[Federal Register: October 7, 2005 (Volume 70, Number 194)]
[Rules and Regulations]
[Page 58603-58605]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07oc05-1]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
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[[Page 58603]]
FEDERAL RESERVE SYSTEM
12 CFR Part 204
[Regulation D; Docket No. R-1236]
Reserve Requirements of Depository Institutions
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Final rule.
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SUMMARY: The Board is amending Regulation D, Reserve Requirements of
Depository Institutions, to reflect the annual indexing of the low
reserve tranche and of the reserve requirement exemption amount for
2006. The Regulation D amendments increase the amount of net
transaction accounts at each depository institution that is subject to
a three percent reserve requirement in 2006 from $47.6 million to $48.3
million. This amount is known as the low reserve tranche. The
Regulation D amendments also increase the amount of total reservable
liabilities of each depository institution that is subject to a zero
percent reserve requirement in 2006 from $7.0 million to $7.8 million.
This amount is known as the reserve requirement exemption amount. The
adjustments to both of these amounts are derived using statutory
formulas specified in the Federal Reserve Act.
The Board is also announcing increases in two other amounts, the
nonexempt deposit cutoff level and the reduced reporting limit, that
are used to determine the frequency with which depository institutions
must submit deposit reports. These amounts are indexed annually in
order to reduce reporting burden for smaller depository institutions.
DATES: Effective date: November 7, 2005.
Compliance dates: For depository institutions that report weekly,
the adjusted low reserve tranche and reserve requirement exemption
amount will apply to the fourteen-day reserve computation period that
begins Tuesday, November 22, 2005, and the corresponding fourteen-day
reserve maintenance period that begins Thursday, December 22, 2005. For
depository institutions that report quarterly, the adjusted low reserve
tranche and reserve requirement exemption amount will apply to the
seven-day reserve computation period that begins Tuesday, December 20,
2005, and the corresponding seven-day reserve maintenance period that
begins Thursday, January 19, 2006. For all depository institutions, the
nonexempt deposit cutoff level, the reserve requirement exemption
amount, and the reduced reporting limit will be used for 2006 deposit
report screening to determine reporting frequency for the twelve-month
period that begins in September 2006.
FOR FURTHER INFORMATION CONTACT: Heatherun Allison, Senior Counsel
(202/452-3565), Legal Division, or Gretchen Weinbach, Senior Economist
(202/452-2841), Division of Monetary Affairs; for user of
Telecommunications Device for the Deaf (TDD) only, contact (202/263-
4869); Board of Governors of the Federal Reserve System, 20th and C
Streets, NW., Washington, DC 20551.
SUPPLEMENTARY INFORMATION: Section 19(b)(2) of the Federal Reserve Act
(12 U.S.C. 461(b)(2)) requires each depository institution to maintain
reserves against its transaction accounts and nonpersonal time
deposits, as prescribed by Board regulations, for the purpose of
implementing monetary policy. Section 11(a)(2) of the Federal Reserve
Act (12 U.S.C. 248(a)(2)) authorizes the Board to require reports of
liabilities and assets from depository institutions to enable the Board
to conduct monetary policy. The Board's actions with respect to each of
these provisions are discussed in turn below.
1. Reserve Requirements. Pursuant to section 19(b)(2) of the
Federal Reserve Act, transaction account balances maintained at each
depository institution up to a certain amount, known as the low reserve
tranche, are subject to a three percent reserve requirement.
Transaction account balances over the low reserve tranche are subject
to a ten percent reserve requirement. Section 19(b)(2) also provides
that, before December 31 of each year, the Board shall issue a
regulation adjusting the low reserve tranche for the next calendar
year. The Act requires the adjustment in the low reserve tranche to be
80 percent of the percentage increase or decrease in total transaction
accounts of all depository institutions over the one-year period that
ends on the June 30 prior to the adjustment.
Currently, the low reserve tranche is $47.6 million. Net
transaction accounts of all depository institutions rose 1.8 percent
(from $700.4 billion to $713.1 billion) between June 30, 2004 and June
30, 2005. Accordingly, the Board is amending Regulation D (12 CFR part
204) to increase the low reserve tranche for net transaction accounts
by $0.7 million, from $47.6 million for 2005 to $48.3 million for 2006.
Section 19(b)(11)(A) of the Federal Reserve Act (12 U.S.C.
461(b)(11)(A)) provides that a zero percent reserve requirement shall
apply at each depository institution to total reservable liabilities
that do not exceed a certain amount, known as the reserve requirement
exemption amount.
Section 19(b)(11)(B) provides that, before December 31 of each
year, the Board shall issue a regulation adjusting the reserve
requirement exemption amount for the next calendar year if total
reservable liabilities held at all depository institutions increase
from one year to the next. Unlike the low reserve tranche, which can be
adjusted upward or downward, no adjustment is made to the reserve
requirement exemption amount if total reservable liabilities held at
all depository institutions should decrease during the applicable time
period. The Act requires the percentage increase in the reserve
requirement exemption amount to be 80 percent of the increase in total
reservable liabilities of all depository institutions over the one-year
period that ends on the June 30 prior to the adjustment.
Total reservable liabilities of all depository institutions
increased by 13.7 percent (from $2,946.2 billion to $3,350.0 billion)
between June 30, 2004, and June 30, 2005. Accordingly, the Board is
amending Regulation D to increase the reserve requirement exemption
amount by $0.8 million, from
[[Page 58604]]
$7.0 million for 2005 to $7.8 million for 2006.\1\
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\1\ Consistent with Board practice, the low reserve tranche and
reserve requirement exemption amounts have been rounded to the
nearest $0.1 million.
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For depository institutions that report weekly, the adjusted low
reserve tranche and reserve requirement exemption amount will be
effective for the fourteen-day reserve computation period beginning
Tuesday, November 22, 2005, and for the corresponding fourteen-day
reserve maintenance period beginning Thursday, December 22, 2005. For
depository institutions that report quarterly, the adjusted low reserve
tranche and reserve requirement exemption amount will be effective for
the seven-day reserve computation period beginning Tuesday, December
20, 2005, and for the corresponding seven-day reserve maintenance
period beginning Thursday, January 19, 2006.
2. Deposit Reports. Section 11(b)(2) of the Federal Reserve Act
authorizes the Board to require depository institutions to file reports
of their liabilities and assets as the Board may determine to be
necessary or desirable to enable it to discharge its responsibility to
monitor and control the monetary and credit aggregates. The Board
screens depository institutions each year and assigns them to one of
four deposit reporting panels (weekly reporters, quarterly reporters,
annual reporters, or nonreporters). An institution's panel assignment
is effective with the annual deposit panel shifts in September of the
screening year.
In order to ease the reporting burden, the Board permits
institutions with net transaction account above the reserve requirement
exemption amount but with total deposits below a specified level (the
``nonexempt deposit cutoff'') to report quarterly. The Board requires
certain large depository institutions to report weekly regardless of
the level of their net transaction accounts if their total deposits
exceed a specified level (the ``reduced reporting limit''). The annual
adjustment to the first amount, the reserve requirement exemption
amount, is described in Section 1 above. The nonexempt deposit cutoff
level and the reduced reporting limit are also adjusted annually, by an
amount equal to 80 percent of the increase, if any, in total deposits
of all depository institutions over the one-year period that ends on
the June 30 prior to the adjustment.
Total deposits at all depository institutions increased 8.3 percent
(from $6,962.1 billion to $7,540.4 billion) between June 30, 2004 and
June 30, 2005. Accordingly, the Board is adjusting the nonexempt
deposit cutoff level upward by $11.3 million, from its current level of
$169.8 million for 2005 to $181.1 million for 2006. The Board is also
adjusting the reduced reporting limit upward by $75 million, from its
current level of $1.131 billion for 2005 to $1.206 billion for 2006.\2\
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\2\ Consistent with Board practice, the nonexempt deposit cutoff
level has been rounded to the nearest $0.1 million, while the
reduced reporting limit has been rounded to the nearest $1 million.
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Beginning in September 2006, the boundaries of the four deposit
reporting panels will be defined as follows. Those depository
institutions with net transaction accounts over $7.8 million (the
reserve requirement exemption amount) or total deposits greater than or
equal to $1.206 billion (the reduced reporting limit) are subject to
detailed reporting, and must file an FR 2900 report either weekly or
quarterly. Of this group, those with total deposits greater than or
equal to $181.1 million (the nonexempt deposit cutoff level) are
required to file the FR 2900 report each week, while those with total
deposits less than $181.1 million are required to file the FR 2900
report each quarter. Those depository institutions with net transaction
accounts less than or equal to $7.8 million (the reserve requirement
exemption amount) and with total deposits less than $1.206 billion (the
reduced reporting limit) are eligible for reduced reporting, and must
either file a deposit report annually or not at all. Of this group,
those with total deposits greater than $7.8 million (but less than
$1.206 billion) are required to file the FR 2910a report annually,
while those with total deposits less than or equal to $7.8 million are
not required to file a deposit report. A depository institution that
manipulates its reporting, however, in an attempt to qualify for less
frequent reporting or to reduce its reserve requirement may be required
to report the FR 2900 on a weekly basis and maintain appropriate
reserve balances with its Reserve Bank, regardless of its most recent
panel assignment.
Notice and Regulatory Flexibility Act. The provisions of 5 U.S.C.
553(b) relating to notice of proposed rulemaking have not been followed
in connection with the adoption of these amendments. The amendments
involve expected, ministerial adjustments prescribed by statute and by
the Board's policy concerning reporting practices. The increases in the
reserve requirement exemption amount, the low reserve tranche, the
nonexempt deposit cutoff level, and the reduced reporting limit serve
to reduce regulatory burdens on depository institutions. Accordingly,
the Board finds good cause for determining, and so determines, that
notice in accordance with 5 U.S.C. 553(b) is unnecessary. Consequently,
the provisions of the Regulatory Flexibility Act, 5 U.S.C. 601, do not
apply to these amendments.
List of Subjects in 12 CFR Part 204
Banks, Banking, Reporting and recordkeeping requirements.
0
For the reasons set forth in the preamble, the Board is amending 12 CFR
part 204 as follows:
PART 204--RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS
(REGULATION D)
0
1. The authority citation for part 204 continues to read as follows:
Authority: 12 U.S.C. 248(a), 248(c), 371a, 461, 601, 611, and
3105.
0
2. Section 204.9 is revised to read as follows:
Sec. 204.9 Reserve requirement ratios.
The following reserve requirement ratios are prescribed for all
depository institutions, banking Edge and agreement corporations, and
United States branches and agencies of foreign banks:
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Category Reserve requirement
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Net transaction accounts:
$0 to $7.8 million..................... 0 percent of amount.
Over $7.8 million and up to $48.3 3 percent of amount.
million.
Over $48.3 million..................... $1,215,000 plus 10 percent of amount over $48.3 million.
Nonpersonal time deposits.................. 0 percent.
Eurocurrency liabilities................... 0 percent.
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[[Page 58605]]
By order of the Board of Governors of the Federal Reserve
System, October 4, 2005.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 05-20299 Filed 10-6-05; 8:45 am]
BILLING CODE 6210-01-P