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      -  Regulation D 
      Regulation E 
      -  Regulation H and Regulation Y  
      -  Regulation K 
      -  Regulation O  
      -  Regulation Y  
      -  Regulation BB  
      -  Rules Regarding Equal Opportunity 
      -  Policy Statements and Other Actions 
      -  Discount Rates in 2006 

#  Record of Policy Actions of the Board of Governors        

##       Regulation D 

### Reserve Requirements of Depository Institutions 

#### [Docket No. R-1268]

*On October 18, 2006*, the Board approved amendments to      reflect the annual indexing of the low reserve tranche and of the      reserve requirement exemption for use in 2007 reserve requirement      calculations. The amendments decrease the 3 percent low reserve tranche      for net transaction accounts to $45.8 million (from $48.3 million in      2006) and increase the reserve requirement exemption to $8.5 million      (from $7.8 million in 2006). 
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Votes for this action: Chairman Bernanke, Vice Chairman Kohn,         and Governors Warsh, Kroszner, and Mishkin. Absent and not voting:         Governor Bies.       

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##       Regulation E 

### Electronic Fund Transfers 

#### [Docket No. R-1247]

*On August 24, 2006*, the Board approved amendments to      Regulation E and its official staff commentary to apply the regulation      to payroll card accounts            established to distribute employee            salaries, wages, or other compensation on a recurring basis. The      amendments also provide financial institutions with an alternative to      sending periodic statements for payroll card accounts if they make      account information available to account holders by certain specified      means. The amendments are effective July 1, 2007.      
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Votes for this action: Chairman Bernanke, Vice Chairman          Kohn, and Governors Bies, Warsh, and Kroszner.        

#### [Docket No. R-1265]

*On November 27, 2006*, the Board approved      amendments to Regulation E and its official staff commentary to clarify      that the requirement to obtain consumer authorization applies to any      person who intends to collect electronically a fee for a check or other      item that is returned unpaid. The amendments also provide guidance on      the regulation's requirements concerning consumer notice when a      returned-item fee is collected electronically or a transaction involves      an electronic check conversion. The amendments, which are based      substantially on an interim final rule approved on August 24, 2006, are      effective January 1, 2007; compliance with certain disclosure      requirements for returned-item fees collected in connection with      point-of-sale transactions is delayed until January 1, 2008.      
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Votes for this action: Chairman Bernanke, Vice Chairman          Kohn, and Governors Bies, Warsh, and Kroszner. Absent and not voting:          Governor Mishkin.        

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##       Regulation H 

### Membership of State Banking Institutions in the      Federal Reserve System 

##       Regulation Y 

### Bank Holding Companies and Change in Bank Control 

#### [Docket No. R-1087] 

*On February 2, 2006*, the Board, acting with the other      federal bank regulatory agencies, approved amendments to the agencies'      market risk rules to reduce            the capital requirement for certain      securities-borrowing transactions collateralized with cash. The      interagency rule, which makes permanent and expands an interim final      rule approved in 2000, is effective February 22, 2006.      
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Votes for this action: Chairman Bernanke, Vice Chairman         Ferguson, and Governors Bies, Olson, and Kohn.       

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##       Regulation K 

### International Banking Operations 

#### [Docket No. R-1147] 

*On March 15, 2006*, the Board approved amendments      requiring Edge Act and agreement corporations and the U.S. branches,      agencies, and representative offices of foreign banks supervised by the      Board to establish and maintain procedures that ensure and monitor      compliance with the Bank Secrecy Act and related regulations. The      amendments are effective April 19, 2006.      
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Votes for this action: Chairman Bernanke and Governors Bies,          Olson, Kohn, Warsh, and Kroszner. Absent and not voting: Vice Chairman          Ferguson.        

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##       Regulation O 

### Loans to Executive Officers, Directors, and Principal      Shareholders of Member Banks 

#### [Docket No. R-1271] 

*On December 6, 2006*, the Board approved an interim      final rule, with request for comment, to implement section 601 of the      Financial Services Regulatory Relief Act of 2006 by eliminating certain      reporting requirements that have not contributed significantly to      effective monitoring or prevention of insider lending abuse. The      interim final rule is effective December 11, 2006. 
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Votes for this action: Chairman Bernanke, Vice Chairman Kohn,          and Governors Bies, Warsh, Kroszner, and Mishkin.        

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##       Regulation Y 

### Bank Holding Companies and Change in Bank Control 

#### [Docket No. R-1235] 

*On February 22, 2006*, the Board approved amendments to      expand the applicability of its Small Bank Holding Company Policy      Statement and related exemptions from its consolidated capital adequacy      guidelines on risk-based and leverage measures by increasing the      asset-size limitation specified in the policy statement from $150 million to $500 million. The amended policy statement does not apply,      however, to bank holding companies with less than $500 million in      assets that engage in significant nonbanking or off-balance-sheet      activities or have a material amount of debt or equity securities      registered with the Securities and Exchange Commission. The amendments      also clarify that subordinated debt related to the issuance of trust      preferred securities generally would be treated as debt under the      policy statement, subject to a five-year transition period. The      amendments are effective March 30, 2006. 
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Votes for this action: Chairman Bernanke, Vice Chairman          Ferguson, and Governors Bies, Olson, and Kohn.        

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##       Regulation BB 

### Community Reinvestment 

#### [Docket No. OP-1240] 

*On March 1, 2006*, the Board, acting with the other      federal bank regulatory agencies, approved guidance intended to aid      implementation of recent changes to the agencies' regulations under      the Community Reinvestment Act (CRA). The guidance discusses, among      other regulatory topics, (1) the criteria for determining if an area is      distressed, is underserved, or has suffered a disaster; (2) the period      of time that bank activities in those areas are eligible for      consideration in a CRA evaluation; and (3) the standards used by CRA      examiners to decide if such activities qualify as "community      development." The guidance also explains how the new community      development test for intermediate small banks (banks with assets      between $250 million and $1 billion) will be applied. The      interagency guidance is effective March 10, 2006. 
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Votes for this action: Chairman Bernanke, Vice Chairman          Ferguson, and Governors Bies, Olson, Kohn, and Warsh.        

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##       Rules Regarding Equal Opportunity 

#### [Docket No. OP-1264] 

*On August 1, 2006*, the Board approved an interim rule,      with request for comment, to extend eligibility for access to      confidential supervisory information to certain noncitizen employees.      The interim rule is effective August 7, 2006, and also applies to all      grants of access made as of that date. 
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Votes for this action: Chairman Bernanke, Vice          Chairman Kohn, and Governors Bies, Warsh, and Kroszner.        

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##       Policy Statements and Other Actions 

### Interagency Advisory on the Unsafe and Unsound Use of      Limitation of Liability Provisions in External Audit Engagement      Letters

*On January 30, 2006*, the Board, acting with      the other federal financial regulatory agencies, approved an advisory      to address safety and soundness concerns associated with agreements by      financial institutions that limit the liability of their external      auditors. The advisory applies to provisions that (1) indemnify an      external auditor against claims made by third parties (including      punitive damages); (2) hold harmless or release an external auditor      from liability for claims or potential claims that might be asserted by      the client financial institution; or (3) limit the remedies available      to the client financial institution. Provisions that waive the right of      financial institutions to seek punitive damages against their external      auditors are not considered unsafe and unsound under the advisory. The      interagency advisory is effective for engagement letters executed on or      after February 9, 2006.      
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Votes for this action: Chairman Greenspan, Vice         Chairman Ferguson, and Governors Bies, Olson, and Kohn.       

### Federal Reserve Currency Recirculation Policy 

#### [Docket No. OP-1164] 

*On March 17, 2006*, the Board revised the      Federal Reserve System's cash services policy, with the intention of      increasing the recirculation of fit currency by (1) initiating a      custodial inventory program to encourage depository institutions to      hold $10 and $20 notes in their vaults to meet customer demand and      (2) charging a fee to depository institutions that deposit fit      $10 or $20 notes at a Reserve Bank and order the same      denominations, above a de minimis amount, during the same      business week. The custodial inventory program will begin in July 2006,      and fee assessments are expected to begin in July 2007.      
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Votes for this action: Chairman Bernanke and Governors          Olson, Kohn, Warsh, and Kroszner. Absent and not voting: Vice Chairman          Ferguson and Governor Bies.        

### Nontraditional Mortgage Product Risks 

#### [Docket No. OP-1246] 

*On September 27, 2006*, the Board, acting with      the other federal financial regulatory agencies, approved interagency      guidance on underwriting and managing nontraditional mortgage products      (loans that allow borrowers to defer payment of principal and in some      cases interest) in a safe and sound manner and on clearly disclosing      the potential risks of those products.
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Votes for this action: Chairman Bernanke, Vice Chairman        Kohn, and Governors Bies, Warsh, Kroszner, and Mishkin.      

### Guidance on Concentrations in Commercial Real Estate Lending, Sound      Risk-Management Practices 

#### [Docket No. OP-1248] 

*On December 6, 2006*, the Board, acting with the other      federal bank regulatory agencies, approved guidance intended to      reinforce sound risk-management practices for institutions that have      high and increasing concentrations of commercial real estate loans on      their balance sheets. The guidance includes supervisory criteria to      assist in identifying institutions that have potentially significant      concentrations. The interagency guidance is effective December 12,      2006. 
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Votes for this action: Chairman Bernanke, Vice Chairman Kohn,          and Governors Bies, Warsh, Kroszner, and Mishkin.        

### Interagency Statement on Sound Practices concerning Elevated      Risk Complex Structured Finance Activities 

#### [Docket No. OP-1254] 

*On December 20, 2006*, the Board, acting with the      Securities and Exchange Commission and the other federal bank and      thrift regulatory agencies, approved a statement that describes      internal controls and risk-management procedures to assist financial      institutions in identifying, managing, and addressing the heightened      legal and reputational risks associated with certain complex      structured finance transactions. The interagency statement is effective      January 11, 2007.      
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Votes for this action: Chairman Bernanke, Vice Chairman Kohn,          and Governors Bies, Kroszner, and Mishkin. Absent and not voting:          Governor Warsh.        

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##       Discount Rates in 2006 

Under the Federal Reserve Act, boards of directors of the Federal      Reserve Banks must establish rates on loans to depository institutions      at least every fourteen days, subject to review and determination by      the Board of Governors.

### Primary Credit 

Primary credit is the Federal Reserve's main lending program.      Primary credit is made available with minimal administration for very      short terms as a backup source of liquidity to depository institutions      that, in the judgment of the lending Federal Reserve Bank, are in      generally sound financial condition. Primary credit is extended at a      rate above the federal funds rate target set by the Federal Open Market      Committee (FOMC).

 During 2006, the Board approved four increases in the      primary credit rate, bringing the rate from 5-1/4 percent to      6-1/4 percent. The Board reached its determinations on the      primary credit rate recommendations of the Reserve Bank boards of      directors in conjunction with the FOMC's decisions to raise the target      federal funds rate from 4-1/4 percent to 5-1/4      percent and related economic and financial developments. Rising energy      prices coupled with high levels of resource utilization contributed to      heightened inflation pressures over the first half of the year. Those      pressures receded over the second half of the year as energy prices      dropped and weakness in the housing sector weighed on economic      activity. In light of these conditions, the Federal Reserve raised the      structure of policy rates at a measured pace in the first half of the      year and kept those rates unchanged for the remainder of the year.      Monetary policy developments are reviewed more fully in other parts of      this report (see the section "      Monetary Policy and Economic        Developments      " and the       minutes of FOMC meetings held in 2006      ).

### Secondary and Seasonal Credit 

Secondary credit is available in appropriate circumstances to      depository institutions that do not qualify for primary credit. The      secondary credit rate is set at a spread above the primary credit rate.      In 2006, the spread was set at 50 basis points.

 Seasonal credit is available to smaller depository      institutions to meet liquidity needs that arise from regular swings in      their loans and deposits. The rate on seasonal credit is calculated      every two weeks as an average of selected money-market yields,      typically resulting in a rate close to the federal funds rate      target.

 At year-end, the secondary and seasonal credit rates were      6-3/4 percent and 5.30 percent, respectively.

### Votes on Discount Rate Changes 

About every two weeks during 2006, the Board approved proposals      by the twelve Reserve Banks to maintain the formulas for computing the      secondary and seasonal credit rates. Details on the four actions by the      Board to approve changes in the primary credit rate are provided below.

*January 31, 2006*. Effective this date, the Board      approved actions taken by the directors of the Federal Reserve Banks of      Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago,      Kansas City, Dallas, and San Francisco to raise the rate on discounts      and advances under the primary credit program by 1/4 percentage      point, to 5-1/2 percent. The same increase was approved for      the Federal Reserve Bank of St. Louis, effective February 1, 2006. The      Board also approved an identical action subsequently taken by the      directors of the Federal Reserve Bank of Minneapolis, effective      February 2, 2006.      
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Votes for this action: Chairman Greenspan, Vice Chairman          Ferguson, and Governors Bies, Olson, and Kohn. Votes against this          action: None.        

*March 28, 2006*. Effective this date, the Board      approved actions taken by the directors of the Federal Reserve Banks of      Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago,      Minneapolis, Dallas, and San Francisco to raise the rate on discounts      and advances under the primary credit program by 1/4 percentage      point, to 5-3/4 percent. The same increase was approved for      the Federal Reserve Bank of St. Louis, effective March 29, 2006. The      Board also approved an identical action subsequently taken by the      directors of the Federal Reserve Bank of Kansas City, effective March      30, 2006.      
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Votes for this action: Chairman Bernanke and Governors Bies,          Olson, Kohn, Warsh, and Kroszner. Votes against this action: None.        

*May 10, 2006*. Effective this date, the Board approved      actions taken by the directors of the Federal Reserve Banks of Boston,      New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago,      Minneapolis, Dallas, and San Francisco to raise the rate on discounts      and advances under the primary credit program by 1/4 percentage      point, to 6 percent. The same increase was approved for the      Federal Reserve Bank of St. Louis, effective May 11, 2006. The Board      also approved an identical action subsequently taken by the directors      of the Federal Reserve Bank of Kansas City, effective May 11, 2006.      
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Votes for this action: Chairman Bernanke, Vice Chairman          Ferguson, and Governors Bies, Olson, Kohn, Warsh, and Kroszner. Votes          against this action: None.        

*June 29, 2006*. Effective this date, the Board      approved actions taken by the directors of the Federal Reserve Banks of      Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago,      Minneapolis, and Dallas to raise the rate on discounts and advances      under the primary credit program by 1/4 percentage point, to      6-1/4 percent. The same increase was approved for the Federal      Reserve Bank of St. Louis, effective June 30, 2006. The Board also      approved identical actions subsequently taken by the directors of the      Federal Reserve Banks of San Francisco, effective June 29, 2006, and      Kansas City, effective July 6, 2006.      
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Votes for this action: Chairman Bernanke, Vice Chairman Kohn,          and Governors Bies, Warsh, and Kroszner. Votes against this action:          None.        

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      Note: Full texts of the policy actions are available via the online version of the Annual Report, from the "Reading Rooms" on the Board's FOIA web page and on request from the Board's Freedom of Information Office.

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