Regulation D: Reserve Requirements of Depository Institutions, 7636-7637 [2017-00613]

Download as PDF 7636 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations responding to economic data and conditions. For these reasons, the Board has determined that ‘‘good cause’’ within the meaning of the APA exists to dispense with the notice, public comment, and delayed effective date procedures of the APA with respect to the final amendments to Regulation A. institutions under § 201.4(a) is 1.25 percent. (b) Secondary credit. The interest rate at each Federal Reserve Bank for secondary credit provided to depository institutions under § 201.4(b) is 1.75 percent. * * * * * Regulatory Flexibility Analysis The Regulatory Flexibility Act (‘‘RFA’’) does not apply to a rulemaking where a general notice of proposed rulemaking is not required.2 As noted previously, a general notice of proposed rulemaking is not required if the final rule involves a matter relating to loans. Furthermore, the Board has determined that it is unnecessary and contrary to the public interest to publish a general notice of proposed rulemaking for this final rule. Accordingly, the RFA’s requirements relating to an initial and final regulatory flexibility analysis do not apply. By order of the Board of Governors of the Federal Reserve System, January 9, 2017. Robert deV. Frierson, Secretary of the Board. Paperwork Reduction Act In accordance with the Paperwork Reduction Act (‘‘PRA’’) of 1995 (44 U.S.C. 3506; 5 CFR part 1320 Appendix A.1), the Board reviewed the final rule under the authority delegated to the Board by the Office of Management and Budget. The final rule contains no requirements subject to the PRA. AGENCY: List of Subjects in 12 CFR Part 201 Banks, banking, Federal Reserve System, Reporting and recordkeeping. Authority and Issuance For the reasons set forth in the preamble, the Board is amending 12 CFR Chapter II to read as follows: 12 CFR CHAPTER II PART 201—EXTENSIONS OF CREDIT BY FEDERAL RESERVE BANKS (REGULATION A) 1. The authority citation for part 201 continues to read as follows: ■ Authority: 12 U.S.C. 248(i)–(j), 343 et seq., 347a, 347b, 347c, 348 et seq., 357, 374, 374a, and 461. 2. In § 201.51, paragraphs (a) and (b) are revised to read as follows: ■ mstockstill on DSK3G9T082PROD with RULES § 201.51 Interest rates applicable to credit extended by a Federal Reserve Bank.3 (a) Primary credit. The interest rate at each Federal Reserve Bank for primary credit provided to depository 25 U.S.C. 603 and 604. primary, secondary, and seasonal credit rates described in this section apply to both advances and discounts made under the primary, secondary, and seasonal credit programs, respectively. 3 The VerDate Sep<11>2014 18:54 Jan 19, 2017 Jkt 241001 [FR Doc. 2017–00612 Filed 1–19–17; 8:45 am] BILLING CODE 6210–01–P FEDERAL RESERVE SYSTEM 12 CFR Part 204 [Docket No. R–1559] RIN 7100 AE–67 Regulation D: Reserve Requirements of Depository Institutions Board of Governors of the Federal Reserve System. ACTION: Final rule. The Board of Governors of the Federal Reserve System (‘‘Board’’) is amending Regulation D (Reserve Requirements of Depository Institutions) to revise the rate of interest paid on balances maintained to satisfy reserve balance requirements (‘‘IORR’’) and the rate of interest paid on excess balances (‘‘IOER’’) maintained at Federal Reserve Banks by or on behalf of eligible institutions. The final amendments specify that IORR is 0.75 percent and IOER is 0.75 percent, a 0.25 percentage point increase from their prior levels. The amendments are intended to enhance the role of such rates of interest in moving the Federal funds rate into the target range established by the Federal Open Market Committee (‘‘FOMC’’ or ‘‘Committee’’). DATES: The amendments to part 204 (Regulation D) are effective January 23, 2017. The IORR and IOER rate changes were applicable on December 15, 2016, as specified in 12 CFR 204.10(b)(5), as amended. FOR FURTHER INFORMATION CONTACT: Clinton Chen, Attorney (202–452–3952), or Sophia Allison, Special Counsel (202–452–3198), Legal Division, or Thomas Keating, Financial Analyst (202–973–7401), or Laura Lipscomb, Section Chief (202–973–7964), Division of Monetary Affairs; for users of Telecommunications Device for the Deaf (TDD) only, contact 202–263–4869; Board of Governors of the Federal Reserve System, 20th and C Streets NW., Washington, DC 20551. SUMMARY: PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 SUPPLEMENTARY INFORMATION: I. Statutory and Regulatory Background For monetary policy purposes, section 19 of the Federal Reserve Act (‘‘the Act’’) imposes reserve requirements on certain types of deposits and other liabilities of depository institutions. Regulation D, which implements section 19 of the Act, requires that a depository institution meet reserve requirements by holding cash in its vault, or if vault cash is insufficient, by maintaining a balance in an account at a Federal Reserve Bank (‘‘Reserve Bank’’).1 Section 19 also provides that balances maintained by or on behalf of certain institutions in an account at a Reserve Bank may receive earnings to be paid by the Reserve Bank at least once each quarter, at a rate or rates not to exceed the general level of short-term interest rates. Institutions that are eligible to receive earnings on their balances held at Reserve Banks (‘‘eligible institutions’’) include depository institutions and certain other institutions.2 Section 19 also provides that the Board may prescribe regulations concerning the payment of earnings on balances at a Reserve Bank.3 Prior to these amendments, Regulation D specified a rate of 0.50 percent for both IORR and IOER.4 II. Amendments to IORR and IOER The Board is amending § 204.10(b)(5) of Regulation D to specify that IORR is 0.75 percent and IOER is 0.75 percent. This 0.25 percentage point increase in 1 12 CFR 204.5(a)(1). 19(b)(1)(A) defines ‘‘depository institution’’ as any insured bank as defined in section 3 of the Federal Deposit Insurance Act or any bank which is eligible to make application to become an insured bank under section 5 of such Act; any mutual savings bank as defined in section 3 of the Federal Deposit Insurance Act or any bank which is eligible to make application to become an insured bank under section 5 of such Act; any savings bank as defined in section 3 of the Federal Deposit Insurance Act or any bank which is eligible to make application to become an insured bank under section 5 of such Act; any insured credit union as defined in section 101 of the Federal Credit Union Act or any credit union which is eligible to make application to become an insured credit union pursuant to section 201 of such Act; any member as defined in section 2 of the Federal Home Loan Bank Act; [and] any savings association (as defined in section 3 of the Federal Deposit Insurance Act) which is an insured depository institution (as defined in such Act) or is eligible to apply to become an insured depository institution under the Federal Deposit Insurance Act. See 12 U.S.C. 461(b)(1)(A). Eligible institution also includes any trust company, corporation organized under section 25A or having an agreement with the Board under section 25, or any branch or agency of a foreign bank (as defined in section 1(b) of the International Banking Act of 1978). 12 U.S.C. 461(b)(12)(C); see 12 CFR 204.2(y) (definition of ‘‘eligible institution’’). 3 See 12 U.S.C. 461(b)(12). 4 See 12 CFR 204.10(b)(5). 2 Section E:\FR\FM\23JAR1.SGM 23JAR1 7637 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations the IORR and IOER was associated with an increase in the target range for the federal funds rate, from a target range of 1⁄4 to 1⁄2 percent to a target range of 1⁄2 to 3⁄4 percent, announced by the FOMC on December 14, 2016 with an effective date of December 15, 2016. The FOMC’s press release on the same day as the announcement noted that: Information received since the Federal Open Market Committee met in November indicates that the labor market has continued to strengthen and that economic activity has been expanding at a moderate pace since mid-year. Job gains have been solid in recent months and the unemployment rate has declined. Household spending has been rising moderately but business fixed investment has remained soft. Inflation has increased since earlier this year but is still below the Committee’s 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation have moved up considerably but still are low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will strengthen somewhat further. Inflation is expected to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further. Near-term risks to the economic outlook appear roughly balanced. The Committee continues to closely monitor inflation indicators and global economic and financial developments. In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1⁄2 to 3⁄4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a return to 2 percent inflation. A Federal Reserve Implementation note released simultaneously with the announcement stated that: mstockstill on DSK3G9T082PROD with RULES The Board of Governors of the Federal Reserve System voted unanimously to raise the interest rate paid on required and excess reserve balances to 0.75 percent, effective December 15, 2016. As a result, the Board is amending § 204.10(b)(5) of Regulation D to change IORR to 0.75 percent and IOER to 0.75 percent. III. Administrative Procedure Act In general, the Administrative Procedure Act (12 U.S.C. 551 et seq.) (‘‘APA’’) imposes three principal requirements when an agency promulgates legislative rules (rules VerDate Sep<11>2014 18:54 Jan 19, 2017 Jkt 241001 made pursuant to congressionally delegated authority): (1) Publication with adequate notice of a proposed rule; (2) followed by a meaningful opportunity for the public to comment on the rule’s content; and (3) publication of the final rule not less than 30 days before its effective date. The APA provides that notice and comment procedures do not apply if the agency for good cause finds them to be ‘‘unnecessary, impracticable, or contrary to the public interest.’’ 12 U.S.C. 553(b)(3)(A). Section 553(d) of the APA also provides that publication not less than 30 days prior to a rule’s effective date is not required for (1) a substantive rule which grants or recognizes an exemption or relieves a restriction; (2) interpretive rules and statements of policy; or (3) an agency finding good cause for shortened notice and publishing its reasoning with the rule. 12 U.S.C. 553(d). The Board has determined that good cause exists for finding that the notice, public comment, and delayed effective date provisions of the APA are unnecessary, impracticable, or contrary to the public interest with respect to the final amendments to Regulation D. The rate increases for IORR and IOER that are reflected in the final amendments to Regulation D were made with a view towards accommodating commerce and business and with regard to their bearing upon the general credit situation of the country. Notice and public comment would prevent the Board’s action from being effective as promptly as necessary in the public interest, and would not otherwise serve any useful purpose. Notice, public comment, and a delayed effective date would create uncertainty about the finality and effectiveness of the Board’s action and undermine the effectiveness of that action. Accordingly, the Board has determined that good cause exists to dispense with the notice, public comment, and delayed effective date procedures of the APA with respect to the final amendments to Regulation D. final regulatory flexibility analysis do not apply. V. Paperwork Reduction Act In accordance with the Paperwork Reduction Act (‘‘PRA’’) of 1995 (44 U.S.C. 3506; 5 CFR part 1320 Appendix A.1), the Board reviewed the final rule under the authority delegated to the Board by the Office of Management and Budget. The final rule contains no requirements subject to the PRA. List of Subjects in 12 CFR Part 204 Banks, banking, Reporting and recordkeeping requirements. For the reasons set forth in the preamble, the Board amends 12 CFR part 204 as follows: PART 204—RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS (REGULATION D) 1. The authority citation for part 204 continues to read as follows: ■ Authority: 12 U.S.C. 248(a), 248(c), 371a, 461, 601, 611, and 3105. 2. Section 204.10 is amended by revising paragraph (b)(5) to read as follows: ■ § 204.10 * Payment of interest on balances. * * * * (b) * * * (5) The rates for IORR and IOER are: Rate (percent) IORR ..................................... IOER ..................................... * * * * 0.75 0.75 * By order of the Board of Governors of the Federal Reserve System, January 9, 2017. Robert deV. Frierson, Secretary of the Board. [FR Doc. 2017–00613 Filed 1–19–17; 8:45 am] BILLING CODE 6210–01–P NATIONAL CREDIT UNION ADMINISTRATION IV. Regulatory Flexibility Analysis 12 CFR Part 747 The Regulatory Flexibility Act (‘‘RFA’’) does not apply to a rulemaking where a general notice of proposed rulemaking is not required.5 As noted previously, the Board has determined that it is unnecessary and contrary to the public interest to publish a general notice of proposed rulemaking for this final rule. Accordingly, the RFA’s requirements relating to an initial and RIN 3133–AE67 55 PO 00000 U.S.C. 603 and 604. Frm 00007 Fmt 4700 Sfmt 4700 Civil Monetary Penalty Inflation Adjustment National Credit Union Administration (NCUA). ACTION: Interim final rule. AGENCY: The NCUA Board (Board) is amending its regulations to adjust the maximum amount of each civil monetary penalty (CMP) within its SUMMARY: E:\FR\FM\23JAR1.SGM 23JAR1

Agencies

FEDERAL RESERVE SYSTEM

[Federal Register Volume 82, Number 13 (Monday, January 23, 2017)]
[Rules and Regulations]
[Pages 7636-7637]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-00613]


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FEDERAL RESERVE SYSTEM

12 CFR Part 204

[Docket No. R-1559]
RIN 7100 AE-67


Regulation D: Reserve Requirements of Depository Institutions

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Board of Governors of the Federal Reserve System 
(``Board'') is amending Regulation D (Reserve Requirements of 
Depository Institutions) to revise the rate of interest paid on 
balances maintained to satisfy reserve balance requirements (``IORR'') 
and the rate of interest paid on excess balances (``IOER'') maintained 
at Federal Reserve Banks by or on behalf of eligible institutions. The 
final amendments specify that IORR is 0.75 percent and IOER is 0.75 
percent, a 0.25 percentage point increase from their prior levels. The 
amendments are intended to enhance the role of such rates of interest 
in moving the Federal funds rate into the target range established by 
the Federal Open Market Committee (``FOMC'' or ``Committee'').

DATES: The amendments to part 204 (Regulation D) are effective January 
23, 2017. The IORR and IOER rate changes were applicable on December 
15, 2016, as specified in 12 CFR 204.10(b)(5), as amended.

FOR FURTHER INFORMATION CONTACT: Clinton Chen, Attorney (202-452-3952), 
or Sophia Allison, Special Counsel (202-452-3198), Legal Division, or 
Thomas Keating, Financial Analyst (202-973-7401), or Laura Lipscomb, 
Section Chief (202-973-7964), Division of Monetary Affairs; for users 
of Telecommunications Device for the Deaf (TDD) only, contact 202-263-
4869; Board of Governors of the Federal Reserve System, 20th and C 
Streets NW., Washington, DC 20551.

SUPPLEMENTARY INFORMATION: 

I. Statutory and Regulatory Background

    For monetary policy purposes, section 19 of the Federal Reserve Act 
(``the Act'') imposes reserve requirements on certain types of deposits 
and other liabilities of depository institutions. Regulation D, which 
implements section 19 of the Act, requires that a depository 
institution meet reserve requirements by holding cash in its vault, or 
if vault cash is insufficient, by maintaining a balance in an account 
at a Federal Reserve Bank (``Reserve Bank'').\1\ Section 19 also 
provides that balances maintained by or on behalf of certain 
institutions in an account at a Reserve Bank may receive earnings to be 
paid by the Reserve Bank at least once each quarter, at a rate or rates 
not to exceed the general level of short-term interest rates. 
Institutions that are eligible to receive earnings on their balances 
held at Reserve Banks (``eligible institutions'') include depository 
institutions and certain other institutions.\2\ Section 19 also 
provides that the Board may prescribe regulations concerning the 
payment of earnings on balances at a Reserve Bank.\3\ Prior to these 
amendments, Regulation D specified a rate of 0.50 percent for both IORR 
and IOER.\4\
---------------------------------------------------------------------------

    \1\ 12 CFR 204.5(a)(1).
    \2\ Section 19(b)(1)(A) defines ``depository institution'' as 
any insured bank as defined in section 3 of the Federal Deposit 
Insurance Act or any bank which is eligible to make application to 
become an insured bank under section 5 of such Act; any mutual 
savings bank as defined in section 3 of the Federal Deposit 
Insurance Act or any bank which is eligible to make application to 
become an insured bank under section 5 of such Act; any savings bank 
as defined in section 3 of the Federal Deposit Insurance Act or any 
bank which is eligible to make application to become an insured bank 
under section 5 of such Act; any insured credit union as defined in 
section 101 of the Federal Credit Union Act or any credit union 
which is eligible to make application to become an insured credit 
union pursuant to section 201 of such Act; any member as defined in 
section 2 of the Federal Home Loan Bank Act; [and] any savings 
association (as defined in section 3 of the Federal Deposit 
Insurance Act) which is an insured depository institution (as 
defined in such Act) or is eligible to apply to become an insured 
depository institution under the Federal Deposit Insurance Act. See 
12 U.S.C. 461(b)(1)(A). Eligible institution also includes any trust 
company, corporation organized under section 25A or having an 
agreement with the Board under section 25, or any branch or agency 
of a foreign bank (as defined in section 1(b) of the International 
Banking Act of 1978). 12 U.S.C. 461(b)(12)(C); see 12 CFR 204.2(y) 
(definition of ``eligible institution'').
    \3\ See 12 U.S.C. 461(b)(12).
    \4\ See 12 CFR 204.10(b)(5).
---------------------------------------------------------------------------

II. Amendments to IORR and IOER

    The Board is amending Sec.  204.10(b)(5) of Regulation D to specify 
that IORR is 0.75 percent and IOER is 0.75 percent. This 0.25 
percentage point increase in

[[Page 7637]]

the IORR and IOER was associated with an increase in the target range 
for the federal funds rate, from a target range of \1/4\ to \1/2\ 
percent to a target range of \1/2\ to \3/4\ percent, announced by the 
FOMC on December 14, 2016 with an effective date of December 15, 2016. 
The FOMC's press release on the same day as the announcement noted 
that:

    Information received since the Federal Open Market Committee met 
in November indicates that the labor market has continued to 
strengthen and that economic activity has been expanding at a 
moderate pace since mid-year. Job gains have been solid in recent 
months and the unemployment rate has declined. Household spending 
has been rising moderately but business fixed investment has 
remained soft. Inflation has increased since earlier this year but 
is still below the Committee's 2 percent longer-run objective, 
partly reflecting earlier declines in energy prices and in prices of 
non-energy imports. Market-based measures of inflation compensation 
have moved up considerably but still are low; most survey-based 
measures of longer-term inflation expectations are little changed, 
on balance, in recent months.
    Consistent with its statutory mandate, the Committee seeks to 
foster maximum employment and price stability. The Committee expects 
that, with gradual adjustments in the stance of monetary policy, 
economic activity will expand at a moderate pace and labor market 
conditions will strengthen somewhat further. Inflation is expected 
to rise to 2 percent over the medium term as the transitory effects 
of past declines in energy and import prices dissipate and the labor 
market strengthens further. Near-term risks to the economic outlook 
appear roughly balanced. The Committee continues to closely monitor 
inflation indicators and global economic and financial developments.
    In view of realized and expected labor market conditions and 
inflation, the Committee decided to raise the target range for the 
federal funds rate to \1/2\ to \3/4\ percent. The stance of monetary 
policy remains accommodative, thereby supporting some further 
strengthening in labor market conditions and a return to 2 percent 
inflation.

    A Federal Reserve Implementation note released simultaneously with 
the announcement stated that:

    The Board of Governors of the Federal Reserve System voted 
unanimously to raise the interest rate paid on required and excess 
reserve balances to 0.75 percent, effective December 15, 2016.

    As a result, the Board is amending Sec.  204.10(b)(5) of Regulation 
D to change IORR to 0.75 percent and IOER to 0.75 percent.

III. Administrative Procedure Act

    In general, the Administrative Procedure Act (12 U.S.C. 551 et 
seq.) (``APA'') imposes three principal requirements when an agency 
promulgates legislative rules (rules made pursuant to congressionally 
delegated authority): (1) Publication with adequate notice of a 
proposed rule; (2) followed by a meaningful opportunity for the public 
to comment on the rule's content; and (3) publication of the final rule 
not less than 30 days before its effective date. The APA provides that 
notice and comment procedures do not apply if the agency for good cause 
finds them to be ``unnecessary, impracticable, or contrary to the 
public interest.'' 12 U.S.C. 553(b)(3)(A). Section 553(d) of the APA 
also provides that publication not less than 30 days prior to a rule's 
effective date is not required for (1) a substantive rule which grants 
or recognizes an exemption or relieves a restriction; (2) interpretive 
rules and statements of policy; or (3) an agency finding good cause for 
shortened notice and publishing its reasoning with the rule. 12 U.S.C. 
553(d).
    The Board has determined that good cause exists for finding that 
the notice, public comment, and delayed effective date provisions of 
the APA are unnecessary, impracticable, or contrary to the public 
interest with respect to the final amendments to Regulation D. The rate 
increases for IORR and IOER that are reflected in the final amendments 
to Regulation D were made with a view towards accommodating commerce 
and business and with regard to their bearing upon the general credit 
situation of the country. Notice and public comment would prevent the 
Board's action from being effective as promptly as necessary in the 
public interest, and would not otherwise serve any useful purpose. 
Notice, public comment, and a delayed effective date would create 
uncertainty about the finality and effectiveness of the Board's action 
and undermine the effectiveness of that action. Accordingly, the Board 
has determined that good cause exists to dispense with the notice, 
public comment, and delayed effective date procedures of the APA with 
respect to the final amendments to Regulation D.

IV. Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (``RFA'') does not apply to a 
rulemaking where a general notice of proposed rulemaking is not 
required.\5\ As noted previously, the Board has determined that it is 
unnecessary and contrary to the public interest to publish a general 
notice of proposed rulemaking for this final rule. Accordingly, the 
RFA's requirements relating to an initial and final regulatory 
flexibility analysis do not apply.
---------------------------------------------------------------------------

    \5\ 5 U.S.C. 603 and 604.
---------------------------------------------------------------------------

V. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act (``PRA'') of 1995 
(44 U.S.C. 3506; 5 CFR part 1320 Appendix A.1), the Board reviewed the 
final rule under the authority delegated to the Board by the Office of 
Management and Budget. The final rule contains no requirements subject 
to the PRA.

List of Subjects in 12 CFR Part 204

    Banks, banking, Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, the Board amends 12 CFR 
part 204 as follows:

PART 204--RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS 
(REGULATION D)

0
1. The authority citation for part 204 continues to read as follows:

    Authority:  12 U.S.C. 248(a), 248(c), 371a, 461, 601, 611, and 
3105.


0
2. Section 204.10 is amended by revising paragraph (b)(5) to read as 
follows:


Sec.  204.10   Payment of interest on balances.

* * * * *
    (b) * * *
    (5) The rates for IORR and IOER are:

------------------------------------------------------------------------
                                                          Rate (percent)
------------------------------------------------------------------------
IORR....................................................            0.75
IOER....................................................            0.75
------------------------------------------------------------------------

* * * * *

    By order of the Board of Governors of the Federal Reserve 
System, January 9, 2017.
Robert deV. Frierson,
Secretary of the Board.
[FR Doc. 2017-00613 Filed 1-19-17; 8:45 am]
 BILLING CODE 6210-01-P

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