Regulation D: Reserve Requirements of Depository Institutions, 60282-60283 [2017-27393]

Download as PDF 60282 Federal Register / Vol. 82, No. 243 / Wednesday, December 20, 2017 / Rules and Regulations 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 these 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. 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 2.00 percent. (b) Secondary credit. The interest rate at each Federal Reserve Bank for secondary credit provided to depository institutions under 201.4(b) is 2.50 percent. * * * * * By order of the Board of Governors of the Federal Reserve System. Ann E. Misback, Secretary of the Board. Regulatory Flexibility Analysis [FR Doc. 2017–27392 Filed 12–19–17; 8:45 am] 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 requirements relating to an initial and final regulatory flexibility analysis do not apply. BILLING CODE 6210–01–P Paperwork Reduction Act ethrower on DSK3G9T082PROD with RULES In accordance with the Paperwork Reduction Act (‘‘PRA’’) of 1995 (44 U.S.C. 3506; 5 CFR 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. 15 U.S.C. 603 and 604. VerDate Sep<11>2014 16:19 Dec 19, 2017 Jkt 244001 FEDERAL RESERVE SYSTEM 12 CFR Part 204 [Docket No. R–1593; RIN 7100 AE–04] 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 1.50 percent and IOER is 1.50 percent, a 0.25 percentage SUMMARY: 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. PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 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’’). DATE: The amendments to part 204 (Regulation D) are effective December 20, 2017. The IORR and IOER rate changes were applicable on December 14, 2017. FOR FURTHER INFORMATION CONTACT: Clinton Chen, Senior Attorney (202– 452–3952), or Sophia Allison, Special Counsel (202–452–3198), Legal Division, or Kristen Payne, Financial Analyst (202–452–2872), or Heather Wiggins, Section Chief (202–452–3674), 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 1.25 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 1.50 percent and IOER is 1.50 percent. 1 12 CFR 204.5(a)(1). 12 U.S.C. 461(b)(1)(A) & (b)(12)(C); see also 12 CFR 204.2(y). 3 See 12 U.S.C. 461(b)(12). 4 See 12 CFR 204.10(b)(5). 2 See E:\FR\FM\20DER1.SGM 20DER1 Federal Register / Vol. 82, No. 243 / Wednesday, December 20, 2017 / Rules and Regulations 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 to 11⁄4 percent to a target range of 11⁄4 to 11⁄2 percent, announced by the FOMC on December 13, 2017, with an effective date of December 14, 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 November indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate. Averaging through hurricane-related fluctuations, job gains have been solid, and the unemployment rate declined further. Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters. On a 12-month basis, both overall inflation and inflation for items other than food and energy have declined this year and are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Hurricanerelated disruptions and rebuilding have affected economic activity, employment, and inflation in recent months but have not materially altered the outlook for the national economy. Consequently, the Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will remain strong. Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee’s 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely. 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 11⁄4 to 11⁄2 percent. The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation. A Federal Reserve Implementation note released simultaneously with the announcement stated that: ethrower 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 1.50 percent, effective December 14, 2017. As a result, the Board is amending section 204.10(b)(5) of Regulation D to change IORR to 1.50 percent and IOER to 1.50 percent. III. Administrative Procedure Act In general, the Administrative Procedure Act (12 U.S.C. 551 et seq.) VerDate Sep<11>2014 16:19 Dec 19, 2017 Jkt 244001 (‘‘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 at least 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) a rule for which the agency finds of good cause for shortened notice and publishes 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 these 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 these 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 55 PO 00000 U.S.C. 603 and 604. Frm 00003 Fmt 4700 Sfmt 4700 60283 requirements relating to an initial and 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 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), 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 (%) IORR ......................................... IOER ......................................... * * * * 1.50 1.50 * By order of the Board of Governors of the Federal Reserve System. Ann E. Misback, Secretary of the Board. [FR Doc. 2017–27393 Filed 12–19–17; 8:45 am] BILLING CODE 6210–01–P NATIONAL CREDIT UNION ADMINISTRATION 12 CFR Part 701 RIN 3133–AE76 Emergency Mergers—Chartering and Field of Membership National Credit Union Administration (NCUA). ACTION: Final rule. AGENCY: The NCUA Board (Board) is issuing this final rule to amend, in its Chartering and Field of Membership SUMMARY: E:\FR\FM\20DER1.SGM 20DER1

Agencies

[Federal Register Volume 82, Number 243 (Wednesday, December 20, 2017)]
[Rules and Regulations]
[Pages 60282-60283]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-27393]


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

FEDERAL RESERVE SYSTEM

12 CFR Part 204

[Docket No. R-1593; RIN 7100 AE-04]


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 1.50 percent and IOER is 1.50 
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'').

DATE: The amendments to part 204 (Regulation D) are effective December 
20, 2017. The IORR and IOER rate changes were applicable on December 
14, 2017.

FOR FURTHER INFORMATION CONTACT: Clinton Chen, Senior Attorney (202-
452-3952), or Sophia Allison, Special Counsel (202-452-3198), Legal 
Division, or Kristen Payne, Financial Analyst (202-452-2872), or 
Heather Wiggins, Section Chief (202-452-3674), 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 1.25 percent for both IORR 
and IOER.\4\
---------------------------------------------------------------------------

    \1\ 12 CFR 204.5(a)(1).
    \2\ See 12 U.S.C. 461(b)(1)(A) & (b)(12)(C); see also 12 CFR 
204.2(y).
    \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 1.50 percent and IOER is 1.50 percent.

[[Page 60283]]

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 to 1\1/4\ percent to a target range of 1\1/4\ to 1\1/
2\ percent, announced by the FOMC on December 13, 2017, with an 
effective date of December 14, 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 November indicates that the labor market has continued to 
strengthen and that economic activity has been rising at a solid 
rate. Averaging through hurricane-related fluctuations, job gains 
have been solid, and the unemployment rate declined further. 
Household spending has been expanding at a moderate rate, and growth 
in business fixed investment has picked up in recent quarters. On a 
12-month basis, both overall inflation and inflation for items other 
than food and energy have declined this year and are running below 2 
percent. Market-based measures of inflation compensation remain low; 
survey-based measures of longer-term inflation expectations are 
little changed, on balance.
    Consistent with its statutory mandate, the Committee seeks to 
foster maximum employment and price stability. Hurricane-related 
disruptions and rebuilding have affected economic activity, 
employment, and inflation in recent months but have not materially 
altered the outlook for the national economy. Consequently, the 
Committee continues to expect that, with gradual adjustments in the 
stance of monetary policy, economic activity will expand at a 
moderate pace and labor market conditions will remain strong. 
Inflation on a 12-month basis is expected to remain somewhat below 2 
percent in the near term but to stabilize around the Committee's 2 
percent objective over the medium term. Near-term risks to the 
economic outlook appear roughly balanced, but the Committee is 
monitoring inflation developments closely.
    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\1/4\ to 1\1/2\ percent. The stance of 
monetary policy remains accommodative, thereby supporting strong 
labor market conditions and a sustained 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 1.50 percent, effective December 14, 2017.

    As a result, the Board is amending section 204.10(b)(5) of 
Regulation D to change IORR to 1.50 percent and IOER to 1.50 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 at least 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) a rule for which the agency 
finds of good cause for shortened notice and publishes 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 these 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 these 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 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), 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  (%)
------------------------------------------------------------------------
IORR.......................................................         1.50
IOER.......................................................         1.50
------------------------------------------------------------------------

* * * * *

    By order of the Board of Governors of the Federal Reserve 
System.
Ann E. Misback,
Secretary of the Board.
[FR Doc. 2017-27393 Filed 12-19-17; 8:45 am]
 BILLING CODE 6210-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.