[Federal Register Volume 83, Number 90 (Wednesday, May 9, 2018)]
[Rules and Regulations]
[Pages 21167-21168]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-09805]
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FEDERAL RESERVE SYSTEM
12 CFR Part 201
[Docket No. R-1585; RIN 7100-AE 90]
Regulation A: Extensions of Credit by Federal Reserve Banks
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Final rule.
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SUMMARY: The Board of Governors of the Federal Reserve System (Board)
is adopting final amendments to its Regulation A to revise the
provisions regarding the establishment of the primary credit rate in a
financial emergency and to delete the provisions relating to the use of
credit ratings for collateral for extensions of credit under the former
Term Asset-Backed Securities Loan Facility (TALF). The final amendments
are intended to allow the regulation to address circumstances in which
the Federal Open Market Committee (FOMC) has established a target range
for the federal funds rate rather than a single target rate, and to
reflect the expiration of the TALF program.
DATES: The final rule is effective June 8, 2018.
FOR FURTHER INFORMATION CONTACT: Sophia H. Allison, Special Counsel,
(202-452-3565), Legal Division, or Lyle Kumasaka, Senior Financial
Analyst, (202-452-2382), 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,
secondary, and seasonal credit available to depository institutions
subject to rules and regulations prescribed by the Board. The primary,
secondary, and seasonal credit rates are the interest rates that the
twelve Federal Reserve Banks charge for extensions of credit under
these programs. Under the primary credit program, Federal Reserve Banks
may extend credit on a very short-term basis, typically overnight, to
depository institutions that are in generally sound condition in the
judgment of the Federal Reserve Bank. In accordance with the Federal
Reserve Act, the primary credit rate is established by the boards of
directors of the Federal Reserve Banks, subject to review and
determination of the Board. The primary credit rate is set forth in
Sec. 201.51(a) of Regulation A.
Section 201.3(e) of Regulation A, adopted in December 2009,
established criteria and procedures governing the acceptance by the
Federal Reserve Bank of New York (FRBNY) of credit ratings issued by
credit rating agencies in connection with extensions of credit under
the former TALF. On June 30, 2010, the TALF was closed for new loan
extensions, and the final outstanding TALF loan was repaid in full in
October 2014.\1\
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\1\ https://www.federalreserve.gov/monetarypolicy/talf.htm.
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I. Notice of Proposed Rulemaking
On December 8, 2017, the Board published a notice of proposed
rulemaking in the Federal Register proposing amendments to Regulation A
that would (1) revise the regulatory procedures for establishing the
primary credit rate in a financial emergency; and (2) delete the
provisions relating to the use of credit ratings for collateral for
extensions of credit under the former TALF.\2\ Specifically, the Board
proposed to amend Sec. 201.51(d)(1) of Regulation A to provide that,
in a financial emergency, the primary credit rate is the target federal
funds rate or, if the FOMC has established a target range for the
federal funds rate, a rate corresponding to the top of the target
range. In addition, the Board proposed to delete Sec. 201.3(e) of
Regulation A as unnecessary given the expiration of the TALF program.
The comment period on the proposed rule closed on January 8, 2018.
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\2\ 82 FR 57886 (Dec. 8, 2017).
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[[Page 21168]]
II. Comments Received on the Proposed Rule and Adoption of Final Rule
The Board received five comments on the proposal. One comment
supported the flexibility the amendment provides during times of
crisis, and raised other issues regarding the size of the Federal
Reserve balance sheet that were outside the scope of the proposal.
Another commenter expressed support for the proposal as eliminating
roadblocks while dealing with an emergency. The other three comments
raised issues outside the scope of the proposal. Accordingly, the final
rule adopts the proposal as proposed.
III. Administrative Law Matters
A. Regulatory Flexibility Act
An initial regulatory flexibility analysis (IRFA) was included in
the proposal in accordance with section 3(a) of the Regulatory
Flexibility Act (RFA).\3\ In the IRFA, the Board requested comment on
the effect of the proposed rule on small entities and on any
significant alternatives that would reduce the regulatory burden on
small entities. The Board did not receive any comments on the IRFA.
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\3\ 5 U.S.C. 601 et seq.
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The RFA requires an agency to prepare a final regulatory
flexibility analysis unless the agency certifies that the rule will
not, if promulgated, have a significant economic impact on a
substantial number of small entities. In accordance with section 3(a)
of the RFA, the Board has reviewed the final rule. Based on its
analysis, and for the reasons stated below, the Board certifies that
the final rule will not have a significant economic impact on a
substantial number of small entities.
Section 201.51(d) of Regulation A. Currently, there are 1,523
depository institutions that are able to request primary credit that
meet the definition of ``small'' business entity, out of a total of
2,777 institutions that are able to request primary credit. The final
rule makes a ministerial amendment to conform the provision to the
current operating framework of the FOMC in establishing a target range
for the federal funds rate. The final rule affects the actions of the
Federal Reserve Banks and the Board, and requires no action or changes
in procedures for any depository institution, large or small, and so
there are no costs associated with the final rule. In addition, the
final rule clarifies the operation of the provision for reducing the
primary credit rate in a financial emergency from its current level to
a lower level based on the target federal funds rate or the target
range for the federal funds rate. Any economic impact of the final rule
on small entities would be beneficial, because the final rule enables
large and small entities to obtain primary credit at an interest rate
that would be lower than the existing primary credit rate. Accordingly,
the Board believes that a reasonable basis exists for assuming that the
economic effect of the final rule would be de minimis or insignificant
for small entities affected by it.
Section 201.3(e) of Regulation A. The final rule deletes obsolete
provisions applicable to credit extended under the TALF program. Since
the TALF program no longer exists, the deletion of regulatory
provisions governing the use of credit ratings in it will have no
impact, economic or otherwise, on any credit rating agency.
Accordingly, the Board believes that a reasonable basis exists for
assuming costs would be de minimis or insignificant for small entities
affected by it.
B. Paperwork Reduction Act Analysis
Office of Management and Budget (OMB) regulations implementing the
Paperwork Reduction Act (PRA) state that agencies must submit
``collections of information'' contained in proposed rules published
for public comment in the Federal Register in accordance with OMB
regulations. OMB regulations define a ``collection of information'' as
obtaining, causing to be obtained, soliciting, or requiring the
disclosure to an agency, third parties or the public of information by
or for an agency ``by means of identical questions posed to, or
identical reporting, recordkeeping, or disclosure requirements imposed
on, ten or more persons, whether such collection of information is
mandatory, voluntary, or required to obtain or retain a benefit.''
In accordance with the PRA, the Board reviewed the proposed rule
under the authority delegated to the Board by OMB. The proposed rule
contained no requirements subject to the PRA, and the Board received no
comments on its PRA analysis in the proposed rule. The final rule
adopts the proposed rule as proposed, and contains no requirements
subject to the PRA.
C. Plain Language
Each Federal banking agency, including the Board, is required to
use plain language in all proposed and final rulemakings published
after January 1, 2000.\4\ The Board has sought to present the final
rule, to the extent possible, in a simple and straightforward manner.
The Board received one comment that addressed the extent to which the
proposed rule used plain language. This comment expressed appreciation
for the Board's plain language interpretation of the regulation as set
forth in the proposed rule.
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\4\ 12 U.S.C. 4809.
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List of Subjects in 12 CFR Part 201
Banks, Banking, Federal Reserve System, Reporting and recordkeeping
requirements.
Authority and Issuance
For the reasons set forth in the preamble, the Board is amending 12
CFR chapter II 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) and (s), 343 et seq., 347a,
347b, 347c, 348 et seq., 357, 374, 374a, and 461.
Sec. 201.3 [Amended]
0
2. Section 201.3 is amended by removing paragraph (e).
0
3. Section 201.51 is amended by revising paragraph (d)(1) introductory
text to read as follows:
Sec. 201.51 Interest rates applicable to credit extended by a
Federal Reserve Bank.3
* * * * *
(d) * * *
(1) The primary credit rate at a Federal Reserve Bank is the target
federal funds rate of the Federal Open Market Committee or, if the
Federal Open Market Committee has set a target range for the federal
funds rate, the rate corresponding to the top of the target range, if:
* * * * *
\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.
By the Board of Governors of the Federal Reserve System, May 3,
2018.
Michele Taylor Fennell,
Assistant Secretary of the Board.
[FR Doc. 2018-09805 Filed 5-8-18; 8:45 am]
BILLING CODE 6210-01-P