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Circular letters announce news, policy, and guidance from the Board of Governors.

May 08, 2008
Agencies Issue Proposed Rules on Risk-based Pricing Notices

The Federal Reserve Board and the Federal Trade Commission today announced proposed regulations that generally would require a creditor to provide a consumer with a risk-based pricing notice when, based in whole or in part on the consumer's credit report, the creditor offers or provides credit to the consumer on terms less favorable than the terms it offers or provides to other consumers. Risk-based pricing refers to the practice of using a consumer's credit report, which reflects his or her risk of nonpayment, in setting or adjusting the price and other terms of credit offered or extended to a particular consumer. Many creditors offer more favorable terms to consumers with better credit histories. The proposed rules would apply, with certain exceptions, to all creditors that engage in risk-based pricing. Under these rules, a risk-based pricing notice would generally be provided to the consumer after the terms of credit have been set, but before the consumer becomes contractually obligated on the credit transaction.

The proposal provides a number of different approaches that creditors may use to identify the consumers to whom they must provide risk-based pricing notices. In addition, the proposed rule includes certain exceptions to the notice requirement. The most significant of the exceptions permits creditors, in lieu of providing a risk-based pricing notice to those consumers who receive less favorable terms, to provide all of their consumers with their credit scores and explanatory information.
Press Release

May 06, 2008
Federal Reserve Announces Results of Auction of $75 Billion in 28-Day Credit Held on May 5, 2008

On May 5, 2008, the Federal Reserve conducted an auction of $75 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate:	2.220 percent
Total propositions submitted:	$96.618 billion
Total propositions accepted:	$75.000 billion
Bid/cover ratio:	1.29
Number of bidders:	71

Bids at the stop-out rate were prorated at 92.52% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on May 8, 2008, and will mature on June 5, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by noon EDT on May 6, 2008. Participants have until 3:00 p.m. EDT on May 6, 2008, to inform their local Reserve Bank of any error.

May 05, 2008
Federal Reserve Will Offer $75 Billion in 28-Day Credit Through Its Term Auction Facility Today

On May 5, 2008, the Federal Reserve will offer $75 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters

Offering Amount:	$75 billion
Term:	28-day loan
Bid Submission Date:	May 5, 2008
Opening Time:	11 a.m. EDT
Closing Time:	1 p.m. EDT
Notification Date:	May 6, 2008
Settlement Date:	May 8, 2008
Maturity Date:	June 5, 2008
Minimum Bid Amount (per bid):	$5 million
Bid Increment:	$100,000
Maximum Bid Amount(per institution):	$7.5 billion (10% of Offering Amount)
Minimum Bid Rate:	2.00 percent
Incremental Bid Rate:	0.001 percent
Minimum Award:	$10,000
Maximum Award:	$7.5 billion (10% of Offering Amount)

Submission of Bids
Participants must submit bids by phone to their local Reserve Bank between the opening time and closing time on the bid submission date.

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and noon EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 3:00 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

Rounding Convention
Pro rata awards will be rounded to multiples of $10,000. Normal rounding convention will be used, except that awards under $10,000 will be rounded to $10,000.

May 02, 2008
Federal Reserve, European Central Bank, and Swiss National Bank Announce an Expansion of Liquidity Measures

The Federal Reserve announced today an increase in the amounts auctioned to eligible depository institutions under its biweekly Term Auction Facility (TAF) from $50 billion to $75 billion, beginning with the auction on May 5. This increase will bring the amounts outstanding under the TAF to $150 billion.

In conjunction with the increase in the size of the TAF, the Federal Open Market Committee has authorized further increases in its existing temporary reciprocal currency arrangements with the European Central Bank (ECB) and the Swiss National Bank (SNB). These arrangements will now provide dollars in amounts of up to $50 billion and $12 billion to the ECB and the SNB, respectively, representing increases of $20 billion and $6 billion. The FOMC extended the term of these reciprocal currency arrangements through January 30, 2009.

In addition, the Federal Open Market Committee authorized an expansion of the collateral that can be pledged in the Federal Reserve's Schedule 2 Term Securities Lending Facility (TSLF) auctions. Primary dealers may now pledge AAA/Aaa-rated asset-backed securities, in addition to already eligible residential- and commercial-mortgage-backed securities and agency collateralized mortgage obligations, beginning with the Schedule 2 TSLF auction to be announced on May 7, 2008, and to settle on May 9, 2008. The wider pool of collateral should promote improved financing conditions in a broader range of financial markets. Treasury securities, agency securities, and agency mortgage-backed securities continue to be eligible as collateral in Schedule 1 TSLF auctions.
Press Release

May 02, 2008
Federal Reserve Proposes Rules to Prohibit Unfair Practices Regarding Credit Cards and Overdraft Services

The Federal Reserve Board on Friday proposed rules to prohibit unfair practices regarding credit cards and overdraft services that would, among other provisions, protect consumers from unexpected increases in the rate charged on pre-existing credit card balances.

The rules, proposed for public comment under the Federal Trade Commission Act (FTC Act), also would forbid banks from imposing interest charges using the "two-cycle" billing method, would require that consumers receive a reasonable amount of time to make their credit card payments, and would prohibit the use of payment allocation methods that unfairly maximize interest charges. They also include protections for consumers that use overdraft services offered by their bank.

"The proposed rules are intended to establish a new baseline for fairness in how credit card plans operate," said Federal Reserve Chairman Ben S. Bernanke. "Consumers relying on credit cards should be better able to predict how their decisions and actions will affect their costs."

The proposed changes to the Board's Regulation AA (Unfair or Deceptive Acts or Practices) would be complemented by separate proposals that the Board is issuing under the Truth in Lending Act (Regulation Z) and the Truth in Savings Act (Regulation DD).

The provisions addressing credit card practices are part of the Board's ongoing effort to enhance protections for consumers who use credit cards, and follow the Board's 2007 proposal to improve the credit card disclosures under the Truth in Lending Act. The FTC Act proposal includes five key protections for consumers that use credit cards:

• Banks would be prohibited from increasing the rate on a pre-existing credit card balance (except under limited circumstances) and must allow the consumer to pay off that balance over a reasonable period of time.
• Banks would be prohibited from applying payments in excess of the minimum in a manner that maximizes interest charges.
• Banks would be required to give consumers the full benefit of discounted promotional rates on credit cards by applying payments in excess of the minimum to any higher-rate balances first, and by providing a grace period for purchases where the consumer is otherwise eligible.
• Banks would be prohibited from imposing interest charges using the "two-cycle" method, which computes interest on balances on days in billing cycles preceding the most recent billing cycle.
• Banks would be required to provide consumers a reasonable amount of time to make payments.

The proposal would also address subprime credit cards by limiting the fees that reduce the available credit. In addition, banks that make firm offers of credit advertising multiple rates or credit limits would be required to disclose in the solicitation the factors that determine whether a consumer will qualify for the lowest rate and highest credit limit.

The Board's proposal under the FTC Act also addresses acts or practices in connection with a bank's payment of overdrafts on a deposit account, whether the overdraft is created by check, a withdrawal at an automated teller machine, a debit card purchase, or other transactions. The proposal requires institutions to provide consumers with notice and an opportunity to opt out of the payment of overdrafts, before any overdraft fees or charges may be imposed on consumers' accounts.
Press Release

April 30, 2008
FOMC Statement

The Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points to 2 percent.

Recent information indicates that economic activity remains weak. Household and business spending has been subdued and labor markets have softened further. Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters.

Although readings on core inflation have improved somewhat, energy and other commodity prices have increased, and some indicators of inflation expectations have risen in recent months. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook remains high. It will be necessary to continue to monitor inflation developments carefully.

The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Gary H. Stern; and Kevin M. Warsh. Voting against were Richard W. Fisher and Charles I. Plosser, who preferred no change in the target for the federal funds rate at this meeting.

In a related action, the Board of Governors unanimously approved a 25-basis-point decrease in the discount rate to 2-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Cleveland, Atlanta, and San Francisco.

April 22, 2008
Federal Reserve Announces Results of Auction of $50 Billion in 28-Day Credit Held on April 21, 2008

On April 21, 2008, the Federal Reserve conducted an auction of $50 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Bids at the stop-out rate were prorated at 75.28% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on April 24, 2008, and will mature on May 22, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by noon EDT on April 22, 2008. Participants have until 3:00 p.m. EDT on April 22, 2008, to inform their local Reserve Bank of any error.

April 21, 2008
Federal Reserve Will Offer $50 Billion in 28-Day Credit Through Its Term Auction Facility Today

On April 21, 2008, the Federal Reserve will offer $50 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters

Offering Amount:	$50 billion
Term:	28-day loan
Bid Submission Date:	April 21, 2008
Opening Time:	11 a.m. EDT
Closing Time:	1 p.m. EDT
Notification Date:	April 22, 2008
Settlement Date:	April 24, 2008
Maturity Date:	May 22, 2008
Minimum Bid Amount (per bid):	$5 million
Bid Increment:	$100,000
Maximum Bid Amount(per institution):	$5 billion (10% of Offering Amount)
Minimum Bid Rate:	2.05 percent
Incremental Bid Rate:	0.001 percent
Minimum Award:	$10,000
Maximum Award:	$5 billion (10% of Offering Amount)

Submission of Bids
Participants must submit bids by phone to their local Reserve Bank between the opening time and closing time on the bid submission date.

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and noon EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 3:00 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

Rounding Convention
Pro rata awards will be rounded to multiples of $10,000. Normal rounding convention will be used, except that awards under $10,000 will be rounded to $10,000.

April 08, 2008
Federal Reserve announces results of auction of $50 billion in 28-day credit held on April 7, 2008

On April 7, 2008, the Federal Reserve conducted an auction of $50 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Bids at the stop-out rate were prorated at 67.70% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on April 10, 2008, and will mature on May 8, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by noon EDT on April 8, 2008. Participants have until 3:00 p.m. EDT on April 8, 2008, to inform their local Reserve Bank of any error.
Press Release

April 07, 2008
Federal Reserve Will Offer $50 Billion in 28-Day Credit Through Its Term Auction Facility Today

On April 7, 2008, the Federal Reserve will offer $50 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters

Offering Amount:	$50 billion
Term:	28-day loan
Bid Submission Date:	April 7, 2008
Opening Time:	11 a.m. EDT
Closing Time:	1 p.m. EDT
Notification Date:	April 8, 2008
Settlement Date:	April 10, 2008
Maturity Date:	May 8, 2008
Minimum Bid Amount (per bid):	$5 million
Bid Increment:	$100,000
Maximum Bid Amount(per institution):	$5 billion (10% of Offering Amount)
Minimum Bid Rate:	2.11 percent
Incremental Bid Rate:	0.001 percent
Minimum Award:	$10,000
Maximum Award:	$5 billion (10% of Offering Amount)

Submission of Bids
Participants must submit bids by phone to their local Reserve Bank between the opening time and closing time on the bid submission date.

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and noon EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 3:00 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

Rounding Convention
Pro rata awards will be rounded to multiples of $10,000. Normal rounding convention will be used, except that awards under $10,000 will be rounded to $10,000.

April 01, 2008
Federal Reserve System announces the availability of maps and data illustrating subprime and alt-A loan mortgage conditions across the United States

The Federal Reserve System on Tuesday announced the availability of a set of dynamic maps and data that illustrate subprime and alt-A mortgage loan conditions across the United States.

The maps, which are maintained by the Federal Reserve Bank of New York, will display regional variation in the condition of securitized, owner-occupied subprime, and alt-A mortgage loans.  The maps and data can be used to assist in the identification of existing and potential foreclosure hotspots.  This may assist community groups, which can mobilize resources to bring financial counseling and other resources to at-risk homeowners.  Policymakers can also use the maps and data to develop plans to lessen the direct and spillover impacts that delinquencies and foreclosures may have on local economies.  Local governments may use the data and maps to prioritize the expenditure of their resources for these efforts.

To access the data visit: www.newyorkfed.org/mortgagemaps/.  Monthly updates are planned.

The maps show the following information for subprime and alt-A loans for each state and most of the counties and zip codes in the United States:

• Loans per 1,000 housing units
  
• Loans in foreclosure per 1,000 housing units
  
• Loans real estate owned (REO) per 1,000 housing units
  
• Share of loans that are adjustable rate mortgages (ARMs)
  
• Share of loans for which payments are current
  
• Share of loans that are 90-plus days delinquent
  
• Share of loans in foreclosure
  
• Median combined loan-to-value ratio (LTV) at origination
  
• Share of loans with low credit score (FICO) and high LTV at origination
  
• Share of loans with low- or no documentation
  
• Share of ARMs with initial reset in the next 12 months
  
• Share of loans with a late payment in the past 12 months

Accompanying data tables report further statistics for states.  The maps and data are drawn from the FirstAmerican CoreLogic, LoanPerformance Loan Level Data Set.  For more details, see the website's technical appendices to the map and the data tables.

Additional mortgage foreclosure resources, including helpful information and links to agencies and organizations that may provide assistance to consumers experiencing difficulty making their mortgage payments, are available on the Board's website at: http://www.federalreserve.gov/pubs/foreclosure/default.htm
Press Release

March 31, 2008
Federal Reserve Banks Announce Restructuring Schedule Changes

The Federal Reserve Banks today announced modifications to the schedule for previously announced check processing infrastructure changes as consumers and businesses continue the shift from using paper checks toward electronic payments and as financial institutions rapidly adopt electronic check processing.

In June 2007, the Federal Reserve Banks selected Philadelphia, Cleveland, Atlanta, and Dallas as regional check processing sites that are expected to provide a full range of paper check processing services and receive processing volume from other sites in a phased transition. Other remaining sites will have their operations scaled back. These scaled-back sites will all print substitute checks, but some will also capture paper check images for processing.

The revised schedule will take effect immediately, with seven sites transitioning in 2008 as opposed to the five that were originally scheduled. Also, the overall transition schedule has been shortened and is set to conclude in early 2010 instead of early 2011. The Reserve Banks will continue to review their check infrastructure annually to respond to further change within the nation's payments system and to meet statutory requirements for long-term cost recovery.

"The transition in consumer and business preferences from paper checks to electronic payments is moving at a very brisk pace. The revised schedule announced today enables the Reserve Banks to continue to provide high-quality check processing services to depository institutions throughout the country. Today's announcement also supports our business strategy to use the authority provided by Check 21 to collect more checks electronically, reducing the reliance on the physical transportation of checks," said Gary Stern, chairman of the Reserve Banks' Financial Services Policy Committee and president of the Federal Reserve Bank of Minneapolis.

Today's announcement marks the Reserve Banks' sixth annual review of their check infrastructure. Since 2003, the Reserve Banks have reduced the locations where they process checks from 45 to 18.  The accelerated schedule for 2008 includes five sites converting to print-only locations (Kansas City, Mo.; Memphis, Tenn.; Cincinnati; Windsor Locks, Conn.; and Jacksonville, Fla.), one site (Seattle) converting to a capture and print site, and one site that just closed (Utica, N.Y.).

The table below describes the revised schedule for each Reserve Bank location.

Check Processing Infrastructure Revised Schedule

The Reserve Banks earned revenues the last three years that exceeded the actual and imputed costs of providing check services to depository institutions as well as their targeted level of profitability. But check volumes have continued to decline, and further decline is anticipated in the coming years. The most recent Federal Reserve study of the nation's payment system revealed that about 30 billion checks were paid in the United States in 2006--down from 37 billion in 2003 and 42 billion in 2001--as electronic payments, including those made by credit cards, debit cards, and automated clearinghouse transactions, increased considerably.

The Federal Reserve Banks' long-term check processing strategy is to reduce costs and restructure their check processing operations in line with declining check volumes while encouraging the greater use of electronics in the collection of checks. This strategy will allow the Reserve Banks to meet the expectations of the 1980 Monetary Control Act. That act requires the Federal Reserve to set prices to recover, over the long run, its total operating costs of providing payment services to depository institutions, as well as the imputed costs it would have incurred and the profits it would have expected to earn had the services been provided by a private business firm.

Fact Sheet

March 28, 2008
Federal Reserve Will Offer $50 Billion in 28-Day Credit Through Its Term Auction Facility on April 7 and April 21, 2008

March 25, 2008
Federal Reserve Announces Results of Auction of $50 Billion in 28-Day Credit Held on March 24, 2008

Bids at the stop-out rate were prorated at 98.87% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on March 27, 2008, and will mature on April 24, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by noon EDT on March 25, 2008. Participants have until 3:00 p.m. EDT on March 25, 2008, to inform their local Reserve Bank of any error.

March 25, 2008
Federal Reserve Study Reveals Biggest Share of Checks are Consumer to Business

The Federal Reserve's 2007 study of the composition of the check market released today shows that nearly 50 percent of checks written are consumer-to-business checks. The Check Sample Study reports on the composition of the check market based on responses from nine large financial institutions that together account for about one quarter of total U.S. paid check volume. The study, which categorizes the use of checks by payer, payee, and purpose, is the third component of the 2007 Federal Reserve Payments Study. Results of the first two components of the study were released December 10, 2007.

The highest percentage of check payers (writers) were consumers at 58 percent, while the highest percentage of check payees (receivers) were businesses at 72 percent. The check purpose with the highest percentage was remittance payments (payments to business and government payees that do not occur at the point of sale) at 49 percent.

The summary report of the 2007 Federal Reserve Payments Study revealed that 2.6 billion consumer checks were converted and cleared as automated clearinghouse (ACH) payments rather than check payments in 2006, an eight-fold increase over 2003. The Check Sample Study found that 42 percent of checks sampled were ineligible for ACH conversion under the current National Automated Clearinghouse Association (NACHA) rules. Ineligible checks include checks such as those with missing or no signature, checks greater than $25,000, and checks from businesses and the government.

"The findings of the Fed's Check Sample Study are intended to help the Federal Reserve, the industry, and the public better understand how checks are being used and inform future payments investment decisions," said Richard Oliver, executive vice president of the Federal Reserve Bank of Atlanta and the Federal Reserve Banks' product manager for retail payments. "In 2007, the fact that much of the data needed for the Check Sample Study were available within one industry source, the Viewpointe archive, allowed for a consistent and systematic sampling methodology and the effort required of participant banks was greatly reduced from what it was when a similar study was conducted in 2001."
Press Release

March 24, 2008
Federal Reserve Will Offer $50 Billion in 28-Day Credit Through Its Term Auction Facility Today

On March 24, 2008, the Federal Reserve will offer $50 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters

Offering Amount:	$50 billion
Term:	28-day loan
Bid Submission Date:	March 24, 2008
Opening Time:	11 a.m. EDT
Closing Time:	1 p.m. EDT
Notification Date:	March 25, 2008
Settlement Date:	March 27, 2008
Maturity Date:	April 24, 2008
Minimum Bid Amount (per bid):	$5 million
Bid Increment:	$100,000
Maximum Bid Amount(per institution):	$5 billion (10% of Offering Amount)
Minimum Bid Rate:	2.19 percent
Incremental Bid Rate:	0.001 percent
Minimum Award:	$10,000
Maximum Award:	$5 billion (10% of Offering Amount)

Submission of Bids
Participants must submit bids by phone to their local Reserve Bank between the opening time and closing time on the bid submission date.

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and noon EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 3:00 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

Rounding Convention
Pro rata awards will be rounded to multiples of $10,000. Normal rounding convention will be used, except that awards under $10,000 will be rounded to $10,000.

March 21, 2008
Agencies Release Proposed Revisions to Interagency Questions and Answers Regarding Flood Insurance

The federal bank, thrift, credit union, and Farm Credit System regulatory agencies today requested public comment on new and revised interagency questions and answers regarding flood insurance.

The Interagency Questions and Answers Regarding Flood Insurance were first published in 1997 under the auspices of the Federal Financial Institutions Examination Council. The agencies are proposing new questions and answers, as well as substantive and technical revisions to the existing guidance, to help financial institutions meet their responsibilities under federal flood insurance legislation and to increase public understanding of the flood insurance regulations. The proposed changes include substantive modifications to questions and answers pertaining to construction loans and condominiums. The agencies are also proposing new questions and answers in a number of areas, including second lien mortgages, the imposition of civil money penalties, and loan syndications/participations. Finally, the agencies are proposing to revise and reorganize certain existing questions and answers to clarify areas of potential misunderstanding and to provide clearer guidance to users.

After public comments are received and considered and the Interagency Questions and Answers are final, they would supersede the 1997 Interagency Questions and Answers and supplement other guidance or interpretations issued by the agencies and the Federal Emergency Management Agency.

The agencies invite comment on the proposed changes and, more generally, on other issues regarding compliance with the federal flood insurance statutes and regulations. Comments are due May 20, 2008.
Press Release

March 18, 2008
FOMC Statement

The Federal Open Market Committee decided today to lower its target for the federal funds rate 75 basis points to 2-1/4 percent.

Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer spending has slowed and labor markets have softened. Financial markets remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters.

Inflation has been elevated, and some indicators of inflation expectations have risen. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook has increased. It will be necessary to continue to monitor inflation developments carefully.

Today's policy action, combined with those taken earlier, including measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain. The Committee will act in a timely manner as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Gary H. Stern; and Kevin M. Warsh. Voting against were Richard W. Fisher and Charles I. Plosser, who preferred less aggressive action at this meeting.

In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 2-1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, and San Francisco.

March 16, 2008
Federal Reserve Announces Two Initiatives Designed to Bolster Market Liquidity and Promote Orderly Market Functioning

The Federal Reserve on Sunday announced two initiatives designed to bolster market liquidity and promote orderly market functioning. Liquid, well-functioning markets are essential for the promotion of economic growth.

First, the Federal Reserve Board voted unanimously to authorize the Federal Reserve Bank of New York to create a lending facility to improve the ability of primary dealers to provide financing to participants in securitization markets. This facility will be available for business on Monday, March 17. It will be in place for at least six months and may be extended as conditions warrant. Credit extended to primary dealers under this facility may be collateralized by a broad range of investment-grade debt securities. The interest rate charged on such credit will be the same as the primary credit rate, or discount rate, at the Federal Reserve Bank of New York.

Second, the Federal Reserve Board unanimously approved a request by the Federal Reserve Bank of New York to decrease the primary credit rate from 3-1/2 percent to 3-1/4 percent, effective immediately. This step lowers the spread of the primary credit rate over the Federal Open Market Committee’s target federal funds rate to 1/4 percentage point. The Board also approved an increase in the maximum maturity of primary credit loans to 90 days from 30 days.

The Board also approved the financing arrangement announced by JPMorgan Chase & Co. and The Bear Stearns Companies Inc.

March 11, 2008
Federal Reserve Announces Results of Auction of $50 Billion in 28-Day Credit Held on March 10, 2008

On March 10, 2008, the Federal Reserve conducted an auction of $50 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Bids at the stop-out rate were prorated at 15.88% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on March 13, 2008, and will mature on April 10, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by noon EDT on March 11, 2008. Participants have until 3:00 p.m. EDT on March 11, 2008, to inform their local Reserve Bank of any error.

March 11, 2008
Federal Reserve and Other Central Banks Announce Specific Measures Designed to Address Liquidity Pressures in Funding Markets

The Federal Reserve announced today an expansion of its securities lending program. Under this new Term Securities Lending Facility (TSLF), the Federal Reserve will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days (rather than overnight, as in the existing program) by a pledge of other securities, including federal agency debt, federal agency residential-mortgage-backed securities (MBS), and non-agency AAA/Aaa-rated private-label residential MBS. The TSLF is intended to promote liquidity in the financing markets for Treasury and other collateral and thus to foster the functioning of financial markets more generally. As is the case with the current securities lending program, securities will be made available through an auction process. Auctions will be held on a weekly basis, beginning on March 27, 2008. The Federal Reserve will consult with primary dealers on technical design features of the TSLF.

In addition, the Federal Open Market Committee has authorized increases in its existing temporary reciprocal currency arrangements (swap lines) with the European Central Bank (ECB) and the Swiss National Bank (SNB). These arrangements will now provide dollars in amounts of up to $30 billion and $6 billion to the ECB and the SNB, respectively, representing increases of $10 billion and $2 billion. The FOMC extended the term of these swap lines through September 30, 2008.

The actions announced today supplement the measures announced by the Federal Reserve on Friday to boost the size of the Term Auction Facility to $100 billion and to undertake a series of term repurchase transactions that will cumulate to $100 billion.
Press Release

March 10, 2008
Federal Reserve Will Offer $50 Billion in 28-Day Credit Through Its Term Auction Facility Today

On March 10, 2008, the Federal Reserve will offer $50 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Submission of Bids
Participants must submit bids by phone to their local Reserve Bank between the opening time and closing time on the bid submission date.

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and noon EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 3:00 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

Rounding Convention
Pro rata awards will be rounded to multiples of $10,000. Normal rounding convention will be used, except that awards under $10,000 will be rounded to $10,000.
Press Release

March 07, 2008
Federal Reserve Announces Two Initiatives to Address Heightened Liquidity Pressures in Term Funding Markets

The Federal Reserve announced today two initiatives to address heightened liquidity pressures in term funding markets.

First, the amounts outstanding in the Term Auction Facility (TAF) will be increased to $100 billion. The auctions on March 10 and March 24 each will be increased to $50 billion--an increase of $20 billion from the amounts that were announced for these auctions on February 29. The Federal Reserve will increase these auction sizes further if conditions warrant. To provide increased certainty to market participants, the Federal Reserve will continue to conduct TAF auctions for at least the next six months unless evolving market conditions clearly indicate that such auctions are no longer necessary.

Second, beginning today, the Federal Reserve will initiate a series of term repurchase transactions that are expected to cumulate to $100 billion. These transactions will be conducted as 28-day term repurchase (RP) agreements in which primary dealers may elect to deliver as collateral any of the types of securities--Treasury, agency debt, or agency mortgage-backed securities--that are eligible as collateral in conventional open market operations. As with the TAF auction sizes, the Federal Reserve will increase the sizes of these term repo operations if conditions warrant.

The Federal Reserve is in close consultation with foreign central bank counterparts concerning liquidity conditions in markets. The Federal Reserve announced two initiatives to address heightened liquidity pressures in term funding markets.
Press Release

March 03, 2008
Statement to Financial Institutions Servicing Residential Mortgages on Reporting Loss Mitigation of Subprime Mortgages

Today the Federal Reserve Board encouraged the institutions it supervises to report on their loan modification efforts in a consistent way and to consider using the HOPE NOW alliance's loan modification reporting standards for their serviced loans.

"We strongly support efforts to improve the collection of data on loan-modification activities. We encourage the institutions we supervise that service subprime mortgage loans to report on their progress in a consistent way. This will make it easier for regulators, the mortgage industry, lawmakers, and homeowners to assess the effectiveness of these efforts," said Federal Reserve Board Governor Randall S. Kroszner.

Consistent loan modification reporting will foster transparency in the securitization market and provide standardized data across the mortgage industry, the Board said in a letter Monday to the institutions it supervises.

The Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the National Credit Union Administration are sending similar letters to the institutions they supervise.
Press Release

February 29, 2008
Federal Reserve Will Offer $30 Billion in 28-Day Credit through Its Term Auction Facility on March 10 and March 24, 2008

The Federal Reserve will conduct two auctions of 28-day credit through its Term Auction Facility (TAF) in March. It will offer $30 billion in an auction to be held on Monday, March 10 and $30 billion in an auction to be held on Monday, March 24.

Some technical changes in procedures will be implemented for the March auctions to improve the overall efficiency of the auction process. The minimum bid rate and other auction details will be announced at 10 a.m. EDT on Monday, the auction day. Previously, this information had been provided on the Friday before each auction. In addition, the bidding period will be shortened to two hours--from 11 a.m. to 1 p.m. EDT--from the three-hour bidding period that had been used in previous auctions. The results of each auction will be announced at 10 a.m. EDT on the Tuesday following each auction; final settlement will occur on the Thursday following each auction.

The Federal Reserve intends to conduct biweekly TAF auctions for as long as necessary to address elevated pressures in short-term funding markets. Decisions regarding auctions in April will be announced by Friday, March 28.

February 28, 2008
Request for Comment on Proposed Change to Daylight Overdraft Posting Rules Under Board's Payments System Risk Policy

The Federal Reserve Board on Thursday requested public comment on a proposed change to the daylight overdraft posting rules under its Payments System Risk (PSR) policy to align the posting times for ACH credit and debit transfers in the payments system.

Under the current posting rules, commercial and government automated clearinghouse (ACH) credit transfers processed by the Federal Reserve Banks' FedACH service are posted at 8:30 a.m. eastern time (ET), while commercial and government ACH debit transfers are posted at 11:00 a.m. ET. The Board proposes to change the posting time for commercial and government ACH debit transfers that are processed by the Reserve Banks' FedACH service to 8:30 a.m. ET to coincide with the posting time for commercial and government ACH credit transfers. In line with this change, the Board also intends, in consultation with the U.S. Treasury, to move the posting time for Treasury Tax and Loan investments associated with Electronic Federal Tax Payment System ACH debit transfers to 8:30 a.m. ET to maintain the simultaneous posting of ACH transactions and related Treasury transactions.

Comments are requested by June 4, 2008.

The Board's notice is attached. The Board also requested comments today on proposed changes to its PSR policy that are intended to loosen intraday liquidity constraints and reduce operational risk in financial markets and the payments system.
Attachment (92 KB PDF)

February 28, 2008
Request for Comment on Proposed Changes to Board's Payments System Risk Policy

The Federal Reserve Board on Thursday requested public comment on proposed changes to its Payments System Risk (PSR) policy that are intended to loosen intraday liquidity constraints and reduce operational risks in financial markets and the payments system. The Board is proposing a new strategy for providing intraday credit to depository institutions and would encourage these institutions to collateralize their daylight overdrafts.

The Board has spent several years reviewing long-term developments in intraday liquidity, operational risk, and risk management in financial markets and the payments system, including the increased use of daylight overdrafts at the Federal Reserve Banks and increased Fedwire funds transfers late in the day. The Board published a consultation paper on these issues in 2006 and received public comments. As a result of this review and the comments, the Board is proposing changes to the Federal Reserve's current strategy for providing intraday credit to the banking industry to help ease intraday liquidity constraints and reduce operational risk.

Specifically, the Board proposes to adopt a policy of supplying intraday balances to healthy depository institutions predominantly through explicitly collateralized daylight overdrafts. To avoid significantly disrupting the operation of the payments system and increasing the cost burden on a large number of institutions that incur small amounts of daylight overdrafts, the Board would allow depository institutions to pledge collateral voluntarily to secure daylight overdrafts. The proposed policy would encourage the voluntary pledging of collateral to cover daylight overdrafts by providing collateralized daylight overdrafts at a zero fee and by raising the fee for uncollateralized daylight overdrafts to 50 basis points (annual rate) from the current 36 basis points. In developing this proposal, the Board has sought to minimize the effect of the proposed policy changes on institutions that use small amounts of daylight overdrafts by increasing substantially the biweekly fee waiver to $150 from $25. The proposed policy would also involve changes to other policy provisions, including adjusting net debit caps, streamlining procedures for the expansion of daylight overdraft capacity for certain foreign banking organizations, eliminating the current deductible for daylight overdraft fees, and increasing the penalty daylight overdraft fee for ineligible institutions to 150 basis points (annual rate) from the current 136 basis points. The Board expects that a revised PSR policy could be implemented approximately two years from the adoption of a final rule.

To assist depository institutions in assessing the impact of the proposed changes on their institution, the Board has developed a simple fee calculator that will allow institutions to estimate their daylight overdraft fees under the proposed policy. The fee calculator is located on the Board’s website at https://www.federalreserve.gov/apps/RPFCalc/.

Comments are requested by June 4, 2008.

The Board's notice is attached. The Board also requested public comment today on a proposed change to the daylight overdraft posting rules under its PSR policy.
Attachment (366 KB PDF)
Payments System Risk Policy Fee Calculator

February 26, 2008
Federal Reserve Announces Results of Auction of $30 Billion in 28-Day Credit Held on February 25, 2008

On February 25, 2008, the Federal Reserve conducted an auction of $30 billion in 28-day credit through its Term Auction Facility.  Following are the results of the auction:

Bids at the stop-out rate were prorated at 69.85% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on February 28, 2008, and will mature on March 27, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by noon EST on February 26, 2008. Participants have until 3:00 p.m. EST on February 26, 2008, to inform their local Reserve Bank of any error.

February 22, 2008
Federal Reserve Will Offer $30 Billion in 28-Day Credit Through Its Term Auction Facility on February 25, 2008

On February 25, 2008, the Federal Reserve will offer $30 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this Announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters

Offering Amount:	$30 billion
Term:	28-day loan
Bid Submission Date:	February 25, 2008
Opening Time:	10 a.m. EST
Closing Time:	1 p.m. EST
Notification Date:	February 26, 2008
Settlement Date:	February 28, 2008
Maturity Date:	March 27, 2008
Minimum Bid Amount (per bid):	$5 million
Bid Increment:	$100,000
Maximum Bid Amount (per institution):	$3 billion (10% of Offering Amount)
Minimum Bid Rate:	2.81 percent
Incremental Bid Rate:	0.001 percent
Minimum Award:	$10,000
Maximum Award:	$3 billion (10% of Offering Amount)

Submission of Bids
Participants must submit bids by phone to their local Reserve Bank between the Opening Time and Closing Time on the Bid Submission Date.

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EST on the Notification Date. Between 10:00 a.m. and noon EST on the Notification Date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 3:00 p.m. EST on the Notification Date to inform their local Reserve Bank of any error.

Rounding Convention
Pro rata awards will be rounded to multiples of $10,000. Normal rounding convention will be used, except that awards under $10,000 will be rounded to $10,000.

February 12, 2008
Federal Reserve Announces Results of Auction of $30 Billion in 28-Day Credit Held on February 11, 2008

On February 11, 2008, the Federal Reserve conducted an auction of $30 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction: