82 FR 7635 - Regulation A: Extensions of Credit by Federal Reserve Banks

FEDERAL RESERVE SYSTEM

Federal Register Volume 82, Issue 13 (January 23, 2017)

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 an increase in the rate for primary credit at each Federal Reserve Bank. The secondary credit rate at each Reserve Bank automatically increased by formula as a result of the Board's primary credit rate action.

[Federal Register Volume 82, Number 13 (Monday, January 23, 2017)]
[Rules and Regulations]
[Pages 7635-7636]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-00612]


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FEDERAL RESERVE SYSTEM

12 CFR Part 201

[Docket No. R-1558]
RIN 7100 AE-66


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'') has adopted final amendments to its Regulation A to reflect 
the Board's approval of an increase in the rate for primary credit at 
each Federal Reserve Bank. The secondary credit rate at each Reserve 
Bank automatically increased by formula as a result of the Board's 
primary credit rate action.

DATES: The amendments to part 201 (Regulation A) are effective January 
23, 2017. The rate changes for primary and secondary credit were 
effective as determined by the Board in its December 14, 2016 
announcement.

FOR FURTHER INFORMATION CONTACT: Clinton Chen, Attorney (202-452-3952), 
or Sophia Allison, Special Counsel, (202-452-3565), Legal Division, or 
Lyle Kumasaka, Senior Financial Analyst (202-452-2382); 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.
    The Board voted to approve a \1/4\ percentage point increase in the 
primary credit rate in effect at each of the twelve Federal Reserve 
Banks, thereby increasing from 1.00 percent to 1.25 percent the rate 
that each Reserve Bank charges for extensions of primary credit. In 
addition, the Board had previously approved to renew the formula for 
the secondary credit rate, 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 increased by \1/4\ percentage point 
as a result of the Board's primary credit rate action, thereby 
increasing from 1.50 percent to 1.75 percent the rate that each Reserve 
Bank charges for extensions of secondary credit. The amendments to 
Regulation A reflect these rate changes.
    The rate changes for primary and secondary credit were effective as 
determined by the Board in its December 14, 2016 announcement.\1\
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    \1\ Federal Reserve Implementation Note, ``Decisions Regarding 
Monetary Policy Implementation'' (Dec. 14, 2016), https://www.federalreserve.gov/newsevents/press/monetary/20161214a1.htm.
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    The \1/4\ percentage point increase in the primary credit rate was 
associated with an increase in the target range for the federal funds 
rate (from a target range of \1/4\ to \1/2\ percent to a target range 
of \1/2\ to \3/4\ percent) announced by the Federal Open Market 
Committee (``Committee'') on December 14, 2016, as described in the 
Board's amendment of its Regulation D published elsewhere in today's 
Federal Register.
    The presentation of the interest rates for primary and secondary 
credit has been changed in the Code of Federal Regulations to improve 
clarity.

Administrative Procedure Act

    In general, the Administrative Procedure Act (12 U.S.C. 551 et 
seq.) (``APA'') 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.'' 12 U.S.C. 553(b)(3)(A). Section 553(d) of the APA 
also provides that publication not less than 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) an agency finding good cause for 
shortened notice and publishing its reasoning with the rule. 12 U.S.C. 
553(d). 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.'' 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. 
Accordingly, the Board has determined that the notice, public comment, 
and delayed effective date requirements of 5 U.S.C. 553 do not apply to 
the final amendments to Regulation A because the amendments involve a 
matter relating to loans. In addition, the Board has determined that, 
were the APA's requirements for notice, public comment, and delayed 
effective date to apply to the final amendments to Regulation A, those 
requirements would be unnecessary and contrary to the public interest. 
Delay in implementation of changes to the rates charged on primary 
credit and secondary credit would permit insured depository 
institutions to profit improperly from the difference in the current 
rate and the announced increased rate. Delay would also undermine the 
Board's action in

[[Page 7636]]

responding to economic data and conditions. For these reasons, the 
Board has determined that ``good cause'' within the meaning of the APA 
exists 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.\2\ 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.
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    \2\ 5 U.S.C. 603 and 604.
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Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act (``PRA'') of 1995 
(44 U.S.C. 3506; 5 CFR part 1320 Appendix A.1), 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 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:

12 CFR CHAPTER II

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.


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\
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    \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.
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    (a) Primary credit. The interest rate at each Federal Reserve Bank 
for primary credit provided to depository institutions under Sec.  
201.4(a) is 1.25 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 1.75 percent.
* * * * *

    By order of the Board of Governors of the Federal Reserve 
System, January 9, 2017.
Robert deV. Frierson,
Secretary of the Board.
[FR Doc. 2017-00612 Filed 1-19-17; 8:45 am]
 BILLING CODE 6210-01-P