[Federal Register Volume 66, Number 30 (Tuesday, February 13, 2001)]
[Rules and Regulations]
[Pages 9907-9908]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-3564]



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 Rules and Regulations
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  Federal Register / Vol. 66, No. 30 / Tuesday, February 13, 2001 / 
Rules and Regulations  

[[Page 9907]]



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 January 
31, 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 5.5 percent to 5.0 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 and announced at the same time.
    Consumer and business confidence has eroded further, exacerbated by 
rising energy costs that continue to drain consumer purchasing power 
and press on business profit margins. Partly as a consequence, retail 
sales and business spending on capital equipment have weakened 
appreciably. In response, manufacturing production has been cut back 
sharply, with new technologies appearing to have accelerated the 
response of production and demand to potential excesses in the stock of 
inventories and capital equipment.
    Taken together, and with inflation contained, these circumstances 
have called for a rapid and forceful response of monetary policy. The 
longer-term advances in technology and accompanying gains in 
productivity, however, exhibit few signs of abating and these gains, 
along with the lower interest rates, should support growth of the 
economy over time.
    Nonetheless, the Committee 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:


Sec. 201.51  Adjustment credit for depository institutions.

    The rates for adjustment credit provided to depository institutions 
under Sec. 201.3(a) are:

------------------------------------------------------------------------
      Federal Reserve Bank           Rate              Effective
------------------------------------------------------------------------
Boston.........................          5.0  January 31, 2001
New York.......................          5.0  January 31, 2001.
Philadelphia...................          5.0  January 31, 2001.
Cleveland......................          5.0  January 31, 2001.

[[Page 9908]]

 
Richmond.......................          5.0  January 31, 2001.
Atlanta........................          5.0  January 31, 2001.
Chicago........................          5.0  January 31, 2001.
St. Louis......................          5.0  February 1, 2001.
Minneapolis....................          5.0  January 31, 2001.
Kansas City....................          5.0  February 1, 2001.
Dallas.........................          5.0  January 31, 2001.
San Francisco..................          5.0  January 31, 2001.
------------------------------------------------------------------------


    Dated: By order of the Board of Governors of the Federal Reserve 
System, February 7, 2001.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 01-3564 Filed 2-12-01; 8:45 am]
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