[Federal Register Volume 75, Number 39 (Monday, March 1, 2010)]
[Rules and Regulations]
[Pages 9093-9095]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-4086]


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FEDERAL RESERVE SYSTEM

12 CFR Part 201

[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 primary credit rate at each Federal 
Reserve Bank.

[[Page 9094]]

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 March 1, 
2010. The rate changes for primary and secondary credit were effective 
on the dates specified in 12 CFR 201.51, as amended.

FOR FURTHER INFORMATION CONTACT: Jennifer J. Johnson, Secretary of the 
Board (202-452-3259); for users of Telecommunication Devices for the 
Deaf (TDD) only, contact 202-263-4869.

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.
    Like the closure of a number of extraordinary credit programs 
earlier this month, the changes to the primary and secondary credit 
rates discussed below are intended as a further normalization of the 
Federal Reserve's lending facilities. The modifications are not 
expected to lead to tighter financial conditions for households and 
businesses and do not signal any change in the outlook for the economy 
or for monetary policy, which remains about as it was at the January 
meeting of the Federal Open Market Committee (FOMC). At that meeting, 
the Committee left its target range for the federal funds rate at 0 to 
\1/4\ percent and said it anticipates that economic conditions are 
likely to warrant exceptionally low levels of the federal funds rate 
for an extended period.
    The Board approved requests by the Reserve Banks to increase by 25 
basis points the primary credit rate in effect at each of the twelve 
Federal Reserve Banks, thereby increasing from \1/2\ percent to \3/4\ 
percent the rate that each Reserve Bank charges for extensions of 
primary credit. As a result of the Board's action on the primary credit 
rate, the rate that each Reserve Bank charges for extensions of 
secondary credit automatically increased from 1.00 percent to 1.25 
percent under the secondary credit rate formula. The final amendments 
to Regulation A reflect these rate changes.
    The Board's action widens the spread between the primary credit 
rate and the top of the FOMC's 0 to \1/4\ percent target range for the 
federal funds rate to \1/2\ percentage point. As indicated in the 
Board's press release announcing this action, the changes to the 
primary credit discount window facility are intended as a further 
normalization of the Federal Reserve's lending facilities in light of 
continued improvement in financial market conditions. In addition, the 
Board announced that effective on March 18, the typical maximum 
maturity for primary credit loans will be reduced from 28 days to 
overnight.\1\ A press release announcing these actions noted that:
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    \1\ The maximum maturity of primary credit loans was extended 
from overnight to 30 days on August 17, 2007, and further extended 
to 90 days on March 16, 2008. The Federal Reserve began the process 
of normalizing the terms on primary credit by reducing the typical 
maximum maturity to 28 days effective January 14, 2010.

    The increase in the spread and reduction in maximum maturity 
will encourage depository institutions to rely on private funding 
markets for short-term credit and to use the Federal Reserve's 
primary credit facility only as a backup source of funds. The 
Federal Reserve will assess over time whether further increases in 
the spread are appropriate in view of experience with the [frac12] 
percentage point spread.

Regulatory Flexibility Act Certification

    Pursuant to the Regulatory Flexibility Act (5 U.S.C. 605(b)), the 
Board certifies that the new primary and secondary credit rates will 
not have a significantly adverse economic impact on a substantial 
number of small entities because the final rule does not impose any 
additional requirements on entities affected by the regulation.

Administrative Procedure Act

    The Board did not follow the provisions of 5 U.S.C. 553(b) relating 
to notice and public participation in connection with the adoption of 
these amendments because the Board for good cause determined that 
delaying implementation of the new primary and secondary credit rates 
in order to allow notice and public comment would be unnecessary and 
contrary to the public interest in fostering price stability and 
sustainable economic growth. For these same reasons, the Board also has 
not provided 30 days prior notice of the effective date of the rule 
under section 553(d).

List of Subjects in 12 CFR Part 201

    Banks, Banking, Federal Reserve System, Reporting and 
recordkeeping.

Authority and Issuance

0
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)

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.\1\
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    \1\ 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 rates for primary credit provided 
to depository institutions under Sec.  201.4(a) are:

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       Federal Reserve Bank          Rate            Effective
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Boston............................   0.75  February 19, 2010.
New York..........................   0.75  February 19, 2010.
Philadelphia......................   0.75  February 19, 2010.
Cleveland.........................   0.75  February 19, 2010.
Richmond..........................   0.75  February 19, 2010.
Atlanta...........................   0.75  February 19, 2010.
Chicago...........................   0.75  February 19, 2010.
St. Louis.........................   0.75  February 19, 2010.
Minneapolis.......................   0.75  February 19, 2010.
Kansas City.......................   0.75  February 19, 2010.
Dallas............................   0.75  February 19, 2010.
San Francisco.....................   0.75  February 19, 2010.
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    (b) Secondary credit. The interest rates for secondary credit 
provided to depository institutions under 201.4(b) are:

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       Federal Reserve Bank          Rate            Effective
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Boston............................   1.25  February 19, 2010.
New York..........................   1.25  February 19, 2010.
Philadelphia......................   1.25  February 19, 2010.
Cleveland.........................   1.25  February 19, 2010.
Richmond..........................   1.25  February 19, 2010.
Atlanta...........................   1.25  February 19, 2010.
Chicago...........................   1.25  February 19, 2010.
St. Louis.........................   1.25  February 19, 2010.
Minneapolis.......................   1.25  February 19, 2010
Kansas City.......................   1.25  February 19, 2010.
Dallas............................   1.25  February 19, 2010.
San Francisco.....................   1.25  February 19, 2010.
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[[Page 9095]]

    By order of the Board of Governors of the Federal Reserve 
System, February 23, 2010.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 2010-4086 Filed 2-26-10; 8:45 am]
BILLING CODE 6210-02-P