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F ederal Reserve Bank of Dallas H E L EN E. H O L C O M B DALLAS, TEXAS F I R S T V I C E P R E S I D E N T AND 75265-5906 C H IE F O P E R A T I N G O F F I C E R December 7, 1998 Notice 98-113 TO: The Chief Operating Officer of each financial institution and others concerned in the Eleventh Federal Reserve District SUBJECT Amendment to Regulation D (Reserve Requirements of Depository Institutions) DETAILS The Board of Governors of the Federal Reserve System has amended Regulation D (Reserve Requirements o f Depository Institutions) to decrease from $47.8 million to $46.5 million the amount of transaction accounts subject to a reserve requirement ratio of three percent. This adjustment is known as the low reserve tranche adjustment. The Board has increased from $4.7 million to $4.9 million the amount of reservable liabilities of each depository institution that is subject to a reserve requirement of zero percent. Additionally, the Board has changed the deposit cutoff levels that are used in conjunc tion with the reservable liabilities exemption to determine the frequency of deposit reporting. The deposit cutoff levels were increased from $78.9 million to $81.9 million for nonexempt depository institutions and from $50.7 million to $52.6 million for exempt depository institu tions. For depository institutions that report weekly, the low reserve tranche adjustment and the reservable liabilities exemption adjustment will apply to the reserve computation period that begins Tuesday, December 1, 1998, and the corresponding reserve maintenance period that begins Thursday, December 31, 1998. For institutions that report quarterly, the low reserve tranche adjustment and the reservable liabilities exemption adjustment will apply to the reserve computation period that begins Tuesday, December 15, 1998, and the corresponding reserve maintenance period that begins Thursday, January 14, 1999. For additional copies, bankers and others are encouraged to use one o f the follow ing toll-free numbers in contacting the Federal Reserve Bank o f Dallas: Dallas O ffice (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; Houston Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) ATTACHMENT A copy of the Board’s notice as it appears on pages 65660-63, Vol. 63, No. 229 of the Federal Register dated November 30, 1998, is attached. MORE INFORMATION For more information regarding reserve requirements, please contact this Bank’s Reserve and Risk Management Division at (214) 922-5646. Depository institutions in the El Paso territory should contact the Reserve Maintenance Division in the El Paso Office at (915) 521-8213. Depository institutions in the Houston territory should contact the Reserve Mainte nance Division in the Houston Office at (713) 652-1538. Depository institutions in the San Antonio territory should contact the Reserve Maintenance Division in the San Antonio Office at (210) 978-1426. For additional copies of this Bank’s notice, contact the Public Affairs Department at (214) 922-5254. Sincerely, 4 |k Monday November 30,1 (A 5) DC $ Federal Reserve System 12 CFR Part 204 t t Regulation D (Docket No. R Reserve Requirements of Depository institutions IL 65660 Federal Register/Vol. 63, No. 229/M onday, November 30, 1998/Rules and Regulations percent, as required by section 19(b)(2)(C) of the Federal Reserve Act, from $47.8 million to $46.5 million of net transaction accounts. This adjustment is known as the low reserve tranche adjustment. The Board is increasing from $4.7 million to $4.9 million the amount of reserveable liabilities of each depository institution that is subject to a reserve requirement of zero percent. This action is required by section 19(b)(ll)(B) of the Federal Reserve Act, and the adjustment is known as the reserveable liabilities exemption adjustment. The Board is also increasing the deposit cutoff levels that are used in conjunction with the reserveable liabilities exemption to determine the frequency of deposit reporting from $78.9 million to $81.9 million for nonexempt depository institutions and from $50.7 million to $52.6 million for exempt institutions. (Nonexempt institutions are those with total reserveable liabilities exceeding the amount exempted from reserve requirements ($4.9 million) while exempt institutions are those with total reserveable liabilities not exceeding the amount exempted from reserve requirements.) Thus, beginning in September 1999, nonexempt institutions with total deposits of $81.9 million or more will be required to report weekly while nonexempt institutions with total deposits less than $81.9 million may report quarterly, in both cases on form FR 2900. Similarly, exempt institutions with total deposits of $52.6 million or more will be required to report quarterly on form FR 2910q while exempt institutions with total deposits less than $52.6 million may report annually on form FR 2910a. Effective date: December 1,1998. Compliance dates: For depository institutions that report weekly, the low reserve tranche adjustment and the reserveable liabilities exemption adjustment will apply to the reserve computation period that begins Tuesday, December 1, 1998, and the corresponding reserve maintenance period that begins Thursday, December 31, 1998. For institutions that report quarterly, the low reserve tranche adjustment and the reserveable liabilities exemption adjustment will apply to the reserve computation period that begins Tuesday, December 15, 1998, and the corresponding reserve maintenance period that begins Thursday, January 14, 1999. For all depository institutions, the deposit cutoff levels will be used to screen institutions in the second quarter of 1999 to determine the reporting D A TES: FEDERAL RESERVE SYSTEM 12CFR Part 204 [Regulation D; Docket No. R-1026] Reserve Requirements of Depository Institutions Board of Governors of the Federal Reserve System. ACTION: Final rule. AG EN CY : The Board is amending Regulation D, Reserve Requirements of Depository Institutions, to decrease the amount of transaction accounts subject to a reserve requirement ratio of three SUMMARY: Federal Register/ Vol. 63, No. 2 2 9 /M o n d ay , N ovem ber 30, 1 9 9 8 /R u le s and Regulations frequency for the twelve month period that begins in September 1999. FOR FURTHER INFORMATION CO NTA CT: Rick Heyke, Attorney (202/452-3688), Legal Division, or June O’Brien, Economist (202/452—3790), Division of Monetary Affairs; for the hearing impaired only, contact Diane Jenkins, Telecommunications Device for the Deaf (TDD) (202/452-3544); Board of Governors of the Federal Reserve System, 20th and C Streets, NW, Washington, DC 20551. SU PP LE M E N T A RY 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. The initial reserve requirements imposed under section 19(b)(2) were set at three percent for net transaction accounts of $25 million or less and at 12 percent on net transaction accounts above $25 million for each depository institution. Effective April 2, 1992, the Board lowered the required reserve ratio applicable to transaction account balances exceeding the low reserve tranche from 12 percent to 10 percent. 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 adjustment in the tranche is to be 80 percent of the percentage increase or decrease in net transaction accounts at all depository institutions over the one-year period that ends on June 30 prior to the adjustment. Currently, the low reserve tranche on net transaction accounts is $47.8 million. Net transaction accounts of all depository institutions decreased by 3.5 percent (from $713.6 billion to $688.6 billion) from June 30, 1997, to June 30, 1998. In accordance with section 19(b)(2), the Board is amending Regulation D (12 CFR Part 204) to decrease the low reserve tranche for transaction accounts for 1998 by $1.3 million to $46.5 million. Section 19(b)(ll)(A) of the Federal Reserve Act (12 U.S.C. 461(b)(ll)(B)) provides that $2 million of reserveable liabilities 1 of each depository institution shall be subject to a zero percent reserve requirement. Each depository institution may, in accordance with the rules and 1 Reservable liabilities include transaction accounts, nonpersonal time deposits, and Eurocurrency liabilities as defined in section 19(b)(5) of the Federal Reserve Act. The reserve ratio on nonpersonal time deposits and Eurocurrency liabilities is zero percent. 65661 regulations of the Board, designate the Thursday, January 14,1999. In addition, reserveable liabilities to which this all institutions currently submitting reserve requirement exemption is to form FR 2900 must continue to submit apply. However, if net transaction reports to the Federal Reserve under accounts are designated, only those that current reporting procedures. would otherwise be subject to a three In order to reduce the reporting percent reserve requirement (i.e., net burden for small institutions, the Board transaction accounts within the low has established deposit reporting cutoff reserve requirement tranche) may be so levels to determine deposit reporting designated. frequency. Institutions are screened Section 19(b)(ll)(B) of the Federal during the second quarter of each year Reserve Act provides that, before to determine reporting frequency December 31 of each year, the Board beginning the following September. In shall issue a regulation adjusting for the July of 1988 the Board set a single cutoff next calendar year the dollar amount of level for all depository institutions of reserveable liabilities exempt from $40 million plus an amount equal to 80 reserve requirements. Unlike the percent of the annual rate of increase of adjustment for the low reserve tranche total deposits.3 In August of 1994, the on net transaction accounts, which Board replaced the single deposit cutoff adjustment can result in a decrease as level that had applied to both well as an increase, the change in the nonexempt and exempt institutions exemption amount is to be made only if with separate cutoff levels, increasing the total reserveable liabilities held at the cutoff level for nonexempt all depository institutions increase from institutions, and in September 1997 one year to the next. The percentage further increased the cutoff level for increase in the exemption is to be 80 nonexempt institutions to $75.0 million. percent of the increase in total In September 1998, the cutoff level for reserveable liabilities of all depository nonexempt institutions, which institutions as of the year ending June determines whether they report (on FR 30. Total reserveable liabilities of all 2900) quarterly or weekly, was raised to depository institutions increased by 4.6 $78.9 million, and the deposit cutoff percent (from $1,821.2 billion to level for exempt institutions, which $1,904.6 billion) from June 30, 1997, to determines whether they report June 30,1998. Consequently, the annually (on FR 2910a) or quarterly (on reserveable liabilities exemption FR 2910q), was raised to $50.7 million. amount for 1999 under section From June 30, 1997, to June 30, 1998, 19(b)(ll)(B) will be increased by $0.2 total deposits increased 4.8 percent, million to $4.9 million.2 from $4,441.3 billion to $4,653.2 billion. The effect of the application of section Accordingly, the nonexempt deposit 19(b) of the Federal Reserve Act to the cutoff level will increase by $3.0 million change in the total net transaction to $81.9 million and the exempt deposit accounts and the change in the total cutoff level will increase by $1.9 million reserveable liabilities from June 30, to $52.6 million. Based on the 1997, to June 30, 1998, is to decrease the indexation of the reserveable liabilities low reserve tranche to $46.5 million, to exemption, the cutoff level for total apply a zero percent reserve deposits above which reports of requirement on the first $4.9 million of deposits must be filed will rise from transaction accounts, and to apply a $4.7 million to $4.9 million. Institutions three percent reserve requirement on the with total deposits below $4.9 million remainder of the low reserve tranche. will be excused from reporting if their The tranche adjustment and the deposits can be estimated from other reserveable liabilities exemption data sources. The $81.9 million cutoff adjustment for weekly reporting level for weekly versus quarterly FR institutions will be effective for the 2900 reporting for nonexempt reserve computation period beginning institutions, the $52.6 million cutoff Tuesday, December 1, 1998, and for the level for quarterly FR 2910q versus corresponding reserve maintenance annual FR 2910a reporting for exempt period beginning Thursday, December institutions, and the $4.9 million level 31, 1998. For institutions that report threshold for reporting will be used in quarterly, the tranche adjustment and the second quarter 1999 deposits report the reserveable liabilities exemption screening process, and the adjustments adjustment will be effective for the will be made when the new deposit computation period beginning Tuesday, December 15, 1998, and for the reserve 3 “Total deposits” as used in determining the maintenance period beginning cutoff level includes not only gross transaction deposits, savings accounts, and time deposits, but 2 Consistent with Board practice, the tranche and also reservable obligations of affiliates, ineligible acceptance liabilities, and net Eurocurrency exemption amounts have been rounded to the liabilities. nearest $0.1 million. 65662 Federal Register/Vol. 63, No. 229/M onday, November 30, 1998/Rules and Regulations reporting panels are implemented in September 1999. All U.S. branches and agencies of foreign banks and all Edge and agreement corporations, regardless of size, are required to file weekly the Report of Transaction Accounts, Other Deposits and Vault Cash (FR 2900). After the indexations become effective in 1999, all other institutions that have reserveable liabilities in excess of the exemption level of $4.9 million prescribed by section 19(b)(ll) of the Federal Reserve Act (known as “nonexempt institutions”) and total deposits at least equal to the nonexempt deposit cutoff level ($81.9 million) will be required to file weekly the Report of Transaction Accounts, Other Deposits and Vault Cash (FR 2900) for the twelve month period starting September 1999. However, nonexempt institutions with total deposits less than the nonexempt deposit cutoff level ($81.9 million), will be able to file the FR 2900 quarterly. Institutions that obtain funds from nonU.S. sources or that have foreign branches or international banking facilities are required to file the Report of Certain Eurocurrency Transactions (FR 2950/2951) at the same frequency as they file the FR 2900. Institutions with reserveable liabilities at or below the exemption level ($4.9 million) (known as exempt institutions) will be required to file the Quarterly Report of Selected Deposits, Vault Cash, and Reserveable Liabilities (FR 291 Oq) if their total deposits equal or exceed the exempt deposit cutoff level ($52.6 million). Exempt institutions with total deposits less than the exempt deposit cutoff level ($52.6 million) but at least equal to the exemption amount ($4.9 million) will be able to file the Annual Report of Total Deposits and Reserveable Liabilities (FR 2910a). Institutions that have total deposits less than the exemption amount ($4.9 million) are not required to file deposit reports if their deposits can be estimated from other data sources. Finally, the Board may require a depository institution to report on a weekly basis, regardless of the cutoff level, if the institution manipulates its total deposits and other reservable liabilities in order to qualify for quarterly reporting. Similarly, any depository institution that reports quarterly may be required to report weekly and to maintain appropriate reserve balances with its Reserve Bank if, during its computation period, it understates its usual reservable liabilities or overstates the deductions allowed in computing required reserve balances. Notice and Public Participation The provisions of 5 U.S.C. 553(b) relating to notice and public participation have not been followed in connection with the adoption of these amendments because the amendments involve expected, ministerial adjustments prescribed by statute and by an interpretative statement reaffirming the Board’s policy concerning reporting practices. Moreover, the low reserve tranche adjustment and the reservable liabilities exemption adjustment are required to be effective for the next calendar year even though the data which they are required to reflect axe only available late in the prior year. In addition, the reservable liabilities exemption adjustment and the increases for reporting purposes in the deposit cutoff levels reduce regulatory burdens on depository institutions, and the low reserve tranche adjustment will have a de m inim is effect on depository institutions with net transaction accounts exceeding $46.5 million. Accordingly, the Board finds good cause for determining, and so determines, that notice and public participation is unnecessary, impracticable, or contrary to the public interest. The provisions of 5 U.S.C. 553(d) relating to notice of the effective date of a rule have not been followed in connection with the adoption of these amendments because the low reserve tranche adjustment and the reservable liabilities adjustment are expected, ministerial amendments prescribed by statute. Moreover, they are required to be effective for the next calendar year even though the data which they are required to reflect are only available late in the prior year. In addition, the reservable liabilities adjustment and the increase in deposit cutoff levels for reporting purposes relieve a restriction on depository institutions, and the low reserve tranche will have a de minimis effect on depository institutions with net transaction accounts exceeding $46.5 million. Accordingly, there is good cause to determine, and the Board so determines, that such notice is impracticable or unnecessary. Regulatory Flexibility Analysis The Board certifies that these amendments will not have a substantial economic impact on small depository institutions. See “Notice and Public Participation” above. List of Subjects in 12 CFR Part 204 Banks, banking, Reporting and recordkeeping requirements. 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) 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. 2. Section 204.9 is revised to read as follows: § 204.9 Reserve requirement ratios. (a) Reserve percentages. The following reserve ratios are prescribed for all depository institutions, Edge and Agreement corporations, and United States branches and agencies of foreign banks: Reserve requirement1 Category Net transaction accounts: $0 to $46.5 million .................................................................................... Over $46.5 m illion..................................................................................... Nonpersonal time deposits ....................................................................... Eurocurrency liabilities .............................................................................. 3 percent of amount. $1,395,000 plus 10 percent of amount over $46.5 million. 0 percent. 0 percent. 1 Before deducting the adjustment to be made by paragraph (b) of this section. (b) Exemption from reserve requirements. Each depository institution, Edge or agreement corporation, and U.S. branch or agency of a foreign bank is subject to a zero percent reserve requirement on an amount of its transaction accounts subject to the low reserve tranche in paragraph (a) of this section not in excess of $4.9 million determined in accordance with § 204.3(a)(3). Federal Register/Vol. 63, No. 229/M onday, November 30, 1998/Rules and Regulations By order of the Board of Governors of the Federal Reserve System, Novem ber 23, 1998. J e n n i f e r J. J o h n s o n , Secretary o f the Board. [FR Doc. 9 8 -3 1 7 6 4 Filed 1 1 -2 7 -9 8 ; 8:45 am] BILLING CODE 6 210 -01 -P 65663 FEDERAL RESERVE BANK OF DALLAS P.O. BOX 6 5 5 9 0 6 DALLAS, TX 7 5 2 6 5 - 5 9 0 6
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