This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

29009

Vol. 66, No. 103

Tuesday, May 29, 2001

FEDERAL RESERVE SYSTEM

12 CFR Part 201

[Regulation A]

Extensions of Credit by Federal

Reserve Banks; Change in Discount

Rate

AGENCY: Board of Governors of the

Federal Reserve System.

ACTION: Final rule.

SUMMARY: The Board of Governors has

amended its Regulation A on Extensions

of Credit by Federal Reserve Banks to

reflect its approval of a decrease in the

basic discount rate at each Federal

Reserve Bank. The Board acted on

requests submitted by the Boards of

Directors of the twelve Federal Reserve

Banks.

DATES: The amendments to part 201

(Regulation A) were effective May 15,

2001. The rate changes for adjustment

credit were effective on the dates

specified in 12 CFR 201.51.

FOR FURTHER INFORMATION CONTACT:

Jennifer J. Johnson, Secretary of the

Board, at (202) 452–3259, Board of

Governors of the Federal Reserve

System, 20th and C Streets NW.,

Washington, DC 20551.

SUPPLEMENTARY INFORMATION: Pursuant

to the authority of sections 10(b), 13, 14,

19, et al., of the Federal Reserve Act, the

Board has amended its Regulation A (12

CFR part 201) to incorporate changes in

discount rates on Federal Reserve Bank

extensions of credit. The discount rates

are the interest rates charged to

depository institutions when they

borrow from their district Reserve

Banks.

The ‘‘basic discount rate’’ is a fixed

rate charged by Reserve Banks for

adjustment credit and, at the Reserve

Banks’ discretion, for extended credit

for up to 30 days. In decreasing the

basic discount rate from 4.0 percent to

3.5 percent, the Board acted on requests

submitted by the Boards of Directors of

the twelve Federal Reserve Banks. The

new rates were effective on the dates

specified below. The 50-basis-point

decrease in the discount rate was

associated with a similar decrease in the

federal funds rate approved by the

Federal Open Market Committee

(FOMC) and announced at the same

time.

In a joint press release announcing

these actions, the FOMC and the Board

of Governors noted that a significant

reduction in excess inventories seems

well advanced. Consumption and

housing expenditures have held up

reasonably well, though activity in these

areas has flattened recently.

Investment in capital equipment,

however, has continued to decline. The

erosion in current and prospective

profitability, in combination with

considerable uncertainty about the

business outlook, seems likely to hold

down capital spending going forward.

This potential restraint, together with

the possible effects of earlier reductions

in equity wealth on consumption and

the risk of slower growth abroad,

continues to weigh on the economy.

With pressures on labor and product

markets easing, inflation is expected to

remain contained. Although measured

productivity growth stalled in the first

quarter, the impressive underlying rate

of increase that developed in recent

years appears to be largely intact,

supporting longer-term prospects.

The FOMC continues to believe that

against the background of its long-run

goals of price stability and sustainable

economic growth and of the information

currently available, the risks are

weighted mainly toward conditions that

may generate economic weakness in the

foreseeable future.

Regulatory Flexibility Act Certification

Pursuant to section 605(b) of the

Regulatory Flexibility Act (5 U.S.C.

605(b)), the Board certifies that the

change in the basic discount rate will

not have a significant adverse economic

impact on a substantial number of small

entities. The rule does not impose any

additional requirements on entities

affected by the regulation.

Administrative Procedure Act

The provisions of 5 U.S.C. 553(b)

relating to notice and public

participation were not followed in

connection with the adoption of the

amendment because the Board for good

cause finds that delaying the change in

the basic discount rate in order to allow

notice and public comment on the

change is impracticable, unnecessary,

and contrary to the public interest in

fostering price stability and sustainable

economic growth.

The provisions of 5 U.S.C. 553(d) that

prescribe 30 days prior notice of the

effective date of a rule have not been

followed because section 553(d)

provides that such prior notice is not

necessary whenever there is good cause

for finding that such notice is contrary

to the public interest. As previously

stated, the Board determined that

delaying the changes in the basic

discount rate is contrary to the public

interest.

List of Subjects in 12 CFR Part 201

Banks, banking, Credit, Federal

Reserve System.

For the reasons set out in the

preamble, 12 CFR part 201 is amended

as set forth below:

PART 201—EXTENSIONS OF CREDIT

BY FEDERAL RESERVE BANKS

(REGULATION A)

1. The authority citation for 12 CFR

part 201 continues to read as follows:

Authority: 12 U.S.C. 343 et seq., 347a,

347b, 347c, 347d, 348 et seq., 357, 374, 374a

and 461.

2. Section 201.51 is revised to read as

follows:

§ 201.51 Adjustment credit for depository

institutions.

The rates for adjustment credit

provided to depository institutions

under § 201.3(a) are:

Federal Reserve Bank Rate Effective

Boston ............. 3.5 May 16, 2001.

New York ......... 3.5 May 15, 2001.

Philadelphia ..... 3.5 May 17, 2001.

Cleveland ......... 3.5 May 17, 2001.

Richmond ........ 3.5 May 15, 2001.

Atlanta ............. 3.5 May 16, 2001.

Chicago ........... 3.5 May 15, 2001.

St. Louis .......... 3.5 May 16, 2001.

Minneapolis ..... 3.5 May 17, 2001.

Kansas City ..... 3.5 May 16, 2001.

Dallas ............... 3.5 May 16, 2001.

San Francisco 3.5 May 15, 2001.

29010 Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Rules and Regulations

By order of the Board of Governors of the

Federal Reserve System, May 22, 2001.

Jennifer J. Johnson,

Secretary of the Board.

[FR Doc. 01–13373 Filed 5–25–01; 8:45 am]

BILLING CODE 6210–01–P

SMALL BUSINESS ADMINISTRATION

13 CFR Part 119

RIN 3245–AE52

PRIME Act Grants

AGENCY: Small Business Administration.

ACTION: Final rule.

SUMMARY: This final rule adds new

regulations to set up the Program for

Investment in Microentrepreneurs Act

(‘‘PRIME’’ or ‘‘the Act’’), created by Title

VII of the Gramm-Leach-Bliley Act,

enacted November 12, 1999. This rule

sets forth the Act’s grant requirements

for qualified Microenterprise

Development Organizations (‘‘MDOs’’)

to: train and provide technical

assistance to disadvantaged

microentrepreneurs; build MDO’s

capacity to give disadvantaged

microentrepreneurs such training and

technical assistance; research and

develop best practices for training and

technical assistance programs for

disadvantaged microentrepreneurs, and

perform such other activities as the

Administrator or designee determines

are consistent with the Act.

PRIME grants will enable MDOs to

reach more disadvantaged

microentrepreneurs with training and

technical assistance, which will make a

difference in their ability to start, grow,

and sustain microenterprises in

economically distressed, high

unemployment areas. SBA will award a

minimum of 75 percent of available

funds to MDOs to use for training and

technical assistance to disadvantaged

microentrepreneurs. At a minimum,

another 15 percent will be used to build

MDOs’ capacity to give more training

and technical assistance. SBA will use

the remaining funds to make grants for

research and development on best

practices or other purposes to improve

MDOs’ services to PRIME’s ultimate

beneficiaries—disadvantaged

microentrepreneurs.

DATES: This rule is effective on June 28,

2001.

FOR FURTHER INFORMATION CONTACT: Jody

Raskind, Chief, Microenterprise

Development Branch, 202–205–6497.

SUPPLEMENTARY INFORMATION:

Introduction

Congress recognized that many

disadvantaged microentrepreneurs lack

sufficient training and education to gain

access to capital and to conduct other

activities necessary to establish,

maintain, and expand their businesses.

It enacted the Program for Investment in

Microentrepreneurs Act (‘‘PRIME’’ or

‘‘the Act’’) to augment training and

technical assistance under the Small

Business Act and other legislation.

PRIME grants to qualified

Microenterprise Development

Organizations (‘‘MDOs’’) will help meet

training and technical assistance needs

for disadvantaged microentrepreneurs,

thereby encouraging entrepreneurship

and capital formation at the community

level.

The congressional mandate to provide

cognitive support to the target market

through the Act is recognition that many

low income and very low-income

entrepreneurs need training and

technical assistance to start, operate,

strengthen, or expand their businesses.

In order to achieve measurable success,

technical assistance providers must be

accessible, consistent and committed to

the entrepreneur’s progress over

extended periods of time. The

competency and capacity of these

providers must also be measured.

Research into the outcomes of support,

its long-term effect, and how best to

continue assistance is essential in

determining the value of support over

the long run.

The U.S. Department of Commerce’s

Characteristics of Business Ownership

shows that in 1987, approximately 17

percent (2.3 million) of businesses in

the United States were operated by lowincome and very low-income

microentrepreneurs. Since then a

variety of economic developments,

including corporate downsizing,

declining availability of lower skilled

manufacturing jobs and expanded

opportunities in the technology field,

have combined to make microenterprise

an increasingly more viable option in

the U.S. economy.

The Aspen Institute estimated that

during 1997 microlenders nationwide

provided business assistance to 172,000

microentrepreneurs, a mere fraction of

low- and very-low income individuals

involved in microenterprise. The

Institute further estimated that of that

number, about 57,000 actively pursued

and benefited from sustained businessbased training and technical assistance.

Of those, approximately 6,000 received

loans.

One of the major constraints is the

cost of providing this training and

technical assistance. Current private

sector sources simply are not meeting

the need. The Act, therefore, focuses on

expanding the cultivation, support and

motivation of these low- and very-low

income microentrepreneurs. It will also

help build the capacity of the

microenterprise industry in order to

deliver vital services to a much greater

segment of the 2.3 million or more low

income and very low income

microentrepreneurs. One of the goals of

the PRIME program is to be a resource

for MDOs as they grow and develop and

ultimately become self-sustaining.

The Act authorizes the U.S. Small

Business Administration (‘‘SBA’’) to

make grants to ‘‘qualified organizations’’

to fund training and technical assistance

for disadvantaged microentrepreneurs.

It also authorizes SBA to make grants to

increase the training and technical

assistance capacities of MDOs. Further,

it authorizes funding for grants for

research and development, and other

undertakings deemed by the

Administrator or designee to be

consistent with the purposes of the Act.

The PRIME program requires that grants

made by SBA be matched by grantees

from non-Federal sources. These

regulations set up four categories of

Technical Assistance Grants targeted to

these purposes.

Grants made either for the purpose of

providing technical assistance to

disadvantaged microentrepreneurs or

for capacity building purposes initially

will be awarded, on a competitive basis,

in amounts not less than $50,000. Such

grants may be renewable, annually, for

up to four additional years. Renewal of

an existing grant will take place at the

discretion of the SBA and will be based

on the availability of funds and the

individual grantee’s performance in

terms of goals met, milestones achieved,

and demonstrated results.

Grants for research and development

will also be awarded on a competitive

basis, though not subject to a minimum

award. These grants may also be

renewed based on the appropriateness

of extended funding periods,

availability of funds, and appropriation

and performance.

PRIME will be implemented with a

clear focus on the applicants’ abilities to

meet the purposes of the Act.

Accountability and outcomes will be an

ongoing consideration during the grant

period. Applicants for funding for

technical assistance to disadvantaged

microentrepreneurs will be evaluated

based on such items as technical

capabilities; market penetration

potential; ability to meet stated goals;

historical performance; key personnel;

resource management; community