59482 Federal Register / Vol. 73, No. 197 / Thursday, October 9, 2008 / Rules and Regulations 

Dated: October 6, 2008. 

Lloyd C. Day, 

Administrator, Agricultural Marketing 

Service. 

[FR Doc. E8–24114 Filed 10–8–08; 8:45 am] 

BILLING CODE 3410–02–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 204 

[Regulation D; Docket No. R–1334] 

Reserve Requirements of Depository 

Institutions 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Interim final rule; request for 

public comment. 

SUMMARY: Under authority of section 

128 of the Emergency Economic 

Stabilization Act of 2008, the Board is 

amending Regulation D, Reserve 

Requirements of Depository Institutions, 

to direct Federal Reserve Banks to pay 

interest on balances held at Reserve 

Banks to satisfy reserve requirements 

and on balances held in excess of 

required reserve balances and clearing 

balances. The Board is also making 

associated minor changes to its clearing 

balance policy and the method for 

recovering float costs. 

DATES: Effective date: This interim final 

rule is effective October 9, 2008. 

Comments must be received on or 

before November 21, 2008. 

ADDRESSES: You may submit comments, 

identified by Docket No. R–1334, by any 

of the following methods: 

Agency Web Site: http:// 

www.federalreserve.gov. Follow the 

instructions for submitting comments at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm. 

Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

E-mail: 

regs.comments@federalreserve.gov. 

Include the docket number in the 

subject line of the message. 

Fax: (202) 452–3819 or (202) 452– 

3102. 

Mail: Jennifer J. Johnson, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. 

All public comments are available 

from the Board’s Web site at http:// 

www.federalreserve.gov/generalinfo/ 

foia/ProposedRegs.cfm as submitted, 

unless modified for technical reasons. 

Accordingly, your comments will not be 

edited to remove any identifying or 

contact information. 

Public comments may also be viewed 

electronically or in paper in Room 

MP–500 of the Board’s Martin Building 

(20th and C Streets, NW.) between 

9 a.m. and 5 p.m. on weekdays. 

FOR FURTHER INFORMATION CONTACT: 

Sophia H. Allison, Senior Counsel (202/ 

452–3565), Legal Division, or Margaret 

Gillis DeBoer, Senior Financial Analyst 

(202/452–3139), Division of Monetary 

Affairs; for information with respect to 

the clearing balance policy and float 

calculations, Jonathan Mueller, Senior 

Financial Analyst (202–530–6291), 

Division of Reserve Bank Operations 

and Payment Systems; 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: 

I. Background 

Section 128 of the Emergency 

Economic Stabilization Act of 2008, 

enacted on October 3, 2008 (the ‘‘2008 

Act’’), accelerated the effective date of 

the authority for the Federal Reserve 

Banks to pay earnings on balances 

maintained at the Reserve Banks by or 

on behalf of depository institutions. The 

2008 Act made this authority effective 

on October 1, 2008. This authority was 

originally enacted in Title II of the 

Financial Services Regulatory Relief Act 

of 2006 (the ‘‘2006 Act’’) (Pub. L. 109– 

351, 120 Stat. 1966 (Oct. 13, 2006), with 

an original effective date of October 1, 

2011. The 2006 Act provides that such 

earnings must be paid at least once each 

quarter at a rate not to exceed the 

general level of short-term interest rates. 

The 2006 Act also provides that the 

Board may prescribe regulations 

concerning the payment of earnings, the 

distribution of earnings to the 

depository institutions that maintain 

balances or on whose behalf balances 

are maintained, and the responsibilities 

of correspondents to distribute and 

credit earnings on balances maintained 

by the respondent on a pass-through 

basis with the correspondent. 

The Board is publishing this interim 

final rule amending Regulation D 

(Reserve Requirements of Depository 

Institutions) to direct the Federal 

Reserve Banks to pay interest on 

balances held at Reserve Banks to satisfy 

reserve requirements (‘‘required reserve 

balances’’) and balances held in excess 

of required reserve balances and 

clearing balances (‘‘excess balances’’). 

Reserve Banks will not pay explicit 

interest on clearing balances (balances 

that an institution holds to satisfy a 

contractual clearing balance agreement). 

Clearing balances will, however, 

continue to earn earnings credits under 

the existing clearing balance policy, 

although the Board has made minor 

adjustments to the calculations of 

earnings credits and float costs to be 

recovered that are related to reserve 

requirements. In addition, the Board has 

eliminated transitional adjustments for 

reserve requirements in the event of a 

merger or consolidation. 

In the past, the absence of interest 

payments on required reserve balances 

acted as a tax on depository institutions’ 

issuance of deposits subject to reserve 

requirements. To the extent that 

depository institutions could not satisfy 

reserve requirements with vault cash, 

they were required to hold more 

balances than they otherwise would in 

a non-interest-bearing account at a 

Reserve Bank. The absence of interest 

on excess balances has meant that, 

when reserve supply significantly 

exceeds demand, the federal funds rate 

can fall to as low as zero. 

The ability to pay interest on balances 

held at Reserve Banks should help 

promote efficiency and stability in the 

banking sector. Paying interest on 

excess balances will permit the Federal 

Reserve to expand its balance sheet as 

necessary to provide sufficient liquidity 

to support financial stability while 

implementing the monetary policy that 

is appropriate in light of the System’s 

macroeconomic objectives of maximum 

employment and price stability. Paying 

interest on excess balances should also 

help to establish a lower bound on the 

federal funds rate. Eligible institutions 

(defined below) will presumably be 

unwilling to lend balances in the funds 

market at a rate much below that paid 

on excess balances maintained at a 

Reserve Bank. In addition, paying 

interest on required reserve balances 

will eliminate much of the reserve tax 

and lessen the incentive for depository 

institutions to engage in reserve 

avoidance behavior, which absorbs real 

resources and diminishes the efficiency 

of the banking system. 

In light of the current severe strains in 

financial markets, the amendments to 

Regulation D will be effective on 

Thursday, October 9, 2008. Interest will 

be calculated beginning with the 

biweekly reserve maintenance period 

ending October 22, 2008, and the 

weekly reserve maintenance period 

ending October 15, 2008. Interest 

payments will occur within the existing 

framework for reserve computation and 

maintenance, which includes reserve 

averaging, carryover provisions, and 

reserve deficiency charges. For both 

excess balances and required reserve 

balances, interest will be paid on these 


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Federal Register / Vol. 73, No. 197 / Thursday, October 9, 2008 / Rules and Regulations 59483 

1This provision is similar to others in Regulation 

D regarding the extent to which the Reserve Bank 

considers balances to belong to one institution for 

purposes of the account relationship, even though 

the funds of more than one institution may be 

involved. Under Regulation D, the balances in the 

pass-through correspondent’s account are treated as 

being the property only of the correspondent for 

purposes of the relationship between the 

correspondent and the Reserve Bank (12 CFR 

204.3(i)(2)). This provision means that the Reserve 

Bank’s debtor-creditor relationship is solely with 

the pass-through correspondent and not with any of 

the correspondent’s respondents, even though the 

funds in the correspondent’s account may include 

the passed-through required reserve balances of one 

or more respondents. 

balances averaged over the reserve 

maintenance period. This approach is 

consistent with the current reserves 

framework under which compliance 

with reserve requirements is measured 

over either a seven-day or a fourteenday reserve maintenance period, 

depending generally on the size of the 

institution. Interest will be credited to 

eligible institutions 15 days after the 

close of the maintenance period in order 

to apply reserve carryover provisions. 

Further details on the interim final rule 

are discussed below. Although the 

amendments to Regulation D are 

effective on October 9, the Board seeks 

comments on all aspects of this 

proposal. 

II. Discussion 

A. Eligible Institutions 

The Act permits Federal Reserve 

Banks to pay interest on balances held 

by or on behalf of ‘‘depository 

institutions.’’ The Act’s definition of 

‘‘depository institution’’ has a broader 

meaning than the definition of that term 

in section 19(b)(1)(A) of the Federal 

Reserve Act and Regulation D. To avoid 

confusion, the Board’s rule uses the 

term ‘‘eligible institution’’ to refer to 

those institutions included in the 2008 

Act’s broader definition of ‘‘depository 

institution.’’ Therefore, the definition of 

‘‘eligible institution’’ includes the 

depository institutions defined in 

section 19(b)(1)(A) of the Federal 

Reserve Act, including banks, savings 

associations, savings banks and credit 

unions that are federally insured or 

eligible to apply for federal insurance. 

‘‘Eligible institution’’ also includes trust 

companies, Edge and agreement 

corporations, and U.S. agencies and 

branches of foreign banks. The 

definition does not include all entities 

for which the Reserve Banks hold 

accounts, such as entities for which the 

Reserve Banks act as fiscal agents, 

including Federal Home Loan Banks. 

B. Rate 

Interest will be paid on average 

required reserve balances and average 

excess balances maintained over a 

reserve maintenance period. The Board 

has established the initial rate of interest 

for required reserve balances to be the 

average targeted federal funds rate over 

the reserve maintenance period less 10 

basis points. Setting this rate below the 

targeted federal funds rate reflects the 

fact that federal funds loans are 

uncollateralized and carry some 

counterparty risk, whereas deposits at 

the Federal Reserve Banks are free from 

such risk. Therefore, establishing some 

spread below the funds rate reflects the 

risk-free nature of a deposit at the 

central bank. The choice of 10 basis 

points is approximately equal to the 

average spread between the overnight 

rate on repurchase agreements secured 

by general Treasury collateral and the 

overnight rate on federal funds in recent 

years but prior to the onset of the 

current financial turmoil. 

The Board has established the rate of 

interest for excess balances to be the 

lowest targeted federal funds rate during 

the reserve maintenance period less 75 

basis points. The Board believes the rate 

on excess balances should be set 

sufficiently low to provide an incentive 

for eligible institutions to trade funds in 

excess of required reserve balances and 

clearing balances in the federal funds 

market, but to provide a disincentive to 

trade funds at rates far below the 

targeted federal funds rate. The Board 

may adjust the formula for the interest 

rate on excess balances in light of 

experience and evolving market 

conditions. Basing the rate on excess 

balances on the lowest rate, rather than 

the average rate, for the reserve 

maintenance period will support the 

funds rate better during periods when 

the Federal Open Market Committee 

eases monetary policy. If the average 

targeted rate were used, then during a 

maintenance period in which policy 

was eased, the rate on excess balances 

might be too close—or even above—the 

new targeted rate. 

C. Treatment of Correspondent Balances 

Balances that earn interest. 

Correspondents provide various services 

to respondent institutions, such as 

check and cash services. Under the 

Federal Reserve Act and Regulation D, 

certain respondents may also elect to 

pass their required reserve balances 

through their correspondents to the 

Federal Reserve Banks for the purposes 

of satisfying reserve requirements, 

rather than holding balances directly 

with a Reserve Bank. A pass-through 

correspondent is responsible for holding 

sufficient balances in its account at the 

Reserve Bank to satisfy its own required 

reserve balance, its own clearing 

balance (if any), and the aggregate 

required reserve balances of its 

respondents. In addition, certain 

institutions may act as pass-through 

correspondents under the Federal 

Reserve Act and Regulation D even 

though they are not themselves ‘‘eligible 

institutions’’ under this interim final 

rule, such as Federal Home Loan Banks. 

Under the interim final rule, the 

Reserve Banks will pay interest on 

required reserve balances maintained by 

or on behalf of an eligible institution, 

even if the pass-through correspondent 

for the eligible institution is itself not an 

eligible institution. In the case of a passthrough correspondent that is not an 

eligible institution, the required reserve 

balances held in the correspondent’s 

account will be solely those held to 

meet its respondent’s reserve 

requirements. Where the pass-through 

correspondent is an eligible institution, 

the required reserve balances in the 

correspondent’s account may include 

those balances held by the 

correspondent to meet its own reserve 

requirement, if any, as well as those 

held to meet its respondent’s reserve 

requirements. 

The interim final rule also provides 

that the Reserve Banks will pay interest 

on excess balances held by or on behalf 

of eligible institutions, even if the passthrough correspondent for the eligible 

institution is itself not an eligible 

institution but has excess balances in its 

account. Without imposing additional 

reporting or accounting requirements, 

Reserve Banks cannot determine 

whether all or part of the excess 

balances in a pass-through 

correspondent’s account at a Reserve 

Bank are held on behalf of respondents. 

In light of this problem, and in order to 

avoid imposing additional reporting or 

accounting burdens, the interim final 

rule deems all of the excess balances 

held in the account of a pass-through 

correspondent that is not an eligible 

institution to be held on behalf of that 

correspondent’s respondents. 

Accordingly, all interest received on 

excess balances by such pass-through 

correspondents are attributable solely to 

the excess balances of their 

respondents.1 This provision enables 

pass-through correspondents and 

respondents to continue to negotiate the 

structure of their contractual 

relationships with maximum flexibility, 

including negotiations regarding the 

appropriate distribution of earnings 

received on behalf of respondent 

balances. 

The Board requests comment on any 

alternative methods of determining 

whether all or part of the excess 


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59484 Federal Register / Vol. 73, No. 197 / Thursday, October 9, 2008 / Rules and Regulations 

2Adjustments associated with mergers completed 

prior to October 9, 2008, will be left in place, but 

no new adjustments would be issued on or after 

October 9, 2008. 

3The exemption amount is the amount of an 

institution’s reservable liabilities that are subject to 

a zero-percent reserve requirement; currently it is 

set at $10.3 million. The low reserve tranche is the 

amount of an institution’s reservable liabilities that 

is subject to the three-percent reserve requirement 

ratio; currently, it is set at 44.4 million. 

balances in a pass-through 

correspondent’s account at a Federal 

Reserve Bank are held on behalf of a 

respondent when the correspondent 

itself is not an eligible institution. For 

example, would it be feasible for a passthrough correspondent to report to the 

Federal Reserve the amount or 

proportion of its excess balances that are 

held on behalf of respondents? Should 

the Board require pass-through 

correspondents to certify that all or a 

specified portion of the excess balances 

in its Reserve Bank account are held on 

behalf of its respondents? Should the 

Board require all balances held by a 

pass-through correspondent on behalf of 

its respondent institutions to be held in 

a segregated account separate from the 

correspondent’s other funds? Would a 

pass-through correspondent that was 

not an eligible institution be able to 

track respondent balances such that it 

could determine what proportion of its 

balances in its Reserve Bank account are 

held on behalf of its respondents? 

Alternately, would it be reasonable for 

the Board to assume that none of the 

pass-through correspondent’s excess 

balances are held on behalf of a 

respondent? 

Passing back of interest to 

respondents. The interim final rule 

provides that a pass-through 

correspondent may pass back to its 

respondent the interest paid on balances 

held on behalf of that respondent, but it 

is not required to do so. Permitting, but 

not requiring, the pass-back of interest 

earnings is consistent with the treatment 

of reserve deficiency charges in 

Regulation D. The Reserve Bank 

assesses a deficiency charge to the 

account of the pass-through 

correspondent for any deficiency in its 

account balances, even if the deficiency 

is attributable to a respondent. It is left 

to the pass-through correspondent to 

determine whether to assess a 

deficiency charge on the respondent, or 

whether to make any adjustments in 

other aspects of the correspondentrespondent relationship to deal with 

attribution of deficiency and other 

charges. 

This approach also avoids interfering 

with existing arrangements between 

pass-through correspondents and 

respondents for services, including 

sweep arrangements or compensating 

balance requirements. Correspondent 

banks typically structure their 

respondent relationships in myriad 

ways, depending on a number of factors, 

such as services provided or balances 

held. Respondents may adjust the level 

of balances held with a correspondent 

in response to changes in the rates paid 

to them or other factors. Respondents 

that are not satisfied with their existing 

arrangements with a correspondent may 

take steps to renegotiate the terms of the 

relationship or even seek another 

correspondent. 

The Board requests comment on 

whether it should require, rather than 

permit, pass-through correspondents to 

pass back to their respondents the 

interest payments on balances held on 

behalf of those respondents. Would that 

requirement significantly interfere with 

existing correspondent-respondent 

arrangements? Would pass-through 

correspondents be able to track 

respondent balances such that they 

could determine how to allocate the 

interest among their respondents? How 

would the Federal Reserve ensure that 

all interest belonging to a respondent 

had in fact been passed back? 

Exemption from Regulation Q. Many 

eligible institutions are subject to 

statutory and regulatory prohibitions 

against payment of interest on demand 

deposits (see, e.g., 12 U.S.C. 461(i); 

Regulation Q (Prohibition Against 

Payment of Interest on Demand 

Deposits), 12 CFR part 217)). The 2006 

Act, however, expressly authorizes the 

Board to prescribe regulations to allow 

pass-through correspondents to pass 

interest back to respondents. Congress 

therefore contemplated that passthrough correspondents could pass back 

part or all of the interest received in a 

correspondent’s Reserve Bank account 

to its respondents, even though the 

payment of interest on demand deposit 

accounts is still otherwise prohibited. 

The interim final rule, therefore, 

clarifies that when a pass-through 

correspondent passes back to its 

respondent interest paid on balances 

held on behalf of that respondent, such 

a payment is not a payment of interest 

on a demand deposit for purposes of 

Regulation Q. 

D. Transitional Adjustments in Mergers 

The Board is eliminating the 

provisions in Regulation D relating to 

merger-related adjustments to reserve 

requirements.2 These provisions, 

currently set forth in § 204.4 of the 

regulation, were originally intended to 

phase-in the burden associated with the 

higher reserve requirements that result 

from a merger or consolidation of 

depository institutions. When two or 

more separate institutions merge or 

consolidate into a single institution, the 

surviving institution typically has a 

reserve requirement that is higher than 

the sum of the reserve requirements of 

the merging institutions. The 

requirement is higher because the 

merged institution receives only one 

low reserve tranche and one exemption 

amount, while, prior to the merger, each 

institution had a low reserve tranche 

and an exemption amount.3 Section 

204.4 of Regulation D permits a phasein of the higher reserve tax associated 

with a merger or consolidation over 

seven quarters. Interest on required 

reserve balances offers a much more 

effective method to address the reserve 

tax associated with mergers or 

consolidations because the interest 

earned essentially eliminates the 

additional tax. Moreover, the length of 

the adjustment period is sufficiently 

long that many institutions become part 

of subsequent mergers, resulting in 

significant complexities in required 

reserves calculations. The Board 

believes that paying interest on required 

reserve balances effectively negates the 

need for the complex adjustment 

provisions and therefore has deleted 

them in the interim final rule. 

E. Clearing Balance Policy Adjustments 

Clearing balances provide a way for 

depository institutions to hold 

additional balances at the Reserve Banks 

to meet their clearing needs. These 

balances currently earn implicit interest 

in the form of earnings credits that can 

be used to cover the cost of Federal 

Reserve priced services. Under the 

current methodology for pricing Federal 

Reserve services, the level of clearing 

balances affect both costs and revenues 

for Federal Reserve priced services. 

In light of the revisions to Regulation 

D, the Board has approved two related 

changes to the method in which 

earnings credits are calculated, along 

with a similar change to the method in 

which float costs to be recovered are 

computed. These changes discontinue 

practices related to reserve requirements 

that are no longer necessary. These 

adjustments previously had been made 

to ensure that respondents viewed 

balances at the Federal Reserve Banks 

and balances at a private-sector 

correspondent as equivalent. 

The first earnings credit adjustment, 

called the ‘‘imputed reserve requirement 

adjustment,’’ imputes a marginal reserve 

requirement ratio of 10 percent to the 

Reserve Banks because a private-sector 

correspondent would be required to 


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Federal Register / Vol. 73, No. 197 / Thursday, October 9, 2008 / Rules and Regulations 59485 

hold reserves against a respondent’s 

balance. If the correspondent had a 

marginal reserve requirement ratio of 10 

percent, then it would grant credits to 

the respondent based on only 90 percent 

of the respondent’s balance because it 

would have to hold the remaining 10 

percent in the form of non-interestearning reserves. The Board has 

eliminated this adjustment because the 

reserves on the respondent’s balance 

would now earn interest at the rate on 

required reserve balances. 

The second earnings credit 

adjustment, called the ‘‘marginal reserve 

requirement adjustment,’’ adjusts for the 

fact that the respondent could deduct 

the balance held at a correspondent, but 

not at the Reserve Bank, from its 

reservable liabilities. The reserve 

requirement reduction is equal to the 

respondent’s marginal reserve 

requirement ratio multiplied by the 

balance at the correspondent. This 

reduction has value to the respondent 

when it frees up balances that can be 

invested in interest-bearing instruments, 

such as a federal funds loan. The Board 

has eliminated this adjustment because 

the respondent will now be indifferent 

between holding balances at the Reserve 

Bank, and earning the rate on required 

reserves, or maintaining the balance at 

a private-sector correspondent, taking 

the due from deduction, and investing 

those funds. 

The Board has also eliminated the 

imputed reserve requirement 

adjustment and adjustment for cash 

items in the process of collection that is 

applied when measuring float costs to 

be recovered by Federal Reserve priced 

services. The Reserve Banks will now 

have to recover 100 percent of float 

costs. Previously, floats costs recovered 

by priced services were reduced by 10 

percent. The adjustment imputed a 

reserve requirement to the Reserve 

Bank, but it also allowed the Reserve 

Banks to adjust the imputed required 

reserves by the adjustment for cash 

items. This approach mirrored that of a 

private-sector correspondent. There is 

no longer a need to impute a reserve 

requirement to the Reserve Banks 

because the private-sector 

correspondent will now earn interest on 

its required reserve balance. As a result, 

the Reserve Banks are no longer entitled 

to an adjustment for cash items. 

Administrative Procedure Act 

In accordance with the 

Administrative Procedure Act (‘‘APA’’) 

section 553(b) (5 U.S.C. 553(b)), the 

Board finds, for good cause, that 

providing notice and an opportunity for 

public comment before the effective 

date of this rule would be contrary to 

the public interest. In addition, 

pursuant to APA section 553(d) (5 

U.S.C. 553(d)), the Board finds good 

cause for making this amendment 

effective without 30 days advance 

publication. The Board has adopted this 

rule in light of, and to help address, the 

continuing unusual and exigent 

circumstances in the financial markets. 

This rule provides tools for carrying out 

monetary policy more effectively. Thus, 

the Board believes that any delay in 

implementing the rule would prove 

contrary to the public interest and 

would be contrary to Congress’s intent 

in accelerating the Board’s authority to 

use these new tools to help address 

current market conditions. The Board is 

requesting comment on all aspects of 

the rule and will make any changes that 

it considers appropriate or necessary 

after review of any comments received. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act 

requires an agency that is issuing a final 

rule to prepare and make available a 

regulatory flexibility analysis that 

describes the impact of the final rule on 

small entities. 5 U.S.C. 603(a). The 

Regulatory Flexibility Act provides that 

an agency is not required to prepare and 

publish a regulatory flexibility analysis 

if the agency certifies that the final rule 

will not have a significant economic 

impact on a substantial number of small 

entities. 5 U.S.C. 605(b). 

Pursuant to section 605(b), the Board 

certifies that this interim final rule will 

not have a significant economic impact 

on a substantial number of small 

entities. The rule implements a program 

for paying interest on certain balances 

held by eligible institutions at the 

Federal Reserve Banks and will benefit 

small institutions that receive such 

interest. There are no new reporting, 

recordkeeping, or other compliance 

requirements associated with this rule. 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act (44 U.S.C. 3506; 5 CFR 

part 1320 Appendix A.1), the Board has 

reviewed the interim final rule under 

authority delegated to the Board by the 

Office of Management and Budget. The 

rule contains no collections of 

information pursuant to the Paperwork 

Reduction Act. 

Plain Language 

Section 772 of the Gramm-LeachBliley Act requires the Board to use 

‘‘plain language’’ in all proposed and 

final rules. In light of this requirement, 

the Board has sought to present the 

interim final rule in a simple and 

straightforward manner. The Board 

invites comment on whether the Board 

could take additional steps to make the 

rule easier to understand. 

List of Subjects in 12 CFR Part 204 

Banks, banking, Reporting and 

recordkeeping requirements. 

Authority and Issuance 

■ For the reasons set forth in the 

preamble, the Board is amending 12 

CFR part 204 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. Section 204.4 is removed and 

reserved. 

§ 204.4 [Reserved] 

■ 3. Section 204.10 is added to read as 

follows: 

§ 204.10 Payment of interest on balances. 

(a) Payment of interest. The Federal 

Reserve Banks shall pay interest on 

balances maintained at Federal Reserve 

Banks by or on behalf of an eligible 

institution as provided in this section 

and under such other terms and 

conditions as the Board may prescribe. 

(b) Rate. Except as provided in 

paragraph (c) of this section, Federal 

Reserve Banks shall pay interest at the 

following rates— 

(1) For required reserve balances, at 

the average targeted federal funds rate 

over the reserve maintenance period 

less 10 basis points; and 

(2) For excess balances, at the lowest 

targeted federal funds rate during the 

reserve maintenance period less 75 basis 

points. 

(c) Pass-through balances. Any excess 

balance held by a pass-through 

correspondent that is not an eligible 

institution is deemed to be held on 

behalf of the pass-through 

correspondent’s respondents. A passthrough correspondent may pass back to 

its respondent interest paid on balances 

held on behalf of that respondent. Such 

a payment is not a payment of interest 

on a demand deposit for purposes of 

Part 217 of this chapter (Regulation Q). 

(d) Definitions. For purposes of this 

section— 

(1) Clearing balance means the 

amount that an eligible institution holds 

to satisfy a contractual clearing balance 

agreement with a Federal Reserve Bank, 

in addition to any required reserve 

balance. 

(2) Eligible institution means— 


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59486 Federal Register / Vol. 73, No. 197 / Thursday, October 9, 2008 / Rules and Regulations 

(i) Any depository institution as 

described in § 204.1(c) of this part; 

(ii) Any trust company; 

(iii) Any corporation organized under 

section 25A of the Federal Reserve Act 

(12 U.S.C. 611 et seq.) or having an 

agreement with the Board under section 

25 of the Federal Reserve Act (12 U.S.C. 

601 et seq.); and 

(iv) Any branch or agency of a foreign 

bank (as defined in section 1(b) of the 

International Banking Act of 1978, 12 

U.S.C. 3101(b)). 

(3) Excess balance means the average 

balance held in an account at a Federal 

Reserve Bank by or on behalf of an 

eligible institution over a reserve 

maintenance period that exceeds the 

sum of the required reserve balance and 

any clearing balance. 

(4) Required reserve balance means 

the average balance held in an account 

at a Federal Reserve Bank by or on 

behalf of an eligible institution over a 

reserve maintenance period to satisfy 

the reserve requirements of this part. 

(5) Targeted federal funds rate means 

the federal funds rate established from 

time to time by the Federal Open Market 

Committee. 

By order of the Board of Governors of the 

Federal Reserve System, October 6, 2008. 

Jennifer J. Johnson, 

Secretary of the Board. 

[FR Doc. E8–24003 Filed 10–8–08; 8:45 am] 

BILLING CODE 6210–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2008–0302; Directorate 

Identifier 2007–NM–323–AD; Amendment 

39–15689; AD 2008–21–05] 

RIN 2120–AA64 

Airworthiness Directives; Boeing 

Model 767–200, –300, and –400ER 

Series Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), Department of 

Transportation (DOT). 

ACTION: Final rule. 

SUMMARY: The FAA is superseding an 

existing airworthiness directive (AD), 

which applies to certain Boeing Model 

767–200, –300, and –400ER series 

airplanes. That AD currently requires an 

inspection to determine if the doormounted escape slide/rafts have certain 

part numbers. This new AD does not 

retain that requirement. This new AD 

continues to require an inspection for 

excessive tension of the firing cable, and 

procedures for providing slack in the 

firing cable or rerouting the firing cable 

if necessary. For certain airplanes, this 

new AD also requires a review of the 

airplane maintenance records to 

determine if a certain service bulletin 

has been incorporated, or an inspection 

to determine if certain door-mounted 

escape slide/rafts are installed. This 

new AD also requires modification of 

certain escape slide/rafts. This AD 

results from reports of uncommanded 

inflation inside the airplane of a doormounted escape slide/raft located in the 

passenger compartment. We are issuing 

this AD to prevent injury to 

maintenance personnel, passengers, and 

crew during otherwise normal operating 

conditions and to prevent interference 

with evacuation of the airplane during 

an emergency, due to uncommanded 

inflation of a door-mounted escape 

slide/raft. 

DATES: This AD becomes effective 

November 13, 2008. 

The Director of the Federal Register 

approved the incorporation by reference 

of a certain publication listed in the AD 

as of November 13, 2008. 

On June 30, 2005 (70 FR 34638, June 

15, 2005), the Director of the Federal 

Register approved the incorporation by 

reference of a certain other publication. 

ADDRESSES: For service information 

identified in this AD, contact Boeing 

Commercial Airplanes, P.O. Box 3707, 

Seattle, Washington 98124–2207. 

Examining the AD Docket 

You may examine the AD docket on 

the Internet at http:// 

www.regulations.gov; or in person at the 

Docket Management Facility between 9 

a.m. and 5 p.m., Monday through 

Friday, except Federal holidays. The AD 

docket contains this AD, the regulatory 

evaluation, any comments received, and 

other information. The address for the 

Docket Office (telephone 800–647–5527) 

is the Document Management Facility, 

U.S. Department of Transportation, 

Docket Operations, M–30, West 

Building Ground Floor, Room W12–140, 

1200 New Jersey Avenue, SE., 

Washington, DC 20590. 

FOR FURTHER INFORMATION CONTACT: 

Keith Ladderud, Aerospace Engineer, 

Cabin Safety and Environmental 

Systems Branch, ANM–150S, FAA, 

Seattle Aircraft Certification Office, 

1601 Lind Avenue, SW., Renton, 

Washington 98057–3356; telephone 

(425) 917–6435; fax (425) 917–6590. 

SUPPLEMENTARY INFORMATION: 

Discussion 

The FAA issued a notice of proposed 

rulemaking (NPRM) to amend 14 CFR 

part 39 to include an AD that 

supersedes AD 2005–12–14, amendment 

39–14130 (70 FR 34638, June 15, 2005). 

The existing AD applies to certain 

Boeing Model 767–200, –300, and 

–400ER series airplanes. That NPRM 

was published in the Federal Register 

on March 18, 2008 (73 FR 14405). That 

NPRM proposed to continue to require 

an inspection to determine if the doormounted escape slide/rafts have certain 

part numbers. For those door-mounted 

escape slide/rafts having certain part 

numbers, the NPRM also proposed to 

continue to require an inspection for 

excessive tension of the firing cable, and 

procedures for providing slack in the 

firing cable or rerouting the firing cable 

if necessary. For certain airplanes, the 

NPRM also proposed to require a review 

of the airplane maintenance records to 

determine if a certain service bulletin 

has been incorporated, or an inspection 

to determine if certain door-mounted 

escape slide/rafts are installed. The 

NPRM also proposed to require 

modification of certain escape slide/ 

rafts. 

Comments 

We provided the public the 

opportunity to participate in the 

development of this AD. We have 

considered the comments that have 

been received on the NPRM. 

Request To Refer to Certain Part 

Numbers (P/Ns) in the Applicability 

Boeing requests that we revise the 

applicability to Boeing Model 767–200, 

–300, and –400ER series airplanes, 

certificated in any category; as 

identified in Boeing Alert Service 

Bulletin 767–25A0395, dated August 31, 

2006; equipped with Goodrich doormounted slide/rafts having P/Ns 

5A3294–1, 5A3294–2, 5A3295–1, or 

5A3295–3. As justification, Boeing 

states that this change clarifies that this 

AD applies only to certain Goodrich 

door-mounted slides/rafts. Boeing also 

states the applicability of the NPRM, as 

written, might require an alternative 

method of compliance (AMOC) for 

airplanes having other door-mounted 

slides/rafts. 

We agree to revise the applicability of 

this AD as requested by Boeing for the 

reasons stated above, except that 

paragraph (c) of this AD refers to 

Revision 1 of the service bulletin, dated 

January 25, 2007. Since we have added 

the affected part numbers for the 

discrepant door-mounted slides/rafts to 

the applicability of this AD, it is no 

longer necessary to require the 

inspection to determine the part 

numbers as specified in paragraph (f) of 

the NPRM. Therefore, we have deleted 


erowe on PROD1PC64 with RULES