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Circular Letters


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

2014

July 30, 2014
Federal Reserve Issues FOMC Statement

Information received since the Federal Open Market Committee met in June indicates that growth in economic activity rebounded in the second quarter. Labor market conditions improved, with the unemployment rate declining further.
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July 24, 2014
Federal Reserve Study Details U.S. Payments Landscape

The 2013 Federal Reserve Payments Study report examines the payments landscape, including updated results on card use by consumers and businesses, discussion of information on third-party payments fraud, and information on emerging and alternative payments likely to replace traditional payments such as cash and checks.
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July 16, 2014
Defining "Eligible Guarantee" for Large Banks

The Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) on Wednesday announced the finalization of a technical correction to the definition of "eligible guarantee" in the agencies' risk–based capital rules.
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July 09, 2014
Minutes of the FOMC, June 17-18, 2014

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on June 17-18, 2014. A summary of economic projections made by Federal Reserve Board members and Reserve Bank presidents for the meeting is also included as an addendum to these minutes.
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July 08, 2014
Results of July 7 Seven-Day Term Deposits Offering

On July 7, 2014, the Federal Reserve conducted a fixed-rate offering of term deposits through its Term Deposit Facility. The operation offered seven-day term deposits at an interest rate of 0.30000 percent. Results are given.
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July 07, 2014
Report Published on Independent Foreclosure Review and Payment Agreement

The Federal Reserve Board on Monday published a report regarding the Independent Foreclosure Review (IFR) and the Payment Agreement that replaced the IFR. The Payment Agreement required large mortgage servicers to provide approximately $10 billion in cash payments to eligible borrowers and other foreclosure prevention assistance.
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July 03, 2014
Seven-Day Term Deposits Offering on July 7

On July 7, 2014, the Federal Reserve will conduct a fixed-rate offering of term deposits through its Term Deposit Facility (TDF). The Federal Reserve will offer seven-day term deposits with an interest rate of 0.30000 percent and a maximum tender amount of $10,000,000,000.
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July 02, 2014
Public Sections of Resolution Plans Issued

The Federal Reserve Board and the Federal Deposit Insurance Corporation (FDIC) on Wednesday released the public portions of annual resolution plans for 17 financial firms. Each plan must describe the company's strategy for rapid and orderly resolution under the U.S. Bankruptcy Code in the event of material financial distress or failure of the company.
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July 02, 2014
Host State Loan-to-Deposit Ratios Released

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency today issued the host state loan-to-deposit ratios that they will use to determine compliance with section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. These ratios update data released on July 1, 2013.
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July 01, 2014
Guidance Issued for Home Equity Lines of Credit (HELOCs)

Four federal financial institutions regulatory agencies and the Conference of State Bank Supervisors (CSBS) today issued guidance to financial institutions regarding home equity lines of credit (HELOCs) nearing their "end-of-draw" periods, which occurs when the principal amount of the HELOC must begin to be repaid.
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July 01, 2014
Results of June 30 Seven-Day Term Deposits Offering

On June 30, 2014, the Federal Reserve conducted a fixed-rate offering of term deposits through its Term Deposit Facility. The operation offered seven-day term deposits at an interest rate of 0.29000 percent. Results are given.
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June 30, 2014
Agencies Release List of Distressed or Underserved Communities

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency today announced the availability of the 2014 list of distressed or underserved nonmetropolitan middle-income geographies, where revitalization or stabilization activities will receive Community Reinvestment Act (CRA) consideration as "community development."
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June 26, 2014
Seven-Day Term Deposit Offering Scheduled June 30

On June 30, 2014, the Federal Reserve will conduct a fixed-rate offering of term deposits through its Term Deposit Facility (TDF). The Federal Reserve will offer seven-day term deposits with an interest rate of 0.29000 percent and a maximum tender amount of $10,000,000,000.
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June 26, 2014
Data Available to Evaluate Potential Systemic Risk

The Federal Reserve Board today announced the availability of data that can be used to evaluate the individual systemic footprint of 33 large U.S. bank holding companies. The data will help to ensure comparability when evaluating the systemic risk profile of each banking organization.
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June 24, 2014
Results of June 23 Seven-Day Term Deposits Offering

On June 23, 2014, the Federal Reserve conducted a fixed-rate offering of term deposits through its Term Deposit Facility. The operation offered seven-day term deposits at an interest rate of 0.28000 percent. Results are given.
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June 24, 2014
Deadline Extended for Capital Plan Resubmissions

The Federal Reserve on Tuesday announced that it has extended the deadline for capital plan resubmissions by Citigroup, Inc., HSBC North America Holdings, Inc., RBS Citizens, Inc., and Santander Holdings USA, Inc.
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June 19, 2014
Seven-Day Term Deposit Offering Scheduled June 23

On June 23, 2014, the Federal Reserve will conduct a fixed-rate offering of term deposits through its Term Deposit Facility (TDF). The Federal Reserve will offer seven-day term deposits with an interest rate of 0.28000 percent and a maximum tender amount of $10,000,000,000.
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June 18, 2014
Federal Reserve Issues FOMC Statement

The policy statement from the June 17–18 meeting of the Federal Open Market Committee (FOMC) is now available. The statement, released following each regularly scheduled FOMC meeting, includes an assessment of economic conditions since the previous meeting and information about the Committee's policy decisions.
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June 18, 2014
Economic Projections from the June 17-18 FOMC Meeting

The table and charts released on Wednesday summarize the economic projections and the target federal funds rate projections made by Federal Reserve Board members and Federal Reserve Bank presidents for the June 17–18 meeting of the Federal Open Market Committee.
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June 17, 2014
Results of June 16 Seven-Day Term Deposits Offering

On June 16, 2014, the Federal Reserve conducted a fixed-rate offering of term deposits through its Term Deposit Facility. The operation offered seven-day term deposits at an interest rate of 0.27000 percent. Results are given.
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June 13, 2014
Guidance Issued on Income Tax Allocation Agreements

Federal banking regulators on Friday issued final supplemental guidance on income tax allocation agreements involving holding companies and insured depository institutions. An aim of the guidance is to reduce confusion regarding ownership of tax refunds.
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June 12, 2014
Comment Requested on Modifying Regulations for Capital Planning, Stress Testing

The Federal Reserve Board on Thursday invited comment on a proposal to modify the regulations for capital planning and stress testing.
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June 12, 2014
Seven-Day Term Deposit Offering Scheduled June 16

On June 16, 2014, the Federal Reserve will conduct a fixed-rate offering of term deposits through its Term Deposit Facility (TDF).
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June 10, 2014
Results of June 9 Fixed-Rate Term Deposits Offering

On June 9, 2014, the Federal Reserve conducted a fixed-rate offering of term deposits through its Term Deposit Facility. The operation offered seven-day term deposits at an interest rate of 0.26000 percent.
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June 05, 2014
Seven-Day Term Deposit Offering Scheduled June 9

On June 9, 2014, the Federal Reserve will conduct a fixed-rate offering of term deposits through its Term Deposit Facility (TDF). The Federal Reserve will offer seven-day term deposits with an interest rate of 0.26000 percent and a maximum tender amount of $10,000,000,000.
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June 05, 2014
FOMC Announces Tentative 2015 Meeting Schedule

The Federal Open Market Committee on Thursday announced its tentative meeting schedule for 2015. The Chair's quarterly news conferences will take place following the March, June, September, and December meetings.
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June 04, 2014
Public Comment on Reducing Regulatory Burden Due September 2

The federal bank regulatory agencies today published the first of a series of requests for comments to identify outdated, unnecessary, or unduly burdensome regulations imposed on insured depository institutions.
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June 03, 2014
New Schedule of Margins Announced

The Federal Reserve on Tuesday announced a new schedule of margins applicable for collateral pledged by depository institutions to secure discount window loans and for payment system risk purposes.
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June 03, 2014
Results of June 2 Seven-Day Term Deposits Offering

On June 2, 2014, the Federal Reserve conducted a fixed-rate offering of term deposits through its Term Deposit Facility. The operation offered seven-day term deposits at an interest rate of 0.26000 percent.
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May 22, 2014
Seven-Day Term Deposit Offering Scheduled May 27

On May 27, 2014, the Federal Reserve will conduct a fixed-rate offering of term deposits through its Term Deposit Facility (TDF). The Federal Reserve will offer seven-day term deposits with an interest rate of 0.26000 percent and a maximum tender amount of $5,000,000,000. As noted in the Federal Reserve Board's May 9, 2014, release, this operation is part of the continuing program of operational testing of its policy tools designed to provide eligible institutions with an opportunity to gain familiarity with term deposit operations. Additional information regarding the operation is listed below; the operation will be conducted as specified in this announcement, Regulation D, and the terms and conditions of the Term Deposit Facility (http://www.frbservices.org/centralbank/term_deposit_facility.html).

Description of Operation and Tender Parameters

TDF Operation ID: F40
Operation Format: Fixed-Rate
Term: Seven-Day
Interest Rate: 0.26000%
Operation Date: Tuesday, May 27, 2014
Opening Time: 10:00 a.m. ET
Closing Time: 2:00 p.m. ET
Notification Date (summary results): Wednesday, May 28, 2014
Settlement Date: Thursday, May 29, 2014
Maturity Date: Thursday, June 05, 2014
Tender Parameters
Maximum Number of Tenders: 1
Minimum Tender Amount: $10,000
Tender Increment: $10,000
Maximum Tender Amount (per institution): $5,000,000,000
Award Minimum Amount: $10,000
Award Maximum Amount: $5,000,000,000

All tenders that are complete and compliant with the operation parameters listed above will be automatically awarded in full at the interest rate shown above. The minimum tender amount is $10,000; the maximum amount is $5,000,000,000 and should be submitted in increments of $10,000. All tenders must be submitted between the opening and closing time on the operation date.

Submission of Tender
Participants must submit tenders by accessing the Term Deposit Facility application (https://www.federalreserve.org/arrow/ARROWWeb/home.do) between the opening time and the closing time on the operation date.

Notification
Participants will be able to view their awards by accessing the Term Deposit Facility application.

Summary operation results will be published on the Board of Governors' website (http://www.federalreserve.gov/monetarypolicy/tdf.htm) at approximately 12:00 p.m. (noon) ET on the notification date.

For media inquiries, call 202-452-2955.


May 21, 2014
Results of May 19 Seven-Day Term Deposits Offering

On May 19, 2014, the Federal Reserve conducted a fixed-rate offering of term deposits through its Term Deposit Facility. The operation offered seven-day term deposits at an interest rate of 0.26000 percent. Following are the results of the operation:

TDF Operation ID: F39
Total Amount Awarded: $27,575,170,000
Number of Participants: 35

The awarded deposits will settle on May 22, 2014, and will mature on May 29, 2014. The interest rate of 0.26000 percent will apply to all awarded deposits.

For media inquiries, call 202-452-2955.


May 21, 2014
Minutes of the FOMC, April 29-30, 2014

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on April 29-30, 2014.

The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board's Annual Report. The descriptions of economic and financial conditions contained in these minutes are based solely on the information that was available to the Committee at the time of the meeting.

FOMC minutes can be viewed on the Board's website at http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm.

Minutes of the Federal Open Market Committee
April 29-30, 2014: HTML | PDF

For media inquiries, call 202-452-2955


May 15, 2014
Seven-Day Term Deposit Offering Scheduled May 19

On May 19, 2014, the Federal Reserve will conduct a fixed-rate offering of term deposits through its Term Deposit Facility (TDF). The Federal Reserve will offer seven-day term deposits with an interest rate of 0.26000 percent and a maximum tender amount of $3,000,000,000. As noted in the Federal Reserve Board's May 9, 2014, release, this operation is part of the continuing program of operational testing of its policy tools designed to provide eligible institutions with an opportunity to gain familiarity with term deposit operations. Additional information regarding the operation is listed below; the operation will be conducted as specified in this announcement, Regulation D, and the terms and conditions of the Term Deposit Facility (http://www.frbservices.org/centralbank/term_deposit_facility.html).

Description of Operation and Tender Parameters

TDF Operation ID: F39
Operation Format: Fixed-Rate
Term: Seven-Day
Interest Rate: 0.26000%
Operation Date: Monday, May 19, 2014
Opening Time: 10:00 a.m. ET
Closing Time: 2:00 p.m. ET
Notification Date (summary results): Tuesday, May 20, 2014
Settlement Date: Thursday, May 22, 2014
Maturity Date: Thursday, May 29, 2014
Tender Parameters
Maximum Number of Tenders: 1
Minimum Tender Amount: $10,000
Tender Increment: $10,000
Maximum Tender Amount (per institution): $3,000,000,000
Award Minimum Amount: $10,000
Award Maximum Amount: $3,000,000,000

All tenders that are complete and compliant with the operation parameters listed above will be automatically awarded in full at the interest rate shown above. The minimum tender amount is $10,000; the maximum amount is $3,000,000,000 and should be submitted in increments of $10,000. All tenders must be submitted between the opening and closing time on the operation date.

Submission of Tender
Participants must submit tenders by accessing the Term Deposit Facility application (https://www.federalreserve.org/arrow/ARROWWeb/home.do) between the opening time and the closing time on the operation date.

Notification
Participants will be able to view their awards by accessing the Term Deposit Facility application.

Summary operation results will be published on the Board of Governors' website (http://www.federalreserve.gov/monetarypolicy/tdf.htm) at approximately 12:00 p.m. (noon) ET on the notification date.

For media inquiries, call 202-452-2955.


May 09, 2014
Federal Reserve Announces Series of Expanded TDF Test Operations

As part of the continuing program of operational testing of its policy tools, the Federal Reserve plans to conduct a series of eight consecutive operations offering seven-day term deposits through its Term Deposit Facility (TDF). Individual operations will be held on the first business day of each week beginning the week of May 19, 2014.

The Federal Reserve currently anticipates that over the first four operations, the maximum award amount will be increased gradually to an amount not to exceed $10 billion; the interest rate paid on these initial four operations will be maintained at 26 basis points. Over the subsequent four operations, the Federal Reserve expects to increase the interest rate paid in small steps to a level not to exceed 30 basis points. Details for each of the weekly operations, including the maximum award amount, rate offered, and other terms, will be announced nearer to the time of each operation on the Board of Governors' website.

These operations are designed to ensure the operational readiness of the TDF and to provide eligible institutions with an opportunity to gain familiarity with term deposit procedures. The development of the TDF and the ongoing TDF test operations are a matter of prudent planning and have no implications for the near-term conduct of monetary policy.

Additional information, including the steps that institutions must complete to be eligible to participate in term deposit operations are available at http://www.frbservices.org/centralbank/term_deposit_facility.html off site.

For media inquiries, call 202-452-2955.


May 08, 2014
Fed Seeks Comment for Proposed Rule Implementing Dodd-Frank Section 622

The Federal Reserve Board on Thursday invited comment on a proposed rulemaking that would implement section 622 of the Dodd-Frank Act, which prohibits a financial company from combining with another company if the ratio of the resulting financial company's liabilities exceeds 10 percent of the aggregate consolidated liabilities of all financial companies.

Financial companies subject to the concentration limit would include insured depository institutions, bank holding companies, savings and loan holding companies, foreign banking organizations, companies that control insured depository institutions, and nonbank financial companies designated by the Financial Stability Oversight Council (FSOC) for Board supervision.

Consistent with section 622, the proposal generally defines liabilities of a financial institution as the difference between its risk-weighted assets, as adjusted to reflect exposures deducted from regulatory capital, and its total regulatory capital. Firms not subject to consolidated risk-based capital rules would measure liabilities using generally accepted accounting standards. The proposal would also provide that the Board would measure and disclose the aggregate liabilities of financial companies annually, and would calculate aggregate liabilities as a two-year average. The proposal reflects recommendations made by the FSOC.

Comments on the proposal should be submitted by July 8, 2014.

For media inquiries, call 202-452-2955.

Attachment (438 KB PDF)


April 30, 2014
Federal Reserve Issues FOMC Statement

Information received since the Federal Open Market Committee met in March indicates that growth in economic activity has picked up recently, after having slowed sharply during the winter in part because of adverse weather conditions. Labor market indicators were mixed but on balance showed further improvement. The unemployment rate, however, remains elevated. Household spending appears to be rising more quickly. Business fixed investment edged down, while the recovery in the housing sector remained slow. Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. Inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace and labor market conditions will continue to improve gradually, moving toward those the Committee judges consistent with its dual mandate. The Committee sees the risks to the outlook for the economy and the labor market as nearly balanced. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term.

The Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions. In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions since the inception of the current asset purchase program, the Committee decided to make a further measured reduction in the pace of its asset purchases. Beginning in May, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $20 billion per month rather than $25 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $25 billion per month rather than $30 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee's sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee's dual mandate.

The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. If incoming information broadly supports the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings. However, asset purchases are not on a preset course, and the Committee's decisions about their pace will remain contingent on the Committee's outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate. In determining how long to maintain the current 0 to 1/4 percent target range for the federal funds rate, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.

When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Richard W. Fisher; Narayana Kocherlakota; Sandra Pianalto; Charles I. Plosser; Jerome H. Powell; Jeremy C. Stein; and Daniel K. Tarullo.

Statement Regarding Purchases of Treasury Securities and Agency Mortgage-Backed Securities


April 09, 2014
Minutes of the FOMC, March 18-19, 2014

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on March 18-19, 2014 and of the conference call held on March 4, 2014. A summary of economic projections made by Federal Reserve Board members and Reserve Bank presidents for the meeting is also included as an addendum to these minutes.

The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board's Annual Report. The descriptions of economic and financial conditions contained in these minutes and in the Summary of Economic Projections are based solely on the information that was available to the Committee at the time of the meeting.

FOMC minutes can be viewed on the Board's website at http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm.

Minutes of the Federal Open Market Committee
March 4 and March 18-19, 2014: HTML | PDF


April 08, 2014
Board to Offer Extensions on Collateralized Loan Obligations Covered by Volcker Rule

The Federal Reserve Board announced today that it intends to exercise its authority to give banking entities two additional one-year extensions to conform their ownership interests in and sponsorship of certain collateralized loan obligations (CLOs) covered by section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, commonly referred to as the Volcker rule. CLOs are securitization vehicles backed predominantly by commercial loans.

Section 619 generally prohibits insured depository institutions and any company affiliated with an insured depository institution from engaging in proprietary trading and from acquiring or retaining ownership interests in, sponsoring, or having certain relationships with a hedge fund or private equity fund. These prohibitions are subject to a number of statutory exemptions, restrictions, and definitions.

Section 619 of the Dodd-Frank Act directed the Board to adopt rules for the conformance period and the Board previously extended the conformance period for all activities and investments by one year to July 21, 2015. To ensure effective compliance, the Board intends to grant banking entities two additional one-year extensions, which together would extend until July 21, 2017, to conform their ownership interests in and sponsorship of CLOs to the statute. Only CLOs in place as of December 31, 2013, that do not qualify for the exclusion in the final rule for loan securitizations would be eligible for the extension. The Board intends to act on these extensions in August of this year and the next year.

A banking entity would not have to include ownership interests in CLOs to determine its investment limits under the final rule, and a banking entity would not be required to deduct CLO investments from tier 1 capital under the final rule until the end of the relevant conformance period.

The Federal Reserve Board consulted with staffs of the other agencies charged with enforcing the requirements of section 619, including the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, and the Commodity Futures Trading Commission, and the agencies plan to administer their oversight of banking entities under their respective jurisdictions in accordance with the Board's conformance rule, including any extension of the conformance period applicable to CLOs.

For media inquiries, call 202-452-2955.

Attachment (19 KB PDF)


March 26, 2014
Board Approves Capital Plans of 25 Bank Holding Companies

The Federal Reserve on Wednesday announced it has approved the capital plans of 25 bank holding companies participating in the Comprehensive Capital Analysis and Review (CCAR). The Federal Reserve objected to the plans of the other five participating firms--four based on qualitative concerns and one because it did not meet a minimum post-stress capital requirement.

Strong capital levels help ensure that banking organizations have the ability to lend to households and businesses and to continue to meet their financial obligations, even in times of economic difficulty. Now in its fourth year, the Federal Reserve in CCAR evaluates the capital planning processes and capital adequacy of the largest bank holding companies, including the firms' proposed capital actions such as dividend payments and share buybacks and issuances.

When considering an institution's capital plan, the Federal Reserve considers both qualitative and quantitative factors. These include a firm's capital ratios under severe economic and financial market stress and the strength of the firm's capital planning process. After the Federal Reserve objects to a capital plan, the institution may only make capital distributions with prior written approval from the Federal Reserve.

"The Federal Reserve's annual capital plan assessment provides a structured and comparative way to promote and assess the capacity of large bank holding companies to understand and manage their capital positions," Federal Reserve Gov. Daniel Tarullo said. "With each year we have seen broad improvement in the industry's ability to assess its capital needs under stress and continuing improvements to the risk-measurement and -management practices that support good capital planning. However, both the firms and supervisors have more work to do as we continue to raise expectations for the quality of risk management in the nation's largest banks."

The Federal Reserve can object to a capital plan based on qualitative or quantitative concerns, or both. The Federal Reserve can require a new capital plan from an institution outside of the annual review at any time if there is a material change in the condition of an individual institution or in the economy or financial markets that could potentially lead to a change in a firm's capital position.

The Federal Reserve did not object to the capital plans for Ally Financial Inc.; American Express Company; Bank of America Corporation; The Bank of New York Mellon Corporation; BB&T Corporation; BBVA Compass Bancshares, Inc.; BMO Financial Corp.; Capital One Financial Corporation; Comerica Incorporated; Discover Financial Services; Fifth Third Bancorp; The Goldman Sachs Group, Inc.; Huntington Bancshares Incorporated; JP Morgan Chase & Co.; Keycorp; M&T Bank Corporation; Morgan Stanley; Northern Trust Corporation; The PNC Financial Services Group, Inc.; Regions Financial Corporation; State Street Corporation; SunTrust Banks, Inc.; U.S. Bancorp; UnionBanCal Corporation; and Wells Fargo & Company. Bank of America Corporation and The Goldman Sachs Group, Inc., met minimum capital requirements after submitting adjusted capital actions.

Based on qualitative concerns, the Federal Reserve objected to the capital plans of Citigroup Inc.; HSBC North America Holdings Inc.; RBS Citizens Financial Group, Inc.; and Santander Holdings USA, Inc. The Federal Reserve objected to the capital plan of Zions Bancorporation because the firm did not meet the minimum, post-stress tier-1 common ratio of 5 percent.

U.S. firms have substantially increased their capital since the first set of government stress tests in 2009. The aggregate tier 1 common equity ratio, which compares high-quality capital to risk-weighted assets, of the 30 bank holding companies in the 2014 CCAR has more than doubled from 5.5 percent in the first quarter of 2009 to 11.6 percent in the fourth quarter of 2013, reflecting an increase in tier 1 common equity of more than $511 billion to $971 billion during the same period.

That trend is expected to continue. All but two of the 30 participants in this year's CCAR are expected to build capital from the second quarter of 2014 through the first quarter of 2015. In the aggregate, the firms are expected to distribute 40 percent less than their projected net income during the same period. The 30 institutions in CCAR this year have a combined $13.5 trillion in assets, or approximately 80 percent of all U.S. bank holding company assets.

Comprehensive Capital Analysis and Review 2014: Assessment Framework and Results (PDF)

Board Votes

For media inquiries, call 202-452-2955


March 25, 2014
Results of March 24 Seven-Day Term Deposits Offering

On March 24, 2014, the Federal Reserve conducted a floating-rate offering of term deposits through its Term Deposit Facility. The operation offered seven-day term deposits with the rate set equal to the sum of the interest rate paid on excess reserves plus a fixed spread of 1 basis point.

Following are the results of the operation:

TDF Operation ID: F38
Total Amount Awarded: $14,251,000,000
Number of Participants: 27

The awarded deposits will settle on March 27, 2014, and will mature on April 3, 2014. The operation effective rate will apply to all awarded deposits.

For media inquiries, call 202-452-2955.


March 25, 2014
Fed Releases Survey Results on Mobile Financial Services

The use of mobile phones to access a bank account, credit card, or other financial account continued to increase in prevalence among adults in the United States last year, according to the Federal Reserve Board's latest report on the use of mobile financial services. As of December 2013, 33 percent of all mobile phone users and 51 percent of smartphone users had used mobile banking in the past 12 months. This is an increase from 28 percent in December 2012 for mobile phone users and 48 percent for smartphone users. The use of mobile phones to make payments at the point-of-sale has experienced substantial growth over the past several years, increasing threefold between the 2011 and 2012 surveys, and again between 2012 and 2013. In 2013, 17 percent of smartphone owners, representing 9 percent of the U.S. adult population, reported having used their phone to make a purchase at a retail store in the past 12 months.

Mobile phones are also increasingly used to help make decisions while shopping. Among smartphone owners, 44 percent had used their phone to compare prices while shopping and 42 percent had used their phones to browse product reviews in store. Over two-thirds of those who had used their phone to do price comparisons had changed where they made their purchase based on that information.

The Federal Reserve Board completed its first Survey of Consumers' Use of Mobile Financial Services in December 2011, and released a summary report in March 2012. The Board has continued to conduct the survey and release a report annually to monitor trends in the use of mobile financial services, and to understand how the rapidly expanding use of this technology affects consumer decisionmaking and the overall economy.

The Board's report looks at how consumers access their bank's services using mobile phones ("mobile banking"), at their payment for goods and services using mobile phones ("mobile payments"), as well as their use of mobile phones to inform their shopping decisions.

The most common mobile banking activities continue to be reviewing account balances, monitoring recent transactions, or transferring money between accounts. The use of mobile phones to deposit checks by taking pictures of them using the phone's camera again increased substantially between surveys, with 38 percent of mobile banking users having deposited a check with their phone in 2013.

The use of mobile financial services is particularly prevalent among the 17 percent of the population that is underbanked (people with bank accounts but who also use check cashers, payday lenders, auto title loans, pawn shops, or payroll cards). Among the 88 percent of underbanked consumers with mobile phones, 39 percent had used mobile banking in 2013. Mobile phones may also allow for the extension of financial services to an additional 10 percent of the population that is unbanked (those without a bank account), as 69 percent of this group has a mobile phone, 64 percent of which are smartphones.

While the use of mobile banking continues to increase, the report indicates that those consumers who do not use mobile banking are becoming more skeptical of the benefit of mobile banking and the level of security associated with the technology. Well over half of mobile phone owners who do not currently use mobile banking say they have no interest in using this technology. Consumers are similarly skeptical of the benefits and security of mobile point-of-sale payments, or believe it is simply easier to use another method of payment. Almost three quarters of all mobile phone owners said that they were "unlikely" or "very unlikely" to use their mobile phones to buy things at the point-of-sale if given the option.

The survey was conducted on behalf of the Board by GfK, an online consumer research firm. Data collection began December 6, 2013, and concluded on December 23, 2013. Just over 2,600 respondents completed the survey. A report summarizing the survey's mobile financial services findings may be found at: www.federalreserve.gov/econresdata/consumers-and-mobile-financial-services-report-201403.pdf

For media inquiries, call 202-452-2955


March 24, 2014
Full Corrected Results for the 2014 Dodd-Frank Act Stress Test Released

The Federal Reserve on Monday issued full corrected results for the 2014 Dodd-Frank Act stress test.

As announced on Friday, the Federal Reserve adjusted the stress test results to address inconsistencies in the treatment of the fourth quarter 2013 actual capital actions and assumptions about preferred and employee compensation-related issuance over the course of the planning horizon.

Dodd-Frank Act Stress Test 2014: Supervisory Stress Test Methodology and Results (PDF)

For media inquiries, call 202-452-2955.


March 24, 2014
Proposed Rule on Minimum Requirements for Appraisal Management Companies

Six agencies today issued a proposed rule that would implement minimum requirements for state registration and supervision of appraisal management companies (AMCs). An AMC is an entity that serves as an intermediary between appraisers and lenders and provides appraisal management services.

In accordance with section 1124 of Title XI of the Financial Institution Reform, Recovery, and Enforcement Act of 1989, as added by section 1473 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the minimum requirements in the proposed rule would apply to states that elect to establish an appraiser certifying and licensing agency with the authority to register and supervise AMCs.

The proposed rule would not compel a state to establish an AMC registration and supervision program, and there is no penalty imposed on a state that does not establish a regulatory structure for AMCs. However, an AMC is barred by section 1124 from providing appraisal management services for federally related transactions in a state that has not established such a regulatory structure.

Under the proposed rule, participating states would require that an AMC:

  • Register in the state and be subject to its supervision;
  • Use only state-certified or licensed appraisers for federally related transactions, such as real estate-related financial transactions overseen by a federal financial institution regulatory agency that require appraiser services;
  • Require that appraisals comply with the Uniform Standards of Professional Appraisal Practice;
  • Ensure selection of a competent and independent appraiser; and
  • Establish and comply with processes and controls reasonably designed to ensure that appraisals comply with the appraisal independence standards established under the Truth in Lending Act.

The proposed rule also would require that the certifying and licensing agency of a participating state have certain authorities, including the authority to:

  • Approve or deny initial AMC registration applications and applications for renewals;
  • Examine the AMC and require the AMC to submit relevant information to the state;
  • Verify that the appraisers on the AMC's appraiser network or panel hold valid state certifications or licenses;
  • Conduct investigations of AMCs to assess potential violations of appraisal-related laws;
  • Discipline an AMC that violates appraisal-related laws; and
  • Report an AMC's violation of appraisal-related laws, as well as disciplinary and enforcement actions, and other pertinent information about an AMC's operations to the Appraisal Subcommittee of the Federal Financial Institutions Examination Council.

The proposed rule would provide participating states 36 months after its effective date to implement the minimum requirements. An AMC that is a subsidiary of a financial institution and regulated by a federal financial institution regulatory agency is required by section 1124 and the proposed rule to meet the same minimum requirements as other AMCs, although such an AMC is not required to register with a state.

In conjunction with the proposal, the Federal Deposit Insurance Corporation is proposing to rescind appraisal regulations promulgated by the former Office of Thrift Supervision (OTS). The OTS appraisal regulations are duplicative of the FDIC's appraisal regulations in Part 323. Similarly, in a separate rulemaking, the Office of the Comptroller of the Currency is rescinding appraisal regulations promulgated by the former OTS.

The proposal is being issued jointly by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Consumer Financial Protection Bureau, the Federal Housing Finance Agency, and the National Credit Union Administration.

The Federal Register notice is attached. The agencies are seeking comments from the public on all aspects of the proposal. The public will have 60 days to review and comment on the proposal and the proposed Paperwork Reduction Act analysis. Publication of the proposal in the Federal Register is expected shortly.

Comments on this proposal: Submit | View

Board Votes

Attachment (367 KB PDF)

Media Contacts:
OCC Stephanie Collins (202) 649-6870
Federal Reserve Susan Stawick (202) 452-2955
FDIC Greg Hernandez (202) 898-6984
CFPB Sam Gilford (202) 435-7673
FHFA Corinne Russell (202) 649-3032
NCUA Ben Hardaway (703) 518-6333

March 21, 2014
Seven-Day Term Deposit Offering Scheduled March 24

On March 24, 2014, the Federal Reserve will conduct a floating-rate offering of term deposits through its Term Deposit Facility (TDF). As noted in the Federal Reserve Board's February 21, 2014, release, this operation will have a term of seven days and the rate will be set equal to the sum of the interest rate paid on excess reserves (currently 25 basis points) plus a fixed spread of 1 basis point, resulting in an effective rate of 26 basis points. The maximum tender amount will be $1,250,000,000.

This operation is part of ongoing small-value operations designed to provide eligible institutions with an opportunity to gain familiarity with term deposit operations. Additional information regarding the operation is listed below; the operation will be conducted as specified in this announcement, Regulation D, and the terms and conditions of the Term Deposit Facility (http://www.frbservices.org/centralbank/term_deposit_facility.html).

Description of Operation and Tender Parameters

TDF Operation ID: F38
Operation Format: Floating-Rate
Term: Seven-Day
Reference Rate: Interest rate paid on excess reserves (IOER)
Spread: 0.01000%
Operation Date: Monday, March 24, 2014
Opening Time: 10:00 a.m. ET
Closing Time: 2:00 p.m. ET
Notification Date (summary results): Tuesday, March 25, 2014
Settlement Date: Thursday, March 27, 2014
Maturity Date: Thursday, April 3, 2014
Tender Parameters
Maximum Number of Tenders: 1
Minimum Tender Amount: $10,000
Tender Increment: $10,000
Maximum Tender Amount (per institution): $1,250,000,000
Award Minimum Amount: $10,000
Award Maximum Amount: $1,250,000,000

All tenders that are complete and compliant with the operation parameters listed above will be automatically awarded in full. The minimum tender amount is $10,000; the maximum amount is $1,250,000,000 and should be submitted in increments of $10,000. All tenders must be submitted between the opening and closing time on the operation date.

Submission of Tender
Participants must submit tenders by accessing the Term Deposit Facility application (https://www.federalreserve.org/arrow/ARROWWeb/home.do) between the opening time and the closing time on the operation date.

Notification
Participants will be able to view their awards by accessing the Term Deposit Facility application.

Summary operation results will be published on the Board of Governors' website (http://www.federalreserve.gov/monetarypolicy/tdf.htm) at approximately 12:00 p.m. (noon) ET on the notification date.

For media inquiries, call 202-452-2955.


March 21, 2014
Fed Releases Summary Results of Bank Stress Tests

According to the summary results of bank stress tests announced by the Federal Reserve on Thursday, the largest banking institutions in the United States are collectively better positioned to continue to lend to households and businesses and to meet their financial commitments in an extremely severe economic downturn than they were five years ago. This result reflects continued broad improvement in their capital positions since the financial crisis.

Reflecting the severity of the most extreme stress scenario—which features a deep recession with a sharp rise in the unemployment rate, a drop in equity prices of nearly 50 percent, and a decline in house prices to levels last seen in 2001—projected loan losses at the 30 bank holding companies in the latest stress tests would total $366 billion during the nine quarters of the hypothetical stress scenario. The aggregate tier 1 common capital ratio, which compares high-quality capital to risk-weighted assets, would fall from an actual 11.5 percent in the third quarter of 2013 to the minimum level of 7.6 percent in the hypothetical stress scenario. That minimum post-stress number is significantly higher than the 30 firms' actual tier 1 common ratio of 5.5 percent measured in the beginning of 2009.

Capital is important to banking organizations, the financial system, and the economy broadly because it acts as a cushion to absorb losses and helps to ensure that losses are borne by shareholders, not taxpayers. The Federal Reserve's stress scenario estimates are the outcome of deliberately stringent and conservative assessments under hypothetical economic and financial market conditions and the results are not forecasts or expected outcomes.

"The annual stress test is one of the Federal Reserve's most important tools to gauge the resiliency of the financial sector and to help ensure that the largest firms have strong capital positions," Federal Reserve Governor Daniel K. Tarullo said. "Each year we are making substantial improvements, which have helped make the process even stronger than when we first conducted the stress tests in the midst of the financial crisis five years ago."

This is the fourth round of stress tests led by the Federal Reserve since the tests in 2009 and is the second year that the Federal Reserve has conducted stress tests pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act. The changes to the tests this year are as follows:

  • In addition to the 18 institutions that have been part of the stress tests since 2009, an additional 12 firms with assets greater than $50 billion were included this year;
  • The Federal Reserve used independent projections of balance sheet and risk-weighted asset growth rather than depending on the firms' calculation for these categories as was done in prior years, improving the comparability and robustness of the results;
  • The tests included an estimate of losses that could result if a financial institution's largest counterparty were to default unexpectedly. This scenario was applied to eight firms with substantial trading or custodial operations. The counterparty default scenario is part of the global trading shock, which is applied to six firms with large trading operations; and
  • The Federal Reserve in this year's test began to phase in the revised capital framework approved by the Board in July 2013. The Federal Reserve calculated each firm's capital ratios in accordance with the capital requirements that will be in effect during each projected quarter.

In addition to releasing results under the severely adverse hypothetical scenario, the Federal Reserve also on Thursday released results from the adverse scenario, which features a more moderate recession than that seen in the severely adverse scenario, but includes a steep rise in long-term interest rates. In the adverse scenario, the aggregate tier 1 common capital ratio would fall from an actual 11.5 percent in the third quarter of 2013 to the minimum level of 9.7 percent in the hypothetical stress scenario.

The quantitative results from both the adverse and the severely adverse scenarios in the supervisory stress tests are only one component in the Federal Reserve's analysis during the Comprehensive Capital Analysis and Review (CCAR). CCAR is an annual exercise in which the Federal Reserve evaluates the capital planning processes and capital adequacy at the largest financial institutions. The latest CCAR results will be released on Wednesday, March 26, at 4 p.m. EDT. It is important to note that capital plans of firms in CCAR have been objected to on qualitative grounds even when capital ratios have exceeded all minimum post-stress capital requirements.

Dodd-Frank Act Stress Test 2014: Supervisory Stress Test Methodology and Results (PDF)

For media inquiries, call 202-452-2955.


March 19, 2014
Economic Projections from the March 18-19 FOMC Meeting

The attached table and charts released on Wednesday summarize the economic projections and the target federal funds rate projections made by Federal Reserve Board members and Federal Reserve Bank presidents for the March 18-19 meeting of the Federal Open Market Committee.

The table will be incorporated into a summary of economic projections released with the minutes of the March 18-19 meeting. Summaries of economic projections are released quarterly.

Projections (PDF) | Accessible Materials

For media inquiries, call 202-452-2955.


March 19, 2014
Federal Reserve Issues FOMC Statement

Information received since the Federal Open Market Committee met in January indicates that growth in economic activity slowed during the winter months, in part reflecting adverse weather conditions. Labor market indicators were mixed but on balance showed further improvement. The unemployment rate, however, remains elevated. Household spending and business fixed investment continued to advance, while the recovery in the housing sector remained slow. Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. Inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace and labor market conditions will continue to improve gradually, moving toward those the Committee judges consistent with its dual mandate. The Committee sees the risks to the outlook for the economy and the labor market as nearly balanced. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term.

The Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions. In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions since the inception of the current asset purchase program, the Committee decided to make a further measured reduction in the pace of its asset purchases. Beginning in April, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $25 billion per month rather than $30 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $30 billion per month rather than $35 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee's sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee's dual mandate.

The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. If incoming information broadly supports the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings. However, asset purchases are not on a preset course, and the Committee's decisions about their pace will remain contingent on the Committee's outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate. In determining how long to maintain the current 0 to 1/4 percent target range for the federal funds rate, the Committee will assess progress—both realized and expected—toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.

When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.

With the unemployment rate nearing 6-1/2 percent, the Committee has updated its forward guidance. The change in the Committee's guidance does not indicate any change in the Committee's policy intentions as set forth in its recent statements.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Richard W. Fisher; Sandra Pianalto; Charles I. Plosser; Jerome H. Powell; Jeremy C. Stein; and Daniel K. Tarullo.

Voting against the action was Narayana Kocherlakota, who supported the sixth paragraph, but believed the fifth paragraph weakens the credibility of the Committee's commitment to return inflation to the 2 percent target from below and fosters policy uncertainty that hinders economic activity.

Statement Regarding Purchases of Treasury Securities and Agency Mortgage-Backed Securities


March 18, 2014
Results of March 17 Seven-Day Term Deposits Offering

On March 17, 2014, the Federal Reserve conducted a fixed-rate offering of term deposits through its Term Deposit Facility. The operation offered seven-day term deposits at an interest rate of 0.26000 percent. Following are the results of the operation:

TDF Operation ID: F37
Total Amount Awarded: $15,413,000,000
Number of Participants: 27

 

 

 

The awarded deposits will settle on March 20, 2014, and will mature on March 27, 2014. The interest rate of 0.26000 percent will apply to all awarded deposits.

For media inquiries, call 202-452-2955.


March 13, 2014
Fed to Offer Seven-Day Term Deposits on March 17

On March 17, 2014, the Federal Reserve will conduct a fixed-rate offering of term deposits through its Term Deposit Facility (TDF). The Federal Reserve will offer seven-day term deposits with an interest rate of 0.26000 percent and a maximum tender amount of $1,250,000,000. As noted in the Federal Reserve Board's February 21, 2014, release, this operation is part of ongoing small-value operations designed to provide eligible institutions with an opportunity to gain familiarity with term deposit operations. Additional information regarding the operation is listed below; the operation will be conducted as specified in this announcement, Regulation D, and the terms and conditions of the Term Deposit Facility (http://www.frbservices.org/centralbank/term_deposit_facility.html).

Description of Operation and Tender Parameters

TDF Operation ID: F37
Operation Format: Fixed-Rate
Term: Seven-Day
Interest Rate: 0.26000%
Operation Date: Monday, March 17, 2014
Opening Time: 10:00 a.m. ET
Closing Time: 2:00 p.m. ET
Notification Date (summary results): Tuesday, March 18, 2014
Settlement Date: Thursday, March 20, 2014
Maturity Date: Thursday, March 27, 2014
Tender Parameters
Maximum Number of Tenders: 1
Minimum Tender Amount: $10,000
Tender Increment: $10,000
Maximum Tender Amount (per institution): $1,250,000,000
Award Minimum Amount: $10,000
Award Maximum Amount: $1,250,000,000

All tenders that are complete and compliant with the operation parameters listed above will be automatically awarded in full at the interest rate shown above. The minimum tender amount is $10,000; the maximum amount is $1,250,000,000 and should be submitted in increments of $10,000. All tenders must be submitted between the opening and closing time on the operation date.

Submission of Tender

Participants must submit tenders by accessing the Term Deposit Facility application (https://www.federalreserve.org/arrow/ARROWWeb/home.do) between the opening time and the closing time on the operation date.

Notification

Participants will be able to view their awards by accessing the Term Deposit Facility application.

Summary operation results will be published on the Board of Governors' website (http://www.federalreserve.gov/monetarypolicy/tdf.htm) at approximately 12:00 p.m. (noon) ET on the notification date.

For media inquiries, call 202-452-2955.


March 06, 2014
Fed to Conduct Seven-Day Term Deposits Offering

On March 10, 2014, the Federal Reserve will conduct a fixed-rate offering of term deposits through its Term Deposit Facility (TDF). The Federal Reserve will offer seven-day term deposits with an interest rate of 0.26000 percent and a maximum tender amount of $1,250,000,000. As noted in the Federal Reserve Board's February 21, 2014, release, this operation is part of ongoing small-value operations designed to provide eligible institutions with an opportunity to gain familiarity with term deposit operations. Additional information regarding the operation is listed below; the operation will be conducted as specified in this announcement, Regulation D, and the terms and conditions of the Term Deposit Facility (http://www.frbservices.org/centralbank/term_deposit_facility.html).

Description of Operation and Tender Parameters

TDF Operation ID: F36
Operation Format: Fixed-Rate
Term: Seven-Day
Interest Rate: 0.26000%
Operation Date: Monday, March 10, 2014
Opening Time: 10:00 a.m. ET
Closing Time: 2:00 p.m. ET
Notification Date (summary results): Tuesday, March 11, 2014
Settlement Date: Thursday, March 13, 2014
Maturity Date: Thursday, March 20, 2014
Tender Parameters
Maximum Number of Tenders: 1
Minimum Tender Amount: $10,000
Tender Increment: $10,000
Maximum Tender Amount (per institution): $1,250,000,000
Award Minimum Amount: $10,000
Award Maximum Amount: $1,250,000,000

All tenders that are complete and compliant with the operation parameters listed above will be automatically awarded in full at the interest rate shown above. The minimum tender amount is $10,000; the maximum amount is $1,250,000,000 and should be submitted in increments of $10,000. All tenders must be submitted between the opening and closing time on the operation date.

Submission of Tender
Participants must submit tenders by accessing the Term Deposit Facility application (https://www.federalreserve.org/arrow/ARROWWeb/home.do) between the opening time and the closing time on the operation date.

Notification
Participants will be able to view their awards by accessing the Term Deposit Facility application.

Summary operation results will be published on the Board of Governors' website (http://www.federalreserve.gov/monetarypolicy/tdf.htm) at approximately 12:00 p.m. (noon) ET on the notification date.

For media inquiries, call 202-452-2955.


March 05, 2014
Stress Test Guidance for Medium-Sized Firms

Three federal bank regulatory agencies are issuing final guidance describing supervisory expectations for stress tests conducted by financial companies with total consolidated assets between $10 billion and $50 billion.

These medium-sized companies are required to conduct annual, company-run stress tests under rules issued by the agencies in October 2012 to implement a provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act. These companies are required to perform their first stress tests under the Dodd-Frank Act by March 31, 2014.

The agencies' stress test rules are flexible to accommodate different risk profiles, sizes, business mixes, market footprints, and complexity for companies in the $10 billion to $50 billion asset range. Consistent with this flexibility, the final guidance describes general supervisory expectations for these companies' Dodd-Frank Act stress tests, and, where appropriate, provides examples of practices that would be consistent with those expectations.

The final guidance from the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency is similar to proposed guidance issued by the agencies last year. The agencies clarified certain aspects in response to comments received.

The guidance confirms that companies with assets between $10 billion and $50 billion are not subject to the Federal Reserve's capital plan rule, the Federal Reserve's annual Comprehensive Capital Analysis and Review, Dodd-Frank Act supervisory stress tests, or related data collections, which apply to bank holding companies with assets of at least $50 billion.

Media Contacts:
Federal Reserve Board Eric Kollig 202-452-2955
FDIC Greg Hernandez 202-898-6984
OCC Contact Name 202-649-6870

Attachment (348 KB PDF)


March 04, 2014
Results of March 3 Seven-Day Term Deposits Offering

On March 3, 2014, the Federal Reserve conducted a fixed-rate offering of term deposits through its Term Deposit Facility. The operation offered seven-day term deposits at an interest rate of 0.26000 percent. Following are the results of the operation:

TDF Operation ID: F35
Total Amount Awarded: $13,542,000,000
Number of Participants: 26

The awarded deposits will settle on March 6, 2014, and will mature on March 13, 2014. The interest rate of 0.26000 percent will apply to all awarded deposits.

For media inquiries, call 202-452-2955.


February 28, 2014
Comment Period on Physical Commodity Activities Extended 30 Days

The public will have an additional 30 days to comment on an advance notice of proposed rulemaking regarding physical commodity activities conducted by financial holding companies, the Federal Reserve Board said Thursday. Comments are now due April 16, 2014.

The Board is considering whether additional restrictions would help ensure that physical commodities activities of financial holding companies are conducted in a safe and sound manner and do not pose a threat to financial stability. The Board extended the comment period to allow interested persons more time to analyze the issues and prepare their comments.

For media inquiries, call 202-452-2955.

Attachment (18 KB PDF)


February 27, 2014
Fed to Offer Seven-Day Term Deposits on Monday, March 3

On March 3, 2014, the Federal Reserve will conduct a fixed-rate offering of term deposits through its Term Deposit Facility (TDF). The Federal Reserve will offer seven-day term deposits with an interest rate of 0.26000 percent and a maximum tender amount of $1,250,000,000. As noted in the Federal Reserve Board's February 21, 2014, release, this operation is part of ongoing small-value operations designed to provide eligible institutions with an opportunity to gain familiarity with term deposit operations. Additional information regarding the operation is listed below; the operation will be conducted as specified in this announcement, Regulation D, and the terms and conditions of the Term Deposit Facility (http://www.frbservices.org/centralbank/term_deposit_facility.html).

Description of Operation and Tender Parameters

TDF Operation ID: F35
Operation Format: Fixed-Rate
Term: Seven-Day
Interest Rate: 0.26000%
Operation Date: Monday, March 3, 2014
Opening Time: 10:00 a.m. ET
Closing Time: 2:00 p.m. ET
Notification Date (summary results): Tuesday, March 4, 2014
Settlement Date: Thursday, March 6, 2014
Maturity Date: Thursday, March 13, 2014
Tender Parameters
Maximum Number of Tenders: 1
Minimum Tender Amount: $10,000
Tender Increment: $10,000
Maximum Tender Amount (per institution): $1,250,000,000
Award Minimum Amount: $10,000
Award Maximum Amount: $1,250,000,000

All tenders that are complete and compliant with the operation parameters listed above will be automatically awarded in full at the interest rate shown above. The minimum tender amount is $10,000; the maximum amount is $1,250,000,000 and should be submitted in increments of $10,000. All tenders must be submitted between the opening and closing time on the operation date.

Submission of Tender
Participants must submit tenders by accessing the Term Deposit Facility application (https://www.federalreserve.org/arrow/ARROWWeb/home.do) between the opening time and the closing time on the operation date.

Notification
Participants will be able to view their awards by accessing the Term Deposit Facility application.

Summary operation results will be published on the Board of Governors' website (http://www.federalreserve.gov/monetarypolicy/tdf.htm) at approximately 12:00 p.m. (noon) ET on the notification date.

For media inquiries, call 202-452-2955.


February 25, 2014
Board Gives Release Dates for Latest Supervisory Stress Tests Results

The Federal Reserve Board on Tuesday announced that results from the latest supervisory stress tests conducted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act will be released on Thursday, March 20, and the related results from the Comprehensive Capital Analysis and Review, or CCAR, will be released on Wednesday, March 26. Results will be released for both exercises at 4 p.m. EDT.

The Dodd-Frank Act stress tests are forward-looking exercises conducted by the Federal Reserve and large financial companies supervised by the Federal Reserve. The exercises help assess whether institutions have sufficient capital to absorb losses and support operations during adverse economic and financial market conditions over a period of nine quarters. The Dodd-Frank Act supervisory stress test results will include data such as post-stress capital ratios, revenue, and loss estimates under hypothetical adverse and severely adverse scenarios provided by the Federal Reserve. The capital ratios assume a common set of capital actions for all of the firms. The standardized capital actions used in the Dodd-Frank Act stress test results provide for comparability across the firms as they assume no changes in recent levels of dividend payments and no common stock repurchases.

CCAR is an annual exercise by the Federal Reserve to help assess whether the companies have robust, forward-looking capital planning processes that account for their unique risks and are supported by the firms' risk-measurement and -management practices. As part of the CCAR, the Federal Reserve evaluates each company's plans to make capital distributions, such as dividend payments, stock repurchases, or planned acquisitions. CCAR results will include post-stress capital ratios under hypothetical adverse and severely adverse scenarios provided by the Federal Reserve and will reflect the capital actions the companies plan to undertake during the nine-quarter period. In addition to the quantitative results, the Federal Reserve will indicate whether it has objected to a firm's capital plan based on qualitative grounds.

To see the instructions and scenarios for the 2014 Dodd-Frank Act stress tests and CCAR, go to www.federalreserve.gov/bankinforeg/stress-tests-capital-planning.htm.

For media inquiries, call 202-452-2955.


February 24, 2014
Board to Publish Semiannual Report on Banking Applications

The Federal Reserve Board on Monday announced that it will soon begin publishing a semi-annual report with aggregate data and other information regarding banking applications.

The report will be released in the second half of 2014 and include statistics on the length of time taken to process applications and notices, the number of approvals, denials, and withdrawals, and the primary reasons for withdrawals.

When the Board receives an application--for example, a proposed acquisition or a request to establish a branch--it evaluates the application in light of statutory factors, including financial condition, performance under the Community Reinvestment Act (CRA), and managerial experience. If the Board approves the application, an announcement to the public is made.

However, if issues are identified that could result in staff recommending denial of a proposal to the Federal Reserve Board, staff informs the filer of the particular issues. In some cases, the filer chooses to withdraw the application. The new report will increase transparency of the applications process by providing more detailed information to the public and supervised institutions regarding the bases for withdrawn applications.

Also on Monday, the Board released guidance describing common issues identified by the Federal Reserve that have led to recent withdrawal of applications. Some of those issues include less-than-satisfactory supervisory rating(s) for safety and soundness, consumer compliance, or CRA; inadequate compliance with the Bank Secrecy Act; and concerns regarding the financial condition or management of the proposed organization.

For media inquiries, call 202-452-2955.

SR 14-2/CA 14-1: Enhancing Transparency in the Federal Reserve's Applications Process


February 21, 2014
Fed to Conduct Term Deposit Operations in March

The Federal Reserve plans to conduct a series of seven-day term deposit operations in March under the Term Deposit Facility (TDF) as part of the ongoing program of small-value offerings announced on September 8, 2010. These small-value operations are designed to ensure the operational readiness of the TDF and to provide eligible institutions with an opportunity to gain familiarity with term deposit procedures. The development of the TDF and the ongoing small-value TDF operations are a matter of prudent planning and have no implications for the near-term conduct of monetary policy.

The Federal Reserve plans to conduct four operations of seven-day term deposits in March with the individual operations held on March 3, March 10, March 17, and March 24. The first three operations will offer fixed-rate deposits with the rate set in advance at 26 basis points, as in previous TDF operations. The last operation will employ a floating-rate format, with the rate set equal to the sum of the interest rate paid on excess reserves (currently 25 basis points) plus a fixed spread of 1 basis point, resulting in an effective rate of 26 basis points.

Further details for each of the weekly operations will be announced nearer to the time of each operation, and additional information, including the steps that institutions must complete to be eligible to participate in term deposit operations are available at http://www.frbservices.org/centralbank/term_deposit_facility.html.

For media inquiries, call 202-452-2955.


February 21, 2014
Certain Banking Organizations Permitted to Use Advanced Approaches Framework

The Federal Reserve Board and the Office of the Comptroller of the Currency on Friday permitted certain banking organizations to begin using an additional approach to determine their risk-based capital requirements.

Under the agencies' "Advanced Approaches" capital framework, which implements standards developed by the Basel Committee on Banking Supervision, firms must meet specific risk measurement and management criteria when calculating their risk-based capital requirements. The framework applies to large, internationally active banking organizations--generally those with at least $250 billion in total consolidated assets or at least $10 billion in total on-balance sheet foreign exposure--and includes the depository institution subsidiaries of those firms.

Before a banking organization may use the Advanced Approaches framework to determine its risk-based capital requirements, it must conduct a satisfactory trial, or "parallel run," using the Advanced Approaches framework. Under the supervision of its regulator, a firm must show it can comply with the Advanced Approaches framework during the parallel run period for at least four consecutive calendar quarters using risk-measurement and risk-management systems that adhere to the Advanced Approaches framework.

Eight bank holding companies, eight national banks, and four state member banks have completed their parallel run: The Bank of New York Mellon Corporation, the Bank of New York Mellon, and BNY Mellon National Association; Citigroup Inc. and Citibank, NA; The Goldman Sachs Group, Inc. and Goldman Sachs Bank USA; JPMorgan Chase & Co., JPMorgan Chase Bank, NA, Chase Bank USA National Association, and JPMorgan Bank and Trust Company, National Association; Morgan Stanley, Morgan Stanley Bank, NA, and Morgan Stanley Private Bank, NA; Northern Trust Corporation and The Northern Trust Company; State Street Corporation and State Street Bank and Trust Company; and U.S. Bancorp and U.S. Bank National Association. These firms will use the Advanced Approaches framework to calculate and publicly disclose their risk-based capital ratios beginning with the second quarter of 2014. Under the capital rules finalized by U.S. regulators in July 2013, these firms must meet the minimum risk-based capital ratios under both the Advanced Approaches and the generally applicable risk-based capital frameworks.

Also on Friday, the Federal Reserve Board issued a final rule clarifying that bank holding companies using the Advanced Approaches framework will incorporate those changes into the capital planning and stress testing cycles that begin October 1, 2015. The Board previously adopted two interim final rules requiring firms to incorporate the Advanced Approaches framework into their capital planning and stress testing cycles that begin October 1, 2014. The final rule provides the Federal Reserve and the institutions additional time to integrate the Advanced Approaches framework into their respective stress testing and capital planning processes.

Media Contacts:
Federal Reserve Board Eric Kollig 202-452-2955
OCC Stephanie Collins 202-649-6870

February 19, 2014
Board Approves Final Rule Strengthening Supervision and Regulation

The Federal Reserve Board on Tuesday approved a final rule strengthening supervision and regulation of large U.S. bank holding companies and foreign banking organizations.

The final rule establishes a number of enhanced prudential standards for large U.S. bank holding companies and foreign banking organizations to help increase the resiliency of their operations. These standards include liquidity, risk management, and capital. It also requires a foreign banking organization with a significant U.S. presence to establish an intermediate holding company over its U.S. subsidiaries, which will facilitate consistent supervision and regulation of the U.S. operations of the foreign bank. The final rule was required by section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

"As the financial crisis demonstrated, the sudden failure or near failure of large financial institutions can have destabilizing effects on the financial system and harm the broader economy," Federal Reserve Chair Janet Yellen said. "And, as the crisis also highlighted, the traditional framework for supervising and regulating major financial institutions and assessing risks contained material weaknesses. The final rule addresses these sources of vulnerability."

For U.S. bank holding companies with total consolidated assets of $50 billion or more, the final rule incorporates the previously issued capital planning and stress testing requirements as an enhanced prudential standard. It also requires such a U.S. bank holding company to comply with enhanced risk-management and liquidity risk-management standards, conduct liquidity stress tests, and hold a buffer of highly liquid assets based on projected funding needs during a 30-day stress event. These requirements will help ensure that these firms can continue to lend to households and businesses even in times of financial stress. In addition, the final rule requires publicly traded U.S. bank holding companies with total consolidated assets of $10 billion or more to establish enterprise-wide risk committees. The new requirements for U.S. bank holding companies complement the stress testing and resolution planning requirements for large bank holding companies that the Board previously finalized.

The final rule will not apply to nonbank financial companies that are designated by the Financial Stability Oversight Council for Federal Reserve supervision. Instead, the Federal Reserve Board said it will apply enhanced prudential standards to these institutions through a subsequently issued order or rule following an evaluation of the business model, capital structure, and risk profile of each designated nonbank financial company. In addition, the final rule does not implement single-counterparty credit limits or early remediation requirements for U.S. or foreign banking organizations, which will be implemented at a later date following further study.

For foreign financial institutions, the final rule recognizes that the U.S. operations of foreign banking organizations have become more complex, interconnected, and concentrated in recent years. The requirements in the final rule will bolster the capital and liquidity positions of the U.S. operations of foreign banking organizations and promote a level playing field among all banking firms operating in the United States. Foreign banking organizations with U.S. non-branch assets of $50 billion or more will be required to establish a U.S. intermediate holding company over their U.S. subsidiaries. The foreign-owned U.S. intermediate holding company generally will be subject to the same risk-based and leverage capital standards applicable to U.S. bank holding companies. The intermediate holding companies also will be subject to the Federal Reserve's rules requiring regular capital plans and stress tests.

"The most important contribution we can make to the global financial system is to ensure the stability of the U.S. financial system," Daniel K. Tarullo said.

Like U.S. bank holding companies with assets of $50 billion or more, a foreign banking organization with combined U.S. assets of $50 billion or more will be required to establish a U.S. risk committee and employ a U.S. chief risk officer to help ensure that the foreign bank understands and manages the risks of its combined U.S. operations. In addition, these foreign banking organizations will be required to meet enhanced liquidity risk-management standards, conduct liquidity stress tests, and hold a buffer of highly liquid assets based on projected funding needs during a 30-day stress event. Foreign banking organizations with total consolidated assets of $50 billion or more, but combined U.S. assets of less than $50 billion, are subject to enhanced prudential standards. However, the capital, liquidity, risk-management, and stress testing requirements applicable to these foreign banking organizations are substantially less than those applicable to foreign banking organizations with a larger U.S. presence. In addition, the final rule implements stress testing requirements for foreign banking organizations with total consolidated assets of more than $10 billion and risk committee requirements for foreign banking organizations that meet the asset threshold and are publicly traded.

The final rule for foreign banking organizations includes several adjustments in response to comments. For example, the final rule raises the threshold for requiring a U.S. intermediate holding company from $10 billion to $50 billion of U.S. non-branch assets and extends the initial compliance date for foreign banking organizations to July 1, 2016, a year later than originally proposed. The final rule also generally defers application of the leverage ratio to foreign-owned U.S. intermediate holding companies until 2018.

U.S. bank holding companies subject to the rule will need to comply by January 1, 2015.

The Federal Reserve consulted with other members of the Financial Stability Oversight Council in developing the final rule.

For media inquiries, call 202-452-2955.

Statement by Chair Janet L. Yellen

Statement by Gov. Daniel K. Tarullo

Final Rule (PDF)

Board Votes


February 19, 2014
Minutes of the FOMC, January 28–29, 2014

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on January 28-29, 2014.

The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board's Annual Report. The descriptions of economic and financial conditions contained in these minutes are based solely on the information that was available to the Committee at the time of the meeting.

FOMC minutes can be viewed on the Board's website at http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

Minutes of the Federal Open Market Committee
January 28-29, 2014: HTML | PDF


February 12, 2014
Federal Reserve Seeks Comment on Several Proposals

The Federal Reserve Board on Wednesday requested comment on proposals to repeal its Regulation DD (Truth in Savings) and Regulation P (Privacy of Consumer Financial Information) and to make amendments to the Identity Theft Red Flags rule in Regulation V (Fair Credit Reporting).

Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) transferred rulemaking authority for a number of consumer financial protection laws from the Board to the Bureau of Consumer Financial Protection (CFPB), except with respect to certain motor vehicle dealers. Because the CFPB has already issued interim final rules that are substantially identical to the Board's Regulation DD and Regulation P, the Board is proposing to repeal its versions of those regulations.

The Board is also seeking comment on a proposed amendment to provisions of the Board's Regulation V that require financial institutions and creditors to implement identity theft prevention programs. The proposal would revise the rule to reflect legislation that amended the Fair Credit Reporting Act (FCRA) to clarify that these provisions apply only to creditors that regularly extend credit or obtain consumer reports in the ordinary course of their business. The amendments to the FCRA were intended to narrow the scope of the law so that it would not be applied to professionals, such as doctors or lawyers, who sometimes allow consumers to delay payment.

Comments on the proposals must be submitted within 60 days from the date of publication in the Federal Register, which is expected shortly.

Truth in Savings (Regulation DD) (PDF)

Privacy of Consumer Information (Regulation P) (PDF)

Identity Theft Red Flags (Regulation V) (PDF)

Board Votes

For media inquiries, call 202-452-2955.


February 04, 2014
Reserve Banks Laud Industry Response to Consultation Paper

Cleveland, OH, February 4, 2014--Federal Reserve Bank leadership lauded the feedback received from payment system participants to the "Payment System Improvement--Public Consultation Paper," noting that more than half the nearly 200 responses came from non-banks.

"We are thrilled with the number of responses received and with the diversity of perspectives represented by the responses," commented Sandra Pianalto, president of the Federal Reserve Bank of Cleveland and chair of the Financial Services Policy Committee, which issued the paper. "On behalf of the Reserve Banks, I would like to thank the commenters for preparing such thoughtful and insightful responses. It's critical that all ideas and perspectives are considered as we collectively identify the most promising opportunities to advance the U.S. payment system."

Responses were submitted by individual financial institutions, businesses, payment networks and processors, software vendors, payment innovators, consultants, and consumers, as well as from trade groups representing financial institution and business members. Responses may be viewed at www.FedPaymentsImprovement.org/user-submissions/.

The Reserve Banks released the consultation paper in September 2013 with responses due in December 2013. The paper solicited comments on gaps and opportunities in the payment system; potential desired outcomes, strategies, and tactics to shape the future of U.S. payments; and the Fed's role in implementing the strategies and tactics. Industry feedback was sought as input to the Reserve Banks' decisions regarding future improvement initiatives, which will be communicated in a paper to be published in the second half of 2014.

"We are carefully reviewing the feedback that we have received on the consultation paper to identify common themes and issues for future focus, as well as insights into potential solutions," noted Pianalto.

In concert with the analysis of responses, the Reserve Banks have a number of additional information-gathering efforts underway designed to inform future plans. Two of these efforts will further explore the needs related to faster retail payments described in one of the consultation paper's desired outcomes. They include research on end-user demand for specific payment attributes and an assessment of alternatives for speeding U.S. payments. A third effort involves identifying gaps and opportunities related to payment system security.

To advance industry dialogue on key issues and gain further insight on needed improvements, updates will be shared with industry stakeholders in the coming months via a number of Fed and industry forums and communications. For more information on these opportunities and to subscribe to strategic direction updates from the Fed, visit www.FedPaymentsImprovement.org.

"The Reserve Banks remain committed to the continual improvement of the U.S. payment system and will work collaboratively with stakeholders this year and beyond to implement innovations that meet evolving end- user needs for speed, efficiency and security," said Pianalto. "The input- and information-gathering underway will lay a strong foundation for the success of our future collective endeavors."

The FSPC is responsible for the overall direction of financial services and related support functions for the Federal Reserve Banks, as well as for providing Federal Reserve Bank leadership in dealing with the evolving U.S. payment system. The FSPC is composed of three Reserve Bank presidents and two Reserve Bank first vice presidents.


February 03, 2014
Janet L. Yellen Sworn in as Fed Chair

Janet L. Yellen on Monday took the oath of office as Chair of the Board of Governors of the Federal Reserve System. The oath was administered by Governor Daniel K. Tarullo in the Board Room.

President Obama announced his intention to nominate Dr. Yellen to be the Chair of the Board of Governors on October 9, 2013, and the Senate confirmed her on January 6, 2014. Prior to her appointment as Chair, Dr. Yellen served as Vice Chair of the Board of Governors.

Dr. Yellen's term as Chair ends February 3, 2018, and her term as a member of the Board ends January 31, 2024.

A biography of Dr. Yellen is available on the Board's website: www.federalreserve.gov/bios/.

For media inquiries, call 202-452-2955.

Chair Yellen's bio


January 30, 2014
FOMC Unanimously Selects Janet L. Yellen as Chair

The Federal Open Market Committee, at its annual organizational meeting this week, unanimously selected Janet L. Yellen to serve as its Chair, effective February 1, 2014. She is scheduled to be sworn in as Chair of the Board of Governors of the Federal Reserve System at 9 a.m. EST February 3. She will remain as Board Vice Chair over the weekend, with the authority to exercise all the duties of the Chair.


January 29, 2014
Federal Reserve Issues FOMC Statement

Information received since the Federal Open Market Committee met in December indicates that growth in economic activity picked up in recent quarters. Labor market indicators were mixed but on balance showed further improvement. The unemployment rate declined but remains elevated. Household spending and business fixed investment advanced more quickly in recent months, while the recovery in the housing sector slowed somewhat. Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. Inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee sees the risks to the outlook for the economy and the labor market as having become more nearly balanced. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term.

Taking into account the extent of federal fiscal retrenchment since the inception of its current asset purchase program, the Committee continues to see the improvement in economic activity and labor market conditions over that period as consistent with growing underlying strength in the broader economy. In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions, the Committee decided to make a further measured reduction in the pace of its asset purchases. Beginning in February, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $30 billion per month rather than $35 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $35 billion per month rather than $40 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee's sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee's dual mandate.

The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other  policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. If incoming information broadly supports the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings. However, asset purchases are not on a preset course, and the Committee's decisions about their pace will remain contingent on the Committee's outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. The Committee also reaffirmed its expectation that the current exceptionally low target range for the federal funds rate of 0 to 1/4 percent will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6-1/2 percent, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Richard W. Fisher; Narayana Kocherlakota; Sandra Pianalto; Charles I. Plosser; Jerome H. Powell; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen.

Statement Regarding Purchases of Treasury Securities and Agency Mortgage-Backed Securities (PDF)


January 24, 2014
Board Offers Supervisory Guidance to Large Bank Holding Companies

The Federal Reserve Board on Friday provided additional information on its expectations for the recovery and resolution preparedness of certain large domestic bank holding companies. Recovery and resolution preparedness aims to reduce the effect of a firm's failure or material weakness on the financial system and the broader economy.

The supervisory guidance discusses the importance of having robust systems to manage collateral, information, and payments, clearing, and settlement activities. It also stresses the importance of adequate liquidity and funding arrangements during times of stress. The expectations will be incorporated into the Federal Reserve's ongoing supervisory assessments of recovery and resolution preparedness at large bank holding companies subject to the guidance.

The supervisory guidance is applicable to eight domestic bank holding companies--Bank of America Corporation; Bank of New York Mellon Corporation, PLC; Citigroup Inc.; Goldman Sachs Group, Inc.; JPMorgan Chase & Co.; Morgan Stanley; State Street Corporation; and Wells Fargo & Company.

For media inquiries, call 202-452-2955.

SR letter 14-1


January 15, 2014
Agencies Approve Interim Final Rule on Collateralized Debt Obligations

Five federal agencies on Tuesday approved an interim final rule to permit banking entities to retain interests in certain collateralized debt obligations backed primarily by trust preferred securities (TruPS CDOs) from the investment prohibitions of section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, known as the Volcker rule.

Under the interim final rule, the agencies permit the retention of an interest in or sponsorship of covered funds by banking entities if the following qualifications are met:

  • the TruPS CDO was established, and the interest was issued, before May 19, 2010;
  • the banking entity reasonably believes that the offering proceeds received by the TruPS CDO were invested primarily in Qualifying TruPS Collateral; and
  • the banking entity's interest in the TruPS CDO was acquired on or before December 10, 2013, the date the agencies issued final rules implementing section 619 of the Dodd-Frank Act.

The federal banking agencies on Tuesday also released a non-exclusive list of issuers (PDF) that meet the requirements of the interim final rule.

The interim final rule defines Qualifying TruPS Collateral as any trust preferred security or subordinated debt instrument that was:

  • issued prior to May 19, 2010, by a depository institution holding company that as of the end of any reporting period within 12 months immediately preceding the issuance of such trust preferred security or subordinated debt instrument had total consolidated assets of less than $15 billion; or
  • issued prior to May 19, 2010, by a mutual holding company.

Section 171 of the Dodd-Frank Act provides for the grandfathering of trust preferred securities issued before May 19, 2010, by certain depository institution holding companies with total assets of less than $15 billion as of December 31, 2009, and by mutual holding companies established as of May 19, 2010. The TruPS CDO structure was the vehicle that gave effect to the use of trust preferred securities as a regulatory capital instrument prior to May 19, 2010, and was part of the status quo that Congress preserved with the grandfathering provision of section 171.

The interim final rule also provides clarification that the relief relating to these TruPS CDOs extends to activities of the banking entity as a sponsor or trustee for these securitizations and that banking entities may continue to act as market makers in TruPS CDOs.

The interim final rule was approved by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Commodity Futures Trading Commission, and the Securities and Exchange Commission, the same agencies that issued final rules to implement section 619. The agencies will accept comment on the interim final rule for 30 days following publication of the interim final rule in the Federal Register.

Media Contacts:
Federal Reserve Board Barbara Hagenbaugh (202) 452-2955
CFTC Steve Adamske (202) 418-5080
FDIC Andrew Gray (202) 898-7192
OCC Bryan Hubbard (202) 649-6870
SEC Public Affairs (202) 551-4120

Attachment (101 KB PDF)


January 14, 2014
Public Comment Requested on Commodity Activities of Financial Holding Companies

The Federal Reserve Board on Tuesday sought comment to help inform its consideration of physical commodity activities conducted by financial holding companies, including current authorizations of these activities and the appropriateness of further restrictions.

The Board is considering whether additional restrictions would help ensure that physical commodities activities authorized for financial holding companies are conducted in a safe and sound manner and do not pose a threat to financial stability. The Board, in an advance notice of proposed rulemaking, addresses commodity activities conducted under different sections of the Bank Holding Company Act, including section 4(k) complementary authority, section 4(o) grandfathered authority, as well as merchant banking authority.

The topics covered by the advance notice include:

  • the nature of risks that physical commodity activities could pose to the safety and soundness of financial holding companies and to financial stability more broadly;
  • the potential conflicts of interest and other adverse effects of engagement by financial holding companies in physical commodity activities;
  • and the potential risks and benefits of imposing additional capital requirements or other restrictions on the commodity activities of financial holding companies.

Comments are welcome through March 15, 2014. After reviewing the comments, the Board will consider what further action, including a rulemaking, is warranted. Comments on a proposal would also be considered before a final rule would be issued.

For media inquiries, call 202-452-2955.

Attachment (PDF)

Board Votes


January 14, 2014
Results of 28-Day Term Deposits Offering

On January 13, 2014, the Federal Reserve conducted a fixed-rate offering of term deposits with full allotment of tenders through its Term Deposit Facility. The operation offered 28-day term deposits at an interest rate of 0.26000 percent. Following are the results of the operation:

TDF Operation ID: F34
Total Amount Awarded: $12,822,110,000
Number of Participants: 31

The awarded deposits will settle on January 16, 2014, and will mature on February 13, 2014. The interest rate of 0.26000 percent will apply to all awarded deposits.


January 10, 2014
Reserve Banks Transfer Residual Earnings to the Treasury

The Federal Reserve Board on Friday announced preliminary unaudited results indicating that the Reserve Banks provided for payments of approximately $77.7 billion of their estimated 2013 net income to the U.S. Treasury. Under the Board's policy, the residual earnings of each Federal Reserve Bank are distributed to the U.S. Treasury, after providing for the costs of operations, payment of dividends, and the amount necessary to equate surplus with capital paid-in.

The Federal Reserve Banks' 2013 estimated net income of $79.5 billion was derived primarily from $90.4 billion in interest income on securities acquired through open market operations (U.S. Treasury securities, federal agency and government-sponsored enterprise (GSE) mortgage-backed securities (MBS), and GSE debt securities). Operating expenses of the Reserve Banks, net of amounts reimbursed by the U.S. Treasury and other entities for services the Reserve Banks provided as fiscal agents, totaled $3.8 billion in 2013. In addition, the Reserve Banks were assessed $702 million for the costs related to producing, issuing, and retiring currency, $580 million for Board expenditures, and $563 million to fund the operations of the Consumer Financial Protection Bureau. The Reserve Banks had interest expense of $5.2 billion on depository institutions' reserve balances, and recorded losses of $1.3 billion that result from the daily revaluation of foreign currency denominated asset holdings at current exchange rates.

Additional earnings were derived from income from services of $436 million, and net income of $143 million attributable to the consolidated limited liability companies that were created in response to the financial crisis. In 2013, statutory dividends totaled $1.6 billion and $147 million of net income was used to equate surplus to capital paid-in.

The attached chart illustrates the amount of Federal Reserve Banks' residual earnings distributed to the U.S. Treasury from 2004 through 2013 (estimated).

For media inquiries, call 202-452-2955.

Figure of 'Federal Reserve Distributions to the U.S. Treasury, 2004-2013'. Bar chart. Federal Reserve distributions to the Treasury displayed annually: 2004, $18.1 billion; 2005, $21.5 billion; 2006, $29.1 billion; 2007, $34.6 billion; 2008, $31.7 billion; 2009, $47.4 billion; 2010, $79.3 billion; 2011, $75.4 billion; 2012, $88.4 billion; 2013, $77.7 billion.

Source of 2004–2012 data: 2012 Annual Report of the Board of Governors of the Federal Reserve System


January 10, 2014
Federal Reserve Board Requests Comment on Proposed Revisions

The Federal Reserve Board on Friday requested comment on proposed revisions to the Regulation HH risk-management standards for certain financial market utilities that have been designated as systemically important by the Financial Stability Oversight Council, including those for which the Board is the Supervisory Agency pursuant to Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Board also requested comment on related revisions to part I of the Federal Reserve Policy on Payment System Risk (PSR policy), which is applicable to financial market infrastructures (FMIs) more generally, including those operated by the Federal Reserve Banks.

Both sets of revisions are based on and generally consistent with the April 2012 Principles for Financial Market Infrastructures (PFMI) developed jointly by the international standard-setting bodies, the Committee on Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions. Revisions include establishing separate standards to address credit risk and liquidity risk, a new standard on general business risk, and heightened requirements on transparency and disclosure. The Board believes that the implementation of risk-management standards based on the PFMI can help promote the safety and efficiency of FMIs and U.S. financial institutions that use FMIs, as well as foster greater financial stability during times of stress.

Comments on both proposals must be submitted by March 31, 2014.

Regulation HH risk-management standards (386 KB PDF)

Federal Reserve Policy on Payment System Risk (PSR policy) (230 KB PDF)

Board Votes


January 10, 2014
Agencies Release Public Sections of Resolution Plans

The Federal Reserve Board and the Federal Deposit Insurance Corporation (FDIC) on Friday made available the public portions of resolution plans for 116 institutions that submitted plans for the first time in December 2013, the latest group to file resolution plans with the agencies.

The Dodd-Frank Wall Street Reform and Consumer Protection Act requires that bank holding companies (and foreign companies treated as bank holding companies) with total consolidated assets of $50 billion or more and nonbank financial companies designated for enhanced prudential supervision by the Financial Stability Oversight Council periodically submit resolution plans to the Federal Reserve Board and the FDIC. Each plan must describe the company's strategy for rapid and orderly resolution in the event of material financial distress or failure of the company, and include both a public and confidential section.

Companies subject to the resolution plan requirement filed their initial resolution plans on a staggered schedule. The 116 companies whose initial resolution plans were due by December 31, 2013, are those that generally have less than $100 billion in qualifying nonbank assets.

Two groups of institutions have already filed resolution plans. The first group, generally those bank holding companies with $250 billion or more in qualifying nonbank assets, submitted initial plans in July 2012 and their second annual plans in October 2013. The second group, generally those with $100 billion or more, but less than $250 billion, in qualifying nonbank assets, submitted their initial plans in July 2013. The group that was required to file their initial plans last month represents the third group of filers.

The public portions for the 116 companies' resolution plans, as well as those of institutions that filed previously, are available on the Federal Reserve and FDIC websites.

In addition, the FDIC released the public sections of the recently filed resolution plans of 22 insured depository institutions. The majority of these insured depository institutions are subsidiaries of bank holding companies that concurrently submitted resolution plans. The insured depository institution plans are required by a separate regulation issued by the FDIC. The FDIC's regulation requires a covered insured depository institution with assets greater than $50 billion to submit a plan under which the FDIC, as receiver, might resolve the institution under the Federal Deposit Insurance Act.

The public portions for the 22 covered insured depository institutions are available on the FDIC website.

Media Contacts:
Federal Reserve Board Eric Kollig 202-452-2955
FDIC Andrew Gray 202-898-7192

January 08, 2014
Minutes of the FOMC, December 17–18, 2013

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on December 17-18, 2013. A summary of economic projections made by Federal Reserve Board members and Reserve Bank presidents for the meeting is also included as an addendum to these minutes.

The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board's Annual Report. Summaries of economic projections are released on a quarterly schedule. The descriptions of economic and financial conditions contained in these minutes and in the Summary of Economic Projections are based solely on the information that was available to the Committee at the time of the meeting.

The FOMC minutes can be viewed on the Board's website at www.federalreserve.gov/monetarypolicy/fomccalendars.htm

For media inquiries, call 202-452-2955

Minutes of the Federal Open Market Committee
December 17-18, 2013: HTML | PDF


January 08, 2014
Federal Reserve to Offer 28-Day Term Deposits

On January 13, 2014, the Federal Reserve will conduct a fixed-rate offering of term deposits with full allotment of tenders through its Term Deposit Facility (TDF). The Federal Reserve will offer 28-day term deposits with an interest rate of 0.26000 percent and a maximum tender amount of $1,250,000,000. As noted in the Federal Reserve Board's April 26, 2013, release, this operation is part of ongoing small-value operations designed to provide eligible institutions with an opportunity to gain familiarity with term deposit operations. Additional information regarding the operation is listed below; the operation will be conducted as specified in this announcement, Regulation D, and the terms and conditions of the Term Deposit Facility (http://www.frbservices.org/centralbank/term_deposit_facility.html).

Description of Operation and Tender Parameters

TDF Operation ID: F34
Operation Format: Fixed-Rate, Full allotment
Term: 28-day
Interest Rate: 0.26000%
Operation Date: Monday, January 13, 2014
Opening Time: 10:00 a.m. ET
Closing Time: 2:00 p.m. ET
Notification Date (summary results): Tuesday, January 14, 2014
Settlement Date: Thursday, January 16, 2014
Maturity Date: Thursday, February 13, 2014
Tender Parameters
Maximum Number of Tenders: 1
Minimum Tender Amount: $10,000
Tender Increment: $10,000
Maximum Tender Amount (per institution): $1,250,000,000
Award Minimum Amount: $10,000
Award Maximum Amount: $1,250,000,000


All tenders that are complete and compliant with the operation parameters listed above will be automatically awarded in full at the interest rate shown above. The minimum tender amount is $10,000; the maximum amount is $1,250,000,000 and should be submitted in increments of $10,000. All tenders must be submitted between the opening and closing time on the operation date.

Submission of Tender
Participants must submit tenders by accessing the Term Deposit Facility application (https://www.federalreserve.org/arrow/ARROWWeb/home.do) between the opening time and the closing time on the operation date.

Notification
Participants will be able to view their awards by accessing the Term Deposit Facility application.

Summary operation results will be published on the Board of Governors' website (http://www.federalreserve.gov/monetarypolicy/tdf.htm) at approximately 12:00 p.m. (noon) ET on the notification date. Soon after, summary results will be posted on the Term Deposit Facility Resource Center page of the Central Bank Central website (http://www.frbservices.org/centralbank/term_deposit_facility.html).


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