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###### Federal Reserve System

          - 12 CFR Part 201
          - [Docket No. R-1645]
          - RIN 7100 AF-34

# AGENCY:

Board of Governors of the Federal Reserve System.

# ACTION:

Final rule.

# 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:

*Effective date:*                         The amendments to part 201 (Regulation A) are effective January 31, 2019.                    

*Applicability date:*                         The rate changes for primary and secondary credit were applicable on December 20, 2018.                    

# FOR FURTHER INFORMATION CONTACT:

Clinton Chen, Senior Attorney (202/452-3952), or Sophia Allison, Senior Special Counsel (202/452-3565), Legal Division, or Kristen Payne, Senior Financial Institution & Policy Analyst (202/452-2872), 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 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.

                    On December 19, 2018, 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 2.75 percent to 3.00 percent the rate that each Reserve Bank charges for extensions of primary credit. In addition, the Board had previously approved the renewal of the secondary credit rate formula, 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 3.25 percent to 3.50 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 2 to 2                    1/4                     percent to a target range of 2                    1/4                     to 2                    1/2                     percent) announced by the Federal Open Market Committee on December 19, 2018, as described in the Board's amendment of its Regulation D published elsewhere in this issue of the                     **Federal Register**                    .                

## Administrative Procedure Act

                    In general, the Administrative Procedure Act (“APA”) [1]                                          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.” [2]                                          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.[3]                                          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.” [4] 

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 these 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.[5]                                          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                           ( print page 512)                        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,[6]                                          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.                

## 12 CFR Chapter II

# 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:

# PART 201—EXTENSIONS OF CREDIT BY FEDERAL RESERVE BANKS (REGULATION A)

1. The authority citation for part 201 is revised 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.                        

2. In § 201.51, paragraphs (a) and (b) are revised to read as follows: 

§ 201.51 

                            (a)                             *Primary credit.*                             The interest rate at each Federal Reserve Bank for primary credit provided to depository institutions under § 201.4(a) is 3.00 percent.                        

                            (b)                             *Secondary credit.*                             The interest rate at each Federal Reserve Bank for secondary credit provided to depository institutions under § 201.4(b) is 3.50 percent.                        

* * * * *

By order of the Board of Governors of the Federal Reserve System, December 20, 2018.

Ann Misback,

Secretary of the Board.

# Footnotes

1.                             5 U.S.C. 551*et seq.*
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2.                             5 U.S.C. 553(b)(3)(A).                    
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3.                             5 U.S.C. 553(d).                    
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4.                             5 U.S.C. 553(a)(2) (emphasis added).                    
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5.                             5 U.S.C. 603, 604.                    
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6.                             44 U.S.C. 3506; see 5 CFR part 1320, appendix A.1.                    
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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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[FR Doc. 2018-28423 Filed 1-30-19; 8:45 am]

 BILLING CODE 6210-01-P