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Circular Letters


Circular Letter Archives

2009

September 24, 2009
Federal Reserve Announces Term Auction Facility (TAF) and Term Securities Lending Facility (TSLF) Schedules Through January 2010

The Federal Reserve has announced schedules for operations under the Term Auction Facility (TAF) and the Term Securities Lending Facility (TSLF) through January 2010 and other information related to those facilities.

These schedules are consistent with the intention indicated in the Federal Reserve's June 25 press release to gradually scale back these facilities in response to continued improvements in financial market conditions.

The schedules also take account of the possibility that market pressures could be heightened over year-end. As noted in previous announcements, the Federal Reserve remains prepared to expand its liquidity operations more generally should financial market conditions deteriorate materially.

Term Auction Facility
Under the TAF facility, to date the Federal Reserve has reduced offered amounts from a peak of $150 billion per auction to $75 billion per auction as conditions in short-term funding markets have continued to improve. Under the schedules, the Federal Reserve will continue to offer $75 billion per 28-day auction through January in order to ensure that an adequate volume of funding is available in the period leading up to year-end and over year-end. Reductions in the sizes of those 28-day operations are expected to resume early next year. The amounts offered under the existing cycle of auctions of 84-day funds will be reduced to $50 billion effective in October and to $25 billion in November and December, and the maturities of those operations will be reduced. The purpose of shortening the maturities is to align the maturity dates of those operations with the maturities in the cycle for 28-day funds. With the completion of that transition, the auction schedule will be converted by early next year to a single cycle of 28-day funds offered every 28 days.

Term Securities Lending Facility
As announced on June 25, the Federal Reserve has discontinued Schedule 1 TSLF operations and TSLF Options Program operations. It has also reduced the frequency and size of its Schedule 2 TSLF operations. Consistent with recent further improvements in conditions in secured financing markets, the amounts offered in TSLF auctions will be scaled back further from their current size of $75 billion. TSLF offerings will be reduced to $50 billion in the October auction and to $25 billion in the November, December, and January auctions in the current 28-day cycle of auctions.
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September 23, 2009
FOMC Statement

Information received since the Federal Open Market Committee met in August suggests that economic activity has picked up following its severe downturn. Conditions in financial markets have improved further, and activity in the housing sector has increased. Household spending seems to be stabilizing, but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability.

With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time.

In these circumstances, the Federal Reserve will continue to employ a wide range of tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt. The Committee will gradually slow the pace of these purchases in order to promote a smooth transition in markets and anticipates that they will be executed by the end of the first quarter of 2010. As previously announced, the Federal Reserve’s purchases of $300 billion of Treasury securities will be completed by the end of October 2009. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.


September 22, 2009
Federal Reserve Announces Results of Auction of $75 Billion in 28-Day Credit Held on September 21, 2009

On September 21, 2009, the Federal Reserve conducted an auction of $75 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
     
Total propositions submitted: $55.763 billion
Total propositions accepted: $55.763 billion
Bid/cover ratio: 0.74
     
Number of bidders: 83

The awarded loans will settle on September 24, 2009, and will mature on October 22, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on September 22, 2009. Participants have until 12:30 p.m. EDT on September 22, 2009, to inform their local Reserve Bank of any error.


September 21, 2009
Federal Reserve Offers $75 Billion in 28-Day Credit Through Its Term Auction Facility

On September 21, 2009, the Federal Reserve will offer $75 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount:   $75 billion
Term:   28-day loan
Bid Submission Date:   September 21, 2009
  Opening Time:   11:00 a.m. EDT
  Closing Time:   12:30 p.m. EDT
Notification Date:   September 22, 2009
Settlement Date:   September 24, 2009
Maturity Date:   October 22, 2009
Minimum Bid Amount (per bid):   $5 million
Bid Increment:   $100,000
Maximum Bid Amount (per institution):   $7.5 billion (10% of Offering Amount)
Minimum Bid Rate:   0.25 percent
Incremental Bid Rate:   0.001 percent
Minimum Award:   $10,000
Maximum Award:   $7.5 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

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


September 15, 2009
Federal Reserve to Implement Consumer Compliance Supervision Program of Nonbank Subsidiaries of Bank Holding Companies and Foreign Banking Organizations

The Federal Reserve will implement a consumer compliance supervision program in nonbank subsidiaries of bank holding companies (BHCs) and foreign banking organizations (FBOs) with activities covered by the consumer protection laws and regulations the Federal Reserve has the authority to enforce. The policy, which will take effect immediately, also provides for the investigation of consumer complaints against these nonbank entities.

In 2007, the Federal Reserve, along with the Federal Trade Commission (FTC), Office of Thrift Supervision (OTS), and two associations of state regulators, launched a joint pilot project that conducted targeted consumer protection compliance reviews of selected non-depository lenders with significant subprime mortgage operations. The policy builds upon the groundwork of the pilot program and responds to a need for more effective supervision and consumer protection. It is designed to improve the Federal Reserve's understanding of the consumer compliance risk that certain products and services may pose to the holding companies and consumers and to guide supervisory activity for these entities.
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September 09, 2009
Federal Reserve announces results of auction of $75 billion in 84-day credit held on September 8, 2009

On September 8, 2009, the Federal Reserve conducted an auction of $75 billion in 84-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
     
Total propositions submitted: $31.908 billion
Total propositions accepted: $31.908 billion
Bid/cover ratio: 0.43
     
Number of bidders: 75

The awarded loans will settle on September 10, 2009, and will mature on December 3, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on September 9, 2009. Participants have until 12:30 p.m. EDT on September 9, 2009, to inform their local Reserve Bank of any error.
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September 08, 2009
Federal Reserve Offers $75 Billion in 84-Day Credit Through Its Term Auction Facility

On September 8, 2009, the Federal Reserve will offer $75 billion in 84-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount:   $75 billion
Term:   84-day loan
Bid Submission Date:   September 8, 2009
  Opening Time:   11:00 a.m. EDT
  Closing Time:   12:30 p.m. EDT
Notification Date:   September 9, 2009
Settlement Date:   September 10, 2009
Maturity Date:   December 3, 2009
Minimum Bid Amount (per bid):   $5 million
Bid Increment:   $100,000
Maximum Bid Amount (per institution):   $7.5 billion (10% of Offering Amount)
Minimum Bid Rate:   0.25 percent
Incremental Bid Rate:   0.001 percent
Minimum Award:   $10,000
Maximum Award:   $7.5 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

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


August 28, 2009
Federal Reserve Announces Amounts of Term Auction Facility (TAF) Credit Offered at September Auctions Will be Reduced to $75 Billion

The Federal Reserve on Friday announced that the amounts of Term Auction Facility (TAF) credit offered at each of the two auctions in September will be reduced to $75 billion from $100 billion in August. Specifically, the Federal Reserve will offer $75 billion of 84-day credit on Tuesday, September 8, and $75 billion of 28-day credit on Monday, September 21.


August 25, 2009
Federal Reserve Announces Results of Auction of $100 Billion in 28-Day Credit Held on August 24, 2009

On August 24, 2009, the Federal Reserve conducted an auction of $100 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
     
Total propositions submitted: $73.404 billion
Total propositions accepted: $73.404 billion
Bid/cover ratio: 0.73
     
Number of bidders: 97

The awarded loans will settle on August 27, 2009, and will mature on September 24, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on August 25, 2009. Participants have until 12:30 p.m. EDT on August 


August 24, 2009
Federal Reserve Offers $100 Billion in 28-Day Credit Through Its Term Auction Facility

On August 24, 2009, the Federal Reserve will offer $100 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount:   $100 billion
Term:   28-day loan
Bid Submission Date:   August 24, 2009
  Opening Time:   11:00 a.m. EDT
  Closing Time:   12:30 p.m. EDT
Notification Date:   August 25, 2009
Settlement Date:   August 27, 2009
Maturity Date:   September 24, 2009
Minimum Bid Amount (per bid):   $5 million
Bid Increment:   $100,000
Maximum Bid Amount (per institution):   $10 billion (10% of Offering Amount)
Minimum Bid Rate:   0.25 percent
Incremental Bid Rate:   0.001 percent
Minimum Award:   $10,000
Maximum Award:   $10 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

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


August 17, 2009
Federal Reserve and Treasury Department Announce Extension to Term Asset-Backed Securities Loan Facility (TALF)

The Federal Reserve Board and the Treasury Department on Monday announced that they approved an extension to the Term Asset-Backed Securities Loan Facility (TALF) and that, at this time, they do not anticipate any further additions to the types of collateral that are eligible for the facility.

Conditions in financial markets have improved considerably in recent months. Nonetheless, the markets for asset-backed securities (ABS) backed by consumer and business loans and for commercial mortgage-backed securities (CMBS) are still impaired and seem likely to remain so for some time. To promote the flow of credit to businesses and households and to facilitate the financing of commercial properties, the Federal Reserve and Treasury approved extending TALF loans against newly issued ABS and legacy CMBS through March 31, 2010. Because new CMBS deals can take a significant amount of time to arrange, the Federal Reserve and Treasury approved TALF lending against newly issued CMBS through June 30, 2010. The Board will continue to monitor financial conditions and will consider in the future whether unusual and exigent circumstances warrant a further extension of the TALF to help promote financial stability and economic growth. The Federal Reserve and Treasury had previously authorized TALF loans through December 31, 2009.

After having conducted a thorough analysis of a number of potential candidates, the Federal Reserve and Treasury announced on Monday that they are holding in abeyance any further expansion in the types of collateral eligible for the TALF. The securities already eligible for collateralizing TALF loans include the major types of newly issued, triple-A-rated ABS backed by loans to consumers and businesses, and newly issued and legacy triple-A-rated CMBS. The Federal Reserve and Treasury are prepared to reconsider their decision if financial or economic developments indicate that providing TALF financing for investors' acquisitions of additional types of securities is warranted.


August 12, 2009
FOMC Statement

Information received since the Federal Open Market Committee met in June suggests that economic activity is leveling out. Conditions in financial markets have improved further in recent weeks. Household spending has continued to show signs of stabilizing but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing but are making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve is in the process of buying $300 billion of Treasury securities. To promote a smooth transition in markets as these purchases of Treasury securities are completed, the Committee has decided to gradually slow the pace of these transactions and anticipates that the full amount will be purchased by the end of October. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.


August 11, 2009
Federal Reserve Announces Results of Auction of $100 Billion in 84-Day Credit Held on August 10, 2009

On August 10, 2009, the Federal Reserve conducted an auction of $100 billion in 84-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
     
Total propositions submitted: $42.941 billion
Total propositions accepted: $42.941 billion
Bid/cover ratio: 0.43
     
Number of bidders: 91

The awarded loans will settle on August 13, 2009, and will mature on November 5, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on August 11, 2009. Participants have until 12:30 p.m. EDT on August 11, 2009, to inform their local Reserve Bank of any error.


August 10, 2009
Federal Reserve Offers $100 Billion in 84-Day Credit Through Its Term Auction Facility

On August 10, 2009, the Federal Reserve will offer $100 billion in 84-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount:   $100 billion
Term:   84-day loan
Bid Submission Date:   August 10, 2009
  Opening Time:   11:00 a.m. EDT
  Closing Time:   12:30 p.m. EDT
Notification Date:   August 11, 2009
Settlement Date:   August 13, 2009
Maturity Date:   November 5, 2009
Minimum Bid Amount (per bid):   $5 million
Bid Increment:   $100,000
Maximum Bid Amount (per institution):   $10 billion (10% of Offering Amount)
Minimum Bid Rate:   0.25 percent
Incremental Bid Rate:   0.001 percent
Minimum Award:   $10,000
Maximum Award:   $10 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

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


August 10, 2009
Annual adjustment of fee-based trigger for additional mortgage loan disclosures

The Federal Reserve Board on Monday published its annual adjustment of the dollar amount of fees that triggers additional disclosure requirements under the Truth in Lending Act for home mortgage loans that bear rates or fees above a certain amount.

The dollar amount of the fee-based trigger has been adjusted to $579 for 2010 based on the annual percentage change reflected in the Consumer Price Index that was in effect on June 1, 2009.

The adjustment is effective January 1, 2010. This adjustment does not affect the new rules for "higher-priced mortgage loans" adopted by the Board in July 2008. Coverage of mortgage loans under the July 2008 rules is determined using a different rate-based trigger.

The Home Ownership and Equity Protection Act of 1994 restricts credit terms such as balloon payments and requires additional disclosures when total points and fees payable by the consumer exceed the fee-based trigger (initially set at $400 and adjusted annually) or 8 percent of the total loan amount, whichever is larger.
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August 05, 2009
Federal Reserve balance sheet data are now available through interactive Data Download Program

The Federal Reserve Board on Wednesday announced that data from its H.4.1 statistical release, "Factors Affecting Reserve Balances of Depository Institutions and Condition Statement of Federal Reserve Banks," which includes the weekly publication of the Federal Reserve's balance sheet, is now available through the Data Download Program. The program provides interactive access to Federal Reserve statistical data in a variety of formats and is available at http://www.federalreserve.gov/datadownload/.

The Data Download Program allows users to create customized data sets or download pre-formatted packages in multiple formats, including XML. More information about how to use the program is available at http://www.federalreserve.gov/datadownload/help/default.htm.

The H.4.1 release is typically published on Thursday, generally at 4:30 p.m. ET. Data from the release will be available for download in the Data Download Program at the same time.
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July 30, 2009
Federal Reserve Approves Final Amendments to Regulation Z That Revise Disclosure Requirements for Private Education Loans

The Federal Reserve Board has approved final amendments to Regulation Z (Truth in Lending) that revise the disclosure requirements for private education loans.

the amendments implement provisions of the Higher Education Opportunity Act (HEOA) enacted in August 2008. Under the amendments, creditors that extend private education loans must provide disclosures about loan terms and features on or with the loan application and must also disclose information about federal student loan programs that may offer less costly alternatives. Additional disclosures must be provided when the loan is approved and when the loan is consummated. The Board is also providing model disclosure forms that creditors could use to comply with the new disclosure requirements.

The new disclosure requirements apply to loans made expressly for postsecondary educational expenses but do not apply where educational expenses are funded by credit card advances, or real-estate-secured loans. In addition, the amendments do not apply to education loans made, insured, or guaranteed by the federal government, which are subject to disclosure rules issued by the Department of Education.

The Board's amendments also implement the HEOA's restrictions on using the name, emblem, or mascot of an educational institution in a way that implies that the institution endorses the creditor's loans.
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July 29, 2009
Board Publishes 5 Tips for Shopping for a Mortgage

Buying a home should be a dream come true not a nightmare of worry and stress. A new Federal Reserve Board publication, "5 Tips for Shopping for a Mortgage," will help consumers avoid potential pitfalls and make well-informed decisions when choosing a home loan.

Financing the purchase of a home is one the most complex financial decisions that consumers make. The Federal Reserve’s latest "5 Tips" guide is designed to help homebuyers find the mortgage that is best for them. As a starting point, consumers are urged to conduct a financial self-assessment that includes scrutinizing their budget, checking credit reports, and reviewing credit scores. The guide directs consumers to a worksheet for developing a monthly spending plan and strongly suggests setting aside funds for emergencies.

It is important for consumers to evaluate their options and avoid expensive loans. The publication recommends taking the time do some comparison shopping by analyzing loan offers from mortgage lenders and mortgage brokers. It also explains the difference between brokers and lenders--mortgage brokers arrange mortgage loans with lenders, while mortgage lenders lend money directly. "5 Tips" explains that learning about the risks and benefits of various types of mortgage loans is critical to obtaining and sustaining the right mortgage for a family's budget.

The guide advises consumers to take advantage of additional information from other Federal Reserve publications, resources, and websites. It suggests that consumers also seek financial education materials from other trusted sources such as the U.S. Department of Housing and Urban Development and NeighborWorks.

English and Spanish versions of "5 Tips for Shopping for a Mortgage" are available both in print and online at: http://www.federalreserve.gov/pubs/mortgagetips/.

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July 28, 2009
Federal Reserve Announces Results of Auction of $125 Billion in 28-Day Credit Held on July 27, 2009

On July 27, 2009, the Federal Reserve conducted an auction of $125 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
     
Total propositions submitted: $82.375 billion
Total propositions accepted: $82.375 billion
Bid/cover ratio: 0.66
     
Number of bidders: 103

The awarded loans will settle on July 30, 2009, and will mature on August 27, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on July 28, 2009. Participants have until 12:30 p.m. EDT on July 28, 2009, to inform their local Reserve Bank of any error.


July 27, 2009
Federal Reserve offers $125 billion in 28-day credit through its Term Auction Facility

On July 27, 2009, the Federal Reserve will offer $125 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters

Offering Amount: $125 billion
Term: 28-day loan
Bid Submission Date: July 27, 2009
Opening Time: 11:00 a.m. EDT
Closing Time: 12:30 p.m. EDT
Notification Date: July 28, 2009
Settlement Date: July 30, 2009
Maturity Date: August 27, 2009
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution): $12.5 billion (10% of Offering Amount)
Minimum Bid Rate: 0.25 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $12.5 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

Rounding Convention
Pro rata awards will be rounded to multiples of $10,000. Normal rounding convention will be used, except that awards under $10,000 will be rounded to $10,000.
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July 23, 2009
Federal Reserve Proposes Significant Changes to Regulation Z (Truth in Lending) Intended to Improve the Disclosures Consumers Receive in Connection with Closed-End Mortgages and Home-Equity Lines of Credit

The Federal Reserve Board on Thursday proposed significant changes to Regulation Z (Truth in Lending) intended to improve the disclosures consumers receive in connection with closed-end mortgages and home-equity lines of credit (HELOCs). These changes, offered for public comment, reflect the result of consumer testing conducted as part of the Board's comprehensive review of the rules for home-secured credit. The amendments would also provide new consumer protections for all home-secured credit.

"Consumers need the proper tools to determine whether a particular mortgage loan is appropriate for their circumstances," said Federal Reserve Chairman Ben S. Bernanke. "It is often said that a home is a family's most important asset, and it is the Federal Reserve's responsibility to see that borrowers receive the information they need to protect that asset."

To shop for and understand the cost of credit, consumers must be able to identify and understand the key terms of the mortgage. In formulating the proposed revisions to Regulation Z, the Board used consumer testing to ensure that the most essential information is provided at a suitable time using content and formats that are clear and conspicuous.

"Our goal is to ensure that consumers receive the information they need, whether they are applying for a fixed-rate mortgage with level payments for 30 years, or an adjustable-rate mortgage with low initial payments that can increase sharply," said Governor Elizabeth A. Duke. "With this in mind, the disclosures would be revised to highlight potentially risky features such as adjustable rates, prepayment penalties, and negative amortization."

Closed-end mortgage disclosures would be revised to highlight potentially risky features such as adjustable rates, prepayment penalties, and negative amortization. The Board's proposal would:

  • Improve the disclosure of the annual percentage rate (APR) so it captures most fees and settlement costs paid by consumers;
  • Require lenders to show how the consumer's APR compares to the average rate offered to borrowers with excellent credit;
  • Require lenders to provide final Truth in Lending Act (TILA) disclosures so that consumers receive them at least three business days before loan closing; and
  • Require lenders to show consumers how much their monthly payments might increase, for adjustable-rate mortgages.

The Board will also work with the Department of Housing and Urban Development to make the disclosures mandated by TILA, and HUD's disclosures, required by the Real Estate Settlement Procedures Act, complementary; potentially developing a single disclosure form that creditors could use to satisfy both laws.

In developing the proposed amendments, the Board recognized that disclosures alone may not always be sufficient to protect consumers from unfair practices. To prevent mortgage loan originators from "steering" consumers to more expensive loans, the Board's proposal would:

  • Prohibit payments to a mortgage broker or a loan officer that are based on the loan's interest rate or other terms; and
  • Prohibit a mortgage broker or loan officer from "steering" consumers to transactions that are not in their interest in order to increase the mortgage broker's or loan officer's compensation.

The rules for home-equity lines of credit would be revised to change the timing, content, and format of the disclosures that creditors provide to consumers at application and throughout the life of such accounts. Currently, consumers receive lengthy, generic disclosures at application. Under the proposal, consumers would receive a new one-page Board publication summarizing basic information and risks regarding HELOCs at application. Shortly after application, consumers would receive new disclosures that reflect the specific terms of their credit plans. In addition, the Board's proposal would:

  • Prohibit creditors from terminating an account for payment-related reasons unless the consumer is more than 30 days late in making a payment.
  • Provide additional protections related to account suspensions and credit-limit reductions, and reinstatement of accounts.

The Federal Register notices are attached. The comment periods end 120 days after publication of the proposals in the Federal Register, which is expected shortly.

Highlights of Proposed Rules Regarding Home-Secured Credit (14 KB PDF)

Statement by Chairman Ben S. Bernanke

Statement by Governor Elizabeth A. Duke

Regulation Z--HELOC:

Draft Federal Register notice, Regulation Z--HELOC (5.4 MB PDF)

Key Questions to Ask About Home Equity Lines of Credit (Attachment A) (68 KB PDF)

Summary of Findings: Design and Testing of Truth in Lending Disclosures for Home Equity Lines of Credit (1.06 MB PDF)

Model forms and samples:

  1. G-14(A) (152 KB PDF) Early Disclosure Model Form (Home-equity Plans)
  2. G-14(B) (165 KB PDF) Early Disclosure Model Form (Home-equity Plans)
  3. G-14(C) (217 KB PDF) Early Disclosure Sample (Home-equity Plans)
  4. G-14(D) (212 KB PDF) Early Disclosure Sample (Home-equity Plans)
  5. G-14(E) (209 KB PDF)  Early Disclosure Sample (Home-equity Plans)
  6. G-15(A) (212 KB PDF) Account-Opening Disclosure Model Form (Home-equity Plans)
  7. G-15(B) (221 KB PDF) Account-Opening Disclosure Sample (Home-equity Plans)
  8. G-15(C) (224 KB PDF) Account-Opening Disclosure Sample (Home-equity Plans)
  9. G-15(D) (219 KB PDF) Account-Opening Disclosure Sample (Home-equity Plans)
  10. G-24(A) (131 KB PDF) Periodic Statement Transactions; Interest Charges; Fees Sample (Home-equity Plans)
  11. G-24(B) (188 KB PDF) Periodic Statement Sample (Home-equity Plans)
  12. G-24(C) (158 KB PDF) Periodic Statement Sample (Home-equity Plans)
  13. G-25 (10 KB PDF) Change-in-Terms Sample (Home-equity Plans)
  14. G-26 (8 KB PDF) Rate Increase Sample (Home-equity Plans)

Regulation Z--Closed-end Mortgages:

Draft Federal Register notice, Regulation Z--Closed-end Mortgages (8.2 MB PDF)

Key Questions to Ask About Your Mortgage (Attachment A) (68 KB PDF)
Fixed vs. Adjustable Rate Mortgages Early Disclosure (Attachment B) (73 KB PDF)

Model forms and samples:

  1. H–4(B) (91 KB PDF) Adjustable-Rate Loan Program Model Form
  2. H–4(D) (86 KB PDF) Adjustable-Rate Loan Program Sample (Hybrid ARM)
  3. H–4(E) (86 KB PDF) Adjustable-Rate Loan Program Sample (Interest Only ARM)
  4. H–4(F) (87 KB PDF) Adjustable-Rate Loan Program Sample (Payment Option ARM)
  5. H-4(G) (58 KB PDF) Adjustable-Rate Adjustment Notice Model Form
  6. H–4(I) (99 KB PDF) Adjustable-Rate Adjustment Notice Sample (Interest Only ARM)
  7. H–4(J) (99 KB PDF) Adjustable-Rate Adjustment Notice Sample (Hybrid ARM)
  8. H–4(K) (49 KB PDF) Adjustable-Rate Annual Notice Model Form
  9. H–4(L) (107 KB PDF) Negative Amortization Monthly Disclosure Model Form
  10. H-19(A) (150 KB PDF) Fixed Rate Mortgage Model Form
  11. H-19(B) (140 KB PDF) Adjustable-Rate Mortgage Model Form
  12. H-19(C) (158 KB PDF) Mortgage with Negative Amortization Model Form
  13. H-19(D) (169 KB PDF) Fixed Rate Mortgage with Balloon Payment Sample
  14. H-19(E) (215 KB PDF) Fixed Rate Mortgage with Interest Only Sample
  15. H-19(F) (164 KB PDF) Step-Payment Mortgage Sample
  16. H-19(G) (218 KB PDF) Hybrid Adjustable-Rate Mortgage Sample
  17. H-19(H) (204 KB PDF) Adjustable-Rate Mortgage with Interest Only Sample
  18. H-19(I) (151 KB PDF) Adjustable-Rate Mortgage with Payment Option Sample

July 16, 2009
Board issues interim final rule amending credit card provisions of Regulation Z (Truth in Lending)

The Federal Reserve Board on Wednesday approved an interim final rule amending Regulation Z (Truth in Lending) to require creditors to increase the amount of notice consumers receive before the rate on a credit card account is increased or a significant change is made to the account's terms. The amendments also allow consumers to reject such increases and changes by informing the creditor before the increase or change goes into effect.

These revisions are the first stage in the Federal Reserve Board's implementation of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit Card Act). In May 2009, the Credit Card Act amended the Truth in Lending Act (TILA) and other statutes to establish fair and transparent practices for open-end consumer credit plans, including credit cards.

The Credit Card Act's amendments to TILA go into effect in three stages. This interim final rule implements the provisions of the Credit Card Act that go into effect on August 20, 2009. The remaining provisions go into effect on February 22 or August 22, 2010 and will be implemented by the Federal Reserve Board at a later date.

The interim final rule implements the requirements in the Credit Card Act as follows:

  • Creditors must provide written notice to consumers 45 days before the creditor increases an annual percentage rate on a credit card account or makes a significant change to the terms of a credit card account.
  • Creditors must inform consumers in the same notice of their right to cancel the credit card account before the increase or change goes into effect. If a consumer does so, the creditor is generally prohibited from applying the increase or change to the account.
  • Creditors generally must mail or deliver periodic statements for credit cards and other open-end consumer credit accounts at least 21 days before payment is due.

The notice that will be published in the Federal Register is attached. Comments on the interim final rule must be submitted within 60 days after publication in the Federal Register, which is expected shortly.
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July 15, 2009
Restructuring of check processing operations in the Fourth and Seventh Districts

The Federal Reserve Board has approved amendments to Appendix A of Regulation CC that reflect the restructuring of the Federal Reserve Banks' check-processing operations.

Appendix A provides a routing symbol guide that helps depository institutions determine the maximum permissible hold periods for most deposited checks. On September 12, 2009, the Reserve Banks will transfer the check-processing operations of the head office of the Federal Reserve Bank of Chicago to the head office of the Federal Reserve Bank of Cleveland. To ensure that the information in Appendix A accurately describes the structure of check-processing operations within the Federal Reserve System, the final rule deletes the reference in Appendix A to the Chicago head office and reassigns the routing numbers listed thereunder to the Cleveland head office. To coincide with the effective date of the underlying check processing changes, the amendments are effective September 12, 2009.


July 14, 2009
Federal Reserve Announces Results of Auction of $125 Billion in 84-Day Credit Held on July 13, 2009

On July 13, 2009, the Federal Reserve conducted an auction of $125 billion in 84-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
     
Total propositions submitted: $47.768 billion
Total propositions accepted: $47.768 billion
Bid/cover ratio: 0.38
     
Number of bidders: 87

The awarded loans will settle on July 16, 2009, and will mature on October 8, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on July 14, 2009. Participants have until 12:30 p.m. EDT on July 14, 2009, to inform their local Reserve Bank of any error.


July 13, 2009
Federal Reserve Offers $125 Billion in 84-Day Credit Through Its Term Auction Facility

On July 13, 2009, the Federal Reserve will offer $125 billion in 84-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount: $125 billion
Term: 84-day loan
Bid Submission Date: July 13, 2009
  Opening Time: 11:00 a.m. EDT
  Closing Time: 12:30 p.m. EDT
Notification Date: July 14, 2009
Settlement Date: July 16, 2009
Maturity Date: October 8, 2009
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution): $12.5 billion (10% of Offering Amount)
Minimum Bid Rate: 0.25 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $12.5 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

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


July 02, 2009
Agencies Publish Final Rules and Guidelines to Promote Accurate Reports About Consumers

The federal financial regulatory agencies and the Federal Trade Commission have published final rules and guidelines to promote the accuracy and integrity of information furnished to credit bureaus and other consumer reporting agencies, and widely used to determine consumers' eligibility for credit, employment, insurance, and rental housing.

As required by the Fair and Accurate Credit Transactions Act, the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Federal Trade Commission, National Credit Union Administration, Office of the Comptroller of the Currency, and Office of Thrift Supervision are publishing these final rules and guidelines, with an effective date of July 1, 2010.

Under the rules, entities that furnish information about consumers to consumer reporting agencies generally must include a consumer's credit limit in the information provided. The federal agencies are also publishing an Advance Notice of Proposed Rulemaking (ANPR) to identify possible additions to the information that furnishers must provide to consumer reporting agencies, such as the account opening date.

Also, under the rules, if a consumer believes his or her credit report includes inaccurate information, the consumer may submit a dispute directly to the entity that provided the information to the consumer reporting agency, and that entity must investigate the dispute. The rules do not change a consumer's ability to submit a dispute to a consumer reporting agency or a furnisher's duty to investigate a dispute referred by a reporting agency.
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July 02, 2009
Federal Reserve advises bank customers on California registered warrants

The California State Controller's Office has announced that it may issue registered warrants, or IOUs, for some payments as early as today. These registered warrants would not be payable immediately, but rather on a future date. These warrants will be identified with the word "REGISTERED" on the front.

Customers are advised to consult with their banks before depositing a registered warrant and should ask the following:

  • Will the bank accept the registered warrant for deposit? Some banks may have arrangements to advance funds to depositors prior to the warrant's payment date.
  • When will the funds be made available for withdrawal? These warrants will not be subject to the normal, federal check-hold limits and therefore could be subject to extended holds.
  • Is there a potential to incur fees? The State of California will likely return unpaid any registered warrants that it receives before the payment date. Therefore, depositors of these warrants may be subject to returned-deposit fees if their banks attempt to collect these warrants before they are payable.In addition, if customers rely on these funds to make other payments, they may be subject to overdraft or bounced-check fees if the warrants are returned.

The State of California has provided additional information on these registered warrants at http://www.sco.ca.gov/5935.html.
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June 30, 2009
Agencies Seek Comment on Proposed Interagency Guidance on Funding and Liquidity Risk Management

The federal bank, thrift, and credit union regulatory agencies are seeking comment on the proposed Interagency Guidance on Funding and Liquidity Risk Management.

The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, and the National Credit Union Administration are issuing this guidance to communicate consistent expectations on sound practices for the management of funding and liquidity risks, and to strengthen liquidity risk-management practices. This guidance brings the agencies' liquidity risk principles into alignment with the international guidance issued in September 2008 by the Basel Committee on Banking Supervision titled, Principles for Sound Liquidity Risk Management and Supervision.1

Recent turmoil in the financial markets emphasizes the importance of good liquidity risk management for the safety and soundness of financial institutions. The proposed guidance emphasizes the importance of cash flow projections, diversified funding sources, stress testing, a cushion of liquid assets, and a formal, well-developed contingency funding plan for measuring, monitoring, and managing liquidity risk. The proposed guidance, when finalized, will apply to all domestic financial institutions, including banks, thrifts, and credit unions.

The agencies are requesting comments on all aspects of the proposed guidance, which will be published in the Federal Register. Comments are due within 60 days after publication in the Federal Register.

Media Contacts:
OCC Dean DeBuck 202-874-5770
Federal Reserve Barbara Hagenbaugh 202-452-2955
FDIC David Barr 202-898-6992
OTS William Ruberry 202-906-6677
NCUA Cherie Umbel 703-518-6337


1. NCUA is not a member of the Basel Committee and federally-insured credit unions are not subject to Basel-issued principles.


June 30, 2009
Federal Reserve Announces Results of Auction of $150 Billion in 28-Day Credit Held on June 29, 2009

On June 29, 2009, the Federal Reserve conducted an auction of $150 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
     
Total propositions submitted: $86.337 billion
Total propositions accepted: $86.337 billion
Bid/cover ratio: 0.58
     
Number of bidders: 106

The awarded loans will settle on July 2, 2009, and will mature on July 30, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on June 30, 2009. Participants have until 12:30 p.m. EDT on June 30, 2009, to inform their local Reserve Bank of any error.


June 29, 2009
Federal Reserve Offers $150 Billion in 28-Day Credit Through Its Term Auction Facility

On June 29, 2009, the Federal Reserve will offer $150 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount: $150 billion
Term: 28-day loan
Bid Submission Date: June 29, 2009
  Opening Time: 11:00 a.m. EDT
  Closing Time: 12:30 p.m. EDT
Notification Date: June 30, 2009
Settlement Date: July 2, 2009
Maturity Date: July 30, 2009
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution): $15 billion (10% of Offering Amount)
Minimum Bid Rate: 0.25 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $15 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

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


June 26, 2009
Agencies issue interim final rule for mortgage loans modified under the Making Home Affordable Program

The federal bank and thrift regulatory agencies today invited public comment on an interim final rule that provides that mortgage loans modified under the U.S. Department of the Treasury's Making Home Affordable Program (MHAP) will retain the risk weight applicable before modification.

On March 4, 2009, the Treasury announced guidelines under the MHAP to promote sustainable loan modifications for homeowners at risk of losing their homes to foreclosure. The interim final rule would provide a common interagency capital treatment for mortgage loans modified under MHAP. For example, mortgage loans risk weighted at 50 percent prior to modification would continue to be risk weighted at 50 percent after modification provided they continue to meet other applicable criteria.

The interim final rule, by the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of Thrift Supervision, will take effect upon publication in the Federal Register, which is expected shortly. Public comments must be submitted within 30 days after publication in the Federal Register.
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June 26, 2009
Federal Reserve announces extensions of and modifications to a number of its liquidity programs

The Federal Reserve on Thursday announced extensions of and modifications to a number of its liquidity programs. Conditions in financial markets have improved in recent months, but market functioning in many areas remains impaired and seems likely to be strained for some time. As a consequence, to promote financial stability and support the flow of credit to households and businesses, the Federal Reserve is extending a number of facilities through early 2010. At the same time, in light of the improvement in financial conditions and reduced usage of some facilities, the Federal Reserve is trimming the size and changing the terms of some facilities.

Specifically, the Board of Governors approved extension through February 1, 2010, of the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF), the Commercial Paper Funding Facility (CPFF), the Primary Dealer Credit Facility (PDCF), and the Term Securities Lending Facility (TSLF). The expiration date for the Term Asset-Backed Securities Loan Facility (TALF) currently remains set at December 31, 2009. The Term Auction Facility (TAF) does not have a fixed expiration date.

The extension of the TSLF also required the approval of the Federal Open Market Committee (FOMC), as that facility is established under the joint authority of the Board and the FOMC.

In addition, the temporary reciprocal currency arrangements (swap lines) between the Federal Reserve and other central banks have been extended to February 1. The Federal Reserve action to extend the swap lines was taken by the FOMC.

The Federal Reserve also announced changes to certain liquidity programs in light of the improvement in financial conditions and the associated reduction in usage of some facilities. Specifically, the Federal Reserve trimmed the size of upcoming TAF auctions, because the amount of credit extended under that facility has been well below the offered amount. In view of very weak demand at TSLF Schedule 1 auctions and TSLF Options Program auctions over recent months, auctions under these programs will be suspended. The frequency of Schedule 2 TSLF auctions will be reduced to one every four weeks and the offered amount will be reduced. The authorization for the Money Market Investor Funding Facility (MMIFF) was not extended, and an additional administrative criterion was established for use of the AMLF. If necessary in view of evolving market conditions, the Federal Reserve will increase the size of TAF auctions and resume TSLF operations that have been suspended.

The Board and the FOMC will continue to monitor closely the condition of financial markets and the need for and effectiveness of the Federal Reserve's special liquidity facilities and arrangements. Should the recent improvements in market conditions continue, the Board and the FOMC currently anticipate that a number of these facilities may not need to be extended beyond February 1. However, if financial stresses do not moderate as expected, the Board and the FOMC are prepared to extend the terms of some or all of the facilities as needed to promote financial stability and economic growth. The public will receive timely notice of planned extensions, discontinuations, or modifications of Federal Reserve programs.

TAF and Swap Lines
In recent months, conditions in wholesale funding markets have improved, and partly as a result, usage of the TAF and the dollar facilities provided by foreign central banks has declined notably. For some time, amounts bid at TAF auctions have fallen short of the amounts auctioned. In view of the decreasing need for TAF funding, the Board has reduced the amounts auctioned at the biweekly auctions of TAF funds from $150 billion to $125 billion, effective with the auction to be held on July 13. The Federal Reserve anticipates that, if market conditions continue to improve in coming months, TAF funding will be reduced gradually further.

The extension of the dollar liquidity swap arrangements through February 1 currently applies to the swap lines between the Federal Reserve and each of the following central banks: the Reserve Bank of Australia, the Banco Central do Brasil, the Bank of Canada, Danmarks Nationalbank, the Bank of England, the European Central Bank, the Bank of Korea, the Banco de Mexico, the Reserve Bank of New Zealand, Norges Bank, the Monetary Authority of Singapore, Sveriges Riksbank, and the Swiss National Bank. The extension of the foreign currency swap arrangements currently applies to the swap lines between the Federal Reserve and the Bank of England, the European Central Bank, and the Swiss National Bank. The Bank of Japan will consider extensions of the dollar liquidity swap and the foreign-currency liquidity swap arrangements with the Federal Reserve and will announce its decision following its next Monetary Policy Meeting.

TSLF and PDCF
The Federal Reserve extended the TSLF, with certain modifications, and the PDCF through February 1.

In view of the considerable progress to date in deleveraging by primary dealers and dealers' improved access to funding in the market for repurchase agreements, activity at the TSLF has fallen notably. In response, the Board and the FOMC approved certain modifications to the TSLF. In particular, TSLF auctions backed by Schedule 1 collateral (Treasury, agency debt, and agency-guaranteed mortgage-backed securities) will be suspended, effective July 1. Also, the Federal Reserve suspended the TSLF Options Program (TOP), effective with maturity of outstanding June TOP options. TSLF auctions backed by Schedule 2 collateral (Schedule 1 collateral and investment-grade corporate, municipal, mortgage-backed, and asset-backed securities) will now be conducted every four weeks, rather than every two weeks, and the total amount offered under the TSLF will be reduced to $75 billion. The Federal Reserve anticipates that the amounts auctioned under the TSLF will be scaled back further over time as permitted by market conditions. However, the Federal Reserve is prepared to resume Schedule 1 TSLF operations and TOP auctions and to increase the frequency and size of Schedule 2 auctions if warranted by evolving market conditions.

Although the amount outstanding under the PDCF is currently zero, the Board believes it appropriate to continue to provide the PDCF as a backstop liquidity facility for primary dealers in the near term, while financial market conditions remain somewhat fragile.

AMLF, CPFF, and MMIFF
The Board extended the authorizations for the AMLF and the CPFF through February 1, 2010. The authorization for the MMIFF, which expires on October 30, 2009, was not extended.

Usage of the AMLF has declined considerably as market conditions have improved. Nonetheless, in view of the continued fragility in market conditions, the Board judged it appropriate to extend the authorization for the AMLF. To help ensure that the AMLF is used for its intended purpose of providing a temporary liquidity backstop to money market mutual funds (MMMFs), the Federal Reserve established a redemption threshold whereby a MMMF would have to experience material outflows--defined as at least 5 percent of net assets in a single day or at least 10 percent of net assets within the prior five business days--before it can sell asset-backed commercial paper (ABCP) that would be eligible collateral for AMLF loans to depository institutions and bank holding companies. Any eligible ABCP purchased from a MMMF that has experienced redemptions at these thresholds could be pledged to AMLF at any time within the five business days following the date that the threshold level of redemptions was reached.

The Board similarly judged that market conditions warranted the extension of the CPFF through February 1 in order to help ensure the access of U.S. businesses to short-term funding. Interest rates posted on the CPFF are at levels that are increasingly unattractive for many borrowers as market conditions improve, and accordingly usage of the CPFF is declining fairly steadily. In these circumstances, the Board judged that modifications to the CPFF were not necessary at this time.

Given the overall improvement in market conditions and the continued availability of the AMLF and the CPFF, the Board believed that it was not necessary to extend the authorization for the MMIFF.
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June 24, 2009
Agencies Announce Proposed Revisions to Regulations Implementing the Community Reinvestment Act

The federal bank and thrift regulatory agencies today proposed revisions to regulations implementing the Community Reinvestment Act (CRA) to require the agencies to consider low-cost education loans provided to low-income borrowers when assessing a financial institution's record of meeting community credit needs.

This proposal, which is being proposed jointly by the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of Thrift Supervision, incorporates provisions of the recently enacted Higher Education Opportunity Act, which revised the CRA.

The proposal also would incorporate into the CRA rules statutory language that allows the agencies, when assessing an institution's record, to consider, as a factor, capital investments, loan participations, and other ventures by nonminority- and nonwomen-owned financial institutions in cooperation with minority- and women-owned institutions and low-income credit unions. This language codifies guidance in the Interagency Questions and Answers on Community Reinvestment, published on January 6, 2009.

Although the agencies seek comment on all aspects of the proposal, they are focusing on the following questions:

  • How "education loans" should be defined, including whether private loans not governmentally insured or guaranteed and loans for elementary and secondary education should be covered, as well as loans for education expenses associated with unaccredited institutions;
  • Whether the proposed definition of "low-cost" is appropriate; and
  • Whether "low-income" should be defined differently from the way it is currently defined in the CRA regulations, including how the agencies should treat the student's family income or expected contribution.

Public comments are due 30 days after the proposal is published in the Federal Register, which is expected shortly. The Federal Register notice is attached.

Media Contacts:
Federal Reserve Board Susan Stawick 202-452-2955
FDIC David Barr 202-898-6992
OCC Dean DeBuck 202-874-5770
OTS William Ruberry 202-906-6677

June 24, 2009
FOMC Statement

Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing. Conditions in financial markets have generally improved in recent months. Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.


June 22, 2009
Board Seeks Nominations for Appointments to Consumer Advisory Council

The Federal Reserve Board announced on Monday that it is seeking nominations for appointments to its Consumer Advisory Council.

The Council advises the Board on the exercise of its responsibilities under various consumer financial services laws and on other matters. The group meets in Washington, D.C., three times a year.

Ten new members will be appointed to serve three-year terms beginning in January 2010.

Nominations should include a résumé and the following information about nominees:

  • full name, title, address, telephone and facsimile numbers, and email address;
  • organization's name, brief description of organization, address, and telephone and facsimile numbers;
  • past and present positions, dates, and descriptions of responsibilities;
  • knowledge, interests, or experience related to community development and reinvestment, consumer protection regulations, consumer credit, or other consumer financial services; and
  • positions held in community and banking associations and on councils and boards.

Nominations should also include the nominator's name, organizational affiliation, title, address, telephone and facsimile numbers, and email address. Individuals may nominate themselves.

Letters of nomination with complete information, including a résumé for each nominee, must be received by August 28, 2009. Nominations not received by August 28 may not be considered.

Electronic nominations are preferred.

If electronic submission is not feasible, the nominations may be mailed (not sent by facsimile) to Joseph Firschein, Assistant Director and Community Affairs Officer, Division of Consumer and Community Affairs, Board of Governors of the Federal Reserve System, Washington, DC 20551.

For further information, contact Jennifer Kerslake, Secretary of the Council, at (202) 452-6470.

The Board's notice is attached


June 16, 2009
Federal Reserve Announces Results of Auction of $150 Billion in 84-Day Credit Held on June 15, 2009

On June 15, 2009, the Federal Reserve conducted an auction of $150 billion in 84-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
     
Total propositions submitted: $48.023 billion
Total propositions accepted: $48.023 billion
Bid/cover ratio: 0.32
     
Number of bidders: 97

The awarded loans will settle on June 18, 2009, and will mature on September 10, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on June 16, 2009. Participants have until 12:30 p.m. EDT on June 16, 2009, to inform their local Reserve Bank of any error.


June 15, 2009
Federal Reserve Offers $150 Billion in 84-Day Credit Through Its Term Auction Facility

On June 15, 2009, the Federal Reserve will offer $150 billion in 84-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount: $150 billion
Term: 84-day loan
Bid Submission Date: June 15, 2009
  Opening Time: 11:00 a.m. EDT
  Closing Time: 12:30 p.m. EDT
Notification Date: June 16, 2009
Settlement Date: June 18, 2009
Maturity Date: September 10, 2009
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution): $15 billion (10% of Offering Amount)
Minimum Bid Rate: 0.25 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $15 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

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


June 11, 2009
Agencies Issue Frequently Asked Questions on Identity Theft Rules

Six federal agencies issued a set of frequently asked questions (FAQs) today to help financial institutions, creditors, users of consumer reports, and issuers of credit cards and debit cards comply with federal regulations on identity theft and discrepancies in changes of address.

The "Red Flags and Address Discrepancy Rules," which implement sections of the Fair and Accurate Credit Transactions Act of 2003 (FACT Act), were issued jointly on November 9, 2007, by the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency, Office of Thrift Supervision, and Federal Trade Commission.

The rules require financial institutions and creditors to develop and implement written Identity Theft Prevention Programs and require issuers of credit cards and debit cards to assess the validity of notifications of changes of address. The rules also provide guidance for users of consumer reports regarding reasonable policies and procedures to employ when consumer reporting agencies send them notices of address discrepancy.

The agencies' staff have jointly developed answers to these FAQs to provide guidance on numerous aspects of the rules, including which types of entities and accounts are covered; establishment and administration of an Identity Theft Prevention Program; address validation requirements applicable to card issuers; and the obligations of users of consumer reports upon receiving a notice of address discrepancy.

Attachment (54 KB PDF) off-site image

Media Contacts:
Federal Reserve Susan Stawick 202-452-2955
FDIC David Barr 202-898-6992
NCUA Cherie Umbel 703-518-6337
OCC Dean DeBuck 202-874-5770
OTS William Ruberry 202-906-6677
FTC Frank Dorman 202-326-2674

June 10, 2009
Federal Reserve Issues First Monthly Report on its Credit and Liquidity Programs

The Federal Reserve on Wednesday issued the first of an ongoing series of monthly reports providing considerable new information on its credit and liquidity programs.

The report, entitled Federal Reserve Credit and Liquidity Programs and the Balance Sheet, makes public a wide range of data concerning borrowing patterns and collateral.

"The Federal Reserve strongly believes in transparency as a fundamental principle of central banking in a democracy. This new report, together with other steps taken as a result of a comprehensive review of our disclosure practices led by Vice Chairman Kohn, significantly enhances the information Federal Reserve is releasing and should help the public and the Congress better judge how we are carrying out our responsibilities for stabilizing the financial system and the economy," said Board Chairman Ben S. Bernanke. "We will continue to look for opportunities to broaden the scope of information and analysis we provide."

For many of the Federal Reserve's credit and liquidity programs, the new information in the report includes the number of borrowers and borrowing amounts by type of institution, collateral by type and credit rating, and data on the concentration of borrowing. The report also includes information on liquidity swap usage by country, quarterly income for important classes of Federal Reserve assets, and asset distribution and other information on the limited liability companies created to avert the disorderly failures of Bear Stearns and American International Group.

In addition, the report summarizes and discusses recent developments across a number of programs. Each report will be available on the Federal Reserve Board's public website approximately two weeks after the end of the month at www.federalreserve.gov/monetarypolicy/bst.htm.

The new report is part of the Federal Reserve's continuing effort to enhance the transparency of its credit and liquidity programs and is consistent with the amendment to the recent budget resolution sponsored by Sen. Christopher Dodd, chairman of the Senate Committee on Banking, Housing and Urban Affairs, and Sen. Richard Shelby, the ranking member.

Separate from the report, the Federal Reserve Bank of New York recently made available the investment management agreements related to its financial stability and liquidity activities. They are posted on its public website at www.newyorkfed.org/aboutthefed/vendor_information.html.
June 2009 Report (928 KB PDF) off-site image


June 08, 2009
Banking Organizations Have Submitted Capital Plans to Bolster Their Capital Buffers as Required by the Supervisory Capital Assessment Program

The 10 banking organizations required by the Supervisory Capital Assessment Program to bolster their capital buffers have all submitted capital plans that, if implemented, would provide sufficient capital to meet the required buffer under the assessment's more-adverse scenario. As supervisors, we will be working with the institutions to ensure their plans are implemented quickly and effectively.

Supervisors also continue to work with all regulated financial institutions to review the quality of their corporate-governance, risk-management and capital-planning processes.


June 02, 2009
Federal Reserve Announces Results of Auction of $150 Billion in 28-Day Credit Held on June 1, 2009

On June 1, 2009, the Federal Reserve conducted an auction of $150 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
     
Total propositions submitted: $95.588 billion
Total propositions accepted: $95.588 billion
Bid/cover ratio: 0.64
     
Number of bidders: 103

The awarded loans will settle on June 4, 2009, and will mature on July 2, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on June 2, 2009. Participants have until 12:30 p.m. EDT on June 2, 2009, to inform their local Reserve Bank of any error.


June 01, 2009
Federal Reserve Will Offer $150 Billion in 28-Day Credit Through Its Term Auction Facility Today

On June 1, 2009, the Federal Reserve will offer $150 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount: $150 billion
Term: 28-day loan
Bid Submission Date: June 1, 2009
  Opening Time: 11:00 a.m. EDT
  Closing Time: 12:30 p.m. EDT
Notification Date: June 2, 2009
Settlement Date: June 4, 2009
Maturity Date: July 2, 2009
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution): $15 billion (10% of Offering Amount)
Minimum Bid Rate: 0.25 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $15 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

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


June 01, 2009
Agencies Propose Rule to Implement S.A.F.E. Act Mortgage Loan Originator Registration Requirements

Washington -- The Federal financial institution regulatory agencies are together issuing for public comment proposed rules requiring mortgage loan originators who are employees of agency-regulated institutions to meet the registration requirements of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (S.A.F.E. Act).

The S.A.F.E. Act requires the agencies to jointly develop and maintain a system for registering residential mortgage loan originators who are employees of agency-regulated institutions, including national and State banks, savings associations, credit unions, and Farm Credit System institutions, and certain of their subsidiaries. These mortgage loan originators must be registered with the Nationwide Mortgage Licensing System and Registry (Registry), a database established by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators to support the licensing of mortgage loan originators by the States. As part of this registration process, mortgage loan originators must furnish to the Registry background information and fingerprints for a background check. The S.A.F.E. Act generally prohibits employees of an agency-regulated institution from originating residential mortgage loans without first registering with the Registry.

The proposal, which is being issued jointly by the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of Thrift Supervision, Farm Credit Administration, and National Credit Union Administration, establishes the registration requirements for mortgage loan originators employed by agency-regulated institutions as well as requirements for these institutions, including the adoption of policies and procedures to ensure compliance with the S.A.F.E Act and final rule. As required by the law, the proposal also requires these mortgage loan originators to obtain a unique identifier through the Registry that will remain with that originator, regardless of changes in employment. When the system is fully operational, consumers will be able to use the unique identifiers to access employment and other background information of registered mortgage loan originators. Pursuant to the S.A.F.E. Act, the proposal further requires these mortgage loan originators to provide their unique identifiers to consumers in certain circumstances and agency-regulated institutions to make them available to consumers.

Because modification of the Registry to accept federal registrations involves complex technical issues, the proposed rule provides for a delay in implementation of the registration requirements until 180 days after the Registry becomes operational and available for initial federal registrations.

The Federal Register notice and proposed rule are attached. The proposal will soon be published in the Federal Register and the comment period will end 30 days thereafter.
Attachment (477 KB PDF) off-site image

Media Contacts:
Federal Reserve Board Susan Stawick 202-452-2955
FCA Christine Quinn 703-883-4056
FDIC David Barr 202-898-6992
NCUA Cherie Umbel 703-518-6337
OCC Dean DeBuck 202-874-5770
OTS William Ruberry 202-906-6677

May 27, 2009
Restructuring of Check Processing Operations in the Fourth and Ninth Districts

The Federal Reserve Board has approved amendments to Appendix A of Regulation CC that reflect the restructuring of the Federal Reserve Banks' check-processing operations.

Appendix A provides a routing symbol guide that helps depository institutions determine the maximum permissible hold periods for most deposited checks. On July 25, 2009, the Reserve Banks will transfer the check-processing operations of the head office of the Federal Reserve Bank of Minneapolis to the head office of the Federal Reserve Bank of Cleveland. To ensure that the information in Appendix A accurately describes the structure of check-processing operations within the Federal Reserve System, the final rule deletes the reference in Appendix A to the Minneapolis head office and reassigns the routing numbers listed thereunder to the Cleveland head office. To coincide with the effective date of the underlying check processing changes, the amendments are effective July 25, 2009.


May 20, 2009
Board Announces Approval of Final Amendments to Regulation D Pertaining to Transfers From Savings Deposits and the Establishment of Excess Balance Accounts at Federal Reserve Banks

The Federal Reserve Board announced the approval of final amendments to Regulation D (Reserve Requirements of Depository Institutions) to liberalize the types of transfers consumers can make from savings deposits and to make it easier for community banks that use correspondent banks to receive interest on excess balances held at Federal Reserve Banks.

The amendments would also ensure that correspondents that are not eligible to receive interest on their own balances at Reserve Banks pass back to their respondents any interest earned on required reserve balances held on behalf of those respondents. The Board is also making other clarifying changes to Regulation D and Regulation I (Issue and Cancellation of Federal Reserve Bank Capital Stock).

The Board has revised Regulation D's restrictions on the types and number of transfers and withdrawals that may be made from savings deposits. The final amendments increase from three to six the permissible monthly number of transfers or withdrawals from savings deposits by check, debit card, or similar order payable to third parties. Technological advancements have eliminated any rational basis for the distinction between transfers by these means and other types of pre-authorized or automatic transfers subject to the six-per-month limitation.

The Board also approved final amendments to Regulation D to authorize the establishment of excess balance accounts at Federal Reserve Banks. Excess balance accounts are limited-purpose accounts for maintaining excess balances of one or more institutions that are eligible to earn interest on their Federal Reserve balances. Each participant in an excess balance account will designate an institution to act as agent (which may be the participant's current pass-through correspondent) for purposes of managing the account. The Board is authorizing excess balance accounts to alleviate pressures on correspondent-respondent business relationships in the current unusual financial market environment, which has led some respondents to prefer holding their excess balances in an account at the Federal Reserve, rather than selling them through a correspondent in the federal funds market. A correspondent could hold its respondents' excess balances in its own account at the Federal Reserve Bank; however, doing so may adversely affect the correspondent's regulatory leverage ratio. As market conditions evolve, the Board will evaluate the continuing need for excess balance accounts.

The final amendments to Regulations D and I will become effective 30 days after publication in the Federal Register. Excess balance accounts will be available for the reserve maintenance period beginning July 2, 2009.
Press Release off-site image


May 19, 2009
Federal Reserve Announces Results of Auction of $150 Billion in 84-Day Credit Held on May 18, 2009

On May 18, 2009, the Federal Reserve conducted an auction of $150 billion in 84-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
     
Total propositions submitted: $55.570 billion
Total propositions accepted: $55.570 billion
Bid/cover ratio: 0.37
     
Number of bidders: 96

The awarded loans will settle on May 21, 2009, and will mature on August 13, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on May 19, 2009. Participants have until 12:30 p.m. EDT on May 19, 2009, to inform their local Reserve Bank of any error.


May 19, 2009
Federal Reserve Announces That Certain High-Quality Commercial Mortgage-Backed Securities Will Become Eligible Collateral Under the Term Asset-Backed Securities Loan Facility (TALF)

The Federal Reserve Board announced that, starting in July, certain high-quality commercial mortgage-backed securities issued before January 1, 2009 (legacy CMBS) will become eligible collateral under the Term Asset-Backed Securities Loan Facility (TALF).

The TALF is designed to increase credit availability and support economic activity in part by facilitating renewed issuance of consumer and business asset-backed securities (ABS) and CMBS. The Board authorized the TALF on November 24, 2008, under section 13(3) of the Federal Reserve Act. Under the TALF, the Federal Reserve Bank of New York (FRBNY) has extended loans secured by triple-A-rated newly issued ABS backed by certain consumer and business loans and leases. On May 1, 2009, the Board announced it would expand the range of acceptable TALF collateral to include newly issued CMBS starting with the June subscription.

On March 23, 2009, the Federal Reserve announced that it would evaluate extending the list of eligible collateral for TALF loans to include certain legacy securities. The objective of the expansion is to restart the market for legacy securities and, by doing so, stimulate the extension of new credit by helping to ease balance sheet pressures on banks and other financial institutions. The announcement marks the first addition of a legacy asset class to the list of eligible TALF collateral.

The CMBS market, which has financed approximately 20 percent of outstanding commercial mortgages, including mortgages on offices and multi-family residential, retail and industrial properties, came to a standstill in mid-2008. The extension of eligible TALF collateral to include legacy CMBS is intended to promote price discovery and liquidity for legacy CMBS. The resulting improvement in legacy CMBS markets should facilitate the issuance of newly issued CMBS, thereby helping borrowers finance new purchases of commercial properties or refinance existing commercial mortgages on better terms.

To be eligible as collateral for TALF loans, legacy CMBS must be senior in payment priority to all other interests in the underlying pool of commercial mortgages and must meet certain other criteria designed to protect the Federal Reserve and the Treasury from credit risk. The FRBNY will review and reject as collateral any CMBS that does not meet the published terms or otherwise poses unacceptable risk.

Eligible newly issued and legacy CMBS must have at least two triple-A ratings from DBRS, Fitch Ratings, Moody's Investors Service, Realpoint, or Standard Poor's and must not have a rating below triple-A from any of these rating agencies. More broadly, the Federal Reserve is formalizing procedures for determining the set of rating agencies whose ratings will be accepted for various types of eligible collateral in the Federal Reserve's credit programs.

The initial subscription date for TALF loans collateralized by newly issued CMBS will be June 16, 2009. The subsequent subscription dates for TALF loans collateralized by newly issued and legacy CMBS will be announced in advance. The subscription date for loans collateralized by all other ABS will remain toward the beginning of the month.
Press Release off-site image


May 18, 2009
Federal Reserve offers $150 billion in 84-day credit through its Term Auction Facility

On May 18, 2009, the Federal Reserve will offer $150 billion in 84-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters

Offering Amount:   $150 billion
Term:   84-day loan
Bid Submission Date:   May 18, 2009
  Opening Time:   11:00 a.m. EDT
  Closing Time:   12:30 p.m. EDT
Notification Date:   May 19, 2009
Settlement Date:   May 21, 2009
Maturity Date:   August 13, 2009
Minimum Bid Amount (per bid):   $5 million
Bid Increment:   $100,000
Maximum Bid Amount (per institution):   $15 billion (10% of Offering Amount)
Minimum Bid Rate:   0.25 percent
Incremental Bid Rate:   0.001 percent
Minimum Award:   $10,000
Maximum Award:   $15 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

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


May 08, 2009
Board Approves Final Rules Revising Disclosure Requirements for Mortgage Loans under Regulation Z

The Federal Reserve Board approved final rules that revise the disclosure requirements for mortgage loans under Regulation Z (Truth in Lending). The revisions implement the Mortgage Disclosure Improvement Act (MDIA), which was enacted in July 2008 as an amendment to the Truth in Lending Act (TILA).

The MDIA seeks to ensure that consumers receive cost disclosures earlier in the mortgage process. The final rule largely follows a proposal issued by the Board in December 2008. Under the MDIA, creditors must comply with the new provisions on July 30, 2009. The Board's implementing regulations apply to dwelling-secured consumer loans for which a creditor receives an application on or after July 30, 2009.

The MDIA requires creditors to give good faith estimates of mortgage loan costs ("early disclosures") within three business days after receiving a consumer's application for a mortgage loan and before any fees are collected from the consumer, other than a reasonable fee for obtaining the consumer's credit history. These requirements are consistent with the Board's July 2008 final rule, which applied to loans secured by a consumer's principal dwelling. The MDIA broadens this requirement by also requiring early disclosures for loans secured by dwellings other than the consumer's principal dwelling, such as a second home.

In addition, the rules would implement the MDIA's requirements that:
  • Creditors wait seven business days after they provide the early disclosures before closing the loan; and
  • Creditors provide new disclosures with a revised annual percentage rate (APR), and wait an additional three business days before closing the loan, if a change occurs that makes the APR in the early disclosures inaccurate beyond a specified tolerance.

The rules would permit a consumer to expedite the closing to address a personal financial emergency, such as a foreclosure.


May 07, 2009
Federal Reserve, OCC, and FDIC Release Results of the Supervisory Capital Assessment Program

The results of a comprehensive, forward-looking assessment of the financial conditions of the nation's 19 largest bank holding companies (BHCs) by the federal bank supervisory agencies were released on Thursday.

The exercise--conducted by the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation--was conducted so that supervisors could determine the capital buffers sufficient for the 19 BHCs to withstand losses and sustain lending--even if the economic downturn is more severe than is currently anticipated. In a detailed summary of the results of the Supervisory Capital Assessment Program (SCAP), the supervisors identified the potential losses, resources available to absorb losses, and resulting capital buffer needed for the 19 participating BHCs.

The SCAP is a complement to the Treasury's Capital Assistance Program (CAP), which makes capital available to financial institutions as a bridge to private capital in the future. Together, these programs play a critical role in ensuring that the U.S. banking sector will be in a position of strength.

Statement by Chairman Ben S. Bernanke off-site image

Overview of Results (333 KB PDF) off-site image

Related information

May 05, 2009
Federal Reserve Announces Results of Auction of $150 Billion in 28-Day Credit Held on May 4, 2009

On May 4, 2009, the Federal Reserve conducted an auction of $150 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
     
Total propositions submitted: $131.562 billion
Total propositions accepted: $131.562 billion
Bid/cover ratio: 0.88
     
Number of bidders: 124

The awarded loans will settle on May 7, 2009, and will mature on June 4, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on May 5, 2009. Participants have until 12:30 p.m. EDT on May 5, 2009, to inform their local Reserve Bank of any error.


May 04, 2009
Federal Reserve Will Offer $150 Billion in 28-Day Credit Through Its Term Auction Facility Today

On May 4, 2009, the Federal Reserve will offer $150 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount: $150 billion
Term: 28-day loan
Bid Submission Date: May 4, 2009
  Opening Time: 11:00 a.m. EDT
  Closing Time: 12:30 p.m. EDT
Notification Date: May 5, 2009
Settlement Date: May 7, 2009
Maturity Date: June 4, 2009
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution): $15 billion (10% of Offering Amount)
Minimum Bid Rate: 0.25 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $15 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

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


May 04, 2009
Restructuring of Check Processing Operations in the Tenth, Eleventh, and Twelfth Districts

The Federal Reserve Board has approved amendments to Appendix A of Regulation CC that reflect the restructuring of the Federal Reserve Banks' check-processing operations. Appendix A provides a routing symbol guide that helps depository institutions determine the maximum permissible hold periods for most deposited checks. On June 20, 2009, the Reserve Banks will transfer the check-processing operations of the Seattle branch office of the Federal Reserve Bank of San Francisco to the Los Angeles branch office of that Reserve Bank. On June 27, 2009, the Reserve Banks will transfer the check-processing operations of the Denver branch office of the Federal Reserve Bank of Kansas City to the Los Angeles branch office and to the head office of the Federal Reserve Bank of Dallas. Effective June 20, 2009, the Board is amending the list of routing symbols in Appendix A associated with the Federal Reserve Bank of San Francisco to reflect the transfer of check-processing operations from Seattle to Los Angeles. Effective June 27, 2009, the Board is amending the lists of routing symbols in Appendix A associated with the Federal Reserve Banks of Kansas City, Dallas, and San Francisco to reflect the transfer of check-processing operations from Denver to Los Angeles and Dallas.
Press Release off-site image


May 01, 2009
Federal Reserve announces expansion of eligible collateral under Term Asset-Backed Securities Loan Facility (TALF)

The Federal Reserve Board on Friday announced that, starting in June, commercial mortgage-backed securities (CMBS) and securities backed by insurance premium finance loans will be eligible collateral under the Term Asset-Backed Securities Loan Facility (TALF).

The CMBS market came to a standstill in mid-2008. The inclusion of CMBS as eligible collateral for TALF loans will help prevent defaults on economically viable commercial properties, increase the capacity of current holders of maturing mortgages to make additional loans, and facilitate the sale of distressed properties. CMBS accounted for almost half of new commercial mortgage originations in 2007. 

More than 1.5 million insurance premium finance loans are extended to small businesses each year so they can obtain property and casualty insurance. The loans are often funded through the asset-backed securities (ABS) market and have become more expensive and more difficult to obtain since the shutdown of that market last fall. The inclusion of insurance premium ABS as TALF-eligible collateral will facilitate the flow of credit to small businesses.

The Board also authorized TALF loans with maturities of five years. Currently, all TALF loans have maturities of three years. TALF loans with five-year maturities will be available for the June funding to finance purchases of CMBS, ABS backed by student loans, and ABS backed by loans guaranteed by the Small Business Administration. The Board indicated that up to $100 billion of TALF loans could have five-year maturities; it will continue to evaluate that limit. Some of the interest on collateral financed with a five-year loan may be diverted toward an accelerated repayment of the loan, especially in the fourth and fifth years.

The Board authorized the TALF on November 24, 2008, under section 13(3) of the Federal Reserve Act. Under the TALF, the Federal Reserve Bank of New York extends loans secured by AAA-rated ABS backed by newly and recently originated loans. On February 10, 2009, the Board announced that it is prepared to undertake a significant expansion of the TALF. Friday's announcement marks another step along that expansion.

A new term sheet and a frequently-asked-questions document, specific to the CMBS collateral expansion, are attached. Also attached is a revised frequently-asked-questions document for the TALF program, including a description of the premium finance ABS collateral expansion as well as other changes.
Press Release off-site image


April 29, 2009
FOMC Statement

Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories, fixed investment, and staffing. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is facilitating the extension of credit to households and businesses and supporting the functioning of financial markets through a range of liquidity programs. The Committee will continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of financial and economic developments.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.


April 23, 2009
Federal Reserve System Publishes Annual Financial Statements

The Federal Reserve System on Thursday published the annual financial statements for the combined Federal Reserve Banks, the 12 individual Federal Reserve Banks, the limited liability companies (LLCs) that were created in 2008 to respond to strains in financial markets, and the Board of Governors for the years ended December 31, 2008 and 2007.

New information about the assets held by each of the consolidated LLCs is also included in the annual financial statements. The composition of the LLCs' portfolios is detailed in the statements. Measures of the quality of these assets are provided as well as information about their value. For mortgages held, information is included regarding concentrations by geography and type. The statements contain summaries of the associated credit and market risk for each significant holding.

The financial position of the combined Federal Reserve Banks, with detail for each Federal Reserve Bank and the consolidated LLCs, is also published weekly in the Board's H.4.1 statistical release.

Total Reserve Bank assets were $2.25 trillion on December 31, 2008, which is an increase of $1.33 trillion from the prior year. The increase was primarily the result of a $595 billion increase in loans to depository institutions and others, a $530 billion increase in central bank liquidity swaps, and a $412 billion increase in investments held by consolidated LLCs, offset, in part, by a $263 billion decrease in U.S. government securities. Balances of depository institutions and the U.S. Treasury held with the Reserve Banks contributed most significantly to the $1.33 trillion increase in Reserve Bank liabilities.

Reserve Bank comprehensive income (net income after a decline in the funded status of benefit plans) decreased $3.2 billion from its 2007 level to $35.5 billion in 2008. Net interest income on System Open Market Account holdings decreased $11.7 billion. Interest paid on depository institutions' reserve balances, which began on October 9, 2008, totaled $0.8 billion. Comprehensive income was also reduced by $5.2 billion due to the decline in the fair value of investments held by the consolidated LLCs, offset, in part, by $3.5 billion in net income on those investments. The change in the funded status of Federal Reserve benefit plans resulted in an additional decrease of $3.5 billion. The decrease in comprehensive income was offset by an increase of $3.6 billion in interest income on central bank liquidity swaps, $3.8 billion in realized gains on the sale of U.S. government securities, and $7.1 billion in interest earned on loans to depository institutions and others.

The Reserve Banks transferred $31.7 billion to the U.S. Treasury in 2008, a $2.9 billion decrease from 2007.

The individual and combined Reserve Bank financial statements and those of the consolidated LLCs and the Board are audited annually by an independent external auditor.

The Federal Reserve System financial statements may be accessed via the Federal Reserve Board's website at: http://www.federalreserve.gov/monetarypolicy/bst_fedfinancials.htm


April 21, 2009
Federal Reserve Announces Two New Interest Rates Applicable to Loans Extended Under Term Asset-Backed Securities Loan Facility (TALF)

The Federal Reserve Board on Tuesday announced two new interest rates applicable to loans extended under the Term Asset-Backed Securities Loan Facility (TALF). The rates apply to certain loans secured by asset-backed securities (ABS) with weighted average lives to maturity (WALM) of less than two years. The new rates will be based on one- and two-year London interbank offered (Libor) swap rates, resulting in a better match to the duration of the underlying ABS collateral.

The new rates, along with some technical clarifications, will take effect for the May TALF funding. Subscriptions for the May funding will be accepted on May 5, and the loans will settle on May 12.

The new interest rates apply to fixed-rate TALF loans secured by ABS that do not benefit from a government guarantee. The interest rate for TALF loans secured by ABS with a WALM of less than one year will be the one-year Libor swap rate plus 100 basis points. The interest rate for loans secured by ABS with a WALM of one year or more but less than two years will be the two-year Libor swap rate plus 100 basis points. The interest rate on loans secured by ABS with a WALM of two years or more will continue to be the three-year Libor swap rate plus 100 basis points.

The Board authorized the TALF on November 24, 2008, under section 13(3) of the Federal Reserve Act. The TALF is intended to make credit available to consumers and businesses on more favorable terms by facilitating the issuance of ABS and improving the market conditions for ABS more generally. Under the TALF, the Federal Reserve Bank of New York extends three-year loans secured by AAA-rated ABS backed by newly and recently originated loans.

A new term sheet and a revised frequently-asked-questions document are attached.
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April 21, 2009
Federal Reserve Announces Results of Auction of $150 Billion in 84-Day Credit Held on April 20, 2009

On April 20, 2009, the Federal Reserve conducted an auction of $150 billion in 84-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
     
Total propositions submitted: $83.830 billion
Total propositions accepted: $83.830 billion
Bid/cover ratio: 0.56
     
Number of bidders: 98

The awarded loans will settle on April 23, 2009, and will mature on July 16, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on April 21, 2009. Participants have until 12:30 p.m. EDT on April 21, 2009, to inform their local Reserve Bank of any error.


April 20, 2009
Federal Reserve Will Offer $150 Billion in 84-Day Credit Through Its Term Auction Facility Today

On April 20, 2009, the Federal Reserve will offer $150 billion in 84-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount:   $150 billion
Term:   84-day loan
Bid Submission Date:   April 20, 2009
  Opening Time:   11:00 a.m. EDT
  Closing Time:   12:30 p.m. EDT
Notification Date:   April 21, 2009
Settlement Date:   April 23, 2009
Maturity Date:   July 16, 2009
Minimum Bid Amount (per bid):   $5 million
Bid Increment:   $100,000
Maximum Bid Amount (per institution):   $15 billion (10% of Offering Amount)
Minimum Bid Rate:   0.25 percent
Incremental Bid Rate:   0.001 percent
Minimum Award:   $10,000
Maximum Award:   $15 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

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


April 16, 2009
Board Announces Availability of New Video "Lessons from a Storm"

The Federal Reserve Board on Thursday announced the availability of a new video, "Lessons from a Storm," that tells the stories of families who, in the aftermath of Hurricane Katrina, learned about the benefits of maintaining a bank account that allows for the direct deposit of payments and benefits.

The devastation that accompanied Hurricane Katrina in 2005 left many individuals and families without homes and without a way to receive payments sent to them by mail. Evacuees who had bank accounts, and who had payments automatically deposited into their accounts, could immediately access their funds at any branch of their bank. They also had a place for government emergency payments to be deposited.

The video notes that consumers who use their bank account carefully and avoid overdraft fees will likely find it costs less than not having a bank account.

The 17-minute video was produced by a cooperative effort of the Federal Reserve Banks. Both English and Spanish versions are available for viewing online at: www.bos.frb.org/consumer/lessons-from-a-storm/. Instructions for ordering a DVD are also available on the site.

For more information, contact the Public and Community Affairs Department of the Federal Reserve Bank of Boston at (800) 409-1333.


April 06, 2009
Federal Reserve, Bank of England, European Central Bank, Bank of Japan, and Swiss National Bank announce swap arrangements

The Bank of England, the European Central Bank (ECB), the Federal Reserve, the Bank of Japan, and the Swiss National Bank are announcing swap arrangements that would enable the provision of foreign currency liquidity by the Federal Reserve to U.S. financial institutions. Should the need arise, euro, yen, sterling and Swiss francs would be provided to the Federal Reserve via these additional swap agreements with the relevant central banks.  Central banks continue to work together and are taking steps as appropriate to foster stability in global financial markets.

Federal Reserve Actions
The Federal Open Market Committee has authorized new temporary reciprocal currency arrangements (foreign currency liquidity swap lines) with the Bank of England, the ECB, the Bank of Japan, and the Swiss National Bank. If drawn upon, these arrangements would support operations by the Federal Reserve to provide liquidity in sterling in amounts of up to £30 billion, in euro in amounts of up to €80 billion, in yen in amounts of up to ¥10 trillion, and in Swiss francs in amounts of up to CHF 40 billion.

These foreign currency liquidity swap lines have been authorized through October 30, 2009.
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March 31, 2009
Board Requests Public Comment on Proposed Changes to the Methodology for Calculating the Private Sector Adjustment Factor

The Federal Reserve Board has requested public comment on proposed changes to the methodology for calculating the imputed costs, collectively known as the private sector adjustment factor (PSAF), that are considered when setting fees and measuring cost recovery for certain payment services provided to depository institutions (DIs). The comment period ends on May 29, 2009.

Specifically, the Board requests comment on its proposal to replace the current correspondent bank model underlying the PSAF calculation with a model based on elements derived from publicly traded firms more broadly. The Board is considering a new methodology because the recent implementation of the payment of interest on DI required reserve balances and excess balances held at Reserve Banks and the subsequent reduction in clearing balances held at Reserve Banks have changed the priced services balance sheet to more closely reflect publicly traded firms more generally rather than correspondent banks. Any change to the methodology could be effective as early as the 2010 pricing process.

The Monetary Control Act of 1980 requires the Federal Reserve to set fees for the services it provides to depository institutions at a level sufficient to recover, over the long run, the actual costs of providing these services, as well as the imputed costs and profits. The PSAF is an allowance for imputed costs, including financing costs, return on equity capital, taxes, and certain other expenses that are not explicitly incurred by the Reserve Banks but would be incurred by a private business firm providing the services. The methodology underlying the PSAF is reviewed periodically to ensure that it is appropriate and relevant in light of changes that may have occurred in Reserve Bank priced-services activities, accounting standards, finance theory, and regulatory and business practices.
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March 24, 2009
Federal Reserve Announces Results of Auction of $150 Billion in 84-Day Credit Held on March 23, 2009

On March 23, 2009, the Federal Reserve conducted an auction of $150 billion in 84-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
     
Total propositions submitted: $101.642 billion
Total propositions accepted: $101.642 billion
Bid/cover ratio: 0.68
     
Number of bidders: 103

The awarded loans will settle on March 26, 2009, and will mature on June 18, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on March 24, 2009. Participants have until 12:30 p.m. EDT on March 24, 2009, to inform their local Reserve Bank of any error.


March 23, 2009
Federal Reserve Will Offer $150 Billion in 84-Day Credit Through Its Term Auction Facility Today

On March 23, 2009, the Federal Reserve will offer $150 billion in 84-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount: $150 billion
Term: 84-day loan
Bid Submission Date: March 23, 2009
  Opening Time: 11:00 a.m. EDT
  Closing Time: 12:30 p.m. EDT
Notification Date: March 24, 2009
Settlement Date: March 26, 2009
Maturity Date: June 18, 2009
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution):   $15 billion (10% of Offering Amount)
Minimum Bid Rate: 0.25 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $15 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

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


March 23, 2009
Joint Statement by Treasury and Federal Reserve on the Federal Reserve's Role in Preserving Financial and Monetary Stability

Introduction
Sound economic performance requires both financial stability and monetary stability. As the nation's central bank, the Federal Reserve has critical responsibilities in both areas.

The Congress created the Federal Reserve in 1913 in large part in response to the periodic panics and crises that plagued the U.S. financial system in the 19th and early 20th centuries. Over nearly a century, in the service of its original mandate as well as its monetary and regulatory responsibilities, the Federal Reserve has developed wide-ranging institutional expertise regarding financial markets and institutions, foreign as well as domestic. The Federal Reserve also has the unique ability to serve as the lender of last resort, a vital function in crises. For these reasons, it is natural and desirable that the Federal Reserve should play a central role, in cooperation with the Department of the Treasury and other agencies, in preventing and managing financial crises.

While the Federal Reserve has traditionally collaborated with other agencies in efforts to preserve financial stability, it alone is responsible for maintaining monetary stability. The monetary policy-making arm of the Federal Reserve, the Federal Open Market Committee (FOMC), determines monetary conditions in the United States, subject to its congressional mandate to foster maximum sustainable employment and stable prices. The Federal Reserve's independence with regard to monetary policy is critical for ensuring that monetary policy decisions are made with regard only to the long-term economic welfare of the nation.

This joint statement reflects the common views of the Treasury and the Federal Reserve on the appropriate roles of the Federal Reserve and the Treasury during the current financial crisis and in the future and on the steps necessary to ensure that both financial and monetary stability will be achieved.

The Treasury and the Federal Reserve agree on the following broad points:

1. Treasury-Federal Reserve cooperation in improving the functioning of credit markets and fostering financial stability
The Federal Reserve's expertise and powers are indispensable for preventing and managing financial crises. The programs it has initiated since the onset of this crisis have played a critical role in helping to contain the damage to the broader economy. As long as unusual and exigent circumstances persist, the Federal Reserve will continue to use all its tools working closely and cooperatively with the Treasury and other agencies as needed to improve the functioning of credit markets, help prevent the failure of institutions that could cause systemic damage, and to foster the stabilization and repair of the financial system.

2. The Federal Reserve to avoid credit risk and credit allocation
The Federal Reserve's lender-of-last-resort responsibilities involve lending against collateral, secured to the satisfaction of the responsible Federal Reserve Bank. Actions taken by the Federal Reserve should also aim to improve financial or credit conditions broadly, not to allocate credit to narrowly-defined sectors or classes of borrowers. Government decisions to influence the allocation of credit are the province of the fiscal authorities.

3. Need to preserve monetary stability
Actions that the Federal Reserve takes, during this period of unusual and exigent circumstances, in the pursuit of financial stability, such as loans or securities purchases that influence the size of its balance sheet, must not constrain the exercise of monetary policy as needed to foster maximum sustainable employment and price stability. Treasury has in place a special financing mechanism called the Supplementary Financing Program, which helps the Federal Reserve manage its balance sheet. In addition, the Treasury and the Federal Reserve are seeking legislative action to provide additional tools the Federal Reserve can use to sterilize the effects of its lending or securities purchases on the supply of bank reserves.

4. Need for a comprehensive resolution regime for systemically critical financial institutions
The Treasury and the Federal Reserve remain fully committed to preventing the disorderly failure of systemically critical financial institutions. To reduce the risk of future crises, the Treasury and the Federal Reserve will work with the Congress to develop a regime that will allow the U.S. government to address effectively at an early stage the potential failure of any systemically critical financial institution. As part of the framework set forth, the legislation should spell out to the extent possible the expected role of the Federal Reserve and other U.S. government agencies in such resolutions.

In the longer term and as its authorities permit, the Treasury will seek to remove from the Federal Reserve's balance sheet, or to liquidate, the so-called Maiden Lane facilities made by the Federal Reserve as part of efforts to stabilize systemically critical financial institutions.


March 19, 2009
Board Announces that the Set of Eligible Collateral for Loans Extended by the Term Asset-Backed Loan Facility (TALF) is being expanded to Include Four Additional Categories of Asset-Backed Securities

The Federal Reserve Board on Thursday announced that the set of eligible collateral for loans extended by the Term Asset-Backed Securities Loan Facility (TALF) is being expanded to include four additional categories of asset-backed securities (ABS):

  • ABS backed by mortgage servicing advances
  • ABS backed by loans or leases relating to business equipment
  • ABS backed by leases of vehicle fleets
  • ABS backed by floorplan loans

Mortgage servicing advances are loans extended by residential mortgage servicers to cover payments missed by homeowners. Accepting ABS backed by mortgage servicing advances should improve the servicers' ability to work with homeowners to prevent avoidable foreclosures. The additional new ABS categories complement the consumer and small business loan categories that were already eligible--ABS backed by auto loans (including auto floorplan loans), credit cards loans, student loans, and SBA-guaranteed small business loans.

The new categories of collateral will be eligible for the April TALF funding. Additional details on the April funding will be released on March 24. Subscriptions for the April funding will be accepted on April 7, and those loans will settle on April 14.

The subscription period for the first TALF funding ends today. The requested loans will settle on March 25.

The Board authorized the TALF on November 24, 2008, under section 13(3) of the Federal Reserve Act. Under the TALF, the Federal Reserve Bank of New York extends three-year loans secured by AAA-rated ABS backed by newly and recently originated loans.

On February 10, 2009, the Board announced that it is prepared to undertake a significant expansion of the TALF. Today's announcement marks the first step in that expansion; a number of other asset classes are under review.

A new term sheet and a revised frequently-asked-questions document are attached.
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March 18, 2009
FOMC Statement

Information received since the Federal Open Market Committee met in January indicates that the economy continues to contract. Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending. Weaker sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment. U.S. exports have slumped as a number of major trading partners have also fallen into recession. Although the near-term economic outlook is weak, the Committee anticipates that policy actions to stabilize financial markets and institutions, together with fiscal and monetary stimulus, will contribute to a gradual resumption of sustainable economic growth.

In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve's balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months. The Federal Reserve has launched the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses and anticipates that the range of eligible collateral for this facility is likely to be expanded to include other financial assets. The Committee will continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of evolving financial and economic developments.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.


March 17, 2009
Board Adopts Final Rule That Delays Until March 31, 2011, the Effective Date of New Limits on the Inclusion of Trust Preferred Securities and Other Restricted Core Capital Elements in Tier 1 Capital

The Federal Reserve Board announced the adoption of a final rule that delays until March 31, 2011, the effective date of new limits on the inclusion of trust preferred securities and other restricted core capital elements in tier 1 capital of bank holding companies (BHCs). This action is being taken in light of continued stress in financial markets and the efforts of BHCs to increase their overall capital levels.

These new limits were scheduled to take effect on March 31, 2009, pursuant to a final rule adopted by the Board on March 10, 2005 (70 Federal Register 11827). The delay will further the Board's efforts, as well as the efforts of the other Federal banking agencies and the U.S. Department of the Treasury, to respond to the current financial situation.

As explained in further detail in the final rule, as a result of delaying implementation of the new limits and until the new effective date in 2011, all BHCs may include cumulative perpetual preferred stock and trust preferred securities in tier 1 capital up to 25 percent of total core capital elements.
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March 11, 2009
Federal Reserve Proposes Amendments to Regulation Z to Revise Disclosure Requirements for Private Education Loans

The Federal Reserve Board has proposed amendments to Regulation Z (Truth in Lending) that would revise the disclosure requirements for private education loans.

The amendments implement provisions of the Higher Education Opportunity Act (HEOA), which was signed into law on August 14, 2008. Under the amendments, creditors that extend private education loans would provide disclosures about loan terms and features on or with the loan application and would also have to disclose information about federal student loan programs that may offer less costly alternatives. Additional disclosures would have to be provided when the loan is approved and when the loan is consummated. The Board is also proposing model disclosure forms that creditors could use to comply with the new disclosure requirements.

The new disclosure requirements would apply to loans made expressly for postsecondary educational expenses but would not apply where educational expenses are funded by credit card advances, or real-estate-secured loans. In addition, the proposal does not apply to education loans made, insured, or guaranteed by the federal government, which are subject to disclosure rules issued by the Department of Education.

The Board's proposal also implements the HEOA's restrictions on using the name, emblem, or mascot of an educational institution in a way that implies that the institution endorses the creditor's loans.

The public comment period ends 60 days after publication of the proposed amendments in the Federal Register, which is expected shortly.
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March 10, 2009
Federal Reserve Announces Results of Auction of $150 Billion in 28-Day Credit Held on March 9, 2009

On March 9, 2009, the Federal Reserve conducted an auction of $150 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
     
Total propositions submitted: $116.872 billion
Total propositions accepted: $116.872 billion
Bid/cover ratio: 0.78
     
Number of bidders: 116

The awarded loans will settle on March 12, 2009, and will mature on April 9, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on March 10, 2009. Participants have until 12:30 p.m. EDT on March 10, 2009, to inform their local Reserve Bank of any error.


March 10, 2009
Federal Reserve Announces Revised Results of Auction of $150 Billion in 28-Day Credit Held on March 9, 2009

(Note: This release supersedes the release of 10 a.m. EDT March 10, 2009. The figures in the previous release for total propositions submitted, total propositions accepted and the bid/cover ratio have been revised to correct a processing error.)

On March 9, 2009, the Federal Reserve conducted an auction of $150 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
     
Total propositions submitted: $117.872 billion
Total propositions accepted: $117.872 billion
Bid/cover ratio: 0.79
     
Number of bidders: 116

The awarded loans will settle on March 12, 2009, and will mature on April 9, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on March 10, 2009. Participants have until 12:30 p.m. EDT on March 10, 2009, to inform their local Reserve Bank of any error.


March 09, 2009
Federal Reserve Will Offer $150 Billion in 28-Day Credit Through Its Term Auction Facility Today

On March 9, 2009, the Federal Reserve will offer $150 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount: $150 billion
Term: 28-day loan
Bid Submission Date: March 9, 2009
Opening Time: 11:00 a.m. EDT
Closing Time: 12:30 p.m. EDT
Notification Date: March 10, 2009
Settlement Date: March 12, 2009
Maturity Date: April 9, 2009
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution): $15 billion (10% of Offering Amount)
Minimum Bid Rate: 0.25 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $15 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

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


March 05, 2009
Board Has Compiled Some Tips to Help Protect Consumers from Foreclosure Scams

March 1–9 is National Consumer Protection Week, and the Federal Reserve Board has compiled some tips to help protect consumers from becoming victims of foreclosure avoidance scams. It's important for consumers to know that housing counselors and other resources are available at no or low cost to assist homeowners who have fallen behind on their mortgage payments.

"Saving a home from foreclosure requires fast and informed action but the solution doesn't have to be costly," said Federal Reserve Governor Elizabeth A Duke. "It shouldn't hurt to get help."

Solicitors of foreclosure schemes reach out to potential victims by a variety of means using the Internet, the telephone, and direct mailings. Some solicitors go door-to-door or approach homeowners at events related to home preservation. The information the Federal Reserve is providing, which is part of its "5 Tips" series, is intended to give consumers the basic information they need to recognize and avoid foreclosure avoidance scams. Consumers are urged to check the credentials of counselors and to avoid working with someone who collects a fee before providing any services or accepts payment only by cashier's check or wire transfer. Consumers should not pay for a service without knowing exactly what they are buying.

Avoiding foreclosure cannot be guaranteed--regardless of the circumstances. Working with a legitimate counselor can increase the chances of keeping a home, but consumers should be wary of people who tell them it's a sure thing. Details of the transaction, along with any promises, should be provided up front and in writing.

The tips to follow will help consumers select a reputable counselor and avoid fraudulent foreclosure scams.

  • Work only with a non-profit HUD-approved counselor. For a list of certified counselors visit www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm or call 877-HUD-1515 (877-483-1515). If the name of the organization you are working with isn't on the list, then switch to one that is.
  • Don't pay an arm and a leg. Most housing counselors provide no- or low-cost counseling services. You should not have to pay hundreds, or thousands, of dollars for assistance.
  • Be wary of "guarantees." No one can ensure you good results.
  • Know what you are signing. Don't let a counselor pressure you into signing paperwork you haven't had a chance to read thoroughly or that you don't understand.
  • If it sounds too good to be true, it probably is.
  • If you feel you are a victim of foreclosure fraud, trust your instincts and ask for help. Report suspicious schemes to your state and local consumer protection agencies, which you can find on the Consumer Action Website.

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March 04, 2009
Federal Financial Regulatory Agencies Issue Statement in Support of the "Making Home Affordable" Loan Modification Program

The U.S. government entered into an agreement today with Bank of America to provide a package of guarantees, liquidity access, and capital as part of its commitment to support financial market stability.

The federal bank, thrift, and credit union regulatory agencies encourage all federally regulated financial institutions that service or hold residential mortgage loans to participate in the "Making Home Affordable" loan modification program. Guidelines for the program were announced today by the Treasury Department.

The Treasury Department previously has indicated that institutions receiving financial assistance in the future under the Financial Stability Plan established under the Troubled Assets Relief Program will be required to implement loan modification programs in accordance with the Treasury Department's guidelines.

The agencies strongly support the program's goal of promoting sustainable loan modifications for at-risk homeowners that appropriately balance the interests of homeowners, servicers, and investors.  The federal bank, thrift, and credit union regulatory agencies worked closely with the Treasury Department in developing the guidelines.

By providing servicers and holders of eligible residential mortgages with incentives to modify loans at risk of foreclosure, the program will promote sustainable alternatives to foreclosures on owner-occupied residential properties. These incentives should help make affordable loan modifications more attractive than foreclosure. The program also provides incentives for homeowners whose mortgages are modified to remain current on their mortgages after modification. Taken together, these incentives should help responsible homeowners remain in their homes and avoid foreclosure, thereby easing downward pressures on house prices in many parts of the country and averting the costs to families, communities, and the economy from avoidable foreclosures.
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March 03, 2009
Treasury and Federal Reserve Announce Launch of Term Asset-Backed Securities Loan Facility (TALF)

In carrying out the Financial Stability Plan, the Department of the Treasury and the Federal Reserve Board are announcing the launch of the Term Asset-Backed Securities Loan Facility (TALF), a component of the Consumer and Business Lending Initiative (CBLI). The TALF has the potential to generate up to $1 trillion of lending for businesses and households.

The TALF is designed to catalyze the securitization markets by providing financing to investors to support their purchases of certain AAA-rated asset-backed securities (ABS). These markets have historically been a critical component of lending in our financial system, but they have been virtually shuttered since the worsening of the financial crisis in October. By reopening these markets, the TALF will assist lenders in meeting the borrowing needs of consumers and small businesses, helping to stimulate the broader economy.

Under today's announcement, the Federal Reserve Bank of New York will lend up to $200 billion to eligible owners of certain AAA-rated ABS backed by newly and recently originated auto loans, credit card loans, student loans, and SBA-guaranteed small business loans. Issuers and investors in the private sector are expected to begin arranging and marketing new securitizations of recently generated loans, and subscriptions for funding in March will be accepted on March 17, 2009. On March 25, 2009, those new securitizations will be funded by the program, creating new lending capacity for additional future loans.

The program will hold monthly fundings through December 2009 or longer if the Federal Reserve Board chooses to extend the facility.

Today the Board also released revised terms and conditions for the facility and a revised set of frequently asked questions. The revisions include a reduction in the interest rates and collateral haircuts for loans secured by asset-backed securities guaranteed by the Small Business Administration or backed by government-guaranteed student loans. The modifications are warranted by the minimal credit risk on these assets owing to the government guarantees, and, by making the terms of the TALF loans more attractive, they should encourage greater flows of credit to small businesses and students.

Additional details of the TALF and the CBLI can be found at http://www.financialstability.gov/. Further information on the Federal Reserve's credit and liquidity programs is available at http://www.federalreserve.gov/monetarypolicy/bst.htm. The Treasury Department also released a new white paper outlining efforts to unlock credit markets. On February 10, 2009, the Board and Treasury announced an expansion of TALF to include new asset categories that could generate up to $1 trillion in new lending. Teams from the Treasury Department and Federal Reserve are analyzing the appropriate terms and conditions for accepting commercial mortgage-backed securities (CMBS) and are evaluating a number of other types of AAA-rated newly issued ABS for possible acceptance under the expanded program. The expanded program will remain focused on securities that will have the greatest macroeconomic impact and can most efficiently be added to the TALF at a low and manageable risk to the government.
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March 02, 2009
U.S. Treasury and Federal Reserve Board Announce Participation in AIG Restructuring Plan

The U.S. Treasury Department and the Federal Reserve Board today announced a restructuring of the government's assistance to AIG in order to stabilize this systemically important company in a manner that best protects the U.S. taxpayer. Specifically, the government's restructuring is designed to enhance the company's capital and liquidity in order to facilitate the orderly completion of the company's global divestiture program.

The company continues to face significant challenges, driven by the rapid deterioration in certain financial markets in the last two months of the year and continued turbulence in the markets generally.The additional resources will help stabilize the company, and in doing so help to stabilize the financial system.

As significantly, the restructuring components of the government's assistance begin to separate the major non-core businesses of AIG, as well as strengthen the company's finances. The long-term solution for the company, its customers, the U.S. taxpayer, and the financial system is the orderly restructuring and refocusing of the firm.This will take time and possibly further government support, if markets do not stabilize and improve.

Given the systemic risk AIG continues to pose and the fragility of markets today, the potential cost to the economy and the taxpayer of government inaction would be extremely high.AIG provides insurance protection to more than 100,000 entities, including small businesses, municipalities, 401(k) plans, and Fortune 500 companies who together employ over 100 million Americans. AIG has over 30 million policyholders in the U.S. and is a major source of retirement insurance for, among others, teachers and non-profit organizations.The company also is a significant counterparty to a number of major financial institutions.

AIG operates in over 130 countries with over 400 regulators and the company and its regulated and unregulated subsidiaries are subject to very different resolution frameworks across their broad and diverse operations without an overarching resolution mechanism.Within the options available, the restructuring plan offers a multi-part approach which brings forward the ultimate resolution of the company, has received support from key stakeholders and the rating agencies, and provides the best possible protection for taxpayers in connection with this commitment of resources.

The steps announced today provide tangible evidence of the U.S. government's commitment to the orderly restructuring of AIG over time in the face of continuing market dislocations and economic deterioration.Orderly restructuring is essential to AIG's repayment of the support it has received from U.S. taxpayers and to preserving financial stability.The U.S. government is committed to continuing to work with AIG to maintain its ability to meet its obligations as they come due.

Treasury has stated that public ownership of financial institutions is not a policy goal and, to the extent public ownership is an outcome of Treasury actions, as it has been with AIG, it will work to replace government resources with those from the private sector to create a more focused, restructured, and viable economic entity as rapidly as possible. This restructuring is aimed at accelerating this process. Key steps of the restructuring plan include:

Preferred Equity
The U.S. Treasury will exchange its existing $40 billion cumulative perpetual preferred shares for new preferred shares with revised terms that more closely resemble common equity and thus improve the quality of AIG's equity and its financial leverage. The new terms will provide for non-cumulative dividends and limit AIG's ability to redeem the preferred stock except with the proceeds from the issuance of equity capital.

Equity Capital Commitment
The Treasury Department will create a new equity capital facility, which allows AIG to draw down up to $30 billion as needed over time in exchange for non-cumulative preferred stock to the U.S. Treasury. This facility will further strengthen AIG's capital levels and improve its leverage.

Federal Reserve Revolving Credit Facility
The Federal Reserve will take several actions relating to the $60 billion Revolving Credit Facility for AIG established by the Federal Reserve Bank of New York (New York Fed) in September 2008, to further the goals described above.

Repayment by Preferred Stock Interests
The Revolving Credit Facility will be reduced in exchange for preferred interests in two special purpose vehicles created to hold all of the outstanding common stock of American Life Insurance Company (ALICO) and American International Assurance Company Ltd. (AIA), two life insurance holding company subsidiaries of AIG. AIG will retain control of ALICO and AIA, though the New York Fed will have certain governance rights to protect its interests. The valuation for the New York Fed's preferred stock interests, which may be up to approximately $26 billion, will be a percentage of the fair market value of ALICO and AIA based on valuations acceptable to the New York Fed.

Securitization of Life Insurance Cash Flows
The New York Fed is authorized to make new loans under section 13(3) of the Federal Reserve Act of up to an aggregate amount of approximately $8.5billion to special purpose vehicles (SPVs) established by domestic life insurance subsidiaries of AIG. The SPVs would repay the loans from the net cash flows they receive from designated blocks of existing life insurance policies held by the parent insurance companies.The proceeds of the New York Fed loans would pay down an equivalent amount of outstanding debt under the Revolving Credit Facility. The amounts lent, the size of the haircuts taken by the New York Fed, and other terms of the loans would be determined based on valuations acceptable to the New York Fed.

Restructuring of Other Terms
After the transactions described above, the total amount available under the Facility will be reduced from $60 billion to no less than $25 billion. In addition, the interest rate on the Facility, which is three-month LIBOR plus 300 basis points, will be modified by removing the existing floor (3.5 percent) on the LIBOR rate. The Facility will continue to be secured by a lien on a substantial portion of AIG's assets, including the businesses AIG plans to retain. The other material terms of the Facility remain unchanged.

Issuance of Preferred Stock
As required by the credit agreement governing the Revolving Credit Facility, AIG has agreed to issue on March 4, 2009, shares of convertible preferred stock representing an approximately 77.9% equity interest in AIG to an independent trust for the sole benefit of the United States Treasury.

AIG must be in compliance with the executive compensation and corporate governance requirements of Section 111 of the Emergency Economic Stabilization Act, including the most stringent limitations on executive compensation as required under the newest amendments to the Emergency Economic Stabilization Act. Additionally, AIG must continue to maintain and enforce newly adopted restrictions put in place by the new management on corporate expenses and lobbying as well as corporate
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February 25, 2009
Agencies to Begin Forward-Looking Economic Assessments

The federal bank regulatory agencies announced today that they will start conducting forward-looking economic assessments of large U.S. banking organizations as the Capital Assistance Program (CAP) gets underway. These assessments will be done on an interagency basis as a coordinated supervisory exercise to ensure they are carried out in a timely and consistent manner. Supervisors will work with institutions to estimate the range of possible future losses and the resources to absorb such losses over a two-year period.

Currently, the major U.S. banking institutions have capital in excess of the amounts required to be considered well capitalized. The CAP is designed to ensure that major U.S. banking organizations have sufficient capital to perform their critical role in our financial system on an ongoing basis and can support economic recovery, even in more severe economic environments.

The assessments will be conducted at eligible U.S. bank holding companies with assets exceeding $100 billion under two economic scenarios: a baseline and a more adverse scenario. The baseline scenario reflects a consensus expectation among private forecasters and the more adverse scenario reflects a deeper and longer recession than in the baseline. The agencies expect to complete the assessment process as soon as possible, but no later than the end of April 2009.

The agencies are issuing a set of Frequently Asked Questions (FAQs) with additional details about the assessment process. The FAQs are attached.

Attachment (91 KB PDF) off-site image

Media Contacts:
Federal Reserve Deborah Kilroe 202-452-2955
FDIC David Barr 202-898-6992
OCC Dean DeBuck 202-874-5770
OTS William Ruberry 202-906-6913

February 24, 2009
Federal Reserve Announces Results of Auction of $150 Billion in 84-Day Credit Held on February 23, 2009

On February 23, 2009, the Federal Reserve conducted an auction of $150 billion in 84-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
     
Total propositions submitted: $111.683 billion
Total propositions accepted: $111.683 billion
Bid/cover ratio: 0.74
     
Number of bidders: 96

The awarded loans will settle on February 26, 2009, and will mature on May 21, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EST on February 24, 2009. Participants have until 12:30 p.m. EST on February 24, 2009, to inform their local Reserve Bank of any error.


February 23, 2009
Federal Reserve Will Offer $150 Billion in 84-Day Credit Through Its Term Auction Facility Today

On February 23, 2009, the Federal Reserve will offer $150 billion in 84-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount: $150 billion
Term: 84-day loan
Bid Submission Date: February 23, 2009
   Opening Time: 11:00 a.m. EST
   Closing Time: 12:30 p.m. EST
Notification Date: February 24, 2009
Settlement Date: February 26, 2009
Maturity Date: May 21, 2009
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution): $15 billion (10% of Offering Amount)
Minimum Bid Rate: 0.25 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $15 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EST on the notification date. Between 10:00 a.m. and 11:30 a.m. EST on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EST on the notification date to inform their local Reserve Bank of any error.

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


February 23, 2009
Joint Statement by the Treasury, FDIC, OCC, OTS, and the Federal Reserve on the Capital Assistance Program

The U.S. Department of the Treasury, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Federal Reserve Board today issued the following joint statement:

"A strong, resilient financial system is necessary to facilitate a broad and sustainable economic recovery. The U.S. government stands firmly behind the banking system during this period of financial strain to ensure it will be able to perform its key function of providing credit to households and businesses. The government will ensure that banks have the capital and liquidity they need to provide the credit necessary to restore economic growth. Moreover, we reiterate our determination to preserve the viability of systemically important financial institutions so that they are able to meet their commitments.

"We announced on February 10, 2009, a Capital Assistance Program to ensure that our banking institutions are appropriately capitalized, with high-quality capital. Under this program, which will be initiated on February 25, the capital needs of the major U.S. banking institutions will be evaluated under a more challenging economic environment. Should that assessment indicate that an additional capital buffer is warranted, institutions will have an opportunity to turn first to private sources of capital. Otherwise, the temporary capital buffer will be made available from the government. This additional capital does not imply a new capital standard and it is not expected to be maintained on an ongoing basis. Instead, it is available to provide a cushion against larger than expected future losses, should they occur due to a more severe economic environment, and to support lending to creditworthy borrowers. Any government capital will be in the form of mandatory convertible preferred shares, which would be converted into common equity shares only as needed over time to keep banks in a well-capitalized position and can be retired under improved financial conditions before the conversion becomes mandatory. Previous capital injections under the Troubled Asset Relief Program will also be eligible to be exchanged for the mandatory convertible preferred shares. The conversion feature will enable institutions to maintain or enhance the quality of their capital.

"Currently, the major U.S. banking institutions have capital in excess of the amounts required to be considered well capitalized. This program is designed to ensure that these major banking institutions have sufficient capital to perform their critical role in our financial system on an ongoing basis and can support economic recovery, even under an economic environment that is more challenging than is currently anticipated. The customers and the providers of capital and funding can be assured that as a result of this program participating banks will be able to move forward to provide the credit necessary for the stabilization and recovery of the U.S. economy. Because our economy functions better when financial institutions are well managed in the private sector, the strong presumption of the Capital Assistance Program is that banks should remain in private hands."


February 23, 2009
Board Launches New Web Site Section on Credit and Liquidity Programs and the Balance Sheet

The Federal Reserve Board on Monday launched a new section of its website expanding the information provided about the policy tools the Federal Reserve has employed to address the financial crisis and simplifying access to that information.

The website section--"Credit and Liquidity Programs and the Balance Sheet"--presents a wide range of material, including a detailed explanation of the Federal Reserve's balance sheet; descriptions of all of the Federal Reserve's liquidity and credit facilities; discussion of the Federal Reserve's risk-management practices; information on the types and amounts of collateral being pledged at the various lending facilities; and an extensive set of links to congressional reports and other resources.

"This new section of our website is one of a series of significant steps we have taken to improve the public's understanding of our actions during this extraordinary period," said Federal Reserve Chairman Ben S. Bernanke.

"We are continuing to review our disclosure policies relating to our balance sheet and lending policies. Our goal is to be as transparent as possible, both to ensure that the Federal Reserve is accountable to the Congress and the public, and because many of the Board's policies are likely to be more effective if they are well understood by the markets and the public."

The new section of the Board's website can be accessed at: http://www.federalreserve.gov/monetarypolicy/bst.htm

In addition, as part of ongoing enhancements to the Board's website, a new tool has been added to allow for advanced searches of recent and historical Federal Open Market Committee material.


February 10, 2009
Federal Reserve Announces Results of Auction of $150 Billion in 28-Day Credit Held on February 9, 2009

On February 9, 2009, the Federal Reserve conducted an auction of $150 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
     
Total propositions submitted: $142.448 billion
Total propositions accepted: $142.448 billion
Bid/cover ratio: 0.95
     
Number of bidders: 117

The awarded loans will settle on February 12, 2009, and will mature on March 12, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EST on February 10, 2009. Participants have until 12:30 p.m. EST on February 10, 2009, to inform their local Reserve Bank of any error.


February 10, 2009
Federal Reserve is Prepared to Expand the Term Asset-Backed Securities Loan Facility (TALF)

The Federal Reserve Board on Tuesday announced that it is prepared to undertake a substantial expansion of the Term Asset-Backed Securities Loan Facility (TALF). The expansion could increase the size of the TALF to as much as $1 trillion and could broaden the eligible collateral to encompass other types of newly issued AAA-rated asset-backed securities, such as commercial mortgage-backed securities, private-label residential mortgage-backed securities, and other asset-backed securities. An expansion of the TALF would be supported by the provision by the Treasury of additional funds from the Troubled Asset Relief Program.

The Board's objective in expanding the TALF would be to provide additional assistance to financial markets and institutions in meeting the credit needs of households and businesses and thus to support overall economic growth in the current period of severe financial strains. Decisions concerning the expansion of the TALF, which will be made in consultation with the Treasury Department, will draw on initial experience in administering the program and the Board's assessment of the likely effectiveness of possible enhancements to the program in advancing its broad economic goals.

Under the current specification of the TALF, the Federal Reserve Bank of New York will lend to eligible owners of certain AAA-rated asset-backed securities (ABS). The Federal Reserve had previously announced that it would accept AAA-rated asset-backed securities backed by newly and recently originated auto loans, credit card loans, student loans, and SBA-guaranteed small business loans as collateral for TALF loans. The date that the TALF will commence operations will be announced later this month.

Related Press Releases
Federal Reserve announces the creation of the Term Asset-Backed Securities Loan Facility (TALF) off-site image
November 25, 2008
Federal Reserve releases revised information detailing operational aspects of Term Asset-Backed Securities Loan Facility (TALF) off-site image
December 19, 2008
Federal Reserve releases additional terms and conditions of the Term Asset-Backed Securities Loan Facility (TALF) off-site image
February 6, 2009


February 09, 2009
Federal Reserve Will Offer $150 Billion in 28-Day Credit Through Its Term Auction Facility Today

On February 9, 2009, the Federal Reserve will offer $150 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount:   $150 billion
Term:   28-day loan
Bid Submission Date:   February 9, 2009
  Opening Time:   11:00 a.m. EST
  Closing Time:   12:30 p.m. EST
Notification Date:   February 10, 2009
Settlement Date:   February 12, 2009
Maturity Date:   March 12, 2009
Minimum Bid Amount (per bid):   $5 million
Bid Increment:   $100,000
Maximum Bid Amount (per institution):   $15 billion (10% of Offering Amount)
Minimum Bid Rate:   0.25 percent
Incremental Bid Rate:   0.001 percent
Minimum Award:   $10,000
Maximum Award:   $15 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EST on the notification date. Between 10:00 a.m. and 11:30 a.m. EST on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EST on the notification date to inform their local Reserve Bank of any error.

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


February 06, 2009
Federal Reserve Releases Additional Terms and Conditions of the Term Asset-Backed Securities Loan Facility (TALF)

The Federal Reserve Board on Friday released additional terms and conditions--including loan rates and collateral haircuts--of the Term Asset-Backed Securities Loan Facility (TALF). The additions were determined after further analysis and consultation with issuers, investors, and dealers in asset-backed securities (ABS).

The new terms and conditions also include a revised definition of eligible borrowers and additional specifications regarding eligible ABS collateral. In addition to a new term sheet, the Board released a revised frequently-asked-questions document detailing the changes.

The Board authorized the TALF on November 24, 2008, under section 13(3) of the Federal Reserve Act, and provided further details about the terms and conditions for the program on December 19, 2008. The TALF is designed to increase credit availability and support economic activity by facilitating the issuance of ABS collateralized by certain consumer and small business loans. The ABS markets historically have been an important funding source for consumer credit and small business loans guaranteed by the Small Business Administration (SBA), but deteriorating conditions in ABS markets have caused issuance of such securities to come to a near standstill in recent months.

Under the TALF, the Federal Reserve Bank of New York will lend up to $200 billion to eligible owners of certain AAA-rated ABS backed by newly and recently originated auto loans, credit card loans, student loans, and SBA-guaranteed small business loans. The date that the TALF will commence operations will be announced later this month.
Terms and conditions off-site image
Frequently asked questions off-site image


February 03, 2009
Federal Reserve Announces Extension Through October 30, 2009, of Its Existing Liquidity Programs That Were Scheduled to Expire on April 30, 2009

The Federal Reserve on Tuesday announced the extension through October 30, 2009, of its existing liquidity programs that were scheduled to expire on April 30, 2009. The Board of Governors and the Federal Open Market Committee (FOMC) took these actions in light of continuing substantial strains in many financial markets.

The Board of Governors approved the extension through October 30 of the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF), the Commercial Paper Funding Facility (CPFF), the Money Market Investor Funding Facility (MMIFF), the Primary Dealer Credit Facility (PDCF), and the Term Securities Lending Facility (TSLF). The FOMC also took action to extend the TSLF, which is established under the joint authority of the Board and the FOMC.

In addition, to address continued pressures in global U.S. dollar funding markets, the temporary reciprocal currency arrangements (swap lines) between the Federal Reserve and other central banks have been extended to October 30. This extension currently applies to the swap lines between the Federal Reserve and each of the following central banks: the Reserve Bank of Australia, the Banco Central do Brasil, the Bank of Canada, Danmarks Nationalbank, the Bank of England, the European Central Bank, the Bank of Korea, the Banco de Mexico, the Reserve Bank of New Zealand, the Norges Bank, the Monetary Authority of Singapore, the Sveriges Riksbank, and the Swiss National Bank. The Bank of Japan will consider the extension at its next Monetary Policy Meeting. The Federal Reserve action to extend the swap lines was taken by the Federal Open Market Committee.

The current expiration date for the Term Asset-Backed Securities Loan Facility (TALF) remains December 31, 2009. Other Federal Reserve liquidity facilities, such as the Term Auction Facility (TAF), do not have a fixed expiration date.

The AMLF provides loans to depository institutions to purchase asset-backed commercial paper from money market mutual funds. The CPFF provides a liquidity backstop to U.S. issuers of commercial paper. The MMIFF supports a private-sector initiative to provide liquidity to U.S. money market investors. The PDCF provides discount window loans to primary dealers. Under the TSLF, the Federal Reserve Bank of New York auctions term loans of Treasury securities to primary dealers. The TALF will support the issuance of asset-backed securities collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration. Under the TAF, Reserve Banks auction term discount window loans to depository institutions.


January 30, 2009
Board Announces Final Rules Pertaining to the Asset-Backed Commercial Paper Money Market Fund Liquidity Facility (AMLF)

The Federal Reserve Board announced two final rules pertaining to the Asset-Backed Commercial Paper Money Market Fund Liquidity Facility (AMLF), which extends loans to banking organizations to finance their purchases of high-quality asset-backed commercial paper from money market mutual funds.

The first rule provides a temporary limited exception from the Board's leverage and risk-based capital rules for bank holding companies and state member banks. The second rule provides a temporary limited exception from sections 23A and 23B of the Federal Reserve Act, which establish certain restrictions on and requirements for transactions between a bank and its affiliates.

The two final rules, originally approved as interim final rules on September 19, 2008, will facilitate participation by depository institutions and bank holding companies as intermediaries between the AMLF and money market mutual funds. These exceptions are subject to various conditions to promote safety and soundness.

The Board has also adopted a third final rule, originally approved as an interim final rule on September 14, 2008. It provides a temporary exception to the limitations in section 23A of the Federal Reserve Act, allowing all insured depository institutions to provide liquidity to their affiliates for assets typically funded in the tri-party repo market.  This exception expires on October 30, 2009, unless extended by the Board, and is subject to various conditions to promote safety and soundness.


January 29, 2009
Board Requests Public Comment on Proposed Changes to Regulation D to Authorize the Establishment of Limited Purpose Accounts

The Federal Reserve Board has requested public comment on proposed changes to Regulation D (Reserve Requirements of Depository Institutions) to authorize the establishment of limited purpose accounts, called "excess balance accounts" (EBAs), at Federal Reserve Banks. The authorization of EBAs for the excess balances of institutions eligible to receive earnings on their balances maintained at Federal Reserve Banks is intended to address pressures on correspondent-respondent business relationships in the current market environment.

The establishment of EBAs would allow EBA participants to earn interest at the excess balance rate in a Federal Reserve Bank account managed by a correspondent or other agent without EBA participants having to open a separate individual account at the Federal Reserve Bank.

The Board will evaluate the continuing need for EBAs when more normal market functioning is restored.

The public comment period ends March 2, 2009.
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January 28, 2009
FOMC Statement

The Federal Open Market Committee decided today to keep its target range for the federal funds rate at 0 to 1/4 percent. The Committee continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.

Information received since the Committee met in December suggests that the economy has weakened further. Industrial production, housing starts, and employment have continued to decline steeply, as consumers and businesses have cut back spending.Furthermore, global demand appears to be slowing significantly. Conditions in some financial markets have improved, in part reflecting government efforts to provide liquidity and strengthen financial institutions; nevertheless, credit conditions for households and firms remain extremely tight. The Committee anticipates that a gradual recovery in economic activity will begin later this year, but the downside risks to that outlook are significant.

In light of the declines in the prices of energy and other commodities in recent months and the prospects for considerable economic slack, the Committee expects that inflation pressures will remain subdued in coming quarters. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.

The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability. The focus of the Committee's policy is to support the functioning of financial markets and stimulate the economy through open market operations and other measures that are likely to keep the size of the Federal Reserve's balance sheet at a high level. The Federal Reserve continues to purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand the quantity of such purchases and the duration of the purchase program as conditions warrant. The Committee also is prepared to purchase longer-term Treasury securities if evolving circumstances indicate that such transactions would be particularly effective in improving conditions in private credit markets.The Federal Reserve will be implementing the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses. The Committee will continue to monitor carefully the size and composition of the Federal Reserve's balance sheet in light of evolving financial market developments and to assess whether expansions of or modifications to lending facilities would serve to further support credit markets and economic activity and help to preserve price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Dennis P. Lockhart; Kevin M. Warsh; and Janet L. Yellen. Voting against was Jeffrey M. Lacker, who preferred to expand the monetary base at this time by purchasing U.S. Treasury securities rather than through targeted credit programs.
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January 27, 2009
Federal Reserve Announces Results of Auction of $150 Billion in 84-Day Credit Held on January 26, 2009

On January 26, 2009, the Federal Reserve conducted an auction of $150 billion in 84-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
     
Total propositions submitted: $136.051 billion
Total propositions accepted: $136.051 billion
Bid/cover ratio: 0.91
     
Number of bidders: 102

The awarded loans will settle on January 29, 2009, and will mature on April 23, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EST on January 27, 2009. Participants have until 12:30 p.m. EST on January 27, 2009, to inform their local Reserve Bank of any error.


January 27, 2009
Board Announces Appointment of the Chairs and Deputy Chairs of the Twelve Federal Reserve Banks for 2009

The Federal Reserve Board announced the appointment of the chairs and deputy chairs of the twelve Federal Reserve Banks for 2009. Each Reserve Bank has a nine-member board of directors. The Board of Governors in Washington appoints three of these directors and each year designates one of its appointees as chair and a second as deputy chair.
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January 26, 2009
Federal Reserve Will Offer $150 Billion in 84-Day Credit Through Its Term Auction Facility Today

On January 26, 2009, the Federal Reserve will offer $150 billion in 84-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount:   $150 billion
Term:   84-day loan
Bid Submission Date:   January 26, 2009
  Opening Time:   11:00 a.m. EST
  Closing Time:   12:30 p.m. EST
Notification Date:   January 27, 2009
Settlement Date:   January 29, 2009
Maturity Date:   April 23, 2009
Minimum Bid Amount (per bid):   $5 million
Bid Increment:   $100,000
Maximum Bid Amount (per institution):   $15 billion (10% of Offering Amount)
Minimum Bid Rate:   0.25 percent
Incremental Bid Rate:   0.001 percent
Minimum Award:   $10,000
Maximum Award:   $15 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EST on the notification date. Between 10:00 a.m. and 11:30 a.m. EST on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EST on the notification date to inform their local Reserve Bank of any error.

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


January 20, 2009
Restructuring of the Check Processing Operations in the Fifth and Sixth Districts

The Federal Reserve Board has approved amendments to Appendix A of Regulation CC that reflect the restructuring of the Federal Reserve's check processing operations in the Fifth and Sixth Districts.

Appendix A provides a routing number guide that helps depository institutions determine the maximum permissible hold periods for most deposited checks.  As of March 21, 2009, the Charlotte branch office of the Federal Reserve Bank of Richmond no longer will process checks, and banks currently served by that office will be reassigned to the head office of the Federal Reserve Bank of Atlanta.  To ensure that the information in Appendix A accurately describes the structure of check processing operations within the Federal Reserve System, the final rule deletes the reference in Appendix A to the Charlotte branch office of the Federal Reserve Bank of Richmond and reassigns the routing numbers listed thereunder to the head office of the Federal Reserve Bank of Atlanta.  To coincide with the effective date of the underlying check processing changes, the amendments are effective March 21, 2009.  As a result of these changes, some checks deposited in the affected regions that currently are nonlocal checks will become local checks that are subject to shorter permissible hold periods.
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January 16, 2009
Treasury, Federal Reserve, and the FDIC provide assistance to Bank of America

The U.S. government entered into an agreement today with Bank of America to provide a package of guarantees, liquidity access, and capital as part of its commitment to support financial market stability.

Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $118 billion of loans, securities backed by residential and commercial real estate loans, and other such assets, all of which have been marked to current market value. The large majority of these assets were assumed by Bank of America as a result of its acquisition of Merrill Lynch. The assets will remain on Bank of America's balance sheet. As a fee for this arrangement, Bank of America will issue preferred shares to the Treasury and FDIC. In addition and if necessary, the Federal Reserve stands ready to backstop residual risk in the asset pool through a non-recourse loan.

In addition, Treasury will invest $20 billion in Bank of America from the Troubled Asset Relief Program in exchange for preferred stock with an 8 percent dividend to the Treasury. Bank of America will comply with enhanced executive compensation restrictions and implement a mortgage loan modification program.

Treasury exercised this funding authority under the Emergency Economic Stabilization Act's Troubled Asset Relief Program (TARP). The investment was made under the Targeted Investment Program. The objective of this program is to foster financial market stability and thereby to strengthen the economy and protect American jobs, savings, and retirement security.

Separately, the FDIC board announced that it will soon propose rule changes to its Temporary Liquidity Guarantee Program to extend the maturity of the guarantee from three to up to 10 years where the debt is supported by collateral and the issuance supports new consumer lending.

With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy. As was stated in November when the first transaction under the Targeted Investment Program was announced, the U.S. government will continue to use all of our resources to preserve the strength of our banking institutions and promote the process of repair and recovery and to manage risks.
Press Release off-site image


January 13, 2009
Federal Reserve Announces Results of Auction of $150 Billion in 28-Day Credit Held on January 12, 2009

On January 12, 2009, the Federal Reserve conducted an auction of $150 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
     
Total propositions submitted: $107.747 billion
Total propositions accepted: $107.747 billion
Bid/cover ratio: 0.72
     
Number of bidders: 97

The awarded loans will settle on January 15, 2009, and will mature on February 12, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EST on January 13, 2009. Participants have until 12:30 p.m. EST on January 13, 2009, to inform their local Reserve Bank of any error.


January 12, 2009
Governor Randall S. Kroszner Resigns From Board of Governors of the Federal Reserve System, Effective January 21, 2009

Randall S. Kroszner has submitted his resignation as a member of the Board of Governors of the Federal Reserve System, effective January 21, 2009.

Kroszner, who has been a member of the Board since March 1, 2006, submitted his letter of resignation to President Bush. He will return to the Booth School of Business at the University of Chicago to assume a newly created chaired professorship.

"Randy's contributions to the Federal Reserve and his country during his nearly three years at the Board have been invaluable," said Federal Reserve Chairman Ben S. Bernanke. "We have greatly benefited from the intellectual rigor he brought to the consideration of both monetary and regulatory policy. In particular, he ably oversaw the completion of significant new regulations protecting mortgage borrowers and credit card customers. We will miss the keen insight, and good humor that he brought to our deliberations. I wish him the best as he returns to the University of Chicago."

Kroszner, 46, was appointed to the Board by President Bush to fill an unexpired term ending January 31, 2008. During his time on the Board he served as Chairman of both the Committee on Supervisory and Regulatory Affairs and the Committee on Consumer and Community Affairs.

Before joining the Board, Kroszner was Professor of Economics at the Graduate School of Business of the University of Chicago. In addition, he served as a member of the President's Council of Economic Advisers from 2001 to 2003.
Press Release off-site image


January 12, 2009
Federal Reserve Will Offer $150 Billion in 28-Day Credit Through Its Term Auction Facility Today

On January 12, 2009, the Federal Reserve will offer $150 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Today's auction incorporates a change in the method for setting the minimum bid rate. The minimum bid rate will now be set at a level equal to the rate of interest that banks earn on excess reserve balances, currently 0.25 percent. Previously, the minimum bid rate for TAF auctions had been determined based on a measure of the averaged expected overnight federal funds rate over the term of the credit being auctioned.

Description of Offering and Auction Parameters
Offering Amount:   $150 billion
Term:   28-day loan
Bid Submission Date:   January 12, 2009
  Opening Time:   11:00 a.m. EST
  Closing Time:   12:30 p.m. EST
Notification Date:   January 13, 2009
Settlement Date:   January 15, 2009
Maturity Date:   February 12, 2009
Minimum Bid Amount (per bid):   $5 million
Bid Increment:   $100,000
Maximum Bid Amount (per institution):   $15 billion (10% of Offering Amount)
Minimum Bid Rate:   0.25 percent
Incremental Bid Rate:   0.001 percent
Minimum Award:   $10,000
Maximum Award:   $15 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EST on the notification date. Between 10:00 a.m. and 11:30 a.m. EST on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EST on the notification date to inform their local Reserve Bank of any error.

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


January 07, 2009
Federal Reserve Announces Changes to Money Market Investor Funding Facility (MMIFF)

The Federal Reserve Board announced two changes to the Money Market Investor Funding Facility (MMIFF).

First, the set of institutions eligible to participate in the MMIFF was expanded from U.S. money market mutual funds to also include a number of other money market investors. The newly eligible participants include U.S.-based securities-lending cash-collateral reinvestment funds, portfolios, and accounts (securities lenders); and U.S.-based investment funds that operate in a manner similar to money market mutual funds, such as certain local government investment pools, common trust funds, and collective investment funds.

Second, the Board authorized the adjustment of several of the economic parameters of the MMIFF, including the minimum yield on assets eligible to be sold to the MMIFF, to enable the program to remain a viable source of backup liquidity for money market investors even at very low levels of money market interest rates.

The Board authorized the MMIFF on October 21, 2008 under section 13(3) of the Federal Reserve Act. The MMIFF became operational on November 24, 2008. The MMIFF is designed to serve as a source of liquidity to money market mutual funds and other eligible money market investment vehicles, thereby increasing their ability to meet redemption requests and their willingness to invest in money market instruments, particularly term money market instruments. Under the MMIFF, the Federal Reserve Bank of New York provides a credit facility to a series of special purpose vehicles (SPVs) established by the private sector. The SPVs will purchase certain U.S. dollar-denominated, highly rated, short-term certificates of deposit, bank notes, and commercial paper from eligible money market investors.
Press Release off-site image


January 06, 2009
Issuance of Final Interagency Questions and Answers on Community Reinvestment

The federal financial institution regulatory agencies announced the publication of new and revised Interagency Questions and Answers Regarding Community Reinvestment that, among other things, encourage financial institutions to take steps to help prevent home mortgage foreclosures.

The agencies are now finalizing nine new questions and answers and making substantive changes to 14 existing questions and answers proposed in 2007.  The new and revised Questions and Answers encourage financial institutions to participate in foreclosure prevention programs that have the objective of providing affordable, sustainable, long-term loan restructurings or modifications for homeowners who are facing foreclosure on their primary residences.  The Questions and Answers also address activities undertaken by a majority-owned financial institution in cooperation with a minority- or women-owned financial institution or a low-income credit union.

The agencies revised one question and answer that addresses financial institution investments in nationwide community development funds.  The revised question and answer notes that these funds are important sources of investments for low- and moderate-income and underserved communities throughout the country and can be an efficient vehicle for institutions in making qualified investments that help meet community development needs.  It also provides that the agencies will consider whether the purpose, mandate, or function of the fund includes serving geographies or individuals located within the institution's assessment area(s) or a broader statewide or regional area that includes the institution’s assessment area(s).  Typically, such information will be found in the fund's prospectus, but may be contained in other fund documents provided by the institution, at its option, in connection with its CRA evaluation.

In addition, the Federal Reserve Board, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and Office of Thrift Supervision are proposing for comment one new and two revised questions and answers.  The revisions to the two existing questions and answers would allow pro rata consideration in certain circumstances for an activity that provides affordable housing targeted to low- or moderate-income individuals.  The proposed new question and answer would provide examples of how an institution can determine that community services it provides are targeted to low- and moderate-income individuals.  The agencies invite public comment on these proposed new and revised questions and answers.
Press Release off-site image


2008

December 30, 2008
Federal Reserve Announces Details of Program to Purchase Mortgage-Backed Securities

The Federal Reserve on Tuesday announced that it expects to begin operations in early January under the previously announced program to purchase mortgage-backed securities (MBS) and that it has selected private investment managers to act as its agents in implementing the program.

Under the MBS purchase program, the Federal Reserve will purchase MBS backed by Fannie Mae, Freddie Mac, and Ginnie Mae; the program is being established to support the mortgage and housing markets and to foster improved conditions in financial markets more generally.

Further information regarding the structure and operation of the MBS purchase program is provided in the attached set of Frequently Asked Questions (FAQs).

Frequently asked questions off-site image


December 30, 2008
Federal Reserve Announces Results of Auction of $150 Billion in 83-Day Credit Held on December 29, 2008

On December 29, 2008, the Federal Reserve conducted an auction of $150 billion in 83-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.200 percent
     
Total propositions submitted: $102.979 billion
Total propositions accepted: $102.979 billion
Bid/cover ratio: 0.69
     
Number of bidders: 72

The awarded loans will settle on January 2, 2009, and will mature on March 26, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EST on December 30, 2008. Participants have until 12:30 p.m. EST on December 30, 2008, to inform their local Reserve Bank of any error.


December 29, 2008
Federal Reserve Will Offer $150 Billion in 83-Day Credit Through Its Term Auction Facility Today

On December 29, 2008, the Federal Reserve will offer $150 billion in 83-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount: $150 billion
Term: 83-day loan
Bid Submission Date: December 29, 2008
  Opening Time: 11:00 a.m. EST
  Closing Time: 12:30 p.m. EST
Notification Date: December 30, 2008
Settlement Date: January 2, 2009
Maturity Date: March 26, 2009
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution): $15 billion (10% of Offering Amount)
Minimum Bid Rate: 0.20 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $15 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EST on the notification date. Between 10:00 a.m. and 11:30 a.m. EST on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EST on the notification date to inform their local Reserve Bank of any error.

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


December 19, 2008
Federal Reserve and Other Central Banks Announce Schedules for Term Auctions of U.S. Dollar Liquidity

Today, the Federal Reserve, the Bank of England, the Bank of Japan, the European Central Bank (ECB), and the Swiss National Bank are announcing schedules for term auctions of U.S. dollar liquidity to be conducted during the first quarter of 2009. These schedules cover operations providing 28-day and 84-day dollar liquidity. Schedules for provision of dollar liquidity at other terms will be announced separately by individual central banks. Central banks will continue to work together to address pressures in global money markets.

Federal Reserve Actions
During the first quarter of 2009, the Federal Reserve will conduct three auctions of 28-day credit and three auctions of 84-day credit through its Term Auction Facility (TAF), as indicated in the schedule below.

Schedule for 28-day and 84-day TAF Auctions
First Quarter 2009

Auction Date

Term

Settlement Date

Maturity Date

12 January 2009

28 days

15 January 2009

12 February 2009

26 January 2009

84 days

29 January 2009

23 April 2009

9 February 2009

28 days

12 February 2009

12 March 2009

23 February 2009

84 days

26 February 2009

21 May 2009

9 March 2009

28 days

12 March 2009

9 April 2009

23 March 2009

84 days

26 March 2009

18 June 2009

Related Announcements by Other Central Banks
Information on related announcements by other central banks is available at the following websites:

Bank of England off-site image
Bank of Japan (79 KB PDF) off-site image
European Central Bank off-site image
Swiss National Bank (61 KB PDF) off-site image


December 19, 2008
Board Adopts Revisions to Payment System Risk Policy

The Federal Reserve Board on Friday adopted revisions to its Payment System Risk (PSR) policy that are designed to improve intraday liquidity management and payment flows for the banking system, while also helping to mitigate the credit exposures of the Federal Reserve Banks from daylight overdrafts. The Board has spent several years reviewing long-term developments in intraday liquidity, operational risk, and risk management in financial markets and the payments system, including the increased use of daylight overdrafts at the Federal Reserve Banks and increased Fedwire funds transfers late in the day. The Board published a consultation paper on these issues in 2006 and proposed major changes to the PSR policy in early 2008.

Based on the comments on the proposed changes, the Board adopted changes to the PSR policy that are substantially the same as those proposed for comment. The revised PSR policy will adopt a new approach that explicitly recognizes the role of the central bank in providing intraday balances and credit to healthy depository institutions predominately through collateralized daylight overdrafts. To avoid significantly disrupting the operation of the payment system and increasing the cost burden on a large number of institutions that incur small amounts of daylight overdrafts, the Board approved a voluntary collateral regime that would encourage the pledging of collateral to cover daylight overdrafts by providing collateralized daylight overdrafts at a zero fee and by raising the fee for uncollateralized daylight overdrafts to 50 basis points (annual rate). The Board also sought to minimize the effect of the policy changes on institutions that use small amounts of daylight overdrafts and approved a substantial increase in the biweekly fee waiver to $150 from $25.

In addition, the Board approved changes to other elements of the PSR policy dealing with daylight overdrafts, including adjusting net debit caps, streamlining maximum daylight overdraft capacity (max cap) procedures for certain foreign banking organizations, eliminating the current deductible for daylight overdraft fees, and increasing the penalty daylight overdraft fee for ineligible institutions to 150 basis points (annual rate). The implementation of the revised PSR policy will take effect either in the fourth quarter of 2010 or the first quarter of 2011. A specific date will be announced by the Board at least 90 days in advance.

The Board also approved for eligible foreign banking organizations an interim policy change. The interim policy relates to the calculation of the deductible amount from daylight overdraft fees under the existing policy, which will be discontinued with the elimination of the deductible under the revised PSR policy. The interim policy also allows for the early implementation of the streamlined procedure for max caps, which will remain under the revised PSR policy. The interim policy change for the deductible and streamlined max cap procedure will be effective on March 26, 2009.

Lastly, the Board endorsed a four-prong strategy, which includes these policy changes, through which the Federal Reserve and industry will address related intraday liquidity, operational, and credit risks in the wholesale payment system. Industry and Federal Reserve efforts are ongoing with these initiatives.

To assist depository institutions in assessing the impact of the revised PSR policy on their institution, the Board has created a simple fee calculator that will allow institutions to estimate their new daylight overdraft fees. The fee calculator is located on the Board's website at https://www.federalreserve.gov/apps/RPFCalc/. off-site image

The Board's notice is attached.

Federal Register notice (249 KB PDF) off-site image


December 19, 2008
Board Will Not Pursue Proposal to Change Daylight Overdraft Posting Rules Under Payment System Risk Policy

The Federal Reserve Board on Friday announced that it will not pursue at this time its proposal to change the daylight overdraft posting rules under its Payment System Risk (PSR) policy.

In early 2008, the Board requested comment on changing the posting time for commercial and government ACH debit transfers that are processed by the Federal Reserve Banks' FedACH service to 8:30 a.m. eastern time (ET) from 11:00 a.m. ET on the settlement date. The proposal would have aligned the posting time for ACH debit transfers with the posting time for ACH credit transfers, which are currently posted at 8:30 a.m. ET on the settlement date.

In response to the proposal, almost all commenters stated that the posting-rule change would place additional costs and liquidity pressures on many institutions at this time and would not necessarily address some of the issues discussed for making the change. For example, commenters did not believe there are significant competitive disparities between the ACH operators or depository institutions that result from differences in settlement times and did not believe customers of depository institutions would significantly benefit from the change.

While not pursuing the original proposal at this time, the Board believes that the simultaneous posting of ACH credit and debit transfers at 8:30 a.m. ET would enhance the efficiency of the payment system in the long run. The Board believes that over time the payment of interest on Federal Reserve account balances and the broad PSR policy changes, which were announced separately today, will significantly mitigate the concerns raised by commenters. The Board will monitor changes in the environment as the industry adjusts to the initial implementation of the payment of interest on Federal Reserve account balances and other market and environmental factors and will reconsider the proposed posting-rule change in the future.

Based on the Board's decision, commercial and government ACH debit transfers processed by the Federal Reserve Banks' FedACH service will continue to be posted at 11:00 a.m. ET, while commercial and government ACH credit transfers will continue to be posted at 8:30 a.m. ET. In line with this decision, the Board will not move the posting time for Treasury Tax and Loan investments associated with Electronic Federal Tax Payment System ACH debit transfers. These transactions will continue to be posted at 11:00 a.m. ET.

The Board's notice is attached.

Federal Register notice (43 KB PDF) off-site image


December 19, 2008
Federal Reserve Releases Revised Information Detailing Operational Aspects of Term Asset-Backed Securities Loan Facility (TALF)

The Federal Reserve Board on Friday released revised terms and conditions and questions and answers detailing operational aspects of the Term Asset-Backed Securities Loan Facility (TALF). The revised terms and conditions were determined after consultation with asset-backed securities (ABS) issuers, investors, and dealers, and include an extension of the TALF loan maturity from one to three years and additional specification of eligible ABS collateral. In addition, to provide more certain investor access, TALF loans will be provided to all eligible borrowers with eligible collateral rather than distributed through an auction. The documents will be subject to further refinement in coming weeks based on continued market analysis and consultation and on clarification of operational details.

The Board authorized the TALF on November 24, 2008 under section 13(3) of the Federal Reserve Act.off-site image The TALF is designed to increase credit availability and support economic activity by facilitating renewed issuance of consumer and small business asset-backed securities (ABS). The ABS markets historically have funded a substantial share of consumer credit and SBA-guaranteed small business loans, but conditions in ABS markets have caused issuance of such securities to come to a standstill in recent months.

Under the TALF, the Federal Reserve Bank of New York will finance the purchase of eligible ABS by investors. The TALF will finance only certain newly issued, highly rated ABS collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration.

Terms and conditions off-site image
Frequently asked questions off-site image


December 18, 2008
Annual Notice of Asset-Size Exemption Threshold for Depository Institutions

The Federal Reserve Board on Thursday published its annual notice of the asset-size exemption threshold for depository institutions under Regulation C, which implements the Home Mortgage Disclosure Act (HMDA).

The asset-size exemption for depository institutions will increase from $37 million to $39 million based on the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers for the twelve-month period ending in November 2008. As a result, depository institutions with assets of $39 million or less as of December 31, 2008, are exempt from collecting data in 2009. An institution's exemption from collecting data in 2009 does not affect its responsibility to report the data it was required to collect in 2008.

The adjustment is effective January 1, 2009.

HMDA and the Board's Regulation C require most mortgage lenders located in metropolitan areas to collect, report, and disclose data about applications for, and originations and purchases of, home purchase loans, home improvement loans, and refinancings. Data reported include the type, purpose, and amount of the loan; the race, ethnicity, sex, and income of the loan applicant; the location of the property; and loan price information for some loans. The purposes of HMDA include helping to determine whether financial institutions are serving the housing needs of their communities and assisting in fair lending enforcement.

The Board's notice is attached.

Attachment (18 KB PDF) off-site image


December 18, 2008
Federal Reserve Approves Rules That Will Better Protect Credit Card Users

The Federal Reserve Board on Thursday approved final rules that would better protect credit card users by prohibiting certain unfair acts or practices and improving the disclosures consumers receive in connection with credit card accounts and other revolving credit plans.

The final rules prohibiting certain credit card practices were adopted under the Federal Trade Commission Act, and are being issued concurrently with substantially similar final rules by the Office of Thrift Supervision and the National Credit Union Administration. Among other things, the rules will:

  • Protect consumers from unexpected interest charges, including increases in the rate during the first year after account opening and increases in the rate charged on pre-existing credit card balances.
  • Forbid banks from imposing interest charges using the "two-cycle" billing method.
  • Require that consumers receive a reasonable amount of time to make their credit card payments.
  • Prohibit the use of payment allocation methods that unfairly maximize interest charges.
  • Address subprime credit cards by limiting the fees that reduce the amount of available credit.

In finalizing the rules on unfair credit card practices, the Board carefully considered information obtained through consumer testing and more than 60,000 comment letters received during the comment period.

"The revised rules represent the most comprehensive and sweeping reforms ever adopted by the Board for credit card accounts," said Federal Reserve Chairman Ben S. Bernanke. "These protections will allow consumers to access credit on terms that are fair and more easily understood."

The Board is also adopting final rules to revise the disclosures consumers receive in connection with credit card accounts and other revolving credit plans to ensure that information is provided in a timely manner and in a form that is readily understandable. These rules amend Regulation Z (Truth in Lending) and conclude a comprehensive review of the open-end credit rules. The final rules under Regulation Z require changes to the format, timing, and content requirements for credit card applications and solicitations and for the disclosures that consumers receive throughout the life of an open-end account. Many of the changes reflect the result of consumer testing conducted on behalf of the Board during its review.

"Our intent is to increase transparency and fairness in how credit card and deposit accounts operate, thereby enhancing competition and empowering consumers to better manage their accounts and avoid unnecessary costs," said Federal Reserve Governor Randall S. Kroszner. "The rules represent a significant step forward in consumer protection. By ensuring fairness and making credit terms easier to understand, these safeguards should allow more consumers to benefit from using credit."

Both of the final rules addressing credit card accounts take effect on July 1, 2010.

The Board is separately proposing rules to protect consumers that use overdraft services offered by their bank. The rule solicits public comment on proposed amendments to Regulation E (Electronic Fund Transfers) intended to provide consumers a choice regarding their institution's payment of overdrafts for automated teller machine withdrawals and one-time debit card transactions. The Board is proposing two alternative approaches to providing consumer choice, including a proposed requirement that would require institutions to obtain consumers' affirmative consent (or opt-in) before any overdraft fees or charges may be imposed on consumers' accounts. The comment period for the Regulation E proposal ends 60 days after publication in the Federal Register.

In a related move, the Board is adopting final amendments to Regulation DD (Truth in Savings) to address depository institutions' disclosure practices related to overdraft services. The effective date for the final rules adopted under Regulation DD is January 1, 2010.

All four Federal Register notices are attached. Publication of each of the rules is expected shortly.

Highlights of Rules Regarding Credit Card Accounts and Overdraft Services (27 KB PDF) off-site image

Statement by Chairman Ben S. Bernanke off-site image

Statement by Governor Randall S. Kroszner off-site image

Federal Register notice, Regulation AA (848 KB PDF) off-site image

Federal Register notice, Regulation DD (110 KB PDF) off-site image
B-10 (70 KB PDF) Aggregate fee model off-site image

Federal Register notice, Regulation E (367 KB PDF) off-site image

Model forms and samples:
  1. A-9 (23 KB PDF) Model consent form for overdraft services off-site image
  2. A-9 (A) (24 KB PDF) Model opt-out form for account opening off-site image
  3. A-9 (B) (9 KB PDF) Model opt-out form for periodic statements off-site image

Review and Testing of Overdraft Notices (1.94 MB PDF) off-site image

Federal Register notice, Regulation Z (2.18 MB PDF) off-site image

Model forms and samples:
  1. G-10 (A) (81 KB PDF) Applications and solicitations model form (credit cards) off-site image
  2. G-10 (B) (77 KB PDF) Applications and solicitations sample (credit cards) off-site image
  3. G-10 (C) (79 KB PDF) Applications and solicitations sample (credit cards) off-site image
  4. G-10 (D) (32 KB PDF) Applications and solicitations model form (charge cards) off-site image
  5. G-10 (E) (111 KB PDF) Applications and solicitations sample (charge cards) off-site image
  6. G-17 (A) (83 KB PDF) Account-opening model form off-site image
  7. G-17 (B) (77 KB PDF) Account-opening sample off-site image
  8. G-17 (C) (79 KB PDF) Account-opening sample off-site image
  9. G-17 (D) (79 KB PDF) Account-opening sample (line of credit) off-site image
  10. G-18 (A) (158 KB PDF) Periodic statement transactions: interest charges; fees sample off-site image
  11. G-18 (D-E) (29 KB PDF) Periodic statement new balance, due date, late payment, and minimum payment sample (credit cards) and periodic statement new balance, due date, and late payment sample (open-end plans (non-credit-card accounts)) off-site image
  12. G-18 (F) (170 KB PDF) Periodic statement form off-site image
  13. G-18 (G) (197 KB PDF) Periodic statement form off-site image
  14. G-19 (18 KB PDF) Checks accessing a credit card sample off-site image
  15. G-20 (100 KB PDF) Change-in-terms sample off-site image
  16. G-21 (149 KB PDF) Penalty rate increase sample off-site image

Design and Testing of Effective Truth in Lending Disclosures: Findings from Qualitiative Consumer Research (3.78 MB PDF) off-site image

Design and Testing of Effective Truth in Lending Disclosures: Findings from Experimental Study (3 MB PDF) off-site image


December 17, 2008
Agencies Release Annual CRA Asset-Size Threshold Adjustments for Small and Intermediate Small Institutions

The federal bank regulatory agencies today announced the annual adjustment to the asset-size thresholds used to define "small bank," "small savings association," "intermediate small bank," and "intermediate small savings association" under the Community Reinvestment Act (CRA) regulations. The annual adjustments for banks are required by the 2005 CRA regulatory amendments and for savings associations by the OTS 2007 CRA regulatory amendments.

Annual adjustments to these asset-size thresholds are based on the year-to-year change in the average of the Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers, not seasonally adjusted, for each twelve-month period ending in November, with rounding to the nearest million.

As a result of the 4.49 percent increase in the CPI index for the period ending in November 2008, the definitions of small and intermediate small institutions for CRA examinations will change as follows:

  • "Small bank" or "small savings association" means an institution that, as of December 31 of either of the prior two calendar years, had assets of less than $1.109 billion.

  • "Intermediate small bank" or "intermediate small savings association" means a small institution with assets of at least $277 million as of December 31 of both of the prior two calendar years, and less than $1.109 billion as of December 31 of either of the prior two calendar years.

These asset-size threshold adjustments are effective January 1, 2009. The agencies will publish the adjustments in the Federal Register. In addition, the agencies will post a list of the current and historical asset-size thresholds on the website of the Federal Financial Institutions Examination Council.

Attachment (30 KB PDF) off-site image

Media Contacts:
Federal Reserve Susan Stawick 202-452-2955
FDIC David Barr 202-898-6992
OCC Dean DeBuck 202-874-5770
OTS William Ruberry 202-906-6913

December 16, 2008
Federal Reserve Announces Results of Auction of $150 billion in 28-Day Credit Held on December 15, 2008

On December 15, 2008, the Federal Reserve conducted an auction of $150 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.280 percent
     
Total propositions submitted: $63.014 billion
Total propositions accepted: $63.014 billion
Bid/cover ratio: 0.42
     
Number of bidders: 71

The awarded loans will settle on December 18, 2008, and will mature on January 15, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EST on December 16, 2008. Participants have until 12:30 p.m. EST on December 16, 2008, to inform their local Reserve Bank of any error.


December 16, 2008
FOMC Statement

The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to 1/4 percent.

Since the Committee's last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined. Financial markets remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further.

Meanwhile, inflationary pressures have diminished appreciably. In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate further in coming quarters.

The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability. In particular, the Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.

The focus of the Committee's policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve's balance sheet at a high level. As previously announced, over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant. The Committee is also evaluating the potential benefits of purchasing longer-term Treasury securities. Early next year, the Federal Reserve will also implement the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses. The Federal Reserve will continue to consider ways of using its balance sheet to further support credit markets and economic activity.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Christine M. Cumming; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.

In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Cleveland, Richmond, Atlanta, Minneapolis, and San Francisco. The Board also established interest rates on required and excess reserve balances of 1/4 percent.


December 16, 2008
Restructuring of the Check Processing Operations in the Sixth and Eighth Districts, Regulation CC

The Federal Reserve Board has approved amendments to Appendix A of Regulation CC that reflect the restructuring of the Federal Reserve's check processing operations in the Sixth and Eighth Districts.

Appendix A provides a routing number guide that helps depository institutions determine the maximum permissible hold periods for most deposited checks. As of February 21, 2009, the head office of the Federal Reserve Bank of St. Louis no longer will process commercial checks, and banks currently served by that office will be reassigned to the head office of the Federal Reserve Bank of Atlanta. To ensure that the information in Appendix A accurately describes the structure of check processing operations within the Federal Reserve System, the final rule deletes the reference in Appendix A to the head office of the Federal Reserve Bank of St. Louis and reassigns the routing numbers listed thereunder to the head office of the Federal Reserve Bank of Atlanta. To coincide with the effective date of the underlying check processing changes, the amendments are effective February 21, 2009. As a result of these changes, some checks deposited in the affected regions that currently are nonlocal checks will become local checks that are subject to shorter permissible hold periods.

The Board's notice is attached.

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December 16, 2008
Agencies Approve Final Rule on Deduction of Goodwill From Tier 1 Capital

The federal banking and thrift regulatory agencies today approved a final rule that would permit a banking organization to reduce the amount of goodwill it must deduct from tier 1 capital by any associated deferred tax liability.

Under the final rule, the regulatory capital deduction for goodwill would be equal to the maximum capital reduction that could occur as a result of a complete write-off of the goodwill under generally accepted accounting principles (GAAP). The final rule is in substance the same as the proposal issued in September. The final rule will be effective 30 days after publication in the Federal Register. However, banking organizations may adopt its provisions for purposes of regulatory capital reporting for the period ending December 31, 2008.

The final rule was approved by the Federal Reserve Board, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and Office of Thrift Supervision. The draft Federal Register notice is attached.

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Media Contacts:
Federal Reserve Deborah Lagomarsino 202-452-2955
FDIC David Barr 202-898-6992
OCC Kevin M. Mukri 202-874-5770
OTS William Ruberry 202-906-6677

December 15, 2008
Federal Reserve Will Offer $150 billion in 28-Day Credit Through Its Term Auction Facility Today

On December 15, 2008, the Federal Reserve will offer $150 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount: $150 billion
Term: 28-day loan
Bid Submission Date: December 15, 2008
   Opening Time: 11:00 a.m. EST
   Closing Time: 12:30 p.m. EST
Notification Date: December 16, 2008
Settlement Date: December 18, 2008
Maturity Date: Janary 15, 2009
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution): $15 billion (10% of Offering Amount)
Minimum Bid Rate: 0.28 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $15 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EST on the notification date. Between 10:00 a.m. and 11:30 a.m. EST on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EST on the notification date to inform their local Reserve Bank of any error.

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


December 09, 2008
Federal Reserve Announces It Will Conduct Two Auctions of Term Credit Through Its Term Auction Facility (TAF) in January 2009

The Federal Reserve will conduct two auctions of term credit through its Term Auction Facility (TAF) in January 2009. It will offer $150 billion of 28-day credit in an auction to be held on Monday, January 12, and $150 billion in 84-day credit in an auction to be held on Monday, January 26.


December 05, 2008
Federal Reserve Seeks Public Comment on Proposed Changes to Regulation Z (Truth in Lending)

The Federal Reserve Board on Friday proposed for public comment changes to Regulation Z (Truth in Lending) that would revise the disclosure requirements for mortgage loans. The revisions would implement the Mortgage Disclosure Improvement Act (MDIA) which was enacted in July 2008 as an amendment to the Truth in Lending Act (TILA).

The MDIA seeks to ensure that consumers receive cost disclosures earlier in the mortgage process. In several respects, the MDIA is substantially similar to final rules issued by the Board in July 2008. However, the MDIA also broadens and adds to those regulatory requirements.

The MDIA requires creditors to give good faith estimates of mortgage loan costs ("early disclosures") within three business days after receiving a consumer's application for a mortgage loan and before any fees are collected from the consumer, other than a reasonable fee for obtaining the consumer's credit history. These requirements are consistent with the Board's July 2008 final rule which applied to loans secured by a consumer's principal dwelling. The MDIA broadens this requirement by also requiring early disclosures for loans secured by dwellings other than the consumer's principal dwelling, such as a second home.

In addition, the proposed rules would implement the MDIA's requirements that:

  • Creditors wait seven business days after they provide the early disclosures before closing the loan; and
  • Creditors provide new disclosures with a revised annual percentage rate (APR), and wait an additional three days before closing the loan, if a change occurs that makes the APR in the early disclosures inaccurate beyond a specified tolerance.

The proposed rules would permit a consumer to expedite the closing to address a personal financial emergency, such as a foreclosure. Under the MDIA, the proposed rules would become effective on July 30, 2009.

The notice that will be published in the Federal Register is attached. The public comment period ends January 23, 2009.

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December 02, 2008
Federal Reserve Announces the Extension of Three Liquidity Facilities Through April 30, 2009

In light of continuing strains in financial markets, the Federal Reserve on Tuesday announced the extension through April 30, 2009, of three liquidity facilities: the Primary Dealer Credit Facility (PDCF), the Asset-Backed Commercial Paper Money Market Fund Liquidity Facility (AMLF), and the Term Securities Lending Facility (TSLF). These facilities had previously been authorized through January 30, 2009.

The extension through April 30 for these facilities is consistent with the term authorized for several other liquidity-related facilities: the Commercial Paper Funding Facility (CPFF), the Money Market Investor Funding Facility (MMIFF), and the temporary reciprocal currency arrangements (swap lines) with 14 other central banks.

The PDCF provides discount window loans to primary dealers. The AMLF provides loans to depository institutions to purchase asset-backed commercial paper from money market mutual funds. Under the TSLF, the Federal Reserve Bank of New York auctions term loans of Treasury securities to primary dealers. The CPFF provides a liquidity backstop to U.S. issuers of commercial paper. The MMIFF supports a private-sector initiative to provide liquidity to U.S. money market investors.


December 02, 2008
Federal Reserve Announces Results of Auction of $150 billion in 84-Day Credit Held on December 1, 2008

On December 1, 2008, the Federal Reserve conducted an auction of $150 billion in 84-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.420 percent
     
Total propositions submitted: $66.471 billion
Total propositions accepted: $66.471 billion
Bid/cover ratio: 0.44
     
Number of bidders: 80

The awarded loans will settle on December 4, 2008, and will mature on February 26, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EST on December 2, 2008. Participants have until 12:30 p.m. EST on December 2, 2008, to inform their local Reserve Bank of any error.


December 01, 2008
Federal Reserve Will Offer $150 billion in 84-Day Credit Through Its Term Auction Facility Today

On December 1, 2008, the Federal Reserve will offer $150 billion in 84-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount: $150 billion
Term: 84-day loan
Bid Submission Date: December 1, 2008
   Opening Time: 11:00 a.m. EST
   Closing Time: 12:30 p.m. EST
Notification Date: December 2, 2008
Settlement Date: December 4, 2008
Maturity Date: February 26, 2009
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution): $15 billion (10% of Offering Amount)
Minimum Bid Rate: 0.42 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $15 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EST on the notification date. Between 10:00 a.m. and 11:30 a.m. EST on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EST on the notification date to inform their local Reserve Bank of any error.

Rounding Convention
Pro rata awards will be rounded to multiples of $10,000. Normal rounding convention will be used, except that awards under $10,000 will be rounded to $10,000.
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November 25, 2008
Federal Reserve announces it will initiate a program to purchase the direct obligations of housing-related GSEs

The Federal Reserve announced on Tuesday that it will initiate a program to purchase the direct obligations of housing-related government-sponsored enterprises (GSEs)—Fannie Mae, Freddie Mac, and the Federal Home Loan Banks—and mortgage-backed securities (MBS) backed by Fannie Mae, Freddie Mac, and Ginnie Mae. Spreads of rates on GSE debt and on GSE-guaranteed mortgages have widened appreciably of late.  This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally.

Purchases of up to $100 billion in GSE direct obligations under the program will be conducted with the Federal Reserve's primary dealers through a series of competitive auctions and will begin next week.  Purchases of up to $500 billion in MBS will be conducted by asset managers selected via a competitive process with a goal of beginning these purchases before year-end. Purchases of both direct obligations and MBS are expected to take place over several quarters. Further information regarding the operational details of this program will be provided after consultation with market participants.
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November 25, 2008
Federal Reserve announces results of auction of $150 billion in 13-day credit held on November 24, 2008

On November 24, 2008, the Federal Reserve conducted an auction of $150 billion in 13-day credit through its Term Auction Facility. This was a forward auction designed to provide term funding over year-end--the awarded loans will settle on December 23, 2008. Following are the results of the auction:

Stop-out rate: 0.380 percent
     
Total propositions submitted: $31.075 billion
Total propositions accepted: $31.075 billion
Bid/cover ratio: 0.21
     
Number of bidders: 16

The awarded loans will mature on January 5, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EST on November 25, 2008. Participants have until 12:30 p.m. EST on November 25, 2008, to inform their local Reserve Bank of any error.
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November 25, 2008
Federal Reserve announces the creation of the Term Asset-Backed Securities Loan Facility

The Federal Reserve Board on Tuesday announced the creation of the Term Asset-Backed Securities Loan Facility (TALF), a facility that will help market participants meet the credit needs of households and small businesses by supporting the issuance of asset-backed securities (ABS) collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA).

Under the TALF, the Federal Reserve Bank of New York (FRBNY) will lend up to $200billion on a non-recourse basis to holders of certain AAA-rated ABS backed by newly and recently originated consumer and small business loans. The FRBNY will lend an amount equal to the market value of the ABS less a haircut and will be secured at all times by the ABS. The U.S. Treasury Department—under the Troubled Assets Relief Program (TARP) of the Emergency Economic Stabilization Act of 2008—will provide $20 billion of credit protection to the FRBNY in connection with the TALF. The attached terms and conditions document describes the basic terms and operational details of the facility. The terms and conditions are subject to change based on discussions with market participants in the coming weeks.

New issuance of ABS declined precipitously in September and came to a halt in October. At the same time, interest rate spreads on AAA-rated tranches of ABS soared to levels well outside the range of historical experience, reflecting unusually high risk premiums. The ABS markets historically have funded a substantial share of consumer credit and SBA-guaranteed small business loans. Continued disruption of these markets could significantly limit the availability of credit to households and small businesses and thereby contribute to further weakening of U.S. economic activity. The TALF is designed to increase credit availability and support economic activity by facilitating renewed issuance of consumer and small business ABS at more normal interest rate spreads.
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November 18, 2008
Federal Reserve announces results of auction of $150 billion in 28-day credit held on November 17, 2008

On November 17, 2008, the Federal Reserve conducted an auction of $150 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.510 percent
     
Total propositions submitted: $104.478 billion
Total propositions accepted: $104.478 billion
Bid/cover ratio: 0.70
     
Number of bidders: 80

The awarded loans will settle on November 20, 2008, and will mature on December 18, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EST on November 18, 2008. Participants have until 12:30 p.m. EST on November 18, 2008, to inform their local Reserve Bank of any error.
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November 18, 2008
Restructuring of the Check Processing Operations in the Seventh District, Regulation CC

The Federal Reserve Board has approved amendments to Appendix A of Regulation CC that reflect the restructuring of the Federal Reserve's check processing operations in the Seventh District.

Appendix A provides a routing number guide that helps depository institutions determine the maximum permissible hold periods for most deposited checks.  As of January 31, 2009, the Des Moines office of the Federal Reserve Bank of Chicago no longer will process checks, and banks currently served by that office will be reassigned to the head office of the Federal Reserve Bank of Chicago.  To ensure that the information in Appendix A accurately describes the structure of check processing operations within the Federal Reserve System, the final rule deletes the reference in Appendix A to the Des Moines office of the Federal Reserve Bank of Chicago and reassigns the routing numbers listed thereunder to the head office of the Federal Reserve Bank of Chicago.  To coincide with the effective date of the underlying check processing changes, the amendments are effective January 31, 2009.  As a result of these changes, some checks deposited in the affected regions that currently are nonlocal checks will become local checks that are subject to shorter permissible hold periods.
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November 17, 2008
Federal Reserve Will Offer $150 billion in 28-Day Credit Through Its Term Auction Facility Today

On November 17, 2008, the Federal Reserve will offer $150 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount: $150 billion
Term: 28-day loan
Bid Submission Date: November 17, 2008
   Opening Time: 11:00 a.m. EST
   Closing Time: 12:30 p.m. EST
Notification Date: November 18, 2008
Settlement Date: November 20, 2008
Maturity Date: December 18, 2008
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution): $15 billion (10% of Offering Amount)
Minimum Bid Rate: 0.51 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $15 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EST on the notification date. Between 10:00 a.m. and 11:30 a.m. EST on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EST on the notification date to inform their local Reserve Bank of any error.

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


November 13, 2008
Agencies Seek Comment on Proposed Interagency Appraisal and Evaluation Guidelines

The federal bank, thrift, and credit union regulatory agencies have jointly issued for comment proposed Interagency Appraisal and Evaluation Guidelines that reaffirm supervisory expectations for sound real estate appraisal and evaluation practices. The proposed guidance builds on the existing federal regulatory framework to clarify risk management principles and internal controls for ensuring that financial institutions' real estate collateral valuations (both appraisals and evaluations) are reliable and support their real estate-related transactions. The initiative is intended to respond to heightened concerns over appraisals and credit quality.

The proposed guidance would replace the 1994 Interagency Appraisal and Evaluation Guidelines to incorporate recent supervisory issuances and reflect changes in industry practice, uniform appraisal standards, and available technologies.

The proposed revisions address:

  • Additional detail on the agencies' expectations for an independent appraisal and evaluation function.
  • Greater explanation of the agencies' minimum appraisal standards, including clarification of requirements for appraisals of residential tract developments.
  • Revisions to the Uniform Standards of Professional Appraisal Practice, which are incorporated by reference in the agencies' appraisal regulations.
  • Risk-focused appraisal and evaluation reviews separate and apart from an institution's compliance function.
  • New appendices -- Appendix A provides further clarification on real estate transactions that are exempt from the agencies' appraisal regulations; Appendix B addresses acceptable evaluation alternatives and use of automated valuation models; and Appendix C contains a new glossary of terms.

The agencies request comments on all aspects of the proposed guidance. Comments are due to the agencies sixty days after publication in the Federal Register.
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November 13, 2008
Agencies Issue Final Rule to Implement Unlawful Internet Gambling Enforcement Act

The Department of the Treasury and the Federal Reserve Board announced the release of a joint final rule to implement the Unlawful Internet Gambling Enforcement Act of 2006. The Act prohibits gambling businesses from knowingly accepting payments in connection with unlawful Internet gambling, including payments made through credit cards, electronic funds transfers, and checks.

The Board and the Treasury are required by the Act to develop a joint rule in consultation with the Department of Justice. The final rule requires U.S. financial firms that participate in designated payment systems to establish and implement policies and procedures that are reasonably designed to prevent payments to gambling businesses in connection with unlawful Internet gambling. The rule provides non-exclusive examples of such policies and procedures and sets out the regulatory enforcement framework. For purposes of the rule, unlawful Internet gambling generally would cover the making of a bet or wager that involves use of the Internet and that is unlawful under any applicable federal or state law in the jurisdiction where the bet or wager is initiated, received, or otherwise made.

Compliance with the rule is required by December 1, 2009.
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November 12, 2008
Federal Reserve Announces Results of Auction of $150 Billion in 17-Day Credit Held on November 10, 2008

On November 10, 2008, the Federal Reserve conducted an auction of $150 billion in 17-day credit through its Term Auction Facility. This was a forward auction designed to provide term funding over year-end--the awarded loans will settle on December 22, 2008. Following are the results of the auction:

Stop-out rate: 0.528 percent
     
Total propositions submitted: $12.629 billion
Total propositions accepted: $12.629 billion
Bid/cover ratio: 0.08
     
Number of bidders: 16

The awarded loans will mature on January 8, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EST on November 12, 2008. Participants have until 12:30 p.m. EST on November 12, 2008, to inform their local Reserve Bank of any error.


November 12, 2008
Interagency Statement on Meeting the Needs of Creditworthy Borrowers

The Department of the Treasury, the Federal Deposit Insurance Corporation, and the Federal Reserve have recently put into place several programs designed to promote financial stability and to mitigate procyclical effects of the current market conditions. These programs make new capital widely available to U.S. financial institutions, broaden and increase the guarantees on bank deposit accounts and certain liabilities, and provide backup liquidity to U.S. banking organizations. These efforts are designed to strengthen the capital foundation of our financial system and improve the overall functioning of credit markets.

The ongoing financial and economic stress has highlighted the crucial role that prudent bank lending practices play in promoting the nation's economic welfare. The recent policy actions are designed to help support responsible lending activities of banking organizations, enhance their ability to fund such lending, and enable banking organizations to better meet the credit needs of households and business. At this critical time, it is imperative that all banking organizations and their regulators work together to ensure that the needs of creditworthy borrowers are met. To support this objective, consistent with safety and soundness principles and existing supervisory standards, each individual banking organization needs to ensure the adequacy of its capital base, engage in appropriate loss mitigation strategies and foreclosure prevention, and reassess the incentive implications of its compensation policies.
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November 10, 2008
Federal Reserve Will Offer $150 Billion in 17-Day Credit Through Its Term Auction Facility Today

On November 10, 2008, the Federal Reserve will offer $150 billion in 17-day credit through its Term Auction Facility. This is a forward auction designed to provide term funding over year-end--awarded loans will settle on December 22, 2008.

Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount: $150 billion
Term: 17-day loan
Bid Submission Date: November 10, 2008
  Opening Time: 11:00 a.m. EST
  Closing Time: 12:30 p.m. EST
Notification Date: November 12, 2008
Settlement Date: December 22, 2008
Maturity Date: January 8, 2009
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution): $15 billion (10% of Offering Amount)
Minimum Bid Rate: 0.528 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $15 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EST on the notification date. Between 10:00 a.m. and 11:30 a.m. EST on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EST on the notification date to inform their local Reserve Bank of any error.

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


November 06, 2008
Federal Reserve Banks Announce Reduced Number of Check Processing Sites and Accelerated Restructuring Schedule

The Federal Reserve Banks today announced that the Federal Reserve Bank of Cleveland will serve as the single paper check processing and adjustments site and that the Federal Reserve Bank of Atlanta will serve as the single electronic check processing site for the Federal Reserve System. The Reserve Banks also announced they will utilize a flexible restructuring schedule that scales back or shifts operations at their other sites when paper check volumes no longer justify the existing operation.

This strategy updates the June 2007 announcement that identified the Federal Reserve Banks of Atlanta, Dallas, Philadelphia, and Cleveland as regional processing sites. Since that time, paper check volumes have declined significantly and no longer support the need for four full-service regional sites. The transition from four to one full service paper processing site is likely to take place by the end of 2009. In addition, the schedules for transitioning the other current processing sites are being accelerated to take place earlier in 2009 than previously planned.

Under the Reserve Banks' plans, selected sites may remain as capture/print sites or print-only sites for a period of time during this transition based on market conditions and remaining paper check volume. The specific transition dates for all paper processing sites, including Atlanta, Dallas, and Philadelphia, will be determined on that same basis. Customers in affected territories will receive a minimum of 60 days notice before processing operations are shifted to a new site or any service level changes take place. Virtually all customers currently receiving paper will receive substitute checks, as opposed to the original paper check, as this transition unfolds. A schedule has not been established for the transition to a central electronic check processing site to Atlanta. That information will be communicated when it is available.

Cleveland was also selected as the Reserve Banks' single check adjustments site over the other previously announced long-term adjustments sites Charlotte, N.C., Jacksonville, Fla., and Portland, Ore. Check adjustments is the back-office check processing function where processing issues are remediated. Because adjustments are handled for both paper and Check 21 processing, the adjustments function transition to a single site is expected to occur over a somewhat longer timeframe than paper processing and be driven by overall declines in adjustment case level volume. The schedule for restructuring adjustments sites is subject to change, and the Reserve Banks will notify employees and customers at least 60 days in advance of the confirmed date.

As a result of the actions announced today, the Reserve Banks expect to reduce their overall check staff by approximately 750 positions. Some staff reductions may occur through attrition and there may be some opportunities for reassignment. To assist affected staff, the Reserve Banks will offer a variety of programs, including separation packages, extended medical coverage, and career transition assistance.

The Reserve Banks' restructuring moves of the past six years have been an important part of their efforts to meet requirements for recovering costs for providing check services over the long term. The number of checks paid in the United States has fallen from 42 billion in 2001, to 37 billion in 2003, and to 30 billion in 2006.

While restructuring check operations will continue to be challenging, this process and related changes support the Reserve Banks' mission to promote the long-term efficiency and integrity of the nation's payments system.
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November 05, 2008
Federal Reserve Announces It Will Alter Formulas Used to Determine Interest Rates Paid to Depository Institutions on Required Reserve Balances and Excess Reserve Balances

The Federal Reserve Board announced that it will alter the formulas used to determine the interest rates paid to depository institutions on required reserve balances and excess reserve balances.

Previously, the rate on required reserve balances had been set at the average target federal funds rate established by the Federal Open Market Committee (FOMC) over a reserves maintenance period minus 10 basis points. The rate on excess balances had been set as the lowest federal funds rate target in effect during a reserve maintenance period minus 35 basis points. Under the new formulas, the rate on required reserve balances will be set equal to the average target federal funds rate over the reserve maintenance period. The rate on excess balances will be set equal to the lowest FOMC target rate in effect during the reserve maintenance period. These changes will become effective for the maintenance periods beginning Thursday, November 6.

The Board judged that these changes would help foster trading in the funds market at rates closer to the FOMC's target federal funds rate.
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November 04, 2008
Federal Reserve Announces Results of Auction of $150 Billion in 84-Day Credit Held on November 3, 2008

On November 3, 2008, the Federal Reserve conducted an auction of $150 billion in 84-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.600 percent
     
Total propositions submitted:    $138.939 billion
Total propositions accepted: $138.939 billion
Bid/cover ratio: 0.93
     
Number of bidders: 89

The awarded loans will settle on November 6, 2008, and will mature on January 29, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EST on November 4, 2008. Participants have until 12:30 p.m. EST on November 4, 2008, to inform their local Reserve Bank of any error.


November 04, 2008
Federal Reserve Board Alerts Public to Instances of Questionable Solicitations Directed at Consumers

The Federal Reserve Board on Tuesday alerted the public to instances of questionable solicitations directed at consumers. These solicitations promise consumers access to personal loans through a nonexistent Federal Reserve lending program.

Under this fraudulent scheme, targeted individuals are told that that they can work through a broker to access a Federal Reserve program that extends sizable secured loans to consumers. Consumers are encouraged to deposit large sums of money into a bank account, under the guise of a security deposit, in order to receive the purported loan.

The Federal Reserve is advising consumers that it has no involvement in these solicitations and does not directly sponsor consumer lending programs. The matter has been referred to the appropriate authorities for action.

Consumers are strongly urged to verify the legitimacy of potential service providers before entering into a business transaction. Individuals seeking personal finance options are encouraged to do business only with reputable lenders and to shop around for the most favorable loan terms.

Consumers with questions about solicitations that they suspect may be fraudulent are encouraged to contact the Federal Reserve Board Consumer Help Center at http://www.federalreserveconsumerhelp.gov or by calling 1-888-851-1920.


November 03, 2008
Federal Reserve will offer $150 billion in 84-day credit through its Term Auction Facility today

On November 3, 2008, the Federal Reserve will offer $150 billion in 84-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm) off-site image.

Description of Offering and Auction Parameters

Offering Amount:   $150 billion
Term:   84-day loan
Bid Submission Date:   November 3, 2008
  Opening Time:   11:00 a.m. EST
  Closing Time:   12:30 p.m. EST
Notification Date:   November 4, 2008
Settlement Date:   November 6, 2008
Maturity Date:   January 29, 2009
Minimum Bid Amount (per bid):   $5 million
Bid Increment:   $100,000
Maximum Bid Amount (per institution):   $15 billion (10% of Offering Amount)
Minimum Bid Rate:   0.60 percent
Incremental Bid Rate:   0.001 percent
Minimum Award:   $10,000
Maximum Award:   $15 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) off-site image at approximately 10:00 a.m. EST on the notification date. Between 10:00 a.m. and 11:30 a.m. EST on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EST on the notification date to inform their local Reserve Bank of any error.

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


October 29, 2008
FOMC Statement

The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 1 percent.

The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures. Business equipment spending and industrial production have weakened in recent months, and slowing economic activity in many foreign economies is damping the prospects for U.S. exports. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit.

In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate in coming quarters to levels consistent with price stability.

Recent policy actions, including today's rate reduction, coordinated interest rate cuts by central banks, extraordinary liquidity measures, and official steps to strengthen financial systems, should help over time to improve credit conditions and promote a return to moderate economic growth. Nevertheless, downside risks to growth remain. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.

In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 1-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Cleveland, and San Francisco.


October 29, 2008
Federal Reserve, Banco Central do Brasil, Banco de Mexico, Bank of Korea, and Monetary Authority of Singapore Announce the Establishment of Temporary Reciprocal Currency Arrangements

Today, the Federal Reserve, the Banco Central do Brasil, the Banco de Mexico, the Bank of Korea, and the Monetary Authority of Singapore are announcing the establishment of temporary reciprocal currency arrangements (swap lines). These facilities, like those already established with other central banks, are designed to help improve liquidity conditions in global financial markets and to mitigate the spread of difficulties in obtaining U.S. dollar funding in fundamentally sound and well managed economies.

Federal Reserve Actions
In response to the heightened stress associated with the global financial turmoil, which has broadened to emerging market economies, the Federal Reserve has authorized the establishment of temporary liquidity swap facilities with the central banks of these four large and systemically important economies. These new facilities will support the provision of U.S. dollar liquidity in amounts of up to $30 billion each by the Banco Central do Brasil, the Banco de Mexico, the Bank of Korea, and the Monetary Authority of Singapore.

These reciprocal currency arrangements have been authorized through April 30, 2009.

The FOMC previously authorized temporary reciprocal currency arrangements with ten other central banks: the Reserve Bank of Australia, the Bank of Canada, Danmarks Nationalbank, the Bank of England, the European Central Bank, the Bank of Japan, the Reserve Bank of New Zealand, the Norges Bank, the Sveriges Riksbank, and the Swiss National Bank.

IMF Announcement
Separately, the Federal Reserve welcomes the announcement today by the International Monetary Fund of the establishment of the Short-Term Liquidity Facility, which is designed to help member countries that are facing temporary liquidity problems in the global capital markets. The Federal Reserve is supportive of the IMF's role in helping countries address and resolve their ongoing economic and financial difficulties.

Information on Related Actions Being Taken by Other Central Banks and by the IMF
Information on the actions that will be taken by central banks and by the International Monetary Fund is available at the following websites:
Banco Central do Brasil off-site image
Banco de Mexico off-site image
Bank of Korea off-site image
Monetary Authority of Singapore off-site image
International Monetary Fund off-site image


October 28, 2008
Federal Reserve and Reserve Bank of New Zealand Announce the Establishment of a Temporary Reciprocal Currency Arrangement

Today, the Federal Reserve and the Reserve Bank of New Zealand are announcing the establishment of a temporary reciprocal currency arrangement (swap line) to address ongoing, elevated pressures in U.S. dollar short-term funding markets. This facility, like those already established with other central banks, is designed to help improve liquidity conditions in global financial markets.

Federal Reserve Actions
The Federal Open Market Committee has authorized the establishment of a new swap facility with the Reserve Bank of New Zealand that will support the provision of U.S. dollar liquidity in amounts of up to $15 billion. This reciprocal currency arrangement has been authorized through April 30, 2009.

The FOMC previously authorized temporary reciprocal currency arrangements with nine other central banks: the Reserve Bank of Australia, the Bank of Canada, Danmarks Nationalbank, the Bank of England, the European Central Bank, the Bank of Japan, the Norges Bank, the Sveriges Riksbank, and the Swiss National Bank.

Information on Related Actions Being Taken by Other Central Banks
Information on the actions that will be taken by the Reserve Bank of New Zealand is available at the following website:
Reserve Bank of New Zealand


October 22, 2008
Federal Reserve Announces It Will Alter the Formula Used to Determine the Interest Rate Paid to Depository Institutions on Excess Balances

The Federal Reserve Board on Wednesday announced that it will alter the formula used to determine the interest rate paid to depository institutions on excess balances.

Previously, the rate on excess balances had been set as the lowest federal funds rate target established by the Federal Open Market Committee (FOMC) in effect during the reserve maintenance period minus 75 basis points. Under the new formula, the rate on excess balances will be set equal to the lowest FOMC target rate in effect during the reserve maintenance period less 35 basis points. This change will become effective for the maintenance periods beginning Thursday, October 23.

The Board judged that a narrower spread between the target funds rate and the rate on excess balances at this time would help foster trading in the funds market at rates closer to the target rate. The Board will continue to evaluate the appropriate setting of the rate on excess balances in light of evolving market conditions and make further adjustments as needed.


October 21, 2008
Federal Reserve Announces the Creation of the Money Market Investor Funding Facility (MMIFF)

The Federal Reserve Board on Tuesday announced the creation of the Money Market Investor Funding Facility (MMIFF), which will support a private-sector initiative designed to provide liquidity to U.S. money market investors.

Under the MMIFF, authorized by the Board under Section 13(3) of the Federal Reserve Act, the Federal Reserve Bank of New York (FRBNY) will provide senior secured funding to a series of special purpose vehicles to facilitate an industry-supported private-sector initiative to finance the purchase of eligible assets from eligible investors. Eligible assets will include U.S. dollar-denominated certificates of deposit and commercial paper issued by highly rated financial institutions and having remaining maturities of 90 days or less. Eligible investors will include U.S. money market mutual funds and over time may include other U.S. money market investors.

The short-term debt markets have been under considerable strain in recent weeks as money market mutual funds and other investors have had difficulty selling assets to satisfy redemption requests and meet portfolio rebalancing needs. By facilitating the sales of money market instruments in the secondary market, the MMIFF should improve the liquidity position of money market investors, thus increasing their ability to meet any further redemption requests and their willingness to invest in money market instruments. Improved money market conditions will enhance the ability of banks and other financial intermediaries to accommodate the credit needs of businesses and households.

The attached term sheet describes the basic terms and operational details of the facility.

The MMIFF complements the previously announced Commercial Paper Funding Facility (CPFF), which on October 27, 2008 will begin funding purchases of highly rated, U.S.-dollar denominated, three-month, unsecured and asset-backed commercial paper issued by U.S. issuers, as well as the Asset Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF), announced on September 19, 2008, which extends loans to banking organizations to purchase asset backed commercial paper from money market mutual funds. The AMLF, CPFF, and MMIFF are all intended to improve liquidity in short-term debt markets and thereby increase the availability of credit.

MMIFF Terms and Conditions (56 KB PDF) off-site image


October 21, 2008
Federal Reserve Announces Results of Auction of $150 Billion in 28-Day Credit Held on October 20, 2008

On October 20, 2008, the Federal Reserve conducted an auction of $150 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 1.110 percent
     
Total propositions submitted:   $113.271 billion
Total propositions accepted: $113.271 billion
Bid/cover ratio: 0.76
     
Number of bidders: 74

The awarded loans will settle on October 23, 2008, and will mature on November 20, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on October 21, 2008. Participants have until 12:30 p.m. EDT on October 21, 2008, to inform their local Reserve Bank of any error.


October 21, 2008
Board Issues Statement Concerning Its Approval of the Proposal by Wells Fargo and Company to Acquire Wachovia Corporation

The Federal Reserve Board on Tuesday released a statement concerning its action of October 12, 2008, approving the proposal by Wells Fargo & Company, San Francisco, California, to acquire Wachovia Corporation, Charlotte, North Carolina.

Attached is the Board's Statement relating to this action.
Attachment (125 KB PDF) off-site image


October 20, 2008
Federal Reserve Will Offer $150 Billion in 28-Day Credit Through Its Term Auction Facility Today

On October 20, 2008, the Federal Reserve will offer $150 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount: $150 billion
Term: 28-day loan
Bid Submission Date: October 20, 2008
  Opening Time: 11:00 a.m. EDT
  Closing Time: 12:30 p.m. EDT
Notification Date: October 21, 2008
Settlement Date: October 23, 2008
Maturity Date: November 20, 2008
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution): $15 billion (10% of Offering Amount)
Minimum Bid Rate: 1.11 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $15 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

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


October 20, 2008
Agencies Encourage Participation in Treasury's Capital Purchase Program, FDIC's Temporary Liquidity Guarantee Program

The federal banking and thrift regulatory agencies encourage all eligible institutions to use the Treasury Department's Capital Purchase Program and the Federal Deposit Insurance Corporation's Temporary Liquidity Guarantee Program. On October 14, 2008, the U.S. government announced a series of initiatives to strengthen market stability, improve the strength of financial institutions, and enhance market liquidity. Treasury announced a voluntary Capital Purchase Program to encourage U.S. financial institutions to build capital to increase the flow of financing to U.S. businesses and consumers and to support the U.S. economy. Under the program, Treasury will purchase up to $250 billion of senior preferred shares on standardized terms.

Treasury's Capital Purchase Program and the FDIC's Temporary Liquidity Guarantee Program complement one another. Through these programs, fresh capital and liquidity are available to foster new lending in our nation's communities.

Under Treasury's Capital Purchase Program, eligible institutions will be able to sell equity interests to Treasury in amounts equal to 1 percent to 3 percent of the institution's risk-weighted assets. These equity interests will constitute Tier 1 capital for the eligible institution.

Treasury and the agencies on Monday issued application guidelines and other documents for the Capital Purchase Program. Those documents are attached. If regulated by the Federal Reserve, contact your local Reserve Bank about the program. If regulated by the FDIC, contact the appropriate regional office for your institution. If regulated by the Office of the Comptroller of the Currency, contact Fred Finke (fred.finke@occ.treas.gov) for more information and send applications to HQ.Licensing@occ.treas.gov or OCC Director of Licensing, 250 E St. SW, Mail Stop 7-13, Washington DC, 20219-0001. If regulated by the Office of Thrift Supervision, contact the appropriate regional office for your institution.

Nine large financial organizations already have agreed to participate in the Capital Purchase Program. We encourage other institutions to take advantage of the benefits of the Capital Purchase Program by contacting their primary federal regulator and appropriate bank holding company regulator if applicable for details about the program, conditions, and eligibility. The deadline to apply is November 14, 2008.

All eligible institutions are automatically covered by the FDIC's Temporary Liquidity Guarantee Program without charge for the first 30 days. The Treasury's Capital Purchase Program and FDIC's Temporary Liquidity Guarantee Program share a common goal--to restore capital flows to the consumers and businesses that form the core of our economy. The federal bank and thrift regulatory agencies encourage eligible institutions to participate in that common goal.


October 17, 2008
Agencies Announce Decision on Regulatory Capital Impact of Emergency Economic Stabilization Act of 2008 on Fannie Mae and Freddie Mac Preferred Stock

The federal banking and thrift regulatory agencies announced today that they will allow banks, bank holding companies, and thrifts (collectively, "banking organizations") to recognize the effect of the tax change enacted in Section 301 of the Emergency Economic Stabilization Act of 2008 (EESA) in their third quarter 2008 regulatory capital calculations.

Section 301 of EESA provides tax relief to banking organizations that have suffered losses on certain holdings of Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) preferred stock by changing the character of these losses from capital to ordinary for federal income tax purposes. However, because the EESA was not enacted until October 3, 2008, banking organizations will not be able to recognize the tax effects of the ordinary losses resulting from Section 301 of EESA in financial statements prepared in accordance with generally accepted accounting principles until the fourth quarter of 2008. Today's decision by the agencies will allow banking organizations to recognize the economic benefits of the change in the tax treatment of losses on Fannie Mae and Freddie Mac preferred stock under Section 301 of the EESA in the third quarter of 2008 for regulatory capital purposes.

The agencies plan to provide regulatory reporting instructions to banking organizations describing how the effect of the tax change enacted in Section 301 of EESA should be reflected in the measurement of regulatory capital in their regulatory reports for September 30, 2008.

Media Contacts:
Federal Reserve Deborah Lagomarsino 202-452-2955
FDIC David Barr 202-898-6992
OCC Kevin M. Mukri 202-874-5770
OTS William Ruberry 202-906-6677

October 16, 2008
Federal Reserve Issues Guidance for Consolidated Supervision of Bank Holding Companies and Combined U.S. Operations of Foreign Banking Organizations

The Federal Reserve on Thursday issued enhanced guidance that refines and clarifies its programs for the consolidated supervision of bank holding companies and the combined U.S. operations of foreign banking organizations (FBOs). The Federal Reserve also released guidance clarifying supervisory expectations with respect to firmwide compliance risk management.

While initiation of these efforts predated the recent period of considerable strain in the financial markets, these enhanced approaches to consolidated supervision and firmwide compliance risk management emphasize several elements that should support a more resilient financial system.

The Federal Reserve continues to work, both independently and in conjunction with other supervisors and functional regulators, on a number of initiatives to strengthen supervisory approaches and reinforce expectations for sound practices in response to market events.

"This supervisory guidance on consolidated supervision and compliance risk management will better equip our supervisory staff, working closely with other U.S. and foreign supervisors and regulators, to understand and assess the full range and scope of a banking organization's operations and risks," said Federal Reserve Board Governor Randall S. Kroszner.

"This guidance should not only provide greater clarity regarding our longstanding responsibilities as a consolidated supervisor, but is also responsive to ongoing developments in the financial sector. The objectives of fostering financial stability and deterring or managing financial crises will be furthered by the Federal Reserve having a more complete view of firmwide risks and controls," Governor Kroszner said.

The continuing growth in the size and complexity of many banking organizations exposes these firms to a wide array of potential risks, while at the same time making it more challenging for a single supervisor to have a comprehensive perspective on the firm as a whole. In this regard, the consolidated supervision guidance is designed to foster consistent Federal Reserve supervisory practices and assessments across institutions with similar activities and risks.

The guidance describes how Federal Reserve staff develops an understanding and assessment of the consolidated operations of a bank holding company and the U.S. operations of an FBO through continuous monitoring activities, discovery reviews, and testing activities, as well as through interaction with, and reliance to the fullest extent possible on, other relevant supervisors and functional regulators.

The separate compliance risk management guidance endorses the principles set forth in the April 2005 paper issued by the Basel Committee on Banking Supervision entitled Compliance and the compliance function in banks. This guidance clarifies certain Federal Reserve supervisory policies regarding compliance risk management programs and oversight at large banking organizations with complex compliance profiles.

The supervisory guidance on both consolidated supervision and compliance risk management is attached.
SR Letter 08-8/CA Letter 08-11 off-site image
SR Letter 08-9/CA Letter 08-12 off-site image


October 16, 2008
Federal Reserve Announces Interim Final Rule to Allow Bank Holding Companies to Include Senior Perpetual Preferred Stock Issued to the Treasury Department in Tier 1 Capital

The Federal Reserve Board on Thursday announced the adoption of an interim final rule that will allow bank holding companies to include in their Tier 1 capital without restriction the senior perpetual preferred stock issued to the Treasury Department under the capital purchase program announced by the Treasury on October 14, 2008. Treasury established the capital purchase program under the Emergency Economic Stabilization Act of 2008, which became law on October 3, 2008. Details about the capital purchase program are available on the Treasury's web site.

The Board adopted the rule on an interim final basis to immediately provide guidance to bank holding companies concerning the regulatory capital treatment of such senior perpetual preferred stock and to support and facilitate the timely provision of capital to bank holding companies under the capital purchase program. The Board continues to work with Treasury, the other federal banking agencies, and other parties on other capital and related matters associated with the capital purchase program.

The interim rule will be effective as of October 17, 2008. The Board is, however, seeking public comment on the interim rule. Comments must be submitted within 30 days of publication of the interim rule in the Federal Register, which is expected soon.

The draft Federal Register notice for the rule is attached.
Attachment (43 KB PDF) off-site image


October 14, 2008
Joint statement by Federal Reserve, U.S. Department of the Treasury, and Federal Deposit Insurance Corporation (FDIC)

Washington, DC-- The following statement was made by Treasury Secretary Henry M. Paulson, Jr, Federal Reserve Chairman Ben Bernanke and FDIC Chairman Sheila C. Bair:

Today we are taking decisive actions to protect the U.S. economy, to strengthen public confidence in our financial institutions, and to foster the robust functioning of our credit markets. These steps will ensure that the U.S. financial system performs its vital role of providing credit to households and businesses and protecting savings and investments in a manner that promotes strong economic growth in the U.S. and around the world. The overwhelming majority of banks in the United States are strong and well-capitalized. These actions will bolster public confidence in our system to restore and stabilize liquidity necessary to support economic growth.

Last week, the President's Working Group on Financial Markets announced that the U.S. government would deploy all of our tools in a strategic and collaborative manner to address the current instability in our financial markets and mitigate the risks that instability poses for broader economic growth. This past weekend, we and our G7 colleagues committed to a comprehensive global strategy to provide liquidity to markets, to strengthen financial institutions, to prevent failures that pose systemic risk, to protect savers, and to enforce investor protections.

We welcomed the steps announced by our European colleagues this weekend to implement the action plan, and ensure financial institutions in Europe can finance economic growth. Today we are implementing our strategy with three important actions.

First, Treasury is announcing a voluntary capital purchase program. A broad array of financial institutions is eligible to participate in this program by selling preferred shares to the U.S. government on attractive terms that protect the taxpayer. Second, after receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Paulson signed the systemic risk exception to the FDIC Act, enabling the FDIC to temporarily guarantee the senior debt of all FDIC-insured institutions and their holding companies, as well as deposits in non-interest bearing deposit transaction accounts. Regulators will implement an enhanced supervisory framework to assure appropriate use of this new guarantee.

We are pleased to announce that nine major financial institutions have already agreed to participate in both the capital purchase program and the FDIC guarantee program. We appreciate that these healthy institutions are taking these steps to strengthen their own positions and to enhance the overall performance of the U.S. economy. By participating in these programs, these institutions, along with thousands of others to come, will have enhanced capacity to perform their vital function of lending to U.S. consumers and businesses and promoting economic growth. They have also committed to continued aggressive actions to prevent unnecessary foreclosures and preserve homeownership.

Third, to further increase access to funding for businesses in all sectors of our economy, the Federal Reserve has announced further details of its Commercial Paper Funding Facility (CPFF) program, which provides a broad backstop for the commercial paper market. Beginning October 27, the CPFF will fund purchases of commercial paper of 3 month maturity from high-quality issuers.

Together these three steps significantly strengthen the capital position and funding ability of U.S. financial institutions, enabling them to perform their role of underpinning overall economic growth. These actions demonstrate to market participants here and around the world the strength of the U.S. government's commitment to take all necessary steps to unlock our credit markets and minimize the impact of the current instability on the overall U.S. economy. The actions taken today are a powerful step toward restoring the health of the global financial system.

Remarks by Chairman Ben S. Bernanke at the President's Working Group Market Stability Initiative announcement off-site image


October 14, 2008
Board Announces Additional Details Regarding the Commercial Paper Funding Facility (CPFF)

The Federal Reserve Board on Tuesday announced additional details regarding the Commercial Paper Funding Facility (CPFF), including that it would begin funding purchases of commercial paper on October 27, 2008.

The Board authorized the CPFF on October 7, 2008 under Section 13(3) of the Federal Reserve Act to provide a liquidity backstop to U.S. issuers of commercial paper. The CPFF is intended to improve liquidity in short-term funding markets and thereby increase the availability of credit for businesses and households.

Under the CPFF, the Federal Reserve Bank of New York will finance the purchase of unsecured and asset-backed commercial paper from eligible issuers through its primary dealers. The CPFF will finance only highly rated, U.S. dollar-denominated, three-month commercial paper.

The attached terms-and-conditions and questions-and-answers documents describe the terms and operational details of the facility, which were determined after consultation with commercial paper issuers and dealers.

Commercial Paper Funding Facility
Terms and conditions off-site image
FAQs off-site image


October 13, 2008
Federal Reserve and Other Central Banks Announce Further Measures to Provide Broad Access to Liquidity and Funding to Financial Institutions

In order to provide broad access to liquidity and funding to financial institutions, the Bank of England (BoE), the European Central Bank (ECB), the Federal Reserve, the Bank of Japan, and the Swiss National Bank (SNB) are jointly announcing further measures to improve liquidity in short-term U.S. dollar funding markets.

The BoE, ECB, and SNB will conduct tenders of U.S. dollar funding at 7-day, 28-day, and 84-day maturities at fixed interest rates for full allotment. Funds will be provided at a fixed interest rate, set in advance of each operation. Counterparties in these operations will be able to borrow any amount they wish against the appropriate collateral in each jurisdiction. Accordingly, sizes of the reciprocal currency arrangements (swap lines) between the Federal Reserve and the BoE, the ECB, and the SNB will be increased to accommodate whatever quantity of U.S. dollar funding is demanded. The Bank of Japan will be considering the introduction of similar measures.

Central banks will continue to work together and are prepared to take whatever measures are necessary to provide sufficient liquidity in short-term funding markets.

Federal Reserve Actions
To assist in the expansion of these operations, the Federal Open Market Committee has authorized increases in the sizes of its temporary swap facilities with the BoE, the ECB, and the SNB, so that these central banks can provide U.S. dollar funding in quantities sufficient to meet demand.

These arrangements have been authorized through April 30, 2009.

Information on Related Actions Being Taken by Other Central Banks
Information on the actions that will be taken by the other central banks is available at the following websites:
Bank of England off-site image
European Central Bank off-site image
Bank of Japan off-site image
Swiss National Bank off-site image


October 12, 2008
Approval of Proposal by Wells Fargo & Company to Acquire Wachovia Corporation

The Federal Reserve Board on Sunday announced its approval of the application and notice under sections 3 and 4 of the Bank Holding Company Act by Wells Fargo & Company, San Francisco, California, to acquire Wachovia Corporation and its subsidiary banks, Wachovia Bank, National Association, both of Charlotte, North Carolina, and Wachovia Bank Delaware, National Association, Wilmington, Delaware, and the nonbanking subsidiaries of Wachovia Corporation.

Attached is the Board's Order relating to this action.
Attachment (22 KB PDF) off-site image


October 08, 2008
Board Authorizes Federal Reserve Bank of New York to Borrow Securities from Certain Regulated U.S. Insurance Subsidiaries of AIG

The Federal Reserve Board has authorized the Federal Reserve Bank of New York to borrow securities from certain regulated U.S. insurance subsidiaries of the American International Group (AIG), under section 13(3) of the Federal Reserve Act.

Under this program, the New York Fed will borrow up to $37.8 billion in investment-grade, fixed-income securities from AIG in return for cash collateral. These securities were previously lent by AIG's insurance company subsidiaries to third parties.

As expected, drawdowns to date under the existing $85 billion New York Fed loan facility have been used, in part, to settle transactions with counterparties returning these third-party securities to AIG. This new program will allow AIG to replenish liquidity used in settling those transactions, while providing enhanced credit protection to the New York Fed and U.S. taxpayers in the form of a security interest in these securities.


October 08, 2008
Federal Reserve and Other Central Banks Announce Reductions in Policy Interest Rates

Joint Statement by Central Banks

Throughout the current financial crisis, central banks have engaged in continuous close consultation and have cooperated in unprecedented joint actions such as the provision of liquidity to reduce strains in financial markets.

Inflationary pressures have started to moderate in a number of countries, partly reflecting a marked decline in energy and other commodity prices. Inflation expectations are diminishing and remain anchored to price stability. The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability.

Some easing of global monetary conditions is therefore warranted. Accordingly, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, Sveriges Riksbank, and the Swiss National Bank are today announcing reductions in policy interest rates. The Bank of Japan expresses its strong support of these policy actions.

Federal Reserve Actions
The Federal Open Market Committee has decided to lower its target for the federal funds rate 50 basis points to 1-1/2 percent. The Committee took this action in light of evidence pointing to a weakening of economic activity and a reduction in inflationary pressures.

Incoming economic data suggest that the pace of economic activity has slowed markedly in recent months. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit. Inflation has been high, but the Committee believes that the decline in energy and other commodity prices and the weaker prospects for economic activity have reduced the upside risks to inflation.

The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.

In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 1-3/4 percent. In taking this action, the Board approved the request submitted by the Board of Directors of the Federal Reserve Bank of Boston.

Information on Actions Taken by Other Central Banks
Information on the actions that will be taken by other central banks is available at the following websites:

Bank of Canada off-site image
Bank of England off-site image
European Central Bank off-site image
Sveriges Riksbank (Bank of Sweden) off-site image
Swiss National Bank off-site image

Statements by Other Central Banks
Bank of Japan off-site image


October 07, 2008
Federal Reserve Announces Results of Auction of $150 Billion in 85-Day Credit Held on October 6, 2008

On October 6, 2008, the Federal Reserve conducted an auction of $150 billion in 85-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 1.390 percent
     
Total propositions submitted:   $138.092 billion
Total propositions accepted: $138.092 billion
Bid/cover ratio: 0.92
     
Number of bidders: 71

The awarded loans will settle on October 9, 2008, and will mature on January 2, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on October 7, 2008. Participants have until 12:30 p.m. EDT on October 7, 2008, to inform their local Reserve Bank of any error.


October 07, 2008
Federal Reserve and Other Central Banks Announce Schedules for Term and Forward Auctions of U.S. Dollar Liquidity for Fourth Quarter

Central banks recently announced coordinated actions to expand the provision of U.S. dollar liquidity. Today, the central banks are announcing schedules for term and forward auctions of U.S. dollar liquidity conducted during the fourth quarter of this year. These schedules include dates of any 28-day and 84-day term auctions and two preliminary dates for any forward auctions of U.S. dollar liquidity over the year-end. Scheduling of the forward auctions is still tentative and may be adjusted in response to financial market conditions.

Federal Reserve Actions
As previously announced, the Federal Reserve will conduct an auction of 28-day credit through its Term Auction Facility (TAF) in October and another in November. A third auction of 28-day credit is now scheduled for December. These auction dates are October 20, November 17, and December 15, and $150 billion will be offered in each auction.

As previously announced, the Federal Reserve will also conduct two auctions of three-month credit through the TAF in October and November. Two more auctions of three-month funding are now scheduled for December. These auction dates are October 6, November 3, December 1, and December 29, and $150 billion will be offered in each auction.

Two forward TAF auctions, designed to reassure market participants that term funding will be available over year-end, are now tentatively scheduled for November 10 and November 24. Settlement would occur on December 22 and December 23, respectively, and the funding would be over corresponding terms of 17 days and 13 days, to bridge the turn of the year. Each forward auction will offer funding of $150 billion.

Schedule for 28-day and 84-day TAF Auctions
Fourth Quarter 2008

Auction Date

Term

Settlement Date

Maturity Date

6 October 2008

85 days 1

9 October 2008

2 January 2009

20 October 2008

28 days

23 October 2008

20 November 2008

3 November 2008

84 days

6 November 2008

29 January 2009

17 November 2008

28 days

20 November 2008

18 December 2008

1 December 2008

84 days

4 December 2008

26 February 2009

15 December 2008

28 days

18 December 2008

15 January 2009

29 December 2008

83 days1

2 January 2009

26 March 2009

1. Term modified because of holiday.

Preliminary Schedule for Forward TAF Auctions

Auction Date

Term

Settlement Date

Maturity Date

10 November 2008

17 days

22 December 2008

8 January 2009

24 November 2008

13 days

23 December 2008

5 January 2009

Information on Related Actions Being Taken by Other Central Banks
Information on the actions that will be taken by other central banks is available at the following websites:
Bank of Canada
off-site image
Bank of England off-site image
Bank of Japan off-site image
European Central Bank off-site image
Swiss National Bank off-site image

October 07, 2008
Agencies Seek Public Comment on Proposed Rulemaking to Lower Risk Weights for Claims On, or Guaranteed by, Fannie Mae and Freddie Mac

The federal bank and thrift regulatory agencies announced today that they will request public comment on a joint notice of proposed rulemaking (NPR) to allow a banking organization to assign a 10 percent risk weight to claims on, and portions of claims guaranteed by, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Claims include all credit exposures, such as senior and subordinated debt and counterparty credit risk exposures, but do not include preferred or common stock.

The agencies believe reducing the risk weight from the current 20 percent is appropriate in light of the financial support the Treasury Department announced in September to provide to Fannie Mae and Freddie Mac through senior preferred stock purchase agreements. Under the proposal, the 10 percent risk weight would apply as long as these agreements remain in effect.

The NPR is being issued by the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision. Public comments are due 30 days following publication in the Federal Register, which is expected soon. The draft Federal Register notice is attached.
Attachment (117 KB PDF) off-site image


October 06, 2008
Board Announces That It Will Begin to Pay Interest on Depository Institutions Required and Excess Reserve Balances

The Federal Reserve Board on Monday announced that it will begin to pay interest on depository institutions' required and excess reserve balances. The payment of interest on excess reserve balances will give the Federal Reserve greater scope to use its lending programs to address conditions in credit markets while also maintaining the federal funds rate close to the target established by the Federal Open Market Committee.

Consistent with this increased scope, the Federal Reserve also announced today additional actions to strengthen its support of term lending markets. Specifically, the Federal Reserve is substantially increasing the size of the Term Auction Facility (TAF) auctions, beginning with today's auction of 84-day funds. These auctions allow depository institutions to borrow from the Federal Reserve for a fixed term against the same collateral that is accepted at the discount window; the rate is established in the auction, subject to a minimum set by the Federal Reserve.

In addition, the Federal Reserve and the Treasury Department are consulting with market participants on ways to provide additional support for term unsecured funding markets.

Together these actions should encourage term lending across a range of financial markets in a manner that eases pressures and promotes the ability of firms and households to obtain credit. The Federal Reserve stands ready to take additional measures as necessary to foster liquid money market conditions.

Interest on Reserves
The Financial Services Regulatory Relief Act of 2006 originally authorized the Federal Reserve to begin paying interest on balances held by or on behalf of depository institutions beginning October 1, 2011. The recently enacted Emergency Economic Stabilization Act of 2008 accelerated the effective date to October 1, 2008.

Employing the accelerated authority, the Board has approved a rule to amend its Regulation D (Reserve Requirements of Depository Institutions) to direct the Federal Reserve Banks to pay interest on required reserve balances (that is, balances held to satisfy depository institutions' reserve requirements) and on excess balances (balances held in excess of required reserve balances and clearing balances).

The interest rate paid on required reserve balances will be the average targeted federal funds rate established by the Federal Open Market Committee over each reserve maintenance period less 10 basis points. Paying interest on required reserve balances should essentially eliminate the opportunity cost of holding required reserves, promoting efficiency in the banking sector.

The rate paid on excess balances will be set initially as the lowest targeted federal funds rate for each reserve maintenance period less 75 basis points. Paying interest on excess balances should help to establish a lower bound on the federal funds rate. The formula for the interest rate on excess balances may be adjusted subsequently in light of experience and evolving market conditions. The payment of interest on excess reserves will permit the Federal Reserve to expand its balance sheet as necessary to provide the liquidity necessary to support financial stability while implementing the monetary policy that is appropriate in light of the System's macroeconomic objectives of maximum employment and price stability.

The Board also approved other related revisions to Regulation D to prescribe the treatment of balances maintained by pass-through correspondents under the new rule and to eliminate transitional adjustments for reserve requirements in the event of a merger or consolidation. In addition, the Board approved associated minor changes to the method for calculating earnings credits under its clearing balance policy and the method for recovering float costs.

The revisions to Regulation D and the other changes will take effect on Thursday, October 9, 2008. The Board recognizes that depository institutions may choose to adjust their typical liquidity management practices in light of the payment of interest on required reserve balances and excess balances; the primary credit program and other Federal Reserve liquidity facilities are available to help institutions meet temporary funding requirements.

The Board's notice of its actions regarding the amendments to Regulation D and associated changes is attached. While the action is effective immediately, the Board will accept public comments until November 21, 2008, and the proposal will be published in the Federal Register shortly. The Board will adjust the rule as appropriate in light of comments.

Substantial Further Increases in Term Auction Facility Auctions
The sizes of both 28-day and 84-day Term Auction Facility (TAF) auctions will be boosted to $150 billion each, effective with the 84-day auction to be conducted Monday. These increases will eventually bring the amounts outstanding under the regular TAF program to $600 billion. In addition, the sizes of the two forward TAF auctions to be conducted in November to extend credit over year end have been increased to $150 billion each, so that $900 billion of TAF credit will potentially be outstanding over year end.

Exemption to Allow Limited Bank Purchases of Assets from Money Market Mutual Funds
The Board on Monday published a letter granting a request by a depository institution for an exemption from the limits on transactions with affiliates under section 23A of the Federal Reserve Act and the Board's Regulation W to allow the institution to purchase assets from affiliated money market mutual funds under certain circumstances. The Board is open to considering similar requests from depository institutions under similar circumstances.

Federal Register notice (56 KB PDF) off-site image
Interest on Required Reserve Balances and Excess Balances FAQs (23 KB PDF) off-site image
Interest on Reserves and the Implementation of Monetary Policy FAQs off-site image
Federal Reserve System Reporting and Reserves Web site off-site image


October 06, 2008
Federal Reserve Will Offer $150 Billion in 85-Day Credit Through Its Term Auction Facility Today

On October 6, 2008, the Federal Reserve will offer $150 billion in 85-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount: $150 billion
Term: 85-day loan
Bid Submission Date: October 6, 2008
  Opening Time:   11:00 a.m. EDT
  Closing Time:   12:30 p.m. EDT
Notification Date: October 7, 2008
Settlement Date: October 9, 2008
Maturity Date: January 2, 2009
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution): $15 billion (10% of Offering Amount)
Minimum Bid Rate: 1.39 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $15 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

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


October 03, 2008
Statement by Chairman Bernanke on action taken by Congress

I applaud the action taken by the Congress. It demonstrates the government's commitment to do what it takes to support and strengthen our economy. The legislation is a critical step toward stabilizing our financial markets and ensuring an uninterrupted flow of credit to households and businesses.

The Federal Reserve will continue to work closely with the Treasury as it undertakes these new initiatives. We will continue to use all of the powers at our disposal to mitigate credit market disruptions and to foster a strong, vibrant economy.
Press Release off-site image


September 30, 2008
Board's Consumer Advisory Council will meet on October 23

The Federal Reserve Board announced Tuesday that the Consumer Advisory Council will hold its next meeting on Thursday, October 23. The meeting will take place in Dining Room E, Terrace Level, in the Board's Martin Building. The session will begin at 9:00 a.m. and is open to the public. Anyone planning to attend the meeting should, for security purposes, register no later than Tuesday, October 21, by completing the form found online at: https://www.federalreserve.gov/secure/forms/cacregistration.cfm. Additionally, attendees must present photo identification to enter the building.

The Council's function is to advise the Board on the exercise of its responsibilities under various consumer financial services laws and on other matters on which the Board seeks its advice. Time permitting, the Council will discuss the following topics:

  • Housing and Economic Recovery Act of 2008
  • Proposed rules regarding credit cards and overdraft services
  • Home Mortgage Disclosure Act (HMDA)

Reports by committees and other matters initiated by the Council members may also be discussed. The Board invites comments from the public on any of these matters.

The Board's notice is attached.
Attachment (22 KB PDF) off-site image


September 29, 2008
Statement by Chairman Bernanke on Agreement by the Congress and the Administration

I welcome the agreement by the Congress and the Administration on a comprehensive plan to stabilize our financial system and support our economy. This legislation should help to restore the flow of credit to households and businesses that is essential for economic growth and job creation, while at the same time affording strong and necessary protections for taxpayers. I look forward to swift passage of the legislation.

In addition, the Federal Reserve Board supports the timely actions taken by the Federal Deposit Insurance Corporation, which demonstrate our government's unwavering commitment to financial and economic stability.
Press Release off-site image


September 29, 2008
Federal Reserve Bank of Richmond Ready to Provide Liquidity in Wachovia Transition

RICHMOND, VA -- The banking operations of Wachovia Corp., which is headquartered in Charlotte, N.C., are being acquired by Citigroup Inc. The transaction is being facilitated by the Federal Deposit Insurance Corporation and concurred with by the Board of Governors of the Federal Reserve and the Secretary of the Treasury.

Citigroup will acquire the bulk of Wachovia's assets and liabilities, including five depository institutions and assume senior and subordinated debt of Wachovia. Wachovia will continue to own AG Edwards and Evergreen.

In support of this transition, the Federal Reserve Bank of Richmond stands ready to provide liquidity as needed.

Contact:
Lisa Oliva, Vice President Public Affairs
Federal Reserve Bank of Richmond
804.697.8192
Lisa.Oliva@rich.frb.org


September 29, 2008
Federal Reserve and Other Central Banks Announce Further Coordinated Actions to Expand Significantly the Capacity to Provide U.S. Dollar Liquidity

In response to continued strains in short-term funding markets, central banks today are announcing further coordinated actions to expand significantly the capacity to provide U.S. dollar liquidity. Central banks will continue to work together closely and are prepared to take appropriate steps as needed to address funding pressures.

Federal Reserve Actions
The Federal Reserve announced today several initiatives to support financial stability and to maintain a stable flow of credit to the economy during this period of significant strain in global markets.

We will continue to adapt these liquidity facilities as necessary and will keep them in place as long as circumstances require.
Actions by the Federal Reserve include: (1) an increase in the size of the 84-day maturity Term Auction Facility (TAF) auctions to $75 billion per auction from $25 billion beginning with the October 6 auction, (2) two forward TAF auctions totaling $150 billion that will be conducted in November to provide term funding over year-end, and (3) an increase in swap authorization limits with the Bank of Canada, Bank of England, Bank of Japan, Danmarks Nationalbank (National Bank of Denmark), European Central Bank (ECB), Norges Bank (Bank of Norway), Reserve Bank of Australia, Sveriges Riksbank (Bank of Sweden), and Swiss National Bank to a total of $620 billion, from $290 billion previously.

These steps are being undertaken to mitigate pressures evident in the term funding markets both in the United States and abroad. By committing to provide a very large quantity of term funding, the Federal Reserve actions should reassure financial market participants that financing will be available against good collateral, lessening concerns about funding and rollover risk.

All of the temporary reciprocal swap facilities have been authorized through April 30, 2009.

Dollar funding rates abroad have been elevated relative to dollar funding rates available in the United States, reflecting a structural dollar funding shortfall outside of the United States. The increase in the amount of foreign exchange swap authorization limits will enable many central banks to increase the amount of dollar funding that they can provide in their home markets. This should help to improve the distribution of dollar liquidity around the globe.
Press Release off-site image


September 29, 2008
Annual Adjustments for Reserve Calculations and Deposit Reporting, Regulation D

The Federal Reserve Board announced the annual indexing of the reserve requirement exemption amount and of the low reserve tranche for 2009. These amounts are used in the calculation of reserve requirements of depository institutions. The Board also announced the annual indexing of the nonexempt deposit cutoff level and the reduced reporting limit that will be used to determine deposit reporting panels effective 2009.

All depository institutions must hold a percentage of certain types of deposits as reserves in the form of vault cash, as a deposit in a Federal Reserve Bank, or as a deposit in a pass-through account at a correspondent institution. Reserve requirements currently are assessed on the depository institution's net transaction accounts (mostly checking accounts). Depository institutions must also regularly submit deposit reports of their deposits and other reservable liabilities.

For net transaction accounts in 2009, the first $10.3 million, up from $9.3 million in 2008, will be exempt from reserve requirements. A 3 percent reserve ratio will be assessed on net transaction accounts over $10.3 million up to and including $44.4 million, up from $43.9 million in 2008. A 10 percent reserve ratio will be assessed on net transaction accounts in excess of $44.4 million.

These annual adjustments, known as the low reserve tranche adjustment and the reserve requirement exemption amount adjustment, are based on growth in net transaction accounts and total reservable liabilities, respectively, at all depository institutions between June 30, 2007 and June 30, 2008.

For depository institutions that report weekly, the low reserve tranche adjustment and the reserve requirement exemption amount adjustment will apply to the fourteen-day reserve computation period that begins Tuesday, December 2, 2008 and the corresponding fourteen-day reserve maintenance period that begins Thursday, January 1, 2009.

For depository institutions that report quarterly, the low reserve tranche adjustment and the reserve requirement exemption amount adjustment will apply to the seven-day reserve computation period that begins Tuesday, December 16, 2008, and the corresponding seven-day reserve maintenance period that begins Thursday, January 15, 2009.

The Board also announced changes in two other amounts, the nonexempt deposit cutoff level and the reduced reporting limit, that are used to determine the frequency with which depository institutions must submit deposit reports.
Press Release off-site image


September 24, 2008
Federal Reserve and Other Central Banks Announce Additional Measures to Address Elevated Pressures in Funding Markets

Today, the Federal Reserve, the Reserve Bank of Australia, the Danmarks Nationalbank, the Norges Bank, and the Sveriges Riksbank are announcing the establishment of temporary reciprocal currency arrangements (swap lines) to address elevated pressures in U.S. dollar short-term funding markets. These facilities, like those already in place with other central banks, are designed to improve liquidity conditions in global financial markets. Central banks continue to work together during this period of market stress and are prepared to take further steps as the need arises.

Federal Reserve Actions
The Federal Open Market Committee has authorized the establishment of new swap facilities with the Reserve Bank of Australia, the Sveriges Riksbank, the Danmarks Nationalbank, and the Norges Bank. These new facilities will support the provision of U.S. dollar liquidity in amounts of up to $10 billion each by the Reserve Bank of Australia and the Sveriges Riksbank and in amounts of up to $5 billion each by the Danmarks Nationalbank and the Norges Bank.

In sum, these new facilities represent a $30 billion addition to the $247 billion previously authorized temporary reciprocal currency arrangements with other central banks: European Central Bank ($110 billion), Bank of Japan ($60 billion), Bank of England ($40 billion), Swiss National Bank ($27 billion), and Bank of Canada ($10 billion).

These reciprocal currency arrangements have been authorized through January 30, 2009.

Information on Related Actions Being Taken by Other Central Banks
Information on the actions that will be taken by other central banks is available at the following websites:

Reserve Bank of Australia off-site image
Danmarks Nationalbank (National Bank of Denmark) off-site image
Norges Bank (Bank of Norway) off-site image
Sveriges Riksbank (Bank of Sweden) off-site image


September 23, 2008
Federal Reserve Announces Results of Auction of $75 Billion in 28-Day Credit Held on September 22, 2008

On September 22, 2008, the Federal Reserve conducted an auction of $75 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 3.750 percent
     
Total propositions submitted: $133.562 billion
Total propositions accepted: $ 75.000 billion
Bid/cover ratio: 1.78
     
Number of bidders: 85

Bids at the stop-out rate were prorated at 58.10% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on September 25, 2008, and will mature on October 23, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on September 23, 2008. Participants have until 12:30 p.m. EDT on September 23, 2008, to inform their local Reserve Bank of any error.


September 22, 2008
Federal Reserve will offer $75 billion in 28-day credit through its Term Auction Facility today

On September 22, 2008, the Federal Reserve will offer $75 billion in 28-day credit through its Term Auction Facility.  Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Note: Some key deadlines have changed for this TAF auction. Please review the following parameters. For a list of key times to be used in upcoming auctions, see http://www.federalreserve.gov/monetarypolicy/tafdates20080811.htm

Description of Offering and Auction Parameters

Offering Amount:   $75 billion
Term:   28-day loan
Bid Submission Date:   September 22, 2008
  Opening Time:   11:00 a.m. EDT
  Closing Time:   12:30 p.m. EDT
Notification Date:   September 23, 2008
Settlement Date:   September 25, 2008
Maturity Date:   October 23, 2008
Minimum Bid Amount (per bid):   $5 million
Bid Increment:   $100,000
Maximum Bid Amount (per institution):   $7.5 billion (10% of Offering Amount)
Minimum Bid Rate:   1.94 percent
Incremental Bid Rate:   0.001 percent
Minimum Award:   $10,000
Maximum Award:   $7.5 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards.  Participants have until 12:30 p.m. EDT on the notification date to inform their local Reserve Bank of any error. 

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


September 22, 2008
Board Announces the Approval of a Policy Statement on Equity Investments in Banks and Bank Holding Companies

The Federal Reserve Board on Monday announced the approval of a policy statement on equity investments in banks and bank holding companies. The policy statement provides additional guidance on the Board's position on minority equity investments in banks and bank holding companies that generally do not constitute "control" for purposes of the Bank Holding Company Act.
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September 19, 2008
Federal Reserve Board Announces Two Enhancements to its Programs to Provide Liquidity to Markets

The Federal Reserve Board on Friday announced two enhancements to its programs to provide liquidity to markets. One initiative will extend non-recourse loans at the primary credit rate to U.S. depository institutions and bank holding companies to finance their purchases of high-quality asset-backed commercial paper (ABCP) from money market mutual funds. This should assist money funds that hold such paper in meeting demands for redemptions by investors and foster liquidity in the ABCP markets and broader money markets.

To further support market functioning, the Federal Reserve also plans to purchase from primary dealers federal agency discount notes, which are short-term debt obligations issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks.

Statement Regarding Planned Purchases of Agency Debt off-site image


September 18, 2008
Federal Reserve and Other Central Banks Announce Further Measures to Address Elevated Pressures in Funding Markets

Today, the Bank of Canada, the Bank of England, the European Central Bank (ECB), the Federal Reserve, the Bank of Japan, and the Swiss National Bank are announcing coordinated measures designed to address the continued elevated pressures in U.S. dollar short-term funding markets. These measures, together with other actions taken in the last few days by individual central banks, are designed to improve the liquidity conditions in global financial markets. The central banks continue to work together closely and will take appropriate steps to address the ongoing pressures.

Federal Reserve Actions
The Federal Open Market Committee has authorized a $180 billion expansion of its temporary reciprocal currency arrangements (swap lines). This increased capacity will be available to provide dollar funding for both term and overnight liquidity operations by the other central banks.

The FOMC has authorized increases in the existing swap lines with the ECB and the Swiss National Bank. These larger facilities will now support the provision of U.S. dollar liquidity in amounts of up to $110 billion by the ECB, an increase of $55 billion, and up to $27 billion by the Swiss National Bank, an increase of $15 billion.

In addition, new swap facilities have been authorized with the Bank of Japan, the Bank of England, and the Bank of Canada. These facilities will support the provision of U.S. dollar liquidity in amounts of up to $60 billion by the Bank of Japan, $40 billion by the Bank of England, and $10 billion by the Bank of Canada.

All of these reciprocal currency arrangements have been authorized through January 30, 2009.

Information on Related Actions Being Taken by Other Central Banks
Information on the actions that will be taken by other central banks is available at the following websites:

Bank of Canada off-site image
Bank of England off-site image
European Central Bank off-site image
Bank of Japan (11 KB PDF) off-site image
Swiss National Bank (58 KB PDF) off-site image


September 16, 2008
FOMC Statement

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 2 percent.

Strains in financial markets have increased significantly and labor markets have weakened further. Economic growth appears to have slowed recently, partly reflecting a softening of household spending. Tight credit conditions, the ongoing housing contraction, and some slowing in export growth are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.

Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.

The downside risks to growth and the upside risks to inflation are both of significant concern to the Committee. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Christine M. Cumming; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh. Ms. Cumming voted as the alternate for Timothy F. Geithner.
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September 16, 2008
Federal Reserve Board, With Full Support of the Treasury Department, Authorizes the Federal Reserve Bank of New York to Lend Up to $85 Billion to the American International Group

The Federal Reserve Board on Tuesday, with the full support of the Treasury Department, authorized the Federal Reserve Bank of New York to lend up to $85 billion to the American International Group (AIG) under section 13(3) of the Federal Reserve Act. The secured loan has terms and conditions designed to protect the interests of the U.S. government and taxpayers.

The Board determined that, in current circumstances, a disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth, and materially weaker economic performance.

 

The purpose of this liquidity facility is to assist AIG in meeting its obligations as they come due. This loan will facilitate a process under which AIG will sell certain of its businesses in an orderly manner, with the least possible disruption to the overall economy.

The AIG facility has a 24-month term. Interest will accrue on the outstanding balance at a rate of three-month Libor plus 850 basis points. AIG will be permitted to draw up to $85 billion under the facility.

The interests of taxpayers are protected by key terms of the loan. The loan is collateralized by all the assets of AIG, and of its primary non-regulated subsidiaries.  These assets include the stock of substantially all of the regulated subsidiaries.  The loan is expected to be repaid from the proceeds of the sale of the firm’s assets. The U.S. government will receive a 79.9 percent equity interest in AIG and has the right to veto the payment of dividends to common and preferred shareholders.
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September 15, 2008
Federal Banking Agencies Evaluating FASB's Accounting Proposals

The federal banking agencies are evaluating the amendments to generally accepted accounting principles proposed today by the Financial Accounting Standards Board (FASB).

These proposals would amend Statement of Financial Accounting Standards No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (FAS 140), and FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities (FIN 46(R)).

The FASB's proposed amendments would remove the concept of a qualifying special purpose entity (QSPE) from FAS 140. This would require that variable interest entities previously accounted for as QSPEs under FAS 140 be analyzed to determine whether they must be consolidated in accordance with FIN 46(R). The amendment also would revise the criteria for reporting a sale versus a financing.

The proposed amendments also would modify the guidance in FIN 46(R) for determining which enterprise, if any, would consolidate a variable interest entity and require additional disclosures.  Banking organizations commonly use QSPEs and variable interest entities for securitization and other structured finance activities.

The Federal Reserve Board, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and Office of Thrift Supervision are evaluating the potential impact that these proposals could have on banking organizations' financial statements, regulatory capital, and other regulatory requirements. The agencies expect to engage in discussions with banks, savings associations, and bank holding companies to review and understand fully the implications of the proposed amendments.
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September 15, 2008
Request for Comment on Draft Interagency Proposed Rule to Permit a Banking Organization to Reduce the Amount of Its Goodwill Deduction From Tier 1 Capital by any Associated Deferred Tax Liability

The Federal Reserve Board on Monday requested public comment on an interagency notice of proposed rulemaking (NPR) that would permit a banking organization to reduce the amount of its goodwill deduction from tier 1 capital by any associated deferred tax liability.

Under the proposed rule, the regulatory capital deduction for goodwill would be equal to the maximum capital reduction that could occur as a result of a complete write-off of the goodwill, which is equal to the amount of goodwill reported on the balance sheet under generally accepted accounting principles (GAAP) less any associated deferred tax liability. The proposal is consistent with the treatment of other similar assets.

The NPR will be published in the Federal Register following approval by the Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and Office of Thrift Supervision.    Public comments are due 30 days following publication, which is expected soon.
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September 10, 2008
Federal Reserve Announces Results of Auction of $25 Billion in 28-Day Credit Held on September 9, 2008

On September 9, 2008, the Federal Reserve conducted an auction of $25 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 2.530 percent
     
Total propositions submitted: $46.237 billion
Total propositions accepted: $25.000
Bid/cover ratio: 1.85
     
Number of bidders: 53

Bids at the stop-out rate were prorated at 28.63% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on September 11, 2008, and will mature on October 9, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on September 10, 2008. Participants have until noon EDT on September 10, 2008, to inform their local Reserve Bank of any error.


September 09, 2008
Federal Reserve Will Offer $25 Billion in 28-Day Credit Through Its Term Auction Facility Today

On September 9, 2008, the Federal Reserve will offer $25 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Note: Some key deadlines have changed for this TAF auction. Please review the following parameters. For a list of key times to be used in upcoming auctions, see http://www.federalreserve.gov/monetarypolicy/tafdates20080811.htm

Description of Offering and Auction Parameters
Offering Amount: $25 billion
Term: 28-day loan
Bid Submission Date: September 9, 2008
Opening Time: 2:00 p.m. EDT
Closing Time: 3:30 p.m. EDT
Notification Date: September 10, 2008
Settlement Date: September 11, 2008
Maturity Date:   October 9, 2008
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution): $2.5 billion (10% of Offering Amount)
Minimum Bid Rate:   2.01 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $2.5 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until noon EDT on the notification date to inform their local Reserve Bank of any error.

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


September 09, 2008
Federal Reserve Announces Results of Auction of $25 Billion in 84-Day Credit Held on September 8, 2008

On September 8, 2008, the Federal Reserve conducted an auction of $25 billion in 84-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 2.670 percent
     
Total propositions submitted:   $31.638 billion
Total propositions accepted: $25.000
Bid/cover ratio: 1.27
     
Number of bidders: 38

Bids at the stop-out rate were prorated at 86.68% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on September 11, 2008, and will mature on December 4, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on September 9, 2008. Participants have until noon EDT on September 9, 2008, to inform their local Reserve Bank of any error.


September 08, 2008
Federal Reserve Will Offer $25 Billion in 84-Day Credit Through Its Term Auction Facility Today

On September 8, 2008, the Federal Reserve will offer $25 billion in 84-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Note: Some key deadlines have changed for this TAF auction. Please review the following parameters. For a list of key times to be used in upcoming auctions, see http://www.federalreserve.gov/monetarypolicy/tafdates20080811.htm

Description of Offering and Auction Parameters
Offering Amount:   $25 billion
Term:   84-day loan
Bid Submission Date:   September 8, 2008
  Opening Time:   11:00 a.m. EDT
  Closing Time:   12:30 p.m. EDT
Notification Date:   September 9, 2008
Settlement Date:   September 11, 2008
Maturity Date:   December 4, 2008
Minimum Bid Amount (per bid):   $5 million
Bid Increment:   $100,000
Maximum Bid Amount (per institution):   $2.5 billion (10% of Offering Amount)
Minimum Bid Rate:   2.02 percent
Incremental Bid Rate:   0.001 percent
Minimum Award:   $10,000
Maximum Award:   $2.5 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until noon EDT on the notification date to inform their local Reserve Bank of any error.

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


September 08, 2008
Restructuring of the Check Processing Operations in the Sixth District, Regulation CC

The Federal Reserve Board has approved amendments to Appendix A of Regulation CC that reflect the restructuring of the Federal Reserve's check processing operations in the Sixth District.

Appendix A provides a routing number guide that helps depository institutions determine the maximum permissible hold periods for most deposited checks.  As of November 15, 2008, the Jacksonville branch office of the Federal Reserve Bank of Atlanta no longer will process checks, and banks currently served by that office will be reassigned to the head office of the Federal Reserve Bank of Atlanta.  To ensure that the information in Appendix A accurately describes the structure of check processing operations within the Federal Reserve System, the final rule deletes the reference in Appendix A to the Jacksonville branch office of the Federal Reserve Bank of Atlanta and reassigns the routing numbers listed thereunder to the head office of the Federal Reserve Bank of Atlanta.  To coincide with the effective date of the underlying check processing changes, the amendments are effective November 15, 2008.  As a result of these changes, some checks deposited in the affected regions that currently are nonlocal checks will become local checks that are subject to shorter permissible hold periods.
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September 07, 2008
Federal Banking Agencies Issue Joint Release on Fannie Mae and Freddie Mac

The federal banking agencies have been assessing the exposures of banks and thrifts to Fannie Mae and Freddie Mac. The agencies believe that, while many institutions hold common or preferred shares of these two government-sponsored enterprises, a limited number of smaller institutions have holdings that are significant compared to their capital.

The Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision are prepared to work with these institutions to develop capital-restoration plans pursuant to the capital regulations and the prompt corrective action provisions of the Federal Deposit Insurance Corporation Improvement Act.

All institutions are reminded that investments in preferred stock and common stock with readily determinable fair value should be reported as available-for-sale equity security holdings, and that any net unrealized losses on these securities are deducted from regulatory capital.
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September 07, 2008
Statement by Federal Reserve Board Chairman Ben S. Bernanke

Statement by Federal Reserve Board Chairman Ben S. Bernanke:

"I strongly endorse both the decision by FHFA Director Lockhart to place Fannie Mae and Freddie Mac into conservatorship and the actions taken by Treasury Secretary Paulson to ensure the financial soundness of those two companies.  These necessary steps will help to strengthen the U.S. housing market and promote stability in our financial markets.  I also welcome the introduction of the Treasury's new purchase facility for mortgage-backed securities, which will provide critical support for mortgage markets in this period of unusual credit-market uncertainty."


September 05, 2008
Board Issues Joint Supervisory and Consumer Affairs Letter Encouraging Banking Organizations to Work with Customers Affected by Hurricane Gustav or Any Subsequent Storms

The Federal Reserve Board issued a joint supervisory and consumer affairs letter that encourages banking organizations to work with borrowers and customers in communities affected by Hurricane Gustav or any subsequent storms.

The letter reaffirms the Federal Reserve's long-standing policy of using available regulatory flexibility to facilitate the recovery efforts of banks serving areas that experience damage caused by hurricanes.  Banking organization's efforts to work with borrowers in communities under stress, if conducted in a reasonable manner, are consistent with safe and sound banking practice, may contribute to the health and recovery of the local communities, and are in the public interest.

Banking organizations supervised by the Federal Reserve are encouraged to work with Reserve Bank supervisory and operations staff to resolve any weather-related operating problems.
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August 28, 2008
Board Announces Online Resource to Help Consumers Make Informed Choices When Refinancing a Home Loan

The Federal Reserve Board on Thursday announced the launch of an online resource to help consumers make informed choices when refinancing a home loan.

"A Consumer's Guide to Mortgage Refinancing," which is available at http://www.federalreserve.gov/pubs/refinancings/default.htm, contains useful tips and answers to frequently asked questions about the refinancing process. The information provided can help consumers determine when refinancing makes sense, what a refinancing will cost, and whether it is advisable to switch into a different type of mortgage. Consumers will also learn about mortgage terms and how to calculate the time it will take to recover refinancing costs before benefiting from a lower mortgage rate.

Choosing a mortgage is the most important financial decision many individuals will make. Consumers are encouraged to ask questions about loan features when talking to lenders, mortgage brokers, settlement or closing agents, and other professionals involved with the transaction to ensure that they have clear and complete answers.

The site also provides mortgage shopping worksheets, a glossary of mortgage terms, a link to an online refinancing calculator, a printable PDF format, and links to the Board's other consumer education resources on mortgages.

In addition, the Board has updated the publication "What You Should Know about Home Equity Lines of Credit" to include information for consumers on line of credit freezes or reductions in lines of credit. The updated information is available at http://www.federalreserve.gov/pubs/equity/equity_english.htm. Lenders and creditors may use the earlier version of the print version of this material until existing supplies are exhausted.

Single copies of the brochure versions of these materials are free from: Publications, Mail Stop 127, Federal Reserve Board, 20th and C Streets, N.W., Washington, DC 20551; 202-452-3245


August 26, 2008
Elizabeth A. Duke Formally Sworn in as Member of the Board of Governors of the Federal Reserve System

Elizabeth A. Duke was formally sworn in as a member of the Board of Governors of the Federal Reserve System at a ceremony Tuesday in the atrium of the Board's main building in Washington.

Friends, family and Board employees attended the ceremony, which was presided over by Federal Reserve Chairman Ben S. Bernanke.

Governor Duke assumed her position on August 5 following her confirmation by the Senate on June 27, 2008. Governor Duke’s term expires January 31, 2012.

A biography of Governor Duke is available on the Board's website: http://www.federalreserve.gov/aboutthefed/bios/board/duke.htm


August 26, 2008
Federal Reserve Announces Results of Auction of $75 Billion in 28-Day Credit Held on August 25, 2008

On August 25, 2008, the Federal Reserve conducted an auction of $75 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 2.380 percent
     
Total propositions submitted:   $84.168 billion
Total propositions accepted: $75.000
Bid/cover ratio: 1.12
     
Number of bidders: 66

Bids at the stop-out rate were prorated at 64.10% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on August 28, 2008, and will mature on September 25, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on August 26, 2008. Participants have until 12:30 p.m. EDT on August 26, 2008, to inform their local Reserve Bank of any error.


August 25, 2008
Federal Reserve Will Offer $75 Billion in 28-Day Credit Through Its Term Auction Facility Today

On August 25, 2008, the Federal Reserve will offer $75 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Note: Some key deadlines have changed for this TAF auction. Please review the following parameters. For a list of key times to be used in upcoming auctions, see http://www.federalreserve.gov/monetarypolicy/tafdates20080811.htm

Description of Offering and Auction Parameters
Offering Amount: $75 billion
Term: 28-day loan
Bid Submission Date: August 25, 2008
  Opening Time:   11:00 a.m. EDT
  Closing Time:   12:30 p.m. EDT
Notification Date: August 26, 2008
Settlement Date: August 28, 2008
Maturity Date: September 25, 2008
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution): $7.5 billion (10% of Offering Amount)
Minimum Bid Rate:   2.01 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $7.5 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 12:30 p.m. EDT on the notification date to inform their local Reserve Bank of any error.

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


August 13, 2008
Federal Reserve Announces Results of Auction of $50 Billion in 28-Day Credit Held on August 12, 2008

On August 12, 2008, the Federal Reserve conducted an auction of $50 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 2.450 percent
     
Total propositions submitted:   $75.462 billion
Total propositions accepted: $50.000 billion
Bid/cover ratio: 1.51
     
Number of bidders: 65

Bids at the stop-out rate were prorated at 51.56% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on August 14, 2008, and will mature on September 11, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on August 13, 2008. Participants have until noon EDT on August 13, 2008, to inform their local Reserve Bank of any error.


August 12, 2008
Federal Reserve Announces Results of Auction of $25 Billion in 84-Day Credit Held on August 11, 2008

On August 11, 2008, the Federal Reserve conducted an auction of $25 billion in 84-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 2.754 percent
     
Total propositions submitted:    $54.800 billion
Total propositions accepted: $25.000 billion
Bid/cover ratio: 2.19
     
Number of bidders: 64

Bids at the stop-out rate were prorated at 80.00% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on August 14, 2008, and will mature on November 6, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on August 12, 2008. Participants have until noon EDT on August 12, 2008, to inform their local Reserve Bank of any error.


August 12, 2008
Federal Reserve Will Offer $50 Billion in 28-Day Credit Through Its Term Auction Facility Today

On August 12, 2008, the Federal Reserve will offer $50 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Note: Some key deadlines have changed for this TAF auction. Please review the following parameters. For a list of key times to be used in upcoming auctions, see http://www.federalreserve.gov/monetarypolicy/tafdates20080811.htm.

Description of Offering and Auction Parameters

Offering Amount: $50 billion
Term: 28-day loan
Bid Submission Date: August 12, 2008
  Opening Time:   2:00 p.m. EDT
  Closing Time:   3:30 p.m. EDT
Notification Date: August 13, 2008
Settlement Date: August 14, 2008
Maturity Date: September 11, 2008
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution):   $5 billion (10% of Offering Amount)
Minimum Bid Rate:   2.01 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $5 billion (10% of Offering Amount)

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

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

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


August 11, 2008
Federal Reserve Will Offer $25 Billion in 84-Day Credit Through Its Term Auction Facility Today

On August 11, 2008, the Federal Reserve will offer $25 billion in 84-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Note: Some key deadline times for the TAF auctions have changed. Please review the following auction parameters. For a list of key times to be used in upcoming auctions, see http://www.federalreserve.gov/monetarypolicy/files/TAFkeydatesandtimes.pdf

Description of Offering and Auction Parameters

Offering Amount:

$25 billion
Term: 84-day loan
Bid Submission Date: August 11, 2008
   Opening Time: 11 a.m. EDT
   Closing Time: 12:30 p.m. EDT
Notification Date: August 12, 2008
Settlement Date: August 14, 2008
Maturity Date: November 6, 2008
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution): $2.5 billion (10% of Offering Amount)
Minimum Bid Rate:   2.04 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $2.5 billion (10% of Offering Amount)

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

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EDT on the notification date. Between 10:00 a.m. and 11:30 a.m. EDT on the notification date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until noon EDT on the notification date to inform their local Reserve Bank of any error.

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


August 05, 2008
FOMC Statement

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 2 percent.

Economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.

Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities, and some indicators of inflation expectations have been elevated. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.

Although downside risks to growth remain, the upside risks to inflation are also of significant concern to the Committee. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Elizabeth A. Duke; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh. Voting against was Richard W. Fisher, who preferred an increase in the target for the federal funds rate at this meeting.


August 05, 2008
Annual Adjustment of Fee-based Trigger for Additional Mortgage Loan Disclosures

The Federal Reserve Board on Tuesday published its annual adjustment of the dollar amount of fees that triggers additional disclosure requirements under the Truth in Lending Act for home mortgage loans that bear rates or fees above a certain amount.

The dollar amount of the fee-based trigger has been adjusted to $583 for 2009 based on the annual percentage change reflected in the Consumer Price Index that was in effect on June 1, 2008. 

The adjustment is effective January 1, 2009. This adjustment does not affect the new rules adopted by the Board in July 2008 for "higher-priced mortgage loans." Coverage of mortgage loans under the July 2008 rules is determined using a different rate-based trigger.

The Home Ownership and Equity Protection Act of 1994 restricts credit terms such as balloon payments and requires additional disclosures when total points and fees payable by the consumer exceed the fee-based trigger (initially set at $400 and adjusted annually) or 8 percent of the total loan amount, whichever is larger.
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July 29, 2008
Federal Reserve Announces Results of Auction of $75 Billion in 28-Day Credit Held on July 28, 2008

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

Stop-out rate: 2.350 percent
     
Total propositions submitted: $90.555 billion
Total propositions accepted: $75.000 billion
Bid/cover ratio: 1.21
     
Number of bidders: 70

Bids at the stop-out rate were prorated at 24.75% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on July 31, 2008, and will mature on August 28, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by noon EDT on July 29, 2008. Participants have until 3:00 p.m. EDT on July 29, 2008, to inform their local Reserve Bank of any error.


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

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

Description of Offering and Auction Parameters
Offering Amount: $75 billion
Term: 28-day loan
Bid Submission Date: July 28, 2008
   Opening Time: 11 a.m. EDT
   Closing Time: 1 p.m. EDT
Notification Date: July 29, 2008
Settlement Date: July 31, 2008
Maturity Date: August 28, 2008
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution): $7.5 billion (10% of Offering Amount)
Minimum Bid Rate:   2.01 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $7.5 billion (10% of Offering Amount)

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

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

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


July 15, 2008
Federal Reserve Announces Results of Auction of $75 Billion in 28-Day Credit Held on July 14, 2008

On July 14, 2008, the Federal Reserve conducted an auction of $75 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 2.300 percent
     
Total propositions submitted: $93.344 billion
Total propositions accepted: $75.000 billion
Bid/cover ratio: 1.24
     
Number of bidders: 82

Bids at the stop-out rate were prorated at 10.77% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on July 17, 2008, and will mature on August 14, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by noon EDT on July 15, 2008. Participants have until 3:00 p.m. EDT on July 15, 2008, to inform their local Reserve Bank of any error.


July 15, 2008
Restructuring of the Check Processing Operations in the First and Third Districts, Regulation CC

The Federal Reserve Board has approved amendments to Appendix A of Regulation CC that reflect the restructuring of the Federal Reserve's check processing operations in the First and Third Districts.

Appendix A provides a routing number guide that helps depository institutions determine the maximum permissible hold periods for most deposited checks.  As of September 20, 2008, the Windsor Locks office of the Federal Reserve Bank of Boston no longer will process checks, and banks currently served by that office will be reassigned to the head office of the Federal Reserve Bank of Philadelphia.  To ensure that the information in Appendix A accurately describes the structure of check processing operations within the Federal Reserve System, the final rule deletes the reference in Appendix A to the Windsor Locks office of the Federal Reserve Bank of Boston and reassigns the routing numbers listed thereunder to the Federal Reserve Bank of Philadelphia.  To coincide with the effective date of the underlying check processing changes, the amendments are effective September 20, 2008.  As a result of these changes, some checks deposited in the affected regions that currently are nonlocal checks will become local checks that are subject to shorter permissible hold periods.
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July 15, 2008
Agencies Issue Final Guidance on Supervisory Review Process (Pillar 2) Related to Implementation of Basel II Advanced Approaches Rule

The federal banking and thrift agencies today issued final guidance outlining the supervisory review process for banking organizations implementing the new advanced capital adequacy framework known as Basel II.  The final guidance relating to supervisory review is aimed at helping banking organizations meet certain qualification requirements in the advanced approaches rule, which took effect April 1.

The advanced approaches rule consists of three pillars:  minimum risk-based capital requirements (Pillar 1); supervisory review of capital adequacy (Pillar 2); and market discipline through enhanced public disclosures (Pillar 3).  The final Pillar 2 guidance details the agencies’ standards for ensuring that each institution subject to the advanced approaches rule has a rigorous process for assessing its overall capital adequacy in relation to its risk profile and a comprehensive strategy for maintaining appropriate capital levels.
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July 14, 2008
Board Issues Final Rule Amending Home Mortgage Provisions of Regulation Z (Truth in Lending)

The Federal Reserve Board on Monday approved a final rule for home mortgage loans to better protect consumers and facilitate responsible lending. The rule prohibits unfair, abusive or deceptive home mortgage lending practices and restricts certain other mortgage practices. The final rule also establishes advertising standards and requires certain mortgage disclosures to be given to consumers earlier in the transaction.

The final rule, which amends Regulation Z (Truth in Lending) and was adopted under the Home Ownership and Equity Protection Act (HOEPA), largely follows a proposal released by the Board in December 2007, with enhancements that address ensuing public comments, consumer testing, and further analysis.

The final rule adds four key protections for a newly defined category of "higher-priced mortgage loans" secured by a consumer's principal dwelling. For loans in this category, these protections will:

  • Prohibit a lender from making a loan without regard to borrowers' ability to repay the loan from income and assets other than the home's value. A lender complies, in part, by assessing repayment ability based on the highest scheduled payment in the first seven years of the loan. To show that a lender violated this prohibition, a borrower does not need to demonstrate that it is part of a "pattern or practice."
  • Require creditors to verify the income and assets they rely upon to determine repayment ability.
  • Ban any prepayment penalty if the payment can change in the initial four years. For other higher-priced loans, a prepayment penalty period cannot last for more than two years. This rule is substantially more restrictive than originally proposed.
  • Require creditors to establish escrow accounts for property taxes and homeowner's insurance for all first-lien mortgage loans.

In addition to the rules governing higher-priced loans, the rules adopt the following protections for loans secured by a consumer's principal dwelling, regardless of whether the loan is higher-priced:

  • Creditors and mortgage brokers are prohibited from coercing a real estate appraiser to misstate a home's value.
  • Companies that service mortgage loans are prohibited from engaging in certain practices, such as pyramiding late fees. In addition, servicers are required to credit consumers' loan payments as of the date of receipt and provide a payoff statement within a reasonable time of request.
  • Creditors must provide a good faith estimate of the loan costs, including a schedule of payments, within three days after a consumer applies for any mortgage loan secured by a consumer's principal dwelling, such as a home improvement loan or a loan to refinance an existing loan. Currently, early cost estimates are only required for home-purchase loans. Consumers cannot be charged any fee until after they receive the early disclosures, except a reasonable fee for obtaining the consumer's credit history.

For all mortgages, the rule also sets additional advertising standards. Advertising rules now require additional information about rates, monthly payments, and other loan features. The final rule bans seven deceptive or misleading advertising practices, including representing that a rate or payment is "fixed" when it can change.

The rule's definition of "higher-priced mortgage loans" will capture virtually all loans in the subprime market, but generally exclude loans in the prime market. To provide an index, the Federal Reserve Board will publish the "average prime offer rate," based on a survey currently published by Freddie Mac. A loan is higher-priced if it is a first-lien mortgage and has an annual percentage rate that is 1.5 percentage points or more above this index, or 3.5 percentage points if it is a subordinate-lien mortgage. This definition overcomes certain technical problems with the original proposal, but the expected market coverage is similar.

The new rules take effect on October 1, 2009. The single exception is the escrow requirement, which will be phased in during 2010 to allow lenders to establish new systems as needed.

In a related move, the Board is publishing for public comment a proposal to revise the definition of "higher-priced mortgage loan" under Regulation C (Home Mortgage Disclosure), which requires lenders to report price information for such loans, to conform to the definition the Board is adopting under Regulation Z.
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July 14, 2008
Federal Reserve Will Offer $75 Billion in 28-Day Credit Through Its Term Auction Facility Today

On July 14, 2008, the Federal Reserve will offer $75 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount: $75 billion
Term: 28-day loan
Bid Submission Date: July 14, 2008
   Opening Time: 11 a.m. EDT
   Closing Time: 1 p.m. EDT
Notification Date: July 15, 2008
Settlement Date: July 17, 2008
Maturity Date: August 14, 2008
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution): $7.5 billion (10% of Offering Amount)
Minimum Bid Rate: 2.01 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $7.5 billion (10% of Offering Amount)

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

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

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


July 08, 2008
Agencies Issue Statement on Basel II Advanced Approaches Qualification Process

The federal banking and thrift agencies today issued an interagency statement outlining the qualification process for banking organizations implementing the new advanced capital adequacy framework known as Basel II. The process consists of three major stages: adoption of an implementation plan; completion of a satisfactory parallel run; and advancement through three transitional periods. The statement updates the interagency statement on qualification issued in January 2005 to reflect the final advanced approaches rule published December 7, 2007.
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July 01, 2008
The Federal Reserve will conduct two auctions of 28-day credit through its Term Auction Facility (TAF) in July

The Federal Reserve will conduct two auctions of 28-day credit through its Term Auction Facility (TAF) in July.  It will offer $75 billion in an auction to be held on Monday, July 14, and $75 billion in an auction to be held on Monday, July 28. 
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July 01, 2008
Federal Reserve announces results of auction of $75 billion in 28-day credit held on June 30, 2008

On June 30, 2008, the Federal Reserve conducted an auction of $75 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 2.340 percent
     
Total propositions submitted: $90.881 billion
Total propositions accepted: $75.000 billion
Bid/cover ratio: 1.21
     
Number of bidders: 77

Bids at the stop-out rate were prorated at 97.49% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on July 3, 2008, and will mature on July 31, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by noon EDT on July 1, 2008. Participants have until 3:00 p.m. EDT on July 1, 2008, to inform their local Reserve Bank of any error.
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June 30, 2008
Federal Reserve Will Offer $75 Billion in 28-Day Credit Through Its Term Auction Facility Today

On June 30, 2008, the Federal Reserve will offer $75 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount: $75 billion
Term: 28-day loan
Bid Submission Date: June 30, 2008
  Opening Time: 11 a.m. EDT
  Closing Time: 1 p.m. EDT
Notification Date: July 1, 2008
Settlement Date: July 3, 2008
Maturity Date: July 31, 2008
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount(per institution):   $7.5 billion (10% of Offering Amount)
Minimum Bid Rate: 2.01 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $7.5 billion (10% of Offering Amount)

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

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

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


June 26, 2008
Board Proposes Rule to Implement Certain Approaches for Calculating Risk-Based Capital Requirements Included in Basel II Capital Accord

The Federal Reserve Board on Thursday proposed a rule for public comment that would implement certain of the less-complex approaches for calculating risk-based capital requirements that are included in the international Basel II capital accord.

The proposal, known as the standardized framework, would be available for banks, bank holding companies, and savings associations not subject to the advanced approaches of Basel II. Under the advanced approaches rule, which took effect April 1 and is mandatory only for large, internationally active banking organizations, banking organizations are required to develop rigorous risk-measurement and risk-management techniques as part of a new risk-sensitive capital framework. The standardized framework also seeks to more closely align regulatory capital requirements with institutions' risk and should further encourage improvements in their risk-management practices.

"The increased risk sensitivity of the standardized framework is aimed at both enhancing safety and soundness for the wide range of institutions that will not be adopting the advanced approaches of Basel II and fostering competitive equity for these institutions," said Federal Reserve Board Governor Randall S. Kroszner. "Recognizing the diversity of banking organizations in the United States, we want to provide these banks the option of using a more updated capital framework without unduly increasing regulatory burden."

The proposed standardized framework addresses a number of areas including:

  • Expanding the number of risk-weight categories to which credit exposures may be assigned.
  • Using loan-to-value ratios to risk weight most residential mortgages to enhance the risk sensitivity of the capital requirement.
  • Providing a capital charge for operational risk using the Basic Indicator Approach under the international Basel II capital accord.
  • Emphasizing the importance of a bank's assessment of its overall risk profile and capital adequacy.
  • Providing for comprehensive disclosure requirements to complement the minimum capital requirements and supervisory process through market discipline.

The Federal Deposit Insurance Corporation has voted to issue the interagency notice of proposed rulemaking (NPR) on the Basel II standardized framework for public comment. The Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) also are considering the NPR. The Board authorized the staff to publish the NPR in the Federal Register for public comment after the other agencies complete their approval processes. For the OCC and OTS, that includes review by the Office of Management and Budget. Comments will be accepted for 90 days from the date of publication in the Federal Register.
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June 25, 2008
FOMC Statement

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 2 percent.

Recent information indicates that overall economic activity continues to expand, partly reflecting some firming in household spending. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and the rise in energy prices are likely to weigh on economic growth over the next few quarters.

The Committee expects inflation to moderate later this year and next year. However, in light of the continued increases in the prices of energy and some other commodities and the elevated state of some indicators of inflation expectations, uncertainty about the inflation outlook remains high.

The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time. Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.

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


June 23, 2008
Board Seeks Nominations for Appointments to Consumer Advisory Council

The Federal Reserve Board announced today that it is seeking nominations for appointments to its Consumer Advisory Council.

The Council advises the Board on the exercise of its responsibilities under various consumer financial services laws and on other matters.  The group meets in Washington, D.C., three times a year.

Ten new members will be appointed to serve three-year terms beginning in January 2009.

Nominations should include a résumé and the following information about nominees:
• Complete name, title, address, telephone number, e-mail address, and fax number;
• Organization's name, brief description of organization, address, telephone and fax numbers;
• Past and present positions, dates, and descriptions of responsibilities;
• Knowledge, interests or experience related to community reinvestment, consumer protection regulations, consumer credit, or other consumer financial services;
• Positions held in community and banking associations, councils, and boards.

Nominations should also include the complete name, organization name, title, address, telephone number, e-mail address, and fax number of the nominator.  Individuals may nominate themselves.

Letters of nomination with complete information, including a résumé for each nominee, must be received by August 29, 2008.  Nominations not received by August 29 may not be considered.

Electronic nominations are preferred.  The appropriate form can be accessed at:
https://www.federalreserve.gov/secure/forms/cacnominationform.cfm off-site image

If electronic submission is not feasible, the nominations can be mailed (not sent by facsimile) to Sheila Maith, Advisor, Division of Consumer and Community Affairs, Board of Governors of the Federal Reserve System, Washington, DC  20551. 

The Board's notice is attached.

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June 18, 2008
Federal Reserve Announces Launch of National Minority-Owned Bank Program

The Federal Reserve System today announced the nationwide launch of Partnership for Progress, an innovative outreach and technical assistance program for minority-owned and de novo institutions.  The program seeks to help these institutions confront their unique challenges, cultivate safe and sound practices, and compete more effectively in today's marketplace through a combination of one-on-one guidance, workshops, and an extensive interactive web-based resource and information center (http://www.fedpartnership.gov/).

"The program's overarching mission is to preserve and promote minority-owned institutions and to enhance their vital role in providing access to credit and financial services in communities that have been historically underserved," said Federal Reserve Board Chairman Ben S. Bernanke. "The Federal Reserve is committed to helping minority-owned and de novo banks achieve long-term success."

Partnership for Progress provides insight on key issues in three distinct stages of a bank's life cycle: "Start a Bank," "Manage Transition," and "Grow Shareholder Value." Topics covered include credit and interest rate risk, capital and liquidity, and banking regulations. To ensure broad access to the program, all aspects of the training will be available through workshops, online courses, and the program's interactive website.

"This cutting-edge program, which draws on insights from economics, accounting, finance, and regulatory compliance, will become a valuable resource for institutions at different stages of their development," said Federal Reserve Board Governor Randall S. Kroszner.

In developing the program, Federal Reserve officials met with minority-owned and de novo banks across the country as well as trade groups, bank consultants, and state and federal banking agencies to better understand the challenges these institutions face in raising capital, growing their institutions, and attracting talent. This process provided valuable insight and contributed significantly to the design of the program, which was spearheaded by the Federal Reserve Bank of Philadelphia. Key concepts from the program will be incorporated into the Federal Reserve System's examiner training to provide a deeper understanding of the issues unique to minority-owned institutions.

The nationwide launch of Partnership for Progress follows a successful pilot for the program that began last fall. Questions and comments regarding the program should be directed to Marilyn Wimp at the Federal Reserve Bank of Philadelphia, 215-574-4197.


June 17, 2008
Federal Reserve Announces Results of Auction of $75 Billion in 28-Day Credit Held on June 16, 2008

On June 16, 2008, the Federal Reserve conducted an auction of $75 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 2.360 percent
     
Total propositions submitted: $89.377 billion
Total propositions accepted: $75.000 billion
Bid/cover ratio: 1.19
     
Number of bidders: 76

Bids at the stop-out rate were prorated at 97.69% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on June 19, 2008, and will mature on July 17, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by noon EDT on June 17, 2008. Participants have until 3:00 p.m. EDT on June 17, 2008, to inform their local Reserve Bank of any error.


June 16, 2008
Federal Reserve Will Offer $75 Billion in 28-Day Credit Through Its Term Auction Facility Today

On June 16, 2008, the Federal Reserve will offer $75 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount: $75 billion
Term: 28-day loan
Bid Submission Date: June 16, 2008
   Opening Time: 11 a.m. EDT
   Closing Time: 1 p.m. EDT
Notification Date: June 17, 2008
Settlement Date: June 19, 2008
Maturity Date: July 17, 2008
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount(per institution): $7.5 billion (10% of Offering Amount)
Minimum Bid Rate:   2.05 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $7.5 billion (10% of Offering Amount)

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

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

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


June 09, 2008
Federal banking agencies announce third annual interagency minority depository institutions national conference

Federal Banking Agencies Announce Third Annual Interagency Minority Depository Institutions National Conference, July 16-18, 2008—Chicago, Illinois

The federal bank and thrift regulatory agencies announced today the agenda and keynote speaker for the 2008 Interagency Minority Depository Institutions (MDI) National Conference.  The theme of this year's conference for federally insured MDIs will be "Know Your Business, Grow Your Business."  This year's keynote speaker will be Robert L. Johnson, founder and Chairman, The RLJ Companies.

Representatives from the Federal Deposit Insurance Corporation, Federal Reserve Board, Office of the Comptroller of the Currency, and Office of Thrift Supervision will address a wide range of issues regarding the challenges MDIs face today in ensuring their long-term success and viability. 

The 2008 Interagency Minority Depository Institutions National Conference will be held at the Westin Michigan Avenue Hotel in Chicago, Illinois, from July 16-18, 2008.

Confirmed participants include:

FDIC Chairman Sheila Bair
FRB Governor Randall Kroszner
OCC Comptroller John Dugan
OTS Director John Reich

Conference details and registration information are available at:  http://www.fdic.gov/regulations/resources/minority/national_conference.html.
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June 03, 2008
Tentative 2009 FOMC meeting schedule

The Federal Open Market Committee on Tuesday announced its tentative meeting schedule for 2009:

January 27-28 (Tuesday-Wednesday)

March 17 (Tuesday)

April 28-29 (Tuesday-Wednesday)

June 23-24 (Tuesday-Wednesday)

August 11 (Tuesday)

September 22 (Tuesday)

November 3-4 (Tuesday-Wednesday)

December 15 (Tuesday)

January 26-27, 2010 (Tuesday-Wednesday)

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June 03, 2008
Federal Reserve announces results of auction of $75 billion in 28-day credit held on June 2, 2008

On June 2, 2008, the Federal Reserve conducted an auction of $75 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 2.26 percent
     
Total propositions submitted: $95.914 billion
Total propositions accepted: $75.000 billion
Bid/cover ratio: 1.28
     
Number of bidders: 73

Bids at the stop-out rate were prorated at 48.47% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on June 5, 2008, and will mature on July 3, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by noon EDT on June 3, 2008. Participants have until 3:00 p.m. EDT on June 3, 2008, to inform their local Reserve Bank of any error.
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June 02, 2008
Federal Reserve will offer $75 billion in 28-day credit through its Term Auction Facility today

On June 2, 2008, the Federal Reserve will offer $75 billion in 28-day credit through its Term Auction Facility.  Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters

Offering Amount:   $75 billion
Term:   28-day loan
Bid Submission Date:   June 2, 2008
  Opening Time:   11 a.m. EDT
  Closing Time:   1 p.m. EDT
Notification Date:   June 3, 2008
Settlement Date:   June 5, 2008
Maturity Date:   July 3, 2008
Minimum Bid Amount (per bid):   $5 million
Bid Increment:   $100,000
Maximum Bid Amount(per institution):   $7.5 billion (10% of Offering Amount)
Minimum Bid Rate:   2.00 percent
Incremental Bid Rate:   0.001 percent
Minimum Award:   $10,000
Maximum Award:   $7.5 billion (10% of Offering Amount)

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

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

Rounding Convention
Pro rata awards will be rounded to multiples of $10,000.  Normal rounding convention will be used, except that awards under $10,000 will be rounded to $10,000.
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May 29, 2008
Federal Reserve Will Offer $75 Billion in 28-Day Credit Through Its Term Auction Facility on June 2, 16, and 30, 2008

The Federal Reserve will conduct three auctions of 28-day credit through its Term Auction Facility (TAF) in June. It will offer $75 billion in an auction to be held on Monday, June 2, settling on Thursday, June 5, and maturing on Thursday, July 3; $75 billion in an auction to be held on Monday, June 16, settling on Thursday, June 19, and maturing on Thursday, July 17; and $75 billion in an auction to be held on Monday, June 30, settling on Thursday, July 3, and maturing on Thursday, July 31.

May 28, 2008
Governor Frederic S. Mishkin resigns from Board, effective August 31, 2008

Frederic S. Mishkin submitted his resignation on Wednesday as a member of the Board of Governors of the Federal Reserve System, effective August 31, 2008.

Mishkin, who has been a member of the Board since September 5, 2006, submitted his letter of resignation to President Bush.  He will return to the Graduate School of Business at Columbia University as a professor of economics and resume teaching in the fall.  The Federal Open Market Committee meeting on August 5 will be his last.

"Rick's contributions to the intellectual underpinnings of monetary policy at the Federal Reserve have been invaluable," said Federal Reserve Board Chairman Ben S. Bernanke.  "His keen insights, deep analysis and humor have enriched our deliberations.  I greatly value his friendship and counsel and wish him all the best as he returns to teaching."

Mishkin, 57, was appointed to the Board by President Bush to fill an unexpired term ending January 31, 2014.  During his time on the Board, he served as Chairman of the Committee on Economic Affairs and as a member of the Committee on Supervisory and Regulatory Affairs and the Committee on Consumer and Community Affairs.

Before joining the Board, Mishkin was the Alfred Lerner Professor of Banking and Financial Institutions at the Graduate School of Business, Columbia University, from 1999 to 2006.  In addition, he has taught at the University of Chicago, Northwestern University, and Princeton University.
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May 22, 2008
Federal Financial Regulators Issue Final Illustrations of Consumer Information for Hybrid Adjustable-Rate Mortgage Products

The federal financial regulatory agencies today issued final illustrations for helping consumers understand certain hybrid adjustable-rate mortgage (ARM) products.

The agencies' Statement on Subprime Mortgage Lending (Subprime Statement), which became effective July 10, 2007, recommended that institutions provide clear, balanced, and timely information to consumers about the relative benefits and risks of hybrid ARM products. The illustrations are intended to assist institutions in providing this information.

The illustrations consist of (1) an explanation of some key features of products covered by the Subprime Statement; and (2) three charts with examples of the potential payment shock accompanying these types of loans.

Institutions are not required to use the illustrations. They may use them, provide information based on them, or provide consumers with information described in the guidance in an alternate format.

The agencies will be posting the illustrations on their websites for downloading and printing. In particular, versions of the illustrations will be posted in English and in Spanish together with a template of the illustrations that institutions can modify to reflect the latest market conditions.
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May 20, 2008
Federal Reserve Announces Results of Auction of $75 Billion in 28-Day Credit Held on May 19, 2008

On May 19, 2008, the Federal Reserve conducted an auction of $75 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 2.100 percent
     
Total propositions submitted:    $84.438 billion
Total propositions accepted: $75.000 billion
Bid/cover ratio: 1.13
     
Number of bidders: 75

Bids at the stop-out rate were prorated at 71.65% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on May 22, 2008, and will mature on June 19, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by noon EDT on May 20, 2008. Participants have until 3:00 p.m. EDT on May 20, 2008, to inform their local Reserve Bank of any error.


May 19, 2008
Federal Reserve Will Offer $75 Billion in 28-Day Credit Through Its Term Auction Facility Today

On May 19, 2008, the Federal Reserve will offer $75 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters
Offering Amount: $75 billion
Term: 28-day loan
Bid Submission Date: May 19, 2008
   Opening Time: 11 a.m. EDT
   Closing Time: 1 p.m. EDT
Notification Date: May 20, 2008
Settlement Date: May 22, 2008
Maturity Date: June 19, 2008
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount(per institution): $7.5 billion (10% of Offering Amount)
Minimum Bid Rate:   1.99 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $7.5 billion (10% of Offering Amount)

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

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

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

 


May 13, 2008
Restructuring of the check processing operations in the Sixth and Eighth Districts, Regulation CC

The Federal Reserve Board has approved amendments to Appendix A of Regulation CC that reflect the restructuring of the Federal Reserve's check processing operations in the Sixth and Eighth Districts, and provided notice relating to future changes to Appendix A.

Appendix A provides a routing symbol guide that helps depository institutions determine the maximum permissible hold periods for most deposited checks. As of July 19, 2008, the Memphis branch office of the Federal Reserve Bank of St. Louis no longer will process checks, and banks currently served by that office will be reassigned to the head office of the Federal Reserve Bank of Atlanta. To ensure that the information in Appendix A accurately describes the structure of check processing operations within the Federal Reserve System, the final rule deletes the reference in Appendix A to the Memphis branch office of the Federal Reserve Bank of St. Louis and reassigns the routing numbers listed thereunder to the head office of the Federal Reserve Bank of Atlanta. To coincide with the effective date of the underlying check processing changes, the amendments are effective July 19, 2008. As a result of these changes, some checks deposited in the affected regions that currently are nonlocal checks will become local checks that are subject to shorter permissible hold periods.

The attachment also provides notice that, as they announced on March 31, 2008, the Federal Reserve Banks are accelerating their planned reductions in the number of locations at which they process checks. Whereas they had previously announced that the transitions would take place by early 2011, the Reserve Banks now plan to cease check processing operations at all of their check processing offices except four—Philadelphia, Cleveland, Atlanta, and Dallas—by early 2010. The Board intends to publish each related amendment to Appendix A approximately 60 days prior to the effective date of the amendment to give affected banks ample time to make necessary changes.
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May 08, 2008
Agencies Issue Proposed Rules on Risk-based Pricing Notices

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

The proposal provides a number of different approaches that creditors may use to identify the consumers to whom they must provide risk-based pricing notices. In addition, the proposed rule includes certain exceptions to the notice requirement. The most significant of the exceptions permits creditors, in lieu of providing a risk-based pricing notice to those consumers who receive less favorable terms, to provide all of their consumers with their credit scores and explanatory information.
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May 06, 2008
Federal Reserve Announces Results of Auction of $75 Billion in 28-Day Credit Held on May 5, 2008

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

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

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

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

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


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

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

Description of Offering and Auction Parameters

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

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

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

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


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

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

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

In addition, the Federal Open Market Committee authorized an expansion of the collateral that can be pledged in the Federal Reserve's Schedule 2 Term Securities Lending Facility (TSLF) auctions. Primary dealers may now pledge AAA/Aaa-rated asset-backed securities, in addition to already eligible residential- and commercial-mortgage-backed securities and agency collateralized mortgage obligations, beginning with the Schedule 2 TSLF auction to be announced on May 7, 2008, and to settle on May 9, 2008. The wider pool of collateral should promote improved financing conditions in a broader range of financial markets. Treasury securities, agency securities, and agency mortgage-backed securities continue to be eligible as collateral in Schedule 1 TSLF auctions.
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May 02, 2008
Federal Reserve Proposes Rules to Prohibit Unfair Practices Regarding Credit Cards and Overdraft Services

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

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

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

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

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

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

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

The Board's proposal under the FTC Act also addresses acts or practices in connection with a bank's payment of overdrafts on a deposit account, whether the overdraft is created by check, a withdrawal at an automated teller machine, a debit card purchase, or other transactions. The proposal requires institutions to provide consumers with notice and an opportunity to opt out of the payment of overdrafts, before any overdraft fees or charges may be imposed on consumers' accounts.
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April 30, 2008
FOMC Statement

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

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

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

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

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

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


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

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

Stop-out rate: 2.870 percent
     
Total propositions submitted:   $88.288 billion
Total propositions accepted: $50.000 billion
Bid/cover ratio: 1.77
     
Number of bidders: 83

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

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

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


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

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

Description of Offering and Auction Parameters

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

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

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

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


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

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

Stop-out rate: 2.820 percent
Total propositions submitted: $91.569 billion
Total propositions accepted: $50.000 billion
Bid/cover ratio: 1.83
Number of bidders: 79

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

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

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by noon EDT on April 8, 2008. Participants have until 3:00 p.m. EDT on April 8, 2008, to inform their local Reserve Bank of any error.
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April 07, 2008
Federal Reserve Will Offer $50 Billion in 28-Day Credit Through Its Term Auction Facility Today

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

Description of Offering and Auction Parameters

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

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

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

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


March 31, 2008
Federal Reserve Banks Announce Restructuring Schedule Changes

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

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

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

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

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

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

Check Processing Infrastructure Revised Schedule

Office Service level/where processing volume will move (print sites only) Original transition date Revised transtion date
Atlanta Regional processing site ------- -------
Cleveland Regional processing site ------- -------
Philadelphia Regional processing site ------- -------
Dallas Regional processing site ------- -------
Utica, N.Y. Closed 1Q 2008 -------
Kansas City, Mo. Print only/Dallas 2Q 2008 April 18, 2008
Memphis, Tenn. Print only/Atlanta 3Q 2008 July 18, 2008
Seattle Capture and print 4Q 2008 3Q 2008
Windsor Locks, Conn. Print only/Philadelphia 1Q 2009 3Q 2008
Cincinnati Print only/Cleveland 4Q 2008 4Q 2008
Jacksonville, Fla. Print only/Atlanta 3Q 2010 4Q 2008
Minneapolis Capture and print 3Q 2009 1Q 2009
Baltimore, Md. Print only/Philadelphia 4Q 2009 1Q 2009
Charlotte, N.C. Print only/Atlanta 2Q 2009 2Q 2009
Denver Capture and print 2Q 2010 2Q 2009
Des Moines, Iowa Print only/Cleveland 4Q 2010 3Q 2009
Los Angeles Capture and print 4Q 2010 4Q 2009
St. Louis, Mo. Print only/Atlanta 1Q 2011 4Q 2009
Chicago Capture and print 1Q 2010 1Q 2010

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

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

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

The Federal Reserve will conduct two auctions of 28-day credit through its Term Auction Facility (TAF) in April. It will offer $50 billion in an auction to be held on Monday, April 7 and $50 billion in an auction to be held on Monday, April 21.

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

On March 24, 2008, the Federal Reserve conducted an auction of $50 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:
Stop-out rate: 2.615 percent
     
Total propositions submitted: $88.869 billion
Total propositions accepted: $50.000 billion
Bid/cover ratio: 1.78
     
Number of bidders: 88

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

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

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


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

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

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

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

"The findings of the Fed's Check Sample Study are intended to help the Federal Reserve, the industry, and the public better understand how checks are being used and inform future payments investment decisions," said Richard Oliver, executive vice president of the Federal Reserve Bank of Atlanta and the Federal Reserve Banks' product manager for retail payments. "In 2007, the fact that much of the data needed for the Check Sample Study were available within one industry source, the Viewpointe archive, allowed for a consistent and systematic sampling methodology and the effort required of participant banks was greatly reduced from what it was when a similar study was conducted in 2001."
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March 24, 2008
Federal Reserve Will Offer $50 Billion in 28-Day Credit Through Its Term Auction Facility Today

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

Description of Offering and Auction Parameters

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

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

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

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


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

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

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

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

The agencies invite comment on the proposed changes and, more generally, on other issues regarding compliance with the federal flood insurance statutes and regulations. Comments are due May 20, 2008.
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March 18, 2008
FOMC Statement

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

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

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

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

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

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


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

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

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

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

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


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

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

Stop-out rate: 2.800 percent
     
Total propositions submitted: $92.595 billion
Total propositions accepted: $50.000 billion
Bid/cover ratio: 1.85
     
Number of bidders: 82

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

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

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


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

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

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

The actions announced today supplement the measures announced by the Federal Reserve on Friday to boost the size of the Term Auction Facility to $100 billion and to undertake a series of term repurchase transactions that will cumulate to $100 billion.
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March 10, 2008
Federal Reserve Will Offer $50 Billion in 28-Day Credit Through Its Term Auction Facility Today

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

Description of Offering and Auction Parameters
Offering Amount: $50 billion
Term: 28-day loan
Bid Submission Date: March 10, 2008
     Opening Time: 11 a.m. EDT
     Closing Time: 1 p.m. EDT
Notification Date: March 11, 2008
Settlement Date: March 13, 2008
Maturity Date: April 10, 2008
Minimum Bid Amount (per bid): $5 million
Bid Increment: $100,000
Maximum Bid Amount (per institution):   $5 billion (10% of Offering Amount)
Minimum Bid Rate: 2.39 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $5 billion (10% of Offering Amount)

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

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

Rounding Convention
Pro rata awards will be rounded to multiples of $10,000. Normal rounding convention will be used, except that awards under $10,000 will be rounded to $10,000.
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March 07, 2008
Federal Reserve Announces Two Initiatives to Address Heightened Liquidity Pressures in Term Funding Markets

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

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

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

The Federal Reserve is in close consultation with foreign central bank counterparts concerning liquidity conditions in markets. The Federal Reserve announced two initiatives to address heightened liquidity pressures in term funding markets.
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March 03, 2008
Statement to Financial Institutions Servicing Residential Mortgages on Reporting Loss Mitigation of Subprime Mortgages

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

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

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

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


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

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

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

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


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

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

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

Comments are requested by June 4, 2008.

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


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

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

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

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

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

Comments are requested by June 4, 2008.

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


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

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

Stop-out rate: 3.080 percent
     
Total propositions submitted: $67.958 billion
Total propositions accepted: $30.000 billion
Bid/cover ratio: 2.27
     
Number of bidders: 72

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

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

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


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

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

Description of Offering and Auction Parameters

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

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

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

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


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

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

Stop-out rate:     3.010 percent
       
Total propositions submitted:   $58.400 billion
Total propositions accepted:   $30.000 billion
Bid/cover ratio:   1.95
       
Number of bidders:   66

Bids at the stop-out rate were prorated at 20.73% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on February 14, 2008, and will mature on March 13, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by noon EST on February 12, 2008. Participants have until 3:00 p.m. EST on February 12, 2008, to inform their local Reserve Bank of any error.


February 08, 2008
Federal Reserve Will Offer $30 Billion in 28-Day Credit Through Its Term Auction Facility on February 11, 2008

On February 11, 2008, the Federal Reserve will offer $30 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this Announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters

Offering Amount:   $30 billion
Term:   28-day loan
Bid Submission Date:     February 11, 2008
Opening Time:   10 a.m. EST
Closing Time:   1 p.m. EST
Notification Date:   February 12, 2008
Settlement Date:   February 14, 2008
Maturity Date:   March 13, 2008
Minimum Bid Amount (per bid):   $5 million
Bid Increment:   $100,000
Maximum Bid Amount (per institution):   $3 billion (10% of Offering Amount)
Minimum Bid Rate:   2.86 percent
Incremental Bid Rate:   0.001 percent
Minimum Award:   $10,000
Maximum Award:   $3 billion (10% of Offering Amount)

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

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

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


February 07, 2008
Request for Comment on Proposed Changes to Regulations D and I to Incorporate Provisions of the Financial Services Regulatory Relief Act of 2006

The Federal Reserve Board on Thursday requested public comment on proposed changes to Regulation D (Reserve Requirements of Depository Institutions) and Regulation I (Issue and Cancellation of Federal Reserve Bank Stock) to incorporate provisions of the Financial Services Regulatory Relief Act of 2006. The proposed amendments would remove certain restrictions on the way depository institutions maintain required reserves and clarify and update other provisions of the regulations.

The Federal Reserve Act imposes reserve requirements on certain deposits and other liabilities (primarily checking accounts) of depository institutions, such as banks, thrift institutions, and credit unions. Depository institutions must maintain required reserves in the form of cash in their vaults or as a balance in an account at a Federal Reserve Bank. Depository institutions may maintain a balance directly with a Federal Reserve Bank or with a correspondent institution that, in turn, holds reserve balances for respondents in a Federal Reserve account on a "pass-through" basis. The Financial Services Regulatory Relief Act of 2006 amended the Federal Reserve Act to permit both banks that are Federal Reserve System members as well as nonmember banks to enter into pass-through correspondent arrangements. (Member banks include all national banks and any state-chartered banks that apply for membership and are accepted.) Previously, the Federal Reserve Act permitted only nonmember banks to enter into such arrangements.

The proposal would implement the revisions to the pass-through rules as well as make other changes to clarify and modernize the regulations. These changes include simplifying the restrictions on certain types of transfers and withdrawals that may be made from savings deposits, clarifying the definitions of "time deposit" and "vault cash" to incorporate the substance of previously issued written staff guidance, reorganizing the provisions relating to deposit reporting and to the calculation and maintenance of required reserves, and making other minor editorial changes for clarity, including technical changes to Regulation D and Regulation I relating to the location of a depository institution for purposes of Federal Reserve Bank accounts and stock.

The public comment period ends forty-five days after publication of the proposed amendments in the Federal Register, which is expected shortly.

The Board's notice is attached.
Attachment (177 KB PDF) off-site image


February 01, 2008
Federal Reserve Will Conduct Two Auctions of 28-Day Credit Through its Term Auction Facility in February

The Federal Reserve will conduct two auctions of 28-day credit through its Term Auction Facility (TAF) in February. It will offer $30 billion in an auction to be held on Monday, February 11 and $30 billion in an auction to be held on Monday, February 25.

To facilitate participation by smaller institutions, the minimum bid size will be reduced to $5 million, from $10 million in the previous auctions. The minimum bid rate, along with further details, will be announced at noon EST, the Friday before each auction. The results of each auction will be announced at 10 a.m. EST on the Tuesday following each auction; final settlement will occur on the Thursday following each auction.

The Federal Reserve intends to conduct biweekly TAF auctions for as long as necessary to address elevated pressures in short-term funding markets. Decisions regarding auctions in March will be announced by Friday, February 29.


January 30, 2008
FOMC Statement

The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 3 percent.

Financial markets remain under considerable stress, and credit has tightened further for some businesses and households. Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets.

The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully.

Today's policy action, combined with those taken earlier, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.

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

In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 3-1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Kansas City, and San Francisco.


January 29, 2008
Federal Reserve Announces Results of Auction of $30 Billion in 28-Day Credit Held on January 28, 2008

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

Stop-out rate:
   
3.123 percent
     
Total propositions submitted:   $37.452 billion
Total propositions accepted:   $30.000 billion
Bid/cover ratio:   1.25
     
Number of bidders:   52

Bids at the stop-out rate were prorated at 27.94% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on January 31, 2008, and will mature on February 28, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by noon EST on January 29, 2008. Participants have until 3:00 p.m. EST on January 29, 2008, to inform their local Reserve Bank of any error.


January 25, 2008
Federal Reserve will offer $30 billion in 28-day credit through its term auction facility on January 28, 2008

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

January 22, 2008
FOMC Statement

The Federal Open Market Committee has decided to lower its target for the federal funds rate 75 basis points to 3-1/2 percent.

The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets.

The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully.

Appreciable downside risks to growth remain. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Eric S. Rosengren; and Kevin M. Warsh. Voting against was William Poole, who did not believe that current conditions justified policy action before the regularly scheduled meeting next week. Absent and not voting was Frederic S. Mishkin.

In a related action, the Board of Governors approved a 75-basis-point decrease in the discount rate to 4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Chicago and Minneapolis.


January 15, 2008
Federal Reserve Announces Results of Auction of $30 Billion in 28-Day Credit Held on January 14, 2008

On January 14, 2008, the Federal Reserve conducted an auction of $30 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate:   3.95 percent
     
Total propositions submitted:   $55.526 billion
Total propositions accepted:   $30.000 billion
Bid/cover ratio:   1.85
     
Number of bidders:   56

Bids at the stop-out rate were prorated at 11.12% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on January 17, 2008, and will mature on February 14, 2008. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by Noon EST on January 15, 2008. Participants have until 3:00 p.m. EST on January 15, 2008 to inform their local Reserve Bank of any error.


January 11, 2008
Federal Reserve Will Offer $30 Billion in 28-day Credit Through Its Term Auction Facility on January 14, 2008

On January 14, 2008, the Federal Reserve will offer $30 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this Announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).
Press Release off-site image


January 10, 2008
Reserve Bank Income and Expense Data and Transfers to the Treasury for 2007

The Federal Reserve Board on Thursday announced that the Federal Reserve Banks distributed approximately $34.437 billion of their $41.941 billion total income to the U.S. Treasury during 2007.

Federal Reserve System income is derived primarily from interest earned on U.S. government securities that the Federal Reserve has acquired through open market operations. This income amounted to $40.298 billion in 2007. Additionally, income from fees for the provision of priced services to depository institutions totaled $878 million. The remaining income of $765 million includes earnings on foreign currencies, earnings from loans, and other income.

Net operating expenses of the twelve Reserve Banks totaled $2.608 billion in 2007. In addition, the cost of earnings credits granted to depository institutions amounted to $242 million. The Reserve Banks were assessed for Board expenditures totaling $296 million and for the cost of currency totaling $576 million.

Net additions to income amounted to $198 million, primarily representing unrealized gains on assets denominated in foreign currencies that are revalued to reflect current market exchange rates, which is offset, in part, by interest expense on reverse repurchase agreements.

Net income for the Federal Reserve Banks in 2007 amounted to $38.551 billion. Under the Board's policy, each Reserve Bank's net income was transferred to the U.S. Treasury, after providing for $992 million in statutory dividends to member banks and $3.121 billion to equate surplus to paid-in capital.


January 04, 2008
Federal Reserve Will Conduct Two Auctions of 28-day Credit Through Its Term Auction Facility in January

The Federal Reserve will conduct two auctions of 28-day credit through its Term Auction Facility (TAF) in January. It will offer $30 billion in the auction to be held on Monday, January 14 and $30 billion in the auction to be held on Monday, January 28.

The minimum bid rate, along with further details, will be announced at noon EST, the Friday before each auction. The results of each auction will be announced at 10 a.m. EST on the Tuesday following each auction; final settlement will occur on the Thursday following each auction. Noncompetitive bids will not be accepted at the January auctions, but the Federal Reserve will continue to evaluate the potential usefulness of this feature.

The Federal Reserve intends to conduct biweekly TAF auctions for as long as necessary to address elevated pressures in short-term funding markets. Decisions regarding auctions in February will be announced by Friday, February 1.
Press Release off-site image


January 02, 2008
Restructuring of the Check Processing Operations of the Federal Reserve Banks of New York, Philadelphia, and Cleveland

The Federal Reserve Board has approved amendments to Appendix A of Regulation CC that reflect the restructuring of the check processing operations of the Federal Reserve Banks of New York, Philadelphia, and Cleveland, and provided notice relating to future changes to Appendix A.

Appendix A provides a routing symbol guide that helps depository institutions determine the maximum permissible hold periods for most deposited checks. To ensure that the information in Appendix A accurately describes the structure of check processing operations within the Federal Reserve System, the Board is amending the lists of routing symbols in Appendix A associated with the Federal Reserve Banks of New York, Philadelphia, and Cleveland to reflect the transfer of check processing operations from the Federal Reserve Bank of New York’s Utica office to the head offices of the Federal Reserve Banks of Philadelphia and Cleveland. To coincide with the effective date of the underlying reassignment of check processing functions, the amendments to Appendix A under the Federal Reserve Banks of New York and Cleveland that revise the listings for the Utica office and the Cleveland head office are effective February 23, 2008, and the amendments to Appendix A under the Federal Reserve Banks of New York and Philadelphia that revise the listings for the Philadelphia head office and delete the remaining listings for the Utica office are effective March 29, 2008. As a result of these changes, some checks deposited in the affected regions that currently are nonlocal checks will become local checks that are subject to shorter permissible hold periods.

The attachment also provides advance notice that the Reserve Banks have decided to cease check processing operations, as they announced in June 2007, at all of their check processing offices except four--Cleveland, Philadelphia, Atlanta, and Dallas--between 2008 and early 2011. The attachment lists the branches and offices from which and to which the Reserve Banks plan to transfer check processing operations and the tentative timeframe for each transfer. The Board intends to publish each related amendment to Appendix A approximately 60 days prior to the effective date of the amendment to give affected banks ample time to make necessary changes.
Press Release off-site image


2007

December 19, 2007
Agencies Release Annual CRA Asset-Size Threshold Adjustments for Small and Intermediate Small Institutions

The federal bank regulatory agencies today announced the annual adjustment to the asset-size thresholds used to define "small bank," "small savings association," "intermediate small bank," and "intermediate small savings association" under the Community Reinvestment Act (CRA) regulations. The annual adjustments for banks are required by the 2005 CRA regulatory amendments and for savings associations by the Office of Thrift Supervision's 2007 CRA regulatory amendments.

Annual adjustments to these asset-size thresholds are based on the year-to-year change in the average of the Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers, not seasonally adjusted, for each 12-month period ending in November, with rounding to the nearest million.

As a result of the 2.7 percent increase in the CPI for the period ending in November 2007, the definitions of small and intermediate small institutions for CRA examinations will change as follows:

  • "Small bank" or "small savings association" means an institution that, as of December 31 of either of the prior two calendar years, had assets of less than $1.061 billion.
  • "Intermediate small bank" or "intermediate small savings association" means an institution with assets of at least $265 million as of December 31 of both of the prior two calendar years, and less than $1.061 billion as of December 31 of either of the prior two calendar years.

These asset-size threshold adjustments are effective January 1, 2008. The agencies will publish the adjustments in the Federal Register. In addition, the agencies will post a list of the current and historical asset-size thresholds on the web site of the Federal Financial Institutions Examination Council (www.ffiec.gov/cra). off-site image

Attachment (53 KB PDF) off-site image

Media Contacts:
Federal Reserve Board Deborah Lagomarsino 202-452-2955
FDIC David Barr 202-898-6992
OCC Dean DeBuck 202-874-5770
OTS William Ruberry 202-906-6677

December 17, 2007
Annual Notice of Asset-Size Exemption Threshold for Depository Institutions

The Federal Reserve Board on Monday published its annual notice of the asset-size exemption threshold for depository institutions under Regulation C, which implements the Home Mortgage Disclosure Act (HMDA).

The asset-size exemption for depository institutions will increase from $36 million to $37 million based on the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers for the twelve-month period ending in November 2007. As a result, depository institutions with assets of $37 million or less as of December 31, 2007, are exempt from collecting data in 2008. An institution’s exemption from collecting data in 2008 does not affect its responsibility to report the data it was required to collect in 2007.

The adjustment is effective January 1, 2008.

HMDA and the Board's Regulation C require most mortgage lenders located in metropolitan areas to collect, report, and disclose data about applications for, and originations and purchases of, home purchase loans, home improvement loans, and refinancings. Data reported include the type, purpose, and amount of the loan; the race, ethnicity, sex, and income of the loan applicant; the location of the property; and loan price information for some loans. The purposes of HMDA include helping to determine whether financial institutions are serving the housing needs of their communities and assisting in fair lending enforcement.

The Board's notice is attached.
Attachment off-site image (26 KB PDF)


December 12, 2007
Federal Reserve and Other Central Banks Announce Measures Designed to Address Elevated Pressures in Short-Term Funding Markets

Today, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank are announcing measures designed to address elevated pressures in short-term funding markets.

Federal Reserve Actions
Actions taken by the Federal Reserve include the establishment of a temporary Term Auction Facility (approved by the Board of Governors of the Federal Reserve System) and the establishment of foreign exchange swap lines with the European Central Bank and the Swiss National Bank (approved by the Federal Open Market Committee).

Under the Term Auction Facility (TAF) program, the Federal Reserve will auction term funds to depository institutions against the wide variety of collateral that can be used to secure loans at the discount window. All depository institutions that are judged to be in generally sound financial condition by their local Reserve Bank and that are eligible to borrow under the primary credit discount window program will be eligible to participate in TAF auctions. All advances must be fully collateralized. By allowing the Federal Reserve to inject term funds through a broader range of counterparties and against a broader range of collateral than open market operations, this facility could help promote the efficient dissemination of liquidity when the unsecured interbank markets are under stress.

Each TAF auction will be for a fixed amount, with the rate determined by the auction process (subject to a minimum bid rate). The first TAF auction of $20 billion is scheduled for Monday, December 17, with settlement on Thursday, December 20; this auction will provide 28-day term funds, maturing Thursday, January 17, 2008. The second auction of up to $20 billion is scheduled for Thursday, December 20, with settlement on Thursday, December 27; this auction will provide 35-day funds, maturing Thursday, January 31, 2008. The third and fourth auctions will be held on January 14 and 28, with settlement on the following Thursdays. The amounts of those auctions will be determined in January. The Federal Reserve may conduct additional auctions in subsequent months, depending in part on evolving market conditions.

Depositories will submit bids through their local Reserve Banks. The minimum bid rate for the auctions will be established at the overnight indexed swap (OIS) rate corresponding to the maturity of the credit being auctioned. The OIS rate is a measure of market participants’ expected average federal funds rate over the relevant term. The minimum rate for the December 17 auction along with other auction details will be announced on Friday, December 14. Noncompetitive tenders may be accepted beginning with the third auction. The results of the first auction will be announced at 10 a.m. Eastern Time on December 19. The schedule for releasing the results of later auctions will be determined subsequently. Detailed terms of the auction and summary auction results will be available at http://www.federalreserve.gov/.

Experience gained under this temporary program will be helpful in assessing the potential usefulness of augmenting the Federal Reserve’s current monetary policy tools--open market operations and the primary credit facility--with a permanent facility for auctioning term discount window credit. The Board anticipates that it would seek public comment on any proposal for a permanent term auction facility.

The Federal Open Market Committee has authorized temporary reciprocal currency arrangements (swap lines) with the European Central Bank (ECB) and the Swiss National Bank (SNB). These arrangements will provide dollars in amounts of up to $20 billion and $4 billion to the ECB and the SNB, respectively, for use in their jurisdictions. The FOMC approved these swap lines for a period of up to six months.

Information on Related Actions Being Taken by Other Central Banks
Information on the actions that will be taken by other central banks is available at the following websites.

Bank of Canada (http://www.bankofcanada.ca/off-site image)
Bank of England (http://www.bankofengland.co.uk/off-site image)
European Central Bank (http://www.ecb.int/off-site image)
Swiss National Bank (http://www.snb.ch/off-site image)

Statements by Other Central Banks
Bank of Japan (http://www.boj.or.jp/off-site image)
Swedish Riksbank (http://www.riksbank.com/off-site image)

Federal Register Notice (33 KB PDF) off-site image


December 11, 2007
FOMC Statement

The Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points to 4-1/4 percent.

Incoming information suggests that economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending. Moreover, strains in financial markets have increased in recent weeks. Today’s action, combined with the policy actions taken earlier, should help promote moderate growth over time.

Readings on core inflation have improved modestly this year, but elevated energy and commodity prices, among other factors, may put upward pressure on inflation. In this context, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.

Recent developments, including the deterioration in financial market conditions, have increased the uncertainty surrounding the outlook for economic growth and inflation. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; William Poole; and Kevin M. Warsh. Voting against was Eric S. Rosengren, who preferred to lower the target for the federal funds rate by 50 basis points at this meeting.

In a related action, the Board of Governors unanimously approved a 25-basis-point decrease in the discount rate to 4-3/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, and St. Louis.


November 29, 2007
Agencies Issue Proposed Rules and Guidelines that Address Accuracy and Integrity of Consumer Report Information and Rules to Allow Direct Disputes

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Trade Commission have approved proposed regulations and guidelines to help ensure the accuracy and integrity of information provided to consumer reporting agencies and to allow consumers to directly dispute inaccuracies with financial institutions and other entities that furnish information to consumer reporting agencies. The proposal would implement section 312 of the Fair and Accurate Credit Transactions Act of 2003, which amends the Fair Credit Reporting Act.

As required by section 312, the agencies are proposing guidelines for use by entities that furnish information about consumers to a consumer reporting agency regarding the accuracy and integrity of the information that they furnish. The agencies are also proposing regulations that would require each entity that furnishes information to a consumer reporting agency to establish reasonable policies and procedures for implementing the guidelines. Additionally, the proposed rules would allow consumers to dispute inaccuracies about certain information reflected on their consumer reports directly with the furnishers of that information.
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November 19, 2007
Federal Reserve Announces Centralized Resource for Consumers Experiencing Problems with Banks or Other Financial Institutions

The Board of Governors of the Federal Reserve System has announced a new resource for consumers who experience problems with banks or other financial institutions. Federal Reserve Consumer Help is a new centralized resource that consolidates and streamlines the Federal Reserve's consumer complaint and inquiry program. Helpful customer service professionals are available to answer questions and assist with a wide range of issues relating to financial products and services and consumer protection laws.

The Federal Reserve is responsible for ensuring that the financial institutions it supervises comply with consumer protection and fair lending laws, such as those governing checking and savings accounts, credit cards, and consumer loans including mortgages. It is also responsible for ensuring that consumers have a mechanism for identifying banking acts or practices that may require further investigation or possible regulatory action.

Consumers calling the new toll-free number (888-851-1920) between the hours of 8 a.m. and 6 p.m. Central Time will be able to speak directly to a customer service professional. After hours, callers may leave a message and Federal Reserve Consumer Help staff will return their calls the next business day.

The new website, http://www.federalreserveconsumerhelp.gov/, was designed with easy, electronic access in mind—allowing consumers to submit a complaint or inquiry electronically. The website provides answers to commonly asked banking questions and links to many consumer protection materials and resources. Consumers will also find an updated version of the brochure "How to File a Consumer Complaint Against a Bank" on the website. This brochure explains, step-by-step, the Federal Reserve's complaint process and tells consumers what to expect during a complaint investigation.Copies of the brochure are available by calling or writing to Federal Reserve Consumer Help.
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November 14, 2007
FOMC Announces It Will Increase the Frequency and Expand the Content of Economic Projections Released to the Public

The Federal Open Market Committee (FOMC) announced that, as part of its ongoing commitment to improve the accountability and public understanding of monetary policy making, it will increase the frequency and expand the content of the economic projections that are made by Federal Reserve Board members and Reserve Bank presidents and released to the public. Since 1979, projections of economic growth, unemployment, and inflation have been published semiannually in the Federal Reserve's Monetary Policy Report to the Congress. Summaries of those semiannual projections have also been published in the minutes of FOMC meetings.

In the future, the FOMC will compile and release projections four times each year rather than twice a year. In addition, the projection horizon will be extended to three years, from two. FOMC meeting participants will now provide projections for overall personal consumption expenditures (PCE) inflation, as well as for real gross domestic product (GDP) growth, the unemployment rate, and core PCE inflation. Projections of nominal GDP growth will be discontinued. Summaries and explanations of the projections will be published along with the minutes of the FOMC meeting at which they were discussed. These descriptions will provide a fuller discussion of the projections, covering not only the outcomes that most meeting participants see as most likely, but also the risks to the economic outlook and the dispersion of views among policymakers.
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November 06, 2007
Board Approves Fee Schedule for Federal Reserve Bank Priced Services

The Federal Reserve Board announced the approval of fee schedules for Federal Reserve Bank payment services for depository institutions (priced services), effective January 2, 2008. The Reserve Banks project that they will recover 101.1 percent of all their priced services costs in 2008 and achieve full cost recovery for the fourth consecutive year. Overall, the price level for Federal Reserve priced services will increase about 3 percent in 2008. This increase reflects an approximately 5 percent rise in check service fees combined with an 8 percent decrease in fees for the Reserve Banks' electronic payment services. In 2008, the Reserve Banks will continue to encourage the movement to a more electronic check-processing environment by lowering the fees for Check 21 deposits destined to electronic recipients by 3 percent and raising the fees for paper check deposits by about 12 percent. In addition, the Reserve Banks will offer depository institutions greater incentives to receive their check presentments electronically through Check 21.

In addition, the Board approved the 2008 private-sector adjustment factor (PSAF) for Reserve Bank priced services of $113.1 million. The PSAF is an allowance for income taxes and other imputed expenses that would have to be paid and profits that would have to be earned if the Reserve Banks' priced services were provided by a private business. The Monetary Control Act of 1980 requires that the Federal Reserve establish fees to recover the costs of providing priced services, including the PSAF, over the long run, to promote competition between the Reserve Banks and private-sector service providers.
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November 02, 2007
Board Approves Final Rules to Implement Basel II Risk-Based Capital Framework

The Federal Reserve Board approved final rules to implement new risk-based capital requirements in the United States for large, internationally active banking organizations. The new advanced capital adequacy framework, known as Basel II, more closely aligns regulatory capital requirements with actual risks and should further strengthen banking organizations' risk-management practices.

For banking organizations that meet the relevant qualifying criteria, Basel II would replace the current U.S. rules implementing the Basel Capital Accord of 1988 (Basel I). Basel II would be mandatory for large, internationally active banking organizations (so-called "core" banking organizations with at least $250 billion in total assets or at least $10 billion in foreign exposure) and optional for others. Under Basel II, core banking organizations would be required to enhance the measurement and management of their risks, including credit risk and operational risk, through the use of advanced approaches for calculating risk-based capital requirements.

Core banking organizations also would be required to have rigorous processes for assessing their overall capital adequacy in relation to their total risk profile and to publicly disclose information about their risk profile and capital adequacy. Under Basel II, risk-based capital requirements will vary on the basis of a banking organization's actual risk profile and experience, which should lead institutions to make better decisions about extending credit, mitigating risks, and determining overall capital needs. Banking organizations with a higher risk profile will have higher regulatory capital requirements than those with a lower risk profile.

The new U.S. Basel II rule is technically consistent in most respects with international approaches and includes a number of prudential safeguards as originally proposed in September 2006. These safeguards include a requirement that banking organizations satisfactorily complete a four-quarter parallel run period before operating under the Basel II framework, a requirement that an institution satisfactorily complete a series of transitional periods before operating under Basel II without floors, and a commitment by the agencies to conduct ongoing analysis of the framework to ensure Basel II is working as intended. Importantly, Basel II in the United States will be implemented with retention of the leverage ratio and prompt corrective action (PCA) requirements, which will continue to bolster capital and complement risk-based measures.

Following a successful parallel run period, a banking organization would have to progress through three transitional periods (each lasting at least one year), during which there would be floors on potential declines in risk-based capital requirements.
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November 01, 2007
Board Announces Amendments to Five Regulations to Clarify Requirements for Providing Consumer Disclosures in Electronic Form

The Federal Reserve Board announced the adoption of amendments to five consumer financial services and fair lending regulations (Regulations B, E, M, Z, and DD) to clarify the requirements for providing consumer disclosures in electronic form. In 2001, the Board published interim final rules to establish uniform standards for the electronic delivery of disclosures. However, the mandatory compliance date for these rules was later lifted and institutions have not been required to comply with the 2001 interim final rules.

The amendments, which represent final action on a proposal issued for comment in April, simplify the Board's rules by: (1) withdrawing certain portions of the 2001 interim final rules that restate or cross-reference provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act) and accordingly are unnecessary; (2) withdrawing provisions of the 2001 interim final rules that may impose undue burdens on electronic banking and commerce and may be unnecessary for consumer protection; and (3) adopting certain provisions that provide guidance on the use of electronic disclosures. The mandatory compliance date is October 1, 2008.
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October 31, 2007
FOMC Statement

The Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points to 4-1/2 percent.

Economic growth was solid in the third quarter, and strains in financial markets have eased somewhat on balance. However, the pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction. Today's action, combined with the policy action taken in September, should help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and promote moderate growth over time.

Readings on core inflation have improved modestly this year, but recent increases in energy and commodity prices, among other factors, may put renewed upward pressure on inflation. In this context, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.

The Committee judges that, after this action, the upside risks to inflation roughly balance the downside risks to growth. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; William Poole; Eric S. Rosengren; and Kevin M. Warsh. Voting against was Thomas M. Hoenig, who preferred no change in the federal funds rate at this meeting.

In a related action, the Board of Governors unanimously approved a 25-basis-point decrease in the discount rate to 5 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Richmond, Atlanta, Chicago, St. Louis, and San Francisco.


October 01, 2007
Agencies Propose Joint Rule to Implement Unlawful Internet Gambling Enforcement Act

The Department of the Treasury (Treasury) and the Board of Governors of the Federal Reserve System (Board) announced the release of a joint proposed rule to implement the Unlawful Internet Gambling Enforcement Act (the Act). The Act prohibits gambling businesses from accepting payments in connection with unlawful Internet gambling, including payments made through credit cards, electronic funds transfers, and checks.

The proposed rule would require U.S. financial firms that participate in designated payment systems to have policies and procedures that are reasonably designed to prevent payments being made to gambling businesses in connection with unlawful Internet gambling. The proposed rule would provide examples of such policies and procedures. For purposes of the proposed rule, unlawful Internet gambling generally would cover the making of a bet or wager that involves use of the Internet and that is unlawful under any applicable federal or state law in the jurisdiction where the bet or wager is made.

The Board and Treasury are required by the Act to develop jointly the proposed rule in consultation with the Department of Justice. Comments on the proposed rule are requested by December 12, 2007. The agencies request comment on all aspects of the proposed rule.
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September 26, 2007
Annual Adjustments for Reserve Calculations and Deposit Reporting, Regulation D

The Federal Reserve Board announced the annual indexing of the reserve requirement exemption amount and of the low reserve tranche for 2008. These amounts are used in the calculation of reserve requirements of depository institutions. The Board also announced the annual indexing of the nonexempt deposit cutoff level and the reduced reporting limit that will be used to determine deposit reporting panels effective 2008.

All depository institutions must hold a percentage of certain types of deposits as reserves in the form of vault cash, as a deposit in a Federal Reserve Bank, or as a deposit in a pass-through account at a correspondent institution. Reserve requirements currently are assessed on the depository institution's net transaction accounts (mostly checking accounts). Depository institutions must also regularly submit deposit reports of their deposits and other reservable liabilities.

For net transaction accounts in 2008, the first $9.3 million, up from $8.5 million in 2007, will be exempt from reserve requirements. A 3 percent reserve ratio will be assessed on net transaction accounts over $9.3 million up to and including $43.9 million, down from $45.8 million in 2007. A 10 percent reserve ratio will be assessed on net transaction accounts in excess of $43.9 million.

For depository institutions that report weekly, the low reserve tranche adjustment and the reserve requirement exemption amount adjustment will apply to the fourteen-day reserve computation period that begins Tuesday, November 20, 2007, and the corresponding fourteen-day reserve maintenance period that begins Thursday, December 20, 2007.

For depository institutions that report quarterly, the low reserve tranche adjustment and the reserve requirement exemption amount adjustment will apply to the seven-day reserve computation period that begins Tuesday, December 18, 2007, and the corresponding seven-day reserve maintenance period that begins Thursday, January 17, 2008.
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September 24, 2007
Agencies Adopt Final Rules to Implement the Bank "Broker" Provisions of the Gramm-Leach-Bliley Act

The Securities and Exchange Commission (SEC) and Board of Governors of the Federal Reserve System (Board) announced the adoption of final joint rules to implement the "broker" exceptions for banks under Section 3(a)(4) of the Securities Exchange Act of 1934. These exceptions were adopted as part of the Gramm-Leach-Bliley Act of 1999 (GLB Act). The rules define the scope of securities activities that banks may conduct without registering with the SEC as a securities broker and implement the most important "broker" exceptions for banks adopted by the GLB Act. Specifically, the rules implement the statutory exceptions that allow a bank, subject to certain conditions, to continue to conduct securities transactions for its customers as part of the bank's trust and fiduciary, custodial and deposit "sweep" functions, and to refer customers to a securities broker-dealer pursuant to a networking arrangement with the broker-dealer.

The rules are designed to accommodate the business practices of banks and to protect investors. In developing these rules, the agencies consulted extensively with the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Office of Thrift Supervision. Banks do not have to start complying with the rules until the first day of their fiscal year commencing after September 30, 2008.
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September 21, 2007
Agencies Issue Final Rules on Expanded Examination Cycle

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision issued final rules expanding the range of small institutions eligible for an extended 18-month on-site examination cycle.  The final rules allow well-capitalized and well-managed banks and savings associations with up to $500 million in total assets and a composite CAMELS rating of 1 or 2 to qualify for an 18-month (rather than a 12-month) on-site examination cycle.  Until recently, only institutions with less than $250 million in total assets could qualify for an extended 18-month on-site examination cycle.  The final rules also make parallel changes to the agencies' regulations governing the on-site examination cycle for U.S. branches and agencies of foreign banks consistent with the International Banking Act of 1978.

The final rules are effective upon publication in the Federal Register, which is expected shortly.
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September 19, 2007
Agencies Request Comment on Statement of Best Practices on Garnishment Orders of Exempt Federal Benefit Funds

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the National Credit Union Administration requested public comment on a proposed statement encouraging federally regulated financial institutions to follow best practices to protect federal benefit payments from garnishment orders. Federal law protects federal benefit payments--such as Social Security benefits, Supplemental Security Income benefits, Veterans' benefits, Federal Civil Service retirement benefits, and Federal Railroad benefits--from garnishment orders and the claims of judgment creditors subject to certain exceptions, such as garnishment orders relating to alimony or child support payments. The proposed statement lists best practices followed by financial institutions in this area, invites suggestions on other practices the agencies should consider, and encourages financial institutions to stay apprised of any future guidance issued by the Social Security Administration or Department of Veterans Affairs regarding garnishment practices and of developments in the courts in their jurisdiction regarding garnishment practices.

Comment is requested by 60 days after publication in the Federal Register.
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September 18, 2007
FOMC Statement

Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 4-3/4 percent.

Economic growth was moderate during the first half of the year, but the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally. Today' action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time.

Readings on core inflation have improved modestly this year. However, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.

Developments in financial markets since the Committee' last regular meeting have increased the uncertainty surrounding the economic outlook. The Committee will continue to assess the effects of these and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; William Poole; Eric Rosengren; and Kevin M. Warsh.

In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 5-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Cleveland, St. Louis, Minneapolis, Kansas City, and San Francisco.


September 05, 2007
Statement by Chairman Bernanke on the Death of Edward M. Gramlich, Former Member of the Board of Governors of the Federal Reserve System

Statement of Chairman Ben S. Bernanke on the death of Edward M. Gramlich, former member of the Board of Governors of the Federal Reserve System:

I will miss Ned both as a colleague and as a friend. His contributions to the Federal Reserve were broad and significant, including his leadership in consumer protection issues, his work to restructure the discount window, and his expertise and judgment in the making of monetary policy. But those who knew him will miss not only his penetrating insight and shining intelligence but also his great wit and warmth. I extend my deepest sympathy to his family.


September 04, 2007
Federal Financial Regulatory Agencies and CSBS Issue Statement on Loss Mitigation Strategies for Servicers of Residential Mortgages

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the National Credit Union Administration and the Conference of State Bank Supervisors on Tuesday issued a statement encouraging federally regulated financial institutions and state-supervised entities that service securitized residential mortgages to review to determine the full extent of their authority under pooling and servicing agreements to identify borrowers at risk of default and pursue appropriate loss mitigation strategies designed to preserve homeownership.

Significant numbers of hybrid adjustable-rate mortgages will reset throughout the remainder of this year and next.  Many subprime and other mortgage loans have been transferred into securitization trusts that are governed by pooling and servicing agreements.  These agreements may allow servicers to contact borrowers at risk of default, assess whether default is reasonably foreseeable, and, if so, apply loss mitigation strategies designed to achieve sustainable mortgage obligations.  Servicers may have the flexibility to contact borrowers in advance of loan resets.

Appropriate loss mitigation strategies may include, for example, loan modifications, deferral of payments, or a reduction of principal.  In addition, institutions should consider referring appropriate borrowers to qualified homeownership counseling services that may be able to work with all parties to avoid unnecessary foreclosures.
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August 17, 2007
FOMC Statement

Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward. In these circumstances, although recent data suggest that the economy has continued to expand at a moderate pace, the Federal Open Market Committee judges that the downside risks to growth have increased appreciably. The Committee is monitoring the situation and is prepared to act as needed to mitigate the adverse effects on the economy arising from the disruptions in financial markets.

Voting in favor of the policy announcement were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Richard W. Fisher; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Michael H. Moskow; Eric Rosengren; and Kevin M. Warsh.


August 17, 2007
Federal Reserve Board Discount Rate Action

To promote the restoration of orderly conditions in financial markets, the Federal Reserve Board approved temporary changes to its primary credit discount window facility. The Board approved a 50 basis point reduction in the primary credit rate to 5-3/4 percent, to narrow the spread between the primary credit rate and the Federal Open Market Committee's target federal funds rate to 50 basis points. The Board is also announcing a change to the Reserve Banks' usual practices to allow the provision of term financing for as long as 30 days, renewable by the borrower. These changes will remain in place until the Federal Reserve determines that market liquidity has improved materially. These changes are designed to provide depositories with greater assurance about the cost and availability of funding. The Federal Reserve will continue to accept a broad range of collateral for discount window loans, including home mortgages and related assets. Existing collateral margins will be maintained. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York and San Francisco.


August 10, 2007
Federal Reserve Providing Liquidity to Facilitate the Orderly Functioning of Financial Markets

The Federal Reserve is providing liquidity to facilitate the orderly functioning of financial markets.

The Federal Reserve will provide reserves as necessary through open market operations to promote trading in the federal funds market at rates close to the Federal Open Market Committee's target rate of 5-1/4 percent. In current circumstances, depository institutions may experience unusual funding needs because of dislocations in money and credit markets. As always, the discount window is available as a source of funding.


August 07, 2007
FOMC Statement

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

Economic growth was moderate during the first half of the year. Financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters, supported by solid growth in employment and incomes and a robust global economy.

Readings on core inflation have improved modestly in recent months. However, a sustained moderation in inflation pressures has yet to be convincingly demonstrated. Moreover, the high level of resource utilization has the potential to sustain those pressures.

Although the downside risks to growth have increased somewhat, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Michael H. Moskow; William Poole; Eric Rosengren; and Kevin M. Warsh.


August 01, 2007
Annual Adjustment of Fee-Based Trigger for Additional Mortgage Loan Disclosures

The Federal Reserve Board on Wednesday published its annual adjustment of the dollar amount that triggers additional disclosure requirements under the Truth in Lending Act for home mortgage loans that bear rates or fees above a certain amount.

The dollar amount of the fee-based trigger has been adjusted to $561 for 2008 based on the annual percentage change reflected in the Consumer Price Index that was in effect on June 1, 2007.

The adjustment is effective January 1, 2008.

The Home Ownership and Equity Protection Act of 1994 restricts credit terms such as balloon payments and requires additional disclosures when total points and fees payable by the consumer exceed the fee-based trigger (initially set at $400 and adjusted annually) or 8 percent of the total loan amount, whichever is larger.
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July 20, 2007
Banking Agencies Reach Agreement on Basel II Implementation

The Federal Reserve, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Deposit Insurance Corporation have reached an agreement regarding the implementation of Basel II in the United States. The agreement resolves major outstanding issues and will now lead to finalization of a rule implementing the advanced approaches for computing large banks' risk-based capital requirements.

The agencies have agreed that rules implementing the advanced approach should be finalized expeditiously, and should be technically consistent in most respects with international approaches. The agreement retains the NPR's transitional floor periods. After the parallel run in 2008, those transitional floors provide for maximum cumulative reductions of 5 percent during the first year of implementation, 10 percent in the second year, and 15 percent in the third year.

After the end of the second transition year period, the agencies will publish a study that evaluates the new framework to determine if there are any material deficiencies. If the study finds there are such material deficiencies that cannot be addressed by existing tools, banks will not be permitted to exit the third transitional period unless the deficiencies are first addressed by changes to the regulation. However, if a primary supervisor disagrees with a finding of material deficiency, it may authorize banks it supervises to exit the third transitional period, but only if it first provides a public report explaining its reasoning.

The agencies also agreed to proceed promptly to issue a proposed rule that would provide all non-core banks with the option to adopt a standardized approach under the Basel II Accord. This would replace the earlier proposed rule to adopt the "Basel IA" option. The agencies intend that the proposed standardized option would be finalized before the core banks begin the first transition period year under the advanced approaches of Basel II.
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July 19, 2007
Agencies Issue Statement on Enforcement of Bank Secrecy Act/Anti-Money Laundering Requirements

The Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, and the National Credit Union Administration have issued a statement setting forth the agencies' policy for enforcing specific anti-money laundering requirements of the Bank Secrecy Act (BSA). The purpose of the Interagency Statement on Enforcement of Bank Secrecy Act/Anti-Money Laundering Requirements is to provide greater consistency among the agencies in enforcement decisions in BSA matters and to offer insight into the considerations that form the basis of those decisions.

The applicable statutes provide that if a regulated institution fails to establish and maintain a BSA compliance program or fails to correct a previously identified problem with its BSA compliance program, the appropriate agency shall issue a formal cease and desist order. The statement, which reflects the agencies' current practices on enforcement with respect to BSA compliance, describes the circumstances under which the agencies will issue a cease and desist order in compliance with these statutory provisions. The statement also makes clear that the agencies may take formal or informal enforcement actions to address other concerns related to BSA or anti-money laundering, depending on the facts.
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July 18, 2007
Agencies Announce Pilot Project to Improve Supervision of Subprime Mortgage Lenders

The Board of Governors of the Federal Reserve System, the Office of Thrift Supervision, the Federal Trade Commission, and state agencies represented by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators will cooperate in an innovative pilot project to conduct targeted consumer-protection compliance reviews of selected non-depository lenders with significant subprime mortgage operations.

The collaborative state/federal pilot is scheduled to begin in the fourth quarter of this year and will focus on non-depository subsidiaries of bank and thrift holding companies, as well as mortgage brokers doing business with, or working for, these entities. Additionally, the states will conduct coordinated examinations of independent state-licensed subprime lenders and their associated mortgage brokers. By joining together in applying a coordinated review program, the regulatory agencies will be better positioned to evaluate and more consistently assess subprime mortgage lending practices across a broad range of mortgage lenders and other participants within the industry.

The agencies will evaluate the companies' underwriting standards, as well as senior management oversight of the risk-management practices used for ensuring compliance with state and federal consumer protection regulations and laws, including the Home Mortgage Disclosure Act, the Equal Credit Opportunity Act, the Truth in Lending Act, the Real Estate Settlement Procedures Act, the Federal Trade Commission Act, and the Home Ownership and Equity Protection Act. The agencies will initiate appropriate corrective or enforcement action as warranted by the findings of the reviews or investigations.

At the conclusion of the reviews, the agencies will analyze the results and determine whether the project is to be continued. If so, the agencies will determine the focus of future reviews at that time.
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July 11, 2007
Agencies Release Proposed Revisions to Interagency Questions and Answers Regarding the Community Reinvestment Act

The federal bank and thrift regulatory agencies have requested public comment on a series of new and revised interagency questions and answers pertaining to the Community Reinvestment Act (CRA). The Interagency Questions and Answers Regarding Community Reinvestment were first published in 1996 under the auspices of the Federal Financial Institutions Examination Council (FFIEC). They have been revised by the agencies periodically since then to help financial institutions and the public better understand CRA regulations.

The agencies are proposing new questions and answers as well as substantive and technical revisions to the existing material. Some of the proposed revisions are intended to encourage institutions to work with homeowners who are unable to make mortgage payments by highlighting that they can receive CRA consideration for foreclosure prevention programs for low- and moderate-income homeowners, consistent with the April 2007 interagency Statement on Working with Mortgage Borrowers. In addition, the revisions propose to clarify that institutions of all sizes should receive favorable consideration for providing credit in a manner that is responsive to the needs of their communities. Such activities include, for example, offering affordable small loan programs.

The majority of the proposed revisions clarify existing questions and answers, improve readability, or adopt current terminology. Many of the proposed revisions update existing guidance to reflect terminology changes made by the U.S. Office of Management and Budget and the U.S. Census Bureau or to reflect recent changes in the agencies' CRA regulations.

The agencies invite comment on the proposed changes to the interagency questions and answers and, more generally, on other issues raised by the CRA. Comments are due September 10, 2007.
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June 29, 2007
Federal Financial Regulatory Agencies Issue Final Statement on Subprime Mortgage Lending

The federal financial regulatory agencies today issued a final Statement on Subprime Mortgage Lending to address issues relating to certain adjustable-rate mortgage (ARM) products that can cause payment shock.

The statement describes the prudent safety and soundness and consumer protection standards that institutions should follow to ensure borrowers obtain loans they can afford to repay. These standards include a fully indexed, fully amortized qualification for borrowers and cautions on risk-layering features, including an expectation that stated income and reduced documentation should be accepted only if there are documented mitigating factors that clearly minimize the need for verification of a borrower's repayment capacity. Consumer protection standards include clear and balanced product disclosures to customers and limits on prepayment penalties that allow for a reasonable period of time, typically at least 60 days, for customers to refinance prior to the expiration of the initial fixed interest rate period without penalty.

The statement reinforces the April 17, 2007 interagency Statement on Working with Borrowers, in which the agencies encouraged institutions to work constructively with residential borrowers who are financially unable or reasonably expected to be unable to meet their contractual payment obligations on their home loans. Workout arrangements that are consistent with safe and sound lending practices are generally in the long-term best interest of both the financial institution and the borrower.

The agencies published the proposed Statement on Subprime Mortgage Lending for comment on March 8, 2007. Comments were received from financial institutions, trade associations, consumer and community organizations, members of Congress, state and local officials, and members of the public. The agencies made a number of changes to the proposal to respond to commenters' concerns and to provide additional clarity.
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June 28, 2007
FOMC Statement

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

Economic growth appears to have been moderate during the first half of this year, despite the ongoing adjustment in the housing sector. The economy seems likely to continue to expand at a moderate pace over coming quarters.

Readings on core inflation have improved modestly in recent months. However, a sustained moderation in inflation pressures has yet to be convincingly demonstrated. Moreover, the high level of resource utilization has the potential to sustain those pressures.

In these circumstances, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Cathy E. Minehan; Frederic S. Mishkin; Michael H. Moskow; William Poole; and Kevin M. Warsh.


June 26, 2007
Federal Reserve Banks Announce Changes to Increase Check Service Efficiency

The Federal Reserve Banks announced changes to their check operations as consumers and businesses continue the shift from using paper checks toward electronic payments. As part of a longer-range strategy, the Federal Reserve Banks have selected Philadelphia, Cleveland, Atlanta and Dallas as regional check processing sites that are expected to provide the full range of check processing services through at least mid-2011. Other remaining sites will have their operations scaled back. These scaled-back sites will all print substitute checks, but some will also capture paper checks. The regional sites will provide a full range of check processing services and receive processing volumes from the other sites in a phased transition.

These changes are expected to begin in 2008, and the Reserve Banks will continue to review this check infrastructure annually to respond to further change within the nation's payments system and to meet statutory requirements for long-term cost recovery.
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June 20, 2007
Board Announces Availability of Online Mortgage Comparison Calculator

Federal Reserve Board announced the availability of an online Mortgage Comparison Calculator that consumers can use to compare monthly mortgage payments and the amount of equity they will build for up to six types of fixed- and adjustable-rate mortgages. The calculator, which can be accessed at https://www.federalreserve.gov/apps/mortcalc/ one of several resources the Board provides to help consumers make informed decisions when shopping for home loans.

"We have created a tool that will allow consumers to look ahead to see how much equity they will build and what their mortgage payments might be three, five, seven or ten years down the road with different mortgage products," said Federal Reserve Board Governor Randall S. Kroszner. The calculator will make it easy for consumers to compare monthly payments and equity accumulation among 30-year and 15-year fixed-rate mortgages, interest-only fixed-rate mortgages, adjustable-rate mortgages (ARMs), interest-only ARMs, and payment-option ARMs. "These comparisons should encourage more consumers to shop around and compare mortgage offers," Kroszner said.

In addition to identifying the types of mortgages they are considering, consumers are asked to provide information on home value, primary mortgage amount, second mortgage amount (optional), private mortgage insurance (PMI) premium (optional), estimated interest rates, and expectations about future interest rates (for adjustable-rate mortgages).

The calculator estimates the loan balance in future years, home equity in future years, initial monthly payment (principal and interest), future monthly payments with no interest rate change, and future monthly payments with an interest rate change.

The user-friendly calculator includes a mortgage shopping worksheet, a glossary of mortgage terms, and links to the Board's other consumer education resources on mortgages.


June 15, 2007
Board Seeks Nominations for Appointments to Consumer Advisory Council

The Federal Reserve Board announced that it is seeking nominations for appointments to its Consumer Advisory Council. The Council advises the Board on the exercise of its responsibilities under various consumer financial services laws and on other matters. The group meets in Washington, D.C., three times a year. Ten new members will be appointed to serve three-year terms beginning in January 2008.

Letters of nomination with complete information, including a résumé for each nominee, must be received by August 24, 2007. Nominations not received by August 24 may not be considered.
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June 12, 2007
Banking Agencies Issue Host State Loan-to-Deposit Ratios

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency issued the host state loan-to-deposit ratios that the banking agencies 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 June 13, 2006.

In general, section 109 prohibits a bank from establishing or acquiring a branch or branches outside of its home state primarily for the purpose of deposit production. Section 109 also prohibits branches of banks controlled by out-of-state bank holding companies from operating primarily for the purpose of deposit production. Section 109 provides a process to test compliance with the statutory requirements.

A bank that fails the test is in violation of section 109 and is subject to sanctions by the appropriate banking agency.
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June 12, 2007
Public Hearing on Abusive Lending Practices

The Federal Reserve Board announced the panelists for its public hearing under the Home Ownership and Equity Protection Act (HOEPA) on June 14, 2007. They include key players in the home mortgage market, including the subprime sector--lenders, brokers, secondary market participants, consumer advocacy and community development organizations, academics and researchers, and state regulators.
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June 01, 2007
Agencies issue final illustrations of consumer information for nontraditional mortgage products

The federal bank, thrift, and credit union regulatory agencies have issued final illustrations of consumer information intended to help institutions implement the consumer protection portion of the Interagency Guidance on Nontraditional Mortgage Product Risks that the agencies adopted October 4, 2006. The consumer protection section of the guidance sets forth recommended practices to ensure that consumers have clear and balanced information about nontraditional mortgages before choosing a mortgage product or before selecting a payment option for an existing mortgage.

The illustrations consist of (1) a narrative explanation of nontraditional mortgage products, (2) a chart comparing interest-only and payment option adjustable rate mortgages (ARMs) to a traditional fixed-rate loan, and (3) a table that could be included with monthly statements for a payment option ARM showing the impact of various payment options on the loan balance.
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June 01, 2007
Tentative 2008 FOMC meeting schedule

The Federal Open Market Committee on Friday announced its tentative meeting schedule for 2008.
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May 29, 2007
Final Rule to Implement Section 601 of the Financial Services Regulatory Relief Act of 2006, Regulation O

The Federal Reserve Board announced the approval of a final rule that would implement section 601 of the Financial Services Regulatory Relief Act of 2006, which eliminated several statutory reporting and disclosure requirements relating to insider lending by insured depository institutions. The Board proposed and supported eliminating these statutory reporting and disclosure provisions because the federal banking agencies have not found them particularly useful in monitoring insider lending or preventing insider abuse.

The final rule amends the Board's Regulation O (12 CFR part 215) to reflect the elimination of these reporting and disclosure requirements. Regulation O implements statutory restrictions on the ability of insured depository institutions to extend credit to their executive officers, directors, principal shareholders, and to related interests of such persons ("insiders").
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May 29, 2007
Discussion Topics for June 14 Public Hearing Under the Home Ownership and Equity Protection Act (HOEPA)

The Federal Reserve Board announced the discussion topics for its June 14 public hearing under the Home Ownership and Equity Protection Act (HOEPA). The purpose of the hearing is to gather information about how the Board might use its rulemaking authority to curb abusive lending practices in the home mortgage market, including the subprime sector, in a way that preserves incentives for responsible lenders to provide credit to borrowers.

Hearing participants will discuss whether the Board should use its rulemaking authority to address concerns about certain terms and practices related to home mortgage loans, including:

    Prepayment penalties
    Escrow accounts for taxes and insurance on subprime loans
    "Stated income" or "low doc" loans
    Consideration of a borrower's ability to repay a loan

The Board is also soliciting written comments from the public. Comments are due August 15, 2007.

The hearing is scheduled for Thursday, June 14, 2007, at the Federal Reserve Board at 20th and C Streets, N.W., Washington, D.C.
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May 23, 2007
Proposed Amendments to Regulation Z

The Federal Reserve Board on Wednesday issued for public comment proposed amendments to Regulation Z (Truth in Lending) that are intended to improve the effectiveness of the disclosures consumers receive in connection with credit card accounts and other revolving credit plans by ensuring that information is provided in a timely manner and in a form that is readily understandable.

The proposed amendments principally focus on the rules for open-end credit accounts that are not home-secured, chiefly general-purpose and retail credit card plans. The proposal would require changes to the format, timing, and content requirements for credit card applications and solicitations and for the disclosures that consumers receive throughout the life of an open-end account, including account-opening and periodic statements. These changes largely reflect the result of consumer testing conducted on behalf of the Board as part of its comprehensive review of the open-end credit rules.

The proposal follows the Board’s comprehensive review of the open-end credit rules (other than home-secured) and takes into consideration comments from the public on two previously issued advance notices of proposed rulemaking. The comment period ends 120 days after publication of the proposal in the Federal Register.
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May 15, 2007
Restructuring of the Check Processing Operations of the Federal Reserve Bank of Atlanta and Future Changes to Appendix A of Regulation CC

The Federal Reserve Board on Tuesday announced the approval of amendments to Appendix A of Regulation CC that reflect the restructuring of the check processing operations of the Federal Reserve Bank of Atlanta and provide notice relating to future changes to Appendix A.

Appendix A provides a routing symbol guide that helps depository institutions determine the maximum permissible hold periods for most deposited checks. To ensure that the information in Appendix A accurately describes the structure of check processing operations within the Federal Reserve System, the Board is amending the list of routing symbols in Appendix A associated with the Federal Reserve Bank of Atlanta to reflect the transfer of check processing operations from that Reserve Bank's Nashville branch office to its head office. These amendments are effective July 21, 2007, to coincide with the effective date of the underlying reassignment of check processing functions. As a result of these changes, some checks deposited in the affected regions that currently are nonlocal checks will become local checks that are subject to shorter permissible hold periods.

The attachment also provides advance notice that the Reserve Banks have decided to transfer the check-processing operations of two offices in the second half of 2007. Specifically, checks currently processed at the Helena branch office of the Federal Reserve Bank of Minneapolis will be processed at the Denver branch office of the Federal Reserve Bank of Kansas City, and checks currently processed at the head office of the Federal Reserve Bank of San Francisco will be processed at the Los Angeles branch office of that Reserve Bank. The Board intends to publish the associated amendments to appendix A at least sixty days prior to the effective date of the amendment in order to give affected banks ample time to make processing changes and, if necessary, amend their availability schedules and related disclosures and provide their customers with notice of any changes to their availability schedules.

The Board's notice is attached.
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May 09, 2007
FOMC Statement

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

Economic growth slowed in the first part of this year and the adjustment in the housing sector is ongoing. Nevertheless, the economy seems likely to expand at a moderate pace over coming quarters.

Core inflation remains somewhat elevated. Although inflation pressures seem likely to moderate over time, the high level of resource utilization has the potential to sustain those pressures.

In these circumstances, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Cathy E. Minehan; Frederic S. Mishkin; Michael H. Moskow; William Poole; and Kevin M. Warsh.


April 20, 2007
Request for Comment on Proposed Amendments to Five Consumer Financial Services and Fair Lending Regulations

On April 20, 2007, the Federal Reserve Board requested public comment on proposed amendments to five consumer financial services and fair lending regulations (Regulations B, E, M, Z, and DD) to clarify the requirements for providing consumer disclosures in electronic form.

In 2001, the Board published interim final rules to establish uniform standards for the electronic delivery of disclosures. However, the mandatory compliance date for these rules was later lifted and institutions are not required to comply with the interim final rules. Since that time, the Board has not taken further action with respect to the interim final rules in order to allow electronic disclosure practices to continue to develop without regulatory intervention and to allow the Board to gather further information about these practices.

The proposal issued for comment today would simplify the Board's rules by (1) withdrawing certain portions of the 2001 interim final rules that restate or cross-reference provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act) and accordingly are unnecessary; (2) withdrawing provisions of the interim rules that may impose undue burdens on electronic banking and commerce and may be unnecessary for consumer protection; and (3) retaining certain provisions of the interim final rules that provide guidance on the use of electronic disclosures.

The proposal would also implement certain provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which mandates certain disclosures for online credit card solicitations.

The comment period ends sixty days after publication of the attached notices in the Federal Register, which is xpected shortly.
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April 17, 2007
Federal Regulators Encourage Institutions to Work with Mortgage Borrowers Who are Unable to Make Their Payments

The federal bank, thrift and credit union regulatory agencies are encouraging financial institutions to work with homeowners who are unable to make mortgage payments. Prudent workout arrangements that are consistent with safe and sound lending practices are generally in the long-term best interest of both the financial institution and the borrower. Institutions will not face regulatory penalties if they pursue reasonable workout arrangements with borrowers.

Borrowers who are unable to make their mortgage payments should contact their lender or servicer as soon as possible to discuss available options. Examples of constructive workout arrangements include modifying loan terms, and/or moving borrowers from variable-rate loans to fixed-rate loans. Bank and thrift programs that transition low- or moderate-income homeowners from higher-cost loans to lower-cost loans may also receive favorable consideration under the Community Reinvestment Act (CRA), provided the loans are made in a safe and sound manner. Federal credit unions are exempt from CRA requirements.

The agencies want to remind their institutions that existing regulatory guidance and accounting standards do not require immediate foreclosure on homes when borrowers fall behind on payments. In addition, under the Homeownership Counseling Act, institutions are required to inform delinquent borrowers about the availability of homeownership counseling. Institutions should also consider working with reputable consumer-based organizations to help financially stressed borrowers avoid predatory foreclosure rescue scams.
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April 04, 2007
Board Announces Final Revisions to its 1980 Interpretation of Regulation D

The Federal Reserve Board announced final revisions to its 1980 interpretation of Regulation D (Reserve Requirements of Depository Institutions), which sets forth criteria for the "bankers' bank" exemption from reserve requirements. The revisions authorize the Board to determine, on a case by case basis, whether certain entities not already expressly authorized in the interpretation may become customers of bankers' banks to a limited extent.

A bankers' bank is an institution that is organized solely to do business with other financial institutions, is owned primarily by the financial institutions with which it does business, and does not do business with the general public.

The Board will publish the attached notice in the Federal Register shortly, and the final rule will become effective 30 days after publication.
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April 03, 2007
Agencies Seek Comment on Expanded Examination Cycle for Certain Institutions

The federal bank and thrift agencies requested public comment on proposed interim rules expanding the range of small institutions eligible for an extended 18-month on-site examination cycle. The proposed interim rules allow well-capitalized and well-managed banks and savings associations with up to $500 million in total assets and a composite CAMELS rating of 1 or 2 to qualify for an 18-month (rather than a 12-month) on-site examination cycle.

Until recently, only institutions with less than $250 million in total assets could qualify for an extended 18-month on-site examination cycle. The proposed interim rules also revise the provisions governing the on-site examination cycle for the U.S. branches and agencies of foreign banks.

The proposed interim rules, effective upon publication in the Federal Register, implement section 605 of the Financial Services Regulatory Relief Act of 2006 and related provisions from the International Banking Act, both of which are already effective.

The proposed interim rules, issued by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision, are attached and will be published in the Federal Register shortly. The agencies will be seeking comment on the interim rules for a 30-day period.
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March 21, 2007
FOMC Statement

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

Recent indicators have been mixed and the adjustment in the housing sector is ongoing. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters.

Recent readings on core inflation have been somewhat elevated. Although inflation pressures seem likely to moderate over time, the high level of resource utilization has the potential to sustain those pressures.

In these circumstances, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Cathy E. Minehan; Frederic S. Mishkin; Michael H. Moskow; William Poole; and Kevin M. Warsh.


March 21, 2007
Federal Regulators Seek Public Comment on Model Privacy Notice

Eight federal regulators have released a notice of proposed rulemaking (NPR) requesting comment on a model privacy form that financial institutions can use for their privacy notices to consumers required by the Gramm-Leach-Bliley Act (GLB Act). The privacy notices must describe an institution's information sharing practices, and, for certain types of sharing, consumers have the right to opt out. The notices must be provided when a consumer first becomes a customer of a financial institution and then annually for as long as the customer relationship lasts.

The proposed model privacy form is the "prototype privacy notice" developed by six of these federal agencies after a year-long consumer testing process. The NPR proposes that a financial institution that chooses to use the model form would satisfy the disclosure requirements for the notices and so could take advantage of a legal "safe harbor." The NPR also proposes to remove, after a transition period, the sample clauses now included in some of the agencies' privacy rules.

The NPR was developed jointly by the Board of Governors of the Federal Reserve System, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Federal Trade Commission, the National Credit Union Administration, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Securities and Exchange Commission.

Written comments on the proposed rule amendments may be submitted within 60 days after their publication in the Federal Register, which is expected in late March.
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March 02, 2007
Agencies Seek Comment on Subprime Mortgage Lending Statement

The federal financial regulatory agencies today issued for comment a proposed Statement on Subprime Mortgage Lending to address certain risks and emerging issues relating to subprime mortgage lending practices, specifically, particular adjustable-rate mortgage (ARM) lending products. The proposal addresses concerns that subprime borrowers may not fully understand the risks and consequences of obtaining these products, and that the products may pose an elevated credit risk to financial institutions. In particular, the proposed guidance focuses on loans that involve repayment terms that exceed the borrower's ability to service the debt without refinancing or selling the property.

The agencies request comment on all aspects of the proposed statement and are particularly interested in public comment about whether: 1) these arrangements always present inappropriate risks to institutions and consumers, or the extent to which they can be appropriate under some circumstances; 2) the proposed statement would unduly restrict existing subprime borrowers' ability to refinance their loans; 3) other forms of credit are available that would not present the risk of payment shock; 4) the principles of the proposed statement should be applied beyond the subprime ARM market; and 5) an institution's limiting of prepayment penalties to the initial fixed-rate period would assist consumers by providing them sufficient time to assess and act on their mortgage needs.

Comments are due sixty days after publication in the Federal Register.
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February 16, 2007
Federal Reserve Board Alerts Public to Questionable Solicitations Directed at Homeowners

The Federal Reserve Board on Friday alerted the public to instances of questionable solicitations directed at homeowners.

The Federal Reserve has received inquiries and complaints from recipients of direct mail solicitations that suggest there is a "Community Reinvestment Act (CRA) program" that entitles certain homeowners to cash grants or equity disbursements. Some of these solicitations may be read to indicate that the Federal Reserve endorses or supports the offers they contain. These solicitations appear to be a deceptive effort to encourage consumers to apply for a mortgage loan secured by the consumer's home. The Federal Reserve cautions the public about loan solicitations or other offers from lenders or mortgage brokers that offer consumers cash grants or equity disbursements as part of a "CRA Program." No such federal programs exist and these programs are not required by the CRA.

The Community Reinvestment Act is a federal law that was enacted in 1977. It encourages depository institutions to help meet the credit needs of their communities, including low- and moderate-income neighborhoods, in ways that are consistent with safe and sound banking operations. The CRA does not entitle individuals to any grants or loans.

The Federal Reserve is also advising consumers that it does not endorse or sponsor mortgage loan programs. Consumers should be very suspicious of conducting business with lenders or mortgage brokers that make deceptive claims. Individuals who are considering taking out a loan using their house as security are urged to shop around. Comparing loan programs offered by a variety of different lenders can help consumers to get a better deal. This online interagency pamphlet, Looking for the Best Mortgage: Shop, Compare, Negotiate, contains useful information about shopping for home loans: http://www.federalreserve.gov/pubs/mortgage/mortb_1.htm

Questions regarding these loan solicitations should be directed to crahelp@frb.gov or to the CRA Assistance Line at 202-872-7584.


February 15, 2007
Agencies Seek Public Comment on Proposed Supervisory Guidance for Basel II

The federal bank and thrift regulatory agencies announced that they will seek public comment on three proposed supervisory guidance documents related to the September 2006 notice of proposed rulemaking (NPR) on new risk-based capital requirements in the United States for large, internationally active banking organizations.

The September 2006 NPR detailed the agencies' proposal for implementing the new capital framework issued by the Basel Committee on Banking Supervision in 2004 (Basel II). The proposed U.S. Basel II capital framework would be mandatory for large, internationally active U.S. banking organizations and optional for other institutions. The Basel II NPR includes requirements that banking organizations would need to satisfy to calculate their risk-based capital under the proposed new capital framework. The proposed supervisory guidance provides information to assist bankers, as well as supervisors, in addressing the Basel II qualification requirements.
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February 09, 2007
Susan Schmidt Bies Submits her Resignation as a Member of the Board of Governors, Effective March 30, 2007

Susan Schmidt Bies submitted her resignation Friday as a member of the Board of Governors of the Federal Reserve System, effective March 30, 2007.

Bies, who has been a member of the Board since December 7, 2001, submitted her resignation to President Bush, and plans to spend more time with her family. She does not plan to attend the March 20-21 meeting of the Federal Open Market Committee.

"Sue's invaluable contributions to both monetary and regulatory policy at the Federal Reserve have been aided by her unique perspective as both an economist and a banker," said Federal Reserve Board Chairman Ben S. Bernanke. "Her leadership at the Board was most evident in guiding our efforts in banking policy and community affairs. I will miss her counsel and wish her all the best in her new endeavors."
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February 08, 2007
Atlanta Fed Names Dennis P. Lockhart New President and Chief Executive Officer

Dennis P. Lockhart will become president and chief executive officer of the Federal Reserve Bank of Atlanta effective March 1, 2007, announced Larkin Martin, chairman of the board of the Federal Reserve Bank of Atlanta. Lockhart, 60, succeeds Jack Guynn, who retired from the Atlanta Fed on Oct. 1, 2006.

Lockhart is currently a faculty member of Georgetown University's Walsh School of Foreign Service. In the master's program there, he chairs concentrations in International Business-Government Relations and Global Commerce and Finance. He also serves as an adjunct professor in the economics department at Johns Hopkins University's Nitze School of Advanced International Studies, where he teaches a course in international business.

"We are very pleased that Dennis Lockhart will be joining the Atlanta Fed as its president and chief executive," said Martin, who is also managing partner of Martin Farm in Courtland, Ala. "Dennis is a seasoned and versatile leader, bringing with him a wealth of experience in banking, finance and international business. He also has significant experience leading large, diverse organizations as well as experience in academia. All of his background will serve him well as he leads the Bank forward and helps shape important decisions relating to the nation's economy and financial system."
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January 31, 2007
FOMC Statement

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

Recent indicators have suggested somewhat firmer economic growth, and some tentative signs of stabilization have appeared in the housing market. Overall, the economy seems likely to expand at a moderate pace over coming quarters.

Readings on core inflation have improved modestly in recent months, and inflation pressures seem likely to moderate over time. However, the high level of resource utilization has the potential to sustain inflation pressures.

The Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Cathy E. Minehan; Frederic S. Mishkin; Michael H. Moskow; William Poole; and Kevin M. Warsh.
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January 16, 2007
Federal Reserve Banks Announce New Studies to Examine Nation's Check and Electronic Payments Usage

The Federal Reserve Banks announced plans to conduct another round of studies to determine the current composition of the nation's retail payments market, including checks, credit and debit cards, and automated clearing house (ACH) transactions. These two studies will build on information gained from similar studies published by the Reserve Banks in 2001 and 2004. One study will quantify the number and value of checks being written in the United States. Another study will quantify the number and value of electronic payments. In addition, the check study will attempt to determine the primary uses for check writing, something that was researched in the 2001 study but not in 2004. The information for this round of studies will be collected during the first half of 2007 with results released later in the year. The Reserve Banks will work with Global Concepts, Inc. for the check study and Dove Consulting for the electronic payments study.
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January 12, 2007
Approval of Changes to Board's Policy on Payments System Risk

The Federal Reserve Board approved changes to its Policy on Payments System Risk that revise the Board's expectations for systemically important payments and settlement systems subject to its authority and update and clarify the policy with regard to central counterparties.

Under the revised policy, systemically important payments and settlement systems subject to the Board's authority are expected to complete and disclose publicly self-assessments against the principles and minimum standards in the policy. The self-assessment should be reviewed and approved by the system's senior management and board of directors upon completion and made readily available to the public. In addition, a self-assessment should be updated following material changes to the system or its environment and, at a minimum, reviewed by the system every two years. The Board expects each systemically important system subject to its authority to complete and publish its initial self-assessment by December 31, 2007.
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January 11, 2007
Launch of New Web Site, Resources for Bank Directors and Update of Insights Online Training Course

The Federal Reserve Board announced the launch of a new web site for bank directors and the update of an existing online director training course. Resources for Bank Directors offers numerous resources designed to assist bank directors with their management oversight responsibilities. Insights is an online training course that introduces bank directors to corporate governance and director duties and responsibilities; covers basic bank financial analysis; and discusses the sources, control, and monitoring of portfolio risks, including credit, liquidity, and market risks. Additionally, it provides links to Internet sites that directors might find useful.
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January 09, 2007
Reserve Bank Income and Expense Data and Transfers to the Treasury for 2006

The Federal Reserve Board announced that the Federal Reserve Banks distributed approximately $28.547 billion of their $37.838 billion total income to the U.S. Treasury during 2006. Federal Reserve System income is derived primarily from interest earned on U.S. government securities that the Federal Reserve has acquired through open market operations. This income amounted to $36.452 billion in 2006. Additionally, income from fees for the provision of priced services to depository institutions totaled $909 million. The remaining income of $477 million includes earnings on foreign currencies, earnings from loans, and other income.

The operating expenses of the twelve Reserve Banks totaled $2.420 billion in 2006. In addition, the cost of earnings credits granted to depository institutions amounted to $277 million. Assessments against Reserve Banks for Board expenditures totaled $301 million and the cost of currency amounted to $492 million.

Total net income for the Federal Reserve Banks in 2006 amounted to $34.189 billion. Under the Board's policy, each Reserve Bank's net income is transferred to the U.S. Treasury, after providing for statutory dividends to member banks and the amount necessary to equate surplus to paid-in capital.
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January 05, 2007
Agencies Issue Final Statement Concerning Elevated Risk Complex Structured Finance Activities

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Securities and Exchange Commission have issued a final statement on the complex structured finance activities of financial institutions. The statement describes the types of internal controls and risk management procedures that should help financial institutions identify, manage, and address the heightened legal and reputational risks that may arise from certain complex structured finance transactions (CSFTs).

The statement represents supervisory guidance for institutions supervised by the four banking agencies and a policy statement for institutions supervised by the Securities and Exchange Commission.ÿ Because the statement focuses on sound practices related to elevated risk CSFTs -- transactions that typically are conducted by a limited number of large financial institutions -- it will not affect or apply to the vast majority of financial institutions, including most small institutions.
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January 03, 2007
Minutes of Federal Open Market Committee, December 12, 2006

The Federal Reserve Board and the Federal Open Market Committee released the minutes of the Committee meeting held on December 12, 2006.

The minutes for each regularly scheduled meeting of the Committee are made available three weeks after the day of the policy decision and subsequently are published in the Board's Annual Report. The summary description of economic and financial conditions contained in these minutes is based solely on the information that was available to the Committee at the time of the meeting.
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2006

December 29, 2006
Annual Notice of Asset-size Exemption Threshold for Depository Institutions

The Federal Reserve Board published its annual notice of the asset-size exemption threshold for depository institutions under Regulation C, which implements the Home Mortgage Disclosure Act (HMDA).

The asset-size exemption for depository institutions will increase from $35 million to $36 million based on the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers for the twelve-month period ending in November 2006. As a result, depository institutions with assets of $36 million or less as of December 31, 2006, are exempt from collecting data in 2007. An institution’s exemption from collecting data in 2007 does not affect its responsibility to report the data it was required to collect in 2006.
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December 27, 2006
Agencies Release Annual CRA Asset-Size Threshold Adjustments

The federal bank regulatory agencies today announced the annual adjustment to the asset-size thresholds used to define "small bank" and "intermediate small bank" under the Community Reinvestment Act (CRA) regulations. The annual adjustments are required by the 2005 CRA regulatory amendments.

Annual increases to these asset-size thresholds are based on the year-to-year change in the average of the Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers, not seasonally adjusted, for each twelve-month period ending in November, with rounding to the nearest million.

As a result of the 3.32% increase in the CPI index for the period ending in November 2006, the definitions of small and intermediate small banks for CRA examinations will change as follows:

  • "Small bank" means a bank that, as of December 31 of either of the prior two calendar years, had assets of less than $1.033 billion.
  • "Intermediate small bank" means a small bank with assets of at least $258 million as of December 31 of both of the prior two calendar years, and less than $1.033 billion as of December 31 of either of the prior two calendar years.

These asset-size threshold adjustments are effective January 1, 2007.
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December 21, 2006
Suspicious Activity Report (SAR) Revised To Support Joint Filing and Reduce Duplicate SARs

The Financial Crimes Enforcement Network (FinCEN) and the federal banking agencies have announced that the format for the Suspicious Activity Report by Depository Institutions (SAR-DI) has been revised to support a new joint filing initiative, which will reduce the number of duplicate SARs filed for a single suspicious transaction. The revisions are the result of a joint effort by FinCEN and the federal banking agencies.

Recently approved by the Office of Management and Budget, the revised SAR-DI format is being released to allow depository institutions subject to SAR filing requirements to begin initial planning for the effective implementation date of June 30, 2007. Depository institutions will have the option of using either the existing or the revised SAR-DI formats. Use of the revised format for filing will become mandatory December 31, 2007. The ability to file using E-Filing, or electronic filing, is currently being finalized, as are the Magnetic Media Specifications.

This is an approved final form, but the form should not be filed until the actual effective implementation date of June 30, 2007.
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December 18, 2006
Agencies Propose Joint Rules to Implement the Bank "Broker" Provisions of the Gramm-Leach-Bliley Act

The Securities and Exchange Commission (SEC) and Board of Governors of the Federal Reserve System (Board) announced the release of joint proposed rules to implement the "broker" exceptions for banks under Section 3(a)(4) of the Securities Exchange Act of 1934. These exceptions were adopted as part of the Gramm-Leach-Bliley Act of 1999 (GLB Act). The SEC and the Board approved issuing the joint proposed rules for public comment at separate open meetings held on December 13, 2006, and December 18, 2006, respectively.

The proposed rules would help define the scope of securities activities that banks may conduct without registering with the SEC as a securities broker and would implement the most important "broker" exceptions for banks adopted by the GLB Act. Specifically, the proposed rules would implement the statutory exceptions that allow a bank, subject to certain conditions, to continue to conduct securities transactions for its customers as part of the bank's trust and fiduciary, custodial and deposit "sweep" functions, and to refer customers to a securities broker-dealer pursuant to a networking arrangement with the broker-dealer.

Comments on the proposed rules are requested within 90 days of publication in the Federal Register, which is expected soon.
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December 14, 2006
Interim Decision on Impact of FAS 158 on Regulatory Capital

The federal bank and thrift regulatory agencies announced an interim decision that the Statement of Financial Accounting Standards No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans (FAS 158), will not affect banking organizations' regulatory capital.

Until the Federal Reserve Board, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and Office of Thrift Supervision determine otherwise through a rulemaking, banks, bank holding companies, and savings associations should exclude from regulatory capital any amounts recorded in accumulated other comprehensive income (AOCI) resulting from the adoption and application of FAS 158.

The agencies plan to provide regulatory reporting instructions to banking organizations to assist them in implementing the interim exclusion of the effects of FAS 158 on AOCI from the measurement of regulatory capital.


December 13, 2006
Revised Policy Regarding Allowance for Loan and Lease Losses

The federal financial regulatory agencies announced the issuance of a new interagency policy statement on the Allowance for Loan and Lease Losses (ALLL) and supplemental Frequently Asked Questions (FAQs). The policy statement revises and replaces a 1993 policy statement on the ALLL.

The agencies believe an assessment of the appropriateness of the ALLL is critical to the safety and soundness of a financial institution, especially in today’s uncertain economic environment and when concentrations in untested loan products are present. The policy statement has been updated to ensure consistency with generally accepted accounting principles (GAAP) and post-1993 supervisory guidance.
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December 12, 2006
FOMC Statement

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

Economic growth has slowed over the course of the year, partly reflecting a substantial cooling of the housing market. Although recent indicators have been mixed, the economy seems likely to expand at a moderate pace on balance over coming quarters.

Readings on core inflation have been elevated, and the high level of resource utilization has the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.

Nonetheless, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; William Poole; Kevin M. Warsh; and Janet L. Yellen. Voting against was Jeffrey M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target at this meeting.
Press Release


December 05, 2006
Draft interagency notice of proposed rulemaking on Basel IA, Regulations H and Y

The Federal Reserve Board on Tuesday released a draft interagency notice of proposed rulemaking that would revise the existing risk-based capital framework by giving the vast majority of banks, bank holding companies, and savings associations the option of either continuing to use the existing Basel I-based capital rule or adopting a more risk sensitive rule, known as Basel IA. However, as proposed, Basel IA would not be available to large, complex international banking organizations subject to the proposed Basel II advanced capital framework.

"Basel IA is intended as an option for the wide range of institutions that will not be adopting the advanced approaches of Basel II," said Governor Susan S. Bies. "The goal is to improve the Basel I standards by making them somewhat more risk sensitive while at the same time retaining a relatively simple and straightforward approach suitable for all but the largest and most complex institutions."

The proposed Basel IA modifications represent the latest of more than twenty modifications to the original U.S. risk-based capital standards adopted under the Basel I Accord of 1988. They would:

  • Allow banking organizations other than the advanced Basel II organizations to elect to adopt Basel IA or remain subject to the existing risk-based capital rules
  • Use loan-to-value ratios to determine risk-weights for most residential mortgages
  • Increase the number of risk weight categories to which credit exposures may be assigned
  • Expand the use of external credit ratings for certain externally-rated exposures
  • Expand the range of collateral and guarantors that may qualify an exposure for lower risk weights
  • Increase the credit conversion factors for certain commitments with an original maturity of less than one year
  • Assess a risk-based capital charge to reflect the risks in securitizations with early amortization provisions that are backed by revolving exposures
  • Remove the 50 percent limit on the risk weight that applies to certain derivative contracts

"A goal of Basel IA is to foster competitive equity for banks that do not adopt the advanced approaches of Basel II," said Governor Randall S. Kroszner. "Perhaps the most significant of the Basel IA proposals in that regard is a more risk-sensitive treatment of home mortgages."

The Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) also are considering the notice of proposed rulemaking. The Board authorized the staff to publish the notice in the Federal Register for public comment after the other agencies complete their approval processes. For the OCC and OTS, that includes review by the Office of Management and Budget, which may result in changes to the notice of proposed rulemaking.

The draft Federal Register notice is attached.
Preamble
Draft Notice


November 28, 2006
Approval of Final Rule Regarding Consumer Authorization Requirements and a Request for Public Comment on a Proposed Rule, Both Under Regulation E

The Federal Reserve Board announced its approval of a final rule regarding consumer authorization requirements when a person, such as a merchant, seeks to electronically collect a fee for checks or other items that are returned unpaid. The final rule clarifies that the requirement to obtain the consumer's authorization applies to the person seeking to electronically collect the returned item fee. The rule contains additional provisions related to the consumer's authorization and the content of notices that must be given to the consumer.

In a separate action, the Board requested public comment on a proposed rule to except transactions of $15 or less from Regulation E's requirement that receipts be made available to consumers for transactions initiated at an electronic terminal. The proposed exception is intended to facilitate the ability of consumers to use debit cards in retail environments where the receipt requirement may not be practical or cost-effective. The Board requests comment on the proposed rule within sixty days after publication in the Federal Register.
Press Release


November 17, 2006
Board Announces Appointment of the Chairmen and Deputy Chairmen of the Twelve Federal Reserve Banks for 2007

The Federal Reserve Board on Friday announced the appointment of the chairmen and deputy chairmen of the twelve Federal Reserve Banks for 2007.

Each Reserve Bank has a nine-member board of directors. The Board of Governors in Washington appoints three of these directors and each year designates one of its appointees as chairman and a second as deputy chairman.

Following are the names of the chairmen and deputy chairmen appointed by the Board for 2007:

Boston
Lisa M. Lynch, William L. Clayton Professor of International Economic Affairs, The Fletcher School of Law and Diplomacy, Tufts University, Medford, Massachusetts, named Chairman.

Henri A. Termeer, Chairman, President, and Chief Executive Officer, Genzyme Corporation, Cambridge, Massachusetts, named Deputy Chairman.

New York
Jerry I. Speyer, President and Chief Executive Officer, Tishman Speyer, New York, New York, named Chairman.

Denis M. Hughes, President, New York State AFL-CIO, New York, New York, named Deputy Chairman.

Philadelphia
Doris M. Damm, President and Chief Executive Officer, ACCU Staffing Services, Cherry Hill, New Jersey, renamed Chairman.

William F. Hecht, Retired Chairman and Chief Executive Officer, PPL Corporation, Allentown, Pennsylvania, renamed Deputy Chairman.

Cleveland
Tanny B. Crane, President and Chief Executive Officer, Crane Group Company, Columbus, Ohio, named Chairman.

Alfred M. Rankin, Jr., Chairman, President, and Chief Executive Officer, NACCO Industries, Inc., Cleveland, Ohio, named Deputy Chairman.

Richmond
Thomas J. Mackell, Jr., Warrenton, Virginia, renamed Chairman.

Theresa M. Stone, President (retired), Lincoln Financial Media, Greensboro, North Carolina, renamed Deputy Chairman.

Atlanta
V. Larkin Martin, Managing Partner, Martin Farm, Courtland, Alabama, named Chairman.

D. Scott Davis, Chief Financial Officer, United Parcel Service, Atlanta, Georgia, named Deputy Chairman.

Chicago
Miles D. White, Chairman and Chief Executive Officer, Abbott, Abbott Park, Illinois, renamed Chairman.

John A. Canning, Jr., Chairman and Chief Executive Officer, Madison Dearborn Partners, Inc., Chicago, Illinois, renamed Deputy Chairman.

St. Louis
Irl F. Engelhardt, Chairman, Peabody Energy, St. Louis, Missouri, named Chairman.

Cynthia J. Brinkley, President, AT&T Missouri, St. Louis, Missouri, named Deputy Chairman.

Minneapolis
Frank L. Sims, Corporate Vice President, Transportation, Cargill, Inc., Wayzata, Minnesota, renamed Chairman.

James J. Hynes, Executive Administrator, Twin City Pipe Trades Service Association, St. Paul, Minnesota, renamed Deputy Chairman.

Kansas City
Robert A. Funk, Chairman and Chief Executive Officer, Express Personnel Services, International Headquarters, Oklahoma City, Oklahoma, renamed Chairman.

Lu M. Cordova, CEO, Corlund Industries and Chairman, CTEK Angels, Boulder, Colorado, renamed Deputy Chairman.

Dallas
James T. Hackett, Chairman, President, and Chief Executive Officer, Anadarko Petroleum Corporation, Houston, Texas, named Chairman.

Anthony R. Chase, Chairman and Chief Executive Officer, ChaseCom, L.P., Houston, Texas, renamed Deputy Chairman.

San Francisco
David K.Y. Tang, Partner, Preston Gates & Ellis LLP, Seattle, Washington, renamed Chairman.

T. Gary Rogers, Chairman and Chief Executive Officer, Dreyer's Grand Ice Cream, Inc., Oakland, California, renamed Deputy Chairman.


November 16, 2006
Statement by Chairman Bernanke on the passing of Milton Friedman

Statement by Federal Reserve Chairman Ben S. Bernanke:

"Among economic scholars, Milton Friedman had no peer. The direct and indirect influences of his thinking on contemporary monetary economics would be difficult to overstate. Just as important, in his humane and engaging way, Milton conveyed to millions an understanding of the economic benefits of free, competitive markets, as well as the close connection that economic freedoms bear to other types of liberty. He will be sorely missed."


November 15, 2006
Board Approves Fee Schedule for Federal Reserve Bank Priced Services

The Federal Reserve Board on Tuesday approved fee schedules for Federal Reserve Bank payment services for depository institutions (priced services), effective January 2, 2007.

Since the mid-1990s, there has been a national trend away from the use of checks and toward the use of more efficient electronic payment alternatives. In response, the Reserve Banks have undertaken a number of initiatives to improve operational efficiency and reduce costs, making significant changes to their payments infrastructure. In particular, the Reserve Banks have been adapting their physical check processing infrastructure, reducing the number of Federal Reserve check processing locations from forty-five in 2003 to twenty-two in 2006, and modernizing their check-processing platform. In addition, the Reserve Banks began modifying their product offerings to encourage depository institutions to move to a more electronic check- processing environment.

As a result, the Reserve Banks project that they will recover 101.5 percent of all their priced services costs in 2007 and achieve full cost recovery for the third consecutive year. Overall, the price level for Federal Reserve priced services will increase about 1 percent in 2007. This increase reflects an approximately 6 percent rise in paper check service fees combined with a 0.1 percent increase in fees for the Reserve Banks' electronic payment services. In 2007, the Reserve Banks will continue to encourage the movement to a more electronic check-processing environment by offering depository institutions incentives to receive their checks electronically through Check 21 and by lowering the price on Check 21 deposits destined to electronic recipients by 12.5 percent. The 2007 fee schedule for each of the priced services, except the check service, is included in the attached Federal Register notice. Fee schedules for all priced services are available on the Federal Reserve Banks' financial services web site at www.frbservices.org (http://www.frbservices.org).

From 1996 to 2005, the Reserve Banks recovered 98.4 percent of priced services costs, including operating costs, imputed costs, and targeted return on equity (or net income). Net income during this ten-year period totaled about $700 million. The Reserve Banks estimate that they will recover 108.2 percent of their priced services costs in 2006 before recognizing the effects of a standard recently issued by the Financial Accounting Standards Board on employers' accounting for defined benefit pension and other postretirement plans (FAS 158). Recognizing the deferred benefit plan losses on the balance sheet, as required by FAS 158, will reduce cost recovery in 2006 to an estimated 77.2 percent. The deferred items could be significant gains or losses in any given year; therefore, recognizing them could cause cost recovery to vary significantly above or below 100 percent. To avoid volatility in priced-services fees, the Reserve Banks will not consider the deferred gains or losses when they set prices each year. The Reserve Banks will, however, continue to factor such gains or losses into the fee-setting process to the extent that they are recognized in expenses through the systematic approach required by generally accepted accounting principles. Furthermore, in light of the recent adoption of FAS 158, the Board plans to continue to study how incorporating FAS 158 affects our assessment of the Federal Reserve's compliance with the Monetary Control Act's long-run cost recovery requirement.

In addition, the Board approved the 2007 private-sector adjustment factor (PSAF) for Reserve Bank priced services of $132.5 million. The PSAF is an allowance for income taxes and other imputed expenses that would have to be paid and profits that would have to be earned if the Reserve Banks' priced services were provided by a private business. The Monetary Control Act of 1980 requires that the Federal Reserve establish fees to recover the costs of providing priced services, including the PSAF, over the long run, to promote competition between the Reserve Banks and private-sector service providers.
Board's notice


November 15, 2006
Minutes of Federal Open Market Committee, October 24–25, 2006

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on October 24-25, 2006.

The minutes for each regularly scheduled meeting of the Committee are made available three weeks after the day of the policy decision and subsequently are published in the Board's Annual Report. The summary description of economic and financial conditions contained in these minutes is 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 web site at http://www.federalreserve.gov/fomc.

Minutes of the Federal Open Market Committee, October 24-25, 2006


October 25, 2006
FOMC Statement

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

Economic growth has slowed over the course of the year, partly reflecting a cooling of the housing market. Going forward, the economy seems likely to expand at a moderate pace.

Readings on core inflation have been elevated, and the high level of resource utilization has the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.

Nonetheless, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; William Poole; Kevin M. Warsh; and Janet L. Yellen. Voting against was Jeffrey M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target at this meeting.
Press Release


October 25, 2006
Agencies Issue Report on Use and Counterfeiting of U.S. Currency Abroad

On October 25, 2006 the Treasury Department, the Federal Reserve Board and the U.S. Secret Service issued their third collaborative report on the use and counterfeiting of U.S. currency abroad. The report revealed that while more than half of circulated U.S. banknotes are held in other countries, counterfeiting incidents remain low.

The international popularity of U.S. currency makes it an obvious target for counterfeiters. But the report estimates that of U.S. notes in circulation abroad and at home, only about one note in 10,000 is counterfeit.

The report attributes this low level of incidents to extensive U.S. data gathering, education efforts, law enforcement and communications with banks around the world.

Additionally, the introduction of the new currency design starting in 1996 and related educational outreach around the world made counterfeit detection easier.

The study reaches five major conclusions about the counterfeiting of U.S. currency:

  • The average incidence of counterfeit U.S. currency passing is generally low both inside and outside the United States, notwithstanding occasional large seizures of uncirculated counterfeits.
  • Foreign banks and law enforcement agencies are eager to develop links with the U.S. Secret Service to detect and suppress counterfeiting activity.
  • The interagency counterfeiting group has strengthened working relationships between the Secret Service and foreign financial and law enforcement organizations, which allowed for improved investigations and training.
  • When counterfeit notes are found overseas, procedures invoked within each country vary widely. A lack of legal authority for banks and cash handlers to confiscate suspected or actual counterfeit U.S. currency increases concern about counterfeiting and hampers enforcement.
  • The Secret Service U.S. Dollars Counterfeit Note Search website established in 1999, www.usdollars.usss.gov, has been extremely effective in aiding banks and cash handlers, their customers, and law enforcement in tracking and identifying counterfeit notes.

This study is the last in a series of reports and provides updates to the first reports issued in 2000 and 2003. Much of the information presented in the earlier reports remains valid today.
Press Release


October 18, 2006
Agencies Provide Consumer Information on Nontraditional Mortgage Loans

On October 18, 2006 the federal bank, thrift, and credit union regulatory agencies announced the publication of a new resource that can help consumers make more informed choices when considering nontraditional mortgage loans. Interest-Only Mortgage Payments and Payment-Option ARMs—Are They for You? features a glossary of lending terms, a mortgage shopping worksheet, and a list of additional information sources. This information can help consumers, whether buying a house or refinancing a mortgage, decide if an interest-only mortgage (an I-O mortgage) or an adjustable-rate mortgage (ARM) with the option to make a minimum payment (a payment-option ARM) is right for them.
Press Release


September 29, 2006
Federal Financial Regulatory Agencies Issue Final Guidance on Nontraditional Mortgage Product Risks

The federal financial regulatory agencies today issued final guidance to address the risks posed by residential mortgage products that allow borrowers to defer repayment of principal and sometimes interest (Interagency Guidance on Nontraditional Mortgage Product Risks). These products, referred to variously as "nontraditional," "alternative," or "exotic" mortgage loans (referred to below as nontraditional mortgage loans), include "interest-only" mortgages and "payment option" adjustable-rate mortgages. These products allow borrowers to exchange lower payments during an initial period for higher payments later.

The final guidance discusses the importance of carefully managing the potential heightened risk levels created by these loans. Toward that end, management should:

  • Ensure that loan terms and underwriting standards are consistent with prudent lending practices, including consideration of a borrower's repayment capacity;
  • Recognize that many nontraditional mortgage loans, particularly when they have risk-layering features, are untested in a stressed environment. These products warrant strong risk management standards, capital levels commensurate with the risk, and an allowance for loan and lease losses that reflects the collectibility of the portfolio; and
  • Ensure that consumers have sufficient information to clearly understand loan terms and associated risks prior to making a product or payment choice.

The agencies are issuing two additional related documents--Proposed Illustrations of Consumer Information for Nontraditional Mortgage Products and an addendum to the May 2005 Interagency Credit Risk Management Guidance for Home Equity Lending.

The agencies are issuing for comment Proposed Illustrations of Consumer Information for Nontraditional Mortgage Products. The agencies believe that illustrations of consumer information may be useful to institutions as they seek to implement the consumer information recommendations of the guidance. The agencies seek public comment on all aspects of the proposed illustrations, including whether these illustrations or a modified form should be adopted by the agencies. Comments on the proposed illustrations are due 60 days after publication in the Federal Register.
Press Release


September 21, 2006
Roger T. Cole appointed director of Board’s Division of Banking Supervision and Regulation

The Federal Reserve Board today announced the appointment of Roger T. Cole as director of the Division of Banking Supervision and Regulation, effective immediately. Cole joined the Board's staff in 1979 as a senior financial analyst. He was appointed to the Board's official staff in 1988 and promoted to associate director in 1997 and senior associate director in 2001. Before joining the Board, Cole was a financial analyst at the Federal Reserve Bank of Boston and worked at the Wyatt Company.

Cole succeeds Rich Spillenkothen, who retired in June after thirty years of service at the Board, including nearly fifteen years as director of the division. Cole holds a B.A. in economics from Bucknell University and an M.A. in economics from Johns Hopkins University.
Press Release


September 20, 2006
FOMC Statement

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

The moderation in economic growth appears to be continuing, partly reflecting a cooling of the housing market.

Readings on core inflation have been elevated, and the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.

Nonetheless, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Jack Guynn; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Kevin M. Warsh; and Janet L. Yellen. Voting against was Jeffrey M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target at this meeting.
Press Release


September 05, 2006
Frederic S. Mishkin sworn in as member of the Board of Governors

Frederic S. Mishkin on Tuesday took the oath of office as a member of the Board of Governors of the Federal Reserve System. The oath was administered by Chairman Bernanke in the Board Room. President Bush announced his intention to nominate Dr. Mishkin on June 30 and the Senate confirmed him on July 26. Dr. Mishkin was nominated to a seat vacated by the resignation of Roger W. Ferguson, Jr., on April 28, 2006. The term expires January 31, 2014.
Press Release


September 05, 2006
Agencies Seek Public Comment on Basel II and Market Risk Proposed Rulemakings

The federal bank and thrift regulatory agencies announced that they will request public comment on a notice of proposed rulemaking (NPR) that would implement new risk-based capital requirements in the United States for large, internationally active banking organizations. The NPR details the agencies' plans for implementing the Basel Committee on Banking Supervision's (BCBS) new capital accord (Basel II) that was issued in 2004. The agencies also will request comment on proposed Basel II supervisory reporting templates.

The Federal Reserve Board (Board), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) first adopted risk-based capital standards in 1989. Those standards were based on the Basel Capital Accord that the BCBS originally issued in 1988 (Basel I). For banking organizations that meet qualifying criteria, the Basel II NPR would replace U.S. rules implementing Basel I. The proposed framework would be mandatory for large, internationally active banking organizations and optional for others.

The agencies also announced that they will request comment on proposed revisions to the market risk capital rules that the OCC, Board, and FDIC have used since 1997 for banking organizations with significant exposure to market risk. Under the market risk capital rule, certain banking organizations are required to calculate a capital requirement for the general market risk of their covered positions and the specific risk of their covered debt and equity positions. The proposed revisions would enhance the rule's risk sensitivity and would require public disclosures of certain qualitative and quantitative market risk information.

The notice of proposed rulemaking on the market risk capital rule would implement changes the BCBS approved in 2005 and also would apply to certain savings associations, which currently are not covered under the rule. The agencies will also seek comment on proposed supervisory reporting templates related to the market risk capital rule.

The Board, FDIC, OCC and OTS request comments on the proposals within 120 days of publication in the Federal Register.
Press Release


August 09, 2006
Agencies Issue Report on Compliance with Consumer Dispute Provisions of FCRA

The Federal Trade Commission (FTC) and Federal Reserve Board issued a joint report to Congress on compliance with the consumer dispute provisions of the Fair Credit Reporting Act (FCRA).

The Fair and Accurate Credit Transactions Act of 2003 (FACT Act), which generally amends the FCRA, required the FTC and the Board to conduct a study of the extent to which consumer reporting agencies and furnishers of information to consumer reporting agencies (CRAs) complied with certain FCRA requirements.

The study found that although most consumer disputes appear to be processed within the statutory timeframe, there is disagreement as to the adequacy of the investigations performed by the CRAs and by the furnishers of information.

The resulting report recommends no additional administrative or legislative action at this time to amend the dispute process. Rather, the FTC and the Board believe that recent FACT Act provisions intended to enhance the customer dispute process should be given time to take effect. The FTC and the Board will continue to monitor the performance of the dispute process, explore possible enhancements, and make recommendations for action, if appropriate.
The report is available on the Board's web site at: http://www.federalreserve.gov/boarddocs/rptcongress/
fcradispute/fcradispute200608.pdf


August 09, 2006
Annual Adjustment of Fee-based Trigger for Additional Mortgage Loan Disclosures

The Federal Reserve Board published its annual adjustment of the dollar amount that triggers additional disclosure requirements under the Truth in Lending Act for home mortgage loans that bear rates or fees above a certain amount.

The dollar amount of the fee-based trigger has been adjusted to $547 for 2007 based on the annual percentage change reflected in the Consumer Price Index that was in effect on June 1, 2006. The adjustment is effective January 1, 2007.

The Home Ownership and Equity Protection Act of 1994 restricts credit terms such as balloon payments and requires additional disclosures when total points and fees payable by the consumer exceed the fee-based trigger (initially set at $400 and adjusted annually) or 8 percent of the total loan amount, whichever is larger.
Attachment (117 KB PDF)


August 08, 2006
FOMC Statement

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent. Economic growth has moderated from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.

Readings on core inflation have been elevated in recent months, and the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting contained inflation expectations and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.

Nonetheless, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Jack Guynn; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Kevin M. Warsh; and Janet L. Yellen. Voting against was Jeffrey M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target at this meeting.
Press Release


June 29, 2006
FOMC Statement

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 5-1/4 percent.

Recent indicators suggest that economic growth is moderating from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.

Readings on core inflation have been elevated in recent months. Ongoing productivity gains have held down the rise in unit labor costs, and inflation expectations remain contained. However, the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures.

Although the moderation in the growth of aggregate demand should help to limit inflation pressures over time, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information. In any event, the Committee will respond to changes in economic prospects as needed to support the attainment of its objectives.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Jack Guynn; Donald L. Kohn; Randall S. Kroszner; Jeffrey M. Lacker; Sandra Pianalto; Kevin M. Warsh; and Janet L. Yellen.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 6-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, and Dallas.
Press Release


June 23, 2006
Donald L. Kohn takes Oath of Office for a Four-year Term as Vice Chairman of the Board of Governors

On June 23, 2006 Donald L. Kohn took the oath of office for a four-year term as Vice Chairman of the Board of Governors of the Federal Reserve System. The oath was administered in the Board Room by Chairman Ben S. Bernanke. Vice Chairman Kohn’s wife, Gail Kohn, and his mother, children and grandchildren were present.

President Bush announced his intention to nominate Governor Kohn as Vice Chairman on May 18, and the Senate confirmed him on June 19. He originally took office on August 5, 2002, as a member of the Board for a term that expires January 31, 2016.


June 22, 2006
Atlanta Fed President Jack Guynn to Retire October 1, 2006

Statement by Chairman Ben S. Bernanke on the retirement of Jack Guynn, President of the Federal Reserve Bank of Atlanta:

"Jack Guynn's forty-two-year career at the Federal Reserve Bank of Atlanta, including more than a decade as President, is an outstanding example of dedicated public service. Jack worked tirelessly for the betterment of the Federal Reserve System. I will miss his friendship as well as his valued insights at the Federal Open Market Committee table."
Atlanta Fed Press Release


June 21, 2006
Mark W. Olson submits his resignation as a member of the Board of Governors, effective June 30, 2006

Mark W. Olson submitted his resignation Wednesday as a member of the Board of Governors of the Federal Reserve System, effective June 30, 2006.

Olson, who has been a member of the Board since December 7, 2001, submitted his resignation to President Bush. He is leaving the Board to assume the chairmanship of the Public Company Accounting Oversight Board. He will not attend the June 28-29 meeting of the Federal Open Market Committee.

"Mark’s leadership and wide experience in financial services and government were invaluable assets for the effective operation of both the Board and Federal Reserve System during his tenure," said Chairman Ben S. Bernanke. "He has been an exemplary colleague and I will miss his wise counsel. I wish him well in his new and vital role of overseeing the auditors of public companies."

Olson, 63, was appointed by President Bush to fill an unexpired term on the Federal Reserve Board ending January 31, 2010. During his time on the Board, he has served as the Board’s administrative governor, as Chairman of the Board’s Committee on Consumer and Community Affairs, as a member of the Committee on Supervisory and Regulatory Affairs, and as a member of the Committee on Federal Reserve Bank Affairs.

Before joining the Board, Olson served as staff director of the Securities Subcommittee of the Senate Banking, Housing, and Urban Affairs Committee. Prior to that, he was a partner with Ernst & Young LLP at its predecessor, Arthur Young & Company, and he was president and chief executive officer of Security State Bank, Fergus Falls, Minnesota.
Press Release and resignation letter


June 16, 2006
ANPR Lowering Recordkeeping Threshold for Funds Transfers

The Federal Reserve Board, jointly with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), issued an advance notice of proposed rulemaking (ANPR) that seeks information on the potential benefit and burden of lowering or eliminating the $3,000 threshold in the recordkeeping rule for funds transfers and transmittals of funds by financial institutions. The ANPR requests public comment on the potential benefit of a lower threshold to law enforcement and the potential burden of a lower threshold to the financial system. In addition, the ANPR seeks input from the general public on the potential impact that a lower threshold might have on their funds transfer or transmittal of funds practices.

The Board and FinCEN request that comments on the ANPR be submitted within sixty days of publication in the Federal Register, which is expected shortly.
Press Release


June 15, 2006
Lessons Learned from Hurricane Katrina

The member agencies of the Federal Financial Institutions Examination Council (FFIEC) and the Conference of State Bank Supervisors today announced the release of LESSONS LEARNED FROM HURRICANE KATRINA: Preparing Your Institution for a Catastrophic Event . The booklet relays financial institutions' experiences and lessons learned in the aftermath of Hurricane Katrina that other institutions may find helpful in considering their readiness for a catastrophic event.
Press Release


June 15, 2006
Board Seeks Nominations for Appointments to Consumer Advisory Council

The Federal Reserve Board announced that it is seeking nominations for appointments to its Consumer Advisory Council. The Council advises the Board on the exercise of its responsibilities under various consumer financial services laws and on other matters. The group meets in Washington, D.C., three times a year. Ten new members will be appointed to serve three-year terms beginning in January 2007.
Press Release


June 15, 2006
Request for Comment Regarding Payment System Risk Policy and Intraday Liquidity Management

The Federal Reserve Board on Thursday requested public comment on a consultation paper that is intended to help the Board obtain broader information on intraday liquidity management issues and to lay the groundwork for discussions about the long-term evolution of its Payment System Risk (PSR) Policy.

The consultation paper seeks information from the financial industry and other interested parties on their experience in managing intraday liquidity, credit, and operational risks associated with Fedwire funds transfers and associated transactions. In particular, the paper requests views on potential changes in market practices, depository institution and Federal Reserve Bank operations, and the Board's PSR Policy that could reduce one or more of these risks, while maintaining or improving the efficiency of the payments system over the long run.
Press Release


June 13, 2006
Updated Riegle-Neal Loan-to-Deposit Ratios

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency issued the host state loan-to-deposit ratios that the banking agencies 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 7, 2005.

In general, section 109 prohibits a bank from establishing or acquiring a branch or branches outside of its home state primarily for the purpose of deposit production. Section 109 also prohibits branches of banks controlled by out-of-state bank holding companies from operating primarily for the purpose of deposit production.
Press Release


June 06, 2006
Consumer Advisory Council Meeting

On June 6, 2006, the Federal Reserve Board announced that the Consumer Advisory Council will hold its next meeting on Thursday, June 22. The meeting will take place in Dining Room E, Terrace level, in the Board's Martin Building. The session will begin at 9:00 a.m. EDT and is open to the public. Anyone planning to attend the meeting should, for security purposes, register no later than Tuesday, June 20, by completing the form found on-line at: https://www.federalreserve.gov/secure/forms/cacregistration.cfm . Additionally, attendees must present photo identification to enter the building. The Council's function is to advise the Board on the exercise of its responsibilities under various consumer financial services laws and on other matters.
Press Release


May 31, 2006
Federal Reserve Banks Announce Change to Cash Infrastructure

The Federal Reserve Banks today announced that the cash processing operation at the Federal Reserve Bank of Kansas City's Omaha, Neb., branch will be changed to a cash depot. This change is part of a broader effort to update the Federal Reserve's infrastructure for processing currency.

A cash depot is an alternative market presence for Federal Reserve cash services. With a cash depot, the Federal Reserve contracts with a third party—usually an armored carrier—that acts as a secure collection point for Federal Reserve currency deposits from the region's depository institutions. The depot also distributes currency orders that depository institutions have placed with the Reserve Bank. The work of counting deposits and preparing orders is done by a Federal Reserve office in another city. The Federal Reserve pays for the transportation between the Reserve Bank office and the depot. The depot operator follows strict procedures developed by the Federal Reserve.
Press Release


May 31, 2006
Federal Reserve Banks Announce Changes To Increase Check Service Efficiency

The Federal Reserve Banks today announced changes to their check operations. As part of these changes, the Federal Reserve Banks will discontinue check processing at locations in San Francisco, Kansas City, Mo., and Helena, Mont. Volume from these locations will be shifted to other Reserve Bank check processing centers. No firm date for the transition has been determined, but it is expected to take place in 2007 or the first half of 2008.

The new round of restructurings will transfer check processing operations from three locations: San Francisco to Los Angeles, Kansas City to St. Louis, and Helena to Denver. This decision impacts the Canadian check collection service provided by the Helena office. An announcement regarding the transfer of the Canadian check collection service to another Reserve Bank will be made by the end of 2006. Additionally, the Reserve Banks will streamline their check adjustment function, discontinuing adjustments at the Detroit, Helena, Houston, Memphis, Tenn., and San Francisco offices. (The term "check adjustments" refers to the part of the check processing operation in which check processing errors are resolved.)
Press Release


May 10, 2006
FOMC Statement

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 5 percent.

Economic growth has been quite strong so far this year. The Committee sees growth as likely to moderate to a more sustainable pace, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.

As yet, the run-up in the prices of energy and other commodities appears to have had only a modest effect on core inflation, ongoing productivity gains have helped to hold the growth of unit labor costs in check, and inflation expectations remain contained. Still, possible increases in resource utilization, in combination with the elevated prices of energy and other commodities, have the potential to add to inflation pressures.

The Committee judges that some further policy firming may yet be needed to address inflation risks but emphasizes that the extent and timing of any such firming will depend importantly on the evolution of the economic outlook as implied by incoming information. In any event, the Committee will respond to changes in economic prospects as needed to support the attainment of its objectives.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Jack Guynn; Donald L. Kohn; Randall S. Kroszner; Jeffrey M. Lacker; Mark W. Olson; Sandra Pianalto; Kevin M. Warsh; and Janet L. Yellen.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 6 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Dallas, and San Francisco.
Press Release


May 09, 2006
Agencies Request Comment on a Revised Proposed Statement on the Complex Structured Finance Activities of Financial Institutions

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Securities and Exchange Commission have requested public comment on a revised proposed statement on the complex structured finance activities of financial institutions. The revised statement describes the types of internal controls and risk management procedures that should help financial institutions identify, manage and address the heightened legal and reputational risks that may arise from certain complex structured finance transactions.

The agencies have modified the revised statement in several important respects in light of the comments received on the original proposed statement, which was issued for comment on May 19, 2004. The revised statement would represent supervisory guidance for institutions supervised by the four banking agencies and a policy statement for institutions supervised by the Securities and Exchange Commission.

Comments on the revised statement are requested within thirty days of publication in the Federal Register.
Press Release


May 01, 2006
Public Hearings Under the Home Ownership and Equity Protection Act

The Federal Reserve Board on Monday invited consumers, consumer advocacy organizations, lenders, and other interested parties to participate in four public hearings on the home equity lending market.

The Board is holding the hearings under the Home Ownership and Equity Protection Act (HOEPA), which was enacted in 1994 in response to reports of predatory home equity lending practices in underserved markets. HOEPA amended the Truth in Lending Act (TILA) to impose additional disclosure requirements and limits on certain high-cost, home-secured loans. HOEPA also directs the Board to periodically hold public hearings to examine the home equity lending market and the adequacy of existing regulatory and legislative provisions for protecting the interests of consumers, particularly low-income consumers.

The Board's 2006 hearings will focus on three topics: (1) predatory lending and the impact of the HOEPA rules, and state and local anti-predatory lending laws on the subprime market; (2) nontraditional mortgage products such as interest only mortgage loans and payment option adjustable rate mortgages, and reverse mortgages; and (3) how consumers select lenders and mortgage products in the subprime mortgage market. Time will be reserved after panel discussions by invited speakers for brief statements from other interested parties.

The first hearing is scheduled for Wednesday, June 7, 2006, at the Federal Reserve Bank of Chicago, 230 South LaSalle Street, Chicago, Illinois. The second is scheduled for Friday, June 9, 2006, at the Federal Reserve Bank of Philadelphia, Ten Independence Mall, Philadelphia, Pennsylvania. The third is scheduled for Friday, June 16, 2006, at the Federal Reserve Bank of San Francisco, 101 Market Street, San Francisco, California, and the fourth is scheduled for Tuesday, July 11, 2006, at the Federal Reserve Bank of Atlanta, 1000 Peachtree Street, N.E., Atlanta, Georgia. All hearings are scheduled from 8:30 a.m. to 4:00 p.m.
Press Release


April 19, 2006
Data Download Application

The Federal Reserve Board announced its new Data Download application, which provides interactive access to Federal Reserve statistical data in a variety of electronic formats. Data Download is the first application to allow custom data packages to be created in SDMX-ML, a technical statistical data standard that is gaining support among central banks and statistical agencies.

Data from the following four releases are now available: Industrial Production and Capacity Utilization (G.17), Flow of Funds Accounts of the United States (Z.1), Commercial Paper, and Selected Interest Rates (H.15). More releases will be added in the future. The application delivers customized data sets in machine-readable electronic formats (Excel, CSV, XML) or allows for quick downloading of formatted data packages.

The SDMX-ML technical standard was developed by the Statistical Data and Metadata Exchange (SDMX) initiative under the governance of the Bank for International Settlements, the European Central Bank, World Bank, International Monetary Fund, Eurostat, the United Nations, and the Organisation for Economic Co-operation and Development.

Data Download is available on the Board's web site at http://www.federalreserve.gov/datadownload.


April 03, 2006
Updated Answers to Frequently Asked Questions About HMDA Price Data

The federal bank, credit union, and thrift supervisory agencies, along with the Department of Housing and Urban Development (HUD), released updated "Answers to Frequently Asked Questions" (FAQs) to aid interpretation of the 2005 home loan data to be disclosed this year under the Home Mortgage Disclosure Act (HMDA).

For the second year in a row, the data will include price information on loans priced above reporting thresholds set by the Federal Reserve Board regulation that implements HMDA, Regulation C. As of March 31, lenders started making these data available to the public upon request in the form of a Loan Application Register, after removing certain information to protect the privacy of applicants and borrowers. Summary statistical reports for each lender and an aggregate report for each Metropolitan Statistical Area will be released in September by the Federal Financial Institutions Examination Council (FFIEC).

Preliminary indications are that the data will show that the proportion of mortgage loans with prices above the HMDA price reporting thresholds increased from 2004 to 2005. The updated FAQs, in newly added Question 27, explain that an increase is expected because of changes in the interest rate environment from 2004 to 2005—specifically, the narrowing of the difference between short-term interest rates and long-term interest rates (sometimes referred to as a "flattening of the yield curve"). Changes in other factors, such as the business practices of lenders or the risk profiles or borrowing practices of borrowers, also could have affected the proportion of loans reported as higher-priced loans.

The updated FAQs will be posted on each of the agencies' web sites and on the web site of the FFIEC .
Press Release


March 31, 2006
Report Issued on Improving Financial Privacy Notices for Consumers

Federal regulators today released Evolution of a Prototype Financial Privacy Notice , a report by Kleimann Communication Group summarizing consumer research commissioned by the regulators as part of their ongoing efforts to develop improved financial privacy notices. The report's release concludes the first phase of an interagency project by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Federal Trade Commission, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission to explore alternatives for financial privacy notices that would be easier for consumers to read, understand, and use than many of the notices consumers currently receive from financial institutions.

The report's findings indicate that it is possible for financial privacy notices to include all of the information required by law in a short document that consumers can readily understand. The report fully describes the extensive research that underlies these findings and the development of a prototype simplified privacy notice. The report concludes that consumers need a context for understanding information in financial privacy notices. The research shows that while there is a general awareness of information sharing practices, most consumers do not understand them. According to the report, consumers are overwhelmed by complex information, and simplification of financial privacy notices enhances consumers' ability to read the notices and make informed choices about the use of their personal information. The research also demonstrates that consumers more easily understand the important information in the notice when good design reinforces the content.
Press Release


March 30, 2006
Notice of Proposed Rulemaking to Implement Basel II Risk-Based Capital Requirements in the United States for Large, Internationally Active Banking Organizations

The Federal Reserve Board has issued an interagency notice of proposed rulemaking (NPR) that would implement Basel II risk-based capital requirements in the United States for large, internationally active banking organizations. The proposed rule would require the largest internationally active banks to enhance the measurement and management of their risks, including credit risk and operational risk. It also would require these banks to have rigorous processes for assessing overall capital adequacy in relation to their total risk profile and to publicly disclose information regarding their risk profile and capital adequacy.

The NPR details the agencies' plan for implementing the Basel Committee on Banking Supervision's new capital accord (Basel II). For banks that meet qualifying criteria, the NPR would replace U.S. rules implementing the Basel Capital Accord of 1988 (Basel I).

The NPR builds on an advance notice of proposed rulemaking (ANPR) issued by the agencies in August 2003. It includes a number of prudential safeguards, including the requirement that a bank satisfactorily complete a four-quarter parallel run period, beginning no sooner than January 1, 2008, before operating under the Basel II framework. Following a successful parallel run, a bank would have to progress through three transitional periods, each of at least one year, during which there would be temporary floors on potential declines in risk-based capital requirements. A bank would need approval from its primary federal supervisor to move to each of the transitional floors, and at the end of the transition period to move to full Basel II.

The Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) also are considering the NPR. The Board authorized the staff to publish the NPR in the Federal Register for public comment after the other agencies complete their approval processes.
Press Release


March 28, 2006
FOMC Statement

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 4-3/4 percent.

The slowing of the growth of real GDP in the fourth quarter of 2005 seems largely to have reflected temporary or special factors. Economic growth has rebounded strongly in the current quarter but appears likely to moderate to a more sustainable pace. As yet, the run-up in the prices of energy and other commodities appears to have had only a modest effect on core inflation, ongoing productivity gains have helped to hold the growth of unit labor costs in check, and inflation expectations remain contained. Still, possible increases in resource utilization, in combination with the elevated prices of energy and other commodities, have the potential to add to inflation pressures.

The Committee judges that some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Jack Guynn; Donald L. Kohn; Randall S. Kroszner; Jeffrey M. Lacker; Mark W. Olson; Sandra Pianalto; Kevin M. Warsh; and Janet L. Yellen.

In a related action, the Board of Governors approved a 25-basis-point increase in the discount rate to 5-3/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Dallas, and San Francisco.
Press Release


March 22, 2006
Federal Financial Institutions Regulatory Agencies Seek Public Comment on Issues Related to the Accuracy of Consumer Credit Reports and the Reinvestigation of Disputes

The federal financial institution regulatory agencies and the Federal Trade Commission have jointly issued for comment an Advance Notice of Proposed Rulemaking (ANPR) on section 312 of the Fair and Accurate Credit Transactions Act (FACT Act).

Section 312 requires the agencies to: (1) establish guidelines regarding the accuracy and integrity of information furnished to consumer reporting agencies; and (2) prescribe regulations that require the entities that furnish such information to establish reasonable policies and procedures for implementing the guidelines. Section 312 also requires the agencies to prescribe regulations that identify the circumstances under which an entity that furnishes information to consumer reporting agencies will be required to reinvestigate a dispute concerning the accuracy of information contained in a consumer credit report based on a consumer’s direct request.

The ANPR invites comment on issues relating to: (1) the factors that the agencies must consider for developing the accuracy and integrity guidelines; and (2) the considerations that the agencies must weigh before adopting rules that identify the circumstances in which entities that furnish information to consumer reporting agencies must reinvestigate direct consumer disputes.

Comments are due 60 days after publication in the Federal Register. The notice is attached.
Press Release


March 17, 2006
Approval of Policy Changes to Federal Reserve Cash Services Policy

The Federal Reserve Board announced the approval of policy changes that seek to reduce the overuse of Federal Reserve Bank cash-processing services by providing incentives for depository institutions to recirculate currency among their customers. The Reserve Banks estimate that the changes to the cash services policy could affect approximately 150 to 225 depository institutions with high-volume currency operations.

The changes are intended to reverse a shift by depository institutions away from traditional patterns of currency activity toward greater reliance on Reserve Bank cash processing. The Federal Reserve expects depository institutions to recirculate to their customers fit currency deposited with them and to deposit only excess or unfit currency with Federal Reserve Banks. To promote the recirculation of fit Federal Reserve notes by depository institutions, two elements have been added to the existing cash services policy. First, a custodial inventory program will permit depository institutions to transfer a percentage of the $10 and $20 notes in their vaults to the books of the Federal Reserve, allowing the institutions to reduce the size and frequency of their deposits of currency to and orders from the Reserve Banks. This incentive will be coupled with a fee charged to depository institutions that deposit fit $10 or $20 notes at a Reserve Bank and order the same denomination, above a de minimis amount, during the same business week.

The Reserve Banks expect to begin accepting requests to participate in the custodial inventory program in May 2006, with program operations beginning in July 2006. The assessment of fees is expected to being in July 2007.
Press Release


March 15, 2006
Bank and Thrift Agencies Issued Advisory on Influenza Pandemic Preparedness

The federal bank and thrift regulatory agencies have issued an interagency advisory to financial institutions and their technology service providers that is intended to raise awareness of the threat of a pandemic influenza outbreak and its potential impact on the delivery of critical financial services. The advisory discusses the National Strategy for Pandemic Influenza and the roles and responsibilities this strategy outlines for financial institutions and advises financial institutions and their service providers to consider this and similar threats in their event response and contingency strategies.
Press Release


March 15, 2006
Approval of Final Rule Amending Regulation K to Require Edge and Agreement Corporations and U.S. Branches, Agencies, and Other Offices of Foreign Banks to Establish Procedures for Ensuring Compliance with the Bank Secrecy Act

The Federal Reserve Board announced its approval of a final rule to amend Regulation K to require Edge and Agreement corporations and U.S. branches, agencies, and other offices of foreign banks supervised by the Board to establish and maintain procedures reasonably designed to ensure and monitor compliance with the Bank Secrecy Act and related regulations.The Board will publish its final rule in the Federal Register shortly, and the rule will become effective 30 days after publication.

The Bank Secrecy Act generally requires a financial institution doing business in the United States to keep records and make reports that have a high degree of usefulness in criminal, tax, or regulatory proceedings. Domestic financial institutions, such as state member banks subject to the Board's Regulation H, already have been required to establish and maintain programs to ensure and monitor compliance with the Bank Secrecy Act. The Board's final rule amends Regulation K to require Edge and Agreement corporations and U.S. branches, agencies, and other offices of foreign banks to implement and maintain similar compliance programs.
Press Release


March 09, 2006
Agencies Extend Comment Period on Interagency Guidance on Concentrations in Commercial Real Estate Lending

The federal financial regulatory agencies today extended the comment period on the proposed guidance on Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices. The comment period will be extended for 30 days to April 13, 2006 from the previous date of March 14, 2006.
Press Release


March 02, 2006
Community Reinvestment Act Guidance

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency announced final guidance implementing the recent changes to their Community Reinvestment Act (CRA) regulations. The guidance clarifies, among other things, the availability of CRA consideration for bank activities that revitalize or stabilize designated disaster areas.

The guidance indicates that a bank's loans, investments, and services in support of disaster recovery that help to attract new, or retain existing, businesses or residents to a designated disaster area will receive CRA "community development" consideration for a 36-month period following designation of the area. The guidance allows for extensions of this period in unusual cases, and the agencies plan to substantially extend the time periods in the Gulf Coast areas hit by hurricanes Rita and Katrina. The guidance also addresses the availability of CRA "community development" consideration for bank activities that revitalize or stabilize underserved or distressed middle-income rural areas. The other major issue it addresses is implementation of the new community development test for banks with assets between $250 million and $1 billion.

The guidance will be effective upon publication in the Federal Register, which is expected shortly.
Press Release


March 01, 2006
Randall S. Kroszner Sworn in as Member of the Board of Governors

Randall S. Kroszner on Wednesday took the oath of office as a member of the Board of Governors of the Federal Reserve System. The oath was administered by Chairman Bernanke in the Board Room.

President Bush announced his intention to nominate Dr. Kroszner on January 27 and the Senate confirmed him on February 17. Dr. Kroszner was nominated to a seat vacated by the resignation of Edward M. Gramlich on August 31, 2005. The term expires January 31, 2008.


February 27, 2006
Approval of Final Rule Expanding the Definition of a Small Bank Holding Company

The Federal Reserve Board announced the approval of a final rule that expands the definition of a small bank holding company (BHC) under the Board's Small Bank Holding Company Policy Statement and the Board's risk-based and leverage capital guidelines for bank holding companies.

The policy statement facilitates the transfer of ownership of small community banks by permitting debt levels at small BHCs that are higher than what would typically be permitted for larger BHCs. Because small BHCs may, consistent with the policy statement, operate at a level of leverage that generally is inconsistent with the capital guidelines, the capital guidelines provide an exemption for small BHCs.

In its revisions to the Policy Statement, the Board has raised the small BHC asset size threshold from $150 million to $500 million and amended the related qualitative criteria for determining eligibility as a small BHC for the purposes of the policy statement and the capital guidelines. The final rule takes effect 30 days after publication in the Federal Register.
Press Release


February 24, 2006
Kevin M. Warsh Sworn in as Member of the Board of Governors

Kevin M. Warsh took the oath of office as a member of the Board of Governors of the Federal Reserve System. The oath was administered by Vice President Cheney in the Vice President’s Ceremonial Office in the Eisenhower Executive Office Building.

President Bush announced his intention to nominate Mr. Warsh on January 27 and the Senate confirmed him on February 17. Mr. Warsh was nominated to a vacant seat. The term expires January 31, 2018.


February 23, 2006
Roger W. Ferguson, Jr., Submits his Resignation

Roger W. Ferguson, Jr., submitted his resignation Wednesday as Vice Chairman and as a member of the Board of Governors of the Federal Reserve System, effective April 28, 2006.

Ferguson, who has been a member of the Board since November 5, 1997, submitted his letter of resignation to President Bush. He will not attend the March 27–28 meeting of the Federal Open Market Committee.

“Roger has made invaluable contributions to the Federal Reserve and to the country,” said Federal Reserve Board Chairman Ben S. Bernanke. “He led the Fed’s first response to the 9/11 terrorist attacks, was a strong advocate for increased transparency of monetary policy, and ably represented the Federal Reserve in important international fora. I value his friendship and counsel greatly and wish him all the best in his new endeavors.”

Ferguson, 54, was first appointed to the Board by President Clinton to fill an unexpired term ending January 31, 2000. He was then appointed by President Bush to a full term that expires on January 31, 2014.

Before joining the Board, Ferguson was a Partner at McKinsey & Company, Inc., an international management consulting firm. Prior to that, he was an attorney at the New York City office of Davis Polk & Wardwell.

A copy of his resignation letter is attached.
Attachment


February 03, 2006
Agencies Issue Interagency Advisory on External Auditor Limitation of Liability Provisions

The federal financial regulatory agencies announced the issuance of a final advisory that addresses safety and soundness concerns that may arise when financial institutions agree to limit their external auditors’ liability. The agencies’ primary concern is that limiting the liability of external auditors in engagement letters may reduce the reliability of audits.

The Interagency Advisory on the Unsafe and Unsound Use of Limitation of Liability Provisions in External Audit Engagement Letters informs financial institutions that they should not enter into external audit engagement letters that incorporate unsafe and unsound limitation of liability provisions with respect to audits of financial statements and internal control over financial reporting.

The advisory is effective for audit engagement letters executed on or after the date it is published in the Federal Register.

The agencies may take appropriate supervisory action if unsafe and unsound limitation of liability provisions are included in external audit engagement letters executed on or after the date the advisory is published in the Federal Register. The advisory is attached and will be published in the Federal Register shortly.
Attachment (links off-site)


February 03, 2006
Federal Bank and Thrift Supervisors Announce Banking Forum in New Orleans

The federal bank and thrift regulatory agencies announced that they will be hosting a forum in New Orleans for banks and thrifts on March 2 and 3, 2006.

The forum, titled “The Future of Banking on the Gulf Coast: Helping Banks and Thrifts Rebuild Communities,” will focus on the short-term and long-term challenges facing banks and thrifts operating in the areas affected by Hurricanes Katrina and Rita and on ways of helping meet the needs of the local communities. Principals from each of the four federal banking agencies will participate in the forum, which will convene at the New Orleans Marriott, 555 Canal Street, New Orleans, Louisiana, at 8:00 a.m. CST on Thursday, March 2, 2006, and close at noon on Friday, March 3, 2006. The FDIC and NeighborWorks of New Orleans will conduct optional bus tours of devastated areas nearby on the afternoons of Wednesday, March 1, and Friday, March 3.

Invitees include senior executives of both large and small FDIC-insured institutions operating in the areas most severely affected by Hurricanes Katrina and Rita (Mississippi and Louisiana), and senior executives of FDIC-insured institutions from outside of that region who are interested in providing technical assistance or other support or in learning how they can help communities meet the challenges presented by the hurricanes.

The opening session and remarks of agency principals, from 8:30 to 9:30 a.m. on March 2, will be open to the media as will the keynote address by Donald E. Powell, Federal Coordinator of Recovery and Rebuilding in the Gulf Coast Region, from 12:30 to 1:30 p.m. on March 2.

FDIC-insured institutions interested in learning more about the forum or in obtaining registration information should call 703-516-1049 or e-mail mbluyus@fdic.gov.

February 01, 2006
Bernanke sworn in as Chairman of the Board of Governors

On February 1, 2006 Ben S. Bernanke became the fourteenth Chairman of the Board of Governors of the Federal Reserve System and the Chairman of the Federal Open Market Committee, succeeding Alan Greenspan. The oath of office was administered in the Board Room at 9:00 a.m. by Vice Chairman Roger W. Ferguson, Jr.

The Senate confirmed Dr. Bernanke as Chairman and as a member of the Board on January 31, following a hearing on November 15 by the Senate Committee on Banking, Housing and Urban Affairs. President Bush announced his intention to nominate Dr. Bernanke on October 24.

Dr. Bernanke’s four-year term as Chairman ends January 31, 2010, and his fourteen-year term as a member of the Board ends January 31, 2020.
Press Release (links off-site)


January 31, 2006
FOMC Statement

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 4-1/2 percent.

Although recent economic data have been uneven, the expansion in economic activity appears solid. Core inflation has stayed relatively low in recent months and longer-term inflation expectations remain contained. Nevertheless, possible increases in resource utilization as well as elevated energy prices have the potential to add to inflation pressures.

The Committee judges that some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Jack Guynn; Donald L. Kohn; Jeffrey M. Lacker; Mark W. Olson; Sandra Pianalto; and Janet L. Yellen.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 5-1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Kansas City, Dallas, and San Francisco.
Press Release (links off-site)


January 13, 2006
Federal Financial Regulators Announce Public Service Campaign to Help Hurricane Victims

The federal financial regulatory agencies announced a public service campaign to aid in the financial recovery of victims of last year's hurricanes.

The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, the National Credit Union Administration and state financial regulators are encouraging banks, thrifts, and credit unions to continue to work with borrowers affected by the hurricanes. Assistance may include waiving fees, lowering interest rates, extending repayment schedules, or deferring principal or interest for an additional period, where appropriate. For these options to be considered, however, it is essential that the borrower contact his or her lender.
Press Release (links off-site)


January 11, 2006
Federal Bank and Thrift Agencies Propose Guidance on Commercial Real Estate Lending

The federal bank and thrift regulatory agencies issued for comment proposed guidance on sound risk management practices for concentrations in commercial real estate lending. The proposed guidance—from the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Office of Thrift Supervision—reinforces existing guidelines for real estate lending and safety and soundness. It provides criteria for identifying institutions with commercial real estate loan concentrations that may warrant greater supervisory scrutiny. As provided in the guidance, such institutions should have robust risk-management systems in place and capital levels higher than the regulatory minimums and appropriate to the risk associated with these concentrations.

Comments are requested on all aspects of the guidance and are due 60 days after publication in the Federal Register.
Press Release (links off-site)


January 04, 2006
Publication of Amendments Addressing Electronic Check Conversion Transactions and Coverage of Payroll Cards

The Federal Reserve Board announced final amendments to Regulation E (Electronic Fund Transfer Act) that clarify the responsibilities of parties involved in electronic check conversion transactions and require that consumers receive written notification in advance of these transactions. Additional revisions to the regulation's official staff commentary provide guidance on preauthorized transfers from consumers' accounts, error resolution, and disclosures at automated teller machines (ATMs).

The Board also amended Regulation E so that it covers payroll card accounts.

Among other things, the final rule provides that merchants and other payees that convert payments by check into electronic fund transfers must provide a notice to consumers to obtain consumer authorization for the electronic fund transfer. Merchants and other payees must also notify consumers that if a check is converted, funds may be debited from consumers' accounts as soon as the same day that payment is received, and the check will not be returned by their financial institution.The final rule addressing electronic check conversion and other matters will take effect thirty days after the date of publication in the Federal Register, which is expected soon. The mandatory compliance date is January 1, 2007.

The Board is adopting a separate interim final rule on payroll card accounts to provide that payroll card accounts established for the purpose of providing salary, wages, or other employee compensation on a recurring basis are accounts covered by Regulation E. The interim final rule grants flexibility to financial institutions that must provide account transaction information to payroll card users.

The amendments to address payroll cards are being issued as interim final rules so that interested parties may comment on the new requirements. The Board requests comment within sixty days after publication in the Federal Register.
Press Release (links off-site)


2005

December 20, 2005
Federal Financial Regulatory Agencies Propose Guidance on Nontraditional Mortgage Products

The federal financial regulatory agencies today issued for comment proposed guidance on residential mortgage products that allow borrowers to defer repayment of principal and sometimes interest. These nontraditional mortgage products include "interest-only" mortgage loans where a borrower pays no principal for the first few years of the loan and "payment option" adjustable-rate mortgages where a borrower has flexible payment options, including the potential for negative amortization. Institutions are also increasingly combining these mortgages with other practices, such as making simultaneous second-lien mortgages and allowing reduced documentation in evaluating the applicant's creditworthiness. The proposed guidance discusses the importance of carefully managing the potential heightened risk levels created by these loans. Comment is requested on all aspects of the guidance, particularly on the section regarding comprehensive debt service qualification standards. Comments are due sixty days after publication in the Federal Register.
Press Release (links off-site)


December 16, 2005
Annual Notice of Asset-size Exemption Threshold for Depository Institutions, Regulation C

The Federal Reserve Board published its annual notice of the asset-size exemption threshold for depository institutions under Regulation C, which implements the Home Mortgage Disclosure Act (HMDA). The asset-size exemption for depository institutions will increase to $35 million based on the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers for the twelve-month period ending in November 2005. As a result, depository institutions with assets of $35 million or less as of December 31, 2005, are exempt from data collection in 2006. An institution's exemption from collecting data in 2006 does not affect its responsibility to report the data it was required to collect in 2005.
The adjustment is effective January 1, 2006.
Press Release (links off-site)


December 15, 2005
Restructuring of Federal Reserve Check Processing Operations in the Sixth District, Regulation CC

The Federal Reserve Board approved amendments to Appendix A of Regulation CC that reflect the restructuring of the check processing operations of the Federal Reserve Bank of Atlanta. Appendix A provides a routing symbol guide that helps depository institutions determine the maximum permissible hold periods for most deposited checks. The Board is amending the list of routing symbols in Appendix A associated with the Atlanta Reserve Bank to reflect the transfer of check processing operations from the Atlanta Reserve Bank's New Orleans branch office to its head office. These amendments are effective March 31, 2006. The Board also is providing notice that the previously announced transfer of the check processing operations of the Nashville branch office of the Atlanta Reserve Bank to the Atlanta Reserve Bank's head office will be delayed until 2007. Finally, the Reserve Banks have decided to stop processing checks at the East Rutherford office of the Federal Reserve Bank of New York and that checks currently processed by that office instead will be processed at the head office of the Federal Reserve Bank of Philadelphia.
Press Release (links off-site)


December 14, 2005
Agencies Publish Guide to Help Financial Institutions Comply with Information Security Guidelines

The federal bank and thrift regulatory agencies today announced the publication of a compliance guide for the Interagency Guidelines Establishing Information Security Standards (Security Guidelines). The compliance guide summarizes the obligations of financial institutions to protect customer information and illustrates how certain provisions of the Security Guidelines apply to specific situations.
Press Release (links off-site)


December 13, 2005
FOMC Statement

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 4-1/4 percent.

Despite elevated energy prices and hurricane-related disruptions, the expansion in economic activity appears solid. Core inflation has stayed relatively low in recent months and longer-term inflation expectations remain contained. Nevertheless, possible increases in resource utilization as well as elevated energy prices have the potential to add to inflation pressures.

The Committee judges that some further measured policy firming is likely to be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Richard W. Fisher; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.

In a related action, the Board of Governors unanimously approved a 25-basis point increase in the discount rate to 5-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
Press Release (links off-site)


November 22, 2005
Minutes of Federal Open Market Committee, November 1, 2005

The Federal Reserve Board and the Federal Open Market Committee on Tuesday released the minutes of the Committee meeting held on November 1, 2005. The minutes for each regularly scheduled meeting of the Committee are made available three weeks after the day of the policy decision and subsequently are published in the Board's Annual Report. The summary description of economic and financial conditions contained in these minutes is based solely on the information that was available to the Committee at the time of the meeting.
Press Release (links off-site)


November 21, 2005
Final Rule Governing Remotely Created Checks

The Board of Governors of the Federal Reserve System approved amendments to its Regulation CC that define "remotely created checks" and create transfer and presentment warranties to shift liability for an unauthorized remotely created check to the institution where it is first deposited. In order to help reduce the potential for fraud, the amendments to Regulation CC create transfer and presentment warranties under which any bank that transfers or presents a remotely created check would warrant that the check is authorized by the person on whose account the check is drawn. The warranties would apply only to banks and would ultimately shift liability for losses attributable to an unauthorized remotely created check to the depositary bank. These amendments would not affect the rights of checking account customers, as they are not liable for unauthorized checks drawn on their accounts. The amendments are effective on July 1, 2006.
Press Release (links off-site)


November 17, 2005
Agencies Issue Final Rules on Post-Employment Restrictions for Senior Examiners

The federal bank and thrift regulatory agencies today issued final rules to implement a special post-employment restriction on certain senior examiners employed by an agency or Federal Reserve Bank, as required by the Intelligence Reform and Terrorism Prevention Act of 2004.

Under the final rules, if an examiner serves as the senior examiner for a depository institution or depository institution holding company for two or more months during the examiner’s final twelve months of employment with an agency or Federal Reserve Bank, the examiner may not knowingly accept compensation as an employee, officer, director, or consultant from that institution or holding company, or from certain related entities.

The final rules are effective on December 17, 2005.
Press Release (links off-site)


November 17, 2005
Agencies Finalize FACT Act Rule on Medical Information

The federal bank, thrift, and credit union regulatory agencies today issued final rules under the Fair Credit Reporting Act (FCRA) that create exceptions to the statutory prohibition against obtaining or using medical information in connection with credit eligibility determinations. The final rules, which are substantially identical to the interim final rules issued by the agencies in June 2005, also address the sharing of medically related information among affiliates. The effective date for these final rules is April 1, 2006.
Press Release (links off-site)


November 01, 2005
FOMC Statement

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 4 percent.

Elevated energy prices and hurricane-related disruptions in economic activity have temporarily depressed output and employment. However, monetary policy accommodation, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity that will likely be augmented by planned rebuilding in the hurricane-affected areas. The cumulative rise in energy and other costs have the potential to add to inflation pressures; however, core inflation has been relatively low in recent months and longer-term inflation expectations remain contained.

The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Richard W. Fisher; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.

In a related action, the Board of Governors unanimously approved a 25-basis point increase in the discount rate to 5 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
Press Release (links off-site)


October 24, 2005
Statement by Chairman Alan Greenspan on the appointment of Ben Bernanke

“The President has made a distinguished appointment in Ben Bernanke. Ben comes with superb academic credentials and important insights into the ways our economy functions. I have no doubt that he will be a credit to the nation as Chairman of the Federal Reserve Board.”
Press Release (links off-site)


October 20, 2005
Federal Banking Agencies Request Comment on Suggested Domestic Risk-Based Capital Modifications

The federal banking agencies have published an interagency advance notice of proposed rulemaking (ANPR) regarding potential revisions to the existing risk-based capital framework. These changes would apply to banks, bank holding companies, and savings associations. The ANPR document discusses various modifications to the U.S. risk-based capital standards including:

  • Increasing the number of risk weight categories to which credit exposures may be assigned;
  • Expanding the use of external credit ratings as an indicator of credit risk for externally-rated exposures;
  • Expanding the range of collateral and guarantors that may qualify an exposure for lower risk weights;
  • Using loan-to-value ratios, credit assessments, and other broad measures of credit risk for assigning risk-weights to residential mortgages;
  • Modifying the credit conversion factor for various commitments, including those with an original maturity of under one year;
  • Requiring that certain loans 90 days or more past due or in a non-accrual status be assigned to a higher risk weight category;
  • Modifying the risk-based capital requirements for certain commercial real estate exposures;
  • Increasing the risk sensitivity of capital requirements for other types of retail, multifamily, small business, and commercial exposures; and
  • Assessing a risk-based capital charge to reflect the risks in securitizations with early amortization provisions that are backed by revolving retail exposures.

Comments must be received on or before January 18, 2006.
Press Release (links off-site)


October 06, 2005
Advanced Notice of Proposed Rulemaking, Risk Based Capital Standards

The Federal Reserve Board has decided to request public comment on proposed revisions to the U.S. risk-based capital standards for banking organizations. These current standards are based upon the 1988 Basel Capital Accord, also known as Basel I.

The proposed revisions should more closely align risk-based capital requirements with the risk inherent in various exposures and could mitigate competitive inequalities that may arise as new capital rules, known as Basel II, are implemented for the most complex internationally active banking organizations.

The modifications that the Board, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, and Office of Thrift Supervision are considering would apply to banks, bank holding companies, and savings associations. They will be set forth in an advanced notice of proposed rulemaking to be published shortly in the Federal Register. Comment is requested within ninety days of publication.
Press Release (links off-site)


October 06, 2005
Waiver of Appraisal Standards for Institutions Affected by Hurricanes Katrina and Rita

The Federal Reserve Board announced its approval of an order waiving its appraisal requirements for three years for regulated financial institutions affected by Hurricanes Katrina and Rita. This action was coordinated with the Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Office of Thrift Supervision, and National Credit Union Administration, collectively referred to as “the agencies.”

The waiver covers transactions involving real estate located in certain Alabama, Mississippi, and Texas counties and Louisiana parishes that have been designated by the Federal Emergency Management Agency (FEMA) as qualifying for “Individual and Public Assistance (all categories)” and “Individual and Public Assistance (Categories A and B)” as a result of Hurricanes Katrina and Rita.

To qualify for the waiver, a financial institution needs to document that: (1) the transaction involves real property located in the designated disaster areas; (2) the property involved was directly affected by the major disaster or the transaction would facilitate recovery from the disaster(s); (3) there is a binding commitment to fund the transaction that is made within three years after the date the major disaster was declared; and (4) the value of the real property supports the institution’s decision to enter into the transaction.
Press Release (links off-site)


October 04, 2005
2006 Reserve Requirements

The Federal Reserve Board announced the annual indexing of the low reserve tranche and of the reserve requirement exemption amount for 2006. These amounts are used in the calculation of reserve requirements of depository institutions. The Board also announced the annual indexing of the nonexempt deposit cutoff level and the reduced reporting limit that will be used to determine deposit reporting panels effective September 2006.

All depository institutions must hold a percentage of certain types of deposits as reserves in the form of vault cash, as a deposit in a Federal Reserve Bank, or as a deposit in a pass-through account at a correspondent institution. Reserve requirements currently are assessed on the depository institution's net transaction accounts (mostly checking accounts). Depository institutions must also regularly submit reports of their deposits and other reservable liabilities.

For reserve requirements in 2006, the first $7.8 million of net transaction accounts (up from $7.0 million in 2005), will be exempt from reserve requirements. A 3 percent reserve ratio will be assessed on net transaction accounts over $7.8 million up to and including $48.3 million (up from $47.6 million in 2005). A 10 percent reserve ratio will be assessed on net transaction accounts in excess of $48.3 million.

For depository institutions that report weekly, the low reserve tranche and the reserve requirement exemption amount for 2006 will first apply to the fourteen-day reserve computation period that begins Tuesday, November 22, 2005 and the corresponding fourteen-day reserve maintenance period that begins Thursday, December 22, 2005.

For depository institutions that report quarterly, the low reserve tranche and the reserve requirement exemption amount for 2006 will first apply to the seven-day reserve computation period that begins Tuesday, December 20, 2005, and the corresponding seven-day reserve maintenance period that begins Thursday, January 19, 2006.

The Board also announced increases in two other amounts, the nonexempt deposit cutoff level and the reduced reporting limit, that are used to determine the frequency with which depository institutions must submit deposit reports.
Press Release (links off-site)


September 28, 2005
Orders Exempting Bank Transfer Agents Affected by Hurricane Katrina

The federal banking agencies announced the issuance of orders granting emergency relief to bank transfer agents affected by Hurricane Katrina. The orders cover national banks, state member banks, state nonmember banks, bank holding companies, and bank subsidiaries. The relief applies retroactively for the period beginning August 29, 2005 through October 17, 2005.

Transfer agents maintain records related to the issuance and transfer of securities and provide operational assistance in the sale and transfer of ownership of securities. These agents also may disburse dividends and send corporate information, including proxies, to holders of securities. The storm and its aftermath have resulted in a lack of communications, facilities, and available staff, that could hamper the efforts of transfer agents to access securities, records, and funds, and to process securities transactions.

To address compliance issues caused by Hurricane Katrina and its aftermath, the orders conditionally exempt banks, bank holding companies, and bank subsidiaries acting as transfer agents from compliance with Section 17A of the Securities Exchange Act of 1934. These orders, which are being issued by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, complement an order issued by the Securities and Exchange Commission on September 15, 2005, that exempts transfer agents under the SEC's jurisdiction from the requirements of Section 17A of the Securities Exchange Act of 1934. Any transfer agents or other persons requiring additional assistance are encouraged to contact staff at the agencies for individual relief or interpretive guidance.
Press Release (links off-site)


September 20, 2005
FOMC Statement

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 3-3/4 percent.

Output appeared poised to continue growing at a good pace before the tragic toll of Hurricane Katrina. The widespread devastation in the Gulf region, the associated dislocation of economic activity, and the boost to energy prices imply that spending, production, and employment will be set back in the near term. In addition to elevating premiums for some energy products, the disruption to the production and refining infrastructure may add to energy price volatility.

While these unfortunate developments have increased uncertainty about near-term economic performance, it is the Committee's view that they do not pose a more persistent threat. Rather, monetary policy accommodation, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. Higher energy and other costs have the potential to add to inflation pressures. However, core inflation has been relatively low in recent months and longer-term inflation expectations remain contained.

The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Richard W. Fisher; Donald L. Kohn; Michael H. Moskow; Anthony M. Santomero; and Gary H. Stern. Voting against was Mark W. Olson, who preferred no change in the federal funds rate target at this meeting.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 4-3/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Richmond, Chicago, Minneapolis, and Kansas City.
Press Release (links off-site)


September 16, 2005
Supervisory practices for financial institutions and borrowers affected by Hurricane Katrina

The Federal Reserve Board encouraged banking organizations to work with borrowers and other customers in communities affected by Hurricane Katrina. Additionally, the Board reminded banking organizations that regulatory flexibility is available to facilitate recovery in areas affected by this disaster.
Press Release (links off-site)


September 09, 2005
Change in Tentative FOMC Meeting Schedule for 2006

The Federal Open Market Committee on Friday announced a change in its tentative meeting schedule for 2006.

The Committee plans to hold its first scheduled meeting of the year on Tuesday, January 31. It had previously planned to meet for two days: January 31 and February 1. This schedule change avoids a meeting that spans the terms of two Chairmen.

In keeping with past practice, Chairman Greenspan plans to attend this meeting.
2005 Monetary policy (links off-site)


September 01, 2005
Assistance for Displaced Customers

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision (the agencies), and the Conference of State Bank Supervisors are asking insured depository institutions to consider all reasonable and prudent steps to assist customers’ and credit union members’ cash and financial needs in areas affected by Hurricane Katrina. The agencies are working with state regulatory agencies, financial industry trade groups, and affected financial institutions to identify customer needs and monitor institutions’ restoration of services.

The agencies remind the public that deposit insurance is in full force and that money in FDIC- or NCUA-insured accounts is protected by federal deposit insurance.

The agencies encourage financial institutions to assist affected institutions and consider all reasonable and prudent actions that could help meet the critical financial needs of their customers and their communities. To the extent consistent with safe and sound banking practices, such actions may include:

  • Waiving ATM fees for customers and non-customers
  • Increasing ATM daily cash withdrawal limits
  • Easing restrictions on cashing out-of-state and non-customer checks
  • Waiving overdraft fees as a result of paycheck interruption
  • Waiving early withdrawal penalties on time deposits
  • Waiving availability restrictions on insurance checks
  • Allowing loan customers to defer or skip some payments
  • Waiving late fees for credit card and other loan balances due to interruption of mail and/or billing statements or the customer’s inability to access funds
  • Easing credit card limits and credit terms for new loans
  • Delaying delinquency notices to the credit bureaus

Press Release (links off-site)


August 09, 2005
FOMC Statement

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 3-1/2 percent.

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. Aggregate spending, despite high energy prices, appears to have strengthened since late winter, and labor market conditions continue to improve gradually. Core inflation has been relatively low in recent months and longer-term inflation expectations remain well contained, but pressures on inflation have stayed elevated.

The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Richard W. Fisher; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 4-1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
Press Release (links off-site)


August 08, 2005
BSA/AML Webcast

The federal banking and thrift agencies, along with the Financial Crimes Enforcement Network (FinCEN), announced registration details for a live webcast of the Bank Secrecy Act/Anti-Money Laundering Examination Manual outreach event in New York on August 22.

The webcast is open to all parties interested in BSA/AML compliance issues, but registration is required. The outreach event will be held from 9 a.m. to noon EDT and will be available for on-demand viewing for three months following the presentation.

The event is part of a series of briefings for the banking industry and field examiners on the BSA/AML Examination Manual. The host organizations are the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Office of Thrift Supervision, and FinCEN. Also participating in these outreach events are state banking agencies, Office of Foreign Assets Control, banking organizations, and banking trade associations.

To register for the webcast go to: www.ffiec.gov.


July 27, 2005
Board Launches Online Financial Education Project with USA Today

The Federal Reserve Board on Tuesday launched a new online project with USA Today that teaches middle school and high school students about economics and personal finances by challenging them to construct a newspaper front page.

Students are provided with instructions and a template of the front page of The Fed Today. Over four weeks, they are expected to consult the Federal Reserve’s recently redesigned education web site—FederalReserveEducation.org—for information needed to complete all of the elements of the page, including headlines, photos, captions, graphs and statistics. The project helps teachers meet national and state academic content standards for high school economics and personal finance courses.

It may be found at: http://www.usatoday.com/
educate/federalreserve/index_new2.html
(links off-site)


July 18, 2005
Bank Secrecy Act/Anti-Money Laundering Outreach Events

The Federal banking and thrift agencies, along with the Financial Crimes Enforcement Network (FinCEN), announced registration details for the upcoming outreach events related to the Bank Secrecy Act/Anti-Money Laundering Examination Manual that was released on June 30. The events include:

  • Three nationwide conference calls to be held August 2–4, 2005; and
  • Five regional half-day outreach meetings, including a simulcast of one of the meetings via the Internet.

These meetings will be held in San Francisco, Dallas, Chicago, New York, and Miami. Banking organizations are encouraged to participate in these voluntary sessions. The content of these events is similar, and that should be factored into a banking organization’s decision to participate in the sessions. During these events, the BSA/AML Examination Manual will be discussed and examination expectations will be provided. There will also be an opportunity to provide feedback, ask questions, and address implementation issues.

Participating in the outreach sessions will be the Board of Governors of the Federal Reserve System (Board), Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), Office of Thrift Supervision (OTS), the Office of Foreign Assets Control (OFAC), and FinCEN.

The BSA/AML Examination Manual emphasizes a banking organization’s responsibility to establish and implement risk-based policies, procedures, and processes to comply with the BSA and safeguard its operations from money laundering and terrorist financing.
Press Release (links off-site)


June 30, 2005
FOMC Statement

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 3-1/4 percent.

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. Although energy prices have risen further, the expansion remains firm and labor market conditions continue to improve gradually. Pressures on inflation have stayed elevated, but longer-term inflation expectations remain well contained.

The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Richard W. Fisher; Edward M. Gramlich; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 4-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
Press Release (links off-site)


June 28, 2005
Federal Reserve Banks Announce Changes to Cash Infrastructure

Minneapolis, Minn., June 28, 2005–The Federal Reserve Banks today announced changes to cash services that are intended to improve operating effectiveness by providing cash services at some locations using different distribution methods.

The Reserve Banks plan in the next six to twelve months to switch from branch-based cash services to cash depots in Birmingham, Ala.; Oklahoma City, Okla.; and Portland, Ore. These changes are part of a broader effort to update the Federal Reserve’s infrastructure for processing currency.

A cash depot is an alternative market presence for Federal Reserve cash services. With a cash depot, the Federal Reserve contracts with a third party—usually an armored carrier—that acts as a secure collection point for Federal Reserve currency deposits from the region’s depository institutions. The depot also distributes currency orders that depository institutions have placed with the Reserve Bank. The work of counting deposits and preparing orders is done by a Federal Reserve office in another city. The Federal Reserve pays for the transportation between the Reserve Bank office and the depot operator. The operator follows strict procedures developed by the Federal Reserve.

The Birmingham cash depot will be serviced by the Federal Reserve Bank of Atlanta’s head office, the Oklahoma City cash depot will be serviced by the Federal Reserve Bank of Dallas’ head office, and the Portland cash depot will be serviced by the Federal Reserve Bank of San Francisco’s Seattle office. Approximately 50 cash employees work at the Birmingham, Oklahoma City, and Portland branches combined, but the number that will be affected by these changes is undetermined at this time. The Reserve Banks will offer a variety of programs to staff that are affected by these decisions, including separation packages, extended medical coverage and career transition assistance.

The Federal Reserve will continue its evaluation of cash services and plans to announce further changes as recommendations are approved, including the possibility of serving new markets.
Press Release (links off-site)


June 15, 2005
Nominations for Consumer Advisory Committee

On June 15, 2005 the Federal Reserve Board announced that it is seeking nominations for appointments to its Consumer Advisory Council.

The Council advises the Board on the exercise of its responsibilities under various consumer financial services laws and on other matters on which the Board seeks advice. The group meets in Washington, D.C., three times a year.

Ten new members will be appointed to serve three-year terms beginning in January 2006.
Press Release (links off-site)


May 18, 2005
Gramlich Resignation

On May 18, 2005 Edward M. Gramlich submitted his resignation as a member of the Board of Governors of the Federal Reserve System, effective August 31, 2005.

Gramlich, who has been a member of the Board since November 5, 1997, submitted his letter of resignation to President Bush. In view of his impending departure and in keeping with Federal Open Market Committee practice, he will not attend the August 9 meeting of the FOMC.

“Ned has contributed powerfully to the work of the Board and of the FOMC for nearly eight years,” said Federal Reserve Board Chairman Alan Greenspan. “Our deliberations have been enriched by his keen insights, his good humor and his lively mind.”

Gramlich is resigning to pursue several teaching and research interests. He will become the Richard A. Musgrave Collegiate Professor in the Gerald R. Ford School of Public Policy at the University of Michigan, teaching in that program and in the new Michigan in Washington Program. He will also hold a part-time appointment as Senior Fellow at the Urban Institute.

Press Release (links off-site)


May 03, 2005
FOMC Statement

(Note: Corrects previous release to add sentence in second paragraph, which was dropped inadvertently.)

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 3 percent.

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. Recent data suggest that the solid pace of spending growth has slowed somewhat, partly in response to the earlier increases in energy prices. Labor market conditions, however, apparently continue to improve gradually. Pressures on inflation have picked up in recent months and pricing power is more evident. Longer-term inflation expectations remain well contained.

The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Richard W. Fisher; Edward M. Gramlich; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
Press Release (links off-site)


March 23, 2005
Interagency Guidance Regarding Security Breaches

The federal bank and thrift regulatory agencies have jointly issued Interagency Guidance on Response Programs for Unauthorized Access to Customer Information and Customer Notice. The guidance interprets the agencies' customer information security standards and states that financial institutions should implement a response program to address security breaches involving customer information. The response program should include procedures to notify customers about incidents of unauthorized access to customer information that could result in substantial harm or inconvenience to the customer.

Under the guidance, a financial institution should notify its primary federal regulator of a security breach involving sensitive customer information, whether or not the institution notifies its customers.
Press Release (links off-site)


March 22, 2005
FOMC Statement

On March 22, 2005 The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 2-3/4 percent.

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. Output evidently continues to grow at a solid pace despite the rise in energy prices, and labor market conditions continue to improve gradually. Though longer-term inflation expectations remain well contained, pressures on inflation have picked up in recent months and pricing power is more evident. The rise in energy prices, however, has not notably fed through to core consumer prices.

The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Ben S. Bernanke; Susan S. Bies; Roger W. Ferguson, Jr.; Edward M. Gramlich; Jack Guynn; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 3-3/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, and San Francisco.
Press Release (links off-site)


February 28, 2005
Definitive Municipal Securities

On February 28, 2005 the Federal Reserve Board approved the Federal Reserve Banks’ proposal to stop providing services to depository institutions for the collection and processing of definitive municipal securities. The Reserve Banks will stop accepting deposits of bonds and coupons on September 30, 2005, and will complete the withdrawal from the noncash collection service on December 30, 2005.

Definitive municipal securities are registered or bearer bonds that have been issued by state and local governments with interest coupons in certificated, or physical, form. Municipal bond and coupon volume has been declining since the passage of the Tax Equity and Fiscal Responsibility Act of 1982, which effectively eliminated the issuance of municipal bearer bonds. The noncash collection service is provided centrally by the Jacksonville Branch of the Federal Reserve Bank of Atlanta and represented less than 0.2 percent of the Reserve Banks’ total priced financial services costs in 2004.

The withdrawal from this service is prompted by the declining volume of definitive municipal securities, the Reserve Banks’ expected underrecovery of costs for providing the service in future years, and the availability of reasonable private-sector alternatives. With the exit of the Reserve Banks, depository institution customers of the noncash collection service could instead use a private-sector service provider, such as the Depository Trust Company or a correspondent bank, to collect their definitive municipal bonds and coupons or could present these items for payment directly to the paying agent.
Press Release (links off-site)


February 18, 2005
Guidance on Overdraft Protection Programs

The federal bank and credit union regulatory agencies today announced final joint guidance to assist insured depository institutions in the disclosure and administration of overdraft protection programs.

Depository institutions may offer overdraft protection programs to transaction account customers as an alternative to traditional ways of covering overdrafts. In response to concerns about the marketing, disclosure, and implementation of these programs, the agencies published for comment proposed interagency guidance on overdraft protection programs in June 2004. The final joint guidance responds to comments received by consumer and community groups, individual consumers, depository institutions, trade associations, vendors offering overdraft protection products, other industry representatives, and state agencies.

The final joint guidance contains three primary sections: Safety and Soundness Considerations; Legal Risks; and Best Practices. The safety and soundness discussion seeks to ensure that financial institutions offering overdraft protection programs adopt adequate policies and procedures to address credit, operational, and other associated risks.
Press Release(links off-site)


February 02, 2005
FOMC Statement

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 2-1/2 percent.

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. Output appears to be growing at a moderate pace despite the rise in energy prices, and labor market conditions continue to improve gradually. Inflation and longer-term inflation expectations remain well contained.

The Committee perceives the upside and downside risks to the attainment of both sustainable growth and price stability for the next few quarters to be roughly equal. With underlying inflation expected to be relatively low, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Ben S. Bernanke; Susan S. Bies; Roger W. Ferguson, Jr.; Edward M. Gramlich; Jack Guynn; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 3-1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
Press Release (links off-site)


2004

December 21, 2004
2005 Regulation C Asset-size Exemption

On December 21, 2004 the Federal Reserve Board published its annual notice of the asset-size exemption threshold for depository institutions under Regulation C, which implements the Home Mortgage Disclosure Act (HMDA).

The asset-size exemption for depository institutions will increase $1 million to a level of $34 million based on the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers for the twelve-month period ending in November 2004. As a result, depository institutions with assets of $34 million or less as of December 31, 2004, are exempt from data collection in 2005. An institution’s exemption from collecting data in 2005 does not affect its responsibility to report the data it was required to collect in 2004.

The adjustment is effective January 1, 2005.
Press Release (links off-site)


December 21, 2004
Agencies Announce Final Rules on Disposal of Consumer Information

On December 21, 2004 the federal bank and thrift regulatory agencies announced interagency final rules to require financial institutions to adopt measures for properly disposing of consumer information derived from credit reports.

Current law requires financial institutions to protect customer information by implementing information security programs. The final rules require institutions to make modest adjustments to their information security programs to include measures for the proper disposal of consumer information. They also add a new definition of “consumer information.”

The agencies’ final rules implement section 216 of the Fair and Accurate Credit Transactions Act of 2003 (FACT Act) and include this new statutory requirement in the Interagency Guidelines Establishing Standards for Safeguarding Customer Information (retitled the Interagency Guidelines Establishing Standards for Information Security), which were adopted in 2001.

The final rules will take effect on July 1, 2005.
Press Release (links off-site)


December 14, 2004
FOMC Statement

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 2-1/4 percent.

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. Output appears to be growing at a moderate pace despite the earlier rise in energy prices, and labor market conditions continue to improve gradually. Inflation and longer-term inflation expectations remain well contained.

The Committee perceives the upside and downside risks to the attainment of both sustainable growth and price stability for the next few quarters to be roughly equal. With underlying inflation expected to be relatively low, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Ben S. Bernanke; Susan S. Bies; Roger W. Ferguson, Jr.; Edward M. Gramlich; Thomas M. Hoenig; Donald L. Kohn; Cathy E. Minehan; Mark W. Olson; Sandra Pianalto; and William Poole.

In a related action, the Board of Governors unanimously approved a 25 basis point increase in the discount rate to 3-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.

In addition, the Committee unanimously decided to expedite the release of its minutes. Beginning with this meeting, the minutes of regularly scheduled meetings will be released three weeks after the date of the policy decision. The first set of expedited minutes will be released at 2 p.m. EST on January 4, 2005.
Press Release (links off-site)


December 06, 2004
Federal Reserve Studies Confirm Electronic Payments Exceed Check Payments

Surveys conducted by the Federal Reserve confirm that electronic payment transactions in the United States have exceeded check payments for the first time. The number of electronic payment transactions totaled 44.5 billion in 2003, while the number of checks paid totaled 36.7 billion, according to recent surveys of U.S. depository financial institutions and electronic payments organizations.

Previous research by the Federal Reserve found that the number of checks paid in 2000 was 41.9 billion transactions, compared with 30.6 billion electronic payments. Electronic payments consist of such payment methods as credit cards, debit cards and automated clearinghouse (ACH) transactions, like direct debit.

The decline in the number of checks paid from 41.9 billion transactions to 36.7 billion reflects an annual average rate of decline of 4.3 percent from 2000 to 2003. As for electronic forms of payment, the increase from 30.6 billion to 44.5 billion reflects an average annual rate of increase of 13.2 percent for the same period.

“The balance has shifted from check writing to electronic payments, and we expect this trend to continue,” said Richard Oliver, senior vice president of the Federal Reserve Bank of Atlanta and the Federal Reserve Banks’ product manager for retail payments. “Indeed, at current growth rates, credit cards and debit cards will both surpass checks in terms of total annual transactions in 2007. Such rapid change presents opportunities and challenges for an industry traditionally geared toward paper-based payments. The value of these surveys is that they quantify this shift and provide important insight for all industry participants.”
Press Release (links off-site)


December 01, 2004
Revised Bank Holding Company Rating System

On December 1, 2004 the Federal Reserve issued a revised bank holding company (BHC) rating system. The revised system more closely aligns the Federal Reserve’s rating process with the focus of its current supervisory practices by placing an increased emphasis on risk management, providing a more flexible and comprehensive framework for evaluating financial condition, and requiring an explicit determination of the likelihood that the nondepository entities of a BHC will have a significant negative impact on the depository subsidiaries. The revised rating system becomes effective January 1, 2005.

Under the revised rating system, each BHC is assigned a composite rating (C) based on an evaluation and rating of three essential components of an institution’s financial condition and operations. These three components are: Risk Management (R); Financial Condition (C); and potential Impact (I) of the parent company and nondepository subsidiaries on the subsidiary depository institutions. A fourth rating, Depository Institution (D), mirrors the primary regulator’s assessment of the subsidiary depository institutions. A simplified version of the rating system that includes only the R and C components will be applied to noncomplex bank holding companies with assets below $1 billion.

The policy also contains guidance on implementation of the revised rating system based on BHC size and complexity.
Press Release (links off-site)


November 10, 2004
FOMC Statement

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

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. Output appears to be growing at a moderate pace despite the rise in energy prices, and labor market conditions have improved. Inflation and longer-term inflation expectations remain well contained.

The Committee perceives the upside and downside risks to the attainment of both sustainable growth and price stability for the next few quarters to be roughly equal. With underlying inflation expected to be relatively low, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Ben S. Bernanke; Susan S. Bies; Roger W. Ferguson, Jr.; Edward M. Gramlich; Thomas M. Hoenig; Donald L. Kohn; Cathy E. Minehan; Mark W. Olson; Sandra Pianalto; and William Poole.

In a related action, the Board of Governors unanimously approved a 25 basis point increase in the discount rate to 3 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, and Kansas City.
Press Release (links off-site)


October 28, 2004
Consumer Brochures Regarding Checks

On October 28, 2004 the Federal Reserve Board announced the publication of two new consumer guides that provide practical information on the changes resulting from technological advances in check processing.

Technological innovation is allowing for checks to be collected and processed more efficiently, reducing the time and resources dedicated to handling, sorting, and transporting checks. A federal law known as the Check Clearing for the 21st Century Act (Check 21), which took effect today, makes it easier for banks to electronically transfer check images instead of physically transferring paper checks. Check 21 does not require banks to accept checks electronically, but it facilitates electronic transmission between banks by providing a way for banks that clear checks electronically to exchange information with those that do not.

The “Consumer Guide to Check 21 and Substitute Checks” describes how consumers may be affected by the new law and provides information on how to resolve problems associated with the receipt of substitute checks.

A second consumer guide, “What You Should Know about Your Checks,” discusses more broadly how check payments have changed, including the increased use of electronic check conversion, a process separate from Check 21. In the check conversion process, a consumer authorizes the use of information from their paper check to make an electronic payment at the point of sale or when paying a bill by mail.

Both brochures stress that because payments might be processed faster, when a check is written, the money may be deducted from a consumer’s checking account sooner. As a result, consumers should be sure they have enough money in their account to cover the amount of their check.


October 27, 2004
Appointment of Chairmen and Deputy Chairmen

On October 27, 2004 the Federal Reserve Board announced the appointment of the chairmen and deputy chairmen of the twelve Federal Reserve Banks for 2005.

Each Reserve Bank has a nine-member board of directors. The Board of Governors in Washington appoints three of these directors and each year designates one of its appointees as chairman and a second as deputy chairman.

For Atlanta the chairman and deputy chairman appointed by the Board for 2005 are:

David M. Ratcliffe, Chairman, President, and Chief Executive Officer, Southern Company, Atlanta, Georgia, renamed Chairman.

V. Larkin Martin, Managing Partner, Martin Farm, Courtland, Alabama, renamed Deputy Chairman.
Press Release (links off-site)


October 14, 2004
Agencies provide consumer information on avoiding overdraft and bounced-check fees

The federal bank, thrift, and credit union regulatory agencies announced the publication of a new consumer resource, Protecting Yourself from Overdraft and Bounced-Check Fees.

The brochure’s key message to consumers is that the best way to avoid overdraft and bounced-check fees is to manage accounts wisely. That means keeping an up-to-date check register, recording all electronic transactions and automatic bill payments, and monitoring account balances carefully.

Many banks, savings and loans, and credit unions offer “courtesy overdraft protection” or “bounce coverage” plans so checks do not bounce and ATM, debit card, and other electronic or automatic transactions go through. But most financial institutions charge a flat fee (often $20 to $30) for each item they cover. Even if a financial institution has a bounce-coverage plan, there is no guarantee an overdraft will be covered.

The federal financial regulatory agencies want consumers to know that careful account management is the lowest-cost way to avoid overdraft and returned-check fees and protect your hard-earned money. If overdraft protection is needed every now and then, consumers should talk with their financial institution or a financial adviser about what choices and services are right for them. Financial institutions may provide other ways of covering overdrafts that may be less expensive. For example, consumers may be able to link a savings or other account to automatically transfer funds into their checking account. Consumers also may be able to establish an overdraft line of credit or link a checking account to a credit card.
Brochure (links off-site)


October 06, 2004
Annual Adjustments for Reserve Calculations and Deposit Reporting

On October 6, 2004 the Federal Reserve Board announced the annual indexing of the low reserve tranche and of the reserve requirement exemption amount for 2005. These amounts are used in the calculation of reserve requirements of depository institutions.

All depository institutions must hold a percentage of certain types of deposits as reserves in the form of vault cash, as a deposit in a Federal Reserve Bank, or as a deposit in a pass-through account at a correspondent institution. Reserve requirements currently are assessed on the depository institution’s net transaction accounts (mostly checking accounts). Depository institutions must also regularly submit deposit reports of their deposits and other reservable liabilities.

For net transaction accounts in 2005, the first $7.0 million, up from $6.6 million in 2004, will be exempt from reserve requirements. A 3 percent reserve ratio will be assessed on net transaction accounts over $7.0 million up to and including $47.6 million, up from $45.4 million in 2004. A 10 percent reserve ratio will be assessed on net transaction accounts in excess of $47.6 million.

These annual adjustments, known as the low reserve tranche adjustment and the reserve requirement exemption amount adjustment, are based on growth in net transaction accounts and total reservable liabilities, respectively, at all depository institutions between June 30, 2003 and June 30, 2004.
Press Release (links off-site)
Attachment (PDF links off-site)


September 28, 2004
Banks to Begin Distributing Redesigned $50 Bill

Newly redesigned $50 notes arrive at banks beginning today ready to make their way into circulation and consumer wallets. Today marks the day the Federal Reserve System distributes the new note to banks and thus into the public’s hands.

To mark the occasion, officials from the U.S. Department of the Treasury, Federal Reserve Board and the U.S. Secret Service were on hand for the first transaction using the newly redesigned $50 note. Paying homage to the symbol of freedom featured in the note’s new design, the U.S. flag, the officials used one of the first new $50 notes to buy an American flag from the Alamo Flag shop in Washington, D.C.’s Union Station.

The $50 note includes enhanced security features, subtle background colors of blue and red, images of a waving American flag and a small metallic silver-blue star. The new design is part of the U.S. government’s ongoing efforts to stay ahead of counterfeiting and protect the integrity of U.S. currency.

“The stability and integrity of U.S. paper currency is something the U.S. government takes very seriously,” said Brian Roseboro, Under Secretary for Domestic Finance at the Department of the Treasury. “We believe that redesigning the currency regularly and enhancing security features is the way to keep U.S. currency safe and secure from would-be counterfeiters.”

“A combination of factors keep currency counterfeiting at low levels,” said Paul Johnson, Assistant Special Agent in Charge of the U.S. Secret Service’s Criminal Investigations Division. “Improved worldwide cooperation in law enforcement, improvements in currency design, like those in the new $50 notes that will begin circulating today, and a better-informed public all contribute to our success in the fight against counterfeiting.”

The government is supporting the new currency’s issue with a public education program designed to inform people in the U.S. and overseas about updated security features and ensure a smooth introduction of each newly designed note into circulation.

“As we introduce these beautiful new notes, we want to emphasize that the older design $50 notes will remain in circulation for some time to come and will remain legal tender,” said Louise Roseman, the Federal Reserve Board’s Director of Federal Reserve Bank Operations and Payment Systems.

The new $50 note is the second denomination in the Series 2004 currency, the most secure series of notes in U.S. history. The first denomination in the series to be redesigned was the $20 note, which began circulating in October 2003.

“The next denomination in the series will be a new $10 note,” said Ferguson. “We are currently working on the design and expect to unveil it in the spring of 2005.” The $100 note is also slated to be redesigned, but a timetable for its introduction is not yet set. No decision has been reached on any potential design changes to the $5 note, but the $1 and $2 notes will not be redesigned.

Security Features
The new $50 design retains three important security features that were first introduced in the 1990s and are easy for consumers and merchants alike to check:
Watermark: A faint image, similar to the portrait, which is part of the paper itself and is visible from both sides when held up to the light.
Security thread: Also visible from both sides when held up to the light, this vertical strip of plastic is embedded in the paper and spells out the denomination in tiny print.
Color-shifting ink: The numeral in the lower right corner on the face of the note, indicating its denomination, changes color from copper to green when the note is tilted.

Press Release (links off-site)


September 21, 2004
FOMC Statement

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 1-3/4 percent.

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. After moderating earlier this year partly in response to the substantial rise in energy prices, output growth appears to have regained some traction, and labor market conditions have improved modestly. Despite the rise in energy prices, inflation and inflation expectations have eased in recent months.

The Committee perceives the upside and downside risks to the attainment of both sustainable growth and price stability for the next few quarters to be roughly equal. With underlying inflation expected to be relatively low, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Ben S. Bernanke; Susan S. Bies; Roger W. Ferguson, Jr.; Edward M. Gramlich; Thomas M. Hoenig; Donald L. Kohn; Cathy E. Minehan; Mark W. Olson; Sandra Pianalto; and William Poole.

In a related action, the Board of Governors unanimously approved a 25 basis point increase in the discount rate to 2-3/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
Press Release (links off-site)


September 08, 2004
Agencies announce brochure on new Internet scam

On September 8, 2004 the federal bank, thrift and credit union agencies today announced the publication of a brochure with information to help consumers identify and combat a new type of Internet scam known as “phishing.”

The term is a play on the word “fishing,” and that’s exactly what Internet thieves are doing—fishing for confidential financial information, such as account numbers and passwords. With enough information, a con artist can run up bills on another person's credit card or, in the worst case, even steal that person’s identity.

In a common type of phishing scam, individuals receive e-mails that appear to come from their financial institution. The e-mail may look authentic, right down to the use of the institution’s logo and marketing slogans. The e-mails often describe a situation that requires immediate attention and then warn that the account will be terminated unless the e-mail recipients verify their account information immediately by clicking on a provided link.

The link will take the e-mail recipient to a screen that asks for account information. While it may appear to be a page sponsored by a legitimate financial institution, the information will actually go to the con artist who sent the e-mail.

The federal financial regulatory agencies want consumers to know that they should never respond to such requests. No legitimate financial institution will ever ask its customers to verify their account information online.

The interagency brochure is available on each agency’s web site and financial institutions are encouraged to download the camera-ready file for use in their own customer-education programs.
Press Release (links off-site)


August 31, 2004
Central Data Repository

On August 31, 2004 the federal banking agencies announced that they will target implementation of the Central Data Repository (CDR) for one of the first two Call Report periods of 2005. A specific date will be announced by the end of the year.

The CDR is an Internet-based system created to modernize and streamline how the agencies collect, validate and distribute financial data, or “Call Reports,” submitted by banks. This initiative — the Call Report Modernization Project — is an interagency effort under the auspices of the FFIEC.
Press Release (links off-site)


August 10, 2004
FOMC Statement

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 1-1/2 percent.

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. In recent months, output growth has moderated and the pace of improvement in labor market conditions has slowed. This softness likely owes importantly to the substantial rise in energy prices. The economy nevertheless appears poised to resume a stronger pace of expansion going forward. Inflation has been somewhat elevated this year, though a portion of the rise in prices seems to reflect transitory factors.

The Committee perceives the upside and downside risks to the attainment of both sustainable growth and price stability for the next few quarters are roughly equal. With underlying inflation still expected to be relatively low, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Ben S. Bernanke; Susan S. Bies; Roger W. Ferguson, Jr.; Edward M. Gramlich; Thomas M. Hoenig; Donald L. Kohn; Cathy E. Minehan; Mark W. Olson; Sandra Pianalto; and William Poole.

In a related action, the Board of Governors unanimously approved a 25 basis point increase in the discount rate to 2-1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
Press Release (links off-site)


August 05, 2004
Study of Investigations of Disputed Consumer Information

On August 5, 2004 the Federal Reserve Board announced that it is conducting a study on the adequacy of investigations of disputed consumer information reported to consumer reporting agencies. In connection with the study, the Board is soliciting public comment on issues that will assist in the preparation of the study.

The Fair and Accurate Credit Transactions Act of 2003 (FACT Act), which generally amends the Fair Credit Reporting Act (FCRA), requires the Board and the Federal Trade Commission to conduct a joint study of the extent to which consumer reporting agencies and furnishers of information to consumer reporting agencies comply with certain FCRA requirements. The study will focus on: 1) the prompt investigation of disputed information; 2) the completeness of information reported to consumer reporting agencies; and 3) the prompt correction or deletion of any information that cannot be verified.
Press Release (links off-site)


August 02, 2004
Changes to Increase Efficiency in Reserve Bank Check Services

The Federal Reserve Banks today announced further changes to increase the efficiency of their check-processing operations while maintaining high-quality services to depository institutions throughout the country. Check processing operations at nine sites will be discontinued and the volumes at these sites shifted to other Federal Reserve locations. These changes will take place through 2005 and early 2006, and they respond to the nation’s increasing substitution of electronic payments for paper checks. This announcement follows the Reserve Banks’ June 16, 2004, announcement of a strategy to meet the evolving demands of the payments system.

The Reserve Banks will continue providing check services to customers nationwide. However, by decreasing the number of check-processing locations and increasing capacity at other sites, the Reserve Banks will reduce their check service operating costs in line with the ongoing shift in consumer and business preferences for electronic payments.

In the Sixth District two check processing sites, Birmingham and Nashville, will be consolidated into Atlanta.
Press Release (links off-site)


July 28, 2004
Bank Secrecy Act Exam Procedures

The federal financial institutions regulatory agencies today issued Bank Secrecy Act (B.S.A.) procedures for examining each domestic and foreign banking organization’s customer identification program (CIP) which is required by section 326 of the USA PATRIOT Act (codified in the B.S.A. at 31 U.S.C. 5318(l)). The procedures are designed to help financial institutions fully implement the new CIP requirements and facilitate a consistent supervisory approach among the federal financial institutions regulatory agencies.

The USA PATRIOT Act, signed into law on October 26, 2001, establishes new and enhanced measures to prevent, detect, and prosecute money laundering and terrorism. The regulation implementing section 326 of the Act requires each financial institution to implement a written CIP that includes certain minimum requirements and is appropriate for its size and type of business. The CIP must be incorporated into the financial institution’s anti-money laundering compliance program, which is subject to approval by the financial institution organization’s board of directors. Compliance with the regulation was required by October 1, 2003.
Press Release (links off-site)


June 26, 2004
Basel II Capital Standards

The Basel Committee on Banking Supervision today released its document “International Convergence of Capital Measurement and Capital Standards: A Revised Framework.” The Framework (also referred to as Basel II) represents the outcome of the work of the Basel Committee, with active participation by the U.S. banking and thrift agencies (Agencies), over recent years to secure international convergence on revisions to regulations and standards governing the capital adequacy of internationally active banking organizations. The Framework will form the basis upon which the Agencies, and representatives of the other Basel Committee member countries, develop proposed revisions to existing capital adequacy regulations and standards.

The Framework is available on the Basel Committee’s web site at www.bis.org, the Office of the Comptroller of the Currency's (OCC) web site at www.occ.treas.gov, the Federal Reserve Board’s (Federal Reserve) web site at www.federalreserve.gov, the Federal Deposit Insurance Corporation's (FDIC) web site at www.fdic.gov, and the Office of Thrift Supervision's (OTS) web site at www.ots.treas.gov.

U.S. Implementation Plans
As noted, the Framework will form the basis upon which the Agencies develop proposed revisions to their existing risk-based capital adequacy regulations. As previously announced, the Agencies expect that only a small number of large, internationally active U.S. banking organizations would be required to use the Framework, and that those institutions would use only the most advanced approaches for determining their risk-based capital requirements. Application of the Framework’s advanced approaches to other qualifying U.S. banking organizations would be at the banking organization’s option.

The Agencies have developed a comprehensive plan to incorporate the advanced risk and capital measurement methodologies of the Framework into regulations and supervisory guidance for U.S. institutions. This plan will ensure that U.S. implementation efforts are consistent with the Framework; reflect the unique statutory, regulatory and supervisory processes in the United States; and appropriately seek and consider comments on individual aspects of the plan from all interested parties.

Prior to implementation, it is expected that institutions using Framework-based regulations and guidance will first be subject to a year of “parallel running;” i.e. application of the advanced approaches in tandem with the current risk-based capital regime, beginning in January 2007. The Agencies anticipate that the Framework would become fully effective in the United States in January 2008. The Agencies plan to apply prudential floors to risk-based regulatory capital calculations in the two years immediately after adoption of the Framework. Qualified institutions that opt in to the Framework subsequent to the initial implementation period would be subject to a similar phase-in schedule (i.e. parallel running and floors).

Given the investments needed to qualify for the advanced approaches of the Framework, the Agencies believe that it would be prudent for banking organizations that expect to adopt the Framework on or near the effective date to begin planning their implementation efforts. In order to facilitate such efforts, the Agencies have described below the significant milestones in the development of Framework-based regulations, guidance, and policies. Additional information on these activities will be forthcoming.

Supervisory Guidance
The Agencies are developing supervisory guidance for various portfolios and risk exposures addressed by the Framework. This guidance is intended to provide U.S. institutions and supervisors with a clear description of the essential components and characteristics of the measurement and management structure for these risks and to describe relevant supervisory expectations for banking organizations adopting a Framework-based process for the determination of minimum regulatory risk-based capital requirements.

The Agencies have previously published for notice and comment draft supervisory guidance on Internal Ratings-Based Systems (IRB) for Corporate Credit and on the Advanced Measurement Approaches (AMA) for Operational Risk. See 68 Fed. Reg. 45949 (August 4, 2003). The Agencies expect to publish for notice and comment draft supervisory guidance on IRB Systems for Retail Credit in the third quarter of 2004. Over the course of the next year, the Agencies will publish for comment additional guidance on other aspects of IRB Systems.

Institutions that expect to adopt the Framework are encouraged to consider the supervisory standards articulated in the guidance in developing their implementation plans for the adoption of Framework-based systems. Specifically, institutions should begin to self-assess the extent to which their systems and processes comply with or differ from proposed supervisory standards. The Agencies expect to publish additional information regarding the process that will be used to assess individual institutions’ efforts to meet IRB and AMA qualifying standards.

Additional Quantitative Impact Study
Later this year, the Agencies will conduct a fourth Quantitative Impact Study (QIS-4) to evaluate the potential effects of a U.S. implementation of the Framework. QIS-4 will assist banking organizations and their supervisors in better understanding the implications of this proposal on the regulatory capital requirements of individual institutions and may provide some insight with regard to the competitive implications of the new rules. A full or partial recalibration of the Framework may be considered based on the results of the QIS-4 exercise.

Although other countries may undertake joint or independent reviews similar to QIS-4, the forthcoming study, as implemented in the United States, will be tailored to the domestic interests of the Agencies and will focus on the effect of the proposal on U.S. banking organizations, especially those large internationally active institutions that the Agencies have proposed to require to conform to Framework-based regulations. Other institutions that anticipate adhering to Framework-based regulations on a voluntary basis may also participate in the study in order to understand better the nature of the internal risk measurement information that the new rules would require and to estimate their resulting capital requirements.

As before, the Agencies will request that participants submit requested information by completing a series of computerized spreadsheets—the Agencies will ensure consistency in responses through detailed instructions, questionnaires, and supervisory oversight. The Agencies expect to finalize and distribute survey materials to participating institutions in October 2004 and to request that institutions complete and return the survey results by mid-January 2005. Institutions that want to participate in the study should discuss the project with their federal supervisor(s) by the end of July 2004.

Revision of Capital Adequacy Regulations
In August of 2003, the Agencies published for notice and comment an advance notice of proposed rulemaking (ANPR) discussing possible revisions to U.S. risk-based capital adequacy regulations relating to an earlier iteration of the Framework. See 68 Fed. Reg. 45900 (August 4, 2003). With the publication of the Framework, the Agencies will continue this rulemaking process.

As provided in the ANPR, the Agencies expect that some U.S. banking organizations would use the most advanced approaches set forth in the Framework to determine their risk-based capital requirements, while others would continue to apply the existing capital rules. As a result, the United States would have a bifurcated regulatory capital framework. In conjunction with the assessment of U.S. risk-based capital adequacy regulations relating to the Framework, the Agencies are assessing possible changes to capital regulations for U.S. institutions not subject to Framework-based regulations.

Importantly, all U.S. banking organizations would continue to be subject to a leverage ratio requirement under existing regulations, and Prompt Corrective Action (PCA) legislation and implementing regulations would remain in effect.

The Agencies expect that a notice of proposed rulemaking on possible revisions to risk-based capital adequacy regulations relating to the Framework will be published in mid-2005. After fully considering all comments, the Agencies expect to be in a position to publish final rules on this proposal in the second quarter of 2006. Possible changes to capital regulations for U.S. institutions not subject to the Framework-based regulations will be considered and addressed in this same general timeframe.
Press Release (links off-site)


June 25, 2004
Tentative FOMC Schedule

The Federal Open Market Committee announced its tentative meeting schedule for 2005:

February 1-2 (Tuesday-Wednesday)
March 22
May 3
June 29-30 (Wednesday-Thursday)
August 9
September 20
November 1
December 13
January 31-February 1, 2006 (Tuesday-Wednesday)


June 21, 2004
Chairman Greenspan sworn in for fifth term

Saturday evening Alan Greenspan took the oath of office as Chairman of the Board of Governors of the Federal Reserve System for a fifth four-year term commencing on June 20, 2004. The oath was administered by Vice President Dick Cheney at the Colorado home of former President Gerald Ford. Witnesses included President and Mrs. Ford and Chairman Greenspan’s wife, Andrea Mitchell.

President Bush nominated Dr. Greenspan on May 18, and he was confirmed by the Senate on June 17. He originally took office on August 11, 1987.


June 17, 2004
Board seeks nominations for appointments to Consumer Advisory Council

The Federal Reserve Board announced Thursday that it is seeking nominations for appointments to its Consumer Advisory Council. Eleven new members will be appointed to serve three-year terms beginning in January 2005.

The Council advises the Board on the exercise of its responsibilities under various consumer financial services laws and on other matters on which the Board seeks advice. The group meets in Washington, D.C., three times a year.

Nominations should include a résumré and the following information about nominees:

  • Complete name, title, address, telephone, e-mail address and fax numbers;
  • Organization’s name, brief description of organization, address, telephone and fax numbers;
  • Past and present positions;
  • Knowledge, interests or experience related to community reinvestment, consumer protection regulations, consumer credit, or other consumer financial services;
  • Positions held in community and banking associations, councils, and boards.

Nominations should also include the complete name, organization name, title, address, telephone, e-mail address and fax numbers for the nominator.

Letters of nomination with complete information, including a resume for each nominee, must be received by August 27, 2004. NOMINATIONS NOT RECEIVED BY AUGUST 27, 2004 MAY NOT BE CONSIDERED.

Electronic nominations are preferred.

If electronic submission is not feasible, the nominations can be mailed (not sent by facsimile) to Terri Johnsen, Manager, Community Affairs, Division of Consumer and Community Affairs, Board of Governors of the Federal Reserve System, Washington, D.C. 20551.
Press Release (links off-site)


June 16, 2004
Approval of proposal by Regions Financial Corporation

The Federal Reserve Board announced its approval of the proposal by Regions Financial Corporation, Birmingham, Alabama, to merge with Union Planters Corporation, and thereby indirectly acquire Union Planters Bank, National Association, both in Memphis, and Union Planters Bank of the Lakeway Area, Morristown, all in Tennessee.
Press Release (links off-site)


June 16, 2004
Strategy to Meet Evolving Needs of Payment System

The Federal Reserve Banks announced a strategy to accommodate the evolution of the nation’s payments system from paper check processing to electronic processing, a development driven by a significant broad-based change in user preference. The Reserve Banks’ strategy entails launching new products and services to support the implementation of the Check 21 Act in October 2004, as well as streamlining its check-processing infrastructure by discontinuing check processing at locations to be announced later this year. Even with these changes, the Federal Reserve Banks will continue to provide check processing services on a national basis.

In this effort, Reserve Banks will provide opportunities through their Check 21 products and services for financial institutions to make use of electronic check services as a means of reducing their overall check operating costs. These steps should also reduce the time during which industry participants and the Reserve Banks must support significant investments in dual processing platforms.

In 2003, Reserve Banks’ check volume declined at about a 5 percent rate. For 2004, check volumes have declined at an accelerated pace compared to the same period last year. A 2001 Federal Reserve study revealed that about 42 billion checks were written that year in the United States, considerably lower than industry estimates. Those volumes are expected to continue to decline in coming years. The Reserve Banks will continue to assist the nation’s financial services industry by conducting research related to the nation’s payments system. The results of the most recent study will be available later this year.
Press Release (links off-site)


June 14, 2004
JP Morgan Chase and Bank One Merger

The Federal Reserve Board announced its approval of the application filed by J. P. Morgan Chase & Co., New York, New York, to merge with Bank One Corporation, Chicago, Illinois, and to acquire Bank One’s subsidiary banks, including its lead subsidiary bank, Bank One, National Association, also in Chicago.
Press Release (links off-site)


June 10, 2004
Survey of Small Business Finances

The Federal Reserve Board began the latest Survey of Small Business Finances this month, the fourth in a series since 1988 aimed at increasing policymakers’ understanding of how economic and regulatory changes affect small firms’ access to credit.

On behalf of the Board, NORC, a social science research organization at the University of Chicago, is collecting information from small businesses about their finances in 2003. Through the end of this year, it will conduct telephone interviews with 4,000 executives at firms of fewer than 500 employees.

The last survey collected information on small business finances in 1998. Both the state of the economy and the use of technology are very different today than they were then. The Board plans to publish findings from the new study in early 2006 after all the data have been collected and analyzed.

Participants are randomly selected from all fifty states and the District of Columbia using scientific sampling methods. They will be asked about their use of credit and other financial services and their experience in obtaining credit during 2003. Information will be collected about firms’ assets, liabilities, income and expenses.

Participation is voluntary but a broad sample will help government policymakers more clearly understand the impact of their actions on small businesses. The names and addresses of participants and any other identifying information will be held in the strictest confidence.
Press Release (links off-site)


June 08, 2004
Amendments to Regulation V

The Federal Reserve Board issued amendments to Regulation V, which implements the Fair Credit Reporting Act (FCRA), that would add model notices for financial institutions to use if they furnish negative information to consumer reporting agencies. The amendments also provide guidance to financial institutions regarding the use of the model notices. The Board is publishing the model notices pursuant to the Fair and Accurate Credit Transactions Act (FACT Act) amendments to the FCRA.

The amendments are effective July 16, 2004.
Press Release (links off-site)


May 25, 2004
Survey of Consumer Finances

The Federal Reserve Board in June will begin a statistical study of household finances, the Survey of Consumer Finances, that will provide policymakers with important insight into the economic condition of all types of American families.

The survey, undertaken every three years since 1983, is being conducted for the Board by NORC, a social science research organization at the University of Chicago, through December of this year.

The data collected will provide a representative picture of what Americans own — from houses and cars to stocks and bonds — how and how much they borrow and how they bank. Past study results have been important in policy discussions regarding pension and social security reform, tax policy, deposit insurance reform and a broad range of other areas.

Participants in the study are chosen at random from 79 areas across the United States, using a scientific sampling procedure. A representative of NORC contacts each potential participant personally to explain the study and request time for an interview.

Summary results for the 2004 study will be published in early 2006 after all data from the survey have been assessed and analyzed.
Press Release (links off-site)


May 06, 2004
Request for Comment: Trust Preferred Securities

The Federal Reserve Board requested public comment on a proposed rule that would retain trust preferred securities in the tier 1 capital of bank holding companies (BHCs), but with stricter quantitative limits and clearer qualitative standards.

Under the proposal, after a three-year transition period, the aggregate amount of trust preferred securities and certain other capital elements would be limited to 25 percent of tier 1 capital elements, net of goodwill. The amount of trust preferred securities and certain other elements in excess of the limit could be included in tier 2 capital, subject to restrictions. Internationally-active BHCs would generally be expected to limit trust preferred securities and certain other capital elements to 15 percent of tier 1 capital elements, net of goodwill. Comments are requested by July 11, 2004.
Press Release (links off-site)


May 04, 2004
FOMC Statement

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 1 percent.

The Committee continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity. The evidence accumulated over the intermeeting period indicates that output is continuing to expand at a solid rate and hiring appears to have picked up. Although incoming inflation data have moved somewhat higher, long-term inflation expectations appear to have remained well contained.

The Committee perceives the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. Similarly, the risks to the goal of price stability have moved into balance. At this juncture, with inflation low and resource use slack, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured.

Voting for the FOMC monetary policy actions were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Ben S. Bernanke; Susan S. Bies; Roger W. Ferguson, Jr.; Edward M. Gramlich; Thomas M. Hoenig; Donald L. Kohn; Cathy E. Minehan; Mark W. Olson; Sandra Pianalto; and William Poole.


April 26, 2004
New $50 Bill

On Monday April 26, 2004 U.S. government officials from the Department of the Treasury, the Federal Reserve and the United States Secret Service, unveiled the new $50 note design with enhanced security features, and subtle background colors of blue and red, and images of a waving American flag and a small metallic silver-blue star.

The new design is part of the government’s ongoing efforts to stay ahead of counterfeiting and protect the integrity of U.S. currency. The new $50 note, which will be issued in late September or early October, is the second denomination in the Series 2004 currency. The first was the $20 note, which began circulating in October 2003.

“U.S. currency is a worldwide symbol of security and integrity. These new designs help us keep it that way, by protecting against counterfeiting and making it easier for people to confirm the authenticity of their hard-earned money,” U.S. Treasury Secretary John W. Snow said. “In addition to keeping our currency safe from counterfeiters, the President’s economic policies are ensuring that more of those dollars stay in the pockets of American families.”

Snow was joined at the unveiling of the new $50 note’s design by Federal Reserve Board Governor Mark W. Olson, Tom Ferguson, director of the Treasury’s Bureau of Engraving and Printing, which produces U.S. currency, and C. Danny Spriggs, deputy director of the United States Secret Service, the law enforcement agency responsible for combating counterfeiting.
Press Release (links off-site)


April 13, 2004
Spanish Version of Consumer Brochure

On April 13, 2004 the federal Interagency Task Force on Fair Lending published a Spanish-language version of a brochure that alerts consumers to potential borrowing pitfalls, including high-cost home loans, and provides tips for getting the best financing deal possible. The brochure, Utilizar su hogar como garantía para un préstamo es arriesgado (Putting Your Home on the Loan Line Is Risky Business), warns that regardless of whether a home equity loan is for a home repair, bill consolidation or some other purpose, it’s important to shop around.
Press Release (links off-site)


March 26, 2004
Revisions to Regulation Z

On March 26, 2004 the Federal Reserve Board issued revisions to Regulation Z, which implements the Truth in Lending Act, and to the official staff commentary that applies and interprets the requirements of the regulation.

Regulation Z is revised to add an interpretative rule of construction to clarify that where the word "amount" is used in the regulation to describe disclosure requirements, it refers to a numerical amount. In addition, revisions to the staff commentary provide guidance on consumers' exercise of rescission rights for certain home-secured loans.

The Board is also publishing several technical revisions to the commentary. The revisions are effective April 1, 2004. The date for mandatory compliance is October 1, 2004.
Press Release (links off-site)


March 18, 2004
Request for Comment HMDA Disclosure Tables

On March 18, 2004 the Federal Reserve Board requested public comment on proposed changes (1.2 MB PDF) to the public disclosure tables that are used to report data collected by lenders under the Home Mortgage Disclosure Act (HMDA).

The proposal would revise some of the existing disclosure tables, delete one set of existing tables, and add new tables.

Recent revisions to Regulation C, the Board regulation that implements HMDA, require lending institutions to report new data including loan pricing information (the rate spread between the annual percentage rate on the loan and the yield on Treasury securities of comparable maturity); whether the loan is subject to the Home Ownership and Equity Protection Act (HOEPA); whether manufactured housing is involved; whether the loan is subject to a first or subordinate lien on the property; and certain information about requests for preapproval. These data items would be reflected on the proposed new tables. Comments on these proposed changes must be received by May 10, 2004.
Press Release (links off-site)


March 16, 2004
FOMC Statement

On March 16, 2004 the Federal Open Market Committee decided to keep its target for the federal funds rate at 1 percent.

The Committee continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity. The evidence accumulated over the intermeeting period indicates that output is continuing to expand at a solid pace. Although job losses have slowed, new hiring has lagged. Increases in core consumer prices are muted and expected to remain low.

The Committee perceives the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. The probability of an unwelcome fall in inflation has diminished in recent months and now appears almost equal to that of a rise in inflation. With inflation quite low and resource use slack, the Committee believes that it can be patient in removing its policy accommodation.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Ben S. Bernanke; Susan S. Bies; Roger W. Ferguson, Jr.; Edward M. Gramlich; Thomas M. Hoenig; Donald L. Kohn; Cathy E. Minehan; Mark W. Olson; Sandra Pianalto; and William Poole.
Press Release (links off-site)


February 12, 2004
FFIEC Call Report Modernization Web site

On February 12, 2004 the federal bank regulatory agencies announced the availability of a web site that provides information on the Federal Financial Institutions Examination Council’s (FFIEC) Call Report Modernization initiative. The FFIEC Call Report agencies (the Federal Reserve Board, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency) are building a central data repository (CDR) to modernize and streamline how the agencies collect, process, and distribute bank financial data.

The web site features a timeline, progress reports, frequently asked questions and answers, and highlights of future process changes. It provides details about project participants and how financial institutions and software vendors can participate in the initiative. The site also contains information outlining the technology supporting the new reporting process.

The FIND (Financial INstitutions Data - Bank Call Reports) web site provides details on the initiative in the months leading up to the implementation of the CDR and will continue to provide guidance after completion of the initiative. Implementation of the CDR is slated for the fall of 2004, and banks will first use the CDR to submit their September 30, 2004, Call Report data to the agencies. The web site can be accessed at: www.FFIEC.gov/find.
Press Release (links off-site)


February 10, 2004
Improvements to Board Web site

On February 10, 2004 the Federal Reserve Board announced a number of improvements to its web site, including the capability to view and submit comments on regulatory proposals.

Comments on regulatory proposals can be submitted by e-mail to regs.comments@federalreserve.gov or http://www.federalreserve.gov/generalinfo/foia/. The public can also view and submit comments on proposals by the Board and other federal agencies from the http://www.regs.gov web site. The Board will continue to process public comments delivered by standard mail and fax.

In addition, the Board has expanded the offerings on its Freedom of Information Act (FOIA) web pages. Public comments on proposed regulations, other proposals, and information collections are posted at: http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.

The Board has also established two special sections on its web site. One section contains Federal Reserve documents relating to the proposed Basel II Capital Accord under the heading "Banking Information and Regulation." Updates related to Basel II, as well as historical documentation, can now be found at http://www.federalreserve.gov/generalinfo/basel2/default.htm.

The second section is dedicated to the Federal Reserve System's financial education efforts and contains educational tools on personal finance gathered from across the Federal Reserve System. Users have easy access to multiple resources, including information on e-banking, shopping for a mortgage, preventing identity theft, consumer credit protections, and economic education. The site is at http://www.federalreserveeducation.org/fined/index.cfm.

Press release (links off-site)


February 06, 2004
Proposed Changes to CRA Regulations

On February 6, 2004 the federal bank and thrift regulatory agencies published in the Federal Register a joint interagency notice of proposed rulemaking (NPR) regarding the Community Reinvestment Act (CRA).

CRA directs the agencies to assess an insured depository institution's record of meeting the credit needs of its entire community, and to consider that record when acting on certain applications for branches, office relocations, mergers, consolidations and other corporate activities. The NPR is the product of an interagency review of the CRA regulations that fulfilled the commitment the agencies made when they adopted the current CRA regulations in 1995 to review the regulations to determine whether they were producing objective, performance-based CRA evaluations without imposing undue burden on institutions.

The agencies are proposing amendments to the CRA regulations in two areas.

First, to reduce unwarranted burden consistent with the agencies' ongoing efforts to identify and reduce regulatory burden, the agencies are proposing to amend the definition of "small institution" to mean an institution with total assets of less than $500 million, without regard to any holding company assets.

This change would take into account substantial institutional asset growth and consolidation in the banking and thrift industries since the definition was adopted. The proposal would increase the number of institutions that are eligible for evaluation under the small institution performance standards, while only slightly reducing the portion of the nation's bank and thrift assets that is subject to evaluation under the large retail institution performance standards.

Second, in order to better address abusive lending practices in CRA evaluations, the agencies are proposing to amend the regulations to provide explicitly that an institution's CRA evaluation will be adversely affected by evidence of specified discriminatory, illegal, or abusive practices by the institution or by an affiliate whose loans were considered in the evaluation as part of the institution's own CRA record.

In addition, the agencies also propose several enhancements to the loan data disclosed in CRA public evaluations and CRA disclosure statements.

The agencies encourage comments from the public and regulated financial institution on all aspects of this NPR, in order to ensure a full discussion of the issues. Comments must be received by April 6, 2004.
Press Release (links off-site)


February 05, 2004
Changes to Policy Statement on Payments System Risk

The Federal Reserve Board on Thursday announced that it intends, beginning in July 2006, to require Reserve Banks to release interest and redemption payments on securities issued by government-sponsored enterprises and international organizations only when the issuer’s Federal Reserve account contains sufficient funds to cover these payments.

The Reserve Banks have been processing and posting these payments to depository institutions’ Federal Reserve accounts by 9:15 a.m. Eastern Time, the same posting time as for U.S. Treasury securities’ interest and redemption payments, even if the issuer has not fully funded its payments.

However, the rising level of intraday credit in recent years has prompted a reassessment of this practice, which is inconsistent with that of private issuing and paying agents for their customers’ securities. In general, these issuing and paying agents do not allow payments to be made for a securities issuer before the issuer has fully funded its payments.

The Board requests comment by April 16, 2004 on how best to promote a smooth market adjustment while implementing this change in its Policy Statement on Payments System Risk.

The Board first adopted the policy statement in 1985 and has modified and expanded it periodically. Its objectives are to reduce risk and increase efficiency in the payments system, including minimizing intraday float. To that end, the Board introduced fees for daylight overdrafts in 1994 but granted a temporary exemption to government-sponsored enterprises until after market participants adjusted to the introduction of fees for depository institutions. The Board completed a broad review of the Policy Statement on Payments System Risk two years ago and found that market participants have adjusted to the fees, permitting reconsideration of the temporary exemption.

Concurrent with the change for interest and redemption payments on the securities of government-sponsored enterprises and international organizations, the Board also plans to align its policy treatment of the general corporate account activity of these entities with the treatment of activity of other account holders that do not have regular access to the discount window. Such treatment would include applying a penalty fee to daylight overdrafts resulting from these entities’ general corporate payment activity.

By law, Reserve Banks act as fiscal agents for these government-sponsored enterprises and international organizations: the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, entities of the Federal Home Loan Bank System, the Farm Credit System, the Federal Agricultural Mortgage Corporation, the Student Loan Marketing Association, the International Bank for Reconstruction and Development (World Bank), the Inter-American Development Bank, the Asian Development Bank, and the African Development Bank.

Attachment (links off-site)
Press Release (links off-site)


February 05, 2004
FACT Act

On February 5, 2004 the Federal Reserve Board announced its approval of final rules to establish effective dates for all provisions of the Fair and Accurate Credit Transactions Act of 2003 (FACT Act) that do not have a statutorily prescribed effective date. These regulations are being issued jointly with the Federal Trade Commission.

The recently enacted FACT Act amended the Fair Credit Reporting Act (FCRA) and required the Board and the FTC to adopt final rules establishing the effective dates for certain provisions of the FACT Act. In mid-December, the Board and the FTC jointly adopted interim final rules that established December 31, 2003 as the effective date for the preemption provisions of the FACT Act as well as provisions authorizing the agencies to adopt rules or take other actions to implement the FACT Act. The agencies now have adopted final joint rules with the same schedule of effective dates contained in the interim rules.

Also in mid-December, the Board and the FTC jointly issued for comment proposed joint rules that would establish a schedule of effective dates for other provisions of the FACT Act that do not contain effective dates. After reviewing the comments on the proposal, the agencies now have adopted joint final rules that establish March 31, 2004 as the effective date for the provisions of the FACT Act that do not require significant changes to business procedures. With respect to other provisions that likely entail significant changes to business procedures, the joint final rules make these provisions effective on December 1, 2004, to allow industry a reasonable time to establish systems to comply with the statute.
Press Release (links off-site)


February 03, 2004
Senior Loan Officer Opinion Survey

The January 2004 Senior Loan Officer Opinion Survey on Bank Lending Practices addressed changes in the supply of, and demand for, bank loans to businesses and households over the past three months. In addition, the survey contained a series of questions on commercial real estate lending; banks were asked about longer-term changes in terms on commercial real estate loans, the types of properties used to secure these loans, and commercial real estate loan securitizations. Responses were received from fifty-six domestic and twenty-one foreign banking institutions.

Moderate net fractions of both domestic banks and U.S. branches and agencies of foreign banks indicated that they had eased lending standards and several lending terms on C&I loans over the past three months. A few domestic banks also eased lending standards on commercial real estate loans over the same period. After reporting declining demand for C&I loans for the past three years, domestic banks, on net, indicated in the January survey that loan demand from firms of all sizes had strengthened. By contrast, foreign institutions continued to report weaker C&I loan demand on net. Both domestic and foreign institutions reported stronger demand for commercial real estate loans, on net, over the past three months.

Small net fractions of domestic banks indicated that they had tightened some terms on credit card loans, but standards and terms on other household loans were reportedly unchanged. A sizable net percentage of banks experienced weaker demand for loans to purchase homes over the past three months, and a number of institutions indicated that demand for all types of consumer loans had declined over the same period.
Press Release (links off-site)


January 30, 2004
WorkGroup on Dormant Bank Concept

The Federal Reserve Board announced on January 30, 2004 that it has established a private-sector Working Group on NewBank Implementation to further develop the concept of a dormant bank that would be available for activation, if necessary, to clear and settle U.S. government securities.

In a report released January 7, a previous private-sector panel, the Working Group on Government Securities Clearance and Settlement, recommended nine steps to mitigate risks to the financial system from the interruption or termination of the services of a clearing bank as the result of either operational or non-operational problems.

All of the major participants in the U.S. government securities markets depend on one of two commercial banks to settle their trades and facilitate financing of their positions. The September 11 terrorist attacks demonstrated how operational disruptions to a clearing bank’s services could disrupt the trading, clearance, and settlement of government securities.

One of the first working group’s nine recommendations, which were endorsed by the Board, called for the Board to establish a second panel focused on developing NewBank, a limited-purpose, dormant entity, ready for activation in the event that one of the two major clearing banks permanently exited the business, voluntarily or involuntarily, and no well-qualified bank stepped forward to purchase the exiting bank’s clearing business.

The Board has asked the new working group to flesh out the NewBank concept and address any challenges to implementing it. Once those challenges have been successfully addressed, those that have agreed to own NewBank should take the necessary steps to implement the concept, including obtaining a limited-purpose bank charter. The Board asked the Working Group to prepare a report by late this year that summarizes its progress, identifies the remaining challenges that need to be addressed before a charter application can be submitted, and sets out a timetable for meeting those remaining challenges.

Michael Urkowitz, Senior Adviser to Deloitte Consulting, the chairman of the previous working group, has agreed to serve as chairman of the NewBank panel. The NewBank Working Group will include senior representatives of the two major clearing banks (J.P. Morgan Chase and The Bank of New York), the Fixed Income Clearing Corporation, The Bond Market Association, the Investment Company Institute, Cantor Fitzgerald Securities, Federated Investors, Fidelity Investments, Goldman Sachs & Co., Lehman Brothers, Merrill Lynch, Morgan Stanley & Co., Salomon Smith Barney (Citigroup), State Street Bank & Trust Co., and UBS Investment Bank. Staff of the Federal Reserve, the Securities and Exchange Commission, the Department of the Treasury, the Federal Deposit Insurance Corporation, and the New York State Banking Department will participate as observers and technical advisers.
Press Release (links off-site)


January 28, 2004
FOMC Statement

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 1 percent.

The Committee continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity. The evidence accumulated over the intermeeting period confirms that output is expanding briskly. Although new hiring remains subdued, other indicators suggest an improvement in the labor market. Increases in core consumer prices are muted and expected to remain low.

The Committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. The probability of an unwelcome fall in inflation has diminished in recent months and now appears almost equal to that of a rise in inflation. With inflation quite low and resource use slack, the Committee believes that it can be patient in removing its policy accommodation.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Ben S. Bernanke; Susan S. Bies; Roger W. Ferguson, Jr.; Edward M. Gramlich; Thomas M. Hoenig; Donald L. Kohn; Cathy E. Minehan; Mark W. Olson; Sandra Pianalto; and William Poole.


January 21, 2004
Federal Reserve Board agrees to seek comment on proposed revisions to Community Reinvestment Act (CRA)

The Board of Governors of the Federal Reserve seeks comment on an interagency proposal to revise regulations that implement the Community Reinvestment Act (CRA).

The Community Reinvestment Act is intended to encourage depository institutions to help meet credit needs in their communities, including low- and moderate-income neighborhoods. The agencies are proposing limited amendments to the regulation in two areas. First, the definition of “small institution,” a category of institutions entitled to streamlined CRA evaluations, would be amended to include banks and thrifts with total assets of less than $500 million (the threshold is now $250 million), and eliminate consideration of an institution’s holding company size (now, an institution is not “small” if its holding company is larger than $1 billion).

Second, the proposal would specify when unlawful discrimination, other illegal credit practices, or abusive asset-based lending by a bank or its affiliate might adversely affect the bank’s CRA rating.

The agencies also propose enhancements to the loan data they disclose in CRA public evaluations and CRA disclosure statements.

A notice of proposed rulemaking will be published jointly after it has been acted upon by all of the banking agencies with CRA supervisory responsibilities.

The public is invited to comment on the proposal. The public comment period will close April 20, 2004.

To download the request for comment:
http://www.federalreserve.gov/boarddocs/press/foiadocs/2004/20040120/default.pdf

Press Release (links off-site)


January 08, 2004
Federal Reserve Banks' Income Transferred to US Treasury

On January 8, 2004 the Federal Reserve Board released figures that indicate the Federal Reserve Banks distributed approximately $21.997 billion of their $23.792 billion total income to the U.S. Treasury during 2003.

Federal Reserve System income is derived primarily from interest earned on U.S. government securities that the Federal Reserve has acquired through open market operations. This income amounted to $22.602 billion in 2003. Additionally, revenues from fees for the provision of priced services to depository institutions totaled $887 million. The remaining income of $303 million includes earnings on foreign currencies, earnings from loans, and other income.

The operating expenses of the 12 Reserve Banks totaled $2.366 billion in 2003, including the System's net pension costs. In addition, the cost of earnings credits granted to depository institutions amounted to $121 million. Assessments against Reserve Banks for Board expenditures totaled $297 million and the cost of currency amounted to $508 million.

Net additions to income amounted to $2.481 billion, resulting primarily from unrealized gains on assets denominated in foreign currencies revalued to reflect current market exchange rates.

Total net income for the Federal Reserve Banks in 2003 amounted to $22.981 billion. Under the Board's policy, each Reserve Bank's net income after the statutory dividend to member banks and the amount necessary to equate surplus to paid-in capital is transferred to the U.S. Treasury. The statutory dividends to member banks in 2003 were $518 million.
Press Release (links off-site)


January 07, 2004
Recommendations of Working Group on Government Securities Clearance and Settlement

On January 7, 2004 the Federal Reserve Board released the report of the private-sector Working Group on Government Securities Clearance and Settlement and endorsed its recommendations.

The Working Group, formed by the Board following the September 11, 2001 terrorist attacks in New York City, recommended nine steps to mitigate risks to the financial system from the interruption or termination of the services of a clearing bank as the result of either operational or non-operational problems.
Press Release (links off-site)


January 05, 2004
Policy Statement on Financial Support for Investment Funds

On January 5, 2004 the federal banking and thrift supervisory agencies issued a policy statement alerting financial institutions to the safety and soundness and legal issues involved in providing financial support to investment funds advised by the institution or its subsidiaries or affiliates.

The policy statement is prompted by recent market developments, including market volatility, the continued low interest rate environment, and operational and corporate governance weaknesses. It warns that investment advisory services can pose material risks to a financial institution's liquidity, earnings, capital and reputation and can harm investors, if the associated risks are not effectively controlled.
Press Release (links off-site)


2003

December 23, 2003
Privacy Disclosures Under the Gramm-Leach-Bliley Act (GLB Act)

On December 23, 2003 eight federal regulators announced an advance notice of proposed rulemaking (ANPR ) requesting public comment on ways to improve the privacy notices financial institutions provide to consumers under the Gramm-Leach-Bliley Act (GLB Act).

The ANPR describes various approaches that the agencies could pursue to allow or require financial institutions to provide alternative types of privacy notices that would be more readable and useful to consumers. It also seeks comment on whether differences between federal and state laws pose any special issues for developing a short privacy notice.

Section 503 of the GLB Act requires financial institutions to provide a notice to each customer that describes the institution's policies and practices regarding the disclosure to third parties of nonpublic personal information. In 2000, the agencies published consistent final regulations that implement these provisions, including sample clauses that institutions may use in privacy notices. However, the regulations do not prescribe any specific format or standardized wording for privacy notices.

The agencies do not propose the adoption of any specific action at this time to improve privacy notices. Instead, the agencies request input on what approaches would be most useful to consumers while taking into consideration the burden on financial institutions.

The ANPR was developed jointly by the Board of Governors of the Federal Reserve System, Commodity Futures Trading Commission, Federal Deposit Insurance Corporation, Federal Trade Commission, National Credit Union Administration, Office of the Comptroller of the Currency, Office of Thrift Supervision, and Securities and Exchange Commission.

The agencies will evaluate the public comments on the ANPR with a view toward developing proposals for appropriate interpretations or amendments to their respective regulations. In the event that the agencies decide to proceed, the agencies expect to do so through proposed rulemaking. The agencies also expect that consumer testing will be a key component in the development of any specific proposal.

A copy of the ANPR is attached. Written comments may be submitted within 90 days of its publication in the Federal Register, which is expected in early January.
Press Release (links off-site)


December 22, 2003
Check 21/Proposed changes to reg CC

On December 22, 2003 the Federal Reserve Board approved a proposed rule to amend Regulation CC and its commentary to implement the Check Clearing for the 21st Century Act (Check 21 Act). The Check 21 Act was enacted on October 28, 2003, and becomes effective on October 28, 2004.

To facilitate check truncation and electronic check exchange, the Check 21 Act authorizes a new negotiable instrument called a "substitute check" and provides that a properly prepared substitute check is the legal equivalent of the original check for all purposes. A substitute check is a paper reproduction of the original check that can be processed just like the original check. The Check 21 Act does not require any bank to create substitute checks or to accept checks electronically.

The Board's proposed amendments: (1) set forth the requirements of the Check 21 Act that apply to banks; (2) provide a model disclosure and model notices relating to substitute checks; and (3) set forth bank indorsement and identification requirements for substitute checks. The proposed amendments also clarify some existing provisions of the rule and commentary.

The Board's Federal Register notice is attached. Comment on the proposed rule is requested by March 12, 2004.
Press Release (links off-site)


December 19, 2003
HMDA Disclosure/asset size exemption

On December 19, 2003 the Federal Reserve Board published its annual notice of the asset-size exemption threshold for depository institutions under Regulation C (Home Mortgage Disclosure).

The asset-size exemption for depository institutions is raised to $33 million based on the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers for the twelve-month period ending in November 2003. As a result, depository institutions with assets of $33 million or less as of December 31, 2003, are exempt from data collection in 2004. An institution's exemption from collecting data in 2004 does not affect its responsibility to report the data it was required to collect in 2003.

The Board also is publishing technical amendments to Regulation C and the staff commentary to conform them to changes in the standards for defining metropolitan statistical area boundaries made by the U.S. Office of Management and Budget.

The adjustment and technical amendments are effective January 1, 2004.

The Home Mortgage Disclosure Act (HMDA) and the Board's Regulation C require most depository institutions and certain for-profit, nondepository institutions to collect, report, and disclose data about applications for, and originations and purchases of home purchase loans, refinancings, and home improvement loans. Data reported include the type, purpose, and amount of the loan; the ethnicity, race, sex, and income of the loan applicant; and the location of the property. The purposes of HMDA include helping to determine whether financial institutions are serving the housing needs of their communities and assisting in fair lending enforcement.
Press Release (links off-site)


December 18, 2003
Request for comment/effective dates FACT Act

On December 16, 2003 the Federal Reserve Board requested comment on interim final rules and proposed rules to establish effective dates for certain provisions of the Fair and Accurate Transactions Act of 2003 (FACT Act) including provisions that preempt state laws that regulate areas governed by the Fair Credit Reporting Act (FCRA). These regulations are being issued jointly with the Federal Trade Commission.

The recently enacted FACT Act amends the FCRA and requires the Board and the FTC, within sixty days of enactment, to adopt final rules establishing the effective dates for provisions of the FACT Act that do not have a statutorily prescribed effective date.

The Board and the FTC are jointly proposing rules establishing a schedule of effective dates for provisions of the FACT Act that do not contain effective dates. The joint proposed rules would establish March 31, 2004 as the effective date for provisions of the FACT Act that do not require significant changes to business procedures. With respect to other provisions that likely entail significant changes to business procedures, the joint proposed rules would make these provisions effective on December 1, 2004, to allow industry a reasonable time to establish systems to comply with the statute.

Comments on the joint interim final rules and proposed rules are due by January 12, 2004. http://www.federalreserve.gov/boarddocs/press/bcreg/2003/20031216/ (links off-site)


December 09, 2003
FOMC Statement

On December 9, 2003 the Federal Open Market Committee decided to keep its target for the federal funds rate at 1 percent.

The Committee continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity. The evidence accumulated over the intermeeting period confirms that output is expanding briskly, and the labor market appears to be improving modestly. Increases in core consumer prices are muted and expected to remain low.

The Committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. The probability of an unwelcome fall in inflation has diminished in recent months and now appears almost equal to that of a rise in inflation. However, with inflation quite low and resource use slack, the Committee believes that policy accommodation can be maintained for a considerable period.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Ben S. Bernanke; Susan S. Bies; J. Alfred Broaddus, Jr.; Roger W. Ferguson, Jr.; Edward M. Gramlich; Jack Guynn; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; and Robert T. Parry.
Press Release (links off-site)


December 04, 2003
Final rule amending Regulation Y

On December 4, 2003 the Federal Reserve Board announced its approval of a final rule that expands the ability of all bank holding companies, including financial holding companies, to process, store and transmit nonfinancial data in connection with their financial data processing, storage and transmission activities.
Press Release (links off-site)


October 28, 2003
FOMC Statement

On October 28, 2003 the Federal Open Market Committee decided to keep its target for the federal funds rate at 1 percent.

The Committee continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity. The evidence accumulated over the intermeeting period confirms that spending is firming, and the labor market appears to be stabilizing. Business pricing power and increases in core consumer prices remain muted.

The Committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. In contrast, the probability, though minor, of an unwelcome fall in inflation exceeds that of a rise in inflation from its already low level. The Committee judges that, on balance, the risk of inflation becoming undesirably low remains the predominant concern for the foreseeable future. In these circumstances, the Committee believes that policy accommodation can be maintained for a considerable period.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Ben S. Bernanke; Susan S. Bies; J. Alfred Broaddus, Jr.; Roger W. Ferguson, Jr.; Edward M. Gramlich; Jack Guynn; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Robert T. Parry; and Jamie B. Stewart, Jr.
Press Release (links off-site)


October 22, 2003
Approval of fee schedules for Federal Reserve Bank priced services

On October 22, 2003 the Federal Reserve Board approved fee schedules for Federal Reserve Bank priced services, effective January 2, 2004.

Overall, the price level for Federal Reserve priced services will increase about 4 percent in 2004 from 2003 levels. The increase reflects an approximately 5 percent rise in check service fees combined with a 1 percent drop in fees for the Reserve Banks’ electronic payment services.

The 2004 fee schedule for each of the priced services, except the check service, is included in the attached Federal Register notice. Fee schedules for all priced services will be available on the Federal Reserve Banks’ financial services web site at www.frbservices.org.

The Board also approved, effective January 8, 2004, changing the earnings credit rate on clearing balances from the federal funds rate to 90 percent of the three-month Treasury bill rate, and increasing the frequency with which depository institutions can change contracted clearing balances.

In addition, the Board approved the 2004 private-sector adjustment factor (PSAF) for Reserve Bank priced services of $179.7 million. The PSAF is an allowance for taxes and other imputed expenses that would have to be paid and profits that would have to be earned if the Federal Reserve’s priced services were provided by a private business. The Monetary Control Act of 1980 requires the Federal Reserve to recover the costs of providing priced services, including the PSAF, over the long run, to promote competition between the Reserve Banks and private-sector service providers.

The Reserve Banks estimate that they will recover 85.6 percent of all their priced services costs in 2003 and project that they will recover 93.6 percent of these costs in 2004.
Press Release (links off-site)


October 08, 2003
Proposed changes to the Board’s cash services policy

On October 8, 2003 the Board of Governors of the Federal Reserve requested comment on proposed changes to its cash services policy. The changes would address a shift by depository institutions away from traditional patterns of currency activity toward greater reliance on Reserve Bank cash processing and provide incentives for depository institutions to recirculate currency among their customers.

To reduce depository institutions’ overuse of Reserve Bank cash-processing services that are provided at no charge, the Board proposes revising its cash services policy by adding two elements: (1) a custodial inventory program that provides an incentive to depository institutions to hold currency in their vaults to meet customers’ demand; and (2) a fee to depository institutions that deposit fit currency to, and order currency from, Reserve Banks within the same week. Initially the policy changes would apply only to the $5, $10, and $20 denominations. The Reserve Banks estimate that the proposed changes would affect approximately 100 of their largest cash customers.

The Board proposes to implement the recirculation policy in phases. In early 2004, the Reserve Banks will accept applications for a custodial inventory proof-of-concept, or trial, program. The Board will evaluate the results of the program after about six months of operation and will decide whether to implement a permanent custodial inventory program in 2005. Reserve Banks would begin assessing the recirculation fee in 2006. In 2007, the Board would extend the recirculation policy to one-dollar notes if the Reserve Banks are unable, by working collaboratively with depository institutions, to achieve significant savings.

The Board requests comment by January 15, 2004.
Press Release (links off-site)


October 07, 2003
New consumer brochure on predatory lending

The federal Interagency Task Force on Fair Lending has published a new brochure that alerts consumers to potential borrowing pitfalls, including high-cost home loans, and provides tips for getting the best financing deal possible. The brochure, Putting Your Home on the Loan Line Is Risky Business, warns that regardless of whether a home equity loan is for a home repair, bill consolidation or some other purpose, it is important to shop around.

Borrowing from an unscrupulous lender, especially one that offers a high-cost loan using the home as security, could result in the loss of the borrower’s home and their money. The brochure cautions that certain lenders—often called “predatory lenders”—target homeowners with low incomes or credit problems, including the elderly, by deceiving them about loan terms or giving them loans they cannot afford to repay. Before signing the credit contract, consumers are encouraged to

  • Think about their financing options
  • Do their homework
  • Think twice before they sign a loan contract
  • Know that they have rights under the law

The brochure notes that many consumers may have other options for meeting their financial needs besides taking out a home equity loan. Housing counseling and social service programs are available to assist people with financial problems.

If consumers decide that a loan is right for them, the brochure suggests talking with several lenders; comparison shopping for interest rates, payments, term of the loan, points and fees, and other costs of the loan; and having a knowledgeable friend, attorney, or housing counselor review the loan documents. A shopping checklist is included with the brochure.

The publication also reminds consumers that if they are refinancing or using their home as security for a home equity loan (or for a second mortgage loan or a line of credit), federal law gives them three business days after signing the loan papers to cancel the deal. The cancellation must be submitted in writing, after which the lender is required to return any money the consumer has paid to date.

If the three-day period has already passed and consumers believe they have been misled, the brochure suggests that they contact a state or local bar association, a local consumer protection agency, or a local fair housing or housing counseling agency.

The brochure is available at the Board’s website: http://www.federalreserve.gov/pubs/riskyhomeloans/default.htm

A PDF (Portable Document Format) version is provided on the web site so that consumer groups, financial institutions, agencies, and other organizations can download and print copies for distribution to their clients and customers. It includes a space on the back panel for organizations to provide their own contact information. A Spanish-language version of the publication will be available in the future.

Single copies of the brochure are also available free of charge from the Federal Reserve Board: Publications, Stop 127, Federal Reserve Board, 20th & C Streets, N.W., Washington, D.C. 20551; (202) 452-3245.
Press Release (links off-site)

October 03, 2003
New Quarterly Schedule for Federal Reserve Bulletin

On October 3, 2003 the Federal Reserve Board announced the move to a quarterly publication schedule for the Federal Reserve Bulletin and the creation of a new monthly statistical supplement.

Beginning in the first quarter of 2004, the Bulletin will be enhanced and published four times a year. A quarterly report on the condition of the banking system and an annual report on changes in consumer regulations are among the new materials to be presented in the Bulletin. The Bulletin will continue to include topical research articles and summaries of Board survey findings, the Board’s semiannual Monetary Policy Reports, a Legal Developments section, and other features such as lists of staff members, councils, committees, lists of Federal Reserve publications, and maps of the Federal Reserve Districts.

The revised publication schedule responds to the results of customer surveys, the increased use of the Internet to access information on a more timely basis, and the Board’s desire to provide a broader range of articles on topics of interest to Bulletin readers. A quarterly schedule will also make the planning and production of the Bulletin more efficient.

The tables that now appear in the Financial and Business Statistics section of the Bulletin will be published monthly as a separate publication titled Statistical Supplement to the Federal Reserve Bulletin. All tables that now appear in the Federal Reserve Bulletin, including special tables, will appear in the Statistical Supplement. All statistical series will be published with the same frequency that they have currently in the Bulletin. The first issue of the Statistical Supplement will be published in January 2004. The Publications Committee will monitor the usefulness of this publication in meeting the needs of the public over time, especially in light of the widespread dissemination of data through the Internet.

Separate subscriptions for the two publications will be available starting with the January 2004 issue of the Statistical Supplement. For additional subscription information, contact Publications Fulfillment at 202-452-3244 or 202-452-3245 or send an e-mail to publications-bog@frbog.frb.gov.

Articles published in the Bulletin will continue to be available online at www.federalreserve.gov/pubs/bulletin/default.htm.
Press Release (links off-site)


October 02, 2003
Consumer Advisory Council Meeting

On October 2, 2003 the Federal Reserve Board announced that the Consumer Advisory Council will hold its next meeting on Thursday, October 23. The session will begin at 9:00 a.m. and is open to the public.

The Council's function is to advise the Board on the exercise of its responsibilities under various consumer financial services laws and on other matters on which the Board seeks its advice. Time permitting, the Council will discuss the following topics:

  • Payroll Cards
  • Funding and Long-term Sustainability of Non-profit Organizations
  • Convenience Checks Issued in Connection with Credit Cards

Reports by committees and other matters initiated by the Council members may also be discussed. The Board invites comments from the public on any of these matters.

For more information about the meeting, including a registration form, go to: http://www.federalreserve.gov/BoardDocs/Press/other/2003/20031002/ (links off-site)


October 01, 2003
Annual Adjustment of Net Transaction Accounts

On October 1, 2003 the Federal Reserve Board announced the annual adjustments in the amount of net transaction accounts used in the calculation of reserve requirements and the cutoff level used to determine the detail and frequency of deposit reporting.

For net transaction accounts in 2004, the first $6.6 million, up from $6.0 million in 2003, will be exempt from reserve requirements. A 3 percent reserve ratio will be assessed on net transaction accounts over $6.6 million up to and including $45.4 million, up from $42.1 million in 2003. A 10 percent reserve ratio will be applied above $45.4 million.

For depository institutions that report weekly, the low reserve tranche adjustment and the reservable liabilities exemption adjustment will apply to the reserve computation period that begins Tuesday, November 25, 2003 and the corresponding reserve maintenance period that begins Thursday, December 25, 2003.

For institutions that report quarterly, the low reserve tranche adjustment and the reservable liabilities exemption adjustment will apply to the reserve computation period that begins Tuesday, December 16, 2003, and the corresponding seven-day reserve maintenance period that begins Thursday, January 15, 2004.

Additionally, the Board increased the deposit cutoff level that is used with the exemption level to determine the frequency and detail of deposit reporting.
Press Release (links off-site)


September 16, 2003
FOMC Statement

On September 16, 2003 the Federal Open Market Committee decided to keep its target for the federal funds rate at 1 percent.

The Committee continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity. The evidence accumulated over the intermeeting period confirms that spending is firming, although the labor market has been weakening. Business pricing power and increases in core consumer prices remain muted.

The Committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. In contrast, the probability, though minor, of an unwelcome fall in inflation exceeds that of a rise in inflation from its already low level. The Committee judges that, on balance, the risk of inflation becoming undesirably low remains the predominant concern for the foreseeable future. In these circumstances, the Committee believes that policy accommodation can be maintained for a considerable period.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Ben S. Bernanke; Susan S. Bies; J. Alfred Broaddus, Jr.; Roger W. Ferguson, Jr.; Edward M. Gramlich; Jack Guynn; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Robert T. Parry; and Jamie B. Stewart, Jr.
Press Release (links off-site)


September 12, 2003
Request for Comment: Asset Backed Commercial Paper

On Friday September 12, 2003 the federal bank and thrift regulatory agencies requested public comment on an interim final rule and a notice of proposed rulemaking (NPR) to amend their risk-based capital standards for the treatment of assets in asset-backed commercial paper (ABCP) programs consolidated under the recently issued Financial Accounting Standards Board Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46). The NPR would also modify the risk-based capital treatment of certain securitizations with early amortization provisions.
Press Release (links off-site)


September 08, 2003
Online Applications Guide

An online guide for U.S. and foreign banking organizations submitting applications to the Federal Reserve has been added to the Board of Governors' public web site.

The new web page, www.federalreserve.gov/generalinfo/applications/afi/, describes the regulatory requirements and processing procedures for applications, notifications and requests necessary for a broad range of activities, including mergers of banking organizations.

The site describes specific types of applications as well as the statutory factors considered by the Federal Reserve in evaluating applications, including the banking organization's record of compliance with the Community Reinvestment Act. It provides links to application forms and lists contacts at each Reserve Bank for questions regarding the submission of applications or the submission of public comments on applications.
Press Release (links off-site)


August 28, 2003
Amendments announced to Regulation CC, Appendix A

On August 28, 2003, the Federal Reserve Board announced amendments to Appendix A of Regulation CC, effective November 1, 2003, that reflect the restructuring of the Federal Reserve’s check processing operations in the Fourth District. These amendments are the first in a series of amendments to Appendix A that will take place through the end of 2004, associated with the previously-announced restructuring of the Reserve Banks’ check processing operations.
Press Release (links off-site)


August 25, 2003
Request for comment on anti-tying restrictions

On August 25, 2003, the Federal Reserve Board requested public comment on an official interpretation of the anti-tying restrictions in section 106 of the Bank Holding Company Act Amendments of 1970 and related supervisory guidance.

Section 106 generally prohibits a bank from conditioning the availability or price of one product on a requirement that the customer also obtain another product from the bank or an affiliate. The Board’s proposed interpretation of section 106 provides banking organizations and their customers a comprehensive guide to the special anti-tying restrictions applicable to banks under section 106.

The Board also proposed to adopt an exception under section 106 for the financial subsidiaries of state nonmember banks. The proposed interpretation, supervisory guidance and financial subsidiary exception will be published in the Federal Register. Comment is requested by September 30, 2003.
Press Release (links off-site)


August 19, 2003
Truth in Lending Act for home mortgage loans

On August 19, 2003, the Federal Reserve Board published its annual adjustment of the dollar amount that triggers additional disclosure requirements under the Truth in Lending Act for home mortgage loans that bear rates or fees above a certain amount.

The dollar amount of the fee-based trigger has been adjusted to $499 for 2004 based on the annual percentage change reflected in the Consumer Price Index that was in effect on June 1, 2003.

The adjustment is effective January 1, 2004.

The Home Ownership and Equity Protection Act of 1994 bars credit terms such as balloon payments and requires additional disclosures when total points and fees payable by the consumer exceed the fee-based trigger (initially set at $400 and adjusted annually) or 8 percent of the total loan amount, whichever is larger.
Press Release (links off-site)


August 19, 2003
Bank lending practices

The Board has released its August 2003 Senior Loan Officer Opinion Survey on Bank Lending Practices. This survey addressed changes in the supply of, and demand for, bank loans to businesses and households over the past three months. In addition, the survey contained a supplementary question on potential demand for commercial and industrial (C&I) loans, as well as special questions on measures taken by banks to support the returns on their business loans in response to declining net interest margins. Fifty-eight domestic and seventeen foreign banking institutions responded to the survey.
Press Release (links off-site)


August 12, 2003
FOMC statement

On August 12, 2003, the Federal Open Market Committee decided to keep its target for the federal funds rate at 1 percent.

The Committee continues to believe that an accommodative stance of monetary policy, coupled with still-robust underlying growth in productivity, is providing important ongoing support to economic activity. The evidence accumulated over the intermeeting period shows that spending is firming, although labor market indicators are mixed. Business pricing power and increases in core consumer prices remain muted.

The Committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. In contrast, the probability, though minor, of an unwelcome fall in inflation exceeds that of a rise in inflation from its already low level. The Committee judges that, on balance, the risk of inflation becoming undesirably low is likely to be the predominant concern for the foreseeable future. In these circumstances, the Committee believes that policy accommodation can be maintained for a considerable period.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Ben S. Bernanke; Susan S. Bies; J. Alfred Broaddus, Jr.; Roger W. Ferguson, Jr.; Edward M. Gramlich; Jack Guynn; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Robert T. Parry; and Jamie B. Stewart, Jr.


August 12, 2003
Request for comments on proposed interagency guidance on response programs to protect against identity theft

On August 12, 2003, the federal bank and thrift regulatory agencies requested public comment on proposed guidance that would require financial institutions to develop programs to respond to incidents of unauthorized access to customer information, including procedures for notifying customers under certain circumstances.

The proposed interpretation describes the components of a response program and sets a standard for providing notice to customers affected by unauthorized access to or use of customer information that could result in substantial harm or inconvenience to those customers, thereby reducing the risk of losses due to fraud or identity theft.

Comment on the proposed guidance is requested by October 14, 2003. Specific information on how to file a comment is contained in the Federal Register notice.
Press Release (links off-site)


August 08, 2003
Interagency rules on disciplinary actions against accountants and accounting firms

On August 8, 2003, the federal bank and thrift regulatory agencies issued final rules governing their authority to take disciplinary actions against independent public accountants and accounting firms that perform audit and attestation services required by section 36 of the Federal Deposit Insurance Act. Proposed rules were published for comment in the Federal Register in January 2003.

The final rules, which take effect on October 1, 2003, establish procedures under which the agencies can, for good cause, remove, suspend, or bar an accountant or firm from performing audit and attestation services for insured depository institutions with assets of $500 million or more. The rules permit immediate suspensions in limited circumstances.
Press Release (links off-site)


August 04, 2003
Requests for comment on two interagency documents related to the proposedimplementation of the new Basel Capital Accord

On August 4, 2003, the four federal bank and thrift regulatory agencies announced the publication of joint Federal Register notices and requests for comment on two interagency documents related to the proposed implementation of the new Basel Capital Accord in the United States. Comments are due November 3, 2003.
Press Release (links off-site)


July 23, 2003
Interagency guidance on use of discount window

On July 23, 2003, the federal banking, thrift, and credit union regulatory agencies issued guidance on the appropriate use of the Federal Reserve’s new primary credit discount window program in depository institutions’ liquidity risk management and contingency planning.

The guidance provides background on the Federal Reserve’s discount window programs, including new primary and secondary credit programs introduced in January. It also reiterates well-established supervisory policies on sound liquidity contingency planning, and discusses sound practices in using primary credit program borrowings in liquidity contingency plans.
Press Release (links off-site)


July 11, 2003
Request for public comment on implementation of the New Basel Capital Accord

The Federal Reserve Board decided to issue an interagency advance notice of proposed rulemaking (ANPR) seeking public comment on the implementation of the New Basel Capital Accord in the United States. The Board also decided to seek comment on draft interagency supervisory guidance on internal-ratings based systems for corporate credits and draft guidance on advanced measurement approaches (AMA) for measuring operational risk.

The ANPR provides that large, internationally active banking organizations that meet certain size or foreign-exposure thresholds would be required to meet rigorous supervisory standards and implement the advanced internal ratings-based (A-IRB) approach for credit risk and the AMA for operational risk. It describes the A-IRB approach to credit risk and its application to particular portfolios of credit exposures (wholesale, retail, and equity) as well as the A-IRB approach to credit risk mitigation and for securitization exposures. The ANPR also provides guidance and supervisory standards for the AMA for operational risk, outlines the proposed approaches for supervisory review and disclosure (Pillars 2 and 3 in the New Accord), and seeks comment on certain competitive considerations.

The draft supervisory guidance on internal ratings-based systems for corporate credits describes the essential components and characteristics of an acceptable A-IRB framework, including rating assignment, validation, quantification, data maintenance, and oversight and control mechanisms. The draft supervisory guidance on the AMA for operational risk sets forth expectations for banking organizations for calculating operational risk exposure under the proposed framework and outlines requirements for governance, measurement, monitoring, and control of operational risk.

Comment on the ANPR and two interagency guidance pieces is requested within 90 days following publication in the Federal Register, expected shortly.
Press Release (links off-site)


June 30, 2003
Final rule on Regulation Y

The Federal Reserve Board announced its approval of a final rule that modifies Regulation Y to allow bank holding companies engaged in permissible derivatives activities to transfer title to commodities underlying derivative contracts on an instantaneous, pass-through basis. The Board will publish its final rule in the Federal Register shortly, and the rule will become effective August 4, 2003.
Press Release (links off-site)


June 25, 2003
FOMC statement

The Federal Open Market Committee lowered its target for the federal funds rate by 25 basis points to 1 percent. In a related action, the Board of Governors approved a 25 basis point reduction in the discount rate to 2 percent.
Press Release (links off-site)


June 18, 2003
Interagency effort to modernize bank data collection

The Federal Financial Institutions Examination Council (FFIEC) today announced the first step in an interagency effort to modernize and streamline how federal bank regulators collect, process and distribute quarterly bank financial reports.

The first step involves awarding a contract, through the Federal Deposit Insurance Corporation(FDIC), to Unisys Corporation, McLean, Virginia. Unisys, with its development team of Microsoft, PricewaterhouseCoopers, IDOM, EDGAR Online, UBMatrix, and V-Tech Solutions, will create a flexible solution, based on proven technologies, that incorporates Internet delivery using promising new innovations like the XBRL business reporting language.
Press Release (links off-site)


June 03, 2003
Request for comments on interagency plan to reduce regulatory burden

The federal financial regulatory agencies announced that they will publish a joint notice and request for comments on a plan to identify and eliminate outdated, unnecessary or unduly burdensome regulations imposed on insured depository institutions.

The request from the Board of Governors of the Federal Reserve System (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) is being made pursuant to section 2222 of the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA). The National Credit Union Administration (NCUA) will be issuing a separate notice and request for comments pursuant to EGRPRA.
Press Release (links off-site)


May 28, 2003
Proposed amendment to Regulation K

The Federal Reserve Board announced that it is seeking public comment on a proposal to amend Regulation K to require Edge and Agreement corporations and U.S. branches, agencies, and other offices of foreign banks supervised by the Board to establish and maintain procedures reasonably designed to ensure and monitor compliance with the Bank Secrecy Act and related regulations.
Press Release (links off-site)


May 23, 2003
Regulation C transition rules

The Federal Reserve Board on Friday announced the publication of transition rules to provide lenders with guidance on collecting and reporting information when an application for a home mortgage loan is received before—and final action is taken after—January 1, 2004. The rules were published as an amendment to the official staff commentary that applies and interprets the requirements of Regulation C (Home Mortgage Disclosure Act).
Press Release (links off-site)


May 22, 2003
Banking Agencies Issue Host State Loan-to-Deposit Ratios

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 the banking agencies 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 June 24, 2002.
Press Release (links off-site


May 21, 2003
Operating hours for the online Fedwire® Funds Service expanded

The Federal Reserve Board announced it will expand the operating hours for the online Fedwire® Funds Service. The Fedwire Funds Service will open three and one-half hours earlier (9:00 p.m. Eastern Time the prior calendar day) than the current opening time of 12:30 a.m. ET. The closing time for the service will remain 6:30 p.m. ET. The scheduled timeframe for full implementation of the expanded operating hours is the second quarter of 2004. Fedwire participants will be notified at least sixty days before the specific effective date of the new hours.
Press Release (links off-site)


May 20, 2003
Series of amendments to Appendix A of Regulation CC to reflect the restructuring of the Federal Reserve’s check processing operations

The Federal Reserve Board has announced a series of amendments to Appendix A of Regulation CC that the Board will make later in 2003 through the end of 2004 to reflect the restructuring of the Federal Reserve’s check processing operations. Appendix A provides a routing number guide that helps depository institutions determine the maximum permissible hold periods for most deposited checks.
Press Release (links off-site)


May 19, 2003
Systemwide financial education initiative announced

Federal Reserve Board Chairman Alan Greenspan will stress the benefits of economic and financial education in a public service announcement and during a visit to a Washington, D.C., school. The events are part of a broad initiative throughout the Federal Reserve System to provide consumers with more resources for making smart financial decisions.
Press Release (links off-site)


May 14, 2003
Launch of the redesigned U.S. $20 note

U.S. government officials unveiled a new $20 note design with enhanced security features and subtle background colors. The new design is part of an ongoing effort to stay ahead of the counterfeiting of U.S. currency.
Press Release (links off-site)


May 09, 2003
Senior Loan Officer Opinion Survey on Bank Lending Practices

The April 2003 Senior Loan Officer Opinion Survey on Bank Lending Practices focused on changes in the supply of and demand for bank loans to businesses and households over the past three months. In addition, the survey contained two sets of supplementary questions that focused on the reasons for recent changes in the credit quality of business and commercial real estate loans, as well as changes in lending terms for commercial real estate loans. Responses were received from fifty-six domestic and eighteen foreign banking institutions.
Press Release (links off-site)


May 06, 2003
FOMC statement

The Federal Open Market Committee decided to keep its target for the federal funds rate unchanged at 1-1/4 percent.
Press Release (links off-site)


March 28, 2003
Final staff commentary on Regulation Z

The Federal Reserve Board issued revisions to the official staff commentary that applies and interprets the requirements of Regulation Z, which implements the Truth in Lending Act.

The commentary revisions discuss the status of certain credit card-related fees and the rules for replacing an accepted credit card with one or more cards.

In addition, the commentary revisions discuss the disclosure of private mortgage insurance premiums and the selection of Treasury security yields for determining whether a mortgage loan is covered by provisions in Regulation Z that implement the Home Ownership and Equity Protection Act.

The revisions are effective April 1, 2003. The date for mandatory compliance is October 1, 2003.
Press Release (links off-site)


March 18, 2003
FOMC statement

The Federal Open Market Committee decided to keep its target for the federal funds rate unchanged at 1-1/4 percent.

While incoming economic data since the January meeting have been mixed, recent labor market indicators have proven disappointing. However, the hesitancy of the economic expansion appears to owe importantly to oil price premiums and other aspects of geopolitical uncertainties. The Committee believes that as those uncertainties lift, as most analysts expect, the accommodative stance of monetary policy, coupled with ongoing growth in productivity, will provide support to economic activity sufficient to engender an improving economic climate over time.

In light of the unusually large uncertainties clo