

1. Daily data on prices are available upon request to the Board of Governors. For orderingaddress, see inside front cover.

2. In July 1976 a financial group, composed of banks and insurance companies, was addedto the group of stocks on which the index is based. The index is now based on 400 industrialstocks (formerly 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and40 financial.

3. On July 5, 1983, the American Stock Exchange rebased its index, effectively cuttingprevious readings in half.

4. Since July 1983, under the revised Regulation T, margin credit at broker-dealers hasincluded credit extended against stocks, convertible bonds, stocks acquired through theexercise of subscription rights, corporate bonds, and government securities. Separate report-ing of data for margin stocks, convertible bonds, and subscription issues was discontinued inApril 1984.

5. Free credit balances are amounts in accounts with no unfulfilled commitments tobrokers and are subject to withdrawal by customers on demand.

6. Series initiated in June 1984.7. Margin requirements, slated in regulations adopted by the Board of Governors pursuant

to the Securities Exchange Act of 1934, limit the amount of credit that can be used topurchase and cany "margin securities" fas defined in the regulations) when such credit iscollateralized by securities. Margin requirements on securities are the difference between themarket value (100 percent) and the maximum loan value of collateral as prescribed by theBoard. Regulation T was adopted effective Oct. 15. 1934; Regulation U, effective May 1,1936; Regulaiion G, effective Mar. II, 1968; and Regulation X. effective Nov. !, 1971.

On Jan, 1, 1977, the Board of Governors for the first time established in Regulation T theinitial margin required for writing options on securities, setting it at 30 percent of the currentmarket value of the stock underlying the option. On Sept, 30, 1985, the Board changed therequired initial margin, allowing it to be the same as the option maintenance margin requiredby the appropriate exchange or self-regulatory organization; such maintenance margin rulesmust be approved by the Securities and Exchange Commission.


1.38 FEDERAL FISCAL AND FINANCING OPERATIONS

Millions of dollars

Federal Finance A25

Type of account or operation

Fiscal year

1997 1998'

Calendar year

Aug. Sept. Oct.

US. budget'1 Receipts, total2 On-budget3 Off-budget4 Outlays, total5 On-budget6 Off-budget7 Surplus or deficit ( - ) . tola]8 On-budget9 Off-budget

Source of financing (lolal)10 Borrowing from the public11 Operating cash (decrease, or increase {-))..12 Other2

MEMO13 Treasury operating balance (level, end of

period)14 Federal Reserve Banks15 Tax and loan accounts

1,453,0621,085,570

367,4921,560,5121,259,608

300,904-107,450-174.038

66,588

129,712-6.276

-15,986

44,2257,700

36,525

1,579,2921,187,302

391,9901,601,2351,290,609

310,626-21,943

-103,30781,364

38,171604

-16,832

43,6217,692

35,930

1,721,7981,305,999

415,7991,652,5521,335,948

316,60469,246

-29,94999,195

-51,0494,743

-22,940

38,8784,952

33,926

111,74179,13532,606

122,90792,55530,352

-11,166-13,420

2,254

33,989-362

-22,461

36,4276,704

29,722

180,936149,72631,210

142,725107,90034,81438.22241,826-3,604

-46,413-2,45110.642

38,8784,952

33.926

119,97490,06429,910

152,436123.68728.749

-32,462-33.623

1,161

15,3302.661

14,471

36,2174,440

31,776

113,97881,83632,142

131,095100,07831.017

-17.117-18,242

1,125

22,36420,335

-25,582

15,8825,219

10,663

178,646143,33735,309

184,056149,40134,655

-5,410-6.064

654

-5,390-1,62112,421

17,5036,086

11,417

171,722129,92141,801

101,386102,489-1,10370.33627,43242,904

-31,249-39,567

480

57,0707,623

49,446

1. Since 1990, off-budget items have been the social security trust funds (federal old-agesurvivors insurance and federal disability insurance) and the U.S. Postal Service.

2. Includes special drawing rights (SDRs); reserve position on the U.S. quota in theInternational Monetary Fund (IMF); loans to the IMF; other cash and monetary assets:accrued interest payable to the public; allocations of SDRs; deposit funds; miscellaneousliability (including checks outstanding) and asset accounts; seigniorage; increment on gold;

net gain or loss for U.S. currency valuation adjustment; net gain or loss for IMF loan-valuation adjustment; and profit on sale of gold.

SOURCE. Monthly totals: U.S. Department of the Treasury, Monthly Treasury Statement ofReceipts and Outlays of the US. Government; fiscal year totals: U.S. Office of Managementand Budget. Budget of the US. Government.



1.39 US. BUDGET RECEIPTS AND OUTLAYS'

Millions of dollars

Source or type

Fiscal year Calendar year

H2

1998

Jan.

All suurces .

2 Individual income taxes, net3 Withheld4 Nonwithheld5 Refunds

Corporation income taxes6 Gross receipts7 Refunds8 Social insurance taxes and contributions, net9 Employment taxes and contributions2 . . .

10 Unemployment insurance11 Other net receipts*

12 Excise taxes13 Customs deposits14 Estate and gift taxes15 Miscellaneous receipts4 . . .

OUTLAYS

16 All types

17 National defense18 International affairs19 General science, space, and technology.20 Energy21 Natural resources and environment . . . .22 Agriculture

23 Commerce and housing credit24 Transportation25 Community and regional development .26 Education, training, employment, and

social services

27 Health28 Social security and Medicare29 Income security

30 Veterans benefits and services . . .31 Administration of justice32 General government33 Net interest5

34 Undistributed offsetting receipts6

1,579,292

737,466580,207250,75393,560

204,49322,198

539,371506,75128.2024,418

56,92417,92819,84525,465

1,601,235

270,47315.22817.1741,483

21,3699,032

-14,62440,76711,005

53,008

123,843555,273230.886

39,31320,19712,768

244,013-49.973

1,721,798

828,586646,483281,52799,476

213,24924,593

571,831540,01427,4844.333

57,67318,29724,07632,658

1.652,552

268,45613,10918,2191,270

22,39612,206

1,01440,3329,720

54,919

131,440572,047233,202

41,78122,83213,444

243,359-47,194

845,527

400,436292,252191.05082.926

106,4519,635

288,251268,35717,7092.184

28,0848,61910,47712.866

797,418

132,6985,7408,938803

9,6281,465

-7,57516,8475,678

25,080

61,809278,863124.034

17,69710.6706.623

122.655-24,235

773,812

354,072306.86558,06910,869

104,65910,135

260,795247,79410,7242,280

31,1339,67910,26213,348

824370

140,8739,420

10.040411

11.10610,590

-3,52620,414

5.749

26,851

63,552283,109106,353

22,07710,2127.302

122.620-22.795

922,632

447,514316,309219,13687,989

109,35314,220

312,713293,520

17,0802,112

29.9228,546

12,97115.837

815,886

129,3514,6109,426957

10,0512,387

-2,48316.1964,863

65.053286.305125,196

19,61511,2876,139

122,345-21.340

824,998

392,332339,14465,20412,032

104,16114,250

268,466256,14210,1212.202

33,3669,83812,35918.735

877.026

140.1968.29610,142

699

12,671

16,757

4,04620,8346,972

27,245

67.836316,809109,481

22,75012,0419,079

116,954-25,795

113,978

51,34152,5302,2143,404

4,8051,364

45,92642,9402,655331

6,0211,3802,1323,738

131,095

18,1734,9241,558-2182,0805,620

-7013,4471,405

4,111

10,47743,72814,644

1,8412,0671,418

19,350-2.828

178,646

75.98869.628

7,094734

45,1232.749

48.60147,869

315417

5,4461,4722,2392,527

184,056

27,178822

1,918151

2.5453,238

-1,8213,4001,505

5.465

11,75779,63321,945

5,3052,1322,198

20,029-3 ,343

171,722

99,85758.52742.324

994

7.1852,055

54,92853,725

867337

4 8061,2862,2063,509

101.386

19,2701,1791,398-1071.4583.939

7452.558

709

5.136

10,98415,24817,349

1.8282,090

18819.947•2,530

1. Functional details do nol sum to total outlays for calendar year data because revisions tomonthly totals have not been distributed among functions. Fiscal year total for receipts andoutlays do not correspond to calendar year data because revisions from the Budget have notbeen fully distributed across months.

2. Old-age, disability, and hospital insurance, and railroad retirement accounts3. Federal employee retirement contributions and civil service retirement and

disability fund.

4. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts.5. Includes interest received by trust funds.6. Rents and royalties for the outer continental shelf. U.S. government contributions for

employee retirement, and certain asset sales.SOURCE. Fiscal year totals: U.S. Office of Management and Budget, Budget of the U.S.

Government. Fiscal Year 2000: monthly and half-year totals: U.S. Department of the Trea-sury, Monthly Treasury Sliitftnt'tit of Receipts and Outlays njthe U.S. Government.


Federal Finance A27

1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION

Billions of dollars, end of month

hem

1 Federal debt outstanding

2 Public debt securities3 Held by public4 Held by agencies

6 Held by public7 Held by agencies

8 Debt subject to statutory limit

9 Public debt securities10 Other debt1

MHMO11 Statutory debt limit

1996

Dec. 31

5,357

5,3233,8261,497

3427

8

5,237

5,2370

5,500

Mar. 31

5,415

5.3813,8741.507

3426

8

5,294

5,2940

5,500

1997

June 30

5,410

5.3763,8051,572

3426

7

5,290

5,2900

5.500

Sept. 30

5,446

5.4133.8151,599

33267

5,328

5.3280

5,950

Dec. 31

5,536

5,5023,8471.656

34277

5,417

5,4160

5,950

Mar. 31

5,573

5,5423,8721,670

3126

5

5,457

5,4560

5,950

1998

June 30

5,578

5.5483.7901,758

30264

5,460

5,4600

5,950

Sept. 30

5,556

5,5263.7611,766

29264

5,440

5,4390

5,950

Dec. 31

5,643

5.614n.a.n.a.

29n.a.n.a.

5,530

5,5300

5.950

1. Consists of guaranteed debt of U.S. Treasury and other federal agencies, specifiedparticipation certificates, notes to international lending organizations, and District of Colum-bia stadium bonds.

SOURCE U.S. Department of the Treasury, Monthly Statement of the Public Debt of theUnited States and Treasury Bulletin,

1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership

Billions of dollars, end of period

Type and holder

1 Total gross public debt

By type2 Interest-bearing1 Marketable4 Bills5 Notesb Bonds7 Inflation-indexed notes and bonds'8 Nonmarketable^9 State and local government scries

10 Foreign issues11 Government12 Public13 Savings bonds and notes

15 Non-intcresl-bearing

By holder5

16 U.S. Treasury and other federal agencies and trust funds17 Federal Reserve Banks18 Private investors19 Commercial banks20 Money market fund';21 Insurance companies22 Other companies2.1 State and local treasuries

Individuals24 Savings bonds25 Other securities26 Foreign and international'1 . .27 Other miscellaneous investors •'

1995

4,988.7

4,964.43.307.2

760.72,010.3

521.2n.a.

1,657.2104.540.840.8

.0181.9

1 ?99 f,24.3

1,304.5391.0

3,294.9278.7

71.5241.5228.8469.6

185.0162.7862.2794.9

1996

5.323.2

5,317.23,459.7

777.42.112.3

555.0n.a.

1.857.5101.337.447.4

.0182.4

1 505 96.0

1,497.2410.9

3,411.2261.8

91.6214.1258.5482.5

187.0169.6

1.135.6610.5

1997

5,502.4

5,494.93,456.8

715.42,106.1

587 ~i31.0

2,038.1124 136.236.2

.0181.2

1 666 77̂ 5

1,655.7451.9

3,393.4269.888.9

224.9265.0493.0

186 5168.4

1.278.0418.8

1998

5,614.2

5,605.43,355.5

691.01,960.7

621.250.6

2,249.9165.334.334.3

.0180.3

1,840 0

J

n.a.

Ql

5,542.4

5.535.33,467.1

720.12,091.9

598.741.5

2,068.2139.135.436.4

.0181.2

1 681 57~2

1,670.4400.0

3.430.7278.6

84.8182.2268.1444.8

186.3165.8

1,240.3579.8

1998

Q2

5,547.9

5,540.23.369.5

641.12.064.6

598.750.1

2,170.7155.036.036.0

.0180.7

1 769 17.7

1,757.6458.4

3,330.6263.7

82.7185.0267.2464.7

186.0165.0

1,248.6467.7

Q 3

5,526.2

5,518.73.331.0

637.72,009.1

610.441.9

2.187.7164.435.135.1

.0180.8

1 777 37.5

1,765.6458.1

3,301.0260.0

84.2IS80271.4469 0

186.0166.4

1,217.2458.9

Q4

5.614.2

5,605.43,355.5

691.01,960.7

621 250.6

2,249.9165.334.334.3

.0180.3

1,840.08.8

n.a.

1. The U.S. Treasury first issued in flat ion-indexed securities during the first quarter of1997.

2. Includes (not shown separately) securities issued to the Rural Electrification Administra-tion, depository bonds, retirement plan bonds, and individual retirement bonds.

3 Nonmarkctable series denominated in dollars, and series denominated in foreign cur-rency held by foreigners.

4. Held almost entirely by U.S Treasury and other federal agencies and trust funds.5. Data for Federal Reserve Banks and U.S. government agencies and trust funds are actual

holdings; data for other groups are Treasury estimates.6. Includes slate and local pension funds.

7. In March 1996, in a redefinition of series, fully defeased debt backed by nonmarketablefederal securities was removed from "Other miscellaneous investors" and added to "State andlocal treasuries." The data shown here have been revised accordingly.

8. Consists of investments of foreign balances and international accounts in the UnitedStates.

9 Includes savings and loan associations, nonprofit institutions, credit unions, mutualsavings banks, corporate pension trust funds, dealers and brokers, certain U.S. Treasurydeposit accounts, and federally sponsored agencies

SOURCE. U.S. Treasury Department, data by type of security. Monthly Statement of thePublic Debt of the United States; data by holder, Treasury Bulletin.



1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1

Millions of dollars, daily averages

1998

Dec.

1998, weekending

Dec. 9 Dec. 16 Dec. 23 Dec. 30

1999. week ending


OUTRIGHT TRANSACTIONS2

By type of security1 U.S. Treasury bills

Coupon securities, by maturity2 Five years or less3 More than five years4 Inflation-indexed

Federal agency5 Discount notes

Coupon securities, by maturity6 One year or less7 More than one year, but less than

or equal to five years8 More than five years9 Mortgage-backed

By type of counterpartyWith interdealer broker

10 U.S. Treasury11 Federal agency12 Mortgage-backed

With other13 US. Treasury14 Federal agency15 Mortgage-backed

FUTURES TRANSACTIONS3

By type of deliverable security16 U.S. Treasury bills

Coupon securities, by maturity17 Five years or less18 Mare than five years19 Inflation-indexed




OPTIONS TRANSACTIONS4

By type of underlying security25 U.S. Treasury bill's





30,362

131.24894,390

1,497

46,265

7004,8644 640

92,708

146.3113,478

31,293

111,18552,99161,415

3,29619,467

0

0

0000

1.6858,125

0

0

000

862

35,010

111,37073,238

602

43,274

856

3,4613,894

68,053

121,8062,223

22,926

98,41349,26145,127

50

3,28116,164

0

0

0000

1,1455,621

0

0

0

00

912

30,397

76,14747,464

415

38,998

716

3,491r

2,41359,167

84,1862,193

20.854

70,23743,424'38,314

108

2,73110,292

0

0

0000

9343.004

0

0

0

00

806

39.754

93,54061,330

259

40,902

693

4.5992.048

62,512

104,7742,327

20,633

90,10945,91441,879

4,52614,928

0

0

0000

1.2094,418

0

0

000

822

35,490

97,50759,804

386

41,600

454

6,1012,896

99,250

107,4723,568

34,264

85,71547,48364,986

2,71712,523

0

6843,474

0

00

1,258

31.544

78,91652,035

239

38,054

975

2,7202,230

63,416

91.7091.806

23,038

71,02542,17240,379

2,93611,200

0

0

0000

1,2423,189

0

00

781

22,028

61,22640,259

236

36,437

953

2,5272,378

37,763

65,4491,517

14,505

58,30040,77823,259

2,7188,845

0

0

0000

8642,737

0

00

326

27,504

56,76725,372

157

1,6161,377

24,278

56,6821,3908,562

53,11838,26015,716

1,8205,211

0

0

0000

7331,471

0

00

743

33,896

72,84559,579

3,681

50,075

1,443

4,3965,965

77.398

92.6723.582

24.238

77,32958,29753,160

1,90112,874

0

0

0000

1,2414,366

0

00

1,287

33,260

118,96286,526

1,200

41,964

1.252

5,8944,790

122,401

132,7034,185

36,511

107,24549,71585,891

2,93321,370

0

0

0000

1,6325.064

0

00

1,242

36,190

104,19365,107

814

44,280

993

8.1402,150

61,252

117,8584,001

17,826

88,44551,56143,425

2,15314,667

0

1,8184,433

0

00

2,319

26,287

96,15159,782

1,188

38.565

866

5.7773,425

72,919

103,2253 347

22.547

80,18245,28550,372

1.84413,964

0

0

0000

2,0544,867

0

00

674

1. Transactions are market purchases and sales of securities as reported to the FederalReserve Bank of New York by the U.S. government securities dealers on its published list ofprimary dealers. Monthly averages are based on the number of trading days in the month.Transactions are assumed to be evenly distributed among the trading days of the report week.Immediate, forward, and futures transactions are reported at principal value, which does notinclude accrued interest; options transactions are reported at the face value of the underlyingsecurities.

Dealers report cumulative transactions for each week ending Wednesday.2. Outright transactions include immediate and forward transactions. Immediate delivery

refers to purchases or sales of securities (other than mortgage-backed federal agency securi-ties) for which delivery is scheduled in five business days or less and "when-issued"securities that settle on the issue date of offering. Transactions for immediate delivery of mortgage-backed agency securities include purchases and sales for which delivery is scheduled in thirty businessdays or less. Stripped securities are reported at market value by maturity of coupon or corpus.

Forward transactions are agreements made in the over-the-counter market that specifydelayed delivery. Forward contracts for U.S. Treasury securities and federal agency debtsecurities are included when the time to delivery is more than five business days. Forwardcontracts for mortgage-backed agency securities are included when the time to delivery ismore than thirty business days.

3. Futures transactions are standardized agreements arranged on an exchange. All futurestransactions are included regardless of time to delivery.

4. Options transactions are purchases or sales of put and call options, whether arranged onan organized exchange or in the over-the-counter market, and include options on futurescontracts on U.S. Treasury and federal agency secunties.

NOTE, "n.a." indicates thai data are not published because of insufficient activity.


Federal Finance A29

1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1

Millions of dollars

Item

NET OUTRIGHT POSITIONS1

Bv type of security1 U.S. Treasury bills




or equal to live years8 More than five years9 Mortgage-backed

NET FUTURES POSITIONS4

Bv type of deliverable security10 U.S. Treasury bills

Coupon securities, by maturity11 Five years or less12 More than five years1.1 Inflation-indexed


Coupon securities, by maturity15 One year or less1b More than one year, but less lhan

or equal lo live years17 More than five years18 Mortgage-backed

NET OPTIONS POSITIONS

Bv type of deliverable security19 U.S.'Treasury bills '.



Coupon securities, bv maturity24 One year or less25 More than one year, but less than

or equal lo five years26 More than five vears27 Mortgage-backed '

Reverse repurchase agreements28 Overnight and continuing29 Term

Securities borrowed30 Overnight and continuing31 Term

32 Overnight and continuing33 Term

Repurdutse agreements34 Overnight and continuing35 Terra '

Securities loaned36 Overnight and continuing17 Term

Securities pledged38 Overnight and continuing39 Term ."

Collateralized loans40 Total

1998

Oct. Nov. Dec.

1998, week ending

Dec. 2 Dec. 9 Dec. 16 Dec. 23 Dec. 30

1999. week end

Jan. 6 Jan. 13

ng

Jan. 20

Positions2

-9,335

1,1966,4122.705

18,395

1,870

5,1196,797

48.954

n.a.

-9.070-24.562

0

0

0

000

0

-1,301-3.788n.a.

0

0

0n.a.3.160

-6,782

5587,2721.798

17,666

2,188

3,2085,584

37,219

271

-4,399-27,583

0

0

0

000

0

-2.128-1,602n.a.

0

0

0n.a.2.380

-4,551

-5.3883,1801,186

20,788

2.075

3.093'499

38,689

507

-4,012-24,757

0

0

0

000

0

-3,155-1,387

0

0

0

0n.a.1,213

2,294

-2,2865,7171,517

17,333

2,251

3,3964,866

33,233

551

-6,203-26,539

0

0

0

000

0

-2,418-752

0

0

0

0n.a.1,458

4,374

-5,2824,0071.241

21,969

1,958

4,0265,302

41,692

495

-5,845-26,034

0

0

0

000

0

-2,535-721

0

0

0

0n.a.

479

-11,472

-7,6913.5121,089

22,540

2,297

4.4154,338

39,932

n.a.

-4,215-26,745

0

0

0

000

0

-3,260-1,275

0

0

0

0n.a.1,087

-9,773

-5,1423,3041,104

22,223

1,895

2,2571,964

37,331

n.a.

-2,998-23,356

0

0

0

000

0

-3,928-1,858

0

0

0

0n.a.1,815

-4,368

-4,0581,0751,099

17,475

2,000

1,6471,839

37,624

n.a.

-2,852-22,324

0

0

0

000

0

-3,282-1,624

0

0

0

0n.a.1,286

2,991

-7,2573.8751,999

20,326

2,780

2,6654,621

36,834

n.a.

-598-25,164

0

0

0

000

0

-1,935-3.135

0

0

0

0n.a.2,032

4,374

-9,8102,3532,020

20,409

2,726

3,5783,873

24,444

n.a.

-490-20,011

0

0

0

000

0

- 5 8-1,569

0

0

0

0n.a.3.064

88

-9,523-1,570

2,015

16,352

2,832

4,6644,622

20,520

n.a.

-716-18,637

0

0

0

000

0

838-323

0

0

0

0n.a.3,736

Financing5

278.468847,663

234,431109,805

2,8510

666,957777,445

8,1573 947

53.8615.112

21.841

240,639780,552

210,066107.922

3,17463

588,736709,894

8,9434,008

46,8513,556

23,528

242,653807,304

205.654112,684

2,95267

608.988713,037

9,3693,567

47.5655,075

21,850

248,942730,585

209,357109,554

3,18667

614,567634.759

9,4243,904

42,7284.576

24.391

250,409778.286

206,947110,517

2,81667

612,649685,047

9,8634,409

45,5384.610

22,408

265,083814,651

205,544111,511

3,203n.a.

646,524705,563

9,8033,763

48,6185,279

26,182

226.311850,670

203,289112,705

3,304n.a.

598,564758.512

7,6692,434

48.4295,207

20,734

228,433820,439

204,256117,152

2,478n.a.

576,474738,282

9,987n.a.

48,9205,287

18.012

232,698716,925

216.303110.907

2.537n.a.

610.018622,805

10,325n.a.

48,5135,483

17.205

231,128789,354

221,630104,063

2,480n.a.

620,080668.796

9,871n.a.

47,8195,777

17,062

249.350804,992

226,469105,938

2,537n.a.

674,334702.050

10,455n.a.

48.4455,725

16,285

1. Data for positions and financing are obtained from reports submitted to the FederalReserve Bank of New York by the U.S. government securities dealers on its published list ofprimary dealers. Weekly figures are close-of-business Wednesday data. Positions for calendardays of the report week are assumed to be constant. Monthly averages are based on thenumber of calendar days in the month.

2. Securities positions are reported at market value.3. Net outright positions include immediate and forward positions. Net immediate posi-

tions include securities purchased or sold (other than mortgage-backed agency securities) thatha\e been delivered or are scheduled to be delivered in five business days or less and"when-issued" securities thai settle on (he issue date of offering. Net immediate positions tormortgage-backed agency securities include securities purchased or sold that have beendelivered or are scheduled to be delivered in thirty business days or less.

Forward positions reflect agreements made in the over-the-counter market that specifydelayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt

securities are included when the time to delivery is more than five business days. Forwardcontracts for mortgage-backed agency securities arc included when the time to delivery ismore than thirty business days.

4. Futures positions reflect standardized agreements arranged on an exchange. All futurespositions are included regardless of time to delivery.

5. Overnight financing refers to agreements made on one business day that mature on thenext business day: continuing contracts are agreements that remain in effect for more than onebusiness day bui have no specific maturity and can be terminated without advance notice byeither party; term agreements have a fixed maturity of more than one business day. Financingdata are reported in tenns of actual funds paid or received, including accrued interest.

NOTE, "n.a " indicates that data are not published because of insufficient activity.



1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding

Millions of dollars, end of period

Agency 1996

1998

July Aug. Sept. Oct.

1 Federal and federally sponsored agencies.

2 Federal agencies3 Defense Department1

4 Export-Import Bank2-1

Federal Housing AdministrationGovernment National Mortgage Association certificates of

participation5

Postal Service6 .Tennessee Valley AuthorityUnited States Railway Association6

10 Federally sponsored agencies7..1112131415161718

Federal Home Loan Banks .Federal Home Loan Mortgage Corporation .Federal National Mortgage AssociationFarm Credit Banks8

Student Loan Marketing Association9

Financing CorporationFarm Credit Financial Assistance Corporation" .Resolution Funding Corporation

MEMO19 Federal Financing Bank debt13

Lending to federal and federally sponsored agencies20 Export-Import Bank' ".21 Postal Service6

22 Student Loan Marketing Association23 Tennessee Valley Authority24 United States Railway Association6

Other lending'4

25 Farmers Home Administration26 Rural Electrification Administration27 Other

738,928

39,1866

3,455116

n.a.8,073

27,536n.a.

699,742205,81793,279

257,23053,17550,335

8,1701.261

29,996

103,817

3,4498,073n.a.3,200n.a.

33,71917,39237,984

844,611

37,3476

2,05097

5,76529,429n.a.

807,264243,194119,961299,174

57,37947,529

8,1701,261

29,996

78,681

2,0445,765n.a.3,200n.a.

21,01517,14429,513

925,823

29,3806

1,44784

n.a.n.a.

27,853n.a.

896.443263.404156,980331,27060,05344,763

8,1701.261

29,996

58,172

1,431n.a.

18,32516,70221.714

1,022,609

27,7926

552102

27,786n.a.

994,817313,919169,200369,77463,51737,7178,1701,261

29,996

49,090

552n.a.n.a.

13,53014,89820,110

26,9906

n.a.156

n.a.n.a.26,984n.a.

1,090,715328,009208,800415,229

64,52833,2708,1701,261

29,996

42,610

10,90014,12617.584

26,6686

n.a.26,507

1.103,596334,494213,800423,188

57,91033,350

8,1701,261

29,996

42,396

tn.a.

9,75614,28418,356

1,172475

26,6916

n.a.174

n.a.n.a.26,685

1,145,884343,188232,994430,582

64,33233,760

8.1701.261

29.996

45,955

tn.a.

9,50014,16622,289

26,3506

n.a.26,344n.a.

367,274246,708431,300

60,720n.a.8,1701,261

29,996

44,952

9,50014,19121,261

n.a.

26.3156

n.a.205

n.a.n.a.

26..1O9

373,755267,890446,377

66,086n.a.8.1701,261

29,996

44,824

tn.a.

9,50014,19921,125

1. Consists of mortgages assumed by the Defense Department between 1957 and 1963under family housing and homeowners assistance programs.

2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976.3. On-budget since Sept. 30, 1976.4. Consists of debentures issued in payment of Federal Housing Administration insurance

claims. Once issued, these securities may be sold privately on the securities market.5. Certificates of participation issued before fiscal year 1969 by the Government National

Mortgage Association acting as trustee for the Farmers Home Administration, the Departmentof Health, Education, and Welfare, the Department of Housing and Urban Development, theSmall Business Administration, and the Veterans Administration.

6. Off-budget.7. Includes outstanding noncontingent liabilities: notes, bonds, and debentures. Includes

Federal Agricultural Mortgage Corporation, therefore details do not sum to total. Some dataare estimated.

8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, which isshown on line 17.

9. Before late 1982, the association obtained financing through the Federal Financing Bank(FFB). Borrowing excludes that obtained from the FFB, which is shown on line 22.

10. The Financing Corporation, established in August 1987 to recapitalize the FederalSavings and Loan Insurance Corporation, undertook its first borrowing in October 1987.

11. The Farm Credit Financial Assistance Corporation, established in January 1988 toprovide assistance to the Farm Credit System, undertook its first borrowing in July 1988.

12. The Resolution Funding Corporation, established by the Financial Institutions Reform,Recovery, and Enforcement Act of 1989, undertook its first borrowing in October 1989.

13. The FFB, which began operations in 1974, is authorized to purchase or sell obligationsissued, sold, or guaranteed by other federal agencies. Because FFB incurs debt solely for thepurpose of lending to other agencies, its debt is not included in the main portion of the table toavoid double counting.

14. Includes FFB purchases of agency assets and guaranteed loans; the latter are loansguaranteed by numerous agencies, with the amounts guaranteed by any one agency generallybeing small. The Farmers Home Administration entry consists exclusively of agency assets,whereas the Rural Electrification Administration entry consists of both agency assets andguaranteed loans.


Securities Markets and Corporate Finance A31

1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments

Millions of dollars

Type of issue or issuer,or use

July Aug. Sept. Dec.

1 All issues, new and refunding1 . . . .

B\ type of issue2 General obligation3 Revenue

By type of issuer4 State5 Special district or statutory authority3

6 Municipality, county, or township . .

7 Issues for new capital

By use of proceeds8 Education9 Transportation

10 Utilities and conservation11 Social welfare12 Industrial aid13 Other purposes

171,222

60.409110,813

13,651113,22844,343

112,298

26,85112,3249,791

24,5836,287

32.462

214,694

69,934134,989

18,237134,91970,558

135,519

31,86013,95112,21927.7946,667

35,095

262,342

87,015175,327

23,506178,42160,173

160,568

36.90419,92621,037n.a.8,594

42,450

29,665

10,13519,530

2,80918,0997,220

19341

4,9112,9622,368n.a.

5635,279

22,599

6.51516,084

1.97216,2445,673

15,895

2.7333.677795

n.a.1,0024,674

20,344

5,81214.532

1,48314,2334,628

11,258

2,4351,9821,179n.a.

7092,764

17,526

5,61911,907

1,28012,4903,756

9,106

2,041918831

n.a.315

2,726

19,528

6,79112,737

1,86512,9244,739

12,736

2,6051.5982,785n.a.

4713,359

19,325

5,43313,892

77813,4735,073

12,452

2.353806

2,225n.a.

6383,242

24288

8,63215,656

2,56115,9375.790

14,517

2,7661,800

984n.a.1,3764,477

16,926

6,92510,001

31812,9293,679

11,917

2,9361,706

672n.a.

4524,439

1. Par amounts of long-term issues based on date of sale.2. Includes school districts.

SOURCE. Securities Data Company beginning January 1990; Investment Dealer'sDigest before then.

1.46 NEW SECURITY ISSUES U.S. Corporations

Millions of dollars

Type of issue, offering,or issuer

May July Aug. Sept. Nov.'

1 All issues1

2 Bonds2

By type of offering3 Public, domestic4 Private placement, domestic-5 Sold abroad

By industry group6 Nonfinancial7 Financial

8 Stocks2

Bv type of offering9 Pubitc

10 Private placement3

By industry group11 Nonfinancia!12 Financial

n.a.

n.a.

465.489n.a.

83,433

429,157

122,006

80,46041,546

n.a.

n.a.

537,880n.a.

103,188

117,880

117,880n.a.

60,38657,494

n.a.

126,577

126,577n.a.

73,94452,633

84,449

70,313

56,9657,6005,748

20,45649,857

14,700

14,700

9,2715,429

109,687

93,243

78,2807,6007,363

24,44468.799

17,111

17,1

10,2486,863

77,750

68,133

54,2667,6006.267

24,82143,313

9,772

9,772n.a.

6,3903,382

60,708

57,145

45,7457,6003,800

20,39936,746

3,725

2,5601,165

85,833

81,352

71,1347,6002,618

16,56264,790

4,640

4,640

2,2662,374

70,907

62,692

48,2567,6006.837

16,63246,060

8,655

8,655

5,8792,776

104,288

95,910

80,5567,6007,754

31,91163,999

8,902

8,902

6,1452,757

73,001

65,140

54,2797,6003,261

20,40044,741

8,492

8,492n.a.

7,3901,102

1. Figures represent gross proceeds of issues maturing in more than one year: they are theprincipal amount or number of units calculated by multiplying by the offering price. Figuresexclude secondary offerings, employee stock plans, investment companies other than closed-end, intracorporate transactions, and Yankee bonds. Stock data include ownership securitiesissued by limited partnerships.

2. Monthly data cover only public offerings.3. Monthly data are not available.SOURCE. Beginning July 1993, Securities Data Company and the Board of Governors of

the Federal Reserve System.



1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets'

Millions of dollars

Item

1 Sales of own shares7

2 Redemptions of own shares3 Net sales3

4 Assets4

5 Cash5

6 Other

1997

1,190,900

918,728272.172

3,409,315

174,1543,235,161

1998'

1,461,430

1,217,022244,408

4,173,531

191,3933,982,138

1998

June

122,288

97,89924,389

3,986,952

199,1353,787,817

July

134,801

107,36827,433

3,957,093

195,9663,761,127

Aug.

111,587

118,812-7,225

3,479,401

194,4353,284,967

Sept.

118,478

107,04911.429

3,625,841

211,2533.414,588

Oct.

116,471

108,8387,633

3,804,591

210,0263,594,565

Nov.

112,627

89,70222,925

4,002,089

207,4223,794,667

Dec.'

140,700

134,2896,412

4,173,531

191,3933.982,138

1999

Jan.

160,486

135,68324,802

4301,012

203,6634,097,349

1. Data include stock, hybrid, and bond mutual funds and exclude money market mutualfunds.

2. Excludes reinvestmenl of net income dividends and capital gains distributions and shareissue of conversions from one fund to another in the same group.

3. Excludes sales and redemptions resulting from transfers of shares into or out of moneymarket mutual funds within the same fund family.

4. Market value at end of period, less current liabilities.5. Includes all U.S. Treasury securities and other short-term debt securities.

1.48 CORPORATE PROFITS AND THEIR DISTRIBUTION

Billions of dollars: quarterly data at seasonally adjusted annual rates

Account

1 Profits with inventory valuation andcapital consumption adjustment

2 Profits before taxes3 Profits-tax liability4 Profits after laxes

6 Undistributed profits

7 Inventory valuationS Capita) consumption adjustment

1996

750.4680.2226.1454.1261.9192.3

- 1 271 4

1997

817.9734.4246.1488.3275 1213.2

6.976.6

1998

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

279.2n.a.

n.a.92.2

1997

Ql

794.3712.4238.8473.6274.1199.5

8.173.8

Q2

815.5729.8241.9487.8274.7213.2

10.375.5

Q3

840.9758.9254.2504.7275.1229.5

4.877.2

Q4

820.8716.4249.3487.1276.4210.6

4.380.1

1998

Ql

829.2719.1239.9479 2277.3201.8

25.3849

Q2

820.6723.5241.6481.8278.1203.7

7.889.4

Q3

827.0720.5243.2477.3279.0198.3

11.794.8

Q4

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

282.3n.a.

n.a.99.7

SOURCE. U.S. Department of Commerce, Survey of Current Business.

1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities1

Billions of dollars, end of period: not seasonally adjusted

ASSETS

1 Accounts receivable, gross'2 Consumer3 Business4 Real estate

5 LESS: Reserves for unearned income6 Reserves for losses

7 Accounts receivable, net8 All other

9 Total assets

LiABim its AND CAPITAL

10 Bank loans11 Commercial paper

Debt12 Owed to parent13 Not elsewhere classified14 All other liabilities15 Capital, surplus, and undivided profits

16 Total liabilities and capital

541.7201.9274.966.9

5r9113

479.5216.8

696.3

14.8171.6

41.8247.4146.274.6

696.3

607.0233.0301.672.4

60.712.8

533.5250.9

784 4

15.3168.6

51.1300.0163.685.9

784.4

637.1244.9309.582.7

55.613.1

568 32900

858 3

19.7177.6

60.3332.5174.793.5

858.3

1997

Ql

648.0249 4315.2

83.4

51.312.8

583.9289.6

873.4

18.4185.3

61.03246189.294.9

873.4

Q2

651.6255.1311.7

84.8

57.213.3

581.2306.8

887.9

18.8193.7

60.0345.3171.498.7

887.9

Q3

660.5254.5319.5

86.4

54.612.7

593.1289.1

882.3

20.4189.6

61.6322.8190.197.9

882.3

Q4

663.3256.8318.5

87.9

52.713.0

597.6312.4

910.0

24.1201.5

64.7328.8189.6101.3

910.0

1998

Ql

667.2251.7325.9

89.6

52.113.1

601.9329.7

9316

22.0211.7

64.6338.2193.1102.1

931.6

Q2

676.0251.3334.989.9

53.213.2

609.6340.1

949 7

22.3225.9

60.0348.7188.9103.9

949.7

Q3

688.6254 9335.198.5

52.413.2

622.9313.7

936 6

24.9226.9

58.3337.6185.4103.6

936.6

1. Includes finance company subsidiaries of bank holding companies but not of retailersand banks. Data are amounts carried on the balance sheets of finance companies; securitizedpools are not shown, as they are not on the books.

2. Before deduction for unearned income and loss


Securities Market and Corporate Finance A33

1.52 DOMESTIC FINANCE COMPANIES Owned and Managed Receivables'

Billions of dollars, amounts outstanding

Type of credit

I Total

3 Real estate

5 Total

6 Consumer

8 Motor vehicle leases9 Revolving"

10 Other3

Securitized assets4

12 Motor vehicle leases

14 Other15 Real estale16 One- to four-familv17 Other

Securitized real estate assets4

19 Other

21 Motor vehicles

23 Wholesale loans5

25 Equipment

27 Leases28 Other business receivables6

Securiti2ed assets4

29 Motor vehicles30 Retail loans

32 Leases

35 Leases.36 Other business receivables6

1996 1997 1998

1998

July Aug. Sept. Oct. Nov. Dec.

Seasonally adjusted

761.9

307 7111.9342.4

809.8

327 7121.1361.0

885.1

356 2135.3393.6

840.6

336 6125.2378.7

846.4

339.1128.1379.2

853.5

343 9128.8380.7

867.2

351 7132.3383.2

872.7

353 8134.3384.7

885.1

356 2135.3393.6


769.7

310.686.792.532.533.2

36.88.70.0

20.1111.952.130 5

28.90.4

347 267.125.133.090

194.859.9

134.947.6

24.02.7

21 30.0

11.34.76.62.4

818.1

330.987.096.838.634.4

44.310.80.0

19.0121.159.028.9

33.00.2

366 163.525.627.710 2

203.951.5

152.351.1

33.02.4

30 50.0

10.74.26.54.0

894.3

359.8103.193.036.033.2

54.814.76.7

18.1135.375.131 1

29.00.1

399 274.929.333.512 1

221.451.9

169.559.2

27.02.3

24 70.0

11.55.26.35.3

835.2

336.591.797.329.635.0

50.210.85.3

18.5125.265.928 5

30.60.1

371 561.129.221.010 9

212.851.6

161.254.5

26.32.2

24 10.0

11.55.16.45.4

842.6

340.595.396.930.234.7

49.210.75.3

18.2128.168.628.7

30.70.1

374.062.529.622.010.9

212.051.8

160.257.0

25.92.1

23.80.0

11.44.96.45.2

850.0

344.996.294.929.334.6

51.814.25.3

18.8128.868.430 1

30.20.1

376 265.530.024.2

210.847.9

162.958.9

24.52.0

22.50.0

11.34.96.45.3

865.5

351.297.694.634.634.6

51.614.45.3

18.6132.372.230 2

29.80.1

382 068.530.427.011 1

211.547.2

164.359.6

25.01.9

23.20.0

12.05.66.45.2

874.4

353.999.094.434.734.6

53.414.25.3

18.4134.374.130.7

29.40.1

386.370.929.430.311.2

212.047.8

164.260.4

25.82.4

23.40.0

11.85.46.45.3

894.3

359.8103.193.036.033.2

54.814.76.7

18.1135.375.131.1

29.00.1

399.274.929.333.512.1

221.451.9

169.559.2

27.02.3

24.70.0

11.55.26.35.3

NOTE. This table has been revised to incorporate several changes resulting from thebenchmarking of finance company receivables to the June 1996 Survey of Finance Compa-nies. In that benchmark survey, and in the monthly surveys ihat have followed, more detailedbreakdowns have been obtained for some components. In addition, previously unavailabledata on securitized real eslale loans are now included in this table. The new information hasresulted in some ^classification of receivables among the three major categories (consumer,real estate, and businessj and in discontinuities in some component series between May andJune 1996.

Includes finance company subsidiaries of bank holding companies but not of retailers andbanks. Data in this table also appear in the Board's G.20 (422) monthly statistical release. Forordering address, see inside front cover.

1. Owned receivables are those carried on the balance sheet of the institution. Managedreceivables are outstanding balances of pools upon which securities have been issued; thesebalances are no longer carried on the balance sheets of the loan originator. Data are shown

before deductions for unearned income and losses. Components may not sum to totalsbecause of rounding.

2. Excludes revolving credit reported as held by depository institutions that are subsidiar-ies of finance companies.

3. Includes personal cash loans, mobile home loans, and loans to purchase other types ofconsumer goods such as appliances, apparel, boats, and recreation vehicles.

4. Outstanding balances of pools upon which securities have been issued; these balancesare no longer earned on the balance sheets of the loan originator.

5. Credit arising from transactions between manufacturers and dealers, that is, floor planfinancing.

6. Includes loans on commercial accounts receivable, factored commercial accounts, andreceivable dealer capital; small loans used primarily for business or farm purposes; andwholesale and lease paper for mobile homes, campers, and travel trailers.



1.53 MORTGAGE MARKETS Mortgages on New Homes

Millions of dollars except as noted

PRIMARY MARKETS

Terms1

1 Purchase price (thousands of dollars)2 Amount of loan (thousands of dollars)3 Loan-lo-pnce ratio (percent)4 Maturity (years)5 Fees and charges (percent of loan amount)

Yield {percent per year)6 Contract rate7 Effective rale1 '8 Contracl rale (HUD series)4

SECONDARY MARKETS

Yield (percent per \ear]9 FHA mortgages (Section 203)5

10 GNMA securities6

FEDERAL NATIONAL MORTGAGE ASSOCIATION

Mortgage holdings (end of periodi1 1 Total12 FHA/VA insured

14 Mortgage transactions purchased (during period)

Mortgage commitments (during period)15 Issued7

16 To sell8

FEDERAL HOME LOAN MORTGAGE CORPORATION

Mortizcwe htMin^b (end t>f period?17 Total18 FHA/VA insured19 Conventional

Mortgage transactions (during period)20 Purchases21 Sales

22 Mortgage commitments contracted (during period)9

182.4139.278.227.21.21

7.567.778.03

8.197.48

180.1140.380.428.21.02

7.577.737.76

7.897.26

195.2151.180.028.40.89

6.957.087.00

7.046.43

1998


Terms and yields in primary and secondary markets

208.7160.178.728.50.90

6.997.137.05

7.056.48

191.5150.481.328.60.87

6.957.096.86

7.036.42

192.7150.880.928.70.85

6.856.986.64

6.536.05

201.4155.879.828.60.86

6.726.856.86

7.076.10

Nov.

192.1148.179.528.30.76

6.686.806.84

7.026.25

Dec.

206.0159.079.428.70.98

6.806.946.83

7.066.18

1999

Jan.

202.3153.378.028.41.01

6.816.966.80

7.086.18

Activity in secondary markets

287,05230,592

256,460

68,618

65,859130

137,755220

137,535

125,103119,702

128,995

316,67831,925

284,753

70,465

69,9651 298

164,421177

164.244

117,401114,258

120,089

414.51533.770

380.745

188,448

193.7951 880

255.010'785'

254.225'

267.402250.565

281.899

359,82733,036

326,791

17,326

13.217419

202.582456

202,126

22.60522.263

23,528

366,89032 929

333.961

14,316

17.016233

206.856489

206,367

21.50720.634

24,694

375,66532.903

342,762

15,681

16.282249

216.521569

215,952

25.36624,294

23,375

386,45232,814

353,638

18,967

30.551193

231,458569

230,889

20.62919,472

25,025

399,80433,420

366,384

23,557

17,9940

242.270602

241,668

23.98622,660

28,903

414,515?3.770

380,745

26,222

16,803434

255,010'785'

254,225'

34,29928,024

29,703

418,3233.3,483

384,840

14,005

20,7540

257,062387

256,675

27,67231,422

23,900

1. Weighted averages based on sample suncys uf mortgages originated by major institu-tional lender groups for purchase of newly built homes; compiled by the Federal HousingFinance Board in cooperation with the Federal Deposit Insurance Corporation.

2. Includes all fees, commissions, discounts, and "points" paid (by the borrower or theseller) to obtain a loan.

3. Average effective interest rate on loans closed for purchase of newly built homes,assuming prepayment a; the end of ten years.

4. Average contract rate on new commitments for conventional first mortgages; from U.S.Department of Housing and Urban Development (HUD). Based on transactions on the firstday of the subsequent month.

5. Average gross yield on thirty-year, minimum-downpayment first mortgages insuredby the Federal Housing Administration iFHA) for immediate delivery in the privatesecondary market. Based on transactions on first day of subsequent month.

6. Average net yields to investors on fully modified pass-through securities backed bymortgages and guaranteed by the Government National Mortgage Association (GNMA),assuming prepayment in twelve years on pools of thirty-year mortgages insured by theFederal Housing Administration or guaranteed by the Department of Veterans Affairs.

7. Does not include standby commitments issued, but includes standby commitmentsconverted.

8. Includes participation loans as well as whole loans.9. Includes conventional and government-underwritten loans. The Federal Home Loan

Moitgage Corporation's mortgage commitments and mortgage transactions include activityunder mortgage securities ssvap programs, whereas the corresponding data for FNMAexclude swap activity.


Real Estate A35

1.54 MORTGAGE DEBT OUTSTANDING'


Type of holder and property 1995

Q3 Q4 Ql Q3P

1 All holders

Bv type oj property2 One- lo four-family residences3 Mullifamily residences4 Nonfarm. nonresidential5 Farm

By type of holder6 Major financial institutions . .7 Commercial banks2

8 One- to fo'ir-famtly . . . .9 Mullifamily

10 Nonfarm, nonresidential11 Farm12 Savings institutions^ . . . .13 One- lo four family . . . .14 Multifamily15 Nonfarm, nonresidential16 Farm17 Life insurance companies .18 One- to four-family . . . .19 Mullifamily20 Nonfarm, nonresidential21 Farm

22 Federal and related agencies23 Government National Mortgage Association . . .24 One- to four-family25 Multifamily26 Farmers Home Administration4

27 One- to four-family28 Multifamily29 Nonfarm. nonresidentiui30 Farm31 Federal Housing and Veterans' Administrations32 One to four-family33 Multifamily34 Resolution Trust Corporation35 One- to tour-family36 Multifamily37 Nonfarm. nonresidential38 Farm39 Federal Deposit Insurance Corporation40 One- to four-family41 Multifamily42 Nonfatm. nonresidential43 Farm44 Federal National Mortgage Association45 One- to four-family46 Multifamily47 Federal Land Banks48 One- to four-family49 Farm50 Federal Home Loan Mortgage Corporation . . . .51 One- lo four-family52 Muhtfamily

53 Mortgage pools or trusts5

54 Government National Mortgage Association . . .55 One- to four-family56 Multifamily57 Federal Home Loan Mortgage Corporation . . . .58 One- lo four-family59 Muliifjinily60 Federal National Mortgage Association61 One- to four-family62 Multifamily63 Farmers Home Administration4

64 One- to four-family65 Multifamily66 Nonfarm. nonresidenlial67 Farm68 Private mortgage conduits69 One- to four-family'1

70 Multifamily71 Nonfarm. nonresidential72 Farm

73 Individuals and others7 . . .74 One- to rbiir-fainily . . . .75 Mullifamily76 Nonfarm. nonresidential77 Farm

4,392,794

3,355,485271,748682,590

82,971

1.819.8061.012.711

615,86139,346

334,95322,551

596,191477,626

64.34353.933

210,9047,01823,902170,4219,563

315.580660

41,78118,09811.3195,6706,69410,9644,7536,21110,4285,2002.8592.369

07,8211,0491,5955,177

0174.312158,76615,54628,5551,671

26.88541.7123S.8822.830

1.730.004450,934441,1989,736

490,851487.725

3.126530,343520,7639,580

19

097

257.857208,50011,74437.613

0

527,404368,36669,61172,44516,983

4,602.654

3,529,403281,592707,09884,561

1,894.4201,090.189669,43443,837353.08823,830

596.763482,35361.98752.135

288207.468

7.31623,435167.0959.622

306.774220

41.79117,70511.6176.2486,2219,8095,1804.6291.864691647525

04,303492428

3.3830

176,824161,66515,15928,4281,673

26.75543.75339.9013.852

1.863,210472.283461,43810.845

515.051512.238

2.813582.959569,72413,235

II

054

292,906227,80015,58449,522

0

538,251371,78973.52475.09717.841

4,929,422

3.761.017300.559780.71387,134

1,979.1141,145,389698,50846,675375,32'24.883

628.335513.71261,57052.723

331205,3906,77223,197165,39910,022

300,935

041.59617,30!11.6856,8415.7686.2443,5242,719

00000

2,431365413

1,6530

174.556160.75113.80529,6021,742

27.86046,50441,7584,746

2.064,882506,340494,15812,182

554,260551,5132.747

650,780633,21017,570

30001

353.499261,90021,96769,633

0

584,491375.79881,282109,14318,268

5,180,913

3,956,813308,417825,92289,760

2,068,0021.227,131752,32349.166398,84126,801

631,444519,56460,34851.187

346209.4267,08023,615168,37410,358

291,410770

41,33217,45811,7137,2464,9163,4621,4372,025

00300

1,476221251

1.0040

168,458156,36312,09530,3461,786

28,56046,32940,9535.376

2,202,549529,867516,21711.650

569,920567,3402,580

690,919670,67720,242

20002

411,841299.40025.65586,786

0

618,951405.98881,702112,485

18,777

5,279,327

4,029.268314,585845,057

90,417

2,086,7641,244.151

762,55650,642

403,97526,978

631,822520,672

59,54351,252

154210,792

7.18623,755

169.37710.473

292,581

041,19517,25311,7207.3704,8523,8211,7672.054

00000

724109123492

0167.V2156,245

11.47730,657

1.80428,85348,45442.629

5.825

2.272,999536,810523,156

13,654579,385576.846

2.539709,582687.981

21.601

0002

447,219318,000

29,26499.955

0

626,984413,057

82,387112,63618.904

5,379,351

4.101.294320.229866,40291.425

2,119.3231,270 076779,95451,790

410,87627,456

637,012527,03659.07450.532

369212,235

7,32123,902170,42310.589

293.499880

40,97217.16011.7147.3694.7293.6941.6412.051

00t)00

786118134534

0166.670155.87610.79431,0051.824

29,18150.36444 4405.924

2.330,674533,011519,15213,859

583.144580.7! 5

2.429730.832708.12522,707

0002

483.685.1.36,82433,477113.384

0

635,855421,10082,172I 13,28319.100

5.502,583

4.192.363326,532890,70892,980

2,124,3051,280,778784.95752.175415,32928.316629.882520.27658.70450,519

383213.6457.48824,038171,39310.726

294,547880

40,92117,05911,7227,4974,6443,6311,6102,021

00000

56485963840

167,202156,76910.43331,3521,845

29,50750,86944.5976.272

2.442,603537.586523.24314.343

609,791607.4692.322

761.359737.63123,728

2000

533,865364,31638,144131,405

0

641,129425.01082.535114,18219,402

5,642,865

4,297,628332,922918,02094.295

2,144,0751,295.721784.95853,049

429.03228.682633,281525.17456.63151.078

398215,0737,62924,181172,41110.851

294.307770

40.90717 02511.7367,5664,5793,4481,5931,855

00000

4827282

3280

166,243156,20810,03532,0091,883

30,12651.21144,2546.957

2,548,050541,431526,93414,497

635,726633.1242.602

798.460770,97927,48!

0I)0

572,4 II391.73640,893139,802

0

656,433436.05282,921117,80319,657

1 Multifamily debt refers to loans on structures of live or more units.2. includes loans held hy nondeposil trust companies but not loans held by bank trust

departments.3. Includes savings banks and savings and loan associations.4. FmHA-guaranteed securities sold to the Federal Financing Bank were reallocated from

FmHA mortgage pools lo FmHA mortgage holdings in 1986:Q4 because of accountingchanges by the Fanners Home Administration.

5. Outstanding principal balances of mortgage-backed securities insured or guaranteed bythe agency indicated.

6. Includes securilized home equity loans.7. Other holders include mortgage companies, real estate investment trusts, state and local

credit agencies, state and local retirement funds, noninsured pension funds, credit unions, andfinance companies.

SOURCE. Based on data from various institutional and government sources. Separation ofnonfarm mortgage debt by type of property, if not reported directly, and interpolations andextrapolations, when required for some quarters, are estimated in part by the Federal Reserve.Line 69 from Inside Mortgage Securilies and other sources



1.55 CONSUMER CREDIT1

Millions of dollars, amounts outstanding, end of period

Holder and type of credit 1996 1991

July Aug. Sepl. Oct.

1 Total

2 Automobile3 Revolving. .4 Other2

5 Total

By major holder6 Commercial banks7 Finance companies8 Credit unions9 Savings institutions

10 Nonfinancial business"11 Pools of securitized assets4

By major type of credit12 Automobile13 Commercial banks14 Finance companies15 Pools of securitized assets4

16 Revolving17 Commercial banks18 Finance companies19 Nonrinancial business3

20 Pools of securitized assets

21 Other22 Commercial banks23 Finance companies24 Nonfinancial business3

25 Pools of securitized assets4

1,181,913

392,321499,486290.105

1,211,590

526,769152,391144,14844,71177,745265,826

395,609157,04786,69051,719

522,860228,61532,49344,901188,712

293,121141,10733,20832,84425,395

Seasonally adjusted

1,233,099

413,369531,140288,590

1,308,376

447,181558,592302,603

1,269,844

428,121543,612298,111

1,277,412

432,240548,747296,425

1,285,346

434,964552,462297,920

1,297,171

436,966557,093303,113

1,301,122'

441,342'556,404'303,376'


1,264,103

512,563160,022152,36247,17278.927313,057

416,962155,25487,01564,950

555,858219,82638,60844.966221,465

291,283137,48334,39933,96126,642

1,340,919

513,558172,406157,06652,28474,894

370,711

451,138157.928103,11572,955

584,516207,838

36,04739.193

270.594

305,265147,79233,24435.70127,162

1,262,958

491.507156,366153,73548.98965,478346,883

429,723153.20391.74172.470

537,349197,64629,60533,807246.635

295,886140,65835,02031,67127,778

1,277,611

498.219160,151154.14649,64866,004349,443

434,924155,50895,25770,766

545,564200,42430,15534,009251,165

297,123142,28734,73931,99527,512

1,288,362

497,860160,078155,16750,30765,557359,393

438,965156,28796,18372,146

549,786197,61529,31233,743

259,348

299,611143,95834,58331,81427,899

1,299,809

501,982166,861156,04350,96665,949358,008

442,255156,78897,63771,788

555,456199,23434,59733,762

258,139

302,098145,96034,62732,18728,081

1,309,001'

500,383168,262156,521'51,62566,632365,578

445,467'157,12698,95472,582

559,080'195,37734,69633,787

265,311

304,454'147,88034,61232,84527,685

1,308,376

447,181558,592302,603

1,340,919

513,558172,406157,06652.28474,894

370,711

451.138157.928103,11572.955

584,516207,838

36,04739,193

270,594

305.265147,79233,24435,70127,162

1. The Board's series on amounts of credit covers most short- and intermediate-term creditextended to individuals. Data in this table also appear in the Board's G.19 (421) monthlystatistical release. For ordering address, see inside front cover.

2. Comprises mobile home loans and all other loans that are not included in automobile orrevolving credit, such as loans for education, boats, trailers, or vacations. These loans may besecured or unsecured.

3. Includes retailers and gasoline companies.4. Outstanding balances of pools upon which securities have been issued; these balances

are no longer carried on the balance sheets of the loan originator.5. Totals include estimates for certain holders for which only consumer credit totals are

available.

1.56 TERMS OF CONSUMER CREDIT1

Percent per year except as noted


INTEREST RATES

Commercial banks1 48-monlh new car2 24-month personal

Credit card plan3 All accounts4 Accounts assessed interest . .

Auto finance companies5 New car6 Used car

OTHER TERMS'

Maturity (months)7 New car8 Used car

Loan-to-value ratio9 New car

10 Used car

Amount financed {dollars)11 New car12 Used car

9.0513.54

15.6315.50

9.8413.53

51.651.4

91100

16,98712,182

9.0213.90

15.7715.57

7.1213.27

54.151.0

9299

18,07712,281

8.7213.74

15.7115.63

6.3012.64

52.153.5

9299

19,08312,691

n.a.n.a.

6.0212.63

50.954.0

91100

18,87812,698

n.a.n.a.

n.a.n.a.

6.2312.51

51.754.1

92100

19,08412,733

8.7113.45

15.8315.85

6.0012.68

53.054.1

93101

19.06812.407

5.9212.65

53.154.2

93101

19,02812,731

n.a.n.a.

6.3312.58

53.154.2

92100

19,19912,914

8.6213.75

15.6915.72

6.7912.41

52.854.3

91100

19,59013,112

n.a.n.a.

n.a.n.a.

6.4312.31

52.254.2

91100

19,73413,202

1. The Board's series on amounts of credit covers most short- and intermediate-term creditextended to individuals. Data in this table also appear in the Board's G.19 (421) monthlystatistical release. For ordering address, see inside front cover.

2. Data are available for only the second month of each quarter.3. At auto finance companies.


Flow of Funds A37

1.57 FUNDS RAISED IN US. CREDIT MARKETS'

Billions of dollars; quarterly data at seasonally adjusted annual rates

Transaction category or sector

1 T o t a l n e t b o r r o w i n g b y d o m e s t i c n o n t i n a n c i a l s e c t o r s . . . .

By sector and instrument1 Federal "overmnent1 Treasury securities4 Budget agency securities and mortgages

5 Nonfederal

By instrument6 Commercial paper7 Municipal securities and loansS Corporate bondsl) Bank loans n.e.e

10 Other loans and advances11 Mortgages12 Home13 Multifamily residential14 Commercial15 Farm16 Consumer credit

By horrtnvini! .sector17 Household18 Nonfinancial business19 Corporate . . .""0 Noiifann noncorporate21 Farm22 Stale and local government

2} Foreign net borrowing in United States24 Commercial paper25 Bonds16 Bank loans n e e21 Other loans and advances

28 Total domestic plus foreign

29 Total net borrowing by financial sectors

By instrument30 Federal government-related31 Government-sponsored enterprise securities32 Mortgage pool securities33 Loans from US. government

34 Private35 Open market paper3b Corporate bonds37 Bank loans n.ec38 Other loans ami advances39 Mortgages

Bv bt'rrawing serlor40 Commercial banking4] Savings institutions42 Credit unions43 Lite insurance companies44 Government-sponsored enteiprises45 Federally related mortgage pools4d Issuers of asset-hacked securities (ABSs)47 Finance companies48 Mortgage companies44 Real estate investment trusts (RElTs)50 Brokers and dealers11 Funding corporations '

1993

587.1'

256.1248.3

7.8

331.0'

10.074.875.26.4

-18.9122.9'156.1'- 4 . 7 '

-29 .6 '1.0

60.7

207.7'57.2r

51.4'3.22.6

66.2

69 8-9 .682.9

.7-4 .2

656.9r

294.4

165.380.684.7

.0

129.1-5.5123.1

-14.422.4

3.6

13.411.3

.21

so!&84.7R3.6-1.4

.03.4

12 06.3

1994

S77.I'

155.9155.7

.2

421.3'

21.4-35.9

23.375.234.0

178 4'179.7'

.5'- 4 . 1 '

2.2124.9

312.6'155.0'147.4'

3 34.4

-J6.2

- 14.0-26 1

12.2! 4

-1.5

563.1'

468.4

287.5176.9115.4-4 .8

180.940.5

121.8-13.7

22.69.8

20.112.8

23

17Z 1115 472.948.7

- 1 1 513 7

.521.1

1995

703.41"

144.4142.9

1.5

558.9'

18.1-48.2

73.3101.4'67.2

208.1'176.0'

9.7'20.9'

1.6138.9

345.4'265.0'2.31.5'

30.6'2.9

-51.5

71.113.549.7

8.5- .5

774.51"

456.2r

204.1105 498.2

.0

252. l r

42.7196.7

4.8'3.44.6'

22.52.6- l-.1

105.998.2

141.150.2

.45.6'

-5 .034.9

1996

720.3'

145.0146.6-1.6

575.3'

_ g

2.b72.563.0'36.4'

313.0'256.4'

17.1'36.9'

2.688.8

359.8'222.3'170.7'46.8'4.8

-6.8

76.911.355.89.1

.8

797.3r

552.1'

231.590.4

141.1.0

320.7'92.2

175.5'20.0'27.9

5.0'

13.025.5

11 1

90.4141.1153.645.912.47.0'

-2.064.1

1497

736.9'

23.123.2

- • '

713.8'

13.771.490.7

106.3'66.2'

312.9'243.0'

15.1'51.6'

3.2'52.5

333.6'

m r257.9'59.9'

6.2'56.1

56.91.7

46.785

-2 .0

793.8'

652.8'

212.898.4

114.4.0

440.0'166 7208.2'

114'35.616.2'

46.119.7

12

98.4114.4204.4

48.7-4 .7 '36.8'8.1

80.7

Q2

Nonfinanc

612.0r

-43 .5-43.8

.2

655.6'

20.359.686.1

114.1'20.8

295.2'211.7'

18.9'60.1'

4.5'59.5

328.0'285.1'214.1'

64.7'6.4'

42.5

61.710.438.711.51.2

673.71"

Financia

667.9r

286.2198.188.1

.0

381.7'77.0

228.1'-2 .0 '61.015.5'

76.431.9

.2

.1198.188.1

120.7120.5

-12.230.6'34.9

-21.5

1997

C-i

lal sectors

826.5'

30 131.2-.9

796.2'

14.588.9

122.929.0'78.1'

412.5'3 14 <l'

14.7'60.3'

3.5'50.3

.168.4'355.2'283.8'

66.7'4.7'

72.6

92.5-11.6100..1

7.3-3.5

919.0'

sectors

601.9'

161.046.4

114.60

440.9'168.8202.3'

25.9'37.56.5'

32.522.3

2

246.4

1146226.2

8.911.4'30. Sr

-6.9115.3'

Q4

858.3'

40.839.0

1.7

817.5'

12.8103.274.4

138.6'142.3'308.4'208.6'

27.0'69.9'

2.9'37.8

302.1'423.1'341.7'

72.1'9.2'

92.3

42.3.7

32.415.7

-6.5

900.5r

993.2'

298.1157.9140.3

.0

695.0'244.2337.8'

26.1'61.725.2'

61.041.7

3- .3

157.9140.3385.1

W 6-17.4'

58.9'7.0

99.2

Q l

904.7

- 3 0 0-27.6

-2 .4

934.7

51.1116.7157.2-2 .884.3

471.3172 828.366.8

3.457.0

437.5402.9.121.1

74.57 3

94.3

67.855.314.35.2

-7 .0

972.5

936.4

227.3142.584 8

.0

709 1237.4340.578.632.719.8

81.510.6

s0

142.584 8

282.180.140.26 6 2-1.0

137 9

1998'

Q2

925.4

-70.9-69.4-1 .4

996.2

3.8100.1160.8185.334.6

446.8320.3

31.189.46.0

64.8

457.2460.1357.3

95.77.2

78.9

85.")-25.5107.5

8.4-4 .4

1,011.3

994.9

413.4166.4247.0

.0

581.5134.8176.9

-21 176.014.8

80.031.2

2- . 6

166.4247.0368.1101.8

-48.062.120.0

-33.3

Q3

855.5

-136.5-136.1

- .4

991.9

85.683.687.1

125.873.5

453.0361.5

12.474.54.6

83.4

452.7466.6374.6

85.96.1

72.6

- 2 8 06.2

-35.33.6

- 2 . 4

827.5

1.061.5

561.6294.0267.5

.0

499.9141.0178.362.082.336.3

61.763.7

1.01.6

294.0267.5293.5

-14.02.0

82.8-2.610.1

04

1,118.3

26.914.712.2

1.091.4

-43.087.0

123.8144.0117.0596.045.3.3

14.3123.7

4.766.6

592.7423.3318.7

98.85.8

75.4

-38.0-4 .7

-32.99.9

-10.3

1,080.3

1,471.3

785.7614.5171.2

.0

685.7130.7337.2- 16.3173.760.3

66.5106 8

41.8

614.5171.2324.2

76.82.0

50.012.344.9



1.57 FUNDS RAISED IN U.S. CREDIT MARKETS'—Continued

Transaction category or sector 1997

Q2 Q3 04

1998'

Ql Q2 Q3 Q4

52 Total net borrowing, all sectors

53 Open market paper54 U.S. government securities55 Municipal securities56 Corporate and foreign bonds . . . .57 Bank loans n.e.c58 Other loans and advances59 Mortgages60 Consumer credit

951.4r

-5.1421.4

74.8281.2-7.2

- . 8126.5'60.7

1,031.6'

35.7448.1-35.9157.362.950.3

188.2'124.9

1,230.7'

74.3348.5

-48.2319.61H.770.2

212.7'138.9

1^49.4'

102.6376.5

2.6303.8'92.165.1'

318.0'88.8

1,446.6'

184.1235.9

71.4345.7'128.2'99.8r

329.1'52.5

1,341.5'

107.7242.659.6

352.9'123.685.0

310.7'59.5

1,521.0'

171.7191.388.9

425.5'62.2

112.1'419.0'

50.3

1,893.7'

257.7338.9103.2444.6'180.5'197.5'333.6'

37.8

1,908.9

343.8197.3116.7512.081.0

110.0491.1

57.0

2,006.2

113.1342.5100.1645.3172.7106.1461.6

64.8

1,889.0

232.7425.1

83.6230.1191.4153.4489.4

83.4

61 Total net issues

62 Corporate equities63 Nonfinancial corporations64 Foreign shares purchased by U.S. residents65 Financial corporations66 Mutual fund shares

429.7

137.721.363.453.0

292.0

Funds raised through mutual funds and corporate equities

2,551.6

83.0812.587.0

428.1137.5280.5656.366.6

125.2

24.6-44.9

48.121.4

100.6

144.3'

- 3 . 1 '-58.3

50.44.8'

147.4

234.2

-3.4-64.2

60.0.8

237.6

186.4'

-78 .8 '-114.4

41.3-5 .6 '

265.1

173.9'

-76.2 '-100.0

54.4-30.6 '250.1

239.4'

-60.5 '-124.0

64.3- . 8 '

299.9

157.7'

-103.3'-143.3

~ ^40.3'

261.0

213.9

- 107.5-139.2

13.618.2

321.4

267.8

-115.9-129.1

4.09.2

383.7

-118.1

-319.0-308.4-32.9

22.2200.9

24.8

-171.4-474.4

319.1-16 .1196.2

1. Data in this table also appear in the Board's Z.I (780) quarterly statistical release, tablesF.2 through F.4. For ordering address, see inside front cover.


1.58 SUMMARY OF FINANCIAL TRANSACTIONS1

Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates

Flow of Funds A39


Q2 Q3 04

1998'

Ql 02 Q3 Q4

NET LENDING IN CREDIT MARKETS

] Total net lending in credit markets

2 Domeslic nonfederal nonfinancial sectors3 Household4 Nonfinancial corporate business5 Nonfarm noncorporate business6 State and local governments7 Federal government8 Rest of the world9 Financial sectors

101112131415161718192021222324252627282930313233

Monetary authorityCommercial banking

U.S.-chartered banksForeign banking offices in United StalesBank holding companiesBanks in US-affiliated areas

Savings institutionsCredit unionsBank personal trusts and estatesLife insurance companiesOther insurance companiesPrivate pension fundsState and local government retirement fundsMoney market mutual fundsMutual fundsClosed-end fundsGovernment-sponsored enterprisesFederally related mortgage poolsAsset-backed securities issuers (ABSs)Finance companiesMortgage companiesReal estate investment trusts (REITs)Brokers and dealersFunding corporations

RELATION OF LIABILITIESTO FINANCIAL ASSETS

34 Net flows through credit markets

Other financial sources35 Official foreign exchange36 Special drawing rights certificates37 Treasury currency38 Foreign deposits39 Net interbank transactions40 Checkable deposits and currency41 Small time and savings deposits42 Large time deposits43 Money market fund shares44 Security repurchase agreements45 Corporate equities46 Mutual fund shares47 Trade payables48 Security credit49 Life insurance reserves50 Pension fund reserves51 Taxes payable52 Investment in bank personal trusts53 Noncorporate proprietors' equity54 Miscellaneous

9S1.4r

40.4'- . 2 '9.1

-1.132.6

- 1 8 . 4129.3800.01

36.2142.2149.6-9.8

.02.4

-23.321.79.5

100.4'27.750.2'22.720.4

159.520.087.884.781.0

- 20 .9.0.6

14.8-35 .1 '

55 Total financial sources

Liabilities not identified as assets (—)56 Treasury currency57 Foreign deposits58 Net interbank liabilities59 Security repurchase agreements60 Taxes payable61 Miscellaneous

Floats not included in assets ( —)62 Federal government checkable deposits63 Other checkable deposits64 Trade credit

65 Total identified to sectors as assets

.0

.4-18.5

50.5117.3

-70 .3-23.5

20.271.3

137.7292.0

52.261.437.1'

267.4'11.4

.925.91

340.9'

2,326.3'

- . 2-5.7

4.246.415.8

-169.5'

-1.5-1.3-4 .0

2,442.0'

1,031.6'

237.7'274.4'

17.7.6

-55.0-27.5132.3689.0'

31.5163.4148.1

11.2.9

3.36.7

28.17.1

72.0'24.946.1'22.330.0-7.1-3.7117.8115.465.848.3

-24.04.7

-44.2-16.2

1,031.6'

-5.8.0.7

52.989.8-9.7

-39.919.643.378.224.6

100.694.0- .1

35.5'258.9'

2.617.850.3'

248.3'

2,093.3'

- . 243.0-2.769.416.6

-155.9'

-4.8-2.8

1.5

2,129.3'

1,230.7'

- 9 5 . 6 '

4.7-91.4

- . 2273.9

1,052.5'12.7

265.9186.575.4- .34.2

-7.616.2

-8.3100.0'21.556.01

27.586.552.510.586.7'98.2

119.349.9-3.4

2.290.1

-23.8 '

1,230.7'

2.2.6

35.39.9

-12.796.665.6

142.3110.5'- 3 . 1 '147.4101.526.745.8'

228.5'6.24.0

62.1'

2,767.8'

- . 525.1-3.117.5'21.1

-198.5'

-6.0-3.8

-11.7

2,927.7'

1349.4'

- 17 .7 '-18.4'

20.04.4

-23.7-7.7

417.3'957.6'

12.3187 5119.663.3

3.9.7

19.925.5-7.769.6'22.552.3'45.988.848.9

4.784.2'

141.1123.4

18.48.23.8'

-15 .724.C

1,349.4'

-6 .3- . 5

.185.9

- 51 .615.897.2

114.0145.841.4'-3.4

237.676.952.444.5'

243.6'16.2

-8.643.3'

448.8'

2,942.6'

- . 959.4-3.3

.6'20.4

- 6 1 . C

.5-4 .0

-26.7 '

2,957.6'

1,446.6'

-106.7'-124.0'

14.82.7

- . 2 '4.9

310.1'1,238.3'

38.3324.3274.940.25.43.7

- 4 716.87.6

94.3'25.265.5'36.687.580.9-3.494.3'

114.4166.021.9

- 9 . 1 '8.8'

14.9'58.4'

1,446.6'

.7- . 5

.0107.4

-19.7 '41.597.1

122.5157.6120.9'

-78.8 '265.199.2'

111.0'54.3'

306.9'14.675.025.1'

568.9'

3^15.4'

- . 6107.4

-19.965.3'17.2

-228.4'

-2.7-3 .921.5'

3359.5'

1,341.5'

-56.5 '-72.2 '-28.7

2.741.8

5.7308.5'

1,083.8'42.9

290.0286.7- 3 . 6

5.11.8

23.825.210.7

171.3'28.061.6'34.626.190.0-3.4118.9'88.1

105.9.9

-24.48.4'

-17.4 '2.8'

1,341.5'

.4

.0

.223.9

-56.3 '50.634.0

174.798.9

202.9'- 7 6 . 2 '250.148.7'

124.4'62.4'

326.5'14.171.839.6'

523.0'

3,255.0'

- .510.7

-26.7168.9'29.3

-396.1'

-8 .3-4 .3

-58.7

3,540.7'

1,521.0'

-155.3'-148.7'

31.72.8

-41.03.3

402.91.270.0'

22.9226.2220.7

4.6-5.0

5.8-35.3

13.67.3

92.9'32.064.6'79.1

121.5108.0-3.455.6'

114.6163.768.382.9

7.2'18.01

30.4'

1,521.0'

2.4.0

1.3116.1

-25.0 '-38.4

47.0188.4226.2115.5'

-60.5 '299.9136.1'91.1'63.9/

337.3'30.1 '80.838.7'

554.3'

3,726.3'

.793.8

-50.023.9'15.2'

-42.4'

10.0-3.072.6'

3,605.4'

1,893.7'

36.4'8.2'

-2.62.9

27.9'9.0

208.7'1,639.7'

52.9464.9386.258.219.41.1

-2.07.78.8

34.1'34.779.5'9.5

144.261.8-3.4158.5'140.3332.2

-21 .3-93.6'

17.6'71.7'

141.4'

1,893.7'

17.5.0

-1.9103.079.8'71.9

155.970.7

147.8117.9'

-103.3'261.0151.91

116.8'37.4'

300.3'-7 .7 '78.4

-26.8 '404.1'

3,868.4'

-2 .4148.3

-33.0190.8'

5.C-550.3'

-7.9-5.081.9'

4,040.9'

1,908.9

-218.5-227.5

13.23.0

-7 .315.5

238.61,873.3

27.4292.9260.5

11.615.35.5

10.116.52.4

95.723.474.581.7

172.0143.6- 2 . 4165.284.8

223.028.758.813.2

245.8115.9

1,908.9

1.0.0.3

-45.3-107.1

65.6154.9186.2248.0259.5

-107.5321.4

88.5165.349.3

261.59.7

50.320.2

1,206.6

4,737.4

- . 2-94 .6

30.7115.2

6.895.0

7.5-4.010.4

4,570.6

2,006.2

404.7310.1

-45 .63.2

137.112.8

314.21,274.5

7.7136.1130.518.1

-17 .65.1

-1.822.73.1

66.5-1.5130.160.6

200.1152.6-2.4140.4247.0337.0

27.1- 5 6 . 4

9.3-183.1

-20.5

2,006.2

8.1.0.2

89.046.6

109.336.2

-16.5186.4

-113.6-115.9

383.74.9

128.338.3

284.9-2.757.5-8.7

224.8

3,347.3

- . 3148.311.4

-175.35.0

-75.8

-41.7-3.0

-110.7

3,589.6

1,889.0

7.8-137.1

23.33.3

118.313.958.6

1,808.748.3

242.6286.7

-53.16.02.9

33.920.5

2.087.8-7.795.550.9

247.593.5-2.4

250.0267.5248.079.74.5

-2.477.0

-27.9

1^89.0

11.4.0

1.787.314.3

-61.7115.281.5

400.7228.6

-319 .0200.981.4

179.631.7

278.034.047.8

-43.1637.4

3,896.7

1.169.219.490.525.8

-105.0

24.1-3.2

-58.0

3,832.9

2,551.6

-173.8-174.4

-11.03.48.2

10.7385.1

2,329.6.8

554.6569.7-24.1-7.416.4

101.128.1

3.9136.6

3.0174.475.1

356.498.6-2.0

401.0171.2292.9119.4

6.0-10 .0

-230.549.1

2,551.6

8.6.0

-2.336.8

-103.381.3

313.6115.1306.6

-153.4-171.4

196.277.4

- 7 1 . 049.0

352.6-5767.115.8

556.8

4421.6

-3.031.3

- 4 8 . 4.7.8

-79.1

20.4-2.1

-30.8

4,333.5

1. Data in this table also appear in the Board's Z.1 (780) quarterly statistical release, tablesF. 1 and F.5. For ordering address, see inside front cover.

2. Excludes corporate equities and mutual fund shares.



1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1



1 Total credit market debt owed bydomestic nonfinancial sectors

By sector and instrument2 Federal government3 Treasury securities4 Budget agency securities and mortgages

5 Nonfederal

By mwiimjem6 Commercial paper7 Municipal securities and loans8 Corporate bonds9 Bank loans n.e.c

10 Other loans and advances11 Mortgages12 Home13 Multifamily residential14 Commercial15 Farm16 Consumer credit

By borrowing secwr17 Household18 Nonfinancial business19 Corporate20 Nont'arm noncorporate21 Farm22 State and local government

23 Foreign credit market debt held inUnited States

24 Commercial paper25 Bonds26 Bank loans n e e27 Other loans and advances

28 Total credit market debt owed by nonnnancialsectors, domestic and foreign

29 Total credit market debt owed byfinancial sectors

By instrument30 Federal government-related31 Government-sponsored enterprise securities32 Mortgage pool securities33 Loans trom U.S. government34 Private35 Open market paper36 Corporale bonds37 Bank loans n.e.c38 Other loans and advances . .'39 Mortgages

By borrowing sector40 Commercial banks41 Bank holding companies42 Savings institutions43 Credit unions44 Life insurance companies45 Government-sponsored enterprises46 Federally related mortgage pools . . .47 Issuers of asset-backed .securities (ABSsj48 Brokers and dealers49 Finance companies50 Mortgage companies51 Real estate investment trusts (REITs)52 Fundine corporations

53 Total credit market debt, domestic and foreign

54 Open market paper55 U.S. government securities56 Municipal securities57 Corporate and foreign bonds58 Bank loans ae.c59 Other loans and advances60 Mortgages6) Consumer credit

1994 1995 1996 1997

1997

Q2 Q3 Q4

1998'

Ql Q2 Q3 Q4

Nonnnancial sectors

13,018.6'

3,492.33,465.6

26.7

9,526.3'

139.21,341.71,253.0

759.9669.6

4,378.9'3,357.0'

269.5'669.5'

83.0983 9

4,454.0'3,950.6'2,686.6'1,121.8

142.21,121.7

370.8

42.7242.3

26.159.8

13,389.4'

13,721.9'

3.636.73,608.5

28.2

10.085.2'

157.41.293.51.326.3

861.3'736.9

4.587.0'3,533.0'

279.2'690.3'

84.61.122.8

4,804.3'4,210.7'2.913.2'1,152.4'

145.11,070.2

441.9

56.2291.9

^4.659.3

14,163.8'

14,442.3'

3.781.83,755.1

26.6

10,660.5'

156.41,296.01.398.8

924.3'773.2'

4,900.1'S.755.7'

300.0'757.2'

87.11.211.6

5,135.4'4,461.7'3,1126'1,199.2'

149.91,063.4

518.8

67.5347.743.760.0

14,961.1r

15,177.6'

3.S04.93,778."!

26.5

11.372.7'

168.61,367.51,489.51.030.7'

839.5'5,212.9'3,998.8'

315.1'808.8'90.3'

1.264.1

5,471.7'4.781.6'3.366.4'1.259.1'

156.1'1.119.5

569.6

65.1394.4

52.158.0

15,747.2'

14,721.3'

3.760.63 734.3

26.3

10,960.7'

179.31.326.81.440.2

995.9'788.5

5 024.9'3.855.3'

304.6'776.3'

88.71,205.0

5,261.2'4,613.5'3 2V.6 '1.224.4'

153.5'1.086.1

539.2

71.3361.2

46.460.3

15.260.5'

14,924.5'

3,771.23.745.1

26.1

11,153.3'

176.61.340.21,470.9

995.2'802.9

5.140.7'3.951.5'

308.3'791.3'

89.6'1.226.7

5,373.0'4,684.8'3.289 1'1.240.4'

155.2'1,095.5

557.7

64.3386.348.258.9

15,482.2'

15,177.6'

3.804.93.778.3

26.5

11,372.7'

168.61.367.51,489.51,030.7'

839.5'5.212.9'3.998.8'

315.1'808.8'

90.3'1.264 1

5,471.7'4.781.6'3.366.4'1,259.1'

156.1'1,119.5

569.6

65.1394.4

52 158.0

15,747.2'

15,405.6

3,830.83.804.8

25.9

11,574.9

193.11,397.11,528.81,0320

866.15.321.84.083.0

322.1825.5

91.21,236.0

5,529.34,901.23,468.31.277.8

155.11,144.3

584.1

7o.7398.0

53.455.9

15,989.7

15,598.7

3.749 03,723.4

25.6

11,849.8

202.51,429.31,569.01,084 4

873.55.434.44.164.0

329.9847.9

92.61,256.8

5,651.45,027.63,565.31,301.6

160.61,170.8

606.6

71.4424.9

55.554.8

16,205.3

15,809.8

3.720.23,694.7

25.5

12,089.6

21b.91.439.91,590.81,107.1

886.15,561.54.268.1

333.0866.5

93.81,287 4

5,786.25,124.73,639.71,3225

162.51,178.8

600.2

74.0416.0

56.453.8

16,410.0

16,130.1

3,752.23,723.7

28.5

12,377.8

193.01,464.31,621.81,143.7

916.85,704.74,375.7

336.6897.4

95.01.333.6

5.958.35.219.83.709.31.347.8

162.71,199.8

591.6

72.9407.8

58.952.0

16,721.7

Financial sectors

3,822.2

2,172.7700.6

1,472.1.0

1,649.5441.6

1,008.848.9

131.618.7

94.5133.6112.4

.5

.6700.6

1,472.1579.0

34.3433.7

18.731.1

211.0

17,211.6'

623.55,665.01,341.72,504.0

8.34.9860.9

4.397.6'983.9

4,281.0'

2,376.8806.5

1.570.3.0

1.904.2'486.9

1,205.453.7'

135.023.3'

102.6148.0115.0

.4

.5806.5

1,570.3720.1

29.3483.9

19.136.7'

248.6

4,833.2'

2.608.3896.9

1,711.4.0

2.224 9'579.1

1.380.9'73.7'

162.928.3'

113.6150.0140.5

.41.6

896.91,711.4

873.827.3

529.831.543.7'

312.7

5,452.9'

2.821.0995.3

1.825.8.0

2,631.9'745.7

1,556.1'87.1'

198.544.5'

140.6168.6160.3

.61.8

995 11.825.81,089.3

35.3554.5

268'80.4'

373.7'

5,086.3'

2,706.2944.2

1,762.1.0

2 380.1'642.5

1.453.9'73.5'

173.736.6'

125.7160.5144.3

.41.8

944.21.762.1

917.935.3

557.828.358.0'

350.O

5,208.3'

2,746.5955.8

1,790.7.0

2,461.8'684.7

1.476.2'79.7'

183.038.2

130 0164.0149.8

.51.9

955.81.790.7

989.033.6

532.731.2'65.7'

363.4

5,452.9'

2.821.0995.3

1,825.8.0

2.631.9'745.7

1.556.1'87.1'

198.S44.5'

140.6168.6160.3

.6I S

995.31,825.81,089.3

35.3554.5

26.8'80.4'

373.7'

All sectors

18,444.9'

700.46.013.61,293.52,823.6

949.6931.1

4.610.4'1,122.8

19,794.3'

803.06,390.01,296.03.127.5'1,041.7

996.2'4.928.4'1.211.6

21,200.2'

979.46.625.91,367.53.440.1'1.169.8'1.095.9'5.257.4'1.264.1

20,346.8'

893 16.466.81.326.83.255.3'1.115.81.022.4'5 061.5'1.205.0

20,690.5'

925.76.517.71.340 21,313.4'1.123.11,044.95,178 9'1.226.7

21,200.2'

979.46.625.91,367.53,440.1'1,169.8'1,095.9'5.257 4'1.264.1

5,682.0

2,877 91,030.91,847.0

.02,804.1

804.91.637.0

106 1206.6

49.4

148.7181.2162.9

.71.8

1.030.91,847.01.154.1

35.1571 9

39.197.0

411.6

5,935.5

2,981.21,072.51,908.7

.02,954.3

838.91,735.7

101.0225.6

53.2

159.6190.5170.7

.81.6

1,072.51,908.71,243.9

40.1596.9

27.1112 54105

6,205.7

3,121.61,146.01.975.6

.03.084.2

874.21.785.4

116.1246.2

62.2

169.6196.1186.6

1.02.0

1,146.01,975.61,321.2

39.4589.4

27.6133.2417.9

6.568.9

3,318.01,299.62,018.4

.03.250.9

906.71,864.4

112.9289.6

77.3

188.7193.5213.3

I.I2.5

1.299.62,018.41.406.2

42.5615.6

28.1145 7413.6

21,671.7

1,074.86.708.61,397.1'3,563.91.191.51,128.75.371.21.236.0

22,140.8

1,112.76.730.21,429.33,729.61.240.91,153.95,487.51,256.8

22.615.8

1,165.16.841.81.439.93.792.21,279.71,186.15,623.71,287 4

23,290.6

1,172.67.070.21,464.3*.893 91.315.51,258.45.782.01.3.33.6

]. Dala in this table also appear in the Board's Z. 1 (780) quarterly statistical release, tablesL.2 through L.4. For ordering address, sec inside front cover.


1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES1

Billions of dollars except as noted, end of period

Flow of Funds A41


Q2 Q3 04 Ql Q2 Q4

CREDIT MARKET DEBT OUTSTANDING2

1 Total credit market assets

2 Domestic nonfedera] nonfinancial sectors3 Household4 Nonfinancial corporate business5 Nonfarm noncorporate business6 State and local governments7 Federal government8 Rest of the world9 Financial sectors

10 Monetary authority11 Commercial banking12 US-chartered banks13 Foreign banking offices in United States14 Bank holding companies15 Banks in US.-afiiliated areas16 Savings institutions17 Credit unions18 Bank personal trusts and estates19 Life insurance companies20 Other insurance companies21 Private pension funds22 State and local government retirement funds23 Money market mutual funds24 Mutual funds25 Closed-end funds26 Government-sponsored enterprises27 Federally related mortgage pools28 Asset-backed securities issuers (ABSs)29 Finance companies30 Mortgage companies31 Real estate investment trusts (REITs)32 Brokers and dealers33 Funding corporations

RELATION OF LIABILITIESTO FINANCIAL ASSETS

34 Total credit market debt

Other liabilities35 Official foreign exchange36 Special drawing rights certificates37 Treasury currency38 Foreign deposits39 Net interbank liabilities40 Checkable deposits and currency41 Small time and savings deposits42 Large time deposits43 Money market fund shares44 Security repurchase agreements45 Mutual fund shares46 Security credit47 Life insurance reserves48 Pension fund reserves49 Trade payables50 Taxes payable51 Investment in bank personal trusts52 Miscellaneous


Financial assets not included in liabilities ( + )54 Gold and special drawing rights55 Corporate equities56 Household equity in noncorporate business . . .

Liabilities not identified as assets ( —)57 Treasury currency58 Foreign deposits59 Net interbank transactions60 Security repurchase agreements61 Taxes payable62 Miscellaneous

Floats not included in assets (—)63 Federal government checkable deposits .64 Other checkable deposits65 Trade credit

17,211.6'

3,035.9'1,979.2'

289.237.6

729.9203.4

1,216.012,756.3'

368.23,254.32,869.6

337.118.429.2

920.8246.8248.0

1,487.5'446.4660.9'455.8459.0718.8

86.0663.3

1.472.1541.7476.2

36.513.393.3

107.5'

17,211.6'

53.28.0

17.6373.9280.1

1.242.02,183.2

411.2602.9549.5

1,477.3279.0520.3'

5,057.5'1,140.6

66 Total identified to sectors as assets

101.4699.4

5,326.6'

37,535.5'

21.16,237.93.370.5'

-5.4325.4-6.567.848.8

1,046.5'

3.438.0

-245.9

47,985.7'

18,444.9'

2,899.1'1,937.8'

280.442.3

638.6203.2

1,530.313,812.3'

380.83.520.13,056.1

412.618.033.4

913.3263.0239.7

1.587.5'468.7716.9'483.3545.5771.396.4

750.0'1,570.3

661.0526.2

33.015.5

183.486.3'

18,444.9'

63.710.218.2

418.8290.7

1.229.32.279.7

476.9745.3660.0'

1,852.8305.7566.2'

5.821.1'1,242.2

19,794.3'

2,921.5'1,968.9'

291.046.7

614.8195.5

1,933.8'14,743.5'

393.13,707.73,175.8

475.822.034.1

933.2288.5232.0

1,657.0'491.2769.2'529.2634.3820.2101.1807.91

1,711.4784.4544.541.219.3'

167.7110.3'

19,794.3'

53.79.7

18.3516.1240.8

1,245.12.377.0

590.9891.1701.5'

2,342.4358.1610.6'

6,567.8'1,319.0

107.6803.0

5,693.7'

41,029.9'

22.18,331.33,578.3'

-5.8360.2-9.085.3'62.4

-1,369.3'

3.134.2

-257.6

54,058.1r

123.8871.7

6,012.0'

44,643.8'

21.410,062.43,776.1'

-6.7431.2- 10 .6

86.0'76.9

-1,723.8'

-1 .630.1

-284.2'

59,906.5'

21,200.2'

2,764.8'1.794.91

305.849.5'

614.6'200.4

2,259.0'15,975.9'

431.44,031.93,450.7

516.127.437.8

928.5305.3239.5

1,751.3'515.3834.7'565.8721.9901.1

97.7902.2'

1.825.8950.4566.4

32.1'28.1'

182.6'164.0'

21,200.2'

48.99.2

18.3619.4219.4'

1.286.62,474.1

713.41.048.7

822.4'2,989.4

469.1'665.V

7,680.9'1,418.2'

138.3'1,082.86,461.5'

49,365.7'

21.112,776.04.097.4'

-7 .3534.5-32.2151.2'91.4'

-2,110.0'

-8.126.2

-273.8'

67,88«.3C

20,346.8'

2,801.5'1,853.2'

281.448.0

618.9197.3

2,095.015,252.9'

412.43,856.83,295.2

501.823.836.1

937.8299.9235.5

1,723.7'498.6798.7'542.7656.5861.399.4

848.6'1.762.1

818.9553.1

34.821.9'

160.2'130.0'

20,346.8'

46.79.2

18.4568.8197.5'

1.265.32,432.3

646.7952.4768.rf

2,717.5414.3'639.6'

7,169.4'1,319.8

133.9982.9

6,258.4'

46,888.0'

21.111,627.03,964.4'

-6.9478.1-8.196.6'77.6

-1,687.0'

-6.827.9

-366.6

63,895.6'

20,690.5'

2,744.2'1,798.4'

290.448.7

606.6198.2

2,196.415,551.8'

412.73,912.93,351.9

501.022.537.5

929.0303.9237.3

1,746.7'506.6814.8'562.0678.7890.498.5

862.5'1,790.7

863.3564.455.523.7'

164.7'133.4'

20,6*0.5'

46.19.2

18.7597.8189.0'

1.234.22,438.8

696.11,005.1

797.7'2,973.6

431.8'655.6'

7,556.3'1,353.5'

143.1'1.058.96.449.8'

48.346.0'

21.012,649.44,030.7'

-6.7501.5-22.1113.1'87.9'

-1.656.3'

-7.819.5

-366.2'

66^84.2'

21,200.2'

2.764.8'1,794.9'

305.849.5'

614.6'200.4

2,259.0'15,975.9'

431.44,031.93,450.7

516.127.437.8

928.5305.3239.5

1,751.3'515.3834.7'565.8721.9901.1

97.7902.2'

1,825.8950.4566.4

32.1 '28.1'

182.6'164.0'

21,200.2'

48.99.2

18.3619.4219.4'

1,286.62,474.1

713.41,048.7

822.4'2,989.4

469.1'665.0'

7,680.9'1,418.2'

138.3'1,082.86,461.5'

49365.7'

21.112,776.04,097.4'

-7.3534.5-32.2151.2'91.4'

-2,110.0'

-8.126.2

-273 .8 '

67,888.3'

21,671.7

2,706.91,756.5

289.650.2

610.6204.3

2,324.016,436.5

433.84,093.33,505.1

517.931.239.2

931.0306.7240.1

1,779.1521.1853.4582.5775.0939.397.1

942.91,847.01,000.4

572.046.831.5

244.0199.5

21,671.7

48.29.2

18.4608.1182.4

1,259.42.525.2

750.91,130.7

891.03,340.2

505.3677.3

8,246.81,407.7

149.51,179.36,746.4

51357.4

21.214,397.64,108.8

-7.4510.8-21.2183.587.4

-2,018.7

-10.421.4

-323.8

71,463.4

22,140.8

2,766.51,787.4

280.151.0

648.0207.5

2,401.216,765.6

440.34,136.43,543.6

525.626.840.4

930.6315.1240.9

1,796.0520.8885.9600.2815.9977.696.5

978.51,908.71.082.4

579.032.733.8

198.3196.2

22,140.8

50.19.2

18.4630.4197.8

1,321.02.530.8

754.01,153.7

861.53,439.0

540.6686.9

8,349.41,414.6

141.41.207.26.784.3

52,230.9

21.014,556.14,136.2

-7.4547.9-17.1134.492.6

-2,007.8

-16.124.2

-363.2

72,556.7

22,615.8

2,785.41,770.3

287.751.8

675.5210.9

2,416.417,203.0

446.54,195.73,616.2

510.128.341.1

939.0320.8241.4

1,817.6518.9909.8613.1869.9

1,003.495.9

1,041.01,975.61,148.3

592.733.833.2

217.5189.0

22,615.8

54.59.2

18.8652.2196.3

1,282.72,554.4

776.51.249.7

919.83,151.9

579.0694.8

7,810.41,434.8

151.71,112.47,042.9

52307.5

21.212,758.44.153.7

-7.2565.2-15.4167.498.8

-2,012.6

-12.015.7

-383.7

70,824.6

23,290.6

2.771.31.737.7

302.352.7

678.7213.6

2,508.117,797.5

452.54,337.03,761.1

504.226.545.2

964.3327.2242.4

1,847.9519.6953.4632.9965.9

1,023.295.4

1,141.32,018.41.225.6

630.235.330.7

159.9194.6

23,290.6

60.19.2

18.3661.4184.0

1,335.22,629.1

805.01.334.2

877.73,626.1

569.6707.0

8,770.11.481.3

147 21.291.06.848.0

54.644.9

21.615,437.74,164.4

-7.9573.0-27.0159.097.7

-2,304.1

-3.923.1

-319.5

76,078.2

1. Data in this table also appear in the Board's Z. I (780) quarterly statistical release, tablesL.I and L.5. For ordering address, see inside front cover.

2. Excludes corporate equities and mutual fund shares.


A42 Domestic Nonfinancial Statistics • April 1999

2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures

Monthly data seasonally adjusted, and indexes 1992=100, except as noted

Measure

1 Industrial production1

Market groupings1 Products total3 Final, total4 Consumer goods5 Equipment6 Intermediate7 Materials

Indusux groupings8 Manufacturing

9 Capacity utilization, manufacturing (percent)". .

10 Construction contracts^

11 Nonagricultural employment, total4

12 Goods-producing, total13 Manufacturing, total14 Manufacturing, production workers15 Service-producing16 Personal income, total17 Wages and salary disbursements18 Manufacturing19 Disposable personal income5

20 Retail sales5

Prices'1

21 Consumer (1982-84=100)22 Producer finished goods (1982= 100)

1996

119.5

114.4115.5111.3122.7110.9127.8

121.4

' 81.4

130.9

117.32.4

97.498.6

123.1165.2159.8135.7164.0159.6

156.9131.3

1997

126.8

119.6121.1114.1133.9115.2138.2

129.7

82.0

142.6'

120.324

98.299.6

126.5174.5171.2144.7171.7166.9

160.5131.8

1998

131.4

123.6'125.5'115.2'144.1'118.0'144.0

135.1

80.8'

151.0'

123.42.3

98.599.6

130.1183.2182.6151.1178.6175.3

163.0130.7

1998

May

131.9

124.5126.6116.8144.2118.2143.6

135.4

81.6

153r/

123.2102.599.0

100.1129.7182.2181.5151.5177.5175.8

162.8130.6

June

130.6

123.6125.5115.1144.1118.0141.8

133.7

80.2

152.0'

123.3102.698.999.9

130.0182.7181.8150.5177.9176.0

163.0130.7

July

130.5

123.3124.7114.0143.91 19.1141.9

133.6

79.8

155.0'

123.5101.997.998.4

130.4183.4182.8149.6178.7174.8

163.2131.0

Aug.

132.4

124.9126.8116.1146.0119.1144.4

135.7

80.7

154.0

123.8102.498.499.1

130.6184.2184.1151.3179.4174.9

163.4130.7

Sept.

131.9

124.1126.0114.8146.2118.3144.4

1J3.2

80.1

150.0'

123.9102.398.499.3

130.9184.8184.6152.1179.9175.6

163.6130.6

Oct.'

132.4

124 9126.7115.2147.5119.0144.5

136.1

80.3

148.0

124.1102.298.199.0

131.1185.5185.6151.7180.7177.7

164.01314

Nov.'

132.3

124.5126.3115.1146.4119.1144.8

13b.4

80.1

152.0

124.4102.197 898.6

131.5186.3186.6151.4181.4178.9

164.0130.8

Dec.

132.5'

124.7'126.2'115.4'145.5'120.2'145.2'

136.6'

79.9

153.0'

124.7102.497.798.5

131.8187.3187.5151.8182.3180.7'

163.9131.0

1999

Jan.

132.5

124.6126.0115.4145.0120.4145.3

136.7

79.6

147.0

124.9102.497.698.5

132.1n.a.n.a.n.a.n.a.

181.1

164.3131.5

1. Daia in this table appear in the Board's G.17 (419) monthly statistical release. The dataare ako available on the Board's web site. hllp://www.federalreserve.gov/releases/gl7. Theiaiesi historical revision of the industrial production index and Ihe capacity utilization rateswas released in November 1998. The remit annual revision is described in an article in theJanuaiy 1999 issue of the Bulletin. For a description of the methods of estimating industrialproduction and capacity utilization, see "Industrial Production and Capacity Utilization:Historical Revision and Recent Development." Federal Risen-e Bulletin, vol. 83 (February1997), pp. 67-92, and the references cited Iherein For details about the construction ofindividual industrial production series, see "Industrial Production: 1989 Developments andHistorical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204.

2. Ratio of index of production to index of capacity. Based on data from the FederalReserve, DRI McGraw-Hill. U.S. Department of Commerce, and other sources.

3. Index of dollar value of total construction contracts, including residential, nonresiden-lial. and heavy engineering, from McGraw-Hill Information Systems Company, F.W. DodgeDivision.

A. Based on dala from U.S. Department of Labor. Employment and Earnings. Series coversemployeu-s only, excluding personnel in the armed forces.

5. Based on data from U.S. Department of Commerce. Surrey of Current Business.b. Based on data not seasonally adjusted. Seasonally adjusted data for changes in the price

indexes can be obtained from the U.S. Department of Labor. Bureau of Labor Statistics,Monthly Labor Review.

NOTE. Basic data (not indexes) for series mentioned in notes 4 and 5, and indexes for seriesmentioned in notes 3 and 6. can also be found in the Survey of Current Business.

2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT

Thousands of persons; monthly data seasonally adjusted

Category

HOUSEHOLD SURVEY DATA1

1 Civilian labor force'Employment

2 Nonagricultural industries^3 Agriculture

Unemployment4 Number5 Rale (percent of civilian labor force)

ESTABLISHMENT SURVEY DATA

6 Nonagricultural payroll employment4

7 Manufacturing8 Mining9 Contract construction

[0 Transportation and public utilities11 Trade12 Finance13 Service14 Government

1996

133,943

123,2643.443

7,2365.4

119,608

18,495580

5.4186,253

28,0796,911

34,45419,419

1997

136,297

126.1593,399

6,7394.9

122,690

18,657592

5,6866,395

28,6597,091

36,04019,570

1998

137.673

128,0853.378

6.2104.5

125,833

18.716575

5,9656,551

29.2997,341

37,52519,862

1998

June

137,498

127,8903,363

6.2454.5

125,751

18,780578

5.9466.538

29.2697,333

37.49419.813

July

137,407

127,7533,423

6,2314.5

125,849

18,594571

5,9706.550

29,3747,370

37,61419,826

'Vug.

137,481

127,7723.492

6.2174.5

126,191

18,693571

5,9896,570

29,3837,372

37,69119,922

Sept.

138,081

128,3483,470

6,2634.5

126,363

18,692568

5,9816,579

29,4547,393

37,76819.928

Oct.

138,116

128,3003,558

6,2584.5

126,527

18,633564

6,0126.595

29.4537,417

37.90519,948

Nov'

138.193

128,7653,348

6.0804.4

126,804

18,573560

6,0516,604

29,5497,441

38,04019,986

Dec.1

138,547

129,3043,222

6.0214.3

127,102

18.557555

6,1506,629

29,5957,459

38,13720,020

1999

Jan.

139,347

130,0973,299

5.9504.3

127,347

18,544546

6.1656,651

29,6537,481

38,25120,056

1. Beginning January 1994, reflects redesign of current population survey and populationcontrols from the 1990 census.

2. Persons sixteen years of age and older, including Residenl Armed Forces. Monthlyfigures are based on sample data collected during the calendar week that contains the twelfthday; annual data arc averages of monthly figures. By definition, seasonality does not exist inpopulation figures.

3. Includes self-employed, unpaid family, and domestic service workers.

4 Includes all full- and part-time employees who worked during, or received pay for, thepay period thai includes the twelfth day of Ihe month; excludes proprietors, self-employedpersons, household and unpaid family workers, and members of Ihe armed forces. Data areadjusted lo the March 1992 benchmark, and only seasonally adjusted data are available at thistime.

SOURCE. Based on data from U.S. Department of Labor. Employment and Earnings.


Selected Measures A43

2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1

Seasonally adjusted

Series

1 Total industry

2 Manufacturing

3 Primary processing4 Advanced processing4

5 Durable goods6 Lumber and products7 Primary melals8 Iron and steel9 Nonferrous

10 Induslrial machinery and equipment11 Electrical machinery12 Motor vehicles and parts13 Aerospace and miscellaneous

transportation equipment

14 Nondurable goods15 Textile mill products16 Paper and products17 Chemicals and products18 Plastics materials19 Petroleum products

20 Mining21 Utilities22 Electric

1 Total industry

2 Manufacturing?

3 Primary processing4 Advanced processing

5 Durable goods6 Lumber and products7 Primary metals8 Iron and steel9 Nonfcrrous

10 Industrial machinery andequipment

11 Electrical machinery12 Motor vehicles and parts13 Aerospace and miscellaneous

transportation equipment

14 Nondurable goods15 Textile mill products16 Paper and products17 Chemicals and products18 Plastics materials19 Petroleum products

20 Mining21 Utilities22 Electric

1973

High

89.2

88.5

91.287.2

89.288.7

100.2105.890.8

96.089.293.4

78.4

87.891.497.1S7.6

102.096.7

94.396.299.0

01

1998

02 Q3 Q4'

Output (1992=100)

130.4

133.8

121.2140.1

154.4115.6128.2128.3128.0194.1278.2140.8

102.7

112.7113.6115.5116.8127.3111.6

107 0110.9112.8

1975

Low

72.6

70.5

68.271.8

68.961.265.966.659.8

74.364.751.3

67.6

71.760.069.269.750.681.1

88.282.982.7

131.3

134.7

121.1141.4

156.1116.4125.3124.0127.0203.0282.8135.3

106.1

112.7113.2115.0116.9127.5112.0

IO"i 3115.6118.3

131.6

134.8

120.2142.1

157.9117.7122.4118.7126.8207.9292.7137.2

106.6

111.3112.1115.0114.4128.4112.7

103 6119.6121.2

Previous cycles

High

87.3

86.9

88.186.7

87.787.994.295.891.1

93.289.495.0

81.9

87.591.296.184.690.990.0

96.089.188.2

Low

71.1

69.0

66.270.4

63.960.845.137.060.1

64.071.645.5

66.6

76.472.380.669.963.466.8

80.375.978.9

132.4

136.4

120.3144.5

161.2119.0119.6112.7127.9212.2304.5148.6

105.5

111.4111.1114.0113.7130.0112.3

101.2114.0117.3

01

1998

1

Q2 Q3 Q4

Capacity (percent of 1992 output)

157.6

163.5

143.0173.5

190.2142.0140.8140.9140.4226.5351.2182.8

127.0

135.81.34.8130.6147.1139.4116.2

119.7125.9123.5

Latest cycle6

High

85.4

85.7

88.984.2

84.693.692.795.289.3

85.484.089.1

87.3

87.390.493 586.297.088.5

88.092.695.0

Low

Capacity ut

78.1

76.6

77.776.1

73.175.57.3.771.874.2

72.375.055.9

79.2

80.711185.079.374.885.1

87 083.487.1

159.6

165.8

144.0176.4

193.9143.0142.0142.8140.8234.7366.6183.9

127.5

136.6134.9131.6148.0140.7116.5

119.9126.2123.8

1998

Jan.

161.5

168.1

145.1179.2

197.5143.9143.2144.6141.3242.9381.6184.9

128.0

137.5135.1132.5148.9141.9116.8

120.1126.5124.0

Aug.

lization rate (percent)

83.0

82.2

85.281.0

81.481.392.191.992.4

85.780.277.8

79.5

83.585.388.879.79.3.495.8

90.087.290.2

82.0

80.7

83.179.9

80.982.386.984.789.7

85.276.283.4

83.5

80.982.887.076.792.997.7

86.395.197.8

163.5

170.3

146.1182.0

201.2144.9144.4146.5141.7251.6396.7186.0

128.5

138.4135.2133.4149.7143.2117.1

120.5126.7124.3

Qi

1998

02 03 Q4'

Capacity utilization rale (percent)

82.7

81.8

84.880.8

81.281.491.091.091.285.779.277.0

80.8

83.184.388.579.491.396.1

89.488.191.3

1998

Sept.

81.3

80.1

82.179.5

80.381.183.778.190.6

84.577.080.9

82.6

80.282.385.775.987.194.7

85.295.098.8

Oct.'

81.3

80.3

82.479.6

80.681.683.778.490.4

84.977.280.9

83.3

80.383.286.775.789.194.4

84.792.096.9

82.3

81.2

84.180.2

80.581.488.386.990.186.577.173.6

83.2

82.583.987.479.090.696.1

87.891.695.6

81.5

80.2

82.979.3

79.981.885.582.189.785.676.774.2

83.3

80.983.086.876.890.596.5

86.294.697.7

Nov.' Dec.

80.9

80.1

82.379.5

80.181.582.174.991.1

84.376.980.0

82.1

80.682.384.276.394.196.3

84.287.992.2

80.8

79.9

82.479.1

79.783.182.777.489.3

83.876.278.8

80.9

80.581.185.575.889.197.0

83.190.094.1

81.0

80.1

82.379.4

80.182.182.876.990.384.376.879.9

82.1

80.582.285.575.990.895.9

84.089.994.4

1999

Jan.p

80.5

79.6

82.178.8

79.583.482.176.888.7

8.3.176.379.1

80.0

80.381.285.775.889.697.4

81.690.193.7

1. Data in this table appear in the Board's G.17 (419) monthly statistical release. The dataare also available on the Board's web :>ite, http://www.fedcralreserve.gov/releases/gl7. Thelatest historical revision of the industrial production index and the capacity utilization rateswas released in November 1998. The recent annual revision is described in an article in theJanuary 1999 issue of the Bulletin. For a description of the methods of estimating industrialproduction and capacity utilization, see "Industrial Production and Capacity Utilization:Historical Revision and Recent Developments," Federal Reserve Bulletin, vol. 83 (February1997), pp. 67-92, and the references cited therein. For details about the construction ofindividual industrial production series, see "Industrial Production: 1989 Developments andHistorical Revision." Federal Reser\'e Bulletin, vol. 76 (April 1990), pp. 187-204.

2. Capacity utilization is calculated as the ratio of the Federal Reserve's seasonally adjustedindex of industrial production to the corresponding index of capacity.

3. Primary processing includes textiles; lumber: paper; industrial clu1* u uls; syntheticmaterials; fertilizer materials; petroleum products: rubber and plastics; stone, clay, and glass;primary metals; and fabricated metals.

4. Advanced processing includes foods: tobacco; apparel; furniture and fixtures; printingand publishing; chemical products such as drugs and toiletries; agricultural chemicals; leatherand products; machinery; transportation equipment: instruments; and miscellaneous manufac-tures.

5. Monthly highs. 1978-80; monthly lows, 1982.6. Monthly highs, 1988-89; monthly lows, 1990-91.



2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1

Monthly data seasonally adjusted

Group

1992pro-por-tion

1998ave.

1998 1998

Apr. May July Aug. Sept. Oct.r Nov.r Dec.

1999

Jan.p

Index (1992= 100)

MAJOR MARKETS

1 Total index

2 Products3 Final products4 Consumer goods, total5 Durable consumer goods6 Automotive products7 Autos and trucks8 Autos, consumer9 Trucks, consumer

10 Auto parts and allied goods11 Other12 Appliances, televisions, and

conditioners13 Carpeting and furniture14 Miscellaneous home goods15 Nondurable consumer goods16 Foods and tobacco17 Clothing18 Chemical products19 Paper products20 Energy21 Fuels22 Residential utilities

23 Equipment24 Business equipment25 Information processing and related26 Computer and office equipment27 Industrial28 Transit29 Autos and trucks30 Other31 Defense and space equipment32 Oil and gas well drilling33 Manufactured homes

34 Intermediate products, total35 Construction supplies36 Business supplies

37 Materials38 Durable goods materials39 Durable consumer parts40 Equipment parts41 Other42 Basic metal materials43 Nondurable goods materials44 Textile materials45 Paper materials46 Chemical materials47 Other48 Energy materials49 Primary energy50 Converted fuel materials

SPECIAL AGGREGATES

51 Total excluding autos and trucks52 Total excluding motor vehicles and parts53 Total excluding computer and office

equipment54 Consumer goods excluding autos and trucks55 Consumer goods excluding energy56 Business equipment excluding autos and

trucks57 Business equipment excluding computer and

office equipment58 Materials excluding energy

100.0

60.546.329.16.12.61.7.9.7.9

3.5

1.0.8

1.623.010.32.44.52.92.9

.82.1

17.213.25.41.14.02.51.21.33.3

.6

.2

14.25.38.9

39.520.84.07.69.23.18.9I.I1.83.92.19.76.33.3

97.195.1

98.227.426.2

12.129.8

131.4

123.6125.5115.2135.8132.9137.8109.2166.2124.9138.0

206.1117.1115.1110.2109.097.8

120.6105.8112.7110.5113.2

144.1163.5209.9646.3140.0133.7124.6138.975.7

134.7149.2

118.0127.1112.7

144.0176.4144.0277.4129.0121.3113.4109.3115.8114.1111.5103.7101.4108.1

131.3130.8

127.1114.0115.6

142.4156.6

1303

122.6124.5116.0135.1133.0141.0115.1166.1120.5136.7

195.5119.2115.6111.3110.4100.7121.3109.2109.1111.0107.6

139.5156.3195.3520.3138.4126.0126.2137.776.2

153.9147.1

117.0125.5112.0

142.6173.6143.1263.4130.7126.1114.8109.9117.2117.2110.0103.0101.6105.8

130.2129.7

126.7114.7116.8

138.8155.0

130.2

122.5124.2115.2134 5131.5138.6104.8170.5120.3136.9

197.9115.8116.8110 5110.199.3

121.2107.7106.5110.4104.0

140.3157.0199.2547.4136.6126.8120.9136.976.3

157.4149.6

117.1125.7112.1

142.5173.5144.2264.5129.7125.9114.9111.1117.0116.5111.4102.8101.4105.6

130.2129.7

126.4113.9116.2

161.1

138.7155.0

130.7

123.2125.3115.8135.9132.7138.9106.5169.8122.7138.5

203.8114.3118.3110.8109.1100.4121.3106.3113.2111.2113.7

142.4160.1202.3584.9139.4130.3121.6139.875.9

155.7148.0

116.9124.7112.2

142.7173.7143.7265.8129.7123.7114.2110.6116.3115.6111.0103.7101.0109.0

130.7130.3

126.7114.5116.1

164.6

140.8154.9

131.3

124.0126.2116.4136.9134.6141.3107.4173.8123.7138.8

203.4115.9118.2111.4110.299.9

123.2106.2111.5111.6111.0

143.6162.2206.0601.5139.4133.6123.4140.875.9

147.6148.0

117.3125.4112.5

143.1174.5144.4266.9130.3123.5114.4110.5116.3116.2110.9103.8101.3108.6

131.3130.9

127.3115.1117.0

166.7

142.3155.5

131.9

124.5126.6116.8138.3136.8143.5108.4177.1126.0139.4

202.7119.1117.9111.5110.898.8

122.5105.7112.5110.9112.9

144.2163.1209.2620.6138.1135.5125.1139.676.0

147.1149.0

118.2126.6113.3

143.6175.4147.9268.6129.6123.0114.1111.0115.5115.6111.2104.3101.0110.8

131.8131.3

127.7115.3117.3

167.4

142.6156.0

130.6

123.6125.5115.1130.7121.7118.293.8

142.2125.4137.8

199.9117.0117.1111.2108.598.8

122.8105.3118.2111.4121.2

144.1163.6210.3638.6142.9128.2108.6141.775.8

136.7146.1

118.0126.1113.2

141.8171.7131.9271.0128.3120.1113.9110.2117.3114.8110.6104.8101.8110.7

131.2131.2

126.4114.8114.7

170.0

142.7153.4

130.5

123.3124.7114.0124.6107.392.875.8

110.0125.6138.7

207.8117.3115.9m i108.598.4

122.2106.3118.4112.9120.7

143.9163.5211.8654.6144.2121.991.7

146.676.1

131.9151.1

119.1128.5113.6

141.9171.8129.7274.1128.1120.2114.1110.1117.3114.6111.7104.8102.9108.6

131.6131.7

126.2114.9113.5

171.8

142.2153.6

132.4

124.9126.8116.1140.1141.7151.4124.4178.9127.6138.5

209.4116.7115.3110.3107.597.7

119.0106.6120.1112.1123.7

146.0166.6213.1671.6142.3141.6136.9132.676.5

127.7145.7

119.1128.0113.8

144.4177.4149.6278.0128.3121.9113.1107.7116.4113.6111.6104.4101.2110.7

132.1131.3

128.0114.3115.7

169.9

144.8156.9

131.9

124.1126.0114.8137.4136.4143.4128.3161.1125.9138.0

209.9116.3114.5109.3106.997.1

118.0105.9116.8108.3120.7

146.2167.4217.3693.6139.5140.1135.6140.975.5

123.4147.8

118.3126.9113.3

144.4177.7147.7282.7127.7118.2112.0107.6115.0111.8111.5105.2102.3110.9

131.7131.0

ill A113.2114.6

171.0

145.1156.7

132.4

124.9126.7115.2140.5141.1150.6119.9181.0127.4139.7

215.2120.3113.6109.1108.095.4

117.2105.2115.0108.4117.8

147.5169.0219.0716.7141.6141.6136.1141.176.4

119.4150.9

119.0128.4113.5

144.5178.8146.2287.0128.4118.3111.7108.8115.8111.1110.4103.7102.6106.1

132.1131.5

127.8113.4115.3

172.7

146.2157.3

132.3

124.5126.3115.1139.9139.6149.1113.7183.2125.9139.9

222.3117.7113.0109.1109.694.5

119.2104.1107.8109.1106.5

146.4168.0219.5746.7139.8140.4136.4138.575.5

115.2154.6

119.1129.1113.2

144.8180.0145.6290.3129.3117.4111.9106.8112.7112.2113.1102.2100.6105.3

132.0131.5

127.5113.3116.0

171.5

144.5158.1

132.5

124.7126.2115.4139.6139.1147.7115.5179.0126.8139.7

224.1114.4113.8109.6109.694.3

120.0103.4111.1109.5111.3

145.5168.0221.1761.7141.2139.1136.3132.774.1

103.2156.6

120.2130.3114.3

145.2180.6144.4293.2129.6117.6111.3106.2113.1109.8115.0103.4101.5107.1

132.3131.9

127.7113.7115.9

171.5

144.1158.3

132.5

124.6126.0115.4140.0140.0149.4111.7185.2126.6139.8

224.7117.8111.9109.5109.693.0

120.2102.2112.4112.2111.9

145.0167.7222.1784.6140.4138.0135.8132.773.099.2

157.5

120.4130.3114.5

145.3181.4143.9298.0129.2117.0111.1105.6114.0109.4114.3102.499.9

107.4

132.2131.8

127.6113.6115.8

143.4158.7



2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued

Group

MAJOR INDUSTRIES

59 Ibtal index

60 Manufacturing61 Primary processing62 Advanced processing

63 Durable goods64 Lumber and products65 Furniture and fixtures66 Stone, clay, and glass

products67 Primary metals68 Iron and steel69 Raw steel70 Nonferrous71 Fabricated metal products. . .72 Industrial machinery and

equipment73 Computer and office

equipment74 Electrical machinery75 Transportation equipment.. .76 Motor vehicles and parts .77 Autos and light trucks .78 Aerospace and

miscellaneoustransportationequipment

79 Instruments80 Miscellaneous

81 Nondurable goods82 Foods83 Tobacco products84 Textile mill products85 Apparel products86 Faper and products87 Printing and publishing88 Chemicals and products . . . .89 Petroleum products90 Rubber and plastic products .91 Leather and products

92 Mining93 Metal94 Coal95 Oil and gas extraction% Stone and earth minerals

97 Utilities98 Electric99 Gas

SPECIAL AGGREGATES

100 Manufacturing excluding motorvehicles and parts

101 Manufacturing excludingcomputer and officeequipment

102 Computers, communicationsequipment, andsemiconductors

103 Manufacturing excludingcomputers andsemiconductors

104 Manufacturing excludingcomputers, communicationsequipment, andsemiconductors

Major Markets

105 Products, total

106 Final

107 Consumer goods108 Equipment109 Intermediate

SICcode

2425

3233

331,2331PT

333-6,934

35

3573637

371371PT

372-6,93839

20212223262728293031

10121314

491.493PT492.493PT

1992pro-por-tion

100.0

85.426.558.9

45.02.01.4

2.13.11.7.1

1.45.0

8.0

1.87.39.54.92.6

4.65.41.3

40.4941.61.82.23.66.79.91 43.5

.3

6.9.5

1.04.8

.6

7.76.21.6

80.5

83.6

5.9

81.1

79.5

2,001.9

1.552.1

1,049.6'502.5449.9

1998avg.

131.4

135.1120.6142.1

157.5117.0121.5

126.1123.9121.0115.7127.2127.2

203.8

649.4291.8123.0141.1128.5

104.9113.0117.6

111.9109.6106.0112.699.2

114.9105.1115.4112.1132.675.3

104.1110.5109.799.8

124.3

114.3117.4103.0

134.7

130.1

515.6

120.1

118.5

2,481.4

1,952.2

1,210.0744.3530.7

1998

Jan.

130.3

133.8121.6139.8

153.9115.2119.4

124.6129.2128.9122.5129.7127.6

191.8

526.3277.7121.3141.9132.0

100.9111.5119.7

113.1110.5110.1115.0102.5115.7106.4117.0111.2131.077.3

107.6110.9112.4103.6127.5

109.8111.4102.2

133.4

129.6

459.3

120.3

118.8

2,462.9

1,935.8

1 ^20 1'718.2528.0

Feb.

130.2

133.7121.1140.0

154.0116.2118.6

124.0128.1128.2123.328.0

126.6

192.3

552.6278.5121.5140.4128.2

102.6112.5119.9

112.8109.9112.7113.2101.1115.9106.4116.7110.5131.178.3

107.5123.2104.1104.6123.1

109.0111.299.3

133.4

129.4

467.6

120.1

118.5

2,456.2

1.928.6

1.210.8720.6528.3

Mar.

130.7

134.1121.0140.6

155.2115.3121.5

124.5127.1127.7120.0126.4127.2

198.4

589.6278.2122.3140.0128 8

104.5112.8120.0

112.4109.7105.3112.6101.6115.0105.4116.6113.0131.477.9

105.8109.3103.4104.0120.0

114.0115.7106.3

133.8

129.5

473.4

120.2

118.7

Gross v

2,474.5

1,948.1

1,218.7732.5527.6

Apr.

131.3

134 9121.5141.6

156.2116.1121.0

124.0127.5126.7122.4128.4127.8

200.6

605.4280.8123.3140.8130.9

105.7113.0120.1

113.0110.3109.8113.3101.0115.2105.5117.7112.8133.276.3

105.7106.9107.2102.9123.3

112.8115.2102.0

134.6

130.2

482.7

120.9

119.3

May

131.9

135.4121.4142.3

157.2116.4120.6

124.5126.5125.5121.9127.6128.7

202.5

623 9282.0125.2144.1132.7

106.3113.8119.1

113.0110.7111.5114.5100.4115.0105.6116.9111.5133.175.8

105.4108.5106.0102.4124.4

115.2118.998.3

134.9

130.6

490.7

121.1

119.5

June

1998

July

Index (1992 =

130.6

133.7120.2140.4

154.S116.7122.0

123.5122.1119.8116.0124.9128.0

205.8

641.4285.5114.2121.1110.1

106.3112.4118.5

112.0109.2104.7112.0100.5114.9105.5116.2111.6132.474.5

104.7108.0110.4100.4125.6

118.7121.0108.4

134.5

128.8

502.9

119.2

117.5

alue (billions of 1992 dollars

2,489.8

1,961.6

1 224 8739.9529.7

2,498.5

1,966.1

1 225 2744.2533.6

2,470.3

1.938.2

1 201 8740.1512.6

130.5

133.6120.7139.9

154.4117.5120.8

125.4122.6120.2118.3125.4127.8

209.0

657.0289.4108.2107.686.9

107.1112.6118.5

112.1109.0106.0113.21O0.1115.9105.4115.7113.4132.775.3

104.6105.7112.8100.0125.4

1183119.8111.7

135.1

128.6

511.8

118.9

117.2

Aug.

100)

132.4

135.7120.6143.3

159.8118.5120.1

127.0124.4122.5120.3126.7126.3

207.0

673.6290.8130.3154.2142.0

106.9113.0117.7

111.3107.9107.0111.899.2

115.3104.9114.3114.1132.274.0

103.7109.0109.799.2

124.3

120.2121.2115.7

134.6

130.6

522.5

120.6

119.0

, annual rates)

2,454.6

1,915.6

1 185 0734.3538.4

2,525.1

1.985.9

1 227 4762.5540.3

Sept.

131.9

135.2119.3143.2

159.6117.0121.6

126.6120.1113.4112.6128.1126.2

207.7

695.5297.7127.6149.91 '6.5

105.8114.2117.0

110.6107.7104.2111.298.3

113.9104.6113.3110.7132.673.5

102.4106.4115.896.8

120.3

120.1122.6109.7

134.4

130.0

538.3

119.9

118.1

2,501.0

1,966.4

1 208 2762.7535.7

Oct.'

132.4

136.1120.1144.2

161.2118.0124.5

128.3120.6114.4109.7128.0126.9

211.2

718.5302.4128.4150.2140.4

106.9114.6115.9

110.9109.1101.9112.497.3

115.4104.2113.1110.4133.472.8

102.0113.6110.896.8

118.8

116.5120.398.7

135.3

130.8

552.1

120.4

118.7

2,519.7

1,982.3

1 217 1769.8538.7

Nov.r

132.3

136.4120.2144.7

161.0118.2123.7

130.4118.6109.7100.2129.2127.5

212.0

748.4304.9127.0148.8138.1

105.5114.1114.0

111.6111.399.8

111.295^5

112.3105.41142112.8135.073.9

101.4112.2108.695.2

128.2

111.4114.696.5

135.8

130.9

564.1

120.4

118.8

2,514.5

1,977.1

1,216.9764.5538.5

Dec.

132.5

136.6120.6144.7

161.4120.7123.6

130.2119.7113.9102.0126.6128.3

213.4

763 5306.3125.3146.8137.3

104.1114.4115.0

111.6111.2100.1109.795.2

114.4105.2113.711.1.7135.573.2

100.3112.2114.192.8

124.4

114.1117.0100.6

136.1

131.0

572.4

120.4

118.8

2,520.4

1,976.9

1,219.4761.7544.0

1999

Jan.p

132.5

136.7120.5144.9

161.6121.4124.8

130.4119.1113.4103.0126.0127.5

213.8

786 4310.3125.0147.5117 9

103.0114.3113.8

111.6111.796.9

109.894.4

114.8104.8113.8114.2135.171.5

98.5110.4102.093.0

124.8

114.3116.6103.9

136.1

131.0

585.4

120.1

118.6

2,524.8

1 980.5

1 224.8759.6544.9

I. Data in this table appear in the Board's G.17 (419) monthly statistical release. The dataare also available on the Board's web site, http://www.federalreserve.gov/releases/gl7. Thelatest historical revision of the industrial production index and the capacity utilization rateswas released in November 1998. The recent annual revision is described in an article in theJanuary 1999 issue of the Bulteiin. For a description of the methods of estimating industrialproduction and capacity utilization, see "Industrial Production and Capacity Utilization:

Historical Revision and Recent Developments," Federal Reserve Bulletin, voi. 83 (February1997), pp, 67-92, and the references cited therein. For details about the construction ofindividual industrial production series, see "Industrial Production: 1989 Developments andHistorical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204.

2. Standard industrial classification.



2.14 HOUSING AND CONSTRUCTION

Monthly figures at seasonally adjusted annual rates except as noted

1998

Mar. Apr. May June July Aug. Sept. Oct Nov.' Dec.

NEW UNITS

1 Permits authorized2 One-family3 Two-family or more4 Started5 One-family6 Two-family or more7 Under constroction al end of period1.8 One-family9 Two-family or more

10 Completed11 One-family12 Two-family or more13 Mobile homes shipped

Merchant builder activity inone-family units

14 Number sold15 Number for sale at end of period1..

Price of units sold (thousandsof dollars)1

16 Median17 Average

EXISTING UNITS (one-family)

18 Number sold

Price of units sold (thousandsof dollars)1

19 Median20 Average

CONSTRUCTION

21 Total put in place

22 Private23 Residential24 Nonresidential25 Industrial buildings26 Commercial buildings27 Other buildings28 Public utilities and other

29 Public30 Military31 Highway32 Conservation and development.33 Other

1,4261,070

3561,4771,161

316820584235

1,4051,123

283361

757326

140.0166.4

4,087

118.2145.5

Private residential real estate activity (thousands of units except as noted)

1,4411,062379

1,4741,134340834570264

1,4071,122285354

804287

146.0176.2

4,215

124.1154.2

1,6041,184421

1,6161,271345936638298

1,4741,157318372

888303

151.6181.3

4,785

130.6162.9

1,5691,136

4331,583'1,234'349'911616295

1,4861,130356374

836285

152.0

178.9

4,890

127.1157.2

1,5171.145372

1,542'1,235'307'911619292

1,5091,198311370

892286

148.0

176.7

4,770

128.2159.7

1,5431,152391

1,541'1,221'320'917627290

1.4581.112346374

892287

153.2183.5

4,830

130.5162.3

1,5171,128389

1,626'1,274'352'930639291

1,4841,166318362

919287

148.0175.9

4,740

134.0169.2

1,5811,173408

1,719'1,306'413'937643294

1,5491,225324380

877284

149.9179.8

4,910

133.8168.4

1,6181,180438

1,615'1,264'351'940645295

1,5151,178337368

839285

154.9

186.5

4,730

132.9165.9

1,5441,164380

1,576'1,251'325'948650298

1,4661,185281369

845'2<Xf

182.7'

4,690

131.2162.9

1.6901,198492

1,6981,298400969658311

1,4411,155286352

907293

151.0181.2

4,770

130.7161.8

1,6561.238418

1,6541,375279972666306

1,6021.253349389

1,015293

150.0175.6

4,880

131.7163.9

Value of new construction (millions of dollars)

1,7291,306423

1,7381,378360

1,001690311

1,4081,132276

382

978297

151.3182.2

5,030

130.6163.0

581,813

444,743255,570189,17332,56375,72230,63750,252

137,0702,639

41,3265,92687,179

618,051

470,969

265,536205.43331.41783.72737,38252,906

147,0822,625

45.2465,62893,583

655,922

509,608296,142213,46630,26788,17838,11656,905

146,3142,730

45,1295,527

92,928

639,913

494,333

286,045208,28831.47483,98137,81255,021

145,5802,818

45,5595,488

91.715

645,974

500,078

289,666210,41231,45786,06439,16853,723

145.8962,850

46.1754,98591,886

6353%

496,495288,003208,49229,64286,32137,67854,851

138,9012,471

42,0305,14689,254

650341

503,592291,907211,68530,06788,48037,33455,804

146,7492,659

44,5415,98993.560

658,673

511.514299.300212,21428,61688,31037,40657,882

147,1593,325

43,8095,47594,550

663^00

516,601

300,612215,98932,30286,24338,30559,139

146,6993.187

44,2915,442

93,779

670,133

521,050

304,993216,05730,30087,55338,30959,895

149,0832,325

45,7195,904

95,135

670,218

525.106

306,090219,01629,24691,04237,53661,192

145,1122,577

45,5635.143

91.829

676,694

530,662310,297220,36530,08793,56437,68959,025

146,0312,522

44,1455,513

93,851

688,529

537,161

315,338221,82328,02596,61939,30757,872

151,3682,639

48,0835,652

94,994

1. Not at annual rates.2. Not seasonally adjusted.3. Recent data on value of new construction may not be strictly comparable with data for

previous periods because of changes by the Bureau of the Census in its estimating techniques.For a description of these changes, see Construction Reports (C-30-76-5), issued by theCensus Bureau in July 1976.

areason-

SOURCE. Bureau of the Census estimates for all series except (1) mobile homes, whichprivate, domestic shipments as reported by the Manufactured Housing Institute and seasally adjusted by the Census Bureau, and (2) sales and prices of existing units, which arepublished by the National Association of Realtors. All back and current figures are availablefrom the originating agency. Permit authorizations are those reported to the Census Bureaufrom 19,000 jurisdictions beginning in 1994.



2.15 CONSUMER AND PRODUCER PRICES

Percentage changes based on seasonally adjusted data except as noted

Change from 12months earlier

1998Jan.

1999Jan.

Change from 3 months earlier(annual rate)

1998r

Sept.

Change from 1 month earlier

Sept. Oct. Nov. Dec.

1999

Indexlevel,Jan.

1999'

CONSUMER PRICES^(1982-84=100)

1 All items

2 Food3 Energy items4 All items less food and energy.5 Commodities6 Services

PRODUCER PRICES(1982=100)

7 Finished goods8 Consumer foods9 Consumer energy

10 Other consumer goods11 Capital equipment

Intermediate materials12 Excluding foods and feeds13 Excluding energy

Crude materials14 Foods15 Energy16 Other

1.6

-6.52.2

.43.0

-1.7- .7

-10.4.4

-1.5.1

- 6 . 0-37 .3

-3.9

1.7

2.1- 7 . 4

2.41.22.8

.91.9

-7.54.0

-2.4-1.6

- 3 . 7-16 .7-14.5

.7

1.3-17.2

2.4.0

3.5

-2.7- . 9

-25.54.2

.0

-4.1- . 9

-14.6-53.5-12.4

2.2

2.3- 3 . 4

2.61.7

- . 3- . 6

-3.11.4

-1.2

-1.6-1.2

-3.3-14.6

-5.8

1.5

2.5- 9 . 0

2.31.13.0

-9.23.0

.9

- 2 . 2- 1 . 8

-19.6-25.3-19.9

2.0

2.8-5.1

2.5252.5

1.5- . 3

-10.48.0

-3.8-2.4

-6.2-1.3

-24.6

. 1 '- 1 . 2 '

.2- . 1

.3

- . 9 '-3.6'-1.2'

.0- . 1 '

- . 2- . 2 '

2.9'5.1'

-2.7

.1- . 3 '

. 1 '

- . 4 '- 1 . 5 '

.1

.1

- . 3 '- . 2

.0- 2 . 7 '

.1 '-1.1 '

3.6.2

.4Sf

-2.31.8'.0'

- . 5 '- . 2

- 4 . 1 '-5.2-1.6 '

.5!.(>1.8

- . )- . 1

5.1.6

164.3

163.698.1

175.3143.7193.2

131.5135.671.7

151.6137.7

121.5132.1

101.662.4

128.7

1. Not seasonally adjusted.2. Figures for consumer prices are for all urban consumers and reflect a rental-equivalence

measure of homeownership.

SOURCE. US Department of Labor. Bureau of Labor Statistics.


A48 Domestic Nonfinancial Statistics D April 1999

2.16 GROSS DOMESTIC PRODUCT AND INCOMEBillions of current dollars except as noted; quarterly data at seasonally adjusted annual rates

GROSS DOMI.STIC PRODI ICI

1 Total

BY source

3 Durable goods4 Nondurable goods5 Services

7 Fixed investment8 Nonrcsitiential9 Structures

10 Producers' durable equipment11 Residential Mrucliircs

12 Change in business inventoriesI ^ Nontarni

LS Hxpoits16 Imports

IS Federal14 State and local

flv nitij(>r rv/h' of product^0 Final sales total2 1 Goods2.1. Durahle23 Nondurable"M Services25 Structures

27 Durable goods28 Nondurable goods

Ml-M()29 Total GDP in chained 1992 dollars

NATIONAL INCOMH

30 Total

3 1 Compensation of employees32 Wages and salaries '33 Government and government enterprises34 Other 135 Supplement to wages mid salaries36 Hmployer eonlribtuions lor social insurance37 Other labor income

V) Busing and prolessionul1

40 Farm1

4 ! Rental income ot persons2

42 Corporate profits1

43 Profits before tax1

4? Capital consumption adjustment

46 Nel interest

7.661.6

5.215.7643.3

1.539.21,033.2

1.131.')1.099.8

787.')216.9571.0311.8

32.1^4 s

- 9 1 . :K73.8965.1)

5 1 8.48R6.X

7.629.52.780.11.228.81.55 1 f>4.179.5

669.7

32.120.81 1.4

6.994.8

6,256.0

4,409.03.640.4

640.92.999.5

768.6381.7387.0

527.7488.8

38.9

150.2

750.46K0.2

71.4

4 IK.6

8.110.9

5,493.7673.0

1,600.63,220.1

l,"'56.01,188.6

860.7240.2620.5327.9

67.461 1

-93.4965.4

1.058.8

5202934.4

8,(143.52,911.21.310.11.601.04.414 1

718.3

67.411.631.8

7,269.8

6,646.5

4,687.23.893.6

664.23 229 4

791.7400.7392.9

551.2515.8

35.5

158.2

817.9754.4

6 976.6

432.0

8,508.9

5,806.072.1.5

1.662.03.420.5

1,369.^1.308.8

919.4246.8692.6369.4

60.4517

-154. ]958.5

1.1 12.6

520.7967.1

8.448.53.041 41,189.11.652.14.641.0

766.1

60.425.834.6

7,549.9

,,.a.

4.980.14.151.2

689.53,463.7

827.1420.2406.9

575.5548.4

27.1

162.0

n.a.n.a.

n.a.

1997

0 4

8,254.5

5.593.2682.2

1.611.23.297.8

1.29">.O1.220.1

882.8246.4636.4337.4

71.966 9

-98.8988.6

1.087.4

520.1947.9

8,182.62.948.71.334.31.614.44,501.2

732.7

71.914.037.9

7.J64.6

6,767.9

4.798.03,993.6

671.41 1 " > ^ ~>

804.4407.4197.0

558.0526 6

M.4

158.8

820.8736.4

4.180.1

412.4

1998

01

8.384.2

5.676.5705.1

1.611.13.138.2

1.366.61.271.1

921.3245.0676.3349.8

95.590 5

-121.7971.1

1.097.1

511.6953.3

8,288.71.005.81.376.91.628.84.538.4

744.6

95.549.945.6

7.464.7

6.875.0

4.882.84.065 9

679.53.3864

816.8414.1402.8

564.2516.8

27.4

158.1

829.2719.1

25.184.9

440.5

02

8.440.6

5.771.7720.1

1.655.21.198.4

1.345.01.105.8

941 9245.4696.6365 8

19.211 i

-159.3949.6

1,108.9

520.7960.4

8.401.31.025.11,380.81.644.44.619.5

756.6

39.24.5

34.7

7,498.6

6.945.5

4.945.24.121.6

685.81.435.8

821.5417 9405 7

571.7544.0

27 7

161 0

820.6723.5

7.889.4

447.1

03

8,537.9

5.846.7718.9

1 670 01.457.7

[. 164.41.107.5

911.6246.2685.4175.8

57.049 1

-165.5936.2

1,101.7

1 497 1519.4972.9

8,480.91,029.01.171.01.655.94,678.5

773.5

57 019.517.5

7,566.5

7.032.3

5.011.64.181.1

692 71,488.4

830.5422.1408.4

576.1550.9

25.2

161.6

827.0720.5

1 1.794.8

454.0

04

8,672.8

5.927.1749.8

1.689.53.487.8

1.400.91.150.9

962.9250.6712.1.188.1

50.041 1

-167 .8 '975.1

1.142.9

531.0981.6

8.62^ 83.105.61.426.51.679.14.727.7

789.6

50.029.420.5

7.670.0

n.a.

5.081.84.244.1

700 11.543.9

817.7426.741 1.0

590.0561 7

28.3

165.0

n.an.a.n.a.

99 7

n..i.

I With inventory valuation and capital consumption adju:2. With capital consumption adjustment.

3. For after-tax profits, dividends, and the like.SOURCK. U.S. Department of Commerce, Survc

,ee table I 4S.of CitiTvm Bw



2.17 PERSONAL INCOME AND SAVING

Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates

PERSONAL INCOME AND SAVING

I Total personal income

2 Wage and salary disbursements3 Commodity-producing industries

9 Proprietors' income1

11 Farm1

14 Personal interest income

16 Old-age survivors, disability, and health insurance benefits

18 EQUALS: Personal income

19 LESS: Personal tax and nontax payments

MEMOPer capita (chained 1992 dollars)

23 Gross domestic product24 Personal consumption expenditures

26 Saving rate (percent)

GROSS SAVING

27 Gross saving

28 Gross private saving

Capital consumption allowances32 Corporate

35 Federal

38 State and local

41 Gross investment

43 Gross government investment

45 Statistical discrepancy

6,425.2

3,631.1909.0674.6823.3

1,257.9640.9

387.0527.7488.8

38.9150.2248.2719.4

1 068.0538.0

306.3

6,425.2

890.5

5 534 7

1376 2

158 5

26,335.817,893.118 989 0

2.9

1,274.5

1,114.5

158.5262.4-1.2

452.0232.3

160.0-39.6

70.6-110.3

199.777.1

122.6

1,242.3

1,131.9229.7

-119.2

-32.2

6,784.0

3,889.8975.0719.5879.8

1,370.8664.2

392.9551.2515.835.5

158.2260.3747.3

1 110 4565.9

326.2

6,784.0

989.0

5,795.1

5,674 1

121 0

27,136.218,340.9'19 349 0

2.1

1,4063

1.141.6

121.0296.7

6.9

477.3242.8

264.749.570.6

— 21.1215.2

81.1114.1

1,350.5

1,256.0235.4

-140.9

-55.8

7,123.6

4,149.21,026.9

751.5938.5

1,494.3689 5

406.9575.5548.427.1

162.0263.1764.9

1,149 5586.7

347.4

7,123.6

1,098.1

6,025.5

5,998.1

27 4

27,942.019,064.419,785.0

.5

n.a.

n.a.

27.4n.a.n.a.

500.7252 6

n.a.

69.7n.a.

85.0

n.a.

1,369.2237.4n.a.

n.a.

1997

04

6,904.9

3.989.91,003.7

741.3904.5

1.410.2671 4

397.0558.0526.6

31.4158.8261.3753.0

1,120.5572.2

333.6

6,904.9

1,025.5

5,879.4

5,781.2

98.2

27,398.218,530.519,478.0

1.7

1,428.0

1,131.6

98.2295.0

4.3

487.7247 0

296.472.370.2

2.2224.1

82.7141.4

1360.7

1,292.0236.5

-167.8

-67.3

1998

Ql

7,003.9

4,061.91,019.0

750.4918.9

1,444.5679 5

402.8564.2536.8

27.4158.3261.6757.0

1 139 0581.6

3409

7,003.9

1.066.8

5,937 1

5,864.0

73.0

27.718.818,771.119,632.0

1.2

1,482.5

1,130.1

73.0312.0

25.3

492.5248.6

352.4128.769.958.8

223.783.5

140.2

1,428.4

1,366.6237.4

-175.6

-54.1

Q2

7,081.9

4,117.61,023.2

750.8932.2

1,476.4685 8

405.7571.7544.0

27.7161.0262.1763.0

1 145 8585.0

345.1

7,081.9

1,092.9

5 988 9

5 963 3

25 6

27,783.019,007.819,719.0

.4

1,448.5

1,079.0

25.6300.9

7.8

497.8250.7

369.4143.969.574.4

225.684.3

141.3

1,362.7

1,345.0232.5

-214.8

-85.7

Q3

7,160.8

4,177.11,028.0

750.9945.8

1,510.6692 7

408.4576.1550.9

25.2163.6263.0769.2

1 152 9589.0

349.5

7,160.8

1,108.4

6,052 4

6 039 8

126

27,972.119,156.319 829 0

.2

1,474.5

1,078.7

12.6304.8

11.7

503.1254.2

395.7161.669.692.0

234.285.4

148.7

1372.5

1,364.4239.7

-231.6

-102.0

Q4

7,247.9

4,240.01,037.3

753.9957.1

1,545.5700.1

411.0590.0561.7

28.3165.0265.7770.2

1,160.2591.3

354.2

7,247.9

1,124.3

6,123.6

6 125 4

- 1 8

28,292.119,320.519,958.0

.0

n.a.

n.a.

-1.8n.a.

509.4257.2

n.a.69.7

n.a.

86.6

n.a.

1,400.9239.9n.a.

1. Wilh inventory valuation and capital consumption adjustments.2. With capital consumption adjustment.

SOURCE. U.S. Department of Commerce, Survey of Current Business.


A50 International Statistics • April 1999

3.10 U.S. INTERNATIONAL TRANSACTIONS Summary

Millions of dollars; quarterly data seasonally adjusted execpt as noted1

llem credits or debits

1 Balance on current account

6 Other service transactions, net

8 U.S. government grants9 U.S. government pensions and other transfers

10 Private remittances and other transfers

11 Change in U.S. government assets other than officialreserve assets, net (increase, - )

12 Change in U.S. official reserve assets (increase, - )13 Gold14 Special drawing rights (SDRs)15 Reserve position in International Monetary Fund16 Foreign currencies

17 Change in U.S. private assets abroad (increase. - )18 Bank-reported claims1

19 Nonbank-rcportcd claims

21 U.S. direct investments abroad, net

22 Change in foreign official assets in United States (increase, +)23 U.S. Treasury securities24 Other U.S. government obligations25 Other U.S. government liabilities4

26 Other US liabilities reported by U S banks27 Other foreign official assets^

28 Change in foreign private assets in United States (increase. +129 U.S. bank-reported liabilities30 U.S. nonbank-rcported liabilities31 Foreign private purchases of U.S. Treasury securities, net32 U.S. currency Hows

34 Foreign direct investments in United States, net

35 Allocation of special drawing rights36 Discrepancy

38 Before seasonal adjustment

MEMOChanges in official assets

39 U.S. official reserve assets (increase, - )40 Foreign official assets in United States, excluding line 25

(increase, +1

41 Change in Organization ot Petroleum Exporting Countries officialassets in United States (part of line 22)

-115,254-173,729

575 845-749,574

4,76969,06919,275

-11,170-3,433

-20,035

-589

-9.7420

-808- 2,466-6.468

-317,122-75,108-45,286

-100,074-96,654

109,76868,977

3,735-217

34,0083,265

355,68130,17659,63799.54812,30096.36757,653

(I-22,742

-22.742

-9.742

109,985

4,239

-134,915-191,337

611,983-803,320

4,68478,07914,236

-15,023-4,442

-21.112

-708

6.6680

170-1.280

7.578

-374,761-91,555-86.333

-115,801-81.072

127,344115,671

5,008-3625,7041,323

436,01316,47839,404

154.99617.362

130,15177,622

0-59,641

-59,641

6.668

127,706

14,911

-155.215-197,954

679,325-877,279

6,78180.967-5.318

-12,090-4,193

-23.408

174

-1.0100

- 350-3,575

2,915

-477,666-147,439-120,403

-87,981-121.843

15.817-7.270

4.334-2.52121.928-654

717,624148.059107,779146,71024,782

196,84593,449

0-99.724

-99,724

-1,010

18,338

10,822

1997

03

- 38,094-49,296172,302

-221,5981,945

20,246-1,544-2,362-1,056-6,027

436

-7300

-139-463-128

-123.023-29,577-24.791-41,167-27,488

21,2586,6862,667

-1,16712.439

633

160,18012.60626,27535,4326.576

60.32718.964

0-20,027-10,018-10,009

-730

22,425

3.0.11

04

-45,043-49,839174,284

-224.1231.10.1

20,277-4,247-5,213•1,069

-6,055

29

-4,5240

-150-4.221

-153

-118,946-27,539-47,907

-8,030-35,470

-26,979-24,578

86-244

-3.2501,007

247,47089,64347,39035.3019.900

36.78328.453

0-52.007

3,528-55.535

-4.524

-26.735

-1,282

1998

01

-46,735-55,698171,469

-227,1671,527

19,164- 2,248- 2.266-1.126-6.088

-388

-4440

-182-85

-177

-44,8163,074

-6,596- 6 973

-34,321

11,32411,3362.610

-1,059-607-956

84,205-50,497

32,707-1,701

74677,01925.931

0-1.146

6,217-9.363

-444

12.383

-968

Q2

-56,690-64,443164,821

-229,2641,043

19,529-1,377-2,063-1,126-6,253

-4.13

- 1.9450

72-1.031

-986

-107,409-24,615-14,327-27,878-40,589

-10.274-20,318

254-4229,380

832

175,13337,67018,04026,9162,149

71.01719.141

01.6181,474

144

-1,945

-9.852

-494

Q i

-hi,299-64,360163,560

-227.9201,101

17,504-5,460-2,582-1,132-6,370

194

-2,0260

188-2.078

-136

-46.22(1- 28,335

16.970-21.243

-46.170-32.811

1.906-414

-12.607-2.444

159,23282,680

-2577,277

22.93827,065

0-3,511

-10,7607.249

-2,026

-45,956

-12.013

1. Seasonal factors are not calculated for line* 12-16, 18-20, 22-34, and 38^102. Data are on an international accounts basis. The data differ from (he Census basis data,

shown in table 3.11, for reasons of coverage and timing. Military exports arc excluded frommerchandise trade data and are included in line 5.

3. Reporting banks include all types of depository institutions as well as some brokers anddealers.

4. As iated priior through foreign ofri<

5. Consists of inve:corporations and state

SOURCE. U.S. Depai

Business.

ly with military sales contracts and other transaction1; arranged wiihial agencies..tments in U.S. corporate stocks and in debt securities of privatend local governments.tnent of Commerce, Bureau of Economic Analysis, Survey of Current


Summary Statistics A51

3.11 U.S. FOREIGN TRADE'

Millions of dollars: monthly dala seasonally adjusted

Hem

I Goods and services, balance2 Merchandisei Services

4 Goods and services, exports5 Merchandise

7 Goods and services, imports8 Merchandise9 Services

1996'

-108,574-191,337

82,76.3

850,775611,983238,792

-959,349-803,320-156,029

1997'

-110,207-197,955

87,748

"37.59?679.325258.268

-1,047 799-877,279-170,520

1998

-168,587-247,985

79,398

931.315671,055260.260

- 1 099.902-919,(140-18(1.862

1998

June'

-14,325-20,642

6.317

76,13254.67421,458

-90,457-75,316-15,141

July'

-15.028-21.140

6,112

74,90253,73321,169

-89,930-74,873-15,057

Aug.'

-16,785-22,846

6.061

74,89553,76921,126

-91,680-76,615-15,065

Sept.'

-14,481-20,913

6,432

77.37455.91221.462

-91,855-76,825-15,030

Oct.1

-13,700-20,279

6.579

80,12658,24621.880

-9 i .82b-78.525-15.301

Nov,

-15,257-21,668

6,411

78,95857,11021.848

-94,215-78.778-15,437

Dec.11

-13,786-20,328

6,542

78,49656.55221,944

-92,282-76,880-15,402

I. Dala show monthly values consistent with quarterly figures in ihe U.S. balance ofpayments accounts.

SOURCE. FT900, U.S. Department of Commerce. Bureau of the Census and Bureau olEconomic Analysis.

3.12 U.S. RESERVE ASSETS


Asset

1 Total

2 Gold stock, including ExchangeStabilization Fund1

3 Special drawing rights2'"'4 Reserve position in International Monetary

Fund"5 Foreign currencies

1995

85,832

11,05011.037

14,64949,096

1996

75,090

11,04910.312

15.43538.294

1997

69,954

11.05010.027

18.07130.809

1998

June

71,161

11,04710.001

18.94531.168

July

72,264

1 1,0469,586

20.78030,852

Aug.

73,544

11,0469,891

21,16131,446

Sept.

75.66

11,04410,106

21,64432,882

Oct.

79,183

11,04110,379

22,27835,485

Nov.

77,683

11,04110.393

22.04934.200

Dec.

81,755

1 1,04110,603

24,1 1136,001

1999

Jan.1*

80.675

1 1 ,(«610,465

24,12935,035

1. Gold held "under earmark" at Federal Reserve Banks for foreign and internationalaccounts is not included in the gold stock of the United States: see labile 3.13, line 3. Goldstock is valued at $42.22 per fine troy ounce.

2. Special drawing rights (SDRs) are valued according to a technique adopted by theInternational Monetary Fund (IMF) in July 1974. Values are based on a weighted average ofexchange rates for Ihe currencies of member countries. Froin July 1974 through December1980. sixteen currencies were used: since January 1981, five currencies have been used. U.S.

SDR holdings and reserve positions in the IMF also have been valued on this basis since July1974.

3. Includes allocations of SDRs by the International Monetary Fund on Jan. I of the yearindicated, as follows: 1970—$867 million; 1971— $717 million; 1972—$710 million; 1979—$1,139 million; 1980—$1,152 million; 1981—$1,093 million: plus net transactions in SDRs.

4. Valued at current market exchange rates.

3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS1


Asset

1 Deposits

ih'ld in tusloily2 US, Treasury securities"< tiamtarked gold1

1995

386

522.17011.702

1996

167

638.04911.197

1997

457

620,88510.763

1998

June

200

616,56910.617

July

161

613,89310,586

Aug.

161

588,33710,510

Sept.

347

578.40110,457

Oct.

154

588,76810,403

Nov.

211

608,06010.355

Dec.

167

607,57410.343

1999

Jan.'

233

612,67010.343

1. Eidudes deposits and U.S. Treasury securities held lor international and regionalorganizations.

2. Marketable U.S. Treasury bills, notes, and bonds and nonmarkelable U.S. Treasurysecurities, in each case measured at face (not market) value.

3. Held in foreign and international accounts and valued at $42.22 per tine troy ounce; notincluded in the gold stock of the United Slates.



3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS


Item

1 Total1

By type2 Liabilities reported by banks in the United States"3 U.S. Treasury bills and certificates3

U.S. Treasury bonds and notes4 Marketable

6 U.S. securities other than U.S. Treasury securities5

By area

8 Canada9 Latin America and Caribbean

10 Asia11 Africa12 Other countries

1996

758,624

113,098198,921

379,4975,968

61,140

257,91521,29580,623

385,4847,3795,926

1997

778,596

135,384148,301

423,4565,994

65,461

263.22118,74997.616

382.36310,1186,527

1998

June

781,205

144,235134,324

428,2166,229

68,201

264,71819,396

100,924378 113

11,5556.497

July

775,372

142,375131,089

428,6856,269

66,954

270,35519,963

100,901367,687

11,9044,560

Aug.

760,864

144,120130,398

411,7656,311

68,270

266,60016,38798,480

363,90211,5013,992

Sept.

735,121

131,551128,146

401,4616,350

67,613

258.23416,17079,838

365,63111,7213,525

Oct.

747,243'

134,822'128,598

410,4625,997

67,364

270.630'17,21678,143'

367.784'11,1132,355

Nov.

753,706'

125,265'133,702

422,3056,035

66,399

271,960'19,45777,433'

371,578'10,2213,055

Dec.p

759,061

122,947134,152

427,5796,067

68,316

266,55819,28780,004

380,45910,1962,555

1. Includes the Bank for International Settlements.2. Principally demand deposits, time deposits, bankers acceptances, commercial paper,

negotiable time certificates of deposit, and borrowings under repurchase agreements.3. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official

institutions of foreign countries.4. Excludes notes issued to foreign official nonreserve agencies. Includes current value of

zero-coupon Treasury bond issues to foreign governments as follows: Mexico, beginningMarch 1988, 20-year maturity issue and beginning March 1990, 30-year maturity issue;

Venezuela, beginning December 1990, 30-year maturity issue; Argentina, beginning April1993, 30-year maturity issue.

5. Debt securities of US. government corporations and federally sponsored agencies, andU.S. corporate stocks and bonds.

SOURCE. Based on U.S. Department of the Treasury data and on data reported to thedepartment by banks {including Federal Reserve Banks) and securities dealers in the UnitedStates, and on the 1989 benchmark survey of foreign portfolio investment in the UnitedStates.

3.16 LIABILITIES TO, AND CLAIMS ON, FOREIGNERSPayable in Foreign Currencies


Reported by Banks in the United States1

Item

1 Banks' liabilities

4 Other claims

1994

89,25860,71119,66141,05010,878

1995

109,71374,01622,69651,3206,145

1996

103,38366,01822,46743,55110.978

1997

Dec.

117,52483,03828,66154,3778,191

1998

Mar.

100,63882,20928,12754,082

7,926

June

87,88968,28627,38740,899

7,354

Sept.

93,81567,81327,29340,520

8,453

I. Data on claims exclude foreign currencies held by U.S. monetary authorities. 2, Assets owned by customers of the reporting bank located in the United States thatrepresent claims on foreigners held by reporting banks for the accounts of the domesticcustomers.


Bank-Reported Data A53

3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States'Payable in U.S. dollars

Millions oi dollars, end of period

lleni

BY HOI.DI.R \ND TYPh Of LIABILITY

1 Total, all foreigners

2 Banks' own liabilities3 Demand deposits4 Time deposits2

5 Ochei"'6 Own foreign olliees'

7 Banks' custodial liabilities'X U.S. Treasury bills anil ccrlilicnlcsb

9 Other negotiabkyind readily Iransterableinstruments

10 Other

1 1 Nonmonelary inlenialional ;ind regional organizations^12 Banks' own liabilities "13 Demand deposits14 Time deposits'15 Other

17 U..S. Treasury bills and cerlilicatcs"IS Other negotiable;and readily transferable

instruments'1" Other

20 Olheial institutions''21 Banks' own liabilities22 Demand deposits23 Time deposits"24 Other1

2? Banks' custodial liabilities'26 U.S. Treasury bills and certificates"27 Other negotiable and readily transferable

instruments2S Other

•") Banks1"W Banks' own liabilities31 Unanibalcd foreign banks32 Demand depositsV Time deposits'34 Other'35 Own foreign olliees4

36 Banks' custodial liabilities'37 U.S. Treasury bills and certilicates"38 Other negotiable and readily transferable

instruments'39 Other

40 Other foreigners41 Banks' own liabilities42 Demand deposits4^ Time deposits"44 Other

45 Banks' custodial liabilities'46 U.S. Treasury bills and eerlilieales''47 Olhei negotiable and readily transferable

instruments'4« Other

Mr.MO49 Negotiable time certificates ol deposil in custody loi

foreigners

1996

1,162.148

758.99827,034

1X6.910143,510401.544

403.150236.874

72.01194.265

13.97213.355

295,7847.542

617352

2650

312,01979,406

15.13644.559

232.613198.921

31.266426

694,835562.898161,354

1 1,69289,76557.897

401,544

131,93723.106

17.(1279I.S04

141.322103.339

1 1,80258 02533.512

37,98314.495

21.4532.035

14.571

1997

1,283,787

883.74032,104

198,546168,1)1 1485,079

400,047193,239

93,641113.167

11.6901 1,486

165,4666.004

i()4

69

133i

783 685102,028

2,31441.39658.31X

181.657148.301

1.1.151205

8 16.007642.207157.128

17,52783.43356,168

485,079

173,8003 1.915

35.393106,492

172.405128,01912,24768 ^5147,521

44,3861 2,954

24.9646,468

16,083

1998

1.344,175

884,50429,275

151.444140.02256.1.76.1

459.67118X393

139,615136,663

11,81010.827

725.8784,877

983636

3470

^57 09978.7042,786

28,67747,241

178,395134.152

43.569674

884,810677,224113,461

14,10546,27353,083

563,763

207,58635,466

44,574127.546

190.456117,74912,31270,61634.821

72.7071.1.139

51,1258.443

26,969

1998

June

1.288,032

884,73436,246

186.686183,402478,400

403,298169.225

112,598121,475

14.10,313,441

2266.7846.431

662338

322•>

178 559102.392

2.58236,04463,766

176.167134,324

41.180663

809,091632,872154,47220,77275,23158.469

478.4IK)

176,21925,337

38.1221 12.760

186.279136.029-12.66668.62754,736

50.2509,226

32,974S.050

21.229

July

1,306,155

896,97230,928

188,056192.536485.452

409,183164.274

117,433127.476

14,31412.188

196.3545.815

2 126349

1.7770

173 464102.275

3.56036.33362,382

171,189131,089

39.792308

824.652643,722158,27015.09778.25264,921

485,452

180,93022,929

19.203118.798

193,725138,78712.2.5267,11759,418

54.9389,907

36,6618,370

22.847

Aug.

1,341,295

928,18233,038

183,556190,542521.046

413,113162,235

123,378127,500

15,18813,684

596.2527.373

I 504490

1,0122

^74 518101,608

3,45635.57862.574

172,910130.398

41.759753

852,890673.127152,081

16,06374,20161,817

521,046

179,76320.696

40,180118.887

198.699139,76313,46067,52558,778

58,93610,651

40,4277,858

25,867

Sept.

1,350,292

917,00833,547

174,173165,205544.083

433,284160,598

142,169130,517

15,215I3.S62

4085,7637,691

1 353435

818100

259 69785,3103,607

28,07653,627

174,387128.146

45,684557

876.463687.824143.74115.79971.25956,Mil

544.083

188,63121.563

44.S07122.269

198,917130,01213,73369,07547,204

68,90510.454

50 8607,591

27.391

Oct.'

1,371,998

911.25832,071

158.664153,269567.254

460,740168,764

151,2.19140.737

12.8101 1.644

975,4186,129

1 166.509

6570

263.42084,826

3,32526,14855,353

178,594128.598

49.691305

898.909690.862123,608

15,80256.19351.613

567.254

208.04727.556

48,240132.251

196,859123,926

12,84770,90540,174

72,93312.101

52.6518,181

29,933

Nov.

1,346,154

S80.6I632.104

149.746143.341555.425

465.538IK2.9I7

142.399140.222

13.20712.267

2345,8026,231

940570

3700

258.96779.4502,744

25.65951.047

179,517133.702

45.346469

885.634673.486118,06115,11951,35251,590

555 475

212,14835,213

44.999131,936

188.346115,41314,00766,93334.473

72,93313.432

51.6847,817

28.793

Dee.1'

1,344,175

884,50429 275

151.444140.02256.1.763

459 671183,393

139.615136.663

1 1,81010,827

725,8784,877

983636

3470

257.09978.7042,786

28,67747,241

17X.W5134.152

4.1.569674

884,810677,224113,46114,10546,27353.083

563,763

207,58635,466

44,574127,546

190.456117,749

12,31270,61634,821

72.70713.139

51.1258.443

26.969

1, Reporting banks include all lypes of depositor} institutions as well as some brokers anddealers. Excludes bonds and notes of maturities longer than one year.

2. Excludes negotiable time certificates of deposit, which are included m "Other negotia-ble and readily transferable insirumenis."

.V Includes borrowing under repurchase agreements.•4. For I'.S. banks, includes amounts owed to ovwi foreign branches and foreign subsidiar-

ies consolidated in quarterly Consolidated Reports of Condition tiled with bank regulatoryagencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consistsprincipally o( amounts owed to the head otlice or parent foreign bank, and to foreignbranches, agencies, or wholly owned subsidiaries of the head ollice or parent foreign bank.

\ Financial claims on residents of the United Stales, other than loni;-term securities, heldby or through reporting banks for foreign customers.

6. Includes nonmarketublc certificates of indebtedness and Treasury hills issued to ollicialinstitutions of foreign countries.

7. Principally bankers acceptances, commercial paper, and negotiable time certilieates o|'deposil.

8. Principally Ihc International Bank For Reconstruction and Development, the Inter-American Development Bank, and the Asian Development Bank, Excludes "holdings ofdollars" of the lnlernational Monetary Fund.

9. Foreign mural banks, foreign central governments, and the Bank for InternationalSettlements.

10. Excludes centra! banks, which are included in "'Oflkial institutions.1'



3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States'—Continued

Item

AREA


51 Foreign countries

52 Europe53 Austria54 Belgium and Luxembourg55 Denmark56 Finland57 France58 Germany59 Greece60 Italy61 Netherlands62 Norway63 Portugal64 Russia65 Spain66 Sweden67 Switzerland68 Turkey69 United Kingdom70 Yugoslavia"71 Other Europe and other former U.S.S.R.12

72 Canada

73 Latin America and Caribbean74 Argentina75 Bahamas76 Bermuda77 Brazil78 British West Indies79 ChileSO Colombia81 Cuba82 Ecuador83 Guatemala84 Jamaica85 Mexico86 Netherlands Antilles87 Panama88 Peru89 Uruguay90 Venezuela91 Other

92 Asia

China93 Mainland94 Taiwan95 Hong Konc96 India97 Indonesia98 Israel99 Japan

100 Korea (South)101 Philippines102 Thailand103 Middle Eastern oil-exporting countries'3

104 Other

105 Africa106 Et-vpt107 Morocco108 South Africa109 Zaire110 Oil-exporting countries14

11 1 Other

112 Other113 Australia114 Other

115 Nonmonetary international and regional organizations116 International15

117 Latin American regional'*1

118 Other regional17

1996

1,162,148

1,148,176

376,5905,128

24,0842,5651,958

35,07824,660

1,83510.94611,110

1,2883,5627 621

17.7071.623

44.5386.738

153.420206

22.521

38,92(1

467 52913,87788,8955,527

27,701251.465

2.9153.256

211,7671.282

62831,2406.0994,099

8341,890

17,3638.670

249,083

30,43815,99518,7893,9302,2986,051

117,3165,9493,378

10,91216,28517,742

8,1162012

112458

102,6262,898

7,9386,4791,459

13,97212,099

1,339534

1997

1,283,787

1,272,097

420,4322,717

41,0071,5142,246

46,60723,737

1,55211,3787,385

3172.2627.968

18.9891.628

39,0234.054

181,904239

25,905

28.341

536 39320.199

112.2176,911

31,037276,418

4,0723,652

662,0781,494

45033,972

5,0854,241

8932.582

21.6019.625

269.379

18.25211.84017.7224,5673,5546,281

143,40113,0603,2506,501

14,95925,992

10.3471 663

M82,158

103,0603,318

7,2056.304

901

11,69010,517

424749

1998

1,344,175

1,332,365

426.9803.181

42.8191.4301,862

44,63021 357

2.0667,104

10.760710

3,2352,442

15,7753,027

50,6544.286

181.540258

29.844

30,212

554,52619,012

118,0506,841

15,790302,011

5,0084,615

621,5721,331

53937,143

5.0193,860

8402,445

19,88710,501

305,633

13,04012,70820,8205,2588,2887,749

168,16212,4543,3247,360

15,12331,347

8,9071 339

971,517

53.0882.861

6.1074.9691.138

11.8109 998

7941,018

1998

June

1,288,032

1,273,921

402,1012,268

35,4541.9891,438

46,16225,470

2,42911,5096,845

6072,3344,654

11,6493,148

38,9864,894

176.703234

25,330

28.864

568.22818.502

116.4357.769

35,345295,321

4,3564,805

631,6161,363

52238,044

6,8613.723

9251.982

20,44210,154

254,412

21,55811,61919,7204,8213,8486,095

118,66913,2693,4187,148

13,82930,418

10,7351,523

842.642

53,5522.929

9,5878,5101.077

14,10312.548

694861

July

1,306,155

1,291,841

431.7832,602

33,8452,0131.211

47,14023,730

2.78411,1147.0971,1792,8236,398

12,0792,198

44,6765,077

196,859322

28.636

29.526

564,05521,010

115,3097,216

34,292290,009

4,9874.023

631,7721,273

51938,5548,9223.596

9842,097

19,4929,937

247.952

18,91911,33315,8264.6783,9385.969

123.16712.7132.6096.780

13.90228.118

10,7881,319

742,446

73,8933.049

7,7376,4901,247

14,31411.220

7502,344

Aug.

1,341,295

1,326,107

457,5372,671

35,0862.1281,350

48.32828,751

2,94110,6259.2391,4692.4242.718

14,2831,769

39.3624.317

219 197242

30.637

27.844

556.69921,655

113,5437.332

27.824291.098

4,7264,102

621,6081,237

55038,087

8,3403.675

9002,091

20,1259,744

266.480

18,50611,29018,3496.4375.6515,296

131,37612,4912,7777,869

14,53231,904

10,5621,459

762,428

353,6842.880

6,9855,9311,054

15,18812,825

7211,642

Sept.

1,350,292

1,335,077

450,5873,137

33,9341,5781,181

50,40525,811

2,5449 1838,066

6882,292i.085

20,4853,285

48,3934,264

204,915253

27.088

28,701

561,50218,384

124,2497,920

18,453298,697

5,7254.475

621,5401.241

54135.6818.5883.826

8432,276

19,1809,821

275.745

18,52312,08016,6275,1445,4705,984

142,76712.9712.7126.664

16.62730,176

11,0981.616

882,658

63.7273,003

7,4446,4271,017

15,21512.782

8031,630

Oct.

l,371,998r

l,359,188r

451.350'2,799

39.91 11.8131,193

47,34822,024'

2,9017,1247,251'1,1492.3771,735

26.5693.257

47,3324,105

202,536'362

27.564

31,278

575,837'17,706

128.8937.247

17.308310,058'

5,5984.888

571,6791.232

57818 0586,255'3,793

7992,223

19,6r>29,803

284,441'

15,814'12,802'16,5085,3375,6714,781

156,340'12.505'2,5397,134

14.71830.292

9,7491.288

782.358

73.2912.727

6.5 3?5.3721,161

12,810'10,519'1,0081,283

Nov.

1.346,154'

1,332,947'

449,567'2,824'

42,0141,6751,706

48,169'22,606'

2.4446,3789,298

7972,4002,698

27,017'3,857

50,1673,842

195.099'271

26.31)5

29,249'

545,251'18,892

1 15,5987,241

13,370'298.260'

4,778'4 124"

631.510'1.204'

52436.720'6,009'3.774'

8142,199

19,631'10,540

293,584'

13,784'12,361'16,7395,0896,2478,106

164,31112,396'2,8496,788

16,37028.544

8.8891,498

751.659

123,0172.628

6,4075,1801,227

13.207'11,298'

598i.311

Dec.!1

1.344,175

1,332,365

426,9803,181

42.8191,4301,862

44,63021,357

2,0667,104

10,760710

3,2352,442

15,7753,027

50,6544,286

181,540258

29,844

30.212

554.52619.012

118,0506,841

15,790302,011

5,0084,615

621,5721,331

53937,14?5,0193,860

8402.445

19,88710,501

305.633

13.04012.70S20.8205.2588.2887.749

168.16212.4543.3247,360

15.12331,347

8,9071,339

971,517

3.0882,861

6,1074,9691,138

11,8109.998

7941.018

11. Since December 1992, has excluded Bosnia, Croatia, and Slovenia.12. Includes the Bank for International Settlements. Since December 1992. has

included all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia,13. Comprises Bahrain. Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab

Emirates (Trucial States).14. Comprises Algeria. Gabon, Libya, and Nigeria.

15. Principally the International Bank for Reconstruction and Development. Excludes"holdings of dollars" of the International Monciary Fund.

16. Principally the Inter-American Development Bank.17. Asian, African. Middle Eastern, and European regional organizations, except the Bank

for International Settlements, which is included in "Other Europe."



3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States'Payable in U.S. Dollars


Area or country


2 Foreign countries

3 Europe . .4 Austria5 Belgium and Luxembourg6 Denmark7 Finland8 France9 German}

10 Greece '1 1 Italv12 Netherlands13 Norway14 Portugal15 Russia16 Spain17 Sweden18 Switzerland19 Turkev20 United Kingdom21 Yugoslavia2

22 Other Kuiope and other former U.S.S.R.'

23 Canada

24 Latin America and Caribbean25 Argentina26 Bahamas27 Bermuda28 Brazil29 British West Indies30 Chile11 Colombia . . . . . . .32 Cuba.13 Ecuador14 Guatemala15 J-imaica36 Mexico37 Netherlands Antilles38 Panama19 Peru40 Uruguay41 Venezuela42 Other

43 AsiaChina

44 Mainland45 Taiwan46 Honiz Kong47 India48 Indonesia49 Israel50 Japan51 Korea (South)52 Philippines5? Thailand54 Middle Eastern oil-exporting countries4

55 Other

S6 Africa57 Egypt58 Morocco59 South Africa60 Zaire61 Oil-exporling countries^62 Other

63 Other64 ^uwal ia65 Othei

66 Nonmonelary international and regional organizations'* . . .

1996

599,925

597,321

165,76"1.6626.727

492971

15,2468,472

5686,4577.117

BOS418

1.6693.21 !1J.VJ

19,7981,109

85.234115

3,956

26,436

274,1537.400

71.8714,129

17,259105,510

5.1366.247

01,031

620345

IS.4252\209

2,7362,720

5S91.7023.174

122,478

1,4011,894

12,8021,9461.762

63359.96718.901

1,6972.679

10.4248.172

"• 776247524584

0420

1.001

5.7094,5771,1.12

2.604

1997

708,225

705,762

199.8801,3546.641

9801,233

16,23912,676

4026,2306.141

555777

1.2482,9421.854

28,8461,558

103,14352

7,009

27.189

.143,7308,924

89.3798,782

21,696145,471

7,9136.945

01.311

8S6424

19,42817.8384,3643,491

6292,1294,120

125,092

1.579922

13,9912.2002,651

76859,54918,162

1,6892,259

10.79010,532

3 530247511805

01.212

755

6,3415.1001.041

2,463

1998

737,207

733,589

234.4771.0437,1872.5841.070

15,25115,922

5757.2835.713

827694775

5,7364,223

46,9421,981

106.71353

9.885

47.212

343,4969,518

97,9064.90S

16.222153.138

8,3126,493

01,3991,126

33321,1266,7793,6143.2601,1263.1035.133

9K.656

l . l l l1,0429,0691,4681,9511,166

46,7128.0031,4711,835

16,2698,359

1 P2257372643

0936914

6.6266.167

459

3,618

1998

June

727,960

725.045

22.1.2771,2597,7821.1981.146

15,47415,751

1646.4355.763

680888

1,0575,5603,069

34.9702,414

109,75553

9,659

32.701

165.8148,518

77,5959.452

24,552176,825

8,4977,102

01.410

932320

20,37114,2944,2333,965

9592,4954.274

94.825

1,989836

12,8701,9722.098

95443.00511,027

1,5411.8898.4488.196

2 484283430653

0308810

5.9445.418

506

2.915

July

740,227

735.817

229,9281,8928.459

9331,032

14,42111,327

4506,3455,642

5531.1561.3456.4244.553

49,3592,010

104,39779

9,551

36,007

159,2778,421

78.77010.62224,187

166,2038,4346,914

01.649

911.135

20.06216,2784,3084 0091,1542,4364,584

100,187

1,679585

11 0451,8222.0101,116

45.56612.863

1.2441,820

11,2079,210

1.497294471630

01,331

771

6,9216,067

854

4.410

Aug.

764.878

760,488

227.6881,8566,7791,3741,161

17,31412,029

5308.6174.3211,110

7251.2095.2254,456

49,2581,990

99 17453

10.507

41.402

379.3838,724

77,8759,629

23,530192,334

8,3076.905

01.518

950318

20,07812,9394,1574,0611,0552,6494.354

102.382

2,70365!

13,8211,8782,031

89844,82211,508

1,2591.883

12.1368,792

1 262279426653

01.046

858

6.3715.999

372

4,390

Sept.

768,427

763.105

234,9671,8498,2001.0591.073

17,07715,375

3736,5104,803

640975920

7,9804,319

55,7981,900

97,43653

8,627

41,165

373.2378.777

86.86710.61019.071

182,7578,3456,813

01,4581.166

10520,67710,2944,2263.829

9552,6384,447

104.61 A

1,3801,011

10.5481.82.12,108

94152,213

9,8231.2802,129

12,6818.657

3012272390694

0787869

6,1 105.783

327

5,322

Oct.

749.543'

744.153r

224,6612,358r

9,245r

1.7681,149

16.30715.121

4157.1535.230

662885883

6.0514,508

43,3371,848

98.74653

8.942

37.316

168 1949,087

88,9236,585

17,644183.122

8.5496 764

01.444

947330

22,0397,3234.0113,706

9582.6894.273

104,781'

2.2751.0798,2441.5822,044'1,504

52.9049.7331.I2S1.952

13.5318,805

2,785322405665

0533860

6.2165.809

407

5.390

Nov.

756,099'

751,861'

228.922'2,3117,4092,5241,050'

18,881'17.997

5106,544'5,686

385679760

5,2345.087

45.8581.915

97,07253

8,967

44,830'

368,212'9,2.25

91,1715,702

17,801'179,223'

8,824'6,639

01,351'1.483

^9922.483

7.696.1.864'3,618'1.0402,7885.005

100.759'

2,488'957

8,2381,5332,069'

916'48,406

8,947'1.6191.884

15,0798.62.1

2 61 1259390704

0454804

6,5276.008

519

4.238

Dec.P

737,207

733,589

234.4771.0437,1872,5841,070

15,25115,922

5757.2835,733

827694775

5,7364.223

46,9421,981

106,71353

9,885

47,212

34.1.4969.518

97.9064,908

16,222153,138

8,3126,493

01,1991.126

33321,126

6,7793.6143,2601,1263,1035,133

98,656

1,3111,0429,0691,4681,9511.166

46.7128,0031.4711,815

16,2698,359

1,122257372643

0916914

6,6266.167

459

3,618

1. Reporting hank.s include all types of depository institutions as well as some brokers anddealers.

2. Since December IS)92, has excluded Bosnia, Croatia, and Slovenia.3. Includes ihc Bank for International Settlements. Since December 1<J92. has included all

parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia

4. Comprises Bahrain, Iran, Iraq, Kuwait. Oman, Qatar, Saudi Arabia, and United ArabEmirates (Trucial States).

5. Comprises Algeria, Gabon, Libya, and Nigeria.6. Excludes the Bank for International Settlements, which is included in "Other Europe."



3.19 BANKS1 OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the United States'Payable in U.S. Dollars


Type ol claim

1 Total

2 Banks' L'laims1 Foreign public borrowers4 Own foreign oliices2

5 Unafliliated foreign banks6 Deposits7 Oilier8 All other foreigners

9 Claims of banks' domestic customers' . . . .10 Deposits11 Negotiable and readily transferable

instruments4

12 Outstanding collections and otherclaims

MhMO13 Customer liability on acceptances

14 Dollar deposits in banks abroad, reported bynonhanking business enterprises in theUniled States5

1996

743,919

599,92522.216

341.574113.68233.S2679.856

122.453

143.99477.657

51,207

15.130

10,388

39,661

1997

852.852

708,22520.581

431,685109,23010.9957S.235

146.729

144.62771.110

53,967

17.550

9.624

33.816'

199S

717.20723.543

486.840105.56028,45477.112

121.258

39.978

199K

June

880,836

727,96027,780

435,201107.83222.84384,989

157.147

152.87686.008

52.171

14.697

6.599

24.402'

July

740,22735,635

446,536101,95623,28378.673

156.100

11.927'

Aug.

764.87829.758

466,019106.03424.59381.441

163.067

28.4.16'

Sept.

926,478

768.42726.377

486.452108.97230.42678.546

146.626

158,05189.602

5.1.512

14.917

6.068

2X082'

Oct.1

749,54328.164

476.973109.14026.71382.427

135.266

U.265

N m .

756.09925.993

487.610117.919

14.1498.1.770

1 24.557

12.888

Dec1'

737.2072.1.54.1

486.K40105.56628.45477.1 12

121.258

39.978

1, For banks' claims, data arc monthly; tor claim1- of banks' domestic customers, data arefor quarter ending with month indicated.

Reporting hanks include all types of depository institution as well as some brokers anddealers.

2. For II.S banks, includes amounts due from own foreign branches and foreign subsidiar-ies consolidated in quarterly Consolidated Reports nf Condition hied with bank regulatoryagencies. Foi agencies, hnmehev and majority-owned subsidiaries of foreign banks, consist's

principally of amounts due from the head oil ice or parent loreign bank, and Irom Inreignbranches, agencies, or \vholl\ owned subsidiaries-, of the head oihee or parent loreign bank.

3. Assets held by reporlim: banks in (he accounts of their domestic customers.4. Principally negotiable lime ueiiilicates ol deposit, bankers acceptances, and commercial

paper.5. Includes demand and lime deposit1* and ncgoiiahlc and iiouneiiotiahle certitiuiles ol

deposit denominated in U.S. dnllars Usual b> h.niks abroud.

3.20 BANKS" OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported hy Banks in the United States'Payable in U.S. Dollars


Malurity, bv borrower and area

1 Total '....

liy hnrnwi-r2 Maturity ol one year or less3 Foreign public borrower*. . . . .4 All other foreigners

6 Foreign public borrowers7 Al l other foreigners

fly areaMatiuity of one year or less

8 Europe . . . . . . . .9 Canada

10 Lat in Amer ica and Caribbean1 1 Asia!2 Af r ica13 Al l oilier1

Maturity of more than one year14 Europe15 Canada16 Latin America and Caribbean17 Asia18 Africa19 A l l other'

|s>94

202.282

170.41 ]15,415

IM.97f>31 87 1

7.S3824.033

56.3816,690

59.58.340,567

1.3795.811

4.1583.505

15,7175.3231.5811,385

1995

224,932

I7S.X5714 995

163.86246,075

7,52238,553

55,6226,751

72.50440.296

1,2952.389

4,9952.751

27,6817.9411.4211,286

1996

258.106

21 I.S591 54 1 I

196.44846 ^47

6.79039.457

55.6908.139

103.25438.078

1,3165.182

6.9652.645

24.9439.3921.361

941

1997

Dec

276,550

205,78112.081

193.70070 769

8.49962.270

58.294>).l> 1 7

97.207Vf 964

2.2114.188

13.2402.525

42.04910.215

1.2361.484

1998

M.n

285.570

214.77916,965

197. KI470 791i 1.26559.526

6*1.1509.297

IOI.07O28.75 1

2.2274.284

15.1 182.765

.10.16110.786

1.2541.505

June

292.747

211.34716/197

194.150SI 40010.64770.713

73.7878.766

99.61 121.570

I.I 164.497

I.Vf2,

4 7 .

1 2.|1..

0 6

7169

89

590 6

Sepl

281.085

208.39214.61 1

191.779

1 o!s7561,818

69,0108 951

99.65022.110

1.7626.687

15.1812.982

19.1.1412.122

1.1701.904

I. Reporting hanks include all types of depository institutions as welldealers

Mime brokers and 2. Maturity is. time remaining until maturity.v Includes nonmone!ai\ mlernaiional and regional orgai



3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. and Foreign Offices of U.S. Banks1


Area or country

Sept. Sept.

Total..

2 G-10 countries and Switzerland3 Belgium and Luxembourg4 France5 Germany6 Italy7 Netherlands8 Sweden9 Switzerland

10 United Kingdom11 Canada12 Japan

13 Other industrialized countriesAustriaDenmarkFinlandGreeceNorwayP l

141516171819 Portugal .20 Spain21 Turkey22 Other Western Europe23 South Africa24 Australia

25 OPEC2

26 Ecuador27 Venezuela28 Indonesia29 Middle East countries30 African countries

31 Non-OPEC developing countries

394041424344454647

48495051

Latin AmericaArgentinaBrazilChileColombiaMexicoPeruOther

AsiaChina

MainlandTaiwan

IndiaIsraelKorea (South) . . .MalaysiaPhilippinesThailandOther Asia

AfricaEgyptMorocco... .ZaireOther Africa1

52 Eastern Europe.53 Russia4

54 Other

55 Offshore banking centers.56 Bahamas57 Bermuda5859606162636465 Miscellaneous and unallocated7

Cayman Islands and other British West Indies .Netherlands AntillesPanamas

LebanonHong Kong. ChinaSingaporeOther*..

499.5

191.27.2

19.124.711.83.62.75.1

85.810 021.1

45.71.11.3.9

4.52.01.2

13.61.61.21.0

15.4

24.1.5

3.73.8

15.3.9

96.0

11.28.46.12.6

18.4.5

2.7

1.19.24.2

.416.23.13.32.14.7

.3

.6

.0

.8

2.7.8

1.9

72.910.28.4

21.41.61.3

I20.010.1

.166.9

551.9

206.013.619427.311.5

172.76.7

82.410.328.5

50.2.9

2.6.8

5.73.21.3

11.61.94.71.2

16.4

22.1.7

2.74.8

13.3.6

112.6

12.913.76.82.9

17.3

1.89.44.4

.519.14.44.14.94.5

4.7.0.9

4.21.03.2

99.211.06.3

32.410.31.4.1

25.013.1

.157.6

586.2

220.011.317.433.915.25.93.06.3

90.514.821.7

62.11.01.7.6

6.13.01.4

16.12.84.81.7

22.8

19.2.9

2.35.4

10.2.4

15.017.86.63.1

16.31.33.0

2.610.43.8

.521.9

5.55.4

.01.0

5.31.83.5

105.214.24.0

32.011.7

1.7.1

26.015.5

.150.0

645.3

228.311.716.629.816.04.02.65.3

104.714.023.7

65.7I.I1.5.8

6.78.0

.913.22.74.72.0

24.0

19.71.12.45.2

10.7.4

14.320.7

7.04.1

16.21.63.3

2.510.34.3

.521.56.05.85.7

7.7.1.9

6.93.73.2

134.720.34.5

37.226.1

2.0.1

27.916.7

.159.6

647.6

231.414.119.732.114.44.53.46.0

99.216.321.7

66.41.91.7

76.35.31.0

14.42.86.31.9

24.4

21.81.11.94.9

13.2.7

128.1

14.322.06.83.7

17.21.63.4

2.710.54.9

.614.66.56.06.84.3

.6

.0

.9

8.93.55.4

131.320.96.7

32.819.92.0

.130.817.9

.159.6

678.8

250.09.4

17.934,120.26.43.65.4

110.615.726.8

71.71.52.81.46.14.71.1

15.43.45.51.9

27.8

22.3.9

2.15.6

12.51.2

16427.37.63.3

16.61.43.4

3.610.65.3

.816.36.47.07.34.7

1.1.7.0.9

7.14.22.9

129.616.17.9

35.115.82.6

.135.216.7

.357.6

711.0

247.811.420.234.719.37.24.14.8

108.315.122.6

73.81.73.71.96.24.61.4

13.94.46.11.9

28.0

22.91.22.26.5

11.81.1

17.126.18.03.4

16.41.83.6

4.39.74.91.0

16.25.65.76.24.5

.9

.7

.0

.9

9.85.14.7

138.919.89.8

45.721.72.1

.127.212.7

.1

726.0

242.811.015.428.615.56.23.37.2

113.413.728.6

64.51.52.41.35.13.6

.911.74.58.22.2

23.1

26.01.32.56.7

14.41.2

138.7

18.428.68.71.4

17.42.04.1

3.29.04.9

.715.65.15.75.44.3

.9

.6

.0

.8

9.15.14.0

145.729.99.8

43.414.63.1

.132.212.7

I99.1

739.1

249.011.215.525.519.77.34.85.6

120.113.525.8

74.31.72.01.56.14.0

.716.54.99.93.7

23.2

25.71.33.35.5

14.31.4

147.4

19.332.49.03.3

17.72.14.0

4.211.75.0

.716.24.55.05.54.2

1.0.6.0

1.1

12.07.54.6

129.329.29.0

24.914.03.2

.133.815.0

.1101.3

746.6

275.013.120.528.719.58.33.16.9

134.816.523.7

72.01.92.11.45.83.41.3

15.16.59.65.0

20.0

25.31.23.25.1

15.5.3

144.4

20.229.99.13.6

17.92.24.4

3.911.34.9

.914.54.75.44.93.7

1.5.6.0

10.96.84.1

123.522.79.3

33.910.53.3

.130.013.5

295.6

1. The banking offices covered by these data include U.S. offices and foreign branches ofU.S. banks, including U.S. banks that are subsidiaries of foreign banks. Offices not coveredinclude U.S. agencies and branches of foreign banks. Beginning March 1994. the data includelarge foreign subsidiaries of U.S. banks. The data also include other types of US. depositoryinstitutions as well as some types of brokers and dealers. To eliminate duplication, the dataare adjusted to exclude the claims on foreign branches held by a U.S. office or another foreignbranch of the same banking institution.

These data are on a gross claims basis and do not necessarily reflect the ultimate countryrisk or exposure of U.S. banks. More complete data on the country risk exposure of U.S. banksare available in the quarterly Country Exposure Lending Survey published by the FederalFinancial Institutions Examination Council.

2. Organization of Petroleum Exporting Countries, shown individually; other members ofOPEC (Algeria, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria. Qatar, Saudi Arabia, and UnitedArab Emirates); and Bahrain and Oman (not formally members of OPEC).

3. Excludes Liberia. Beginning March 1994 includes Namibia.4. As of December 1992. excludes other republics of the former Soviet Union.5. Includes Canal Zone.6. Foreign branch claims only.7. Includes New Zealand, Liberia, and international and regional organizations.



3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises inthe United States


Type of liability, and area or country

1 Total

2 Payable in dollars? Payable in foreign currencies

4 Financial liabilities5 Payable in dollars6 Payable in foreign currencies

7 Commercial liabilities8 Trade payablcs9 Advance receipts and other liabilities

10 Payable in dollars1 1 Payable in foreign currencies

Rv tiicn or countryFinancial liabilities

12 Europe13 Belgium and Luxembourg14 France - - . . .15 Germany16 Netherlands17 .Switzerland18 United Kingdom

19 Canada

20 Latin America and Caribbean21 Bahamasi? Bermuda">3 Bra7il24 British West Indies25 Mexico26 Venezuela

27 Asia28 Japan29 Middle Eastern oil-exporting countries'

30 Africa31 Oil-exporting countries2

32 A l l other1

Commercial liabilities33 Europe34 Belgium and Luxembourg35 France36 Germany37 Netherlands38 Switzerland39 United Kingdom

40 Canada

41 Latin America and Caribbean42 Bahamas43 Bermuda44 Brazil45 British West Indies46 Mexico47 Venezuela

48 Asia49 Japan50 Middle Eastern oil-exporting countries1

51 Africa52 Oil-exporting countries

51 Other

1994

54,309

38.298Ift.O I I

32,95418.81814,136

21,35510,00511,350

19,4801,875

21.703495

1,7271,961

552688

15.541

629

2,03410180

207998

05

8,4017,314

35

135123

50

6,771241728604722327

2,444

1.037

1.85719

34516123

574276

10,7414.5551,576

428256

519

1995

46,448

11.90312.545

24,24112,90311,338

22,20711,01311.194

21.0001.207

15,622369999

1.974466895

10.138

632

1,78.159

14757

866122

5,9885.436

27

150122

66

7 700331481767500413

3.568

1.040

1.7401

2059856

416221

10,4213,3151,912

619254

6X7

1996'

61,782

19.54222.240

33.04911,91121,136

28,73312,72016.013

27,6291.104

23.179632

1.0911,834

556699

17.161

1.401

1,668236

507S

1.03017

1

6,4215,869

25

380

340

9,767479680

1,002766624

4,303

1.090

2,57463

297196

14665328

13.4224,6142,168

1.040532

840

1997

June

56,445r

38,65117.794'

28,207'11,44216,765'

28,23811,04017,198

27,2091.029

18.474'238

1.2801,765

466591

12.912'

1.616

1.2851245597

77515

1

6.2485.668

39

290

555

8,683736708845288429

3.818

1,136

2,50033

397225

26594304

13,8754,4302,420

941423

1.103

Sept.

55,891

39,74616,145

26,4611 1,48714,974

29,43010,88518,545

28,2591.171

18.01989

1,1141.730

507645

12.165

651

1,067106452

66976

1

6,2395,725

23

110

452

9.343703782945452400

3.829

1,150

2,22438

ISO213

23562322

14,6284,5532,984

929504

1,156

Dec.

60,037'

41.956'18.081'

29.532'1 3.043'16.489'

30.50510.90419.601

28,9131.592

19,657'186

1,6842.018

494lib

12,737'

2.392

1.386141229143604

261

5.3945.085

12

600

643

10,228666764

1,274439375

4,086

1,175

2,17616

203220

12565261

14,9664,5003,111

874408

1.086

1998

Mar.

58.040

42.25S15.782

28.05013,56814,482

29,99010,10719,883

28,6901,300

20,307127

1,7952.578

472345

13,145

1,045

965178691

51721

1

5,0244,767

21

330

676

9 951565840

1,068443407

4,041

1,347

2,05127

174249

5520219

14,6724,3723,138

83.1376

1.136

June

51J70r

39,963'11,407'

22,32211,98810,334

29,048'9,537'

19,511

27,975'1.073'

15,46875

1,6992,441

484189

8,765

5.19

1,3206

4976

84551

1

4,3153,869

0

290

651

9.924'5576ir

1.219'485'349'

3.741'

1.206

2.285'14

209246

27557196

13,611'3,995'3.194

921354

1.101

Sept.

49,215

38.14610,869

19,3319,8129,519

29,88410.27619,608

28,5141,350

12,905150

1,4572,167

417179

6,610

.389

1,3511

73154834

231

4,0053,754

0

310

650

10,947621740

1,408440507

4,286

1,504

1,84048

168256

511230

13,5.183,779.1,582

810372

1,245

I, Comprises Bahrain, Iran. Iraq. Kuwait, Oman, Qatar. Saudi Arabia, and United ArabEmirates (Trucial Stales).

2. Comprises Algeria. Gabon. Libya, and Nigeria3. Includes nontnoneuiry international und regional organization:


Nonbank-Reported Data A59

3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises inthe United States


Type ot claim, and area or country

1 Toral

2 Payable in dollars3 Payable in foreign currencies

By type4 Financial claims5 Deposils6 Payable in dollars7 Payable in foreign currenciesX Other financial claims'>• Payable in dollars

10 Payable in foreign currencies

1 1 Commercial claims12 Trade receivables13 Advance payments and other claims

14 Payable in dollars15 Payable in foreign currencies

By area tir imtntivFinancial claims

16 Europe17 Belgium and Luxembourg18 France ~.19 Germany20 Netherlands21 Swilzerland22 United Kingdom

23 Canada

24 Latin America and Caribbean25 Bahamas26 Bermuda27 Brazil28 British West Indies29 Mexico30 Venezuela

31 Asia32 Japan33 Middle Easiern oil-exporting countries'

34 Africa35 Oil-exporting cnunlrics2

16 A l l other'

Commercial claims37 Europe38 Belgium and Luxembourg39 France40 Germany41 Netherlands42 Swilzerland43 United Kingdom

44 Canada

45 Latin America and Caribbean46 Ualiamas47 Bermuda48 Brazil . .49 British West Indies50 Mexico51 Venezuela

52 Asia53 Japan54 Middle Eastern oil-exporting countries'

55 Africa ^56 Oil-exporting countries"

57 Other1

1994

57,888

53.8054.083

33.8971 S.50718.026

4SI15,39014,306

1,084

23,99121,158

2,833

21,4712 518

7.93686

800540429523

4,649

3,581

19,5362.424

27520

15,228723

35

1.S71953141

3730

600

9.540213

1.881l,0">7

311557

2,556

1.988

4,1179

234612

811,241

148

6.9822.655

708

45467

910

1995

52,509

48,7113.798

27,39815,13314.654

47912,26510,976

1,289

25,11122.998

2.113

23,0812,030

7,609193803436517498

4,303

2,851

14,5001,965

81830

10.393554

32

1.579871

3

2765

583

9.824231

1,8301.070

452520

2.656

1,951

4.30410

272898

79991285

7,3121,870

974

65487

1,006

1996'

65,897

59,1566.741

37,52321.62420.852

77215,89912,3743.525

28,37425.751

2.623

25,9302.444

11.085185694276493474

7,922

3.442

20,0321,553

1401,468

15,536457

31

2,2211.035

22

17414

569

10.443226

1.6441.337

562642

2,946

2,165

5.27635

2751.303

1901,128

157

8.3762.003

971

746166

1,368

1997

June

68.264r

62,080'6,184

40,715'24,106'22,615'

1,49116,609'13.352'3.257

27.54924.858

2,691

26,1131,436

12,9042036S0281519447

9,814

6,420'

18,7252.064

1881.617

13.551497

21

1.934766

20

17915

553

9,603127

1.1771.229

613189

2,836

2.464

5,24129

1971,136

981.140

451

8,4602,0791,014

61881

1,161

Sept.

70,506 r

64,1446,362'

41.805'21,951'22,392'

1,55917,854'14,795'3,059'

28,70125,110

3,591

26.9571.744

15.608'360

1,111352764448

11.000'

4,279

19,1762 442

1901.501

12,957508

15

2,015999

15

I7J16

553

10.4H6331

1,6421.395

571381

2.904

2,649

5,028

1281,101

981,219

418

8.5762,048

987

764207

1.198

Dec.

68,128r

62,1735,955'

16,959'22.909'21,060'

1,84914,050'11,806'2,244'

31,16927,536

3.633

29,3071,862

14.999'406

1,015427677434

10.337'

3.313

15.5432.308'

1081.313

10,462'537

36

2,133823

11

31915

652

12,120328

1,7961.614

597554

3,660

2,660

5.75027

2441.162

1091,392

576

8,7131,9761,107

680119

1,246

1998

Mar.

71,004

65,3595.645

40,30120,86319,155

1.70819,43816.9812,457

30.70326.888

3.815

29.2231,480

14.187378902393911401

9.289

4.688

18,2071,316

661,408

13.551967

47

2.174791

9

12516

720

12,8542.32

1.9391.670

534476

4.828

2,882

5.48113

2.181,128

881,302

441

7.6181,713

987

613122

1.235

June

63,265r

57,664'5.601'

32,355'14,76213.084

1,67817.593'14,918'2,675

30,910'26,827'

4,083

29,662'1,248'

14,105'518810'290975403

9,639

3,020

11,9671.306

481,3947,3491.089

57

2,376886

12

15515

732

12,945'216'

1,955'1,757'

492'418'

4,664'

2.779

6,082'12

359'1,183

1 101.462

585

7,367'1.757'1.127

657116

1,080

Sept.

68,039r

62,097'5.942'

37,26215,40613,3742,032

21,85619,867

1,989

30,777'26,393'

4,384

28,856'1,921'

14,473496

1,140359867409

9,849

4,090

15.7582,105

63710

10,9601.122

50

2,121928

13

15716

663

13,092'219'

2,098'1.502'

46 V546'

4,681'

2.291'

5.773'39

173'1,062

911.356

566

7,190'1,789'

967

740128

1,691

1. Comprises Bahrain, Iran, Iraq. Kuwaii, Oman, Qatar, Saudi Arabia, and United ArabFmirates (Trueial States).

2. Comprises Algeria, Gabon, Libya, and Nigeria.3. Includes nonmonetary international and regional organizations.



3.24 FOREIGN TRANSACTIONS IN SECURITIES

Millions of dollars

Transaction, and area or counln 1997Jan.—Dec. July Aug. Sept.

STOCKS

1 Foreign purchases . .2 Foreign sates

3 Net purchases, or sales ( - )

4 Foreign countries

5 Europe6 France7 Germany8 Netherlands9 Switzerland

10 United Kingdom11 Canada12 Latin America and Caribbean13 Middle East1

14 Other Asia15 Japan16 Africa17 Other countries

18 Nonmonetary international andregional organizations

19 Foreign purchases

20 Foreign sales

21 Net purchases, or sales (—)


23 Europe24 France25 Germany26 Netherlands27 Switzerland28 United Kingdom29 Canada30 Latin America and Caribbean31 Middle East'32 Other Asia33 Japan34 Africa35 Other countries


U.S. corporate securities

1,097,9581,028.361

69.597

69,754

62,6886,6419,0593,8317,848

22.478-1,406

5,203383

2,0724,787

472342

610.116

475,958

134,158

133,59571,6313,3002,7423,576

18754,134

6,26434,7332,155

16,9969,3571.005

811

563

1,596,1361,542,003

54,133

54,513

72,3386,099

10,6098,3266,269

24,336-4,764

781-1,082

-12,554-1,407

624-830

905,268

727.855

177,413

177,756127,943

3,3904.3813,4904,856

97,6946,077

24,7274,994

12,6798,381

1901,146

-343

1,596,1361,542.003

54,133

54,513

72,3386,099

10,6098,3266,269

24,336-4,764

781-1,082

-12,554-1,407

624-830

-380

905,268

727,855

177,413

177,756127,943

3,3904,3813,4904,856

97,6946,077

24.7274.994

12,6798,381

1901,146

146,147142,591

3,581

7,2271,7341,020830

1,490695

-1,6001,798286

-3,949-540204

-385

74.89153.464

21,427

21,328

12,630667203369404

9,283607

6,346162

1,253527101229

152,833150,308

2,525

2,739

6,983199

1,5031.2651,0921,154-443-614-134

-2,905-306- 1 4

-134

-214

74,95164,461

10,490

10367

8,650451806

-859234

5,665640

1,730171

-597-511

-4821

141,566

139,722

1,844

1,843

5,459988

1,326163

-2771,740-276

610-157

-4.112214159160

67,52958,678

8,851

8,813

5,81323313932

1003,924

4391,592-1881,709- 1 0- 1 7

-535

38

137,418147,891

-10,473

-10,430

2,18285

1,281876

-307700195

-11,766148

-678519-98

-43

100,18692,663

7323

7,473

12.323184268275

1.0039.760

443- 2.927

-58-1.847

-713-61

-400

145,588142,831

2,757

2,754

-24936068

1,009-1,974

632-5072,058-1771,823

597-217

23

108,678'105.437'

3,241'

3,230'

12,062'701

-135704

- 5 010,182'

292-11,135

21,1851,624

55769

126,494118,996

7,498

7,515

4,38650

3721,816-4201,902-1983,691-334

- 882241

-63

-17

81,941'60,480'

21,461'

22,431r

16,717'235435

64251

13,777'558

2,293835

1,904'1.194

24100

-970

Foreign securities

37 Stocks, nel purchases, or sales ( —)38 Foreign purchases39 Foreign sales40 Bonds, net purchases, or sales ( - )41 Foreign purchases42 Foreign sales

43 Net purchases, or sales (->, of stocks and bonds


45 Europe46 Canada47 Latin America and Caribbean48 Asia49 Japan50 Africa51 Other countries

-40.942756,015796,957-48.171

1.451,704

1.499,875

-89,113

-88,921-29,874

-3,085-25,258

25,123-10,001-3,293-2,288


8,009940,506932,497-18,695

1,335,274

1,353,969

-10,686

-1035710,469

-1.163-12,423

-3,326-1,663-1,411-2,503

8,009940,506932,497-18,695

1,335,274

1,353,969

-10,686

-10,35710,469

-1,163-12,423-3,326-1,663-1,411-2.503

2,50288,61086,108

-12,413151,482163,895

-9,911

-9,885

-7,273161

-2,553516-38-32

-704

- 2 6

-3.53782,24785,784

3,076118.922115,846

-461

-390

2,281

2,201-4,838

-59-316-269294

-71

5,55774,37668,8191,049

139,393138.344

6,606

6,623

1,2022,667

-1,1964,2271,741-122-155

-17

6,10789,49683,3893,384

152,88)149,497

9,491

9,492

6,007-1.1181,2143,5502,239-163

8,04690,40782,36115,980102,20286,222

24,026

24,119

10,792

9464,5856,6996,134

41,093

-93

-2,644'70,245'72,889'-918'

55,57356,491'

-3,562r

-3,556'

2,243'562

-3,907-2,064'-2,390

-56-334

-6

138,900134,256

4,644

4,642

2,450-614-189332

-3143,154-9773,088-21915514116129

58,88241,130

17,752

17,674

9.110

-170217996-366,874184

2,6862,4723.1522,238

1654

26269,56369,301-4,42256.80561,227

-4,160

-4,000

2,485

—4,82825!

-1,489-1,882

5-424

-160

1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq. Kuwait. Oman, Qatar,Saudi Arabia, and United Arab Emirates (Trucial States).

2. Includes state and local government securities and securities of U.S. governmentagencies and corporations. Also includes issues of new debt securities sold abroad by U.S.corporations organized to finance direct investments abroad.


Securities Holdings and Transactions A61

.V25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions'

Million', of dollars; net purchases, or sales ( —) during period

Area or countr\

1 Total estimated

2 ["nrcign countries

3 httrope-1 Belgium and Luxembourg5 Germany6 Netherlands7 Sweden . . .8 Su K/er!ai)d . . . . . .9 Lni led Kingdom

10 Othei huropc and funnel US S.R.1 1 Canada

12 Latin America and Caribbean1 1 Venezuela14 Othci Latin America and Caribbean15 Nclhcilamls Antilles . . . .16 Asia17 Japan18 AfiicaI1) Other

21 International . . .22 Latin American regional .

Mr-Mci2} foreign countries . . . .24 Olfieial institutions25 Other loreign

26 Middle hast '27 Af r ica '

1997

184,171

181.688

144,9213.427

22.4711.746- 4 6 56.02<8

98.2531.1.461- 8 1 1

-2.554655

-549- 2.66019.56720,360

1.5241.041

481621170

181.68843.959

1 19.729

7.616

1998

46,677

44.208

21,5863.805

148-5,533

I.4K65.240

12.1204.320

572

-3.73559

9.450-13.244

27.38.113.048

751-2.349

1.502199

44.2084,123

40.085

-16.5542

1998

Jan.-Dcc.

46,677

44,208

21,5863.805

148-5.553

1 4865.241)

12.1204.320

572

-3.73559

9.450-13.244

27.38313.IMS

751-2 .349

i 4oo

1.502199

44.2084,123

40,085

-16.554» 2

11>98

June

1,506

1.810

229- 5 1 3

- 1 . 1 8 1543355

- 9 7 1- 1.543

1.76183

2.912818

1.722- 1 . 6 2 8- 1 . 1 5 2• 2.442

145- 2 4 1

104- M S

0

1.810- 3 , 4 8 6

5,296

- 1.3880

July

-4 .454

-4 .507

-6.465215

82- 6 7 5

-•V)-827

-5.921422

- 6 1 9

685108

2,185-1.808

1.326774

22588

U s192

-4.507469

-4 .976

-2.5780

Aug.

-15.795

-15.795

-2.823667

- 1.799-5.081

- 1 5 2- 6808.000

-5,778-2,088

-5.940- 1.308

1.914-8.546

.1.856299

62- 1.150

Q

108

-15.795-16.920

1.125

-4.1601

Sept

-5,2711

-5.261

-2.7711 11894

-579-330

3632.217

-5,449-663

-1.2336

2,982-4.221

207128SI

468

- a

-288

-5 .26 i-10.104

5.041

5.8370

Oel

-2.I9.V

-2.855'

- 9.869'- 6061.1711.541

1932.811

-11,168- I . 8 I 3 1

-1,188

491- 3 5

-1.288832

7.7561.23.1

87850

66 "*64 s

II

-2.855'9.001

-11.856'

-2760

Nciv.

25.456r

25.556'

- 1 .

\1 .V

1.

- 5 .7.

11.7.

75'10075686310790'

)94

'612711

145>32'11

145649

00- 19- 6

25.556'1 1.84313.711'

2330

Dec.11

10.541*

9.426

8 0772.148-556

898581175

1.0741.757

614

-1.817I0K

-165- 1 760

4.3471,750

16189

1 I '11.084

1

9.4265.2744.152

-2.4420

I. OlHcial aiul private transacti,m,,nal mah,m> ,,i more ihan onkxdmlcs nonmaikuiihk- US. IYLMM

in marketable U S Treasury secunticur Data are based on monthly transactlonds and notes held b \ official insiiinm

having ;m 2. Comprises Bahrain, Iran, Iraq. Kuwait. Oman. Qatar. Saudi Arabia ,ind United ArabMIS reports. Hniirates ITITILIIII Suilcs).s nrtbreiyii ^ CompnsL-s Algeria. Gabon. Lib\a. and Nigmii.



3.28 FOREIGN EXCHANGE RATES AND INDEXES OF THE FOREIGN EXCHANGE VALUE OF THE U.S. DOLLAR'

Currency units per dollar except as noted

Item

COUNTRY/CURRENCY UNIT

1 Australia/dollar2

6 China, P.RVyuan7 Denmark/krone8 European Monetary Union/euro1

9 Finland/markka

11 Germany/deutsche mark12 Greece/drachma

13 Hong Kong/dollar

15 Ireland/pound2

17 Japan/yen18 Malaysia/ringgit19 Mexico/peso20 Netherlands/guilder21 New Zealand/dollar2

22 Norway/krone23 Portugal/escudo

24 Singapore/dollar25 South Africa/rand26 South Korea/won27 Spain/peseta

29 Sweden/krona30 Switzerland/franc31 Taiwan/dollar..32 Thailand/baht33 United Kingdom/pound34 Venezuela/holivar

NOMINAL

35 G-10 (March 1973= 100)4

36 Broad (January 1997= 100)5

37 Major currencies (March I973 = 1OO)6

38 Other important trading partners (January1997= 100)7

REAL

39 Broad (March 1973 = 1OO)5

40 Major currencies (March 1973= 100)'41 Other important trading partners (March

1973= 100)7

1996 1997 1998

1998

Sept. Ocl. Nov. Dec.

1999

Jan. Feb.

Exchange Rates

78.2810.58930.97

1.00511.36*88.33895.8003n.a.4 59485.11581.5049

240.82

7.734535.51

159.951,542.76

108.782.51547.6001.6863

68.776.4594

154.28

1.41004.3011

805.00126.6855.2896.70821.2361

27.46825.359

156.07417.19

74.3712.20635.81

1.07791.38498.31936.6092n.a.5.19565.83931.7348

273.28

7.743136.36

151.631,703.81

121.062.81737.9181.9525

66.257.0857

175.44

1.48574.6072

950.77146.5359.026

7.64461.4514

28.77531.072

163.76488.39

62.9112.37936.31

1.16051.48368.30086.7030n.a.5.34735.89951.7597

295.70

7.746741.36

142.481,736.85

130.993.92549.1521.9837

53.617.5521

180.25

1.67225.5417

1,400.40149.4165.006

7.95221.4506

33.54741.262

165.73548.39

58.8911.95535.05

1.18051.52)88.30556.4717n.a.5.17345.69691.6990

292.47

7.748042.58

147.241,678.92

134.483.8050

10.2191.9169

50.447.5564

174.19

1.72266.0966

1.375.54144.3366.2607.88161.4000

34.64640.402

168.23583.85

61.7911.52433.81

1.18891.54S28.27786.2294n.a.4.98455.49251.638)

281.64

7.748342 39

152.211,620.96

121.053.8000

10.1591.8479

52.137.4294

168.01

1.63785.7991

1,344.14139.2366.345

7.83951.3373

33.12138.118

169.44570.68

63.4911.84014.71

1.19321.54048.27786.3960n.a.5.11635.64221.6827

282.64

7.743242.43

147.771,664.91

120.293.80009.9691.8969

53.407.4562

172.52

1.63785.6511

1.294.01143.0567.578

8.01401.3852

32.60336.527

166.11569.66

61.8211.74634.44

1.20521.54338.27806.3531n.a.5.07695.59811.6698

280.43

7.747142.59

148.761,653.23

117.073.80149.9071.8816

52.237.6050

171.19

1.65155.9030

1,213.22142.0868.117

8.07161.3604

32.33736.276

167.08565.89

63.20n.a.n.a.1.51201.51948.27896.41941.1591n.a.n.a.n.a.

278.91

7.748642 55

n.a.

113.293.8000

10.128n.a.

53.887.4532n.a.

1.67915.9931

1.175.11n.a.

68.6307.81881.3856

32.30036.622

164.98569.80

63.99n.a.n.a.1.92611.49778.27556.63791.1203n.a.n.a.n.a.

287.41

7.749042.53

n.a.

116.673.8000

10.006n.a.

M 357.7240n.a.

1.70046.1146

J.I 88.84n.a.

69.0707.95321.4272

32.56437.137

162.76577.32

Indexes1

87.3497.4385.23

98.25

85.9585.83

92.52

96.38104.4791.85

104.67

90.5693.20

93.62

98.85116.2596.52

125.70

98.4398.33

105.83

97.17118.8596.99

131.38

100.1 199.04

109.02

93.69115.4693.46

129.02

97.1095.47

106.62

95.46115.3494.23

127.31

96.6796.21

104.45

94.61114.5693.40

126.80

95.8995 44

103.59

n.a.114.68'92.37'

128.98'

95.8694.61

104.71

n.a.116.3793.76

130.83

96.8996.09

105.18

1. Averages of certified noon buying rates in New York for cable transfers. Data in thistable also appear in the Board's G.5 (405) monthly statistical release. For ordering address,see inside front cover.

2. Value in U.S. cenis.3. As of January 1999, the euro is reported in place of the individual euro-area currencies.

These currency rates can be derived from the euro rate by using the fixed conversion rates (incurrencies per euro) as shown below:

1936.27 Italian lire40.3399 Luxembourg francs2.20371 Netherlands guilders200.482 Portuguese escudos166.386 Spanish pesetas

Euro equals13.760340.33995.945736.559571.95583

Austrian schillingsBelgian francsFinnish markkasFrench francsGerman marks

Series revised as of August 1978 (see Fed'eral Resen-e Bulletin, vol. 64 (August 1978)

neasure of the importance to U.S. exporters of that country's trade in third coun—T » » F r I . 1 J* . 1. . f • 1. . I . . . f . I ¥ T *"• I I I '

.787564 Irish pounds

4. For more information on the indexes of the foreign exchange value of the dollar, seeFederal Reserve Bulletin, vol. 84 (October 1998), pp. 811-18.

index sum to one.8. Weighted average of the foreign exchange value of the U.S. dollar against a subset of

broad index currencies that do not circulate widely outride the country of issue. The weightfor each currency is its broad index weight scaled so that the weights of the subset ofcurrencies in the index sum to one.


A63

Guide to Statistical Releases and Special Tables

STATISTICAL RELEASES—List Published Semiannually, with Latest Bulletin Reference

Issue PageAnticipated schedule of release dates for periodic releases December 1998 A72

SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference

Title and Date Issue Page

Assets and liabilities of commercial banksDecember 31, 1997 May 1998 A64March31, 1998 August 1998 A64June 30. 1998 November 1998 A64September 30, 1998 February 1999 A64

Terms of lending at commercial banksFebruary 1998 May 1998 A66May 1998 August 1998 A67August 1998 November 1998 A66November 1998 February 1999 A66

Assets and liabilities of U.S. branches and agencies of foreign banksDecember 31, 1997 May 1998 A70March31, 1998 August 1998 A72June 30, 1998 November 1998 A72September 30, 1998 February 1999 A72

Pro forma balance sheet and income statements for priced service operationsMarch 31, 1998 July 1998 A64June30, 1998 October 1998 A64September 30, 1998 January 1999 A64

Residential lending reported under the Home Mortgage Disclosure Act1995 September 1996 A681996 September 1997 A681997 September 1998 A68

Disposition of applications for private mortgage insurance1996 September 1997 A761997 September 1998 A72

Small loans to businesses and farms1997 September 1998 A76

Community development lending reported under the Community Reinvestment Act1997 September 1998 A79



Index to Statistical Tables

References are to pages A3-A62 although the prefix "A" is omitted in this index

. 15-2110

ACCEPTANCES, bankers (See Bankers acceptances)Assets and liabilities (Sec ulso Foreigners)

Commercial banks. 15-21Domestic finance companies. 32, 33Federal Reserve Banks, 10Foreign-related institutions. 20

AutomobilesConsumer credit. 36Production, 44. 45

BANKERS acceptances. 5. 10. 22, 23Bankers balances, 15-21. (See also Foreigners)Bonds (See also U.S. government securities)

New issues, 31Rates. 23

Business activity, nonfinancial, 42Business loans (See Commercial and industrial loans)

CAPACITY utilization. 43Capital accounts

Commercial banks. ,.,-.Federal Reserve Banks.

Certificates of deposit. 23Commercial and industrial loans

Commercial banks. 15-21Weekly reporting banks, 17, 18

Commercial banksAssets and liabilities. 15-21Commercial and industrial loans. 15-21Consumer loans held, by type and terms, 36Real estate mortgages held, by holder and property, 35Time and savings deposits. 4Dmmei

ConditiiConstruction. 42. 46Consumer credit, 30Consumer prices. 42Consumption expenditures. 48, 49Corporations

Profits and their distribution, 32Security issues. 31.61

Cost of living (See Consumer prices)Credit unions. 36Currency in circulation. 5. 13Customer credit, stock market. 24

DEBT {See sjiecific types of debt or securities)Demand deposits. 15-21Depository institutions

Reserve requirements. 8Reserves and related items, 4. 5. 6. 12

Deposits (See ulso .specific types)Commercial hanks. 4. 15-21Federal Reserve Banks. 5, 10Interest rates, 14

Discount rales at Reserve Banks and at foreign central banks andforeign countries {See Interest rates)

Discounts and advances by Reserve Banks (See Loans)Dividends, corporate. 32

EMPLOYMENT, 42

FARM mortgage loans. 35Federal agency'obligations. 5. 9. 10. I 1. 28. 29Federal credit agencies, 30

Commercial paper, 22, 23, 32" "tion statements (See Assets and liabilities)

nrlinn -P 46

Federal financeDebt subject to statutory liniitauou. and types and ownership

of gross debt. 27Receipts and outlays. 25. 26Treasury linancing of surplus, or deficit. 25Treasury operating balance. 25

Federal Financing Bank. 30Federal funds. 23. 25Federal Home Loan Banks. 30Federal Home Loan Mortgage Corporation. 30, 34. 35Federal Housing Administration. 30. 34. 35Federal Land Banks, 35Federal National Mortgage Association, 30. 34, 35Federal Reserve Banks

Condition statement. 10Discount rates (See Interest rates)U.S. government securities held. 5. 10, 11, 27

Federal Reserve credit. 5. 6. 10, 12Federal Reserve notes. 10Federally sponsored credit agencies. 30Finance companies

Assets and liabilities. 32Business credit. 33Loans. 36Paper, 22. 23

Float, 5Flow of funds, 37-41Foreign currency operations. 10Foreign deposits in U.S. banks. 5Foreign exchange rates. 62Foreign-related institutions. 20Foreign trade, 51Foreigners

Claims on, 52. 55. 56. 57, 59Liabilities to. 51. 52. 53. 58. 60. 61

GOLDCertificate account. 10Stock. 5. 51

Government National Mortgage Association. 30. 34. 35Gross domestic product. 48, 49

HOUSING, new and existing units, 46

INCOME, personal and national. 42. 48. 49Industrial production. 42. 44Insurance companies. 27, 35Interest rates

Bonds, 23Consumer credit. 36Federal Reserve Banks, 7Money and capital markets, 23Mortgages. 34Prime rate. 22

International capital transactions of United States. 50-61International organizations. 52, 53. 55, 58. 59Inventories, -18Investment companies, issues and assets. 32Investments (See also specific types)

Commercial banks, 4. 15-21Federal Reserve Banks, 10. 11Financial institutions. 35

LABOR force, 42Life insurance companies (See Insurance companies)


A65

Loans (See also specific types)Commercial banks, 15-21Federal Reserve Banks, 5, 6, 7, 10. 11Financial institutions, 35Insured or guaranteed by United States, 34, 35

MANUFACTURINGCapacity utilization, 43Production, 43, 45

Margin requirements, 24Member banks (See also Depository institutions)

Reserve requirements, 8Mining production, 45Mobile homes shipped, 46Monetary and credit aggregates, 4, 12Money and capital market rates, 23Money stock measures and components, 4, 13Mortgages (See Real estate loans)Mutual funds, 13, 32Mutual savings banks (See Thrift institutions)

NATIONAL defense outlays, 26National income, 48

OPEN market transactions, 9

PERSONAL income. 49Prices

Consumer and producer, 42. 47Stock market, 24

Prime rate, 22Producer prices, 42, 47Production, 42. 44Profits, corporate, 32

REAL estate loansBanks, 15-21,35Terms, yields, and activity, 34Type of holder and property mortgaged, 35

Reserve requirements, 8Reserves

Commercial banks. 15-21Depository institutions. 4, 5. 6, 12Federal Reserve Banks. 10U.S. reserve assets, 51

Residential mortgage loans, 34, 35Retail credit and retail sales, 36, 42

SAVINGFlow of funds, 37-41National income accounts, 48

Savings institutions, 35. 36, 37—41Savings deposits (See Time and savings deposits)Securities (See also specific types)

Federal and federally sponsored credit agencies. 30Foreign transactions, 60New issues, 31Prices, 24

Special drawing rights, 5, 10, 50, 51State and local governments

Holdings of U.S. government securities, 27New security issues, 31Rates on securities, 23

Stock market, selected statistics, 24Stocks (See also Securities)

New issues, 31Prices, 24

Student Loan Marketing Association, 30

TAX receipts, federal, 26Thrift institutions, 4. (See also Credit unions and Savings

institutions)Time and savings deposits, 4, 13, 15-21Trade, foreign, 51Treasury cash. Treasury currency, 5Treasury deposits, 5, 10, 25Treasury operating balance, 25

UNEMPLOYMENT, 42U.S. government balances

Commercial bank holdings, 15-21Treasury deposits at Reserve Banks, 5, 10, 25

U.S. government securitiesBank holdings, 15-21,27Dealer transactions, positions, and financing, 29Federal Reserve Bank holdings, 5, 10, 11. 27Foreign and international holdings and

transactions. 10, 27, 61Open market transactions, 9Outstanding, by type and holder, 27, 28Rates, 23

U.S. international transactions, 50-62Utilities, production, 45

VETERANS Administration, 34, 35

WEEKLY reporting banks, 17, 18Wholesale (producer) prices, 42, 47

YIELDS (See Interest rates)


A66 Federal Reserve Bui letin • April 1999

Federal Reserve Board of Governorsand Official Staff

ALAN GREENSPAN, ChairmanALICE M. RIVLIN, Vice Chair

EDWARD W. KELLEY, JR.LAURENCE H. MEYER

OFFICE OF BOARD MEMBERS

LYNN S. FOX, Assistant to the BoardDONALD J. WINN, Assistant to the BoardTHEODORE E. ALLISON, Assistant to the Board for Federal

Reserve System AffairsWINTHROP P. HAMBLEY, Deputy Congressional LiaisonBOB STAHLY MOORE. Special Assistant to the BoardDIANE E. WERNEKE, Special Assistant to the Board

LEGAL DIVISION

J. VIRGIL MATTINGLY, JR., General CounselSCOTT G. ALVAREZ, Associate General CounselRICHARD M. ASHTON, Associate General CounselOLIVER IRELAND, Associate General CounselKATHLEEN M. O'DAY, Associate General CounselKATHERINE H. WHEATLEY, Assistant General Counsel

OFFICE OF THE SECRETARY

JENNIFER J. JOHNSON, Secretary

ROBERT DEV. FRIERSON, Associate SecretaryBARBARA R. LOWREY, Associate Secretary and Ombudsman

DIVISION OF BANKINGSUPERVISION AND REGULATIONRICHARD SPILLENKOTHEN, Director

STEPHEN C. SCHEMERING, Deputy DirectorHERBERT A. BIERN, Associate DirectorROGER T. COLE, Associate DirectorWILLIAM A. RYBACK, Associate DirectorGERALD A. EDWARDS, JR.. Deputy Associate DirectorSTEPHEN M. HOFFMAN, JR.. Deputy Associate DirectorJAMES V. HOUPT, Deputy Associate DirectorJACK P. JENNINGS, Deputy Associate DirectorMICHAEL G. MARTINSON, Deputy Associate DirectorSIDNEY M. SUSSAN, Deputy Associate DirectorMOLLY S. WASSOM, Deputy Associate DirectorHOWARD A. AMER, Assistant DirectorNORAH M. BARGER, Assistant DirectorBETSY CROSS, Assistant DirectorRICHARD A. SMALL, Assistant DirectorWILLIAM C. SCHNEIDER, JR., Project Director,

National Information Center

DIVISION OF INTERNATIONAL FINANCE

KAREN H. JOHNSON, Director

LEWIS S. ALEXANDER, Deputy DirectorPETER HOOPER III, Deputy DirectorDALE W. HENDERSON, Associate DirectorDAVID H. HOWARD, Senior AdviserDONALD B. ADAMS, Assistant DirectorTHOMAS A. CONNORS, Assistant Director

DIVISION OF RESEARCH AND STATISTICS

MICHAEL J. PRELL, Director

EDWARD C. ETTIN, Deputy DirectorDAVID J. STOCKTON, Deputy DirectorWILLIAM R. JONES. Associate DirectorMYRON L. KWAST, Associate DirectorPATRICK M. PARKINSON, Associate DirectorTHOMAS D. SIMPSON, Associate DirectorLAWRENCE SLIFMAN, Associate DirectorMARTHA S. SCANLON, Deputy Associate DirectorSTEPHEN D. OLINER, Assistant DirectorSTEPHEN A. RHOADES, Assistant DirectorJANICE SHACK-MARQUEZ, Assistant DirectorCHARLES S. STRUCKMEYER. Assistant DirectorALICE PATRICIA WHITE, Assistant Director

JOYCE K. ZICKLER, Assistant DirectorGLENN B. CANNER. Senior AdviserDAVID S. JONES, Senior AdviserJOHN J. MINGO, Senior Adviser

DIVISION OF MONETARY AFFAIRS

DONALD L. KOHN, Director

DAVID E. LINDSEY, Deputy DirectorBRIAN F. MADIGAN. Associate DirectorRICHARD D. PORTER, Deputy Associate DirectorVINCENT R. REINHART, Deputy Associate DirectorWILLIAM C. WHITESELL, Assistant DirectorNORMAND R.V. BERNARD, Special Assistant to the Board

DIVISION OF CONSUMERAND COMMUNITY AFFAIRSDOLORES S. SMITH, Director

GLENN E. LONEY, Deputy DirectorSANDRA F. BRAUNSTEIN, Assistant DirectorMAUREEN P. ENGLISH, Assistant DirectorADRIENNE D. HURT. Assistant DirectorIRENE SHAWN MCNULTY. Assistant Director


A67

ROGER W. FERGUSON, JR.EDWARD M. GRAMLICH

OFFICE OFSTAFF DIRECTOR FOR MANAGEMENT

S. DAVID FROST, Staff DirectorJOHN R. WEIS, Adviser

MANAGEMENT DIVISION

S. DAVID FROST. Director

STEPHEN J. CLARK. Associate Director. Finance FunctionDARRELL R. PAULEY, Associate Director, Human Resources

FunctionSHEILA CLARK, EEO Programs Director

DIVISION OF SUPPORT SERVICES

ROBERT E. FRAZIER, Director

GEORGE M. LOPEZ, Assistant DirectorDAVID L. WILLIAMS, Assistant Director

DIVISION OF INFORMATION RESOURCESMANAGEMENT

STEPHEN R. MALPHRUS, Director

RICHARD C. STEVENS. Deputy DirectorMARIANNE M. EMERSON, Assistant DirectorMAUREEN HANNAN, Assistant DirectorPo KYUNG KIM, Assistant DirectorRAYMOND H. MASSEY. Assistant DirectorEDWARD T. MULRENIN, Assistant DirectorDAY W. RADEBAUGH. JR., Assistant DirectorELIZABETH B. RIGGS. Assistant Director

DIVISION OF RESERVE BANK OPERATIONSAND PAYMENT SYSTEMS

CLYDE H. FARNSWORTH, JR., Director

LOUISE L. ROSEMAN, Associate DirectorPAUL W. BETTGE, Assistant DirectorKENNETH D. BUCKLEY, Assistant DirectorJACK DENNIS, JR., Assistant DirectorJOSEPH H. HAYES, JR., Assistant DirectorJEFFREY C. MARQUARDT, Assistant DirectorMARSHA REIDHILL, Assistant DirectorJEFF STEHM, Assistant Director

OFFICE OF THE INSPECTOR GENERAL

BARRY R. SNYDER, Inspector GeneralDONALD L. ROBINSON, Assistant Inspector General



Federal Open Market Committeeand Advisory Councils

FEDERAL OPEN MARKET COMMITTEE

MEMBERS

ALAN GREENSPAN, Chairman

EDWARD G. BOEHNE

ROGER W. FERGUSON, JR.

EDWARD M. GRAMLICH

EDWARD W. KELLEY, JR.

LAURENCE H. MEYER

ROBERT D. MCTEER, JR.

WILLIAM J. MCDONOUGH, Vice Chairman

MICHAEL H. MOSKOW

GARY H. STERN

ALICE M. RIVLIN

ALTERNATE MEMBERS

J. ALFRED BROADDUS, JR.

JACK GUYNN

JERRY L. JORDAN

ROBERT T. PARRY

JAMIE B. STEWART, JR.

STAFF

DONALD L. KOHN, Secretary and EconomistNORMAND R.V. BERNARD, Deputy SecretaryLYNN S. FOX, Assistant SecretaryGARY P. GILLUM, Assistant SecretaryJ. VIRGIL MATTINGLY, JR., General CounselTHOMAS C. BAXTER, JR., Deputy General CounselMICHAEL J. PRELL, Economist

KAREN H. JOHNSON, Economist

LEWIS S. ALEXANDER, Associate Economist

STEPHEN G. CECCHETTI, Associate EconomistPETER HOOPER III, Associate EconomistWILLIAM C. HUNTER, Associate EconomistRICHARD W. LANG, Associate EconomistDAVID E. LINDSEY, Associate EconomistARTHUR J. ROLNICK, Associate EconomistHARVEY ROSENBLUM, Associate EconomistLAWRENCE SLIFMAN, Associate EconomistDAVID J. STOCKTON, Associate Economist

PETER R. FISHER, Manager, System Open Market Account

FEDERAL ADVISORY COUNCIL

ROBERT W. GILLESPIE, President

KENNETH D. LEWIS,Vice President

LAWRENCE K. FISH, First DistrictDOUGLAS A. WARNER HI, Second DistrictRONALD L. HANKEY, Third DistrictROBERT W. GILLESPIE, Fourth DistrictKENNETH D. LEWIS, Fifth DistrictSTEPHEN A. HANSEL, Sixth District

NORMAN R. BOBINS, Seventh DistrictKATIE S. WINCHESTER, Eighth DistrictRICHARD A. ZONA, Ninth DistrictC. Q. CHANDLER, Tenth DistrictRICHARD W. EVANS, JR., Eleventh DistrictWALTER A. DODS, JR., Twelfth District

JAMES ANNABLE, Co-Secretary

WILLIAM J. KORSVIK, Co-Secretary


A69

CONSUMER ADVISORY COUNCIL

YVONNE S. SPARKS STRAU [ HER. St. Louis, Missouri, ChairmanDWIGHT GOLANN, Boston. Massachusetts. Vice Chairman

LAUREN ANDERSON. New Orleans. LouisianaWAITER J. BOYER. Garland. TexasWAYNE-KENT A. BRADSHAW, LOS Angeles, CaliforniaMALCOLM M. BUSH, Chicago, IllinoisMARY ELLEN DOMEIER. New Ulm. Minnesota

JEREMY D. EISLER, Biloxi, MississippiROBERT F. ELLIOT, Prospect Heights, IllinoisJOHN C. GAMBOA. San Francisco. CaliforniaROSE M. GARCIA. El Paso. TexasVINCENT J. GIBLIN. West Caldwell, New JerseyKARLA S. IRVINE. Cincinnati, OhioWILLIE M. JONES, Boston, MassachusettsJANET C. KOEMLER. Jacksonville. FloridaGWENN S. KYZ.KR, Allen, Texas

JOHN C. LAMB. Sacramento. CaliforniaANNE S. LI . Trenton, New JerseyMARTHA W. MILLER. Greensboro. North CarolinaDANIEL W. MORTON. Columbus. OhioCAROL J. PARRY. New York. New YorkPHILIP PRICE, JR.. Philadelphia. PennsylvaniaMARTA RAMOS. San Juan, Puerto RicoDAVID L. RAMP, St. Paul. MinnesotaMARILYN ROSS, Omaha. NebraskaROBERT G. SCHWEMM, Lexington, KentuckyDAVID J. SHIRK, Eugene. OregonGAIL M. SMALL, Lame Deer, MontanaGARY S. WASHINGTON. Chicago. IllinoisROBERT L. WYNN, II. Madison, Wisconsin

THRIFT INSTITUTIONS ADVISORY COUNCIL

WILLIAM A. FITZGERALD, Omaha, Nebraska, PresidentF. WEI LER MEYER. Falls Church. Virginia. Vice President

GAROLD R. BASE. Piano. TexasJAMES C. BLAINE. Raleigh, North CarolinaDAVID A. BOCHNOWSKI. Munster. IndianaLAWRENCE L. BOUDREAUX III. New Orleans, LouisianaRICHARD P. COUGHLIN. Stoneham, Massachusetts

BABETI'K E. HEIMBUCH. Santa Monica. CaliforniaTHOMAS S. JOHNSON, New York, New YorkWILLIAM A. LONGBRAKE. Seattle. WashingtonKATHLEEN E. MARINANGEL. McHenry. IllinoisANTHONY J. POPP, Marietta. Ohio



Federal Reserve Board Publications

For ordering assistance, write PUBLICATIONS SERVICES,MS-127, Board of Governors of the Federal Reserve System.Washington, DC 20551, or telephone (202) 452-3244, or FAX(202) 728-5886. You may also use the publications orderform available on the Board's World Wide Web site(http://www.federalreserve.gov). When a charge is indicated, pay-ment should accompany request and be made payable to theBoard of Governors of the Federal Reserve System or may beordered via Mastercard, Visa, or American Express. Payment fromforeign residents should be drawn on a U.S. bank.

BOOKS AND MISCELLANEOUS PUBLICATIONSTHE FEDERAL RESERVE SYSTEM —PURPOSES AND FUNCTIONS.

1994. 157 pp.ANNUAL REPORT, 1997.ANNUAL REPORT: BUDGET REVIEW, 1998-99.FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or $2.50

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ANNUAL STATISTICAL DIGEST: period covered, release date, num-ber of pages, and price.

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239 pp.266 pp.264 pp.254 pp.231pp.288 pp.272 pp.256 pp.712 pp.185 pp.215 pp.215 pp.281 pp.190 pp.404 pp.

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SELECTED INTEREST AND EXCHANGE RATES —WEEKLY SERIES OFCHARTS. Weekly. $30.00 per year or $.70 each in the UnitedStates, its possessions, Canada, and Mexico. Elsewhere,$35.00 per year or $.80 each.

REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERALRESERVE SYSTEM.

ANNUAL PERCENTAGE RATE TABLES (Truth in Lending—Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp.Vol. II (Irregular Transactions). 1969. 116 pp. Each volume$5.00.

GUIDE TO THE FLOW OF FUNDS ACCOUNTS. 672 pp. $8.50 each.FEDERAL RESERVE REGULATORY SERVICE. Loose-leaf; updated

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additional airmail costs.THE FEDERAL RESERVE ACT AND OTHER STATUTORY PROVISIONS

AFFECTING THE FEDERAL RESERVE SYSTEM, as amendedthrough October 1998. 723 pp. $20.00 each.

THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A MULTI-COUNTRY MODEL, May 1984. 590 pp. $14.50 each.

INDUSTRIAL PRODUCTION—1986 EDITION. December 1986.

440 pp. $9.00 each.FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY.

December 1986. 264 pp. $10.00 each.FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALY-

SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each.RISK MEASUREMENT AND SYSTEMIC RISK: PROCEEDINGS OF A

JOINT CENTRAL BANK RESEARCH CONFERENCE. 1996.578 pp. $25.00 each.

EDUCATION PAMPHLETSShort pamphlets suitable for classroom use. Multiple copies areavailable without charge.

Consumer Handbook on Adjustable Rate MortgagesConsumer Handbook to Credit Protection LawsA Guide to Business Credit for Women, Minorities, and Small

BusinessesSeries on the Structure of the Federal Reserve System

The Board of Governors of the Federal Reserve SystemThe Federal Open Market CommitteeFederal Reserve Bank Board of DirectorsFederal Reserve Banks

A Consumer's Guide to Mortgage Lock-InsA Consumer's Guide to Mortgage Settlement CostsA Consumer's Guide to Mortgage. RefinancingsHome Mortgages: Understanding the Process and Your Right

to Fair LendingHow to File a Consumer ComplaintMaking Sense of SavingsSHOP: The Card You Pick Can Save You MoneyWelcome to the Federal ReserveWhen Your Home is on the Line: What You Should Know

About Home Equity Lines of CreditKeys to Vehicle LeasingLooking for the Best Mortgage


A71

STAFF STUDIES: Only Summaries Printed in theBULLETIN

Studies and papers on economic and financial subjects that arc ofgeneral interest. Requests to obtain single copies of the full text orto be added to the mailing list for the series may be sent toPublications Services.

Staff Studies 1-157. 161, and 168-169 are out of print.

158. THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIRE-MENTS IN THE MARKETS FOR STOCKS AND DERIVATIVEPRODUCTS, by Mark J. Warshawsky with the assistance ofDietrich Earnhart. September 1989. 23 pp.

159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSIDI-ARIES OF BANK HOLDING COMPANIES, by Nellie Liang andDonald Savage. February 1990. 12 pp.

160. BANKING MARKETS AND THE USE OF FINANCIAL SER-VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, byGregory E. Elliehausen and John D. Wolken. September1990. 35 pp.

162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM MORT-GAGE LOAN RATES IN TWENTY CITIES, by Stephen A.Rhoades. February 1992. 11 pp.

163. CLEARANCE AND SETTLEMENT IN U.S. SECURITIES MAR-KETS, by Patrick Parkinson. Adam Gilbert, Emily Gollob,Lauren Hargraves, Richard Mead, Jeff Stehm, and MaryAnn Taylor. March 1992. 37 pp.

164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, byJames T. Fergus and John L. Goodman, Jr. July 1993.20 pp.

165. THE DEMAND FOR TRADE CREDIT: AN INVESTIGATION OFMOTIVES FOR TRADE CREDIT USE BY SMALL BUSINESSES, byGregory E. Elliehausen and John D. Wolken. September1993. 18 pp.

166. THE ECONOMICS OF THE PRIVATE PLACEMENT MARKET, byMark Carey, Stephen Prowse, John Rea, and Gregory Udell.January 1994. I l l pp.

167. A SUMMARY OF MERGER PERFORMANCE STUDIES IN BANK-ING, 1980-93, AND AN ASSESSMENT OF THE "OPERATINGPERFORMANCE" AND "EVENT STUDY" METHODOLOGIES,by Stephen A. Rhoades. July 1994. 37 pp.

170. THE COST OF IMPLEMENTING CONSUMER FINANCIAL REGU-LATIONS: A N ANALYSIS OF EXPERIENCE WITH THE TRUTHIN SAVINGS ACT, by Gregory Elliehausen and Barbara R.Lowrey, December 1997. 17 pp.

171. THE COST OF BANK REGULATION: A REVIEW OF THE EVI-DENCE, by Gregory Elliehausen, April 1998. 35 pp.



Maps of the Federal Reserve System

12• SAN F R W LSCO

ALASKA

10

HAWAII

9VlfNMiM'OI.IS • 7

CHIIAIIO

KANSAS Cirv P • •

11 •DALLAS

•Sr. 1

8

• , •(.LIATI AND

4KuOUIS

6 •All ASIA

21

UOSION

•"1 • N i vv YORK

Fill!

•'HMOND

5

\DI LPHIA

LEGEND

Both pages

• Federal Reserve Bank city

E3 Board of Governors of the FederalReserve System. Washington, D.C.

Facing page

• Federal Reserve Branch city

— Branch boundary

NOTE

The Federal Reserve officially identifies Districts by num-ber and Reserve Bank city (shown on both pages) and byletter (shown on the facing page).

In the 12th District, the Seattle Branch serves Alaska,and the San Francisco Bank serves Hawaii.

The System serves commonwealths and territories asfollows: the New York Bank serves the Commonwealth

of Puerto Rico and the U.S. Virgin Islands; the San Fran-cisco Bank serves American Samoa, Guam, and the Com-monwealth of the Northern Mariana Islands. The Board ofGovernors revised the branch boundaries of the Systemmost recently in February 1996.


A73

1 Ai n

vrNH

MA •

CT

BOSTON

2-B

NY

NEW YORK

3-C

PHILADELPHIA

4-DPittsburgh

1 Cincinnati

CLEVELAND

5-EBaltimore MD

"It*RICHMOND

6-F

Birmingham

Mm, ifiir *"New Orleans

"ill

ATLANTA

Jacksonville

Miami

7-G

Wl

IL

I )otroil •

CHICAGO

8-H

B, )

MOJ L«»isville

T~^ • B f Memphis

ST. LOUIS

9-1 MT

• HelenaM l

SD

MINNEAPOLIS

10-J

M

• ii Oll lai l . i*M-l

S.M

KANSAS CITY

U-K

NM

I ' Pa-..)

S.ni Antonio

DALLAS

12-L

Salt Lake Cpity

•Los Angeles

AZ

SAN FRANCISCODigitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis


Federal Reserve Banks, Branches, and Offices

FEDERAL RESERVE BANKbranch, or facility Zip

ChairmanDeputy Chairman

PresidentFirst Vice President

Vice Presidentin charge of branch

BOSTON* 02106 William C. BrainardWilliam O.Taylor

NEW YORK* 10045 John C. WhiteheadPeter G. Peterson

Buffalo 14240 Bal Dixit

PHILADELPHIA 19105 Joan CarterCharisse R. Lillie

CLEVELAND* 44101 G. Watts Humphrey, Jr.David H. Hoag

Cincinnati 45201 George C. JuilfsPittsburgh 15230 John T. Ryan, III

RICHMOND* 23219 Claudine B. MaloneJeremiah J. Sheehan

Baltimore 21203 Daniel R. BakerCharlotte 28230 Joan H. Zimmerman

ATLANTA 30303 John F. WielandPaula Lovell

Birmingham 35283 V. Larkin MartinJacksonville 32231 Marsha G. RydbergMiami 33152 Mark T. SoddersNashville 37203 N. Whitney JohnsNew Orleans 70161 R. Glenn Pumpelly

CHICAGO* 60690 Lester H. McKeever, Jr.Arthur C. Martinez

Detroit 48231 Florine Mark

ST. LOUIS 63166 Susan S. ElliottCharles W. Mueller

Little Rock 72203 Diana T. HueterLouisville 40232 Roger ReynoldsMemphis 38101 Mike P. Sturdivant, Jr.

MINNEAPOLIS 55480 David A. KochJames J. Howard

Helena 59601 Thomas O. Markle

KANSAS CITY 64198 Jo Marie DancikTenence P. Dunn

Denver 80217 Kathryn A. PaulOklahoma City 73125 Larry W. BrummettOmaha 68102 Gladys Styles Johnston

DALLAS 75201 Roger R. HemminghausJames A. Martin

El Paso 79999 Patricia Z. Holland-BranchHouston 77252 Edward O. GaylordSan Antonio 78295 Bartell Zachry

SAN FRANCISCO 94120 Gary G. MichaelNelson C. Rising

Los Angeles 90051 Lonnie KanePortland 97208 Nancy WilgenbuschSalt Lake City 84125 Barbara L."WilsonSeattle 98124 Richard R. Sonstelie

Cathy E. MinehanPaul M. Connolly

William J. McDonoughJamie B. Stewart, Jr.

Edward G. BoehneWilliam H. Stone. Jr.

Jerry L. JordanSandra Pianalto

J. Alfred Broaddus, Jr.Walter A. Varvel

Jack GuynnPatrick K. Barron

Michael H. MoskowWilliam C. Conrad

William PooleW. LeGrande Rives

Gary H. SternColleen K. Strand

Thomas M. HoenigRichard K. Rasdall

Robert D. McTeer, Jr.Helen E. Holcomb

Robert T. ParryJohn F. Moore

Carl W. Turnipseed'

Charles A. Cerino'Robert B. Schaub

William J. Tignanelli'DanM. Bechter1

James M. MckeeFredR. Herr1

James D. Hawkins'James T. Curry HIMelvyn K. Purcel!'Robert J. Musso1

David R. Allardice'

Robert A. HopkinsThomas A. BooneMartha L. Perine

Samuel H. Gane

Carl M. Gambs'Kelly J. DubbertSteven D. Evans

Sammie C. ClayRobert Smith, III'James L. Stull'

MarkL. Mullinix1

Raymond H. Laurence'Andrea P. WolcottGordon R. G. Werkema2

•Additional offices of these Banks are located at Windsor Locks, Connecticut 06096; East Rutherford, New Jersey 07016; Utica at Oriskany, New York 13424;Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311: Des Moines. Iowa 50306; Indianapolis. Indiana 46204; Milwaukee.Wisconsin 53202; and Peoria, Illinois 61607.

1. Senior Vice President.2. Executive Vice President


Documents

Federal Reserve Bulletin April 1999