Regulation D: Reserve Requirements of Depository Institutions, 512-513 [2018-28424]

Download as PDF 512 Federal Register / Vol. 84, No. 21 / Thursday, January 31, 2019 / Rules and Regulations 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. Paperwork Reduction Act In accordance with the Paperwork Reduction Act (‘‘PRA’’) of 1995,6 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. 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 is revised 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 3.00 percent. (b) Secondary credit. The interest rate at each Federal Reserve Bank for secondary credit provided to depository institutions under § 201.4(b) is 3.50 percent. * * * * * By order of the Board of Governors of the Federal Reserve System, December 20, 2018. Ann Misback, Secretary of the Board. khammond on DSKBBV9HB2PROD with RULES [FR Doc. 2018–28423 Filed 1–30–19; 8:45 am] BILLING CODE 6210–01–P 6 44 U.S.C. 3506; see 5 CFR part 1320, appendix A.1. 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 16:41 Jan 30, 2019 Jkt 247001 FEDERAL RESERVE SYSTEM 12 CFR Part 204 [Docket No. R–1646] RIN 7100–AF35 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 2.40 percent and IOER is 2.40 percent, a 0.20 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: Effective date: The amendments to part 204 (Regulation D) are effective January 31, 2019. Applicability date: The IORR and IOER rate changes were applicable on December 20, 2018. FOR FURTHER INFORMATION CONTACT: Clinton Chen, Senior Attorney (202– 452–3952), or Sophia Allison, Senior Special Counsel (202–452–3565), Legal Division, or Kristen Payne, Senior Financial Institution & Policy Analyst (202–452–2872), or Laura Lipscomb, Assistant Director (202–912–7964), 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.1 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 1 12 PO 00000 U.S.C. 461(b). Frm 00002 Fmt 4700 Sfmt 4700 is insufficient, by maintaining a balance in an account at a Federal Reserve Bank (‘‘Reserve Bank’’).2 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.3 Institutions that are eligible to receive earnings on their balances held at Reserve Banks (‘‘eligible institutions’’) include depository institutions and certain other institutions.4 Section 19 also provides that the Board may prescribe regulations concerning the payment of earnings on balances at a Reserve Bank.5 Prior to these amendments, Regulation D specified a rate of 2.20 percent for both IORR and IOER.6 II. Amendments to IORR and IOER The Board is amending § 204.10(b)(5) of Regulation D to specify that IORR is 2.40 percent and IOER is 2.40 percent. This 0.20 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 2 to 21⁄4 percent to a target range of 21⁄4 to 21⁄2 percent, announced by the FOMC on December 19, 2018, with an effective date of December 20, 2018. 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 strong rate. Job gains have been strong, on average, in recent months, and the unemployment rate has remained low. Household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier in the year. On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent. Indicators 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. The Committee judges that some further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective over the medium term. The Committee judges that risks to the economic outlook are roughly balanced, but will continue to monitor global economic and financial 2 12 CFR 204.5(a)(1). U.S.C. 461(b)(1)(A) & (b)(12)(A). 4 See 12 U.S.C. 461(b)(1)(A) & (b)(12)(C); see also 12 CFR 204.2(y). 5 See 12 U.S.C. 461(b)(12)(B). 6 See 12 CFR 204.10(b)(5). 3 12 E:\FR\FM\31JAR1.SGM 31JAR1 513 Federal Register / Vol. 84, No. 21 / Thursday, January 31, 2019 / Rules and Regulations developments and assess their implications for the economic outlook. 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 21⁄4 to 21⁄2 percent. A Federal Reserve Implementation note released simultaneously with the announcement stated: The Board of Governors of the Federal Reserve System voted unanimously to raise the interest rate paid on required and excess reserve balances to 2.40 percent, effective December 20, 2018. Setting the interest rate paid on required and excess reserve balances 10 basis points below the top of the target range for the federal funds rate is intended to foster trading in the federal funds market at rates well within the FOMC’s target range. khammond on DSKBBV9HB2PROD with RULES As a result, the Board is amending § 204.10(b)(5) of Regulation D to change IORR to 2.40 percent and IOER to 2.40 percent. III. Administrative Procedure Act In general, the Administrative Procedure Act (‘‘APA’’) 7 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.’’ 8 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 good cause for shortened notice and publishes its reasoning with the rule.9 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 U.S.C. 551 et seq. U.S.C. 553(b)(3)(A). 9 5 U.S.C. 553(d). 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.10 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. In accordance with the Paperwork Reduction Act (‘‘PRA’’) of 1995,11 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: ■ * 10 5 85 11 44 VerDate Sep<11>2014 16:41 Jan 30, 2019 Payment of interest on balances. * * * * (b) * * * (5) The rates for IORR and IOER are: 75 U.S.C. 603, 604. U.S.C. 3506; see 5 CFR part 1320, appendix A.1. Jkt 247001 PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 IORR ..................................... IOER ..................................... * * * * 2.40 2.40 * By order of the Board of Governors of the Federal Reserve System, December 20, 2018. Ann Misback, Secretary of the Board. [FR Doc. 2018–28424 Filed 1–30–19; 8:45 am] BILLING CODE 6210–01–P BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1003 RIN 3170–AA92 Home Mortgage Disclosure (Regulation C) Adjustment to AssetSize Exemption Threshold Bureau of Consumer Financial Protection. AGENCY: ACTION: V. Paperwork Reduction Act § 204.10 Rate (percent) Final rule; official commentary. The Bureau of Consumer Financial Protection (Bureau) is amending the official commentary that interprets the requirements of the Bureau’s Regulation C (Home Mortgage Disclosure) to reflect the asset-size exemption threshold for banks, savings associations, and credit unions based on the annual percentage change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI–W). Based on the 2.6 percent increase in the average of the CPI–W for the 12-month period ending in November 2018, the exemption threshold is adjusted to increase to $46 million from $45 million. Therefore, banks, savings associations, and credit unions with assets of $46 million or less as of December 31, 2018, are exempt from collecting data in 2019. SUMMARY: Effective date: This rule is effective January 31, 2019. Applicability date: This rule is applicable on January 1, 2019, consistent with relevant statutory or regulatory provisions. DATES: FOR FURTHER INFORMATION CONTACT: Monique Chenault, Paralegal Specialist, Office of Regulations, at (202) 435–7700. If you require this document in an alternative electronic format, please contact CFPB_Accessibility@cfpb.gov. SUPPLEMENTARY INFORMATION: E:\FR\FM\31JAR1.SGM 31JAR1

Agencies

[Federal Register Volume 84, Number 21 (Thursday, January 31, 2019)]
[Rules and Regulations]
[Pages 512-513]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-28424]


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

FEDERAL RESERVE SYSTEM

12 CFR Part 204

[Docket No. R-1646]
RIN 7100-AF35


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 2.40 percent and IOER is 2.40 
percent, a 0.20 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: 
    Effective date: The amendments to part 204 (Regulation D) are 
effective January 31, 2019.
    Applicability date: The IORR and IOER rate changes were applicable 
on December 20, 2018.

FOR FURTHER INFORMATION CONTACT: Clinton Chen, Senior Attorney (202-
452-3952), or Sophia Allison, Senior Special Counsel (202-452-3565), 
Legal Division, or Kristen Payne, Senior Financial Institution & Policy 
Analyst (202-452-2872), or Laura Lipscomb, Assistant Director (202-912-
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.\1\ 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'').\2\ 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.\3\ 
Institutions that are eligible to receive earnings on their balances 
held at Reserve Banks (``eligible institutions'') include depository 
institutions and certain other institutions.\4\ Section 19 also 
provides that the Board may prescribe regulations concerning the 
payment of earnings on balances at a Reserve Bank.\5\ Prior to these 
amendments, Regulation D specified a rate of 2.20 percent for both IORR 
and IOER.\6\
---------------------------------------------------------------------------

    \1\ 12 U.S.C. 461(b).
    \2\ 12 CFR 204.5(a)(1).
    \3\ 12 U.S.C. 461(b)(1)(A) & (b)(12)(A).
    \4\ See 12 U.S.C. 461(b)(1)(A) & (b)(12)(C); see also 12 CFR 
204.2(y).
    \5\ See 12 U.S.C. 461(b)(12)(B).
    \6\ 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 2.40 percent and IOER is 2.40 percent. This 0.20 
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 2 to 2\1/4\ percent to a target range of 2\1/4\ to 2\1/2\ 
percent, announced by the FOMC on December 19, 2018, with an effective 
date of December 20, 2018. 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 strong 
rate. Job gains have been strong, on average, in recent months, and 
the unemployment rate has remained low. Household spending has 
continued to grow strongly, while growth of business fixed 
investment has moderated from its rapid pace earlier in the year. On 
a 12-month basis, both overall inflation and inflation for items 
other than food and energy remain near 2 percent. Indicators 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. The Committee judges 
that some further gradual increases in the target range for the 
federal funds rate will be consistent with sustained expansion of 
economic activity, strong labor market conditions, and inflation 
near the Committee's symmetric 2 percent objective over the medium 
term. The Committee judges that risks to the economic outlook are 
roughly balanced, but will continue to monitor global economic and 
financial

[[Page 513]]

developments and assess their implications for the economic outlook.
    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 2\1/4\ to 2\1/2\ percent.

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

    The Board of Governors of the Federal Reserve System voted 
unanimously to raise the interest rate paid on required and excess 
reserve balances to 2.40 percent, effective December 20, 2018. 
Setting the interest rate paid on required and excess reserve 
balances 10 basis points below the top of the target range for the 
federal funds rate is intended to foster trading in the federal 
funds market at rates well within the FOMC's target range.

    As a result, the Board is amending Sec.  204.10(b)(5) of Regulation 
D to change IORR to 2.40 percent and IOER to 2.40 percent.

III. Administrative Procedure Act

    In general, the Administrative Procedure Act (``APA'') \7\ 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.'' \8\ 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 good cause for shortened notice and publishes its 
reasoning with the rule.\9\
---------------------------------------------------------------------------

    \7\ 5 U.S.C. 551 et seq.
    \8\ 5 U.S.C. 553(b)(3)(A).
    \9\ 5 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.\10\ 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.
---------------------------------------------------------------------------

    \10\ 5 U.S.C. 603, 604.
---------------------------------------------------------------------------

V. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act (``PRA'') of 
1995,\11\ 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.
---------------------------------------------------------------------------

    \11\ 44 U.S.C. 3506; see 5 CFR part 1320, appendix A.1.
---------------------------------------------------------------------------

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
                                                             (percent)
------------------------------------------------------------------------
IORR....................................................            2.40
IOER....................................................            2.40
------------------------------------------------------------------------

* * * * *

    By order of the Board of Governors of the Federal Reserve 
System, December 20, 2018.
Ann Misback,
Secretary of the Board.
[FR Doc. 2018-28424 Filed 1-30-19; 8:45 am]
BILLING CODE 6210-01-P