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 appendix provides a summary of policy actions in 2021. Policy actions were implemented through (1) rules and regulations, (2) policy statements and other actions, and (3) discount rates for depository institutions. 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. This appendix also provides information on the Board and the Government Performance and Results Act.
For information on the Federal Open Market Committee's (FOMC's) policy actions relating to open market operations, see Appendix B, "Minutes of Federal Open Market Committee Meetings."
Rules and Regulations
Regulation D (Reserve Requirements of Depository Institutions)
Effective July 29, 2021. On May 28, 2021, the Board approved a final rule (Docket No. R-1737)
to eliminate references to an interest on required reserves (IORR) rate and an interest on excess reserves (IOER) rate and replace them with a single interest on reserve balances (IORB) rate.1 The final rule also simplified the formula used to calculate the amount of interest paid on balances maintained by or on behalf of eligible institutions in master accounts at Federal Reserve Banks and made other minor conforming amendments. (Note: On July 28, 2021, the Board established the IORB rate, effective July 29, 2021, at 0.15 percent (the level of the IORR and IOER rates in effect prior to the Board's action). See "Interest on Reserves" for Board votes on interest on reserves in 2021.)
Voting for this action: Chair Powell, Vice Chair Clarida, Vice Chair for Supervision Quarles, and Governors Brainard, Bowman, and Waller.
Regulation I (Federal Reserve Bank Capital Stock)
Effective February 14, 2022. On December 21, 2021, the Board approved a final rule (Docket No. R-1745) to streamline reporting requirements for member banks related to their subscriptions to Federal Reserve Bank capital stock.2 In particular, the final rule reduces the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to Federal Reserve Bank capital stock, except in the context of mergers.
Voting for this action: Chair Powell, Vice Chair Clarida, and Governors Quarles, Brainard, Bowman, and Waller.3
Regulation O (Loans to Executive Officers, Directors, and Principal Shareholders of Member Banks)
Effective February 17, 2021. On February 5, 2021, the Board approved an interim final rule and request for comment (Docket No. R-1740) to extend, through March 31, 2021, an exception for Paycheck Protection Program (PPP) loans from the requirements of section 22(h) of the Federal Reserve Act (FRA) and certain provisions of Regulation O.4 These requirements limit the types and quantity of loans that certain bank directors, shareholders, officers, and businesses owned by these persons can receive from their related banks. In April and July 2020, the Board issued interim final rules to provide exceptions from these requirements to certain loans that were guaranteed under the Small Business Administration's PPP. The interim final rule approved on February 5, 2021, extended this relief to PPP loans, including "second draw" PPP loans, made through March 31, 2021.
Voting for this action: Chair Powell, Vice Chair Clarida, Vice Chair for Supervision Quarles, and Governors Brainard, Bowman, and Waller.
Effective May 21, 2021. On May 7, 2021, the Board approved an interim final rule and request for comment (Docket No. R-1740) to extend the exception for PPP loans from the requirements of section 22(h) of the FRA and certain provisions of Regulation O.5 The current interim final rule extended this relief to PPP loans, including "second draw" PPP loans, made during the period permitted by statute, but in no case later than March 31, 2022.
Voting for this action: Chair Powell, Vice Chair Clarida, Vice Chair for Supervision Quarles, and Governors Brainard, Bowman, and Waller.
Regulation Q (Capital Adequacy of Bank Holding Companies, Savings and Loan Holding Companies, and State Member Banks)
Effective March 22, 2021. On March 8, 2021, the Board approved an interim final rule and request for comment (Docket No. R-1741), issued jointly with the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) (together with the Board, "the agencies"), to support and facilitate the Department of the Treasury's implementation of the Emergency Capital Investment Program (ECIP).6 Congress established the ECIP to support the efforts of low- and moderate-income community financial institutions to provide loans, grants, and forbearance to small businesses, minority-owned businesses, and consumers, especially in low-income and underserved communities. Under the program, Treasury purchases preferred stock or subordinated debt from qualifying minority depository institutions and community development financial institutions. The interim final rule permits the ECIP-issued preferred stock or ECIP-issued subordinated debt to qualify as additional tier 1 capital or tier 2 capital, respectively, under the agencies' capital regulation.
Voting for this action: Chair Powell, Vice Chair Clarida, Vice Chair for Supervision Quarles, and Governors Brainard, Bowman, and Waller.
Regulations Q (Capital Adequacy of Bank Holding Companies, Savings and Loan Holding Companies, and State Member Banks), Y (Bank Holding Companies and Change in Bank Control), LL (Savings and Loan Holding Companies), and YY (Enhanced Prudential Standards)
Effective April 5, 2021. On January 16, 2021, the Board approved a final rule (Docket No. R-1724) updating its capital planning requirements to be consistent with other recently modified Board rules.7 In October 2019, the Board finalized a risk-based prudential framework for large bank holding companies and U.S. intermediate holding companies of foreign banking organizations. The final rule modifies the capital planning, regulatory reporting, and stress capital buffer (SCB) requirements for firms in the lowest risk category under this updated framework. In particular, these firms will be subject to a two-year supervisory stress test cycle and will not be subject to company-run stress tests. In addition, the final rule applies capital planning requirements to large savings and loan holding companies that are not predominantly engaged in insurance or commercial activities.
Voting for this action: Chair Powell, Vice Chair Clarida, Vice Chair for Supervision Quarles, and Governors Brainard, Bowman, and Waller.
Regulation Y (Bank Holding Companies and Change in Bank Control)
Effective April 1, 2022 (compliance date May 1, 2022). On November 16, 2021, the Board approved a final rule (Docket No. R-1736), issued jointly with the OCC and FDIC, to improve information sharing about cyber incidents that may affect the U.S. banking system.8 Under the Computer-Security Incident Notification Requirements for Banking Organizations and Their Bank Service Providers (subpart N of Regulation Y), a banking organization is required to notify its primary federal regulator of any "computer-security incident" that rises to the level of a "notification incident" as soon as possible, and no later than 36 hours after the banking organization determines that a notification incident has occurred. The final rule also requires a bank service provider to notify affected banking-organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has materially affected, or is reasonably likely to materially affect, banking organization customers for four or more hours.
Voting for this action: Chair Powell, Vice Chair Clarida, and Governors Quarles, Brainard, Bowman, and Waller.
Regulation EE (Netting Eligibility for Financial Institutions)
Effective March 29, 2021. On February 16, 2021, the Board approved a final rule (Docket No. R-1661) to reduce risk and increase efficiency in the financial system by applying netting protections to a broader range of financial institutions.9 The final rule applies netting provisions of the Federal Deposit Insurance Corporation Improvement Act of 1991 to certain new entities, including swap dealers. In addition, the final rule makes minor changes to the existing activities-based test to clarify how it would apply following a consolidation of legal entities.
Voting for this action: Chair Powell, Vice Chair Clarida, Vice Chair for Supervision Quarles, and Governors Brainard, Bowman, and Waller.
Rules of Procedure—Statement Clarifying the Role of Supervisory Guidance
Effective May 10, 2021. On March 25, 2021, the Board approved a final rule (Docket No. R-1725) that codifies, with amendments, the Interagency Statement Clarifying the Role of Supervisory Guidance issued in September 2018 by the Board, OCC, FDIC, National Credit Union Administration, and Consumer Financial Protection Bureau.10 The final rule outlines the role of supervisory guidance and confirms that, unlike a law or regulation, supervisory guidance does not have the force and effect of law.
Voting for this action: Chair Powell, Vice Chair Clarida, Vice Chair for Supervision Quarles, and Governors Brainard, Bowman, and Waller.
Policy Statements and Other Actions
Capital Planning and Stress Testing
On March 25, 2021, the Board approved (1) an extension, through June 30, 2021, of pandemic-related limits on capital distributions by large bank holding companies and U.S. intermediate holding companies of foreign banks and (2) an extension of time, also through June 30, 2021, to notify these firms about whether their SCB requirements would be recalculated.11 The Board also announced that, following completion of the 2021 stress tests, firms whose capital levels were above minimum risk-based capital requirements would be subject to normal restrictions on capital distributions under the Board's SCB framework and would no longer be subject to pandemic-related restrictions. However, these restrictions would remain in place until September 30, 2021, for any firm that fell below its minimum risk-based capital requirements in the stress tests. If a firm's capital was still below stress test requirements after that date, it would be subject to stricter limitations on capital distributions under the SCB framework.
Voting for this action: Chair Powell, Vice Chair Clarida, Vice Chair for Supervision Quarles, and Governors Brainard, Bowman, and Waller.
On June 21, 2021, the Board approved a delegation of authority related to SCB requirements and stress test results. Specifically, the Board delegated to the director of the Division of Supervision and Regulation and the director of the Division of Financial Stability, with the concurrence of the Vice Chair for Supervision, the authority to provide firms subject to the Board's capital plan rule with notice of their SCB requirement, an explanation of supervisory stress test results, their final SCB requirement, and confirmation of their planned capital distributions. On June 24, 2021, the Board announced that pandemic-related restrictions on firms' capital distributions would end.12
All 23 firms subject to the 2021 stress tests remained above their minimum capital requirements and would therefore be subject to the Board's normal SCB framework.
Voting for this action: Chair Powell, Vice Chair Clarida, Vice Chair for Supervision Quarles, and Governors Brainard, Bowman, and Waller.
On August 5, 2021, the Board approved affirmation of the SCB requirement for HSBC North America Holdings, Inc., in response to its request for reconsideration.13 The Board also directed staff to conduct a closer examination of issues raised in the reconsideration process to inform continuing improvements in the stress testing methodology.
Voting for this action: Chair Powell, Vice Chair Clarida, Vice Chair for Supervision Quarles, and Governors Brainard, Bowman, and Waller.
Credit Risk Retention—Determination of Interagency Review
On December 12, 2021, the Board approved a determination of the results of the interagency review (Docket No. OP-1688), issued jointly with the OCC, FDIC, Federal Housing Finance Agency, Securities and Exchange Commission, and Department of Housing and Urban Development, required under the Board's Regulation RR, Credit Risk Retention, and the respective credit risk retention regulations of the other agencies (collectively, "the credit risk retention regulations").14 Specifically, the interagency review covered the definition of "qualified residential mortgage (QRM)," the community-focused residential mortgage exemption, and the exemption for qualifying three- to four-unit residential mortgage loans, as each is set forth in the credit risk retention regulations. After completing the review, the Board and the other agencies determined not to propose any changes at this time to the QRM definition or the associated exemptions for community-focused residential mortgages and qualifying three- to four-unit residential mortgages.
Voting for this action: Chair Powell, Vice Chair Clarida, and Governors Quarles, Brainard, Bowman, and Waller.
Fedwire Funds Service
On September 30, 2021, the Board approved a notice (Docket No. OP-1613) announcing that the Federal Reserve Banks will adopt the ISO® 20022 message format for the Fedwire® Funds
Service.15 The new format will allow for increased efficiency due to greater interoperability among global payment systems as well as a richer set of payment data that may help banks and other participants comply with sanctions and anti-money-laundering requirements. The Board also invited public comment on a revised plan for migrating the Fedwire Funds Service to the new message format on a single day, rather than in three separate phases as previously proposed. This single-day migration would be targeted for, and would be no earlier than, November 2023.
Voting for this action: Chair Powell, Vice Chair Clarida, Vice Chair for Supervision Quarles, and Governors Brainard, Bowman, and Waller.
Interest on Reserves
On June 16, 2021, the Board approved raising the interest rate paid on required and excess reserve balances from 0.10 percent to 0.15 percent, effective June 17, 2021.16 This action was taken to support the FOMC's decision on June 16, 2021, to maintain the federal funds rate in a target range of 0 to 1/4 percent. Setting the interest rate paid on required and excess reserve balances to 15 basis points above the bottom of the target range for the federal funds rate was intended to foster trading in the federal funds market at rates well within the FOMC's target range and to support smooth functioning of short-term funding markets.
Voting for this action: Chair Powell, Vice Chair Clarida, Vice Chair for Supervision Quarles, and Governors Bowman, Brainard, and Waller.
On July 28, 2021, the Board approved establishing the interest rate paid on reserve balances at 0.15 percent, effective July 29, 2021.17 This action was taken to support the FOMC's decision on July 28, 2021, to maintain the federal funds rate in a target range of 0 to 1/4 percent. As announced on June 2, 2021, the Federal Reserve Board approved a final rule, effective July 29, 2021, amending Regulation D to eliminate references to an IORR rate and to an IOER rate and replace them with a single IORB rate.18 Therefore, the Board voted on one rate—the interest on reserve balances rate—at this meeting and will continue to do so going forward.
Voting for this action: Chair Powell, Vice Chair Clarida, Vice Chair for Supervision Quarles, and Governors Bowman, Brainard, and Waller.
Paycheck Protection Program Liquidity Facility
On March 4, 2021, the Board approved an extension of the Paycheck Protection Program Liquidity Facility (PPPLF) to June 30, 2021, to enable the facility to provide continued support for the flow of credit to small businesses through the Small Business Administration's PPP.19 Under the PPPLF, eligible financial institutions could pledge PPP loans as collateral in exchange for term credit.
Voting for this action: Chair Powell, Vice Chair Clarida, Vice Chair for Supervision Quarles, and Governors Brainard, Bowman, and Waller.
On June 25, 2021, the Board approved an extension of the PPPLF to July 30, 2021, in order to enable financial institutions to pledge to the facility any PPP loans approved by the Small Business Administration through the June 30, 2021, expiration of the PPP.20
Voting for this action: Chair Powell, Vice Chair Clarida, Vice Chair for Supervision Quarles, and Governors Brainard, Bowman, and Waller.
Discount Rates for Depository Institutions in 2021
Under the FRA, 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. Therefore, about every two weeks the Board considers proposals by the Reserve Banks for the level of the primary credit rate and for the formulas used to compute the secondary and seasonal credit rates.21
Primary, Secondary, and Seasonal Credit
Primary credit, the Federal Reserve's main lending program for depository institutions, is extended at the primary credit rate. It is made available, with minimal administration, as a source of liquidity to depository institutions that, in the judgment of the lending Federal Reserve Bank, are in generally sound financial condition. Throughout 2021, the primary credit rate was 1/4 percent.
Following changes to the primary credit rate program announced by the Board on March 15, 2020, in 2021 depository institutions could borrow primary credit for periods as long as 90 days, prepayable and renewable by the borrower on a daily basis. Collectively, maintaining the offering rate and other terms of primary credit reflected continued efforts by the Federal Reserve to encourage discount window use to support the smooth flow of credit to households and businesses during the COVID event.22
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 2021, the spread was set at 50 basis points. At year-end, the secondary credit rate was 3/4 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 0.15 percent (see table E.1).23
Table E.1. Federal Reserve Bank interest rates on loans to depository institutions, December 31, 2021
Percent
| Reserve Bank | Primary credit | Secondary credit | Seasonal credit |
|---|---|---|---|
| All banks | 0.25 | 0.75 | 0.15 |
Note: Primary credit is available for very short terms as a backup source of liquidity to depository institutions that are in generally sound financial condition in the judgment of the lending Federal Reserve Bank. Secondary credit is available in appropriate circumstances to depository institutions that do not qualify for primary credit. Seasonal credit is available to help relatively small depository institutions meet regular seasonal needs for funds that arise from a clear pattern of intra-yearly movements in their deposits and loans. The discount rate on seasonal credit takes into account rates charged by market sources of funds and is reestablished on the first business day of each two-week reserve maintenance period.
Votes on Changes to Discount Rates for Depository Institutions
Throughout 2021, there were no changes to the primary credit rate, and the Board approved proposals by the Reserve Banks to renew the formulas used to compute the secondary and seasonal credit rates.
The Board of Governors and the Government Performance and Results Act
Overview
The Government Performance and Results Act (GPRA) of 1993 requires federal agencies to prepare a strategic plan covering a multiyear period and to submit an annual performance plan and an annual performance report. Although the Board is not covered by GPRA, the Board voluntarily complies with the spirit of the act and, like other federal agencies, publicly publishes a multiyear Strategic Plan, as well as an Annual Performance Plan and an Annual Performance Report.24
Strategic Plan, Performance Plan, and Performance Report
On December 27, 2019, the Board published the Strategic Plan 2020–23, which outlines the organization's priorities across five functional areas—Monetary Policy and Financial Stability, Supervision, Payment System and Reserve Bank Oversight, Public Engagement and Community Development, and Mission Enablement—for maintaining the stability, integrity, and efficiency of the nation's monetary, financial, and payments systems. In formulating the Strategic Plan 2020–23, the Board identified and prioritized the goals and objectives paramount to advancing the organization's mission while allowing for appropriate flexibility to respond to emerging and evolving challenges.
The Annual Performance Plan sets forth the projects and initiatives in support of the Board's current Strategic Plan's goals and objectives during a one-year period. The Annual Performance Plan helps the organization identify and prioritize investments and dedicate sufficient resources across the five functions to meet its congressional mandate, while maintaining ongoing operations.
The Annual Performance Report summarizes the Board's accomplishments throughout the performance year that contributed toward achieving the goals and objectives identified in that year's Annual Performance Plan. The Annual Performance Report provides transparency into the organization's activities and helps the Board to communicate the continued fulfillment of its dual mandate to the U.S. Congress and the public.
Ultimately, the organization's planning and reporting processes enable the Board to identify, prioritize, and progress those activities most critical to advancing its mission.
Footnotes
1. See Federal Register notice at https://www.govinfo.gov/content/pkg/FR-2021-06-04/html/2021-11758.htm. Return to text
2. See Federal Register notice at https://www.govinfo.gov/content/pkg/FR-2022-01-13/html/2022-00503.htm. Return to text
3. Randal Quarles's term as Vice Chair for Supervision ended on October 13, 2021. He resigned as a member of the Board of Governors, effective December 25, 2021. Return to text
4. See Federal Register notice at https://www.govinfo.gov/content/pkg/FR-2021-02-17/html/2021-02966.htm. Return to text
5. See Federal Register notice at https://www.govinfo.gov/content/pkg/FR-2021-05-21/html/2021-10711.htm. Return to text
6. See Federal Register notice at https://www.govinfo.gov/content/pkg/FR-2021-03-22/html/2021-05443.htm. Return to text
7. See Federal Register notice at https://www.govinfo.gov/content/pkg/FR-2021-02-03/html/2021-02182.htm. Return to text
8. See Federal Register notice at https://www.govinfo.gov/content/pkg/FR-2021-11-23/html/2021-25510.htm. Return to text
9. See Federal Register notice at https://www.govinfo.gov/content/pkg/FR-2021-02-26/html/2021-03596.htm. Return to text
10. See Federal Register notice at https://www.govinfo.gov/content/pkg/FR-2021-04-08/html/2021-07146.htm. Return to text
11. See press release at https://www.federalreserve.gov/newsevents/pressreleases/bcreg20210325a.htm. Return to text
12. See press release at https://www.federalreserve.gov/newsevents/pressreleases/bcreg20210624a.htm. Return to text
13. See press release at https://www.federalreserve.gov/newsevents/pressreleases/bcreg20210805a.htm. Return to text
14. See Federal Register notice at https://www.govinfo.gov/content/pkg/FR-2021-12-20/html/2021-27561.htm. Return to text
15. See Federal Register notice at https://www.govinfo.gov/content/pkg/FR-2021-10-06/html/2021-21801.htm. Return to text
16. See press release at https://www.federalreserve.gov/newsevents/pressreleases/monetary20210616a1.htm. Return to text
17. See press release at https://www.federalreserve.gov/newsevents/pressreleases/monetary20210728a1.htm. Return to text
18. See press release at https://www.federalreserve.gov/newsevents/pressreleases/bcreg20210602a.htm. Return to text
19. See press release at https://www.federalreserve.gov/newsevents/pressreleases/monetary20210308a.htm. Return to text
20. See press release at https://www.federalreserve.gov/newsevents/pressreleases/monetary20210625a.htm. Return to text
21. See the minutes of the Board of Governors discount rate meetings at https://www.federalreserve.gov/monetarypolicy/discountrate.htm. Return to text
22. See press release at https://www.federalreserve.gov/newsevents/pressreleases/monetary20200315b.htm. Return to text
23. For current and historical discount rates, see https://www.frbdiscountwindow.org. Return to text
24. The Strategic Plan, Annual Performance Plan, and Annual Performance Report are available on the Federal Reserve Board's website at https://www.federalreserve.gov/publications/gpra.htm. Return to text