[Federal Register Volume 67, Number 38 (Tuesday, February 26, 2002)]
[Notices]
[Page 8803]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-4489]


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FEDERAL RESERVE SYSTEM

[Docket No. R-1098]


Pro Forma Financial Statements for Federal Reserve Priced 
Services

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Notice.

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SUMMARY: After considering comments received in response to its 
requests for comment on a proposal to discontinue the quarterly 
publication of interim pro forma financial statements for Federal 
Reserve priced services in March 2001, the Board has determined that 
the priced-services pro forma financial statements will only be 
produced annually.

EFFECTIVE DATE: February 19, 2002.

FOR FURTHER INFORMATION CONTACT: For questions regarding the priced-
services pro forma financial statements contact Gregory L. Evans, 
Manager (202/452-3945); or Elizabeth Miyagi, Financial Analyst (202/
452-2222), Division of Reserve Bank Operations and Payment Systems. For 
users of Telecommunication Device for the Deaf (TDD) only, please 
contact 202/263-4869.

SUPPLEMENTARY INFORMATION: The Board has published pro forma financial 
statements for Federal Reserve priced services (pro formas) quarterly 
and annually since 1984. Essentially, the purpose of the pro formas is 
to provide information to the public regarding the financial results of 
Reserve Bank priced services activities and to allow the public to 
assess Federal Reserve compliance with the Monetary Control Act (MCA).
    The MCA requires the Federal Reserve to set fees for priced 
services to recover total costs over the long run. The Federal Reserve 
reviews cost recovery over a ten-year period to assess compliance with 
the MCA requirement. The Board believes that the ten-year historical 
recovery rate, together with the annual pro formas published in the 
Board's Annual Report and the additional cost-recovery information 
included in the annual repricing Federal Register notice, provides the 
relevant information to enable Congress and the public to evaluate the 
Federal Reserve's performance under MCA. The Board believes the 
information in the quarterly pro formas is of little value to parties 
interested in priced-services financial results because it does not 
provide a relevant long-term cost-recovery assessment. Given the staff 
resources required to produce, document, and review the pro formas, the 
Board believes the cost of producing quarterly pro formas exceeds the 
benefit.
    The Board requested public comment on discontinuing quarterly pro 
formas in March 2001 (66 FR 16945, March 28, 2001). The Board received 
only two comments on the proposal to discontinue publication of the 
quarterly pro formas, both disagreeing with the Board's recommendation. 
The comment letters, one from the National Clearinghouse Association 
(NCHA) and one from the Electronic Check Clearing House Organization 
(ECCHO) were essentially identical and indicated that the quarterly pro 
formas were the only source of current information that could provide 
early warning of trends and developments for Federal Reserve priced 
services specifically and for payments more generally. The commenters 
believed that such information is particularly important in the current 
environment of rapid changes in the payment system. The commenters also 
expressed surprise with the proposal to provide less information to the 
public given a recent GAO report on potential conflicts of interest, 
which concluded that the System should provide more information to the 
payments industry about its services and product enhancements.
    Although these comments clearly expressed a desire for the 
continuation of the quarterly pro formas, they were not responsive with 
regard to identifying which elements of the current pro formas provide 
the most relevant information. The Board continues to believe that the 
information provided in the quarterly pro formas is of little value to 
parties interested in the Federal Reserve's priced-services financial 
results when compared with the costs to produce them. Quarterly pro 
formas present data for priced services activities at an aggregate 
level and do not provide information such as volume trends that the 
commenters had indicated in their comment letters. The Board recently, 
however, started providing more useful quarterly payment system 
information including volume trends on the Board's public website. This 
information is more relevant to the public and the payment system 
industry.
    Because of the limited interest expressed in retaining the 
quarterly pro formas, the availability of more relevant information on 
the Board's website, and the Board's continued belief that quarterly 
pro formas do not provide sufficient useful information to warrant the 
preparation costs, the Board is changing the publication frequency of 
pro formas to annually.

    By order of the Board of Governors of the Federal Reserve 
System, February 20, 2002.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 02-4489 Filed 2-25-02; 8:45 am]
BILLING CODE 6210-01-P