[Code of Federal Regulations]
[Title 12, Volume 2, Parts 200 to 219]
[Revised as of January 1, 1999]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR201.3]

[Page 7-8]
 
                       TITLE 12--BANKS AND BANKING
 
                   CHAPTER II--FEDERAL RESERVE SYSTEM
 
PART 201--EXTENSIONS OF CREDIT BY FEDERAL RESERVE BANKS (REGULATION A)--Table of Contents
 
Sec. 201.3  Availability and terms.

    (a) Adjustment credit. Federal Reserve Banks extend adjustment 
credit on a short-term basis to depository institutions to assist in 
meeting temporary requirements for funds or to cushion more persistent 
shortfalls of fundspending an orderly adjustment of a borrowing 
institution's assets and liabilities. Such credit generally is available 
only for appropriate purposes and after reasonable alternative sources 
of funds have been fully used, including credit from special industry 
lenders such as Federal Home Loan Banks, the National Credit Union 
Administration's Central Liquidity Facility, and corporate central 
credit unions. Adjustment credit is usually granted at the basic 
discount rate, but under certain circumstances a special rate or rates 
above the basic discount rate may be applied.
    (b) Seasonal credit. Federal Reserve Banks extend seasonal credit 
for periods longer than those permitted under adjustment credit to 
assist smaller depository institutions in meeting regular needs for 
funds arising from expected patterns of movement in their deposits and 
loans. A special rate or rates at or above the basic discount rate may 
be applied to seasonal credit.
    (1) Seasonal credit is only available if:
    (i) The depository institution's seasonal needs exceed a threshold 
that the institution is expected to meet from other sources of liquidity 
(this threshold is calculated as certain percentages, established by the 
Board of Governors, of the institution's average total deposits in the 
preceding calendar year);
    (ii) The Federal Reserve Bank is satisfied that the institution's 
qualifying need for funds is seasonal and will persist for at least four 
weeks; and
    (iii) Similar assistance is not available from special industry 
lenders.
    (2) The Board may establish special terms for seasonal credit when 
depository institutions are experiencing unusual seasonal demands for 
credit in a period of liquidity strain.
    (c) Extended credit. Federal Reserve Banks extend credit to 
depository institutions under extended credit arrangements where similar 
assistance is not reasonably available from other sources, including 
special industry lenders. Such credit may be provided where there are 
exceptional circumstances or practices affecting a particular depository 
institution including sustained deposit drains, impaired access to money 
market funds, or sudden deterioration in loan repayment performance. 
Extended credit may also be provided to accommodate the needs of 
depository institutions, including those with longer term asset 
portfolios, that may be experiencing difficulties adjusting to changing 
money market conditions over a longer period, particularly at times of 
deposit disintermediation. A special rate or rates above the basic 
discount rate may be applied to extended credit.
    (d) Emergency credit for others. In unusual and exigent 
circumstances, a Federal Reserve Bank may, after consultation with the 
Board of Governors, advance credit to individuals, partnerships, and 
corporations that are not depository institutions if, in the judgment of 
the Federal Reserve Bank, credit is not available from other sources and 
failure to obtain such credit would adversely affect the economy. The 
rate applicable to such credit will be above the highest rate in effect 
for advances to depository institutions. Where the collateral used to 
secure such credit consists of assets other than obligations of, or 
fully guaranteed as to principal and interest by, the United States or 
an agency thereof, an

[[Page 8]]

affirmative vote of five or more members of the Board of Governors is 
required before credit may be extended.

[58 FR 68513, Dec. 28, 1993]