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Circular Letters


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

2009

December 28, 2009
Federal Reserve Board Proposes Amendments to Regulation D That Would Enable the Establishment of a Term Deposit Facility

The Federal Reserve Board proposed amendments to Regulation D (Reserve Requirements of Depository Institutions) that would enable the establishment of a term deposit facility.

Under the proposal, the Federal Reserve Banks would offer interest-bearing term deposits to eligible institutions through an auction mechanism. Term deposits would be one of several tools that the Federal Reserve could employ to drain reserves to support the effective implementation of monetary policy.

This proposal is one component of a process of prudent planning on the part of the Federal Reserve and has no implications for monetary policy decisions in the near term.

Public comments will be accepted on the proposal for 30 days after publication in the Federal Register.
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December 22, 2009
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 12-month period ending in November, with rounding to the nearest million.

As a result of the 0.98 percent decrease in the CPI index for the period ending in November 2009, 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 $1.098 billion.
  • "Intermediate small bank" or "intermediate small savings association" means a small institution with assets of at least $274 million as of December 31 of both of the prior two calendar years, and less than $1.098 billion as of December 31 of either of the prior two calendar years.

These asset-size threshold adjustments are effective January 1, 2010. 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 (http://www.ffiec.gov/cra).

Attachment (27 KB PDF) Links off-site

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

December 17, 2009
U.S. Regulators Encourage Comments to Basel Committee

The Basel Committee on Banking Supervision (the Committee) today released for comment new proposals that aim to strengthen the resiliency of the banking sector through new capital and liquidity standards. Following the Basel II enhancements released in July 2009, these proposals represent part of the Committee's ongoing effort to apply lessons learned from recent market events to enhance regulation, supervision, and risk management of global banks. Proposed changes include introduction of new standards for liquidity risk management, the addition of a leverage ratio to the Basel II framework, improvements to the quality and consistency of capital, and strengthening of capital requirements for counterparty credit risk.

The Committee requests responses on the proposals, which are available on the Committee's website at http://www.bis.org/press/p091217.htm, by April 16, 2010. The Office of the Comptroller of the Currency, the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision, which are members of the Committee, encourage interested persons to review and comment on the proposals.

Comments may be sent via e-mail to baselcommittee@bis.org or to:

Secretariat of the Basel Committee on Banking Supervision
Bank for International Settlements
CH-4002, Basel, Switzerland

Media Contacts:
Federal Reserve Board Barbara Hagenbaugh 202-452-2955
FDIC David Barr 202-898-6992
OCC Bryan Hubbard 202-874-5770
OTS William Ruberry 202-906-6677

December 16, 2009
FOMC Statement

Information received since the Federal Open Market Committee met in November suggests that economic activity has continued to pick up and that the deterioration in the labor market is abating. The housing sector has shown some signs of improvement over recent months. Household spending appears to be expanding at a moderate rate, though it remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment, though at a slower pace, and remain reluctant to add to payrolls; they continue to make progress in bringing inventory stocks into better alignment with sales. Financial market conditions have become more supportive of economic growth. 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 contribute to 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.

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, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, 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 is in the process of purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. In order to promote a smooth transition in markets, the Committee is gradually slowing the pace of these purchases, and it anticipates that these transactions will be executed by the end of the first quarter of 2010. 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.

In light of ongoing improvements in the functioning of financial markets, the Committee and the Board of Governors anticipate that most of the Federal Reserve's special liquidity facilities will expire on February 1, 2010, consistent with the Federal Reserve's announcement of June 25, 2009. These facilities include the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, the Commercial Paper Funding Facility, the Primary Dealer Credit Facility, and the Term Securities Lending Facility. The Federal Reserve will also be working with its central bank counterparties to close its temporary liquidity swap arrangements by February 1. The Federal Reserve expects that amounts provided under the Term Auction Facility will continue to be scaled back in early 2010. The anticipated expiration dates for the Term Asset-Backed Securities Loan Facility remain set at June 30, 2010, for loans backed by new-issue commercial mortgage-backed securities and March 31, 2010, for loans backed by all other types of collateral. The Federal Reserve is prepared to modify these plans if necessary to support financial stability and economic growth.

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.


December 15, 2009
Federal Reserve Announces Results of Auction of $75 Billion in 28-Day Credit Held on December 14, 2009

On December 14, 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: $46.035 billion
Total propositions accepted: $46.035 billion
Bid/cover ratio: 0.61
Number of bidders: 102

The awarded loans will settle on December 17, 2009, and will mature on January 14, 2010. 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 15, 2009. Participants have until 12:30 p.m. EST on December 15, 2009, to inform their local Reserve Bank of any error.


December 14, 2009
Federal Reserve Offers $75 Billion in 28-Day Credit Through Its Term Auction Facility

On December 14, 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: December 14, 2009
  Opening Time: 11:00 a.m. EST
  Closing Time: 12:30 p.m. EST
Notification Date: December 15, 2009
Settlement Date: December 17, 2009
Maturity Date: January 14, 2010
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. 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 01, 2009
Federal Reserve Announces Results of Auction of $25 Billion in 42-Day Credit Held on November 30, 2009

On November 30, 2009, the Federal Reserve conducted an auction of $25 billion in 42-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent


Total propositions submitted: $16.730 billion
Total propositions accepted: $16.730 billion
Bid/cover ratio: 0.67


Number of bidders: 49

The awarded loans will settle on December 3, 2009, and will mature on January 14, 2010. 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 1, 2009. Participants have until 12:30 p.m. EST on December 1, 2009, to inform their local Reserve Bank of any error.


November 30, 2009
Federal Reserve Offers $25 Billion in 42-Day Credit Through Its Term Auction Facility

On November 30, 2009, the Federal Reserve will offer $25 billion in 42-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: $25 billion
Term: 42-day loan
Bid Submission Date: November 30, 2009
Opening Time: 11:00 a.m. EST
Closing Time: 12:30 p.m. EST
Notification Date: December 1, 2009
Settlement Date: December 3, 2009
Maturity Date: January 14, 2010
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: 0.25 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. 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 27, 2009
Agencies Extend Compliance Date for Final Rule to Implement Unlawful Internet Gambling Enforcement Act

The Department of the Treasury and the Federal Reserve Board on Friday announced the release of a joint final rule to extend the compliance date for their joint regulation implementing certain provisions of the Unlawful Internet Gambling Enforcement Act by six months to June 1, 2010.

The Federal Register notice regarding the extension of the compliance date is attached.

Attachment (25 KB PDF) off-site image

Media Contacts:
Federal Reserve Board
Susan Stawick
(202) 452-2955

Treasury
Meg Reilly
(202) 622-2960


November 25, 2009
Federal Reserve Announces Revisions to the Policies Governing Directors of Federal Reserve Banks and Their Branches

The Federal Reserve Board announced revisions to the policy governing eligibility, qualifications, and rotation for directors of Federal Reserve Banks and their Branches. The revisions address situations where, as a result of a company changing character, affiliations and stockholdings that were previously permissible may become impermissible for Class B and Class C directors.

Each Federal Reserve Bank has a nine-member board of directors. Commercial banks that are members of the Federal Reserve System (member banks) elect three Class A and three Class B directors, and the Board of Governors appoints three Class C directors. As required by the Federal Reserve Act, Class A directors of each Reserve Bank represent the member banks within the Federal Reserve District. Class B and Class C directors represent the public and may not be officers, directors, or employees of any bank. In addition, Class C directors may not be stockholders of any bank. The Board has by policy extended these prohibitions on affiliations and stockholdings to encompass bank holding companies and other financially-related entities to ensure that Reserve Bank boards reflect an appropriate cross-section of industry and the public. The policy refers to these entities as "financial affiliation companies" and "financial stock issuers," respectively.

The revised policy provides that if a Class B or Class C director is affiliated with a company that becomes a financial affiliation company during his or her term, the director must either resign from the impermissible affiliation or resign from the Reserve Bank's board within 60 days of the earlier of the date that the director becomes aware of the prohibited affiliation or the Board informs the Reserve Bank of the change in character of the company. During this time, the director would be required to recuse himself or herself from all duties related to service as a Reserve Bank director until the affiliation is severed.

A Class C director who holds stock in a company that becomes a financial stock issuer during the course of the director's term must divest the impermissible stock or resign from the Reserve Bank's board within 60 days of the earlier of the date that the director becomes aware of the prohibited nature of the company or the Board informs the Reserve Bank of the company's status as a financial stock issuer. Until the stock is divested, the Class C director would be required to recuse himself or herself from Reserve Bank director duties and would not be allowed to purchase additional stock in the relevant company while remaining on the Reserve Bank board.
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November 17, 2009
Board Approves Reduction in Maximum Maturity of Primary Credit Loans Effective January 14, 2010

In light of the continued improvement in financial market conditions, the Federal Reserve Board announced that it approved a reduction in the maximum maturity of primary credit loans at the discount window for depository institutions to 28 days from 90 days effective January 14, 2010. Primary credit loans will remain eligible for renewal upon request of the borrower.

Prior to August 2007, the maximum available term of primary credit was generally overnight. The Federal Reserve lengthened the maximum maturity first to 30 days on August 17, 2007 and then to 90 days on March 16, 2008 in order to enhance banks' access to term funds and thus support their ability to lend to households and businesses.
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November 17, 2009
Federal Regulators Issue Final Model Privacy Notice Form

Eight federal regulatory agencies released a final model privacy notice form that will make it easier for consumers to understand how financial institutions collect and share information about consumers. Under the Gramm-Leach-Bliley Act (GLB Act), institutions must notify consumers of their information-sharing practices and inform consumers of their right to opt out of certain sharing practices. The model form issued today can be used by financial institutions to comply with these requirements.

The Financial Services Regulatory Relief Act of 2006 amended the GLB Act to require the agencies to propose a succinct and comprehensible model form that allows consumers to easily compare the privacy practices of different financial institutions, and has an easy-to-read font.

The agencies conducted extensive consumer research and testing in developing the model form issued today. Then they solicited public comments and considered those comments in developing a model form that is easier for consumers to understand and use. The final rule provides that a financial institution that chooses to use the model form obtains a "safe harbor" and will satisfy the disclosure requirements for notices. The rule also removes, after a transition period, the sample clauses now included in the appendices of the agencies' privacy rules.

The final model privacy form 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.
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November 17, 2009
Federal Reserve Announces Results of Auction of $75 Billion in 28-Day Credit Held on November 16, 2009

On November 16, 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: $31.119 billion
Total propositions accepted: $31.119 billion
Bid/cover ratio: 0.41
Number of bidders: 82

The awarded loans will settle on November 19, 2009, and will mature on December 17, 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 17, 2009. Participants have until 12:30 p.m. EST on November 17, 2009, to inform their local Reserve Bank of any error.


November 16, 2009
Federal Reserve Proposes Rules to Restrict Fees and Expiration Dates on Gift Cards

The Federal Reserve Board announced proposed rules that would restrict the fees and expiration dates that may apply to gift cards. The rules would protect consumers from certain unexpected costs and would require that gift card terms and conditions be clearly stated.

The proposed rules would prohibit dormancy, inactivity, and service fees on gift cards unless: (1) there has been at least one year of inactivity on the certificate or card; (2) no more than one such fee is charged per month; and (3) the consumer is given clear and conspicuous disclosures about the fees. Expiration dates for funds underlying gift cards must be at least five years after the date of issuance, or five years after the date when funds were last loaded.

The Board's proposed rules generally cover retail gift cards, which can be used to buy goods or services at a single merchant or affiliated group of merchants, and network-branded gift cards, which are redeemable at any merchant that accepts the card brand.

The proposed rules are issued under Regulation E (Electronic Fund Transfers) to implement the gift card provisions of the Credit Card Accountability Responsibility and Disclosure Act of 2009. Comments on the proposal must be submitted within 30 days after publication in the Federal Register.
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November 16, 2009
Federal Reserve Offers $75 Billion in 28-Day Credit Through Its Term Auction Facility

On November 16, 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: November 16, 2009
Opening Time: 11:00 a.m. EST
Closing Time: 12:30 p.m. EST
Notification Date: November 17, 2009
Settlement Date: November 19, 2009
Maturity Date: December 17, 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. 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 16, 2009
Federal Reserve Approves Interim Final Rule Requiring Notice be given to Consumers When Their Mortgage Loan is Sold or Transferred

The Federal Reserve Board approved an interim final rule to implement a recent statutory amendment requiring that notice be given to consumers when their mortgage loan has been sold or transferred. The new disclosure requirement became effective immediately upon enactment of the Helping Families Save Their Homes Act in May, 2009. Under that Act, a purchaser or assignee that acquires a mortgage loan must provide the required disclosures in writing within 30 days.

To provide compliance guidance and greater certainty on the new requirements, the interim final rule, revising Regulation Z (Truth in Lending Act), is effective upon publication. However, to allow time for any necessary operational changes, compliance with the interim final rule is optional for 60 days. During the 60-day period, parties that acquire a mortgage loan continue to be subject to the statute's requirements.

The Board is also soliciting comment on the interim rule for 60 days before considering the adoption of a permanent rule.
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November 13, 2009
Agencies Issue Final Rule for Mortgage Loans Modified Under the Home Affordable Mortgage Program

The federal bank and thrift regulatory agencies issued a final rule providing that mortgage loans modified under the U.S. Department of the Treasury's Home Affordable Mortgage Program (HAMP) will generally retain the risk weight appropriate to the mortgage loan prior to modification.

The agencies adopted as final their interim final rule issued on June 30, 2009, with one modification. The final rule clarifies that mortgage loans whose HAMP modifications are in the trial period, and not yet permanent, qualify for the risk-based capital treatment contained in the rule.

The final rule, issued 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 30 days after publication in the Federal Register.
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November 13, 2009
Federal Reserve Announces Final Rules Prohibiting Institutions From Charging Fees for Overdrafts on ATM and One-Time Debit Card Transactions

The Federal Reserve Board announced final rules that prohibit financial institutions from charging consumers fees for paying overdrafts on automated teller machine (ATM) and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions.

Before opting in, the consumer must be provided a notice that explains the financial institution's overdraft services, including the fees associated with the service, and the consumer's choices. The final rules, along with a model opt-in notice, are issued under Regulation E, which implements the Electronic Fund Transfer Act.

The Board's consumer testing shows that most consumers prefer not to be enrolled in overdraft services for ATM and one-time debit card transactions unless they affirmatively consent, or opt in. At the same time, testing shows that most consumers want overdraft services to cover important bills, such as checks they use to pay rent, utilities, and telephone bills.

To ensure that consumers have a meaningful choice, the final rules prohibit financial institutions from discriminating against consumers who do not opt in. The final rules require institutions to provide consumers who do not opt in with the same account terms, conditions, and features (including pricing) that they provide to consumers who do opt in. For consumers who do not opt in, the institution would be prohibited from charging overdraft fees for any overdrafts it pays on ATM and one-time debit card transactions.

The Federal Register notice is attached. The final rules are effective July 1, 2010.
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November 12, 2009
Federal Regulators Reopen Comment Period for Correspondent Concentration Risks Guidance

The federal bank and thrift regulatory agencies announced they are reopening the comment period on proposed guidance on correspondent concentration risks, originally published on September 25. The comment period will be open until November 27, 2009, an additional 30 days after the original comment period closed.
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November 12, 2009
Federal Reserve Announces Final Rules Prohibiting Institutions From Charging Fees for Overdrafts on ATM and One-Time Debit Card Transactions

The Federal Reserve Board announced final rules that prohibit financial institutions from charging consumers fees for paying overdrafts on automated teller machine (ATM) and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions.

Before opting in, the consumer must be provided a notice that explains the financial institution's overdraft services, including the fees associated with the service, and the consumer's choices. The final rules, along with a model opt-in notice, are issued under Regulation E, which implements the Electronic Fund Transfer Act.

The Board's consumer testing shows that most consumers prefer not to be enrolled in overdraft services for ATM and one-time debit card transactions unless they affirmatively consent, or opt in. At the same time, testing shows that most consumers want overdraft services to cover important bills, such as checks they use to pay rent, utilities, and telephone bills.

To ensure that consumers have a meaningful choice, the final rules prohibit financial institutions from discriminating against consumers who do not opt in. The final rules require institutions to provide consumers who do not opt in with the same account terms, conditions, and features (including pricing) that they provide to consumers who do opt in. For consumers who do not opt in, the institution would be prohibited from charging overdraft fees for any overdrafts it pays on ATM and one-time debit card transactions.

The Federal Register notice is attached. The final rules are effective July 1, 2010.
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November 06, 2009
Restructuring of Check Processing Operations in the Third and Fourth Districts, Regulation CC

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 December 12, 2009, the Reserve Banks will transfer the check-processing operations of the head office of the Federal Reserve Bank of Philadelphia 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 Philadelphia 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 December 12, 2009.
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November 04, 2009
FOMC Statement

Information received since the Federal Open Market Committee met in September suggests that economic activity has continued to pick up. Conditions in financial markets were roughly unchanged, on balance, over the intermeeting period. Activity in the housing sector has increased over recent months. Household spending appears to be expanding 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, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, 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 about $175 billion of agency debt. The amount of agency debt purchases, while somewhat less than the previously announced maximum of $200 billion, is consistent with the recent path of purchases and reflects the limited availability of agency debt. In order to promote a smooth transition in markets, the Committee will gradually slow the pace of its purchases of both agency debt and agency mortgage-backed securities and anticipates that these transactions will be executed by the end of the first quarter of 2010. 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.


November 03, 2009
Board Approves Fee Schedule for Federal Reserve Bank Priced Services

The Federal Reserve Board has announced the approval of fee schedules for payment services the Federal Reserve Banks provide to depository institutions (priced services), effective January 4, 2010.

The Reserve Banks project that they will recover 96.8 percent of their priced services costs in 2010. The Reserve Banks expect to recover all of their actual and imputed expenses, and earn a small profit that is below their targeted return on equity. Priced services cost recovery is heavily influenced by the projected under recovery in the check service as it transitions to an end-to-end electronic check processing environment. The Reserve Banks are continuing to take aggressive steps to reduce their check service costs and expect to return to full cost recovery within the next several years. Because an increasing proportion of checks collected through the Reserve Banks will be presented electronically, the effective fees paid to collect checks using the Reserve Banks' Check 21 services are expected to decline, on average, 23 percent. The average fee paid by depository institutions to return a check electronically will rise 7 percent. In addition, the fees for the Reserve Banks' FedACH® service, Fedwire® Funds and National Settlement Services, and Fedwire® Securities Service will increase approximately 14 percent.

Fee schedules for all priced services are available on the Federal Reserve Banks' financial services website at http://www.frbservices.org/.

In addition, the Board approved the 2010 private-sector adjustment factor (PSAF) for Reserve Bank priced services of $50.2 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 03, 2009
Federal Reserve Announces Results of Auction of $25 Billion in 70-Day Credit Held on November 2, 2009

On November 2, 2009, the Federal Reserve conducted an auction of $25 billion in 70-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
Total propositions submitted: $13.152 billion
Total propositions accepted: $13.152 billion
Bid/cover ratio: 0.53
Number of bidders: 53

The awarded loans will settle on November 5, 2009, and will mature on January 14, 2010. 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 3, 2009. Participants have until 12:30 p.m. EST on November 3, 2009, to inform their local Reserve Bank of any error.


November 02, 2009
Federal Reserve Offers $25 Billion in 70-Day Credit Through Its Term Auction Facility

On November 2, 2009, the Federal Reserve will offer $25 billion in 70-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: $25 billion
Term: 70-day loan
Bid Submission Date: November 2, 2009
Opening Time: 11:00 a.m. EST
Closing Time: 12:30 p.m. EST
Notification Date: November 3, 2009
Settlement Date: November 5, 2009
Maturity Date: January 14, 2010
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: 0.25 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. 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.


October 20, 2009
Federal Reserve Announces Results of Auction of $75 Billion in 28-Day Credit Held on October 19, 2009

On October 19, 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: $39.566 billion
Total propositions accepted: $39.566 billion
Bid/cover ratio: 0.53
Number of bidders: 83

The awarded loans will settle on October 22, 2009, and will mature on November 19, 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 20, 2009. Participants have until 12:30 p.m. EDT on October 20, 2009, to inform their local Reserve Bank of any error.


October 19, 2009
Federal Reserve Offers $75 Billion in 28-Day Credit Through Its Term Auction Facility

On October 19, 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: October 19, 2009
Opening Time: 11:00 a.m. EDT
Closing Time: 12:30 p.m. EDT
Notification Date: October 20, 2009
Settlement Date: October 22, 2009
Maturity Date: November 19, 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.


October 06, 2009
Federal Reserve Announces Results of Auction of $50 Billion in 70-Day Credit Held on October 5, 2009

On October 5, 2009, the Federal Reserve conducted an auction of $50 billion in 70-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 0.250 percent
Total propositions submitted: $24.830 billion
Total propositions accepted: $24.830 billion
Bid/cover ratio: 0.50
Number of bidders: 75

The awarded loans will settle on October 8, 2009, and will mature on December 17, 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 6, 2009. Participants have until 12:30 p.m. EDT on October 6, 2009, to inform their local Reserve Bank of any error.


October 05, 2009
Federal Reserve Offers $50 Billion in 70-Day Credit Through Its Term Auction Facility

On October 5, 2009, the Federal Reserve will offer $50 billion in 70-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: 70-day loan
Bid Submission Date: October 5, 2009
Opening Time: 11:00 a.m. EDT
Closing Time: 12:30 p.m. EDT
Notification Date: October 6, 2009
Settlement Date: October 8, 2009
Maturity Date: December 17, 2009
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: 0.25 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 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 29, 2009
Board Approves Proposed Rule Amending Credit Card Provisions of Regulation Z (Truth in Lending)

The Federal Reserve Board has proposed rules amending Regulation Z (Truth in Lending) to protect consumers who use credit cards from a number of potentially costly practices.

Among other things, the proposed rule would:

  • Protect consumers from unexpected increases in credit card interest rates by generally prohibiting increases in a rate during the first year after an account is opened and increases in a rate that applies to an existing credit card balance.
  • Prohibit creditors from issuing a credit card to a consumer who is under the age of 21 unless the consumer has the ability to make the required payments or obtains the signature of a parent or other cosigner with the ability to do so.
  • Require creditors to obtain a consumer's consent before charging fees for transactions that exceed the credit limit.
  • Limit the high fees associated with subprime credit cards.
  • Ban creditors from using the "two-cycle" billing method to impose interest charges.
  • Prohibit creditors from allocating payments in ways that maximize interest charges.

In December 2008, the Federal Reserve adopted final regulations prohibiting unfair credit card practices and improving the disclosures consumers receive in connection with credit card accounts. This proposal would amend aspects of those regulations to incorporate provisions of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit Card Act), which was enacted in May 2009.

The proposed rule represents the second stage of the Federal Reserve's implementation of the Credit Card Act. On July 15, 2009, the Board issued an interim final rule implementing the provisions of the Credit Card Act that went into effect on August 20, 2009. The proposed rule would implement the provisions that go into effect on February 22, 2010. The remaining provisions of the Credit Card Act go into effect on August 22, 2010 and will be implemented by the Federal Reserve at a later date.

Comments on the proposal must be submitted within 30 days after publication in the Federal Register, which is expected shortly.
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September 24, 2009
Board Issues Revision to Regulation S Regarding Costs Incurred by Financial Institutions in Producing Customer Financial Records

The Federal Reserve Board has issued a revision to Regulation S, which sets the rates and conditions under which a government agency must reimburse a financial institution for costs incurred in producing customer financial records under the Right to Financial Privacy Act.

The revision, which becomes effective January 1, 2010, changes Regulation S in several ways. Most significantly, the personnel fees chargeable for searching and processing document requests are increased substantially. The amendments also encourage electronic document productions by not allowing a $0.25 per page fee to be charged by a financial institution for printing electronically stored information without the requesting agency's consent. The amended regulation also includes a mechanism for automatically updating the labor rates found in the regulation every three years, and makes other technical changes to the rule.
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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.
Press Release off-site image


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 06, 2009
Joint statement by Federal Reserve, Treasury, FDIC, and OCC on Treasury Capital Assistance Program and Supervisory Capital Assessment Program

Joint Statement
by

Secretary of the Treasury Timothy F. Geithner, Chairman of the Board of Governors of the Federal Reserve System Ben S. Bernanke, Chairman of the Federal Deposit Insurance Corporation Sheila Bair, and Comptroller of the Currency John C. Dugan

The Treasury Capital Assistance Program and the Supervisory Capital Assessment Program

During this period of extraordinary economic uncertainty, the U.S. federal banking supervisors believe it to be important for the largest U.S. bank holding companies (BHCs) to have a capital buffer sufficient to withstand losses and sustain lending even in a significantly more adverse economic environment than is currently anticipated. In keeping with this aim, the Federal Reserve and other federal bank supervisors have been engaged in a comprehensive capital assessment exercise--known as the Supervisory Capital Assessment Program (SCAP)--with each of the 19 largest U.S. BHCs.

The SCAP will be completed this week and the results released publicly by the Federal Reserve Board on Thursday May 7th, 2009 at 5pm EDT. In this release, supervisors will report--under the SCAP "more adverse" scenario, for each of the 19 institutions individually and in the aggregate--their estimates of: losses and loss rates across select categories of loans; resources available to absorb those losses; and the resulting necessary additions to capital buffers. The estimates reported by the Federal Reserve represent values for a hypothetical 'what-if' scenario and are not forecasts of expected losses or revenues for the firms. Any BHC needing to augment its capital buffer at the conclusion of the SCAP will have until June 8th, 2009 to develop a detailed capital plan, and until November 9th, 2009 to implement that capital plan.

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. A strong, resilient financial system is necessary to facilitate a broad and sustainable economic recovery. The U.S. government reaffirms its commitment to stand firmly behind the banking system during this period of financial strain to ensure it can perform its key function of providing credit to households and businesses.

Understanding the Results of Supervisory Capital Assessment Program

The SCAP Focus on the Quantity and Quality of Capital
Minimum capital standards for a BHC serve only as a starting point for supervisors in determining the adequacy of the BHC's capital relative to its risk profile. In practice, supervisors expect all BHCs to have a level and composition of Tier 1 capital well in excess of the 4% regulatory minimum, and also to have common equity as the dominant element of that Tier 1 capital.

Under the SCAP, supervisors evaluated the extent to which each of the 19 BHCs would need to alter either the amount or the composition (or both) of its Tier 1 capital today to be able to comfortably exceed minimum regulatory requirements at year-end 2010, even under an more adverse economic scenario.

The SCAP capital buffer for each BHC is sized to achieve a Tier 1 risk-based ratio of at least 6% and a Tier 1 Common risk-based ratio of at least 4% at the end of 2010, under a more adverse macroeconomic scenario than is currently anticipated.

The SCAP focuses on Tier 1 Common capital--measured by applying the same adjustments to "voting common stockholders' equity" used to calculate Tier 1 capital--as well as overall Tier 1 capital, because both the amount and the composition of a BHC's capital contribute to its strength. The SCAP's emphasis on Tier 1 Common capital reflects the fact that common equity is the first element of the capital structure to absorb loss and offers protection to more senior parts of the capital structure. All else equal, more Tier 1 Common capital gives a BHC greater permanent loss absorption capacity and a greater ability to conserve resources under stress by changing the amount and timing of dividends and other distributions.

The Role of the SCAP Buffer
By its design, the SCAP is more stringent than a solvency test. First, each BHC's capital was rigorously evaluated against a two-year-ahead adverse scenario that is not a prediction or an expected outcome for the economy, but is instead a “what if” scenario. In addition, the buffer was sized so that each BHC will have a cushion above regulatory minimums even in the stress scenario. Thus, any need for additional capital and/or a change in composition of capital to meet the SCAP buffer is not indicative of inadequate current capitalization. Instead, the SCAP buffer builds in extra capital against the unlikely prospect that the adverse scenario materializes.

The presence of this one-time buffer will give market participants, as well as the firms themselves, confidence in the capacity of the major BHCs to perform their critical role in lending, even if the economy proves weaker than expected. Once this upfront buffer is established, the normal supervisory process will continue to be used to determine whether a firm's current capital ratios are consistent with regulatory guidance.

The SCAP and the Capital Planning Process
Over the next 30 days, any BHC needing to augment its capital buffer will develop a detailed capital plan to be approved by its primary supervisor, in consultation with the FDIC, and will have six months to implement that plan. In light of the potential for new commitments under the Capital Assistance Program or exchanges of existing CPP preferred stock, supervisors will consult with Treasury on the development and evaluation of the plans. The capital plan will consist of three main elements:

  • A detailed description of the specific actions to be taken to increase the level of capital and/or to enhance the quality of capital consistent with establishing the SCAP buffer. BHCs are encouraged to design capital plans that, wherever possible, actively seek to raise new capital from private sources. These plans should include actions such as:
    • Issuance of new private capital instruments;
    • Restructuring current capital instruments;
    • Sales of business lines, legal entities, assets or minority interests through private transactions and through sales to the PPIP;
    • Use of joint ventures, spin-offs, or other capital enhancing transactions; and
    • Conservation of internal capital generation, including continued restrictions on dividends and stock repurchases and dividend deferrals, waivers and suspensions on preferred securities including trust preferred securities, with the expectation that plans should not rely on near-term potential increases in revenues to meet the capital buffer it is expected to have.
  • A list of steps to address weaknesses, where appropriate, in the BHC's internal processes for assessing capital needs and engaging in effective capital planning.
  • An outline of the steps the firm will take over time to repay government provided capital taken under the Capital Purchase Program (CPP), Targeted Investment Program (TIP), or the CAP, and reduce reliance on guaranteed debt issued under the TLGP.

In addition, as part of the 30-day planning process, firms will need to review their existing management and Board in order to assure that the leadership of the firm has sufficient expertise and ability to manage the risks presented by the current economic environment and maintain balance sheet capacity sufficient to continue prudent lending to meet the credit needs of the economy.

Supervisors expect that the board of directors and the senior management of each BHC will give the design and implementation of the capital plan their full and immediate attention and strong support. Capital plans will be submitted and approved by supervisors by June 8th, 2009. Upon approval, these capital plans will be the basis for the BHC's establishment of the SCAP capital buffer by November 9th, 2009.

Mandatory Convertible Preferred under the CAP
To ensure that the banking system has the capital it needs to provide the credit necessary to support economic growth, the Treasury is making capital available under its Capital Assistance Program as a bridge to private capital in the future. A BHC may apply for Mandatory Convertible Preferred (MCP) in an amount up to 2% of risk-weighted assets (or higher upon request). MCP can serve as a source of contingent common capital for the firm, convertible into common equity when and if needed to meet supervisory expectations regarding the amount and composition of capital. Treasury will consider requests to exchange outstanding preferred shares sold under the CPP or the Targeted Investment Program (TIP) for new mandatory convertible preferred issued under the CAP. In order to protect the taxpayer interest, the Treasury expects that any exchange of Treasury-issued preferred stock for MCP will be accompanied or preceded by new capital raises or exchanges of private capital securities into common equity.

The MCP instrument is designed to give banks the incentive to redeem or replace the government-provided capital with private capital when feasible. The term sheet for MCP is available at www.financialstability.gov.

The SCAP focused on the largest financial firms to ensure that they maintain adequate capital buffers to withstand losses in an adverse economic environment. Smaller financial institutions generally maintain capital levels, especially common equity, well above regulatory capital standards. There is no intention to expand the SCAP beyond the 19 BHCs that have recently completed this exercise.

The Treasury reiterates that the CAP application process remains open to these institutions under the same terms and conditions applicable to the 19 SCAP BHCs. The Treasury stands ready to review and process any applications received in an expedient manner. For those firms wishing to apply to CAP, supervisors will review those firms' risk profiles and capital positions. In addition, supervisors will evaluate the firms' internal capital assessment processes, including capital planning efforts that incorporate the potential impact of stressful market conditions and adverse economic outcomes.

Redeeming Preferred Securities Issued under the CPP
Supervisors will carefully weigh an institution's desire to redeem outstanding CPP preferred stock against the contribution of Treasury capital to the institutions overall soundness, capital adequacy, and ability to lend, including confirming that BHCs have a comprehensive internal capital assessment process.

All BHCs seeking to repay CPP will be subject to the existing supervisory procedures for approving redemption requests for capital instruments.

The 19 BHCs that were subject to the SCAP process must have a post-repayment capital base at least consistent with the SCAP buffer, and must be able to demonstrate its financial strength by issuing senior unsecured debt for a term greater than five years not backed by FDIC guarantees, in amounts sufficient to demonstrate a capacity to meet funding needs independent of government guarantees.
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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.
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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.
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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 08, 2009
Federal Reserve announces results of auction of $150 billion in 28-day credit held on April 6, 2009

On April 6, 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: $106.251 billion
Total propositions accepted: $106.251 billion
Bid/cover ratio: 0.71
     
Number of bidders: 105

The awarded loans will settle on April 9, 2009, and will mature on May 7, 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 7, 2009. Participants have until 12:30 p.m. EDT on April 7, 2009, to inform their local Reserve Bank of any error.
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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.

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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.
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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.
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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.
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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.
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