This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

60671

Vol. 62, No. 218

Wednesday, November 12, 1997

1Weekly reporters include domestic depository

institutions with total reservable liabilities greater

than the exemption amount provided by the zeroreserve tranche, currently $4.4 million, and total

deposits at or above the deposit cut-off established

for institutions that are not fully exempt from

reserve requirements, currently $75 million. U.S.

branches and agencies of foreign banks and Edge

and Agreement corporations, regardless of their

size, must report weekly.

Institutions that are not weekly reporters file

deposit reports on either a quarterly or annual basis,

depending on the size of their total deposits and

their total reservable liabilities. This proposal will

have no effect on those institutions.

2 In the past, the threshold deposit level for

weekly reporters has been indexed to the growth of

total deposits and revised annually. As part of the

Board’s most recent review of the deposit reporting

forms, however, the threshold deposit level for

weekly reporting of deposits was raised to $75

million, effective as of the reporting week ending

September 15, 1997.

3See 47 FR 44705 (October 12, 1982).

4Applied vault cash for an individual institution

is equal to the lesser of total vault cash or required

reserves.

FEDERAL RESERVE SYSTEM

12 CFR Parts 204

[Regulation D; Docket No. R–0988]

Reserve Requirements of Depository

Institutions

AGENCY: Board of Governors of the

Federal Reserve System.

ACTION: Proposed rule.

SUMMARY: The Board is proposing

amendments to Regulation D, Reserve

Requirements of Depository Institutions,

to move from the current system of

contemporaneous reserve maintenance

for institutions that are weekly reporters

to a system under which reserves are

maintained on a lagged basis by such

institutions. Under a lagged reserve

maintenance system, the reserve

maintenance period for a weekly

reporter will begin 30 days after the

beginning of a reserve computation

period. Under the current system, the

reserve maintenance period begins only

two days after the beginning of the

computation period.

DATES: Comments must be submitted on

or before January 12, 1998.

ADDRESSES: Comments, which should

refer to Docket No. R–0988, may be

mailed to Mr. William W. Wiles,

Secretary, Board of Governors of the

Federal Reserve System, 20th Street and

Constitution Avenue, N.W.,

Washington, D.C. 20551. Comments

addressed to Mr. Wiles also may be

delivered to the Board’s mail room

between 8:45 a.m. and 5:15 p.m. and to

the security control room outside of

those hours. Both the mail room and the

security control room are accessible

from the courtyard entrance on 20th

Street between Constitution Avenue and

C Street, N.W. Comments may be

inspected in Room MP–500 between

9:00 a.m. and 5:00 p.m.

FOR FURTHER INFORMATION CONTACT:

William Whitesell, Section Chief,

Money and Reserves Projections

Section, Division of Monetary Affairs

(202/452–2967); Oliver Ireland,

Associate General Counsel, (202/452–

3625) or Lawranne Stewart, Senior

Attorney (202/452–3513), Legal

Division. For the hearing impaired only,

contact Diane Jenkins,

Telecommunications Device for the Deaf

(TDD) (202/452–3544), Board of

Governors of the Federal Reserve

System, 20th and C Streets, N.W.,

Washington, D.C. 20551.

SUPPLEMENTARY INFORMATION: In order to

satisfy the reserve requirements

imposed under Regulation D (Reserve

Requirements of Depository

Institutions), depository institutions that

file detailed deposit reports with the

Federal Reserve once a week (‘‘weekly

reporters’’) are required to maintain

reserves against their deposits on a

virtually contemporaneous basis.1

Weekly reporters are required to

maintain average reserve balances over

a 14-day reserve maintenance period

that begins only two days after the

beginning of the 14-day computation

period.2 The requirement for

contemporaneous reserve maintenance

was implemented in 1984 to enhance

the conduct of monetary policy by

strengthening the ability of the Board to

control M1, the narrowest measure of

the money supply, through operations

directed at the supply of reserves.3

Since that time, however, the Federal

Reserve’s operating procedures have

changed and it no longer maintains

target ranges for M1. Additionally, the

use of contemporaneous reserve

maintenance requires depositories and

the Federal Reserve to estimate and

project the quantity of reserves that will

be needed to meet reserve requirements

during the current maintenance period.

These estimates have become

increasingly difficult to formulate with

any precision on a timely basis, in part

because of the implementation by many

depository institutions of retail sweep

programs. Such programs have lowered

required reserves for institutions that

have implemented them and have

increased uncertainties regarding the

reserve balances depository institutions

must hold at the Reserve Banks. For

example, for some large institutions,

required reserves are sometimes above

and sometimes below their holdings of

vault cash, with the result that it is

difficult to project reliably the extent to

which reserves in excess of applied

vault cash will be required by these

institutions.

The Board therefore is requesting

comment on a proposal to amend

Regulation D to return to a system of

lagged reserve requirements. Under the

proposal, a lag of thirty days (two full

maintenance periods) would be

introduced between the beginning of a

reserve computation period and the

beginning of the maintenance period

during which reserves for that

computation period must be

maintained. The reserve maintenance

period therefore would not begin until

seventeen days after the end of the

computation period. The proposal also

provides for a two-period lag in the

computation of the vault cash to be

applied to satisfy reserve requirements.4

Providing a two-period lag for both

required reserves and applied vault cash

will allow the Federal Reserve, as well

as the depository institutions, to

calculate the level of required reserve

balances before the beginning of the

maintenance period. The increased lag

also should reduce the level of resources

that depository institutions and the

Federal Reserve currently must devote

to estimating and projecting required

reserve balances.

The Board’s proposal will not affect

the provisions of Regulation D

concerning the carryover of excess or

deficiencies in a depository institution’s

reserve account.

The Board proposes to implement the

shift to a lagged reserve requirement in

July 1998. The Board believes that the

transition to the new system could be
60672 Federal Register / Vol. 62, No. 218 / Wednesday, November 12, 1997 / Proposed Rules

5While weekly reporters that are Edge or

Agreement corporations or U.S. branches or

agencies of a foreign bank may have deposits of less

than $75 million, the deposits of these entities

represent only a portion of the total deposits of the

larger organizations to which they belong.

made most easily after completion of the

changeover of software used by the

Federal Reserve to process most data

flows, currently projected for March

1998, and prior to the annual deposit

panel shifts that will take place in

September 1998.

Initial Regulatory Flexibility Analysis

The Regulatory Flexibility Act (5

U.S.C. 601–612) requires an agency to

publish an initial regulatory flexibility

analysis with any notice of proposed

rulemaking. An initial regulatory

flexibility analysis must include: (1) A

description of the reasons why action by

the agency is being considered; (2) a

statement of the objectives of, and legal

basis for, the proposed rule; (3) a

description of and, where feasible, an

estimate of the number of small entities

to which the proposed rule will apply;

(4) a description of the projected

reporting, recordkeeping, and other

compliance requirements of the

proposed rule; and (5) an identification,

to the extent practicable, of all relevant

Federal rules that may duplicate,

overlap, or conflict with the proposed

rules. 5 U.S.C. 603(b).

As discussed above, the Board is

considering this action to improve the

ability of the Federal Reserve to estimate

accurately the need for reserves on a

timely basis, with the objective of

ensuring greater effectiveness of the

Federal Reserve’s open market

operations. Under section 19 of the

Federal Reserve Act, the Board is

authorized to promulgate rules

concerning the maintenance of reserves.

12 U.S.C. 461(c). The Board does not

believe that there are any Federal rules

that duplicate, overlap, or conflict with

the proposed rule.

The proposal will affect only

institutions that are weekly deposit

reporters, which generally include

depository institutions that have total

deposits of $75 million or greater, as

only these institutions currently are

required to maintain reserves on a

contemporaneous basis.5 The proposed

amendments will not increase reporting

or recordkeeping requirements

associated with Regulation D for

institutions that are weekly reporters,

but will significantly simplify

compliance with the rule for these

institutions. The proposal therefore will

not increase regulatory burden on small

institutions generally and will reduce

regulatory burden for those small

institutions that are affected.

List of Subjects in 12 CFR Part 204

Banks, banking, Federal Reserve

System, Reporting and recordkeeping

requirements.

For the reasons set out in the

preamble, the Board proposes to amend

part 204 of chapter II of title 12 of the

Code of Federal Regulations as follows:

PART 204—RESERVE

REQUIREMENTS OF DEPOSITORY

INSTITUTIONS (REGULATION D)

1. The authority citation for part 204

continues to read as follows:

Authority: 12 U.S.C. 248(a), 248(c), 371a,

461, 601, 611, and 3105.

2. In § 204.3, paragraph (c) is revised

to read as follows:

§ 204.3 Computation and maintenance.

* * * * *

(c) Computation of required reserves

for institutions that report on a weekly

basis. (1) Required reserves are

computed on the basis of daily average

balances of deposits and Eurocurrency

liabilities during a 14-day period ending

every second Monday (the

‘‘computation period’’). Reserve

requirements are computed by applying

the ratios prescribed in § 204.9 to the

classes of deposits and Eurocurrency

liabilities of the institution. In

determining the reserve balance that is

required to be maintained with the

Federal Reserve, the average daily vault

cash held during the computation

period is deducted from the amount of

the institution’s required reserves.

(2) The reserve balance that is

required to be maintained with the

Federal Reserve shall be maintained

during a 14-day period (the

‘‘maintenance period’’) that begins on

the third Thursday following the end of

a given computation period.

* * * * *

By order of the Board of Governors of the

Federal Reserve System, November 6, 1997.

William W. Wiles,

Secretary of the Board.

[FR Doc. 97–29761 Filed 11–10–97; 8:45 am]

BILLING CODE 6210–01–P

SOCIAL SECURITY ADMINISTRATION

20 CFR Part 404

[Regulations No. 4]

RIN 0960–AE35

Reduction of Disability Benefits—

Workers’ Compensation and Public

Disability Benefits and Payments

AGENCY: Social Security Administration.

ACTION: Proposed rules; extension of

comment period.

SUMMARY: On September 4, 1997, in the

Federal Register (62 FR 46682), we

published a proposal to revise our rules

on the reduction of Social Security

benefits based on disability on account

of receipt of workers’ compensation

and/or public disability benefits and

payments provided under Federal (other

than Social Security), State, or local

laws or plans to clarify our existing

policies. To allow the public additional

time to send us comments, we are

extending the comment period. We are

also making a few changes in the

address and contact information.

DATES: To be sure that your comments

are considered, we must receive them

no later than January 5, 1998.

ADDRESSES: Comments should be

submitted in writing to the

Commissioner of Social Security, P.O.

Box 1585, Baltimore, MD 21235, sent by

telefax to (410) 966–2830, sent by E-mail

to ‘‘regulations@ssa.gov’’, or delivered

to the Office of Process and Innovation

Management, Social Security

Administration, L2109 West Low Rise

Building, 6401 Security Boulevard,

Baltimore, MD 21235–0001, between

8:00 a.m. and 4:30 p.m. on regular

business days. Comments may be

inspected during these same hours by

making arrangements with the contact

person shown below.

FOR FURTHER INFORMATION CONTACT:

Daniel T. Bridgewater, Legal Assistant,

Office of Process and Innovation

Management, Social Security

Administration, L2109 West Low Rise

Building, 6401 Security Boulevard,

Baltimore, MD 21235, (410) 965–3298

for information about these rules.

Dated: November 6, 1997.

Kenneth S. Apfel,

Commissioner of Social Security.

[FR Doc. 97–29842 Filed 11–10–97; 8:45 am]

BILLING CODE 4190–29–P