Depository institutions rely on both Treasury securities and municipal
bonds to balance out the level of risk in their asset portfolios (which regulatory
agencies watch very closely) and add liquidity to their portfolios. The purpose
of this exercise is to sample a few of the large depository institutions'
balance sheets and see how heavily they depend on Treasury and municipal bonds.
a. Visit S&P's Market Insight database at mhhe.com/edumarketinsight
and look up the balance sheet of three of the nation's largest diversified
banks and two of the nation's largest thrifts and mortgage finance companies.
(Find the listing by clicking on the "Industry" tab and searching under "GICS
Sub-Ind Constituents" for the categories, "Diversified Banks" and "Thrifts
and Mortgage Finance.")
b. From the most recent annual balance sheets (look under "Excel Analytics")
for each of the companies that you have identified, determine what percentage
of total assets ("Assets-Total") are represented by: (i) Treasuries and Federal
Agency securities ("Investment Securities: National Government"), and (ii)
municipal bonds ("Investment Securities: Local Government").
c. From your results in part (b) does it appear that the large banks place
a greater or lesser reliance on government debt as compared to thrifts and
mortgage finance companies? Why or why not?
