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Table 1 - Page 1

Factors Affecting Reserve Balances of Depsitory Institutions, Part 1 Description of Averages of daily figures Description of close of business Wednesday Description of Reserve Bank Credit Description of Securities held outright Description of U.S. Treasury securities Description of Federal agency debt securities Description of Mortgage-backed securities Description of Term auction credit Description of Repurchase agreements Description of Other loans Description of Primary credit, Secondary credit and Seasonal credit Description of Asset-backed Commercial Paper Money Market Mutual Fund Liquidity Facility Description of Credit extended to American International Group, Inc., net Description of Term Asset-Backed Securities Loan Facility Description of Other credit extensions Description of Net portfolio holdings of Commercial Paper Funding Facility LLC Description of Net portfolio holdings of Maiden Lane LLC Description of Net portfolio holdings of Maiden Lane II LLC Description of Net portfolio holdings of Maiden Lane III LLC Description of Net portfolio holdings of TALF LLC Description of Preferred interests in AIA Aurora LLC and ALICO Holdings LLC Description of Float Description of Central bank liquidity swaps Description of Other Federal Reserve assets Description of Gold stock Description of Special drawing rights certificate account Description of Total factors supplying reserve funds Description of Treasury currency outstanding

 

Reserve Bank credit: Reserve Bank credit is the sum of securities held outright, repurchase agreements, term auction credit, other loans, net portfolio holdings of Commercial Paper Funding Facility LLC, net portfolio holdings of Maiden Lane LLC, net portfolio holdings of Maiden Lane II LLC, net portfolio holdings of Maiden Lane III LLC, net portfolio holdings of TALF LLC, total preferred interests in AIA Aurora LLC and ALICO Holdings LLC, float, central bank liquidity swaps, and other Federal Reserve assets. 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.

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

Primary credit: Primary credit is a lending program available to depository institutions that are in generally sound financial condition. Primary credit is available in terms from overnight to 90 days. In extending primary credit, Reserve Banks must judge that the borrower is likely to remain eligible for primary credit for the term of the loan.

Secondary credit: Secondary credit is a lending program available to depository institutions that are not eligible for primary credit. It is extended on a very short-term basis, typically overnight, at a rate that is 50 basis points above the primary credit rate. In contrast to primary credit, there are restrictions on the uses for secondary credit extensions. Secondary credit is available to meet backup liquidity needs when its use is consistent with a timely return to a reliance on market sources of funding or the orderly resolution of a troubled institution. Secondary credit may not be used to fund an expansion of the borrower's assets. Moreover, the secondary credit program entails a higher level of Reserve Bank administration and oversight than the primary credit program. Reserve Banks typically apply higher haircuts on collateral pledged to secure secondary credit. In addition, the liquidity position of secondary credit borrowers is monitored closely and the Federal Reserve typically is in close contact with the borrower's primary federal regulator.

Seasonal: Seasonal credit is a lending program designed to assist small depository institutions in managing significant seasonal swings in their loans and deposits. Seasonal credit is available to depository institutions that can demonstrate a clear pattern of recurring intra-yearly swings in funding needs. Eligible institutions are usually located in agricultural or tourist areas. The interest rate applied to seasonal credit is a floating rate based on market rates. Return

Asset-backed Commercial Paper Money Market Mutual Fund Liquidity Facility: The Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF) is a lending facility that provides funding to U.S. depository institutions and bank holding companies to finance their purchases of high-quality asset-backed commercial paper (ABCP) from money market mutual funds under certain conditions. The program is intended to assist money funds that hold such paper to meet demands for redemptions by investors and to foster liquidity in the ABCP market and money markets more generally. Return

Credit extended to American International Group, Inc., net: On September 16, 2008, the Federal Reserve announced that it would lend to American International Group, Inc. (AIG) to provide AIG with breathing room to execute a value-maximizing strategic plan. On October 8, 2008, the FRBNY was authorized to extend credit to certain AIG subsidiaries against a range of securities. The credit extended to AIG under both of these programs is reported on this line. The credit extended under the October 8, 2008 agreement has been repaid. Return

Term Asset-Backed Securities Loan Facility: The Term Asset-Backed Securities Loan Facility (TALF) is a funding facility that issues loans with a term of up to three years (and in some cases, five years) to holders of eligible asset-backed securities (ABS). The program is intended to assist the financial markets in accommodating the credit needs of consumers and businesses of all sizes by facilitating the issuance of ABS backed by consumer and small business loans and to improve the market conditions for ABS more generally. Return

Other credit extensions: The value of loans made by Federal Reserve Banks that are not categorized elsewhere on this balance sheet. Recently, this line included emergency credit to Bear Stearns that was announced on March 16, 2008, and, before the credit extension was listed separately, the credit extended to AIG. 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 up front 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 above) 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

Float: Reserve balances can be affected by mismatches in check-clearing operations. When a check is received by a Reserve Bank, the depositing institution's account is credited according to a fixed schedule, regardless of when the check is presented to the bank on which it is drawn. When there are delays in the presentment of checks to the paying institution, the receiving institution's account is credited before the account of the paying depository institution is charged, elevating reserve balances. Conversely, if the paying institution's account is debited faster than the schedule for crediting the receiving institution's account, reserve balances are reduced. These increases or decreases in reserve balances that result from mismatches in the timing of check clearing are known as float. Float figures include the net amount of float-related adjustments. 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 Federal Reserve 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:

Gold stock: The gold stock of the United States is held by the Treasury and consists of gold that has been monetized: the Treasury has issued certificates reflecting the value of the gold to the Federal Reserve in return for a credit for the same dollar value to the Treasury's accounts. The gold stock also includes unmonetized gold, against which certificates have not been issued by the Treasury (although virtually all the Treasury's gold has been monetized since 1974).

The value of the gold stock is recorded on Federal Reserve and Treasury books at $42.22 per troy ounce, the so-called official U.S. government price established by international agreement and confirmed by Congress in 1973. If the Treasury buys or sells gold, however, the purchase or sale is executed at market prices.

Acquisition of gold, and its monetization by the Treasury, can affect reserve balances at depository institutions. Acquisition increases reserve balances "Gold stock" and "Treasury cash holdings" rise, but the "U.S. Treasury, general account" balance falls. Monetization leaves the gold stock unchanged, but reduces Treasury cash holdings and increases the Treasury's general account. Monetization itself does not alter reserve balances, but these balances increase when the Treasury spends the proceeds or shifts the proceeds to the accounts that it maintains with depository institutions. Return

Special drawing right certificate account: Reserve Banks hold special drawing rights certificates (SDRs), an international monetary reserve asset created by the International Monetary Fund in 1970. Under the law providing for the United States' participation in the SDR system, the Secretary of the Treasury is authorized to issue SDR certificates, somewhat similar to gold certificates, to the Reserve Banks, which are required to purchase the SDRs for the purpose of financing SDR acquisitions or exchange stabilization operations. The value of the SDRs is established monthly, based on the exchange rates of a number of the underlying currencies. Return

Treasury currency outstanding: Coin and paper currency (excluding Federal Reserve notes) held by the public, financial institutions, Reserve Banks, and the Treasury are liabilities of the U.S. Treasury. This item consists primarily of coin, but includes about a small amount of U.S. notes--that is, liabilities of the U.S. Treasury--that have been outstanding since the late 1970s. U.S. notes are no longer issued. Return

Total factors supplying reserve funds: Total factors supplying reserve funds are the sum of "Reserve Bank credit," "gold stock," the "special drawing right certificate account," and "Treasury currency outstanding." Return

Averages of daily figures: The figures in column two are seven-day averages of the daily values for each item. The seven days end on the Wednesday date shown, and begin on the Thursday before. The figures in columns three and four are the changes in the item from the seven-day average in column two to the average of the seven days ending on the prior Wednesday (column three) and to the average of the seven days ending on the Wednesday one year prior (column four). Return

Wednesday: The figures in column five are the values for each item at the close of business on the Wednesday date shown. Return

 

Table 1 - Page 2

Factors Affecting Reserve Balances of Depsitory Institutions, Part 2 Description of currency in circulation Description of reverse repurchase agreements Description of Treasury cash holdings Description of Deposits with F.R. Banks, other than reserve balances Description of Other liabilities and capital Description of Total factors, other than reserve balances, absorbing reserve funds Description of Reserve balances with Federal Reserve Banks

 

Currency in circulation: Currency in circulation includes paper currency and coin held both by the public and in the vaults of depository institutions. The total includes Treasury estimates of coins outstanding and Treasury paper currency outstanding. This definition of currency in circulation differs from the currency component of the money stock, a measure of currency used in some other Federal Reserve reports (for example, the H.6 release), which excludes currency held in vaults of depository institutions. 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

Treasury cash holdings: Treasury cash holdings include paper currency and coin held in Treasury vaults, including silver bullion, silver dollars, coinage metal, and unmonetized gold. The value of Treasury cash holdings is estimated using Treasury data. 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."

Other liabilities and capital: A total for other liabilities and capital. The major components of this sum are described in table 9 of the H.4.1 statistical release. This item includes the liabilities to entities other than the Federal Reserve of the LLCs that have been consolidated on the books of the Federal Reserve. Return

Total factors, other than reserve balances, absorbing reserve funds: This item is the sum of "currency in circulation," "reverse repurchase agreements," "Treasury cash holdings," "deposits with Federal Reserve Banks other than reserve balances," and "other liabilities and capital." Return

Reserve balances with Federal Reserve Banks: Reserve balances with Federal Reserve Banks are the difference between "total factors supplying reserve funds" and "total factors, other than reserve balances, absorbing reserve funds." This item includes balances at the Federal Reserve of all depository institutions that are used to satisfy reserve requirements and balances held in excess of balance requirements. It excludes reserves held in the form of cash in bank vaults, and excludes service-related deposits. Return

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