[Code of Federal Regulations]
[Title 12, Volume 2]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR201.4]

[Page 7]
 
                       TITLE 12--BANKS AND BANKING
 
                   CHAPTER II--FEDERAL RESERVE SYSTEM
 
PART 201_EXTENSIONS OF CREDIT BY FEDERAL RESERVE BANKS (REGULATION A)--Table 
 
Sec.  201.4  Availability and terms of credit.

    (a) Primary credit. A Federal Reserve Bank may extend primary credit 
on a very short-term basis, usually overnight, as a backup source of 
funding to a depository institution that is in generally sound financial 
condition in the judgment of the Reserve Bank. Such primary credit 
ordinarily is extended with minimal administrative burden on the 
borrower. A Federal Reserve Bank also may extend primary credit with 
maturities up to a few weeks as a backup source of funding to a 
depository institution if, in the judgment of the Reserve Bank, the 
depository institution is in generally sound financial condition and 
cannot obtain such credit in the market on reasonable terms. Credit 
extended under the primary credit program is granted at the primary 
credit rate.
    (b) Secondary credit. A Federal Reserve Bank may extend secondary 
credit on a very short-term basis, usually overnight, as a backup source 
of funding to a depository institution that is not eligible for primary 
credit if, in the judgment of the Reserve Bank, such a credit extension 
would be consistent with a timely return to a reliance on market funding 
sources. A Federal Reserve Bank also may extend longer-term secondary 
credit if the Reserve Bank determines that such credit would facilitate 
the orderly resolution of serious financial difficulties of a depository 
institution. Credit extended under the secondary credit program is 
granted at a rate above the primary credit rate.
    (c) Seasonal credit. A Federal Reserve Bank may extend seasonal 
credit for periods longer than those permitted under primary credit to 
assist a smaller depository institution in meeting regular needs for 
funds arising from expected patterns of movement in its deposits and 
loans. An interest rate that varies with the level of short-term market 
interest rates is applied to seasonal credit.
    (1) A Federal Reserve Bank may extend seasonal credit only if:
    (i) The depository institution's seasonal needs exceed a threshold 
that the institution is expected to meet from other sources of liquidity 
(this threshold is calculated as a certain percentage, established by 
the Board of Governors, of the institution's average total deposits in 
the preceding calendar year); and
    (ii) The Federal Reserve Bank is satisfied that the institution's 
qualifying need for funds is seasonal and will persist for at least four 
weeks.
    (2) The Board may establish special terms for seasonal credit when 
depository institutions are experiencing unusual seasonal demands for 
credit in a period of liquidity strain.
    (d) Emergency credit for others. In unusual and exigent 
circumstances and after consultation with the Board of Governors, a 
Federal Reserve Bank may extend credit to an individual, partnership, or 
corporation that is not a depository institution if, in the judgment of 
the Federal Reserve Bank, credit is not available from other sources and 
failure to obtain such credit would adversely affect the economy. If the 
collateral used to secure emergency credit consists of assets other than 
obligations of, or fully guaranteed as to principal and interest by, the 
United States or an agency thereof, credit must be in the form of a 
discount and five or more members of the Board of Governors must 
affirmatively vote to authorize the discount prior to the extension of 
credit. Emergency credit will be extended at a rate above the highest 
rate in effect for advances to depository institutions.

[Reg. A, 67 FR 67786, Nov. 7, 2002]

[[Page 8]]