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Federal R eserve Bank OF DALLAS ROBERT D. M C T E E R , J R . DALLA S, TEX AS p re s id e n t A N D C H IE F E X E C U T I V E O F F I C E R 7 5 2 6 5 -5 9 0 6 July 17, 1997 Notice 97-60 TO: The Chief Executive Officer or Branch Manager of each financial institution and others concerned in the Eleventh Federal Reserve District SUBJECT Amendments to Regulation D (Reserve Requirements of Depository Institutions) and Regulation I (Issue and Cancellation of Capital Stock of Federal Reserve Banks) DETAILS The Board of Governors of the Federal Reserve System has announced amendments to Regulation D and Regulation I to define the location of a depository institution to facilitate interstate branching. The amendments clarify the Federal Reserve District where a depository institution is eligible for Federal Reserve membership and the location of a depository institution’s reserve account. To provide for expeditious handling of location determinations, the Board also amended its delegation rules to allow the Secretary of the Board to make such determinations under Regulation D or Regulation I. The final amendments are effective October 1, 1997. ATTACHMENTS Copies of the Board’s notices as they^appear on pages 34613-17, Vol. 62, No. 124, of the Federal Register dated June 27, 1997, are attached. For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal Reserve Bank of Dallas: Dallas Office (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) -2- MORE INFORMATION For more information regarding Regulation D, please contact the Reserve Management Division at (214) 922-5646 at the Dallas Office. 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 Maintenance 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 more information regarding Regulation I, please contact Claude Davis at (214) 922-5607. For additional copies of this Bank’s notice, please contact the Public Affairs Department at (214) 922-5254. Sincerely yours, Federal Register / Vol. 62, No. 124 / Friday, June 27, 1997 / Rules and Regulations 34613 FEDERAL RESERVE SYSTEM 12CFR Parts 204 and 209 [Regulations D and I; Docket No. R -0963] Reserve Requirements of Depository Institutions and Issue and Cancellation of Capital Stock of Federal Reserve Banks B oard of G overnors of the F ederal Reserve System . ACTION: F in al rule. AGENCY: SUMMARY: T he B oard is am en d in g R egulations D an d I, Reserve R eq uirem en ts of D epository In stitutio ns a n d Issue an d C ancellation of C apital Stock of F ederal Reserve Banks, respectively, to define th e lo catio n of a d ep o sito ry in stitu tio n for p u rp o ses of F ederal Reserve m em b ersh ip an d reserve ac co u n t m ain ten an ce. T hese am en d m e n ts w ill facilitate in terstate banking. 34614 Federal Register / Vol. 62, No. 124 / Friday, June 27, 1997 / Rules and Regulations O ctober 1 ,19 97. w h ere ac co u n t entries are posted . Every n a tio n a l b a n k is re q u ire d to becom e a m em b er a n d sto ck h o ld er of th e F ederal O liver Irelan d, A ssociate G eneral Reserve Bank of its d istrict (FRA section C ounsel, (202/452-3625) or S teph an ie 2(1)). State banks m ay a p p ly to the M artin, S enior A tto rney (202/452 B oard to su bscrib e to th e stock of the 3198), Legal D ivision. For th e hearing F ederal Reserve B ank organized w ith in im p aired only, co ntact D iane Jenkins, T eleco m m u n icatio n s D evice for th e D eaf the d istrict in w h ic h th e ap p ly in g ban k is located (FRA section 9(1)). T hese (TDD) (202/452-3544), B oard of p ro v ision s suggest th a t m em b ersh ip is G overnors of th e F ederal Reserve lim ite d to one F ed eral Reserve Bank an d System , 20th a n d C Streets, N.W., th a t m e m b ersh ip is to be d eterm in e d by W ashington, D.C. 20551. th e geographical lo cation of th e bank. SUPPLEMENTARY INFORMATION: R ecent A b a n k m u st h o ld reserves at th e statu to ry changes have e lim in ate d m any F ed eral Reserve B ank of w h ic h it is a barriers to in terstate b an k in g .1 C onsequently, th e n u m b e r of d epo sitory m em b er or w h ere it m a in ta in s an ac co u n t (FRA sectio n 19(c)(1)). in stitu tio n s th a t operate b ran c h es in Therefore, a n o n m e m b er b a n k w o u ld m ore th a n one F ederal Reserve D istrict h o ld its reserve ac co u n t at th e Reserve is ex pected to increase. O n January 2, B ank w h ere it m a in ta in s an ac co u n t for 1998, th e F ederal Reserve Banks w ill p u rp o ses of ch eck collection a n d other begin to im p le m e n t a n ew acco unt p ay m en ts services. FRA section 13(1) stru ctu re th a t w ill p ro v id e a single pro v id es th a t th e n o n m e m b er b an k m ay F ed eral Reserve ac co u n t for each m a in ta in th is clearing ac co u n t w ith the do m estic d ep o sito ry in stitu tio n . F ederal Reserve B ank of its district. T he a d v e n t of interstate ban kin g C harter or h e a d office lo catio n is th e raises q u estio ns as to h o w certain sta tu s quo u n d e r th e FRA as to w here p ro v isions of th e F ederal Reserve A ct a b a n k is lo cated for m em b ersh ip (FRA)2 w ill a p p ly to banks w ith p u rp o ses a n d n o n m e m b er reserve in terstate b ran ch es. M any of these a c co u n t pu rp o ses. The N ation al B ank q u estion s are rela te d to a b a n k ’s A ct req uires a n a tio n al b a n k ’s “ lo c atio n .” To date, th e B oard a n d th e organizatio n certificate to state th e place F ed eral Reserve Banks generally have w h ere its o p eratio ns o f d isc o u n t an d in te rp re te d th e te rm “ lo c atio n ,” as u se d d ep o sit are to b e carried on, designating in th e FRA, to m e an th e geographic th e state, territory, or district, an d the lo catio n of a bank, h eav ily in flu e n ce d p articu la r co u n ty a n d city, tow n, or b y th e lo catio n sp ecified in th e b a n k ’s village (12 U.S.C. 22). State law s m a y b e charter, or if no ch arter lo catio n is less specific w ith resp ect to statespecified, th e lo catio n of th e b a n k ’s ch artered banks, an d the d eterm in a tio n h e a d office. T his in terp retatio n , of th e b a n k ’s locatio n m ay n o t be how ever, m ay n o t alw ays be ap p ro p riate ascertainable from th e b a n k ’s charter. in a n in terstate b ran c h in g en vironm ent, U n d er a strict in terp re tatio n of th e w h ere a b an k m ay have offices in c h a rte r/h e a d office rule, a b an k co u ld be m u ltip le F ederal Reserve D istricts an d a m em b er o n ly of th e Reserve Bank do m ost of its b u sin e ss in places other w h o se d istrict encom p asses th e location th a n its ch arter or h ea d office location. specified in its ch arter or, in th e case of In M arch 1997, th e B oard p ro p o sed a state b an k w ith n o specific ch arter am en d m e n ts to its R egulation D (12 CFR location, th e lo catio n of its h e a d office. p a rt 204, Reserve R equirem ents of F or a ban k w ith in terstate b ranch es, D epository In stitu tio n s) an d R egulation how ever, th is lo catio n test m ay n o t be I (12 CFR p a rt 209, Issue an d th e ap p ro p riate m ean s of d eterm ining C ancellation of C apital Stock of F ederal w h ere th e b a n k is located for Reserve Banks) to define “ lo c atio n ” for m em b ersh ip or reserve acco unt p u rp o ses of th e F ederal Reserve p u rposes. A n interstate b an k m ay have m e m b ersh ip a n d reserve ac co u n t its m a in office or do th e b u lk of its m a in te n an c e (62 FR 11117, M arch 11, b u sin e ss som ew here other th a n its 1997). c h arter lo cation an d m ay w ish to establish a F ederal Reserve B ank Background re la tio n sh ip closer to its bu sin ess A m em b er bank, even if it has headqu arters. Sim ilarly, a b a n k h old in g interstate b ran ch es, m u st be a m em b er co m p an y w ith su b sid iary bank s in of a p articu la r F ederal Reserve Bank. m u ltip le F ederal Reserve D istricts th at T he m e m b ersh ip q u estio n is closely m anages th o se ban k s as a co m bin ed rela te d to o th er lo cation issues su ch as b u sin e ss m a y w ish to centralize w h ere reserve acco un ts are located an d o p eration s in a single district. In ad d itio n , th e Board a n d th e Federal 1See, the Riegle-Neal Interstate Banking and Branching Efficiency Act, Pub. L. 103-328,108 Stat. R eserve Banks m ay find it m ore efficient to ad m in ister a b a n k ’s ac co u n t an d 2338 (1994). 212 U.S.C. 221 etseq. p erfo rm other fu nction s in a district e f f e c t i v e DATE: FOR FURTHER INFORMATION CONTACT: other th a n th e d istrict en com p assin g the ch arter or h e a d office location. B oard’s Proposal S ection 9(1) of th e FRA au th o rizes the B oard to p rescrib e ru les a n d regulations governing ap p lica tio n s b y state banks to subscribe to th e stock of th e F ederal Reserve B ank organized w ith in the district in w h ic h th e ap p ly in g b a n k is located. S ection 2(1) of th e FRA requires n a tio n al bank s to becom e m em ber banks in acco rdance w ith th e p ro v isio n s of the FRA, a n d section l l ( i ) gives th e B oard general au th o rity to w rite ru les necessary to perform its duties, fu nction s, an d services u n d e r th e FRA. A ccordingly, th e B oard p ro p o se d to am en d R egulation I to set forth a d efin itio n of “ lo c atio n ” for th e p u rp o se of acquiring F ederal Reserve B ank stock. T his am e n d m e n t also w o u ld h elp answ er o ther m em ber b an k location q u estion s related to reserve accoun t m a in te n an c e, su pervisio n, a n d other issues. T he p ro p o se d R egulation I p ro v isio n stated a general ru le that, for m e m b ersh ip p u rp o ses, a b a n k is c o n sid ered to be located in th e F ederal Reserve D istrict sp ecified in th e b a n k ’s ch arter or organizing certificate, or, if no su c h lo catio n is specified, th e location of its h e a d office. T he B oard c o u ld m ake exception s to th e general ru le for a p a rticu la r b an k after con sidering certain criteria. T hu s, if th e b a n k ’s location w ere u n c e rta in or its locatio n b ased on its charter, organizing certificate, or h e a d office differed from th e location w h ere it c o n d u c te d m ost of its b usin ess, th e Board, after co n su lta tio n w ith the relev an t Reserve Banks, co u ld designate th e ap p ro p riate location for m em b ersh ip pu rp o ses. (The rele v an t Reserve Banks are th e Reserve B ank w h o se d istrict co ntains th e b a n k ’s ch arter or h e a d office lo catio n a n d th e Reserve B ank in w h o se d istrict th e b a n k is p ro p o se d to be located.) O ne c o n sid eratio n in m aking this d eterm in a tio n w o u ld be w h e th e r any other law s w o u ld req u ire th e b an k to have a rela tio n sh ip w ith a particu la r Reserve Bank. For exam ple, M assach usetts an d N ebraska law s p ro v id e th a t state bank s m ay becom e m em bers of the Boston a n d Kansas City Reserve Banks, respectiv ely.3 T he Board c o u ld also co n sid er o th er criteria, su ch as th e b u sin e ss n ee d s of th e bank, w here th e h ea d office of th e b a n k is located, w h ere th e b a n k does th e b u lk of its bu sin ess, a n d th e lo catio n th a t w o u ld allow th e bank, th e Board, a n d the Reserve Banks to perfo rm th e ir 3Mass. Gen. L. ch. 167F, section 8 (1996) and Neb. Rev. Stat. section 8-130 (1996). Federal Register / Vol. 62, No. 124 / Friday, June 27, 1997 / Rules and Regulations fu nction s m ost efficiently an d effectively. For exam ple, th e Board m ig h t co n sid er th e efficiency of b an k su p e rv iso ry fu nctions, ac co u n t m an agem en t, a n d F ed eral Reserve m o n etary policy. G enerally, these am en d m e n ts w o u ld n o t affect cu rren t re la tio n sh ip s b etw een ban k s a n d F ederal Reserve Banks. A b an k th a t already ow ns stock in or has an accou nt at a F ederal Reserve Bank m ay, b u t n ee d not, seek a B oard d eterm in a tio n to change its location. The Board an ticip ates th a t th e “lo c a tio n ” issue w ill arise p rin c ip a lly from m ergers of existing bank s or o th er changes in the organizatio n or m a n ag e m en t of b ank h o ld in g com panies. O rdinarily , th e B oard expects th a t “ lo c atio n ” decisions w o u ld be w o rk e d o u t b e tw e en the Reserve Banks an d th e bank. A lth o u g h th e p ro p o se d R egulation I am e n d m e n t w o u ld be sufficient to d eterm in e w h ere a m em b er b a n k ’s reserve ac co u n t w o u ld be located, the B oard also p ro p o se d to am en d R egulation D to clarify th e lo catio n of n o n m e m b er b an k reserve accounts. The B oard p ro p o sed th is am e n d m e n t u n d e r th e a u th o rity of sectio n 19(c)(1) of the FRA, w h ic h p ro v id es th a t depo sito ry in stitu tio n s m u st h o ld reserves subject to su c h ru les a n d regulations th a t the B oard m ay prescribe. T he R egulation D a m e n d m e n t is sim ilar to th e R egulation I p ro p o sal an d w o u ld , in effect, assure th a t n o n m e m b er bank s are treated com parably to m em b er b an k s for ac co u n t lo catio n p urposes. R egulation D also ap p lies to Edge an d agreem ent corp orations an d U.S. b ran ch es a n d agencies of foreign banks. S ection 25A of th e FRA requires Edge corp orations to carry reserves in the sam e am o u n ts as th e B oard prescribes for m em b er bank s an d au th o rizes the B oard to w rite ru les governing the o p erations of su c h corporatio ns. S ection 25 of th e FRA also au th orizes th e Board to req u ire agreem ent corp o ratio n s to m a in ta in reserves. S ection 7 of th e In tern atio n al B anking A ct pro v id es th a t F ederal b ran ch es an d agencies of foreign bank s are subject to the FRA ’s reserve req u irem en t p ro visio ns (including section 19(c)) as if th e y w ere m em ber banks. T h at A ct also pro v id es th a t the B oard m ay im po se th e sam e req u irem en ts o n state-licensed branches a n d agencies of foreign b an k s after c o n su lta tio n a n d in co o p eratio n w ith the state b a n k su p erv iso ry authorities. T he B oard req u e sted co m m en t on w h e th e r it sh o u ld a p p ly th e sam e or sim ilar criteria for determ in in g the locatio n of reserve accoun ts for U.S. b ran ch es a n d agencies of foreign banks an d Edge a n d agreem ent co rpo ratio ns as it does for d ep o sito ry in stitu tio n s. Sum m ary o f Public Comments T he B oard received 12 com m ents on th e p ro p o sed am en d m e n ts from the follow ing categories of entities: Federal Reserve Banks ............................ Bank holding com panies ........................ Commercial banks .................................... Trade associations .................................... Credit unions ............................................. 4 3 2 2 1 Total ......................................................... 12 A ll of th e com m enters s u p p o rte d th e B o ard’s p ro p o sed am en d m e n ts in general an d agreed th a t th e am en d m e n ts w o u ld p ro v id e o p eratio n al efficiencies a n d flexibility th a t w ill be necessary in an in terstate ban kin g en vironm ent. R ole o f A ffe c te d B a n k T hree com m enters asked the B oard to clarify that, w h e n m ak ing a location d eterm in a tio n , th e B oard w ill co nsult w ith th e affected d ep o sito ry in stitu tio n as w ell as th e affected Reserve Banks, as th e d ecisio n co u ld have a significant im p act o n th e d ep o sito ry in stitu tio n ’s operations. O n a rela te d po in t, tw o com m enters suggested th a t th e Board clarify th a t a dep o sito ry in stitu tio n m ay req u e st a locatio n d eterm in atio n . T he B oard h a d alw ays in te n d e d th a t a locatio n d eterm in a tio n w o u ld involve c o n sid eratio n of th e view s of, a n d in m a n y cases w o u ld b e m a d e at th e in itia tio n of, th e affected in stitu tio n . T he B oard h as m o d ifie d th e final regulatory language to p ro v id e th a t the B oard co u ld m ake a location d eterm in a tio n if it believes su c h a d eterm in a tio n is n ecessary to enable the in stitu tio n operate efficiently. T he final a m en d m e n ts also p ro v id e th a t th e B oard w ill co n su lt w ith th e affected in stitu tio n , as w ell as th e relevan t Reserve Banks, before m aking a locatio n determ ination . L im ite d R elo ca tio n s O ne co m m en ter suggested th a t B oard sh o u ld avoid “ fo ru m -sh o p p in g ” by lim itin g th e n u m b e r of tim es a b an k m ay change its d esignated locatio n a n d by allow ing relocatio ns o n ly w h e n u n d e rta k e n in good faith a n d on a show ing of good cause. As frequent relo cation s w o u ld prob ab ly n o t allow th e B oard an d th e Reserve Banks to perform th e ir fu nction s efficiently an d effectively, th e Board does n o t ex p ect to allow frequent relo cation s for a single in stitutio n. M u ltip le F ederal R eserve M em b ersh ip s O ne co m m enter stated that, sh o u ld the B oard co n sid er accom m odating interstate b an kin g an d b ran c h in g by allow ing banks to becom e m em bers of tw o or m ore Reserve B anks, su c h a 34615 p ro p o sal w o u ld req u ire careful analysis, fu rth er p u b lic com m ent, a n d p erh a p s a legislative change. T he B oard is n o t at this tim e co nsid ering allo w in g m u ltip le F ed eral Reserve m em b ersh ip s for a single bank. P ass-Through P rovisions O ne co m m en ter encourag ed th e Board to co n sid er a d d itio n a l am en d m e n ts to R egulation D ’s p ass-th ro u g h prov ision s rela te d to m em ber ban ks an d out-of d istrict correspo ndents. T he B oard is in th e process of review in g th e p ass th ro u g h p ro visio ns in light of the Reserve B anks’ single-account structure. O b taining P a ym en ts S ervices From O ther R eserve B a n ks T w o com m en ters ask ed w h a t effect, if any, th e p ro p o sed am en d m e n ts w o u ld have on th e ab ility o f a d eposito ry in stitu tio n to obtain p ay m en ts an d other financial services from a Reserve B ank other th a n th e Reserve Bank at w h ic h it h o ld s a n account. T he B oard has p ro p o sed am en d m e n ts to R egulation J (12 CFR p art 210), governing th e collectio n a n d re tu rn of checks th ro u g h F ederal Reserve Banks, th a t w o u ld allow a n in stitu tio n to u se th e check collectio n services of an y Reserve Bank, regardless of w h ere th e in stitu tio n m a in ta in s an ac co u n t (62 FR 27547, M ay 20, 1997). T he Reserve Banks are c u rren tly revising th e ir operating circulars to pro v id e in stitu tio n s w ith sim ilar flexibility for all F ederal Reserve services. T hese am en d m e n ts to R egulations D an d I, therefore, w o u ld n o t affect th e ab ility of an in stitu tio n to obtain services from any Reserve Bank. O ne of these com m enters also asked w h e th e r an in s titu tio n ’s ac co u n t re la tio n sh ip an d su perv isory re la tio n sh ip co u ld be w ith different Reserve Banks. A bsent u n u su a l circu m stances, th e B oard expects th a t th e m ost efficient a n d effective ad m in istra tio n of F ederal Reserve fu n ctio ns generally w o u ld req u ire the ac co u n t an d sup erv isory fu nction s for a p articu la r d ep o sito ry in stitu tio n to be located at a single Reserve Bank. U.S. B ra nches a n d A g en cies o f Foreign B anks; E dge a n d A g ree m en t C orporations T he B oard received four com m ents on th e trea tm e n t of U.S. b ran c h es an d agencies of foreign banks a n d Edge a n d agreem ent corpo rations u n d e r th e p ro p o se d am en d m e n ts to R egulation D. A ll four co m m enters b eliev e d th a t it w o u ld be logical to d eterm in e the lo cation of th e se entities in th e sam e m a n n e r as for dom estic in stitu tio n s. T he com m enters also raise d questions rela te d to th e n u m b e r of F ed eral Reserve 34616 Federal Register / Vol. 62, No. 124 / Friday, June 27, 1997 / Rules and Regulations accoun ts th a t a foreign b a n k fam ily (or Edge or ag reem ent co rp o ratio n family) sh o u ld m a in tain . T he B oard is c u rren tly review ing th e ap p ro p riate trea tm e n t for accoun ts of th e se en tities for reserve purp oses. in stitu tio n s b y allow ing th e m to estab lish th a t location m ore convenien tly. Effective Date Banks, ban kin g, F ed eral Reserve System , R eporting an d record keep ing requirem ents. T he effective date of th e am en d m e n ts to R egulations D a n d I is O ctober 1, 1997. T his w ill allo w in stitu tio n s to request locatio n d eterm in a tio n s three m o n th s in advance of th e single ac co u n t im p lem en ta tio n date. A lthou gh the Board m ay m ake d eterm in a tio n s during th is th ree -m o n th period, these determ in a tio n s generally w o u ld n o t be effective u n til Janu ary 2 ,1 9 9 8 . D elegation o f A uthority In c o n ju n ctio n w ith th e final am en d m e n ts d isc u sse d above, th e Board is also am en d in g its Rules R egarding the D elegation of A u th o rity (12 CFR p art 265) to p ro v id e th a t th e S ecretary of the B oard m ay determ in e an in s titu tio n ’s lo catio n u n d e r R egulation D or R egulation I if th e relev an t F ederal Reserve Banks a n d th e in stitu tio n agree on th e specific Reserve B ank in w h ic h th e in stitu tio n sh o u ld h o ld stock or w ith w h ic h th e in stitu tio n sh o u ld m a in ta in a reserve accou nt, an d th e agreed-upon locatio n does n o t raise an y significant p o licy issues. See D ocket R -0 97 3, elsew here in to d a y ’s Federal Register. Final Regulatory Flexibility A nalysis T w o of th e th ree req u irem en ts of a final regulatory flexibility analysis (5 U.S.C. 604), (1) a su c cin c t statem en t of th e n ee d for a n d th e objectives of the ru le an d (2) a sum m ary of th e issues raise d by th e p u b lic co m m en ts, th e agency’s assessm en t of th e issues, an d a sta te m en t of th e changes m a d e in th e final ru le in resp o n se to th e com m ents, are d isc u sse d above. T he th ird re q u ire m e n t o f a final regulatory flexibility analy sis is a d escrip tio n of significant alternativ es to the ru le th at w o u ld m in im iz e th e r u le ’s econom ic im p act on sm all en tities an d reasons w h y th e alternatives w ere rejected. T he final am en d m e n ts w ill ap p ly to all dep o sito ry in stitu tio n s, regardless of size, an d rep rese n t relativ ely m in o r changes to th e existing rules. T he am en d m e n ts sh o u ld n o t have a negative econom ic im p a c t o n sm all in stitu tio n s, and, therefore, th e re w ere n o significant alternatives th a t w o u ld h av e m in im iz ed th e econ om ic im p act on th ose in stitu tio n s. T he am en d m e n ts w ill clarify th e lo cation of an in stitu tio n for F ederal Reserve m e m b ersh ip an d reserve ac co u n t m a in te n an c e pu rp o ses and, in som e cases, co u ld red u c e econom ic b u rd e n o n affected L is t o f S u bjects 12 CFR Part 204 12 CFR Part 209 B anks, banking, F ed eral Reserve System , R eporting an d recordkeeping req u irem en ts, Securities. F or th e reason s set o u t in the pream ble, 12 CFR parts 204 an d 209 are a m e n d e d as set forth below . PART 204— RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS (REGULATION D) 1. T he au th o rity citatio n for p art 204 c o n tin u es to read as follows: A uthority: 12 U.S.C. 248(a), 248(c), 371a, 461, 601, 611, and 3105. 2. In § 204.3, paragraph (b) is revised to read as follows: § 2 0 4.3 * * Com putation and m aintenance. * * * (b) Form a n d lo ca tio n o f reserves. (1) A d ep o sito ry in stitu tio n , a U.S. b ran c h or agency of a foreign b ank, an d an Edge or agreem ent co rp o ratio n sh all h o ld reserves in th e form of v au lt cash, a balance m a in ta in e d d irectly w ith the F ederal Reserve Bank in th e F ederal Reserve D istrict in w h ic h it is located, or a p ass-th ro u g h account. Reserves h e ld in th e form of a p ass-th rou gh ac co u n t sh a ll be co n sid ered to be a balance m a in ta in e d w ith a F ederal Reserve Bank. (2) (i) For p u rp o ses of th is section, a d ep o sito ry in stitu tio n is lo cated in the F ederal Reserve D istrict th a t co ntains th e lo cation sp ecified in th e in s titu tio n ’s c h arter or organizing certificate, or, if no su c h locatio n is specified, th e location of its h ea d office, u n le ss otherw ise d eterm in e d by th e B oard u n d e r p arag rap h (b)(2)(ii) of th is section. (ii) If th e lo catio n specified in paragraph (b)(2)(i) of th is section, in the B o ard’s judgm ent, is am biguous, w o u ld im p ed e th e ability of th e B oard or th e F ed eral Reserve Banks to perform th e ir fu nction s u n d e r th e F ed eral Reserve A ct, or w o u ld im p ed e th e ab ility of the in stitu tio n to operate efficiently, th e B oard w ill d eterm in e th e F ederal Reserve D istrict in w h ic h th e in stitu tio n is located, after co n su lta tio n w ith the in stitu tio n an d th e relev an t F ederal R eserve Banks. T he rele v an t F ederal Reserve Banks are th e F ederal Reserve B ank w h o se D istrict co ntains th e lo cation specified in p arag rap h (b)(2)(i) of th is section an d th e F ed eral Reserve B ank in w h o se D istrict th e in stitu tio n is p ro p o se d to be located. In m aking th is d eterm in atio n , th e B oard w ill co n sid er a n y ap p licab le law s, th e b u sin e ss need s o f th e in stitu tio n , th e lo catio n of th e in s titu tio n ’s h e a d office, th e locations w h ere th e in stitu tio n perform s its b u sin ess, a n d th e locations th a t w o u ld allow th e in stitu tio n , th e Board, an d the F ederal Reserve Banks to perform th e ir fu n ctio ns efficiently an d effectively. * * * * * PART 209— ISSUE AND CANCELLATION OF CAPITAL STOCK OF FEDERAL RESERVE BANKS (REGULATION I) 3. T he au th o rity citatio n for p a rt 209 co n tin u es to read as follows: A uthority: 12 U.S.C. 248, 321-338, 486, 1814, 1816. 4. A n e w § 209.15 is a d d e d to read as follows: § 2 0 9.1 5 Location of bank. (a) G eneral rule. F or p u rp o ses of th is part, a n a tio n al b a n k or a state b a n k is lo cated in th e F ed eral Reserve D istrict th a t con tain s th e lo cation specified in th e b a n k ’s ch arter or organizing certificate, or, if n o su c h lo catio n is specified, th e lo catio n of its h e a d office, u n le ss o th erw ise d eterm in e d b y th e B oard u n d e r p ara g ra p h (b) of this section. (b) B oard d eterm in a tio n . If the locatio n of a b a n k as specified in paragraph (a) of this section, in the B o ard’s judgm ent, is am biguous, w o u ld im p ed e th e ab ility of th e B oard or th e F ederal Reserve Banks to perform th e ir fu n ctio ns u n d e r th e F ed eral Reserve A ct, or w o u ld im p ed e th e ab ility of th e b a n k to operate efficiently, th e Board w ill d eterm in e th e F ederal Reserve D istrict in w h ic h the b an k is located, after co n su lta tio n w ith th e b a n k a n d the relev an t F ederal Reserve Banks. T he relev an t F ederal Reserve Banks are the F ederal Reserve B ank w h o se D istrict contains th e lo catio n specified in the p arag rap h (a) of th is sectio n a n d th e F ederal Reserve B ank in w h o se D istrict th e b an k is p ro p o sed to be located. In m aking th is d eterm in atio n , th e B oard w ill co n sid er an y ap p licab le law s, the b u sin e ss n ee d s of th e bank, th e location of th e b a n k ’s h e a d office, th e locations w h ere th e b an k perform s its bu sin ess, a n d th e locations th a t w o u ld allo w the bank, th e Board, a n d th e F ederal Reserve Banks to p erfo rm th e ir fu n ctio ns efficiently a n d effectively. Federal Register / Vol. 62, No. 124 / Friday, June 27, 1997 / Rules and Regulations By order of the Board of Governors of the Federal Reserve System, June 23,1997. William W. Wiles, Secretary o f the Board. [FR Doc. 97-16872 Filed 6-2 6 -9 7 ; 8:45 am] BILLING CODE 6 210 -01 -P FEDERAL RESERVE SYSTEM 12 CFR Part 265 [Docket No. R -0 97 3 ] Rules Regarding Delegation of Authority B oard of G overnors of the F ed eral Reserve System . ACTION: F in al rule. AGENCY: T he B oard is a m en d in g its delegation ru les to allow th e S ecretary of th e B oard to d eterm in e th e Federal Reserve D istrict in w h ic h a n in stitu tio n is lo cated for p u rp o ses o f F ederal Reserve m e m b ersh ip a n d reserve a c co u n t m a in te n an c e. T his am e n d m e n t sh o u ld p ro v id e for m ore ex p ed itio us h a n d lin g of lo catio n determ inatio ns. EFFECTIVE DATE: O ctober 1 ,19 97. SUMMARY: FOR FURTHER INFORMATION CONTACT: O liver Irelan d, A ssociate G eneral C ounsel, (202/452— 3625) or S teph an ie M artin, S enior A ttorney (202/452 3198), Legal D ivision. F or th e hearing im p aired only, contact D iane Jenkins, T eleco m m u n icatio n s D evice for th e Deaf (TDD) (202/452-3544), B oard of G overnors of th e F ederal Reserve System , 20th an d C Streets, N.W., W ashing ton , D.C. 20551. SUPPLEMENTARY INFORMATION: T he Board h as a d o p te d am en d m e n ts to its R egulations D (Reserve R equirem ents of D epository In stitu tio n s, 12 CFR p art 204) an d R egulation I (Issue an d C ancellation of C apital Stock of F ederal R eserve Banks, 12 CFR p a rt 209) to define th e lo catio n of a d epo sitory in stitu tio n for p u rp o ses of F ed eral R eserve m e m b ersh ip a n d reserve ac co u n t m a in te n an c e. (See D ocket No. R -09 63, elsew here in to d a y ’s Federal Register.) T he am en d m e n ts p rovide th a t an in stitu tio n is co n sid ered to be located in th e F ederal Reserve D istrict specified in its ch arter or organizing certificate, or, if no su ch lo catio n is specified, th e locatio n of its h e a d office. T he B oard co u ld m ake excep tions to th e general ru le for a p articu la r in stitu tio n after con sidering certain criteria. T hus, if th e in s titu tio n ’s lo cation w ere u n c e rta in or its lo cation b ased o n its charter, organizing certificate, or h ea d office differed from th e lo catio n w h ere it co n d u c te d m ost of its b u sin e ss, th e B oard c o u ld designate th e ap p ro p riate location, after co n su lta tio n w ith the in stitu tio n an d th e relev an t Reserve Banks. (The rele v an t Reserve Banks are th e Reserve B ank w hose district c o ntains th e b a n k ’s charter, organizing certificate, license, or h e a d office lo catio n an d th e Reserve B ank in w h o se d istrict th e b a n k is p ro p o sed to be located.) T he B oard is delegating to the Secretary of th e Board th e a u th o rity to m ake a lo catio n d eterm in a tio n u n d e r R egulation D or R egulation I if the relev an t F ed eral Reserve Banks a n d th e in stitu tio n agree on th e specific Reserve B ank in w h ic h th e in stitu tio n sh o u ld h o ld stock or w ith w h ic h th e in stitu tio n sh o u ld m a in ta in a reserve account, an d th e ag reed -up on lo cation does n o t raise any significant po licy issues. A dm inistrative Procedure Act T he A d m in istrativ e P ro ced u re A ct (5 U.S.C. 553(b)(A)) exem pts “ ru les of agency organization, p ro ced u re, or p ra c tic e ” from th e n otice of p ro p o sed ru lem aking an d p u b lic co m m en t requirem ents. As the B oard ’s delegation ru les fall u n d e r th is exem ption , the B oard is ad o p tin g these am en d m e n ts w ith o u t n o tice-an d -co m m en t procedures. List o f Subjects in 12 CFR Part 265 A u th o rity delegations (G overnm ent agencies), Banks, banking, Federal Reserve System . For th e reason s set forth in the pream ble, th e Board is a m en d in g 12 CFR P art 265 as set forth below : PART 265— RULES REGARDING DELEGATION OF AUTHORITY 1. T he a u th o rity citatio n for p art 265 co n tin u es to rea d as follows: Authority: 12 U.S.C. 248 (i) and (k). 2. S ection 265.5 is a m e n d e d by ad d in g a n e w parag rap h (f) to re a d as follows: § 265.5 Functions delegated to Secretary of the Board. * * * * * (f) L ocation o f in stitu tio n . To d eterm in e th e F ederal Reserve D istrict in w h ic h an in stitu tio n is located p u rsu a n t to § 204.3(b)(2)(ii) of R egulation D (12 CFR p a rt 204) or § 209.15(b) of R egulation I (12 CFR part 209) if: (1) T he rele v an t F ederal Reserve Banks an d th e in stitu tio n agree on the specific Reserve B ank in w h ic h the in stitu tio n sh o u ld h o ld sto ck or w ith w h ic h th e in stitu tio n sh o u ld m a in ta in reserve balances; an d (2) T he ag reed -up on lo catio n does n o t raise an y significant p o licy issues. 34617 By order of the Board of Governors of the Federal Reserve System, June 23,1997. William W. Wiles, Secretary o f th e Board. [FR Doc. 97-16871 Filed 6-26-97; 8:45 am] BILLING CODE 6210 -01 -P
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