[Federal Register Volume 73, Number 59 (Wednesday, March 26, 2008)]
[Rules and Regulations]
[Pages 15861-15862]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-6107]



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 Rules and Regulations
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  Federal Register / Vol. 73, No. 59 / Wednesday, March 26, 2008 / 
Rules and Regulations  

[[Page 15861]]



FEDERAL RESERVE SYSTEM

12 CFR Part 201

[Regulation A]


Extensions of Credit by Federal Reserve Banks

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Board of Governors of the Federal Reserve System (Board) 
has adopted final amendments to its Regulation A to reflect the Board's 
approval of a reduction in the primary credit rate at each Federal 
Reserve Bank. The secondary credit rate at each Reserve Bank 
automatically decreased by formula as a result of the Board's primary 
credit rate action.

DATES: The amendments to part 201 (Regulation A) are effective March 
26, 2008. The rate changes for primary and secondary credit were 
effective on the dates specified in 12 CFR 201.51, as amended.

FOR FURTHER INFORMATION CONTACT: Jennifer J. Johnson, Secretary of the 
Board (202/452-3259); for users of Telecommunication Devices for the 
Deaf (TDD) only, contact 202/263-4869.

SUPPLEMENTARY INFORMATION: The Federal Reserve Banks make primary and 
secondary credit available to depository institutions as a backup 
source of funding on a short-term basis, usually overnight. The primary 
and secondary credit rates are the interest rates that the twelve 
Federal Reserve Banks charge for extensions of credit under these 
programs. In accordance with the Federal Reserve Act, the primary and 
secondary credit rates are established by the boards of directors of 
the Federal Reserve Banks, subject to the review and determination of 
the Board.
    On the dates listed below, the Board approved requests by eight 
Reserve Banks to reduce by 25 basis points the primary credit rate in 
effect at those Federal Reserve Banks, thereby decreasing from 3.50 
percent to 3.25 percent the rate that each of those Reserve Banks 
charged for extensions of primary credit. As a result of the Board's 
action on the primary credit rate, the rate that each of those Reserve 
Banks charged for extensions of secondary credit automatically 
decreased from 4.00 percent to 3.75 percent under the secondary credit 
rate formula. The rate changes for primary and secondary credit were 
effective on the dates specified in the following tables.
    Primary credit under 12 CFR 201.4(a)

------------------------------------------------------------------------
        Federal Reserve Bank           Rate            Effective
------------------------------------------------------------------------
Boston.............................     3.25   March 17, 2008.
New York...........................     3.25   March 16, 2008.
Cleveland..........................     3.25   March 17, 2008.
Richmond...........................     3.25   March 17, 2008.
Chicago............................     3.25   March 17, 2008.
Minneapolis........................     3.25   March 17, 2008.
Kansas City........................     3.25   March 17, 2008.
San Francisco......................     3.25   March 17, 2008.
------------------------------------------------------------------------

    Secondary credit under 12 CFR 201.4(b)

------------------------------------------------------------------------
        Federal Reserve Bank           Rate            Effective
------------------------------------------------------------------------
Boston.............................     3.75   March 17, 2008.
New York...........................     3.75   March 16, 2008.
Cleveland..........................     3.75   March 17, 2008.
Richmond...........................     3.75   March 17, 2008.
Chicago............................     3.75   March 17, 2008.
Minneapolis........................     3.75   March 17, 2008.
Kansas City........................     3.75   March 17, 2008.
San Francisco......................     3.75   March 17, 2008.
------------------------------------------------------------------------

    The Board's action narrowed the spread between the primary credit 
rate and the Federal Open Market Committee's target federal funds rate 
to 25 basis points. As indicated in the Board's press release 
announcing this action, the changes to the primary credit discount 
window facility were intended to bolster market liquidity and promote 
orderly market functioning. In addition, the press release stated that 
the Board had approved an increase in the maximum maturity of primary 
credit loans to 90 days from 30 days.
    Subsequently, the Board approved requests by each of the twelve 
Federal Reserve Banks to decrease the primary credit rate in effect at 
each of the Reserve Banks to 2.50 percent. As a result of the Board's 
action on the primary credit rate, the rate that each Reserve Bank 
charges for extensions of secondary credit automatically decreased to 
3.00 percent under the secondary credit rate formula. The final 
amendments to Regulation A reflect these rate changes.
    The decrease in the primary credit rate was associated with a 
similar decrease in the target for the federal funds rate (from 3.00 
percent to 2.25 percent) approved by the Federal Open Market Committee 
(Committee) and announced at the same time. A press release announcing 
these actions noted that:

    Recent information indicates that the outlook for economic 
activity has weakened further. Growth in consumer spending has 
slowed and labor markets have softened. Financial markets remain 
under considerable stress, and the tightening of credit conditions 
and the deepening of the housing contraction are likely to weigh on 
economic growth over the next few quarters.
    Inflation has been elevated, and some indicators of inflation 
expectations have risen. The Committee expects inflation to moderate 
in coming quarters, reflecting a projected leveling-out of energy 
and other commodity prices and an easing of pressures on resource 
utilization. Still, uncertainty about the inflation outlook has 
increased. It will be necessary to continue to monitor inflation 
developments carefully.
    Today's policy action, combined with those taken earlier, 
including measures to foster market liquidity, should help to 
promote moderate growth over time and to mitigate the risks to 
economic activity. However, downside risks to growth remain. The 
Committee will act in a timely manner as needed to promote 
sustainable economic growth and price stability.

Regulatory Flexibility Act Certification

    Pursuant to the Regulatory Flexibility Act (5 U.S.C. 605(b)), the 
Board certifies that the new primary and secondary credit rates will 
not have a significantly adverse economic impact on a substantial 
number of small entities because the final rule does not impose any 
additional requirements on entities affected by the regulation.

Administrative Procedure Act

    The Board did not follow the provisions of 5 U.S.C. 553(b) relating 
to notice and public participation in connection with the adoption of 
these amendments because the Board for good cause determined that 
delaying

[[Page 15862]]

implementation of the new primary and secondary credit rates in order 
to allow notice and public comment would be unnecessary and contrary to 
the public interest in fostering price stability and sustainable 
economic growth. For these same reasons, the Board also has not 
provided 30 days prior notice of the effective date of the rule under 
section 553(d).

List of Subjects in 12 CFR Part 201

    Banks, Banking, Federal Reserve System, Reporting and 
recordkeeping.

Authority and Issuance

0
For the reasons set forth in the preamble, the Board is amending 12 CFR 
Chapter II as follows:

PART 201--EXTENSIONS OF CREDIT BY FEDERAL RESERVE BANKS (REGULATION 
A)

0
1. The authority citation for part 201 continues to read as follows:

    Authority: 12 U.S.C. 248(i)-(j), 343 et seq., 347a, 347b, 347c, 
348 et seq., 357, 374, 374a, and 461.

0
2. In Sec.  201.51, paragraphs (a) and (b) are revised to read as 
follows:


Sec.  201.51  Interest rates applicable to credit extended by a Federal 
Reserve Bank.\1\
---------------------------------------------------------------------------

    \1\ The primary, secondary, and seasonal credit rates described 
in this section apply to both advances and discounts made under the 
primary, secondary, and seasonal credit programs, respectively.
---------------------------------------------------------------------------

    (a) Primary credit. The interest rates for primary credit provided 
to depository institutions under Sec.  201.4(a) are:

------------------------------------------------------------------------
        Federal Reserve Bank           Rate            Effective
------------------------------------------------------------------------
Boston.............................     2.50  March 18, 2008.
New York...........................     2.50  March 18, 2008.
Philadelphia.......................     2.50  March 20, 2008.
Cleveland..........................     2.50  March 18, 2008.
Richmond...........................     2.50  March 19, 2008.
Atlanta............................     2.50  March 19, 2008.
Chicago............................     2.50  March 18, 2008.
St. Louis..........................     2.50  March 19, 2008.
Minneapolis........................     2.50  March 19, 2008.
Kansas City........................     2.50  March 18, 2008.
Dallas.............................     2.50  March 18, 2008.
San Francisco......................     2.50  March 18, 2008.
------------------------------------------------------------------------

    (b) Secondary credit. The interest rates for secondary credit 
provided to depository institutions under 201.4(b) are:

------------------------------------------------------------------------
        Federal Reserve Bank           Rate            Effective
------------------------------------------------------------------------
Boston.............................     3.00  March 18, 2008.
New York...........................     3.00  March 18, 2008.
Philadelphia.......................     3.00  March 20, 2008.
Cleveland..........................     3.00  March 18, 2008.
Richmond...........................     3.00  March 19, 2008.
Atlanta............................     3.00  March 19, 2008.
Chicago............................     3.00  March 18, 2008.
St. Louis..........................     3.00  March 19, 2008.
Minneapolis........................     3.00  March 19, 2008.
Kansas City........................     3.00  March 18, 2008.
Dallas.............................     3.00  March 18, 2008.
San Francisco......................     3.00  March 18, 2008.
------------------------------------------------------------------------

* * * * *

    By order of the Board of Governors of the Federal Reserve 
System, March 21, 2008.
Robert deV. Frierson,
Deputy Secretary of the Board.
 [FR Doc. E8-6107 Filed 3-25-08; 8:45 am]
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