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Circular Letters


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

2013

December 27, 2013
Agencies Review Treatment of Collateralized Debt Obligations

The Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission on Friday said they are reviewing whether it would be appropriate and consistent with the Dodd-Frank Wall Street Reform and Consumer Protection Act not to subject collateralized debt obligations backed by trust preferred securities to the investment prohibitions of section 619 of Dodd-Frank, otherwise known as the "Volcker rule."

The agencies intend to address the matter no later than January 15, 2014. The accounting staffs of the agencies believe that, consistent with generally accepted accounting principles, any actions in January 2014 that occur before the issuance of December 31, 2013, financial reports should be considered when preparing those financial reports.

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Commodity Futures Trading Commission, and the Securities and Exchange Commission issued final rules to implement section 619 on December 10, 2013.

Attachment (78 KB PDF)

Media Contacts:
Federal Reserve Board Barbara Hagenbaugh (202) 452-2955
FDIC Andrew Gray (202) 898-7192
OCC William Grassano (202) 649-6870
SEC Public Affairs (202) 551-4120

December 26, 2013
Board Approves a Final Rule on Swaps Push-out Provision

The Federal Reserve Board on Tuesday approved a final rule clarifying the treatment of uninsured U.S. branches and agencies of foreign banks under section 716 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, commonly known as the swaps push out provision. The final rule adopts without change the interim final rule issued by the Board on June 5, 2013.

Section 716 of Dodd-Frank generally prohibits the provision of certain types of federal assistance, such as discount window lending and deposit insurance, to swaps entities. The provisions of section 716 became effective on July 16, 2013.

Insured depository institutions that are swaps entities are eligible for a transition period of up to 24 months to comply and for certain statutory exceptions. The final rule clarifies that, for purposes of section 716, uninsured U.S. branches and agencies of foreign banks are treated as insured depository institutions. Thus, they are eligible to apply for a transition period and are treated as insured depository institutions for purposes of the other provisions of section 716.

The final rule also sets forth the process for state member banks and uninsured state branches or agencies of foreign banks to apply to the Board for the transition period.

The final rule is effective January 31, 2014.

For media inquiries, call 202-452-2955

Attachment (57 KB PDF)

Board Votes


December 24, 2013
Board Seeks Comment on Proposed Amendments to Regulation A

The Federal Reserve Board on Monday invited public comment on proposed amendments to Regulation A (Extensions of Credit by Federal Reserve Banks) to implement section 1101 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 1101 amended the Federal Reserve's emergency lending authority in section 13(3) of the Federal Reserve Act.

As required under the Dodd-Frank Act, the proposed rule is designed to ensure that any emergency lending program or facility is for the purpose of providing liquidity to the financial system, and not to aid an individual failing financial company.

The proposed rule has been developed in consultation with the Treasury Department. Comments on the proposal are due by March 7, 2014.

Attachment (PDF)

Comments on this proposal: View

For media inquiries, call 202-452-2955.

Board Votes


December 20, 2013
Asset-Size Threshold Adjustments Released for Small Banking 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 are required by the CRA rules. Financial institutions are evaluated under different CRA examination procedures based upon their asset-size classification. Those meeting the small and intermediate small asset-size threshold are not subject to the reporting requirements applicable to large banks and savings associations.

Annual adjustments to these asset-size thresholds are based on the 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 1.39 percent increase in the CPI index for the period ending in November 2013, 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 $ 1.202 billion.
  • "Intermediate small bank" or "intermediate small savings association" means a small institution with assets of at least $ 300 million as of December 31 of both of the prior two calendar years, and less than $ 1.202 billion as of December 31 of either of the prior two calendar years.

These asset-size threshold adjustments are effective January 1, 2014. The agencies will publish the adjustments in the Federal Register. In addition, the agencies will post a list of the current and historical asset-size thresholds on the website of the Federal Financial Institutions Examination Council.

Attachment (28 KB PDF)

Media Contacts:
Federal Reserve Board Susan Stawick 202-452-2955
FDIC Greg Hernandez 202-898-6984
OCC Stephanie Collins 202-649-6870

December 20, 2013
Guidance for Banks on Investments in Covered Funds

Three federal financial institution regulatory agencies today issued a FAQ (Frequently Asked Questions) document to provide clarification and guidance to banking entities regarding investments in "Covered Funds" and whether collateralized debt obligations backed by trust preferred securities (TruPS CDOs) could be determined to be Covered Funds under the final rules to implement section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The FAQs are intended to clarify that banking entities that have holdings in TruPS CDOs are not required to sell these holdings immediately under the final rules, but instead may use the conformance period to determine if they can be brought into conformance by the end of the conformance period, which is July 21, 2015.

The document released by the agencies provides an overview of some of the key legal issues banking entities should consider in determining whether holdings of TruPS CDOs are subject to the provision of the final rules implementing section 619, commonly known as the Volcker Rule. The issues identified and discussed in the document are whether a TruPS CDO qualifies in its current form as a Covered Fund under the final rules; whether it can be restructured or otherwise conformed to the final rules by the end of the conformance period of July 21, 2015; and whether a bank's investment in the CDO constitutes an ownership interest.

The final rules were approved by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Securities and Exchange Commission, and the Commodity Futures Trading Commission on December 10, 2013.

FAQ Regarding Collateralized Debt Obligations Backed by Trust Preferred Securities under the Final Volcker rule (PDF)

Media Contacts:
Federal Reserve Board Barbara Hagenbaugh 202-452-2955
FDIC Andrew Gray 202-898-7192
OCC Robert M. Garsson 202-649-6870

December 20, 2013
Large Financial Institutions Advised to Evaluate Transactions Intended to Reduce Risk

The Federal Reserve Board on Friday advised large financial institutions to carefully evaluate transactions intended to reduce risk to ensure that, if risks are shifted to a thinly capitalized counterparty or affiliated entity of the firm, any residual risk is effectively captured in the firm's internal capital adequacy assessment. Examiners will closely consider such transactions, and potential residual risks, when evaluating an institution's capital adequacy.

Following inquiries from banking institutions and investors, the Board issued the guidance to clarify that while efforts to reduce risk can be positive, certain transactions can result in residual risks to the firm that may not be accounted for in risk-based capital measures. Institutions should be able to demonstrate that the residual risks are fully reflected in their internal assessment of capital adequacy and that they maintain sufficient capital to account for such risks.

Supervisors will closely scrutinize risk-transfer transactions that result in substantial reductions in risk-weighted assets when assessing capital adequacy, including during the annual Comprehensive Capital Analysis and Review of the 30 largest financial institutions.

SR Letter 13-23


December 19, 2013
Comment Requested for Guidance on Income Tax Allocation Agreements

Federal banking regulators are seeking comment on supplemental guidance on income tax allocation agreements involving holding companies and insured depository institutions. An aim of the proposed guidance is to reduce confusion regarding ownership of any tax refunds.

In 1998, federal banking regulators issued an interagency policy statement on income tax allocation, which stated that a holding company that receives a tax refund from a taxing authority obtains these funds as agent for its subsidiary insured depository institutions and other affiliates. The proposed guidance would supplement the 1998 policy statement by instructing insured depository institutions and their holding companies to review their tax allocation agreements to ensure the agreements expressly acknowledge that the holding company receives any tax refunds as an agent. In addition, all banking organizations would be asked to insert specific language in their tax allocation agreements to further clarify tax refund ownership.

The proposed addendum would also clarify how sections 23A and 23B of the Federal Reserve Act, which establish certain restrictions on and requirements for transactions between depository institutions and their affiliates, apply to tax allocation agreements.

The federal banking regulators are proposing the guidance in response to disputes between holding companies in bankruptcy and failed depository institutions regarding ownership of tax refunds. Courts have come to differing conclusions regarding the ownership of tax refunds between holding companies and depository institutions based on their interpretation of language in tax allocation agreements.

The Interagency Policy Statement on Income Tax Allocation in a Holding Company Structure can be found at www.gpo.gov/fdsys/pkg/FR-1998-11-23/pdf/98-31179.pdf. Comments on the proposed guidance should be provided on or before January 21, 2014.

Attachment (59 KB PDF)

Board Votes
Media Contacts:
Federal Reserve Board Barbara Hagenbaugh 202-452-2955
FDIC David Barr 202-898-6992
OCC Stephanie Collins 202-649-6870

December 19, 2013
Public Comment Period Extended on Diversity Policies and Practices

Six federal financial regulatory agencies announced today that they are extending the comment period for their proposed policy statement for assessing diversity policies and practices of the institutions they regulate to allow the public more time to analyze the issues and prepare their comments.

Commenters now have until February 7, 2014, to provide feedback on the proposed policy statement. Originally, comments were due December 24, 2013.

The proposed policy statement, issued pursuant to section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, is intended to promote transparency and awareness of diversity policies and practices within federally regulated financial institutions.

The agencies that issued the proposal are the Federal Reserve Board, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission.

Attachment (37 KB PDF)

Media Contacts:
Federal Reserve Board Barbara Hagenbaugh 202-452-2955
CFBP Michelle Muth Person 202-435-7857
FDIC David Barr 202-898-6992
NCUA John Fairbanks 703-518-6336
OCC Stephanie Collins 202-649-6870
SEC Office of Public Affairs 202-551-4120

December 19, 2013
2013 Federal Reserve Payments Study Released Today

Cleveland, Ohio, December 19, 2013--The 2013 Federal Reserve Payments Study, released today, shows that card payments--credit and debit--now account for more than two-thirds of all noncash payments, while the number of checks paid continued to decline.

The Study, conducted triennially and available at www.frbservices.org, examines noncash payment trends in the United States. The 2013 Study has been expanded to include new information related to various payment initiation methods and unauthorized payments. To provide perspective on consumer and business payment trends over the past decade, the results are compared to previous payment studies conducted in 2004, 2007, and 2010.

The 2013 Study's highlights include:

  • The total number of noncash payments, excluding wire transfers, was 122.8 billion, a growth rate of 4.4 percent annually from 2009 to 2012. The rate of growth was down slightly from the previous 10 year (2003-2012) growth rate of 4.7 percent. The total value of noncash payments grew from $72.2 trillion in 2009 to just under $79 trillion in 2012.
  • The number of credit card payments, which had shown a decline in the 2010 Study, grew at an annual rate of 7.6 percent from 2009 to 2012. Debit card payments grew at a rate of 7.7 percent over that same period.
  • Automated Clearing House (ACH) growth slowed to 5.1 percent annually from 2009 to 2012, down from the average annual growth of 10.9 percent over the previous 10 years. From 2009 to 2012, the number of ACH payments as a percentage of total payments increased less than 1 percent while the value of ACH as a percentage of total noncash payments rose almost 10 percentage points, from 51.5 percent to 61.3 percent.
  • The number of checks paid continues to decline, falling to 18.3 billion, less than half the number a decade earlier (37.3 billion). Checks are increasingly being deposited as images, with 17 percent being deposited as an image at the bank of first deposit versus 13 percent as reported in the 2010 Study.
  • The 2013 Study estimates that there were 31.1 million unauthorized payment transactions in 2012, with a value of $6.1 billion.

The study was made possible by broad-based industry support and information sharing. "Payments industry participants in the Study provided a robust response, affording the Federal Reserve the opportunity to review a full range of traditionally collected information on the number and value of noncash payment types, as well as new data on payment initiation methods, third-party fraud and other relevant noncash payment factors," said Jim McKee, senior vice president of the Federal Reserve Bank of Atlanta, which sponsored the Study. "Furthermore," he continued, "as part of the Fed's long-standing commitment to collaborate with the industry in making the payments system more efficient, we hope the longer-term, 10-year view provided in the 2013 Study offers increased insight into shifts in consumer and business payments choices."

As in previous studies, the estimates reported are based on information gathered in three survey efforts: the 2013 Depository and Financial Institutions Payments Survey (DFIPS), the 2013 Network, Processors and Issuers Payments Surveys (NPIPS), and the 2013 Check Sample Survey (CSS). The Federal Reserve partnered with McKinsey & Company and Lieberman Research Group, as its subcontractor, on the DFIPS, and with Blueflame Consulting and MH Consulting, as its subcontractor, on the NPIPS. McKinsey & Company reviewed a large random sample of images for the CSS. The information collected in each survey is combined with information about payments trends from previous studies and then analyzed and adjusted for seasonality to produce comprehensive estimates not available in other studies. "The objective of the study is to produce trend information valuable to the industry in serving the public interest to improve the U.S. payments system," McKee said.

A more detailed report, anticipated in Spring 2014, will include a complete description of the methodologies used and data collected for the 2013 Payments Study.


December 18, 2013
Fed Board and FOMC Release Economic Projections From the Dec. 17–18 Meeting

The attached table and charts released on Wednesday summarize the economic projections and the target federal funds rate projections made by Federal Reserve Board members and Federal Reserve Bank presidents for the December 17-18 meeting of the Federal Open Market Committee.

The table will be incorporated into a summary of economic projections released with the minutes of the December 17-18 meeting. Summaries of economic projections are released quarterly.

Projections (PDF)

For media inquiries, call 202-452-2955.


December 18, 2013
Federal Reserve Issues FOMC Statement

Information received since the Federal Open Market Committee met in October indicates that economic activity is expanding at a moderate pace. Labor market conditions have shown further improvement; the unemployment rate has declined but remains elevated. Household spending and business fixed investment advanced, while the recovery in the housing sector slowed somewhat in recent months. Fiscal policy is restraining economic growth, although the extent of restraint may be diminishing. Inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.

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

Taking into account the extent of federal fiscal retrenchment since the inception of its current asset purchase program, the Committee sees the improvement in economic activity and labor market conditions over that period as consistent with growing underlying strength in the broader economy. In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions, the Committee decided to modestly reduce the pace of its asset purchases. Beginning in January, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $35 billion per month rather than $40 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $40 billion per month rather than $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee's sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee's dual mandate.

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

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

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Charles L. Evans; Esther L. George; Jerome H. Powell; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Eric S. Rosengren, who believes that, with the unemployment rate still elevated and the inflation rate well below the target, changes in the purchase program are premature until incoming data more clearly indicate that economic growth is likely to be sustained above its potential rate.

Statement Regarding Purchases of Treasury Securities and Agency Mortgage-Backed Securities (200 KB PDF)


December 12, 2013
Subset of Higher-Priced Mortgage Loans Exempt from Appraisal Requirements

WASHINGTON--Six federal financial regulatory agencies today issued a final rule that creates exemptions from certain appraisal requirements for a subset of higher-priced mortgage loans. The exemptions are intended to save borrowers time and money while still ensuring that the loans are financially sound.

The appraisal requirements for higher-priced mortgages were established by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Under the Dodd-Frank Act, closed-end mortgage loans are considered to be higher-priced if they are secured by a consumer's home and have interest rates above a certain threshold. The Dodd-Frank Act requires creditors to obtain a written appraisal based on a physical visit of the home's interior before making these loans.

The final rule provides that loans of $25,000 or less and certain "streamlined" refinancings are exempt from the Dodd-Frank Act appraisal requirements, which go into effect on January 18, 2014.

In addition, the final rule contains special provisions for manufactured homes, which can present unique issues in determining the appropriate valuation method. To ensure that access to affordable housing options is not hindered while creditors make the necessary adjustments, the requirements for manufactured home loans will not become effective for 18 months. Starting on July 18, 2015, loans secured by an existing manufactured home and land will be subject to the Dodd-Frank Act's appraisal requirements. Loans secured by a new manufactured home and land will be exempt only from the requirement that the appraiser visit the home's interior. For loans secured by manufactured homes without land, creditors will be allowed to use other valuation methods without an appraisal, such as using third-party valuation services or "book values."

In January 2013, a final rule implementing the new Dodd-Frank Act appraisal requirements was issued by the Federal Reserve Board, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the National Credit Union Administration, and the Office of the Comptroller of the Currency. Compliance with the January 2013 final rule will become mandatory on January 18, 2014. These same agencies are jointly issuing today's final rule to provide additional exemptions in response to public comments.

The Federal Register notice is attached.

Media Contacts:
Federal Reserve Susan Stawick (202) 452-2955
CFPB Sam Gilford (202) 435-7673
FDIC Greg Hernandez (202) 898-6984
FHFA Stefanie Johnson (202) 649-3030
NCUA Ben Hardaway (703) 518-6333
OCC Stephanie Collins (202) 649-6870

Attachment (1.37 MB PDF)

Board Votes


December 12, 2013
Public Comment Requested on Check Collection and Return Rules

The Federal Reserve Board on Thursday requested public comment on proposed amendments to check collection and return rules to reflect the evolution of the nation’s check collection system from one that is largely paper-based to one that is virtually all electronic.

The check collection and return provisions in Regulation CC (Availability of Funds and Collection of Checks) currently apply only to paper checks. The Board is proposing that electronic checks and electronic returned checks that banks exchange by agreement also be subject to these rules unless otherwise agreed by the sending and receiving banks. In addition, the Board is requesting comments on alternative approaches to modify the current expeditious-return and notice of nonpayment requirements to encourage the few remaining banks demanding paper returns to accept electronic returns.

The Board is also proposing a new indemnity for electronic items cleared through the check-collection system that did not originate as paper checks.

Comments on the attached Federal Register notice are due by May 2, 2014.

For media inquiries, call 202-452-2955.

Attachment (1.06 MB PDF)

Board Votes


December 11, 2013
Social Media: Consumer Compliance Risk Management Guidance

The Federal Reserve is issuing the attached interagency guidance, Social Media: Consumer Compliance Risk Management Guidance (Guidance), to address the applicability of federal consumer protection and compliance laws, regulations, and policies to activities conducted via social media by financial institutions. Financial institutions are using social media as a tool to generate new business and interact with consumers. Social media may more broadly distribute information to users of financial services and may help users and providers find each other and match products and services to users' needs. The use of social media to attract and interact with customers can impact a financial institution's risk profile, including risk of harm to consumers, compliance and legal risks, operational risks, and reputation risks. Increased risk can arise from poor due diligence, oversight, or control on the part of the financial institution. The Guidance is intended to assist financial institutions in understanding potential risks associated with the use of social media, along with expectations for managing those risks.

The Guidance begins with a description of important elements of a compliance risk management program for social media, which should be commensurate with the extent to which an institution participates in social media. In order to highlight the potential risk areas financial institutions should encompass within the risk management program, the Guidance continues with a discussion of compliance and legal risk to highlight a number of laws and regulations that can apply to interactions within social media. The last two sections of the Guidance address reputational risk and operational risk. This guidance does not impose additional obligations on financial institutions, but instead highlights existing legal requirements that apply to social media forums.

Federal Reserve Banks are asked to distribute this letter and the accompanying guidance to state member banks, as well as to supervisory and examination staff. Questions on the attached guidance should be directed to Carol Evans, Assistant Director, at (202) 452-2051; or Lanette Meister, Senior Supervisory Consumer Financial Services Analyst, at (202) 452-2705. In addition, questions may be sent via the Board's public website.

signed by
Sandra F. Braunstein
Director
Division of Consumer and Community Affairs

Attachments:
Social Media: Consumer Compliance Risk Management Guidance


December 10, 2013
Board Releases Deadline for Conformity with Volcker Rule

The Federal Reserve Board on Tuesday announced that banking entities covered by section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act will be required to fully conform their activities and investments to the statute and regulations by July 21, 2015.

Section 619, commonly referred to as the "Volcker Rule," prohibits insured depository institutions and any company affiliated with an insured depository institution from engaging in short-term proprietary trading of certain securities, derivatives, and other financial instruments for the firm's own account, subject to certain exemptions, including market making and risk-mitigating hedging. It also imposes limits on banking entities' investments in, and other relationships with, hedge funds and private equity funds. The Board and other agencies on Tuesday adopted regulations for this section.

The Dodd-Frank Act directed the Board to adopt rules governing the conformance period for section 619 and requires banking entities to conform by July 21, 2014, unless extended by the Board. To ensure effective compliance, the Board is extending the conformance period by one year.

The Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, and the Commodity Futures Trading Commission will apply section 619 in accordance with the Board's conformance rule.

For media inquiries, call 202-452-2955.

Board Votes

Attachment (48 KB PDF)


December 10, 2013
Final Rules Issued to Implement the Volcker Rule

Five federal agencies on Tuesday issued final rules developed jointly to implement section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Volcker Rule").

The final rules prohibit insured depository institutions and companies affiliated with insured depository institutions ("banking entities") from engaging in short-term proprietary trading of certain securities, derivatives, commodity futures and options on these instruments, for their own account. The final rules also impose limits on banking entities' investments in, and other relationships with, hedge funds or private equity funds.

Like the Dodd-Frank Act, the final rules provide exemptions for certain activities, including market making, underwriting, hedging, trading in government obligations, insurance company activities, and organizing and offering hedge funds or private equity funds. The final rules also clarify that certain activities are not prohibited, including acting as agent, broker, or custodian.

The compliance requirements under the final rules vary based on the size of the banking entity and the scope of activities conducted. Banking entities with significant trading operations will be required to establish a detailed compliance program and their CEOs will be required to attest that the program is reasonably designed to achieve compliance with the final rule. Independent testing and analysis of an institution's compliance program will also be required. The final rules reduce the burden on smaller, less-complex institutions by limiting their compliance and reporting requirements. Additionally, a banking entity that does not engage in covered trading activities will not need to establish a compliance program.

The Federal Reserve Board announced on Tuesday that banking organizations covered by section 619 will be required to fully conform their activities and investments by July 21, 2015.

Statement by Chairman Ben S. Bernanke

Statement by Governor Daniel K. Tarullo

Final Rule (PDF)

Final Rule - Preamble (7.2 MB PDF)

Fact Sheet (PDF)

Community Bank Guide (PDF)

Media Contacts:
Federal Reserve Board Barbara Hagenbaugh 202-452-2955
CFTC Steve Adamske 202-418-5080
FDIC Andrew Gray 202-898-7192
OCC Robert M. Garsson 202-649-6870
SEC Judy Burns 202-551-6050

Board Votes


December 06, 2013
Board Releases Guidance on Risk Management and Oversight

The Federal Reserve Board on Thursday released guidance reminding financial institutions it supervises to exercise appropriate risk management and oversight when using service providers.

The guidance describes factors financial institutions should consider when choosing a service provider and how service providers should be overseen. A service provider is defined as any organization or entity--such as a consultant--that enters into a contractual relationship with a financial institution to provide business functions or activities, such as accounting, auditing, loan review, compliance, and risk management.

The guidance does not discourage financial institutions from outsourcing activities to service providers, but says firms should be aware of the potential risks. If service provider relationships are not managed effectively, they may expose financial institutions to risks that can result in reputational problems, financial loss, or regulatory actions, according to the guidance.

Furthermore, the guidance states that the use of service providers does not relieve a financial institution's board of directors or senior managers of responsibility for the activities performed by service providers. Financial institutions are responsible for ensuring that all activities conducted by service providers comply with applicable laws and regulations and are consistent with safe and sound banking practices.

The guidance is applicable to state-chartered banks that are members of the Federal Reserve System, bank and savings and loan holding companies and their nonbank subsidiaries, and U.S. operations of foreign banking organizations.

SR letter 13-19/CA letter 13-21, "Guidance on Managing Outsourcing Risk"

For media inquiries, call 202-452-2955.


December 06, 2013
Board Issues Rule Affecting Financial Market Utilities

The Federal Reserve Board on Thursday issued a final rule that amends Regulation HH to set out the conditions and requirements for a Federal Reserve Bank to open and maintain accounts for and provide financial services to financial market utilities designated as systemically important by the Financial Stability Oversight Council.

In addition, the final rule, which implements provisions of Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, would authorize a Reserve Bank to pay interest on the balances maintained by a designated financial market utility in accordance with the statute and other terms and conditions as the Board may prescribe.

The final rule will become effective 60 days after it is published in the Federal Register, which is expected shortly.

Attachment (PDF)

Board Votes

For media inquiries, call 202-452-2955.


December 06, 2013
Board's Market Risk Capital Rule Now Aligns with Basel III

The Federal Reserve Board on Friday issued a final rule that makes technical changes to the Board's market risk capital rule to align it with the Basel III revised capital framework adopted by the Board earlier this year.

The market risk capital rule is used by banking organizations with significant trading activities to calculate regulatory capital requirements for market risk. Technical changes to the rule reflect modifications by the Organization for Economic Cooperation and Development regarding country risk classifications. The final rule also clarifies criteria for determining whether underlying assets are delinquent for certain traded securitization positions. It clarifies disclosure deadlines, and modifies the definition of a covered position. Each of these changes makes the market risk capital rule consistent with the revised capital framework that will come into effect in January 2015.

Also on Friday, the Federal Reserve made minor modifications to the Basel III revised capital framework to clarify the criteria for subordinated debt instruments that may be counted as tier 2 capital.

Federal Register notices:
Risk-Based Capital Guidelines; Market Risk (PDF)
Regulatory Capital Rules (PDF)

Board Votes

For media inquiries, call 202-452-2955.


December 03, 2013
Rule Amends Definitions in the Bank Secrecy Act

The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, and the Federal Reserve Board on Tuesday announced a final rule amending the definitions of "funds transfer" and "transmittal of funds" under regulations implementing the Bank Secrecy Act. The final rule adopts the amendments as proposed in November 2012.

The amendments to the definitions maintain the current scope of funds transfers and transmittals of funds subject to the Bank Secrecy Act and are necessary in light of amendments to the Electronic Fund Transfer Act made by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Attachment (PDF)

Board Votes

Media Contacts:
Federal Reserve Board Barbara Hagenbaugh 202-452-2955
FinCEN Steve Hudak 703-905-5149

November 27, 2013
Public Comment Requested on Payment System Risk Policy

The Federal Reserve Board on Wednesday requested public comment on proposed changes to part II of the Federal Reserve Policy on Payment System Risk (PSR policy) that are designed to enhance the efficiency of the payment system. The proposed changes are largely related to the posting rules for automated clearing house (ACH) and commercial check transactions.

Technology and processing improvements have enabled payment systems and depository institutions to achieve significant efficiencies since the Board first established posting rules to measure depository institutions' intraday Federal Reserve account balances. The proposed changes to the PSR policy posting rules are intended to align them with current operations and processing times and to strategically position the rules for future advancements in the speed of clearing and settlement.

Specifically, the Board proposes to move the posting of ACH debit transactions processed by the Federal Reserve Banks' FedACH service overnight to 8:30 a.m. Eastern Time (ET) from 11:00 a.m. ET to align with the posting of ACH credit transactions. The Board is also proposing a set of principles for establishing future posting rules for the Reserve Banks' same-day ACH service.

For commercial check transactions, the Board proposes to move the posting time for receiving most credits for deposits and debits for presentments to 8:30 a.m. ET, and to establish two other posting times at 1:00 p.m. ET and 5:30 p.m. ET. The current posting times were designed for a paper-processing environment and do not begin crediting or debiting for check transactions deposited and presented until 11:00 a.m. ET.

The Board also is proposing companion amendments to Regulation J (Collection of Checks and Other Items by Federal Reserve Banks and Funds Transfers through Fedwire) to permit the Reserve Banks to obtain settlement from paying banks by as early as 8:30 a.m. ET for checks that the Reserve Banks present and to permit the Reserve Banks to require paying banks that receive presentment of checks from the Reserve Banks to make the proceeds of settlement for those checks available to the Reserve Banks as soon as 30 minutes after receipt of the checks.

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

For media inquiries, call 202-452-2955.

Federal Reserve Policy on Payment System Risk; Procedures for Measuring Daylight Overdrafts (609 KB PDF)

Collection of Checks and Other Items by Federal Reserve Banks and Funds Transfer to Fedwire (258 KB PDF)

Board Votes


November 20, 2013
Adjustments Made to Dollar Thresholds in Regulations Z and M

The Federal Reserve Board and the Consumer Financial Protection Bureau (CFPB) today announced they are increasing the dollar thresholds in Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing) for exempt consumer credit and lease transactions. Transactions at or below the thresholds are subject to the protections of the regulations.

The adjustments to the thresholds reflect the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers as of June 1, 2013 and will take effect on January 1, 2014. These increases are consistent with amendments to the Truth in Lending and Consumer Leasing laws made by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Based on the adjustments announced today, the protections of the Truth in Lending and Consumer Leasing acts generally will apply to consumer credit transactions and consumer leases of $53,500 or less in 2014—an increase of $500 from 2013. However, private education loans and loans secured by real property (such as mortgages) are subject to the Truth in Lending Act regardless of the amount of the loan.

Although the Dodd-Frank Act generally transferred rulemaking authority under the Truth in Lending Act and the Consumer Leasing Act to the CFPB, the Federal Reserve Board retains authority to issue rules for certain motor vehicle dealers. Therefore, the agencies are issuing these adjustments jointly.

The attached notices will be published shortly in the Federal Register.

Regulation M (28 KB PDF)

Regulation Z (29 KB PDF)

Board Votes

Media Contacts:
Federal Reserve Board Susan Stawick 202-452-2955
CFPB Sam Gilford 202-435-7673

November 20, 2013
Minutes of the FOMC, October 29–30, 2013

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on October 29-30, 2013 and of the conference call held on October 16, 2013.

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

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

For media inquiries, call 202-452-2955.

Minutes of the Federal Open Market Committee
October 29-30, 2013: HTML | PDF


November 19, 2013
Estimation Tool for Community Banks Released

The federal bank regulatory agencies today released an estimation tool to help community banks understand the potential effects of the recently revised regulatory capital framework on their capital ratios.

The revised framework implements the Basel III regulatory capital reforms and certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

In July 2013, the Federal Reserve Board and Office of the Comptroller of the Currency approved the revised framework as final rules, and the Federal Deposit Insurance Corporation approved the revised framework as an interim final rule. The final rules and interim final rule are substantively identical.

The estimation tool is not part of the revised capital framework and not a component of regulatory reporting. Results from the tool are simplified estimates that may not precisely reflect banks' actual capital ratios under the framework. Additionally, banks should be aware that the estimation tool requires certain manual inputs that could have meaningful effects on results and should reference the revised capital framework when using the estimation tool.

The estimation tool is available at: www.fdic.gov/regulations/capital/Bank_Estimation_Tool.xlsm

The revised capital frameworks are available in the Federal Register at:
www.gpo.gov/fdsys/pkg/FR-2013-10-11/pdf/2013-21653.pdf and www.gpo.gov/fdsys/pkg/FR-2013-09-10/pdf/2013-20536.pdf

Media Contacts:

Federal Reserve Eric Kollig (202) 452-2955
OCC Stephanie Collins (202) 649-6870
FDIC David Barr (202) 898-6992

November 19, 2013
Fed Announces Results of 28-Day Term Deposits

On November 18, 2013, the Federal Reserve conducted a fixed-rate offering of term deposits with full allotment of tenders through its Term Deposit Facility. The operation offered 28-day term deposits at an interest rate of 0.26000 percent. Following are the results of the operation:

TDF Operation ID: F33
Total Amount Awarded: $13,531,600,000
Number of Participants: 27

The awarded deposits will settle on November 21, 2013, and will mature on December 19, 2013. The interest rate of 0.26000 percent will apply to all awarded deposits.


November 15, 2013
Final Revisions Released on Interagency Q&A Community Reinvestment Document

The federal bank regulatory agencies with responsibility for Community Reinvestment Act (CRA) rulemaking today published final revisions to "Interagency Questions and Answers Regarding Community Reinvestment." The Questions and Answers document provides additional guidance to financial institutions and the public on the agencies' CRA regulations.

The revisions focus primarily on community development. Community development activities are considered as part of the CRA performance tests for large institutions, intermediate small institutions, and wholesale and limited purpose institutions. Small institutions may use community development activity to receive consideration toward an outstanding CRA rating. Among other things, the amendments:

  • Clarify how the agencies consider community development activities that benefit a broader statewide or regional area that includes an institution's assessment area.
  • Provide guidance related to CRA consideration of, and documentation associated with, investments in nationwide funds.
  • Clarify the consideration of certain community development services, such as service on a community development organization's Board of Directors.
  • Address the treatment of loans or investments to organizations that, in turn, invest those funds and use only a portion of the income from their investment to support a community development purpose.
  • Clarify that community development lending performance is always a factor considered in a large institution's lending test rating.

The final revisions are being issued by the Federal Reserve Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency. The attached notice will be published shortly in the Federal Register. The agencies also are revising the relevant interagency CRA examination procedures, which will be released soon.

For more information on the CRA, including these Questions and Answers and the agencies' CRA regulations, visit the Federal Financial Institutions Examination Council website at: http://www.ffiec.gov/cra.

Attachment (PDF)

Media Contacts:
Federal Reserve Susan Stawick 202-452-2955
FDIC Greg Hernandez 202-898-6984
OCC Stephanie Collins 202-649-6870


Board Votes


November 13, 2013
Federal Reserve to Conduct Fixed-Rate Offering of Term Deposits

On November 18, 2013, the Federal Reserve will conduct a fixed-rate offering of term deposits with full allotment of tenders through its Term Deposit Facility (TDF). The Federal Reserve will offer 28-day term deposits with an interest rate of 0.26000 percent and a maximum tender amount of $1,250,000,000. As noted in the Federal Reserve Board's April 26, 2013, release, this operation is part of ongoing small-value operations designed to provide eligible institutions with an opportunity to gain familiarity with term deposit operations. Additional information regarding the operation is listed below; the operation will be conducted as specified in this announcement, Regulation D, and the terms and conditions of the Term Deposit Facility (http://www.frbservices.org/centralbank/term_deposit_facility.html).

Description of Operation and Tender Parameters

TDF Operation ID: F33
Operation Format: Fixed-Rate, Full allotment
Term: 28-day
Interest Rate: 0.26000%
Operation Date: Monday, November 18, 2013
Opening Time: 10:00 a.m. ET
Closing Time: 2:00 p.m. ET
Notification Date (summary results): Tuesday, November 19, 2013
Settlement Date: Thursday, November 21, 2013
Maturity Date: Thursday, December 19, 2013

Tender Parameters

Maximum Number of Tenders: 1
Minimum Tender Amount: $10,000
Tender Increment: $10,000
Maximum Tender Amount (per institution): $1,250,000,000
Award Minimum Amount: $10,000
Award Maximum Amount: $1,250,000,000

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

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

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

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


November 08, 2013
Board Statement on Scenarios for Future Capital Planning, Stress Testing Exercises

The Federal Reserve Board on Thursday issued a final policy statement describing the processes it will use to develop scenarios for future capital planning and stress testing exercises.

The policy statement will be used to develop scenarios for both annual supervisory and company-run stress tests. It describes the characteristics of the stress test scenarios and explains the procedures for formulating the scenarios. Although the policy statement is not effective until January 1, 2014, the macroeconomic scenarios released last week for the 2014 stress testing exercise are consistent with the policy statement.

Also on Thursday, the Federal Reserve issued revised macroeconomic scenarios for the 2014 capital planning and stress testing program to correct a minor computational error for the projections of the five-year Treasury yield in the baseline and adverse scenarios. The severely adverse scenario was unchanged. As the Federal Reserve has previously said, the adverse and severely adverse scenarios are hypothetical scenarios and not forecasts. The baseline scenario does not represent the forecast of the Federal Reserve.

For more information on the Federal Reserve's capital planning and stress testing program, go to www.federalreserve.gov/bankinforeg/stress-tests-capital-planning.htm.

For media inquiries, call 202-452-2955.

Attachment (199 KB PDF)

Related Information

Stress Tests and Capital Planning

2014 Supervisory Scenarios for Annual Stress Tests Required under the Dodd-Frank Act Stress Testing Rules and the Capital Plan Rule (PDF)

2014 Supervisory Scenarios (Excel)


November 05, 2013
Annual Indexing of Reserve Requirement Exemption Amounts for 2014

The Federal Reserve Board on Tuesday announced the annual indexing of the amounts used in determining reserve requirements of depository institutions and deposit reporting panels effective in 2014.

All depository institutions must hold a percentage of certain types of deposits as reserves in the form of vault cash, as a deposit in a Federal Reserve Bank, or as a deposit in a pass-through account at a correspondent institution. Reserve requirements currently are assessed on the depository institution's net transaction accounts (mostly checking accounts). Depository institutions must also regularly submit reports of their deposits and other reservable liabilities.

For net transaction accounts in 2014, the first $13.3 million, up from $12.4 million in 2013, will be exempt from reserve requirements. A 3 percent reserve ratio will be assessed on net transaction accounts over $13.3 million up to and including $89.0 million, up from $79.5 million in 2013. A 10 percent reserve ratio will be assessed on net transaction accounts in excess of $89.0 million.

These annual adjustments, known as the low reserve tranche adjustment and the reserve requirement exemption amount adjustment, are based on growth in net transaction accounts and total reservable liabilities, respectively, at all depository institutions between June 30, 2012 and June 30, 2013.

The new low reserve tranche and reserve requirement exemption amount will apply to the 14-day reserve maintenance period that begins January 23, 2014. For depository institutions that report deposit data weekly, this maintenance period corresponds to the 14-day computation period that begins Tuesday, December 24, 2013. For depository institutions that report deposit data quarterly, this maintenance period corresponds to the seven-day computation period that begins Tuesday, December 17, 2013.

The Board also announced changes in two other amounts, the nonexempt deposit cutoff level and the reduced reporting limit, that are used to determine the frequency with which depository institutions must submit deposit reports. The attached Federal Register notice contains a description of the new boundaries for deposit reporting that will be effective in 2014.

Attachment (PDF)

For media inquiries, call 202-452-2955.


November 01, 2013
Board Releases Supervisory Scenarios for 2014 Capital Planning and Stress Testing

The Federal Reserve Board on Friday issued the supervisory scenarios that will be used in the 2014 capital planning and stress testing program, as well as instructions to firms with timelines for submissions. The program includes the Comprehensive Capital Analysis and Review (CCAR) of 30 bank holding companies with $50 billion or more of total consolidated assets.

The aim of the annual reviews is to ensure that large financial institutions have robust, forward-looking capital planning processes that account for their unique risks, and to help ensure that they have sufficient capital to continue operations throughout times of economic and financial stress. Capital is important to banking organizations, the financial system, and the economy broadly because it acts as a cushion to absorb losses and helps to ensure that losses are borne by shareholders, not taxpayers.

"The capital planning and stress testing program has been an integral component of the Federal Reserve's broader supervisory and regulatory efforts to make the financial system stronger and safer since the financial crisis," Gov. Daniel K. Tarullo said.

Financial institutions submitting capital plans will be evaluated to ensure they have sufficient capital to continue to lend to households and businesses even under stressful conditions. In addition, they must incorporate the transition requirements from the recently finalized Basel III capital standards into their stress tests and capital plans.

CCAR includes an evaluation of institutions' plans to make capital distributions, such as dividend payments or stock repurchases. The Federal Reserve will approve capital distributions only for institutions whose capital plans it approves and who demonstrate sufficient financial strength even after making the planned capital distributions to continue operating as financial intermediaries under stressful economic and financial conditions.

Eighteen bank holding companies will be participating in the CCAR for the fourth consecutive year in 2014. An additional 12 financial institutions will be participating in CCAR for the first time during this stress testing cycle.

The capital planning and stress testing program led by the Federal Reserve since the financial crisis has contributed to a significant increase in capital at the largest banking organizations in the United States. The 18 bank holding companies have increased their aggregate tier 1 common capital to $836 billion in the second quarter of 2013, the period of most recent data, from $392 billion in the first quarter of 2009. The tier 1 common ratio for these firms, which compares high-quality capital to risk-weighted assets, has more than doubled to a weighted average of 11.1 percent from 5.3 percent.

All 30 of the companies in the CCAR in 2014 must submit their capital plans on or before January 6, 2014.

As in previous years, the Federal Reserve in March will release summary results, including supervisory projections of capital ratios, losses, and revenues under stress scenarios. For the first time in 2014, the Federal Reserve will publish the results of stress tests conducted under the supervisory adverse scenario. As in prior years, results of stress tests under the severely adverse scenario will also be released.

The Federal Reserve will require institutions to use the supervisory scenarios in both the stress tests conducted as part of the CCAR and in the stress tests that are part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Some companies that are not part of CCAR, including state member bank subsidiaries of CCAR participants and some companies with between $10 billion and $50 billion in assets, also will use the supervisory scenarios for Dodd-Frank Act stress tests.

The baseline, adverse, and severely adverse scenarios include 28 variables, including economic activity, unemployment, exchange rates, prices, incomes, and interest rates. To accompany the scenarios, the Federal Reserve is publishing a narrative that describes the general conditions surrounding the scenarios, changes to the scenarios from previous years, and a general description of other variables that firms may use in their stress tests.

As in prior years, six bank holding companies with large trading operations will be required to factor in a global market shock as part of their scenarios. The Federal Reserve will publish the components of the global market shock soon. In addition, for the first time in 2014, eight bank holding companies with substantial trading or custodial operations will be required to incorporate a counterparty default scenario.

Previous CCAR participants, also participants in 2014

Participants new to CCAR in 2014

Global market shock participants, 2014

Counterparty default participants, 2014

Ally Financial Inc.

American Express Company

Bank of America Corporation

The Bank of New York Mellon Corporation

BB&T Corporation

Capital One Financial Corporation

Citigroup Inc.

Fifth Third Bancorp

The Goldman Sachs Group, Inc.

JPMorgan Chase & Co.

KeyCorp

Morgan Stanley

The PNC Financial Services Group, Inc.

Regions Financial Corporation

State Street Corporation

SunTrust Banks, Inc.

U.S. Bancorp

Wells Fargo & Company

BMO Financial Corp.

BBVA Compass Bancshares, Inc.

Comerica Inc.

Discover Financial Services

HSBC North America Holdings Inc.

Huntington Bancshares Inc.

M&T Bank Corp.

Northern Trust Corp.

RBS Citizens Financial Group, Inc.

Santander Holdings USA, Inc.

UnionBanCal Corp.

Zions Bancorp

Bank of America Corporation

Citigroup Inc.

The Goldman Sachs Group, Inc.

JPMorgan Chase & Co.

Morgan Stanley

Wells Fargo & Company

Bank of America Corporation

The Bank of New York Mellon Corporation

Citigroup Inc.

The Goldman Sachs Group, Inc.

JPMorgan Chase & Co.

Morgan Stanley

State Street Corporation

Wells Fargo & Company

2014 Supervisory Scenarios for Annual Stress Tests Required under the Dodd-Frank Act Stress Testing Rules and the Capital Plan Rule (PDF)

Comprehensive Capital Analysis and Review 2014: Summary Instructions and Guidance (PDF)

Related Information
Stress Tests and Capital Planning

For media inquiries, call 202-452-2955.


October 31, 2013
Fed Board Approves Fee Schedules for Payment Services

The Federal Reserve Board announced on Thursday the approval of fee schedules, effective January 2, 2014, for payment services the Federal Reserve Banks provide to depository institutions (priced services).

The Reserve Banks project that they will recover 102.3 percent of their priced services costs in 2014. The Reserve Banks expect to recover all of their actual and imputed expenses, and earn a profit that is above their targeted return. Overall, the price level for Reserve Bank priced services will increase approximately 1 percent in 2014 from 2013. The effective fees for the Reserve Banks' Check 21 services are expected to decline 2 percent. In addition, the effective fees for the Reserve Banks' FedACH® service will decline marginally. The effective fees will increase about 8 percent for Fedwire® Funds and National Settlement Services and decrease about 1 percent for Fedwire® Securities Service. The Board also approved a modest increase to FedLine® access fees.

The 2014 fee schedule for each of the priced services, except the extensive check service fee schedule, is included in the attached Federal Register notice. Fee schedules for all priced services will be available on the Federal Reserve Banks' financial services website at www.frbservices.org.

Lastly, the Board approved the 2014 private-sector adjustment factor (PSAF) of $23.4 million for Reserve Bank priced services. The PSAF is an allowance for income taxes and other imputed expenses that would have been paid and profits that would have been 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.

The Board's notice is attached.

For media inquiries, call 202-452-2955.

Attachment (333 KB PDF)

Board Votes


October 31, 2013
Temporary Bilateral Liquidity Swap Arrangements Will Convert to Standing Arrangements

The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank announced on Thursday that their existing temporary bilateral liquidity swap arrangements are being converted to standing arrangements, that is, arrangements that will remain in place until further notice.

The standing arrangements will constitute a network of bilateral swap lines among the six central banks. These arrangements allow for the provision of liquidity in each jurisdiction in any of the five currencies foreign to that jurisdiction, should the two central banks in a particular bilateral swap arrangement judge that market conditions warrant such action in one of their currencies.

The existing temporary swap arrangements have helped to ease strains in financial markets and mitigate their effects on economic conditions. The standing arrangements will continue to serve as a prudent liquidity backstop.

Information on the actions taken by other central banks is available at the following websites:

Bank of Canada
Bank of England
Bank of Japan
European Central Bank
Swiss National Bank

For media inquiries, call 202-452-2955.


October 30, 2013
Federal Reserve Issues FOMC Statement

Information received since the Federal Open Market Committee met in September generally suggests that economic activity has continued to expand at a moderate pace. Indicators of labor market conditions have shown some further improvement, but the unemployment rate remains elevated. Available data suggest that household spending and business fixed investment advanced, while the recovery in the housing sector slowed somewhat in recent months. Fiscal policy is restraining economic growth. Apart from fluctuations due to changes in energy prices, inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished, on net, since last fall. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term.

Taking into account the extent of federal fiscal retrenchment over the past year, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program as consistent with growing underlying strength in the broader economy. However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases. Accordingly, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee's dual mandate.

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

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

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Charles L. Evans; Jerome H. Powell; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.


October 24, 2013
Rule Proposed to Strengthen Liquidity Positions of Large Financial Institutions

The Federal Reserve Board proposed a rule on Thursday to strengthen the liquidity positions of large financial institutions.

The proposal would for the first time create a standardized minimum liquidity requirement for large and internationally active banking organizations and systemically important, non-bank financial companies designated by the Financial Stability Oversight Council. These institutions would be required to hold minimum amounts of high-quality, liquid assets such as central bank reserves and government and corporate debt that can be converted easily and quickly into cash. Each institution would be required to hold liquidity in an amount equal to or greater than its projected cash outflows minus its projected cash inflows during a short-term stress period. The ratio of the firm's liquid assets to its projected net cash outflow is its "liquidity coverage ratio," or LCR.

"Liquidity is essential to a bank's viability and central to the smooth functioning of the financial system," Chairman Ben S. Bernanke said. "The proposed rule would, for the first time in the United States, put in place a quantitative liquidity requirement that would foster a more resilient and safer financial system in conjunction with other reforms."

The LCR would apply to all internationally active banking organizations—generally, those with $250 billion or more in total consolidated assets or $10 billion or more in on-balance sheet foreign exposure—and to systemically important, non-bank financial institutions. The proposal also would apply a less stringent, modified LCR to bank holding companies and savings and loan holding companies that are not internationally active, but have more than $50 billion in total assets. Bank holding companies and savings and loan holding companies with substantial insurance subsidiaries and non-bank, systemically important financial institutions with substantial insurance operations are not covered by the proposal.

The proposal defines various categories of high quality, liquid assets (HQLA) and also specifies how a firm's projected net cash outflows over the stress period would be calculated using common, standardized assumptions about the outflows and inflows associated with specific liabilities, assets, and off-balance-sheet obligations.

"Since financial crises usually begin with a liquidity squeeze that further weakens the capital position of vulnerable firms, it is essential that we adopt liquidity regulations to complement the stronger capital requirements, stress testing, and other enhancements to the regulatory system we have been putting in place over the past several years," Gov. Daniel K. Tarullo said.

The liquidity proposal is based on a standard agreed to by the Basel Committee on Banking Supervision. The LCR would also establish an enhanced prudential liquidity standard consistent with section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The proposed rule is generally consistent with the Basel Committee's LCR standard, but is more stringent in several areas, including the range of assets that will qualify as HQLA and the assumed rate of outflows of certain kinds of funding. In addition, the proposed transition period is shorter than that included in the Basel agreement. The accelerated transition period reflects a desire to maintain the improved liquidity positions that U.S. institutions have established since the financial crisis, in part as a result of supervisory oversight by the Federal Reserve and other U.S. bank regulators. Under the proposal, U.S. firms would begin the LCR transition period on January 1, 2015, and would be required to be fully compliant by January 1, 2017.

"This rule would help ensure that the liquidity positions of our banking firms do not weaken as memories of the crisis fade," Tarullo said.

The Federal Reserve developed the proposed rule with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency. Comments will be received through January 31, 2014.

Related Information

Current FAQ

What is the difference between a bank's liquidity and its capital?

Meeting Memoranda

Open Board Meeting on October 24, 2013

Federal Register notice (PDF)

Statement by Chairman Ben S. Bernanke

Statement by Governor Daniel K. Tarullo

For media inquiries, call 202-452-2955


October 23, 2013
Board Hosts Financial Education Day

High school students from Washington, D.C., learned about personal budgeting, responsible borrowing, and financing secondary education at workshops taught by Federal Reserve Board staff members on Wednesday.

The sessions at Francis L. Cardozo Senior High School and Columbia Heights Educational Campus were part of Federal Reserve Financial Education Day. Reserve Banks conducted more than 25 similar events for students and teachers around the country, highlighting the importance of financial education for young people.

"Financial education supports not only individual well-being but also the economic health of our nation," said Federal Reserve Chairman Ben Bernanke. "Effective financial education is not just about teaching students about financial products or performing financial calculations. It also involves teaching them the essential skills and concepts they will need to make major financial choices."

Federal Reserve Financial Education Day events drew on a series of four classroom lesson plans, "Financial Fundamentals from the Fed," that teach topics including earning income, saving and budgeting, use of credit, and financial institutions and services. The lessons are free, classroom-tested, and ready for use in high schools. For more information about the lesson plans and the Federal Reserve's other financial education resources, visit www.federalreserveeducation.org.

For media inquiries, please call 202-452-2955.


October 23, 2013
Regulators Propose Standards for Assessing Diversity Policies, Practices

Six federal financial regulatory agencies are proposing joint standards for assessing the diversity policies and practices of the institutions they regulate.

The proposed standards are intended to promote transparency and awareness of diversity policies and practices within the institutions.

The assessment standards cover four key areas:

  • Organizational commitment to diversity and inclusion;
  • Workforce profile and employment practices;
  • Procurement and business practices and supplier diversity; and
  • Practices to promote transparency of organizational diversity and inclusion.

In developing these proposed standards, the six agencies tailored the standards to account for variables including asset size, number of employees, governance structure, income, number of members or customers, contract volume, location, and community characteristics. The agencies recognize standards may need to change and evolve over time.

Each of the federal financial regulatory agencies houses an Office of Minority and Women Inclusion (OMWI). Under Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, each OMWI is required to develop standards for assessing diversity policies and practices in the regulated entities.

The agencies' OMWI directors held roundtable discussions with a range of parties, including representatives from depository institutions, holding companies, credit unions, and industry trade groups to solicit input on assessment standards and to learn about the challenges and successes of current diversity programs and policies. Roundtable discussions also were held with financial professionals, consumer advocates, and community representatives to gain a greater understanding of issues facing minorities and women in employment and in business contracting in the financial sector. Information obtained from those discussions helped shape the proposed standards.

Once published in the Federal Register, the proposed policy statement will be available for public comment for 60 days.

The agencies issuing the proposed Interagency Policy Statement Establishing Joint Standards for Assessing the Diversity Policies and Practices of Entities Regulated by the Agencies are the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission.

Attachment (382 KB PDF)

Media Contacts:
Federal Reserve Board Barbara Hagenbaugh 202-452-2955
CFPB Michelle Muth Person 202-435-7857
FDIC David Barr 202-898-6992
NCUA John Fairbanks 703-518-6336
OCC Stephanie Collins 202-649-6870
SEC Kevin Callahan 202-551-4120

Board Votes


October 22, 2013
Federal Regulators Provide Guidance on Qualified Mortgage Fair Lending Risks

Five federal regulatory agencies today issued a statement to address industry questions about fair lending risks associated with offering only Qualified Mortgages. Creditors have asked for clarity regarding whether the disparate impact doctrine of the Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B, allows them to originate only Qualified Mortgages. For the reasons described in the statement, the five agencies do not anticipate that a creditor's decision to offer only Qualified Mortgages would, absent other factors, elevate a supervised institution's fair lending risk.

The Consumer Financial Protection Bureau's Ability-to-Repay Rule implements provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act that require creditors to make a reasonable, good faith determination that a consumer has the ability to repay a mortgage loan before extending credit to the consumer. Lenders are presumed to have complied with the Ability-to-Repay Rule if they issue Qualified Mortgages, which must satisfy requirements that prohibit or limit risky features that harmed consumers in the recent crisis.

The ECOA makes it illegal for a creditor to discriminate in any aspect of a credit transaction based on characteristics including race, religion, marital status, color, national origin, sex, and age.

The agencies note the decisions creditors will make about product offerings in response to the Ability-to-Repay Rule are similar to decisions creditors have made with regard to other significant regulatory changes affecting particular types of loans. The statement counsels that creditors should continue to evaluate fair lending risk as they would for other types of product selections, including by carefully monitoring policies and practices and implementing effective compliance management systems.

The agencies issuing the statement with supervisory authority for the Fair Housing Act (FHA) believe that the same principles apply in determining compliance with the FHA and its implementing regulation.

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

Attachment (32 KB PDF)

Media Contacts:
Federal Reserve Susan Stawick 202-452-2955
CFPB Sam Gilford 202-435-7673
FDIC Andrew Gray 202-898-7192
NCUA Ben Hardaway 703-518-6333
OCC Stephanie Collins 202-649-6870

October 09, 2013
Minutes of the FOMC, September 17–18, 2013

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on September 17–18, 2013.

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

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

For media inquiries, call 202-452-2955.

Minutes of the Federal Open Market Committee
September 17–18, 2013: HTML | PDF


October 09, 2013
Institutions Encouraged to Work with Borrowers during Government Shutdown

Five federal regulatory agencies encourage financial institutions to work with customers affected by the federal government shutdown.

Prudent workout arrangements that are consistent with safe-and-sound lending practices are generally in the long-term best interest of the financial institution, the borrower, and the economy.

Affected borrowers may face a temporary hardship in making payments on debts such as mortgages, student loans, car loans, credit cards, and other debt. The agencies encourage financial institutions to consider prudent workout arrangements that increase the potential for creditworthy borrowers to meet their obligations. The agencies realize that the effects of the federal government shutdown on individuals should be transitory, and prudent efforts to modify terms on existing loans should not be subject to examiner criticism.

Those affected by the government shutdown are encouraged to contact their lenders immediately should financial strain occur.

Media Contacts:
Federal Reserve Board Barbara Hagenbaugh (202) 452-2955
CFPB Samuel Gilford (202) 435-7673
FDIC Andrew Gray (202) 898-7192
NCUA John Fairbanks (703) 518-6336
OCC Bryan Hubbard (202) 649-6747

October 08, 2013
Board Issues Redesigned $100 Note

The Federal Reserve on Tuesday began supplying financial institutions with a redesigned $100 note that incorporates new security features to deter counterfeiters and help businesses and consumers tell whether a note is genuine.

Distance, demand, and the policies of individual financial institutions will influence how quickly the redesigned notes reach businesses and consumers around the world.

"The new design incorporates security features that make it easier to authenticate, but harder to replicate," said Federal Reserve Board Governor Jerome H. Powell. "As the new note transitions into daily transactions, the user-friendly security features will allow the public to more easily verify its authenticity."

The Federal Reserve, U.S. Department of the Treasury, U.S. Bureau of Engraving and Printing, and the U.S. Secret Service partner to redesign Federal Reserve notes to stay ahead of counterfeiting threats.

The redesigned $100 note includes two new security features: a blue 3-D security ribbon with images of bells and 100s, and a color-changing bell in an inkwell. The new features, and additional features retained from the previous design, such as a watermark, offer the public a simple way to visually authenticate the redesigned $100 note.

Consumers worldwide are advised that it is not necessary to trade in older-design $100 notes for new ones. It is U.S. government policy that all designs of U.S. currency remain legal tender, regardless of when they were issued.

For more information about the new design $100 note, as well as training and educational materials, visit www.newmoney.gov.

For media inquiries, please call 202-452-2955.


October 03, 2013
Agencies Release Public Sections of Resolution Plans

The Federal Deposit Insurance Corporation (FDIC) and the Board of Governors of the Federal Reserve System (Board) on Thursday released the public sections of the recently filed annual resolution plans for 11 firms. Each plan must describe the company's strategy for rapid and orderly resolution in the event of material financial distress or failure of the company.

The Dodd-Frank Wall Street Reform and Consumer Protection Act requires that bank holding companies with total consolidated assets of $50 billion or more and nonbank financial companies designated by the Financial Stability Oversight Council submit resolution plans to the FDIC and Board.

Firms that filed their initial resolution plans in 2012—generally those with U.S. nonbank assets greater than $250 billion—were required to submit revised resolution plans by October 1, 2013. Those firms include Bank of America Corporation, Bank of New York Mellon Corporation, Barclays PLC, Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group, Inc., JPMorgan Chase & Co., Morgan Stanley, State Street Corporation, and UBS AG. In April of this year, the agencies issued guidance to these 11 filers regarding information that should be included in the 2013 plans concerning certain obstacles to resolvability under bankruptcy. Those obstacles included funding and liquidity, global cooperation, counterparty actions, multiple competing insolvencies, and operations and interconnectedness.

A second group of firms, generally those with between $100 and $250 billion in total U.S. nonbank assets, submitted their initial resolution plans on July 1, 2013. A third group, generally those subject to the rule with less than $100 billion in total U.S. nonbank assets, must submit their initial resolution plans by December 31, 2013.

By regulation, resolution plans must be divided into a public section and a confidential section. The public sections of the plans are available on the FDIC and Board websites.

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

September 24, 2013
Fed Board Issues Rules on Basel III Reforms

The Federal Reserve Board on Tuesday issued two interim final rules that clarify how companies should incorporate the Basel III regulatory capital reforms into their capital and business projections during the next cycle of capital plan submissions and stress tests.

Rules to implement the Basel III capital reforms in the United States were finalized in July, and will be phased-in beginning in 2014 or 2015, depending on the size of the banking organization. The planning horizon for the next capital planning and stress testing cycle runs from the fourth quarter of 2013 through the fourth quarter of 2015. Thus, the next capital planning and stress testing cycle, which begins October 1, overlaps with the implementation of the Basel III capital reforms.

The Board's first interim final rule applies to bank holding companies with $50 billion or more in total consolidated assets. The rule clarifies that in the next capital planning and stress testing cycle, these companies must incorporate the revised capital framework into their capital planning projections and into the stress tests required under the Dodd-Frank Wall Street Reform and Consumer Protection Act using the transition paths established in the Basel III final rule. This rule also clarifies that for the upcoming cycle, capital adequacy at large banking organizations would continue to be assessed against a minimum 5 percent tier 1 common ratio calculated in the same manner as under previous stress tests and capital plan submissions, ensuring consistency with those previous exercises.

The second interim final rule provides a one-year transition period for most banking organizations with between $10 billion and $50 billion in total consolidated assets. These companies this fall are conducting their first company-run stress test under the Board's rules implementing the Dodd-Frank Act. These companies will be required to calculate their stress test projections using the Board's current regulatory capital rules during the upcoming stress test to allow time to adjust their internal systems to the revised capital framework.

The interim final rules also clarify that companies will not be required to use the advanced approaches in the Basel III capital rules to calculate their projected risk-weighted assets in a given capital planning and stress testing cycle unless the companies have been notified by September 30 of that year, prior to the start of that capital planning and stress testing cycle.

The interim final rules are effective immediately. The Federal Reserve will accept comments on the interim final rules through November 25, 2013, and the rules could be revised later in response to comments. In addition, the Y-14 reporting instructions, which can be found at www.federalreserve.gov/apps/reportforms/default.aspx, are being updated to reflect these changes.

For media inquiries, call 202-452-2955

Application of the Revised Capital Framework to the Capital Plan and Stress Test Rules (401 KB PDF)

Annual Company-Run Stress Tests at Banking Organizations with Total Consolidated Assets of more than $10 Billion but less than $50 Billion; One-Year Transition Period to Revised Regulatory Capital Framework for 2013-2014 Stress Test Cycle (256 KB PDF)


September 24, 2013
Fed Guidance on Reporting Financial Abuse of Older Adults

Seven federal regulatory agencies today issued guidance to clarify that the privacy provisions of the Gramm-Leach-Bliley Act generally permit financial institutions to report suspected elder financial abuse to appropriate authorities.

The Gramm-Leach-Bliley Act generally requires that a financial institution notify consumers and give them an opportunity to opt out before providing nonpublic personal information to a third party. Today's guidance clarifies that it is generally acceptable under the law for financial institutions to report suspected elder financial abuse to appropriate local, state or federal agencies.

Older adults can be attractive targets for financial exploitation and may be taken advantage of by scam artists, financial advisors, family members, caregivers, or home repair contractors. Recent studies suggest that financial exploitation is the most common form of elder abuse and that only a small fraction of incidents is reported. Older adults often are targeted because they have retirement savings, accumulated home equity, or other assets. They also are more likely to experience cognitive decline, which can impair their capacity to recognize financial exploitation and scams.

Employees of financial institutions may be able to spot irregular transactions, account activity, or behavior that signals financial abuse. They can play a key role in preventing and detecting elder financial exploitation by reporting suspicious activities to the proper authorities.

The attached interagency guidance is being issued by the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, Federal Trade Commission, National Credit Union Administration, Office of the Comptroller of the Currency, and the Securities and Exchange Commission. The Commodity Futures Trading Commission is issuing the document as staff guidance.

Attachment (51 KB PDF)

Media Contacts:
Federal Reserve Board Susan Stawick 202-452-2955
CFPB Michelle Person 202-435-7170
CFTC Steve Adamske 202-418-5675
FDIC David Barr 202-898-6992
FTC Jay Mayfield 202-326-2181
NCUA John Fairbanks 703-518-6336
OCC Stephanie Collins 202-649-6870
SEC Kevin Callahan 202-551-4120

September 18, 2013
Fed Board and FOMC Release Economic Projections From the Sept. 17–18 Meeting

The attached table and charts released on Wednesday summarize the economic projections and the target federal funds rate projections made by Federal Reserve Board members and Federal Reserve Bank presidents for the September 17–18 meeting of the Federal Open Market Committee.

The table will be incorporated into a summary of economic projections released with the minutes of the September 17-18 meeting. Summaries of economic projections are released quarterly.

Projections (PDF)

For media inquiries, call 202-452-2955.


September 18, 2013
Federal Reserve Issues FOMC Statement

Information received since the Federal Open Market Committee met in July suggests that economic activity has been expanding at a moderate pace. Some indicators of labor market conditions have shown further improvement in recent months, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen further and fiscal policy is restraining economic growth. Apart from fluctuations due to changes in energy prices, inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished, on net, since last fall, but the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term.

Taking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy. However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases. Accordingly, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee's dual mandate.

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

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

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Charles L. Evans; Jerome H. Powell; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.


September 11, 2013
Fed Announces Results of 28-Day Term Deposits

On September 9, 2013, the Federal Reserve conducted a fixed-rate offering of term deposits with full allotment of tenders through its Term Deposit Facility. The operation offered 28-day term deposits at an interest rate of 0.26000 percent. Following are the results of the operation:

TDF Operation ID: F32
Total Amount Awarded: $11,662,100,000
Number of Participants: 25

The awarded deposits will settle on September 12, 2013, and will mature on October 10, 2013. The interest rate of 0.26000 percent will apply to all awarded deposits.


September 04, 2013
Fed to Offer 28-Day Term Deposits

On September 9, 2013, the Federal Reserve will conduct a fixed-rate offering of term deposits with full allotment of tenders through its Term Deposit Facility (TDF). The Federal Reserve will offer 28-day term deposits with an interest rate of 0.26000 percent and a maximum tender amount of $1,250,000,000. As noted in the Federal Reserve Board's April 26, 2013, release, this operation is part of ongoing small-value operations designed to provide eligible institutions with an opportunity to gain familiarity with term deposit operations. Additional information regarding the operation is listed below; the operation will be conducted as specified in this announcement, Regulation D, and the terms and conditions of the Term Deposit Facility (http://www.frbservices.org/centralbank/term_deposit_facility.html).

Description of Operation and Tender Parameters

TDF Operation ID: F32
Operation Format: Fixed-Rate, Full allotment
Term: 28-day
Interest Rate: 0.26000%
Operation Date: Monday, September 9, 2013
Opening Time: 10:00 a.m. ET
Closing Time: 2:00 p.m. ET
Notification Date (summary results): Tuesday, September 10, 2013
Settlement Date: Thursday, September 12, 2013
Maturity Date: Thursday, October 10, 2013
Tender Parameters
Maximum Number of Tenders: 1
Minimum Tender Amount: $10,000
Tender Increment: $10,000
Maximum Tender Amount (per institution): $1,250,000,000
Award Minimum Amount: $10,000
Award Maximum Amount: $1,250,000,000

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

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

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

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


September 03, 2013
Template for Tailored Resolution Plans Released

The Federal Reserve Board and the Federal Deposit Insurance Corporation (FDIC) on Tuesday released an optional model template for tailored resolution plans that certain firms will be submitting for the first time later this year.

The Dodd-Frank Wall Street Reform and Consumer Protection Act requires that bank holding companies with total consolidated assets of $50 billion or more and nonbank financial companies designated for enhanced prudential supervision by the Financial Stability Oversight Council submit resolution plans to the Federal Reserve and the FDIC. The initial resolution plans for one group of firms--generally those with less than $100 billion in total nonbank assets or $100 billion in U.S. nonbank assets if they are a foreign-based company--must be submitted to the Federal Reserve and the FDIC on or before December 31.

The resolution plan rule previously issued by the agencies permits eligible firms, generally those that are smaller and less complex, to file a tailored resolution plan. A tailored resolution plan focuses on the nonbanking operations of the firm and on the interconnections and interdependencies between the nonbanking and banking operations. The optional template is intended to facilitate the preparation of tailored resolution plans.

Attachment (167 KB PDF)

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

August 28, 2013
Agencies Revise Proposed Risk Retention Rule

Six federal agencies on Wednesday issued a notice revising a proposed rule requiring sponsors of securitization transactions to retain risk in those transactions. The new proposal revises a proposed rule the agencies issued in 2011 to implement the risk retention requirement in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).

This proposal is being issued jointly by the Board of Governors of the Federal Reserve System, the Department of Housing and Urban Development, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission. As provided under the statute, the Secretary of the Treasury, as Chairperson of the Financial Stability Oversight Council, played a coordinating role in the rulemaking. The rule would provide asset-backed securities (ABS) sponsors with several options to satisfy the risk retention requirements. The original proposal generally measured compliance with the risk retention requirements based on the par value of securities issued in a securitization transaction and included a so-called premium capture provision. The agencies are now proposing that risk retention generally be based on fair value measurements without a premium capture provision.

As required by the Dodd-Frank Act, the proposal would define "qualified residential mortgage" (QRM) and exempt securitizations of QRMs from risk retention. The new proposal would define QRMs to have the same meaning as the term qualified mortgages as defined by the Consumer Financial Protection Bureau. The new proposal also requests comment on an alternative definition of QRM that would include certain underwriting standards in addition to the qualified mortgage criteria.

Similar to the original proposal, under the new proposal, securitizations of commercial loans, commercial mortgages, or automobile loans of low credit risk would not be subject to risk retention. Further, the rule would recognize the full guarantee on payments of principal and interest provided by Fannie Mae and Freddie Mac for their residential mortgage-backed securities as meeting the risk retention requirements while Fannie Mae and Freddie Mac are in conservatorship or receivership and have capital support from the U.S. government. This provision also is unchanged from the original proposal.

The agencies are requesting comment on the revised proposed rule by October 30, 2013.

Media Contacts:
Federal Reserve Board Eric Kollig 202-452-2955
FDIC Andrew Gray 202-898-7192
FHFA Stefanie Johnson 202-649-3030
HUD Brian Sullivan 202-402-7527
OCC Stephanie Collins 202-649-6870
SEC Office of Public Affairs 202-551-4120

Attachment (1.86 MB PDF)


August 21, 2013
FOMC Meeting Minutes Released

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on July 30–31, 2013.

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

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

For media inquiries, call 202-452-2955.

Minutes of the Federal Open Market Committee
July 30–31, 2013: HTML | PDF


August 16, 2013
Board Issues Final Rule on Fees for Large Financial Companies

The Federal Reserve Board on Friday issued a final rule establishing annual assessment fees for its supervision and regulation of large financial companies.

The Dodd-Frank Wall Street Reform and Consumer Protection Act directs the Board to collect assessment fees equal to the expenses it estimates are necessary or appropriate to supervise and regulate bank holding companies and savings and loan holding companies with $50 billion or more in total consolidated assets and nonbank financial companies designated by the Financial Stability Oversight Council for supervision by the Federal Reserve.

The final rule outlines how the Board determines which companies are charged, estimates the applicable expenses, determines each company's assessment fee, and bills for and collects the assessment fees.

Under the final rule, each calendar year is an assessment period. For the 2012 assessment period, the first year for which assessment fees will be collected, the Board will notify each company of the amount of its assessment when the rule becomes effective in late October. Payments for the 2012 assessment period will be due no later than December 15, 2013. The Board estimates it will collect about $440 million from 70 companies for the 2012 assessment period.

Beginning with the 2013 assessment period, the Federal Reserve will notify each company of the amount of its assessment fee no later than June 30 of the year following the assessment period. Payments will be due by September 15. The Federal Reserve will transfer the assessment fees it collects to the U.S. Treasury.

For media inquiries, call 202-452-2955.

Attachment (477 KB PDF)
Board Votes


July 31, 2013
Federal Reserve Issues FOMC Statement

Information received since the Federal Open Market Committee met in June suggests that economic activity expanded at a modest pace during the first half of the year. Labor market conditions have shown further improvement in recent months, on balance, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen somewhat and fiscal policy is restraining economic growth. Partly reflecting transitory influences, inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished since the fall. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

The Committee will closely monitor incoming information on economic and financial developments in coming months. The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives.

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

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Charles L. Evans; Jerome H. Powell; Sarah Bloom Raskin; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.


July 30, 2013
Comments Sought on Dodd-Frank Stress Test Guidance

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

These medium-sized companies are required to conduct annual company-run stress tests beginning this fall under rules the agencies issued in October 2012 to implement a provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).

To help these companies conduct stress tests appropriately scaled to their size, complexity, risk profile, business mix, and market footprint, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency are proposing guidance to provide additional details tailored to these companies.

The stress test rules allow flexibility to accommodate different approaches by different companies in the $10 billion to $50 billion asset range. Consistent with this flexibility, the proposed guidance describes general supervisory expectations for Dodd-Frank Act stress tests, and, where appropriate, provides examples of practices that would be consistent with those expectations.

The public comment period on the proposed supervisory guidance will be open until September 25, 2013.

Stress Test Guidance for Medium-Sized Firms (PDF)

Media Contacts:
Federal Reserve Eric Kollig 202-452-2955
FDIC David Barr 202-898-6992
OCC William Grassano 202-649-6870

July 25, 2013
Lenders Should Work with Student Loan Borrowers

The federal bank regulatory agencies today issued a statement encouraging financial institutions to work constructively with private student loan borrowers experiencing financial difficulties. Prudent workout arrangements are consistent with safe and sound lending practices and are generally in the long-term best interest of both the financial institution and the borrower.

Student loan borrowers who are unemployed or underemployed may face hardship in making payments on their private student loan debts after separation from school or during periods of economic difficulty. Current interagency guidance permits prudent workout and modification programs for retail loans, including student loans, and provides that extensions, deferrals, renewals, and rewrites may be used to help borrowers overcome temporary financial difficulties. Institutions that have private student loan workout programs should provide borrowers with information that clearly explains the programs, including eligibility criteria and the process for requesting a modification.

The statement is being issued by the Federal Deposit Insurance Corporation, the Federal Reserve Board, and the Office of the Comptroller of the Currency.

Agencies Encourage Financial Institutions to Work with Student Loan Borrowers Experiencing Financial Difficulties (17 KB PDF)

Media Contacts:
Federal Reserve Board Susan Stawick 202-452-2955
FDIC Greg Hernandez 202-898-6984
OCC Stephanie Collins 202-649-6870

July 16, 2013
Fed Announces Results of 28-Day Term Deposits

On July 15, 2013, the Federal Reserve conducted a fixed-rate offering of term deposits with full allotment of tenders through its Term Deposit Facility. The operation offered 28-day term deposits at an interest rate of 0.26000 percent. Following are the results of the operation:

TDF Operation ID: F31
Total Amount Awarded: $11,913,100,000
Number of Participants: 25

The awarded deposits will settle on July 18, 2013, and will mature on August 15, 2013. The interest rate of 0.26000 percent will apply to all awarded deposits.


July 10, 2013
Agencies Issue Proposed Rule on Higher-Priced Mortgage Loans

Six federal financial regulatory agencies today issued a proposed rule that would create exemptions from certain appraisal requirements for a subset of higher-priced mortgage loans. The proposed exemptions are intended to save borrowers time and money and to promote the safety and soundness of creditors. The appraisal requirements for higher-priced mortgages were imposed by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Under the Dodd-Frank Act, mortgage loans are considered to be higher-priced if they are secured by a consumer's home and have interest rates above a certain threshold.

The proposed rule would provide that the following three types of higher-priced mortgage loans would be exempt from the Dodd-Frank Act appraisal requirements: loans of $25,000 or less; certain "streamlined" refinancings; and certain loans secured by manufactured housing.

In January 2013, a final rule implementing the new Dodd-Frank Act appraisal requirements was issued by the Federal Reserve Board, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the National Credit Union Administration, and the Office of the Comptroller of the Currency. Compliance with the final rule will become mandatory on January 18, 2014. These same agencies are jointly issuing the proposed rule on additional exemptions in response to public comments previously received.

The Federal Register notice is attached. The agencies are seeking comments from the public on all aspects of the proposal. The public will have until September 9, 2013, to review and comment on most of the proposal. However, comments related to the proposed Paperwork Reduction Act analysis will be due 60 days after the rule is published in the Federal Register. Publication of the proposal in the Federal Register is expected shortly.

Attachment (679 KB PDF)

Media Contacts:
Federal Reserve Board Susan Stawick 202-452-2955
CFPB Moira Vahey 202-435-9151
FDIC Greg Hernandez 202-898-6984
FHFA Stefanie Johnson 202-649-3030
NCUA John Fairbanks 703-518-6336
OCC Bryan Hubbard 202-649-6870

Board Votes


July 10, 2013
Fed to Offer 28-Day Term Deposits

On July 15, 2013, the Federal Reserve will conduct a fixed-rate offering of term deposits with full allotment of tenders through its Term Deposit Facility (TDF). The Federal Reserve will offer 28-day term deposits with an interest rate of 0.26000 percent and a maximum tender amount of $1,250,000,000. As noted in the Federal Reserve Board's April 26, 2013, release, this operation is part of ongoing small-value operations designed to provide eligible institutions with an opportunity to gain familiarity with term deposit operations. Additional information regarding the operation is listed below; the operation will be conducted as specified in this announcement, Regulation D, and the terms and conditions of the Term Deposit Facility (http://www.frbservices.org/centralbank/term_deposit_facility.html).

Description of Operation and Tender Parameters

TDF Operation ID: F31
Operation Format: Fixed-Rate, Full allotment
Term: 28-day
Interest Rate: 0.26000%
Operation Date: Monday, July 15, 2013
Opening Time: 10:00 a.m. ET
Closing Time: 2:00 p.m. ET
Notification Date (summary results): Tuesday, July 16, 2013
Settlement Date: Thursday, July 18, 2013
Maturity Date: Thursday, August 15, 2013
Tender Parameters
Maximum Number of Tenders: 1
Minimum Tender Amount: $10,000
Tender Increment: $10,000
Maximum Tender Amount (per institution): $1,250,000,000
Award Minimum Amount: $10,000
Award Maximum Amount: $1,250,000,000

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

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

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

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


July 10, 2013
Minutes of the FOMC, June 18–19, 2013

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on June 18–19, 2013. A summary of economic projections made by Federal Reserve Board members and Reserve Bank presidents for the meeting is also included as an addendum to these minutes.

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

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

For media inquiries, call 202-452-2955.

Minutes of the Federal Open Market Committee
June 18-19, 2013: HTML | PDF


July 09, 2013
Agencies Adopt Supplementary Leverage Ratio Notice of Proposed Rulemaking

The Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) on Tuesday proposed a rule to strengthen the leverage ratio standards for the largest, most systemically significant U.S. banking organizations.

Under the proposed rule, bank holding companies with more than $700 billion in consolidated total assets or $10 trillion in assets under custody (covered BHCs) would be required to maintain a tier 1 capital leverage buffer of at least 2 percent above the minimum supplementary leverage ratio requirement of 3 percent, for a total of 5 percent. Failure to exceed the 5 percent ratio would subject covered BHCs to restrictions on discretionary bonus payments and capital distributions. In addition to the leverage buffer for covered BHCs, the proposed rule would require insured depository institutions of covered BHCs to meet a 6 percent supplementary leverage ratio to be considered "well capitalized" for prompt corrective action purposes. The proposed rule would currently apply to the eight largest, most systemically significant U.S. banking organizations.

Also on Tuesday, the FDIC Board approved a capital interim final rule and the OCC approved a final capital rule identical in substance to the final rules issued by the Federal Reserve Board on July 2, 2013.

A strong capital base at the largest, most systemically significant U.S. banking organizations is particularly important because capital shortfalls at these institutions have the potential to result in significant adverse economic consequences and contribute to systemic distress both domestically and internationally. Higher capital standards for these institutions will place additional private capital at risk before the federal deposit insurance fund and the federal government's resolution mechanisms would be called upon, and reduce the likelihood of economic disruptions caused by problems at these institutions.

The agencies are proposing a substantial phase-in period for the rule with an effective date of January 1, 2018. The NPR will be published in the Federal Register with a 60 day public comment period.

Attachment: Regulatory Capital Rules: Regulatory Capital, Enhanced Supplementary Leverage Ratio Standards for Certain Bank Holding Companies and their Subsidiary Insured Depository Institutions (PDF)

Media Contacts:
Federal Reserve Board Eric Kollig 202-452-2955
OCC Bryan Hubbard 202-649-6870
FDIC Andrew Gray 202-898-7192

Board Votes


July 02, 2013
Federal Reserve Board Approves Final Rule to Help Ensure Banks Maintain Strong Capital Positions

The Federal Reserve Board on Tuesday approved a final rule to help ensure banks maintain strong capital positions that will enable them to continue lending to creditworthy households and businesses even after unforeseen losses and during severe economic downturns.

The final rule minimizes burden on smaller, less complex financial institutions.; It establishes an integrated regulatory capital framework that addresses shortcomings in capital requirements, particularly for larger, internationally active banking organizations, that became apparent during the recent financial crisis. The rule will implement in the United States the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

"This framework requires banking organizations to hold more and higher quality capital, which acts as a financial cushion to absorb losses, while reducing the incentive for firms to take excessive risks," Chairman Ben Bernanke said. "With these revisions to our capital rules, banking organizations will be better able to withstand periods of financial stress, thus contributing to the overall health of the U.S. economy."

Under the final rule, minimum requirements will increase for both the quantity and quality of capital held by banking organizations. Consistent with the international Basel framework, the rule includes a new minimum ratio of common equity tier 1 capital to risk-weighted assets of 4.5 percent and a common equity tier 1 capital conservation buffer of 2.5 percent of risk-weighted assets that will apply to all supervised financial institutions. The rule also raises the minimum ratio of tier 1 capital to risk-weighted assets from 4 percent to 6 percent and includes a minimum leverage ratio of 4 percent for all banking organizations. In addition, for the largest, most internationally active banking organizations, the final rule includes a new minimum supplementary leverage ratio that takes into account off-balance sheet exposures.

On the quality of capital side, the final rule emphasizes common equity tier 1 capital, the most loss-absorbing form of capital, and implements strict eligibility criteria for regulatory capital instruments. The final rule also improves the methodology for calculating risk-weighted assets to enhance risk sensitivity. Banks and regulators use risk weighting to assign different levels of risk to different classes of assets--riskier assets require higher capital cushions and less risky assets require smaller capital cushions.

"Adoption of the capital rules today is a milestone in our post-crisis efforts to make the financial system safer," Governor Daniel Tarullo said. "Along with the stress testing and capital review measures we have already implemented, and the additional rules for large institutions that are on the way, these new rules are an essential component of a set of mutually reinforcing capital requirements."

The banking agencies carefully reviewed the comments received on the proposal and made a number of changes in the final rule, in particular to address concerns about regulatory burden on community banks. For example, the final rule is significantly different from the proposal in terms of risk weighting for residential mortgages and the regulatory capital treatment of certain unrealized gains and losses and trust preferred securities for community banking organizations.

In total, for community banks, the changes from current regulations target a few areas that are higher risk, but are otherwise minimal. Indeed, nine out of 10 financial institutions with less than $10 billion in assets would meet the common equity tier 1 minimum plus buffer of 7 percent in the final rule, according to data from March 2013.

As with all financial institutions subject to the final rule, community banks will have a significant transition period to meet the new requirements. The phase-in period for smaller, less complex banking organizations will not begin until January 2015 while the phase-in period for larger institutions begins in January 2014. In another change from the proposal, savings and loan holding companies with significant commercial or insurance underwriting activities will not be subject to the final rule at this time. The Federal Reserve will take additional time to evaluate the appropriate regulatory capital framework for these entities.

The Federal Reserve coordinated the final rule with the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC), which continue to review this matter. The FDIC has provided notice that it will consider the matter as an interim final rule on July 9, 2013. The OCC expects to review and consider the matter as a final rule by July 9, 2013.

Federal Register notice (PDF)

Community Bank Guide (PDF)

Statement by Chairman Ben S. Bernanke

Statement by Governor Daniel K. Tarullo

Statement by Governor Elizabeth A. Duke

Board Votes

For media inquiries, call 202-452-2955


July 01, 2013
Banking Agencies Issue Host State Loan-to-Deposit Ratios

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency today issued the host state loan-to-deposit ratios that the banking agencies will use to determine compliance with section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. These ratios update data released on June 29, 2012.

In general, section 109 prohibits a bank from establishing or acquiring a branch or branches outside of its home state primarily for the purpose of deposit production. Section 109 also prohibits branches of banks controlled by out-of-state bank holding companies from operating primarily for the purpose of deposit production.

Section 109 provides a process to test compliance with the statutory requirements. The first step in the process involves a loan-to-deposit ratio screen that compares a bank's statewide loan-to-deposit ratio to the host state loan-to-deposit ratio for banks in a particular state.

A second step is conducted if a bank's statewide loan-to-deposit ratio is less than one-half of the published ratio for that state or if data are not available at the bank to conduct the first step. The second step requires the appropriate banking agency to determine whether the bank is reasonably helping to meet the credit needs of the communities served by the bank's interstate branches.

A bank that fails both steps is in violation of section 109 and is subject to sanctions by the appropriate banking agency.

The updated host state loan-to-deposit ratios are attached.

Section 109 Host State Loan to Deposit Ratios (31 KB PDF)

Media Contacts:
Federal Reserve Board Susan Stawick 202-452-2955
OCC Stephanie Collins 202-649-6870
FDIC Greg Hernandez 202-898-6984

June 25, 2013
Fed Proposes Revised Data Collection for Money Market Instruments

The Federal Reserve Board on Tuesday proposed new data collection requirements related to selected money market instruments. To assist the Federal Reserve in monitoring money market conditions, the proposal would require insured depository institutions with total assets of $26 billion or more, and U.S. branches and agencies of foreign banks with third party assets of $900 million or more, to report daily to the Federal Reserve on their federal funds transactions, Eurodollar transactions, and certificates of deposit.

Comments to the Board on the proposal will be due 60 days after it is published in the Federal Register, which is expected shortly. The Federal Register notice is attached.

For media inquiries, call 202-452-2955.

Attachment (PDF)


June 19, 2013
Fed Board and FOMC Release Economic Projections From the June 18-19 Meeting

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

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

Projections (PDF)

For media inquiries, call 202-452-2955.


June 19, 2013
Federal Reserve Issues FOMC Statement

Information received since the Federal Open Market Committee met in May suggests that economic activity has been expanding at a moderate pace. Labor market conditions have shown further improvement in recent months, on balance, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy is restraining economic growth. Partly reflecting transitory influences, inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished since the fall. The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

The Committee will closely monitor incoming information on economic and financial developments in coming months. The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives.

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

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Jerome H. Powell; Sarah Bloom Raskin; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was James Bullard, who believed that the Committee should signal more strongly its willingness to defend its inflation goal in light of recent low inflation readings, and Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.


June 18, 2013
Agencies Release List of Underserved Communities

WASHINGTON--The federal bank and thrift regulatory agencies today announced the availability of the 2013 list of distressed or underserved nonmetropolitan middle-income geographies where revitalization or stabilization activities will receive Community Reinvestment Act (CRA) consideration as "community development."

"Distressed nonmetropolitan middle-income geographies" and "underserved nonmetropolitan middle-income geographies" are designated by the agencies in accordance with their CRA regulations. The criteria for designating these areas are available on the Federal Financial Institutions Examination Council (FFIEC) website (http://www.ffiec.gov/cra). The designations continue to reflect local economic conditions, including triggers such as unemployment, poverty, and population changes.

As with past releases, the agencies incorporate a one-year lag period for geographies that are no longer designated as distressed or underserved in the current release. Geographies subject to this one-year lag period are eligible to receive consideration for community development activities for 12 months after publication of the current list.

The current and previous years' lists can be found on the FFIEC website, along with information about the data sources used to generate those lists. In addition, although the 2010 Census demographic profiles for American Samoa, Commonwealth of the Northern Mariana Islands, Guam, and U.S. Virgin Islands have been released, the full Census summary files for these areas are not yet available. The 2013 list will be updated when the full Census summary files become available.

Attachments:
2013 List of Middle-Income Nonmetropolitan Distressed or Underserved Geographies
2013 Distressed or Underserved Nonmetropolitan Middle-Income Geographies Source Information and Methodology

Media Contacts:
Federal Reserve Board Susan Stawick (202) 452-2955
OCC Stephanie Collins (202) 649-6870
FDIC Greg Hernandez (202) 898-6984

June 05, 2013
Board Approves Interim Final Rule Related to Dodd-Frank

The Federal Reserve Board on Wednesday approved an interim final rule clarifying the treatment of uninsured U.S. branches and agencies of foreign banks under the so-called swaps push-out provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Section 716 of Dodd-Frank generally prohibits the provision of certain types of federal assistance, such as discount window lending and deposit insurance, to swaps entities. The provisions of section 716 become effective on July 16, 2013.

Insured depository institutions that are swaps entities are eligible for a transition period of up to 24 months to comply and for certain statutory exceptions. The interim final rule clarifies that, for purposes of section 716, uninsured U.S. branches and agencies of foreign banks will be treated as insured depository institutions. Thus, they will be eligible to apply for a transition period and will be treated as insured depository institutions for purposes of the other provisions of section 716.

The interim final rule also establishes the process for state member banks and uninsured state branches or agencies of foreign banks to apply to the Board for the transition period.

The interim final rule is effective as of June 5, 2013. Comments will be accepted through August 4, 2013, and the interim final rule will be revised by the Board if necessary in light of the comments received.

For media inquiries, call 202-452-2955

Attachment (PDF)

Board Votes


May 22, 2013
Minutes of the FOMC, April 30–May 1, 2013

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on April 30–May 1, 2013.

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

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

Minutes of the Federal Open Market Committee
April 30–May 1, 2013: HTML | PDF


May 21, 2013
Federal Reserve Announces Results of 28-Day Term Deposits

On May 20, 2013, the Federal Reserve conducted a fixed-rate offering of term deposits with full allotment of tenders through its Term Deposit Facility. The operation offered 28-day term deposits at an interest rate of 0.26000 percent. Following are the results of the operation:

TDF Operation ID: F30
Total Amount Awarded: $10,496,100,000
Number of Participants: 32

The awarded deposits will settle on May 23, 2013, and will mature on June 20, 2013. The interest rate of 0.26000 percent will apply to all awarded deposits.


May 15, 2013
Federal Reserve Offers 28-Day Term Deposits

On May 20, 2013, the Federal Reserve will conduct a fixed-rate offering of term deposits with full allotment of tenders through its Term Deposit Facility (TDF). The Federal Reserve will offer 28-day term deposits with an interest rate of 0.26000 percent and a maximum tender amount of $1,250,000,000. As noted in the Federal Reserve Board's April 26, 2013, release, this operation is part of ongoing small-value operations designed to provide eligible institutions with an opportunity to gain familiarity with term deposit operations. Additional information regarding the operation is listed below; the operation will be conducted as specified in this announcement, Regulation D, and the terms and conditions of the Term Deposit Facility (http://www.frbservices.org/centralbank/term_deposit_facility.html).

Description of Operation and Tender Parameters

TDF Operation ID: F30
Operation Format: Fixed-Rate, Full allotment
Term: 28-day
Interest Rate: 0.26000%
Operation Date: Monday, May 20, 2013
Opening Time: 10:00 a.m. ET
Closing Time: 2:00 p.m. ET
Notification Date (summary results): Tuesday, May 21, 2013
Settlement Date: Thursday, May 23, 2013
Maturity Date: Thursday, June 20, 2013
 
Tender Parameters
Maximum Number of Tenders: 1
Minimum Tender Amount: $10,000
Tender Increment: $10,000
Maximum Tender Amount (per institution): $1,250,000,000
Award Minimum Amount: $10,000
Award Maximum Amount: $1,250,000,000

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

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

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


May 13, 2013
Fed Board: Results of Company-Run, Midyear Stress Tests Due on July 5

Eighteen large U.S. bank holding companies are required to submit the results of their company-run, midyear stress tests to the Federal Reserve on July 5, the Federal Reserve said in instructions to those firms Monday.

The Dodd-Frank Wall Street Reform and Consumer Protection Act required that large bank holding companies and non-bank financial institutions that are designated for Federal Reserve supervision by the Financial Stability Oversight Council conduct two stress tests each year. In the midyear test, which is being conducted for the first time in 2013, each firm develops its own baseline, adverse, and severely adverse scenarios to best reflect its individual operations and risks. In the annual Dodd-Frank Act test earlier in the year, the firms used scenarios developed by the Federal Reserve and the Federal Reserve also conducted its own supervisory stress tests of the institutions.

Each firm in the midyear test is required to release the results produced under its severely adverse scenario, helping promote market discipline and understanding of the financial conditions and risks of individual firms, between September 15 and September 30.

The midyear stress tests mark another important step in the Federal Reserve's work in ensuring that large financial firms have robust capital planning processes and adequate capital so that they can continue to lend to households and businesses even during adverse economic and financial circumstances. Federal Reserve supervisors will incorporate the midyear stress tests into their ongoing assessment of the firms, but will not be measuring the stress test results against specific capital regulatory minimums.

For media inquiries, call 202-452-2955

Attachment (165 KB PDF)


May 01, 2013
Citing Modest Improvements, FOMC Holds Steady on Monetary Policy

Information received since the Federal Open Market Committee met in March suggests that economic activity has been expanding at a moderate pace. Labor market conditions have shown some improvement in recent months, on balance, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy is restraining economic growth. Inflation has been running somewhat below the Committee's longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee continues to see downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

The Committee will closely monitor incoming information on economic and financial developments in coming months. The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives.

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

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Charles L. Evans; Jerome H. Powell; Sarah Bloom Raskin; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.


April 29, 2013
Payments to Goldman Sachs and Morgan Stanley Borrowers Covered by Foreclosure Agreement to Begin May 3

Payments to more than 220,000 borrowers whose mortgages were serviced by Goldman Sachs and Morgan Stanley are scheduled to begin on Friday, May 3 following an agreement announced earlier this year by the Federal Reserve Board.

Under the agreement, $247 million will be made in direct payments to borrowers whose homes were at any stage of the foreclosure process in 2009 and 2010 with the former subsidiaries of Goldman Sachs (Litton Loan Servicing LP) and Morgan Stanley (Saxon Mortgage Services, Inc.).

Payments will range from $300 to more than $125,000. In most cases, borrowers will receive a letter with an enclosed check sent by the paying agent--Rust Consulting, Inc. Some borrowers may receive letters from Rust requesting additional information needed to process their payments. Previously, Rust sent postcards to borrowers notifying them of their eligibility to receive payment under the agreement.

The payments stem from agreements reached earlier this year between 13 servicers and two agencies—the Office of the Comptroller of the Currency and the Federal Reserve. The agreements provide for a total of $3.6 billion in cash payments to 4.2 million borrowers. Distribution of checks to borrowers whose mortgages were serviced by the other 11 servicers began April 12 and will continue through mid-July. As of April 26, approximately 1.2 million checks have been cashed or deposited totaling approximately $1.2 billion dollars.

As in the case of the other servicers, payment amounts for borrowers whose mortgages were serviced by Goldman Sachs and Morgan Stanley were determined after categorizing borrowers according to the stage of the foreclosure process and the type of possible servicer error. In some cases, the payment amounts for Goldman Sachs and Morgan Stanley borrowers differ from those received by borrowers in the same categories with the other 11 servicers. The amounts differ because borrowers whose mortgages were serviced by Goldman Sachs and Morgan Stanley were not able to request a review of their foreclosure file.

As is the case for borrowers whose mortgages were serviced by the other 11 firms, borrowers whose mortgages were serviced by Goldman Sachs and Morgan Stanley who accept a payment will not be prevented from taking any action related to their foreclosure. Servicers are not permitted to ask borrowers, in connection with accepting these payments, to sign a waiver of any legal claims they may have against their servicer.

Borrowers with all 13 servicers can call Rust at 1-888-952-9105 to update their contact information, verify that they are covered by the agreement, or with further questions. Information provided to Rust will only be used for purposes related to the agreement. Borrowers should beware of scams and anyone asking them to call a different phone number or to pay a fee to receive payment under the agreement.

For media inquiries, call 202-452-2955.

Independent Foreclosure Review Payment Agreement for Goldman Sachs and Morgan Stanley (PDF)


April 26, 2013
Federal Reserve Announces Small-Value Fixed-Rate Term Deposit Operations

The Federal Reserve plans to conduct fixed-rate offerings of term deposits with full allotment of tenders under the Term Deposit Facility (TDF) as part of the ongoing program of small-value offerings announced on September 8, 2010. The Board had previously announced that it would consider various formats for the TDF as part of the development of the facility.

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

The Federal Reserve plans to use a fixed-rate, full-allotment format to offer 28-day term deposits on May 20 with settlement on May 23. Under this format, the Federal Reserve will announce the operation interest rate, and each participating institution may submit one tender that will be awarded in full at the pre-determined rate. Official operation terms, including the fixed-rate and maximum tender size, will be announced nearer to the time of the operation.

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

For media inquiries, call 202-452-2955.


April 24, 2013
Federal Reserve Announces Issue Date of Redesigned $100 Note

The Federal Reserve Board on Wednesday announced that the redesigned $100 note will begin circulating on October 8, 2013. This note, which incorporates new security features such as a blue, 3-D security ribbon, will be easier for the public to authenticate but more difficult for counterfeiters to replicate.

The new design for the $100 note was unveiled in 2010, but its introduction was postponed following an unexpected production delay. To ensure a smooth transition to the redesigned note when it begins circulating in October, the U.S. Currency Education Program is reaching out to businesses and consumers around the world to raise awareness about the new design and inform them about how to use its security features. More information about the new design $100 note, as well as training and educational materials, can be found at www.newmoney.gov.

For media inquiries, call 202-452-2955

Related Information

Video
The New $100 Note

Current FAQs
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About the Fed
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April 17, 2013
Fed Provides Information on Checks Sent under Independent Foreclosure Review Payment Agreement

The paying agent for checks being sent to borrowers under the Independent Foreclosure Review has assured the Federal Reserve Board that early problems with some checks have been corrected and that funds are available to cash all checks.

Some early recipients of checks informed the Federal Reserve's consumer helpline on Tuesday that they were told their checks could not be cashed. Members of the Board staff contacted the paying agent, Rust Consulting, Inc., and the paying bank, The Huntington National Bank. Rust subsequently corrected problems that led to some checks being rejected.

The Board will continue to monitor the payments closely and encourages borrowers who have concerns or experience difficulties cashing their checks to call Rust at 1-888-952-9105.

As previously announced, on April 12, payments began to 4.2 million borrowers following an agreement reached by federal bank regulatory agencies and 13 mortgage servicers. More than 50,000 people have already cashed or deposited checks.

For media inquiries, call 202-452-2955


April 16, 2013
Agencies Provide Additional Instructions for Submission of Some Resolution Plans

The Federal Reserve Board (Board) and the Federal Deposit Insurance Corporation (FDIC) on Monday announced the release of additional guidance, clarification and direction for the first group of institutions filing their resolutions plans pursuant to the Dodd-Frank Act.

These 11 institutions filed their initial resolution plans with the Federal Reserve Board and the FDIC in 2012. Plans were required generally from U.S. bank holding companies with $250 billion or more in total nonbank assets and foreign-based bank holding companies with $250 billion or more in total U.S. nonbank assets. Following review of the initial resolution plans, the agencies have developed instructions for the firms to detail what information should be included in their 2013 resolution plan submissions.

In particular, the revised instructions include requests for more detailed information on, and analysis of, obstacles to resolvability under the Bankruptcy Code including global issues, financial market utility interconnections, and funding and liquidity, as well as to provide analysis to support the strategies and assumptions contained in the firms' resolution plans.

The Board and the FDIC have also granted an extension to the filing date to give the firms additional time to develop resolution plan submissions that address the agencies' instructions. Accordingly, the 2013 resolution plan filing deadline will move from July 1, 2013, to October 1, 2013. The extension does not affect resolution plan submission dates for other banking organizations.

The agencies expect that the submission of increasingly comprehensive resolution plans will facilitate a more robust and effective resolution planning process. As in 2012, the Board and the FDIC will post the public sections of the resolution plans to their websites.

The additional guidance can be found on the Board website at:

Guidance for 2013§165(d) Annual Resolution Plan Submissions by Domestic Covered Companies that Submitted Initial Resolution Plans in 2012 (PDF)

Guidance for 2013§165(d) Annual Resolution Plan Submissions by Foreign-Based Covered Companies that Submitted Initial Resolution Plans in 2012 (PDF)

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


April 15, 2013
Federal Reserve Board Invites Comment on Proposal to Establish Annual Assessments

The Federal Reserve Board on Monday invited comment on a proposal to establish an annual assessment of bank holding companies and savings and loan holding companies with $50 billion or greater in total consolidated assets and for nonbank financial companies designated by the Financial Stability Oversight Council for supervision by the Federal Reserve.

The Dodd-Frank Wall Street Reform and Consumer Protection Act directs the Federal Reserve to collect assessments, fees, or other charges equal to the expenses the Board estimates are necessary and appropriate to carry out its supervisory and regulatory responsibilities for these large financial companies. The proposed rule outlines how the Federal Reserve Board would determine which companies are assessed, estimate the total expenses that are necessary or appropriate to carry out its supervisory and regulatory responsibilities for such companies, determine the amount of each company's assessment, and bill for and collect the assessments.

Under the proposal, each calendar year would be an assessment period. The Federal Reserve would notify each company of the amount of its assessment no later than July 15 of the year following the assessment period. Payments would be due by September 30.

Under the proposal, 2012 would be the first assessment period and payments would not be collected until the rule is finalized. Using the methodologies in the proposal, the Board estimates that for 2012 there would be approximately 70 companies assessed and the Board would collect a total of approximately $440 million. All assessments collected by the Federal Reserve would be transferred to the U.S. Treasury.

Comments on the proposed rule must be submitted by June 15.

For media inquiries, call 202-452-2955

Attachment (120 KB PDF)

Board Votes


April 10, 2013
Minutes of the Federal Open Market Committee, March 19-20, 2013

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on March 19-20, 2013. A summary of economic projections made by Federal Reserve Board members and Reserve Bank presidents for the March 19-20, 2013 meeting is also included as an addendum to these minutes.

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

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

Minutes of the Federal Open Market Committee
March 19-20, 2013: HTML | PDF


April 10, 2013
Payments to 4.2 Million Borrowers Covered by Foreclosure Agreement to Begin April 12

Payments to 4.2 million borrowers are scheduled to begin on April 12 following an agreement reached by the Office of the Comptroller of the Currency and the Federal Reserve Board with 13 mortgage servicers.

The agreement, which was reached earlier this year, provides $3.6 billion in cash payments to borrowers whose homes were in any stage of the foreclosure process in 2009 or 2010 and whose mortgages were serviced by one of the following companies, their affiliates, or subsidiaries: Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.

The payments will range from $300 to $125,000. For borrowers whose mortgages were serviced by 11 of the 13 servicers—all servicers but Goldman Sachs and Morgan Stanley—checks will be sent in several waves beginning with 1.4 million checks on April 12. The final wave is expected in mid-July 2013. More than 90 percent of the total payments to borrowers at those 11 servicers are expected to have been sent by the end of April. Information about payments to borrowers whose mortgages were serviced by Goldman Sachs and Morgan Stanley will be announced in the near future.

In most cases, borrowers will receive a letter with an enclosed check sent by the Paying Agent—Rust Consulting, Inc. Some borrowers may receive letters from Rust requesting additional information needed to process their payments. Previously, Rust sent postcards to the 4.2 million borrowers notifying them of their eligibility to receive payment under the agreement.

Rust is sending all payments and correspondence regarding the foreclosure agreement at the direction of the OCC and the Federal Reserve.

Borrowers can call Rust at 1-888-952-9105 to update their contact information or to verify that they are covered by the agreement. Information provided to Rust will only be used for purposes related to the agreement. Borrowers should beware of scams and anyone asking them to call a different number or to pay a fee to receive payment under the agreement.

Accepting a payment will not prevent borrowers from taking any action they may wish to pursue related to their foreclosure. Servicers are not permitted to ask borrowers to sign a waiver of any legal claims they may have against their servicer in connection with accepting payment.

In determining the payment amounts, borrowers were categorized according to the stage of their foreclosure process and the type of possible servicer error. Regulators then determined amounts for each category using the financial remediation matrix published in June 2012 as a guide, incorporating input from various consumer groups. Regulators have published the payment amounts and number of people in each category on their web sites at www.occ.gov/independentforeclosurereview and www.federalreserve.gov/consumerinfo/independent-foreclosure-review-payment-agreement.htm.

While the agreement ended the Independent Foreclosure Review for the 13 companies identified above, the review continues for OneWest, Everbank, and GMAC Mortgage.

Regulators continue to monitor the servicers' actions to correct the unsafe and unsound mortgage servicing and foreclosure practices required by other parts of regulators' enforcement actions, which remain in effect.

Regulators have issued guidance to the servicers under foreclosure-related enforcement actions directing a review before foreclosure sales for all pending foreclosures. These reviews help prevent avoidable foreclosures by ensuring foreclosure-prevention alternatives are considered and foreclosure standards are met. Regulators encourage borrowers needing foreclosure prevention assistance to work directly with their servicer or to contact the Homeowner's HOPE Hotline at 888-995-HOPE (4673) (or at www.makinghomeaffordable.gov) to be put in touch with a U.S. Department of Housing and Urban Development-approved nonprofit organization that can provide free assistance.

Independent Foreclosure Review Payment Agreement Details (PDF)

Media Contacts:
Federal Reserve Board Barbara Hagenbaugh 202-452-2955
OCC Bryan Hubbard 202-649-6870

April 05, 2013
FOMC Announces Tentative Meeting Schedule for 2014

The Federal Open Market Committee on Friday announced its tentative meeting schedule for 2014:

January 28–29 (Tuesday–Wednesday)
March 18–19 (Tuesday–Wednesday)
April 29–30 (Tuesday–Wednesday)
June 17–18 (Tuesday–Wednesday)
July 29–30 (Tuesday–Wednesday)
September 16–17 (Tuesday–Wednesday)
October 28–29 (Tuesday–Wednesday)
December 16–17 (Tuesday–Wednesday)
January 27–28, 2015 (Tuesday–Wednesday)

The Chairman's quarterly news conferences will take place following the March, June, September, and December meetings.


April 04, 2013
Board Finalizes Standards for Fed-Regulated Banks Engaged in Certain Transactions with Retail Customers

The Federal Reserve Board on Thursday announced the finalization of standards for banking organizations regulated by the Federal Reserve that engage in certain types of foreign exchange transactions with retail customers.

The rule, issued pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, establishes requirements for risk disclosures to customers, recordkeeping, business conduct, and documentation for retail foreign exchange transactions. Regulated institutions engaging in such transactions will be required to notify the Federal Reserve and to be well capitalized. They will also be required to collect margin for retail foreign exchange transactions.

The types of transactions covered by the rule include foreign exchange transactions that are futures or options on futures, over-the-counter options on foreign currency, and so-called rolling spot transactions. The rule covers entities regulated by the Federal Reserve including state-chartered banks that are members of the Federal Reserve System, bank and savings and loan holding companies, Edge Act and agreement corporations, and uninsured, state-licensed branches and agencies of foreign banks.

The Federal Reserve consulted with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation in developing the rule. The agencies have engaged in separate rulemakings as specified by Dodd-Frank.

The rule will be effective on May 13, 2013.

For media inquiries, call 202-452-2955.

Attachment (PDF)


April 03, 2013
Board OKs Rule on Determining When a Company Is "Predominantly Engaged in Financial Activities"

The Federal Reserve Board on Wednesday announced approval of a final rule that establishes the requirements for determining when a company is "predominantly engaged in financial activities." The requirements will be used by the Financial Stability Oversight Council (FSOC) when it considers the potential designation of a nonbank financial company for consolidated supervision by the Federal Reserve.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, a nonbank financial company can be designated by the FSOC for supervision by the Federal Reserve only if it is "predominantly engaged in financial activities." A company is considered to be predominantly engaged in financial activities if 85 percent or more of the company's revenues or assets are related to activities that are defined as financial in nature under the Bank Holding Company Act. Additionally, the FSOC may issue recommendations for primary financial regulatory agencies to apply new or heightened standards to a financial activity or practice conducted by companies that are predominantly engaged in financial activities.

The final rule largely adopts the approach in the proposed rule, with a few exceptions. For example, the final rule states that engaging in physically settled derivatives transactions generally will not be considered a financial activity, a change from the proposal.

The final rule also defines the terms "significant nonbank financial company" and "significant bank holding company." Among the factors the FSOC must consider when determining whether to designate a nonbank financial company for consolidated supervision by the Federal Reserve is the extent and nature of the company's transactions and relationships with other significant nonbank financial companies and significant bank holding companies. If designated, those nonbank financial companies will be required to submit reports to the Federal Reserve, the FSOC, and the Federal Deposit Insurance Corporation on the company's credit exposure to other significant nonbank financial companies and significant bank holding companies as well as the credit exposure of such significant entities to the company. Consistent with the proposal, a firm will be considered significant if it has $50 billion or more in total consolidated assets or has been designated by the FSOC as systemically important.

The final rule will become effective on May 6, 2013.

For media inquiries, call 202-452-2955.

Attachment (PDF)


March 27, 2013
Fed Survey Provides Information on Mobile Financial Services

The use of mobile phones to access a bank account, credit card, or other financial account became more prevalent in the United States last year, according to the Federal Reserve Board's latest report on the use of mobile financial services. As of November 2012, 28 percent of all mobile phone users and 48 percent of smartphone users had used mobile banking in the past 12 months. This is a significant increase from 21 percent in December 2011 for mobile phone users and 42 percent for smartphone users. While relatively less common, the use of mobile phones to make payments at the point-of-sale increased threefold over the same period, with 6 percent of smartphone owners having used their phone to make a purchase.

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

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

The use of mobile financial services is particularly prevalent among the 10 percent of the population that is underbanked (people with bank accounts but who use check cashers, payday lenders, or payroll cards). Among the 90 percent of underbanked consumers with mobile phones, 49 percent had used mobile banking in the 12 months preceding November 2012, up from 29 percent in December 2011. Mobile phones may also allow for the extension of financial services to an additional 10 percent of the population that is unbanked (those without a bank account), as 59 percent of this group has a mobile phone, half of which are smartphones.

While the use of mobile banking increased 33 percent between 2011 and 2012, the report indicates that many consumers remain skeptical of the benefit of mobile banking and the level of security associated with the technology. More than half of mobile phone owners who do not currently use mobile banking say they have no interest in using this technology. Consumers are similarly skeptical of the benefits and security of mobile payments, or believe it is simply easier to use another method of payment. Less than one-fourth of all mobile phone owners expressed an interest in using their mobile phones to buy things at the point-of-sale.

The most common mobile banking activities continue to be reviewing account balances, monitoring recent transactions, or transferring money between accounts. Notably, the use of mobile phones to deposit checks has doubled between surveys, with 21 percent of mobile banking users having deposited a check with their phone in the 12 months prior to November 2012.

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

The survey was conducted on behalf of the Board by GfK (formerly Knowledge Networks), an online consumer research firm. Data collection began November 16, 2012, and concluded on November 27, 2012. Nearly 2,600 respondents completed the survey. A report summarizing the survey's mobile financial services findings may be found at: www.federalreserve.gov/econresdata/consumers-and-mobile-financial-services-report-201303.pdf (PDF)

For media inquiries, call 202-452-2955


March 27, 2013
Board Begins 2013 Survey of Consumer Finances

The Federal Reserve Board in April will begin a statistical study of household finances, the Survey of Consumer Finances, that will provide policymakers with important insight into the economic condition of all types of American families.

The survey has been undertaken every three years since 1983. It is being conducted for the Board by NORC, a social science research organization at the University of Chicago, through December of this year.

The data collected will provide a representative picture of what Americans own--from houses and cars to stocks and bonds--how and how much they borrow and how they bank. Past study results have been important in policy discussions regarding recovery of households from the Great Recession, changes in the use of credit, use of tax-preferred retirement savings accounts, and a broad range of other issues.

"This survey is one of the nation's primary sources of information on the financial condition of different types of households," Federal Reserve Board Chairman Ben S. Bernanke said in a letter to prospective survey participants. "Our previous surveys…have helped the Federal Reserve and other parts of the government make policy decisions and have also supported a wide variety of basic research, public discussion, and education."

Participants in the study are chosen at random from 127 areas, including metropolitan areas and rural counties across the United States, using a scientific sampling procedure. A representative of NORC contacts each potential participant personally to explain the study and request time for an interview.

"I assure you that we give the highest priority to guarding the privacy of all survey participants and the confidentiality of their answers," Chairman Bernanke said. NORC uses names and addresses only for the administration of the survey, and that identifying information will be destroyed at the close of the study. NORC is required never to give the names and addresses of participants to anyone at the Federal Reserve or anywhere else.

Summary results for the 2013 study will be published in early 2015 after all data from the survey have been assessed and analyzed.

The attached letter from Chairman Bernanke will be mailed in mid-April to approximately 13,000 households urging their participation in the study.

For media inquiries, call 202-452-2955

Chairman Bernanke's Letter

Survey of Consumer Finances


March 22, 2013
Increase in Required Electronic Loan Data Fields

Federal and state bank supervisors today announced an increase in the number of required loan data fields in the Interagency Loan Data Request (ILDR). The federal agencies making today's announcement were the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency. They were joined by the Conference of State Bank Supervisors (CSBS).

The ILDR is a voluntary, standardized data request that banks can use to electronically submit loan information for safety and soundness examinations. The electronic collection of this loan level data reduces the time that examiners spend compiling the information, giving them more time to verify and analyze the data. In turn, banks benefit from a more efficient examination process.

While participation in the ILDR is voluntary, certain data fields are mandatory for those who choose to electronically submit the information. The federal agencies and the CSBS are now increasing the number of required fields from five to 30 to facilitate greater consistency in the data submission process. There are 82 fields in total.

The attachment provides a list of the data fields and highlights the required fields. Other than the change in the number of required fields, the ILDR format and layout remain unchanged. Financial institutions using the ILDR should provide the new required loan data fields for examinations starting on September 30, 2013.

Table of Data Fields for Interagency Loan Data Request (ILDR) (PDF)

Media Contacts:
FDIC Greg Hernandez (202) 898-6984
Federal Reserve Barbara Hagenbaugh (202) 452-2955
OCC Bryan Hubbard (202) 649-6870
CSBS Catherine Woody (202) 728-5733

March 21, 2013
Agencies Issue Updated Leveraged Lending Guidance

Federal bank regulatory agencies today released updated supervisory guidance on leveraged lending, which has been increasing since 2009 after declining during the financial crisis.

The guidance from the Federal Reserve Board, the Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency (the agencies) covers transactions characterized by a borrower with a degree of financial leverage that significantly exceeds industry norms. The guidance replaces guidance issued in April 2001.

Before the financial crisis, the volume of leveraged credit transactions grew tremendously and participation by non-regulated investors willing to accept looser terms increased. While leveraged lending declined during the crisis, volumes have since increased and prudent underwriting practices have deteriorated. For example, some debt agreements have included features that weaken lender protection by excluding meaningful maintenance covenants and including other features that can limit lenders' recourse in the event of weakened borrower performance. In addition, capital and repayment structures for some transactions, whether originated to hold or to distribute, have been aggressive. Management information systems at some institutions have proven less than satisfactory in accurately aggregating exposures on a timely basis.

It is important that banks provide leveraged financing to creditworthy borrowers in a safe and sound manner.

The guidance issued today focuses attention on the following key areas:

  • Establishing a sound risk-management framework: The agencies expect that management and the board of directors identify the institution's risk appetite for leveraged finance, establish appropriate credit limits, and ensure prudent oversight and approval processes.
  • Underwriting standards: An institution's underwriting standards should clearly define expectations for cash flow capacity, amortization, covenant protection, collateral controls, and the underlying business premise for each transaction, and should consider whether the borrower's capital structure is sustainable, regardless of whether the transaction is underwritten to hold or to distribute.
  • Valuation standards: An institution's standards should concentrate on the importance of sound methods in the determination and periodic revalidation of enterprise value.
  • Pipeline management: An institution should be able to accurately measure exposure on a timely basis; establish policies and procedures that address failed transactions and general market disruptions; and ensure periodic stress tests of exposures to loans not yet distributed to buyers.
  • Reporting and analytics: An institution should ensure that management information systems accurately capture key obligor characteristics and aggregates them across business lines and legal entities on a timely basis, with periodic reporting to the institution's board of directors.
  • Risk rating leveraged loans: An institution's risk rating standards should consider the use of realistic repayment assumptions to determine a borrower's ability to de-lever to a sustainable level within a reasonable period of time.
  • Participants: An institution that participates in leveraged loans should establish underwriting and monitoring standards similar to loans underwritten internally.
  • Stress testing: An institution should perform stress testing on leveraged loans held in portfolio as well as those planned for distribution, in accordance with existing interagency issuances.

This guidance applies to financial institutions supervised by the agencies that engage in leveraged lending activities. The number of community banks with substantial involvement in leveraged lending is small and they should be largely unaffected by this guidance.

Attachment (237 KB PDF)

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


March 20, 2013
FOMC Releases Statement

Information received since the Federal Open Market Committee met in January suggests a return to moderate economic growth following a pause late last year. Labor market conditions have shown signs of improvement in recent months but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy has become somewhat more restrictive. Inflation has been running somewhat below the Committee's longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee continues to see downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

The Committee will closely monitor incoming information on economic and financial developments in coming months. The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives.

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

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Charles L. Evans; Jerome H. Powell; Sarah Bloom Raskin; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.


March 20, 2013
Fed Board and FOMC Release Economic Projections From the March 19-20 Meeting

The attached table and charts released on Wednesday summarize the economic projections and the target federal funds rate projections made by Federal Reserve Board members and Federal Reserve Bank presidents for the March 19–20 meeting of the Federal Open Market Committee.

The table will be incorporated into a summary of economic projections released with the minutes of the March 19–20 meeting. Summaries of economic projections are released quarterly.

Projections (PDF) | Accessible Materials


March 18, 2013
Proposed Revisions to Interagency Questions and Answers Regarding Community Reinvestment

The federal bank regulatory agencies today requested comment on proposed revisions to "Interagency Questions and Answers Regarding Community Reinvestment." The Questions and Answers document provides additional guidance to financial institutions and the public on the agencies' Community Reinvestment Act (CRA) regulations.

The proposed revisions focus primarily on community development. Community development activities are considered as part of the CRA performance tests for large institutions, intermediate small institutions, and wholesale and limited purpose institutions. Small institutions may use community development activity to receive consideration toward an outstanding CRA rating. Among other things, the proposed amendments would:

  • Clarify how the agencies consider community development activities that benefit a broader statewide or regional area that includes an institution's assessment area.
  • Provide guidance related to CRA consideration of, and documentation associated with, investments in nationwide funds.
  • Clarify the consideration of certain community development services.
  • Address the treatment of qualified investments to organizations that use only a portion of the investment to support a community development purpose.
  • Clarify that community development lending should be evaluated in such a way that it may have a positive, neutral, or negative impact on the large institution lending test rating.

The proposed revisions are being issued by the Federal Reserve Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency. The notice that will be published in the Federal Register is attached. Comments will be due 60 days after that publication, which is expected shortly.

For more information on the CRA, including these Questions and Answers and the agencies' CRA regulations, visit the Federal Financial Institutions Examination Council website at: http://www.ffiec.gov/cra.

Attachment (161 KB PDF)

Media Contacts:
Federal Reserve Board Susan Stawick 202-452-2955
FDIC Greg Hernandez 202-898-6984
OCC William Grassano 202-649-6870

March 15, 2013
Federal Reserve System Publishes Annual Financial Statements

The Federal Reserve System on Friday released the 2012 combined annual financial statements for the Federal Reserve Banks, as well as for the 12 individual Federal Reserve Banks, the consolidated variable interest entities (VIEs) that were created to respond to strains in financial markets, and the Board of Governors. These financial statements are audited annually by an independent auditing firm.

The Federal Reserve Banks' 2012 net income before providing for remittances to the U.S. Treasury was $90.6 billion. The Reserve Banks provided for remittances to the U.S. Treasury of $88.4 billion.

The Reserve Banks' net income was derived primarily from $80.5 billion in interest income on securities acquired through open market operations--U.S. Treasury securities, government-sponsored enterprise (GSE) debt securities, and federal agency and GSE mortgage-backed securities (MBS). Realized gains on sales of Treasury securities during the year were $13.3 billion, and net earnings attributable to the consolidated VIEs totaled $6.0 billion.

Total Reserve Bank assets as of December 31, 2012, were $2.9 trillion, which is approximately the same as at the end of the previous year. Holdings of U.S. Treasury securities increased by $58.9 billion, and federal agency and GSE MBS holdings increased by $102.1 billion. GSE debt securities holdings decreased by $28.3 billion, and balances held under central bank liquidity swap arrangements decreased by $90.9 billion.

Investments held by the consolidated VIEs decreased from $35.7 billion to $2.8 billion as a result of the sale of investments during the year. Proceeds from the sale of investments were used to repay, in full, loans extended by the Federal Reserve Bank of New York to Maiden Lane LLC, Maiden Lane II LLC, and Maiden Lane III LLC.

Loans outstanding under the Term Asset-Backed Securities Lending Facility decreased from $9.1 billion to $0.6 billion in 2012 as a result of principal payments and loan prepayments.

The Federal Reserve System financial statements are available on the Federal Reserve Board's website at www.federalreserve.gov/monetarypolicy/bst_fedfinancials.htm.

For media inquiries, call 202-452-2955.


March 14, 2013
Fed Announces Results of Comprehensive Capital Analysis and Review

The Federal Reserve on Thursday announced it has approved the capital plans of 14 financial institutions in the Comprehensive Capital Analysis and Review (CCAR). Two other institutions received conditional approval, while the Federal Reserve objected to the plans of two firms.

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

When considering an institution's capital plan, the Federal Reserve considers both qualitative and quantitative factors. These include a firm's capital ratios under severe economic and financial market stress, the strength of the firm's capital planning process, and the institution's plans to meet new Basel 3 capital requirements as they would be implemented in the United States. After the Federal Reserve objects to a capital plan, the institution may only make capital distributions with prior written approval from the Federal Reserve.

"Now in its third year, the Federal Reserve's review of capital plans provides a regular, structured, and comparative way to promote and assess the capacity of large bank holding companies to understand and manage their capital positions, with particular emphasis on risk-measurement practices," Federal Reserve Gov. Daniel Tarullo said. "The financial crisis showed not only that regulators needed to increase capital requirements and conduct regular stress tests, but also that firms need strong internal processes to evaluate their own capital needs based on their individual risks and circumstances."

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

The Federal Reserve did not object to the capital plans for American Express Company; Bank of America Corporation; The Bank of New York Mellon Corporation; Capital One Financial Corporation; Citigroup, Inc.; Fifth Third Bancorp; KeyCorp; Morgan Stanley; The PNC Financial Services Group, Inc.; Regions Financial Corporation; State Street Corporation; SunTrust Banks, Inc.; U.S. Bancorp; and Wells Fargo & Company.

The Federal Reserve did not object to the capital plans for The Goldman Sachs Group, Inc., and JP Morgan Chase & Co., but required the two institutions to submit new capital plans by the end of the third quarter to address weaknesses in their capital planning processes. The Federal Reserve objected to the capital plans of Ally Financial, Inc., and BB&T Corporation.

U.S. firms have substantially increased their capital since the first set of government stress tests in 2009. The weighted tier 1 common equity ratio, which compares high-quality capital to risk-weighted assets, of the 18 bank holding companies in the 2013 CCAR has more than doubled from 5.6 percent at the end of 2008 to 11.3 percent in the fourth quarter of 2012, reflecting an increase in tier 1 common equity from $393 billion to $792 billion during the same period. The 18 institutions hold more than 70 percent of the total assets of all U.S. bank holding company assets.

The stronger capital position is due in part to substantially lower capital distributions by bank holding companies than before the financial crisis. The 18 institutions paid out 19 percent of net income in common dividends in 2012, half of what they paid out as a percentage of net income before the financial crisis in 2006.

For media inquiries, call 202-452-2955.

Comprehensive Capital Analysis and Review 2013: Assessment Framework and Results (1.42 MB PDF)

Stress Test Methodology and Results (1.97 MB PDF)


March 13, 2013
Fed Changes Timing of FOMC Statements and News Conferences

The Federal Reserve announced on Wednesday that, to better facilitate the release of information in conjunction with the Chairman's quarterly news conferences, the time between the release of the Federal Open Market Committee's statement and the beginning of the news conference is being reduced.

Committee policy statements for all regularly scheduled meetings will now be released at 2 p.m. Eastern Time. For meetings with news conferences, the Committee's current economic projections will also be released at 2 p.m. Eastern Time, and the Chairman's news conference will begin at approximately 2:30 p.m. Eastern Time.

For media inquiries, call 202-452-2955.


March 12, 2013
Fed Announces Results of Auction of $3 Billion in 28-day Term Deposits

On March 11, 2013, the Federal Reserve conducted an auction of $3 billion in 28-day term deposits through its Term Deposit Facility. Following are the results of the auction:

TDF Auction ID: A29
Competitive Amount Offered: $3,000,000,000
Competitive Amount Tendered: $9,415,000,000
Competitive Amount Awarded: $3,000,010,000
Non-Competitive Amount Awarded: $45,100,000
Total Amount Awarded: $3,045,110,000
Stop-Out Rate: 0.25500 percent
Bid-to-Cover Ratio (Competitive Auction): 3.14
Number of Bids Submitted: 41
Number of Participants Submitting Bids: 25

Bids at the stop-out rate were pro-rated at 53.037 percent. Resulting awards were rounded to the nearest $10,000 except that all awards below $10,000 were rounded up to $10,000.

The awarded deposits will settle on March 14, 2013, and will mature on April 11, 2013. The stop-out rate shown above will apply to all awarded deposits.


March 07, 2013
Federal Reserve Releases Summary Results of Bank Stress Tests

The nation's largest bank holding companies have continued to improve their ability to withstand an extremely adverse hypothetical economic scenario and are collectively in a much stronger capital position than before the financial crisis, according to the summary results of bank stress tests announced by the Federal Reserve on Thursday.

Reflecting the severity of the stress scenario--which includes a peak unemployment rate of 12.1 percent, a drop in equity prices of more than 50 percent, a decline in housing prices of more than 20 percent, and a sharp market shock for the largest trading firms--projected losses at the 18 bank holding companies would total $462 billion during the nine quarters of the hypothetical stress scenario. The aggregate tier 1 common capital ratio, which compares high-quality capital to risk-weighted assets, would fall from an actual 11.1 percent in the third quarter of 2012 to 7.7 percent in the fourth quarter of 2014 in the hypothetical stress scenario.

The Federal Reserve's stress scenario estimates are the outcome of deliberately stringent and conservative assessments under hypothetical, adverse economic conditions and the results are not forecasts or expected outcomes.

Despite the large hypothetical declines, the aggregate post-stress capital ratio exceeds the actual aggregate tier 1 common ratio for the 18 firms of approximately 5.6 percent at the end of 2008, prior to the government stress tests conducted in the midst of the financial crisis in early 2009. This is the third round of stress tests led by the Federal Reserve since the tests in 2009, but is the first year that the Federal Reserve has conducted stress tests pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Federal Reserve's implementing regulations.

"The stress tests are a tool to gauge the resiliency of the financial sector," Federal Reserve Governor Daniel K. Tarullo said. "Significant increases in both the quality and quantity of bank capital during the past four years help ensure that banks can continue to lend to consumers and businesses, even in times of economic difficulty."

For media inquiries, call 202-452-2955

Stress Test Methodology and Results (1.97 MB PDF)


March 06, 2013
Federal Reserve Offers $3 Billion in 28-day Term Deposits through Its Term Deposit Facility

On Monday, March 11, 2013, the Federal Reserve will offer $3 billion in 28-day term deposits through its Term Deposit Facility. As noted in the Federal Reserve Board's September 8, 2010 release, this offering is part of ongoing small-value operations designed to provide eligible institutions with an opportunity to become familiar with term deposit operations. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation D, and the terms and conditions of the Term Deposit Facility (http://www.frbservices.org/centralbank/term_deposit_facility.html offsite icon).

Description of Offering and Competitive Auction Parameters

TDF Auction ID: A29
Offering Amount: $3,000,000,000
Term: 28 days
Auction Date: Monday, March 11, 2013
Opening Time: 10:00 a.m. ET
Closing Time: 2:00 p.m. ET
Notification Date: Tuesday, March 12, 2013
Settlement Date: Thursday, March 14, 2013
Maturity Date: Thursday, April 11, 2013
Competitive Auction Parameters
Maximum Number of Bids: 3
Minimum Bid Amount (per bid): $10,000
Bid Increment: $10,000
Maximum Bid Amount (per institution): $1,250,000,000
Maximum Bid Rate: 0.75000%
Incremental Bid Rate: 0.00100%
Award Minimum Amount: $10,000
Award Maximum Amount: $1,250,000,000


Competitive bids submitted at the stop-out rate will be pro-rated and 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.

Non-Competitive bids are allowed in this auction. All non-competitive bids will be automatically awarded in full at the stop-out rate of the competitive auction. The minimum amount for a non-competitive bid is $10,000; the maximum amount is $5,000,000 and should be submitted in increments of $10,000. Non-Competitive bids must be submitted between 10:00 a.m. ET and 2:00 p.m. ET on the auction date.

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

Notification
Summary auction results will be published on the Board of Governors' website (http://www.federalreserve.gov/monetarypolicy/tdf.htm offsite icon) at approximately 12:00 p.m. (noon) ET on the notification date. Soon after, results will be posted on the Term Deposit Facility Resource Center page of the Central Bank Central website (http://www.frbservices.org/centralbank/term_deposit_facility.html offsite icon). Participant awards will be posted to the Term Deposit Facility application at approximately 12:00 p.m. ET on the notification date, and participants will be able to view their awards by accessing the Term Deposit Facility application.


March 05, 2013
Board Publishes Report on Debit Card Transactions in 2011

The Federal Reserve Board on Tuesday published a report containing summary information on the volume and value, interchange fee revenue, certain debit card issuer costs, and fraud losses related to debit card transactions in 2011. The report is the second in a series to be published every two years pursuant to section 920 of the Electronic Fund Transfer Act (EFTA).

The Board's Regulation II (Debit Card Interchange Fees and Routing), which implements this provision of the EFTA, provides that a debit card issuer subject to the interchange fee standard (a covered issuer) may not receive an interchange fee that exceeds 21 cents plus 5 basis points multiplied by the value of the transaction, plus a 1-cent fraud-prevention adjustment, if eligible. The regulation does not apply to debit card issuers with consolidated assets of less than $10 billion, certain government-administered debit cards, and certain prepaid cards. The interchange fee standard became effective on October 1, 2011.

Covered issuers' costs of authorizing, clearing, and settling (ACS) debit card transactions, excluding fraud losses, varied greatly across respondents in 2011, with the median issuer having an average ACS cost of 11 cents and the issuer at the 75th percentile having an average ACS cost of 36 cents. Issuers with the highest debit card transaction volume generally had the lowest ACS costs per transaction as reflected in an overall average of 5 cents per transaction. Conversely, issuers with the smallest debit card programs generally had the highest ACS costs per transaction.

The Board estimated debit-card fraud losses to all parties (merchants, cardholders, and issuers) to be $1.38 billion in 2011, with an average loss of approximately 8 basis points per debit card transaction, down slightly from 2009. The median covered issuer's average fraud loss per transaction was nearly 5 basis points, the same as in 2009. The median covered issuer had average fraud prevention and data security costs of slightly less than 1.5 cents per transaction.

The Board does not plan to propose revisions to the Regulation II interchange fee standard or the fraud-prevention adjustment based on these survey data. Sixty-seven percent of covered issuers had average ACS costs below 21 cents (the base component of the interchange fee standard) in 2011. This proportion is lower than the 80 percent of covered issuers with average ACS costs below 21 cents in 2009 due to the addition of first-time survey respondents, most of whom are foreign banking organizations or other covered issuers with very small debit card programs and high ACS costs per transaction. Issuers that responded to both the 2009 and 2011 data collections typically reported ACS costs per transaction that were lower in 2011 than in 2009. Covered issuers that had average ACS costs below 21 cents in 2011 processed well over 99 percent of all reported covered transactions, the same proportion as in 2009.

The median issuer fraud loss, which serves as the basis for the ad valorem portion of the interchange fee standard, is essentially unchanged from 2009 (5 basis points). Further, when rounded to the nearest cent, the median fraud-prevention and data security costs remained at

1 cent per transaction (the current fraud-prevention adjustment).

2011 Interchange Fee Revenue, Covered Issuer Costs, and Covered Issuer and Merchant Fraud Losses Related to Debit Card Transactions (PDF)

For media inquiries, call 202-452-2955.


February 28, 2013
Amendments to Consent Orders Memorialize $9.3 Billion Foreclosure Agreement

WASHINGTON--The Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board today released amendments to their enforcement actions against 13 mortgage servicers for deficient practices in mortgage loan servicing and foreclosure processing. The amendments require the servicers to provide $9.3 billion in payments and other assistance to borrowers.

The amendments memorialize agreements in principle announced in January with Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo. The amount includes $3.6 billion in cash payments and $5.7 billion in other assistance to borrowers such as loan modifications and forgiveness of deficiency judgments.

Borrowers covered by the amendments include 4.2 million people whose homes were in any stage of the foreclosure process in 2009 or 2010 and whose mortgages were serviced by one of the companies listed above. These borrowers are expected to be contacted by the Paying Agent--Rust Consulting, Inc.--by the end of March 2013 with payment details. The Paying Agent will send payments and correspondence.

Borrowers covered by the amendments are expected to receive compensation ranging from hundreds of dollars up to $125,000. Borrowers are not required to take any additional steps to receive the payments. In addition, borrowers will not be required to execute a waiver of any legal claims they may have against their servicer as a condition for receiving payment.

Borrowers can call the Paying Agent at 1-888-952-9105 to update their contact information or to verify that they are covered by the amendments.

In providing the $5.7 billion in assistance, the 13 servicers are expected to undertake well-structured loss mitigation efforts focused on foreclosure prevention, with preference given to activities designed to keep borrowers in their homes through affordable, sustainable, and meaningful home preservation actions.

Borrowers seeking assistance should work directly with their servicer or a counselor approved by the U.S. Department of Housing and Urban Development (HUD). Borrowers can reach HUD-approved counselors by calling 888-995-HOPE (4673).

OCC and Federal Reserve examiners continue to monitor the servicers’ implementation of corrective actions required by the original enforcement actions to address unsafe and unsound mortgage servicing and foreclosure practices.

For the 13 servicers, these amendments to the enforcement actions replace the requirements related to the Independent Foreclosure Review. For GMAC Mortgage, Everbank, and OneWest, which did not enter agreements in principle with federal regulators, the Independent Foreclosure Review process continues. Regulators expect the reviews for these servicers to be completed over the course of the coming year. These companies service 457,000 mortgages that were in some stage of foreclosure in 2009 or 2010.

Related Links:

Amendments to the Consent Orders issued by the OCC
Aurora Bank FSB (PDF)
Bank of America, N.A. (PDF)
Citibank, N.A. (PDF)
HSBC Bank USA, N.A. (PDF)
JP Morgan Chase Bank, N.A. (PDF)
MetLife Bank, N.A. (PDF)
PNC Bank, N.A. (PDF)
Sovereign Bank, National Association (PDF)
U.S. Bank National Association and U.S. Bank National Association ND (PDF)
Wells Fargo Bank, N.A. (PDF)

Amendments to the Consent Orders issued by the Federal Reserve
Bank of America Corporation (PDF)
Citigroup Inc., and Citifinancial Credit Company (PDF)
The Goldman Sachs Group, Inc., and Goldman Sachs Bank U.S.A. (PDF)
HSBC North America Holdings, Inc., and HSBC Finance Corporation (PDF)
JPMorgan Chase & Co. and EMC Mortgage Corporation (PDF)
Morgan Stanley (PDF)
The PNC Financial Services Group, Inc. (PDF)
SunTrust Banks, Inc., SunTrust Bank, and SunTrust Mortgage, Inc. (PDF)
U.S. Bancorp (PDF)
Wells Fargo & Company (PDF)

Media Contacts:
Federal Reserve Board Barbara Hagenbaugh 202-452-2955
OCC Bryan Hubbard 202-649-6870

February 26, 2013
Federal Reserve Board Announces Proposed Rule Regarding Federal Reserve Bank Accounts and Services for Financial Market Utilities Designated as Systemically Important

The Federal Reserve Board on Tuesday requested comment on a proposed rule to amend Regulation HH to set out the conditions and requirements for a Federal Reserve Bank to open and maintain accounts for and provide financial services to financial market utilities designated as systemically important by the Financial Stability Oversight Council.

In addition, the proposed rule, which implements provisions of Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, would authorize a Reserve Bank to pay interest on the balances maintained by a designated financial market utility in accordance with the title and other terms and conditions as the Board may prescribe.

The Board is requesting public comment on all aspects of the proposed amendments to Regulation HH contained in the attached Federal Register notice. Comments on the proposal will be due 60 days after the rule is published in the Federal Register, which is expected shortly.

For media inquiries, call 202-452-2955.

Attachment (295 KB PDF)


February 22, 2013
Federal Reserve Board Extends Comment Period on Proposed Rule to Implement Enhanced Prudential Standards and Early Remediation Requirements Until April 30, 2013

The Federal Reserve Board has extended until April 30, 2013, the comment period on a proposed rule to implement the enhanced prudential standards and early remediation requirements established under sections 165 and 166 of the Dodd-Frank Wall Street Reform and Consumer Protection Act for foreign banking organizations and foreign nonbank financial companies supervised by the Board. The enhanced prudential standards include risk-based capital and leverage requirements, liquidity standards, risk management and risk committee requirements, single-counterparty credit limits, and stress test requirements.

The Board extended the comment period to allow interested persons more time to analyze the issues and prepare their comments. Originally, comments were due by March 31, 2013.

Attachment (11 KB PDF)


February 20, 2013
Minutes of the Federal Open Market Committee, January 29–30, 2013

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on January 29–30, 2013.

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

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

For media inquiries, call 202-452-2955.

Minutes of the Federal Open Market Committee
January 29-30, 2013: HTML | PDF


January 30, 2013
FOMC to Maintain Current Monetary Policy

Information received since the Federal Open Market Committee met in December suggests that growth in economic activity paused in recent months, in large part because of weather-related disruptions and other transitory factors. Employment has continued to expand at a moderate pace but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has shown further improvement. Inflation has been running somewhat below the Committee's longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. Although strains in global financial markets have eased somewhat, the Committee continues to see downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.

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

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Charles L. Evans; Jerome H. Powell; Sarah Bloom Raskin; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.


January 28, 2013
Federal Reserve Board Announces Release Dates For Results from Supervisory Stress Tests and From the Comprehensive Capital Analysis and Review (CCAR)

The Federal Reserve Board on Monday announced that results from the supervisory stress tests conducted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act will be released on Thursday, March 7, and the related results from the Comprehensive Capital Analysis and Review, or CCAR, will be released on Thursday, March 14. Results will be released for both exercises at 4:30 p.m. Eastern Time.

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

CCAR is an annual exercise by the Federal Reserve to help assess whether the largest bank holding companies have sufficient capital to continue operations during the upcoming two-year period assuming economic and financial stress and have robust, forward-looking capital planning processes that account for their unique risks and are supported by the firms' risk-measurement and -management practices. As part of the CCAR, the Federal Reserve evaluates each company's plans to make capital distributions, such as dividend payments, stock repurchases, or planned acquisitions. CCAR results include capital ratios under a severely adverse scenario provided by the Federal Reserve, and reflect the capital actions the companies plan to undertake.

Also on Monday, the Federal Reserve Board released the global market shock component of the adverse and severely adverse scenarios used in the latest Dodd-Frank Act stress tests and the CCAR to evaluate the capital positions of the six bank holding companies with significant trading operations. The Federal Reserve Board previously had issued publicly the macroeconomic scenarios for the current stress test cycle.

To see the global market shock data and some of the templates for the results to be issued in March, and for more general information on the Dodd-Frank Act stress tests and the CCAR, go to www.federalreserve.gov/bankinforeg/stress-tests-capital-planning.htm. offsite icon

For media inquiries, call 202-452-2955.


January 18, 2013
Agencies Issue Final Rule on Appraisals for Higher-Priced Mortgage Loans

WASHINGTON--Six federal financial regulatory agencies today issued the final rule that establishes new appraisal requirements for "higher-priced mortgage loans." The rule implements amendments to the Truth in Lending Act made by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act). Under the Dodd-Frank Act, mortgage loans are higher-priced if they are secured by a consumer's home and have interest rates above certain thresholds.

For higher-priced mortgage loans, the rule requires creditors to use a licensed or certified appraiser who prepares a written appraisal report based on a physical visit of the interior of the property. The rule also requires creditors to disclose to applicants information about the purpose of the appraisal and provide consumers with a free copy of any appraisal report.

If the seller acquired the property for a lower price during the prior six months and the price difference exceeds certain thresholds, creditors will have to obtain a second appraisal at no cost to the consumer. This requirement for higher-priced home-purchase mortgage loans is intended to address fraudulent property flipping by seeking to ensure that the value of the property legitimately increased.

The rule exempts several types of loans, such as qualified mortgages, temporary bridge loans and construction loans, loans for new manufactured homes, and loans for mobile homes, trailers and boats that are dwellings. The rule also has exemptions from the second appraisal requirement to facilitate loans in rural areas and other transactions.

The rule is being issued by the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the National Credit Union Administration, and the Office of the Comptroller of the Currency. The Federal Register notice is attached. The rule will become effective on January 18, 2014.

In response to public comments, the agencies intend to publish a supplemental proposal to request additional comment on possible exemptions for "streamlined" refinance programs and small dollar loans, as well as to seek clarification on whether the rule should apply to loans secured by existing manufactured homes and certain other property types.

Media Contacts:
Federal Reserve Board Susan Stawick (202) 452-2955
CFPB Moira Vahey (202) 435-9151
FDIC Greg Hernandez (202) 898-6984
FHFA Stefanie Johnson (202) 649-3030
NCUA Kenzie Snowden (703) 518-6334
OCC Stephanie Collins (202) 649-6870

Attachment (1.1 MB PDF) offsite icon


January 17, 2013
Federal Reserve Banks Announce New Study to Examine Nation's Payments Usage

The Federal Reserve's Retail Payments Office (RPO), located at the Federal Reserve Bank in Atlanta, today announced plans to conduct a new study to determine the current volume and composition of electronic and check payments in the United States. This triennial study continues the research conducted by the Federal Reserve in 2001, 2004, 2007, and 2010.

"While the Federal Reserve's 2013 Payments Study will continue to build upon trend information gathered in previous studies, this year's study casts a broader net across the evolving payments landscape," said Jim McKee, RPO senior vice president and the study's executive sponsor. "The 2013 study will provide additional data on electronic payment methods, cash deposit and withdrawal information and, for the first time, limited third-party fraud information, in an effort to provide the industry with further insight on emerging trends."

The 2013 Federal Reserve Payments Study consists of three survey efforts commissioned to estimate the annual number, dollar value and composition of retail noncash payments in the United States. Together, the survey efforts will provide aggregate estimates and current trends in the use of payment instruments by U.S. consumers and businesses. Previous studies have revealed significant changes in the U.S. payments system over time, including a continuing decline in the use of checks and growing use of electronic payments, such as automated clearinghouse, electronic banking transactions, credit cards, debit cards and stored value cards. The Federal Reserve will work with the Global Concepts office of McKinsey & Company and Blueflame Consulting, LLC to conduct this research study. Preliminary results should be released by late 2013.

"The industry-wide participation in past studies has been extensive, appreciated and necessary in allowing us to continue to offer meaningful results," McKee said. "We hope to continue to garner robust industry support in this mutually beneficial effort."

More information about Federal Reserve Financial Services can be found at www.frbservices.org offsite icon This site also contains links to the four previous Payments Studies.

* * *

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

Under FSPC oversight, the Retail Payments Office was established to direct the retail payments activities of the Federal Reserve Banks. With its main focus on the Check and Automated Clearing House functions, the RPO works with Reserve Banks to undertake comprehensive and far-reaching initiatives to improve the payments system.


January 15, 2013
Federal Reserve Board Announces Agreement with Treasury Department Regarding Credit Protection for the Term Asset-Backed Securities Loan Facility (TALF)

The Federal Reserve Board on Tuesday announced that it agreed with the Treasury Department that the credit protection Treasury has provided for the Term Asset-Backed Securities Loan Facility (TALF) is no longer necessary because the accumulated fees collected through TALF exceed the amount of TALF loans outstanding. The TALF remains a joint Treasury-Federal Reserve program, and the Treasury and Federal Reserve will continue to consult on the administration of the program.

During the financial crisis, after asset-backed securities markets seized up, the Federal Reserve Bank of New York lent $71 billion under the TALF to investors in highly rated asset-backed securities (ABS) and commercial mortgage-backed securities (CMBS). By encouraging issuance of ABS and CMBS, the TALF supported the economy by increasing credit availability to American households and businesses. Nearly all TALF loans have been repaid or matured. As of January 9, 2013, TALF loans outstanding totaled $556 million. Accumulated fees collected through TALF totaled $743 million through January 9, 2013.

TALF, which began operating in March 2009, was originally authorized to lend up to $200 billion, with the Treasury's Troubled Asset Relief Program (TARP) providing $20 billion in credit protection. When the program closed on June 30, 2010, $43 billion in loans, with initial maturities of three or five years, were outstanding and the Board agreed at that time to a reduction in TARP credit protection to $4.3 billion. By June 20, 2012, loans outstanding totaled $5.3 billion and the Board then agreed to a reduction in TARP credit protection to $1.4 billion. Borrowers have continued to repay their loans early at a rapid pace, in part because interest rates on TALF loans were designed to be higher than market rates in more-normal conditions. Additionally, most three-year TALF loans have matured. All remaining loans are well collateralized and current in payments of interest and principal.

TALF supported the origination of nearly 3 million auto loans, more than 1 million student loans, nearly 900,000 loans to small businesses, 150,000 other business loans, and millions of credit card loans.

For media inquiries, call 202-452-2955.


January 15, 2013
Federal Reserve Announces Results of Auction of $3 Billion in 28-day Term Deposits Held on January 14, 2013

On January 14, 2013, the Federal Reserve conducted an auction of $3 billion in 28-day term deposits through its Term Deposit Facility. Following are the results of the auction:

TDF Auction ID: A28
Competitive Amount Offered: $3,000,000,000
Competitive Amount Tendered: $5,680,000,000
Competitive Amount Awarded: $3,000,000,000
Non-Competitive Amount Awarded: $36,010,000
Total Amount Awarded: $3,036,010,000
Stop-Out Rate: 0.26000 percent
Bid-to-Cover Ratio (Competitive Auction): 1.89
Number of Bids Submitted: 32
Number of Participants Submitting Bids: 20

Bids at the stop-out rate were pro-rated at 45.575 percent. Resulting awards were rounded to the nearest $10,000 except that all awards below $10,000 were rounded up to $10,000.

The awarded deposits will settle on January 17, 2013, and will mature on February 14, 2013. The stop-out rate shown above will apply to all awarded deposits.


January 10, 2013
Reserve Bank Income and Expense Data and Transfers to the Treasury for 2012

The Federal Reserve Board on Thursday announced preliminary unaudited results indicating that the Reserve Banks provided for payments of approximately $88.9 billion of their estimated 2012 net income to the U.S. Treasury. Under the Board's policy, the residual earnings of each Federal Reserve Bank are distributed to the U.S. Treasury, after providing for the costs of operations, payment of dividends, and the amount necessary to equate surplus with capital paid-in.

The Federal Reserve Banks' 2012 estimated net income of $91.0 billion was derived primarily from $80.5 billion in interest income on securities acquired through open market operations (U.S. Treasury securities, federal agency and government-sponsored enterprise (GSE) mortgage-backed securities (MBS), and GSE debt securities). Additional earnings were derived primarily from net realized gains on the sale of U.S. Treasury securities of $13.3 billion, net income of $6.1 billion attributable to the consolidated limited liability companies that were created in response to the financial crisis, and income from services of $450 million, offset by losses of $1.1 billion that result from the daily revaluation of foreign currency denominated asset holdings at current exchange rates. The Reserve Banks had interest expense of $3.9 billion on depository institutions' reserve balances.

Operating expenses of the Reserve Banks, net of amounts reimbursed by the U.S. Treasury and other entities for services the Reserve Banks provided as fiscal agents, totaled $3.7 billion in 2012. In addition, the Reserve Banks were assessed $1.2 billion for the cost of new currency and Board expenditures, and $387 million to fund the operations of the Bureau of Consumer Financial Protection and Office of Financial Research. In 2012, statutory dividends totaled $1.6 billion and $461 million of net income was used to equate surplus to capital paid-in.

The preliminary unaudited results include valuation adjustments as of September 30 for Term Asset-Backed Securities Loan Facility (TALF) loans and the consolidated limited liability companies. The final results, which will be presented in the Reserve Banks' annual audited financial statements and the Board of Governors' Annual Report, will reflect valuation adjustments as of December 31.

The attached chart illustrates the amount of Federal Reserve Banks' residual earnings distributed to the U.S. Treasury from 2003 through 2012 (estimated).

For media inquiries, call 202-452-2955

Attachment (72 KB PDF)


January 09, 2013
Federal Reserve Offers $3 Billion in 28-day Term Deposits through its Term Deposit Facility

On Monday, January 14, 2013, the Federal Reserve will offer $3 billion in 28-day term deposits through its Term Deposit Facility. As noted in the Federal Reserve Board's September 8, 2010 release, this offering is part of ongoing small-value operations designed to provide eligible institutions with an opportunity to become familiar with term deposit operations. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation D, and the terms and conditions of the Term Deposit Facility (http://www.frbservices.org/centralbank/term_deposit_facility.html).

Description of Offering and Competitive Auction Parameters

TDF Auction ID: A28
Offering Amount: $3,000,000,000
Term:   28 days
Auction Date: Monday, January 14, 2013
Opening Time: 10:00 a.m. ET
Closing Time: 2:00 p.m. ET
Notification Date: Tuesday, January 15, 2013
Settlement Date: Thursday, January 17, 2013
Maturity Date: Thursday, February 14, 2013
   
Competitive Auction Parameters  
Maximum Number of Bids: 3
Minimum Bid Amount (per bid): $10,000
Bid Increment: $10,000
Maximum Bid Amount (per institution): $1,250,000,000
Maximum Bid Rate: 0.75000%
Incremental Bid Rate: 0.00100%
Award Minimum Amount: $10,000
Award Maximum Amount: $1,250,000,000

Competitive bids submitted at the stop-out rate will be pro-rated and 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.

Non-Competitive bids are allowed in this auction. All non-competitive bids will be automatically awarded in full at the stop-out rate of the competitive auction. The minimum amount for a non-competitive bid is $10,000; the maximum amount is $5,000,000 and should be submitted in increments of $10,000. Non-Competitive bids must be submitted between 10:00 a.m. ET and 2:00 p.m. ET on the auction date.

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

Notification
Summary auction results will be published on the Board of Governors' website (http://www.federalreserve.gov/monetarypolicy/tdf.htm) at approximately 12:00 p.m. (noon) ET on the notification date. Soon after, results will be posted on the Term Deposit Facility Resource Center page of the Central Bank Central website (http://www.frbservices.org/centralbank/term_deposit_facility.html) Participant awards will be posted to the Term Deposit Facility application at approximately 12:00 p.m. ET on the notification date, and participants will be able to view their awards by accessing the Term Deposit Facility application.


January 07, 2013
Independent Foreclosure Review to Provide $3.3 Billion in Payments, $5.2 Billion in Mortgage Assistance

WASHINGTON--Ten mortgage servicing companies subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing have reached an agreement in principle with the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board to pay more than $8.5 billion in cash payments and other assistance to help borrowers.

The sum includes $3.3 billion in direct payments to eligible borrowers and $5.2 billion in other assistance, such as loan modifications and forgiveness of deficiency judgments. The payments involve mortgage servicers operating under enforcement actions issued in April 2011 by the OCC, the Federal Reserve, and the Office of Thrift Supervision. The agreement ensures that more than 3.8 million borrowers whose homes were in foreclosure in 2009 and 2010 with the participating servicers will receive cash compensation in a timely manner.

Eligible borrowers are expected to receive compensation ranging from hundreds of dollars up to $125,000, depending on the type of possible servicer error.

This agreement includes Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo. For these participating servicers, fulfillment of the agreement would meet the requirements of the enforcement actions that mandated that the servicers retain independent consultants to conduct an Independent Foreclosure Review.

As a result of this agreement, the participating servicers would cease the Independent Foreclosure Review, which involved case-by-case reviews, and replace it with a broader framework allowing eligible borrowers to receive compensation significantly more quickly. The OCC and the Federal Reserve accepted this agreement because it provides the greatest benefit to consumers subject to unsafe and unsound mortgage servicing and foreclosure practices during the relevant period in a more timely manner than would have occurred under the review process. Eligible borrowers will receive compensation whether or not they filed a request for review form, and borrowers do not need to take further action to be eligible for compensation.

A payment agent will be appointed to administer payments to borrowers on behalf of the servicers. Eligible borrowers are expected to be contacted by the payment agent by the end of March with payment details. Borrowers will not be required to execute a waiver of any legal claims they may have against their servicer as a condition for receiving payment. In addition, the servicers' internal complaint process will remain available to borrowers.

The agencies continue to work to reach similar agreements in principle with other servicers that are not parties to the agreement announced today, but that are also subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing.

OCC and Federal Reserve examiners are continuing to closely monitor the servicers' implementation of plans required by the enforcement actions issued in April 2011 to correct the unsafe and unsound mortgage servicing and foreclosure practices.

Media Contacts:
Federal Reserve Board Barbara Hagenbaugh 202-452-2955
OCC Bryan Hubbard 202-649-6870

January 03, 2013
Minutes of the Federal Open Market Committee, December 11–12, 2012

The Federal Reserve Board and the Federal Open Market Committee on Thursday released the attached minutes of the Committee meeting held on December 11–12, 2012. A summary of economic projections made by Federal Reserve Board members and Reserve Bank presidents for the December 11–12, 2012 meeting is also included as an addendum to these minutes.

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

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

Minutes of the Federal Open Market Committee
December 11-12, 2012: HTML | PDF


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