[Code of Federal Regulations]
[Title 12, Volume 2]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR201.5]

[Page 11]
 
                       TITLE 12--BANKS AND BANKING
 
                   CHAPTER II--FEDERAL RESERVE SYSTEM
 
PART 201--EXTENSIONS OF CREDIT BY FEDERAL RESERVE BANKS (REGULATION A)--Table of Contents
 
Sec. 201.5  Advances and discounts.

    (a) Federal Reserve Banks may lend to depository institutions either 
through advances secured by acceptable collateral or through the 
discount of certain types of paper. Credit extended by the Federal 
Reserve Banks generally takes the form of an advance.
    (b) Federal Reserve Banks may make advances to any depository 
institution if secured to the satisfaction of the Federal Reserve Bank. 
Satisfactory collateral generally includes United States government and 
Federal agency securities, and, if of acceptable quality, mortgage notes 
covering 1-4 family residences, State and local government securities, 
and business, consumer and other customer notes.
    (c) If a Federal Reserve Bank concludes that a depository 
institution will be better accommodated by the discount of paper than by 
an advance, it may discount any paper endorsed by the depository 
institution that meets therequirements specified in the FRA.

    Effective Date Note: At 67 FR 67785, Nov. 7, 2002, Sec. 201.5 was 
revised, effective Jan. 9, 2003. For the convenience of the user the 
revised text follows:

Sec. 201.5  Limitations on availability and assessments.

    (a) Lending to undercapitalized insured depository institutions. A 
Federal Reserve Bank may make or have outstanding advances to or 
discounts for a depository institution that it knows to be an 
undercapitalized insured depository institution, only:
    (1) If, in any 120-day period, advances or discounts from any 
Federal Reserve Bank to that depository institution are not outstanding 
for more than 60 days during which the institution is an 
undercapitalized insured depository institution; or
    (2) During the 60 calendar days after the receipt of a written 
certification from the chairman of the Board of Governors or the head of 
the appropriate federal banking agency that the borrowing depository 
institution is viable; or
    (3) After consultation with the Board of Governors. In unusual 
circumstances, when prior consultation with the Board is not possible, a 
Federal Reserve Bank should consult with the Board as soon as possible 
after extending credit that requires consultation under this paragraph 
(a)(3).
    (b) Lending to critically undercapitalized insured depository 
institutions. A Federal Reserve Bank may make or have outstanding 
advances to or discounts for a depository institution that it knows to 
be a critically undercapitalized insured depository institution only:
    (1) During the 5-day period beginning on the date the institution 
became a critically undercapitalized insured depository institution; or
    (2) After consultation with the Board of Governors. In unusual 
circumstances, when prior consultation with the Board is not possible, a 
Federal Reserve Bank should consult with the Board as soon as possible 
after extending credit that requires consultation under this paragraph 
(b)(2).
    (c) Assessments. The Board of Governors will assess the Federal 
Reserve Banks for any amount that the Board pays to the FDIC due to any 
excess loss in accordance with section 10B(b) of the Federal Reserve 
Act. Each Federal Reserve Bank shall be assessed that portion of the 
amount that the Board of Governors pays to the FDIC that is attributable 
to an extension of credit by that Federal Reserve Bank, up to 1 percent 
of its capital as reported at the beginning of the calendar year in 
which the assessment is made. The Board of Governors will assess all of 
the Federal Reserve Banks for the remainder of the amount it pays to the 
FDIC in the ratio that the capital of each Federal Reserve Bank bears to 
the total capital of all Federal Reserve Banks at the beginning of the 
calendar year in which the assessment is made, provided, however, that 
if any assessment exceeds 50 percent of the total capital and surplus of 
all Federal Reserve Banks, whether to distribute the excess over such 50 
percent shall be made at the discretion of the Board of Governors.