[Federal Register Volume 66, Number 67 (Friday, April 6, 2001)]
[Rules and Regulations]
[Pages 18185-18186]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-8449]



 ========================================================================
 Rules and Regulations
                                                 Federal Register
 ________________________________________________________________________
 
 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.
 
 ========================================================================
 

  Federal Register / Vol. 66, No. 67 / Friday, April 6, 2001 / Rules 
and Regulations  

[[Page 18185]]



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 March 
20, 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 5.0 percent to 4.5 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 persistent pressures on profit margins 
are restraining investment spending and, through declines in equity 
wealth, consumption. The associated backup in inventories has induced a 
rapid response in manufacturing output and, with spending having firmed 
a bit since last year, inventory adjustment appears to be well 
underway.
    Although current developments do not appear to have materially 
diminished the prospects for long-term growth in productivity, excess 
productive capacity has emerged recently. The possibility that this 
excess could continue for some time and the potential for weakness in 
global economic conditions suggest substantial risks that demand and 
production could remain soft. In these circumstances, when the economic 
situation could be evolving rapidly, the Federal Reserve will need to 
monitor developments closely.
    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............................     4.5  March 20, 2001.
New York..........................     4.5  March 20, 2001.
Philadelphia......................     4.5  March 20, 2001.
Cleveland.........................     4.5  March 20, 2001.
Richmond..........................     4.5  March 20, 2001.
Atlanta...........................     4.5  March 20, 2001.
Chicago...........................     4.5  March 20, 2001.
St. Louis.........................     4.5  March 21, 2001.
Minneapolis.......................     4.5  March 20, 2001.
Kansas City.......................     4.5  March 20, 2001.
Dallas............................     4.5  March 20, 2001.
San Francisco.....................     4.5  March 20, 2001.
------------------------------------------------------------------------



[[Page 18186]]

    By order of the Board of Governors of the Federal Reserve 
System, April 2, 2001.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 01-8449 Filed 4-5-01; 8:45 am]
BILLING CODE 6210-01-P