Transactions Between Member Banks and Their Affiliates: Exemption for Certain Purchases of Asset-Backed Commercial Paper by a Member Bank From an Affiliate, 55708-55710 [E8-22701]
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55708
Federal Register / Vol. 73, No. 188 / Friday, September 26, 2008 / Rules and Regulations
Appendix B to Part 208—Capital
Adequacy Guidelines for State Member
Banks: Tier 1 Leverage Measure
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*
*
*
*
II. * * *
h. Notwithstanding anything in this
appendix to the contrary, a bank may deduct
from its average total consolidated assets the
amount of any asset-backed commercial
paper (i) purchased by the bank between
September 19, 2008, and January 30, 2009
(unless extended by the Board), from an SECregistered open-end investment company
that holds itself out as a money market
mutual fund under SEC Rule 2a–7 (17 CFR
270.2a–7) and (ii) pledged by the bank to a
Federal Reserve Bank to secure financing
from the ABCP lending facility established by
the Board on September 19, 2008.
PART 225—BANK HOLDING
COMPANIES AND CHANGE IN BANK
CONTROL (REGULATION Y)
1. The authority citation for part 225
continues to read as follows:
■
Authority: 12 U.S.C. 1817(j)(13), 1818,
1828(o), 1831i, 1831p–1, 1843(c)(8), 1844(b),
1972(1), 3106, 3108, 3310, 3331–3351, 3907,
and 3909; 15 U.S.C. 6801 and 6805.
2. In Appendix A to part 225, amend
section III.C.1. by adding a new third
paragraph to read as follows:
■
Appendix A to Part 225—Capital
Adequacy Guidelines for Bank Holding
Companies: Risk-Based Measure
*
*
*
*
*
*
*
*
III. * * *
C. * * *
1. * * *
*
*
This category also includes ABCP (i)
purchased by a bank holding company
between September 19, 2008, and January 30,
2009 (unless extended by the Board), from an
SEC-registered open-end investment
company that holds itself out as a money
market mutual fund under SEC Rule 2a–7 (17
CFR 270.2a–7) and (ii) pledged by the bank
holding company to a Federal Reserve Bank
to secure financing from the ABCP lending
facility established by the Board on
September 19, 2008.
*
*
*
*
*
3. In Appendix D to part 225, amend
section II by adding new paragraph d to
read as follows:
■
Appendix D to Part 225—Capital
Adequacy Guidelines for Bank Holding
Companies: Tier 1 Leverage Measure
sroberts on PROD1PC70 with RULES
*
*
*
*
*
II. * * *
d. Notwithstanding anything in this
appendix to the contrary, a bank holding
company may deduct from its average total
consolidated assets the amount of any assetbacked commercial paper (i) purchased by
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17:40 Sep 25, 2008
Jkt 214001
the bank holding company between
September 19, 2008, and January 30, 2009
(unless extended by the Board), from an SECregistered open-end investment company
that holds itself out as a money market
mutual fund under SEC Rule 2a–7 (17 CFR
270.2a–7) and (ii) pledged by the bank
holding company to a Federal Reserve Bank
to secure financing from the ABCP lending
facility established by the Board on
September 19, 2008.
By order of the Board of Governors of the
Federal Reserve System, September 19, 2008.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. E8–22702 Filed 9–25–08; 8:45 am]
BILLING CODE 6210–01–P
FEDERAL RESERVE SYSTEM
12 CFR Part 223
[Regulation W; Docket No. R–1331]
Transactions Between Member Banks
and Their Affiliates: Exemption for
Certain Purchases of Asset-Backed
Commercial Paper by a Member Bank
From an Affiliate
Board of Governors of the
Federal Reserve System.
ACTION: Interim final rule with request
for public comment.
AGENCY:
SUMMARY: To reduce liquidity and other
strains being experienced by money
market mutual funds, the Federal
Reserve System adopted on September
19, 2008, a special lending facility that
enables depository institutions and bank
holding companies to borrow from the
Federal Reserve Bank of Boston on a
non-recourse basis if they use the
proceeds of the loan to purchase certain
types of asset-backed commercial paper
(ABCP) from money market mutual
funds (ABCP Lending Facility). To
facilitate use of the ABCP Lending
Facility by member banks, the Board of
Governors of the Federal Reserve
System (Board) also has adopted, on an
interim final basis, regulatory
exemptions for member banks from
certain provisions of sections 23A and
23B of the Federal Reserve Act and the
Board’s Regulation W. The exemptions
would increase the capacity of a
member bank to purchase ABCP from
affiliated money market mutual funds in
connection with the ABCP Lending
Facility.
DATES: The exemption became effective
on September 19, 2008. Comments must
be received on or before October 31,
2008.
ADDRESSES: You may submit comments,
identified by Docket No. R–1331, by any
of the following methods:
PO 00000
Frm 00026
Fmt 4700
Sfmt 4700
• Agency Web Site: https://
www.federalreserve.gov Follow the
instructions for submitting comments at
https://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
• Federal eRulemaking Portal: https://
www.regulations.gov Follow the
instructions for submitting comments.
• E-mail:
regs.comments@federalreserve.gov.
Include docket number in the subject
line of the message.
• Fax: (202) 452–3819 or (202) 452–
3102.
• Mail: Jennifer J. Johnson, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue, NW., Washington,
DC 20551.
All public comments are available
from the Board’s Web site at https://
www.federalreserve.gov/generalinfo/
foia/ProposedRegs.cfm as submitted,
unless modified for technical reasons.
Accordingly, your comments will not be
edited to remove any identifying or
contact information. Public comments
may also be viewed electronically or in
paper form in Room MP–500 of the
Board’s Martin Building (20th and C
Street, NW) between 9 a.m. and 5 p.m.
on weekdays.
FOR FURTHER INFORMATION CONTACT:
Mark E. Van Der Weide, Assistant
General Counsel, (202) 452–2263, or
Andrea R. Tokheim, Counsel, (202) 452–
2300, Legal Division; or Norah M.
Barger, Deputy Director, (202) 452–
2402, Division of Banking Supervision
and Regulation. For the hearing
impaired only, Telecommunication
Device for the Deaf (TDD), (202) 263–
4869.
In light of
the ongoing dislocations in the financial
markets, and the impact of such
dislocations on the functioning of the
ABCP markets and on the operations of
money market mutual funds, the Board
adopted the ABCP Lending Facility on
September 19, 2008. Under the facility,
depository institutions and bank
holding companies (banking
organizations) are able to borrow from
the Federal Reserve Bank of Boston on
a non-recourse basis on condition that
the organizations use the proceeds of
the Federal Reserve credit to purchase,
at amortized cost, certain highly rated
U.S. dollar-denominated ABCP from
money market mutual funds. The ABCP
purchased must be used to secure the
borrowing from the Reserve Bank. The
purpose of the ABCP Lending Facility is
to assist money market mutual funds to
obtain liquidity by enabling them to sell
some of their high-credit-quality
secured assets at amortized cost. The
SUPPLEMENTARY INFORMATION:
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Federal Register / Vol. 73, No. 188 / Friday, September 26, 2008 / Rules and Regulations
sroberts on PROD1PC70 with RULES
ABCP Lending Facility will expire on
January 30, 2009 (unless extended by
the Board).
To facilitate usage of the ABCP
Lending Facility, the Board has adopted
on an interim basis exemptions from
sections 23A and 23B of the Federal
Reserve Act (12 U.S.C. 371c, 371c-1)
and the Board’s Regulation W (12 CFR
part 223). The exemptions increase the
capacity of a member bank to purchase
ABCP from an affiliated money market
mutual fund in connection with the
ABCP Lending Facility. In addition, a
member bank may use the exemptions
only if the bank has not been
specifically informed by the Board, after
consultation with the bank’s appropriate
Federal banking agency, that the bank
may not use these exemptions. If the
Board believes, after such consultation,
that use of the exemptions would not be
appropriate for the member bank, the
Board may withdraw the exemptions for
the bank or may impose supplemental
conditions on the bank’s use of the
exemptions.
The Board has determined that these
exemptions are in the public interest
and consistent with the purposes of
sections 23A and 23B. The substantial
protections provided to intermediaries
by the Federal Reserve in connection
with the ABCP Lending Facility largely
mitigate the safety-and-soundness
concerns that sections 23A and 23B
were designed to address. Because
Federal Reserve extensions of credit to
a member bank under the ABCP
Lending Facility are on a non-recourse
basis, the bank should bear no risk of
loss from purchases of ABCP under the
facility. Therefore, the Board believes
that it is appropriate to exempt a
member bank that serves as an
intermediary in the ABCP Lending
Facility from the requirements of
sections 23A and 23B and Regulation
W.
Consistent with its purpose to
mitigate temporary stresses faced by
money market mutual funds, the interim
final rule will expire on January 30,
2009, unless extended by the Board.
Administrative Procedure Act
Pursuant to sections 553(b) and (d) of
the Administrative Procedure Act (5
U.S.C. 553(b) and (d)), the Board finds
that there is good cause for making the
rule effective immediately on September
19, 2008, and that it is impracticable,
unnecessary, or contrary to the public
interest to issue a notice of proposed
rulemaking and provide an opportunity
to comment before the effective date.
The Board has adopted the rule in light
of, and to help address, the continuing
unusual and exigent circumstances in
VerDate Aug<31>2005
17:40 Sep 25, 2008
Jkt 214001
the financial markets. The rule will
provide immediate relief to depository
institutions that elect to participate in
the ABCP Lending Facility. The Board
is soliciting comment on all aspects of
the rule and will make any changes that
it considers appropriate or necessary
after review of any comments received.
Regulatory Flexibility Act
The Regulatory Flexibility Act
requires an agency that is issuing a final
rule to prepare and make available a
regulatory flexibility analysis that
describes the impact of the final rule on
small entities. 5 U.S.C. 603(a). The
Regulatory Flexibility Act provides that
an agency is not required to prepare and
publish a regulatory flexibility analysis
if the agency certifies that the final rule
will not have a significant economic
impact on a substantial number of small
entities. 5 U.S.C. 605(b).
Pursuant to section 605(b), the Board
certifies that this interim final rule will
not have a significant economic impact
on a substantial number of small
entities. The rule reduces regulatory
burden on large and small insured
depository institutions by granting
exemptions from the Federal
transactions with affiliates regime for
insured depository institutions that
purchase ABCP from affiliated money
market mutual funds pursuant to the
ABCP Lending Facility.
Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act (44 U.S.C. 3506; 5 CFR
Part 1320 Appendix A.1), the Board has
reviewed the interim final rule under
authority delegated to the Board by the
Office of Management and Budget. The
rule contains no collections of
information pursuant to the Paperwork
Reduction Act.
Plain Language
Section 722 of the Gramm-LeachBliley Act requires the Board to use
‘‘plain language’’ in all proposed and
final rules. In light of this requirement,
the Board has sought to present the
interim final rule in a simple and
straightforward manner. The Board
invites comment on whether it could
take additional steps to make the rule
easier to understand.
List of Subjects in 12 CFR Part 223
Banks, Banking, Federal Reserve
System.
Authority and Issuance
For the reasons set forth in the
preamble, the Board amends Chapter II
of Title 12 of the Code of Federal
Regulations as follows:
■
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Fmt 4700
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55709
PART 223—TRANSACTIONS
BETWEEN MEMBER BANKS AND
THEIR AFFILIATES (REGULATION W)
1. The authority citation for part 223
continues to read as follows:
■
Authority: 12 U.S.C. 371c and 371c–1.
2. In § 223.42, add paragraph (o) to
read as follows:
■
§ 223.42 What covered transactions are
exempt from the quantitative limits,
collateral requirements, and low-quality
asset prohibition?
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*
*
*
*
(o) Purchases of certain asset-backed
commercial paper. Purchases of assetbacked commercial paper from an
affiliated SEC-registered open-end
investment company that holds itself
out as a money market mutual fund
under SEC Rule 2a–7 (17 CFR 270.2a–
7), if the member bank:
(1) Purchases the asset-backed
commercial paper between September
19, 2008, and January 30, 2009 (unless
extended by the Board), pursuant to the
asset-backed commercial paper lending
facility established by the Board on
September 19, 2008; and
(2) Has not been specifically informed
by the Board, after consultation with the
member bank’s appropriate Federal
banking agency, that the member bank
may not use this exemption.
3. Add a new § 223.56 to subpart F to
read as follows:
■
§ 223.56 What transactions are exempt
from the market-terms requirement of
section 23B?
The following transactions are exempt
from the market-terms requirement of
§ 223.51.
(a) Purchases of certain asset-backed
commercial paper. Purchases of assetbacked commercial paper from an
affiliated SEC-registered open-end
investment company that holds itself
out as a money market mutual fund
under SEC Rule 2a–7 (17 CFR 270.2a–
7), if the member bank:
(1) Purchases the asset-backed
commercial paper between September
19, 2008, and January 30, 2009 (unless
extended by the Board), pursuant to the
asset-backed commercial paper lending
facility established by the Board on
September 19, 2008; and
(2) Has not been specifically informed
by the Board, after consultation with the
member bank’s appropriate Federal
banking agency, that the member bank
may not use this exemption.
(b) [Reserved]
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55710
Federal Register / Vol. 73, No. 188 / Friday, September 26, 2008 / Rules and Regulations
By order of the Board of Governors of the
Federal Reserve System, September 19, 2008.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. E8–22701 Filed 9–25–08; 8:45 am]
BILLING CODE 6210–01–P
FEDERAL HOUSING FINANCE BOARD
12 CFR Part 915
FEDERAL HOUSING FINANCE
AGENCY
12 CFR Part 1261
RIN 2590–AA03
Federal Home Loan Bank Boards of
Directors: Eligibility and Elections
Federal Housing Finance
Board; Federal Housing Finance
Agency.
ACTION: Interim final rule with request
for comments.
sroberts on PROD1PC70 with RULES
AGENCIES:
SUMMARY: The Federal Housing Finance
Agency (FHFA) is issuing and seeking
comment on an interim final regulation
to implement section 1202 of the
Housing and Economic Recovery Act of
2008, which revises section 7 of the
Federal Home Loan Bank Act (Bank
Act). Section 7 governs the eligibility
and election of individuals to serve on
the boards of directors of the 12 Federal
Home Loan Banks (Banks).
DATES: This interim final rule is
effective on September 26, 2008. The
FHFA will accept written comments on
the interim final rule on or before
November 25, 2008.
ADDRESSES: Submit comments to the
FHFA using any one of the following
methods:
E-mail: comments@fhfb.gov. Please
include RIN 2590–AA03 in the subject
line of the message.
Fax: 202–408–2580.
Mail/Hand Delivery: Federal Housing
Finance Board, 1625 Eye Street, NW.,
Washington DC 20006, Attention: Public
Comments/RIN 2590–AA03.
Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments. If
you submit your comment to the
Federal eRulemaking Portal, please also
send it by e-mail to the FHFA at
comments@fhfb.gov to ensure timely
receipt by the FHFA. Include the
following information in the subject line
of your submission: Federal Housing
Finance Agency. Interim Final Rule:
Federal Home Loan Bank Boards of
Directors: Eligibility and Elections. RIN
Number 2590–AA03.
VerDate Aug<31>2005
18:25 Sep 25, 2008
Jkt 214001
We will post all public comments we
receive without change, including any
personal information you provide, such
as your name and address, on the FHFA
Web site at https://www.fhfb.gov/
Default.aspx?Page=93&Top=93.
FOR FURTHER INFORMATION CONTACT:
Thomas P. Jennings, Senior Attorney
Advisor (FHFB), jenningst@fhfb.gov,
(202) 408–2553; or Patricia L. Sweeney,
Management Analyst (FHFB),
sweeneyp@fhfb.gov or (202) 408–2872.
You can send regular mail to the Federal
Housing Finance Board, 1625 Eye
Street, NW., Washington DC 20006.
SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Background
Effective July 30, 2008, the Federal
Housing Finance Regulatory Reform Act
of 2008 (Act), Division A of the Housing
and Economic Recovery Act of 2008,
Public Law No. 110–289, 122 Stat. 2654
(2008), transferred the supervisory and
oversight responsibilities of the Office of
Federal Housing Enterprise Oversight
and the Federal Housing Finance Board
over the Federal National Mortgage
Association (Fannie Mae), Federal
Home Loan Mortgage Corporation
(Freddie Mac) (collectively,
Enterprises), and the Banks to a new
independent executive branch agency
known as the Federal Housing Finance
Agency (FHFA). The FHFA is
responsible for ensuring that the
Enterprises and the Banks operate in a
safe and sound manner, including being
capitalized adequately, and carry out
their public policy missions, including
fostering liquid, efficient, competitive,
and resilient national housing finance
markets. The Enterprises and the Banks
continue to operate under regulations
promulgated by OFHEO and the FHFB
until the FHFA issues its own
regulations.
Section 1101 of the Act revised
section 7 of the Bank Act. 12 U.S.C.
1427. The FHFB regulation
implementing section 7 is codified at 12
CFR part 915. Part 915 governed the
nomination and election only of those
directors who are chosen from among
the officers and directors of members of
the Banks, which this interim final rule
refers to as member directors. The Act
amended section 7(b) of the Bank Act,
12 U.S.C. 1427(b), to give the members
the right to also elect all of the other
directors on the boards of directors of
the Banks, which other directors are
referred to in this interim final rule as
independent directors. The FHFA has
kept the basic process of elections that
exists in part 915 as it applies to
member directorships, making changes
as necessary to comply with the
PO 00000
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amendments to section 7 of the Bank
Act. The FHFA has added provisions to
govern the process for nominating
individuals for independent
directorships and for conducting the
election of independent directors in
conjunction with the election of
member directors. The organizational
structure of part 915 also has been
revised.
Section 1201 of the Act (codified at 12
U.S.C. 4513(f)) requires the Director of
the FHFA to consider the differences
between the Banks and the Enterprises
in rulemakings that affect the Banks
with respect to the Banks’ cooperative
ownership structure, mission of
providing liquidity to members,
affordable housing and community
development mission, capital structure,
and joint and several liability. In
preparing the interim final rule, the
Director considered these factors and
determined that the rule is appropriate,
particularly because this interim final
rule implements a statutory provision of
the Bank Act that applies only to the
Banks. See 12 U.S.C. 1427.
II. Description of the Interim Final Rule
The interim final regulation removes
part 915 of the FHFB regulations and
establishes part 1261 of the FHFA
regulations, which will contain the rules
governing the eligibility and election of
Bank directors. The name of new part
1261 will read ‘‘Federal Home Loan
Bank Director Eligibility and Elections.’’
A. Definitions: Section 1261.1
The FHFA has made technical
changes to the definitions of ‘‘bona fide
resident,’’ ‘‘guaranteed directorship,’’
‘‘stock directorship,’’ and ‘‘voting state,’’
but their meanings remain the same as
they were in part 915. The meaning of
‘‘record date’’ has not changed. The
identification number for the Banks is
the same, except that it is now the
number assigned by the FHFA.
The Act’s amendments to section 7 of
the Bank Act, 12 U.S.C. 1427, divide the
directorships of the Banks into two
categories—member directorships and
independent directorships. Both types
of directorships are filled by a vote of
the members; however, elections for
member directors are held on a state-bystate basis, whereas independent
directors are elected at large by all the
members of a Bank without regard to
whether the members located in a
particular voting state may be voting on
member directors in any particular year.
The definitions of ‘‘independent
directorship’’ and ‘‘member
directorship’’ reflect that difference.
The definitions of ‘‘guaranteed
directorship’’ and ‘‘stock directorship’’
E:\FR\FM\26SER1.SGM
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]]>Agencies
[Federal Register Volume 73, Number 188 (Friday, September 26, 2008)]
[Rules and Regulations]
[Pages 55708-55710]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-22701]
-----------------------------------------------------------------------
FEDERAL RESERVE SYSTEM
12 CFR Part 223
[Regulation W; Docket No. R-1331]
Transactions Between Member Banks and Their Affiliates: Exemption
for Certain Purchases of Asset-Backed Commercial Paper by a Member Bank
From an Affiliate
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Interim final rule with request for public comment.
-----------------------------------------------------------------------
SUMMARY: To reduce liquidity and other strains being experienced by
money market mutual funds, the Federal Reserve System adopted on
September 19, 2008, a special lending facility that enables depository
institutions and bank holding companies to borrow from the Federal
Reserve Bank of Boston on a non-recourse basis if they use the proceeds
of the loan to purchase certain types of asset-backed commercial paper
(ABCP) from money market mutual funds (ABCP Lending Facility). To
facilitate use of the ABCP Lending Facility by member banks, the Board
of Governors of the Federal Reserve System (Board) also has adopted, on
an interim final basis, regulatory exemptions for member banks from
certain provisions of sections 23A and 23B of the Federal Reserve Act
and the Board's Regulation W. The exemptions would increase the
capacity of a member bank to purchase ABCP from affiliated money market
mutual funds in connection with the ABCP Lending Facility.
DATES: The exemption became effective on September 19, 2008. Comments
must be received on or before October 31, 2008.
ADDRESSES: You may submit comments, identified by Docket No. R-1331, by
any of the following methods:
Agency Web Site: https://www.federalreserve.gov Follow the
instructions for submitting comments at https://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
Federal eRulemaking Portal: https://www.regulations.gov
Follow the instructions for submitting comments.
E-mail: regs.comments@federalreserve.gov. Include docket
number in the subject line of the message.
Fax: (202) 452-3819 or (202) 452-3102.
Mail: Jennifer J. Johnson, Secretary, Board of Governors
of the Federal Reserve System, 20th Street and Constitution Avenue,
NW., Washington, DC 20551.
All public comments are available from the Board's Web site at
https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical reasons. Accordingly, your
comments will not be edited to remove any identifying or contact
information. Public comments may also be viewed electronically or in
paper form in Room MP-500 of the Board's Martin Building (20th and C
Street, NW) between 9 a.m. and 5 p.m. on weekdays.
FOR FURTHER INFORMATION CONTACT: Mark E. Van Der Weide, Assistant
General Counsel, (202) 452-2263, or Andrea R. Tokheim, Counsel, (202)
452-2300, Legal Division; or Norah M. Barger, Deputy Director, (202)
452-2402, Division of Banking Supervision and Regulation. For the
hearing impaired only, Telecommunication Device for the Deaf (TDD),
(202) 263-4869.
SUPPLEMENTARY INFORMATION: In light of the ongoing dislocations in the
financial markets, and the impact of such dislocations on the
functioning of the ABCP markets and on the operations of money market
mutual funds, the Board adopted the ABCP Lending Facility on September
19, 2008. Under the facility, depository institutions and bank holding
companies (banking organizations) are able to borrow from the Federal
Reserve Bank of Boston on a non-recourse basis on condition that the
organizations use the proceeds of the Federal Reserve credit to
purchase, at amortized cost, certain highly rated U.S. dollar-
denominated ABCP from money market mutual funds. The ABCP purchased
must be used to secure the borrowing from the Reserve Bank. The purpose
of the ABCP Lending Facility is to assist money market mutual funds to
obtain liquidity by enabling them to sell some of their high-credit-
quality secured assets at amortized cost. The
[[Page 55709]]
ABCP Lending Facility will expire on January 30, 2009 (unless extended
by the Board).
To facilitate usage of the ABCP Lending Facility, the Board has
adopted on an interim basis exemptions from sections 23A and 23B of the
Federal Reserve Act (12 U.S.C. 371c, 371c-1) and the Board's Regulation
W (12 CFR part 223). The exemptions increase the capacity of a member
bank to purchase ABCP from an affiliated money market mutual fund in
connection with the ABCP Lending Facility. In addition, a member bank
may use the exemptions only if the bank has not been specifically
informed by the Board, after consultation with the bank's appropriate
Federal banking agency, that the bank may not use these exemptions. If
the Board believes, after such consultation, that use of the exemptions
would not be appropriate for the member bank, the Board may withdraw
the exemptions for the bank or may impose supplemental conditions on
the bank's use of the exemptions.
The Board has determined that these exemptions are in the public
interest and consistent with the purposes of sections 23A and 23B. The
substantial protections provided to intermediaries by the Federal
Reserve in connection with the ABCP Lending Facility largely mitigate
the safety-and-soundness concerns that sections 23A and 23B were
designed to address. Because Federal Reserve extensions of credit to a
member bank under the ABCP Lending Facility are on a non-recourse
basis, the bank should bear no risk of loss from purchases of ABCP
under the facility. Therefore, the Board believes that it is
appropriate to exempt a member bank that serves as an intermediary in
the ABCP Lending Facility from the requirements of sections 23A and 23B
and Regulation W.
Consistent with its purpose to mitigate temporary stresses faced by
money market mutual funds, the interim final rule will expire on
January 30, 2009, unless extended by the Board.
Administrative Procedure Act
Pursuant to sections 553(b) and (d) of the Administrative Procedure
Act (5 U.S.C. 553(b) and (d)), the Board finds that there is good cause
for making the rule effective immediately on September 19, 2008, and
that it is impracticable, unnecessary, or contrary to the public
interest to issue a notice of proposed rulemaking and provide an
opportunity to comment before the effective date. The Board has adopted
the rule in light of, and to help address, the continuing unusual and
exigent circumstances in the financial markets. The rule will provide
immediate relief to depository institutions that elect to participate
in the ABCP Lending Facility. The Board is soliciting comment on all
aspects of the rule and will make any changes that it considers
appropriate or necessary after review of any comments received.
Regulatory Flexibility Act
The Regulatory Flexibility Act requires an agency that is issuing a
final rule to prepare and make available a regulatory flexibility
analysis that describes the impact of the final rule on small entities.
5 U.S.C. 603(a). The Regulatory Flexibility Act provides that an agency
is not required to prepare and publish a regulatory flexibility
analysis if the agency certifies that the final rule will not have a
significant economic impact on a substantial number of small entities.
5 U.S.C. 605(b).
Pursuant to section 605(b), the Board certifies that this interim
final rule will not have a significant economic impact on a substantial
number of small entities. The rule reduces regulatory burden on large
and small insured depository institutions by granting exemptions from
the Federal transactions with affiliates regime for insured depository
institutions that purchase ABCP from affiliated money market mutual
funds pursuant to the ABCP Lending Facility.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act (44 U.S.C. 3506; 5
CFR Part 1320 Appendix A.1), the Board has reviewed the interim final
rule under authority delegated to the Board by the Office of Management
and Budget. The rule contains no collections of information pursuant to
the Paperwork Reduction Act.
Plain Language
Section 722 of the Gramm-Leach-Bliley Act requires the Board to use
``plain language'' in all proposed and final rules. In light of this
requirement, the Board has sought to present the interim final rule in
a simple and straightforward manner. The Board invites comment on
whether it could take additional steps to make the rule easier to
understand.
List of Subjects in 12 CFR Part 223
Banks, Banking, Federal Reserve System.
Authority and Issuance
0
For the reasons set forth in the preamble, the Board amends Chapter II
of Title 12 of the Code of Federal Regulations as follows:
PART 223--TRANSACTIONS BETWEEN MEMBER BANKS AND THEIR AFFILIATES
(REGULATION W)
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1. The authority citation for part 223 continues to read as follows:
Authority: 12 U.S.C. 371c and 371c-1.
0
2. In Sec. 223.42, add paragraph (o) to read as follows:
Sec. 223.42 What covered transactions are exempt from the
quantitative limits, collateral requirements, and low-quality asset
prohibition?
* * * * *
(o) Purchases of certain asset-backed commercial paper. Purchases
of asset-backed commercial paper from an affiliated SEC-registered
open-end investment company that holds itself out as a money market
mutual fund under SEC Rule 2a-7 (17 CFR 270.2a-7), if the member bank:
(1) Purchases the asset-backed commercial paper between September
19, 2008, and January 30, 2009 (unless extended by the Board), pursuant
to the asset-backed commercial paper lending facility established by
the Board on September 19, 2008; and
(2) Has not been specifically informed by the Board, after
consultation with the member bank's appropriate Federal banking agency,
that the member bank may not use this exemption.
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3. Add a new Sec. 223.56 to subpart F to read as follows:
Sec. 223.56 What transactions are exempt from the market-terms
requirement of section 23B?
The following transactions are exempt from the market-terms
requirement of Sec. 223.51.
(a) Purchases of certain asset-backed commercial paper. Purchases
of asset-backed commercial paper from an affiliated SEC-registered
open-end investment company that holds itself out as a money market
mutual fund under SEC Rule 2a-7 (17 CFR 270.2a-7), if the member bank:
(1) Purchases the asset-backed commercial paper between September
19, 2008, and January 30, 2009 (unless extended by the Board), pursuant
to the asset-backed commercial paper lending facility established by
the Board on September 19, 2008; and
(2) Has not been specifically informed by the Board, after
consultation with the member bank's appropriate Federal banking agency,
that the member bank may not use this exemption.
(b) [Reserved]
[[Page 55710]]
By order of the Board of Governors of the Federal Reserve
System, September 19, 2008.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. E8-22701 Filed 9-25-08; 8:45 am]
BILLING CODE 6210-01-P
