[Federal Register Volume 67, Number 222 (Monday, November 18, 2002)]
[Rules and Regulations]
[Page 69467]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-29193]



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  Federal Register / Vol. 67, No. 222 / Monday, November 18, 2002 / 
Rules and Regulations  

[[Page 69467]]



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 
November 6, 2002. 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; for users of 
Telecommunications Device for the Deaf (TDD) only, contact (202) 263-
4869.

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 1.25 percent to .75 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 stated that the FOMC continues to believe that an accommodative 
stance of monetary policy, coupled with still-robust underlying growth 
in productivity, is providing important ongoing support to economic 
activity. However, incoming economic data have tended to confirm that 
greater uncertainty, in part attributable to heightened geopolitical 
risks, is currently inhibiting spending, production, and employment. 
Inflation and inflation expectations remain well contained. In these 
circumstances, the FOMC believes that this additional monetary easing 
should prove helpful as the economy works its way through this current 
soft spot. With its recent action, the FOMC believes 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 balanced with respect to the prospects for both goals 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................................    .75  Nov. 7, 2002.
New York..............................    .75  Nov. 6, 2002.
Philadelphia..........................    .75  Nov. 7, 2002.
Cleveland.............................    .75  Nov. 7, 2002.
Richmond..............................    .75  Nov. 7, 2002.
Atlanta...............................    .75  Nov. 7, 2002.
Chicago...............................    .75  Nov. 7, 2002.
St. Louis.............................    .75  Nov. 7, 2002.
Minneapolis...........................    .75  Nov. 7, 2002.
Kansas City...........................    .75  Nov. 7, 2002.
Dallas................................    .75  Nov. 6, 2002.
San Francisco.........................    .75  Nov. 6, 2002.
------------------------------------------------------------------------


    Dated: November 12, 2002.

    By order of the Board of Governors of the Federal Reserve 
System.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 02-29193 Filed 11-15-02; 8:45 am]
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