Rule2021-26542
Federal Reserve Bank Capital Stock
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 8, 2021
Effective
January 7, 2022
Issuing agencies
Federal Reserve System
Abstract
The Board of Governors (Board) is publishing a final rule that applies an inflation adjustment to the threshold for total consolidated assets in Regulation I. Federal Reserve Bank (Reserve Bank) stockholders that have total consolidated assets above the threshold receive a different dividend rate on their Reserve Bank stock than stockholders with total consolidated assets at or below the threshold. The Federal Reserve Act requires that the Board annually adjust the total consolidated asset threshold to reflect the change in the Gross Domestic Product Price Index, published by the Bureau of Economic Analysis (BEA). Based on the change in the Gross Domestic Product Price Index as of October 28, 2021, the total consolidated asset threshold will be $11,229,000,000 through December 31, 2022.
Full Text
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<title>Federal Register, Volume 86 Issue 233 (Wednesday, December 8, 2021)</title>
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[Federal Register Volume 86, Number 233 (Wednesday, December 8, 2021)]
[Rules and Regulations]
[Pages 69578-69579]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-26542]
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FEDERAL RESERVE SYSTEM
12 CFR Part 209
[Regulation I; Docket No. R-1761]
RIN 7100-AG 23
Federal Reserve Bank Capital Stock
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Final rule.
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SUMMARY: The Board of Governors (Board) is publishing a final rule that
applies an inflation adjustment to the threshold for total consolidated
assets in Regulation I. Federal Reserve Bank (Reserve Bank)
stockholders that have total consolidated assets above the threshold
receive a different dividend rate on their Reserve Bank stock than
stockholders with total consolidated assets at or below the threshold.
The Federal Reserve Act requires that the Board annually adjust the
total consolidated asset threshold to reflect the change in the Gross
Domestic Product Price Index, published by the Bureau of Economic
Analysis (BEA). Based on the change in the Gross Domestic Product Price
Index as of October 28, 2021, the total consolidated asset threshold
will be $11,229,000,000 through December 31, 2022.
DATES: This final rule is effective January 7, 2022.
FOR FURTHER INFORMATION CONTACT: Evan Winerman, Senior Counsel (202-
872-7578), Legal Division; or Rebecca Rider, Senior Financial
Institutions Policy Analyst (202-736-1926), Reserve Bank Operations and
Payments Systems Division.
SUPPLEMENTARY INFORMATION:
I. Background
Regulation I governs the issuance and cancellation of capital stock
by the Reserve Banks. Under section 5 of the Federal Reserve Act \1\
and Regulation I,\2\ a member bank must subscribe to capital stock of
the Reserve Bank of its district in an amount equal to six percent of
the member bank's capital and surplus. The member bank must pay for
one-half of this subscription on the date that the Reserve Bank
approves its application for capital stock, while the remaining half of
the subscription shall be subject to call by the Board.\3\
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\1\ 12 U.S.C. 287.
\2\ 12 CFR 209.4(a).
\3\ 12 U.S.C. 287 and 12 CFR 209.4(c)(2).
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Section 7(a)(1) of the Federal Reserve Act \4\ provides that
Reserve Bank stockholders with $10 billion or less in total
consolidated assets shall receive a six percent dividend on paid-in
capital stock, while stockholders with more than $10 billion in total
consolidated assets shall receive a dividend on paid-in capital stock
equal to the lesser of six percent and ``the rate equal to the high
yield of the 10-year Treasury note auctioned at the last auction held
prior
[[Page 69579]]
to the payment of such dividend.'' Section 7(a)(1) requires that the
Board adjust the threshold for total consolidated assets annually to
reflect the change in the Gross Domestic Product Price Index, published
by the BEA.
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\4\ 12 U.S.C. 289(a)(1).
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Regulation I implements section 7(a)(1) of the Federal Reserve Act
by (1) defining the term ``total consolidated assets,'' \5\ (2)
incorporating the statutory dividend rates for Reserve Bank
stockholders,\6\ and (3) providing that the Board shall adjust the
threshold for total consolidated assets annually to reflect the change
in the Gross Domestic Product Price Index.\7\ The Board has explained
that it ``expects to make this adjustment [to the threshold for total
consolidated assets] using the final second quarter estimate of the
Gross Domestic Product Price Index for each year, published by the
Bureau of Economic Analysis.'' \8\
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\5\ 12 CFR 209.1(d)(3) (``Total consolidated assets means the
total assets on the stockholder's balance sheet as reported by the
stockholder on its Consolidated Report of Condition and Income (Call
Report) as of the most recent December 31, except in the case of a
new member or the surviving stockholder after a merger `total
consolidated assets' means (until the next December 31 Call Report
becomes available) the total consolidated assets of the new member
or the surviving stockholder at the time of its application for
capital stock'').
\6\ 12 CFR 209.4(e), (c)(1)(ii), and (d)(1)(ii); 209.2(a); and
209.3(d)(3).
\7\ 12 CFR 209.4(f).
\8\ 81 FR 84415, 84417 (Nov. 23, 2016).
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II. Adjustment
The Board annually adjusts the $10 billion total consolidated asset
threshold based on the change in the Gross Domestic Product Price Index
between the second quarter of 2015 (the baseline year) and the second
quarter of the current year.\9\ The second quarter 2021 Gross Domestic
Product Price Index estimate published by the BEA in October 2021
(117.546) is 12.29 percent higher than the second quarter 2015 Gross
Domestic Product Price Index estimate published by the BEA in October
2021 (104.683). Based on this change in the Gross Domestic Product
Price Index, the threshold for total consolidated assets in Regulation
I will be $11,229,000,000 as of January 7, 2022.
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\9\ The BEA makes ongoing revisions to its estimates of the
Gross Domestic Product Price Index for historical calendar quarters.
The Board calculates annual adjustments from the baseline year
(rather than from the prior-year total consolidated asset threshold)
to ensure that the adjusted total consolidated asset threshold
accurately reflects the cumulative change in the BEA's most recent
estimates of the Gross Domestic Product Price Index.
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III. Administrative Law Matters
Administrative Procedure 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 that are required by statute and Regulation I and are
consistent with a method previously set forth by the Board.\10\
Accordingly, the Board finds good cause for determining, and so
determines, that notice in accordance with 5 U.S.C. 553(b) is
unnecessary.
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\10\ See 12 CFR 209.4(f) and n. 8 and accompanying text, supra.
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Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) does not apply to a rulemaking
where a general notice of proposed rulemaking is not required.\11\ As
noted previously, the Board has determined that it is unnecessary to
publish a general notice of proposed rulemaking for this final rule.
Accordingly, the RFA's requirements relating to an initial and final
regulatory flexibility analysis do not apply.
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\11\ 5 U.S.C. 603 and 604.
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Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995,\12\ the
Board has reviewed this final rule. No collections of information
pursuant to the Paperwork Reduction Act are contained in the final
rule.
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\12\ 44 U.S.C. 3506; 5 CFR 1320.
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List of Subjects in 12 CFR Part 209
Banks and banking, Federal Reserve System, Reporting and
recordkeeping requirements, Securities.
Authority and Issuance
For the reasons set forth in the preamble, the Board amends
Regulation I, 12 CFR part 209, as follows:
PART 209--ISSUE AND CANCELLATION OF FEDERAL RESERVE BANK CAPITAL
STOCK (REGULATION I)
0
1. The authority citation for part 209 continues to read as follows:
Authority: 12 U.S.C. 12 U.S.C. 222, 248, 282, 286-288, 289,
321, 323, 327-328, and 466.
0
2. In part 209, remove all references to ``$10,785,000,000'' and add in
their place ``$11,229,000,000'' wherever they appear.
By order of the Board of Governors of the Federal Reserve
System, under delegated authority, December 2, 2021.
Ann E. Misback,
Secretary of the Board.
[FR Doc. 2021-26542 Filed 12-7-21; 8:45 am]
BILLING CODE 6210-01-P
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