83 FR 21167 - Regulation A: Extensions of Credit by Federal Reserve Banks
FEDERAL RESERVE SYSTEM Federal Register Volume 83, Issue 90 (May 9, 2018)
Federal Register Volume 83, Issue 90 (May 9, 2018)
| Page Range | 21167-21168 | |
| FR Document | 2018-09805 |
[Federal Register Volume 83, Number 90 (Wednesday, May 9, 2018)] [Rules and Regulations] [Pages 21167-21168] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-09805] ======================================================================= ----------------------------------------------------------------------- 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. ----------------------------------------------------------------------- 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\ --------------------------------------------------------------------------- \1\ https://www.federalreserve.gov/monetarypolicy/talf.htm. --------------------------------------------------------------------------- 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. --------------------------------------------------------------------------- \2\ 82 FR 57886 (Dec. 8, 2017). --------------------------------------------------------------------------- [[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. --------------------------------------------------------------------------- \3\ 5 U.S.C. 601 et seq. --------------------------------------------------------------------------- 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. --------------------------------------------------------------------------- \4\ 12 U.S.C. 4809. --------------------------------------------------------------------------- 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
![Federal Register / Vol. 83, No. 90 / Wednesday, May 9, 2018 / Rules and Regulations 21167
AMS is committed to complying with PART 925—GRAPES GROWN IN A SUPPLEMENTARY INFORMATION: The
the E-Government Act, to promote the DESIGNATED AREA OF Federal Reserve Banks make primary,
use of the internet and other SOUTHEASTERN CALIFORNIA secondary, and seasonal credit available
information technologies to provide to depository institutions subject to
increased opportunities for citizen ■ 1. The authority citation for part 925 rules and regulations prescribed by the
access to Government information and continues to read as follows: Board. The primary, secondary, and
services, and for other purposes. Authority: 7 U.S.C. 601–674. seasonal credit rates are the interest
USDA has not identified any relevant ■ 2. Section 925.215 is revised to read rates that the twelve Federal Reserve
Federal rules that duplicate, overlap, or as follows: Banks charge for extensions of credit
conflict with this action. § 925.215 Assessment rate.
under these programs. Under the
primary credit program, Federal Reserve
A proposed rule concerning this On and after January 1, 2018, an
Banks may extend credit on a very
action was published in the Federal assessment rate of $0.020 per 18-pound
lug is established for grapes grown in a short-term basis, typically overnight, to
Register on March 1, 2018 (83 FR 8802).
designated area of southeastern depository institutions that are in
Copies of the proposed rule were also
California. generally sound condition in the
mailed or sent via facsimile to all grape
judgment of the Federal Reserve Bank.
handlers. Finally, the proposal was Dated: May 3, 2018
In accordance with the Federal Reserve
made available through the internet by Bruce Summers,
Act, the primary credit rate is
USDA and the Office of the Federal Acting Administrator, Agricultural Marketing established by the boards of directors of
Register. A 30-day comment period Service.
the Federal Reserve Banks, subject to
ending April 2, 2018, was provided for [FR Doc. 2018–09817 Filed 5–8–18; 8:45 am]
review and determination of the Board.
interested persons to respond to the BILLING CODE 3410–02–P
The primary credit rate is set forth in
proposal. One comment was received in
§ 201.51(a) of Regulation A.
support of the decreased assessment
rate. The commenter stated that a FEDERAL RESERVE SYSTEM Section 201.3(e) of Regulation A,
decreased assessment rate should result adopted in December 2009, established
in lower costs to the industry and 12 CFR Part 201 criteria and procedures governing the
ultimately to the consumer. No changes [Docket No. R–1585; RIN 7100–AE 90] acceptance by the Federal Reserve Bank
will be made to the rule as proposed of New York (FRBNY) of credit ratings
based on the comments received. The Regulation A: Extensions of Credit by issued by credit rating agencies in
proposal contained administrative Federal Reserve Banks connection with extensions of credit
revisions to the Order’s subpart under the former TALF. On June 30,
AGENCY: Board of Governors of the
headings to bring the language into 2010, the TALF was closed for new loan
Federal Reserve System.
conformance with the Office of Federal extensions, and the final outstanding
ACTION: Final rule.
Register requirements. These revisions TALF loan was repaid in full in October
are not included in this rule as they SUMMARY: The Board of Governors of the 2014.1
were included in a technical Federal Reserve System (Board) is
I. Notice of Proposed Rulemaking
amendment final rule published in the adopting final amendments to its
Federal Register on April 6, 2018 (83 FR Regulation A to revise the provisions On December 8, 2017, the Board
14736). regarding the establishment of the published a notice of proposed
primary credit rate in a financial rulemaking in the Federal Register
A small business guide on complying emergency and to delete the provisions
with fruit, vegetable, and specialty crop proposing amendments to Regulation A
relating to the use of credit ratings for that would (1) revise the regulatory
marketing agreements and orders may collateral for extensions of credit under
be viewed at: http://www.ams.usda.gov/ procedures for establishing the primary
the former Term Asset-Backed credit rate in a financial emergency; and
rules-regulations/moa/small-businesses. Securities Loan Facility (TALF). The
Any questions about the compliance (2) delete the provisions relating to the
final amendments are intended to allow
guide should be sent to Richard Lower use of credit ratings for collateral for
the regulation to address circumstances
at the previously-mentioned address in extensions of credit under the former
in which the Federal Open Market
the FOR FURTHER INFORMATION CONTACT Committee (FOMC) has established a TALF.2 Specifically, the Board proposed
section. target range for the federal funds rate to amend § 201.51(d)(1) of Regulation A
rather than a single target rate, and to to provide that, in a financial
After consideration of all relevant emergency, the primary credit rate is the
material presented, including the reflect the expiration of the TALF
program. target federal funds rate or, if the FOMC
information and recommendation has established a target range for the
submitted by the Committee and other DATES: The final rule is effective June 8,
federal funds rate, a rate corresponding
available information, it is hereby found 2018.
to the top of the target range. In
that this rule will tend to effectuate the FOR FURTHER INFORMATION CONTACT:
addition, the Board proposed to delete
declared policy of the Act. Sophia H. Allison, Special Counsel,
§ 201.3(e) of Regulation A as
(202–452–3565), Legal Division, or Lyle
List of Subjects in 7 CFR Part 925 unnecessary given the expiration of the
Kumasaka, Senior Financial
Analyst, (202–452–2382), Division of TALF program. The comment period on
amozie on DSK3GDR082PROD with RULES
Grapes, Marketing agreements, the proposed rule closed on January 8,
Reporting and recordkeeping Monetary Affairs; for users of
Telecommunications Device for the Deaf 2018.
requirements.
(TDD) only, contact 202–263–4869;
For the reasons set forth in the Board of Governors of the Federal 1 https://www.federalreserve.gov/monetarypolicy/
preamble, 7 CFR part 925 is amended as Reserve System, 20th and C Streets NW, talf.htm.
follows: Washington, DC 20551. 2 82 FR 57886 (Dec. 8, 2017).
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![21168 Federal Register / Vol. 83, No. 90 / Wednesday, May 9, 2018 / Rules and Regulations
II. Comments Received on the Proposed level to a lower level based on the target 2000.4 The Board has sought to present
Rule and Adoption of Final Rule federal funds rate or the target range for the final rule, to the extent possible, in
The Board received five comments on the federal funds rate. Any economic a simple and straightforward manner.
the proposal. One comment supported impact of the final rule on small entities The Board received one comment that
the flexibility the amendment provides would be beneficial, because the final addressed the extent to which the
during times of crisis, and raised other rule enables large and small entities to proposed rule used plain language. This
issues regarding the size of the Federal obtain primary credit at an interest rate comment expressed appreciation for the
Reserve balance sheet that were outside that would be lower than the existing Board’s plain language interpretation of
the scope of the proposal. Another primary credit rate. Accordingly, the the regulation as set forth in the
commenter expressed support for the Board believes that a reasonable basis proposed rule.
proposal as eliminating roadblocks exists for assuming that the economic
List of Subjects in 12 CFR Part 201
while dealing with an emergency. The effect of the final rule would be de
other three comments raised issues minimis or insignificant for small Banks, Banking, Federal Reserve
outside the scope of the proposal. entities affected by it. System, Reporting and recordkeeping
Accordingly, the final rule adopts the Section 201.3(e) of Regulation A. The requirements.
proposal as proposed. final rule deletes obsolete provisions Authority and Issuance
III. Administrative Law Matters applicable to credit extended under the
TALF program. Since the TALF program For the reasons set forth in the
A. Regulatory Flexibility Act no longer exists, the deletion of preamble, the Board is amending 12
An initial regulatory flexibility regulatory provisions governing the use CFR chapter II as follows:
analysis (IRFA) was included in the of credit ratings in it will have no
impact, economic or otherwise, on any PART 201—EXTENSIONS OF CREDIT
proposal in accordance with section 3(a)
credit rating agency. Accordingly, the BY FEDERAL RESERVE BANKS
of the Regulatory Flexibility Act (RFA).3
Board believes that a reasonable basis (REGULATION A)
In the IRFA, the Board requested
comment on the effect of the proposed exists for assuming costs would be de
rule on small entities and on any minimis or insignificant for small ■ 1. The authority citation for part 201
significant alternatives that would entities affected by it. continues to read as follows:
reduce the regulatory burden on small B. Paperwork Reduction Act Analysis Authority: 12 U.S.C. 248(i)–(j) and (s), 343
entities. The Board did not receive any et seq., 347a, 347b, 347c, 348 et seq., 357,
comments on the IRFA. Office of Management and Budget 374, 374a, and 461.
The RFA requires an agency to (OMB) regulations implementing the
§ 201.3 [Amended]
prepare a final regulatory flexibility Paperwork Reduction Act (PRA) state
analysis unless the agency certifies that that agencies must submit ‘‘collections ■ 2. Section 201.3 is amended by
the rule will not, if promulgated, have of information’’ contained in proposed removing paragraph (e).
a significant economic impact on a rules published for public comment in
substantial number of small entities. In the Federal Register in accordance with ■ 3. Section 201.51 is amended by
accordance with section 3(a) of the RFA, OMB regulations. OMB regulations revising paragraph (d)(1) introductory
the Board has reviewed the final rule. define a ‘‘collection of information’’ as text to read as follows:
Based on its analysis, and for the obtaining, causing to be obtained, § 201.51 Interest rates applicable to credit
reasons stated below, the Board certifies soliciting, or requiring the disclosure to extended by a Federal Reserve Bank.3
that the final rule will not have a an agency, third parties or the public of
significant economic impact on a * * * * *
information by or for an agency ‘‘by
substantial number of small entities. means of identical questions posed to, (d) * * *
Section 201.51(d) of Regulation A. or identical reporting, recordkeeping, or (1) The primary credit rate at a
Currently, there are 1,523 depository disclosure requirements imposed on, Federal Reserve Bank is the target
institutions that are able to request ten or more persons, whether such federal funds rate of the Federal Open
primary credit that meet the definition collection of information is mandatory, Market Committee or, if the Federal
of ‘‘small’’ business entity, out of a total voluntary, or required to obtain or retain Open Market Committee has set a target
of 2,777 institutions that are able to a benefit.’’ range for the federal funds rate, the rate
request primary credit. The final rule In accordance with the PRA, the corresponding to the top of the target
makes a ministerial amendment to Board reviewed the proposed rule under range, if:
conform the provision to the current the authority delegated to the Board by * * * * *
operating framework of the FOMC in OMB. The proposed rule contained no 3 The primary, secondary, and seasonal
establishing a target range for the federal requirements subject to the PRA, and credit rates described in this section apply to
funds rate. The final rule affects the the Board received no comments on its both advances and discounts made under the
actions of the Federal Reserve Banks PRA analysis in the proposed rule. The primary, secondary, and seasonal credit
and the Board, and requires no action or final rule adopts the proposed rule as programs, respectively.
changes in procedures for any proposed, and contains no requirements By the Board of Governors of the Federal
depository institution, large or small, subject to the PRA. Reserve System, May 3, 2018.
and so there are no costs associated with
amozie on DSK3GDR082PROD with RULES
Michele Taylor Fennell,
the final rule. In addition, the final rule C. Plain Language
clarifies the operation of the provision Assistant Secretary of the Board.
for reducing the primary credit rate in Each Federal banking agency, [FR Doc. 2018–09805 Filed 5–8–18; 8:45 am]
a financial emergency from its current including the Board, is required to use BILLING CODE 6210–01–P
plain language in all proposed and final
35 U.S.C. 601 et seq. rulemakings published after January 1, 4 12 U.S.C. 4809.
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Document Created: 2018-05-09 03:18:00
Document Modified: 2018-05-09 03:18:00
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final rule. | |
| Dates | The final rule is effective June 8, 2018. | |
| 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. | |
| FR Citation | 83 FR 21167 | |
| CFR Associated | Banks; Banking; Federal Reserve System and Reporting and Recordkeeping Requirements |
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