Record of Policy Actions of the Board of Governors
Policy actions of the Board of Governors are presented pursuant to section 10 of the Federal Reserve Act. That section provides that the Board shall keep a record of all questions of policy determined by the Board and shall include in its annual report to Congress a full account of such actions. This section provides a summary of policy actions in 2017, as implemented through (1) rules and regulations, (2) policy statements and other actions, and (3) discount rates for depository institutions. Policy actions were approved by all Board members in office, unless indicated otherwise.1 More information on the actions is available from the relevant Federal Register notices or other documents (see links in footnotes) or on request from the Board's Freedom of Information Office.
For information on the Federal Open Market Committee's policy actions relating to open market operations, see section 9, "Minutes of Federal Open Market Committee Meetings."
Rules and Regulations
Regulations A (Extensions of Credit by Federal Reserve Banks) and D (Reserve Requirements of Depository Institutions)
On January 3, 2017, the Board approved amendments to Regulations A and D (Docket Nos. R-1558 and R-1559) to implement its interest rate actions on December 14, 2016, in conjunction with the action by the Federal Open Market Committee (FOMC) on the same date to increase the target range for the federal funds rate by 25 basis points, to a range of 1/2 percent to 3/4 percent. The Regulation A action reflects the Board's approval of an increase in the interest rate charged by the Federal Reserve Banks on primary credit from 1 percent to 1-1/4 percent, with the rate on secondary credit increased by formula as a result of the primary credit rate change. The Regulation D action reflects an increase to 3/4 percent, effective December 15, 2016, in the rates of interest paid on balances maintained to satisfy reserve balance requirements and on excess balances maintained at the Federal Reserve Banks by or on behalf of eligible institutions.2 (Note: Similar amendments to Regulations A and D were approved by the Board on March 15,3 June 14,4 and December 13, 2017,5 to implement the Board's interest rate actions taken on those dates in conjunction with the FOMC's actions taken on those same dates to increase the target range for the federal funds rate. See "Interest on Reserves" and "Discount Rates for Depository Institutions in 2017" later in this section for more information, including the Board votes for each action.)
Voting for the January 3, 2017, actions: Chair Yellen, Vice Chairman Fischer, and Governors Tarullo, Powell, and Brainard.
Regulation C (Home Mortgage Disclosure)
On December 13, 2017, the Board approved a final rule (Docket No. R-1590) repealing the Board's Regulation C, which was superseded by the interim final rule from the Consumer Financial Protection Bureau (CFPB) to implement the Home Mortgage Disclosure Act pursuant to the transfer of rulemaking authority to the CFPB under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).6 The CFPB issued a revised final rule in April 2016. The Board's final rule repealing its Regulation C is effective January 22, 2018.
Voting for this action: Chair Yellen, Vice Chairman for Supervision Quarles, and Governors Powell and Brainard.
Regulation I (Issue and Cancellation of Federal Reserve Bank Capital Stock)
On January 5, 2017, the Board approved a final rule (Docket No. R-1560) to apply an inflation adjustment to the asset threshold at which member banks are subject to a different dividend rate on their Federal Reserve Bank stock.7 In January 2016, the Fixing America's Surface Transportation Act set the dividend rate that member banks with more than $10 billion in total consolidated assets earn on their Federal Reserve Bank stock at the lesser of 6 percent or the most recent 10-year Treasury auction rate prior to the dividend payment. (Member banks below the asset threshold will continue to earn a dividend of 6 percent on their Reserve Bank stock.) The act also requires the Board to adjust the $10 billion threshold annually for inflation. Based on this adjustment, the total consolidated asset threshold will be $10,122,000,000 through December 31, 2017. The final rule is effective March 27, 2017. (Note: On November 13, 2017, the Board published a final rule to establish a total consolidated asset threshold, as adjusted for inflation, of $10,283,000,000 through December 31, 2018.8 )
Voting for this action: Chair Yellen, Vice Chairman Fischer, and Governors Tarullo, Powell, and Brainard.
Regulation Q (Capital Adequacy of Bank Holding Companies, Savings and Loan Holding Companies, and State Member Banks)
On November 9, 2017, the Board approved a final rule (Docket No. R-1571), published jointly with the Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC), to extend the existing regulatory capital treatment for mortgage-servicing assets and certain other items in order to prevent different rules from taking effect while all three agencies consider a broader simplification of the capital rules.9 The final rule applies only to banking organizations not subject to the agencies' "advanced approaches" capital rules, generally firms that have less than $250 billion in total consolidated assets and less than $10 billion in total foreign exposure. The final rule is effective January 1, 2018.
Voting for this action: Chair Yellen, Vice Chairman for Supervision Quarles, and Governors Powell and Brainard.
Regulations Q (Capital Adequacy of Bank Holding Companies, Savings and Loan Holding Companies, and State Member Banks), WW (Liquidity Risk Measurement Standards), and YY (Enhanced Prudential Standards)
On September 1, 2017, the Board approved a final rule (Docket No. R-1538) to enhance financial stability by establishing restrictions on qualified financial contracts (QFCs) of global systemically important banking organizations (G-SIBs).10 The final rule, issued under section 165 of the Dodd-Frank Act, would require U.S. G-SIBs and the U.S. operations of foreign G-SIBs to amend the terms of QFCs to prevent the immediate termination of these contracts if a firm enters bankruptcy or another resolution process. QFCs include derivatives and securities financing transactions, such as repurchase agreements and securities lending transactions. Because G-SIBs conduct a large volume of transactions through QFCs, the mass termination of these contracts as a result of a G-SIB resolution might lead to the disorderly failure of the G-SIB, generate asset fire sales, and transmit financial risk across the U.S. financial system. The final rule contains two key requirements: (1) QFCs of G-SIBs, including those with foreign counterparties, are required to clarify that U.S. resolution laws providing for a temporary stay to prevent mass terminations apply to the contracts, and (2) QFCs of G-SIBs are prohibited from allowing the exercise of default rights that could spread the bankruptcy of one G-SIB entity to its solvent affiliates. The final rule also amends certain definitions in the Board's capital and liquidity rules to ensure that the regulatory capital and liquidity treatment of QFCs to which a covered entity is a party is not affected by the final rule's restrictions on such QFCs. The final rule is effective on November 13, 2017, with phased-in compliance beginning on January 1, 2019.
Voting for this action: Chair Yellen, Vice Chairman Fischer, and Governors Powell and Brainard.
Regulations Y (Bank Holding Companies and Change in Bank Control) and YY (Enhanced Prudential Standards)
On January 23, 2017, the Board approved a final rule (Docket No. R-1548) that revises the capital plan and stress test rules, effective for the 2017 Comprehensive Capital and Analysis Review (CCAR) cycle.11 The final rule provides that large and noncomplex firms will no longer be subject to the qualitative component of the CCAR assessment or the provisions of the capital plan rule whereby the Board may object to the firm's capital plan on the basis of qualitative deficiencies in the firm's capital planning process. Under the final rule, large and noncomplex firms are bank holding companies and U.S. intermediate holding companies of foreign banking organizations that (1) have total consolidated assets of at least $50 billion but less than $250 billion, (2) have nonbank assets of less than $75 billion, and (3) are not identified as global systemically important banks. The final rule also modifies certain reporting requirements, simplifies the initial applicability provisions of both the capital plan and stress test rules, reduces the amount of additional capital distributions such firms may make during a capital plan cycle without seeking the Board's prior approval, and extends the range of potential as-of dates the Board may use for the trading and counterparty scenario component used in the stress test rules. The final rule is effective March 6, 2017.
Voting for this action: Chair Yellen, Vice Chairman Fischer, and Governors Tarullo, Powell, and Brainard.
Regulation BB (Community Reinvestment)
On November 8, 2017, the Board approved a final rule (Docket No. R-1574), issued jointly with the FDIC and OCC, to conform certain definitions and other provisions in its Community Reinvestment Act regulation to recent revisions the CFPB made to its Regulation C.12 In particular, the final rule revised the definitions of "home mortgage loan" and "consumer loan," as well as the public-file content requirements. The final rule, which also removed obsolete references to the Neighborhood Stabilization Program, is effective January 1, 2018.
Voting for this action: Chair Yellen, Vice Chairman for Supervision Quarles, and Governors Powell and Brainard.
Regulation CC (Availability of Funds and Collection of Checks)
On May 16, 2017, the Board approved a final rule (Docket No. R-1409) to create a default framework for electronic check collection and return, reflecting the evolution of the U.S. check collection system from a paper-based to virtually all-electronic system.13 Among other provisions, the final rule amends existing check-return requirements to create incentives for banks still using paper to accept electronic presentment and return, creates legal protections for electronic checks to ensure that a bank receives similar protections regardless of whether a check is in paper or electronic form, creates protections for banks that receive electronic items that are not checks but are cleared through the check collection system, and retains the existing same-day settlement rule for paper checks. The final rule is effective July 1, 2018.
Voting for this action: Chair Yellen, Vice Chairman Fischer, and Governors Powell and Brainard.
Rules of Organization and Rules Regarding Delegation of Authority
On October 25, 2017, the Board approved an amendment (Docket No. OP-1578) to the definition of a quorum of the Board in the Rules of Organization to facilitate the Board's ability to function efficiently during periods of substantial vacancies on the Board.14 The amendment provides that four Board members constitute a quorum, unless there are three or fewer Board members in office, in which case a quorum would be all Board members in office. The amendment does not alter the definition of a quorum in normal operating conditions (that is, when five or more members are in office, four members would still constitute a quorum). In addition, the amendment provides that (1) recused or disqualified Board members are excluded from calculations of the quorum requirement and (2) in exigent circumstances, a quorum would be defined as a majority of Board members in office. In connection with the Rules of Organization amendment, the Board also approved a final rule (Docket No. R-1578) amending its Rules Regarding Delegation of Authority to provide for a modified quorum procedure during exigent circumstances.15 The Rules of Organization amendment is effective October 25, and the delegation of authority final rule is effective November 22, 2017.
Voting for these actions: Chair Yellen, Vice Chairman for Supervision Quarles, and Governors Powell and Brainard.
Rules of Practice for Hearings
On January 6, 2017, the Board approved a final rule (Docket No. R-1543) amending its rules of practice and procedure to implement an annual adjustment to its maximum civil money penalty (CMP) amounts to account for inflation, as required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.16 The act required this adjustment to be made annually rather than every four years, prescribed the formula for inflation adjustment, and directed federal agencies to make a "catch-up" adjustment (the first inflation adjustment after enactment of the law). An interim final rule issued by the Board in July 2016 incorporated the catch-up adjustment in the CMP levels. The final rule, effective January 15, 2017, set the CMP levels pursuant to the required annual adjustment for 2017.
Voting for this action: Chair Yellen, Vice Chairman Fischer, and Governors Tarullo, Powell, and Brainard.
On December 26, 2017, the Board approved a final rule (Docket No. R-1595) amending its rules of practice and procedure to implement an annual adjustment for 2018 to its maximum CMP amounts to account for inflation, as required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.17 The final rule is effective January 10, 2018.
Voting for this action: Chair Yellen, Vice Chairman for Supervision Quarles, and Governors Powell and Brainard.
Rules Regarding Availability of Information
On October 19, 2017, the Board approved a final rule (Docket No. R-1556) to amend its regulations for processing requests under the Freedom of Information Act (FOIA), pursuant to the FOIA Improvement Act of 2016.18 The amendments clarify and update procedures for the disclosure of records to the public, extend the deadline for administrative appeals, and add information on dispute resolution services. The final rule, effective November 24, 2017, finalizes an interim final rule published in December 2016.
Voting for this action: Chair Yellen, Vice Chairman for Supervision Quarles, and Governors Powell and Brainard.
Policy Statements and Other Actions
Covered Fund Seeding-Period Extensions
On July 17, 2017, the Board approved an order delegating authority to the Federal Reserve Banks, in consultation with Board staff, to approve (but not deny) an application by a banking entity for an extension of time to conform certain "seeding" investments in hedge funds or private equity funds (covered funds) to the requirements of section 165 of the Dodd-Frank Act, commonly known as the Volcker rule.19 "Seeding" refers to the period of time during which a banking entity provides a new fund with initial equity to permit the fund to attract investors. The Volcker rule requires that a banking entity actively seek unaffiliated investors to reduce its investment in the covered fund, no later than one year after the date of establishment of the fund, to an amount that is not more than 3 percent of the total outstanding ownership interests in the fund. A banking entity may request the Board's approval for an extension of time for up to two additional years to conform its investment. Under the order, a Federal Reserve Bank may approve a banking entity's request for an extension of the seeding period, provided certain criteria are met. The order is effective July 24, 2017.
Voting for this action: Chair Yellen, Vice Chairman Fischer, and Governors Powell and Brainard.
Joint Accounts at Reserve Banks
On August 3, 2017, the Board approved final guidelines (Docket No. OP-1557) for evaluating requests for joint accounts at Federal Reserve Banks to facilitate settlement between and among depository institutions participating in private-sector payment systems.20 While the Reserve Banks routinely open and maintain accounts for eligible depository institutions, joint accounts, in which the rights and liabilities are shared among multiple depository institution account holders, have not generally been available. The guidelines broadly outline factors that will be considered, but all requests for joint accounts will be evaluated on a case-by-case basis. The final guidelines are effective September 5, 2017.
Voting for this action: Chair Yellen, Vice Chairman Fischer, and Governors Powell and Brainard.
Payment System Improvement Strategies
On August 29, 2017, the Board approved the publication of Strategies for Improving the U.S. Payments System: Federal Reserve Next Steps in the Payments Improvement Journey.21 The paper, published jointly with the Federal Reserve Banks, follows up on the strategic vision articulated in the Federal Reserve's January 2015 paper on payment system improvement. The new paper puts forward a series of refreshed strategies and new tactics to achieve the desired outcomes of speed, security, efficiency, international payments, and industry collaboration.
Voting for this action: Chair Yellen, Vice Chairman Fischer, and Governors Brainard and Powell.
Disaster-Related Appraisal Exceptions
On October 10, 2017, the Board approved a statement and order (Docket No. OP-1577), published jointly with the FDIC, National Credit Union Administration, and OCC, granting temporary exceptions to the regulatory appraisal requirements for federally related transactions in designated disaster areas of Florida, Georgia, Puerto Rico, Texas, and the U.S. Virgin Islands, provided the transactions meet certain criteria.22 The exceptions were intended to facilitate disaster recovery from Hurricanes Harvey, Irma, and Maria and will expire three years after the date of the disaster declaration for each area.
Voting for this action: Chair Yellen, Vice Chairman Fischer, and Governors Brainard and Powell.
Interest on Reserves
On March 15, 2017, the Board approved raising the interest rate paid on required and excess reserve balances from 3/4 percent to 1 percent, effective March 16, 2017.23 This action was taken to support the FOMC's decision on March 15 to raise the target range for the federal funds rate by 25 basis points, to a range of 3/4 percent to 1 percent.
Voting for this action: Chair Yellen, Vice Chairman Fischer, and Governors Tarullo, Powell, and Brainard.
On June 14, 2017, the Board approved raising the interest rate paid on required and excess reserve balances from 1 percent to 1-1/4 percent, effective June 15, 2017.24 This action was taken to support the FOMC's decision on June 14 to raise the target range for the federal funds rate by 25 basis points, to a range of 1 percent to 1-1/4 percent.
Voting for this action: Chair Yellen, Vice Chairman Fischer, and Governors Powell and Brainard.
On December 13, 2017, the Board approved raising the interest rate paid on required and excess reserve balances from 1-1/4 percent to 1-1/2 percent, effective December 14, 2017.25 This action was taken to support the FOMC's decision on December 13 to raise the target range for the federal funds rate by 25 basis points, to a range of 1-1/4 percent to 1-1/2 percent.
Voting for this action: Chair Yellen, Vice Chairman for Supervision Quarles, and Governors Powell and Brainard.
Discount Rates for Depository Institutions in 2017
Under the Federal Reserve Act, the boards of directors of the Federal Reserve Banks must establish rates on discount window loans to depository institutions at least every 14 days, subject to review and determination by the Board of Governors. Periodically, the Board considers proposals by the 12 Reserve Banks to establish the primary credit rate and approves proposals to maintain the formulas for computing the secondary and seasonal credit rates.
Primary, Secondary, and Seasonal Credit
Primary credit, the Federal Reserve's main lending program for depository institutions, is extended at the primary credit rate, which is set above the usual level of short-term market interest rates. It is made available, with minimal administration and for very short terms, as a backup source of liquidity to depository institutions that, in the judgment of the lending Federal Reserve Bank, are in generally sound financial condition. During 2017, the Board approved three increases in the primary credit rate, bringing the rate from 1-1/4 percent to 2 percent. The Board reached these determinations on the primary credit rate recommendations of the Reserve Bank boards of directors. The Board's actions were taken in conjunction with the FOMC's decisions to raise the target range for the federal funds rate by 75 basis points, to 1-1/4 percent to 1-1/2 percent. Monetary policy developments are reviewed more fully in other parts of this report (see section 2, "Monetary Policy and Economic Developments").
Secondary credit is available in appropriate circumstances to depository institutions that do not qualify for primary credit. The secondary credit rate is set at a spread above the primary credit rate. Throughout 2017, the spread was set at 50 basis points. At year-end, the secondary credit rate was 2-1/2 percent.
Seasonal credit is available to smaller depository institutions to meet liquidity needs that arise from regular swings in their loans and deposits. The rate on seasonal credit is calculated every two weeks as an average of selected money market yields, typically resulting in a rate close to the target range for the federal funds rate. At year-end, the seasonal credit rate was 1.40 percent.26
Votes on Changes to Discount Rates for Depository Institutions
Details on the three actions by the Board to approve increases in the primary credit rate are provided below.
March 15, 2017. Effective March 16, 2017, the Board approved actions taken by the boards of directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Kansas City, Dallas, and San Francisco to increase the primary credit rate from 1-1/4 percent to 1-1/2 percent. On March 16, 2017, the Board approved an identical action subsequently taken by the board of directors of the Federal Reserve Bank of Minneapolis, effective immediately.
Voting for this action: Chair Yellen, Vice Chairman Fischer, and Governors Tarullo, Powell, and Brainard.
June 14, 2017. Effective June 15, 2017, the Board approved actions taken by the boards of directors of the Federal Reserve Banks of Boston, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, Kansas City, Dallas, and San Francisco to increase the primary credit rate from 1-1/2 percent to 1-3/4 percent. On June 15, 2017, the Board approved identical actions subsequently taken by the boards of directors of the Federal Reserve Banks of New York, St. Louis, and Minneapolis, effective immediately.
Voting for this action: Chair Yellen, Vice Chairman Fischer, and Governors Powell and Brainard.
December 13, 2017. Effective December 14, 2017, the Board approved actions taken by the boards of directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Kansas City, Dallas, and San Francisco to increase the primary credit rate from 1-3/4 percent to 2 percent. On December 14, 2017, the Board approved identical actions subsequently taken by the boards of directors of the Federal Reserve Banks of Chicago, St. Louis, and Minneapolis, effective immediately.
Voting for this action: Chair Yellen, Vice Chairman for Supervision Quarles, and Governors Powell and Brainard.
Footnotes
1. Governor Tarullo resigned on April 5, and Randal Quarles joined the Board as a member and as Vice Chairman for Supervision on October 13, 2017. Vice Chairman Fischer resigned on October 16, 2017. Return to text
2. See Federal Register notices at www.gpo.gov/fdsys/pkg/FR-2017-01-23/html/2017-00612.htm and www.gpo.gov/fdsys/pkg/FR-2017-01-23/html/2017-00613.htm. Return to text
3. See Federal Register notices at www.gpo.gov/fdsys/pkg/FR-2017-04-18/html/2017-07742.htm and www.gpo.gov/fdsys/pkg/FR-2017-04-18/html/2017-07743.htm. Return to text
4. See Federal Register notices at www.gpo.gov/fdsys/pkg/FR-2017-06-26/html/2017-13106.htm and www.gpo.gov/fdsys/pkg/FR-2017-06-26/html/2017-13107.htm. Return to text
5. See Federal Register notices at www.gpo.gov/fdsys/pkg/FR-2017-12-20/html/2017-27392.htm and www.gpo.gov/fdsys/pkg/FR-2017-12-20/html/2017-27393.htm. Return to text
6. See Federal Register notice at www.gpo.gov/fdsys/pkg/FR-2017-12-22/html/2017-27491.htm. Return to text
7. See Federal Register notice at www.gpo.gov/fdsys/pkg/FR-2017-02-24/html/2017-03568.htm. Return to text
8. See Federal Register notice at www.gpo.gov/fdsys/pkg/FR-2017-11-13/html/2017-24553.htm. Return to text
9. See Federal Register notice at www.gpo.gov/fdsys/pkg/FR-2017-11-21/html/2017-25172.htm. Return to text
10. See Federal Register notice at www.gpo.gov/fdsys/pkg/FR-2017-09-12/html/2017-19053.htm. Return to text
11. See Federal Register notice at www.gpo.gov/fdsys/pkg/FR-2017-02-03/html/2017-02257.htm. Return to text
12. See Federal Register notice at www.gpo.gov/fdsys/pkg/FR-2017-12-27/html/2017-27813.htm. Return to text
13. See Federal Register notice at www.gpo.gov/fdsys/pkg/FR-2017-06-15/html/2017-11379.htm. Return to text
14. See Federal Register notice at www.gpo.gov/fdsys/pkg/FR-2017-11-22/html/2017-25122.htm. Return to text
15. See Federal Register notice at www.gpo.gov/fdsys/pkg/FR-2017-11-22/html/2017-24052.htm. Return to text
16. See Federal Register notice at www.gpo.gov/fdsys/pkg/FR-2017-01-25/html/2017-00595.htm. Return to text
17. See Federal Register notice at www.gpo.gov/fdsys/pkg/FR-2018-01-10/html/2018-00227.htm. Return to text
18. See Federal Register notice at www.gpo.gov/fdsys/pkg/FR-2017-10-25/html/2017-23095.htm. Return to text
19. See press release at www.federalreserve.gov/newsevents/pressreleases/bcreg20170724a.htm. Return to text
20. See Federal Register notice at www.gpo.gov/fdsys/pkg/FR-2017-09-05/html/2017-18705.htm. Return to text
21. See press release at www.federalreserve.gov/newsevents/pressreleases/other20170906a.htm. Return to text
22. See Federal Register notice at www.gpo.gov/fdsys/pkg/FR-2017-10-24/html/2017-22957.htm. Return to text
23. See press release at www.federalreserve.gov/newsevents/pressreleases/monetary20170315a1.htm. Return to text
24. See press release at www.federalreserve.gov/newsevents/pressreleases/monetary20170614a1.htm. Return to text
25. See press release at www.federalreserve.gov/newsevents/pressreleases/monetary20171213a1.htm. Return to text
26. For current and historical discount rates, see www.frbdiscountwindow.org/. Return to text