Regulation D: Reserve Requirements of Depository Institutions, 39724-39725 [2019-17175]

Download as PDF 39724 Federal Register / Vol. 84, No. 155 / Monday, August 12, 2019 / Rules and Regulations 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 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 2.75 percent. (b) Secondary credit. The interest rate at each Federal Reserve Bank for secondary credit provided to depository institutions under 201.4(b) is 3.25 percent. * * * * * By order of the Board of Governors of the Federal Reserve System, August 6, 2019. Ann Misback, Secretary of the Board. [FR Doc. 2019–17173 Filed 8–9–19; 8:45 am] BILLING CODE 6210–01–P FEDERAL RESERVE SYSTEM 12 CFR Part 204 [Docket No. R–1672; RIN 7100–AF 55] Regulation D: Reserve Requirements of Depository Institutions Board of Governors of the Federal Reserve System. jspears on DSK3GMQ082PROD with RULES AGENCY: 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 15:59 Aug 09, 2019 Jkt 247001 ACTION: Final rule. The Board of Governors of the Federal Reserve System (‘‘Board’’) is amending Regulation D (Reserve Requirements of Depository Institutions) to revise the rate of interest paid on balances maintained to satisfy reserve balance requirements (‘‘IORR’’) and the rate of interest paid on excess balances (‘‘IOER’’) maintained at Federal Reserve Banks by or on behalf of eligible institutions. The final amendments specify that IORR is 2.10 percent and IOER is 2.10 percent, a 0.25 percentage point decrease 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 August 12, 2019. Applicability date: The IORR and IOER rate changes were applicable on August 1, 2019. 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 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 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). PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 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 2.35 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 2.10 percent and IOER is 2.10 percent. This 0.25 percentage point decrease in each rate was associated with a decrease in the target range for the federal funds rate, from a target range of 21⁄4 to 21⁄2 percent to a target range of 2 to 21⁄4 percent, announced by the FOMC on July 31, 2019, with an effective date of August 1, 2019. The FOMC’s press release on the same day as the announcement noted that: Information received since the Federal Open Market Committee met in June indicates that the labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although growth of household spending has picked up from earlier in the year, growth of business fixed investment has been soft. On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 2 to 21⁄4 percent. A Federal Reserve Implementation note released simultaneously with the announcement stated: The Board of Governors of the Federal Reserve System voted unanimously to lower the interest rate paid on required and excess reserve balances to 2.10 percent, effective August 1, 2019. As a result, the Board is amending § 204.10(b)(5) of Regulation D to change IORR to 2.10 percent and IOER to 2.10 percent. 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). E:\FR\FM\12AUR1.SGM 12AUR1 Federal Register / Vol. 84, No. 155 / Monday, August 12, 2019 / Rules and Regulations jspears on DSK3GMQ082PROD with RULES 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 changes 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 U.S.C. 551 et seq. U.S.C. 553(b)(3)(A). 9 5 U.S.C. 553(d). 10 5 U.S.C. 603, 604. 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. V. Paperwork Reduction Act Department of the Army 32 CFR Part 633 [Docket ID: USA–2019–HQ–0016] Individual Requests for Access or Amendment of CID Reports of Investigation Department of the Army, DoD. Final rule. AGENCY: ACTION: This final rule removes the Department of the Army regulation concerning the Criminal Investigation Banks, Banking, Reporting and Division (CID) reports of investigation recordkeeping requirements. on specific military installations. The For the reasons set forth in the content of this part is addressed in DoD preamble, the Board amends 12 CFR regulations related to the Privacy Act part 204 as follows: and Freedom of Information Act, and it is unnecessary. PART 204—RESERVE DATES : This rule is effective on August REQUIREMENTS OF DEPOSITORY 12, 2019. INSTITUTIONS (REGULATION D) FOR FURTHER INFORMATION CONTACT: T.L. Williams at 571–305–4355. ■ 1. The authority citation for part 204 continues to read as follows: SUPPLEMENTARY INFORMATION: This final rule removes 32 CFR part 633, Authority: 12 U.S.C. 248(a), 248(c), 461, ‘‘Individual Requests for Access or 601, 611, and 3105. Amendment of CID Reports of ■ 2. Section 204.10 is amended by Investigation,’’ which was originally revising paragraph (b)(5) to read as codified on July 27, 1979 (44 FR 44156), and most recently updated on May 17, follows: 2013 (78 FR 29019). It has been § 204.10 Payment of interest on balances. determined that publication of this CFR * * * * * part removal for public comment is impracticable, unnecessary, and (b) * * * contrary to public interest since it is (5) The rates for IORR and IOER are: based on removing content which is covered in DoD regulations at 32 CFR Rate part 286, ‘‘DoD Freedom of Information (percent) Act (FOIA) Program’’ (last updated IORR ........................................... 2.10 January 5, 2017, at 82 FR 1197), and 32 IOER ........................................... 2.10 CFR part 310, ‘‘DoD Privacy Program’’ (last updated April 11, 2019 at 84 FR 14730). By order of the Board of Governors of the Additional internal Army guidance is Federal Reserve System, August 6, 2019. published in Army Regulation 190–45, Ann Misback, ‘‘Law Enforcement Reporting,’’ Secretary of the Board. (available at https://armypubs.army.mil/ [FR Doc. 2019–17175 Filed 8–9–19; 8:45 am] ProductMaps/PubForm/AR.aspx) which was most recently updated on BILLING CODE 6210–01–P September 27, 2016. This rule is not significant under Executive Order (E.O.) 12866, ‘‘Regulatory Planning and Review,’’ therefore, E.O. 13771, ‘‘Reducing Regulation and Controlling Regulatory Costs’’ does not apply. List of Subjects in 12 CFR Part 204 SUMMARY: List of Subjects in 32 CFR Part 633 85 15:59 Aug 09, 2019 DEPARTMENT OF DEFENSE RIN 0702–AB00 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. 75 VerDate Sep<11>2014 39725 11 44 U.S.C. 3506; see 5 CFR part 1320 Appendix A.1. Jkt 247001 PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 Freedom of information, Investigations, Privacy. E:\FR\FM\12AUR1.SGM 12AUR1

Agencies

[Federal Register Volume 84, Number 155 (Monday, August 12, 2019)]
[Rules and Regulations]
[Pages 39724-39725]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-17175]


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

FEDERAL RESERVE SYSTEM

12 CFR Part 204

[Docket No. R-1672; RIN 7100-AF 55]


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 2.10 percent and IOER is 2.10 
percent, a 0.25 percentage point decrease 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 August 12, 2019.
    Applicability date: The IORR and IOER rate changes were applicable 
on August 1, 2019.

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 2.35 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 2.10 percent and IOER is 2.10 percent. This 0.25 
percentage point decrease in each rate was associated with a decrease 
in the target range for the federal funds rate, from a target range of 
2\1/4\ to 2\1/2\ percent to a target range of 2 to 2\1/4\ percent, 
announced by the FOMC on July 31, 2019, with an effective date of 
August 1, 2019. The FOMC's press release on the same day as the 
announcement noted that:

    Information received since the Federal Open Market Committee met 
in June indicates that the labor market remains strong and that 
economic activity has been rising at a moderate rate. Job gains have 
been solid, on average, in recent months, and the unemployment rate 
has remained low. Although growth of household spending has picked 
up from earlier in the year, growth of business fixed investment has 
been soft. On a 12-month basis, overall inflation and inflation for 
items other than food and energy are running below 2 percent. 
Market-based measures of inflation compensation remain low; survey-
based measures of longer-term inflation expectations are little 
changed.
    Consistent with its statutory mandate, the Committee seeks to 
foster maximum employment and price stability. In light of the 
implications of global developments for the economic outlook as well 
as muted inflation pressures, the Committee decided to lower the 
target range for the federal funds rate to 2 to 2\1/4\ percent.

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

    The Board of Governors of the Federal Reserve System voted 
unanimously to lower the interest rate paid on required and excess 
reserve balances to 2.10 percent, effective August 1, 2019.

    As a result, the Board is amending Sec.  204.10(b)(5) of Regulation 
D to change IORR to 2.10 percent and IOER to 2.10 percent.

[[Page 39725]]

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 changes 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........................................................        2.10
IOER........................................................        2.10
------------------------------------------------------------------------


    By order of the Board of Governors of the Federal Reserve 
System, August 6, 2019.
Ann Misback,
Secretary of the Board.
[FR Doc. 2019-17175 Filed 8-9-19; 8:45 am]
BILLING CODE 6210-01-P