Extensions of credit by Federal Reserve banks (Regulation A): Discount rate change,

[Federal Register: September 3, 1999 (Volume 64, Number 171)]

[Rules and Regulations]

[Page 48274-48275]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr03se99-6]

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 an increase 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.

EFFECTIVE DATE: The amendments to part 201 (Regulation A) were effective August 24, 1999. 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, (202) 452-3259; for users of Telecommunications Device for the Deaf (TDD), contact Diane Jenkins, (202) 452-3544, 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. In increasing the basic discount rate from 4.5 percent to 4.75 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.

With financial markets functioning more normally, and with persistent strength in domestic demand, foreign economies firming, and labor markets remaining very tight, the degree of monetary ease required to address the global financial market turmoil of last fall is no longer consistent with sustained, non-inflationary, economic expansion. The 25-basis-point increase in the discount rate was associated with a similar increase in the federal funds rate announced at the same time.

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 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............................ 4.75 August 24, 1999. New York.......................... 4.75 August 24, 1999. Philadelphia...................... 4.75 August 24, 1999. Cleveland......................... 4.75 August 24, 1999.

   [[Page 48275]]

   Richmond.......................... 4.75 August 24, 1999. Atlanta........................... 4.75 August 24, 1999. Chicago........................... 4.75 August 24, 1999. St. Louis......................... 4.75 August 24, 1999. Minneapolis....................... 4.75 August 25, 1999. Kansas City....................... 4.75 August 24, 1999. Dallas............................ 4.75 August 26, 1999. San Francisco..................... 4.75 August 24, 1999.

   By order of the Board of Governors of the Federal Reserve System, August 30, 1999. Jennifer J. Johnson, Secretary of the Board.

   [FR Doc. 99-22958Filed9-2-99; 8:45 am]

   BILLING CODE 6210-01-P