[Federal Register Volume 76, Number 213 (Thursday, November 3, 2011)]
[Rules and Regulations]
[Pages 68064-68066]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-28048]


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FEDERAL RESERVE SYSTEM

12 CFR Part 204

[Regulation D; Docket No. R-1435]
RIN No. 7100 AD 85


Reserve Requirements of Depository Institutions

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule.

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SUMMARY: The Board is amending Regulation D, Reserve Requirements of 
Depository Institutions, to reflect the annual indexing of the reserve 
requirement exemption amount and the low reserve tranche for 2012. The 
Regulation D amendments set the amount of total reservable liabilities 
of each depository institution that is subject to a zero percent 
reserve requirement in 2012 at $11.5 million (up from $10.7 million in 
2011). This amount is known as the reserve requirement exemption 
amount. The Regulation D amendments also set the amount of net 
transaction accounts at each depository institution that is subject to 
a three percent reserve requirement in 2012 at $71.0 million (up from 
$58.8 million in 2011). This amount is known as the low reserve 
tranche. The adjustments to both of these amounts are derived using 
statutory formulas specified in the Federal Reserve Act.
    The Board is also announcing changes in two other amounts, the 
nonexempt deposit cutoff level and the reduced reporting limit, that 
are used to determine the frequency at which depository institutions 
must submit deposit reports.

DATES: Effective date: December 5, 2011.
    Compliance dates: For depository institutions that report deposit 
data weekly, the new low reserve tranche and reserve requirement 
exemption amount will apply to the fourteen-day reserve computation 
period that begins Tuesday, November 29, 2011, and the corresponding 
fourteen-day reserve maintenance period that begins Thursday, December 
29, 2011. For depository institutions that report deposit data 
quarterly, the new low reserve tranche and reserve requirement 
exemption amount will apply to the seven-day reserve computation period 
that begins Tuesday, December 20, 2011, and the corresponding seven-day 
reserve maintenance period that begins Thursday, January 19, 2012. For 
all depository institutions, these new values of the nonexempt deposit 
cutoff level, the reserve requirement

[[Page 68065]]

exemption amount, and the reduced reporting limit will be used to 
determine the frequency at which a depository institution submits 
deposit reports effective in either June or September 2012.

FOR FURTHER INFORMATION CONTACT: Sophia H. Allison, Senior Counsel 
(202) 452-3565, Legal Division, or Christian S. Miller, Financial 
Analyst (202) 452-3769, Division of Monetary Affairs; for users of 
Telecommunications Device for the Deaf (TDD) only, contact (202) 263-
4869; Board of Governors of the Federal Reserve System, 20th and C 
Streets, NW., Washington, DC 20551.

SUPPLEMENTARY INFORMATION: Section 19(b)(2) of the Federal Reserve Act 
(12 U.S.C. 461(b)(2)) requires each depository institution to maintain 
reserves against its transaction accounts and nonpersonal time 
deposits, as prescribed by Board regulations, for the purpose of 
implementing monetary policy. Section 11(a)(2) of the Federal Reserve 
Act (12 U.S.C. 248(a)(2)) authorizes the Board to require reports of 
liabilities and assets from depository institutions to enable the Board 
to conduct monetary policy. The Board's actions with respect to each of 
these provisions are discussed in turn below.

Reserve Requirements

    Pursuant to section 19(b) of the Federal Reserve Act (Act), 
transaction account balances maintained at each depository institution 
are subject to reserve requirement ratios of zero, three, or ten 
percent. Section 19(b)(11)(A) of the Act (12 U.S.C. 461(b)(11)(A)) 
provides that a zero percent reserve requirement shall apply at each 
depository institution to total reservable liabilities that do not 
exceed a certain amount, known as the reserve requirement exemption 
amount. Section 19(b)(11)(B) provides that, before December 31 of each 
year, the Board shall issue a regulation adjusting the reserve 
requirement exemption amount for the next calendar year if total 
reservable liabilities held at all depository institutions increase 
from one year to the next. No adjustment is made to the reserve 
requirement exemption amount if total reservable liabilities held at 
all depository institutions should decrease during the applicable time 
period. The Act requires the percentage increase in the reserve 
requirement exemption amount to be 80 percent of the increase in total 
reservable liabilities of all depository institutions over the one-year 
period that ends on the June 30 prior to the adjustment.
    Total reservable liabilities of all depository institutions 
increased about 9.4 percent (from $4,928 billion to $5,392 billion) 
between June 30, 2010, and June 30, 2011. Accordingly, the Board is 
amending Regulation D to set the reserve requirement exemption amount 
for 2012 at $11.5 million, an increase of $0.8 million from its level 
in 2011.\1\
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    \1\ Consistent with Board practice, the low reserve tranche and 
reserve requirement exemption amounts have been rounded to the 
nearest $0.1 million.
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    Pursuant to Section 19(b)(2) of the Act (12 U.S.C. 461(b)(2)), 
transaction account balances maintained at each depository institution 
over the reserve requirement exemption amount and up to a certain 
amount, known as the low reserve tranche, are subject to a three 
percent reserve requirement. Transaction account balances over the low 
reserve tranche are subject to a ten percent reserve requirement. 
Section 19(b)(2) also provides that, before December 31 of each year, 
the Board shall issue a regulation adjusting the low reserve tranche 
for the next calendar year. The Act requires the adjustment in the low 
reserve tranche to be 80 percent of the percentage increase or decrease 
in total transaction accounts of all depository institutions over the 
one-year period that ends on the June 30 prior to the adjustment.
    Net transaction accounts of all depository institutions increased 
25.9 percent (from $944 billion to $1,188 billion) between June 30, 
2010 and June 30, 2011. Accordingly, the Board is amending Regulation D 
to increase the low reserve tranche for net transaction accounts by 
$12.2 million, from $58.8 million for 2011 to $71.0 million for 2012.
    For depository institutions that file deposit reports weekly, the 
new low reserve tranche and reserve requirement exemption amount will 
be effective for the fourteen-day reserve computation period beginning 
Tuesday, November 29, 2011, and for the corresponding fourteen-day 
reserve maintenance period beginning Thursday, December 29, 2011. For 
depository institutions that report quarterly, the new low reserve 
tranche and reserve requirement exemption amount will be effective for 
the seven-day reserve computation period beginning Tuesday, December 
20, 2011, and for the corresponding seven-day reserve maintenance 
period beginning Thursday, January 19, 2012.

2. Deposit Reports

    Section 11(b)(2) of the Federal Reserve Act authorizes the Board to 
require depository institutions to file reports of their liabilities 
and assets as the Board may determine to be necessary or desirable to 
enable it to discharge its responsibility to monitor and control the 
monetary and credit aggregates. The Board screens depository 
institutions each year and assigns them to one of four deposit 
reporting panels (weekly reporters, quarterly reporters, annual 
reporters, or nonreporters). The panel assignment for annual reporters 
is effective in June of the screening year; the panel assignment for 
weekly and quarterly reporters is effective in September of the 
screening year.
    In order to ease reporting burden, the Board permits smaller 
depository institutions to submit deposit reports less frequently than 
larger depository institutions. The Board permits depository 
institutions with net transaction accounts above the reserve 
requirement exemption amount but total transaction accounts, savings 
deposits, and small time deposits below a specified level (the 
``nonexempt deposit cutoff'') to report deposit data quarterly. 
Depository institutions with net transaction accounts above the reserve 
requirement exemption amount but with total transaction accounts, 
savings deposits, and small time deposits above the nonexempt deposit 
cutoff are required to report deposit data weekly. The Board requires 
certain large depository institutions to report weekly regardless of 
the level of their net transaction accounts if the depository 
institution's total transaction accounts, savings deposits, and small 
time deposits exceeds a specified level (the ``reduced reporting 
limit''). The nonexempt deposit cutoff level and the reduced reporting 
limit are adjusted annually, by an amount equal to 80 percent of the 
increase, if any, in total transaction accounts, savings deposits, and 
small time deposits of all depository institutions over the one-year 
period that ends on the June 30 prior to the adjustment.
    From June 30, 2010 to June 30, 2011, total transaction accounts, 
savings deposits, and small time deposits at all depository 
institutions increased 9.3 percent (from $7,473 billion to $8,171 
billion). Accordingly, the Board is increasing the nonexempt deposit 
cutoff level by $18.9 million to $ 271.5 million for 2012 (up from 
$252.6 million in 2011). The Board is also increasing the reduced 
reporting limit by $106 million

[[Page 68066]]

to $1.521 billion in 2012 (up from $1.415 billion for 2011).\2\
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    \2\ Consistent with Board practice, the nonexempt deposit cutoff 
level has been rounded to the nearest $0.1 million, and the reduced 
reporting limit has been rounded to the nearest $1 million.
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    Beginning in 2012, the boundaries of the four deposit reporting 
panels will be defined as follows. Those depository institutions with 
net transaction accounts over $11.5 million (the reserve requirement 
exemption amount) or with total transaction accounts, savings deposits, 
and small time deposits greater than or equal to $1.521 billion (the 
reduced reporting limit) are subject to detailed reporting, and must 
file a Report of Transaction Accounts, Other Deposits and Vault Cash 
(FR 2900 report) either weekly or quarterly. Of this group, those with 
total transaction accounts, savings deposits, and small time deposits 
greater than or equal to $271.5 million (the nonexempt deposit cutoff 
level) are required to file the FR 2900 report each week, while those 
with total transaction accounts, savings deposits, and small time 
deposits less than $271.5 million are required to file the FR 2900 
report each quarter. Those depository institutions with net transaction 
accounts less than or equal to $11.5 million (the reserve requirement 
exemption amount) and with total transaction accounts, savings 
deposits, and small time deposits less than $1.521 billion (the reduced 
reporting limit) are eligible for reduced reporting, and must either 
file a deposit report annually or not at all. Of this group, those with 
total deposits greater than $11.5 million (but with total transaction 
accounts, savings deposits, and small time deposits less than $1.521 
billion) are required to file the Annual Report of Deposits and 
Reservable Liabilities (FR 2910a) report annually, while those with 
total deposits less than or equal to $11.5 million are not required to 
file a deposit report. A depository institution that adjusts reported 
values on its FR 2910a report in order to qualify for reduced reporting 
will be shifted to an FR 2900 reporting panel.
    Notice and Regulatory Flexibility Act. The provisions of 5 U.S.C. 
553(b) relating to notice of proposed rulemaking have not been followed 
in connection with the adoption of these amendments. The amendments 
involve expected, ministerial adjustments prescribed by statute and by 
the Board's policy concerning reporting practices. The adjustments in 
the reserve requirement exemption amount, the low reserve tranche, the 
nonexempt deposit cutoff level, and the reduced reporting limit serve 
to reduce regulatory burdens on depository institutions. Accordingly, 
the Board finds good cause for determining, and so determines, that 
notice in accordance with 5 U.S.C. 553(b) is unnecessary. Consequently, 
the provisions of the Regulatory Flexibility Act, 5 U.S.C. 601, do not 
apply to these amendments.

List of Subjects in 12 CFR Part 204

    Banks, banking, Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, the Board is amending 12 
CFR part 204 as follows:

PART 204--RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS 
(REGULATION D)

0
1. The authority citation for part 204 continues to read as follows:

    Authority:  12 U.S.C. 248(a), 248(c), 371a, 461, 601, 611, and 
3105.


0
2. Section 204.4(f) is revised to read as follows:


Sec.  204.4  Computation of required reserves.

* * * * *
    (f) For all depository institutions, Edge and Agreement 
corporations, and United States branches and agencies of foreign banks, 
required reserves are computed by applying the reserve requirement 
ratios below to net transaction accounts, nonpersonal time deposits, 
and Eurocurrency liabilities of the institution during the computation 
period.

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            Reservable liability                 Reserve requirement
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Net Transaction Accounts:
    $0 to reserve requirement exemption      0 percent of amount.
     amount ($11.5 million).
    Over reserve requirement exemption       3 percent of amount.
     amount $11.5 million) and up to low
     reserve tranche ($71.0 million).
    Over low reserve tranche ($71.0          $1,785,000 plus 10 percent
     million).                                of amount over $71.0
                                              million.
Nonpersonal time deposits..................  0 percent.
Eurocurrency liabilities...................  0 percent.
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Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 2011-28048 Filed 11-2-11; 8:45 am]
BILLING CODE 6210-01-P