Regulation D: Reserve Requirements of Depository Institutions, 52753-52754 [2019-21346]

Download as PDF 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 Jkt 250001 PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 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 52754 Federal Register / Vol. 84, No. 192 / Thursday, October 3, 2019 / Rules and Regulations 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 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. U.S.C. 553(b)(3)(A). U.S.C. 553(d). 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. The FAA is adopting a new airworthiness directive (AD) for all The Boeing Company Model 737–600, –700, –700C, –800, –900, and –900ER series airplanes. This AD requires repetitive inspections for cracking of the left and right hand side outboard chords of List of Subjects in 12 CFR Part 204 frame fittings and failsafe straps at a Banks, Banking, Reporting and certain station, and repair if any recordkeeping requirements. cracking is found. This AD was For the reasons set forth in the prompted by reports of cracking preamble, the Board amends 12 CFR discovered in this area. The FAA is part 204 as follows: issuing this AD to address the unsafe condition on these products. PART 204—RESERVE DATES: This AD is effective October 3, REQUIREMENTS OF DEPOSITORY 2019. INSTITUTIONS (REGULATION D) The Director of the Federal Register approved the incorporation by reference ■ 1. The authority citation for part 204 of a certain publication listed in this AD continues to read as follows: as of October 3, 2019. Authority: 12 U.S.C. 248(a), 248(c), 461, The FAA must receive comments on 601, 611, and 3105. this AD by November 18, 2019. ■ 2. Section 204.10 is amended by ADDRESSES: You may send comments, revising paragraph (b)(5) to read as using the procedures found in 14 CFR follows: 11.43 and 11.45, by any of the following methods: § 204.10 Payment of interest on balances. • Federal eRulemaking Portal: Go to * * * * * http://www.regulations.gov. Follow the (b) * * * instructions for submitting comments. (5) The rates for IORR and IOER are: • Fax: 202–493–2251. • Mail: U.S. Department of TABLE 1 TO PARAGRAPH (b)(5) Transportation, Docket Operations, M– 30, West Building Ground Floor, Room Rate W12–140, 1200 New Jersey Avenue SE, (percent) Washington, DC 20590. • Hand Delivery: Deliver to Mail IORR ........................................... 1.80 IOER ........................................... 1.80 address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. * * * * * For service information identified in By order of the Board of Governors of the this final rule, contact Boeing Federal Reserve System, September 25, 2019. Commercial Airplanes, Attention: Ann Misback, Contractual & Data Services (C&DS), Secretary of the Board. 2600 Westminster Blvd., MC 110–SK57, [FR Doc. 2019–21346 Filed 10–2–19; 8:45 am] Seal Beach, CA 90740–5600; telephone 562–797–1717; internet https:// BILLING CODE 6210–01–P www.myboeingfleet.com. You may view this service information at the FAA, DEPARTMENT OF TRANSPORTATION Transport Standards Branch, 2200 South 216th St., Des Moines, WA. For Federal Aviation Administration information on the availability of this material at the FAA, call 206–231–3195. 14 CFR Part 39 It is also available on the internet at http://www.regulations.gov by searching [Docket No. FAA–2019–0711; Product for and locating Docket No. FAA–2019– Identifier 2019–NM–167–AD; Amendment 0711. 39–19755; AD 2019–20–02] RIN 2120–AA64 Airworthiness Directives; The Boeing Company Airplanes Federal Aviation Administration (FAA), DOT. AGENCY: 85 95 VerDate Sep<11>2014 16:33 Oct 02, 2019 11 44 U.S.C. 3506; see 5 CFR part 1320, appendix A.1. Jkt 250001 Final rule; request for comments. ACTION: PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 SUMMARY: Examining the AD Docket You may examine the AD docket on the internet at http:// www.regulations.gov by searching for and locating Docket No. FAA–2019– 0711; or in person at Docket Operations between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this final rule, E:\FR\FM\03OCR1.SGM 03OCR1

Agencies

[Federal Register Volume 84, Number 192 (Thursday, October 3, 2019)]
[Rules and Regulations]
[Pages 52753-52754]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-21346]


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FEDERAL RESERVE SYSTEM

12 CFR Part 204

[Docket No. R-1675]
RIN 7100-AF 58


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 1.80 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.
    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\
---------------------------------------------------------------------------

    \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).
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II. Amendments to IORR and IOER

    The Board is amending Sec.  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 2\1/4\ percent to a target range of 1\3/4\ to 2 percent, announced 
by the FOMC on September 18, 2019, with an effective 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 1\3/4\ 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 Sec.  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 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)

[[Page 52754]]

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\
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    \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.
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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:

                       Table 1 to Paragraph (b)(5)
------------------------------------------------------------------------
                                                                 Rate
                                                               (percent)
------------------------------------------------------------------------
IORR........................................................        1.80
IOER........................................................        1.80
------------------------------------------------------------------------

* * * * *

    By order of the Board of Governors of the Federal Reserve 
System, September 25, 2019.
Ann Misback,
Secretary of the Board.
[FR Doc. 2019-21346 Filed 10-2-19; 8:45 am]
 BILLING CODE 6210-01-P