[Federal Register Volume 66, Number 246 (Friday, December 21, 2001)]
[Rules and Regulations]
[Pages 65816-65817]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-31433]


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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.

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SUMMARY: The Board of Governors has amended its Regulation A, 
Extensions of Credit by Federal Reserve Banks to reflect its approval 
of a decrease in the basic discount rate at each Federal

[[Page 65817]]

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 
December 11, 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, D.C. 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 1.5 percent to 1.25 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 
25-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 stated that economic activity remains soft, with 
underlying inflation likely to edge lower from relatively modest 
levels. To be sure, weakness in demand shows signs of abating, but 
those signs are preliminary and tentative. 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. Although 
the necessary reallocation of resources to enhance security may 
restrain advances in productivity for a time, the long-term prospects 
for productivity growth and the economy remain favorable and should 
become evident once the unusual forces restraining demand abate.

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 C.F.R. part 201 continues to read 
as follows:

    Authority: 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 instituions.

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

------------------------------------------------------------------------
       Federal Reserve Bank         Rate             Effective
------------------------------------------------------------------------
Boston...........................   1.25  December 11, 2001
New York.........................   1.25  December 11, 2001
Philadelphia.....................   1.25  December 11, 2001
Cleveland........................   1.25  December 13, 2001
Richmond.........................   1.25  December 13, 2001
Atlanta..........................   1.25  December 13, 2001
Chicago..........................   1.25  December 11, 2001
St. Louis........................   1.25  December 12, 2001
Minneapolis......................   1.25  December 13, 2001
Kansas City......................   1.25  December 13, 2001
Dallas...........................   1.25  December 13, 2001
San Francisco....................   1.25  December 11, 2001
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    By order of the Board of Governors of the Federal Reserve 
System.
    December 17, 2001.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 01-31433 Filed 12-20-01; 8:45 am]
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