Federal Reserve Bank Capital Stock, 52173-52174 [2017-24553]

Download as PDF 52173 Rules and Regulations Federal Register Vol. 82, No. 217 Monday, November 13, 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 209 [Regulation I; Docket No. R–1560] RIN 7100–AE 68 Federal Reserve Bank Capital Stock Board of Governors of the Federal Reserve System. ACTION: Final rule. AGENCY: The Board of Governors (Board) is publishing a final rule that applies an inflation adjustment to the threshold for total consolidated assets in Regulation I. Federal Reserve Bank (Reserve Bank) stockholders that have total consolidated assets above the threshold receive a different dividend rate on their Reserve Bank stock than stockholders with total consolidated assets at or below the threshold. The Federal Reserve Act requires that the Board annually adjust the total consolidated asset threshold to reflect the change in the Gross Domestic Product Price Index, published by the Bureau of Economic Analysis (BEA). Based on the change in the Gross Domestic Product Price Index as of September 28, 2017, the total consolidated asset threshold will be $10,283,000,000 through December 31, 2018. DATES: This final rule is effective January 1, 2018. FOR FURTHER INFORMATION CONTACT: Evan Winerman, Counsel (202/872– 7578), Legal Division; or Kimberly Zaikov, Financial Project Leader (202/ 452–2256), Reserve Bank Operations and Payments Systems Division. For users of Telecommunications Device for the Deaf (TDD) only, contact (202) 263– 4869. SUPPLEMENTARY INFORMATION: asabaliauskas on DSKBBXCHB2PROD with RULES SUMMARY: I. Background Regulation I governs the issuance and cancellation of capital stock by the Reserve Banks. Under section 5 of the VerDate Sep<11>2014 17:36 Nov 09, 2017 Jkt 244001 Federal Reserve Act 1 and Regulation I,2 a member bank must subscribe to capital stock of the Reserve Bank of its district in an amount equal to six percent of the member bank’s capital and surplus. The member bank must pay for one-half of this subscription on the date that the Reserve Bank approves its application for capital stock, while the remaining half of the subscription shall be subject to call by the Board.3 Section 7(a)(1) of the Federal Reserve Act 4 provides that Reserve Bank stockholders with $10 billion or less in total consolidated assets shall receive a six percent dividend on paid-in capital stock, while stockholders with more than $10 billion in total consolidated assets shall receive a dividend on paidin capital stock equal to the lesser of six percent and ‘‘the rate equal to the high yield of the 10-year Treasury note auctioned at the last auction held prior to the payment of such dividend.’’ Section 7(a)(1) requires that the Board adjust the threshold for total consolidated assets annually to reflect the change in the Gross Domestic Product Price Index, published by the BEA. Regulation I implements section 7(a)(1) of the Federal Reserve Act by (1) defining the term ‘‘total consolidated assets,’’ 5 (2) incorporating the statutory dividend rates for Reserve Bank stockholders 6 and (3) providing that the Board shall adjust the threshold for total consolidated assets annually to reflect the change in the Gross Domestic Product Price Index.7 The Board has explained that it ‘‘expects to make this adjustment [to the threshold for total consolidated assets] using the final second quarter estimate of the Gross Domestic Product Price Index for each 1 12 U.S.C. 287. CFR 209.4(a). 3 12 U.S.C. 287 and 12 CFR 209.4(c)(2). 4 12 U.S.C. 289(a)(1). 5 12 CFR 209.1(d)(3) (‘‘Total consolidated assets means the total assets on the stockholder’s balance sheet as reported by the stockholder on its Consolidated Report of Condition and Income (Call Report) as of the most recent December 31, except in the case of a new member or the surviving stockholder after a merger ‘total consolidated assets’ means (until the next December 31 Call Report becomes available) the total consolidated assets of the new member or the surviving stockholder at the time of its application for capital stock’’). 6 12 CFR 209.4(e), (c)(1)(ii), and (d)(1)(ii); 209.2(a); and 209.3(d)(3). 7 12 CFR 209.4(f). 2 12 PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 year, published by the Bureau of Economic Analysis.’’ 8 II. Adjustment The Board annually adjusts the $10 billion total consolidated asset threshold based on the change in the Gross Domestic Product Price Index between the second quarter of 2015 (the baseline year) and the second quarter of the current year.9 The second quarter 2017 Gross Domestic Product Price Index estimate published by the BEA in September 2017 (113.037) is 2.83% higher than the second quarter 2015 Gross Domestic Product Price Index estimate published by the BEA in September 2017 (109.921). Based on this change in the Gross Domestic Product Price Index, the threshold for total consolidated assets in Regulation I will be $10,283,000,000 as of the effective date of January 1, 2018. III. Administrative Law Matters Administrative Procedure Act The provisions of 5 U.S.C. 553(b) relating to notice of proposed rulemaking have not been followed in connection with the adoption of these amendments. The amendments involve expected, ministerial adjustments that are required by statute and Regulation I and are consistent with a method previously set forth by the Board.10 Accordingly, the Board finds good cause for determining, and so determines, that notice in accordance with 5 U.S.C. 553(b) is unnecessary. Regulatory Flexibility Act The Regulatory Flexibility Act (RFA) does not apply to a rulemaking where a general notice of proposed rulemaking is not required.11 As noted previously, the Board has determined that it is unnecessary to publish a general notice of proposed rulemaking for this final rule. Accordingly, the RFA’s requirements relating to an initial and 8 81 FR 84415, 84417 (Nov. 23, 2016). BEA makes ongoing revisions to its estimates of the Gross Domestic Product Price Index for historical calendar quarters. The Board calculates annual adjustments from the baseline year (rather than from the prior-year total consolidated asset threshold) to ensure that the adjusted total consolidated asset threshold accurately reflects the cumulative change in the BEA’s most recent estimates of the Gross Domestic Product Price Index. 10 See 12 CFR 209.4(f) and n. 8 and accompanying text, supra. 11 5 U.S.C. 603 and 604. 9 The E:\FR\FM\13NOR1.SGM 13NOR1 52174 Federal Register / Vol. 82, No. 217 / Monday, November 13, 2017 / Rules and Regulations final regulatory flexibility analysis do not apply. Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1995,12 the Board has reviewed this final rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule. List of Subjects in 12 CFR Part 209 Banks and banking, Federal Reserve System, Reporting and recordkeeping requirements, Securities. Authority and Issuance For the reasons set forth in the preamble, the Board amends Regulation I, 12 CFR part 209, as follows: PART 209—ISSUE AND CANCELLATION OF FEDERAL RESERVE BANK CAPITAL STOCK (REGULATION I) 1. The authority citation for part 209 continues to read as follows: ■ Authority: 12 U.S.C. 12 U.S.C. 222, 248, 282, 286–288, 289, 321, 323, 327–328, and 466. 2. In part 209, remove all references to ‘‘$10,122,000,000’’ and add in their place ‘‘$10,283,000,000’’, wherever they appear. ■ By order of the Board of Governors of the Federal Reserve System, acting through the Secretary of the Board under delegated authority, November 7, 2017. Margaret M. Shanks, Deputy Secretary of the Board. [FR Doc. 2017–24553 Filed 11–9–17; 8:45 am] BILLING CODE 6210–01–P SMALL BUSINESS ADMINISTRATION 13 CFR Part 107 RIN 3245–AG65 Small Business Investment Companies—Administrative Fees U.S. Small Business Administration. ACTION: Final rule. AGENCY: The U.S. Small Business Administration (SBA) is revising its regulations to increase the Small Business Investment Company (SBIC) licensing and examination fees. The Small Business Investment Act of 1958, as amended, allows SBA to collect licensing and examination fees to offset SBA’s costs associated with the administration of these two activities. asabaliauskas on DSKBBXCHB2PROD with RULES SUMMARY: 12 44 U.S.C. 3506; 5 CFR part 1320. VerDate Sep<11>2014 17:36 Nov 09, 2017 Jkt 244001 SBA last increased fees for SBICs in 1996. Current fees offset less than 40% of SBA’s administrative expenses related to these activities. This final rule increases SBIC licensing and examination fees in annual steps through October 2020, at which time SBA estimates that the annual fees will recoup approximately 80% of SBA’s annual expenses directly related to these activities. Beginning in October 2021, this rule increases licensing and examination fees annually based on inflation. DATES: This rule is effective December 13, 2017. FOR FURTHER INFORMATION CONTACT: Theresa Jamerson, Office of Investment and Innovation, (202) 205–7563 or sbic@ sba.gov. SUPPLEMENTARY INFORMATION: I. Background Information The Small Business Investment Act of 1958, as amended (‘‘Act’’), authorizes SBA to collect fees to cover the costs associated with the licensing and examination of SBICs. 15 U.S.C. 681(e)(2)(B) and 687b(b). Although SBA has regulations setting the amount of these fees, SBA has not increased licensing and examination fees for SBICs since 1996. As part of the final rule published January 31, 1996 (61 FR 3177), SBA set licensing fees ‘‘to reflect the Agency’s costs of processing applications’’ and similarly set examination fees to ‘‘produce total revenue sufficient to cover the current direct costs to SBA of conducting examinations.’’ In a subsequent rule published on April 30, 1997 (62 FR 23337), SBA capped examination fees at $14,000, which lowered the fee for SBICs with over $60 million in assets. As part of the rationale for this change, the rule stated, ‘‘many of the largest SBICs are bank-owned and do not use federal leverage, so that fees computed on the basis of total assets do not appropriately reflect the level of effort and risk associated with the examination process.’’ Neither rule included an adjustment for inflation. Although fees set in 1996, as adjusted in 1997, were intended to fully reimburse SBA’s costs, by fiscal year (FY) 1999 (the earliest fiscal year for which SBA expenses are readily available), licensing and examination fees only covered approximately 85% of SBA’s direct costs. SBA’s direct costs are the expenses related to licensing and examination (e.g., personnel compensation and benefits associated with licensing and examinations, technology, subscription services, travel and other costs associated with PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 licensing and examinations), and excludes SBA’s overhead costs (e.g., office space, utilities, and other supporting offices within SBA). In FY 2016, licensing and examination fees reimbursed approximately 35% of SBA’s direct licensing and examination expenses, and less than a quarter of SBA’s licensing and examination expenses when including overhead. On December 16, 2016, SBA published a proposed rule (81 FR 91049) to gradually increase the SBIC licensing and examination fees each year through October 1, 2020, and thereafter annually based on inflation, beginning on October 1, 2021. The proposed rule detailed the reasons for the widening gap between fees received and SBA related expenses. Key reasons include inflation, changes in the SBIC portfolio, increased capital at risk (SBAguaranteed leverage and commitments), SBA’s efforts to improve SBIC program performance, and technology implementation. As noted above, the Act authorizes SBA to collect fees to cover the costs associated with the licensing and examination of SBICs. The Act requires SBA to deposit the fees in the account for salaries and expenses of the Administration and authorizes SBA to use licensing fees to cover licensing costs and examination fees to cover the costs of examinations and other program oversight activities. 15 U.S.C. 681(e)(2) and 687b(b). To the extent that SBA does not cover its licensing and examination costs by charging SBICs for these fees, the balance is paid out of Agency funds. In other words, when SBICs do not pay fees sufficient to cover SBA’s licensing and examination costs, taxpayers bear the burden of covering those costs. It is an appropriate use of SBA’s statutory authority in this final rule to increase SBIC licensing and examination fees to cover a greater percentage of licensing and examination costs. The effect of the statutory language authorizing SBA to use licensing fees to cover licensing costs and examination fees to cover the costs of examinations and ‘‘other program oversight activities’’ is that SBA may use examination fees to cover a broader category of expenses than those for which it may charge (i.e., examination costs alone). Although the current and estimated future costs of compensation and benefits of SBA personnel involved in licensing and examinations, not including any additional related expenses, fully support the fee increases in this final rule, in the proposed rule, SBA identified a number of costs it expected to pay for with the funds made available E:\FR\FM\13NOR1.SGM 13NOR1

Agencies

[Federal Register Volume 82, Number 217 (Monday, November 13, 2017)]
[Rules and Regulations]
[Pages 52173-52174]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-24553]



========================================================================
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. 217 / Monday, November 13, 2017 / 
Rules and Regulations

[[Page 52173]]



FEDERAL RESERVE SYSTEM

12 CFR Part 209

[Regulation I; Docket No. R-1560]
RIN 7100-AE 68


Federal Reserve Bank Capital Stock

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule.

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

SUMMARY: The Board of Governors (Board) is publishing a final rule that 
applies an inflation adjustment to the threshold for total consolidated 
assets in Regulation I. Federal Reserve Bank (Reserve Bank) 
stockholders that have total consolidated assets above the threshold 
receive a different dividend rate on their Reserve Bank stock than 
stockholders with total consolidated assets at or below the threshold. 
The Federal Reserve Act requires that the Board annually adjust the 
total consolidated asset threshold to reflect the change in the Gross 
Domestic Product Price Index, published by the Bureau of Economic 
Analysis (BEA). Based on the change in the Gross Domestic Product Price 
Index as of September 28, 2017, the total consolidated asset threshold 
will be $10,283,000,000 through December 31, 2018.

DATES: This final rule is effective January 1, 2018.

FOR FURTHER INFORMATION CONTACT: Evan Winerman, Counsel (202/872-7578), 
Legal Division; or Kimberly Zaikov, Financial Project Leader (202/452-
2256), Reserve Bank Operations and Payments Systems Division. For users 
of Telecommunications Device for the Deaf (TDD) only, contact (202) 
263-4869.

SUPPLEMENTARY INFORMATION:

I. Background

    Regulation I governs the issuance and cancellation of capital stock 
by the Reserve Banks. Under section 5 of the Federal Reserve Act \1\ 
and Regulation I,\2\ a member bank must subscribe to capital stock of 
the Reserve Bank of its district in an amount equal to six percent of 
the member bank's capital and surplus. The member bank must pay for 
one-half of this subscription on the date that the Reserve Bank 
approves its application for capital stock, while the remaining half of 
the subscription shall be subject to call by the Board.\3\
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    \1\ 12 U.S.C. 287.
    \2\ 12 CFR 209.4(a).
    \3\ 12 U.S.C. 287 and 12 CFR 209.4(c)(2).
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    Section 7(a)(1) of the Federal Reserve Act \4\ provides that 
Reserve Bank stockholders with $10 billion or less in total 
consolidated assets shall receive a six percent dividend on paid-in 
capital stock, while stockholders with more than $10 billion in total 
consolidated assets shall receive a dividend on paid-in capital stock 
equal to the lesser of six percent and ``the rate equal to the high 
yield of the 10-year Treasury note auctioned at the last auction held 
prior to the payment of such dividend.'' Section 7(a)(1) requires that 
the Board adjust the threshold for total consolidated assets annually 
to reflect the change in the Gross Domestic Product Price Index, 
published by the BEA.
---------------------------------------------------------------------------

    \4\ 12 U.S.C. 289(a)(1).
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    Regulation I implements section 7(a)(1) of the Federal Reserve Act 
by (1) defining the term ``total consolidated assets,'' \5\ (2) 
incorporating the statutory dividend rates for Reserve Bank 
stockholders \6\ and (3) providing that the Board shall adjust the 
threshold for total consolidated assets annually to reflect the change 
in the Gross Domestic Product Price Index.\7\ The Board has explained 
that it ``expects to make this adjustment [to the threshold for total 
consolidated assets] using the final second quarter estimate of the 
Gross Domestic Product Price Index for each year, published by the 
Bureau of Economic Analysis.'' \8\
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    \5\ 12 CFR 209.1(d)(3) (``Total consolidated assets means the 
total assets on the stockholder's balance sheet as reported by the 
stockholder on its Consolidated Report of Condition and Income (Call 
Report) as of the most recent December 31, except in the case of a 
new member or the surviving stockholder after a merger `total 
consolidated assets' means (until the next December 31 Call Report 
becomes available) the total consolidated assets of the new member 
or the surviving stockholder at the time of its application for 
capital stock'').
    \6\ 12 CFR 209.4(e), (c)(1)(ii), and (d)(1)(ii); 209.2(a); and 
209.3(d)(3).
    \7\ 12 CFR 209.4(f).
    \8\ 81 FR 84415, 84417 (Nov. 23, 2016).
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II. Adjustment

    The Board annually adjusts the $10 billion total consolidated asset 
threshold based on the change in the Gross Domestic Product Price Index 
between the second quarter of 2015 (the baseline year) and the second 
quarter of the current year.\9\ The second quarter 2017 Gross Domestic 
Product Price Index estimate published by the BEA in September 2017 
(113.037) is 2.83% higher than the second quarter 2015 Gross Domestic 
Product Price Index estimate published by the BEA in September 2017 
(109.921). Based on this change in the Gross Domestic Product Price 
Index, the threshold for total consolidated assets in Regulation I will 
be $10,283,000,000 as of the effective date of January 1, 2018.
---------------------------------------------------------------------------

    \9\ The BEA makes ongoing revisions to its estimates of the 
Gross Domestic Product Price Index for historical calendar quarters. 
The Board calculates annual adjustments from the baseline year 
(rather than from the prior-year total consolidated asset threshold) 
to ensure that the adjusted total consolidated asset threshold 
accurately reflects the cumulative change in the BEA's most recent 
estimates of the Gross Domestic Product Price Index.
---------------------------------------------------------------------------

III. Administrative Law Matters

Administrative Procedure Act

    The provisions of 5 U.S.C. 553(b) relating to notice of proposed 
rulemaking have not been followed in connection with the adoption of 
these amendments. The amendments involve expected, ministerial 
adjustments that are required by statute and Regulation I and are 
consistent with a method previously set forth by the Board.\10\ 
Accordingly, the Board finds good cause for determining, and so 
determines, that notice in accordance with 5 U.S.C. 553(b) is 
unnecessary.
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    \10\ See 12 CFR 209.4(f) and n. 8 and accompanying text, supra.
---------------------------------------------------------------------------

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) does not apply to a rulemaking 
where a general notice of proposed rulemaking is not required.\11\ As 
noted previously, the Board has determined that it is unnecessary to 
publish a general notice of proposed rulemaking for this final rule. 
Accordingly, the RFA's requirements relating to an initial and

[[Page 52174]]

final regulatory flexibility analysis do not apply.
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    \11\ 5 U.S.C. 603 and 604.
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Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995,\12\ the 
Board has reviewed this final rule. No collections of information 
pursuant to the Paperwork Reduction Act are contained in the final 
rule.
---------------------------------------------------------------------------

    \12\ 44 U.S.C. 3506; 5 CFR part 1320.
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List of Subjects in 12 CFR Part 209

    Banks and banking, Federal Reserve System, Reporting and 
recordkeeping requirements, Securities.

Authority and Issuance

    For the reasons set forth in the preamble, the Board amends 
Regulation I, 12 CFR part 209, as follows:

PART 209--ISSUE AND CANCELLATION OF FEDERAL RESERVE BANK CAPITAL 
STOCK (REGULATION I)

0
1. The authority citation for part 209 continues to read as follows:

    Authority: 12 U.S.C. 12 U.S.C. 222, 248, 282, 286-288, 289, 321, 
323, 327-328, and 466.

0
2. In part 209, remove all references to ``$10,122,000,000'' and add in 
their place ``$10,283,000,000'', wherever they appear.

    By order of the Board of Governors of the Federal Reserve 
System, acting through the Secretary of the Board under delegated 
authority, November 7, 2017.
Margaret M. Shanks,
Deputy Secretary of the Board.
[FR Doc. 2017-24553 Filed 11-9-17; 8:45 am]
 BILLING CODE 6210-01-P