Loans to executive officers, directors, and princi- pal shareholders of member banks.............. Minimum security devices and procedures for 219 Reimbursement to financial institutions for as- 44 225 Bank holding companies and change in bank con- Rules regarding foreign gifts and decorations......... 1 Rules regarding delegation of authority................ 10 Open market operations of Federal Reserve banks 11 Rules regarding availability of information............. 11. SUPPLEMENTAL PUBLICATIONS: The Federal Reserve Act, as amended through December 3 PART 201-EXTENSIONS OF CREDIT 201.1 Authority, scope and purpose. 201.6 Federal Intermediate Credit Banks. 201.53 Emergency credit for other than de- AUTHORITY: Sections 10(a), 10(b), 13, 13a, and 19 of the Federal Reserve Act (12 U.S.C. 347a, 347b, 343 et seq., 347c, 348 et seq., 374, 374a, and 461); Sec. 7(b) of the Internation- al Banking Act of 1978 (12 U.S.C. 347d). § 201.1 Authority, scope and purpose. (a) Authority and Scope. This part is issued under the authority of sections 10(a), 10(b), 13, 13a, and 19 of the Fed- eral Reserve Act (12 U.S.C. 347a, 347b, 343 et seq., 347c, 348 et seq., 374, 374a, and 461), other provisions of the Fed- eral Reserve Act, and section 7(b) of the International Banking Act of 1978 (12 U.S.C. 347d) and relates to exten- sions of credit by Reserve Banks to de- pository institutions and others. Except as may be otherwise provided, this part shall be applicable to United States branches and agencies of for- eign banks subject to reserve require- ments under Regulations D (12 CFR Part 204) in the same manner and to the same extent as member banks. (b) Purpose. This part establishes rules under which Federal Reserve Banks is an effective method of su institutions. The lending functions the Federal Reserve System are co ducted with due regard to the bas objectives of monetary policy and t maintenance of a sound and orderly nancial system. These basic objectiv are promoted by influencing the ove all volume and cost of credit throug actions that affect the volume a cost of reserves to depository instit tions. Borrowing by individual depo tory institutions, at a rate of intere that is adjusted from time to time accordance with prevailing econom and money market conditions, has direct impact on the reserve positio of the borrowing institutions and th on their ability to meet the cred needs of their customers. However, t effects of such borrowing do n remain localized but have an impo For purpose of this part, the follo means an institution that maintai reservable transaction accounts nonpersonal time deposits and is: (i) An insured bank as defined in se tion 3 of the Federal Deposit Insu ance Act (12 U.S.C. 1813(h)) or a ba that is eligible to apply to become insured bank under section 5 of su (ii) A savings bank or mutual savin bank as defined in section 3 of t (iii) An insured credit union as (iv) A member as defined in section 2 of the Federal Home Loan Bank Act (12 U.S.C. 1422(4)); or (v) An insured institution as defined in section 401 of the National Housing Act (12 U.S.C. 1724(a)) or an institution that is eligible to apply to become an insured institution under section 403 of such Act (12 U.S.C. 1726). (2) A financial institution that is not required to maintain reserves under Part 204 of this Title (Regulation D) because it is organized solely to do business with other financial institutions, is owned primarily by the financial institutions with which it does business, and does not do business with the general public is not a depository institution. (b) "Transaction account and nonpersonal time deposits" have the meanings specified in Part 204 of this Title (Regulation D). § 201.3 Availability and terms. (a) Short-term adjustment credit. Federal Reserve credit is available on a short-term basis to a depository institution under such rules as may be prescribed to assist the institution, to the extent appropriate, in meeting temporary requirements for funds, or to cushion more persistent outflows of funds pending an orderly adjustment of the institution's assets and liabilities. Such credit generally is available only after reasonable alternative sources of funds, including credit from special industry lenders, such as Federal Home Loan Banks, the National Credit Union Administration's Central Liquidity Facility, and corporate central credit unions have been fully used. Under certain circumstances, a surcharge may be imposed above the basic rate of interest normally charged by Reserve Banks. narily be limited to the amoun which the depository institution's sonal needs exceed certain per ages, established by the Board of ernors, of the institution's ave total deposits in the preceding ca dar year. Such credit will be avail if the Reserve Bank is satisfied the institution's qualifying need funds is seasonal and will persist fo least four weeks. Need for credit a pository institutions will also be g consideration when institutions are periencing unusual seasonal dema for credit in a period of liqui strain. To the extent practicable, a pository institution should arrang advance for seasonal credit for the period during which such credit is pected to be required. Under cert circumstances, a surcharge may be posed above the basic rate of inter normally charged by Reserve Banks (2) Other extended credit. Fede Reserve credit is available to dep tory institutions under extended cre arrangements where similar assista is not reasonably available from ot sources, including special indus lenders. Such credit may be provi where there are exceptional circu stances or practices involving only particular depository institution. E ceptional circumstances would inclu situations where an individual depo tory institution is experiencing fina cial strains arising from particular o cumstances or practices affecting th institution-including sustained dep it drains, impaired access to mon market funds, or sudden deteriorati in loan repayment performance. E tended credit may also be provided accommodate the needs of deposito institutions, including those wi longer term asset portfolios, that ma be experiencing difficulties adjustin to changing money market condition over a longer period, particularly a times of deposit disintermediation. special rate or rates above the bas discount rate established by the R serve Banks, subject to review and de termination by the Board of Gove nors, may be applied to other ex tended credit. (c) Emergency credit for others. I unusual and exigent circumstances, Reserve Bank may, after consultation with the Board, advance credit to individuals, partnerships, and corporations that are not depository institutions if, in the judgment of the Reserve Bank, credit is not available from other sources and failure to obtain such credit would adversely affect the economy. The rate applicable to such credit will be above the highest rate for advances in effect for depository institutions. Where the collateral used to secure such credit consists of assets other than obligations of, or fully guaranteed as to principal and interest by, the United States or an agency thereof, an affirmative vote of five or more Board members is required before credit may be extended. § 201.4 Advances and discounts. (a) Reserve Banks may lend to depository institutions either through advances secured by acceptable collateral or through the discount of certain types of paper. Credit extended by the Federal Reserve generally takes the form of an advance. (b) Reserve Banks may make advances to any depository institution if secured to the satisfaction of the Reserve Bank. Satisfactory collateral generally includes United States government and Federal agency securities, and, if of acceptable quality, mortgage notes covering 1-4 family residences, State and local government securities, and business, consumer and other customer notes. (c) If a Reserve Bank concludes that a depository institution will be better accommodated by the discount of paper than by an advance, it may discount any paper endorsed by the depository institution that meets the requirements specified in the Federal Reserve Act. § 201.5 General requirements. (a) Credit for capital purposes. Federal Reserve credit is not a substitute for capital. (b) Compliance with law and regulation. All credit extended under this part shall comply with applicable requirements of law and of this part. Each Reserve Bank (1) shall keep itself informed of the general character and amount of the loans and investments of depository institutions with a view of ascertaining whethe undue use is being made of credit fo the speculative carrying of or tradin in securities, real estate, or commo ities, or for any other purpose incor sistent with the maintenance of soun credit conditions, and (2) shall consi er such information in determinin whether to extend credit. (c) Information. A Reserve Ban shall require such information as it be lieves appropriate or desirable t insure that paper tendered as collate al for advances or for discount is a ceptable and that the credit provide is used in a manner consistent wit this part. (d) Indirect credit for others. Excep with the permission of the Board o Governors, no depository institutio shall act as the medium or agent c another depository institution in r ceiving Federal Reserve credit. A Reserve Bank may discount fo any Federal Intermediate Credit ban (1) agricultural paper, or (2) note payable to and bearing the endors ment of the Federal Intermediat Credit Bank that cover loans or a vances made under subsections (a) an (b) of section 2.3 of the Farm Cred Act of 1971 (12 U.S.C. 2074) and tha are secured by paper eligible for di count by Reserve Banks. Any paper s discounted shall have a period remain ing to maturity at the time of discour of not more than nine months. 90-035 0-82--2 |