Regulation A: Extensions of Credit by Federal Reserve Banks, 18215-18216 [2017-07742]

Download as PDF 18215 Rules and Regulations Federal Register Vol. 82, No. 73 Tuesday, April 18, 2017 This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. The Code of Federal Regulations is sold by the Superintendent of Documents. FEDERAL RESERVE SYSTEM 12 CFR Part 201 [Docket No. R–1562] RIN 7100–AE76 Regulation A: Extensions of Credit by Federal Reserve Banks Board of Governors of the Federal Reserve System. ACTION: Final rule. AGENCY: The Board of Governors of the Federal Reserve System (‘‘Board’’) has adopted final amendments to its Regulation A to reflect the Board’s approval of an increase in the rate for primary credit at each Federal Reserve Bank. The secondary credit rate at each Reserve Bank automatically increased by formula as a result of the Board’s primary credit rate action. DATES: The amendments to part 201 (Regulation A) are effective April 18, 2017. The rate changes for primary and secondary credit were applicable on March 16, 2017. FOR FURTHER INFORMATION CONTACT: Clinton Chen, Attorney (202–452–3952), or Sophia Allison, Special Counsel, (202–452–3565), Legal Division, or Lyle Kumasaka, Senior Financial Analyst (202–452–2382); 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: The Federal Reserve Banks make primary and secondary credit available to depository institutions as a backup source of funding on a short-term basis, usually overnight. The primary and secondary credit rates are the interest rates that the twelve Federal Reserve Banks charge for extensions of credit under these programs. In accordance with the Federal Reserve Act, the primary and secondary credit rates are established by the boards of directors of nlaroche on DSK30NT082PROD with RULES SUMMARY: VerDate Sep<11>2014 13:31 Apr 17, 2017 Jkt 241001 the Federal Reserve Banks, subject to the review and determination of the Board. On March 15, 2017, the Board voted to approve a 1⁄4 percentage point increase in the primary credit rate in effect at each of the twelve Federal Reserve Banks, thereby increasing from 1.25 percent to 1.50 percent the rate that each Reserve Bank charges for extensions of primary credit. In addition, the Board had previously approved to renew the formula for the secondary credit rate, the primary credit rate plus 50 basis points, on March 6, 2017. Under the formula, the secondary credit rate in effect at each of the twelve Federal Reserve Banks increased by 1⁄4 percentage point as a result of the Board’s primary credit rate action, thereby increasing from 1.75 percent to 2.00 percent the rate that each Reserve Bank charges for extensions of secondary credit. The amendments to Regulation A reflect these rate changes. The 1⁄4 percentage point increase in the primary credit rate was associated with an increase in the target range for the federal funds rate (from a target range of 1⁄2 to 3⁄4 percent to a target range of 3⁄4 to 1 percent) announced by the Federal Open Market Committee (‘‘Committee’’) on March 15, 2017, as described in the Board’s amendment of its Regulation D published elsewhere in this Federal Register. 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) PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 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 APA further provides that the notice, public comment, and delayed effective date requirements of 5 U.S.C. 553 do not apply ‘‘to the extent that there is involved . . . a matter relating to agency management or personnel or to public property, loans, grants, benefits, or contracts.’’ 5 U.S.C. 553(a)(2) (emphasis added). Regulation A establishes the interest rates that the twelve Reserve Banks charge for extensions of primary credit and secondary credit. The Board has determined that the notice, public comment, and delayed effective date requirements of the APA do not apply to the final amendments to Regulation A for several reasons. The amendments involve a matter relating to loans, and are therefore exempt under the terms of the APA. In addition, the Board has determined that notice, public comment, and delayed effective date would be unnecessary and contrary to the public interest because delay in implementation of changes to the rates charged on primary credit and secondary credit would permit insured depository institutions to profit improperly from the difference in the current rate and the announced increased rate. Finally, because delay would undermine the Board’s action in responding to economic data and conditions, the Board has determined that ‘‘good cause’’ exists within the meaning of the APA to dispense with the notice, public comment, and delayed effective date procedures of the APA with respect to the final amendments to Regulation A. Regulatory Flexibility Analysis The Regulatory Flexibility Act (‘‘RFA’’) does not apply to a rulemaking where a general notice of proposed rulemaking is not required.1 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 15 U.S.C. 603 and 604. E:\FR\FM\18APR1.SGM 18APR1 18216 Federal Register / Vol. 82, No. 73 / Tuesday, April 18, 2017 / Rules and Regulations requirements relating to an initial and final regulatory flexibility analysis do not apply. FEDERAL RESERVE SYSTEM Paperwork Reduction Act [Regulation D—R–1563] 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. 12 CFR Chapter II List of Subjects in 12 CFR Part 201 Banks, Banking, Federal Reserve System, Reporting and recordkeeping requirements. Authority and Issuance For the reasons set forth in the preamble, the Board is amending 12 CFR chapter II to read as follows: 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: ■ § 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 institutions under § 201.4(a) is 1.50 percent. (b) Secondary credit. The interest rate at each Federal Reserve Bank for secondary credit provided to depository institutions under § 201.4(b) is 2.00 percent. * * * * * By order of the Board of Governors of the Federal Reserve System, April 12, 2017. Ann E. Misback, Secretary of the Board. [FR Doc. 2017–07742 Filed 4–17–17; 8:45 am] nlaroche on DSK30NT082PROD with RULES BILLING CODE 6210–02–P 3 The 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. VerDate Sep<11>2014 13:31 Apr 17, 2017 Jkt 241001 12 CFR Part 204 RIN 7100–AE77 Regulation D: Reserve Requirements of Depository Institutions Board of Governors of the Federal Reserve System. ACTION: Final rule. AGENCY: 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 1.00 percent and IOER is 1.00 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 April 18, 2017. The IORR and IOER rate changes were applicable on March 16, 2017. 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: SUMMARY: 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 1 12 PO 00000 CFR 204.5(a)(1). Frm 00002 Fmt 4700 Sfmt 4700 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 0.75 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 1.00 percent and IOER is 1.00 percent. This 0.25 percentage point increase in the IORR and IOER was associated with an increase in the target range for the federal funds rate, from a target range of 1⁄2 to 3⁄4 percent to a target range of 3⁄4 to 1 percent, announced by the FOMC on March 15, 2017 with an effective date of March 16, 2017. The FOMC’s press release on the same day as the announcement noted that: Information received since the Federal Open Market Committee met in February indicates that the labor market has continued to strengthen and that economic activity has continued to expand at a moderate pace. Job gains remained solid and the unemployment rate was little changed in recent months. Household spending has continued to rise moderately while business fixed investment 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). E:\FR\FM\18APR1.SGM 18APR1

Agencies

[Federal Register Volume 82, Number 73 (Tuesday, April 18, 2017)]
[Rules and Regulations]
[Pages 18215-18216]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-07742]



========================================================================
Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 

========================================================================


Federal Register / Vol. 82, No. 73 / Tuesday, April 18, 2017 / Rules 
and Regulations

[[Page 18215]]



FEDERAL RESERVE SYSTEM

12 CFR Part 201

[Docket No. R-1562]
RIN 7100-AE76


Regulation A: Extensions of Credit by Federal Reserve Banks

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule.

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

SUMMARY: The Board of Governors of the Federal Reserve System 
(``Board'') has adopted final amendments to its Regulation A to reflect 
the Board's approval of an increase in the rate for primary credit at 
each Federal Reserve Bank. The secondary credit rate at each Reserve 
Bank automatically increased by formula as a result of the Board's 
primary credit rate action.

DATES: The amendments to part 201 (Regulation A) are effective April 
18, 2017. The rate changes for primary and secondary credit were 
applicable on March 16, 2017.

FOR FURTHER INFORMATION CONTACT: Clinton Chen, Attorney (202-452-3952), 
or Sophia Allison, Special Counsel, (202-452-3565), Legal Division, or 
Lyle Kumasaka, Senior Financial Analyst (202-452-2382); 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: The Federal Reserve Banks make primary and 
secondary credit available to depository institutions as a backup 
source of funding on a short-term basis, usually overnight. The primary 
and secondary credit rates are the interest rates that the twelve 
Federal Reserve Banks charge for extensions of credit under these 
programs. In accordance with the Federal Reserve Act, the primary and 
secondary credit rates are established by the boards of directors of 
the Federal Reserve Banks, subject to the review and determination of 
the Board.
    On March 15, 2017, the Board voted to approve a \1/4\ percentage 
point increase in the primary credit rate in effect at each of the 
twelve Federal Reserve Banks, thereby increasing from 1.25 percent to 
1.50 percent the rate that each Reserve Bank charges for extensions of 
primary credit. In addition, the Board had previously approved to renew 
the formula for the secondary credit rate, the primary credit rate plus 
50 basis points, on March 6, 2017. Under the formula, the secondary 
credit rate in effect at each of the twelve Federal Reserve Banks 
increased by \1/4\ percentage point as a result of the Board's primary 
credit rate action, thereby increasing from 1.75 percent to 2.00 
percent the rate that each Reserve Bank charges for extensions of 
secondary credit. The amendments to Regulation A reflect these rate 
changes.
    The \1/4\ percentage point increase in the primary credit rate was 
associated with an increase in the target range for the federal funds 
rate (from a target range of \1/2\ to \3/4\ percent to a target range 
of \3/4\ to 1 percent) announced by the Federal Open Market Committee 
(``Committee'') on March 15, 2017, as described in the Board's 
amendment of its Regulation D published elsewhere in this Federal 
Register.

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 APA further provides that the notice, public comment, and 
delayed effective date requirements of 5 U.S.C. 553 do not apply ``to 
the extent that there is involved . . . a matter relating to agency 
management or personnel or to public property, loans, grants, benefits, 
or contracts.'' 5 U.S.C. 553(a)(2) (emphasis added).
    Regulation A establishes the interest rates that the twelve Reserve 
Banks charge for extensions of primary credit and secondary credit. The 
Board has determined that the notice, public comment, and delayed 
effective date requirements of the APA do not apply to the final 
amendments to Regulation A for several reasons. The amendments involve 
a matter relating to loans, and are therefore exempt under the terms of 
the APA. In addition, the Board has determined that notice, public 
comment, and delayed effective date would be unnecessary and contrary 
to the public interest because delay in implementation of changes to 
the rates charged on primary credit and secondary credit would permit 
insured depository institutions to profit improperly from the 
difference in the current rate and the announced increased rate. 
Finally, because delay would undermine the Board's action in responding 
to economic data and conditions, the Board has determined that ``good 
cause'' exists within the meaning of the APA to dispense with the 
notice, public comment, and delayed effective date procedures of the 
APA with respect to the final amendments to Regulation A.

Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (``RFA'') does not apply to a 
rulemaking where a general notice of proposed rulemaking is not 
required.\1\ 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

[[Page 18216]]

requirements relating to an initial and final regulatory flexibility 
analysis do not apply.
---------------------------------------------------------------------------

    \1\ 5 U.S.C. 603 and 604.
---------------------------------------------------------------------------

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.

12 CFR Chapter II

List of Subjects in 12 CFR Part 201

    Banks, Banking, Federal Reserve System, Reporting and recordkeeping 
requirements.

Authority and Issuance

    For the reasons set forth in the preamble, the Board is amending 12 
CFR chapter II to read as follows:

PART 201--EXTENSIONS OF CREDIT BY FEDERAL RESERVE BANKS (REGULATION 
A)

0
 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.

0
 2. In Sec.  201.51, paragraphs (a) and (b) are revised to read as 
follows:


Sec.  201.51  Interest rates applicable to credit extended by a Federal 
Reserve Bank.\3\
---------------------------------------------------------------------------

    \3\ The 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.
---------------------------------------------------------------------------

    (a) Primary credit. The interest rate at each Federal Reserve Bank 
for primary credit provided to depository institutions under Sec.  
201.4(a) is 1.50 percent.
    (b) Secondary credit. The interest rate at each Federal Reserve 
Bank for secondary credit provided to depository institutions under 
Sec.  201.4(b) is 2.00 percent.
* * * * *

    By order of the Board of Governors of the Federal Reserve 
System, April 12, 2017.
Ann E. Misback,
Secretary of the Board.
[FR Doc. 2017-07742 Filed 4-17-17; 8:45 am]
BILLING CODE 6210-02-P