Board of Governors of the Federal Reserve System.
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.
This rule is effective June 26, 2017. The rate changes for primary and secondary credit were applicable beginning June 15, 2017.
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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.
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The Federal Reserve Banks make primary Start Printed Page 28756and 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 June 14, 2017, 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 1.50 percent to 1.75 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 2.00 percent to 2.25 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 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 3/4 to 1 percent to a target range of 1 to 11/4 percent) announced by the Federal Open Market Committee (“Committee”) on June 14, 2017, 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 (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. The Board has determined that the notice, public comment, and delayed effective date requirements of the APA do not apply to the final amendments to Regulation A for several reasons. The amendments involve a matter relating to loans, and are therefore exempt under the terms of the APA. In addition, the Board has determined that notice, public comment, and delayed effective date would be unnecessary and contrary to the public interest because 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. Finally, 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.
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 (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.
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- Federal Reserve System
- Reporting and recordkeeping
Authority and Issuance
For the reasons set forth in the preamble, the Board is amending 12 CFR part 201 as follows:
PART 201—EXTENSIONS OF CREDIT BY FEDERAL RESERVE BANKS (REGULATION A)
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1. The authority citation for part 201 continues to read as follows: End Amendment Part
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2. In § 201.51, paragraphs (a) and (b) are revised to read as follows: End Amendment Part
Interest rates applicable to credit extended by a Federal Reserve Bank.
(a) Primary credit. The interest rate at each Federal Reserve Bank for primary credit provided to depository institutions under § 201.4(a) is 1.75 percent.
(b) Secondary credit. The interest rate at each Federal Reserve Bank for secondary credit provided to depository institutions under § 201.4(b) is 2.25 percent.
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By order of the Board of Governors of the Federal Reserve System, June 19, 2017.
Ann E. Misback,
Secretary of the Board.
[FR Doc. 2017-13106 Filed 6-23-17; 8:45 am]
BILLING CODE 6210-02-P