[Federal Register Volume 73, Number 193 (Friday, October 3, 2008)]
[Rules and Regulations]
[Pages 57488-57490]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-22944]
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FEDERAL RESERVE SYSTEM
12 CFR Part 204
[Regulation D; Docket No. R-1297]
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 2009. 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 2009 at $10.3 million, up from $9.3 million in
2008. This amount is known as the reserve requirement exemption amount.
The Regulation D amendment also sets the amount of net transaction
accounts at each depository institution that is subject to a three
percent reserve requirement in 2009 at $44.4 million, up from $43.9
million in 2008. 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: November 3, 2008.
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, December 2, 2008, and the corresponding
fourteen-day reserve maintenance period that begins Thursday, January
1, 2009. 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 16, 2008, and the corresponding seven-day
reserve maintenance period that begins Thursday, January 15, 2009. For
all depository institutions, these new values of the nonexempt deposit
cutoff level, the reserve requirement 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 2009.
FOR FURTHER INFORMATION CONTACT: Sophia Allison, Senior Counsel (202/
452-3565), Legal Division, or Margaret Gillis DeBoer, Senior Financial
Analyst (202/452-3139), 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.
1. 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
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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 13.0 percent (from $4,211 billion to $4,760 billion) between
June 30, 2007, and June 30, 2008. Accordingly, the Board is amending
Regulation D to increase the reserve requirement exemption amount by
$1.0 million, from $9.3 million for 2008 to $10.3 million for 2009.\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
1.4 percent (from $646 billion to $655 billion) between June 30, 2007
and June 30, 2008. Accordingly, the Board is amending Regulation D (12
CFR part 204) to increase the low reserve tranche for net transaction
accounts by $0.5 million, from $43.9 million for 2008 to $44.4 million
for 2009.
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, December 2, 2008, and for the corresponding fourteen-day
reserve maintenance period beginning Thursday, January 1, 2009. 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
16, 2008, and for the corresponding seven-day reserve maintenance
period beginning Thursday, January 15, 2009.
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, 2007 to June 30, 2008, total transaction accounts,
savings deposits, and small time deposits at all depository
institutions increased 5 percent (from $6,144 billion to $6,443
billion). Accordingly, the Board is increasing the nonexempt deposit
cutoff level to $224.6 million for 2009. The Board is also increasing
the reduced reporting limit to $1,258 million for 2009.\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 2009, the boundaries of the four deposit reporting
panels will be defined as follows. Those depository institutions with
net transaction accounts over $10.3 million (the reserve requirement
exemption amount) or with total transaction accounts, savings deposits,
and small time deposits greater than or equal to $1,258 million (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 $224.6 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 $224.6 million are required to file the FR 2900
report each quarter. Those depository institutions with net transaction
accounts less than or equal to $10.3 million (the reserve requirement
exemption amount) and with total transaction accounts, savings
deposits, and small time deposits less than $1,258 million (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 $10.3 million (but with total transaction
accounts, savings deposits, and small time deposits less than $1,258
million) 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 $10.3 million are not required to
file a deposit report. A depository institution that adjusts
[[Page 57490]]
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.
0
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)
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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 204.9 is revised to read as follows:
Sec. 204.9 Reserve requirement ratios.
The following reserve requirement ratios are prescribed for all
depository institutions, banking Edge and agreement corporations, and
United States branches and agencies of foreign banks:
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Category Reserve requirement
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Net transaction accounts:
$0 to $10.3 million................ 0 percent of amount.
Over $10.3 million and up to $44.4 3 percent of amount.
million.
Over $44.4 million................. $1,023,000 plus 10 percent of
amount over $44.4 million.
Nonpersonal time deposits.............. 0 percent.
Eurocurrency liabilities............... 0 percent.
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By order of the Board of Governors of the Federal Reserve
System, acting through the Director of the Division of Monetary
Affairs under delegated authority, September 25, 2008.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. E8-22944 Filed 10-2-08; 8:45 am]
BILLING CODE 6210-01-P