[Federal Register Volume 66, Number 103 (Tuesday, May 29, 2001)]
[Rules and Regulations]
[Pages 29009-29010]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-13373]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Rules
and Regulations
[[Page 29009]]
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.
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SUMMARY: The Board of Governors has amended its Regulation A on
Extensions of Credit by Federal Reserve Banks to reflect its approval
of a decrease 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.
DATES: The amendments to part 201 (Regulation A) were effective May 15,
2001. 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, at (202) 452-3259, Board of Governors of the Federal Reserve
System, 20th and C Streets NW., Washington, DC 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 for up to 30 days. In decreasing the basic discount
rate from 4.0 percent to 3.5 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. The
50-basis-point decrease in the discount rate was associated with a
similar decrease in the federal funds rate approved by the Federal Open
Market Committee (FOMC) and announced at the same time.
In a joint press release announcing these actions, the FOMC and the
Board of Governors noted that a significant reduction in excess
inventories seems well advanced. Consumption and housing expenditures
have held up reasonably well, though activity in these areas has
flattened recently.
Investment in capital equipment, however, has continued to decline.
The erosion in current and prospective profitability, in combination
with considerable uncertainty about the business outlook, seems likely
to hold down capital spending going forward. This potential restraint,
together with the possible effects of earlier reductions in equity
wealth on consumption and the risk of slower growth abroad, continues
to weigh on the economy.
With pressures on labor and product markets easing, inflation is
expected to remain contained. Although measured productivity growth
stalled in the first quarter, the impressive underlying rate of
increase that developed in recent years appears to be largely intact,
supporting longer-term prospects.
The FOMC continues to believe that against the background of its
long-run goals of price stability and sustainable economic growth and
of the information currently available, the risks are weighted mainly
toward conditions that may generate economic weakness in the
foreseeable future.
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 price stability and 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:
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Federal Reserve Bank Rate Effective
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Boston............................. 3.5 May 16, 2001.
New York........................... 3.5 May 15, 2001.
Philadelphia....................... 3.5 May 17, 2001.
Cleveland.......................... 3.5 May 17, 2001.
Richmond........................... 3.5 May 15, 2001.
Atlanta............................ 3.5 May 16, 2001.
Chicago............................ 3.5 May 15, 2001.
St. Louis.......................... 3.5 May 16, 2001.
Minneapolis........................ 3.5 May 17, 2001.
Kansas City........................ 3.5 May 16, 2001.
Dallas............................. 3.5 May 16, 2001.
San Francisco...................... 3.5 May 15, 2001.
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[[Page 29010]]
By order of the Board of Governors of the Federal Reserve
System, May 22, 2001.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 01-13373 Filed 5-25-01; 8:45 am]
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