Regulation A: Extensions of Credit by Federal Reserve Banks, 52752-52753 [2019-21344]
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Federal Register / Vol. 84, No. 192 / Thursday, October 3, 2019 / Rules and Regulations
FEDERAL RESERVE SYSTEM
12 CFR Part 201
[Docket No. R–1674]
RIN 7100–AF 57
Regulation A: Extensions of Credit by
Federal Reserve Banks
Board of Governors of the
Federal Reserve System.
ACTION: Final rule.
AGENCY:
The Board of Governors of the
Federal Reserve System (‘‘Board’’) has
adopted final amendments to its
Regulation A to reflect the Board’s
approval of a decrease in the rate for
primary credit at each Federal Reserve
Bank. The secondary credit rate at each
Reserve Bank automatically decreased
by formula as a result of the Board’s
primary credit rate action.
DATES:
Effective date: The amendments to
part 201 (Regulation A) are effective
October 3, 2019.
Applicability date: The rate changes
for primary and secondary credit were
applicable on September 19, 2019.
FOR FURTHER INFORMATION CONTACT:
Sophia H. Allison, Senior Special
Counsel (202–452–3565), Legal
Division, or Lyle Kumasaka, Lead
Financial Institution & Policy Analyst
(202–452–2382), 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: The
Federal Reserve Banks make primary
and secondary credit available to
depository institutions as a backup
source of funding on a short-term basis,
usually overnight. The primary and
secondary credit rates are the interest
rates that the twelve Federal Reserve
Banks charge for extensions of credit
under these programs. In accordance
with the Federal Reserve Act, the
primary and secondary credit rates are
established by the boards of directors of
the Federal Reserve Banks, subject to
the review and determination of the
Board.
On September 18, 2019, the Board
voted to approve a 1⁄4 percentage point
decrease in the primary credit rate in
effect at each of the twelve Federal
Reserve Banks, thereby decreasing from
2.75 percent to 2.50 percent the rate that
each Reserve Bank charges for
extensions of primary credit. In
addition, the Board had previously
SUMMARY:
VerDate Sep<11>2014
16:33 Oct 02, 2019
Jkt 250001
approved the renewal of the secondary
credit rate formula, the primary credit
rate plus 50 basis points. Under the
formula, the secondary credit rate in
effect at each of the twelve Federal
Reserve Banks decreased by 1⁄4
percentage point as a result of the
Board’s primary credit rate action,
thereby decreasing from 3.25 percent to
3.00 percent the rate that each Reserve
Bank charges for extensions of
secondary credit. The amendments to
Regulation A reflect these rate changes.
The 1⁄4 percentage point decrease in
the primary credit rate was associated
with a decrease in the target range for
the federal funds rate (from a target
range of 2 to 21⁄4 percent to a target
range of 13⁄4 to 2 percent) announced by
the Federal Open Market Committee on
September 18, 2019, as described in the
Board’s amendment of its Regulation D
published elsewhere in today’s Federal
Register.
Administrative Procedure Act
In general, the Administrative
Procedure Act (‘‘APA’’) 1 imposes three
principal requirements when an agency
promulgates legislative rules (rules
made pursuant to Congressionallydelegated 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.’’ 2 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.3 The APA
further provides that the notice, public
comment, and delayed effective date
requirements of 5 U.S.C. 553 do not
apply ‘‘to the extent that there is
involved . . . a matter relating to agency
management or personnel or to public
property, loans, grants, benefits, or
contracts.’’ 4
Regulation A establishes the interest
rates that the twelve Reserve Banks
charge for extensions of primary credit
U.S.C. 551 et seq.
U.S.C. 553(b)(3)(A).
3 5 U.S.C. 553(d).
4 5 U.S.C. 553(a)(2) (emphasis added).
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. The amendments involve a matter
relating to loans and are therefore
exempt under the terms of the APA.
Furthermore, because delay would
undermine the Board’s action in
responding to economic data and
conditions, the Board has determined
that ‘‘good cause’’ exists within the
meaning of the APA to dispense with
the notice, public comment, and
delayed effective date procedures of the
APA with respect to the final
amendments to Regulation A.
Regulatory Flexibility Analysis
The Regulatory Flexibility Act
(‘‘RFA’’) does not apply to a rulemaking
where a general notice of proposed
rulemaking is not required.5 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.
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.
15
25
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Frm 00006
Fmt 4700
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55
U.S.C. 603, 604.
U.S.C. 3506; see 5 CFR part 1320, appendix
6 44
A.1.
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Federal Register / Vol. 84, No. 192 / Thursday, October 3, 2019 / Rules and Regulations
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 2.50
percent.
(b) Secondary credit. The interest rate
at each Federal Reserve Bank for
secondary credit provided to depository
institutions under § 201.4(b) is 3.00
percent.
*
*
*
*
*
By order of the Board of Governors of the
Federal Reserve System, September 25, 2019.
Ann Misback,
Secretary of the Board.
[FR Doc. 2019–21344 Filed 10–2–19; 8:45 am]
BILLING CODE 6210–02–P
FEDERAL RESERVE SYSTEM
12 CFR Part 204
[Docket No. R–1675]
RIN 7100–AF 58
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 1.80 percent and
IOER is 1.80 percent, a 0.30 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
October 3, 2019.
SUMMARY:
Applicability date: The IORR and
IOER rate changes were applicable on
September 19, 2019.
FOR FURTHER INFORMATION CONTACT:
Sophia H. Allison, Senior Special
Counsel (202–452–3565), Legal
Division, or Francis Martinez, Senior
Financial Institution & Policy Analyst
(202–245–4217), 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 2.10 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
1.80 percent and IOER is 1.80 percent.
This 0.30 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 to 21⁄4
percent to a target range of 13⁄4 to 2
percent, announced by the FOMC on
September 18, 2019, with an effective
1 12
U.S.C. 461(b).
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).
2 12
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
16:33 Oct 02, 2019
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52753
date of September 19, 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 July
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 household spending has been
rising at a strong pace, business fixed
investment and exports have weakened. 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 13⁄4 to 2 percent. This action supports
the Committee’s view that sustained
expansion of economic activity, strong labor
market conditions, and inflation near the
Committee’s symmetric 2 percent objective
are the most likely outcomes, but
uncertainties about this outlook remain. As
the Committee contemplates the future path
of the target range for the federal funds rate,
it will continue to monitor the implications
of incoming information for the economic
outlook and will act as appropriate to sustain
the expansion, with a strong labor market
and inflation near its symmetric 2 percent
objective.
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 1.80 percent, effective
September 19, 2019. Setting the interest rate
paid on required and excess reserve balances
20 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
§ 204.10(b)(5) of Regulation D to change
IORR to 1.80 percent and IOER to 1.80
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 Congressionallydelegated 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)
75
U.S.C. 551 et seq.
E:\FR\FM\03OCR1.SGM
03OCR1
]]>Agencies
[Federal Register Volume 84, Number 192 (Thursday, October 3, 2019)]
[Rules and Regulations]
[Pages 52752-52753]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-21344]
[[Page 52752]]
=======================================================================
-----------------------------------------------------------------------
FEDERAL RESERVE SYSTEM
12 CFR Part 201
[Docket No. R-1674]
RIN 7100-AF 57
Regulation A: Extensions of Credit by Federal Reserve Banks
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Board of Governors of the Federal Reserve System
(``Board'') has adopted final amendments to its Regulation A to reflect
the Board's approval of a decrease in the rate for primary credit at
each Federal Reserve Bank. The secondary credit rate at each Reserve
Bank automatically decreased by formula as a result of the Board's
primary credit rate action.
DATES:
Effective date: The amendments to part 201 (Regulation A) are
effective October 3, 2019.
Applicability date: The rate changes for primary and secondary
credit were applicable on September 19, 2019.
FOR FURTHER INFORMATION CONTACT: Sophia H. Allison, Senior Special
Counsel (202-452-3565), Legal Division, or Lyle Kumasaka, Lead
Financial Institution & Policy Analyst (202-452-2382), 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: The Federal Reserve Banks make primary and
secondary credit available to depository institutions as a backup
source of funding on a short-term basis, usually overnight. The primary
and secondary credit rates are the interest rates that the twelve
Federal Reserve Banks charge for extensions of credit under these
programs. In accordance with the Federal Reserve Act, the primary and
secondary credit rates are established by the boards of directors of
the Federal Reserve Banks, subject to the review and determination of
the Board.
On September 18, 2019, the Board voted to approve a \1/4\
percentage point decrease in the primary credit rate in effect at each
of the twelve Federal Reserve Banks, thereby decreasing from 2.75
percent to 2.50 percent the rate that each Reserve Bank charges for
extensions of primary credit. In addition, the Board had previously
approved the renewal of the secondary credit rate formula, the primary
credit rate plus 50 basis points. Under the formula, the secondary
credit rate in effect at each of the twelve Federal Reserve Banks
decreased by \1/4\ percentage point as a result of the Board's primary
credit rate action, thereby decreasing from 3.25 percent to 3.00
percent the rate that each Reserve Bank charges for extensions of
secondary credit. The amendments to Regulation A reflect these rate
changes.
The \1/4\ percentage point decrease in the primary credit rate was
associated with a decrease 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
1\3/4\ to 2 percent) announced by the Federal Open Market Committee on
September 18, 2019, as described in the Board's amendment of its
Regulation D published elsewhere in today's Federal Register.
Administrative Procedure Act
In general, the Administrative Procedure Act (``APA'') \1\ 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.'' \2\ 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.\3\ The APA further provides that the notice,
public comment, and delayed effective date requirements of 5 U.S.C. 553
do not apply ``to the extent that there is involved . . . a matter
relating to agency management or personnel or to public property,
loans, grants, benefits, or contracts.'' \4\
---------------------------------------------------------------------------
\1\ 5 U.S.C. 551 et seq.
\2\ 5 U.S.C. 553(b)(3)(A).
\3\ 5 U.S.C. 553(d).
\4\ 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. The amendments involve a matter relating to
loans and are therefore exempt under the terms of the APA. Furthermore,
because delay would undermine the Board's action in responding to
economic data and conditions, the Board has determined that ``good
cause'' exists within the meaning of the APA to dispense with the
notice, public comment, and delayed effective date procedures of the
APA with respect to the final amendments to Regulation A.
Regulatory Flexibility Analysis
The Regulatory Flexibility Act (``RFA'') does not apply to a
rulemaking where a general notice of proposed rulemaking is not
required.\5\ 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.
---------------------------------------------------------------------------
\5\ 5 U.S.C. 603, 604.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\6\ 44 U.S.C. 3506; see 5 CFR part 1320, appendix A.1.
---------------------------------------------------------------------------
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)
0
1. The authority citation for part 201 continues to read as follows:
Authority: 12 U.S.C. 248(i)-(j), 343 et seq., 347a, 347b, 347c,
348 et seq., 357, 374, 374a, and 461.
[[Page 52753]]
0
2. In Sec. 201.51, paragraphs (a) and (b) are revised to read as
follows:
Sec. 201.51 Interest rates applicable to credit extended by a
Federal Reserve Bank.\3\
---------------------------------------------------------------------------
\3\ The primary, secondary, and seasonal credit rates described
in this section apply to both advances and discounts made under the
primary, secondary, and seasonal credit programs, respectively.
---------------------------------------------------------------------------
(a) Primary credit. The interest rate at each Federal Reserve Bank
for primary credit provided to depository institutions under Sec.
201.4(a) is 2.50 percent.
(b) Secondary credit. The interest rate at each Federal Reserve
Bank for secondary credit provided to depository institutions under
Sec. 201.4(b) is 3.00 percent.
* * * * *
By order of the Board of Governors of the Federal Reserve
System, September 25, 2019.
Ann Misback,
Secretary of the Board.
[FR Doc. 2019-21344 Filed 10-2-19; 8:45 am]
BILLING CODE 6210-02-P
