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Table 10 - Page 1

Eliminations column: This partially filled column, labeled Eliminations from Consolidation, precedes the Wednesday column. These data are amounts that are eliminated when consolidating the balance sheets of the 12 Reserve Banks into a single balance sheet. Cash items in transit between Reserve Banks (or Reserve Bank branches) are eliminated from "Items in Process of Collection" and from "Deferred Availability Cash Items" to avoid double counting. Items in transit within the Federal Reserve appear in parentheses in the column labeled "Eliminations from Consolidation." Return

Gold certificate account: The gold certificate account reflects the receipts issued to the Reserve Banks by the Treasury against its gold holdings. In return, the Reserve Banks issue an equal value of credits to the general account of the Treasury, computed at the statutory price of $42.22 per troy ounce. Because nearly all of the gold held by the Treasury has been monetized in this fashion, the Federal Reserve Banks' gold certificate account of $11 billion represents the nation's entire official gold stock. Return

Coin: This item indicates the value of coin on hand at Federal Reserve Banks. The Reserve Banks buy coin at face value from the U.S. Treasury's Bureau of the Mint in order to fill orders from depository institutions. Return

Securities held outright: The amount of securities held by Federal Reserve Banks. This quantity is the cumulative result of permanent open market operations--outright purchases or sales of securities--conducted by the Federal Reserve. Section 14 of the Federal Reserve Act defines the securities that the Federal Reserve is authorized to buy and sell. Return

U.S. Treasury securities: The total face value of U.S. Treasury securities held by the Federal Reserve. This total is broken out in the lines below. Purchases or sales of U.S. Treasury securities by the Federal Reserve Bank of New York (FRBNY) are made in the secondary market, or with various foreign official and international organizations that maintain accounts at the Federal Reserve. FRBNY's purchases or sales in the secondary market are conducted only through primary dealers.

• Bills: The current face value of the Federal Reserve's outright holdings of Treasury bills.
• Notes and bonds, nominal: The current face value of the Federal Reserve's outright holdings of nominal Treasury notes and bonds.
• Notes and bonds, inflation-indexed: The current face value of the Federal Reserve's outright holdings of inflation-indexed Treasury notes and bonds.
• Inflation compensation: Inflation compensation reflects adjustments for the effects of inflation to the principal of inflation-indexed securities.
  Return

Federal agency debt securities: The current face value of federal agency obligations held by Federal Reserve Banks. These securities are direct obligations of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. Return

Mortgage-backed securities: The current face value of mortgage-backed obligations held by Federal Reserve Banks. These securities are guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae. Return

Repurchase agreements: Repurchase agreements reflect some of the Federal Reserve's temporary open market operations. Repurchase agreements are transactions in which securities are purchased from a primary dealer under an agreement to sell them back to the dealer on a specified date in the future. The difference between the purchase price and the repurchase price reflects an interest payment. The Federal Reserve may enter into repurchase agreements for up to 65 business days, but the typical maturity is between one and 14 days. Federal Reserve repurchase agreements supply reserve balances to the banking system for the length of the agreement. The Federal Reserve employs a naming convention for these transactions based on the perspective of the primary dealers: the dealers receive cash while the Federal Reserve receives the collateral. Return

Term auction credit: Under the Term Auction Facility (TAF) program, the Federal Reserve auctions term funds to depository institutions. All depository institutions judged to be in generally sound financial condition by their local Reserve Bank and that are eligible to borrow under the primary credit discount window program are eligible to participate in TAF auctions. All advances must be fully collateralized with an appropriate haircut. Return

Other loans: Other loans is the sum of "Primary credit," "Secondary credit," "Seasonal credit," "Primary dealer and other broker-dealer credit," "Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility," "Credit extended to American International Group, Inc.," �Term Asset-Backed Securities Loan Facility,� and "Other credit extensions." Return

Net portfolio holdings of Commercial Paper Funding Facility LLC: The Commercial Paper Funding Facility (CPFF) provides a liquidity backstop to U.S. issuers of commercial paper through a special purpose vehicle (SPV), the CPFF LLC. This LLC purchases three-month unsecured and asset-backed commercial paper directly from eligible issuers. The Federal Reserve provides financing to the LLC through the CPFF, and all lending is secured by all of the assets of the LLC and, in the case of commercial paper that is not asset-backed commercial paper, by the retention of upfront fees paid by the issuers or by other forms of security acceptable to the Federal Reserve in consultation with market participants. This line reports the book value of the commercial paper and other investments held by the LLC.

Because the FRBNY is the sole beneficiary of the CPFF LLC, the assets and liabilities of the LLC are consolidated onto the books of the FRBNY. Return

Net portfolio holdings of Maiden Lane LLC: To facilitate the acquisition of the Bear Stearns Companies, Inc. by JPMorgan Chase & Co., the Federal Reserve Bank of New York (FRBNY) created and extended credit to Maiden Lane LLC. Maiden Lane LLC is a limited liability company formed to acquire certain assets of Bear Stearns and to manage those assets through time to maximize the repayment of credit extended to it and to minimize disruption to financial markets. This line reports the fair value of the assets held by the LLC.

Because the FRBNY is the primary beneficiary of the LLC, the assets and liabilities of the LLC are consolidated onto the books of the FRBNY. Return

Net portfolio holdings of Maiden Lane II LLC: On December 12, 2008, FRBNY began extending credit to Maiden Lane II LLC, a company formed as part of a restructuring of the government's financial support to AIG, to purchase residential mortgage-backed security (RMBS) assets from AIG subsidiaries. This line reports the fair value of the RMBS held by the LLC.

Because the FRBNY is the primary beneficiary of the LLC, the assets and liabilities of the LLC are consolidated onto the books of the FRBNY. Return

Net portfolio holdings of Maiden Lane III LLC: On November 25, 2008, the FRBNY began extending credit to Maiden Lane III LLC, a company formed to purchase multi-sector collateralized debt obligations (CDOs) on which the Financial Products group of AIG had written credit default swap (CDS) contracts. This line reports the fair value of the CDOs held by the LLC.

Because the FRBNY is the primary beneficiary of the LLC, the assets and liabilities of the LLC are consolidated onto the balance sheet of the FRBNY. Return

Net portfolio holdings of TALF LLC: The loans provided through the TALF (refer to the note accompanying loans extended under the Term Asset-Backed Securities Loan Facility in table 1) to eligible borrowers are non-recourse, meaning that the obligation of the borrower can be discharged by surrendering the collateral to the FRBNY. TALF LLC is a limited liability company formed to purchase and manage any asset-backed securities received by the FRBNY in connection with the decision of a borrower not to repay a TALF loan. This line reports the fair value of the asset-backed securities and other investments held by the LLC.

Because the FRBNY is the primary beneficiary of the LLC, the assets and liabilities of the LLC are consolidated onto the books of the FRBNY. Return

Preferred interests in AIA Aurora LLC and ALICO Holdings LLC: AIA Aurora LLC and ALICO Holdings LLC are two limited liability companies created to directly or indirectly hold all of the outstanding common stock of American International Assurance Company Ltd. (AIA) and American Life Insurance Company (ALICO), two life insurance subsidiaries of AIG. AIG will retain control of AIA Aurora LLC and ALICO Holdings LLC, and the FRBNY will have certain consent, disposition, and conversion rights with respect to its preferred interests. Return

Items in process of collection: Items in the process of collection are checks and other items payable on demand that have been presented to Reserve Banks for collection. On the reporting date, they are in the process of being transported to the institutions on which they are drawn. These items include negotiable orders of withdrawal and matured corporate and municipal coupons. U.S. government checks, postal money orders, and food coupons, although classified as cash items, are not included because they are charged to the Treasury's account on the day they are received by the Federal Reserve. Return

Bank premises: This item is the initial cost of the land and buildings of the Reserve Banks and branches, less an allowance for depreciation on buildings and including building-related machinery and equipment. Return

Central bank liquidity swaps: The FOMC has authorized temporary reciprocal currency arrangements (central bank liquidity swaps) with certain foreign central banks to help provide liquidity in U.S. dollars to overseas markets. These swaps involve two transactions. First, when the foreign central bank draws on the swap line, it sells a specified amount of its currency to the Federal Reserve in exchange for dollars at the prevailing market exchange rate. The foreign currency that the Federal Reserve acquires is placed in an account for the Federal Reserve at the foreign central bank. This line in the statistical release reports the dollar value of the foreign currency held under these swaps. Second, the dollars that the Federal Reserve provides are deposited in an account for the foreign central bank at the Federal Reserve Bank of New York. At the same time as the draw on the swap line, the Federal Reserve and the foreign central bank enter into a binding agreement for a second transaction in which the foreign central bank is obligated to repurchase the foreign currency at a specified future date at the same exchange rate. At the conclusion of the second transaction, the foreign central bank pays a market-based rate of interest to the Federal Reserve. Central bank liquidity swaps are of various maturities, ranging from overnight to three months. Return

Other assets: This item includes other Federal Reserve assets and non-float-related as-of adjustments. In addition to the as-of adjustments, there are many components in this category, including the following major items:

• Assets denominated in foreign currencies: Foreign currencies are revalued to reflect movements in market exchange rates each day. If, in the revaluation, the value of the currency increases, then other Federal Reserve assets increase. On the other side of the balance sheet, "Other liabilities and capital" increase because the increase in value of the currency becomes earnings, which are reflected in the earnings category within the capital account. Other liabilities and capital decline in value as the earnings are removed from this category and the U.S. Treasury's general account increases because the funds are remitted to this account at the Reserve Banks.

  Since 1963, the Federal Reserve has occasionally agreed to warehouse foreign currency for the Treasury. In such transactions, the Federal Reserve takes the foreign currency from the Treasury in return for dollars provided to the Treasury. The Federal Reserve makes a spot purchase of the currency and protects the value of those currencies purchased by simultaneously selling the same amount of currencies forward at the same price to the Treasury.

  When the Federal Reserve warehouses foreign currencies for the Treasury, both "other Federal Reserve assets" and "U.S. Treasury, general account" increase in value at the time of the spot transaction. Both accounts decline when the forward transaction is completed or when currencies are withdrawn from the warehousing arrangement prior to maturity.

• Premiums paid on securities bought: This release reports Federal Reserve holdings of securities at face value, not necessarily at market value. If the Federal Reserve pays more than the face value for securities it purchased, the premiums over the face value are amortized as the securities mature. Part of the premium is transferred daily to the earnings category as a "negative earning." As the premium in "Other Federal Reserve assets" is reduced, a simultaneous balancing reduction is made in "Other liabilities and capital." Securities purchased at a premium over face value are accounted for in this way because, at maturity, the Federal Reserve Banks receive only the face amount of the securities, not the amount actually paid.

  The premiums paid on securities bought under repurchase agreements, though, are not amortized. These premiums are, in effect, returned to the Federal Reserve Banks when the securities are repurchased by the dealer, since the negotiated price in the original transaction reflects the premiums.

• Accrued interest and other accounts receivable: This item represents the daily accumulation of interest earned on U.S. government securities--other than bills--owned by the Federal Reserve or held under repurchase agreements, on loans to depository institutions, and on foreign currency investments. Interest is accrued daily. Return

 

Table 10 - Page 2

Federal Reserve notes, net: This item reflects the total value of Federal Reserve notes (paper currency) outstanding net of the quantities held by Reserve Banks. Return

Reverse repurchase agreements: Reverse repurchase agreements are transactions in which securities are sold to primary dealers or foreign central banks under an agreement to buy them back from the same party on a specified date at the same price plus interest. Reverse repurchase agreements absorb reserve balances from the banking system for the length of the agreement. As with repurchase agreements, the naming convention used here reflects the transaction from the dealers' perspective; the Federal Reserve receives cash in a reverse repurchase agreement and provides collateral to the dealers. Return

Deposits with F.R. Banks, other than reserve balances: This item is the sum of "Term deposits held by depository institutions," "U.S. Treasury, general account," "U.S. Treasury, supplementary financing account," "foreign official accounts," "service-related deposits," and "other deposits."

• Term deposits held by depository institutions: Term deposits are deposits with specified maturity dates that are held by institutions that are eligible to receive interest on their balances at Reserve Banks. Term deposits are separate and distinct from balances maintained in an institution's master account at a Federal Reserve Bank as well as from those maintained in an excess balance account. Term deposits are intended to facilitate the conduct of monetary policy by providing a tool for managing the aggregate quantity of reserve balances.
• Other deposits held by depository institutions: This account reflects the balances in the accounts that depository institutions have with the Federal Reserve Banks. These balances include reserve balances and service-related balances.
• U.S. Treasury, general account: This account is the primary operational account of the U.S. Treasury at the Federal Reserve. Virtually all U.S. government disbursements are made from this account. Some tax receipts, primarily individual and other tax payments made directly to the Treasury, are deposited in this account, and it is also used to collect funds from sales of Treasury debt.
• U.S. Treasury, supplementary financing account: With the dramatic expansion of the Federal Reserve's liquidity facilities, the Treasury agreed to establish the Supplementary Financing Program with the Federal Reserve. Under the Supplementary Financing Program, the Treasury issues debt and places the proceeds in the Supplementary Financing Account. The effect of the account is to drain balances from the deposits of depository institutions, helping to offset, somewhat, the rapid rise in balances that resulted from the various Federal Reserve liquidity facilities.
• Foreign official: Foreign official deposits are balances of foreign central banks and monetary authorities, foreign governments, and other foreign official institutions with accounts at FRBNY. These balances usually are relatively small because the accounts do not bear interest. While transactions in these accounts are handled by FRBNY for balance sheet purposes, the deposits are allocated across all of the Reserve Banks based on each Reserve Bank's capital and surplus.
• Other deposits: Other deposits at Federal Reserve Banks include balances of international and multilateral organizations with accounts at FRBNY, such as the International Monetary Fund, United Nations, International Bank for Reconstruction and Development (World Bank); the special checking account of the ESF (where deposits from monetizing SDRs would be placed); and balances of a few U.S. government agencies, such as the Fannie Mae and Freddie Mac. Return

Deferred availability cash items: Reserve Banks do not give immediate credit for all checks or other items deposited with them for collection because it can take time to collect payment. Reserve Banks defer credit according to a schedule, which takes into account the time for presentments to be made. The maximum credit deferral is two business days, after which funds are added to the depositing institution's reserve account, regardless of whether the item has been collected from the institution on which it is drawn. The difference between "items in process of collection" and "deferred availability cash items" is "float." Return

Other liabilities and accrued dividends: This item is the accrued dividends on Federal Reserve Bank capital stock paid in, accrued between semiannual payment dates (the last business days of June and December). This item also includes the liabilities of the LLCs to entities other than the Federal Reserve that have been consolidated on the Federal Reserve's balance sheet, including liabilities that have recourse only to the portfolio holdings of these LLCs. Return

Capital paid in: Banks that are members of the Federal Reserve System make payments for Federal Reserve Bank capital stock. Each member is required by law to become a shareholder and subscribe to shares of its district Reserve Bank in an amount equal to 6 percent of its own paid-in capital and surplus. Of this amount, half must be paid to the Federal Reserve and half remains subject to call by the Board of Governors. When a member's capital or surplus changes, its holdings of Reserve Bank stock must be adjusted accordingly. Return

Surplus: After expenses are paid and the statutory cumulative 6 percent dividend on paid-in capital stock is met, Reserve Banks are required by law to pay a part of net earnings into surplus so that surplus equals the amount of capital paid in. Return

Other capital accounts: These accounts consist of the unallocated net earnings since the last payment of dividends to stockholders, the amount necessary to equate surplus to paid in capital at year-end, and the accumulated interest to be paid to the Treasury on outstanding Federal Reserve notes. Return

Total Capital: Total capital is the sum of "capital paid in," "surplus," and "other capital accounts." Return