MINUTES OF THE MEETING OF THE 

TREASURY BORROWING ADVISORY COMMITTEE 

OF THE PUBLIC SECURITIES ASSOCIATION 

January 30 and 31, 1996 

The Committee convened at 11:40 a.m. at the Treasury 

Department for the portion of the meeting that was open to the 

public. All members were present, except Mr. Kessenich and Mr. 

McKnew. The Federal Reaister announcement of the meeting and a 

list of Committee members are attached. 

Assistant Secretary for Financial Markets Bradbury welcomed 

the Committee and the public to the meeting. Assistant Secretary 

for Economic Policy Gotbaum summarized the current state of the 

U.S. economy. Jill Ouseley, Director, Office of Market Finance, 

discussed charts, which had been released to the public on 

January 29, updating Treasury borrowing estimates and providing 

statistical information on recent Treasury borrowing and market 

interest rates. 

The public meeting ended at 12:lO p.m. 

Debt limit 

The Committee reconvened in closed session at the Madison 

Hotel at 2:10 p.m. The members were present who had attended the 

public briefing. Assistant Secretary Bradbury gave the Committee 

its Charge, which is also attached. The Committee began by 

agreeing by consensus to open its report to the Secretary with an 

apolitical statement of its concern that the statutory debt limit 

should be increased in order to prevent a default on the 

Governmentgs obligations. 

February refundinq 

The Committee then discussed an overall approach to funding 

for the January-March and April-June quarters, displayed in the 

attached draft proformas, which were prepared by one of the 

Committee members using the Treasury market borrowing estimates 

that were released by the Treasury on January 29. 

The Committee voted unanimously to recommend a February midquarter refunding consisting of offerings to the public of $18.5 

billion of 3-year notes, $14.0 billion of 10-year notes, $12.0 

billion of 30-year bonds to raise a total of $13.2 billion of 

cash in the refunding. Each of the amounts of the notes and 

bonds is $0.5 billion above amounts offered in the most recent 

sale of each maturity. The Committee voted by 15-1 to recommend a 

new 10-year note and unanimously to recommend a new 30-year bond, 

as opposed to reopening outstanding securities. The Committee 
also voted unanimously to recommend issuing $8 billion of cash 

management bills (CUBS) maturing on February 29, 1996. 

For the rest of the January-March quarter, the committee 

consensus was to raise each of the notes and 52-week bills by 

$0.5 billion and finance the remainder of the borrowing need in 

bills, especially CMBs with April maturities. 

The Committee agreed by consensus to recommend a financing 

plan for the April-June quarter, which includes a $0.5 billion 

increase in each of the notes, except for a $1.0 billion increase 

in the 10-year notes, and $0.5 billion increase in the 52-week 

bills, and paying down Treasury bills, on balance. 

Schedulina Government - s~onsored en ter~rise market entry 

In reply to the question in the Charge, the Committee 

consensus was that the Treasury's traditional @@traffic cop8@ role 

in scheduling GSEsl new issues does not make a significant 

contribution to the stability of either the Treasury market or 

the market for agency securities. The consensus was0that, while 

this Treasury function probably served a historical purpose, it 

is anachronistic in today's highly liquid capital markets and 

could be streamlined. 

The meeting adjourned at 3:40 p.m. 
Januarv 31 

The Committee reconvened at 8:30 a.m. at the Treasury in 

closed session. All members were present, except Mr. Kessenich. 

The Chairman presented the Committee report (copy attached) to 

Under Secretary for Domestic Finance Hawke and Assistant 

Secretary Bradbury. 

In response to questions, the Committee expanded on the 

discussion in the Committee report regarding Treasury approval of 

the timing of Government-sponsored enterprise sales of debt 

securities. Also, the committee urged the Treasury to announce 

as soon as practical the borrowing strategy that it intends to 

pursue over the next several years. For example, whether the 

Treasury intends to increase the number of times securities are 

offered or to introduce alternative debt instruments. 

The meeting adjourned at 8:45 a.m. 

11 K. Ouseley, 

of Market Direr0r Fina ce v Domestic Finance 

January 31, 1996 

Attachments 

Certified by: 

Committee 

of the Public Securities Association 

January 31, 1996